Santa Ana Looks to Renovate Complex

In its newest effort to bolster business downtown, Santa Ana’s City Council will consider one of its biggest redevelopment projects: a $3.58-million subsidy to three businesses that would occupy a trio of vacant buildings.

Under the plan, which goes before the council in four to six weeks, the city would spend $2.3 million to renovate the buildings, at 4th Street and Broadway.

Known collectively as the Phillips Hutton Building, the small complex was bought by the city in the mid-1980s for $1.28 million. City officials said they are not worth much more today because of the millions in improvements needed before they could be occupied.

Three companies--Nestor Gaffney Architects, Griffin Realty and redevelopment consulting agency Rosenow Spevacek Group--will take ownership of one building each, provided they spend about $500,000 each on improvements, said John Reekstin, the city redevelopment director.

Two are destined to become office buildings, while the third will house offices and a restaurant.

“This is a very significant project,” Reekstin said. “It’s part of a continuing effort to draw people into the downtown.”

City Councilman Jose Solorio said he appreciates the project because it involves renovating historic buildings. “Private-public partnerships will help make the area stronger,” he said.

The makeover of the three buildings would be one of the most costly in the history of Santa Ana’s redevelopment authority, which has underwritten about $20 million worth of such projects over the past 10 years.

The city is working to fuse a nascent Artists Village--with studios, shops and eateries attractive to middle-class consumers--with a bustling Latino shopping area that serves as a magnet for immigrants living in the area.

In the past five years, Reekstin said, the city has offered a range of subsidies to companies willing to move into downtown Santa Ana, including:

A loan of $450,000 to a partnership headed by developer Mike Harrah, as well as a loan of $30,000 to one of his tenants, the Memphis Cafe & Bar, to pay for improvements to the Southern-style eatery in the Santora Building. The loans need not be repaid if a restaurant continues operating on the same scale for eight years.

The sale of land to the Olson Co. for $1.2 million less than its market value. The company is building 86 lofts on three blocks between Main, Bush, Sycamore and 2nd streets.

A grant of $400,000 to the Gypsy Den restaurant for improvements to the building. The restaurant opened three years ago.

A loan of $70,000 to Tangata, a restaurant at the Bowers Museum of Cultural Art.

In addition, the city spent $6.5 million to renovate the 1924-vintage Grand Central Art Center, a complex of galleries and studios that also houses a small theater. An additional $350,000 went to convert a former auto repair shop into the Orange County Center for Contemporary Art, and $1.7 million in seed money went to help the acclaimed High School of the Arts establish itself in a downtown high-rise after years in a more suburban setting in Los Alamitos.

“The point has been to create cornerstone projects that spur private developer interest, and that is happening,” Reekstin said. Luring Memphis downtown “was very important, because we wanted a first-class restaurant.”

Dan Bradley, one of the two Memphis owners, said he was attracted to the proposal because of “the level of commitment to the arts, the Artists Village and to the area. The city was so eager to have us.”

Bradley, who has one other Memphis restaurant, in Costa Mesa, said that without the subsidy, which covered a kitchen installation, “it would have been cost-prohibitive. We would not have been able to do it.”

Even though business has not been booming, Bradley said he is hopeful. “We knew the [initial] numbers would not be outrageous, but we’re looking ahead to a brighter future.”

City officials laud businessmen like Bradley as pioneers, but some Latino merchants see such businesses as a foreboding sign of their own extinction.

The buzz heard in taquerias and travel agencies is often about what the city is doing not for the Latino merchants but for businesses that cater to other types of customers.

Manuel Pena, owner of insurance agency Manuel Pena Consulting, said the city’s incentives are a great way to encourage business downtown, apart from the equity issue.

“It does not upset me that they do these things, but they should do it equally with everyone,” Pena said. “Instead of sticking with a known factor, a downtown, an old-fashioned one, and using it, and relying on the Hispanic influence here, they are worried Santa Ana is too Hispanic. They want change. But these people are not going home.”

City Councilwoman Alberta Christy said the initial subsidies may seem large, but the city benefits in the long term.

“The returns that are going to be generated there over the years are more than the incentive,” she said. “We get business license fees and support for the community. It’s a lot of things that businesses do.”