Housing deal in Anaheim may be dead

A proposed housing project near Disneyland that has fueled a rancorous debate over the future of Anaheim’s Resort District and the city’s relationship with the entertainment giant may be dead.

Details of the deal’s possible collapse are contained in a lawsuit that project developer SunCal Cos. filed last week against the owners of the 26-acre parcel where 1,500 condominiums and low-income apartments were to be built.

SunCal says the Frank Family Partnership reneged on the $46-million deal to sell the land. SunCal is asking that the contract be enforced and wants $60 million in damages. The land is occupied by two mobile home parks.

The lawsuit, filed in Orange County Superior Court, alleges that the Frank Family Partnership conspired with unnamed third parties to kill the deal.

“The Frank Family Partnership is apparently blowing off a $46-million deal,” said Skip Miller, SunCal’s attorney. “Would you do that unless you had something else in the fire?”

Attorneys for the Frank Family Partnership said Tuesday that it was SunCal that walked out on the deal, which was signed in April 2005.

The Frank Family Partnership extended the close of escrow eight times, but SunCal did not pay a $500,000 deposit that would have extended it one last time for three more months, said Ed Connor, an attorney for the partnership.

“We were absolutely stunned,” he said.

Miller said an extension of as little as three months wouldn’t have mattered because SunCal wouldn’t have been able to obtain city approval of the project until next summer, a condition of the sale, because of two ballot measures that would halt the plans.

The suit alleges that “opposition to the project has caused significant delays.” Much of the opposition has come from the Walt Disney Co., which has filed two lawsuits and funded the two ballot measures.

Over the last 15 months, debate over the project has pitted Disney, tourist officials and their allies against developers, housing advocates, low-wage workers and some religious leaders who argue that the city, and especially the tourist district, needs low-cost housing.

Disney and tourism officials are concerned that the more than $6 billion in public and private funds poured into the resort district over the last 13 years would be wasted if the area returns to its past, marked by seedy motels, tacky shops and neon signs.

The Frank Family Partnership has begun negotiating with others, but Connor said Disney was not one of them.

Anaheim City Councilman Harry Sidhu said the potential buyers want to build a hotel rather than housing, an idea he supports. “It’s not going to end neatly. There’s going to be more fireworks,” he said. “This was a painful experience for everybody.”

The Disney-backed ballot measures are scheduled to go before voters in June 2008. One is a referendum that would overturn the council’s decision to zone the area for housing. The second is an initiative that calls for voters to decide the fate of any new housing project within the 2.2-square-mile resort district.

The yearlong zoning dispute over the Frank Family Partnership parcel, across the street from Disney’s planned third theme park, made headlines in the New York Times and International Herald-Tribune and provided spoof material for “The Daily Show.”

Since Disney and tourist officials began collecting signatures for the initiative and referendum, Anaheim residents have been inundated with mailers and television and radio spots from both sides.

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