HUNTINGTON BEACH : Waterfront Builder to Get Cash Payment

The City Council this week agreed to a financial arrangement that will allow the developer of the massive Waterfront project to immediately collect a $5.6-million cash payment from the Redevelopment Agency.

The agency owes the Robert L. Mayer Corp. the money as reimbursement for various construction and public works improvements at the Waterfront site, which overlooks Pacific Coast Highway at Huntington Street.

The agency, however, was scheduled to pay the debt over a decade or longer as it collects revenue from its taxes related to the redevelopment project. Under the agreement council members approved Monday, however, Mayer will collect the money immediately.

The First California Capital Markets Group Inc., a banking group, has agreed to assume the collection of the money for Mayer. The group will pay the developer the full amount now and will establish a trust into which the Redevelopment Agency will repay the debt with tax revenues.

“From our standpoint, we continue to make payments as originally planned . . . but they’ll get a one-time cash payment,” said Stephen V. Kohler, the city’s principal redevelopment specialist.

In exchange for the immediate payment, the Newport Beach-based developer will relieve the agency from a debt related to the relocation of the Driftwood Beach Club Mobile Home Park. Because dozens of the 200 coaches in the park have been moved to make room for the project, the agency had been required to pay Mayer for lost rental income, Kohler said.

By negating that debt, the agency will save an estimated $1.2 million, according to a financial adviser to the city Redevelopment Agency.

Mayer will also reimburse the agency $30,000 for legal expenses related to the agreement, which has been in the works for nearly six months.

Kohler said the agency favored the deal as a gesture of goodwill toward the developer of the seaside project, a 10-year endeavor valued at nearly $400 million.

“We are in a partnership with Mayer in the Waterfront development, so anything we can contribute to that partnership we will look at with diligence,” Kohler said.

The agreement was approved 4 to 0 by the council. Mayor Peter M. Green and Councilwomen Linda Moulton-Patterson and Grace Winchell are visiting Huntington Beach’s sister city of Anjo, Japan, and were absent for the vote.

The financial arrangement comes in the final planning stages of Phase II of the project, which will include a 500-room, 20-story hotel tower, a 337-condominium complex and a 33,000-square-foot health spa. That facet of the development is tentatively expected to get under way by early next year.

The developer, however, has yet to secure financial backing for its construction.

The initial phase of the project, the 13-story Waterfront Hilton, opened a year ago.