Long Beach Sputters in Disney's Wake : Development: The firm's decision to bail out of the city has created a swirl of criticism and finger-pointing. Officials must decide what to do with port property and the Queen Mary.

By BETTINA BOXALL

March 13, 1992 12 AM PT

TIMES STAFF WRITER

The Walt Disney Co.’s decision to pack up and leave town has left Long Beach in a swirl of fault-finding and questions--about what went wrong and what to do next.

The vision of a new Disney development rising on the waterfront evaporated like stardust last week when the entertainment company abruptly announced that it would cease operation of the Queen Mary and Spruce Goose tourist attractions at the end of September and drop the development rights for about 250 acres of adjoining land, much of it under water.

An unusual wave of public criticism has followed, as several city councilmen lay the blame for Disney’s departure at the feet of the Harbor Commission and Mayor Ernie Kell.

“I think (Disney representatives) walked . . . because I don’t think they liked the way they were treated,” said Councilman Les Robbins. “They’ve had nothing but flak from the port.”

There have also been complaints that Kell did not take an active role in trying to persuade Disney to stay. “I’ve heard a lot of people say, ‘Where was the mayor?,’ Robbins commented earlier this week.

While local leaders are pointing fingers, they must also figure out what to do with the valuable waterfront land and the city-owned Queen Mary ocean liner, which, together with the Spruce Goose seaplane, employs 1,100 people.

“I feel we’re going to have to look at the site in a lot of different ways,” said Kell, who wants the Harbor Department to fund a consultant’s study to suggest development possibilities, both with and without the ship and the plane. He rejected criticisms that the harbor commissioners--whom he appoints--mishandled the Disney negotiations and that he failed to step in to keep them going.

“Disney is a big company,” Kell observed. “They’re tough boys. What I said or (the port commissioners) said didn’t influence their decision. They walked because the economics weren’t there.”

Disney, for its part, has taken care not to criticize local leaders. Instead a spokesman said the company broke off talks to extend its Long Beach lease because it was losing too much money on the attractions and was too busy with other projects to develop another venture in the city for years to come.

Kell said just last week that he still thought the Queen Mary was a viable tourist attraction, but he is already having second thoughts. “If Disney can’t make it (succeed), I don’t know who can,” Kell remarked Tuesday. “That has been a financial disaster since it sailed into the harbor.”

The Harbor Commission, which oversees port operations in the city, is prepared to keep the stately floating hotel open in the short term at the harbor’s expense. But local leaders are divided about its long-term fate. Some insist it is time the city dumped the 1936 passenger liner, which has consistently lost money since it steamed into Long Beach 25 years ago. Others argue that the Queen Mary is too beloved a local landmark to abandon.

“If you have a postcard of Long Beach, it has the Queen Mary in it,” Councilman Warren Harwood noted. “This isn’t just history or a ship. It’s Long Beach and you just can’t let it go down the drain.”

The future of the Spruce Goose, Howard Hughes’ “Flying Boat,” is even more uncertain. To keep it, the port would have to strike a new agreement with the wooden aircraft’s owner, the nonprofit Aero Exhibits Inc. And Harbor Commissioner David L. Hauser said there is “very little chance of that.”

William A. Schoneberger, president of Aero Exhibits, said three parties have expressed interest in the attraction--the University of Nevada system and people interested in starting museums in Oceanside and Oregon. None has made an offer, however, and it would cost whoever takes the world’s largest airplane at least $2 million to move it.

For all the discord over the negotiations and the Queen Mary, one thing local leaders agree on is that the port property next to the ship needs to be developed into a tourist attraction that will pump lots of tax dollars into the city’s hard-pressed General Fund and help fill downtown hotels that were 40% empty last year.

“It’s too good a site not to do something with,” said Chris Davis, president of the Long Beach Area Convention and Visitors Council. “This is one of those things that causes everyone to stop in their tracks and go, “Uh-oh, what do we do next?’ ”

Disney’s interest, however short-lived, broadened city perceptions of the waterfront’s potential.

Disney picked up the Queen Mary lease when it bought the Wrather Corp. in 1988. Soon afterward Disney started working on development plans for a resort, major seaside theme park and aquarium, stirring hopes that local shores would hum with tourists in a way they haven’t since the heyday of the now-demolished Pike Amusement Park.

Even after Disney decided in December that it would instead build a $3-billion resort in Anaheim, next to Disneyland, executives still said they might consider the tract for a smaller-scale project. Now that Disney has dropped that idea as well, it is up to the city to pursue its own visions.

“We about landed the biggest theme park in the West and we ought to continue down that trail,” Harwood suggested.

Some harbor commissioners are promoting a cruise ship terminal as at least part of a new development. Other suggestions have included a marketplace of restaurants and shops like those found in Boston or San Francisco, or an aquarium.

Harwood complained that the city should have started devising plans for the land months ago. “I think we’re in terrible shape. . . . We wait until we’re in a hole and then all of a sudden we’re scrambling.”

He is among those who have condemned the port’s handling of the negotiations, along with Robbins, Councilman Evan Anderson Braude and Vice Mayor Jeffrey A. Kellogg.

Chief among their contentions is that harbor commissioners were on the verge of striking a deal with Disney and then raised some last-minute issues, souring the agreement.

“I think the negotiations were going along fairly well until someone threw a curve,” Robbins asserted. “I think (Disney) began to say, “God, what are we getting into?’ ”

Harbor commissioners, who had been confident of signing a deal to extend Disney’s lease for two years, have been taken aback by the lambasting.

“I’m really in shock,” said Harbor Commissioner Roy Hearrean, one of the lead negotiators. “All I did was do my job. . . . Our negotiations did not deal with any of the reasons for why they left.”

Moreover, commissioners emphasize that even if Disney had stayed for a couple more years, there was nothing to prevent it from leaving then. “We have a situation that is beyond our control, that is based on pure economics,” Commissioner Alex Bellehumeur said. “Even if we were to subsidize them for two years, there is no way for (a Disney project) to go forward.”

The negotiations had primarily concerned Disney’s request for port subsidies to offset its Long Beach losses, which the company pegged at nearly $8 million a year.

The port had routinely been giving Queen Mary operators a $1.8-million annual rent credit. Disney initially asked for another $5 million a year, while the port was offering another $1.2 million a year. By the end of the talks, Disney seemed willing to shave its request to an extra $2 million annually, according to harbor commissioners.

It was at that point, councilmen contend, that the port commissioners dropped the ball, trying to drive the subsidy down further and raising last-minute demands.

Not everyone is so sure Disney was that interested in staying, however.

“There was a feeling that Disney may not have been totally sincere,” said Councilman Tom Clark. “The only reason they were in Long Beach was because Wrather wouldn’t sell them the Disneyland Hotel (in Anaheim) without taking the Queen Mary. This may have been their first chance to walk away.”

Disney had to either end the lease or negotiate a short extension by next Wednesday, or the lease would have continued for another 55 years.

Times staff writer Roxana Kopetman contributed to this story.