By HOWARD FINE

Staff Reporter

There was a time when Hollywood went begging for new development. But now, city officials are facing the prospect of competition for development rights a sure sign that Tinseltown is making a comeback.

Case in point: The owners of a three-story commercial building at the southwest corner of Hollywood Boulevard and Highland Avenue want to tear down the structure and put up a 21-story, 400-room hotel, at an estimated cost of $85 million, with hopes of having Marriott Corp. to operate it.

But standing in the way is the Los Angeles Community Redevelopment Agency, and possibly TrizecHahn Corp., which is developing a major retail-entertainment complex across the street that will include the new venue for the annual Academy Awards show.

The CRA hopes to put in a new commercial project, dubbed the Hollywood Parkade, for most of the block on the south side of Hollywood Boulevard between Highland and Orange Drive. That includes the site where Yorkburry Development LLC, led by hotel developer Mazen Nazzal, wants to put a Marriott.

CRA officials say they are not sure they want a hotel in that location. Moreover, the CRA may choose a master developer for the entire block, which could cut Yorkburry out of the picture.

Yorkburry officials fear just that, especially since TrizecHahn has submitted a proposal for the block and since the CRA has the power to condemn property within the project area.

"We think they (TrizecHahn) will try to get the land condemned so that they can then add to their empire," said Sheldon Sloan, attorney for the property owners.

TrizecHahn senior vice president of development David Malmuth said that the company was asked to submit a proposal for redevelopment of the south side of Hollywood Boulevard by other businesses in the area.

"There is an opportunity here to enhance the south side of Hollywood Boulevard," Malmuth said.

He said that the TrizecHahn proposal involves a hotel, possibly an office building, and 50,000 to 60,000 square feet of retail space.

Nazzal and his partners, who own several hotels in the Middle East and London, purchased the property in 1982, but held off on redeveloping it.

Until recently, the area was too depressed to support a major hotel to compete with the already existing Holiday Inn and Hollywood Roosevelt Hotel, said Gus Sader, who, as managing partner of San Diego-based Hospitality Asset Services, would manage Yorkburry's assets if and when the hotel is built.

All that changed, though, with the current economic rebound and the announcement of TrizecHahn's Hollywood and Highland project.

"We are ready to go and have all the capabilities for our project," Sader said. "We are committed to build on that piece of land."

But CRA officials say the Nazzal partnership should have moved more quickly.

"They have owned the land for 16 years and only now, when we send them a notice inviting proposals for the redevelopment zone, do they come forward with their plans," said Ann Marie Gallant, deputy administrator of economic development for the CRA, who oversees Hollywood redevelopment.

Gallant said a decision is not expected before early September.

"Once we get to this stage, it's a competitive bidding process. We look at all the proposals and determine which one or which ones most closely fit into the overall plan we have in mind for the area," Gallant said.

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