Once a bustling waterfront community full of fishermen, cannery workers and shipbuilders, downtown San Pedro has in recent decades become a symbol of urban decay.

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Seedy bars and tattoo parlors, mom-and-pop stores struggling in half-vacant buildings and low-income housing projects all within yards of the waterfront and the massive Port of Los Angeles complex.

But, finally, San Pedro is showing some signs of new life.

Led by a wave of loft and condominium developments, more than 1,200 residential units have been completed or are under construction, most of these in five major projects that also contain tens of thousands of square feet of retail space. New businesses are opening up, halting a decades-long business exodus. In addition, plans for a waterfront makeover are finally getting some serious attention.

"This is all very amazing. We're seeing hundreds of millions of dollars of investment pouring in, which is just great for our community," said Joe Gatlin, president of the Central San Pedro Neighborhood Council and a San Pedro native who has waited nearly 40 years to see such a turnaround.

Yet for all the promise, the revitalization remains fragile.

Only a handful of the dozens of blocks that comprise downtown San Pedro have been touched so far and there are precious few new jobs for the urban professionals that the development projects are being marketed to.

Plus, in a case of bad timing, most of these residential units are coming on line in the midst of the worst real estate downturn in years.

Just as important, downtown San Pedro remains largely isolated from the waterfront that was so vital to its early days as a center of fishing, canning and shipbuilding. While there are grand plans to remake the entire waterfront and connect it to the downtown district, those plans largely hinge on the whims of the Port of Los Angeles, which until recently has largely ignored its San Pedro neighbor.

"This is a waterfront that could rival the great waterfronts of San Diego, Long Beach and San Francisco something that people from all over the region and beyond could flock to," said L.A. City Councilwoman Janice Hahn, a longtime San Pedro resident who now represents the area.

The port does have a $1.1 billion plan to remake the waterfront and realign the streets to connect the waterfront to downtown San Pedro. But that plan is only now coming to public review and actual construction remains years away. (See article page 25.)

Yet despite all this, city, community and business leaders remain optimistic that the redevelopment taking place in downtown San Pedro will stick this time, unlike so many times in the past 40 years.

They point to a confluence of factors that helped launch this redevelopment drive, starting with the ascension to power in 2001 of Mayor James Hahn and his sister, Councilwoman Janice Hahn, longtime San Pedro residents who were determined to pay more attention to the area.

Shortly after taking office, Councilwoman Hahn, along with the San Pedro Chamber of Commerce, the Community Redevelopment Agency and the Los Angeles Harbor Commission, asked the Urban Land Institute to come up with recommendations for revitalizing the community.

In 2002, the institute issued a 30-page report with two main recommendations: bring in 3,000 more housing units, and connect new housing and retail redevelopment projects along the waterfront with the downtown.

In the past, such studies of San Pedro had generally sat on shelves, but not this time. Mayor Hahn and Councilwoman Hahn, the CRA and, to some extent, the port all agreed to act on its recommendations.

"This report is the playbook for downtown San Pedro. They hit it dead on," said Eric Eisenberg, principal in the Renaissance Group and chairman of the Downtown San Pedro Business Improvement District.

One other factor contributed: The Community Redevelopment Agency, recognizing that its original 60-acre Beacon Street redevelopment project area was way too small to turn the tide, had just created the 700-acre Pacific Avenue redevelopment project area, essentially taking in the rest of downtown. Now, virtually any project proposed for the downtown area could be in line to receive CRA subsidies as a jump-start.

Loft boom

City and community leaders first turned their attention to the housing side. Signs that new housing could serve as a catalyst were already evident in downtown Los Angeles. And it appeared to be working on a smaller scale in San Pedro as dozens of artists had moved into downtown in the 1990s, taking advantage of available live-work space and cheap rents. Their presence spawned the opening of galleries and a few restaurants.

Starting in 2003, the city and CRA invited developers to come in and pitch residential projects. With a regional housing boom taking place, developers responded, drawn by the potential of a revamped waterfront and an underserved market.

"We were intrigued by the revitalization effort going on in downtown San Pedro," said Jill Froman, sales and marketing director for Marina del Rey-based Lee Homes Inc., which finished the $41 million, 116-unit Centre Street Lofts project a year ago. "We had done a lot of work in Janice Hahn's district, so when she came to us and asked us how we could make this work, we readily accepted the challenge."

Numerous other condominium and loft proposals flowed in, both for market-rate and affordable housing. Among the market rate projects to move forward: Bank Lofts at Seventh and Mesa streets, La Salle Lofts at Seventh and Center streets and the Grand View Lofts on Grand Avenue.

On the affordable housing side were two noteworthy projects on the north side of town: 49 units for low-income single women and mothers at Toberman Village, and a Habitat for Humanity project containing 16 units that drew former President Jimmy Carter to town for the groundbreaking last fall.

Yet no matter how many projects came forward, redevelopment of downtown San Pedro was not going to be viewed as a success unless something could be done about the area's central eyesore: the 40-year-old, 11-story Pacific Trade Center building that had been home to defense contractor Logicon Inc. The building, with crooked floors and laden with asbestos, had sat vacant since 1990, when Logicon was acquired by Northrop Grumman Inc.

Enter developer Raffi Cohen of Beverly Hills-based Galaxy Commercial Holding LLC, who proposed demolishing the building to make way for a 16-story glass tower of 318 condo units called the Vue. When the demolition actually took place in 2006, the community was elated.

"When Raffi Cohen took that monster out, that was the moment when we knew some renewal would really happen," said Richard Pawlowski, a longtime resident and real estate broker. The Vue is set for completion later this year. (See article page 27.)

Waiting in the wings is an even more massive project at the corner of Fifth and Palos Verdes streets. Originally planned as a $150 million, 251-unit mixed use project in two buildings, developer Omninet Capital LLC recently bought an adjacent parcel and now envisions a project of $200 to $250 million.

"This is going to be a larger project than originally put forth. So we're right now taking our time to analyze what the community needs and what the area needs," said Omninet senior vice president Michael Daniel, who added the revised plan should be ready later this year.

With all of these condos and lofts drawing residents to downtown, some new businesses have begun to trickle in. More than a half-dozen restaurants have opened in the last year, including Niko's Pizzeria, Nosh Cafe and Mishi's Strudel House. Some old bars have been renovated and retail outlets have opened, including Off the Vine, a wine store.

"There's definitely been an improvement. More people are now supporting business in the downtown area," said Darka Klaric, owner of Drop-In Cards & Gifts on Sixth Street.

While there's some concern about adequate parking in the downtown area and rising rents eventually driving out some of the mom-and-pop businesses, neither of these issues has yet reached a critical mass. Indeed, downtown had been so bad for so long that many businesses had either shuttered or moved to a more prosperous corridor along Western Avenue.

"Now, the flow is beginning to reverse and some of the businesses are moving back to downtown," said Camilla Townsend, president and chief executive of the San Pedro Chamber of Commerce.

There's more concern about some longtime residents being priced out as the downtown area gentrifies, particularly some of the artists who pioneered the return to downtown a decade ago. "We have apartment buildings where the rents have doubled in the last three years," said Gatlin of the Central San Pedro Neighborhood Council.

Office jobs

While the pace of retail businesses opening in downtown is expected to pick up as residents move into the area, there's still one crucial element missing from downtown San Pedro: a vibrant commercial office market. Indeed, some are complaining that city officials are following the Urban Land Institute playbook a bit too closely. The ULI study, citing a 40 percent office vacancy rate at the time, strongly recommended against any further office development.

Now, as much of the land best suited primed for redevelopment is going to housing, there's concern about where all these new residents will work beyond the generally low-paying world of retail jobs. "We are concerned about the lack of job-creating businesses opening up," Townsend said.

Hahn said there is the potential for some office space in downtown. But for now, she is focused on nurturing a chamber-sponsored business incubator in nearby Wilmington developing technologies for cleaning up port pollution.

More pressing is the housing downturn that could nip San Pedro's revitalization in the bud. But Hahn said she is not too worried about the slowdown.

"Some of the condo units may convert to rentals and some projects might take a little longer to complete. And there may be new players that come in to pick up these projects if they stall. We know that these things are cyclical: We just have to hang on until things turn again."

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