Two Orange County developers are likely to take over a stalled mixed-use project on Garden Grove Blvd., a nine-story rusted steel structure that is wearing the city’s patience thin.

Rich Knowland, a principal with Newport Beach-based Brooks Street, told the City Council on Tuesday night that they plan to partner, “50-50,” with LAB Holdings, the developer behind the popular Packing House food hall in downtown Anaheim.

“An organic, mom-and-pop incubator space for retail, food, and farm-to-fork type things — and hopefully a wine bar,” said Knowland.  Plans for the project include commercial space with residential units on upper floors.

“It’s seamless – not residential stacked on top of this thing,” he added.

The original Garden Grove Galleria project, otherwise known as Lotus Plaza, began in 2007 and included plans for two stories of retail space and 66 luxury condominium units. It was pitched as a first-of-its kind development that would revitalize the area along Garden Grove Blvd.

But the project ground to a halt in 2009 when Cathay General Bancorp, the bank financing the project, refused to pay the developer’s construction costs, citing a decline in the property’s value during the economic downturn.

A number of developers have since shown interest in reviving the project, although many have been wary of whether the market will have an appetite for the required 40,000 square feet of retail space.

But after city leaders made it clear in March that they had had enough, vowing to go forward with the demolition of the structure if construction did not resume by July, Cathay and the Emlen W. Hoag Foundation, which owns the property, have been scrambling to push for a deal.

The city is currently negotiating an agreement with Cathay, Hoag and Brooks Street to postpone the deadline for filing legal action, which could come before the city council for approval as soon as June 9.

Contact Thy Vo at or follow her on Twitter @thyanhvo.

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