3rd and Broadway redevelopment project in Santa Ana remains in limbo

On 3rd Street, an aging three-story parking structure tucked in downtown Santa Ana’s Main and Broadway corridor is at the heart of a potential legal battle between the city and Caribou Industries, a local real estate company with ties to major redevelopment projects in the city.

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On Sept. 15, the City Council authorized filing a lawsuit against Caribou Industries and affiliate Partners Capital Solutions over an agreement the city has with the developers for 3rd and Broadway, a project to replace the parking structure at 201 W. 3rd St. City Attorney Sonia Carvalho reported the 6-0 decision  – Councilmember Thai Viet Phan abstained – following a council discussion in closed session.

The city selected Caribou Industries in 2016 to redevelop the city-owned property with a 16-story residential and commercial building alongside a 10-story hotel. But revisions to the original proposal and ongoing site work delays have kept the city in negotiations with Caribou Industries President Michael Harrah for at least a decade.

The latest plan for the project and development agreement with Caribou Industries was approved by the City Council in 2022, calling for a mixed-use structure with 171 residential units, including 19 allocated for very-low-income housing, approximately 13,419 square feet of commercial space, 444 parking spaces and a second building with a 75-room hotel with a lobby, rooftop restaurant and ground-floor cafe.

As of September 2026, construction has yet to begin and the project remains in the pre-construction phase.

In 2013, the 3rd Street property was considered one of the largest parcels available in downtown Santa Ana with the “greatest opportunity” for redevelopment, city officials said at the time. The city sought bids to redevelop the more than 1.4-acre site after learning it would cost roughly $8.6 million to modernize and repair the parking structure built in 1982 — city leaders also said the structure had reached “a point of functional obsolescence” in the pedestrian-heavy area.

The City Council wanted a developer willing to include a hotel or hospitality component in the project, and by 2014, the city had received five proposals.

City staff initially recommended OliverMcMillan, a San Diego-based firm, as the most qualified developer for the project. The firm’s proposal included housing with ground-floor retail, but the firm would not add a hotel without a feasibility study. Other firms said the hospitality market in downtown Santa Ana “did not sufficiently support financing and construction of a new hotel,” and kept the hotel out of revised proposals after the city offered the option.

Harrah’s Caribou Industries, which is also behind the 37-story One Broadway Plaza proposal, was the only respondent to include a hotel in its pitch. In 2016, the council chose the developer to move forward with the 3rd and Broadway project.

Negotiations to complete the agreement with the Santa Ana-based developer continued for several more years as details such as the mix of retail and housing were worked out and questions still lingered about the viability of the hotel and what kind it should be — Kosmont, a consultant hired by the city, said the hotel carried the biggest economic risk.

Kosmont also found a “significant financial gap” in the project’s plan to demolish the current parking structure, replace 253 public parking spaces and reconnect Sycamore Street. A 2018 staff report recommended the city subsidize an estimated $13 million in public improvements, including $6 million for site preparation and demolition. Caribou would then reimburse the city with revenue from the replacement public parking.

After the council approved Harrah’s proposal, Santa Ana authorized the transfer of the property to the developer in 2022 through a grant deed. As long as the project is completed and meets the requirements listed in the development agreement with the city, the property belongs to Harrah.

Timelines around permits, construction and completion laid out in the agreement let the city seek remedies in court if the developer fails to meet deadlines without a proper extension. Terms in the deed also give Santa Ana the right to reclaim the property, assuming the city provides proper notice and an opportunity for the developer to address the issue.

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In recent years, city officials have attributed construction delays to Southern California Edison’s utility relocation requirements. The city says SCE needs electrical load data from surrounding properties, delaying infrastructure planning.

Caribou Industries invoked an “unavoidable delay” clause in 2023.

The clause, included in the development agreement, allows deadlines for construction and other progress markers to be extended under circumstances deemed beyond a party’s reasonable control. The city said Caribou Industries told officials that despite its best efforts, coordination with SCE had prevented it from meeting contract deadlines.

The city gave Caribou Industries a two-year extension, but in March 2025 said the issue was now “lack of progress” on Caribou’s part. The project remains in the pre-construction phase, pending utility coordination.

Harrah pushed back this week on the “lack of progress” characterization.

He said Caribou Industries has “never stopped answering” SCE’s requests for information about the site’s existing power supply and has provided all required documents, which are now “with the field engineer” for review before the utility relays its intentions to Caribou and the city.

The city now says Caribou has “reengaged with SCE and is working toward securing temporary power,” and the city is monitoring that coordination, with plans to oversee demolition once temporary power has been established.

Records show the city attorney has been in active discussions with Caribou Industries about the project since February, following a separate closed-session vote earlier this year.

When asked this week for comment, Harrah did not address the basis for the potential litigation, or whether he or his attorneys had been in contact with the city since the closed-session vote earlier this month.

He instead pointed to the coordination on the power utilities that has stalled the project. Harrah said Caribou Industries is waiting on a “will-serve” letter from SCE that would authorize 12,000 amps of power to the 3rd and Broadway project, and that he expects a response from the utility around September or October.

“We are making good progress on mutually resolving all issues,” Harrah said in a statement Thursday, Sept. 24.

He said the construction timeline remains contingent on the utility. And once SCE responds with a plan to supply “adequate power to the entire project,” he said a start date for mobilization and beginning construction will be set.

The development agreement requires construction to be completed within 24 months of starting.

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