The council voted to issue a "notice to cure" to Ohio-basedDevelopers Diversified Realty, which has approximately $17.5million invested in the project. That decision provides thedeveloper with two options: either findfinancing within 30 days orbe fired from the project.

"We are extremely surprised and disappointed by the action takenby the Long Beach City Council regarding the Queensway Bayproject," says Eric Mallory, a senior VP at DDR. The project wasfully financed and substantially pre-leased before the anchortheater tenants filed bankruptcy. However, city officials say theproject is already nearly two years behind schedule.

The Queensway Bay project is tied to the city's efforts torevitalize and redevelop Long Beach's downtown bay area. If DDR iskicked off the project, city officials say a smaller project willbe considered.