Gotcha, Kajima!

If Bradford Kinney's plan willwork anywhere, it'll work in Orange County.

Kinney, chairman and CEO of Glacier of Anaheim LLP, is poised to build the much-vaunted Gotcha Glacier sports complex. The 35-acre megaproject will include America's first indoor ski slope, a scuba-diving tank, a skydiving wind tunnel, a skate park and a rock-climbing wall—all housed in a massive hangar-shaped building designed by F+A Architects, the same outfit that built the highly successful South Coast Plaza shopping mall.

Kinney is banking on the county's population of young people and its booming tourism industry to support his project, whose price tag has already reached $105 million.

“We're going to break ground in a few months,” Kinney told the Weekly on Feb. 24. “The project is getting bigger and better every day. We already have 80 percent of our spaces leased.”

But many details about the project remain cloudy, the biggest of which has to do with whether the Gotcha Glacier will make money. Kinney flatly refused to discuss the project's financing but promised the project will be finished—on budget and on time—no later than February 2002.

Of course, completing the project on time is crucial to keeping it under budget. And critical to that will be the performance of Gotcha Glacier's project manager, Kajima Corp., the Japanese construction giant that built the world's first (and only) indoor ski park, the Spring Summer Winter and Autumn Sports facility in Tokyo.

“Kajima Corp. has promised to do the construction on budget and on time,” said Kinney. “There are no possible hang-ups whatsoever.”

Kinney said he isn't worried about what happened the last time Kajima promised to finish a project on time and on budget: the ill-fated Belmont Learning Complex in downtown Los Angeles. Under Kajima's supervision, Belmont fell years behind schedule, and its cost swelled to more than $250 million before numerous environmental problems led the LA Unified School District to abandon Belmont altogether in January.

According to a recent audit of the project by Don Mullinax, LA Unified's inspector general, Kajima Urban Development officials assured the LA Fire Department on several occasions that there were no environmental problems with the school site. Those assurances, Mullinax wrote, may have violated federal and state law and, in his opinion, amounted to “grossly negligent misrepresentations of environmental conditions at the Belmont site.” In September 1999, Mullinax referred his report—along with his allegations about Kajima—to law-enforcement agencies for further investigation.

Asked whether Kajima's role in the Belmont fiasco bothered him, Kinney said no. “The problems with Belmont weren't Kajima's fault,” he responded.

Besides, Kinney said, environmental problems wouldn't be an issue for the Gotcha Glacier project. “There was a major analysis done of this site, so we aren't going to have any of those environmental problems,” Kinney said. That study, he added, was done by the environmental firm Law/Crandall.

As it turns out, however, Law/Crandall did much of the early environmental testing at Belmont, failing to notice the high levels of underground methane gas and other hazardous chemicals that later killed the project. Law/Crandall's analysis was included by Mullinax in the compilation of alleged misdeeds he referred to law enforcement.

Kinney said they chose Kajima for the Gotcha Glacier project because of its experience with the Japanese ski park and its successful completion of the Long Beach Aquarium several years ago. Unlike Belmont, Kajima finished the aquarium on time and under budget.

“They built the aquarium and did a wonderful job,” said Kinney. “According to the city of Long Beach, they were on time and pleasant to deal with.”

Though Kajima completed the project on schedule, the $117.5 million aquarium has so far failed to generate the attendance necessary to make it profitable. According to a Feb. 8 story in the Long Beach Press Telegram, aquarium officials are cutting costs, eliminating staff positions, and seeking government grants to keep up with debt payments on the project. Thanks to financing put together by Kajima, the city of Long Beach agreed to guarantee the bonds used to pay for the aquarium. That means that, if the aquarium can't make this year's $9 million debt payment, city officials will have to fork over bed taxes and tidelands revenue to the project's creditors.

Unlike LA Unified's Belmont or Long Beach's aquarium, Gotcha Glacier isn't a public-private partnership. In fact, Anaheim is investing relatively little in the project—officials say just $2 million in new infrastructure. But the city has a long-term interest in the project because it will continue to own the property after construction begins, through a 55-year lease estimated to be worth at least $14 million to the city over the next 30 years.

That's if Gotcha Glacier turns out to be as profitable as the Long Beach Aquarium is not.

Kinney's not worried. “When we check into Kajima, they come out with flying colors on everything,” he said. “They're one of the largest construction companies in the world. When you're that big, you end up getting at least some bad press.”

But some bad press is worse than others. Consider a story involving Kajima known as the Hanaoka Incident. On June 30, 1945, hundreds of starving Chinese slave workers attempted to escape a Kajima labor camp. They failed, and at the orders of Kajima officials, 113 of them were massacred. In 1990, Kajima officials apologized for the incident, but despite the continued efforts of survivors to receive compensation, the company has steadfastly refused to pay reparations.

Nor is Kajima's bad press confined to the history books. Since the 1980s, about a half-dozen Kajima Corp. employees have been arrested and charged with bid-rigging in Japan. In fact, a Lexis-Nexis search of the words “Kajima” and “Gotcha”—intended to find articles on the company's role in the upcoming Anaheim project—turned up a February 1990 article in The Economist. The article reported that Kajima and dozens of other Japanese builders had agreed to pay the U.S. Justice Department $33 million to settle bid-rigging charges involving a project to build a U.S. Navy base at Yokosuka. As The Economist reported, it was the first such fine in world history.

The article's headline? “Gotcha!”