Developer wants to turn hotel into multimedia hive.

The marble-clad lobby and gold-leafed decorative molding of the Pacific Grande Hotel in downtown Los Angeles has classic charm.

Inside, antique lights guide visitors toward a wide staircase with hand-carved banisters that lead to a mezzanine level.

Sound like a good real estate buy?

Well, maybe at the turn of the century when hotels and office buildings along Spring Street comprised the heart of the city's business district. Today, the 260-room hotel and others like it in the area have deteriorated. But the neighborhood didn't stop developer James Schneider from buying the property last November for about $2 million. It's all a part of his vision to transform the historic Spring Street corridor into a pocket for multimedia companies.

"We would like to attract the kind of people who appreciate the funky, old buildings," said Schneider, a tax-attorney who previously rehabilitated buildings in San Diego's Gaslamp Quarter.

"They are the Internet types, the Digirati," he said. "We figure that those with pony-tails would live, work or incubate businesses on Spring Street in these wonderful old buildings rather than the Class A vacancies downtown."

But before techies can start moving in, Schneider needs some help. He is negotiating with the Community Redevelopment Agency to obtain public support for the project (including the possible issuance of tax-exempt bonds to cover the costs of the upgrade).

He also is soliciting help from the Department of Water and Power and Pacific Bell to underwrite some of the costs of wiring Integrated Services Digital Network lines into the building for high-speed transmission of computer data.

So far, the idea has some city support.

"We think the idea is a solid one for the area, and are trying to find ways to allocate agency funding for the project," said Don Spivack, CRA's deputy administrator. "We're in negotiations at the moment, trying to come up with a solid plan."

Spivack didn't know how much of the project the agency could underwrite. And Schneider said he is waiting for city support before starting construction - though he pledges to continue with his own money should funding not come through.

"The attorneys and bankers that used to be there moved to high-rises and new buildings in the '50s and '60s," said Schneider. "Now, there's more of the criminal element."

Currently, about 70 people live in the hotel, Schneider said.

The city is concerned about the displacement of residents, but at the city's request, Schneider has agreed to set aside about 50 rooms for low-income housing, said Reynold Blight, a manager at the Community Development Department.

But Blight said the city supports the idea of converting most of the building to a multi-media office center.

The area is already equipped for the digital age. Four years ago, the city installed fiber optic cables along portions of Spring Street. The cables are made of glass fibers that can carry digital information in the form of pulses of light - a form of technology demanded to navigate the Internet and other multimedia applications.

The goal is to attract fledgling high-tech companies that cannot afford higher rents in the suburbs, said Blight.

"Everyone would like to be at the beach and overlooking the Pacific Ocean, but not everyone has that kind of money - especially start-up companies," Blight said. "Other cities in the county are months or years away from providing fiber optic power in business districts. We are ready right now, and if we can move quickly, we can provide that space immediately."

Schneider and city officials also figure that entrepreneurs will locate along Spring Street because it carries certain government business incentives.

Mayor Richard Riordan in 1996 declared a 36-block area near downtown, including the Pacific Grand Hotel, a tax-free zone for five years. The exemption from city business taxes was one way Riordan had hoped to promote growth in blighted downtown area.

The area has also been marked by President Clinton as part of the Los Angeles Supplemental Empowerment Zone. Basically, businesses that move into the neighborhood receive federal tax breaks and can take advantage of raising capital through the Community Development Bank.

Schneider hopes he can entice other property owners - and tenants - by using the Pacific as a model. He hopes to have it opened and refurbished sometime this fall.

As far as the crime element, Schneider says the area is already going through a transformation. He said the retrofit of L.A. City Hall will cause thousands of government workers into temporary offices near Fourth and Spring streets - boosting the area's number of government workers to about 10,000. In addition, Spring Street is home to the CRA headquarters, the Los Angeles Times, the Ronald Reagan building, and part of the Los Angeles Police Department's vice squad.

But, if Schneider builds it, will they come?

"I think it's a fantastic idea," said Brad Luster, a managing partner with Major Properties, a real estate firm that specializes in older downtown buildings. "It is subject to being able to create a market for it, though."

"There are minor hurdles - like upgrading the buildings, security issues, and creating a nightlife," he said. "But in the end, you're talking about a whole new concept for an area that's been dead for many years."