Plans for Max Factor project fall victim to Hollywood troubles.

The much-heralded deal through which Procter & Gamble Co. was to sell the historic Max Factor building to Hollywood developer Jerry Schneiderman, who would renovate and restore the structure, fell through last month.

A P&G spokeswoman said the company now is in negotiations with another Los Angeles-area developer to sell the four-story, 34,000-square-foot building at 1666 N. Highland Ave. She would not name the new developer.

Back in December 1992, former L.A. City Councilman Mike Woo announced with much fanfare that a special city ad hoc committee, formed to save the building's Max Factor Museum of Beauty after P&G announced plans to close it, had selected a proposal from Schneiderman's Colony Bancorp.

Schneiderman wanted to buy the building and restore its facade to its 1935 condition. Under the deal, Colony Bancorp was to develop the property for retail uses, a restaurant, a new History of Hollywood Museum and a 99-seat Bob Baker Marionette Theater.

Hollywood Heritage, a historical preservation group, was to operate the 10-year-old Max Factor Museum, which P&G still operates at the. The plan was for Hollywood Heritage to take over operation of the museum until the collection of beauty products and costumes could be moved to the Hollywood Entertainment Museum -- then scheduled to open in 1995.

The winning proposal for the future of the Max Factor building and museum was written by community activist Robert Nudelman, who was to be the president of the new historical museum project.

Kimberly Stewart, public affairs manager for the cosmetics and fragrance division of P&G, said P&G negotiated with Schneiderman for about a year, lowering the building's selling price from its original $1.5 million to an undisclosed amount, and eventually signing a sales agreement in October 1993.

Colony Bancorp was to deposit $25,000 in escrow immediately after the agreement was signed, but failed to do so, Stewart said. Schneiderman said the two sides couldn't agree on whether the deposit was refundable.

Then the Jan. 17, 1994 Northridge earthquake struck, causing damage to the Max Factor building, and P&G again lowered the price. But Schneiderman and P&G couldn't agree on the cost of the earthquake damage, Schneiderman said. The gap between the two damage estimates was more than $200,000.

"The earthquake kind-of screwed everything up," said Nudelman.

Schneiderman said Nudelman also posed a problem when he couldn't raise the funds necessary to prelease space for the proposed History of Hollywood Museum, possibly because of investor concerns about impacts from Metro Rail subway construction. Schneiderman also said Colony Bancorp and P&G couldn't agree on who would pay a Metro Rail benefit assessment tax. Stewart said P&G broke off discussions with Colony Bancorp in August.

"There are no ill feelings," said Schneiderman. it works better for someone else, that's fine. ... It's just a business deal that turned sour."

Stewart said P&G will continue to keep the make-up museum open, awaiting the collection's move to the Hollywood Entertainment Museum.

However, the president of the entertainment museum, Phyllis Caskey, said that project also has hit a major roadblock - damage to its proposed home at the Hollywood Pacific Theatres building at 6433 Hollywood Blvd. caused by Metro Rail tunneling.

Caskey said that when Metro Rail crews struck water lines last month, the building's basement was flooded with two to three feet of water. Meanwhile, the sidewalk in front of the building has split.

"It (the purchase of the building) has a big question mark," said Caskey. "I'm not going to just move ahead ... until we know what we're buying."

The L.A. Community Redevelopment Agency has already agreed to provide $4 million toward the entertainment museum project.

The sale price of the Hollywood Pacific Theatres building was earlier estimated at $8 million to $10 million, but has reportedly been revised significantly downward. That building also suffers from earthquake damage.

Caskey said it is now possible the entertainment museum could wind up in another building. The sale of the Hollywood Pacific Theatres building, now owned by Pacific Theatres, had not yet entered escrow when the subway tunneling damage occurred last month.

Stewart said P&G hopes to negotiate a deal with the new Max Factor building developer that also includes restoring and renovating the structure, much the way Schneiderman had planned to do.

The Max Factor building is a combination of three buildings joined in 1935, two of which were designed in 1915. Original uses included a beauty salon, offices, print shop and laboratory.

The Max Factor Museum was created as a tourist attraction for the 1984 Olympics. The museum, which has remained open free of charge for the past 10 years, drew 1,000 visitors a week at one time. P&G took over the property in 1991 and shortly thereafter announced plans to close the museum.