Redevelopment of Ambassador Hotel Back on Drawing Board.

Plans to redevelop the Ambassador Hotel property on Wilshire Boulevard into a school and commercial center are getting back on track after years of delays and disputes with the Los Angeles Unified School District.

The group that has been trying to develop the property, Wilshire Center Marketplace, is talking to Developers Diversified Realty, a Cleveland-based real estate investment trust, about forming a joint venture for developing the site. DDR has even worked on marketing materials and talked to potential tenants.

Finalizing any agreement depends on the outcome of discussions with the district. But the two sides appear to be close to settling their differences and moving forward with a school at the rear of the property and a retail center fronting Wilshire Boulevard.

"What I've been told is that discussions are going well," said school board member Caprice Young. "For me, this is more than just a school; it's symbolic of breaking the gridlock. ... Everyone wants to get this resolved."

The plan the district and developers are discussing would divide the property into two parcels of about 12 acres each, with an extension of Seventh Street running down the middle. The southern portion would likely house a junior high school.

"We think it'll work out great," said Ted Slaught, a broker with Charles Dunn Co., which has been marketing the project on behalf of the owners.

Craig Trottier, development director at DDR, declined comment on the company's involvement with the project, other than to say, "It's something we're looking into. We're looking at various alternatives in the L.A. area and we're excited to be down there:"

DDR is currently redeveloping the failed Long Beach Plaza Mall into a pedestrian-friendly center that would have large discount retailers and smaller shops. It also has a joint venture with developer OliverMcMillan of San Diego on several L.A.-area projects, including retail centers at Queensway Bay in Long Beach and in Culver City.

"They're making a big push to become a major Southern California developer," Slaught said of DDR.

A resolution of the Ambassador saga would be a boon both for the Mid-Wilshire area, which lacks in retail amenities, and the district, which is desperately searching for school sites. The school population is expected to reach 776,150 in 2008 from the current 700,000.

The Ambassador property has a long and tangled history. New York developer Donald Trump was part of the group that acquired the 23-acre property in the late '80s and announced plans to build a 125-story skyscraper.

But the L.A. school board wanted the property for a high school and moved to condemn it through eminent domain, depositing $48 million. The district dropped its plans in 1994, but with the real estate recession in full swing, the owners sued to force the district to take the property after all - at a premium price.

The partnership revived its plans last year to build a retail center to include deep-discount and specialty retailers and a movie theater. But several months after those plans were announced, a frustrated Trump pulled out of the partnership.

The school district, meanwhile, contended that the partnership still owed it $48 million plus interest, and has been trying to foreclose. Young said those proceedings are ongoing in the event the two sides can't reach an agreement.

Another party to contend with is the Los Angeles Conservancy, which opposes demolishing the.78-year-old hotel.

"It's one of L.A.' s most important architectural and cultural landmarks," said Ken Bernstein, director of preservation issues. "The Ambassador was the city's premier location for lodging, special events and entertainment. It exemplified, the California lifestyle and was the catalyst for the Wilshire corridor."

Bernstein said it's "quite possible" to reuse the Ambassador in a productive way, either as a hotel, senior housing or even as a school with a commercial component.