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Redondo Beach has worked out a deal to ensure CenterCal will be obligated to redevelop the north and south ends of the waterfront and pier. The city will refinance a loan so it can buy the Fun Factory leasehold for $9 million. Chuck Bennett/Daily Breeze/SCNG

Since 1972, the Fun Factory on the Redondo Beach Pier with its arcade and carnival games has been creating memories for generations of visitors. Today, the Tilt-a-Whirl still spins, while the bumper cars and the merry-go-round are long gone.

In September, the seaside arcade is set to close, the result of a $9 million settlement in 2017 to buy out the remaining seven years of the Fun Factory's lease, including the Fun Fish Market next door.

But now the owner of the arcade, Steve Shoemaker, is having second thoughts. He wants to collect the $9 million and continue operating the Fun Factory on a month-to-month basis.

"I thought I got over it six months ago," Shoemaker said Tuesday, March 5. "The thought of closing it was like taking my baby away."

The way Shoemaker figures, the city bought out the lease to make room for a future waterfront redevelopment project with CenterCal Properties. But the project is now in limbo, bogged down in court over a $15 million claim for damages by the developer against the city.

"I got to thinking, why kick us out when you don’t have anything to replace it with?" Shoemaker said. "You’ll just have a vacant building."

In recent months, Shoemaker, who has a long history with the city that includes multiple lawsuits and criminal charges, has written letters to city officials asking to renegotiate a month-to-month lease for 2020. But so far, he has yet to hear back.

Shoemaker said he would need to make a new deal with the city by May or June. If not, they will start liquidating the games in September.

Assistant City Manager Mike Witzansky explained it's not that simple.

According to the 2017 settlement agreement, the arcade needs to vacate the premises by Dec. 31, 2019 before collecting the $9 million.

"What he’s wanting to do is to receive the $9 million to be bought out and then retain a month-to-month lease with the city as owner of the Fun Factory," Witzanksy said. "That is clearly not something that’s offered under the terms."

The possibility of a deal with Shoemaker to save the Fun Factory, which has 25 employees, is further complicated by the ongoing litigation with CenterCal, which still technically has an agreement to receive the master leaseholds in the waterfront even though the project is not moving forward.

"Given the litigation over the waterfront, we are not actively pursuing any leases," Witzansky said. "Hopefully, we will find a way to resolve that issue, which would ultimately give City Council the option to consider new leases. But we are not currently discussing anything."

CenterCal CEO Fred Bruning said nothing in the company's agreement with the city precluded it from negotiating any new leases as long as the lease has a six-month termination clause.

"If they wanted to extend the lease for a period less than six months, I believe they can do that," Bruning said Wednesday, March 6.

Bruning said CenterCal and the city were working toward a settlement agreement.

"I’d love to see the right thing happen for the city, whatever that resolution might be," Bruning said. "As long as we are treated at least partially fairly, I would be fine with it."

Contact Lisa Jacobs lisa.jacobs@TBRnews.com or follow her on Twitter @lisaannjacobs.

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