Only two months ago, the council had threatened to terminate its contract with Developers Diversified Realty Corp. because the Ohio-based builder was about two years' behind schedule. Under terms of the new extension, Developers Diversified cannot sue the city over the project and must pay $500,000 if construction doesn't begin within 15 months.

The $100-million Queensway Bay project is a cornerstone of Long Beach's efforts to turn itself into a major tourist destination. Plans call for dozens of restaurants, shops and theaters on 18 acres of city-owned land south of Ocean Boulevard, not far from the Long Beach Convention Center.

Developers Diversified has had trouble lining up financing for the ambitious project, in part because not one but two theater tenants who would anchor the complex have backed away from their preliminary commitments. Additional terms of its new extension from the city allow Long Beach officials to begin seeking back-up plans from other builders. Developers Diversified will also have to turn over $5 million worth of plans and studies to the city at no charge if its new deadline isn't met.