The Cardinal, a planned continuing care retirement community at North Hills, has cleared two crucial hurdles -- one regulatory, the other financial -- that will allow its developer to break ground in the coming months and go head to head with a similar project farther north.

Kane Realty and partner Drucker & Falk received approval from the state Department of Insurance to convert reservations to contracts and begin early construction phases. The developers also nailed down financing for the 202-unit project just east of Six Forks Road and north of Interstate 440. Neither is an easy feat.

The state closely regulates CCRCs, which offer a range of medical services -- skilled nursing, assisted living, independent living -- that let residents stay in one place as their needs change.

Regulators want to make sure that residents are getting proper care but also that their investments are protected by limited supply.

Meanwhile, commercial real estate lenders have been clenching up, asking for more equity from developers, requiring more pre-sales and raising borrowing costs -- especially with projects that hinge on home ownership -- as housing sales slow.

The Cardinal received financing from Health Care REIT, an Ohio real estate investment trust that invests exclusively in health care facilities, developer John Kane says. Kane and his partner will have to front roughly 20 percent of the $140 million project.

The partners also must get contracts for half the units before the state or the lender allow vertical construction. There are about 200 nonbinding reservations, Kane says. He hopes 30 percent to 40 percent will turn into hard contracts, and that building begins by early next year.

A sluggish home-sales market could threaten that goal. But the project is expected to open in 2010 -- enough time for the market to recover.

A more imminent threat is The Cypress of Raleigh, a 48-acre CCRC off Strickland Road, inside I-540, where units will open in September. That project's 202-unit first phase is 85 percent pre-sold. Cypress principal Mark Andrews says a second phase could begin early next year.

The projects have similar price points. Cardinal units start in the low $300,000s and reach north of $1 million. Cypress offers homes from $375,000 to above $925,000.

But the projects are vastly different. Kane offers a six- or seven-story condominium environment amid the shops and restaurants, hotels and offices he has been building at North Hills in recent years. The Cypress offers a more bucolic campus with detached single-family homes and open spaces.

The determining factor for many prospects may be the ownership structures of each.

Buyers at the Cypress will find a more traditional buy-and-sell structure. They, or their survivors, stand to gain when appreciation holds up. But they have to stomach any depreciation a down market could bring. Andrews points to several communities that have appreciated through booms and busts.

Kane wants to minimize risk with a "refundable model." Sellers are guaranteed 90 percent of what they initially paid, plus half of any appreciation. If a slow market reduces the value, they still walk away with that 90 percent -- something he thinks buyers will cotton to as the current market debunks some recent assumptions.

"Most people thought that housing values would continue to go up forever," Kane says. "We've learned that premise is not a good premise."