Downtown Raleigh tower could be derailed

RALEIGH -- A tight lending environment and missed development deadlines could derail plans for an ambitious downtown tower that was to feature offices, condominiums and hotel rooms soaring above the city's new convention center.

Russell Allen, Raleigh's City Manager, wants the City Council to reopen bidding to developers who would compete to build on a 0.51-acre city-owned lot bordered by Salisbury, Lenoir and South streets.

The move would nullify such a contract already in place with Raleigh developer Empire Properties, which in 2007 was approved to build the 22-story Lafayette tower.

The city agreed to sell the land to Empire for $1.44 million -- if the developer met certain development deadlines.

But Empire missed an April deadline to file revised plans for the project. Allen opposes granting the developer's request for additional extensions.

"He does not have financing and does not know when he can get it," Allen said.

Messages seeking comment from Greg Hatem, Empire's managing partner, were not immediately returned.

The scenario illustrates the financing roadblocks facing the city and builders as lenders reduce risk in a slowing economy. Several projects, including another condo-hotel tower on city land, have been delayed for similar reasons.

Wary of sluggish home sales and decreasing travel nationwide, financiers are asking developers to secure more pre-sales or pay more cash into such projects -- even in relatively healthy markets.

If the City Council approves Allen's recommendation during its meeting Tuesday, it would begin soliciting new bids, and Empire would have to bid again, but against other developers.