RALEIGH -- The City Council voted unanimously today to amend its agreement with the developer behind Charter Square, a key project planned for the south end of Fayetteville Street that has been stalled by the credit crunch.
The vote eliminates from the agreement a requirement that the developer begin construction 10 months after completing a 550-space parking deck under the site.
The parking deck is expected to be finished by the end of the month, but the developers have thus far been unable to get financing for two towers that are to be built on top of the 1.75-acre site.
The amended agreement gives the developer more flexibility in the number of floors and the mix of office, residential and retail in the towers. A hotel has also been added to the list of acceptable uses inside the towers.
The towers still must include a minimum of 50,000 square feet of retail on the ground floors and the overall construction value of the Charter Square project remains unchanged. The two towers must be valued at $100 million or more.
Charter Square is one of a number of public-private deals in downtown Raleigh that have been stalled because of the ongoing credit crunch. The project is a key component of the city’s ongoing revitalization efforts downtown.
The towers are to be built at the southeastern corner of the City Plaza, a $14.8 million public square that Raleigh plans to open in October. Raleigh and the Downtown Raleigh Alliance are each considering finding a temporary use for the Charter Square property until the project gets funded. The amended agreement includes language that would allow that to happen.
The alliance wants to turn a portion of the property into an ice rink for two months this winter, while the city has proposed possibly installing a patch of artificial turf.
The development group behind Charter Square includes Craig Davis Properties, White Oak Properties, East-West Partners and Beacon Street Development. The group paid the city $5.28 million for the 1.75-acre site in November.
That deal was closed with the help of a $31.75 million loan from Bank of America. The loan, supplemented with $6.25 million in equity, was used to cover the costs of building the parking deck. The city will pay the developer $24.4 million for the parking deck when it is complete.
The City Council has already voted twice this year not to give extensions to developers who failed to meet certain city-imposed deadlines on downtown projects.
In February, the City Council pulled the plug on plans by Reynolds Co. to build 25 stories of condos, hotel rooms and shops.
In May, Greg Hatem, a partner with Empire Properties, asked that his company be released from an agreement with the city to build a hotel near the city's new convention center downtown. The decision comes after efforts to obtain a loan for the project rubbed up against development deadlines imposed by the city.
City Manager Russell Allen said he supported amending the Charter Square agreement because, unlike Reynolds and Empire, the developer had purchased the property and built a parking deck on the site.
With the amended agreement, the developers behind Charter Square essentially have five years from the time they purchased the property to complete the towers.