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More big delays for Grand Avenue project

August 26, 2010 |  2:56 pm

 

GrandAvenueProject

Construction on the long-stalled Grand Avenue project may be delayed two more years because developers have been unable to secure financing.

The $3 billion Frank-Gehry designed Grand Avenue complex was supposed to be the centerpiece of an elaborate effort to rebuild the blocks stretching from Bunker Hill to City Hall. But While backers of downtown development cheer Eli Broad's recent decision to locate his new contemporary art museum on Grand Avenue, and as work begins on a new 16-acre park nearby, the latest delay on the $3-billion, Frank Gehry-designed Grand Avenue complex is a reminder of how tenuous the broader reconstruction of the civic center area remains.

The project developer, Related Cos., said this week that it plans to request a two-year extension of its current February 2011 deadline to begin construction on the hotel, condo and shopping complex. If the new deal is approved by city and county officials, groundbreaking would not have to start until 2013 – six years after work was first slated to begin.

Bill Witte, president of the developer’s California division, said the company may request another extension if it hasn’t secured loans by 2013.

"There is no chance of financing a significant project in the near term,” Witte said. “I’m not sure there’s much of a chance of financing even an insignificant project in the near term.”

Proposed in the early 2000s during the zenith of downtown’s building boom, the project's plans call for a boutique hotel, thousands of luxery condos and acres of retail space for restaurants, shops and art galleries. A towering Gehry-designed glass skyscraper was to mark the area as a cultural hub for tourists, shoppers and a new breed of wealthy downtown denizens.

 

 

Now it’s looking likely that Broad’s museum and the planned park –  designed as part of the overall development -- will open before construction on Gehry’s towers even begins.

The project remains popular among downtown boosters, but some concede that the plans may need to be tweaked to take into account the economic downturn.

Eric Richardson, a downtown blogger, praised the Grand Avenue project for “the attention that the idea brought to downtown revitalization.” But he said some residents feel that what the area really needs is more grocery stores, pharmacies and other basic amenities.

“We’ve been very slow to pull in the retail that kind of completes the picture of life downtown,” he said. “Some people are asking, ‘Does downtown really need a mega-project at this point?' ”

The Grand Avenue project, approved by city and county officials in February 2007, is one of the last of several proposed “mega-projects” downtown that are still alive in the wake of the real estate crash in 2008. Officials with Related said they had already secured about $300 million of the $1.1 billion required to build the first phase of the project.

During the last renegotiation of the construction deadline, Related agreed to pay a penalty of $3 million a year to push back construction. Under the new extension, which officials say Related will probably ask for in the coming weeks, it must pay an additional $1 million in penalties, which would be paid when construction begins.

Witte and others say they hope the Broad museum and the new park will raise the profile of Bunker Hill and make it easier to secure loans. The developer is considering altering plans for Grand Avenue, Witte said. But he would not say what changes are being considered.

-- Kate Linthicum 

Image: Related Co.

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