COLORADOAN.COM – The economic slowdown has claimed its first major victim in Fort Collins as developers Monday pulled the plug on a proposed 279-unit student housing project in Old Town.
Citing development time pressures and frozen capital markets, Rael Development Corp. of Irvine, Calif., e-mailed the city’s planning department that it had decided not to proceed with the project.
"There are just too many time pressures on us to get this project moving in the right direction for a 2010 opening," developer Lawrence Rael said in his e-mail. "Factor into this the seller time pressures and frozen capital markets, and you will understand our reasons for this decision."
Rael had planned to buy Block 23 – the former home of Taco John’s, Placita Garibaldi and a tire company on North College Avenue – and turn it into CSU student housing.
The site, bordered on the east by Mason Street and the west by North College, is owned by Mike Jensen, who amassed the entire block for redevelopment.
"There is wonderful opportunity in that piece of ground and something great will happen," Jensen said Tuesday.
"With the capital markets, I was not surprised at all," that Rael pulled out, Jensen said. "There’s a lot of fear out there. But we don’t have any concern that when the fear goes away and when the money markets heal themselves there will be capital for a project like this."
For now, Jensen has the property back on the market and still plans to raze the three empty buildings on the site by the end of the year.
Rael’s decision was disappointing, said senior planner Anne Aspen, who works across the street from Block 23.
"That project was going to be a real boost to the downtown and add more of a 24/7 presence, which we need," she said. "It’s a bummer and sort of a sign of the times."
Block 23 was the first major project to pull the plug in the city, "but others are teetering on the edge," she said. "I know it from the tone of voice when I’m talking with them on the phone. It’s really hard for everyone."
With credit markets tightening, developers are being asked to put up more equity than they have, Jensen said.
Aspen said Rael was "a delight to work with" and would have done a great project. "Hopefully, he will keep us in mind. He really liked the community and saw the potential with the CSU market and with the community in general."
Rael said in an e-mail to the city he continues to believe in the city and hold it in high esteem. "We will continue to seek out opportunities for the future," he said.
At a neighborhood meeting last week, architect Jim Birdsall of Berthoud said the project was on a tight time frame to open for the 2009-2010 fall semester. Several at the meeting questioned whether a project that also included a four-story parking garage, could be built in just over 10 months.