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Raleigh may break off deal on downtown tower project

Posted August 4, 2008

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— City Manager Russell Allen has asked the City Council to terminate Raleigh's agreement with a developer for a proposed downtown tower.

The city sold a half-acre lot at the corner of Lenoir and Salisbury streets, across from the new convention center, to Empire Properties two years ago for $1.44 million. The developer planned to build the 22-story Lafayette tower, which would mix an 80-room boutique hotel with offices and 40 high-rise condominiums.

Empire missed an April deadline for submitting plans to the city and couldn't confirm the project has the financing to move forward, but the City Council voted last month to give the developer until November to get his financing in place.

Part of that extension involved Empire picking up part of the cost of widening Salisbury Street between Lenoir and South streets, estimated at about $50,000.

The developer has refused to agree to the extension under the city's new terms, so Allen has recommended that the city void the contract. The city could then seek new bids to develop the site.

"(The terms of the extension) were presented to the developer, and he has refused to sign the agreement," Allen said. "There are other interested developers out there. I have indicated that to council, (and) we think we could get other proposals."

Empire owner Greg Hatem said that, even though the widening isn't within the boundaries of the property his firm purchased, he would be willing to pay for a portion of the cost later – not in advance as the city wants.

Putting the property back on the market would delay development of the site, which Hatem said would hurt the momentum downtown being generated by the convention center.

"If we're going to get the hotel rooms, we all need to be working together to get them as opposed to distracting each other from the issues," he said. "The issue at hand is we all need to be building a hotel."


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  • input Aug 4, 2008

    No one on this site has the terms of the aggrement, so quit posting opinions.

  • WHEEL Aug 4, 2008

    Haten is going to have to sweeten Allens cut to get this one through. Incidentally who died and left Russell Allen in charge of the World.

  • Phrostbite Aug 4, 2008

    why not give Empire another month & take contingency bids in the meantime. Since the convention center is finished their are a lot of well experienced developers that have the capital & the will to build on that site, given how booked the convention center already is.

  • Nelly Aug 4, 2008

    Sounds like the City - or at least Russell Allen - already has another developer in mind. He sure seems to be pushing hard to terminate Empire's contract. I would not be surprised if another local developer comes out of the woodwork for this location soon.

  • I-40 Warrior Aug 4, 2008

    "...Sounds like city council is now scrambling (as I said when they broke ground, you need 1000's of hotel rooms to support conventions)" by atc2

    That hits the nail on the head. 80 more hotel rooms is a drop in the bucket if we expect the convention center to ever draw large events that bring in people from outside our area. Rooms and restaurants (preferably some chains people are familiar with) within walking distance are the keys for both large turnouts and big cash for the city in the form of taxes that you and I don't have to pay (well, at least not the hotel tax).

  • Southern Fried Yankee Aug 4, 2008

    What Raleigh needs is a good 10 cent parking deck....

  • Not_So_Dumb Aug 4, 2008

    It sounds like the city wants the money in advance. Not going to make many people happy with that demand with how hard credit is to come by these days. Add in the fact that road projects seem to take a lot longer than one would think, and I can see why this company balked.

    Of course, if it is in the contrary to the contract, the city should look to get the property back on the market. Perhaps they will make sure that the contract is more explicit next time.

  • Adelinthe Aug 4, 2008

    "Empire does not yet actually own the property. The sale has not been finalized."

    Ahhhh soooo, now I understand.

    We're trying to figure out why office buildings are still being built near Crossroads in Cary when there's entire buildings empty at Regency and MacGregor.

    Haven't the banks learned yet???

    God bless.

    Rev. RB

  • Tired_of_LIBERALS Aug 4, 2008

    Another waste of city tax dollars. Get government OUT of the development business!

  • foetine Aug 4, 2008

    This is a city that threw a million dollars and free rent at the steakhouse and now they want to nickel and dime a local business. What's $50,000? They shake you down once, they shake you down twice. We talk about wanting local businesses to flourish, but as the costs go out of control, it's only the chains that can afford the space. Meeker won't be happy until they build a Super-Walmart on Moore Square.