Raleigh may break off deal on downtown tower project

Raleigh, N.C. — 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."