February 3, 2009 - Reynolds Company, Raleigh N.C.

Developer misses deadline, contract ended

The Raleigh City Council voted 5-3 today to terminate its contract with a developer that recently missed a city-imposed deadline on a key project to build a 25-story condo-hotel-retail tower on a city-owned lot at Dawson and Hillsborough Streets.

Developer misses deadline, contract ended

The Raleigh City Council voted 5-3 today to terminate its contract with a developer that recently missed a city-imposed deadline on a key downtown project.

The vote brings to a close Reynolds Co. of Raleigh’s eight year attempt to build a 25-story condo-hotel-retail tower on a city-owned lot at Dawson and Hillsborough Streets.

The City Council had granted Reynolds numerous extensions in the past. But Mayor Charles Meeker said today he no longer believes the Reynolds project will move forward anytime soon.

“I really think its time to take the property back,” he said. “I don’t think this project can really proceed.”

Councilors Mary-Ann Baldwin, Russ Stephenson, Nancy McFarlane and Thomas Crowder also voted to terminate the contract. The move reopens the bidding on the project to other developers.

Reynolds project, called “The Hillsborough,” involved two adjacent properties: One, at 309 Hillsborough, was sold by the city to Reynolds in August 2001. The other, at 301 Hillsborough, is still owned by the city. Reynolds missed a Dec. 30 deadline to buy the property at 301 Hillsborough from the city for $5 million, which prompted the developer to ask for a six-month extension.

Two months ago Reynolds appeared to have a deal with Regions Bank to finance the purchase. The deal hasn’t closed, as Reynolds continues to grapple with rising borrowing costs.

The council’s vote means the city will now buy back the property at 309 Hillsborough Street from Reynolds for $458,000, the same amount the developer paid in 2001.

Reynolds has spent $2.5 million on the project, including the cost of knocking down an old police building that used to be at 301 Hillsborough Street.

City Manager Russell Allen said today one option is to pave over the property and turn it into a parking lot until another developer is prepared to purchase the property.

Original Story - News and Observer