January 10,2009 - Mirabella San Francisco Bay, Foster City CA

Developer of Foster City retirement community needs delay

The developers behind Mirabella San Francisco Bay, the retirement community at the heart of a major development effort to provide Foster City with a downtown core, have been unable to obtain construction funding and are asking city officials for a delay.

The setback to the project is just the latest example of the effect the national financial crisis has had on the local economy.

CitiSuites, the company behind the multimillion-dollar rehabilitation of the Benjamin Franklin Hotel in San Mateo, stopped work in May due to financial problems and hopes to resume this year.

In a letter dated Dec. 8, the management of Mirabella explained its predicament to the more than 700 people who have signed up to reserve a spot in the complex and offered them refunds on their $1,000 deposits.

"Mirabella San Francisco Bay unfortunately has been caught up in the national credit squeeze," the letter stated, "and all of our longtime bankers who have provided construction funding for our previous endeavors are unavailable in this difficult economic time period."

The developers, Pacific Retirement Services and Sares Regis Group of Northern California, contacted the city about the same time to request the delay. The City Council discussed the matter in closed session last month and instructed planning officials to request more information from the developers.

Paul Riepma, Pacific's senior vice president for marketing, said Friday that the company will take about two months to determine whether the project can resume as scheduled or if more time is needed.

"I believe that in 60 days we're going to have financing paths identified," Riepma said. "But we depositors."

Riepma said he remains optimistic that the project itself is not in jeopardy, partly because of the strong demand from the community, which he called "unprecedented in the industry."

"The market has spoken," he said. "In 30 years of doing this, I've never had a project that's had this kind of response."

Riepma said he has also seen improvement in the credit market since the company sent out its letter last month.

Kristi Chappelle, Foster City's assistant city manager, said it is still too early for city officials to contemplate abandoning Mirabella and starting over with a new developer. The City Council is happy with the developer and the project, she said.

"We went through a pretty exhaustive process to find this developer," Chappelle said. "I think it would be disappointing to everybody if we had to start all over again."

Mirabella San Francisco Bay is a residential and commercial project that is expected to consist of eight buildings ranging in height from one to 15 stories. It is slated to occupy 11 acres of a 15-acre lot adjacent to the Foster City government center between Foster City and Shell boulevards.

The centerpiece of the plan is a continuing-care retirement community with 370 independent residential units. The project is also slated to include as much as 50,000 square feet of retail and restaurant space, 70 affordable housing units for seniors and roughly 1.3 acres of open space designed to serve as a community gathering spot.

Pacific Retirement Services, a nonprofit, recently completed a similar project in Seattle, and Mirabella Portland is being developed.

Councilwoman Linda Koelling said she is not worried that the Mirabella San Francisco Bay project will fall apart.

"At this point in time I think it's just another victim of the economic crisis that's happening. I'm not surprised, given what's going on out there," Koelling said. "But I'm not concerned long-term."

The Foster City Planning Commission will meet Thursday to discuss the draft environment impact report for the Mirabella project. The meeting is scheduled for 7:30 p.m. in the Foster City Council chamber, at 620 Foster City Blvd.

Original Story - San Meteo County Times