Rice Village's Sonoma mixed-used development on hold

After months of delays related to the credit crunch, the upscale Sonoma condo and retail project planned in Rice Village has officially hit the skids.

After months of delays related to the credit crunch, the upscale Sonoma condo and retail project planned in Rice Village has officially hit the skids.

The developer said the project is being put on hold due to economic uncertainties and tumultuous credit markets, which has kept it from securing the loan it needs to move forward with the development.

"It's an extraordinarily unusual time," said Julie Tysor, of owner Lamesa Corp. "We just think it's an intelligent thing to just take a breath, which is what many, many developers are doing across the nation."

Last month, residential developers Florida-based Turnberry Associates and Hanover Co. of Houston said they were canceling their respective projects planned for sites in the Galleria area.

Those who put down deposits for units in Sonoma are being notified today that the project is not moving forward. They will have their money returned with interest.

Tysor said the project at Bolsover and Morningside is being put on hold "for the short-term."

"It doesn't mean this development won't occur," she said. "It's an unbelievable site for a development of this nature and we wholeheartedly believe in what we designed. The buyers love the site and lenders love the site."

A portion of Bolsover, a street the developer acquired from the city to build the project, will remain closed.

As part of its contract with the city, the developers agreed to build public parking and a plaza by the middle of 2012.

"Just because we're not coming out of the ground today we have plenty of time to do what's right with this tract of land," Tysor said.

Along with other builders, the developers have struggled to finance their project.

They altered their construction plans earlier this year in hopes of securing the money to build it.

Randall Davis, the project's fee developer, and Lamesa, were originally seeking a $100 million construction loan, with 30 percent equity, to build the first phase of the project 125 units.

But they were unable come to terms on a deal as lending tightened. So they went back to the market and were negotiating for a $70 million loan with 40 percent equity to build the smaller second phase of 85 units.

At that point they had nearly 70 buyers who had put down deposits. More than half were interested in the second building.

Ultimately, the developers were still short on financing.

"That issue combined with the current economic unsuredness and the timing of what's going on in our economy gave this partnership enough concern to say we were placing it on hold," Tysor said.

Original story - Chron.com