Developer Greg Hatem is asking Wake County leaders to give him at least three more years to begin construction on a prominent downtown project. 

In a letter dated Oct. 1, Hatem told Wake County officials that his company, Empire Properties, would not meet a county-imposed deadline that required construction of The L Building to begin by Nov. 16.

The L Building, a mix of offices and shops, was supposed to wrap around the county parking deck at the corner of McDowell and Davie streets. The project has been stalled because of the credit crunch, which has resulted in the parking deck sitting naked with its rough concrete exterior exposed.

The Wake County Commissioners gave Hatem an 18-month extension in May 2009.

Hatem is requesting that his company's agreement with the county be extended until November 2013.

He also wants to add a clause in the agreement that would allow for another three-year extension in November 2013 if the state's unemployment rate and the Triangle office vacancy rate are above where they were in March 2007.

That's the date Empire and the county entered into their public-private agreement.

Hatem did not immediately return a call seeking comment.
 

North State Bank will soon open a groundfloor branch on Fayetteville Street in downtown Raleigh.

Greg Hatem, president of Empire Properties, said North State has leased 5,000 square feet of space on the groundfloor of the company's 230 Fayetteville Street building.

North State currently has a branch on the 12th floor of the 16 W. Martin Street building at the corner of Martin and Salisbury streets.

The new location, scheduled to open sometime in June, will provide the bank with a more visible and convenient location for customers and will include a night drop off, an ATM and counters with bank tellers, Hatem said.

Hatem said the 230 Fayetteville Building is full expect for two smaller spaces.

Downtown Raleigh developer Greg Hatem has been given a "Creative Thinkers Award" by the Carolinas Chapter of The Counselors of Real Estate.

Hatem, president of Empire Properties, has bought and renovated dozens of downtown buildings and filled them with cafes, restaurants and bars, such as The Raleigh Times, The Duck & Dumpling and The Pit.

“Greg is a winner for his creative maneuvering around myriad obstacles in being a catalyst for downtown Raleigh redevelopment”, said Loren Kennedy, a CRE member and creator of the awards. “He has taken a path to becoming a restaurateur to enable him to fill ground floor spaces that were considered by experts to be un-leasable. He has orchestrated uncommon and highly complicated financing strategies that solved un-financeable deals."

Although Hatem and Empire's influence can be seen all over downtown, the developer has, it should be noted, not figured out a way around the credit crisis.

If downtown Raleigh had as much interest from lenders as it did parking, the City Council and City Manager Russell Allen would be very happy people.

Last week the council voted to lease the property at 301 Hillsborough Street to Campbell University so that the school can turn it into a parking lot. You may recall that the land was supposed to be sold to the Reynolds Company, who were going to develop it into a hotel. But Reynolds could never nail down financing for the project, and the City Council and Allen got tired of waiting so they terminated the agreement earlier this year. 

Now the giant hole in the ground at 301 Hillsborough has been filled, and Campbell Law students and faculty will soon be able to park across from the school's new home, which opens next month. The lease agreement was approved at the same meeting where the council gave the developers behind Charter Square more time to get their two-tower project off the ground. The developers were given an extension largely because they are about to finish an underground parking deck below the site, which is at the south end of Fayetteville Street next to the City Plaza. 

The city will buy the deck for about $25 million once it's complete. And let's not forget the Wake County parking deck that was just finished on the other side of the convention center. That deck is supposed to be surrounded by Empire Properties L Building, another project halted by the credit crunch. 

Downtown Raleigh already had a lot of parking before these latest decks, so it seems reasonable to ask why the city appears to have never met a parking deck/lot it didn't like. The leasing of 301 Hillsborough is a sensible short-term use of the property, but are all these parking decks necessary? They're not cheap, after all, particularly when they're being build underground. 

What do you think?

As my colleague Jack Hagel reported today, the City Council gave Greg Hatem and Empire Properties until Nov. 1 to file new site plans for The Lafayette, the project proposed for a city-owned piece of property across from the new convention center. Although most council members went out of their way to lavish Hatem and Empire with praise, the council also included in its action a mandate that this be the last extension given.

This issue of the city giving developers extensions is an interesting one. The City Council can play hardball with developers who've agreed to build on property Raleigh owns, but that tactic doesn't have any effect on the capital markets. Nor is it likely to change the landscape for these projects getting funding. Yesterday, City Manager Russell Allen said other developers besides Empire have expressed interest in the land bordered by Salisbury, Lenoir and South streets. Allen's argument to the council was that there's no point in having Empire sit on a project it can't get money for. Allen admitted rebidding the project could just end up delaying the project further, but he thinks it's worth that risk.

In essence, the city (and the City Council) is acting like a bank. Empire's agreement with the city has certain terms, and once those aren't met the city can move in and take it away. Raleigh adopted this approach to developing city-owned property after several previous projects languished or never got built. The problem with the City Council playing hardball is that it's not like these developers don't want to build downtown, they just can't get the money at the moment. That isn't going to change just because council members beat their chest and say they're frustrated and fed up with delays.

It's all very reminiscient of a line from a Simpsons episode titled "Homer Bad Man." In the scene, Homer begins opening all the Krusty Klump Bar wrappers in the Kwik-E-Mart. Apu, the Kwik-E-Mart's owner, responds:

"Hey. Hey! Hey! I have asked you nicely not to mangle my merchandise. You leave me no choice but to...ask you nicely again."

That appears to be the question being asked of developer Greg Hatem by the City Council. During today's meeting, the council will vote on whether to void an existing agreement that Hatem's company, Empire Properties, has with the city do develop a city-owned piece of property across from the new convention center. The move would essentially rebid the project, forcing Empire to compete with other developers for a project it previously won. In our story today, Hatem said he would probably walk away from the project rather than bid again.

Today's vote should be good political theater for lots of reasons.

1) Hatem and Empire have been instrumental in downtown's renewal in recent years. The company has renovated dozens of buildings, filling them with cafes, restaurants and bars. After giving repeated extensions to other developers in recent years, it would be noteworthy to say the least if the city lost patience with Hatem of all people.

2) Hatem is more than just a developer in downtown Raleigh. Most of the City Council attended his wedding last month, as did a good chunk of the city's Planning Department.

3 ) Developers frequently criticize the City Council for lacking business acumen. If the council rebids the project (known as Site #4), those criticisms could get even louder. City Manager Russell Allen says Empire does not have the financing to move ahead with its plans, and has no idea where that financing will come from in the future. Hatem notes in today's article that the lending environment is terrible and that city leaders are "naive if they think there are people who are lining up that can actually do this faster and better."

Allen states clearly that if the project is rebid the city still desires a project that has a unique design and a mix of retail, restaurant, hotel rooms and condos. That sort of project has become extremely difficult to finance, particularly if a developer is trying to build on land he or she doesn't already own.

So the question becomes: In voiding Empire's agreement and starting over, is the city moving the project along or just making sure nothing will get built on that site for an even longer time?