Durham has already invested more than $7 million in redeveloping the Rolling Hills site where two earlier developers tried and failed.

Now it turns out the city has to spend $68,257 more that it had not counted on.

The money is going to pay off a loan that Rolling Hills's first developer, NCM Development Corp., made to the second developer, the Southeast Durham Development Corp., in 1995.

The city sold the Rolling Hills site to NCM in 1985. After NCM gave up on building and selling a residential subdivision, it sold the undeveloped property to SEDDC. In 2003, the city repossessed the remaining property for SEDDC's failure to finish.

Now, the city plans to sell part of the 20-acre Rolling Hills site to developer McCormack Baron Salazar for $1. That requires the city to have a clear title, but when community development staffers did a due title search they discovered that, when the city repossessed, it acquired an unpaid debt of more than $91,000.

According to Community Development Director Reginald Johnson, NCM representatives agreed to settle for $68,297. The City Council gets to discuss the arrangement at its work session Thursday.

Barring new developments before Sept 24, Rolling Hills' prospective redeveloper will be asking the city to cover $325,000 in planning expenses the developer couldn't raise.

Plus a little extra, raising the total cost to taxpayers to $750,000.

Whether the City Council goes along should be decided by the end of September. Council members get an update on the project's situation at a special work session Sept. 24, said Larry Jarvis, assistant community development director.

St. Louis developer McCormack Baron Salazar presented a schedule for moving the Rolling Hills/Southside revitalization project ahead on Wednesday, but said it needs 14 more days to prepare specifics for the City Council.

Those specifics include how to cover the $325,000 McCormark Baron was supposed to raise for its share of the planning cost. In more than 18 months since the city approinted McCormack Baron to lead the Rolling Hills/Southside project, the company hasn't been able to find the money.

City Councilman Farad Ali told company representatives that, after that delay, they have a lot to do to regain the community's trust.

"It's the big elephant in the room," Ali said.

McCormack Baron executives Stan Mulvihill and Sandra Moore acknowledged that failure and said efforts to find money had been stymied by last fall's economic collapse.

Joe Parker, steering committee member and a board member of the N.C. Housing Finance Agency, said he left the meeting with a "wait and see" impression.

"It's interesting to see what may come of this, regarding the City Council move," he said.

Tom Gallas, a consultant working with McCormack Baron, suggested a planning process to start in September and finish by the end of the year, including a week-long charette to involve the public in the revitalization project's design.

Ray Eurquhart, the only steering committee member present who lives in the project area, liked the public-involvement part.

"The charetting part, for me, that's where the pedal hits the metal," he said after the meeting. Having a plan, he said, the community can move ahead whether or not McCormack Baron is involved.

Preparatory to redevelopment, the city has appropriated up to $6 million to buy out property owners and relocate residents in the dilapidated subdivision just south of the Durham Freeway. Since early 2008, all but five of the 51 private properties have been bought or are under contract.

The city has also applied for$34 million in federal stimulus money for the project. Word on its approval is expected by the end of the year, but even if the grant is approved the city must have a specific plan of action to get the money, City Manager Tom Bonfield said this morning.

The revitalization project involves clearing and redeveloping that 20-acre tract as well as redeveloping parts of the adjacent Southside neighborhood. The area involved was the heart of Hayti, Durham's original black neighborhood, much of which was demolished during Urban Renewal in the 1970s.

Read more about Rolling Hills/Southside in Saturday's Durham News.