A deal to develop another downtown hotel has fallen through.
Plans between the Charleston Urban Renewal Authority and Virginia-based developer KM Hotels to build a Homewood Suites by Hilton on Quarrier Street were called off on Wednesday because of financing problems, said CURA director Jim Edwards.
KM Hotels owner Mayur Patel contacted CURA "a couple of weeks back and indicated that the financing market for hotels in Charleston had softened a bit," Edwards said, adding it had problems with its lender.
Patel asked for a Nov. 15 extension to purchase the property, but board members would only agree to that if KM Hotels made an additional "performance deposit" on the property.
Patel would not agree to that.
A performance deposit is nonrefundable and is made "in case they don't perform in the future after closing," Edwards said.
CURA will return a down payment - between $40,000 and $45,000 - to KM Hotels, but will retain its initial $42,000 deposit, Edwards said.
In August, the agency agreed to a 35-day extension of the allotted 120 days KM Hotels had to get its franchise agreement with Hilton. That deadline has since passed.
Talks between the agency and the company began more than a year ago. Edwards said at the time of the first extension that KM Hotels was having difficulties securing a franchise agreement with Hilton.
Mayor Danny Jones, who initially (and strongly) opposed the plan, said he hopes developer Charlie Wendell is still interested in building on the block, which once housed the Holley Hotel.
"I personally didn't have much confidence in this proposal, but I'm not a sore winner. And I'm just hoping that Charlie Wendell is still interested, because the potential is doing the whole block with a parking garage on Dickinson Street," Jones said.
Jones added the he has reached out to Wendell's attorney.
Wendell, who most recently built the new Courtyard by Marriott along the Elk River, proposed a mixed-use plan that was not favored by commissioners.
Edwards said commissioners voted to reissue a request for proposals for the Holley site.
"We certainly want to look at alternatives. We want to see that site developed as much as ever," Edwards said.
The agency and KM Hotels had reached an agreed purchase price of $885,000. Edwards said the property, which is about the size of an acre, was appraised at $990,000 a few years ago.
In other business Wednesday, CURA commissioners:
* Approved a measure that would allow Edwards to spend up to $75,000 on asbestos removal and demolition of a portion of 1212 Quarrier St. CURA was granted the deed recently and now owns the building, which butts up against Arlington Court. There are plans to demolish an addition of the building in about eight weeks.
* Voted to reissue a request for proposals for Chamberlain Court, a group of row houses that sits off Lewis Street on the East End. Developer Chris Sadd has been turned down twice in his pursuit of low-income tax credits, which would make the building affordable to purchase and renovate.
* Agreed to allow the Charleston Area Alliance to loan an additional $45,000 to Crawford Holdings - a development company owned and operated by Tighe Bullock - for the Staats building on the West Side.
Though board members voted last month to give the group its final loan until its initial debt is paid off, Edwards said the first mortgage on the property requires that any other debt be approved by CURA before being dispersed.
* Voted to let Edwards issue a second request for proposals for 1601 Washington St. E. Edwards said CURA didn't receive any submission the first time.
CURA will next meet at 9 a.m. Wednesday, Nov. 19 in the Morrison Building, which is located at 815 Quarrier St., Suite 244.
Reach Rachel Molenda at rachel.molenda@wvgazettemail.com, 304-348-5102 or follow @rachelmolenda on Twitter.