A nine-block redevelopment project that officials hope will one day bring more life to downtown Medford has been put on hold indefinitely because of economic strains on the real estate market, the project's developer announced Thursday.
The $100 million project, a joint effort by the Medford-based automotive retailer Lithia Motors, the city and the Medford Urban Renewal Agency, will not move forward until there is an economic upswing, said real estate developer Mark Rivers, who was hired by Lithia to create The Commons.
"Lithia and the development team maintain great enthusiasm and optimism for downtown Medford and this type of redevelopment," Rivers said. "We believe in Medford, believe in downtown, believe in this renaissance.
"If and when we see a break in the negative economic clouds, we'll be ready to act," he added.
Lithia will reevaluate the project on a quarterly basis, he said.
The Commons development would house the headquarters for Lithia in an office tower with space for other businesses, residential buildings, retail stores, a three-block city park and a parking garage roughly bounded by Jackson Street, Riverside Avenue, Sixth Street and Central Avenue.
Construction of the development had been set to begin this year.
Lithia's announcement, made at a Medford City Council meeting Thursday, came as no surprise to city officials.
"As the economic developer for the city, I've seen things across the nation are slow," said Bill Hoke, deputy city manager and city economic developer. "We haven't had as many inquiries (from businesses) in the past one and a half years, so the indicators have been there."
High inflation, high fuel prices, unemployment, the mortgage foreclosure crisis and struggling financial institutions have postponed or doomed other developments around the nation, Rivers said.
"Banks are not lending to new developments, and office and retail tenants aren't taking space," Rivers said.
"The Commons today simply cannot attract financing in this market or the other uses to sustain its mixed-use nature."
The announcement came on the same day as Lithia's quarterly earnings report but was not related, Rivers said. Lithia announced it had lost $243.4 million for the second quarter, thanks to a drop in same-store sales, the cost of shuttering several operations and changes in accounting requirements.
Councilman John Statler last month had requested that Rivers give the council an update on the project.
Some work already has been completed to make way for the project, including replacing water lines, building a Greyhound station on Front Street so that Greyhound can vacate its space at Bartlett Street and the purchase of property.
MURA, which made a commitment to contribute $14.1 million to the project, spent $1.4 million so far to buy two properties in the footprint of The Commons.
About $850,000's worth of century-old water lines along North Riverside were replaced with funds from Lithia and the Medford Water Commission. The commission paid about $675,000 of the cost, as the lines needed to be replaced. Lithia made up the balance to accommodate the extra demand for water that would come from The Commons.
Lithia has spent more than $2 million on the project, but the precise amount was not available Thursday, Rivers said.
"I was disappointed this is not going forward," said Councilwoman Jill Stout. "I was not one who voted for the city to participate in this project. I was running for office at the time. I felt at the time there was not enough of a guarantee by Lithia to get this built. I have to say we are going to get a lot of letters saying, 'We told you so.' "
Councilman Bob Strosser said there was no way to predict the current economic situation when the agreement was signed in September 2006.
"It appears the project is still viable but delayed," Strosser said. "What is at question seems to be the timing of the project, and that's a function of economic issues none of us could have predisposed. ... As for the money already spent, it has gone to public infrastructure that would be beneficial to the community either way."
Reach reporter Paris Achen at 776-4459 or email@example.com.