An agreement between the city and local developers to build an elevated housing project above a parking lot appears to have unraveled.

An agreement between the city and local developers to build an elevated housing project above a parking lot appears to have unraveled.

Code-named "Skybox," a 25-unit residential complex proposed above a parking lot on Central Avenue received an enthusiastic response from the Medford Urban Renewal Agency last summer.

But a 90-day exclusive negotiation that ended Dec. 19 hasn't been extended between the city and developers Allan Sandler of Ashland and Mark McKechnie, owner of Oregon Architecture.

"It's unraveled," said McKechnie. "But I don't know if it's completely unraveled."

McKechnie said he hopes to discuss the project with city officials in more detail to see whether issues can be resolved.

Under the original proposal, the city would have retained ownership of the land, and the developers would have paid $1 for "air rights" to build the residential complex.

However, the developers asked the city to sell them the land, which they would lease back to the city for up to 100 years.

Councilor Dick Gordon, board chairman for MURA, said he didn't feel it was in the best interests of the city for the developers to own the land rather than just have air rights.

"Many members of the MURA board were surprised by that," he said.

He said the original proposal was intriguing and the project was unique.

However, after thinking about the project more, Gordon said he didn't think it provided a high-enough density for the downtown area.

Bill Hoke, deputy city administrator, said the city could have either granted an extension of the exclusive negotiation agreement between the city and the developers or allow it to expire.

Hoke said the city and the developers could still negotiate or enter into a new agreement in the future. He said he hasn't received any other inquiries about the property since the exclusive right to negotiate expired.

Hoke said he sent information to the developers Monday explaining that the letter of intent wasn't extended.

Sandler said there were numerous legal challenges to creating a project that was suspended above a parking lot. He said each column that supported the residential complex would have been considered part of a separate tax lot if he didn't get ownership of the land.

Sandler said he was under the impression that the city didn't object to providing the land to help the project along.

"I thought everything was set," he said.

Sandler said he thought the city would extend the 90-day exclusive agreement but hasn't heard anything from city officials.

"We didn't know if we'd just run out of time," he said. "It certainly is not a nice way of doing business."

Reach reporter Damian Mann at 541-776-4476 or Follow him on Twitter at @reporterdm.