A flurry of workers will return to the 30-story Centerpoint Condominiums in October, bringing life back to a symbol of the Valley's economic meltdown.
And along Tempe Town Lake, the city is maneuvering to help the mammoth - but stalled - South Bank development begin building offices, hotels, stores and residential towers.
The two developments were among the most ambitious planned in Tempe and their recent progress is a sign that the city is ticking up, Mayor Hugh Hallman said.
The city noted that more than 300 investors from around the world sought to buy the 375-unit project, and Hallman suggested a development deal is in the works at South Bank.
"That's all I can tell you," Hallman said. "You see a trend?"
For now, the revival of Centerpoint is ending a nightmare for the downtown and its merchants. Ohio-based Zaremba Group will reposition the towers as luxury apartments that target Tempe's massive student population. The public will see the same kind of amenities that were envisioned by the original developer, Tempe-based Avenue Communities, said Kent Chantung, Zaremba's residential development director.
"They're going to see the new standard of luxury rental living in the Valley," Chantung said.
Zaremba set its sights on Centerpoint two years ago, Chantung said, when somebody close to Avenue Communities told Zaremba the company was in financial distress. Zaremba couldn't work anything out, and Centerpoint fell into foreclosure after its major lender, Mortgages Ltd., went into bankruptcy during a spectacular meltdown. Centerpoint became the property of ML Manager, the successor firm of Mortgages Ltd.
Hundreds of investors had more than $100 million tied up in Centerpoint, said Mark Winkleman, ML Manager's chief operating officer. They'll only recover a fraction of the money after Zaremba paid $30 million for Centerpoint. More than $200 million was spent to develop the unfinished structures.
"It's probably the epitome of what went wrong in Mortgages Ltd.," Winkleman said. "It's a business they ventured into that, in retrospect, was probably unfortunate and ill-advised."
ML Manager failed to sell Centerpoint in a foreclosure auction but spent months marketing the project and searching for a buyer who stood the greatest chance of making the project a success, Winkleman said.
"It's a great project and it has a bright future," Winkleman said.
Centerpoint's 22-story tower will open in March, along with retail space. The 30-story tower will open in July of 2011.
The towers are part of Tempe's effort to make downtown a vibrant urban core, Hallman said. While Hallman has pushed to increase the number of owner-occupied properties in a city with a high percent of renters, Hallman said he's not disappointed Centerpoint will become rentals.
"Owner occupancy versus rental isn't really what's at issue here," Hallman said. "It's the quality of the project."
Outside downtown, Tempe reached a deal with the South Bank developer that's designed to help it ride out the real estate recession. Tempe had agreed to sell the 27-acre site at the southeast end of Town Lake to The Wolff Company, for $42 million. Wolff spent more than $40 million to build roads, water lines and excavate land for basements when the economy tanked and work stopped.
Wolff still owes Tempe $28.7 million for a portion of the land, which the city agreed to regain ownership of while giving the developer five years to buy the property back. But Wolff will pay about $5.4 million in assessments during that time even though the city will own the land.
The transaction helps Wolff move forward on the land it's already paid for, Hallman said, while letting it buy back land as the economy improves.
South Bank is the second project stalled on this site, as a Peabody Hotel deal fell through a decade ago in the wake of a previous recession.
South Bank has approval for 3.6 million square feet in multiple mid-rise buildings. Hallman said Wolff deserves high marks for its commitment.
"Even when times get hard they do not walk away," Hallman said.