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Credit crunch threatens Costco project
Bw read.
Cross Creek Investments LLC needs a financial partner to jump-start the planned Costco site and surrounding shopping center near New Baltimore.
The recession-like economy and generally uncertain "market conditions" have made it difficult for developer and landowner Cross Creek Investments LLC to obtain credit for the project, corporation representative Steve Vento said.
He and his partners have been "very close a couple of times" to striking deals with potential equity investors but the offers eventually were pulled "off the table," Vento said.
His company "never intended to have an equity partner," he said.
Instead, it expected to obtain credit from an institutional lender and wholly own and control the project, Vento said. But the sharp economic downturn has changed the picture, he said.
"The credit markets are very jittery and inconsistent," said Vento, who has traveled to Europe in search of lenders to help bankroll development of the 39-acre site at U.S. 29 and Route 600.
Though the planned Costco store represents a significant feather in the developer’s cap, lenders are unwilling to underwrite expensive infrastructure costs for the shopping center without commitments to the site from other businesses.
"Who is going to go around Costco" is the unknown that causes creditors concern, Vento said.
Still, he remains at a loss to explain the current credit crisis as it affects commercial development.
There’s "nothing to put your finger on," Vento said, noting that interest rates continue to be low and regional job creation relatively strong.
"This market is an anomaly," concluded the 20-plus year building industry veteran.
Besides a 148,000-square-foot Costco warehouse store, the Cross Creek Shopping Center would include about 100,000-square-feet of neighborhood retail and commercial space.
His corporation continues to actively market the shopping center site, said Vento, who declined to discuss specifics about potential businesses that might locate there.
The combination of Costco and other users would help assure lenders of the project’s viability, Vento suggested.
"Nothing breeds activity like activity," he said.
Costco has a contract to buy 16 acres from Cross Creek Investments.
The Issaquah, Wash.-based company declined to comment on the planned New Baltimore store.
"Our corporate policy is not to comment on specific markets," Costco chairman and founder Jeff Broutman said through company spokeswoman Therese Wontorek.
But Vento considers the company strongly committed to a New Baltimore store. "They’re very vested in this site," he said.
Cross Creek Investments’ inability secure a loan to develop the project "is strictly a function of the credit market," Vento said. "It’s nothing specific to Angler."
The developer had hoped to deliver a finished building site by June 1. That deadline appears in jeopardy, as does Costco’s goal of opening the New Baltimore store before Thanksgiving.
Meanwhile, the developer and the county must defend a lawsuit filed by a New Baltimore man who wants to stop the Costco store project.
James Rohr, who lives on Route 600 about a half-mile from the shopping center site, argues that Fauquier’s supervisors last fall violated the county comprehensive plan and zoning ordinance in granting Cross Creek Investments a special-exception permit for the store.
The case will be heard in Fauquier’s circuit court in April.
Despite the company's financial and legal challenges, Vento believes "we're going to see a Costco" at New Baltimore.
Prinicpals with Angler Development LLC of Warrenton, headed by Jack Hazel, established Cross Creek Investments LLC. Vento serves as Angler's exectuive vice president.
E-mail the reporter: ddelrosso@timespapers.com
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