Comments on Pointe Blue

Here are quotes from the city's statement on Pointe Blue:

"It is not feasible to leave the project in limbo for an indefinite period."
-Mayor Gary Becker

"The work that (Scott) Fergus has done on this project to date has so many good elements that we will continue to work with Key Bridge."
-Becker

"We are reopening. All the facilities are still in place at the marina. We are renting slips for the 2008 boating season."
-William Pugh, president of W.H. Pugh Coal Company. Pugh closed his business in fall 2007 when construction of Pointe Blue looked imminent.

"I believe we will eventually have residential development on the site. But for now we need to decide how to manage the city-owned property in the interim and when and how to redevelop it in the future."
-Brian O'Connell, director of city development for the city

Pointe Blue sleeps with the fishes

Pointe Blue is dead. We predicted as much several times over the last few months, but the official word came Friday. (Note to a certain tipster who said word would come by Jan. 10 ... you were off by a day.)

Our big question following the news was simple: What happened? We called Brian O'Connell, director of development for the city, and got the answer. It's not real exciting.

The bottom fell out of the residential real estate market in the past year and no one is willing to loan money for condos people may not buy, O'Connell said. You know the sub-prime mortgage crisis that's in the news on a daily basis? That's the assassin of Pointe Blue.

"The project was viable two years ago, or so," he said. "Unfortunately, some pieces of it took time getting together and the financial market turned."

The same story is being told around the country, like here, here, here, here, here, here, here ... and those are all just in the past month.

The reason Pointe Blue failed now is because the developer needed another extension from the city to retain his rights to the lakefront property. He'd already been given several extensions, and this time the city concluded the project wasn't going to happen, O'Connell said.

"Keeping this particular agreement going didn't make sense," he said.

So what's next?

No one is really sure, O'Connell said.

The good news is Racine still has a prime piece of real estate along its lake front that someone is going to develop. When, who, how, what ... are all at the mercy of the financial markets.

O'Connell, the mayor and other city officials will meet with financial advisers to consider next steps. Scott Fergus, the developer behind Pointe Blue, wants another shot at developing the lake front portion of the property. But O'Connell said it was too early to comment on that idea.

Another option is to bank the land and wait for the economy to turn around. Then again, that may be the only option at this point.

Pointe Blue theories

I've heard two theories on the status of Pointe Blue - one positive, one not so much.

1. A major lender dropped out because it was overexposed in the current sub prime lending crisis. The developers are looking for a new lender, and shouldn't have a problem because the project is in a prime position on Lake Michigan. In this scenario, Pointe Blue is delayed, but far from dead.

2. Condo sales for Pointe Blue are slow, and the developer can't move forward until more people commit to the project. This is also related to the housing market, but suggests the project itself isn't viable - at least not at this time.

A recent J-S article reported that a quarter of the 440 units at Pointe Blue have buyers, which seems like a good start to me. But I haven't confirmed sales with the developers (who won't return calls or emails) and I'm not sure if that quarter is people who are reserving a condo, or who are actually committed to buying one.

Also, the Washington Post had an interesting article over the summer about a national cool down in the condo market. The article reported that the slow market led lenders to require more units to be pre-sold before loans are approved. During the boom market, developers could get away with pre-selling a quarter of the units; during the downturn they're being asked to sell half, according to the Post.

Pointe Blue may be seeing the same effect. Even if they've pre-sold 100 units, the lenders may want 200 or more.

Silence on Pointe Blue

Four days of asking around, and not a single word to report on the alleged $200 million Pointe Blue development in Downtown Racine. I say "alleged" because it sure seems like this thing is going to fall through. If it was closer to done, wouldn't someone be willing to say something along the lines of, "We're close, it's just paperwork, details, etc., etc. ..."

No one is saying anything. I've called and emailed the developer, Scott Fergus. I've called and emailed Mayor Becker. I've called the director of city development. I've checked in with city aldermen. The closest thing to any sort of comment I've received was from someone close to the negotiations who said on the phone, "If no one is saying anything, maybe they don't want to say anything." Click.

So the project that was a done deal in April is, obviously, far from a done deal. The question now seems to be: Is Pointe Blue dead?

You'll know when I know.

Where are you, Pointe Blue?

What's the latest on the $200 million Pointe Blue development in Downtown Racine? I wish I knew. While waiting on call backs from the city and the developer, let's recap where things stand.

On March 28, The Journal Times reported:

Financing for Pointe Blue, which will be this city's largest development project ever, is now in place. Tuesday's announcement by the developer means the project will soon begin construction...

Over the weekend, the financing package for both site acquisition and construction fell into place, the developer, Scott Fergus of KeyBridge Development Group, said Tuesday.

"They have agreed to finance the project," Fergus said of the national capital group which wants to remain unnamed until the closing. Fergus said that should happen on or before April 11.

The financing announcement erases the perception of uncertainty that some observers had when the complex deal took longer than expected to be knitted together.

Fergus, president of Milwaukee-based KeyBridge, said he heard the doubts, but never shared them.

"In reality, no, I never doubted it was going to happen," said the former Racinian and state legislator.

Mayor Gary Becker said he heard the doubts also, but remained confident during the process.

"The thing about it was: Although there were potholes, it always kept moving forward," Becker said.

Fergus said he expects construction to start about April 16. Despite delays, he said the project is still on schedule...

Here's what the site of the largest development in Racine history currently looks like ...



It doesn't look like they've hit those April deadlines. In fact, they haven't moved dirt on this project, and nobody seems to be saying why. Hopefully we'll find out this week. -d