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TBJ: West Village races to meet Dec. 31 tax credit deadline

Driving back into Durham on Thursday from a week in Orlando and Charleston, S.C., I decided to drive by the West Village Phase II project along Morgan & Main downtown to see a daylight view of the project, though I didn't expect much in the way of new developments over the Christmas holiday.

Needless to say, I was quite a bit surprised therefore to see a large construction crew out and about, far enough along to be testing fire alarm systems and installing exterior lighting. "Huh," I said to my wife, "I didn't realize they were this far along with the project," given the noticeable changes even in our week away from the Bull City.

Leave it to Friday's Triangle Business Journal to give the low-down in a well-reported article by Amanda Jones Hoyle. Turns out that Blue Devil Partners sold off the value of the historic tax credits  generated by the restoration of the old Liggett factory to Wachovia in exchange for cash that could be used today towards construction costs on the massive redevelopment project. According to the TBJ, if the project misses its Dec. 31 deadline, the developers will face some penalties in their agreement with Wachovia.

TBJ reports that the Old Cigarette Warehouse (one of the southmost buildings in the complex) will not be complete until summer 2008 and will miss the deadline, but that the Cobb, O'Brien, Walker, and Main Street Office buildings still have a chance of making it. (The Chesterfield building that is a signature structure at the corner of Main & Duke is now described as a third phase estimated to start in summer 2008.

As a result, you can expect to see construction crews working throughout the weekend to hit the deadline -- the City-County Inspections director is quoted in the business paper as potentially prepping his staff for overtime hours in order to complete the inspections before the New Year rolls in.

David Rosenthal, a consultant to BDP, is quick to note in the article that the financial impact of the penalties is minimal (perhaps 3% of the loan value), and may be a wash given the project's ability to take advantage of more tax credits than initially estimated.

Still, the completion of a big portion of the project's construction phase is likely to lead to more speculation as to when commercial and retail tenants will be announced for the project. Interestingly, Raleigh-based Vanguard Property Group no longer appears to be handling retail leasing for the project, as the West Village marketing flyers have disappeared from their web site (where they appeared this summer) and instead have cropped up over at the Hunter & Associates site instead.

As of now, though, the CoStar data available via Colliers Pinkard's web site list the West Village Phase II properties as being 0% leased -- save for the fully-leased Research Lab, which likely reflects the 50,000 sq. ft. position Duke publicly took in the project several years back. We'll see over the next few months whether this 0% is inaccurate, or whether the BDP folks are still striving to fill up their space.

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