The Wichita City Council on Tuesday cut the amount of a loan it gave to prominent downtown developers Real Development, partly as an acknowledgment that one of the projects has stalled.
The developer and the city cut the original $3 million loan that the developer expected to spend to change the outside of Sutton Place, a large white office building at 209 E. William.
Real Development spent $241,000 in loan money on exterior work at Sutton Place, largely to accommodate a new ground-floor coffee shop in 2008.
But the firm has run into serious cash-flow problems renovating another large building, Wichita Executive Centre at 125 N. Market, and can't afford to go forward with work on Sutton Place, said Dave Lundberg, a partner in Real Development.
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The money comes from the city, which is supposed to be repaid from bonds that it sells to the public. But because the project stalled, the city hasn't issued the bonds, Lundberg said.
Tuesday's move allows the city to sell bonds and recoup its money.
Lundberg said he expects a new loan soon on the Wichita Executive Centre project, which would pay off unpaid construction bills and allow Real Development to resume other projects, including Sutton Place.
Sutton Place is now about 40 percent occupied, Lundberg said.
The city also cut $44,000 from $603,000 it lent to Real Development to renovate the exterior of Broadway Plaza after an internal review found some of the work didn't qualify for the city's financing program.
A city review found the work included an inset doorway that became part of the internal entryway during construction, said Allen Bell, the city's director of urban development.
That means the city will issue bonds to cover its $800,500 in loans for both projects. Real Development will have to repay $44,000.
Lundberg said that Real Development continues to get surprisingly strong interest in its properties. It owns nine downtown office buildings.