While most downtown developers loathe to admit it publicly, some in the development community have been impacted by this summer's credit crunch.

One such developer is Amir Kalantari.

Speculation about his condo site at the northeast corner of 11th Street and Grand Avenue has lingered for years partly because the developer's company, the Kalantari Group, got the property entitled in 2005 and then let it sit while other builders got in on the residential building boom.

Though Kalantari was set to break ground this summer on his 23-story Glass Tower so-called because of its glass exterior the developer said that didn't happen because he has had to "revisit" secondary financing options.

While Corus Bank of Chicago has been retained as the primary lender on the project, Kalantari said that now he must decide whether to "pay out of pocket or get a mezzanine lender" for secondary financing. Kalantari declined to say how much additional funding the $70 million project needs.

"We have been forced to slow down because of issues in the banking market," Kalantari said. "We are still bullish about the product in the market."

Corus also is financing the construction of Beverly Hills-based Astani Enterprises Inc.'s Concerto condo development downtown. Astani secured a $190 million loan from Corus earlier this year after dropping lender Fremont Investment & Loan when it became entangled in the subprime meltdown.

Kalantari said the credit crunch has reduced his options for secondary financing. "Whereas I might have had 10 options a year ago, that has been lowered to three. You have to weigh the costs of going out of pocket or to a lender."

Mezzanine financing has become more common in the development industry as primary construction lenders have lowered the percentage of a project they are willing to fund.

As recently as last year, construction loans might cover 75 percent of the cost of a project but now most lenders are only willing to cover about 65 percent, forcing developers to seek higher-rate mezzanine loans to see a project to completion. Both loans are then paid back through long-term mortgage debt.

Kalantari said that in the next month he will decide which funding route his company will take. Once that is settled, the project could break ground in six months at the latest.

The 192,000-square-foot, 128-unit building was designed by Doug Hanson of DeStefano and Partners Ltd., who already has scaled back much of the expensive glass fa & #231;ade envisioned by a prior design firm.

Despite prior speculation, Kalantari said that he's not interested in selling the site, which he purchased in 2004.

Wireless Upgrade

Since April 2005, wireless Internet service has been available in Pershing Square and the surrounding area courtesy of the L.A. Community Redevelopment Agency.

Now, the city agency is extending the free service in a two-year pilot program, slated to go live around the first of the year.

The system expansion, which will include the installation of 13 new Wi-Fi transmitters, will provide free Web access to a 16-square-block area. The current system utilizes just two transmitters.

The expansion will bring free Internet access to such areas as Bunker Hill, Little Tokyo and the Historic Core, but is optimized for outdoor use.

JoVoGo Communications, a Baton Rouge, La.-based Internet systems company, was awarded a $165,000 contract to provide and install the equipment.

Architect's Home

Santee Village, a sprawling adaptive reuse development in the Fashion District, alludes to its past in more ways than just architecture.

The sprawling 445-unit condominium and apartment development that spans a block of Los Angeles Street is at or near the birth site of African American architect Paul Revere Williams something residents are reminded of daily.

Developer Mark Weinstein says that his research indicates that Williams was born in 1893 at a since-razed home at the Santee Village site, though others have placed the home down the street a bit. At the time, African Americans were not allowed to be born at the county hospital.

So, Weinstein had a fountain built at the courtyard of his project to commemorate the renowned architect, who designed the Beverly Hills Hotel, the Hollywood YMCA and other projects.

Weinstein said that most residents at first don't know much about Williams, "but Santee Village has a high percentage of creative people and a lot of people think it's neat and fascinating when they find out."

Staff reporter Daniel Miller can be reached at dmiller@labusinessjournal.com or (323) 549-5225, ext. 263.

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