November 25, 2009 — Inland American Communities Group, Inc. (IAC) notified the University of Utah (U) on November 13th, that it will not be exercising its option to go forward with the Universe Project, and the non-binding letter of intent between the U and IAC concerning the project is formally terminated.
Despite this turn of events, the U is grateful to IAC and its staff for the professional, creative and honest approach employed while trying to make the project work during a time of unprecedented financial upheaval and unpredictability.
The U and IAC have been, and continue to be, excited about the prospects and opportunities for a vibrant and engaging transit-oriented development at this unique location west of Rice-Eccles Stadium, and the U remains confident that such a project will be developed.
Over the past several months the university and IAC have discussed concerns about the feasibility of the project given a variety of current economic conditions. Some of these economic conditions include:
The lending environment and the expectation of financial returns on invested capital have significantly changed since the issuance of the request for proposal (RFP) in the spring of 2008 and the subsequent selection of IAC as the designated developer of the project in November of that year.
Rental housing markets nationally and in Salt Lake City have softened, which has resulted in lack of depth of demand for on-campus housing, especially for the product type envisioned.
The commercial retail environment has also softened considerably both nationally and in Salt Lake City as prospective tenants appear to be unwilling to pay rental rates needed to support the project as envisioned.
University parking demands, especially during evenings and weekends, challenge the shared parking assumptions of the IAC development plan.
Even though there would be great value to be derived from the current lower construction cost environment, this is only one component of the real estate development equation. Lower construction cost alone is not enough to offset other factors.
The goals for the U at this site continue to be to:
- provide amenities that will attract outstanding students, exceptional faculty and the public.
- create an exciting and vibrant experience for those coming to the University of Utah.
- take advantage of mass-transit opportunities.
- establish a compatible and stronger connection between the university and neighborhood communities.
- stimulate high-quality development on the western edge of campus as an entry portal onto the U campus and a gateway into Salt Lake City.
- enhance the appearance and functional use of the site.
It is the intention of the university to continue to evaluate this project, including market and financial conditions, in anticipation of development opportunities that will achieve the goals listed above.
For more information on Inland American Communities Group, Inc., please visit www.inlandac.com