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CHICAGO-After weeks of skating on thin ice, developers of the star-crossed Block 37 in the Loop were told Wednesday the city is looking for someone else to build on the State Street site. Developers reportedly were unable to obtain financing for the hotel component of a $250-million development, and downscaled plans were unacceptable to department of planning and development commissioner Alicia Mazur Berg.

Not only did the revised plan lack the previously promised hotel rooms, a 66-story condominium tower also was missing, leaving only a Lord & Taylor department store connected to other retail space and a rooftop restaurant.

“I think it’s unfortunate this developer could not pull the project together on such a premium site in the city,” Berg’s predecessor, Grubb & Ellis senior vice president Christopher R. Hill, tells GlobeSt.com. “I’m disappointed, but life goes on.”

The city block bounded by State, Washington, Dearborn and Randolph streets has been vacant since the 1980s, and previous attempts to redevelop the prime Loop location were stalled in the early 1990s by the recession. The land has been used during the winter for “Skate on State.”

However, plans approved by the city’s plan commission earlier this year were greeted with renewed optimism even though it was conceded financing for a proposed 12-story Marriott hotel could be a problem given the softening economy.

“We were generous with the time the developer said was needed to do the job right,” Berg told reporters at a press conference. “Well, the time is up.”

Now, approximately $40 million in incentives promised to the development team–the largest tax increment financing deal ever offered by the city, Hill notes–will be offered to others who come in with their plans. Berg indicated there should be no shortage of new development proposals.

Hill thinks a hotel would be “wonderful” for the site but adds a new proposal could succeed without it or a residential component. “It’s predominantly a retail development,” Hill says. “It’s on State Street in a rapidly reviving center of the city–in the heart of the Loop.”

While previous designs were criticized for being too “suburban” in character, the most recent sketches by Chicago-based Solomon Cordwell Buenz were greeted with enthusiasm for its pedway connecting the hotel and retail elements as well as a rooftop park. However, without the hotel and condominiums, Berg says the revised plan was nothing more than a “big box.”

Given the history of the site, Berg was asked whether she thought Block 37 was jinxed. “I don’t believe in things like that,” she says, laughing off the suggestion.

So did Hill. “It’s not jinxed. It’s a fantastic site, in a thriving Downtown in a major American city,” Hill says. “It’s not voodoo, it’s not magic, it’s not supernatural.”

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