Construction is to begin soon on the long-delayed Museum on the Square project, which even in its scaled-back form is expected to stimulate revitalization of downtown Santa Rosa.

City building officials issued a permit last week for the project, which promises to transform the vacant former AT&T building into a glass-clad office building and wine museum.

Developer Hugh Futrell signed closing documents on his $11 million construction loan Friday afternoon and expects work on the interior of the building to begin this month, he said.

"My partners and I are extremely excited about the project, more so than ever," Futrell said. "We think it will be transformative, and we know our tenants agree."

Work on the shell of the hulking structure should be finished by the end of the year, with tenants in place early in 2015, he said.

The milestone comes more than 20 years after most of the 100-foot-tall monolith was vacated by AT&T and a decade after the city began considering buying the windowless eyesore to re-energize the southwest corner of Old Courthouse Square.

The city purchased the building in 2007 with $3 million in redevelopment funds. Initial plans called for demolishing it to create a clean slate for development. But the thick concrete walls — it was built to protect the telecom gear it housed from a nuclear blast — made demolition prohibitively expensive.

Futrell and his partners in 2010 proposed reusing the five-story structure, adding five stories of residential units on top, and housing the Sonoma County Museum and a restaurant on the first floor.

But the post-recession lending environment, combined with uncertainty over the demise of the city's redevelopment agency, dealt the project setback after setback.

A promising early tenant, software firm M?ier, pulled out. The museum, citing the uncertainty of the project, followed suit. Futrell abandoned the residential units and redesigned the project to focus on the office space.

The city finally sold the building to Futrell in October 2013 for just over $1million, $900,000 less than he originally agreed to pay, after the state required a new appraisal.

The two main tenants are to be Luther Burbank Savings, which is taking the fourth and fifth floors, and TLCD Architecture,the firm that designed the remaking of the building and will take the third floor. The second floor remains unleased, though Futrell said he hasn't begun trying to lease it. A restaurant and wine museum are planned for the ground floor, he said.

The news of the progress was met with excitement and relief by city officials who've worked for years to keep it on track, at times against heavy odds. Last year, Mayor Scott Bartley called the scaled-back version of the project a "Hail Mary" effort.

On Friday, Bartley said he's confident even the downsized version will be a boon to downtown by generating construction jobs and bringing a steady stream of workers into the heart of the city.

"It took a long time to get to this point, but this is a good thing for the city," Bartley said. "This is going to bring that corner back to life."

He praised Futrell for his persistence, which he said is rooted in a strong belief that the project will improve his hometown.

"I think this is a signature moment for him in this community," Bartley said.

Futrell said there have been so many unexpected setbacks that he wasn't ready to celebrate winning the loan until it was closed and recorded, which he expects to happen next week.

"We are virtually at the finish line of closing the loan and commencing construction after a challenging multi-year period with an exceptional number of obstacles," Futrell said.

He thanked Luther Burbank Savings in particular for remaining committed to the project throughout. "Their patience to make this work is a bedrock of the project," Futrell said.

Luther Burbank Savings CEO John Biggs said he's happy to see the project moving forward three years after he agreed to lease space in it. The fast-growing company has about 100 employees spread out in four buildings on Fourth Street, just east of the downtown core.

"It's really difficult to run a complex operation when people are in four different buildings," Biggs said. "My goal was to get all of my people under one roof and do it downtown."

The company, which has offices statewide, showed its commitment to downtown with the construction in 2012 of its new two-story headquarters on the site of the former Traverso's deli, just to the west of the AT&T building. The consolidation of its remaining operations nearby will continue that trend, he said.

"I'm a big proponent of the revitalization of downtown and think this is major step toward doing it," Biggs said.

(You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @citybeater.)