The Railroad Square transit village was briefly derailed Thursday when the developer, frustrated over financing problems and under fire for proposing less housing, decided to pull out.
"I think on any given day if you are in this business, you wake up and question your own sanity," developer Michael Dieden said. "This morning was one of those."
By early afternoon, however, Dieden softened his position, saying he was "taking a timeout" to decide how to proceed.
Soon after he agreed to stay aboard, he said he had been besieged by offers of help from business and civic leaders.
"Everyone has rallied . . . we remain committed to this being a viable project," he said.
Dieden has set up meetings with rail and Santa Rosa officials next week to present ideas for the project, which is supposed to place a food and wine center, housing, and retail, restaurant and office space near a planned commuter rail line.
As word spread that Dieden might drop the project, he received offers of help obtaining financing from developers Hugh Futrell and Rick Derringer, both of whom have Railroad Square projects.
"We are having conversations on how we can assist him to hold the deal together," said Futrell, who initially was part of Dieden's Creative Housing Associates.
Futrell said they'll be looking this weekend at how they may be able to help finance Dieden's project, which was modeled on the Ferry Building on San Francisco's Embarcadero.
"We will review the numbers, identify his market concerns and see what we can do," Futrell said. "We know the residential stuff here better than anyone else."
"I am hoping we can work out some arrangement to go forward," said Derringer, who has a 73-unit housing project approved for Railroad Square. "I think we can make the SMART project reality."
SMART is Sonoma Marin Area Rail Transit, the public agency that owns the Railroad Square property and is planning the commuter rail line that would stop there.
Dieden's Creative Housing was chosen over two other developers to develop a transit village on the 5½-acre property.
"It would be disappointing to me if we could not have them do this project. They were clearly the best candidate," said Bob Jehn, a Cloverdale city councilman and a member of SMART's selection team. "There was unanimous support we negotiate with them."
Losing Dieden could be a big political setback for SMART, which plans to return to the voters next year with a sales tax measure to help pay for the Cloverdale-to-Larkspur commuter rail line. In November, Measure R failed to get a sufficient majority to pass.
Dieden's initial plan included a food and wine center, retail space and 250 units of housing near the rail depot.
The problem, he said Thursday, is that the housing market has taken a downturn and financing for multifamily residential development is difficult to get. As a result, he has asked to scale back the housing portion of the development.
"The equity markets are very suspect on these projects," he said. "They are unwilling to go forward."
The proposal had an earlier setback when Santa Rosa Junior College, unsure when the project would ever break ground, decided to build its culinary academy elsewhere.
Dieden presented a revised plan earlier this month that reduced the housing to 118 units and included a parking garage. It was roundly criticized at a public meeting May 16.