Filene’s site permits revoked

Boston Redevelopment Authority director John Palmieri said the future of the Filene’s project should no longer be in the hands of its current owners, led by Vornado Realty Trust of New York.

“It’s in our best interests for them to find a buyer, someone with the wherewithal and commitment to deliver a project to the city,’’ Palmieri said. “They have proven unable or unwilling to commit the resources needed to proceed.’’

Already locked in a poisonous relationship with City Hall, Vornado and its local partner, John B Hynes III, are trying to sell the property because they cannot find financing for their proposal, which included offices, condominiums, and a hotel. Several local and national developers have expressed interest, but the owners are still in the process of soliciting formal bids.

Vornado and Hynes did not respond to requests for comment yesterday.

Palmieri sent a four-page letter to the developers yesterday in which he said their failure to move forward has resulted in several negative effects on the city: a loss of more than $20 million in tax revenue and of 3,300 construction and permanent jobs related to the complex. The redevelopment also forced the closing of Filene’s Basement, which employed 218 people and served as a magnet for the Downtown Crossing shopping district.

Vornado and Hynes stopped construction on the $750 million project in the summer of 2008, citing a global credit crisis that closed off funding for large development projects across the country. The work stoppage left the site covered by several half-demolished buildings and a massive crater at the center.

Some real estate specialists said the city’s move to revoke the permits could complicate efforts to redevelop the property. For example, if Hynes and Vornado are unable to sell, they would then have to try to win new approvals for a different project from the very city officials who have repeatedly questioned their motives and abilities.

“It’s just going to create a stalemate between the two sides, which means the city is going to be living with a hole in the ground for longer than it needs to,’’ said David Begelfer, chief executive of NAIOP Massachusetts, a commercial real estate association.

Prospects for a sale of the property remain uncertain. While dozens of builders have expressed interest, most say they would only buy the site if Vornado agrees to sell it for much less than the $100 million the firm and its partners initially paid for it in 2005.

Even if Vornado and Hynes are willing to sell at a loss, a new owner would face the same obstacles: a slow real estate market and reluctance among lenders to take risks on large construction projects.

Offices and condominiums still remain difficult to finance, meaning a new project on the site would have to be smaller and possibly focus on construction of apartments and stores.

“It would be quite difficult to proceed with a large project there,’’ said William McCall, president of McCall & Almy, a commercial brokerage and advisory firm. “We need a stronger market, and the market is very fragile right now.’’

Casey Ross can be reached at cross@globe.com.