Del Rey Oaks golf-and-hotel project looks for new investors.

Cash and Checks Accepted: Mayor Joseph Russell says despite losing its major funding source, the Resort at Del Rey Oaks will still move forward.

The main financial backer for the Resort at Del Rey Oaks is pulling out of the project due to the downturn in the economy. David Gazek, a senior vice president for Federal Development, the company building the resort, says JER Partners decided a few months ago to invest its money elsewhere.

JER Partners, a Virginia-based division of J.E. Robert Companies, is a private equity real estate investment company. The group’s withdrawal puts the Resort in the club with several Fort Ord redevelopment projects, including Marina Station and East Garrison, that have stalled due to the declining housing market.

City officials canceled two study sessions about the project scheduled for July 9 and Aug. 13. The City Council held a special, closed session meeting on Aug. 13 with Federal Development.

Mayor Joseph Russell says the council extended the exclusive negotiating agreement with Federal for another 45 days. He says the city is still committed to the project. “We have been with Federal for four years,” he says. “We want to make it work.”

The project would include an 18-hole golf course, 691 residential units and 450 hotel rooms. The posh resort would be built on 310 acres northeast of South Boundary Road and General Jim Moore Boulevard.

Gazek admits it will be a “bumpy road” to find new investors but says he is hopeful that Monterey Peninsula real estate will hold its value and recover soon. “We fully intend to stay with the project and see it through this difficult economic time.”

Federal still intends to loan the city $350,000 a year for the next three years as planned, and pay for city consultants associated with the development, Gazek says. But work on the environmental impact report has been delayed and the Sept. 10 study session may also be canceled.

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