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Ben Logue says his dream of transforming dilapidated State Street hotels into a stylish but affordable housing-and-retail project is alive and well.

The Salt Lake City Redevelopment Agency hopes that's true, because with engineering troubles and cost overruns, the project looks to be in peril.

The RDA recently extended loan agreements for Logue's Tannach Properties LLC, in hopes Logue could complete the structures. Hailed at a May 2012 groundbreaking as a boon to downtown redevelopment, the Plaza at State Street is more than a year beyond its planned opening date.

Logue, in conjunction with the RDA and a passel of lenders, envisioned a development that would replace the old single-room Regis and Cambridge hotels, as well as the REX theater, with trendy housing, cafes and shops around a European-style plaza that would extend east to Edison Avenue.

But engineering and design problems cropped up almost immediately, Logue said. Soil problems led to challenges with footings and foundations. And a new high-tech flooring concept required design and engineering changes.

What had been budgeted at $32 million has now morphed into a $52 million project.

The RDA Board, which doubles as the City Council, voted to extend the loan-guarantee timetable so that Logue would have time to secure more funding, said Board Chairman Stan Penfold.

"Right now, he has to raise additional capital," Penfold said. "He's in a bad cycle where he needs cash."

Penfold said he hopes Logue can keep the project going, because, among other things, it would add 136 affordable-housing units downtown. "I hope he can do it," Penfold said. "This is an unusual and complicated project. It would be difficult for someone else to step in."

RDA Board member Kyle LaMalfa said he, too, is "rooting for" Logue to complete the project. The affordable housing the project would offer is an important part of the city's housing stock. "What he is replacing is a bunch of low-income housing the city is loath to lose," LaMalfa said of the 50-some rooms in the single-room-occupancy hotels.

The RDA's decision to extend the agreement put Logue in an optimistic mood. "It's all good," he said. "It's been a frustrating project, but everything is fine. It will work out."

According to Logue's new schedule, the Plaza on State Street should be completed by year's end.