Developer Tivoli Properties Inc. is working to resurrect its 1138 Peachtree project in Midtown, once the proposed site of a ritzy Mandarin Oriental Hotel.

Tivoli Properties President Scott Leventhal confirmed to Atlanta Business Chronicle Oct. 13 his company continues to pursue developing the property.

“Quit is not in my vocabulary,” Leventhal said. “We don’t have anything to announce yet, but we continue to work hard to see it come to fruition.”

Representatives of Tivoli Properties, including an attorney with Seyfarth Shaw LLP, met with the Development Authority of Fulton County Aug. 31 to ask for $115 million in bond financing. The bonds would essentially offer a long-term tax abatement on the project. The mixed-use development would include a hotel and stores.

The Development Authority granted a letter of inducement for the bonds. Generally, projects that come before the authority and receive a vote of confidence have a bona fide chance to move forward, local bond attorneys said.

Tivoli has additional equity to support the project, Leventhal confirmed . He would not comment on his equity partners, but said he believes the capital markets are improving enough that the project has a true second chance.

“There is a significant amount of capital that is finding its way back into the real estate industry,” he said. “The capital is not looking for development projects at this time but it’s only natural that the capital sources will lose patience with distressed [property acquisition] opportunities. And, when they do, development will reignite.”

The project faces huge obstacles, including the uncertainty surrounding the economic recovery, an already competitive landscape for luxury hotels in Midtown that includes the well-established Four Seasons on 14th Street, and a lack of confidence among investors that a sustained commercial real estate rebound is under way.

Tivoli does not have a hotel operator in mind, Leventhal said.

Any hotel project “is not for the meek and mild,” said Paul Breslin, managing partner of Panther Hospitality, a consulting group.

Even the right product in the right location “will be very challenging,” he said.

Leventhal said, “This project depends on job growth. We are going to be patient.”

Tivoli’s request of the development authority comes eight months after First Citizens Bank & Trust Co., a South Carolina bank, foreclosed on the site for the 53-story Mandarin Oriental Hotel, a project that was conceived near the end of the real estate boom that reached its apex between 2005 and 2007, a period defined by easy credit and unbridled optimism.

Tivoli’s earlier, $285 million mixed-use project had been slated for 1138 Peachtree St., a parking lot between 13th and 14th streets, one of the busiest sections of the Midtown district. The project was supposed to be a jewel along the proposed Midtown Mile, envisioned as more than 1 million square feet of street-level retail spanning 14 blocks between The Fox Theatre and the Woodruff Arts Center.

“This would be another big win for Midtown and an encouraging sign that development is ramping up,” said Susan Mendheim, president and CEO of the Midtown Alliance, in an e-mail to Atlanta Business Chronicle. “The 1138 Peachtree location is prime for another quality, mixed-use high-rise. It has the potential to be a new icon for Midtown and Atlanta’s skyline, and we’re certainly excited to hear more about plans for it.”

Tivoli’s project comes as a potential rival gains some momentum across from The High Museum of Art.

Alvin D. Jones, president and CEO of Alvin James Group, plans to build a $350 million, 250-room luxury hotel in the 1300 block of Peachtree Street.

The proposed five-star hotel project would include 100 condominium units.

James said he got a funding commitment for the project Oct. 12, which will allow him to close on the land soon.

“I have an Asian investment group providing the funding for the land acquisition and the development,” he said.

A hotel project started today wouldn’t be complete for three years “so that’s not bad timing,” Breslin said, and might bode better for a project.

“The Atlanta market is still strong for the long haul,” he said. “We may be a little over capacity for the short haul.”

But for the market to support a luxury hotel development in Midtown “one needs to be comfortable with what both the business cycle will be in three years, and where we will be on the property cycle,” said Mark Woodworth, president of Colliers-PKF Hospitality Research, a research and consulting firm in Atlanta.

The business cycle is demand for hotel rooms, and the property cycle is the economics of building new product, he said.

Both nationally and in Atlanta, the hotel industry has reached bottom, Woodworth said, “and we have begun the process of moving down the road to recovery.”

But Woodworth believes this recovery will be a long one.

The nation, and Atlanta, had a strong first half of the year for demand, he said, and preliminary numbers for the third quarter look good.

When demand grows, hotel managers and owners are able to increase room rates “and we’re just beginning that part now,” Woodworth said.

But on the property side, many hotel owners continue to find themselves in difficult straits, he said, when it comes to generating enough cash to pay mortgages.

“Strategic default is becoming more prevalent in the industry,” he said.

The W Atlanta-Downtown Hotel & Residences entered the foreclosure process Oct. 5 and The Mansion on Peachtree was foreclosed upon in February. Both properties remain in operation.

“The market value of the vast majority of hotels today are significantly below their replacement costs,” Woodworth said. “If I can buy a hotel at a price that is well below the cost to build, I’m not going to build.”

The buying and selling of hotels has to begin in earnest before property values increase and it makes more sense to build new product, he said.

“Will the market values in Midtown Atlanta be equal to replacement costs [in three years]?” Woodworth said. “I don’t know.”