Developers of the planned Best Western Peppertree Inn at the northwest corner of Third Avenue and Division Street say they haven't been able to obtain commercial loans to complete financing for the $9 million project and they are no longer predicting that any work will be done at the site this winter.

Rita Santillanes, who is codeveloping the project with her husband, John, says commitments for $4 million in Small Business Administration-backed loans obtained through the Northwest Business Development Association last summer will remain available for three years.

Santillanes earlier had expected that commitments for the SBA loans would encourage a commercial lender to complete the financing package in time to resume construction and frame the planned structure before winter set in, but now she declines to say whether she expects work to resume any time soon.

"I don't want to speculate that it will happen this winter," she says. "I heard from a banker there's some potential (for financing to come through), but I've heard that before. I'm going to wait until I see a piece of paper with a signature on it."

She says banks tightened their credit policies during the recession, and they're still reluctant to approve commercial construction loans. "Hospitality loans are almost nonexistent," Santillanes says.

Work at the site stalled last winter after the couple's bank withdrew the original financing for it, leaving an unfinished foundation and mounds of dirt exposed to motorists' views at the high-traffic intersection just north of the Division Street interchange with Interstate 90.

Despite the construction delay, the scope of the project, which is to include a connected parking structure, remains unchanged, and work could resume on short notice, Santillanes says.

"We're keeping everything up to date," she says. "The city understands the situation and is talking directly with the builder."

The building permit will remain active through May, says Dan Skindzier, the city's inspector supervisor.

EA White Construction Co., of Tualatin, Ore., is the contractor on the project, and Dale Sweeney Designs PLLC, of Bellevue, Wash., designed it.

The Santillaneses bought the property, which is the former site of St. John's Lutheran Church and a Subway restaurant building, in July 2007. The hotel project, which started with demolition of St. John's, initially was delayed for three months over questions about whether the church was eligible to be listed on the National Register of Historic Places. By the time the city had issued the demolition permit, the recession had deepened, and the Santillaneses original bank financing fell through.

The Santillaneses also own Best Western Peppertree Inns at Spokane International Airport and in Liberty Lake, Yakima, and Auburn, Wash.