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Chastened by angry Sugar House residents and tightfisted banks, developer Craig Mecham now hopes to fill the roundly derided "sugar hole" with something different — reality.

Gone are the high-priced condos and high-rent office tower once penciled to hug the heart of Sugar House on the corner of 2100 South and Highland Drive. Now, after nearly three years of setbacks, Mecham proposes to build a five-story apartment building set back above street-level shops at the popular east Salt Lake City hub.

The project is preliminary, Mecham said, and everything from color to design is subject to change. But the basics are set: roughly 200 "market rate" apartments, ranging from studios to three bedrooms, perched above retail stores. A national chain restaurant could occupy the premier corner space across from the iconic Sugar House monument.

"I'm as anxious as you are to see something developed there," Mecham told the Sugar House Community Council late Wednesday. "We're excited about this."

The initial rendering looks a bit like The Gateway, with beige brick retail buildings and beige apartments jutting five levels above. Two levels of underground parking are planned, with access (dipping below the sidewalk) off 1100 East, and a parking-garage exit off the south end of the building.

Mecham conceded he does not yet have financing secured, but said two or three lenders are "very interested."

"As I stand before you now, we do not have financing," he told the council, adding he hopes that will change within 60 days. The city's Redevelopment Agency has been encouraging, he said, "but quite often there are strings attached."

Nevertheless, council trustees and a handful of residents in attendance praised the scaled-back project.

"Overall, this is so much better than the last presentation," said Amy Barry, vice chairwoman of the community council. "I'm really excited about the prospect of having this here."

Trustee Derek Payne said he likes the change because it won't "go dark" at 5 p.m. like an office building would. "You're going to have a very active night life and day life."

The plan includes outdoor sidewalk seating for restaurants and cafes.

"Having more residential here is what we need," agreed trustee Larry Migliaccio. "And we're going to knock Salt Lake's socks off."

Mecham expects a 20-month build that could begin late-summer 2011, pending city approvals.

If it gets a green light, trustee Sheila O'Driscoll wants the developer to invite back the merchants who were given the boot in 2007.

"I realize that making it profitable for you is a priority," she said, while calling for out-of-the-box thinking to make it "profoundly wonderful."

Mecham said he has talked to merchants about leasing space, but said he warned them rents could be high since underground parking is so expensive.

"I will lease to them. And I will lease to them at a discounted rate," he said. "But it has to be financially feasible."

Despite the plaudits, pointed questions remain. How would the project interact with the planned streetcar? How "green" would it be? And how badly would construction disrupt pedestrian flow?

Dubbed "The Sugar House Loop," the venture calls for nearly 50,000 square feet of ground-level retail, spanning Highland and 2100 South, and 200,000 square feet of apartment space. When it comes to commercial tenants, Mecham said "we do not want to commit at this point."

He did say a plan to complete an adjacent biking-pedestrian trail connection "is going to happen." And Mecham closed by saying he still is looking at adding future office space on a parcel he owns directly south.