A $14 million redevelopment of the Olympic Athletic Club and new four-star hotel on historic Ballard Avenue has been put on hold while the owners seek funding.

Early last year, the city of Seattle and the Ballard Avenue Landmark District Board approved the demolition of two buildings located just south of the health club at 5212 and 5214 Ballard Avenue. Construction of a 65,000 square foot, four-story, 29-unit hotel was supposed to begin at that site by October, but the current mortgage crisis has left banks unable to approve many large loans, said Mark Durall, general manager of the health club.

Owner's Jim and Debra Riggle are in the process of selling their $2.9 million Woodinville home to help finance the project and keep their business free of outside investors. Durall said he is optimistic about starting construction for the club expansion and hotel within the next six months.

"(The Riggle's) are committed to keeping the business in the family," said Durall. "It's kind of a legacy for them. It's a family owned business and they want it to remain a family owned business."

According to the city's staff report, the owner's bank would not commit to financing the new hotel building because an environmental assessment showed there was pollution adjacent to the site.

The construction permits expire in two years, and can be extended another two years, but Durall said that long of a delay isn't expected.

The Riggle's development includes the expansion of the existing club on the second and third floors, 3,000 square feet of retail space at ground level facing Ballard Avenue and a three-level parking garage for 79 vehicles above and below grade.

In the interim, the landmark district board approved 4-1 the demolition of the smaller, wooden building at 5214 Ballard Ave. to restore an existing parking lot to its original dimensions by adding six parking stalls for a total of 20.

Health club owner Jim Riggle is a member of the historic board and was not eligible to vote.

However, restoring additional parking was conditioned upon future board approval of an application to install some low-level landscaping at the entrance of the parking lot.

The parking would be primarily for health club members but free to the public on Saturday nights when the club is closed.

The owners told the board that through their own research, the site has historically been parking of some kind, either for vehicles or horses as early at the late 1890's.

"We're talking about 100 years of parking," said Durall.

The wooden structure was built in 1958, before the historic district formed in 1976. The board only considers building built from the 1890 through the 1940's as "historically significant."

Though the building had previously been approved for demolition for the hotel project, board member Elaine Wine said she could not support tearing it down to build parking along the historic street without guarantee of replacement with the Olympic hotel building.

There are13 parking lots in the historic district, including both of Olympic's. All but one existed when the district formed.

"The board strongly discourages new off-street parking within the district," said Wine. "It wants to see buildings not parking lots. If you approve it you are saying it's OK to have parking lots in this historic district."

Board members John Burreson and Linda Day didn't agree and said the project would just restore parking that had already been there.

Day also voted to approve the application because the amount of additional parking wasn't significant. The lot makes up just 28 percent of the site.

"It doesn't adversely effect the character of the district," said Day. "It's not changing what it looks like."

Ballard Avenue is one of seven historic districts in Seattle. The Ballard Avenue Landmark District Board regulates the appearance of new and current buildings on that street.

Rebekah Schilperoort can be reached at 783-1244 or rebekahs@robinsonnnews.com