Mar. 31, 2010--The developer of the Waveyard water park in Mesa is looking to start the project with only the water component at first, while delaying the resort until the economy picks up.

Waveyard co-owner Richard Mladick said Tuesday investor interest is strong in the water park but a lodging industry slump may trigger a phased-development approach.

The $250 million project has a mid-2011 deadline from Mesa to begin construction near Loop 202 and Dobson Road. The bulk of the project is supposed to open at the same time, but Mladick said it might be necessary to build in phases.

"The average daily (room) rates are in the tank right now and there just isn't financing out there right now for the resort component of the project," Mladick said.

Mayor Scott Smith said he's been approached to see if the city would allow only part of the project to begin.

Smith said he couldn't say whether he'd support it because no specific plan has come forward to date, but he's open to discussing the option.

The roughly 125-acre project would include whitewater rafting, surfing, scuba, an indoor water park and other amenities on what is now a city-owned golf course and ball fields. It was proposed in 2007 and voters later overwhelmingly approved tax incentives for it.

Waveyard initially had to convince Mesa in January of this year that it had financing to begin, but it asked the city last fall for a 2-year extension because the recession made it impossible to raise funds. Mesa instead gave Waveyard 18 more months, until July 2011.

The company has said Waveyard would become Arizona's second-largest tourist draw, after the Grand Canyon.

Waveyard is aggressively working to build the project on the same scale it initially planned, Mladick said. Only the timing will differ, he said.

"We're going to bring every possible opportunity to the city so if we can get a significant portion of the project financed but we can't get the resort financed, we're going to put that before the city and let the city make the decision," Mladick said.

Waveyard is one of two major resorts facing delays in Mesa.

The $1 billion Gaylord resort proposed in east Mesa is also waiting for the lodging industry to pick up, Smith said.

The 1,500-room resort will rely mostly on midsized conventions, which are in a big slump.

That segment of the market has leveled off, Smith said, but must recover before Gaylord is built.

"When will that happen? Who knows," Smith said. "I fully expect that we'll be looking at a delay on the original time frame because the economy has been much deeper in the hole than any of us have envisioned and has lasted longer."

The financial outlook on Gaylord hasn't changed in recent months, Smith said, adding the lodging industry has been largely stable with some small improvements.

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