Brad Fraley and Timothy O’Byrne plan to move forward with a scaled-back version of their development at 500 Southwest Bond Street, building apartments near the Old Mill District instead of the high-end hotel and condominiums they envisioned before the real estate crash.

Fraley said Wednesday that their project, dubbed “The Village” in its early days, is set to move forward, after they renegotiated a pair of delinquent loans with PremierWest Bank to avoid foreclosure last month.

The developers have been working since 2006 to build on nearly 6 acres of land near the roundabout where Southwest Bond Street meets Southwest Wilson Avenue.

But the real estate crash in 2008 and missed loan payments totaling more than $8 million threatened to push the original project into foreclosure before it ever got off the ground.

PremierWest Bank filed a complaint May 3 in Deschutes County Circuit Court, stating Fraley and O’Byrne owed about $8.1 million in unpaid loans to the bank. The complaint said the bank would sell the property at auction, though no date was set.

But the two parties agreed in mid-September on a modified payment plan that would allow the project to move ahead, Fraley said.

“This has been an ongoing process. We were talking with (PremierWest) since January trying to work on these issues” regarding the loans, Fraley said.

PremierWest Bank President CEO Jim Ford confirmed that a deal had been made.

“We have reached an agreement with the developers, which has set aside a foreclosure,” Ford wrote in an email to The Bulletin. The terms of the agreement were confidential, Ford wrote.

The new plan for the 500 Bond project is a series of apartment buildings on the property. Many details of the plan, including the number of apartments, the design and the overall project cost, haven’t been decided yet, Fraley said. Small retail buildings could go in as well. The Village name will likely be dropped.

But construction on the first of five development phases could start next spring, with apartments possibly ready in fall 2013.

“We’re starting to talk with architects about a plan, looking at apartments rather than the hotel concept we used to have,” Fraley said. “We’re hoping to maybe fill a niche for student housing, once the four-year (Oregon State University-Cascades) campus starts up. There aren’t a lot of housing options” around the Old Mill District.

OSU officials hope to have funding in place for construction of campus facilities by the end of 2013, with the first group of four-year students expected to start in fall 2015.

Fraley and O’Byrne are considering apartments of several sizes, from studios to three bedrooms, with each unit between 600 and 1,200 square feet. Early plans also call for a series of common areas and landscaping work around the complexes.

The developers have already poured about $1.5 million into the project through work on nearby streets. They funded part of the roundabout construction at Southwest Bond and Southwest Wilson, Fraley said, and paid to widen Bond Street in the area for eased traffic flow.

In its earliest days, the development envisioned five buildings ranging from 40 to 72 feet high, anchored by a four- to five-star hotel, and condominiums, according to The Bulletin’s archives. The estimated price tag was $127 million.

The apartment proposal reflects a plan more viable in today’s economy. A lower project cost to build apartments at the middle price range of the market helps fill a need for rental housing in Bend, Fraley said.

The proposal is one of several apartment projects planned in Bend. A Lake Oswego developer filed plans earlier this month for 100 rental units in northeast Bend, off Boyd Acres Road. And another developer filed preliminary plans for a three-story apartment complex near Southwest Theater Drive and Southwest Columbia Street, not far from Fraley’s proposed apartments.

A survey of more than 5,700 rental properties by the Central Oregon Rental Owners’ Association earlier this year found just 4.4 percent of rental units vacant in the region, down from 5.2 percent in 2011.

And the project’s location — walking distance from the Old Mill District’s retail center — heightens its appeal, Fraley said.

“We believe this is one of the more prime pieces of property left” for residential housing in Bend, he said.

Fraley and O’Byrne are still working out the specifics of their new plan for 500 Bond.

Fraley said they expect to submit application paperwork to the city in the next few months.

“I think we’re pretty dedicated to getting it through,” Fraley said. “We’ve been through a lot. We’re all very optimistic moving forward.”