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A housing development slated for Rosemount's UMore Park has fallen through after the financing company and developer bowed out of the 1,500-home project.

San Diego-based Newland Communities informed city officials in September that it canceled an agreement to buy 436 acres from the University of Minnesota to build Vermillion Crossing, said Kim Lindquist, Rosemount community development director.

"Obviously, we're disappointed," she said. "We had finally gotten a concept plan approved and had a good partnership with the university."

The problem was with the financier, North America Sekisui House (NASH), said David Newman, an adviser Newland hired to work on the UMore project until last week. "My understanding is that NASH was directed not to invest in any new projects until they're able to resolve some financial issues," he said.

Financing with the Japanese homebuilding company, which is among the world's largest, fell through in the spring, Newman said. Newland then tried to obtain other funding but couldn't do it.

Newland worked on the project for more than 10 years and was disappointed that it fizzled, he said, adding that other Newland projects weren't affected.

"Newland loves the project, I love the project, we love Rosemount," Newman said. "The city was very supportive of what we were trying to do."

The developer is known for large, master-planned communities, he said, including Stonemill Farms in Woodbury, which Newland officials say was the Twin Cities' bestselling development during the most recent recession.

Lindquist said city officials will meet with university representatives and discuss plans for the site, using information about road and utility needs they have gleaned from the previous project.

The university will put out another request for proposals for developers later this year, a University of Minnesota spokesperson said.

Lindquist said the vast majority of the area will eventually be housing, with some retail and industrial development.

"The city of Rosemount is experiencing demand for residential [property]," Lindquist said.

Development is gradually moving eastward in the city, with the UMore Park area next in line. Other undeveloped land lies farther east, Lindquist said.

If things don't continue to move forward with UMore, development may have to leapfrog over that acreage, she said, adding that she doesn't have reason to believe that UMore won't develop.

The former Vermillion Crossing site is part of the university's massive 4,800-acre UMore property in the south metro.

The acreage was once a federally owned munitions plant that produced gunpowder during World War II. A gravel mine takes up more than 1,000 acres of the land today, with extraction expected to continue for decades.

In 2006, the University of Minnesota unveiled plans to build an eco-village for 20,000 to 30,000 residents at UMore Park, but that idea stalled during the recession, eventually dying.

Erin Adler • 612-673-1781