SALEM - Plans have fallen through to move three historic houses on Federal Street that are in the way of the state's $160 million courthouse project.

Lynn developer Charles Reither, who submitted proposals to relocate all three buildings, one of which is nearly 200 years old, has backed out of the deal, according to state officials.

"Mr. Reither is no longer in the picture," said Kevin Flanigan, a spokesman for the state Division of Capital Asset Management, which is overseeing the court project.

The state is heading back to the starting line and will begin a new search for developers. Time is running out, however, and the odds grow greater that the buildings will be demolished - a fate local historic preservationists have hoped to avoid.

"We'd like not to do that, but we're getting close to that time," said state Rep. John Keenan, who has worked closely with Historic Salem Inc. and others to get the houses moved.

The state spent nearly $2 million last year acquiring the former law office, rooming house and apartment building at 58-62 Federal St., which are near the corner of North Street. It planned to move them by last September, then changed the date to November and, later, December. It even offered financial incentives to lure a developer but drew little interest other than Reither.

In early November, the state announced that the Lynn developer was moving all three houses, one to Prospect Avenue and another to Butler Street. A site for the third property was not announced. When Reither did not meet deadlines for moving the houses, the state decided to look for another developer, Keenan said.

The Salem News was not able to reach Reither, who has been involved in one other Salem project in recent years, according to city records. He was listed as the manager of J&M Development LLC, which was building four condominiums in the rear of 69 Boston St., where another developer was restoring the historic 1740 Samuel Pope House. The city agreed to subdivide the land for the two projects.

In late December, a lender foreclosed on J&M Development. An auction on the Putnam Street property is scheduled for April 4, according to a lawyer handling the case.

The three Federal Street buildings, which were built between 1814 and about 1900, are key pieces in the complex courthouse project. Before construction begins on the new court complex, these properties must be moved or demolished and the adjacent First Baptist Church must be relocated to the corner of Federal and North streets.

Keenan said he expects a public meeting will be held soon on plans to move the church,

Before work begins at the court site, however, construction is expected to begin on road improvements to North Street. Federal Street neighbors have raised concerns about work at the intersection of Federal and North streets, but those plans received a key approval last week and appear to be moving forward, DCAM said.

"We're looking at March or April" for the road construction to start, Flanigan said.

Before that work begins, DCAM will make one last attempt to find someone to move the houses. It plans to advertise the properties this week or next.

"We just want to make every effort possible to find somebody ... because we know it's important to people locally," Flanigan said.

The three homes are located on one of the most historic streets in the city and are considered "contributing buildings" in the Federal Street National Register District.

The Salem News was not able to reach a spokesman for Historic Salem.

While hopeful that the houses can be saved, Keenan said it may be hard to find a buyer in the current housing slump.

"I think the real estate market makes it a little more difficult now," he said.

Construction is expected to start this year on the new courthouse, which will include superior, district, housing and juvenile courts in one building at the corner of Federal and North streets. The adjacent Family & Probate Court building is scheduled to be renovated.