The California Public Employees' Retirement System has agreed to buy developer John Saca's share of The Towers on Capitol Mall project, officials announced Tuesday.

CalPERS said CIM Group of Los Angeles will serve as lead developer of the project, which will likely look much different from the 54-story condominium, hotel and retail complex Saca planned at the corner of Capitol Mall and Third Street.

Saca blamed skyrocketing construction costs and a downturn in the real estate market for the demise of his project. He added that he lost a "tremendous amount of money" in the early stages of the development.

Saca sent a letter promising to send refunds to those who earlier made deposits on condominiums.

"I believe CalPERS will regroup and do their best to design a project that makes sure this address will serve the Sacramento community with pride," Saca said in the letter. "CalPERS has directed the new developer as its first order of business to resolve issues with all the outstanding creditors, including the consultants and contractors that have done work on the project."