Sacramento Proposal/Approval/Construction Thread - III [Archive] - Page 41

innov8

Jul 12, 2009, 4:26 PM

Bob Shallit: Move quickly or lose hotel financing deal, Sacramento told
bshallit@sacbee.com
Published Saturday, Jul. 11, 2009

Developers of a proposed downtown hotel project have a not-so-subtle warning for city officials:

Act quickly to back the project or risk losing a $91 million financing commitment from a South Korean investment group.

The Sacramento developers – a joint venture of Parkcrest Development and USA Hospitality – want city officials to donate the land for the 25-story hotel and a six-level garage on Eighth Street, between K and L. That would be a departure from earlier city plans to sell the land to developers.

The Parkcrest and USA team also wants the city to forgo some taxes during the hotel's first few years of operations.

If those incentives are granted within a few months, Seoul-based investment firm Consus Asset Management "is in," says Sungmin Park, a Parkcrest VP.

But, he says, delays could force Consus to take its money elsewhere: "This is very time-sensitive."

Park says his Korean American company worked for years to get Consus to invest in U.S. projects, but the company was focused on China, Russia, South Korea and other markets where returns were higher.

Setbacks in Asia last year prompted Consus to look for "safer havens" and back the Sacramento project.

Parkcrest is kicking in $8 million, and other local investors, including Moe Mohanna, have committed millions more, giving the developers sufficient funding for the $136 million project, Park says.

Now, he adds, "we just need the city to say 'yes' to us."

City staffers are negotiating with the developers over terms of any deal. The issue is scheduled to go before the City Council on Aug. 4.

I would recommend that if the city does donate the land and put off some
taxes for the first few years that they also negotiate with the developers to
get a better overall design of the project. I don’t think it’s too much to ask
in exchange for the above incentives to change how parking’s incorporated
into the project. A new design could include spreading the hotel over the
half block instead of its current massing at a single corner. The same could
be done with the parking in having it above the ground floor of the hotel but
below the hotel rooms. The hotel might not be as tall but its appearance
from the street would be much more attractive.

SacUrbnPlnr

Jul 12, 2009, 6:39 PM

To Donate Land for a K Street Hotel?

Although it may seem distasteful at first blush to even consider giving away the land and providing other financial incentives, the City needs to figure out whether these subsidies would be a good deal in the long run based on additional TOT, sales taxes, increased revenue from larger convention business, and other possible economic benefits from the proposed project.

We can only hope that the City is carefully considering the financial risks and rewards of the proposed project versus other options for this site. It may make sense for the City to move forward with this project, wait for a better deal from another developer, develop a hotel project itself on this site (as the City did with the Sheraton Grand) or solicit less ambitious proposals for the site that require little or no subsidy, are less risky, but will also be less catalyzing for the K Street Mall.

nevernude

Jul 12, 2009, 7:57 PM

SacUrbnPlnr

Jul 12, 2009, 9:11 PM

Good ideas.

However, it would be very challenging to make 1,000 square feet of residential space pencil out in a high-rise building in Sacramento at $350,000 ($350/sq. ft.) given the local market and our regulatory environment, which significantly affects urban development costs. Your suggestion to deliver ownership housing affordable to middle-class households is more likely to pencil out in adaptive re-use of existing buildings (such as the I-Lofts in Old Sacramento and the 14th and R Lofts) or in podium-style mid-rise buildings of four or five stories that can be constructed using wood or steel framing (in contrast to steel reinforced concrete or the type steel frame construction required for high-rise buildings).

I just returned from a trip to Denver and took a look at several of the high-rise condominium projects recently completed or near completion. It seems that developers in Denver can deliver an equivalent high-rise residential product for as much as 20% less than in the Sacramento market.

Web

Jul 12, 2009, 10:37 PM

wburg

Jul 12, 2009, 11:20 PM

I would be fine with subsidies or tax incentives AS LONG AS THE PROJECT HAS REASONABLY AFFORDABLE HOUSING!!!!!! A downtown that just has 9-5'ers, tourists, and visiting government officials has shown it cannot work. If I were the city, i'd tell these hotels to add a couple of floors of condos on top and figure a way to get them pencil out at about 1000 sf for 350,000. I think that is the sweet spot for housing in midtown and downtown. Look at 14 and R. They have a lot of great options to buy between 700 and 1000 square feet and it doesn't cost you 400 to 500K like L Street or the condos above that hotel at 15th and L. And they have sold better than almost every new development. The city needs to identify opportunities for middle-class condos in downtown and midtown and do whatever it takes to get them built now.

This project, as currently proposed, doesn't include ANY housing at all.

The project at 14th & R is selling like hotcakes--in part BECAUSE it is in a historic building, NOT a new building--and in part because adaptive reuse of an existing building can be a lot cheaper than new construction. The high-rise and mid-rise condo units on L Street, both those in the hotel at 15th and at 17th, are selling tepidly if at all. That alone tells you something: there IS an existing market for residential housing downtown in historic buildings, but not much of one in new buildings and new hotels.

Seems to me that if the city was to re-use the Bel-Vue as moderate-income for-sale condo units, with a mixed-use component using the already-existing retail spaces on the ground floor, and another new nightclub at 815 L, we could have that corner occupied VERY quickly--and THEN put a hotel on the corner of 8th and K.

SacUrbnPlnr

Jul 13, 2009, 12:35 AM

The tepid sales at the Marriott may have more to do with the fact that the building is primarily a hotel, the architecture and layout of the residential units are uninspiring, and there are no balconies. Buyers who are able to pay the asking prices for the Marriott condos would probably want private balconies.

The low sales at the L Street Lofts are largely due to a legal dispute between the developer and his original investment partner that lasted over a year. This dispute prevented any sales of units at the Lofts and leasing of the ground floor commercial space. The developer also had to resolve a dispute with Otto Construction (the general contractor) over payment. These legal issues have now been resolved, and the developer has begun marketing the unsold unit again. Unfortunately, this is a very challenging market, so we'll see whether buyer interest, which was very high a year ago, is still there.

nevernude

Jul 13, 2009, 12:59 AM

I completely agree with you. Get D & S or Loftworks on it. I think the one big mistake that Sacramento and developers in Sacramento have made is trying to make these huge projects happen. If you look at the urban renewal of places like Portland, Denver, Seattle, etc, they didn't happen because some big-pocketed developer came in a built two 50-plus story residential towers. They happened because a few developers rehabbed old buildings and some other developers built new 5-10 story condo buildings and a critical mass eventually formed, like the Pearl District or LoDo or Belltown. I don't want to live in a big residential tower surrounded by nothing or by office buildings. I'd rather be in a smaller building surrounded by other housing with ground level shops and restaurants.

I love what D & S have done with 14 and R and I am a big fan of adaptive re-use. If you look at the most important catalysis projects in midtown over the last 10 years, they are almost all adaptive-reuse. Loftworks' building on J and 16th. 14 and R. Restaurants like Lucca, Zocolo, and Mulvaney's B&L are all adaptive re-use. As is the Firestone building. So I think the city should do whatever they can to support firms making these things happen.

What I was trying to say in my post is that the city shouldn't give out any money or incentives without requiring that the project include housing. If someone has the land and wants to build a new building and get money from the city, it needs housing and it needs ground-level retail or restaurants. If it doesn't we shouldn't even meet with them.

tronblue

Jul 13, 2009, 5:05 AM

Sadly the city plans to knock down the existing buildings at L and 8th. These buildings could have been used for similar purposes. But sadly that won't happen. The city is trying to accumulate as many weeded lots at possible. Plus, who would want to live in a overly refurbished flat in the old Bel-Vue for over 2 grand rent. We don't have those kinds of trust fund babies in sac that will live in sketchy areas for that kinda money.

SacTownAndy

Jul 13, 2009, 4:49 PM

I just returned from a trip to Denver and took a look at several of the high-rise condominium projects recently completed or near completion. It seems that developers in Denver can deliver an equivalent high-rise residential product for as much as 20% less than in the Sacramento market.

Case in point- the nearly complete 42-story "Spire" project. The majority of units are priced well under $400k. The developer has made it very clear in the local media that his project is aimed at attracting middle class folks downtown.

http://www.spiredenver.com/

wburg

Jul 13, 2009, 8:21 PM

I got a copy of the "Mitigated Negative Declaration" for the hotel project at 10th & K Street. There are no renderings or drawings of the proposed hotel, but it includes a few details: 12 stories, 180 rooms, about 8000 sf of retail space along K Street.

Because this project meets the requirements for a "Mitigated Negative Declaration," no EIR is needed for this project. The project applicant is listed as "10th & K Investors, LLC," located on Somerdale Circle in Roseville.

tronblue

Jul 17, 2009, 7:17 PM

From the Sacramento press:

City plans to demolish the Bel-Vue and adjacent buildings were mentioned in my Sacramento Press article on July 3 ( http://sacramentopress.com/headline/10159/City_To_Demolish_Landmark_BelVue_Building ) but at the time the developer and financing organization behind the project were not identified. Since then, both have appeared, along with an additional partner. The financier, Consus Asset Management, is a new player in Sacramento. The developer, Bob Leach, just completed another Sacramento project, the Le Rivage Hotel. The other player in this project is a well-known name in K Street real estate, Mohammed “Mo” Mohanna. All three are asking the city for $18.6 million in free real estate and several years of tax forgiveness once the project is complete, and they want this done immediately, before public input and analysis by city staff and commissions can be completed.
Since my earlier article saw print, these parties were mentioned by articles in the Sacramento Bee, in Bob Shallit’s columns:
http://www.sacbee.com/shallit/story/2005107.html
In this column, Shallit mentions South Korea based Consus Asset Management (http://consusgroup.com/ ) as the primary financier, willing to put up $91 million for construction. Lead developer Bob Leach, builder of Le Rivage Hotel, made contact with Consus through local hotel builder Parkcrest Development. Also on the project team is Mohammed “Mo” Mohanna, who recently owned the land until the city paid him $18.6 million for it, after a lengthy series of negotiations, complex legal maneuvering, and the demolition of the buildings on the corner of 8th & K Street. The article mentioned that the developers were hoping for some tax breaks on this project.
Shallit followed this up with a second column:
http://www.sacbee.com/shallit/story/2017611.html
Here, the developers have urged the city to move quickly or risk losing financing. They have asked the city to give them the land, currently city-owned, for free, and to forgive taxes on the hotel for the first few years of its operation. Transferring the land quickly would also mean that there would be no time for an Environmental Impact Report to be completed, and before issues like the demolition of the Bel-Vue have had an opportunity to be fully reviewed by city staff, Preservation Commission or Planning Commission.
This issue will go before the Sacramento City Council on August 4. The city of Sacramento has held an Exclusive Right to Negotiate (ERN) with Bob Leach and Parkcrest, extended for 45 days on June 9, but that ERN expires on Friday, July 24.
The unspoken irony in the developers’ demand is that the city of Sacramento just paid nearly $20 million to wrest the property out of Mohanna’s hands, and are now being asked to give the property back to him. They are also asking for a free hand to demolish a Sacramento landmark, and forgiveness of future taxes, which means that it will be many years before the city of Sacramento sees any economic benefit or return on their investment of $20 million, their donation of a half-block of prime downtown real estate (by the city’s own valuation, worth the $18.6 million paid to Mohanna) and their sacrifice of irreplaceable historic buildings. This free giveaway would also add up to far more than the taxpayer-funded donation provided to developer David Taylor to rehabilitate three existing buildings on the 1000 block of K Street, a move that sparked widespread public criticism.
Why is there a need for such urgency? One possible answer is that there is another hotel project planned for K Street, only two blocks away. Unlike the project at 8th and K, this alternate project would require no historic buildings to be demolished. This project does not require the full Environmental Impact Report, instead using a far simpler process called a Mitigated Negative Declaration (MND.) The MND identifies the developer behind the project as "10th & K Developers, LLC" and mentions that it will include 180 rooms in a 12-story building with ground floor retail. Could this simpler, less complex project be the competition that worries the developers behind 8th and K, and enough of a problem to make them demand a massive public subsidy from the city of Sacramento for a project that will not have to pay taxes for many years, and action fast enough to short-circuit public debate and review by city staff?
Meanwhile, the deadline for public comment on the Notice of Preparation is approaching. According to Jennifer Hageman of the city of Sacramento’s Economic Development Department, part of the process will include a public scoping meeting to present this issue to the public, but as of this writing no date has been identified for such a meeting.
To give public comment about this issue, contact Jennifer Hageman of the City of Sacramento’s Community Development Department at jhageman@cityofsacramento.org or (916)808-5538. Written comments should be sent to Jennifer Hageman, City of Sacramento Community Development Department, 300 Richards Boulevard, Sacramento, CA 95811. Comments are due before 4:00 PM on July 27, 2009.

wburg

Jul 17, 2009, 8:07 PM

Thanks for reposting...Sacramento Press also hosted complete copies of the Notice of Preparation and the Mitigated Negative Declaration for 10th & K, for those who are interested.

Surefiresacto

Jul 21, 2009, 6:41 PM

An the competition heats up!:hell:

bshallit@sacbee.com
Published Tuesday, Jul. 21, 2009
Another hotel project is being proposed for the downtown area – this one by three developers who envision a 12-story "select-service" Marriott, Hyatt or Starwood at the key corner of 10th and K streets.

The developers say their 165-room concept makes more sense than the luxury 409-room project being proposed by another development team for the corner of Eighth and K.

"There is a 400-room hotel in downtown Sacramento's future, clearly," says Brian Larson, a hotel development veteran who is teaming on this project with Tony Giannoni and Jim Brennan.

"But when will that occur?"

Not soon, he suggests, saying his group's 165-room plan is the "right size" for a market that's seen room occupancy slide over the past two years.

The developers also say the most important need in the downtown market is for an upscale hotel priced 10 to 20 percent below the full-service lodging already in the downtown core.

A street-level restaurant isn't part of the plan. And some luxury service touches might be absent.

But Larson says the building – at the intersection's southwest corner – would have an "urban, sophisticated footprint," with swimming pool, fitness facilities, business center and meeting space.

The architect, Hornberger + Worstell of San Francisco, has been involved mostly with upscale projects – including W Hotels – and will be producing a "spectacular design with outstanding curb appeal," says Larson, who was part of the team that built the Citizen Hotel.

His partners also have lots of experience. Giannoni built the Marriott Residence Inn at 15th and L streets while Brennan developed office condos at the northeast corner of 10th and K.

The developers say their $43 million project would be financed by a combination of equity investments from local people and possibly a federally subsidized, city-issued bond that would be repaid by the developers.

The new proposal creates a choice for city officials: Kick in about $31.5 million in the form of land and various tax breaks for the 25-story hotel proposed by Bob Leach, Moe Mohanna and others at Eighth and K. Or provide about $10 million in tax breaks and other kinds of assistance for the new proposal.

Both projects would be great additions, says Leslie Fritzsche, Sacramento's downtown development manager. But only one is likely to get city backing.

"The market will not support the addition of that many rooms," she says.

Surefiresacto

Jul 21, 2009, 6:44 PM

It's unfortunate about the unlikelyhood of a 1st floor restaurant in this proposal, but the list of hotels they are name dropping would be nice. Marriott, Hyatt or Starwood... I think a W Hotel would be fine.

goldcntry

Jul 21, 2009, 8:16 PM

W would be a great choice, but COME ON!!! Can we at least make it to the 20th floor???? Sheesh.

Surefiresacto

Jul 21, 2009, 8:35 PM

I actually think a 12 floor hotel there would be cool. So long as the design is impressive, which it sounds like is the intention. Anything would be great as opposed to the 2-3 story s*** shacks that currently line the street.

tronblue

Jul 21, 2009, 8:46 PM

Can someone reach Mo for comment? I want to hear his two cents on this other hotel project that will compete with his partnership down the street. I need some good comedy today.

Pistola916

Jul 21, 2009, 11:09 PM

I like the 12-story proposal idea. But I would like to see a Kimpton or a W hotel on that site, and a kick-ass design would help.

Web

Jul 22, 2009, 2:56 AM

sounds like only 1 of these will get the nod......I wonder which one moves???

any bets?? 10th or 8th???

I say 10th

Phillip

Jul 22, 2009, 4:14 AM

I'm not getting my hopes up for either hotel, but I really like the 10th & K proposal over the 8th & K Hilton, for a bunch of reasons:

1) Two blocks closer to the Convention Center.

2) 165 new rooms vs 409 rooms. Easier to absorb. Overbuilding leads to price wars that impair all the hotels.

3) $10 million in subsidies/tax breaks requested vs $30-35 million in subsidies at 8th & K. (I'd like no subsidy at all even better.)

4) A midrange or limited service hotel will bring new visitors Downtown, people who don't stay there now. People who are loyal to brands like Hilton Garden Inn, Courtyard by Marriott, and Hyatt Place have to stay in the Sacramento suburbs or Natomas now. A new midrange will make staying Downtown a viable option.

Another 4* like Hilton will appeal to the same niche as Downtown's existing Hyatt, Sheraton, and Citizen. It will draw customers away from those hotels but not really add anything new to the overall Downtown mix.

5) Won't have to tear down the Bel-Vue.

Surefiresacto

Jul 22, 2009, 3:52 PM

Plus it will possibly extend the walkable part of K Street from the convention center to 10 street rather than leaving a gap between the mall and the convention center.

ltsmotorsport

Jul 22, 2009, 9:52 PM

Agree with all your reasons Phillip. 10th and K for me too.

tronblue

Jul 23, 2009, 4:02 AM

My vote is 10th and K too.

At this point we should all be sending emails ore calling in about the issue at 8th and K. I've sent from some of my various emails all ready. Info below.

"Meanwhile, the deadline for public comment on the Notice of Preparation is approaching. According to Jennifer Hageman of the city of Sacramento’s Economic Development Department, part of the process will include a public scoping meeting to present this issue to the public, but as of this writing no date has been identified for such a meeting.
To give public comment about this issue, contact Jennifer Hageman of the City of Sacramento’s Community Development Department at jhageman@cityofsacramento.org or (916)808-5538. Written comments should be sent to Jennifer Hageman, City of Sacramento Community Development Department, 300 Richards Boulevard, Sacramento, CA 95811. Comments are due before 4:00 PM on July 27, 2009."

innov8

Jul 23, 2009, 5:05 AM

Be sure to write the mayor and city council too. The 8th & K proposal
will go before the council on Thursday August 6th. You can confirm this
on-line as the date draws nearer. The business terms for this project also
have not been finalized yet.

snfenoc

Jul 24, 2009, 9:47 PM

I knew the Sutter Foundation (medical office/plant) building was taking waaaaay too long...

Turner dropped as contractor of Sutter Health midtown project
Sacramento Business Journal - by Michael Shaw Staff writer

Sutter Health has parted ways with Turner Construction Co., Sacramento’s largest general contractor and the principal builder for Sutter’s $665 million midtown hospital master plan, citing a need to keep construction schedules on track.

Turner had been on the project since it started in 2003.

The Boldt Co. of Appleton, Wis., has been brought on to evaluate the project and will take over today. According to a construction expert, Boldt is a pioneer in construction techniques designed to streamline projects.

Significant construction work is already under way and Turner is helping with the transition, said Larry Maas, Sutter’s executive in charge of the master plan. He described the split as a “mutual decision” by Sutter and Turner.

“Most projects struggle with budget and scheduling,” he said. “We find ourselves struggling with budget and schedule as well. ... It’s in the best interests of both parties to move on.”

But that blame doesn’t rest with any one company, Maas said.

“To be fair to Turner, they’re just one member of the team,” he added. “The team as a whole has had challenges.”

The project is a renovation of Sutter General Hospital and construction of a new power plant, medical office building and women’s and children’s center. Hard construction costs are expected to top out at $430 million. The health network still expects the project to be completed by November 2011, though some of the early deadlines have slipped. Completion of the medical office building has been pushed from fall into early next year.

Boldt arrived in Sacramento last year after completing a 70,000-square-foot medical office building in Fairfield for Sutter and is one of the contractors working on the health system’s massive Cathedral Hill Hospital in San Francisco.

A Turner spokesman said the company is in discussions with Sutter, admitting that the project has been impacted by challenges related to design completion, permitting, approvals and increasing construction costs over the past eight years.

“Turner is committed to mutually resolving outstanding issues with Sutter Health in an expeditious manner,” spokesman Chris McFadden said.

“This is pretty unusual,” said Bob Earl, a construction consultant formerly with Sundt Construction in Sacramento. “If there is a long-term relationship, most people want to try to maintain that through the project. It is very unusual to have the contractor leave after construction has started. It usually takes pretty extraordinary circumstances.”

Earl added he was not aware of the split or the details surrounding it.

As for Boldt, Earl said the company is an innovator along with Sutter in developing lean construction techniques and a method called project integrated delivery, both of which look to keep work flowing and costs down.

“They’re on the same wavelength,” Earl said.

Turner, based in New York, opened its Sacramento office in 1982 and has been the region’s largest contractor for years. It reported $742 million in contract income from the local office in 2007, and employed 420 people during the peak season. McFadden said Turner’s Sacramento office completes about $290 million in construction annually and has 132 full-time employees.

Turner continues to perform other work for Sutter and will remain the contractor at a large hospital project in Burlingame.

Maas said the midtown Sacramento project has had to deal with issues from the Office of Statewide Health Planning and Development, which oversees hospital construction in the state.

David Byrnes, a spokesman for the agency, said it has expedited reviews to keep the project on track and sends state inspectors to the site on a weekly basis.

“We don’t get involved in the contractor issue, we just try to support the project,” he said.

Construction on the medical office complex is already well under way, but the new power plant needs to be up and running before work on some of the other major components can begin.

Boldt general manager Jay Harris said the company will evaluate the project for several weeks and will put 25 to 30 employees to work on it initially. The number of workers could increase significantly after that.

Harris explained Boldt’s lean construction process as one that creates incentives for subcontractors to focus on the project as a whole rather than their own individual success. One of the principal features is participants sharing in extra profits when projects are delivered under budget.

The contractor switch isn’t the first change for Sutter on the project.

Last year, Sutter switched architects, bringing on Sacramento’s Lionakis and EwingCole of Irvine. The previous architect was KMD Architects of San Francisco. Maas said Sutter had difficulty getting access to local resources from KMD and was often talking with architects in distant cities.

“Lionakis is excited that Sutter has brought us on board to be a part of such a great project,” said Chuck Hack, director of business development at Lionakis. “When we were brought on board, we felt the role Sutter needed us to take on played to many of our strengths as a company.”

KMD representatives could not be reached for comment.

http://assets.bizjournals.com/story_image/257560-0-0-1.jpg

http://sacramento.bizjournals.com/sacramento/stories/2009/07/20/daily57.html?page=2

innov8

Jul 25, 2009, 3:18 PM

http://img190.imageshack.us/img190/9872/1901nightbroadwayloftsm.jpg (http://img190.imageshack.us/i/1901nightbroadwayloftsm.jpg/)

Broadway Lofts

This week it was reported that the developers of a residential and retail
project at 19th and Broadway are close to being shovel ready and starting
demolition work on the site's existing buildings as early as October. Last
week Millennium Real Estate Services reported getting a $25 million
commitment from Evanston Financial in addition to the $4.4 million in state
Proposition 1C funding.

147,000 sf. Mix-Use project
7,734 sf. Retail
17,628 sf. Office
125 lofts
11 live/work lofts

This is one project I really did not expect to see get off the ground any time
soon… but I’ll believe it when I see it.

innov8

Jul 27, 2009, 4:31 AM

http://img198.imageshack.us/img198/3677/greyhoundi.jpg (http://img198.imageshack.us/i/greyhoundi.jpg/)

Relocating Downtown Greyhound

This Tuesday the 28th, City Council will vote to authorize construction of the
new Greyhound Terminal Building on Richards Blvd. The plan is to have
Greyhound terminal moved by April 1, 2012 when the lease at its current
location (703 L Street) expires. There is also the possibility that relocation
may need to occur sooner if the landlord at 703 L Street exercises its right
to an early termination of the current lease. The City Council also plans to
suspend the traditional process of competitive bidding for building design
because it could extend the project completion time beyond Greyhound's
lease expiration date.

Money to pay for this project will come from the cities General Fund (Fund 1001)
when city staff return in the fall of 2009 with a recommendation to award the
final professional services agreement for architectural design services.
Staff will then proceed with the competitive process in selecting a qualified
contractor to build the new terminal. The chosen contractor will assist the
architect in scoping and designing a constructible facility within the project budget.

Background Information

On December 12, 2006, City Council authorizing the purchase of 300 Richards
Boulevard, which included several adjacent vacant parcels, City staff
approached Greyhound to determine if the Richards Boulevard site was
feasible for its needs until the Sacramento Intermodal Transportation Facility
is ready for occupancy. Greyhound's review determined that the site would
adequately accommodate its operations.

May 20, 2008, City Council committing $2 million for required site work
including grading, utilities, sidewalks, curbs and gutters and the extension of
the driveway off of Richards Boulevard to Bannon Street. The balance of the
necessary funds ($4 million) will come from Sheraton Hotel sale proceeds
earmarked for downtown redevelopment projects.

February 24, 2009, City Council approved the lease agreement with
Greyhound and the Mitigation Monitoring Plan for the 420 Richards Boulevard
site improvement.

Work is anticipated to begin on site during summer 2010 with completion at the end of 2011.

snfenoc

Jul 29, 2009, 7:21 AM

http://www.sacbee.com/business/story/2054594.html

Neighbors, developer wrestle over Curtis Park railyard project
jwasserman@sacbee.com
Published Sunday, Jul. 26, 2009

A capital city shaped by its role in American railroad history is about to tackle its second large effort to build a new community of houses and stores on an old, toxic railyard.

This time, the story is unfolding in Curtis Park, a leafy enclave a few miles southeast of the larger downtown railyard also under redevelopment.

Developer Paul Petrovich proposes to turn a vacant 72acre slice of Curtis Park land where Western Pacific Railroad workers once repaired locomotives into a new urban neighborhood. After years of delay, his proposal is headed to City Hall for votes as soon as August or early September, city development officials say.

"We're roughly four to six weeks from the Planning Commission and five weeks from the City Council after that," said Sacramento Planning Director David Kwong.

The proposed Curtis Park Village development of nearly 500 residences and 256,000 square feet of retail and small office space sits directly east of Sacramento City College. While the Curtis Park railyard represents a major effort in its own right, it is small by comparison with the 240-acre downtown railyard, the biggest railyard redevelopment project in the United States.

The plan for downtown includes 10,000 or more residences, offices, cultural and entertainment venues on the spot where laborers once built trains for the transcontinental railroad.

Nineteen months after the Sacramento City Council approved that railyard project, steered by Georgia-based Thomas Enterprises, council members face a difficult sequel in Curtis Park Village.

Directly east of the proposed development sits Curtis Park, a well-established neighborhood of older homes where residents are on high alert to any change that could affect their quality of life. The neighborhood association has voiced various objections to developer Petrovich's plan.

To the west sits Land Park, another active, affluent neighborhood, but one that has been less vocal about the future of the Curtis Park railyard, from which it is separated by freight and light-rail lines.

In this project, as in downtown, much is at stake for how the city and region meet their goals to put more people into less space better served by public transit.

"This is a very large infill development," said Councilwoman Lauren Hammond, who represents the area. "If there isn't support for this size of infill development, that's going to be it for infill development. I don't see how anybody else can succeed."

Leaders of the 2,400-home Curtis Park neighborhood say they want the railyard developed. The battle, they say, is about how. Some in the neighborhood, home to attorneys, upper-level state employees and land-use planners, are fretting over a design concept they consider too suburban in character, too auto-oriented and with too much commercial space for a part of town built from 1890 to 1930.

Neighborhood leaders want the retail portion of the development trimmed to 125,000 square feet and focused on specialty retailers, not big national stores that draw in outside traffic. They also want housing above some of the stores.

"There's a lot of people that don't want chain stores," said Kathleen Ave, who chairs a neighborhood concerns committee for the Sierra Curtis Neighborhood Association.

Rosanna Herber, SCNA president, said, "We don't support the project as it's been submitted." She and her fellow activists asked the city to pull its environmental study and start over by analyzing alternatives to "trying to squeeze a suburban development between two traditional neighborhoods."

Petrovich, who bought the railyard in 2003 from Union Pacific and has spent $14 million so far cleaning up and hauling away its toxic legacy, said his critics have it wrong.

Curtis Park Village, he said, "would have the character of Curtis Park and Land Park – built to modern standards."

Petrovich said houses would be constructed from patterns that copy the neighborhood. He defended the lack of housing above stores, saying he tried that concept at his R Street Safeway development in midtown Sacramento, and it hasn't pulled in the rent to make it work economically.

The developer also defended the size of the retail space, saying it is needed to make the development pay for itself.

Earlier this month, the state awarded the project $9 million in Proposition 1C transit-oriented development funds to stimulate growth near transit stops. The site is near two South Line light-rail stops and many, including council member Hammond, are pushing for a pedestrian bridge connecting the site to the Sacramento City College rail station. It remains unclear, however, how that would be funded.

Petrovich, who said he developed $440 million in property in 2007 and 2008, is the force behind many Sacramento-area suburban shopping centers and urban infill projects. But he said Curtis Park Village is by far his biggest challenge. The 49-year-old former commercial real estate broker calls it "the opportunity to do something big. I want to do it right," he said. "This is going to be here long after me."

His plan envisions housing for about 1,200 people – a combination of 178 single-family detached houses, 212 apartments and 90 affordable-rate senior citizen apartments. The homes would have Curtis Park-style rear garages, many with so-called "granny flats" for lower-cost renting.

The plan also contains a standard 50,000-square-foot grocery store and numerous smaller stores served by 983 parking spaces. Petrovich said buildings and design features near the street would prevent the "sea of parking" look common to suburban shopping centers.

The concept also features a 4.5-acre zone that could house entertainment features such as a bowling alley or athletic club. Finally, there is a 7.5-acre park that would also serve as the solution to one of the project's thorniest issues, its toxic dirt.

Petrovich said he would dig a hole 20 feet deep across the entire park acreage and fill it in with contaminated dirt left behind by decades of shop work. That would be capped with a thick layer of clean dirt, he said.

The California Department of Toxic Substances Control, which has long investigated and monitored the site for contaminants, called the park plan an adequate remedy.

"The contaminated soil that may be buried under a park area would not contaminate groundwater and would be covered by clean fill to eliminate direct human exposure," said Thomas Tse, a hazardous substances engineer for the department.

Petrovich said that in the time he has owned the railyard, he has dug up and shipped 80,000 cubic yards of tainted dirt to a landfill in Utah. Another 25,000 cubic yards of soil now sits in mounds under tarps in the yard. "You're going to see three times that by the end of the year," he said.

When Petrovich took over the railyard, he told neighbors he would clean the entire property to residential standards. But once his crews started digging, they found that the contamination was much more extensive than they expected.

Tse said new cleanup plans will address the newly found contamination. But he said plans and technologies presented in environmental studies to the city are "generally acceptable" to the state.

In the meantime, as hearings approach, Curtis Park neighborhood leaders and Petrovich have engaged in occasional new battles of words.

Herber, asked if the Sierra Curtis Neighborhood Association would sue if the city approved the environmental study, the project and new zoning, said, "I think it's too soon to tell about a lawsuit. We don't want to sue. We want the development to go forward. But we're not going to be ramrodded."

City Hall's Kwong said, "We feel our draft environmental impact report will be adequate to meet CEQA (California Environmental Quality Act) and will be defensible."

Petrovich warned that if opponents prevent him from gaining approval for too long, he'll instead seek permits to build 1.2 million square feet of industrial buildings and warehouses on the site. That's allowed under its current zoning, he said.

Herber called the threat "ludicrous."

If the City Council approves Curtis Park Village, the developer's timetable is to finish the toxic cleanup next spring, start street work and utilities in a year and sell houses in about two years. The project would fill a toxic hole in the neighborhood left nearly three decades ago when the railroad pulled out.

Petrovich explained, "Our goal is to knit this thing together as if the railyard never existed."

Majin

Jul 29, 2009, 5:40 PM

I can't believe how long that project has been in the works.

seinar

Jul 29, 2009, 8:14 PM

I live in Hollywood Park and have been waiting for this development for a long time. I dont know what people are complaining about, that site is a 72 acre eye-sore that just sitting there. At least someone is willing to take the risk and clean up the site and do something constructive with it. If you drive over the tracks by the city college, you can see that the site is self contained. The way the plan looks, i dont see many people going in to Curtis Park proper. I personally am waiting to buy a custom home lot and lease some office space there..and maybe put my mother in the senior development as she is getting up there in age.

Phillip

Aug 4, 2009, 7:19 AM

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090801/A_NEWS/908010317

Downtown Stockton's Lexington Hotel checks out

By David Siders
Record Staff Writer
August 01, 2009 12:01 AM

STOCKTON - The Lexington Plaza Waterfront Hotel, a central part of Stockton's campaign to rebuild its waterfront and, when it opened in 2007, the most expensive private investment downtown in almost 20 years, is to close next week, the hotel said Friday, millions of dollars in debt and unable to withstand the real estate market's fall.

First Bank of Missouri, the bank foreclosing on the hotel, is likely to take possession of the hotel at a public auction Thursday.

The announcement deflated City Hall.

"I think everyone is in shock that this would happen at this juncture," Mayor Ann Johnston said. "It's just so frustrating. I'm just so frustrated that this kind of thing happens."

The hotel had been in receivership since summer 2008, and hotel and city officials had expected it to stay open despite foreclosure and an October petition for bankruptcy protection by the hotel's owner, Regent Hotel LLC.

Johnston said hotel Vice President Jeroen Gerrese told her a court-appointed receiver had ordered the hotel to close after the weekend. Gerrese did not return telephone calls for comment. A hotel official referred calls to the receiver, Steven Speier.

Speier said the hotel will remain open until Thursday's auction and that his involvement with the hotel will end then. A decision to close the hotel or not will be the buyer's, he said.

Johnston said Gerrese told her there are "a number of parties who are interested" in the hotel, though she said he did not name them. The hotel is in substantial debt. A legal announcement of the sale put that debt at $39.6 million. In a bankruptcy filing, Regent in May referred to an appraisal of the hotel at $22.3 million.

Regent said when it opened the hotel in December 2007, then a Sheraton Hotel, that it paid $62 million to build it. Its financing relied on the sale of condominiums at the hotel, the market for which evaporated during the foreclosure crisis. Contractors were left unpaid, First Bank foreclosed on Regent and a receiver was appointed.

Regent, a subsidiary of the company that built Stockton Arena and Stockton Ballpark, has claimed the bank unfairly withheld part of its $40 million construction loan. That litigation remains in court.

In its petition for Chapter 11 bankruptcy protection, Regent listed as assets the $22.3 million hotel and $368,113 in cash. It listed $49.3 million in claims against it.

Regent representatives did not return telephone calls for comment. Nor did First Bank.

Regent has maintained during its bankruptcy and foreclosure proceedings that the hotel is an operational success.

In May, the last month for which a record was available, occupancy at the Lexington was just less than 25 percent and the average room rate $97, according to a report by Speier in Regent's bankruptcy case. The hotel that month posted a $19,896 operating deficit, the report said. The previous month, however, the hotel had a surplus of $20,104, and from July 2008 through May hotel revenue was $4.9 million, better than expenses by $75,807, according to the report.

The hotel was built on waterfront property the city sold Regent for $1. Its construction also benefitted from a $500,000 city subsidy.

Johnston and City Manager Gordon Palmer said they expect it will remain a hotel.

"I expect that we'll have a new operator there," Palmer said. "I don't know when."

Johnston said it "makes no sense at all" to close the hotel before another operator can be found. She said Gerrese told her the hotel was canceling events worth hundreds of thousands of dollars.

"I just think it's so irresponsible of the receiver to close it," she said.

The hotel became part of Vantage Hospitality Group's Lexington Collection in November, months after Sheraton demanded it stop using its name. A Lexington spokeswoman, Melissa Scott, said Friday she did not know if the hotel was closing.

Palmer said the hotel's closure "shows what happens when the economy falls apart." He said, "I'm disappointed."

The announcement startled hotel employees. One of them, Anthony Henry, said there is a mandatory staff meeting Sunday to discuss the closure.

John Beckman of the Building Industry Association of the Delta said the hotel informed him it will not be open for events the BIA had planned to host there in September and November.

In an e-mail, the hotel's Amber Wright said, "I regret to inform you that I was advised Thursday evening the hotel will cease operation next week, thus making all contracts null and void."

Beckman said he was told the BIA will have its deposit refunded.

The hotel is the largest private investment in downtown since American Savings Bank built its $40 million headquarters in 1989. The bank building, purchased by the city in 2007 to eventually turn into a new City Hall, is now Chase Bank Plaza.

Contact reporter David Siders at (209) 943-8580 or dsiders@recordnet.com. Visit his blog at recordnet.com/blogs.

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SLO

Aug 5, 2009, 6:24 AM

So the pool was never finished? wow. It didnt say how many condos sold, any idea?

kryptos

Aug 5, 2009, 2:37 PM

wow. that is one of the most bland looking hotels I've ever seen. It looks like a plain office building, not really a hotel. its no wonder it was never at 100% occupancy.

Phillip

Aug 5, 2009, 10:30 PM

So the pool was never finished? wow. It didnt say how many condos sold, any idea?

I don't know about the pool or how many condos sold. The hotel opened 18 months ago and I don't think they'd leave the pool unfinished for that long. I'll guess the pool needed some repairs and management decided not to do them.

As for the condos, if furniture on the balcony is a sign of occupancy then not many have sold. But I don't know numbers.

Phillip

Aug 5, 2009, 11:33 PM

wow. that is one of the most bland looking hotels I've ever seen. It looks like a plain office building, not really a hotel. its no wonder it was never at 100% occupancy.

I agree the Sheraton/Lexington looks more like an office building (an office building with a lot of little balconies) than it looks like a traditional hotel, but I still like the overall look, other than the front entryway. The views from the rooms of the boats in the channel ought to be some of the best views in Stockton.

I think the hotel's biggest problem was location---that it was in downtown Stockton, which has an image problem, even more than downtown Sacramento. The better hotels migrated to north Stockton a long time ago, along with the shopping and restaurants. The northside is where people are used to staying in Stockton. There's not much near the new hotel besides the arena and ballpark, and some of the adjacent neighborhoods look a little sketchy.

I guess the city thought the new hotel/condo could help turn downtown Stockton's image around, maybe help catalyze a 'back to Downtown" movement like was happening in so many cities when the hotel was conceived. I don't blame Stockton for trying. Maybe if this had gone up 3 or 4 years sooner when things were still booming then the condos might have sold, the project could have "taken hold", maybe even attracted more development nearby. So bad timing/bad luck was involved too.

Another factor, I don't know how significant, is that the Sheraton/Lexington charged for parking. I heard $12/night but I'm not sure. People expect pay parking at nice downtown hotels but I've heard the Sheraton was the ONLY hotel in Stockton that charged for parking. For people who aren't used to pay parking that by itself can be a dealkiller.

I see some parallels between the Stockton story and some of the hotel proposals for downtown Sacramento, but I didn't post the article because I think that what happened to the Stockton Sheraton must inevitably happen to any new hotel built in downtown Sacramento. Sacramento isn't Stockton, every situation is unique etc etc.

Downtown Sacramento is a solid, established hotel market unlike Downtown Stockton. In Sac there's no question whether an upscale hotel can survive Downtown; it's more a question of how many, and if there's room for one more? I'm hoping there's room and that something goes up but we'll see how it all plays out.

innov8

Aug 7, 2009, 12:37 AM

WOW, and we thought Sac has a tough market. I'm sure the 24 arrests in
the "Beer Run" sting didn't help. It's also hillarious that some of the condos
were priced at over $1 million :haha: :haha: :laugh:

Lexington Hotel Auction Draws No Buyers

August 6, 2009

http://www.news10.net/news/local/story.aspx?storyid=64710&catid=2

STOCKTON, CA - With the opening bid set at $12 million, there were no takers when Stockton's Lexington Hotel went on the auction block Thursday morning at San Joaquin County Courthouse.

Dozens of former employees of the Lexington watched the auction proceeding, hoping for a buyer.

"We want to see who buys the hotel. Hopefully, we'll have jobs on Monday," said Frances Ochoa.

Ochoa and the others will have to keep looking for work after the auction attempt produced no bids.

The Lexington closed suddenly last week, putting more than 100 people out of work. The hotel sits next to Stockton's downtown arena and was a key element to the city's redevelopment.

An unusual feature of the building placed three floors of condominiums on the top. Some were priced at more than $1 million.

Hotel manager Jeroen Gerrese said that decision was a bad one.

"I'm not sure we would have done anything different on the hotel side. Would we have built the hotel with condos on top? The answer is obviously not if we knew than what we know now," said Gerrese.

Although down payments took place on more than two dozen condos, every one of those deals eventually fell through.

by tdaly@news10.net

News10/KXTV
Copyright 2009 / All Rights Reserved

sugit

Aug 7, 2009, 5:06 PM

This goes before the council next week. Here is the staff report (http://sacramento.granicus.com/MetaViewer.php?view_id=8&event_id=94&meta_id=182207) is anyone wants to read it

25-story hotel eyed for K Street
Developer has $91.6M in private financing for proposed 409-room inn
Sacramento Business Journal - by Mark Anderson Staff writer

Developer Bob Leach has big plans to build a 409-room hotel on K Street, despite the sluggish market for hotels.

Armed with $91.6 million in private financing, Leach plans to ask the Sacramento City Council on Tuesday to donate land, worth about $8 million, for his project. The 25-story hotel tower would rise out of what’s now a quarter-block hole in the ground on the K Street mall at 8th Street. The hotel’s parking garage would be built across the alley on 8th Street, with ground-floor retail facing L Street.

With timely approvals, the $136 million hotel project could open in summer 2013, when it’s likely to face a better economy and the return of Sacramento’s typically stable lodging market.

“The benefit for the city of this project is that it puts no cash into the project up front,” said Leach, developer of the Lake Natoma Inn in Folsom and Le Rivage Hotel in Sacramento.

In addition to Leach, the hotel’s team includes downtown businessman Mohammed “Moe” Mohanna, Sacramento’s Parkcrest Development Corp. and RCH Group, a real estate advisory firm in Roseville. The team has a commitment for $91.6 million in financing from South Korean Consus Asset Management. Financing is the most elusive thing facing hotel construction.

City staffers and Mayor Kevin Johnson met with Leach and his team last week. The meeting also was attended by a representative of Consus, who flew from South Korea, said Leslie Fritzsche, Sacramento’s downtown development manager in the Economic Development Department.

The Korean investors like the downtown location in the capital, as well as the city’s involvement in the hotel, which they believe adds another level of due diligence, said Sung-Min Park, director of project management with Parkcrest Development.

The hotel would be either a Renaissance by Marriott or a Hilton-branded property. It would feature an 18,000-square-foot ballroom and some meeting spaces, which would allow it to tie in to business at the Sacramento Convention Center at 13th and K streets.

At Tuesday’s Council meeting, the city will get a status report on the project and decide whether to move forward. The Council will not be asked to formally approve the project, which is still evolving, but the project team could ask the city to extend an exclusive right to negotiate, which precludes any other proposals for the land.

Rather than cash, the city’s subsidy for the project could come in the form of future room taxes and property tax increment money — as well as the value of the land.

To make the deal work, the city would contribute about half a block of land and buildings it has been assembling under its ownership for a decade.

The city-owned land has a current value of about $8 million. The city spent about $20 million assembling the land.

The hotel team is asking the city to return room taxes generated by the project back to the project for eight years, with a net present value of about $12.8 million. And the tax increment increase created by the project would go back into the project for 10 years, with a net present value of $4.6 million.

After construction is completed, the city could choose to buy the parking garage at the cost of construction, Leach said.

The hotel development team also is offering the city an equity stake in the property. That would have to be approved by the City Council.

Another very preliminary hotel development proposal calls for a limited-service, 165-room hotel at 10th and K streets. That project has no funding associated with it. The city could get a look at more details of that project in September, Fritzsche said.

The hotel market, both locally and nationwide, is hurting through this protracted recession. Hotel analysts at PKF Consulting in San Francisco forecast the lodging industry to stay sluggish for at least a couple years and then to slowly start growing. The growth in Sacramento is expected to be even slower because of all the new hotels in the past decade. Some of the worst lagging hotels locally are in suburban markets. Downtown hotels are tracking slightly better.

For many hotel owners, the recession has been running far too long. More than 2,000 hotels in California are in danger of defaulting on their loans, and experts expect hundreds to be foreclosed.

The Korean investors are not interested in buying an existing hotel at a steep discount. Consus wants to put its money into creating a new income-producing asset, Park said, adding that Consus is seeking a U.S. investment in order to diversify.

The Sacramento Convention & Visitors Bureau wants more downtown hotel rooms to attract business to the city center, said Mike Testa, spokesman with the bureau

But timing is also important.

“If it was going to be finished and opened in two weeks, that would be a big concern,” he said. “If it comes online in three years, that gives us a lot of time to sell it.”

The hotel would fall inside the Downtown Sacramento Partnership. Its board of directors includes two downtown hotel developers — David Taylor, who built the Sheraton Grand Sacramento Hotel, and Kipp Blewett, who developed The Citizen Hotel. Neither returned calls for comment.

“We are very excited about the possibilities of a new property there, but we have no details on the business terms or deal points,” said Kevin Greene, policy manager with the Downtown Sacramento Partnership.

The parking garage would be six stories tall with 372 parking spaces. Of those, 220 would be for the hotel, with the rest for public parking. The garage would be built so it could be expanded to have three stories of residential built on top of it. That residential component is not part of this project because neither high-end apartments nor condominiums are viable now or perhaps for the next five years or more, Leach said.

The ground floor around the garage will host retail shops at the sidewalk level. In addition to being a city mandate, the retail is a good idea, Leach said. *Let's hope they would actually get filled, unlike US Bank building.*

The new construction would replace one of the most derelict stretches of K Street. “We will have built this hotel with enough synergy around it to make sure the businesses around it survive,” Leach said.

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Majin

Aug 7, 2009, 6:08 PM

wburg

Aug 7, 2009, 6:09 PM

Of course, this project also involves a total of $34 million in subsidy costs (the developers consider the land value $14 million, plus $20 million in future tax forgiveness,) demolition of a city landmark and two half-blocks of Sacramento's underground sidewalks. The partners involved are a suburban hotel developer with no experience building towers, Consus, who has no experience building projects in the United States, and "Mo" Mohanna.

The equity stake in the project requires a 25% investment by the city, with a promise of a 10% return of the hotel's net cash flow (after operating expenses, debt service to Consus, and a preferred return for other investors.)

The city landmark, the Bel-Vue, was designed by architect George Sellon (same person who designed 926 J Street) and could easily be repaired to serve as rental or condominium housing--and, as examples like the 14th & R project have shown us, even in this market it's economical to do adaptive reuse--and they sell. The building also has street-facing retail (still in use!) and a great alley-scape, which would work well with the city's plan for alley activation, which will also be heard at next Tuesday's meeting. And because the building is already in place, it can be ready a lot faster than a new construction project--we could have more people living right off K Street in a year or two, instead of in a decade or two when some theoretical future residential project gets built on top of the parking garage.

I'm all for building something on 8th and K, but this ain't it. We deserve better.

wburg

Aug 7, 2009, 6:15 PM

That sounds awesome, K street really needs it. Besides the separate 6 story parking garage I see nothing but good things from this project (especially like the potential 3 storys of residential on top of the parking garage).

You might want to have a word with this guy, Majin--he seemed to have a different opinion.

Moe Mohanna

Dead on arrival.

Majin

Aug 7, 2009, 6:22 PM

Whoops, foot in mouth.

You have a good memory.

innov8

Aug 8, 2009, 3:50 AM

Agreed Wburg.

This current proposals just weak with this awful garage. This garage just like
the Library Tower garage at 8th & J Street where retails on J Street
hardly improved the over all street view of the structure that
sits above it. This is a huge give away of city subsidies to Mo who
just took the city to the cleaners in buying this same land from him just over a
year ago. I vote no with this design. If the cities going to give away $34 million
we should get a better design where the garage is hidden inside the structure
like has been done with many other towers in Sacramento.

snfenoc

Aug 8, 2009, 7:52 AM

I'm fine with the building and its location. A nice-looking hotel coming on line possibly when the market improves? Great. Street-level retail? Works for me. An opportunity for the parking structure to have condos built on top of it IF the residential market gets better? Awesome! I have a sledgehammer in my garage, I'll be happy to help demolish the Bel-Vu for that proposal. Yeah, old buildings are great and shit, but a 400+ room hotel filling a hole that could sit empty for years? I'll take it!

HOWEVER, it is absolutely ridiculous for our poor ass city to donate a plot of land worth millions and excuse the development from taxes for a decade. (I'm all for fewer and lower taxes, but even I think it's unreasonable to pay no taxes when everyone else has to pay them.)

If a project cannot get off the ground on its own merit, then it should not be built. That's how the free market should work. These subsidies have to end. We are becoming more and more dependent on handouts funneled through the government. That is scary, because it comes at a heavy price.....our freedom.

Vote Ron Paul!

wburg

Aug 9, 2009, 4:24 PM

innov8 and snefnoc: I encourage both of you to email your messages to the members of the City Council. My personal big argument is preservation of the landmark, but the issue of the ugly parking garage (bad urban design) and the $34 million subsidy (after they just gave him $18 million for the land!) are equally valid reasons why this project is a bad, bad idea.

innov8

Aug 9, 2009, 6:12 PM

Last week someone with the Mayors office asked my thoughts on the matter
so we discussed it for a bit. Councilmember Tretheway has also asked to speak
to me, so I'll do my best to illustrate how this is not only poor city planning but
an incredibly large handout for a city that's broke. These million dollar handouts
have now become the status quo for nearly all new developments in downtown.

Web

Aug 9, 2009, 8:26 PM

ltsmotorsport

Aug 9, 2009, 9:19 PM

Totally agree. Mo should prove he can build something on his own before he comes crawling back to the city.

tronblue

Aug 9, 2009, 11:13 PM

Rock on innov8. My vote is for K n 10th. I think at K and 8th business types that stay at the hotel will do just that stay in their room. Unless they are looking for some tail or crack and that might be a better location than 10th.

tronblue

Aug 9, 2009, 11:14 PM

Oh and seriously why has Mo not been run out of town.

kryptos

Aug 10, 2009, 4:38 PM

Whoops, foot in mouth.

You have a good memory.

if your still planning to run for Mayor, gotta watch the gaffes

NikeFutbolero

Aug 11, 2009, 3:28 AM

so what's going on with the lighting at 500cm? when are they going to finish?

snfenoc

Aug 12, 2009, 6:14 AM

I went to the City Council meeting tonight. I know you are all waiting for news on the 8 & K (& L) Street hotel (& parking garage) proposal, so here you go.

It has been..................................

............continued until the 25th. Ha ha ha ha ha ha ha! Fooled you! OK, settle down. Don't shoot the messenger. If you want to place blame, look no further than the development team. They requested the delay. Perhaps they needed more time to develop their silver tongues. It can't be easy to trick the Sacramento City Council into supporting such a dumb proposal. :rolleyes:

I would have left as soon as the delay was announced, but I was bug bombing the house, and I needed to be somewhere else for four hours. Might as well watch a council meeting. It was actually an interesting meeting. A few notes:

1) The Hotel Berry could be on track for renovation sooner than we thought. Some of you may remember about 6 months ago the whole deal fell apart. However, another potential source of financing ($10 million) has been found. Council approved the SHRA to go after that funding. The council also approved about $1.5 million in tax increment gap financing for the project - if it is awarded the $10 million.

2) There was some discussion on the development of alleyways in the grid.
Nothing new to report. It looks like there are three separate demonstration projects: 1) A small residential project on a part of one alley; 2) a "Restaurant Row" on a part of another; and 3) improving the lighting, paving and overall appearance of yet another alley to make it more appealing to pedestrians. I would not call these projects impressive. However, I do think they are important. They are little experiments, so the city, property owners and developers can figure out how best to develop alleyways. Councilwoman Sheedy threw a mini shit fit about midtown being the focus of the alleyway experiments. She wants an alley in down town (her district) included in the experimental process. I guess down town doesn't get enough attention from the council.

3) I met wburg. I cannot believe it. He actually seems normal. I hesitated to introduce myself, because I feared the universe might implode as soon as our hands clasped. However, that would almost certainly cause an indefinite delay in the council bending the entire city over and allowing Moe Mohanna and his team to f**k us all in the collective ass. Sadly, the universe remained intact after I shook wburg's hand, so we'll just have brace ourselves for a good raping two weeks from now.

wburg

Aug 12, 2009, 8:56 AM

A handshake isn't quite enough to start the reaction you're thinking of. But in two weeks, if we both go to the city council meeting and both of us tell the city council that the Mohanna plan is a horrible idea, for entirely different reasons, ideally along with innov8 and anyone else who thinks this is a bad idea, and thus are teaming up for a common goal, a universal implosion is quite likely. Especially if the council is impressed enough to agree with us (for whatever reasons) and turns the project down.

btw, Sheedy's district is North Sac/Del Paso Heights, not downtown (that's Tretheway's district.) When the idea of alley activation was first raised, about five years ago, the discussion was very much about alleys downtown--especially the alley behind Greyhound along the 700 block of K/L. At some point the discussion got shifted to Midtown.

And you seem pretty normal too...for a libertarian, that is.

Majin

Aug 12, 2009, 5:19 PM

^^ Nimbys

Mr. Ozo

Aug 12, 2009, 6:38 PM

wburg

Aug 12, 2009, 9:08 PM

I'll toss one out there: the Alley Between K and J and 9th and 10th, behind what is now the Citizen Hotel. Everyone of those buildings has a basement with Alley Entrances. I went to basement shows under 926 J street for years back when it still had the Joe's Style Shop sign. It's such a cool building that was gutted and no one has rented for 5 years. We paid 160 bucks a month for a 12by20 room for band practice back in 2000-2002. I'm sure they want 20 times that now, and not a soul actually uses the building, which is sad because it's like from 1870 or something. Besides the Citizen most of the buildings are cheap restarants and bail bonds. Many fond memories of walking through the alleys around there.

Point is, if the city somehow lossened up, you could have some really cool basement bars or Jazz lounges, of which San Francisco has scores of. You could never bring them up to fire or ADA standards without destorying the character, which is probably why they remain under used.

That's where the State Historic Building Code can help: there are exceptions to many modern building codes for historic buildings. They still emphasize life safety and access, but there are ways to simplify that process. That's one of the benefits (in addition to things like tax breaks) to reuse of existing buildings.

The alley you're talking about is one of my favorites too--a friend has lived on that alley for a decade or so, and one thing we often say about it is that from that alley, Sacramento really looks like a big city, with gritty old buildings in the foreground and shiny towers in the background. We still have a few like that, but few that provide such good examples.

K Street already has one basement bar (Marilyn's on K,) and there are some in Old Sacramento, but yeah, we could certainly use some more--and we used to have A LOT of bars below ground level (specifically, during the period when bars were illegal!) I saw some great shows in the old Joe's Style Shop (my personal favorite was the Melt-Banana/Comets On Fire show) and wouldn't mind more live music venues in that neck of the woods. Action (including light and activity and thus SAFETY) in the alleys would add a great deal to K Street, despite Councilmember Pannell's comment that we shouldn't let alley activation distract us from K Street. In fact, the two could work together! Right now, alleys are scary and dark and smelly, and present a barrier to night-time foot traffic on K. Lit up, clean and occupied, they would stop being a barrier and become an invitation to K Street.

tronblue

Aug 12, 2009, 10:34 PM

Yea, make sure to always say Jazz lounge or the ones listed below and not punk or hip-hop lounge to the council. Jazz has always been an excepted highbrow art form not associated with drugs, immorality, or people of lower class systems. Also, do not try to influence anyone to put an all-ages venue down there.

Words like wine, steak, sushi, social, babyboomer, ultra, boring, just another, more of the same, cougar den, the tool shed, overpriced, sunburned blondes, and Bro's can only be associated with lounge. I might be missing some. Oh Elitists Lounge. I think id go there actually.

Mr. Ozo

Aug 12, 2009, 10:39 PM

Jazz does sound better on paper....but I don't see Jazz bands. The city has shut down numerous venues Downtown, including Junta which ruined Charles Twilling, leaving him 100,000s in debt. Gee what's there now on 700 K street: nothing They shut down Joe's Style Shop after the guys running the ground level called the cops a bunch of stupid pigs...the next week the building was condemned and we were all evicted. That was stupid of the tenants, but what's in the building now: nothing. It used to be artists and musicians sharing cheap creative space. Apparently use the words Euro Lounge and they roll out the Golden Carpet.

Wburg: I was at that show! I didn't know who Melt Banana was but they let me in free because I had a room upstairs. Crazy show.

wburg

Aug 13, 2009, 2:24 AM

I put on a couple of shows at Joe's in 2000-2001, it was a neat space even if utterly lacking in the air conditioning department.

I'm not much of a jazz fan either, I think downtown needs more rock & roll clubs--rock music is old-fashioned enough that its original fans are now in their 70s--and what better place than K Street? It's a perfect spot for multiple entertainment venues, with places to eat in between.

Charles just ended up hitching his wagon to the wrong horse. He assumed that Mo would win the battle over what to do with the 700 block, rather than Zeiden, but the city went with Zeiden's plan and Charles got the boot. As the folks renting Joe's Style Shop found out, getting on the city's bad side is inadvisable for a live music venue.

Jazz has always been an excepted highbrow art form not associated with drugs, immorality, or people of lower class systems.

I assume you're being sarcastic here...one of the earliest nicknames for marijuana was "jazz clover" and it was most definitely associated with immorality, lower-class folks and drugs...back in the 1920s to 1940s, when Sacramento had some smokin' jazz clubs along the old Black neighborhood on M Street--in some circles, we were known as the New Orleans of the West. Obviously, music has changed over time, and newer music forms claim the title of "corruptor of youth," but the spirit is the same. I think it's high time we reclaimed that title...all we need is a place for a 21st century Bourbon Street downtown. With blues on the street, jazz in the alley, hip-hop down the lane and punk in the basement!

tronblue

Aug 13, 2009, 3:30 AM

OZO: Man how could I forget Euro.

Wburg, when am I ever serious? You have some quotes? I agree the spirit is in the same realm.

Phillip

Aug 13, 2009, 5:33 AM

I went to the City Council meeting tonight. I know you are all waiting for news on the 8 & K (& L) Street hotel (& parking garage) proposal, so here you go.

Thanks for the update, snfenoc. I wanted to go but I was out of town. Glad I didn't rush back for nothing. Was anyone from the hotel development team there (Mohanna, Leach, Consus)? Just curious.

It's surprising the developers want a delay now, since just a couple weeks ago they were insisting that Sacramento act quickly or risk losing the Consus investment altogether. Without some revision I don't think the current proposal (free land, no taxes, city subsidy, tear down Bel-Vue, detached parking garage) will sound much better in a few weeks.

Maybe in light of current economic realities--hotel demand down, rates falling, Sacramento broke--the development team is reviewing the scale and scope of what's possible right now.

Consus says they have $91 million to invest in a Downtown Sacramento hotel. Without large subsidies that's not enough to build a 400-room highrise hotel. It's about $30 million more than they need to build a 150-room hotel though, even if they pay back the $18 million that Sacramento gave to Mo for the land. (The competing 10th and K proposal called for 165 rooms at $43 million.)

$18 million land + $43 million hotel = $61 million

A smaller hotel wouldn't require a huge separate garage either or tearing down the Bel-Vue.

I still think 10th & K is a better hotel site than 8th & K. Maybe if Consus has to pay for their land (wherever they build) they'd consider buying the 10th & K site and building a 150-bed hotel there? If 10th & K works then another hotel could be built at 8th & K later. It seems like the 8th and K location is being pushed because the land might be gotten for free, rather than because that's the best possible location for a new hotel.

Would a new unsubsidized 150-room hotel be economically viable in downtown Sacramento now, in any location? I don't know. But if a 150-room hotel isn't viable then a 400-room hotel won't be either.

snfenoc

Aug 13, 2009, 6:05 AM

Was anyone from the hotel development team there (Mohanna, Leach, Consus)?

I only know what Moe looks like, and I did not see him. As for the others, I can't say; but I don't think they were there. The item was continued at the development team's request. So unless one of the members was bug bombing his house, I doubt he'd have a good reason to sit through a 3 hour city council meeting.

Would a new unsubsidized 150-room hotel be economically viable in downtown Sacramento now, in any location? I don't know. But if a 150-room hotel isn't viable then a 400-room hotel won't be either.

I'm not sure if it works like that. If I were an investor with lots of money (:lmao: :lmao: :lmao: :lmao:), I can say I'd probably be more willing to put $91 million into a heavily-subsidized, 409-room hotel than I would be to put $60 million into a non-subsidized, 150-room hotel. It seems the chance for a large return could be a lot higher with the bigger, subsidized hotel.

Often on this forum/peanut gallery, we tend to think developers and investors are idiots. Some are (Saca and Nassi being shining examples). But many are very shrewd. They know what they are doing. If they want to tear down a building we think is historical, or if they want to build bigger than we think is possible, they may have a good reason. In regard to this proposal, the development/investment team has 34 million reasons.

wburg

Aug 13, 2009, 10:52 PM

Often on this forum/peanut gallery, we tend to think developers and investors are idiots. Some are (Saca and Nassi being shining examples). But many are very shrewd. They know what they are doing. If they want to tear down a building we think is historical, or if they want to build bigger than we think is possible, they may have a good reason. In regard to this proposal, the development/investment team has 34 million reasons.

Keep in mind we're talking about Mo Mohanna here...and his previous partner for a project on that lot was Saca, before even Saca dropped out and they invited Consus, a firm with zero experience building in the US. I have met enough developers to know that many are very shrewd. But I'm not sure that Mohanna would fall into that category. His main experience is in buying old buildings when they were out of fashion, renting them and not fixing them, and occasionally selling them to people who do know how to build skyscrapers (the best-known case being his sale of the old Clunie Hotel to the Benvenutis to build the Renaissance Tower.) I don't think he has any experience with actually building towers himself.

My impression is that Mohanna considers himself entitled to the land, even after he got a fat check from the city when they bought it from him, and thus has "dibs" on what gets built there.

Web

Aug 14, 2009, 1:35 AM

Moe for Mayor!

snfenoc

Aug 14, 2009, 2:55 AM

It seems like Mohanna has made a lot of money off of Sacramento property. I think that's pretty shrewd.

Keep in mind I'm not saying that developers are shrewd because they have the city's interests in mind. I'm saying they are shrewd because they have their own interests in mind. If they can make money with adaptive reuse, they'll do it. If they can make money with new construction, they'll do it. If they can make money by building bigger, they'll do it. If they can make money with 34 million in subsidies, they'll do it.

Web

Aug 14, 2009, 4:54 PM

wburg

Aug 14, 2009, 5:16 PM

Majin

Aug 14, 2009, 5:22 PM

Republicans respect that form of shrewdness.

innov8

Aug 14, 2009, 9:28 PM

Being shrewd separates those with common sense and those that don't. Moe unfortunately
has more of this than our current city council.

shrewd
Pronunciation: \ˈshrüd, especially Southern ˈsrüd\
Function: adjective
Etymology: Middle English shrewed, from shrewe + 1-ed
Date: 13th century

synonyms shrewd, sagacious, perspicacious, astute mean acute in perception and sound in judgment. shrewd stresses practical, hardheaded cleverness and judgment <a shrewd judge of character>. sagacious suggests wisdom, penetration, and farsightedness <sagacious investors got in on the ground floor>. perspicacious implies unusual power to see through and understand what is puzzling or hidden <a perspicacious counselor saw through the child's facade>. astute suggests shrewdness, perspicacity, and diplomatic skill <an astute player of party politics>.

http://www.merriam-webster.com/dictionary/shrewd

innov8

Aug 14, 2009, 9:40 PM

It sounds like this is now all about the money and not about how the
proposal will actually funtion once built. No urban planning guidlines have
been used to this point and as wburg has said "this project hasn't even been
submitted to city staff, nor has city planning staff or Design Commission
been shown the plan to provide comment. They seem to be doing things backwards".

Bob Shallit: Downtown hotel deal still a work in progress

By Bob Shallit
http://www.sacbee.com/shallit/story/2110592.html
Aug. 14, 2009

The fate of a proposed 25-story downtown hotel won't be determined for at least another 10 days.

Developer Bob Leach was scheduled to appear before the City Council this week, asking for free land and tax rebates for a full-service, 409-room Marriott hotel at Eighth and K streets and an adjacent parking garage.

Instead, he asked for a delay until Aug. 25 after glimpsing a city staff report he considered critical of the financing plan for the $137 million project.

"I was told a neutral report was coming out," says Leach. "But it was anything but neutral. They slammed it."

That's not the case, says Assistant City Manager John Dangberg.

He says the city is trying to work out a financing deal for the project, but staffers have concerns about some deal points, including a proposal that $15.4 million in room taxes be rebated to Leach's group during the hotel's first eight years of operations.

Leach's development group - backed by a South Korean company that he says has pledged $91.7 million in financing - is also seeking a $4.7 million rebate of tax increment funds and city-owned land valued at $14 million.

Any deal could come down to how much equity the Leach group is willing to give the city in exchange for its support.

"If we're going to put up (more than) $30 million and take on some risk, we want to share in the upside," Dangberg says.

Leach says he's willing to sweeten the terms.

"We're going to take a couple of weeks and fine tune it," he says of his team's proposal. "I think they'll be impressed."

Phillip

Aug 15, 2009, 12:51 AM

If I were an investor with lots of money (:lmao: :lmao: :lmao: :lmao:), I can say I'd probably be more willing to put $91 million into a heavily-subsidized, 409-room hotel than I would be to put $60 million into a non-subsidized, 150-room hotel. It seems the chance for a large return could be a lot higher with the bigger, subsidized hotel.

Two separate issues here: 1) large hotel vs small hotel and 2) subsidized vs. not subsidized.

I want to put aside the whole subsidy question for a second and focus on the hotel's size a little more because the hotel's size speaks to its viability, whether it's subsidized or not.

Conventional wisdom puts a hotel's breakeven point somewhere around 65%. That's a huge oversimplification and doesn't take into account all the differences among hotels---full service vs basic, how much debt, downtown vs suburbs, etc. Still 65% is the figure often used for quick armchair analysis, and using it here:

A 150-bed hotel needs about 98 guests per night on average to break even.

A 400-bed hotel needs about 260 guests per night on average to break even.

If Sac's downtown hotel market only grows by 125 guests (and some would call that an optimistic projection since occupancy is still falling) and all of them stay at a new 150-bed hotel it will enjoy 83% occupancy and be profitable. If the same 125 guests stay at a new 400-bed hotel it will only be 31% occupied and headed for default. The larger hotel still has to buy furniture, pay heat and electric, constuction loan interest etc on all of the empty non-revenue producing rooms.

True though, if the market grows by 400 guests instead of 125 guests, then the larger hotel would be much more profitable than the small.

OTOH, you can expand a 150-bed hotel later if it's too small, or build another. It's tough to fix a too large hotel after the fact.

Ghost of Econgrad

Aug 15, 2009, 8:14 PM

innov8

Aug 19, 2009, 4:35 AM

Keep in mind we're talking about Mo Mohanna here...and his previous partner for a project on that lot was Saca, before even Saca dropped out and they invited Consus, a firm with zero experience building in the US. I have met enough developers to know that many are very shrewd. But I'm not sure that Mohanna would fall into that category. His main experience is in buying old buildings when they were out of fashion, renting them and not fixing them, and occasionally selling them to people who do know how to build skyscrapers (the best-known case being his sale of the old Clunie Hotel to the Benvenutis to build the Renaissance Tower.) I don't think he has any experience with actually building towers himself.

My impression is that Mohanna considers himself entitled to the land, even after he got a fat check from the city when they bought it from him, and thus has "dibs" on what gets built there.

I got to speaking with Councilmember Tretheway today, I learned three
things about the 8th & K St., proposal.

1) The Bob Leach and Moe team are not even close to getting the
blessing from the council on the proposed financial terms submitted by the
developers nore the hotel design. Neither has any substance that the city
will take seriously.
2) On Aug. 24th Moe Mohanna will no longer be part of Bob Leach’s
development team. The contract agreement that they both agreed to some
time ago will end on the 24th only if the city doe’s not enter into Exclusive
Right to Negotiate on this project.
3) What ever is built at the 8th & K/L St., site, the facade of the
Bel-Vue will be apart of the project. The interior of the buildings to far gone
to be cleaned up and used again, so as of now, the city wants to at least keep the façade.

ltsmotorsport

Aug 19, 2009, 5:34 AM

Well, good news all around then.

wburg

Aug 19, 2009, 8:46 PM

I got to speaking with Councilmember Tretheway today, I learned three
things about the 8th & K St., proposal.

1) The Bob Leach and Moe team are not even close to getting the
blessing from the council on the proposed financial terms submitted by the
developers nore the hotel design. Neither has any substance that the city
will take seriously.
2) On Aug. 24th Moe Mohanna will no longer be part of Bob Leach’s
development team. The contract agreement that they both agreed to some
time ago will end on the 24th only if the city doe’s not enter into Exclusive
Right to Negotiate on this project.
3) What ever is built at the 8th & K/L St., site, the facade of the
Bel-Vue will be apart of the project. The interior of the buildings to far gone
to be cleaned up and used again, so as of now, the city wants to at least keep the façade.

Interesting feedback, thanks for sharing it, but those comments also raise more questions.

About #2: Does Mo Mohanna not being part of the development team mean that he will no longer be an investor, or that he just won't be part of the development team? If he is no longer an investor, who will be taking his place to provide his portion of the money for the project? If it just means his name won't be on the application, but we're still getting into financial bed with Mo, does that make any real difference?

About #3: Who assessed the building's current condition, and is that assessment available to the public? Does "facade" mean the exterior of the building as a whole (features like the alley facing) or just the front wall facing 8th Street? Considering that the interior of the Bel-Vue's ground floor is still currently occupied by a tenant, and the residential area upstairs was occupied until last year, how can they say it is "too far gone" when even projects like the Maydestone (with extensive fire damage, vacant for many years) are salvageable with interior rehab?

Is the city exploring tax credits, Mills Act implementation, or other preservation incentives for developers that would make restoration of the building more economically appealing? And has either the Preservation Commission or preservation staff been allowed to weigh in on the project yet?

Surefiresacto

Aug 20, 2009, 4:01 PM

Hammer time
by Bob Shallit
Published: Thursday, Aug. 20, 2009

Old Sacramento's most conspicuous hole in the ground is finally getting filled.

Foundation work began last week at the former sites of the side-by-side Ebner and Empire hotels on K street between Second and Front.

A historic replica of the 1850s-era buildings should be completed and ready for leasing in a year, says Dave Scurfield, part of the project development team.

Planned uses include basement parking, ground-floor retail and two stories of office space.

"This isn't the most ideal time to start a project," Scur- field says in reference to the slow economy. "But we felt we had an obligation to get started."

Plans for the site have been in the works for decades. One earlier development group hoped to restore the Ebner, but that didn't prove feasible and it was leveled in 2003, leaving a gaping hole on one of Old Sac's most vibrant blocks.

The current development team – which includes Johan Otto, Steve Ayers and Ben Mortel as well as Scurfield – faced several delays before finally getting under way on the $6 million project, financed in part with redevelopment money.

Scurfield, whose father developed sites in the area, says it's rewarding to "make a contribution to getting Old Sacramento finished and having an investment in my old backyard."

Unforunatley there is no residential in this project.

202_Cyclist

Aug 24, 2009, 2:38 PM

When the housing crash ends, how will Sacramento grow?

By Jim Wasserman
Sacramento Bee
Published Monday, Aug. 24, 2009

http://www.sacbee.com/business/story/2133284.html?mi_rss=Business

Some day this housing crash will end. Judging from history, Sacramento's ranks of developers will snap right back into growth mode – building a fresh wave of new homes.

The big question: Will this new wave of growth create a more urban, compact Sacramento, as many community activists and politicians hope? Or will it follow the time-tested pattern of past booms in the late 1970s, the second half of the 1980s and the first half of this decade, pushing ever-larger homes farther into farmland?

http://www.sacbee.com/business/story/2133284-a2133318-t2.html

Perhaps it's easiest to expect more of the same. Suburban development has for decades been Sacramento's main growth industry, aside from state government.

During this decade's housing boom, builders constructed 156,000 homes, condos and apartments in the Sacramento region – largely on empty land in suburban cities. Much of this last wave of housing on former farmland has proved especially vulnerable to shredded values and foreclosures – a fate far less common in established neighborhoods closer to jobs.

Still, signs of change were starting to emerge even before the housing market fell apart. Loft-style housing projects were popping up all over Sacramento's central city. And construction had begun on two 53-story condominium towers on Capitol Mall.

So might visions of mid- and high-rise living in downtown Sacramento take off where they left off – just as it seemed the city was reaching a new level?

Looking ahead, analysts believe the next wave of residential growth in the Sacramento region – perhaps still several years off – might be different. It's likely to roll in with expensive gasoline, higher home energy costs and lenders' continued insistence on tight credit.

State and federal policies governing the flow of public money increasingly favor more compact, transit-friendly types of development. And as baby boomers age, they are expected to move down to smaller housing units.

All these forces could mean more people in the next wave of growth will live in smaller homes, and more may live downtown. But no one should underestimate the ethos of the Central Valley: People here like yards and space.

Around town, people who build houses and those trying to shape the market think daily about what the Sacramento of the future will look like. Here are some of their thoughts:

Industry tracker

Greg Gross flips open a laptop and counts the lots planned for houses, apartments and condos in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.

His tally: 106,000.

The number is staggeringly ambitious in a housing crash where builders will be lucky to sell 4,000 homes this year. It speaks to the bullish nature of Sacramento land developers.

Around 91,000 lots are on vacant land and called future inventory, just "cows walking across the field," said Gross. He is a regional consultant with Houston's Metrostudy, advising developers and builders on what buyers want.

These lots are where the capital region's future will be written, assuming it follows the suburban development patterns that have guided the region since World War II. Many could remain undeveloped if patterns change, or could be filled with smaller homes or multi-family housing.

Gross' opinion: "The majority of folks are going to raise their family in a single-family home. There are not millions of people looking for a condo."

Giant publicly traded builders that rule this market will want that, too, he said. Builders need empty land to mass produce houses for a region projected to capture about 9 percent of California's job growth until 2050 – and possibly double its population to nearly 4 million.

Yet the consultant issues a caveat. What people want may become limited by constraints on resources, including water shortages and costly energy.

Downtown developers

Scott Syphax and Steve Goodwin are banking on such limits. They plan 2,900 mid-rise homes in an old industrial area north of downtown Sacramento. It's called Township 9.

Their vision wouldn't raise eyebrows in Vancouver or San Francisco. But nothing like it has been done in Sacramento. Next door at the railyard, Georgia's Thomas Enterprises plans to do it even bigger – 12,000 homes on 240 acres.

Syphax, chief executive of Township 9, called it "a project that represents our future."

"A lot of stakeholders other than us are interested in making sure it happens," he said.

Those interested parties include the state of California. It is providing $30 million to redevelop Richards Boulevard for a new transit stop and other street work. (The railyard got $78 million for similar infrastructure.) Sacramento Regional Transit fast-tracked $37 million to open a northbound light rail station at Township 9 in October 2010.

In the next wave of Sacramento's growth, Syphax said, economic incentives will go to land-efficient transit-focused projects like Township 9. Builders at empty suburban edges will face "a growing patchwork of mandates." He cited Assembly Bill 32, which requires the state to reduce its carbon emissions, and Senate Bill 375, which ties transportation dollars to compact regional growth plans.

Township 9 President Steve Goodwin acknowledges Sacramento's long lean toward the suburban lifestyle. But he says cities such as Portland, Ore., "that are farther along in downtown development" show an accelerated acceptance when "people see that lifestyle in practice.

"I think in the next cycle Sacramento is positioned to take advantage of all the research and development that's been done in other cities," he said.

Wall Street home builder

Chris Cady has built single-family homes in the capital region for 13 years as Sacramento division president of Michigan-based Pulte Homes. Having just merged with Centex Homes, Pulte is the region's largest home builder, accounting for almost one in five sales of new homes.

Cady looks at a next wave of growth in the context of now.

"We're kind of set for what we can deliver today. It's in the west Rosevilles and the Elk Groves of the world," he said.

But there's already a change from the last housing wave that planted so many large homes on empty land. Small and basic is back with a price tag around $250,000. Lots are smaller, and even growth magnets like west Roseville now plan stores and town centers into the residential mix.

The new downsizing will especially fit a next wave of empty-nest boomers and Generation Y approaching its key buying years, said Pulte marketing executive Donna O'Connell.

The region's largely flat, open geography has plenty more room for this single-family scenario. When west Roseville is full, Cady anticipates a repeat on 14,000 new lots in neighboring Placer Vineyards – miles from any older city center. It's already been approved by the Placer County Board of Supervisors. But it's challenged by lawsuits raising the sort of air quality and environmental issues cited by Syphax.

Government watchdog

Quickly in a conversation about the next wave of new homes, Michael McKeever says wait a minute: Change is already revealing itself.

As executive director of the Sacramento Council of Governments, McKeever said 60 percent to 70 percent of recent new housing across the region and much now in the pipeline is on "small lots" of 5,000 square feet or less, or is attached, as in condominiums and townhouses.

In 2002, that percentage was a long-range planning goal that the region hoped to meet by 2050 with its new "blueprint" growth plan. Then, just 20percent of new housing was on a small lot or attached.

Rising land prices during the boom forced early change.

"It's clearly dramatically higher than it was when the blueprint was adopted, and in the vicinity of what we hoped would be the average for the next 45 years. That's a pretty significant change," McKeever said.

He cited a 2009 U.S. Environmental Protection Agency report noting a dramatic Sacramento shift toward housing growth in its central city and core suburbs. The EPA ranks the capital region among "leaders in promoting growth management and redevelopment," alongside Denver, Portland and Atlanta.

The report on residential construction says 25 percent of the Sacramento region's 2007 building permits for homes were in developed zones typically referred to as "infill."

That compared with just 9 percent from 1995 to 2000.

"Trends locally and some national and state data make me feel like there's change afoot here," McKeever said. Rising gasoline prices will likely cement an inward trend during the next wave, he said.

"It doesn't mean there's not a plan for master-planned greenfield communities (built in open country). But it will be different than before," he said. "We put the kind of product Pulte is selling in west Roseville with sort of the suburban model of smart growth. And Township 9 is the urban model of smart growth," he says. "They are both very important. We need a lot of both."

sugit

Aug 25, 2009, 11:27 PM

The 8th and K hotel goes before the council today (http://sacramento.granicus.com/MetaViewer.php?view_id=8&event_id=70&meta_id=182965). Looks like the developers are offering 40% of cash flow instead of 10% after certain expenses (est 11M over 10 years), and 40% of the sale value at sale time in approx 10 years. (est 30M).

They are now asking for 50% of the TOT for 14 years, instead of 100% for 10.

Looks like they are going to continue to hammer this out for 90 more days. In the mean time, they will prepare an RFQ, as to not waste time if this goes nowhere. If an agreement is not reached in 90 days, the RFQ goes out.

An interesting note though is that Corus has not given a formal commitment with completed T&Cs.

innov8

Aug 26, 2009, 4:19 AM

Tonight the 8th and K St., proposal got the councils blessing to sort out
things over the next 90 days in regards to RFQ’s. The 10th & K hotel
developer was also there at tonight’s meeting and told the council
that if they extended the current 8th & K proposal an additional 90 days,
they would see that as a sign to drop out of proposing their hotel project
because the market could not support both projects. There is also a chance
that we might not see either hotels built on K Street. If after 90 days
Bob Leach and company get rejected by the council and the other proposal
at 10th & K has already walked away… we could be left with zilch on K Street.

William, you were the best speaker there and really summed it up when you
said “the project asks to much and gives to little”. Man, I was impressed… :cheers:
to bad it did not sway the council. Let’s see how things go from here, there
better be some huge changes in regards to parking because this current proposal sucks.

snfenoc

Aug 26, 2009, 6:37 AM

Estimated cash flows and sale prices are not enough to justify the city paying for this project. Whether government reaps a return or not (at best, I think it will probably just break even), it simply shouldn't be in the business of business. I say, sell the property to the highest bidder and let the chips fall. It shouldn't have gotten involved in the property swap between Zeiden and Mo in the first place.

I was at the meeting tonight. wburg and the guy who went before him both made good cases in favor of keeping the Bel-Vue. Although it looks like the council supports continuing the negotiations between Bob Leach/USA Hospitality and the city, at least a few members seem concerned about the old SRO's fate. Waters would like the facade saved (not really adaptive reuse, but it's something). Cohn and Tretheway would like Leach to investigate saving the entire building, either as a separate project or incorporating it into the hotel project (they support at least saving the facade). Leach seemed amenable. However, I'm not sure if this will lead to anything significant on the adaptive reuse front. There seem to be a number of issues: I'm pretty sure there is a height limit of 300 feet on the 800 block of K street, so adding more floors above street level seems unlikely. Plus, the cost of adding 4-6 floors of parking (whether it's above or below street level) to an already 23-story tower may be higher than building a separate structure. Also, I think the development team plans to sell the parking facilities to the city sometime in the future, so it may be better to have the parking (and street level retail) in a separate building rather than have the city and some other interest own parts of the same building. Keeping those issue in mind, where will the parking go if the Bel-Vue is saved? You can't have a 409-room hotel with no parking.

Sadly, I think the 90-day extension may have killed the 10th and K proposal - even if 8th and K loses steam in that period. As many people have said, a 165-room hotel seems more in tune with the market right now. It may not be perfect (it should have a restaurant, or nightclub or something on the ground floor), but it was better than a heavily-subsidized, Bel-Vue killing, out of tune with the market hotel. Oh, well.

Earlier in the evening a disappointed and visibly upset Councilman Cohn mentioned the 65th Street Transit Village. According to him it is dead and the property shall remain a strip mall. The project has tried to get federal funding for at least two cycles and has been denied each time. Another one bites the dust. Sometimes I really hate this city. I'm tired of having my hopes dashed. I guess the lesson is simple; don't hope for anything.

wburg

Aug 26, 2009, 7:51 PM

Saving the facade is a joke--it still means a parking structure, with a dead building's torn-off face glued to one side. The facade of the Esquire is still the entrance to a movie theater (even if it's not the same building.) The Public Market building maintained two walls and a roof truss but the building is a public space and an integrated part of a bigger project. The Bel-Vue facade on a parking structure misses the whole point of adaptive reuse--no eyes on the street, no downtown residents, no retail on the ground floor, no historic building (facades aren't eligible by themselves) and the total loss of embodied energy and historic material.

Incidentally, the Bel-Vue was never an SRO: it is an apartment building. That's a plus, because unlike the Berry, it doesn't have low-income retirements attached to the title--they could be market rate rental apartments or for-sale condos.

tronblue

Aug 26, 2009, 11:40 PM

Good to see there are so many forward thinkers on the council. Seems like the names change but the same level of logic has been used in the last 50 years. I'm sure some of these morons lost a lot of sleep over the 8/k or 10/k decision.

I feel like the 8th and K proposal is like this. Some slick weasel comes to my house and cons me into letting him have one bedroom and he bills me for repairs that were not really needed since the room is intact and completely livable. Next he rents it out and I don't see a dime. Mean while I'm stuck trying to get my head out of my ass. And the only foot traffic increase on the street and neighborhood is from hookers and escorts due to the increase in babyboomer suits on business away from home.

wburg

Aug 27, 2009, 4:59 AM

One thing I noticed: Tretheway, Cohn and Waters spoke, but the rest of the Council (and the Mayor) didn't weigh in at all. Normally on big projects they will at least offer some feedback.

Web

Aug 27, 2009, 6:00 AM

One thing I noticed: Tretheway, Cohn and Waters spoke, but the rest of the Council (and the Mayor) didn't weigh in at all. Normally on big projects they will at least offer some feedback.

The mayor needs his 200 volunteers to speak......:haha:

tronblue

Aug 28, 2009, 1:06 AM

They cashed their buyouts

wburg

Aug 29, 2009, 12:07 AM

:previous:

http://i10.photobucket.com/albums/a132/mz1613/16thNSt98condo6000sfretailEMJIRe-1.jpg
CADA gave a presentation on this building yesterday; apparently they are proceeding and should break ground in 2010. The building is a 9-story, 110-unit project (technically 8 stories, but the penthouses will have a mezzanine level) with about 5000 square feet of ground floor retail. The retail portion will front 16th Street, with a parking entrance for cars (and another for bikes) on the N Street side. The garage takes up the second floor, floors 3-8 are residenital. The project will include a 1300 sf community room and a rooftop garden above the garage, with private patios and outdoor community space.

For the retail component, the owners are looking for "boutiques or specialty stores (e.g. books, music/videos, fitness)" rather than restaurants, which makes sense to me because there are already a lot of restaurants nearby, many of which are struggling.

The units range from 660-975 sf for the 76 1-bedroom units, and 900-1300 sf for the 34 two-bedroom units. The project market rate units are priced to be attractive as entry-level, workforce housing units that should be attainable by state employees and office workers in downtown Sacramento. The workforce housing affordability projected will provdie 93 of the units at $325K-399K, which is affordable at income levels of 135-150% AMI, with the remaining 17 penthouse units priced between $480,000 and $585,000. Spaces in the parking lot will be optional: buyers can choose to buy 1, 2 or 0 parking spaces in the garage. There will be a total of 136 parking spaces.

There is currently a 14 unit apartment on the site, CADA is trying to relocate the front 4 units and is offering it free to anyone willing to pay to transport it. If they cannot find anyone willing to take them on, they will document the building, deconstruct it and sell the components to a dealer of recycled building materials.

The sketch provided with the packet, by LDA Architects, is a little more linear-looking than the above rendering; same basic shape, but instead of the swoopy line of the rof it is more of a straight line, with the transparent corner feature.

Phillip

Aug 29, 2009, 12:21 AM

sugit, innov8, wburg, and snfenoc----Thanks for updates on the City Council discussion about the the K Street hotel.

From my standpoint saving the Bel-Vue and hiding the parking garage are worthwhile goals, but secondary issues. I’m still stuck on the hotel’s financial fundamentals.

The developers are proposing that in exchange for a $31.5 million contribution from the city ($14 million land, $12.8 million rebated occupancy taxes, $4.6 million tax increment rebate) the hotel will give back to Sacramento:

1) 40% of cash flow after certain expenses
2) 50% of collected room taxes (vs. 100% that other hotels pay)
3) 40% of sale proceeeds when the hotel is sold in 10 years.

40% of cash flow after certain expenses:

Those “certain expenses” include the hotel’s daily operating costs. What if the hotel’s cash flow isn’t enough to cover its daily operating costs? The city would get 40% of zero. It’s not an outlandish scenario. It's pretty common now, unfortunately.

50% of collected room taxes:

If a new hotel “grows” the downtown hotel market, so that new people stay downtown who didn’t used to stay downtown before, then even if the new hotel only returned 50% of TOT for a period of years Sacramento’s overall TOT revenues would increase.

But if the new hotel only diverts visitors who otherwise would have stayed at Hyatt, Sheraton, Embassy Suites etc. (which I think will probably be the case) then the city’s TOT revenues would actually fall, as the city will be collecting 50% of TOT from visitors who would have paid 100%.

40% of sale proceeds when the hotel is sold in 10 years:

Noone in the world has a clue what hotels will be selling for 10 years from now. Today hotels are trading significantly below current construction costs and prices are still dropping. If that situation persists 40% of sale proceeds ten years from now could be less than the city’s $31.5 million contribution today.

============

If Downtown can support another hotel I’d like to see one built. I still like 10th and K location better, but...

Also I don't enjoy being harsh about 8th & K because I admire Bob Leach's work in Sacramento and I think his Le Rivage especially is a real gem. Most people only see Le Rivage driving past it on I-5 and that view doesn't do it justice at all. To appreciate Le Rivage you've really got to drive there, park, and walk around. Might as well have lunch at Scott's Seafood while you're there.

Hopefully 90 days of further discussion can produce something that will work for both the developers and for the city.

Ghost of Econgrad

Aug 29, 2009, 7:05 PM

Bob Shallit: Fulcrum snaps up downtown Sacramento lofts project at bargain price
By Bob Shallit
bshallit@sacbee.com
Published: Saturday, Aug. 29, 2009 - 12:00 am | Page 3B

In tough times, some amazing real estate deals can be had.

Just ask Mark Friedman, head of the Fulcrum Property development firm, which emerged this week as owner of a 42-unit residential and retail project at 16th and H streets in downtown Sacramento.

The complex – originally intended as upscale condos – cost upward of $15 million when it was built in 2007. Fulcrum got it for less than half that amount – just over $6 million – in a foreclosure sale held Wednesday on the east steps of the Sacramento County courthouse.

"It's a good price," Friedman says, "and kind of a measure of what's happened to real estate values."

Wednesday's sale of the 1600 H Lofts complex concludes a complicated process that started in March when Fulcrum acquired the building's deed from lender United Commercial Bank.

Fulcrum initiated foreclosure against the project developer, who had fallen into default. That led to Wednesday's auction. No bids emerged above Fulcrum's minimum of $6.3 million, the price it paid for the deed.

"It was over in 20 seconds," Friedman says of the auction. "Going once, going twice, sold."

Fulcrum now plans to make some modest renovations and rent out the lofts – which boast 10-foot ceilings, concrete floors, open spaces and exposed beams – for between $1,100 and $2,200 a month.

Developer Jeff Kraft "did a really nice job," Friedman says. "That was part of the problem. He overbuilt for this market."

None of the project's loft units ever was sold. One retail space was purchased by a hair salon and spa.

Friedman figures he can offer a "great living experience" at rents that pencil out, thanks to a bargain real estate deal.

TJ watch

Trader Joe's appears to be stepping up its interest in a possible new store site near the Sacramento Zoo.

Last week, five execs from the Southern California specialty foods chain were again seen at an empty grocery store site in the Del Rio Road shopping center, according to reports from tenants and neighbors.

"It looks like (they're) moving forward," says Scott Rose, president of the Land Park Community Association, who also heard about the recent visit after months of no apparent activity by TJ personnel.

The company has steadfastly declined to comment on plans for this or any other future locations.

The shopping center's owner, retired dentist Herbert Yee, chuckles when told that neighbors have spotted Trader Joe reps at the site.

But Yee says he's been told not to comment.

"When they hoist the sign," he says, "I'll tell you."

No losers

The California State Fair attracts an honest crowd.

So reports Stephanie Horgan, the fair's guest services chief, whose responsibilities include overseeing the "lost and found" department.

Every hour or so, people turn in valuables they've found somewhere on the sprawling fairgrounds.

Last weekend, for example, somebody turned in a purse containing a cell phone, an iPod and $40 in cash. Later in the day, a fairgoer from Oakland showed up and was "elated" to discover her purse had been found, Horgan says.

"She just couldn't believe that somebody had turned it in and not taken anything," Horgan says.

On Thursday, someone turned in a wallet with $200 that also was "reunited" with its owner.

When Horgan lost her own wallet at the fair recently, she didn't panic.

"I knew some good person would turn it in," she says.

Actually, no one did. She found it herself a few days later, just where she'd left it: in her desk drawer.

Web

Aug 30, 2009, 5:34 AM

CADA gave a presentation on this building yesterday; apparently they are proceeding and should break ground in 2010. The building is a 9-story, 110-unit project (technically 8 stories, but the penthouses will have a mezzanine level) with about 5000 square feet of ground floor retail. The retail portion will front 16th Street, with a parking entrance for cars (and another for bikes) on the N Street side. The garage takes up the second floor, floors 3-8 are residenital. The project will include a 1300 sf community room and a rooftop garden above the garage, with private patios and outdoor community space.

For the retail component, the owners are looking for "boutiques or specialty stores (e.g. books, music/videos, fitness)" rather than restaurants, which makes sense to me because there are already a lot of restaurants nearby, many of which are struggling.

The units range from 660-975 sf for the 76 1-bedroom units, and 900-1300 sf for the 34 two-bedroom units. The project market rate units are priced to be attractive as entry-level, workforce housing units that should be attainable by state employees and office workers in downtown Sacramento. The workforce housing affordability projected will provdie 93 of the units at $325K-399K, which is affordable at income levels of 135-150% AMI, with the remaining 17 penthouse units priced between $480,000 and $585,000. Spaces in the parking lot will be optional: buyers can choose to buy 1, 2 or 0 parking spaces in the garage. There will be a total of 136 parking spaces.

There is currently a 14 unit apartment on the site, CADA is trying to relocate the front 4 units and is offering it free to anyone willing to pay to transport it. If they cannot find anyone willing to take them on, they will document the building, deconstruct it and sell the components to a dealer of recycled building materials.

The sketch provided with the packet, by LDA Architects, is a little more linear-looking than the above rendering; same basic shape, but instead of the swoopy line of the rof it is more of a straight line, with the transparent corner feature.

oh so this is on the other side of the street from where that vacant lot which started construction and then went poof.....also not the enterprise rental car either.

Surefiresacto

Sep 1, 2009, 4:08 PM

Any word on the 3 bars that are supposed to go up on 10th street?... the mermaid bar, pizza place and something else?

Cynikal

Sep 1, 2009, 4:31 PM

They are moving forward. Hang on to your swim fins for a little while longer.

Surefiresacto

Sep 1, 2009, 8:59 PM

Ok good. Be sure to let me know when mer-man tryouts are.

downtownserg89

Sep 1, 2009, 10:36 PM

hey guys! I was wondering if you guys had any updates on the old crystal milk factory on 10th and D street.

they've completely demolished everything and all the concrete has been ground up into huges piles of fine dust, basically.

any updates on any proposed projects on that site, perhaps? just curious :)

Cynikal

Sep 2, 2009, 3:25 PM

The Creamery project is mostly residential and very cool but they are currently waiting for financing. After the demo they spent a month crushing the concrete on site. They will be recycling it for the new project.

I'll try to drag up a link to the project but you can search the City's website for it.

Korey

Sep 2, 2009, 5:34 PM

This is the latest thing the city has on the Crystal Creamery project:

http://www.cityofsacramento.org/dsd/meetings/commissions/planning/2008/documents/P07-123CPCreportforCreameryRC3-27-08.pdf (PDF so it might load slow, clicker beware)

Some Sac Bizjournal article:

http://sacramento.bizjournals.com/sacramento/stories/2008/08/11/story3.html

Both are from a year ago so read with grains of salt.

Also, because the Crystal name reminded me, anyone know the latest on the Crystal Ice building on R St? It's Freidman's project last time I checked and that's enough to keep me interested.

Ghost of Econgrad

Sep 3, 2009, 9:42 PM

September 3, 2009
Curtis Park Village won't be a "toxic time bomb"
A Monday debate on Capital Public Radio's "Insight" program about proposed development plans for Curtis Park Village really caught the attention of the California Department of Toxic Substances Control. Officials took issue with some of the points made on the show.

During the debate on the development concept between Sacramento developer Paul Petrovich and Rosanna Herber, president of the Sierra Curtis Neighborhood Association, Herber raised concerns about Petrovich's plan to bury some of the old railyard site's toxic soils beneath a park planned for the development.

She said specifically, "There haven't been a lot of areas that have used this technology. There's only one in existence longer than five years.....It's a toxic time bomb that's waiting to go off."

Thursday, a team from DTSC called to have its say on the technology - and to state there will be no toxic time bomb at the site.

Ray Leclerc, assistant deputy director for the state's site cleanup program, said Thursday, "Leaving residuals (some toxic dirt) in place at these contaminated sites is a common part of most cleanups, especially in more urban areas. It's common in Southern California and even in Sacramento."

The team was quick to point out that it has received no specific plan yet from Petrovich about what he plans to do with the park. The point was that it has been done before, has been done for at least 20 years in California. The Petrovich plan for the park site, said DTSC project manager Fernando Amador, is expected later this year. The specifics will be made public reviewed and open to public comment before a DTSC technical team makes a final decision.

But bottom line, they said, this is not new, unproven technology that will unduly threaten nearby neighborhoods of the Curtis Park Village proposed development.

Tags: Curtis Park Village, Department of Toxic Substances Control
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