West Sac condo tower on tap
150 units will wait for hotter market
Sacramento Business Journal - June 8, 2007
by Michael Shaw
Staff writer
While residential towers have seemingly stalled in downtown Sacramento, a San Diego developer with pension fund backing is seeking approval for a 24-story condominium tower on the West Sacramento riverfront.
Fairfield Residential LLC is looking to build a 150-unit development on about 1 acre between the pyramid-shaped Ziggurat building and the California State Teachers' Retirement System's new headquarters under construction.
"I don't think you can get a better view from a residential project in the downtown area," said Val Toppenberg, West Sacramento's redevelopment director. The site also abuts West Sacramento's River Walk Park.
Fairfield bought the property last year, but the developer said it's likely to wait until conditions are more favorable before building.
"We're not going to rush into a bad market," said Dan Milich, development manager with Fairfield. "We're in a position to wait it out. If you're wondering about a groundbreaking, it's too early for that."
It's also too early to set prices for the condominiums, he said.
Fairfield has time on its side, Milich said, because fees at the site were frozen for 10 years when development agreements were struck.
Meanwhile, the project has a mighty equity partner in the form of CalSTRS. The pension fund has partnered with Fairfield before. In 2006, the fund's real estate portfolio included $95.1 million in assets attributed to Fairfield or its affiliates, according to a CalSTRS investment report.
The West Sacramento condo tower was originally pitched last year as a 17-story building, but developers decided they needed more stories to make the project work, said Jim Bermudez, associate planner with the city.
Fairfield on Thursday was scheduled to seek approvals from the city's Planning Commission for design approval and permission to add seven stories, which would bring the building up to about 240 feet. Planning staff has recommended approval of the changes. The Planning Commission vote was not available before press time. If adopted, the project could go before the West Sacramento City Council within a month.
City officials are optimistic that the project won't suffer the same setbacks as high-rise condo projects on the Sacramento side of the river.
"Given the nature of the project and the nature of their financing, this probably has an excellent chance of moving forward," Toppenberg said.
Fairfield would need to seek a construction loan to build the project, Milich said. Financing of pricey residential projects is scarce these days, judging from the delays and problems with Sacramento's other condo towers. A resurgent housing market, however, might lead to looser lending.
Fairfield struck an unprecedented agreement with the city over affordable housing.
West Sacramento has a citywide policy that typically requires 15 percent of new housing units to be priced so that low- or very-low-income residents can purchase them. Fairfield, however, does not have to provide affordable units within the tower. For the first time, the city allowed a developer to provide off-site affordable housing to satisfy its inclusionary housing rules.
Fairfield paid about $1.9 million to cover the costs of a nonprofit housing agency that acquired 23 low-income studio apartments in the neighborhood that will be refurbished.
Now, off-site affordable housing is an approach the city will consider with other riverfront properties, given the premium land costs there and the additional expense for building vertical developments, said Aaron Laurel, with the city's Housing and Community Investment Department.
Fairfield develops multifamily housing, ranging from small apartment buildings to high rises nationwide, primarily on the East and West coasts. It often acts as construction manager on its own projects.
The site is part of an overall development plan for 18 acres known collectively as Raley's Landing, so named because the development group included Raley's Inc. The overall plan for Raley's Landing was approved last year and includes additional housing as well as office and commercial space on other riverfront sites. Developers involved in other aspects of the plan include Panattoni Development Corp. and Signature Properties Inc.
Signature is now planning the first phase of a 7-acre site north of Raley Field and West Capitol Avenue for lots that would house 134 townhomes, with prices starting in the mid $300,000s, said David Nybo, Signature's director of land acquisition and forward planning. The company is seeking tentative map approval from the Planning Commission and if all goes well, could begin construction within a year. Future phases include a neighborhood coffee shop and restaurant, and two mid-rise projects that would bring the total number of units to about 400.
Large condo projects have not fared well in the past year.
In Sacramento, there has been no word yet from the partners in The Towers on Capitol Mall project -- John Saca and the California Public Employees' Retirement System -- on what will happen with their plans to build twin 53-story condo towers. Saca has failed to come up with enough financing to satisfy the agreement with CalPERS, essentially putting the project on hold.
Craig Nassi, the developer of Aura, another high-rise condo tower in downtown Sacramento, has struggled to secure financing for the project since last fall.
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