Sacramento: 301 Capitol Mall: A New Plan for The Towers Site

[creamcityleo79]

Originally Posted by Phillip

A recurrent theme here is that 301 will go up, one way or another, because CalPERS needs to "protect their investment"....CalPERS will increase their funding "to protect their investment"....CalPERS will put pressure on Deutsche Bank "to protect their investment"...

What investment are we talking about? I didn't think any CalPERS money had been spent yet.

I thought CalPERS loaned Saca $100 million.

[innov8]

Anybody pick up the newest Sac Biz Journal yet? Did they write anything about the towers?

[Schmoe]

Originally Posted by Phillip

A recurrent theme here is that 301 will go up, one way or another, because CalPERS needs to "protect their investment"....CalPERS will increase their funding "to protect their investment"....CalPERS will put pressure on Deutsche Bank "to protect their investment"...

What investment are we talking about? I didn't think any CalPERS money had been spent yet.

From the Bee article quoting the CalPERS official:
"He is looking to CalPERS and to other sources as well," Eliopoulos said. "We'd like to be as helpful as possible to understand the financial issues that he has raised and to ensure that our investment is protected."

This is a theme because they made it a theme, not those on this board. This statement indicates an investment has been made.

[skyscaper mamma]

Sac Biz Journal doesn't say anything about this latest development. Maybe in this afternoons e-edition.

[skyscaper mamma]

I just realized that there is a huge silence.......where's Majin's two bits on this?

[innov8]

This whole episode feels like back in 1999 when the KINGS started kicking ass
against the LA Lakers in the playoffs. The Kings forced the eventual
NBA champions Los Angeles Lakers to a deciding fifth game in the
opening round of the playoffs, and then lost when Robert Horry came
from way out there to knock down a three. Man, that was a close one...
made me feel like crap till the next season. That was going to be the KINGS year.

Go Saca

[mechanico]

Originally Posted by Schmoe

This statement indicates an investment has been made.

Calpers must not have given $100 million.Maybe they are dishing it out in small chunks.

Originally Posted by william

Liens are far more common than most people realize and for precisely the reason stated - protection.

You are correct. If you want to get paid quickly and before everyone else you put a lien on a project.

This has been blown out of proportion. We knew construction would grind to a halt for winter and we new the project was changing hands. Thats all thats happened.

The only question at this point is whether the Deutsche Bank thinks the Sacramento Real estate market will turn around in the next couple of years. Does anyone have any info on where they are moving their money or what their forecast is for California RE? A great deal has changed since it got involved. Is funding luxury condos in the current market too much of a risk?

[arod74]

Originally Posted by mechanico

The only question at this point is whether the Deutsche Bank thinks the Sacramento Real estate market will turn around in the next couple of years. Does anyone have any info on where they are moving their money or what their forecast is for California RE? A great deal has changed since it got involved. Is funding luxury condos in the current market too much of a risk?

The anecdotal evidence from across the country isn't too promissing. High rise condo projects from Miami to Las Vegas are being hit hard by the softening real estate market. What Deutsche needs to realize is that Sacramento hasn't been saturated yet like those markets; specifically luxury condos. The demand is there for the towers considering the sell through on aura and this project.
The Bee has blown this way out of proportion as usual. Remember bad news sells papers. I still bank on the fact that Bovis is signed on and i'm sure they have done their due diligence in examining the funding. I wont be worried until they pull out.

[skyscaper mamma]

Sac Biz online today:
Work stopped on Towers project
Sacramento Business Journal - 2:58 PM PST Fridayby Michael ShawStaff writer
Construction work on the 53-story Towers on Capitol Mall in Sacramento has stopped indefinitely, developer John Saca told the Business Journal late Thursday, as the project tries to reorganize financially.

"Unanticipated construction-cost increases and the need for additional capital are primary reasons for the delay in proceeding," Saca said in a prepared statement. "The construction-cost estimates for this project have risen significantly. We have also decided to suspend construction activity in order to allow our architect and contractor time to reassess the cost parameters."

John Dangberg, assistant city manager for Sacramento, said it should become clear within the next two to three weeks how long the construction halt is likely to last.

Saca did not say when he expected work to resume. He had previously stated that he was attempting to secure financing from California Public Employees' Retirement System beyond the $100 million that CalPERS has committed to the project, and construction financing through the major lender on the project, Deutsche Bank.

[snfenoc]

This Article from News 10 seems optimistic:

Work on the Towers on Capitol Mall, the twin $470 million luxury residential towers project considered a centerpiece of downtown Sacramento renovation, has stopped while developer John Saca seeks funding to complete construction according to Saca's spokesman Eric Rasmusson.

Construction was halted amidst $7.3 million in liens filed against Saca by unpaid contractors. Work began on the 600-foot Towers at Capitol Ave. between 3rd and 4th streets last July.

Rasmusson said at that time the project's cost estimate was $330 million. Now the cost estimate is between $450 and $470 million.

Rasmusson said skyrocketing construction costs are a big factor in the cost overruns but he is downplaying the work stoppage saying projects of this magnitude routinely have "temporary breaks".

"Huge projects try to die 10 times a day and it's our job to keep them alive," said Rasmusson.

Saca is seeking further funding to get construction back on track and secure a $375 million loan from Deutsche Bank.

Last April, Saca reached an agreement with California Public Employees' Retirement System to invest $100 million and serve as an equity partner in the project. CalPERS spokesperson Pat Macht said CalPERS has not ruled out investing more money in the project. "We know it's an important project to the city it's important to us and we are going to be as helpful as we possibly can."

In October, the City of Sacramento agreed to give Saca $11 million to help fund the luxury hotel that will occupy 18 floors of one of the towers. Both Rasmusson and Assistant City Manager John Dangberg said there are absolutely no discussions about the city dumping any more money into the project.

"Our city manager has met with John (Saca) and CalPERS to make sure that CalPERS understands how important this project is to the city of Sacramento," said Dangberg.

Dangberg said the city is still "very confident that the project is going to move forward."

Rasmusson said there is no way Saca would let this project fall apart. "This is his vision. He believes this is the right thing to do and he continues to work towards it he still sees this as a very viable project and is still committed to getting it done regardless of how tough it is."

Rasmusson says along with working to find additional funding from investors, Saca is working with the project's contractor and architect to look at ways to mitigate some of the cost increases.

The Towers are expected to feature two million square feet of residential and commercial space, including more than 800 condominium units and a four-star hotel as well as restaurants and shopping outlets. Construction was expected to be completed in 2009.

[mechanico]

After reading the bizjournal article I retract my "blown out of proportion" statement. The two articles lead me to believe Saca is in salvage mode.

[creamcityleo79]

Originally Posted by mechanico

After reading the bizjournal article I retract my "blown out of proportion" statement. The two articles lead me to believe Saca is in salvage mode.

Who knows who to believe? I like the News10 article. It has actual quotes from people on all sides who all seem very confident this will go forward. I like this quote best:
"Huge projects try to die 10 times a day; and it's our job to keep them alive."

[ltsmotorsport]

Yeah, and like arod said, bad news sells papers. Saca, CalPers, and Deustche will see the project through; it'll just be a little boring at the site for a while.

[Phillip]

Originally Posted by Los_Lobo

I was under the impression that Saca's been using the CalPERS money to date. I don't know where else he'd be getting the money for all the demo, drawings, sales staff/office, pilings and equipment so far, especially after spending $20 million for the lot. A previous SBJ article also mentioned Saca saying he had enough equity to carry him into 2007. Is there other equity in the project besides CalPERS that could possibly front the project so far?

I thought when CalPERS first announced their participation they said their $100 million commitment was contingent on $375 million from Deutsche Bank coming through, and that CalPERS funds wouldn't be spent before that happened.

I've tried finding the post to support that (I thought I read it here) and so far I haven't. With over 1500 posts now this thread is getting tough to search!

There's a Bee article posted here from September (post #638) where Saca said he and CalPERS had spent $70 million on 301CM to that date---without breaking down how much was Saca money and how much CalPERS. It's difficult to imagine all $70 million was Saca's, and many millions more have been spent since September.

Either I was wrong (what??) about CalPERS original policy (no funding before full financing) or CalPERS changed that policy. In either event you've convinced me that CalPERS HAS been spending real money at 301CM and they DO have an investment to protect now....or a loss to minimize, depending how you look at it.

[snfenoc]

I just saw two reports on the Towers:

Channel 3 - Took a slightly negative view

Channel 10 - Took a positive view

There will be a segment on Channel 3 at 6:30 with the folks from the SBJ about the Towers project, as well as Aura. The headline given to the segment is "The Towering Fiasco?"

[snfenoc]

Well, the "Towering Fiasco Report?" was just more of the same information. It was definitely not a rah-rah; in fact, it was a tad deflating:

Channel 3 interviewed some guy named Trujillo from the SBJ. He said the Towers may take as little as 3-4 weeks (Assistant City Manager John Dangberg - source) or a number of months to get more funding and get back on track. He also noted it is possible, but unlikely, for the project to be delayed for much longer, or scrapped altogether. He was not as "optimistic" for Aura. According to him, permits have been ordered but not picked up, and there is speculation the project may be delayed indefinitely, or cancelled.


I think I am going to switch my allegiance to News 10.

[creamcityleo79]

Originally Posted by snfenoc

Well, the "Towering Fiasco Report?" was just more of the same information. It was definitely not a rah-rah; in fact, it was a tad deflating:

Channel 3 interviewed some guy named Trujillo from the SBJ. He said the Towers may take as little as 3-4 weeks (Assistant City Manager John Dangberg - source) or a number of months to get more funding and get back on track. He also noted it is possible, but unlikely, for the project to be delayed for much longer, or scrapped altogether. He was not as "optimistic" for Aura. According to him, permits have been ordered but not picked up, and there is speculation the project may be delayed indefinitely, or cancelled.


I think I am going to switch my allegiance to News 10.

I've been thinking of doing the same thing for a while. But, I think this was the final straw. I have loved KCRA for years. But, News10 has simply become the better broadcast. In their reports in the past few years, they have been very positive and supportive of the Sacramento region and the growth of that region. By the way, I follow Sacramento news online via their websites.

On second glance, we may watch KCRA as my husband is a freak about watching shows in HD. We don't watch the news here anymore. They are so sensationalist it's sickening. They show very minor stories at the top of the news and wait for the major stories until 15 minutes into it. Also, the news is very biased and just as intolerant as the population here is. Recently, there was a lesbian couple that was ran over outside a club by 2 men in a truck after they yelled obscenities and slurs about their sexuality. The story has still not aired. That was last week. The top story on the news the next night was a woman in the suburbs who got her purse snatched. They recently had a series of top stories about a man who was going to health clubs and day spas and receiving massages, waxes, etc and leaving without paying. Top stories...for DAYS!!! 80 more days and I'll be on my way back home!

[sugit]

My guess is we are looking at a couple months until construction could start again. No point of stopping and starting right up again a month later in the middle of rain and a high water table.

I'm in the not optimistic group as well for Aura. I know you have an in at Aura Innov8, but I'm beginning to believe that person is full of it and just leading you on. At least if Aura is canceled, I would imagine some of those buyers would go to The Towers if Saca can get things together

The bold makes me think CalPERS would rather see someone else put money in

Construction Halted On Towers Project
Developer Blames Skyrocketing Costs
http://www.kcra.com/news/10736376/detail.html

SACRAMENTO, Calif. -- Work on Sacramento's The Towers On Capitol Mall project had come to halt after the developer ran into money problems.

The sound of pile drivers has stopped, much of the construction equipment is gone, and for now, at least, the project is hole in the ground.

Eric Rassmusson, a spokesman for developer John Saca, blamed skyrocketing construction costs for the shutdown.

Whether it's concrete or steel or glass in the curtain wall that we're going to require, everything has nearly doubled," Rasmusson said. "We are absolutely referring to this as a temporary shutdown."

Groundbreaking for what are supposed to be the tallest condo buildings on the West Coast took place last summer. At the time, Saca said he had already collected nonrefundable deposits on hundreds of units.

Lolly Aita, who bought her three-bedroom condo in The Towers nearly two years ago, said she remains hopeful they will eventually be built.

"I know John Saca and I know that he has some good connections," Aita said.

Since the groundbreaking, Saca has asked for has asked for and received from the city of Sacramento an $11 million taxpayer subsidy for the hotel portion of the project.

Now he's asking for the Calpers investment fund, which has already committed $100 million to project to help more.

"We obviously feel very strongly about the project and we're hopeful that Mr. Saca can find additional sources of capital," Calpers spokeswoman Pat Macht said.

Calpers said it is helping Saca look for another investor, but so far has not committed any more of its own money. That means for now, at least, no one knows when the bulldozers and cranes might be moving again.

Rassumusson said right now Saca is only looking at private investors for the project and does not plan to ask for any more subsidies from the city.

[enigma99a]

I wouldn't be suprised to see Tsakopoulos throw in some cash.

[snfenoc]

I have a couple of bucks.