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

[brandon12]

Originally Posted by Phillip

I think you meant it's curious that Corus Bank won't finance all of Aura, not DB. DB was never involved with Aura.

If one bank thought both tower projects pencilled out, that having two nearby projects increased the viability of both, then conceivably the same bank could finance both.

I've wondered why Wells Fargo didn't want to get involved in either of these towers, since WF headquarters are practically across the street from both. Seems like WF would be most attuned to the issues and potential of the Capitol Mall location, more than out of state banks.

Both projects still face multiple hurdles, even if the city does loan $11 million to Aura.

Wells Fargo is based on San Francisco; I don't believe the Sacramento operations are anything more than a regional outpost for them. Plus, I don't think any bank would want to be involved in two very similar projects totalling $700M 3 blocks away from each other in Sacramento. In Manhatten or the loop, maybe. Capitol Mall: I don't think so.

[innov8]

Wells Fargo did not believe it this project from the beginning.
I would imagine that right now the higher ups who make these
decisions at WF are still feeling pretty confident about there initial
thoughts on the Towers.

[brandon12]

Some banks are very risk averse and prefer to finance safe, conservative projects. Other banks seek the higher yields associated with riskier ventures. I don't know anything about Wells Fargo's business model, but perhaps one of their strengths/specialties isn't high-rise condos in untested markets.

[sugit]

Originally Posted by brandon12

Wells Fargo is based on San Francisco; I don't believe the Sacramento operations are anything more than a regional outpost for them. Plus, I don't think any bank would want to be involved in two very similar projects totalling $700M 3 blocks away from each other in Sacramento. In Manhatten or the loop, maybe. Capitol Mall: I don't think so.

Yes, they are regional jobs for the most part, but they actually have some very big and very high paying jobs in that office. What was essentially the #3 or #4 person in WF (Exec VP for Retail Banking) worked out of that office when she was promoted to the postition while I was there. An HQ it is not, but it carries a lot of big wigs.

They have their commerical banking office for the region (wouldn't touch Saca's project and does have many doubters, but that's part b/c of WF very conservative lending policy) WF Brokerage and Trust services, Human Resources, Marketing, Finance and Strategy, Public Relations, and Retail Exec Managment for all of Northern CA and Central CA.

In all they are a big employer on Capitol Mall. I think they probably have around 50K+ in office space, and are actually looking to add more space by consolidate some of their Roseville office to DT.

[urban_encounter]

Originally Posted by Phillip

I think you meant it's curious that Corus Bank won't finance all of Aura, not DB. DB was never involved with Aura.

If one bank thought both tower projects pencilled out, that having two nearby projects increased the viability of both, then conceivably the same bank could finance both.

Both projects still face multiple hurdles, even if the city does loan $11 million to Aura.

Excuse the typo I did in fact mean that it was curious that Corus Bank would not completely finance a project with sales numbers (as being reported by Aura)..


But as Brandon stated more clearly, i don't think that one bank is at all interested in financing nearly 1092 highrise residential units in a city such as Sacramento.

I do agree with you that both projects still face multiple hurdles, and frankly i'll be shocked at this point if both projects get built. That does of course contradict my early prediction that both projects would get built. I thought Aura was a lock to get built and still I'm left wondering how a project can struggle even with such strong sales.. There are 25 or 30 major highrise projects in Chicago (most condos) and many are built on spec. I walked past a tower a couple of weeks ago near Navy Pier, that has been completed for quite some time, that had a banner on the front of it bragging that the tower was now nearly half sold....

My prediction now is that only Saca's Tower(s) will end up being constructed.

Aura I think is a long shot at best (even with a city loan)...
And believe me, losing Aura after such strong sales, will be a shame (and a set back for residential highrise development in Sacramento).

Other cities such as Austin, Portland and San Diego to name a few have been able to attract a number of developers from across the U.S. to build major highrise projects. BCN was Sacramento's first and if Nassi fails (as I suspect he will) even after such strong sales, it might make it a little harder to attract developers from outside California for a few years.

As Sugit pointed out however, Saca is much further along with his project and has a lot riding on it's success. Mostly his family's fortune and reputation.

Something will rise there (at 301 CM) and i suspect it will be the project as planned (both Towers simultaneously as designed); or one tower initially with the second tower going up in a couple of years, once the housing market is strong again.


Hopefully I'm proven wrong (yet again) and both projects end up getting built. But my expectations have been lowered dramatically as of late...

[thinktanq]

OK, here's a bit of Towers gossip:

I was at a party last night and ran into a (rather drunk) friend of mine who works for the Sac Building Department. He said the real reason for the work stoppage was Saca's use of non-union labor on the project. When CalPERS discovered this, they witheld further funding, and CalPERS and Saca are at a standstill over this issue.

If I remember correctly, the City's subsidy may have been contingent on use of union labor as well, and they may be in the mix.

My friend's take was that work on the project would continue soon, and that Saca was just being stubborn about this issue.

In other words: The work halt isn't due to any real inability to continue. Rather, it's the result of a squabble. The project is not in jeopardy.

Make of this what you will, and take it with a grain of salt. I don't have any more details than this.

[Phillip]

>> I was at a party last night and ran into a (rather drunk) friend of mine who works for the Sac Building Department. He said the real reason for the work stoppage was Saca's use of non-union labor on the project. When CalPERS discovered this, they witheld further funding, and CalPERS and Saca are at a standstill over this issue. <<

Interesting but if true it seems self-defeating on CalPERS part to insist on terms that would drive the project's cost up even further, pretty much guaranteeing that it won't happen.

[brandon12]

Originally Posted by thinktanq

OK, here's a bit of Towers gossip:

I was at a party last night and ran into a (rather drunk) friend of mine who works for the Sac Building Department. He said the real reason for the work stoppage was Saca's use of non-union labor on the project. When CalPERS discovered this, they witheld further funding, and CalPERS and Saca are at a standstill over this issue.

If I remember correctly, the City's subsidy may have been contingent on use of union labor as well, and they may be in the mix.

My friend's take was that work on the project would continue soon, and that Saca was just being stubborn about this issue.

In other words: The work halt isn't due to any real inability to continue. Rather, it's the result of a squabble. The project is not in jeopardy.

Make of this what you will, and take it with a grain of salt. I don't have any more details than this.

This just doesn't smell right to me. I don't think CALPERS invests only in union-friendly companies. The city? That's another story. I would imagine the city might have some strings attached to any funding it provided, including assurances of union labor during and after construction.
Whatever the case, I hope work does start again in the next few weeks.

[POGO]

What contractor was non-union. The pile driving company, Foundation Constructors is union. The left because they didn't get paid, not because of a union squabble. Just what we need, a DRUNK Sacramento building inspector spreading rumors.

[reggiesquared]

Speaking of the Maloofs- Saca needs to lure MTV's real world to the towers like the maloofs did to their casino.

[Trojan]

Good idea!

[robw340]

Went to the Towers sales office this past weekend, and there was quite a bit of people coming in and out inquiring about the project ....I was asking inf about a 1 bdrm, and while i was there all the sales people were very busy; I was glad to see such interest , and i hope it keeps up

[downtownserg89]

Originally Posted by reggiesquared

Speaking of the Maloofs- Saca needs to lure MTV's real world to the towers like the maloofs did to their casino.

haha i would so have to be on that cast!

[mechanico]

Originally Posted by robw340

Went to the Towers sales office this past weekend, and there was quite a bit of people coming in and out inquiring about the project ....I was asking inf about a 1 bdrm, and while i was there all the sales people were very busy; I was glad to see such interest , and i hope it keeps up

Does anyone one have any recent sales figures?

[ltsmotorsport]

Originally Posted by robw340

Went to the Towers sales office this past weekend, and there was quite a bit of people coming in and out inquiring about the project ....I was asking inf about a 1 bdrm, and while i was there all the sales people were very busy; I was glad to see such interest , and i hope it keeps up

Good to hear there is still a lot of buzz going on, especially since no news agency ever goes to the sales office to see what's going on.

[innov8]

When I've walked by there during the week on my lunches, I’ve
only seen one sales person in the office... and it's been that
way for the last couple weeks now. Until an announcement
is made by CalPERS or the Saca team, I would think that they
are working hard on damage control and tiring to hold on to buyers
who have already put down money. It was reported by the SBJ that
27 cancellations have happen since sales began… I’m sure
since the stoppage of work three weeks ago, more people have started
thinking of this option. If there is any positive news to report,
I would think it would be in there best interest to spread the good news.

[mechanico]

Originally Posted by innov8

I would think that they
are working hard on damage control and tiring

Freudian slip?

[innov8]

^

[goldcntry]

Yay for the endorsement from Sac Business Journal! Let's hope that Mayor whats-her-name actually reads it and is swayed accordingly. I'm tired of looking at the empty hole across the street!

[Majin]

Has anybody identified exactly what the problem is with The Towers? As far as I understood, CalPers has invested $100 million, Deutsche Bank has approved Saca for the construction loan, and Saca already had Bovis as the new contractor.

What exactly would be the reason for the halt in work? Yes material prices and such as been going up, but why would that be any reason to stop the project? Investors and lenders know material prices and real estate markets fluxuate and don't stay static throughout a 2 year project, it doesnt seem like a legitimate reason to pull funding.

At least (at this point) Auras case is clear cut. Their lender won't lend them the money they need until they get an additional $10 million from the city in redevelopment funds. Since Saca already has his CalPERS investment and construction load from Deutsche Bank locked, I don't see how Saca would be facing an issue like this?