TMA newsletter

This will be a significant test of downtown's growing residential market, and of what people are willing to pay. The high-rise condominium towers planned for downtown will not be ready for occupancy for years, but the apartment rental projects provide a test for downtown living right now: Studio apartments will start at about $900 a month, with penthouse units as much as $4,000. Residents that want a parking space will have to pay an extra $100 to $125 a month.

The new apartments are coming mainly from two projects that have been in the works for years. 225 units are in the seven-story apartment building owned by the CIM Group at 800 J St. The apartments have high, concrete ceilings and windows that open. The balconies feature decorative metal grillwork. Panes of glass reflect green and blue, and there are few doors. The target audience: young professionals, seniors, empty nesters and business people or politicians who need a part-time place downtown.

The second big project is developer Sotiris Kolokotronis' four-story 176 unit complex on L Street between 18th and 19th.

In 2004, work on 1801 L Street stalled for seven months after cost overruns left Kolokotronis without the money needed to finish. He found new private financing and resumed construction.

A smaller project by St. Anton Partners opened last fall at 21st and L streets, where, 58 of the 65 units have been leased.

In October, a fourth project is scheduled to open. The renovated Cathedral Building will bring 23 high-end apartments to a former Sears department store at the corner of 12th Street and the K Street Mall.

Both the 1801 L Street project and the one at 800 J St. replace sites that for years were holes in the ground. They were among the city's top priorities for redevelopment, and officials allocated $16 million in redevelopment funds to subsidize 800 J and $4.75 million for 1801 L. When the projects were conceived, the concept of building new high-end apartments in the central city was new.

The idea of living in a new building on downtown's main drag appealed to Alan Koppes, 75, a retired Procter & Gamble executive who sold his house in El Dorado Hills in 2000 and moved downtown to the 13th floor of the Capitol Towers apartment complex downtown.

Koppes recently signed a lease to pay $3,200 a month for a two-bedroom penthouse unit atop 800 J St. It's more than double what he currently pays for a unit that's about the same size. His new walls are salmon-colored concrete, and his balcony overlooks Cesar Chavez Park and the U.S. Bank building next door.

"I just think the idea of something new and different and flashy is appealing," Koppes said. It doesn't bother him to pay so much in rent. He can afford it, and he doesn't have to deal with the hassles of home ownership.

"I had houses for many years, and I'm happy not to have one anymore," Koppes said. "My rationale is that the money I'd put into a house I can put into other things that appreciate."

The apartments at 1801 L Street also are modern-looking inside, but the building's blocklong facade, designed by architect Ron Vrilakas, includes several styles: Some sections look Mediterranean, others like brick East Coast brownstones, complete with front stoops leading to live-work units. Some smaller sections have wood siding.

"The main reason for that is that it's such a big building you want to mix it up," said project spokesman Demetri Romas.

City leaders have long hoped that the arrival of more residents in downtown and midtown will create demand for more stores, more nightlife and more arts venues downtown.

Store owners in the increasingly lively area around 18th and L say they're looking forward to the influx of people.

"I think the timing was right for me to open," said Eftihia Nelson, owner of the new Felicia Strati clothing store at 19th and Capitol, right next to the leasing office for 1801 L Street. She said several prospective tenants have stopped by to peruse her selection of women's clothing from Italy and Greece.

Both 1801 L Street and the 800J Lofts at 800 J St. are notable for something other than loft living and lofty rents. They also epitomize the nationwide trend toward "mixed income" developments, in which affordable units earmarked for low-income residents are blended into market rate residential projects rather than being isolated elsewhere.

As a condition of receiving public money, both projects have set aside a considerable number of affordable units: 93 in all. The St. Anton Building at 21st and L streets also includes 17 affordable units.

While these units are generally indistinguishable from their market rate counterparts, they rent for far less -- from about $550 for a studio to about $700 to $750 for a two-bedroom.

Romas said he likes the idea of people from different economic stratas living side by side at 18th and L.

"We're not here in our society to segregate the poor and the rich," he said. "(When) you put them together, you can see yourself in the other person's place."

Ethan Evans, executive director of the Sacramento Housing Alliance, said he, too, appreciates the creation of such mixed-income communities. His group just wishes the city would require such affordable units in all the high-end buildings now in the works for downtown, not just the ones that receive city subsidies.

City of Sacramento Department of Transportation has released its 2006 Transportation Programming Guide – a wish list of prioritized transportation programs and projects in ten areas such as bridge replacements and major street improvements.

“The transportation programming guide is a comprehensive tool to guide City decisions about transportation needs such as the highest priority traffic signal, the top ranked sidewalks to schools and the list of railroad crossings most deserving of safety improvements so residents will no longer be disturbed by the sound of train horns,” explained Engineering Services Division Project Manager Saed Hasan. “When funding is available, we can then proceed to design and construct these projects.”

The guide represents project ideas solicited from the Mayor and City Council, the Planning Commission, City staff and community leaders and residents. In addition to a community advisory committee, Sacramento residents provided input to the City about projects they would like to see in their neighborhoods at an open house last June. The City Council approved the guide in November 2005.

The public can review the completed document at www.cityofsacramento.org. Disks or hard copies are also available at the Department of Transportation receptionist, second floor, City Hall, 915 I Street, downtown Sacramento or call the department at 808-8300.

Funding for City transportation projects and programs comes from the Sacramento County Measure A half-cent sales transportation tax and federal, state and local transportation dollars.

For more information, please contact Linda Tucker, City of Sacramento at (916) 808-7523.

Downtown proposed buildings (2006)

All proposed buildings envision a new, vital urban core for Sacramento, but only one has firm financing and all face rising construction costs, soft markets for residential and commercial real estate and questions about when, if ever, the K Street retail district will revive.

In 2005, developers rushed to promote downtown high-rise living and working, with major proposals for Capitol Mall and L Street.

* John Saca plans The Towers, a 53-story condominium, hotel and retail project at Capitol Mall and Fourth Street.

* David S. Taylor announced he had tenants and financing for a 25-story office tower, Six Twenty-One Capitol Mall.

* Denver developer Craig Nassi and Taylor announced a plan to build a 38-story residential tower, Aura, next door at 601 Capitol Mall.

* Nassi also said he would build a condo complex, the 50-story Epic Tower at 12th and I streets.

* Others on the drawing boards include Danny Benvenuti's 31-story mixed-use tower at the current Greyhound bus depot site at 7th and L streets and Angelo G. Tsakopoulos' 29-story Parthenon building at 500 Capitol Mall, which would add 430,000 square feet of office space to downtown Sacramento.

Some of those projects may be scrapped, downsized or redesigned because of swelling materials costs. For example, architects with LPA Sacramento regularly add 5 percent to 10 percent to their cost projections from the time a building is planned to when it is built.

That means that any delays on a project such as the $300 million Towers can cost millions more in overruns.

Recent turns in the local real estate market could pose another problem to condo builders charging $500 per square foot and more.

Inventory of the most expensive homes in the Sacramento region has ballooned, sales have slowed and prices are flat at best. Meanwhile, high-end homebuilders are offering incentives such as free swimming pools and landscaping worth tens of thousands of dollars.

Saca says his wealthy buyers are drawn by the lifestyle promised by downtown living. He says he has 19,000 names on a buyer-interest list, 5,000 people who have prequalified to buy in The Towers and more than 500 potential tenants who have put down refundable deposits.

Taylor believes with the housing market cooling, the test for his condo project with Nassi will come when potential buyers have to commit their deposits with no chance for a refund.

Excavation begins on the Six Twenty-One site in February. British investor Lewis Trust Group backed the project last year after Taylor signed tenant deals with the California Restaurant Association and law firm Downey Brand, which will occupy the 14th through 18th floors when the building opens in 2008.

Together the contracts total about one-fourth of the building's 366,000 square feet of leasable space. Other firms are in negotiations for an additional 155,000 square feet.

Still, high-end office vacancy rates downtown have nearly quadrupled since 2001 to around 10 percent. If all the high-rise office projects get built, they would add 1.13 million square feet of leasable space to the downtown market.

The Benvenuti property at 701 L Street is earning money from its Greyhound Lines lease.

Taylor and others also are concerned about the future of the K Street Mall corridor. Rehabilitating the struggling retail core will cost about $20 million in public subsidies, according to a recent estimate.

"It's the key to the future success of the entire downtown corridor," said Michael Ault, who heads the Downtown Partnership, a business group that supports downtown business development.

The city is working with K Street property owners to untangle issues that are blocking progress, but Taylor still calls the plans "tenuous."

Development on R Street (2008) R Street was an industrial rail corridor in the 1800s, but a variety of residential and commercial projects have opened on or around R Street in the past few years, and more are under construction or planned. Gourmet coffee and art galleries suggest that the city's decade-long effort to rebuild R Street as a walkable district of housing, shops and offices, but Crystal Ice and other rundown buildings show how much work remains. For more information, please call Leslie Fritzsche, Downtown Development Manager with the City of Sacramento at 916-808-5450.

More than a century of industry left many of the properties contaminated with toxic chemicals that must be cleaned up before the sites can be redeveloped. The extent of contamination remains unknown, because no detailed investigation has ever been made public.

Still, a variety of residential and commercial projects have opened on or around R Street in the past few years. More are under construction or planned.

On the eastern portion of the corridor, the new Safeway complex at 19th Street provides an anchor for retail expansion westward. It eventually will include shops, restaurants and 11 luxury apartments.

On the west end, the California Public Employees' Retirement System last week revealed that it plans to buy nearly all the properties along R Street between Second and Seventh streets. The pension fund plans to build 300,000 square feet of housing there.

Q Street, considered part of the R Street corridor by the city, has been undergoing a residential renaissance of its own. The latest project is the 119-unit Fremont Mews apartment complex under construction at 15th and Q.

The city's plans call for taking advantage of R Street's light-rail line and industrial grit to create an environment distinctly different from the rest of downtown and midtown. One sign of this thinking: A striking, corrugated metal complex of four lofts on Q Street features large windows that unabashedly overlook the light-rail line and the Crystal Ice complex. The 1,350-square-foot condos sold for as much as $450,000.

But impediments remain. One is the street's lack of adequate sidewalks, sewers and other necessities. CADA recently completed a study concluding that such improvements would cost $60 million, and it has been working to secure funding. It recently obtained an $800,000 grant from the city to install an underground tank to contain high water flows during storms.

The agency also has obtained $3.2 million in grants from the federal government and the Sacramento Area Council of Governments to upgrade the light-rail stations at 13th and 16th streets.

One of the biggest potential targets for redevelopment on R Street, the largest and most visible of the industrial eyesores, the hulking Crystal Ice and Cold Storage plant, has sat empty since the operation closed in 1993. Repeated attempts by developers to purchase it have fallen through. Crystal Ice occupies a two-block stretch of R Street between 16th and 18th streets, just west of developer Paul Petrovich's Safeway complex.

Petrovich recently was in escrow to buy Crystal Ice for a housing, retail and office development, but the deal fell through and the condition of the building is so bad it's getting to the point of being a danger to public health. Some of the structural columns have been removed.

Tsakopoulos and Cummings have owned the complex since 1970. In the mid-1990s, the pair proposed two office towers for the site. But the city rejected their proposal as incompatible with its new plan for R Street, which called for a mix of housing, shops and low-rise offices. That plan was adopted after community activists strenuously objected to proposals from various developers to turn R Street into a corridor of office buildings.

According to property records, Tsakopoulos has since transferred his ownership interest in Crystal Ice to two nonprofit organizations devoted to policy issues concerning his native Greece. He is a founder and a major supporter of both. Potential buyers still negotiate with him and Cummings, however.

Meanwhile, developers are making big plans for other industrial properties dotting the corridor once served by the first operating rail line west of the Rockies.

Having completed a toxic cleanup funded by a $500,000 grant from the U.S. Environmental Protection Agency, Regis Homes is preparing to renovate the old CADA warehouse at 12th and R streets into 116 lofts. Live-work units on the ground floor will feature roll-up glass garage doors.

Trong Nguyen, president of World of Good Tastes, parent company of the La Bou restaurant chain, has an agreement to buy the former Orchard Supply building at 17th and R streets across from Crystal Ice. Nguyen said he'd like to transform the old Orchard Supply building into housing as well but doesn't think the economics will work. The state Department of Toxic Substances Control already scraped a layer of contaminated dirt up to 5 feet deep from the site, but that qualifies it for only commercial use.

To use it for housing, they would have to reclean the whole thing, and no one can afford to do that, not even the government."

At the moment, Nguyen is planning to use the building for a coffee roasting operation and commissary for his restaurants.

Sacramento Transportation Management Association