Friday, January 8, 2010
Ambitious West Sac project advances
Bridge District competes with Railyards
Sacramento Business Journal
A major developer and city officials have quietly been laying the groundwork for a $200 million plan to bring urban homebuyers to the West Sacramento waterfront.
Mark Friedman, a Sacramento infill developer whose family owns Arden Fair mall, is working on an agreement for the first 450 homes south of Raley Field. Ground work is under way, and vertical construction could begin next year.
The Bridge District in West Sacramento — overshadowed by The Railyards’ grandiose proposal in downtown Sacramento and to a lesser extent the Township 9 project on Richards Boulevard — is, like those other projects, an ambitious plan to redevelop heavily industrialized areas.
The site is along the Sacramento River between Highway 50 and Tower Bridge. There have been plans to build there for decades but with minimal action until 2007, when the city ramped up near-term redevelopment goals.
Friedman, the major player who owns more than 50 acres within the district, has unceremoniously knocked down 200,000 square feet of warehouses in the past few months in anticipation of signing a development agreement for the first housing project there. He described the agreement as the final piece of a complex puzzle that has been assembled over the past two years. The agreement went before the City Council on Wednesday, but has been deferred until next month.
“It is one of the most significant projects of this type in the state,” West Sacramento Mayor Christopher Cabaldon said. “It’s a fundamental transformation of our waterfront. We don’t have an Old Sac for people to go to. For years there was not real access to the river as it was given up generations ago to heavy industry.”
The 188-acre district, formerly called the “Triangle area,” is about three-fourths the size of The Railyards and includes Raley Field and the pioneering Ironworks lofts by Regis Homes. New-home construction in the region has stopped, however, due to the housing downturn.
The bleak housing market is a worry for Friedman.
“I think that what we have to offer will be so unique and so compelling that we’ll be successful even in a weak real estate market,” he said. “That said, I’d be lying if I weren’t concerned about economic conditions.”
West Sacramento staff expects that Bridge District housing will be “pioneering, higher-risk and will sell or rent at discounted prices to comparable projects in the city of Sacramento’s downtown, midtown and Railyards neighborhoods,” which officials consider to be the primary competitors, according to a staff assessment.
“If they can hit the median household income with their pricing, they are going to be golden,” said Kathryn Boyce, an account executive with housing analyst Hanley Wood Market Intelligence. “I think it makes sense to try to beat The Railyards because it has received so much attention, and play off that. That way, people are coming in and looking at your product.”
Going green
Friedman said he will build an entirely “green” neighborhood that could include a boathouse on the river, community gardens and amenities such as bocce courts or playgrounds on sites that were formerly parking lots or storage facilities. West Sacramento, meanwhile, will extend to the south its riverfront park and trail that sits in front of the Ziggurat and new office tower that houses the California State Teachers’ Retirement System.
City officials expect to break ground on that project by May.
The $200 million to $250 million price tag is Friedman’s estimate of the total cost for infrastructure and 700 housing units in the first phase of what ultimately could be a $2 billion redevelopment by Friedman and other developers.
For the first phase, Friedman has agreed to build 386 market-rate homes and will donate land for construction of 70 affordable units in an urban village setting. Following the demolition work that already has begun, he expects a full grading of the site in April. The first units likely to be built will be a five-story, 70-unit apartment project of affordable homes with tuck-under parking to be developed by Bridge Housing of San Francisco. The building was designed by David Baker and Associates.
Kevin Griffith, a senior program manager with Bridge Housing, said it is awaiting the transfer of state funding to the city for infrastructure improvements, but is otherwise prepared to start building. The affordable project is funded with a combination of state, local redevelopment, tax credit, city and developer contributions.
Friedman aims to eventually build 2,300 residential units and 2 million square feet of offices within the district. He said his company, Fulcrum Property, has the financial strength to build without outside investment, if necessary.
“I don’t know what other assurances I can give,” Friedman said. “I wouldn’t be devoting this much energy if I didn’t think we could pull it off. You can’t look at it like you’re going to raise $2 billion — the success of each phase will validate the next.”
Others to join in
A separate development agreement is in the works with local architect Dean Unger and his development partners to produce 100 market-rate homes. Their ultimate plans in the area could include office towers or hotels, more housing units and retail.
West Sacramento’s redevelopment agency expects to develop 175 units itself, in a mix of market-rate and affordable housing.
The first $52 million already is committed to build roads, put in utility lines and remake the area into a habitable environment through a combination of public and private funds. West Sacramento’s program manager, Katy Jacobson, said public funding totals $40 million, but there won’t be any sales-tax or general fund borrowing for the project.
Although development goals for the district were outlined in 1993, plans for the area south of Raley Field didn’t launch until last year when West Sacramento was granted $23 million in state grant funds for transit-oriented development. The Railyards and Township 9 received money from the same pool. The state money hasn’t yet reached West Sacramento coffers, but that is expected to happen within the next few months.
A jump start
With underlying construction work under way at all three major infill projects, it remains to be seen which will be first to establish an identity or market for potential homebuyers.
Steve Goodwin, president of the Township 9 development, said he expects to be competitive.
“Competition is healthy because right now there aren’t enough choices for people,” he said. “Ours is unique because we sit right on the American River. This will appeal to people with an active lifestyle. Having light rail right to the front is also huge.”
Officials at Thomas Enterprises Inc., developer of The Railyards, did not respond to a request for comment.
Friedman also expects both competition and synergy as each project comes on-line.
“We will compete with those projects, but we will also complement them,” Friedman said. “We will be looking for the same kind of urban residents. Each will gravitate to the one that appeals to them.”
He expects his project to be certified as a smart-growth neighborhood under the U.S. Green Building Council’s Leadership in Energy and Environmental Design for neighborhoods. Green features include a natural stormwater filtration system that doesn’t require a chemical-based water treatment plant as well as space for homeowners to grow their own vegetables. The concrete from demolished warehouses is being recycled to form new roadbeds.
One of the amenities Friedman is especially excited about is the potential boathouse.
“The river has great appeal,” he said. “I’m confident we will provide something different.”
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