Sacramento Proposal/Approval/Construction Thread - III

[Ghost of Econgrad]

Originally Posted by tronblue

Here is your free land and no taxes


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[Web]

Originally Posted by Majin

They should do it, no need to wait to august just give them the land now.

why not give land they dont own to all "developers".......freebies are never good

[innov8]

Originally Posted by Pistola916

Bob Shallit: Move quickly or lose hotel financing deal, Sacramento told
bshallit@sacbee.com
Published Saturday, Jul. 11, 2009

Developers of a proposed downtown hotel project have a not-so-subtle warning for city officials:

Act quickly to back the project or risk losing a $91 million financing commitment from a South Korean investment group.

The Sacramento developers – a joint venture of Parkcrest Development and USA Hospitality – want city officials to donate the land for the 25-story hotel and a six-level garage on Eighth Street, between K and L. That would be a departure from earlier city plans to sell the land to developers.

The Parkcrest and USA team also wants the city to forgo some taxes during the hotel's first few years of operations.

If those incentives are granted within a few months, Seoul-based investment firm Consus Asset Management "is in," says Sungmin Park, a Parkcrest VP.

But, he says, delays could force Consus to take its money elsewhere: "This is very time-sensitive."

Park says his Korean American company worked for years to get Consus to invest in U.S. projects, but the company was focused on China, Russia, South Korea and other markets where returns were higher.

Setbacks in Asia last year prompted Consus to look for "safer havens" and back the Sacramento project.

Parkcrest is kicking in $8 million, and other local investors, including Moe Mohanna, have committed millions more, giving the developers sufficient funding for the $136 million project, Park says.

Now, he adds, "we just need the city to say 'yes' to us."

City staffers are negotiating with the developers over terms of any deal. The issue is scheduled to go before the City Council on Aug. 4.

I would recommend that if the city does donate the land and put off some
taxes for the first few years that they also negotiate with the developers to
get a better overall design of the project. I don’t think it’s too much to ask
in exchange for the above incentives to change how parking’s incorporated
into the project. A new design could include spreading the hotel over the
half block instead of its current massing at a single corner. The same could
be done with the parking in having it above the ground floor of the hotel but
below the hotel rooms. The hotel might not be as tall but its appearance
from the street would be much more attractive.

[SacUrbnPlnr]

To Donate Land for a K Street Hotel?

Although it may seem distasteful at first blush to even consider giving away the land and providing other financial incentives, the City needs to figure out whether these subsidies would be a good deal in the long run based on additional TOT, sales taxes, increased revenue from larger convention business, and other possible economic benefits from the proposed project.

We can only hope that the City is carefully considering the financial risks and rewards of the proposed project versus other options for this site. It may make sense for the City to move forward with this project, wait for a better deal from another developer, develop a hotel project itself on this site (as the City did with the Sheraton Grand) or solicit less ambitious proposals for the site that require little or no subsidy, are less risky, but will also be less catalyzing for the K Street Mall.

[nevernude]

I would be fine with subsidies or tax incentives AS LONG AS THE PROJECT HAS REASONABLY AFFORDABLE HOUSING!!!!!! A downtown that just has 9-5'ers, tourists, and visiting government officials has shown it cannot work. If I were the city, i'd tell these hotels to add a couple of floors of condos on top and figure a way to get them pencil out at about 1000 sf for 350,000. I think that is the sweet spot for housing in midtown and downtown. Look at 14 and R. They have a lot of great options to buy between 700 and 1000 square feet and it doesn't cost you 400 to 500K like L Street or the condos above that hotel at 15th and L. And they have sold better than almost every new development. The city needs to identify opportunities for middle-class condos in downtown and midtown and do whatever it takes to get them built now.

[SacUrbnPlnr]

Good ideas.

However, it would be very challenging to make 1,000 square feet of residential space pencil out in a high-rise building in Sacramento at $350,000 ($350/sq. ft.) given the local market and our regulatory environment, which significantly affects urban development costs. Your suggestion to deliver ownership housing affordable to middle-class households is more likely to pencil out in adaptive re-use of existing buildings (such as the I-Lofts in Old Sacramento and the 14th and R Lofts) or in podium-style mid-rise buildings of four or five stories that can be constructed using wood or steel framing (in contrast to steel reinforced concrete or the type steel frame construction required for high-rise buildings).

I just returned from a trip to Denver and took a look at several of the high-rise condominium projects recently completed or near completion. It seems that developers in Denver can deliver an equivalent high-rise residential product for as much as 20% less than in the Sacramento market.

[Web]

Originally Posted by SacUrbnPlnr

To Donate Land for a K Street Hotel?

Although it may seem distasteful at first blush to even consider giving away the land and providing other financial incentives, the City needs to figure out whether these subsidies would be a good deal in the long run based on additional TOT, sales taxes, increased revenue from larger convention business, and other possible economic benefits from the proposed project.

We can only hope that the City is carefully considering the financial risks and rewards of the proposed project versus other options for this site. It may make sense for the City to move forward with this project, wait for a better deal from another developer, develop a hotel project itself on this site (as the City did with the Sheraton Grand) or solicit less ambitious proposals for the site that require little or no subsidy, are less risky, but will also be less catalyzing for the K Street Mall.

A)land at K st and L st
B)subsidy to develop a parking garage
C)non taxable for x years
D)ummm no guarantee of anything

just seems weird to give away so much to Moe for something which may not ever be built....

[wburg]

Originally Posted by nevernude

I would be fine with subsidies or tax incentives AS LONG AS THE PROJECT HAS REASONABLY AFFORDABLE HOUSING!!!!!! A downtown that just has 9-5'ers, tourists, and visiting government officials has shown it cannot work. If I were the city, i'd tell these hotels to add a couple of floors of condos on top and figure a way to get them pencil out at about 1000 sf for 350,000. I think that is the sweet spot for housing in midtown and downtown. Look at 14 and R. They have a lot of great options to buy between 700 and 1000 square feet and it doesn't cost you 400 to 500K like L Street or the condos above that hotel at 15th and L. And they have sold better than almost every new development. The city needs to identify opportunities for middle-class condos in downtown and midtown and do whatever it takes to get them built now.

This project, as currently proposed, doesn't include ANY housing at all.

The project at 14th & R is selling like hotcakes--in part BECAUSE it is in a historic building, NOT a new building--and in part because adaptive reuse of an existing building can be a lot cheaper than new construction. The high-rise and mid-rise condo units on L Street, both those in the hotel at 15th and at 17th, are selling tepidly if at all. That alone tells you something: there IS an existing market for residential housing downtown in historic buildings, but not much of one in new buildings and new hotels.

Seems to me that if the city was to re-use the Bel-Vue as moderate-income for-sale condo units, with a mixed-use component using the already-existing retail spaces on the ground floor, and another new nightclub at 815 L, we could have that corner occupied VERY quickly--and THEN put a hotel on the corner of 8th and K.

[SacUrbnPlnr]

The tepid sales at the Marriott may have more to do with the fact that the building is primarily a hotel, the architecture and layout of the residential units are uninspiring, and there are no balconies. Buyers who are able to pay the asking prices for the Marriott condos would probably want private balconies.

The low sales at the L Street Lofts are largely due to a legal dispute between the developer and his original investment partner that lasted over a year. This dispute prevented any sales of units at the Lofts and leasing of the ground floor commercial space. The developer also had to resolve a dispute with Otto Construction (the general contractor) over payment. These legal issues have now been resolved, and the developer has begun marketing the unsold unit again. Unfortunately, this is a very challenging market, so we'll see whether buyer interest, which was very high a year ago, is still there.

[nevernude]

I completely agree with you. Get D & S or Loftworks on it. I think the one big mistake that Sacramento and developers in Sacramento have made is trying to make these huge projects happen. If you look at the urban renewal of places like Portland, Denver, Seattle, etc, they didn't happen because some big-pocketed developer came in a built two 50-plus story residential towers. They happened because a few developers rehabbed old buildings and some other developers built new 5-10 story condo buildings and a critical mass eventually formed, like the Pearl District or LoDo or Belltown. I don't want to live in a big residential tower surrounded by nothing or by office buildings. I'd rather be in a smaller building surrounded by other housing with ground level shops and restaurants.

I love what D & S have done with 14 and R and I am a big fan of adaptive re-use. If you look at the most important catalysis projects in midtown over the last 10 years, they are almost all adaptive-reuse. Loftworks' building on J and 16th. 14 and R. Restaurants like Lucca, Zocolo, and Mulvaney's B&L are all adaptive re-use. As is the Firestone building. So I think the city should do whatever they can to support firms making these things happen.

What I was trying to say in my post is that the city shouldn't give out any money or incentives without requiring that the project include housing. If someone has the land and wants to build a new building and get money from the city, it needs housing and it needs ground-level retail or restaurants. If it doesn't we shouldn't even meet with them.

[tronblue]

Sadly the city plans to knock down the existing buildings at L and 8th. These buildings could have been used for similar purposes. But sadly that won't happen. The city is trying to accumulate as many weeded lots at possible. Plus, who would want to live in a overly refurbished flat in the old Bel-Vue for over 2 grand rent. We don't have those kinds of trust fund babies in sac that will live in sketchy areas for that kinda money.

[SacTownAndy]

Originally Posted by SacUrbnPlnr

I just returned from a trip to Denver and took a look at several of the high-rise condominium projects recently completed or near completion. It seems that developers in Denver can deliver an equivalent high-rise residential product for as much as 20% less than in the Sacramento market.

Case in point- the nearly complete 42-story "Spire" project. The majority of units are priced well under $400k. The developer has made it very clear in the local media that his project is aimed at attracting middle class folks downtown.

http://www.spiredenver.com/

[wburg]

I got a copy of the "Mitigated Negative Declaration" for the hotel project at 10th & K Street. There are no renderings or drawings of the proposed hotel, but it includes a few details: 12 stories, 180 rooms, about 8000 sf of retail space along K Street.

Because this project meets the requirements for a "Mitigated Negative Declaration," no EIR is needed for this project. The project applicant is listed as "10th & K Investors, LLC," located on Somerdale Circle in Roseville.

[tronblue]

From the Sacramento press:

City plans to demolish the Bel-Vue and adjacent buildings were mentioned in my Sacramento Press article on July 3 ( http://sacramentopress.com/headline/...elVue_Building ) but at the time the developer and financing organization behind the project were not identified. Since then, both have appeared, along with an additional partner. The financier, Consus Asset Management, is a new player in Sacramento. The developer, Bob Leach, just completed another Sacramento project, the Le Rivage Hotel. The other player in this project is a well-known name in K Street real estate, Mohammed “Mo” Mohanna. All three are asking the city for $18.6 million in free real estate and several years of tax forgiveness once the project is complete, and they want this done immediately, before public input and analysis by city staff and commissions can be completed.
Since my earlier article saw print, these parties were mentioned by articles in the Sacramento Bee, in Bob Shallit’s columns:
http://www.sacbee.com/shallit/story/2005107.html
In this column, Shallit mentions South Korea based Consus Asset Management (http://consusgroup.com/ ) as the primary financier, willing to put up $91 million for construction. Lead developer Bob Leach, builder of Le Rivage Hotel, made contact with Consus through local hotel builder Parkcrest Development. Also on the project team is Mohammed “Mo” Mohanna, who recently owned the land until the city paid him $18.6 million for it, after a lengthy series of negotiations, complex legal maneuvering, and the demolition of the buildings on the corner of 8th & K Street. The article mentioned that the developers were hoping for some tax breaks on this project.
Shallit followed this up with a second column:
http://www.sacbee.com/shallit/story/2017611.html
Here, the developers have urged the city to move quickly or risk losing financing. They have asked the city to give them the land, currently city-owned, for free, and to forgive taxes on the hotel for the first few years of its operation. Transferring the land quickly would also mean that there would be no time for an Environmental Impact Report to be completed, and before issues like the demolition of the Bel-Vue have had an opportunity to be fully reviewed by city staff, Preservation Commission or Planning Commission.
This issue will go before the Sacramento City Council on August 4. The city of Sacramento has held an Exclusive Right to Negotiate (ERN) with Bob Leach and Parkcrest, extended for 45 days on June 9, but that ERN expires on Friday, July 24.
The unspoken irony in the developers’ demand is that the city of Sacramento just paid nearly $20 million to wrest the property out of Mohanna’s hands, and are now being asked to give the property back to him. They are also asking for a free hand to demolish a Sacramento landmark, and forgiveness of future taxes, which means that it will be many years before the city of Sacramento sees any economic benefit or return on their investment of $20 million, their donation of a half-block of prime downtown real estate (by the city’s own valuation, worth the $18.6 million paid to Mohanna) and their sacrifice of irreplaceable historic buildings. This free giveaway would also add up to far more than the taxpayer-funded donation provided to developer David Taylor to rehabilitate three existing buildings on the 1000 block of K Street, a move that sparked widespread public criticism.
Why is there a need for such urgency? One possible answer is that there is another hotel project planned for K Street, only two blocks away. Unlike the project at 8th and K, this alternate project would require no historic buildings to be demolished. This project does not require the full Environmental Impact Report, instead using a far simpler process called a Mitigated Negative Declaration (MND.) The MND identifies the developer behind the project as "10th & K Developers, LLC" and mentions that it will include 180 rooms in a 12-story building with ground floor retail. Could this simpler, less complex project be the competition that worries the developers behind 8th and K, and enough of a problem to make them demand a massive public subsidy from the city of Sacramento for a project that will not have to pay taxes for many years, and action fast enough to short-circuit public debate and review by city staff?
Meanwhile, the deadline for public comment on the Notice of Preparation is approaching. According to Jennifer Hageman of the city of Sacramento’s Economic Development Department, part of the process will include a public scoping meeting to present this issue to the public, but as of this writing no date has been identified for such a meeting.
To give public comment about this issue, contact Jennifer Hageman of the City of Sacramento’s Community Development Department at jhageman@cityofsacramento.org or (916)808-5538. Written comments should be sent to Jennifer Hageman, City of Sacramento Community Development Department, 300 Richards Boulevard, Sacramento, CA 95811. Comments are due before 4:00 PM on July 27, 2009.

[wburg]

Thanks for reposting...Sacramento Press also hosted complete copies of the Notice of Preparation and the Mitigated Negative Declaration for 10th & K, for those who are interested.

[Surefiresacto]

An the competition heats up!

bshallit@sacbee.com
Published Tuesday, Jul. 21, 2009
Another hotel project is being proposed for the downtown area – this one by three developers who envision a 12-story "select-service" Marriott, Hyatt or Starwood at the key corner of 10th and K streets.

The developers say their 165-room concept makes more sense than the luxury 409-room project being proposed by another development team for the corner of Eighth and K.

"There is a 400-room hotel in downtown Sacramento's future, clearly," says Brian Larson, a hotel development veteran who is teaming on this project with Tony Giannoni and Jim Brennan.

"But when will that occur?"

Not soon, he suggests, saying his group's 165-room plan is the "right size" for a market that's seen room occupancy slide over the past two years.

The developers also say the most important need in the downtown market is for an upscale hotel priced 10 to 20 percent below the full-service lodging already in the downtown core.

A street-level restaurant isn't part of the plan. And some luxury service touches might be absent.

But Larson says the building – at the intersection's southwest corner – would have an "urban, sophisticated footprint," with swimming pool, fitness facilities, business center and meeting space.

The architect, Hornberger + Worstell of San Francisco, has been involved mostly with upscale projects – including W Hotels – and will be producing a "spectacular design with outstanding curb appeal," says Larson, who was part of the team that built the Citizen Hotel.

His partners also have lots of experience. Giannoni built the Marriott Residence Inn at 15th and L streets while Brennan developed office condos at the northeast corner of 10th and K.

The developers say their $43 million project would be financed by a combination of equity investments from local people and possibly a federally subsidized, city-issued bond that would be repaid by the developers.

The new proposal creates a choice for city officials: Kick in about $31.5 million in the form of land and various tax breaks for the 25-story hotel proposed by Bob Leach, Moe Mohanna and others at Eighth and K. Or provide about $10 million in tax breaks and other kinds of assistance for the new proposal.

Both projects would be great additions, says Leslie Fritzsche, Sacramento's downtown development manager. But only one is likely to get city backing.

"The market will not support the addition of that many rooms," she says.

[Surefiresacto]

It's unfortunate about the unlikelyhood of a 1st floor restaurant in this proposal, but the list of hotels they are name dropping would be nice. Marriott, Hyatt or Starwood... I think a W Hotel would be fine.

[goldcntry]

W would be a great choice, but COME ON!!! Can we at least make it to the 20th floor???? Sheesh.

[Surefiresacto]

I actually think a 12 floor hotel there would be cool. So long as the design is impressive, which it sounds like is the intention. Anything would be great as opposed to the 2-3 story s*** shacks that currently line the street.

[tronblue]

Can someone reach Mo for comment? I want to hear his two cents on this other hotel project that will compete with his partnership down the street. I need some good comedy today.