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

[Majin]

Originally Posted by neuhickman79

You are the internet embodiment of Dan Visnich! Maybe you'll choke on your bow tie and some punk kids from the suburbs will come and beat you with your cane.

I've have siliently been following this thread all night.

Funniest comment of the night award goes to you. I actually laughed out loud

[Majin]

I'm not at all worried about 301 getting built. Saca has pretty much gone all in on this project with this own money, hes already pile driving 7 days a week and got backing from CalPERS who obviously intend to see this project through. Do you honestly think Saca/CalPERS is going to spend all this money and do all this work without trying to sell the rest of the units when they have 2-3 years left before the building is even done?

I dont really understand how/why someone would precieve a project as a failure if 100% of the units arent sold before construction starts, thats just unreasonable and stupid.

Yes, sales for homes and condos are alot slower than they were 3-4 years ago. But I hate to break it to you, but the pace we are seeing right now is ACTUALLY NORMAL. 3-4 years ago was NOT NORMAL and no one in their right mind (developers, lenders, etc) would expect that pace to continue indefinately. I'm quite sure Saca was prepared for a housing slowdown and isnt sweating it at all. Obviosuly CalPERS is not since they are putting up $350 million to support him. As deep as Saca is in this, he is seeing this to completion.

Aura on the other hand, I wouldnt be suprised at all if that was canceled with the lack of progress on that site. As of right now they can easily walk away and not have invested much (unlike Saca).

[bennywah]

as someone who works for intercontinetal hotels group, or 6 continents hotels, they have contracts with the state and local govt which allow for rates of up too $131 dollars per night, and there are other companies which pay for rates which get certain percantages off the local rate ect, its all a tax right off to major corp's so it doesn't matter how expensive the rate is for an intercontinetal in sac is, corps, the govt, ect have pre exsisting contracts with ich inc and get a write off regaurdless of where its at!!

[urban_encounter]

Originally Posted by Phillip

Can CalPers compel Deutsche Bank to issue the additional $375 million needed?

Are you kidding??

I'm pretty certain that a pension fund with a $230 Billion Investment Portfolio has some clout with DB. But i doubt Cal Pers would need to compel DB. They would probably front the rest of the money themselves or back the rest of the project entirely.

Understand that the Towers are as much of an investment for Cal Pers as it is for Saca. Cal Pers didn't build that portfolio by flushing hundreds of millions of dollars...

[brandon12]

Originally Posted by Majin

I've have siliently been following this thread all night.

Funniest comment of the night award goes to you. I actually laughed out loud

^agreed.

[sugit]

Originally Posted by Majin

Yes, sales for homes and condos are alot slower than they were 3-4 years ago. But I hate to break it to you, but the pace we are seeing right now is ACTUALLY NORMAL. 3-4 years ago was NOT NORMAL and no one in their right mind (developers, lenders, etc) would expect that pace to continue indefinately.

A point often overlooked by people who only know the "good times"...

[urban_encounter]

Originally Posted by neuhickman79

I'm sorry to say. But, you're really an idiot...the examples that you and mechanico(you must be the evil twin!) give are of housing markets that are WAY oversaturated. Sacramento is NOT an oversaturated market. As a matter of fact, the downtown area is an UNTAPPED market. You really are small-minded and have no place on this forum if you really believe that this project is too "big" for Sacramento. You are the internet embodiment of Dan Visnich! Maybe you'll choke on your bow tie and some punk kids from the suburbs will come and beat you with your cane.

I agree that the Towers are ambitious and especially so for Sacramento. But that would also be the case for just about any city other than New York or Chicago. Although being ambitious is what helped create beautiful sklyines in both NY and here in Chicago. Frankly, I'm not sure how many cities can take the equvlent of a 108 story condominium project (in this case two 54 story towers) and fill it up prior to the foundation being poured. I doubt that it could be done anywhere in the U.S. Personally I think it's a positive that nearly half the units are pre sold. Sales are still happening, albeit slower.

I wouldn't (and wont) lose any sleep over 301 CM. Construction and sales are ongoing and sales will be ongoing even when the project is complete.

Same goes for Aura. Your not going to see a developer walk away from a project that is 77% sold out prior to the first shovel of dirt being turned. Especially given his potential profit margin.

Doubtful that there will be any new high end luxury condos proposed for the next couple of years though until the market returns to normal and absorbs The Towers and Aura.

[TowerDistrict]

truthfully, i was in doubt that this project would happen. i was unsure if deutsche bank could fund it, i was wondering if CalPERS had enough money to follow through. i thought maybe Saca wasn't committed to seeing it happen. but all that uncertainty was erased today with one single comment:

Originally Posted by Majin

I'm not at all worried about 301 getting built.

[NewToCA]

Towers and Aura should make it through, but I expect Epic to be a delayed or downsized significantly.

Bottom line is downtown Sacramento has to increase it's residential core for all other progress (nightlife, shopping and restaurants) to happen. The Towers and Aura are critical to develop the residential mass.

Within the housing slowdown problem (which I do think is legit) I think that allocation of funds becomes an even more significant issue due to higher probability of delay for some ambitious projects. If I were betting I would say that K St and Westfields gets financial support over the Railyards. Building up what you have is cheaper than new starts, and should go a long way towards attacting another wave of folks to want to live downtown.

And the Arena debate (and probable defeat) isn't helping this ambitious project.

[Trojan]

If three high rise luxury condos can be built, then I am assuming there is still a huge market for high rises such as The Metropolitan, which are more middle class and in the price market for more people.

[Los_Lobo]

This is an editorial in the Bee and addresses the $11 million subsidy of the IC Hotel.

Editorial: High-rises, high stakes
2 condo projects key to downtown revival

Published 12:00 am PDT Tuesday, October 24, 2006
Story appeared in EDITORIALS section, Page B6

Downtown Sacramento has no high-rise condominiums, but the proposed Towers project near the river would be the largest of its kind on the West Coast -- if it gets built. If. The downtown isn't poised for a slow housing evolution, but a sudden transformation with an enormous economic ripple effect. Surely Towers developer John Saca is praying for a few more downtown enthusiasts to commit to buying units in his 53-story project. If he presells half of its 799 units -- and he is close -- crucial financing kicks in. The project presumably gets built. And despite this cyclical downturn in the housing market, downtown's skyline changes forever.

It is hard not to cheer for the Towers at 301 Capitol Mall and a project three blocks down the street, the stylish, 268-condominium project known as Aura.

The Towers venture is clearly bigger and bolder; it will include an Intercontinental Hotel that can cater both to its guests and to condo owners upstairs. For the city of Sacramento, there are cash considerations in play. A whole lot of new taxes are on their way if the projects get built.

Capitol Mall is within the downtown's official redevelopment zone. In these zones, new property taxes (available when new buildings are constructed or old ones are renovated) flow to the city to pay for affordable housing needs and more redevelopment within the zone. All those new condominiums (sales prices between $368,000 and $852,000) mean new property taxes that would flow back to the city's redevelopment agency. The Towers project alone could mean $7 million in additional funds from various taxes.

That's why the City Council wisely decided to help this project along with an $11 million loan that, under its terms, likely won't get repaid. The loan is to help pay for the furnishings of the Intercontinental. On its face, they are curious assets to subsidize -- beds and lamps and carpet and such. But it is easier for a developer to finance the structure through private lenders than the soft assets such as the pillows. And the city isn't really investing in pillows as much as providing that last increment of financing that may be key to finishing the project and triggering all that new tax revenue.

First, a handful of potential condominium buyers have to fall in love with downtown's future. The stakes are high, but so are the possibilities.

[WonderlandPark]

They are pile driving like mad and the article still considers it "proposed towers." huh?

[joninsac]

Next year at this time, when both of The Towers are about 25 stories tall, the Bee will have a story like "Saca breaks ground on twin tower condo project" or something like that.

[greenmidtown]

hi, I'm new but I've been following the forum blah, blah, blah. Is it possible that downtown can experience a renaissance with condo's, lofts, luxury hotels, skyscrapers etc. while the suburbs suffer a housing slump? My answer is why not? Downtown Sac has so much to offer beyond just an urban lifestyle but an amazing climate, abundance of trees, diversity, walkable neighborhoods, and a burgeoning arts scene that you can't find in the suburbs. Not to mention excitement, it's in the air here. And personally I already consider Sacramento a great city, the new developments will just reassure the doubters. The Towers will be built because the market is here, their's no better city for it.

[brandon12]

^welcome greenmidtown,

I don't believe that the cetral city housing market can react in opposite direction to the greater Sac mkt in general. But it can (and I think will) suffer less of a correction over the next year or two than the burbs, and then when the overall mkt begins to turn the corner again, probably recover/appreciate faster than the burbs.

[friedpez]

Just a question: If Saca fails to sell the required units by Dec 31, can he just "buy" them himself? Would the financial backers consider that legit, and then release their financing?

[mechanico]

Originally Posted by friedpez

Just a question: If Saca fails to sell the required units by Dec 31, can he just "buy" them himself? Would the financial backers consider that legit, and then release their financing?

We don't know if there is a deadline, dcox20 is looking into it.

[Los_Lobo]

Originally Posted by mechanico

We don't know if there is a deadline, dcox20 is looking into it.

Yes, we DO know. As I stated before, the deadline allows the seller (Saca) to back out if he doesn't have financing by 12/31/06. For anyone with a copy of the purchasing agreement, it's on page 2, Section 6 (Construction Financing Contingency). After explaining in depth the terms (basically what I've already stated), it ends the paragraph with "The contingency set forth in this Section 6 is for the sole benefit of the Seller."

So Saca isn't under a 12/31/06 deadline for sales. I'm sure he'd LIKE to have 1/2 the sales completed and financing lined up by then but he doesn't HAVE to.

[TowerDistrict]

here is a portion of the email correspondence regarding the $11 million InterContinental Hotel subsidy, between me and Leslie Fritzsche, the manager of downtown development...

Originally Posted by TowerDistrict

Many people claim the InterContinental was already going to carry through with the project, and Mr. Saca already had them signed and committed to it. I understand the construction cost issue very well, but I don't quite understand why, with approximately $10 million in the hole for downtown redevelopment funds, you would choose to give $11 million to a project that was ready to go without such funding?

Originally Posted by Leslie Fritzsche

Mr. [TowerDistrict], thank you for your interest. To answer your question, we thoroughly analyzed the need for the project funding. Without this investment by the City, the project would not be in a position to move forward. Their was a financial gap in the economics for the hotel which necessitated this assistance.

If you have any further questions, please let me know.

[POGO]

I call bulls*** Leslie.