Sacramento officials, developers eager to get started on K Street makeover
rlillis@sacbee.com
Published Thursday, Jul. 15, 2010
Could it be real this time?
After years of fits and failures on Sacramento's K Street, city officials are brimming with optimism after the City Council voted Tuesday night to negotiate with two developers who say they have the plans – and more importantly, the cash – to finally revamp the mall's most blighted blocks.
By a 5-4 vote, the council voted to negotiate with local developers D&S Development and David S. Taylor Interests. City officials will spend the coming months poring over the firms' finances and proposals, with the hope that the projects will be finished in about two years.
As part of a deal with the city, the developers would be given 19 downtown properties the city spent $42 million purchasing. Millions more in downtown redevelopment subsidies are also available.
So what are we getting for all of that?
If all goes as planned, by the summer of 2012 the blighted 700 and 800 blocks of K Street will be transformed into a lively stretch of restaurants, shops, a music venue and more than 250 units of housing. Most of the businesses looking to jump into the project operate popular local eateries.
"You close your eyes and take a look at what we're going to put there and the optimism is pretty great," said Councilman Kevin McCarty. "It's real."
The D&S/Taylor plan was described as more doable than past proposals for the 700 and 800 blocks of K Street, which have steadily deteriorated for the past decade even as the city succeeded in revamping blocks to the east.
Both development teams have identified their funding resources for what is a combined $82 million proposal.
In voting for the D&S/Taylor plan, a majority of the council rejected a recommendation from a four-member ad hoc committee that included Mayor Kevin Johnson. That group preferred a more ambitious project that contained a significant funding gap.
"We've been boondoggled one too many times on K Street," said Councilwoman Sandy Sheedy, explaining her vote. "If we want something done, this is the plan to get us there."
The teams behind the project were already at work Wednesday. D&S executive Bay Miry said he had met with his architects and was setting up meetings with city building officials.
"We intend for K Street to change immediately," Miry said, adding his goal is to break ground on the project by the end of the year.
Miry's firm, which developed a restaurant and residential complex at 14th and R streets, will handle renovations on the historic storefronts that line the 700 block of K Street. Miry said he has letters of interest from several local businesses to open on the block, including midtown sushi restaurant Kru, eateries Magpie Catering, Crepeville and Burgers & Brew, and coffee spot Old Soul.
Shady Lady, which runs a bar at 14th and R, wants to run a 400- to 500-person music venue on K Street. Alex Origoni, co-owner of Shady Lady, told the council the venue would attract both nationally known groups and local acts.
The council was sold on D&S's financial plan. The firm said it already has $19.5 million of the $35.5 million price tag for their project. The remainder would come from $16 million in city subsidies, $8 million of which Miry said his firm would repay.
For the neighboring 800 block, Taylor is planning to use $16 million in city redevelopment funds earmarked for him as part of his purchase of the downtown Sheraton. He said in his proposal that he has $24 million in debt and equity available and is seeking $6.2 million in additional public subsidies for his development.
At Tuesday's council meeting, Taylor described his project to build 120 housing units and 32,000 square feet of retail as "realistic." On Wednesday, he did not return several phone calls seeking comment and it was unclear if he had retail tenants for his slice of the project.
Taylor is downtown's most prolific developer; he told the council his firm has invested $440 million on five blocks of Eighth and K streets.
The council vote to go with the D&S/Taylor projects – and not the more elaborate plan by Rubicon Partners to build a year-round market and music venue – surprised some people, who thought the ad hoc committee's support of Rubicon gave the firm an unbeatable advantage.
But members of the committee – Johnson and Councilmen Rob Fong, Steve Cohn and Ray Tretheway – failed to persuade a single one of their colleagues to get on board with their recommendation.
"I was surprised, but there may have been some prejudgment that Rubicon would not pencil out," said Tretheway.
He was not upset, however, with the council's choice. "I think we're going to be OK," he said.
The combination of Taylor's résumé and a D&S plan described as having sound finances has downtown and city officials optimistic.
"There's some momentum in that space that for a long time hasn't had a lot of positive activity," said Michael Ault, executive director of the Downtown Sacramento Partnership.