Sacramento Railyards - The New Downtown

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econgrad: You do realize that message was posted a month ago, and we already agreed to put down the race card, right? While urban development historically has a lot to do with race, right now we're discussing the issue of whether or not the Railroad Technology Museum will actually be able to happen in the Railyards, and the role of government money in the Railyards.

One of the reasons for the current full-court press by Thomas Enterprises to get the Railyards approved is because if they do so by the end of the year they can apply for state infrastructure funds. This means that state bond money (otherwise known as your tax money, plus interest) would be used to pay for infrastructure, instead of having those fees paid by the developer. The other cash Thomas seeks is, as mentioned, money from State Parks for an as-yet-undetermined portion of the Shops buildings.

My question, for the libertarians in the room, is this: What do you think of developers like Thomas Enterprises seeking public funds, rather than private capital, for things like infrastructure expenses, which are normally paid for by the developer?

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[wburg]

econgrad: You do realize that message was posted a month ago, and we already agreed to put down the race card, right? While urban development historically has a lot to do with race, right now we're discussing the issue of whether or not the Railroad Technology Museum will actually be able to happen in the Railyards, and the role of government money in the Railyards.

One of the reasons for the current full-court press by Thomas Enterprises to get the Railyards approved is because if they do so by the end of the year they can apply for state infrastructure funds. This means that state bond money (otherwise known as your tax money, plus interest) would be used to pay for infrastructure, instead of having those fees paid by the developer. The other cash Thomas seeks is, as mentioned, money from State Parks for an as-yet-undetermined portion of the Shops buildings.

My question, for the libertarians in the room, is this: What do you think of developers like Thomas Enterprises seeking public funds, rather than private capital, for things like infrastructure expenses, which are normally paid for by the developer?

[innov8]

Wow wberg, what were you saying about an agreement had be meet
between the Thomas Enterprises and the preservationist? Seriously,
who tells you this stuff because you credibility is continuing to erode.


Daniel Weintraub: Railyard project developer runs into a brick wall
By Daniel Weintraub of The Sacramento Bee
Thursday, October 18, 2007

Although the railyard on the northern edge of downtown Sacramento was once the center of industry in the region, for decades it has been a blight on the neighborhood, its abandoned buildings crumbling while toxic waste seeped into the soil below.

Developers and potential investors came and went, promising to buy the contaminated land from the railroad, clean it up and turn it into something special. But none of those deals ever amounted to anything.

Thomas Enterprises, a Georgia-based company better known for building shopping centers than new urban villages, looked for a while like one more in that long line of big talkers. But the firm actually delivered.

Thomas managed to buy the land from Union Pacific, an accomplishment in itself because the railroad company is a notoriously hard-nosed seller. The new owners then moved the toxic cleanup into high gear and designed a mixed-use project of 10,000 housing units, offices, shops, restaurants and entertainment.

But now Thomas has run into a major impediment: a fight with historic preservationists over how the old railroad buildings the company has promised to save should be used, and how the land around them should be developed.

The state Railroad Museum wants two of the buildings, representing about half the square feet of all the structures combined, for a massive expansion of its operation, and the museum's supporters are using hardball tactics to try to get their way.

In a letter of intent from an earlier incarnation of the project, the developers promised the museum both buildings. But recently this year Thomas said they were willing to part with only one, the museum's backers swung into action.

In a move to gain negotiating leverage, they filed an application with the federal government for a historic preservation district far larger than the developer intended, without talking to the company. The district's boundaries would make it more difficult for the firm to build the project it intends and potentially tie up every important decision in mountains of red tape.

Meanwhile, the State Lands Commission, which claims jurisdiction over a piece of the property because the American River once ran through it, joined the fray. The commission says its claim can be satisfied by, you guessed it, the property owners giving up the two buildings the museum wants for its expansion.

The museum wants to use one of the buildings for a new, state-of-the-art railroad technology center featuring interactive exhibits and a theater. The other building would house the museum's rehabilitation works, where historic trains are stripped down, rebuilt and repainted. Visitors would take guided tours to see this work in progress and talk to the artisans and tradesmen who do it.

"This is a way of honoring this great heritage while seeing a vision that really looks to the future," said Paul Hammond, the museum's director.

The developers, though, question whether the Railroad Museum can handle the expansion it is planning. Their biggest fear is that the museum will become a huge black hole in the middle of their development, sucking the life out of a space that is supposed to be filled with people day and night.

"We just want to do what we think is best for the community and for the development," said Suheil Totah, a Thomas Enterprises vice president who is overseeing the project.

Totah and his partners are right to be upset by the museum community's sense of entitlement to buildings that are privately owned. But the developer has also made some mistakes.

The firm tried to make a big splash by signing a deal to bring to the project a Bass Pro Shop outlet – a big boating supercenter that would seem horribly out of place itself in a new neighborhood filled with shops, restaurants and nightclubs. That decision and the planned phasing of their project raise questions about whether the developers really intend to build all the housing they have promised, or if they are just using it as a carrot to get the office and retail approvals they want from the city.

Finally, they have told local and state officials that they need a guarantee of at least $300 million in public money for streets, sewers, schools and other infrastructure before they can turn one shovel of dirt, and they ultimately want a total of $700 million. While much of that money would be generated by higher property taxes levied on the improvements the company plans to make, the demand is extravagant. And it includes some costs that clearly should not be the public's responsibility, such as rehabilitation work on the historic brick buildings.

Still, this is a project of national significance that holds enormous potential for the future of the state capital and the entire region. The developers say they have already spent $150 million and will spend hundreds of millions more if they fulfill their plans.

Their dispute with the museum cries out for mediation from state and local government leaders, who should find a way to satisfy the preservationists without endangering the future of the very buildings they are trying to preserve.

[innov8]

Railyard questions abound
City Council vote awaits key answers
By Michael Shaw of The Sacramento Business Journal

Friday, October 19, 2007

As 2007 property tax bills land in mailboxes across Sacramento County, Thomas Enterprises Inc. appears to be getting a break on its 244-acre downtown railyard -- valued at $40 by the county assessor's office.
That's not an oversight. Officials had expected a reassessment certainly higher than that sometime this year after Thomas' purchase of the property from Union Pacific in late December. But the assessment has had to wait, one of several hanging issues as the specific plan for Thomas' development, called The Railyards, comes before the City Council on Nov. 20.

The specific plan, if approved, will provide entitlements and a framework for development. But Thomas is working to resolve other critical issues as well, the company said. The Railyards will need urban schools unlike any other in Sacramento, ones with indoor playgrounds to limit exposure to contaminated soil. For the same reason, no school site in The Railyards will be located on the ground floor.

Then there's the matter of how much the city should pay for 32 acres of railyard property it's buying from Thomas to create an intermodal transportation hub. That issue has remained unresolved for 10 months and won't be settled before the City Council votes next month.

Gary Young was Sacramento County's chief appraiser until he retired in March, but he agreed to stay on to tackle the issue of setting land values for railyard property. "I figured I was the best qualified," Young said.

It's not an easy task given that Thomas has declined to divulge how much it paid for the land and there's not a comparable sale. Thomas vice president Suheil Totah said that the company has invested close to $150 million in the project altogether. That includes the land purchase, and likely the necessary insurance coverage, pre-development costs and the cleanup now under way.

Thomas had initially set the price for the city's 32 acres, which also include easements for rail tracks, at $55 million, or more than a third of the developer's investment to date.

Asked how that value was justified, Totah said that $55 million won't be the ultimate price. The price will be determined through mediation or, barring that, binding arbitration. But that process has been delayed, too, as the city trudges through an appraisal process of its own that has stretched on for longer than officials anticipated.

Nowhere to go but up
It's the city's delayed appraisal process that has stalled the assessor's own appraisal of the railyard.

"I don't want to get caught in the middle," Young said. "If I put a value on it now, one side could use that as evidence."

Beyond that, however, Young said he's very skeptical about the property's overall value until infrastructure is built and development occurs.

"There's a tremendous amount of contamination," he said. "They are spending tens of millions of dollars for cleanups. I have to take that into consideration. The entire infrastructure is going to cost in excess of $500 million."

So, as a practical matter, the railyard remains valued at $40, although Thomas' 2007 tax bill of $14,080.14 reflects assessments that aren't limited by that value. The bill contains assessments for the city library, the Sacramento Area Flood Control Agency and the American River Flood Control District. The amount is equivalent to what a mid-sized retail business would pay.

In the meantime, the city is still moving forward with its own appraisal.

Marty Hanneman, assistant city manager who's in charge of The Railyards project for Sacramento, said it's not critical for the public or the City Council to know the city's cost for buying the land before the specific plan is approved next month.

"It's a totally separate issue and process," he said.

That's how Councilmember Kevin McCarty is approaching things. He was the lone dissenter in the vote to guarantee $55 million and accept the mediation-arbitration process with Thomas. His pressing concern now is that if the price comes in lower, the money is refunded and not applied to some other aspect of the project.

"When you spend $55 million of taxpayers' money, you should be sure you're getting something worth $55 million," he said. "It's important that we get cash back, not store credit."

But McCarty supports the plan for the Railyards itself, which includes up to 12,000 homes, 2.4 million square feet of office space and 1.3 million square feet for retail shops and restaurants.

McCarty and other City Council members haven't been told the city's initial appraisal value for the land. Meanwhile, the city discovered it needs a second appraisal if it wants to qualify for federal transportation money to shape the intermodal hub, Hanneman said. That has pushed the mediation process back until the spring.

"Once we have both appraisals, we'll go to the council," he said.

"Once we have both appraisals, we'll go to the council," he said.

Buried in the report
But there's little time to resolve everything if the city wants to chase critical state money for infrastructure. The Railyards is eligible for a portion of $850 million reserved for high-density urban infill projects and $300 million for infrastructure costs for transit-oriented developments available through Proposition 1C. Totah believes The Railyards faces stiff competition from projects in larger cities.

Those include L.A. Live, a sports and entertainment district by developer Anschutz Entertainment Group across from the Staples Center in Los Angeles and the Transbay Terminal project in San Francisco.

In the meantime, Thomas' officials are meeting with the Sacramento City Unified School District to draft a plan for urban schools to serve the estimated 22,000 people that will inhabit The Railyards. The developer doesn't know what kind of community, how many baby boomers, hipsters or families, will move in.

"The needs for a school won't be at the same rate as if we were building 10,000 single-family homes in Elk Grove," Totah said. "There just aren't going to be as many kids necessarily moving into high-rise apartment buildings and condominiums."

Thomas is expected to address the school issue, among others, before the City Council on Tuesday.

According to the project's draft environmental report, "Potential schools would not be at ground level and would use indoor play areas." Likewise, the multifamily housing would be located above ground-floor retail, a design that would prevent casual exposure to contaminated soil.

Also buried in the report is the inclusion of Sacramento's suburban park goal of 5 acres of neighborhood and community parks for every 1,000 residents and another 8 acres of city- and region-wide open space. Holding The Railyards to that standard would require 300 acres of parks and open space, more than the entire property itself.

The city has no urban infill standard for parks, so the developer has already reached an agreement that will provide about 50 acres of park, Hanneman said. Thomas will provide more benches, streetlights and other amenities than found in a typical park to compensate for the lower acreage.

[TowerDistrict]

Tug of war over railyard history
Developer balks as state seeks buildings to expand museum.
By Mary Lynne Vellinga - Bee Staff Writer



The developers of the downtown railyard have picked a fight with the state of California – right when they're about to ask the state for many millions of dollars in bond funds to get their industrial site ready for building.

At the core of the dispute are two of the seven historic railyard shop buildings. These are the largest buildings, the spaces where workers once repaired and made boilers and steam engines. One of the buildings, the erecting shop, has brick walls dating to 1868, the dawn of the transcontinental railroad.

The state Department of Parks and Recreation has long been working on the assumption that it would receive the boiler shop and the erecting shop for an expansion of the California State Railroad Museum. Former railroad owner Union Pacific even let the museum move its equipment and rail cars into those buildings in 1999.

Museum staff and volunteers use the boiler shop to restore cars and locomotives and to build exhibits for the museum. The erecting shop contains part of the museum's collection of locomotives. Trains move back and forth on a 65-ton transfer table that the museum spent $500,000 to restore.

The parks department envisions something much grander, however: a hands-on technology museum where visitors can watch engines being restored, use computers to load their own "freight" into cars, listen to the voices of railyard workers in a recording studio and drive trains in simulated cabs.

But since it bought the railyard from Union Pacific late last year, developer Thomas Enterprises has backed away from the plan. Local representatives say the Georgia company, headed by financier Stan Thomas, is willing to part with only the boiler shop.

While Thomas Enterprises hasn't disclosed how much it paid for the 240-acre railyard, city officials say tax records suggest it was about $75 million.

Richard Rich, development director for Thomas Enterprises, questioned this week the rail museum's attendance figures and its financial ability to carry out its expansion plan.

The historic shops form the core of what Thomas hopes to turn into a bustling district of 12,000 residential units, office buildings and hotels.

"By making the shops an exciting place with arts venues, a public market, eateries and entertainment, Thomas will be able to attract buyers for future housing," Rich said. "We're trying to take a Superfund site and turn it into an active, thriving community. The hurdles are absolutely enormous," he said. "We have to do it with the assets we have, and the assets we have are the central shops." Rich said the shops district should be geared toward the future, not just Sacramento's past identity as the terminus of the transcontinental railroad.

"Does it make sense for us to give half the (square footage) in the central shops so the rail museum can triple in size?" Rich asked. "Is this the biggest draw we can put in there?"

Rich, a former Disney executive, suggested that a hands-on, kid-friendly museum like the Exploratorium in San Francisco or Innoventions, a Disney attraction of corporate-sponsored exhibits highlighting scientific or technological development, would be a better choice.

Some top city officials agree with his assessment. "I want to see people walking around, I want to see them eating and being entertained; I don't want to see it become wasteland," said City Manager Ray Kerridge. "If it becomes museum row, that could happen."

Kathy Daigle, associate director of the California State Railroad Museum Foundation, defended the park department's vision, saying a rail technology museum would be a strong draw. She said the museum would also give visitors an inside look at bullet trains and future train technologies. She said the museum has raised $19.6 million in bond funds and private donations – about 80 percent of the money needed to improve the buildings.

That's more than Thomas Enterprises can say, she said. The developer says it needs to secure $300 million for streets, sewers, utilities and other improvements before construction on the first phase of the project can begin. Much of that money is expected to come from the city and state.

"We say they're 5 percent funded and we're 80 percent funded," Daigle said. "We have experience running a world-class museum. It is a little difficult for us to be questioned by them because we know we can do it."

Besides the shops themselves, Thomas Enterprises is also sparring with the state parks department over the size of a historic district that will surround the buildings. In August, the parks department joined local preservation groups in filing an application with the federal government to designate a much larger district.

Another state agency is involved in the squabble. The State Lands Commission wrote a letter urging the city not to approve the project until its legal claim to land that once was under the American River is resolved. This is the same spot where Thomas Enterprises plans to build a giant Bass Pro fishing store.

For years, the developer's representatives have been negotiating with the commission on a complicated land swap between the city and state that also would have included the developer transferring the shop buildings to the parks department, said Curtis Fossum, assistant chief counsel for the commission. But Thomas never consummated the swap, he said.

Suheil Totah, vice president of Thomas Enterprises, has now said the proposed swap with the commission never included the shop buildings. Thomas, he said, has decided it can move forward without commission approval.

"In our mind, the claim is bogus; they don't have a claim," Totah said.

He accused the commission of applying political pressure on behalf of the parks department. The commission consists of the state controller, lieutenant governor and the governor's director of finance. Fossum said there's no question the commission has a valid claim; it's been involved in similar situations all over the state.

"The state agencies are a little surprised at the position that this developer from Georgia is taking on this," Fossum said. "I don't know that he has any experience in California."

If the museum issue isn't resolved soon, city officials worry it will become a distraction as Thomas and the city move toward applying for money from the state's $2.85 billion housing bond. "I would hate for it to get in the way," said Mayor Heather Fargo.

[arod74]

Kinda siding with Thomas on this one. Seems like the boiler room would provide ample space for the museums needs. Deversifaction is a key for entertainment options to make the railyards a success and taking half the space for a railroad technology museum is a placing most of the eggs in very suspect basket for drawing power. The railyard is mainly going to be a sucess because it draws locals not just tourists and most of us aren't interested in multiple visits to a railroad museum. Thomas makes a good point about the funding for the musuem, $19.6 million isn't near enough to make the museums vision viable IMO. The California State Railroad Museum needs to come to its senses and get on board with Thomas and the city or else that state bond money is going to other cities and developers on the same page.

[TowerDistrict]

I just don't see how bond money intended for mixed-use urban infill
infrastructure and housing is at all connected to the railroad museum.
Besides what appears on the surface to be state goverment blackmail,
why or how are these two issues connected at all?

[kryptos]

Originally Posted by TowerDistrict

I just don't see how bond money intended for mixed-use urban infill
infrastructure and housing is at all connected to the railroad museum.
Besides what appears on the surface to be state goverment blackmail,
why or how are these two issues connected at all?

its connected because the preservationist freakos are connecting it in order to muscle the city and the developer into giving them what they want. There are so many better uses for those buildings than an expansion of a Museum about the railroads.

[kryptos]

Originally Posted by wburg

econgrad: You do realize that message was posted a month ago, and we already agreed to put down the race card, right? While urban development historically has a lot to do with race, right now we're discussing the issue of whether or not the Railroad Technology Museum will actually be able to happen in the Railyards, and the role of government money in the Railyards.

One of the reasons for the current full-court press by Thomas Enterprises to get the Railyards approved is because if they do so by the end of the year they can apply for state infrastructure funds. This means that state bond money (otherwise known as your tax money, plus interest) would be used to pay for infrastructure, instead of having those fees paid by the developer. The other cash Thomas seeks is, as mentioned, money from State Parks for an as-yet-undetermined portion of the Shops buildings.

My question, for the libertarians in the room, is this: What do you think of developers like Thomas Enterprises seeking public funds, rather than private capital, for things like infrastructure expenses, which are normally paid for by the developer?

Im not libertarian, but I am a fiscally conservative democrat. And honestly, i see nothing wrong with it. Currently we have half a trillion going to wars, we almost paid for a $223 million dollar bridge to nowhere in Alaska, and our tax dollars are spent on pork barrel projects everywhere and IT WILL NEVER STOP...so if tax dollars go to bettering the quality of life and bettering a city with downtown revitalization, I am all for it. You cant get something for nothing in this Capitalist Country, so you gotta pay to play, and if that means tax money will be used to make Sacramento a more vibrant city, so be it.

[creamcityleo79]

Originally Posted by kryptos

Im not libertarian, but I am a fiscally conservative democrat. And honestly, i see nothing wrong with it. Currently we have half a trillion going to wars, we almost paid for a $223 million dollar bridge to nowhere in Alaska, and our tax dollars are spent on pork barrel projects everywhere and IT WILL NEVER STOP...so if tax dollars go to bettering the quality of life and bettering a city with downtown revitalization, I am all for it. You cant get something for nothing in this Capitalist Country, so you gotta pay to play, and if that means tax money will be used to make Sacramento a more vibrant city, so be it.

COMPLETELY AGREED!!!

[ltsmotorsport]

It's amazing how two articles from the same publication can have such different view points on the same story.

Now, as for me, I can't help but see Thomas' side, mainly because of property rights. The State Lands Commission is completely out of line thinking they have a claim on land they never owned, just because there was water there over 100 years ago. The same goes for the Parks Department. They have NEVER owned any land in the railyards, only agreements to use some buildings for their needs. It doesn't sound like they have a written confirmation to hand over both buildings either.

Kinda funny too that the second article posted tried to vilify Thomas, but every sentence I read made me feel for them more, just cause me and everyone here knows what developers have to go through in Sacramento, and this is 100 times worse than normal.

[BrianSac]

Originally Posted by ltsmotorsport

It's amazing how two articles from the same publication can have such different view points on the same story.

Now, as for me, I can't help but see Thomas' side, mainly because of property rights. The State Lands Commission is completely out of line thinking they have a claim on land they never owned, just because there was water there over 100 years ago. The same goes for the Parks Department. They have NEVER owned any land in the railyards, only agreements to use some buildings for their needs. It doesn't sound like they have a written confirmation to hand over both buildings either.

Kinda funny too that the second article posted tried to vilify Thomas, but every sentence I read made me feel for them more, just cause me and everyone here knows what developers have to go through in Sacramento, and this is 100 times worse than normal.

Yes, it really is appauling how this city, not just the city gov't (everyone involved) just cant seem to get anything done right.
The museum people and the lands commission people want the land for themselves or to at least control what gets actually developed.

The end result will be greatly reduced denisty, caps on heights of buildings and much more open space then originally invisioned by Thomas.

Like I said before, it will be a decade before we see anything actually built and/or a completion of any restoration or remodeling of the the railyards buildings. If it takes Sacramento 8 yrs to widen a sidewalk on the Tower bridge can you imagine how long it will take to realize the plans Thomas originally had for the railyard property.

[Web]

I only have one say.....If Thomas wants the CASH for infrastructure he will have to follow the system.....and as someone posted before....Manhattens system is much slower.....

Just bowing to any developer can lead to many issues.....And a Bass Pro Shop is not that great a loss if it is where the parks want something......


attack away as usual........

[TowerDistrict]

The system of what, though?

Thomas has to give up their property to a state museum in order to receive
bond money intended for urban infill housing and infrastructure? Of course I
think questioning the developer's intentions and keeping a close eye on
every move they make will lead to a better project in the long run - one
that suits the city and its people. But if the state would choose to hold out
on crucial money because the railroad museum doesn't get to triple its size
is just extortion. A silly political dick waving contest where the only losers
are the people of Sacramento. This whole issue is stupid.

I suppose Thomas still has the leverage... They don't have to give up the
building, and they don't have to build affordable housing either.

[Web]

Sounded like it was a deal and then taken off the table.......the 2 buildings vs 1 building.

So just sell it to them then,........

Seems like a small issue for a huge area.....x acres vs xxxx acres

And no the area will not fully develop in my lifetime....I say 30+ yrs to fully build out.....especially if housing is involved which it is.

and since this is a superfund site(or is it?) hmmmm arent the feds very involved???

I just don't think bending over backwards for a huge developer who is looking for a huge influx of public money means carte blanche.......there has to be a compromise somewhere.