Record High Office Vacancy

As reported by the SacBee, The Sacramento region office vacancy rate increased in this year's first quarter to an all-time high of 23.74 percent, according to commercial real estate brokerage firm Cornish & Carey Commercial Newmark Knight Frank.

The rate increased 0.36 percent from the previous quarter, reflecting 366,000 square feet of additional vacant space in the region's 22 office submarkets. This is nearly equivalent to the size of "The Emerald Tower" being almost completely empty at 300 Capitol Mall which is an 18-story office tower and 383,238 square feet.

In all, vacant office space in the region totals nearly 16 million square feet. This is not the economic recovery we have been told was right around the corner. 

10 Percent Cut for New Sacramento Courthouse

The Judicial Council has endorsed a cost-cutting direction for court construction statewide, including the reassessment of 13 projects and further construction budget trimming on 24 projects. The council approved recommendations from the Court Facilities Working Group that are expected to yield significant, long-term savings throughout the $5 billion program.

The New Sacramento Criminal Courthouse must reduce hard construction costs by a minimum of 10 percent. Currently the proposed courthouse for Sacramento is estimated to cost $437,516,000 million. A 10 percent cut will reduce costs by $43,751,600 million. One recommendation made by the Judicial Council is that Sacramento reduces number of courtrooms from 44 to 42 to reflect reduction of 2 new judgeships, pending fall 2012 Judicial Council action to adopt update to new judgeship requirements, in addition to 10% reduction. The new courthouse budget would now be $393,764,400 million with a target to achieve low-cost construction methodologies.

Senate Bill 1407 was enacted in 2008 to authorize up to $5 billion in funding for new and renovated courthouses using court fees, penalties, and assessments rather than taxpayer revenues from the state’s General Fund. Since 2009, more than $1.1 billion in funding originally designated for courthouse construction has been borrowed, swept to the state’s General Fund, or redirected to court operations.

 

http://www.courts.ca.gov/documents/jc-20120424-itemD.pdf

http://www.courts.ca.gov/documents/oc12-Apr_24.pdf

Railroad Track Relocation

Sacramento railroad track relocation project (click to enlarge)

This project is relocating and realign about 2.3 miles of Union Pacific railroad track to make room for an expanded Sacramento Valley Station, which will be turned into an intermodal hub that will handle Amtrak and Capitol Corridor service as well as light rail and bus services. The cost to relocate the track is $45 million and paid for by both The Department of Transportation that won $20 million in federal stimulus money and more than $25 million in state Proposition 1B money.

The track relocation project began in April of last year is estimated to be completed in December 2012.

Wells Fargo Center 20th Anniversary

Wells Fargo Center under construction in 1991

Today is the 20^th anniversary of the Grand Opening for the Wells Fargo Center on Capitol Mall. As Sacramento’s tallest building at 423 ft, it has a distinctive curved copper roof caps the building, with a cleft in its middle as a postmodern architectural style. Inside the building there is a five-story clear glass atrium with granite and marble walls with a Wells Fargo history museum is located in the lobby and Il Fornaio Restaurant.

Wells Fargo Center under construction in 1991

The architect Hellmuth, Obata and Kassenbaum (HOK) designed the tower which also won the BOMA Building of the Year Award for 1994. This 502,000 sf. building occupies an entire 2.3 acre city block with a masonry & granite exterior. There are a total of 33 floors (30 on ground, 3 below), 13 elevators count and an adjoining 6-story parking garage.

Wells Fargo Center under construction in 1991

The tower was originally constructed for $120 million in 1992 and sold in 2000 for $130 million. The building was later resold again to to Hines’ Core Fund in 2007 for $237,250,000 million.

Wells Fargo Center 2008

Wells Fargo Center, 400 Capitol Mall, Sacramento, CA 95814, California, USA.

Cost Reductions Urged for New Sacramento County Courthouse

The Judicial Council working group overseeing the judicial branch’s facilities program is recommending that 13 planned courthouse projects be reassessed with the goal of significantly lowering their costs. Options to be considered in these projects may include significantly reducing square footage, undertaking renovations instead of new construction, evaluating lease options, and using lower-cost construction methods where feasible.

The Sacramento Courthouse is recommended to "Reduce Costs Now" by the Judicial Council. The current proposal includes: 44 courtroom, 405,500 sf., and an estimated total cost: $437,516,000. Expected completion: 1Q 2015

The committee will also recommend to the Judicial Council that the remaining 25 active projects funded under Senate Bill 1407 continue as planned, but undergo other cost reductions as they proceed. See the list of recommendations here.

The working group’s recommendations are expected to be considered by the Judicial Council at its April 24, 2012, meeting. The council can accept, modify, or reject the recommendations, which will be posted on the California Courts website.

http://www.courts.ca.gov/facilities-sacramento.htm

Arena Effort Dead

Yesterday Mayor Kevin Johnson admitted “Is the deal as we know it dead? Absolutely.”  According to the Sacramento Press, The breaking point for Johnson, he said, was the Maloofs’ refusal to put up collateral for the city’s refinance of their loan. I personally can’t believe this was not in the agreed upon in the March 1st framework… but apparently it wasn’t. In addition, the Maloof’s also refused to pay $3.26 million in pre-development costs for a building they would not own. This doesn’t sound all that odd to me. Why as a renter of a new building (Maloof’s) would they also pay for the pre-development costs? Those costs are traditionally picked up by the owners which in this case would be the city.

This is all a sad state of affairs. If the Kings go, don’t think the city will just pick-up an expansion team to fill the void. … that would be an additional cost of $100 to $300 million payed to the NBA and its owners.

Sutter Medical Center Expansion

Anderson Lucchetti Women’s and Children’s Center

Construction crews continue work on the spanning structure over L Street, which is scheduled to be completed this summer. The next step is connecting the steel of the spanning structure with Sutter General Hospital on the second, third and fourth floors and completing the exterior. The spanning structure includes two walkways on the second floor – with one for patients and staff, and another for family and the public – clinical space on the third floor with a connection to the operating rooms in Sutter General, and staff lockers and mechanical rooms on the fourth floor.

Anderson Lucchetti Women’s and Children’s Center

The look of the Women’s and Children’s Center is being completed as metal panels are currently being installed. This will include copper panels similar to the look of Capitol Pavilion on the first floor.

Anderson Lucchetti Women’s and Children’s Center

Anderson Lucchetti Women’s and Children’s Center walkways

After the spanning structure is completed, the construction team will work on two other bridges that will connect the entire campus: one over 28th Street connecting the Sutter Cancer Center/Buhler Building to Sutter Capitol Pavilion, and an open-air bridge connecting the south parking lot on 29th Street to the Anderson Lucchetti Women’s and Children’s Center.

Anderson Lucchetti Women’s and Children’s Center

Anderson Lucchetti Women’s and Children’s Center

153.5 ft tall structure
$600 million project
To be completed in late 2012 Sutter Medical Center, Sacramento campus expansion will be completed in 2013. http://www.sutterdistrict.org/

626 I Street Rehabilitation Project

626 I Street Rehabilitation Project

This project will be completed in September 2012; it will consist of 108 units for extremely low income elderly persons. Rehab cost $19.4 million.

626 I Street before rehab March 2010

SHRA Report

La Valentina Station Construction

Corner of 12th and D
David Baker + Partners Architects
$27 million project
81 units of affordable housing
Scheduled to be completed in summer 2012. One of the first near-zero-energy projects in the Sacramento area.

7th & H SRO Construction

7th & H SRO Construction

Eight story 102 foot tall building
$47 million project
Developer and owner Mercy Housing California
122 studios (325sf) and 28 one bed room (500sf) units
Sixteen parking spaces, retail and health clinic on the ground floor. Construction is expected to be complete in October 2012

7th & H SRO Construction

7th & H SRO Construction

7th & H SRO Construction

East End Gateway Construction

East End Gateway 2

The contractor will be installing three levels of concrete blocks on top of the footings for East End Gateway 2.  They will also be installing steel reinforcement bar, underslab electrical conduit and plumbing and pouring the concrete slab.

In addition, the contractor will be laying-out and digging the footings that will form the perimeter of the slab for East End Gateway 3. Once the contractor digs out the footings, they will be installing steel reinforcement bar and sleeves to accommodate electrical and plumbing, pouring the concrete footings and installing the first three levels of concrete blocks on top of the footings.

Estimated Development Costs: $25,838,000.  84 market rate one and two bedroom apartment units, ground floor retail/commercial space and 93 parking spaces. Location: SW and NW corner of 16th and O Streets. Developer: Ravel Rasmussen Properties and Separovich/Domich Real Estate; Architect: Stantec Architecture

CADA Latest News

East End Gateway 2

East End Gateway 3

East End Gateway 2 & 3 foundation work

East End Gateway 2 & 3 rendering

Sustainable Regional Growth Plans

In November, the Sacramento Area Council of Governments released its long awaited draft Sustainable Communities Strategy (SCS) -- a plan for guiding regional growth intended to reduce the region's greenhouse gas emissions while accommodating nearly 900,000 more residents by 2035. SACOG's SCS is one of four such plans being drafted by the state's largest metro regions in order to company with Senate Bill 375, the 2008 law that seeks to reduce greenhouse gas emissions through the promotion of more compact development and alternative transportation methods. While SCS's in other regions have drawn criticism, the California Planning & Development Report reports that SACOG's SCS has been widely praised for preserving farmland and encouraging greater density in urban centers. The SCS is expected to be adopted by SACOG's board in April.

Please read more about SCS Blueprint Plan here: Sacramento Region SCS Builds on Tradition of Blueprint Planning  & SB 375 Is Now Law -- But What Will It Do?

SactoMoFo 4! Saturday, April 21st 11am - 6pm

Check out http://www.facebook.com/SactoMoFo for more info!!

Arena Debacle?

It looks as if U.S. Rep. Doris Matsui might derail the proposed new arena in the railyards shortly after Sacramento Mayor Johnson declared that the city is "on the verge of doing something very special." Her statement was made on where the proposed arena is planned and where  the intermodal transportation center (ITC) was also originally supposed to be built.  

In a SacBee Editorial: Don't build a big barrier inrailyard, Matsui draws attention to how the current arena plan might not work. Before the arena plans came to be, for ten years ITC was in the planning stages with both renderings and site plans released in the last two years. This current arena effort would toss out all those dollars spent and years planning the ITC.  After reading the article, Matsui draws concern by emphasizing that the aim should be to create a well-integrated center of architectural and functional significance that has a strong sense of place. I heard that statement to infer that the new arena would greatly reduce the functionality of the transportation center using the current plans, thus putting Federal Funds in jeopardy to fund the ITC.

The article also refers to the Rose Center of the Urban Land Institute suggestion to place a public plaza in the corridor from the depot to the Central Shops with the arena as far west as possible on the site and transportation facilities as far east as possible. The editorial brings up some good points and the comments are informing.

City Council agrees to Arena Financing Plan

In a 7-2 vote, the council approved a nonbinding "term sheet" with the Sacramento Kings, AEG and the development firm slated to build the project. By approving the plan, the council has set into motion a series of critical votes in the coming months. Those votes must occur under a tight timeline, as the city works toward breaking ground on the arena by next summer to open the facility for the 2015-16 NBA season.

Now the Kings and AEG will begin work on a memorandum of understanding on revenue sharing and arena expenses. That agreement is scheduled to be completed by April 15. In addition, the city has looked at leasing parking assets to a private firm in exchange for an upfront payment that would go toward the arena. In recent weeks, city officials have floated another idea: to create a municipal finance authority that would allow the city to maintain control of its parking operations. Under that plan, the city would issue bonds to fund the arena project and pay that debt back through parking revenue

Last night’s vote by the council also approved the spending of $850,000from the city's parking fund to hire a team of consultants to help in the pre-development process.

Framework for New Arena

In addition to this new rendering for the proposed arena in the railyards, the city has released the financial term sheet detailing the huge finical commitment the city will be making to lease the city’s parking operations for 50-years.

City Public Commitment: $255.5 million

·         $230 million parking monetization

·         $18.5 million from land sales. (Estimated total value of land salesis$30.7million;however, the City has used conservative assumptions. So only $18.5 million is budgeted for the ESC in order to address variability of market conditions and to account for expenses associated with sale of the land.)

·         $5 million Sheraton MOPA (for predevelopment costs under a public-private partnership)

·         $1.5 million parking infrastructure fund(for predevelopment costs)

Capital Campaign (e.g., bricks, other) $3 million
Sacramento Kings $73.25 million
Anschutz Entertainment Group (AEG) $58.75 million

TOTAL $390.5million

The new arena plan includes a 30-year commitment from the Kings to stay in Sacramento, and a 30-year operating lease with AEG. All non-Kings events will be charged a Facility Fee of $1 per ticket. There will also be a tiered revenue-sharing plan that gives the city 15 percent of the first $10 million net operating profit from the facility, and 30 percent of the next $5 million of profit. The city would get 50 percent of all net profit after that.

The ICON-Taylor team has guaranteed to deliver a completed arena by September 2015 – in time for the start of the 2015-16 basketball season – and cost overrun protection, assuring the city of a $391 million final price tag. Taylor would build a $25 million adjacent garage with a combination of private funds and profits from a previous city/Taylor redevelopment project.

The nonbinding  term sheet must be approved by the City Council this Tuesday for the project to go forward in addition to spend $850,000 from the city's parking fund to move ahead on preliminary steps in the process.

City officials say the parties would need to commit by April 3 to spending a combined $13 million on engineering, environmental and other costs.

The documents show for the first time how the city would backfill the $9 million a year the general fund would lose once the city completes its plan to extract upfront cash from its parking operations.

It should also be mentioned that this project is going to use the city's MOPA funds, proceeds from the sale of the Sheraton that were supposed to be use for David Taylor's 800 K Street project. With SHRA dissolved and MOPA funds spent on the arena, K Street might have an abandon dirt lot for years to come.

To read the term sheet for the Sacramento Entertainment and Sports Complex, click here.

Streetcar Planning Study Complete

The City of Sacramento has compleated their initial study to support the reintronuction of streetcars to identify the logical first line. For nearly two decades, the concept of implementing a streetcar line in the core of the Sacramento region has surfaced in multiple plans and studies including the Downtown Sacramento Historic Trolley Study (1994), the SACOG Metropolitan Transportation Plan for 2035 (2008), the City of Sacramento and West Sacramento General Plans, and the Sacramento Regional Transit Long Range Plan (2009). Since May 2006, the City of Sacramento has worked in partnership with the City of West Sacramento, the Sacramento Regional Transit District and the Yolo County Transportation District to develop a streetcar project that will connect Downtown Sacramento (Downtown Riverfront Streetcar line) to West Sacramento.

As you can see by this starter line map, plans to run the Streetcars down Capitol Mall have been revised to instead go up 3rd Street and then east on H & I Streets by the proposed arena in the Railyards. I really liked the idea of Streetcars down Capitol Mall but I can only guess that it would not have created the same revenue as other more populated areas.

The estimated total project cost for the starter line is $125-135 million. This cost includes track installation, stop improvements including sidewalk improvements where needed, the conversion of Third Street to two-way operation from Capitol Mall to L Street, train signaling and power systems, streetcar vehicles, a storage/light maintenance facility, professional services (i.e., engineering design), and a project reserve. The annual operating and maintenance cost for the proposed starter line is estimated at $4 million, In 2008 the City of West Sacramento passed Measure K, which is a sales tax measure that includes revenues estimated at $1.2m per year for operation and maintenance of the Downtown/Riverfront Streetcar.

Next Steps

The balance of the project cost would be provided by a combination of state, regional, and local funds. It is recommended that the partnership of City of West Sacramento, RT, and YCTD to pursue a federal Small Starts 5309 grant for the starter line.  The partnership would work collaboratively to pursue state and regional funds. The balance of the remaining funding needed, after any revenues generated from state or regional sources, would be provided by the two cities based on their fair share of the project costs.

It is also recommended that the City of Sacramento work in partnership with the City of West Sacramento, RT, and the Yolo County Transportation District (YCTD) to determine a fare and sponsorship strategy for the starter line. The approach to fares could involve one fixed fare (i.e., $2 is a typical one-way trip cost for other streetcar lines with a fixed fare), a distance-based fare, or a “fare free zone” in the core with fares for longer distance trips originating outside the zone (i.e., similar to the City of Portland’s fare structure).

Once the funding is in place, and environmental studies and design plans are completed, construction of the Starter Line is anticipated to take 18 months.

If this project does get funded, I vote that the city use vintage streetcars. They have a certian amount of charm that the modern streetcars don't have. Watching these old streetcars pass by is always a time-warp. They're colorful, elegant, and very functional, which is why they would be one of my favorite additions to the fabric of the city.

New Arena Deal Achieved

This morning a tentative deal was announced to build a new arena in the downtown railyards and it  looks as if it will bridge the funding gap many people including myself did not see doable. Details are expected to be released in a term sheet by the city this Thursday. Thus far, here is what has been disclosed.

More than half the money would come from leasing the city's parking to a private operator, but the team's owners say they've also agreed to pay $75 million upfront.

The city will contribute $200 million to $250 million to the deal, primarily from leasing its parking garages to a private operator.

Other small pots of money include revenue from cell phone tower leases and electronic billboards. The deal does not include a hotel tax.

The city will collect a 3 percent to 5 percent surcharge on every ticket for every event at the arena, both sports and nonsports. That revenue will go directly into the city's general fund. That figure is expected to be in the millions of dollars annually, and will cover a portion of the $9 million in lost revenues from the city's planned lease of its downtown garages.

The Maloofs will pay off their current $67 million loan with the city. They will obtain a new, longer term loan, using the team and arena-related revenue as collateral.

Entertainment conglomerate AEG has agreed to pay nearly $60 million for the right to operate the city-owned facility

The City Council is expected to vote on the deal at its March 6 meeting.

Business Improvement Districts

Midtown Property and Business Improvement District

Next week the City Council will discuss renewing the Midtown Sacramento Property and Business Improvement District (PBID) for an additional five years and also form a new improvement district within the R Street corridor.  The Midtown district was originally formed in January 2008 to provide a marketing/advocacy program to create a positive business atmosphere in the District.

R Street Property and Business Improvement District

Participation in the proposed PBID is to serve the public interest by providing security services, street maintenance, parking services, and marketing efforts to enhance economic development. If the Midtown PBID is renewed, the City will participate as a property owner and will have a total first-year annual assessment of approximately $22,250. This is an increase by $1770 due to the assumption of SHRA properties.  If the R Street corridor PBID is formed, the City will have a total annual assessment of approximately $610. The City’s assessment will not increase for the five year authorization of the PBID.

Sacramento Granicus

Consolidating the Design and Planning Commissions

Yesterday the City Council meet to discuss the merging of the Design Commission and the Planning Commission to be renamed the Planning and Design Commission. This newly formed commission is expected to be adopted on February 28^thand the recruitment process for seating the new commission will take approximately three months. The City’s advisory board has recommended consolidating the Commissions but increasing the commission size to 13 members; and establishing required qualifications for each member.

A consolidation of the Commissions is anticipated on savings of multiple departmental staff time and resources. Currently estimated staff time directly associated with staffing the Design Commission meeting calendar is approximately $25,000. This direct amount would be a General Fund savings in the consolidation.

The Design Commission’s workload has dropped off since 2007 with only three (3) projects being heard in 2010 and only five (5) being heard in 2011. As you can tell by my postings here, things have really slowed down.