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Thursday, May 23, 2013
Cashing out of The Kay: Building holding Pizza Rock, K-Bar and Dive Bar up for sale [Updated]
by Jared Goyette, published on December 10, 2012 at 9:39 AM
Storyline: Community
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The area around K Street in downtown Sacramento has done well in recent years, and one group of developers is hoping for a return on their investment. If the price is right, the city could see money headed its way as well.
The building that holds Pizza Rock, K-Bar, and Dive Bar, along with six other establishments, is up for sale. Local developer David S. Taylor, who owns the property along with the CIM Group of Los Angeles, says they are "testing the market" and will only sell with the right offer. They have not listed a price.
The City of Sacramento subsidized the project, called 1000 Kay, with $5.7 million in 2009, and Taylor said the terms of the deal were such that the city would be in line to get the money back if Taylor's company and CIM received an offer that was high enough. The money from any purchase would first go to the investors, and if they made a specified amount of profit, the remaining amount would go to the city. (Taylor wasn't sure what the exact figures were, but we're working to get those from city staff soon.)
They decided to sell because they believed they had "nine high-quality tenants" in the building. The sale shouldn't affect the businesses, Taylor said.
While Taylor said that one of their initial fears when developing the project was that "no one would show up," the area has seen a resurgence in recent years, with a cluster of restaurants and cafes opening both on K Street and in the surrounding blocks, including K-Bar, Tequila Museo Mayahuel, Blackbird Kitchen & Bar, Estelle’s Patisserie, Plaza Café Lounge and Broadacre Coffee.
The downtown Business Partnership has sought to take advantage of the momentum by rebranding the area between 7th and 13th streets as "The Kay."
In other words, it was a "Field of Dreams" type situation: he built it, and the people did in fact show up.
"It shows that if you provide good entertainment options, people will come," Taylor said. "They will come in droves and they will come consistently."
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If I remember correctly, some of the projects involving redevelopment money included details that the city would get some amount of the sale price as part of deal with the city. I would be interested in reading if this project was one of those (I know 800J was one), and if so, what are the details.
http://www.sacramentopress.com/headline/9795/K_Street_Mall_redevelopment_continues
"The Sacramento City Council came under fire in March for approving $5.7 million in subsidies for the project on the blighted mall. The funding includes $5.4 million for tenant and public improvements, and nearly $300,000 for abatement and interior demolition."
In addition to the subsidies for the District 30/Pizza Rock/Dive Bar project, the city also provided $9.8 million plus the value of the land, plus a couple of additional loans to keep the Cosmopolitan Cabaret open:
http://www.sacramentopress.com/headline/6637/K_Street_Subsidies
"In the last 5 years the city has gave out millions in an effort to revitalize K Street Mall. To name a few, the Cosmopolitan received a $9.8 million subsidy..."
Let's hope this doesn't become another example of "socialize the losses and privatize the profits": like the Sheraton project, the sale of this land should reimburse some of the value invested by the city of Sacramento in the project!
Potentially, funds thus generated could be used to catalyze other projects currently in stasis due to the demise of redevelopment, like the 800 block of K Street, which was not able to get funded before the clock ran out for redevelopment projects.
Keep out of town developers out of our backyard, since they have no sincere interest in revitalizing downtown; they are only in it for their selfish gains.
In addition, I want to point out that there are only 6 tenants not 9, and before that there used to be 7 high quality tenants. Lastly, if Taylor knew that “no one would show up” why would they develop here? SIMPLE; free land and lucrative subsidies. These spell out high returns with very little, if any, capital deployment from their end. These guys do not know the meaning of free enterprise, which ultimately leaves the small, local businessman, developer, entrepreneur out of the picture.