Railyards

Immense railyards project gets manager

2011-07-09T00:56:46Z

New Sacramento Railyards Project Manager Fran Lee Halbakken said she became a civil engineer because she loves solving problems.

Halbakken is now tackling challenges with one of the city's and country's largest redevelopment projects after starting in her new role June 27. At nearly 240 acres of combined private and city land, the railyards project is so big it will virtually double the size of the central business district.

The key position was created at a critical stage of the massive undertaking. The private portion of the site has a new owner and the projects’ housing plan must be revised in light of the recession. Also, plans for a new regional transit center must be coordinated with efforts to make serious headway on financing an adjacent arena by next spring.

Halbakken got her civil engineering degree at Sacramento State. After college, she went to work with the U.S. Army Corps of Engineers and found working in the public sector suited her.

"I always knew I was going to be a public servant," said Halbakken, sitting in her City Hall office. "That was a huge appeal, knowing you could make the world better."

She’s worked for the city for 25 years.

Since 2004, she'd worked as operations manager for the city's Department of Transportation. In that post, Halbakken oversaw transportation policy development and planning. Key projects included co-managing development of a strategic plan for Sacramento River crossings and managing development of the central city parking plan.

She also played a key role in obtaining $225 million in local, state and federal funding for railyards infrastructure such as bridges, roads and railroad track relocation. The funding was gathered after the city and private railyards developer Thomas Enterprises developed the project's land use plan in 2006 and 2007. The money will finance work that will continue into 2015.

After Inland American Real Estate Trust took possession of most of the railyards site last fall, Halbakken led the transfer of ownership and agreements of the property, according to transportation department spokeswoman Linda Tucker.

In her new position, Halbakken has been loaned out to the City Manager's office to work on the railyards project full-time. She now oversees all aspects of the city's end in the enterprise, including planning, funding efforts and coordination with private developers.

Urban development experts recommended smaller-scale, market-driven development of the railyards in January.

The city needed to create the new post at this time because city staff must now work with Inland to revise plans for housing that must be built as a requirement of some of the funding already acquired.

Much has changed in the housing market since the land use plan was approved by the Sacramento City Council in December 2007. The start of housing construction hasn't been scheduled, but should be within five years, Halbakken said.

The new post was also created as an attempt to build a new sports and entertainment complex downtown is kicking into high gear at the mayor's office. Halbakken is overseeing coordination of plans for a future transit center with the developing plans for a Sacramento Kings arena.

The two facilities are expected to sit adjacent to each other on 33 acres of railyards land the city bought from Thomas Enterprises. She's working with a city-wide team to answer questions about how to ensure both facilities are high-quality, she added.

They're also looking at how to promote secondary development around the site, from downtown to the historic Southern Pacific Railroad central shops and the area to the east.

Halbakken is already working to keep current railyards infrastructure projects on schedule. Those include track relocation, which is phase 1 of transit center construction, and construction of bridges to extend Fifth and Sixth streets over the tracks north of H Street.

She's not directly involved, but the city is now gearing up for infrastructure work that will improve highway access to the site and nearby Township 9: a $10 million off-ramp and road expansion and improvement project at the Richards Boulevard interchange at Interstate 5 slated to start next week.

Off ramps will each gain another lane. Richards Boulevard will be expanded with two more lanes in the interchange. Other improvements will be made to Richards Boulevard, Jibboom Street and Bercut Drive, which will be extended into the railyards site.

Bike lanes, sidewalks and planter strips will be added to Jibboom Street and Bercut Drive. The work on the I-5/Richards to Railyards Access Improvements project is expected to be done in the fall of 2012 and will prepare the area for the first phase or two of railyards and Township 9 development.

Tucker said in 10 to 20 years, the intersection will be redesigned to accommodate more traffic.

Halbakken is also starting preliminary planning for other aspects of the railyards project that are at least five years away, such as the transit center's second phase – improvements to the adjacent historic Sacramento Valley Station train depot.

City officials are still trying to determine the impact California's new state budget may have on the railyards finance plan, Tucker added.

The budget may cause an $80 million funding gap for the railyards' planned $745 million in infrastructure if redevelopment agencies are no longer allowed to keep tax increments – the extra property tax revenue generated by development of the site, Halbakken said.

The Sacramento native worked as an engineer managing and designing facilities and high-level engineering projects with the U.S. Army Corps of Engineers until joining the city’s Department of Public Works in 1986.

She said she feels lucky to work on a legacy project that will lay the groundwork for the growth of her hometown's central business district in years to come.

"I think this is really important to the city," she said. "One of the reasons I left the federal government was to work for the city where I was born and raised – and to give back."

Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

Railyards growth should start small, experts say

2011-01-29T01:38:02Z

The next stage of growth for Sacramento's historic railyards should continue to connect the site with surrounding areas, allowing for smaller-scale development of neighborhoods linked by public transit and an open-space network, urban development experts said Friday at City Hall.

An eight-person panel of development and design experts presented recommendations for downtown railyards development to the city.

They were brought to Sacramento through a fellowship program sponsored by the Urban Land Institute's Daniel Rose Center for Public Leadership in Land Use. The panelists spent three days working in Sacramento and touring the railyards before making the recommendations.

The city and the railyards’ former owner, Thomas Enterprises, pulled together $225 million in local, state and federal funding to build infrastructure including streets, bridges and relocated train tracks. Site cleanup and completed environmental reviews have helped ready the site for construction.

As one of the country's largest infill projects, redeveloping the roughly 240-acre site will take years and must be market-driven. The city may own only 33 acres of that site. Yet as "good stewards," city officials and staff must now help reshape the development vision to plan for new economic realities and allow incremental growth, said panel co-chair Con Howe, managing director of CityView Los Angeles Fund and Los Angeles' former planning director.

"Owners and developers come and go," Howe said. "But the city will be the steward ... for a very long time."

The plan for the site should be integrated with plans for the River District, Sacramento and American riverfronts, the central business district, residential neighborhoods such as Midtown, open space and transportation networks, panelists said.

Sacramento's 2030 general plan does that to a small degree. But specific plans for each area are far more detailed.

"We think it's essential you look at the city ... and start to think about all these resources you could be connecting ... so the whole is greater than the sum of its parts," said Robert Lane, senior fellow for urban design at the Regional Plan Association in New York.

The plan should view the railyards as a transit district, rather than just a site containing a transit center, they said.

The panelists recognized that all cities must work in an economic climate where there's a lack of both public funding and private investment. They recommended linking public and private investments to build small neighborhoods that are each complete as a place.

The most expensive way to start would be from the inside out, starting with development of the historic central railroad shops. An alternative would be to allow more natural growth from the city to move into the site, said Frank Cannon, president of Union Station Neighborhood Company in Denver.

Denver provides a good example of how long redevelopment of a large former railyard can take. It's taken at least 30 years, three mayoral administrations and multiple property owners to develop its 200-acre freight yard. After consolidating rail corridors, reclaiming riverfront, building streets and other infrastructure and investing in a multi-modal transit facility, the area is now one of Denver's most desirable, Cannon said.

The city should also start finding ways to expose residents and visitors to the historic site and create a sense of place there, they said.

The site hasn't been open to the public for decades, so most Sacramentans don't have a true sense of the history and size of the railyards and its Central Shops.

John Hodgson, former chair of the ULI Sacramento District Council, said he was "blown away" when he toured the site for the first time last summer after living here for about 40 years.

While long-term plans could include public markets and the future railroad museum, the city should create low-cost uses that will get people to the site and excite them about future development possibilities, said Marlene Gafrick, director of Houston's Planning and Development Department.

Interim uses could include street festivals, sports, arts, culture, wellness and educational events inside and outside the central shops, she said.

Representatives of Thomas Enterprises and Inland American Real Estate Trust, which now owns 203 acres of railyards, attended the presentation.

Mayor Kevin Johnson was among four mayors chosen as the center's 2010/2011 fellows. The other cities are Detroit, Houston and Charlotte, N.C.

Johnson's efforts to promote Sacramento and a national buzz about the railyards site helped the city win one of the four spots, city Infill Coordinator Desmond Parrington said later.

Sacramento's fellowship team also includes Assistant City Manager John Dangberg, Sacramento Area Council of Governments Executive Director Mike McKeever and Hodgson, president of The Hodgson Company, a Sacramento land use development and advocacy firm. Each of those three served on a fellowship panel for one of the other cities.

The fellowship program seeks out cities with interesting land-use challenges and provides free assistance.

Johnson and the city's three other fellows will visit Miami in February and Denver in June to learn from land-use issues there. They and city staff will work with panel members to build on and implement the recommendations over the next year.

"It's a very good juncture for us to get that kind of feedback," Parrington said. "It's a good juncture not only because we have a change in the developer, but because of the economy. The plan (by Thomas Enterprises) was developed in the height of the boom. Now we're in the trough. It's a good time to revisit things."

Inland to reimburse city for railyards overpayment

2011-01-14T02:34:46Z

The new downtown railyards owner has consented to cover a $3.2 million debt owed to the city for a key parcel of land, a company spokesman said Thursday.

Inland American Real Estate Trust agreed to reimburse the city for the amount taxpayers overpaid the railyards' former owner, developer Thomas Enterprises, for nearly 33 acres of land next to the historic train depot: $2.65 million plus interest, said Inland spokesman Jared Ficker of California Strategies, a public affairs company.

Last spring, a court arbitrator ended more than three years of dispute between the city and Thomas by setting the value for the land at $52.35 million, significantly less than the $55 million the city paid in 2006.

"From our perspective, this had to get resolved so we could move the project forward. So that's what we did," Ficker said.

The city plans to build a new regional transit center on the land. The property is also being discussed as a possible location for a new arena.

Ownership of the parcel must be transferred to the city so the city can request bids for track relocation work within the next few weeks – which in turn protects federal and state funding for track relocation and other railyards infrastructure. It's too early to provide a figure for the amount of funding that will be protected, Ficker said.

"We knew this was a critical path item to moving forward on the track relocation," Ficker said.

Thomas Enterprises had proposed several alternatives to reimbursing the city for the overpayment, but no agreement was reached before the company lost ownership of the railyards in a foreclosure auction.

The Sacramento City Council must approve the parcel purchase and sale agreement and a handful of other agreements. The items are expected to go before them next week or the week after, Ficker said.

Photo by Brandon Darnell. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

Inland moves cautiously on railyards

2011-01-05T04:37:14Z

The new owner of the downtown railyards development site on Tuesday night disclosed plans to move slowly on the property.

A consultant for the suburban Chicago real estate investment firm, Inland American Real Estate Trust, said the company has "no immediate plans" to change the land use plan the Sacramento City Council approved for the country's largest infill project under its previous owner, Thomas Enterprises.

In 2011, Inland will concentrate on continuing infrastructure projects including bridge construction and railroad track relocation – the "critical building block" for further development, said Inland spokesman Jared Ficker of California Strategies, a public affairs company.

"We need to stay focused on the current and substantial infrastructure development," he said. "We're going to be focused on that for the next year."

The 13-minute presentation before the City Council was Inland's first public appearance and discussion of its plans for the site since foreclosing on the property near Sacramento Valley Station on Oct. 22. Inland officials including Project Manager Dean Stermer were present but didn't address the council. Thomas Enterprises officials also attended the meeting.

The Oak Brook, Ill., company took ownership of the 203-acre site dubbed the Railyards after Georgia developer Thomas Enterprises defaulted on nearly $194 million in loans in June.

Inland American, one of five real estate investment trusts owned by the Inland Real Estate Group of Companies, created Inland American Sacramento LLC as a single-asset entity and holder of the railyards property. The parent company has diverse real estate assets in every state, with a total value exceeding $25 billion.

Inland will continue working with the city to resolve the transfer of a parcel now owned by the city. Inland will present a series of agreements to help work out the transition in coming weeks, Ficker said.

Since October, Inland has been working with city, state and independent contractors to keep infrastructure construction going on such projects as the Fifth and Sixth street bridges and track relocation and to protect state and federal funding for the work.

About $167 million in state, federal and local funds plus $71 million in private funds from Thomas – a total of $238 million – has been lined up for infrastructure, Assistant City Manager John Dangberg said.

The railyards once drove Sacramento's economy after they were opened in the steam locomotive era by Central Pacific, which later became Southern Pacific. The heart of the railyards were its railroad shops. Those central shops were closed in 1999 after Union Pacific bought Southern Pacific.

Eight central shop buildings were all that remained when Thomas Enterprises bought 238 acres of the historic railyards from Union Pacific in late December 2006. Thomas planned to transform the property into a $6 billion, 21st-century mixed-use district designed to recapture the importance of the former railroad site and double the size of downtown. Thomas was working closely with the city, which expects to build a regional transit center on adjacent land.

Thomas' plans called for more than 12,000 residential units, 2.3 million square feet of office space, 1.4 million square feet of retail, nearly 500,000 square feet of mixed-use space and 46 acres of parks and other open space. The heart of the development was expected to be a cultural center based in rehabbed railroad shops sitting around a large central plaza.

Inland plans to work closely with the California Department of Parks and Recreation to rehab the central shops, Ficker said.

Thomas began cleaning the shops of lead paint, asbestos, metals and other industrial toxins in July 2009. Thomas has completed nearly all soil remediation caused by about 150 years of industrial use on the site. The only work that remains is under railroad tracks and can't be cleaned until the tracks are relocated, Dangberg said.

The track relocation project is expected to be put out for bid this month. A contract must be approved by March to keep $25 million in state Proposition 1B monies already awarded, said Jerry Way, director of the city's transportation department.

Mayor Kevin Johnson thanked Inland officials for all their work so far and asked them to return to the council "sooner rather than later" for council input when they begin considering modifying the land use plan.

"You guys came in and grabbed the bull by the horns and did everything we could have asked for," he said. "We have some ideas we would like to share at the appropriate time."

Photo of Jared Ficker, left, and Dean Stermer by Kathleen Haley. Bridge construction photo by Brandon Darnell. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

Inland presentation postponed

2010-12-14T23:07:48Z

The railyards' new owner won't make its first presentation to the Sacramento City Council Tuesday night. The site update has been postponed until after the holidays.

City staff withdrew the item from the council agenda Tuesday morning under agreement with the Inland Real Estate Group of Companies, a suburban Chicago real estate investment firm that foreclosed on the defaulted property in October, said Assistant City Manager John Dangberg.

Thomas Enterprises was developing the site as the Railyards, but defaulted on loans from Inland in June.

Inland's railyards project team felt it needed a couple more weeks to understand issues and flesh out the presentation.

"We mutually agreed that it would be better timing early in January," Dangberg said. "They felt they'd have a better presentation early next year."

Inland representatives have already met privately with individual council members and assured council and city staff that they're committed to the site's future, he added.

The council agenda still contains a consent calendar item authorizing Interim City Manager Gus Vina to appropriate $7.5 million in federal funds and transfer $1.5 million from the city's State and Federal Grant Match Project for railyards access improvements to Interstate 5 and Richards Boulevard.

Inland officials could not be reached for comment.

Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

Photo by Brandon Darnell.

Inland to present plans to council

2010-12-11T01:33:45Z

The new owner of the historic railyards will roughly outline plans for the site Tuesday.

Representatives for the Inland Real Estate Group of Companies, a Chicago-area real estate investment firm, are scheduled to appear before the Sacramento City Council for the first time since taking over the defaulted property Oct. 22.

They will briefly discuss their approach to the project and what may be the focus in the future, as well as give a quick update on infrastructure work taken over from Thomas Enterprises and other issues they're focusing on in the transition, said Assistant City Manager John Dangberg.

"I think they've gotten their bearings and just want to share with the public where they're at," Dangberg said.

Thomas Enterprises was developing the site as the Railyards, but defaulted on loans from Inland in June. Inland representatives have engaged in "a tremendous amount of coordination" with city, state and federal agencies for more than a month to ensure infrastructure work and its funding continue, said Dean Stermer, who heads up Inland's team on the project.

"Our primary job is to complete the work that's ongoing right now," Stermer said Friday from the company's offices in Oak Brook, Ill. "That's 110 percent everyone's focus right now."

The council agenda also contains a consent calendar item authorizing Interim City Manager Gus Vina to appropriate $7.5 million in federal funds and transfer $1.5 million from the city's State and Federal Grant Match Project for railyards access improvements to Richards Boulevard and Interstate 5. The contract is expected to be awarded in March. The total cost of the project is estimated at more than $10 million.

The City Council meeting at 6 p.m. Tuesday will be the council's last for 2010.

Photos by Brandon Darnell. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

Inland forecloses on Railyards

2010-10-23T01:24:16Z

A Chicago-area real estate investment company took possession of most of downtown Sacramento's historic railyards Friday in a courthouse auction after no one else bid.

The company, Inland American Real Estate Trust, officially foreclosed on Thomas Enterprises' 203-acre Railyards site by winning the auction outside the Sacramento County courthouse Friday afternoon. Inland had set the opening bid at $50,350,000 in an off-site process earlier this week.

"Inland will now roll up its sleeves and work with the city, state of California and other agencies to allow the project to proceed," Inland representative Jared Ficker said just minutes after the auction.

Inland will work with the city, state and independent contractors to keep infrastructure construction going on such projects as the Fifth and Sixth street bridges and railroad track relocation, according to Ficker and Assistant City Manager John Dangberg, who attended the trustee sale.

The company is putting together a development team and will set up an office in Sacramento. Ficker said it’s too early to comment on how the planned development would change under new ownership. Inland expects to announce its plans within two months.

Thomas Enterprises staff will serve as project consultants for Inland for an undetermined amount of time during the transition. Under an agreement between the two companies, Thomas will have the right to buy the Inland subsidiary that now owns the Railyards for the next 18 months.

Dangberg applauded Thomas Enterprises for all of its hard work at the site and in getting $154 million in federal and state funding for the development.

"The city of Sacramento is looking very much forward to working with Inland for a smooth transition," he said.

The auction wasn't marketed to potential investors worldwide. That led auction experts to predict that the sale was held as a technicality so Inland could get clear title to the land.

During the auction, Priority Posting auctioneer Mike Birdsall explained rules for more than 30 people and journalists gathered to watch the event. The crowd included representatives from Inland, Thomas and the city, as well as curious onlookers.

"Your bid will only be canceled by a higher bid," he said, sitting behind a laptop computer at a table outside the courthouse doors. "I will not pronounce the property sold until I have the funds in my hand."

The auction didn't go off without a couple of hitches, though.

One guy thrust bankruptcy papers at Birdsall in the middle of the Railyards auction. The documents were for another property, the man said later.

Birdsall misread the opening bid from Inland as $50,350. However, the trustee's instructions to set the opening bid at more than $50 million trumped the auctioneer's misquote. Birdsall held the auction a second time at Ficker's request.

"Going once, twice, third and last," Birdsall said. "Property sold to the beneficiary."

No one else entered a bid during either auction. If someone had, Ficker could have bid higher on behalf of Inland and won ownership of the property.

Technically, the auction was for the property's second mortgage. Inland owned the first and second mortgages.

If someone else was the successful bidder, they would not have gotten the deed to the property unless they could also pay off the undisclosed first mortgage or deed, which likely would have been much higher.

The foreclosure ends months of uncertainty over the project. Thomas defaulted on nearly $194 million in loans on the property in June. The company could have declared bankruptcy, which could have tied up the site in a lengthy legal process.

Mayor Kevin Johnson said he believes foreclosure was the best outcome, said mayoral Special Assistant R.E. Graswich.

Graswich let the mayor know by text message when the auction was done. Johnson had just one thing to say.

“His text message said, ‘Amen,’ ” Graswich said.

Photos by Suzanne Hurt.

Railyards set for Friday auction

2010-10-20T02:18:49Z

Sacramento has probably never seen a foreclosure auction like the one that may take place here Friday.

The 203-acre Railyards property is scheduled to be sold for cash on the spot to the highest bidder on the Sacramento County courthouse steps at 1:30 p.m. Friday.

Poised for the auction block: Most of the historic former Southern Pacific railyards, where railroad shops more than a century old mark one end of the first transcontinental railroad. Adjacent to downtown, the site's been approved for a $6 billion mixed-use project reported to be the country's largest infill development.

Current plans call for a regional transportation center to be built there, along with housing, office, retail and open space. Other developers are working on a proposal to build a new Sacramento Kings arena on city-owned property between the Railyards site and the downtown train station.

Georgia developer Thomas Enterprises defaulted on its loans for the property in June. Its lender, Inland American Real Estate Trust of suburban Chicago, scheduled the auction last month.

The two sides may still negotiate a new agreement on what are now nearly $194 million in loans before the auction takes place.

"A lot of this could be just smoke and mirrors. They're probably scrambling right now," said Robert Storment, president of the California State Auctioneers Association.

It's also possible, even likely, the auction will be postponed by the seller, as late as the morning of the auction. Once an auction is scheduled, it can be postponed repeatedly for up to a year after the initial date.

A courthouse sale of such a property would be unusual anywhere in the country. What makes this stand out is that the property once housed railyards and is a big chunk of land right next to a major city's downtown core, said Hannes Combest, chief executive officer of the National Auctioneers Association, based in Kansas.

"That is very unique," she said. "You don't find 203 acres within a city that are available for development."

The sale could throw a spotlight on the hidden world of foreclosure auctions.

Every weekday, a group gathers just outside the doors to the Gordon D. Schaber Sacramento County Courthouse, where hundreds of thousands – sometimes millions – of dollars’ worth of foreclosed property is auctioned off.

Auctioneers usually set up at green metal tables off to the side of the courthouse entrance. Throughout the day, they "cry" or announce the properties for sale and the auctions that have been postponed.

"This sale is made without express or warranty...." one auctioneer began on a recent morning. "How much am I offered and by whom? Do I hear a higher bid?"

Auctioneers must call out the entire process whether anyone is bidding or not. Most sales involve houses. Thousands of homes are sold in foreclosure auctions every day in this country.

Only a very small percentage of properties are bought outside Sacramento's courthouse, the auctioneer said.

The majority of people who enter the courthouse take no notice of the tiny, often quiet group of men in military-short haircuts, T-shirts and jeans. Some buyers represent themselves. Others earn commissions representing investors.

Fortunes can be made and lost there on real estate deals gone bad. Buyers are known for being cut-throat competitive. Eyes hidden behind dark sunglasses, many are unfriendly to outsiders who don’t operate in their small daily sphere.

"There's no love down here," an auctioneer said.

Currently, Stewart Default Services and a company called Priority Posting have assigned the sale of the Railyards property to an experienced auctioneer. The property reverts back to the bank if it's not sold at auction.

Thomas may be trying to negotiate to repay significantly less than what they currently owe because the land is no longer worth that much in 2010. The auction was still scheduled as of late Tuesday afternoon.

Usually, a property like the Railyards would be auctioned in a very different way. Such property is usually marketed worldwide. "Due diligence" packages with 100 to 200 pages of information would lay out the property's pros and cons for buyers. Preview time would be arranged. The sale would usually take place on site at the Railyards or a nearby hotel conference room.

However, it's still possible large groups of buyers could turn up at the courthouse Friday. In that case, principal investors would be likely to attend to handle the bidding themselves. But they could send representatives who'd communicate via cell phones and post bids as requested. Cash must be paid on the spot and could be in the form of cashier’s checks.

Many courthouse foreclosure auctions are held so the bank can get clear title to the property. The lender may send a representative to keep bidding until they are the high bidder or they get the price they want.

"They don't expect anyone to show up," said Tommy Williams, a nationally recognized auctioneer who co-founded Williams & Williams of Tulsa, Oklahoma. "It's nothing more than a legal formality to get this into the hands of the mortgage company."

Storment agreed. Still, stranger things have happened at foreclosure auctions, he said.

"I have seen someone come out of the blue – maybe there's a group that thinks it's worth 500 million. Maybe they think 500 million is a steal," he said. "But I wouldn't make that bet."

Railyards auction date set

2010-10-01T01:35:50Z

Railyards developer Thomas Enterprises moved closer to surrendering the downtown Sacramento property in a foreclosure auction after a notice of the sale was filed Tuesday.

Infrastructure work continued Thursday, after a public sale to the highest bidder was set for 1:30 p.m. Oct. 22 on the steps of the Sacramento County courthouse, 720 Ninth St., according to a notice of trustee's sale. A copy of the notice filed by Stewart Default Services on behalf of Thomas' primary lender, Chicago-area Inland American Real Estate Trust, was posted at the property’s front gate.

The two sides have been trying to negotiate an agreement to avoid a foreclosure even before Inland filed a notice of default June 15. An agreement may still be reached, avoiding a foreclosure sale.

The sale appears to be listed at slightly more than 203 acres, after Thomas Enterprises sold nearly 33 acres out of its 238-acre Railyards property to the city. The company previously reported the property’s size at 244 acres, but that represents the size of the planning district.

Thomas Enterprises now appears to owe nearly $194 million, after interest, fees and other costs have added up on what was $187 million in loans, according to the document.

Officials from Thomas Enterprises and Inland did not return phone calls seeking comment.

Track relocation to be rebid

2010-09-01T02:48:27Z

The Sacramento City Council on Tuesday approved a $290,000 redesign of the downtown railroad track relocation.

Work on the $68 million railroad track relocation project was delayed after bids came in $12 million over budget in May and developer Thomas Enterprises defaulted in June on more than $187 million in private loans, used to buy the 244-acre historic railyards in 2006.

The project, which includes construction of the Fifth and Sixth street bridges, makes up the first phase of the new regional transportation center to be built adjacent to the Sacramento Valley Station downtown.

The council approved funding to redesign the track relocation portion of the project, budgeted at $45 million, without discussion as part of its consent calendar Tuesday night. Standard construction systems, specialty items and amenities such as LED tunnel lighting have been eliminated from the design to save money, said city Department of Transportation spokeswoman Linda Tucker.

Work had been expected to start in May. Contracts for bridge construction were awarded separately from the rest of the project after bids came back too high. The city expects to seek new bids for track relocation construction this fall, she said.

Thomas is overseeing the Fifth Street bridge construction, while the city oversees the Sixth Street bridge construction and track relocation. Crews began work on the new Fifth and Sixth street bridges — including pile driving and concrete pouring — in July. The bridges will allow those downtown streets to extend into the Railyards development.

Negotiations over the Georgia developer's defaulted loans are reportedly continuing this week between Thomas Enterprises and lender Inland American Real Estate Trust.

Officials from the California Department of Housing and Community Development met with Inland and city staff Monday to discuss the state agency's move to freeze Thomas' access to $30 million in state Proposition 1C funding last month and options that may allow state and/or federal funding to continue to be available if Inland forecloses.

The city and Thomas Enterprises did not respond to additional questions Tuesday.

Photos by Suzanne Hurt and Eric Whalen. Suzanne Hurt is a staff reporter for The Sacramento Press.

Railyards loans report expected soon

2010-08-27T01:09:54Z

Thomas Enterprises is expected to inform state officials next week whether the company is close to heading off foreclosure on the downtown Railyards development.

The Georgia developer missed the state's deadline Monday to bring more than $187 million in private loans back into good standing and end the foreclosure process initiated by Chicago-area lender Inland American Real Estate Trust in June.

The California Department of Housing and Community Development, which last month froze Thomas' access to $30 million in state funding for the development, agreed on Monday to give the two sides a few more days and postponed further action. The 244-acre infill project could be in danger of losing $71 million in total funding from the state if the situation is not resolved.

Inland officials are traveling from Oak Brook, Ill., to Sacramento early next week for a joint meeting at the agency. The two sides will report the status of their negotiations to state and city officials, said Panorea Avdis, director of external affairs for the state's Housing and Community Development department.

"They are coming here early next week to give us an update," Avdis said. "We don't know how their negotiations have gone."

Thomas Enterprises has been trying for months to renegotiate its loans with Inland. Thomas Vice President Suheil Totah returned from meetings in Chicago Monday without an agreement with Inland.

The issue didn't appear to be solved Thursday afternoon, shortly before most state agencies close down for another furlough Friday.

"We're not going to comment on the status of the negotiations," said Thomas Enterprises Development Coordinator Leslie Valpey Thursday. "We're not going to weigh in at all until the matter is resolved."

The state had previously awarded four grants totaling $78 million in Proposition 1C money for development of the railyards to Thomas and the city. About $7 million has already been disbursed. Housing and Community Development department officials have been reviewing options and will determine the next course of action — such as whether to freeze the remaining Proposition 1C money — after the update. The exact date is still being worked out.

"It's hard to predict," Avdis said. "We're going to have to evaluate it based on what they provide us."

Suzanne Hurt is a staff reporter covering business and development for The Sacramento Press.

Money woes pile up for Railyards developer

2010-07-31T02:14:09Z

Thomas Enterprises' problems with financing the Railyards development have reached a critical point after the state of California began efforts to yank more than $70 million in funding from the project.

The California Department of Housing and Community Development has put the Georgia developer on notice that it's freezing disbursements because Thomas is in default on more than $187 million in private loans on the 244-acre project.

The state agency sent out a letter July 22 warning Thomas to pay the amount in arrears in order to bring the loans back into good standing and get the lender, Inland American Real Estate Trust of suburban Chicago, to end foreclosure actions within 30 days.

The letter was a 30-day pre-notice of default alerting Thomas Enterprises it is now in breach of contract with the state. Inland filed its default notices June 15.

Work on bridges for Fifth and Sixth streets continued Friday afternoon. However, the move could lead to at least a partial stop in development work at the historic railyards. Thomas already owes various companies more than $5 million for work done so far, said Thomas Enterprises Vice President Suheil Totah.

Next week, company officials will meet with construction contractors, engineers and other vendors to ask them to continue working on the project.

"This letter has now elevated the loan dispute from urgent to critical," Totah said. "Our hope is they would continue their work to allow time for this matter to be resolved."

The state had previously awarded four grants totaling $78 million in Proposition 1C money for development of the railyards. Of that, $50 million in infill grants was awarded directly to Thomas, and nearly $28 million in transit-oriented development grants were awarded to the city on behalf of the project. About $7 million has already been disbursed over the last six months, said Chris Westlake, deputy director of the state's Housing and Community Development department.

"We're concerned with the notice of default that was filed. Any existing liens or mortgages have to be current," he said. "Since these are state bond funds, we are very careful with how they are being utilized."

The letter notified Thomas it is in danger of defaulting on the first grant, which totals $30 million. For now, disbursements are simply being halted. That was the first notice sent out — how much they're in danger of losing has yet to be determined, Westlake said.

"It all depends on what happens with the foreclosure action by Inland," he said. "We have to reassess it at that time."

Thomas officials are worried they may lose additional funding as well.

"The loss of up to $80 million in state funding could have a ripple effect on some of the other funding," Totah said.

Thomas Enterprises has planned a $6 billion redevelopment of the historic Southern Pacific railyards that would add 12,000 residential units, 1.4 million square feet of retail, 2.3 million square feet of office, 500,000 square feet of mixed-use space and 46 acres of parks and open space. The Railyards would be centered around renovated historic railroad shops and a future regional transportation center adjacent to downtown.

The company and Inland have each proposed different options to resolve loan issues, but no agreement has been reached, according to Totah and an Inland official.

"Inland American continues to make its best effort to work with Thomas Enterprises, Inc., the developer of the Sacramento Railyards project, to address the current default status of the loans on the property," Inland spokesman Matt Tramel said in an e-mail.

"Inland American's continued intention with all parties, including the Department of Housing and Community Development and the city of Sacramento, is to work to promote the completion of all activities related to development at the Railyards project," he said.

The $30 million grant was awarded for interior roads and other infrastructure work — not for bridge work — as long as 15 percent of the housing Thomas builds there is affordable. A $17 million transit-oriented development grant is being used to build the Fifth Street bridge.

Work on the Sixth Street bridge is not yet in jeopardy, because the California Department of Transportation awarded that funding in the form of Proposition 1B transportation bond monies.

Sacramento city officials are disappointed over the latest development, but don't believe any grant monies awarded to the city are at risk, city Department of Transportation spokeswoman Linda Tucker wrote in an e-mail.

"None of our funding is in jeopardy as a result of what is going on between the state and Thomas Enterprises," she said. "We remain cautiously optimistic that the state will receive the necessary assurances from Thomas Enterprises within the time frame required so grant funding can continue. That's the indication we have from them."

If the loan dispute is not resolved and Inland sells the railyards land to another developer in a foreclosure sale, which would be expected in early October, state grants are not assumable by a new development company, said Westlake, adding that the state remains committed to the project.

"We want to get the housing built. Getting construction jobs going and keeping them going is critical to the state," he said. "However, we have to be prudent and careful with the large taxpayer dollars involved in the project."

Totah said he remains "optimistic" the company can overcome the current financial challenges. The potential of losing the property and all the work that has gone into the project over nearly a decade is "very alarming," he said.

"If this one is not overcome, it would have irreparable damage and would set the project back a long time," he said.

Photo of Suheil Totah of Thomas Enterprises by Suzanne Hurt, a staff reporter for The Sacramento Press. Photos of railyards development by Kati Garner.

Railyards foreclosure process started

2010-06-16T03:22:59Z

A large national real estate investment company took the first step toward foreclosing on Sacramento's railyards Tuesday.

Inland American Real Estate Trust recorded a notice of default against S. Thomas Enterprises of Sacramento, LLC, after the developer missed its April 30 deadline to pay $185 million in loans used to buy the 244-acre property in 2006.

The effort to redevelop the former Union Pacific railyards is the biggest infill project currently underway in the country. The city is considering plans to build a new arena there.

With its parent company headquartered in a Chicago suburb, Inland is reported to be the nation's eighth largest real estate owner.

"Inland American has made its best effort to work with Thomas Enterprises, Inc., the developer of the Sacramento Railyards project, to address the current default status of the loans on the property," Inland spokesman Matt Tramel said in a prepared statement.

Infrastructure work, which has already started, is not expected to be impacted, according to Thomas Enterprises and Inland officials.

The two sides have been negotiating on an extension of the loan for months. They have not been able to agree on a new deadline, interest rates or fees, said Thomas Enterprises Vice President Suheil Totah, standing at the edge of the railyards Tuesday afternoon.

He declined to discuss specifics that led the lender to record the default notice with the Sacramento County Clerk/Recorder's Office, which has set the foreclosure process in motion.

Inland officials would not comment on whether negotiations would continue with Thomas. They did restate their intentions to not walk away from the railyards redevelopment project to city officials, who are trying to get Inland, state and federal officials together in the same room to discuss the situation.

“I have been in contact with top executives at Inland and they are fully committed to the railyards," Mayor Kevin Johnson said Tuesday in a prepared statement. "I look forward to working with our partners on the state and federal levels to make sure this project stays on track.”

Totah said the investment company has indicated its willingness to continue the relationship with Thomas, rather than pushing the Atlanta-based development company to find a new investor.

"The lender has expressed its interest in seeing things continue and is committed to this project," Totah said. "We hope to reach agreement on those final terms as soon as possible."

Thomas Enterprises now has 120 days to repay the loan or win an extension, or it will face foreclosure. Stan Thomas, the company's founder, and others at the Atlanta headquarters expect to resume those negotiations shortly. No date has been set, though.

"We expect things will be resolved within that time frame," Totah said.

Photo by Suzanne Hurt, a staff reporter for The Sacramento Press.

Railyards parcel value: $52 million

2010-04-29T04:03:57Z

Ending more than three years of dispute, a court arbitrator determined Wednesday the city overpaid developer Thomas Enterprises by more than $2.5 million for railyards land next to the historic train depot.

The land is at the center of current discussions to build a new arena and regional transit center adjacent to downtown.

Arbitrator William Bettinelli, a retired Sonoma judge, set the value of nearly 33 acres of land at $52.35 million, the city manager's office and the developer announced in a joint press release late Wednesday afternoon.

In 2006, the city paid Thomas Enterprises $55 million for the parcel after the developer bought the 244-acre former railyards site from Union Pacific Railroad Co. That money was provided to help the developer close on the acquisition from Union Pacific, said Assistant City Manager John Dangberg.

However, a city appraiser later valued the land at about $8 million, while an appraiser hired by Thomas Enterprises set the value at more than $87 million.

Both sides said Wednesday they will respect the arbitrator's decision.

"We thought the property was worth more (than $55 million). But we did not know how much more," said the developer's independent counsel, attorney Tom Redmon of Wilke, Fleury, Hoffelt, Gould and Birney of Sacramento. "That was the purpose of the arbitration — to have someone finally determine what the value was."

The parcel contains the Sacramento Valley Station train depot, parking lots and existing tracks — which cover roughly three acres — and stretches north to the historic Southern Pacific railroad shops being redeveloped by Thomas Enterprises.

The 32.68-acre parcel includes 17.46 acres of railroad easement. The land is located in the southwestern part of the railyards development and holds historic value as the western start of the first transcontinental railroad.

Bettinelli considered values for about two dozen other nearby properties, such as the Bank of America building at 555 Capitol Mall and two weeks of expert testimony to help determine the price. He has worked as an arbitrator since 1991.

The value was determined based on the expected best use, or how the land is expected to be developed, and comparable real estate prices in the central business district, according to Bettinelli's written decision.

Within 10 days of the ruling, Thomas Enterprises must sign a promissory note to repay the $2.65 million difference in 2012, Dangberg said.

Under the development agreement with Thomas, the city also has the right to a parcel of land, at no cost to the city, to build the 5th Street Garage north of the relocated tracks, between what will be the extended Fifth and Sixth streets.

The Kamilos group, led by developer Gerry Kamilos as the Sacramento Convergence Holdings LLC, has entered into talks with the city to build a new arena. The group is asking the city to donate 9.5 acres of the railyards land next to the train depot for the arena.

Thomas Enterprises paid $218,000 in current and back property taxes earlier this month after Sacramento City Councilman Kevin McCarty drew attention to the unpaid taxes at a press conference and city staff shot off a letter asking the California Department of Housing and Community Development to withhold $17 million in Proposition 1B funds. The back taxes were due in December.

City staff are now looking forward to making more progress with the development, including opening bids for railroad track relocation on Wednesday after the arbitration ruling came out, according to Dangberg and other city staff.

"We agreed to live with the decision," he said. "We've gotten it and now we'll move on."

Photo by Eric Whalen.

Arbitrator sets railyards parcel at $52 million

2010-04-28T23:51:35Z

Ending more than three years of dispute, a court arbitrator has determined the city overpaid developer Thomas Enterprises by more than $2.5 million for railyards land next to the historic train depot, it was announced Wednesday.

The land is at the center of current discussions to build a new arena and regional transit center adjacent to downtown.

Arbitrator William Bettinelli, a retired Sonoma judge, set the value of nearly 33 acres of land at $52.35 million, the city manager's office announced at 4:29 p.m. In 2006, the city paid Thomas Enterprises $55 million for the parcel after the developer bought the 244-acre former railyards site from Union Pacific.

However, a city appraiser later valued the land at $8 million, while an appraiser hired by Thomas Enterprises set the value at more than $87 million.

The land, which holds historic value as the western start of the first transcontinental railroad, starts at the Sacramento Valley Station train depot and stretches north to the historic Southern Pacific railroad shops being redeveloped by Thomas Enterprises.

Bettinelli considered two weeks of expert testimony that were held last month to determine the price. He has worked as an arbitrator since 1991.

The 32.68-acre parcel includes 16 to 17 acres of railroad easement, according to the city.
The Kamilos group, led by developer Gerry Kamilos as the Sacramento Convergence Holdings LLC, has entered into talks with the city to build a new arena. The group is asking the city to donate 9.5 acres of the railyards land next to the historic train depot for the arena.

Under the development agreement with Thomas, the city has the right to a parcel of land, at no cost to the city, to build the 5th Street Garage north of the relocated tracks, between what will be the extended 5th and 6th streets.

Photos by Eric Whalen.

Railyards arbitration begins

2010-03-17T02:48:15Z

A dispute over the value of a key parcel of railyards land is getting closer to a resolution. An arbitration hearing began Monday over land likely to become the home of a future arena and a regional transit center.

On Monday, two weeks of witness testimony began to help determine how much the city of Sacramento should pay developer Thomas Enterprises for nearly 33 acres of prime land adjacent to downtown. The land also holds historic value as the western start of the first transcontinental railroad.

The city already paid $55 million for the parcel in 2006 after Thomas Enterprises bought the 244-acre former railyards site.

But the city and the developer have never agreed on the parcel's value. A city appraiser later valued the land at $8 million, while an appraiser hired by Thomas Enterprises set the value at more than $87 million.

The land stretches from the Sacramento Valley Station train depot downtown to the historic Southern Pacific railroad shops currently undergoing redevelopment by Thomas Enterprises.

The 32.68-acre parcel includes more than 17 acres of railroad easement. After factoring out the depot and land being used for public transit, about eight acres of vacant land remain, said Senior Deputy City Attorney Sheryl Patterson.

Thomas Enterprises representatives won't disclose what the company paid Union Pacific for the land or any other information relevant to the arbitration, according to company spokeswoman Leslie Valpey.

Last week, a sports and entertainment arena task force formed by Mayor Kevin Johnson recommended that the Sacramento City Council support a proposal to build a new arena on the city's railyards parcel in connection with a new regional transit center the city already plans to build there.

Court arbitrator William Bettinelli, a retired Sonoma judge, is presiding over the hearing after the city won a coin toss held by Sacramento County Superior Court Judge Robert Hight. Hight helped the two sides winnow their lists of arbitrators down until Bettinelli was chosen. Bettinelli has experience trying, arbitrating and mediating complex, multi-party construction and real estate cases, among others.

Bettinelli must determine the land's value after weighing all the information presented in the hearing. A decision is expected by April 26.

Photo by Eric Whalen.

State turns over $31 million for RR tracks

2009-12-12T07:05:45Z

Helping to save $20 million in local federal stimulus money, the state of California on Thursday ponied up $31 million in Prop. 1B funding for projects connected to Sacramento's future regional transportation center.

The Sacramento Area Council of Governments and the city of Sacramento told the California Transportation Commission this week that the city would lose the federal stimulus funds unless the agency paid out the Prop. 1B money as promised, said Erik Johnson, SACOG spokesman.

The bulk of the $31 million will be used for a $60 million railroad track relocation, the first phase of the train station and public transit center being built in the 244-acre historic railyards adjacent to the Sacramento Valley Station downtown.

"In order to receive the $20 million, we had to have all of our funds to move forward," Johnson said. "Congress wanted to have the stimulus funding move quickly. They (the state) understood that need."

Darrell Steinberg, state Senate president pro tem, represents Sacramento and helped win state funding for the project. U.S. Rep. Doris Matsui helped land the federal stimulus money, according to SACOG.

The state allocated $25 million in trade corridor improvement funds to the city to help move the tracks and for tunnel work under the new tracks.

The state also allocated nearly $6 million in highway railroad crossing safety funds. The money will go toward the $12 million Sixth Street overpass to be built by Railyards developer Thomas Enterprises, Johnson said. The money was paid to Thomas on behalf of the city, which requested the money in August.

All the funds had been awarded but not turned over, he said.

Reconfiguring and relocating the tracks has been a SACOG priority for years, Johnson said.

The Sacramento Valley Station sits on a major national trade route, the Central Corridor, whose western junction is the high-volume Port of Oakland. Freight and passenger trains share three tracks, a configuration set up about the time the Sacramento station was built in 1925.

Track relocation work will include building tracks devoted to freight, allowing a higher volume of freight trains to move more quickly through Sacramento. Freight and passenger tracks will be moved at least 300 feet north and straightened to allow for longer trains.

SACOG helped the city apply for the Prop. 1B funding. SACOG also is responsible for the regional distribution of about $109 million in federal stimulus funds. The organization earmarked $20 million for the railroad tracks project, the largest single project receiving those funds, Johnson said.

Sacramento Mayor Kevin Johnson said he was happy the California Transportation Commission has allocated the funding for the transportation center and the Railyards.

"This project is important to revitalizing our downtown and will be a tremendous regional asset as new residents, visitors and workers come in and out of this area," he said in a prepared statement.

Photos by Suzanne Hurt, a staff reporter for The Sacramento Press.

Prop. 1B money sought for tracks

2009-12-06T05:11:55Z

The city of Sacramento is about to ask the state of California to make good on its promise to award at least $20 million for railroad track relocation so work can start by May.

Unable to sell as many bonds as expected, the state has not disbursed $20 million in trade corridor funds that was awarded last year under state Proposition 1B. Next week, the city will ask the California Transportation Commission to borrow $25 million against the bond money, said Linda Tucker, spokesperson for the city's Department of Transportation.

"We've got to get this going," she said Friday, when the city announced it had met a Dec. 1 deadline for another $20 million in federal stimulus funding.

The city already has gathered $15 million from federal, state and local sources. The state money is needed to fully fund the $60 million track relocation, which is the first phase of building the regional transportation center next to the Sacramento Valley Station downtown.

The city met the deadline by submitting construction authorizations for the final design of phase 1 of the transportation center, and by submitting easements and permits for utility relocation to the California Department of Transportation.

“Last March, we learned the biggest chunk of stimulus money in Sacramento would be going to the Railyards if the project could be ready for construction in 9 months," Mayor Kevin Johnson said in a statement.

"With that looming deadline, city staff have been scrambling to work with multiple federal, state and local agencies, rail operators and utility companies to gain federal environmental clearance and secure project approvals and have everything turned in by Tuesday, Dec. 1," he said. "I am pleased to say, yes, we made it!”

Despite that, construction has been delayed again. The work was targeted to start this fall, then delayed to March. Now, construction has been pushed back to May.

The city delayed the start because of the project's complexity. The extra time will give contractors longer to submit a bid and allow the city more time to award the work, Tucker said.

"It has to meet a lot of criteria to be eligible for funds coming from a myriad of sources," she said.

The city applied for $6 million more for Phase 1 in August but did not win it, Tucker said.

The new tracks are now expected to begin operating in mid-2012.

Railyards lawsuits defeated

2009-11-17T04:56:56Z

Westfield Downtown Plaza and a citizens' group lost legal challenges against the Railyards development, developer Thomas Enterprises and the city announced Monday.

The lawsuits against the city of Sacramento, the city's Redevelopment Agency and developer Thomas Enterprises argued that the poject's two environmental impact reports (EIRs) were inadequate and did not comply with the California Environmental Quality Act known as CEQA. Sacramento County Superior Court Judge Lloyd Connelly ruled in favor of the city and developer on all points raised by the Downtown Plaza and three people represented by attorney Bill Kopper.

Those individuals — Robert Castro Jr., Linda Powers and Chris Rich — filed one lawsuit as the group Sacramento Citizens Concerned About the Railyards, whose acronym is SCCARY. Two are members of labor unions, Kopper said.

"This is good news," Mayor Kevin Johnson said in a statement issued by the city and developer. "We can now focus on the task of creating jobs and developing an area that will play a vital role in making Sacramento a world-class city."

The plaintiffs are not satisfied with the ruling because 10 to 15 issues they raised were not addressed, Kopper said.

"There were many important issues in the case that we feel got short shrift by the court," he said. "I think it was a very cavalier attitude as to what the adverse impacts of the project will be because there is such a desire to advance the success of the Railyards."

For example, questions raised by the California Office of Historic Preservation and the State Water Resources Control Board in draft EIRs weren't answered in the final EIRs, he said. With an EIR stating that 192,000 vehicle trips eventually will be generated by the Railyards daily, the California Department of Transportation requested that the project's impact on the freeways circling the central city be considered, but that was "brushed aside," Kopper said.

The judge also ruled the city does not need to analyze downtown intersections one by one to determine if there should be widening or other improvements to prevent the gridlock predicted by a traffic study, he said.

The city approved the Railyards Specific Plan in December 2007 for the 244-acre site north of downtown between the Sacramento River and the Alkali Flat neighborhood.

The $6-billion project is expected to add more than 12,000 residential units, 2.3 million square feet of office space, 1.4 million square feet of retail, nearly 500,000 square feet of mixed-use space and 46 acres of parks and other open space, all centered around the city's future regional transportation center and a cultural hub in the historic Southern Pacific railroad shops.

Suheil Totah, vice president for Thomas Enterprises, called the decision "another important milestone" for the project.

"We're very pleased the judge found that everything was done in accordance with the law," Totah said by phone. "He found both EIRs did what they were supposed to do."

The Westfield Group could not be reached for comment.

Suzanne Hurt is a staff reporter for The Sacramento Press.

Railyard shops cleanup, preservation underway

2009-11-11T06:25:04Z

Piles are growing at the city's old railyard.

Inside the long-abandoned Southern Pacific railroad shops, there are piles of metal, wood, debris and contaminated junk. Up on roofs, white-suited, specially trained abatement workers are pulling up roofing material and roofing adhesive containing asbestos. Outside one of the shops lies a makeshift salvage yard.

Georgia developer Thomas Enterprises and a contractor, Allied Environmental of Placerville, are three months into a $5 million cleanup of the historic "Central Shops," which will form the centerpiece of a 244-acre mixed-used district dubbed the Railyards.

The developers envision the shops as the cultural heart of a district that will include the future a regional transportation center and retail, office and residential use. The centerpiece will be an open-air market and adjacent plaza. There also has been talk of a $500 million arena/entertainment center, a performing arts center and even a new $500 million county courthouse.

During a tour of the shops Tuesday, Railyards Development Director Richard Rich said workers are setting aside everything connected to Sacramento's railroad history to be recycled and used in the district.

"We want to save every single piece of this," Rich said as he pointed to old metal lockers and train parts inside the former Paint Shop. "Part of our job is to retell the story of the railyards as we rebuild this and bring it back."

Very little remains from the 1930s or earlier, when the shops were the center of the locomotive industry on the West Coast and that industry drove the city, he said. For more railyard photos, go here.

The railroad company took most items of value long ago. Then, squatters and vandals carried off everything they could.

Still, workers have already dug up tons of gnarled, rusted iron during soil remediation. Rich said he would like to hire an artist to create a large sculpture from the salvaged iron. The sculpture would go in the future Market Plaza.

"That's a dream at this point," Rich said. "I don't know where we'd find the money."

Hundreds of heavy locomotive drive wheels and axles were found on the site, which lies next to the Sacramento Valley Station train depot. California State Parks gathered up most of them, and two drive wheels left with the developers may become sculptures. Thomas Enterprises is talking with the parks department about placing drive wheel sculptures at intersections throughout the district.

"I would like every single intersection that we do to have some calling card of rail history there," Rich said.

Central Pacific established the Sacramento railyard during the steam locomotive era. The company, which later became Southern Pacific, built the first shop in 1868 — before Sacramento gained fame as the western start of the first transcontinental railroad with the driving of the last spike on May 10, 1869.

In the 1930s, Southern Pacific slowly began abandoning the railyards. Rail traffic was down because of the Depression.

The company set up maintenance shops for newer diesel locomotives in more rural areas as Sacramento grew, and the shops began falling into disrepair. The shops officially closed in 1999, four years after Union Pacific bought Southern Pacific.

Now, eight Central Shops — seven brick and one metal — are all that remain of what was once at least 243 buildings. The developers are giving the metal Boiler Shop and the Erecting Shop, the largest and grandest, to state parks for its future Railroad Technology Museum. State parks will handle abatement of those.

The buildings' exteriors will be preserved following the Secretary of the Interior's guidelines for rehabbing historic buildings. Abatement work, Phase 1 of shop restoration, is expected to be completed by March.

On Tuesday, 50 workers worked on various abatement projects including removing the badly peeling lead-based interior paint, junk contaminated with heavy metals and polychlorinated biphenyl or PCB, and asbestos sheetrock, floor tiles and pipe insulation. They're also removing extensive graffiti.

"Our job now is to clean these buildings so we can start to do the major work on the renovation," Rich said.

British Environmental Resources Management is providing construction management. The company initially was hired by Southern Pacific and has done all cleanup at the site for 20 years.

"Our primary challenge was to make sure we could abide by California environmental laws to take toxics out but not damage these historic buildings," Rich said. "It's something we have to watch very carefully."

Workers can't remove all the lead-based paint without damaging historic interior bricks. So remaining paint will be encapsulated in new paint, in a process created by the city's environmental office, he said.

The Railyards are the country's largest infill project. Most of the six shops are expected to be filled by restaurants, clubs, retail shops and small museums. Organizations have expressed interest in setting up museums for model railroads, carousels and blacksmithing in the 3,800-square-foot Blacksmith Shop.

The 56,000-square-foot Paint Shop will house an open-air market with Central Valley products including produce, cheese, wine, meat and fish -- similar to San Francisco's Ferry Building. It will be near the extended 5th Street.

An open space next to it, once a turntable that moved locomotives and train cars to the Paint Shop, will be turned into Market Plaza. Plans call for landscaping, water features, public art and a small outdoor performance area.

"That plaza is going to be the cultural living room of this region," Rich said.

On the other side of the plaza, clubs, restaurants and shops are expected to open in the Planing Mill, Car Shop and Machine Shop, where locomotives, passenger cars and flat cars once were built. The first building constructed on the site was a machine shop in 1868. Upper floors could contain art lofts and archive space.

Small shops and restaurants could go into the "Tower of Jewels," a three-story brick craphouse built in 1878. The plaster facade is peeling off the brick building, so the mortar on that and the rest of the brick buildings will be repointed.

The shops are expected to be ready for tenants in two or three years. The city has committed to building a 2,000-space parking garage east of the market. The garage will serve the regional transportation center and the Central Shops, said Suheil Totah, Thomas Enterprises vice president.

The county is considering the site for a new courthouse, said Totah, adding that Thomas Enterprises likes the idea of the city building an arena there as well.

Rich said he expects all electrical cables at the site will be underground. He said he hopes to use a line of old above-ground electrical poles to hold a 30-foot-high, 300-foot-long lighted landmark "Sacramento Railyards" sign.

That's just one of the efforts to preserve as much as possible. Restoring the historic buildings that once played such a large role in Sacramento is the key, Totah and Rich said.

"It would actually be cheaper to knock them down and rebuild them. But there's an ambiance you can't get with a new building," Rich said. "So they're priceless in that way."

Photos by Eric Whalen. Suzanne Hurt is a staff reporter for The Sacramento Press.

Pile-driving tests begin at Railyards

2009-11-04T04:55:06Z

Test pile-driving began Tuesday at Sacramento's historic railyard as the site's developers prepare for bridge construction.

The sights and sounds were a sample of what's to come in about four months when foundation work starts for bridges on Fifth and Sixth streets.

At that time, the developers at Thomas Enterprises realize some neighbors may be annoyed by the booms of about 400 piles being driven into the earth. But the noise won't be the same to all ears, they said.

"To us, it's the sound of progress," said Leslie Valpey, the project's development coordinator. "And activity at a time when there's not a lot of activity."

That sound also represents the historic Southern Pacific railyards coming to life again after decades of disuse and decay.

Other infrastructure work has already been done elsewhere on the site, where a $6-billion mixed-use district containing a new regional transportation center is expected to be built over the next 20 years.

Infrastructure work includes the initial grading of Railyards Boulevard and northern portions of Fifth and Sixth streets. Abatement inside the historic Central Shops and building up the elevated 10-acre Vista Park with soil has also begun.

The bridges will be built in the section of the 244-acre site that lies closest to downtown. The two bridges will provide a way for extensions of the two streets to travel over new, relocated tracks and into the heart of the Railyards.

Work crews are using a 120-foot crane to drive six test piles there this week. The piles create the bridges' foundations.

"The most important thing is really these (piles), because that's what's holding the bridge when it goes up," said Elias Rashmawi, director of land redevelopment for the project. "It's the foundation work."

Two types of piles — an H pile and a pipe pile — are being driven into the ground at three locations. Crews drive a 60-foot pile into the ground, weld a second of the same length on to that, and drive the entire pile down 115 to 118 feet, he said.

The piles go through sand, then gravel, then a layer of sand and gravel and silty sand, as well as water, because an aquifer starts 20 feet below the ground, he said.

Readings are taken on resistance, load and stress, to show how much capacity the piles can handle. The tests help the designers and installers determine which type of pile to use and at what depths and where. Pile driving for the bridge is expected to take one to two months.

The bridges will be built over the tracks, and two pedestrian tunnels will be built under the tracks. One tunnel will start at the historic Sacramento Valley Station and the other at Old Sacramento. Bridge construction is expected to be finished by next fall.

Track relocation work, which will be overseen by the city of Sacramento, will be done at the same time, according to Thomas Enterprises Vice President Suheil Totah. New tracks will be laid and trains will begin using those before the old tracks are dismantled.

Fifth and Sixth streets are expected to be completed after that.

Thomas Enterprises is handling all the bridge and road work as part of a partnership with the city. The city won a grant to fund construction of the Sixth Street bridge and the developer was awarded Proposition 1C funding for the Fifth Street bridge, Totah said.

Photos by Kati Garner. Suzanne Hurt is a staff reporter for The Sacramento Press.

Arbitration close for Railyards land

2009-10-29T02:27:04Z

The city of Sacramento and Railyards developer Thomas Enterprises expect to move forward Monday on attempts to put a price tag on key land needed for a future regional transportation center.

The city exercised its right to request an independent arbitrator after both sides failed to agree on the price of 33 acres needed to build the transportation center, an expansion of the historic Sacramento Valley Station into the 244-acre Railyards development.

A public hearing has been set for 9 a.m. Monday at Sacramento County Superior Court to help narrow down the list of potential arbitrators qualified to set a value and price for the land, which will also contain relocated railroad tracks and other infrastructure needed for the transit center and the Railyards development, said Sheryl Patterson, senior deputy city attorney.

Each side will submit five names to a judge. The judge will winnow that to a list of the five most qualified.

Both sides will then strike names from the list, after the judge tosses a coin to decide who goes first. Arbitrators will be crossed off if not available. The arbitrator is expected to be selected and the dates of arbitration hearings set by the end of next week, Patterson said.

Photo by Eric Whalen. Suzanne Hurt is a staff reporter for The Sacramento Press.

Agencies plan RR track mitigation

2009-09-17T01:07:56Z

Concerns about historic Southern Pacific railroad shops and other archaeological resources delayed the environmental review process for the future regional transportation center proposed for the Railyards.

A complicated review process also caused delays as federal, state and city planners worked out plans to mitigate environmental and other impacts expected from the future depot, which will connect with the historic Sacramento Valley Station.

Under the National Environmental Protection Act, the Federal Highway Administration (FHWA) conducted a review of the city's proposal to prevent or offset impacts to wildlife, air and water quality, historic buildings, building occupants and train passengers during construction and operation of the new depot and relocated train tracks. The environmental assessment was approved Aug. 31.

Federal agencies conducted concurrent reviews of the environmental assessment, so the process took less time than it would have in the past, according to the FHWA. The process took more than a year, compared to the average three to five years a linear review usually takes.

Still, the number of agencies involved, the lack of experience some agencies have with environmental reviews and the fact that conducting concurrent environmental reviews is a new procedure postponed a decision the city expected months ago, said Ellie Buford, the city's principal planner for the environmental review of Sacramento's intermodal facility.

"Last-minute" concerns arose over potential impacts to the built environment's historic properties, archaeological resources which are listed or eligible to be listed with the National Register of Historic Places, she said.

Those properties are the Central Shops Historic District, which dates back as far as 1868; the Sixth Street levee, built from 1852 to 1880; the Sacramento Southern Pacific Railroad Station District, built in 1925; and the Southern Pacific Railroad Depot, a national landmark now known as Sacramento Valley Station, built in 1925.

The train tracks will be moved closer to the Central Shops. The future depot will be located between the Central Shops and the Sacramento Valley Station.

The agencies involved want to make sure the four historic properties are protected, according to the FHWA. In the last stage of the review process, a document was added that spells out additional ways these resources will be protected.

According to the new document, known as the Intermodal Built Environment Treatment Plan, the city must assess the current condition of historic properties and monitor the foundation of the historic central railroad shops during construction and operation of the train tracks and depot for vibration and stability. The California Department of Transportation (Caltrans) must determine the protective measures required for each phase of the intermodal project.

A detection of harmful vibrations could lead to a stop in construction and the need to use alternative construction methods, as well as reinforce the buildings, Buford said.

The worst-scenario is that vibrational impacts from driving pilings into the ground and other construction could cause the shops to fall down, said Deputy State Historic Preservation Officer Stephen Mikesell, who has been heavily involved in the environmental review on behalf of the California Office of Historic Preservation.

While that is "highly unlikely," the possibility has led to the need for monitoring, he said.

Geotechnical studies indicated that no structural damage would occur from the construction or operation of the tracks, Buford said.

The state Office of Historic Preservation signed off on the environmental assessment with full confidence, Mikesell said.

"I feel pretty good that the resources are pretty well-protected," he said. "We're confident the city is prepared to do the right thing."

The document spells out the city's right to enter the Central Shops, which are privately owned by Railyards developer Thomas Enterprises, to conduct the monitoring. That agreement had to be worked out in recognition of the public-private partnership which is simultaneously developing the Railyards and adjacent depot, which is integral to design plans for the Railyards.

In addition, the document requires the city to hire a qualified consultant to prepare historic structure reports for each of the properties, in accordance with Historic American Building Survey/Historic American Engineering Record standards.

If the finding must be registered with the Library of Congress, the FHWA must ensure the Caltrans contacts the National Park Service (NPS) to determine the documentation needed for each resource, according to the document. Then, Caltrans must get NPS approval of at least documentary photographs before any construction can begin that would impact a historic property.

Otherwise, appropriate documentation must be determined by the California State Parks Office of Historic Preservation and Caltrans. The document also requires the city to prepare archival copies of the documentation for federal or state repositories.

The Sixth Street levee is important because it represents three distinct episodes in levee construction, which document residents' struggle with decades of flooding by the American and Sacramento rivers. The levee preserves the technological responses used at the time and may contain artifacts. Settlers built the levee, one of the city's first, using anything they had. Specialists will have to go through a section of it to see if pottery or any other archaeologically valuable items were used, Buford said.

The Native American Heritage Commission told the city its Sacred Lands File contains no record of native American cultural resources in the project area. Four native Americans and a group representing native Americans didn't respond to the city's requests for information about whether the site was believed to contain artifacts or significance.

In the document, standard mitigation measures were outlined to protect the endangered Swainson’s hawk and Valley Elderberry Longhorn beetle, as well as bats and purple martins identified as species of concern, or their habitat.

Elderberry bushes provide critical habitat for the beetle. Three elderberry bushes within 20 feet of existing tracks must be moved to a nature preserve or mitigation bank to prevent disturbance from heavy construction equipment. The other bush, which is more than 20 feet from the site of the future tracks, can be fenced.

A survey will be conducted to determine if Swainson's hawks are nesting in trees during their February to September breeding season. If so, heavy construction equipment won't be used within 2,000 yards, according to Buford.

Purple martins have been nesting under a ramp from the I Street bridge. Biologists have recommended planting pine trees to offset the loss of disturbed nesting space under the ramp, erecting permanent perching wires to offset other utility wires that are coming down and other measures that would protect nesting materials and flight. Biologists also may build bird houses for the species, she said.

Biologists must update information about bats, which include the pallid and Pacific Western big-eared bats. Intermittent roosting but no nesting was observed under I-5 and the I Street ramp. Mitigation measures will be determined based on what a new study finds, she said.

Photos by David Watts Barton. Suzanne Hurt is a staff reporter for The Sacramento Press.

New depot gets environmental OK

2009-09-16T02:49:20Z

Sacramento's future regional transportation center has gotten a green light to move on to its final design phase after clearing a federal environmental hurdle, months later than expected.

The U.S. Department of Transportation's Federal Highway Administration (FHWA) on Friday confirmed the city's proposed "intermodal facility" has made it through the federal environmental review process required due to federal funding for the project. Approval was delayed due to the complicated review process and concerns about the impact on historic Southern Pacific railroad shops and other historic properties.

Federal transportation officials, along with other federal and state agency staff, have determined the new depot will not have significant impact on the environment as long as proposed mitigation measures are followed.

The FHWA signed off on the project's environmental assessment by issuing a "finding of no significant impact," or FONSI, for the first two phases of the transportation center, an expansion of the historic Sacramento Valley Station into the 244-acre Railyards development site. The FHWA actually signed off on the FONSI Aug. 31 and then notified the city of Sacramento, the lead agency on the project.

This environmental approval allows the city to submit construction authorizations for phases 1 and 2 to the California Department of Transportation by Dec. 1. Meeting that deadline ensures the project will still get $20 million in stimulus funding for the $56 million track relocation.

"It's a very important milestone for our project," said Hinda Chandler, project manager and a senior architect with the city's Department of Transportation.

Construction of Railyards infrastructure is expected to start within a month after the California Department of Housing and Community Development agreed to begin doling out $47 million in Prop. 1C money awarded in June 2008 to Railyards developer Thomas Enterprises. Following a six-week hiatus, the company will begin building the bridge at Fifth and H streets to extend Fifth Street into the Railyards.

The environmental approval allows the city to get easements and permits for utility relocation and to initiate final design work, in order to show by Dec. 1 that the city is ready to begin construction. The city had expected to get FHWA's approval on the environmental review process months ago, according to Chandler and Linda Tucker, spokesperson for the city's transportation department.

While construction had initially been anticipated for this fall, the delay put off construction for Phase 1 — track relocation — until March 2010, due to the lengthy bidding process that must now be held. Construction of Phase 2 — $30 million in expansions and improvements to the existing depot at Fifth and I streets — is expected to begin once track relocation is complete.

The expansion is expected to equip Sacramento to meet regional transportation needs for freight trains, service operators and passengers until at least 2025.

Sacramento Valley Station sits on a major national trade route called the Central Corridor, whose western junction is the high-volume Port of Oakland. The volume of imports and exports handled by the port via Sacramento has outgrown the 1925 station's current track setup, where freight and passenger trains share three tracks.

This has created a bottleneck for freight trains. As freight rail tonnage is expected to double by 2025, the situation would only get worse, and the Port of Oakland would be unable to handle growing trade.

Building tracks devoted to freight is expected to eliminate the bottleneck and enable a higher volume of freight trains to move more quickly through Sacramento, Tucker said.

In addition, Sacramento's station has not been able to keep up with the increasing number of train passengers. The station is already California's second-busiest train depot and the seventh busiest in the country, with 1.5 million train users each year and a roughly estimated 200,000 others using light rail, taxis, and local and Amtrak buses.

Cities are finding that downtown train stations are easier to access than airports outside cities. Train travel is becoming more popular after a decline that lasted 50 years, Chandler said.

Ridership is especially growing between Sacramento and the Bay Area. Expanding the transportation center to include a bigger, modern terminal and more space for trains, buses and other transportation is expected to draw up to 7.5 million users by 2025, and as many as 15 million if high-speed rail is added, Chandler said.

The station has eight Amtrak bus bays. The new regional center is expected to include 24 local bus bays and 11 for Amtrak and Greyhound buses, plus room for high-speed rail if needed.

In June, the Sacramento City Council voted against its 2007 decision to move the existing station 300 feet north, next to relocated train tracks. Councilmembers changed their minds after discovering an unnecessary station relocation would make the city ineligible to get federal funding for up to 80 percent of the project.

A California Environmental Quality Act review was conducted previously. Under the National Environmental Protection Act, an environmental review must be conducted by the lead federal agency when a project is getting federal funding. The new transportation center will get money from federal highway, transit and railroad programs through the U.S. Department of Transportation.

The FHWA and other agencies have been carefully reviewing the city’s proposal for more than a year. The other agencies include the California Department of Transportation, the state Office of Historic Preservation, the U.S. Fish and Wildlife Service, U.S. Environmental Protection Agency, the Federal Railroad Administration (FRA), the Federal Transit Administration and their state equivalents.

"It's a pretty good-sized project," said FHWA spokesperson Doug Hecox. "It's something we (took) great pains to be careful about."

The agencies worked quickly to make sure the project wouldn't lose the stimulus funding in what FRA spokesperson Warren Flatau described as "choreographed bureaucratic collaboration."

"Everyone (was) committed to doing this in record time," he said.

To expedite the project, the agencies conducted concurrent reviews — a relatively new practice. Until two or three years ago, federal environmental reviews took an average of three to five years, and sometimes up to eight, while each agency took its turn reviewing the environmental assessment document, according to the FHWA.

An environmental review for Phase 3, estimated to cost $252 million, must be done at a later date because the design for that phase is still only conceptual, Chandler said.

That phase could involve major renovation of the historic station building. Phase 3 isn't funded and may not happen for many years, said Deputy State Historic Preservation Officer Stephen Mikesell, who has been heavily involved in the environmental review on behalf of the California Office of Historic Preservation.

A combination of federal, state and local funding is being used to finance the entire project. Last year, the project was awarded another $20 million in trade corridor funds under state Proposition 1B to fund track construction that will eliminate the bottleneck.

The city expects the state to issue bonds and award that funding within six months. If the state is no longer able to provide that funding, the city is confident the funds can be found elsehwere, Tucker said.

The city applied for $6 million more for Phase 1 in August, and on Tuesday, expects to submit an application for $30 million more, mostly for Phase 2.

An engineering consultant is designing the relocation of freight and passenger tracks, which will be moved north by 300 feet at the closest point and 500 feet at the farthest. The tracks will be straightened to allow long platforms and thus, longer trains.

Tracks will no longer be shared upon completion of this project. Four passenger tracks, two passenger platforms and at least two freight tracks will be built. The new configuration should increase passenger safety while no longer requiring freight trains to slow down as much. The tracks and new, longer platforms will allow more and longer trains, Tucker said.

Relocation of the tracks should take about a year. Tracks and signals will then be tested for three to four months. The new tracks are expected to be operating by mid-2011, Chandler said.

The historic rail station became a government facility in 2006, when the city bought that and nine acres of land from Thomas Enterprises. Amtrak leased the station from Union Pacific prior to the developer's purchase of the site.

The city is in arbitration with Thomas Enterprises as the two sides try to agree on the value and price for another 24 acres that the city has an option to buy, Chandler said. Negotiations aren't holding up track relocation.

The existing station will continue to be used as the depot during construction of the first two phases. Improvements to the historic station will include restoring an entrance at Fourth and I streets, which will highlight the station's architecture and allow passengers to enter from the front.

Once the larger facility is built to the north across the tracks, the historic depot will be used as a gateway to the new depot and as one location for baggage and ticketing.

"We feel it'll be a seamless blend of old and new," Chandler said.

However, the long-term use of the existing depot hasn't been settled. That could continue to be used as part of the depot or for an unrelated purpose, Mikesell said.

Photos by Eric Whalen. Suzanne Hurt is a staff reporter for The Sacramento Press.