Newest articles on The Sacramento Press tagged as "thomas enterprises"

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."

City rebids track relocation

2011-01-27T02:26:58Z

Sacramento transportation officials on Wednesday rebid the city's downtown railroad track relocation project.

Tracks that are part of a major trade route must be moved 500 feet north of their existing location at Sacramento Valley Station, Fifth and I streets, and straightened to allow for longer freight trains. That will enable a larger volume of trains to move through Sacramento and to do so more quickly.

The project will also separate currently shared freight and passenger tracks to increase safety while still allowing freight trains to move at higher speeds.

Four new tracks – two devoted to passenger trains and two for freight – will be built. Passenger platforms, separate tunnels for pedestrians, passengers and service and new utilities will also be added, said Department of Transportation Operations Manager Fran Halbakken.

The Department of Transportation won $20 million in federal stimulus money and more than $25 million in state Proposition 1B money for the project.

But the cost for the track relocation itself had to be scaled back to $45 million. Then the project had to be redesigned and rebid last May after the city was unable to find another $12 million in funding.

“Staff has worked tirelessly to get this project ready to rebid – in between coordinating with a new property owner/partner on a dozen new agreements, so as not to jeopardize any of the $45 million in federal and state funding that has been cobbled together for this much-anticipated project,” city transportation department Director Jerry Way said in a prepared statement.

Sacramento Department of Transportation Director Jerry Way. Photo by Brandon Darnell.

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

Total cost of the project, including construction management and other work, is about $68 million. Work was delayed while the project was redesigned and rebid, and while ownership of the historic railyards changed hands. The city had hoped to break ground last May.

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 near the Sacramento Valley Station. Moving the train tracks also allows further development of the historic railyards.

Developer Thomas Enterprises defaulted in June on more than $187 million in private loans, which had been used to buy 238 acres of the railyards in 2006. The company’s lender, Inland American Real Estate Trust now owns the site and is partnering with the city on the track relocation project on adjacent city-owned land.

Groundbreaking is expected in May. Transportation officials expect the work to take about two years.

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

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.

Four teams vie for arena project

2010-12-31T02:41:25Z

A team handpicked by Mayor Kevin Johnson and led by Sacramento developer David Taylor and national sports facility builders has emerged as one of the frontrunners to develop a new arena.

Taylor quietly ended his partnership with developer Gerry Kamilos after their first proposal, a complicated land swap, didn't produce a viable proposal by its October deadline. Taylor is now partnering with the historic railyards' new owner, Inland Real Estate Group of Companies, and others. On Thursday, his group submitted a letter of interest to Johnson's arena task force briefly outlining a proposed process for developing a sports and entertainment center.

Another three teams submitted new or modified arena proposals by a noon deadline Thursday. This time, none of the teams have the backing of the National Basketball Association or the Maloof family, which owns the Sacramento Kings.

The other candidates were among the seven original teams that submitted arena proposals last year. They include the Sacramento Convergence team led by Kamilos; the CORE team led by entrepreneur Ali Mackani and two former arena task force members, real estate attorney Mike Kvarme and developer Larry Kelley, president of McClellan Park; and Natomas Entertainment Sports Center Partners, the only team proposing a plan for the existing Arco Arena site.

The NBA has also ended its partnership with the Convergence team after endorsing that plan in January 2010 during a bold press conference across from City Hall.

"The NBA is not backing any one of the arena initiatives, and we will have no further comment at this time," NBA spokesman Mike Bass said in an e-mail to The Sacramento Press Thursday.

The Maloofs have been trying to get an arena built to replace Arco for 11 years. But the family isn't joining any teams in the current effort to get a new arena built. Johnson, a former NBA player, is leading the effort and will brief the Maloofs on the second round of ideas once he gets the proposals, Kings spokesman Mitch Germann said.

"The Maloofs aren't tied to any of the groups that are giving presentations," Germann said. "They're excited to see the proposals that come as a result of this."

Johnson put out a call for proposals late last year, then put together a task force to analyze the proposals. The mayor reconvened the task force in November and put out a call for a second round of new or updated proposals.

The players left in the game are teaming up with national firms that have substantial experience developing, designing and building stadiums and arenas for professional football, baseball and basketball teams.

ICON-Taylor
Taylor has joined a team put together by the mayor that includes Inland, which owns the land adjacent to city property where some teams have proposed a new arena be built; Populous, a global sports architecture firm based in Kansas City, Mo.; New York-based Turner Construction; former arena task force member Dan Meis, who designed the Staples Center in Los Angeles; and ICON Venue, an owner's representative company whose website says it specializes in delivering home venues for pro sports teams. ICON’s projects have included Denver's Pepsi Center and the Chicago White Sox's new Comiskey Park, named US Cellular Field.

Taylor said Johnson contacted him about joining a new team after he left the Sacramento Convergence team.

"I felt the prior effort was not going to have the legs I would have liked it to have," Taylor said. "After being asked to look at this other team and talking to them at length, I was convinced it made sense to give it another try."

The ICON-Taylor team would focus on identifying strategies to finance an integrated arena and regional transit center in the railyards. The team offered to refine designs, present cost and revenue information and develop a conceptual approach for the project by April.

Sacramento Convergence Team
In a letter submitted to the task force Thursday, Kamilos and his team have altered their original proposal, but key elements remain. The team still proposes to build the arena on city railyards land and the Maloofs would operate the facility under a 30-year lease. The plan would still require state legislation to move forward.

But the team's proposed real estate deal has been simplified somewhat, and the price tag for the "Downtown Events Center" has been cut from $400 million to $350 million. Developers also propose buying an adjacent two to six acres from Inland to accommodate parking and a hotel, retail and dining adjacent to the arena and the future regional transit center, Kamilos said.

However, the team now proposes working with the California Exposition and State Fair board to build new fairgrounds at the existing state fair site and to privately develop 125 acres for destination retail, dining and entertainment and other mixed use, including residential and possibly office. State fair operations would remain with the Cal Expo board, but other events at the site would be run privately by VisionMaker Worldwide, a member of the Convergence Team.

The plan would also redevelop the 184-acre site containing Arco Arena in Natomas for mixed use. The arena would be retooled and existing parking would remain.

Under the plan, the Maloofs would share parking revenue and possibly a ticket fee. The Maloofs would operate the arena and collect revenue from facility rentals. The developers would assume the Maloofs’ $67 million Arco Arena debt and pay it off under the current schedule over 17 more years.

"It's essential in a small market that the facility is operated by the team ownership, especially in these times, in order for teams to break even on a cash flow basis," Kamilos said.

The Convergence team has added new members, including AECOM; Hunt Construction Group, which is building the Barclays Center in Brooklyn; Tutor Perini Corp., which has built sports centers and regional transit facilities; and POSCO Engineering & Construction. The group expects to finish a project analysis by May, which would allow construction to begin in 2013 and the new arena to open in summer 2015, according to the letter.

CORE Team
The CORE team – chosen by the task force as one of the top three candidates last spring – has altered its proposal by adding the railyards as a second possible location for an arena and recruiting Kelley, a former Kings owner, to lead the effort. The team also added Kvarme and his law firm, Weintraub Genshlea Chediak. Kelley and Kvarme were key players in one of the country's biggest infill developments and public/private partnerships involving redevelopment of McClellan Air Force Base.

The team continues to offer Westfield Downtown Plaza as another viable location and met briefly with representatives of Westfield and the Maloofs to discuss whether they might be able to work together on the project. The response was positive, but more information must still be gathered to create a workable financing plan under a public/private partnership, Mackani said.

The team will seek assistance from consultants such as Flintco, which has worked on such projects as the FedEx Forum in Memphis, Tenn., he added.

"But at the end of the day, it's about how to fund a project like this. Not how to build it," Mackani said. "That's where our focus is going to be."

Natomas ESC Partners
Natomas ESC Partners didn't make any significant changes to its proposal, but resubmitted it after getting Johnson's assurance it would be reconsidered, said team member Mike Corrick of Nacht & Lewis Architects in Sacramento.

The plan proposes building a $410.6 million, 950,000-square-foot sports and entertainment complex on 100 acres of city-owned land just north of Arco Arena. Arco would become a science park, possibly containing a science museum. Developers would also add a wetlands greenbelt, 250,000-square-foot office park, a spa hotel, retail and housing built in phases to the site.

The team includes Wisconsin-based Hammes Company, which developed the $1.6 billion New Meadowlands stadium that opened in April for the New York Giants and the New York Jets; Skanska, the construction firm that built New Meadowlands; NBBJ, a Seattle firm that built the Staples Center in Los Angeles and six other arenas or stadiums; municipal financing expert Jeff Baize of Brookhurst Development Corp.; and Nacht & Lewis Architects.

The project would be funded by Citigroup issuing taxable bonds that would be repaid over 25 years through the Kings' $10 million annual lease of the property, 50 percent of game day ticket revenues totaling $25.4 million a year, new naming rights, parking fees, facility rental and other revenue. The city would provide the land.

"We thought we had a very viable plan for the Natomas property and we had a very qualified team and a feasible financing plan," Corrick said.

In an e-mailed statement, Johnson said he recognizes developing the project will be challenging, especially in such a tough economy. But the four teams now vying for the project have substantial track records, he said.

"The game is now on," he said in the statement. "And these four different teams will compete with one another and the people of Sacramento, who care about jobs, will be the real winners of this competition."

The arena task force released the four project concepts shortly before 4:30 p.m. A public hearing is set for 10 a.m. Jan. 6 at historic City Hall. The task force will release an analysis of the concepts on Jan. 21, prior to a Sacramento City Council discussion Jan. 25.

In the end, the winning proposal will be the one with the best financing plan, Corrick said.

"It'll be interesting to see what comes out of this round," he said.

Graphic 1 provided by the ICON-Taylor team. Photo of Gerry Kamilos by Suzanne Hurt. Graphic 2 provided by the CORE Team. Graphic 3 provided by Natomas ESC Partners. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

Sacramento development in 2010

2010-12-30T03:28:33Z

Development in Sacramento suffered some significant setbacks in 2010. But there were modest moves forward as well, making for a mixed picture heading into 2011.

The focus was on five major projects, which included:

1. The Railyards
A suburban Chicago real estate investment firm, the Inland Real Estate Group of Companies, took ownership of most of Sacramento's historic downtown railyards in a courthouse foreclosure auction held in October. Inland foreclosed on the 203-acre Railyards site after then-owner Thomas Enterprises defaulted on nearly $194 million in loans in June. The two sides had been negotiating on a loan extension for several months but failed to agree on terms. 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 railroad track relocation.

The bridges are expected to be done in January. Work on the $60 million railroad track relocation was delayed after bids came in $12 million over budget in May and Thomas defaulted. In August, the City Council approved a track relocation redesign as part of the first phase of the new train station and public transit center being built adjacent to downtown's Sacramento Valley Station. The city delayed seeking new bids for relocation construction from fall 2010 to January. Inland was scheduled to publicly discuss its approach to the site for the first time at a City Council meeting Dec. 14. The presentation was postponed until early January.

2. Sacramento Arena
The city of Sacramento spent a large portion of 2010 trying to find a workable plan to build a new multipurpose arena to house the Sacramento Kings and host music and other events. Seven development teams made brief, public pitches at City Hall in January. Mayor Kevin Johnson formed an arena task force to consider the proposals. The task force recommended three plans as the top contenders in March. In April, the City Council approved an exclusive negotiation agreement with the Sacramento Convergence Team, a group led by developers Gerry Kamilos and David Taylor. That team lost its exclusive negotiating rights in October after failing to sell Cal Expo officials on their idea: to move the state fairgrounds to the area around Arco Arena and to then allow private development of the existing fairgrounds, which would clear the way to build an arena on city-owned property at the downtown railyards. The mayor reopened the process and set a noon Thursday deadline for new and modified proposals.

3. K Street Mall
Movement also took place on K Street Mall. The most important development took place in July, when the Sacramento City Council chose two teams — one led by D & S Development, Inc., and CFY Development, Inc., and the other by Sacramento developer David Taylor — to revitalize the troubled 700 and 800 blocks. Work continued in 2010 on the $4.5 million project by the city and Sacramento Regional Transit to renovate St. Rose of Lima Park and the 700 block streetscape. The City Council also allowed bikes to return to K Street Mall and paved the way for cars to return in 2011.

The Downtown Sacramento Partnership hired a retail recruiter to help reduce vacancies, upgrade the retail mix and support business owners in the 66-block property-based business improvement district. Work also got under way on several new K Street Mall businesses. San Francisco nightclub owner George Karpaty’s crew worked through 2010, and he expects to open Dive Bar, Pizza Rock and District 30 at 1016, 1020 and 1022 K St. in January. Ernesto Delgado also expects to open his Tequila Museo Mayahuel at 12th and K streets in early 2011. Vive Cocina opened in February next to St. Rose of Lima Park

Meanwhile, a grand opening for St. Rose of Lima Park's renovation wasn't held during summer as planned following a conflict that kept the city from turning on the park's new interactive water fountain, or sprayground.

4. Docks Area Riverfront Promenade
In June, the city marked the completion of Pioneer Landing Park and the first phase of the $15 million Docks Area Riverfront Promenade with a ground breaking. The $5.4 million first phase included the park and 1,200 feet of parkway from O Street to R Street. The one-mile promenade is expected to provide a paved path connecting Old Sacramento and Miller Park by 2013 or 2014.

The first phase was paid for with money from State Proposition 40, State Proposition 1B street improvement funds, redevelopment tax increment financing and development impact fees from parks. The city has already applied for nearly $5 million in Proposition 84 grant funding from the state to finance most of the promenade's second phase. The third phase, which would also cost about $5 million, is expected to start in 2013 if funding is available. An estimated $14 million in infrastructure for the Docks Area had been expected to begin between mid-2011 and the start of 2012. The start of infrastructure work is expected to be postponed while the city seeks funding.

Just across I-5 from the Riverfront Promenade and connected by the O Street bridge and refurbished bike and pedestrian viaduct at R Street was the $100 million expansion of the Crocker Art Museum.

5. River District
City staff unveiled the River District Specific Plan, which the City Council is expected to vote on in January. A groundbreaking ceremony was held for the new, temporary Greyhound bus terminal in August. The $5.4 million bus station is being built at 420 Richards Blvd. on about 1.75 acres in the Discovery Centre development in the River District. The old Greyhound terminal at Seventh and L streets is expected to close in 2011. The bus terminal will eventually move to the new regional transit facility expected to be built in the Railyards development within eight to 15 years.

Work also continued on Sacramento Regional Transit's new green line from downtown to the River District, and eventually, to the airport. Utilities were relocated, track foundation was laid and some overhead poles to hold wire were installed. The line is expected to open in mid-2011, but no date has been determined. In September, Sacramento's Discovery Museum and its partners sought the community's help in applying for $7 million in state grants to build the Powerhouse Science Center. PG&E readied the site near the vacant 99-year-old PG&E power station on Jibboom Street for construction. Museum officials hope to break ground in late 2011 or early 2012 and open the new museum in late 2013 or early 2014.

First photo by Brandon Darnell. Arena graphic provided by the CORE group. Other photos by Suzanne Hurt, 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.

Fifth and Sixth street bridges nearing completion

2010-12-03T01:11:27Z

The two city-funded bridges under construction in the railyards are scheduled to be completed next month.

The bridges will make Fifth and Sixth streets continuous where they are currently cut off by the railyards just east of the Amtrak station downtown.

“The bridges will be for both vehicle traffic and pedestrians,” said Linda Tucker, spokeswoman for the Sacramento Department of Transportation.

The transition of much of the railyards property from Thomas Enterprises to Inland American Real Estate Trust, Inc. following Thomas Enterprises’ defaulting on loans will not affect the bridge construction, since they are on city-owned land, according to Tucker.

When it comes to the track realignment necessary for trains to be able to pass under the bridges, there are still some possible kinks to work out.

“We are continuing to work out with Inland the transfer of agreements,” Tucker said. “My understanding is that we will be doing some joint announcements in a couple of weeks just to update the community on what’s been worked out.”

The $9 million bridge project is fully funded, as is the estimated $50 million track realignment.

The track realignment project will be opened for bidding in January, Tucker said.

“We are looking forward to moving ahead,” she said. “It’s been a bit exhausting going through the transition, and I think everyone – City Hall as well as the community – is looking forward to seeing more work going on out there.”

The blue square on the map above shows the Fifth and Sixth street bridges. The red square is intersection of F and Seventh streets for reference.

Brandon Darnell is a staff reporter for The Sacramento Press.

New possibilities as arena task force reboots

2010-11-19T02:05:56Z

Mayor Kevin Johnson's arena task force resumed its work to get a new facility built in Sacramento Thursday – minus two members who've now thrown their expertise behind a runner-up proposal.

At the same time, the task force is opening the process to more developers after its top choice – a complicated three-way land swap submitted by developers Gerry Kamilos and David Taylor – didn't pan out.

The task force is accepting new proposals as well as updated versions from the first round of proposals submitted last December. The public is expected to get its first look at the contenders in early January, the group said Thursday in a press release.

In a surprise move, two task force members decided against rejoining the task force. Real estate attorney Mike Kvarme and developer Larry Kelley, president of McClellan Park, are teaming up with entrepreneur Ali Mackani and the CORE group as they consider updating a plan that originally proposed building a new arena at Westfield Downtown Plaza.

The task force identified that proposal as one of the three strongest plans to construct a new Sacramento Kings arena last March. Kvarme and Kelley felt Mackani and his team made the most sense.

"We felt the best way to get the process done was to join with the CORE group," Kvarme said. "In the interim, Larry and I both independently reached a similar conclusion, which is that a downtown arena serves the city's interests the best. And that a team like the CORE group, with some additional expertise, would be the most logical way to proceed."

They both believe adding their experience to the group isn't a conflict of interest because the task force was disbanded last spring, he said.

Ironically, Kvarme and Kelley once sat on opposite sides of the negotiating table. Kelley oversaw privatization of McClellan Air Force Base, and Kvarme represented Sacramento County in its nearly five-year fight against it. The two have been talking jointly with the CORE group only for the last few weeks.

Developer Gerry Kamilos said his Convergence group continues "working hard" on a new plan after their first bid to build an arena didn't meet city deadlines. He doesn't consider the move by Kvarme and Kelley to be a conflict of interest, he said.

"As a community, we need to pursue everything," Kamilos said. "I'm not concerned with who's on what team. We're all trying to achieve the best idea to ensure a new arena is built downtown."

Inland Real Estate Trust, which recently took ownership of the former railyards, is expected to submit something in lieu of Railyards developer Thomas Enterprises, which lost the property after defaulting on loans. However, the company wasn't quite ready to discuss any plans, said Dean Stermer, interim project executive for the railyards.

"We're still working furiously," he said.

The CORE group will first focus on choosing a viable downtown site that can be acquired in a way that makes financial sense. Westfield Downtown Plaza and the former railyards are two potential sites. But there are others, Kvarme said.

"My sense was, one of the first things somebody needs to do is tie up a site," he said. "We're going to try and put something together in a way we feel it can get done."

Arena proposal graphic provided by the CORE group.

Arena task force meets next week

2010-11-11T02:10:15Z

Mayor Kevin Johnson is reassembling his arena task force next week to consider next steps in the effort to get a new arena built in Sacramento.

Mayoral Special Assistant R.E. Graswich and other staff from the mayor's office expect to meet Nov. 18 with at least 10 members of the original Sacramento First Task Force. Details for the private meeting at City Hall were still being finalized Wednesday.

Graswich will update the task force on the status of a proposal from their chosen developer, Sacramento Convergence Holding LLC, led by Gerry Kamilos and David Taylor. The developers’ exclusive negotiating period with the city ended late last month after they were unable to produce a viable plan on schedule.

The discussions will consider whether the city made mistakes with the Convergence team, what those mistakes might have been and what a logical next step might be, Graswich said.

"We want to have a frank discussion about where we're at," he said.

City staffers have also said they will propose a way to move forward with the process to the City Council. But that might not happen until January.

None of the seven teams behind competing arena proposals will be there. Five teams, including Convergence, have expressed interest in still being considered.

Some teams are in the process of finalizing updates. Most are essentially the same plans they originally submitted.

Task force members may be especially interested in updates to two proposals they identified as runners-up to the Convergence proposal, Graswich said. One would be from Thomas Enterprises, which owned the former Union Pacific railyards until last month and also proposed building an arena on the adjacent city land. The other was a plan by Ali Mackani and a group called CORE to build the arena where Westfield Downtown Plaza is now located.

Thomas Enterprises' proposal is "problematic" because of the company's financial problems – it lost ownership of the 203-acre Railyards development site after defaulting on loans for the property, Graswich said.

"It just creates questions about their viability, really," he said. "But that proposal was on city property. So that proposal is still of interest."

On Tuesday, Johnson traveled to suburban Chicago to meet with Inland American Real Estate Trust, the new owner of the former Union Pacific railyards. Inland officials sounded "enthusiastic" about the possibility of constructing the arena on adjacent city-owned land, Johnson blogged after the meeting.

A report on next week’s meeting is expected to be released soon afterward.

Johnson is eager to get the task force working again, after the group made progress last spring with its first recommendations, Graswich said.

"Hopefully, we can regain some of that momentum," he said.

Graphic provided by Thomas Enterprises as part of its downtown arena proposal.

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.

Our Firm Has Been Transparent on The Railyard

2010-09-08T22:57:32Z

By: Stan Thomas
Thomas Enterprises, Inc.

When Thomas Enterprises first got involved in the Railyards in 2002, it was a massive toxic wasteland, fenced off with hazardous-waste signs with abandoned buildings and no infrastructure or zoning. The site had been isolated from the City for 150 years with numerous failed efforts to redevelop the site over decades. I poured tens of millions of dollars of my own money into this site before the purchase was even realized, all at significant risk. When the acquisition stalled due to toxics, many including the Bee, called for us to move aside and allow other developers to step in. We remained determined and closed the transaction in December of 2006 without a loan, pouring tens of millions of additional money of my own along with funds from the sale of property to the City. We closed on the acquisition even though the site was not zoned, primarily unremediated and we had no assurance of public funding.

After the closing, we borrowed private money secured in part by the Railyards. The Bee, for reasons I don’t understand, suggests that there was wrongdoing in replenishing the funds I had earlier advanced from my other projects. The Bee also curiously fails to mention that the loans were secured by other Thomas projects with substantial equity to support the loans. These loans were obtained with the knowledge of the City. Lastly, the Bee fails to point out that public funds coming into the project have gone directly to public infrastructure for which they are earmarked and for land to be dedicated to the public. There is no misappropriation of funds and none of the public dollars have gone into other Thomas projects.

We have been transparent with the community and our public partners. We hired local employees, union contractors and vendors creating significant jobs with thousands more on the way during unprecedented economic times. During the nearly four years since we have owned the property, we substantially completed the soil clean-up, worked extensively with the community to incorporate their vision for the development and entitled the property. In spite of tremendous state-wide competition and calls by the Bee and others to fund other projects, we secured significant infrastructure funding that is currently transforming the historic buildings and constructing the 5th - 6th Street bridges. Work will soon start on the intermodal facility and other roads which enhance the region’s transportation infrastructure irrespective of the Railyards development. All of this has occurred on one of the largest and most challenging urban infill projects in the nation during the worst recession since the Great Depression, while other less complex projects in the region and nationally sit stalled.

As we are working on a transaction with our lender that allows this transformative project to continue, I remain committed to deliver on my promise to the Sacramento community.

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 future in limbo

2010-08-31T00:54:37Z

No decision has been made on the future of Thomas Enterprises’ involvement in the Railyards development project.

Officials from the California Department of Housing and Community Development met Monday with the city of Sacramento and Inland American Real Estate Trust to discuss the future of the project.

“We discussed how to keep the TOD funds flowing so that (the) City does not jeopardize the Federal Stimulus funding for the track relocation (5th Street Bridge) and to keep the construction jobs going,” Panorea Avdis, director of external affairs for the California Department of Housing and Community Development, wrote in an e-mail.

“No recommendations or decisions can be made at this time,” Avdis told The Sacramento Press Monday. “We’re assessing and reviewing our options.”

Avdis said the state is not privy to ongoing negotiations between Inland and Thomas Enterprises, so she does not know if Inland plans to go forward with foreclosure proceedings.

“We’re totally committed (to the project),” Avdis said. “We want to see the project happen, but we also want to be prudent with the taxpayers’ dollars.”

Representatives from Inland and Thomas Enterprises did not return phone calls Monday.

Inland recently initiated a foreclosure process on Thomas Enterprises, developers of the Railyards project.

A report is expected this week, but has yet to be released.

Brandon Darnell 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.

Arena plan moving forward

2010-07-09T02:56:13Z

A few more details have emerged as part of an arena and land-swap plan currently being considered by city and state fair officials.

A plan laid out by developers Gerry Kamilos and David Taylor calls for mixed-use private development of city-owned railyards land and the current state fairgrounds site. That development would help finance a $400 million sports and entertainment complex downtown and new fairgrounds in North Natomas, according to documents the city released late last week.

The "Sacramento Convergence" development team, which includes Macquarie Capital, would invest $600 to $700 million in private equity and debt in the project. The developers also propose other funding mechanisms, Kamilos said Thursday.

"The city and the state are not in a position to invest anything into these properties," he said. "The idea is to have the private sector come in and provide the capital to increase the value of those properties that both the city and state would benefit from."

Financing is proposed to come from land sales, parking fees, lease revenue, special districts to collect sales and property taxes from the properties, and bond proceeds generated by setting up tax increment districts, refinance districts and bond districts, Kamilos said.

"All the elements have been done before," he said. "It's just been in different configurations."

The team proposes to build a new Sacramento Kings arena that would anchor a railyards complex containing 500,000 to 600,000 square feet of retail, office and hotel space; 100 to 150 residential units; at least one parking garage with 2,200 to 3,000 spaces; and possibly an urban entertainment facility designed by former Disney executives.

As proposed, the 19,000-seat arena would measure roughly 375 feet by 475 feet and be 140 feet high, encompassing 750,000 to 800,000 square feet. The Kings or another professional basketball team would be the lead tenant. The plan is being worked out with the National Basketball Association and the Kings' owners, the Maloof family, who would sign a 30-year lease for the new arena.

"The updated numbers reflect quite a bit of analysis that's been done to date," Kamilos said. "But we still have quite a bit of technical work to do to solidify all the numbers."

The building would be equipped to host concerts, circuses and other events, including professional hockey games.

The Kamilos group is asking the city to donate 9.5 acres of railyards land for the project. The arena and parking structure, which would be shared with a future regional transportation center, would be built on city land in a public-private partnership with the city. But the remainder of the development at the site would be private.

The land is located between the Sacramento Valley Station and Thomas Enterprises' Railyards development. The historic train depot would be linked to the arena with an outdoor plaza serving as a gateway to the arena.

The plan also calls for the sale of 350-acre Cal Expo and swapping that site for one at the Arco Arena site, along with private, mixed-use development of the current state fairgrounds, which would need the approval of the California Exposition and State Fair board.

The developers are proposing to sell or auction the Cal Expo land. That land would be expected to be developed concurrently with an arena and new fairgrounds. However, the state fair would be held at the current site until new facilities were operational, developers said.

One possible concept for the Cal Expo site's development would include 4,900 residential units on 260 acres, a mixed-use retail and residential area containing 210 units and 340,000 square feet of retail on 35 acres. The concept includes 1 million square feet of office space in buildings averaging three stories on another 35 acres, and 20 acres for recreation and elementary school needs, according to the plan.

Money generated by land sales would be used to help pay off debt.

State legislation would be needed to approve the sale of the state fairgrounds for private development. Draft legislation is being created by a team including representatives from the developers, NBA, Maloofs, city, state and Cal Expo and would be presented to the state legislature before Aug. 31, Kamilos said.

The project would benefit the city and state by using private investment for the costly entitlement process that would enable the two sites to be developed, Kamilos said.

"By partnering with the private sector, the public sector entities will actually gain more than if they disposed of the properties as they are in today's market,” he said.

The information provided in the developer's official proposal and the complex plan has just enough detail to help the city and developers make sure the concept works and see if the primary stakeholders, the NBA and Cal Expo officials, are also on board, said Betty Masuoka, a former assistant city manager temporarily managing the project for the city.

A project parameters agreement is now being created for the next phase of work, where the developers and city staff nail down revenue sources, site plans and environmental and technical concerns.

"I think it's important people understand we're moving forward and we're making progress," she said. "It's not being put on a back burner."

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

A deeper look at city's decision to hire 30 new cops

2010-06-30T05:07:09Z

When the Sacramento City Council resolved a $43 million budget gap last week, it also decided to hire 30 police officers during the following three fiscal years.

The decision to create 30 new police officer positions was non-controversial among council members, even though the city is experiencing harsh cuts in its departments.

“I think we felt that this was an appropriate measure to keep our police department at a level that can maintain public safety,” Councilman Steve Cohn said in an interview Monday.

The city has figured out how to pay $3.6 million for the police officers during fiscal years 2010/2011, 2011/2012 and some of 2012/2013. Sheraton Hotel parking funds will cover $1 million of that amount. The remaining $2.6 million will be paid out of funds owed to the city from Thomas Enterprises, the company developing the Railyards, according a June 22 report from city Finance Director Leyne Milstein.

However, the city will eventually need another $2.4 million to keep the positions intact for the entire fiscal year of 2012/2013, Milstein’s report said.

A filled Sacramento police officer position costs about $100,000 total per year, department spokesman Sgt. Norm Leong said. The $100,000 includes the police officer's salary and benefit package, which includes medical and retirement benefits, he said.

Even though the positions will be available, officers won’t begin patrolling right away. “While the posting for these officers can begin immediately, there is a substantial amount of lead time that is needed to complete the background/training/hiring process,” Milstein wrote.

“It takes approximately six months from the date of posting to complete the background process for each applicant. It will take an additional six months to complete academy training, and another year before the officer can function independently in the field.”

Cohn said the 30 positions are vital for the city's safety. “We don’t want to lose momentum and not have a police academy.”

While the City Council approved hiring 30 police officers, the department still faced cuts to officer positions.

In the 2010/2011 budget, the City Council cut 85 police officer positions that were vacant, according to Leong. Those positions were vacant, so there were no police officer layoffs. However, it means the department cannot hire for those positions.

The city has about 1.5 officers for every 1,000 residents, Leong said. Other capital cities such as Austin and Denver have a higher ratio of officers to residents, he said. Austin has 2.04 officers for 1,000 people, while Denver’s staffing levels are 2.61 officers to every 1,000 residents, Leong noted.

At his Tuesday press conference, Mayor Kevin Johnson pointed to the figure of 1.5 officers per 1,000 residents to make the point that the department does not have enough officers.

Johnson addressed the issue of the $2.4 million the City Council will need to find to keep the new officers in fiscal 2012/2013.

“We’ve started the process now, even in this budget cycle, to work to that end,” Johnson said. The city will need to monitor sales and property taxes, and look at how it can spur economic development to be on a path to pay for the $2.4 million, he said.

The 2010/2011 fiscal year starts July 1.

Photo of council members by Anthony Bento.

Kathleen Haley is a staff reporter for The Sacramento Press.

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.

Mayor Johnson Criticizes Councilman McCarty's Press Conference

2010-04-14T05:16:58Z

Mayor Kevin Johnson criticized City Councilman Kevin McCarty Tuesday morning for holding a Friday press conference on the tax situation of the developers of the downtown railyards.

McCarty held a press conference Friday morning outside the Amtrak station on I Street. He announced that if Thomas Enterprises did not pay its taxes, the city should try to block as much as $47 million in state funding to the railyards. The company paid the property taxes that day, according to Suheil Totah, vice president of Thomas Enterprises.

Cynthia Gibbs, acting assistant tax collector, confirmed that the county received the payment from the company Tuesday.

"I don't feel that (holding the press conference) was the way to go about it," Johnson said during his Tuesday press conference. "There's ways we can do it that get the point across."

He said that the city should have been proactive and called the company to ask about the situation rather than hold a public press conference, "because you don't know the whole story."

Johnson stated that McCarty's press conference could endanger positive perceptions of Sacramento as a place to do business and as a business partner.

Senior Deputy City Attorney Sheryl Patterson said Friday that the city does not have the authority to block payments on amounts other than the $17 million from the California Transportation Commission's Proposition 1B funds.

"At the end of the day, we have to be very careful and smart with the way we go about these things," Johnson said.

Staff reporter Kathleen Haley contributed to this story. Agnus-Dei Farrant is an intern for The Sacramento Press.

Railyards developer pays back taxes

2010-04-10T04:50:55Z

The developer of the downtown Railyards paid Sacramento County about $218,000 in current and back taxes and penalties Friday, said Suheil Totah, vice president of Thomas Enterprises.

Funds were sent from the company's Atlanta headquarters to the county's assessor office via overnight mail, Totah said.

But Thomas Enterprises did not pay the property taxes in time to prevent city officials from publicly criticizing the company earlier Friday.

The city had moved to cut off state grant payments to the company, according to an April 9 letter from city officials to the state’s housing and development department.

A letter from Assistant City Manager John Dangberg said that as long as the taxes were unpaid, Sacramento would not sign off on funds to Thomas Enterprises from a $17 million state grant.

The company owed as much as $114,000 in back taxes that were not paid in December, according to the letter.

Now, Senior Deputy City Attorney Sheryl Patterson said Sacramento will be "back in business" with Thomas Enterprises after the city verifies Monday that the company has paid its taxes.

City Councilman Kevin McCarty held a press conference Friday morning to announce that if the company did not pay its taxes, the city should try to block as much as $47 million in state funding to the Railyards.

But Patterson said the city did not have the authority to block payments on amounts other than the $17 million from the grant.

The city could have written a letter asking the state’s Housing and Community Development Department to stop payments on additional state funds for the Railyards, she added.

Photo by Sacramento Press Staff Reporter Suzanne Hurt.

Kathleen Haley is a staff reporter for The Sacramento Press.

City considering K Street developers

2010-03-23T06:04:32Z

Not everyone can agree on what the future K Street should look like when it comes to putting hammer to nail.

Four development teams vying for work and the chance to make their mark on this key piece of downtown real estate have at least one thing in common: they all recognize the possibility of using federal low-income housing tax credits and historic tax credits to create a mixed-use neighborhood integrating the street's historic architecture.

"That's a major opportunity," said Sacramento developer David Taylor, a team leader for the group 700-800 K Street, LLC, at a presentation hearing scheduled by the city of Sacramento Monday night. "It's a major headache as well."

Each team wants to build housing, retail and office space. But plan details and team philosophies differ.

For instance, Rubicon Partners Inc., St. Anton Partners and Preferred Capital Advisors want to build a neighborhood around a 35,000-square-foot farmer's market, 2,000-seat entertainment venue, a 22,000-square-foot grocery store and an artisan alley with artists' apartments over their ground-floor work spaces. The plan calls for 100,000 square feet of retail — far larger than the three other plans.

"We're looking for a game-changer on K Street," said Kipp Blewett, co-founder of Rubicon Partners and chairman of the Downtown Sacramento Partnership. The team believes the project will draw people downtown again after other plans have failed.

The farmer's market and sizeable entertainment venue would not be located far from a mixed-use redevelopment under way in the railyards downtown, where the city appears likely to build a future sports and entertainment arena. Thomas Enterprises is in the midst of a $5 million cleanup of the railyards' historic "Central Shops" and restoration of a 56,000-square-foot historic building that will house an open-air public market at the heart of the 244-acre development.

The K Street development team members see themselves as supporters, rather than competitors with Thomas or the arena developer. However, this team's farmer's market could be built within three to five years, while Thomas' might not be built for seven to 10, Blewett said.

"We're ready to go on K Street," he added. "We're ready to go now."

Thomas Enterprises could not be reached for comment.

Another team — Bridge Housing, Saca Development and Bagatelos Development LLC — wants to build "sustainable" market rate and low-income housing that blend into one another, interspersed with 34,000 square feet of open-space terraces and courtyards. The plan would incorporate such things as photovoltaic roof canopies and healthy building materials.

The team is excited about integrating new housing and existing historical properties, including the Bel-Vue Apartments, to create "more of a neighborhood," said Brad Wiblin, vice president of Bridge Housing.

"We're in a situation which really calls for a change in dynamics on the ground," he added.

Following models that have worked in San Diego and Old Pasadena, Taylor's group — which includes Z Gallerie owner Joe Zeiden — wants to start with retail and finish construction within two years, constructing a mixed-use project that is needed in this economy while allowing room for future growth.

Zeiden helped revive Old Pasadena by building one of his stores there, before there was housing. That started the district's redevelopment, said Zieiden. He now plans to move his store out of Westfield Downtown Plaza and onto the 700 block of K Street in an effort to kick-start a similar revival in Sacramento.

"I've been doing this for 30 years now. I've seen what works. I've seen what doesn't," he said. "I think the street has amazing potential."

D&S Development, Inc., and CFY Development Inc. — led by Cyrus Youssefi — want to reduce the size of 160-foot-deep retail spaces on the 700 block of K Street and use the 66-foot-deep leftover space to create alley-fronting housing and a garage.

They envision a flower shop, restaurants and sidewalk cafes and vendors' sidewalk kiosks in a block of mainly restored historic storefront. They also plan to restore the mural on the original Tower Records storefront and commission other murals from local artists. The goal is to draw retail energy out of storefronts and create the kind of vitality found on Santa Monica's Third Street Promenade or Berkeley's Fourth Street, said architect Bob Kuchman.

"We're really trying to reinvigorate the street and create a real energy out here," he said.

The city will hold development team interviews March 25 at a time and location not yet disclosed. The Sacramento City Council is expected to choose a development team by mid-May. For more information about the proposals, click on this link.

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.

Task force spots flaws in arena proposals

2010-02-19T06:21:22Z

Mayor Kevin Johnson’s volunteer task force on Thursday continued its second session of challenging proposals presented by prospective developers of a new arena in Sacramento.

The 12-member task force heard presentations from Thomas Enterprises, the Kamilos Group, Natomas ESC Partners and Tripp Development. The prospective developers explained their financing plans, among other issues.

Task force member Mike Kvarme asked how much of Thomas Enterprises’ project financing would rely on obtaining federal funding.

“It’s a large part of it,” said Suheil Totah, vice president of Thomas Enterprises.

Totah also commented on the site’s location at the railyards in Downtown. Thomas Enterprises is developing the railyards.

“I think the NBA sees this as the right location in order to maximize funding for the actual team itself,” Totah said.

After the presentation from Thomas Enterprises, the Kamilos Group made its pitch to the task force. Gerry Kamilos’ proposal has the backing of the NBA, the Maloofs and developer David Taylor.

In Kamilos’ plan, the Downtown railyards will be the site of a 19,000-seat sports and entertainment arena. In a second part of the plan, a new fairgrounds would be built at Arco Arena and on nearby land.

John Moag, a consultant for the NBA working with Kamilos, last month explained a third part of the proposal. For that part, Kamilos' development team intends to purchase the California Exposition & State Fair from the state. A mixed-use residential development would be built at the Cal Expo site. Funds from the new development would help finance the arena Kamilos plans to build at the railyards Downtown, Moag said.

Taylor said he felt that the commitment from the NBA and the Maloof family was “huge.” The Maloofs own the Sacramento Kings.

But task force member Ron Tom said that many Natomas residents have told him they don’t want a new fairgrounds to be built in their neighborhood.

“Our team is very experienced with sitting and listening,” Kamilos said.

One piece of the project’s financing would come from people who own property at the Cal Expo property, Kamilos said. He explained that property owners at that location would pay an annual assessment.

The mechanism to assess the property owners at the Cal Expo property would require approval by the state Legislature.

Kamilos said there is a possibility that the legislation could go into a “spot bill,” which is a way to move legislation into an existing bill.

The Natomas ESC Partners followed Kamilos’ presentation with a pitch to create an arena next to the current Arco Arena site in Natomas.

Rick Millitello, an executive vice president for Skanska Builders, indicated that Magic Johnson’s company may work with Natomas ESC Partners on the project.

Skansa has been in a relationship with Magic Johnson Enterprises for more than two years, Millitello said. “Specifically, Magic helps bring us a more robust, diversity involvement into the projects that really helps our diversity program.”

On a separate note, Larry Kelley, a task force member and former owner of the Sacramento Kings, told ESC Partners that their financing plan involves millions of dollars in costs to the Maloofs that are not affordable. "I can just tell you, as a previous owner of the Kings, they're broke," Kelley said.

Tripp Development made the final presentation Thursday. Rick Tripp proposed to build a new complex Downtown that would be paid by funds from real estate agents and brokers. The real estate agents would dedicate their commissions to financing the complex, he said.

The agents would then be investors in the arena, Tripp said.

Task force member Chris Lehane complimented Tripp on thinking “out-of-the-box.”

Staff Reporter Suzanne Hurt contributed to this story. Kathleen Haley is a staff reporter for The Sacramento Press.

Work underway on train station, tracks

2010-01-28T06:12:30Z

Maintenance work began Wednesday on Union Pacific railroad tracks in the Downtown Sacramento railyards, while ongoing upgrades continue at the historic Sacramento Valley Station.

Union Pacific has started rail maintenance work on existing tracks. Rail cars that are part of a track replacement train known as the TRT 909 are pulling up the rail and replacing railroad ties underneath, said Aaron Hunt, public relations director for Union Pacific.

"We have track improvement projects going on throughout the state currently," he said.

The work is not part of the $60 million Downtown track relocation project, said Richard Rich, development director of Thomas Enterprises' Railyards project.

The timing was determined by the amount of train traffic and loads on the tracks, even though those tracks will be ripped out in a year or so, as track relocation work is scheduled to start by May. Railroad track relocation is the first phase of a regional transportation center being built in the 244-acre historic railyards adjacent to the existing station at Fifth and I streets.

The design and location of the future transit hub must still be determined. Two weeks ago, Thomas and another development team proposed incorporating the transportation center into a new Kings arena if the arena were built adjacent to the existing train station.

On Tuesday, the California Department of General Services closed off a dozen parking spaces next to the train station for work expected to begin soon on upgrading the station's electrical system, said Linda Tucker, spokesperson for the city's Department of Transportation.

Those spaces won't be available until May 15. The station's water system is also being updated at this time, she said.

City workers are designing new front-entry canopies for all the doors and strengthening wall and floor connections, she said.

Workers have also secured the building against pests, updated the natural gas system, repaired basement leaks, removed some lead paint and asbestos, and done other work since the city bought the building on behalf of its residents in 2006. Amtrak leases the station from the city.

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 in a configuration set up about the time the Sacramento station was built in 1925.

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

NBA proposes Sacramento arena deal

2010-01-16T04:40:28Z

The ongoing drama over a new Sacramento arena was kicked up a notch Thursday when a consortium of investors and local developers, together with the NBA, proposed a complex real estate deal involving the Railyards, Cal Expo and Arco Arena. Whether or not that deal eclipses all the other proposals on the table remains to be seen.

But regardless of which arena proposal ultimately becomes reality, it will be a game-changer for Sacramento.

Just how much depends on which of seven proposals the city and the Sacramento Kings' owners agree on. The Maloof/NBA proposal involves real estate deals that would lead to Cal Expo being sold to private developers for a mixed-use neighborhood, Arco Arena and adjacent land being transformed into the new state fairgrounds, and a sports arena being built on donated city land adjacent to the train station.

The backers of all seven proposals made brief pitches to more than 120 people at a sometimes raucous, fairly informal open house held Thursday night in the lobby of City Hall. But the biggest surprise came after the event organized by Mayor Kevin Johnson's arena task force, when developers and investors behind a complex real estate proposal held a separate press conference at the Citizen Hotel.

Representing the National Basketball Association at the second press conference, John Moag, who heads the sports investment banking company Moag & Co., outlined a complicated plan spearheaded by developer Gerry Kamilos.

"I think we can all agree we have a building that needs to be replaced. The real question has always been, 'How?' " Moag said. "We came with the assumption we were not going to raise new taxes. That made for a very difficult and complicated scenario."

The NBA has become a partner to negotiate for the project on behalf of the Maloofs, which own the Sacramento Kings franchise and its current home, Arco Arena. The city owns land around the arena. The Maloofs did not attend the press conference.

Kamilos, developer David Taylor and two investment companies would form a private consortium that proposes building a 19,000-seat sports and entertainment arena adjacent to the historic train depot on land donated by the city of Sacramento. That project would be financed in part by the group buying Cal Expo and developing a mixed-use, master-planned neighborhood there. The group also proposes the city and the Maloofs turn Arco Arena and the adjacent land over to the state for the new fairgrounds, Moag said.

The Maloofs would contribute $300 million to the new arena, he said. However, the proposal also calls for retiring a $68.5 million city loan to the Maloofs. The Kings would sign a 30-year lease. The private group would own and operate the new sports and entertainment arena for 30 years, then turn it over to the city.

Proponents of other projects proposed building at a variety of locations, from the same city-owned railyards land to the east end of Downtown Plaza, the Sacramento River waterfront in the Docks Area and Arco Arena. Some proposed funding mechanisms, but not all.

Thomas Enterprises, which is developing the former railyards, proposes building a sports and entertainment center in the same city-owned railyards location as the third phase of the current regional transportation center project. Under that proposal, the historic train depot would serve as the lobby and ticketing center for the arena, as well as the future transportation center. A passenger concourse would wrap around the side of the arena to the relocated tracks and a multi-level, shared parking garage would be built.

A performing arts center is proposed for a new fourth phase. The proposal would decrease the cost of both the transportation center and the arena and allow the use of transportation funding not available to other projects, Thomas Enterprises Vice President Suheil Totah said.

"It will help establish the historic depot as the Grand Central Station of the West," he said at City Hall. "This event center is the next logical step to the redevelopment of the railyards and the revitalization of Downtown Sacramento."

Graphic provided by Thomas Enterprises.

Other proposals include:

— Natomas Entertainment Sports Center Partners, led by Jeff Baize of Brookhurst Corp., proposes building a new entertainment complex on 100 acres of city-owned land adjacent to Arco Arena. The complex would include a mixed-use neighborhood emphasizing green technology and re-purposing Arco Arena as a power generation facility. "That site has been working from a traffic and infrastructure capacity," he said.

— Matt Haines of M & M Group and owner of 33rd Street Bistro presented a plan developed more than a decade ago for then-Mayor Joe Serna. Haines proposes building a sports and entertainment center on the waterfront in the future Docks Area. A location near Miller Park would bring needed development to the riverfront and nearby Capitol Mall, and encourage the use of Broadway and R Street as access routes, he said. "Our river will come alive like never before," he said. He proposes financing the project through equity seat rights, or selling individual seats in the center, which Haines said has raised $200 million for UC Berkeley.

— Ali Mackani, who owns Lounge on 20, and a group called CORE propose redeveloping the east end of Westfield Downtown Plaza into a retail and entertainment district, with two floors of retail and an outdoor public park on the third floor. "Our downtown lacks energy," Mackani said. "We don't have a destination. We need to make sure our core is strong. We have to do a better job in creating an attraction for everyone."

— Rick Tripp of Tripp Development also sees the east end of Downtown Plaza as the best location. This proposal focused on financing, rather than design. Tripp proposed private financing and no requirement for publicly owned real estate — or compensating taxpayers for real estate at market rate, he said.

— Doug Tatara proposes building an entertainment complex including a sports and entertainment arena, a California theme park and a monorail connecting Cal Expo to downtown. He proposes raising money for the arena through the recruitment of 25 corporate sponsors who would have advertising contracts with the arena.

The mayor's task force will visit proposed locations on Feb. 18 and conduct a review of the proposals with each group on March 4. The task force will make recommendations to the mayor on March 11.

Railyards 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.

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.

Railyards shops cleanup to start

2009-07-02T03:28:08Z

Cleanup of historic Southern Pacific railroad shops is expected to begin late this month as the next phase of the Sacramento Railyards project kicks into gear.

Hazardous materials including lead paint, asbestos, metals and other industrial toxins need to be removed from the shops, which were built starting in 1868. Georgia developer Thomas Enterprises has put the abatement project out to bid and expects to award the contract in the next few weeks, said Richard Rich, development director for the Railyards project.

In its heyday, Southern Pacific practically owned the town. The railyards drove Sacramento's economy, and nearly a third of all the city's residents worked there. The shops lay at the center of the railyards.

The Railyards project, the country's largest infill project, will not only double the size of downtown, but the mixed-use district is being designed to recapture the importance of the former railroad site. The Central Shops being redeveloped near the Sacramento Valley Rail Station depot are the key to that, Rich said.

"Right now, the depot is kind of in a forgotten corner of downtown," he said. ""That'll put enough urban fabric around the depot that it becomes the center of the city again."

On Monday, the city won $55.8 million in Proposition 1C infill redevelopment funds from the California Department of Housing and Community Development. About $30 million will go to the $6 billion Railyards project. The new funding brings the project's state public bond funding to $115-$120 million, although none of that has been received, said Thomas Enterprises Vice President Suheil Totah.

The Railyards project also won $20 million in federal stimulus money this year and another $8 million in federal funds for a freeway connection project. The city and developer are pursuing another $100 million in federal stimulus money to help fund the city's future intermodal transportation facility. Developments are expected soon on the city's bid to get National Enviromental Policy Act approval for the facility.

The city has committed funding to the project and promised to build a city parking garage there as well. Thomas Enterprises has invested $200 million in the project so far. Private investment is expected to total about $5 billion, Totah said.

Central Pacific originally established the railyards during the steam locomotive era. The company later became Southern Pacific. The 244-acre site grew to contain at least 243 buildings.

The shops and other buildings began falling into disrepair in the 1930s when the Depression brought reduced rail traffic.

About the same time, diesel locomotives began to gain favor over steam locomotives. The Sacramento Railyards had been set up to produce and repair steam locomotives. Some diesels were worked on there, but retooling the railyards for diesel proved too difficult.

In addition, Southern Pacific moved most of its maintenance work to rural areas like Roseville as Sacramento grew. The railyard shops officially closed in 1999, four years after Union Pacific bought Southern Pacific.

Seven brick shop buildings were all that remained when Thomas Enterprises bought the site for an undisclosed amount in December 2006. All seven will be preserved and rehabbed for adaptive reuse. The massive Boiler Shop and Erecting Shop will be used for the state's Railroad Technology Museum.

Thomas will rehab the other five shops. The 56,000 former Paint Shop will contain a public market selling Central Valley products including produce, cheese, wine, meat and fish — similar to San Francisco's Ferry Building — near an extended Fifth Street. Other former railyard shops will house restaurants, nightclubs and retail stores. In the center, a football field-sized plaza will be built to hold large city events, a farmers' market or small performances.

"These buildings, which will surround the public open space, will form the nucleus of the cultural district," Rich said.

Hazardous materials abatement work is the first step to rehabbing the shops. About 80 percent of the work will be to remove lead-based paint from interior brick. Ten percent will be to remove sheetrock, floor tiles and pipe insulation containing asbestos. The rest involves other contaminants including heavy metals and polychlorinated biphenyl or PCB, he said.

The "significant" cost of abatement won't be known until crews get into the work. Thomas Enterprises tested methods to remove the paint without damaging the hard, fired surface of the brick. Nothing worked, said Rich.

"That put us in a difficult position of how to do it without damaging the brick," he said.

Standards set by the U.S. Secretary of the Interior dictate that the interiors of historic buildings that were originally covered with paint must likewise be covered with paint during rehab. Workers will gently scrape as much lead paint off the walls as possible and the brick will be encapsulated with lead-free paint, he said.

Thomas Enterprises broke ground on the infrastructure phase last winter. Initial grading of Railyards Boulevard and northern portions of Fifth and Sixth streets has been done. Extending Fifth and Sixth streets into the site will help connect the railyards with downtown, said Totah, adding that more infrastructure work will start once the developer gets the state funding it's been awarded.

Building construction is expected to start next year on 5th, 7th and Camille streets. Construction may include housing, mixed-use and office.