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Jose Luis Villegas /

Empty store fronts on K Street near 7th Street on Monday night, July 29, 2013

Settlement paves way for K Street development to start

Published: Friday, Jun. 27, 2014 - 10:18 pm

State officials and the city of Sacramento finalized an agreement Friday that will allow developers to take control of the 700 block of K Street, finally paving the way for the start of a pivotal redevelopment project in the blighted area.

The property transfer had been blocked for months after the state Department of Finance ruled the city and the developers did not have financing in place for the $48 million project before the deadline for finalizing redevelopment deals. The state closed down redevelopment agencies in 2011, ending a practice that allowed local governments to use property tax revenue to subsidize redevelopment projects.

Under the settlement, the city agreed to drop a lawsuit against the state and forgo $2.6 million of the $3.6 million in redevelopment funds it had previously approved for the project. The remaining $1 million will be made available to the city.

Leslie Fritzsche, the city’s economic development manager, said the city will come up with its financing plan in the next 45 days. She said the city expects construction on the project to begin early next year.

The key to the settlement is the state’s approval to allow the city to transfer 11 parcels on the block to developers.

State Senate President Pro Tem Darrell Steinberg, D-Sacramento, brokered the deal and said in a statement, “This is another leap forward for Sacramento’s progression toward a vibrant downtown where people can live, shop, work and play without major commuting, which is important for both our economy and our environment.”

“When you begin putting the pieces together – the railyard, the arena, Seventh and K – you can see the emergence of a major renaissance in downtown Sacramento, and I’m pleased to be in a position where I can help that along,” he said.

Two companies – CFY Development and D&S Development – have proposed a makeover for the block. The plan calls for building 137 affordable and market-rate housing units on top of stores, a music club and restaurants.

The block has been a focus of the city’s downtown revitalization effort for years. The city spent millions of dollars acquiring properties on the street, and the City Council voted in 2010 to grant control of the block to the development teams.

The block also borders the Downtown Plaza, where work on a $477 million arena for the Sacramento Kings is scheduled to begin next month.

“It’s great news for the economic momentum on that part of K Street,” said Michael Ault, executive director of the Downtown Sacramento Partnership. “It’s been a long time coming, and it’s exciting to see this project move forward considering this span of K is situated to be the gateway to the new arena.”

Principals for D&S and CFY were unavailable for comment.

Councilman Steve Hansen, who represents downtown, said the project would provide a much-needed boost to the housing stock of the central city.

“Everything about fixing downtown has to do with housing,” he said. “Housing is the most important element that’s been missing in the strategies for the last 30 years. People don’t necessarily care as much about places they don’t live.”

Call The Bee’s Ryan Lillis, (916) 321-1085. Read his City Beat blog at

Read more articles by Ryan Lillis

About City Beat

Ryan Lillis has covered the city of Sacramento, its 108 neighborhoods and its politicians since 2008. Prior to that, he covered crime at The Bee. A native of upstate New York, Lillis has a journalism degree from the University of California, Berkeley.

Contact reporter Ryan Lillis at

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Note: The City Beat blog switched blog platforms in September 2013. All posts after the switch are found here. Older posts are available using the list below.

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