Allen Warren’s New Faze development company had to get “really skinny” during the recession, laying off all but two employees, filing for bankruptcy protection on some projects and selling off residential lots.
But Warren, now in his second term as city councilman for Sacramento’s District 2, said he never considered closing the business that once had as many as 45 employees and a billion-dollar portfolio.
“I’m not a quitter. I believed in myself,” he said recently, discussing his 27-year-old company’s comeback. New Faze Development Inc., headquartered on Del Paso Boulevard in North Sacramento, not far from where Warren grew up, is ramping up hiring and launching construction on four housing complexes throughout the region over the next few months.
“We’re going from first gear to second or third – we’re picking up momentum,” Warren said.
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The rebound started with a bit of a gamble. Warren, who is 52, said he was unable to build on any of the undeveloped properties New Faze carried into the recession.
Given what it had spent for that land, “you couldn’t build a new house and get what you paid into it,” he said.
So Warren doubled down, acquiring properties whose values had plummeted during the downturn. One was a parcel, near Del Paso Boulevard and El Camino Avenue, where another developer had faltered after building just seven homes.
He said he ended up acquiring it for 25 percent of the price he had offered for it years earlier – when it was just bare dirt.
New Faze started building there in 2011 and now is completing the last of the 60 homes in what is called Renaissance Park. All have been sold – at prices that started at just under $200,000 and climbed above $300,000 as demand grew.
We’re going from first gear to second or third ... we’re picking up momentum.
Allen Warren, New Faze Development
Work on a final phase of that project, with 20 more homes, should get started this spring, said Charanjeet “Charlie” Tiwana, New Faze’s vice president for strategic investments.
The new homes, like those in the completed phase of Renaissance Park, feature some high-end elements, including granite countertops, stainless steel appliances and energy-efficient lighting systems, said Tiwana, who joined New Faze two years ago.
Also on tap for New Faze is a more rural project, Renaissance at Dry Creek, 53 homes and 10 halfplexes on large lots – some as big as 8,000 square feet – near Marysville Boulevard and Dry Creek Road on the northern edge of Warren’s council district.
Construction also is set to start soon at Victoria Park, a 143-unit new housing complex with 30,000 square feet of retail on 47th Avenue in south Sacramento – a project that was put on hold because of economic conditions in 2007.
Martin Tuttle, now West Sacramento’s city manager, worked on the Victoria Park project while a New Faze vice president a decade ago and said he’s happy to see it finally being built.
“It will be a nice fit on 47th Avenue and a strong seller,” he said, adding that he’s glad to see New Faze “back in the game.”
The target demographic for Victoria and the two Renaissance projects: moderate-income people, including first-time homebuyers and others who lost their houses in the recession and now are “trying to get back into the market,” Tiwana said.
A more upscale group of buyers will be sought for Urbane30, seven homes to be built starting this spring at 30th and U streets in the midtown area. The three-story homes will feature flat roofs suitable for use as patios or urban gardens, and high-grade exterior finishes with wood accents.
The target demographic there? “Totally different” from the other projects, said Allen T. Warren, the councilman’s cousin, who now serves as New Faze’s chief operating officer. The Urbane30 homes probably will be priced around $700,000. he said.
Several other projects also are in the pipeline, including some out of state.
Councilman Warren, the company owner, said he is mindful of the downturn that wiped out so many homebuilders and is determined to keep debt down, run a lean business and grow slowly.
New Faze now has 10 employees and is adding several more this year with the idea of topping out at no more than 20, well below its pre-recession high, Warren said. The goal for construction is completing 50 to 100 homes this year.
“Given what we’ve come through, that would be a very big year for us,” Warren said of that target, adding that the company is “fortunate to still be around to do the things we love – smart growth, urban infill projects.”
For a time, it looked like New Faze, often hailed for taking on difficult projects in lower-income neighborhoods, wouldn’t make it through the downturn. The company faced foreclosure on several projects and gave up control of high-profile developments, including Del Paso Nuevo in North Sacramento, the Alchemy lofts in midtown and Sun Meadows, a retirement community in south Sacramento.
It also accumulated big debts to subcontractors – obligations Warren said have been largely paid off.
“Nobody is owed a penny” from the two projects New Faze has built over the past four years – Renaissance Park and Park Place East, a 33-home project on 34th Street near Highway 50, Warren said. “And if there are older (debts), they’re very minuscule.”
Warren also has faced personal financial challenges, including a lawsuit from Wells Fargo Bank over about $2 million in unpaid loans.
Warren said last week that he paid off millions of dollars in other loans from the bank but stopped payments because of a dispute over Wells’ handling of his multimillion-dollar personal investments.
He said the conflict involves some of the same issues, including unauthorized accounts being opened in his name, that have led to massive fines for the bank and the resignation last year of its chief executive officer.
“I paid back every penny (from loans) until that dispute came about. That stopped everything,” Warren said.
Julie Campbell, a regional vice president with Wells Fargo, said Warren’s claims were denied by an arbitration panel in 2015 “as having no merit” and that Warren was ordered to pay legal fees of more than $500,000.
“Meanwhile Mr. Warren has refused to repay loans he obtained from Wells” or the legal fees, she said in a statement, adding that a trial on the case could begin as early as May.
Warren said he is appealing the arbitration ruling, including the legal fees issue, and filed an amended complaint with new charges against the bank.
As for the various legal and other sorts of challenges New Faze has faced, Warren said they’re all part of the ups and downs of running a development company.
“If we have a few scrapes and scars from being in business for nearly 30 years, I gladly accept that,” he said.
Despite stepping away from some of the day-to-day management of New Faze to focus on council issues, Warren said he’s excited about the company’s revival – and especially enthusiastic about New Faze projects in North Sacramento, where he grew up, became a high school sports star and went on to sign a professional baseball contract before injuries derailed his athletic career.
He cited a few of the latest “wins” for the community: a Grocery Outlet supermarket to be built on Del Paso Boulevard, just a couple of blocks from the Renaissance housing subdivision, along with a brewpub opening next month and a recording studio and events space that recently opened on the boulevard.
In Warren’s view, the area is overcoming its reputation for crime and is set to follow Oak Park in becoming a center for hip new businesses and a magnet for renters and homebuyers seeking historic charm and proximity to downtown and the nearby Arden area.
“This is a hidden jewel – a diamond with one or two layers of dust over it,” Warren said. “You just need to polish it to see.”
Bob Shallit: 916-321-1017