Another big housing complex is being targeted for Sacramento’s booming R Street corridor.
In an unusual deal, the Capitol Area Development Authority is partnering with Sacramento’s CFY Development to acquire the half block that takes up the north side of S Street between 17th and 18th streets – a weed-covered expanse that formerly was home to a metal-plating firm and other industrial users.
The partners’ plan: Build as many as 150 apartment units along with retail on the site, with about 60 percent of the living spaces at market rate and the rest discounted for renters with lower incomes.
But the plan could be scrapped if testing shows that remediation of contaminated groundwater at the site will be too expensive.
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“If it turns out to be a $500,000 problem, fine, we can deal with that,” said Wendy Saunders, CADA’s executive director. “But if it’s $10 million, we’ll just have to not complete the purchase.”
The site also has soil contamination, a legacy of the industrial businesses that operated there for decades. But Saunders said she has been assured that issue can be dealt with fairly easily during the normal course of excavating the site for construction.
The groundwater testing will be conducted over the next five months.
Under a proposed agreement that will go to CADA’s board next week, the agency and CFY will make a $50,000 nonrefundable deposit toward the $3.5 million purchase price for the land. The deal calls for additional deposits if the buyers can’t complete their due diligence within 150 days.
“It’s a risky venture,” Saunders said of the possibility of losing deposit money. But she said it’s part of CADA’s mission to foster development – and assessing the contamination issue at a key midtown property is “doing a public good.”
The project is somewhat unusual for CADA. On major projects like this, the agency typically acquires land from the state and then sells it to private developers.
In this instance, the land is being acquired from a private Roseville partnership that acquired the property in 2013 after another development team failed in its plans for an upscale condo and retail project there.
And instead of selling the land, CADA – a joint-powers agency run by the city and the state – is retaining an ownership position in the project.
“We have a real interest in the health of the R Street corridor,” Saunders said of that decision, noting that being a partner on the project will give CADA a hand in the building design as well as in its management once it is completed.
CADA’s interest in the property will be held by a nonprofit the agency formed in 2014.
Saunders said CADA jumped at the chance to acquire the land when it came on the market in February because the agency is behind on its statutory obligations to provide affordable housing along the R Street corridor.
It opted to partner with CFY, she said, because of that company’s experience in related projects.
“They’re a great affordable-housing developer and they share our vision for R Street,” Saunders said.
CFY was the developer on the innovative, CADA-backed Warehouse Artist Lofts project at 1108 R St.
Ali Youssefi, vice president with CFY, said the area is an excellent location for a mixed-used project, adjacent to the Ice Blocks development under construction and near several other planned housing projects.
Though it’s a “challenging brownfield site,” Youssefi said his company and CADA have the experience “to tackle the cleanup and do something special here.”