Railyards protest made Sacramento a test case for economic development
After decades of fits, starts, environmental cleanup and negotiations, a unanimous vote by city council appeared to secure a multimillion-dollar plan to spur development of a soccer stadium, shops and a concert venue in the Railyards, Sacramento’s 240-acre infill project.
The vote was met with applause from a packed audience on a Tuesday evening in early June, after nearly three-and-a-half hours of deliberation. From behind his desk, Mayor Kevin McCarty produced a soccer ball for a ceremonial toss between the team’s general manager and the city’s vice mayor. Councilmembers donned Sacramento Republic FC scarves and jerseys, and posed for photos behind a team banner.
“We definitely feel like we’re off to the races,” said Denton Kelley, the project’s lead developer, over the low roar of conversation in the council chambers.
What wasn’t publicly known at the time — and wouldn’t be for another two weeks — was that a group opposing the deal had already gathered more than 100 protest signatures from people living in the Railyards. They would gather dozens more in the weeks ahead, enough to put the city’s latest financing agreement for the project on hold.
The incident, experts said, would make Sacramento a test case for a relatively new piece of law, which established a protest process for these types of special taxing districts.
When the subcommittee overseeing the taxing district arrived back at city hall to take a final, procedural vote on the issue in late June, they learned of the protest less than 10 minutes before the meeting, according to two members. The panel peppered the city’s attorneys with questions about what had happened, and how they could proceed.
“Can staff please explain to me what’s going on?” asked Councilmember Karina Talamantes.
The local hospitality workers’ union, Unite Here Local 49, had taken issue with the financing agreement.
Union leaders believed the affordable housing requirements for the project were too low, and would magnify the housing crisis that already challenged low-wage workers like their members, who staff hotels and casinos in the region. They said the deal amounted to a giveaway for developers. They wanted neutrality agreements for some of the planned projects in the districts, including the soccer stadium and any hotels that may be built, which would ease the process of unionizing employees who will one day work at those sites.
The union organized residents of the first two apartment buildings in the Railyards, which had opened in just the past year. Many agreed to protest. Several of the residents said they themselves struggled to find affordable housing, and wanted others to have the same opportunity they found in the Railyards.
They succeeded. On Monday, the city announced that the protest signatures amounted to a majority of the residents living in the Railyards. An earlier, smaller version of the special taxing district would remain in place, but the district expansion — designed to repay more developers’ infrastructure costs with expected increases in property tax — would be put on hold for a year.
The groups planning to build in the Railyards affirmed their commitments to the projects nonetheless. Sacramento Republic FC said it would break ground soon on its planned soccer stadium, and expected to finish construction by the 2027 season. Downtown Railyard Ventures said it would move forward with its “Central Shops” project, which would convert historic warehouses into restaurants, bars, retail and entertainment. Construction of Kaiser Permanente’s planned hospital — which was not expected to benefit from the taxing district — is on track, the health system said in a statement.
City officials said they are looking at other means of supporting development in the Railyards. They may revisit the expansion move in a year.
In the meantime, economic development experts are paying attention as the process — established by the legislature in 2019 — plays out in Sacramento’s Railyards.
“From a statewide policy perspective, we’re watching it,” said Gurbax Sahota, president and CEO of the California Association for Local Economic Development. “We’re watching to see if it’s the process we envisioned.”
‘A relatively new creature’
In the past, when city and county leaders in California wanted to use property tax dollars to spur major projects in their communities, it was done through local redevelopment agencies. The state dissolved those agencies in 2011, over concerns that the system diverted money from schools and subsidized developers.
In the years that followed, as state lawmakers created new tools for local governments to motivate development, they sought to add more public participation into the process, experts said, to avoid some of the concerns that had been raised about the agencies.
Under redevelopment agencies, Sahota said, “the public was somewhat disconnected… And these are really technical tools.”
One law, which had some of the old tools of redevelopment agencies, created additional means of transparency, including a protest process. And as the law evolved for the type of taxing district used in the Railyards — an enhanced infrastructure financing district — those provisions were adopted into it, too, said Dan Carrigg, a consultant for the California Association for Local Economic Development.
“They are still a relatively new creature,” said Chris Micheli, a longtime lobbyist and adjunct professor at the University of the Pacific’s McGeorge School of Law.
As Sacramento and other municipalities test the process, Micheli said, it’s possible that local governments will go back to the legislature and ask for new language. For instance, it took the city nearly three weeks to finalize the protest count and confirm the addresses of those who submitted protests. In the meantime, Sacramento was hit with a lawsuit claiming the delay violated the law. So policymakers, Micheli said, might consider building in more time for cities to assemble lists of residents in a proposed special taxing district.
Experts said they believe the Railyards episode marked the first time a group has used the protest process in the law. And if the formal protests had amounted to between 25% and 50% of the Railyards residents, rather than a majority, the city would have had to organize a special election for the district’s residents and property owners to vote on the issue.
“I almost never want to be first in anything,” said Councilmember Phil Pluckebaum, whose district includes the Railyards, and who sits on the committee overseeing the special taxing district. “I definitely did not want to spend the next several years establishing new case laws… I still am unclear what the rules are for establishing residency and holding an election.”
Former Sacramento Mayor Darrell Steinberg, who left office in December after leading the effort to put an agreement together for the project, said the protest mechanism wasn’t discussed during his time working on the deal.
It’s important to give the public a voice on such matters, he said. But he believed the language was intended to protect residents in existing neighborhoods, where new development might risk pricing people out, rather than largely undeveloped areas like the Railyards.
Still, an earlier, smaller version of the special taxing district remains intact. It includes the land where Sacramento Republic FC and its owners — the Wilton Rancheria tribe — plan to build a 12,000-seat soccer stadium. And the city will find a way through or around the special district expansion, he said.
A delay, he said, is “not what everybody would prefer.” But the project will move forward.
“This is a blip,” Steinberg said. “It doesn’t change the fundamentals.”
This story was originally published July 16, 2025 at 3:06 PM.
