Real Estate News

Natomas building activity poised to resume

Weeds grow on an unfinished lot in the Natomas area of Sacramento last May. Federal flood rules have prevented construction in the region since December 2008. That could change soon if a building moratorium is lifted.
Weeds grow on an unfinished lot in the Natomas area of Sacramento last May. Federal flood rules have prevented construction in the region since December 2008. That could change soon if a building moratorium is lifted.

The pipeline to restart development in Sacramento’s Natomas community could be reopened as soon as April 1, city officials said Thursday, the result of long-awaited federal action on flood safety regulations.

Natomas, home to about 100,000 people, was Sacramento’s fastest-growing region until December 2008. That’s when the Federal Emergency Management Agency imposed building restrictions in response to safety concerns about the levees that ring the Natomas basin, providing critical flood protection in heavy rain years.

Mayor Pro Tem Angelique Ashby, who represents a portion of Natomas, said FEMA is expected to issue a determination letter by March 30 stating that those building restrictions will be lifted 90 days later.

The city said its first priority will be to consider applications from property owners who have been waiting years to rebuild homes damaged by fire – of which there are about a half-dozen – and those who had to halt remodeling activities midstride.

“While we’re very excited to be coming out of this time, we want people to understand we’re being measured and responsible toward the 100,000 people who live in Natomas,” said Ashby.

The city plans to be ready to review building applications almost as soon as the FEMA letter arrives. On March 31, the City Council will vote on a proposal to resume development in Natomas. If that is approved, city staff will begin accepting applications the next day, April 1.

The proposed development program calls for new housing construction in the first 12 months to be limited to 1,000 single-family homes and 500 multifamily units, Ashby said. There will be no limit on commercial construction.

The total permitted new residences will increase to 2,000 in the second year and 3,000 in the third.

Officials said the go-slow approach is aimed at balancing housing demand against flood protection. On the one hand, new development will provide the fees needed to help complete flood protection projects in the region, as well as other community infrastructure. But city officials do not want to allow too many more people in Natomas until that flood control work is done.

“We think this is sort of the sweet spot between what the market is asking for and a cautious approach,” said Scot Mende, the city’s principal planner.

Natomas is surrounded by 43 miles of levees that protect the bowl-like region from the Sacramento River, the American River and several creeks. Although millions of dollars in upgrades have been performed on those levees over the years, seepage concerns remained and eventually triggered the building restrictions. In the event of a levee break, parts of Natomas could see flood depths great enough to submerge a two-story house.

The Sacramento Area Flood Control Agency completed about $400 million of repairs on the most important levee segments in 2012. The U.S. Army Corps of Engineers is responsible for the remaining work, estimated to cost $600 million more. That work was held up for years by political debates in Congress about federal spending priorities.

President Barack Obama included $3 million in his new federal budget for the Corps to finish planning the remaining Natomas levee work. But doing that levee work depends on Congress allocating millions more for construction.

At a news conference Thursday, city officials addressed questions about whether additional development would expose more people to flood risk in Natomas. They emphasized that the building moratorium occurred not because Natomas levees were unsafe but because federal levee performance standards changed after Hurricane Katrina in New Orleans.

“I don’t think the city is taking a risk,” Ashby said. “I think we’re being very prudent. The actual risk of a flood is very low.”

In addition to about 100,000 residents, Natomas is also home to about 30,000 jobs, Sacramento International Airport, several major highways and Sleep Train Arena, home of the Sacramento Kings professional basketball team.

The Kings are building a new arena downtown, and plans to market the existing arena property for another purpose have been on hold because of the moratorium. Ashby said lifting the moratorium “does allow the Kings to market it differently.”

As a measure of the housing demand that once existed, the city estimates there are 3,669 finished housing lots sitting vacant in Natomas.

Ioannis Kazanis, spokesman for the North State Building Industry Association, said builders will be pleased to get back to work in Natomas, which was the hottest new home market in the region before the moratorium hit. But Kazanis said the recession – which struck about the same time as the Natomas moratorium – has made builders more conservative.

“I don’t think anyone wants to get too far ahead of themselves until we see what the market is demanding up there,” he said. “We are going to be cautious.”

Bill Busath, the city’s interim utilities director, said there is adequate water available to serve new development in Natomas, even though Sacramento and the state are experiencing a fourth year of severe drought.

“The water supply in Natomas was planned before buildout,” Busath said.

Any new homes will be subject to the same water conservation rules as the rest of the city, he said, and will be more water-efficient than existing homes because they are subject to the latest building codes.

Call The Bee’s Matt Weiser at (916) 321-1264. Follow him on Twitter @matt_weiser.

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