For a decade, CalPERS and the city of Sacramento have had a signed understanding that the giant pension fund would build hundreds of housing units along downtown’s R Street corridor. All this time later, CalPERS has not lived up to its end of the bargain.
City officials sent the retirement agency a letter this year saying CalPERS is “out of compliance” with a memorandum of understanding the parties signed in 2001 and amended in 2007.
Under the terms of the agreement – linked to the development of the CalPERS headquarters building at 400 Q St. – the pension fund agreed to build nearly 400 housing units along R Street by 2012. But as of today, just 36 have been constructed.
Councilman Steve Hansen, who represents downtown, said city officials are in “very productive” conversations with CalPERS.
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“The city clearly needs more housing,” Hansen said. “We expect CalPERS to fulfill their obligation and I think we’re going to have to keep focused on it.”
The city provided the April letter last week to The Sacramento Bee. In a written statement, CalPERS said it is “continuing to work on a plan and ... we’re committed to honoring the MOU.”
“We are currently in active negotiations to provide for the fulfillment of the MOU,” the agency said, adding, “it is our practice not to comment on active real estate negotiations, so we don’t have further comment at this time.”
Once a row of warehouses and state offices, R Street elsewhere has steadily transformed into a lively strip of restaurants and lofts.
So far, just one CalPERS project of three has been built: the 36-unit SoCap Lofts on the northern side of the 600 block of R Street. The pension agency agreed to construct another 36 single-family homes across the street called the Seventh Street Lofts, saying it anticipated finishing by summer 2009, but that phase has not occurred.
The third, most ambitious development phase outlined in the MOU was a 300-unit development on the 300 block of R Street, where a parking lot behind CalPERS headquarters still exists. That project was expected to include 14,500 square feet of retail and 325 parking spaces in a multilevel garage, and was slated to be finished by spring 2012.
The amended MOU was signed at the beginning of the economic recession. CalPERS wrote in its agreement that “changes in market conditions could substantially impact the delivery schedule.”
Just a few blocks away, CalPERS is involved in another large-scale project that city officials are anxious to see completed.
CalPERS is partnering with Los Angeles-based developer CIM on a 30-story high rise at Third Street and Capitol Mall, a block that has been vacant for years and was once the site of planned 53-story condo towers.
CIM representatives recently met with city officials to discuss the building’s design, but are searching for an anchor tenant before beginning construction. The company had initially said it hoped to start construction in 2018.