A remarkable vote is about to take place in downtown Sacramento. The central business district’s property owners will be asked next month whether they are willing to pull $30 million out of their pockets to help build a $150 million streetcar system.
The mail ballot vote will be distributed Jan. 13 to the several hundred companies and individuals that own 1,200 parcels within three blocks of the planned rail line. Landowners will be asked to commit to annual payments for 30 years to help Sacramento and West Sacramento launch a modern version of the little rail cars that trundled through much of central Sacramento and its inner suburbs more than a half century ago.
Do Sacramento’s core area business leaders believe streetcars will provide the kind of economic boost Portland’s downtown and Pearl District have gotten from a similar project there? Advocates, including downtown Sacramento Councilman Steve Hansen, say the easy-on, easy-off trolleys will make downtown a more convenient place to live, work and to spend money in, and will help toward Hansen’s goal of doubling the number of downtown residents.
Property owners will have a month to decide. Their vote likely will be the make-or-break moment for the nearly 10-year effort to bring streetcars back to Sacramento.
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As planned, the streetcars would crisscross the Tower Bridge on a 3.3-mile rail route in the street with stops at City Hall and Raley Field in West Sacramento, and numerous stops in downtown Sacramento, including near Old Sacramento, the railyard, the arena, and the community and convention centers. The streetcars would travel along the K Street Mall and loop as far east as 19th Street in midtown. The trolleys would run at 15-minute intervals initially, and eventually every 10 minutes.
One major downtown property owner, David Taylor, who was a fence-sitter on the idea, says he changed his mind after reviewing an economic analysis indicating the streetcar line will help increase property values and commercial rents. Taylor’s U.S. Bank Tower on Capitol Mall likely would contribute $60,000 a year. Taylor says that amounts to about 1 percent of the rent his building’s tenants pay.
“I’m a full-on proponent,” Taylor said. The streetcar “makes ours a more attractive location. As people decide to live in the core, because it is easier to get around, that builds momentum for property values.”
The public typically pays for transportation projects. The streetcar idea, however, is being pitched as a hybrid – part transportation project, part economic development tool.
The financing is a hybrid as well. The federal government has given an early indication that it is willing to pay half the cost, $75 million, if Sacramento leaders meet certain benchmarks. Of the remaining half, West Sacramento would pay $25 million, the state $10 million, the city of Sacramento $7 million, the county of Sacramento $3 million. Downtown property owners’ annual fees would account for the remaining $30 million.
The biggest landowner in the proposed fee district is the Sacramento Kings group, which is developing the downtown arena at Sixth and K streets and surrounding land. Although the city will own the arena building, the Kings group is responsible for costs associated with the property, including the streetcar fee. That group has already kicked in $500,000 in seed money for a streetcar. One of its partners, Mark Friedman, told The Sacramento Bee this week the group is on board to pay an additional fee he said will be more than $100,000 a year.
A representative for the Hyatt Regency Hotel, the second biggest property owner along the route, said his group is willing to pay what they estimate will be $82,000 year. “I think it is going to be a great addition to the city, a feature our guests will be able to use,” hotel general manager Scott Vandenberg said. “We feel that (fee amount) is appropriate for the product we are going to receive.”
Small property owners would pay far less. Sacramento City Councilman Hansen, who owns a house three blocks from the line, said he would pay a $36 annual fee.
Some property owners have been harder to persuade, demanding alterations in the project.
To win broader support, streetcar advocates, including the city of Sacramento and Sacramento Regional Transit, have agreed to move the bigger light-rail trains off K Street, switching them over to H Street. Property owners around K Street have complained that light-rail trains, some of which are four cars long, wall off an entire block when stopped, making the street less hospitable. Each streetcar, on the other hand, is just one vehicle, with a lower, thinner profile, and is more pedestrian-friendly, and likely to attract riders who want to come to restaurants and clubs on K Street.
Moving light rail will cost an extra $17 million, which will be handled outside the $150 million streetcar budget. Some but not all of that $17 million has been identified from existing local transportation funds.
Proponents also have agreed to create a nonprofit management group to run the streetcar program, allowing downtown property owners more say in how it is run than they would have had if Regional Transit ran the cars. Friedman, in particular, said he and other property owners want to make sure the rail cars feel safe and comfortable for people who don’t typically use public transit.
One owner who has been skeptical, Richard Rich, co-owner of the California Fruit Building at Fourth and J streets, credits proponents with listening to property owner concerns, and making improvements. He is now considering voting for it, but only if proponents show him they can handle construction cost overruns without putting the burden on property owners, and without reducing the scope of the project to the point where it might not be effective.
Sacramento Regional Transit had major cost overruns a few years ago when it laid new rail on downtown streets and ran into a host of unexpected problems with underground utilities and historical artifacts.
“Cost overruns are a very real issue,” Rich said. “It could be 10 percent. Who picks that up?”
Kirk Trost, an attorney with the Sacramento Area Council of Governments, which is serving as the project sponsor and manager, said the $150 million has numerous built-in contingencies that will handle any surprises.
Although the property owner vote is significant, it isn’t the only vote ahead for the streetcar program. Under state law, only registered voters in the streetcar line area are allowed to decide whether to create the financing district. But many of them are renters, not property owners. So, the property owner vote will be “advisory.” If that group agrees to pay the set up the fee program, a second vote would take place in April and May among registered voters in the immediate area. If both groups approve, Sacramento and West Sacramento city officials will push forward to secure the federal funding.
If that happens, and if the federal and state support comes through, Trost said work could begin in 2016 and finish in 2017 or 2018.
Call The Bee’s Tony Bizjak, (916) 321-1059.