A deal to build Sacramento’s tallest tower has fallen through, forcing planners to find another way forward for a prominent piece of downtown real estate that has been vacant since the recession.
CalPERS, the site’s owner, is terminating its agreement for 301 Capitol Mall with developer CIM Group, Board President Henry Jones said Tuesday.
The pension fund voted a year ago to back the 33-story development with $550 million, after forming an LLC with the Los Angeles-based company in 2017 to manage the project.
At the time, CalPERS and CIM committed to starting construction only if they secured a marquee tenant to anchor the building.
Jones, who first mentioned the change while speaking at a candidate forum, declined to share CalPERS’ reasons for the change in direction.
“Now that we have terminated the agreement with CIM, the whole process is to find a new partner moving forward,” Jones said in an interview. “That has yet to be determined.”
The agreement officially ends Sept. 30, according to a memo CalPERS sent to CIM on Aug. 1.
Sacramento City Coucilman Steve Hansen, whose district includes the Capitol Mall site, suggested another developer could pick up where CIM left off.
“This doesn’t mean that the project has to restart, but CalPERS needs to move with a sense of purpose in order to keep the project on track, on schedule and get something built,” Hansen said.
“We are cautiously optimistic that this change represents an opportunity to continue to fulfill CalPERS’ obligations, both moral and financial, to the citizens of the city but also to their investors, which are our public employees,” he said.
CIM Group spokesman Bill Mendel also declined to share specific reasons for ending the agreement.
“We at CIM believe the project we and CalPERS created is a good solution for the site, albeit not the only solution,” Mendel said in an emailed statement. “We are confident that CalPERS will be successful in identifying a worthy alternative for this important site.”
In November, the planning process took a step forward when developers submitted an application to the city, which launched a months-long review process. Plans for the 557-foot tower had included 790,000 square feet of office space; 12,400 square feet of retail; 6,400 square feet for restaurants, 100 apartments and an elevated fourth-floor public park.
The site has sat vacant for more than a decade. CalPERS in 2007 halted construction of two 53-story condo towers there, and the lot has been empty since then.