Sacramento River District redevelopment gains momentum as stalled projects move ahead

Sacramento’s River District is about to realize the completion of a key housing project that is part of a redevelopment plan for the 830-acre industrial area north of downtown.

Track 281, a market-rate apartment complex, will open to renters in May and is the first of several new housing, office and park developments that are beginning to change the face of the neighborhood. Completion of the six garden-style apartment buildings is two years behind schedule due to construction delays. Other housing projects in the River District have been plagued by financing issues.

“For any development project, the stars have to align,” said Devin Strecker, executive director of the River District, a nonprofit business organization that works to encourage development in the area. “Financing and construction are always cyclical.”

Strecker said the current housing shortage in Sacramento and the fact that the city has continued to add population despite declines in other parts of the state are all factors in pushing the development projects to finally become a reality.

The dream to create a new urban district in the area between the Sacramento River to the north, the railyards to C Street to the south, Sutter’s Landing Park to the east and the Sacramento River to the west dates back more than 25 years. In reality, the area is more known for its large homeless population and ugly industrial buildings than as a visionary new urban area of Sacramento.

Up until now, the few exceptions to the construction lags have included several hundred affordable housing units and the SMUD Museum of Science and Curiosity, which opened in November 2021 in a former power plant that was abandoned for years.

Marisol Village opened its first phase of 122 affordable units in 2022 and is in the process of leasing another 103 affordable units that became ready for occupancy earlier this year. The entire $300 million project of 427 apartments is replacing the former 218-unit Twin Rivers public housing community.

River District projects see long awaited financing

As the first market-rate building is completed, financing has also come through for another stalled projects.

Three hundred and seventy-two market-rate rental garden apartments are scheduled to be constructed starting next month as part of the Township Nine project on North Fifth Street in the River District. A Hyatt branded hotel will also be built with construction slated to start later this year.

Township Nine is now on its third developer and the project has been delayed for eight years. The new firm building out the project, 29 Street Capital, took over in 2019 after the development firm First Capital filed for bankruptcy.

“The market wasn’t ready for it,” said Rachel Bardis, senior vice-president of development for 29 Street Capital. “Timing is everything.”

Bardis said 29 Street Capital has secured a $86 million loan for the construction of the first 372 market rental units. “It is an up and coming area and we are very excited about it,” she said.

Bardis said the hotel that will be built later this year by the garden apartments will be unique. She said the world’s second Caption by Hyatt hotel will feature a lobby area that will serve as a community center with comfortable coaches and chairs and food and drink options that not only cater to hotel guests but to residents of Sacramento.

A small number of market-rate rental apartments are also being built in another part of the River District, part of the Marisol Village Apartment Complex on Swallowtail Avenue. Eighteen market rental apartments will be part of an 84 unit new phase of Marisol Village that are expected to start leasing in the fall of this year.

What’s on offer for River District renters?

Cheaper rents than downtown or midtown Sacramento will attract tenants, Sid Paul, vice president of acquisition for Four Pointe Management Group, developers of the Track 281 housing project

Studios will start at $1,400, and one-bedrooms will go for slightly under $2,000, Paul said. Two bedrooms are priced at slightly more than $2,000.

“Hopefully new residents will see the product they’re getting and the value they’re getting compared to other spots in the city, “ he said. “There’s a value that they can perceive.”

Many apartments in the new complex are relatively small. The average studio will only be 372 square feet. But Paul said the complex will offer generous amenities including a large gym, community room/coworking center and an outdoor pool.

The location of the complex, a renovation of a former Hawthorn Suites motor hotel, is squarely in an industrial area. It is within walking distance from the chain restaurant Denny’s and a Mexican restaurant, but it is also across the street from a four-story self-storage facility that is under construction.

Paul said other restaurants and shopping is a half-mile ride by car, a drive he hopes tenants will be willing to make in exchange for less expensive rents. Still he concedes of the apartment development, “It’s just a little bit removed from the moment.”

In addition to new housing and office space, The River District is scheduled to be getting this year a small beauty makeover overlooking the Sacramento River. A 1.5-acre park containing pink and white cherry blossoms, named Hanami Line, will be an extension of the 1.98 acre existing park.

Developers take a conservative approach

While two parts of the Township Nine project will start to be built, the construction timelines for the rest of the project, about 1,600 units, is still unclear. Bardis said 29 Street Capital will wait until the first phase is completed in 2024 before determining the timing of future apartment phases.

Despite the new developments, the vision of a unified new urban area of Sacramento is far from becoming a reality.

The River District’s various housing projects are scattered throughout the more than 800 acres that make up the area, individual developments unconnected to each other with usually no stores or restaurants within walking distance. Warehouses and industrial buildings are often the nearest neighbor, not the shopping and entertainment venues that often attract people to living in an urban environment in the first place.

Other projects in the River District are still delayed. The Growers District, which is to feature 540 units of market rental housing in three former warehouse buildings, plus space for commercial tenants, was approved by the Sacramento City Council in July 2022.

Developer Bauen Capital had hoped that construction could begin in late 2023 but the project has stalled, said Strecker, the River District’s executive director. “Because of the current lending markets, the developers were having trouble getting the financing for it, so they decided to put off construction for several years,’ he said

John Kohlenbrener, a development official with Bauen Capital, said in an email to The Bee that the company has not yet tried to obtain financing.

“Procuring a design team and getting an efficient and correct design on paper has taken a little more time than anticipated,” he said.

Kohlenbrener said the plan is for 2024 construction start date given a “realistic view” of the remaining steps, including design, permitting and financing.

He said in the meantime, Bauen is looking to attract local businesses of all varieties that could fill the warehouses before construction begins on the apartments. Kohlenbrener said the the businesses could stay during the apartment renovations because construction crews could work around them.

River District’s future tied to state workers

There is the “big if” concerning the River Districts biggest project, the nearly $1 billion state Richards Boulevard Office Complex that is scheduled to be completed in early 2024.

More than 5,200 state workers were to occupy four new office towers, ranging in height from seven to 11-stories. The idea was that the new workers would bring new economic activity to the River District, but that was before the pandemic introduced the concept of remote workers.

The state has been non-committal as to how many workers will occupy the buildings. Workers from at least seven state departments and divisions, now scattered in various buildings in Sacramento, were scheduled to occupy the buildings.

Jennifer Lida, a spokeswoman for the state division of general services, would only say that “the level of day-to-day use will depend upon how the departments have determined to operate in 2024 when the buildings open.”

Even with COVID-19 restrictions lifted, the largest state worker’s union, the Service Employees International Union, Local 1,000, has pushed for the contractual rights of workers to do their job at home.

Brian Nash, a spokesman for the SEIU, said the union wants full flexibility for state employees to work from home. “The state wants workers back in their offices because they feel it will help businesses in the River District,” said Nash. “Our position is that it’s not going to make any difference because folks don’t have any disposable income. The cost of living keeps going up and the wages don’t.”

Currently, less than 50% of Sacramento-based state workers have returned to the office and, for many, the work week consists of a combination of working from home and the office.

“It’s a different world than when the state contemplated those buildings because of the reality of how COVID changed work life,” Sacramento Mayor Darrell Steinberg said.

Steinberg says it’s unclear how many state workers will ultimately use the buildings and the answer may also depend on the outcome of upcoming contract negotiations between the SEIU and state workers on whether employees will retain the option of working from home. He’s hoping the final state policy will “offer some balance,” and result in workers using the buildings at least part of the time.

The current contract between state workers and the SEIU expires on June 30.