Saturday, September 09, 2006

Alms for the Towers

The Sacramento Bee has an update on The Towers at Capitol Mall condo project.

Condo high-rise seeks subsidy

With work already well under way on his twin 54-story condominium and hotel towers, developer John Saca is still wrapping up important financial details, including obtaining an $11 million subsidy from the city and closing on his construction loan.

Caught between rising construction costs and a slumping housing market, Saca has seen the budget for his $500 million project, which would be the tallest residential structure on the West Coast, tighten. A few months ago, Saca began negotiating with the city for a subsidy, something he said he had previously viewed as "a last resort."

"We absolutely need it," he said. "What's happened is our construction costs for the project have gone up well over $100 million from last year."

The money would be used to help pay for furnishings and fixtures in the luxury InterContinental Hotel slated to occupy the lower 18 floors in one of the two towers at Third Street and Capitol Mall...

Condominium owners will have access to a spa, room service, a concierge and other hotel-style amenities in return for homeowners' dues of $500 a month, far less than those charged in many new high-rise condo projects.

"This is the first high-rise residential project to be built downtown," Saca said. "To compel people to move out of their homes in east Sacramento or wherever, you've got to give them amenities."

Another piece of the financial puzzle that Saca has yet to complete is the closing of his $375 million construction loan with Germany's Deutsche Bank. The developer said he needs to obtain "less than a hundred" more non-refundable deposits before he meets the requirements for closing the loan.

So far, Saca said, he has collected non-refundable deposits on about 400 units at prices ranging from the high $300,000s to $4 million. "We are really close to hitting the number we need for our lender," he said. "It's not a concern for us now."

11 comments:

Anonymous said...

Sure, why not give every tom, dick and charlie 10 million for their project, in fact Saca needs more money, for after all he is building top shelf stuff, and you know, those Thomas Kincaide lovers have expensive tastes! Will 100 million do the trick?

Tear up a few more uban gardens displacing hard work by the citizens, and subsidize some more condos....why not? The moneys free!

RMB said...

This is just beautiful. If the city is stupid enough to give him the subsidy on top of building the new stadium I feel sorry for anyone who lives in Sac. Every other builder will expect the same subsidy. What ever happened to private people taking risk to earn money and then not expecting the gov't to bail them out when thing go bad. Last I checked there is no public benefit to a private apartment building.There's always BK Saca

tom stone said...
This comment has been removed by a blog administrator.
Anonymous said...

Hmmm... looks like CalPERS has sunk $70 million already. What's the deadline before Deutsche pulls the rug out?

From what I'm hearing, Deutsche has been taking a lot of risks lately. I bet they can't wait to bail on this deal and they're hoping the deadline hits before enough buyers show up. The city should hold on to it's $11 million until Deutsche makes a move.

Spacebär said...

Maybe I'm just being naïve but I don't see why the city should bail this developer out. Shouldn't the developer seek additional financing from the financial markets or change the scope of the project?

Garth Farkley said...

There goes my CALPERS pension.

I guess I wanted to die with my boots on anyway.

Anonymous said...

Dangberg, go to guy for Fargo says Saca needs the money so we better give it to him...

Dangberg also gave the the Maloof's 500 million through his shrewd bargaining power...

previously while working for a State subsidiary, Dangberg destroyed the Urban Gardens built by citizens of Sacramento for more "upscale" Condos/Apartments...

SWEET!

Anonymous said...

I took a look at the Aura project a few months ago and the first thing that I asked was about the HOA dues. I was told it would be about 70 cents/sq foot. For a 1000 sq ft 2br 2ba unit, that would be about $700/mo. Why would I pay ~500K for a condo and pay $700 on top of that every month when I can rent a similar place (not so glitzy, though but definitely with all the amenities) for about ~1200/mo?

Happy in SF said...

$500 HOA's!!! Now, tell me again why somebody would sell there large stand alone house in East Sac with no HOAs to live in a fancy apartment? I can't beleive the amount of deposits they've managed to colect.

Anonymous said...

can't believe the deposits Saca has received?

Don't...obviously the guys is a BS Realtor Artist...

why do you think he's now gone back to the City to be put on the dole?

Saca'a project doesn't "pencil out"...probably never did...he's into the PR and Publicity Spin and now that he's on the way to being "down and out"...he want "food stamps"

Spacebär said...

I wonder if the 23% rate of buyers backing out of contracts applies to this project. Since it is a high end project, I suspect that the rate could be higher.