Friday, January 12, 2007

Saca Towers Project Halted

From the Sacramento Bee:

Towers project on hold
Construction stops as developer Saca seeks more cash to pay bills.


Construction has stopped on downtown Sacramento's most ambitious development project ever -- two 53-story condominium and hotel towers planned for the foot of Capitol Mall.

In a sign of developer John Saca's ongoing financial struggle to build his skyscrapers, several contractors filed liens against him in the past week for unpaid bills totaling $7.3 million for such items as architectural work and pile driving.

Hit with millions of dollars in cost overruns, Saca is seeking additional financing. Without it, he likely won't be able to close on his $375 million construction loan from Deutsche Bank.

Eric Rasmusson, a spokesman for Saca, called the work stoppage "a short temporary regroup" while the developer tries to reconstruct a workable budget and secure his construction financing.
...
City officials, concerned that a marquee project may falter, are "doing everything we can to support John in his discussions with CalPERS," said John Dangberg, the city's assistant city manager for economic development.

"We believe they've made a commitment to the project, and we want them to follow through with their commitment and their investment on that site," Dangberg said. "This is a very important project to the city of Sacramento, particularly since a building has been torn down and there are piles in the ground. We want it to proceed, and we think it will proceed. We're not interested in having a hole at the gateway to the Capitol Mall."
...
While his sales have slowed in recent months with the slump in the residential market, Saca is very close to meeting the Deutsche Bank requirement that he presell 400 units. According to Hanley Wood Market Intelligence, a Costa Mesa-based housing analyst, he had collected non-refundable deposits on 383 units as of November.
Update: "A gaping hole instead of two towering towers." --CBS 13 video clip here.

15 comments:

dan said...

LOL..

you mean,

you mean?

Saca is nothing but hype and BS?

and, he can't even pay his bills?

LOL...

imagine that!

Sippn said...

383 nonrefundable deposits. Most tracts get off the ground with no deposits.

He'll find 17 more easily.

RMB said...

The real comedy is to read the comments on the Sac Bee site. There are still a bunch of people who think these towers should be built no matter what the cost to the city. God I hate people that work with OPM and have no accountability.

Sippn, you must be sippin something good. There are a number of these units on the MLS for sale already and I wouldn't be to surprised to see a number of people walk away from their deposits in the near future. The 400 is the break point for the Deutsch bank funding, but I would imagine they will start to reconsider whether this is a good idea or not soon.
Calpers has a few more years left to throw their weight around but in about 5 yrs they are going to be singing a different tune. If you don't know what I am talking about do the math on the number of retires coming out in the next 5-10 years and the amount of money Calpers is going to have to disburse on an annual basis to pay these people compared to the inflows into Calpers.

Anonymous said...

Those people who think the Towers should be built at any cost are just a bunch of kids trying to promote their utopian urban planning ideals that they are being fed in college. I will bet none of them even holds a job and pays taxes. Those of us that do work for a living and pay taxes must rise up and protest to make sure our city and/or our state does not bail out Sacaville.

Anonymous said...

Imagine - A developer that overhyped his project. That has never happened before.

Add to that a developer that did not pay his contractors. Wow. That's sure something new!

drwende said...

Didn't someone here predict exactly this scenario? Good call!

Bakersfield Bubble said...

How can this be?? Who could have predicted this?? LMAO. I live 4 hours away I knew this was a joke and so did all the regulars here, except sipin.

# said...

Eric Rassmusson, a spokesman for developer John Saca, blamed skyrocketing construction costs for the shutdown.

"Whether it's concrete or steel or glass in the curtain wall that we're going to require, everything has nearly doubled," Rasmusson said. "We are absolutely referring to this as a temporary shutdown."

http://www.kcra.com/news/10736376/detail.html

# said...

Saca in December 2006:

"We've had some cost overruns and things like that, but we've worked around them and things are going well," Saca said. "We've taken in $26 million in non-refundable deposits -- off of a brochure. That shows Sacramento is ready for a project like this and wants to go urban."

http://www.sacbee.com/142/story/93567.html

Lander said...

More from the Bee:

It's official: Mayor Heather Fargo will seek a third term.

Fargo, who had indicated in recent interviews she would run, formally announced her candidacy during a speech Thursday to downtown business leaders. The mayor said she wanted another term largely to keep up momentum for revitalizing downtown.

"We can feel the (progress). We can see it. We can even hear it with the pile driving," said Fargo, referring to upscale downtown development projects under way, from condos to office buildings to hotels. "We will go over, under, around, or through to make these projects happen."

The mayor's announcement, which came as little surprise to Sacramento's political class, highlighted the annual State of Downtown breakfast at Memorial Auditorium. Nearly 700 business and civic leaders came for scrambled eggs, coffee and recipe ideas for downtown's future.

Speakers at last year's event bubbled with enthusiasm over the high-rise construction going on downtown, including the Towers, a planned 53-story luxury hotel and condo complex on Capitol Mall that would remake the Sacramento's skyline.

This year's tone was more subdued.

The Towers project, struggling amid a cooling housing market, was mentioned only briefly.

Sippn said...

Weren't you guys here telling me construcion costs were going down?

rmb said...

Construction costs are going down. (I work in construction) But when you have blown the money on your own expenses and mansion and Bentley instead of paying the people working for you, you have to come up with an excuse. Last year (2005) construction costs were still rising, so what better way to snow the media than to give that excuse, they will never check anyway.

Perfect Storm said...

Whether it's concrete or steel or glass in the curtain wall that we're going to require, everything has nearly doubled," Rasmusson said.

This statement is pure crap. The only thing that has doubled is the budget, because Saca and his teamm have no idea what they are doing?

Anonymous said...

He'll be filing for bankruptcy in 2 years.

He's way overextended on his other projects as well.

Word is he went on a buying spree in 2005.

Anonymous said...

Bakersfield has its own SACA Tower:
http://tinyurl.com/yc65ws