Monday, June 11, 2007

"Towering Fiasco" Pronounced "Dead"

From KCRA (also video):

It appears the Towers at Capitol Mall will not be part of the Sacramento skyline. Several people who have deposits on the towers project tell KCRA 3 they've recently been contacted by John Saca informing them they will have their deposits back by Friday and that the project is dead.
Tuesday Updates:

From News10:
Saca sent a letter [pdf] to condo buyers telling them their deposits are being refunded. "It is with great humility and disappointment that I write this letter," Saca said.
From the Sacramento Bee:
The California Public Employees' Retirement System has announced [doc, News10] it is taking over the debt-ridden Towers high-rise project on Capitol Mall. That means the 53-story luxury condo and hotel that Towers developer John Saca envisioned for the site near the Tower Bridge is dead.
...
Saca broke ground last summer, but the project was $70 million to $80 million over budget by the fall and condo sales slowed to a trickle as the region's housing market went soft. The site now is little more than a hole in the ground the size of a city block.
More video from KCRA:
John Saca Addresses Tower Project
CalPERS Buys Out Towers Developer

18 comments:

chuck said...
This comment has been removed by a blog administrator.
smf said...

Anyone really surprised? I said it almost 2 years ago that this would not get built.

Now maybe the people who want to build condo towers in R. Cordova and W. Sac. feel hopeful?

Little off topic, but I just checked out SacBee, and there are the first signs of deep, deep reductions in similarly sized homes.

Check out 95655 4062 sq.ft. homes. Top range is $750K, the bottom is $569K.

There is also a home in 95827 of 2558 sq. ft. Top range sold was $520K. Were for sale at $420K and above. Now one with 'sweat equity' for $369K.

There is another 1596 sq.ft. for $299K. Many with less area are going for much more than this.

First time I see some real bleeding.

Max said...

And.... the Bee has nothing. :) Guess there's no way to put a positive spin on this, so they're MIA.

Sippn said...

Wal Mart it is!

waiting_for_the_fall said...

How much interest did they earn on those deposits?

Sounds like a good plan: Announce an upscale condo tower, collect deposits, put them in a high yield savings account or CD, wait a year then announce the project is dead. Walk away with profit.

HappyinSF said...

Wow, there are going to be a lot of angry people posting on SacBee when they finally get around to covering this.
What they don't seem to get in their argument about turning Sac into a world class city is that progress has done absolutely nothing for the majority in Sacramento. In fact, it has put the populous, with there state jobs, out of the market or stretched further or forclosed on. There children have moved away in order to have a higher quality life.
And then there were the towers, people rooted for these to fail for the very fact that they were a symbol of the huge gap between the rich and the poor. They argue it brings in revenue, rich people clean up the streets. They also drive rents through the roof thus driving the current residents out and since Sacramento unlike SF does not have rent control it leaves very few reasons for locals to want this.
I wonder how many of the people who put down deposits were local and or had any intention on living in the towers.

Patient Renter said...

"And.... the Bee has nothing. :) Guess there's no way to put a positive spin on this, so they're MIA."

Hahaha, Ouch.

Patient Renter said...

"I wonder how many of the people who put down deposits were local and or had any intention on living in the towers."

We've discussed this a bit before. The answer is that probably very few actually intended to live there. Many of the condos were listed for resale (yes, even though they weren't built yet).

Max said...

Well, the Bee finally arrived at the party a day late. They'll probably flesh out a story by tomorrow.

I guess all that sucking up to Saca was for naught. At least they got some full-page ad spreads out of it last June. :)

Wal Mart it is!

You're way off... think smaller... think more legs!

Sippn said...

Hooters?

Steven said...

The part that bothers me the most about this project is that CalPers now owns the project.

A public employee retirement program has no business operating as a land developer. Another developer like Saca will step in and take them to the cleaners.

David said...

Are ANY of these high-rise condo projects clearly on track for completion? There's been so much hype, it's ridiculous. I remember one of friends saying during the summer of 2005 that he was going to buy one of the units "as an investment!" That struck me as a terrible idea then, and facts have borne this out.

smf said...

"Are ANY of these high-rise condo projects clearly on track for completion?"

No.

But lost in all the hubbub about the high rise towers, the other condo/lofts projects in Sacramento get no attention. And way too many of those are available.

There is the L street lofts, 500 N street, and some lofts in J street.
Plus you have other low rise condo projects going on thru the metro area.

David said...

SMF, you say "too many." In what way do you mean that? That there is insufficient demand? I wonder what how they will effect value over the long-term. It seems like there are two contradictory aspects: increased supply of units versus enhanced "ambience" of the community from more updated housing.

Brian said...

The problem w/ the other low-rise lofts around town seems to be the price, not the demand. I would love to move into a nice 2 bdr condo in downtown/midtown. I'm the perfect demo... mid-late 20s couple, healthy incomes, don't want kids for a few years yet, but damn if I'm gonna spend $500k+ for a nice 1400 sq. ft. condo instead when 10 minutes away a giant, albeit boring as hell, tract home w/ yard is $100-150k cheaper and those are still overpriced. Are building costs and fees so high that developers won't eventually sell a nice new condo for 300k instead of 500k? I doubt it, so I will wait.

smf said...

"SMF, you say "too many." In what way do you mean that? That there is insufficient demand?"

No, but that way more housing was built than was required by the actual demand, rather than the speculative demand.

If I take a look at residential projects I have worked on in the last 18 years, I would say that we did anywhere from 2X to 3X more than the previous years.

And I have seen more condo projects cancelled lately than started.

"The problem w/ the other low-rise lofts around town seems to be the price, not the demand."

Bingo! These units should be priced for YOUNG people, not someone with $$$$$$. But they didn't.

sacprofessor said...

I think those who invested as potential purchasers of one of the Tower's condos got much better return on their investment than those who invested in buying a downtown condo in 2005 and now own it. Getting all your money back is one hell of a lot better than watching the value of your airspace drop like a rock.

Brian said...

The best comment on the Bee article:

".....a common sentiment seems to be that Sacramento is growing therefor it is or must become more metropolitan. Yet when I visit the folks in Sac, all I see are monster trucks and Wall Marts.
.....
I moved to SF as soon as I could make it happen, I didn't sit around cursing a donkey for being a donkey,"