Saturday, May 21, 2011

Sacarmento Bee: Governor Proposes Elimination of CADA in Sacramento

Jerry Brown plans to sell Capitol housing he helped create

Published: Saturday, May. 21, 2011 - 12:00 am | Page 3A
More than 50 years ago, California purchased 42 blocks of land in downtown Sacramento after its officials admired New York Gov. Nelson Rockefeller's sprawling campus of state office buildings in Albany.

By Gov. Jerry Brown's first term in the late 1970s, much of that Sacramento land stood unused or untended. Brown signed off on allowing a joint authority of the state and the city of Sacramento to preserve or develop the property until the state had a need for it.

The Capitol Area Development Authority has been credited in the years since with approving more than 800 new residential units and with raising downtown property values by stopping state land from going to waste.

Now Brown wants to sell the Capitol-area residential, commercial, retail and other property not used for state operations to help pay state bond debt. CADA's portfolio of about 75 downtown properties was valued at as much as $50 million before the recession. Experts say the state may be unable to recover fair values in a depressed market.

"Only if you lower the prices deep enough will you find takers," said Jaime R. Alvayay, head of the Real Estate & Land Use Institute at California State University, Sacramento.

Sacramento Mayor Kevin Johnson is backing Brown's plan because it would return land to the property tax roll, providing more revenue for local governments and schools.

"The governor's proposal is welcome and long overdue," Johnson said in a statement. "I share his sense of urgency to move quickly."

But former CADA executives, board members and the assemblyman who represents the area have expressed concern about how future revitalization could be affected if the properties revert fully to private hands.

Since 1996, the state has sold a small portion – about 6.5 blocks – of the original area to homeowners or to CADA to flip to developers, earning about $8 million. At least five projects on formerly state-owned land slowed during the recession with developers unable to secure financing.

"Not a lot of urban infill projects are being built right now," said John Dangberg, a Sacramento assistant city manager and former CADA executive director.

The CADA project zone is an irregular, roughly rectangular area bounded by L and S streets between Fifth and 20th streets. It receives no funding from the state and reinvests rental revenue into its operation. State law requires a quarter of its nearly 1,400 residential units to be affordable housing. Preserving the threshold through new legislation likely would be one of the many complex issues involved in a sale. It also is expected to lower the sales price.

"Our whole business model would have to change," CADA Executive Director Paul Schmidt said.
Some of the properties were first tagged as state surplus in 1995. Brown plans for the Department of General Services to spend the rest of this year studying how to arrange individual sales. Estimates of how much those sales could bring the state may come next January when the governor releases his budget proposal for the 2012-2013 fiscal year.

CADA is credited with ensuring that projects fit into a comprehensive, orderly and mixed-use development plan. Among its successes is the $24.4 million Fremont Mews Apartments on 15th Street.

"CADA represents a positive force," said Assemblyman Roger Dickinson of Sacramento. "We need to move cautiously in reducing that force."

Developer John Hodgson, a former chair of CADA's board of directors, urged weighing the financial benefits to the state against any negative impacts on the Capitol area.

H.D. Palmer, spokesman for Brown's Finance Department, said state officials will "be looking to make sure both the state and the city stand to benefit" if the sale proceeds.

Sacramento-based developer Sotiris Kolokotronis, who most recently completed a project for CADA in 2001, called it a "golden opportunity" to give downtown redevelopment a shot in the arm.

"I would hope," Dangberg said, "any new owner does as good a job as CADA has done over the past three decades as a landlord and in reinvesting in this community."

Brown wants to dispose of other state-owned properties that serve no immediate government function, such as the Los Angeles Memorial Coliseum, the Ramirez Canyon property in Southern California and the Caltrans-owned Montclair Golf Course in Oakland.

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