Thursday, November 30, 2006

Towers Stalled?

Let’s hope the developer is able to proceed with this exciting project for downtown, even though the housing market has slowed.

Towers project facing hurdles
Downtown high-rise residence far over budget; unit sales lag.
By Jon Ortiz - Bee Staff WriterPublished 12:00 am PST Thursday, November 30, 2006

It's little more than a giant hole in the ground, but already the 53-story Towers hotel and condominium project is $70 million over its original $500 million budget.

Meanwhile, sales of the Towers' condos are slow, and developer John Saca has switched general contractors.

What all of that means for one of the tallest residential construction projects on the West Coast remains to be seen. Saca is in talks with his backers for more money, and his isn't the first commercial development to overshoot its budget. Contractor changes aren't as common, but Saca says that the swap brings in a more experienced high-rise mixed-use construction firm.

However, one thing is clear: Saca admits the Towers, at Third Street and Capitol Mall, is being pinched between a weak housing market and rising prices for materials such as steel and concrete.

Despite those challenges, Saca, a scrappy local developer who has already brought his project farther along than naysayers thought he would, remains optimistic.

"We're close to a deal with our backers for more money," he said Wednesday. "We're pumping along."

Saca went public two years ago with his vision for a massive twin-tower structure anchored by a luxury hotel, high-end retail and 804 condos rising 600 feet and drastically changing the Sacramento skyline. He figured it would cost about $500 million for the land and construction.

Many thought the building was too ambitious to be Sacramento's first high-rise condo project and questioned whether there were enough customers to fill all those units, priced from $368,000 to $852,000.

Saca, whose father founded the Filco home appliance chain, had a reputation as a savvy land investor and shopping center developer, but had no history with high-rise construction. Still, he gained credibility in April when the giant California Public Employees' Retirement System agreed to invest $100 million in his project.