Local group bidding for UP railyard
Members back a downtown arena, but another suitor says it's close to deal for site.
By Mary Lynne Vellinga -- Bee Staff Writer
Published 2:15 am PDT Thursday, June 2, 2005
http://www.sacbee.com/content/sports/basketball/kings/story/12994011p-13840669c.html
A trio of prominent local developers has submitted an offer to buy the shuttered downtown railyard, which an out-of-town group has been unable to purchase despite 2 1/2 years of negotiations with Union Pacific Railroad.
If the team of David Taylor, Tony Giannoni and Angelo Tsakopoulos succeeds in acquiring the site, it could re-emerge as a location for a new arena for the Sacramento Kings.
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All three men have been Involved in trying to get a new arena built. Taylor and Giannoni served on an advisory group to Mayor Heather Fargo that recommended a location on the end of the K Street Mall. Fargo had earlier promoted the railyard as a good location for the Kings.
"I'm still eager to figure out how to get an arena downtown," Taylor said.
UP has put the local group off and continued to negotiate with Millennia, the entity it chose in 2002 to buy the railyard. Millennia has told city staff it expects to sign key deal points as soon as today - allowing the sale to close in as little as a month.
But city officials have become jaded about such pledges in the light of repeated postponements.
"It's become a joke," said Carol Shearly, the city's new growth manager.
Taylor said redevelopment of the 240-acre railyard - one of the largest urban infill sites in the country - "is much better handled by a local group because of the long-term commitment required to get it done."
Taylor and Giannoni are downtown office developers, and Taylor's firm just completed the new Sacramento City Hall addition. Tsakopoulos is the region's most prominent converter of undeveloped land into subdivisions.
Taylor said the group would build a mix of housing and offices, along with enough retail to serve the neighborhood. He said he would welcome an arena, but expressed doubt that the Maloof family, owners of the Kings, would consider a downtown location. The Maloofs have expressed a preference for building a new facility in North Natomas.
Taylor said the group initially submitted its offer to Union Pacific in December and checked back with Union Pacific in April. Both times, they were told UP continues to work toward consummating a sale to Millennia, a partnership backed by Georgia shopping center developer Stanley Thomas.
"I can understand Union Pacific's wanting to give them every opportunity to close, but it's been a long time," Giannoni said.
Millennia, whose architect is famed urban designer Jon Jerde, was chosen by Union Pacific in the fall of 2002 to buy the southern part of the railyard.
Its bid won out over proposals by three other finalists, including a group that included Taylor.
Millennia quickly indicated it wanted to buy the entire 240-acre site, and Union Pacific agreed.
The ambitious deal has taken so long to accomplish that representatives of the investment group - along with city officials - have ceased predicting when the sale will occur.
"I let my frustration go a year ago," said City Councilman Ray Tretheway. "Now, it's just watch and see status for me."
Still, both Shearly and Tretheway say Millennia and Union Pacific are plugging away on the deal. Activity has picked up recently, Shearly said, with lawyers from both parties meeting in Atlanta, Los Angeles and Omaha, Neb. "They're trying this week to get business points finalized," she said.
Millennia representatives declined to comment."We're still moving forward, but we don't have any news to report just yet," said local lawyer Suheil Totah.
That stance contrasts sharply with the fanfare that accompanied Millennia's entrance into town. In December 2003, Millennia head Eric Levine, a New York City lawyer, first unveiled the group's vision of a new neighborhood with 4,500 housing units, office towers and shops.
At the time, the group members predicted a plan would be submitted to the city by March 2004, a goal that came and went.
Then, in July 2004, Millennia and UP announced that the basic terms of the sale had been inked, and the property was in escrow. Levine said Millennia expected to close by the end of 2004.
Shearly said she's not surprised the transaction has taken a long time, given the sheer complexity of the deal and the numerous issues that have arisen.
These include the issue of who will pay for additional toxic finds in the railyard, a Superfund site, and who will pay to move the existing tracks that serve Amtrak and UP's freight operation.
Shearly said she meets with Totah "on a weekly basis," and has been told a formal land use application will be submitted shortly.
Given downtown's hot housing market, the application may contain more housing units than the 4,500 previously discussed. "I've heard 10,000 units bandied about, but I don't know if they can get there or not," she said.
One controversial element of the Millennia proposal has been the substantial amount of retail it includes. Downtown merchants and city officials have previously said they would be reluctant to go along with anything that could hurt the K Street Mall.
Taylor said his group's proposal would focus more on housing and offices and include only enough shops to serve the growing neighborhoods, not draw people from elsewhere.
"I've always felt that the stuff that needs to go over there is the stuff you can't do in the rest of downtown - first of all, many, many units of high-density housing," he said.
Millennia has not revealed how much it has proposed paying for the railyard. Taylor would not disclose a specific figure for the rival proposal, either.
"Our offer was structured to meet whatever they're paying," he said.
He said it was Tsakopoulos' idea to contact Union Pacific.
"Angelo called and said he wanted to make an offer on it," Taylor said. "His idea was to be the financial partner and rely more on Tony and me to do the planning and processing."
It isn't the first time Tsakopoulos has attempted to buy a piece of the railyard. In 1989, he and partner Phil Angelides, now the state treasurer, agreed to purchase the front 37 acres of the railyard for $50 million from then-owner Southern Pacific. The deal fell through because of uncertainties over the toxic cleanup.
Once the largest industrial complex west of the Mississippi River, the former railyard has been sitting idle for years. The last of the repair shop "gangs" punched out for good in 1999. At various points, city politicians have envisioned big time sports facilities in the yard. The late Mayor Joe Serna Jr. touted the possibility of major league baseball. Fargo pursued a plan to put a new Kings arena there. But in both cases, their dreams fizzled.
