On Tuesday, August 25, the Sacramento City Council will hear a proposal by developers Bob Leach and Parkcrest Development to build a hotel at the corner of 8th and K Street and a parking structure at the corner of 8th and L Street, a project that would require demolition of city landmark the Bel-Vue Apartments and adjacent buildings. The meeting will be held at New City Hall, 915 I Street, at 6:00 PM in the main City Council chambers.
The item was originally to be heard at the August 11 meeting of the City Council (see sacramentopress.com/headline/11884/City_to_decide_on_fate_of_BelVue_Apartments_and_Berry_Hotel_today ) but was taken off the agenda at the last minute. According to the staff report, the "Exclusive Right to Negotiate" between the city of Sacramento and the developers expired on Sunday, August 23, but city staff can still work with the development group while a new RFQ (Request for Qualifications) is being prepared, a process that should take about 90 days according to the staff report. If city staff and developers cannot reach an agreement, the new RFQ will request proposals from other developers and development groups for a different project on the 800 K Street site.
Also according to the staff report, city staff had not fully analyzed the new proposal as of its submittal date of Friday, August 21, and could not provide complete comment. One change from previous proposals is a change to requested exemption from the hotel's "Transient Occupancy Tax": instead of 100% exemption from TOT for 10 years, they are asking for 50% exemption for 14 years. According to the accompanying financial documents, this would add up to approximately the same total subsidy for the project, but over a different span of time.
Another change is that Mohammed "Mo" Mohanna is no longer listed as a member of the development team. The staff report does not specify whether another investor has joined the team in Mohanna's place, or whether one of the existing investors will contribute more funds to make up for Mohanna's financial contribution to the project, or why this change has taken place. Most of the financial commitment comes from the Korean firm Consus, but the city has not yet received a formal commitment with complete terms and conditions from Consus.
The staff report does mention that the original "Exclusive Right to Negotiate" for this project occurred as a condition of a lawsuit settlement between the city of Sacramento and Mohanna, in addition to the city's payment of about $18 million to Mohanna for the land.
The total subsidy for the project is estimated at $31.5 million in land and tax exemption (both transient occupancy tax and tax-increment fund exemption.) This amount does not include the money previously paid to Mohanna for the property as a result of the lawsuit settlement.
The staff report does not address the issue of a potentially competing hotel project planned for the corner of 10th and K Street, nor does it address the issue of the demolition of the Bel-Vue landmark.
The staff report for this item can be found here.
The agenda for this week's City Council meeting can be found here.