Bring on the Building

To capitalize on future growth, downtown Sacramento needs smart, dense housing

Back Commentary May 8, 2015 By Michael Ault

Downtown Sacramento is constantly evolving. Over the past decade, more than $1 billion in public and private investments were made downtown to effectively transform its landscape. The result: Downtown Sacramento is well on its way to becoming a vibrant urban district.

Creating a viable housing market in the city’s core is a top priority of the Downtown Sacramento Partnership and the city of Sacramento. Earlier this year, during the Partnership’s annual State of Downtown address, Mayor Kevin Johnson emphasized his goal to bring 10,000 new housing units to the central city over the next 10 years. This commitment and focus is crucial to creating an economically viable downtown.

This is music to the ears of the young people polled recently by the DSP, nearly half of which indicated they would be interested in living in downtown Sacramento once the arena is built, compared to only 25 percent today. Yet most notably, the same respondents cite lack of housing options as a top reason they would not want to live in the urban core. In 18 months, the arena will open its doors; downtown must be ready.  

Several prominent residential projects are already underway. The long-awaited mixed-use development of the 700 block of K Street will bring 137 apartments near the arena, and the Kings have announced plans to build a 16-story, 250-room hotel that will include five floors of residential space along J Street. The six-story mixed-use development 16 Powerhouse will provide 50 residential units in midtown.

A thriving downtown needs to have a diverse residential population representing a broad cross-section of our citizens — from young professionals and families to empty-nesters and every group in between. We must be a community made up of both renters and homeowners of all income levels. However, Sacramento’s downtown core represents one of the greatest concentrations of affordable housing in the entire region.

A more balanced mix of housing options is a critical element to meet the coming demand. One million young adults move each year, according to a 2014 City Observatory study. These young migrant professionals are lending economic growth and urban revitalization to their communities. We need an adequate supply of all types of housing to be considered attractive to all demographics.

Major opportunities are on the horizon that will provide an increased inventory of market-rate and for-sale housing at strategic locations within the downtown core and nearby neighborhoods. Plans are well under way to transform the old Crystal Ice Buildings into the Ice Blocks, a mixed-use project with 150 residential units across two buildings; 117 single-family units are planned for construction at The Creamery at Alkali Flats; nearly 1,000 residential units are under construction as part of The Bridge District development in West Sacramento; and, in the future, as many as 12,000 housing units may be built in The Railyards. But these aren’t done deals. While there may be pent-up demand for market-rate and for-sale housing downtown, obstacles continue to hinder their development.

Downtown housing, by definition, needs to be comprised of high-density, multi-story dwellings. Add structural or underground parking, improvements to aging infrastructure and costs associated with mitigating construction in an urban environment, and these units often cost significantly more to build.

Cities across the country are surpassing their downtown housing goals by offsetting some of the cost barriers to urban development. A major factor in building new apartments in Baltimore has been a tax credit for developers that build more than 50 units. The resulting occupancy has led to additional development and, just as important, a residential renaissance that can be used as a key marketing tool to lure investors into downtown Baltimore’s biggest office buildings.

To achieve — and fill — 10,000 housing units in the next 10 years, we must  keep project costs down, streamline processes that have traditionally hindered high-density developments, and recognize that compounding fees associated with building within the core are a disincentive to development.

Now is the time. We have the right team in place: strong public-sector leadership, determined private developers and a public eager to call downtown home. We need a system that enables downtown Sacramento to be the vibrant, economically viable center we all crave. We should be proud of our burgeoning downtown, let us now think and act strategically if we want to keep our momentum.