K Street Drama, Not Over Yet

Just when it looked like the eternally running drama over what to do with K Street after ruining it over and over again trying to recapture the magic when it served as the great main street of downtown back-in-the-day, the state has stepped in and…well, read this story in the Sacramento Bee.

An excerpt.

Sacramento’s K Street is suddenly facing another challenge.

Work on the blighted 700 block of downtown’s main thoroughfare is in peril after state officials ruled the city cannot hand over city-owned properties or grant $3.6 million in redevelopment subsidies to the developers seeking to remake a row of empty storefronts into housing, boutiques, restaurants and a live music hall.

The Sacramento City Council gave its approval Tuesday night for the city attorney to file a lawsuit in Sacramento Superior Court challenging the decision, which city officials fear will block a project that just months ago seemed to finally be taking off.

“The project once again has stopped,” said City Manager John Shirey.

The battle stems from the state Department of Finance’s determination in June that the city and the development team behind the 700 block project had not met a list of deadlines to secure federal tax credits and other financing. Redevelopment funds slated for the project weren’t allocated before the city’s agreement with the developers expired, prompting the state to argue that the money should revert to local governments and schools, as required by a 2011 law that eliminated the ability of local governments to divert property tax dollars for redevelopment projects.

The future of nine properties the city had agreed to grant to the developers is also unclear.

State finance officials said that because the properties were purchased by the city with redevelopment money, the parcels can’t simply be gifted to a developer. Instead, the city would be required to sell the parcels through a deal requiring the approval of other entities on an oversight board, including Sacramento County, and local school and community college districts. That deal would then need the further approval of the state Department of Finance.

City officials contend they preserved the development’s funding plan by extending the project’s development agreement in December, allowing another year for the building plan to take shape and secure financing. State officials argue the city did not have the authority to grant that extension and that the agreement – and the city’s right to spend redevelopment dollars on the project – expired in June.

“The agreement collapsed under the weight of its own conditions,” said state finance spokesman H.D. Palmer.

About David H Lukenbill

I am a native of Sacramento, as are my wife and daughter. I am a consultant to nonprofit organizations, and have a Bachelor of Science degree in Organizational Behavior and a Master of Public Administration degree, both from the University of San Francisco. We live along the American River with two cats and all the wild critters we can feed. I am the founding president of the American River Parkway Preservation Society and currently serve as the CFO and Senior Policy Director. I also volunteer as the President of The Lampstand Foundation, a nonprofit organization I founded in 2003.
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