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Thursday, May 17, 2012
Feature: July 2009
The Middle of Somewhere
The region continues on its path of self-discovery
Story by Robert Celaschi
When a city is forging a new identity, it’s tough to know which parts will stick. Only time sorts out the fads from the fundamental changes and the daydreamers from the visionaries.
Looking back for Comstock’s 20th anniversary, it’s easier now to recognize 1989 as the time when Sacramento started coming into its own.
For decades the city had been little more than “Fresno with a governor,” in the words of economic consultant Robert Fountain. Bay Area folks knew it only as a stop for gasoline and restrooms on the way to the Sierra Nevada.
But by 1989 Sacramento was starting to look like the place we know today. The Kings had only recently started playing basketball in a permanent Arco Arena. The downtown skyline added the 28-story Renaissance Tower — quickly nicknamed the Darth Vader building. The riverboat Delta King opened as a hotel. A year earlier Sacramento got the Hyatt Regency, the first downtown luxury hotel in ages.
When 1989 began, the Sacramento Municipal Utility District was running a nuclear power plant at Rancho Seco. By the end of the year, voters — fed up with its poor performance record — shut down the reactor for good.
But 1989 was also a year of big dreams that never came true. Gregg Lukenbill, the real estate developer and founder of Sky King Inc. who had brought the Kings to town, teamed up with some partners to nab the NFL’s Los Angeles Raiders. They even persuaded the city and county to put up a $50 million bond-backed franchise inducement to persuade Raiders owner Al Davis.
“That was the pinnacle of the inclusiveness of business and the city working together,” Lukenbill says. “It could have happened, and it should have happened. But it didn’t.” Davis got a competing offer from Oakland and took it.
Lukenbill was working on another big idea that year, one he ranks higher than the Raiders or his attempt two years earlier to lure the Oakland A’s to town. It was the campaign to consolidate Sacramento’s city and county governments.
“I had this certain sense of national-scale change and figured that was our window on a multiplicity of fronts,” Lukenbill says. The idea was to create a coordinated, regional plan.
“Every council person is provincial here,” he says, thinking back to his efforts to rezone Natomas for Arco Arena and other projects.
“We got blackmailed into building the Hyatt. ‘You want Natomas? You have to build the Hyatt,’” he says. “You think we had a little pressure on us? It wasn’t enough that we built two arenas back-to-back in three years; we didn’t even get a break on taxes — $16,700 a day in tax and bond payments, including the Hyatt.”
In 1990 voters rejected the idea of consolidation, 56 percent to 44 percent. In fact, the trend went in the opposite direction. Citrus Heights broke away from Sacramento County in 1996 when it approved cityhood. Elk Grove followed in 2000, and Rancho Cordova in 2003.
“You could see where if we didn’t get some consolidation, it was going to factionalize,” Lukenbill says. “And we have been factionalized.”
Frustration still creeps into his voice.
“The thing that fascinates me about Sacramento is what we are capable of when we are aligned, and what we are not capable of when we’re not aligned,” he says. “There probably is no city in America with greater opportunity and less organized ability to capitalize on the good things of the community, and we suffer for it.”
Other grand gestures fell short over the years. There was the 1993 idea to emulate Monterey with a large freshwater aquarium in Old Sacramento. In 1996 the big idea was a 15-acre amusement park with a gold rush theme, and then there were the 53-story condo towers that developer John Saca wanted to build downtown in 2007.
“There probably is no city in America with greater opportunity and less organized ability to capitalize on the good things of the community, and we suffer for it.”
—Gregg Lukenbill, founder, Sky King Inc.
Amid the splashy successes and failures were some premature ideas, big visions that didn’t make it in the 1980s but eventually caught on. One involved the 18.3-mile starter line of Regional Transit’s light-rail system.
“I remember when Roseville and Folsom wouldn’t even talk to us about extensions,” says David Boggs, general manager of RT in the late ’80s, now executive director of the Valley Metro Regional Public Transportation Authority in Phoenix. The old Southern Pacific railroad right of way was available to Folsom and beyond, but “Folsom just didn’t want anything to do with light-rail back in the ’80s,” Boggs says. “It couldn’t get legs.”
RT finally extended the light-rail line to Folsom in 2005.
Another project decades in the making was Lot A, a parking lot at Capitol Mall and 7th Street. The city thought it had forged a deal in 1989 for office towers and a Ritz-Carlton hotel. An economic slump dictated otherwise. Mayor Joe Serna once even offered to sell Lot A for $1 and couldn’t find a taker.
Finally developer David Taylor bought the land in 2002 and erected the 25-story US Bank Tower this past year.
Perhaps the biggest of all the plodding projects is the railyards, a 240-acre infill development in waiting. In 1989 developers Phil Angelides and Angelo Tsakopoulos tried to buy a chunk of the old Southern Pacific yards downtown, but that deal fell through. Only this past spring has work finally started on infrastructure for homes, offices and stores at the railyards, now owned by Thomas Enterprises.
Given Sacramento’s 20-year record, should the city be regarded as a dynamo? Or does its reach too often exceed its grasp?
“I think a lot of things have improved in the last 20 years,” says Rick Eytcheson, president and general manager of Capital Public Radio Inc., “but it’s been in spite of the dearth of bold leadership.” Back in the ’80s he was general manager of radio stations KFBK-AM and KAER-FM.
The key word is bold. There are still people who get things done, Eytcheson says, but the style today is different.
“People like David Taylor, who goes about his business very quietly but builds projects that really add to the appearance and aesthetics of the downtown core,” he says.
Since the late 1980s Sacramento’s business leadership has had a complete changing of the guard, says economic consultant Fountain, a former professor at Sacramento State. Lukenbill dropped out of the limelight and now runs an air transportation service. Developer Buzz Oates, now in his 80s, has turned over operation of his namesake company to a younger generation of executives. Angelo Tsakopoulos remains a force, but his daughter, Eleni Tsakopoulos-Kounalakis, has assumed the presidency of AKT Development Corp.
Many of today’s business leaders have MBA degrees from places such as UC Berkeley, Harvard and Stanford.
“Ten years ago they didn’t have MBAs from anywhere, not even from [Sacramento] State,” Fountain says. “I do think it is a completely different atmosphere now.”
Patrick Fry, president and CEO of nonprofit Sutter Health, has found business leaders more philanthropic in recent years.
“Trying to raise $50 million 20 years ago was almost impossible,” Fry says. It was a better climate when Sutter launched its major expansion downtown a few years ago.
“I think the Sutter Medical Center project downtown is one of the largest philanthropic endeavors that has ever happened in this area, outside of the universities,” he says. In particular he named the $18 million gift by the Lucchetti and Anderson families that run Pacific Coast Building Products, and the $10 million gift by developer Enlow Ose and Melena Adams Ose.
“They decided that they have benefited from the growth of the region, and they want to leave a mark with their personal giving,” Fry says. “There are a lot more people stepping up.”
When Sutter recruits executives to Sacramento, they are impressed with the amenities, Fry says. The Robert and Margrit Mondavi Center for the Performing Arts at UC Davis brings in major performers. Restaurants and nightlife have improved. And the traditional Sacramento perks never went away: the rivers and lakes and the proximity to Lake Tahoe and the Bay Area.
“I think a lot of things have improved in the last 20 years,
but it’s been in spite of the dearth of bold leadership.”
—Rick Eytcheson, president and general manager, Capital Public Radio
“What I hear the most from people who come up to the Sacramento area is that it is unique from a recreational standpoint,” Fry says.
On a national level, Sacramento still flies below the radar as a business city. When Forbes listed its 15 most livable cities in April 2009, Sacramento wasn’t there. Denver was, along with Baltimore and Pittsburgh. All three have about the same regional population as Sacramento.
Using other criteria, Forbes ranked Sacramento 119th among the best places for business and careers. The breakdown was 169th for the cost of doing business, 102nd for projected job growth and 67th for educational attainment. And a year ago when Inc. magazine ranked its best cities for doing business, Sacramento sat at 186, well behind Salt Lake City, Charlotte, San Antonio and Portland. Sacramento didn’t even make the top 30 cities in its size class.
What gives?
“If you look for their criteria, very rapid growth for both income and employment plays a very big part,” Fountain says. Then, too, Sacramento has had trouble stepping out from the shadow of San Francisco, Oakland and San Jose.
“Being this near the Bay Area is both a marvelous opportunity and a terrible competitive position to be in,” Fountain says. “There’s always the opportunity for us to tap into the Bay Area and be coupled to it. But there’s also the opportunity for the very bestsplums to be picked by it from us. I do think Sacramento has not learned how to live with its big neighbor very well.”
Sacramento has things that the Bay Area can’t offer, he says, but the Bay Area has even more things that Sacramento can’t offer.
Sacramento has never been a major headquarters city. It hasn’t acquired the major league sports that Phoenix and Denver has got. It hasn’t hosted an event on the scale of the 2002 Winter Olympics in Salt Lake City. (No, the ’60 Winter Games at Squaw Valley don’t count. That was 100 miles away and a half-century ago.)
Not to worry, says Fountain: “I would say what is happening to Sacramento is, rather than mimicking other cities, it is developing its own way to go. We don’t do it like everyone else. In the long run it may have enormous payoff.”
Others agree.
“There’s no need for Sacramento to carve out its own identity that’s nationwide,” says William Burg, a local historian and president of the Sacramento County Historical Society. “I don’t consider it an obligation of Sacramento to overshadow San Francisco. We’ve got a big sister down the road that gets all the attention, but we’ve got a good personality.”
In other words, it’s better to be what we are than worry about what we aren’t. It’s saving something of the “Fresno with a governor” flavor while adding some San Francisco dazzle.
“It’s almost like we are inventing an intermediate methodology,” Fountain says. “It doesn’t happen fast when you have to invent the methodology.”
The railyards could change the character of the city, but it will take awhile.
“It is going to be like when it gets dark. It is going to happen so gradually that you won’t notice it,” says Steve Ruland, who has run Ruland’s Used Office Furnishings for a quarter century.
Slow isn’t necessarily a bad thing. Fountain says he knows business leaders who have moved into the area from higher profile cities such as Chicago and Atlanta who won’t go back. Sacramento is less of a pressure cooker, they tell him.
As Sacramento figures out its new methodology, it’s going to have a new type of economy to deal with. When the recession ends, Fountain expects the playing field to look a lot different.
“Our biggest industry has always been building houses,” he says. “Everybody got surprised in the last eight years about how many houses you could build without jobs to go with them.” Health care, rapid transportation and communications will lead the way, he predicts. High-tech manufacturing won’t.
As for Sacramento’s future leaders, he says, they might be here already but we don’t yet know them.
Lost and found in a valley town
Someone visiting Sacramento for the first time in 20 years might miss a few vanished landmarks. Then again, they might like some of the additions. Here are a few of each.
Lost
Tower Records: Russ Solomon started selling used records in his father’s Tower Drug Store at 16th Street and Broadway. He set up his first Tower Records store in 1961, and by the late ’90s Tower claimed to be the largest independent music and entertainment retailer in the world.
But the debts were piling up, and the company, officially called MTS Inc., started losing money. Then came layoffs. Stores closed. It all ended in a 2006 bankruptcy.
In 2007, Solomon leased his old store on Broadway, across 16th Street from the Tower Theatre and opened up shop as R5 Records and Video. That’s R for Russ, according to the company, and 5 for ... uh ... five.
The Sacramento Union: It folded three times. The original daily newspaper died in 1994. An unrelated website revived the old name in 2004 and added a weekly magazine for a few months in 2005. A weekly paper sprouted in 2006 and kept the name alive for nearly three years before ending its run in March.
All three shared a strong conservative political posture that didn’t translate into strong profits.
The Money Store: Its TV ads featured baseball players Phil Rizzuto and Jim Palmer as pitchmen, and its West Sacramento headquarters added the word ziggurat to the local patois. The Money Store once ranked as the area’s ninth-largest private employer.
Eventually a bank scooped it up for a couple billion dollars, and the whole operation now does business from New Jersey. But the ziggurat is still there and is now home to state offices.
Found
The River Cats: West Sacramento proved that a minor league team could be a major draw. The Triple-A farm team for the Oakland A’s came to town in 2000, shipped from Vancouver, British Columbia.
Raley Field provided a cozy home within walking distance of downtown Sacramento. The team provided some winning baseball. The Cats have been Pacific Coast League champs for four of the past six years.
It’s not clear exactly what a river cat is, but it evokes a more athletic image than a Solon, which was the name of Sacramento’s previous PCL team.
A real skyline: At least a dozen skyscrapers have gone up in Sacramento over the past 20 years. The latest additions, US Bank Tower and Bank of the West Tower, give some real heft to the view along Capitol Mall.
Had some other projects materialized instead of fizzled during the last real estate cycle, Capitol Mall would have added a pair of 53-story condos by local developer John Saca and the 39-story Aura Tower by Craig Nassi, head of BCN Development of Denver.
Sun City: It was the first time the Del Webb organization went outside of Arizona to build one of its residential developments for active seniors. Starting in 1994, it built more than 3,000 single-story ranch homes surrounding a pair of golf courses.
It was a hit, such a hit that the developer did it again in 1999 at Sun City Lincoln Hills. After 15 years in the area, Sun City is now courting retiring baby boomers.
photographer
Tim Engle
