Builder - December 2008 - (Page 26) INSIDE STORY well at the $32 million East Brunswick shelled out to build a 1,681-slot parking garage for commuters and future residents of Cornerstone. (Neary says the township will pay for the garage’s construction with parking fees and contracts with bus companies using the depot. The township opened the garage on Oct. 1 and will pay Toll $1 per year in rent. It has a 60-year lease with a 30-year option.) One mayoral candidate in the recent election, Christi Calvano, is against building more houses in an area whose roads are already badly congested. Calvano also doesn’t buy the township’s promises about leasing space to high-end retailers. She points to another strip mall redevelopment, about a mile south of the Golden Triangle, for which the township made similar promises; in November, the fi rst two stores to open there were Toys “R” Us and Babies “R” Us. David Stahl, East Brunswick’s newly elected mayor, has objected in the past to how this project was negotiated, including the subordination of the township to Toll’s lender for any claim on the land. But Stahl generally favors the project and said during his campaign that he might shore up the budget gap through spending cuts and debt restructuring. In an interview with a local newspaper last March, Toll’s vice president of land acquisition, Robert Fuller, said that Cornerstone’s progress had “no real correlation” with Toll’s financial circumstances, which since that interview have worsened. Demand for housing in New Jersey hasn’t exactly been robust lately; in the third quarter of 2008, the state’s foreclosures were up 95 percent compared with the same period the previous year, and its rate of foreclosures in September—one in every 453 homes—outpaced the national average, according to Realty Trak. “A lot of people think Golden Triangle is a terrible idea now,” admits Neary. What once looked like a promising solution to this problematic site’s redevelopment remains up in the air because, he says, “it’s a different market today.”—J.C. INFRASTRUCTURE REPAIR Treading Water A construction moratorium doesn’t stop land acquisitions in Sacramento. O n Dec. 8, a FEMA-imposed moratorium on all new construction projects went into effect in the flood-prone area around Natomas, Calif. That moratorium won’t be lifted until 2011 at the earliest, or until the Sacramento Area Flood Control Agency (SAFCA) fi nishes a $618 million levee improvement program to provide the Natomas Basin with 100-year level flood protection and a 200-year level over time. Developers and builders that pulled building permits before Dec. 8 had 180 days to at least partially construct their buildings to effect those permits. But well before the moratorium, Sacramento’s housing market was tanking from a collapse in buyer demand. Some builders there have gone under and others have pulled up stakes, including Pardee Homes, which, according to local sources, sold 100 acres in Natomas—203 fi nished lots, 405 partially fi nished lots, and a 12-acre condo site—to Granite Bay Holdings for $25 million, or about 20 percent of Pardee’s estimated total investment. (Neither Pardee nor Granite Bay returned phone calls from Builder requesting comment.) Another group, San Diego–based private equity firm Ranch Capital, recently acquired a townhouse project in Natomas from D.R. Horton called Provence. As of mid-October, the infrastructure for Provence was installed but the 187 home units were not yet built, says Kevin Smith, a principal with MDS Development, which Ranch Capital is paying to identify land acquisition opportunities. Smith wouldn’t comment on what Ranch Capital paid Horton, but he did note that Ranch Capital didn’t pull permits before the moratorium because homes would require flood insurance “that would take $40,000 to $60,000 in purchasing power away from buyers.” Smith was coy about what kind of homes will be built, saying only that the company thinks “the market will support higher-density, 1,000- to 1,500-square-foot townhouses that target baby boomers looking to downsize.” He doesn’t expect the community to be limited to active adults, however. During the levee repair, Smith says Ranch Capital will work with the city of Sacramento and surrounding towns “to come up with an absolute winning development.” And he’s not letting a little water seepage keep him from searching for other land deals. But he knows that communities on that land “have to be close to jobs and offer products that are affordable. In the last cycle, too many of us got carried away with three-car garages and five bedrooms.”—J.C. courtesy safca GOT AN INSIDE STORY? E-MAIL JOHN CAULFIELD AT: jcaulfield@hanleywood.com 26 ■ B U I LD E R de ce m ber 2008 W W W.BUILDERONLINE.COM http://WWW.BUILDERONLINE.COM
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.