Two years ago, the city of Sacramento bought a downtown building to settle a lawsuit. Now it wants to explore selling or leasing it. The city bought the building, in the heart of downtown at Eighth and K streets, from developer Paul Petrovich in August 2023. It never announced any plans for it.
On Tuesday, the city announced it's trying something new to find a use for it.
"The City of Sacramento is inviting innovative developers, entrepreneurs and businesses to submit proposals for the purchase or lease of the historic Hale Building located at 825-831 K Street in downtown Sacramento," a city blog post said.
"We are leading by example: upcycling the old Hale building, a process known as adaptive reuse, to bring new life to this major corridor connecting DOCO and the SAFE Credit Union Convention Center," Mayor Kevin McCarty said in the blog post. "We plan to sell this building to someone with vision, who can take action to revitalize downtown."
Ideally the city is looking for proposals that include "destination retail or other vibrant uses," that will help "the continued revitalization of K Street," the post said.
A new city request for proposal webpage created with commercial real estate company Jones Lang LaSalle about the opportunity also mentions the possibility of housing.
When the city bought the three-story building in the summer of 2023, then-Councilmember Katie Valenzuela proposed using it for a homeless shelter. That idea never came to fruition, as the city opened a shelter along Roseville Road instead. There are still around 5,000 people on the wait list for a Sacramento area shelter bed at any given time however, many of whom sleep downtown.
In a 2016 lawsuit, Petrovich alleged the city illegally blocked his plans to build a gas station near his Crocker Village project in Curtis Park. To settle the lawsuit, the city agreed to pay Petrovich $7.5 million and to buy his K Street building for $18.5 million.
The Sacramento Bee reported last year the city likely overpaid for the building, according to over half a dozen real estate experts.
Petrovich is again threatening to sue the city over Crocker Village, this time for the Planning and Design Commission's denial of a request to build more single-family homes instead of a mix of single-family homes and multi-family residences.
The 73,000 square-foot Hale building was built in 1881, making it historic, the blog post said. It used to house the Hale Brothers department store. It also has 32 underground parking spots.
Real estate software firm SkySlope and T-Mobile are tenants, which together occupy 35% of the building, according to the city webpage.
The webpage lists recent sales of similar downtown properties, ranging from $3.7 million to $11 million each. It also boasts the proximity to the state Capitol, government buildings and Golden 1 Center.
"Foot traffic levels are expected to continue to increase as state employees return to work," the webpage says.
Interested people can submit proposals until Oct. 3. The final selection will require council approval.
