SACRAMENTO - A Downtown Sacramento affordable housing project is planned to transform a historic building on K Street, at an eye-popping price.
The project will cost $50 million for fewer than 100 rooms. For comparison, the remodel costs are set to run more than triple the highest-priced home sold in Sacramento last month.
The 100-year-old Sequoia Hotel is the problem property getting an expensive transformation.
Mayor Darrell Steinberg voted to approve the plan to help battle Sacramento's homeless problem. The building will include mental health services. The city's portion of the $50 million price tag is $3 Million.
"Number one, we desperately need more affordable housing," Steinberg said. "The expense of building affordable housing and permanent supportive housing is too high and we do have a model that needs to be changed and reformed."
The cost to rebuild the Sequoia Hotel will run $2,800 per square foot.
Last month, the highest-priced Sacramento home cost $842 a square foot, and the average Sacramento home went for $337 a square foot.
Councilmember Katie Valenzuela is defending the Sequoia remodel, mostly paid with state funds.
"There's different colors of money, and this money is highly regulated by HUD and the state to be used for this purpose and that regulation requires more cost," Valenzuela said.
Sacramento developer John Vignocchi says the big price tag is a big problem.
"It's a flawed methodology, Vignocchi said.
"Have you ever looked for financing that would cover something like that," CBS13's Steve Large said.
"No," Vignocci replied, "because nobody in the private market would ever finance something like this. The only agency that would ever finance something like this is a government agency because they're other people spending other people's money."
When it's complete, a single, one-room unit will cost more than $500,000 to build.
"It's grossly inefficient," Vignocchi said.
Construction is set to begin next month. The 89 rooms are expected to be complete by the end of 2025.
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