City Council votes 4-1 to sell large Sylvan Corners lot to housing developer

Sentinel staff report–
Following extended discussion during a council meeting Thursday night, the Citrus Heights City Council voted to sell a high-profile, 11.3-acre vacant lot at Sylvan Corners to a developer for constructing up to 93 single-family homes.

Under the $4.17 million sale agreement, the developer, Woodside Homes, is to pay an initial deposit of $200,000, followed by another $200,000 after a 90-day “due diligence” period. The remaining balance would be due once entitlements for the project are completed, which is expected to take about a year. The final price is contingent on the total number of homes ultimately approved to be built.

Thursday’s agreement only approved the sale of the land, meaning that the related development proposal must still be formally submitted and make its way through the city’s planning, permitting and public hearing process.

In a visual, described as a “potential schematic” provided by the developer, a total of 93 lots can be seen, with dimensions of 35×75 and 40×75. A total of 69 “front-loaded bungalow lots” and 24 “alley-loaded cottage lots” are shown, but square footage and specifics were not described.

Two access driveways are shown on Auburn Boulevard, with a green area at one entrance shown preserving several existing oak trees at the site. Another green area labeled “storm drainage basin” is shown taking up a large area nearest Sylvan Corners.

Planning Manager Colleen McDuffy told council members that the basin “does not sound too interesting,” but said it could be landscaped to create a “nice amenity for Sylvan Plaza.”

The sale was opposed by newly elected Councilman Tim Schaefer, but supported by Mayor Steve Miller, Vice Mayor Porsche Middleton, and Councilwoman Jeannie Bruins. Councilman Bret Daniels also voted in favor, but said his vote was a “reluctant yes.”

Positive comments were made about the housing being required to include some affordable units, referred to as “workforce housing.” As the city declared the land “surplus” in order to sell it, the property comes under the Surplus Lands Act, which requires 15% of the lots to be affordable to those earning 80% of the area’s median income.

In Citrus Heights, the median 3-person household income is $77,700, with 80% of that being $62,150 per year, according to a staff report. Projected pricing for the homes is listed at $400,000 and $300,000 for the subsidized homes, according to a report from the city’s economic development department.

A significant factor in the council’s decision was ensuring the sale was financially viable. The city purchased the land in 2019 using a line of credit, which incurs more than $10,000 in interest each month the city continues holding the land.

The city purchased the land from the San Juan Unified School District for $3.4 million, but has incurred $192,000 in interest and another $57,000 in ancillary fees. Another $150,000 in interest payments are anticipated to be paid through January 2022, when the city anticipates receiving final payment from the developer.

With Woodside Homes’ offer, the city stands to pocket about $300,000, if the full $4.17 million is received by the beginning of next year and the project moves forward, according to staff projections. The offer price is based on $50,000 per single-family detached lot and $30,000 for the smaller lots.

Councilman Daniels said he would have preferred to wait for a better offer to come along with mixed-use or other potential, but noted continued interest payments would make doing so cost-prohibitive. With Woodside Homes being the only developer to make an offer during a 120-day offering period, Daniels opted for a “reluctant yes” on the sale.

“It’s an incredible disappointment,” he said. “The whole point of taking this on and spending so much staff time on it was to see that it became something different. That it was a destination type of property.”

Schaefer also expressed disappointment, saying the city didn’t accomplish anything by purchasing the lot and then selling it to a developer for homes to be built on.

The mayor offered a different perspective, saying the city’s housing goals encourage home ownership, and noted the city already has vacant commercial buildings needing to be filled. Miller said he “would love” a sports complex or similar use, but said “it just doesn’t pencil out for us.”

“We could have very well been looking at a proposal that was apartments, a gas station, drive-thru restaurants, or another strip mall that we don’t need,” said Miller. “So I think it was very important to take control of this, and yes, it did cost us a little in interest payments, but the goal was to break even, and I think we’re doing that — maybe even a little better.”

Councilwoman Bruins also joined Miller in supporting the housing use, noting that Rusch Park is already located several blocks away. She described herself as an advocate of mixed-use development, but noted commercial vacancies across the street as a reason to support a housing-only proposal at the corner.

Property taxes from the sale were also an economic factor considered, with city staff estimating close to $30,000 per year would go to the city in new property taxes generated by the development. The city is slated to begin receiving its share of property taxes at the beginning of 2023, but only a fraction of the 1% property tax assessed on homeowners will go to the city.

Want to share your thoughts about development at Sylvan Corners? Submit a letter to the editor or opinion column for publication: Click here