K Street Overhaul On Hold As Sacramento, State Fight Over Redevelopment Funds

SACRAMENTO (CBS13) — The K Street overhaul is on hold in downtown Sacramento as the state and city are now in a legal battle over millions of dollars of redevelopment money.

City leaders hoped to break ground on the project in the fall on the 700 block of K Street.

The property's been boarded up for years, and now hope is fading about anything happening to change that anytime soon.

"It's absolutely one of the worst blocks in our city," said City Manager John Shirey.

That's why it's one of Sacramento's top downtown redevelopment priorities.

Developers had been hoping to break ground later this year on a $48 million makeover. City leaders set aside more than $2.5 million to help get the makeover started.

The project was approved in 2010 by the city, two years before Gov. Jerry Brown dissolved redevelopment agencies. But now the city is saying the state is refusing to turn over the money, forcing the city to sue.

"It's the only recourse that we have in the department of finances," said City Councilman Steve Hansen.

The project, a mixture of new apartments and retail stores built into the historic building facades, and right across the street from where a new arena is planned.

And now with this last-minute setback, the blighted block could continue to be an eyesore in the years to come.

"I hope it's not dead," Shirey said. "I hope we win the lawsuit, which will require the money to continue."

Now this goes to the courts, which could take years. It's a real letdown to the city, which planned to have this projected completed at the same time as a new downtown arena opens in 2016.