Governor Newsom today announced that the Department of General Services (DGS) and the Department of Housing and Community Development (HCD) have selected McCormack Baron Salazar, Inc. (MBS) as leader of the developer team to redevelop three state office buildings along Capitol Mall in Sacramento into affordable housing.

Why it matters: In 2019, to help address California’s Housing crisis, Governor Newsom issued Executive Order N-06-19 to make excess state properties available for conversion to affordable housing. The three Sacramento buildings could transform to upwards of 400 new homes with a range of affordability right in the heart of downtown Sacramento.

What Governor Newsom said: “We need to build more housing, faster. Everyone in California deserves to have a home and in just a few years we’ve made significant investments and progress to address the state’s housing crisis. Projects like these are reimagining what our cities look like – creating more housing near transit, work, and shops – all while increasing affordability and fighting climate change.”

Governor Newsom has prioritized affordable housing redevelopment for underutilized state properties. This award will explore the adaptive reuse potential of some of those properties and could serve as a model for projects across the state. Uniquely located steps from the State Capitol where there is already high frequency light rail and bus service, walkability to jobs, services, and amenities—this climate-smart community could serve as an example of infill infrastructure investments that build more housing faster and help more people be less reliant on cars to get where they need to go.

In January, in keeping with the Governor’s Executive Order, DGS and HCD issued a Request for Qualifications for the headquarters of the Employment Development Department (EDD) at 800 Capitol Mall, the EDD Solar Building at 751 N Street, and the State Personnel Board Building at 801 Capitol Mall, all located in downtown Sacramento. The guidelines set a priority for project visions that had adaptive reuse but allowed for alternative development scenarios.

“Post-pandemic, we have a new group of state buildings that can be put to vital use providing housing for Californians who need it,” said California Government Operations Secretary Amy Tong. “The selection of a developer for this special Sacramento site is an exciting milestone in our ongoing effort to increase the supply of housing in our state.”

“These three state buildings along Capitol Mall show the great potential of the Governor’s Executive Order to transform underutilized state properties in partnership with local governments,” said Business, Consumer Services and Housing Agency Secretary Lourdes Castro Ramírez. “These buildings are in downtown Sacramento, in a walkable neighborhood, close to light rail and bus lines and near jobs, shopping and health care. We look forward to the development team’s concepts and working closely with the city of Sacramento.”

“Adaptive reuse is a tool that can revitalize downtown areas impacted by hybrid work, and we have been looking forward to putting forward a demonstration project for the concept in our excess sites program,” said DGS Director Ana M. Lasso. “We are hopeful that this will be just that project. To be working on a project like this, so close to the Capitol, with our partners at HCD, the City of Sacramento, and the MBS team, is an extraordinary opportunity.”

“The re-envisioning of these office buildings will reinvigorate a downtown that is walkable and close to transit, services, and amenities, and will create more climate-friendly housing for all,” said HCD Director Gustavo Velasquez. “This project will assist hundreds of working families struggling with housing security and will attract new businesses while giving a boost to existing businesses.”

"The transformation of these large office buildings on the Capitol Mall into housing will help Sacramento achieve two important goals: Bringing more residents downtown and creating more places where people can afford to live,” said Sacramento Mayor Darrell Steinberg. “We are eager to partner with Governor Newsom's administration on this project and many others."

The development team selected for the project is led by MBS, a firm that – over the past 50 years – has completed more than 200 projects, built more than 25,000 homes and 1.6 million square feet of retail and commercial space, and has created innovative and economically sustainable communities in over 48 cities across 25 states and territories. They are joined by a strong group of partners, including Perkins&Will, Paulett Taggart Architects, Page & Turnbull, PAE Engineers, Vanir Construction Management, Inc., SCA Environmental, Inc., Holmes, Urban Strategies, Inc., Klein Hornig, and McCormack Baron Management.

MBS’ vision for the site includes 400-800 homes across all three sites. The homes will come in various sizes, from studios to three-bedroom homes, and serve various incomes, with approximately 370 affordable homes, 170 of which will be reserved for very low-income households. The project also envisions amenities including community rooms, a large roof deck, and a mixed-income childcare center.