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Showdown on K Street: Council eyes nightclubs

The core of Sacramento’s downtown, where an estimated 30,000 state and Capitol employees regularly shop, eat and frolic within blocks of their offices, would become an entertainment hub with a fancy nightclub, an upscale pizza eatery and “dive bar” featuring a mermaid.

But first, the city has to give its blessing – and at least $5.4 million, perhaps more – and the opposition from the owners of existing restaurant owners have to be overcome.

The proposed projects between 1012 to 1022 on K Street include:

–Frisky Rhythm, a 4,000-square-foot nightclub targeting the customers 30 years of age and older.

–Dive Bar, described as a “hip re-creation of a vintage dive bar” that includes an aquarium featuring women in mermaid costumes. The tavern would be about 3,200 square feet.

–Pizza Rock, a 5,600-square-foot restaurant described by the developers as “a very trendy yet rustic adult pizza lounge where pizza artisan meets nightlife energy.

If this all sounds a little too cool for 10th and K, it shouldn’t: The site already is home to the popular Cosmopolitan supper club and dinner theater, across the street is the Crest Theater, and a block away the posh Citizen Hotel just had its grand opening. The Pyramid Alehouse and Ambrosia are up K at 11th, and Marilyn’s on K and Danielle’s Creperie are down the block. K Street is gradually being upscaled, and the first to notice are the lunch and early-evening crowds from the Capitol and surrounding state offices looking for food and entertainment.

On March 10, the Sacramento City Council is expected to decide whether to approve the project. On the city’s side, that would include providing redevelopment funds and, in return, getting a piece of the action in the form of tax revenues and a share of profits. For critics, the latter provision has raised a red flag: By getting a share of the profits the city, in effect, is in competition with the existing businesses.

Proponents, led by David S. Taylor, partner CIM Group and San Francisco nightclub owner George Karpaty, believe the attractions would entice new business to downtown Sacramento and make the area an entertainment destination. They said they are putting in $5.8 million and the city share is $5.65 million. Karpaty owns and operates a half-dozen venues in the San Francisco Bay area, including the popular Ruby Skye.

Taylor and CIM bought the 503-room Sheraton Grand Hotel at 13th and last year and a nearby city-owned garage for $130 million. The deal included a provision that the city use half of the proceeds of the net profit to invest in a CIM-Taylor downtown project. Some of the funding for the 10th and K proposal is coming from those proceeds.

The Sacramento City Council agreed to sell the 503-room Sheraton Grand Hotel on J Street, and the formerly city owned parking garage across the street, to developer Taylor and CIM for $130 million. After settling its bond debts, the city realized about $44 million in profit, according to local newspaper reports. Taylor built the hotel with an $8 million city subsidy in 1999-2001.

According to their latest proposal, the project “reinforces 10th and K as (a) focus for entertainment” and “supports investments in other venues, such as Cosmopolitan, Citizen, Parlare, and Pyramid.” The said the three new facilities would provide about 100 jobs and provide about $447,000 annually in sales and property taxes.

But some of those who own restaurants in downtown Sacramento are not so sure. They believe the city’s stake is higher, about $8.6 million, and that the new venues would drain customers from the other locations.

“There are currently more restaurants, bars and nightclubs than the market can support in these difficult economic times. Demand is likely to contract further during the coming year,” noted a coalition of business owners opposing the project.

“Existing hospitality businesses have lost 20 percent to 40 percent of their revenues over the last year…currently businesses are either breaking even or losing money,” the group noted.

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