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Bridgeway Towers
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Bridgeway Towers

April 10th, 2011

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For 30 years, the concrete tower at 500 N Street has embodied the booms and busts of Sacramento's real estate market.

Bridgeway Towers was built in 1980 and promised luxury downtown condominium living. But interest rates soared just as it opened, and less than a dozen condos were sold before the rest of the 15- story building was turned into rental apartments.

Years of quiet followed. But then, in 2005, the middle-aged building was swept up in another condo craze. At the peak of the local real estate market, a partnership headed by a Pismo Beach developer known as the "condominium conversion maven" swooped in and bought the units left unsold three decades earlier.

Then came the bust. The developer was in the middle of rehabbing the apartments and putting them back on the market as condos when prices tanked. His Bridgeway Towers North LLC defaulted on a $34 million loan and work stopped.

For the past few years, nearly half of the building's 134 units have sat vacant and in various stages of repair while a court-appointed receiver worked through issues such as asbestos, mold and permitting problems, and Wells Fargo dragged its feet on foreclosing.

"If you look at the building at night, you notice you don't see a lot of lights," longtime resident Jim Pachl said.

Now, as the real estate market stirs to life, there is some hope again for the future of 500 N.

Wells Fargo just sold the unpaid loan on the building to a pair of local developers, 28-year-old Ray Sahadeo and his partner, Mark Chisick, who have been snapping up distressed properties with their company, S360 Development. The sale was recorded last Monday.

Sahadeo said he couldn't give too many details about their plans for the property. Technically, he and Chisick are the lenders now after buying the note from Wells Fargo. With the original developer in default, they have the right to foreclose.

"If and when a time comes that we take title, in our eyes it wouldn't be a bad thing," Sahadeo said. "To me the best use of the building is as condos and renovating the units."

While Sahadeo couldn't guarantee that his company will take ownership of the property and finish the work Bridgeway started, word of the note transfer was welcome news to those who have watched the building sit in limbo for years.

"That's the best thing I've heard in about two years," real estate agent Jim Dinse said when informed of the deal by The Bee. Dinse is trying to sell three of the existing condos in the building. "It shows there is still interest in the downtown market, still interest in that project in particular."

Bridgeway Towers' recent woes stem from an ill-fated decision by Pismo Beach developer Alfred Nevis and investors to convert the apartments into condos during the bubble. Bridgeway Towers North LLC took out its loan from Wells Fargo for a maximum amount of $34.15 million in October 2005.

But the project ran into money problems as the recession hit. Work stopped in 2009 after Bridgeway Towers North LLC stopped making debt payments to Wells Fargo, court records show.

As of December 2009, Bridgeway owed Wells Fargo $15.3 million, according to court filings.

Nevis, who ran the Bridgeway project, made a reputation for himself around the state converting large apartment complexes into condos. Many of those projects, however, have been plagued by problems and wound up in court.

Nevis has been sued nine times in Sacramento Superior Court alone since 2007 by insurers, homeowners associations and contractors. In 2009, owners in the Alder Grove development sued Nevis and investors for substandard work in that condo project. He was also sued in a Delaware court over a failed Emeryville condo project.

Nevis could not be reached for comment.

In December 2009, after Bridgeway defaulted on the Wells Fargo loan, a judge appointed a receiver to manage the property.

The receiver discovered asbestos and mold in some of the unsold units, according to court filings. There was also a problem with the building's sprinkler system. The developer had taken out permits for work on the system, but the permits expired and the sprinkler work had never been inspected by the city.

Court filings show the receiver, Paladin Asset Preservation, and the homeowners' association went back and forth on issues, haggling over indemnity clauses and the type of work that could be done on the building.

Association board member Pachl believes the receiver made too big a deal of the alleged asbestos and mold. Any building of that age is probably going to have traces of mold around plumbing, he said. And the asbestos was isolated to the backing of old tiles.

"The asbestos is really a nothing issue," Pachl said. "If anybody has any vinyl made before 1982 or 1983, chances are they have some asbestos."

Sahadeo agreed that the issues are minimal and can be fixed.

Residents like Pachl have spoken glowingly of the building, which offers a unique opportunity to live in a vibrant, urban area within walking distance of restaurants, museums and shopping.

Condo owner Jim Brungardt said he lived in such diverse places as New York, New Orleans and Germany before coming to Sacramento and falling for 500 N St.

"I've lived all over and I love this place," he said.

Sahadeo cited this "pride of ownership" as a selling point for the property.

"There should be optimism. It's a great project," he said.