In less than a month, the City Council and Mayor Joe Serna will grapple with the city's continuing urban identity crisis: On downtown's R Street the crisis takes the form of highrise concrete and steel versus the need for downtown housing.

On the one side are two major players in the local development game, Angelo Tsakopoulos and Joseph Benvenuti, who have proposed three ten-story office towers with a combined total of 827,000 square feet of office space with some ground floor retail and no housing. On the other side are neighborhood activists armed with a two-year old City Council vote that requires an equal amount of new housing to new office space and limits the height of buildings along R Street to no more than 75 feet. The developers are claiming economic hard times, and the neighborhood residents are crying "play by the rules!" At stake may be the economic future of downtown Sacramento.

The R Street Corridor has been the target of intense developer interest for several years. During the last major confrontation in the mid-1980s over two 30-story office towers, the City Council agreed to create a Citizens Advisory Committee to pursue a community-wide solution. In January 1991, after years of haggling between local residents, housing advocates, developers and state officials, the Council finally settled the debate with a close 5-4 vote in favor of a pro-neighborhood/pro-housing solution. Among other things it specifies that for every foot of office space added along R Street, there must also be one square foot of housing.

That agree-upon solution has wide acceptance among neighborhood residents, says Marguerite Crouse, who is a neighborhood activist for the loosely coordinated R Street steering committee. However her staunchly pro-housing stand has met some resistance even among housing advocates. She reminded us in a recent interview that the January 1991 plan is a detailed, block-by-block blueprint for the development of R Street which was agreed upon and accepted by all interested parties, including developers and residents. "The latest effort to gain approval for highrise office construction on R Street is nothing more than a sneak attack by speculators before the Preferred Alternative has been solidified into policy!" she insisted.

Current Sacramento Old City Association (SOCA) president Andrea Rosen takes a somewhat less strident position. She told us that the 1991 plan in her view is not a "plan" but is only a concept. "The important question we need to be trying to answer is what are we as a community doing to preserve and stabilize Sacramento's central core? I don't think we have yet arrived at an adequate answer."

Nonetheless, Rosen feels that despite the pressure on the City Council to be pro-economic development, the city cannot afford the consequences of building office-only projects downtown. "SOCA is not inflexible. We are open to entertaining any reasonable mix of office, retail and residential. But large office-only projects such as are currently proposed on R Street are a travesty to the public process."

Exacerbating the situation, from the housing advocates' standpoint, is the fact that exemptions to the 75-foot height limit are available for buildings near a light rail station. Both the Benvenuti and Tsakopoulas proposals fall within this loophole.

The first proposal is one ten-story tower known as the 16th Street Station by Joseph Benvenuti on the north side of R Street between 16th and 17th streets. It consists of 277,000 square feet of office space and is close enough to light rail to qualify for an exemption. However, there is no housing component.

The second proposal, also close to light rail, is called the Crystal Ice Office Project by AKT (Angel K. Tsakopoulos) Developments, William C. Cummings and H.A. Edwards Joint Venture. It consists of two ten-story towers with 550,000 square feet of office space covering the two half blocks on the south side of R Street between 16th and 18th streets.

Jeff Archuleta, a planner with the city Planning Department, notes that these proposals are speculative at this point, which means that the likelihood that they will ever be built, even if approved, is questionable. What the landowners want to do is obtain approval in the form of an "entitlement to build:" the type of project they are proposing. As they property increases in value because of the entitlement, it may then be sold for a profit. In fact, Angelo Tsakopoulos has made much of his money through similar speculative acquisitions of property throughout the Sacramento area.

The Planning Commission will likely consider the Benvenuti and Tsakopoulos proposals at their meeting on March 25. When asked about the Planning Department's position, Archuleta stated judiciously that "the days of adopting a planning concept that doesn't work financially are over."

Depending on their assessment of the proposals, Commission members may request the developers to scale down their proposals before sending them on to the City Council. According to Archuleta, the earliest date the Council could review the proposals is April 20; a date early in May would not be unrealistic.

Long before the proposals ever reach the Council, interested parties on both sides of the controversy will be dusting off their crystal ball to predict the Council vote. Once such prognosticator is Brooks Tuitt, the garrulous and opinionated editor of SOCA's Old City Guardian.

"The vote could be quite close, although there are several unknowns given the new membership," he says. According to Truitt, about the only "sure bet" in favor of reaffirming the 1991 decision is Heather Fargo from District 1.

Another source in a position to know told us that if the vote were for or against the 1991 pro-housing decision, the Council seems to be leaning against it. However, given the differences between the developers' current proposals and the ground rules in the 1991 plan, a compromise based on economics is probably. All but the most hardline at both ends of the debate seem to agree that neither the office-only nor the 1:1 office-to-housing split called for in the 1991 plan are likely to survive.

Sacramento's Council members cover the full spectrum from frequently-pro-development, such as Terry Kastanis, Jimmie Yee and Sam Pannell; to those who are housing-oriented, such as Debra Ortiz, Darrell Steinberg and Josh Pane. (It was Pane's swing vote in 1991 that gave the pro-housers their victory.) Rob Kerth and Mayor Joe Serna are rated as swing votes.

In a recent telephone interview, new Council member Debra Ortiz clearly characterized herself as a housing advocate. "My overriding concern about housing is one of equity," she said. "Do people have the opportunity to get into decent and affordable housing? I believe we can and must do better than we have in the past." And in the coming R Street debate, she told us her initial focus will be on "whether or not the process in place has been honored."

For his part, Serna campaigned heavily for both neighborhood revitalization and jobs during his campaign. Although not tipping his hand, according to some observers the signals he has provided thus far suggest that he would be inclined to compromise both to preserve the character of the neighborhood and generate jobs. That could mean scaling down the size of the projects and adding a mixed-use/residential component.

A study commissioned by the city concluded that without sizable subsidies, a 1:1 office-to-housing ratio would not be economically feasible on R Street. The profit margin for housing will be competitive only if either the rents are sky high or the subsidies are high. Residents will object to the former and the city can't afford the latter. A 3:1 would be financially feasible, the study concluded. That latter finding may point the way toward a compromise solution at the City Council level.

States Beverly Frets-Brown of the city's Redevelopment Agency: "We know we need more housing downtown, but the housing density models used in our studies tell us that even 30 condominium units per acre or 60 stand-along, market-rate rentals per acre are not economically viable." She suggested that as property values go up along R Street, increased tax revenues could be pumped into new housing there as a form of tax increment funding.

Truitt of the Old City Guardian writes a peppery, take-no-prisoners political column every month. He sums up his pessimistic views on the prospects for housing along R Street in characteristic crusty fashion: "Councils come and go; mayors come and go," he said. "But the gamblers are always there with their money, looking to make more."

Do Sacramento City Council members face clear conflicts of interest when they vote on projects which financially benefit major contributors to the election campaigns?

For example, in 1981 Terry Kastanis and Sam Pannell, both currently on the Council, received nearly 37 percent of their total contributions from land development interests. More recently, of the $59,296 Kastanis collected for his 1992 recall election campaign, over 22 percent came from developers and real estate firms and another 30 percent from unions.

Among Kastanis' chief benefactors has been his friend of over 30 years, developer Angelo K. Tsakopoulos, who along with four other family members, contributed nearly $6,000 or 10 percent of his 1992 campaign total. Back in 1081, it was Tsakopoulos and some of his associates who helped Kastanis elected to the Council in the first place. In 1981, Tsakopoulos, his brother George, and a few other developer associates contributed $4,000 toward the first $8,300 Kastanis raised, enabling him to far outdistance the fundraising of his primary election rivals.

While Kastanis' recall election campaign heated up in South Sacramento last year, another battle was quietly brewing downtown. Tsakopoulos, along with realtor William C. Cummings and H.A. Edwards Joint Venture, filed permits for entitlements in the fall for two highrise office buildings to be located between 16th and 18th streets on the south side of R Street. A third project, proposed by Joe Benvenuti, would be located across the street.

These three project proposals will come before the City Cpouncil for what is known as an "early review" on April 20. Collectively, they are described by housing advocates as a clear challenge to the pro-housing, R Street Preferred Alternative concept which was previously adopted by the Council in 1991.

Given the volatility of the looming land use debate, the potential "conflict of interest" question may be overlooked. However, it remains an important consideration, particularly since two members of the Council have received sizable contributions in the past from a principal party in the projects being considered.

Richard Archibald, the deputy city attorney, told us that elected officials, such as the members of the City Council and the mayor, are specifically exempted conflict of interest restrictions. "The Political Reform Act, although much amended since being enacted in the early 1970s, is what we still follow today," Archibald said. In his view, there will probably not be any move to restrict voting on the Council based solely on arguments about conflicts of interest. "A more likely approach will be to limit campaign contributions. That seems to be the way campaign reform is moving."

Ruth Holton of Common Cause told us that in her opinion, conflict of interest laws at the local level are weak and are badly in need of strengthening. "The rules should be changed to prohibit voting on issues when elected officials have received substantial contributions and when their resulting vote will specifically benefit the contributors," she said.

She noted further that frequently the perception of a conflict of interest can be just as damaging as is the reality. "The public needs to be assured that Council decisions will be made on the merits of the projects being considered," she said. That assurance is now based solely on the goodwill of the elected officials whose links to special interests may make independent action difficult even with the best of intentions.

When Suttertown News recently contacted Kastanis about his views on the proposed R Street projects and the possibility that conflicts of interest might occur during the upcoming council review, he declined comment. Notably, however, in a previous interview with the News, Kastanis acknowledged his dilemma. "I couldn't accomplish anything if I refused to vote on anything (involving a financial contributor)," he said.

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