The Truckee Railyard project heralds a lot of firsts. It’s the first time the Town of Truckee has partnered this closely with a developer. Likely the first time a developer convinced Union Pacific to accept commercial development within a balloon track. The first time this site will diverge from a history of industrial uses. The first Truckee project for Holliday Development, which has been building mix-used communities in the Bay Area for more than 20 years.

While exciting, being out in front of the pack means any headwind hits you straight-on. After spending 12 years and counting on the Truckee Railyard, owner and developer Rick Holliday acutely feels the pain of being a pioneer. In addition to the pocketful of firsts, the site offers up issues of environmental cleanup, significant infrastructure updates, airplane flight paths overhead, a railroad running through, and a heap of expectations from the Town.

Truckee Development Associates, LLC (led by Holliday Development) is in charge of the Railyard Project. The parent company specializes in public-private partnerships and sustainable infill projects, and so is no stranger to complicated projects. Overall, the field of infill redevelopment is not for the “faint of heart,” Holliday says, but “[the Railyard] is by far the most complex development I’ve ever worked with.”

The biggest hurdles weren’t necessarily related to the project being a forerunner, but rather just dumb luck (or lack thereof). As the original Railyard Master Plan moved through the Town of Truckee approval process from 2006 to 2009, the country dove into the Great Recession. Then in 2011, when the project would normally have been moving forward, a key piece for funding the required massive infrastructure updates disappeared as California dissolved its redevelopment agencies.

Despite the many setbacks, it looks like the rubber is about to meet the road. A revised master plan was approved in September, the first building permit was successfully obtained in October, and the project is expected to break ground next spring. The development agreement, slated to go before the Town Planning Commission in December, will formalize arrangements for the downtown main street roundabout, the highly anticipated theater, the affordable housing plan, streetscape details, and more.

Holliday, who holds an undergraduate degree in urban policy and a masters degree in city and regional planning, both from the University of California, Berkeley, maintains his dedication to the project. “It’s a canvas in terms of a piece of land,” he said.

Truth be told, Holliday is less a painter than a circus performer, juggling an impressive number of elements for more than a decade to move the project forward. This Moonshine Inkfeature delves into these multifaceted layers, uncovering a rich story of clever negotiations, carefully built alliances, unusual solutions, and sheer determination. ~ ME

Grand Plans to Extend a Downtown

The Town of Truckee has long eyed the rail yard as an opportunity to extend the downtown commercial core and address key issues in the area. With a limited amount of flat land available due to the topography of the Truckee River Valley, the redevelopment of the rail yard was seen as an opportunity to use land efficiently and reinvest in the downtown. This vision led to a unique situation where developer and jurisdiction ended up marching in lockstep.

Things started moving forward when the Town was awarded a $350,000 planning grant from California’s Sustainable Communities Grant and Loan Program in 2002, which recognized that the Truckee rail yard was a prime example of infill development and would help thoughtfully answer the state’s population pressures.

The Railyard will “bring a variety of benefits to the town,” said then-town council member Richard Anderson in 2009. “It essentially transforms what is a blighted area into an organic extension of our downtown.”

One of the main hold-ups to the project was the fact that Union Pacific owned most of the land. Circa 2003, the railroad company realized there was value to the redevelopment plans and sold a significant portion of the rail yard site to Holliday Development in 2004.

From the time of incorporation, the Town identified that key infrastructure issues in downtown were intertwined with the Railyard project: Trout Creek’s restoration, parking and circulation concerns, and the railroad site’s physical cleanup. Thus, when Holliday Development came onto the scene, the Town immediately leveraged the opportunity to address these problems and entered into a joint venture with the developer. For example, a top priority was the poorly functioning T-intersection of Glenshire Drive with Donner Pass Road, so ambitious plans were made to realign the streets through the site.

“It was a cooperative effort different than anything we’ve ever done before,” said Tony Lashbrook, Truckee town manager.

Even with the partnership, the plans took some left turns. In 2011, California dissolved its redevelopment agencies, ending a massive 60-year-old multibillion-dollar program intended to combat blight. The rail yard was a perfect candidate for redevelopment and Holliday believed that the agencies’ funds were critical to financing the needed infrastructure improvements. The dissolution of the program “was kinda like being hit by a missile,” Holliday said. He took the problem to Governor Jerry Brown, who set out to find other state money. That effort led to a program that serendipitously came into being at about the same moment the redevelopment agencies were being eradicated.

The Railyard secured $12.5 million in state grant commitments which came in the form of cap-and-trade dollars, a program that was established in late 2011 to reduce greenhouse gas emissions. The argument went that affordable, infill, higher-density development minimizes vehicle miles traveled. The Town earmarked an additional $1.5 million in economic development funds. The infrastructure was back on track.

Infrastructure improvements are the first phase of the project and are slated to break ground next spring. The Phase I Infrastructure Plan includes building the railroad’s new maintenance building, extending Church Street across Donner Pass Road with a roundabout and building out Donner Pass Road further east, cleaning up extra railroad track, building sidewalks, creating parking, and more. An additional 635 public parking spots are planned for the Railyard, as compared to a current inventory of 486 downtown public spaces regulated by the Town. The Town has earmarked further capital budget funds (collected from traffic impact fees) for several of the intersections to the tune of $6 million; the forthcoming developer agreement will formalize the details.

These improvements will create the “first grid of infrastructure,” said Jason Hansford, the Truckee Railyard project manager. The goal is to finish Phase I by the end of next summer, which will result in four developable parcels and will get the project started in earnest. “It’s a series of dominoes,” Hansford said. “Once one part goes in, the rest will go down pretty easily.”

After more than 20 years of planning, the Railyard’s considerable contributions to helping establish a walkable and vibrant downtown are nearing fruition. “The Truckee Railyard project is a perfect example of the Truckee way of making things happen, of overcoming obstacles and getting to yes,” then-town council member Josh Susman said in a 2009 Moonshine Ink article. ~ ME

Strong Business Connection

The Truckee Railyard development seeks to complement the existing, 150-year-old downtown core by introducing a movie theater, grocery store, brew pub, and a mixed- use retail and commercial space called the Railhouse Building. Holliday Development has been selective in looking for partners to fill these spaces, all in an effort to create a strong connection between the downtown core and the new Railyard neighborhood.

However, Holliday didn’t have to look far in selecting these vendors, all of which are successful business owners with insight to the community’s needs and wants.

In the spring of 2015, Steven and Melissa Siig, owners of Tahoe Art Haus & Cinema, got wind of the Truckee Railyard development’s theater element and worried about its impact on their Tahoe City theater. At the time, Rick Holliday was talking to large names like Cinemax to fill the space with an eight-screen theater. Steven, who goes by Siig, cold-called Rick Holliday and explained not only the concerns for his own business, but also why he and his wife would be the right people for the Truckee job.

“We know what the community wants,” Siig said when explaining the diverse programming of the Art Haus, a mom-and-pop hall that offers everything from blockbuster hits and ski movie premieres to independent films, musical concerts, and performing arts events.

The theater element is especially integral to the development’s success because of a community benefit aspect embedded in the project. The Town is requiring that the Railyard show its investment in the residents of Truckee and dedication to the project through the compilation of a downtown core stimulator. Enter the cinema.

Currently the Siigs, who are negotiating with Holliday, are working on a footprint for a three-room facility at the Railyard. The plan includes one large screen and two smaller ones with a plan for the larger of the three rooms to have accordion-style seating that allows the space to open easily for A-list performing art shows or live music.

Located directly next to the theater will be a brew pub owned and operated by Andy and Alicia Barr, owners of FiftyFifty Brewing Co. The Barrs have been talking to Holliday for the past six years and recently signed a letter of intent to purchase land.

“We want to create a destination beer experience,” Andy said of the space where they plan to have a full restaurant, tasting room, and rooftop event space. “The plan is to be customer-experience oriented, not distribution-oriented.”

The space will be what Andy is calling the “local pilot test system” where he hopes to have 20 to 30 beers on tap, covering everything from barrel-aged to sours to experimental.

Andy and Alicia plan to work closely with the Siigs at the Art Haus, selling their beer and food at the theater. The Siigs would like to see dinner-and-a-movie specials with the brewery.

In addition to the brewery experience, and further in the future, the Barrs plan to rent out the second floor of the building as office space and additional street level space to retailers.

NEW GROCERY STORE

Douglas Wiele of Foothill Partners, a retail property owner/developer based in El Dorado Hills, has signed a letter of intent with Holliday Development to purchase a block of land to build a Nugget Market inside the Railyard balloon track. Wiele’s specialty is the development and ownership of infill and neighborhood retail environments.

Wiele, who has worked with Nugget in the past, is passionate about the philosophy that Truckee’s downtown should have more outlets for everyday essentials. “Currently, daily-needs shopping is drawing people away from downtown.” Wiele said. “The culture suffers when these merchants are out of downtown.”

Holliday Development and Foothill Partners selected the Sacramento-based Nugget chain because it’s been a family-owned operation since opening in 1926, and the fact that it ranks on Forbes top 100 best companies to work for in the country — 13th in 2016.

The grocer is heavily into prepared foods and on-site dining, something the other grocers in Truckee lack.

The space will be 35,000 square feet, approximately the same size as the Truckee Safeway.

Down the road, Wiele envisions the addition of a small independent drugstore, 7,500 square feet of street level retail space, and 7,500 feet of second-floor office space.

THE RAILYARD BUILDING

The Railhouse, which will be a multi-use building developed by Holliday, is a 100,000 square foot space offering residential units, parking, and storefronts located directly at the entryway to the new part of downtown and across the street from the brew pub and movie theater. The architecture for the space follows a tiered plan to ease the feel of a multi-story building, for which there is a 50-foot height limit. ~ AG

Up First: Housing the Creatives

A space for Truckee’s artists to live, collaborate, and perform is no longer a pipe dream. This past spring, the Town of Truckee gave the go-ahead for a 77-unit affordable housing community geared toward creative people. The Artist Lofts are the first installment of the Truckee Railyard project to get the green light, setting a new precedent for the Tahoe region, where affordable housing units are often the last parts built in a development.

“I’ve put my blood and guts into this,” Rick Holliday said. “I’m excited to get started.”

The release of the Truckee and North Tahoe regional housing study in August identified a need for more than 5,000 low-income housing units in North Tahoe to accommodate a growing workforce. According to Ali Youssefi, vice president of CFY Development and designer of the Artist Lofts project, the Low Income Housing Tax Credit can help Truckee and North Tahoe reach this target.

This tax credit was first ratified in 1986, around the time that Youssefi’s father Cyrus founded CFY Development. The company has utilized the incentive to develop more than 30 affordable housing communities throughout the state of California, accounting for more than 3,500 units.

“These tax credits are the primary source of funding used to produce affordable housing across the country and a critical piece of our financing,” Youssefi said. But CFY is among the vanguard with the focus on artists, and the company leverages its many years of experience to get it done.

In 2008, an amendment to the tax credit code designated “persons who are involved in artistic or literary activities” as a special class equivalent to special needs groups including disabled or elderly individuals. The amendment caught Youssefi’s attention and became the basis for the first time he partnered with Holliday.

Holliday Development was desperate to figure out how to redevelop a Sacramento warehouse the company purchased in 2002. After nine years of thwarted efforts, the city’s redevelopment agency eventually suggested affordable housing. Even though Holliday is a long-term board member (27 years) of Bridge Housing, a San Francisco nonprofit formed to “spearhead new solutions to the worsening shortage of affordable housing,” this was not his area of development expertise, so he turned to CFY in 2012. Their first affordable artist community was born — the Warehouse Artist Lofts (WAL).

“Within six months [of partnering with Youssefi], WAL was under construction,” Holliday said. “It is a really good site and gave me an idea of what his idea is and what he can do.” In Ali Youssefi, Holliday says he got a partner that’s “100 percent battle-tested, road-tested, and capital-tested.” Looking for high-quality performers who have a vision is a keystone of Holliday’s development style.

Thus, when Holliday began his Truckee Railyard project and considered how to satisfy the Town’s affordable housing requirements, he immediately thought of Youssefi. Truckee’s art scene has grown significantly, and features several art galleries and workshops, including the Truckee Roundhouse — a warehouse and makerspace near the airport slated to open Dec. 1. Add to this that the Youssefi family has a home in Tahoe Donner, and the recipe for another solid partnership was born.

“I am inspired by artists and their creative minds, and I think that Truckee has one of the strongest creative communities per capita in the country,” Youssefi said.
Again, the two moved fast. Holliday first discussed the Railyard opportunity with Youssefi in 2013, and the initial site design was completed in 2014.

In addition to bringing relief to community members desperate for affordable housing the Artist Lofts are also designed to act as a stimulant to the downtown core.

“WAL has brought over 100 of some of Sacramento’s most creative individuals and families under one roof, energizing the neighborhood, and creating an affordable place for artists to live in the heart of downtown,” Youssefi said.

The Truckee Artist Lofts will cater to creative members of the community, but will not bar other low-income individuals. “Everyone will be able to apply for an apartment in the building,” Youssefi said. “The most important qualification is income level.”

The 121,000 square foot four-story project will have 66 multifamily units restricted to those who make between 30 to 60 percent of the area’s median income. The remaining 11 units will be market-rate. Final details are to be formalized in the Railyard Development Agreement with the Town, but one condition of approval is that the units will target full-time residents only and not allow short-term vacation or nightly rentals.

The Town of Truckee approved the affordable housing project in May 2016, months before it signed off on the development’s master plan. Early affirmation allowed CFY to focus on submitting an application for the tax credits this past fall. The developers are looking for $20 million in tax credits on a project estimated to cost $29 million. The Artist Lofts was wait-listed for public funds, but CFY will re-apply in March, when a new application period opens.

“We have an eligible project and we’re pretty experienced people at doing this process, so we’ll apply till we get it,” Holliday said.

Youssefi stressed that one affordable housing community won’t solve the current housing crisis, but a range of ideas and implementation, including the Artist Lofts, are needed to bridge the gap.

“As we work on solving the housing crisis in Truckee, it’s important that we create a diverse supply of affordable housing, and this project is envisioned to help do just that,” he added. ~ MH

Meet the Neighbors

There are 11 property owners within the Railyard Master Plan area — the largest landholders being Holliday Development and Union Pacific Railroad, which own approximately 35 acres and 33 acres, respectively. The rest of the landowners and neighbors further afield are a mixed lot — some of them have delayed the development via lawsuits, while others are willingly picking up and moving their own operations to make way for the Railyard project.

After the 2009 master plan was approved, a group called Friends of Truckee sued the Town of Truckee over concerns regarding the environmental review documents. While tight-lipped about its membership, the group was outspoken about its dislike of the realignment of Donner Pass Road, and requested improvements be made in Brickelltown and the preservation of the Union Pacific warehouse building, among other appeals.

Many felt the group was only interested in self-preservation. Then-town council member Josh Susman didn’t mince words; he told Moonshine Ink in 2009 that he believed the Friends of Truckee were a “small group with a vested interest in protecting their individual businesses and their ability to demand high rents in the downtown.”

The litigation held up the project for nearly two years, but eventually was settled in favor of the Railyard.

Fast forward to the approval of the new master plan. Upon this nod to go forward, Holliday Development gave Flyers Energy, owner of a card-lock fueling facility, notice to vacate its rented spot located in the southwest portion of the plan area. Flyers denied the Railyard’s right to evict it and sued Truckee Development Associates, creating another costly litigation. However, in late August the courts again ruled in favor of the Railyard.

“Winning [the Flyers case] is psychologically helpful,” Holliday said. “There’s no ambiguity and we move forward.”

On the other end of the spectrum, talks were started early about neighboring Truckee-Tahoe Lumber Co. relocating its longtime headquarters to remove the asynchronous industrial site from the plan area. Andrew Cross, the lumber company’s president and CEO, is in full support of the idea and plans to move the business to the airport within three years.

“It’s the right thing for Truckee. There’s no question. The downtown should be a downtown,” Cross explains. “If you look at a map, looking down at Truckee, there’s this huge lot that’s undeveloped. You can’t help but think that there’s where downtown belongs. The best part of Truckee is just sitting there, untouched. I’m excited to see something happen there.”

TTL plans to retain ownership of their 3.15 acres in the Railyard area, with tentative plans for its future, but with every indication that it will tie into the Railyard vision.

“It’s a family lot, I don’t want to part with it,” Cross said. “It’s beautiful. The creek runs right next to it and something will fit there really well. It’s a great revitalization opportunity.”

The Railyard is seen by many to be a poster child for sustainable infill development, and perhaps that explains the wide support the development has sustained.

“This is smart growth on steroids,” said Tony Lashbrook, Truckee town manager. As he told Comstock’s magazine, a business publication based in Sacramento, in 2012, “I’ve been in local government for 31 years, and I’ve never seen the kind of community support for development that I have for this rail yard.” ~ ME

Balancing Old-School Railroads and Modern Development

Railroad companies were granted the power of congressional right of way back in 1875, giving them much autonomy laying thousands of miles of tracks on public lands, and while the times have changed, they are still powerful entities that call the shots on the land they own.

Therefore, when the developers of the Truckee Railyard project entered into the purchase of the 35 acres of Union Pacific (UP) property, they knew it would require meticulous planning to negotiate and meet the needs of the railroad company and more than 100 years of railroad ownership in the area.

Truckee is also not just another train stop on the map — it’s an integral location for keeping much of the Western rail network open, giving further reason to being very cautious about their property.

“Truckee is a critical route to all ports on the West Coast. We needed assurance that our operations would be as good or better after the developments as they were originally,” said Rick Gooch, the director of special properties for Union Pacific.

Gooch was a key player in negotiating between the Town of Truckee, Holliday Development, and the railroad company, and the “unsung hero” of getting UP staff on board with the project, according to Rick Holliday.

A balloon track — the oval-shaped loop of track that connects to the main railroad — is currently located in the middle of the rail yard. Holliday says he spent nearly $250,000 on analyzing alternatives for the balloon track — including different routes and alternate modes of turning trains around. The 2009 Railyard master plan had the track relocated eastward on the same lot, but later studies determined that to be unfeasible, and planners had to rethink the course of action. Holliday suggested leaving the track as is, and developing inside the balloon. “When I first proposed it, I got laughed out of the room,” he recalls.

The Truckee balloon track allows snow removal and other railroad machinery to change directions by circling the track to return the other direction.  It marks the eastern terminus for the snow-clearing line that runs east-west through the Sierra Nevada, with up to 180 trips per winter on the roughly four-hour journey to the western side. If snow keeps trains from getting to Truckee, they may have to be rerouted to Southern California or north almost to Oregon, Gooch said.

Therefore, UP had to be convinced their operations wouldn’t be hindered. “There was some heavy lifting that needed to be done inside UP to get all the folks on board … but it’s a well-designed project that is compatible with existing railroad operations,” Gooch said.

Per 2016 changes to the 2009 master plan, it was decided the balloon track would remain in its current location, with modifications to its shape. This added 10 acres of development area to the project, within the track, while honoring the town’s history. “Keeping the rail operations in the center of the development emphasizes Truckee’s history as an industrial rail town,” the developer’s application stated.

Other major changes to UP property include taking down all current UP buildings and moving operations outside the balloon track, including the snow removal command, staffing area, cold storage facilities, mechanic shop, and equipment staging tracks. To sweeten the deal, Holliday Development agreed to pay for these new maintenance buildings at an estimated cost of $7 to $8 million.

THE BALLOON REMAINS, AND FURTHER RAILROAD OBSTACLES

But blockades remain. The Railyard plan calls for the Donner Pass and Church Street extension roads to cross over the balloon track at three separate points, which requires approval from the California Public Utilities Commission (CPUC). And while UP does not ultimately hold the decision, it will be consulted by the CPUC for input on the crossings applications, which will be filed by the Town of Truckee.

Typically, crossings such as these are not approved. Jason Hansford, the project manager for the Truckee Railyard, explains that normally the CPUC and railroad aim to remove crossings, while the Railyard is trying to build three new ones.

Nonetheless, Truckee remains optimistic. “The Town believes the proposed crossings are unique and warrant approval for a number of reasons,” said Becky Bucar, the engineering manager for the Town of Truckee, in an email to Moonshine Ink.

She mentions that the proposed crossings are required in order to build an essential transportation facility, that the volume and speed of the trains on the balloon track are much less than on mainline tracks, that an overpass or underpass has been found to be impractical, and a conversion of the track to a “wye” was also determined to be infeasible.

“Town staff has worked closely with UP and CPUC staff to address their concerns on the application,” Bucar said. Several draft applications have been sent to both the CPUC and UP for review, and the Town intends to submit a formal application to the CPUC later this November. ~ DZ

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