The Sacramento Planning Commission on Thursday applauded a development team's plan for the 700 block of K Street.

D & S Development, Inc., and CFY Development Inc. – led by David Miry and his son, Bay Miry, and Cyrus Youssefi and his son, Ali Youssefi – propose a mix of adaptive reuse and new construction for the south side of the block.

Since it was introduced, the plan has grown to incorporate Sacramento's historic underground and plenty of outdoor living space, while keeping its residential component smaller and less expensive. The project would also restore historic building façades to help preserve the legacy of K Street, which was once the thriving heart of the city.

The plan calls for 63,780 square feet of retail, which includes a live music club, four restaurants with bars, and shops. The team, which is seeking planning entitlements, also proposes a six-story apartment building with 153 units and a 91-space parking garage. The development would feature sidewalk patio seating in front of nearly every ground-floor space, open-air mezzanines and rooftop decks for dining, bars or residential use.

Planning commission members praised the plan as reasonable yet exciting and varied enough to serve as a catalyst for further development of the troubled K Street Mall.

"That'll clean up that end of the town, and the rest will follow," Commissioner James Frayne said at the meeting Thursday night.

The amount of retail has been nearly doubled from the 37,480 square feet of retail space originally proposed.

The retail square footage was expanded to include another 15,000 square feet of original street-level spaces, which were turned into building basements when the street level was raised in the 1860s and 1870s, and 10,000 square feet of rooftop decks and second-floor mezzanine space. The plan now proposes using the majority of the block's basements for retail after developers got inside and saw how much character the spaces have.

"It blew our minds," Bay Miry said earlier Thursday.

Developers have found retail tenants interested in at least half the space, Ali Youssefi said.

The team also increased the number of alley-front apartments by 17, originally proposed at 136 units. The top floor would have a mezzanine level and rooftop deck with views of the Capitol, while parking would be located underground and on the building's ground floor.

The developers and the city wanted to add as many apartments and as much density as possible. They determined the building could contain five levels of wood construction, which includes a mezzanine level, on top of two stories of concrete cast construction.

The use of wood rather than steel will keep costs down so the units can be priced more affordably, while still meeting seismic requirements and all other building and life-safety requirements due to the smaller size. Rents are still being determined with the city, but could range from $700 to $1,300 for studios to two bedrooms, they said.

Commissioners especially liked plans to protect the Tower Records mural at 726 K St. and to turn the historic Banking Hall building at 700 K St. into a live music club with a roof terrace.

One concern that was expressed was that developers not ignore daytime uses by focusing too much on night clubs, said city Associate Planner Evan Compton.

The developers are seeking retailers who would draw daytime clients, including flower shops, a salon or spa, hard goods and a possible market.

They will spend the next month or two working with the city to determine what kind of financial assistance the city can provide. The city owns the block, but its future ownership is under discussion.

They're also pursuing new market tax credits established by the federal Community Renewal Tax Relief Act of 2000 out of "sensitivity" to the city's "limited resources," Youssefi said.

City staff expect to bring the project back before the Preservation and Planning commissions and the City Council for final action in May and June. The developers hope to start construction in the fourth quarter of 2011 and open the completed development two and a half years from now. 

Graphics provided by the developers. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.