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Construction is under way at the historic brick cannery buildings on the west side of Railroad Square in Santa Rosa, and next week developers will submit their formal application to the city for the long-awaited project.

Eighty live-work lofts, townhomes and upscale flats could begin going on the market in early 2007, said San Francisco developer John Stewart, who is spearheading the $40 million project.

His application comes after several years of meetings with city officials, historians, neighbors, merchants and community groups - and just days after the Sonoma-Marin Area Rail Transit District released its ideas for the 5? acres between the cannery and the railroad depot.

Together, the two projects could transform the historic district into what many envision as a teeming center of condos, shops, restaurants, a food and wine center, a culinary school, pedestrians, bikers and, maybe someday, trains.

"We're betting on Santa Rosa," Stewart said.

Nailing down the cannery's future is the next step in the revitalization of historic Railroad Square, which has included restoration of the railroad depot and the 88-year-old water tower and development of the Hyatt Vineyard Creek Hotel and adjacent convention center.

Several developers also have new residential, office and retail buildings under way.

As the cannery project begins the city's formal review process next week, neighbors are applauding Stewart's willingness to listen to their ideas.

"We really feel we've found somebody who sees the value here, who respects us and our feelings," said Carol Dean, president of the West End Neighborhood Association.

The association was interested, among other things, in retaining some historical aspects of the former Del Monte cannery buildings, built in 1908, and in creating a corridor from Santa Rosa Creek to Fourth Street, Dean said.

The success of the cannery project could trigger conversion of about 15 historic brick warehouses north of the cannery into mixed-use housing and shops, said Jocelyn Lundgren, economic development and redevelopment manager for the city.

"John Stewart's project is testing the market. If his project is successful, we expect the others will follow," Lundgren said.

SMART may choose a developer for its 5? acres by the end of the year, and Stewart said he intends to apply. The fate of the train will be decided in November 2006, when Sonoma and Marin counties will vote jointly on a sales tax proposal to subsidize rail service from Cloverdale to Larkspur.

"We're gambling the SMART development goes well, we're gambling people want to live in flats and live-work places in town and we're gambling the sales tax goes well and they put the rail back where it should be," Stewart said.

The cannery project is being developed by Santa Rosa Canners LLC. Stewart and Richard Devine, also of San Francisco, are the company's managing partners.

Santa Rosa Canners bought nearly two acres, two cannery buildings and the water tower from Michael Franchetti and his family in 1999 for $1 million. Total development costs are expected to approach $40 million, Stewart said.

There are three cannery buildings in the area bounded by the creek and the railroad depot, between Third and Sixth streets.

Santa Rosa Canners is developing the middle and southern buildings, and it is landscaping a walkway between the two that connects the creek with Fourth Street.

Read all of the PD's fire coverage here

Santa Rosa Junior College is considering buying the middle building for its culinary school.

The larger two-story southern building, which runs the length of a football field at 3 W. Third St., will be turned into 80 for-sale housing units, under the current plan. Prices on the units have not yet been set, Stewart said, but they will be market rate.

The east and south walls will be retained. Inside, Santa Rosa Canners plans to build a five-story building.

The first and second floors will have parking on the interior. Along the east side will be 15 live-work loft units. On the west side, facing the creek, will be 17 two-story townhomes. The loft units will be 900 square feet, and the townhouses will be 1,200 to 1,300 square feet.

The third through fifth floors will hold 48 one-story condominiums, nearly 2,000 square feet each, accessed by elevators.

The 80 units will feature high ceilings and some hardwood floors, including reuse of tongue-and-groove planks removed from the roof.

Santa Rosa Canners has received city approval to demolish parts of the buildings and clean up the site. Retaining some of the historic brick walls is a complex undertaking that will cost about $500,000, Stewart said.

The civil engineer on the project is Carlile Macy of Santa Rosa. Midstate Construction of Petaluma is the general contractor. The architect is Saida & Sullivan of San Francisco.

Stewart, chairman of John Stewart Co. in San Francisco, has 30 years of experience developing and managing many types of housing, he said. The company has 1,100 employees statewide and manages 24,000 housing units, including 1,100 in the Presidio in San Francisco. Santa Rosa Canners is Stewart's first project in Sonoma County.