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A new agreement between the developer of a proposed Railroad Square food and wine center and the Sonoma-Marin Area Transit district, which owns the downtown Santa Rosa site, keeps the $180 million project on track.

That agreement also lays out what SMART expects to be built there as a transit center.

"It is an important milestone; without this there wouldn't be a project," said John Nemeth, SMART's rail planning manager, who also cautioned, "There is still a long way to go. The project has a financing gap they are trying to close."

Michael Dieden, the Los Angeles developer who was selected to build the Santa Rosa food and wine center, said the agreement was an important step.

"Now we have the business relationship with SMART consummated, we are now able to seek the public funding, gain entitlements and seek the private financing that is necessary for the project to go forward," Dieden said.

The agreement was reached July 16, but it was overshadowed by a decision by the SMART board of directors to place a quarter-cent sales tax on the November ballot.

The tax, which needs a two-thirds majority to pass in Sonoma and Marin counties, would raise $890 million over 20 years for a commuter train system to run between Cloverdale and Larkspur.

It is the second time SMART is attempting to pass the tax. A similar measure in 2006 was approved in Sonoma County, but fell short in Marin County by less than 2 percent of the vote.

Passage of that tax measure and the construction of a commuter line would be important to the Railroad Square development, Dieden said.

"It has bearing. This is a transit-oriented project. It is designed to increase the ridership for the SMART train and to afford the consumer the availability of housing right on the train (line) so they don't need a car," Dieden said. "It will be discouraging if the initiative doesn't pass, but it is not fatal. The project will go forward with or without the train."

Dieden's firm, Creating Housing Associates, is a partner with John Stewart of the John Stewart Co. of San Francisco in the project, now called New Railroad Square LLC.

They are proposing to build a San Francisco Ferry Building-style project on 5? acres in Railroad Square.

It would include a 40,000-square-foot public market and food and wine center, a 10,000-square-foot retail center that would probably have a restaurant, 40,000 square feet of office space, 186 market-rate and low-income housing units and a 263-space garage.

It is now combined with Stewart's own project to turn a century-old cannery in Railroad Square into housing.

The first step is to apply for about $18 million in state funds and tax credits, Stewart said.

"Do I think it is a lock? No, but I think the odds are better than 50-50 we can put this deal together in the near term, even in this market," Stewart said.

In the agreement with SMART, New Railroad Square would get title to the land when the developers secure financing, complete the environmental cleanup, have a construction bond and receive approval from Santa Rosa to proceed with the infrastructure, which is one step before getting an actual building permit.

SMART has given the developers eight years to do the first project phase and nine years for the second.

The agreement also sells to The Stewart Co. the loading dock attached to Stewart's cannery and an easement for a new street for $187,770.

The combined project is expected to cost $180 million and be paid for with a variety of public and private funds.

You can reach Staff Writer

Bob Norberg at 521-5206 or bob.norberg@pressdemocrat.com.