Downtown Santa Rosa hotel/garage deal collapses

  • (File photo, 2009): The parking lot on E Street where The White House department store was located for decades before it closed in 1985. The structure was razed in 1991 to make way for city parking. The city partnered with a developer to build a 12-story residential tower on the site, but the deal fell apart as costs rose and the economy faltered.

Santa Rosa city leaders have pulled the plug on a proposal to have a developer build a boutique hotel and city-owned parking garage, a project they had hoped would prove a boon to the struggling downtown.

The City Council in a closed-door session Tuesday indicated it will not extend an exclusive agreement with MetroPacific Properties of San Rafael to build a 151-room hotel and six-story, 545-space parking garage on a 1.3-acre E Street site now home to a 116-space city parking lot.

The agreement, already extended once, is set to expire Dec. 1. Unless the council votes for an extension, negotiations will end, said City Attorney Caroline Fowler.

"It's dead," Councilwoman Jane Bender said Thursday when asked about the status of the project. She said the original terms of the deal had changed since the city agreed to a joint project with MetroPacific in August 2008.

"The bottom-line is they wanted a whole lot more than we agreed to. We can't do that and they don't have the money to go ahead," Bender said.

But Sia Barmand of MetroPacific believes the council decision "is based on miscommunications." He said his company is willing to stick to terms of the original deal, including having the city pay no more than $11.7 million toward construction of the garage.

Barmand said the differences between the city and his company "involve a lot of other deal points," differences he hopes to clarify during further discussions with city staff next week.

"I don't know if the deal is dead but if it is dead I think it can be revived," he said.

However, he also said the city council's discussions about possibly reducing the size of the parking garage would shift unreasonable added costs to his company and potentially make the project unworkable.

The E Street property, just across Second Street from the U.S. Post Office, has been the site of several failed proposals over the past five years.

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