Deal reached to protect Santa Rosa meadow in sale of Chanate hospital property

An undeveloped Santa Rosa meadow long regarded as open space but included among some 82 acres Sonoma County wants to sell to a housing developer would be officially preserved under a multi million-dollar real estate deal that could be approved starting in less than two weeks.

The Board of Supervisors is set to cast its first vote June 20 on an agreement to sell the sprawling site of the county’s old Chanate Road hospital complex to a team led by Santa Rosa-based developer Bill Gallaher, who envisions building a mixed-use community with as many as 800 rental units, plus veterans housing and a variety of community amenities.

That agreement, if finalized, would require Gallaher’s team to secure a conservation easement for a 10-acre parcel that includes the oak-shaded meadow at the end of Beverly Way. An easement would ensure the parcel is not paved over after the county sells the site, an outcome neighbors feared when they realized four months ago that the meadow was included in the sale even though it has been marked for years by a sign declaring it part of the Paulin Creek Open Space Preserve.

Gallaher’s team originally wanted to determine the future of the meadow after the county finalized the sale and the project passed through Santa Rosa’s planning process. But Komron Shahhosseini, Gallaher’s project manager, said he was comfortable with the requirement the meadow be preserved.

“We’re just happy that there is a resolution,” Shahhosseini said.

Easement drops price

Because of the conservation easement, the maximum sale price anticipated by the county is now $11.5 million, down $1 million from when supervisors agreed earlier this year to enter into exclusive negotiations with Gallaher.

An appraisal put the value of the land at about $13.3 million, without any entitlements, according to the county.

County officials said they believe the deal is worth as much as six times the maximum cash amount to the county when considering the value of the affordable housing planned for the site and the costs the county will avoid by selling the land, among other factors.

The required easement is a product of lobbying by neighbors, who launched an intense campaign to protect the Beverly Way meadow from development, consulting an attorney, filing extensive requests for public records and distributing signs to supporters around the community, among other efforts.

Mark Epstein, a Beverly Way homeowner who was at the forefront of that campaign, said he would rather have seen the county hold onto the meadow parcel, but he was happy to hear about the conservation easement.

“The county is trying,” Epstein said. “We can tell that they’re trying to balance various interests, and we get that they’re doing what they can to make it work for everybody. But there definitely is a lot of information to be fleshed out over time.”

Supervisor Shirlee Zane, the board chairwoman, said last month that she would find a way to make sure the meadow parcel was protected, reversing her previous position that the matter would be handled by Santa Rosa after the county sold the land.

Zane, whose district includes the hospital complex site, reiterated Wednesday her belief that county staff members failed to properly educate supervisors about the history of the meadow parcel.

But she was also sympathetic to the fact that, during the two and a half years the county has been working actively toward a sale of the site, it has seen turnover in some of its most senior staff members, including the county administrator and the general services director.

“In a deal this size, there were some things that might have gotten missed, and that was one of them,” Zane said of the meadow parcel. “We didn’t get fully informed, otherwise we would have handled it differently. But I will say, to give (staff) credit, that I think they have worked really hard.”

20 percent affordable units

Under the terms of the agreement supervisors will consider later this month, Gallaher would pay a minimum of $6 million in cash for the land, planning to build at least 400 units on the site.

He would pay $13,800 for each additional unit beyond 400 approved by Santa Rosa, resulting in the total maximum envisioned price of $11.5 million. Previously, the county had anticipated the price for each additional unit would be $15,000, but the figure was discounted to reflect the removal of the 10-acre meadow parcel from potential development.

Yet county officials say the real price tag is far higher. Including the cost of the affordable housing Gallaher plans to build - which the county sees as providing a public benefit - and the money the county will save by avoiding on-site maintenance and demolition costs, among other considerations, the total value of the deal rises to a minimum of about $42.4 million and a maximum of $71.9 million, officials said.

“The county felt that it was important to conserve (the meadow parcel) and, in recognizing the public benefit of doing so, we’re willing to reduce the overall price for the land,” said General Services director Caroline Judy. “You have to look at the broad value of the overall proposal and all the aspects that are included when you talk about the benefit to the public of the deal.”

Of the up to 800 planned rental units, Gallaher plans to make 20 percent affordable to residents with very low incomes, which the county says equates to an annual salary of $41,300 for a family of four. Between 100 and 250 of those units would be set aside for seniors.

The developer’s team also plans to build between 50 and 60 units for veterans - in addition to the other rental units - in partnership with nonprofits, according to Shahhosseini.

Though the county has been working toward a sale for years - most actively since Sutter Health left the old hospital complex at the end of 2014 - residents said they felt blindsided when they learned of Gallaher’s specific plans just days before supervisors voted to enter exclusive negotiations in February.

Jim Barnes, who lives on Cobblestone Drive near the hospital site, indicated he still felt that way and planned to review the sale agreement with a critical eye.

‘Legacy project’

“I’m pretty skeptical about how this whole thing went down,” Barnes said. “I don’t feel like the citizens had an adequate opportunity to influence the decision of the Board of Supervisors as far as what was done with the property. I’m skeptical that the county isn’t sweetening the deal somewhere.”

But Zane said that, by law, supervisors have to conduct much of their real estate conversations behind closed doors. And in her view, the potential influx of housing the project could provide helps make it a critical deal for the community.

“As I’ve talked to people in the community, they’ve said, ‘Man, when have we had, what, 800 units developed in this county?’ It is a legacy project, and it’s exactly what we need right now,” Zane said, pointing to the county’s low rental vacancy rate and high rate of homelessness.

Because state law requires the county to sign off on the sale agreement through an ordinance, if supervisors approve it June 20, they will need to cast a second formal vote, scheduled for July 11, according to Judy. And the sale would not close until after Santa Rosa approves the project’s permits, a process expected to last 12 to 18 months.