SMART selling land near downtown Santa Rosa station to housing developer

The vacant lot next to Santa Rosa’s downtown train station is being sold to a developer with plans for a highly anticipated transit-oriented housing and commercial center.

Sonoma-Marin Area Rail Transit, which begins service on Friday, has agreed to sell its 5.4-acre property west of the Railroad Square station to ROEM Development Corp. of Santa Clara for $5.75 million.

The deal inked Tuesday calls for the sale to be finalized only after the developer wins necessary approvals from the city for the $85 million project, which could include several hundred residential units.

The sale agreement was structured with payments required at key junctures over ?28 months to motivate ROEM to move forward with the project quickly, said Farhad Mansourian, SMART’s general manager.

“We didn’t want an open-ended contract,” Mansourian said. “We want to see shovels in the ground. We want action.”

The deal could pave the way for the single largest rail-oriented housing and commercial development in Sonoma County.

The property and neighboring land that is the site of a former brick cannery building have been eyed for more than a decade as prime downtown development opportunities.

Last year, when ROEM was selected by SMART to develop the site, the company proposed 268 units of market-rate and affordable housing, retail spaces focused on food and wine, and a public plaza.

Sonoma County Supervisor Shirlee Zane said the proposed project was exactly the type of transit-oriented development the community has been talking about for years.

“I think once the train is running in the next couple of days, the opportunities are really endless,” said Zane, who also serves on SMART’s board of directors. “It’s just screaming to be developed.”

Zane acknowledged the process has been frustratingly slow. ROEM was selected by the SMART board as the preferred developer last June, and at that point there was talk of the project being under construction by now. But it took ?14 months to even ink the sale agreement.

The company has been watching SMART’s progress on the rail line closely, said Alex Sanchez, vice president of ROEM, which has built more than ?3,000 units in more than ?30 projects in the state since 2000. It was no coincidence a deal was struck the same week that service between Santa Rosa and San Rafael is set to begin, Sanchez said.

The company needed to wait until federal regulators signed off on SMART’s operations before it could commit to Mansourian on moving forward, he said.

“He got the green light, and we gave him the green light on our deal,” Sanchez said.

The company still needs to complete its review on the property, file its project application with the city, win approval by various city boards and commissions, and ultimately get building permits for the site, portions of which are known to have environmental issues from its years serving as a rail yard.

Neither Sanchez nor Mansourian made a copy of the sale agreement available Tuesday.

The city is eager to see the development move forward and to see the details of the proposal, especially its affordable housing component, said David Guhin, the city’s director of housing and economic development.

“ROEM has a track record as an affordable housing developer. They have some creative ideas, so that’s why we’re excited to work with them,” Guhin said.

ROEM had previously asked the city to contribute nearly $7 million to fund 61 units of affordable senior units in the project. But that request was denied earlier this year, and the $3 million the city had set aside to spur affordable development was spent on other projects.

The city hopes ROEM will include affordable units in the project, as opposed to the common practice of paying fees to support the development of such units elsewhere in the city, Guhin said.

When affordable units are built on site, 15 percent must be set aside for low- and very low-income residents, defined as people making 80 percent and ?50 percent of the area median income respectively, Guhin noted.

Whether the developer will ask the city to subsidize the construction of more affordable units remains to be seen.

The city has a variety of tools available to incentivize affordable housing, among them increasing the densities allowed by zoning, granting development concessions or making other direct funding available, he said.

The good news for ROEM is that the project is within the Downtown Station Area Plan, which outlines the types of higher-density housing the city wants to see near the station. The plan relieves developers who seek to build within those guidelines of the need to perform costly and time-consuming environmental studies, Guhin said.

The city likes what it has seen in preliminary plans, Guhin said.

“It’s got all the elements that we’re focused on,” Guhin said.