Healdsburg’s Mill District mixed-use redevelopment nears construction

Construction is scheduled to begin next month on a large-scale residential and commercial redevelopment project in central Healdsburg that will upgrade a former lumber mill property into an upscale hotel and retail area, and more than 200 new apartments and condos.

The roughly $500 million Mill District mixed-use development, at the city’s main entry along Healdsburg Avenue, had been delayed for more than a year, but now Vancouver-based Replay resorts expects to start work on the utilities, public streets and sidewalks in December.

Around the same time, construction is slated to begin on the first of the housing — 41 affordable, multifamily units in a building at the southern edge of the 9.5-acre property, directly behind the McDonald’s restaurant at the corner of Exchange Avenue.

“That’s the hope, and we’re making a push. We’re really, really pumped,” said Eric Chan, Replay’s director of development on the Mill District. “A lot of really good things, in a weird way, came out of this year for us, and it really just somewhat showed the perseverance of the overall project.”

In October, the project’s affordable housing component, with partner Eden Housing of Hayward, landed one of a dozen highly sought-after federal subsidies awarded by geography statewide. West + Creek Builders of Sacramento is expected to take about a year to a year and a half to finish the building.

At least 24 of the one- , two- and three-bedroom apartments will be maintained at the very low-income level, equivalent to yearly income of about $40,000 for an individual and no more than $57,000 a year for a family of four. The remaining units will be reserved for the low-income level, with income capped at $63,700 for individuals, and about $91,000 for a family of four.

A prior plan to include some apartments at the lowest defined income level, often considered transitional housing for those experiencing homelessness, was left out of the final deal between the city and the developer, said David Woltering, Healdsburg’s interim community development director. The community benefit was floated as part of the pitch to the City Council, which endorsed the project on a 5-0 vote in March 2019.

Healdsburg is set to be paid $1.3 million by developers for a new pedestrian and bicycle pathway in the downtown corridor near the city’s roundabout, helping connect people to a planned SMART passenger rail stop nearby. Healdsburg will receive more than $1 million toward the purchase of a new firefighting ladder truck as well. About an acre of the development site also will be set aside as a public park.

The city still regards the affordable housing component as a major win in the overall project, aligning with a goal to expand workforce housing in one of the North Bay’s most expensive markets, with a median home price of nearly $800,000 in October, according to Seattle-based real estate brokerage firm Redfin.

“These units are critical. I also think it’s a good opportunity for people to live in mixed-income units,” said Stephen Sotomayor, Healdsburg’s housing administrator. “Studies show a mix of incomes in different areas, including affordable housing units, makes for a more healthy community, instead of clustering certain incomes in a certain area.”

Work on the Mill District’s first market-rate homes — 39 condos in several three-to-four story buildings — is set to commence after the affordable project gets underway. The remaining 128 homes — a mix of market-rate condos for sale and middle-income apartments for rent, could take up to a decade to build under the city’s restrictive growth management ordinance.

Replay is interested in finding ways to speed up that delivery, if possible, Chan said, but does not currently have a path for doing so.

“That’s just sort of the way it worked out, I guess,” he said. “But, who knows, maybe the GMO will be amended. We would absolutely be open to discussing that and figure out how to expedite this.”

The final component of the project is a 53-room luxury hotel in a pair of two-to-four story buildings, with 15,000 square feet of commercial retail space occupying the ground floors. A favored operator for the hotel has emerged, but the selection isn’t complete and won’t be disclosed until the spring, Chan said.

The hotel will include a restaurant, as well as a pool and fitness center that will be shared with Mill District residents. Room rates are expected to be $500 to $800 per night, comparable to Hotel Healdsburg located just a couple of blocks away.

The hotel, affordable housing and first market-rate homes are all expected to be finished by the end of 2022.

“It’s going to be great, and I think will engage that whole part of town,” said Mayor Evelyn Mitchell. “I really envision it as a really nice, viable addition to the community. I really do. Right now, what is it and what has it been, nothing but a lumber yard, so this is huge. I couldn’t really be happier about it.”

You can reach Staff Writer Kevin Fixler at 707-521-5336 or kevin.fixler@pressdemocrat.com. On Twitter @kfixler.