Housing, grocery store among proposals as Santa Rosa council seeks to transform 2 downtown parking sites

After months of staff work, the Santa Rosa City Council is set to advance a pair of potential deals with developers that could transform two prominent city-owned downtown properties into housing.

The city seeks to redevelop the parking garage on Third Street just east of Old Courthouse Square and the former White House department store site on Third and E streets, which has been a parking lot for decades.

In doing so, the council faces hefty opposition from business and property owners over plans for the Third Street garage, which merchants and office tenants say they rely on — pressure that underscores the tension between meeting the expectations of longtime businesses and the acute need for more housing.

Local governments are under exceptional pressure from state leaders to build more housing in the next decade and Santa Rosa has long eyed downtown as a prime place for redevelopment because of its proximity to transit, shopping and other services.

The latest plan for the 720-acre downtown area, approved in late 2020, aims to add 7,000 new homes by 2040 — about twice the previous mark, which the city missed by a mile.

City officials have said transforming city garages and other city-owned property, as proposed, could be one of the easiest ways to speed the city’s goal of increasing housing in the urban center.

The council in December approved designating the two sites and a third parking lot on B and Fifth streets as surplus lands, a first step to selling off city-owned property, and put out a call to developers who could transform the sites.

The city received seven bids from six respondents and after several closed-door discussions the council on Tuesday will consider entering exclusive negotiations with Napa-based Rogal Projects for the redevelopment of the Third Street garage and with Burbank Housing and developer Hugh Futrell for the former White House lot.

The council will hold onto the surface lot on Fifth and B streets for now.

Jill Scott, the city’s real estate manager, said the city was eager to move forward with redevelopment and the council was impressed with both proposals, which she described as “community-focused and pretty great.”

“We’re really excited,” she said.

Few details about the proposals have been revealed but Scott said both would add mixed-income housing and community amenities to the city’s core. A quarter of all housing units proposed must be affordable per state requirement.

If the council approves moving forward with negotiations, the city and developers will hammer out a sale or lease price and other terms, details on what will be built and a proposed construction timeline.

Proceeds from the garage sale must go back to the parking district for acquisition, maintenance and improvement of downtown parking.

Any successful proposal is likely to be put under a microscope as business interests and housing advocates closely watch how this effort plays out. The outcome of any development on these two sites could impact whether the city seeks to develop other city-owned properties to increase housing production and a successful project could draw greater private investment to the area.

Redevelopment advances amid business objections

The Third Street garage, at Third and D streets, was built in 1965 and is the smallest of the city’s five garages with just under 200 spaces. It serves nearby office tenants and downtown visitors.

The city has long sought to redevelop the site, which needs millions of dollars in upgrades. Plans last April to designate the property as surplus were put on pause after opposition from nearby businesses.

Rogal Projects, owned by Keith Rogal, who was recently awarded a state contract to redevelop the Sonoma Developmental Center in Sonoma Valley, submitted a joint bid with Freebird Development, an affordable housing developer, for the site and the other two city properties.

The proposal didn’t meet the required criteria for the two other sites, which gave first priority to the proposal with the greatest number of affordable units, but the pair were the lone respondents for the Third Street garage property, Scott said.

Scott said Freebird wasn’t interested in moving forward with negotiations, citing financial considerations, but Rogal was.

Rogal declined to comment on his proposal or the prospect of being awarded a future deal.

Any project built on the site must include at least 75 public parking spaces, per the city’s notice to sell or lease the property. An earlier proposal from the city had called for replacing all of the parking as a condition of the sale.

Scott said developers informed city staff that the requirement to replace some of the parking likely hampered developers’ interest in building on the site.

The proposal has again raised alarm among business and property owners who would like to see the garage property remain untouched.

Redeveloping the garage would cause tenants along the Fourth Street corridor to leave and would impact long-standing businesses, said Doug Van Dyke, owner of ER Sawyer Jewelers.

“It’s the lifeblood of numerous employers and the economic impact is going to be catastrophic in my opinion,” he said. “The city of Santa Rosa absolutely can’t move forward with this project without the full support of the property owners.”

Van Dyke said he wants to see a more robust discussion between city officials and impacted businesses about redevelopment plans. He said it felt that the city has dismissed businesses’ concerns.

Toraj Soltani, owner of Mac’s Delicatessen, said on-street parking along Fourth Street is often taken so his customers and employees rely on the garage parking.

He wants to see the garage remain available to merchants and said redeveloping the property would be a financial hit to businesses that are still struggling to come out of the pandemic.

Both said they supported development of the White House lot and said they wanted the city to prioritize that first before moving on to other sites.

While the Third Street garage is heavily used, Scott said, overall there is a surplus of parking downtown and the city believes it could get more value out of the site if its developed into housing.

A city-commissioned study of downtown parking been October 2021 and April 2022 found that about 74% of the more than 8,700 public and private parking spots were vacant during peak hours.

White House site eyed for grocery store

The 1.3-acre site that once housed the White House department store, which closed in 1985 and was razed in 1991, has also long been looked at for housing development or even the home of a new city hall.

Those efforts have all fallen flat.

Affordable housing developer Burbank Housing and developer Hugh Futrell submitted a joint proposal for the site that calls for mixed-income housing.

In an email, Futrell said the proposal includes affordable, rent-restricted units and market-rate for-sale apartments, an on-site private parking garage for residents, a grocery market and a child care facility.

Though it wasn’t the proposal with the highest number of affordable units, it included more housing overall and more community amenities that the city was seeking, Scott said.

Futrell, whose company is behind a number of housing and commercial projects downtown, said the considerable investment he has made in the area shows a commitment to creating a vibrant city center that includes mixed-income housing, provides amenities for residents and workers, is architecturally dynamic and historically sensitive.

“Should the city choose to go forward with us … the White House project would be a kind of capstone to these efforts,” he said, adding that the property is a “key piece — fundamental piece — for the continued revitalization of the downtown.”

Larry Florin, Burbank Housing president and CEO, said they were honored to be considered for redevelopment of the site.

“If confirmed by the City Council, we look forward to working with Hugh and city staff to develop a project that brings much needed housing, including affordable housing, to downtown Santa Rosa,” he said.

Sale terms, other details still being hammered out

If the city approves moving forward with negotiations with the two teams, the city will have 90 days to come to an agreement with the developers on a list of requests, or a term sheet, that outlines how many total units will be built, how many affordable units will be included, and what community amenities will be included, among other details, Scott said.

The city manager may extend negotiations by an additional 90 days if enough progress toward an agreement has been made.

If negotiations are successful the city will have another 60 days to negotiate and craft a development and disposition agreement for the properties which will detail the price and terms of the sale or lease and a construction timeline.

That agreement will come back before the council in open session for approval.

The city can pursue a deal with another of the respondents if negotiations fail or ultimately issue a request for proposals for development of either site. Developers who respond to the request for proposal would only be required to provide 15% affordable housing, fewer units than under the state redevelopment process.

As the city negotiates the deals, staffers will also look to begin site work to prepare the properties for eventual construction.

The city was awarded a $9.5 million grant from the California Department of Housing and Community Development to assist with predevelopment costs such as demolition of the garage and surface lot and utility and infrastructure work.

The grants are intended to promote infill housing by providing financial assistance to cover the costs of work to get properties shovel-ready and the money must be spent by June 30, 2027.

“That really fills a gap for the developers, especially in this market,” Scott said.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On Twitter @paulinapineda22.