Las Vegas developer bids over $15 million for Sonoma County’s Chanate campus

A bidding war topping $15 million on Tuesday may have finally resolved the fate of Sonoma County’s embattled Chanate Road campus after years of failed attempts to unload the property.

Las Vegas real estate agent and developer Eddie Haddad, representing Nevada-based Resources Group, placed the highest bid, offering $15,050,000 for the nearly 72-acre government property in northeast Santa Rosa.

Tuesday’s auction represented the county’s fifth attempt to sell the troubled complex, home of the former community hospital and other county offices. And the auction may prove the last attempt if the Board of Supervisors accepts Haddad’s bid at its next meeting on Nov 16.

A successful sale would represent the largest disposal of surplus county land in a generation and an immediate prospect for the type of high-profile housing development county leaders have touted for years.

County staff will recommend the board accept the bid, General Services Director Caroline Judy said at the auction’s end.

In August, the Board of Supervisors voted unanimously to sell the property via Ten-X, an online real estate auction platform.

During Tuesday’s auction, which stretched a little over two hours, Haddad beat out nine other bidders, including Mill Valley-based Capretta Properties and Irvine-based housing developer City Ventures.

The county last appraised the property at $23 million, though seismic concerns and extensive building demolition and cleanup awaiting any final buyer appeared to have depressed figures offered in initial bidding.

The sealed bids for the property ranged from $200,000 to $4.2 million — the highest sealed bid that then set the started the round of verbal offers.

The county hosted a Zoom meeting to announce the bids as they came in.

An enthusiastic “Yes!” was heard over the county’s Zoom mic as bidding reached $8.7 million, meeting the county’s minimum acceptable offer.

Whoops and laughter from the county’s mic were occasionally audible as the bidding continued, reaching $10 million, then $13 million, until Haddad placed the final, winning bid just after 1 p.m.

Haddad and partner Goerges Maalouf won a bid for a 59-acre former Coast Guard site in Concord in March. They paid $58.4 million for the property where they hope to add 2,000 housing units, according to the San Francisco Business Times. The Concord property already holds 286 units.

The Chanate Road campus has sat mostly vacant since its primary occupant, Sutter Health, which took over the former community hospital, relocated to its new Mark West Springs Road site.

Vandalism, rising maintenance costs, a bruising court battle with neighbors and the specter of the Rogers Creek Fault running under the property have all clouded the property’s fate.

A seismic study conducted for the county earlier this year determined that 46 acres of the campus is safe for projects including housing development. The study cost the county $512,450.

Three fault zones crossing the property prevent developers from building homes on those areas, but are suitable for parking, roads and parks.

A long list of developers have offered to buy the property after an initial $11.5 million sale agreement in 2017 with local developer Bill Gallaher was scuttled by a successful lawsuit waged by neighbors concerned about his proposal. It called for up to 870 housing units, including senior and affordable units, as well as amenities including a grocery store, amphitheater and dog park.

Gallaher was not among the bidders competing for the property Tuesday.

The county neared a sale a few more times but negotiations repeatedly failed over myriad issues including uncertainty of the exact location of the Rodgers Creek Fault in the property’s vicinity.

One of Tuesday’s top bidders, City Ventures, the Irvine-based real estate firm, was among the developers who’d previously sought to buy the property. It bid $15 million Tuesday, more than twice its prior $6.5 million offer.

As the county’s attempts to unload the property faltered, taxpayers have had to cover the costs of general maintenance and combating vandalism. The county has paid $963,699 for security, fire safety, vegetation management and site hardening at the property during 2020/21 fiscal year. Since Sutter left, maintenance and utilities at the site have cost the county around $7.2 million.

County and Santa Rosa officials have eyed the site for housing development for more than 15 years since Sutter first announced its plans to move, but bidders on Tuesday did not have to disclose what their intentions are for the property.

Haddad could not be reached on Tuesday.

The city of Santa Rosa and its elected leaders would be responsible for oversight of any development proposal.

You can reach Staff Writer Emma Murphy at 707-521-5228 or emma.murphy@pressdemocrat.com. On Twitter @MurphReports.