Condo construction that incorporates the walls of the century-old cannery in Santa Rosa's historic Railroad Square has been delayed for years. (CHARLIE GESELL/ PD)

Long-awaited project at Santa Rosa cannery faces ax in state redevelopment fight

The construction of the SMART train is moving ahead full throttle. But when the train is up and running sometime in early 2016 and passengers start arriving at Santa Rosa Railroad Square, what are they going to find?

At the moment, the view to the west is pretty dismal.

The propped-up brick facade of the old cannery building and the Railroad Square water tower resting on the ground are testament to the city's threadbare dream of having a thriving transit-oriented, mixed-use project on that site by now.

Specific plans for a food and wine center, a culinary academy, a fitness center, etc. are long gone, casualties, for the most part, of the Great Recession. But one segment of the grand plan — a 93-unit housing project that seeks to preserve the 1908 walls of the cannery — is still alive. That is unless Gov. Jerry Brown and his people at the state Department of Finance snuff it out entirely. A decision is expected by Saturday.

In brief, the housing project is threatened by the governor's decision to eliminate — in abrupt fashion — all redevelopment agencies statewide and seize the money for schools and other purposes. And so far, it is not looking good for the $5.5 million in funds designated for this project.

"They are bayonetting the wounded and stealing their watches," John Stewart, the developer of the Cannery project, says about the process.

The Department of Finance, which is in charge of deciding what few redevelopment projects survive and can proceed because of an "enforceable obligation" to do so, has already given the city project a thumbs down. But Santa Rosa believes it has a good case. So does Rep. Mike Thompson, state Sen. Noreen Evans, Assemblyman Wes Chesbro, former Mayor Ernesto Olivares, county supervisors, neighborhood leaders and host of others who have been pressing state officials to rethink the decision.

Evans, Chesbro, Supervisor-elect Susan Gorin, Santa Rosa City Manager Kathy Millison and others met with finance officials in Evans' office on Monday in a last-ditch effort to change their minds.

Gorin was mayor in 2009 when Santa Rosa received an $11.3 million Proposition 1C grant from the state for the transit-oriented development -- the only city to receive such an award in Marin and Sonoma counties. As part of that application, she said, the city made a binding commitment that affordable housing would be included in the first phase of the project and that redevelopment money would be used to make it work. Based on that promise, Stewart said he proceeded with spending

$1.5 million on cleaning up the cannery site and getting the clearances and funding he needs to get started. He says he recently received his final environmental clearance and was ready to go, until he was blindsided by the state's decision to take away pivotal funding.

Stewart said he has invested more than $7.5 million and 13 years of his time in trying to more forward on this first phase of what the city is hoping will be a $200 million project. But everything is now at risk.

"This is clearly economic development in reverse," he said.

"If this project collapses it will take at least a decade to reconstruct another one and move forward on that site," Gorin said.

Let's be clear. Given the historic abuses that have occurred through redevelopment — some of them related to the construction of pro sports stadiums in so-called blighted areas — there are good arguments for why the whole system needed to be scrubbed. But there are also good arguments for why abruptly curtailing all projects and sweeping the funds as a near-term budget-balancing maneuver has been an abysmal failure.

Exhibit A is a recent state legislative analyst's report finding that, despite projections of a surplus by the end of the year, California is looking at a $1.9 billion deficit. This is largely because the governor will be lucky to get half of the $3 billion he was anticipating getting out of redevelopment agencies. Instead, he's reaped about 30 lawsuits — with more to come — the biggest being from the League of California Cities, which argues that the governor's methods in this money grab are unconstitutional.

Exhibit B is the potential demise of projects such as the Cannery project.

Granted, this is just one of numerous worthy redevelopment projects that are being torpedoed mid-stream. The state has denied funding for two high-profile projects in Sonoma County, siphoning $9.5 million in funds designated for completion of the Springs redevelopment project along Highway 12 near Sonoma, which has brought new vitality to that area, and $6.6 million designated for the Roseland Village project.

Meanwhile, Petaluma filed suit in late November challenging the state's "flawed and arbitrary rationale" for denying millions in city redevelopment funds, including $15 million earmarked for the East Washington Street interchange and $7.5 million for the Rainer Avenue crosstown connector.

By comparison, the funding for the Stewart housing project is small potatoes. It's also frustrating to consider that after all the hearings and community brainstorming about what should be built at Railroad Square — and all the demands placed on bidders — the best we can come up with for a first phase is affordable senior housing and some parking.

Nonetheless, it's a start, and it's the best hope the city has of seeing one for the foreseeable future.

There's also a domino effect. According to Dave Gouin, Santa Rosa's director of economic development and housing, if this project falls through, the city will also likely lose all $11.3 million of the Proposition 1C funds that were designated for the entire Railroad Square project, $5.6 million in federal Section 108 funds, $1.5 million in Brownfield Economic Development Grant funds and $400,000 in stimulus money. So in total, the city stands to lose more than $24 million that would otherwise be spent locally.

Let's also keep in mind that this is exactly the kind of project for which redevelopment was originally intended — to create something positive out of a negative area. And after all the battles about growth that dominated this region for two decades, this is also exactly the type of development that Sonoma County and cities have agreed they want.

It's infill development, meaning it involves construction inside the urban growth boundaries and does not encourage sprawl. It's transit-oriented, meaning it's built on a rail line that will encourage future residents — those that occupy all 279 units — to get out of cars and use the train.

It includes environmental restoration, including the cleanup of soil problems that date back to the days after the earthquake of 1906 when much of debris from Santa Rosa's crumbled buildings was just tossed into Santa Rosa Creek.

And it includes historic preservation, which is why those old walls have remained propped up for so many years now. It's part of Stewart's commitment to the Cultural Heritage Board to preserve use them as for his new building.

Of course, even if the state does pull the plug, it's not likely to be the last act. Stewart isn't committing to what his next move would be, but it doesn't take a legal expert to see that the odds are pretty good that Governor Brown will likely be seeing lawsuit No. 31 coming his way.

So in the end, the money is still not likely to go toward balancing the budget. It will go where funding that's mishandled in this way often goes — to lawyers.

This is a hell of a way to run a railroad.

By the way, this transit-linked project is being built on a railroad line that Gov. Jerry Brown himself supported not that long ago. Somebody should remind of that before he derails this project, and the brick facade of the cannery becomes a monument to penny-wise, pound-foolish politics.

(Paul Gullixson is editorial director for The Press Democrat. Email him at

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