Santa Rosa agrees to begin negotiations to redevelop 2 downtown parking sites

Santa Rosa will move forward with negotiations with two development teams that seek to remake two prominent parking sites downtown into housing and other uses.

The City Council, in a 5-2 vote Tuesday, approved a proposal to enter into exclusive negotiations with Napa-based developer Rogal Projects for the redevelopment of the city-owned garage on Third Street.

The approval was granted despite an ongoing lawsuit that seeks to halt the process and over the objections of some downtown property owners and merchants who contend their businesses will be negatively impacted by the loss of parking.

Vice Mayor Dianna MacDonald and Councilmember Jeff Okrepkie voted against the measure, raising questions about the process the city took to choose the developer.

City Hall administrators have said the city followed the process outlined by state housing officials under the Surplus Land Act.

The vote represented a rare public split among the seven-member council on a critical issue like housing — underscoring the tension between meeting the expectations of powerful business interests and the acute need for more housing.

Housing advocates and dozens of other residents who wrote to the council in support of redeveloping the site said it will help bring new residents that will patronize businesses and create a more vibrant city, which could attract more visitors and private investment to the city core.

A separate agreement was approved with affordable housing developer Burbank Housing and Hugh Futrell to redevelop the former White House store lot on E and Second streets, which has long been used as a surface parking lot and eyed for housing development.

Few details about what the two teams are proposing for the sites have been revealed, but the projects could add mixed-income housing and community amenities like a grocery store, transforming a prominent stretch of downtown.

A quarter of all housing units proposed on each site must be affordable per state requirements, though what level of affordability is still to be determined.

Tuesday’s approval is the latest step in a monthslong effort to transform these city properties. City officials have said it could be one of the easiest ways to speed the city’s goal of increasing housing downtown.

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

Santa Rosa received seven bids from six respondents and the council ultimately directed staff to move forward with Rogal, Burbank and Futrell. The city will hold onto the third parking site for now.

Santa Rosa officials will next work to hammer out the price and terms of a sale or lease, details about what will be built, and an expected construction timeline, among other details, with the two development groups.

A development and disposition agreement outlining those terms will return to the council in open session for approval at a future meeting.

The city has long looked to redevelop the two sites but prior plans for the garage property have been met by pushback from downtown property owners and businesses.

Amy Van Dyke, who owns ER Sawyer Jewelers with her husband Doug, said her employees and clients park in the garage and redeveloping the site would hurt business. The White House lot is appropriate for housing, she said, but the garage is highly utilized, echoing concerns from others along the Fourth Street corridor.

“We will not survive if that is taken down,” she said.

The garage, built in 1965, is the smallest of the city’s five garages with just under 200 spaces but is one of the most utilized, serving nearby office tenants and downtown visitors.

Officials have previously said it needs more than $3 million in upgrades and they believe the city could get more value out of the land if it’s redeveloped into housing.

Plans last April to designate the property as surplus were put on pause after business and property owners pressured the city to pump the brakes on the garage conversation.

On Tuesday, downtown stakeholders again asked the council to hold off on a decision.

Business people alleged the process has largely played out behind closed doors and that their concerns have been dismissed by city officials seeking to forge ahead with redevelopment plans.

Toraj Soltani, owner of Mac’s Deli and Cafe on Fourth Street, asked that the city allow time for more discussions with impacted merchants before moving forward with negotiations. He also wants the city to conduct an economic impact study.

Council member Chris Rogers, whose District 5 includes much of downtown, said several public discussions were held ahead of the council’s December decision to declare the garage as surplus land and community members had plenty of opportunities to have a say in the process.

Delaying the vote would likely mean losing out on a $9.5 million state grant the city received to assist with predevelopment costs such as demolition of the garage and infrastructure work on the two sites, which staff has said is critical to ensuring projects pencil out financially for developers and are ultimately built.

“The road to a dead downtown has been paved by a thousand meetings like this where we’re asked to delay and delay and delay and this time we’re being asked to give up $10 million that can help deliver housing for people, it can help deliver a grocery store, it can help deliver other amenities that we desperately need downtown,” he said.

He said the garage site is a public asset and the city must decide what is the best use that will benefit the city as a whole, not one specific group. Redeveloping the site could bring new residents to the area and help enliven downtown, he said.

He committed to working with businesses to mitigate the impacts of redevelopment but said it was in the city’s best interest to move forward with negotiations.

But Okrepkie argued the city shouldn’t approve entering negotiations with a developer just because it could lose out on state funding.

He said he was uneasy with how quickly the process had played out and approving the deal with Rogal because of how the developer was chosen and said the city should solicit additional responses — an issue raised by neighboring property owner Airport Business Center, which is suing the city to stop redevelopment of the garage.

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 all three downtown sites.

The proposal didn’t meet the required criteria for the other two sites but the pair were the lone respondents for the Third Street garage property. Freebird wasn’t interested in moving forward with negotiations, but Rogal was.

The majority of council members directed staff in closed session to move forward with negotiations with Rogal and state housing officials also signed off on it.

When Freebird dropped out of contention the city should have reached out to a larger pool of applicants, said Okrepkie, who pulled the item off the consent agenda where it would have been considered for approval among a dozen other routine matters.

Rogal didn’t respond to a request for comment.

Jill Scott, the city’s real estate manager, said the city cast a wide net and notified more than 1,500 groups, including affordable housing developers, other local government agencies, parks and recreation departments and nonprofits, that the site was being considered for redevelopment when it designated the property as surplus.

Okrepkie also raised concerns about moving forward amid pending litigation that could hinder future development of the site.

The lawsuit, filed in Sonoma County Superior Court on Feb. 28, challenges the city’s designation of the garage as surplus property and seeks that the judge revoke the surplus status and issue an injunction to halt city efforts to dispose of the property.

In a letter sent to the city ahead of the meeting, attorney Mathew Henderson threatened further legal action if the city moved forward with disposing of the property.

A case management conference is scheduled for Oct. 24 and the parties have requested a trial though it hasn’t yet been scheduled. City attorneys said the lawsuit didn’t prohibit the city from moving forward with negotiations.

Still, the council’s Tuesday approval was praised by proponents who said the two projects will help address the city’s critical housing needs. They also contended that most of the 8,700 public and private parking spots downtown go largely unused and redevelopment of the sites was appropriate.

Abby Arnold, who lives just east of downtown, said creating housing is critical and prioritizing the redevelopment of the garage site was a great opportunity to bring new housing and residents downtown.

She said increasing housing of all income levels will help address overcrowding and homelessness for those most vulnerable and open up home ownership opportunities for residents priced out of the market.

“Approving the agreement with Rogal Properties will be an important statement by the City Council that homes for people are more important than homes for cars,” she said.

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