Santa Rosa’s plan to turn downtown garage into housing on pause amid opposition from business interests

A plan to transform a city-owned parking garage in downtown Santa Rosa into housing appears to have hit a roadblock after opposition from the business community.

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.

It needs about $3 million in upgrades, and Santa Rosa officials think the city can get more value out of the land if it is redeveloped as housing. Transforming city garages and other city-owned property could be one of the easiest ways to speed a long-desired goal of increasing housing in the city’s urban center.

But business and property owners have pressured the city to put the brakes on the garage conversion. They stress that they’re not opposed to housing but don’t believe that the Third Street site is well suited for housing and say they want the city to balance residential growth with business needs.

The pushback comes as many downtown merchants and business owners continue to struggle after two years of pandemic challenges.

Developer Hugh Futrell, whose company has developed housing and commercial projects downtown, said retailers and office tenants rely on the parking to serve their customers and workforces. A lengthy redevelopment and construction process also would harm downtown commerce, opponents contend.

Negotiations with developers can take years and are “often ultimately fruitless” and there’s no guarantee a project will be built even after the disruption to businesses, he said.

“Through all this, office and retail leasing would be paralyzed and businesses and their employees severely and unjustifiably harmed,” said Futrell, who chairs the Downtown Action Organization, which manages the Santa Rosa Downtown District, a taxing entity formed to clean up and promote the city center.

The group’s board voted in November to oppose declaring the garage surplus land, a first step to putting city-owned property on the market.

The City Council was expected to consider the designation April 12 but the item was pulled off the agenda as the city reevaluates its options.

Councilman John Sawyer, whose family owned a downtown business for decades, said delaying a decision will give the city more time to talk with stakeholders and evaluate other options.

“This is a very popular garage right in the center of downtown so we need to put the pause button on, do our research, have more conversations with developers and make sure that we clearly understand the impacts on the existing businesses,” Sawyer said.

Santa Rosa has looked to infill redevelopment to spur housing and commercial growth downtown for decades, and has added incentives in recent years to lure developers, including eased height limits and parking requirements.

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. (By 2019, when work on the new plan was underway, just 375 homes had been added.)

Staff assessed city-owned properties for current use and viability of a future housing development and in January presented the City Council with three properties city officials identified as having the most potential, including the Third Street garage.

The council gave City Hall the green light to put the garage on the market with the stipulation that the public parking be replaced as a condition of the sale. The council also signaled support for redeveloping a surface parking lot on Fifth and B streets if the garage plan was successful.

A plan to redevelop a parking lot on Fifth and E streets behind Russian River Brewing Co.’s brewpub was opposed after owner Natalie Cilurzo said they’d have to relocate if the lot was turned into housing.

The City Council discussed in a closed-door session late February the price and terms of a sale or lease for the Third Street garage but in April the city hit pause on the project after businesses grew wary of potential impacts.

Charles Evans, who owns the building that houses restaurant Perch and Plow adjacent to the garage, said there have been talks about redeveloping parking garages and lots downtown since he bought property there about 30 years ago.

This is the first formal plan that has been put forward, Evans said, one of several property owners who voiced opposition to the proposal.

Evans expressed frustration with what he described as a lack of communication between the city and neighboring property owners regarding the plan.

He questioned whether the city could legally designate the property as surplus land because the garage was paid for through fees collected from the parking district. He noted that even if the city can, it would be tough to redevelop.

Requiring a developer to demolish the garage and replace the parking as part of a new project is “backwards” and the small footprint would make a project on the site too expensive to pencil out for builders, he said.

Jill Scott, the city’s real estate manager, said the city holds the title to the garage and has authority under city code to sell the property. Proceeds from the sale must go back to the parking district for acquisition, maintenance and improvement of downtown parking, she said.

Redeveloping the garage would cause tenants to leave and make it harder to lease space at 50 Old Courthouse Square, the office tower next to the garage, because construction would be a nuisance, said Natalie Balfour, asset and project manager with Airport Business Center, which owns the building that is home to the Santa Rosa Metro Chamber, law offices and a jewelry store.

“The constant noise, dust and trash created by massive demolition and construction, especially lasting multiple years, can become unbearable enough for tenants to leave,” Balfour wrote in a letter to the City Council.

Tenants enjoy the convenience of parking at the Third Street garage and, though there are other parking options nearby, they’re not interested, she said, citing safety concerns related to homelessness in the area.

There are nearly 4,700 parking spaces downtown, including about 2,800 spaces in five parking garages, nearly 700 across nine surface lots and about 1,000 metered parking spaces.

Opponents have proposed an alternative site for redevelopment as housing: the parking lot on Third and E streets, across from the downtown Sonoma County Library branch.

The 1.3-acre site that once housed the White House department store, which closed in 1985 and was razed in 1991, has long been eyed for redevelopment but previous efforts have fallen flat.

City staff did not include the parking lot in its recent assessment of downtown properties as the city hopes to leverage the site for a future city hall.

But business and property owners said the site would be ideal for housing.

Evans said it doesn’t require demolition, which would reduce the project timeline and cost and could make the site more attractive to a developer. Construction would be less disruptive to neighboring properties, too, he said.

Balfour echoed that in her letter to the City Council.

City staff plans to further study the issue and gather community feedback then will bring back a discussion on downtown assets to the City Council during a future study session, said Scott, the real estate manager.

“We’re thankful the city decided to pursue more viable options,” Balfour told The Press Democrat.

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