Sonoma County supervisors approve $15 million sale of Chanate Road campus in Santa Rosa

After five attempts in nearly as many years, Sonoma County supervisors have finally agreed to sell the county’s troubled Chanate Road campus in northeast Santa Rosa.

In an auction last week, Las Vegas real estate agent and developer Eddie Haddad made the highest bid for the site, offering $15.05 million for the almost 72-acre government property.

On Tuesday, county supervisors unanimously approved selling the property for the full bid price. The sale, the largest involving surplus county land in a generation, is set to be finalized on Dec. 22.

“It’s been a long road and it’s very exciting to take this step,” Lynda Hopkins, chair of the Board of Supervisors, said at the meeting.

If successful, the sale of the campus — home of the former community hospital and county offices — would appear to open the door for the kind of large-scale housing development local leaders have long hoped for at the site.

The city of Santa Rosa would have final say over any development proposals.

For the past seven years, the Chanate property has sat mostly vacant after its primary occupant, Sutter Health, relocated to its current Mark West Springs Road site. Since then, 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 fate of the crumbling campus.

It’s unclear what Haddad’s plans are for the property. His company, Resources Group LLC, is registered in Las Vegas and was formed in 1996, according to state business filings.

Attempts to reach Haddad and Resources Group Tuesday were unsuccessful.

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

County and Santa Rosa officials have eyed the Chanate campus for housing since Sutter first announced its plans to move 15 years ago.

The property carries an affordable housing covenant, meaning at least 15% of all homes built on the site must reserved for people with low- or moderate-incomes.

“That’s really significant because there’s a huge shortage of affordable housing in Sonoma County,” said Caroline Judy, the county’s chief real estate official, noting the median sale price for single family homes in the region now tops $750,000.

“It’s out of the reach of most of the current residents in Sonoma County,” she said.

The deal also allows the county to lease back a public health lab and morgue as well the Coroner’s Office on the property for at least four years.

The 10-acre Paulin Meadow site at the southwest corner of the property at the end of Beverly Way is not part of the sale and will remain woodland open space. A historic cemetery at the campus will remain open to the public.

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

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

The campus neared a sale other times but negotiations repeatedly failed over myriad issues including uncertainty of the exact location of the nearby Rodgers Creek Fault.

Should Haddad back out of the latest sale agreement before escrow closes next month, the county would then offer the property to the second highest bidder in last week’s auction, Irving-based developer City Ventures, which offered $15 million.

The county would also retain a $1 million deposit Haddad made on the property, Judy said.

The county last appraised the Chanate campus at $23 million, though seismic concerns and extensive building demolition and cleanup awaiting the final buyer appeared to have depressed auction offers.

A seismic study conducted for the county earlier this year determined 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 other parts of the campus, but those areas are suitable for parking, roads and parks.

As the county’s attempts to unload the property faltered, taxpayers 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.

Judy, the soon-retiring county General Services director, admitted she was relieved the nearly five-year process to sell the property appears near completion.

“I will reserve my celebration until Dec. 22, but it’s certainly the culmination of a lot of work on the part of staff,” she said. “We’re looking forward to a positive outcome.”

That sense of relief carried over to supervisors as took what they hoped would be their final roll call on the matter.

“A great big yippie-yippie-yay — yes,” said Supervisor Susan Gorin, calling out her vote.

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412. On Twitter @ethanvarian