Sonoma County supervisors weigh complex Chanate Road land deal to create affordable housing
The favored buyer of a large swath of county-owned land long coveted for housing development offered a single dollar for the 72-acre northeast Santa Rosa property, along with various incentives that could dramatically increase the county's financial returns over the next 15 years.
The deal, however, would result in far fewer homes on the property than envisioned in 2017, when Oakmont Senior Living and its owner, developer Bill Gallaher, agreed to pay up to $12.5 million for the old county complex on Chanate Road.
Details of three bids for the property were divulged Thursday night, when county officials released evaluations of the rival proposals. County staff are urging the Board of Supervisors to dismiss two of the bids Tuesday and initiate negotiations with the California Community Housing Agency, a Kings County-based government agency that is teaming up with two Bay Area companies to build rental housing on the property.
Under the complex proposal, the county could earn $83.8 million from the deal in 15 years, according to estimates contained in the bid. The potential windfall far exceeds the other two bids for the property, which ranged from $8 million to $11 million for the land up front.
The county would receive a $5 million advance on promised future equity and permission to use the morgue and public health lab on the property for five years. Most importantly, it would obtain an option to buy back the property in 15 years, likely at a significant discount to the price it would command on the open market, staff concluded.
Supervisor Shirlee Zane, whose district includes the Chanate property and surrounding neighborhoods, would not reveal her position on the offer but said it meets the criteria set by the county for bidders. She attempted to quell speculation that the county was getting a raw deal by taking $1 just a few years after nearing a $12.5 million deal for the same property.
“We wouldn't even be considering this if it was that simple,” Zane said. “There's layers of public benefit, and it's not fair to say (the county) is getting $1 (for the property).”
If its offer is accepted, the California Community Housing Agency will partner with Larkspur-based consultant Catalyst Housing Group and San Francisco-based developer BUILD to construct rental housing on the property.
Together, they plan to build 500 units of affordable housing, with buildings up to two stories tall, on the 71.6-acre site that was once home to Sutter Medical Center and the old county hospital.
“We're very, very excited to be in this market,” said Lou Vasquez, founding partner with BUILD. “I think we can fill a need here, and that's part of our mission.”
BUILD last did business in Santa Rosa in 1987, when it built office buildings in Fountaingrove. Vasquez said about one-quarter of the company's projects now include affordable housing.
Officials with Catalyst and the California Community Housing Agency did not return multiple telephone calls and email messages seeking comment over three days.
Santa Rosa will have final say on the shape of any proposed development, but the California Community Housing Agency's pitch to make 100% of the development affordable gives it a distinct advantage over its competitors, said Caroline Judy, director of the county Department of General Services.
In contrast, the two rival bidders - Oakmont Senior Living and EAH Housing - promised to make 25% of the housing affordable, the bare minimum under state laws that apply to the sale.
With its pitch to build some 500 units on the property, the California Community Housing Agency has significantly scaled back the size of the development from the 2017 proposal by Oakmont Senior Living. Its plan to build 867 units - the largest development in the city - ignited neighborhood opposition and led to a lawsuit that ultimately torpedoed its deal with the county.
The county rescinded its agreement with Oakmont last October after a judge ruled the land sale should have been subjected to an environmental assessment because it contained sufficient details on the extent of development.
Aftershocks from that landmark court loss were visible in Oakmont Senior Living's response to a county question about its development plans this time around.
“Based upon previous litigation, OSLP does not have plans for development and is interested solely in a fee simple sale of the property,” according to county documents.
Oakmont Senior Living officials could not be reached for comment Friday.
Judy pushed back on the word “proposal” to describe the bid by the California Community Housing Agency, saying there's no development proposal in the bid and supervisors won't vote on a development proposal. She characterized the current process as “completely different” from the one that led to the lawsuit.