Sonoma County’s Chanate Road complex appraised at $23 million as it heads to auction

A new appraisal of Sonoma County’s troubled Chanate Road campus has valued the Santa Rosa property at $23 million just as a new seismic study determined that just under two-thirds of the property is safe to build housing.

After four failed attempts to offload the nearly 72-acre property, the county is pinning its hopes on the results of a newly completed appraisal and seismic study that together better answer a question long asked by interested buyers: How feasible is extensive redevelopment of the site?

Since 2015 — after Sutter Health relocated from the campus to its new Mark West Springs Road hospital — a long list of developers have offered to buy the property, but negotiations repeatedly failed over myriad issues including uncertainty of the exact location of the Rodgers Creek Fault in the property’s vicinity.

One interested buyer informed the county that the lack of specifics regarding the fault’s location was too big of an unknown to complete the sale, said Caroline Judy, director of the county’s general services department.

The county has conducted seismic evaluations in the past, but none have been as detailed as the study conducted this summer by San Diego-based independent consultant Kleinfelder, county officials said.

“A lot of it is not a surprise,” Paul Gullixson, the county’s communications manager, said of the findings. “But it’s a lot more detail than we have known in the past.”

The study, which cost the county $512,450, determined that 46 acres of the Chanate Road campus is safe for projects including housing development.

Three fault zones crossing the property prevent developers from building residences on those areas, but developers can build features like parking, roads and parks on those spots, Gullixson said.

“Knowing precisely the boundaries of those existing fault (zones), helps create certainty for buyers,” said Judy.

Kleinfelder Fault Zone Map with Setbacks.pdf

Another point of certainty stemming from the seismic study is the campus’ market value.

Past appraisals, including one in 2019, valued the property at far less than the latest $23 million appraisal. It was handled by Healdsburg-based real estate appraiser Dana Burwell, at a cost of $8,000.

The 2019 appraisal, by a different consultant, estimated the property was worth $10.7 million. That was before the cost of demolition associated with the abandoned hospital and other buildings, which brought the value down to $4.2 million.

The new appraisal does not factor in the cost of demolition and assumes the site is not contaminated, which would be an additional expense to developers.

On Tuesday, the property went up for sale on Ten-X, an online real estate auction platform. Bidding will be open until Nov. 9 when the county will open sealed bids and hold a virtual public hearing to call for further bids. The Sonoma County Board of Supervisors will then vote to accept the highest bidder or reject all bidders on Nov. 16.

The auction launches the fifth and perhaps final attempt in a string of disputed or unrealized sales that stretch back to the board’s 2015 vote authorizing the largest disposition of county-owned land in a generation.

Vandalism, rising maintenance costs, a bruising court battle and the specter of the Rogers Creek Fault running under the property have all clouded the property’s fate.

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, according to Judy.

County officials could not say how big of a development the 46 acres would allow or how a future project on that area would compare to past proposals, including the one proposed by local developer Bill Gallaher in 2017.

Gallaher’s proposal called for up to 870 housing units, including senior and affordable units, as well as amenities including a grocery store, amphitheater and dog park.

The proposal and the county’s sale agreement with Gallaher for up to $11.5 million was sunk 2018 by a successful lawsuit by the neighbors who sued the county for not conducting an environmental impact study of a housing development on the property.

Neighbors raised concerns over the density of housing and retail, increased traffic and the impact on a narrow and wooded evacuation corridor. The hilly Chanate property sits east of Mendocino Avenue on the edge of the Hidden Valley area.

Following the lawsuit, the county dropped any requirement that the property be developed expressly for housing. It has placed even fewer conditions on the auction sale.

Should the auction result in a sale, any developer would have to bring a proposed project to the city of Santa Rosa, which has jurisdiction over the property.

Any future housing development on the property, based on its size and and past proposals, could stand among the largest projects in Santa Rosa in decades.

After years of tepid housing growth and the loss of more than 3,000 homes in the city to the 2017 Tubbs fire, and another 30 or so in the Glass fire last year, Santa Rosa’s lineup of housing projects is now more packed.

In addition to the shuttered former community hospital complex, the Chanate Road property is also home to the county morgue and coroner’s office, the public health lab and the Bird Rescue Center of Sonoma County, a nonprofit.

Responsibility for demolition and any state environmental impact studies would fall to any buyer with development plans for the property.

The county opted not to include the cost of demolition in the newest appraisal because the cost to the county would be higher than was a private developer might pay due to state requirements, Judy said.

County officials were tight-lipped regarding whether they are expecting bids to match or approach the $23 million appraisal.

When bidding ends in November, the Board of Supervisors will be able to either accept the highest bid or reject all bids.

You can reach Staff Writer Emma Murphy at 707-521-5228 or emma.murphy@pressdemocrat.com. On Twitter @MurphReports.