Sonoma County’s Chanate Road ex-hospital site could become 800-unit housing development

Sonoma County supervisors are considering an ambitious plan to sell the 82-acre site of the former Sutter Medical Center off Chanate Road in Santa Rosa to a prominent local developer who wants to build as many as 800 new housing units there.

The Board of Supervisors is expected to vote Tuesday on moving forward with a proposal that, if ultimately finalized, would mark the county’s largest land sale in recent history. Developer Bill Gallaher and his team would pay as much as $12.5 million in cash for the property, though county officials say the deal is worth many millions more when various cost savings are taken into account.

Gallaher’s vision would transform the Chanate site - a sprawling campus in the eastern Santa Rosa hills that includes the shuttered hospital and dozens of acres of open space - into a large mixed-use community.

Among the hundreds of planned housing units, 20 percent would be affordable to residents with very low incomes. Some of the total units would be reserved for seniors and veterans.

The deal would bring to a close a more than two-year period of uncertainty about the future of the site, which Sutter vacated in 2014 when it relocated its hospital next to Luther Burbank Center for the Arts. More importantly for local government officials, however, it would provide an influx of new units into Sonoma County’s perennially tight housing market, while addressing neighborhood desires for open space and community amenities.

“I don’t think we could have gotten a better proposal,” said Supervisor Shirlee Zane, whose district includes the Chanate site. “It’s really what we had - and certainly what I had - envisioned for this wonderful property ... We desperately need housing.”

Beyond housing, the development would feature 68 acres of open space, two miles of trails and include a recreation center, dog park, amphitheater and grocery store.

The entire Chanate site spans 117 acres, but 26 acres owned by the Sonoma County Water Agency and 9 acres owned by the county’s Agricultural Preservation and Open Space District would not be included in the sale.

Permitting process

Under the deal coming before the board, Gallaher would plan to build at least 400 residential units on the site for a payment of $6 million. The price would rise for each additional unit built up to 800, with the maximum purchase price set at $12.5 million. Once sold, permitting through the city of Santa Rosa - the Chanate land is owned by the county but within Santa Rosa’s city limits and will need to pass through its planning process - will determine the number of units the site can ultimately support.

But the government would also reap substantial savings because Gallaher has agreed to lease the site’s morgue and public health lab buildings back to the county for $1 annually for five years. They are currently valued at about $1.6 million over that time period.

Additionally, the county would save about $10 million on the cost of demolishing the seismically unsafe hospital building, bringing the total value of the deal up to as much as about $24 million, county officials said. Gallaher’s proposal plans to preserve the facade of the main entrance to the hospital building.

Gallaher brings to the Chanate project extensive local ties to the area with a professional background that includes building hundreds of homes in Oakmont and senior living facilities Fountaingrove Lodge and Varenna at Fountaingrove.

Choosing a developer

The process of choosing a preferred developer for the Chanate site began in August 2015 when supervisors approved broad plans to sell or lease the property. Sutter relocated at the end of 2014 from the aging Chanate hospital building, which county staff found would cost the county about $94 million to modernize and renovate.

Because the property was considered “surplus land,” the county in October 2015 first offered the site to nonprofit developers, as required by state law, but received no interest, officials said.

The county then launched a request for proposals to develop the site in February of last year, and received two proposals by the May deadline: one from Gallaher’s team and one from a team led by Curt Johansen, who was once chair of Petaluma’s planning commission.

Gallaher’s proposal was chosen by a committee that included representatives of various county departments and the city of Santa Rosa.

The county and city are working on a memorandum of understanding that would outline agreement on the broad components of the Chanate deal, said Caroline Judy, director of the county’s general services department.

Once the project moves under the city’s purview, it will have to undergo an environmental review, including analysis of traffic impacts, according to city and county officials.

Santa Rosa Mayor Chris Coursey said the proposal appeared to include a “good number” of affordable units and an encouraging mix of open space and other elements, but he cautioned the city still has a lot of work to do in evaluating the project.

“We’re being handed something that may look like a done deal to the public, but it’s not a done deal,” Coursey said. “It’s the beginning.”

Traffic may prove to be a major concern for residents as the project moves forward. Jim Barnes, a longtime nearby resident on Cobblestone Drive, said he did not believe two-lane Chanate Road was big enough to handle the traffic from hundreds of new residential units.

“Unless they make Chanate a four-lane road, it’s not going to work at all,” said Barnes, 61. “Not even close.”

Issues ahead

County officials noted the road formerly supported hundreds of hospital employees and patients at the Sutter facility, but Barnes said many of the workers were coming and going in shifts, allowing the traffic to be spread out more.

Supervisor Susan Gorin said commercial development at the site, such as the grocery store, would help mitigate some of the traffic impacts. But the specifics would have to be studied further as the proposal progresses, said Gorin, who lived for many years near the Chanate site.

“I see this as a good framework,” Gorin said of the Gallaher plans. “It’s a good, first public proposal, but like any development proposal, the details of it will have to be worked out through extensive community outreach conversations and the approval process at the (Santa Rosa) Planning Commission and the City Council.”

Zane also understands the traffic issues facing Chanate Road - she said she’s been driving there regularly for years to get to the county government buildings, and the situation has not significantly worsened or improved. Zane said she was “not convinced that it’s a major issue” worthy of stalling the project.

Additionally, employees who work on the site for the county’s Behavioral Health and Health Services departments should eventually be relocated. That should also help lessen the traffic impact, Zane said.

Others may press for more affordable units on the site. Stephen Harper, a longtime leader of the Housing Advocacy Group, said he wanted to see well beyond 20 percent of the units made affordable to low-income residents.

“Twenty percent is not adequate,” Harper said. “It doesn’t even make a dent in the need. The city and the county have not been doing a good job keeping up with the numbers, and here’s a great opportunity to do that. We need that housing. We have a crisis here.”

Gallaher could not be reached for comment on the Chanate proposal. Komron Shahhosseini, project manager for the proposed development and a member of the county Planning Commission, declined comment.

But bid documents Gallaher submitted to the county in May offered some insights.

‘A beautiful property’

Gallaher noted he and his wife both “roamed the beautiful open space in this property as children” and were excited about it remaining publicly accessible. He noted his team’s past experience with Varenna and Fountaingrove Lodge, both of which he said required outreach and consensus building, plus environmental review and geotechnical studies similar to what will likely be necessary at the Chanate site.

“The Chanate Campus is a beautiful property, unique in Sonoma County and a rare opportunity for any developer, but particularly rare for a native of the county,” Gallaher wrote. “We believe our proposed plan captures the county’s vision and objectives and will complement existing neighborhoods with the preservation of the existing natural areas as open space and the creation of a vibrant mixed-use community.”

Should supervisors approve Gallaher as the site’s developer Tuesday, county staff will negotiate final details of the sale, a process expected to last a few months.

After supervisors sign off on that, the plans will move to the city’s process, with units potentially opening in 2020, according to the county.

You can reach Staff Writer J.D. Morris at 707-521-5337 or jd.morris@pressdemocrat.com. On Twitter @thejdmorris.