Santa Rosa downtown new housing growth is accelerating

Housing and commercial projects designed to breathe new life into Santa Rosa’s inner-city are increasing due to consumer trends, changing city policies, vertical construction and renewed emphasis on public/private partnerships, according to civic and business leaders working to stimulate downtown development.

A review of changes taking place was the topic for a panel presentation at the June 7 Sonoma County Alliance meeting featuring Peter Rumble, CEO of the Santa Rosa Metro Chamber, Gabe Osburn, Deputy Director of Development Services for the City of Santa Rosa and Hugh Futrell, CEO of the Hugh Futrell Corporation, a developer who has built housing and commercial buildings in the city for many years.

“A strong economic case can be made for diverse infill development, especially if you look at how different development methods impact revenue, infrastructure, workforce, and provide support for business services,” said Rumble.

“City residents want to live in walkable neighborhoods near restaurants, shops, amenities, and services close to their homes — as well as access to child care and education services downtown. This is a path to unlock economic growth.”

The Metro Chamber’s 2023 Strategic Plan includes a road map for a healthy business environment, a diversified and inclusive economy and a thriving community.

Rumble said two primary sources of revenue for Santa Rosa’s $200 million city budget come from sales taxes $74.7 million (38%) and another $34.7 million (18%) from property taxes, with the remainder derived from fees, other taxes and charges.

“Having a strong business community is a source of sales tax for the city, but this is volatile income that can increase when times are good and decline when they are not. Property taxes are less volatile, creating growth opportunities. An analysis of different land-use development plans shows where the most value can be found.”

Rumble observed that the 2 malls in the city show how values can vary per acre, calculated by dividing the dollar value of property by the acreage they occupy, an assessment tool initiated by Urban 3, a municipal economic analysis firm in 2018-19 commissioned by the city.

For example, Coddingtown’s value is $2.2 million per acre due to reliance on large outdoor parking areas, while the downtown Plaza’s value is $4.6 million per acre because of its multilevel parking garage producing $54,248 in retail/sales tax revenue per acre per year, while Coddingtown generates $23,765 in retail/sales tax per acre, per year.

Using the same calculation for residential projects, Rumble said 118 single-family residential homes on 15 acres in the city are valued at $5.5 million, however, the 118-unit 8-story Cornerstone Properties housing project, currently ready to begin construction on only a quarter acre at 566 Ross Street downtown, has a value of $140 million.

When finished, the Cornerstone project will include a child care facility for 52 children operated by Storybook Village Preschool. A 160-unit project being built on half an acre at 420 Mendocino Avenue has a similar value.

In 2022 the Metro Chamber conducted a survey to help define business and community needs. Most business members responding (70%) said increased housing downtown was important for the community and 43% said child care expansion is also a priority.

Another study showed that while downtowns nationwide average about 3% of city area, they represent 31% of citywide tax revenue. Inner city residential occupancy rates are increasing much faster (38%) than the rest of the city (3%) in this report, based on nationwide input.

According to Rumble, while not everyone wants to live in a city, the need for urbanized housing spans all ages and demographics. This and other factors have led to the finding that the city is underdeveloped when it comes to infill projects. On a broader scale, he stated Sonoma County is 30,000 units short of its housing goals, and there is a trend back to living in urban environments.

“Years ago, people left cities for single-family homes in suburban subdivisions. In recent years, this migration pattern has reversed with the notable difference that inner cities are now more attractive for those returning. Studies show that older generations and young adults want to be in urban environments along with a desire to be less car dependent.”

“We can’t kid ourselves about what is needed here. If we never build for lack of vision and architecture, we face the loss of human potential that we will never realize. I’m not a believer in the premise that we must kill growth or risk becoming a global metropolis.”

Santa Rosa is the 5th largest city in the Bay Area and the 26th largest city in California, meaning it is comparable in size to Providence, Salt Lake City, Vancouver, WA., Grand Rapids and Sioux City. Rumble revealed that these cities have recognized the importance of expanding urban housing while convincing other leaders to do the same.

Downtown properties

Rumble said the Santa Rosa Metro Chamber has an Affordable Housing Loan Pool, started with a contribution of $2 million from Kaiser Permanente that has been leveraged to $5 million today. “With 4 affordable projects underway, we’re closing deals on 250 units, and have already created 350 units with about 1,000 people who have homes today.”

He said some people complain about parking availability in downtown areas.

“Not true. Parking can be found about half a block in every direction and is dirt cheap starting at 25 cents with the first hour free in parking garages,” Rumble added.

According to Osburn, parking downtown is a challenging discussion. “Statistics show that surplus parking exists, but how do you spread it around the city?” In this case surplus refers to a property underutilized for its purpose.

He said Santa Rosa has surplus property downtown, including the City Hall administrative area.

“So where does City Hall go? There have been heavy discussions about surplus property. We need to re-imagine and reposition City Hall and also find ways to connect railroad square with the downtown Plaza mall — perhaps with a pedestrian corridor through the mall.”

According to Osburn, renewed emphasis on urban living creates 3 challenges.

·It is more costly for developers to build in downtown from an infrastructure standpoint since the city must keep up in terms of providing streets, water and sewer lines to these buildings and maintain them in perpetuity.

·Growth boundaries and city limits are barriers, and

·Environmentally sensitive areas, and federally designated endangered species — such as the tiger salamander — can also restrict development.

“The city’s role from a policy standpoint is to reduce impediments for development,” Osburn said, “In 2008-09, during an economic downturn, we realized the city had to refocus on downtown while als defining obstacles that had to be addressed. More projects started to fill the pipeline starting in 2010, and over following years as the city ramped up downtown housing efforts.”

At issue is how to make high density housing available to low-income residents downtown. Osburn noted that inclusionary and affordable offsets exist in housing fees and impact fees that can be reduced if developers build vertically.

By 2015 he said the city peeled back layers of the “impediments onion” to address city policy issues, as well as time and money factors for developers trying to hit a certain market window — including the need to reduce costs and cut the project approval process from 1-2 years to 6 months as part of an aggressive downtown growth priority program.

“In the last 3-6 months, Osburn noted, “progress has been made.”

He said parklets were also seen as a way to enhance the downtown core.

“Santa Rosa was the first to try this as early as 2015 as the city was rejuvenating efforts to support the need for more downtown homes. When businesses came in to pay their parklet impact fees, these funds were used throughout the city to develop other parklets and similar park facilities.

Developer Hugh Futrell says “It takes a team to develop future buildings. But the question is, what needs to be done downtown? For years my company focused on nonurban development. In the late 90s, our company went downtown.

He recalled that complex design issues and capital-intensive projects were once a barrier to entry, but this is changing now. We were looking to find a drawbridge to aid development.

In the 1990s the general plan included a call to building 500 housing units per year in the downtown core.

“This ambitious goal was an unrealized hope. However, we did see an opportunity with changing policy mandates. The good thing about building downtown is there are no wetlands, endangered species, or affluent zip code lawyers!”

Futrell had 12 housing and commercial projects built downtown, with two of the projects still in progress, demonstrating that having a good design is critical, given the need for low-income, mixed-use projects.

These projects include Beaver Street apartments; Railroad Square Terrace; 200 4th Street (offices); 210 3rd Street (bank); Burbank Condominiums; Humboldt Apartments; The Museum on the Square; Hotel E; Art House hotel/apartments; 888 4th Street; 891 3rd Street, and 10 E. Street. Collectively, these projects have 302 affordable and market rate units. Six also have from 2-to-7 levels, with a total of 36 vertical stories.

Futrell said “These projects represent a $150 million investment from partners, lenders and the Hugh Futrell Corporation — working with the City of Santa Rosa Infrastructure Finance Committee — as part of an integrated master plan in the downtown core that includes low income/affordable, market rate and ownership units.

“These projects were assisted by city staff and Gabe Osburn — and I’m not just saying this because he reviews our plans. We were lucky to have focused people on the city’s staff.”

Since the pandemic, fewer employees are working downtown, and some people have perceptions about the lack of safety in the city. At the same time, Futrell says there are too many office vacancies in the core, raising the need for employee attraction and retention programs.

Futrell believes the impact of street homelessness is also affecting public safety perceptions in downtown. He said greater resources need to be made available for increased foot patrols, as part of the downtown communty's advocacy over this issue. He noted that the City Council in June did, in fact, fund 2 more officers in the Downtown Enforcement Team as part of its budget approval process. .

He said while housing developments offer the ability for more families to live downtown, the future of the inner core depends on a perception of safety and well-being among residents, employees and visitors.

“A city must have a cohesive downtown presence. This means connecting with people, a transitional role that creates a sense of pride, human connection and security, including safe, people-accessible parks close to work for renters, owners and others who shop and work here.”

“To support young families living downtown, they need access to child care and school services along with day care,” Futrell said. “We have been working together with Burbank Housing to provide significant plans for child care downtown,” Futrell added.

Editor’s note: The onllne story has been corrected on the number of Futrell Corporation projects already built and a correction on Futrell’s statement regarding police foot patrols downtown.