Art House apartments in downtown Santa Rosa set to rise over next year

A new four-story building that will combine apartments, lodging and art behind a grid of glass and steel is starting to rise in downtown Santa Rosa.

PG&E crews were at work last week on the intersection of Seventh and Riley streets, where construction is underway on the foundation for the Art House, a Hugh Futrell development that will include 21 apartments for rent at market rates and 15 extended-stay lodging units above an art gallery.

Futrell said the project is ?expected to be completed by mid-2020.

The building on the southeastern corner of the intersection will fill in a corner space left open by his Humboldt Apartments, which features 52 affordable units.

The lot is less than a quarter of an acre.

Futrell’s Art House will follow the phased opening this summer of Hotel E, a boutique hotel in the historic Empire Building on Old Courthouse Square. In the coming years, Futrell also is looking to build a large apartment tower at 888 Fourth St., which he has touted as ?“undoubtedly the highest-value rental project in Santa Rosa.”

It’s unclear who will operate the art gallery space in the new apartment building. Futrell said he planned to have that decided before the end of the year.

Futrell’s partners in the Art House project are Zach and Stephanie Berkowitz, who are developing a six-story, 104-unit building at nearby 420 Mendocino Ave., and Santa Rosa-based real estate investor Altus Equity Group. Summit State Bank is financing the project.

Forrest Jinks, the CEO and founder of Altus, noted in an interview earlier this summer that the project is one of the first in Santa Rosa to take advantage of a federal tax incentive meant to spur investment in distressed neighborhoods.

The so-called “opportunity zone” initiative calls on investors to keep their dollars in special funds for development to earn capital gains tax breaks. Investors’ rewards rise the longer they leaves their money in opportunity zones, which are census tracts deemed to be ?economically disadvantaged.

Two of California’s nearly 900 opportunity zones are in Santa Rosa, including parts of downtown and Roseland. About a quarter of the roughly 1,800 residents in the downtown Santa Rosa tract live in poverty, according to the Federal Financial Institutions Examination Council.

“We were kind of a guinea pig,” Jinks said, adding downtown Santa Rosa was “incredibly fortunate” to be included in the program.

You can reach Staff Writer Will Schmitt at 707-521-5207 or will.schmitt@pressdemocrat.com.