Latest developer backs out of Chanate Road deal with Sonoma County
Sonoma County supervisors on Tuesday were forced to scrap their latest effort to sell the troubled Chanate Road campus after a third developer walked away from negotiations, striking another blow to the county’s yearslong quest to offload the land in northeast Santa Rosa for housing.
The lead developer, San Rafael-based EAH Housing, backed out last week after six months of contract talks, company officials confirmed Tuesday. A bid to replace EAH with another affordable housing firm was rejected by the Board of Supervisors in a closed-session meeting Tuesday, according to county officials.
EAH’s business partner cited delays coming to agreement on terms and conditions for its decision in its Feb. 3 letter to the county.
“It wasn’t quite coming together for us,” Scott Johnson, EAH director of business development, said in an interview Tuesday. “We wanted to give the team and the county the opportunity to continue moving forward with another inclusionary partner.”
The setback comes three years after the Board of Supervisors first tried to offload the property for up to $12.5 million in a deal with local developer Bill Gallaher. His plan, which envisioned more than 800 units on the 72-acre site, was derailed by a lawsuit filed by neighbors.
As the years have dragged on, county costs of maintaining the property have skyrocketed and property appraisals have dropped precipitously, raising questions about the county’s ability to dispose of the property, one of the largest vacant public parcels eyed for housing within city limits.
“The sale of the Chanate property continues to be challenging for this board and this county,” said Board of Supervisors Chairwoman Susan Gorin. “It’s a beautiful piece of property. Yet we just can’t seem to get the right partners and the right deal being made.”
Under the county’s current process, any deal for the property would come with a 50-year promise to set aside at least a quarter of the constructed units as affordable housing. Final approval of any development would rest with the city of Santa Rosa.
EAH, which specializes in affordable housing, was the lead in a development team that included Integral Capital and master developer JH Community Partners, which sent the Feb. 3 letter.
The county was required under state rules to deal principally with affordable housing firms or public or nonprofit entities.
JH Community Partners would not meet those standards, but the Santa Clara company has been pursuing a deal for the Chanate site since 2016, according to Curt Johansen, the managing partner. It’s already replaced one of its partners in the deal since August.
In a bid to keep the latest deal alive, the company offered in its Feb. 3 letter to find another affordable housing developer, naming BRIDGE Housing, Burbank Housing, Eden Housing, Mercy Housing, Satellite Affordable Housing Associates or MidPen Housing.
“On a personal level, I have invested much time and expense to pursue this opportunity,” Johansen said in his letter.
But the Board of Supervisors nixed that plan Tuesday during a closed session meeting, General Services Director Caroline Judy said.
“With EAH’s departure, there is no qualified buyer remaining,” Judy said. “Under the law, there is no replacement.”