Sonoma County advances sale of former hospital complex to housing developer

Sonoma County is moving ahead with the proposed sale of its sprawling former Santa Rosa hospital complex to a housing developer, advancing on Tuesday a landmark deal backed by several high-profile housing and homeless advocates but criticized by residents who wanted more time to evaluate potential impacts on their neighborhoods.

The Board of Supervisors unanimously granted initial approval to a sale agreement for the 82-acre site off Chanate Road, where developer Bill Gallaher could pay as much as $11.5 million to build a mixed-use community with a maximum of 800 rental units plus another 50 to 60 units for veterans, among other amenities.

If formally approved in a second board vote next month, the sale would be the county’s largest real estate deal in recent history, with the potential to produce one of the single largest housing projects built in Santa Rosa in many years.

Supervisors are backing the deal in a bid to help expand the region’s increasingly tight housing market while ensuring that a portion of the new homes are available to low-income residents and other underserved groups. Gallaher, the founder of Oakmont Senior Living, intends to make 20 percent of the 800 rental units affordable to residents with very low annual incomes - $41,300 or less for a family of four, according to county figures - and reserve between 100 and 250 of the total rental units for seniors.

“We have an opportunity to repurpose (the site) in terms of the community’s most pressing human need, which is the necessity for housing,” said Supervisor Shirlee Zane, the board chairwoman whose district includes the Chanate Road complex. “It’s egregious to me that we cannot provide even the most basic housing for the people who live here, and particularly our workforce, our seniors and our veterans.”

Tuesday’s hearing featured a packed crowd of supporters and opponents. Those in favor of the deal wore green armbands, while opponents who wanted more time to evaluate the sale wore white clothing.

“Many people have not had time to digest this,” said Joanne Thomas, a longtime neighbor of the Chanate Road site.

The county has been working to determine the future of the site for 2½ years, but residents have said they felt blindsided when they learned of Gallaher’s proposal just days before supervisors voted to enter into exclusive negotiations with his team in February.

“Please slow down. Don’t vote on this today. Give us more time,” Thomas said. “I just cannot believe that our concerns are not being heard. I hope you will listen to us.”

One major concern cited by neighbors is the effect of new housing on Chanate Road, an already-congested route during peak commuting times.

Neighbors and others objecting to the deal also have posed questions about Gallaher’s potential political influence over the board. Over the past nine years, Gallaher, his family members, employees and their family members contributed at least $134,969 to benefit supervisors’ campaigns, according to a Press Democrat review of campaign finance records.

Zane and a representative for Gallaher have said that the political spending did not influence the county’s decision to select Gallaher’s proposal for the site.

A group of medical professionals, meanwhile, has also voiced objections about the net loss of health services on the site, which served as a health care epicenter in past decades. Dr. Panna Lossy, a leader of that group, presented the board with petitions she said included more than 780 signatures calling on the county to not move forward and to gather more public input.

Additionally, some neighbors of the site are pushing for a 125-foot “building buffer zone” to preserve open land on the site behind their homes near the Bird Rescue Center.

County supervisors and a developer’s representative have repeatedly sought to assure the community that many of the concerns about the project will be addressed during Santa Rosa’s planning and permit approval process, which will require public input.

“It’s going to be long and arduous. It’s going to involve a lot of outreach to all of the stakeholders in the area, including our neighbors, which we’re more than happy to do,” said Komron Shahhosseini, Gallaher’s project manager. “As soon as we know whether or not we have a project, the outreach can really begin.”

Those who spoke in favor of the deal Tuesday included Jennielynn Holmes, director of shelter and housing with Catholic Charities, who called it one of the “great hopes” she had for the future, citing the units envisioned to house homeless veterans. Brian Ling, executive director of the Sonoma County Alliance, said the business coalition strongly supports the project, saying it was “time for action to speak louder than words.”

The real estate deal has already overcome one controversy, when neighbors were able to secure a conservation easement protecting a 10-acre parcel on the site form development. The parcel includes a beloved open meadow and it was long considered part of an official open space preserve.

Also, Shahhosseini said Tuesday that Gallaher’s team has agreed to find a suitable home for the Sloan House women’s shelter, which is on the site. If the shelter needs to be moved off site, Gallaher has agreed to pay $1 million or more to build a new shelter facility, Shahhosseini said.

Gallaher has agreed to pay at least $6 million in cash for the 82-acre Chanate Road property.

The price will rise by $13,800 for each unit his team is allowed to build beyond 400, resulting in the maximum anticipated sales price of $11.5 million.

The county maintains that the deal is ultimately worth more than six times as much, considering the development cost of the affordable housing and the demolition and maintenance costs the county will avoid through the sale, among other factors.

Supervisors on Tuesday were confident that the real estate deal would prove to be beneficial to the county in the long run.

“This will be, probably in a decade, a very vital, complete neighborhood and will be an asset for all of the folks who live surrounding here,” said Supervisor Susan Gorin.

Because the county is legally required to approve the sale of the property through an ordinance, supervisors will need to vote again, likely on July 11, to make the sale agreement final.

After that, the project will need to pass through Santa Rosa’s planning and permit approval process, a step the county estimates could take about 1½ years. The formal sale will not close until after that process is complete.

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