Sonoma County approves sale of old Santa Rosa hospital site to housing developer

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Sonoma County supervisors signed off Tuesday on perhaps the largest sale of county land in a generation, unanimously approving an ambitious but controversial deal to transform the northeast Santa Rosa site of the former county hospital complex into a high-profile housing development.

The 5-0 decision, the second of two formal votes to approve the real estate deal, clears the way for developer Bill Gallaher to pay as much as $11.5 million for the 82 acres off Chanate Road, where he proposes to build up to 800 rental units, plus housing for veterans, a grocery store, an amphitheater and other amenities.

County leaders have touted the sale to Gallaher, a politically connected Santa Rosa developer, as a clear-sighted move to meet an urgent regional need — expanding the housing supply, especially for renters, who’ve seen rates skyrocket in recent years.

“It is a vision and a concept that I think people in this community really do care passionately about, which is having housing for everybody, so that when you go to the grocery store, you know that person who is checking you out has safe and affordable housing,” said Supervisor Shirlee Zane, the board chairwoman, whose district includes the site.

The health care complex is centered around the former Community Hospital, built in 1936 and vacated in 2014 after Sutter Health moved into its new hospital off Mark West Road. The aging building did not meet current seismic building standards and racked up costly maintenance bills, according to the county. Much of it is slated for demolition under Gallaher’s proposal.

Though a sale of the property was first raised as a possibility more than a decade ago, the deal approved Tuesday has faced strong criticism from neighbors, health care advocates and others since it was first unveiled as a proposal in February. Opponents raised concerns about the loss of health care services on the site and the future of open lands on the property.

But proponents, including Gallaher’s representative, have emphasized all along that the details of the project will ultimately be determined by Santa Rosa officials, since the land lies within city limits. A formal sale will not close until the city’s permit and planning process is complete, and officials expect that period to last about 18 months.

After Tuesday’s vote, Komron Shahhosseini, Gallaher’s project manager, expressed relief that the deal had passed a major milestone and could proceed toward adding hundreds of new housing units.

“We’re very happy, thankful for the board and that they had the vision to understand that this is something that is very, very needed — desperately needed, as I think everybody knows,” Shahhosseini said in an interview. “We’re looking forward to getting on to the city process, where so many of the issues that have been brought up by neighbors will be addressed.”

The project survived one challenge after neighbors campaigned against the inclusion in the sale of a roughly 10-acre parcel long considered part of an official open space preserve. After the county conceded, the revised real estate deal now requires Gallaher’s team to secure a conservation easement that will permanently protect the parcel, which includes a beloved open meadow.

But other concerns remain. Dr. Panna Lossy, a leader of a group of medical professionals concerned about the loss of health care services on the site, reiterated some of those objections Tuesday, even as she voiced support for at least some of what the county is trying to accomplish.

“We definitely support the affordable housing component of this deal,” Lossy said. “We wish there were more affordable housing coming with this. We also feel that the terms of the sale are not in the best public interest.”

Lossy said the sale betrayed the site’s longstanding “history of caring for vulnerable populations.” She asked supervisors to consider whether their position was influenced by political donations made by Gallaher and people with ties to him.

“I would urge all of us to be careful in questioning our own unintentional bias when we are accepting gifts from industry representatives,” Lossy said.

Supervisor James Gore rejected assertions that the sale was influenced by political spending.

“The nice comment that came up about unintended bias — I would ask everybody in this room to look at your own,” Gore said. “If you’re frustrated with the process, join the club. I am, too; I think a lot of us are. Land use is messy, unfortunately.”

A Press Democrat review of campaign finance records found that Gallaher, the founder of Oakmont Senior Living, his family members, employees and their family members contributed at least $134,969 to benefit campaigns by the current supervisors over the past nine years. Zane and Shahhosseini have both said the spending did not influence the county’s decision to select Gallaher’s proposal, one of two submitted last year for the acreage.

Under terms of the deal, Gallaher’s team has agreed to pay at least $6 million in cash for the land. He will pay $13,800 more for each unit his team is allowed to build beyond 400, resulting in the maximum projected sales price of $11.5 million maximum, about $2 million less than the property’s appraised value.

The county has defended the sale price, claiming the value to taxpayers is much greater when factoring in the cost of developing the planned affordable housing and the demolition and maintenance costs the county will avoid through the sale, among other considerations. The county pegged the total maximum value of the deal to taxpayers at $71.9 million.

Still, critics of the deal have questioned that figure and called the projected sale price a “giveaway” of valuable public land. Others said they felt the process was rushed.

The county gathered community feedback on what should be done with the land at a 2015 meeting, but neighbors did not learn of Gallaher’s specific plans until shortly before supervisors voted to enter exclusive negotiations with his team in February.

Jim Barnes, who lives on Cobblestone Drive near the old hospital complex, said Tuesday that while he was not worried about what the county was trying to accomplish with the deal, he had a “huge amount of problems with how it was done.”

Supervisor Susan Gorin addressed that complaint, saying, “it has taken a very long time to get to this place, but I do understand from the public perception why you think it has been rushed. What we are doing now is not approving a project, it is approving a sale agreement with the developer.”

Gallaher’s plan calls for 20 percent of the maximum 800 rental units to be set aside for residents with very low incomes, which equates to an annual salary of $41,300 for a family of four, or rent of $1,033 for a family of the same size, according to the county. Separately, a maximum of 60 units are proposed for homeless veterans.

At the city level, Gallaher’s project will have to undergo an extensive environmental review, including seismic and traffic studies, as well as rezoning to allow housing to be built on the site.

Still, Santa Rosa’s top planning administrator signaled the city welcomed the proposed development.

“We’re obviously very, very excited about the housing potential on this site,” said David Guhin, the city’s director of planning and economic development. “We’re looking forward to the process and looking forward to seeing what comes out of it.”

A neighborhood meeting is likely even before Gallaher’s team submits an application to city planners, Santa Rosa officials said. Because of the size and scope of the proposal for the Chanate Road land, city planner Jessica Jones said the project would likely involve a higher-than-normal amount of public engagement.

A Sonoma County judge on Tuesday rejected a last-minute legal motion to halt the sale. The motion was part of a lawsuit challenging the sale of the hospital complex, brought by Roseland neighborhood advocate Duane De Witt. The case is going forward, De Witt said.

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

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