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Lawsuit over Sonoma County’s land sale to housing developer gets day in court

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The two sides in a lawsuit involving one of Sonoma County’s largest proposed housing developments had their long-awaited day in court Friday, advancing a high-stakes legal fight over the sprawling site of the old county hospital complex in northeast Santa Rosa.

Superior Court Judge René Chouteau appeared skeptical of some claims advanced by the neighbors trying to unwind the county government’s decision last summer to sell the 82-acre property along Chanate Road. He questioned whether he should defer to the judgment of elected officials regarding the public value of the sale and weighed claims by the plaintiffs that county officials exceeded the scope of what state law allows them to discuss about the real estate deal behind closed doors.

Chouteau also pressed the lawyers for the team of developer Bill Gallaher and the county to explain why a more detailed environmental review wasn’t needed before the Board of Supervisors approved the sale.

At the hearing’s conclusion, Chouteau promised to “get a decision out as quickly as possible.” Attorneys for both sides said they don’t expect one for about two weeks or more.

The residents whose lawsuit prompted Friday’s hearing have objected to the way supervisors decided one year ago to sell the property in Santa Rosa’s northeastern hills. Gallaher is now seeking approval from the city to build nearly 870 housing units on the property — which would make it the largest single housing development in the works in Santa Rosa.

Neighbors organized under the name Friends of Chanate argue the sale price was too low — capped at $11.5 million at maximum build-out. They also say the Board of Supervisors didn’t adhere to state open meetings requirements and the county should have done more environmental analysis before signing off on the deal.

“The county discounted its sales price for public property for benefits that will never be guaranteed by this development agreement,” Noreen Evans, an attorney and former state legislator who’s representing Friends of Chanate, said during Friday’s hearing.

Chouteau asked early on whether the law directed him to defer to the Board of Supervisors’ determination regarding the sales price, which starts at $6 million and could rise to as much as $11.5 million depending on how many homes are built. The county says the deal provides far greater value to the public than the sticker price alone suggests.

But Evans said the county can’t guarantee any of those benefits will be realized.

“It’s completely illusory,” she said.

The most pivotal issue in the case, however, centers around whether state law required the county to do more environmental review before deciding to sell the Chanate Road property. Evans and her clients contend it does, saying the county effectively authorized a large new development without proper consideration of its cumulative impacts.

But Gallaher’s team and the county maintain they did all that was required under the state’s bedrock environmental law. They note the sale hasn’t closed yet — and won’t until the project goes through Santa Rosa’s planning process, since the site is within city limits. And Santa Rosa’s process will require a thorough environmental review.

“The county has not committed itself to a set course of action, because no one has any certainty as to what the city will do,” said attorney Tina Wallis, who represented Gallaher’s team Friday.

“That’s really the question in this case,” Chouteau said. He appeared unconvinced by Wallis and the county.

“It’s not covered in any case that I have found,” he said. “Basically, here, the county has transferred the property to a developer and said ‘Now it’s between you and the city.’ And there is a provision for the city doing environmental review, but the county did not do environmental review before they took that step.”

But launching an environmental review before the project details are worked out on Santa Rosa’s end would have required an inappropriate level of speculation about what the development would ultimately look like, Wallis said. Friends of Chanate has argued the county knew enough to do at least some review, which the group says was necessary to properly inform the county’s decision about the sale.

The county and developer’s team have insisted the decision to sell the old hospital site was open, transparent, legal and fair.

“Admittedly, this transaction, this action that occurred, is kind of unique. It’s not something you see every day,” Chief Deputy County Counsel Debbie Latham said Friday. “Every step of the way, the county scrutinized this process. Every step of the way, the county determined it was exempt from (environmental review requirements).”

Gallaher’s plans for the Chanate Road site have already begun to work their way through the city’s planning process. They were the focus of a raucous community meeting last month where most of the hundreds of people who showed up relayed strong objections to the proposed development. If the Friends of Chanate suit succeeds, it could halt the city planning process and send the sale back to the county for reconsideration.

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

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