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A vacant Railroad Square parcel that for at least a decade has shown promise as the future site of hundreds of housing units in the heart of downtown Santa Rosa is under contract with a new developer in hopes a project will finally get off the ground.

Petaluma-based Cornerstone Properties, which specializes in commercial real estate, entered into a purchase agreement in late July with the Sonoma-Marin Area Rail Transit commuter system for the 5.31-acre property adjacent to the downtown train station. The deal, worth $6.7 million according to SMART, is contingent on Cornerstone wrapping up its evaluation of the land by the end of this month.

The SMART parcel is one of the largest undeveloped parcels in the city’s core.

“It’s a jewel piece of property,” said Farhad Mansourian, general manager of SMART. “(It’s) near downtown, near a station, near everything.”

The year-old rail system is hoping the third time is a charm for the property, situated on the designated rail right-of-way and historically used as rail yard. A pair of deals for the land previously collapsed — the first in the wake of the economic recession and the second earlier this year when the developer backed out over concerns of possible soil contamination.

As a result, SMART went back to the drawing board and put out a request for new proposals in March, receiving four bids by the May deadline. At a July board meeting, SMART chose to award the deal to Cornerstone.

“SMART’s interest is in having this property developed as soon as possible,” said board Chairwoman Deb Fudge. “We understand that it’s more expensive now to develop with the increasing construction and labor costs, partly because of the fires, but we’re interested in a developer that can move this forward more quickly.”

SMART officials said the push to complete a project on the property would make good on their goal to deliver transit-oriented housing for the area. In addition, it could lead to increased train ridership by situating potential commuters just a short walk away from the downtown SMART station, officials said.

If the deal moves forward, the city and Cornerstone Properties will have final say on whatever gets built, SMART officials acknowledged. The transit agency hopes the project’s emphasis is housing — perhaps even for SMART employees struggling with the region’s high cost of living.

“We’re losing people right and left because of the excessive housing costs,” said Mansourian. “We’re hurting. We want this project to be successful. We need housing.”

In January, the previous would-be buyer, ROEM Development Corp., walked away from a $5.75 million deal for the property. In its last pitch to the city, the Santa Clara-based developer was planning for 321 one- and two-bedroom apartments that included 48 affordable units, all above 15,000 square feet of retail and office space anchored by a food and wine market similar to Napa’s Oxbow Market.

The area is zoned for up to five-story buildings, and David Guhin, the city’s planning and economic development director, said his office remains intent on maximizing the amount of housing on the site, including affordable units.

“Our goal is to expedite the process of any housing in that area,” Guhin said. “Once they feel comfortable with their due diligence process and figure out what they need to figure out to make this final, we’ll be off and running.”

Reached by phone Thursday, Alon Adani, a principal with Cornerstone Properties, declined to comment about the deal.

“We’d rather not talk about it right now,” he said. “When the time comes, we’ll talk about it.”

The company also owns the Petaluma building it leases to SMART for administrative offices, as well as the downtown Santa Rosa building and adjacent parking lot occupied by The Press Democrat — another location identified for a future housing project.

The SMART land falls within the city’s downtown plan, making the project eligible for a new housing development incentive designed to encourage high-density construction. The incentives include lower development fees for qualifying proposals, with some expenses deferred to the back end of projects. Construction would need to begin before mid-2023 to qualify.

No construction schedule has been presented and Cornerstone has yet to publicly float a development proposal as it continues to review the property’s boundaries, its utility network and its infrastructure and environmental cleanup needs.

Layers of existing easements and titles contributed to decisions by two prior buyers to drop their bids for the land, according to Santa Rosa attorney Doug Bosco, who is assisting Cornerstone in its review of the parcel. He is an investor in Sonoma Media Investments, which owns The Press Democrat.

Though still early on in the process, SMART officials think the land deal will at last translate into the transit-friendly development long sought for the site.

“Part of my confidence is related to the timing of where we are with more parties working more closely together,” said Fudge, a longtime Windsor councilwoman. “The other two agreements were put together differently and failed for different reasons, but I think all the stars are lining up right now for Railroad Square to move forward in the near future.”

You can reach Staff Writer Kevin Fixler at 707-521-5336 or at kevin.fixler@pressdemocrat.com. On Twitter @kfixler.

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