Sonoma County renews effort to sell Chanate Road property for housing

Call it Chanate 2.0.

Sonoma County supervisors are once again seeking to sell a nearly 72-acre property in northeast Santa Rosa to an affordable housing developer, reviving an effort started more than three years ago that triggered a neighborhood rebellion and a legal challenge that ultimately forced the county to cancel a deal with a prominent local homebuilder.

The property in question is at 3313 Chanate Road, site of the old county hospital and later Sutter Medical Center. It was slated by the county to be one of Santa Rosa’s largest single housing projects in recent memory.

But the legal setback prompted the county in October to walk away from a multimillion-dollar deal with developer Bill Gallaher, who wanted to build 867 housing units on the sprawling site, including rental apartment buildings three or four stories tall, a prospect that neighbors vehemently opposed.

In December, supervisors voted to start all over again, and county staffers last week solicited financial offers from about 650 organizations, including five local Native American tribes.

Prospective buyers are limited, under state law, to designated public agencies and “housing sponsors” that would ?focus on building affordable housing, with parks, schools or other government facilities as alternatives. For housing sponsors, the property would carry a ?55-year deed restriction for affordable housing.

Caroline Judy, the county’s general services director, said the purchase offers are not required to include the buyer’s development plan but must prove the entity has the wherewithal to make it happen.

“We need to see the financial capacity of the organization to close through an escrow process,” she said. “They need to provide us assurance they have the money.”

The project design is a matter to be worked out between the buyer and Santa Rosa, Judy said.

Asked if the county is obliged to sell the land to the highest bidder, Judy said the offers must be compared with the “fair market value” based on an appraisal of the property.

The county has obtained an appraisal, which is not a public record until the recommended proposals are brought before the supervisors for their consideration, she said.

A 2016 appraisal ranged from as little as $7 million for the unimproved property to as much as $275.5 million if it was developed with commercial properties and housing.

The new sale process will exclude a nearly 10-acre portion of the site that features a beloved grassy meadow neighbors have long understood to be part of an open space preserve.

Prospective buyers may submit offers for the entire 71.6-acre property, or for one or more of three land “bundles” of about 20, 21 and 30 acres.

The deadline for offers is May 10.

Private developers will only be allowed to submit offers if none is received from housing sponsors, Judy said.

County Supervisor Shirlee Zane, whose district includes the Chanate site, declined to say what she would like to see built on the old hospital site.

“I would hope that whoever buys it listens to the neighborhood and the community ... and we come up with a win-win solution for everybody,” she said. Zane, especially, was targeted by opponents of the former sale, who placed large signs in her McDonald Avenue neighborhood and along her route to work assailing aspects of the deal.

“I learned of their frustration and came out more humble on the other side,” Zane said, referring to the controversy over the first attempt to sell the land.

In February 2017, when the supervisors were on the verge of approving a deal with Gallaher for up to 800 new housing units, Zane said: “I don’t think we could have gotten a better proposal. It’s really what we had - and certainly what I had - envisioned for this wonderful property. We desperately need housing.”

Housing is still “one of the highest needs in our community,” she said Thursday, “but it’s up to the community to decide where to put it.”

“I don’t want anything in particular there (at Chanate),” Zane said, other than a “good price” for the property, with the money used to build housing and offices for local workers.

Joanne Thomas, a Chanate area resident who fought the Gallaher plan, said neighbors want to see “a safe and reasonable development” that would “maintain the character of the property and the surrounding neighborhoods.”

Residents are concerned over how Chanate Road would accommodate “hundreds, if not thousands” more people using it every day, Thomas said in an email.

Acknowledging that Santa Rosa needs more affordable housing, Thomas said she would support “sweat-equity housing” that young families help build for themselves in the form of condominiums or townhouses in park-like settings.

Chanate 2.0 is a latest round in an effort dating back to August 2015 when the supervisors approved broad plans to sell the property.

Sutter had relocated at the end of 2014 from the aging hospital building, which the county found would cost about $94 million to modernize and renovate for seismic safety.

No affordable housing developers made offers at the time, and Gallaher’s proposal was accepted when the process was opened to private developers.

Gallaher, well known for building homes in Oakmont and senior living facilities in Fountaingrove, had agreed to pay up to $12.5 million for the land.

His plan was shelved after Chanate residents prevailed in their lawsuit alleging the county should have conducted an environmental assessment of the project.

Supervisors opted against spending more money to appeal the case.

Noreen Evans, a Santa Rosa attorney and former state legislator who represented the residents, said she is monitoring the new sale process.

Brandon Cho, a site acquisition specialist for Oakmont Senior Living, a Gallaher-owned company, was among the recipients of a request from the county to submit a purchase proposal.

Representatives of Gallaher’s company did not respond to repeated requests for comment last week.

Among the other recipients were the Cloverdale Rancheria of Pomo Indians, Dry Creek Rancheria of Pomo Indians, Federated Indians of Graton Rancheria, Kashia Band of Pomo Indians and the Lytton Band of Pomo Indians.

Judy, the general services administrator, said the property has “tremendous potential.”

“It’s a unique piece of Sonoma County’s history,” she said.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com.