Rohnert Park, Laulima Development at stalemate over $400 million Station Avenue downtown redevelopment project

A 2-acre property owned by Rohnert Park that houses the city’s storage and maintenance yard has become a sticking point delaying construction of the long-desired downtown square - and could possibly upend the $400 million project altogether.

Laulima Development, which owns the adjacent 32-acre former State Farm Insurance site set for the grand city center called Station Avenue, accuses the city of reneging on a piece of the development agreement struck with the City Council in November. As part of the deal, the San Francisco company claims the city agreed to sell the maintenance yard for $1 million.

Believing it had an understanding with the city, Laulima began demolishing the 320,000-square-foot facility this past winter, managing partner David Bouquillon said. That process wrapped up in the spring, but Bouquillon said he won’t sink any more money into building the mixed-use project decades in the making until he receives a guarantee on the city-owned property needed for a commercial parking lot.

“We’ve spent $20 million in good faith including purchase of the property, and also reimbursed the city for staff time of over $1.5 million, and now they need to perform,” said Bouquillon. “It’s a clean and buildable site. It’s in the city’s court, and they’ve been put on notice that we’re on hold.”

The details of the agreement, however, state only that the city will sell a sixth of an acre of the property, where Rohnert Park’s public works department is also now housed, for $300,000 so the developer can use it to access the site while building the project’s first phase. Intent to sell the remaining property in a separate agreement, at a price determined later while the city finds another a site to relocate, is also listed in the documents.

Laulima had been targeting what all parties acknowledge was an aggressive timeline, hoping to open its 270,000 square feet of office space, restaurants and boutique retail stores in the fall of 2020. The completion date would be just in time for the holiday season, with 460 apartments and a five-story luxury hotel set to follow in spring 2021.

The city rejects Bouquillon’s position on the so-called corporation yard, located on the southeastern edge of the project. But without a final deal in hand that includes the transfer of the property over a two- to three-year period, he said those dates are now up in the air.

“Fall is definitely in jeopardy,” said Bouquillon, who has overseen similar urban core projects around the Bay Area, including San Jose’s Santana Row and Emeryville’s Bay Street. “These delays are lengthy, and once you lose time you can’t get it back. We’ll work with the city on timing, but our stance has always been that we were never going to make an investment of this kind next to an old corporation yard. Absolutely not.”

In March, the City Council rejected a staff recommendation to hire an architect to draw up building plans and determine the total cost of relocating the maintenance yard to a different city-owned tract of land. City Manager Darrin Jenkins has previously estimated that it could be in the range of $5 million, according to Vice Mayor Joe Callinan.

“I can’t see us going into debt to move those buildings. That’s not a smart move,” said Callinan. “If he wants us to move, it shouldn’t cost us anything. They’ve got to make it worth our while. I’ve said that since Day 1, and I still say that.”

Jenkins, who was closely involved in negotiations with Laulima on the development agreement before it appeared before the City Council, declined to say what it may cost Rohnert Park to move the corporation yard. He disputed that the city ever agreed to sell Bouquillon the land for $1 million, however.

“That’s what he wants, but I’m not going to negotiate in the newspaper,” said Jenkins. “We are in agreement to talk about the terms of the corporation yard, and we’re doing that. I do understand the project isn’t proceeding right now, but that’s not because of anything on the city’s part. The first phase is nowhere near the corporation yard.”

Mayor Gina Belforte, who was the lone vote in support of the architectural contract, said she’s disappointed by any delays on the downtown project, which has consistently ranked among the top three wishes of residents in the city’s annual community survey.

“I guess I don’t know why we couldn’t get both parties to the table and knock it out. I’d hope we’d sit down and rectify it,” said Belforte. “The community is counting on this project. I certainly would hate to see us lose it and not deliver that to our community.”

Station Avenue never getting off the ground is a risk the city is taking, Bouquillon said. After razing the site, he’d next need to apply for permits from the city for grading the land as well as utility and infrastructure work, but has postponed all of that for now.

“They all want a downtown, but we’re paying for the downtown. They should be treating this project like a catalyst and somehow they’ve gotten a little off track,” said Bouquillon. “Me as a developer, I can’t invest our money with uncertainty. If they want us to pay for their move, the deal is done.

“We bought the land for so cheap, I don’t have to build on it, ever,” he added of the $13.5 million purchase price in December 2017. “I can sit and wait forever, and it’s not for sale either.”

Jenkins, Rohnert Park’s city manager for nearly six years, said it was more important that the city get the downtown right than get it quickly. A six-month delay would be “OK,” he said, but stated he did not know what it would take to get the two sides back on the same page to move forward. “It’s a good question,” said Jenkins.

Callinan, a residential and light commercial developer by trade, has long raised concerns about the maintenance yard issue, dating to before the project received the council’s unanimous approval in November. Other minor snags, such as some residents being irked by the uprooting of dozens of redwood trees dotting the former insurance campus, have cropped up since Laulima began redevelopment, and he was unsure if the current dispute would be resolved soon.

“I understand people want a downtown, but I’m not going sell the boat. That’s not how I work,” he said. “I’m not saying I don’t want a downtown. I do. But I represent the citizens of Rohnert Park, and I can’t sell them out. If he’s going to leave, the only thing I’m going to miss are the redwoods that he cut down.”

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