Leading bidder announced for Chanate Road property in Santa Rosa

A new government agency emerged Wednesday as the leading bidder for a sprawling property eyed for housing in northeast Santa Rosa, nine months after a lawsuit by angry neighbors compelled the county to cancel a deal to sell the land to a local developer.

The California Community Housing Agency, formed in January to provide bond funding for housing projects across the state, has been selected by county staff as the top choice to acquire the 72-acre property along Chanate Road.

County staff ranked the agency’s proposal higher than offers by two rival bidders, EAH Housing and Oakmont Senior Living Properties LLC, said Caroline Judy, director of the county Department of General Services.

Their recommendation will be presented Tuesday to the Board of Supervisors, which must decide whether to initiate negotiations with the California Community Housing Agency. If a sales agreement is reached, it would return to the board for review.

The staff recommendation is a setback for Oakmont Senior Living, owned by developer Bill Gallaher. His Windsor company struck a deal with the county in 2017 to purchase the property for up to $12.5 million, depending on how much housing it would be allowed to build. Its proposal called for 867 housing units - including rental apartment buildings three or four stories tall - on the site of the old county hospital complex.

A Sonoma County Superior Court judge voided the deal last year, siding with neighbors who argued the sale should have been subjected to environmental review.

The county’s current attempt to sell the property follows the state’s surplus sale rules, which require the buyers be either public agencies or “housing sponsors” that would focus on building affordable housing, meeting certain thresholds for affordable housing in the process.

The county will require the property to be deed restricted for 55 years, a mandate that will ensure affordable housing will be part of any development on the land for at least a half-century.

“The sale and potential use of surplus property support Sonoma County’s vision of the future,” Judy said Wednesday. “The county is selling the property to address one of the county’s most pressing needs - affordable housing.”

While the recommendation of county staff became public Wednesday, details of the bidder’s proposal - and the amount of money it offered - will not be released until Friday, Judy said.

Any deal with the county would be restricted to the sale of the property and exclude any sort of development proposal. Though owned by the county, the property is located inside the city of Santa Rosa, which must approve any plans to develop the property.

Based in Kings County, the California Community Housing Agency is authorized to issue public bonds to acquire, own, maintain and operate housing projects. To participate, local jurisdictions must become members of the agency.

The agency, which is led by the Kings County Board of Supervisors, was formed Jan. 29. Santa Rosa joined two weeks later, authorizing the agency to issue bonds to purchase the Annadel Apartments along Jennings Avenue and convert them into affordable housing.

Scott Carper, program manager for the agency and California Public Finance Authority, another Kings County project, did not return telephone calls seeking comment Wednesday.

Officials with EAH Housing and Oakmont Senior Living didn’t return requests for comment.

The sale of the 71.6-acre property won’t include a 10-acre grassy meadow neighbors have viewed as an open space preserve. Judy said county staff is working with the Agricultural and Open Space District to record a conservation easement on that space, which would require approval from the Board of Supervisors at a later date.

The price of the property is not the only mystery. The county’s most recent appraisal is also sealed, pending negotiations. A 2016 appraisal pegged the value of the land at $7 million after demolition costs of $6 million, and a potential value of $275.5 million if developed with commercial uses and housing.

Selling the property will relieve the county of ongoing maintenance costs. The county spends $800,000 per year to maintain the property, a number that includes costs for security patrols. Safety is another concern, Judy said, noting the buildings on the property are seismically unsafe.

Staff Writer Will Schmitt contributed to this report. You can reach Staff Writer Tyler Silvy at 707-526-8667 or tyler.silvy@pressdemocrat.com. On Twitter @tylersilvy