A developer has walked away from the most eagerly anticipated new housing project in Santa Rosa, a major setback in the city’s bid to add hundreds of badly needed apartments beside the downtown train station.
The decision by the Santa Clara-based ROEM not to move forward with the project was a blow for Santa Rosa and Sonoma-Marin Area Rail Transit officials, who had high hopes for swift construction of the $70 million mixed-use development.
It also triggered a round of finger-pointing over who was responsible for the collapse of the deal, with SMART officials saying the developer wasn’t serious and the developer calling the SMART board unreasonable.
“It’s a huge disappointment,” Santa Rosa Mayor Chris Coursey said, noting that the project had been under consideration since mid-2016. “That’s two and half years that’s been lost on a very dearly needed project in Santa Rosa.”
SMART owns the vacant 5.4-acre property in Railroad Square just west of the downtown rail station. For years, the site and neighboring former cannery property have been eyed for a mixed-use development that could help revitalize the city’s economy, provide needed housing downtown and boost train ridership.
Ambitious plans for a food and wine center and housing in the late 2000s fell victim to the recession. Subsequent efforts by John Stewart to develop the cannery site separately have gone nowhere, with the spot being used in recent years to stage plays, with the brick cannery walls as a backdrop.
Then in mid-2015, with completion of the initial 43-mile operating segment of the rail line on the horizon, SMART invited developers to share their visions for the property. Five did, and a year later, ROEM was the last one standing.
The company made a splashy presentation to the City Council, calling for 268 units of market-rate and affordable housing, retail spaces focused on food and wine and a public plaza. Council members were giddy and residents and rail supporters thrilled.
But SMART and ROEM had yet to agree on terms. That took more than a year. On Sept. 1, 2017, ROEM agreed to buy the land for $5.75 million.
The sale agreement was structured with payments required at key junctures over 28 months, a structure designed to motivate ROEM to move the project forward quickly, Farhad Mansourian, SMART’s general manager, said at the time.
The first refundable payment of $75,000 was made by ROEM on or around Sept. 1. A second payment of $100,000 was due Dec. 31.
But in November, ROEM asked the SMART board for an extension of this second deadline for 90 days, said Alex Sanchez, a vice president of ROEM, which has built more than 3,000 units in more than 30 projects in the state since 2000.
The company wanted additional time to complete its analysis of the complex title history for the property, which stretches back more than 100 years, and its environmental issues, which include a history of contamination, Sanchez said.
“We didn’t have sufficient time to explore the condition of the property,” Sanchez said.
But the SMART board, in a closed-door meeting, rejected the request, feeling the developer wasn’t demonstrating commitment to the project, said Windsor Councilwoman Deb Fudge, chairwoman of the SMART board. “They weren’t willing to invest another $100,000 and that really spoke volumes,” Fudge said.