Tribes eye large clinic for site of Santa Rosa Kmart burned in Tubbs Fire

There’s been a question for several years what would replace the Kmart store in Santa Rosa, even while shoppers were still frequenting the “big box” retail building that the Tubbs Fire destroyed nearly three years ago.

Shortly after a new proposal was submitted for hundreds of apartments on the site of the former Fountaingrove Inn to the east across Highway 101, another large commercial site burned in the same firestorm that swept through the north end city in the early hours of Oct. 9, 2017, is being envisioned for a much different use.

Under consideration for the 9-acre site at 3771 Cleveland Ave., which includes the former store’s parking lot and the now-cleared footprint of the 114,500-square-foot building, is what’s described on the city’s online parcel information portal as “SCIHP Medical Office Building.” It’s described as a two-story, 70,000-square-foot medical office building.

“I’m not at liberty to speak about this right now,” said Betty Arterberry, CEO of Sonoma County Indian Health Project.

Funded by state, county and private money, the project describes itself as a consortium of the Cloverdale Rancheria of Pomo Indians of California, Dry Creek Rancheria Band of Pomo Indians, Federated Indians of Graton Rancheria, Lytton Rancheria of California, Manchester Band of Pomo Indians of the Manchester Rancheria and Kashia Band of Pomo Indians of Stewarts Point Rancheria.

The project’s main clinic, located at 144 Stony Point Road, opened in 2001. There’s also a satellite clinic on the coast, in Point Arena.

As has been happening with other sites in the burn zone, city planning staff talks with developers what’s allowable under zoning and general plan documents, according to spokesman Kevin King.

The Kmart store was originally built in 1970, and the property has been owned by Cleveland Avenue Associates for nearly three decades, according to county and city documents.

In the past several years, the property owners have pursued differing ideas about reusing the building and property, even when Sears Holding Company, the parent of Kmart, had no plans to give up the site, The Press Democrat reported at the time.

Lowe’s Home Centers made two attempts to convert the site to one of its stores both before and after the fire, according to city documents and Tom Laugero, a Keegan & Coppin partner who has been marketing the property for years. In 2016, Lowe’s spent about nine months analyzing a reworking of the site for a store and garden center, even getting to the preapplication stage of talks with the city.

“Somewhere in the country, Lowe’s had bought a former Kmart store and tried to retrofit it but found it was too expensive,” Laugero said.

In December 2016, the property owners started talks with the city about converting the Kmart into a multitenant retail building, submitting a project application in June 2017. Final lease negotiations were underway with Smart & Final, Ross Stores, Homegoods and Planet Fitness, and the remodel was set to go for city conceptual review in mid-October 2017, Laugero said.

The owners considered rebuilding the structure as retail, but construction costs at the time of the rebuild made that option too expensive, particularly as the “Amazon effect” was pressing on profits in the retail sector, Laugero said.

But Lowe’s returned in early 2018 and considered building a store on the site for the better part of the year, before a change in senior management froze new projects not already in construction, he said.

A plan for nearly 300 market-rate apartments was floated in a co-development deal, but the prospects of three years before rent revenue would arrive as tenants moved in at a time when rents were leveling post-fire put that plan on hold.

“And now we’re working with another partner that will be a user for the property, and that’s as much as I can say,” Laugero said.

Jeff Quackenbush (jquackenbush@busjrnl.com, 707-521-4256) covers wine, construction and real estate.