Subscribe

Santa Rosa fast-tracks downtown housing construction

Downtown Santa Rosa housing projects

Under construction:

• 888 Fourth St. – 89 market-rate units

• 80 College Ave. – 54 units, including 53 supportive housing units, equivalent to very-low-income housing, and one manager’s unit.

Pending building permit issuance:

• 420 Mendocino Ave. – 116 market-rate units

Entitlement secured projects:

• 1 Santa Rosa Ave. – 120 units with 4-5 affordable units in compliance with the Inclusionary Housing Ordinance

• Santa Rosa Cannery – 129 units, 100% affordable

Pending entitlement issuance:

• 320 College Avenue/Lincoln Street (application submitted) – 38 units, project will comply with Inclusionary Housing Ordinance

Potential future investments:

• SMART site (pre-application) – 110 units with 10% affordable

• Ross Street (pre-application) – 109 units with 10% affordable

• Several other catalyst sites have been identified in downtown Santa Rosa.

Source: City of Santa Rosa

Santa Rosa may be at a turning point in allowing urban housing, creating policies and streamlining reviews aimed at being more friendly to investors and developers.

“After years of strategic planning we now have specific direction as part of a comprehensive development strategy,” said Mayor Tom Schwedhelm. “City council members are on the same page with a series of 7-to-0 unanimous votes supporting urban core development. We’ve realized we can’t continue with business as usual and have to take risks to achieve these goals. Development doesn’t happen overnight in our Downtown Station Area Specific Plan, we have to be willing to offer incentives to accelerate the process.”

He said the council is united, evidenced by its sanction of waived impact fees and eased housing requirements, while focusing on finding ways to attract people back to the city center by eliminating bureaucratic roadblocks.

Councilman Jack Tibbetts said he’s seeing “overwhelming support” for high-density living. And he thinks that reduced local impact fees could help increase tourism and overnight stays, leading to increased business and retail activity.

“For example, when building taller structures, as floor levels increase impact fees go down,” Tibbetts said. “Staff understands the new direction and is finding ways to make this process even more efficient and cost effective.”

Clare Hartman, Santa Rosa interim assistant city manager (courtesy photo)
Clare Hartman, Santa Rosa interim assistant city manager (courtesy photo)

Clare Hartman, Santa Rosa’s interim assistant city manager, noted that the city council’s follow-through with approval actions beyond just policy support are creating much needed predictability for downtown projects, combined with community support coming from various sectors.

“Our goal is to attract three to five market rate housing projects to catalyze downtown development,” Hartman said. “We know we’re ready because it’s not uncommon to get all types of opinions at public hearings in support of downtown housing from the business community, those living in the city, environmental groups, transit and climate action advocates as well as from local and outside developers.”

She said all downtown city property has been evaluated and is undergoing a process to support public-private-partnership, or P3, developments. This includes city parking garages, surface lots and the city hall area.

“Look for city council agenda items in November for an ENA (exclusive negotiation agreement) and a DDA (disposition and development agreement) for city parking lots and developer partnerships,” Hartman said.

A number of fee reductions and incentives have been offered to developers through the High-Density Multifamily Residential Incentive Program, such as reduced capital facilities fees (CFF), reduced park fees, deferred water and wastewater fees, along with reduced inclusionary affordable housing requirements for downtown (4% for rental property downtown versus 8% outside of downtown).

Officials said the application process time has been reduced from 10 months to three months, and application fees were reduced due to permit streamlining from $24,000 in entitlement fees to $9,000. Through a “housing by right” policy, no use permit or rezoning is necessary. Enabling the Zoning Administrator to act as the review authority, versus the Design Review Board, also saves time, they said.

Federally designated opportunity zones offer tax incentives as well. The downtown area is one of two such zones in Santa Rosa.

On Oct. 13, the council added another major tool, according to Hartman, with adoption of the Downtown Station Area Specific Plan. City officials note the city is moving away from density and height standards and minimum parking requirements.

Keith Rogal of Napa Redevelopment Partners stands on one of the piles of demolition debris from buildings of the former Napa Pipe plant at 1025 Kaiser Road on Monday, Dec. 3, 2018. (JEFF QUACKENBUSH / NORTH BAY BUSINESS JOURNAL)
Keith Rogal of Napa Redevelopment Partners stands on one of the piles of demolition debris from buildings of the former Napa Pipe plant at 1025 Kaiser Road on Monday, Dec. 3, 2018. (JEFF QUACKENBUSH / NORTH BAY BUSINESS JOURNAL)

The relaxed parking policy allows for creative, market-driven solutions such as shared parking, transit passes or parking permit arrangements with city parking garages, as is the case with the 1 Santa Rosa Ave. project. It’s a 120-apartment development by Keith Rogal, who is reworking the 157-acre Napa Pipe property with a Costco and hundreds of homes and built Carneros Inn over a decade ago. The Santa Rosa effort would have studios and one- and two-bedroom units.

While no rental rates have been announced, he said rents could probably be at or near the upper bracket, but comparable to that for class A garden apartments in a mid-range urban community

Downtown Santa Rosa housing projects

Under construction:

• 888 Fourth St. – 89 market-rate units

• 80 College Ave. – 54 units, including 53 supportive housing units, equivalent to very-low-income housing, and one manager’s unit.

Pending building permit issuance:

• 420 Mendocino Ave. – 116 market-rate units

Entitlement secured projects:

• 1 Santa Rosa Ave. – 120 units with 4-5 affordable units in compliance with the Inclusionary Housing Ordinance

• Santa Rosa Cannery – 129 units, 100% affordable

Pending entitlement issuance:

• 320 College Avenue/Lincoln Street (application submitted) – 38 units, project will comply with Inclusionary Housing Ordinance

Potential future investments:

• SMART site (pre-application) – 110 units with 10% affordable

• Ross Street (pre-application) – 109 units with 10% affordable

• Several other catalyst sites have been identified in downtown Santa Rosa.

Source: City of Santa Rosa

“Our project passed design review and is ready to move forward to the construction permitting phase thanks to the recent changes in Santa Rosa’s building policies when the city council and staff created a clear path for this development and pulled together to make it happen,” Rogal said.

“For us, this was an excellent opportunity to enhance downtown as well as a case of good timing, we are now getting ready to go out for bids. We hope to receive our final building permit this spring with construction underway by summer. Meanwhile, there is a tier of permits related to rough grading, making public improvements, installing utility lines, street alignment, and foundation pouring. Completion is scheduled for 2022.”

He said Midstate Construction is handling pre-construction work, and Lowney Architecture of Oakland created the classic design. Lowney is familiar with modular construction and the top five floors of the seven-story, 75-foot-high 1 Santa Rosa apartment building will use this technique, supported by two floors with traditional concrete foundations. Five or six modular construction firms are expected to bid for this project.

Rogal said he has received support from the area’s larger employers who see these apartments as a way to remain competitive for attracting and retaining employees who enjoy the quality of city life yet want to be close to many outdoor attractions within a short walking, cycling or public transportation radius. He observed that new housing like this paves the way for increased activity downtown.

“The city has a lot to recommend it, but there has not been much in the way of a new housing supply at its center for decades. In the past, the economics were not there, now we are bullish on downtown development and take a long, 10-year view down the road to recovery and beyond.”

A key challenge facing developers is the cost of construction versus the availability of capital to cover the entire project.

Rogal said loan-to-cost ratios have moved lower on the commercial side, in the 65% to 70% loan-to-cost level. This has created a gap between the cost of construction and the amount banks and other lending institutions may be willing to cover.

Peter Rumble, CEO of Santa Rosa Metro Chamber of Commerce (courtesy photo)
Peter Rumble, CEO of Santa Rosa Metro Chamber of Commerce (courtesy photo)

Santa Rosa Metro Chamber CEO Peter Rumble said big employers are desperate for this type of housing, with more people migrating here from larger cities who are accustomed to not having a car and may actually prefer to move about on foot to local businesses, restaurants, entertainment and other venues – especially now that many are working from home and do not commute.

“Before the 1906 earthquake, old photos of Santa Rosa show many five- to seven-story apartment buildings and commercial spaces downtown. Over time, our city evolved into one of the least urban areas in the region due to a movement toward anti-development and decisions that led to a housing crisis, including lost opportunities in Old Railroad Square and Courthouse Square. The fires in 2017 marked the turning point within our local city council when it listened seriously — and differently — to developers who want to build here,” Rumble said.

Michelle Whitman, executive director of Santa Rosa’s Renewal Enterprise District (courtesy photo)
Michelle Whitman, executive director of Santa Rosa’s Renewal Enterprise District (courtesy photo)

Michelle Whitman, executive director of the Renewal Enterprise District, said the RED is currently in a due diligence phase to find ways to bridge the funding divide developers face when attempting to complete capital requirements for Santa Rosa urban construction, saying it is important to do pro forma financial planning well in advance.

During the first week of October, the Sonoma County Board of Supervisors committed to loan the RED housing fund $10 million of its PG&E settlement funds on the condition that the city of Santa Rosa matches the county's commitment. The Santa Rosa City Council plans to meet to discuss the allocation of its settlement dollars. Following its deliberations, should the city also commit to loan the RED housing fund $10 million, the combined total would be $20 million.

A public survey is being conducted and workshops are being held to test community reactions and expectations. Whitman said the city will present its plan to the council Nov. 17 for deliberation, following several public meetings to collect community input. A study session at the city council is also scheduled for Oct. 27, or later, to discuss the Enhanced Infrastructure Financing District (EIFD), another potential funding source.

“The purpose of the RED’s proposed housing fund is to enable developers to use this money as a loan granted under favorable terms to leverage larger sums from banks and investors as part of a public/private financing plan.”

Whitman said the funding gap was created, in part, by introducing a new higher density housing product in downtown Santa Rosa. Having an untested market means there are few, to no, comps for lenders to point to.

“If we can launch a few pioneer projects to prove demand, I expect other developments will follow, with their lenders and investors willing to fully fund their projects. Construction costs are high, especially for funding infill projects. We’re not reinventing the wheel here, we’re working with advisors to see how this can be accomplished,” Whitman explained.

She said private money is sitting on the sidelines, which with a project involving 100 rental units, could take $40 to $50 million to construct. If 10% of this total came from a public source to help fill the gap between actual costs and what lenders are willing to provide (based on a profitability analysis), it could leverage the other 90% for the project.

Early in 2021, a discussion of private public partnership opportunities, particularly with city hall is also planned.

“There is a lot of optimism within the development community, as well as among city and county public officials that believe Santa Rosa will be a winner with everyone working together.”

Keith Woods, CEO of the North Coast Builders Exchange (courtesy photo)
Keith Woods, CEO of the North Coast Builders Exchange (courtesy photo)

Keith Woods, CEO of the North Coast Builders Exchange said the $20 million fund will help but it is 20 years overdue.

“Anything that can be done to stimulate development is a good thing, but it also requires having a fair fee structure and consideration for how long it will take to build,” Woods said.

He pointed to a prediction a few years ago by Beacon Economics’ Christopher Thornberg that upwards of 30,000 housing units were needed in Sonoma County to make up for homes lost in the 2017 Tubbs Fire and those not built as population increased. He also noted that Gov. Gavin Newsom has said there is a statewide shortfall of 3.5 million housing units.

“We still have a long way to go,” Woods said.

Correction, Oct. 19, 2020: The print version of this story said the proposal for the RED housing fund contribution from the PG&E settlement was a $20 million matching contribution. Rather, the county and city are discussing that each would provide $10 million to the fund.

Show Comment

Our Network

The Press Democrat
Sonoma Index-Tribune
Petaluma Argus Courier
Sonoma Magazine
Bite Club Eats
La Prensa Sonoma
Emerald Report
Spirited Magazine