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City’s quest for retail threatens apartment proposal

SANTA ROSA – The future of a proposed 102-unit apartment complex at the site of a former Santa Rosa hotel is becoming less certain as it butts up against a new city policy of maximizing commercial development.

Oakland-based BayRock Residential is the owner of the shuttered Los Robles Lodge site on Cleveland Avenue in northwest Santa Rosa. The company received city approval in 2006 to demolish the hotel and build 80 townhouses in its place. But with the real estate downturn hitting townhouses particularly hard, the company said apartments, which are performing better, would make more economic sense.

“The 80-unit townhouse plan, economically, can’t work today,” Stuart Gruendl, a founding partner of BayRock, said at a city Planning Commission meeting last month. “I can’t sell a townhouse today for more money than you can buy one of those cute bungalows downtown in a walkable location,” he said. “I just can’t compete.”

The Planning Commission agreed, in a 4-2 vote, to let BayRock return in the future with a new application for the apartments. But city staff and a number of commissioners – including some who voted in BayRock’s favor – said they may ultimately reject the new proposal because they would prefer to see commercial, tax-generating development on the site, which is visible from Highway 101 and located next to Coddingtown Mall.

“This is one of not that many sites that enjoy freeway visibility,” Erin Morris, a senior city planner, said at the meeting. “Certain types of retailers want to be on the freeway, and the city has concluded that they are going elsewhere to get their freeway-adjacent sites.”

Ms. Morris’ position is based on a June 2007 report commissioned by the city that showed Santa Rosa’s demand for retail services outweighed supply by more than $204 million. The report, performed by Portland consulting firm Marketek Inc., said Santa Rosa is losing retail business to areas outside its borders, and the city could support an increase of 1.1 million square feet in retail space by 2012.

“The fact is sales tax has been declining, and we have a responsibility to make sure we do what is best for the city as a whole,” commission Chairman Scott Bartley, who voted to reject BayRock’s new proposal, told the Business Journal.

Mr. Bartley said that since the Los Robles property is designated as commercial by Santa Rosa’s general plan, the city can deny the apartment proposal despite approving the earlier, condo project. “I don’t think it’s the Planning Commission or the city’s job to help an applicant chase the market,” he said.

Mr. Gruendl and other representatives of BayRock did not return several calls for comment placed last week.

At least two of the four commissioners who voted in BayRock’s favor last month indicated they may ultimately vote against the proposal unless the developer adds commercial space. Only two commissioners, Nick Caston and David Poulsen, said they may support a residential-only project.

“You know why Santa Rosa has a bad reputation and why people don’t want to spend their money investing in Santa Rosa is things like this,” Mr. Poulsen said of efforts to reject the new project.

Mr. Caston said he supports the project because it is an infill site within walking distance of retail services and a potential commuter rail station. The apartment project would also provide lower-cost housing than the original townhouse proposal, he said. “If this is the opportunity for us to get the smaller, more naturally affordable units because of the market then I’d like to take the opportunity,” he said.

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