Sonoma Public Infrastructure (formerly General Services)
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The County’s efforts to sell the property to qualified housing sponsors did not succeed despite the County’s best efforts. Exposing the property as available to purchase in the private market is intended to attract a broader set of interested parties including commercial developers who can manage the risks associated with entitling and developing the property.
Yes. In April, the County notified the State Housing and Community Development Department (HCD) describing its historic efforts to sell the property through the State-mandated surplus sale process and requested the right to proceed with a private sale (See County letter dated April 6, 2020 to HCD with supporting exhibits at the Property Sale Process page.)
The commercial brokerage community has the experience and networks to guide the County in advertising and marketing the property to the greatest number of qualified buyers; the brokers can advise the County on market value, pricing, how to identify the greatest number of interested and qualified buyer(s) and assist County in negotiating for the best terms and price.
CBRE has a strong track record in similar sales efforts for public agencies with the ability to attract builders, developers and investors. Together with NBPA’s familiarity with the Chanate property and knowledge of the local market, the brokers will market this unique property regionally, nationally and globally to generate multiple competitive offers.
The County has decided to enlist the services of professional commercial real estate brokers to assist with the marketing and sale of Chanate to ensure the broadest possible exposure to the market and to solicit the most qualified and best offers. This relationship will leverage deep connections in the brokerage community with buyers, developers and investors throughout the United States and beyond. Professional brokers have additional resources that will benefit the County in the sale, including marketing resources and decades of experience in handling sophisticated negotiations for complicated property sales. Any final decision to sell and the final terms will be subject to the approval of the Board of Supervisors.
The brokers will prepare an offering memorandum describing the sale opportunity, which will highlight the unique and beneficial attributes of the property and its development potential; the offering memorandum will also include the County’s requirements for the sale. This offering memorandum will be posted on a digital portal and notice of the offering for sale will be sent to thousands of potentially interested buyers, developers and investors by the brokers directly. The county will also provide notice of this opportunity through its purchasing portal.
The County’s requirements are for an all cash, as-is sale, without inclusion of a condition that the buyer receive entitlements prior to closing, and a close of escrow to occur by end of 2020. The buyer will take title subject to existing leases and interests of record, and subject to an affordable housing covenant requiring at least 15% of all housing built, if any, to be made affordable. The Buyer will handle all environmental clearances, CEQA compliance and all demolition activities related to the existing buildings required for development. The sale will also provide for the lease back and/or relocation of the Morgue/Coroner’s Office and Public Health Lab on terms acceptable to buyer and the County.
The property will be sold without entitlements and without any requirement from the county that a particular type of use be made. Any and all future uses of the property will be determined through applications made to the City of Santa Rosa.
The County expects to lease back the lab and morgue on a short term basis on terms acceptable to both County and buyer. The County has requested that interested buyers provide proposals to the county for the relocation of such uses. The Buyer will take subject to and assume all County’s obligations under the lease with Community Action Partners for the Sloan House under its lease terminating in 2023.
The Cemetery will continue to be preserved in perpetuity. The buyer may enhance the grounds but must agree to recognize and preserve this historic use and provide access to the public.
While the brokers will make recommendations on a proposed offered sales price, this amount is not yet identified. Any sales agreement and offered sales price will come back to the Board for approval.
There is no buyer identified at this time; however with the assistance of the brokerage community, the County expects a larger number of interested commercial developers, including housing developers, to be notified of the availability of the property being for sale. Acceptable uses for the property will be determined by the City of Santa Rosa.
It’s possible that a commercial developer will develop housing on the property and may work with local housing developers but that is a decision for the buyer(s) and the City of Santa Rosa. Decisions about what type of development will be built is completely up to the buyer(s) and the City of Santa Rosa, which is the only agency involved with decisions on future land use at the site. The County will sell the property subject to an affordability covenant as required by State law, which will provide that if housing is built, then at least 15% of those housing units must be affordable consistent with State law.
The County hopes to sell the property and close escrow no later than December 31, 2020 as it is cost prohibitive to continue to manage the vacant property.
While the County Board did set aside funding to study the decommissioning and activities associated with a possible demolition, there are no current plans for the County to demolish the buildings on the Chanate Campus; the buyer of the property will be responsible for demolition, permitting and CEQA compliance associated with all development activities.
The 10 acre Parcel J will be conserved and is not part of the property sale. The County will continue to own and manage Parcel J until a long term land conservation group or parks entity can assume ownership. The County is working with the SCAPOSD on the terms of a conservation easement which is scheduled to be transferred no later than December 2020.
The Surplus Land Act (Government Code Section 54220 and following) requires that government property sold as surplus must first be offered to designated agencies and entities: affordable housing providers, school districts, park districts, or other governmental entities. If the property is not sold to a qualified agency or entity for purposes described in the Surplus Land Act, then the property may be offered for sale to private parties. The County issued a solicitation seeking offers to purchase the property from the designated agencies In February 2019. Responses were due on May 10, 2019. Three qualified entities have expressed interest in purchasing the property to produce housing. The list of parties which received notice of solicitation is available on the Chanate website.
The County has a duty to make the best deal on behalf of taxpayers, and publicizing the proposal details before negotiations are completed would cripple the County’s negotiating position. Government Code section 6255, as interpreted by the courts, makes the offers received exempt from public disclosure during the evaluation and negotiation process in order to protect the public’s assets and value.
This transaction is a sale of surplus land; it is not a development. The offers received by the County in a surplus sale must contain information about the potential housing and its affordability, but no specific development plan is being reviewed as part of the surplus sale process. Acceptance of an offer to purchase the property does not approve the development of housing; rather, it is a statutorily required consideration in weighing a proposal submitted by a qualified housing sponsor. (See Government Code section 54227.)
The actual development plan (including road placement, density and zoning requirements, fire safety, emergency evacuation plans, etc.), will be developed, discussed, and determined by the City of Santa Rosa after the sale.
Judging each proposal on its individual merits is an important part of evaluation. To compare proposals on equal footing, County leadership requires a way of comparing very different types of offers. Using their education, training, and experience, the County experts develop specific metrics across all submissions.
The Surplus Property Act requires that certain factors are considered in the initial phase of the sale process if there are multiple offers from housing sponsors. Key criteria legally required under the Surplus Property Act are:
The Chanate campus is a significant asset with serious challenges but also enormous potential, and the County is committed to thoroughly analyzing and weighing the merits of each proposal.
The County General Services team comprises executive-level commercial and government real estate professionals, architects, engineers, and planners. As part of the evaluation process they consult with their counterparts in the private sector, and in similar communities, to learn more about the entities proposing to purchase the property, and how similar properties were handled. They investigate each proposer’s background, previous projects, affiliates, and references. Additionally, they work with investment advisors and specialist financiers to evaluate all aspects of the proposed short and long-term project funding, and the financial acumen and abilities of the partnership submitting the proposal. Staff work closely and consult with counsel throughout their investigations to ensure that potential transactions are legally sound.
Key findings and further questions are discussed confidentially with County Counsel and County leadership in closed session in order to provide direction to negotiators. The California Code directs that this process take 90 days.
No. Four parcels on the Chanate Campus will be excluded from the sale. Parcel N (APN 180-090-007), consisting of approximately 26 acres is a Sonoma County Water Agency (Sonoma Water) property that is managed by Sonoma Water for the safety of the County. Parcel N 9 which is owned by Sonoma Water will be excluded from the sale. Parcel J (APN 180-100-016) consisting of approximately 9.96 acres is dedicated to public access and excluded from the sale. Parcel O (APN 180-020-010) consisting of approximately 8 acres is dedicated to open space and will be excluded from the sale. Parcel P (APN 180-820-009) consisting of approximately 1 acre of land is dedicated to open space and will be excluded from the sale.
Parcels A through I, K through M are being sold. See the Property Description Property Description for more information on these parcels and acreage being sold. The parcels to be sold may be purchased by a designated agency in their entirety or in the bundles described at the Property Description. There are three bundles 1) Parcels A-F, 2) Parcels G-I and 3) Parcels K-M. Please see map.
In 2015, the county prepared an estimate for demolition of the Chanate Hospital. The County does not warrant the accuracy or reliability of this estimate. The County has not prepared estimates for demolition of any other structures on the property. The estimated range of demolition expenses could be anywhere from $6 million to $12 million.
The type of development will be based upon the proposal of either a designated entity or a private party. The City of Santa Rosa will determine whether the proposed development is consistent with the General Plan, and will require full environmental and planning review.
Existing permitted uses will continue until termination of the license or lease. New interim uses will be subject to Board of Supervisors approval until the property is sold.
If the property is not sold to designated agencies for purposes described in the Surplus Land Act, then thereafter the property may be offered for sale to private parties.
Currently, Parcels O and P are designated open space known as “Paulin Creek Open Space Preserve” and are managed by the Sonoma County Agricultural and Open Space District. The County Board of Supervisors has committed to conserving Parcel J, which is adjacent to Parcel O. When that occurs all three parcels will be combined into approximately 19 acres of open space accessible to the public.
The process of initially advertising the opportunity to purchase or lease the surplus property is proscribed by the Surplus Land Act and described therein. A sale to a “housing developer” in the initial phase carries the requirement that 25% of the units developed are affordable as defined in the Health and Safety Code, and that there is a similar “affordability covenant” deed restriction for 55 years.
If no agreement is reached with a qualified housing sponsors in the initial phase, then in the second phase there is a minimum 15% affordability requirement or affordable rent as defined in Section 50079.5. Rental units shall remain affordable to and occupied by lower income households for a period of 55 years.
The County estimates that, at the earliest, the property could be approved for sale by the end of 2019, with the new buyers taking ownership in the first quarter of 2020.
Interested parties will be able to purchase the entire Chanate Campus. Alternately, parties may submit offers to purchase any or all of three pre-defined bundles of properties. Bundles were defined to provide interested parties sufficient land, access and potential internal circulation to facilitate development of the properties.
The County has defined the bundles to provide interested parties sufficient land, access, and potential internal circulation facilitate development of the properties.
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