What does the future hold for one of the largest developable properties in the city center?

Speculation about the former Sears site on the south end of the Santa Rosa Plaza has persisted since the downtown mall’s anchor department store closed in 2018 and after a proposal to move county government operations there failed two years ago.

Now, two new, possibly competing, proposals have emerged.

One could bring badly needed housing and the downtown area’s first grocery store. The other could create up to 40,000 square feet of meeting space and a hotel that could attract new visitors to the area.

Mall giant Simon Property Group, which jointly owns the property with Seritage Growth Properties, has been tight-lipped, declining to comment on either plan.

But public documents, meeting minutes and Press Democrat interviews with city, tourism and business officials show the mall is considering those twin tracks as it weighs new uses for the space.

Tourism officials have touted their vision for a marquee convention center and 250-room hotel as pivotal for downtown, where businesses have struggled to compete with other commerce hubs in the region and attract the steady foot traffic needed to sustain a thriving mix of restaurants, bars and small stores.

Economic impact from the project once it is up and running could hit $42 million a year, according to projections. That’s equivalent to about 0.2% of Sonoma County’s overall $30 billion economy.

“It would be transformative. I know that word gets thrown around a lot, but this would truly be transformative for downtown with the business that flows through the convention center to all of the restaurants, all of the shops, all of the hotels,” said Peter Rumble, president and CEO of the Santa Rosa Metro Chamber.

The proposal, crafted mostly behind the scenes, has emerged slowly through public meetings and documents in recent months as officials seek to line up political support and put together a financing plan that could tap into local taxes, bond financing and state and federal dollars.

Construction costs for the convention center alone are estimated at more than $80 million.

“There’s no question it’s one of the most exciting projects I’ve worked on in my 30 years,” Claudia Vecchio, president and CEO of Sonoma County Tourism, told The Press Democrat.

Vecchio and the tourism agency have pitched the idea to Simon, which appears “supportive” of the idea, according to Vecchio. She didn’t disclose who at the company tourism officials have been working with directly.

Meanwhile, Simon has been in talks with an unnamed national housing developer to bring apartments and retail to the site, according to downtown leaders and tourism officials, although no one has seen official plans.

The idea appears to be in line with Simon’s plans to redevelop other shuttered storefronts at its properties nationwide.

The downtown mall’s general manager said in a statement, Simon is “exploring avenues” on how to best redevelop the property, now vacant after the furniture store that occupied the ground floor left at the end of June.

“We are always looking for ways to elevate Santa Rosa Plaza,” Danielle Nelson said in the emailed statement. “We want to ensure that any changes to our property not only advance the community, but also bring amenities and brands everyone can enjoy. More details surrounding the development will be provided at a later date.”

Simon has not submitted formal plans for the former Sears site, but the ball is largely in its court as tourism officials await a decision on either proposal.

A decision on a winning proposal could come as soon as this year, according to a city official involved in some of the discussions.

The 7.2-acre property at First and A streets includes the 139,000-square-foot retail space, 779 parking spaces across a garage and surface lot and the 22,000-square-foot auto center across the street.

Either plan could be significant for the mall and wider downtown landscape as city officials seek to revitalize the urban core, injecting new money into the local economy and providing a boost to government coffers.

“I would say whatever the outcome, either one is going to be phenomenal to have downtown,” Rumble said. “Right now, that space is just dead and it doesn’t support really anything so to have it redeveloped into something beneficial is a really fantastic thing regardless of the way it goes.”

Large-scale meeting space, hotel

Sonoma County Tourism first unveiled plans in May 2023 for a “big, audacious goal” — building a convention center.

The idea had been tossed around years earlier as the agency began to update its long-term strategic plan in 2018, but the conversation was set aside amid years of emergency response to wildfires, floods and the pandemic.

It reemerged as a popular proposal when officials began the planning process anew in 2022.

Preliminary work got underway in September after Sonoma County Tourism hired hospitality consultant HVS to conduct a feasibility study and market analysis to determine whether a convention center would be successful here.

The analysis showed what tourism and business leaders already knew: There is demand for additional business meeting space in Sonoma County.

“We’ve known anecdotally for many years that we don’t have the space that demand would indicate we need,” said Rumble, the chamber executive, whose organization is supporting Sonoma County Tourism with planning efforts. “We know that we lose business to other parts of California, other parts of the country, because a large business convention or business meeting runs out of capacity real quick.”

Tourism officials and HVS analyzed 30 properties in the region and selected the Sears site as the top contender because of its central location and proximity to amenities.

The project would entail a two-story convention center with a 21,000-square-foot ballroom and smaller meeting rooms across from the parking garage on A Street, according to renderings that Sonoma County Tourism shared with The Press Democrat.

The six-story hotel would extend east toward B Street and feature all-day dining on the ground floor, a 5,000-square-foot ballroom on the second floor and a rooftop with indoor and outdoor fitness spaces, a pool and dining.

The two facilities would be connected by a central outdoor courtyard with access to Santa Rosa Plaza. The second-level connection to the mall would remain sealed off.

The former auto center would be redeveloped into an outdoor event space. The parking garage — which Vecchio said is one of the most lucrative parts of the deal — would stay as is.

Vecchio said the development would allow the tourism agency to focus further on attracting business travelers to Sonoma County, which largely draws leisure tourism.

“I think tourism in Sonoma County has really grown over the past 20 years, but this project would be that transformational project that takes the industry in an important new direction,” she said Tuesday. “There are a lot of good reasons to target business travel, so it’s really going to take our industry to the next level.”

Preliminary construction estimates put the cost at $82 million, including preconstruction work, environmental studies, planning and entitlement costs.

That doesn’t include the cost to acquire the property or for the hotel construction, which Vecchio said would be built by a private developer.

When Sonoma County sought to buy the site in 2022 it offered to pay nearly $21 million.

That means the proposed convention center and hotel project could top out over $100 million. It’s a hefty price tag for a project that will take four years to be profitable, according to financial projections Sonoma County Tourism shared with city and county officials.

Vecchio anticipates the convention center could open in five years under the best-case scenario,though cost and demand projections presented in public meetings show an opening date of 2028.

Operations, financing questions remain

Sonoma County Tourism, which operates partly on taxpayer dollars, has spearheaded the project, with assistance from the Metro Chamber, Downtown Action Organization and city and county officials.

The plans have been discussed openly in public meetings of the various boards and among members of a city and county group eyeing the creation of a new tax district downtown.

Nelson, the mall manager, told the Downtown Action Organization, which oversees the city’s downtown community benefit district, in April the project was “in line with Simon’s interests.”

But Nelson also shared she and Simon officials had questions about the cost estimates and funding availability as well as the timeline, minutes from the April 10 meeting show.

Vecchio, in an interview and in public meetings, said Sonoma County Tourism has had three conversations with Simon officials in the past several months.

She said she was told company executives would be traveling to Santa Rosa to look at the market — a possible indication that Sears is being looked at for redevelopment — though she said she wasn’t involved in planning the visit or didn’t know if officials had already come.

“It’s a project that they are considering,” Vecchio told the Public Financing Authority, which is overseeing the proposed tax district, during a June 20 meeting. “They haven’t shut us down during this entire process.”

Vecchio said Simon during their last conversation in June asked the tourism agency to return with an offer for the property.

But two key questions still need to be worked out as tourism officials move forward with the plan: Who will manage the site and how will it be paid for?

“We have a lot in front of us to accomplish,” Vecchio said. “We’re very, very early in this process.”

Vecchio said Sonoma County Tourism staffers are studying both issues.

A joint powers authority could be formed to represent Sonoma County and Santa Rosa and a nonprofit entity created to own and operate the convention center, Vecchio said. The tourism agency would market the meeting space, she said.

The hotel would be owned and operated privately.

Sonoma County Tourism is in the process of hiring a consultant to help put together what Vecchio termed the “financial stack” — the various pots of money tourism officials hope to tap into to build the project.

Business taxes are being eyed as a key funding source. Two main options include the business improvement assessment collected from hotels by cities to pay for tourism promotion and lodging taxes paid by overnight guests that help local governments pay for day-to-day operations.

The agency could rely on bonds or seek funding through the California Infrastructure and Economic Development Bank, which provides loans and other financing for public infrastructure projects.

Officials also have looked to city and county officials involved in the proposed downtown tax district for financial support. Under that proposal, a portion of property taxes generated downtown would be used to pay for infrastructure improvements and other projects aimed at revitalizing the city center, if ap proved.

“There are a number of ways that we could both raise capital and have a program in place to pay back whatever debt we incur,” Vecchio said.

Housing proposal under wraps

Plans for the convention center have crystallized quickly in recent months just as Simon is making ripplesabout its potentially competing vision to bring housing and a grocery store to the same site.

Vecchio said Simon officials have indicated they are in discussions with a national developer though an agreement hasn’t been reached.

“How competitive that actually is, I don’t know,” she told city and county officials during the July 20 meeting of the Public Financing Authority.

Little is publicly known about those plans except for a leasing brochure on Simon’s website touting redevelopment of an anchor store at Santa Rosa Plaza.

Those plans were widely circulated after being posted on a Santa Rosa subreddit in January.

That’s how tourism officials first heard about the proposal, Vecchio said, but it served as an impetus to move swiftly on the convention center and hotel.

Vecchio and Rumble said they had not seen a proposal for a housing development and didn’t know who the prospective developer was.

“In concept, it's generally known, but in detail who that developer might be is unknown, any kind of specifics of what could be done are unknown,” Rumble said.

Officials with the Downtown Action Organization and Santa Rosa Council member Chris Rogers, whose district includes the downtown, similarly had little information about the Simon plan.

The promotional brochure has since been taken down from Simon’s website though a page regarding leasing and advertising opportunities at Santa Rosa Plaza points to a “multimillion-dollar makeover” to re-imagine the east-facing B Street entrance with dining and new retail and transform a “former department store space … with a multilevel residential tower and store.”

The redevelopment proposal is in line with Simon’s national playbook and a move by the site's co-owner, Seritage, to potentially unload the property as it tries to reshape its portfolio to pay down debt.

Seritage, which was spun off from Sears Holdings in 2015, reported selling 68 assets in 2023 and is in the process of selling, auctioning or entertaining offers for additional properties this year, according to an April company news release, though it’s not clear if the Santa Rosa Plaza site is under consideration.

Multiple calls to Seritage’s New York offices and emails to its leasing and redevelopment team over the last few weeks went unanswered.

Simon has submitted plans, rezoned land and received approvals to replace the Sears at Briarwood Mall in Ann Arbor, Michigan, at Brea Mall in Orange County and at Stoneridge Shopping Center in Pleasanton with apartments, retail and other amenities.

John Phipps, Simon’s vice president of development, during a public meeting last year about the Ann Arbor project, told attendees the company was “looking at doing this whenever (it) can,” according to Michigan Live.

The projects are just some of the redevelopment proposals at Simon properties nationwide moving through the planning process, part of a $1.5 billion plan to add thousands of multifamily units and hotel rooms and expand its retail offerings at its malls that the company’s CEO David Simon announced in 2023.

Phipps, who represented Simon in the scuttled deal with the county and who has reviewed Sonoma County Tourism’s plans, according to board meeting minutes of the Downtown Action Organization, did not respond to a detailed inquiry about the two proposals.

A Simon spokesperson declined to make Phipps available for an interview and did not confirm whether Simon is still considering the housing project.

While local plans remain under wraps, Simon’s bid to turn the property into housing and a grocery store could address an acute need in the region and bring more people to the city center, housing advocates have said.

You can reach Staff Writers Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com and Sara Edwards at 707-521-5487 or sara.edwards@pressdemocrat. com.