Construction continues on The Cannery housing project as the SMART train heads south along the project that sits along West Third Street at the west end of Railroad Square, Thursday, Oct. 12, 2023. (Chad Surmick / The Press Democrat)
New housing key to new life downtown?
Projects aim to bring foot traffic back to Santa Rosa core
By Sara Edwards The Press Democrat

There’s an anecdote developers like to share about Santa Rosa: More housing in downtown Santa Rosa will bring more people to downtown Santa Rosa. And keep them there.

It’s a story Hugh Futrell believes holds true.

Futrell’s company has a number of projects in the works downtown in different sectors such as housing, office and lodging.

He recently entered exclusive negotiations with the Santa Rosa City Council in partnership with Burbank Housing to bring a multipurpose development with housing and additional amenities such as a grocery store.

Another one of his housing projects is in its final construction phase just outside downtown at 888 Fourth St.

“When there’s more people on the street, more retailers, more restaurants that attract people or events that attract the community as a whole, those things over time will alter that perception,” he said, referring to the belief by some that downtown is an “undesirable” place to be.

“There has also been a decline in the amount of downtown employment, particularly since the pandemic, and reversing that is going to be important to maintain a balanced downtown between housing, employment and hospitality.”

Santa Rosa City Council has made housing a priority, easing requirements for developers with plans on bringing high-density housing to the heart of the city.

One of the efforts was the passing of an ordinance that cuts the design review process from 10 months to three months and permit costs from $24,000 to $9,000.

The Express Permitting Program also was created to cut the planning, engineering and building review times from around 18 months to 6 months total.

Housing in downtown Santa Rosa has been a key topic when it comes to revitalizing the historic area.

Both market-rate and affordable housing units exist, but more projects have been announced in the past year. Building more places to live downtown will by extensionbring more people downtown.

Council member Chris Rogers, whose district includes downtown Santa Rosa, said one of the biggest challenges with bringing more urban housing continues to be high costs of building and construction.

“The cost of living is really high here and rents feel very high to us, and to many developers, the return on investment is low so we really do have to be creative to get projects built up here,” he said.

State of downtown housing

Data from the Up Downtown program shows that 198 units of housing have been constructed in downtown Santa Rosa since 2016, with 418 units currently under construction (as of this year) and another 924 units in the building permit process since 2016.

There’s housing in the Rosenberg building, and Catholic Charities recently completed the first phase of its affordable housing project with Burbank Housing known as Caritas Homes.

The second phase is expected to break ground next fall.

On top of more affordable housing developments, efforts to bring more workforce housing also have increased.

Developer Cornerstone Downtown’s director of marketing and development, Pauline Block, said they hear from employers constantly about the need for workforce housing, especially for people with occupations such as teaching or nursing who don’t qualify for affordable housing but often are unable to afford typical rent.

“We really need all levels of housing,” Block said. “It’s going to take a collaboration to really make a difference in downtown, with employers, developers and with the city so I think there’s an opportunity and openness to figure out how to make it happen.”

Cornerstone Downtown has two developments currently in the planning stages. The first property is at 34 Sixth St. near the Railroad Square SMART station and will be a six-story building with 114 units of housing. Eight percent of the units will be reserved for low-income households.

The second property is at 556 Ross Street which is currently a parking lot between the former Press Democrat building and Barrel Proof Comedy. This project will be an eight-story, mixed-use development with 118 units of housing, a public child care center, a small cafe and shared electric fleet of vehicles for building residents to use.

Both are waiting for final confirmations to break ground.

Block said there have been many challenges with bringing more workforce housing to downtown Santa Rosa. She says there aren’t the same subsidies, grants or tax credits available for this type of housing.

She also said other economic factors such as capital expenses, increased risk associated with borrowing funds and high interest rates have created challenges for developers, not just in Santa Rosa but across California.

“Investors and financial institutions are more cautious about the added risks of our market,” Block said. “If you look at places like Oakland or San Francisco pre-COVID, where there was a lot of building happening, you have the same construction costs we have here, sometimes maybe a little more for labor costs. But the rents are much lower here than they are in those areas so that’s where it’s been an issue.”

Another challenge is that many local developers specialize in single-family or low-density housing.

Economic development division deputy director Raissa de la Rosa said the city has been working with developers from outside the county to bring high-density infill housing and other community amenities to downtown.

“In order to survive, we need to have a higher density of housing versus parking,” she said. “We’re still going to have more than enough parking, but it’s one of the incentives that we have to recruit new developers downtown.”

De la Rosa added that once the foot traffic increases, more amenities will follow such as a grocery store or more places that offer child care.

What took so long to bring housing downtown?

Mid- and high-density housing wasn’t the development pattern for Santa Rosa. Rather than building up, development sprawled outward toward the city’s edges, which is why housing is limited in terms of finding space near Courthouse Square and Railroad Square.

After the Tubbs Fire of 2017 took out more than 3,000 Santa Rosa homes, Santa Rosa and Sonoma County formed the Renewal Enterprise District to accelerate the construction of mid- to high-density housing near public transit hubs.

Michelle Whitman, a board member for the Renewal Enterprise District, said the district was able to attract state funding with the goal of bringing more housing to downtown, but interviews with developers and stakeholders revealed that financing issues made the idea nearly impossible.

“They faced financing gaps that they couldn’t address and the reason for that was we were trying to accelerate this type of housing that didn’t really exist in downtown Santa Rosa and the city center more broadly,” Whitman said.

Whitman said sponsors and developers would typically be able to reach between 90% and 95% of funding for a project, but struggled to close the funding gap because of the lack of proof this type of housing was in demand.

The Renewal Enterprise District, using grant money obtained from the state as well as county and state PG&E settlement money from the Tubbs Fire, helped close the gap.

The push for affordable housing

Calum Weeks, policy director with Santa Rosa-based housing advocacy organization Generation Housing said the downtown area needs different types of housing including affordable, market-rate, for-rent and for-sale options.

He said many Sonoma County residents are living in overcrowded conditions, one of many issues surrounding housing that Generation Housing addresses. According to the organization’s State of Housing report from 2022, Santa Rosa has eight out of 10 of the most overcrowded neighborhoods in the county.

“We’re trying to ultimately reduce the level of overcrowding and give everyone the standard of living that they deserve,” Weeks said. “There are a lot of (developments) in the pipeline, and we really want to see the city and county as a whole continue making good policy choices to keep up with the momentum.”

Another hurdle

Larry Florin, CEO of affordable housing development Burbank Housing, said the economics of building affordable housing in downtown Santa Rosa has been challenging, especially given the increased demand.

Burbank Housing has about 1,700 units of affordable housing in Santa Rosa with fewer than 200 of those in the downtown area, according to Florin.

“We’d like to see the revitalization of downtown Santa Rosa include people of all income levels,” Florin said. “That’s the reason we submitted our proposal for the (former White House department store land) to ensure that diversity of socioeconomic populations are represented.”

Florin said more affordable housing developments also would mean fewer parking spaces would be necessary considering nearby transit options and shorter walking distance to key services.

“(Parking) has a huge impact on the financial feasibility of a project, so being able to produce fewer spaces is really important in terms of making projects affordable,” he said.

You can reach Staff Writer Sara Edwards at 707-521-5487 or sara.edwards@pressdemocrat. com.

“We really need all levels of housing. It’s going to take a collaboration to really make a difference in downtown, with employers, developers and with the city.”

PAULINE BLOCK, Developer Cornerstone Downtown director of marketing, development