As Santa Rosa advances plans for a new City Hall, here's what the deal could mean

What could the future hold for a three-block stretch south of Santa Rosa's Old Courthouse Square? Characterized by a sprawling and dated government campus and pockmarked with partially vacant commercial spaces, the corridor connects the city's main commercial drag and the historic Burbank Gardens neighborhood. City Hall officials and downtown stakeholders have long looked to reimagine the area, particularly the city's 7.6-acre government campus, which includes four properties at Santa Rosa Avenue and First Street. Now, after several starts and stops, it appears the area could be headed for a transformation. The vision includes the type of development that can support new residents and attract visitors, creating an 18-hour downtown, while providing the city workforce with a new modern hub. Under a deal the council unanimously endorsed Aug. 18, Santa Rosa will sell most of the city property to Museum on the Square LLC, headed by local developer Hugh Futrell. In exchange, the city will acquire and relocate government operations to Futrell's remodeled office building two blocks north at 520 Third St. The city will lease 90 and 100 Santa Rosa Ave. back from Futrell for $2 for up to two years while the new building is outfitted for city workers, work that Futrell's firm will be responsible for completing under the terms of the exchange agreement. The proposal will cost $4.55 million upfront — the difference between the negotiated price of the city properties and the Third St. building. Tenant improvements to prepare the building for workers and other costs associated with the move are estimated at up to $20 million. 'Opening the city site for redevelopment has the ability to be transformational for downtown,' said Ken Lafranchi, a local property owner and licensed architect, who added the campus is sitting on prime real estate that is underutilized. 'It's a huge opportunity.' The property exchange, crafted mostly behind the scenes, has been cast as the most cost-effective alternative to addressing about $100 million in deferred and future maintenance needs at the 1960s-era government complex, and would allow the city to co-locate about 300 employees spread across several buildings into a central, upgraded space. City leaders say redeveloping the city campus also could help generate new revenue for the city, about $60 million in property, sales and hotel taxes and other fees over 30 years, and create hundreds of temporary and permanent jobs, according to city projections. 'This move is a huge win for the city and both residents and employees,' Mayor Mark Stapp said. The building at 520 3rd Street in Santa Rosa, which Santa Rosa city officials are considering purchasing as its new government headquarters, on Monday, August 17, 2026. (Christopher Chung/The Press Democrat) A number of questions hang over the deal as the plan advances. While city executives have said tenant improvements in the new space would likely be financed at an annual cost of $1 million over 30 years, the council has yet to publicly consider a formal financing plan. The city also must build into its budget a mechanism to cover ongoing maintenance at the new site to avoid a backlog like the one plaguing the existing campus. Still to be decided is where the City Council will meet and where city employees and visitors will park. Other key details also must still be worked out, including what will happen to the existing tenants at 520 Third St. who will have to vacate their offices. Some of those details will be sorted out during an ongoing 85-day due diligence period where city staffers and Futrell's team are conducting additional evaluations ahead of the targeted Dec. 31 closing date and over the following two years while the city remains on parts of the campus. City move long in the works Santa Rosa leaders have long mulled a move out of the aging City Hall complex. The campus, made up of a set of disjointed gray concrete buildings, has seismic safety concerns, asbestos, water intrusion and other maintenance needs that have been pushed off for decades, Transportation and Public Works Director Dan Hennessey said. Building systems and structural components, such as the roof, HVAC and the electrical system, have reached the end of their useful life and parts of the complex are inaccessible and require significant reconstruction to comply with the Americans with Disabilities Act, he said. Santa Rosa City Hall, Thursday June 20, 2024. (Chad Surmick / The Press Democrat) The city estimates the complex needs about $48 million in immediate repairs plus an additional $50 million to address systemic failures in the future, figures that staff anticipate will continue climbing if further delayed and would burden an already stretched budget. 'The cost to the city here is real,' he said. 'We are not paying for it annually and as a result of that it continues to grow rather than having us address it in a meaningful way.' Santa Rosa in 2019 courted consultants who could help advise the city's transition out of its current home while freeing up the land for much-needed housing. Proposals included building a new civic center on a city lot at Third and E streets or rebuilding on a portion of the existing City Hall campus while making the rest available for private development. When the council revisited the idea in late 2022, members scrapped plans, citing the anticipated high costs and the city's uncertain fiscal outlook. But several closed-door discussions over a 15-month period starting in late 2024 indicate staffers and elected officials continued exploring options, including relocating workers to an existing office space, at about a quarter of the price of repairing the existing facilities. Jill Scott, the city's real estate manager, said as the city sought a new space it was critical the workforce remain downtown. Scott said the city required up to 80,000 square feet to accommodate some 300 employees and other needs. The existing City Hall and three city buildings across First Street have about 97,000 square feet of space, though Scott said some of it, including the basement at City Hall, has significantly deteriorated and is unusable. The city evaluated several buildings but 520 Third St. emerged as the top contender because of its size, location and condition, Scott said. Futrell, a longtime downtown champion behind the redevelopment of Hotel E in the former Empire Building and several other projects, said in an interview that as city officials sought updated space for its workforce they had long expressed interest in his Third Street property. City leaders first approached him about two-and-a-half years ago with the exchange idea and there were serious but intermittent discussions before city officials decided not to pursue the project, he said. The city reached out again early this year to reinitiate conversations, he said. What could be built? The five-story former AT&T building on the southwest corner of Old Courthouse Square was built in the 1970s to house sensitive telephone switching gear. Santa Rosa purchased the vacant building in 2007 and later sold it to Futrell, whose team stripped down the concrete structure and reopened the building as offices in 2016. It has about 80,000 square feet of leasable space. It's home to prominent legal firm Carle, Mackie, Power and Ross, which leased the fifth floor a year ago, and longtime tenant TLCD Architecture. VisiQuate, a healthcare tech firm, also has offices in the building, as does Futrell's firm. Futrell said he and his partners were hesitant to let it go considering the time and financial investment made into revamping the space but ultimately came around, citing the economics of the deal, the city's need for new space and the redevelopment opportunity at the City Hall site. The development team has been having internal discussions about the best use for the site and are assessing market conditions, he said. The group is focused on creating what Futrell described as 'a superior project' that complies with the city's Downtown Station Action Plan, which outlines development guidelines for the urban center. Futrell said downtown needs a mix of housing to support different income ranges, including for-sale units, and amenities to serve current and future residents, such as a grocery store or child care. Retail and commercial space also could be eyed as part of the project. One of the properties, the former Chamber of Commerce building at 631 First St., could be preserved and repurposed, said Futrell, who highlighted the building's architectural design and condition. But it's likely other pieces of the property would be headed for eventual demolition. A city analysis estimates the property could support about 100 hotel rooms, 350 apartments, 60 condominium units, 15,000 square feet of offices, 10,000 square feet of retail and 7,000 square feet of public space. Lafranchi, the downtown property owner and architect, said the site's flat terrain, proximity to a major highway and nearby public transportation and access to the Prince Memorial Greenway make it an ideal location for development. Because the site is a few blocks outside the main downtown corridor, Lafranchi said developers could look to create more of a neighborhood center with a variety of uses. The seven-acre Santa Rosa City Hall site in Santa Rosa on Monday, August 17, 2026. (Christopher Chung/The Press Democrat) The city will retain approximately 1.65 acres on the southern portion of the city site where Santa Rosa and Matanzas creeks flow beneath City Hall, which community members and elected leaders have said they want to see daylighted. It's unclear whether such an idea is viable. The channelized waterway is a critical component of flood mitigation infrastructure downtown, where FEMA officials recently mapped increased flood hazards. Futrell said the city's use of that site likely would not impact any planned development on the rest of the property. With few public details about what's in store for the property and other issues still to be resolved, the proposal has generated some skepticism among urban planners and downtown-watchers. Santa Rosa resident David Woltering is a community planning consultant who has studied ways to make cities more liveable and with urban planner Rick Phillips penned two papers focused on how Santa Rosa could revitalize its urban center. Woltering said while the property exchange provides a quick, near-term fix to address the substantial maintenance needs at the city campus, he worries the city is letting go of a valuable asset with a significant development potential without having a full understanding of the public benefits it will get in return. 'A lot of times, in terms of what communities get back in these types of development deals, it's not always that inspiring or beautiful. It's functional, designed to fit a bottom line and a developer's interest,' he said. 'I think that's something that has happened in this community over the years.' The city, he said, can help alleviate some of those concerns by having a robust visioning process with considerable public input to help shape the project. Futrell has indicated he intends to involve both downtown stakeholders and the broader community as planning gets underway. Woltering also questioned the proposed relocation of city operations to 520 Third St. In their essay, Woltering and Phillips envisioned moving City Hall to the south end of Santa Rosa Plaza. The new civic center hub would include a new central library and mixed-use development along the greenway that wraps around a central green space. Woltering said civic centers should not only serve operational needs but also as a community gathering place and a point of civic pride. 'When I look at the city's proposal, this isn't it at all,' he said. Work to finalize site plans, other efforts underway before escrow closes City Hall executives and council members are all-in on the idea, which they say could help advance efforts to revitalize the city center and alleviate financial burdens tied to the deteriorating campus. Downtown Santa Rosa has long served as an employment hub in the North Bay and it lacks many of the amenities that make downtowns elsewhere an economic engine. The city in the last decade has taken steps to drive more growth downtown by incentivizing construction and activate the area with more programming, but downtown continues to struggle with persistent office vacancies and retail turnover. Stapp said the city property represents some of the largest developable land downtown, is underutilized and could provide a blank slate to reimagine the area. A successful project could result in new property taxes and a spending windfall generated by future residents and visitors and could help prompt other private development, he said. Significant work must be completed over the next four months before the deal closes. During the due diligence period, the two parties are conducting additional property inspections to identify potential remediation or other needed repairs. The city, as part of the exchange agreement, agreed to tap up to $450,000 from a Brownfields Revolving Loan Fund to support lead and asbestos abatement at 631 and 655 First St., which the city would vacate immediately after closing, City Hall spokesperson Misti Wood said. At 520 Third St., the city and Futrell are discussing potential repairs to the roof, south windows where water intrusion is a concern, and the basement. Santa Rosa also is engaging a planner to help design the new city offices and before closing must provide Futrell's firm with a detailed outline of proposed tenant improvements, cost estimates and a construction schedule, according to the agreement. A new location for council chambers hasn't yet been determined. The city as part of those planning efforts is evaluating whether the new facility can accommodate a meeting space and also looking at off-site options, said Wood, who noted the city would remain in the current chamber space for up to two years after the exchange is finalized. The city also is evaluating options for employee and visitor parking. The new space has limited on-site parking and most tenants park at the First Street garage south of the Transit Mall, which Wood said the city is considering using as part of the relocation. Also still to be worked out are relocation agreements with the existing tenants. The city on Sept. 1 took over a second floor suite vacated by legal firm Dickenson Peatman and Fogerty. Wood said the city has initiated discussions with the other tenants, though there's no timeline for when they will have to move out. Sources close to some of these discussions have raised concerns that with limited prime office space available downtown the firms could be forced to relocate outside the city's urban core, which would have a significant impact. Wood said the city is committed to providing tenants as much notice as possible before they have to leave and making the transition easy. Santa Rosa could begin occupying parts of the new civic space soon after the deal is finalized, while officials intend to move into other parts of the space in phases as construction is completed. Staff from finance, human resources, the communications office and parking that work at the former Chamber of Commerce building will be consolidated into available space at the main city building or temporarily reassigned to remote work, while a small number of employees will be relocated to 520 Third St. The City Council is expected to further discuss the exchange proposal, including an agreement with Futrell related to the development of the city properties and tenant improvements plans, likely in late fall. You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com.