Negotiations over downtown Santa Rosa garage development continue as challenge heads to court

Santa Rosa staffers have requested additional time to reach a deal with the Napa developer chosen to redevelop a city-owned downtown parking garage into housing.

The city’s real estate team has been working with Keith Rogal for the past seven months to negotiate the terms of the potential sale or lease and development of Garage 5 on Third Street but say more time is needed to bring back a tentative agreement to the City Council.

Rogal proposes building a mix of market-rate and affordable housing with various community amenities, though few details of his plans have been publicly revealed.

The request from staffers for more time comes as the city also prepares to head to court in late May to defend itself against a challenge by a neighboring property owner seeking to halt efforts to sell or lease the property.

The City Council will consider the time extension during its regular meeting May 7 along with a dozen other routine items on the consent agenda.

A council majority last September approved entering exclusive negotiations with Rogal’s team, Rogal Projects, for the redevelopment of the garage site.

The approval was granted over the objections of some downtown property owners and merchants who contend their business will be negatively impacted by the loss of parking. Two council members who opposed moving forward with negotiations also raised questions about the process the city took to choose the developer and concerns about the pending litigation.

City staff had up to six months to come to an agreement with Rogal on a list of requests, or a term sheet, outlining how many total units will be built, how many affordable units will be included, and what community amenities will be included.

The two parties recently reached a consensus on the term sheet, according to a staff report prepared ahead of the May 7 meeting, and would typically have another 60 days to prepare a development and disposition agreement detailing the price and terms of the sale or lease and a construction timeline, among other details.

City officials have requested an additional 90 days beyond the 60-day period to work with Rogal, citing the “complexities of the negotiations,” according to the staff report.

"We appreciate the council’s support for our redevelopment plans for Garage 5, and feel confident that all substantive issues will be worked through in a way that is productive and satisfactory for both the project and the city," Rogal said in an emailed statement.

A tentative agreement will be brought to the council in open meeting once it’s reached, potentially later this summer according to the timeline outlined in the report.

Rogal, in public comments made before a closed session discussion in late March about the price and terms of the garage disposition, said his team plans to build a mixed-use project with a “significant” number of market-rate housing and affordable units.

Plans also could include space for a day care, public park and children’s play area.

Rogal and his partners also have purchased a retail building at 640 Fourth St., adjacent to the garage, to enhance development capabilities on the small garage site, he said.

Rogal also is behind the 120-unit 1 Santa Rosa Avenue project near Old Courthouse Square and last year was awarded a state contract to redevelop the Sonoma Developmental Center in Sonoma Valley.

He said he and his team turned their attention toward downtown Santa Rosa about five years ago, buoyed by city efforts at the time to ease development processes and fees to encourage construction.

“From our perspective, the Garage 5 site was one of the most compelling in terms of its ability to be transformative,” he told the council, adding that despite rising interest rates and increased building costs the team is confident in the project and their ability to meet the city’s goals to build it.

“We’re committed to doing it. We’re excited to do it,” he said.

Santa Rosa has long looked to redevelop the nearly 60-year-old garage property but had previously held off amid pressure from nearby property owners and businesses. The site is in need of millions of dollars in upgrades and is the smallest of the city’s garages with just under 200 spaces.

The council in December 2022 approved designating the garage, as well as the former White House store lot on Third and E streets, and a third parking lot downtown as surplus lands, a first step to selling off city-owned property. The council at that time directed staff to request proposals from developers.

Rogal Projects submitted a joint bid with Freebird Development, an affordable housing developer, for all three sites but their proposal didn’t meet the required criteria for the two others. They were the lone respondents for the Third Street garage property.

Freebird wasn’t interested in moving forward with negotiations, but Rogal was.

The council last September also approved entering exclusive negotiations with Burbank Housing and developer Hugh Futrell for the White House lot, and those discussions continue.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.