By ERIC ANDERSON
Santa Rosa is financially strapped yet it has elected — through a selection committee of City Council and Redevelopment Agency board members — to refuse $10 million in potential revenue from the AT&T building.
At least that is our calculation having studied the winning “Museum on the Square” proposal after it was posted on the city’s Web site and now having seen that project’s expected economic benefit, as outlined in a recent Press Democrat article.
Our hotel/museum/restaurant proposal — the “Exchange,” one of two finalists — was rejected in favor of the winning office/condo/museum proposal. This is not a case of sour grapes; we wish the winners nothing but good fortune. Our questions are focused on the selection committee’s decision-making process and on the City Council’s fiduciary obligation.
Our Exchange proposal describes how Santa Rosa would have generated $10 million to $14 million in revenue over 10 years. The winner’s proposal generates $2.3 million, a sum Santa Rosa officials tout as a “good deal” for the city. We have no insight as to why the city believes $2.3 million is better than $10 million to $14 million, but this $10 million to $11 million disparity has encouraged me to take the rather extraordinary act of submitting this column in order to shine some light on the process.
While the selection committee may have selected the right team, it is substantially clear that on a financial basis it chose the wrong project.
We ask the reader to compare the two projects as we have:
• Winner will pay Santa Rosa $1.9 million to acquire AT&T property. Loser offered $3 million contingent on hotel’s success;
• Winner will pay $400,000 in additional real estate taxes to Santa Rosa over 10 years. Loser’s model shows payments of $10 million to $11 million in hotel occupancy and real estate taxes over the same period.
• Winner proposes spending $23 million in improvements to the building. Loser proposed spending $30 million. SR loses tax revenue on $7 million difference.
• Winner includes office space (30 percent vacancy rate in office market) and up to 45 condos (amid an historic housing crash). Loser proposed 152 boutique hotel rooms servicing Sonoma County’s core strength, it’s tourism industry, a use demonstrated by the economic study included with our proposal.
• Winner will create few new jobs as its main tenants are already in Santa Rosa. Loser’s hotel would have created approximately 60 to 70 new jobs and had already signed up Gavin Newsom’s hotel company — Plumpjack — to run the hotel.
• Winner promised to include a to-be-identified restaurant in their project; loser included a James Beard award-winning restaurant as part of its application.
• Winner partnered with a local museum, which survives on significant municipal support. Loser offered a museum — The Exchange — led by a board chaired by Steve Oliver, an important art patron who is in the process of handing over his priceless Alexander Valley “art ranch” to an organization supporting the Community Foundation of Sonoma County. The Exchange would have begun life with a $5 million endowment.
• The loser included in its proposal a comprehensive strategy to rebuild Courthouse Square per the city’s design. It also included an innovative financial model that avoided using the city’s general fund. The winner did not respond to that part of application process concerning other downtown projects.
Did the selection committee and senior staff fully study or comprehend our “Exchange” proposal? Leaving $10 million in potential revenue on the table begs the question.
Will this project be an economic generator as the city touts and The Press Democrat reports? Will moving office jobs across Santa Rosa Avenue generate new economic growth?
These are complicated questions, but we believe they are readily answered with common sense. Without even getting into questions of urban design and overall vision, we believe the city needs to be more closely questioned on what it is doing with the exceedingly important AT&T property. We would hope Santa Rosa works with the winning team in crafting a better financial deal for the city and a more forward-thinking use for the building, one that more fully embraces a new downtown.
Healdsburg has done it. Why not Santa Rosa?
Eric Anderson, a graduate of Santa Rosa High School, lives in New York City where is a principal in a number of businesses, including Urban Green & Prune restaurant.
See Press Democrat Editorial Director Paul Gullixson’s blog about this subject on the PD insider blog.