WatchSonoma Watch

Santa Rosa’s ‘Museum on the Square’ delayed again


New state rules clarifying the dissolution of local redevelopment agencies could save Santa Rosa $7 million, but they also may force further delay in the ballyhooed Museum on the Square project.

The upside for the city, which like hundreds of others around the state saw its redevelopment agency dissolved in February, is that it now has a path to recoup $7 million in loans it made to the agency.

Planned makeover of AT&T building in downtown Santa Rosa, right, looking east to Courthouse Square.

The downside is the new process outlined by a new state law will further delay the effort to transform a downtown eyesore into a gleaming 10-story multi-use tower.

The City Council on Tuesday reviewed some of the impacts of Assembly Bill 1484, which was signed into law by Gov. Jerry Brown on June 27.

The main one was the need for the city to loan the former redevelopment agency, known as the successor agency, an additional $183,000 for new administrative work required by the law, such as requiring an outside accountant review agency financial documents.

Those tasks, if completed on time, should result in the state deeming the $7 million in loans as valid obligations, meaning the city would be able to be repaid from property tax revenues once set aside for redevelopment.

“I think it’s not a bad investment, spending $183,000 — even though we’ll get it back — to get $7 million,” said Councilman Jake Ours.

Another potential impact of the new law is it will likely further delay Museum on the Square, already more than two years behind schedule.

The city’s redevelopment agency in 2007 purchased the long-vacant AT&T building, and in 2010 agreed to sell it at a $1.1 million loss to a development team led by Hugh Futrell.

Plans call for transforming the concrete eyesore into a $23 million glass-clad tower housing the Sonoma County Museum, a restaurant and four stories of office space, capped by five stories of apartments.

Advocates say the project would create hundreds of jobs and tens of millions in economic activity for the city.

The dissolution of the redevelopment agency already delayed the project once this year. The title company handling the sale wanted assurances about who controlled the property in the wake of redevelopment’s demise.

There are now three layers of oversight for the former redevelopment agency programs and assets — the Santa Rosa City Council as the successor agency, a seven-member local oversight board that includes representatives of other taxing districts including schools, and the state Department of Finance.

Initially, the title company wanted assurance the state and oversight board agreed the property could be sold to Futrell. That required the City Council to approve a third six-month escrow extension through Dec. 31.

Now the title company wants to make sure the latest extension is valid. It’s requiring the oversight board and the Department of Finance to sign off on the extension, as well. The new law gives the department up to 45 days to respond to such requests. That could take the process through November, which would leave the deal “highly challenged” to close by the end of the year, Futrell said.

It would also make funding for the project less likely this year, Futrell explained. That’s because the project is relying on federal “new market tax credits,” which create incentives for lenders to invest in projects in low-income communities.

Those lenders are in the process of packaging their 2012 credits with qualified projects. But a project with an outstanding title question is unlikely to be selected until the issue is resolved, Futrell said.

“Every month that goes by with an unsettled title issue makes it more difficult get 2012 credits and pushes us into the 2013 cycle,” Futrell said.

In May, when the need for the latest extension was apparent, Futrell said the title issue had been resolved and construction remained on track to begin in the fall. That timeline is “no longer accurate,” he said.

Futrell praised city officials for working diligently to overcome the latest set of hurdles, and said he’s confident the clean title will eventually be granted.

“But if you are a tax credit investor in, let’s say Boston, Mass., looking at what’s going on in California, you might not have the same degree of confidence,” he said.

Dave Gouin, the city’s director of economic development and housing, confirmed another extension may be needed. His staff is preparing to update the City Council on the issue next month.

3 Responses to “Santa Rosa’s ‘Museum on the Square’ delayed again”

  1. Steveguy says:

    Maybe the SMART Board can be the first to buy those ” Transit Oriented” Condos…

    Never mind, as we would have to subsidize them anyway. Sad, so sad. We are doomed with the politicians that we have, yet ALL will be voted back in.. Oh my.

  2. Stephen says:

    It’s always cute to see a hick town full of “hick chicsters” trying to hip. Give it up. Downtown is a disaster that only a good magnitude ten earthquake can resolve.

    Since everyone wanted the SMART to badly, why are they not just abandoning old down town. Get stuff along those railways so SR can maybe con and lure some tourists into “historic” downtown.

    Just do the right thing snd put the police department there. Then they’ll be right next to all the criminals…yay!~

  3. R.B.Fish says:

    Museum on the Square…how creative! Move a relatively popoular existing museum build a new restaurant where one just had to close, with 3 stories of offices and 4 stories on appartments does not sound like a good deal. I’m sure the upscale tenants are going to love the bus depot and the Sears building and lovely parking lot and 101 view. Who’s the creative director?