WatchSonoma Watch

Former AT&T building in Santa Rosa cleared for sale


Santa Rosa has been cleared to sell the former AT&T building downtown to a developer with long-delayed plans to transform the concrete monolith into a modern, glass-clad office building.

The state Department of Finance on Friday afternoon informed local officials that the sale, held up for more than a year by the demise of the city’s redevelopment agency, could proceed.

“It feels good to be at this point,” said a relieved Dave Gouin, the city’s director of economic development and housing. “If we can close in the next two weeks, it’ll be huge for this community.”

Illustration of AT&T building project proposed for downtown Santa Rosa. (TLCD Architecture)

Illustration of AT&T building project proposed for downtown Santa Rosa. (TLCD Architecture)

The project, known as Museum on the Square for the gallery space once planned for the ground floor, has been the city’s highest profile economic development effort for years.

Mayor Scott Bartley said the prospect of finally getting new businesses into a remodeled building in what is now the “deadest part of our downtown” would be a huge boost for the city.

“It’s fantastic news that this thing came together and we can get moving on it,” Bartley said.

The decision from the state comes not a moment too soon. Developer Hugh Futrell has said he needed to complete the sale by the end of August in order to keep a key anchor tenant. The city now anticipates closing the deal by mid-September, which Futrell has indicated would satisfy the tenant, Gouin said.

Futrell was out of town and could not be reached for comment.

Now that the sale has been approved, Gouin said he was free to identify the anchor tenant as Luther Burbank Savings. The fast-growing bank, which is expanding its mortgage lending business, is looking to move out of offices it leases on Fourth Street east of D Street, Gouin said.

The other major tenant is TLCD Architecture, which designed the project. It started out as a 10-story tower with five stories of residential atop five stories of office and commercial space in the existing structure. The city redevelopment agency bought the eyesore for $3 million in 2007 and agreed to sell to Futrell in 2010 for $1.9 million.

But the tight lending environment and challenges inherent in financing a mixed-use building were compounded by the demise of the state’s redevelopment agencies. In May, Futrell was forced to lop the apartments off the top of the building and focus on remodeling the existing structure. At the time Bartley likened the revised project to a “Hail Mary.”

Weeks later, the Sonoma County Museum, which had plans for a first floor art museum, pulled out of the project, citing the delays and continued uncertainty surrounding the project.

Futrell has said he’s not worried about finding a new ground-floor tenant for the building.

State finance officials had called into question the extensions the city had granted to Futrell for the sale, arguing that it should have been moving more quickly to liquidate the property to generate funds to be shared among various taxing districts, such as schools.

Gouin said the city stressed to state officials that the best way for the city to carry out its obligations to wind down its redevelopment agency and disperse the former agency’s assets was to let the sale to Futrell move forward.

The state required the city to get an updated appraisal for the property, which it did, Gouin said. The new appraisal came in lower than the old one, however. The new appraisal sets the vacant building’s value at $913,000 to $1.2 million, Gouin said.

That means the city will have to renegotiate the $1.9 million sale price with Futrell and his lenders, likely settling on a price somewhere within the appraisal range, Gouin said.

Bartley said he believes Futrell has completed construction drawings and review by the city building department and things should start happening on the property soon after the sale is complete.

“I think he’s going to be getting things moving as quickly as he can,” Bartley said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @citybeater.

7 Responses to “Former AT&T building in Santa Rosa cleared for sale”

  1. Carl says:

    So Mr. Futrell is free to move forward making big bucks off the backs of Santa Rosa taxpayers. You’d think he would use local construction workers so some of that money could get regenerated through the local economy. Unfortunatly he must have a lot of distain for local workers because he wants to use workers and contractors from Southern California as he has on many of his projects. Sounds like Hugh is selling out Santa Rosa – AGAIN!

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  2. GAJ says:

    It should be primarily residential as initially planned.

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  3. RICHARD says:

    Dear bear,

    Here’s an idea. Use it for storage:, government, bank, insurance, records; art etc.

    It is a harden, fir resistant structure. Storage building generate little traffic, more traffic at this location is not needed.

    Modifications for this use would be minor. It would be a waste to cut this thick walled heavily reinforced building up to make a glass office building, in my opinion.

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  4. bear says:

    Criticism is good, but what would YOU actually do with this building in this condition in this location?

    Learn this: once you build something, you’re stuck with it for a very long time, either through maintenance or by scrapping it and starting over.

    Ideas? This should be a private sector opportunity!

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  5. James Bennett says:

    Why do you suppose mixed use (Smart Growth) is difficult to finance?

    It doesn’t ‘pencil’ because people generally don’t like it, it generally has to be subsidized.

    They tend to have a very low occupancy rate.

    Obviously Smart Growth isn’t about what we like.

    It is a globalist model that has been insidiously imposed on us by a hi-jacked American Planning Association.

    Appropriations within our hi-jacked government bribe/extort cash strapped municipalities into installing it.

    It is done largely through grant money eligibility which justifies the need for and pays (over pays) adherent bureaucrats.

    Ever wonder why the redevelopment agencies stayed intact after Brown did away with it?

    We believe that was temporary, with knowledge that these regional plans (along with SB 1) would reinstate redevelopment on steroids.

    Lighting the fuse on the time bomb that is our freedom and fiscal health.

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  6. brown act Jack says:

    Heck, he might as well ask the City to donate the building to him.

    They purchase a piece of Junk for 3 million, accept a bid for 2. something or other, and then don’t force the close of the sale because the buyer can not buy the place as economic conditions went down.

    As to the appraisal, Hah! Worth between 900K and 1.2 million!

    Reminds me of a test on appraisals I took years ago. There is a brand new hotel in the middle of the desert, how much is it worth if it cost $5 Million to build.
    Answer was , Wait, it is coming to me.

    Nothing, if it has no income!

    If I remember correctly, it was bought by the RDA to improve the square area, and that meant it would be torn down to be replaced,

    another beautiful dream about to be fulfilled.

    Don’t hold your breath!

    Ask the appraiser to justify the price and value estimate.
    And look for the comparables
    Put it in the record for the public to compare with the original estimates and valuations.

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  7. RICHARD says:

    Santa Rosa has excess office space now, it does not need this building. This building will only draw tenants from existing buildings. This could result in empty and abandoned buildings. It has happened before during urban renewal and redevelopment.

    ” The city redevelopment agency bought the eyesore for $3 million in 2007… The new appraisal sets the vacant building’s value at $913,000 to $1.2 million … ”

    So the city, meaning the tax payers, stand to lose between 2.1 and 1.8 million.

    The city council and city manager should do better by the tax payers. But they seem to serve the special interests to the determent of the tax payers.

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