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Residential component dropped from proposal for Santa Rosa's former AT&T building

A revised proposal for the site of the former AT&T building lops five stories of residences off the top.

TLCD Architecture
Published: Thursday, May 2, 2013 at 3:00 a.m.
Last Modified: Friday, May 3, 2013 at 7:08 a.m.

A downtown developer is downsizing his plans for the former AT&T building in Santa Rosa because he's under the gun to get the long-delayed project moving this summer.

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A revised proposal for the site of the former AT&T building lops five stories of residences off the top.

TLCD Architecture

Hugh Futrell is asking the city to let him chop five stories off what had been a 10-story mixed-use tower dubbed Museum on the Square, eliminating entirely the project's residential component.

The change is needed to simplify the financing and speed up construction of the project to prevent tenants for the office space from pulling out of the deal, Futrell said.

"We still believe this is a critically transformative project for downtown Santa Rosa," Futrell said.

The city's former redevelopment agency purchased the long-vacant AT&T building in 2007 for $3 million. The plan was to find a developer to revitalize the windowless concrete structure, which many viewed as an eyesore in the heart of downtown.

Futrell partnered with TLCD Architecture to design a glass-clad building housing the Sonoma County Museum and a restaurant on the first floor, with four stories of offices above. On top of that, they proposed five stories with 43 apartments.

But the challenging financing environment and demise of the redevelopment agency conspired to repeatedly stall the project. The 2010 contract to sell the building to Futrell for $2.1 million has been extended three times, most recently through the end of this year.

The state Department of Finance threw a monkey wrench into those plans in March, informing the city that the extensions conflicted with the requirement that the former agency "expeditiously wind down" its affairs. Instead it directed the city to "terminate or renegotiate" such contracts with an eye toward raising revenue.

Financing for the original project was also being held up by its reliance upon federal tax credits, which Futrell said "introduce tremendous complexity to the whole process."

So when it came time to renegotiate the deal with the city, Futrell realized the only way he could get it done quickly enough for an August construction start was to simplify the financing and revert to a more conventional approach.

The new project will be easier to finance because he has signed leases for three of the four floors above the museum, he said. TLCD Architecture is one. The other Futrell has not named.

Instead of $26 million, the new project will cost $16.5 million. With no residential component, there will be no need for parking in the basement, further simplifying the design, Futrell said.

The change also effectively nullifies the agreement Futrell struck with the city to allow future building residents access to the garage through the city's transit mall on Second Street.

While he still envisions the Sonoma County Museum will occupy the ground floor, the new agreement with the city would not require it.

"The museum is still part of the deal," Futrell said.

But Diane Evans, executive director of the Sonoma County Museum, would not say whether her organization is still on board. "We are following the evolving developments and are not in a position to comment," Evans said.

Tired of waiting for the project, the museum previously decided to take over the adjacent Conklin Brothers flooring warehouse for, among other things, an art gallery.

While he is now under intense pressure to close escrow by August and begin construction, Futrell said he is confident he can pull it off.

"We are moving forward on our end at extra high speed," Futrell said. "So long as we get through our process and are able to pull permits in August that will allow our anchor tenant to stay in the deal, the project is a go."

He and his partners have already spent $1.8 million on the project and expect to spend $500,000 more in the coming month to get it shovel ready, he said. The redesign is a further sign of his commitment to the project, he said.

"We are all in to get this project under construction in August," he said.

The new agreement heads Monday to what is known as the oversight board of the successor agency of the redevelopment agency, then to the Santa Rosa City Council on Tuesday, said David Gouin, the city's director of economic development and housing.

"We believe it's in the best interest of the state and the city to proceed with the commercial project now," Gouin said.

The new valuation of the building, when a new appraisal is complete, should benefit from having signed leases, Gouin said. And while it won't get an influx of people living in the 43 new downtown apartments, the city will still benefit by being able to "activate this very challenging property right in the middle of our downtown and boost economic activity," Gouin said.

The staff report for the revised project says it could create 600 jobs and generate $60 million of annual economic activity for the city.

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

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