Petaluma housing project stalled
A major Petaluma housing project is in limbo after a developer decided to sell the venture, delaying construction of new homes in the city at a time of an acute housing shortage.
The Riverfront development on a vacant 35-acre property bordered by Highway 101, the Petaluma River and Hopper Street is slated to have 273 housing units, including single-family homes, townhouses and apartments, commercial and office space and a hotel. It is the largest housing project in Petaluma currently under development, and it is expected to help ease the housing crunch made worse by October’s wildfires.
But construction of the first phase is on hold as builder Comstock Homes and its investment partner, Real Capital Solutions, are seeking to sell the project to “a national home builder,” according to Troy Busse, director of purchasing for El Segundo-based Comstock Homes.
“It’s not good news. The investment group decided to sell,” he said. “They didn’t think it would bring in the returns they were hoping.”
Busse declined to say which company was interested in purchasing the project since the sale is not finalized. Richmond American Homes is reportedly the builder, according to a source familiar with the deal. Comstock CEO Dave Lauletta said the sale could close by the end of May, and there is a slight chance that Comstock could still build the project if the deal falls through.
“If they decide to move forward then we may be selling the development to another builder,” he said. “We probably won’t know until the end of May, however. The development will go forward eventually, it’ll either be by Comstock or the home builder.”
The Riverfront project was originally developed by Basin Street Properties, which has several Petaluma projects in its portfolio, including the Theater District. Basin Street received approval for 134 houses and sold that aspect of the project to Comstock and Real Capital Solutions, which provided financing.
A message left with Ryan Atkin, vice president of home building for Colorado-based Real Capital Solutions, was not returned.
The single-family home portion of the project was branded as North Bank by Comstock. A sales office Comstock opened up on D and 2nd streets in Petaluma closed two weeks ago and Comstock has taken down a website marketing home in the North Bank community.
Busse said the homes were to be built in three phases. The first 19 homes, including model houses, would have broken ground by now if not for the pending sale, Busse said. He said Comstock will still develop the land for the project, including constructing the streets and laying the utilities, and should wrap up in August.
Basin Street sold the hotel development to Arizona-based Glacier House Hotels, which plans to build a 122-room Courtyard by Marriott. Jordan Scott, president of Glacier House, said the company plans to break ground sometime between September and November and open by the fall of 2019.
“Petaluma is a great place to visit both for business and leisure,” he said. “We believe there is a strong market for a Marriott product.”
Scott said the company is contracting with Guerdon Enterprises, which makes modular buildings. The company will prefabricate the hotel rooms in Idaho and ship them by container to the building site, he said.
Busse said Comstock had explored using prefabricated walls and roofs to build the North Bank homes. The use of prefab materials is popular, especially in the wildfire rebuilding projects where labor is scarce and expensive.
“It’s brutal finding labor right now. Workers can’t afford to live in the area,” Busse said. “I know there’s a demand, especially after the wildfires. You’ve got to get creative.”
Frank Marinello, vice president of development at Basin Street, said the Riverfront development has three more phases — townhouses, a mixed-use commercial and apartment component and office buildings. He said the company is marketing the townhouses to potential builders. Basin Street is currently designing the mixed-use phase and could build the project or sell it to another builder, he said, and the company would likely build the offices “when the market is right.”
Emmanuel Ursu, a principal planner for the city of Petaluma, said the Riverfront project has most of the needed city approvals except for building permits for the individual structures. Some phases still need site plan and architectural review, he said.