A California appellate court has sided with Santa Rosa in a case challenging a 2022 City Council decision to declare Garage 5 on Third Street as surplus property.
Airport Business Center, a major commercial landlord and developer that owns the office tower adjacent to the downtown garage, had sought to halt city efforts to sell and redevelop the city-owned property.
The case largely hinged on whether the city followed proper procedures in finding the garage was no longer needed and could be designated surplus under California law.
In a ruling issued Wednesday, a three-judge panel of the state’s 1st District Court of Appeal found that city officials conducted comprehensive studies showing there was ample parking downtown that could absorb demand if the garage were redeveloped, that the garage needed extensive repairs and that the land could be better utilized.
Matthew Henderson, the attorney representing Airport Business Center, argued in court filings and in a Nov. 19 hearing before the panel that the decision was reached arbitrarily and was not backed up by written findings as required under the Surplus Land Act.
State law requires local government entities to prioritize housing when disposing of public properties.
The panel, in its decision, pointed to an extensive administrative record — more than 12,000 pages — that they said supported the city’s decision.
“We conclude this evidence provides adequate support for the conclusion that the property constitutes surplus land,” Presiding Justice Alison M. Tucher wrote.
Chad Surmick / The Press Democrat
The city of Santa Rosa is considering redeveloping the Third and D. Street parking garage into affordable housing in downtown Santa Rosa on April 26, 2022. (Chad Surmick / The Press Democrat)
The decision upheld a lower court ruling that previously had handed the city an initial win in a case that dates back nearly three years.
Santa Rosa officials have maintained the process to redevelop the garage has been fair and that state housing officials have signed off on it at every turn. The League of California Cities and California Special Districts Association submitted filings in support of the city.
Henderson and a company representative did not respond by Friday evening to a request for comment on the court’s decision.
The City Council approved a resolution in December 2022 designating the garage and two other downtown properties as surplus, a first step to selling city-owned land. In September 2023, the council approved entering exclusive negotiations with Rogal Projects of Napa for redevelopment of Garage 5.
Airport Business Center filed a lawsuit in Sonoma County Superior Court in February 2023 arguing the city didn’t follow proper procedures in finding the garage was no longer needed.
The trial court in May 2024 struck down Airport Business Center’s lawsuit, but the judge granted a request by the company to bar the city from immediately selling the property to allow them to consider appealing the decision.
That meant that while Santa Rosa officials could continue negotiations, it couldn’t finalize any deal.
In its appeal, Airport Business Center argued the garage didn’t fall within the statutory definition of surplus land under state law because it was still needed for public use. The city’s requirement that any new development on the site include 75 public parking spaces implied the garage was still needed, Henderson argued.
He further argued that the resolution the council approved designating the property surplus was not supported by evidence as required under the act and therefore the designation was unlawful. The resolution needed to include detailed written findings which were omitted, he said.
“The law is clear … that (the findings) can’t just be rote recitations of it’s no longer necessary for public use and therefore it’s surplus,” he argued. “There have to be actual facts supporting that.”
Agnes Patricia Ursea, the outside attorney hired to represent the city, said while Santa Rosa officials have acknowledged the garage is highly used, redeveloping the property would help meet the city’s housing goals.
The city in recent years has increasingly turned to transforming its own properties to speed up a goal of increasing housing in the urban center. The latest plan calls for 7,000 new homes by 2040 in the 720-acre downtown.
Ursea argued that the city reached its decision after careful consideration and that the state law doesn’t require the city to make specific findings supporting the designation. Findings must only be made when determining if the property is considered exempt or nonexempt surplus land, she said.
The panel of judges agreed with the lower court that it is in the city government’s purview to determine whether a public property is necessary for continued operations or can be disposed of.
Tucher wrote in the decision that Airport Business Center was construing “something that is merely useful” — the public parking spaces — with something that is necessary. Associate Justices Ioana Petrou and Victor Rodríguez concurred with her decision.
The judges argued the purpose of the Surplus Land Act is to help advance the state’s affordable housing priorities and imposing additional restrictions on local governments’ ability to redevelop public property would hinder those efforts.
“Appellant’s proposal … would potentially undermine the purpose of the Act by erecting a substantial roadblock for agencies considering whether to make underutilized assets available for development of affordable housing,” according to the decision.
The panel also rejected Airport Business Center’s argument that the 75 spaces required in the new development showed that the garage was necessary because the required number is less than half the current number of spaces and there is capacity at other public garages to meet demand.
It’s unclear what the judge’s order means for ongoing negotiations between the city and the developer.
The council last met in closed session in February to discuss the price and terms of the sale. A city spokesperson in April said negotiations with Rogal were ongoing but a deal has yet to return to the council for a vote.
City officials did not respond to a request for comment by deadline.
You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.