Financing and Ownership Analysis Underway for Santa Rosa Downtown Convention Center Project

Sonoma County Tourism and its newly hired consultant will work out the details over the next three months of what it will take to bring the agency’s vision of a premier convention center to life in downtown Santa Rosa.

Financial analysts at El Segundo-based Kosmont Companies will seek to answer three key questions about the project: who will own it, how it will be financed and who will be liable if the project is not profitable.

“How are you going to finance this project? That’s the $81 million question, of course,” Claudia Vecchio, president and CEO of Sonoma County Tourism, said at a special board meeting Tuesday where the proposal was discussed.

Sonoma County Tourism is proposing a convention center with 40,000 square feet of meeting space and a 250-room hotel in the former Sears site at Santa Rosa Plaza.

Little new information about the project was revealed Tuesday, but the presentation provided a timeline of the essential work that needs to be done in the coming months before the council applies for funding.

And while updates were provided at the tourism agency’s board meetings, the study session also provided an opportunity for the broader community, including business leaders and elected officials, to get a first look at next steps.

Kosmont Companies will analyze three ownership scenarios and gather potential financing — essentially funds that tourism officials can tap to build the project.

The work will help tourism officials present the proposal to mall giant Simon Properties, which jointly owns the property with Seritage Growth Properties, and other potential local partners.

“This idea goes beyond the Santa Rosa Mall. It will impact downtown and hopefully the (Railroad Square) neighborhood,” said Paul Nieto, senior vice president of Kosmont Companies. “I hope it helps unify and create a real synergy for this neighborhood.”

In May 2023, Sonoma County Tourism first unveiled its plans for a convention center, but details of the proposal, largely worked out behind the scenes over the past year, have slowly emerged through public meetings and documents as tourism officials seek to align political and financial support.

Vecchio said Tuesday that discussions with Simon were continuing, but declined to provide details.

Simon has remained tight-lipped, declining to comment on the proposal. The site has also been considered by Simon for housing and grocery development, though little information about those projects has been released.

A Simon spokesperson said via email that there was no update on the site’s redevelopment. Santa Rosa Plaza Manager Danielle Nelson attended Tuesday’s meeting, but other Simon officials did not appear to be in the audience.

Sonoma County Tourism hired Kosmont Companies in August to help develop a road map as tourism officials continue discussions with Simon.

The company, founded in 1986, has a long history of working with cities, counties, nonprofits and real estate developers on real estate and public-private development projects.

Joe Dieguez, Kosmont’s senior vice president, said the three ownership scenarios could involve Sonoma County, Santa Rosa or a special nonprofit entity — the most common arrangement — owning the site.

This component will help determine different financing options for the project, Dieguez said, adding that municipal governments and nonprofits can often access bond financing and better interest rates.

The cost of building the convention center alone is estimated at more than $80 million, a tall order for tourism officials and advocates who say demand for a project of this magnitude is growing. That figure does not include acquisition costs or the cost of building the hotel.

Financial projections show the center could generate $42 million a year in economic impact once operational, hosting up to 345 events a year and attracting 91,300 visitors once operations are stabilized. That could translate into 30,800 occupied room nights and new business for downtown restaurants and retailers.

Kosmont’s analysis will also examine the return on investment for partners, risk and the role of private developers and neighboring landowners and the company will develop a plan for acquiring the property and building and operating the center.

Vecchio said the tourism agency would embark on a community engagement process to solicit feedback from residents and stakeholders.

As Kosmont finalizes her analysis over the next three to four months, she expects Sonoma County Tourism to visit early next year to court potential partners and seek funding.