Bill Hocker | Dec 5, 2015

NVR 12/05/15: Supervisors to take up winery growth debate

Discussion and possible direction regarding the recommendations being forwarded by the Planning Commission from the Agricultural Protection Advisory Committee (APAC)

Item 9D on the agenda here with documents
The agenda Letter is here

My concerns in reading the Final APAC recommendations (beginning at the bottom of page 3 here) to be presented to the BOS remain the same as they were before the committee was convened. The expansion of tourism venues into the vineyards is unlikely to be slowed by any of these recommendations and at least two of them will have the effect of easing or hastening that expansion. Despite the effort of residents to protect agricultural land from commercial exploitation and the effort of staff to craft solutions to slow that commercialization, the pro-development interests within the wine industry, refusing any changes that might threaten their right to future exploitation of the tourist trade, insured that the recommendations would have little real consequence.

8. Small winery ordinance

If the ostensible purpose of this ordinance is to allow for poorer dreamers to be able to break into the Napa wine industry then it is a bit of a ruse. The costs and time involved in obtaining a use permit, while substantial perhaps compared to other permits, are still a small part of the overall cost of a project including land, building and equipment. Making that part of the process a little less expensive will not suddenly make it affordable to people less wealthy than the current developers.

The developers bringing in projects under this proposal will be no different from those proposing current projects, although if the process appears less arduous, there will probably be more of them. Without controls on the future development of properties allowed small wineries (beyond the 5 yr period proposed), developers will be encouraged to bring in their proposals under the small winery definition, with the opportunity of an expedited process, and once the winery is in place begin applying for expansions to capacity, area and hospitality as happens all too consistently now.

Had proponents of this process really wished to provide a mechanism for affordable winery startups on AP/AW land, they should have considered limiting all wineries on parcels less than 40 acres to the small winery definition with no development potential allowed beyond those limits. The current value of sub-40 acre parcels, which now reflect their potential value as multi-million dollar tourism event centers, would then fall to the point that the dreamers might actually be able to buy them. Unfortunately, the dreamer scenario was just a subtrafuge to ease continued winery development.

11. The Jan 1, 2017 Implementation date

Giving a date for new regulations to go into effect without a moratorium on current applications is a recipe for a gold rush. As I have mentioned elsewhere:

Supervisor Luce has already intimated that it is time to consider a permanent moratorium on new wineries in the Ag Preserve based on the large surplus of permitted processing capacity available. And as the planning commission was recently informed, the planning department is receiving applications faster than they can be processed, another a reason for a moratorium. And as the BOS is considering changes to the General Plan regarding wineries, prudence would suggest a moratorium while the changes are made lest there is a surge of applications.

It is time for a moratorium on winery development - at least until the Implementation date - but preferably forever. Unfortunately this prudent action thus far seems to be a nonstarter.

12. Definition of agriculture

The planning commission recommended change in the definition of agriculture, while welcome, is a bit tepid, crafted it seems to make as little change to the existing text as possible. More importantly, the definition still depends on the definition of "incidental-ness" and "subordinate-ness" based on metrics which have done little to prevent the proliferation of event center wineries thus far.

The area definition posits a 40% ratio between hospitality and production areas. The inclusion of caves and outdoor areas in that calculation is a desirable recommendation. But an area does not really define the difference between hospitality revenue and wine revenue that is in fact the reason that event centers are being created. Without the potential profits to be made in food service and event rentals it is quite probable that many of these new projects and expansions would not happen. (The owner of the proposed Anthem winery said as much with her statistical analysis during APAC).

Wineries should be built for the need to process grapes not the desire to process tourists. Most wineries being proposed will not be processing grapes from new vineyards, which are expanding at a rate much less than the new winery capacity necessary to process them. The new wineries are, in fact, dividing the existing production of Napa wine into ever smaller brands that cannot compete economically in the wholesale world market, and are demanding DTC sales to make up for the inefficiencies in production they create. The tourism industry is, of course, only too happy to promote more of these vanity venues for their customers to visit. But tourism comes at a cost to the environment and the quality of life of residents, the things that make Napa a special place. The destructive character of tourism as an advertising strategy needs to be viewed against its value to the Napa wine industry as a whole. Is the urban development necessary to accommodate an ever expanding tourist economy desirable for the sustainability of the Napa wine industry, or is it just necessary for a minor segment of vintners to help justify their extravagant investments?

To be truly incidental and subordinate, in a way that insures that hospitality uses are not the drivers of winery proliferation, the relationship between wine production and hospitality might be better defined economically. Not just to insure that wineries are not being built solely for their hospitality profits, but to gauge how much hospitality revenues are a part of the entire industry. I know nothing of how records of wine sales are kept, but I know that they are well regulated and a comparison between the wines sold at a winery and winery revenue less total wine sales should be able to be made. This could be done with another couple of lines on the yearly winery certification also being recommended. I would urge the Board to explore an economic definition of "incidental and subordinate" to insure that wineries are being built with the desire to produce wine and not just to profit from more tourism.

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