City Council to consider revised deal with Montage Healdsburg developer

The city of Healdsburg is poised to accept millions of dollars in payments from the developer of the new Montage Healdsburg luxury hotel in exchange for revising some of the required public amenities that were included in a decade-old construction agreement for the resort.

The Healdsburg City Council on Tuesday will consider an amended deal with Sonoma Luxury Resort, a subsidiary of developer Robert Green Co. The proposal, which requires council approval, would still ensure an affordable housing site on the 258-acre resort property on the north side of town, as well as a future public park and trail network, among other benefits that were tied to the prior approval of the 130-room hotel and up to 70 custom villa-style homes.

Under the revised agreement, however, Robert Green Jr., president and chief executive officer of his Encinitas-based commercial development firm, will pay a fee to the city instead of prepping 14 acres of land for the affordable housing project. The proposal also calls for Green to make cash payments to pass off construction of a planned fire substation and bicycle and pedestrian pathway. The fire substation will now be built by developer Bob Comstock of Southern California-based Comstock Homes through a separate agreement for a hotel and residential project known as North Village, just west of Montage Healdsburg.

The amended deal with Green, hammered out over several months with city staff, still requires that a pair of roadways be brought up to public access specifications. It also maintains prior cash commitments toward the fire substation and 36 acres of parkland on the resort property. Those payments total $4.75 million, plus the yet-to-be-finalized costs associated with building the bike path and grading the future affordable housing site, which could see a mix of as many as 150 apartments and townhomes.

The negotiation came about last year in part after the city failed to meet at least two deadlines for submitting design plans for construction of the park and affordable housing project, per terms of the original deal. A city staff report cited 2019’s Kincade fire, the ongoing pandemic health orders and budget constraints as reasons why the city missed the master planning cutoffs with the developer, which prevented him from preparing the land for their respective projects on set timelines.

Under the revised proposal, the city would need to meet an April 15 deadline for submitting to the developer its cost estimates for grading both the affordable housing site and the bike path. Green would then be responsible for paying the city 2021 construction costs plus a small escalator for one year if the city doesn’t begin to build before the end the year.

“I do feel like it’s both frustrating for the developer and the community that the reason why some of these things are happening is because the city has not been ready to move forward with some of the work,” said Councilwoman Skylaer Palacios. “My fear I guess with taking the in-lieu fees is, how much longer will the city have wait to do the work? I think the city will follow through, I just think it may take so much longer than we anticipated.”

In June, Green proposed paying the city $7.25 million and other benefits he valued at $2 million in exchange for relocating the lower-income housing off the secluded resort property, as well as bypassing other elements of the original deal. The item came before the City Council in September, setting off a spirited discussion involving residents exasperated over the possibility they would never see several long-promised public amenities tied to approval of the $310 million, five-star resort, which opened to guests last month.

Since that meeting, council members reaffirmed their desire to keep the affordable housing on the Montage Healdsburg property rather than move it elsewhere in town. A council committee that included Mayor Evelyn Mitchell and Vice Mayor Ozzy Jimenez also singled out a developer for that project: Oakland-based Freebird Development in partnership with Jamboree Housing Corp. of Irvine for the resort property project.

The group’s initial proposal to the city envisions including 76 apartments for rent and 33 townhomes for sale, at a range of prices. The City Council is scheduled to formally approve the city entering into an exclusive negotiating agreement with the group for the project at a meeting next month, Mitchell said.

“Their whole approach was one that we felt we would get the right product in the long run, because it’s going to take a while,” she said. “They were respectful of the city’s character, making sure not just … to dig out the hill and put up a bunch of buildings, and really working within the topography of the site.”

Council members also asserted that they wanted Green to complete two road upgrades, which will link up to the Parkland Farms residential subdivision and are intended to aid emergency evacuations. The amended agreement would eventually lead to delivering the pair of public trails as well.

Healdsburg resident Deb Kravitz, a local attorney who closely tracks city business, said she was satisfied with what she called a deal born of compromise. Even though construction of the park space, now estimated to cost as much as $10 million, will be delayed some years, she applauded the public involvement in the process.

“My initial reaction is that I’m pleased with it. That’s a tradeoff I’m comfortable with,” Kravitz said. “A lot of original public benefit items that the developer was trying to change, it looks like are going to happen. And I think that’s a positive for that community to have those road connections. I know that was important to lot of residents of Parkland Farms.”

Green, meanwhile, is contesting the largest water quality penalty in North Coast history, a more than $6.4 million fine issued by state regulators in December for dozens of documented environmental violations during Montage Healdsburg’s construction in late 2018 and early 2019. In an emailed statement, he said he and his legal team plan to continue fighting the fines, appealing to the State Water Quality Control Board.

“We filed an appeal to the state board and will pursue the appeal process aggressively,” Green said in the written statement.

You can reach Staff Writer Kevin Fixler at 707-521-5336 or kevin.fixler@pressdemocrat.com. On Twitter @kfixler.