Montage Healdsburg resort developer recommended for $4.9 million fine for environmental violations

The developer of a luxury Healdsburg resort could be forced to pay a $4.9 million fine for egregious environmental violations after allowing an estimated 6.6 million gallons of sediment-laden runoff to leave the construction site during heavy rainfall last winter, threatening already imperiled fish species in tributaries of the Russian River.

Staffers for the North Coast Regional Water Quality Control Board documented 38 violations of the federal Clean Water Act between October 2018 and May 2019 by developer Robert Green Jr., the owner of Montage Healdsburg, previously known as Saggio Hills.

The violations — hundreds of examples of them — were observed during repeat inspections, despite warnings to the developer of inadequate efforts to control erosion and runoff at the 258-acre site, according to regulatory documents.

Board personnel twice suspended construction through work stoppage orders, yet deficiencies still were abundant once crews were given permission to resume work, regulators said.

Even though there were points at which improvements were made, erosion control measures such as straw wattles and coverings for bare, exposed ground, were not maintained, said Claudia Villacorta, the water quality control board’s prosecution team assistant executive officer.

Eventually, the controls were removed while wet weather still lay ahead so that a storm that came through in mid-May rained on the landscape without anti-erosion measures in place, she said.

“We felt like the conduct was, frankly, grossly negligent,” Villacorta said by phone. “They repeatedly failed to take action, implement effective practices, and I think that’s the reason why the penalty - the proposed fine - was significant.”

The fine — which would be the highest for this type of violation ever issued in the region — is based on calculations that each of three storms that dropped 2.2 inches of rain on Healdsburg resulted in 2.2 million gallons of runoff from the construction site.

The fine is only proposed at this point and is subject to a public hearing before the full water quality control board in mid-April in Humboldt County, at which point Green and Sonoma Luxury Resort LLC, which is formally named in the complaint, can choose to contest it, waive a hearing and enter into closed-door settlement negotiations, or just pay the proposed fine, Villacorta said.

Green, president and chief executive of the Encinitas-based Robert Green Company, was attending a Windsor community meeting on Wednesday night to present his vision for a new Windsor Civic Center and mixed-use development. After the meeting, he said was “deeply disappointed” with the water quality board’s decision and would issue a written statement in the coming days.

“We are deeply disappointed and we will evaluate what we’ve been given,” Green said. “That’s all I’m going to say. It’s a smarter way to go for us.”

He would not say whether he denied the violations occurred or how he and the company planned to approach the hearing and fine. Instead, his focus was the Windsor pitch, which could include a new city hall, police station, library and school district offices; a four-story, 151-room boutique hotel; 87 housing units; and commercial retail and restaurant space.

Though Green does not yet have a contract for what would be the development with a price tag in the hundreds of millions of dollars, he is exclusively negotiating with the town for the job. Town Manager Ken MacNab said Green had informed him of issues on the Montage Healdsburg site, but not to any detail and that Windsor would move forward in their process with belief work would be completed without violations.

“It would be unfair to the Robert Green Co. to assume what happened up there is going to be what happens in Windsor,” MacNab said. “Plus, I think the nature of the land for the project is a lot different in Windsor than it is in Healdsburg, so I don’t even know if we have the potential for those types of violations in our town.”

The Healdsburg project — a 130-room luxury resort on the northern edge of town with 70 villas across a vineyard-studded landscape with numerous amenities — has been controversial from the start, in large part because of its scale and price point.

Green bought the property in 2005 for $16.8 million. He won city approval for his plan in 2008 but did not begin construction until May 2017.

Green previously estimated the cost at $310 million, saying he hoped to open in 2020. On Wednesday, he confirmed the hotel was still on track to be finished by the end of this year in spite of the work stoppages. The project required grading and disturbance of about 65 acres of land in the hills on the city’s edge, with little attention to how that exposed land would fare when rain came, water regulators said.

Beginning with the first significant rainfall of the season on Oct. 3, 2018, staff conducting routine inspections for the regional board and the city of Healdsburg, which is tasked with ensuring contractors are in compliance, began documenting vast expanses of unprotected, exposed mud and puddled water, sediment-laden runoff leaving the site and finding its way to Foss Creek and Lytton Creek, among other waterways, according to board documents. The Russian River watershed supports coho and chinook salmon and steelhead trout - all of them protected under the federal Endangered Species Act. Fine sediments can get in a fish’s gills and cause suffocation or can smother their eggs or obstruct their view of food, Villacorta said.

“Those observations we weren’t able to make,” she said. “It requires a complete bioassessment of the site. But there is that threat. There was a high potential of that occurring.”

In November 2018, after several city reports of deficiencies, water board staff gave Green 10 days notice of a Nov. 29 inspection that included reference to several days of rain in the forecast. City personnel already had informed the developers of deficiencies in its erosion and runoff controls, according to board documents.

Two large storms came in the intervening days, and when the inspection occurred, “staff observed hundreds of instances of inadequate sediment and erosion control efforts, as well as evidence of gross sediment discharges to receiving waters,” board personnel reported. “A reasonable and prudent person would have corrected the deficient (best management practices) ... and ensured they were functioning throughout the site, especially given the forecasted rain event.”

David Mickaelian, Healdsburg’s city manager, and Larry Zimmer, the city’s public works director, each declined repeated requests for an interview for this story on Wednesday through city spokeswoman Rhea Borja. City staff has continued to monitor the project and was unaware of any other work stoppages since March, Borja said.

MacNab, Windsor’s town manager, said the violations at the luxury hotel site in Healdsburg would be unacceptable on the proposed civic center project, on which the Town Council will meet to discuss on Feb. 5.

“I can tell you with no uncertainty that it would be the town’s expectation that he follows approvals, the regulatory requirements and that he maintains a project that’s in compliance during construction,” he said. “There’s no doubt in my mind that is the expectation of myself, our council and our community.”

Editor’s Note: This story has been updated to clarify that the formal recipient of the complaint is Sonoma Luxury Resort LLC and to clarify the circumstances concerning removal of erosion-control and runoff mitigation measure before wet weather in May.

You can reach Staff Writer Mary Callahan at 707-521-5249 or mary.callahan@pressdemocrat.com. On Twitter @MaryCallahanB. Staff Writer Kevin Fixler can be reached at 707-521-5336 or kevin.fixler@pressdemocrat.com. On Twitter @kfixler.