Vision for housing and hotel development in northern Healdsburg challenged in court

Healdsburg has begun its review of a developer’s proposal to build what would be the city’s largest housing project, a plan on the north end of town that has restoked the fiery debate in this Wine Country destination over the pace of residential growth and hotel development.

Already, the proposal by Southern California-based Comstock Homes has drawn a legal challenge against the city, with opponents asserting the expansive development would run afoul of state environmental regulations.

The project, on a vacant former lumber yard bounded by Healdsburg Avenue and Highway 101 north of Simi Winery, currently calls for more than 350 units of housing and a 120-room hotel.

The housing would be split between 132 income-restricted rental units for the local workforce and a 220-unit senior living community. Plans also call for 20,000 square feet of retail space.

“We have a vision to provide something sorely needed in the community,” said Debra Geiler, Comstock’s director of entitlements. “The mix of housing units and the hotel and all of it is sort of the economic balance. If we succeed, what we will be able to provide to Healdsburg is a paradigm shift in community design and creating neighborhoods.”

But Sebastopol-based California River Watch has filed suit contending that Healdsburg failed to lawfully account for the greenhouse gas emissions the luxury hotel would generate. The lawsuit is a key piece of the group’s goal to force local governments to more closely account for the climate impacts of commercial growth and the region’s tourism economy.

“We have maybe 10 years to make major changes in how we conduct our lives and business activities to avoid irreversible, catastrophic global warming,” said Santa Rosa-based environmental attorney Jerry Bernhaut, who represents the group. “If the only way to get affordable housing is to destroy the environment, then we’re in deep trouble. That’s unconscionable.”

Healdsburg, however, has emerged as one of the county’s most expensive and slowest-growing real estate markets, adding just over 300 new homes in the past decade under the city’s growth cap approved by voters in 2000. The city of roughly 12,000 people has about 5,000 homes, including apartments and houses. At the end of July, the median monthly rental rate was $3,200 and the median sales price for a single-family house was $830,000, according to San Francisco-based real estate service Trulia.

Remade in recent decades from a farm town surrounded by prune and hop orchards into a stop for Wine Country visitors and diners, Healdsburg has also endured a bruising fight over the rate and density of hotel development. The issue came to head late last year with the city adopting new rules banning additional hotels on the central plaza, and limiting future downtown lodging projects to five rooms or fewer.

Yet to attract new housing affordable for its workforce, the city and others in the county have often had to settle for mixed-use developments that offer trade-offs. The common strategy includes deals allowing more profitable elements, such as market-rate homes or hotels, to offset the cost of income-restricted units.

Healdsburg officials have opened the door to such projects, and Comstock Homes’ North Village development is the biggest bid to date. It would surpass the Parkland Farms subdivision, with 346 single-family homes, as the largest housing project in the city’s history.

“A number of documents really suggest that we’re lacking a significant amount of housing. Community surveys also show that housing is the number one focal point in this community,” said City Manager David Mickaelian. “So what we’re trying to do is get the right kind of housing, and get it built as efficiently as possible. And I think the affordable housing component, that’s huge.”

Developer with local ties

Longtime Healdsburg resident Bob Comstock founded Comstock Homes in 1991, and the company has built thousands of homes across the state. The portfolio includes the 34 single-family homes that make up Healdsburg’s Sorrento Square neighborhood. Comstock and his wife, Sandy, also own Comstock Wines in Healdsburg’s Dry Creek Valley.

In 2017, Comstock bought the 32-acre lumber yard property formerly known as Quaker Hill at Healdsburg’s northern edge for $10.3 million, according to the Sonoma County Assessor’s Office. The land is zoned for mixed-use development and falls under a plan prepared by the city for its northern gateway, outlining future commercial and residential growth in the area.

Comstock submitted his plans in June and is in the initial stages of hammering out details of the project with the city. Bob Comstock was unavailable for an interview this week, but Geiler said if the proposal can get approval from Healdsburg’s Planning Commission and City Council, construction would start by late 2020 as part of an 18-month build-out timeline.

The hotel developer partnering with Comstock on the bungalow-style lodging remains unnamed in the preliminary plans.

Right out of the gate, however, Healdsburg’s plans for its northern city limits and Comstock’s proposal in particular, have run into sharp opposition.

The June 25 lawsuit against the city from California River Watch followed the City Council’s approval in May of its development plan for the northern gateway - a step that allowed Comstock to submit its proposal. Vice Mayor Leah Gold was the lone vote against the plan. Earlier this year, she tried unsuccessfully to convince a majority of fellow council members to pass a moratorium on new hotel construction, which has risen sharply in the city.

“That was the entire basis for my objection. The majority of residents have told us pretty clearly that they feel hotel development is happening too quickly in Healdsburg,” said Gold, citing a 2018 community survey. “I felt the responsible thing to do was not to have a hotel in a plan that we were currently approving.”

The number of hotel rooms in the city jumped 42% in 2018 - from 387 at the start of the year to 548. The 130-room Montage Hotels & Resorts guesthouse is set to be finished in 2020, and the 53-room Mill District boutique hotel is scheduled for 2021. Another 150 rooms are under review between North Village and two small-scale projects, which would push Healdsburg to 881 total hotel rooms and represent a 128% increase in a roughly five-year period.

Tourism economy questioned

The hotel-centered growth, and the additional tourist activity it supports comes at an excessive cost for the environment and efforts to limit climate change, said Bernhaut, the California River Watch attorney. The group successfully sued the county’s regional climate protection authority in 2017, arguing that Sonoma County had failed to sufficiently account for local greenhouse gas emissions.

The group, in its lawsuit against the city, has targeted the hotel proposed in the North Village project. The legal complaint faults the city for not establishing a way to estimate the likely rise in greenhouse gases from additional air travel by future visitors. It also demands use of specific measures to mitigate those expected emission increases. Each is required under the California Environmental Quality Act pertaining to emissions that have a “significant impact on the environment,” as a Sonoma County Superior Court judge affirmed in the 2017 judgment against the county’s regional climate protection authority.

The new suit aims to force the city to withdraw its environmental study of the area and revise the plan so it includes a way to calculate rising emissions. From there, estimates could be made on individual projects so measures can be taken to lessen their impacts, according to Bernhaut.

He is building a case that he hopes will carry legal weight across the county, forcing cities to come up with strategies for less tourism-based economic growth and therefore less greenhouse gas emissions. A judge’s ruling is expected by early next year.

“There’s a feeding frenzy right now to make Sonoma County a global tourist destination,” he said. “What’s really required is not just some greenhouse gas reduction measure, but really ratcheting down on this whole economic system. Every project has its cumulative effect.”

Mickaelian declined to comment on the lawsuit. Geiler also said she would not discuss the court challenge, but said the environmental study for the area followed the state’s guidelines and that Comstock will continue to seek city approval of the project.

In 2015, a regional climate protection authority report showed that Healdsburg’s greenhouse gas emissions had increased to 25% above 1990 levels. Five years earlier, in 2010, the city’s emissions were measured at 16% above the 1990 benchmark.

By 2030, California cities are supposed to have slashed emissions to 40% below 1990 levels under a 2015 executive order issued by then-Gov. Jerry Brown. By 2050, the levels are intended to fall to 80% below 1990 levels.

In March 2018, the Healdsburg City Council voted 5-0 to recommit the city to the regional authority’s plan to reduce emissions through various recommended measures and comply with Brown’s order.

‘An existential threat’

Healdsburg’s addition of new hotels means its large hospitality and tourism workforce will grow - and will be searching for places to live. For the city, that means a greater need to add new housing for middle- and low-income workers, or settling on a commuter workforce that travels longer distances, which creates even more greenhouse gas emissions, said Gail Jonas, who has lived in Healdsburg for 52 years.

Yet, even the designated affordable units that can result from hotel-housing developments such as North Village can be out of reach for lower-income workers, Jonas said.

A hotel worker, for instance, would need to make between $38,000 and $72,000 annually - 50% to 110% of the area’s median income - to qualify for one of Comstock’s 30 proposed multi-family units. For a larger batch of 102, the income limits would be at 120% to 160% of the area median income level, or $78,000 to $105,000 annually for an individual - an income bracket that Healdsburg has termed the “missing middle.”

“It’s a vicious cycle,” said Jonas, 79, an environmental activist and retired attorney. “To rely on hotels as the way to buttress up affordable housing is to compound the problem. We keep increasing tourism and increasing the number of lowest-wage workers, but are not solving the problem.”

Jonas was a vocal backer of the Mill District project, slated for just north of the Highway 101 offramp to central Healdsburg. It is to include a 53-room hotel, 15,000 square feet of commercial retail space and 208 housing units. Of the approved housing, 138 are market-rate units and 70 are income-restricted.

She defended her support of the project, saying the developer, Vancouver-based Replay, worked with the city for four years to negotiate terms that include providing a third of the housing for affordable units and minimizing its carbon footprint. However, Jonas said it’s now time to begin ramping up scrutiny of future hotel projects as their number has skyrocketed in recent years.

“You have to start somewhere,” she said. “We have to look at the long term and where we’re going if we keep doing what we’re doing if nothing changes. And it’s not about me. I’m too old, I’ll be gone. This is an existential threat to my grandchildren, so I’m doing everything I can.”

The North Village project would include 220 housing units proposed for seniors ages 62 and up to fill another void in the city, said Geiler. Of those, 20 units would be held at 50% of the area median income and reserved for workers and volunteers in the senior community. Thirty assisted living and 24 memory support beds will also be available on site. But none of it, she warned, will be built without the hotel.

“With the amount of subsidized housing, it’s not possible,” said Geiler. “It really all teeters on economics. When Bob acquired this site, he was looking at it with city for how can we maximize housing. So that’s what we’re trying to put together. And we’re hopeful, and think we have a great project and a lot of affordable housing stock and special needs housing for the community.”

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