Cloverdale sees economic rebound, growth in tourism

Cloverdale might just be the last quiet small town in Sonoma County.

Often overlooked at the northern end of the county, it doesn’t get the traffic or tourists of popular Wine Country destinations like Healdsburg and Sonoma, which struggle with maintaining identity as they reap a bounty of hotel and sales taxes from visitors.

But there’s a sense that things are changing for Cloverdale, a community of 8,800, with more tourists venturing there and the downtown seeing an uptick of new businesses and eateries.

“The town is really starting to see some tourism,” said veteran City Councilman Gus Wolter, who was chosen by his colleagues last week to serve as mayor in 2017.

Hotel room tax revenue is up, there are a few new restaurants and stores, along with development projects in the pipeline.

“People are observing there is more activity and interest in Cloverdale,” City Manager Paul Cayler said.

There have been plenty of predictions over the past decade that Cloverdale was on the cusp of emerging from its economic doldrums and would become more of a destination, rather than the “Gateway to the Mendocino Coast” slogan that it adopted five years ago. The former slogan was “Where the vineyards meet the redwoods.”

Cloverdale’s economy has languished over the past couple of decades following the closure of most of its lumber mills, as well as the re-routing of busy Highway 101 out of the downtown.

But Cayler said there are more people downtown on weekends, empty storefronts are filling, and there are consistently more inquiries about development, both residential and commercial.

“I think a lot of people are discovering the unique charm of Cloverdale,” Cayler said. “It’s really a nice place and very attractive for families.”

The town isn’t crawling with wine-tasting rooms, but it has a beer pub. One wine-tasting room closed about a year ago, but another is reported in the works at the former First America Bank building downtown.

Wolter, who is referred to Cloverdale as “Mayberry” because of its sleepy, small-town vibe, sees tourism as the economic driver that will help the largely bedroom community.

The retired bank manager and former longtime owner of a Cloverdale bed-and-breakfast inn said “tourists actually have a choice now of where they’re going to eat and where they’re going to shop.”

Revenue from so-called bed taxes on overnight visitors increased modestly in the past fiscal year. Originally budgeted at $180,000 for 2015-16, it is projected to close at $206,000. Next year’s projected bed-tax revenue is $220,000.

One of the most encouraging signs of economic turnaround has been with the city’s approximate ?$6.3 million general fund, which ended with a $1.6 million surplus after years of barely breaking even.

Credit goes in part to Cloverdale voters who in 2014 agreed to reinstate a utility tax that brings in approximately $375,000 annually to city coffers.

“In addition, real estate values are starting to go back to pre-recession days,” Wolter said, meaning property tax revenues are also more robust.

Another anticipated boost to municipal finances is from marijuana, both medical and recreational, and a tax scheme that Cloverdale voters approved in November for cannabis dispensaries and related businesses.

The City Council is still developing regulations on where and how many such businesses will be allowed, but tentatively has decided on a maximum of two dispensaries, each of which would likely bring in more than $100,000 annually in taxes for the city.

“It’s not just opening the floodgates to 20 dispensaries and all kinds of grows. The whole City Council supports that slow approach,” Wolter said.

In the meantime there are more conventional developments on the horizon.

Plans are inching forward to develop Thyme Square, a downtown five-acre property the city bought seven years ago from a struggling developer.

The city is moving to sell a portion of the property to Alexander Valley Medical Center to build a new, expanded health clinic and also has a conceptual plan in place to construct a new police station and youth skate park.

One of the biggest game-changers for the city is the long-planned Alexander Valley Resort at the southern end of Cloverdale, first approved in 2009 before it stalled along with the economy.

The most recent iteration in 2015 called for a 100- to 150-room, multistory resort hotel with restaurant, conference facilities, gift shop and full-service spa, as well as up to 170 types of residential dwellings.

“We’re hopeful it comes to fruition for the city,” Wolter said. “It sets the stage for being a tourist destination.”

At the same time, Cayler said the city will need to be mindful of the issues that have arisen in Healdsburg and Sonoma, with booming businesses in the tourism sector, but also pressing questions about how such cities serve residents.

“We’re still a very long way from that point,” he said. “There’s a lot of elbow room to be able to grow that way.”

You can reach Staff Writer Clark Mason at 707-521-5214 or clark.mason@pressdemocrat.com. On Twitter @clarkmas