Hotel Project Sonoma gets its approval

After 12 long years of processing and changes, Sonoma’s Planning Commission has granted its approval of the proposed 62-room hotel on West Napa Street, just west of the Plaza. 

Kenwood Development, the company owned by Darius Anderson, bought the multiple parcels owned by Bill Lynch’s Index Tribune well over a decade ago, with plans to demolish the old printing plant and several other structures, combine multiple lots into one, and create an upscale, five-star accommodation. 

Since then, it’s been a long, winding road towards City approval.

As first proposed, “Hotel Project Sonoma” as Kenwood calls it, would have had two restaurants, and an event center located in what is now the Lynch Building. No housing was included, despite the Development Code requirement that “normally” 50% of the developed footage be devoted to housing. 

The original design proposal was French-inspired with Mansard Roofs. The final, approved design includes one 80-seat restaurant, no event center, and the addition of eight residential condominiums. An undeground, 113-stall parking garage will be be part of the complex has well. 

Two of the condo units will be Affordable in perpetuity. 

As a condition of approval, Kenwood will pay over $2 million into Sonoma’s Affordable Housing Trust Fund. 

The 12-year path to approval included several Environmental Impact Reports, overcoming a ballot measure that would have limited the hotel’s number of rooms, the appeal of an EIR upheld by the City Council, and significant design changes intended to conform to the community’s increased focus on the need for more housing in Sonoma, including Affordable Housing. 

In a presentation to the Planning Commission, Kenwood’s Bill Hooper and architect Michael Ross characterized the project as “greatly improved” as a result of their listening to the concerns of the public. 

Actually, the changes in the project were necessary in order to gain likely approval.

Sonoma’s current Development Code requires that development on commercial parcels over one-half acre in size shall include an equal square footage of housing and non-housing structures, but the hotel application was submitted under the previously approved land-use regulations that provided the opportunity to apply for a total waiver of housing.

In this case, a balance was struck; the eight condominiums satisfy a portion of the current requirements, and the in-lieu payment into the city’s Affordable Housing Trust Fund was deemed acceptable by the commission to satisfy the housing requirement. 

The $2 million can be offset by the acquisition and conversion of market rate units into Affordable ones, based on square footage. The payment must be made in five annual installments; the Planning Commission imposed a five percent annual interest rate on the unpaid balance. 

Payment does not begin until the hotel is granted its occupancy permit, which is several years in its future.

Kenwood estimates that the construction of the project will take approximately 18 months. It includes excavating a massive underground space that will accommodate parking and “back of the shop” operations, such as laundry.

Unlike meetings about this proposal in the past, public attendance was light. Some 15 people spoke, most in favor of the project. 

The developer has agreed to allow the unionizing of its employees, not a common practice in this area. Union proponents hope that unionization will spread to other hotels in the area. Other proponents spoke about the difficulty of finding hotel rooms in the busy season. 

Room rates for the hotel were not disclosed, but previous discussions indicated they would be at “five-star’ levels. Kenwood’s estimate of future Transient Occupancy Taxes (TOT) paid to the City of Sonoma are in the range of $1.5 million per year. 

Using $1.5 million TOT, room rates at a hotel occupancy of 65% annually would indicate an average room rate close to $800 per night.

Management of the hotel and its future ownership was not discussed. 

The Lodge at Sonoma on Broadway began as a locally-owned and managed hotel, but ran into financial difficulty within a year or two of opening and has changed hands several times, attesting to the difficulty of successfully launching a single-location, independently owned hotel. 

Similarly, MacArthur Place Hotel began as locally-owned but is now owned by Wall Street bank JP Morgan Chase; undergoing expansion, it is currently on the market.

The vote of approval was 5-1. Commissioner Dambach was absent and Commission Chair Larry Barnett recused himself from participation in the meeting and the vote. (Barnett is a member of the Sun Editorial board). 

The decision of the commission can be appealed to the City Council. The appeal period runs for 15 calendar days from the date of commission approval.