Thursday July 17, 2008

With a unanimous vote, the Napa City Council approved the Ritz-Carlton Napa Valley project at its July 15, 2008 meeting. The developer, River House Land Company, is expected to now pursue the needed construction permits with the first quarter of 2011 targeted for completion of construction and occupancy.

A study prepared by Applied Development Economics for the developer shows the 351-room hotel will generate $100 million a year in local economic activity. Included in this total is an estimated $5.2 million in tax revenues to the City in the first full year of operations, with tax revenue rising to $7.6 million after five years. These revenues from property tax, sales tax and transient occupancy tax (TOT) have the potential to fund a variety of essential City services. The remainder of the $100 million forecast represents wages to employees and indirect and induced impacts through employee expenditures and business goods and services purchased by the hotel.

With the site located within the Soscol Gateway Redevelopment Project Area, some $1.2 million in property tax would be generated annually for traffic circulation and drainage improvements in the Redevelopment Area, and around $400,000 for other neighborhood programs and activities. The hotel project will pay $530,000 to meet their inclusionary affordable housing obligations. In addition, the project will make a voluntary contribution of an additional $500,000 to address housing needs. Through Redevelopment tax increment revenue the project will also generate a minimum of $400,000 per year to be dedicated exclusively to the affordable housing fund. Over the 45 year life of the Redevelopment Agency, the Ritz Carlton is projected to produce $28.7 million for affordable and workforce housing.

The economic development strategy formed more than ten years ago is coming to fruition today, according to Cassandra Walker, Economic Development Director for the City of Napa. The Ritz-Carlton Napa Valley project represents a “major accomplishment in the City’s efforts to receive some of the benefit from the growing hospitality sector in Napa Valley,” said Walker.

Two other hotels are currently under construction in downtown Napa. The Westin Verasa is set for a September 2008 opening, with the Avia Hotel expected to open in mid 2009. Hotel expansions have been approved in two other locations, bringing the total to 896 new rooms approved, increasing the City of Napa lodging inventory over the next three years,

“Hotel development in Napa has been a long time coming and is just now beginning to reach the number where the City may host conferences and larger professional associations,” said Walker. “The City has planned responsibly and insisted on high quality hospitality development and the results of those efforts are now becoming a reality.”

 “An increase of $5 million in revenue to the City would allow us to improve and expand services we provide. To put that figure into context, we’re estimating that it will cost $1.5 million a year to staff and operate the new Fire Station #5 in Browns Valley on the west side of town,” said City Manager Mike Parness, “or for another comparison, it costs about $3 million a year to maintain the parks we have. This new revenue can also fund some of the infrastructure work we need to do. We’re spending $1.2 million this year to make sidewalk repairs in about 60 locations. There are many more places where these repairs need to be made.”

The Agenda Report and supporting documents that were reviewed by the Council are available here . More information is also available on the Ritz-Carlton Napa Valley Project Page.