Top 10 Stories of 2010: Despite economy, tech, tourism show promise

The Jobs & Prosperity Project was the most visible of multiple and continuing efforts under way to once-and-for-all connect the dots between a strong, jobs-producing economy and the fiscal health of public entities in the North Bay.

---Business Journal Staff Report

No. 6: Huge leap forward for Napa tourism.

The Napa Valley Destination Council came into fruition after bringing all the cities in the county on board to launch a business improvement district and raise funds for tourism promotion.

The TBID will add a 2 percent assessment on visitors’ fees, which will then be distributed into a countywide marketing fund in conjunction with the Napa Valley Destination Council.

The destination council said the TBID could generate as much as $4 million for the county-wide effort, a tenfold increase from the bureau’s previous budget.

---Jenna V. Loceff

No. 7: Marin’s largest hospital returns to district operation.

At midnight June 29, the operation of Marin General Hospital was transferred from Sutter Health to the Marin Healthcare District.

Sutter had operating responsibility for the hospital since 1996.

Since the transfer, the district has joined in a foundation focused on physician recruitment.

But the battle between the district and Sutter is not over. In August, the district sued seeking to recover $120 million Sutter transferred out of Marin County. Sutter has vigorously defended the transfers.

---Business Journal Staff Report

No. 8: Marin’s launches its own energy program.

Marin Clean Energy was established in Marin to provide an alternative energy option for residents and business owners.

Marin Clean Energy is a Community Choice Aggregation. It was established by California Assembly Bill 117 in 2002, which gave cities and counties the authority to procure electricity on behalf of customers within their jurisdictions.

The agencies are set up so PG&E delivers the electricity, reads the electric meters and issue bills. But generation of electricity and the price would be determined locally.

The Marin-based energy authority was created in December 2008 to address climate change by attempting to reduce energy-related greenhouse gas emissions. The program launched in 2010.

Also, the authority is addressing issues relating to securing energy supply, price stability and energy efficiencies.

According to the MEA its intent is to promote the development of a wide range of renewable energy sources and energy efficiency programs including, but not limited to, solar and wind energy production at competitive rates for customers.

The authority has created a program that it hopes will help stimulate local renewable energy assets.

Starting Jan. 1, the Feed-In Tariff program will allow local residents and property owners who have small-scale renewable generation systems, like solar or wind, the opportunity to sell the electrical output directly to Marin Clean Energy. It will then sell it back to consumers.

---Jenna V. Loceff

No. 9: Banks navigate treacherous economy.

The banking industry across the nation has shifted dramatically in 2010, and the North Bay was no exception.

There were positives, Exchange Bank has now posted six straight profitable quarters, Summit State Bank reported third-quarter net income that nearly doubled year over year and AltaPacific Bank reported nine consecutive quarters of increased earnings.

Bank of Marin and Umpqua expanded their reach into Sonoma County and Sonoma Bank parent Sterling Savings was able to raise $730 million.

Meanwhile, Circle Bank has decided to raise funds through an initial public offering.

But there were problems as well. Tamalpais Bank and Sonoma Valley Bank were both taken over by regulators and sold, the first to Union Bank and the second to Westamerica. Charter Oak Bank in Napa was merged into Bay Commercial.

Credit has been tight and regulators have been scrutinizing closely what banks are doing, creating frustration industry-wide when loans are not able to be made. Some new SBA programs have helped, but bankers feel they are not able to make some of the loans they would like to.

---Jenna V. Loceff

No. 10: Wine mergers and acquisitions accelerate.

Merger and acquisition activity for North Coast wine-related operations was stronger in 2010 than in the past two years and is expected to pick up further in 2011.

"There's going to be continued upward swing in activity, including bank-related operations where they are taking over assets," said Sean Maher of St. Helena-based consultancy Maher Advisors. "There will be activity with profitable businesses and struggling businesses, with some distressed wineries, like in the 1990s, did not sell the brand and the asset as one piece."

Operations with good cash flow and "reasonable expectations of value" will always have buyers, according to Robert Nicholson, whose Healdsburg-based firm International Wine Associates advised on four undisclosed transactions this year, with a total value of $50 million.

Brand equity and its ability to drive cash flow are prime drivers in valuation these days, he said.

"Underperforming assets will find it tough in the present environment and 2011," Mr. Nicholson said.

For the North Coast, that includes a number of small-scale family-owned wineries or vineyards that became overleveraged when financing interest rates were low or obtained high-interest loans, according to Mr. Nicholson said.

The largest single transaction in 2010 was a $269 million sale-leaseback deal for Sterling Vineyards in Calistoga, Beaulieu Vineyards in Rutherford and 2,000 acres of winegrape vines in Napa Valley. London-based drinks conglomerate Diageo sold them to real estate investment trust Realty Income Corp. of Escondido in exchange for a 20-year lease for the properties. Diageo retained ownership and marketing of the brands.

Private wine groups were active acquirers and investors. At the beginning of 2010, Jay Thompson, chief executive officer of The Murano Group, acquired a minority stake in Copain Wine Cellars near Healdsburg and a majority stake in Copain Custom Crush of Santa Rosa, both founded by Kevin McQuown and Wells Guthrie in 1999 and 2000, respectively.

In February, Santa Rosa-based Vintage Wine Estates, which has a growing portfolio of wine operations including Windsor Vineyards and Girard Winery, purchased a minority stake in Kunde Family Estate winery in Kenwood.

In May, the Indelicato family, which operates Delicato Family Vineyards in Manteca, gained a platform for production of Napa Valley estate wines with the purchase Black Stallion Winery in the Oak Knoll district from the Maglich family.

Financial services industry giant turned vintner Bill Foley in June acquired Chalk Hill Winery and the associated 500-acre estate home from Fred Furth. Sonoma-based Foley Family Wines has grown over the past several years to include ownership or investments in more than a dozen North Coast, Pacific Northwest and New Zealand brands, including Sebastiani.

Also in June, the Trinchero family, whose St. Helena-based company owns Sutter Home and a number of other brands, acquired troubled Havens Wine Cellars from Entertainment Properties Trust's VinREIT subsidiary for $6.5 million.

Another distressed VinREIT investment, the remaining Cosentino Signature Wines facility in Napa Valley, was turned back to lenders in bankruptcy court in December.

In August, Dan and Katy Leese partnered with Peter Kight, owner of Quivera and other wineries, to acquire Steelhead Wines of Dry Creek Valley and formed sales and marketing firm V2 Wine Group in Sonoma. The Leeses had just exited Sonoma-based 585 Wine Partners after a change in management by significant investor Fred Franzia of Bronco Wine Co.

In October, Derek Benham's Graton-based Purple Wine Co. added a fifth brand as well as chardonnay and zinfandel selections to the portfolio with the acquisition of the Paso Robles-based Four Vines brand.

Also in October, Pelican Brands of Carmel, Ind., acquired the Napa Smith Brewery & Winery at the junction of Highway 29 and Jamieson Canyon Road in a trustee's sale.

---Jeff Quackenbush