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AMERICAN CANYON – Initial site work could begin this summer on a 287,000-square-foot wine warehouse project in the industrial areas at the north end of the city, and the same real estate developer will be seeking city approval this week for a proposed 56,000-square-foot winery condominium project atop Oat Hill.

R.H. Hess Development Co. of American Canyon obtained Planning Commission approval April 30 for a two-building project called Lombard Crossing Industrial Park. Construction documents and final-map revisions are being prepared.

Meanwhile, the city Planning Commission on May 28 is set to consider a proposal for Oat Hill Winery Condos, which would house up to nine wineries or related businesses on the northeast side of the hilltop.

How much further the projects progress after that initial site work will depend on demand, according to R.H. Hess project manager Chris Koenig.

“In today’s market you need a lot more of a project leased or sold to get financing, which is pretty tough,” Mr. Koenig said.

While R.H. Hess doesn’t have tenant or buyer commitments in hand for Oat Hill ahead of project approval, the proposal has garnered interest from a vintner who would like to occupy several units and wine producers who have encountered difficulties building small freestanding wineries, according to Mr. Koenig.

“One guy we talked to told us the county would have required paving of a three-mile stretch of road to allow the fire department to reach the property,” he said. “For a proposed 3,000-square-foot winery, you can’t justify that cost.”

Such cost considerations and other regulatory constraints have been persuading some vintners in recent years to build wineries in business parks, lease space for production in existing buildings or contract with a custom-winemaking business.

Located on a portion of the 10.53-acre site, Oat Hill Winery Condos would have 33,600 square feet of wine production or storage space plus up to 22,200 square feet for offices and appointment-only wine-tasting, depending on how much mezzanine space is built, according to the draft mitigated negative declaration environmental review released May 8.

The Airport Land Use Commission last week determined the project is consistent with Compatibility Zone D in the airport land use plan, which allows industrial operations with 100 to 150 people.

The Oat Hill Winery Condos project could cost as much as $8 million to build. That includes a few hundred thousand dollars of architectural enhancements and roughly three acres of potentially commercial vineyards as downhill landscaping.

The city General Plan has a “commercial specialty” land-use policy overlay for Oat Hill on the light-industrial use designation for the Green Island Road area to “capitalize on and attract visitors due to their unique viewsheds.” However, the project has parking and appointment-only tasting limitations on visitor traffic from the intersection of Napa Junction Road and Highway 29.

Among the environmental impacts addressed in the May 8 draft document were water use, winery wastewater and greenhouse-gas emissions. R.H Hess is seeking a will-serve letter from the city for the project. Winery wash water flowing into floor drains will be pumped into individual holding tanks and hauled a few times a year 25 miles to East Bay Municipal Utility District’s biogas electricity generation facility.

Metrics for measuring project-level greenhouse-gas emissions are forthcoming from regional, state and federal regulators. The city’s draft environmental document for the Oak Hill project uses the 7,000-metric-ton carbon dioxide-equivalent annual limit the state Air Resources Board proposed for industrial projects in October, the American Association of Wine Economists’ working paper on winery carbon footprints and the carbon inventory from an Oregon boutique vintner to arrive at 1,950 metric tons a year. Proposed mitigation is landscaping on about two-thirds of the site and 34 net metric tons of offset emissions from wastewater electricity production.

R.H. Hess wants to have the winery condos ready for occupancy by mid-2010 in time for use at harvest.

The two-building Lombard Crossing Industrial Park project is estimated to cost $25 million to $30 million, depending on whether it is built before the end the current slump in construction activity, according to Mr. Koenig.

The project is located about a third of a mile northeast of Oat Hill. The developer is planning to build a rail spur from the California Northern tracks that run along part of the northern edge of the property to serve the planned 151,000- and 136,000-square-foot buildings. The forthcoming resumption of Northwestern Pacific freight rail service to the North Coast would connect with national rail lines at Lombard.

A condominium map for the two buildings would allow for lease or sale of eight units in the smaller building and three units in the larger one.

For more information, call R.H. Hess at 707-255-8075.