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Napa Co. winery applications for modified permits

Six new use-permit applications plus seven modifications to existing permits in Napa County were issued from Jan. 1 through April 5, proposing wine-production increases totaling 487,000 gallons per year. This first-quarter figure is more than the annual production increases reported for the county in 2014, 2011, 2010 and 2006.

Baldacci Family Vineyards (Archangel Investments, LLC)

Increase production from 20,000 to 40,000 gallons/year

Behrens Family Winery (Les Behrens and Lisa Drinkward)

Major modification of use permit from 10,000 to 20,000 gallons/year

Black Sears Winery (Ashlander, LLC)

Major modification of use permit

Bin to Bottle Custom Crush Wine Production Facility (Bin to Bottle, LLC, Wilkinson)

Major modification, with maximum of 250,000 gallons/year capacity

Flynnville Wine Company (PD Properties, LLC)

New 40,000 gallons/year winery

Fortunati Vineyards Winery (Gary Luchtel)

New 12,000 gallons/year winery

Grassi Family Winery (Grassi Wine Company)

New 25,000-gallon-a-year winery.

Laura Michael Wines (Laura and Michael Swanton)

Major modification of use permit.

Mountain Peak Winery (Mountain Peak Vineyards, LLC)

New 100,000-gallon-a-year winery.

Raymond Vineyard and Cellar, Inc. (Boisset Collection)

Major modification of use permit.

Sam Jasper Winery (San Bernabe, LLC)

New 20,000-gallon-per-year winery.

WHL Winery (South Whitehall Lane Development, LLC)

New 10,000-gallon-a-year winery.

ZD Wines (Robert DeLeuze and Brett DeLeuze)

Major modification of use permit.

Source: Napa County Planning Commission


After two years of discussion, the Napa County Board of Supervisors is this year developing changes to winery use-permit reporting procedures to make sure the area’s roughly 500 wine producers meet the requirements of their operating permits when it comes items like event sizes, production limits and tasting-room hours.

“Compliance is definitely a priority,” said Napa County Fourth District Supervisor Alfredo Pedroza. “Everyone involved must understand that we will enforce use permits. We all want the same thing — a predictable system so everyone understands the goals and what we are striving for. Compliance is a two-way street and includes having a commitment from the wine industry to adhere to permit requirements as well as having consistent and predictable processes.”

At the same time, there is uncertainty in the industry on what this future course of action may be.

“We need clarity to achieve easier implementation and buy-in,” Pedroza said. “Napa residents and wine industry want such a program to be balanced. Our current cumbersome bureaucratic process is not consistent at times, so we are also looking for ways to incentivize reporting and make it more dependable and clear.”

As an example, “if a permit states that a winery has 10 workers, but now has 20, creating jobs and fostering economic growth is a good thing, but figures still have to be kept up to date. Reporting is especially important with regard to winery production, hospitality and hosting activities to see if they are consistent with today’s realities.”

David Morrison is director of Napa County’s Planning, Building and Environmental Services Department, which issues use permits and is responsible for enforcing and auditing winery compliance.

“If a winery is found to be in violation, our goal is to get them in compliance as soon as possible,” Morrison said.

The intent is to take steps to maintain the high standards Napa already has without creating an entirely new system, he said.

“We have to make sure that everyone is operating under the same rules, so that wineries with violations do not gain an unfair advantage over their competition, which could lead to damaging the brand and image of Napa Valley,” Morrison said.

REGULATING PRODUCTION

When it comes to wine production, Morrison said wineries have to report production, crush figures and bottling counts today to state and federal agencies including the state Alcohol Beverage Control Department and the federal Alcohol and Tobacco Tax and Trade Bureau. However, Napa County does not see this data.

“State and federal agencies can provide the county with aggregate numbers, but not specific data on individual wineries, due to the proprietary nature of the information. Instead, we are looking to have relevant data sent directly to the county by the wineries, where it would receive the same proprietary protection,” Morrison said.

There is concern among some in the county that winery permit rules are not effectively enforced and impact residents as a consequence. At the same time, there is interest in the wine industry to have a fair playing field so some of its members will not continue operating outside the rules.

Ten years ago, Napa County began conducting random annual spot production audits beginning with five wineries, which was increased to 10 five years later, while also including reviews of tours and tastings log books and marketing events. However, with 500 wineries legally established in the county, it would take 25 years to cycle through all of them.

Napa Co. winery applications for modified permits

Six new use-permit applications plus seven modifications to existing permits in Napa County were issued from Jan. 1 through April 5, proposing wine-production increases totaling 487,000 gallons per year. This first-quarter figure is more than the annual production increases reported for the county in 2014, 2011, 2010 and 2006.

Baldacci Family Vineyards (Archangel Investments, LLC)

Increase production from 20,000 to 40,000 gallons/year

Behrens Family Winery (Les Behrens and Lisa Drinkward)

Major modification of use permit from 10,000 to 20,000 gallons/year

Black Sears Winery (Ashlander, LLC)

Major modification of use permit

Bin to Bottle Custom Crush Wine Production Facility (Bin to Bottle, LLC, Wilkinson)

Major modification, with maximum of 250,000 gallons/year capacity

Flynnville Wine Company (PD Properties, LLC)

New 40,000 gallons/year winery

Fortunati Vineyards Winery (Gary Luchtel)

New 12,000 gallons/year winery

Grassi Family Winery (Grassi Wine Company)

New 25,000-gallon-a-year winery.

Laura Michael Wines (Laura and Michael Swanton)

Major modification of use permit.

Mountain Peak Winery (Mountain Peak Vineyards, LLC)

New 100,000-gallon-a-year winery.

Raymond Vineyard and Cellar, Inc. (Boisset Collection)

Major modification of use permit.

Sam Jasper Winery (San Bernabe, LLC)

New 20,000-gallon-per-year winery.

WHL Winery (South Whitehall Lane Development, LLC)

New 10,000-gallon-a-year winery.

ZD Wines (Robert DeLeuze and Brett DeLeuze)

Major modification of use permit.

Source: Napa County Planning Commission

“How effective would it be to audit each winery only once in a quarter of a century? The challenge is to figure out how to provide an effective review. The wine production formula that the county has relied upon in the past doesn’t fit some current winery operations, nor can it be easily modified to accommodate everyone — which has led to delays in finding a lasting solution,” Morrison said.

The Napa County Grand Jury’s final report in May 2015 noted that audits conducted between 2011 and 2013 showed that 30 percent to 40 percent of the 20 wineries (out of a total of 467 wineries in the county at the time) were not in compliance for one or more permit requirements. These audits were limited in scope and not all of the conditions of approval were reviewed, which provided an incomplete picture of the extent of compliance.

“What we are looking for is an effective reporting framework that addresses a modern wine industry to ensure its compliance with the county’s historic policies to protect agriculture,” Morrison concluded.

Rex Stults, government relations director with the Napa Valley Vintners Association, said the county is under pressure to be more forceful when issuing use permits.

“In the past, not much attention was paid to compliance and seeking modifications can be painful, time-consuming (nine to 12 months or more) and expensive ($70,000 to $100,000 and above), including county staff time required to issue permits,” Stults said. “So winery owners typically ask for more in their initial use permit applications than what they are prepared to do right away. The real question is will the motivation to achieve compliance in the future contain more sticks than carrots?”

As production levels have risen to meet growing demand, wineries have paid greater attention to updating permits — which includes increasing gallons of output per year, number of annual visitors, road access, development areas, and other criteria when applying for permit modifications.

In October 2015, the Agriculture Protection Advisory Committee established by the Napa County Board of Supervisors met for six months to review and discuss a variety of topics. Use permit compliance was considered to be a high priority, including whether there should be mandatory annual compliance checks — as well as ways to determine if wineries are abiding by the rule that 75 percent of the fruit used in locally produced wine must come from Napa Valley grape growers.

The final APAC report included 13 recommendations. At the top of the list was, “Avoid the use of variances (modification of code requirements) as a principal tool for achieving compliance with land use regulations. Variances may be used only when there is specific evidence supporting all necessary findings.”

The days of begging for forgiveness when it comes to noncompliance may be coming to an end, given public feedback to Napa County’s elected officials, Stults said. Those speaking out against winery applications have concerns not just about production, but about parking and traffic issues, the numbers of people coming to marketing events and tasting rooms along with environmental issues and quality of life factors — including noise and headlights shining on adjacent residential homes.

“Given today’s situation, the elasticity of what a winery can and cannot do is not infinite,” Stults said. “As a result, the board of supervisors is going to be more rigid when it comes to compliance enforcement.”

Donna Oldford, principal of the Plans4Wine consulting practice that helps wineries in St. Helena and throughout northern Napa County prepare to file use permit applications and modifications, said the goal of a future compliance and reporting process should be “to make it as simple as possible, and not primarily a punitive thing.”

A consultant for 30 years, she said “forgiveness is possible.

“The Planning Commission hears winery modification requests all the time where compliance is part of the overall proposal — and they approve most of them,” Oldford said. “It has been the county’s policy for years to encourage wineries to come forward voluntarily to resolve compliance issues. If future changes include penalties, it flies in the face of this policy.”

CHECKING FOR COMPLIANCE

Napa County’s new Code Enforcement manual, unveiled in February, covers everything from land use violations to the health of residents. The revisions provide a comprehensive reference document for responding to public complaints, identifying violators, encouraging voluntary compliance, and pursuing legal enforcement. The revised reporting procedure for evaluating winery compliance, being developed now, will be addressed through a separate ordinance in the months ahead.

Since 2015, the backlog of compliance cases in Napa County decreased from 917 to 676, a reduction of 26 percent, according to a report from the Napa County Planning Commission. During this period, the number of compliance officers doubled, and between 2015 and 2016 new investigations grew from 200 to more than 350.

Sometimes variances are appropriate, Oldford said.

“That’s why they’re in the zoning code,” she said. “State law actually requires the alternative of variances, if the findings in support of a variance have been met.”

According to Don Barrella, a county of Napa planner, a modification is used to make changes to an existing use permit, such as increases in production, number of planned events, tasting room hours, etc. On the other hand, a variance is a request by a winery to deviate from code requirements, such as road setbacks, slope regulations and height standards.

For example, the Winery Definition Ordinance requires wineries provide a 600-foot setback on all major collector roads and all state highways, and a 300-foot setback that applies to any and all public or private roads that provide access for more than one property owner.

“You can see how onerous that is and it creates, in effect, a variance factory,” Barrella said. “Variances are an important remedy when certain conditions exist. When the ordinance itself is unreasonable, variances becoming a way of doing business of necessity.”

RECESSION CHANGED THINGS

In 2008 wineries experienced a reversal during the Great Recession, when 70 percent of their distribution channels disappeared.

“The wine industry found out how little distribution it had, leading smaller wineries to opt for direct-to-consumer shipments and greater emphasis on wine club memberships,” Oldford said. “This led to a trend toward more diversity in winery marketing events and a combination of more focused tours and tasting activities with larger gatherings at wine release and club events, but there should be a balance with respect for others privacy.

“You can’t push too far in this direction without a backlash, and there are concerns about wineries encroaching on residential development since a lot of people want to have a home in Napa Valley. It is amazing that we have preserved Napa County the way we have. However, everyone has to agree to play well with others and find remedies that work.

“I believe the Napa County Board of Supervisors will do something, but will it be a burden on the wine industry? Code enforcement has been stepped up, but at the same time there has to be a measure of forgiveness on compliance issues. Fewer wineries will want to come forward voluntarily if there are punitive consequences. Without the wine industry, what else do we have here? The reporting process can’t be extreme.

“We can’t have wine businesses hamstrung; they have to be able to operate effectively. If reasonable procedures are established, the industry can respect that.”

Oldford expects to see a new procedure soon but can’t say what form it will take.

“All of this is not for the faint of heart, there are some moments of sheer terror during the process,” he said. “Having a heavy hand doesn’t work here, but there is no world where you don’t have change.”

Another wine industry consultant, Beth Painter, principal with Balanced Planning, Inc., has worked with clients in Napa County area since 1995.

“Wineries don’t want to add more reporting that does not have clarity and purpose, but the devil is in the details,” Painter said. “Winery owners want to understand the new proposed approach being taken and whether it is fair, equitable and reasonable.”

Painter said a key concern is how Napa County’s world-class wine and hospitality destination should be managed, including issues revolving around the workforce, housing and visitor traffic, along with concerns about the compatibility of wineries with residential areas and land use.

“Should all wineries be required to have annual audits?” Painter asked. “What will the reporting changes, new protocols and procedures be? How will we make it work at every level? How can wineries stay economically viable with more traffic in the valley, and is there a better way to handle visitors than what is being done today? All of these concerns can be addressed, and hopefully resolved, if enough folks are willing to work together to find solutions.”