Delivery date uncertain: Amazon backs away from Sonoma County warehouse plans

Plans by online retailer Amazon to expand its North Bay footprint with two facilities in Sonoma County were recently called off for one and made doubtful for the other. One developer is saying the company is frustrated with delays in getting needed government approvals.

The two facilities were set to bring 431,000 square feet online, collectively among the county’s largest commercial footprints. And if staffed like its locations in Napa and Solano counties, Amazon could have employed 200-300 at each site.

“They were unable to secure permits from the county in a timely manner,” said Jose McNeill of Victory Station LLC, which owns a 250,000-square-foot Victory Station distribution warehouse at 22801 Eighth St. E. in Sonoma Valley.

The other location is an 181,000-square-foot planned facility in the industrial area next to Charles M. Schulz–Sonoma County Airport north of Santa Rosa. Amazon missed a key deadline to finalize its deal with the project developer.

“I tried to figure out why, but honestly I don’t know,” Larry Wasem, managing general partner of project owner Airport Business Center, said of the decision by Amazon.

The nation's largest online retailer did not confirm the reasons for the decisions, issuing a statement:

“We weigh a variety of factors when deciding where to develop future sites to best serve our customers,” the company wrote in an email. “It is common for us to explore multiple locations simultaneously and adjust based on our operational needs.

McNeill sent Permit Sonoma a letter late last week, saying Amazon was no longer intending to lease space there.

That came just days after Amazon opted not extend the time to finalize a build-to-suit lease contract for the airport project by the March 26 deadline, according to Wasem.

Permit Sonoma was then instructed to halt work on processing the application for the airport project, located at 5051 Aviation Blvd., according to Bradley Dunn, policy manager and agency spokesperson. The department has been processing applications related to both proposed Amazon sites.

The origins of the Victory Station project go back to 2009 under a previous owner. McNeill secured updated approvals in 2015 and 2017. Construction was completed in 2018, but had been unoccupied until Amazon was revealed as a tenant in May 2020. Initially, Permit Sonoma was approaching Amazon’s planned last-mile “delivery station,” where packages would be loaded onto the company’s vans headed to destination addresses, as a use that would fit the previous approvals.

But public pressure, citing concerns such as extra traffic and water use, resulted in heightened scrutiny of the proposed Victory Station use. A new use permit application for a “freight terminal” was required early last year, including parking for vans on an adjoining property.

Permit Sonoma sent the applicant team letters in March, August and October 2021 that the application was incomplete, according to Dunn.

The project team submitted several follow-up documents in February of this year. But Permit Sonoma replied with a letter dated March 8 that information was still lacking for the new use with van deliveries versus big-rig truck delivery and pick-ups for a similarly sized distribution warehouse. Such information said to be still lacking was traffic analysis for total volume and trip generation, greenhouse gas emission projections from vehicle miles traveled, and estimated groundwater resources impact.

“They came back with more questions, and that’s where Amazon said, ‘We’ve been doing this for quite a while, and we’re done,’” McNeill said.

Dunn said the county called for a full-scope traffic study a year ago.

“These things shouldn’t have been surprising,” Dunn said. He noted that some of the additional information requests are coming from state mandates, such as the California Environmental Quality Act.

“What has happened around the state is that (governments) that do not go through a significant environmental review process get challenged in court under CEQA,” Dunn said. “If they are not prepared to provide the information now, they may have to provide it later. The assertion that we were requesting too much information does not square up with the requirement that developments in California provide this information.”

Because the approvals follow the property and not the tenant, the Victory Station application for a freight terminal could still be pursued for another tenant, Dunn said.

Meanwhile, Amazon has been building out its regional and last-mile logistics to serve the North Bay. In 2017, a 300,000-square-foot sortation facility opened in Vacaville, and a smaller delivery station was added a few years later. And last year, a 201,000-square-foot delivery station opened at Napa Logistics Park in American Canyon, where the project was approved, built and occupied within a year.

The company said it employs about 500 year-round across those locations.

McNeill said that the plan now is to find a new tenant or a buyer for Victory Station.

“There’s not much vacancy, and rents (for Sonoma County industrial space) have moved up 25%,” he said.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

April 6, 2022: Jose McNeill secured updated approvals for Victory Station in 2015 and 2017, not the previous owner. The story has been updated with a reworking of the first seven paragraphs.