Plan for Napa hotel in former post office returns with new design after partner exits

After a few hiccups, the Franklin Station Hotel project in Napa is back on track — with changes.

When the Business Journal in October first covered the story, Napa developer Jim Keller was moving through the city approvals process in his bid to transform the historic Napa post office into a luxury hotel project to the tune of $100 million.

But in November, co-developer Cypress Equities walked away from the project.

“We weren’t on the same page, as far as design goes,” Keller said last week, explaining that Napa County Landmarks deemed the design proposals for the front of the old post office too overwhelming. Napa County Landmarks is a nonprofit historic-preservation organization charged with carrying out federal standards on the local level that call for preserving historical buildings. Part of the approvals process for the hotel project includes reaching an agreement with the city and Napa County Landmarks.

“(We’ve now) approached the design to really comply with what was approved in the development agreement, and we backed away from pushing any limits there,” Keller said. “To a reader who looks at the two plans, they'll see a simpler, more scaled-back approach that really accentuates the post office a lot more.”

The project had been expected to break ground this summer, but between the co-developer’s departure, revised design plans needing approval, and how hard the pandemic has hit the hospitality industry, it could be several years before Franklin Station Hotel begins welcoming guests, Keller noted.

He also is getting ready to raise capital and seek financing for the downtown project, which qualifies as a Napa opportunity zone, a tax-incentive program for project developers. Opportunity zones were added to the federal tax code in December 2017 as part of the Tax Cuts and Jobs Act.

Keller purchased the Napa landmark nearly four years ago for $2 million, promising new life for the historic post office building that was badly damaged in the 2014 South Napa earthquake. In November 2018, the Napa City Council and Keller entered into a development agreement to move forward with the Franklin Station Hotel project, located at 1351 Second St.

San Francisco-based SB Architects remains on the team to lead the hotel’s architecture and design, along with a design team that includes more than a half-dozen companies that specialize in the hospitality industry.

Several months after Cypress left the team, Keith Houchin, senior associate and senior designer at SB Architects, reconnected with Keller to get back on track with the project.

Houchin in October told the Business Journal his team’s approach was to save as much of the building as possible and keep its existing details without trying to mimic or recreate its historic character.

“In the previous design, we had pushed to align with the front of the lobby. It wasn’t consistent with the prior agreement and we weren’t gaining anything by trying to save the entirety of the post office,” Houchin said. “The damage that is in the back part of the post office that wasn’t designated, would cost substantially more money to repair and bring back up.”

Houchin said he and Keller decided it would make the most sense to demolish the back four-fifths of the building and simplify in a smaller area.

“By doing this, we’ve been able to meet what’s been agreed to, and still maintain and meet Jim’s development targets and make a successful hotel,” Houchin said. “One of the critical things is, yes, we want to save the project (but also) make sure it could be operated successfully by a hotel operator.”

The new plans were recently resubmitted to the planning commission and are expected to be made public soon.

“I'm hopeful and fingers crossed that nothing is going to slow us down,” Keller said. “And that's kind of the approach that I'm taking.”

Staff Writer Cheryl Sarfaty covers tourism, hospitality, health care and education. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.