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Regulators raise water quality fine to $6.4 million for Montage Healdsburg resort

The developer of the luxury Montage Healdsburg hotel is facing one of the largest environmental penalties of its kind in state history for dozens of alleged water quality violations during construction over the soggy winter of 2018-19.

The North Coast Regional Water Quality Control Board is seeking to fine Sonoma Luxury Resort, a subsidiary for Encinitas developer Robert S. Green, more than $6.4 million for allowing what board prosecutors say was an estimated 9.4 million gallons of mud and sediment-filled stormwater to leave the site during work of the ultra-high-end hotel in north Healdsburg.

Poor erosion control on the 258-acre site unleashed soils into streams of the Russian River watershed and put fish and other other aquatic wildlife at risk, regulators found, counteracting millions of dollars spent to improve habitat and restore imperiled, protected runs of salmon and steelhead trout, according to Jeremiah Puget, a water pollution control staffer with the regional water quality board.

Claudia Villacorta, the water board’s assistant executive officer, said in January that regulators found “the conduct was, frankly, grossly negligent.”

“They repeatedly failed to take action, implement effective practices, and I think that’s the reason why the penalty ― the proposed fine ― was significant,” she said Tuesday.

In an emailed statement, Green said his firm, the Robert Green Co., is a champion of the environment and intends to try to settle the matter with the regional board, though the two sides have failed so far to reach an agreement.

“Anyone familiar with our project and our stewardship of this land knows the extreme measures we have always taken to preserve and protect the natural environment,” Green said in the statement.

The 130-room hotel, in the works for more than 15 years and formerly named Saggio Hills, is set to open by December with rooms and suites that run from $695 to $1,695 a night. Future plans call for 70 villa-style homes on the wooded property.

In their record of visits between October 2018 and May 2019, water board staff documented repeated failures to control runoff on the construction site. The problems continued despite early and repeated interventions by board staff and city officials, as well as two work stoppages imposed by the state board during a storm-filled winter, the agency said.

The board had proposed a $4.9 million fine when it first announced the case in January but later found evidence, including satellite imagery, of stormwater discharges on three additional dates estimated to have allowed an additional 2.8 million gallons of runoff to reach Russian River tributaries, according to Villacorta.

The proposed fine is based on dozens of alleged violations of the federal Clean Water Act. It is the largest ever in the North Coast region and may be the largest penalty of its type in the state, notwithstanding a $9.1 million fine recommended earlier this year over construction-related stormwater issues at the site of a 900-luxury home project in southern Orange County, according to state regulators. That fine is still pending, according to Blair Robertson, a spokesman for the California State Water Board.

Construction sites larger than 1 acre in size must have a stormwater permit and have a stormwater professional involved in designing and managing erosion and sediment controls, the regional water board said.

When regulatory personnel inspect construction sites, however, they cannot dictate what measures are used to secure soils and runoff, but can only make recommendations and determine whether or not methods employed are sufficient, Puget said.

The complaint against Sonoma Luxury Resort is based on problems found on multiple occasions throughout the eight-month period. The issues included failure to cover disturbed earthen areas, failure to install erosion control measures, failure to contain and manage runoff, among many others, as well a few instances of failing to cover waste disposal containers and store chemicals in watertight containers.

Hundreds of examples of inadequate practices were observed, in some cases, even when there was storm activity in the forecast, regulators said.

Settlement talks underway for months over the alleged violations and proposed penalty have broken down, setting the stage for a Dec. 10-11 hearing on the amended complaint, Villacorta said.

“We are hoping to continue to enter into settlement discussions as we move forward,” she added in an interview.

Green said that his development firm and its subsidiary on the project “have always cooperated fully with the staff and counsel of the North Coast Regional Water Quality Control Board and participated in productive exchanges of information and accurate data. We and our consultants and counsel continue to conduct good faith negotiations to settle this matter in the correct and responsible manner.”

Still, Green faces controversy of another sort at the moment, as well, as his company vies to renegotiate the terms of an earlier agreement with the city of Healdsburg through which it had agreed to develop on-site affordable housing and other public amenities, including a fire substation, a community park, a trail network and two roads meant to aid evacuation as part of its project.

In exchange for dropping the requirements, Green has offered to pay the city $7.25 million and forego $1 million he had put in escrow for the affordable housing work and another $1 million already invested in utilities. The City Council is set to discuss that request at its Sept. 21 meeting.

You can reach Staff Writer Mary Callahan at 707-521-5249 or mary.callahan@pressdemocrat.com. On Twitter @MaryCallahanB.

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