After months of negotiations requiring a mediator, the city of American Canyon has agreed to initial terms with the developer of the stalled Watson Ranch project.
But final approval of the ambitious residential and commercial development — scheduled to take place later this year — may not be forthcoming from one of its biggest supporters on the City Council unless changes are made.
The council on Jan. 16 approved a 21-page “Term Sheet and Project Schedule Agreement” following several months of talks between the city and the developer aided by a third-party mediator, attorney Michael Durkee.
Durkee was brought in after the city stopped working on responses to public comments generated by the project’s draft environmental impact report, which ground to halt last year over a variety of issues stemming from the plan to build more than 1,200 residential units and a commercial center known as the Napa Valley Ruins and Gardens.
Interim City Manager Jason Holley hailed the term sheet, calling it “an important milestone as this development moves forward.”
He described the term sheet as an outline that wasn’t necessarily binding on other key documents still to be hammered out with the lead developer, McGrath Properties, such as a development agreement.
“We’re incredibly excited to be at this point,” said Terrence McGrath, president of McGrath Properties, regarding the term sheet. “We’ve had a very fruitful and cooperative exchange to get to this place.”
But Councilmember Mark Joseph, a longtime self-described booster of Watson Ranch, said he had several concerns with the term sheet’s details, including provisions for new public parks, the extension of Rio Del Mar eastward, and tax sharing.
He warned these conditions may need to change in the development agreement to win his future support.
“I have been a staunch advocate of this project since I got here, and that’s pushing 25 years,” said Joseph. “I want to see this project happen, and I do support the basic outlines of the plan. But I do have a financial background, and I can’t help but look at the numbers and express some concerns” with the terms.
Joseph, a former city manager, referenced a section in the terms stating the city will give the developer 50 percent of all sales and hotel taxes generated from the project’s commercial end.
He said he was concerned with this tax sharing provision because the city has yet to conduct an updated fiscal analysis of Watson Ranch to know whether such a revenue sharing plan is prudent for American Canyon.
“From my perspective that [fiscal study] should have been done before we entered into some specificity on these terms,” said Joseph. The financial analysis “may tell us we can’t share as much of the tax revenues that we’re talking about sharing.”
Joseph then looked out at the audience where McGrath was sitting, and remarked: “I need some assurances from all sides that even if it says we’re going to share 50-50 up to a certain dollar amount, we may not when the time comes based on what we figure out between now and then.”
McGrath did not respond or saying anything else during the meeting.
Joseph voted in support of the term sheet, which the council approved 5-0. But he added that his vote was a “conditional yes,” and that if the fiscal terms aren’t changed down the road, “I won’t support the development agreement.”
Holley acknowledged the city must still conduct a new fiscal study of the project. He also said, “There is nothing written in stone, and there’s nothing absolutely binding about this agreement. It is all subject to change.”
The Term Sheet and Project Schedule Agreement also contained a timeline for approving Watson Ranch in 2018.
It calls for completing the environmental review process by June 5, holding project approval hearings by the Planning Commission by June 24 and City Council by Aug. 20.