Audit shows 7 wineries exceeding permit limits

2013-08-01T14:06:00Z Audit shows 7 wineries exceeding permit limitsPeter Jensen Napa Valley Register
August 01, 2013 2:06 pm  • 

The results of a random audit of 20 Napa County wineries found that almost all were complying with their use permits’ production limits, but seven were exceeding their visitation and marketing limits.

Napa County planning staff attributed the excess visitation and marketing events as a byproduct of the economic success of smaller wineries. The seven violators’ annual production ranges from 5,000 to 60,000 gallons.

The county Planning Department conducts the anonymous audit every year, sampling about 5 percent of the county’s wineries. Names of wineries are drawn out of a hat to determine each year’s audit.

Last year’s audit marked the first time the county examined wineries’ grape sourcing, and it found all 20 in compliance with their use permits. Audit results were discussed at the Napa County Planning Commission’s meeting last week.

Planning Director Hillary Gitelman noted that the sourcing documents available to staff didn’t show the wineries’ bulk wine bottling operations, only the wine crushed and fermented on site.

“We’re not 100 percent confident that we have fully measured compliance,” Gitelman told the commission. “This has been a really valuable exercise. Every year we learn something.”

Commissioner Bob Fiddaman said he was glad to see that the majority of wineries were in compliance, but was troubled that some wineries exceed their limits on visitation and marketing.

One winery had a limit of seven people per week for visitation, but had a high of 128 people. It also had a marketing event with 50 people, but wasn’t allowed to have marketing events in its use permit.

Another had a cap of 70 people per week, but had a high of 384 people visiting one week, according to the audit results. A winery with an identical cap of 70 per week saw a high of 212 people, according to the audit.

Other violations were smaller, such as exceeding a cap of 40 people per week by 15 people, or going over a limit of 10 people per week by 4 people.

“I was pleased to see the level of compliance,” Fiddaman said. “We’ve got four of these that are significantly out of compliance. That did bother me a little bit.”

The seven wineries will have an opportunity to reduce their visitation numbers or come back to the county for a modification of their use permit, according to a county staff report.

The production violations were smaller — only three wineries exceeded their limits. One exceeded a 5,000 gallon limit by 3,400 gallons, and will seek a use-permit modification.

Another went over a 30,000 gallon cap by 2,102 gallons and is also seeking to modify its use permit.

A third went 10,916 gallons over, but it hasn’t supplied staff with the production totals for 2010 and 2011, which can be averaged to bring the winery under its use permit’s cap.

The 20 wineries produced a total of 726,632 gallons of wine, which was below the 1.67 million permitted. A large portion of that discrepancy could be attributed to one winery, which has approval to produce 900,000 gallons annually but only made 214,000 in 2012, according to the audit results.

Staff broached the idea of adding other use permits the county approves — such as those for buildings in the airport area or Oakville Grocery — into the pool for selection for next year’s audit.

The commissioners balked at the idea and said they preferred that the focus remain on testing wineries’ compliance.

Commissioner Matt Pope said he wanted to ensure the commission is continuing to monitor winery production as much as possible.

“I think zeroing in on winery production is very, very important for this commission,” Pope said.

Commissioner Heather Phillips agreed. “This is really one of our key compliance tools,” Phillips said.

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(4) Comments

  1. ProWine Biz
    Report Abuse
    ProWine Biz - August 02, 2013 8:53 am
    It is truly difficult to understand why we all allow such an archaic and arcane system to exist. This is a perfect example of how government--people with no understanding of how business works, and have no "skin in the game"--can create a system that smothers what might otherwise be a robust, flourishing, tax-generating industry. The focus must be on demand, and meeting that demand, period. Why can't we have a production "credit swap" system like they do for carbon? Wineries that enjoy demand above their limit should be able to use some of that 700,000 gallons that went unsold by the larger winery. Visitor limits? How can we limit any consumer that wants to stop and buy wine at our winery? Why would we? How can government pretend to know which, if any, of your visitors is actually going to buy wine? Maybe the 41st person wanted to buy 10 cases. Lost sales and lost tax revenues. This is not Prohibition. Its time to rise up together and change this oppressive system.
  2. winecurmodgeon
    Report Abuse
    winecurmodgeon - August 02, 2013 3:11 pm
    Which wineries are out of compliance?? Why not name them?
    As for a prior comment, while I am also "pro wine biz" I also realize that the owners of these properties had to promise to abide by clearly stated regulations and limitations to get permits to build and operate these facilities. It was their choice to build yet one more winery but now realize they aren't making as much money as they hoped. Don't agree to regulations for your ego project, ignore them and then blame the county for your lack of success. You developed the business plan. If you wanted to build a special event center, then say so, don't create a false front as a winery.
  3. reagangirl
    Report Abuse
    reagangirl - August 05, 2013 9:55 am
    Once again, the government is flexing its muscles, telling businesses what they can and
    cannot do. Let the market decide that. What's next? Limiting the number of cars
    that go up and down highway 29 and Silverado Trail??? They've done it already in the national
    parks! Time to tell the county to stop targeting good business people who provide jobs
    to this valley.
  4. m_responds
    Report Abuse
    m_responds - August 12, 2013 6:50 am
    As someone with generations of intimate knowledge of the industry, I can safely say that many of the wineries in the valley are not "businesses" at all. They lie and cheat in compliance, ship illegally, do not pay taxes, lie about alc. content and cannot operate within the law. Many (not all) wineries are simply lifestyle write offs - ways for owners to write off expensive restaurant dinners and premium cars as "business expenses". These wineries are the same ones that provide no benefits to their employees, don't pay growers and suppliers on time (or don't pay at all), and still walk around with their nose in the air. These are not "businesses" and they harm real wineries in the industry and the growers and workers they exploit in order to live a lifestyle of conspicuous consumption that they cannot afford. If you are a real business, you obey the laws, otherwise, you are too dumb to be in business. The tax revenue comes from real wineries, not vanity wineries, they are all tax cheats
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