The city’s Adams Street property could accommodate a 70-room luxury hotel and still leave half of the site available for community use, according to a consultant hired by the city.
Kosmont Companies, which has also advised the city on how to help downtown businesses, presented its hotel market analysis to the City Council on Feb. 6. The study analyzed potential hotels on the Adams Street property and the city’s Railroad Avenue property, the former site of the Teen Center.
A 70-room, five-star hotel on Adams Street is feasible with a 65 percent occupancy rate and an average room rate of $1,000 per night, consultant Ken Hira told the council.
The hotel could take up half of the 5.6-acre property and generate $2.5 million a year in hotel, sales and property taxes for the city. A developer’s estimated profits would place the value of the land at $25.6 million, Hira estimated.
However, a hotel with 61 percent occupancy and average rates of $900 per night would not be profitable for a developer, Hira said.
The Railroad Avenue property could accommodate a three- or four-star hotel with 50 rooms with rates ranging from $450 to $500 a night and occupancy between 66 and 70 percent. It could generate close to $1 million a year in taxes, possibly operating in conjunction with the Napa Valley Wine Train station.
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Ongoing revitalization of downtown businesses would help the city attract hotel visitors, Hira said. The city should also encourage existing hotels to renovate and expand, he said.
Hira projected hotel demand at 50 new rooms within five years and 120 new rooms by 2029.
The study was based on previous studies of the Napa Valley tourism market and the prices and occupancy rates of five hotels in and around St. Helena.
The council didn’t discuss the report in depth last week, but Councilmember Mary Koberstein said she was intrigued by the consultant’s suggestion of an Enhanced Infrastructure Financing District.
An EIFD, which is similar to California’s now-defunct redevelopment program, could include non-contiguous commercial properties. With the approval of a majority of the affected property owners, the district could generate revenue for infrastructure improvements through tax increment bonds without raising property taxes.