After seven years – and more than a few bruised feelings along the way – Napa city officials have given their blessing to a package of agreements they hope will finally turn the Napa Pipe development into concrete-and-steel reality.
Tuesday night, the City Council unanimously agreed to supply water to the entire 154-acre site along the Napa River south of Kennedy Park. Access to water had become the latest in a chain of sticking points between city and county in reaching a final deal to launch the project, which aims to build out the former industrial site with a Costco store, hotel, offices and up to 945 homes.
Council members also signed off on five compacts with Napa County, covering tax revenue sharing, Costco’s arrival and municipal services during Napa Pipe’s transition from county to city control.
The council also authorized an application to fold Napa Pipe into its sphere of influence and annex it into the city in two steps. The first step would take in the site’s industrially zoned areas “as soon as practicable” following a city rezoning, with the second step absorbing the remaining lands on Dec. 31, 2022.
To get closer to a final Napa Pipe deal, the city had to grapple with its insistence that a Costco arrive before any housing. But the water agreement –and developer promises of more funding if a warehouse store is slow to arrive – persuaded council members to push for a long-delayed conclusion.
“I will cautiously say I think we’re there,” said Councilwoman Mary Luros after the Napa Pipe votes, all of which were unanimous. “I think we’ve protected ourselves if for some reason Costco doesn’t happen – right away, at least. It’s not perfect, but it’s a good compromise and I support it.”
“We’ve really tried to get this as correct as we could, (and) we’ve achieved most of our goals,” added Councilwoman Juliana Inman.
In recent weeks, how soon the city could strike a water service deal with Napa Pipe’s developer – and its effect on the timing of its annexation – has loomed heavily over the project’s future.
City and county leaders had disagreed on what events would trigger the start of water service to the development. The city proposed doing so after the Local Agency Formation Commission (LAFCO) – the body that approves annexations – approved a phased plan, with a Costco being built first. However, county officials worried that waiting for that step could stretch final approval by several months, and wanted water service to start when LAFCO receives the completed project applications.
Napa County officials, urging greater haste from the city, have pointed to a contract between Costco Wholesale Corp. and Napa Redevelopment Partners LLC. That deal includes a feasibility period that ends Sept. 15, with the option of a 30-day extension, that requires water service for a store to be considered.
By promising water service and supporting a streamlined annexation path, the city hopes to speed LAFCO’s work and enable it to review the Napa Pipe plan as early as Sept. 14, said Rick Tooker, community development director.
“We’re no longer saying that LAFCO must approve both the sphere of influence expansion and the phased annexation” before the city provides water to Napa Pipe, he said after the council meeting. “That was the crux of our discussion.”
Without a city water commitment by the early fall, Napa County could have considered supplying Napa Pipe with groundwater or water from other sources, said Supervisor Mark Luce.
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The Board of Supervisors voted on June 23 to accept alternative water options for Napa Pipe, in part to meet a deadline in its state-approved housing plan requiring a backup water plan if city failed to sign a water agreement by June 30.
Driving Napa County’s urgency to break ground is its need to meet state quotas for affordable housing, a difficult task in a county with strict farmland protections and soaring rents and home prices.
The Napa Pipe agreements call for the city to shoulder 80 percent of the county’s requirements for below-market-price homes starting in 2023, a hurdle virtually impossible to clear without Napa Pipe’s housing stock. Some 190 homes are to be reserved for those earning less than 120 percent of the county’s median income, with allotments for moderate, low and very low incomes.
An attorney for Latinos Unidos del Valle de Napa y Solano, which advocates for affordable housing, urged city officials not to tarry any longer, pointing to the imbalance between wages and rents that forces large numbers of workers to commute from outside the Napa Valley. Further delays could imperil a project that has nearly been derailed by city-county squabbling, but remains essential to provide some sort of housing relief, David Grabill told the council.
“Developments are fragile, especially big developments like these; the whole thing could implode,” he said. “It’s important that you work with the county and the developer to get it moving, in a way that makes everyone happy.”
Other agreements approved by the City Council cover revenue sharing with the county from the development, as well as the fiscal backstop for the city if a Costco store – and the tax money it would bring – is postponed.
Sales and hotel tax revenue from Napa Pipe would be split equally between city and county until annexation, when the city would start keeping all such funds. The county would retain all property tax money before the site’s absorption into the city, after which the city would keep 55 percent.
Napa Redevelopment Partners also agreed to bolster the substitute payments it will give the city if housing is built before a warehouse store, a step the builder can take if no Costco opens within two years.
City officials had insisted on a higher payout, to ensure it could afford to provide public services at Napa Pipe even without the tax revenues of a large chain store. In response, developers raised the minimum backup payment from $214,000 to $700,000 per year, with that total reaching as much as $931,500 as Napa Pipe’s build-out progresses.
Accepting a larger payout in the absence of a Costco is a concession that the store’s arrival, however strongly likely, cannot be fully guaranteed – and that the city should speed approval for Napa Pipe rather than hold out for 100 percent certainty, according to Councilman Peter Mott.
“It’s about finding a middle ground so that in the worst-case scenario, we can still pay for the services,” Mott said. “I still fully believe that Costco is coming, but there could be, say, a terrorist attack tomorrow that puts all their development plans on hold. The full, full unknown is still unknown.
“The developer has worked hard to get to this place. This is the smartest way to make sure we don’t get in a bad place for the city.”