Napa County will look at its water options to serve the proposed Napa Pipe housing and Costco development, just in case the city of Napa balks.
The Board of Supervisors directed staff to begin exploring alternatives that include groundwater. At the same time, supervisors made it clear they want more work done with the city of Napa before choosing.
Tuesday’s action allowed the board to meet a deadline contained in its state-approved housing plan. That plan says the county will pursue alternative Napa Pipe water sources if the city doesn’t commit to provide water by June 30. The county has been sued before by affordable housing advocates.
“If we haven’t taken action by June 30 and someone puts a lawsuit on our doorstep July 1 – that’s the risk I’m trying to avoid,” Board Chairwoman Diane Dillon said.
Still, the board prefers that the city provide water to Napa Pipe and someday annex the development. Supervisors directed staff to do what it can to overcome the last, remaining roadblock and to return with more information on Aug. 11.
That last roadblock concerns the chicken-or-the-egg balance between Costco, water and the Napa Pipe housing.
Napa Pipe is to be located on 154 acres of unincorporated land along the Napa River south of Kennedy Park. The former industrial site is to have up to 945 homes, offices, stores, a hotel, parks, trails – and a Costco.
Costco is to be built first. But last December’s development agreement between the county and Napa Redevelopment Partners has a backstop allowing housing to be built without Costco after two years. The developer would pay $214,000 annually for the first housing phase of 350 residences and more in subsequent phases to cover municipal services in lieu of Costco tax dollars.
City of Napa Community Development Director Rick Tooker said Costco would provide the city with more than $1 million in tax revenue annually. The city is taking a risk if it accepts the in-lieu figures in the development agreement, he said.
As a compromise, the Napa City Council on June 16 indicated the city would provide water for Costco, but not for the housing until the Costco is built. That is in keeping with its “Costco first” mantra. The council is to vote on this proposal on July 21.
Keith Rogal of Napa Redevelopment Partners told supervisors on Tuesday that this approach won’t work. Remediation work and infrastructure improvements to prepare the Costco site will cost $30 million. This price can be supported because the infrastructure will also serve the housing and other project parts.
Rogal didn’t see a lender or investor supporting an approach that provides water to Costco and leaves water uncertain for the remainder of the project. Napa Redevelopment Partners, though confident Costco will be built, can’t give a guarantee.
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Supervisor Keith Caldwell said the city and Napa Redevelopment Partners need to negotiate a solution to the Costco-first roadblock. He doesn’t want the county to go too far on a groundwater option before that, given that groundwater would require a treatment plant.
“Once we commit to groundwater, the deal with the city is off,” Caldwell said.
Supervisor Mark Luce said he understands the developer’s opposition to the city’s proposed Costco-first water commitment.
“What we do need is firm commitment for the entire project so the entire project can move forward, including Costco,” he said.
Supervisor Brad Wagenknecht cast the lone vote against putting alternative water sources on the table. The city is the county’s partner, he said.
“They want to make sure Costco is built, but they’re still working on that,” he said. “I take what they’re saying very seriously. I think Redevelopment Partners needs to take what they’re saying seriously and work with them.”
Everyone involved with the Napa Pipe deal – the county, city and developers – say they believe Costco is coming. But that nagging “what if” that Tooker describes as a thousand-to-one chance continues to be the rub.
Jack Frank, vice president of real estate for Costco, said Costco is a membership store and knows where its members are.
“We determined several years ago that the Napa Valley market could be for us a tremendously viable market,” he said. “For years, we’ve been looking to find a home in the county….”
He called Napa Pipe a “very cool project” that cleans up contamination to create a mixed-use development. Costco is pleased to be the anchor and economic engine. But, he said, infrastructure and water commitments need to be clear and well-defined.
“We would love to be here,” Frank said.