Remote surveillance trailer in St. Helena, CA

Updated 9 a.m. Wednesday —St. Helena ballot measures proposing a hotel at Charles Krug Winery and a real property transfer tax each trailed in early returns.

Measure B, a proposed luxury resort, trailed with 687 no votes (51.2%) and 656 yes votes (48.8%), according to early returns posted by the Napa County Election Division after 12:30 a.m. Wednesday.

Measure A1, approving a city charter, and A2, approving a real property transfer tax, were both trailing. A1 had 702 no votes (53.0%) and 623 yes votes (47.0%). A2 had 760 no votes (57.1%) and 571 yes votes (42.9%).

Becoming a charter city is a prerequisite to St. Helena imposing the transfer tax. If either measure fails, the tax will not take effect.

Lester Hardy, a supporter of A1 and A2, noted that both measures are trailing by a gap that seems insurmountable.

"I'm certainly disappointed, but confident that as the new City Council is seated and gets to work on the budget, that fiscal realities will be addressed in a responsible fashion," Hardy said.

The next results will be released Friday afternoon, according to Registrar of Voters John Tuteur. They will include several thousand vote-by-mail ballots returned in the final days via mail and at drop boxes and vote center.

Noble House Hotels & Resorts, the company that owns the Napa Valley Wine Train and proposed Measure B, hosted an election night party at Ana’s Cantina. CEO Jamie Colee and other supporters anxiously checked their phones as they waited for results to be posted.

“It's early,” Colee said shortly after 8 p.m. "Only a third of the votes are in. We had great momentum toward the end of this and we're going to remain positive."

The outlook for Measure B got worse as election night continued, with the gap growing from 17 votes at 8:01 p.m. to 31 votes after midnight.

Before the results were announced, Colee said the campaign helped him learn "what makes people tick" in St. Helena and what they're concerned about.

"Sometimes we didn't get our message across the right way," he said. "Sometimes our words were twisted we didn't intend. In some cases maybe we could have said our message in a different way so it wasn't misunderstood."

Marcus Marquez, general manager of Brasswood, attended the pro-Measure B party at Ana's. He said he tried to give people accurate information about a "smart project."

"This project is a win-win for so many people and the city itself," Marquez said before the results were announced.

Measure B, also called the St. Helena Agritourism Initiative, was St. Helena’s most controversial ballot initiative in recent memory. It would approve Noble House’s plan to build a roughly 56-room luxury resort on fallow land at Charles Krug Winery, with access from Deer Park Road.

Supporters said the hotel would provide a new revenue stream for a city that faces a substantial structural deficit, attract more customers to local stores and restaurants, and help St. Helena catch up to neighboring cities like Calistoga, Yountville and Napa that have experienced the economic benefits of new lodging.

The hotel would generate $1.8 million a year in transient occupancy taxes for the city during its first five years, according to the city.

Critics were concerned about water, workforce housing, and the unusual process by which the hotel came before voters.

The applicants propose using on-site wells to serve the hotel, but an impartial analysis by the city questioned whether that was compatible with the county’s groundwater policies. Some supporters of Measure B suggested that the hotel should try to hook up to the city’s water system instead.

Noble House proposes to build at least 50 workforce housing units on land it owns along the railroad tracks at Fulton Lane. The city’s analysis questioned the feasibility of housing on that site, but Noble House representatives said workforce housing is essential to their business plan. The company has built workforce housing near its other resorts in environmentally sensitive places like the Florida Keys and Jackson Hole, Wyoming.

Noble House collected enough signatures to get Measure B on the ballot instead of going through the traditional city planning process, which would require hearings in front of the Planning Commission and City Council.

Noble House supplied its own environmental reports, but opponents said the project should have gone through the city’s usual vetting process. That usually involves environmental reports paid for by the applicant but directed by city staff, concessions to offset a project’s impact on city services, and a development agreement approved by the City Council.

All five members of the City Council endorsed Measure B.

Measure A2 would impose a real property transfer tax of 1.5% on transactions between $1 million and $5 million and 3% on transactions over $5 million. Transactions of under $1 million would be exempt.

Measure A1 would turn St. Helena into a charter city and grant it the ability to impose the transfer tax.

Based on past real estate sales, the city estimated the tax would generate about $4.8 million a year, although the amount would fluctuate based on the real estate market.

The tax would help close what city officials say is a $7 million structural deficit in St. Helena’s general fund. Supporters sometimes called it the “least worst” of the various revenue options available to the city.

Critics questioned the city’s revenue estimate and said the tax would put a heavy burden on a small sliver of the population. The seller would pay the tax, although the cost could be shifted to the buyer when the sale is negotiated.

The National Association of Realtors funded a campaign against A1 and A2.

Sue Furdek worked on the pro-A1/A2 campaign.

"However the election turns out, we'll all have to come together to address the issues and address our budget shortfalls," she said on election night before the first results were announced. "We'll do that as a community. It will be super-incumbent on the new council to address those quickly and make some tough decisions."

You can reach Jesse Duarte at 707-967-6803 or jduarte@sthelenastar.com.

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