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Healdsburg’s Saggio Hills resort advances

LUXURY DEVELOPMENT INCLUDES HOTEL, HOMES; $90 MILLION FOR CITY

HEALDSBURG – Several years ago, Tony Korman was working as the head of real estate development for Kendall Jackson Wine Estates when he was approached by luxury hotel developer Robert Green. Mr. Green wanted to build a resort on one of Kendall Jackson’s properties in Sonoma County.

The deal never came to fruition, but the chance meeting of the two developers was the source of the partnership behind Saggio Hills, a new 258-acre luxury resort proposed north of Healdsburg.

When complete, Saggio Hills will include 33 bungalows with 130 total guest rooms, 70 for-sale luxury homes, a spa and health club, at least two swimming pools, conference and wedding facilities, a restaurant and other amenities.

“It will be a five-star, destination resort,” Mr. Korman said.

Mr. Korman said that he had been interested in the Saggio Hills site for several years because of its prime location.

“We just think that Sonoma is a very unique county in the world,” Mr. Korman said. “We feel that it offers a very different experience from Napa.”

The undeveloped site is outside of Healdsburg’s city limits but lies within the city’s urban growth boundary and sphere of influence, meaning that the land can be more easily annexed into the city and is within range of municipal utility services.

From a hospitality industry point of view, Mr. Korman said the site has become more attractive with Healdsburg’s recent emergence as a top Wine Country destination.

“This is the heart of the Wine Country,” Mr. Korman said. “It is where the Dry Creek Valley and Russian River Valley and Alexander Valley meet, and it’s a very desirable destination.”

Mr. Korman did not specify room rates or sale prices for the resort, but a city official said the hotel rooms could easily command more than $600 per night, and the homes could sell for several million dollars each, based on other properties in the area.

Tourism revenues have exploded in Healdsburg in recent years. From 2000 to 2006, the city’s annual lodging tax receipts nearly tripled, reaching $1.4 million. City officials project that Saggio Hills would become the largest tax-generating project in Healdsburg’s history, bringing in more than $90 million over 20 years in lodging taxes alone.

“We never had a project that brought this amount of financial benefit to the city, and it will certainly help pay the costs of the service levels that people here in Healdsburg have become accustomed to,” said Healdsburg City Manager Chet Wystepek.

The project has a number of public benefits besides tax revenues. Sonoma Luxury Resort LLC – the company through which the two developers will build Saggio Hills – plans to donate 14 acres on the site for affordable housing, where it will provide grading and infrastructure to support up to 150 units. The company will also donate 36 acres, grading services and $3 million in cash for a public park as well as about one acre and $1 million in cash for a fire substation.

“There are significant developer contributions that are above and beyond the revenue stream,” Mr. Wystepek said. Healdsburg’s City Council is reviewing an environmental report for the project, and then it will review proposals for annexation and other entitlements. Mr. Korman said he hopes to start construction this summer.

Mr. Korman worked for more than 20 years as a consultant for residential real estate projects in Texas and later Sonoma County, prior to joining Kendall Jackson. He oversaw several winery development projects for Kendall Jackson before leaving the company in 2002 to form Korman Development Inc.

After finishing his new company’s first project – the expansion of Hanzel Winery in Sonoma – Mr. Korman shifted his focus to plans for a new resort. Mr. Korman said he was easily convinced to join the resort project because of the trust he had developed with Mr. Green during earlier negotiations.

“I got to know Robert when I was working at Kendall Jackson, and we developed a very strong respect for each other,” Mr. Korman said.

Mr. Green heads a San Diego County-based firm, the Robert Green Company, and has developed several luxury projects, including the Four Seasons Hotel Silicon Valley in East Palo Alto, the Four Seasons Resort Aviara in Carlsbad, the Four Seasons Resort Jackson Hole in Jackson Hole and a mixed-use, hotel-commercial project called Aventine in La Jolla.

If Saggio Hills achieves its goal of five stars, it would become the first North Bay hotel to reach that rating, according to Ken Fischang, president and CEO of the Sonoma County Tourism Bureau.

“There are only five five-star hotels in California,” Mr. Fischang said, three in San Francisco and two in Beverly Hills.

Star ratings, which are given by Mobil Travel Guide, are based on the level of amenities and quality of service. To reach five stars “is an expensive proposition,” Mr. Fischang said. “It requires a lot of staffing and training. It costs a lot to maintain that rating, but there is a certain customer that wants that full-service experience.”

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