City tasting room regulations: Ideas still swirling

The Sonoma City Council on Monday was set to take its first steps in placing possible limits on wine tasting businesses in the downtown district, but council members and other meeting attendees left with more questions than answers.

The council met Dec. 3 to discuss what has become a growing concern to some local residents that the notable increase in tasting rooms in the surrounding Plaza area is hindering the economic diversity of the downtown.

Since 2012, the number of tasting rooms in the downtown business district – referred to by city officials as the Plaza Retail Overlay District – has doubled, growing from 13 tasting rooms six years ago to 26 today. In other words, of the 138 ground-floor businesses around the Plaza, about 19 percent are tasting rooms.

The improved economy over the last six years has played a role in the uptick in tasting rooms, as tourism dollars have flowed more freely since the recession and wineries have found that direct-to-consumer on-site sales and wine clubs have allowed them to sell their wares without relying on third-party distributors.

But, while Sonoma’s bustling tourism economy has contributed to the plethora of wine dens, critics say rising rent prices have snowballed the increase – with Plaza-area landlords demanding rates that only wine-tourism businesses can afford, resulting in a burgeoning mini-wine city within Wine Country.

Or as Miles Burgin, a Santa Rosa resident who works at Kivelstadt Cellars, said at the meeting, “There needs to be a point where we say, ‘enough is enough.’”

Added Burgin: “I think that we reached that point a while ago.”

The city has been looking at tightening regulations on tasting rooms since December of 2017, when a council-approved moratorium on new downtown tasting rooms first went into effect. But progress has been slow. The ban has since been extended twice by the council and will expire May 1.

City staff on Monday offered the council such recommendations as setting a numerical limit on tasting rooms, requiring them to obtain a use permit, or requiring tasting operators to register annually with the planning department.

Council members Amy Harrington and Rachel Hundley expressed interest in the possibility of the city issuing a limited number of licenses to operate tasting rooms. The council members said that in the licensing model, the tasting room operators would possess the license – somewhat akin to a taxi medallion – allowing them more sway over where a tasting room could be located, and dis-incentivizing rent increases from landlords.

However, City Attorney Jeff Walter was unsure of the viability of tasting-room licenses, as any new regulation could potentially conflict with the permit agreements already held by Plaza property owners. He suggested that perhaps the same result could be achieved by allowing wine tasting rooms to be permitted in all commercial and mixed-use zones.

That would, in effect, said Walter, mean “any property owner with a willing tenant could pop open a wine tasting facility.”

Another issue, Walter acknowledged after the meeting, is whether issuing wine-tasting licenses was akin to regulating alcohol in a way that already falls under the purview of the state department of Alcoholic Beverage Control.

Other possible regulations for the council to consider going forward include stipulating that tasting rooms adhere to local-grape-sourcing requirements; giving preference to locally based wineries; and limiting the number of wine rooms allowed facing the Plaza or along a downtown block.

Councilmember David Cook expressed interest in permitting retail businesses and tasting rooms to share space, allowing for an increase in tasting facilities above the current 26.

“A business that is failing in the retail district would want to maybe have a wine tasting venue come in there,” said Cook. “It would allow somebody who has a small wine label to be able to move into that spot.”

Members of the Sonoma Valley Vintners and Growers Alliance were in attendance at the Monday meeting. The local wine-industry trade group has expressed a preference for allowing market forces to self-regulate the wine-tasting, but SVVA director Maureen Cottingham said the group was willing to work with the city toward reasonable regulation, and added that “65 percent of the jobs (in the Valley) are related to the wine industry.”

“We are here as an industry to work with you in coming up with solutions,” said Cottingham.

Vintners & Growers Alliance member Jeff Zappelli echoed Cottingham’s sentiment of cooperation, but also wanted to express “some concerns” about the current permitting system.

“Land use is not something that we can control,” Zappelli said, referring to tasting-room use permits issued to building owners. “There are only five landlords that control the majority of businesses in the Sonoma square… So by issuing land-use (permits), you are giving them an advantage over us, where they can drive a lot of power and raise a lot of rents.”

Zappelli, manager of Walt Wines, which has a tasting room just off the Plaza on First Street West, said the local wine industry is willing to “work with the city to solve the problems of tourism” and congestion.

“We’re not here to fight you. But we do need to grow,” said Zappelli. “We’re one of the best-paying businesses in town, one of the longest-standing businesses in town; it’s not our fault that we drive traffic.”

Sonoma resident Tony Moll, of Three Fat Guys wine, addressed the council about the needs of those wine businesses who do not yet have a tasting room, but need one to thrive.

“One of the biggest problems with not being able to have a tasting room -- is driving traffic,” Moll said. “I don’t have the money to build a big winery to drive traffic; having a tasting room is a great way to take that next step.”

Moll added that Plaza-area tasting locations were crucial, as tourists don’t tend to wander far from the city center.

“If you’re looking at tourism, or why people come here, it’s to try the wine,” said Moll. “All I’m asking is you guys help make decisions (to) create a pathway to help people like myself.”

Mayor Madolyn Agrimonti, meanwhile, said she didn’t know what the solution is, but felt “that we need to have a decreased number of tasting rooms.”

“I wish I had something better to say,” said Agrimonti. “It’s just too big now… it’s too big.”

City Manager Cathy Capriola said city staff would research the myriad questions brought up in the meeting and return with more information at a January meeting.

Email Jason at Jason.walsh@sonomanews.com.