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Timing, funding of Saggio Hills development remains uncertain

Published: Monday, April 1, 2013 at 8:49 p.m.
Last Modified: Tuesday, April 2, 2013 at 7:52 a.m.

Financing continues to remain elusive for construction of Saggio Hills, the $310 million resort hotel and luxury home development approved on the northern edge of Healdsburg.

In an annual update for the stalled project, developer Robert S. Green was unable to predict when the money might be obtained, or when ground might be broken.

But he said his company remains dedicated to developing the 130-room "world-class" resort and 70 custom-built homes.

Although the market is improving, Green said, lenders are still reluctant to engage in new construction for high-end hotels.

"It still may be some time before they are willing to provide financing at terms that make (a) new full service or luxury project viable to move forward," he wrote in a letter to Healdsburg Planning Director Barbara Nelson.

Despite the uncertainty, the City Council on Monday night cast a 5-0 vote finding Green's company, Sonoma Luxury Resort LLC, is in "good faith compliance" with its development agreement with the city.

The agreement is for a term of 12 years. It allows the resort and homes to be built on the condition developers also construct a fire substation, public and private trails, provide land for affordable housing and a 38-acre community park.

Green was not present at Monday's meeting. But Vice-Mayor Jim Wood said afterwards, "I think it will be built. I think it will take longer than anticipated."

Wood said he spoke with Green last month and the developer "said he was looking at ways to move the project forward."

In his letter dated March 18, Green was equally vague about timing for both the residential and hotel segments of Saggio Hills.

Although the number of high-priced custom home starts over the past year in Sonoma County has been encouraging, he said, "we cannot yet point to a market that will reflect the kind of steady and continuous absorption of our 70 units over a reasonable period of development."

He said it is also important to note "that we hold the property debt free, and therefore have no risk of it falling out of our control."

Green's firm, Sonoma Luxury Resort LLC, paid $16.8 million in 2005 for the 259 acres to develop Saggio Hills.

The Encinitas-based Green has been behind several Four Seasons luxury resort projects.

Saggio Hills was the subject of a couple dozen often lengthy public hearings and a dominant issue in city politics over close to two years before it was approved in late 2008 on a 3-0 City Council vote.

But a citizens' group immediately filed a lawsuit challenging the environmental study, and a judge agreed the document was flawed in several areas. The city then held additional public hearings on the environmental impact report.

Another judge in 2011 found the deficiencies had been addressed, clearing the way again for the project to proceed.

Wood said he has no idea how Green intends to secure financing for construction. And the developer has not shed any light on how he intends to proceed.

In a letter to the city, Green pointed out that the infrastructure on the site has significant costs, in part because nearly all of the private portions of the project have been located in the farthest reaches of the property, to conceal them from view.

And he said the initial public improvements and amenities required have significant upfront costs.

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com

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