A Growing Sonoma Bursts at its Seams

Wine tourism: booming. Mass transit: zooming. Big cannabis: looming. For a once-quiet agricultural region, Sonoma is suddenly an economic engine. And not everybody’s loving the noise. By Patrick Hoge 9/25/17


Liza Hinman lives in two Sonoma County worlds on the same continuum. In one, she is cofounder and chef of the Spinster Sisters, a hip, fun, homey restaurant bringing life and house-made granola parfaits to a formerly run-down part of Santa Rosa. She’s part of a vanguard of entrepreneurial Sonomans who are catering to both locals and tourists through the unifying power of good eating, good drinking, and smartly designed community spaces. In the other world, Hinman, as a mother of three and the wife of a Sonoma native, is unsettled by the changes that have overtaken her hometown of Healdsburg, a once-dilapidated agricultural town of almost 12,000 with a quaint central plaza that has utterly transformed in the last 15 years into a crowded, swanky destination for affluent out-of-towners and second-home owners.

In one world, increased tourism and a well-earned Michelin recommendation are boons for Hinman, a rosy-cheeked, smock-wearing 40-year-old with a broad smile and a gifted touch with locally grown foods. In the other, she finds herself conflicted, avoiding Healdsburg’s downtown of pricey restaurants, clothing stores, and art galleries because of traffic and lack of parking, and shaking her head at the area’s 30—30!—wine tasting rooms. “It’s the ad nauseam conversation that we all have as more and more tourists and Bay Area people discover us,” Hinman says, proffering some of her signature deviled eggs. An East Coast transplant who got her professional start studying and cooking in San Francisco, Hinman knows that it wasn’t long ago that numerous businesses in downtown Healdsburg were shuttered. And she appreciates the tax revenue that supports city services. “It’s our lifeblood here,” she says. “But there has to be a way to find balance, to have a vibrant community for locals and services for tourists.”

Hinman’s contrasting sentiments are echoed across Sonoma County these days, as moneyed visitors from around the world and urban refugees flood into the North Bay in search of the good life. Tourism spending is soaring; hotel and winery development is widespread; and housing prices are climbing fast and approaching an all-time high—all factors that have led to a growing disquiet among longtime valley dwellers. Still a vast Eden of vineyards, restaurants, and resorts, Sonoma maintains a natural beauty and a relatively affordable cost of living that have made it a release valve for the over-pressurized Bay Area. But this restfulness has been disturbed by new strains of anxiety that Sonoma’s laid-back feel, small-town charms, and country roads are being trammeled by too many outsiders with too much cash.

“There’s all that money in the Bay Area just whacking against us like a tide. It’s going to change things,” says Leah Gold, who won a Healdsburg council seat in a June special election. Here, as in San Francisco and much of the rest of the Bay, the wealth divide is becoming glaring. At the same time, many Sonomans see reasons for hope as the county and its nine cities collectively and separately pursue strategies to protect the region’s rural areas, get people out of cars, and encourage development for home buyers and renters across the income spectrum. Central to that is the recently opened $500 million Sonoma-Marin Area Rail Transit service, currently running from San Rafael to Santa Rosa. Planners hope, perhaps fancifully, that pedestrian-friendly villages as affordable as they are walkable will sprout along the line, which one day will stretch 32 miles farther north to Cloverdale and 13 miles south to the San Francisco–bound ferries at the Larkspur terminal.

The most optimistic of Sonoma boosters believe that the county can succeed where its tony neighbor to the east, Napa County, long ago failed. This eventuality is far from guaranteed. Like Napa’s, Sonoma County’s recent history is one of a dramatically ascendant wine industry that has increasingly become intertwined with tourism, fueling an explosion of luxe new wineries, tasting rooms, and event centers. The county’s hospitality industry, also goosed by a wave of craft breweries and distilleries, has grown for seven years straight, hitting $1.93 billion in 2016, up 5.7 percent from 2015. Wine grapes propelled the value of agricultural products to almost $586 million last year, also a record. The economy is humming, with unemployment below 4 percent. New businesses are opening, accommodations are full, and after years of quiescence, long-delayed hospitality and residential development projects are moving forward. And all this before the genie of legalized cannabis—already a sizable business in Sonoma County—is let out of the bottle.

Even small towns like Cloverdale, near the Mendocino County line, are feeling the economic upwelling. The 8,801-person town has new, fancier dining outlets, a thriving arts scene, and a friendly summertime Friday Night Live street party that draws thousands every week. Famously funky Guerneville, idyllically set in the lower Russian River valley, has a bevy of farm-to-table restaurants, a brewery, and Instagram-approved motels and inns. This year the downtown got its first two wine tasting rooms, one of them in a 96-year-old bank building that had sat vacant for three decades until a San Francisco man rehabbed it.

Similarly, Hinman’s Spinster Sisters in Santa Rosa occupies a once-forlorn 1928 stucco-clad building that used to be an Italian family’s grocery store. The restaurant’s name comes from two unmarried sisters who lived upstairs and are now depicted spinning and sewing on one of the restaurant’s orange exterior walls. Since opening in 2012, it has become a hub of life near Juilliard Park, a stately patch of green bordered by bungalows and the home and gardens of famed horticulturist Luther Burbank. Art shows rotate regularly. It seems custom-made to attract urban sophisticates and young people; Santa Rosa, the county’s largest city and still one of its best real estate values (current median home price, according to Zillow: $590K), feels particularly ripe to be discovered.

That’s how former San Franciscans Amanda Dunker and Jeremy Nusser feel. The couple are entrepreneurs who recently bought and converted a vacant 1930s gas station and diner across the street from the Spinster Sisters to use as the global headquarters of their startup, Avalow, which makes garden containers for growing vegetables and offers consulting support. Nusser is a mechanical engineer who has worked at Bay Area tech companies involved in digital payments and gaming. He and Dunker welcome the changes they see happening in Sonoma County and feel lucky that they got in on the ground floor of something big. “We are a San Francisco startup in Sonoma County,” Dunker says. “We are a part of the change in Sonoma County. People are thinking bigger, and we are excited to be a part of it.”

Of course, for every “San Francisco startup” thrilled to be putting down roots in rustic Sonoma, there’s a longtime resident who winces at the new arrival. But perhaps the greatest fear here isn’t of the gentrifying hipster but of the rampaging tourist. Debora Fudge, a former PG&E environmental consultant who has been the mayor of small-town Windsor, population 27,555, 10 miles up the road from Santa Rosa, for almost six terms, talks about avoiding “Napafication.” This, to her, means allowing the region to become overly concentrated on wine and its related tourism: Among other horrors, she cites weekend traffic jams on Napa County’s Highway 29. In her own city, situated roughly midway between Santa Rosa and Healdsburg, officials have plans to install a boutique hotel on the town green. But citizens have come to her worried that it could change the low-key, family-friendly vibe. “People in Windsor keep saying they don’t want to be Healdsburg,” she says. “‘Be careful what you do.’”

Gold, the newly elected Healdsburg councilmember, likewise says she’s trying to stop Healdsburg from growing to be “too much like a Napa town,” although some would say she’s too late. An education consultant and former mayor of the town , Gold beat a 12-year council veteran in June with a campaign focused on the impacts of tourism, scarce parking, and the need for affordable homes; she also proposed a second-home tax to subsidize new housing. Healdsburg’s council had already commissioned a study on how to promote a balanced local economy that doesn’t overly depend on tourism. In August, the council adopted a rule restricting the number of wine tasting rooms and bars to one per block, codifying an informal policy. The City of Sonoma is similarly considering its tasting room policies.

Such debates are not entirely new in Sonoma County. In the fabled Valley of the Moon, powerful local businessman Darius Anderson is still fighting after half a decade to get approvals for a 62-room luxury hotel and an 80-seat restaurant just off the main square in the city of Sonoma. Anderson, a local resident frequently slammed by foes as an über-wealthy threat, is a political lobbyist whose company, Kenwood Investments, is, among many other things, leading the effort to redevelop San Francisco’s Treasure Island. Anderson also owns a culinary school, a winery, a 1,000-acre private pheasant-hunting club in Sonoma, and shares in a publishing company that runs the Santa Rosa Press Democrat.

Anderson’s opponents qualified a 2013 ballot measure to restrict the building and growth of hotels with more than 25 rooms, but voters rejected it. He argues there is room for appropriate growth around the county and continues to try to address the concerns of his critics, whom he credits with improving his project. Local voters and policy leaders, he says with a hint of pride, are very protective of Sonoma County’s “historical qualities.” He recalls that in 1999, city voters rejected a proposal by Texas-based Rosewood Hotels to construct a 100-plus-room luxury hotel on a northern hillside owned by the city. “We believe we’ve got a special little Shangri-la, and we don’t want that to be changed or destroyed. Development in this county is not for the faint of heart. Every project, I don’t care what or where it is, faces opposition,” he says. “What that does is it weeds out the bad projects. People not aligned with the city’s cultural thinking. And it weeds out speculators that just want to come here and make money.”

Gold’s concern about the rising cost of living in Sonoma County—the same crunch affecting the entire Bay Area—is shared by economists who say it’s stifling job and population growth. During the Great Recession, Sonoma County was hit hard as tourism spending plunged and city slickers shed second homes. Median home values dropped by more than half to a low of $305,000 in 2008. Very little housing has been built since then, with prices rising faster than local incomes, though the county remains the second-most affordable in the Bay Area (behind Solano County) in which to buy. In July, the median price for a single-family home hit $645,000, just shy of the 2006 record of $650,000. By contrast, the July median price was $1.5 million in San Mateo County and $1.42 million in San Francisco. Predictably, some of the most expensive homes in Sonoma County are in Healdsburg, a town where voters in 2000 limited the construction of new market-rate homes to about 30 a year. “If you’re here, it’s wonderful. There’s great food, great weather, nice people,” says Mo Ramirez, a lifelong Healdsburg resident. But, he says, “it’s tough for the kids,” who no longer can afford to buy into the dream.

Ownership isn’t even an option for many. In Santa Rosa, where many of the county’s hospitality workers live, the rental vacancy rate is just 1 percent, with the average rent for a two-bedroom apartment at $2,152 a month, according to RentJungle. The Santa Rosa City Council this year attempted to impose rent control, but apartment owners around the state took the issue to the June ballot, and it was narrowly defeated. “A lot of people [who were] living here 20 or 30 years are moving out because they couldn’t afford it no more,” says Robert Kinerk, a clerk in an art gallery in Santa Rosa’s historic Railroad Square district.

Patrick Carlisle, chief market analyst for Paragon Real Estate Group in San Francisco, thinks Bay Area buyers desperately searching for homes they can still afford, as well as retirees leaving the region’s most expensive cities, are playing a significant role in the Sonoma County market. The second-home dynamic is probably also hurting existing residents looking to buy, he says. Affuent buyers from elsewhere in the Bay Area are conditioned to paying more, which ends up driving prices well beyond what current residents may be able to afford. “As the inner Bay Area has gotten so extremely expensive, it has kept pushing the pressure outward,” Carlisle says. To a longtime Sonoman, that $650,000 price tag for a modest home on a small lot looks outrageous. To the San Franciscan, it looks like a steal.

How can a county build a whole lot of housing for people at disparate income levels, maintain its rural tone, provide for tourists, and nurture growth, a vibrant economy, and a good quality of life? The key may be a series of urban planning policies that Sonoma County officials and voters have embraced with particular zeal. Councilwoman Gold helped kick off the trend in 1996 by successfully leading a campaign to get voters to encircle Healdsburg with an urban growth boundary to protect farmland from sprawl. All nine cities now have such limits, the most recent being Cloverdale’s in 2010. County voters also approved a policy that prohibits development in greenbelts between cities and towns, and funded an open space and agricultural protection district that has preserved an extraordinary 111,000 acres of land, the most of any agency in the entire Bay Area since 1990.

One city that has accomplished many bold planning goals is Windsor, which was incorporated only 25 years ago. In the late 1990s, town leaders decided to turn empty fields into a walkable downtown with a central park and a multimodal transit station. In the course of a decade, starting in 2000, architect and developer Orrin Thiessen’s company built 270 residential condominiums over 100 commercial units, mostly in three-story structures evoking historic buildings in the county. Unfortunately for Thiessen, the Great Recession pushed him into Chapter 11 bankruptcy and he had to forfeit control of $80 million in properties and sell his home. Development stopped cold, until recently, when the rising economic tide brought renewed interest to the few blocks yet to be built around the Windsor green. The council recently approved plans for a four-story flat-iron building with 30 apartments, and it’s trying to finalize a deal with a developer to build 387 apartments near the station where trains will one day stop. The town green, meanwhile, is already a true center of the community, drawing up to 6,500 people for regular events including farmers’ markets, concerts, festivals, and outdoor movies.

Rohnert Park mayor Jake Mackenzie, chairman of the Bay Area’s Metropolitan Transportation Commission, is heartened to see housing development again moving forward, particularly along the SMART train line. His city has a train station, and he wants a downtown like Windsor’s built on a 30-acre former State Farm campus next door. “The huge question is, can we find the money and the political will to build workforce and affordable housing that will really stop this trend of people having to spend 40 to 50 percent of their income on housing?” Mackenzie says. “This to me is the most worrisome aspect of the future of Sonoma County.”

Teri Shore, North Bay regional director for the Greenbelt Alliance and a Sonoma resident for 29 years, is optimistic given the steps already taken. “What we need is a new species of developer who knows how and wants to build good, smart growth,” she says. “In a lot of ways, Sonoma County is paradise. Are we going to preserve and protect what we have? We can’t save our greenbelts and our open space if we don’t start building affordable housing near services and public transit.”

As for Hinman, she’s hoping for just that kind of development to happen near the Spinster Sisters, particularly downtown. That could inject new energy into the Juilliard Park neighborhood, which withered after being split by Highway 101 in 1948. “We see that potential, and it’s encouraged us to be quietly ambitious about what we can contribute to the neighborhood,” she says. She and some partners have reopened the nearby Astro Motel, a long-vacant 1963 building on the auto-row part of Santa Rosa Avenue that not long ago was a den of prostitution and drugs. Hinman’s group budgeted roughly $10 million to buy and refurbish the 34-room lodge and turn it into a cyclist-friendly destination featuring a retro-modern aesthetic. The goal is to attract people for bike races and tours as Santa Rosa becomes more known as a destination.

To Hinman, that future seems enticingly close—especially amid the changes she’s already witnessed in Sonoma over the last decade. She hopes that she, her city, and the entire county are able to achieve “sustainable, healthy” growth along the way. “It’s amazing how fast the cycles change,” she says. “Ten years isn’t really that far.”