Carneros Vintners Struggles To Get Custom Crush Facility Ready for 2009 Harvest

Carneros Vintners is struggling to get its million-gallon custom crush facility in Sonoma ready for the 2009 harvest. But spring rains and a raft of yet-to-be-approved building and regulatory permits make that less likely with each passing day.

Crush started the first week of August in 2008, but cooler-than-average temperatures should make 2009 a more average year with Pinot Noir starting to come in closer to the third week in August. Despite this break, owner Dennis Rippey and his son, Tyson (who is managing the project), face an extremely tough challenge.

WEATHER A MAJOR PROBLEM

Because late spring rains delayed the beginning of the facility’s construction, Carneros Vintners hired Steve Martin Associates, Inc. (SMA), to help coordinate and expedite the process.

SMA’s web site says that it has worked with more than 150 winery projects. According to the web site, “Over the years, Steve Martin has developed strong productive relationships with County, State and Federal agencies involved in the review and permitting of building projects. These relationships and the resulting trust that SMA has earned means that SMA projects are streamlined through the permitting process with minimal delays to the construction schedule.”

NO FINAL APPROVALS ON VITAL BUILDING PERMITS

While Carneros Vintners does have a use permit for the production of a million gallons of wine per year, a check of Sonoma County’s online permits and inspection database shows few inspection approvals on any of the issued building permits.

Indeed, as of Aug. 5, none of the dozen main building permits had received final approval.

And while a number of smaller building permits are in a pre-final stage the primary building permit for the main facility (BLD08-5181) showed inspection approvals on just two items of several dozen inspections: foundation clearance and the installation of the electrical meter.

Items which have been inspected but not approved (or which have partial approval) include those for:

• foundations
• underground utilities
• retaining walls
• underfloor electrical
• underfloor plumbing
• rough electrical
• rough mechanical
• rough plumbing
• rough frame
• close-in

Current status of building permits can be checked here.

A PRMD representative said that “absolutely no occupancy or business activity” would be allowed until all permits were finalized.

STATE AND FEDERAL PERMITS STILL IN LIMBO

In addition to delays on building permits, Carneros Vintners has yet to receive approval for its federal and state alcoholic beverage permits.

According to the California Department of Alcoholic Beverage Control, Carneros Vintners has a pending application dated May 22 for a winegrower and public warehouse permits. Approval, the ABC said, would not be granted until the facility was finished and available for inspection.

In addition, the most recent list of bonded wineries available from the Alcohol and Tobacco Tax and Trade Bureau (TTB) has no mention of Carneros Vintners. A TTB representative said that proposed facilities must be completed “with bonded and non-bonded areas clearly demarcated” before a permit could be granted.

ACTUAL PROPERTY AND FACILITY OWNER, CCC VINREIT WATCHING PROCESS WITH A CLOSE EYE

As previously detailed by Wine Industry Insight, the land and buildings for Carneros Vintners are actually owned by CCC Vinreit, LLC., a unit of Kansas City, MO-based Entertainment Properties Trust (NYSE: EPR). EPR has agreed to lease the facility back to Carneros Vintners on a 10-year, triple-net lease that also provides for two, 5-year options.

According to EPR’s 10-Q report filed with the Securities and Exchange Commission on July 28:

“Through June 30, 2009, the Company has invested approximately $7.7 million in this project for the purchase of land and development in Sonoma County, California, and has commitments to fund approximately $0.8 million of additional improvements. Development costs are advanced by the Company in periodic draws. If the Company determines that construction is not being completed in accordance with the terms of the development agreement, the Company can discontinue funding construction draws.”

WII previously published an extensive interview/profile with EPR CEO David Brain. The complete interview is available to VIP Premium Content Subscribers.

CARNEROS VINTNERS HAD NO COMMENT

Despite numerous attempts over the past 10 days by Wine Industry Insight to get details and comments and include the company’s perspective, no one from Carneros Vintners responded by publication time.