Federal cuts threaten Gravenstein Commons and the Barlow Hotel asks for money from the city
PART 1: Recap of the May 19 Sebastopol City Council meeting
This week’s city council meeting had a crowded agenda full of big meaty topics.
In Part 1 of this three-part article, we will cover the update on Gravenstein Commons and the annual report on the Barlow Hotel, which is requesting a share of TOT tax revenue.
Part 2, which will be posted tomorrow, will cover the council's approval of the Sustainable Transportation Grant “Reimagining the Core” plan, which would convert both Petaluma Avenue and Main Street to two-way traffic and add pedestrian safety and streetscape elements. Part two will also cover the town’s Emergency Operations Plan and a special event fee waiver for Micah’s Hugs.
Part 3 will delve into the council’s approval of an increase in their monthly stipend from $350 a month to $950 a month. (Before you howl, consider that the council hadn’t received an increase in compensation since 1984—more than 40 years.)
Mayor Jill McLewis, Councilmember Phill Carter, Councilmember Neysa Hinton, and Councilmember Stephen Zollman were present in chambers for the May 19 Sebastopol City Council meeting. Vice Mayor Sandra Maurer attended via Zoom, and Councilmember Hinton left for work-related reasons at 7:30 pm.
Quick look at the Consent Calendar
The consent calendar consists of items that are routine in nature or don’t require additional discussion, often because they’ve been discussed extensively at a previous council meeting.
In addition to approving the minutes of earlier meetings, the council unanimously approved the following:
Approved the receipt and adoption of the 2026-27 City Council Goals, Priorities and Tasks
Approved the purchase of cameras for the Sebastopol Police Station to be paid for from the Police Endowment Fund
Approved the annual Engineer’s Report for the 2026-27 Street Lighting Assessment and set a public hearing for June 2. (The recommendation is to lower the assessment from $35 to $23.32 for a single-family dwelling.)
Approved a contract change order with Team Ghilotti Inc. for the Bodega Avenue Bike Lanes and Pavement Rehabilitation Phase 2 Project for a total Project Budget of $2,673,600.
Approved a resolution authorizing the California Urban Streams Partnership (CUSP) to prepare and submit a grant application to the California Natural Resources Agency Urban Greening Grant program on behalf of the City. Grant funding would allow design work to begin on Phase 1 of the Calder Creek project.
Approved pay rates and ranges related to the approved City Manager Employment Agreement
Approved the renewal of an agreement between the City of Sebastopol and Sonoma County Community Development Commission for the administration of the Sebastopol Mobilehome Rent Stabilization Program.
Presentations
Gravenstein Commons Update
Gravenstein Commons is a 22-unit permanent supportive housing development at 845 Gravenstein Highway North in Sebastopol, across from the Redwood Marketplace shopping center. Led by St. Vincent de Paul Sonoma County in partnership with the City, the project is designed to house a category of homeless individuals that score as “highly vulnerable” on the county’s Coordinated Entry list.
Rob Plasse of St. Vincent de Paul gave what was probably the shortest report in the history of the council. He said, basically, “Everything’s in the report we sent you.” After reporting that the project was about 60% complete, he then took questions.
Councilmember Zollman, who serves as the western region representative on the Sonoma County Homeless Coalition Board, peppered Plasse with questions regarding the financial viability of the project in light of federal cuts to permanent supportive housing.
“That’s something we’re still working on,” Plasse said. “I’ll be very honest, I could try to sugarcoat it, but I’m not gonna because it is a concern of ours.”
Plasse said the project was designed to rely on permanent supportive housing funds from the federal government, but that they had $600,000 set aside—enough to operate a bare-bones project for two years—in case federal funding didn’t come through.
According to the report, the project is about $1.56 million short of the construction funds needed for completion.
Mayor McLewis asked if St. Vincent de Paul still owned the properties they’d said they could sell to make up the difference. Plasse said they did—“We have not sold a property in ten years”—but that the organization hoped to come up with those funds in another way (i.e., namely, through loans or donations).
Councilmember Zollman also asked if all the people housed at Gravenstein Commons would have to come through the county’s Coordinated Entry program. Plasse confirmed that they would. Zollman and Mayor McLewis pointed out that this flies in the face of earlier information St. Vincent provided that councilmembers might have some say in who was chosen for the program. (Councilmembers had hoped that some longtime Sebastopol homeless might be housed there, but that, it seems, is up to the luck of the draw.)
Plasse noted that, while construction is proceeding apace, the project would likely not be finished until October or populated until late October or November. (According to the report, St. Vincent de Paul has already received a construction extension from the State to Oct. 30, 2026, and an occupancy extension to Dec. 30, 2026.)
Concerned about a replay of the problems at Elderberry Commons, the council quizzed Plasse on security questions regarding the new facility: Was it locked and gated, did it have an onsite manager, and were there security cameras on the premises?
The answers to all of the above were “Yes.”
In addition, Uriel Brena, St. Vincent de Paul’s Director of Housing, added, “Besides case management work, we also provide residents with many life-meaning programs that change their lives. For example, we have at St. Vincent de Paul Commons [in Santa Rosa] a job readiness program where we hire residents to cook meals for unhoused members of our community. So we’re planning to mimic all of our programs at St. Vincent de Paul Commons for the new Gravenstein Commons.”
Some councilmembers also expressed their disappointment that Jack Tibbetts, former executive director of St. Vincent de Paul Sonoma County, had left town before this project was finished. Tibbetts has moved to Oregon where he is running for county supervisor as a Republican.
Annual report on the Barlow Hotel
It looks like the Barlow Hotel project is facing the same sort of financing woes which have delayed (derailed?) Hotel Sebastopol.
Barlow owner Barney Aldridge said, “It’s a lot easier to pay people to design a hotel than it is to get people to invest or fund a hotel, especially in this market. Of all of the real estate categories, hospitality is the least favored kind nationwide. Wine country hospitality is in its own special difficulty…It’s very challenging. I think there’s a fairly good chance—with your assistance and the goodwill that we’ve generated here in the town, with the Barlow and the success that we’ve had—I think there’s a good chance we can get this funded, but I don’t think we can do it without your help.”
In a letter to the council, Aldridge asked the city to grant back 50% of the TOT (transient occupancy tax) for ten years. His letter mentions several California cities that have managed to help developers build hotels in their towns using this mechanism.
“We kind of need to pull everybody in,” he said. “I’ve had to pull in my relatives, I’ve had to pull in my partners. There’s nobody from the outside that’s going to fund this hotel.”
Phill Carter asked Aldridge if the money the city gave back to the project could be used for marketing Sebastopol as a destination. Aldridge said that it definitely could, noting he’d budgeted a million dollars for marketing in the first year.
In public comment, residents were mixed in their response to this proposal
“The promises sound reasonable, but the public carries the long-term burden.” Kyle Falbo said. “If the hotel succeeds, the developer benefits. If the city rebates away the tax revenue, the public loses money that could have supported roads, public safety, parks, infrastructure, housing, and other community needs. TOT is not the developer’s money; it’s public revenue generated because visitors are staying in our community. A 50% redeem is not a minor amendment; it’s a major policy decision.”
Frequent commenter Oliver Dick urged the city to help Aldridge, who he said “wants to spend a huge amount of money, with a lot of risk, building a hotel in an unproved market in a very difficult economic climate.”
“It’s critical to me that the council put their grown-up suits on and think about this from a business perspective. Stop thinking that the council’s money is just to be given away to the needy—you know, the road to hell is paved with good intentions,” Dick said. “There has to be some serious negotiation between the city and this prospective hotel, otherwise we’re going to have two never-never hotel developments downtown, and we’re going to have two vacant patches of land sitting there.”
Because Aldridge’s request came during a presentation—rather than an action item on the regular agenda—City Attorney Alex Mog warned the council from the start that they couldn’t discuss the details of this proposal or make a decision about it that evening. They could, however, make general comments on the situation.
Phill Carter was the only councilmember willing to venture a comment: “Half of something is something,” he said, “but half of nothing is, like, the least desirable thing.”
Part 2 of this City Council Recap will be posted tomorrow and Part 3 will be posted next week.
The council didn't seem to care when they lost all TOT, property tax and incoming tourists when they supported the County's move to convert the Sebastopol Inn into Elderberry Commons. The county overpaid for the hotel by 3x it's appraised value (biggest winner - commercial real estate moguls who sold the hotel). If the council was willing to forfeit 100% of TOT and incur the ongoing expenses of increased city services to Elderberry Commons residents, it should be a no-brainer to in 50-50 with Barney on bringing in tourists and generating at least some TOT.
If the council was so concerned about TOT revenue, they should have made that clear with the county before the hotel conversion and asked for annual, on-going reimbursement for lost TOT and property tax. It would be so much better if that hotel was still there, city services weren't being taxed by Elderberry Commons residents and we had some sort of base for tourists in our downtown area. It probably would have helped support future hotel development as well.
I want to expand briefly on my concern about the request to grant back 50% of the TOT to the Barlow Hotel developer.
A close cautionary tale is Donald Trump’s Commodore Hotel/Grand Hyatt deal in NYC. It's not a one-to-one comparison, because that deal involved property tax abatements rather than TOT. But the public-policy lesson is still relevant: a private hotel developer argues that a project cannot move forward without public tax relief, the city gives up future revenue in the name of economic development, and the long-term cost to the public becomes much larger than it appeared at the beginning.
In the 1970s, Trump redeveloped the Commodore Hotel near Grand Central Terminal into the Grand Hyatt. New York City was in fiscal crisis, and the project was presented as a needed revitalization effort. The city ultimately granted an extraordinary 40-year tax break. ProPublica reports that, according to NYC Dept. of Finance, the break cost the city $410,068,399.55 in forgone revenue to Trump and later hotel owners.
That should give us pause.
A 50% TOT rebate for ten years is not a minor amendment. It's a public subsidy. TOT is not the developer’s money; it's public revenue collected because visitors are staying in our community. That money should go to support city services, infrastructure, public safety, parks, roads, etc.
The Grand Hyatt example shows how these deals can age badly. At the beginning, the subsidy is framed as necessary. The projections are optimistic. The benefits are emphasized. But once the agreement is in place, the public carries the long-term risk.
Before considering any rebate of TOT, the city should require a full accounting of the projected value of the subsidy, the opportunity cost to city services, enforceable public benefits, audit rights, clawback provisions, and a clear explanation of why this developer should receive a benefit that other businesses do not.
Sebastopol should not make a long-term fiscal decision based on pressure, optimism, or fear of an empty lot. Future TOT revenue belongs to the public, and it should not be quietly split with a private developer.
Ref: https://www.propublica.org/article/trump-pushed-for-a-sweetheart-tax-deal-on-his-first-hotel-its-cost-new-york-city-410-068-399-and-counting