The first significant step in what is sure to be a long process from the transformation of an approved development to an unapproved project that would require some land use and general plan changes, officially began Tuesday when the Calistoga City Council approved a Memorandum of Understanding with the developers of the controversial Enchanted Resorts.

The MOU does not allow developers to make the changes they hope to make, but it does give them the green light to ramp up their land use application process.

Originally approved by a former Calistoga City Council for 34 homes on about 88 acres in the early 1990s, the property’s newest owners approached the City of Calistoga in January 2009, indicating they would like to amend the project to reduce the number of homes, but also add an 110-room hotel and a “residence club.”

A residence club is a term that disguises a property historically referred to as a timeshare. Developers, however, distinguish a timeshare from a residence club essentially in terms of value — a timeshare is generally worth a quarter of what the company could sell the same housing for if they called it a residence club, a definition outlined in a prospectus presented at the meeting.

City leaders generally like the plan to upgrade the project from its original residential intent since the resort would generate an escalating amount of sales tax and transient occupancy taxes, or TOT, over time, according to the developer’s prospectus.

A city staff report said that although the costs to the city related to the application process would be paid by the developer, any future benefit from the project would have to be determined as the actual plans for the development evolve.

The prospectus claims the project’s first-year TOT contribution would approach $1.75 million, and by the fifth year of operation would amount to more than $4 million annually.

Of the fewer than half a dozen members of the public who advised the council on which way to act when considering the project, only one spoke in favor of the project — the Calistoga Chamber of Commerce executive director, Rex Albright — presumably because of the project’s potential to positively enhance income to local business from tourism. Several others, including two residents of Diamond Mountain Road, voiced abject opposition.

“When the project was first approved as a residential project, that was one thing,” said Charles de Limur. “But now it has become a residential project with a 110-room hotel and a restaurant. Originally, we were told the view of the project from Diamond Mountain Road would be minimal, but as you drive up that road now it’s apparent the project will become much more visible.”

Ironically, one of the major proponents of the long-awaited and equally controversial Urban Design Plan, George Caloyannidis, also spoke against the project and the potential negative impact it would have on the region.

City Manager Jim McCann said the project would require at least one General Plan change and multiple zoning ordinance changes.

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