Santa Clara County’s proposed zoning ordinance amendments across rural districts is causing concern among the area’s wine producers about how the changes would affect their business operations and bottom lines.

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According to the county, the proposed amendments are designed to help farmers and ranchers access undeveloped and actively farmed properties in unincorporated rural areas of Santa Clara County. These properties are being advertised for home development, which in turn has inflated land values.

The proposal seeks to mitigate this by updating exclusive agriculture, agricultural ranchlands, hillside and rural residential zones. The update consists of four main components:

Replace “local-serving” provisions with objective standards
Simplify and standardize agricultural uses
Limit uses in the exclusive agriculture zone to support long-term agricultural viability
Adopt standards for agricultural impacts

Alamitos Vineyard winery co-owner Shaun Coleman says he’s looking forward to collaborating with county staff to ensure the rules are clear to small business owners and accommodating of the challenges small wineries face relating to compliance procedures. He hopes the rules will be applied consistently across operations of all sizes, from boutique wineries like his Almaden Valley vineyards to larger, historically significant ones like J. Lohr Vineyards and Guglielmo Winery, the latter of which is celebrating 100 years in business this year.

“Our margins as wineries are often small, typically single-digit percentage net profits at best,” says Coleman. “Clear and fair regulations are essential to support our operations and preserve our ability to thrive.”

Given the austere future facing the entire wine industry, due to changing consumer habits and a general oversupply, he and others worry that without clear grandfathering provisions, these changes could limit tastings, events and direct-to-consumer sales, all of which are vital revenue streams for wineries.

“New zoning restrictions could exacerbate these pressures by imposing unforeseen costs or operational limits not accounted for in long-term business planning,” says Kim Engelhardt, president of the Wineries of Santa Clara Valley and co-owner of Lion Ranch Winery.

Zoning rule changes that potentially could cost wineries unforeseen increases in permits or event fees, for example, could force them to raise wine prices.

Engelhardt says a letter has been sent to the county asking them to consider a grandfather clause to protect existing wineries.

Santa Clara Valley’s wine industry generates over $117.2 million annually in tourism dollars and supports the county’s identity as California’s oldest premium wine-producing area.

“Our wineries provide a vital community service by preserving agricultural heritage, offering scenic landscapes and fostering local pride through award-winning wines recognized by Wine Enthusiast and Wine Spectator,” says Engelhardt.

Santa Clara County is not alone in wrangling this ag land use issue, as San Benito County last year attempted to rezone and put restrictions on the subdivision of large properties. However, the proposal, seen as a threat to farmers, was rejected. A new Ag Zone committee is currently re-evaluating how to preserve agricultural land as well as land values.

The Santa Clara County Planning Commission is holding a special meeting to discuss the proposed zoning changes on Aug. 28 at 6 p.m. in the Board of Supervisors’ Chambers, located in the County Government Center, 70 W. Hedding St., San Jose. This meeting will be hybrid, offering both in-person and virtual attendance options. A virtual meeting link will be available in the agenda at http://bit.ly/4mPoHgh

The county has prepared a draft Program Environmental Impact Report for the Rural Zoning Amendments and Agricultural Impact Threshold Project, which is available for review at http://bit.ly/3UF15Pz