Drive along Petaluma Avenue and you'll pass the fenced dirt lot at 6828 Depot Street, its current tenant a rotating public art installation rather than a hotel. Walk two minutes into The Barlow and you'll pass the old Guayaki Yerba Mate warehouse, still standing, its longtime tenant still waiting to relocate while the hotel project planned for that footprint works out its financing. Both sites have had a hotel planned for them since before most people reading this owned their current home. As of this summer, the city had approved a tax rebate for one of the two hotel projects.
On July 21, the Sebastopol City Council voted to rebate half of the city's 12 percent hotel tax back to the developer of the Barlow Hotel for the project's first ten years of operation. Across town, the other long-promised hotel for Depot Street still doesn't have a construction loan. The council's vote puts the two projects at different stages. Meanwhile, restaurants and shops at The Barlow continue to expand.
Two Sites, One Long Wait
The Barlow Hotel is planned for 6782 Sebastopol Avenue, on the footprint of the aging Guayaki building, which Guayaki has not renewed its lease on and is vacating as part of the deal. Barney Aldridge, who founded The Barlow and still serves as its managing partner, first floated the idea of a hotel there more than a decade ago. The Sebastopol Planning Commission and Design Review Board finally approved a development agreement for an 83-room hotel in March 2025, and the City Council signed off the following month.
Four blocks away, Hotel Sebastopol has been in the pipeline even longer. Piazza Hospitality, the Healdsburg-based developer behind four hotels in that town and two more in San Luis Obispo, got its original approval for a 66-room boutique hotel at that same Depot Street address back in 2017. Wildfires that year pushed back contractor availability. A planned 2020 groundbreaking got shelved by the pandemic. Then interest rates climbed, and Piazza's own vice president of development has told the council that lenders view Sebastopol as an unproven market for high-end lodging, meaning banks want to see a track record the town simply doesn't have yet.
Both projects were expected to add overnight lodging alongside the shopping and dining at The Barlow. Their paths have differed: The Barlow project received approval for a tax rebate, while Hotel Sebastopol continues to work through financing.
What the City Actually Agreed To
The Barlow Hotel's development director, Ari Wangerin, told the Planning Commission in mid-July that without a tax rebate, the project was likely headed for a hold. Commissioners spent nearly two hours dissecting what "promoting tourism" should actually mean before recommending the rebate to the council, with Vice Chair Jennifer Koelemeijer pressing for assurance that public funds wouldn't just promote tourism inside a district "owned by one individual."
The revenue numbers behind that debate came from two consultants with very different answers. RRC Associates, hired by the developer, projected the hotel would generate $1,548,000 a year in transient occupancy tax once it's operating. EPS, hired by the city for a second opinion, put the number at $891,000, a gap of roughly $657,000 a year, or about 42 percent below the developer's own projection.
The City Council took up the amendment on July 21, with Vice Mayor Sandra Maurer and Councilmembers Phill Carter, Neysa Hinton, and Stephen Zollman voting in favor. Mayor Jill McLewis recused herself from the entire discussion because she owns a small business across the street from the hotel site.
During the council's discussion, Zollman pointed out that Piazza Hospitality, an experienced developer with four hotels in Healdsburg alone, still hasn't found a way to move Hotel Sebastopol forward. Wangerin agreed that the developer was still working out how to proceed, according to the Sebastopol Times.
He added that Aldridge was willing to put his own money on the line, and that the Barlow team has been working on financing for three years. Wangerin argued Sebastopol needs a revenue source beyond property taxes from houses, telling the council the town "can't survive as a bedroom community," as reported by the Sebastopol Times.
Hotel Sebastopol's Development Timeline
Piazza's own account of Hotel Sebastopol's delays, given to the council in earlier annual updates, traces a chain of bad luck that started with the 2017 wildfires and hasn't really stopped. The pandemic shelved a planned 2020 groundbreaking. Then came a long federal environmental and archeological review tied to a USDA construction loan application, followed by interest rate increases that pushed the project's financing further out of reach. Piazza has floated a redesign that would swap the original two-story, hotel-over-retail layout for a one-story building with storefronts facing Petaluma Avenue, a change the company says could shave roughly $6.5 million off construction costs while keeping all 66 planned rooms, according to reporting on the project's most recent reset.
In the meantime, the empty lot hasn't stayed empty in the way you'd expect. In 2025, Piazza partnered with the Sebastopol Center for the Arts on a temporary installation called The Belonging Project, featuring work from ten artists exploring identity and community. Before that, the same lot hosted a kinetic sculpture by Sebastopol-based artist Ned Kahn. The lot, approved for construction in 2017, has also served as a rotating public art space.
Business Growth at The Barlow
As both hotel projects worked through financing this year, the retail and restaurant side of The Barlow continued to expand. Rust Boutique more than doubled its footprint on April 1, moving from roughly 500 square feet into a space topping 1,300 square feet. Genero's Delicatessen, run by chef-owner Ian Marks, opened in the food court in late January. Iggy's Organic Burgers is taking over the former Cock Robin space with a family-friendly burger and ice cream concept, and Wild Poppy Cafe is opening a second location on-site that will produce fresh tofu for both restaurants. The Venue, in the space that once hosted Peacetown concerts, drew crowds for a Summer Solstice weekend in June with a BBQ, live DJ, and shopping specials, and the Head West makers market has been returning to McKinley Street on the third Sunday of every month through December, according to reporting on The Barlow's spring growth. Property managers have also filed for a construction permit to add six new retail suites at 100 Morris Street.
These additions reflect local operators signing leases and expanding storefronts to serve the foot traffic already there.
What to Actually Watch For
If you live here, the two lots are worth tracking for different reasons. The Barlow Hotel now has a ten-year tax incentive, which the developer says he needs to bring in the outside equity that's been missing. Whether the incentive unlocks financing should become clearer in the city's next development agreement review. Hotel Sebastopol's entitlements run through 2027, and Piazza has been candid with the council that failure is a real possibility if a financing package doesn't materialize before then.
For now, downtown Sebastopol's changes are visible in its retail and restaurant activity as well as the two hotel projects. The deli counters, expanded boutique, and recurring makers market on McKinley Street are part of that activity, while both hotel projects continue working through financing.
If you're weighing what any of this means for property near downtown or The Barlow, that's exactly the kind of question The Shone Group spends time on with clients who know this market from the ground up. Reach out when you're ready to talk specifics.
