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When is a winery a restaurant?

From weddings and concerts to winemaker dinners and pizza offerings, Southern Oregon wineries are adding more incentives to attract customers in an increasingly saturated market.

Just how far they can go may be determined, at least in part, by a complaint against one of their most visible members: Belle Fiore Winery, the 58-acre estate off Dead Indian Memorial Road in Ashland.

Owner Edward Kerwin has been cited by Jackson County for operating a restaurant without approval and not using prepackaged foods as required by land-use statutes governing wineries on rural farmland. Kerwin is scheduled to go before hearings officer Rick Whitlock on July 26.

Whether the matter is settled at the local level or winds up before the Land Use Board of Appeals or the appellate courts, the fallout may dictate how the burgeoning industry operates in future generations.

"The issue is whether it is a limited service restaurant," County Development Director Kelly Madding said. "My belief is that they don't have an approval for operating anything but a limited services restaurant. The conditions of approval were for a limited service restaurant."

When someone applies for permits, the current code is applied, she said. If statewide laws change two weeks later, the previous rules still apply to the particular project.

"The idea works both ways, though," Madding said. "If the law changes, you don't automatically get what the new law allows or doesn't allow, you have what you have whether it's more restrictive or less restrictive."

That means going back to the county and seeking a new permit.

Ashland attorney Chris Hearn said Belle Fiore is merely following Oregon Liquor Control Commission rules dictating kitchen and menu requirements.

"Dr. Kerwin has spent tens of thousands of dollars because of OLCC requirements, including putting in a commercial kitchen and getting a chef," Hearn said. "He got approval from the county starting in 2010 and has expanded based on changes in the law, which has occurred roughly every other year."

The issue has smoldered quietly for nearly two years, said Crissy Bennett, owner of Peerless Restaurant in Ashland, who first met with Madding about the issue in October 2014. She, Pie + Vine owner Tom Beam and Stephen Sacks, who lives near Belle Fiore, filed a complaint seeking county action in March 2015. On Oct. 7, 2015, Jackson County code enforcement officer Tod Miller detailed the violations but the citation was not mailed to Kerwin until May 23.

Ironically, the Peerless Hotel is listed as one of the preferred hotels on Belle Fiore's website.

Oregon Senate Bill 841, which in 2013 set rules for winery events, strictly forbids the operation of a restaurant, Bennett believes.

"It's OK to have commercial kitchens so you can prepare winemaker dinners, do marketing events, and so they can have food pairings. But it strictly says you cannot have menu options," she said.

Her belief is that Belle Fiore's pairings for afternoon and evening hours and separate dessert options violate the rule, not to mention their portion size.

"Food pairings with wine pairings and tastings are no problem," Bennett said. "Unfortunately, SB 841 did not go far enough in defining exactly what food options are allowed. I totally support the wine industry ... it's a very special privilege to conduct commercial activity on farmland. They have to respect the privilege given to them and not abuse it."

Urban restaurant owners pay property and other taxes and city fees, while farmland is nominally taxed. Kerwin said his winery, residence and other buildings are taxed just as if they were within city boundaries.

Madding said she anticipated potential issues when she first saw the 2013 legislation.

"The legislation is broad and it's made that way for a reason, allowing some latitude in the industry," Madding said. "There's a continuum in the activity that can take place in providing food. But there is a ceiling on that. The question is, where is the ceiling? The legislation gives a ceiling but it's not very well defined. It doesn't give people a lot of direction. People generally want to comply with the law. But when the law is really vague, then it's hard to get that clear definition that people need or want."

In a letter to the county in April 2015, Portland attorney Michael Gelardi, then representing Kerwin, wrote the Medford OLCC office "has taken a very aggressive view of state alcohol-related food service requirements at wineries. Specifically, the local OLCC has told Belle Fiore and other local wineries that they must have substantial menus in order to comply with state liquor law. ... This situation has caused confusion throughout Jackson County, and was part of the impetus for the food rules in SB 841. Under that law, Belle Fiore is permitted to sell food sufficient to satisfy OLCC, and Belle Fiore’s menu has been designed for that purpose. Belle Fiore’s food service therefore complies with the applicable law."

Gelardi went on to note: "OLCC interpretations can vary and that the distinction between acceptable wine and food pairings and an unacceptable winery 'restaurant' is not entirely clear under SB 841. Belle Fiore does not intend to operate a restaurant on its property and is willing to adjust its menu to provide the county with greater comfort on this issue."

Kerwin said wineries, by definition, serve alcohol.

"We want it to be uplifting and positive," he said. "If all people do is drink, drink, drink, then you're going to have inebriated people that can be dangerous on the roads and be poor neighbors."

In some ways Belle Fiore, by nature of its visibility and expanse, draws attention, some positive and some not. It also boosts the overall appeal of the region's wineries, said Liz Wan, a consultant and winemaker at Serra Vineyards in the Applegate Valley.

"It's convenient, right off the freeway, they consistently have plenty of staff whether you're going in for tasting or a meal, it fits the bill," Wan said. "People here might think of it as the Taj Mahal, but for people from Napa and Sonoma, that's what they expect to a certain extent. We have a few places like that in the region and that gives us street credibility. They've brought in an amazing winemaker (Kathe Kaigas), set (chef) Stefano Cipollone free in the kitchen with a budget to explore his talents, and trained people who have gone on to work in restaurants and tasting rooms in our region."

Kerwin declined to say how many people were employed by his winery, but based on staffing during a recent Sunday, it would have one of the regional industry's largest payrolls.

"Belle Fiore is a big organization with lots of mouths to feed," Wan said. "At the end of the day, if you are playing by the rules and regulations in this industry and doing right by your neighbors, you can avoid situations like this."

It boils down to money and taxes, Wan said.

"If people perceive somebody else is stealing their slice of pie," she said, "let's go get more pie so we don't have to fight over the same slice."

Mark Wisnovsky, president of Valley View Winery, a pioneering operation in the Applegate Valley, sees clashes as an inevitable part of a still young industry.

"When you are dealing with growing industries you are going to have impacts and we need to discuss the limits what you can and can't do. For the most part it's about understanding the land-use laws. In this case it's not as clear as it should be; it's one of those things that the industry is going to have to deal with."

That there is a clash at all, however, is a positive sign, he said.

"It's a good problem to have because at least we have businesses looking to expand and wanting to provide new services," Wisnovsky said. "We just have to come together and decide the best and proper use of facilities on different types of land."

Oregon's 1970s foray into land use was designed to protect swaths of agriculture land from housing developments, primarily in the Willamette Valley. Little thought was given to what has become a 21st century agronomic powerhouse.

"We need to strike a balance between being viable as a farm-based business and not abusing the right," Wisnovsky said. "It's like making sausage, we're literally working things out, trying to find a compromise and making sure people can survive, growing a product."

Wooldridge Creek Vineyards & Winery owner Kara Olmo leans toward protecting farmland and a rural lifestyle, even at personal cost. She went through a rigorous process to obtain a county conditional use permit that allows her to make cheese at her winery as an added attraction to customers.

Olmo thinks similar permitting steps would be appropriate for Belle Fiore and other wineries wishing to expand food service.

"I don't know of any wineries who are opposed to or taking an active position against Belle Fiore," she said. "As a person who really understands land-use pathways in Jackson County, way more so than anyone should ever know, it does seem to me a conditional use permit for that portion of their business would have been appropriate and would've solved a lot of the issues."

Like many other wine destinations in the region, Dancin Vineyards serves a limited menu during operating hours.

Dan Marca, owner of the winery off South Stage Road, said Dancin went through a unique process with the county to obtain its conditional use permit.

"The bottom line for us was that there were different things, a permitted use winery as well as a conditional use permit in which we went through an exhaustive process of which we are fully compliant," Marca said.

Marca views people in his industry as ambassadors for the region.

"Collectively, we live in a unique growing region," Marca said. "With a lot of good wine."

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at www.facebook.com/greg.stiles.31.

Belle Fiore Winery in Ashland is facing violations of land-use statutes over the amount of food it serves in its tasting room, though owner Edward Kerwin says it's designed to meet OLCC regulations and provide a safe, positive experience for customers. Mail Tribune / Jamie Lusch
Kara Olmo, owner of Wooldridge Creek Vineyards & Winery, opened an on-site creamery to pair cheese with her wines. She advocates wineries get conditional use permits, as she did, to ensure added attractions mesh with farmland use. Mail Tribune / Jamie Lusch