12:15 p.m.Expansion of The Meritage Resort to 322 rooms won easy Planning Commission approval Thursday night.

The Meritage, which opened 21 months ago at Napa Valley Corporate Park with 158 rooms, will become Napa’s largest hotel, surpassing the 274-room Marriott Napa Valley. Construction of the 164-room addition is expected to start in August.

The Meritage would be dethroned if the city approves plans for a 351-room Ritz-Carlton River House at First Street and Silverado Trail. This project is scheduled to go before the Planning Commisson on June 5 for design review and June 19 for project approval.

A key component The Meritage expansion will be an additional 17,000-square-foot conference center, allowing the hotel to attract more mid-week business.

The Meritage is already a “very successful” hotel, with 70 percent occupancy last year, said Kory Kramer, chief of staff for Pacific Hospitality Group, the owner.

By nearly doubling in size, The Meritage will generate $2.2 million annually in bed tax revenues for the city by 2010, Kramer said.

With the new conference space, The Meritage could theoretically handle group events for up to 700 people, but this is not likely, Kramer said.

Commissioner Arthur Roosa questioned if an expanded Meritage would hurt existing hotels. This isn’t likely, said Marlene Demery, the city’s interim planning director.

There is a substantial need for more hotel rooms as the city of Napa emerges as the hotelier to the Napa Valley, said Demery, citing a recent Napa Valley lodging study by HVS Consulting.

Existing and proposed hotels should all do well if they can develop additional mid-week conference business, said Micah Hinkle, a program coordinator with the city’s economic development department. Napa’s top priority is to develop a critical mass of hotels in downtown, he said.

The Meritage sits at the south end of Napa Valley Corporate Park, adjacent to the 100-suite Vino Bello timeshare development and below the Grape Crusher statue which faces Highway 29.

The expansion will occur on vacant land formerly approved for an office park. The addition will essentially match the current buildings in architecture and colors, Kramer said.

The Meritage will now have a second entrance. In addition to the current entry on Bordeaux Way, guests will be able to enter from Napa Valley Corporate Drive.

Because large events have caused a parking crunch, The Meritage will be constructing 90 more spaces than the 164-room addition calls for, city planner Kevin Eberle said.

In additional, the hotel has negotiated an agreement to park 96 overflow vehicles a short distance away at 855 Bordeaux Way. Shuttles will carry visitors from the off-site parking to the hotel.

Hotel officials promised that the addition would incorporate many energy-saving or green features. Asked if the addition would be certified as green, consultant Robert Earl of Earl Consulting Co. said this had not been decided.

The city is working on an ordinance to require green certification, but projects in the planning pipeline are exempt.

The hotel provided a consultant’s analysis of their current operation, reporting that 79 percent of employees live in Napa County. The average salary is $32,500, compared to $26,000 for hotel workers in Napa County and throughout California, said a report by Applied Development Economics of Walnut Creek.

The hotel offers guests a free shuttle to any destination within five miles, including downtown Napa. Commissioners encouraged the hotel to increase service to downtown.

A traffic consultant said the expansion would have little impact on adjacent roads. The Meritage will have to pay 1.5 percent of the cost of a proposed flyover at Highways 221 and 29.

With the flyover costing as much as $35 million, The Meritage’s cost could be a half million dollars, Kramer said.

The Planning Commission’s yes vote was 4-0, with Commissioner Gordon Huether absent.

This vote gives the hotel the green light to proceed unless someone appeals the decision to the City Council.