Channel Properties, one of downtown Napa’s major developers, will have seven months to find a restaurant tenant for the landmark Borreo Building at Third and Soscol.

The City Council gave Channel exclusive negotiations rights Tuesday to bring the 120-year-old stone building back to life.

Channel Properties is currently developing The Riverfront, a $72 million mixed-use project that will bring shoppers, diners and condo residents to the west bank of the river south of Third Street.

The Borreo Building, with its prominent location on two busy streets, with potential views of the new Veteran’s Memorial Park, could become a centerpiece to downtown’s revival, said Mike DeSimoni Sr. of Channel Properties.

“It’s not going to be an easy thing to do, but it does fit into my plan for a destination downtown,” DeSimoni said in an interview Tuesday.

Channel Properties also owns the historic Winship Building at First and Main streets and the Alexandria Square complex at Second and Main. The company is tied to Channel Lumber in Richmond. The DeSimoni family lives in east Napa.

The company proposes to invest $3.5 million to convert the Borreo Building, now a stone shell, into a restaurant and possible site of nighttime entertainment.

The city, which owns the building, recently completed a $1.4 million seismic reinforcement but doesn’t have the money to complete the interior for public use.

Napa intends to lease the 9,600-square-foot structure for 20 years to a private operator who will make 1,600 square feet available for public meetings and other community uses.

The council bestowed exclusive negotiations rights on Channel on a 4-1 vote, with Mayor Jill Techel opposed. She wanted greater public access to this special property, she said.

Other council members got assurances from Cassandra Walker, the city’s economic development manager, that any restaurant or entertainment operation would be acceptable to the community.

“It’s not going to be a $200-a-plate (restaurant) that no one sees,” Councilman Peter Mott said.

The council previously met in closed session to go over a list of potential restaurant tenants. Council told staff to steer away from elite operations that evoked French Laundry-type exclusiveness, Walker said.

Channel Properties would love to bring in a restaurant with the popular appeal of a Bistro Don Giovanni or a Rutherford Grill, DeSimoni said.

If the city doesn’t like Channel’s tenant, it can walk away from the deal, Walker said.

At the end of the lease, the city would own all of the building improvements. After the first 12 years, Channel would split operating profits with the city.

In its January proposal, Channel predicted the city could receive a quarter million dollars of sales tax annually, growing to $12.1 million over 20 years. The combination of sales tax and profit sharing could total $15.2 million over that period.

These numbers would be lower if the city and Channel agree on an operator with lower prices.

Channel Properties and Triad Communities, which is trying to build a major housing and commercial property in Angwin, both vied for development rights at Borreo.

Triad had proposed mostly offices with a small restaurant, with a building investment of less than $2 million, Walker said.

Channel would like to punch windows in the blank west wall of the buildings, giving diners a river view. A patio is also planned.

The possibility of adding windows has been run by several  historic preservation advocates who say it could be allowed, staff said.

One of the major development constraints is parking. The property has only nine spaces, DeSimoni said.

Both Channel and Triad proposed valet parking to solve this lack of nearby spaces, Walker said.