Model Case: Vineyard Domes and Microcabins at a Working Winery, Gillespie County, Texas, SBA 7(a)

A model feasibility case built only from public data. The parcel, borrower and operator are hypothetical; no client file or engagement data is used. The case follows the house format: at a glance, determination, program eligibility, regulatory pathway, market analysis, full cost table, operating assumptions, ten-year pro forma, DSCR by year and by month, break-even, sensitivities, valuation indication and conditions. Figures are as of October 8, 2026. Part of the glamping and short-term rental feasibility study cluster; programme detail on SBA 7(a) and 504 for glamping and cabin resorts and format detail on agritourism and farm stay feasibility.

The project is not feasible as proposed. A $4,294,341 programme financed with a $3,864,907 7(a) loan at 10 percent equity costs $488,961 a year in debt service, and the lodging operation, with $150,000 of modelled event revenue, produces $236,375 of stabilized NOI, a coverage of 0.48x. The arithmetic the research record already implied holds in the model: 14 keys at the published Fredericksburg occupancy of 42 percent and glamping-floor rates of $225 to $275 gross about $546,771 of lodging revenue, and no lodging cost structure turns that into $488,961 of debt capacity. A lender approving the loan as proposed would be underwriting the winery's historical cash flow, not the project, and the credit risk of the new lodging would sit on the existing business.

The project is feasible as restructured, subject to the conditions at the end of this page. The restructure keeps all 14 keys and the pool, drops the event pavilion (the winery's tasting room already provides a licensed venue for breakfast, check-in and small gatherings), and sizes the loan to lodging cash flow: $922,156, which the stabilized NOI of $155,844 covers 1.26x in year 3 and 1.30x in year 4. Total project cost falls to $2,974,696 and the winery funds $2,052,540 (69.0%) from cash, retained earnings and balance-sheet equity, including a $90,000 reserve for the first two seasons. Because the borrower is an operating business, SOP 50 10 8.1 imposes no fixed equity injection; the lender's test is repayment ability, and this structure passes it on the project alone. Where the lender also tests global cash flow, each $100,000 of documented winery EBITDA adds 0.81x of coverage on the restructured debt service, so a winery with modest historical earnings would carry the loan comfortably; the restructure simply stops the winery from being the only source of repayment.

A middle case with a 1,500 sq ft guest pavilion was tested and is reported in the sensitivities; it adds about $562,262 of cost for no modelled revenue and takes year-3 coverage to 1.10x. It belongs in a later phase funded from lodging performance.

Gillespie County has no zoning ordinance; the county's development requirements run through four permits: an approved on-site sewage facility in all areas regardless of acreage, a development plan for multi-unit lodging and similar uses, a floodplain development permit for work in a mapped flood hazard area, and a right-of-way permit for new access to a county road. Water wells go through the Hill Country Underground Water Conservation District and food service through the county health division. Because the parcel is outside the City of Fredericksburg and its ETJ, the city's short-term rental permit (Zoning Ordinance Section 20.222, $150 per unit plus $100 per bedroom, annual inspection since January 1, 2026) does not apply, and county supply is not permit-capped.

Wastewater is the critical-path item. 30 TAC 285.91 Table III sizes hotel and motel flows at 75 gallons per bed per day (60 with water-saving devices), so 14 keys produce 1,050 gallons before the pool and any pavilion, and a commercial facility must pretreat to 140 mg/l BOD5. The restructured budget carries $130,000 for an engineered aerobic system as a model assumption; the engineer's design replaces it as a condition.

The TABC winery permit (G) authorizes wine manufacture and sales for on- and off-premise consumption within the licensed premises; serving wine in guest units or stocking minibars is a mixed-beverage privilege, not a G privilege, and a winery selling for on-premise consumption must keep food available. The Texas Agritourism Act (Civil Practice and Remedies Code Chapter 75A) limits liability for vineyard activities where the statutory sign is posted or a signed agreement obtained; it does not cover overnight lodging, which is insured separately.

Taxes on the guest are 13 percent: 6 percent state hotel occupancy tax plus 7 percent Gillespie County hotel occupancy tax outside the city and ETJ, remitted to the County Treasurer; the city treats cleaning and pet fees as taxable. Tastings and retail carry 6.75 percent sales tax. The county's 2025 property tax rate is $0.2685 per $100; the combined rate with the school and hospital districts was not found, and property tax is modelled at $36,000 as a model assumption with a doubled-tax sensitivity.

Demand. Gillespie County visitor spending was $175 million in 2024 with 1,200 tourism jobs and $17 million of tax revenue (Fredericksburg CVB, citing TravelStats). Texas wineries drew 2.64 million tourist visits and $503.98 million of tourism spending in 2025 (WineAmerica), about $191 per visit by derivation, from 617 producers and 14,043 vineyard acres. Texas direct travel spending reached $98.7 billion in 2025. The drive market is the Austin-Round Rock-San Marcos MSA (2,620,945) and San Antonio-New Braunfels MSA (2,813,140) at July 1, 2025, both within 90 minutes. Published seasonality runs to spring (bluebonnets and wine), October wine month and the December Christmas market, with a summer heat trough.

Supply. AirDNA's Fredericksburg page (updated October 6, 2026) shows 2,617 active listings, 42 percent occupancy, a $328 ADR, $137 RevPAR and $46,800 of revenue per listing, with listings down 17.1 percent, occupancy down 2.1 percent, ADR down 10.3 percent and RevPAR down 13.9 percent in a year. AirROI reports 32.6 percent occupancy and a $338 ADR for August 2025 to July 2026; Chalet counts 1,634 full-time listings at a $283 ADR with a seasonal swing from $255 in September to $308 in May. The 9.4-point gap between vendors is itself a sensitivity range. The named competitive set is Onera Fredericksburg (12 units: treehouses, dome, safari tent, Airstream; $600 to $1,000 peak, about $300 midweek), Outdoorsy Hill Country in Stonewall (21 to 22 climate-controlled safari tents, $240), Dome 6 at Elevation Ranch (domes with hot tubs from $261), 12 Fires Winery glamping in Blanco County (five safari tents, $85 to $300), Wine Barrel Cabins (four cabins), Hoffman Haus ($175 to $296), Stonewall Motor Lodge ($171), The Vineyards of Fredericksburg RV Park (cabins and wagons) and Hill Country Soulcation (three novelty units). No property publishes dated seasonal rates, so the rate shop is a condition.

ADR and occupancy. Domes with hot tubs are modelled at $275 and microcabins at $225, between the glamping floor ($240 to $261) and the whole-market ADR, and well below Onera's premium product. Occupancy follows the published seasonality and averages 42.2%, in line with AirDNA's 42 percent and above AirROI's 32.6 percent; the AirROI case is in the sensitivities. The ramp is a model assumption: 80 percent in year 1, 92 percent in year 2, stabilized from year 3, with ADR flat for two years and 3 percent a year thereafter.

Breakfast baskets and tasting-room cross-sales attributable to lodging are modelled at $12 per occupied night at a 40 percent cost of goods, and other revenue (firewood, bikes, fees) at $10 per occupied night. Stabilized revenue in year-1 dollars is $594,209 on 2,156 occupied nights. Winery revenue is excluded from the project pro forma.

The land is the winery's existing acreage and carries no acquisition cost; it is pledged as collateral and its appraised value supports the real estate note.

Payroll is built from BLS and Texas wage data: maids and housekeeping cleaners $14.26 (Texas median, May 2025 file), trended to $15.00 at a 2027 opening; a lodging manager at $52,000; guest services shared with the tasting room at 0.5 FTE; maintenance shared with the winery at 0.5 FTE. A 22 percent burden applies.

Distribution and card processing is 9.0 percent of lodging revenue (60 percent of bookings through platforms at a blended 13 percent, 2.9 percent processing on direct and winery-club bookings). Utilities are $30,000 a year, anchored to Central Texas Electric Cooperative's 12.17 cents per kWh average (2025) for 14 air-conditioned units and the pool. Insurance is $26,000 and property tax $36,000, both model assumptions pending quotes. Marketing is 4.0 percent and administrative and general 4.0 percent of revenue (shared systems with the winery); repairs and maintenance 4.0 percent and supplies 3.0 percent of lodging revenue; the replacement reserve is 4.0 percent of revenue. Expenses grow 3 percent a year. Hotel occupancy tax is a pass-through and is excluded. Stabilized NOI margin is 26.2%, which is what a 42 percent market produces on a 14-key operation with a full-year service staff.

The weakest three consecutive months are Dec, Jan, Feb: NOI of $18,547 against debt service of $30,837, a coverage of 0.60x. The pool and the winery's own summer programming are the operating answer; the reserve is the credit answer.

With revenue scaled proportionally, the restructured project covers debt service at 38.9% occupancy and reaches 1.25x at 42.0%, against 42.2% modelled, 42 percent (AirDNA) and 32.6 percent (AirROI) in the market. As proposed, break-even is 63.8%, above anything the market has recorded.

All rows start from the restructured base unless labelled otherwise.

The project is most sensitive to occupancy and rate: the AirROI occupancy case takes year-3 coverage to 0.45x and the market's own trailing-year ADR decline to 0.93x, and that vendor spread is the reason the loan is sized to project cash flow rather than to the proposal. Cost, rate and amortization risks are each absorbable at the restructured loan size; a doubled property tax is not, which is why the combined county rate is a condition. Where the lender tests global cash flow, the winery's documented EBITDA is the cushion against the occupancy and rate cases, and the study should present both tests side by side.

No winery-lodging or glamping sale with a published cap rate exists in the public record. The indications below apply hotel and campground evidence to restructured year-3 NOI of $155,844; the appraisal will need a going-concern allocation between the winery and the lodging.

At every rate the indicated value of the lodging alone is below total project cost, which is normal for a 14-key new build and is why the real estate note leans on the winery acreage and the equipment note on the domes and FF&E at discounted values.

Prepared by Michal Mohelsky, J.D., FMVA, Practicing Affiliate of the Appraisal Institute. Model case aligned with SBA SOP 50 10 8.1, under USPAP discipline. MMCG Invest, LLC, 27 Maiden Lane, Suite 625, San Francisco, CA 94108.