Faced with having to fend off a November ballot challenge sponsored by a labor union, a Sacramento developer has pulled the plug on the proposed Kimpton Hotel on Solano Avenue.

At the request of McCuen Properties, on Tuesday night the Napa City Council repealed its approval of the 196-room hotel.

This cancels an effort by Unite Here, a hotel workers union seeking to gain a presence in the local hospitality industry, to put a referendum on the Kimpton hotel before voters.

“Given the circumstances surrounding the referendum petition, McCuen Properties is not prepared to proceed with the Kimpton hotel project at this time,” said attorney J. Robert Anglin Jr., in a letter to the council.

The letter arrived Tuesday, shortly before the council was planning to put the hotel’s future in the hands of city voters.

The pullout is a blow to city finances. Napa had expected to collect $1.2 million a year in bed taxes from the upscale hotel project.

“It’s a big hit,” Napa City Manager Mike Parness said after the council vote. Kimpton revenue had been part of the city’s long-range financial plans, he said.

The union, which does not currently represent workers at any Napa County hotels, mounted a petition campaign to stop the Kimpton this summer after failing to get an agreement that the hotel would remain neutral in any future unionization effort.

The referendum would have challenged the hotel on environmental grounds, asserting that the project’s traffic and noise impacts had not been sufficiently addressed.

Parness said the developer pulled out for a variety of reasons. “They were frustrated I think with the situation and how it developed,” he said in an interview.

The hotel referendum might have been lost on a crowded ballot that includes many other important local, state and national issues and candidates, he said.

“They were concerned about the cost, the uncertainty. They made a business decision,” Parness said.

Owen Li, an organizer with Unite Here, Local 2850, said after the council vote that McCuen’s pullout was unexpected.

“It was clearly a problematic project,” Li said. “What we wanted in November was to have the voters decide.”

McCuen may have pulled out for reasons that had nothing to do with the union’s referendum, Li said. “Maybe they had problems with financing. Maybe they had problems being able to follow some of the conditions.”

The council had approved the Kimpton project on a 3-2 vote in June, with Mayor Jill Techel and Councilman Mark van Gorder citing traffic issues when they voted no.

Councilman Peter Mott said he regretted the developer’s decision. “There is a part of me that would love to put this on the ballot. I see this as an out-of-town special interest (the union) ... forcing this action,” he said.

Mott predicted that voters would have approved the hotel, planned for the site of the Chateau hotel at Solano and Wine Country avenues.

Techel said it was perhaps for the best that the developer would be not forced to spend big bucks defending its project. She noted that developers of Napa Pipe spent $1.7 million to stop a ballot challenge in the June primary.

Parness predicted that this was not death of the hotel proposal. “I wouldn’t be surprised to see them come back at some point,” he said.

The law requires McCuen to wait a year before it could resubmit plans for a similar project.

“I too want to see something new happen there,” van Gorder said. Any new submittal should better address traffic congestion, he said.

This was one of three local measures to drop off the November ballot on Tuesday.

Tuesday morning, the Napa County Board of Supervisors decided not to put a half-cent transportation sales tax to voters, citing the ailing economy and a possible competing one-cent measure to raise the state sales tax. In American Canyon, the city council decided to adopt a new urban limit line, rather than put the proposal before voters in November.