Resort Equities Plan to Revive Northern California's Konocti Harbor Resort and Spa Falls Through
Glenda Anderson | The Press Democrat, Santa Rosa, Calif. | June 3, 2014 1:00am
June 03--Developers' ambitious plans to buy, revamp and reopen Lake County's once premier lakeside resort and concert destination have fallen through for lack of financing.
The collapse of a purchase deal by Resort Equities LLC, the group seeking to revive Konocti Harbor Resort and Spa, deals another setback to hopes of rekindling the bustling business that for decades drew thousands of concert goers to stay on Clear Lake's western shore, taking in acts that ranged from Rascal Flatts to Styx.
Officials with Resort Equities said they were unable to convince investors to fund the project, which had an estimated cost of more than $100 million.
While real estate investments in places like San Francisco and New York are booming, interest in Lake County continues to lag, Grant Sedgwick, president of San Francisco-based Resort Equities, said Monday.
"Gentlemen, regrettably our recent efforts to acquire and redevelop the Konocti Harbor Resort & Spa have not resulted in securing the necessary financing for the project. The buyer and seller agreed to terminate the purchase and sale agreement," Sedgwick, wrote in an email to Lake County officials on Saturday.
Local officials voiced frustration at the loss of a proposal that many hoped would provide jobs and increase county tax revenue.
"It's so disappointing. Everybody worked so hard," Lake County Supervisor Rob Brown said Monday.
The resort, located about 125 miles northeast of San Francisco, was the North Coast's largest concert venue when it closed in 2009.
Owned by Local 38 of the United Association of Plumbers, Pipefitters and Journeymen since 1959, the 261-room, 80-acre destination originally was styled as a company getaway but later expanded to play host to weekend refugees from the Bay Area and beyond with packed houses for daytime and evening concerts. It also hosted water sports events.
"It's so important," Brown said. "There are 300 jobs there in the off-season and up to 700 in the peak season," he said. That doesn't include the jobs and business generated for gas stations and other resorts, Brown said.
The closure's exact financial impact on the county's economy was not available, but the amount the county receives from hotel bed taxes declined by half, to about $500,000 annually, since the resort closed, said Deputy County Administrator Alan Flora.
The county had been working closely with the buyers in an effort to move the proposed deal forward.
In December, county supervisors unanimously approved a major use permit and shoreline development that would have allowed the developers to expand and rehabilitate the resort.
The permits would have allowed Resort Equities to tear down some buildings, rebuild piers and construct more than 200 new hotel rooms and time-share units. The plans also called for increasing the number of boat slips from 100 to 275 and building a party deck and promenade.
Improvements made 20 years ago, including the outdoor amphitheater which seats 5,000, were the resort's undoing. The U.S. Department of Labor contended the San Francisco-based plumbers' union mishandled members' benefit plans by diverting an estimated $36 million into renovating and operating the resort.
The labor department sued and forced the sale as part of a settlement.
Florida-based WhiteStar Advisors is managing the property sale under a court appointment. The terms of its deal with Sedgwick's group have not been revealed. But the original asking price was $15 million.
While the current deal appears to be dead, it does not preclude the parties from starting new negotiations, said WhiteStar's James Bishop.
The property will continue to be marketed for sale and Sedgwick's group is welcome to restart negotiations should financing become available to them, he said in the statement sent to the county.
Sedgwick said he's hoping another chance will materialize.
"These things change," he said of the economy and investors' leanings.
You can reach Staff Writer Glenda Anderson at 462-6473 or firstname.lastname@example.org