Friday, 14 June 2024

EXCLUSIVE: Konocti Harbor under sales contract

Konocti Harbor is reported to be under a sales contract, according to a representative of the company overseeing the resort's sale. Courtesy photo.



KELSEYVILLE – A representative of the company overseeing the sale of Konocti Harbor Resort & Spa said Wednesday that the resort is currently under a sales contract.

The news comes just a few weeks after it was announced that the resort would close temporarily but indefinitely beginning in November.

James Bishop, managing director of WhiteStar Advisors LLC, shared some basic details about the resort's current sales situation in an interview with Lake County News.

“There is a signed contract but they have not yet reached the date by which the escrow needs to be opened,” he explained.

Bishop would not disclose the identity of the potential buyer or discuss terms of the contract, including the price, which is stated as $15 million on the county's multiple listing service.

The purchase contract is still being negotiated, Bishop said, and he wouldn't guess as to when those negotiations or a sale might wrap up.

The 90-acre full-service lakefront resort includes an outdoor amphitheater and indoor showroom, swimming pools, a marina, restaurant and night club facilities, hotel accommodations, a spa, and meeting and conference rooms.

The property had been listed locally by Coldwell Banker Town & Country. However, Bishop noted, “This particular contract did not involve a local Realtor.”

Coldwell Banker Town & Country representatives did not return calls from Lake County News seeking comment.

In November 2004, the US Department of Labor sued Local 38 of the United Association of Plumbers, Pipefitters and Journeymen, whose Convalescent Trust Fund, Lakeside Haven, has owned Konocti Harbor since 1959.

The federal suit alleged that the union diverted $36 million from pension funds to help run the resort, as Lake County News has reported. Department of Labor attorneys told Lake County News in a 2007 interview that the amount the union transferred to the trust fund between 1994 and 2004 was actually around $54 million.

The suit's settlement was finalized in August 2007.

WhiteStar Advisors LLC, based in Boca Raton, Fla., was appointed to act as the resort's independent fiduciary in September 2007, according to federal court records. The company is being paid $25,000 per quarter for its services.

“In this particular case our primary role is to facilitate the sale of the property,” said Bishop. “We see that as our most important function at the moment.”

He added, “Our job is not to manage and run the resort on a day-to-day basis.”

The lawsuit settlement, said Bishop, contains a formulation for the application of the sale's proceeds. “The first money goes back to the trust fund,” he said.

Bishop said the firm doesn't have a permanent presence, and relies on assistance from the current management team – led by Greg Bennett, the resort's longtime president and general manager.

Gloria Della, spokesperson for the US Department of Labor, told Lake County News on Wednesday that the consent order that resulted from the lawsuit isn't affected by the resort's closure or the current situation.

“The independent fiduciary continues to manage the property and the Department is monitoring the case on an ongoing basis,” she said.

During the two years that WhiteStar has been on the job, the economy has changed dramatically, which has proved a challenge in finding a seller.

There have been interested buyers, including Bay Area firm Page Mill Properties, which had at one point looked at buying the resort for $25 million, as Lake County News has reported.

However, that deal fell apart, and Page Mill has now fallen into troubles of its own. The San Jose Mercury News reported that the company failed to make a $50 million balloon payment to Wells Fargo last month and now has a court-appointed receiver overseeing it operations.

Page Mill also is locked in lawsuits over rent hikes in East Palo Alto, where it's the biggest landlord of rent-controlled properties, the San Jose Mercury News reported.

While there have been a number of people looking at Konocti Harbor, Bishop said resorts across the nation have been hit hard in the current economic climate, which is affecting all sectors.

WhiteStar has real estate and investment activities across the country, said Bishop. “We see the same kinds of problems in very high end properties with very sophisticated, high-end type buyers,” he said, just as they struggles for smaller, local properties.

Efforts under way to help employees

Earlier this month, WhiteStar sent Worker Adjustment and Retraining Notification (WARN) letters to local and state government officials, notifying them of the “expected temporary closure” of the resort, effective Nov. 11, as Lake County News has reported. The letter also was sent to Unite Here Local 2850 of Oakland, which represents the resort's workforce.

The closure, which the WhiteStar letter stated was to be for an “indefinite” period of time, was to affect approximately 700 employees, although an accompanying employee count list submitted to the state Employment Development Department listed approximately 559 staff slated for layoff.

Unite Here Local 2850's president, Wei-Ling Huber, said the economy has a lot of accommodations businesses struggling in other places like the Bay Area. I think Konocti's been hit a lot harder than a lot of the other hotels were hit,” Huber said.

Bishop said he didn't know whether the resort will be sold in time to prevent those employees from losing their jobs.

Meanwhile, in response to the announcement that the resort was closing, local officials created a committee to assess the economic impacts, primarily the displaced workers.

County Administrative Officer Kelly Cox said Wednesday that he can't say much publicly about the county's efforts at this point.

He did say, however, that the county has communicated its “strong desire” to all parties involved that the current owners keep Konocti Harbor open and operational until its sold.

“We have also been obtaining information about programs that may be available through the federal government to assist in keeping the facility open,” he said.

Huber said the union has a successor agreement which requires a new owner to retain the current employees if Konocti Harbor continues to be operated as a resort. That successor agreement also is supposed to uphold the current employee contract under new ownership.

She said Unite Here Local 2850 has has a good relationship with UA Local 38, which is working to ensure benefits and severance for the resort's employees.

Huber said Unite Here will meet in early October with UA Local 38 to discuss the succession and worker benefits issues.

She said this is the time of year when Konocti Harbor's seasonal workforce starts to shrink following the more active summer months. Huber estimated the resort tops out at about 700 employees in summer and is reduced to less than 100 employees during the winter.

No potential new owners have yet been introduced to the union, said Huber.

“It's pretty early in the process,” she said, explaining that, in general, the union doesn't start talking to new owners until a few weeks before the new ownership actually takes over.

In the case that Konocti Harbor goes to a new owner who intends to use it for a nonresort use, thus canceling out its succession agreement, Huber said the union will help point union members toward services and assist them in transitioning to new employers.

Teddie Pierce, executive director of the Lake One-Stop Center, located at 55 First St. in Lakeport, said she wants Konocti Harbor's employees to know that help with services including unemployment information, work readiness and career transition counseling is available if it's needed.

She said they can get immediate information about employee assistance by calling the office at 707-263-0630, Monday through Friday, 8 a.m. to 5 p.m., or emailing a request to This email address is being protected from spambots. You need JavaScript enabled to view it. .

E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. . Follow Lake County News on Twitter at .

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