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Top stories of 2009: No. 2, Konocti Harbor Resort & Spa closes

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Konocti Harbor Resort & Spa closed temporarily but indefinitely in November 2009. Courtesy photo.

 

 


KELSEYVILLE – In November, an era of music and entertainment ended in Lake County, when its premier resort, Konocti Harbor Resort & Spa, closed its doors.


The news that the resort would close temporary but indefinitely came to light in early September, after Boca Raton, Fla.-based WhiteStar Advisors LLC – an asset management company that was put in charge of overseeing the resort following a federal lawsuit that was settled in 2007 – began notifying local, state and federal officials of the closure.


As many as 700 employees – the resort's peak seasonal workforce – were estimated to lose jobs.


While the job losses inflated already high unemployment in the county, harder to quantify is the impact on other local businesses, which benefited from the concert goers that the resort drew.


The county also is losing significant transient occupancy – or bed – tax from the resort, according to county officials.


Also in September, the 90-acre resort was listed for $15 million with a local Realtor, a listing that later was canceled.


That sales price was $10 million below a sales price that had been established in 2007 with Page Mill Properties, after the federal Department of Labor's lawsuit was settled. The Page Mill deal later fell through.


Later in September, James Bishop, managing director of WhiteStar Advisors LLC, told Lake County News that the resort was under a sales contract, but he would not divulge the potential buyer or the price. That contract didn't involve a local Realtor, he said.


Since the September news of a sales contract, few new details about a potential new owner for the resort have emerged.


WhiteStar has not returned calls seeking comment on the resort's sales status. Greg Bennett, the resort's president and general manager, also could not be reached for comment.


County officials also haven't received details from WhiteStar, according to County Administrative Officer Kelly Cox.


Cox said the county communicated with the resort's owners and their representatives about assistance that the county may have been able to provide to help keep the resort from closing. He said the county may also be able to assist new owners.


“The current owners and their representatives are aware of the county's strong desire for the resort to have remained open,” he said. “They are also aware of our desire for the resort to reopen at the earliest possible date.”


Cox said the county has actively sought potential buyers for the resort and have arranged for them to meet with the resort owners' current representatives. They've also been supportive when other potential buyers have contacted the county for information about the resort.


If the resort weren't to reopen, Cox anticipated “a negative long-term impact on our unemployment rate and on many sectors of the local economy.”


He continued, “There are many local small businesses who have been largely dependent upon the business generated through Konocti harbor resort. The local tourist industry will be the most heavily impacted but it will also impact other sectors of the economy. It is extremely important that the resort be reopened.”


In 2004, the US Department of Labor filed a lawsuit against Local 38 of the United Association of Plumbers, Pipefitters and Journeymen, whose Convalescent Trust Fund, Lakeside Haven, had owned Konocti Harbor since 1959.


Last year, the resort's ownership was transferred into the ownership of a trustee, according to county property records.


The Department of Labor suit alleged that Local 38's current and former trustees violated federal law by diverting more than $36 million from retirement, health, scholarship, apprenticeship, and vacation and holiday funds to renovate and operate Konocti Harbor, as Lake County News has reported.


Federal officials told Lake County News that they estimated the union actually transferred closer to $54 million from the trust fund between 1994 and 2004.


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 http://twitter.com/LakeCoNews and on Facebook at http://www.facebook.com/pages/Lake-County-News/143156775604?ref=mf .

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