LAKE COUNTY, Calif. – A Bay Area company's nearly yearlong effort to purchase Konocti Harbor Resort and Spa has come to an end.
On Saturday afternoon, Resort Equities President Grant Sedgwick said his firm's attempt to acquire and redevelop Konocti Harbor Resort & Spa failed after more than 10 months of planning and feasibility studies, and seeking investors.
Sedgwick said Resort Equities had determined that acceptable financing for the resort's planned acquisition and $100 million redevelopment did not appear to be available at this time.
County Supervisor Rob Brown, whose district includes the Konocti Harbor property, expressed his disappointment at the news.
“We had a lot of hope in this,” Brown said.
The resort had been a major economic engine for the county, bringing business to other resorts and to local restaurants, and serving as a major contributor of transient occupancy tax, or bed tax, to county of Lake revenues.
It closed in November 2009 and the buyers faced the need of completing significant upgrades.
Resort Equities had signed a purchase agreement last Aug. 1, as Lake County News has reported.
A statement on the sale's failure was released jointly by Resort Equities and WhiteStar Advisors – the asset manager for the resort’s current owner, Lakeside Haven, the convalescent trust fund for Local 38 of the United Association of Plumbers, Pipefitters and Journeymen – on Saturday afternoon.
While the financing situation “may change over the next several months,” the statement noted, “with continued economic recovery, the purchase contract required that a firm decision to proceed had be made by May 31.”
Brown said county staff had done its part to try to assist the sale and resort renovation.
“Our staff worked really hard and did everything they could to make it work for them,” said Brown.
At the same time, James Bishop, principal at WhiteStar Advisors – which a federal court had made the resort's asset manager in 2007 – acknowledged in the Saturday statement that Resort Equities' proposed redevelopment strategy had received “outstanding support and encouragement” from Lake County officials.
County planning staff and other local officials had held meetings at the resort last fall to assess what the buyers needed to do, and the project had been fast-tracked in the planning process.
Last December, the Lake County Planning Commission had unanimously approved a mitigated negative declaration, a major use permit and shoreline variance for Resort Equities' renovation plans.
The plans included building a new 75-unit hotel and 15 two-story fourplexes, demolishing 121 existing rooms, renovating another 150 rooms along with the pool and main lodge areas, building 175 new boat slips, expanding and repairing the resort's system of docks and piers, creating more parking and greater shoreline access, and offering 164 timeshare and fractional ownership units at full buildout.
Resort Equities also had planned to affiliate the resort with an international hospitality brand in order to gain access to a worldwide reservations system.
In December, Sedgwick had estimated escrow could close in the first half of March, an estimate which later was pushed back to May.
Bishop said that the property will continue to be marketed for sale and that Sedgwick’s group would be welcome to restart negotiations should financing alternatives become more available to them.
Brown said Konocti Harbor is a complicated property, and the resort business is a complicated one.
“There's got to be somebody out there that can pull it together,” Brown said. “We've just got to find them.”
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