|County officials say they are working with prospective buyers for Konocti Harbor Resort & Spa in Kelseyville, Calif. Courtesy photo.|
KELSEYVILLE, Calif. – Since it closed nearly two and a half years ago, the fate of Konocti Harbor Resort & Spa, the county’s premier resort, has been a source of near constant speculation.
For decades the resort had been a draw for county residents and visitors alike. Other resorts and businesses had benefited from the customers that came to enjoy its amenities and shows all the year round.
When it closed, hundreds of people lost their jobs, some other local resorts struggled and closed, and on an almost weekly basis there was a new story circulating the community about some well-known celebrity being at the heart of an effort to purchase it.
Now, however, there appears to be a bona fide purchase effort under way, according to county officials.
“We’re working with folks that are very interested in making it a destination resort,” said County Supervisor Rob Brown, in whose district the resort is located.
County Administrative Officer Kelly Cox also told Lake County News that he is aware that the resort is in the process of being sold.
Brown said he’s not at liberty to discuss specifics about who the buyers are, but added that the county has been working with the potential buyers for several months.
Cox said that seeing the resort reopened as a first class destination resort under new ownership has been a top priority for the county.
He and his staff have tried to be supportive of sales efforts, and have been willing to dedicate staff time to support it, including recruiting and meeting with potential buyers.
“We rolled out the red carpet to anybody we met with,” he said.
But those potential buyers didn’t seal the deal, and the resort – which Cox said had been the county’s largest generator of transient occupancy tax, or bed tax, by far – continued to sit empty on the shores of Clear Lake.
Aftermath of lawsuit
Konocti Harbor was closed “temporarily but indefinitely” in November 2009, according to the notice sent to local, state and federal officials by Boca Raton, Fla.-based WhiteStar Advisors LLC.
WhiteStar Advisors is an asset management company that was put in charge of overseeing the resort following a federal lawsuit, settled in 2007, in which the U.S. Department of Labor sued Local 38 of the United Association of Plumbers, Pipefitters and Journeymen, whose Convalescent Trust Fund, Lakeside Haven, had owned Konocti Harbor since 1959.
That suit alleged that Local 38's 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.
Department of Labor officials recently told Lake County News that the agency considered Konocti Harbor a “troubled property,” whose troubles had been exacerbated by the tough real estate market.
However, as a result of the lawsuit $3.5 million was restored to the Local 38 pension plan in September 2007 and additional money may be paid from the sale of the Konocti Harbor.
The lawsuit settlement also prohibited any further diversions of money from the employee benefit plans to Konocti Harbor, according to the Department of Labor.
Those employee benefit plans aren’t exposed to risk of loss, and if and when the property sells, “the plans have some potential for upside,” the agency said.
New concerns arise
Concerns about the resort’s future flared up last month, after a Bay Area newspaper published a story about Pacifica resident Kathleen Bernard’s plan to purchase the resort and make it into a mental health facility.
Both Brown and Cox said they were contacted by numerous county residents concerned about such a plan.
Bernard – who reportedly hosted a public meeting on the plan in San Mateo County last month – did not respond to a request for comment from Lake County News.
Additionally, statements made in the article about the “Mental Health Board of California” being aware of Bernard’s plans and her desire to use funds from Proposition 63 – the Mental Health Services Act – are in question.
When Lake County News contacted the California Department of Mental Health and the state Mental Health Services Oversight and Accountability Commission, officials stated that there was no such thing as a Mental Health Board of California, but suggested Bernard may have brought the idea to another state entity.
Bernard also had not made any contact with Lake County officials, said Cox, who surveyed departments including Community Development.
Cox said Konocti Harbor is not zoned for the use Bernard suggested.
“It’s resort property,” he said, adding that he couldn’t imagine the Board of Supervisors agreeing to a rezone.
Brown emphasized that the prospective buyers with which the county are working do not include Bernard or anyone associated with her.
Brown said the current deal that’s being worked out appears very hopeful.
He said the county wanted any prospective buyer interested in reopening the resort to know that “the county is solidly behind them.”
Email Elizabeth Larson at firstname.lastname@example.org .
written by a guest, April 16, 2012