Multiyear project could cost up to $75 million
LAKE COUNTY — A San Francisco-based resort real estate group is considering the purchase of the shuttered Konocti Harbor Resort & Spa on the south shore of Clear Lake as part of a plan to significantly renovate the 60-acre property and reopen it with mostly shared-ownership accommodations as soon as 2015.
Resort Equities, LLC, applied for a major use permit from the county of Lake, proposing to increase the number of units from 261 currently to 321 and build a 275-space boat dock to replace a 100-space dock that was destroyed in a storm during the nearly four years since the resort closed.
If the property is sold, the project is expected to be phased over three to seven years and cost $50 million to $75 million just for demolition, new construction and renovation, according to Grant Sedgwick, managing partner of Resort Equities Investment Fund and president of sister company Ragatz Resort Realty.
A preliminary hearing before the county Planning Commission could come in early December. A purchase of the property would come around that time. If approved by year-end, the first phases of the project could go to bid in the second quarter of next year, according to Mr. Sedgwick.
He said attractive aspects of the property are the long lake frontage, backdrop of Mount Konocti, entertainment venues with the 5,000-person outdoor amphitheater and 1,000-seat indoor concert hall, and a three-hour drive for more than 9 million residents from Mendocino County to Sacramento to Silicon Valley.
“I can’t think of any resort property like this in such a big market area with so little competition,” Mr. Sedgwick said.
Resort Equities is in a due-diligence phase under an Aug. 1 purchase contract with the property owner, a retirement fund for United Association of Plumbers & Pipefitters Local 38 that purchased the property five decades ago and a vacation spot for members. The resort closed in late 2009 after the settlement of a federal lawsuit, alleging use of about $54 million in pension funds for resort upgrades, called for the sale of the property to repay the fund, according to Lake County News.
The envisioned Konocti Harbor rehabilitation plan is being designed by award-winning resort planning firm Hart Howerton. It would first include tearing down the 50-unit Lakeside Haven Apartments next to the amphitheater as well as the 52 Vista Cloud studio units, eight beach cottages and a VIP suite. The buildings are either functionally obsolete, beyond repair or poorly located, according to a six-page letter accompanying the Sept. 6 use-permit application.
Fifteen two-story fourplexes with 164 two- and three-bedroom shared-ownership units would be built on existing parking lots or tennis courts along the waterfront over five to seven years.
In the existing Vista Lake, Vista Breeze and Vista Star buildings, 102 studio units would be extensively overhauled and converted to 34 smaller two-bedroom units. Forty-eight one-bedroom units in three other buildings would be overhauled as well.
The reason for the change is that as a 261-room hotel, Konocti Harbor suffered from low occupancy for several off-season months of the year, resulting in 37.5 percent occupancy in the two full years before the resort closed, according to the application letter. Shared-ownership typically has much higher occupancy, so more guests per unit — 3.5 after the renovation vs. 2.5 before — in more units could result in 300,000 room-nights a year, compared with 90,000 before.
The concert venues, a key draw for Lake County before the resort closure, would be upgraded but not expanded, and more, closer parking would be added, according to the plan.
“I want this project, when it’s finished, to be affordable,” Mr. Sedgwick said. “We’re not trying to create the highest-priced resort in the country but one most people in the country can afford.”
Craig Cosentino and Al Duncan of KW Commercial have been brokering the resort property sale.
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