- Elizabeth Larson
- Posted On
Konocti Harbor’s new owners share plans for resort
Konocti Harbor has been shuttered since the fall of 2009, and hopes for its reopening and rebirth have been a consistent theme amongst the resort’s longtime fans as well as local businesses and government that benefited from the economic engine that it was for the county.
Even before Konocti Harbor closed, potential buyers had come and gone, each with a vision to revitalize the resort, infuse millions of dollars into its renovation and give a momentous boost to Lake County’s economy.
Those hopes were strongest as Lake County took a pounding in the Great Recession.
Now, with the county building back and having the best employment rates in 30 years, there’s more hopeful news: The resort is under the ownership of a Bay Area group that says it wants to be part of the community, help jumpstart a new round of economic growth and be a good partner.
They have in their hands what is considered to be one of Lake County’s premier and most prized properties.
A spokesman for the buyers released a statement to Lake County News giving some initial details of the plans for the property.
Clear Lake Resort Services LLC, a limited liability corporation registered with the Secretary of State’s Office in January, is reported as the purchaser of the property, according to Russ Hamel, Konocti Harbor’s new managing director.
Hamel revealed that the resort will begin a two- to five-year phased undertaking that will include new construction and upgrades to many of the existing facilities.
The initial renovation phase, Hamel said, will focus on the waterfront area with new docks and slips, a fuel depot, boat storage and a marina supply retail shop.
New studio suites will replace the older waterfront hotel units, and improved retail and restaurant venues that will highlight the main lodge will be added, Hamel reported.
Hamel said that, working with Lake County government officials, agencies and local businesses, the new owners plan to breathe life back into the resort.
He said visitors can look forward once again to a full-service vacation getaway next to the waters of Clear Lake with amenities for water sports, boating, dining and quality entertainment.
The families behind the purchase
While Hamel said Clear Lake Resort Services LLC is Konocti Harbor’s new owner, that LLC differs from the names on the grant deed recorded for the property on March 21.
The grant deed shows the purchasers as Shekou Management LLC, the 50-percent owner, with Andy and Zaida Saberi holding 30 percent and their son, attorney Thomas Saberi, the remaining 20 percent.
State business records show that the Joe and Heidi Shekou Family Trust is listed as Shekou Management LLC’s sole manager or director.
The Saberis own a number of transportation and petroleum businesses, primarily based in the Bay Area, according to state business records.
Hamel did not respond to questions about the new Clear Lake Resort Services LLC, whose agent for service is listed as Thomas Saberi, but such entities are commonly used to hold real estate investments.
Joe Shekou is a Bay Area real estate developer who, along with his wife, Heidi, came to the United States in 1978 with their two small children as refugees from the Iranian revolution, according to an online post by their son-in-law, Bob Herbst, who works with them.
The couple, who Herbst said trained in Iran as engineers, partnered with fellow Iranians to develop a mini storage and industrial park in San Rafael, and their real estate firm owns and manages other office and industrial space around the Bay Area.
The Shekous, who have been frequently featured on society pages in Bay Area publications, have over the past decade and a half met resistance from Marin County residents and environmental groups over planned developments such as a soccer complex they had proposed to build on land Joe Shekou owns near the San Rafael Airport.
In that case, he sued two activists for what he claimed was encroachment for building docks over his property line. The activists and their supporters in turn accused Shekou of filing the suit to silence them.
In December, the Shekous were among a group of property owners who sued the city of Richmond and Mayor Thomas Butt, alleging that he violated state law that protects against politicians' conflicts of interest by secretly working to block their project in what is known as the Freethy Industrial Park, where they had planned to build industrial and office space, restaurants and other facilities.
The city of Richmond has placed a moratorium on that proposed industrial park – which is part of a larger 100-acre area near the water and home to tidal marshes – while it looks at a general plan designation to change it to open space, parks and recreation, agriculture and public, cultural and institutional uses, according to the city’s Web site.
That suit also names gubernatorial candidate Gayle McLaughlin, a former Richmond mayor and councilwoman, as well as the current council members.
Another individual who has been named as a possible party in Konocti Harbor’s purchase is Kay Hakakian, based on court filings in relation to a federal lawsuit against the union which for decades owned the resort.
Hakakian is an East Coast-based businessman whose LinkedIn profile lists him as managing director for Sisko Enterprises LLC, an “investment vehicle for various start ups and other investments” as well as a managing director for Eurodesign group of Smolensk, Russia.
His background also includes a master’s degree in civil engineering from the University of Tehran and a PhD from the University of Paris, later working and teaching in Iran before coming to the United States.
With the grant deed not mentioning Hakakian, is it not yet clear from the Clear Lake Resort Services LLC filings with state officials whether he is still involved with the resort.
Separately, Hamel did not respond to a question from Lake County News about whether Hakakian remains part of the buyers group.
History and closure
Konocti Harbor Resort’s possible sale has been an almost-constant source of speculation and rumor since before its November 2009 closure.
The scale of the interest correlated to its local importance both economically and culturally.
It was owned for nearly six decades by Local 38 of the United Association of Plumbers, Pipefitters and Journeymen’s Lakeside Haven convalescent trust fund.
While the resort began as an affordable vacation spot for union members, its popularity grew to the point that it became a major Northern California vacation spot.
For decades, it had been Lake County’s only full-service lakeside resort, offering indoor and outdoor venues that were favorite concert spots not just for Lake County residents but for thousands of visitors to the county. It annual “Summerfest” series was a favorite, and at one time it also hosted the “Boardstock” extreme water sports event.
During the last five years the resort was open, it was the focus of a 2004 US Department of Labor lawsuit filed against Local 38.
In its suit the Department of Labor 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.
Department of Labor officials later told Lake County News after the suit’s settlement that the union had likely diverted millions more to the resort than the lawsuit stated, as Lake County News has reported.
The federal suit was settled in 2007. The settlement called for the union to repay the trust funds through proceeds earned from selling the resort.
When the suit was settled, Page Mill Properties of Palo Alto had been identified in court documents as a possible buyer for a reported amount of $25 million. That sale fell through, as did other potential sales over the next several years.
Despite the resort not selling, the Department of Labor confirmed to Lake County News that the union repaid the trust funds as it was required to do, which was restated in recently filed documents associated with the case.
Other individuals who were interested at various times in purchasing the resort included lobbyist and developer Darius Anderson, who now is a managing member of Sonoma Media Investments, which the Santa Rosa Press Democrat and the Sonoma Index-Tribune.
Before the federal lawsuit settled Anderson had been looking at the purchase, with his plans at that time reported to include Indian gaming as was reported at the time by Lake County News.
He pulled out of consideration after the Board of Supervisors passed an anti-gaming resolution in February 2007 related to the resort. The board rescinded that resolution in July 2008 at the request of longtime resort General Manager Greg Bennett, who asked the supervisors to be open to any and all potential buyers for the resort.
As a result of the federal court case, WhiteStar Advisors of Boca Raton, Fla., was appointed the resort’s independent fiduciary and tasked with overseeing its operations until it was sold.
In court documents filed earlier this month, James Bishop of WhiteStar Advisors stated that the company decided to close the resort in 2009 because of its inability “to operate profitably.”
“Although the closure was necessary to reduce the continuing losses attributable to the ownership of the property, it also has made its sale more difficult. Most buyers of resort properties prefer to purchase a resort with ongoing profitable operations. In addition, due to the shut down of Konocti, a number of its shuttered facilities have not received regular maintenance,” the document stated.
When Konocti Harbor closed on Nov. 11, 2009, laying off hundreds of employees, Lake County was still grappling with the impacts of the recession.
The closure of one of the county’s largest employers and one of its largest tax-revenue generators was a considerable blow to Lake County. In fact, transient occupancy tax rates in Lake County still have not recovered to pre-closure levels.
In the private sector, it had a long-term impact on other businesses that had also benefited from the resort’s events including smaller resorts, motels, vacation rentals, inns, as well as stores, restaurants, wine tasting rooms, marine businesses and even gas stations.
Following the closure, more potential buyers came forward, with the resort listed at high one point at $15 million.
One of the most promising potential buyers had appeared to be a partnership led by Resort Equities President Grant Sedgwick, who for nearly a year tried to acquire and redevelop Konocti Harbor Resort & Spa, with plans including a new hotel and fourplexes, renovations, removing some buildings and building new boat slips, and offering timeshare and fractional ownership units.
Sedgwick’s effort came to an end in May 2014 after he determined that acceptable financing for the resort's planned acquisition and $100 million redevelopment did not appear to be available.
Since 2015, Konocti Harbor has opened its doors to fire and flood survivors through agreements arranged through the county of Lake. Most recently, in October it offered additional accommodations to Sulphur fire survivors.
About two-dozen county residents displaced by flood and fire are reported to still be living there now, according to District 5 Supervisor Rob Brown.
Hamel did not respond to questions about the fire and flood survivors’ presence at the resort nor about reports of anticipated layoffs of existing staff at the resort.
A successful purchase effort
The documents submitted by WhiteStar to the federal court late in February give a timeline of how the successful purchase ultimately came about.
Based on the documents, the two men leading the effort on the purchasers’ side were Joe Shekou and Kay Hakakian.
A memorandum written by Bishop on Jan. 15 – but filed in February – explained: “On May 21, 2017, an agreement for the purchase and sale of the Konocti Harbor Resort and Spa was executed between Joe Shekou and Kay Hakakian, and the U.A. Local 38 Convalescent Trust, buyer and seller respectively. The contract purchase price was $7 million and the contract provided for a 120-day due diligence period. The purchase agreement also provided for a deposit in the amount of $100,000 which would be refundable during the due diligence period.”
The memo said the purchase agreement provided that the due diligence period could be extended up to 60 days upon once the initial $100,000 deposit was released and another deposit of the same amount was made with the escrow agent. “Prior to the execution of the purchase agreement, WhiteStar required the buyer to produce proof of adequate funds to close, and the buyer provided the required documentation.”
Bishop’s memo said that, prior to the expiration of the initial due diligence period, the proposed buyers notified WhiteStar that they would exercise the option to extend the due diligence period.
“A few days prior to the expiration of the extended due diligence period, the buyer notified WhiteStar it would not proceed with the transaction because upon completion of its inspection the buyer had determined the water and sewer treatment systems would require more work than anticipated for the buyer’s purpose and the property would require materially more in the way of upgrades and renovations than the buyer had anticipated,” Bishop wrote.
“Over the course of approximately two weeks, WhiteStar and the buyer strongly negotiated the points and the seller’s reluctance to entertain any price reduction. Eventually, the parties agreed to a reduced price of $5 million, in consideration of among other things: the work required on the water and sewer systems, the additional upgrades to the property overall to bring much of it to a condition where the facilities would meet current resort operating standards, the impact the recent massive fires have had on a large area around the property, the highly unlikely approval of Native American gaming on the property (a key element to many potential buyers), the fact that with respect to the previous purchase agreements no buyer has proceeded this far with the transaction, and the seller’s continuing carrying cost if the property had to be re-marketed,” the memo said.
At that point, Bishop said the closing of escrow was set for the end of February.
At the time of the 2007 consent decree issued in the federal suit, all of the parties anticipated that Konocti Harbor’s sale price would be at least $10 million, according to the court documents. “The sharp reduction in the value of Konocti over the past 10 years was not foreseen nor was it anticipated at the time the Consent Decree was entered into.”
After the court record on the case showing nearly five years of no filings, WhiteStar filed new documents in February and earlier this month seeking a modification to the consent decree because its terms are no longer feasible due to the change in market and reduced sale price.
Rather than having $4 million in sales proceeds go to both Local 38 and $6 million to its pension trust fund, the change in consent decree seeks to establish that all of the sales proceeds will now go to benefit the pension trust fund.
The documents stated that while WhiteStar had tried numerous times to sell Konocti Harbor, efforts that had failed due to factors the company said include that the market for resort properties in Lake County “declined markedly between 2007 and the present,” adding, “One of the largest impediments to the sale of Konocti is that it resides in a part of Lake County that has experienced enormous wildfire devastation over the course of the last few years.”
Ultimately, WhiteStar concluded that the $5 million sales price for Konocti Harbor is “fair and reasonable.”
Bishop’s statement said Shekou and Hakakian are independent third parties and have no relationship to the federal court case defendants.
The grant deed for Konocti Harbor – acquired by Lake County News from the Lake County Recorder’s Office – was signed by Bishop on March 9, the date of his last filing with the court.
It lists six parcels totaling 85.3 acres: 8710, 8727, 8770, 8780, 8790 and 8800 Soda Bay Road.
The assessor’s office gives the assessed net value of all of properties – including structures – as $13,784,833.
With the purchase now accomplished, Hamel has emphasized the buyers’ desire to be part of the Lake County community and to contribute to it.
“Collaborating with the local community and making a contribution to its economic vitality is important to us. Bringing more recreational and entertainment options to the area promotes tourism and creates much-needed employment and business opportunities,” said Hamel. “We’re excited to begin the revitalization of this iconic Lake County landmark; we’re fortunate to have the chance to work in this beautiful landscape.”
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.
