Two massive San Luis Obispo County developments owned by John King have filed for Chapter 11 bankruptcy protections, putting on hold a foreclosure auction slated for June 1.
King is developing Vaquero de los Robles, a luxury resort near the Paso Robles airport, and Spanish Springs, a development planned near Pismo Beach. The two projects filed for Chapter 11 bankruptcy May 28, with Vaquero de los Robles listing $11 million in assets and $11.6 million in liabilities and Spanish Springs listing $17.5 million in assets and $6.6 million in liabilities.
King has not responded to multiple requests from the Business Times for comment.
The properties were being foreclosed on by King’s lender, Rhode Island-based Textron Financial Corp., which had also filed federal lawsuits against the developments. The lender alleged that King’s companies owed it $14.3 million in unpaid loans for the developments, but King’s companies shot back with a claim that terms of the loans weren’t made clear to them up front.
The San Luis Obispo Tribune reported May 27 that the properties were due to be auctioned off at the county courthouse June 1. But the Chapter 11 filings automatically put on hold Textron’s lawsuits and foreclosure proceedings while King’s companies reorganize.
“It’s on hold unless the bank wants to file, within the bankruptcy court, a motion for relief from stay,” said Brian Hefelfinger, a bankruptcy attorney with Nordman Cormany Hair & Compton in Oxnard who is not involved with the case.
Tourism officials had hoped Vaquero de los Robles would lift sagging sales tax revenue within the next couple years, particularly as the city now faces a $9 million deficit, said Jim App, the Paso Robles city manager.
“What’s lost is the potential,” he said. “We have no destination resort in this county so we lose out on an opportunity.”
The resort was planned to be larger than anything San Luis Obispo County has seen in terms of size. When the Business Times last spoke with King in April 2008, the Vaquero resort was slated to feature hundreds of hotel rooms, a spa hotel, bungalows, a vineyard and wine tasting facility, visitor center, a series of lakes and even golf courses.
The property neighbors the Paso Robles Municipal Airport, meaning it could attract fly-in customers as well as motorists.
Mike Gibson, chief executive officer of the Paso Robles Chamber of Commerce, said the city’s sales tax revenues have plunged nearly 10 percent since the recession began. He said that having King’s project on the table was considered “a fantastic thing to get us out of this economy.”
King also had an eye toward the business community when designing the Vaquero resort. He had set aside about 20,000 square feet of conference space, the largest in Paso Robles outside of the Mid-State Fairgrounds, which offers 75,000 square feet, according to Business Times research. The next largest conference facility is at the Madonna Inn in San Luis Obispo.
King Ventures is one of the largest employers and private companies in San Luis Obispo County, with about 800 workers there and 1,000 companywide. Its 2007 revenue was $32 million. The company owns several of the most popular Central Coast hotels, including the Sycamore Mineral Springs in Avila Beach, The Cliffs Resort in Pismo Beach and the Apple Farm Inn in San Luis Obispo.
Overall, King Ventures owns seven Central Coast properties as well as the Inn at Oyster Point in South San Francisco and Two Bunch Palms in Desert Hot Springs.
Gibson said at this point, the Vaquero resort’s struggles are somewhat insulated, mostly because the project always seemed to be two years away.
“As far as the effect to us, other than another magnificent draw to our community, it was still so far out that we really didn’t start anticipating the revenue draw from that or the tourist attraction,” Gibson said.