Biz Buzz: Inn at Morro Bay may be sold to pay back lender

Two properties owned by San Luis Obispo County hotelier and developer John King have been placed into receivership.

The Inn at Morro Bay and Two Bunch Palms Resort and Spa in Desert Hot Springs are now in the hands of operators charged with managing the properties.

The San Luis Obispo County Superior Court appointed a receiver for the Inn at Morro Bay on April 2 after the lender, Wells Fargo, requested that it grant a judicial foreclosure, which means the property could be sold to pay what is owed.

The Inn at Morro Bay LLC owed Wells Fargo about $8.8 million, and as of Jan. 30, it had failed to make payments totaling more than $65,000, according to court documents. Wells Fargo also said the limited liability corporation had breached its contract by not disclosing it had incurred additional debt — $5.5 million — through a third-party lender, Missouri-based Virtual Realty Enterprises LLC.

King bought the Inn at Morro Bay, a 98-room hotel on 4,000 acres inside Morro Bay State Park, in 1993.

Mike Casola, chief operating officer for King’s Boutique Hotel Collection and former manager of the inn, said Wednesday that the receiver wants to “do the right thing for the community.” The inn remains open for business, he said, and the goal of new management is to “run it seamlessly.”

“We’ve met them, and they seem like nice people,” said Casola, who declined to name the receiver.

Casola noted that the inn’s more than 70 employees have been paid up to date and that vendors have been contacted to discuss what is owed.

“We have not bounced any checks,” he said.

The manager of the Inn at Morro Bay did not return a call from The Tribune on Wednesday, and court documents from last week’s hearing in San Luis Obispo County Superior Court were not yet available.

King’s other property, Two Bunch Palms Resort and Spa, also has been placed into receivership by the Riverside County Superior Court branch in Indio.

Kirby Payne, co-president of HVS Hotel Management based in Rhode Island, has been appointed receiver of the 56-acre hotel and spa with 45 guestrooms, according to court documents. King bought the historic hotel near Palm Springs in 2005.

A receiver was appointed by the court after Bank Midwest, N.A., requested a judicial foreclosure of the property. Bank Midwest claims that Two Bunch Palms LLC owed more than $38 million on its loan as of March 3. The loan fully matured in September, and Two Bunch Palms LLC has failed to pay the full amount.

Neither Payne nor management at Two Bunch Palms returned calls from The Tribune, and Casola said he did not have any details about the operation of that property.

A report in the Desert Sun said that the hotel was open for business and that the more than 110 employees would keep their jobs.

King owns five hotels in San Luis Obispo County, including Apple Farm Inn, Sycamore Springs Resort and The Cliffs Resort. In addition to the Desert Hot Springs resort, he owns a property in Big Sur.

Casola said “all the other hotels are having pretty good years right now.”

“We don’t see any problems with the other hotels,’’ he said.

— Julie Lynem

Electronic health records get boost

Catholic Healthcare West recently announced it would boost funding to $1 billion for electronic health records in its 41 hospitals, including French Hospital Medical Center in San Luis Obispo, Arroyo Grande Community Hospital and Marian Medical Center in Santa Maria.

The nonprofit hospital chain has already started electronic recordkeeping in eight hospitals, where it says the system has helped standardize care delivery, improve medication and patient safety, and provide physicians with more convenient access to patient information.

The program started in local hospitals in November and is expected to be completed by November 2011, according to company spokeswoman Tricia Griffin.

The system is to include both acute care and community physicians, as well as new patient and safety systems, such as medication bar-coding to match patients to their prescribed medications.

— Julia Hickey

Downtown group’s promotions lauded

The San Luis Obispo Downtown Association recently received first place awards at the annual CalFest convention in San Jose.

The association received the Best Promotional Poster award for Concerts in the Plaza, which in 2009 featured a fine art piece by local artist Lorna Teixeira.

The association received a Best Magazine or Newpaper Special Section award for the Holiday Shopping Guide, a 20-year joint project between the Downtown Association and The Tribune.

— Julia Hickey