Local hotelier John King relinquished the Inn at Morro Bay on Thursday to one of his lenders at a public auction on the San Luis Obispo County Courthouse steps.
Wells Fargo took the property when no one stepped forward to meet the asking price of $8.5 million.
According to a notice of default placed on the 98-room hotel last January, King owed Wells Fargo $9 million, and another lender, Virtual Realty Enterprises, which had a second position on the loan, an additional $5.5 million.
Wells Fargo is expected to put the property up for sale, according to a handful of attorneys and real estate brokers who came to the courthouse to see what happened to the hotel during the auction. Wells Fargo representatives could not be reached for comment.
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Representatives from Tri-Guild, the company that took over the hotel during the receivership, say the hotel will continue to stay open for business.
The Inn at Morro Bay is located in Morro Bay State Park and features a restaurant, cocktail lounge, conference rooms and open decks facing the harbor.
It was opened as the Golden Tee Resort Lodge and Marina in 1960 with 31 units and four owners — Glenn Kleinhammer, Eugene Morosin, Milton Rohrberg and Chrome Johns, all Morro Bay residents at the time, according to a Tribune report about the hotel in 1960.
The hotel was bought in 1980 for $3 million by a Los Angeles group called the Kingsway Corp., but then ran into financial trouble and started missing its bed tax payments in 1981.
The owner then defaulted on a $2.3 million loan and the resort was put into a court-appointed receivership — with San Luis Obispo attorney David Farmer as its receiver. He was in charge of collecting rent for two years until it was sold to the Friden Hotel Co., a Santa Barbara-based company, for $5.4 million. The firm also owned El Encanto Hotel in Santa Barbara, three Hilton hotels and the Palm Springs Spa Hotel.
“It’s a beautiful location that seems to be jinxed, or people keep overpaying for it,” Farmer told The Tribune on Thursday. “I remember when we sold it to Friden, I was stunned at the price.”
The hotel group then transformed the Golden Tee from a moderately priced, undistinguished stopping place into The Inn at Morro Bay, with a Cape Cod look and $75 to $225 nightly room prices.
“We’re a destination resort, not just a pass-through between San Francisco and Los Angeles,” said Douglas D. Gerdts, the hotel’s manager at the time.
King bought the hotel property in 1993.
The inn hasn’t changed much since then, although the average room rates range now from $139 to $210, depending on the time of week and year of one’s stay, according to the hotel’s website.
Charlie Richardson, a real estate broker who was at the auction Thursday, said he was sorry that King had lost the property, calling the value of the hotel “priceless.”
“You can’t build this kind of hotel on the water these days, with all of the California Coastal Commission” regulations, he added.
— Melanie Cleveland
L’Aventure Winery in Paso to expand
Stephan Asseo of L’Aventure Winery in Paso Robles will be allowed to expand his winery, tasting room and caves on his 124-acre property, according to the San Luis Obispo County Planning Department.
The expansion includes the construction of a 1,408-square-foot outdoor covered crush pad and bottling area; 9,432 square feet of wine caves for barrel storage; and 810 square feet for a detached wine library building and storage area.
Asseo is also permitted to convert part of his existing 9,000-square-foot building on Live Oak Road into an office.
Established in 1998, Asseo has 58 acres of vineyards that produced about 6,500 cases of Rhone and Bordeaux-blend wines in 2009.
Asseo said he was happy to get the permit — he’s especially excited to start work on the caves — but probably will not start construction until spring 2011.
— Melanie Cleveland