Terranea Resort Finances in Disarray

The financing for the recently opened Terranea Resort in Rancho Palos Verdes is in disarray. The Resort has now missed the deadline to accept the hotel tax rebate loan program with the City of Rancho Palos Verdes. This program calls fror the City to loan back to the resort 80% of the 10% transient occupancy tax for up to 34 months to a maximum loan amount of $8.2 million. The resort stated that Corus Bank, the construction lender on the proper;ty, has not approved the rebate loan program. The bank is in extreme financial difficulty and has not funded its final construction loan payment of $12.5 million.

Corus Bank alleges that the loan is “out of balance” due to the inability of most of the buyers of the resort’s Casitas and Villas to close their purchases due to a lack of available financing for such limited occupancy units. Corus Bank is in negotiations with the FDIC and will either be purchased by another bank or be taken over by the FDIC.

The City of Rancho Palos Verdes is now deciding whether they should extend the proposed tax rebate loan program or to simply allow it to terminate. The City has also expended approx. $150,000 in funds for consultants and legal work related to the agreement, which Terranea Resort officials believe is only owed by them if they eventually opt in to the program. Existing debt on the resort is estimated to be approx. $322 million, including the $180 million construction loan from Corus Bank.

The Resort has been met with very favorable reviews of its amenities and restaurants and has been operating at relatively high occupancy on the weekends. The resort has been offering significant discounts off its published room rates.