Rancho Palos Verdes Lends Helping Hand to Luxury Resort

Rancho Palos Verdes City Council members unanimously approved an $8 million loan late last week to Lowe Enterprises, the developer behind the soon-to-open luxury resort Terranea. Lowe was forced to seek out funds from the city as a last resort, or risk a severely delayed opening. The city, which has said it sits on about $19 million in cash reserves, will not collect the 10% hotel tax from the company for at least 27 months. The decision was made despite disapproval from the city’s finance director.

The $480 million resort, which is located on land that formerly housed the Marineland of the Pacific, will feature 380 hotel rooms and bungalows, three restaurants, a 9-hole golf course, and 82 extended stay “casitas” spread over 102 acres of prime oceanfront property. Lowe claims it will provide the city with over $7 million annually in hotel taxes once it stabilizes in about three years. This is significant in a city that is overwhelmingly residential and gets little income from business taxes.

Counted in Lowe’s portfolio are similar resorts in Lake Tahoe, Vermont, and Indian Wells, and other local hotels including the Sheraton Universal City. The decision comes at a time when hotels are having an especially difficult time securing bank loans and California municipalities are being discouraged from divulging in extraneous expenditures. But Rancho Palos Verdes, a city of only 41,000, has an extraordinarily affluent tax base and very few significant costs. The stimulus package is one it can afford and one it hopes will provide a worthwhile return. And everyone is hoping for fair game against neighboring Trump National Los Angeles.