The City of La Quinta, Calif. is getting out of the golf business by transferring ownership of SilverRock Golf Course to a resort developer for $1. But the deal is far more complicated than it looks.
The golf course transfer will not happen until after the developer, SilverRock Development Co., has started construction on two hotels and has built a permanent clubhouse. The developer will also realign the golf course and make other improvements.
The developer plans to develop a 140-room luxury Montage hotel, and a 200-room Pendry. Construction on both will start in April 2018 and they would open in October 2019.
La Quinta can’t sell the golf course to a private entity for a profit over 10 percent of the total value due to tax-exempt bonds wit used to refinance the property in 2013. But it will receive developer impact fees, estimated at $5 million to $6 million.
The city purchased 525 acres for $42 million in 2002 and used tax-exempt bonds to build the 18-hole Arnold Palmer-designed golf course. The course cost $13 million to build and the city invested another $6 million to accommodate for drainage improvements.
The long-term plan calls for a second golf course and a mix of luxury and boutique hotels, residential and commercial development and a conference center. The second course is still planned, but after the hotels, conference center and other amenities are up and running.