The Heritage House, a Mendocino Coast resort rated by affluent travelers as among the world's best, is mired in debt and facing foreclosure.
Operating under the name of Lantana Mendocino LLC, Heritage House's latest owner has defaulted on a $24 million loan. The default comes less than three years after a German bank agreed to finance Lantana Mendocino's purchase and planned upgrades to the 37-acre oceanfront complex at Little River, according to documents on file in U.S. District Court in San Francisco.
In addition, Lantana Mendocino owes the county of Mendocino about $200,000 in back property taxes and $243,758 in bed taxes collected from guests. Heritage House ownership could face criminal prosecution for withholding public tax revenue, tax collector Shari Schapmire said.
"We're watching this situation very closely," Schapmire said.
Owners Duane Werb and David Wilk -- an adviser to resort developments in Bermuda, Pebble Beach and Aspen, Colo. -- were not available for comment. Joe Eisenberg, a Los Angeles attorney who represents Lantana Mendocino in the federal court litigation, did not return a telephone call seeking comment.
In mid-2005, the Wilk group bought the Heritage House and turned to GHM Hotels, which operates luxury resorts and spas around the globe, to manage hotel, dining and spa operations. GHM also oversaw a project to upgrade about half of the inn's guest quarters.
In October, GHM canceled its management contract. Marco Perry, who was brought in from Miami Beach's trendy Setai Hotel to be general manager of the Heritage House, left for a similar position at the San Ysidro Ranch in Santa Barbara County.
Kaye Smith, current manager, said the Heritage House is "alive and well." She declined to discuss what might happen next, but said Heritage House would not close.
"We plan to stay open," she said.
The cash crisis is a reversal of fortunes for Heritage House, which has long held the reputation as an upscale haven for well-heeled travelers.