The builder of a long-delayed resort development in La Quinta updated city leaders this week on his resort project. It was the first such official update he’s given to the city since last summer.
Robert Green of the Robert Green Company told city council members he is feverishly working to secure a new batch of financing for his Talus resort development. It’s going up on property surrounding the city’s Silver Rock Golf Course and will eventually include a 134-room Montage luxury hotel, a 200-room Pendry lifestyle luxury hotel, a new golf clubhouse, and residential units tied to the two hotel brands.
The most outspoken responses came from City Councilmember Kathleen Fitzpatrick who told Green, “People are very concerned, and they have the right to be.” She added she gets repeated questions about the project from concerned residents.
Green said he’s currently focusing on building Montage guest room building due to their central importance in securing financing for the rest of his development. Work continues on pouring concrete slabs, framing, and plumbing for some guestroom buildings. Green says 3 of 5 residential units are nearly completely framed and foundations are underway for five more units.
But this progress hasn’t come cheap, “We have experienced a $17 million dollar increase in a $56 million dollar budget for those 55 homes. Think about that,” said Green.
The city announced in December the Talus project was seeking refinancing due to rising construction costs and would not be completed on its latest timeline.
Green told council members he closed on a $48 million construction loan in December with Builders Capital. That financing will allow the building of the first 13 homes. He says this is a very important part of the deal’s economics and builds confidence with lenders on the commercial side. 11 of the 29 homes are under contract for between $1,350.00 to $1,450.00 per square foot, said Green. The plan is to reengage with a general contractor RD Olson so they can get the hotel, conference center, and clubhouse open as soon as possible.
“We will keep moving on what we’re doing as our own construction company on the guest rooms,” said Green. “And I can’t give you a firm date on when we’ll open the hotel. But I will give you an update as soon as I know when I’m going to close these loans and as soon as I know RD Olsen will be ready to mobilize fully,” Green added.
He also explained the project’s tenuous and complicated financing moves required by rising interest rates and subsequent higher building costs in the form of more expensive materials and labor.
Financing components now include a December loan of $48 million from Builders Capital, Green says to finish 13 Montage homes.
He also says he closed a $108 million EB5 loan in December, but that money will come in at a time. EB-5 funding comes from a government immigration program allowing developers to offer overseas visa applicants, a spouse, and their children under 21 to obtain permanent US residency and a green card in exchange for their investment money. They’re typically required to make either an $800,000 or $1,050,000 capital investment amount into a U.S. commercial enterprise. The Talus project is offering 135 investors the opportunity for visas in exchange for their $800,000 investment.
Another $170 million money source is CPACE– or Commercial Property Assessed Clean Energy Financing. It’s a government incentives program that rewards developers for using water and energy-efficient systems in their projects. Financing here is at 7.5% interest, which Green says is amazing right now.
The project is also using a senior $100 million construction loan in the form of a bond financing structure in the institutional market.
And a second $60 million construction loan from Builders Capital will pay for Pendry residences at a 10% interest rate.
Green responded to a question from Mayor Linda Evans inquiring about the project’s original $450 million price tag in 2014. He says the project is now in the range of $600 million. The Mayor said she was not anxious to hear about any future developments until this current work in building the Montage and Pendry resort property is completed.
Councilmember Fitzpatrick said she was disappointed with Green, and asked him to be more open and straightforward in his future communications with golf course staff and with residents who are putting their faith in him getting the development done.
“I need to see something really practical out there that’s more than residences,” said Fitzpatrick adding, “I’m looking forward to continuing to try to remain hopeful, but it is increasingly difficult.”
Structural engineers have been at the site and Green says anything that has to be torn out and redone, due to weather damage, will be.