Chateau project receives final blessing
June 7, 2015
A plan to fill a nearly-empty lot at Friday Avenue and Highway 50 received the South Lake Tahoe city council's blessings Monday, paving the way for a project that's been under development or planned since 1998.
In a 5-0 vote, the council allocated 6,307 square feet of commercial floor area to Tahoe Stateline Ventures for another phase of its Chateau project.
Of that commercial floor space, 5,000 square feet came from an amount already allocated to the project in 2013 from the Stateline/Ski Run CFA pool. Another 1,307 square feet came form the city's community recharge pool.
Lew Feldman, the attorney representing Tahoe Stateline Ventures, said if things go according to plan, construction would begin mid-summer and take 18 months for full build out.
The second phase of the Chateau project includes a three-story building, including 32 tourist accommodation units and 19,500 square feet of mixed retail space on the first floor. The project would also include pedestrian sidewalk improvements and plazas.
The developer, Tahoe Stateline Ventures, is a subsidiary owned by Walnut Creek-based Owens Realty Mortgage. Owens acquired the project after its former developer, Randy Lane of Lake Tahoe Development Company, filed for bankruptcy in 2009.
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Feldman stated in past city planning commissions that Owens would likely seek to sell the project once it completed the second phase.
The project once included a convention center and other public improvements, but has been scaled down after $55 million in promised public funding didn't materialize.
In 2014, the first phase received the go-ahead from the city council, resulting in a parking structure and retail space that has only one vacancy remaining.
One business owner objected to the project's second phase.
Rick Edwards, a former owner of the Driftwood Lodge and Rainbow Lodge, implored the council not to approve the project until a settlement could be reached between Owens and property owners who had been impacted when Lane filed for bankruptcy.
He said the "Lane Feldman Owens group is gutting this project piece-by-piece to fit the financial means of Owens."
Edwards said Owens stands to make millions of dollars on the project and Lane would continue to be paid as a consultant.
He added that it should be Owens responsibility to refinance property owners who had subordinated their properties in exchange for promised returns on investment later.
"Is this project a testimonial that city goes out of its way to ensure the financial success of outside companies instead of its own businesses, property owners or citizens?" he asked.
Feldman, the attorney representing Tahoe Stateline Ventures, said while the events that transpired in 2007 were tragic, the current owner wasn't responsible.
City Attorney Tom Watson said there is no active lawsuit against the city regarding the matter. He also cautioned that private disputes shouldn't sway the project's approval.
"It is not incumbent on government to be used to coerce private settlements," Watson said.
Councilman Tom Davis said while he has known Edwards for a number of years and it was sad, the difference in the project is that there isn't any public money.
"I wish we could change that but I can't," Davis said. "This stands alone and I think it would be for the benefit to move this project along."
Resident Ed Moser questioned some of the benefits the project and said it would simply oversaturate the retail area.
"Basically you're making the same mistake from the Olympics-era when all the hotels were put up to accommodate for a short period of time," Moser said.
City Manager Nancy Kerry said the site's current condition provides no economic benefit for the city. A revitalized project does.
"The current site has been referred to as 'the hole in the ground,'" Kerry said. "Building something and improving our community, attracting capital investment has been our goal for a few years now."
She added Owens has taken considerable risk to development the project with its own resources "where developers asked for substantial resources the city isn't able to provide."
Kerry said that attracting high-quality retailers requires higher-end quality room.
"All of this development is going to improve what is currently not being used," Kerry said.