Progress continues on Chateau project | TahoeDailyTribune.com

Progress continues on Chateau project

The Chateau project remains on schedule and under construction as the snowy season arrives, officials reported. "Enough construction has occurred this fall at break-neck speed to enable us to construct through the winter," South Lake Tahoe attorney Lew Feldman said at a public meeting last week. With the foundation and underground parking now in place, builders can continue construction on a $15 million portion of the Chateau project — nicknamed "the hole" — next to Harveys. Work on the overall project restarted in August. But most recently, officials anticipate "in the very near future" to announce that retail space is 100 percent pre-leased, Feldman said. "Appetite for commerce on this side of the street is very, very high," he said. "And the quality of the streetscape is going to equal or exceed what we're able to deliver at Heavenly Village." The second phase of the Chateau project will consist of street-level shop space and streetscape improvements near the state line. It is part of a larger $400 million venture that suffered years of setbacks. About 19,000 square feet of the second phase of the project will be retail, and another 9,000 square feet will comprise a restaurant on the corner of Stateline and Highway 50, Mayor Tom Davis said Thursday. Nightclubs, shopping areas and other retail are also planned for the area, according to a city of South Lake Tahoe news release earlier this year. Additionally, Davis said the shopping hub will feature heated sidewalks to help melt accumulated snow. Building materials for the Chateau project include natural cedar and granite, which will complement the center's surroundings, Feldman said. "This is really going to be a tremendous recent upgrade to the South Shore vision plan downtown experience," he said. The project, perhaps as expected, has already received a large and positive response, he said. "Sometimes when we do positive things, there's some negativity associated with them," Feldman said. "But I haven't encountered anybody who doesn't think this is a good idea." Davis, who visits the site frequently to observe its progress, said he's one South Lake Tahoe resident who is thrilled to see progress at the city's infamous hole in the ground. "We're excited about it," Davis said. "It's going to be a very happy day when that fence comes down." Feldman said construction on the second phase of the Chateau project should be completed by next summer.

Barrier comes down at Chateau project

It has been several years since a wood-and-concrete barrier was erected in front of a construction project, once seemingly abandoned at the California-Nevada state line, to block a large excavation area dubbed the "Ta-hole" from motorists and pedestrians. But after years of hurdles and setbacks, the fence came down Monday to reveal the extensive progress being made on a $15 million phase of the project. "This is a great day for the city and a great day for out citizens," South Lake Tahoe Councilman Tom Davis said at the construction site Monday. "We've waited a long, long time to see this portion of the hole in the ground completed." Locals and tourists can now catch a glimpse of the Chateau project through a chain-linked fence along Hwy 50, where construction on about 30,000 square feet of retail and restaurant space is nearing completion. According to Davis, a deli will go in on the south side of the project near McP's Pub Tahoe, and another restaurant will move into the structure with the cone-shaped roof across from Harveys. The shops between the two restaurants will be retail, Davis said, but what they will sell exactly is currently unknown. Lew Feldman, the South Shore attorney representing Owens Financial, the majority property owner of the site, did not return multiple phone calls for comment. Whatever the stores may be, city Councilwoman JoAnn Conner said the new shopping center, along with the addition of new sidewalks and features, will be better for everyone all around. "It will be much safer for local, tourists and businesses," she said. "It's a total win." Large construction vehicles removed the heavy concrete blocks that made up a portion of the barrier Monday, so workers could start building the landscape and heated sidewalks. It was the latest development in what Owens Financial considers a part of a larger project for the site. Earlier this year, the company acquired nine parcels, or 3.4 acres, of land that are a portion of the permitted Chateau development. The company has said that the additional space allows it to build the originally envisioned $400 million project, which consists of constructing a 19,000-square-foot spa, 58,000 square feet of retail, 20,000 square feet or more of meeting space and 477 hotel and condo units. "We're so excited to see the wall finally coming down," Conner said. "It's been years in the making." Davis said businesses at the site are expected to open by mid-June or early July.

Some Chateau businesses identified, Bevmo delayed

South Shore locals may already be familiar with three businesses moving into the retail portion of the Chateau project, but they'll have to wait a bit longer to shop at the new Bevmo planned at the "Y". According to two tenant improvement applications turned into the city, Powder House and Cascade Clothing will be moving into the Chateau development some time after construction ends in early July. And McP's, which was located next door to the project and closed about two weeks ago, will occupy the cone-shaped roof on the corner of Hwy 50 and Stateline Ave. "We're not closing (permanently)," said Pete Joseph, co-owner of McP's, which has been operating in South Lake Tahoe for 21 years. "We're just moving into a bigger and better and fun location." Joseph doesn't expect McP's to reopen at its new spot until late September or early October. However, he said that when the restaurant does open it will be able to offer a more "complete" menu thanks to the availability of a much larger kitchen. The old McP's building, located at 4093 Lake Tahoe Blvd., is slated to be torn down soon. And other tenants at the Chateau have either not been named or are not lined up at this time. Lew Feldman, the attorney representing the owner of the development, did not return a call for comment this week. However, South Lake Tahoe city councilmember Tom Davis said Monday that two spaces still remain vacant. A deli could be going in on the southwest side of the project, he said, but the business hasn't been named. Nevertheless, Davis said he likes what he's seeing so far. "I want locals to have priority first whenever we can," he said. "I think that's important — to promote our local businesses first." On the other side of town, the construction of a Bevmo next to T.J. Maxx has been delayed because a business in a building slated for demolition is still operating on a lease until September. Work to demolish the old building at 949 Emerald Bay Rd. — the current location of Mr. Suds laundromat — and build a 10,000-square-foot Bevmo in its place was initially scheduled for this summer. However, Mr. Suds' lease doesn't expire until September 11, said Suds owner Tom Chiappa. According to Davis, Bevmo now plans to work on the structure through winter with plans to open the store in March 2015.

Construction resumes on Chateau project

Construction on the Chateau project at Lake Tahoe has resumed after a funding fallout halted the project since 2008. A building permit approved Aug. 16 by the South Lake Tahoe City Council opened the door for construction on the second phase of the commercial area. According to a permit worksheet submitted May 22 to the City of South Lake by Tahoe Stateline Venture LLC — which is owned and managed by Owens Financial Group, a lending firm based in Walnut Creek, Calif. — the LLC applied to finance construction on 29,000 square feet for "retail and affiliated utility work, street sidewalks, streetscape, parking at the first floor, restrooms, elevators and ramps." Lew Feldman, a South Lake Tahoe attorney working with Owens Financial Realistic Group, said getting the earthwork and sidewalk established is the first goal in order to get the project moving. "They're getting ready to pour (concrete for) the garage deck, and then they'll start their construction on top of that," South Lake Tahoe Public Works assistant director Jim Marino said. "They have major utilities to run still. So there will be some roadwork on Stateline Avenue and Highway 50." Construction began more than a week ago. The area is planned to be used for nightclubs, shopping areas and miscellaneous retail, according to a City of South Lake Tahoe news release. The worksheet stated the second phase of the project is to cost $15.1 million for labor and materials. Feldman said the total project's cost of $400 million is still a "realistic guestimate." A certificate of merger was recently submitted to the city to consolidate six parcels beneath the retail portion that are to be under construction. As soon as the earthwork is completed for Phase II, construction that does not move any land can continue after the Oct. 15 construction deadline. Tahoe Regional Planning Agency spokesman Jeff Cowen said the permits submitted to the agency for the Chateau project in 2007 are still legitimate. Cowen said as long as the foundation is in place, contractors can build all year; it just needs to be stabilized. He also said if there's any underground work that goes beyond the 9 cubic feet, it must be completed by Oct. 15.

Chateau project could get extension

The Tahoe Regional Planning Agency may consider granting another extension for the long-stalled Chateau project at the state line, where construction could resume this summer under a plan presented by developers. Owens Financial, the owner of the majority of the parcels at the site, has proposed building the retail portion of the project as a way to improve the site and create momentum toward completion of the entire project, which includes hotel and condominium, as well as convention center, space. The Chateau-at-Heavenly project has been stalled for more than five years after financing fell through and the original developer went through bankruptcy proceedings. Although a mid-July deadline has been publicly discussed as being a make-or-break moment for project, approvals of the project could be extended if the developers show diligent progress, TRPA spokesman Jeff Cowen said Friday. The public benefit would be diminished if the project does not resume construction in July, according to Lew Feldman, the South Shore attorney representing Owens Financial. Getting the project restarted by mid-July would allow necessary improvements by South Tahoe Public Utility District to be completed in time for a sidewalk in front of the construction to be in place by the upcoming ski season, which is a concern of Caltrans, Feldman said. Review of the partial project will be before the South Lake Tahoe City Council June 11.

Partial Chateau project approved

Work could resume as soon as next month on the much-maligned "hole in the ground" at the state line following approvals by the South Lake City Council. After hours of discussion Tuesday, the Council unanimously approved construction of a partial Chateau project Tuesday. Several council members expressed concerns with the partial project, but ultimately concluded that something is better than nothing at the stalled development site. Owens Financial, the majority property owner of the site following bankruptcy and foreclosure proceedings, has proposed building the retail portion of what was once envisioned as a more than $400 million retail, lodging and convention center project. Development of the site has been stalled for years after the original developer was unable to secure financing. "It's not everything we want but, man, it sure is a big step," Cole said of the partial, approximately $11 million project. If the city doesn't move forward with the Owens Financial proposal, it will likely be many more years before seeing another proposal for the site, Cole said. Lew Feldman, the South Shore attorney representing Owens Financial, said the proposal to build the retail portion along Lake Tahoe Boulevard is a way to see on-the-ground improvement and increase the marketability of the entire project to investors. Owens Financial, a mortgage bank, is not a development company and has established a wholly owned subsidiary, Tahoe Stateline Venture, to construct the partial project, according to the attorney. Construction of the partial project is scheduled to resume in mid-July. Caltrans issuing an encroachment permit for the project represents a potential snag in the construction schedule, Feldman said. When, or if, construction of the portion of the project outside of what was approved Tuesday will resume is unknown. Although the design of the project would need to remain in line with existing permit approvals, what ends up inside the buildings may change from original plans if it is developed. Lodging in the original proposal could end up being timeshares, condominiums or hotel rooms, Feldman said. Convention center space contained in the original project would remain, but will no longer be publicly controlled because of the dissolution of California redevelopment agencies, Cole said. Several council members said the partial project is not ideal, but the status quo is worse. "I would rather have something than nothing," Davis said.

Chateau project developer makes deal to purchase other parcels; project could move forward as envisioned

The developer of The Chateau project in South Lake Tahoe, just over the state line from Nevada hotel-casinos, struck a deal to buy 3.4 acres of adjacent land and says the additional space gives it room to build the $400 million project as it originally was envisioned several years ago. Owens Realty Mortgage Inc. of Walnut Creek said in a filing with the Securities and Exchange Commission that its wholly owned subsidiary, Tahoe Stateline Venture LLC, is buying nine parcels bordering the property it already owns at The Chateau. The development company said it expects to pay $6 million in cash to the seller, City National Bank. Along with the land itself, Owens Realty Mortgage will be acquiring the right to develop 188 hotel, condominium or fractional-ownership units on the parcels. The property also includes space for retail and open-space development, the company said. William Owens, president and chief executive officer of the development company, said the purchase brings his company's total holdings to 11.5 acres. He said that's enough to allow for construction of 477 hotel and condo units, 58,000 square feet of retail, a 19,000-square-foot spa and about 20,000 square feet of meeting space. The plans still need to the approval of the city of South Lake Tahoe Building Services. Last fall, the company started the construction of 30,507 square feet of retail space fronting South Lake Tahoe Boulevard next to Harveys. That contract totals $15.15 million, and the company said it has invested another $6.4 million in engineering, legal, consulting and other development-related costs on the project. In an earlier filing with the SEC, Owens Realty Mortgage said it valued its existing landholdings at The Chateau at $30.6 million last fall. The new purchase would bring the value of the land to $36.6 million. Owens has been painstakingly working since 2012 to assemble the land parcels at The Chateau after the original developer sought bankruptcy protection at the onset of the recession, and multiple foreclosures put the parcels into the hands of lenders.

RockResorts ends Chateau agreements

A day after the developer of the convention center complex at the state line said he was considering replacing RockResorts as the operator of the project, RockResorts announced it had terminated its agreements with the developer. In a presentation to the South Lake Tahoe City Council on May 20, Randy Lane, managing partner of Lake Tahoe Development Co., told of the difficulties he was having finding financing to complete the $420 million project known as The Chateau at Heavenly Village. The project would include a 477-room hotel-condominium in addition to the convention center. Construction stalled early this year after the excavation phase. A Tribune reporter attempted to contact RockResorts the day of Lane’s presentation, but the call was not returned. The next day, Vail Resorts, the parent company of RockResorts, released the following statement: “In light of the recent announcement by Lake Tahoe Development Company (LTDC), the third party developer of the Chateau at Heavenly Village project, that it has placed the project on hold due to financing issues, RockResorts has terminated marketing license and technical services agreements associated with the project. As a result, LTDC will no longer be permitted to use the RockResorts brand in marketing the project.” Lane said May 20 that he was looking to foreign investors to finance The Chateau and would consider shelving the project until financial conditions improve.

Chateau at Heavenly Village construction to embark on next phase

After completing the excavation and foundation phase ahead of its winter schedule in late December, The Chateau at Heavenly Village is expecting vertical construction to commence in March. City permits for the rest of the project are ready to be issued with next steps including finalization of pricing details with contractors and a decision on various funding options. The Chateau is a $420 million redevelopment project that will feature two luxury condominium-hotels with 477 rooms, 50,000-square-feet of conference and event space, a complete destination spa, 1.5-acre park, and a collection of shops and restaurants. RockResorts, a luxury hotel company owned by Vail Resorts, Inc., will operate the property and spa when it is completed. Lake Tahoe Development Co., the project’s developer, has scheduled various sales events locally with others planned in the Bay Area. Over the weekend, a VIP event for more than 200 prospective buyers gave a glimpse of the Tahoe lifestyle. Lake Tahoe Development treated guests to skiing at Heavenly, snowmobiling, lodging at Embassy Suites and a cocktail reception at Edgewood Tahoe Golf Course. “Lake Tahoe Development is proceeding full-speed ahead,” said Kevin Lane, partner, Lake Tahoe Development Co. “We are alive and well and looking forward to completing a project that will have a substantial positive impact on the destination.” The Chateau, continuing the City of South Lake Tahoe’s redevelopment efforts which began in 1991, boasts a prime location for year round activities: it’s within 50 yards of the Heavenly Village and gondola access to the ski resort as well as Harveys, Harrah’s, Horizon and MontBleu Hotel casinos, and is a short walk to Lakeside Beach and Marina. A proposed pedestrian overpass across Highway 50 would connect The Chateau with the gondola at Heavenly Village reinforcing the area’s philosophy for a central gathering place with convenient pedestrian access and minimal driving. The project adds financial benefits for the area as well, including an estimated $1.4 million in transient occupancy tax, more than 500 additional jobs, approximately $6.3 million for area school districts and government agencies, $24 million for affordable housing, consistent shoulder season revenue through meetings and conventions estimated to attract 180,000 visitors, $23 million in room revenue and $56 million in annual discretionary spending. Recognizing that this redevelopment ” constructed to be Leadership in Energy and Environmental Design (LEED) Certified ” should be visually cohesive and environmentally sensitive, developers are continuing the exterior alpine motif of Heavenly Village (most recent redevelopment phase). The project’s exterior materials of native wood and stone in earth tones, along with decorative glass and stucco work, are designed to tastefully blend with Tahoe’s natural beauty and integrate with the existing mountain-style architecture prevalent throughout the redevelopment area. The project is a partnership between Lake Tahoe Development Co. and the City of South Lake Tahoe. A major sales event in San Francisco February 23 will provide reservation holders will have the first opportunity to purchase in this luxurious condominium-hotel. For more information, http://ChateauHeavenly.com/home or http://ChateauHeavenlyVillage.com/.

City Council to mull partial Chateau project

Work on the stalled convention center and condominium project at the state line could resume this summer if all goes according to plan, South Lake Tahoe City Councilman Hal Cole said during a Tuesday council meeting. Additional foreclosures of parcels at the site are expected in May and Owens Financial hopes to have the permits necessary to build the front retail portion of the former Chateau-at-Heavenly project by mid-summer, Cole said. TRPA permits for the project are set to expire in July, but if progress is shown on the development the agency has expressed a willingness to extend its approvals, according to the councilman. "It's either now or the permits expire," Cole said. The parcel map for the site still needs to be consolidated. Caltrans has also been adamant that a sidewalk be among the first additions to the project, Cole said. The planned $420 million retail, condominium and convention center project has been stalled since early 2008 after financing fell through. The project, once envisioned as part of a reinvention of the South Shore, has been a sore spot for residents in the years since. The proposal for the partial project is expected to be before the South Lake Tahoe Planning Commission and City Council in coming months. The partial development would be consistent with the project's original phasing and permitting, Cole said. Mayor Tom Davis said performance bonds need to be part of the renewed effort to construct the project to ensure it is completed this time around. Engineers have taken X-rays of the existing concrete and rebar and have found the material will still be sound for the next two years, Cole said. If the permits expire, it could be years before another project makes it through the permitting process, the councilman said. Cole said he expected to be criticized for pursuing a partial project, but said getting something on the ground could spur investment in the rest of the project. "Our decision is, 'do we want a partial step or no step at all?'" Cole said.