City general fund won’t be used to finance convention center project
The community could be days away from knowing how the 12-acre, 12-year-old convention center proposal may be financed as a South Lake Tahoe redevelopment project across from the Marriott-anchored Heavenly Village development near Stateline.
At this point, the $410 million project appears to involve mostly property taxes and special district funding. The latter allows property owners in the area to tax themselves.
Lake Tahoe Development Co. representatives, led by developer attorney Lew Feldman, have been meeting with a council subcommittee of Mayor Hal Cole and John Upton for months to try to iron out a suitable agreement for both the city and the private developer in time for a May 2007 construction date.
For one thing, the parties are negotiating how much of the project will be dedicated to public access and the level of financing.
“We’ve made significant progress,” Feldman said Tuesday. “Ultimately, the financing plan is very conservative. We’re relying exclusively on project-generated revenue.”
In further dialogue, he also recognized the developer’s heavy financial commitment exceeding $100 million just for the land assembly and convention center construction.
Details are sketchy of who’s paying for what, but it appears developer representatives want the city to go beyond a pledge of property tax revenue.
“In order for the developer to benefit, we would need a financing plan that’s more comprehensive than (property tax increment). It’s not economically viable as a private development,” he said. “We’re going to have to be creative and conservative.”
Both sides seem to agree on two things. The process isn’t easy, and the city’s general fund will be protected, Cole and Feldman pledged in separate interviews this week. The city took a budget hit and massive criticism when a few years ago it discovered a $7 million draw from the city’s core fund to pay for its first redevelopment project where two Marriott timeshare hotels and Heavenly Village sit.
Parties believe the financial agreement will come before the City Council in June. Shortly thereafter, the development agreement is expected.
The city has so far pledged to sell bonds to secure property tax revenue it would agree to turn over to developers Randy Lane of Stateline and John Serpa of Carson City. The commitment essentially allows the developers footing the construction and acquisition costs the benefit of increased property value set by the El Dorado County Assessor’s office.
“There’s going to be huge assessments for millions of dollars in those condos,” he said.
The agreement is substantially different from the first redevelopment project – which got financed with no collateral, a low bond debt rating and the general fund transfer earmarked for a $250 million public-private project. The Heavenly Village project also involved eminent domain, the legal procedures local governments use to redevelop their towns. The city incurred more than $12 million in legal costs.
“This project will be light years better,” Cole said, stressing: “The general fund will not be liable.”
To naysayers who insist no public assistance be granted, Cole countered that the whole “nature of redevelopment allows for the diversion of property taxes that would go to the state to go to projects in local governments.”
Meanwhile, Douglas County has committed 2 percent transient occupancy tax to fund the project, but that will require action from the Nevada Legislature to allow that money to cross the state line to California.
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