Convention center developer asks city to issue bonds
March 15, 2009
SOUTH LAKE TAHOE — The developer of the stalled convention center project is asking the city to issue bonds to help pay off debt and avoid a Chapter 11 bankruptcy filing.
The City Council will review the proposal during its meeting Tuesday.
Lake Tahoe Development Co. is looking for a way to pay off debt from property acquisition and the first phase of construction of the state line project. That debt had an initial term of two to three years, and “was never intended to be long-term,” Randy Lane of Lake Tahoe Development Co. said previously.
The city-issued Mello-Roos bonds would raise about $22 million, which would be used to pay off some of the 10 parties who have liens against the property, according to a March 9 letter from Lane.
In the process, the number of parcels on the site would be reduced from 29 to five, and the city would obtain title to three of those, according to the letter.
“Without the bond issue, should any of the current lenders seek to exercise foreclosure remedies, LTDC may have no alternative but to file for a Chapter 11 reorganization in federal bankruptcy court,” Lane’s letter states.
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The bonds would be sold to “sophisticated investors” who understand the high risk, according to City Manager David Jinkens’ analysis of the proposal.
“Neither the city general fund nor the redevelopment agency would be obligated to pay off the bonds in the event of a default,” Jinkens’ report states.
But Jinkens noted that unless the project’s hotel-condominium units are built and sold within two years, he does not know how Lake Tahoe Development would pay off the debt.
Jinkens also questions whether the city could issue the bonds quickly enough to meet the developer’s 60-day timeline.
The developers said they still do not have funding to continue construction of the approximately $420 million project.
” The council will also consider an ordinance banning the retail sale of dogs and cats ” a move intended to combat the breeding of pets in puppy mills. According to the Humane Society of the United States, most dogs sold in retail shops come from puppy mills, in which animals are treated inhumanely.
If approved, the ordinance will return for final council approval on April 7.
For more on the puppy ordinance, see:
” The council is also slated to vote on an agreement in which the city would lease the Bijou Golf Course parking lot from Knox Johnson for $16,500 for the next year. The one-year lease with an option for an additional year comes after a three-year lease with Johnson expired last year.
” The council will also hear an update on the Lakeview Commons project, a plan for the area around Rufus Allen Boulevard. The council will discuss moving forward with the project’s first phase, which includes improvements to the El Dorado Beach area.
The meeting begins at 9 a.m. in Council Chambers at the Lake Tahoe Airport. The discussion of the convention center project is scheduled for 1:30 p.m. For a full agenda and staff reports, see http://www.cityofslt.us.