Convention center gets the NOD
April 29, 2009
SOUTH LAKE TAHOE ” A notice of default has been filed against the developer of the stalled convention center site at the state line, according to city officials.
An investor who put $1.5 million into the project filed the notice of default, or NOD, this month after not receiving repayment from the developer, according to Redevelopment Director Gene Palazzo.
The developer, Lake Tahoe Development Co., has 90 days to settle the matter with the lender, City Manager David Jinkens said.
But the developer has not filed bankruptcy, said Palazzo, adding that he asked Randy Lane of Lake Tahoe Development on Tuesday if there had been such a filing.
Lane did not return a call from the Tribune on Tuesday.
Jinkens said Lane is working to pay off the debt to the investor within the time allowed. The investor is just one of many, both large and small, who have put money into the project, Jinkens said.
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The notice of default wouldn’t interfere with a city issue of bonds to help pay off debt on the project, Palazzo said. The city is exploring that alternative with the developer, and the idea is expected to return to the City Council for action in late May or early June.
The city-issued Mello-Roos bonds would raise about $22 million, which Lake Tahoe Development would use to pay off debt and avoid a Chapter 11 bankruptcy filing, according to city reports.
Neither the city or the redevelopment agency would be obligated to pay off the bonds in the event of a default, according to Jinkens’ analysis of the proposal.
The bonds would be sold to “sophisticated investors” who understand the high risk, Jinkens said.