Convention center project facing uncertain future
The developer of the stalled convention center project at the state line is looking to foreign investors to finance the project and may consider shelving the project until financial conditions improve.
Other options being considered include replacing RockResorts as the operator of the $420 million project, known as The Chateau at Heavenly Village, which, if completed, also would include a 477-room hotel-condominium. Investors might be more interested in financing the project if a higher-profile operator was brought in, said Randy Lane, managing partner of Lake Tahoe Development Co., which is developing the project.
In a presentation to the South Lake Tahoe City Council on Tuesday, Lane said he also is looking at whether the convention center portion of the project could be built first, with the hotel-condominium to come later. The convention center, which would provide 50,000 square feet of conference and event space, is seen by many as a way to boost the South Shore economy during the traditionally slower spring and fall seasons by bringing meeting-goers to town at those times.
The project is a partnership between the city of South Lake Tahoe and Lake Tahoe Development Co. and is within the state line redevelopment area.
After the project broke ground last June, excavation work was completed and the foundation was laid. But work stopped over the winter and has not resumed. Completion had been scheduled for this fall or winter 2009.
In interviews with the Tribune, Lane said Jan. 30 that work would resume by March 1; on March 4, he revised the start date to about March 25 but said that wasn’t definite.
On Tuesday, Lane told the council that he’s always told the truth about the project as he has known it at the time.
“Unfortunately, things change, and they have been changing at a rather rapid pace,” Lane said.
When Lake Tahoe Development Co. made the decision to start construction in June, a Bay Area bank had made a commitment to financing, Lane said.
The bank pushed back the funding date to September, then to October.
“We unfortunately received the ‘Dear John’ letter in November,” Lane said, referring to the bank’s decision to not fund the project. “Unfortunately, they’re not obligated until you’ve got the check.”
Lake Tahoe Development has invested nearly $100 million in the project and needs a loan of about $200 million for the first phase. Finding funds in the current economic climate is very difficult, Lane said. As a result, he’s been in talks with foreign investors.
And because the response of investors has been “lukewarm” when they learn RockResorts will operate the project, Lane said he’s willing to switch to a new operator if that would bring in funds.
RockResorts is a luxury hotel company owned by Vail Resorts Inc., which owns Heavenly Mountain Resort. A call to RockResorts on Tuesday was not immediately returned.
Lane said the project is costing Lake Tahoe Development $1.2 million per month, even though it is sitting idle, and so shelving it until the financial climate improves isn’t a preferred alternative.
But that may be an option the company ultimately will choose, he said.
The Chateau site is 12 acres in the area of Stateline Avenue and Highway 50. The developer has borne most of the cost of the project, and public funds won’t go into it until it starts generating revenue, officials with the South Tahoe Redevelopment Agency have said.
After Lane’s presentation, Mayor Mike Weber acknowledged a comment he made in March that he would be “the most stunned person on the planet if the project doesn’t start up again in the spring.”
After the meeting, Weber said he remained confident that the project would be completed.
“Someone will finish the project, and hopefully it will be these guys,” Weber said, referring to Lake Tahoe Development. “If I had $200 million, I’d invest in it myself.”