Whole Foods 365 coming to South Lake Tahoe after agreement reached for sale of Knights Inn | TahoeDailyTribune.com

Whole Foods 365 coming to South Lake Tahoe after agreement reached for sale of Knights Inn

Claire Cudahy | ccudahy@tahoedailytribune.com
After restoring the Stream Environment Zone, the developable areas of the Knights Inn property will be sold to Halferty Development Company for the construction of stores and restaurants, including Whole Foods 365.
Courtesy / City of South Lake Tahoe |

It looks like South Lake Tahoe will be getting a Whole Foods 365 after all.

A purchase agreement for the Knights Inn property was signed by owner Pradip Patel and approved by South Lake Tahoe City Council on March 14, putting into motion a project that has been four years in the making.

The Bijou Park Creek Watershed Restoration Project seeks to demolish the existing structures on the parcel, restore the sensitive Stream Environment Zone — Lake Tahoe’s natural water filter — and resell the developable areas to Halferty Development Company.

The original sale was scheduled to go through last year, but the project hit a snag when the California Tahoe Conservancy — with whom the city had applied for a $5.5-million grant to implement the watershed restoration — expressed concern over the project’s scope of environmental benefits. An out-clause in the purchase agreement regarding this grant allowed Patel to pull out.

“We think that in spring of ’19 you would see a Whole Foods open. The other smaller sections of the property might open sooner.”Nancy KerryCity manager

“We were just about to release [the California Natural Resources Act documents] on the project and the proposed development, and had to pull that back,” explained city manager Nancy Kerry at a media event on March 13 announcing the sale.

But after the flooding this winter caused damage to the Knights Inn property, Patel reconsidered the offer and agreed to sell for $5.9 million.

Halferty is set to also buy the adjacent city-owned parcel on the corner of Lake Tahoe and Ski Run boulevards, while Placer County has plans to purchase 64 Tourist Accommodation Units that will be available once the 110-room inn is demolished. Both of these deals will help fund the acquisition of the Knights Inn property.

Halferty has plans to create two commercial shopping and dining areas on the parcels, which will be connected by sidewalks and a bridge that traverses the restored Bijou Park Creek. Whole Foods has already signed on with Halferty as the main tenant with its lower-priced 365 store.

“The idea and the hope is that we will be in demolition by June, maybe July,” said Kerry. “We think that in spring of ’19 you would see a Whole Foods open. The other smaller sections of the property might open sooner.”

Though restoration of the Stream Environment Zone on the Knights Inn property will help sediment settle out of the water before entering into Lake Tahoe, there is still more than can be done.

The city hopes to secure funding from the California Tahoe Conservancy to do more studies and work on lands in the Bijou Park Creek Watershed upstream of the property. This area currently deals with flooding almost every year, and ultimately leads to sediment-filled water flowing into Lake Tahoe.

“The entire watershed delivers about 40,000 pounds of fine sediment per year, and the project as it currently is would remove approximately 8,000 of that, and in the future phases we would be able to look into using the 80 acres of other public land throughout the stream area to reduce further those other fine sediments,” explained Jason Burke, stormwater program coordinator for the city.

The city has already been awarded a $500,000 grant from the California State Water Sources Control Board to study additional watershed projects. At the March 16 board meeting of the California Tahoe Conservancy, the agency will decide if they will re-offer the $300,000 they planned to give the city for further study when they deemed the environmental benefits too small for the larger grant.

The board will also determine if it will give the city more time to submit a completed environmental analysis for the updated project for grant consideration. The city has reduced its grant request from the previous $5.5 million to $3 million.

“I think this is a perfect example … of that public-private partnership where the public was so interested in these types of remedies to the environment that we’ve caused, and at the same time we are not able to do it economically without the investment from the private sector,” said Councilmember Brooke Laine.

“Now what we need is other public partners, like the California Tahoe Conservancy, to help us with the funding to be able to see this section through — and really it was the California Tahoe Conservancy who saw the wisdom in not just dealing with the flooding at the end [of the watershed], but really looking at the multiple acres around this project site and fixing that whole piece.”

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