Gaps close to filled in Park Avenue partnership
The attorney representing the Park Avenue redevelopment partners expects all of the pieces in the evolving development group to be in place by the end of the year.
And, between enthusiasm of the existing partners and the apparent resolution of issues stalling the project, construction could begin in 1999.
“I have the highest level of confidence that we will be able to see commencement at a date certain – namely, building season 1999,” Lew Feldman, an attorney for the partners, said on Friday.
A new partner to develop a modified version of the project’s time-share component is expected to sign on by the end of November. Meanwhile, a second new partner to help finance construction of the 408-room hotel that would replace the Lake Tahoe Inn, scheduled for demolition in the 34-acre, $200 million venture, is expected to formally enter the group by the end of December.
Feldman said he could not release the identities of either potential new partner until deals are signed.
However, other sources close to the proceedings say Intrawest Corp., based in Vancouver, B.C., is the party interested in developing a condominium hotel where a roughly 200 unit time-share was originally planned. Intrawest officials declined to comment.
“Since we are a publicly traded company, we have a policy that we do not comment on rumors at all,” said Valerie Sharp, Intrawest director of corporate communications.
Each unit in a condominium hotel is sold to one investor who typically uses the property a few weeks out of the year. For the remainder of the year, the units are rented out on a nightly basis similar to a traditional hotel.
The change in plans at Park Avenue may also help facilitate a solution to the woes of the KOAR-Tahoe Partners, owners of Embassy Suites Hotel. KOAR officials are seeking permission to convert nearly half of the roughly 400-room hotel into time-share units to meet debt obligations on a loan it needed to finance the project seven years ago.
The Park Avenue partners reportedly held apprehensions about how the prospect of time-shares at Embassy Suites competing against their own time-share component would pan out. However, condominium resort units are reportedly marketed to different demographic groups.
“Having time-share resorts built next door to each other is not a good thing for either project nor this community,” Feldman said.
During the past four years, Intrawest has acquired or partially acquired several ski resorts across North America, including 33 percent of the shares of Mammoth Mountain Ski Area in 1995. Last year, Intrawest obtained on option to acquire roughly 13 acres at the base of Squaw Valley U.S.A. to develop a base village. Intrawest also holds interests at the Keystone and Copper Mountain resorts in Colorado and Whistler Mountain in British Colombia.
The Park Avenue development group originally included owners of the Crescent V Center, Trans Sierra Investments, Cecil’s Market, Heavenly Ski Resort and Lake Tahoe Inn.
The project, which already has regulatory approval, includes a 408-room hotel, the time-share or condominium hotel, a gondola from U.S. Highway 50 to Heavenly, new movie theaters, a public ice rink and other amenities.
The project will require the city to issue bonds to finance the acquisition, relocation and demolition of existing businesses in the project area. The city would repay the bonds through revenues generated by the new projects.
Questions about the time-share component of Park Avenue developed shortly after Signature Resorts, Inc., acquired AVCOM International, Inc., in September 1996. AVCOM, the parent company for All Seasons Resort, Inc., originally held the rights to develop and market the time-share at Park Avenue.
After its acquisition, however, Signature officials determined that building the Park Avenue time-share was “not something that would work out,” said Steve Kenninger, Signature’s chief operating officer.
This prompted Signature more than a year ago to authorize the other Park Avenue partners to “bring in anybody they wanted to” to develop the time-shares, Kenninger said.
Meanwhile, members within the Lake Tahoe Inn partnership reportedly soured on the project several months ago following repeated delays to the anticipated construction date.
Even if all the partners are on line by the end of this year, Feldman said it is unlikely that property acquisitions, development agreements, a bond issue and demolition work could be completed in time for the 1998 building season.
Another factor that could complicate Park Avenue is what happens next door. The Park Avenue project site stretches between the Crescent V Center and Embassy Suites Resort.
If KOAR and the city can not come to terms on the partial time-share conversion at Embassy Suites, KOAR expects to file for protection under Chapter 11 of the U.S. Bankruptcy Code. Such a filing could prevent the city from issuing bonds until the courts resolve the issue – possibly up to two years.
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