Lake Tahoe Development Company to reorganize rather than liquidate
SOUTH LAKE TAHOE, Calif. – The developers of the stalled Chateau at Heavenly Village project near Stateline won’t liquidate their holdings as part of bankruptcy proceedings, but selling the project remains an option, according to a court documents filed Dec. 7.
In the federal court filing, the attorney for Lake Tahoe Development Company, Eugene Yamamoto, said the development company will reorganize, rather than liquidate, its holdings as part of Chapter 11 bankruptcy proceedings.
The attorney also said the company – known simply as “The Debtor” in court documents – has “expended substantial amounts of time and energy pursuing a sale or joint venture of the project” because of the intricacies of the project.
“The Debtor has had some preliminary discussions with the creditors and remains open to explore the possibility of a sale of the Project,” Yamamoto said. “The difficulties in a sale of the Project is not only the availability of qualified purchasers, but the amount of time and resources required to educate a perspective purchaser as to the complexities of the Project, the unique entitlement and construction process (and limitations) in the South Lake Tahoe area.”
Yamamoto said Lake Tahoe Development Company has a plan to reduce the size of the project’s condominiums and modify the phasing of the project to decrease construction costs.
Further details of the plan were not available on Tuesday. Telephone messages left for Lake Tahoe Development Company partners Randy and Kevin Lane, as well as Yamamoto, were not returned.
Existing plans for the Chateau at Heavenly Village include two luxury condominium-hotels with 477 rooms, a 50,000-square-foot convention center and a collection of shops and restaurants just on the California side of the stateline in South Lake Tahoe.
Construction on the project stopped in January 2008 after Lake Tahoe Development Company was unable to secure financing for the $420 million project. Lake Tahoe Development Company filed for Chapter 11 bankruptcy in October.
In the Dec. 7 court filing, Yamamoto said the plan with the smaller condominiums is important to attracting a buyer or financing for the project in a slumping economy.
Implementing the new plan is also dependent on getting extensions to existing permits, Yamamoto said.
“At this point in time the Debtor anticipates that it will file a development plan which allows the Debtor to record a final map, which will enhance the value of the Property and make it more financeable and/or saleable,” Yamamoto said. “Before the Plan can be proposed, the Debtor will need to obtain an extension of the building and TRPA permits. The current building permits expire in July of 2010.”
The development company will likely be able to extend existing building permits by 3 years, Yamamoto adds.
Obtaining the permit extensions could be critical to seeing any progress at the project – known locally as “the hole” – for years, Yamamoto adds.
“Anyone familiar with building in Lake Tahoe area is aware of the substantial hurdles to obtaining any new building permit in the area (including the need for environmental impact reports),” Yamamoto said. “If the existing permits are not extended, it would likely take years and a substantial amount of funding to obtain new building permits.”
As long as the new plans stay within the boundaries of the original Tahoe Regional Planning Agency permit approvals, the TRPA won’t stand in the way of getting the project completed, said TRPA spokesman Dennis Oliver on Tuesday, noting the project’s expected water quality benefits.
“Anything that we can do to make that project viable and make something happen there, we’re open to it,” Oliver said. “We don’t want to see that hole in the ground sit there any longer than necessary.”
“Nobody is in favor of the hole in the ground,” Oliver added. “People are tired of looking at it.”
Planning Agency staff can approve permit extensions without Governing Board approval, but the board will be kept informed of any progress on the stalled project, Oliver said.
The TRPA has been kept “in the loop” regarding Lake Tahoe Development Company’s plan to alter designs for the project, but has not been presented with any formal proposals, Oliver said.
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