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No easy answers for motel owner

M.K. Desai would like to sell the Cedarwood Lodge. Noise and fumes from neighboring businesses, which were not a problem when he purchased the motel 15 years ago, have driven away his customers. The small motel no longer turns a profit.

The owners of the adjacent Taco Bell would like to buy the property to improve the fast food restaurant’s cramped parking lot.

On the surface, it looks like a real-estate match made in heaven.



But in Tahoe, it’s not that simple.

For nearly two years, Desai has been talking with Taco Bell owner Bill Mulan about the proposed sale.




The first obstacle was the distinction made by the Tahoe Regional Planning Agency between tourism-commercial and commercial land use.

Motels in the Tahoe Basin are zoned tourism-commercial and are generally not transferable to another use. The land use designations came about in 1986 from a compromise plan. The only allowable change in property use was either to tear it down for open space or for development in community plan areas.

The two businesses lie in between community plan boundaries.

Yet city, environmental, business and lodging interests all agree that failing motels benefit no one, and owners need a way out of a failing business.

Following laborious discussions among the interested parties, the TRPA in October adjusted its regulations to allow, under certain stringent conditions, a transfer of uses.

“We can allow it to convert tourism to commercial use but we treat it as if it was a vacant lot to begin with,” said TRPA’s Lyn Barnett, acting chief of the project review division.

A motel owner also has the option of selling the accommodation units or the building square footage. Even though the property is limited to 30 percent if the use changes, the current coverage can be sold for other projects.

The biggest restriction is that land coverage is limited to 30 percent, a condition that makes commercial developers choke.

Transfers are easier to do within community plan areas.

“Inside the community plan, they’re allowed to maintain their coverage,” said Terri Jamin, the city public services director.

The goal is to keep commercial development in certain areas and gradually decrease it in between, either through demolition of existing businesses or consolidation.

“In between (plan areas), there needs to be more creative solutions, like marrying of two properties,” she said. The Cedarwood and Taco Bell deal is a good example of such an arrangement.

Nevertheless, the community plan distinction adds to Desai’s frustration. It has blocked other offers that could have been completed earlier.

“Why do they let only 30 percent on this property and other places they allow 70 percent?” he said. “This is a centrally located motel (with commercial businesses all around it). Why is it not in a community plan zone? Who’s going to buy it with only 30 percent coverage?”

Taco Bell is willing and the project is doable, according to city, TRPA and real estate representatives.

Two large empty lots that are part of each property make it possible. Combining all the lots will allow enough coverage for the Taco Bell project without going over the coverage limits.

So why hasn’t the transfer taken place?

Now the snag is in Taco Bell’s court.

Mulan’s franchise agreement with Taco Bell expires in 11 years, too short for a 15-year financing agreement, according to Pembroke Gochnauer, a real estate agent who has actively sought changes in restrictive zoning.

Mulan, owner of Taco Bill, Inc. of Auburn which operates a number of Taco Bell restaurants, is currently working on that problem and was unavailable for comment.

“It’s a deal as soon as Taco Bill sets up its parameters,” Gochnauer said. “This only works because they have the huge lots to handle the coverage.”

The Cedarwood Lodge is not the only motel that needs to be retired, Gochnauer said, and there are plenty of other obstacles left.

“If there are other small motels that want to convert over but can’t, we want to hear from them,” TRPA’s Barnett said.

“Maybe there’s a lack of understanding,” Jamin said. Motels wanting to sell should “contact the city and we’ll set up a meeting with the TRPA, and come up with alternatives.”

So far no one else has called, she said.

Other owners are discouraged from trying due to the restrictions, Gochnauer said. He would like to see more accommodations, such as a greater coverage allowance.

“We propose 70 percent. We would still get something better (after conversion) than what we have now.

“Give me a program by which (a transfer) might be done, and I can find investors that want to buy the property and tear it down and put in something else.”


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