Editorial: Chateau site languishing; project is due for good news
May 18, 2008
With the sun shining and construction season upon us, the Chateau at Heavenly Village is languishing like an abandoned Erector Set.
With about a month until summer begins and several months since the area’s last significant snow fall, the fence-rimmed site is a monument to inactivity and overly optimistic financial projections.
We hope that changes soon.
In an April 23 Tribune guest column, Lake Tahoe Development Company managing member Randy Lane contended the $400 million project still is on schedule despite the temporary construction pause.
The project is supposed to include a 477-room hotel-condominium, a 50,000-square-foot conference center, a spa, a 1.5-acre park, and shops and restaurants. A pedestrian overpass across Highway 50 also is planned.
According to Lane, construction has paused “due to the current credit and real-estate markets.” Lane estimates that a $200 million loan is required for phase one of the project and that he and his partners have been working the past few months to “secure the best financing available.”
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He notes, and this has been apparent at least for the past year, that “the current capital markets for real-estate construction financing are among the most challenging in recent memory.”
This is big news?
Lane goes on to say that in today’s financial markets, “more than 70 percent of all large condo/hotel projects are on hold, with the remaining struggling to get financed.”
He notes that many fewer banks are willing to make loans, and those that do rely on other banks to commit to small portions of the entire loan.
Thus, Lane says, “We have decided to wait on finalizing financing until an appropriate agreement can be secured. What we’re experiencing is not any different than large multimillion-dollar companies looking for credit.”
Here’s our take on the project:
— Most Tahoe residents and tourists don’t care if this financial struggle is typical. They see a hole in the middle of their town and wonder what’s to become of it.
— Could nobody – city officials included – have foreseen a downturn in the financial markets before they went ahead with this project?
— Despite the complexity of the Chateau’s enormous financing process, what sense does it make to begin a huge project without all financing secure from the get-go?
The project itself has merit. Given the growth of our area and its transition from the sleepy town it once was – and some wish it still were – Tahoe will benefit from having a convention center.
The City Council is due to receive an update on the project at its Tuesday meeting. We’re looking for some good news.
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