Plan moves ahead: Agency takes the convention center concept to the next development step
After providing the community with a glimpse into its future Tuesday night, the South Tahoe Redevelopment Agency took a big step forward in presenting the design and financing behind a $410 million project that includes a convention center and hotel condominium complex.
The plan now moves on to the development agreement phase, which is expected to come before the agency on July 11. The environmental document may come before the board June 29.
The timeline includes a May 2007 groundbreaking with completion set two years later on the 12-year-old project proposed near Stateline across from the Marriott-anchored Heavenly Village between Highway 50, Cedar, Stateline and Friday avenues.
“If we don’t do this, what’s the alternative? It’s important to move forward,” said agency board member Kathay Lovell, who like her fellow members also serves on the City Council.
The city has agreed to kick in up to $65 million for the 12-acre project in a creative financing solution that places much of the risk with Lake Tahoe Development Co. and much of the benefit in the area’s surging property values to the city, redevelopment officials stressed repeatedly. Cities are able to utilize the revenue gained in property tax assessments for redevelopment projects. That funding mechanism will essentially pay the city’s portion of the project.
“And 20 percent of that goes into our housing (program) and includes the school district,” agency board Chairman Hal Cole said. Cole worked for months on a subcommittee with board member John Upton on the plan.
The city’s public financing – which goes into effect after the project is built – would include property tax revenue and motel room tax (TOT) generated from a Mello Roos special district, a funding mechanism used to tax a specific designated area to be levied on the condo hotel owners. The units are expected to sell at up to $2.5 million and generate $10,700 per unit in tax revenue. A rough market analysis drawn up for the developer concluded the units could rent for $270 a night.
The city already receives about $380,000 annually in TOT from taxes guests pay, and Finance Director Christine Vuletich pledged the local government would maintain that amount that supplements the general fund.
Few questions were generated from an audience of about 40 people including Tahoe Regional Planning Agency’s division compliance review chief Lyn Barnett.
Citizens for Responsible Government advocate Dr. Pat Martin asked who would finish the project that was scaled down from 20 to 12 acres to bypass the area where Tahoe Tom’s gas station sits. The ground was contaminated by underground storage tanks in what he referred to as “an environmental nightmare.” Lahontan Water Board is overseeing a cleanup effort.
“We didn’t want to hold up the project,” Cole responded later.
The developer, consisting of Randy Lane of Stateline and John Serpa of Carson City, would foot the construction bill and property acquisition costs. Five of 29 properties are left to be bought out.
“This completes our resort destination experience,” said South Shore attorney Lew Feldman, representing Lake Tahoe Development. During his presentation, he summarized the look and function of the retail and lodging businesses in the area as “outliving their useful life.” Feldman worked as a legal consultant on the Park Avenue Redevelopment Project with the city.
The city insists this project has a significantly reduced risk than the Heavenly Village site. In that project, the city sold bond anticipation notes (BANs) to financially help build the $250 million venture and dealt with a lower credit rating. The project also sold the BANs against its transient occupancy tax as collateral for shortfalls. Moreover, it had to develop a payment plan to reimburse the general fund the $7 million it borrowed to finish the project.
In addition, the local government took on more than $12 million in eminent domain-related legal costs from buying up property. It also was forced to go into the parking garage business, building a $6 million complex next to the movie theater.
On the table
South Lake Tahoe Redevelopment Agency Convention Center Project 3
— 93,000 square foot convention center
— Two condo hotels with 386 units (176 luxury)
— 57,000 square foot retail space
— 630 space parking garage
— 4,400 seat arena
— Village green with walking path, pond, waterfall and dining deck
— Road closures at Laurel and Poplar avenues