Planning commision to discus time shares
The planning commission has called a special meeting tonight to consider the transfer of time shares from the Park Plaza Resort to the Embassy Suites Hotel at the state line.
The Park Plaza Resort, part of the planned Park Avenue redevelopment project, had received approval for 195 time shares. The developers then decided that time shares weren’t the way to go.
The owners of the state line Embassy Suites are currently embattled in a lawsuit with the bank that financed construction of the hotel.
With a $53 million debt, KOAR-Tahoe Partners, L.P., the hotel developers, believe their only way out without filing bankruptcy is to convert nearly half the hotel’s rooms to time shares.
Signature Resorts, Inc., a leading time-share company, is partially owned and operated by KOAR’s partners. KOAR has proposed to sell 188 time shares to Signature over a five-to-six-year period.
The developers would use the proceeds to put a $35 million dent in the loan which matured last July and is now in default. The developers have not suggested how they would plan to pay the remaining $18 million, plus interest, should the process go as planned.
KOAR and the bank which financed its loan will each have their day in court March 6 before El Dorado Superior Court Judge Patrick Riley.
At that time the judge can continue a retraining order issued by Judge Suzanne Kingsbury as a preliminary injunction which would continue to prevent the bank from finding a third-party buyer for the overdue loan with a trial pending.
Riley could also rule that the bank is within its rights to sell the outstanding loan which would essentially make the time-share conversion a moot point unless the new lenders are more agreeable to the proposal.
The city and KOAR have undertaken substantial efforts in attempts to make the time-share conversion possible.
The City Council voted a five-year time-share moratorium into existence in 1996 fearing market saturation.
To cater to KOAR, the council voted enabling legislation into place at the end of last year to allow KOAR the opportunity to proceed with the conversion. The legislation allows for transfers of time-share rights within existing redevelopment zones.
Both the Park Plaza Resort and Embassy Suites at the state line fall within the same redevelopment zone.
If the hotel goes bankrupt, there is speculation that the city would have trouble bonding such future redevelopment projects as the Park Avenue Project and Project 3.
KOAR had to prove the conversion would be revenue-neutral for the city. The group said this process cost them thousands of hours to formulate the complicated plan in which the city would receive Letters of Credit for $3 million to offset losses in room taxes.
Should the planning commission fail to approve the proposed transfer and conversion of the time shares, KOAR would have five business days to file an appeal with the City Council.
Attorneys for the bank, Mitsui Trust & Banking Co., Ltd., said Tuesday that the planning commission’s decision would not make any difference in its efforts to sell the loan.
Also on the special meeting agenda is a presentation from Balloffet and Associates regarding an Environmental Impact Statement for Project 3 released Jan. 30.
The redevelopment project consists of the area between the state line and Park Avenue south of U.S. Highway 50.
No action by the commission is required at this meeting regarding Project 3.
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