Redeveloping South Tahoe
Editor’s note: This is the second in a two-part series on South Lake Tahoe redevelopment. The report is designed to update the community to the complexities behind this aspect of city government, including socioeconomic factors like eminent domain. The city plans to redevelop the north side of Highway 50 to build a convention center, condominium complex and retail venues without using eminent domain.
When Kurt Carlsen was forced to move his Bandana’s Pizza parlor four years ago to partly make way for a pedestrian-friendly village with two Marriott time share hotels at Park Avenue near Stateline, the longtime resident was excited to be part of the progress.
As it turned out, Carlsen would have ended up next door to another pizza place, a more well known one – Wolfgang Pucks.
The redevelopment battle with South Lake Tahoe and the Heavenly Village retail operator ended up in court, with Carlsen claiming he didn’t receive fair market value for his business.
He won his eminent domain case, adding about $600,000 to the more than $12 million in legal costs the city shelled out relative to eminent domain. The government practice was recently ratified by a landmark U.S. Supreme Court case in Connecticut that pitted a homeowner against a local redevelopment agency in the state.
Carlsen’s court fight in 2001 proved difficult – but may have been the best thing to happen to him, the Tahoe Bottle Shop owner said. He invested in the liquor store property instead.
“Nobody remembers Bandana’s Pizza. I still would have liked to have a restaurant at the bottom of the (Heavenly) gondola, but that didn’t happen,” Carlsen said. “Everything happens for a reason.”
Redevelopment zone earmarked
Government entities use the legal avenue of eminent domain, the taking of private property at fair market value, to remove “blight” and upgrade their town. The city’s blight and desire to rebuild hasn’t ended at Park Avenue. Consultants helped the city further identify $100 million in blight – defined as major, necessary upgrades and repairs – in its entire 173-acre redevelopment zone spanning from Herbert to Stateline avenues.
During the Park Avenue Redevelopment project that pushed out Carlsen, the Paul Kennedy Steak House, Lake Tahoe Inn and Red Carpet Inn were also demolished at the site.
The removal of these businesses may be a precursor to the second redevelopment project planned on the other side of Highway 50 across from the Marriott-anchored Heavenly Village northeast of South Lake Tahoe. City redevelopment officials are preparing to ink a deal with Stateline developer Randy Lane to build a convention center, condominium complex and 55,000 square feet of retail space. Groundbreaking is expected in May 2007.
What the future holds
The prospect of more redevelopment in the 17-acre site has nearby and affected businesses pondering what the future holds – including how the character of the town will be changed.
The convention center project will have a different financing plan than the one at Park Avenue – one which serves to protect the city.
South Lake Tahoe Mayor Hal Cole, who has been involved with both projects, believes whole-heartedly in the way the preliminary plan is set up.
(And as a point of clarification regarding the finances: Cole indicated for Friday’s redevelopment story he’d be “satisfied if the city didn’t book one person in the convention center because the city’s general fund would be protected” regardless.)
Park Avenue’s redevelopment project resulted in a $7 million cost overrun that came out of the general fund – the city’s core operating account. It’s been a learning experience for the city.
A plan due this spring will outline expectations. Instead of the city buying up the property and displacing tenants like Carlsen, officials expect the developer to deal directly with the 70 property and business owners. Lane and Carson City developer John Serpa have already purchased a handful of properties and plan to meet with more owners, Lane confirmed.
The mayor insists the developer will take on the risk and the responsibility.
“I don’t think I can support eminent domain again,” Cole said Sunday. He’s said previously it would only be used as “a last resort.”
Some doubt intentions
Still, one of the 37 business owners like Pete Joseph of McP’s – a bar and restaurant located in the redevelopment project site – doubts how a developer can take on such a huge task without the city stepping in to perform eminent domain.
In other words, will everyone go willingly?
The developer and city officials think so. The Tahoe Daily Tribune’s own informal poll found at least a third of the business owners would support redevelopment efforts, but some wondered what that would entail. There are considerations such as if those businesses in the redevelopment site would have a spot in the project.
Carlsen offered advice for business owners reviewing their options when the city’s developer approaches them on relocating from the proposed convention center site.
“I strongly recommend they get it in writing,” he said.
Carlsen also summoned a recommendation for the city – if by chance it does get involved with the displacement of any these businesses.
“They need to take a realistic view of what a business is worth and not just tell the business to leave,” he said.
Nearby merchants thriving
Nonetheless, Carlsen and his business neighbor Christian Waskiewicz – a longtime resident who owns Alpen Sierra Coffee Co. – are enjoying the spillover traffic generated in the Village Center area because it has made the cash register ring. It’s certainly grown the sales tax revenue generated for the city. Between 1996 and 2004, sales tax revenue in the redevelopment area has surged 152 percent to $475,208. The city’s total sales tax revenue in 2004 is $3.2 million.
“It’s definitely been good for business – the traffic density and the demographic’s excellent. And I like the Alpine design (of the Park Avenue project),” Waskiewicz said.
He’s unsure about the advantages of developing a condo complex and convention center across Highway 50 from the redeveloped Heavenly Village and privately funded Village Center, except that more visitors and condo unit owners should mean more coffee drinkers in town.
“I just hope we don’t develop for redevelopment sake – in condo bondage,” he said.
The coffee shop owner said he’s “no fan of all the chain stores” that have signed on with redevelopment. Waskiewicz was initially apprehensive about having mega competitor Starbucks putting in its sixth South Shore store at the Village Center – a mere stone’s throw away. But with commercial rents in the primary area of redevelopment among the highest in town, these spaces tend to attract the businesses that can pay the average $3.50 per square foot. Rents start at $1.50 per square foot in the Ski Run Center located on the east side of Highway 50 across from the Ski Run Marina and go as high as $5.50 at the Heavenly Village.
Land seems to be at a premium for those who believe their investment will pay off.
John Jovicich, who owned Cecil’s general store for 30 years before it was demolished, expects the businesses operating in his building to see enough customers to justify the higher price of redevelopment done so far. Sales have rung up all over his building, the Cecil’s Fountain Plaza, located next to the Timber Lodge and Heavenly Village. It’s home to Alpine Leather, North Face and Cecil’s Steak & Brew.
“They’re probably doing three times the business,” Jovicich said. “I believe a lot more money is being generated there, but I don’t know what it does to other areas of the city.”
By some accounts, the Park Avenue Redevelopment Project has brought about similar wages ranging from $6.75 for front-line staff to $15 for managers. At Park Avenue, 15 times more people are employed in the area, with 85 percent of the 40 shops in the 100,000-square-foot Heavenly Village locally owned. Four shops have turned over in the last three years, according to Casteel & Associates.
One criticism of the complex is its perception that it was built solely for tourists, and that notion offends some merchants of the complex. Part of the perception is that locals don’t want to pay for parking, even with most merchants in the Heavenly Village validating tickets from the parking garage. The city’s $6 million parking garage comes with a $9.3 million debt that needs to be paid off. This year, there’s a $107,000 shortfall, according to city finance.
But that doesn’t provide assurance to Jill Beede of Tahoe Country, who moved her gift shop from a small midtown location for the prospect of more foot traffic near Stateline. Beede said she believes if parking was free, she’d have about 20 percent more business.
“You know I have 80 percent local artists featured in my store, but the locals just aren’t coming out. It just kills me. I would have never, ever, ever opened this store had I known the parking issue would bring such negative feelings among locals,” she said. She added that people she knows have even told her they don’t go to the Heavenly Village.
But City Manager Dave Jinkens is steadfast about balancing the needs of the residents with the desires of the visitors.
“We can create a community that welcomes tourists that’s good for people at home,” Jinkens said. “We know the residents have a love-hate relationship with tourists and redevelopment. But where would we be without Heavenly, without Vail, without Marriott?”
Support Local Journalism
Support Local Journalism
Readers around the Lake Tahoe Basin and beyond make the Tahoe Tribune's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User