Redevelopment: More questions than answers…
Nearly a decade ago, the city of South Lake Tahoe planted the seeds of U.S. Highway 50 corridor redevelopment as the first jewel of the many projects, the state line Embassy Suites, joined the casino core skyline.
Nearly a decade later, with the exception of the fledgling Ski Run Marina Project, the state line Embassy Suites stands as the only completed part of the redevelopment project. Not exactly a picture of financial health in its own right, the hotel is poised on the verge of bankruptcy after its valuation has declined to the point where the owners are unable to refinance a short-term bank loan gained for hotel construction.
The Park Avenue Project, Project 3 and the Ski Run Marina Project are reasons why city leaders believe a South Lake Tahoe face-lift will save the declining tourism industry.
When Embassy owner Steve Kenninger compiled a pile of money, $24 million, and convinced an international bank to loan his company, KOAR-Tahoe Partners, L.P., the rest of the money needed to build the hotel, $53 million, Tahoe was a leading destination market.
Between the time ground was broken in 1989 and the hotel opened for business on Dec. 14, 1991, the nation’s economy went south, forcing people to take a harder look at travel plans and where they could get the most bang for their buck. Also, Las Vegas and Reno built theme parks, resorts and palaces which plucked some of Tahoe’s tourist contingency.
Ignoring higher room prices compared to competitors, no commercial air service at the Lake Tahoe Airport and a treacherous two-lane reduced-speed highway which travelers coming from the Bay Area must negotiate, the city moved forward with plans to redevelop the city area west of the casino core hoping the tourists that had forsaken Tahoe for the megaresorts would come back if Tahoe had more to offer.
If nothing else, the city’s representatives have been enthusiastic throughout the last decade regarding redevelopment. One need only look at a September 1996 update on the various redevelopment projects to see that optimism.
According to the update, bond sale was to be completed nearly one year ago. Not only was acquisition of properties to be seized through eminent domain to be completed last month, the affected business were to be relocated by February of 1998.
The Park Avenue Project was, according to the 1996 update, to be completed by the end of 1999.
City officials readily admit that the proposed schedule was ambitious and, in reality, the project timetable has been pushed back about one year. If that is true then bond sales to finance the city’s portion of Park Avenue funds should begin in less than three months.
With the addition of Trilogy, a Canada-based development corporation which boasts the cultivation of Whistler Ski Resort in the Vancouver area, the project appears more steady than it was when the cold-footed HKM Partnership was slated to redevelop the Lake Tahoe Inn.
With an amendment to the city’s 2003 time-share ordinance which could enable state line Embassy owners to convert hotel rooms to time shares and save the hotel from foreclosure, the redevelopment-wellness-indicator-hotel may be looking better as Kenninger said the bank which is threatening foreclosure will wait to see if the time-share proposal comes to fruition.
However, while the ordinance has been amended to allow for a proposed time-share conversion of Embassy, City Council members have hinted that the real battle for conversion lies ahead as accountants and financial planners attempt to prove to council members that the proposed conversion would be “revenue-neutral” as well as advantageous for the city.
Will the city allow the proposed time-share conversion? Can it afford not to? What effect will the outcome of the time-share conversion proposal have on Trilogy, American Ski Company (which owns Heavenly Ski Resort) and other Park Avenue players? Should the state line Embassy or the Ski Run Embassy fail, could other parts of redevelopment still proceed?
These are critical questions which may or may not be answered in the coming months.
One truth that seems certain is the need for progress toward healing the South Shore’s problems.
While Lake Tahoe casino marketing representatives may project a positive attitude toward media regarding business, especially around the holidays, the casino executives paint a far uglier picture of 10-percent occupancy and gaming win declines over the last decade when pleading for advertising money at city and county board meetings.
While casino workers will tell media, on the record, that they can’t comment on the strength or weakness of casino business, off the record they say business has not been spectacular this season.
One other truth that seems certain is, after nine years of alleged redevelopment, there are still more questions than answers.
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