Redevelopment paperwork will get fine tuning
For more than eight years, the Park Avenue Redevelopment time clock has been ticking. The final buzzer to replace the old, tired block of buildings at U.S. Highway 50 and Park Avenue with a new, modish development sounds July 1 when, if the project isn’t in progress, hefty penalties will be leveled.
The South Tahoe Redevelopment Agency will consider making changes to the disposition and development agreement today to adjust some of the timelines leading up to the final date.
One item under review is the deadline for the letter of credit that shows American Skiing Company’s financial backing and construction contracts to build their portion of the project, which includes a posh quarter-share ownership hotel and a $35 million gondola leading from the project site to Heavenly Ski Resort slopes, both scheduled to begin construction this spring.
The letter of credit works as a $5 million deposit from the developers to the city. If the developers fail to show the documents by the given date, the city can draw the money out of the account to cover costs it would incur if the project was delayed by the developers. If ASC begins building later in the summer, it can get the $5 million back from the city with the only penalty being the loss of interest on the money.
The original agreement signed Oct. 28 by both parties calls for proof of financing and construction contracts to be disclosed by ASC, owner of Heavenly Ski Resort and eight other ski areas in the U.S., no later than April 28. An even earlier target date of April 15 was agreed on as a way of easing the Agency’s concerns of missing this year’s building season which begins May 1.
The April 15 date was missed but both parties say they are still right on target for this year’s building season.
Judith Von Klug, South Lake Tahoe’s redevelopment manager, said the proposed changes to the disposition and development agreement loosen the strings on the timeline on the letter of credit but wouldn’t change the final date of July 1.
“April 28th was getting real tight and a lot of the people who are going to be reviewing the documents will be out of town that week,” Von Klug said.
In a staff report to the Agency, Von Klug proposes extending the the letter of credit deadline from April 28 to June 30, and keeping the July 1 deadline as the latest date to close escrow in the developer’s name on the 34-acre Park Avenue property.
She said she expects the city will be ready to turn the property over for a $2 million developer’s fee on May 15, allowing enough cushion for escrow to close by July 1.
If the deal falls out of escrow, the party responsible for the failed exchange will be charged for expenses incurred by the other party if the project were to be delayed to next year. Von Klug said the penalties would be in the millions of dollars.
“The hardship to the city would be about $2.4 million in interest (in the municipal bond payments) if we lose this building season,” she said. “And I’d expect the developer’s cost to be similar.”
Stan Hansen, ASC’s senior vice president, said the company is ready to start building as soon as possible.
“The notes (from ASC’s lender) are in place and we’re waiting for title on the land,” Hansen said. “I think we’ll break ground sometime between June 1 to June 15.”
Hansen said ASC would have no reason to want to delay the project.
“We have 500 people who have made reservations to purchase in the Grand Summit Hotel,” he said. “The Grand Summit is 62 percent sold, that’s $61 million in gross sales. We cannot make those reservations a binding contract until we get ownership of the land.”
Von Klug said there are some steps that need to be finalized before construction can begin in May or June.
“The one thing we have hanging out there is Wallace Theaters,” she said.
A hearing is scheduled for April 28 in El Dorado County Superior Court on Wallace Theaters’ request for a motion to stay on the Park Avenue property, where it has operated a one-screen cinema since 1991.
Aerial easements for the gondola, a plaza maintenance agreement and a parking management agreement for the area also need to be solved before the Tahoe Regional Planning Agency will issue the building permits for the project.
Other amendments being reviewed by the Agency Tuesday include:
n Defer demolition of Bandana’s Gourmet Pizza until October 1. After that date Heavenly Ski Resort will remodel the building for use as a ski rental location and gondola ticket sales office until the Grand Summit is built.
n Allow land to be transferred without proof of financing for the ice rink.
n Allow the Paul Kennedy’s Steak House building to continue to be rented out for commercial space.
The regular City Council meeting begins at 6 p.m. A tentative subdivision map for the Park Avenue Redevelopment Project, a resolution for a formula on the allocation of the 2-percent visitor promotion funds and a lease between the city and the California Tahoe Conservancy for security patrol on the beach near Barton meadow are on the agenda.
Who: South Tahoe Redevelopment Agency
When: Tuesday, 3 p.m.
Where: 1900 Lake Tahoe Blvd., South Lake Tahoe
What: Amendments to the Park Avenue DDA
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