Showdown looms for convention center
September 21, 2005
The next wave of South Lake Tahoe redevelopment may finally come to a head Oct. 4, when the city is expected to decide whether to move forward with Marriott and partners to build a convention center complex on the north side of Highway 50.
After a handful of extensions, changes to negotiating parties and at times a rough ride with the city for not keeping the local government informed of its progress, the final deadline is nearly here for Marriott. The city’s exclusive negotiating agreement with Marriott Ownership Resorts, which stepped in for Harrah’s Lake Tahoe with an interest to build the 16-acre project a few years ago, terminates on Oct. 7. Marriott had nine months to create a feasibility report. If it meshes, a marketing study comes next.
At the outset, the project appears somewhat different than the original plan from 1997 – when Harveys Resort Casino carried the ball before Harrah’s Entertainment bought the competitor. Both the city and Marriott representatives were either a little hush-hush or unaware this week of the final details of the project that the hotelier envisions.
The latest in the proposed $190 million complex calls for a 100,000-square-foot convention center to attract groups of 3,500 to 5,000, retail space and a 425-room condominium hotel with interval ownership. Traditional time share units that rent weekly are out of the discussion, as the city would stand to miss out on collecting much-needed transient occupancy tax.
“We’re all on board with this, as long as it’s a good return on investment. We’re trying to remove all doubts and all unknowns before we go into this,” said Hal Cole, who serves on the Redevelopment Agency subcommittee with John Upton to negotiate the public-private partnership. The City Council acts as the agency.
Cole has been steadfast the project will not tap into the general fund, feeling the pinch of a $7 million construction cost overrun and a $12 million legal bill to settle eminent domain cases relative to the Marriott-anchored project at Park Avenue. The public outcry was swift and harsh.
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At the time the development rights transferred from Harrah’s to Marriott over a year ago the pending bond debt from Park Avenue added up to $119 million. Just servicing that debt cost $7.1 million a year.
This project’s financing appears to be based on two types of property tax financing involving tax increment and creating a special district that would allow the city to work as a conduit for Marriott without footing the bill.
Cole anticipates the site acquisition costs would “shift to the developer,” but calls to Marriott Vacation Club representatives, including South Shore attorney Lew Feldman, were unreturned this week. It appears to be a wait-and-see situation.
“If we have to use eminent domain it will be on a limited basis,” Cole said.
The difference between the Park Avenue project and the convention center plan is the property owners are more willing to either be molded into the complex or sell out, Cole believes. Some have waited years to make improvements, claiming they were in limbo because the project had reached an impasse.
Redevelopment Agency Manager Dave Jinkens, who’s also the city manager, thinks the project’s concept, the way it looks now, would need to go into a process that would allow opinions from the 30-plus property owners affected by it. They lie between Highway 50, Cedar, Friday and Poplar avenues near Stateline across Highway 50 from Heavenly Village.
“I believe most of the property owners think this is a needed thing in town. Otherwise, this town will be in big trouble,” said Michael Blank, who owns the Thunderbird Lodge. To this day, Blank is undecided on whether to sell out in the process.
“Whatever it takes to get the thing going is really important,” he said.
Like other property owners who are mainly in the commercial sector, Blank hasn’t always been very particular on who builds it as much as whether it will be built.
To design and build it, Marriott enlisted help from Segal-Yure partners, including Sierra Shirts owner Harry Segal, with Randy Lane at Falcon Capital, to ensure the project is even feasibility after a 9-month exploration period.
Segal said the community needs a multi-use facility that would host more than conventions but year-round concerts, too. Harrah’s puts on grand-scale, 5,000-seat summer concerts that only fit in the Harveys parking lot.
“Besides that, there’s nothing in this town that will bring in those kinds of numbers,” Segal said.
Support for the project varies depending on what survey is used or who is asked.
A recent city survey determined more South Lake Tahoe residents rated the building of a convention center as “not important.”
Still, many remain committed and see the need.
Nancy Marzocco, marketing manager for Stanford Sierra Camp, confirmed there are times the Fallen Leaf Lake resort is unable to accommodate larger groups. But business is up for the conference camp, and travelers looking for continuing education or tips from legal conferences show a willingness to attend workshops in a beautiful place.
“I definitely think there are conferences and programs out there for this (project), but it would have to have marketing to support it,” she said.
And it may need the entire community on board. This may mean a show-and-tell infrastructure to put Tahoe’s best foot forward, San Diego Convention Center spokesman Fred Sainz said.
Sainz should know. San Diego’s convention center has shown a 2-to-1 return on investment by 2005. Its annual report indicates the $12.5 million investment rakes in $25.5 million in tax revenue.
But people go for more than the building.
“Part of rolling out the welcome mat is having clean beaches, parks and bathrooms. Basic infrastructure is a requirement, not a nicety. It’s like inviting five or six guests over for dinner and not having any food,” he said.
– Fred Sainz
Public Affairs Director for the San Diego Convention Center
“I would instinctively say (South Lake Tahoe) has the appeal, but one thing that may detract from it is the airport service,” he said.
– Dan McHale
General Manager for Inn By the Lake
“Based on our experience with our events center, we’ve learned there’s a significant amount of business looking for such a thing in town,” he said.
– Kathy Farrell
Executive Director for the Tahoe Douglas Chamber of Commerce
“Even if it attracts huge groups, the size of the facility they’re talking about building is not big enough,” she said.
– Nancy Marzocco
Marketing Manager for the Stanford Sierra Camp
“There’s a lot of competition in this industry. They’re got to market it. You can’t just build it, and then they will come,” she said.
– Harry Segal
Sierra Shirts owner
“I believe for this community it’s a window of opportunity to complete the (redevelopment on the) other side of the street,” he said.
South Lake Tahoe City Council:
Mayor Kathay Lovell, in support
“I’m excited about Oct. 4. A lot of work from the subcommittee has gone into this. I think it will be a definitive moment,” she said.
– Mike Weber, in support
“If we have willing buyers and sellers and we’re not using general fund money then it seems to be a no brainer,” he said.
– Ted Long, in support
“It’s one of the most important things that could happen to this town. I know people have their doubts, but when you travel across the country you see there’s no question it can work for us,” he said.
– Hal Cole, in support
“I’m committed before I leave office to get this going,” he said.
– John Upton, unavailable for comment because he is out of town
South Lake Tahoe City Council meeting
Oct. 4, 9 a.m.
Council Chambers; 1900 Lake Tahoe Blvd.
Tentative item: Redevelopment Agency’s exclusive negotiating agreement with Marriott Ownership Resorts on building a convention center