The city’s planning commission approved a partial conversion of the state line Embassy Suites Resort’s hotel rooms to time shares Wednesday night.
The approval came in a complicated series of motions in which the commission partially terminated the future Park Plaza Resort’s rights to 195 time shares and gave them to the Embassy owners.
KOAR-Tahoe Partners, L.P., the hotel developers, only plan to convert 188 units to time shares by adding a small amount of cupboard space to the units.
Park Avenue Project attorney Lew Feldman said, addressing concerns of a loss in Transient Occupancy Tax from the conversion, that the hotel units at the Park Plaza Resort which were to be time shares would help offset losses from Embassy’s conversion.
In order to get the city council to amend its five-year moratorium on time shares at the end of last year, KOAR had to demonstrate that the conversion would be revenue neutral to the city.
KOAR proposed to give the city $3 million in Letters of Credit as well as an annuity that will mature in 30 years. It would yield the city $500,000 per year after that time period.
The city could also dip into the $6 million that would have accumulated by that time, reducing the annual yield.
“I think this is exciting and will take care of a lot of needs of the community,” newly-appointed commission chairman Bob Hedley said.
Perhaps throwing a monkey wrench in the plans is a March 6 court date for KOAR. Claiming they want no part of the time share conversion, the bank which financed their construction loan has attempted to sell the loan, which is now overdue, to a third party.
KOAR filed suit against the bank, claiming its representatives verbally committed to the conversion.
The bank’s attorneys say this did not happen.
KOAR has proposed the conversion and sale of the time shares to pay $35 million of the $53 million loan.
El Dorado Superior Court Judge Patrick Riley will decide in March whether or not to continue the temporary restraining order issued by Judge Suzanne Kingsbury last month preventing the bank from selling the loan.
Depositions in the civil case are ongoing in anticipation of the upcoming hearing.
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