Agreement reached for $410 million convention center

SOUTH LAKE TAHOE - In a historic decision expected to transform the look and feel of South Lake Tahoe, the city's Redevelopment Agency unanimously approved an extensive document that defines the terms to build a 12-acre convention center complex near Stateline.

The $410 million proposal, which includes two condominium hotels, shops and a greenbelt across the street from Heavenly Village, is the largest project to be built on the South Shore. It's also the culmination of a 12-year concept involving four different developers and months of negotiations between South Lake Tahoe redevelopment staff, city officials and the last developer left standing - Lake Tahoe Development.

Groundbreaking is set for May 2007 on the site, which encompasses Highway 50, Cedar, Friday and Stateline avenues.

"This is truly the key that will drive tourism in South Lake Tahoe," retailer Harry Segal summed up the government action after the meeting.

Segal, who co-owns Sierra Shirts and serves as a named retail party in the project, has watched the proposal over the years in which Harveys management intended to build the center until Harrah's Entertainment bought the casino. Marriott International took over for Harrah's as a negotiating party, only to bow out. The move left the door open for Lake Tahoe Development, a partnership with Falcon Capital's Randy Lane of Stateline and DGD Development's John Serpa of Carson City.

The agreement of the northwest side of South Lake Tahoe didn't go unnoticed by one of the city's redevelopment fathers.

"I'm excited and thrilled. This was part of the original vision that completes the whole 'downtown' area," said Century 21 real estate agent Kevin Cole, who was the city's mayor at the time the idea came about between 1990 and 1998. "One thing I'm pleased about is the evolution of the process. In the beginning, we didn't have anything to offer the developer. But we thought that from the very start once the ball got rolling, there would be inertia, and the city wouldn't have to make many concessions."

Current Mayor Hal Cole, who's completing the last year of his three terms in city office, remembers the challenges the city government faced in developing the other side of Highway 50 where two Marriott timeshare hotels stand. For that $250 million project, the city sold bonds against its motel room tax revenue, endured a low credit rating, absorbed huge construction cost overruns and fought through $12 million in eminent domain cases. It's still paying on the $7 million borrowed from the general fund for the redevelopment project.

Lake Tahoe Development will foot the construction bill in turn for property and motel-room tax revenue generated after the project.

The condo units are expected to sell for about $2 million and rent for $270 per unit. According to development agreement statistics, the city stands to gain at least $800,000 in housing funds, $1.5 million in motel room tax and $4 million a year in property tax revenue through the formation of a Mello Roos district.

A district created as tax mechanisms affecting specific areas.

In the end, the city will also own a 93,000-square-foot convention center capable of seating 4,400 people or accommodating groups of 2,000 people in conference assemblies.

The local government will also receive public improvements such as a village green with a pond, walking path and dining deck alongside 57,000 square feet of retail space.

For that, the city has agreed to provide $55 million in public assistance for the project - with the total net cost amounting to $103 million once interest and bond issuance fees are added.

By the time buildings are demolished, 587 rooms will give way to 176 upscale units.