More time to start, but less time to finish - that was the message the South Tahoe Redevelopment Agency sent Tuesday to American Skiing Company, the main developer of the city's $350-million Park Avenue Redevelopment Project.
The Redevelopment Agency approved extending the deadline for ASC's $5-million letter of credit from June 30 to September 22, giving the company nearly three additional months to start construction on its Grand Summit Hotel before the city draws on the deposit.
Whether or not ASC will make the extended deadline for groundbreaking is still uncertain, said Judith Von Klug the city's redevelopment manger.
"We have to deal with the probability that construction won't start until next year," Von Klug said. "We'd be looking at extending the letter of credit to May 31 (2001) but holding the completion of the Grand Summit hotel to July 31, 2002."
The letter of credit was originally posted by Bank Boston in October as a deposit on ASC's commitment to build the upscale Grand Summit Hotel and a $35 million gondola in the city's already half-executed Park Avenue Project, near the state line. The deadline that was originally agreed to by the developers and the Redevelopment Agency was set at April 28, and later extended to June 30.
With staff recommendation, Agency members unanimously agreed to the September 22 extension.
The stretch preserves the city's financial protection while dispelling connotations of project failure that may be associated with drawing down the deposit, said Von Klug wrote in a city staff report.
To meet the new September deadline, ASC will have to show proof of financing for its portion of the project, a final public report issued by the California Department of Real Estate and payment and performance bonds on the project by September 15, a week before the final deadline to allow city staff and Agency members time to review the documents.
Stan Hansen, ASC senior vice president, said meeting the deadline hinges on ASC's getting title to the land. Holding title is a condition of the company's getting a final report from the California Department of Real Estate. The final report is a condition of the company's construction loan because it allows them to convert its hotel unit presales, which currently total about $71 million, to binding contracts.
If the company, which owns Heavenly Ski Resort and eight other ski areas nationwide, fails to meet the deadline, the city will likely consider two options: cashing out on the letter of credit or extending it to May 2001 for the next building season.
Von Klug said the city is ready to turn the title over on the 34-acre property to the developers by the end of this month for a $2 million developer's fee.
But transferring title out of the city's hands before ASC can provide proof of financing raised concerns with Agency members.
Agency Chairman Hal Cole asked staff to look into what it would take to get the land back from ASC, should it decide not to build on the site.
Lewis Feldman, attorney for the developers, said there's a high commitment from ASC to complete the project on time, even if construction doesn't begin until next summer.
"The gondola is ahead of schedule and is expected to be operational in December," Feldman said. "We're now confronted with timelines ... but we're still going to complete the hotel on schedule as determined by the disposition and development agreement."
In any case, a reverter clause outlined in the DDA would allow the city to recapture title on the land should construction not move forward, Von Klug said.
In addition to ASC's Grand Summit Hotel and gondola project, the Park Avenue Redevelopment Project calls for the construction of a retail complex to be built by Trans-Sierra Investments, a Nevada company. It also calls for more than $30 million dollars of environmental and scenic improvements to be built by the city of South Lake Tahoe.