South Lake ‘Hole in the Ground’ to receive attention

Long before the Tahoe Blue Events Center was proposed, a site on the California end of the casino core was envisioned as a big indoor venue.

The City of South Lake Tahoe’s strategic plan prioritizes development of the “‘Hole in the Ground’ site as a way of supporting and attracting visitors to the Stateline core.”

On Aug. 13, the city council approved a $129,930 contract with consultant RSG Inc. to identify stakeholders, analyze the market, present financially feasible concepts for development there and identify potential funding mechanisms.

“This scope of work goes beyond just developing a concept site plan,” Assistant City Manager Hilary Roverud said. “It really looks at how that could actually be financed through the lens of a private developer, as well as the potential to utilize some public financing mechanisms.”

The funding mechanism that helped create the hole in the first place was eliminated in 2012 when California eliminated all redevelopment districts across the state. Redevelopment bulldozed the “souvenir stands, fast food joints and dilapidated 1950s-era motels,” that were just over the state line from the casino core, according to a December 2000 story by Associated Press reporter Tom Gardner.

On the mountain side, the proposed $250 million Park Avenue Redevelopment project resulted in a “chalet-inspired resort,” while on the other side of the street a convention center and shops and even the possibility of a monorail were envisioned.

When a May 2007 groundbreaking was announced for a $410 million convention center complex on the site, Tahoe Daily Tribune writer Susan Wood reported in 2006 it was the culmination of a 12-year project and one of the largest to be built on the South Shore.

Then came the Great Recession and several attempts to restart the project.

The site has been partially developed as the Chateau at the Village and Zalanta projects, a portion of the site, located at 4139 Lake Tahoe Blvd., has long been left in its semi-constructed, rebar state.

President and Principal of RSG, Jim Simon, said one of the public financing mechanisms could be infrastructure financing districts. Other potential tools are zoning and incentives that could financially benefit either the current or a future developer. Mayor Cody Bass requested the consultant research the possibility of tribal acquisition of the property as well.

The consultant’s scope of work also includes project marketing and solicitation to identify potential developers. Roverud said potential buyers do occasionally contact the city and this study could help those developers evaluate the property or motivate the current property owner.

Councilmember Scott Robbins expressed doubts that the consultant’s results could motivate the owner.

“A consulting plan provides an offer to a developer that has heretofore chosen to do nothing.”

He raised the idea of a receivership instead, in which the court appoints a third party to address the property, saying this would force change at the property, while the consultant’s evaluation doesn’t ensure it.

In addition to a receivership, possibilities of eminent domain or other type of property acquisition were also thrown around during discussion.

Simon said he has worked with communities who have used their consulting services alongside pursuing eminent domain or acquisition, or as a precursor to it.

“Because it might be that, for the foreseeable future, there’s nothing the city could do potentially to incentivize that potential development project that the city would like to see,” Simon explained, “And you want to know that right before you start going down the path of potentially expensive acquisition or eminent domain or what have you.”

He said one of the goals of RSG’s effort is to vet that out for the city.

City Attorney Heather Stroud suggested allowing her and Assistant City Manager Roverud work in parallel with the RSG to see whether a receivership is a viable option. “It could be at odds to pursue them at the same time…” she said, explaining it will complicate matters if a receiver is appointed by a court and they will have control of the property. “That would be another complicating factor in this already complicated property.”

However, Stroud did say they can be thinking about a receivership at the same time and bring it back to council at a later date.

More than one public commenter criticized the city spending more than $100,000 on the consultant service.

“Paying another consultant to come up with more fantastical ideas,” Seth Dallob said, “that may or may not pencil for a development that might happen 20 years from now, I think is just a waste of money.”

He suggested the city instead fine them for blight.

“I get it,” Councilmember Tamara Wallace said, “$130,000 is a lot. However, the benefits in my mind far exceed that $130,000…” because the city has lost tens of millions of dollars in TOT and tax revenue from that area. She said a conservative estimate of the city revenue that could be generated there is $5 million a year.

Roverud explained with recent amendments to city code, the city can now fine partially built sites. The code amendments update the city’s abandoned building definition to include a structure that has remained in a state of partial construction for a period of 180 days or more and where continuation of the condition is unsightly or hazardous to the public health, safety, or welfare.

The city may cite these buildings in the amount of $1,000 per building for the first violation and an additional citation in the amount of $1,000 per building that remains in violation 90 days following the first citation.

Councilmembers Bass, Wallace and Robbins voted in favor of entering into an agreement with RSG, Inc for $129,930.

“This is our city, and this is one of the largest hotel developments that has sat vacant for the many years that it has,” Bass said.  “We can’t sit around and wait another 20 years for private developers.”