SLT resolving Redevelopment Agency issues
The vacant lot on Ski Run and Highway 50 looks to Ski Run Marina, from left, Lake Tahoe Vacation Resort, and Red Hut. Photo/Kathryn Reed
By Kathryn Reed
South Lake Tahoe is about to own a highly valuable piece of property in the city – assuming the City Council agrees to buy it.
On the July 15 council meeting the 1½ acres on the corner of Ski Run Boulevard and Highway 50 is on the agenda. It had been acquired by the now defunct Redevelopment Agency in deals with the prior owner of the timeshare complex that is kitty-corner to this lot. Originally that land was to be developed as another phase of what is now a Diamond Resorts owned property.
It is one of several parcels the Successor Agency needs to eventually unload.
“This is one of the last pieces of undeveloped prime real estate (in the city),” City Manager Nancy Kerry told Lake Tahoe News.
The appraised value is $800,000, which is what the city would pay. The city has $1.8 million in undesignated reserves. That pot of money is proposed to be tapped to buy the land.
“This meets the council’s objective to advance economic development. This gives them the opportunity to own a piece of land they have never owned,” Kerry said.
It comes with coverage, but no commercial floor area or tourist accommodation units. It has 88 parking spaces deeded to it from the parking garage next door that is owned by Diamond Resorts.
With the state dissolving redevelopment agencies, a convoluted process is in place for those entities to get rid of land and other holdings they own. Ultimately the Oversight Board will have to approve the purchase. That group’s next meeting is July 25 at 3pm at Lake Tahoe Airport.
This parcel has been on the market, but no potential buyer could make it work in the post-redevelopment era. Ideas had been to turn it into a high-end spa or drugstore like Walgreens.
Now the city would have control over what goes there. It’s possible the city would sell the land to a developer contingent upon what is built. There could be a lease to buy option as well.
“The next step is to market the property and see what kind of interest there is today,” Kerry said.
South Lake Tahoe is sitting on commercial floor area commodities, so developing the site is possible. (In the Lake Tahoe Basin, the Tahoe Regional Planning Agency has made commercial floor area and tourist accommodation units commodities, and has limited how many of each is allowed.)
Other redevelopment/Successor Agency items are also on Tuesday’s council agenda. They involve dealing in part with the $7 million the city took from the general fund to make the Heavenly Village project a reality and the other is the Housing Agency.
This taking was unbeknownst to the public until long after the money was spent. And allegedly the council – which at the time consisted of Hal Cole, Tom Davis, Judy Brown, Kathay Lovell and John Upton – didn’t know either. At least that’s what they said at a May 2003 council meeting when the gifting of public funds – aka taxpayer money – was acknowledged by then City Manager Dave Jinkens.
It was in 2004 that then-Mayor Davis signed a retroactive loan agreement between the city and Redevelopment Agency so the general fund would be repaid. There is still $4 million, which includes interest, that needs to be paid.
Tuesday’s agenda item will help speed up that process.
In 2010, the state “borrowed” $2 million from the city’s Redevelopment Agency. The agency didn’t have the money so it borrowed $426,000 from the Housing Agency.
Money to pay back the Housing Agency and city will come from revenues of sales of former Redevelopment Agency holdings, like the Ski Run-Highway 50 property, as well as property taxes.
A complicated state process allows those debts to be added back as an obligation of the non-existent Redevelopment Agency. The Successor Agency has to approve these transactions.
Kerry said the multimillion-dollar note owed the city could take upward of 10 years to pay off, but she was adamant the debt would be paid once the agencies vote on all the transactions.
On the Aug. 5 council agenda will likely be the option to refinance the bonds associated with redevelopment. This will lower the debt payment, which could mean the Housing Agency and general fund bills get paid sooner.
Let me get this straight. The corner lot on Ski Run has been on the market for at least a year or more already. Deb Howard has had it in escrow, maybe twice now. Yet no buyer has been able to make this parcel work commercially for whatever reason. Now the city wants to buy it for $800k and……put it back on the market…….to see what kind of interest there is?! That has already been done guys.
What is this council thinking? DO NOT BUY THIS LOT. 800k is not funny money to play with so the city can ‘remarket’ something that apparently doesn’t have one. The city has no business doing this and unless some clear plan is in place that has not been revealed then it would be outrageous for them to spend that kind of money on a whim. Alarming. How about pay the current bills instead of blowing the surplus on a commercial lot with no revenue generating plan in place.
In general the competence and results of the government in economic development is abysmal.
South Lake Tahoe’s track record ranks with the worst of the worst.
This is an opportunity for the town of SLT to further depress your poor reputation.
How much did the redevelopment agency pay for this parcel, if it is one parcel, to the owners that where displaced in 1989 never to return. The original plans called for a shopping center. Sounds like the successor agency is selling it to themselves? Nice
The reason no private entity could make this parcel work is with the exception of a few busy weeks a year for tourism, South Lake Tahoe’s market demographics are abysmal, and would not support it.
For the City to purchase this parcel would be further evidence it continues to have no idea what it is doing.
The City does not own that Ski Run/Highway 50 property or any of the other assets or liabilities of the now nonexistent Redevelopment Agency (RDA). Governor Brown eliminated all RDAs in the state of California to be able to eventually take all that associated Tax Increment Revenue for the state. All RDA assets must be sold at their market value and the proceeds must be used to pay the outstanding debts of the RDA. Once all those debts are paid off then the state will take all the Tax Increment Revenue from those properties and instead of that Revenue going to the City (or the other jurisdictions that had previously had an RDA) it will go to the state. Part of the debt of the RDA was to repay the City for the $7 million loan that had been made of which almost half has already been repaid leaving a balance of approximately $3.5 million. If the City pays $800,000 to gain ownership and control of that property, that $800,000 will go to the RDA and then that $800,000 will be used to pay RDA debt, and the City is one of the agencies to which the RDA owes money. So eventually that money will come back to the City but more importantly the City will have control of that property and can hopefully sell it at some point for way more than $800,000. If Governor Brown had not eliminated RDAs then the Tax Increment that the RDA would have received would have just kept paying the City back for the loan and the City wouldn’t need to buy that property.
What’s going to be interesting is how the state will deal with RDA assets such as retention basins that collect water and need to be maintained. Those are considered an RDA asset and must remain as retention basins, but no one will want to buy those.
Where did the $800,000 appraisal come from? No one in the commercial market feels it’s worth that much or it would have sold already. Since it has not sold, the sucker buyer is the City. Sadly, this seems typical.
Kate:
It’s not a City loan, it’s a Redevelopment Agency loan. The City and the Redevelopment Agency operated as two separate entities.
thanks 4-mer
Kate, Yep, the city buys it from itself. The city is the successor agency to the redevelopment agency. The higher the price the better the books looks.
Hey city I have 2 business here in south lake. They both are profitable. I will sell them both for 800k. You could make your money back in 4 to 6 years. That is saying anyone in the city office have the ability to run a bussiness. (Which every in town knows you don’t thats why you work for the city, where all you have to do is show up and pretend to be smarter than the other dumb ass next to you. If your throwing money around this is a better deal. Or you can buy land you don’t know what to do with. Just a thought.
Is this the lot on the corner of Ski Run and 50 that had at one time the little cabin that had a palm readers business? If so, It’s right next door to what was, in the old days, the 3 Swiss motel,Anonnis motel and The Alta Vista motel(one of my folks old places)and, right next door, to the west, was The Sands motel. Oh well, years gone by! All long gone now. Just a distant memory.
Hopefully the city makes the right decision and does not overpay for this piece of land and it becomes someting good. Good luck SLT, as we’re gonna need it!!! OLS
Could the $800,000 be used to fill potholes? It seems that preventing further damage to the streets and the associated higher costs to repair them in the future would be a great investment.
Having the City, CTC and Forest Service enter the real estate development business seems like a bad idea.
The Successor Agency Board is made of up the City Council Members who operate in the capacity of the South Tahoe Redevelopment Successor Agency (STRSA). When the STRSA Board makes any decision it has to be sent to an Oversight Board for their approval which is made up of 5-individuals: one is Nancy Kerry, one is Hal Cole, I think one is EDC Supervisor Norma Santiago, and then there are two others who I don’t know of but who have no affiliation with the City. If the Oversight Board approves the STRSA Board’s decision, then that is sent to the California State Department of Finance for their approval. The state absolutely wants this property sold for as much as possible since the more it sells for the more money there will be to pay the RDA debt, and the sooner that debt is paid off the sooner the state will have the Tax Increment Revenue for their own use.
FYI, this information was contained in the City Council/STRSA Board Meetings and in the meeting minutes.
The City, CTC and Forest Service aren’t going into the real estate development business. This entire situation is being driven by the state of California’s elimination of Redevelopment Agencies.
Did the tag line for the article say ‘resolving Redevelopment Agency issues” or “revolving Redevelopment Agency issues’?
FROM THE ARTICLE – “With the state dissolving redevelopment agencies, a convoluted process”
Come on now, the entire state government system is convoluted and corrupted, and people are fed up.
Here is some news: The Six Californias Initiative is submitting signatures tomorrow. It will be on the ballot in 2016.
It will be an entertaining election.
BOTTOM LINE – The government betrayed the people and the people are going to tear it apart.
From here…. well you know.
CJ McCoy:
Thanks for referencing the “Six Californias Initiative”. I briefly perused that and the two subjects that really jumped out at me were if you lived in the state of “Silicon Valley” you’d really be in fat city economically; and then there’s the always present, ongoing matter of southern California taking water from northern California—but what else is new with that.
I don’t think this Six Californias Initiative will ever fly, but I’d certainly go for splitting California in to two states with one being Northern California and the other Southern California.
Lou, you mention the year 1989 had owners being displaced. Is this part of the old Hodge project that also sat as an empty “hole” for about five or six years? Seems like every major redevelopment project has had huge mismanagement and poor judgement by the city council. The more things change, the more they stay the same.
4-mer
I think you may be right. Their web site is asking for suggestions on alternatives, that may be part of the strategy. I also noticed the Silicon Valley component – the guy behind it Tim Draper a VC from there though I don’t think that is his motivation. He is very respected and insightful and has a keen sense of fairness and integrity so I don’t think this is directly related.
He sees the issues California faces very clearly, you may remember his name as he was the one behind the Voucher Initiative.
Rebel, You are correct. This hole started in 1989 with Richard Hodge getting fee title to land the city paid 18 million for. So Mr. Hodge takes out loans on the property for 15 million then defaults and files for
Bankruptcy. Nice so far, well it gets better. His attorney Lew Feldman. Let’s hope the city doesn’t deal with Feldman or any of his clients any more. They even let Feldman write the MOUs for these projects with ex city attorney Crabb rubber stamping his OK. Hodges bankruptcy attorney Richard Moneymaker, really. Feldman testimony at the bankruptcy hearings was very detrimental to the City of SLT. Those were the words of the redevelopment manager explaining how it works. Will the city even Google the attorneys any developers they deal with? The consustants and attorney would shiver.
Yeah… Draper and the Voucher Program that failed by like 80% at the polls.
old Hal and the Team have a plan.
they are just not telling you what it is.
funny how the City has extra money now that the Parking Meters are going away.
Chief, Maybe the Feldman group, I hope not.
So the question seems to be: if the city buys the lot for 800k, does the city receive that 800 k back from the RDA in kind? And when? If so, and that agreement is part of the legislation, then this short term purchase may make some crazy sense after all.
i would rather the redevelopment pay back the 800k over 10 years, thats 80k a year less that would go to reserves or paying for other things. 800 k seems a bit high as there is no ready willing and able buyer at that price now. What comps are they even using to get that price? There are a number of companies that could have gone there, Dollar tree was looking, Bevmo, Auto Zone, they all passed on it, the question would be why?
reloman:
I’m sure the City would rather have the Redevelopment Agency pay back their debt too but unfortunately the state of California has directed that all the Redevelopment Agency assets be sold as soon as possible for as much as possible so they (the State) can use that money to pay the Redevelopment Agency debt and then take for their own use the Tax Increment revenue that use to come to the City. It’s part of how Governor Brown and the legislature balanced the state budget–they took money from cities. It is within the rights of the state of California to take money from cities.