At the Lake: City awaits property’s future
March 13, 2007
Diamond Resorts’ intended $700 million buyout of parent company, Sunterra, may place the city’s eyes back on Lake Tahoe Vacation Resort’s southwest corner of Ski Run Boulevard and Highway 50.
The Las Vegas-based vacation ownership resort company is in the midst of developing a site behind the former Embassy Vacation Resort to make room for more units in Sunterra’s $10 million expansion plans. There, the company is ahead of its construction schedule.
But the lot the city’s most interested in is across the highway where 2.3 acres of prime land valued at about $2.5 million, according to El Dorado County Assessor’s figures, represents Phase 5 in the resort developer’s ambitious plans. Sunterra plans to add another 24 units and 13,000 square feet of retail space, but no construction has transpired.
The city sent a letter to Sunterra Executive Vice President Keith Maib six weeks ago requesting a firm intention to follow through with its proposal to develop the property located in the local government’s redevelopment zone.
The developer agreement allowed Sunterra a decade to complete the project. But following a bankruptcy filing, stock market delisting, management restructuring and other corporate challenges, the date lapsed in May 2006.
If the company doesn’t satisfy the city’s 1995 agreement requirements, the local government has the legal right to yank the property to make money off of it.
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“Of particular concern is a $300 million lien held by Merrill Lynch Mortgage Capital, Inc.,” the letter drafted by City Manager and Redevelopment Director Dave Jinkens said.
First, the city needs to see a measure of good faith ” which is what Maib said the company plans to do in a letter to be sent in response within a week.
“Our intent is to work with them, but that’s a prime parcel,” said Mayor Kathay Lovell, who also sits on the city’s redevelopment agency board with the other council members.
Lovell wants to see at least 10 percent in a non-refundable deposit of the assessed value from the company to show it’s serious about developing the lot. While vacant, no sales or transient occupancy tax can be generated ” and the city may view that as a loss.