|Address||4125 Lake Tahoe Blvd, South Lake Tahoe, CA|
|Actual Holding Income (Estimated)||$1,100,000|
|Completed Construction to Date|
|Entitled Building Potential|
(Owner will sell portions of the property separately)
|Currently Under Construction|
|Residential / Common Area||(+ 44,000 GSF) 30 units|
Entitlements for development projects in the Lake Tahoe Basin are extremely difficult to obtain and are extraordinarily valuable especially for a mixed-use project of this scale and at this prime location. The Chateau at the Village will be the only newly constructed whole-ownership residential project combined with prime retail located at the world class Heavenly Mountain Resort. With all discretionary entitlements and retail/pad ready improvements in place, the successful bidder will be able to commence additional vertical construction quickly.
24 parcels have been assembled plus $42,750,000 in on-site and off-site improvements have been completed, including demolition, site clearing, utilities, subterranean parking, foundation pouring and shoring, design and architecture. In addition, the Seller has built-out the first phase of retail space at a cost of $21,500,000.
Lake Tahoe and the Sierra Nevada Mountains are one of the geographical and geological wonders of the world and are at the doorstep to the project. The area is a true four-season destination home to the very best vacation outdoor activities and entertainment. Over 3 million people visit South Lake Tahoe annually. From the most scenic and pristine beaches, hiking and biking trails to water sports, skiing, motor sports, world class golfing, camping, fishing, boating, kayaking, rafting and mountain climbing, recreation opportunities are available all year round.
The Marriott Timber Lodge and the Marriott Grand Residences located across the street, as well as other high-quality developments in Lake Tahoe, have all had strong absorption. No new construction has been built in the past 10 years in South Lake Tahoe. New quality retail has proven to be successful as over 90% of the retail space has already been leased at strong rates.
Since 2002 when Vail Resorts purchased Heavenly Mountain Resort, it has invested upwards of $40 Million in the resort including the new Gondola, retail, new chair lifts and opening up new ski terrain. In addition, $400 Million was spent on the construction of the Marriott Timber Lodge and Marriott Grand Residences. Recently Timber Lodge spent an additional $13 Million in renovations and MontBleu is undergoing a $24 Million renovation. At the beginning of 2015 the Hard Rock Hotel & Casino Tahoe opened after a $60 Million renovation of the old Horizons Hotel.
Business in Reno is booming with the recent announcement of Tesla’s Massive GigaFactory Battery Plant. Attention is now on Reno with this announcement. Tesla could create as many as 22,000 jobs in the Reno/Tahoe area at its $5 Billion factory to produce lithium batteries for electric cars. Tesla will join other big names such as Wal-Mart, Amazon and Federal Express in the Reno area. Reno’s success will have substantial economic spill over into Tahoe.
Lake Tahoe has always been a magnate for the rich and famous from the days of Howard Hughes, Frank Sinatra and the Kennedys. Recently tech giants such as Larry Ellison (Oracle), and David Duffield (PeopleSoft) have made their homes in Tahoe. Silicon Valley billionaires and other successful tech entrepreneurs are driving sales with recent luxury estate homes selling in the $25 to $40 Million range.
|Lake Tahoe Development Company Investment|
|Design, Planning, Engineering, Architectural, Legal & Permitting||$7,000,000|
|City Review, Impact Fees (includes Caltrans, City Redevelopment Agency)||$2,200,000|
|New Water/Sewer Fee for Fire Flow||$1,400,000|
|Insurance: Liability, Course of Construction and WRAP Premiums||$3,200,000|
|Hard Construction Costs (see details below)||$24,000,000|
|TOTAL HORIZONTAL INFRASTRUCTURE||$42,725,000|
Hard Construction Costs $24,000,000
Grading and excavating
Concrete foundation and support columns
Concrete paving for 535 parking spaces
Storm sewer and drainage system
Data and telecommunication system infrastructure
Sidewalks, bollards, pole bases, and pads
Landscaping and irrigation
Snow melt system
Lake Tahoe Development Company LLC (“LTDC”) acquired the Chateau site in 2005 for over $70,000,000. Together with the South Lake Tahoe Redevelopment Agency, LTDC secured a development permit in 2006. Subsequently, LTDC invested an additional $42,725,000 (see investment chart).
In 2007, as the recession took hold, LTDC was unable to secure additional financing. The developer eventually filed for bankruptcy, defaulting on deeds of trust secured by some of the 29 legal parcels. The Seller merged 6 of the 29 parcels in the project area. Thus there are now 24 separate parcels.
The Seller, managed by Owens Financial Group, was the largest of the creditors. Between 2013 and 2014, it unified all the parcels in the project area under its ownership. Thereafter, Seller commenced the first vertical construction in the project, a steel frame structure on a post-tension concrete slab over the sub-grade parking structure. This new construction consisted of 23,898 above-grade net rentable square feet of retail space and an unfinished 8,700 square foot below-grade space. This initial phase was completed in October 2014 at a total project cost of $21,500,000 and is over 90% leased. The Seller is now developing a second phase, consisting of 19,000 net rentable square feet of retail space and 30 residential condominium units facing Heavenly Mountain along Lake Tahoe Boulevard (U.S. Hwy 50). Construction is expected to commence in summer of 2015.
The Chateau Project is under the jurisdiction not only of the Tahoe Regional Planning Agency (“TRPA”) but also of the City of South Lake Tahoe (“CSLT”). The strong oversight and authority of TRPA, a joint California-Nevada bi-state agency, restrictive zoning and other land use regulations, and the lack of available sites all make developing new projects within the Lake Tahoe Basin extremely challenging. It would be virtually impossible to replicate the Chateau opportunity.
The Chateau project has received all necessary TRPA and CSLT discretionary approvals. The CSLT approved a discretionary development permit on June 29, 2007 and TRPA approved its discretionary permit for the Chateau on July 25, 2007. Building permits must be procured for vertical construction but are processed administratively by CSLT and are not discretionary.
Entitlements for projects in the Lake Tahoe Basin are extremely difficult to obtain and are extraordinarily valuable once achieved. Over 80% of the land within the Tahoe Basin is owned by the State and Federal governments. Approximately 60,000 lots exist within the Tahoe Basin and almost all of them have been developed, with very few developable lots remaining.
The Chateau’s 11.5-acre site is located within one of only two special height districts within the entire Lake Tahoe Basin, which authorizes construction up to 90 feet in height versus 40 feet throughout the rest of the Basin.
Tourist accommodation units (TAUs) can only be acquired in an amount equal to each TAU taken out of supply. In other words, there is effectively a finite number of TAUs allowed in the TRPA jurisdiction. TAUs are required for the development of condominiums, apartments, hotel rooms, timeshares and fractional units. Furthermore, there are also significant restrictions concerning the creation of land coverage, which basically falls under the same rules as TAUs - coverage rights need to be transferred from other properties.
An earlier rendition of the project was the subject of an Environmental Impact Report (“EIR”) in accordance with the California Environmental Quality Act (“CEQA”), as well as an Environmental Impact Statement (“EIS”) pursuant to TRPA’s Rules and Procedures. The joint EIR/EIS was certified by the TRPA Governing Board and the CSLT City Council in 1998 and re-certified in 2001. The current rendition of the Project required a supplemental environmental analysis dated April 2007 tiering on the prior EIR/EIS. This supplement was certified by the CSLT and TRPA in May and June 2007, respectively.
Entitled Street Level Site Plan
This project was originally conceived to be built in two phases, with entitled density as follows:
|Project A (Phase I)|
|Subterranean parking stalls (Valet Design)||535|
|Accessory space (SF)||75,480|
|Commercial (Retail, F&B) (SF)||29,450|
|TOTAL SALEABLE SF||272,908|
The North phase of the project was intended to house the condominium/hospitality rooms, retail, food and beverage, back of the house, spa, lobby and traditional hospitality accessary uses. A convention/multi-use assembly space, while included in the Project 3 entitlement, is not a build-out requirement.
|Project B (Phase II)|
|Subterranean parking stalls (Valet Design)||182|
|Accessory space (SF)||0|
|Commercial (Retail, F&B) (SF)||27,057|
|TOTAL SALEABLE SF||108,836|
The South side of the project was intended for condominium/hospitality, food and beverage, workout space, pools and related amenities.
|Project A & B Total|
|Subterranean parking stalls (Valet Design)||717|
|Accessory space (TBD) (SF)||75,480|
|Commercial (Retail, F&B) (SF)||56,507|
|Public Open Space (Acres)||1.2|
|TOTAL SALEABLE SF||381,744|
|TOTAL LAND AREA (ACRES)||11.5|