Eminent domain proceedings on South Lake Tahoe's proposed $410 million convention center project are expected to get into full swing in the courtroom Friday.
Businesses that have not negotiated to sell to Lake Tahoe Development Co. are trying to sell off the inventory and find alternative space to relocate. But the South Tahoe Redevelopment Agency - which approved the legal taking of property for public use in September - wants the space to roll out its plans by the groundbreaking on the 12-acre project area due next May.
The developer, led by Falcon Capital's Randy Lane of Stateline and DGD Development's John Serpa of Carson City, had closed on 29 properties located at Highway 50, Cedar, Friday and Stateline avenues. That leaves five parcels where the Shirt Stop, Pub Tahoe, Taco Bell, Paradise Timeshare, Shoreline Ski and Snowboard, Union 76 and Lakeside Landing businesses are situated. Collectively, the property has been valued at $8.5 million, a sum the developer would reimburse the city for.
The Redevelopment Agency wants to take possession of the Lakeside Landing retailer by January so the developer may run a sales office out of the 1,600-square-foot building to start selling its 176 condominium units for about $450,000, the court motion filed by Meyers Nave law firm on behalf of business owners John and Margaret Maxhimer indicates.
Developer attorney Lew Feldman said $450,000 could be at the low end of the pricing scale, but the pricing structure is fluid. He declined to comment on the legal matter.
The hearing is scheduled at El Dorado County Superior Court in Department 4 at 1:30 p.m. Friday.
The motion declares pushing out the Lakeside Landing business during the winter season under the guise of blight and the ability to use it as a sales office is unfair and misguided on a few different fronts.
"If Proposition 90 would have passed, we definitely would have fought on that (blight) issue. Now it's harder to fight," Meyers Nave attorney Claudia Gorham said Tuesday.
The state initiative, which would have made it tougher for cities to use the legal practice, failed in the ballot box last month.
Meyers Nave's motion further points out the developer's claim the entire project is in jeopardy without the sales office appears difficult to absorb.
Calls to the developer were unreturned.
"The agency and wealthy private developer even have the audacity to state that the financial hardship of the developer having to expend $400,000 to convert the building next door to a sales office is greater than the hardship that shutting down Lakeside Landing is to Margie Kovarik-Maxhimer," the document reads.
"The hardship of closing her business is not just substantial but devastating," it adds. The Maxhimers have stocked up a hefty winter inventory for ski visitors.
Gorham, whose Oakland firm will appear for the Maxhimers, also represents Jim Hickey's Union 76 and Bob Daly's Discount Ski and Snowboard. The latter businesses have been given extra time until April to find new locations and a fair market value for their property, Gorham pointed out.
City Attorney Catherine DiCamillo referred the matter to the agency's presiding legal counsel, Stacey Sheston of McDonough Holland and Allen in Sacramento, but she was unavailable for comment Tuesday.
"This particular parcel is absolutely necessary for the success of this project. Clearly, we need those months to get the project up and running," city Redevelopment Manager Gene Palazzo said, speaking on her behalf.
The city had endured a hefty $12 million in associated legal fees after using eminent domain across Highway 50 for the $250 million Park Avenue Redevelopment Project. From that, two Marriott timeshare hotels and Heavenly Village materialized.
In an extensive owner participation agreement between the developer and the city, its Redevelopment Agency has set aside $1.6 million for relocation costs for the property owners and businesses in the convention center project area.
More at stake
Moreover, the developer informed the agency that due to market research trends it needs to more than double the number of for-sale units to 268 and to add about 100 rentable units to a net 386 on the convention center hotel.
"Staff recently received this information and is analyzing any impacts it may have on the approved project," Palazzo wrote in an e-mail.
"We did a survey of other comparable hotels," Feldman said.
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