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Lack of Transparency or Lack of Understanding?

The Kings Beach Center controversy
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Update: The morning of Feb. 6 the Placer County Board of Supervisors adopted a Resolution to approve the Purchase and Sale Agreement for the sale of the 3.5-acre Kings Beach Center to C.W. Clark with Kings Beach Center, LLC for $3 million.

Four years ago, Placer County acquired 3.5 acres of prime real estate across the street from the Kings Beach recreation area. After two years on the market, the county is moving forward with selling the land to Kings Beach Center, LLC (formed by partners C.W. Clark and Kalthia Group Hotels out of San Diego). The decision has angered some residents and a local developer, who say the selection process has been unfair and opaque, and sparked a petition that in about two weeks has collected 500 signatures. However, what many may not understand, says the county, is that all real estate negotiations are done in closed session as required by the state. The first step in the public process begins on Feb. 6, when the county holds a hearing on the purchase and sale agreement.

Late to the Party

The 16 parcels that make up the Kings Beach Center were first acquired by Placer County in 2014 after the previous owner, Steven K. Brown, defaulted on his loans. In April 2016, the county released a Request for Information to identify potential developers/buyers. The county’s goal for the land was to meet the concept outlined in the Tahoe Basin Area Plan and the Kings Beach Vision Plan, which called for a high-quality, mixed-use project with a hotel. Two potential buyers came forward: K Corporation out of Incline Village, and San Francisco-based Laulima Development. After reviewing both proposals, the county decided to go with Laulima.

“Our determination was that K Corp did not meet the criteria and that Laulima, while not exactly what we were looking for, provided the opportunity to get there,” said Placer County Deputy CEO-Tahoe Jennifer Merchant. “The Kaplan proposal (referring to K Corp President James Kaplan) … was not sufficiently aligned with the Kings Beach Center project concept. Its hotel concept did not seem consistent with what we had analyzed in the area plan — they were talking more about rehabbing what was there — and beyond that it did not demonstrate the experience or capacity to undertake a project of that size.”

Although Placer County began discussions with Laulima, the company did not respond to the county’s request for an actual proposal for the project, and thus Placer County stopped negotiations at the end of last summer. (This is a separate incident from the North Tahoe Public Utility District’s decision in December to terminate its lease agreement with Laulima for the operation and management of the North Tahoe Event Center after the company failed to verify its financial capability.)

In October 2017, Placer County received an unsolicited bid to purchase the Kings Beach Center for $3 million from C.W. Clark with plans to build a mixed-use project consisting of 80 to 150 hotel rooms, 10 to 40 residential condominiums, and approximately 15,000 square feet of retail/commercial space including around 2,000 square feet of space to serve the community, such as a library or visitor center.

Two months later, after the county had already begun negotiations with C.W. Clark, K Corp submitted a second proposal. It offered to buy the land for $3 million to build a 100-room, full-service hotel, a 20-unit condominium, 15,000 square feet of commercial/office space, and 7,000 to 10,000 square feet of retail/restaurant space.

However, Merchant says by that time it was too late.

“At this point we were already negotiating with C.W. for two months,” she said. “When you are in a good deal, why go back and look at someone else? They [K Corp] were late to the party. Nothing in there [the K Corp proposal] rose to the level that made us want to consider it.”

A Fair Process?

Alex Min, a 20-year Kings Beach resident and a real estate agent with Sierra Sotheby's International Realty who helped K Corp craft its bid, believes the process has been inequitable. He is one of 552 people who have signed a petition on Change.org asking the Placer County Board of Supervisors that community input be mandatory in the selection of the Kings Beach Center developer. Signors include Aaron Zanto, a local firefighter, and Theresa May Duggan, a local community organizer.

“The county is not looking at both offers,” he said. “There is a lack of transparency. There is no information on what C.W. is proposing while our offer is full-blown transparent — we have drawings, renderings, everything is available, so why is the county going with another company that is hiding everything? Why is the county not working with us both at the same time?”

Min believes that the county and C.W. were purposely not making public C.W. Clark’s design, but the county emphasizes that the design phase has not even started. This first step is about the sale of the property; the design phase comes next.

C.W. President Craig Clark says it will be 30 to 60 days before he has a site plan. Although he has a general idea of what he wants to do, the details will be hammered out after the sale is complete.

“Our plans include what the county advertised for — a hotel, residential, and retail,” he said. “We plan to address all the needs the community has, but the project is not even on paper yet.”

Merchant explains that the one-year escrow period with C.W. is the public’s opportunity to weigh in on the project’s design and details.

“One purpose of the long escrow is so C.W. can work with the community and Placer County to entitle the project,” she said. “The hearing on Tuesday is the first step in any public process on a real estate deal. This is when the public stuff will begin. The project will go to the planning commission, the North Tahoe Regional Advisory Council, and the board of supervisors, that’s when we will talk about design and content and see what the project looks like.”

However, Min questions why the county is not considering the K Corp proposal when it has more favorable terms, such as a $3 million cash offer and 60-day escrow. Clark says they will be financing a portion of the project, but that’s normal for large developments.

“Ninety percent of every developer in the country takes out a loan,” he said. “My partner owns and operates 20 hotels and they are all doing fine, we are equal partners. We don’t have an issue getting financing.”

Clark says the year escrow is necessary because it will take that long to go through the TRPA approval process and secure permits.

Min and Kaplan also take issue with the fact that the county has selected a non-local developer. James Kaplan lives in Incline Village, his two children go to Tahoe Expedition Academy, and his project team is composed of local professionals like architect Dale Cox and development consultant Bill Johnson, who have had years of experience dealing with the Tahoe Regional Planning Agency, which is known at times to be onerous.

“We have a local team, everyone is invested in the community, everyone has an interest in making something great in Kings Beach,” said Kaplan. “Our team received the TRPA’s 2017 Best in Basin recognition for the Tahoe Beachfront Residences. This is a difficult place to do development if you don’t have local knowledge.”

However, Clark says that his team includes locals like Auerbach Engineering and that, while never having worked with the TRPA, he has similar experience dealing with the California Coastal Commission. Like the TRPA, the coastal commission has regulatory oversight over land use and public access in the state’s coastal zone. Clark, who has built more than 25 shopping centers and three hotels, and whose partner owns and operates around 25 motels, said he plans to make one of the Kings Beach Center condos his second home.

“We strongly believe that Placer County is lucky to have someone of this caliber consider a development in Kings Beach,” Merchant said.

The Placer County Board of Supervisors’ hearing on the sale of the Kings Beach Center to Kings Beach Center, LLC is Feb. 6 at 9:15 a.m. in Auburn. Placer County’s Tahoe Administrative Center at 775 N. Lake Blvd in Tahoe City will be live-streaming the meeting, and citizens can participate and provide public comment in real time to the supervisors.

 
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August 9, 2018