South Lake Tahoe close to defaulting on parking garage


By Kathryn Reed

It has been 10 years since the South Lake Tahoe parking garage at Heavenly Village opened. It’s been a financial boondoggle since Day 1. Today it is in technical default and the city is on course to default on the bond payments.

When the area near Stateline was redeveloped, the city of South Lake Tahoe opted to own the parking garage. Throughout the years it has lost various sums of money. Currently, it is operating at about an $80,000 a year loss.

South Lake Tahoe is running out of money to pay the debt on the parking garage at Heavenly Village. Photo/LTN file

The technical default is because revenues are less than expenses. Bondholders are aware of this. But when the fund balance reaches zero or is a negative number, then the whole garage is in default. It’s possible this could occur in the next year if more money is not generated soon.

“Once all of the funds deposited with Bank of New York, Mellon have been depleted, a default on the bonds could occur if yearly parking garage revenue is less than yearly debt service (principal and interest),” Debbie McIntyre, South Lake Tahoe accounting manager, told Lake Tahoe News.

The exact consequences and steps that would be taken if the city defaults on the payments is not known.

“The supplemental reserve is $76,513. The reserve fund is $817,933, which is used during yearly operations,” McIntyre said.

As of July 31, the remaining principal payment was $7.54 million and the remaining interest payments total $5,232,500 for a total remaining balance of $12,772,500. The final payments are due in fiscal year 2027-28.

The original bond from 2002 was $9 million. The soonest the bonds could be refinanced is December 2013, which might be too late, even if it were to help restructure the debt payments.

With California getting rid of redevelopment agencies, this has further complicated the matter in terms of who actually owns the garage.

“The land the garage is on was owned by the [redevelopment agency] and now the successor agency, but the buildings are owned by the [joint powers authority] established for the issuance of the bonds. But regardless, the bondholders have title to the revenue until the debt is paid off, so although regardless of deed, the ownership is the bondholders’,” City Manager Nancy Kerry explained.

“In the case of this property, it is best to leave the ownership with the successor agency and bondholders until the debt is paid.”

To try to prevent complete default, the city is looking at ways to generate more income. But when free unlimited parking is in one direction at the casinos and two-hour free parking is at the center in the other direction, it is hard to convince people paying money for parking is worthwhile.

South Lake Tahoe and Heavenly Mountain Resort last week came to an agreement for people who have season passes to the resort to get a deal on parking. While there was a program in place last year, it did not get implemented until the snow had fallen.

Skiers who have an unlimited ski pass may buy an unrestricted parking pass for $299, while those with restricted ski passes may buy parking passes with blackout dates for $199.

Annual passes — which have nothing to do with the ski resort —  are being lowered to $500.

City officials are also talking to PADMA to see if there are ways to get people to park at the garage and to have more of the Heavenly Village businesses be part of the validation program.

Park Avenue Development Maintenance Association is the organization formed in 2002 to maintain Heavenly Village. The two Marriott properties pay 55 percent collectively, Heavenly Mountain Resort 20 percent, South Lake Tahoe 20 percent, Trans Sierra Investments 2.5 percent, and Cecil’s 2.5 percent for the upkeep for the entire center.






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Comments (19)
  1. Another X Local says - Posted: August 21, 2012

    As always, when the City has their fingers in anything, more millions down a rathole. They didn’t learn with the airport, they didn’t learn with the “convention center” & they didn’t learn with the parking garage. Unfortunately, the bond holders are ultimately going to get screwed in this scam while those who made the decision to issue the bonds get off free.

  2. John S says - Posted: August 21, 2012

    From what I remember (and I may be wrong) The city was basically forced into ownership of the garage. The Marriott crunched the numbers and said that the hotels were profitable but the garage was not therefor they wanted the city to own the garage and take the loss.

  3. dryclean says - Posted: August 21, 2012

    Ask Tom Davis and Hal Cole why this happened. They were on the city council when it went down I believe. Of course, the voters elected them to office again. Such intelligent people we have living here.

  4. JoAnn Conner says - Posted: August 21, 2012

    Lower the parking fee and fill it up more often. People would not park at Village Center, risk a citation, and walk across the street to shop or eat if the garage was more reasonable.

  5. Bob says - Posted: August 21, 2012

    The people in charge of this town have to be sabotaging it. No one is this stupid to build a garage near free parking. Did Davis and his cronies get a kick back from the contractors? Why else would it be built? The altitude has definately gotten to the people making decisions here.

  6. Bob says - Posted: August 21, 2012

    On a creative note: Turn the place into an indoor skate rink. You’ll get more people than cars in the garage. Add a few ramps for boarders. That’s the smallest garage I’ve ever seen – what a waste of concrete.

  7. Steve says - Posted: August 21, 2012

    Appropriate punishment for the costly consultant who incorrectly advised the city council that the parking garage would at a minimum break even, even if Highway 50 was closed for an indefinite period of time, would be to now place him in a pillory in the Heavenly Village and allow taxpayers their revenge. Along with the city councilmembers who naively believed him.

    Redevelopment agency debacles similar to this abound statewide, causing financial damage to taxpayers from one end of the state to the other.

  8. lou pierini says - Posted: August 21, 2012

    John S, I think your are right about the ownership issue. Does the 20% the city pays for maintenance include the heated sidewalk cost or does the city pay that amount?

  9. 30yrlocal says - Posted: August 21, 2012

    More businesses would participate in the validation program if it wasn’t so expensive. Their landlord should buy passes and give them to businesses as they pay their very high rent!

    Yankee Stadium’s parking garages are headed to default as well, The City of Santa Monica had free parking and nobody used the garages..revitalized area and now charge to park and there are lines to use them. Did you know that there are big parking issues all over the world and I even found a website dedicated to parking, lol…, and read some interesting blogs and stories.

    My solution? Offer free first hour and then charge, and require whomever owns the retail spaces to subsidize partial and purchase parking validation passes.

  10. Ron says - Posted: August 21, 2012

    How many season pass holders are going to pay $299 or $199 for a parking pass??? In the 7-years I’ve been in South Lake, I’ve parked there maybe twice. It’s too expensive when free parking is nearby. Lower the price to something realistic.

  11. Careaboutthecommunity says - Posted: August 21, 2012

    Refinance at lower rates?

    Free parking for first 1-2 hours, to lure people in, and hope they stay beyond that.

    Make Marriott and the Village pay for their garage.

    Let it get foreclosed and taken back by the bank, then Marriott can deal with them.

  12. dryclean says - Posted: August 21, 2012

    Great solutions but how about the cause of the problem. It was the city council that approved this. Turn your frustration and anger into a no vote of confidence. It was Cole, Davis and company that approved this on the city’s behalf. They hired the consultant.

  13. Parker says - Posted: August 21, 2012

    It’s crazy that our City got in the business of in essence subsidising Vail Corp! Especially since Vail has such a sweetheart deal with the Gondola, amongst other things. I say let the City default and have Vail take over & subsidize the Garage if it’s so necessary!

  14. sunriser2 says - Posted: August 21, 2012

    Green pigs, remember the transit center?

    They thought after people drove their BMW’s from the bay area they would park them and ride our bus system full of illegal’s and hobo’s.

  15. TeaTotal says - Posted: August 21, 2012

    Default appears to be inevitable.I don’t think there are ways to increase revenue or they would have been done by now. The most telling sentence in the article then becomes:”The exact consequences and steps that would be taken if the city defaults on the payments is not known.” Ya think maybe we should find out exactly where we stand as a City before we do anything?

  16. John says - Posted: August 21, 2012

    Does the garage stay full in winter? I have never parked there because of the expense and of course dropping price can increase total revenue. But only if there is excess capacity at the current price.

  17. Tahoeadvocate says - Posted: August 21, 2012

    No paid parking in Tahoe! That includes the paid parking (along with the tickets they plan to issue) along private and city beaches.

  18. HangsUpsFromWayBack says - Posted: August 21, 2012

    Go ahead make all our days better, chapter 13,the writing been on the wall since they started.

    They had to have the big snow melt machine on the top floor couldn’t even afford to to turn it on.

    We always need all this stuff to be ready for when we become a real resort town like back in the 80’s when we had american money to spend.

    Another month we’ll all be at the church looking for free hand outs.Part times jobs dry up, long time till the snow falls if it falls at all,but we got the worlds biggest scam artist Vail with a ice machine THAT SURE DOESN’T GIVE MUCH BACK CONSIDERING THE AMOUNT CASH THAT FLOWS TO THE TOP .

  19. Criticalthinker55 says - Posted: August 21, 2012

    Quote[“The exact consequences and steps that would be taken if the city defaults on the payments is not known.”]Quote

    The story yet untold.