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The Future of Tahoe City Looks Bright

Kila Properties’ investment in Tahoe City has kick-started the town’s economy
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The Big Four

One problem for Tahoe City is that the four major property owners in the commercial core — Savemart, Safeway, Schlosser Development out of Austin, Texas (Lighthouse Center), and Napa-based Channel Properties (Boatworks Mall) — are all out-of-town landlords with no on-site property managers.

“Businesses in the center where the owners participate and are here are the ones who succeed, and the same goes for landlords,” said Monica Grigoleit, manager of the Cobblestone Center, which has been owned by a local family, the Hausermans, since 1966. “I think you have to be here to see how the businesses are doing and what the town is doing on busy days and slow days.”

When Placer County and the Tahoe City Public Utility District tried last year to create a benefit assessment district to tax downtown property owners to pay for sidewalk maintenance, snow removal, and flower baskets, among others, it was a struggle to get in contact with the four main landowners, said Tahoe City Downtown Association Executive Director JT Chevallier.

“It’s a challenge,” he said. “We want to be able to react quickly to changes in the economic and social environment, and not being able to contact four people who own the majority of downtown makes things a little more difficult.”

(Disclosure: Reporter Melissa Siig is a Tahoe City business owner and a member of the Tahoe City Downtown Association board.)

There was a time this winter when, on the surface, Tahoe City’s future looked grim. The downtown commercial core was facing a plethora of empty restaurants and storefronts. The old Zia Lina space in the middle of downtown, vacated last year, was still empty, as well as the adjoining space that once housed Subway. Moe’s Original Bar B Que, which had become a bright spot in Tahoe City since it opened in 2014, was leaving its waterfront location that hosted popular music shows. The Burrito Window was preparing to move to Kings Beach in anticipation of the demolition of the Henrikson building, the dilapidated structure at the west gateway to town whose removal seemed forever stalled by bureaucratic red tape and a lawsuit. The Boatworks Mall, which suffered severe water damage last winter, lost its two street-front businesses, making it look almost abandoned, and the Lighthouse Center has been without a major restaurant since Lakeside Pizza closed in 2014. After more than 40 years at the same location, Bank of America shuttered its Tahoe City branch in March.

Yet behind the scenes, a Tahoe City renaissance was in the works, one that is just now bearing fruit. Spurred by the investment of Kila Properties, which purchased the Henrikson building in 2013 to build the much-anticipated Tahoe City Lodge, new energy and businesses are taking root in the small North Shore town that had seen its fortunes wane as those of ski resort villages, like Northstar and Squaw Valley, and Truckee were on the rise. Along with the SR 89/Fanny Bridge Community Revitalization project, which will improve traffic congestion and create a pedestrian area in town, and the prospects of a new, modern, community-centric building to take the place of the abandoned firehouse in the center of downtown, things have never looked better for Tahoe City.

The Driver: Tahoe City Lodge

The $60 million Tahoe City Lodge is set to be the North Shore’s first new major hotel in more than half a century. Approved in 2016, the 118-room hotel, which will also feature a restaurant, rooftop pool, and bar, was set to begin construction last year but was stalled by a lawsuit that was settled in December. In April, Kila Properties received the green light from Placer County to demolish the Henrikson building, the run-down, mostly vacant building that has been an eyesore for decades. Kila Properties CEO Samir Tuma, who estimates construction to take 16 months, is optimistic about Tahoe City’s prospects.

“I am very bullish on Tahoe City. There is a lot of anticipation around the hotel,” he said. “The economy has been good for a long time, and the adoption of the [Tahoe Basin] Area Plan and new regulations and a different regulatory attitude opened people’s eyes a little bit. We will see the impact of the hotel — one that people have wanted for a long time — as a cause for optimism.”

Tuma is so positive about Tahoe City’s future that he is looking for other commercial properties to buy.

“I think the Tahoe City market is a very strong market,” he said. “There is a lot going to happen in the next 10 years. I am looking for more opportunities.”

However, right before press time Moonshine Ink learned that the Tahoe City Lodge may face another lawsuit, this time from the Rudnick family, who owns the adjacent Bechdolt building. Aaron Rudnick said the family is upset because the project infringes on their property, including taking away parking spaces and using their driveway.

“We are for tearing down the Henrikson building and for the project, but we don’t think it should be done at the expense of someone else,” Rudnick said. “Taking from us is not okay.”

If the lawsuit is filed, Tuma worries he could lose another building season, just like he lost the 2017 construction season due to a different lawsuit. Or worse.

“This could potentially derail the entire project,” said Tuma. “If it gets put off for a year or two while we fight this thing, I don’t know what will happen to the financial markets.”

On a positive note, outsiders have taken notice of Tuma’s confidence in Tahoe City. Brian Nelson, a craft bartender from San Francisco who has worked for big name restaurants like the Slanted Door and Whitechapel, is opening the Pioneer Cocktail Club along with two partners in the former Zia Lina space in June. 

“I am very aware of Samir’s project,” he said. “We felt this town is ready. We looked at Truckee and what they are doing. But with the hotel coming up, we felt this was moving the town forward. It seemed right.”

Local business owners also see the positive impact of the Tahoe City Lodge. Brendan Madigan, who took over Alpenglow Sports seven years ago, purchased his building in May with his wife, Christin Hanna of Lake Tahoe Dance Collective. He believes Tahoe City is on the verge of a resurgence.

“In my eyes Tahoe City is about to explode,” he said. “In large part, it plays off the growth in Truckee but really, the important factor is Samir’s lodge. We will look back in 50 years and see him as a visionary pioneering change in Tahoe City.”

Moe’s Original Bar B Que, whose lively music scene quickly made it a Tahoe City staple after it opened in 2014, closed in March, citing a lack of space and its landlord putting the kibosh on live music. However, Moe’s will reopen in May in the former Dockside 700 space in the Tahoe City Marina after completely remodeling the interior, and in the fall will add a brewery. Owner Eric Pilcher, who opened the pizza and ice-cream joint Mountain Slice in the old Gear & Grind Café space last August, thinks the foundations for Tahoe City’s future are being laid now.

“We’re building a new bridge, a huge hotel, three restaurants are doing a full remodel, in general there is a lot going on,” he said. “In five years Tahoe City is going to look a lot different.”

One of those other restaurants is Za’s, which is owned by longtime local restaurateur Jonny Roscher. He is relocating Za’s from behind Pete N Peter’s to the former Moe’s space on the lake, almost tripling his seating capacity. He is also expanding his taqueria, Pepper’s, which opened last year, into Za’s’ old dining room.

“I am really optimistic,” Roscher said. “We just need good places. If we have good places, we will attract people.”

The Bank of America building is getting local tenants as well. Confirming community buzz, Plumas Bank told Moonshine Ink it closed escrow on the property May 1 and will be remodeling the building, with a goal to move in before year-end.

The Challenge: Landlords

But it’s not all roses for every Tahoe City business. Many complain of uncooperative landlords who charge exorbitant rents. Thai Kitchen, which will lose its space once the Henrikson building is torn down, has been unable to find a new location that offers affordable rent. D’lish Catering, which operated the Burrito Window and is another Henrikson tenant, bought a building in Kings Beach after it couldn’t find a place in Tahoe City with a reasonable lease. Zia Lina’s Suzanne Nguyen closed the restaurant last February after her landlords, the Dyers, wanted her to go month-to-month after the lease she took over three years prior expired. When she was in escrow with a buyer for her restaurant, Nguyen said that the Dyers stalled for so long on a lease that the buyer pulled out. Nguyen opened Café Zenon at the Tahoe City Golf Course in December 2016, but says she was never able to recoup her investment in Zia Lina.

Terry Dyer and his brother, Paul, own the Trading Post Center at the east end of town and the Zia Lina building, totaling approximately 30,000 square feet of commercial real estate. According to Terry, when a rentable space goes unoccupied it’s because of the inability “to find tenants that are qualified and are willing to do improvements.”

As an example, Thai Kitchen was interested in the Zia Lina space but could not afford to make the upgrades. The restaurant needed a new hood at a cost of $50,000, according to Thai Kitchen manager Bob Keach.

The Tahoe City Downtown Association has recognized that the landlord issue is a real problem for businesses. TCDA hopes to work with the North Lake Tahoe Chamber of Commerce to talk to landlords about what their current needs are to fill empty commercial spaces, such as financing or permitting issues. Another focus is working to engage the four big commercial properties owners (see sidebar).

“Personally, we want to see a vibrant economy that takes into account the needs of landlords and tenants, and that keeps tenants in spaces long-term,” said TCDA President Katherine Hill. “When they move out for whatever the issue is, we lose a vital part of Tahoe City.”

Channel Properties, owner of the Boatworks Mall, did not return multiple requests for comment about plans to fill its vacant spaces. However, Schlosser Development, which owns the Lighthouse Center, is in the beginning stages of expanding. (Safeway purchased its portion of the center in 2015, which includes the former Lakeside Pizza.) It has initial plans to build a 2,500-square foot building in the north corner of the parking lot. While Paul Gaddis, Lighthouse project manager for Schlosser, said the company normally doesn’t like to build without a tenant, it is proceeding with the project because, “We believe in Tahoe City and are willing to spend the money to move it [the building] … down the road.”

Completing the Transformation

Hill is excited for the $34 million SR 89/Fanny Bridge project, which started last year and will replace the aging Fanny Bridge with a new two-lane bridge over the Truckee River, realigning Highway 89, and the installation of sidewalks and three roundabouts — one at the wye and one at either end of the new Highway 89 alignment. The portion of the decommissioned highway from the old Fanny Bridge to the new roundabout on the West Shore, about one-third of a mile, will become a local road owned by Placer County with sidewalks, lighting, and a bike path, with the option to be closed off for pedestrian events, such as farmers markets or street fairs like Truckee Thursdays. Phase two of the project is expected to begin May 1 and wrap up by mid-October. The Tahoe Transportation District has a project schedule on its website.

“Along with improving traffic we get a whole new section of Tahoe City that is walkable,” Hill said. “It will really transform Tahoe City and connect the part of town that does not feel connected — Bank of the West and Front Street Station Pizza — to one core part of Tahoe City. It will be transformational.”

A future project that Hill and many others are also looking forward to is the transformation of the old firehouse properties near Commons Beach. Placer County staff recently narrowed the field of four proposals down to two — Siren Arts’ multi-use community space centered around arts and culture and The Commonwell, which envisions a modern building with a market hall, waterfront amphitheater, and community pool. The county has applied for a $250,000 Tahoe Tourism Master Plan grant to cover the costs for further study of the projects’ financial feasibility, and a decision on the application should be reached in June. Stay updated on the firehouse project.

“I think Tahoe City is in a good place, and coming into an even better place,” said Cobblestone Center manager Monica Grigoleit, noting that the commercial hub’s 35 spaces have been full for the last year, and even has a waitlist. “With the Tahoe City Lodge finally approved, new roundabouts, and a lot of young blood coming into town, there are a lot of good changes. I feel like Tahoe City is going to keep growing. It’s going to be a hot spot.”

 
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October 11, 2018