South Lake’s Chateau: Filling the Hole

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Written by Dylan Silver

The t-shirt shops seemed to stretch for a mile. Every color, design, size, shape and cut was available. They said things like “I (heart) Lake Tahoe,” “Lake Tahoe Lifeguard” and “Lake Tahoe USA Elev. 6229.” This was T-shirt Row—a reasonably priced retail strip along U.S. Highway 50 on the California side of the South Shore’s state line.

Bob Daly, owner of Shoreline of Tahoe, a ski, snowboard, bike and skateboard shop, started his business in the area. He remembers the old strip—a quirky fragment of the downtown area’s history.

“Basically, in the 1980s, it was all souvenir t-shirt shops along there,” Daly says. “They were all dominating the birth of the tourist t-shirt market. If you were a pizza shop, you got rid of your pizza and sold t-shirts.”

For the last five years, the stretch where T-shirt Row once blossomed has been a site of bankrupt development, half-filled with concrete and rebar. It was an eyesore for locals and visitors alike. The fenced-off area, originally slated to be The Chateau but better known as ‘the Hole,’ was a blemish in what was once the most prosperous part of town.

Today, it’s an active construction zone. The movement on the project signaled a positive turn in a town that was waiting patiently for any kind of growth. A new 18,000 square foot retail and restaurant space will open there this summer. Though it’s only a fraction of what was originally planned, the building will make a big difference at South Shore.

“I think it is due time to stop calling it ‘the Hole’ and start calling it ‘Happening,’” says Carol Chaplin, executive director of the Lake Tahoe Visitors Authority, which promotes South Lake Tahoe. “The fact that we have an initial phase of the Chateau poised to open in July, with local business interests looking to occupy the space, is very exciting and long overdue.”

The 12-acre lot was originally slated for a $410 million convention center, parking complex, hotel, condo, restaurant and retail complex. As the economy tanked in 2008, the developer, Lake Tahoe Development Company, went bankrupt, leaving a concrete pad with blocky columns and rebar pointing to the sky. Along U.S. Highway 50, a drab wood and cement barrier fence blocked ‘the Hole’ from the driving public’s view. That wall will come down this summer—five and a half years after it was installed.

“We thought it was important to get that section done,” says South Lake Tahoe city councilman Tom Davis. “The last five or six years, you drive by there, it was just an ugly fence.”

The stalled project quickly became the object of loathing of residents and visitors of South Lake Tahoe. It stood as a reminder of government hypocrisy and a sign of rough times. Frankly, the space, with its piles of construction scraps and silent pillars, was depressing to look at.

The process of how ‘the Hole’ came to be was also controversial. In 2006, the City of South Lake Tahoe used eminent domain to evict and buy plots under several businesses along the stretch of highway. Lake Tahoe Development Company already owned the other 29 parcels in the 12-acre area.

Shirt Stop, Pub Tahoe, Taco Bell, Paradise Timeshare, Union 76, Lakeside Landing and Daly’s Shoreline of Tahoe were among the businesses evicted before building began. Though the businesses were compensated, the procedure left a sour taste for Daly.

“I would say they used the worst kind of eminent domain procedure,” Daly says. “Originally, eminent domain was for a hospital, a freeway, a school. As the rules changed, attorneys argued that their clients would make more tax than the current leaseholders.”

Over the years, Daly found new locations for Shoreline Ski & Snowboard in Tahoe. Though he admits feeling somewhat vindicated when the project went bankrupt, he’s happy that something’s going to be built. He even considered leasing a space at the new complex, but decided against it.

“Life is too short to keep changing spots like that,” Daly says. “I want to ski and snowboard and enjoy the mountains. I don’t want to give up what little free time I have to make a point that I could make a go there.”

So will the entire convention center project ever be completed? As of March, the new developer, Owens Realty Mortgage, Inc. of Walnut Creek, bought an additional nine parcels bordering the property where the new building is going in. The purchase included the right to develop 477 hotel and condo units, more than 50,000 square feet of retail, a massive spa and about 20,000 square feet of meeting space.

“The developer felt strongly that if he did this project, he would attract some interest in the convention center and hotel,” Davis says.

Though he maintains “cautious optimism” in light of the past hurdles, Davis believes the construction and accompanying landscaping will make the downtown area look complete. The project is changing the way residents feel about their town, he adds.

“Citizens are beginning to feel pride in the community again,” Davis says. “That’s the feedback I’m getting. It’s starting to look good.”

Category: Home & Garden, Real Estate & Development