New high-end housing project underway in South Lake Tahoe; Zoning change could bring more homes

SOUTH LAKE TAHOE, Calif. - Construction has begun on a new housing project in South Lake Tahoe behind the Village Shopping Center, home of the now-closed Raley's. The ground has already broken on four homes in the approved first phase and the developer hopes to have 20 total in the project area.

The project is not without controversy as the City of South Lake Tahoe looks to amend its Tourist Core Area Plan to change two lots in the project area from being zoned as Recreation to Tourist Core Mixed-Use Housing to accommodate more of the high-end housing units.

This amendment would change the zoning of the parcel behind the old Colony Inn (“Back Parcel,” APN 029-240-011) and the parcel to the east, at the corner of Heavenly Village Way and Montreal Road (“3828 Montreal,” APN 029-441-03). When the Colony Inn was torn down in the area, most felt the parcel was intended to be permanently retired and the stream environment zone (SEZ) restored.

The League to Save Lake Tahoe's Senior Land Use Policy Analyst Gavin Feiger said the builder, HVR Acquisitions LLC, found a way to build on the Colony Inn parcel.

The zoning change, according to the area plan scoping notice, would allow the developer to build short-term rental (STR) units on both parcels in question. These would be in addition to the similar project planned for the former Colony Inn parcel at 3794 Montreal Road which is already underway since the current zoning allowed it.

The League to Save Lake Tahoe has been against the zoning change and project from the beginning due to environmental concerns. In a 2020 letter from the League to Save Lake Tahoe to the City and Tahoe Regional Planning Agency, Feiger said there were six initial concerns: Land use plans are currently in alignment but proposed changes would alter that with development patterns, stream environment zone (SEZ) impacts, scenic quality, and workforce housing concerns; Changing the desired recreation character; SEZ impacts and restoration policies and goals; Cumulative environmental impacts; as well as concerns of interaction with the then-planned Loop Road Project and a presumption there would be no significant impacts with the area plan change.

The League, along with the California Tahoe Conservancy, has been pushing back as they say the project will also impact the Van Sickle Bi-State Park which is adjacent to the lots owned by Michael Wischmeyer of HVR Acquisitions LLC, the developer of the housing project. They said it would affect the park "directly, indirectly, and cumulatively."

There was a public meeting on the project in November 2020. The first phase of the project that is underway now was approved in 2021.

When the old Colony Inn was demolished at this site an SEZ restoration was required, and the associated Tourist Accommodation Units (TAUs) were supposed to be retired and transferred off the property to the North Shore Boulder Bay project, according to Feiger.

The SEZ restoration completed by the lot's previous owner has failed and the stream zone has been impacted. The League wants the SEZ restored and doesn't want the homes to impact Van Sickle which is set to expand to include camping in the future.

Another concern they have are the "social trails" that would start when people staying in the homes would access nearby shopping and Van Sickle. They want the project area fenced in to prevent the trails.

Feiger said the project was going to the South Lake Tahoe Planning Commission in 2022, but the staff report at the time was going to say "do not recommend." He said the developer pulled the item and then the project was pushed through the area plan changes.

As it stands now, recreation parcels can only be rezoned for dense, workforce housing. Wischmeyer said the homes he is building will be about $550/square foot for the almost 3,900 square foot, three-story homes. The developer said it has been a "wildcard" for pricing with prices up significantly at 25-30 percent. He can't estimate the exact price of the homes, and the $550 is approximate, which would put the homes in the $2.1M range.

Wischmeyer said his lots are in the Town Center and in the Tourist Core Area, exactly where the voters wanted to have vacation homes and rentals.

"I'm trying to get the necessary approvals. This is a great product for the City as it moves tourists out of neighborhoods and into the Tourist Core," said Wischmeyer.

He first put in the application in 2019 to build on the lots he had purchased. Wischmeyer said he's been trying to gain support and mitigate responses from the California Tahoe Conservancy and the League to Save Lake Tahoe. Wischmeyer said he has changed the project three times to try and collaborate with the City and try and get staff support.

At this time, the current recreation-zoned lot might be used for overflow parking for the other units, said Wischmeyer. He said the area is inaccessible to the public.

The project units will be built near the Liberty Utilities substation. Wischmeyer said they will reduce the visibility of the "eyesore" with landscaping.

This week the site is being cleared for building with the removal of trees, and flattening of the building area, and is ready for footings.

Wischmeyer has lived on the South Shore since leaving the Marine Corps and graduating from college, 25 years ago. He and his family still live locally. He said locals want the visitors to be in the Tourist Core where they can walk to restaurants, skiing, the gondola, and shopping.

He said the City asked him to pull back the density of the project, so he did. He said he doesn't know the full layout of the buildings until the zoning changes are heard. The rest of the project has to go before the City Council and the TRPA board. He said once he knows the direction of zoning, then he'll know the next steps.

Whose responsibility is the failed SEZ? Processes have changed since then to sign off on completed projects, but that doesn't help the SEZ on the old Colony Inn site. It has been years since it failed and to fix it at a minimum it needs to be reseeded, and the stream environment restored. Wischmeyer said fire trucks used the area during the Caldor Fire added to the problem and their tracks now pool with water in the SEZ.

On March 18, 2008, the City passed a Resolution to permanently retire the Colony Inn site from future development as a condition of transferring the associated TAUs out of the City limits. That resolution said “WHEREAS, the Colony Inn located partially Within an area identified for SEZ restoration, Once the Colony Inn is demolished, existing development will be transferred out of the SEZ and the site will be restored and permanently retired, thereby furthering the goals of the Stateline/Ski Run Community Plan and attainment of TRPA’s thresholds.”