Owners of Lake Tahoe’s famed Cal Neva resort file for bankruptcy
What lies ahead?
On Aug. 2, 2016, Criswell-Radovan is due to appear in the Northern District of California’s U.S. Bankruptcy Court in Santa Rosa, Calif., for a status conference in front of Federal Bankruptcy Judge Thomas E. Carlson.
There, the court will set appropriate deadlines and may dismiss or convert the case or appoint a trustee if cause exists, according to court documents.
The U.S. Trustee Program is a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases.
When reached for comment by email, Shannon May, spokeswoman for the U.S. Trustee Program, wrote that “we don’t comment on cases beyond the information in the public record.”
The Cal Neva’s website, meanwhile — calnevaresort.com — remains dormant, simply boasting the following information set atop a black and white photo of Lake Tahoe: “The Rebirth of a Legend: Cal Neva Resort and Casino has closed for renovation.”
A checkered past
The Cal Neva includes 219 rooms and cottages, restaurants, a spa and open space featuring panoramic views of Lake Tahoe. The property, which has had plenty of financial and operational struggles the past decade or so, also features a 350-seat show room, 16,000 square feet of meeting space and a lounge.
According to previous reports, Namcal bought the Cal Neva from former owner Chuck Bluth in February 2005, and in 2007, Washoe County, Placer County and the Tahoe Regional Planning Agency approved a $60-plus million renovation that would remodel the hotel by turning rooms into 1- to 3-room condominiums.
Despite an original goal of construction to be finished in 2009, the property suffered a series of setbacks, and the redevelopment was ultimately shelved.
The resort’s bankruptcy problems also surfaced in November 2007, when Canpartners Realty Holding Company lent Namcal $25 million with the Cal Neva property as collateral. On Dec. 9, 2008, Fidelity National Title Insurance Company, on behalf of Canpartners, filed a default notice with the Washoe County Recorder.
That gave Namcal until Jan. 10, 2009, to settle the debt. It didn’t, and Canyon Capital Realty Advisors took over operations in April 2009 after a bidder-free, two-state foreclosure auction.
The resort also closed its casino in April 2010 after three years of operating in the red before reopening in early 2011 with a handful of slot and video machines.
Adding to the problems, the Tahoe Regional Planning Agency asked the resort in May 2010 to ante up with new environmental upgrades in the form of upgraded Best Management Practices. According to previous reports, the property had been out of compliance with environmental standards for much of the past decade.
All this led to Criswell-Radovan’s purchase of the property in 2013.
INCLINE VILLAGE, Nev. — Built in 1926, the Cal Neva Lodge & Casino, once owned by Frank Sinatra and frequented by the likes of the Rat Pack, Marilyn Monroe and members of the Kennedy family, is undoubtedly the most historic resort at North Lake Tahoe.
In more recent years, however, that history has been forgettable, as efforts to restore and reopen the famed resort hugging the North Shore’s California-Nevada state line have continually fallen by the wayside.
This infamous history is repeating itself once again, as Criswell-Radovan, the owner of the property since 2013, filed for bankruptcy on June 10, 2016, putting the multimillion-dollar redevelopment the company started in 2014 back in deep waters.
According to legal documents obtained by the North Lake Tahoe Bonanza, Criswell-Radovan owes more than $27 million to creditors affiliated with the project, including $7 million to lead contractor The Penta Building Group, which is based in Las Vegas and has an office in Reno.
Documents also reveal Ladera Development, the secured creditor of the project that’s also owed $7 million, had set a foreclosure sale initially for April 20, 2016, before extending the sale date through June 10, 2016, which prompted the developers to file for bankruptcy on that date.
Neither officials with Criswell-Radovan, or the company’s legal counsel, Jeffer Mangels Butler & Mitchell, could be reached for comment on this story, despite multiple email and phone call attempts.
Kristina Hill, an Incline Village-based planner who helped the Napa Valley-based development company acquire the necessary permits from Tahoe Regional Planning Agency and Washoe County to begin construction on the property, said Penta Construction stopped working on the project in December 2015.
“They’re not going to work for free — they have other clients who will pay,” Hill said in a June interview, noting that workers deserted the project site after it became clear they would not be paid. “It’s disappointing that they (Criswel-Radovan) only took it so far, and now it’s not even open to the public.”
A SERIES OF DELAYS
In fact, since closing the resort and casino in September 2013, developers have canceled numerous grand openings. This included an originally eyed Dec. 12, 2014, reopening to coincide with what would have been Sinatra’s 99th birthday.
A year later, a reopening slated for Ol’ Blue Eyes’ 100th birthday was nixed. Most recently, developers reportedly had their sights set on opening the Cal Neva this summer.
Despite the delays, Robert Radovan, co-owner of Criswell-Radovan, had expressed confidence numerous times — both in media interviews and in person at various community meetings and events between 2013 and 2015 — the past few years the resort would reopen looking better than ever.
“With the reopening, there will be a rebirth … it will be a totally different creature,” Radovan said in a Sept. 11, 2013, North Lake Tahoe Bonanza story. “Our goal is to be the entertainment center of the North Shore. The Cal Neva has always been an icon of the North Shore. With a new look and a return to a four- or four-and-a-half-star hotel … we plan to bring it back to what it was in its heyday.”
In 2014, when the company announced its first opening-date delay to 2015, Radovan pointed to the poor winter of 2013-14 as a main reason.
“For us, gambling on the snow season next year (2014-15), that could really dramatically hurt us,” he told the Bonanza. “When you open a hotel, you really want to have a strong building, and if we put this off, it just gives us a much more comfortable timeline.”
In the summer of 2014, Radovan even said the company had “secured all the financing,” and residents can expect “a lot of activity” into the fall on the renovation.
“We’re looking forward to opening during the third quarter of (2015),” Radovan told the Bonanza. “Everything is going really well.”
Then came news in November 2014 that Texas-based company Hall Structured Finance had closed a $29 million loan in connection with the Cal Neva’s overhaul, a decision that reportedly put the project on track for a winter or spring 2016 opening.
According to media reports, on top of the $29 million loan, Criswell-Radovan also had lined $20 million in equity, for a total financial package of $49 million.
“We are all excited to bring the Cal Neva Resort back to its former glory as the icon of Lake Tahoe,” Radovan said in a statement provided by a PR firm representing Hall Structured Finance.
However, it was at this time Radovan did not return emails and phone calls seeking further comment from the Bonanza and Sierra Sun newspapers, a trend that continued through 2015 and into this year.
‘We think it’s a good project’
Though the prospect of opening this year is no longer on the horizon, Criswell-Radovan still holds a construction schedule agreement with TRPA that they must meet to keep their permit active, said Tom Lotshaw, TRPA public information officer.
“TRPA code requires diligent pursuit of project completion,” Lotshaw said in a June phone interview, “so we will keep an eye on this schedule and see how the season goes.”
For instance, according to TRPA’s schedule, construction of Cal Neva’s southwest old pool area and northwest port cochere area is to be completed by Oct. 15, 2016.
Further, the construction schedule for the entire project includes dozens of similar benchmarks and runs until Oct. 15, 2018.
When asked about whether the project site was winterized before work was halted in December, Lotshaw said a TRPA official examined the area and — to the best of his knowledge — everything was “in good standing,” noting that a bulk of the stormwater infrastructure is already in place.
However, if the developers completely pull out, TRPA has security deposits and bonds for the redevelopment totaling about $92,500, Lotshaw said.
“At the end of the day, we support the project — we think it’s a good project,” he said. “We’re hopeful and optimistic that the project will able to continue in some way.”
Washoe County officials echoed that sentiment, as illustrated by Washoe County Commissioner Marsha Berkbigler (District 1) in a June email to the North Lake Tahoe Bonanza.
“I am hopeful that a change of hands at the Cal Neva Lodge and Casino will jumpstart renovation at the Cal Neva,” wrote Berkbigler, who also sits on the TRPA Governing Board as Washoe County’s Lake Tahoe rep. “This casino has been a staple in the community for many years, and it is imperative that this establishment once again becomes a great place for people to enjoy. I hope the Cal Neva plays a pivotal role in the economic development and growth of the area for many years to come.”
Redevelopment plans for the 10-story, 191-key resort included a complete overhaul of the Cal Neva’s interior — from the famous Circle Bar to the casino floor to the hotel’s rooms — a relocation of its outdoor pool and several exterior upgrades to comply with environmental laws, according to previous reports.
“I am very disappointed,” Hill reiterated. “I think the whole community is very disappointed, because it was a great project; nobody was opposed to it. Everybody was keen on having it renovated to bring it back to its former glory and bring it up to code. Unfortunately, that didn’t happen.”
North Lake Tahoe Bonanza-Sierra Sun Managing Editor Kevin MacMillan contributed to this report.