On paper, 39° North, a mixed-use development proposed for Kings Beach, checks all the boxes for Placer County. Both the county and the Tahoe Regional Planning Agency have identified the need to drive development to town centers to achieve environmental and economic sustainability. A key way to accomplish this is by building new, modern hotels. Studies commissioned by the county found that a major hotel in the commercial core encourages walkability and increases retails sales and shoulder season activity. There is just one problem — no new large hotel has been developed on the North Shore in 50 years.
Enter 39° North. The project includes 132 hotel rooms, 10,400 square feet of retail space, 38 townhomes, and 63 workforce housing units in the heart of Kings Beach. The Placer County Board of Supervisors last month approved economic subsidies for 39° North to ease the high cost of development in the Basin and try to overcome the half-a-century no-hotel slump. However, some Kings Beach residents as well as local grassroots and environmental organizations are critical of this action, saying it puts the cart before the horse and implies bias toward the project before the environmental process and community engagement are complete.
The Project
Menlo Park-based Kingsbarn Capita and Development is the fourth developer in 7 years to attempt to move forward with this project, often referred to as the Kings Beach Center, which is slated to be built on three separate sites all owned by the county. Kingsbarn entered the picture 5 years ago and merged with the prior developer, Craig Clark, hoping to bring the project to fruition.
“We came to think there would be a lot of real benefit in redeveloping a key town center on the lake,” said Phil Mader, president of Kingsbarn. “It’s a nice opportunity to be able to reinvigorate Kings Beach and do something complementary to the surrounding area.”
Kingsbarn spent the last year redesigning the project after it received community feedback that it was too tall and that the mountain modern architecture didn’t match Kings Beach’s community character. It reduced the number of floors from six to four, cut the number of hotel rooms from 179 to 132, changed the architecture to Old Tahoe style, increased the retail space by 2,100 square feet, and trimmed the length of the workforce housing building from 247 to 192 feet. Originally only planning to build studio and 1-bedroom apartments for workforce housing, after hearing from the public, Kingsbarn added seven 2-bedroom apartments.
“We have done a tremendous amount of changes,” Mader said. “We think Tahoe is a special place and special community and this is a special site. We will continue to refine our plans as we move through the process. This is already hugely different than where we were a year ago.”
Economic Incentives
The issue before the board of supervisors at its June 24 meeting was not approval of the development — there is still a long road to travel before the project will be ready for that step — but rather whether to approve 39° North for the county’s North Lake Tahoe Economic Incentive Program. This program, which started in 2016, was created to lessen the costs and uncertainties of developing lodging in the Basin.
The program has three components — development rights cost offset, infrastructure cost offset, and a tourist occupancy tax (TOT) rebate — and is available for new or remodeled lodging.
Kingsbarn applied for the first and third components. The development rights cost offset translates to the county helping acquire tourist accommodation units (TAU) for projects with a minimum of 40 TAUs (one TAU equals one hotel room). TAUs are a commodity that can be transferred and sold and are required for lodging developments in the Basin; however, there is a finite number of TAUs in Tahoe. As such, starting in 2016 Placer County began purchasing and banking TAUs to help with future redevelopment. The county banked 206 TAUs, of which 146 remain.
“From studies we learned that one of the largest uncertainties preventing developers from building lodging was access to development rights, which are TAUs,” Placer County Deputy CEO Stephanie Holloway told Moonshine Ink.
Paul Griffith, the county’s business development manager, put it a different way at the board of supervisors meeting.
“We are trying to make it more predictable to bring the risk down,” he said. “I think the risk here is higher than anywhere in the country. I think developers understand this.”
Last year, Kingsbarn asked for 146 TAUs, which the board rejected because it intended to save some for future projects. This time, Kingsbarn requested the reservation of 106, resulting in unanimous approval. Kingsbarn will not officially acquire the TAUs until the 39° North project is approved by the board of supervisors.
“I don’t see much of a risk right now to put the TAUs in a reservation,” said Supervisor Shanti Landon at the meeting. “It is appropriate especially when it comes to the intent of the [economic incentive] program.”
If Kingsbarn hadn’t received TAUs from the county, it would have to buy them on the open market or purchase an old hotel to demolish.
“We have done a tremendous amount of changes.”
~ Kingsbarn President Phil Mader
The only other hotel development on the North Shore that has been the beneficiary of the TAU cost offset program is the Tahoe City Lodge, which was approved in 2016 but has yet to be built. It received 60 TAUs.
The other part of the economic incentive program that Kingsbarn applied for and was awarded is the TOT rebate program, which is linked to the TAU cost offset. TOT is a 10% tax collected on all lodging properties that is paid by the consumer and goes back to North Lake Tahoe. As part of the program, 80% of the TOT generated by the new hotel and townhomes will be rebated to Kingsbarn for a 20-year period. The remaining 20% is retained by the county, with half applied to repayment for the TAUs and half invested in the county’s general fund. The TAU cost is estimated at $1.5 million for a 14-year payoff. Once the loan is paid off, Kingsbarn would continue to receive 80% of the TOT revenue as a rebate, and 20% would go to the county as regular TOT revenue.
What the county approved on June 24 is an option agreement only. If and when the project itself is approved, Kingsbarn will have to bring an official TAU loan agreement and TOT rebate agreement for approval by the board of supervisors. It could look the same as what was approved last month, or it could be slightly different.
“Developing in Tahoe is extremely complicated,” Mader said. “Being able to have some level of certainty that if the project is approved TAUs are available and participation in the rebate program is critical. It gives us a very strong foundation for moving forward.”
The only other projects that have been approved for the TOT rebate program are the Tahoe City Lodge and Evo Tahoe City, which was given the green light at the June 24 board meeting for its remodel of the former America’s Best Value Inn.
Mader notes that zero TOT dollars are being generated right now by the properties where 39° North would be built since there is currently no lodging on those sites.
Disagreeing with the Process
However, around 10 people spoke in opposition to approving the economic incentive program for 39° North, as well as addressing other issues regarding the development and the process, at the June 24 meeting. Placer County also received 54 letters.
“These are massive public subsidies, yet there is no public pro forma available to show how the project will be financed or what the community benefit will be in return,” Carnelian Bay resident Danielle Hughes said at the meeting. “There is a lack of community benefit with workforce housing that consists mostly of studios and 1-bedroom apartments that won’t meet the needs of teachers, firefighters, and families. Most troubling is the lack of public process — the project is moving forward without meaningful community engagement.”
Kingsbarn held community meetings on the project in Kings Beach in May 2024 and June 5 of this year, and the board of supervisors hosted one in January 2024.
The grassroots organization Strong North Tahoe, which was started in 2024 to advocate for small-scale redevelopment, financial transparency, and community involvement in fiscal decisions, is critical of the project and the process.
“We believe it’s too early [to approve the economic incentive program for 39° North] because Placer County has stated the public process and engagement haven’t begun yet, but in reality, behind-the-scenes things are happening that we are concerned about that would reduce public engagement and collaboration,” Kings Beach resident Patricia Orr, who is part of the Strong North Tahoe leadership, told Moonshine Ink.
Orr argues that the CEQA process has already begun, yet there has been no public notice, hearing, or scoping. Holloway confirmed that part of the purchase and sale agreement with the county last July required Kingsbarn to move forward with an environmental consultant, which signals the start of the environmental process. However, that is on hold while the applicant makes changes to the project.
Strong North Tahoe is advocating for a full environmental impact report (EIR) and the opportunity to collaborate on the design and scope of the buildings.
“The county keeps saying ‘be patient, the community will have its time to be engaged,’ but in reality, there has only been two informational meetings when the project has been actively worked on since 2023 by the developer,” Orr added. “We will absolutely support the project once the design and scope include community engagement and buy-in. At this time, that hasn’t occurred.”
The environmental nonprofit Mountain Area Preservation also had concerns about the board of supervisors’ vote.
“As an agency, you are showing bias toward the developer when you give public subsidies to a project before it goes through any type of public process, whether that be CEQA or environmental review,” MAP Executive Director Alexis Ollar said. “It shows they just plan to approve the project. That then leaves those of us who do advocacy pushed out of the scenario … It’s basically giving entitlements to a developer who hasn’t done due diligence. Environmental review is due diligence.”
Ollar emphasized the need for more public review of the project in return for public dollars.
“It’s like the community is giving a huge gift of public subsidies in order to provide this new redevelopment,” she said. “Let’s ensure that that new redevelopment is in line with the community area plan.
According to Mader, Kingsbarn’s next step is to flush out its changes to the project and submit the revised design to Placer County for review. Mader said that if everything proceeds smoothly, 39° North could go before the board of supervisors for approval in a year.
