Tahoe City: Evolution or Devolution

by Susan D. Rock

Something's happening to Tahoe City—businesses have closed, nightspots have disappeared—yet the town itself is more attractive than ever, with new parks, bike trails and sidewalks. What's going on at this historic corner of The Lake?

This past autumn, Tahoe City art gallery owner Andrew Bolam pulled up his stakes and relocated his retail space to the newly expanded Village at Northstar. One of several longtime Tahoe City retail and restaurant owners who have either moved, closed up shop or changed hands over the past several months, he's part of an exodus that's left some local residents wondering if the transformation is part of a trend.

While rumors of every sort circulated last summer about businesses leaving town, the fi nal tally in the fall ultimately included Bolam Gallery, Pierce Street Annex, Sierra Vista Lakefront Dining, Baskin Robbins, Village Sports, Painted Rock and Radio Shack. And that's just in the past year. Locals, many of whom lament the loss of the lower-priced eateries and nightspots that made once made Tahoe City fun, funky and affordable, are wont to list the other casualties of recent memory: Stony Ridge, Za's, Naughty Dawg, Hacienda del Lago, Coyote's Restaurante Latino, Yama Sushi, Mandarin Garden, Lakehouse Pizza (the latter two due to fi re) and more.

But reports of Tahoe City's retail demise are greatly exaggerated, say its supporters, asserting that the local shopping, dining and entertainment scene is alive and kicking. Longtime fi xtures say they had one of their best summers. "People like doom and gloom," says Dave Wilderotter, owner of the multiple locations of Tahoe Dave's. "We had a record summer, and most others will probably say the same. As soon as the dust settles, people will get rid of the negativity."

So what's driving the sense—real or imagined—that more businesses than ever are shutting their doors and taking Tahoe City's vibe with it? There are certainly multiple pressures on the town's business community, and yet, multiple reasons why Tahoe City is more attractive to shoppers and diners than ever. Several factors are defi ning the future of this historic town. Can this place hang on to its heritage of hospitality and fun, or is it really in danger of losing its mojo?

In the Shadows of Others

Competition for North Shore disposable income is greater than ever. Shoppers, diners and partiers that once frequented Tahoe City are hitting shiny new playgrounds: Truckee draws a steady fl ow to its revamped, historic downtown strip, and the new self-contained villages at Squaw and Northstar-at-Tahoe attract visitors to upscale boutiques, trendy eateries, pedestrian-friendly plazas and ubiquitous fi repits. There are events, activities and an energy that keep folks from straying and spending time and money elsewhere. And while it might be true that these new and improved destinations are bringing more people to the area in general, some Tahoe City business owners say they're also taking dollars away.

"Truckee and Squaw are the biggest contributors to the drop-off in business," says Bolam, who saw a dramatic dip in sales after Squaw's new village was up and running. "Places like The Village at Squaw attract people who have money and want to shop. It offers a quality experience. People say that Tahoe City has The Lake, but The Lake doesn't necessarily make for a wonderful shopping experience." Bolam hopes to better follow the shoppers with his move to Northstar.

Some Tahoe City businesses have experienced a boomerang effect, however, after the novelty of the new places wears off. "There was a real lull for us after Squaw and Truckee," says Douglas Dale, chef-owner of Wolfdale's for nearly 29 years. "Everybody goes to the new hotspot. They sort of took the interest away from us, but about 2 years later, we were back on the circuit and customers came back." Because he's been in business for so long, Dale was able to weather the storm without longterm fi nancial consequences.

One new restaurant owner in town says that competition is good for business—and worrying about it is misspent energy. "Everyone is so concerned about what everyone else is doing," says Brian Reccow, owner and general manager of Sol y Lago. "If the experience at Northstar, Truckee and Squaw encourages more people to come to Tahoe, great. We should be doing things that complement each other."

Extreme Seasonality

Tahoe City businesses have always endured long slow seasons. For some, the ups and downs have been a welcome respite. "Seasonality is good," says Wilderotter. "It gives us time to change over our stores. We're so busy in summer and winter that, without the downtime, we would probably burn out."

But for others, it's tough to weather. "I need more than a month and a half of business a year to survive," says Bolam, who thinks Northstar's resort setting will provide a steadier fl ow of traffi c. "Outside of our busy season in July and August, I can't tell you how many Saturdays and Sundays I sat in the store with no sales."

Laura Seligman, who decided not to renew the lease for her Painted Rock pottery studio in Cobblestone Shopping Center after eight years in business, seconds Bolam's notion. "It's tough running a business when it's so quiet off-season," she says. "I decided not to spend all my money trying to make money and look for something more fi nancially effi cient." Seligman plans to continue offering paint-your-own pottery in area hotels and at private parties.

"The seasonality is probably more extreme than ever," says Dale, of his Wolfdale's restaurant. "When it's busy, like this summer, it's extraordinarily busy. When it's slow, it's extraordinarily slow. We have to manage accordingly."

Nearby, Sierra Vista's owner has decided that it's not worth managing. After trying to sell the spot for two years, and defl ecting rumors of its demise nearly up to the very end, Wayne Smith, who bought the restaurant and nightclub in 2000, closed his doors in September, telling the Sierra Sun newspaper that "going on into another long, slow season is not the best thing for us right now."

Changing Population

Tahoe City's shifting demographics have also affected the overall retail climate, particularly during the off-seasons. There has been a steady exodus of year-round residents, many of whom cashed in on the rising value of their property and sold to second, third or even fourth homeowners. Young families have been disappearing along with many of the part-timers who used to come up with the kids for the whole summer.

One business that depends almost exclusively on the little people is ice cream—and the local Baskin Robbins had lost enough of its clientele over the past four years to close its doors this past fall. "More expensive homes in town means less kids, and those are our customers," said owner Debi Pierce. She and her husband Steve had owned the franchise for the past eight years and were facing an expensive upgrade. "I'm very sad for the community, for the children. This was their store. We literally watched them grow up."

A shrinking pool of potential employees combined with escalating real estate prices also makes it tougher to recruit staff and get them to stay in the community. "Many of us came here in our twenties, settled down and started careers and businesses," says Cindy Gustafsen, assistant general manager of Tahoe City's Public Utility District (TCPUD), recounting personal experience. "People can't do that now. Twenty year olds can't come here and build a future and think they can afford a home and raise a family here. And as a person who was able to do that, I'm very saddened. The employees that we hire can't have that dream for a life here."

"The changing demographic makes it hard to fi nd employees to provide an excellent level of service," says Dale, whose upscale establishment depends on a professional staff. "There used to be a lot of young people going through town for whom an hourly wage made sense—it doesn't anymore. There's just not the job pool here. I've never before had to look for employees in the middle of August." Dale, who put his wife, son and daughter to work this past summer, also borrowed employees from his brother's restaurant, Le Colonial, in San Francisco.

The high cost of living on the North Shore also makes it hard for would-be small business owners to make a go of it. "It used to be that businesses with a net cash fl ow in the $60,000 to $90,000 range were easy to sell," says O'Neal broker Michael Willette, who has been closely involved with the sale of commercial enterprises in town for the past several years. "Now even franchises are hard to sell. There's no way to buy the business and make enough of a living to move up here."

Normal Evolution?

But reasons for selling or shutting a business aren't always dark and sinister—often it's just the right time. "Everything's always for sale," says Wilderotter, who expanded his Tahoe City store when the adjacent Village Sports closed. "If you've been doing the same thing for 35 years, it's maybe time to do something else. There is a normal changeover in businesses here. People that are successful remain successful by updating their existing businesses and making them stronger. Turnover is healthy. At some point, people don't want blacksmith shops anymore, and record stores will go away. The stores that change with the times prosper. The longtimers are still here because they adapted."

Carol Hester, who has owned Geared For Games in Boatworks Mall for nine years, agrees. "Some of the businesses that have closed, yes, it's because of hard economic times, increase in rent, lack of employees. But for others, their kids graduated from high school or they've been in the business for 20 years, and it's time for change." Hester points to Pierce Street Annex, which closed in September after a 2-decade run to move to a Reno location, as an example of the latter. "Some of it is just turnover. It's not all doom and gloom."

But Hester concedes that commercial vacancy rates in Tahoe City indicate that rents may be a little high. "If our rates were market value, there would probably be more people in here," she says. She hopes for a market adjustment when new properties, such as the Custom House, designated for retail and professional space, are ready for occupancy.

Even so, due to Tahoe's public agency approval process, new construction or improvement to existing property can be so onerous that few are willing to undertake the effort. "Various agencies can tie up a project so long with reviews that building costs are no longer economically feasible," says O'Neal's Willette. "There is a growing awareness that there has to be some fl exibility."

"With all the public investment we've made in the community, there hasn't been a commensurate amount of private reinvestment," agrees TCPUD's Gustafsen, "and a lot of people attribute that to all the rules and regulations. The cost and the limitations on what you can do with a commercial property make it pretty unfeasible for people to do much to their property, and until you get a return on investment, investors aren't going to put a whole lot more money into it."

In an effort to ease the pain, Placer County is talking to property owners about strategies for redevelopment; one solution being discussed involves swapping coverage (one measure tracked by the Tahoe Regional Planning Agency) to permit more development downtown while restoring areas around the perimeter of town.

What's Not to Like?

While some merchants report a drop in foot traffi c over recent years, it's not for lack of ability to get around town—Tahoe City has implemented over $15 million in public infrastructure improvements over the past several years. "We've made it easier to park and walk around town, and we've expanded bike trails and installed fabulous sidewalks," says Gustafsen.

The Placer County Redevelopment Agency approved two additional parking projects to help alleviate a shortage that some business owners say makes it hard to get customers through the door during peak periods. A lot near the corner of Highway 28 and Jackpine Road was recently fi nished, and a threelevel garage at the Tahoe City Marina is on the books for 2009.

Construction was also underway late this fall on Heritage Plaza, located between Syd's Bagelry and Watson Cabin. The town is hoping that the small amphitheater, picnic tables and lake views will provide a street-level spot to gather, nosh and attend events—a smaller version of the successful Commons Beach renovation nearby. The extensive renovation of the dam area has also been completed, along with part of a bike path that will extend along the lakeshore to the east.

Getting Aggressive

Few resort towns can depend solely on reputation, and some think that, for many years, Tahoe City hasn't done enough to sell itself. "We have some outstanding dining and shopping and have rested on our laurels being here on The Lake," says Hester, who is also president of the Tahoe City Downtown Association (TCDA). "We need to do more marketing and outreach to let those folks who might be spending a week in Squaw or Truckee know that The Lake is a unique experience for a day or evening. As business owners, we need to work together. The more businesses that get involved with TCDA, the better, and the better things are going to get for Tahoe City."

One strategy involves bringing more people downtown by hosting continued summer concerts, more festivals, and printing event calendars, walking maps and marketing pieces targeting drive-up markets like Reno, Auburn and Grass Valley. The TCDA's new economic restructuring committee has been consulting with business and property owners on strategy and also conducted surveys of residents and visitors at the farmers' market last summer.

Keeping Perspective

When the popular Hacienda del Lago went up on the block, restaurateur Brian Reccow and his partner, chef Johnny Alamilla, jumped on the prospect and transformed the Mexican restaurant with a complete remodel into the upscale Sol y Lago, serving "Sierra Latino" cuisine. "Here was a great opportunity to do something special," says Reccow, who had lived in the area in the 1990s and then owned several eateries in San Francisco. "A lakefront location like this happens every 25 years. And getting back to Tahoe was coming full circle for me."

This corner of The Lake has long held great allure for residents and visitors alike. It's a place where business owners still strive to do "something special." And at the end of the business day, say many, it's not about the money. "You have to ask why you're in business here in the fi rst place," says Wilderotter. "This is a lifestyle choice. Those that are here only for big profi ts end up moving to Reno or Sacramento. I could probably make more money there, but I'm not here only to make money. I'm here for the lifestyle. It's about getting the bills paid and having a good time. It's about the powder."

"I'm not going to make a fortune off my business," agrees Hester, "but I bought a job and a great way to live in Tahoe."

And, who knows, maybe it will be Tahoe City's turn to shine soon. Truckee reported a tough winter season last year, a few businesses at the Village at Squaw have already turned over and its second phase is on hold, and the Village at Northstar may be under construction for the foreseeable future.

"I still love Tahoe City," says Bolam, of his gallery's former home. "If I could stay there and just break even and pay the bills, I would. I'm moving out of necessity, not desire. I would spend another ten years there if I could. But there's no sense in working for free."