A controversial development near Lake Tahoe's northwest shore will be scaled down after a settlement was reached between Tahoe advocates concerned about growth and developers seeking to continue building in the area.

The settlement, announced earlier today, wraps up nearly 15 years of legal battles between the nonprofits League to Save Lake Tahoe and Sierra Watch against Alterra Mountain Company for its plans to substantially expand Palisades Tahoe, one of Lake Tahoe’s most popular ski resorts.

The proposed expansion, which would have included thousands of bedrooms of new housing and a water park, sparked objections from not only the conservation groups, but concerns from residents worried what additional vehicle traffic could mean in the case of a wildfire evacuation.

The project, known as the Village at Palisades Tahoe, has bounced between courts and the Placer County Board of Supervisors in California since 2011.

As part of the settlement, the League to Save Lake Tahoe and Sierra Watch agreed to drop their most recent lawsuit; Alterra has agreed to substantially scale back its project. The settlement agreement still requires approval by Placer County.

While the settlement doesn’t set a legal precedent, it does send a signal to developers that effects to Lake Tahoe must be considered for any proposal in or near the basin, said Chris Joseph, communications director for the league.

“For 14 years, Olympic Valley has been at the frontlines for the biggest fight over the future of Tahoe,” Tom Mooers, executive director of Sierra Watch, said in a press release. “Now it’s another great example of how we can work together to protect the places we love.”

In a phone conversation, he expanded upon the idea, saying, “It shows to the world how mountain communities can stand up for themselves in this world of private equity owned ski resorts.”

Contentious Olympic Valley project  

Located near the northwest shore of Lake Tahoe about 9 miles south of Truckee, California, Palisades Tahoe has a storied history as one of the region’s most famous ski resorts. In 1960, the resort, under a different name, hosted the winter Olympics. The area surrounding the resort is known as the Olympic Valley.

In 2010, Alterra purchased the resort; the following year, the company applied to Placer County to redevelop and expand the ski resort’s main village. The proposed project included a series of high-rise condos, hundreds of parking spaces and additional employee housing. It also included plans for a massive water park, which ultimately became the most controversial component of the project.

The project would have taken about 25 years to complete, according to original estimates.

Despite strong public opposition, Placer County’s Board of Supervisors voted 4-1 to approve the project. Sierra Watch challenged the approval in court, arguing that Placer County violated state planning laws.

In 2018, a Placer County superior court judge rejected Sierra Watch’s challenge. Sierra Watch appealed the decision to the California Courts of Appeal, and in August 2021, the court agreed with Sierra Watch that the county ignored the proposed development’s effects on Lake Tahoe, as well as fire danger, noise and traffic. The court ordered the county rescind the project's approval by the end of 2022.

Undeterred, Alterra returned to the Placer County Board of Supervisors with a proposal for the exact same project; in 2024, the board again approved the project, and Sierra Watch, joined by the League to Save Lake Tahoe, filed suit again.

“It was the time for us to take a stronger stand to protect the lake,” Joseph said.

A new vision

The initial 2011 application requested nearly 2,200 bedrooms; in 2014, that was scaled down to about 1,500. Under the agreement, slightly fewer than 900 bedrooms will be added, a roughly 60 percent reduction from the original plan. The reduction in housing will reduce more than one-third of the vehicle trips that concerned residents.

Commercial square footage in the project’s main village will be reduced by 20 percent, and the proposed indoor water park will be replaced by a smaller mountain adventure center. The center will not have previously requested waterslides, indoor water skiing, a wave rider, wave pool, waterfalls or indoor river.

“For the entire 14 year effort, Sierra Watch has focused on cutting down the size and scale of the project as the best way to address a series of impacts … because the original proposal was so out of scale with Olympic Valley and Tahoe’s infrastructure,” Mooers said. “Yes, there will be considerable development under this proposal, but we really did address size and scale in this settlement.”

Sensitive parcels at the mouth of Shirley Canyon that were slated to become a subdivision will be permanently protected as open space.

“That in itself is a real victory for Olympic Valley,” Mooers told The Nevada Independent in an interview. 

Alterra has also agreed to not seek any additional development at the site for 25 years, but will build nearly 300 employee housing units for resort employees.

“Today’s agreement is a testament to the power of our shared commitment to this awesome place,” Mooers said. “And for everyone who got involved over the past 14 years, they should feel really good about what we’ve accomplished together.”