A state agency on Friday left hanging a decision about the fate of a controversial $6.6 million taxpayer-funded scheme to demolish the historic Palace Hotel in Ukiah that is sought by a Mendocino County tribe and a group of private investors.
The state Department of Toxic Substances Control officially declared that the Palace decision was “To Be Determined” after announcing $41 million in special state grants for investigation, cleanup, and reuse of contaminated sites in “historically vulnerable and disadvantaged communities.” The Guidiville application was at the bottom of a list of 17 non-profits, tribes and municipalities who received grants, and it was the only one without a dollar amount specified.
While the Guidiville Rancheria’s application was approved in general, a specific grant amount “remains to be determined,” according to state spokesman Devin Hutchings.
Hutchings said the plan outlined by Guidiville, and its group of private investors, is the focus of an “ongoing review of the proposed site investigation by necessary regulatory authorities.”
“The award requires that the proposed project and plans adhere to the requirements of all appropriate regulatory bodies, including those with jurisdiction over site cleanups and historic preservation,” said Hutchings.
The North Coast Regional Water Quality Control Board is the oversight agency for any state-funded investigation at the Palace Hotel site. Senior staff members made clear less than two weeks ago that they did not see demolition of a building listed on the National Register of Historic Places as necessary to do contamination studies on site. They said then they were unaware Guidiville was proposing to tear down the historic three-story brick structure as part of its grant application.
“We have never required demolition of a building to do any investigation for ground contamination,” said Heidi Bauer, senior engineering geologist for the regional water board, whose headquarters are in Santa Rosa.
The State Office of Historic Preservation also has made inquiries to Ukiah city officials about how the demolition proposal made by Guidiville fits with state regulatory guidelines surrounding historic properties.
At issue also is an enforcement order against current Palace owner Jitu Ishwar that the City of Ukiah issued in November after declaring that the hotel complex had become a “public safety hazard” under Ishwar and an earlier ownership spanning more than 30 years. The city ordered protective scaffolding to be erected around portions of the building, but nothing has been done since.
Shannon Riley, Ukiah’s Deputy City Manager, said Friday the city hopes to know a final outcome of the Guidiville grant application “soon.”
Riley did not respond to written questions about how much longer city officials will wait to attempt to enforce its public safety hazard order against Ishwar, and what steps if any might be taken next.
The Guidiville scheme for taxpayer support of demolition of the Palace emerged soon after Ishwar, a local hotel/motel operator and former president of the Greater Ukiah Chamber of Commerce, scuttled a planned sale to a Ukiah financier last summer.
Minal Shankar had developed plans with the aid of noted San Francisco architects and designers specializing in historic preservation. The plans called for a boutique hotel, rooftop event center, restaurants and bars, and ground-level retail shops focused around an interior courtyard.
It was later learned that Shankar’s proposal was the second serious offer in three years that Ishwar spurned in what a court-appointed receiver described as a “real estate play.” Tom Carter, a contractor who oversaw restoration of the historic Tallman Hotel and Blue Wing Saloon in neighboring Lake County, also sought to buy the Palace from Ishwar before Shankar emerged as a possible buyer.
Ishwar walked away from the Shankar proposal apparently in hopes of being made “whole” for he and his wife Paru’s $850,000 investment in 2019 for the dilapidated Palace and its prime half-block downtown site even though he has taken no steps since to stem the landmark building’s decline.
Ishwar, his attorney Steve Johnson, tribal representatives Bunny Tarin and Michael Derry, and Matt Talbert and lawyer Atilla Panczel representing the investment group did not respond to requests for comment on Friday’s state announcement, and how it might affect their pending deal.
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