A state agency says it has identified “regulatory discrepancies” in a $6.6 million grant application by the Guidiville Rancheria to tear down the historic Palace Hotel, so studies for possible ground contamination can be conducted.
After initial acceptance of Guidiville’s application, “further consideration” is required, according to the state Department of Toxic Substances Control.
Late Friday, a department spokesman declined to provide any specifics, or how the issues in question might be resolved before funds are released under a special $250 million state environmental cleanup program benefiting tribes, non-profits, and municipalities in poor areas.
“At this stage, we cannot provide detailed information about potential changes to the application or grant specifics but expect to have more clarity by April,” said Devin Hutchings, who provided a follow up statement from the department.
On March 1, the agency announced it had approved in general the Guidiville application but declared that a specific grant amount “remains to be determined.”
The state announcement raised immediate questions because it clearly identified special grants totaling $41 million for 17 applicants statewide, but left Guidiville at the bottom of its list and the only one without a dollar amount specified. “To Be Determined” was the state notation on the list of Equitable Community Revitalization Grants awarded.
At that time, Hutchings said the plan outlined by Guidiville, and supported by tribal consultant Michael Derry and a group of local investors led by restaurateur Matt Talbert, was the focus of an “ongoing review of the proposed site investigation by necessary regulatory authorities.”
In the follow up to questions raised about its announcement, the state agency issued a statement late Friday afternoon:
“We plan to meet with the applicant to explore options that will ensure compliance with all necessary regulations while also aligning with the (program’s) commitments to environmental protection and community resilience. The grant’s specifics, including its duration and financial allocations, will be determined after we’ve agreed on a path forward that meets these requirements. Our goal is to manage these adjustments collaboratively, reinforcing our dedication to impactful community projects.”
On March 1, the state agency specifically stated that its tentative grant award to Guidiville “…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.”
Guidiville’s scheme to use taxpayer dollars to pay for demolition of the Palace, a downtown landmark listed on the National Register of Historic Places, has been questioned by local preservation advocates, and the state agency charged with oversight of any ground contamination studies.
In February, senior staff at the North Coast Regional Water Quality Control Board in Santa Rosa made clear that they did not see demolition of the Palace building as necessary to do on-site contamination studies.
“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.
In its application Guidiville specifically sought $5.3 million for demolition, contending earlier court-accepted studies were inaccurate and claiming that tearing down the sprawling three-story brick structure was the only way to make a final determination about what if any contamination exists beneath the Palace. Guidiville claimed its own studies show six possible sites of underground fuel storage tanks beneath the Palace. State agencies said, however, that they did not receive copies of the private consulting studies that Guidiville cited in its state application.
Public funding to tear the Palace down and prepare the site for new development is key to a proposal by Guidiville and its private investors to buy the building from current owner Jitu Ishwar and his wife, Paru. The state grant application outlines their intent to demolish the structure, cleanup the site, and construct a new six-story complex housing a boutique hotel, event center, underground parking, apartments, and restaurant, bar, and retail shops.
Before entering into an agreement with Guidiville, Ishwar spurned two earlier proposals to reconstruct the Palace rather than demolish and create a similar complex because he could not get full reimbursement for what he paid for the building and site in 2019 despite not taking any measures to stem the historic building’s deterioration.
How the state’s delayed grant decision affects the escrow agreement between Ishwar and Guidiville, and the city of Ukiah’s months-old “emergency” declaration that the Palace is in imminent danger of collapse is unclear.
Neither Ishwar nor his attorney Stephen Johnson of Mannon, King, Johnson & Wipf responded to requests for comment. Nor did Guidiville tribal consultant Michael Derry or tribal administrator Bunny Tarin.
Deputy Ukiah City Manager Shannon Riley did not respond to a written request seeking city reaction to the new state announcement.
Normally, the state Office of Historic Preservation would weigh in on any planned demolition of a structure listed on the National Register of Historic Places.
But the Ukiah City Council preempted the state office from any oversight when it declared on November 2 that the Palace had deteriorated to such an extent that “it is no longer stable and poses an imminent risk of damage to persons or property due to its instability.”
Further, on November 6 the Ukiah city council declared the Palace statutorily exempt from demolition review under the CEQA, the California Environmental Quality Act.
In the same week, the city gave notice to Ishwar and his Twin Investments LLC to submit within 30 days a plan for stabilization of the building or its demolition.
However, as has been the city’s practice for more than three decades about the Palace’s decline, the City has done nothing since.
Riley acknowledged in recent weeks that city enforcement action was put on hold pending outcome of the Guidiville grant application, and its proposed purchase from Ishwar.
Guidiville and tribal consultant Derry are no strangers to development struggles with municipalities.
Two decades ago, a developer and the Guidiville Rancheria announced plans to build a controversial billion-dollar casino and hotel on a former Naval depot at Point Molate on San Francisco Bay. At the time the casino project was supported by the city of Richmond. The Guidiville tribe, historically located in Mendocino County, claimed it once had fishing rights at Point Molate, according to contemporaneous news accounts. Local voters in 2010 turned down the necessary zoning and permits, however, triggering a legal battle costing millions of dollars, a substitute plan to develop high end housing which later was abandoned, and now a proposal for an East Bay Regional Park development. The Guidiville rancheria as part of a settlement secured an interest in the government surplus land, and may receive a share of $36 million in state money earmarked in 2022 for development of a regional park at Point Molate.
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