In a surprise move, Ukiah city officials are demanding that the Palace Hotel's current owner, Jitu Ishwar, submit a signed contract with a qualified structural engineering firm by today to evaluate the historic landmark's existing condition independently.
If Ishwar fails to comply with the city’s second formal order regarding the safety of the massive brick building, Matt Kizer, the city’s chief building code enforcement officer, is threatening to seek court-imposed fines and possible jail time.
“This is the only notice the city will give before taking enforcement action,” warned Kizer, the city’s chief building code enforcement officer.
It is the strongest action yet taken by city officials, who have waited months for Ishwar and a group that includes the Guidiville Rancheria and private investors to close a deal to buy the Palace, demolish the town’s most significant historical landmark, and prepare the site for a new hotel/retail complex.
The Guidiville group proposes a faux Palace Hotel in its place, complete with a restaurant, bar, event center, and boutique-style hotel accommodations and apartments.
This plan is not new, largely mimicking what an early investor proposed. However, Ishwar rejected it due to financial reasons. The Guidiville group, on the other hand, promises to fully compensate Ishwar under their plan, which relies on securing public funds for private development.
Deputy City Manager Shannon Riley said the new enforcement threat is independent of a pending state grant application by the proposed buyers in escrow with Ishwar to buy the Palace and its prime downtown property.
“We issued the first order in November, and to date, we have not received any permit application or plan to remedy the public safety issues surrounding the Palace,” said Riley.
Riley said the city voluntarily put enforcement action on hold pending a state review of the proposed buyers’ plan to seek a $6.6 million grant to investigate possible contamination of the Palace property from old underground fuel storage tanks, clean up, and prepare the site for private development.
The state Department of Toxic Substances Control has allowed weeks to pass without any announced decision.
“Meanwhile, the public safety issues remain,” said Riley. The city notified Ishwar of its planned follow-up order on April 8.
Representatives of the state agency said Monday afternoon that no timetable has been set for a grant announcement. The state agency in charge of oversight, the North Coast Regional Water Quality Control Board, has said any contamination investigation at the Palace site will not require demolition of the building, as the buyers propose.
Ishwar, his attorney Steve Johnson, the proposed Palace buyers led by the Guidiville Rancheria, and other investors, including downtown restaurant owner Matt Talbert, did not respond to written requests for comments on Monday on how the city action might affect their plans or the pending escrow.
Kizer, the city’s chief building code officer, told Ishwar in a formal written notice that he must initiate a contract with a qualified engineering firm with experience in unreinforced masonry buildings similar in size and type to the 133-year-old Palace Hotel.
Kizer’s notice referenced ZFA Structural Engineers, a firm that has thrice examined the Palace over the past 15 years and, as recently as 2022, found it still structurally sound despite serious decline under two ownerships, including Ishwar. In 2018, the firm submitted plans for a seismic retrofit of the building, which were approved at the time.
No matter what structural engineering firm conducts the demanded city study, Kizer said it must include an independent evaluation of the existing condition of the Palace Hotel structure and supported recommendations to stabilize, demolish, or “otherwise mitigate the hazard to the public caused by the current condition,” and a plan set and documentation of an engineer’s estimate of the cost of any recommendation, and a detailed scope of work necessary for reconstruction or demolition.
Kizer further set a May 14 deadline for Ishwar to submit documents and a permit application to deal with the three city demands, “showing a clear path forward to mitigation.”
Kizer warned Ishwar that if he doesn’t take steps to abate the violations in time prescribed, “the city will take enforcement action, which may include all of the following:
• Issuance of a citation for violation of Cal. Health & Safety Code §17995 (which makes violation of the building code a misdemeanor punishable for a first offense by a fine of $1,000, six months in the county jail, or by both a fine and imprisonment with the fine increasing to $5,000 for a second or subsequent violation.
• Filing a civil action to enjoin the violation as a public nuisance, recovering costs to demolish the building, taking other actions necessary to protect public health and safety, and imposing penalties prescribed to prevent a tax deduction for interest, expenses, depreciation, or amortization arising from Ishwar’s ownership.
Kizer said the city could also seek reinstatement of a court-appointed receivership, which was terminated when Ishwar bought the Palace and property for about $972,000 in 2019. If so, the receiver could take possession and control of the Palace, bill Ishwar for any repairs, and impose those costs as a lien on the property. Ishwar could also become liable for city attorney fees and related expenses.
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Guidiville Appeals, But State Oversight Agency Stands Firm
Despite intense lobbying efforts at the state level, an oversight agency is standing firm in its declaration that the demolition of Ukiah’s historic Palace Hotel is unnecessary to conduct possible ground contamination studies or remedial work.
Newly released documents show the Guidiville Rancheria early this month appealed a state funding agency’s decision to “disallow” $5.3 million in taxpayer money under a special program aimed at tribes, nonprofits, and poor municipalities. Guidiville and a group of proposed local investors wanted to use public funds to raze the three-story brick landmark, clean up the site, and proceed with private, for-profit development of a boutique hotel, restaurant, event center, and retail shops.
A final decision by the state Department of Toxic Substance Control has dragged on for weeks, deepening a divisive community debate about the fate of an iconic structure listed on the National Register of Historic Places. The Palace has been located at the corner of State and Smith streets since 1891 and, for a century, served as a social and commercial centerpiece of downtown.
Famed SF restaurateur Pat Kuleto refurbished the Palace restaurant and bar in the 1970s, but within a decade, the hotel was faltering. It closed in the 1990s and, for nearly three decades, has slid into steep decline under two private ownerships. City officials have twice declared it a public safety and health hazard since 2011.
Now, a bid to have the public finance a teardown so proposed buyers can move ahead with their still secretive plans to develop the site has created a local uproar.
For the second time, however, a state regulatory oversight agency publicly maintains that preliminary reports provided by the Guidiville Rancheria, its tribal consultant, and an investment partnership to support the demolition scheme do not support any measures beyond “standard investigation techniques” that can be used around the perimeter of the landmark building.
Heidi Bauer, senior engineering geologist at the North Coast Regional Water Quality Control Board, stated unequivocally in a formal response this week to the Guidiville appeal: “If contamination exists beneath the actual building, it likely will be from a very old release and unlikely to be still volatile enough to cause vapors to intrude into the building.”
“Even if this condition did exist, this typically can be reassessed prior to reoccupation of the building and mitigations (i.e. HVAC systems) put in place to mitigate this risk without requiring the demolition of the building,” said Bauer.
In her strong rebuttal to the tribe’s reconsideration request, Bauer discounted the tribe’s list of potential petroleum and related contaminants due to historical underground heating and fuel storage tanks that Guidiville and investors claim to be located at or around the Palace site.
“We have not seen information that leads us to believe that the environmental investigation performed to assess the risk to human health and water quality cannot be achieved using standard investigation techniques that can be employed around the perimeter of the building,” said Bauer.
The state Department of Toxic Substance Control, the state agency handing out $250 million earmarked for tribes, nonprofits, and poor municipalities, asked the North Coast Water Board to review Guidiville Tribal Chairman Donald Duncan’s April 1 request that a state decision to include no grant funding for demolition be reconsidered.
The firm response from Bauer, chief of the oversight agency’s clean-up unit, casts doubt on whether Guidiville can secure state funding for anything other than standard investigative work to determine the level of contamination, if any, at the Palace site.
It is unclear whether the lack of state funding for demolition is enough to push Guidiville and its partnership to consider recycling the Palace Hotel, which structural engineering and historic preservation experts contend is a viable alternative and could create a draw for the downtown area.
Tribal representatives, including Duncan and consultant Michael Derry, did not respond to written requests for comment on the regulatory agency’s renewed stance, nor did the attorney representing a list of potential investors, which includes downtown restaurant owner Matt Talbert and three local cannabis entrepreneurs.
In the meantime, current Palace owner Jitu Ishwar faces a new city order demanding that he contract with a certified structural engineer to evaluate the decrepit landmark and seek permits for either stabilization or demolition.
Ishwar missed the first deadline this week, and city representatives scrambled to assure the Ukiah City Council and the public that the “hard deadline” for the new city demands is May 14.
In a report to the City Council this past Wednesday, Deputy City Manager Shannon Riley said about the structural engineering and permit demands for stabilization or demolition, “Again, we’re not mandating one or the other; we’re simply stating that something has to be done.”
According to a transcript of her comments, Riley told council members, “We’re setting hard deadlines. There are penalties for failures to meet those deadlines.” Under code provisions, Ishwar could face escalating fines and possibly jail time if he does not comply.
Riley said Ishwar’s failure to meet this week’s deadline to produce a contract with a structural engineering firm was serious but not as grave as the approaching May 14 demand.
“We have some confidence, I will say, that they are working to meet the deadlines, and we will continue to keep the council and the public posted,” said Riley.
Ishwar, an investor in hotel/motel operations in the region, and his attorney, Stephen Johnson of the firm of Mannon, King, Johnson & Wipf, did not respond to written requests for comment.
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