Guidiville Rancheria was awarded a fraction of the millions of dollars in public funds it sought to demolish the Palace Hotel.
The $200,000 state award was announced in a letter late Wednesday afternoon. It was a serious setback for Guidiville tribal leaders and a proposed local investment group, who tried to tap into a special state program to help underwrite the costs of tearing down the historic landmark and redeveloping it into a new hotel/retail complex.
The tribe’s controversial quest for taxpayer support eventually engulfed the state Department of Toxic Substances Control leadership in politically charged strife since an initial award was announced on March 30, with the amount “To Be Determined.”
Wednesday’s announcement made clear that after a long review, top agency officials formally decided the special state funds “cannot be used to fund demolition.” The official letter to the tribe was signed by Craig Scholer, chief deputy director of the state agency.
Guidiville was given the choice of accepting the state award as outlined Wednesday or seeking a meeting before the agreement is finalized “so that we can collaboratively determine if additional adjustments to the scope are required with revisions to the funding allocation.”
Internal agency documents obtained last week revealed the level of dissent within the agency, including the assertion of a top administrator that she was not sure a Guidiville award would even be legal.
Diane Barclay, the agency’s Northern California Division Chief, wrote in a May 8 memo that she feared the rancheria might have been used as a “mule” by tribal leaders and private investors seeking to fund the demolition of the 55,000-square-foot brick landmark to help finance their development plans under the guise of ground contamination issues.
Barclay told the agency’s legal staff that awarding millions of dollars Guidiville sought is a “nonstarter and probably not even legal according to what we are supposed to be using this money for.”
“I will go to the mat on this one,” vowed Barclay.
On Wednesday, the token award was announced.
Guidiville tribal Chief Donald Duncan and tribal consultant Michael Derry did not respond to requests for comment on the state action or on how the drastically reduced award might affect plans to buy the brick building from current owner Jitu Ishwar.
Ishwar and his attorney, Stephen Johnson, also did not respond to requests for comment.
Tribal representatives, local investors led by Ukiah restaurateur Matt Talbert, and Ishwar have refused to publicly discuss their plans since last October despite requesting millions in taxpayer dollars to move their project forward.
The North Coast Water Quality Control Board, a state oversight agency, raised the first red flag earlier this year. It determined that the demolition of the Palace was unnecessary to conduct investigations at the site for possible contamination, a claim tribal leaders and their consultants initially made.
Senior staff said they had not seen information “that leads us to believe the environmental investigation performed to assess the risk to human health and water quality cannot be achieved using standard investigative techniques that can be employed around the perimeter of the building.”
Since then, the Water Board has determined that “there is no necessity for interior access to the building because any needed investigative work can be done in the exterior areas without demolition.”
After weeks of indecision and internal strife, the state agency formally rejected Guidiville’s April 2 appeal of a determination that funds from a special $500 million, four-year state program aimed at assisting tribes, non-profits, and poor communities to recycle contaminated land into new and profitable uses.
Scholer, the agency’s chief deputy director, told Guidiville in the notice of denial of its appeal, that money is available through a state water resources board program seeking to replace, remove, or upgrade underground storage tanks by 2025.
“We are eager to collaboratively advance this project, honoring our mutual commitment to environmental restoration and community,” wrote Scholer.
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