A court order issued a week ago has paved the way for the completion of a sale of the landmark Palace Hotel in downtown Ukiah.
Court documents show a Ukiah Valley couple who successfully bid $972,084 in 2019 for the 16,000-square-foot hotel and State Street property, which included covering unpaid receivership fees and money advanced to the court-appointed receiver to prepare documentation for the sale, are seeking clear title so the landmark can be resold for development. Until now, the clear title to the property has been tied up in court-appointed receivership issues.
Deputy City Manager Shannon Riley said the City Council will be publicly briefed on the Palace status, and potential development plans “within two weeks.”
Superior Court Judge Ann Moorman on April 6 signed an order dissolving the court-appointed receivership that has controlled the Palace’s fate since January 2017. Moorman acted after a settlement was reached among the current lien holders, court receiver Mark Adams of Santa Monica, and the city of Ukiah to allow the sale of the Palace to be completed.
“Twin Investments has entered into, and the court has approved a Letter of Intent to negotiate a (final) purchase and sale agreement,” according to the settlement terms. Paru and Jitu Ishwar of Ukiah are owners of Twin Investments. They intend to give potential buyers “a nine-month due diligence period to develop plans and financing for rehabilitation of the Palace in accordance with a development agreement between the buyers and the City.”
Deputy City Manager Shannon Riley said the City Council will be briefed publicly on the details “within two weeks” about the plans.
The Palace Hotel fronts State Street in the downtown core and is listed on the National Register of Historic Places. A three-story brick portion was constructed in 1891, and an adjoining 20-room was built in the 1920s. For years it was the center of social life in Ukiah. It enjoyed a brief revival in the 1980s after a ‘cosmetic’ renovation before closing for good.
The Palace fell into such disrepair that it was declared a dangerous building and public nuisance in 2011 but even then, the out-of-town property owner refused to voluntarily abate the conditions. Finally, in 2015, the city petitioned to wrest control of the building from the owner and have the structure placed under court receivership, a move formally granted by the court in 2017.
Since then, efforts to sell the structure have been ongoing.
Todd Schapmire, a real estate agent, said the issues over his five years of involvement have been ‘very complex.’
Schapmire said during his time overseeing the sale of the property he realized that the highest and best use was an upscale historic hotel operation in a downtown showing a revival in restaurants and specialty shops.
“I know that years ago there was a lot of talk about demolishing the Palace but in my five years I never met anyone who was interested in the property advocating that,” he said.
There are a host of issues surrounding a possible rehabilitation of the Palace, and available parking is among them. But, it is now believed valet parking services, and the availability of city parking after hours is seen as addressing parking-related issues if the hotel is reopened.
Deputy City Manager Riley said the recently completed $7 million street improvement project in the downtown area has spurred development interest. Old water and sewer lines have been replaced, and new landscaping, sidewalks, and streetlights have been installed.
“We saw the streetscape project as a municipal investment, and we think it will lead to more projects like the Palace possibility,” said Riley.
Mo Mulheren, the elected city representative on the county Board of Supervisors, said she believes the Palace Hotel plans are a result of city efforts to revitalize the core area through infrastructure improvements including water, sewer, landscaping, and street lighting.
“Those improvements make private sector investing attractive, and I think that is why we have movement with the Palace,” she said.
Mulheren says a Palace project might hint at things to come. “I look forward to talks at the city and county level to decide what will be done with the old courthouse site now that the state has recommitted to constructing a new one.” The state has given the green light to a $118 million courthouse on a 4-acre site fronting Perkins Street near the historic train depot.
Mulheren said she likes the idea of eventually demolishing the old courthouse and relocating the Alex Thomas Plaza to that site. It has been the historic center of local government since the 1860s. “I keep hearing about a plaza there,” said Mulheren.
Mulheren said rehabilitation of the historic Palace Hotel fits with a long-term vision for the downtown core.
The Palace seemingly got a new lease on life after an investigation in 2017 determined that it was not cost-effective to demolish the structure over possible rehabilitation. It raised hope that the decaying structure could be restored in some fashion.
Mark Adams, the court-appointed receiver, at the time said it was probably not feasible to repair the building all at once. He said then he believed a portion could be developed and turned into a revenue-generating venture while the rest of the Palace waited for rehabilitation. At the time, Adams suggested the 20,000-square-foot first floor of the Palace could be developed into a boutique hotel, restaurant, bar, and retail shops.
In 2017, Adams won approval to spend $438,000 on the building to protect it from further deterioration including a fire alarm system, a temporary roof, ceiling supports, preliminary seismic retrofitting, and asbestos evaluation. Tons of interior debris and attempts at securing the building had been made by then owner Eladia Laines, a Marin County real estate agent. Multiple efforts by Laines to keep the Palace from deteriorating further failed, and the city finally acted to wrest control of the landmark structure. She and other associates had bought the building in 1990 at a bankruptcy sale for $115,000.
*The first version of this story erroneously attributed the purchase of the Palace Hotel to a local couple but we edited the story to strike their name, and references to them, after being contacted by Ukiah Deputy City Manager Shannon Riley.
The Palace Hotel money pit has attracted another victim amazing! In the late 70’s a massive amount of money was thrown into a renovation that featured a night club in the rear ‘The Back Door” and an attractive saloon in the front. But then it all went to hell. Over the years I’ve seen many restaurants and dreams come to Ukiah only to die a slow economic death. A partial renovation? Good Luck! Reminds me of Mark Twain’s definition of a gold mine, ” a hole in the ground, with a liar at the entrance”.
Twin Investments LLC is a California Domestic Limited-Liability Company filed On January 22, 2019. The company’s filing status is listed as Active and its File Number is 201902210141.
The Registered Agent on file for this company is Jitu Ishwar and is located at 494 Kennwood Drive, Ukiah, CA 95482. The company’s mailing address is 494 Kennwood Drive, Ukiah, CA 95482.
Gut the building, reinforce the exterior walls and put a parking structure there keeping the ambiance of the building while providing much needed downtown parking. The ground floor could be renovated into commercial spaces with parking above.
My first home in 1973 3rd floor SMITH & SCHOOL streets 🙂
I think it’s a wonderful idea to keep, and use the palace for revenue to Ukiah… FINALLY ! it a beautiful place and the “”city” has sat on it WAY TOO LONG !
HOWEVER, I think the money spent to Ruin our Downtown streets is a Travesty as well as wasted money !
The “city” needs to put the pipe down, step aside and let we the people decide how our town & it’s money should be !
We DONT need a new court house!
Just like we didn’t need a new post office. ! A secondary one, sure but not a new one ! The way you’ve left the old site sickens me ! We need more affordable housing / appartments !! We need to stop being idiots and allow businesses in to generate jobs! And I’m not talking “do you want fries with that” type of jobs !!!
Let’s get good head’s around here ! It’s blatantly obvious that there’s no chance for any head’s being pulled out of anything anytime soon !