City of Ukiah Orders the Owners of the Palace Hotel to Either Stabilize or Demolish the Historic Building

The City of Ukiah is refocusing its attention on the Palace Hotel, after a promising deal with an out-of-town investor fell through. At a special meeting on Wednesday afternoon, Building Official Matt Kaeser presented a slideshow of deterioration that the city believes has accelerated in the last year and a half, due to water intrusion during a wet winter.

City Attorney David Rapport said the project is exempt from environmental review because much of the worst damage occurred during an emergency declared by the governor, and the building poses a risk to health and safety. City Manager Sage Sangiacomo summarized the order, which did not require Council approval.

“The building official’s order here is for the owner to initiate stabilization or demolition of the structurally unsound building,” he began. “We’ve always wanted to see preservation of this structure. We still hope preservation is an option that is on the table for consideration. But first and foremost, the health and safety issue has to be addressed.”

Kaeser went through a series of photographs he took when he inspected the site with the city fire chief and two battalion chiefs on September 29th. Describing one of a pair of side-by-side photos, he pointed out the light coming through some holes in a ceiling, where the floorboards of the story above had fallen apart. “As we went through the building, we all stayed pretty far apart,” he reported. “The four of us pretty much went around in a group, but we stayed far enough away that one of us could rescue the other if we fell through.”

He added that the south side of the building, which is made of concrete and is newer than the portions built out of wood and brick, still seems fairly sound. His main concern is the oldest part of the building, on State and Smith Streets. “That’s where the hazard is,” he said.

Kaeser has the authority to issue an order to the owner to devise a plan to stabilize or demolish the building within 30 days. However, Sangiacomo signaled that the plan won’t necessarily have to be complete by the end of that time. “We fully expect that ownership will come to the table and say we need more time to do these things, these things, these things,” he said. “In the interim, we’re going to do this, this, and this to mitigate.

- Advertisement -

During public comment, Susan Knopf expressed limited patience. “What I’m hearing is, well, we’re entering into new negotiations now,” she said. “If that’s what the plan is for tonight, then I hope that every step of that plan has a very short timeline. I don’t want to come back here in a year and hear dadada, there’s a legal thing.”

Stephen Johnson, the attorney representing the owner, Jitu Ishwar of Twin Investments LLC, described a complex chain of custody. The current owner and an unnamed potential buyer have been meeting with city management about the future of the Palace Hotel. “My client made a poor investment by investing significant funds with the receivership,” Johnson said. He stated that his client was the only investor in the receivership, back in 2017. Three years later, he followed the advice of the receiver and foreclosed on the Palace, which made him the default owner. “The receivership was still in place,” Johnson related. Between 2017 and 2022, “The effective control of the Palace Hotel was in the hands of the receiver and the Superior Court of Mendocino County. My client was not in control of that building.”

Johnson said the owner is engaging a structural engineer to evaluate the building, and he thinks thirty days is not enough time to obtain expert opinions. Council member Susan Sher sounded like she thought there had been enough time to do something with the Palace. “We can get into technicalities about when the owner became the real owner and maybe the receivership was still in existence,” she said. “But there’s just been too many years of neglect and nothing done.”

Mayor Mari Rodin recalled that she was on the council during the years’-long hearing with Eladia Laines. “And I tried to play the mean cop, but council members just kept giving her more time and more time,” she said. “We should have nipped it in the bud a long time ago. But now that it’s a danger to the public, we have to take this action.”

The council voted unanimously to adopt the resolution approving Kaeser’s recommendation.

- Advertisement -