Ukiah moves to take control of historic Palace Hotel

After 25 years of trying to cajole and coerce the owner of Ukiah’s historic Palace Hotel into rehabilitating the dilapidated three-story building, the city of Ukiah plans to take over the mammoth project instead.

Ukiah officials will seek a court order that would place an independent receiver in charge of overseeing work on the shuttered 124-year-old hotel in the heart of Ukiah’s historic downtown. It’s also possible the building could be razed if salvaging proves infeasible.

Fans of the old hotel with a checkered past - at various times it has been a bar, restaurant, music venue and low-rent apartment building - are pleased the city is moving forward with the receivership.

“It’s the only way anything is going to happen with it. It’s just falling apart by the week,” said Alan Nicholson, a local architect and member of Friends of the Palace Hotel, which for years tried to help its Marin County owner, Eladia Laines, with restoration efforts. But like city officials before them, they became discouraged by her inaction, and most now support having a court-appointed receiver take over.

This is the first time the city has sought a receivership for a dilapidated property, officials said.

City officials said the paperwork should be filed with the court next week. A court hearing on the request is expected within 45 days.

If the city’s effort is successful, a professional receiver will be appointed to oversee the work, including hiring engineers and contractors. City officials are recommending that Mark Adams, a Southern California-based receiver, be appointed.

The receiver also would have the power to borrow funds secured against the building to pay for costs, which are not currently known. There have been no formal estimates on the costs, but Ukiah Mayor Doug Crane, a building contractor, said it’s likely to cost “$10 million if it’s a dime.”

Under a receivership, Laines would retain ownership and reap financial benefits, if any, after the work is completed and paid for.

Laines, a Bay Area real estate agent, could not be reached Thursday for comment.

City officials - fed up with years of broken promises to repair the hotel - first threatened Laines with a receivership more than three years ago. Last summer, they gave her a list of tasks and a timeline that had to be met by April 21 to avoid going to court.

City officials said Laines has completed only one of the first seven tasks - asbestos removal.

Laines has been promising to rehabilitate the landmark hotel since 1990, when she and former partners purchased the 60,000-square-foot building in a tax sale for $115,000. Laines claims to be the sole owner of the hotel, but its title remains clouded. The hotel was closed before the sale and has remained so since.

Laines has periodically made repairs and some progress, usually under threat from city officials. In 2009, she hosted a well-attended wine-and-cheese gathering to show off grand plans for a remodel that included condominiums and businesses.

Laines said she’s spent more than $1 million on the hotel. She also reportedly owes thousands of dollars to contractors and others who claim they have not been paid for their work on the hotel.

The city has spent more than $100,000 on studies and staff time trying to move the project forward.

One study placed a $309,000 value on the hotel’s land but said it would cost more than that to remove the buildings.

You can reach Staff Writer Glenda Anderson at 462-6473 or glenda.anderson@pressdemocrat.com. On Twitter @MendoReporter.