Ukiah City Council may seize dilapidated, historic Palace Hotel

The Ukiah City Council is poised to follow through with its threat to wrest control of the historic Palace Hotel from its owner if overdue work to remove asbestos from inside the derelict building has not begun by the council’s Wednesday night meeting.

“If they have not, it is likely that the council will vote for receivership,” Mayor Doug Crane said.

Following such a vote, the city would ask the courts to appoint a receiver to oversee either rehabilitation of the 123-year-old hotel or its demolition if restoration is not feasible.

The hotel’s owner, Eladia Laines, said Friday that her asbestos removal contractor plans to pull the city permits required for the work on Tuesday, just in time to potentially avert the anticipated receivership vote.

“The contractors are starting this next week,” she said. Laines said they’ve been delayed from starting work on the Palace Hotel by other jobs in the Bay Area.

Laines has been working on the hotel under the threat of receivership for more than three years. But the saga of the Palace Hotel under her ownership dates back more than 25 years.

The Marin County real estate agent has been promising to restore the landmark hotel since she and former partners purchased it in a 1990 bankruptcy sale for $115,000.

But little progress was made toward restoration of the three-story, approximately 60,000-square-foot building in the center of Ukiah’s historic district until the council threatened to seek receivership. Since then, work on the hotel primarily has involved removing inner walls and tons of debris and other materials from inside the building.

The city’s earlier efforts to push the renovation along have included spending more than $100,000 in staff time and studies aimed at attracting other investors and promoting a potential sale to someone who could afford the project.

Laines said she’s spent much more than that on the project herself and has shunned proposals to sell. Laines has proposed converting the hotel to shops and condominiums but she needs investors to help fund the project. She has blamed the lack of funding for the project on the economy.

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