Is Ukiah Unfairly Teeing Up to Use Eminent Domain Against the Palace Hotel?
Nossaman’s Eminent Domain Report talks about how the city of Ukiah is getting increasingly frustrated with the owners of the dilapidated Palace Hotel in the middle of its downtown, and is currently considering reviving the local redevelopment agency’s eminent domain authority to force the project forward:
Nearby residents recall the Palace Hotel serving as a hub of activity in the 1970’s and 1980’s when it housed a restaurant, a bar, and a popular music venue attracting well known acts. But the Hotel has been sitting vacant since 1988. According to the article, in 1994, more than 200 downtown merchants and customers signed a petition demanding that the city have the building either cleaned up or torn down.
The property appraised in 2006 for $309,000, but the owners purportedly want over $1 million. A study commissioned by the city concluded it would cost $4.5 million just to tear the Palace Hotel down. Like any redevelopment, the proposed use of eminent domain is drawing a wide range of opinions.
I’d be very interested to know more about the $4.5 million demo estimate—seems like a big number to just float out there all by itself. And it looks like there have been some suggestions made in the past for renovating or re-provisioning the building for other uses besides tearing it down completely. The $309,000 appraisal at the height of the real estate boom also seems conspicuously low, and I would guess it has something to do with onerous historic district regulations and other land use controls relevant to this downtown area that tend to make maintaining such properties ridiculously expensive. As a result, redevelopment agencies are able to low-ball the owners to re-provision their property as they like.