[UPDATED] Rick Caruso vs. Ray Patel: Glendale Redevelopment Agency Eager to Flip Mom-and-Pop Hotel Into 'Americana at Brand'
The Golden Key Hotel is officially SOLD to Rick Caruso! Details after the jump.
As if California lefties needed another reason to side with Governor Jerry Brown on wiping out redevelopment agencies across the state of California once and for all, there's a storybook good-vs.-evil saga playing out in the Valley:
A humble little family-run hotel in Glendale called the Golden Key (awww, so secret garden) is in danger of buyout by local billionaire Rick Caruso, who's more than a little hungry to wrecking-ball that clunker and continue expanding his Americana at Brand mall dynasty.
And only the Glendale Redevelopment Agency (GRA) can declare a winner.
Being money-minded politicians, of course, GRA officials would prefer to collect the much higher property taxes that a newly assessed Americana add-on would provide -- making said politicians the obvious target of enraged citywatchers throughout the Valley and, thanks to Brown's bright Sacramento headlights, redevelopment-haters the state over.
Back when Ray Patel, owner of the hotel, was crying "not for sale," it looked as if the GRA might have to declare the land eminent domain -- a controversial process in which redevelopment agencies are allowed to seize private property and re-sell it for the "greater good."
That way, they're able to collect higher property taxes as land values surge (money Brown would rather see put straight into schools and other local services).
But yesterday at the Glendale agency's meeting, there was no talk of going to such extremes. In fact, there was no talk of the issue at all. Instead, Caruso and Patel asked for a private conference room, emerging an hour and 45 minutes later and mysteriously asking for a week's extension.
Patel hasn't returned our calls, but his agreement to negotiate with Caruso leads us to believe he may be considering selling his hotel for the right price. After all, that precious land bite out of the Americana's footprint means far more to Caruso than it's probably worth. And Patel was never completely against it: In a recent letter to the city, he wrote, "I'm open to an offer, but no one has made me one yet."
The area in which the two owners operate are within the redevelopment area, which was declared "blighted" by the GRA back in the 1970s, before it looked like the third coming of Vegas' Ballagio resort, stucco style.
Glendale City Manager James Starbird told the Weekly yesterday that the community outrage over his redevelopment agency flexing its eminent domain powers is all one big misunderstanding: In fact, he says, the GRA never threatened to do such a thing, though Patel once implied as much on a TV news report.
But it's not like they haven't done it before. The LA Weekly ran a print piece about the deal at the end of December, called "Rick Caruso's Greedy Land Grab."
Caruso's Middlebrook says Patel knew a decade ago that he was buying a business inside a redevelopment zone. By that time, the city had already used eminent domain to push out small Glendale property owners and make way for other private owners.
Some never recovered.
Hovsep "Joe" Kaprielian of the Great Carpet Company opened in 1980 and "built my family around it, I built my friendships around it. All of a sudden the city comes in and says you're out."
Before the Tuesday meeting, CityWatch LA posted an outraged piece on the subject:
Moving forward to 2010, in September, Caruso sent a letter to the City of Glendale and in effect told Glendale to bully the small business owner of the Golden Key Hotel by threatening to forcibly seize his business and property, which is Not For Sale, through a draconian process sometimes called Kelo Eminent Domain. Sadly this is allowed under California Redevelopment Law.
The City Council, which includes Glendale's Mayor, were ready to jump at a moments notice for Mr. Caruso and even ask, "how high?" without fear of falling. In this case the answer to "how high?" is the ultimate price of someone's livelihood: The Golden Key Hotel, which is next door to the Americana and was in existence long before the Americana project was even a pipe dream.
Glendale and Caruso have taught Californians that under Redevelopment Law, all properties within a Redevelopment Project Area are deemed blighted and up for grabs if you have a big time name, a Billion dollar bank account, and a favorite politician or two on your side.
In December, as documented by the Weekly, Patel was still standing his ground:
Patel told the City Council he's open to selling but just doesn't want to be bullied into a price. But Patel told L.A. Weekly that selling is not an option for his family.
The Golden Key Motel and a tenant in the second building targeted by Caruso suffered through Americana's construction. Henry David, who owns the other building, said at the Nov. 30 meeting, "Our tenant was basically put out of business for three years."
But as Glendale civic leaders and real estate interests supporting Caruso make clear, the city wants them gone.
The GRA couldn't be happier about what looked to be Patel's potential reconsideration yesterday. In December, city leaders weren't hiding their distaste for the Golden Key, telling Weekly reporter Tibby Rothman things like "They're really quite underwhelming when you look at them" and "The dated hotel, in my opinion, certainly doesn't fit in with the ... Americana" and -- best of all, from Mayor Ara Najarian -- "I don't think we're losing much, with all due respect to Mr. Patel. ... If we have to forgo the use of a mid-, how do you put it, a midpriced motel. It just don't fit."
Yesterday, again, City Manager Starbird raved to us about Caruso's proposal, which the GRA openly endorses over Patel's. The latter would be a "fine upgrade," sure, he said, but Caruso's would open a floodgate of cash for the city. He said it would provide 350,000 more square feet of retail space (including a cafe), which would mean $800,000 per year in retail tax for the city, $30 to $40 million in local construction value and $300,000 to $400,000 in property tax for the redevelopment agency.
Anyway, the coveted property is back on next Tuesday's agenda at 2:30 p.m. According to the Glendale News-Press, reporting from yesterday's meeting:
Property rights advocates have come to Patel's aid in recent weeks, calling City Hall's endorsement of Caruso's plan more about using the power of the Glendale Redevelopment Agency for big money favoritism rather than removing actual blight.
"Does the city stand with the city of Glendale, or does it stand with the wealthy or politically connected?" Mark Mlikotin, president of the California Alliance to Protect Private Property Rights, said at the morning rally before the meeting. ...
"The city's redevelopment agency doesn't even pretend they are concerned with eliminating blight," [Timothy Sandefur, principal attorney for the Pacific Legal Foundation] said, adding that it was all about development. ...
Patel has submitted a proposal to add 14 rooms and a rooftop pool to the hotel, while also reworking the exterior so that it shares a more similar appearance as the Americana at Brand.
That's one thing that tends to ring true in all recent investigations of California's redevelopment agencies: It's not about the blight.
Starbird admitted to us that, though the Americana at Brand may be a snazzy-lookin' fix to the area it immediately swallows, quality of life hasn't necessarily snazzed along with it in the surrounding community. "I can't say [conditions] have improved," he says.
"That area along Colorado has some areas that have seen better days," he says.
It's just like the giant, gleaming developments L.A.'s own Community Redevelopment Agency approves throughout its own "blighted" areas. The reality is that bum-ridden sidewalks and poorly maintained residential streets in many new buildings' shadows aren't seeing any of their moguls' profit -- as they might if Governor Brown had his way, injecting property taxes straight into schools, welfare programs and police patrol.
In Glendale, if Patel does give in to Caruso's likely bangin' offer, we can say our goodbyes to the last homely nook in the city's largest corporate castle. Next for Caruso: World domination!
Or, at least, L.A. City Hall. He's seriously considering a run for Mayor Antonio Villaraigosa's throne, and he told KNX news radio this morning that he's "not very partial to losing."
But that we knew.
Update: Caruso wins again! Turns out Patel wasn't so much standing his mom-and-pop ground as waiting for a ginormous offer that would set him up for life.
Both parties are keeping the Golden Key's final purchase price under wraps, but the Glendale News-Press digs up some telling court documents:
... In papers filed this week in Los Angeles County Superior Court, Golden Key Hotel owner Ray Patel estimated the value of the 55-room inn at between $15 million and $17 million. Its assessed value is $4.9 million, according to county records.
The deal would bring to close a three-month public ordeal after Caruso announced his intent to expand the Americana onto two properties -- the hotel and a vacant brick building. Patel has resisted, rejecting a $6-million buyout offer and publicly criticizing the city for backing the billionaire developer.
Which would put the sale somewhere between $6 million and $17 million -- not too shabby for a sort of pukey-colored ex-Best Western jammed in the middle of a 15-acre supermall. Let's just say Patel ain't publicly criticizing nobody no more.
That includes the Glendale Redevelopment Agency, who has managed to duck out of the direct line of public criticism at this point, though they wanted this thing to go through just as much as Caruso. (And though California's war against agencies of its kind rages on quite healthily).
Now, the biggest scandal in the Caruso-Patel deal is that Patel fired lawyer David Casselman just one week before the buyout, after he'd been on the case for two years. From the News-Press:
Casselman alleged that Caruso and Patel "colluded" to conceal the true value of the legal settlement, shifting money to the real estate deal, thereby reducing the fees he would receive for his more than two years of work on the case.
Ouch. Who's the fat-cat cheapskate now, eh Patel?
Originally posted February 16 at 10:45 a.m.
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