City Refuses Loan for Work on Old Hotel

The Santa Ana City Council voted 6 to 1 Monday not to lend money to developers who want to reopen the Santa Ana Hotel and provide 72 units of low-income housing.

Only Councilman Miguel Pulido voted for the request for a $1-million, low-interest loan for the project. Council members said they didn’t believe that the project could ever produce enough income to repay the loan, that the lack of parking would cause problems and that the plan ultimately would only turn the hotel back into the “flophouse” it once was.

A partnership made up of architect Donald Krotee, builder Al Shankle and the nonprofit Feedback Foundation is trying to put together $3 million to rehabilitate the deteriorated structure and rent rooms at rates of $165 to $250 a month. “We are talking about people who cannot afford to live in Orange County,” said Feedback spokeswoman LaDale Dunbar.

Krotee said after the council’s action that he will attempt to raise the financing from private investors. The project already has received a commitment for a $1-million loan from the state, and Krotee said private investors have been lined up for another $1 million. He would not name those private investors.

A major stumbling block to the partnership’s plans has been the opposition of the First Presbyterian Church, which is next door to the hotel. City officials have said several times that they wouldn’t recommend that the council make the loan unless full support of the church could be obtained.

Church spokesman Bob Politiski said Monday that First Presbyterian officials believe the hotel would become the “flophouse” it used to be under the plan. He said the transients who used to live there presented drug, alcohol and prostitution problems and churchgoers were frequently targets of verbal abuse on their way to services.

“The last thing the city needs is another transient hotel,” he said.

Krotee said strict state guidelines would keep transients out of the hotel. In addition, he said, a full-time manager and staff would screen all applicants and would live in the building.

Politiski, who said the church congregation has fallen from 1,642 in 1966 to 762 today because of the deterioration of downtown Santa Ana, admitted the church is interested in purchasing the property. He said possible uses would be parking, a preschool or a day facility for senior citizens.

“We’re interested in low-income housing but not in that location,” he said. “Also, it’s just not big enough for senior-citizen housing.”

Dunbar said the state, which would provide its loan through a program specifically designed for rehabilitation of old hotels, will need to see a complete financing package by Jan. 7. In July, Robert Stone, program manager for the state Department of Housing and Community Development, reiterated his support for the project despite the problems.

“This project has the potential of meeting a critical housing need in Santa Ana, and we hope very much that it will succeed,” he wrote.

The rehabilitation plan calls for the lower floor and basement of the hotel to be leased as shopping space. However, Cynthia Nelson, executive director of the city’s Community Development Agency, reported to the council Monday that space is difficult to lease in the surrounding area because of the lack of “parking and foot traffic” in downtown Santa Ana.

Nelson also said the lack of shopping centers, medical services or senior-citizen recreational services within walking distance would be a hardship for senior citizens living at the hotel without cars.