USC Negotiates for Hotel to House Students : Purchase of Embassy Sought to Overcome Shortage on Campus

USC is negotiating to buy the downtown Los Angeles Embassy Hotel, and hopes to use the 74-year-old landmark to house hundreds of students and faculty members.

The plan is the university’s latest attempt to offset a serious shortage of student housing facilities. Last August, USC moved hundreds of students into downtown’s swank Promenade Towers--and triggered a minor tenant-revolt in the process.

Lyn Hutton, USC’s senior vice president for administration, said the university could use the 252-room Embassy to house more than 400 students and faculty members if its negotiations with the building’s owner are successful.

Peter Beale, a developer fast emerging as a leader in the Community Redevelopment Agency’s burgeoning South Park area, recently purchased the hotel for a reported $11.3 million from the Knill Family Trust, which filed for protection under the U.S. bankruptcy code last summer.

The university had initially explored the possibility of leasing the Embassy from Beale, Hutton said, but later dropped the idea “because it just doesn’t fit in with our long-term plans. We’ll either buy it or look for another building.”

Fell on Hard Times

The Embassy, at 851 S. Grand Ave., was once internationally famous because it was one of Los Angeles’ few top-notch hotels. But it eventually fell on hard times and reportedly ran into financial trouble.

The hotel is on the northern edge of South Park, an area which the Community Redevelopment Agency hopes will eventually become a large, middle-class community in the core of the city.

CRA officials say that a deal to house students and faculty at the Embassy could provide South Park with an important boost because it could nearly double the number of people living in the vicinity.

That, in turn, could persuade more businesses to move into the area--and eventually encourage even more people to live there.

If several hundred new residents move into the Embassy, “it could really blow a breath of fresh air into South Park,” said Dolly Chapman, a CRA commissioner.

‘Creative Entrepreneurs’

“We’ve been faced with a sort of chicken-and-egg dilemma,” Chapman said. “Do we fix up the area and bring in new businesses to draw new residents, or do we bring in new residents to draw the businesses?

“As we get more people into South Park, I think we’ll get some more creative entrepreneurs who will want to start up businesses in the area. The students could really help South Park take off.”

Hutton said the Embassy is attractive for several reasons. Not only would it provide the university with hundreds of sorely needed student-housing units, but its 1,600-seat theater and practice rooms could be used by the school’s drama and music departments.

The Embassy also has a limited amount of office space, as well as a restaurant. If the sale goes through, the university would operate the restaurant and use the kitchen to prepare meals for residents, Hutton said.

She added that the hotel would meet the school’s goal of establishing several “residential colleges” with housing and learning facilities under one roof.

Student Housing Shortage

USC officials have been struggling to overcome a severe shortage of student housing facilities. Its dormitories are full, as are most apartments surrounding the campus.

Last summer, an estimated 300 USC students moved into Promenade Towers, a posh high-rise where penthouse rents top $1,800. The move enraged several older tenants in the building, who complained that the students made too much noise, threw wild parties and tossed beer bottles off the top of buildings. Some older tenants moved out, citing problems they claimed were caused by the students. About half of the students are still living at the complex.

Hutton said USC wouldn’t encounter similar difficulties if it buys the Embassy, in part because the school’s own management staff would operate the building and all its residents would be involved with the university. “There wouldn’t be the resentment (toward students) some people felt at the Promenade,” she said.

Beale is one of the principals of South Park Consortium, a group currently negotiating with the CRA to build a $300-million mixed-use development one block south of the hotel.

The project would be South Park’s largest, and would include 2,000 apartment units, 775,000 square feet of office space, and 280,000 square feet of retail shops. It would be spread over a three-block area bounded by Olympic Boulevard and Flower, Olive and 11th streets.

Renovated Building

Beale, who declined to discuss the negotiations, has been involved in South Park for several years. He oversaw the $11.5-million renovation of the Garfield Building at 8th and Hill streets four years ago, and also spearheaded the restoration of Giannini Place--Bank of America’s former headquarters at 6th and Hill--last year.

If USC purchases the Embassy, it will begin yet another chapter in what has been one of the city’s most versatile buildings.

The white, nine-story structure was originally built as a church. It later served as a concert and performing arts hall, a home for dance and theater groups and then as a hotel.

By the late 1960s, the Embassy was primarily housing elderly people receiving assistance from the Los Angeles City Housing Authority. It was converted back to a commercial hotel in 1983.

An agreement between Beale and USC could also benefit the Stillwell Hotel, another moderately priced facility that stands directly across the street from the Embassy.

The 232-unit Stillwell recently underwent a $2-million renovation with the help of the CRA, and would be one of the few inexpensive commercial hotels left in the immediate area.