Sale of Ambassador Hotel to L.A. School District Is OKd

A federal bankruptcy judge approved the sale of the historic Ambassador Hotel and its sprawling grounds to the Los Angeles Unified School District on Wednesday after a deal with a rival bidder fell apart at the last minute.

Just one day earlier, Judge Samuel L. Bufford had signaled his willingness to authorize sale of the 23.5-acre site to Beverly Hills developer Alan Casden, who offered $115 million for the property, about $15 million more than the school district.

But attorneys for Casden and the Ambassador’s bankrupt owners told Bufford on Wednesday that they could not come to terms on the final details of an agreement.

Casden’s lawyer said the deal unraveled over the property owners’ demand that Casden indemnify them against any lawsuit that might be brought by the school district.

“This is a very good day for schoolchildren and a very rotten day for justice,” said Casden’s attorney, Dennis B. Arnold. The agreement was “derailed by a party that isn’t even here,” he said, referring to the school district.

A lawsuit by the district loomed as a distinct possibility.

Last month, the investors who own the property, Wilshire Center Marketplace, agreed to sell the 80-year-old Wilshire Boulevard landmark and an adjoining property to the district, ending a decade of litigation. The district wants the land to ease school overcrowding in the densely populated mid-Wilshire area.

But Casden’s 11th-hour bid for the land angered the city’s elected officials. Mayor James K. Hahn, schools Supt. Roy Romer and Board of Education President Caprice Young accused him of putting commercial interests ahead of schoolchildren.

Romer expressed satisfaction after Wednesday’s court ruling.

“This is an excellent decision,” he said. “If we had not gotten that site, it would have severely hampered our ability to provide adequate classrooms in that area.”

He said hundreds of residents would have lost their homes if the district had been forced to condemn other land in the area for a school.

Romer did not rule out the possibility that some of the 23.5-acre property could be used for commercial development. But he said that decision will be considered only after the district completes its plan for a school.

“The school needs must be met first,” he said.

Casden said he was taken aback by the angry comments of Hahn, Romer, Young and others. That, he said, along with the potential for lengthy litigation, made him withdraw his offer.

“We are not in the business nor do we seek to have adversarial relationships with any governmental agency,” Casden said. “Rather than incur any governmental agency’s ill will, we would rather not be involved with the development of the site.”

He said he would consider developing a portion of the site if the district shows an interest.

Richard Levin, attorney for Wilshire Center Marketplace, said the district could take possession of the property as soon as Jan. 18.

The district initially condemned the property when it was owned by an investment group put together by real estate magnate Donald Trump. Trump wanted to erect the world’s tallest building on the site.

The district paid Trump a $48-million deposit on the property, but later decided to build classrooms elsewhere. Trump fought to keep the district’s deposit as compensation for delays that made his project untenable. By the time the courts ruled in the district’s favor, Trump’s successors had spent the money. And when the district ordered a debtor’s sale, Wilshire Center Marketplace declared bankruptcy.

Last month, the district agreed to pay Wilshire Center Marketplace at least $76.5 million to settle the case and take possession of the property. The school district also is forgiving millions of dollars in interest on its original deposit.

The now shuttered Ambassador is probably best known as the site of Sen. Robert F. Kennedy’s assassination during his 1968 presidential campaign. But its fame as a Los Angeles landmark was established long before then. It hosted kings and presidents. Its Cocoanut Grove nightclub was the premier gathering spot of celebrities and socialites during the 1930s and 1940s. It was designed by Myron Hunt, the same architect responsible for two other local landmarks: the Rose Bowl and the Huntington Library.