Anaheim poised to seize Beach Boulevard motel for future affordable housing

Anaheim City Council voted to authorize eminent domain powers to possibly seize the Rainbow Inn.
On May 21, Anaheim City Council voted to authorize eminent domain powers to possibly seize the Rainbow Inn, a 42-room motel.
(Gabriel San Román)

Anaheim City Council took a rare step towards using eminent domain to seize the Rainbow Inn motel on Beach Boulevard for a future affordable housing project.

Once regarded as part of Orange County’s “road to summer,” west Anaheim’s mile and a half stretch of Beach Boulevard has become bogged down by a glut of blighted motels in recent decades.

Fallen into disrepair, many of the neon-lit motels are routine stops for a host of criminal activities, authorities say, including sex trafficking and drug abuse while also being last resort housing for homeless people.


According to the city, 120 arrests were made at the Rainbow Inn between 2017 and 2021. More than half of those arrests came in 2021.

That same year, a man was critically injured in a shooting at the motel.

Beach Boulevard, once Orange County’s ‘Road to Summer,’ is better known in recent years for sex-trafficking and drugs. Now, three cities are pushing to reimagine the historic corridor.

May 26, 2023

Before it can condemn the Rainbow Inn, Anaheim has to make an offer to buy the 42-room motel.

Having already bought out the former Anaheim Lodge and Covered Wagon motel two years ago, city officials offered Dhanuba Hospitality $6.9 million in December for the Rainbow Inn, which abutted the other two.

But the city hasn’t been able to close a deal since then.

“It has come down to price,” Grace Ruiz-Stepter, executive director of Anaheim Housing Authority, told council members. “We still are hoping that it will be a voluntary sale.”

Recent ongoing negotiations have been regarded as “positive” and will continue.

A sign promising future housing at the location of the former Covered Wagon motel.
A sign promising future housing at the location of the former Covered Wagon motel, which abuts the Rainbow Inn.
(Gabriel San Román)

Acquiring the property, either through a voluntary sale or eminent domain, would give Anaheim a continuous 2.7-acre site for a future affordable housing project, since the Anaheim Lodge and Covered Wagon motels have already been demolished.

Ruiz-Stepter noted that the Beach Boulevard lots could accommodate 120 affordable apartment units for rent and 15 townhomes for sale.

“I lived for a time at the Covered Wagon, which is a piece of slab now,” said Mark Daniels during public comment. “The rebirth of Beach Boulevard is going to be longstanding in the history of Anaheim. This is going to be a renaissance.”

Councilman Jose Diaz, who represents west Anaheim’s District 1, recused himself from the vote because he lives too close to the Rainbow Inn.

Other council members expressed a reluctance to wield eminent domain but voted 6-0 to make it an option going forward.

“We do have to utilize it when it’s necessary,” said City Councilwoman Norma Campos Kurtz. “I support this request. I am very much looking forward to having that area of Beach Boulevard provide much housing that’s needed in our city.”

Anaheim City Council approved the $5.3-million purchase of the property under its motel conversion program.

April 28, 2022

In order to go forward with eminent domain, the city would file a complaint in court and deposit a probable fair market value payment for the property.

“I’m not in favor of just throwing millions of dollars more at a property owner [who] has not been a good owner and a good partner in our city,” said City Councilwoman Natalie Meeks. “Moving forward with this resolution … will help us get through the process of a fairly negotiated settlement or a court authorized settlement that will be fair to all parties.”

The city’s Beach Boulevard Specific Plan in 2019 called for the reduction of available motel rooms along the strip by half.

Jodie Mosley, a longtime west Anaheim resident, said after the meeting that she supported the city buying out the motel but not for more affordable housing.

“We made the Beach Boulevard Specific Plan with our residents and community and we were told good businesses would be coming,” she said. “West Anaheim carries way more than our share of low-income housing already.”

If acquired, the Rainbow Inn would be the fourth motel along Beach Boulevard that the city’s taken possession of in the past five years.

Fourteen motels would remain still standing along the strip.