In the battle waged over the fate of the Golden Key Hotel, the mudslinging promises to come to a head Tuesday, when city officials will conduct a public hearing on the competing development proposals.
Both sides are expected to turn out in full force Tuesday at City Hall, with supporters of hotel owner Ray Patel scheduled to organize and march from the downtown site before the meeting.
Representatives for Rick Caruso, the developer who wants to expand the Americana at Brand onto the Golden Key property, say Patel has run his Colorado Street hotel poorly, pointing to the 2007 loss of Best Western affiliation.
Patel said the Americana at Brand hasn’t lived up to a 2004 profit-sharing agreement with the Glendale Redevelopment Agency.
And to top it off, a Sacramento property rights group wants an investigation of alleged “abuse” by the Redevelopment Agency, which is slated to decide Tuesday whether to accept Caruso’s proposal to acquire and redevelop the Golden Key property.
Redevelopment agencies have the power to remake blighted areas, securing for cities a larger portion of the resulting tax revenues than would otherwise be the case. Gov. Jerry Brown contends that the agencies do not stimulate the economy, and that the extra tax dollars they collect should go to school and county budgets.
On Feb. 2, Glendale’s redevelopment agency was singled out by the California Alliance to Protect Private Property Rights, a Sacramento lobbying group. The alliance sent a letter to state Controller John Chiang’s office, asking that Glendale be added to a list of 18 agencies being audited in the wake of Brown’s proposal to eliminate the agencies statewide and consolidate their income under Sacramento.
In his letter to Chiang, alliance President Mark Mlikotin accused the city of inappropriately seeking to assist the Americana at Patel’s expense, arguing that “such corporate welfare was not the intended purpose of redevelopment agencies or eminent domain.”
Controller’s office spokeswoman Hallye Jordan said the request is one of more than 50 the office has received to add one redevelopment agency or another to the audit list. Glendale won’t be added to the group of 18, she said, but the letter will be forwarded to investigators for review.
When Patel bought the Golden Key in 2002, it was a Best Western International affiliate, a designation widely recognized by consumers as indicating an inn is clean and safe.
Best Western officials inspect each hotel in the chain regularly, testing for cleanliness and maintenance of materials, from bed coverings to coffee makers.
At first Patel’s operation passed inspections easily, with scores exceeding 800 out of a possible 1,000. But in January 2007, the Golden Key’s score plummeted to 260, with problems ranging from stained bed covers to cracked parking lot pavement, according to records made public in Patel’s 2008 lawsuit against the city and Caruso in Los Angeles County Superior Court. The Golden Key lost the Best Western affiliation later that year.
In a 2007 letter to Best Western and in recent interviews, Patel said his attention to day-to-day business was compromised by construction of the 15.5-acre Americana, which started in 2005 and ended in 2008.
Matt Middlebrook, a spokesman for Caruso Affiliated, disputed that.
“The construction of the Americana has no bearing on whether he has stains on the sheets or carpeting,” Middlebrook said. “Losing the Best Western logo speaks directly to Mr. Patel’s ability to operate a hotel.”
But Patel has fought back in his own way, arguing Caruso hasn’t fulfilled all that was pledged to Glendale when the Americana was proposed.
In the Golden Key’s expansion proposal, developer Michael Hall contended that the Americana “has not met its pre-project financial targets.” He referred to the 2004 agreement that calls for Caruso and the city to share Americana profits in excess of 11.75% in retail sales and 8.25% in rentals of 238 apartments at the site.
The city’s written summary of the provision, however, states the profit-sharing deal “is not expected to be triggered over the life of the agreement.” The deal was put in place only “if the project becomes more successful than originally forecasted,” according to the report.
Middlebrook said the Americana has more than met expectations.
“We’ve produced more than $3 million [in sales tax revenue] for the city in the throes of the worst economic downturn since the Depression,” he said.