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Cecil Hotel Courting Affordable Housing Buyer

By Eric Richardson
Published: Monday, August 31, 2009, at 03:23PM
Stay Hotel Eric Richardson [Flickr]

Fred Cordova of 640 South Main Partners said that he expects Stay, the boutique hotel inside the Cecil, to continue operation once a sale goes through.

(Last Update: Tuesday, 10:30am) After a protracted fight with the city over its status on the residential hotel list, the owners of Main street's Cecil Hotel are negotiating a deal to sell the 600-room structure to a group that would primarily operate it as affordable housing.

Fred Cordova, a Vice President at Colliers and a member of hotel ownership group 640 South Main Partners, LLC, said today that the sale is "a compromise solution that might reasonable satisfy all the parties."

The parties involved in two suits involving the hotel jointed filed a request with the court on August 12, asking that a scheduling conference be postponed while a potential sale is negotiated, "upon the closing of which the buyer will be required to use the Hotel primarily for affordable housing."

Bill Lanting, General Manager of the Cecil and head of the Lanting Hotel Group, says that such a deal is far from done. "There are, and have been, continuing discussions with interested buyers - as has been the case since I got involved with the property two years ago - but I can assure you that nothing is in a "final negotiations" stage," he said via email this afternoon.

The August 12 filing says that the owners are "in final negotiations for the execution of a non-binding letter of intent."

Cordova's group bought the 1927 hotel in May of 2007 for $28.5 million. He declined to disclose the price that was being negotiated for the current sale, or to say who the potential buyer would be. (Disclosure: Cordova has contributed opinion pieces to blogdowntown)

The lawsuit between the ownership group and the city stems from the structure's inclusion on the City's residential hotel list.

A city ordinance passed in 2008 -- and previously instituted on an interim ordinance in 2006 -- requires that residential hotels provide replacement housing units for any rooms converted from residential to transient use.

The Cecil group filed a suit against the City disputing the hotel' residential designation. That case is now before the United States District Court. Tenants of the Cecil represented by LACAN filed a countersuit, looking to retain the residential status.

Cordova said he believed that the potential buyer was still working out a business plan for the structure, but that he expected the Cecil's boutique Stay Hotel to remain in operation.

The filing says that the City and LACAN have agreed to good faith negotiations toward a settlement of the cases should a sale go through.

So is the filing and possible sale a sign that Cordova's group gave up on its case? No, but "it's the least bitter pill with the least risk," he said. "There is motivation on everyone's part to resolve the impasse."

Update (Tuesday 10:30am): Just spoke with Bill Lanting, General Manager of the Cecil Hotel, and he said that he believes there's less than a 20% chance of a sale going through. I told him that I had heard the building was in escrow and he said that was untrue. He referred additional questions to Herb Chase of Multi Housing Capital Advisors. A call to Chase was not immediately returned.

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