City and HRI Properties Could Amend Agreement for Hotel Development

The City and HRI Properties LLC could move forward with their plans for a new hotel development at the site of a dilapidated former Young Women’s Christian Association building.

The City Council will vote on Monday to authorize the City Manager to amend an exclusive agreement with the developer in connection with the development of the historic rehabilitation and construction of the new building located on City-owned property at 78 N. Marengo Ave.

The proposed amendment follows a series of legal and regulatory hurdles.

The City Council authorized former City Manager Steve Mermell in November 2020 to enter into an Exclusive Negotiating Agreement with HRI Properties LLC for the disposition, development, and financing of the City-owned property.

Negotiations were paused in March 2021 pending resolution of a lawsuit related to the California Environmental Quality Act, surplus property discussions, and the settlement of previous ownership claims.

The City acquired the building through eminent domain in 2011. Ten years later, the City asked for and is seeking an injunction against the former owner of the famous but neglected structure.

Angela Chen-Sabella, the former owner of the land, claimed the City was required to sell the building back to her on claims that the City had not put the structure into use since it acquired the building.

In December 2022, HRI Properties LLC submitted a revised proposal to the City to turn the Young Women’s Christian Association building, designed by Julia Morgan, California’s first licensed female architect, into a select-service hotel with approximately 213 rooms.

HRI Properties LLC also requested public subsidy in the form of a Transient Occupancy Tax rebate to help offset rising financing, labor, and material costs.

By February 2023, all legal matters were settled in favor of the City, and the California Department of Housing and Community Development approved the process for disposing of the property under the Surplus Land Act. In July 2023, City staff received direction from the City Council to move forward with the agreement, and the Exclusive Negotiating Agreement was officially executed on August 30, 2023.

HRI Properties LLC exercised its option to extend the Exclusive Negotiating Agreement through November 30, 2023, with the goal of refining the project details.

In September, the company presented the hotel proposal to Pasadena’s Design Commission for preliminary consultation.

The commission expressed support for the project, recommending that HRI Properties LLC make design modifications to ensure the new development complements the surrounding Civic Center’s historic character.

The Exclusive Negotiating Agreement outlines the terms for the lease agreement, which will cover the property’s disposition, environmental requirements, project scope, and a financing plan, among other conditions.

To date, HRI Properties LLC has met the Exclusive Negotiating Agreement’s requirements, providing a preliminary site plan, architectural concept drawings, and a development program breakdown that includes building square footage, landscaped areas, and off-site improvements. The project also anticipates applying for State and Federal Historic Rehabilitation Tax Credits.