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Heart Break Hotel: The Uphill Battle to Salvage Cortez Hill

Senior apartments on 9th Street to spur other development?

Mark Grosvenor. “He used to roam around in a nice limo, and he would wear a white scarf flung over his back with a black tux.”  - Image by Robert Burroughs
Mark Grosvenor. “He used to roam around in a nice limo, and he would wear a white scarf flung over his back with a black tux.”

Tucked inside the bend of Interstate 5 where it sweeps past downtown San Diego just south of Balboa Park, Cortez Hill is the seat of a contemporary saga with enough intrigue, broken promises, lawsuits, and glitz to make a television mini-series. There’s a potential hero, Mark Grosvenor, a wealthy hotel operator and tortilla chip magnate with a taste for tuxedoes and limousines. Grosvenor put a 1979 bankruptcy behind him and now hopes to pull off development of his El Cortez Hotel property. He has hired a former redevelopment official to smooth his path. With this project, Grosvenor hopes to bounce back after being hoodwinked and abandoned by Masao Nangaku, his former partner. The Japanese billionaire promised, before his global real estate empire crumbled, to realize Grosvenor’s former high-rise dreams for the El Cortez property.

The El Cortez Tower, The driveway at the comer of Seventh Avenue and Ash Street, where once limousines arrived on prom nights, is covered with litter, and the “O” in one of the hotel’s signs is missing.

Beyond Grosvenor and Nangaku, there’s a subplot about the people on Cortez Hill, property owners and residents grown restless as redevelopment brightened other parts of downtown while Cortez Hill remains blighted. Many want progress, but some fear Grosvenor’s plans could destroy their neighborhood.

Aerial view. Cortez Hill property owners have been waiting for years now for a developer who can rescue the El Cortez Hotel.

Critics say the $10 million that redevelopment officials plan to pump into Grosvenor’s project could be better spent elsewhere or on projects that would help people needier than those who could afford Grosvenor’s lofts, townhomes, and apartments.

“It’s a favorite dumpster raiding spot. People out wandering, it’s something you get used to."

Then there’s the larger-than-life character of the hotel itself, a San Diego landmark on a slow decline since 1978, when longtime owner Harry Handlery sold it to evangelist Morris Cerullo. Cortez Hill vagabonds who spend their nights in bushes north of the El Cortez along Interstate 5 wish hill redevelopment plans could offer them help in turning their lives around. And there are people like Sam Alshamas, operator for ten years of the tiny Beech Market, the neighborhood’s current but doomed social hub, and Leonard and Denise Marien, who lease from Grosvenor the land beneath their Travelodge on Ash Street near the El Cortez. The Mariens and Alshamas say Grosvenor has already let them down.

Detail from El Cortez Hotel façade

Grosvenor is the latest in a long line of potential heroes with elaborate plans for the El Cortez. Son of San Diego socialites Judson and Rachel Grosvenor, he too has become wealthy. Today his main business interests are his nine hotels — seven in San Diego, including the Grosvenor Inn on Sports Arena Boulevard, one in Nashville, one in Minnesota — and Medallion Foods, a tortilla and corn chip factory with about 200 employees, based in Newport, Arkansas.

Grosvenor’s latest plan for the El Cortez property he owns — most of four blocks including the hotel — calls for the 15-story hotel tower to be restored to its original 1927 appearance and converted to 131 apartments for seniors. Grosvenor also hopes to convert adjacent run-down buildings, including a convention center and parking structure, into 145 townhouses and lofts at prices that reportedly will range from the high $100,000s to $350,000. With Grosvenor’s project as a centerpiece, redevelopment officials hope to spruce up nearby streets with jacaranda trees, wider sidewalks, and a plaza on Beech Street.

After waffling for several weeks, Grosvenor decided not to give a formal interview for this article, fearful of publicity at a time when the biggest project of his life hangs in the balance. But he was willing to speak briefly on several occasions — over the phone and once at his Grosvenor Inn office conference room, amid sample bags of Medallion tortilla chips.

Grosvenor says he sees his El Cortez plan as “the first downtown project designed for the ’90s." He believes it is the first sensible, large residential project to come along in the wake of the bankruptcy reorganization of the One Harbor Drive condominiums, which carried price tags ranging from under $300,000 to more than $2 million, and the questionable outlook for the sale of homes priced from $182,000 to $599,000 at CityFront Terrace just down Harbor Drive, which opens this summer.

Fit and in his mid-40s , Grosvenor favors open-necked shirts rather than a coat and tie. In recent weeks, he has been busy trying to line up everything he needs to make his Cortez project happen. Working with architects Tanner, Leddy, Maytum & Stacy of San Francisco (on the hotel tower renovation) and San Diego’s Austin Hansen Group (on the lofts and town- homes), Grosvenor has been refining plans and showing them to city redevelopment officials and to Cortez Hill residents and property owners who attend monthly meetings of a project area committee.

Grosvenor wouldn’t divulge his project’s estimated cost, but it could easily run over $100 million. In the past, contractors have estimated it would cost $30 million to $46 million just to renovate the tower as a hotel. Grosvenor has family wealth to lean on, but he will also need a sizeable construction loan (he had been counting on his onetime Japanese partner Nangaku for $250 million), hard to come by when virtually no loans are being made for big- ticket downtown projects.

So Grosvenor’s ability to finance his project hinges, to a large degree, on whether he can gain approval for his plans and financial support from the Centre City Development Corp., the City of San Diego’s downtown redevelopment division. Redevelopment officials generally support Grosvenor’s plans. CCDC executive vice president Pam Hamilton says her agency has been talking with Grosvenor about providing roughly $10 million in CCDC funding, including a grant for hotel restoration and a low-interest construction loan.

Will Grosvenor be able to parlay the four blocks he reportedly owns outright into the CCDC and other financial backing in order to pull off the project? Observers disagree about his chances for success.

First, Grosvenor’s record is not all rosy. In 1979 he and his father and their company, Nite Lite Inns, filed bankruptcy. Construction stalled on the 206-room Grosvenor Inn they were building on Sports Arena Boulevard when interest rates shot up to around 20 percent.

“When they came in, they were flat out of money, the place was about 99 percent completed; they owed a lot of money to subcontractors, about $300,000, as I recall, and they didn’t have that or any money to begin operation,” says San Diego attorney Colin Weid, who represented the Grosvenors in their bankruptcy.

“It couldn’t have been a worse mess. I’ll take credit for keeping the wolves at bay for them, but you’ve really got to take your hat off to the Grosvenors. By the end of three years, they were exceeding the average daily rates and occupancy in San Diego by at least 10 percent. Within a year after confirmation of their reorganization plan, Mark was able to go to a bank. Home Federal I think it was, and get a loan to pay back the balance of the claims in full with interest and to raise additional money to build out the shopping center (Grosvenor Square) that now surrounds the hotel.”

Mark Grosvenor’s career has been on the rise ever since. At the time, the Grosvenors had three hotels, one of which was in National City and another in Ontario, California. Grosvenor sold the Ontario hotel as part of the bankruptcy reorganization, Weid says, and no longer owns the National City hotel.

According to Bill Park, editor of the Newport Independent (Arkansas), Grosvenor’s Medallion Foods opened about five years ago and has expanded substantially since. And Grosvenor also owns at least $6 million worth of other property in San Diego County, according to the tax rolls, including a home at La Jolla Shores valued for tax purposes at $1.7 million.

In addition to plans for Cortez Hill, Grosvenor is working on a residential “equestrian community” development in Descanso, called Stallion Oaks Ranch.

Along with personal wealth, Grosvenor has a glamorous social life, but friends say he is a complex mix of flamboyance, intelligence, and spirituality. He is a “fabulous yachtsman,” according to Rick Gulley, chief executive officer of the Robert Driver Company and a friend of Grosvenor’s who met the hotelier/developer through the Young President’s Organization, a group of young heads of companies. “He’s very spiritual, very much environmentally oriented. I hardly knew him at all, then we went on a horsebacking trip in Yellowstone and he was in my tent. I came away from that experience really admiring the guy. He filled our tent with Wall St. Journals and Barron's. That was kind of a humorous thing.”

Besides his home in La Jolla, Grosvenor owns a place in Miami, friends report, where he sometimes keeps his sailboat, said by one acquaintance to be an 83-footer called The Evening Star. Just last month, Grosvenor reportedly took the boat cruising in the Caribbean.

But while Grosvenor has built a hotel mini-empire and has friends who admire him, he is not universally liked. “My belief is he will never get much done,” says a San Diego architect who did some earlier consulting work for Grosvenor on Cortez Hill. “He’s a lot of show without much to put confidence in.”

Friends agree that Grosvenor likes the lush life. “He used to roam around in a nice limo, and he would wear a white scarf flung over his back with a black tux,” says Howard Griffith, president of the Bachelor’s Club. Grosvenor is not a member of the club, but Griffith has seen him out on the town. “I think he started out with his dad’s money, but he has done a good job.”

Grosvenor undoubtedly gets some of his flair from his father.

Judson Grosvenor was a stockbroker during the ’60s in Escondido, where he raised his son. The senior Grosvenor shifted from stockbroker to West Coast representative for the Franklin Fund, a family of mutual fund investments, in 1969, according to an Escondido stockbroker who knows the senior Grosvenor.

“They have about 50 funds today, but at the time it was embryonic. If you look at the chart of Franklin Resources, the parent company, you can see what the stock has done. It was like getting in on Ford Motor Company when they were building Model Ts. He’s been a large contributor to charities.”

Now the senior Grosvenor is a multimillionaire, according to the Escondido stockbroker, and is known in San Diego as a major contributor to nonprofit organizations, including the San Diego Symphony. Although the El Cortez project is Mark Grosvenor’s, Jud Grosvenor is involved with the hotel business and often spends time in the offices at the Grosvenor Inn.

Today the El Cortez Hotel and adjacent structures could be shell-shocked buildings in Beirut or Baghdad. The driveway at the comer of Seventh Avenue and Ash Street, where once limousines arrived on prom nights, is covered with litter, and the “O” in one of the hotel’s signs is missing. Posters for an Ice-T concert and the movies Sniper and Excessive Force ire plastered on walls near the street. A wax Pepsi cup rests atop a railing along stairs that lead down from the hotel entry to courtyard shops. Several windows in the 15-story tower are broken, and a vertical row of unbroken windows has the floor numbers spray-painted in giant numerals: 8, 9, 10, 11. Someone has written “Julie” in the dust on an upper window pane.

But there remain traces of the old grandeur of this Spanish Colonial-influenced building of reinforced concrete. It was designed by Los Angeles architects Albert Walker (a former employee of San Diego architect Irving Gill) and Percy Eisen, who also designed the Beverly Wilshire Hotel in Beverly Hills, and built at a cost of $2 million.

The El Cortez has an elaborate plaster arch bearing a floral relief pattern over the main entry, flanked by tall columns. A shade structure known as a pergola, made of more classical columns with square bases and curlicue tops, stands in front of the entryway. Over the entry are inscribed the words Sea Bienvenido, “Be Welcomed.”

On November 24, 1927, the hotel opened, and 50,000 curious visitors streamed through, according to the San Diego Union. At the time, it had 117 units, including 85 apartment suites with kitchenettes and 32 hotel rooms. “Either a permanent or transient trade or a combination of the two can be developed according to the demand,” the Union reported.

During the ’40s, ground-level shops and a hotel annex were added. Harry Handlery bought the hotel in 1951 and presided over a substantial identity change. He added the green-glass Sky Room restaurant in 1955 and the 15-story, $400,000 trademark glass elevator in 1956, along with a field of colorful neon stars near the top of the tower. The elevator was designed by San Diego architect C.J. Paderewski and was touted as the only one of its kind in the world. “The idea for a transparent cab was originated by Harry Handlery, El Cortez owner,” according to the San Diego Tribune. In 1959 or so, Handlery added a moving sidewalk bridge called the “travolator” above Seventh Avenue to connect the El Cortez to Handlery’s adjacent motel, subsequently known as the Travolator. In 1961 Handlery added a 55,000-square-foot convention center on Beech Street between Seventh and Eighth avenues. When Harry Handlery died in 1965, his brother Paul took control of the El Cortez properties and an era of expansion ended.

The hotel stayed much the same until evangelist Morris Cerullo bought it for $7.5 million in 1978. By some reports, hotel personnel felt betrayed by Paul Handlery. j They believed Harry never would have sold. Many San Diegans pleaded for the El Cortez to remain open as a hotel, but Cerullo closed it on October 1, 1978, and thus began its decline through a series of unrealized developer dreams.

Cerullo’s World Evangelism ministry altered interiors and began transforming the building for their purposes but never completed the project. Cerullo sold the hotel properties for about $17 million in December 1981 to El Cortez Associates, a partnership of the Considine California Company Inc. and the Bass Brothers Realty Company of Philadelphia, owned by the Texas billionaire Bass brothers.

The Considine effort was spearheaded by Terry Considine, then in his mid-30s, a Harvard Law School graduate and ambitious Denver-based real estate developer with political aspirations. Considine attempted to persuade city officials that the El Cortez property would be a perfect site for a new downtown convention center. Instead, largely because of funding available from the San Diego Unified Port District, the center was built on Harbor Drive on the property then known as Navy Field.

Grosvenor bought the El Cortez Hotel for $6 million in 1986. He later acquired several adjacent parcels and in 1989 announced that the Minami Group, headed by Masao Nangaku, had purchased majority interest in the property and would provide much of the financing needed to complete a $250 million redevelopment. The hotel was to be renovated and reopened, and an additional four high-rise towers were to be built on the nearly five-acre site bounded by Seventh and Ninth avenues and Cedar and Ash streets. The project also included plans for the hotel’s convention center to be converted into new courtrooms for the County of San Diego.

As it turned out, Grosvenor was taken for a ride. The courtrooms were never finished, and the Japanese eventually tried to pull a demolition permit from the city. Grosvenor pleaded for months with Minami to complete the $5.8 million courts project, which would have brought much-needed income to the vacant property. Then Grosvenor filed suit against Minami in Superior Court in San Diego in 1991. Letters included in the Superior Court file show how long and hard Grosvenor tried to get the Japanese to hold up their end of the bargain, to the point that the developer begins to look gullible.

Grosvenor’s suit alleged that he had been “injured and damaged in excess of $10 million.” According to the suit, Minami originally represented to Grosvenor that Nangaku, who founded the company in 1948 as the Minami Radio Company, had a “personal net worth” in excess of $2.5 billion. It also alleged that Nangaku took Grosvenor to “world-class properties” in France, Germany, Hawaii, and Japan that Nangaku “indicated he owned.” Minami took title to the Cortez property under the corporate name, according to Grosvenor’s suit, even though the corporation itself had “no significant capital,” in order to shield Nangaku from personal liability. “Minami promised to spend at least $250 million (developing the El Cortez property),” the suit further stated.

In June 1990, the suit says, Minami changed its mind about preserving the historic hotel tower and tried to obtain a demolition permit from the city. Before a permit could be issued, the city’s Historical Site Board declared the hotel historically significant, but the damage had been done to the Grosvenor/Minami alliance. Grosvenor wanted out and realized the only way to get the tower restored might be to sell it to a new owner who would respect its heritage. He cut a deal with Minami that allowed him to market the hotel for a sale, for which he would receive a sizeable commission.

At the same time that Nangaku was failing to perform in San Diego, he was seeking a gaming license for the Dunes Hotel in Las Vegas, which he had purchased, ironically, out of bankruptcy for $158 million in 1987. After a drawn-out process, he obtained only a two-year restricted casino license, which he claimed kept him from getting adequate financing to do full-blown renovation of the Dunes. Nangaku also had another downtown Las Vegas project, the $90 million, 35-story Minami Tower. Today the site is forlorn. A giant foundation containing 9000 cubic yards of concrete is the only evidence of Minami’s plans. Nangaku reportedly dropped $35 million on the project before giving up and leaving the land to the city.

“Minami has totally retreated from Las Vegas,” says Richard Welch, that city’s director of the department of economic and urban development. “They liquidated everything.” Nangaku had paid $130 million for the Dunes but sold last November to Mirage Resorts at a fire-sale price of $75 million According to an article in the Los Angeles Times, the new owners plan to blow up the place for movie cameras before developing a new theme resort.

Nangaku’s relationship with Grosvenor was allegedly based on a series of ongoing deceptions on the part of the onetime Japanese billionaire. Grosvenor’s Superior Court case against Minami contains letters in which the San Diego developer tries to get Minami to make good its plans for the court building and Minami continually reassures him that things are okay, even though no visible progress had been made. In the summer of 1990, Grosvenor’s lawsuit alleges, Nangaku flew frequently to Las Vegas in attempts to secure the gaming license for the Dunes, while at the same time claiming to be too busy with work in Japan to come to San Diego to discuss the courthouse lease. At the time, the suit states, Minami’s “Las Vegas Hotel was losing $2 million per month.”

In March of 1991, Minami informed Grosvenor that it had lined up Dai-Ichi, a Japanese bank, to provide a loan to build the courtrooms, but still made no construction progress. In April the county canceled its court- W house lease with Minami. Also in April that year, Minami’s Los Angeles mey, William D. Johnson, wrote the Nevada Gaming Commission that Nangaku was “pleased” the county had canceled the lease and stated that the El Cortez property was “more valuable without the courtrooms,” even though Grosvenor was counting on the signed lease as an asset that would enhance the property’s value as he attempted to sell it in a declining market. Grosvenor’s suit also states that Grosvenor’s attorney was present at an April 1991 meeting of the Nevada Gaming Commission and that Johnson “pleaded with him not to testify” about Minami’s poor showing in San Diego.

“Defendant has consistently engaged in a pattern and practice of entering into agreements and then breaching and attempting to renegotiate those agreements, or electing to simply refuse to perform those agreements,” Grosvenor’s suit says. Despite this, Grosvenor last year dropped the lawsuit, and Minami returned the El Cortez property to him.

In retrospect, Grosvenor’s plans for purely residential development seem better suited to this predominantly residential neighborhood than a convention center, new high-rise towers, or courtrooms. Grosvenor’s latest meeting with the CCDC was on June 10, when he huddled with Pam Hamilton. And generally, the CCDC likes what it sees.

“We all know about his transaction with Minami, that he took the property back on deed in lieu of foreclosure, and that has been a roller coaster,” Hamilton says. “If we can blend our money with conventional financing and take some of our financing out as units sell, I think that is a reasonable risk for us. Two of the buildings are tom apart and have their fronts off. Talk about a blighting influence. When they announced [with Minami] that they wanted to do major high-rises, hotels, offices, and residential up there, we were not involved because the redevelopment area had not been expanded yet. But my gut said that wasn’t the right thing to be A planning. We don’t want to see the office core drained off into that corner of downtown.

“Adaptive reuse [of the Cortez buildings as residential] makes sense. [Grosvenor] has ingenious designs. This will be attractive housing at prices that should sell. In some respects, this recession may actually have helped that neighborhood in terms of its long-term viability.”

One of Grosvenor’s consultants on the Cortez project is Janay Kruger, a CCDC board member from 1985 to 1991, a logical choice, despite the potential for conflict of interest.

“There is not conflict of interest on her part,” Hamilton claims. “We don’t have a policy per se, but the city has a policy. Frankly, it’s escaped me, but she met that at the time. It is a question I raised with our corporation attorney. I don’t have any problem with Janay representing people, or any board member, it doesn’t affect the way I treat people.”

Hamilton says she had not heard about Grosvenor’s earlier bankruptcy but did not consider it an obstacle to cutting a deal with the developer. “Something that long ago would not be a concern,” she says. “We’re going to be more concerned with his current situation.”

Grosvenor and his underlings, including Hal Pollard, the project manager for the Cortez Hill development, have been hard at work to be sure their plans have neighborhood support. At several meetings of the project area committee headed by Ruben Andrews, whose family owns a 22-unit apartment building on Cortez Hill, Grosvenor’s plans have been presented and critiqued by area residents and property owners this year.

Grosvenor’s project would be in keeping with good principles of urban design as espoused by city planners. Instead of being closed off from the street as were early downtown redevelopment projects like the Marina Park and Park Row con dominiums, accessible only from the parking garages, Grosvenor’s units would have individual stoops or front porches leading onto the street. Austin Hansen’s design features clean, simple facades, with no frilly decoration.

Around the buildings would be new landscaping, narrower streets lined with jacarandas, and a new plaza on Beech Street. The plaza could give the neighborhood a gathering spot to replace the market on Beech, which is the site of weekend jazz jams.

A recent project area committee meeting elicited virtually no criticism about the project’s architecture. Instead, residents and property owners worried that Grosvenor’s development would usurp much of t h e curbside parking. City planners are considering parking meters or zones for limited parking. And many at the meeting hoped the hotel’s landmark neon sign would be retained. Pollard said Grosvenor wants to keep it, but Pollard favors removing it Grosvenor’s plans also call for removing the Sky Room restaurant and the glass elevator, which has been deemed unsafe and beyond repair.

At the meeting, Pollard told the committee that the Sky Room’s green “bat wings...don’t fit with the 1927 image,” but one resident insisted that they “enhance the building.” When there was a call for those in favor of saving the restaurant, 25 hands went up.

As the presentation wound down, someone shouted, “What could we do to facilitate this project?” Pollard responded, “Send us a letter of interest in buying a condo.”

When it was created in 1975, the CCDC’s redevelopment powers applied only to the heart of downtown San Diego. But in 1990, the San Diego City Council voted to expand the CCDC’s domain to nearly 1400 acres, including Cortez Hill. As part of the expansion, the CCDC set up a project area committee to get residents and property owners involved with redevelopment. That’s where Andrews and his committee come in.

“When we convened the first public meeting, the group agreed that the number-one priority should be to renovate or clean up the El Cortez site,” says Andrews, a downtown business owner. “We had our first meeting about the time Grosvenor J took the property back. There were problems with transients, graffiti, the landscaping had been left to go fallow, there was trash around the property, buildings had been tom open to do some kind of surveys and hadn’t been closed. The first thing Grosvenor did was clean up the graffiti and close the holes in the building, did weed abatement, picked up trash, and put in 24-hour security.”

Cortez Hill property owners have been waiting for years now for a developer who can rescue the El Cortez Hotel and thus seed neighborhood revitalization and property value appreciation. The area has been plagued by drug dealers and prostitution, but things seem to be turning around in anticipation of Grosvenor’s project.

“The prostitution on Cortez Hill is gone, as far as I can tell,” says architect Ted Smith, who lives in a loft building he designed at Ninth Avenue and Beech Street. Smith says the former Siesta Motor Inn across from his place was a hot spot for hookers and their clients, but new owners have renovated and changed the name to the Days Inn, and the prostitutes have disappeared.

“There’s still some prostitution in the area, we can see them coming and going, but we don’t cater to that clientele,” says Andy Patel, one of the owners of the 48-room Days Inn. “The previous owner got foreclosed upon. He didn’t run it himself, and it was a bad operation. We’ve spent hundreds of thousands. We put everything in the garbage and started over.”

But without a renovated El Cortez as the economic centerpiece of Cortez Hill, and with San Diego’s economy still sagging, hotel operators on the hill are hurting. Patel says that his occupancy has been running less than 50 percent, while most hotels need at least 65 to breakeven.

“This is a white elephant, the El Cortez Hotel. It’s not going to fly,” says Barry Baxter, a partner in groups that own the Comfort Inn on Cortez Hill and the Howard Johnson’s just across Seventh Avenue from the El Cortez, formerly known as the Travolator. He bought the Howard Johnson’s at auction in 1988. Baxter, who also says occupancy has been less than 50 percent in recent months, has filed Chapter 11 bankruptcy. He is negotiating new terms with his lender.

“I’ve been in the real estate business for 25 years. San Diego is a unique area, but look at real estate values coming down. [The Cortez project] is not going to pencil out unless he gets subsidized financing at a very low interest rate. To renovate, no matter what he does, will be a very costly proposal. It has to be knocked down or it’s going to be another U.S. Grant,” predicts Baxter, referring to the historic downtown hotel that has experienced continued financial problems since a costly renovation during the ’80s.

Like some other Cortez Hill property owners who have dealt with Grosvenor personally, Baxter has not found the developer to be forthcoming.

“He keeps everything secret. He called me a couple of times and wanted information from me, but he doesn’t want to divulge his plans. He’s a very secretive guy, which is understandable; he doesn’t want gossip to go around town. But I’ll help him any way I can to support his project.”

Leonard and Denise Marien have a ten-year lease through the year 2000 with Grosvenor for the 28-room Travelodge on Ash Street near the El Cortez.

“At first we were all for his plans, we thought we were going to be bought out,” Mrs. Marien says. They have beer disheartened to watch Grosvenor pump money into renovating the 45-room Friendship Inn he owns just west of their Travelodge.

The Friendship was too run down to compete with the Mariens’ hotel in the past but now could take away some of their business.

“I went to a [project area committee) meeting six or seven months ago,” says Leonard Marien. “The plan he had looked, well, it would be nice around here. But Grosvenor himself, I don’t believe what he says. He was going to buy my property, I went there ten times with my plans to sell it, he puts me off until tomorrow, next week. He said he was going to buy out our lease, break it down, build something else, but nothing ever came of it”

Critics of Grosvenor’s project fear it may gut the neighborhood’s socioeconomic diversity and colorful street life, a mix of homeless, low-income types, and downtown workers — even though the CCDC’s new Draft Cortez Focus Plan specifically calls for new housing on Cortez Hill to meet the needs of many types of people, including the homeless.

Ted Smith thinks it’s unfortunate that Grosvenor is closing the Beech Market and questions plans for a new plaza on Beech Street. “I always get upset when people say, ‘Let’s get rid of the Beech Market.’ It’s this wonderful piece of street with people in it. Can you dream up something better than that, where people sit on the sidewalk in the evening and keep it a safe place?

That’s the only place where there really is night life, it’s a wonderful, real culture.”

Smith doesn’t see the occasional wandering homeless as the threat some property owners and redevelopment officials make them out to be.

“There are homeless who come up to find places to sleep, but I haven’t found it to be a problem,” he says. “It’s a favorite dumpster raiding spot. People out wandering, it’s something you get used to. It’s not that I want to choose that lifestyle, but it’s not that I don’t want it around me either. I’d very much like to see a full spectrum of people on Cortez Hill. It just seems like the classic thing that happens in redevelopment where a whole class of people are moved out to make room for other people.”

Also, Grosvenor’s plaza is ill-conceived in terms of design, Smith says.

“I stood up there the other day on Beech and said, yeah, this is kind of neat, but I can think of about 150 other places in ten blocks I’d rather sit,” Smith says. “The (El Cortez] annex on the south side of Beech between Eighth and Seventh is a tall slab of a building. It’s being remade, but it will throw a big shadow where the plaza will be. There are no windows onto the space. It’s a blank wall. I think the chance of that becoming a lively plaza is really nil.”

Smith also dislikes Grosvenor’s plans for rehabbing small hotels the developer owns around the El Cortez. “All they needed to do was paint them, instead they’re tearing them apart and doing them over. They’re taking clean little motel designs, pretty good pieces of architecture from the ’50s or ’60s, and they’re stuccoing these little concrete block motels and putting Spanish corbels on them. Is that what it means to revise and enrich? You’ve got this beautiful texture in California of all these beautiful styles. When you want to do something to make it come alive again, you don’t bury that past. You spruce it up and make it look good, with new landscaping and a good paint job.”

When the Beech Market closes, probably this month, Armando Pedrin, who has played his saxophone in front of it on many Tuesday nights for the past eight years, will be left without his venue.

“It’s my favorite spot,” says Pedrin. He has been appearing recently with his pal Manuel along on guitar. Pedrin, who runs a barber shop on Market Street, lived on Cortez Hill for several years but now lives in a downtown apartment. He is thinking of moving back.

“I lived there, my kids grew up there, a lot of old folks I know are over there, good friends,” he says. “The people are pretty upset. It was convenient for everybody. Now everybody is going to have to drive to go shopping. Nobody’s going to have a spot to gather and play music. That’s kind of sad. But on the other hand, what can you do?” Bearded, wearing an old flannel shirt and jeans, Cowboy is the healthiest looking of a posse of three men that also includes his side-kicks Dave and Bob. Every night the three camp in the bushes on the northern fringe of Cortez Hill next to Interstate 5, a few blocks from the abandoned, ghostly El Cortez Hotel. If the CCDC has its way, the threesome’s home will soon be transformed into a “linear park” along the freeway’s edge, with a walkway and new lighting and landscaping.

Critics question the CCDC’s plan to give Grosvenor a $10 million boost. “I’m trying to make stuff work market-rate; how come everyone else can get subsidized?” says architect/builder Jonathan Segal, who recently developed and quickly sold 17 lofts starting at under $100,000 at Columbia and Fir downtown, with no CCDC subsidy.

“If I’ve got some money, we can feed all my kids, or we can go to Mr. A’s with one kid,” Segal says. “I just feel there are better ways to spend $10 million than Cortez, but clearly the hotel needs to be saved and done. I’m in support of making Cortez happen, but not in support of subsidizing his condos.”

“I’m a supporter of CCDC, but I feel at this time Centre City East needs some special attention, and very careful attention has to be given to where money is spent,” says downtown property owner Betty Slater, who a few years ago converted a run-down building into the 9G arts complex at 9th and G in Centre City East. Slater says the CCDC ought to be putting money into keeping the main library downtown and into turning around the many distressed properties in the area east of the city’s core.

Grosvenor’s proposed $10 million subsidy could also be used to build about 400 rooms in new single-occupancy hotels along the lines of award-winning projects designed by San Diego architect Rob Quigley. These spaces can cost renters less than $300 a month and are considered “bottom-rung” housing.

The CCDC is requiring Grosvenor to include 45 units of “affordable” housing in his seniors’ tower. But it defines “affordable” as units rented to people who make no more than 120 percent of the median income in San Diego. As of May 1993, median income was $30,760, according to the San Diego Housing Commission, so Grosvenor’s “affordable” units would really be for the middle class.

“In my opinion, this flicking state stinks, especially San Diego,” says Dave, who explains that he was laid off from a job in a local shipyard in 1991 and has been unable to find a job since. “It’s too expensive here, and there’s not enough work.”

Aside from being displaced by the Cortez Hill project, Dave doesn’t see redevelopment as having a major impact on his life. “Give us someplace to live, it would help a lot,” adds Cowboy. “They got too many empty buildings around here.”

“If they could just get some beds for us, because we’re a sore sight to the eyes,” says Bob. “If we’re such big drug dealers, why don’t we have any money? Why ain’t we living inside?”

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Mark Grosvenor. “He used to roam around in a nice limo, and he would wear a white scarf flung over his back with a black tux.”  - Image by Robert Burroughs
Mark Grosvenor. “He used to roam around in a nice limo, and he would wear a white scarf flung over his back with a black tux.”

Tucked inside the bend of Interstate 5 where it sweeps past downtown San Diego just south of Balboa Park, Cortez Hill is the seat of a contemporary saga with enough intrigue, broken promises, lawsuits, and glitz to make a television mini-series. There’s a potential hero, Mark Grosvenor, a wealthy hotel operator and tortilla chip magnate with a taste for tuxedoes and limousines. Grosvenor put a 1979 bankruptcy behind him and now hopes to pull off development of his El Cortez Hotel property. He has hired a former redevelopment official to smooth his path. With this project, Grosvenor hopes to bounce back after being hoodwinked and abandoned by Masao Nangaku, his former partner. The Japanese billionaire promised, before his global real estate empire crumbled, to realize Grosvenor’s former high-rise dreams for the El Cortez property.

The El Cortez Tower, The driveway at the comer of Seventh Avenue and Ash Street, where once limousines arrived on prom nights, is covered with litter, and the “O” in one of the hotel’s signs is missing.

Beyond Grosvenor and Nangaku, there’s a subplot about the people on Cortez Hill, property owners and residents grown restless as redevelopment brightened other parts of downtown while Cortez Hill remains blighted. Many want progress, but some fear Grosvenor’s plans could destroy their neighborhood.

Aerial view. Cortez Hill property owners have been waiting for years now for a developer who can rescue the El Cortez Hotel.

Critics say the $10 million that redevelopment officials plan to pump into Grosvenor’s project could be better spent elsewhere or on projects that would help people needier than those who could afford Grosvenor’s lofts, townhomes, and apartments.

“It’s a favorite dumpster raiding spot. People out wandering, it’s something you get used to."

Then there’s the larger-than-life character of the hotel itself, a San Diego landmark on a slow decline since 1978, when longtime owner Harry Handlery sold it to evangelist Morris Cerullo. Cortez Hill vagabonds who spend their nights in bushes north of the El Cortez along Interstate 5 wish hill redevelopment plans could offer them help in turning their lives around. And there are people like Sam Alshamas, operator for ten years of the tiny Beech Market, the neighborhood’s current but doomed social hub, and Leonard and Denise Marien, who lease from Grosvenor the land beneath their Travelodge on Ash Street near the El Cortez. The Mariens and Alshamas say Grosvenor has already let them down.

Detail from El Cortez Hotel façade

Grosvenor is the latest in a long line of potential heroes with elaborate plans for the El Cortez. Son of San Diego socialites Judson and Rachel Grosvenor, he too has become wealthy. Today his main business interests are his nine hotels — seven in San Diego, including the Grosvenor Inn on Sports Arena Boulevard, one in Nashville, one in Minnesota — and Medallion Foods, a tortilla and corn chip factory with about 200 employees, based in Newport, Arkansas.

Grosvenor’s latest plan for the El Cortez property he owns — most of four blocks including the hotel — calls for the 15-story hotel tower to be restored to its original 1927 appearance and converted to 131 apartments for seniors. Grosvenor also hopes to convert adjacent run-down buildings, including a convention center and parking structure, into 145 townhouses and lofts at prices that reportedly will range from the high $100,000s to $350,000. With Grosvenor’s project as a centerpiece, redevelopment officials hope to spruce up nearby streets with jacaranda trees, wider sidewalks, and a plaza on Beech Street.

After waffling for several weeks, Grosvenor decided not to give a formal interview for this article, fearful of publicity at a time when the biggest project of his life hangs in the balance. But he was willing to speak briefly on several occasions — over the phone and once at his Grosvenor Inn office conference room, amid sample bags of Medallion tortilla chips.

Grosvenor says he sees his El Cortez plan as “the first downtown project designed for the ’90s." He believes it is the first sensible, large residential project to come along in the wake of the bankruptcy reorganization of the One Harbor Drive condominiums, which carried price tags ranging from under $300,000 to more than $2 million, and the questionable outlook for the sale of homes priced from $182,000 to $599,000 at CityFront Terrace just down Harbor Drive, which opens this summer.

Fit and in his mid-40s , Grosvenor favors open-necked shirts rather than a coat and tie. In recent weeks, he has been busy trying to line up everything he needs to make his Cortez project happen. Working with architects Tanner, Leddy, Maytum & Stacy of San Francisco (on the hotel tower renovation) and San Diego’s Austin Hansen Group (on the lofts and town- homes), Grosvenor has been refining plans and showing them to city redevelopment officials and to Cortez Hill residents and property owners who attend monthly meetings of a project area committee.

Grosvenor wouldn’t divulge his project’s estimated cost, but it could easily run over $100 million. In the past, contractors have estimated it would cost $30 million to $46 million just to renovate the tower as a hotel. Grosvenor has family wealth to lean on, but he will also need a sizeable construction loan (he had been counting on his onetime Japanese partner Nangaku for $250 million), hard to come by when virtually no loans are being made for big- ticket downtown projects.

So Grosvenor’s ability to finance his project hinges, to a large degree, on whether he can gain approval for his plans and financial support from the Centre City Development Corp., the City of San Diego’s downtown redevelopment division. Redevelopment officials generally support Grosvenor’s plans. CCDC executive vice president Pam Hamilton says her agency has been talking with Grosvenor about providing roughly $10 million in CCDC funding, including a grant for hotel restoration and a low-interest construction loan.

Will Grosvenor be able to parlay the four blocks he reportedly owns outright into the CCDC and other financial backing in order to pull off the project? Observers disagree about his chances for success.

First, Grosvenor’s record is not all rosy. In 1979 he and his father and their company, Nite Lite Inns, filed bankruptcy. Construction stalled on the 206-room Grosvenor Inn they were building on Sports Arena Boulevard when interest rates shot up to around 20 percent.

“When they came in, they were flat out of money, the place was about 99 percent completed; they owed a lot of money to subcontractors, about $300,000, as I recall, and they didn’t have that or any money to begin operation,” says San Diego attorney Colin Weid, who represented the Grosvenors in their bankruptcy.

“It couldn’t have been a worse mess. I’ll take credit for keeping the wolves at bay for them, but you’ve really got to take your hat off to the Grosvenors. By the end of three years, they were exceeding the average daily rates and occupancy in San Diego by at least 10 percent. Within a year after confirmation of their reorganization plan, Mark was able to go to a bank. Home Federal I think it was, and get a loan to pay back the balance of the claims in full with interest and to raise additional money to build out the shopping center (Grosvenor Square) that now surrounds the hotel.”

Mark Grosvenor’s career has been on the rise ever since. At the time, the Grosvenors had three hotels, one of which was in National City and another in Ontario, California. Grosvenor sold the Ontario hotel as part of the bankruptcy reorganization, Weid says, and no longer owns the National City hotel.

According to Bill Park, editor of the Newport Independent (Arkansas), Grosvenor’s Medallion Foods opened about five years ago and has expanded substantially since. And Grosvenor also owns at least $6 million worth of other property in San Diego County, according to the tax rolls, including a home at La Jolla Shores valued for tax purposes at $1.7 million.

In addition to plans for Cortez Hill, Grosvenor is working on a residential “equestrian community” development in Descanso, called Stallion Oaks Ranch.

Along with personal wealth, Grosvenor has a glamorous social life, but friends say he is a complex mix of flamboyance, intelligence, and spirituality. He is a “fabulous yachtsman,” according to Rick Gulley, chief executive officer of the Robert Driver Company and a friend of Grosvenor’s who met the hotelier/developer through the Young President’s Organization, a group of young heads of companies. “He’s very spiritual, very much environmentally oriented. I hardly knew him at all, then we went on a horsebacking trip in Yellowstone and he was in my tent. I came away from that experience really admiring the guy. He filled our tent with Wall St. Journals and Barron's. That was kind of a humorous thing.”

Besides his home in La Jolla, Grosvenor owns a place in Miami, friends report, where he sometimes keeps his sailboat, said by one acquaintance to be an 83-footer called The Evening Star. Just last month, Grosvenor reportedly took the boat cruising in the Caribbean.

But while Grosvenor has built a hotel mini-empire and has friends who admire him, he is not universally liked. “My belief is he will never get much done,” says a San Diego architect who did some earlier consulting work for Grosvenor on Cortez Hill. “He’s a lot of show without much to put confidence in.”

Friends agree that Grosvenor likes the lush life. “He used to roam around in a nice limo, and he would wear a white scarf flung over his back with a black tux,” says Howard Griffith, president of the Bachelor’s Club. Grosvenor is not a member of the club, but Griffith has seen him out on the town. “I think he started out with his dad’s money, but he has done a good job.”

Grosvenor undoubtedly gets some of his flair from his father.

Judson Grosvenor was a stockbroker during the ’60s in Escondido, where he raised his son. The senior Grosvenor shifted from stockbroker to West Coast representative for the Franklin Fund, a family of mutual fund investments, in 1969, according to an Escondido stockbroker who knows the senior Grosvenor.

“They have about 50 funds today, but at the time it was embryonic. If you look at the chart of Franklin Resources, the parent company, you can see what the stock has done. It was like getting in on Ford Motor Company when they were building Model Ts. He’s been a large contributor to charities.”

Now the senior Grosvenor is a multimillionaire, according to the Escondido stockbroker, and is known in San Diego as a major contributor to nonprofit organizations, including the San Diego Symphony. Although the El Cortez project is Mark Grosvenor’s, Jud Grosvenor is involved with the hotel business and often spends time in the offices at the Grosvenor Inn.

Today the El Cortez Hotel and adjacent structures could be shell-shocked buildings in Beirut or Baghdad. The driveway at the comer of Seventh Avenue and Ash Street, where once limousines arrived on prom nights, is covered with litter, and the “O” in one of the hotel’s signs is missing. Posters for an Ice-T concert and the movies Sniper and Excessive Force ire plastered on walls near the street. A wax Pepsi cup rests atop a railing along stairs that lead down from the hotel entry to courtyard shops. Several windows in the 15-story tower are broken, and a vertical row of unbroken windows has the floor numbers spray-painted in giant numerals: 8, 9, 10, 11. Someone has written “Julie” in the dust on an upper window pane.

But there remain traces of the old grandeur of this Spanish Colonial-influenced building of reinforced concrete. It was designed by Los Angeles architects Albert Walker (a former employee of San Diego architect Irving Gill) and Percy Eisen, who also designed the Beverly Wilshire Hotel in Beverly Hills, and built at a cost of $2 million.

The El Cortez has an elaborate plaster arch bearing a floral relief pattern over the main entry, flanked by tall columns. A shade structure known as a pergola, made of more classical columns with square bases and curlicue tops, stands in front of the entryway. Over the entry are inscribed the words Sea Bienvenido, “Be Welcomed.”

On November 24, 1927, the hotel opened, and 50,000 curious visitors streamed through, according to the San Diego Union. At the time, it had 117 units, including 85 apartment suites with kitchenettes and 32 hotel rooms. “Either a permanent or transient trade or a combination of the two can be developed according to the demand,” the Union reported.

During the ’40s, ground-level shops and a hotel annex were added. Harry Handlery bought the hotel in 1951 and presided over a substantial identity change. He added the green-glass Sky Room restaurant in 1955 and the 15-story, $400,000 trademark glass elevator in 1956, along with a field of colorful neon stars near the top of the tower. The elevator was designed by San Diego architect C.J. Paderewski and was touted as the only one of its kind in the world. “The idea for a transparent cab was originated by Harry Handlery, El Cortez owner,” according to the San Diego Tribune. In 1959 or so, Handlery added a moving sidewalk bridge called the “travolator” above Seventh Avenue to connect the El Cortez to Handlery’s adjacent motel, subsequently known as the Travolator. In 1961 Handlery added a 55,000-square-foot convention center on Beech Street between Seventh and Eighth avenues. When Harry Handlery died in 1965, his brother Paul took control of the El Cortez properties and an era of expansion ended.

The hotel stayed much the same until evangelist Morris Cerullo bought it for $7.5 million in 1978. By some reports, hotel personnel felt betrayed by Paul Handlery. j They believed Harry never would have sold. Many San Diegans pleaded for the El Cortez to remain open as a hotel, but Cerullo closed it on October 1, 1978, and thus began its decline through a series of unrealized developer dreams.

Cerullo’s World Evangelism ministry altered interiors and began transforming the building for their purposes but never completed the project. Cerullo sold the hotel properties for about $17 million in December 1981 to El Cortez Associates, a partnership of the Considine California Company Inc. and the Bass Brothers Realty Company of Philadelphia, owned by the Texas billionaire Bass brothers.

The Considine effort was spearheaded by Terry Considine, then in his mid-30s, a Harvard Law School graduate and ambitious Denver-based real estate developer with political aspirations. Considine attempted to persuade city officials that the El Cortez property would be a perfect site for a new downtown convention center. Instead, largely because of funding available from the San Diego Unified Port District, the center was built on Harbor Drive on the property then known as Navy Field.

Grosvenor bought the El Cortez Hotel for $6 million in 1986. He later acquired several adjacent parcels and in 1989 announced that the Minami Group, headed by Masao Nangaku, had purchased majority interest in the property and would provide much of the financing needed to complete a $250 million redevelopment. The hotel was to be renovated and reopened, and an additional four high-rise towers were to be built on the nearly five-acre site bounded by Seventh and Ninth avenues and Cedar and Ash streets. The project also included plans for the hotel’s convention center to be converted into new courtrooms for the County of San Diego.

As it turned out, Grosvenor was taken for a ride. The courtrooms were never finished, and the Japanese eventually tried to pull a demolition permit from the city. Grosvenor pleaded for months with Minami to complete the $5.8 million courts project, which would have brought much-needed income to the vacant property. Then Grosvenor filed suit against Minami in Superior Court in San Diego in 1991. Letters included in the Superior Court file show how long and hard Grosvenor tried to get the Japanese to hold up their end of the bargain, to the point that the developer begins to look gullible.

Grosvenor’s suit alleged that he had been “injured and damaged in excess of $10 million.” According to the suit, Minami originally represented to Grosvenor that Nangaku, who founded the company in 1948 as the Minami Radio Company, had a “personal net worth” in excess of $2.5 billion. It also alleged that Nangaku took Grosvenor to “world-class properties” in France, Germany, Hawaii, and Japan that Nangaku “indicated he owned.” Minami took title to the Cortez property under the corporate name, according to Grosvenor’s suit, even though the corporation itself had “no significant capital,” in order to shield Nangaku from personal liability. “Minami promised to spend at least $250 million (developing the El Cortez property),” the suit further stated.

In June 1990, the suit says, Minami changed its mind about preserving the historic hotel tower and tried to obtain a demolition permit from the city. Before a permit could be issued, the city’s Historical Site Board declared the hotel historically significant, but the damage had been done to the Grosvenor/Minami alliance. Grosvenor wanted out and realized the only way to get the tower restored might be to sell it to a new owner who would respect its heritage. He cut a deal with Minami that allowed him to market the hotel for a sale, for which he would receive a sizeable commission.

At the same time that Nangaku was failing to perform in San Diego, he was seeking a gaming license for the Dunes Hotel in Las Vegas, which he had purchased, ironically, out of bankruptcy for $158 million in 1987. After a drawn-out process, he obtained only a two-year restricted casino license, which he claimed kept him from getting adequate financing to do full-blown renovation of the Dunes. Nangaku also had another downtown Las Vegas project, the $90 million, 35-story Minami Tower. Today the site is forlorn. A giant foundation containing 9000 cubic yards of concrete is the only evidence of Minami’s plans. Nangaku reportedly dropped $35 million on the project before giving up and leaving the land to the city.

“Minami has totally retreated from Las Vegas,” says Richard Welch, that city’s director of the department of economic and urban development. “They liquidated everything.” Nangaku had paid $130 million for the Dunes but sold last November to Mirage Resorts at a fire-sale price of $75 million According to an article in the Los Angeles Times, the new owners plan to blow up the place for movie cameras before developing a new theme resort.

Nangaku’s relationship with Grosvenor was allegedly based on a series of ongoing deceptions on the part of the onetime Japanese billionaire. Grosvenor’s Superior Court case against Minami contains letters in which the San Diego developer tries to get Minami to make good its plans for the court building and Minami continually reassures him that things are okay, even though no visible progress had been made. In the summer of 1990, Grosvenor’s lawsuit alleges, Nangaku flew frequently to Las Vegas in attempts to secure the gaming license for the Dunes, while at the same time claiming to be too busy with work in Japan to come to San Diego to discuss the courthouse lease. At the time, the suit states, Minami’s “Las Vegas Hotel was losing $2 million per month.”

In March of 1991, Minami informed Grosvenor that it had lined up Dai-Ichi, a Japanese bank, to provide a loan to build the courtrooms, but still made no construction progress. In April the county canceled its court- W house lease with Minami. Also in April that year, Minami’s Los Angeles mey, William D. Johnson, wrote the Nevada Gaming Commission that Nangaku was “pleased” the county had canceled the lease and stated that the El Cortez property was “more valuable without the courtrooms,” even though Grosvenor was counting on the signed lease as an asset that would enhance the property’s value as he attempted to sell it in a declining market. Grosvenor’s suit also states that Grosvenor’s attorney was present at an April 1991 meeting of the Nevada Gaming Commission and that Johnson “pleaded with him not to testify” about Minami’s poor showing in San Diego.

“Defendant has consistently engaged in a pattern and practice of entering into agreements and then breaching and attempting to renegotiate those agreements, or electing to simply refuse to perform those agreements,” Grosvenor’s suit says. Despite this, Grosvenor last year dropped the lawsuit, and Minami returned the El Cortez property to him.

In retrospect, Grosvenor’s plans for purely residential development seem better suited to this predominantly residential neighborhood than a convention center, new high-rise towers, or courtrooms. Grosvenor’s latest meeting with the CCDC was on June 10, when he huddled with Pam Hamilton. And generally, the CCDC likes what it sees.

“We all know about his transaction with Minami, that he took the property back on deed in lieu of foreclosure, and that has been a roller coaster,” Hamilton says. “If we can blend our money with conventional financing and take some of our financing out as units sell, I think that is a reasonable risk for us. Two of the buildings are tom apart and have their fronts off. Talk about a blighting influence. When they announced [with Minami] that they wanted to do major high-rises, hotels, offices, and residential up there, we were not involved because the redevelopment area had not been expanded yet. But my gut said that wasn’t the right thing to be A planning. We don’t want to see the office core drained off into that corner of downtown.

“Adaptive reuse [of the Cortez buildings as residential] makes sense. [Grosvenor] has ingenious designs. This will be attractive housing at prices that should sell. In some respects, this recession may actually have helped that neighborhood in terms of its long-term viability.”

One of Grosvenor’s consultants on the Cortez project is Janay Kruger, a CCDC board member from 1985 to 1991, a logical choice, despite the potential for conflict of interest.

“There is not conflict of interest on her part,” Hamilton claims. “We don’t have a policy per se, but the city has a policy. Frankly, it’s escaped me, but she met that at the time. It is a question I raised with our corporation attorney. I don’t have any problem with Janay representing people, or any board member, it doesn’t affect the way I treat people.”

Hamilton says she had not heard about Grosvenor’s earlier bankruptcy but did not consider it an obstacle to cutting a deal with the developer. “Something that long ago would not be a concern,” she says. “We’re going to be more concerned with his current situation.”

Grosvenor and his underlings, including Hal Pollard, the project manager for the Cortez Hill development, have been hard at work to be sure their plans have neighborhood support. At several meetings of the project area committee headed by Ruben Andrews, whose family owns a 22-unit apartment building on Cortez Hill, Grosvenor’s plans have been presented and critiqued by area residents and property owners this year.

Grosvenor’s project would be in keeping with good principles of urban design as espoused by city planners. Instead of being closed off from the street as were early downtown redevelopment projects like the Marina Park and Park Row con dominiums, accessible only from the parking garages, Grosvenor’s units would have individual stoops or front porches leading onto the street. Austin Hansen’s design features clean, simple facades, with no frilly decoration.

Around the buildings would be new landscaping, narrower streets lined with jacarandas, and a new plaza on Beech Street. The plaza could give the neighborhood a gathering spot to replace the market on Beech, which is the site of weekend jazz jams.

A recent project area committee meeting elicited virtually no criticism about the project’s architecture. Instead, residents and property owners worried that Grosvenor’s development would usurp much of t h e curbside parking. City planners are considering parking meters or zones for limited parking. And many at the meeting hoped the hotel’s landmark neon sign would be retained. Pollard said Grosvenor wants to keep it, but Pollard favors removing it Grosvenor’s plans also call for removing the Sky Room restaurant and the glass elevator, which has been deemed unsafe and beyond repair.

At the meeting, Pollard told the committee that the Sky Room’s green “bat wings...don’t fit with the 1927 image,” but one resident insisted that they “enhance the building.” When there was a call for those in favor of saving the restaurant, 25 hands went up.

As the presentation wound down, someone shouted, “What could we do to facilitate this project?” Pollard responded, “Send us a letter of interest in buying a condo.”

When it was created in 1975, the CCDC’s redevelopment powers applied only to the heart of downtown San Diego. But in 1990, the San Diego City Council voted to expand the CCDC’s domain to nearly 1400 acres, including Cortez Hill. As part of the expansion, the CCDC set up a project area committee to get residents and property owners involved with redevelopment. That’s where Andrews and his committee come in.

“When we convened the first public meeting, the group agreed that the number-one priority should be to renovate or clean up the El Cortez site,” says Andrews, a downtown business owner. “We had our first meeting about the time Grosvenor J took the property back. There were problems with transients, graffiti, the landscaping had been left to go fallow, there was trash around the property, buildings had been tom open to do some kind of surveys and hadn’t been closed. The first thing Grosvenor did was clean up the graffiti and close the holes in the building, did weed abatement, picked up trash, and put in 24-hour security.”

Cortez Hill property owners have been waiting for years now for a developer who can rescue the El Cortez Hotel and thus seed neighborhood revitalization and property value appreciation. The area has been plagued by drug dealers and prostitution, but things seem to be turning around in anticipation of Grosvenor’s project.

“The prostitution on Cortez Hill is gone, as far as I can tell,” says architect Ted Smith, who lives in a loft building he designed at Ninth Avenue and Beech Street. Smith says the former Siesta Motor Inn across from his place was a hot spot for hookers and their clients, but new owners have renovated and changed the name to the Days Inn, and the prostitutes have disappeared.

“There’s still some prostitution in the area, we can see them coming and going, but we don’t cater to that clientele,” says Andy Patel, one of the owners of the 48-room Days Inn. “The previous owner got foreclosed upon. He didn’t run it himself, and it was a bad operation. We’ve spent hundreds of thousands. We put everything in the garbage and started over.”

But without a renovated El Cortez as the economic centerpiece of Cortez Hill, and with San Diego’s economy still sagging, hotel operators on the hill are hurting. Patel says that his occupancy has been running less than 50 percent, while most hotels need at least 65 to breakeven.

“This is a white elephant, the El Cortez Hotel. It’s not going to fly,” says Barry Baxter, a partner in groups that own the Comfort Inn on Cortez Hill and the Howard Johnson’s just across Seventh Avenue from the El Cortez, formerly known as the Travolator. He bought the Howard Johnson’s at auction in 1988. Baxter, who also says occupancy has been less than 50 percent in recent months, has filed Chapter 11 bankruptcy. He is negotiating new terms with his lender.

“I’ve been in the real estate business for 25 years. San Diego is a unique area, but look at real estate values coming down. [The Cortez project] is not going to pencil out unless he gets subsidized financing at a very low interest rate. To renovate, no matter what he does, will be a very costly proposal. It has to be knocked down or it’s going to be another U.S. Grant,” predicts Baxter, referring to the historic downtown hotel that has experienced continued financial problems since a costly renovation during the ’80s.

Like some other Cortez Hill property owners who have dealt with Grosvenor personally, Baxter has not found the developer to be forthcoming.

“He keeps everything secret. He called me a couple of times and wanted information from me, but he doesn’t want to divulge his plans. He’s a very secretive guy, which is understandable; he doesn’t want gossip to go around town. But I’ll help him any way I can to support his project.”

Leonard and Denise Marien have a ten-year lease through the year 2000 with Grosvenor for the 28-room Travelodge on Ash Street near the El Cortez.

“At first we were all for his plans, we thought we were going to be bought out,” Mrs. Marien says. They have beer disheartened to watch Grosvenor pump money into renovating the 45-room Friendship Inn he owns just west of their Travelodge.

The Friendship was too run down to compete with the Mariens’ hotel in the past but now could take away some of their business.

“I went to a [project area committee) meeting six or seven months ago,” says Leonard Marien. “The plan he had looked, well, it would be nice around here. But Grosvenor himself, I don’t believe what he says. He was going to buy my property, I went there ten times with my plans to sell it, he puts me off until tomorrow, next week. He said he was going to buy out our lease, break it down, build something else, but nothing ever came of it”

Critics of Grosvenor’s project fear it may gut the neighborhood’s socioeconomic diversity and colorful street life, a mix of homeless, low-income types, and downtown workers — even though the CCDC’s new Draft Cortez Focus Plan specifically calls for new housing on Cortez Hill to meet the needs of many types of people, including the homeless.

Ted Smith thinks it’s unfortunate that Grosvenor is closing the Beech Market and questions plans for a new plaza on Beech Street. “I always get upset when people say, ‘Let’s get rid of the Beech Market.’ It’s this wonderful piece of street with people in it. Can you dream up something better than that, where people sit on the sidewalk in the evening and keep it a safe place?

That’s the only place where there really is night life, it’s a wonderful, real culture.”

Smith doesn’t see the occasional wandering homeless as the threat some property owners and redevelopment officials make them out to be.

“There are homeless who come up to find places to sleep, but I haven’t found it to be a problem,” he says. “It’s a favorite dumpster raiding spot. People out wandering, it’s something you get used to. It’s not that I want to choose that lifestyle, but it’s not that I don’t want it around me either. I’d very much like to see a full spectrum of people on Cortez Hill. It just seems like the classic thing that happens in redevelopment where a whole class of people are moved out to make room for other people.”

Also, Grosvenor’s plaza is ill-conceived in terms of design, Smith says.

“I stood up there the other day on Beech and said, yeah, this is kind of neat, but I can think of about 150 other places in ten blocks I’d rather sit,” Smith says. “The (El Cortez] annex on the south side of Beech between Eighth and Seventh is a tall slab of a building. It’s being remade, but it will throw a big shadow where the plaza will be. There are no windows onto the space. It’s a blank wall. I think the chance of that becoming a lively plaza is really nil.”

Smith also dislikes Grosvenor’s plans for rehabbing small hotels the developer owns around the El Cortez. “All they needed to do was paint them, instead they’re tearing them apart and doing them over. They’re taking clean little motel designs, pretty good pieces of architecture from the ’50s or ’60s, and they’re stuccoing these little concrete block motels and putting Spanish corbels on them. Is that what it means to revise and enrich? You’ve got this beautiful texture in California of all these beautiful styles. When you want to do something to make it come alive again, you don’t bury that past. You spruce it up and make it look good, with new landscaping and a good paint job.”

When the Beech Market closes, probably this month, Armando Pedrin, who has played his saxophone in front of it on many Tuesday nights for the past eight years, will be left without his venue.

“It’s my favorite spot,” says Pedrin. He has been appearing recently with his pal Manuel along on guitar. Pedrin, who runs a barber shop on Market Street, lived on Cortez Hill for several years but now lives in a downtown apartment. He is thinking of moving back.

“I lived there, my kids grew up there, a lot of old folks I know are over there, good friends,” he says. “The people are pretty upset. It was convenient for everybody. Now everybody is going to have to drive to go shopping. Nobody’s going to have a spot to gather and play music. That’s kind of sad. But on the other hand, what can you do?” Bearded, wearing an old flannel shirt and jeans, Cowboy is the healthiest looking of a posse of three men that also includes his side-kicks Dave and Bob. Every night the three camp in the bushes on the northern fringe of Cortez Hill next to Interstate 5, a few blocks from the abandoned, ghostly El Cortez Hotel. If the CCDC has its way, the threesome’s home will soon be transformed into a “linear park” along the freeway’s edge, with a walkway and new lighting and landscaping.

Critics question the CCDC’s plan to give Grosvenor a $10 million boost. “I’m trying to make stuff work market-rate; how come everyone else can get subsidized?” says architect/builder Jonathan Segal, who recently developed and quickly sold 17 lofts starting at under $100,000 at Columbia and Fir downtown, with no CCDC subsidy.

“If I’ve got some money, we can feed all my kids, or we can go to Mr. A’s with one kid,” Segal says. “I just feel there are better ways to spend $10 million than Cortez, but clearly the hotel needs to be saved and done. I’m in support of making Cortez happen, but not in support of subsidizing his condos.”

“I’m a supporter of CCDC, but I feel at this time Centre City East needs some special attention, and very careful attention has to be given to where money is spent,” says downtown property owner Betty Slater, who a few years ago converted a run-down building into the 9G arts complex at 9th and G in Centre City East. Slater says the CCDC ought to be putting money into keeping the main library downtown and into turning around the many distressed properties in the area east of the city’s core.

Grosvenor’s proposed $10 million subsidy could also be used to build about 400 rooms in new single-occupancy hotels along the lines of award-winning projects designed by San Diego architect Rob Quigley. These spaces can cost renters less than $300 a month and are considered “bottom-rung” housing.

The CCDC is requiring Grosvenor to include 45 units of “affordable” housing in his seniors’ tower. But it defines “affordable” as units rented to people who make no more than 120 percent of the median income in San Diego. As of May 1993, median income was $30,760, according to the San Diego Housing Commission, so Grosvenor’s “affordable” units would really be for the middle class.

“In my opinion, this flicking state stinks, especially San Diego,” says Dave, who explains that he was laid off from a job in a local shipyard in 1991 and has been unable to find a job since. “It’s too expensive here, and there’s not enough work.”

Aside from being displaced by the Cortez Hill project, Dave doesn’t see redevelopment as having a major impact on his life. “Give us someplace to live, it would help a lot,” adds Cowboy. “They got too many empty buildings around here.”

“If they could just get some beds for us, because we’re a sore sight to the eyes,” says Bob. “If we’re such big drug dealers, why don’t we have any money? Why ain’t we living inside?”

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