Palms Hotel SRO to Morph Into Assisted Care Facility

An historic East Village hotel is now embarking on a forward-thinking future as an assisted-care facility.

The Palms – originally known as the Bay View Hotel -- was built in 1869 in the Victorian style of that era, and it has a prominent link to "the Wild West."

In recent years, the Palms has provided "affordable" apartment and single-room occupancy living on lower Park Boulevard along the Park Boulevard trolley line.

But as more seniors with memory issues and others with special needs are winding up downtown, its owners are aiming at that growing market.

They’ve been losing money since they bought the hotel for around $4 million in 2010.

“It doesn't work economically,” said developer Sandy Shapery, whose 12th & A Hotel Partners LP venture is the titleholder of the property. “The electrical service is so inadequate that in the wintertime, everybody plugs their electric heaters in and all the circuit breakers go off.”

Shapery cites experts as saying the place needs at least a million dollars in repairs and basic upgrades to be brought “up to code”.

Current rents range from $550 to $950 a month for the 100 apartments and single rooms. 

So the re-purposing plan is to invest $15 million in a renovation project built subject to state historical standards and convert the Palms into a 70-unit facility that'll offer assisted living, health and memory care programs.

Shapery said financing will come from the U.S. Department of Housing & Urban Development.

“But HUD -- as one of their requirements -- wants to see professional management in place,” he told NBC 7 in an interview Monday before the project was to be considered for approval by the City Council. “And I would like to see that, too."

Going forward, the rent scale could escalate upward from a thousand dollars a month, with federal and state grants subsidizing several units.

In the process, 47 current residents will lose their leases and be given relocation help and transition payments in accordance with city mandates.

One tenant likely to be in that number told us the new plans have been well-known for some time.

"As far as it happening, it happens all over the place all the time, and I have no problem with it," Alex “Fizix” Julian. "You know, in the long run I can get up and go find another place, as other people cannot."

Filling the place with new tenants doesn't figure to be a challenge.

"The market demand is very high,” Shapery explained, “because there are a lot of older people living in the condos downtown that now have to drive to San Marcos or other places, Escondido, where assisted-living facilities have been built because of the lower land costs."

There were concerns among councilmembers about the lack of affordable alternative housing for the displaced residents, but the project was approved on an 8-1 vote with Todd Gloria – in whose district the Palms is located – dissenting.

Testifying in favor of the project was historic preservation activist Bruce Coons, executive director of Save Our Heritage Organisation.

In an email to NBC 7, Coons lauded the Palms as “the greatest Victorian hotel in the county outside of the Hotel del (Coronado).”

According to historical accounts, the legendary Wyatt Earp lived in a second-floor corner unit with his third wife Josie in 1887, at a time when he was running gambling saloons in the Stingaree District.

Nearly a century later, in 1979, Chuck Norris filmed scenes from his martial arts flick "A Force of One" in the Palms.

If all goes according to the schedule envisioned by the Shapery group, the 21st century conversion and renovation project could get under way late this year.

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