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The Real Deal Los Angeles

Pasadena halts Kimpton Hotel development

Officials voted to suspend project after developer requested subsidies due to increased construction costs
April 05, 2017 02:30PM

Pasadena’s YWCA building, Mayor Ted Turnek (Google Maps/Getty Images)

The Pasadena City Council voted Monday to pause the 181-key Kimpton Hotel development it already approved in August on the site of the YWCA building near Pasadena City Hall.

City officials decided to step back and revaluate what is best for the site when developer KHP Capital Partners, the Kimpton-affiliated equity firm funding the construction, requested a subsidy from the city this week. KHP, which was expected to begin construction in 2019, said the project could not move forward without city help, because its construction costs that have increased by 64 percent. 

While the development is on pause, the city will evaluate the 64 percent figure, in addition to considering other developments for the site, the Pasadena Star-News reported.

KHP had requested a more than $30 million waiver of rent and parking fees over 50 years. It said that higher wages and a competitive market had skyrocketed its construction costs.

Pasadena Mayor Terry Tornek —  who opposed the freeze on the project along with council member Gene Masuda — said Kimpton was still the best choice, though he wouldn’t support any further subsidies beyond the waiver of rent and parking.

Kimpton’s project has already faced delays from a lawsuit filed by residents in November alleging the city violated CEQA, the state’s Surplus Land Act and Pasadena’s municipal code.

If the project is delayed further, it could eat at the hotel developer’s already slim margins. KHP’s expected 7 percent return was already below the market rate for a hotel in Southern California, according to a staff report.

The YWCA building has been vacant and in a state of disrepair for 20 years. The city purchased the building in 2012 for $8 million. It was designed by Julia Morgan, the state’s first licensed female architect best known for her design of Hearst Castle in San Simeon. [PSN]Subrina Hudson