The prospects look grim for Salinas hotel-condo project.

Oldtown ‘Pipe Dream’ Going Up In Smoke?: Disappearing Inc.: Developer Gerry Kehoe of Berkeley Inc. has been described as hard to track down by Hilton representatives and Salinas City Councilmembers.

Developer Gerry Kehoe, speaking from his home in Florida, sounds far removed from the jovial, upbeat visionary of last year. He sounds tired, and speaks with a shaky voice.

In previous interviews, Kehoe promised that homeowners could be turning the keys to their new homes in a huge hotel-condo complex near the Steinbeck Center in Oldtown Salinas by Christmas 2005. He talked about a string of 14-story buildings that he said would include a first-class Hilton Hotel and condominium complex.

Now, city officials and hotel executives say Kehoe’s plan is looking more like a fantasy.

“We have no project with Gerry Kehoe,” says Gregory Francois, Vice President of Western Regional Franchise Development for Hilton. “He talked to us three or four years ago, but we haven’t talked to him for a very long time. He just disappears on us. He’s a nice dreamer, and I feel for him, but there’s just no way Hilton would ever lend their name to something doomed for failure.”

Despite all evidence to the contrary, Kehoe insists that the project is still a go.

“It’s our intention to complete the project as soon as we can get all of the approval mechanisms in place,” he says. “It’s a priority from our perspective, and it’s number one on our list of projects to be achieved.”

Kehoe first crafted the idea for the site in December of 2001. By the following month, he’d secured the backing of the Salinas City Council when his development company, Berkley Inc., won the exclusive right to negotiate with the city to develop the property.

“It sounds like paradise,” said Councilwoman Janet Barnes, talking about Kehoe’s plan in January 2002. Other councilmembers used words like “thrilling” and “phenomenal.”  

Fast forward to 2005, and the love-fest is clearly over.

“He’s so elusive,” says Salinas Mayor Pro Tempore Jyl Lutes.

Mayor Anna Caballero was out of town, and could not be reached for comment.

“We’re skeptics,” Lutes continues. “He is so difficult to get a hold of. He gives us all of these reassurances, and then he disappears. I just don’t understand why he’s not moving.”

“An Environmental Impact Report was just completed,” says Rick Phinney, Berkley’s Director of Sales and Marketing.

But that’s about it.

“We are now where we were years ago,” says Salinas City Manager Dave Mora. “We’re just sitting here waiting.”  

Waiting, but not without demands.

“We’ve met, and we’ve given him deadlines, things he has to complete, one a month through May 31,” Lutes says. “If any one of those isn’t met, we automatically stop the project and find someone else.”

Neither Berkley nor the City is willing to discuss the specifics of the meeting, though Lutes did say they generally addressed contracts and the EIR.

Looming deadlines aside, Berkley’s got a host of other problems that stand to further alienate those involved.

Delinquent Operation?

At press time, according to the Secretary of State’s office, Berkley’s California corporation license is suspended.

“It’s been in a suspended status since July of 2004,” says an agent. “They shouldn’t be conducting business at all unless their license status is active.”

This is news to Salinas City officials.

“I’m shocked,” says Lutes, who didn’t know of the corporation’s suspended status. “I am completely shocked. And saddened.”

Kehoe explains the license suspension this way: “It was an administrative thing that I just found out about. We’ve missed a few deadlines, but Berkley will be in good standing within the next few weeks.”

It’s not the first time the company has “missed a few deadlines,” however. According to the Secretary of State’s office in Florida, where Berkley, Inc. is based, Berkley’s corporate status has suffered from similar missed filings. Each time, the license has eventually been reinstated.

In 2001, Berkley bought the old bank building at the corner of Gabilan and Main Streets. Kehoe’s had several different ideas for the property: restaurants, clubs, and the hotel/condo building.

Last summer, Kehoe told the Weekly that 3-D models would be available “in a couple of months.” He has shown nothing yet.

The building still sits empty, waiting for someone to pay its back property taxes and settle a mechanic’s lien filed by Swinerton Builders out of Silicon Valley last summer.

“[The mechanic’s lien] is in the process of being resolved,” Kehoe says. “I believe it will go away very shortly.”

Kehoe says back property taxes, too, will be taken care of. “I think they were paid last Thursday,” he says. “Maybe it was Friday. But it’s just an administrative issue.”

At press time, the taxes were still listed as delinquent.

Perhaps the most perplexing of problems, though, is in Kehoe’s fundamental plan.

Last summer, Kehoe explained that the Hilton Hotel would be the crown jewel of the development.  And according to Kehoe, Hilton is still the plan.

“This five-star idea is fairly new for Hilton,” Kehoe says. “It’s not going to be the antiseptic Hilton we’re used to.”

But Hilton’s Francois adamantly denies that there is a project. The location, according to Francois, who spoke with the Weekly from Hilton’s Beverly Hills corporate headquarters, is the problem.

“Face it: If you put a 500-room hotel in the middle of a lettuce field, that won’t work,” Francois says. “Hilton is always interested in participating in a form of franchise agreement or affiliation that makes economic sense. But Kehoe has never demonstrated how the project makes sense. Oldtown Salinas just isn’t the kind of place that jumps out as feasible.

“It’s a ton of money for something that honestly can’t even come close to being profitable. I think what happened here is that he sold a bill of goods to some naïve public officials who wanted to believe in something like this.”

Lutes calls Hilton’s hands-off position “upsetting.”

“But we weren’t naïve,” she says. “It’s not like we had a host of other hotel offers.”

“He’s spent millions in this town already,” Phinney says about Kehoe’s property purchase, environmental studies and the like—evidence that the man is serious.

“It’s the hardest part to understand,” Lutes says. “He has a lot to lose. But we’re a different Salinas nowadays. We’re no ‘lettuce field.’ There’s so much more happening downtown right now. It only stands to get better. And we can attract a hotel on our own. The bottom line is, we just don’t need Gerry Kehoe’s pipe dream anymore. But the ball is now in his court, and we sincerely hope he can make it happen.”

The number of e-filed tax returns as of March 11—up 2.5 million from last year.
Source: Internal Revenue Service.

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