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18 Nov 2015

Millions Down the Drain: Nejat Kohan Thinks He Was Discriminated Against By the City of Palm Springs While He Tried to Renovate a Historic Hotel

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Nejat Kohan: "I absolutely believe that (Mayor Steve) Pougnet took advantage of my situation as a developer when he asked me for the donation." Nejat Kohan: "I absolutely believe that (Mayor Steve) Pougnet took advantage of my situation as a developer when he asked me for the donation." Brane Jevric

Nejat Kohan is an Iranian Jew who, like many immigrants (myself included), came to this country in hopes of creating better life.

Kohan’s dream was to become a big-time developer. One of the first projects he was involved with here in the desert was the reconstruction of the historic Spanish Inn—nowadays known as Triada—the iconic hotel on Indian Canyon Drive in Palm Springs.

The property has been a hot spot for Hollywood celebrities since 1939. Lana Turner and Elizabeth Taylor frequented there, as well as Howard Hughes and Alan Ladd. In 1995, Los Angeles-based investor Hormoz Ramy bought the deteriorating hotel; Kohan stepped in as his business partner in 2002. Kohan threw all of his financial resources, time and energy into the reconstruction, he said.

“The project I was working on was a massive undertaking,” Kohan said. “There are three complexes within the 65,000-square-foot lot. The underground parking alone is 14,000 square feet.”

Since the property was a historic site in the famed Movie Colony neighborhood, the renovation was done slowly and carefully.

“Many of the hotel’s precious 1930s tiles have been restored to their original condition,” Kohan said. “Most of the damaged Spanish barrel roof tiles were replaced by ones from old 1930s homes located in the L.A. area. It took a lot to make it right.”

While Kohan was focused on the details, the city of Palm Springs began placing requirements on the developers—including the Movie Colony Traffic Calming Program.

“At first, I considered the city’s request for a traffic plan as a normal procedure when such reconstruction was under way,” Kohan said. “The city approved the shared cost of the street improvement with the clause about reimbursements.”

According to Kohan, the deal looked fine on paper, as the city’s demands obligated other surrounding properties to contribute; both the Spanish Inn and the Colony Palms Hotel were asked to put in an estimated $100,000 each.

But by 2007, as Kohan has indicated in documented complaints to the city, trouble was brewing.

“The city approved a covenant for Colony Palms Hotel, reducing its share for the street improvement from $109,000 to $45,000, without my knowledge,” Kohan claims. “That left me to cover the $362,000 cost for that project and then seek reimbursements from several surrounding properties.”

Meanwhile, the cost of the street improvements skyrocketed.

“In 2008, I finished the street plan at the cost of over half a million,” Kohan said, “and the Spanish Inn reconstruction was delayed by it for two years.”

By 2010, according to Kohan, his complaints to the city regarding reimbursement were accumulating—with no visible results. Kohan said he was quite desperate, and that is when the city’s mayor, Steve Pougnet, called him.

“On Monday, Sept. 27, 2010, Steve personally called me around 5:30 p.m.,” Kohan said. “He said: ‘This is Mayor Pougnet. I’m going to come visit your project, the Spanish Inn, right now! Would you also make a check for $500 to my campaign?’ I told him: ‘Yes!’

“The mayor came in a few minutes, and I toured him around,” Kohan continued. “The mayor told me that he was impressed with the progress of the project,” which was then about 80 percent completed. “I gave him the check. He spent about 10 to 15 minutes with me at the Spanish Inn.”

Kohan gave at least three other checks to Pougnet, too—all dated on the 27th day of a month, starting with a birthday check on Pougnet’s birthday, April 27.

“I attended the mayor’s birthday party in one of his friend’s homes and again donated the money to Pougnet’s campaign,” Kohan said. “Later, I was invited to a party at the mayor’s residence and contributed again to his campaign. I did feel that I was obligated to donate to Steve’s campaign in order to get his attention to Spanish Inn problems, particularly to the city’s agreement for the traffic plan.”

But it was all for naught.

“The city never paid anything for the traffic plan which was imposed as a pre-condition for building permits,” Kohan said.

After funding $7 million as a construction loan, the lender stopped financing the Spanish Inn project in 2011, Kohan said.

“I have lost about $2 million in my Spanish Inn investment and general contracting fees,” Kohan said. “Furthermore, there are some claims and liens up to $6.5 million for my personal guarantee. In 2011, the Pacifica Group bought the Spanish Inn in a trustee’s sale for $3.5 million.”

In 2012, the Los Angeles Times reported that the Colony Palms Hotel, about the same size as Spanish Inn, sold for $15 million.

Kohan said he questions Pougnet’s actions.

“I think I was discriminated against, and I believe that the discrimination was based on my origin,” Kohan said. “I also absolutely believe that Pougnet took advantage of my situation as a developer when he asked me for the donation.”

Pougnet did not initially respond to various requests for comment. However, after the initial version of this story was posted, Pougnet sent responses to some questions that had been emailed to him. He said he recalled receiving one “unsolicited contribution from Mr. Kohan in 2010.” In response to a question about whether he discriminated against Kohan, Pougnet responded: “Absolutely not!”

Marcus Fuller, the Palm Springs deputy city manager and city engineer, confirmed the street modifications were a requirement imposed on both the Spanish Inn and Colony Palms Hotel by the City.

Today, Nejat Kohan is no longer a developer. He is now an attorney—with an emphasis on business law and construction.

(Story updated at 5:35 a.m. on Wednesday, Nov. 18)

2 comments

  • Comment Link r. ploss Wednesday, 18 November 2015 17:23 posted by r. ploss

    There's so much to this story; too bad space is limited. But it is a provocative article which raises many questions. Well done. Hope a lot of people see it.

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  • Comment Link Josie Fox Tuesday, 17 November 2015 18:57 posted by Josie Fox

    Corruption and discrimination in big and small cities, nationwide is a trend..Thank god for writers brave enough to dig deep and address it...

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