Compton Closes Former Ramada Hotel : Housing: Development firm files claim against city for expenses incurred while it managed the building.

Compton officials have closed the city’s financially troubled hotel, dashing an Altadena developer’s hopes of transforming part of the complex into a residence for senior citizens.

Last July, a divided City Council voted to sell the hotel for $24.4 million to Cal-State Progressive Development Inc.

The firm had been operating the complex since August, but city officials notified the company in November that the deal was off and set a Dec. 31 deadline for vacating the building. The city’s letter contended that the developer had failed to live up to terms of its contract, but did not elaborate.

On Dec. 23, however, the city shut down the complex, changed the locks and barred Cal-State workers from entering, said the developer’s attorney, Angela D. Robinson.

City officials said the hotel is closed while workers install new carpeting, paint and make various repairs. Councilwoman Marcine Shaw said she hoped the complex will reopen in February, but didn’t know if it would be operating as a hotel.

She said the city may lease the building to another business. “We’re looking at different options,” Shaw said. “Right now it’s closed to get it back into shape.”

The former Compton Ramada Hotel once was considered the centerpiece of the city’s economic revival. The complex included ballrooms, restaurants and a convention center.

The developer had planned to convert the top five floors into housing for senior citizens. The first four floors were to remain the same: hotel rooms, ballrooms, restaurants and a gift shop.

The city and developer were scheduled to wrap up the deal by the end of October. But Robinson said city officials had expressed doubts about Cal-State’s ability to come up with a $3.5-million down payment despite written assurances from a qualified lender.

“They came up with excuses not to sell it,” Robinson said. “They kept asking for more and more. That’s why this deal didn’t close.”

The developer has filed a claim seeking at least $1 million from the city for repairs and other expenses incurred after Cal-State began managing the complex.

On Jan. 3, about 20 former hotel workers appeared before the council to demand that the city pay them thousands of dollars in back wages.

Some workers said they have had trouble getting paid since Cal-State took over.

“They kept reassuring us they were going to pay us,” said Angela Brown, a former housekeeper who said she is owed $1,092 in back wages. “It didn’t sink in until a couple days before Christmas.”

Workers say the the city is responsible for paying workers’ wages because it still owns the building.

“That hotel. . . was still under the city’s name,” said Debra Lindsey, a housekeeper who contends that she is owed $700. “Somebody’s responsible for paying us this money.”

City Atty. Legrand H. Clegg II said Compton has no legal obligation to pay the workers because Cal-State was managing the hotel while the sale was pending. “We’re not responsible for (paying) them,” he said at the meeting.

The 288-room hotel, which overlooks the Redondo Beach (91) Freeway, has been plagued by financial problems and low occupancy.

Less than two years after the hotel opened in 1989, the city took over management of the complex and began foreclosure proceedings. The city had paid developer Naftali Deutsch about $30 million to build an attached parking structure and convention center that are part of the complex, then loaned him $6.7 million to complete the project. But the developer failed to make a single payment on the loan.

The hotel was originally named the Compton Lazben but was renamed after the developer purchased a franchise from Ramada in 1990. The hotel’s franchise has been dropped, a Ramada spokesman said.