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By JOYZELLE DAVIS

Staff Reporter

Whether or not the Ambassador Hotel site becomes a power retail center may depend on the Los Angeles Unified School District.

In the latest chapter of wrangling over the abandoned site, the LAUSD filed foreclosure proceedings in December.

Ambassador Associates, the property's ownership group led by real estate mogul Donald Trump, has until May to pay the estimated $60 million it owes the district. If it doesn't cut the check, the LAUSD gets Ambassador's only asset: the 23-acre Wilshire Boulevard property.

Officials at Ambassador Associates say that will not happen.

"We expect to pay them back," said Barbara Res, senior vice president for Trump. "And we intend to develop the property."

But Res said the group needs more time in order to get entitlements for the property and to sign up a few key tenants so financing can be arranged for the development.

The group's ability to get the money either by bringing in another investment partner or gaining political leverage to extend the deadline depends on the reception its proposed development plan receives from the retail and neighborhood community.

Los Angeles City Councilman Nate Holden, whose district includes the Ambassador site, has supported commercial development of the property since the owners first proposed building a skyscraper. He endorses the new power retail center proposal as well, saying that it will bring much-needed jobs and tax revenue to the area.

"We should go to court to allow (the owners) more time to come up with the money," Holden said. "When the district proposed building a school there, it was as if a stink bomb went off and killed (development) on the entire corridor. The district should just back off."

If the district does receive the property through foreclosure, it might go ahead with its original plans to build a high school. The site provides the rare flat, contiguous piece of land needed for a standard 17-acre high school. And the densely populated Mid-City area is in desperate need for more schools, said Brad Sales, a spokesman for the district.

Alternately, the district could extend the foreclosure deadline for Ambassador Associates in the hopes of getting the $60 million. That money could be used to build several high schools in other parts of the city that are just as crowded, Sales said.

But after a near decade of legal fisticuffs, cutting a trust-dependent deal like that may not be easy.

The Trump-led partnership bought the Ambassador property in the late 1980s and announced plans to build a 125-story skyscraper, which would have been the nation's largest. The school district, however, wanted the property to build a Mid-City high school.

After unsuccessfully trying to negotiate a voluntary sale, the LAUSD sought to condemn the property under eminent domain. It deposited $48 million (the estimated value of the rear 17 acres of the property) with Ambassador Associates as part of that legal process.

Trump insisted on a higher price, and the land sat idle as the two parties tried to negotiate a deal. In 1994, the school district withdrew its bid and the land was once again the Ambassador Associates' to develop.

By then, the bottom had fallen out of the real estate market. Instead of refunding the deposit, Ambassador Associates filed suit to force the district to take the land after all but pay a premium price for it.

Last December, a judge ruled in the LAUSD's favor. The district filed to collect an estimated $60 million the $48 million it paid as a deposit on the land in 1990, plus interest, according to Ed Szcezepkowski, an attorney who represented the district.

There has been speculation that the Community Redevelopment Agency might work with the owners, but no formal development plans have been filed, according to Ed Saulet, a project manager with the CRA.

Saulet said the owners must resolve all legal and financial issues with the LAUSD before the CRA begins negotiating a deal.

Even if the owners are able to satisfy the LAUSD, they have another potential obstacle to plans to raze the legendary Ambassador Hotel: the Los Angeles Conservancy. The group, which advocates preservation of structures that are historically or architecturally significant, filed suit against the school district when it planned to build a high school on the site.

Linda Dishman, executive director of the group, has said that she would like to work with the developers to preserve the hotel.

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