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Sacramento’s old downtown gives way to new as last tenant leaves Hotel Marshall

City Market owner Obaid Khushiwal, who was evicted on Tuesday, reflects on the end of his business at Seventh and L streets in Sacramento.
City Market owner Obaid Khushiwal, who was evicted on Tuesday, reflects on the end of his business at Seventh and L streets in Sacramento. rpench@sacbee.com

For nearly a decade, Obaidullah “Obie” Khushiwal was manager, enforcer, counselor and caretaker at the Hotel Marshall, overseeing the hard-up tenants living in its decrepit but cheap downtown rooms.

Most recently, he was the proprietor of the City Market in the building’s corner on Seventh and L streets.

Now he’s also the last man out of the building. Khushiwal was evicted Tuesday after an acrimonious legal dispute that highlights how downtown is changing from a neighborhood of rough corners and handshake deals to one of high-end, high-stakes businesses with multimillion-dollar loans, leases and contracts.

The rear of the Marshall stands just a few feet from the gleaming metal surface of the new Golden 1 Center, placing the dilapidated structure in a prime spot for redevelopment. Residential tenants were moved out more than two years ago, but Khushiwal’s store stayed open. Developer Guneet Bajwa proposes to demolish the building’s interior and replace it with an 11-story Hyatt Centric, a small-scale boutique brand introduced by the hotel giant in 2015 and catering to “modern explorers” in urban destinations.

The City Council voted last month to loan Bajwa and his group $4 million for the project, an influx of cash that Bajwa said will allow construction to begin this year.

That deal meant Khushiwal had to go. But not without a fight.

“My youth, my golden days passed on this street,” said Khushiwal, 39, Tuesday afternoon. He had spent until the early hours of the morning clearing out the last of his inventory of sodas, chips and cigarettes. By 11 a.m., a lone worker on an extension ladder had hacked down the red letters of his sign and shoveled the debris into a trash can. All that remained of Khushiwal’s presence was a pencil-written closed sign on the door and a colorful slogan on the facade, “trust your struggle.”

Khushiwal said he handled “everything from A to Z, with capital and small letters,” during his years at the Marshall, collecting rent, mediating disputes and handling “hundreds” of evictions. When he grew tired of being the heavy, Khushiwal said he made a deal in 2010 with one of the owners, Ratib Norzei, to run the market.

Khushiwal said there was no written agreement for the business between the two men because they were “personally friends.” He said Norzei had signed a lease with the building owners on their behalf, but he never received a copy.

“I trusted him,” Khushiwal said.

Norzei said no such lease ever existed.

“I never signed any lease,” Norzei said in a phone interview in September. “I (didn’t) see any lease.”

Khushiwal challenged his eviction in court. The case hinged on whether that lease ever existed, or whether Khushiwal was merely occupying the site on a month-to-month agreement, as the building owners asserted in court filings. The Marshall is currently owned by a limited partnership group called Marshall Hotel Investors LP, according to court records.

“This is America ... You don’t just occupy a place and say you have a 10-year lease. It doesn’t work that way,” said Peter Noack, one of the building owners, in September, days after the eviction case went to court.

Noack said Khushiwal was “trying to extort” money from the Marshall owners to leave a space he had no legal right to be in.

“They don’t have any evidence. He doesn’t have a partnership agreement. He doesn’t have a lease,” said Noack.

Khushiwal said he knew he had to leave, but wanted compensation. “ I can’t stop the Hyatt Hotel,” he said. “ just need something fair.”

He wanted the building owners to pay him – maybe as much as $250,000 – to leave.

“They are trying to bully me,” said Khushiwal over a snack bowl of Froot Loops and tea in a back room of the store in mid-September.

Ultimately, a Sacramento Superior Court judge agreed with the owners that businesses require legal documents.

In a Sept. 15 ruling, Commissioner Peter S. Helfer said Khushiwal’s story of missing partnership papers and unsigned leases “strains credulity,” and that he found it more likely there was only “an informal arrangement,” rather than a binding lease for the store.

Khushiwal took it hard. “It’s heavy, heavy stuff,” he said after the store closed, adding that in his part of the world, verbal agreements are common.

Khushiwal is an Afghan refugee whose family immigrated to the United States for political asylum because his father was a military general targeted by the Taliban, he said.

He moved his family from the Bay Area to Elk Grove in 2005 when he was offered a job by Norzei to manage the Hotel Marshall and the adjoining Jade Apartments. The aging, run-down properties largely catered to a coarse crowd that included those recently released from the nearby jail and transients with few other options, he said. Before its last residential tenants left in 2015 – some given relocation assistance and a city-mandated $2,400 each by building owners – it was a a stop of last resort for the poor, addicted and socially shunned.

“It was a mess,” said Khushiwal. “All the mental health (issues), parolees, sex offenders.”

In 2010, Khushiwal said Norzei offered to be fifty-fifty partners with him in running the market themselves after the prior operator was evicted. Tired of the grind of managing the properties, Khushiwal believed the store could support his family – four kids then and five now, including an 11-year-old daughter with cerebral palsy.

Khushiwal said when he took over the market, he put in $45,000 of his own money to fix it up. At first, things went well. A Greyhound bus station across the street provided a steady stream of customers and “booming” business. But in 2011, the station relocated to Richards Boulevard.

“Business went from sky to ground immediately,” Khushiwal said.

In 2013, he and Norzei agreed to let another operator come in and run the store, hoping to improve its finances, Khushiwal said. But that lasted less than a year before the new operator stopped paying rent and abandoned the shop, he said.

Khushiwal said he once again took over operating City Market – this time on his own – but again struggled to make a profit. Court papers filed by the ownership group allege that Norzei made an oral agreement with the managing member of the building partnership to rent the store in 2013, but neither man ever signed a subsequent written agreement. Instead, the court documents allege Khushiwal became an “unauthorized subtenant under an agreement” with Norzei and began paying the rent.

Then in summer 2015, construction on the Golden 1 Center ramped up after starting the previous fall, and streets around the corner store were blocked off. Along with the arena construction, the city began replacing downtown sewer lines in the area.

Business died off again.

“Everything got blocked,” said Khushiwal. “The smell of the sewer on this street for two years was the most horrible thing.”

The Marshall owners slashed Khushiwal’s rent payments by half, to $2,000 a month during the construction, but Khushiwal said he couldn’t even make those payments. He fell behind in rent, eventually owing about $24,000 in back payments, he said.

In August 2016, Khushiwal received a “notice to pay rent or quit,” for that delinquent amount.

Over the next five months, he said he paid it all – selling his car to get some of the money.

Noack disputes the back rent is paid in full, and said $20,000 is still outstanding. Eviction documents don’t reference that dispute but do include emails from a woman Khushiwal’s attorney, Beilal Chatila, identified as the bookkeeper for the property confirming payments of $14,000 by December of last year.

By 2017, Khushiwal said he was current on his rent and believed with games and concerts filling the calendar of the now-open arena, his fortunes would improve. Downtown had changed dramatically in the years since his main clients were the Marshall tenants. Along with the arena, a slew of high-end and mixed use projects have been built or are in the works, developments that are changing the demographic of the area from the down-and-out to the up-and-coming.

“I’m thinking, ‘I have a lease. This day will pass, too,’” he said. “Big development is coming and I will make it all back, the loss.”

For a few months, it seemed like he might. On nights with events, customers came in to pick up Marlboro’s, munchies or a quick drink. Khushiwal hung a banner outside welcoming arena patrons.

But in June, he received notice giving him a month to leave. Noack said Khushiwal had not paid rent in at least three months prior to his eviction. Khushiwal’s attorney said the owners had refused to accept payments for that time period.

With his business out of business, Khushiwal is bitter. He said he feels like, “this big party of rich people got together and stepped on my face.”

He borrowed storage space for his inventory and is looking for a new store to rent, but hasn’t had luck. He’d sell the inventory, but “it’s all garbage,” he said. “If you ask somebody to buy it, nobody does that.”

He said he thinks he was instrumental in helping the owners run and then close the Marshall. Now, he said, “they are just (taking) me by the ear and throwing me on the street.”

Tuesday, he drove by the locked and empty space. He’s got “attachment issues,” he said.

“This is the only thing I have,” he said. “I can’t go back.”

Some development projects in the urban core are well underway, while others seem years away.

Anita Chabria: 916-321-1049, @chabriaa

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