A Christian nonprofit has filed a federal lawsuit against Lake Elsinore, accusing the city of discriminating against its faith-based plans for the long-vacant Ambassador Hotel and trying to bulldoze the 139-year-old downtown landmark instead. Dream Center of Lake Elsinore filed suit in U.S. District Court in Riverside on November 3, seeking at least $950,000 in damages and a permanent injunction to stop the wrecking ball.
A Nonprofit's Fight to Save a Downtown Landmark
According to The Press-Enterprise, the Dream Center bought the hotel at 164 S. Main St. for $195,000 in January 2022, intending to turn the building into a residential treatment facility for homeless people. The nonprofit's proposed faith-based program would have included the 12-step model used by Alcoholics Anonymous and Narcotics Anonymous, along with daily prayer, Bible study and worship, the outlet reports. Plans also called for a retail component with conference and training rooms available for public rental and a public restaurant.
The Dream Center claims the city withdrew its support once officials learned the treatment program was faith-based, and alleges Lake Elsinore imposed costly permitting and environmental review requirements that differed from those applied to comparable nonreligious projects, ultimately derailing the project, per the Press-Enterprise. The lawsuit accuses the city of violating federal religious land-use, fair housing and disability laws, as well as constitutional religious-exercise protections. Lake Elsinore, for its part, argued that the Dream Center had expanded its proposal to include a rooftop event venue, gift shop, public pool and other commercial uses, and that planning staff recommendations were never a final project approval or an environmental exemption.
City Says Hotel Has 65 Dangerous Conditions
The Lake Elsinore Planning Commission denied the Dream Center's conditional use permit application in February 2024, and the City Council later declined to approve the project, determining it required further environmental review. The nonprofit claims that additional review could cost hundreds of thousands of dollars and take up to three years, and cites an August 2023 letter from a city planner stating the project qualified for an environmental exemption.
The Ambassador Hotel has sat vacant and boarded up for more than 30 years, after the city ordered it vacated in March 1992 due to dangerous conditions and authorized boarding it up in 1993 when its then-owner failed to make repairs. City inspectors identified 65 substandard or dangerous conditions at the property in 2017 and ordered repairs or demolition, a tally later cited by Lake Elsinore officials in the more recent court fight, as myvalleynews.com reported. The building has no seismic retrofit and has been declared a public safety hazard.
Court Battle Over a 2021 Compliance Agreement
The city filed a nuisance-abatement lawsuit seeking authorization to demolish the hotel in May 2021, and the Dream Center signed a compliance agreement that August acknowledging longstanding code violations and committing to correction deadlines — an agreement that itself authorized demolition at the nonprofit's expense if it failed to comply. The city claims the Dream Center missed deadlines for permit applications and corrections, and sought a demolition order under the existing lawsuit in March of this year.
Riverside County Superior Court Judge Daniel Ottolia granted the city's demolition motion on July 21, declaring the hotel a public nuisance. Ottolia found that code, fire, electrical, sanitation and safety violations substantially endangered the public and posed an immediate health and safety threat, while also finding the Dream Center had a reasonable opportunity to correct the violations. The nonprofit challenged the ruling at the Fourth District Court of Appeal, which temporarily halted demolition in August before lifting that stay on October 9; the Dream Center dismissed its appeal the following month.
Dueling Accounts of the Hotel's Condition
Jovanny Huerta, identified in the Press-Enterprise report, said the Dream Center made no repairs to the hotel in nearly five years aside from removing some exterior trash, and accused the nonprofit of allowing people inside and onto the roof despite a city occupancy prohibition. The Dream Center disputes that characterization, pointing to a structural engineering firm, JAMA, which evaluated the building in July 2021 and again in June 2026 and concluded — according to the lawsuit — that the hotel could be restored with proper retrofitting and was in good structural condition for its age. The city countered that JAMA's June 2026 evaluation was limited in scope, recorded further deterioration since 2021, and found the hotel unsuitable for occupancy in its current condition.
Barbara Leibold said the Dream Center knew of the dangerous condition when it bought the property and had agreed to correction deadlines, while the nonprofit maintains it invested more than $950,000 in acquisition, planning, permits and other expenses. Brett Masters, the Dream Center's executive director and pastor, declined to comment on the litigation. The nonprofit's attorney, Daniel Dalton, said the facts will be presented during litigation and that the lawsuit was filed to protect civil rights and is consistent with federal law.
City Council Approved Demolition Contract in August
The Lake Elsinore City Council unanimously approved a $198,000 demolition contract with Precision Works Inc., a Ventura-based firm, on August 11, according to myvalleynews.com, authorizing potential change orders of up to $19,800, or 10% of the contract price. That vote came just days after the California Court of Appeal issued a temporary stay on August 7 while the Dream Center's earlier appeal continued, the same outlet reported. Jovanny Huerta said the newer federal lawsuit does not prevent demolition, and that as of the Press-Enterprise's reporting, the city had not yet been served with it. Lake Elsinore intends to proceed with demolition but has set no date.
According to historical information compiled by the Dream Center, a two-story brick building was first constructed on the site in 1887 by Lake Elsinore founder Franklin Heald. The structure operated as a bank for 19 years before becoming a hotel in 1916, per the nonprofit's account. The city's economic development office has separately said it is acquiring the Ambassador Hotel property to evaluate possible future uses, framing the move as part of a broader vision for Lake Elsinore Economic Development's Downtown Main Street revitalization efforts.
