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HomeMy WebLinkAbout2017-11-15 CC MINUTES - Verbatim Minutes only a small portion of the JT meeting EZK REVISIONCITY OF PALM SPRINGS MEMORANDUM OFFICE OF THE CITY CLERK TO: Edward Z. Kotkin City Attorney cc: David H. Ready, Esq., Ph.D. City Manager FROM: Kathleen D. Hart, MMC Interim City Clerk DATE: November 28, 2017 SUBJECT: 11-15-2017, City Council Meeting Transcription Item A, Virgin Hotel Discussion (a portion only) Per our discussion, at the request of Councilmember Kors, I have prepared a transcription of a portion of the Virgin Hotel Item, November 15, 2017, City Council Meeting. Councilmember Kors I obviously take some exception to a potential bribe being a technicality, but everyone’s entitled to their opinion. When we voted to transfer the TOT from the Marriott to the Virgin, which we did, we were assured we were not waiving, potentially not waiving our 1090 claims. In every agreement we’ve done since, we’ve had language. So I want to ask the City Attorney - by combining the TOT program, which we have never done before, with the development agreement we are effectively voting to waive any 1090 claims we may have. Is that correct? City Attorney Kotkin I’m loathe to offer legal advice in response to one Councilmember’s questions, since the entire Council is the holder of the attorney-client privilege. I apologize, my comments, my legal analysis, I’m very happy to offer that. If there’s a vote that I answer that question, I . . . Councilmember Kors Anyone object to him answering the question? [Mayor and Councilmembers response] Ok. You now have a majority. Memo to City Attorney Kotkin Page 2 Verbatim Minutes (a portion only) Item A, Virgin Hotel Development Agreement City Attorney Kotkin Great. Terrific. There’s a verbal majority. I appreciate that. Thank you very much. Mayor Moon We’re all listening. City Attorney Kotkin I appreciate that. Certainly with respect to this transaction, in the event that the agreements that are before the Council this evening are approved as they’re presented in the staff report there would be no feasible way for the City of Palm Springs to seek to recover the potential share of TOT that might be realized by this property through a court proceeding. That is a right that today, under the existing agreements….my analysis is indicating that we would have that capacity. Councilmember Kors No, he is giving us his opinion… Chris. He is not saying guaranteed. Well, that’s not his opinion. City Attorney Kotkin I will qualify my comments, because I have spoken with Councilmember Mills as well, and I will certainly say that with respect to the recovery under 1092, that as a practical matter, that type of a legal action is a challenging undertaking 100%, and that in a certain sense, regardless of the path that the Council chooses, any attorney that tells you “you’re gonna get that money back” [Councilmember Kors, concurrently: “No guarantees, understood”] would be absolutely foolish. We’d be wrong to do that. Councilmember Kors So we are effectively taking it off the table. City Attorney Kotkin I would say if you approve these agreements as they’re presented you’re removing the potential to recover that future money. Again, that’s not money that the City has ever spent or given anybody. It is future money. Councilmember Kors Ok, and just so it’s clear. There’s no reason we need to have the TOT agreement in this development agreement. So if they were separate, we could do the development agreement without that, that’s correct as well. City Attorney Kotkin You could, in theory remove the TOT covenant from the development agreement, convey the consideration in the development agreement that is given to the developer in a separate document and extend the TOT in a new covenant the way we have in conjunction with this development agreement. But it’s far from certain, in my opinion, Memo to City Attorney Kotkin Page 3 Verbatim Minutes (a portion only) Item A, Virgin Hotel Development Agreement that that course of action would be any more likely to preserve the recovery potential under 1092. It’s far from certain. Councilmember Kors The best course of action to do that, would be to pass an ordinance extending the TOT for the three (3) hotels that want them separate and apart from this development agreement. Correct? City Attorney Kotkin If I were charting your course to preserve the City’s recovery rights with respect to 1092 of the Government Code, as to any of these issues with respect to hotel projects I would recommend that you do so in a project neutral, non-specific way by changing the ordinance that provides for the program itself. That is certainly something that could be done, and would obviate the need, potentially, for extensions of the TOT deadline for the commencement of construction with respect to hotel rooms. /kdh