HomeMy WebLinkAbout2087ORDINANCE NO. 2087
AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, AMENDING CHAPTER 5.26 OF THE PALM
SPRING MUNICIPAL CODE, REGARDING THE HOTEL
OPERATIONS INCENTIVE PROGRAM
City Attorney Summary
This Ordinance extends the City's Hotel Operations lncenti�e
Program, with certain modifications, for existing hotels that
undertake specified renovation projects involving significant
investment, subject to certain limitations.
WHEREAS, the City of Palm Springs ("City") is a charter city organized
pursuant to Article XI, Section 5 of the California Constitution and pursuant to the
authority so granted, the City has the power to make and enforce within its limits
all ordinances and regulations with respect to municipal affairs not in conflict with
its own charter.
WHEREAS, Chapter 5.26 of the Palm Springs Municipal Code establishes
the Hotel Operations Incentive Program ("Program"), whereby existing hotels in
the City are eligible to receive certain incentives when they undertake specified
renovation projects involving significant investment.
WHEREAS, Ordinance No. 1972, adopted by the City Council on February
6, 2019, re -instated the Program and included a sunset date of December 31,
2023.
WHEREAS, currently, hotels that have not been in operation for the
previous 36 months are not eligible to participate in the Program because Chapter
5.26 does not specify how to calculate the Phase II Renovation Project Transient
Occupancy Tax Base for such hotels.
WHEREAS, the City Council desires to extend the sunset, date of the
Program, to establish parameters under which hotels without 36 months of
transient occupancy tax may participate in the Program, and to make certain other
adjustments to the Program.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES ORDAIN
AS FOLLOWS:
SECTION 1. incorporation of Recitals. That the findings and
determinations reflected above are true and correct and are incorporated by this
reference herein as the cause and foundation for the action taken by and through
this Ordinance.
SECTION 2. Amendment of Palm Springs Municipal Code Section
6.26.020. Section 5.26.020 of the Palm Springs Municipal Code shall be amended
in its entirety, to read as follows:
55575.18175\41469825.1
Ordinance No. 2087
Page 2
"5.26.020 Definitions.
For the provisions of this Chapter, the following definitions shall apply:
"Adjusted tax rate" means the hotel operations incentive program] tax
rates which shall be exclusively utilized for the calculation of the operating
assistance to be paid by the City to qualified operators of hotels participating
in the hotel performance incentive program. For hotels of one hundred
twenty-four rooms or less, the adjusted tax rate shall be ten and nine -tenths
percent of the rent charged by the operator of the hotel for transient
occupancies. For hotels of one hundred twenty-five rooms or more, the
adjusted tax rate shall be twelve and one -tenths percent of the rent charged
by the operator of the hotel for transient occupancies. The adjusted tax rate
set forth in this Section shall exclusively apply for the calculation of any and
all operating assistance for the term of the hotel performance incentive
program without regard to any increases at any time in the City of Palm
Springs' transient occupancy tax rates.
"Certified Renovation Investment" means the amount of money that
the operator of a Renovation Hotel plans to invest in the course of a Phase
II Renovation Project, and (i) documents to the City's satisfaction, in its
Hotel Operations Incentive Program application, all improvements
proposed, and subsequently (ii) certifies in writing, to the City Manager or
their designee, upon completion of the project, the actual costs and
expenses incurred. If a Phase II Renovation Project includes hotel rooms,
the amount of the investment shall not be less than five thousand dollars
($5,000.00) per room subject to the project. If the project includes any
common area or amenity, or any other area for guest use at the hotel, the
amount of the investment shall not be less than the amount, if any, invested
in rooms, added to the total number of rooms at the hotel that will exist at
the end of the project multiplied by five thousand dollars ($5,000.00).
"Committable rooms program" means the Palm Springs convention
center's committable rooms program which provides the convention center
with a list of hotel properties and a count of hotel rooms available, one year
in advance or more, for potential reservation by meeting groups and/or
conventions in the City.
"Comfort hotel" means a hotel which provides appropriate standards
of physical features and operational services established for hotels by the
American Automobile Association, J.D. Power & Associates, Forbes, or
Smith's Travel Research Service.
55575.18175\41469825.1
Ordinance No. 2087
Page 3
"Construction" means the process of making, building, fabricating,
installing, and setting up tangible physical enhancements to a hotel that
include without limitation, one or more of the following: (i) modification of an
existing structure or amenity, (h) new or upgraded furniture, fixtures or
equipment, (iii) new or upgraded landscaping. Construction may address
hotel rooms, common areas, and/or other areas for guest use.
"Existing hotel" means a property that was constructed, occupied,
and used as a hotel on or before January 1, 2006.
"First class hotel" means a hotel which provides standards of
physical features and operational services which meet or exceed the higher
rating criteria established for hotels by the American Automobile
Association, J.D. Power & Associates, Forbes, or Smith's Travel Research
Service.
"First class hotel standard" means standards of physical features
and operation which qualify a hotel as a first class hotel and which include
operation of the hotel on a twenty-four hours per day/seven day a week
basis with housekeeping services, food and beverage services, room
services, banquet and meeting services, concierge and bellman services,
and parking services.
"Fully entitled" means a hotel that has received and/or been issued
all discretionary permits and entitlements from the City required for the
construction of a new hotel.
"Hotel" means any property containing four (4) or more guest rooms
used by four (4) or more guests for compensation and where the guest
rooms are designed and intended as transient occupancy accommodations.
"New hotel," "first class new hotel," and "comfort new hotel" means a
hotel or first class hotel or comfort hotel that is or was fully entitled as a hotel
after January 1, 2008, but before December 31, 2014 and which is under
construction prior to December 31, 2017. The term "new hotel" does not
include all, or any portion of, or addition to, an existing hotel.
"Operating covenants" means the covenants described in
Section 5.26.050 of this Code.
"Operator" means the person who is proprietor of a hotel, whether in
the capacity of owner, lessee, sub -lessee, mortgagee in possession,
licensee, franchisee, or any other capacity, or the assignee or designee of
such proprietor.
5557i_ 1817i,4146982i.I
Ordinance No. 2087
Page 4
"Phase II Renovation Project" means a hotel improvement project ,
constructed by a Renovation Hotel commencing no more than twelve (12)
months after the City's execution of the operating covenant for that hotel,
and completed no later than December 31, 2028. The hotel may suspend
all or some of its operations during construction of the project. Collection
and payment to the City of transient occupancy tax under Chapter 3.24 of
this Code for any portion of the hotel that remains open during construction
of the project shall continue until the project's completion, without any
consideration to the operator pursuant to this Chapter. Whether the hotel
suspends operations or not, collection and payment to the City of transient
occupancy tax under Chapter 3.24 of this Code by a Phase II Renovation
Project hotel pursuant to this Chapter shall commence immediately on the
Renovation Approval Date.
"Phase II Renovation Project Transient Occupancy Tax Base"
means the annual average, during the thirty-six (36) month period prior to
the date when the City deems the Hotel Operations Incentive Program
application of a potential Renovation Hotel to be complete, of transient
occupancy tax owed to the City.
"Phase II Renovation Project Transient Occupancy Tax Base
Adjustment" means the the one-time increase to the Phase II Renovation
Project Transient Occupancy Tax Base after the fifth anniversary date of
the Renovation Approval Date of the hotel. This increase shall be in an
amount equal to three percent (3%), or the annual percentage change in
the most recent month's data in the Consumer Price Index, whichever is
higher. The Consumer Price Index used in calculating this adjustment shall
be the "Consumer Price Index, Los Angeles -Long Beach -Anaheim, All
Items, 1982-84=100 base, All Urban Consumers (CPI-U)."
"Phase II Renovation Project Transient Occupancy Tax Increment"
means the amount of transient occupancy tax that a Renovation Hotel owes
to the City annually, pursuant to Chapter 3.42 of this Code, after the
Renovation Approval Date, minus the Phase II Renovation Project
Transient Occupancy Tax Base as adjusted by the Transient Occupancy
Tax Base Adjustment.
"Qualified renovation program" means a property improvement
program undertaken by an existing hotel which invests no less than fifteen
thousand dollars per room, or invests no less than one million dollars in
ancillary non -hotel room facilities and/or space. The property improvement
program shall be comprehensively executed in a single renovation project
on the property and be under construction no later than December 31, 2014
and completed no later than December 31, 2015. ,
55575.18175W 1469825.1
Ordinance No. 2087
Page 5
"Renovation Approval Date" is the date of the City's final inspection
and approval of improvements constructed pursuant to a Phase 11
Renovation Project.
"Renovation Hotel" means a "hotel" as defined in Palm Springs
Zoning Code Section 91.00.00, as the City may amend that section from
time to time, which hotel participates in the Hotel Operations Incentive
Program as a Phase II Renovation Project hotel. Upon the adoption of this
ordinance, "hotel" is defined "any building or portion thereof containing six
(6) or more guest rooms used by six (6) or more guests, for compensation
(excepting jails and hospitals), where provision for cooking may be made in
a limited number of individual suites, and which rooms are designed and
intended as temporary or ovemight accommodations." In order to qualify
and apply for participation in the Hotel Operations Incentive Program under
this Chapter, a Renovation Hotel must be in operation for a period of five
(5) years prior to the date when the City accepts the Hotel Operations
Incentive Program application of an operator of a proposed Renovation
Hotel as complete. This five (5) year period may include changes in the
ownership and/or name of the hotel in question and may include lapses in
operation. Additionally, the five (5) year period is not required to be the five
(5) years immediately preceding the date when the City accepts the Hotel
Operations Incentive Program application of an operator of a proposed
Renovation Hotel as complete. However, a Renovation Hotel shall only be
eligible to receive an incentive pursuant to Section 5.26.040(d)(2), if the
Renovation Hotel has been in operation for a total of at least five (5) years
within the fifteen (15) years immediately preceding the date when the City
accepts the Hotel Operations Incentive Program application of an operator
of a proposed Renovation Hotel as complete. A Renovation Hotel that has
not been in operation for a total of at least five (5) years in the fifteen (15)
years immediately preceding the date when the City accepts the Hotel
Operations Incentive Program application of an operator of a proposed
Renovation Hotel as complete shall only be eligible to receive an incentive
pursuant to Section 5.26.040(d)(3). No property that operates as a
Homeshare or Vacation Rental pursuant to Chapter 5.25 of this Code may
also operate as a Renovation Hotel or receive any payment under this
Chapter.
"Transient occupancy" means an uninterrupted stay of no more than
twenty-eight consecutive calendar days.
"Transient occupancy tax base" means the average of the last thirty-
six months of annualized transient occupancy tax owed to the City by an
existing hotel prior to the commencement of a qualified renovation program.
' "Transient occupancy tax increment" means the difference between
the transient occupancy tax base and the amount of transient occupancy
5 5 5 75.181 75\4146992 5.1
Ordinance No. 2087
Page 6
tax owed to the City by an existing hotel after the recordation of the
operating covenants by the City.
"Under construction" means that all necessary discretionary
entitlements have been approved by the City of Palm Springs, grading and
building permits have been iss ed, and that inspection approvals by the City
of Palm Springs of grading foundations to grade level have been
obtained, vertical construction of hotel rooms has begun, and the operating
covenants have been recorded."
SECTION 2. Amendment of Palm Springs Municipal Code
Section 5.26.040. Section 5.26.040 of the Palm Springs Municipal Code
shall be amended in its entirety, to read as follows:
"Section 5.26.040 Incentive Program.
(a) First Class New Hotels. The City shall pay to an operator of a first
class new hotel an amount equal to seventy-five percent (75%) of the
adjusted tax rate. Such payments shall be made for thirty years or until the
operator has been paid fifty million dollars, whichever event occurs first.
The City and a qualified participant under this Section may enter into
an agreement, at the sole discretion of the City, to receive an increase in
the percent of the adjusted tax rate, for no longerthan the first two years of
the qualified participant's Incentive program.
Without regard to any preceding conditions of this Section, the
program shall terminate at any point the first class new hotel is not operated
as a first class hotel.
(b) Comfort New Hotels. The City shall pay to an operator of a comfort
hotel with 125 or more rooms an amount equal to fifty percent of the
adjusted tax rate and such payments shall be made for twenty years or until
the operator has received twenty-five million dollars, whichever event
occurs first. The City shall pay to an operator of a comfort hotel with 51 to
124 rooms an amount equal to fifty percent of the adjusted tax rate and such
payments shall be made for ten years or until the Operator has received
twenty million dollars, whichever event occurs first. The City shall pay to an
operator of a comfort hotel with 49 or fewer rooms an amount equal to fifty
percent of the adjusted tax rate and such payments shall be made for ten
years or until the Operator
event occurs first. Withou
Section, the program shall
operated as a comfort hotel.
t
has received fifteen million dollars, whichever
regard to any preceding conditions of this
terminate at any point the deluxe hotel is not
r
55575.18175\41469825.1
Ordinance No. 2087
Page 7
(c) Existing Hotels. The City shall pay to an operator of an existing hotel
an amount equal to fifty percent of the transient occupancy tax increment
collected and remitted to the City pursuant to Chapter 3.24 of this Code and
such payments shall be made for ten years, or until the operator has
received twenty-five million dollars, whichever event occurs first.
(d) Phase II Renovation Project Hotels. Operators shall only receive an
incentive pursuant to this Chapter in accordance with this
Section 5.26.040(d).
(1) On a hotel's Renovation Approval Date, the City shall inspect
that hotel, and verify that the operator has implemented all Phase II
Renovation Project improvements, and that the improvements
remain on -site. Further, on or before a hotel's Renovation Approval
Date, the operator of that hotel shall submit to the City such
documentation as the City may require, and thereby certify and
demonstrate the expenditure of that operator's Certified Renovation
Investment. Any unexpended portion of the Certified Renovation
Investment shall be subtracted from the Certified Renovation
Investment as that sum pertains to an operator's recoupment of
same in accordance with Section 5.26.040(d)(2).
(2) For a Phase II Renovation Project hotel with thirty-six (36)
complete months of transient occupancy tax payments in the past
three (3) years prior to the date when the City deems the Hotel
Operations Incentive Program application of a potential Renovation
Hotel to be complete and that has been in operation for at least a
total of five (5) years within the fifteen (15) years immediately
preceding the date when the City accepts the Hotel Operations
Incentive Program application of an operator of a proposed
Renovation Hotel as complete, the City shall on an annual basis,
return, reimburse and pay to the operator of a Phase II Renovation
Project hotel an amount equal to fifty percent (50%) of the Phase II
Renovation Project Transient Occupancy Tax Increment collected
and remitted to the City. Renovation Hotels that are Class 1 Historic
Sites as defined in Palm Springs Municipal Code Chapter 8.05, shall
receive an amount equal to seventy-five percent (75%) of the Phase
II Renovation Project Transient Occupancy Tax Increment. The City
shall continue making such payments until the ten (10) year
anniversary of the first payment hereunder, or until an operator has
recouped their Certified Renovation Investment, whichever occurs
first. Notwithstanding any other provision in this Chapter, City
payments to an operator, or the successor of an operator of a Phase
II Renovation Project hotel under this Section 5.26.040(d) shall
terminate immediately and permanently at the end of any period of
thirty (30) days during which the hotel in question is not operated as
55575.18175\41469825.1
Ordinance No. 2087
Page 8
a hotel, unless the City has consented to a suspension of operations I
pursuant to an operating covenant.
(3) For a Phase II Renovation Project hotel with less than thirty
six (36) complete months of transient occupancy tax payments in the
past three (3) years prior to the date when the City deems the Hotel
Operations Incentive Program application of a potential Renovation
Hotel to be complete or that has not been in operation for a total of
at least five (5) years in the fifteen (15) years immediately preceding
the date when the City accepts the Hotel Operations Incentive
Program application of an operator of a proposed Renovation Hotel
as complete, the City shall on an annual basis, return, reimburse and
pay to the operator of a Phase II Renovation Project hotel an amount
equal to fifty percent (50%) of the Phase 11 Renovation Project
Transient Occupancy Tax Increment collected and remitted to the
City. Renovation Hotels that are Class 1 Historic Sites as defined in
Palm Springs Municipal Code Chapter 8.05, shall receive an amount
equal to seventy-five percent (75%) of the Phase II Renovation
Project Transient Occupancy Tax Increment. The City shall continue
making such payments until the ten (10) year anniversary of the first
payment hereunder, or until an operator has recouped their Certified
Renovation Investment, whichever occurs first. Notwithstanding any '
other provision in this Chapter, City payments to an operator, or the
successor of an operator of a Phase II Renovation Project hotel
under this Section 5.26.040(d) shall terminate immediately and
permanently at the end of any period of thirty (30) days during which
the hotel in question is not operated as a hotel, unless the City has
consented to a suspension of operations pursuant to an operating
covenant.
(e) No Renovation Hotel receiving any amount of Phase II Renovation
Project Transient Occupancy Tax Increment or any other consideration
pursuant to an operating covenant entered pursuant to this Chapter may
apply for any additional benefit pursuant to this Chapter, based upon a
second Phase II Renovation Project or otherwise, until the termination of
that Renovation Hotel's receipt of such consideration or benefit in
accordance with Section 5.26.040(d)(2)."
SECTION 4. Severability. If any section or provision of this Ordinance is
for any reason held to be invalid or unconstitutional by any court of competent
jurisdiction, or contravened by reason of any preemptive legislation, the remaining
sections and/or provisions of this Ordinance shall remain valid. The City Council
hereby declares that it would have adopted this Ordinance, and each section or
provision thereof, regardless of the fact that any one or more section(s) or I
provision(s) may be declared invalid or unconstitutional or contravened via
legislation.
55575.18175\41469825.1
Ordinance No. 2087
Page 9
SECTION 5. CEQA. The City Council determines that the adoption of this
Urgency Ordinance is exempt from environmental review under the California
Environmental Quality Act ("CEQA") pursuant to the following provisions of the
CEQA Guidelines, 14 California Code of Regulations, Chapter 3: this Ordinance
is exempt under CEQA Guidelines Section 15378(b)(5) in that it is not a "project'
under CEQA, and will not result in direct or indirect physical changes in the
environment.
SECTION 6. Adoption, Certification, and Publication. The Mayor shall
sign and the City Clerk shall certify to the passage and adoption of this Ordinance
and shall cause the same, or the summary thereof, to be published and posted
pursuant to the provisions of law and this Ordinance shall take effect thirty (30)
days after passage.
PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY
COUNCIL THIS 14TH DAY OF SEPTEMBER 2023.
A�4,ce Ai�� —
GRA IELENA GARNER
MAYOR
ATT
RENDA PREE
CITY CLERK
55571. 18175V41469825_I
Ordinance No. 2087
Page 10
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )
CITY OF PALM SPRINGS)
CERTIFICATION
ss.
I, BRENDA PREE, City Clerk of the City of Palm Springs, California, do
hereby certify that Ordinance No. 2087 is a full, true, and correct copy, and was
introduced at a regular meeting of the City Council on July 24, 2023, and adopted
at a regular meeting of the City Council held on September 14, 2023, by the
following vote:
AYES: Councilmembers deHarte,
Bernstein, Mayor Garner
NOES: None
ABSENT: None
ABSTAIN: None
Holstege, Middleton, Mayor Pro Tern
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal
of the City of Palm Springs, California, this 26th day of September 2023.
T3RENDA FREE, MMC, CERA
CITY CLERK
55575.18175\41469825.1