Loading...
HomeMy WebLinkAbout10/18/2000 - STAFF REPORTS (2) D DATE: OCTOBER 18, 2000 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: REDEVELOPMENT DIRECTOR APPROVAL OF AN EXCLUSIVE AGREEMENT TO NEGOTIATE WITH WALTER PROPERTIES, LLC ON A 5.7 ACRE AGENCY-OWNED PARCEL AT THE CORNER OF ANDREAS ROAD AND CALLE EL SEGUNDO, THE "PRAIRIE SCHOONER" PROPERTY RECOMMENDATION: It is recommended that the Agency approve the Exclusive Agreement to Negotiate with Walter Properties, LLC on a 5.7 + acre Agency-owned parcel at the corner of Andreas Road and Calle El Segundo BACKGROUND: In April, 2000 the Agency received an offer from Walter Properties, LLC, the owners of the Palm Springs Hilton Resort, on an Agency-owned parcel at the southeast corner of Andreas Road and Calle El Segundo, known as the "Prairie Schooner" property. The parcel, approximately 5.7 acres, is across the street from the Hilton and extends along Andreas Road to the western edge of the Wyndham Hotel and the Palm Springs Convention Center. While the Hilton is one of the most successful hotels in Palm Springs in terms of occupancy levels, average daily rate (ADR), and Transient Occupancy Tax (TOT) production, the opportunities to expand their operation are limited by the growth of the Spa Hotel & Casino on the west and north, and Tahquitz Canyon Way on the south. Walter had proposed to the Agency acquiring the Prairie Schooner site and constructing two separate hotel projects: a nationally recognized extended-stay, all-suites hotel of approximately 120 to 160 rooms, an 80-100 room expansion of the Hilton, and 25,000 square feet of group meeting space. Walter Properties feels strongly about the meeting space component because both they as an individual property and the City through the Convention Center have lost larger shows due to the lack of adequate exhibit space in or near the Convention Center. Meeting space is also necessary at that location because the site does not have visibility from Tahquitz Canyon Way; nor is it large enough to create a "destination" that could rely on leisure travelers. Through the negotiation process, several components of the deal have been agreed to: the Developer will pay "fair market" value for the property. The Developer may ask for Agency financial assistance, but staff has not determined an amount that could be recommended to the Agency based on the developer's pro forma. Assistance is not part of this Agreement, but could be part of a subsequent DDA if it is warranted. Other provisions of the DDA would prohibit assignment or resale of the property, since the purpose of the deal with Walter Properties was to maximize the relationship of the new property with the existing Hilton Resort. As Walter Properties has developed the conceptual- and business plans for the project, they have altered the concept. The all-suites portion, now slightly larger at 160 rooms, is the main part of the plan, as is the 25,000 square feet of group meeting space. The 80 room expansion of the Hilton was eliminated for financing reasons; namely, that they were unable to finance the construction of those rooms C,ra- 10 without a separate lobby, support services, and kitchen, because in the case of a default a lender would not be able to sell the property without those items. Therefore, while a number of business points need to be fully negotiated before the DDA is prepared, it is staffs opinion that, among all the possible bidders on this property, the owners of the Hilton property would likely maximize the City's return on the property through the generation TOT because of their success in this marketplace. The Developer's pro forma has been submitted to staff and is now being analyzed by Keyser Marston to determine if assistance, based on the square footage of meeting space (which has a community-wide benefit), is warranted. In addition, the Tribe has expressed interest in the site, linking it to the disposition of the Hilton's tennis courts, which they need for the expansion of their facilities. Staff hopes that there can be a three-way resolution of these issues, perhaps through the subsequent DDA with the Developer and/or a new DDA with the Tribe. This Agreement is for a period of six months, enough time to allow the Developer to produce and submit plans for approval, as well as determine the project feasibility and allow for the negotiation of the DDA. The Developer is eager to move on this project, and considerq it a priority over sites they already control in other Valley cities: Palm Desert, R ncho Mirage, La Quinta, and Indio. JO N S/4RAYMONDJ Redevelopment Dire r APPROVED Executive Directo�0� ATTACHMENTS: 1. Resolution 2. Exclusive Agreement to Negotiate C � - �- Z EXCLUSIVE AGREEMENT TO NEGOTIATE WALTER PROPERTIES, L.L.C. THIS EXCLUSIVE AGREEMENT TO NEGOTIATE ("AGREEMENT") , is made this day of , 2000, by and between the PALM SPRINGS COMMUNITY REDEVELOPMENT AGENCY("AGENCY"), and WALTER PROPERTIES, L.L.C. ("DEVELOPER"). RECITALS The parties entered into this Agreement on the basis ofthe following facts,understandings,and intentions: A. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Sections 33000, et seq.). B. The Agency desires to effectuate the Redevelopment Plan for the Merged Palm Springs Redevelopment ProjectArea No.2(formerly,the Tahquitz-Andreas Project Area)by providing for the development of an extended stay hotel of no fewer than 150 rooms and group meeting facility of no less than 20,000 square feet atthe southeastcorner of Andreas Road and Calle El Segundo("the Site"). C. The Developer desires to construct and operate an extended stay hotel and group meeting facility at the Site. The term"Developer"as used herein includes the principals,partners,and joint venturers of Developer and all obligations of Developer herein shall be the joint and several obligations of such principals, partners, and joint venturers. D. The Agency and Developer desire,for the period setforth herein,to negotiate diligently and in good faith to prepare an agreement whereby the Developer would develop such hotel and meeting facility property on the site. NOW,THEREFORE,and in consideration of the mutual covenants hereinafter contained, it is mutually agreed upon by the parties as follows: SECTION 1. NATURE OF NEGOTIATIONS. A. Good Faith. The Agency and the Developer agree that for the period set forth in Section 2 herein they will negotiate diligently and in good faith to prepare and enter into an agreement (the"DDA")consistent with the provisions of this Agreement for the development of an extended stay hotel and group meeting facility on the Site specified herein. The development will be subject to all rules,regulations,standards,and criteria set forth in the Redevelopment Plan,the City's General Plan, applicable specific plans and zoning regulations, and with this Agreement. B. Site. The Project shall be located upon the following real property,as shown in the"Site Map,"attached hereto as Exhibit"A" and incorporated herein by this reference. C. Construction and Ownership Concept. The Developer's interest shall be fee. The design shall be consistent with the Agency's and the City's design guidelines. Developer's architect shall work with the City's design guidelines to create a harmonious and attractive extended stay hotel and group meeting facility with a distinct identity. The Developer is responsible for financing and C ra `6"' 3 constructing all improvements upon the Site. The"extended stay hotel and group meeting facility"shall consist of at least 150 hotel rooms and a minimum of 20,000 square feet of group meeting space and ballrooms. The Site will be subject to a declaration of covenants,conditions,and restrictions to govern the continued operation of the hotel and meeting space. D. Financial Provisions. The Developer is responsible for acquisition of the site and financing and constructing all improvements upon the Site. Developer shall pay for all necessary public improvements and pay all City's fees for processing the Project, without assistance from the Agency. E. Schedule. The Developer's goal is to develop the hotel and meeting facility by December 31, 2001. The DDA shall contain a Schedule of Performance. F. Use and Transfer Restrictions. The DDA will generally be subject to restrictions on use and transfer during construction and for a specified period thereafter through recorded restrictions (i) to assure that the use will be consistent with and promote the extended stay hotel and group meeting space, (ii)to prevent speculation, (iii)to assure that any transferee has the resources, capability and experience to successfully operate the extended stay hotel and group meeting space, (iv) to assure long-term maintenance of the hotel in a productive and attractive condition, and (iv) to provide an adequate financial return to the Agency. G. Property Acquisition. The Site is Owned by the Agency. During the period of this Agreement, the Agency and Developer shall negotiate a DDA by which the property would be conveyed to the Developer. Nothing in this Agreement conveys the property to the Developer. H. Exclusivity. The Agency agrees for the period set forth in Section 2 that it will not negotiate with or enter into any agreement with any other entity for development of the Site, and the Developeragrees notto negotiate with any other person or entity regarding the development of a resort hotel and/or spa within the territorial jurisdiction of Palm Springs or within 3 miles of the boundary thereof without the approval of Agency. SECTION 2. PERIOD OF NEGOTIATIONS. The period of negotiation shall be one hundred eighty(180)days from the date this Agreement is signed by the Agency,and this Agreement shall terminate after the expiration of such period unless extended as follows: A. For sixty (60) days if an agreement has been prepared by the Agency and executed by the Developer,and has been submitted to the Agency but has not yet been approved by the Agency Board; or B. Forthirty(30)days if the major business terms have been agreed to and the Executive Director determines that further negotiations are likely to result in a written agreement; or C. By mutual agreement of the parties. Developer understands and acknowledges that if negotiations culminate in an agreement,such agreement shall be effective only after and if the agreement has been considered and approved by the Agency Board after public hearing thereon as required by law. cm -6 ' q SECTION & DEVELOPER'S RESPONSIBILITIES. During the period of negotiation, Developerwill prepare such studies, reports, and analysis as shall be necessary to permit Developer to determine the feasibility of its participation in the extended stay hotel and group meeting space. The Developer shall fully cooperate in the development of the Project design and financing plan. During the period of negotiation and as requested by the Agency, the Developer shall submit to the Agency the following: A. Full disclosure of Developer's principals, partners, joint venturers, negotiators, consultants, professional employees, or other associates of the Developer who are participants or principals of the Project, and all other relevant information concerning the above. B. Statement of financial condition in sufficient detail to demonstrate Developer's financial capabilities,those of its principals, partners,joint venturers, and those of its prospective Developers to satisfy the commitments necessitated by the Project. To the extent Developer wants such financial statements to remain confidential,they shall be supplied to the Agency only if the confidentiality of the statements can be maintained. C. All information necessary for the design of the Project to meet the Developer's reasonable requirements. In addition,Developer shall take all actions necessary to obtain construction and permanent financing. The Developer shall negotiate exclusively with the Agency's negotiating team and with no other persons unless expressly authorized to do so by the Agency's negotiating team. During the period of negotiations, no statements will be made by the Developer to the media without the approval of the Agency's negotiating team. No prepared statements shall be released to the media without the mutual consent of the respective negotiating teams. SECTION 4. AGENCY'S RESPONSIBILITIES. A. Preparation of Agreement. If agreement is reached on the business terms for inclusion in the agreement, the Agency shall prepare such agreement for consideration by the Developer. Agency's expenses shall be chargeable against the Good Faith Deposit. B. Zoning. The Agency will undertake all acts necessary to rezone such portions of the property as may be necessary to permit the resort hotel and spa on the Site. SECTION 5. GOOD FAITH DEPOSIT. Concurrently with the execution of thisAgreement,Developershall submit to the Agency a good faith deposit in the sum of Fifteen Thousand Dollars ($15,000.00) in the form of a cash deposit, cashiers'check,irrevocable letterof credit,orotherform of security acceptable to the Agencyto insure that the Developer will proceed diligently and in good faith to negotiate and perform all of the Developer's obligations under this Agreement. If the deposit is in cash or a certified cashiers' check, it shall be deposited in an interest-bearing account of the City. Interest, if any, shall be added to the deposit and held as additional security for the Developer's obligations hereunder. Upon termination of this Agreement the balance, less charges deducted from the deposit pursuantto section 4(A), shall 0. ra M to `so* be returned to the Developer provided that the Developer has negotiated diligently and in good faith and carried out its obligations hereunder. If Developer has failed to do so, inasmuch as the actual damages which would result from a breach by Developer of its obligations under this Agreement are uncertain and would be impractical orextremely difficultto determine,Agency shall be entitled to retain the entire amount of said deposit, as liquidated and agreed damages. It is further understood that the DDA will require an increase in the good faith upon execution of the DDA. The aggregate good faith deposit then required shall be at least Twenty Five Thousand Dollars ($25,000.00). SECTION 6. MISCELLANEOUS. A. No commissions. The Agency shall not be liable for any real estate commission or any broker's fees which may arise herefrom. The Agency represents that it has engaged no broker,agent,orfinderin connection with this transaction,and the Developeragrees to hold the Agency harmless from any claim by any broker,agent,orfinder retained by the Developer. B. Appraisalof Properties. Uponsuccessful negotiationof a Disposition and Development Agreement between Agency and Developer, the property shall be conveyed at fair market value based on an MAI appraisal. Agency shall commission such appraisal, which shall be paid from the Good Faith Deposit described in Section 5. C. Ownership of Documents. If the negotiations contemplated by this Agreement do not result in the execution of an agreement, Developer shall transfer to Agency copies of any reports, studies, analysis, site plan layouts, development cost estimates, engineering studies, memorandums, or similar documents regarding the proposed development and prepared during the period of negotiations, which copies shall become the property of Agency. Such transfer shall be made without any representation or warranty by the Developer as to the accuracy or sufficiency of the contents of such documents and shall be made subject to the rights of the preparers of such documents including, without limitation, the copyright(if any) associated with such documents. D. Purpose of Contract. It is expressly understood and agreed by the parties hereto that this is an Agreement regarding the conduct of contract negotiations only and does not convey any interest in the property whatsoever. it is further agreed and understood that this Agreement does not imply any obligation on the part of the Agency to enter into any agreement that may result in negotiations contemplated herein. E. Amendment. This Agreement may only be amended by a document in writing signed by the parties hereto. F. Time forAcceptance. This Agreement,when executed by the Developer and delivered to the Agency,shall constitute a binding offerwhich cannot be withdrawn priorto September30,2000, so that the Agreement may be presented to the Agency Board. Notwithstanding any other provision herein to the contrary, Agency shall not be obligated hereunder unless and until the Agency Board authorizes the Chairman to execute this Agreement. G. Corporate Authority. The persons executing this Agreement on behalf of the parties hereto warrant that(i)such party is duly organized and existing,(ii)they are duly authorized to execute CM - 6 - (o and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and(iv)the entering into this Agreement does not violate any provision of any other Agreement to which said party is bound. IN WITNESS WHEREOF,the parties have executed this Agreement as of the day first above written. "AGENCY" COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic Chairman ATTEST: Agency Secretary APPROVED AS TO FORM: Agency Counsel [SIGNATURES CONTINUED ON NEXT PAGE] cry k* - ? EXHIBIT"A" TO EXCLUSIVE AGREEMENT TO NEGOTIATE LEGAL DESCRIPTION OF THE PROPERTY The Land is that certain real property located in the City of Palm Springs, County of Riverside, State of California, more particularly described as follows: C ra. -� - RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AN EXCLUSIVE AGREEMENT TO NEGOTIATE WITH WALTER PROPERTIES, LLC. OF BEVERLY HILLS, CALIFORNIA FOR THE PURCHASE AND DEVELOPMENT OF A REDEVELOPMENT- AGENCY-OWNED PARCEL IN MERGED PROJECT AREA #2 (FORMERLY THE TAHQUITZ ANDREAS REDEVELOPMENT PROJECT AREA) WHEREAS the Community Redevelopment Agency does own a parcel of land of approximately 5.7 acres in Merged Project Area #2, formerly known as the Tahquitz Andreas Project Area; and WHEREAS the Agency desires to sell the parcel to a developer that can return the land to productive use and facilitate additional development in the area around the site, including the generation of Transient Occupancy Tax for the City of Palm Springs, and WHEREAS Walter Properties, LLC of Beverly Hills, as owners of the Palm Springs Hilton Resort, have expressed an interest in expanding their business holdings in Palm Springs through the development of additional hotel rooms and group meeting facilities and have determined that the Agency's site is the optimum location for their project; and WHEREAS Walter Properties, LLC has requested the Agency to enter into an Exclusive Agreement to Negotiate for a period of six months on the parcel while they determine begin the process of site planning and project approvals. NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs, that the Exclusive Agreement to Negotiate between the Agency and Walter Properties, LLC is hereby approved. ADOPTED this day of 2000. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Executive Director REVIEWED &APPROVED AS TO FORM AWL c cow,