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HomeMy WebLinkAbout10/24/2001 - STAFF REPORTS (4) DATE: OCTOBER 17, 2001 TO: CITY COUNCIL FROM: REDEVELOPMENT DIRECTOR APPROVAL OF A MEMORANDUM OF UNDERSTANDING WITH COLLIERS SEELEY INTERNATIONAL, INC. TO MARKET THE TAHQUITZ CREEK GOLF RESORT AS A RESORT HOTEL SITE AND PERFORM A MARKETAND FEASIBILITY STUDY ON SUCH A HOTEL RECOMMENDATION: It is recommended that the City Council approve a Memorandum of Understanding with Colliers Seeley International, Inc. to market the Tahquitz Creek Golf Resort as a resort hotel site and to commission a market and feasibility study for the hotel at its own cost. SUMMARY: The City issued a Requestfor Proposal to the development community in July,2000 for the development of a resort hotel atthe Tahquitz Creek Golf Resort. The brokerage firm of Colliers Seeley International, Inc.was the sole respondent,and has brought to the City several interested developers. Colliers has entered an agreement with Goodkin Consulting,one of the world's leading hotel location consultants,to conduct the feasibility analysis on the site at Colliers' own cost, in return for an agreement that allows the brokerage firm to market the site. Included in the study would be the potential impacts of Knotts' purchase of the Oasis Water Park as well as the dispute with DWA over the 6.25 acre portion of the current driving range. BACKGROUND: This MOU allows Colliers to market the site on the City's behalf; in return for that right, they will commission and pay for a first-class feasibility study. The firm is one of the largest real estate brokerage firms in the world and has already brought in several interested prospects to discuss the course. Under this revised Agreement, the City retains the right to terminate the Agreement with Colliers if the Marketing Study shows that the project is not feasible. J'OHN RAYMO D R'edeve p � �ment ector City Manager ATTACHMENTS: 1. Minute Order 2. Memorandum of Understanding CIA MEMORANDUM OF UNDERSTANDING OCTOBER 17, 2001 GOLF COURSE HOTEL MARKET STUDY AND PROJECT DEVELOPMENT Colliers Seeley International, Inc. an international real estate brokerage, working with Goodkin Consulting (in a strategic relationship with PricewaterhouseCoopers), have proposed a Memorandum of Understanding with the City of Palm Springs to assist the City determine the feasibility of a resort hotel development on the City's golf course, known as the Tahquitz Creek Golf Resort, and to assist in securing a quality hotel developer for the project. In return for representing the City in negotiations with prospective hotel/resort developers, Colliers Seeley will, at its own cost, commission Goodkin Consulting to undertake the market analysis of the prospective site. Included in the analysis will be the impacts of the recent court decision on the Desert Water Agency/disputed parcel and the purchase of Oasis Water Park by Cedar Fair and that company's possible interest in developing a hotel. R E C I T A L S WHEREAS, the City of Palm Springs owns land in the City adjacent to the Tahquitz Creek Resort golf courses and driving range on which it contemplates developing a hotel and complementary facilities (the "Project"); and WHEREAS, the City will require a marketing study to assess the viability of the Project and attract a quality hotel developer and operator; such study Colliers Seeley, in conjunction with Goodkin Consulting or other qualified hospitality industry consultant chosen by Colliers Seeley, is willing to provide; and WHEREAS, if the City determines, based on the marketing study, that the Project is viable, Colliers Seeley desires to obtain from the City the exclusive right to sell or lease the Project to a hotel developer. 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. Purpose of the Agreement. The purpose of this MOU is to document the intent of the parties to plan, develop and market the development of a golf course hotel and resort at the Tahquitz Creek Golf Resort owned by the City of Palm Springs. Memorandum shall benefit and be binding on the parties herete, their successors and permit assigns accordiMg to its ternis. }1\useav�sa\oacuntUvc\Fla'n.s\n�wonnanun+o�urmmsrnrvuwc vru l O=Bm 3,20013 B. Good Faith. The City and Colliers Seeley agree that, for the period set forth in Section 2 herein, they will negotiate diligently and in good faith to prepare a market study and secure a development agreement (the "Development Agreement") with a first-class hotel developer consistent with the provisions of this section for the development of the Project on the Site. The development will be subject to all rules, regulations, standards, and criteria set forth in the City's Zoning Code and General Plan, and applicable County and State regulations, and with this Agreement. The Development Agreement will be in a form negotiated by the City with the development entities. C. Project Scope. The facility shall be comprised of at least a hotel of no fewer than 200 rooms, but may also include vacation ownership units, tennis facilities, a golf clubhouse, restaurants, meeting facilities, and other amenities as determined by the market study and the project developer. D. Project Location. The Project shall be located at the Tahquitz Creek Golf Resort upon the real property to be designated as the "Site." The final Project site will be determined prior to the execution of the Development Agreement. SECTION 2. PERIOD OF NEGOTIATIONS, A. Period of Exclusive Negotiation. The period of negotiation shall be three hundred (300) days from the date this Agreement is signed by the City, except as provided herein. Upon completion of the Marketing Study described in Section B. below, the parties shall meet and review the status of the project under this Agreement (herein "Review Meeting"): If the parties determine that the Project is not economically feasible, then Agency may terminate this Agreement. B. Work Performed Under This Agreement. 1. Marketing Study. Within 120 days after the Effective Date, Colliers Seeley will prepare and deliver to the City, without charge to the City, a comprehensive market study for the Project including supportable average daily rates, projected occupancy rates for the initial three years of operation, suggested number and types of rooms/suites and public areas/meeting rooms, suggested recreation amenities, suggested market positioning and a list of potential developers and hotel brands. The marketing study will be prepared by Colliers Seeley in conjunction with Goodkin Consulting or other qualified hospitality consultant selected by Colliers Seeley. The Marketing Study shall be subject to the following criteria: a. The value of the study, were the City to contract for the same, shall be no less than $30,000. b. The study shall report on the feasibility of a golf course hotel project on the Site in current and foreseeable economic conditions, including the optimum composition of the resort, H.\USERS\1SR\DATA\DOCUMENnHmans\MEND of UNDERSTq Mtutu O=Bo 3,2oo12 CM3 likely brands/operators, anticipated ADR and occupancy and the overall economic viability of the project. C. The study shall look at the overall site with and without the disputed 6.25 acre parcel, as well as determine the economic benefits of a relationship with Knott's/Cedar Fair. d. If the study is not delivered within the specified timeframe in this Section, or if the study determines that the feasibility or economic benefits of the project are marginal, the City has the right to terminate the Agreement without penalty or any further compensation to Colliers Seeley. 2. Representation. Following delivery of the marketing study, City and Colliers Seeley agree to negotiate in good faith an exclusive brokerage agreement whereby Colliers Seeley will have the exclusive right to lease the Project property on a development ground lease basis or sell the City's fee interest in the Project property, whichever the City determines to be appropriate, in consideration for which Colliers Seeley shall receive brokerage fees in amounts to be agreed upon by City and Colliers Seeley. The parties acknowledge that a reasonable term for the exclusive brokerage agreement is at least one year. In consideration of the effort and expense involved in the preparation of the market study, City agrees for a period of six(6) months after the delivery of the market study, not to enter into any brokerage or similar agreement or arrangement with respect to the Project property with anyone other than Colliers Seeley, not to solicit or enter into negotiations with any third party for any such agreement or arrangement, unless otherwise excluded per Section E. of this Agreement, and not to sell or lease the Project property (unless the City is represented by Colliers Seeley). If the City and Colliers Seeley ultimately do not enter into an exclusive brokerage agreement but Colliers Seeley nevertheless is the procuring cause of a sale or development ground lease of the Project property, the City agrees to pay to Colliers Seeley a fee equal to two and one-half percent(2.5%) of the fair market value of the Project property payable at the time the City conveys title to the Project property or upon full execution of the development ground lease, as the case may be. The preceding sentence does not apply in circumstances in which Colliers Seeley is the cooperating broker under a listing agreement between the City and another broker. 3. Marketing. The exclusive brokerage agreement will provide that Colliers Seeley will diligently market the Project to hotel developers, equity investors, hotel companies and other potential lessees/ purchasers selected by Colliers Seeley and approved by the City. C. City Approval. Colliers Seeley understands and acknowledges that if negotiations culminate in a Development Agreement with a hotel developer, such agreement shall be effective only after and if the agreement has been considered and approved by the City Council after public hearing thereon as required by law. D. Preparation of Agreement. If agreement is reached on the business terms for inclusion in the Development Agreement, the City shall prepare such agreement for consideration by the selected hotel developer. li\oscas�sn\cocunm.'r�ioras\no:wonnwun+o�tm�uis'rnn�wc r�mc Om..3,2003 ��y f E. Exclusions. Should the City be successful in its negotiations with Cedar Fair, L.P., Knotts Berry Farm, Oasis Water Park or any of its related companies on locating a water- park-related hotel on the City's property, such a project is excluded from this agreement. Should the City sell the disputed 6.25 acre Option Parcel to the Desert Water Agency, such property sale is also excluded from this Agreement. SECTION 3. MISCELLANEOUS. A. Ownership of Documents. If the negotiations contemplated by this Agreement do not result in the execution of an agreement, Colliers Seeley shall transfer to City copies of any reports, studies, analysis, site plan layouts, engineering studies, memorandums, or similar documents regarding the proposed development and prepared during the period of negotiation which copies shall become the property of City. Such transfer shall be made without any representation or warranty by Colliers Seeley 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. B. 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 any property whatsoever. It is further agreed and understood that this Agreement does not imply any obligation on the part of the City to enter into any agreement that may result in negotiations contemplated herein. C. Miscellaneous. This Memorandum contains the entire agreement of the City and Colliers Seeley with respect to the Project and supersedes all prior or contemporaneous written or oral agreements and discussions between the parties on that subject. This Memorandum may only be amended by a document in writing signed by the parties hereto. This Memorandum can be signed in counterparts. There are no third party beneficiaries of this Memorandum. If any provision of this Memorandum is determined to be unenforceable, it shall be deemed automatically amended to the extent necessary to render it enforceable if such can be done without materially altering the intent of the parties as expressed herein, but otherwise shall be severed from the remaining provisions of this Memorandum. D. 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 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. E. Assignment. This Memorandum is non-assignable by either party without the prior written consent of the other party. H.\USERSUSMDATA\DOCUMGNTI 101 S\MCMO or LWOmsr wawpu Omoam 3,zool4 a,90-5000ar MINUTE ORDER NO. APPROVING A MEMORANDUM OF UNDERSTANDING WITH COLLIERS SEELEY INTERNATIONAL, INC. REGARDING THE FEASIBILITY ANALYSIS AND MARKETING OF A RESORT HOTEL PROJECT AT THE TAHQUITZ CREEKGOLF RESORT I HEREBY CERTIFY that this Minute Order, approving a Memorandum of Understanding with Colliers Seeley International, Inc, regarding the feasibility analysis and marketing of a resort hotel project at the Tahquitz Creek Golf Resort, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 17th day of October, 2001. PATRICIA A. SANDERS City Clerk