HomeMy WebLinkAbout1/23/2019 - STAFF REPORTS - 3.A.CITY COUNCIL STAFF REPORT
DATE : January 23 , 2019 LEGISLATIVE
SUBJECT: PROPOSED INTRODUCTION OF AN ORDINANCE OF CITY OF PALM
SPRINGS, CALIFORNIA, AMENDING CHAPTER 5 .26 OF THE PALM
SPRINGS MUNICIPAL CODE , RE-ESTABLISHING THE HOTEL
OPERATIONS INCENTIVE PROGRAM
FROM: David H. Ready , City Manager
BY: Community & Economic Development
SUMMARY
The City Counc il directed modifications to this ordinance , as it originally introduced on
December 19 , 2018. On January 8 , 2019 , the Business Retention Subcommittee gave
direction for an additional modification . The City Council will consider introduction of
Ordinance No .1972 (ATTACHMENT1).
RECOMMENDATION:
Waive reading of the text and introduce for first reading proposed Ordinance No . 1972 ,
"AN ORDINANCE OF CITY OF PALM SPRINGS , CALIFORNIA, AMENDING CHAPTER
5.26 OF THE PALM SPRINGS MUNICIPAL CODE, RE-ESTABLISHING THE HOTEL
OPERATIONS INCENTIVE PROGRAM ."
STAFF ANALYSIS:
On December 19, 2018 , the Council introduced Ordinance No . 1972 for first reading.
At the meeting of December 19 , 2018 , the City Council requested amendments to the
proposed ordinance, and the city attorney has assisted staff in drafting those
amendments . Although the substance of the new hotel operations incentive program is
quite similar to Ordinance No . 1972 as introduced on December 19 , 2018 , the form and
verbiage are quite different. In addition to the these changes , the incorporation of direction
from the Business Retention Subcommittee on January 8, 2019 , and direction from
individual members of the Subcommittee since that date make re-introduction of
Ordinance No . 1972 appropriate.
fi"EM NO. .3 · tf.
Staff summarizes the modifications per Council direction on December 19, 2018 as
follows.
1) TOT payments will commence immediately. See Section 5.26.020, Definitions.
First, there is a new definition -Renovation Approval Date, which means "the
date of the City's final inspection and approval of improvements constructed
pursuant to a Phase II Renovation Project."
Second, the definition of "Phase II Renovation Project" Now incorporates the
following statement:
. . . 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.
2) Prevailing Wage. See Section 5.26.050(b)(1 ), which reads as follows:
(b) All operating covenants shall contain state that Renovation Hotels receiving
any portion of Phase II Renovation Project Transient Occupancy Tax Increment
under this Chapter shall include the following language, modified only as approved
by the City Attorney:
1. Prevailing Wage. In accordance with California Labor Code section 1781(a)(2),
the Participant acknowledges that the City has expressly indicated to the
Participant and persons associated with the Participant that laborers employed
relative to the construction of the Project must be paid the prevailing per diem wage
rate for their labor classification, as determined by the State of California, pursuant
to Labor Code Sections 1720, et seq. and Palm Springs Municipal Code Section
7. 06. 030(1 ). The Participant agrees with the City that the Participant shall assume
the responsibility and be solely responsible for payment of the prevailing per diem
wage rate for their labor classification.
The Participant, on behalf of itself, its successors, and assigns, waives and
releases the City from any right of action that may be available to it pursuant to
California Labor Code Sections 1726 and 1781. The Participant acknowledges
the protections of Civil Code Section 1542 relative to the waiver and release
contained in this Section __ , which reads as follows:
11A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT
THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR
HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
2
BY INITIALING BELOW, THE PARTICIPANT KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION
WITH THE WAIVERS AND RELEASES OF THIS SECTION __ _
Participant's Initials
Additionally, in accordance with this Section , the Participant shall
indemnify, defend with counsel acceptable to the City, and hold the City harmless
against any claims pursuant to California Labor Code Sections 1726 and 1781
arising from this Covenant or the construction or operation of the Project.
3) Indemnification. See Section 5.26.050(b)(2), which reads as follows:
(b) All operating covenants shall contain state that Renovation Hotels receiving
any portion of Phase II Renovation Project Transient Occupancy Tax Increment
under this Chapter shall include the following language, modified only as approved
by the City Attorney
2. Genera/Indemnification. Participant agrees, for itself and for its successors and
assigns, to indemnify, defend with counsel acceptable to the City, and hold the
City, together with its officers, members, officials, employees, agents, volunteers,
and representatives, harmless from and against any loss, liability, claim, or
judgment arising from or related to Participant's participation in the City's Hotel
Operations Incentive Program pursuant to Chapter 5. 26 of the Palm Springs
Municipal Code.
4) Conformance with requirements of California Government Code Section 53083.
See Section 5.26.050(c), which adds a requirement that Phase II Renovation
Projects who document a Certified Renovation Investment of $100,000 or more to
comply with the Government Code's notice and hearing requirements for projects
involving economic development subsidies.
On January 8, 2019, the Business Retention Subcommittee directed that the proposed
ordinance also include an evaluation of the effectiveness of the program after four (4)
years, and any potential extension of the program determined warranted by the City
Council. The non-codified "Section 6" of the Ordinance provides for that review, and for
the potential extension of the Phase II Renovation beyond its currently legislated sunset
-December 31, 2023.
Staff also relocated and modified text previously introduced to ensure effective
implementation of direction from the Council, the Subcommittee at a meeting on January
8, 2019, and subsequently, from the individual members of the Subcommittee, Mayor Pro
Tern Kors and Councilmember Holstege, prior to completion of this report. Staff
summarizes the highlights of this work as follows.
3
• Staff clarifies the m1n1mum investment criteria for participation in the incentive
program, and inserts them in the definition of "Certified Renovation Investment." Some
Renovation Hotels will apply to modify only rooms, others will apply to modify only
common areas and amenities, and some will apply to modify both. The new criteria
address all three (3) possibilities.
• Per the revised definition of a "Phase II Renovation Project," a Renovation Hotel may
choose to remain open, or suspend, in part or in full, its operations during the
construction of improvements. If any part of the hotel remains open during
construction, the hotel continues to pay TOT, without any benefit under the program,
until the completion of the renovation. Per this same definition, as is stated above, the
project begins paying and receiving reimbursement of TOT under the program,
immediately on the date of the City's final inspection or last acceptance.
• The ordinance now clarifies the nature of TOT subject to calculations (in relation to
any Phase II hotel) to be annual. See the definitions of:
o "Phase II Renovation Project Transient Occupancy Tax Base,"
o "Phase II Renovation Project Transient Occupancy Tax Base Adjustment," and
o "Phase II Renovation Project Transient Occupancy Tax Increment."
Note: The ordinance provides for monthly proration of disbursements of Phase II
Renovation Project Transient Occupancy Tax Increment to program participants
based upon annual data used for caluclations. See revised Section 5.26.040(d). As
per the ordinance as introduced on January 9, 2019, payments of increment to
participants continue for ten (1 0) years or until a participant has recovered its entire
renovation investment, whichever comes first.
• The ordinance clarifies the definition of a "Renovation Hotel" as being a hotel as
defined in the City's zoning code that has been in operation for five years (5) prior to
the date when the City deems the application of the operator of that hotel for
participation in the incentive program complete. The ordinance also specifies that this
five (5) year period may include changes in the ownership and/or name of the hotel in
question.
• The ordinance clarifies the definition of "Phase II Renovation Project Transient Occupancy
Tax Base" as the annual average of TOT paid during the thirty-six (36) month period
prior to the operator's filing of a complete program application. This tax base is the
figure that the City uses and annually adjusts when calculating how much of the Phase
II Renovation Project Transient Occupancy Tax Increment will be returned and
reimbursed to an operator.
4
• The ordinance provides that no Renovation Hotel rece1v1ng Phase II Renovation
Project Trans ient Occupancy Tax Increment or any other considerat ion pursuant to
an operating covenant may apply for any additional benefit through the Hote l
Operations Incentive Program until the end of the peri od when the hotel in question is
receiving such consideration or benefit. See new Section 5.26 .040 (e).
For ease of reference, staff provides a legislative draft of the ordinance reflecting the
changes since January 9 , 2019 as ATTACHMENT A to this report, and the revised
ordinance as proposed for re-introduction as ATTACHMENT B.
FISCAL IMPACT:
The fiscal impact of each hotel project accepted in this program w ill vary depending upon
the size of the hotel , the room rates that the hotel charges , the popularity of the hotel , and
w heth er the hotel is a Class 1 structure . Since th i s is a n incentive program , the
presumption is that funds the City receives are "new," and would not have been av a il able
to the City but for the re-es tab lishm ent of the incentive prog ram . Furthermore, additio nal
investment by each participating hotel will yield additional property ta x revenue , make
Palm Springs more competitive in the tourism market , im prove the performance of th e
Convention Center, and enhance sales tax re venue.
SUBMITTED:
ATTACHMENTS :
1. Legislative Draft , 1.9.19 vs . 1.23 .19
2 . Proposed Ord inance 19 72
David H. Ready , E .,
City Manager
Edward Z . Kotkin
City Attorney
5
ATTACHMENT A
6
ORDINANCE NO. -1972
AN ORDINANCE OF CITY OF PALM SPRINGS , CALIFORNIA ,
AMENDING SECTIONSCHAPTER 5 .26.020 /\ND 5 .26 .040(/\) OF THE
PALM SPRINGS MUNICIPAL CODE , RELATING TORE-ESTABLISHING
THE HOTEL OPERATIONS INCENTIVE PROGRAM
Citv Attornev's Summary
This Ordinance re-establishes the hotel operations incentive program feF
hotel operations in the City of Palm Springs,_ with certain modifications
having to do w-Uh the for e x isting hotel, requiredhotels that undertake
specified renovation projects involving s ignificant investment-&Rfi, subject
to new limitations enupon the total amount aincentives that hotel operators
may receive through the program.
The City Council of the City of Palm Springs Ordains:
Section 1. Section 5.26 .020 of the Palm Springs Municipal Code is amended to include
the follow i ng new definitions :
"Certified Renovation Investment" means the documented renovation expenses
approved by the City of Palm Springs and included in the approved Hotel Operations
Jncentiv-e Application .
"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 . a ll 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 f ive thousand dollars ($5 .000.00) per room subject
to the project. If the project includes any common area or amenity at the hotel, the amount
of the investment shall not be less than the amount , if any, invested in rooms , added to
the tota l number of rooms at the hote l that will exist at the end of the project multiplied by
five thousand dollars ($5 ,000.00).
"Phase II Renovation Project" means a propertyhotel improvement project
undertakenconstructed by a Renovation Hotel without phasing, which invests no less than
five thousand dollars ($5 ,000 .00) per room . The Phase II Renovation Project shall be
comprehensively executed in a single renovation project on the property , and be under
construction within 12 (project shall commence no more than twelve ill) months after the
City's e xecution of an Operating Covenant and completedthe operating covenant for that
hotel. and be complete no later than December 31, 2023 . 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
1.17.19 7
Ordinance No . 1972
Page 2
hote l that remains open during cons t ruction of the p roject 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 C ity of transient
occupancy ta x 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-sf, during th e-last thirty-si x months of annua li zed(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
by an existing hotel prior to the commencement of a Phase II Renovation Project..:.
"Phase II Renovation Project Transient Occupancy Tax Base Adjustment" means
the annual increase to the Phase II Renovation Project Transient Occupancy Tax Base ,
after the recordat ion of the operating covenants by the City,. This increase shall be in an
amount equal to three percent (3 -o/o1 %), or the annual percentage change in the most
recent month 's data in the Consumer Price Index , whichever is higher, from the most
recent month's data available with Series Title "All items in . The Consumer Price Index
used in calculating this adjustment shall be the "Consumer Price Index , Riverside-San
Bernardino-Ontario , C/\, all urban consumers, not seasonally adjusted"; /\rea "Riverside
San Bernardino Ontario , CA"; Item "All items '; Base Period "All Items , December
2017=1 00 ". The base , All Urban Consumers (CPI -U)." The City shall calculate a
Renovation Hotel 's Phase II Renovation Project Occupancy Tax Base Adjustment sflaU
apply on eaffithe anniversary date of the fully executed Operating Covenant until the
expiration of the Operating CovenantRenovation Approval Date of the hotel.
"Phase II Renovation Project Transient Occupancy Ta x Increment" means the
amount of the Transient Occupancy Tax Owedtransient occupancy tax that a Renovation
Hotel owes to the City by a Phase II Renova tion Project hotelannually , pu rsuant to
Chapter 3.42 of this Code , after the recordation of the operating covenants by the City
Renovation Approval Date , minus the Phase II Renovation Project T ransient Occupancy
Ta x Base ~as adjusted annually by the Transient Occupancy Tax Base Adjustment,.:.
"Renovation Approval Date" is the date of the City's final inspection and approval
of improvements constructed pursuant to a Phase II 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 hote l
participates in the Hotel Operations Incentive Program as a Phase II Renovation Project
hotel. Upon the adoption of this o rdinance , "hotel" is defined "any property building or
portion thereof containing at--teast-six (6) or more guest rooms used bv six (6) or more
guests, for compensation (excepting jails and hospitals). where the guestprovision for
cooking mav be made in a limited number o f individual suites, and which rooms are
1 .17.19 8
Ordinance No . 1972
Page 3
designed and intended as transient occupancy temporary or overnight accommodations7
The property." 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 Existing hotel as defined herein . Does notoperator
of a proposed Renovation Hotel as complete . This five (5) year period may include
properties operated as Homesharingchanges in the ownership and/or name of the hotel
in question . No property that operates as a Homeshare or Vacation Rentals as defined in
Rental pursuant to Chapter 5.25 .030 of the Palm Springs Municipal Code . of this Code
may also operate as a Renovation Hotel or receive any payment under this Chapter.
Section 2. Section 5.26 .030 of the Palm Springs Municipal Code is amended to include
subdivision (d) which shall read as follows :
(d) To qualify for the hotel operations incentive program asHotel Operations Incentive
Program and undertake a Phase II Renovation Project , the operator of eaffi~ Renovation
Hotel shall:
(1) Complete and submit to the City Manager , the City's application for
participation in the hotel operations incentive programHotel Operations
Incentive Program as a Phase II Renovation Project hotel , includeinclud ing
documentation satisfactory to the City certifying the renovation project for a
Renovation Hotel as a qualified Phase II Renovation Project Hotel ;that
a . the hotel that is the subject of the application in question meets the
requirements of a Renovation Hotel , and
b. the proposed hotel improvement project qualifies as, and meets the
requirements of a Phase II Renovation Project. and the ;
(2) If requested by the City , subscribe to the Palm Springs Convention Center's
:committable rooms: program ;
(3) Execute tRean operating covenants which shall includecovenant that includes
provisions regarding continuing use , maintenance , non-discrimination, and
such other provisions as the City Council.l. in its sole discretion , may reasonably
determine afeto be necessary or appropriate in order to preserveadvance the
goals and intent of this Chapter.
Section 3. Section 5 .26 .040 of the Palm Springs Municipal Code is amended to include
subdivision (d) which shall read as follows :
1.17 .19 9
Ordinance No. 1972
Page 4
(d) Phase II Renovation Project Hete!Hotels . The City shall on a monthly basis return ,
reimburse and pay to an Operatorthe operator of a Phase II Renovation Project Hete!
oohotel a prorated amount equal to fifty percent (50%) of the Phase II Renovation Project
Transient Occupancy Tax Increment collected and remitted to the City pursuant to
Chapter 3 .24 of this Code . .:. Renovation Hotels that are Class 1 Historic Sites as defined
in Palm Springs Municipal Code Chapter 8 .05 , mayshall receive ooa prorated amount
equal to seventy-five percent (75 %) of the Phase II Renovation Project Transient
Occupancy Ta x Increment collected and remitted to the . The City pursuant to Chapter
3.24 of this Code . Suchshall continue making such payments shall be made for until the
ten (1 0) yeafSyear anniversary of the first payment hereunder, or until the Operatoran
operator has recouped their Certified Renovation Investment, whichever occurs first.
\Nithout regard toNotwithstanding any preceding conditions of this Section ,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 point the Reno•KJtion Hotelperiod of thirty (30) days
during which the hotel in question is not operated as a Hotel. (Ord . 1772 § 3 , 201 0 ; Ord .
1742 § 3 , 2008; Ord . 1730 § 2 , 2008)hotel , unless the City has consented to a suspension
of operations pursuant to an operating covenant.
Section 4. Section 5 .26 .040 of the Palm Springs Municipal Code is amended to include
subdivision (e) which shall read as follows:
(e) No Renovation Hotel receiving any amount of Phase II Renovation Project
Trans ient Occupancy Tax Increment or any other consideration pursuant to an operating
covenant 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).
Section 5. Section 5 .26 .050 of the Palm Springs Municipal Code is amended in its
entirety to read as follows :
5 .26 .050 Operating Covenants and Public Hearing Requirements .
(a) Each operator eligible to participate in the C ity's hotel operations incentive program
shall execute an operating covenant negotiated between the City and the operator,
approved by the City Council. and recorded in the official records of Riverside County .
(b) Each ope rating covenant shall state that a Renovation Hotel receiving any portion of
Phase II Renovation Project Transient Occupancy Tax Increment or any other benefit
1 .17.19 10
Ordinance No. 1972
Page 5
under th is Chapter shall include the following language , modified only as approved by
the City Attorney:
1. Prevailing Wage. In accordance with California Labor Code section 1781 (a)(2), the
Participant acknowledges that the City has expressly indicated to the Participant
and persons associated with the Participant that laborers employed relative to the
construction of the Project must be paid the prevailing per diem wage rate for their
labor classification, as determined by the State of California, pursuant to Labor
Code Sections 1720, et seq . and Palm Springs Municipal Code Section
7 .06 .030(1). The Participant agrees with the City that the Participant shall assume
the responsibility and be solely responsible for payment of the prevailing per diem
wage rate for their labor classification .
1.17.19
The Participant. on behalf of itself, its successors , and assigns, waives and
releases the City from any right of action that may be available to it pursuant to
California Labor Code Sections 1726 and 1781 . The Participant acknowledges
the protections of Civil Code Section 1542 relative to the waiver and re lease
contained in this Section , which reads as follows :
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT , IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETILEMENT WITH THE DEBTOR
OR RELEASED PARTY."
BY INITIALING BELOW, THE PARTICIPANT KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION
WITH THE WAIVERS AND RELEASES OF THIS SECTION
Participant's Initials
Add itionallv . in accordance with this Section . the Participant shall
indemnifv . defend with counsel acceptable to the City . and hold the City harm less
against any claims pursuant to California Labor Code Sections 1726 and 1781
arising from this Covenant or the construction or operation of the Project.
11
Ordinance No . 1972
Page 6
2. General Indemnification . Participant agrees . for itse lf and for its successors and
assigns , to indemnify, defend with counsel acceptable to the City , and hold the
City . together with its officers . members . officials . employees . agents . volunteers.
and representatives . harmless from and against any loss. liability , claim . or
judgment arising from or related to participant's partic ipation in the Hotel
Ope rations Incentive Program pursuant Palm Springs Municipal Code Chapter
5 .26 .
(c) In the event that a proposed Renovation Hotel 's Certified Renovation Investment
documented in an application for participation in the Hotel Operations Inventive
Program of one hundred thousand dollars ($1 00 .000). City Counc il consideration of
the operating covenant for that Renovation Hotel shall take place at a pub lic hearing
subject to all requ irements of Ca lifornia Government Code 53083 applicable to grants
of econom ic development subsidies . as that statute may be amended from time to
time .
Section 6. On or about the fourth (4 1h) anniversary of the adoption of this Ordinance .
the City shall review its implementation and effectiveness. At that time, the City Counci l
shall determine whether it wants to extend the December 31 , 2023 Program sunset date
reflected in the "Phase II Renovation Project ." and if so . for how long .
Section 7 . If any section or provision of this Ordinance is for any reason held to be
inval id or unconstitutional by any court of competent jurisdiction . or contravened by
reason of any preemptive legislation , the remaining sections and/or provisions of th is
ordinance shall remain val id . The C ity Council hereby declares that it would have adopted
this Ordinance . and each section o r provision thereof, regardless of the fact that any one
or more section(s) or provision(s) may be declared inval id or unconstitutiona l or
contravened via legislation .
Section 8 . The adoption of this ordinance is not subject to the California Environmental
Quality Act (Public Resources Code Section 21000 et. seq .) pursuant to Section
15060(c)(2) and 15060(c)(3) of the State Guidelines . because the ordinance will not result
in a direct or reasonably foreseeable indirect physical change in the environment and is
not a "project," as that term is defined in Section 15378 of the State Guidelines .
Section 9. The Mayor shall sign and the City Clerk shall certify to the passage and
adoption of this Ord inance and shall cause the same . or the summary thereof. to be
publ ished and posted pursuant to the provisions of law and this Ordinance shall take
effe ct thirty (30) days after passage .
__ PASSED , APPROVED AND ADOPTED BY THE PALM SPRINGS CITY
COUNCIL THIS DAY OF ,JANUARY. 2019.
AYES :
1.17.19 12
Ordi nan ce No . 1972
Page 7
NOES:
ABSTAIN:
ABSENT:
ATIEST:
Anth o ny , Mejia , C MC . City Clerk
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF PALM SPRINGS
ROBERT MOON, MAYOR
CERTIFICATION
)
) ss
)
I, Anthony Mejia , City Clerk, hereby certify that the attached is a true copy of
Ordinance No . , 1972 introduced by the City Council of the City of Palm Springs ,
California , at a City Council meeting held the day of , 2019 .
Ordinance No. 1972 was passed , approved and adopted at a regular City Council
meeting held at the day of , 2019 .
WITNESS my hand and official seal of the City of Palm Springs this __ day of
______ , 2019 .
Anthony Mejia , CMC, City Clerk
1.17 .19 13
ATIACHMENT B
14
ORDINANCE NO. 1972
AN ORDINANCE OF CITY OF PALM SPRINGS, CALIFORNIA,
AMENDING CHAPTER 5.26 OF THE PALM SPRINGS MUNICIPAL
CODE, RE-ESTABLISHING THE HOTEL OPERATIONS INCENTIVE
PROGRAM
Citv Attorney's Summarv
This Ordinance re-establishes the hotel operations incentive program in the
City of Palm Springs, with certain modifications, for existing hotels that
undertake specified renovation projects involving significant investment,
subject to new limitations upon the incentives that hotel operators may
receive through the program.
The City Council of the City of Palm Springs Ordains:
Section 1. Section 5.26.020 of the Palm Springs Municipal Code is amended to include
the following new definitions:
"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 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).
"Phase II Renovation Project" means a hotel improvement project constructed by
a Renovation Hotel without phasing, which project shall commence no more than twelve
(12) months after the City's execution of the operating covenant for that hotel, and be
complete no later than December 31, 2023. 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.
1.17.19 15
Ordinance No. 1972
Page2
"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 annual increase to the Phase II Renovation Project Transient Occupancy Tax Base,
after. This increase shall be in an amount equal to three percent (3o/o), 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, Riverside-San Bernardino-Ontario, All Items, December
2017=100 base, All Urban Consumers (CPI-U)." The City shall calculate a Renovation
Hotel's Phase II Renovation Project Occupancy Tax Base Adjustment on the anniversary
date Renovation Approval Date of the hotel.
"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.
"Renovation Approval Date" is the date of the City's final inspection and approval
of improvements constructed pursuant to a Phase II 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 overnight 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. 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.
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Ordinance No. 1972
Page 3
Section 2. Section 5.26.030 of the Palm Springs Municipal Code is amended to include
subdivision (d) which shall read as follows:
(d) To qualify for the Hotel Operations Incentive Program and undertake a Phase II
Renovation Project, the operator of a Renovation Hotel shall:
(1) Complete and submit to the City Manager, the City's application for
participation in the Hotel Operations Incentive Program as a Phase II
Renovation Project hotel, including documentation satisfactory to the City that
a. the hotel that is the subject of the application in question meets the
requirements of a Renovation Hotel, and
b. the proposed hotel improvement project qualifies as, and meets the
requirements of a Phase II Renovation Project, and the ;
(2) If requested by the City, subscribe to the Palm Springs Convention Center's
"committable rooms" program;
(3) Execute an operating covenant that includes provisions regarding continuing
use, maintenance, non-discrimination, and such other provisions as the City
Council, in its sole discretion, may reasonably determine to be necessary or
appropriate in order to advance the goals and intent of this Chapter.
Section 3. Section 5.26.040 of the Palm Springs Municipal Code is amended to include
subdivision (d) which shall read as follows:
(d) Phase II Renovation Project Hotels. The City shall on a monthly basis return,
reimburse and pay to the operator of a Phase II Renovation Project hotel a prorated
amount equal to fifty percent (50o/o} 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 a prorated amount equal to seventy-five percent (75°/o) of the Phase II Renovation
Project Transient Occupancy Tax Increment. The City shall continue making such
payments until the ten (1 0) 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.
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Ordinance No. 1972
Page4
Section 4. Section 5.26.040 of the Palm Springs Municipal Code is amended to include
subdivision (e) which shall read as follows:
(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 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).
Section 5. Section 5.26.050 of the Palm Springs Municipal Code is amended in its
entirety to read as follows:
5.26.050 Operating Covenants and Public Hearing Requirements.
(a) Each operator eligible to participate in the City's hotel operations incentive program
shall execute an operating covenant negotiated between the City and the operator,
approved by the City Council, and recorded in the official records of Riverside County.
(b) Each operating covenant shall state that a Renovation Hotel receiving any portion of
Phase II Renovation Project Transient Occupancy Tax Increment or any other benefit
under this Chapter shall include the following language, modified only as approved by
the City Attorney:
1. Prevailing Wage. In accordance with California Labor Code section 1781 (a)(2), the
Participant acknowledges that the City has expressly indicated to the Participant
and persons associated with the Participant that laborers employed relative to the
construction of the Project must be paid the prevailing per diem wage rate for their
labor classification, as determined by the State of California, pursuant to Labor
Code Sections 1720, et seq. and Palm Springs Municipal Code Section
7.06.030(1 ). The Participant agrees with the City that the Participant shall assume
the responsibility and be solely responsible for payment of the prevailing per diem
wage rate for their labor classification.
1.17.19
The Participant, on behalf of itself, its successors, and assigns, waives and
releases the City from any right of action that may be available to it pursuant to
California Labor Code Sections 1726 and 1781. The Participant acknowledges
the protections of Civil Code Section 1542 relative to the waiver and release
contained in this Section , which reads as follows:
18
Ordinance No. 1972
Page 5
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY."
BY INITIALING BELOW, THE PARTICIPANT KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION
WITH THE WAIVERS AND RELEASES OF THIS SECTION __ _
Participant's Initials
Additionally, in accordance with this Section , the Participant shall
indemnify, defend with counsel acceptable to the City, and hold the City harmless
against any claims pursuant to California Labor Code Sections 1726 and 1781
arising from this Covenant or the construction or operation of the Project.
2. General Indemnification. Participant agrees, for itself and for its successors and
assigns, to indemnify, defend with counsel acceptable to the City, and hold the
City, together with its officers, members, officials, employees, agents, volunteers,
and representatives, harmless from and against any loss, liability, claim, or
judgment arising from or related to participant's participation in the Hotel
Operations Incentive Program pursuant Palm Springs Municipal Code Chapter
5.26.
(c) In the event that a proposed Renovation Hotel's Certified Renovation Investment
documented in an application for participation in the Hotel Operations Inventive
Program of one hundred thousand dollars ($100,000), City Council consideration of
the operating covenant for that Renovation Hotel shall take place at a public hearing
subject to all requirements of California Government Code 53083 applicable to grants
of economic development subsidies, as that statute may be amended from time to
time.
Section 6. On or about the fourth (4th) anniversary of the adoption of this Ordinance,
the City shall review its implementation and effectiveness. At that time, the City Council
shall determine whether it wants to extend the December 31, 2023 Program sunset date
reflected in the "Phase II Renovation Project," and if so, for how long.
1.17.19 19
Ordinance No. 1972
Page6
Section 7. 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 provision(s) may be declared invalid or unconstitutional or
contravened via legislation.
Section 8. The adoption of this ordinance is not subject to the California Environmental
Quality Act (Public Resources Code Section 21000 et. seq.) pursuant to Section
15060( c)(2) and 15060( c)(3) of the State Guidelines, because the ordinance will not result
in a direct or reasonably foreseeable indirect physical change in the environment and is
not a "project," as that term is defined in Section 15378 of the State Guidelines.
Section 9. 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 DAY OF JANUARY, 2019.
AYES:
NOES:
ABSTAIN:
ABSENT:
ROBERT MOON, MAYOR
ATTEST:
Anthony, Mejia, CMC, City Clerk
1.17.19 20
Ordinance No. 1972
Page 7
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF PALM SPRINGS
CERTIFICATION
)
) ss
)
I, Anthony Mejia, City Clerk, hereby certify that the attached is a true copy of
Ordinance No. 1972 introduced by the City Council of the City of Palm Springs, California,
at a City Council meeting held the day of , 2019. Ordinance No. 1972
was passed, approved and adopted at a regular City Council meeting held at the
___ day of , 2019.
WITNESS my hand and official seal of the City of Palm Springs this __ day of
______ , 2019.
Anthony Mejia, CMC, City Clerk
1.17.19 21