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DATE: November 15, 2017 NEW BUSINESS
SUBJECT: APPROVAL OF AN AMENDED AND RESTATED HOTEL OPERATIONS
COVENANT WITH SELENE PALM SPRINGS, LLC, FOR THE DREAM
HOTEL PROJECT LOCATED AT THE NORTHEAST CORNER OF
CALLE ALVARADO AND EAST AMADO ROAD
FROM: David H. Ready, City Manager
BY: Marcus L. Fuller, Assistant City Manager
SUMMARY
Selene Palm Springs, LLC, a California limited liability company, ("Developer"), is
prepared to initiate construction of the Dream Hotel located on a 7.8 acre property at the
northeast corner of Calle Alvarado and Amado Road. On October 18, 2017, the City
Council approved Amendment No. 8 to the Purchase and Sale Agreement with the
Developer, revising the performance schedule for construction of the Dream Hotel.
Specifically, the City Council has agreed to extend a deadline to December 31, 2018,
for commencement with construction of the vertical "core and shell' of the Dream Hotel.
Accordingly, the Developer has requested an extension for participation in the City's
Hotel Operations Incentive Program (the `Program") to June 30, 2019.
The action to be considered by Council is the approval of an Amended and Restated
Hotel Operations Covenant with the purpose of extending the deadline for participation
in the Program to June 30, 2019.
Selene Palm Springs, LLC, a California limited liability company, is managed by CDI
Ventures, LLC, a California limited liability company, and Qaiser Capital, LLC, a
California limited liability company, with a third member consisting of Calsprings
Properties, LLC, a California limited liability company. The principle managing members
are Lauri Kibby and Abdul Lalani.
RECOMMENDATION:
1. Approve an Amended and Restated Hotel Operations Covenant (Agreement No.
6642) with Selene Palm Springs, LLC, a California limited liability company, for the
ITEM NO. <5 ,A e
City Council Staff Report
November 15, 2017-- Page 2
Dream Hotel Project—Amended Operations Covenant
Dream Hotel located at the northeast corner of Calle Alvarado and East Amado
Road; and
2. Authorize the City Manager or designee to take all actions needed to execute these
actions.
BACKGROUND:
On October 18, 2017, the City Council approved amendments to the Purchase and Sale
Agreement ("PSA") and a related Services Agreement ("SA") for the purpose of
developing and maintaining the Dream Hotel, a First Class Superior Hotel (Four stars),
on a 7.8 acre parcel previously owned by the City located at the northeast corner of
Calle Alvarado and East Amado Road (the "Property"). A copy of the October 18, 2017,
staff report is included as Attachment 1 for reference.
The Dream Hotel was previously approved by the City Council to participate in the City's
Hotel Operations Incentive Program (the "Program"). On December 17, 2014, the City
Council held a public hearing in accordance with Government Code Section 53083, and
approved a Hotel Operations Covenant related to the Selene Palm Springs Resort (now
identified as the Dream Hotel), extending to it participation in the Program.
As noted in the staff report from October 18, 2017, the Developer is prepared to move
forward with construction of the Dream Hotel, and Council agreed to a revised
performance schedule that reflects the following activities on or before the following
milestone dates:
• December 1, 2017 — Site mobilization, commencement of site clearing and grading;
• December 1, 2017 — Submittal of construction drawings for the underground garage
and foundation for the Dream Hotel;
• April 1, 2018 — Submittal of construction drawings for the "core and shell" of the
Dream Hotel;
• April 1, 2018 — Commencement of construction of the underground garage and
foundation for the Dream Hotel;
• December 31, 2018 — Completion of construction of the underground garage and
foundation for the Dream Hotel;
• December 31, 2018 — Commencement of construction of the "core and shell" of the
Dream Hotel;
• June 30, 2020 — Completion of the Dream Hotel
On the basis of the Council's approval of the revised performance schedule reflected
above, the Developer has requested an extension of the current December 31, 2017,
deadline reflected in Chapter 5.26 of the PSMC and the previously approved Hotel
Operations Covenant for the Dream Hotel. The requested extension is for 18-months, to
June 30, 2019, which will provide the Developer 6-months beyond the milestone
deadline of January 1, 2019, for commencement of construction for the "core and shell"
02
City Council Staff Report
November 15, 2017-- Page 3
Dream Hotel Project—Amended Operations Covenant
of the Dream Hotel, which is a reasonable period of time within which to have satisfied
the requirement to be "under construction" of actual hotel rooms (as that meaning is
defined in the Program).
As a matter of reference, the Dream Hotel will include 296 on-site parking spaces, two
restaurants, a screening room, spa, green house, pocket park, four pools, and a rooftop
terrace. The hotel and condominiums will be approximately 280,413 square feet, villas
are 7,820 square feet, meeting space will be 10,035 square feet, and the garage will be
67,755 square feet. The Project will comprise a total of 360,023 square feet total.
The Dream Hotel perspective views and site plans are shown on the next pages.
03
City Council Staff Report
November 15, 2017-- Page 4
Dream Hotel Project—Amended Operations Covenant
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Dream Hotel Project—Amended Operations Covenant
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ANALYSIS:
Hotel Operations Incentive Program
On January 9, 2008, the City Council adopted Ordinance No. 1730, adding Chapter
5.26 to the Palm Springs Municipal Code ('IPSMC") to establish the City's Hotel
Operations Incentive Program (the "Program"). The Program was established with an
understanding that the general welfare and material well-being of the residents of Palm
Springs depend in large measure upon the growth and expansion of the tourism and
travel industries in the community. The operation, maintenance, and expansion of new
and existing quality hotels in the City will create desirable visitor serving facilities that
contribute to the growth and expansion of tourism and travel opportunities in the City,
09
City Council Staff Report
November 15, 2017-- Page 10
Dream Hotel Project—Amended Operations Covenant
ensure utilization of the City's Convention Center, provide employment opportunities for
the residents of the City, and promote and enhance the economy of the community.
Further, the Program was established in large part as a cooperative economic
development tool associated with expansion of the City's Convention Center. In 2005,
the City rededicated the Palm Springs Convention Center after an investment of
$45,000,000 to expand and upgrade the facility. The Program's ultimate success is
measured in the growth in the tourism industry in the community. Therefore, the
Program was established in the best interests of the City to induce and encourage the
operation and maintenance of hotels as first class facilities that would not otherwise
exist, thereby creating new sources of tax revenues for the support of public services
that the City provides its residents and are funded by the City's General Fund. The
Program would ensure that new tax revenue is generated by new hotels or by the
renovation of existing hotels when meeting the specific program objectives as outlined
in Chapter 5.26 of the PSMC.
On May 15, 2013, the City Council adopted Ordinance No. 1842 amending the Program
to revise categories of qualifying new hotels, and to extend the deadline to December
31, 2015, for participation in a "Qualifying Renovation Program," and to extend the
deadline for participation as a "New Hotel" until December 31, 2017.
The Program has been extraordinarily successful for existing hotels under the "Qualified
Renovation Program," prompting private investment estimated at $180 million in the
renovation and upgrading of existing hotels throughout the City, resulting in renovation
of more than 1 ,600 hotel rooms which included the following 14 properties:
• The Alcazar • Palm Mountain Resort
• Bearfoot Inn • Palm Springs Hotel
• Colony Palms • Riviera Hotel
• Colt's Lodge • Saguaro Hotel
• Hard Rock Hotel • Skylark Hotel
• Hilton • Spanish Inn
• Hyatt • Sparrows Hotel
In accordance with the Program, participating existing hotels under the "Qualified
Renovation Program" could share in 50% of the net increase of TOT paid to the City
after deducting the baseline TOT previously paid to the City prior to the renovation. In
this way, the operating assistance paid by the City pursuant to the Program was
generated solely from new TOT revenues; the program in no way results in a net
decrease in existing TOT revenue.
10
City Council Staff Report
November 15, 2017-- Page 11
Dream Hotel Project—Amended Operations Covenant
As an example, the net additional return to the City through June 30, 20171, on the
shared increase of TOT payments realized from the 14 participating existing hotels
under the "Qualified Renovation Program" is $4,838,163 — all of which is new TOT
revenue paid to the City.
The Program also promotes significant private investment required for development and
construction of"New Hotels," as evidenced with the following 4 properties:
• Kimpton (now Rowan) Hotel; Operations Covenant approved November 19, 2014
• Selene (now Dream) Hotel; Operations Covenant approved December 17, 2014
• The Arrive Hotel; Operations Covenant approved March 2, 2016
• Virgin Hotel; Operations Covenant approved May 4, 2016
The Arrive Hotel was the first "New Hotel" to be completed and opened for business; the
Kimpton (now Rowan) Hotel is the second "New Hotel" to be completed and is
anticipated to open on November 15, 2017.
The City Council has also considered and approved the following "New Hotel" to
participate in the Program, by granting an extension of the Program's deadline subject
to the Council's approval of an Operations Covenant:
• Orchid Tree Hotel (to be operated as the Auberge Resorts Collection); on July
26, 2017, the Council approved participation in the Program with the deadline
extended to May 31, 2019
Under the terms of the amended Program, on December 17, 2014, the City Council held
a public hearing in accordance with Government Code Section 53083, and approved an
Operations Covenant related to a new 205-room Selene Palm Springs Resort that was
entitled and approved to be constructed on the property previously owned by the City
located at the northeast corner of Amado Road and Calle Alvarado. A copy of the
December 17, 2014, staff report is included as Attachment 2; a copy of the recorded
Operations Covenant is included as Attachment 3.
However, participation in the Program remains subject to the Program's current
deadline to be "Under Construction" by December 31, 2017, as defined in Chapter 5.26
of the PSMC — which states: "...all necessary discretionary entitlements have been
approved by the City of Palm Springs, grading and building permits have been issued,
and that inspection approvals by the City of Palm Springs of grading and foundations to
grade level have been obtained, vertical construction of hotel rooms has begun, and the
operating covenants have been recorded."
1 The first operations incentive payments pursuant to the Program were paid in the 2011/2012 Fiscal
Year; payments to hotels participating under the "Qualified Renovation Program" end after 10 years,
whereupon 100% of the increased TOT payments accrue to the City.
. 11
City Council Staff Report
November 15, 2017-- Page 12
Dream Hotel Project—Amended Operations Covenant
Subsequently, the Developer proposed revisions to the Selene Palm Springs Resort,
and on June 7, 2017, the City Council adopted Resolution No. 24236, approving an
amendment to Final Planned Development District 333 proposed by the Developer,
formally revising the original Selene Palm Springs Resort (which was also identified as
a Dolce Hotel) to a first class new hotel project consisting of 169 hotel rooms and 34
multi-family residential condominium units, to be operated as a "Dream Hotel" brand
hotel by the Dream Hotel Group. As a matter of reference, the Dream Hotel will include
296 on-site parking spaces, two restaurants, a screening room, spa, green house,
pocket park, four pools, and a rooftop terrace. The hotel and condominiums will be
approximately 280,413 square feet, villas are 7,820 square feet, meeting space will be
10,035 square feet, and the garage will be 67,755 square feet. The Dream Hotel
complex will comprise a total of 360,023 square feet total.
In light of the City's approval of Final Planned Development District 333 and the re-
branding of the hotel to a Dream Hotel project on June 7, 2017, and the Council's
approval on October 18, 2017, of a revised performance schedule for the Developer's
construction of the Dream Hotel, staff recommends that the Council approved an
Amended and Restated Operations Covenant to extend participation in the Program to
the Dream Hotel, with an extended deadline of June 30, 2019.
ENVIRONMENTAL DETERMINATION:
On July 18, 2007, the City Council adopted Mitigated Negative Declaration (MND) No.
2006109032 for the Project; City Council adopted an Addendum to the MND on
November 20, 2013. In accordance with California Environmental Quality Act (CEQA)
Guidelines Section 15162, the City prepared a Subsequent Initial Study / Mitigated
Negative Declaration (IS/MND) for the amended project to identify whether or not any
significant environmental impacts may result from the proposed amended project.
Specifically, the Subsequent IS/MND evaluated the following environmental factors:
aesthetics, agricultural resources, air quality, biological resources, cultural resources,
geology and soils, greenhouse gas emission, hazards and hazardous materials,
hydrology and water quality, land use and planning, mineral resources, noise,
population and housing, public services, recreation, transportation/traffic, tribal cultural
resources, and utilities and service systems.
The Subsequent IS/MND determined that the amended project would not result in any
significant environmental impacts that could not be mitigated. Mitigation measures were
incorporated to ensure that the amended project would have a less than significant
impact on the environment. Pursuant to CEQA Guidelines, a Notice of Intent to adopt a
Subsequent Mitigated Negative Declaration was prepared. The Notice of Intent (NOI)
was circulated for public review and comments. The review and comments period
commenced on April 20, 2017, and closed on May 9, 2017. Comments were received
from reviewing agencies and other interested parties; responses to the comments were
completed.
, 21
City Council Staff Report
November 15, 2017-- Page 13
Dream Hotel Project—Amended Operations Covenant
On June 7, 2017, the City Council adopted Resolution No. 24236, adopting the
Subsequent IS/MND for the amended project. No further environmental review pursuant
to CEQA is required.
FISCAL IMPACT:
Approval of the Amended and Restated Operations Covenant will facilitate construction
of "Dream Hotel" brand hotel by the Dream Hotel Group (with an estimated construction
cost of $100 million), as contemplated by the Purchase and Sale Agreement approved
between the City and Developer on the property previously owned by the City and sold
to the Developer. The Developer has requested an extension of time from December
31, 2017, to June 30, 2019, for commencement of "vertical construction" of hotel rooms
as that deadline is imposed pursuant to the Program and the currently approved
Operations Covenant for the Dream Hotel.
Providing incentives for the development and construction of high quality new hotels is a
common economic tool. For example, since 2000, a sample of California cities that have
provided various forms of economic and tax incentives include: Los Angeles, San
Diego, Palo Alto, Anaheim, Sacramento, Garden Grove, San Francisco, Half Moon Bay,
Petaluma, La Jolla, Santa Rosa, Huntington Beach, San Jose, Laguna Beach, East
Palo Alto, Monterey, Sausalito, Beverly Hills, and Lake Tahoe. Included as Attachment
4 is a list of 37 upscale, full-service hotels constructed since 2000 with economic
assistance.
The economic incentive program offered by Palm Springs is the City's Hotel Operations
Incentive Program (the "Program"). Pursuant to the Program, an eligible "New Hotel"
may receive a rebate of 75% of the "Adjusted tax rate", which is defined for hotels of
125-rooms or more, as 12.1% of the rent charged by the operator of the hotel for
transient occupancies.2
A financial analysis prepared by Keyser Marston Associates (KMA) updated prior
financial analysis of the Kimpton Hotel and Virgin Hotel, and also considered the
absorption and transfer of demand from all four new hotels proposed to come on-line in
Palm Springs in the near future: Kimpton (now Rowan) Hotel (153-rooms), Virgin Hotel
(142-rooms), Dream Hotel (169-rooms), and Andaz Hotel (160-rooms). Of importance to
the City is consideration of how the addition of 624 rooms to the City's existing inventory
may impact existing hotel occupancies or the Average Daily Rate ("ADR") of hotel
rooms — a concept defined as "cannibalization" of overnight hotel room stays from
existing hotels to new hotels. A copy of KMA's analysis is included as Attachment 5.
2 This is an important distinction, as the Program has generally been defined as a 75% rebate of TOT,
which would be 10.125%, rather than 75% of the "adjusted tax rate" which is 9.075%, as stipulated in
Chapter 5.26 of the PSMC.
13
City Council Staff Report
November 15, 2017-- Page 14
Dream Hotel Project—Amended Operations Covenant
KMA has conservatively assumed that with development of a new hotel, there is a
certain "cannibalization" of overnight hotel room stays from existing hotels to the Dream
Hotel upon its opening, causing a modest reduction of TOT revenue over a short-term
period. KMA has considered a 10% loss for the first two years, and 5% loss for the
following three years, for a 5-year absorption period, resulting in a cumulative loss of
$677,400 in TOT revenue otherwise paid to the City for overnight stays at other City
hotels. This figure is noted in the following table.3
TOT TOT Rebate
Room Absorption of Absorption Net New TOT
Year Revenues Payment (75% of Rooms Loss Payments
(13.5%) 12.1%)
2020 $ 10,795,000 $ 1,457,300 $ 979,600 10% $ 145,700 $ 332,000
2021 $ 13,416,000 $ 1,811,200 $ 1,217,500 10% $ 181,100 $ 412,600
2022 $ 16,532,000 $ 2,231,800 $ 1,500,300 5% $ 111,600 $ 619,900
2023 $ 17,488,000 $ 2,360,900 $ 1,587,000 5% $ 118,000 $ 655,900
2024 $ 17,925,000 $ 2,419,900 $ 1,626,700 5% $ 121,000 $ 672,200
2025 $ 18,373,000 $ 2,480,400 $ 1,667,300 0% $ - $ 813,100
2026 $ 18,832,000 $ 2,542,300 $ 1,709,000 0% $ - $ 833,300
2027 $ 19,303,000 $ 2,605,900 $ 1,751,700 0% $ - $ 854,200
2028 $ 19,786,000 $ 2,671,100 $ 1,795,600 0% $ - $ 875,500
2029 $ 20,280,000 $ 2,737,800 $ 1,840,400 0% $ - $ 897,400
2030 $ 20,787,000 $ 2,806,200 $ 1,886,400 0% $ - $ 919,800
2031 $ 21,307,000 $ 2,876,400 $ 1,933,600 0% $ - $ 942,800
2032 $ 21,840,000 $ 2,948,400 $ 1,982,000 0% $ - $ 966,400
2033 $ 22,386,000 $ 3,022,100 $ 2,031,500 0% $ - $ 990,600
2034 $ 22,945,000 $ 3,097,600 $ 2,082,300 0% $ - $ 1,015,300
2035 $ 23,519,000 $ 3,175,100 $ 2,134,300 0% $ - $ 1,040,800
2036 $ 24,107,000 $ 3,254,400 $ 2,187,700 0% $ - $ 1,066,700
2037 $ 24,710,000 $ 3,335,900 $ 2,242,400 0% $ - $ 1,093,500
2038 $ 25,327,000 $ 3,419,100 $ 2,298,400 0% $ - $ 1,120,700
2039 $ 25,961,000 $ 3,504,700 $ 2,356,000 0% $ - $ 1,148,700
2040 $ 26,610,000 $ 3,592,400 $ 2,414,900 0% $ - $ 1,177,500
2041 $ 27,275,000 $ 3,682,100 $ 2,475,200 0% $ - $ 1,206,900
2042 $ 27,957,000 $ 3,774,200 $ 2,537,100 0% $ - $ 1,237,100
2043 $ 28,656,000 $ 3,868,600 $ 2,600,500 0% $ - $ 1,268,100
2044 $ 29,372,000 $ 3,965,200 $ 2,665,500 0% $ - $ 1,299,700
2045 $ 30,106,000 $ 4,064,300 $ 497,100 0% $ - $ 3,567,200
2046 $ 30,859,000 $ 4,166,000 $ - 0% $ - $ 4,166,000
2047 $ 31,630,000 $ 4,270,100 $ - 0% $ - $ 4,270,100
2048 $ 32,421,000 $ 4,376,800 $ - 0% $ - $ 4,376,800
2049 $ 33,232,000 $ 4,486,300 $ - 0% $ - $ 4,486,300
$703,737,000 $ 95,004,500 $ 50,000,000 $ 677,400 $ 44,327,100
s The following Table summarizes the estimated TOT payments that will be generated by the Dream
Hotel. (Note, Table 9 of the KMA analysis ended in 2047, the following Table extended the analysis for
the full 30-year term of the Operations Covenant to 2049 using KMA's financial assumptions for 2.5%
annual increase in gross revenue receipts).
1 �
City Council Staff Report
November 15, 2017-- Page 15
Dream Hotel Project—Amended Operations Covenant
On the basis of KMA's analysis reflected above, during the 30-year term of the
Operations Covenant for the Dream Hotel, the City would receive gross TOT payments
of $95 million, with a total TOT rebate paid to the Developer of $50 million. Section
5.26.040 of the PSMC establishes that participation in the Program for a 30-year term is
subject to a maximum rebate of $50 million; it is anticipated that the maximum rebate
will be reached by Year 26 of the 30-year term of the Operations Covenant for the
Dream Hotel, whereupon the City will retain 100% of all TOT paid in the final four years
of the term.
Accordingly, the City is estimated to receive gross TOT payments of $95 million, with a
total TOT rebate paid to the Developer of $50 million, less $677,400 in TOT absorption
loss, resulting in net new TOT revenue to the City of$44.3 million.
On the basis of KMA's analysis, the Dream Hotel will generate the following net new
revenues to the City in its first year of operation:
Revenue Amount
Property Tax4 $164,300
Sales Tax5 $325,400
Transient Occupancy Taxs 1222 000
$8211700
By 2022 with full stabilization of the Dream Hotel at 70% occupancy, the Dream Hotel
net new annual revenues are estimated to increase as shown:
Revenue Amount
Property Tax' $223,100
Sales Taxa $498,400
Transient Occupancy Tax9 619 900
$1,341,400
4 The estimated assessed valuation of the Dream Hotel is $72,400,000 at opening in 2020, the City's
allocation of the 1% property tax levy is 22.69%.
5 KMA has projected $13.3 million in net new off-site taxable sales generated by Dream Hotel guests
upon opening in 2020; staff notes that with passage of Measure D on November 7, 2017, the KMA
analysis excludes the additional 0.5% local sales tax revenue commencing in 2018, and this figure has
been adjusted accordingly.
6 First year TOT is estimated at a reduced ADR of$175 per night.
7 The estimated assessed valuation of the Dream Hotel including the associated luxury condominium
units is $96,400,000, the City's allocation of the 1% property tax levy is 22.69%.
8 KMA has projected $19.9 million in net new off-site taxable sales generated by Dream Hotel guests
upon hotel stabilization in 2022; staff notes that with passage of Measure D on November 7, 2017, the
KMA analysis excludes the additional 0.5% local sales tax revenue commencing in 2018, and this figure
has been adjusted accordingly.
9 TOT revenue at full stabilization of the Dream Hotel in 2022 is estimated at an ADR of$283.50 per night
at 70% capacity.
City Council Staff Report
November 15, 2017-- Page 16
Dream Hotel Project—Amended Operations Covenant
On the basis of KMA's analysis, the Dream Hotel will generate the following new gross
revenues to the City during the 30-year term of the Operations Covenant10:
Revenue Amount
Property Tax" $8,645,200
Sales Tax12 $16,475,600
Transient Occupancy Tax13 $95,004,500
$120,125,300
Table — KMA Analysis
(No Measure D Sales Tax, Measure J Extended)
Revenue Amount
Property Tax" $8,645,200
Sales Tax12 $16,226,300
Transient Occupancy Tax13 $95,004.500
$119,876,000
Table — KMA Analysis — City Revision
(Measure D Sales Tax, Measure J Sales Tax Ends in 2037)
Revenue Amount
Property Tax11 $8,645,200
Sales Tax12 $20,594,300
Transient Occupancy Tax13 $95.004,500
$124,244,000
Table — KMA Analysis — City Revision
(Measure D Sales Tax, Measure J Sales Tax Extended)
In 2020 upon opening of the Dream Hotel, the City is estimated to receive net new
revenue of $821,700 in 2020 increasing to $1,341 ,400 by 2022. The KMA analysis
shows that the Dream Hotel project, with an assessed value estimated at $96.4 million,
will generate significant gross new revenue to the City in the form of increased property
taxes, sales tax, and TOT payments, estimated at $120.1 million over a 30-year period.
90 Staff notes that the KMA analysis included 2% local sales tax with Measure J without reducing the
revenue by 1% upon Measure J sales tax ending in 2037; however, with passage of Measure D on
November 7, 2017, the KMA analysis excludes the additional 0.5% local sales tax revenue commencing
in 2018. In reviewing the analysis, staff has determined that there is a net positive change in new revenue
when reducing local sales tax revenue by 1% in 2037, while increasing local sales tax revenue by 0.5% in
2018. Staff has provided revised Tables to show the increased nominal revenues due to the sales tax
variability caused by Measure D and Measure J.
" KMA assumed 2% growth in property tax revenue annually.
12 KMA assumed 2.5% growth in sales tax revenue annually.
13 KMA assumed 2.5% growth in TOT revenue annually.
City Council Staff Report
November 15, 2017 -- Page 17
Dream Hotel Project—Amended Operations Covenant
Staff's revisions to the KMA analysis to account for Measure D sales tax revenue
commencing in 2018, with Measure J sales tax revenue ending in 2037, shows that the
Dream Hotel will generate gross new revenue to the City in the form of increased
property taxes, sales tax, and TOT payments of$119.9 million over a 30-year period.
Staff's revisions to the KMA analysis to account for Measure D sales tax revenue
commencing in 2018, with Measure J sales tax revenue extending beyond 2037,
shows that the Dream Hotel will generate gross new revenue to the City in the form of
increased property taxes, sales tax, and TOT payments of$124.2 million over a 30-year
period.
In summary, after deducting the total TOT rebate of $50 million from the estimate of
gross new revenues to the City of $120.1 million generated by the Dream Hotel, the City
is estimated to receive $70.1 million in net new revenues over the next 30 years.
When using the City's revised analysis considering Measure D sales tax revenue
commencing in 2018 with Measure J sales tax revenue ending in 2037, after deducting
the total TOT rebate of $50 million from the estimate of gross new revenues to the City
of $119.9 million generated by the Dream Hotel, the City is estimated to receive $69.9
million in net new revenues over the next 30 years.
When using the City's revised analysis considering Measure D sales tax revenue
commencing in 2018 with Measure J sales tax revenue extended beyond 2037, after
deducting the total TOT rebate of $50 million from the estimate of gross new revenues
to the City of $124.2 million generated by the Dream Hotel, the City is estimated to
receive $74.2 million in net new revenues over the next 30 years.
Absorption of New Hotel Rooms
KMA also previously prepared for the City a financial analysis of a new 350-room Spa
Hotel proposed as part of the Agua Caliente Band of Cahuilla Indians (the "Tribe")
master plan and Casino expansion. A copy of this financial analysis is included as
Attachment 6, and determined a similar absorption and transfer of demand of hotel
rooms to the new Spa Hotel from existing hotels, primarily from comparable Upper
Upscale hotels in the Palm Springs market (those being the Hilton, Hard Rock,
Renaissance, and Hyatt). KMA estimated a cumulative TOT revenue transfer varying
from $2.4 million over 4 years to $4.4 million over 6 years. However, the Tribe has not
yet announced when it intends to develop the new Spa Hotel, or exactly how many hotel
rooms are planned. Moreover, under the new State Gaming Compact, the City and
Tribe will be negotiating casino impact mitigation assistance for the City to provide
services.
KMA has confirmed its assumptions that the addition of hotel rooms represented by
these four new hotels will have a modest effect on net new TOT revenue through a
conservatively estimated 5-year absorption period. These four new hotels represent the
7
City Council Staff Report
November 15, 2017-- Page 18
Dream Hotel Project—Amended Operations Covenant
City's attempt to increase its market share in the Coachella Valley and to capture "better
value" conventions and visitors, by increasing supply of this type of hotel room which
generates increased demand by new conventions. This cause and effect relationship
has also been suggested by the Executive Director of the Palm Springs Convention
Center, as indicated in their letter included as Attachment 7. As noted by Mr. Canfield:
"One of our greatest opportunities for growth in room-nights and economic
impact is by attracting higher rated corporate, incentive and professional
association groups. The addition of higher quality rooms within walking distance
to the center will enhance our ability to attract this higher rated business which
can provide significantly higher economic impact to the city and revenue to the
convention center. Many of these groups also meet mid-week which is our
greatest need period throughout the year.
It will also allow us to book groups with larger attendance and hotel blocks.
Currently, larger groups require us to use hotels that are not within walking
distance to the center and in some cases outside of the city to meet block
requirements. This adds a significant cost and inconvenience for transportation
from the outlying hotels to the center requiring additional discounts or funding
support and making us less competitive."
In KMA's opinion, these four new hotels are expected to bring in higher spending
visitors and notes that there will likely be more transfer among these four hotels then
there will be from the City's existing hotels, which also sets these four new hotels apart
from any potential impact associated with the Tribe's new 350-room Spa Hotel.
The City's existing inventory of hotel rooms as of April 2017 was 6,131 rooms from 125
different properties. The four new hotels that are anticipated to open by 2022 will
increase that inventory by 624 rooms, or 10%. If anticipating the Tribe to complete the
new 350-room Spa Hotel by 2022, the total increase of hotel room inventory will be 974
rooms, or 16%.
KMA has identified that the demand for rooms in the Coachella Valley is projected to
increased at an annual rate of 3.1% from 2012 through 2018, with market occupancy
increasing from 57% to nearly 65%.
Applying an annual growth rate of 3% for 5 years (2018 to 2022) to the Palm Springs
market of 6,131 rooms, would generate a 15% increase of hotel room inventory by 2022
(after completion of the four new hotels). In this case, demand for hotel rooms would
increase by 920 rooms easily accommodating absorption of the 624 rooms being added
by the Rowan Hotel, Virgin Hotel, Dream Hotel, and Andaz Hotel. If anticipating the
Tribe to complete the new 350-room Spa Hotel by 2022, increasing demand would
accommodate most of the new 974 hotel rooms.
i $
City Council Staff Report
November 15, 2017 -- Page 19
Dream Hotel Project—Amended Operations Covenant
It is also important to note that new higher end hotels similar to the Rowan Hotel and
Virgin Hotel will attract brand loyalists, and it is KMA's opinion that the additional rooms
represented by these four new hotels will not have a substantial negative impact on
hotel room rates or occupancy.
Stating from KMA's supplemental analysis, KMA suggests: There is a belief in the hotel
industry that the addition of high quality hotels will improve demand for hotel rooms in
an area, particularly if they are near a Convention Center. Studies by CBRE (Nashville)
and Hunden Strategic Partners (Forth Worth) support this belief.-In addition,
information provided by the Convention Center and the Convention and Visitor's Bureau
indicate that the Convention Center has not been able to secure certain events due to a
lack of high quality hotel rooms within walking distance of the Convention Center.
KMA's reference to the report by CBRE Hotels dated October 16, 2015, is entitled If you
build it, will they come? Convention center and expanded hotel capacity induce positive
changes to the downtown Nashville hotel market; a copy of this report is included as
Attachment 8, and restates the relationship between supply and demand related to
convention center hotels.
The comparison to draw here in Palm Springs is that the City's renovated and expanded
Convention Center has additional capacity for large conventions, however, hotel supply
has not been adequate to draw newer and much larger conventions to it. Learning from
other city experiences, and on KMA's analysis, construction of the four new hotels in
downtown Palm Springs is not expected to substantially harm other hotels in terms of
loss of TOT revenue, and may in fact generate new demand through new and larger
conventions drawn to Palm Springs by these new hotels.
On the basis of the foregoing analysis, staff recommends that the City Council approve
an Amended and Restated Operations Covenant for the Dream Hotel, extending
participation in the Program until June 30, 2019. A copy of the Amended and Restated
Operations Covenant is included as Attachment 9.
1
City Council Staff Report
November 15, 2017-- Page 20
Dream Hotel Project—Amended Operations Covenant
SUBMITTED:
Marcus Fuller, MPA, P.E., P.L.S. Edward Kotkin,
Assistant City Manager City Attorney
David H. Ready,
City Manager
Attachments:
1. October 18, 2017, staff report
2. December 17, 2014, staff report
3. Operations Covenant
4. List of Hotels with Incentives
5. KMA Analysis
6. KMA Analysis — Spa Hotel
7. Convention Center memo re: Demand for Additional Hotel Rooms
8. CBRE Hotels report dated October 16, 2015
9. Amended and Restated Operations Covenant
20
ATTACHMENT 1
21
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°1�fORN�P CITY COUNCIL STAFF REPORT
DATE: October 18, 2017 NEW BUSINESS
SUBJECT: AMENDMENTS TO THE PURCHASE AND SALE AGREEMENT AND
SERVICES AGREEMENT WITH SELENE PALM SPRINGS, LLC, FOR
THE DREAM HOTEL PROJECT LOCATED AT THE NORTHEAST
CORNER OF CALLE ALVARADO AND EAST AMADO ROAD
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
Selene Palm Springs, LLC, a California limited liability company, (Developer), is
prepared to initiate construction of the Dream Hotel Project, (the "Hotel"), located on a
7.8 acre property at the northeast comer of Calle Alvarado and Amado Road. The
property was recently conveyed from the City to Developer pursuant to a Purchase and
Sale Agreement (A6329) and associated Services Agreement (A6329), both of which
have terms and conditions relating to issuance of building permits and commencement
of construction.
The actions to be considered by Council relate to amendments to the Purchase and
Sale Agreement and Services Agreement to allow for issuance of phased building
permits and sequential construction of the Hotel, providing for Developer's ability to
quickly mobilize its resources on the property, close the existing public parking facility,
and commence with construction of the Hotel.
Selene Palm Springs, LLC, a California limited liability company, is managed by CDI
Ventures, LLC, a California limited liability company, and Qaiser Capital, LLC, a
California limited liability company, with a third member consisting of Calsprings
Properties, LLC, a California limited liability company. The principle managing members
are Lauri Kibby and Abdul Lalani.
RECOMMENDATION:
1. Approve Amendment No. 8 to the Purchase and Sale Agreement (A6329) by and
between the City of Palm Springs and Selene Palm Springs, LLC, a California
limited liability company related to the Dream Hotel Project;
ITEM NO. H,�A.
i
0ty Council Staff Report
October 18, 2017--Page 2
Dream Hotel Project
2. Approve Amendment No. 2 to the Services Agreement (A6329) by and between the
City of Palm Springs and Selene Palm Springs, LLC, a California limited liability
company related to the Dream Hotel Project; and,
3. Authorize the City Manager or designee to take all actions needed to execute these
actions.
STAFF ANALYSIS:
On March 6, 2013, the City and Developer entered into the Purchase and Sale
Agreement ("PSA") and a related Services Agreement ("SA") for the purpose of
developing and maintaining the Dolce Hotel Project, (the "Hotel"), a First Class Superior
Hotel (Four+ stars), on a 7.8 acre parcel owned by the City located at the northeast
corner of Calle Alvarado and East Amado Road (the "Property"). The PSA identified the
terms and conditions for the City's conveyance of the Property to Developer, including a
performance schedule that identified deadlines for: (1) entitlements, (2) close of escrow,
(3) start of construction, and (4) opening date of the Hotel. The PSA originally identified
the following conditions:
• Purchase Price: $2,000,000 (Purchase and Sale Agreement
• Purchase Price: $2,675,000 (Services Agreement)
• Entitlements: June 30, 2013
• Close of Escrow: December 31, 2013
• Start of Construction: December 31, 2013
• Opening Date: March 2016
Seven prior amendments to the PSA were approved by Council from March 2014
through May 2017, modifying the performance schedule to reflect the following:
• Entitlements: July 31, 2017
• Close of Escrow: August 31, 2016
• Start of Construction: December 31, 2017
• Opening Date: December 31, 2018
The SA identified the terms and conditions for the City's cooperation with Developer for
the purpose of providing for the assemblage and acquisition of certain property and to
provide funding for replacement parking within a parking structure and/or parking
facilities on the City's Convention Center Parking Lot in conjunction with developing and
maintaining the Hotel. Amendment No. 1 to the SA was approved by Council on
November 4, 2015, incorporating an obligation regarding replacement parking, generally
stating:
Developer shall pay City the amount of $2,675,000 for the unamortized parking
improvements necessary or desirable for the construction of at least 350 public parking
spaces to replace existing public parking spaces on the City Property that will be lost as
a result of the sale of the City Property to the Developer and the construction of the
23
City Council Staff Report
October 18, 2017--Page 3
Dream Hotel Project
Dolce Hotel Project'. Prior to or upon the issuance of a building permit, the Developer
shall cause the full $2,675,000 to be deposited in an escrow account designated and
approved by the City to be held by the City until such time as the funds are required to
fund all or a portion of contributions necessary for funding for replacement of public
parking. (The $2,675,000 payment is referred to herein as the "Parking Fee").
On August 3, 2016, the City Council approved the final escrow instructions for close of
escrow and conveyance of the Property, incorporating provisions from the amended
PSA and SA.
On August 26, 2016, City and Developer completed the real property transaction
consummated by the PSA, and City conveyed fee title interest in the Property to
Developer pursuant to that certain Grant Deed recorded as Document No. 2016-
0367646 (the "Grant Deed"). In accordance with the final escrow instructions a deed
restriction was imposed generally requiring the Developer to submit a parking plan of at
least 350 parking spaces, for City Council consideration of a joint public/private parking
facility to be constructed in conjunction with the Hotel; and, to the extent the City
partnered with the Developer on such a parking facility, the Parking Fee would be paid
into escrow, whereas, if the City opted not to partner with the Developer, the Parking
Fee would be paid in a lump sum upon City's issuance of a building permit.
On April 5, 2017, the City Council reviewed the Developer's plan for parking, and
determined not to participate in a joint public/private parking facility as part of the Hotel.
On June 7, 2017, the City Council adopted Resolution No. 24236, approving an
amendment to Final Planned Development District 333 proposed by Developer, formally
revising the original Dolce Hotel Project to a first class new hotel project consisting of
169 hotel rooms and 34 multi-family residential condominium units, to be operated as a
"Dream Hotel" brand hotel by the Dream Hotel Group. As a matter of reference, the
Dream Hotel will include 296 on-site parking spaces, two restaurants, a screening room,
spa, green house, pocket park, four pools, and a rooftop terrace. The hotel and
condominiums will be approximately 280,413 square feet, villas are 7,820 square feet,
meeting space will be 10,035 square feet, and the garage will be 67,755 square feet.
The Project will comprise a total of 360,023 square feet total.
The Dream Hotel perspective views and site plans are shown on the next pages.
' The Dolce Hotel was the originally proposed hotel group; however, on June 15, 2016, the City Council
approved Amendment No. 5 to the PSA approving the Dream Hotel Group brand as the hotel.
24
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At this time, Developer wants to begin construction of the Hotel, and recognizes that its
plan for doing so varies from certain terms in the PSA and SA. While the Developer is
not asking for new or additional consideration from the City, an important definition as to
the "commencement of construction" and related provisions as to benchmarks and the
City's rights under the PSA and SA must be adjusted if Developer's plan for
construction is to be implemented. Developer has requested approval to construct the
Hotel in phases, with issuance of phased building permits and sequential phased
construction of the Hotel, including mobilization of resources on the Property requiring
closure of the existing surface parking facility to allow for commencement of demolition
prior to issuance of final building permits for the underground parking garage,
foundation, and "core and shell" of the Hotel-
30
City Council Staff Report
October 18, 2017--Page 10
Dream Hotel Project
The advantage of the Developer's approach is that it allows commencement of
construction when the Developer would otherwise be waiting for all the required permits
to be approved at one time. Moreover, the Developer has advised that holding back
from commencing on any work on the Property until all the various building permits
have been issued and related contracts executed is logistically challenging.
However, the PSA as amended includes the following restriction on the commencement
of construction by defining "commence construction" as:
Developer has: (1) completed all pre-construction engineering and design, (2) has
entered into binding and enforceable agreements with General Contractor and MEP and
Structural contractors (consistent with industry practice), and (3) received permits,
licenses, and entitlements from all government entities, including the City, as can
reasonably be considered necessary so that physical construction of the Hotel Project
may begin and proceed to completion without foreseeable interruption of material
duration.
Currently, the Developer is obligated to commence construction within 15 months of
close of escrow (approximately December 1, 2017). The Developer is completing
construction drawings for the underground garage and foundation for the Hotel and
anticipates submitting to the City for building plan check review by December 1, 2017.
The Developer is also completing the construction drawings for the "core and shell" of
the Hotel, and anticipates submitting to the City for building plan check review by April
1, 2018. The Developer has submitted the rough grading and site demolition plans to
the Engineering Services Department, with approval anticipated by November 1, 2017.
Therefore, the Developer will be in a position to mobilize on the Property and
commence with site clearing, demolition, and rough grading operations required to
excavate for the underground parking garage which serves as the foundation for the
Hotel. This work is anticipated to take 3-4 months, while concurrently the Developer is
completing the building plan check review process and obtaining building permits for the
underground parking garage/foundation, and ultimately the vertical "core and shell" of
the hotel by April 1, 2018.
Staff is in agreement with the Developer's proposal for phased building permits and
sequential construction, noting that the Developer has made the following progress with
regard to the Hotel:
• Developer has acquired the property from the City subject to the terms of the
recorded Grant Deed, and secured all entitlements necessary for the Hotel's
development.
• Developer has submitted its parking plan in compliance with the terms of the Grant
Deed through which it received fee title interest to the Property.
• Developer will complete construction drawings for the underground parking
garage/foundation with an expected submittal to the City's Building Department by
December 1, 2017.
31
City Council Staff Report
October 18, 2017—Page 11
Dream Hotel Project
• Developer will complete construction drawings for the vertical "core and shell" of the
Hotel with an expected submittal to the City's Building Department by April 1, 2018.
• Developer has refined its design and construction plans for implementation, and is
prepared to start staging the Property for construction by November 15, 2017.
• Developer has secured a written confirmation from its lender of a $20,000,000 credit
facility, and drawn down $3,400,000 of that funding to date.
• Developer has secured an extension from its lender of the date before which
Developer must submit a full budget for the Hotel by December 31, 2017, so that the
lender can evaluate and consider the additional funding that will be required to
complete the Hotel.
In addition to redefining the "commencement of construction" and making corresponding
adjustments to the Project's established benchmark schedule, Developer has requested
deferral of its payment of the Parking Fee in the amount of $2,675,000. Currently the
Parking Fee must be paid in a lump sum basis upon the issuance of a building permit.
At the time this provision was incorporated into the SA, it was the intent that the City
would immediately replace the lost public parking spaces through the Parking Fee;
however, circumstances have changed and although the City intends to utilize some, if
not all, of the Parking Fee towards the construction of off-site public parking spaces, the
immediate need for the Parking Fee is no longer present. Accordingly, Developer is
requesting that payment of the Parking Fee be deferred until such time as the City
requires the Parking Fee (or portions thereof) to pay for the City's replacement of the
existing parking facilities as contemplated by the SA, likely in coordination with
Developer's receipt of Statewide Community Infrastructure Program (SCIP) funding,
discussed further below. However, a provision has been included in the amendment to
the SA that obligates Developer to pay the Parking Fee by December 31, 2018.
Staff has prepared Amendment No. 8 to the PSA, and Amendment No. 2 to the SA, to
accommodate the Developer's request, while preserving protections for the City with
regard to the Developer's timely progress with construction of the Hotel, including
preserving the City's legal ability to repurchase the Property to the extent the Developer
proceeds with construction, but later fails to complete the Hotel or otherwise abandons
the project. The following outlines the recommended changes to the PSA and SA:
A. Require Developer, prior to City's issuance of any permits for construction of the
vertical "core and shell" of the Hotel, to submit evidence to the City of the availability
of financing to complete the Hotel to the City's reasonable satisfaction; such
evidence may consist of a letter from Developer's private lender confirming approval
of a credit facility in an appropriate amount necessary to complete the Hotel,
estimated at this time to be an additional $50,000,000 beyond the credit facility
already approved;
B. Modify the definition of the "commencement of construction" as stated in
Amendment No. 8, and thereby allow the phasing of construction of the Hotel,
planned to be complete not more than twenty-six (26) months after the issuance of
? 2
City Council Staff Report
October 18, 2017--Page 12
Dream Hotel Project
the building permits necessary to complete the Hotel, or not later than June 30,
2020;
C. Require Developer to submit its completed construction drawings and apply for a
building permit for construction of the underground parking garage/foundation on or
before December 31, 2017;
D. Require Developer to submit its completed construction drawings and apply for a
building permit for construction of the vertical "core and shell" of the Hotel on or
before April 1, 2018;
E. In the event that Developer for any reason has not completed construction of the
Hotel's underground parking garage/foundation by January 1, 2019, and therefore,
has not timely commenced with construction of the vertical "core and shell" of the
Hotel, require Developer to complete all required site civil work, landscaping, utility
work, and associated improvements as reasonably deemed necessary by City to
prepare the underground garage for public use by the City, but excluding air
conditioning systems or elevator equipment;
F. Explicitly require Developer pay prevailing wages, and to indemnify, hold harmless,
and defend the City against any claims in that regard;
G. Prohibit Developer from engaging in any demolition of the Property prior to
Developers submittal of its completed construction drawings and application for a
building permit for construction of the underground parking garage/foundation;
H. In the event that Developer for any reason has not commenced construction of the
Hotel's underground parking garage/foundation by April 1, 2018, require Developer
to restore the Property to its pre-existing condition, including reconstruction of the
existing surface parking facility, and to grant City, at no cost to the City, the right to
maintain, operate, and use the Property as a public parking lot until such time as
Developer, or Developer's successor in interest, proceeds with construction of the
Hotel;
I. Preserving "Repurchase Option A", in the event that Developer for any reason has
not commenced construction of the Hotel's underground parking garage/foundation
by April 1, 2018, after sixty (60) days' written notice and failure to cure, the City in its
sole discretion has the right to acquire the Property from Developer for the
Developer's Purchase Price of $2,000,000 or the current fair market appraised
value, whichever is higher, less the amount the City must expend to restore the
Property to its original condition as a public parking lot;
J. Require the Developer to deliver a commitment letter from its lender that the lender
acknowledges that the Parking Fee in the amount of $2,675,000 is a part of the
Developer's approved funding, including annualized interest on the deferred
payment (at a minimum rate in accordance with IAIF or 2% maximum), with the
Parking Fee to be held and preserved in trust by the lender for the City, for use by
the City, at the City's sole discretion, in whole or part, for replacement parking or any
other public purpose. In the event Developer has not paid the full amount of the
Parking Fee, and Developer has defaulted with regard to completion of the Hotel,
and City elects to acquire the Property pursuant to either "Repurchase Option A" or
"Repurchase Option B" in accordance with Section 19 of the PSA, then the purchase
price shall be reduced by the amount of the Parking Fee owing to the City.
33
City Council Staff Report
October 18, 2017--Page 13
Dream Hotel Project
K. Allow City, at City's cost, to remove all electric vehicle charging equipment, light
poles, and palm trees located on the Property;
L. Require Developer to provide City with ten (10) days' notice before commencing
demolition of the existing parking lot;
M. Require that the Hotel be at least a Four Star Hotel operated by Dream Hotel Group;
and
Developer has submitted its request for a demolition permit and believes it can begin as
early as November 2017. With plans and specifications for the garage and foundation
projected for submittal this year, construction for this component of the Project may
begin by January 2018, saving months that otherwise would have ensued prior to the
vertical core and shell plans and specifications being completed for submittal.
Developer has informed staff the anticipated opening date of the Hotel is early 2020.
The proposed Amendment No. 8 does not affect, modify or delete the existing
"Repurchase Option B" incorporated into the PSA via Amendment No. 4. This option
allows for the City to declare the Developer in default for failure to complete construction
of the Hotel by the revised performance date, which is now recommended in two
phased time frames: (1) completion of underground parking garage/foundation and
commencement of vertical "core and shell" by December 31, 2017; or (2), completion of
the Hotel by June 30, 2020. As was stipulated in this term approved by Council on
November 4, 2015, the purchase price payable by the City to Developer pursuant to
"Repurchase Option B" includes the Purchase Price paid by Developer, plus any cash
payments previously paid for development of the Property since October 1, 2013,
financed costs associated with design and entitlements, amounts financed inclusive of
all "hard" and "soft" costs related to the Property and the improvements constructed
thereon. To the extent the Developer proceeds with construction of the underground
parking garage/foundation and/or the vertical "core and shell" of the Hotel, the
repurchase price will be significantly higher than under the "Repurchase Option A"
scenario.
Parking Fee— SCIP Financing
The Developer intends to finance the Parking Fee pursuant to a SCIP Community
Facilities District ("CFD") to be imposed on the Property. SCIP is a financial tool to
provide financing for public improvements through bonds available through the
California Statewide Community Development Authority, to finance public infrastructure
projects. SCIP allows property owners in participating cities and counties to finance
development impact fees and public capital improvements costs. Thus, to the extent
the City utilizes some or all of the Parking Fee towards the cost of public improvements,
the Developer may be reimbursed through the SCIP bond proceeds for its payment of
the Parking Fee. Developer and other property owners within the project (i.e. individual
owners of the condominium units) would be assessed a special tax for the SCIP CFD
added to the property tax bill. The SCIP bond repayment tied to property tax payments
allows for lower cost, and longer term financing, replacing the Developer's requirement
34
City Council Staff Report
October 18, 2017—Page 14
Dream Hotel Project
for upfront capital for payment of the Parking Fee that carries more expensive financing
than the lower-cost, long-term SCIP bond financing debt.
As outlined above, Developer requests that the SA be amended to allow for deferral of
the Parking Fee payment to the City. In order to secure the City's payment, staff is
recommending that the SA amendment include an obligation of the Developer to
provide a Commitment Letter from its lender acknowledging the City's Parking Fee is a
part of the Developer's approved funding, including annualized interest on the deferred
payment(at a minimum rate in accordance with LAIF or 2% maximum), with the Parking
Fee to be held and preserved in trust by the lender for the City, for use by the City, at
the City's sole discretion, in whole or part, for either (1) replacement parking or other
eligible SCIP financed public improvements, or (2) any other governmental purpose
ineligible for SCIP financing. To the extent the Developer has not commenced with
construction of the vertical "core and shell" of the Hotel by December 31, 2018, the
Parking Fee will become due and payable to the City.
This modification avoids any impact this payment would otherwise have on Developer's
financing through its lender. Since the Developer's lender will hold the Parking Fee until
the City requires it for replacement of public parking, the deferral delays the start of the
three (3) year limitation within which public improvements financed through SCIP must
be spent on the related public improvements, providing the City with greater flexibility in
the timing of physical construction of the replacement parking and/or other public
improvements the City chooses to construct with the payment.
ENVIRONMENTAL DETERMINATION:
On July 18, 2007, the City Council adopted Mitigated Negative Declaration (MND) No.
2006109032 for the Project; City Council adopted an Addendum to the MND on
November 20, 2013. In accordance with California Environmental Quality Act (CEQA)
Guidelines Section 15162, the City prepared a Subsequent Initial Study / Mitigated
Negative Declaration (IS/MND) for the amended project to identify whether or not any
significant environmental impacts may result from the proposed amended project.
Specifically, the Subsequent IS/MND evaluated the following environmental factors:
aesthetics, agricultural resources, air quality, biological resources, cultural resources,
geology and soils, greenhouse gas emission, hazards and hazardous materials,
hydrology and water quality, land use and planning, mineral resources, noise,
population and housing, public services, recreation, transportation/traffic, tribal cultural
resources, and utilities and service systems.
The Subsequent IS/MND determined that the amended project would not result in any
significant environmental impacts that could not be mitigated. Mitigation measures were
incorporated to ensure that the amended project would have a less than significant
impact on the environment. Pursuant to CEQA Guidelines, a Notice of Intent to adopt a
Subsequent Mitigated Negative Declaration was prepared. The Notice of Intent (NOI)
was circulated for public review and comments. The review and comments period
35
City Council Staff Report
October 18, 2017-- Page 15
Dream Hotel Project
commenced on April 20, 2017, and closed on May 9, 2017. Comments were received
from reviewing agencies and other interested parties; responses to the comments were
completed.
On June 7, 2017, the City Council adopted Resolution No. 24236, adopting the
Subsequent IS/MND for the amended project. No further environmental review pursuant
to CEQA is required.
FISCAL IMPACT:
The proposed amendments to the PSA and SA do not affect the Purchase Price the
Developer paid to the City for acquisition of the Property; however, the amendments do
provide for deferral of the Developer's payment of the Parking Fee in the amount of
$2,675,000 that would otherwise be paid upon issuance of the first building permit. In
return for deferral of the Parking Fee payment, Developer has agreed to pay to City
accrued interest (pursuant to LAIF or 2% maximum), until such time as the City has
received full payment of the Parking Fee.
Staff has approximated the net positive economic impact ranging from $500,000 to
$700,000 annually accruing to the City as a result of development of the Hotel. A similar
net positive economic impact will accrue to the other taxing entities (i.e. Palm Springs
Unified School District, Coachella Valley Community College District, Riverside County,
etc.).
i
36
City Council Staff Report
October 18, 2017--Page 16
Dream Hotel Project
SUBMITTED:
Marcus Fuller, MPA, P.E., P.L.S. Edward Kotkin,
Assistant City Manager City Attorney
David H. Ready, Esq., Ph. Jay Vi to
City Manager Direct r, COMmunity& Economic
Develooffent
37
ATTACHMENT 2
38
���P pLM sA4
.y
c
V N
'• o,a..,o..= CITY COUNCIL STAFF REPORT
c'4L rFORItOP
i
i
DATE: December 17, 2014 PUBLIC HEARING
SUBJECT: CONDUCT A PUBLIC HEARING UNDER SECTION 53083 OF THE
CALIFORNIA GOVERNMENT CODE TO APPROVE TWO HOTEL
OPERATIONS COVENANT WITH PALM SPRINGS PROMENADE, LLC
FOR THE CONSTRUCTION OF A 135 ROOM MARRIOTT AC HOTEL
AT THE SOUTHWEST CORNER OF "NEW MAIN STREET" AND
BELARDO ROAD AND EQUI-CAP, LLC FOR THE CONSTRUCTION OF
THE 205-ROOM SELENE PALM SPRINGS RESORT AT THE
NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD,
PURSUANT TO THE CITY'S HOTEL OPERATIONS INCENTIVE
PROGRAM
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
As a condition of receiving the benefits of the City's Hotel Operations Incentive
Program, an operator is required to execute and record an Operations Covenant on the
property to ensure that the hotel will be operated and maintained continuously as a
hotel consistent with the Hotels Operations Incentive Program. This action is to approve
two such agreements in accordance with Chapter 5.26 of the Palm Springs Municipal
Code.
RECOMMENDATION:
1. Open the public hearing and receive public testimony;
2. Approve a Hotel Operations Covenant Agreement with Palm Springs
Promenade, LLC for a 135-room Marriott AC Hotel located at the southwest
corner of "New Main Street" and Belardo Road, in the Downtown Revitalization
Project;
3. Approve a Hotel Operations Covenant Agreement with Equi-Cap, LLC for the
205-room Selene Palm Springs Resort located at the northeast corner of Calle
Alvarado and Amado Road;
4. Authorize the City Manager to execute all documents to effectuate the two
Covenants.
ITEM NO. �c
39
City Council Staff Report
December 17, 2014--Page 2
Hotel Operations Covenant-Marriott AC and Selene Palm Springs
STAFF ANALYSIS:
These two hotel projects are eligible to participate in the City's Hotel Incentive Program,
adopted in early 2008 to facilitate the development of new hotels and the refurbishment
of existing hotels in the City.
Hotel Incentive Program
The City of Palm Springs has been on a remarkable upswing in the last seven or eight
years, with renewed worldwide media attention, and the widespread sense of how much
improved everything is - neighborhoods, downtown, uptown, hotels, everything.
Leading the way in the City's resurgence is its hotel stock. Its resurgence can be traced
to the City Council's actions to create the Hotel Incentive Program.
In 2005 and 2006, the City had just spent $45 million to renovate and expand the
Convention Center, which is the local economy's key to being a "seven day a week"
economy. The response from planners was very positive, but they didn't have the same
reaction to the local hotel stock. All of the City's major hotels were severely outdated.
The Riviera had just closed. The City hadn't seen a new luxury hotel built in over 25
years, and its own economic study said that 1,000 new hotel rooms were needed near
the Convention Center to make it more competitive with similar-sized venues in the
West.
In 2008, the City Council adopted the Hotel Incentive Program, primarily to help "close
the gap" in financing new hotels in the City. What's true nationally is stark in seasonal
markets like Palm Springs: it costs more to build a hotel than it is worth. Every hotel
developer in the country looks for outside sources of funding to get a hotel built. Often
hotels include a time share component or a major condominium development, with the
hope that the profit from these ancillary uses can be monetized in the development
capital for the hotel.
One approach available to the City was simple. The City adopted Chapter 5.26 of the
Municipal Code in December, 2007 (Ordinance 1730, effective January 2008) to provide
an incentive program for the operation and maintenance of quality and first class hotel
facilities which enhance the tourist and travel experience for visitors to the city of Palm
Springs, maximize the use of the city's convention center, provide attractive and
desirable visitor serving facilities and experiences, and assist the city in achieving its
tourism goals. In it, the City agreed to rebate a portion of the transient occupancy tax
(TOT) to a developer of a new hotel for a period of time, as additional cash flow to the
project. Both sides hoped that the stream of additional revenue could help fill the
financing gap for new hotel projects.
However, knowing that the existing hotel stock needed an infusion of investment, the
City also extended the Program to existing hotels - even small hotels. These
renovations helped the City transform into an exciting new destination. The first hotel
assisted in this effort was the Wyndham, which through the efforts of its then-new
owners became the Renaissance, a major important upgrade for the City. That was
accomplished with former Redevelopment Agency assistance.
40
City Council Staff Report
December 17, 2014 -- Page 3
Hotel Operations Covenant—Marriott AC and Selene Palm Springs
The renovation aspect of the Incentive Program has been extraordinary successful,
generating in excess of a $250 million investment in the renovation and upgrading of
hotel properties throughout the City. This type of development has had a positive and
significant effect on tourism in the City, with other positive spillover effects, and
continues at a strong pace, even today.
The first Hotel Incentive Program hotel assisted was the Colony Palms, soon followed
by the Riviera, and then the Hyatt, Saguaro, Hilton, and the Hard Rock. In addition,
several small properties participated, including hotels as small as The Bearfoot Inn, at
11 rooms. In fact, several of the newest and most exciting hotel "re-openings" -- the
Sparrows Lodge, the Skylark, and recently The Palm Springs Hotel and the Triada
Resort and Spa -- were made feasible by the Program. The new Arrive Hotel, now
under construction, is in the program, too.
There is no doubt that without the Hotel Incentive Program Palm Springs would not be
as successful as it is today. The program allows the City to not put any up-front money
into a project, and for a share of new or increased revenues from a development
project, incentivize high quality, transformative development that would have been
impossible otherwise. It's a win for the project, and the results so far have shown it's
definitely a win for the citizens.
The first paragraph of Section 5.26.040(a), "First Class New Hotels," was modified in
2011 as follows:
(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 Marriott AC Hotel and the Selene Palm Springs Resort, as proposed by the
Developers and approved by the City, are qualified as First Class New Hotels and
entitled to the provisions of Section 5.26.040(a) of the ordinance.
Consistent with the provisions of the Program, the two Operators now agree to place
restrictions upon the use and operation of the hotels, in order to ensure that the Project
shall be operated and maintained continuously as a hotel available for short-term
rentals.
The two hotel operators also agreed in the Covenants to participate in the Palm Springs
Convention Center's Committable Rooms Program and each provide designated room-
nights per month for official City use. City will share a percentage of Transient
Occupancy Tax Increment with Owner pursuant to the Program guidelines.
The Hotel Operations Covenants as approved by the City fall under Section 53083 and
are approved at Public Hearings,
- 41
City Council Staff Report
December 17. 2014-- Page 4
Hotel Operations Covenant—Marriott AC and Selene Palm Springs
For Palm Springs Promenade, LLC (Marriott AC), the information is as follows:
1. The business entity that is the beneficiary of the economic development subsidy:
Palm Springs Promenade, LLC, 555 South Sunrise Way, Suite 200, Palm
Springs, CA 92264.
2. The start and end dates and schedule, if applicable, for the economic
development subsidy: The Operations Covenant starts on January 1, 2015 and
ends December 31, 2044. However, the "start date" of the Operations Covenant
is the date at which the construction project is deemed fully completed and the
collection of the TOT commences.
3. A description of the economic development subsidy, including the estimated total
amount of the expenditure of public funds by, or of revenue lost to the local
agency as a result of the economic development subsidy: The subsidy is the
rebate of 75% share of Transient Occupancy Tax (TOT) collected annually
calculated as follows: after the start date (estimated 511/16) the subsidy is based
on TOT collections for the year; 75% of the TOT is payable to For Palm Springs
Promenade, LLC.
4. A statement of the public purposes for the economic development subsidy: The
City has confirmed that for Palm Springs Promenade, LLC, operation and
maintenance of the hotel facilities improvements, enhances the tourist and travel
experience for visitors by providing attractive and desirable facilities and assists
the City in achieving its tourism goals.
5. Projected tax revenue to the local agency as a result of the economic
development subsidy: The City keeps 25% of the TOT. Even with a portion of
the increment being shared with the applicant, the City conservatively still
projects an average of $150,000 of City TOT revenue per year over the thirty
year period.
6. Estimated number of jobs created by the economic development subsidy, broken
down by full-time, part-time and temporary positions: The development of the
hotel will create no fewer than 100 positions, and a number of construction jobs
during the construction period.
For Equi-cap, LLC (Selene Palm Springs Resort), the information is as follows:
1. The business entity that is the beneficiary of the economic development subsidy:
Equi-cap, LLC, 550 South Hope Street, Suite 2640, Los Angeles, CA 90071.
2. The start and end dates and schedule, if applicable, for the economic
development subsidy: The Operations Covenant starts on January 1, 2015 and
ends December 31, 2044. However, the "start date" of the Operations Covenant
is the date at which the construction project is deemed fully completed and the
collection of the TOT commences.
42
City Council Staff Report
December 17,2014--Page 5
Hotel Operations Covenant—Marriott AC and Selene Palm Springs
3. A description of the economic development subsidy, including the estimated total
amount of the expenditure of public funds by, or of revenue lost to the local
agency as a result of the economic development subsidy: The subsidy is the
rebate of 75% share of Transient Occupancy Tax (TOT) collected annually
calculated as follows: after the start date (estimated 5/1/16) the subsidy is based
on TOT collections for the year; 75% of the TOT is payable to For Palm Springs
Promenade, LLC.
4. A statement of the public purposes for the economic development subsidy: The
City has confirmed that for Equi-Cap, LLC (Selene Palm Springs), operation and
maintenance of the hotel facilities improvements, enhances the tourist and travel
experience for visitors by providing attractive and desirable facilities and assists
the City in achieving its tourism goals.
5. Projected tax revenue to the local agency as a result of the economic
development subsidy: The City keeps 25% of the TOT. Even with a portion of
the increment being shared with the applicant, the City conservatively still
projects an average of$225,000 of City TOT revenue over the thirty year period.
6. Estimated number of jobs created by the economic development subsidy, broken
down by full-time, part-time and temporary positions: The development of the
hotel will create no fewer than 100 positions, and a number of construction jobs
during the construction period.
FISCAL IMPACT:
The incentive is provided on a reimbursement basis to these Developers. For cash flow
purposes, Finance will segregate the portion of the TOT due to each Developer from the
TOT available as general City revenue, though it is all booked as revenue to the City.
At the Average Daily Rate for its comparable set and at an occupancy rate that is
slightly but not significantly higher than the City average, each of the Developers would
likely receive a TOT reimbursement of $600,000 per year or more over the life of the
subsidy. The remaining revenue to the City is "new" revenue, however, and available
for general City services.
Jo Ray and rector David H. Ready, C' r
Attachments: Hotel Operations Covenant:
43
i
NOTICE OF PUBLIC HEARING
CITY COUNCIL
CITY OF PALM SPRINGS
HOTEL OPERATIONS COVENANT AGREEMENT
APPROVAL OF ECONOMIC DEVELOPMENT SUBSIDY
SELENE PALM SPRINGS HOTEL (DOLCE HOTEL)
NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs, California, will
hold a public hearing at its meeting of December 17, 2014. The City Council meeting begins at
6:00 p.m., in the Council Chamber at City Hall, 3200 E. Tahquitz Canyon Way, Palm Springs.
The purpose of this hearing is to consider approving a Hotel Operations Covenant Agreement
in accordance with Chapter 5.26 of the Palm Springs Municipal Code to provide a Hotel
Operations Incentive Program for the Selene Palm Springs Hotel (Dolce Hotel) for the
operation and maintenance of hotel facilities that enhance the tourist and travel experience for
visitors to the City, maximize the use of the City's Convention Center, provide attractive and
desirable visitor facilities and experiences, and assist the City in achieving its tourism goals.
The hotel is located at the northeast corner of Amado Road and Calle Alvarado.
REVIEW OF INFORMATION: The staff report and other supporting documents regarding this
matter are available for public review at City Hall between the hours of 8:00 a.m, and
6:00 p.m., Monday through Thursday. Please contact the Office of the City Clerk at
(760) 323-8204 if you would like to schedule an appointment to review these documents.
COMMENTS: At the hearing any person may present oral or written testimony. The City
Council will consider all objections or protests, if any, to the Agreement. Response to this
notice can be made verbally at the Public Hearing and/or in writing before the hearing. Written
comments may be made to the City Council by letter (for mail or hand delivery) to:
James Thompson, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Any challenge of the proposed in court may be limited to raising only those issues raised at the
public hearing described in this notice, or in written correspondence delivered to the City Clerk
at, or prior, to the public hearing. (Government Code Section 65009(b)(2)).
An opportunity will be given at said hearing for all interested persons to be heard. Questions
regarding this case may be directed to John Raymond at (760) 323-8228.
Si necesita ayuda con esta carta, porfavor Ilame a la Ciudad de Palm Springs y puede hablar
con Felipe Primera telefono (760) 323-8253.
es Thompson, City Clerk
44
CITY OF PALM SPRINGS
PUBLIC HEARING NOTIFICATION
- e
Date: December 17, 2014
Subject: HOTEL OPERATIONS COVENANT AGREEMENT
SELENE PALM SPRINGS HOTEL (Dolce Hotel)
AFFIDAVIT OF PUBLICATION
I, Kathie Hart, MMC, Chief Deputy City Clerk, of the City of Palm Springs, California, do
hereby certify that a copy of the attached Notice of Public Hearing was published in the
Desert Sun on December 6, 2014.
I declare under penalty of perjury that the foregoing is true and correct.
�bs" SJ
Kathie Hart, MMC
Chief Deputy City Clerk
AFFIDAVIT OF POSTING
I, Kathie Hart, MMC, Chief Deputy City Clerk, of the City of Palm Springs, California, do
hereby certify that a copy of the attached Notice of Public Hearing was posted at City Hall,
3200 E. Tahquitz Canyon Drive, on the exterior legal notice posting board, and in the Office
of the City Clerk on December 4, 2014.
1 declare under penalty of perjury that the foregoing is true and correct.
V"rLo
Kathie Hart, MMC
Chief Deputy City Clerk
45
ATTACHMENT 3
46
DOC # 2015-0090568
03/06/2015 10:32A Fee:NC
Page 1 of 15
Recorded in Official Records
FREE RECORDING REQUESTED BY County of Riverside
Peter Aldana
AND WHEN RECORDED MAII,TO: Assessor, County Clerk & Recorder
THE CITY OF PALM SPRINGS 'IIIIII�III�II IIIII!�I IIIIII Ili IIIIIIII III IIII IIII IIII
3200 E. Tahquitz Canyon Way
Palm Springs,CA 92262 S R I U PAGE1 SIZE I DA I MISC. LONG RFD COPY
Attention: City Clerk ,)
M A L 465 426 POOR SMF CHG Qexn
NCOR C
C T: CTY UNI U�� 810
OPERATIONS COVENANT A6642
THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND
RESTRICTIONS ("Agreement" or "Covenant") is made and entered into this 17th day of
December, 2014, by and between t�CITY OF PALM SPRINGS, a municipal corporation and
charter city ("City"), and Equi-Cap, LLC, a California limited liability company ("Owner" or
"Participant").
RECITALS :
A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in
December, 2007 to provide a Hotel Operations Incentive Program ("Program") for the operation,
maintenance and expansion of the inventory of quality and first class hotels within the City that
enhance the tourist and travel experience for visitors to the City, maximize the use of the City's
Convention Center, provide attractive and desirable visitor serving facilities and experiences, and
assist the City in achieving its tourism goals. (Chapter 5.26 of the Municipal Code is
incorporated herein by reference and defined terms therein shall, unless otherwise indicated,
have the same meanings herein.)
B. Owner holds fee title to certain real property ("Site"), which is generally located
at the northeast corner of Calle Alvarado and Amado Road as depicted on the Site Plan attached
hereto as Exhibit "B", and legally described on Exhibit "A". The Site, which is located in the
downtown area of the City of Palm Springs, California, is fully entitled for development of a first
class new hotel to contain approximately 205 hotel rooms ("Hotel" or "Project"). Owner has
applied for the Program and has provided satisfactory documentation confirming that the Selene
Palm Springs Resort, as entitled and approved and when completed and under operation, will
qualify as a new first class hotel and be entitled to benefits thereof under and pursuant to
provisions of Chapter 5.26 of the Municipal Code and this Agreement.
C. City and Owner now desire to place restrictions upon the use and operation of the
Project, in order to ensure that the Project shall be operated continuously as a hotel available for
short-term rental for the term of this Agreement.
D. City and Owner also agree that in return for participation in the Program, Owner
shall agree to operate the Project as a hotel; participate in the Palm Springs Convention Center's
Committable Rooms Program; and provide City with a minimum of eight (8) room-nights per
DCHRevise
d11.13201 °T
4
month for official City use; and, City agrees to share a percentage of Transient Occupancy Tax
Increment with Owner pursuant to the Program guidelines.
E. The City finds that no further environmental review is required in connection with
the approval of this Covenant in that in connection with City approval of entitlements related to
the project, approved a mitigated negative declaration on November 20, 2013 and the City finds
that this mitigated negative declaration is the controlling environmental document for this project
and neither a subsequent EIR, supplemental EIR, or EIR Addendum is necessary.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Participant hereby conveys to the City the Operating
Covenants described herein and City hereby agrees to provide Participant with funds as provided
under the Program and as set forth hereinafter.
ARTICLE l
STATEMENT OF OPERATING COVENANTS
1.1. OPERATION AND USE COVENANT. Upon occupancy, Owner covenants to
operate, maintain, and use the Selene Palm Springs Resort in accordance with this Agreement.
All uses conducted on the Site, including, without limitation, all activities undertaken by the
Owner pursuant to this Agreement shall, in all material respects, conform to requirements of this
Agreement and Palm Springs Municipal Code.
1.2. HOTEL USE. The Owner hereby agrees that the Project is to be owned,
managed, and operated as a hotel in a first-class manner, and the Project's participation in the «,
Program shall continue in accordance with the terms of the Program, for a term equal to thirty T
years commencing upon the date Owner first receives from the City the Owner's share of
transient occupancy tax revenues pursuant to the Program, or until Owner has received from the
City the total sum of fifty million dollars if that occurs prior to the expiration of said thirty years,
unless Owner's participation in the Program is terminated prior thereto in accordance with this
Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a) and
Sections 7.9, 7.11, and 7.16 of this Covenant, during the Term, City shall pay to Owner, within
thirty days after receipt from Owner of each monthly payment made by Owner to the tax
administrator per Section 3.24.080 of the Municipal Code, an amount equal to seventy-five
percent of each such payment. City acknowledges and agrees that City has reviewed proposed
development and operational plans for the Hotel and concluded that such plans are in substantial
compliance with and will satisfy first class Hotel requirements of the City and Chapter 5.26 of
the Municipal Code.
1. Housing Uses Prohibited. None of the rooms in the Project will at any
time be utilized as a non-transient residential property including dormitory, fraternity or
sorority house,rooming house,nursing home,hospital, sanitarium, or trailer court or park
without the City's prior consent which consent may be given or withheld in its sole and
absolute discretion.
48
•Z• FOR NOI EL p INCENTIVE PROGRAAM
2. Conversion of Project. No part of the Project will at any time be owned
by a cooperative housing corporation, nor shall the Owner take any steps in connection
with the conversion to such ownership or uses to condominiums, or to any other form of
ownership, without the prior written approval of the City Council which approval may be
given or withheld in its sole and absolute discretion.
ARTICLE 2
WARRANTIES AND COVENANTS
2.1. WARRANTIES AND COVENANTS. For the Term of this Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
I. Owner has completed the City's application for the Hotel Operations
Incentive Program. Since the Hotel will be a new hotel, City has determined the
Transient Occupancy Tax Base to be used to calculate the Transient Occupancy Tax
Increment shall be zero, and the Owner accepts such Transient Occupancy Tax Base.
2. Owner hereby agrees to subscribe to the Palm Springs Convention
s
Center's Committable Rooms Program or any similar successor program as identified by u;
the City Manager without being obligated to incur any additional costs or expenses.
Si P:
3. Upon City's prior request, Owner shall provide the City at no cost eight(8) ;LL"
rooms for one 1 night or 4 rooms for 2 nights) other than Friday or Saturday nights
( ) g ( � ) Y Y gh �
each month for use for City purposes as approved or designated by the City Manager,
provided that such use by the City shall be subject to the rooms being available at the
time of the City's request. Such accommodations shall include all services and amenities
for which the Owner would normally collect transient occupancy taxes but H211 not
include services and amenities that are optional to the transient and for which the
transient is not required to pay a transient occupancy taxes. City shall be responsible for
any transient occupancy taxes for any occupancy provided to City under the provisions of 1
this paragraph. Notwithstanding anything in this Agreement to the contrary, if the City
does not use rooms during any month, then its right to use rooms with respect to that
month shall expire at the end of that month and shall not accrue; provided, however, if
the City was unable to use rooms solely because Owner's Hotel had no rooms available
when the City requested a room in accordance with this Section 2.1.3, then, the City's
right to use rooms shall not expire and may be used by the City in a subsequent month.
ARTICLE 3
MAINTENANCE
3.1. MAINTENANCE.
1. Maintenance Obligation. Owner, for itself and its successors and assigns,
hereby covenants and agrees to maintain and repair or cause to be maintained and
repaired the Site and all related on-site improvements and landscaping thereon,including,
without limitation, buildings, parking areas, lighting, signs and walls in a first class
OPERATIONS COVENANT 49
j -3- FOR HOTEL INCFNTIvE PROGRAM
condition and repair, free of rubbish, debris and other hazards to persons using the same,
and in accordance with all applicable laws, rules, ordinances and regulations of all
federal, state, and local bodies and agencies having jurisdiction, at Owner's sole cost and
expense. Such maintenance and repair shall include, but not be limited to,the following:
(i) sweeping and trash removal; (ii)the care and replacement of all shrubbery, plantings,
and other landscaping in a healthy condition; and (iii)the repair, replacement and
restriping of asphalt or concrete paving using the same type of material originally
installed, to the end that such paving at all times be kept in a level and smooth condition.
In addition, Owner shall be required to maintain the Project in such a manner as to avoid
the reasonable determination of a duly authorized official of the City that a public
nuisance has been created by the absence of adequate maintenance such as to be
detrimental to the public health, safety or general welfare or that such a condition of
deterioration or disrepair causes appreciable harm or is materially detrimental to property
or improvements within one thousand (1,000) feet of such portion of the Site. The
foregoing notwithstanding, Owner shall not be obligated to maintain any street or
sidewalk areas,or landscaping therein, which are to be maintained by the City pursuant to
a Project Financing Agreement executed by the City (as amended).
2. Parking and Driveway. The driveways and traffic aisles on the Site shall
be kept clear and unobstructed at all times.
3. Right of Entry. In the event Owner fails to maintain the Site in the above- Q ti
mentioned condition, and satisfactory progress is not made in correcting the condition
within thirty (30) days from the date of written notice from City (such notice shall ;U',�
reasonably identify the required maintenance), City may, at City's option, and without ;
further notice to Owner, declare the unperformed maintenance to constitute a public
nuisance. Thereafter, either City or its employees, contractors, or agents, may cure
Owner's default by entering upon the Site and performing the necessary landscaping
and/or maintenance in accordance with Section 3.1.1 above. The City shall give Owner,
its representative, or the residential manager reasonable notice of the time and manner of
entry,and entry shall only be at such times and in such manner as is reasonably necessary
to carry out this Agreement. Owner shall pay such costs as are reasonably incurred by
City for such maintenance, including attorneys'fees and costs.
4. Lien. If any costs incurred by City under Section 3 above are not
reimbursed within thirty (30) days after Owners receipt of City's written request for
reimbursement, the same shall be deemed delinquent, and the amount thereof shall bear
interest thereafter at a rate of the lower of ten percent (10%) per annum or the legal
maximum until paid. Any and all delinquent amounts, together with said interest, costs
and reasonable attorney's fees, shall be an obligation of Owner as well as a lien and
charge, with power of sale, upon the property interests of Owner, and the rents, issues
and profits of such property. City may bring an action at law against Owner obligated to
pay any such sums or foreclose the lien against Owner's property interests. Any such lien
may be enforced by sale by the City following recordation of a Notice of Default of Sale
given in the manner and time required by law as in the case of a deed of trust; such sale to
be conducted in accordance with the provisions of Section 2924, et seq., of the California
OPERATIONS COVENANT 50
j 4- FOR HOTEL INCENTIVE PROGRAM
Civil Code, applicable to the exercise of powers of sale in mortgages and deeds of trust,
or in any other manner permitted by law.
Any monetary lien provided for herein shall be subordinate to any bona fide
mortgage or deed of trust covering an ownership interest or leasehold or subleasehold
estate in and to any portion of the Site, and any purchaser at any foreclosure or trustee's
sale (as well as any deed or assignment in lieu of foreclosure or trustee's sale) under any
such mortgage or deed of trust shall take title free from any such monetary lien, but
otherwise subject to the provisions hereof; provided that,after the foreclosure of any such
mortgage and/or deed of trust, all other assessments provided for herein to the extent they
relate to the expenses incurred subsequent to such foreclosure, assessed hereunder to the
purchaser at the foreclosure sale, as owner of the subject Site after the date of such
foreclosure sale, shall become a lien upon such Site upon recordation of a Notice of
Assessment or Notice of Claim of Lien as herein provided. In the event of any such
foreclosure, City (or successor) agrees to and shall recognize and honor any existing
commercial (non-transient occupancy) leases in effect with respect to portions of the
Project, provided that commercial tenants of such leases agree to subordinate and attorn
to City(or successor)as the new landlord with respect to such leases.
ARTICLE 4
COMPLIANCE WITH LAWS
4.I. COMPLIANCE WITH LAWS. Owner shall comply with all ordinances, s
regulations and standards of the City and City applicable to the Site. Owner shall comply with
all rules and regulations of any assessment district of the City with jurisdiction over the Site.
y WU
=4
ARTICLE 5
F.
m
NONDISCRIMINATION
i
5.1. NONDISCRIMINATION. There shall be no discrimination against or TMO
segregation of any person, or group of persons, on account of race, color, creed,religion, gender, —`
sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the Site, or any part thereof, nor shall Owner, or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of guests or vendees of the Site, or any part thereof.
ARTICLE 6
COVENANTS TO RUN WITH THE LAND
6.1. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Site to
the covenants, reservations, and restrictions set forth in this Agreement. City and Owner hereby
declare their express intent that all such covenants, reservations, and restrictions shall be deemed
covenants running with the land and shall pass to and be binding upon the Owner's successors in
r
OPERATIONS COVFNANT J
j -5- FOR HOTS,rNCFNTIVE PROGRAM
title to the Site; provided, however, that on the termination of this Agreement said covenants,
reservations and restrictions shall expire. All covenants without regard to technical classification
or designation shall be binding for the benefit of the City, and such covenants shall run in favor
of the City for the entire term of this Agreement, without regard to whether the City is or remains
an owner of any land or interest therein to which such covenants relate. Each and every contract,
deed or other instrument hereafter executed covering or conveying the Site or any portion thereof
shall conclusively be held to have been executed, delivered and accepted subject to such
covenants,reservations, and restrictions,regardless of whether such covenants, reservations, and
restrictions are set forth in such contract,deed or other instrument.
City and Owner hereby declare their understanding and intent that the burden of the
covenants set forth herein touch and concern the land in that Owner's legal interest in the Site is
rendered less valuable thereby. City and Owner hereby further declare their understanding and
intent that the benefit of such covenants touch and concern the land by enhancing and increasing
the enjoyment and use of the Project by the intended beneficiaries of such covenants,
reservations, and restrictions, and by furthering the public purposes for which the City was
formed.
Owner, in exchange for the City entering into this Agreement,hereby agrees to hold, sell,
and convey the Site subject to the terms of this Agreement. Owner also grants to the City the
right and power to enforce the terms of this Agreement against the Owner and all persons having
any right, title or interest in the Site or any part thereof while such party owns the Site. No party
shall have any liability or obligation in connection with any breach occurring while such party is
not the owner of the Site.
�.
L}y,
Within fifteen (15) business days after request of Owner, City shall execute and provide a
to Owner an estoppel certificate in the forma roved b the City Attorney of the City, L�u,
PP � PP Y tY Y
confirming whether or not Owner is in breach of any obligations under this Agreement and
identifying any required cure.
i_
ARTICLE 7
INDEMNIFICATION
7.1. INDEMNIFICATION. Owner agrees for itself and its successors and assigns to
indemnify, defend, and hold harmless City and its respective officers, members, officials, '—
employees, agents, volunteers, and representatives from and against any loss, liability, claim, or
judgment to or by any third party relating to development and/or operation of the Project by
Owner, excepting only any such loss, liability, claim, or judgment arising solely out of the
intentional wrongdoing or gross negligence of City or its respective officers, officials,
employees, members, agents, volunteers, or representatives. Owner, while in possession of the •'+
Site, and each successor or assign of Owner while in possession of the Site, shall remain fully
obligatedfor the payment of property taxes and assessments in connection with the Site. The
foregoing indemnification, defense, and hold harmless agreement shall only be applicable to and
binding upon the party then owning the Site or applicable portion thereof.
OPERATIONS UOVENANT' 52
j -6- FOR HOTEL INCENTIVE PROGRAM
7.2. ATTORNEYS'FEES. In the event that a party to this Agreement brings an action
against the other party hereto by reason of the breach of any condition, covenant, representation
or warranty in this Agreement, or otherwise arising out of this Agreement, the prevailing party in
such action shall be entitled to recover from the other reasonable expert witness fees, and its
reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal,
and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for
investigating such action, including the conducting of discovery.
7.3. AMENDMENTS. This Agreement shall be amended only by a written
instrument executed by the parties hereto or their successors in title, and duly recorded in the real
property records of the County of Riverside.
i
7.4. NOTICE. Any notice required to be given hereunder shall be made in writing and
shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt
requested, at the addresses specified below, or at such other addresses as may be specified in
writing by the parties hereto:
City: City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: City Manager
S
Copy to: Woodruff, Spradlin& Smart, LLP '
555 Anton Boulevard, Suite 1200
N r.
Costa Mesa,CA 92626 T
Attn: Douglas C. Holland,Esq.
Owner: Equi-Cap, LLC
9190 W. Olympic,#412
Beverly Hills, CA 90212
Telephone. 310.877.3110 =
Attn: Lauri Kibby
The notice shall be deemed given three (3) business days after the date of mailing, or, if
personally delivered,when received.
7.5. SEVERABILITY/WAIVERIINTEGRATION
1. Severability. If any provision of this Agreement or portion thereof, or the
application to any person or circumstances, shall to any extent be held invalid,
inoperative, or unenforceable, the remainder of the provisions, or the application of such
provision or portion thereof to any other persons or circumstances, shall not be affected
thereby; provided, that if any material terms or provisions of these Operating Covenants
are rendered invalid, void and/or unenforceable, or due to changes in the law such terms
or provisions would materially alter the terms of the transactions contemplated herein,the
parties agree to meet and negotiate in good faith to attempt to reform these Operating
Covenants to accomplish the intent of the parties.
OPERATIONS COVENANT 5
j -7- FOR HOTEL INCEN7"IVE PROORAM
2. Waiver. A waiver by either party of the performance of any covenant or
condition herein shall not invalidate this Agreement nor shall it be considered a waiver of
any other covenants or conditions, nor shall the delay or forbearance by either party in
exercising any remedy or right be considered a waiver of, or an estoppel against, the later
exercise of such remedy or right.
3. Inte rag tion. This Agreement contains the entire Agreement between the
parties and neither party relies on any warranty or representation not contained in this
Agreement.
4. Third Parties. No third party beneficiaries are intended, and the only
parties who are entitled to enforce the provisions of these Operating Covenants are the
City,Mortgagees, Participant and their respective successors and assigns.
7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of California and is subject to the provisions of Government Code Section 53083.
7.7. COUNTERPARTS- This Agreement may be executed in any number of
counterparts, each of which shall constitute one original and all of which shall be one and the
same instrument.
7.8. TERMINATION. This Agreement may be terminated only (i) by and upon
expiration of the Term, (ii) by mutual written agreement of the parties, and(iii) by and pursuant
to the provisions of Section 7.9 or 7.10 below. In the event of any such termination, Owner (or
its successor, as applicable) shall not be obligated to return any amounts previously paid to it by m m
the City pursuant to the Program. ,
7.9 DEFAULT BY OWNER. If at any time during the Term, City contends that
Owner has committed a material default with respect this Agreement, e.g., by failing to operate
the Hotel as a first class hotel, City shall deliver to Owner written notice of default which C
specifies in detail all facts alleged by City to constitute such default. For a period of thirty days
thereafter, Owner will have the right to commence and complete cure of the alleged default;
provided, however, if the alleged default is of such a nature as to reasonably require more than
sixty days to cure, and the Parties so agree, Owner will have such addition time as is reasonably
necessary to complete such cure. Subject to Section 7.11 below, if Owner fails to timely cure
such default, City shall then have the right to terminate this Agreement. (To the extent of any
inconsistency between the provisions of this Section 7.9 and the provisions of Section 3.1 above,
the provisions of this Section 7.9 shall prevail.)
7.10 DEFAULT BY CITY. If at any time during the Term, Owner contends that City
has committed a material default with respect this Agreement,Owner may deliver to City written
notice of default which specifies in detail all facts alleged by Owner to constitute such default. C
For a period of thirty days thereafter, City will have the right to commence and complete cure of
the alleged default; provided, however, if the alleged default is of such a nature as to reasonably
require more than sixty days to cure, and the Parties so agree, City will have such addition time
as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if City fails to
timely cure such default, Owner shall then have the right to terminate this Agreement or exercise
OPERATIONS COVENANT 54
j -8- FOR HOTEL INCENTIVE PROGRAM
any and all other rights and remedies available at law and in equity, and each of such rights and
remedies shall be cumulative and not exclusive.
7.11 MORTGAGE PROVISONS. Anything in this Agreement to the contrary
notwithstanding, with respect to any recorded mortgage or deed of trust given in good faith and
for value and encumbering the Hotel ("Mortgage'), any holder thereof that has delivered to City
a copy of such recorded Mortgage and current contact information ("Mortgagee")will be entitled
rights and benefits in accordance with the following:
I. City acknowledges and agrees that the rights and obligations of Owner
under this Agreement may, with or without approval by City, be conditionally assigned by
Owner to any Mortgagee as security for performance of Mortgage obligations.
2. While any Mortgage remains in effect, City will not amend or modify this
Agreement in any material respect without receiving prior written approval from Mortgagee,
which approval may not be unreasonably withheld, delayed or conditioned; provided, however,
failure by Mortgagee to provide written approval or disapproval (and if disapproval the reasons
therefor) within thirty days of delivery of request therefor shall be deemed to constitute approval
by Mortgagee.
3. While any Mortgage remains in effect, in the event City delivers to Owner
of any notice of default as referenced in either Section 3.1 or 7.9 above, City shall concurrently -,M
deliver a copy thereof to Mortgagee. T; "
a V•�
4. Delivery of any such notice of default notwithstanding, City will not
terminate or initiate or pursue any action to terminate this Agreement as long as Mortgagee
diligently (i) declares a default by Owner under the Mortgage, (ii) pursues foreclosure and/or
other appropriate actions under the Mortgage, (iii) pays to City all amounts that would otherwise
have been payable by Owner to City, and(iv)cures non-monetary defaults.
7.12 Operator Provisions. City acknowledges and agrees that operational obligations
of Owner may, with or without consent of City, be assigned by Owner to any entity owned or
wholly controlled by Owner or its Members or Hotel Operator of Owner's choice, and, in
connection therewith, such Hotel Operator may assume all or part of Owner's Hotel operation
obligations under this Agreement; provided, however, Owner shall retain ultimate responsibility
for such Hotel operation obligations. City agrees that while any Hotel Operator agreement is in
effect, and provided that City has been put on notice of such agreement and received contact
information for such Operator, in the event City delivers to Owner of any notice of default as
referenced in either Section 3.1 or 7.9 above, City shall concurrently deliver a copy thereof to the
Operator.
7.13 RESERVED.
7.14 Cooperation. Each party agrees to and shall do and perform such other and
further acts and properly execute and deliver such other and further documents as may be
OPERATIONS COVLNANT 55
j '9' FOR 110"I'EL INCENTIVE PROURAM
reasonably necessary, expedient or convenient to implement and/or effectuate the intents and
purposes hereof. City and Owner agree tp cooperate with each other and/or with any Mortgagee
or proposed Mortgagee, in a manner consistent with concepts and principles of good faith, fair
dealing and commercial reasonableness, with respect to consideration, implementation and
execution of any modification(s) to this Agreement reasonably requested by the City, Owner,
Mortgagee or proposed Mortgagee.
7.15 Reasonable Approvals. Whenever this Agreement requires or calls for the
approval or consent of any party hereto, such approval shall not be unreasonably withheld,
delayed or conditioned.
7.16 Binding Arbitration. In the event of any dispute or controversy arising out of or
relating to this Agreement, or the breach or performance of it, the parties shall reasonably
attempt to resolve such dispute or controversy without resort to third party review or resolution.
The parties shall first meet and confer on any such dispute or controversy. Such meeting(s) shall
include any principal of the Owner and, at the discretion of the City, may include the City
Manager and/or the City Council, either as a whole or through an ad hoc subcommittee
designated by the City Council. Upon a determination by the parties that they are or will be
unable to resolve the dispute or controversy on their own, then the parties shall submit the
dispute, controversy or any remaining unresolved matter to binding arbitration, to be held in the
Coachella Valley, and be conducted pursuant to the Commercial Arbitration Rules of the N
American Arbitration Association.
7.17 Incorporation of Recitals and Exhibits. Each of the recitals set forth above and UL_:
each of the exhibits attached hereto are agreed to and made part of this Agreement.
7.18 Authority. Each party represents and warrants to the other that such party has full
right, power and authority to sign, execute and enter into this Agreement.
IN WITNESS WHEREOF, the City and Owner have executed this Operations Covenant
by duly authorized representatives on the date first written hereinabove.
"CITY" _
TIIE CITY OF PALM SPRINGS,
a municipal corporation and charter city
Bv:
David H. Ready
City Manager
ATTEST:
APPROVED BY 011'IYCOUNCIL
ity Clerk James Thompson
1
1 O- FOR HOTEL INCENTIVE PROGRAM 56
ACKNOWLEDGMENT OF INSTRUMENT
(Cal. Civil Code Section 1181)
State of California )
County of Riverside ) ss.
City of Palm Springs )
On March 3, 2015, before me, JAMES THOMPSON, CITY CLERK, CITY OF
PALM SPRINGS, CALIFORNIA, personally appeared DAVID H. READY, who I
personally know is the CITY MANAGER of the CITY OF PALM SPRINGS whose name
is subscribed to the within instrument and acknowledged to me that he executed the
same in his official and authorized capacity on behalf of the City of Palm Springs, a
California Charter City.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
Witness my hand and the official seal of the City of Palm Springs, California, this
3rd day of March, 2015.
pALM SA*
iy
1
V fft
x x
Signature: c4�lFO�`�,P
MES THOMPSON, CITY CLERK
City of Palm Springs, California
Title or Type of Document
Operations Covenant— Equi-Cap LLC
A6642
IIIIIII IIIIIII IIIII lII IIIIII III IlIII111111 INIII Ill 111I e3��',°�EQ�iFs.F 57
APPROVED AS TO FORM:
WOODRUFF, SP LIN& SMART
By:
Do glas V.4folland,Esq.
City Alt rney
"OWNER"
y:
Name: Lauri Ki for CD Ventures,
LLC
Title: Managing Member
[END OF SIGNATURES]
INI111 HIM 111111IffIN1111111111101111111II11 H 'f°'t-1 of I,
OPERATIONS COVENANT 58
FOR HOTEL INCENTIVE PROGRAM
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE§1189
A notary public or other officer completing this certificate verifies Orly the identity of the individual who signed the
document to which this certificate is attached,and not the truthfulness,accuracy,or validity of that document.
State of Califomia
County of P11�I eA s;d e- )n/'� � {{�� A` �}
On FebVOQXt A 0kaN0t5 beforeme, I�CLC (I0)13VfV11 . IVOMx41u
Date (� t Here Insert Name and Title of the Officer
personally appeared LpA)x
Names of Si ne s
who proved to me on the basis of satisfactory evidence to be the person(e) whose name(e) is/are
subscribed to the within instrument and acknowledged to me that he/she/#hey executed the same in
his/her/their authorized capacity(ies),and that by hia/herAheir signatures)on the instrument the person(e),
or the entity upon behalf of which the persona acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws
cf the State of California that the foregoing paragraph
ja7_ CARRIE ROWNEY s true and correct.
C_WM*4IN s 2072407 WITNESS my hand and official seal.
Lem No wy Putive-Calwornia
RNvaralda County
COWAL Jrrii► 18r Signature
i nature of Not lc
Place Notary Seal Above
OPTIONAL
Though this section is optional,completing this information can deter alteration of the document or
fraudulent reattachment of this form to an unintended document.
Description of Attached Document
Title or Type of Document: Document Date:
Number of Pages: Signers) Other Than Named Above:
Capact4*s)Claimed by Signers)
Signer's Name: Signer's Name:
❑Corporate Officer—Title(s): ❑Corporate Officer — Title(s):
❑Partner — ❑Limited ❑General ❑Partner— ❑ Limited ❑General
❑Individual ❑Attorney in Fact ❑Individual ❑Attorney in Fact
❑Trustee ❑Guardian or Conservator ❑Trustee ❑Guardian or Conservator
171 Other: ❑ Other:
Signer Is Representing: Signer Is Representing:
02014 National Notary Association -www.NationaiNotary.org - 1-800-US NOTARY(1-800-876-6827) Item f15907
I I�IlII I�II�II I�III�I II�I�I I��III�II�I III I�IIII��)I��I as; 59
11 of,'I p
EXHIBIT "A"
SECTION 14. TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO MERIDIAN.
LEGAL DESCRIPTION
BLOCKS 103, 105 AND 106 OF BUREAU OF LAND MANAGEMENT PLAT CA270040S0040E0, DATED 1UNE
27, 1957, IN SECTION 14, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO MERIDIAN, IN THE
CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA,ACCORDING TO THE
OFFICIAL PLAT THEREOF,AND IS MORE PARTICULARLY DESCRIBED AS FALLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 106,
THENCE ALONG THE WESTERLY LINE OF SAID LOTS 105 AND 103, NORTH 00003'35"WEST
645,16 FEET MORE OR LESS TO THE NORTHWEST CORNER OF SAID LOT 103:
THENCE ALONG THE NORTHERLY LINE OF SAID LOT 103, SOUTH 89043740" EAST 354.25 FEET
MORE OR LESS TO THE NORTHEAST CORNER OF SAID LOT 103:
THENCE ALONG THE EASTERLY LINE OF SAID LOT 103, SOUTH 00"05'56" EAST 330.05 FEET
MORE OR LESS TO THE SOUTHEAST CORNER OF SAID LOT 103;
THENCE ALONG THE NORTHERLY LINE OF SAID LOT 105. SOUTH 89049'25" EAST 352.97 FEET
MORE OR LESS TO THE NORTHEAST CORNER OF SAID LOT 105;
THENCE ALONG THE EASTERLY LINE OF SAID LOT 105, SOUTH 00006'10" EAST 315.17 FEET
MORE OR LESS TO THE SOUTHEAST CORNER OF SAID LOT 105;
THENCE ALONG THE SOUTHERLY LINES OF SAID LOTS 105 AND 106, NORTH 89*46'17"WEST
707-68 FEET TO THE POINT OF BEGINNING;
SAID ABOVE DESCRIBED AREA IN METES AND BOUNDS CONTAINS 7,80 ACRES, MORE OR
LESS, AND INCLUDES PORTIONS OF ADJACENT ALLEYS AS VACATED IN DOCUMENT NUMBER
651 FROM THE CITY OF PALM SPRINGS,AND IS SUBJECT TO ALL COVENANTS, RIGHTS,
RIGHTS-OF-WAY,ALLEY WAYS,AND EASEMENTS OF RECORD, INCLUDING AMADO ROAD,
NORTH CALLE ALVARADO,AND NORTH AVENIDA CABALLEROS RIGHTS OF WAY,
THIS DOCUMENT WAS PREPARED BY
ME OR UNDER MY DIRECTION, A
�� 4AND SGRLF
BASED ON RECORD INFORMATION.
No 7070
PHILLIP K. FOMOTOR, P.L S. �9T� ox GALOQ�'S
Page I of I
I NIIII IIIIII�I�III INI II�I�I III IIIII��I III Q
IIIIII III IN n'rF1 14 o;tfi�ar,2
EXHIBIT"B"
SITE PLAN
I � PRELIMINARY SITE PLAN BASE
'i '� q, •r I OOLCE HOTEL
LI I lul�'iy
o � I
i
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77T.7 11
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ill II 1�If l II I��I !I) llllll I I{III 11I�II ;e1c.cran963LH
6
ATTACHMENT 4
G2
Upscale, Full-service Hotels built in California since 2000,with subsidy
Open
Name of Establishment City Date Rooms Subsidy
Crowne Plaza Resort Garden Grove 2000 376 Land & TOT subsidy
Hilton San Diego Gaslamp Quarter San Diego 2000 282 Below-market land sale by City
Portofino Inn &Suites Anaheim 2000 190 City parking subsidy
Westin Palo Alto Palo Alto 2000 184 TOT rebate
Sheraton Hotel Grand Sacramento Sacramento 2001 503 City bond
Embassy Suites Garden Grove 2001 375 land &TOT subsidy
Four Seasons San Francisco San Francisco 2001 277 Residential for-sale
Ritz-Carlton Half Moon Bay Half Moon Bay 2001 261 Residential for-sale
Marriott Suites Anaheim Garden Grove 2002 371 land &TOT subsidy
Marriott San Diego Del Mar San Diego 2002 284 Ballpark subsidies
Embassy Suites Sacramento Riverfronl Sacramento 2002 242 land &TOT subsidy
Sheraton Hotel Sonoma County Petaluma 2002 183 TOT subsidy
Lodge at Torrey Pines La Jolla 2002 175 Ground Lease
Hyatt Vineyard Creek Sonoma County Santa Rosa 2002 155 Land & Conference Center subsidy
Hyatt Regency Huntington Beach Huntington Beacl 2003 517 TOT subsidy
Marriott San Jose San Jose 2003 506 Ground Lease
Preferred Montage Resort& Spa Laguna Beach 2003 262 Residential for-sale
Argonaut Hotel San Francisco 2003 252 Ground Lease
Preferred Hotel Valencia Santana Row San Jose 2003 210 Ground Lease
Omni San Diego Hotel San Diego 2004 511 Ballpark subsidies
Estancia La Jolla Hotel & Spa La Jolla 2004 210 Ground Lease
St Regis San Francisco San Francisco 2005 260 Residential for-sale
Hotel Solamar San Diego 2005 235 Ballpark subsidies
Hotel Vitale San Francisco 2005 199 Ground Lease
Doubletree Suites Anaheim 2006 252 TOT subsidy
Four Seasons East Palo Alto 2006 200 TOT subsidy, ground lease
Hilton Convention Center San Diego 2008 1190 Port rent credits
InterContinental Hotel Monterey 2008 208 TO, property& sales tax subsidy
Citizen Hotel Sacramento 2008 198 TOT rebate
Cavallo Point Lodge Sausalito 2008 142 TOT rebate, ground lease
Montage Beverly Hills Beverly Hills 2008 201 land, TOT subsidy, residential for-sale
JW Marriott &Ritz-Carlton Los Angeles 2010 1001 TOT subsidy, residential for-sale
Ritz-Carlton Highlands Lake Tahoe 2010 173 Residential for-sale
Marriot Courtyard and Residence Inn Los Angeles 2013 392 TOT subsidy
Great Wolf Lodge Garden Grove 2015 603 TOT subsidy, off-site improvements
Hotel Indigo Los Angeles 2017 350 TOT Subsidy
Wilshire Grand InterContinental Los Angeles 2017 900 TOT subsidy, Transferrable FAR
Total Properties: 37 12,830 rooms
Sources: Smith Travel Research,MR&A,BAE, KMA 2017.
G3
ATTACHMENT 5
c4
>
KEYSER MARSTON ASSOCIATES-
ADVISORS IN PL7BLIC/PRIVATE REAL ESTATE DEVELOPMENT
MEMORANDUM
ADVISORS IN: To: David Ready, Ph. D., City Manager
Real Estate
Redevelopment City of Palm Springs
Affordable Housing -
Economic Development
SAN FRANCISCO From: James Rabe, CRE
A.Jerry Keyser
Timothy C.Kelly
Kate Earle Funk cc: Marcus Fuller, Assistant City Manager
Debbie M.Kern Jay Virata, Economic Development Director
Reed T.Kawahara
David Doezema
Los ANGELES Date: November 6, 2017
Kathleen H.Head
James A.Rabe
Gregory D.Soo-Hoo Subject: Review of Key Luxury / Upper Upscale Hotels
Kevin E.Engstrom
Julie L.Ramey
SAN DIEGO
Paul C.Marra At your request, Keyser Marston Associates, Inc. (KMA) has undertaken an additional
analysis of several Luxury or Upper Upscale hotels proposed for development in the City
of Palm Springs (City). This analysis is additive to KMA's previous analysis of the
Promenade Project dated July 18, 2017. That analysis considered the Promenade
development taking place on the former mall site. It included the Kimpton and Virgin
Hotels. There are two other Luxury or Upper/Upscale hotels slated for development in
the downtown area near the Convention Center. The City requested that the projects
containing these hotels also be considered. The Dream Hotel project includes the hotel,
luxury condominiums and upscale retail. The Andaz Hotel is a standalone hotel project.
ANALYSIS
There are two issues to be considered. First, how is the overall Coachella Valley hotel
market performing, and how does the Palm Springs market area fit into the overall
market? Second, will the opening of these hotels take business from other hotels in the
City and thus be a fiscal revenue detriment to the City?
Market Performance
The CBRE hotel consulting group tracks the performance of hotels in California,
including the Coachella Valley. They break the Coachella Valley into two general market
500 SOUTH GRAND AVENUE,SUITE 1480 , LOS ANGELES,CALIFORNIA 90071 : PHONE 213.622.8095
1711002.PS.JAR.emm
WNNV.KEYSERMARSTON.COM 17170.007:001 65
David Ready, Ph.D., City of Palm Springs November 6, 2017
Review of Key Luxury and Upper Upscale Hotels Page 2
areas, Palm Springs (Palm Springs and Cathedral City) and Down Valley Resorts
(Rancho Mirage, Palm Desert, Indian Wells, etc.). Since 2012 and projected into 2018,
the demand for rooms in the Valley has increased at an annual rate of 3.1%, from 2.1
million room nights to over 2.5 million room nights, as shown below. Market occupancy
has increase from 57.0% to 64.6%.
Coachella Valley Palm Springs Palm Springs
Room Nights Room Nights Market Share
2012 2,107,203 652,151 30.95%
2013 2,130,949 667,907 31.34%
2014 2,234,847 699,470 31.30%
2015 2,236,370 663,108 29.65%
2016 2,239,223 717,323 32.03%
2017F 2,453,636 755,039 30.77%
2018F 2,526,251 777,690 30.82%
Source: CBRE Hotels
The Palm Springs area market share has fallen off in part because hotel rooms have
been taken off the market and the opening of the Kimpton Hotel has been delayed. It is
also worth noting that the Palm Springs market area underperforms the rest of the Valley
with respect to overall room rates. For 2017, the CBRE date indicates a $158.26
average daily rate in Palm Springs market area, and a $231.91 average daily rate for the
Down Valley Resorts.
The proposed hotels are significantly different than most other hotels currently in the
market. These are Upper Upscale and Luxury hotels (as those terms are used in the
hotel industry). There is a belief in the hotel industry that the addition of high quality
hotels will improve demand for hotel rooms in an area, particularly if they are near a
Convention Center. Studies by CBRE (Nashville) and Hunden Strategic Partners (Fort
Worth) support this belief, and anecdotally it appears to be supported in downtown Los
Angeles since the opening of the JW Marriott and Ritz Carlton.
In addition, information provided by the Convention Center and the Convention and
Visitors Bureau indicate that that the Convention Center has not been able to secure
certain events due to a lack of high quality hotel rooms within walking distance of the
Convention Center. They have indicated that these hotels would reduce or alleviate that
problem.
1711002.PSAAR,emm (� C
17170.007.001 6 V
David Ready, Ph.D., City of Palm Springs November 6, 2017
Review of Key Luxury and Upper Upscale Hotels Page 3
Finally, development of new hotel rooms has lagged the increased demand for hotel
rooms. While demand for rooms has grown at 3.0% percent per year, hotel room
development has grown at 0.2% per year. The growth in hotel rooms includes the
Kimpton Hotef. Excluding the Kimpton Hotel means that there are fewer hotel rooms in
the Palm Springs market area than there were in 2012.
From a long term demand perspective, it appears that the addition of the new hotels is
unlikely to affect occupancies at the existing hotels over the long term. If there are
dislocations or transfers, it is likely to be among these hotels. There may be some short-
term transfers from local existing hotels which are addressed below.
Public Revenue Projections
KMA has expanded the analysis that it prepared in July 2017 to include the two
additional hotel projects. The Dream Hotel is part of a luxury project that includes 30
condominium units, 169 hotel rooms and hotel villas, and associated retail and food
service space. The Andaz Hotel has 160 hotel rooms, and associated retail and food
service space. Based on information that was provided to KMA, the Dream Hotel is
projected to open in 2020 and the Andaz Hotel in 2022.
As noted above, over the long term, the additional hotel rooms are not expected to draw
traffic away from the existing hotels. If anything, they will compete with each other for
guests. It is appropriate, however, to assume that they will transfer some room nights
from existing hotels in the early years of operation. For purposes of this analysis, KMA
has assumed that 10% of room nights will represent transferred sales in the first two
years of operation and 5% transferred for the next three years.
Three of the hotels (Kimpton, Virgin and Dream) have operating covenant agreements
with the City that provided for a rebate of transient occupancy tax (TOT) revenues.
Under the agreements, the City will rebate 75% of a specified portion of the TOT
collected for a period of 30 years or until the developer receives $50 million.
The attached Summary Table shows the overall property tax, sales tax and net TOT that
the City might receive in 2021, 2027 and over the period 2018 through 2047. The net
TOT revenues are shown for each hotel. Detailed tables are provided in an attachment.
Incremental revenues to the City are projected at $4.5 million in 2021. More than half
($2.9 million) is projected to be sales tax revenues.' The Andaz Hotel has not opened at
this point. The net TOT revenues from the hotels range from $221,000 to $412,000.
' Sales tax revenues include the 1.0% rate that represents local sales tax and the 1.0% rate
authorized by Measure J.
1711002.PS.JAR.emm
17170.007.001. 67
David Ready, Ph.D., City of Palm Springs November 6, 2017
Review of Key Luxury and Upper Upscale Hotels Page 4
In 2027, the incremental revenues increase to $9.8 million. Again, sales tax represents
more than 50% of the increased revenues. Local City property taxes are more than $1.0
million. Net TOT ranges from $440,000 to over $2.0 million for the Andaz Hotel.
Over the period 2018 to 2047, the City could receive nearly $329 million in public
revenues from the projects. Of this amount, more than half is sales tax revenues.
Property tax revenues amount to more than $33 million and net TOT amounts to more
than $169 million. On a net present value basis, discounted at 7.0%, the flow of funds is
worth nearly $116 million.
Attachment
1711002.PS.JAR.emm
17170.007 001 68
SUMMARY TABLE
KEY PUBLIC REVENUES
KEY LUXURY/UPPER UP SCALE HOTELS
PALM SPRINGS, CALIFORINA
Annual Public Revenues-2021
City Property Taxes $646,390
City Sales Tax 2,923,700
Net TOT-Kimpton Hotel 324,600
Net TOT-Virgin Hotel 217,100
Net TOT- Dream Hotel 412,600
Net TOT-Andaz Hotel 0
Total Revenues $4,524,390
Annual Public Revenues -2027
City Property Taxes $1,031,430
City Sales Tax 4,985,600
Net TOT-Kimpton Hotel 444,100
Net TOT-Virgin Hotel 450,100
Net TOT- Dream Hotel 854,200
Net TOT-Andaz Hotel 2,058,300
Total Revenues $9,823,730
Total Public Revenues -2018-2047
City Property Taxes $33,017,680
City Sales Tax 166,850,500
Net TOT-Kimpton Hotel 15,133,000
Net TOT-Virgin Hotel 14,520,900
Net TOT-Dream Hotel 35,464,000
Net TOT-Andaz Hotel 63,879,900
Total Revenues $328,866,980
Net Present Value @ 7.0% $115,951,300
Prepared by:Keyser Marston Assoicates, Inc. [+
Filename:public revenue analysis-Hotel Analysis 11-3 Summary, 1 1/612 01 7,jar U
Attachment
Palm Springs Hotels
Public Revenue Analysis
70
TABLE 1
KEY CITY PUBLIC REVENUES
KEY LUXURYIUPPER UP SCALE HOTELS
PALM SPRINGS,CALIFORNIA
Total City City Total
Property Property Sales Net City
Year Taxes ' Taxes Taxes 2 City TO 3 Revenues
Allocation% 22.69%
2018 $1,113,400 $252,580 $1,679,900 $185,100 $2,117,580
2019 1,135,600 257,610 1,755,100 229,900 2,242,610
2020 2,558.300 580,360 2,771,500 827,900 4,179,760
2021 2,849,400 646,390 2,923,700 954,300 4,524,390
2022 3,538,900 802,810 3,708,700 2,338,500 6,850,010
2023 4,011,700 910,060 4,247,600 2,741,300 7,898,960
2024 4,284,400 971,930 4,629,600 3,195,200 8,796,730
2025 4,370,100 991,370 4,745,400 3,525,500 9,262,270
2026 4,457,500 1,011,190 4,864,000 3,613,400 9,488,590
2027 4,546.700 1,031,430 4,985,600 3,806,700 9,823,730
2028 4,637.600 1,052,050 51110,300 3,901,900 10,064,250
2029 4,730,300 1,073,080 51238,000 3,999,500 10,310,580
2030 4,824,900 1,094,540 5,369,000 4,099,400 10,562,940
2031 4,921,400 1.116,430 5,503,200 4,202,100 10,821,730
2032 5,019,900 1.138,780 5,640,800 4,307,100 11,086,680
2033 5,120,300 1,161,550 5,781,800 4,414,800 11,358,150
2034 5,222,700 1,184,780 5,926,300 4,525,000 11,636,080
2035 5,327,100 1,208,460 6,074,500 4,638,200 11,921,160
2036 5,433,700 1,232,650 6,226,300 4,754,100 12,213,050
2037 5,542,300 1.257,280 6,382,000 4,873,000 12,512,280
2038 5,653,200 1,282,440 6,541,500 4,994,800 12,818,740
2039 5,766,300 1,308,100 6,705,100 5,119,700 13,132,900
2040 5,881,600 1,334,250 6,872,700 5,247,700 13,454,650
2041 5,999,200 1,360,930 7,044,500 5,379,000 13,784,430
2042 6,119,200 1,388,150 7,220,600 5,513,400 14,122,150
2043 6,241,600 1,415,920 7,401,100 5,651,200 14,468,220
2044 6,366,400 1,444,230 7,586,200 5,792.400 14,822,830
2045 6,493,700 1,473,110 7,775,800 8,172,300 17,421,210
2046 6,623,600 1,502,580 7,970,200 8,886,200 18,358,980
2047 6,756,100 1,532,640 8,169,500 9,108,200 18,810,340
Total $145,547,100 $33,017,680 $166,850,500 $128,997,800 $328,865,980
NPV@7% $54,016,900 $12,253,800 $61,181,500 $42,515,900 $115,951,300
1. See Table 2
2. See Table 3
3. See Table 9
Prepared by:Keyser Marston Associates,Inc. 71
Filename:public revenue analysis-Hotel Analysis 11-3;Pub Revs;1116/2017,jar
TABLE 2
ALLOCATION OF PROPERTY TAX REVENUES
KEY LUXURY/UPPER UP SCALE HOTELS
PALM SPRINGS,CALIFORNIA
Incremental
Component Property Assessed Property City
Year Completed Valuation Valuation Tax Base Allocation 2
Allocation% 22.69%
2018 Blocks A,B,C $111,337,000 $111,337,000 $1,113,400 $252,580
2019 $0 113,563,700 1,135,600 257.610
2020 Virgin & Dream $139,990,000 255,825,000 2,558,300 580,360
2021 Dream Condos $24,000,000 284,941,500 2,849,400 646,390
2022 Block D&Andaz $63,250,000 353,890,300 3,538,900 802,810
2023 Block F $40,200,000 401,168,100 4,011,700 910,060
2024 Block G $19,250,000 428,441,500 4,284,400 971,930
2025 $0 437,010,300 4,370,100 991.370
2026 $0 445,750,500 4,457,500 1,011,190
2027 $0 454,665,500 4,546,700 1,031,430
2028 463,758,800 4,637,600 1,052,050
2029 473,034,000 4,730,300 1,073,080
2030 482,494,700 4,824,900 1,094,540
2031 492,144,600 4,921,400 1,116,430
2032 501,987,500 5,019,900 1,138,780
2033 512,027,300 5,120,300 1,161,550
2034 522,267,800 5,222,700 1,184,780
2035 532,713,200 5,327,100 1,208,460
2036 543,367,500 5,433,700 1,232,650
2037 554,234,900 5,542,300 1,257,280
2038 565,319,600 5,653,200 1,282,440
2039 576,626,000 5,766,300 1,308,100
2040 588,158,500 5,881,600 1,334,250
2041 599,921,700 5,999,200 1,360,930
2042 611,920,100 6,119,200 1,388,150
2043 624,158,500 6,241,600 1,415,920
2044 636,641,700 6,366,400 1,444,230
2045 649,374,500 6,493,700 1,473,110
2046 662,362,000 6,623,600 1,502.580
2047 675,609,200 6,756,100 1,532,640
TOTAL $145,547,100 $33,017,700
1. Project Value based on KMA review of developer costs to date and comparable projects
2. City share of property taxes provided by City staff.
Prepared:Keyser Marston Associates, Inc. 72
Filename:public revenue analysis-Hotel Analysis 11-3 Prop Tax; 1 1/612 0 1 7;jar
TABLE 3
SALES TAX REVENUES
KEY LUXURYIUPPER UP SCALE HOTELS
PALM SPRINGS,CALIFORNIA
Developed On Site Kimpton Virgin Dream Andaz
Commercial Taxable Visitor Visitor Visitor Visitor City
Year Square Footage Sales Taxable Sales 2 Taxable Sales 3 Taxable Sales " Taxable Sales 5 Sales Tax 6
Allocation% 2.00%
2018 101,305 $76,371,000 $7,626,400 $1,679,900
2019 101,305 78,280,000 9,473,500 1,755,100
2020 131,655 107,831,000 10,697,300 $7,031,000 13,016,700 2,771,500
2021 131,655 110,527,000 10,964,700 8,517,800 16,177,100 2,923,700
2022 175,655 135,532,000 11,238,800 10,342,200 19,934,400 8,389,200 3,708,700
2023 195,655 159,286,000 11,519,800 10,600,800 20,432,800 10,542,100 4,247,600
2024 206,655 174,749,001) 11,807,800 10,865.800 2D,943,6D0 13,115,400 4,629 6D0
2025 206,655 179,118,000 12,103,000 11,137,400 21,467,200 13,443,300 4,745,400
2026 206,655 183,596,000 12,405.600 11,415,800 22,003,900 13,779,400 4,864,000
2027 206,655 188,186,000 12,715,700 11,7D1,200 22,554,000 14,123,900 4,985,600
2028 206,655 192,891,000 13,033.600 11,993,700 23,117,900 14,477,000 5,110,300
2029 206,655 197,713,000 13,359,400 12,293,500 23,695,800 14,838,900 5,238,000
2030 206,655 202,656,000 13,693,400 12,600,800 24,288,200 15,209,900 5,369,000
2031 206,655 207,722,000 14,035,700 12,915,800 24,895,400 15,590,100 5,503,200
2032 206,655 212,915,000 14,386,600 13,238.700 25,517,800 15,979,900 5,640,800
2033 206,655 218,238,000 14,746,300 13,559,700 26,155,700 16,379,400 5,781,800
2034 206,655 223,694,000 15,115,000 13,908,900 26,809,600 16,788,900 5,926,300
2035 206,655 229,286,000 15,492,900 14,256,600 27,479,800 17,208,600 6,074,500
2036 206,655 235,018,000 15,880,200 14,613,000 28,166,800 17,638,800 6,226,300
2037 206,655 240,893,000 16,277,200 14,978,300 28,871,000 18,079,800 6,382,000 -
2038 206,655 246,915,000 16,684,100 15,352,800 29,592,800 18,531,800 6,541,500
2039 206,655 253,088,000 17,101,200 15,736,600 30,332,600 18,995,100 6,705,100
2040 206,655 259,415,000 17,528,700 16,130,000 31,090,900 19,470,000 6,872,700
2041 206,655 265,900,000 17,966,900 16,533,300 31,868,200 19,956,800 71044,500
2042 206,655 272,548,000 18,416,100 16,946,600 32,664,900 20,455,700 7,220,600
2043 206,655 279,362,000 18,876,500 17,370,300 33,481,500 20,967,100 7,401,100
2044 206,655 286,346,000 19,348,400 17,804,600 34,318,500 21,491,300 7,586,200
2045 206,655 293,505,000 19,832,100 18,249,700 35,176,500 22,028,600 7,775,800
2046 206,655 300,843,000 20,327,900 18,705,900 36,055,900 22,579,300 7,970,200
2047 206,655 308,364,000 20,836,100 19,173,500 36,957,300 23,143,800 8,169.500
TOTAL $166,850,500
1. Taxable sales estimated at$900 ISF for retail space,$900/SF for restaurant space,$8001 SF for hotel commercial space and$401 SF for
office space.Taxable sales estimates include employee spending during work hours.
2. See Table 5
3. See Table 6
4. See Table 7
-� 5. See Table 8
�i..) 6. Includes Measure J Sales Tax
Prepared by:Keyser Marston Associates,Inc.
Filename public revenue analysis-Hotel Analysis 11-3 Sales Tax;1116I2017;jar
TABLE 4
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Revenue per Virgin Revenue per Dream Revenue per Andaz Revenue per
Project Hotel Available Annual Room Hotel Available Annual Room Hotel Available Annual Room Hotel Available Annual Room
Year Rooms Room ' Revenues Rooms Room 2 Revenues Rooms Room Revenues Rooms Room Revenues TOT Revenues 3
2018 153 $107.80 $6,020,000 $0 $0 $0 $812,700
2019 153 $133.90 7,478,000 0 0 0 1,009,500
2020 153 $151.20 8,444,000 142 $112.50 5,831,000 169 $175.00 10,795,000 0 3,384,500
2021 153 $154.98 8,655,000 142 $136.30 7,064,000 169 $217.50 13,416,000 0 3,933,200
2022 153 $158.85 8,871,000 142 $166.49 8,577,000 169 $268.00 16,532,000 160 $15000 8,760,000 5,769,900
2023 153 $162.83 9,093,000 142 $177.80 9,215,000 169 $283.50 17.488,000 160 $188.50 11.008,000 6,318,500
2024 153 $156.90 9,320,000 142 $182.25 9,446,000 169 $290.59 17,925,000 160 $234.50 13,695000 6,802,100
2025 153 $171.07 9,553,000 142 $186.80 9,682,000 169 $297.85 18,373,000 160 $248.50 14,512,000 7,036,200
2026 153 $175.35 9,792,000 142 $191.47 9,924000 169 $305.30 18,832,000 160 $254.71 14,875,000 7,212,100
2027 153 $179.73 10,037,000 142 $196.26 10,172.000 169 $312.93 19,303,000 160 $261.08 15,247000 7,392,500
2028 153 $184.22 10,288,000 142 $201.16 10,426,000 169 $320.75 19,786,000 160 $267.61 15,628,000 7,577,300
2029 153 $188.83 10,545,000 142 $206.19 10,687,000 169 $32877 20.280,000 160 $274.30 16,019,000 7,766,700
2030 153 $193.55 10,809,000 142 $211.35 10,954,000 169 $336.99 20,787,000 160 $281.15 16,419,000 7,960,800
2031 153 $198.39 11,079,000 142 $216.63 11,228,000 169 $345.42 21,307,000 160 $288.18 16,830,000 8,159,900
2032 153 $203.35 11,356,000 142 $222.05 11,509,000 169 $354.05 21,840,000 160 $295.39 17,251,000 8,364,100
2033 153 $208A3 11,640,000 142 $227.60 11,796,000 169 $362.90 22,386,000 160 $302.77 17,682.000 8,573,000
2034 153 $213.64 11,931,000 142 $233.29 12,091,000 169 $371.98 22,945,000 160 $310.34 18,124,000 8,787,300
2035 153 $218.98 12,229,000 142 $239.12 12,394,000 169 $381.28 23,519,000 160 $318.10 18,577000 9,007,100
2036 153 $224.46 12,535,000 142 $245.10 12,703,000 169 $390.81 24,107,000 160 $326.05 19,042,000 9,232,200
2037 153 $230.07 12,848,000 142 $251.23 13021,000 169 $400.58 24,710,000 160 $334.20 19,518,000 9,463,100
2038 153 $235.82 13,169,000 142 $257.51 13,347,000 169 $410.59 25,327,000 160 $342.56 20,006,000 9,699.600
2039 153 $241.72 13,499,000 142 $263.95 13,680,000 169 $420.86 25,961000 160 $351.12 20,506,000 9,942,200
2040 153 $247.76 13,836,000 142 $270.54 14,022,000 169 $431.38 26,610,000 160 $359.90 21,018,000 1o,190,600
2041 153 $253.95 14,182,000 142 $277.31 14,373000 169 $442.16 27,275000 160 $368.90 21,544,000 10,445,500
2042 153 $260.30 14,537,000 142 $284.24 14,732,000 169 $453.22 27,967,000 160 $378.12 22,082,000 10,706,600
2043 153 $266.81 14,900,000 142 $291.35 15,100,000 169 $464.55 28,656.000 160 $387.58 22,634,000 10,974.200
2044 153 $273.49 15,272,000 142 $298.63 15,478.000 169 $476.16 29,372,000 160 $397.26 23,200,000 11,248,500
2045 153 $280.32 15,654,000 142 $306.10 15865,000 169 $488.07 30,106,000 160 $407.20 23,780,000 11,529,700
2046 153 $287.32 16,046,000 142 $313.75 16,262,000 169 $500.27 30,859,000 160 $417.38 24,375,000 11.818.200
2047 153 $294.51 16,447,000 142 $321.59 16,668,000 169 $512.77 31,630,000 160 $427.81 24,984,000 12,113,400
Total
$243,231,200
1.KMA estimate based on review of developer information,other Kimpton Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA estimate based on review of developer information,comparable hotel information and CB RE information for Coachella Valley.
Revenue per available room is equal to total annual room revenues divided by the total number of moms divided by 365 days
3. Based on City's 135%transient occupancy tax(TOT)rate_
Preapred by.Keyser Marston Associates,Inc.
Filename:public revenue analysis-Hotel Analysis 11-3 Hotel Stays;111612017;jar
TABLE 5
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,583,940 2 21.5%
Food& Beverage 10,787,505 24.2%
Retail Sales 6,887,064 15.5%
Ground Transportation 2,050,517 4.6%
Arts, Entertainment&Recreation 12,436,834 27.9%
Other Purchases 2,808,317 6.3%
Total Hotel Guest Expenditures $44,576,465 100.0%
Total Non-Lodging Spending $34,992,525 78.5%
Stabilized Subject to 3 OffsiteTaxable
II. Non-Lodoino Expenditures Subject to Sales Tax Spending($) Sales Tax Spending
Food& Beverage $10,787,505 50% $5,393,752
Retail Sales 6,887,064 75% 5,165,298
Ground Transportation 2,050,517 0% 0
Arts, Entertainment& Recreation 12,436,834 5% 621,842
Other Purchases 2.808,317 50% 1,404,159
Total Non-Lodging Spending $34,970,237
Total Non-Lodging Taxable Spending 36.0% $12,585,051
III. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,585,051
(Less)Transfers and Purchases Outside City (1,887,758)4
Net New Off-Site Taxable Sales $10,697,300
' Estimates by KMA based on research by Palm Springs, Anaheim and Orange County Conventions Bureaus, CBRE
and Dean Runyan Associates.
2 Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA estimate of offsite purchases.
Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
Prepared by:Keyser Marston Associates,Inc. 5
Filename:public revenue analysis-Hotel Analysis 11-3 Kimpton Vistor Spending: 1 1/612 0 1 7.jar
TABLE 6
OFF SITE VISITOR SPENDING-VIRGIN HOTEL
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized
I. Expenditures of Hotel Guests Spending ($) Share of Total
Accomodations $9,265,813 2 21.5%
Food&Beverage 10,429,427 24.2%
Retail Sales 6,658,456 15.5%
Ground Transportation 1,982,453 4.6%
Arts, Entertainment&Recreation 12,024,009 27.9%
Other Purchases 2,715,099 6.3%
Total Hotel Guest Expenditures $43,096,806 100.0%
Total Non-Lodging Spending $33,830,992 78.5%
Stabilized Subject to a Offsite Taxable
II. Non-Lod-ging Expenditures Subject to Sales Tax Spending ($) Sales Tax Spending
Food& Beverage $10,429,427 50% $5,214,713
Retail Sales 6,658,456 75% 4,993,842
Ground Transportation 1,982,453 0% 0
Arts, Entertainment&Recreation 12,024,009 5% 601,200
Other Purchases 2,715,099 50% 1,357,549
Total Non-Lodging Spending $33,809,444
Total Non-Lodging Taxable Spending 36.0% $12,167,306
III. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,167,306
(Less)Transfers and Purchases Outside City (1,825,096)
Net New Off-Site Taxable Sales $10,342,200
Estimates by KMA based on research by Palm Springs, Anaheim and Orange County Convention Bureaus, CBRE
and Dean Runyan Associates.
2 Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA estimate of offsite spending.
4 Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs
76
TABLE 7
OFF SITE VISITOR SPENDING-DREAM HOTEL
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized 1
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $17,859,674 2 21.5%
Food&Beverage 20,102,517 24.2%
Retail Sales 12,834,045 15.5%
Ground Transportation 3,821,140 4.6%
Arts, Entertainment& Recreation 23,176,042 27.9%
Other Purchases 5,233,300 6.3%
Total Hotel Guest Expenditures $83,068,251 100.0%
Total Non-Lodging Spending $65,208,577 78.5%
Stabilized Subject to 3 Offsite Taxable
II. Non-Lodging Expenditures Subject to Sales Tax Spending ($) Sales Tax Spending
Food& Beverage $20,102,517 50% $10,051,258
Retail Sales 12,834,045 75% 9,625,534
Ground Transportation 3,821,140 0% 0
Arts, Entertainment&Recreation 23,176,042 5% 1,158,802
Other Purchases 5,233,300 50% 2,616,650
Total Non-Lodging Spending $65,167,043
Total Non-Lodging Taxable Spending 36.0% $23,452,244
III. Net New Off-Site Taxable Sales
Food&Beverage Spending $10,051,258
Retail Spending $9,625,534
(Less)On-Site Food&Beverage Sales $1,158,802
(Less)On-Site Other Sales $2,616,650
Total Off-Site Taxable Spending $23,452,244
(Less)Transfers and Purchases Outside City (3,517,837) °
Net New Off-Site Taxable Sales $19.934,400
1 Estimates by KMA based on research by Palm Springs, Anaheim and Orange County Convention Bureaus, CBRE
and Dean Runyan Associates.
2 Based on stabilized Year 3 market rate room revenues plus 115%TOT.
3 KMA estimate of offsite taxable spending.
° Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs
Prepared by: Keyser Marston Associates, Inc. 77
Filename:public revenue analysis-Hotel Analysis 11-3 Dream visitor Spending, 1116/2017,jar
TABLE 8
OFF SITE VISITOR SPENDING-ANDAZ HOTEL
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,463,510 2 21.5%
Food&Beverage 10,651,951 24.2%
Retail Sales 6,800,522 15.5%
Ground Transportation 2,024,751 4.6%
Arts, Entertainment& Recreation 12,280,555 27.9%
Other Purchases 2,773,028 6.3%
Total Hotel Guest Expenditures $44,016,325 100.0%
Total Non-Lodging Spending $34,552,815 78.5%
3
Stabilized Subject to Sales Offsite Taxable
ll. Non-Lodging Expenditures Subiect to Sales Tax Spending($) Tax Spending
Food& Beverage $10,651,951 75% $7,988,963
Retail Sales 6,800,522 80% 5,440,418
Ground Transportation 2,024,751 0% 0
Arts, Entertainment&Recreation 12,280,555 5% 614,028
Other Purchases 2,773,028 50% 1,386,514
Total Non-Lodging Spending $34,530,807
Total Non-Lodging Taxable Spending 44.7% $15,429,923
III. Net New Off-Site Taxable Sales
Food& Beverage Spending $7,988,963
Retail Spending $5,440,418
(Less)On-Site Food&Beverage Sales $614,028
(Less)On-Site Other Sales $1,386,514
Total Off-Site Taxable Spending $15,429,923
(Less)Transfers and Purchases Outside City (2,314,488) '
Net New Off-Site Taxable Sales $13,115,400
1 Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Convention Bureaus, CBRE
and Dean Runyan Associates.
2 Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA estimate of offsite taxable spending.
Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs
Prepared by Keyser Marston Associates,Inc. 78
Filename:public revenue analysis-Hotel Analysis 11-3 Andaz Visitor spending; 11/6/2017;jar
TABLE 9
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
- Kimpton Hotel -- -- Virgin Hotel ----
Project Room TOT Pct. Room TOT Pct.
Year lRevenues TOT Rebate Transfer Transfer' Net TOT Revenues TOT Rebate Transfer Transfer' Net TOT
2018 $6,020,000 $812,700 $546,300 10.0% $81,300 $185,100 $0 $0 $0 $0 $0
2019 7,478,000 1,009,500 678,600 10.0% 101,000 229,900 0 0 0 0 0
2020 8444,000 1,139,900 766,300 5.0% 57,000 316,600 5.831,000 787,200 529,200 100% 78,700 179,300
2021 8,655,000 1,168,400 785,400 5.0% 58,400 324.600 7,064,000 953,600 641,100 10.0% 95,400 217,100
2022 8,871,OD0 1,197.600 805,DD0 5.0% 59,900 332,700 8577000 1,157,900 778,400 5.0% 57,900 321,600
2023 9,093000 1,227,600 825,200 0 402,400 9,215,000 1,244,000 836,300 5.0% 62,200 345,500
2024 9,320,000 1,258,200 845,800 0 412,400 9,446,000 1,275,200 857,200 5.0% 63,800 354,200
2025 9,553,000 1,289,700 866,900 0 422,800 9,682,D00 1,307,100 878,600 0 428,500
2026 9,792,000 1,321,900 888,600 0 433,3D0 9,924,000 1,339,700 900,600 0 439,100
2027 10,037,000 1,355,000 910,900 0 444,100 10,172,000 1,373,200 923,100 0 450,100
2028 10,288,000 1,388900 933,600 0 455,300 10,426,000 1,407,500 946,200 0 461,300
2029 10,545,000 1,423,600 957,000 0 466,600 10,687,000 1,442,700 969,800 0 472,900
2030 10,809,000 1459,200 980900 0 478,300 10,954,000 1,478,800 994,100 0 484,700
2031 11,079,000 1.495,700 1,005,400 0 490,300 11.228,000 1,515,800 1,018,900 0 496,900
2032 11.356,000 1,533,100 1,030,600 0 502,500 11,509,000 1,553,700 1,044,400 0 509,300
2033 11,640,000 1,571,400 1,056,300 0 515,100 11,796,000 1,592,500 1,070,500 0 522,000
2034 11.931,000 1,610,700 - 1,082,700 0 528000 12,091,000 1,632,300 1,097,300 0 535,000
2035 12,229.000 1,650,900 1,109,800 0 541,100 12,394,000 1,673,200 1,124,B00 0 548,400
2036 12.535,000 1,692,200 1,137,600 0 554,600 12.703,000 1,714,900 1,152,800 0 562,100
2037 12,848,000 1,734,500 1,166,000 0 568,500 13,021,000 1,757,800 1,181,700 0 576,100
2038 13,169,000 1,777,800 1,195,100 0 582,700 13,347,000 1,501,800 1,211,200 0 590,600
2039 13,499,000 1.822,400 1,225,000 0 597,400 13680,000 1,846,800 1,241,500 0 605,300
2040 13,836,000 1.867,900 1,255,600 0 612,300 14,022,000 1,893,000 1,272,500 0 620,500
2041 14,182,000 1.914,600 1,287,000 0 627,600 14,373,000 1,940,400 1,304,300 0 636,100
2042 14,537,000 1,962,500 1,319,200 0 643,300 14,732,000 1,988,800 1336,900 0 651,900
2043 14,900,000 2,011,500 1352,200 0 659,300 15,100,000 2,038,500 1,370,300 0 668,200
2044 15,272,000 2,061,700 1,385,900 0 675,800 15478,000 2,089,500 1,404,600 0 684,900
2045 15.654.000 2,113,300 1,420,600 0 692,700 15,865,000 2,141,800 1,439,700 0 702,100
2046 16,046,000 2,166,200 1,456,200 0 710,000 16,262,000 2,195,400 1,475,800 0 719,600
2047 16,447,000 2,220,300 1.492.600 0 727 700700 16,668,000 2,250.200 1,512 600 0 737,600
Total $350,065,000 $47,258,900 $31,768,300 $357,600 $15,133,000 $336,247.000 $45,393,300 $30,514,400 $358,000 $14,520,900
1. KMA assumption of room stays that would otherwise occur at other hotels in Palm Springs
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-Hotel Analysis 11-3 TOT Rebate;11 612017:jar
TABLE 9
EFFECT OF TRANSIEN
PALM SPRINGS PROM
PALM SPRINGS,CALIF
-- Dream Hotel ----- ---... Anclaz Hotel -----
Project Room TOT Pct. Room TOT Pct.
Year Revenues TOT Rebate Transfer Transfer' Net TOT Revenues TOT Rebate Transfer Transfer Net TOT
2018 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
2019 0 0 0 0 0 $o 0 0 0 0
2020 10,795,000 1,457,300 979,600 10.0% 145,700 332,000 $0 0 0 0 0
2021 13,416,000 1811,200 1,217500 10.0% 181,100 412,600 $0 0 0 0 0
2022 16,532,000 2,231,800 1,500,300 5.0% 111,600 619,900 $8,760,000 1,182,600 0 10.0% 118,300 1,064,300
2023 17,488,000 2,360,900 1,587,000 5.0% 118,000 655,900 $11.008.000 1,486,100 0 10.0% 148,600 1,337,500
2024 17,925,000 2,419,900 1,626,700 5.0% 121,000 672,200 $13,695,000 1,848,800 0 5.0% 92,400 1,756,400
2025 18,373,000 2,480,400 1,667,300 0 813,100 $14,512,000 1,959,100 0 5.0% 98,000 1,861,100
2026 18,832,000 2,542,300 1,709,000 0 833,300 $14,875,000 2,008,100 0 5.0% 100,400 1,907.700
2027 19,303,000 2,605,900 1,751,700 0 854,200 $15,247,000 2,058,300 0 0 2,058,300
2028 19,786,000 2,671,100 1,795,600 0 875500 $15,628.000 2,109,800 0 0 2,109,800
2029 20,280,000 2,737,800 1,840,400 0 897,400 $16,019,000 2,162,600 0 0 2,162,600
2030 20,787,000 2,806,200 1,886,400 0 919.800 $16,419,000 2,216,600 0 0 2,216,600
2031 21,307,000 2,876,400 1,933,600 0 942800 $16,830,000 2,272,100 0 0 2,272.100
2032 21,840,000 2,948,400 1,982,000 0 966,400 $17,251,000 2,328,900 0 0 2,328,900
2033 22386,000 3,022,100 2,031500 0 990.600 $17,682,000 2.387,100 0 0 2,387,100
2034 22,945,000 3,097,600 2,082,300 0 1,015,300 $18,124,000 2446,700 0 0 2,446,700
2035 23,519,000 3,175,100 2,134,300 0 1,040,800 $18,577,000 2,507,900 0 0 2,507,900
2036 24,107,000 3,254,400 2,187,700 0 1066700 $19,042,000 2,670,700 0 0 2.570.700
2037 24,710,000 3,335,900 2,242,400 0 1,093,500 $19,518,000 2,634,900 0 0 2,634,900
2038 25,327,000 3.419,100 2,298,400 0 1,120,700 $20,006,000 2,700,800 0 0 2,700,800
2039 25,961,000 3,504,700 2,356,000 0 1,148,700 $20,506,000 2,768,300 0 0 2.768300
2040 26,610,000 3,592,400 2,414,900 0 1,177,500 $21,018,000 2,837,400 0 0 2,837,400
2041 27,275,000 3,682,100 2,475,200 0 1,206,900 $21,544,000 2,908,400 0 0 2,908,400
2042 27,957,000 3,774,200 2,537,100 0 1,237,100 $22,082,000 2,981,100 0 0 2,981,100
2043 28,656.000 3,868,600 2,600.500 0 1,268.100 $22,634,000 3,055,600 0 0 3,055.600
2044 29,372,000 3,965,200 2,665,500 0 1,299,700 $23,200,000 3,132,000 0 0 3,132,000
2045 30,106,000 4,064,300 497,100 0 3,567,200 $23,780,000 3,210,300 0 0 3,210,300
2046 30,859,000 4,166,000 0 0 4,166.000 $24,375,000 3,290,600 0 0 3,290,600
2047 31,630,000 4,270,100 0 0 4,270.100 $24,984,000 3,372,600 0 0 3,372,800
Total $638,084,000 $86,141,400 $50,000,000 $677,400 $35,464000 $477,316,000 $64,437,600 $0 $557,700 $63,879,900
1. KMA assumption of roor
Q
Prepared by Keyser Marston Associates,Inc.
Filename public revenue analysis-Hotel Analysis 11-3 TOT Rebate,1 11612 01 7;jar
ATTACHMENT 6
>I I
KEYSER MARSTON ASSOCIATES .
ADVISORS IN PUBLIC/PRIVAI-E REAL ESIAIE DEVLLOPMENI
MEMORANDUM
ADVISORS IN: To- Flinn Fagg AICP, Director of Planning Services
Real Estate City of Palm Springs
Redevelopment
Affordable Housing From: James Rabe, CRE
Economic Development
SAN FRANCISCO Date: February 28, 2017
A.Jerry Keyser
TimothyC.Kelly Subject: Fiscal Effects—Spa Hotel and Casino
Kate Earle Funk
Debbie M.Kern
Reed T.Kawahara
David Doezema At your request, Keyser Marston Associates, Inc. (KMA) undertook a limited fiscal
Los ANGELES analysis of the impacts on the City of Palm Springs (City) of the development of a new
Kathleen H.Head 350 room hotel and expansion of the casino (Project) at the Spa Hotel and Casino site in
James A.Rabe downtown Palm Springs. It is our understanding that the police department and fire
Gregory D.Soo-Hoo
Kevin E.Engstrom department are conducting their own analyses to determine the impact on their
Julie L.Romey departments.
SAN DIEGO
Paul C.Marra The Spa Hotel and Casino is owned by the Agua Caliente and the facility is located on
land owned by the Agua Caliente. As such, the Project is exempt from property taxes,
sales taxes and transient occupancy taxes (TOT). The City, therefore, is concerned that
its public revenue flow may be affected by the new hotel and expanded activities at the
hotel and casino.
The hotel formerly located on the site had 229 rooms, was closed in mid-2014 and has
been demolished. It will be replaced by the new 350 room hotel. Other aspects of the
proposed development include:
• Expansion of the casino by up to 68,000 square feet
• 60,000 square feet of meeting space
• 50,000 square feet of mixed-use/cultural/retail space
• 40,000 square feet of spa/fitness center
• 650 parking spaces
KMA has reviewed the Vision Agua Caliente, Master Plan Project Report, dated January
9, 2017, but has not reviewed any specific information regarding the commercial tenants
in the Project.
500 SOUTH GRAND AVENUE,SUITE 1480, LOS ANGELES,CALIFORNIA 90071 . PHONE 213.622.8095
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Flinn Fagg AICP, City of Palm Springs February 28, 2017
Fiscal Effects— Spa Hotel and Casino Page 2
ANALYSIS
To undertake this analysis, KMA has researched and reviewed various sources of
information to understand the position of the proposed Project in the marketplace, the
likely growth of the hotel market, spending by guests at the Spa Hotel and Casino and
the general impact of Indian Gaming on the local economy.
Hotel Analysis
Background
The original Spa Hotel closed in mid-2014. In the intervening period the market has
adjusted to the loss of these hotel rooms through a combination of new hotel room
additions and higher occupancy at the existing hotels. CBRE's 2017 Southern California
Lodging Forecast indicates there were 3,333 hotel rooms in the Palm Springs/Cathedral
City market in 2011 and 3,378 hotel rooms in 2017 with the projected opening of the
Kimpton Hotel Palomar. The average occupancy rate has increased from 53.4% in 2011
to a projected 58.8% for 2017. Throughout the Coachella Valley, hotel rooms increased
from 10,060 to 10,592 over the same period and occupancy rates increased from 54.7%
to 62.1%. As these numbers would suggest, demand has increased in both the local
(11.1%) and regional (19.6%) market areas during this period.
Within the Palm Springs/Cathedral City market area the Spa Hotel is likely to be most
comparable to the Upper Upscale hotels (Hilton, Hard Rock, Renaissance and Hyatt)
located in Palm Springs. These hotels have a combined 1,027 rooms. Adding the Spa
Hotel to this cohort would generate a 25% increase in the number of rooms in this
market segment. These hotels have performed well over the last three years with an
average occupancy of 67% and average daily rate (ADR) of$160.'
Growth Potential
The growth in hotel occupancy in the Palm Springs/Cathedral City has been somewhat
slower than growth in the Coachella Valley overall. Based on information in CBRE's
2017 Forecast, the Palm Springs/Cathedral City market area has grown at a rate of
1.8% annually (2011 through 2017) increasing nearly 13,000 occupied rooms per year.
The entire Coachella Valley grew at a 3.0% annual rate, which is approximately 80,000
rooms per year. KMA discussed the Palm Springs/Cathedral City and Coachella Valley
market areas and growth potential with CBRE. CBRE indicated that that they believed
with the repositioning of downtown Palm Springs and the expanded uses at the Spa
1 Source: Smith Travel Research
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Flinn Fagg AICP, City of Palm Springs February 28, 2017
Fiscal Effects—Spa Hotel and Casino Page 3
Hotel, that the recent growth rate in the Palm Springs/Cathedral City market area likely
understates future growth potential for this area.
TOT Projections
Based on the above information, KMA has prepared two sets of projections of: 1) the
growth in occupied rooms in the City; 2) how the presence of the Spa Hotel affects the
occupancy of hotels that are subject to TOT; and 3) how TOT revenues remitted to the
City are affected. In Table 1 KMA projects future growth in the Palm Springs area
assuming that occupied rooms grow between 13,000 per year(low growth) and 20,000
per year (high growth). The high growth scenario assumes that the City increase its
market capture to approximately 25% of the Coachella Valley market area growth.
These two alternatives likely represent the reasonable range of impacts that might occur
in the City.
When the new Spa hotel opens, the 350 room hotel will add 127,750 room nights to the
Palm Springs market (350 rooms x 365 days). Based on typical stabilization periods for
hotels, KMA expects that the hotel will have a 58% occupancy in the first year and will
slowly build up to a 67% occupancy level by Year 4. As shown in Table 1 the number of
occupied rooms at the Spa Hotel grows from 74,095 in Year 1 to 85,593 by Year 4.
In the low growth scenario (13,000 annual room nights), the Spa Hotel captures all the
growth and "captures or transfers" 61,095 room nights from the other Palm Springs
hotels. This process continues through Year 6, when the transfers are just under 7,600,
less than one year's growth. In the high growth scenario (20,000 annual room nights),
the transfer loss is 54,095 in Year 1 falling to just under 5,600 in Year 4.
These transfers or losses are important to the City because guests at the Spa Hotel do
not pay TOT. TOT is an important revenue source for the City and helps fund police, fire
and other services. In the low growth scenario, the lost TOT revenues amount to
$1,221,900 in Year 1 falling to $151,850 by Year 6. Over the six-year period the lost
City revenue is over$4.4 million. The loss to the City is less in the high growth scenario.
The first year loss is $1,081,900, falling to $111,850 by the fourth year. The total loss is
$2,438,600.
The KMA analysis was conducted on a constant dollar basis, meaning the effects of
inflation were not included.
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Fiscal Effects—Spa Hotel and Casino Page 4
Sales Tax Revenues
Hotel guests and tourists spend in the local economy. Some of these expenditures will
be onsite and some will be off site in the City or in surrounding communities. KMA
reviewed data from the Palm Springs Convention and Visitors Bureau, CBRE, Dean
Runyan Associates and convention and visitors bureau from Anaheim, Los Angeles and
Orange County. The Spa and Casino project has a large entertainment component so
KMA expects that the visitor spending of its guests will more closely resemble the
spending patterns of visitors to Anaheim and Orange County which also have a large
entertainment component.
Table 2 shows estimates of expenditures by visitors allocated among various categories.
Some or all food & beverage, retail sales, other purchases and arts, entertainment and
recreation represent taxable purchases. Using the Orange County information as a
guide, KMA estimated arts &entertainment spending at approximately 27.5% of visitor
spending. Food & beverage spending amounts to 24.2% of total spending and retail
sales represents 15.5% of purchases. Based on stabilized lodging expenditures of
$15.4 million, total visitor expenditures amount to $71.6 million, including non-lodging
expenditures of$56.2 million.
As with TOT, sales that occur at the Spa Hotel and Casino are not subject to state or
local sales tax. But sales outside the Project are subject to sales tax. Based on our
experience, KMA estimates that 50% of food & beverage purchases and other
purchases will take place offsite. KMA estimates that 75% of retail sales will occur
offsite. The majority of arts, entertainment and recreation expenditures are not taxable.
For this analysis, KMA estimates that only 5% of arts, entertainment, and recreation
expenditures will occur off site and will be taxable. As shown in Table 2, taxable sales
are estimated at$20.3 million. Of these $20.3 million, KMA estimates that 85% or $17.2
million will take place in the City. The remaining 15% represent sales that occur in other
jurisdictions.
Based on the above, stabilized sales tax revenues to the City are estimated at $172,000.
Property Tax Revenues
The City also inquired about any potential loss or reduction in property taxes resulting
from the development of the Spa Hotel & Casino. The Spa Hotel and Casino is not
subject to local property taxation, so there will be no increase in assessed values or
property taxation. The transfer of loss of room revenues at local hotels is likely to have a
larger effect on the Upper Upscale hotels however, this impact will be spread among
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Flinn Fagg AICP, City of Palm Springs February 28, 2017
Fiscal Effects—Spa Hotel and Casino Page 5
them. KMA does not believe that there will be a sufficient impact on their operations that
they would request a reduction in their assessed valuations.
Local City Expenditures
As noted above police and fire services are the most likely to be affected by the new Spa
Hotel and Casino. Any impacts are being separately evaluated by the two departments.
Based on other fiscal analyses undertaken by KMA, we do not anticipate there to be any
other significant public expenditures associated with the visitor aspects of the proposed
project.
CONCLUSIONS
The major fiscal impact of the new Spa Hotel and Casino will be a near term loss of TOT
revenues. The number of rooms at the new Spa Hotel will exceed the near term
incremental demand for hotel rooms; consequently, the Spa Hotel will "take" guests from
the existing hotels. Normally this is not a major issue, but because the Spa Hotel guests
do not pay TOT, the City will see an actual reduction in TOT revenues, rather than just a
pause in the growth of TOT revenues. Depending on whether the Spa Hotel can draw
visitors who would otherwise stay at other Coachella Valley locations, the loss to the City
could range between $2.4 million over four years or$4.4 million over six years.
On a positive basis, the visitors will spend locally. Much of the spending will happen on
the Spa Hotel and Casino site, but significant spending will also occur in the City. KMA
estimates that the increased taxable sales will amount to approximately $172,000
annually, which equates to $688,000 over four years and $1.0 million over six years.
1702020.JAR ` C
17170.006.001 V
TABLE 1
ESTIMATE OF TRANSIENT OCCUPANCY TAX LOSS
SPA HOTEL AND CASINO
PALM SPRINGS,CALIFORNIA
Year 1 Year 2 Year 3 Year 4 Year 6 Year 6
Spa Hotel
Number of Rooms 350 350 350 350 350 350
Annual Room Nights 127,750 127,750 127,750 127,750 127,750 127,750
Occupancy Rate' 58% 62% 65% 67% 67% 67%
Occupied Rooms 74,095 79,205 83,038 85,593 85,593 85,593
Palm Springs/Cathedral City Market Area(low growth)
Average Annual Growth in Demand 13,000 13,000 13,000 13,000 13,000 13,000
Cumulative Growth 13,000 26,000 39,000 52,000 65,000 78,000
Spa Hotel Rooms Occupied
in Excess of Annual Growth 61,095 53,205 44,038 33,593 20,593 7,593
Average Daily Rate(ADR)3 $160.00 $160.00 $160.00 $160.00 $160.00 $160,00
Annual Room Revenues $9,775,200 $8,512,800 $7,046,000 $5,374,800 $3,294,800 $1,214,800
Transient Occupancy Tax(TOT)Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
TOT Loss $1,221,900 $1,064,100 $880,750 $671,850 $411,850 $151,850
Palm Springs/Cathedral City Market Area(high growth)
Average Annual Growth in Demand 20,000 20,000 20,000 20,000 20,000 20,000
Cumulative Growth 20,000 40,000 60,000 80,000 100,000 120,000
Spa Hotel Rooms Occupied
in Excess of Annual Growth 54,095 39,205 23,038 5,593 0 0
Average Daily Rate(ADR)3 $160.00 $160.00 $160.00 $160.00 $160.00 $160.00
Annual Room Revenues $8,655,200 $6,272,800 $3,686,000 $894,800 $0 $0
Transient Occupancy Tax(TOT)Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
TOT Loss $1,081,900 $784,100 $460,750 $111,850 $0 $0
1. KMA estimate based on Smith Travel Research information for Upper Upscale hotels in Palm Springs
2. KMA estimate based on CBRE data for Palm Springs/Cathedral City market area.
3. KMA estimate based on Smith Travel Research information for Upper Upscale hotels in Palm Springs
4. KMA estimate based on CBRE data for Coachella market area and assumes Palm Springs captures approximately 25%of future growth
Prepared by:Keyser Marston Associates, Inc. 03 7
Filename:Spa Hotel TOT loss;2/28/2017,jar
TABLE 2
OFF SITE HOTEL VISITOR SPENDING
SPA HOTEL AND CASINO
PALM SPRINGS,CALIFORNIA
Stabilized
I. Expenditures of Hotel Guests Spending ($) Share of Total
Accomodations $15,406,650 z 21.5%
Food&Beverage 17,341,439 24.2%
Retail Sales 11,071,290 15.5%
Ground Transportation 3,296,307 4.6%
Arts, Entertainment&Recreation 19,992,816 27.9%
Other Purchases 4,514,507 6.3%
Air Transportation 0 0.0%
Total Hotel Guest Expenditures $71,658,837 100.0%
Total Non-Lodging Spending $56,252,187 78.5%
Stabilized Offsite 3 Offsite
II. Non-Lodging Expenditures Subject to Sales Tax Spending($) Spending % Spending
Food& Beverage $17,341,439 50% $8,670,719
Retail Sales 11,071,290 75% 8,303,468
Ground Transportation 3,296,307 0% 0
Arts, Entertainment&Recreation 19,992,816 5% 999,641
Other Purchases 4,514,507 50% 2,257,253
Total Non-Lodging Spending $56,216,358
Total Non-Lodging Taxable Spending 36.0% $20,231,081
III. Net New Off-Site Taxable Sales
Food & Beverage Spending $8,670,719
Retail Spending 8,303,468
Arts, Entertainment, Recreation Spending 999,641
Other Purchases 2,257,253
Total Off-Site Taxable Spending $20,231,081
(Less)Transfers and Purchases Outside City (3,034,662) 4
Net New Off-Site Taxable Sales $17,196,000
Sales Tax @ 1%(Stabilized$2016) $172,000
1 Estimates by KMA based on research by Palm Springs, Anaheim, and Orange County Convention Bureaus, CBRE
and Dean Runyan Associates.
2 Based on KMA's projected stabilized (year 4)room revenues plus 12.5%TOT.
3 KMA assumption based on previous hotel experience and scope of proposed development.
4 Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs.
Prepared by;Keyser Marston Associates,Inc.
Filename:Spa Hotel offsite visitor spending;2128/2017;jar
ATTACHMENT 7
1
Convention Center & Bureau of Tourism
CALIFORNIA
Like no place else.-M
MEMORANDUM
TO: Marcus Fuller, Assistant City Manager
FROM: James Canfield
DATE: November 6, 2017
SUBJECT: Convention Center Demand for Additional Hotel Rooms
As discussed, the following information relates to the need for additional, quality hotel rooms
within"walking distance" to the convention center:
Overall, booking pace at the convention center has been strong and we have a positive outlook
and momentum moving forward. Our recent success has been a product of the incentive
programs that the city enacted that helped our convention hotels and downtown businesses
renovate over the last 10 years. Prior to that program, future bookings were down due to the
condition of the downtown and quality of our convention hotels. The renovations made a big
difference in how the destination is perceived and increased our competitive advantage. We are
primarily attracting SMERF and state association business. SMERF is an acronym for Social,
Military, Educational, Religious and Fraternal organizations. These are generally considered
"Lower Value" groups because the attendees are often paying their own expenses. They have the
lowest economic impact, the lowest hotel rates and they generally like to meet over weekends
which are already our peak demand period. We have generally seen year over year growth in
room-nights but are still losing opportunities related to our current hotel inventory.
Over the last 5 years we have experienced over 141,000 room-nights in lost business due to our
current hotel stock. Issues include overall quality of the hotels, number of quality rooms within
walking distance, number of hotels required to make up blocks, etc. We also have anecdotal
experience when working with potential clients who will raise concerns about where their VIP
attendees, sponsors, board-members, executives, etc. will stay. We have had some groups that
considered having blocks at down-valley properties for those special attendees but it is simply
not practical logistically. We have had groups that have included blocks at hotels in Cathedral
City and Rancho Mirage due to not having enough committable, quality rooms close to the
convention center.
277 N.Avenida Caballeros, Palm Springs, CA 92262 (760)325-6611 Fax(760)778-4102 90
palmspringscc.com -visitpalmsprings.com
One of our greatest opportunities for growth in room-nights and economic impact is by attracting
higher rated corporate, incentive and professional association groups. The addition of higher
quality rooms within walking distance to the center will enhance our ability to attract this higher
rated business which can provide significantly higher economic impact to the city and revenue to
the convention center. Attendees at these events are typically reimbursed for or on company paid
travel and many of these groups also meet mid-week which is our greatest need period
throughout the year.
It will also allow us to book groups with larger attendance and hotel blocks. Currently, larger
groups require us to use hotels that are not within walking distance to the center and in some
cases outside of the city to meet block requirements. This adds a significant cost and
inconvenience for transportation from the outlying hotels to the center requiring additional
discounts or funding support and making us less competitive.
The Kimpton and the anticipated Andaz, Dream, Virgin and other properties, within walking
distance, that are bringing new, higher rated brands to the city will benefit our current clients
who are interested in using the new properties to attract more attendance, and will also provide
an opportunity to attract new,larger and higher rated groups.
We will be targeting marketing efforts in both the leisure and convention markets to include
these new brands as we encourage "Luxury" tourism on the leisure side and corporate, incentive
and professional association groups for convention and group business.
Please let me know if you have any questions or need additional information.
7
Jameq Ca field
Exec tive Pirector
277 N. Avenida Caballeros, Palm Springs, CA 92262 (760) 325-6611 Fax(760) 778-4102 g
palmspringscc.com
ATTACHMENT 8
92
CBREHotels
Hotels > English > Research
IF YOU BUILD IT,WILL THEY COME?CONVENTION CENTER AND EXPANDED HOTEL CAPACITY INDUCE POSITIVE CHANGES TO THE DOWNTOWN
NASHVILLE HOTEL MARKET
M IANAIF IANE Al' D BRETT EDGEl
EXECUTIVES�JMMAR,
The economics of hotels typically suggests that supply growth negatively affects industry performance by spreading existing demand over more
suppliers.In this recoil,we present the opposite case how supply growth can increase demand.This report focuses on how convention centers
and hotels can attract additional demand.improving industry performance rather than detracting from it.We examine hotel market data from
Nashville,where a new convention center and Omni Nashville Hotel opened in 2013.Following the expansion to supply,the rnarket has seen
substantial rate increases as well as greater levels of demand,which has resulted in higher occupancy levels.
Since the new demand has entered the Nashville market,average daily room rates have risen by double digits and the market occupancy level has
gone up.This result is consistent with experiences observed in other markets that have expanded their meetings and lodging potential. Additional
convention visitors who previously did not utilize Nashville as a convention location drove the demand higher.Using the economic concept of Say's
Law and induced demand,we explain how the new Omni positively impacted the Nashville hotel industry.By increasing supply levels enough to
support large national conventions that would have overwhelmed the previous hotel capacity the city can now attract more convention business_
Since 2013,Downtown Nashville has seen supply increase by more than 20 percent and demand expand by an even greater amount.The result is
occupancy levels near 80 percent.
Additionally..by applying econometric techniques to the hotel data,we are able to quantify the specific effects in terms of demand,occupancy,and
rates.Our results show that demand in the downtown Nashville market rose by approximately 700 rooms per day because of the convention hotel
addition.Furthermore,the induced demand has increased rates by almost$7 per night since 04 2013,Overall,these results confirm the economic
intuition behind large convention center hotels.exhibiting how certain supply increases can improve hotel performance in markets that benefit from
the induced demand the supply creates.This conclusion means Downtown Nashville should remain a healthy hotel market for the foreseeable
future
CAN SUPP-Y CREATF DFNAAND2
Large increases in supply often signal trouble for performance in real estate markets.Typically,big additions of inventory negatively affect the
strength of a particular market by creating more price competition among suppliers seeking to capture existing demand.This rule mostly holds true
for the hotel market in particular because supply enters markets in large,.abrupt proliferations of rooms at the opening dates of new hotels.In
contrast,hotel demand fluctuates over time,resulting in weaker market conditions as demand slowly catches up to surges in supply_ As with many
rules,however,an exception exists in certain circumstances where unique supply growth may induce demand within a market,improving market
performance because of supply growth rather than in spite of it.Herein we examine a case of induced demand in one of the fastest growing hotel
markets in the United States.
One unique type of supply addition that can have this positive effect on the market is convention center hotels,which induce demand to a market
by attracting group demand previously not entering the market.Such an event recently occurred in Nashville where a large,state of the an
convention center.the Music City Center..and a convention center hotel,and approximately 1500 new roams(since 2013),including 800 rooms at
the Omni Nashville Hotel(Omni),were built.The purpose of this analysis is to quantify the impact the convention center and hotel additions had on
the lodging market in Downtown Nashville-In this report,the effect of the Omni in specific is analyzed using econometric techniques to test if the
new hotel supply represented by the Omni,induced demand into the market.This additional demand in turn produced better market performance.
Along with demand,hotel financial market performance is analyzed by three metrics:Occupancy,Average Daily Rate(ADR),and Revenue per
Available Room(RevPAR).Each of these metrics improved following the opening of the convention center hotel,displaying the positive effect of
induced demand from the Omni in Nashville.
THE NASHVIIIF F(--ONOMY IS STRC)NGJ
Underlying economic conditions drive performance in many industries including lodging.The Nashville metropolitan economy has recently been
remarkably vibrant,experiencing growth that outpaced that of the nation in terms of income and employment(see Exhibit 1).The Nashville
metropolitan area is in a period of solid economic expansion with strength EXIHIBIT 1:LONG RUN AVERAGES
in health care,professional and scientific services government services,
and manufacturing.On average.Nashville's economy has grown by over GDPTAP Gwdh 536% 2b4"/u 3.12%
4 percent annually since 2010,Furthermore,the recent decision by
Bridgestone to locate its headquarters in Nashville may signal a Personal Inquire lGrosi&owlh 4.57% 1."/b06% 2.63%
continuing trend for the growth of other parts manufacturers,as several Trial Elnpbymenl&txAh 4.51% 1.93°b 2.63%
automotive production plants have been constructed in the region.As Source:fdo*'s Aulylla.PKF Hnitili Research,a CBRE Corgmny,92 2013.
shown in Exhibit 2.real personal incomes and employment,two key economic drivers of hotel demand increased steadily during the past two
decades.This economic robustness creates conditions for strong hotel performance in the market,making an attractive environment in which to
expand supply.
EXHIBIT Y:NASHVILLE ECONOMIC ACTIVITY
93
1-04%
ckw
14 ,
11
10 - - _ __ _-.__ --
I
i
2 - -----
g irrrTrrr7l�ri r'rn�'rrTr-r'rr-rrrmT-rrrr'>Tr �':r,- it ...... .
p
.4
N N N N N N N N N N O O O O O O
—GM? —pmmrd bootie —Taro)Ealpbplad
Source:Maodys Am*s, Kk FKF hospitality Reaserch,o CBRE Company,02 2015
GROWTH IN THE NASHVILLE HOTEL MARKET
The health of the Nashville economy has helped bring about an expansion of the hotel industry in Nashville.Over the past two decades,hotel
supply and demand levels have grown at a steady but moderate pace.Large additions to supply occurred in 2000 and 2001 when the Hilton
Nashville Downtown and the Marriott Nashville @ Vanderbilt University opened,each adding over 300 rooms to the market. Since 2013,lodging
supply in the downtown submarket has expanded by almost 1,500 rooms,a 20 percent gain by year-end 2014.This spike In inventory was fully
absorbed as lodging demand increased by approximately 26 percent from 2012 to 2014.By comparison,national hotel supply grew by about only
1 percent over this period while national demand increased by less than 4 percent.The large differences in growth rates signify that the Nashville
market is indeed undergoing considerable change.These changes beg the question:"Are structural changes ocwrring in the Nashville hotel
market?'
An answer to this question can be traced back to September 2013,when the Omni Nashville Hotel,a convention center property,opened in
downtown.The 800-room facility includes 80,000 sq.ft.of conference space,21 meeting rooms,and two ballrooms.Additionally,the Omni is
integrated with the Music City Center,a large modem convention center that opened in May 2013 offering one million sq.f,of exhibition and
meeting space.Exhibit 3 shows the sharp expansion in supply as well as the lift in demand for the Downtown Nashville submarkel coinciding with
the opening of the convention center and hotel.The Omni alone represents a large portion of the surge in supply since 2013.
EXHIBIT 3:DEMAND AND SUPPLY LEVELS IN DOWNTOWN NASHVILLE SUBMARKET
94
Demand Supply
9,000 10,000
6,000 9 0OO
Motion
7,000 _,. .. WMN @ OoMand Re
Nikon Motdttliq opens Nta 8,000
6,000 Na4mlle a0ntl*OPIK Remunnont
Downtown
0pars 7,000
—
6,000
4,0N ---
0mb
Mvik � 5,000
low
ow
7,000 4,000
000 _. 3,000
a $ 2', 2
—Supply —Dimond(4 per.Mov.Avg.)
Swat SIR lac,P13 Hosplalny Reasarch,a(BRE Compaq,02 2015.
ECONOMIES OF SCALE IN DOWNTOWN NASHVILLE
The dramatic growth in demand seen in the past two years in Nashville can be explained in part by the economic concept of induced demand.For
new supply in Nashville to have induced demand,the supply must offer higher levels of utility for potential hotel guests compared to what
previously existed in Downtown Nashville. One way a convention center hotel provides better utility is by creating a greater scale to both the hotel
market(i.e.guest room capacity)and the meetings market(i.e.the of space available for convention and conference use).Exhibit 4 presents the
size of the Omni Nashville along with the other comparable hotels in the Downtown Nashville submarkel.The Omni s largest meeting space
represents a 39 percent rise from the biggest single meeting space in Downtown Nashville that previously existed.The 80,000 sq.N,of meeting
space contained within the hotel is equal to the next three largest total meeting spaces combined,representing a 30 percent increase in total
meeting space capacity to the entire market.
95
EI :IT 4:DOWNTOWN NASHVILLE HOTELS PPSCALEANDABOVE)
Ormi Nashifi HOtd 2013 800 Uppo Upsmk 25,000 8,occ
RmoissolcelicshviReHaiel 1987 613 Upper Upscale 18,000 31,000
ShemtonHotelNashvil ,Dowttm 1975 482 UpperUpsmk 10,690 25,000
[wVmderhilt PNro Bel 1984 340 luciry 0,442 2g0QO
Daoblehee Wilk 1979 341 Upsok 7,000 2Q257
MiNelnanMovellHouseNoshrilk 1979 287 UpperUpsmk 91000 17,0W
Hutton Hotel 2D09 247 Independent 7,009 13,600
Hlton NmilVllk Dmeltw 2000 33D Upper Upsmk 7,452 IZ962
dutaglcph(clklon Union Staton Hdel 1986 125 UpperUpsmk 2,550 1z000
ManiaHksWIle aVorderbitUpiuelsihy 2001 307 UpperUpsmk 4,70D 11,000
HitonRidenInnN6hhVanderblk 2009 194 Upsmk 3,960 4,272
HemitageH*l 1910 122 Independent 2,404 4,041
(outtoldNoskilkDmmbxn 1998 IT Upsmk 1,570 3,200
R&I Indigo Noshrib 2010 130 Upsmk 1,20) Z708
EmbosWSurriNoshailk@VondeMUmvenk 2001 2C8 UppeUpsmk 1,410 Z679
III&HddNo4yilkliitestEnd 2007 139 Upsalk 780 1,495
Hornell Suks Wilk Doantmwr 2007 113 Upsmk 1,484 1,718
(oorld Nikki YondebiNMLrid 1995 226 Ups<ak 1,000 1,500
Springhill Sit Na4tvillefto(entor 2000 78 Upsmk 322 322
Asmnd Wellion The(opid MI 1961 100 1psmk 0 0
Spirit:Slk kf.,1`9 HospilolH Rta adl,a(BRE Compori 2015.
Along with meeting space the hotel dramatically expanded the room count in Downtown Nashville.The Omni supplies more than double the
average room count of all other Downtown Nashville hotels.This new scale of rooms available can entice larger conventions to use Nashville that
previously may have been constrained by room availability during peak demand periods.This greater supply serves to support conventions at the
Music City Convention Center,which opened six months prior to the Omni. In terms of hotel room supply and meeting space,the Omni Nashville
represents a dramatic growth in scale to the Downtown Nashville hotel market.The map in Exhibit 5 shows the market when the hotel and
convention center opened.The relative size and prime location of the hotel compared to nearby hotels again underscores the new,larger scale the
hotel creates in the market.
EXHIBIT 5:MAP OF DOWNTOWN NASHVILLE HOTELS
yy,�sr.ir.r ir.w
.,._...,....ate.,. r..csC.
SAY LAW IN ACTION
The economic theory of Say's Law can be roughly defined by the phrase,"supply creates its own demand.' This theory provides a mechanism to
explain how the larger scale of the Downtown Nashville market induces new demand into the market. In the case of Downtown Nashville,this
means the extra scale of room supply and conference space caused by the Omni,the other new,properties and the Music City Center entices
additional,larger conferences to locate in Nashville,leading to demand growth.This theory is supported by anecdotal reports of the conventions
selecting Downtown Nashville as their convention destination.The previous convention center,the Nashville Convention Center,draw,an average
of 1,5DO attendees for a national trade show.for Music City Center,the average group is 6,500 participants. Exhibit 6lists a sample of large
conventions that have been hosted at the new complex during the first six months of 2015 that exceed the average convention size Downtown
Nashville previously attracted.These groups likely would not have come to Nashville before because adequate capacity did not exist.The
presence of an expanded hotel inventory and the opening of the Music City Center removed this impediment.
EXHIBITCONFERENCES 1 IN DOWNTOWN 1
Progressive lnsglanreBootand Spat" 10,000
Nonaaal School BoardsAndation 10,000
No Sono l Rifle Association 48,000
Amenco n Ocru potion]T herapy Aaodotior. 8,000
Hearth Patio&Barbecue Asociabon 10,000
Southern Women's Shay 44,000
Source Music City Center,PIT Hospitality Researth,a CORE(ompaB/,Q2 2015.
OMNI NASHVILLE SUPPLY CREATES DEMAND
The induced demand brought in by Downtown Nashville's expanded hotel supply scale has shown up in market data through mid-year 2015.
Demand growth surged by almost 1,000 rooms per night while occupancy rose to approximately 80 percent,levels never seen before In Downtown
Nashville.Exhibit 7 shows how past supply growth interacted with demand,affecting occupancy levels.The two hotel openings in 2000 and 2001
were followed by decreases in occupancy because demand remained relatively stable.Coming out the Great Recession,the Opryland Hotel re-
opening after renovations coincided with occupancy growth though it is not clear how much of this was driven by the economic recovery that began
at the same time.What is clear is that demand ratcheted up since the Omni Nashville opened and that the record high market occupancy levels
continue to sustain themselves.This evidence suggests that Say's Law applies to convention hotels like the Omni Nashville,supporting the claim
that an expansion of convention-oriented supply can spur new tlemand.
EXHIBIT 7:DOWNTOWN NASHVILLE DEMAND AND OCCUPANCY
Occupancy
)%)
40%
M
city 85%
Maawwr Xastmlie fmM
CW a Vandar6ih 011ie)
50%
Uar�rernryCq>rs
HIXmBasMXle /5%
OaBntasr Opens
Owl
Ni 65%
4.OW _---. __... ......... _-___.. . Hotel
opensaXe (orange)
3,OW f Renomums
55%
1991 1992 1"3 1994 1995 1996 1997 1998 1999 2000 2001 2002 7003 1004 7005 2096 2007 2008 2009 2010 2011 2012 2013 2014 2015
—Demmd(4 Of Mm_A,g-) —0trowno(4 Os_More-Avg)
Soule STR Inc,PRf 11"nolny ResserA,a CORE(omKii 02 2015.
To confirm this analysis,PKF Hospitality Research applied econometric techniques to available data to test the predictions Say's Law makes
regarding induced demand.Using the Hotel Horizons®forecasting model.it is possible to isolate the effect of the Omni on the Downtown
Nashville market given all the other factors.This model uses econometric techniques to analyze historical relationships between economic and
hotel performance data,allowing specific relationships(i.e.employment conditions and hotel demand)and events(i.e.the opening of Music City
97
Center and hotel demand)to be tested for statistical significance.Specifically.the impact on demand and occupancy levels is examined followed
by ADR and RevPAR.
Focusing on the exact effect the Omni Nashville Hotel had on the demand for Nashville hotels,this analysis shows that the Omni induced demand
for 693 more rooms per night in the first quarter of 2015. Since September 2013,Nashville averaged 690 more rooms accommodated each
quarter because of the Omni Hotel.Exhibit 8 shows that the Omni induced demand on a year-over-year basis by stimulating additional use of the
Nashville hotel market that otherwise would not have occurred.Note-not all of these induced room nights of demand were accommodated at the
Omni. Other hotels in the CBD submarkel captured a portion of this new business.
EXHIBIT 8:DEMAND INDUCED BY OMNI NASHVILLE HOTEL
Roam Demand
S'NO
4,500
4,OW
3,500
3,000
7,500
2,000
1,500
1m
Soo
0
2009 2010 2011 IN? 2013 2014
■All Other Demand in induced Demand
Spruce STR,lat.,PI(F Hospitality Reseaich,a CBRE Company,02 201 S.
INDUCED DEMAND DRIVES RATES HIGHER
While occupancy rates have remained high following the swell In demand,one might be concerned that rates have fallen to maintain occupancy
levels.The results of this analysis show this concern to be unfounded.The Omni improved the hotel market in Nashville and,on an annualized
basis.did not increase rate competition among existing hotels.Since the new hotel opened in 2013.ADRs have averaged$192 per night and have
exceeded the national rate of growth,increasing by double digits on a year-over-year basis.Exhibit 9 shows occupancy levels have also been
increasing,averaging 78.6 percent since the Omni opened.
EXHIBIT 9:OCCUPANCY LEVEL AND CHANGES IN ADR IN DOWNTOWN NASHVILLE
(hungeinADR 1%) OrapaixyN
2a 05
Omni Made 0Wa� M
f0
75
ro
65
-10
-I5 60
2006 2007 2008 2009 2010 7011 7017 2013 2014 2015
—AvecgeCalyRate —Oaupaxy140h.Mw.AsgJ
Source.SIR,Inc.,02 7015.
While economics 101 suggests that that the large upsurge in supply would negatively influence prices,in the case of Nashville this has not
occurred.Instead,the demand induced by the Omni contributed to an increase in ADR9 in the market each quarter.Exhibit 10 shows the premium
effect the Omni Nashville had on AORs since opening(i.e.when controlling for all other variables,the amount of market ADR change that may be
attributed to the opening of the Omni).By 2015,the impact in the market remains substantial as evidenced by$6.95 higher ADR. These rate Q
98
premiums may be the result of added travelers coming to Nashville because of the boost in conference and convention activity the Omni and Music
City Center support.Increasing room rates while also increasing occupancy is a clear signal of the structural changes occurring in the Nashville
hotel market since high ADR growth typically reduces occupancy by reducing demand.
EXHIBIT 10:CHANGES IN AVERAGE DAILY ROOM NIGHTS AND AVERAGE DAILY RATES
WM 2013 201412015
Induted Average Daily Room Nights: 438 621 772 827 785 693
Induced Demand as a Percent IRoomsAdded SM 77.7% 96.5% 103.4% 98.2% 8G6%
Impad on Avemge Daily Rate S1118 9.11 56.53 56.21 SE54 SE95
Source:PKF ligimli y,o(BRE[wnIi,Q2 2015
Higher rates in the Downtown Nashville submarket have contributed to a strong growth in RevPAR.Downtown upper price hotels'RevPAR growth
rates outperformed the overall market(see Exhibit 11).Since opening,the induced demand as a percent of rooms added by the Omni has
averaged 86 percent while the ADR impact of the new demand has increased rates by an average of$6.92 per quarter.This performance premium
also supports that the Omni positively affected performance by attracting additional demand to Downtown Nashville allowing those hotels most
likely to accommodate convention demand to increase rates while absorbing the new supply.
EXHIBIT 11:DOWNTOWN NASHVILLE REVPAR CHANGES
I'
0
5 Omni
Nashville
Opens
10
d5
p
2W2 2W2 2003 1003 1004 1004 2W5 7W5101M 2W6 7W7 N707 706E 2WB 20a9 2004 M10 2010 1011 2011 2011 2012 2013 2013 2014 2014 2015
—ChDrW n RevPAR Dowiam Sob"oket Upper hxe Hopis -@origea RevPAR Hoslndle Uppa Pn<e Hoek
Sane SIR IX-PC HAM R4111511A SCORE Canpaq,02 2015,
CONCLUSION:DOWNTOWN NASHVILLE HOTEL MARKET IS IN GREAT SHAPE
The economic theory of induced demand examined in this report and supported by the data analyzed provides a robust explanation for how the
recent additions to supply in the Nashville CBD,most notably the Omni Nashville Hotel,positively influenced the overall performance of the
Nashville hotel market. The Omni changed the Downtown Nashville hotel market by significantly increasing guest room and conference capacity,
which induced a significant volume of new travel to the City.The longterm impacts may become less substantial as other factors develop which
influence the hotel business cycle in Nashville,but the nearer-term prospects are strong given the changed landscape of the market with the
opening of the Omni.
Overall,the Music City Center and Nashville Omni projects attracted new,large group demand that is paying higher rates than the market previous
accommodated.The expanded scale of the Nashville hotel market stimulated this growth in demand for national and international conventions,
trade shows,and conferences that historically did not use Nashville as their meeting destination.As a result of the new demand since the
expanded hotel capacity and convention center opened,occupancy and ADRs have risen well above the previous averages in the submarkel and
sustained themselves at these higher levels—all good news for hotel market participants in the Downtown Nashville market.
FOR MORE INFORMATION REGARDING PKF HOSPITALITY RESEARCH,A CBRE COMPANY,PLEASE CONTACT:
Jamie Lane Brett Edgerton
Senior Economist Economist
PKF Hospitality Research I CBRE Hotels PKF Hospitality Research I CBRE Hotels
+1 404 809 3950 -1 404 842 1150 x 245
jamie.lane@pkfc.com brett.edgerton@cbre.com
Follow Jamie on Twitter @Jamie_Lane
To learn more about CBRE Research or to access additional research reports,please visit the Global Research Gateway at
www.cbre.com/researchgaleway.
Additional U.S.research produced by CBRE Research can be found at www.cbre.us/research.
100
ATTACHMENT 9
101
FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
THE CITY OF PALM SPRINGS
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attention: City Clerk
(Space Ab Line for Recorder's Office Use Only)
AMENDED AND R
OPERATIONS AN
AGREEME . 6642
THIS AMENDED AND RES D OPERATION OVENANT AND
DECLARATION OF COVENANTS AN ESTRI IONS (t "Agreement" or
"Restated Covenant") is made and entered in is ay of Octo 2017, by and
between the CITY OF PALM NGS, a I corporation a charter city
("City'), by and through its City and SeI alm Springs, LLC, a California
limited liability company, ("Owner').
R ITA
A. The City of Pa rings ted C .26 o unicipal Code in December,
2007 to provide el Op ions Inc ve Program ("Program") for the operation,
maintenance and a Si a inve of quality and first class hotels within
the anc d t I experience for visitors to the City,
m the the s Con enter, provide attractive and desirable
A serving face an eriences, d assist the City in achieving its tourism
goal apter 5.26 a al Code is incorporated herein by reference and
define s therein I, un otherwise indicated, have the same meanings
herein.)
B. On Decembe 201 ity and Equi-Cap, LLC, a California limited liability
company, ("Equi- tered into that certain Operations Covenant for a first
class new hotel to In approximately 205 hotel rooms identified as the Selene
Palm Springs Resort, (the "Original Hotel"), to be developed on that certain real
property, (the "Site"), which is generally located at the northeast corner of Calle
Alvarado and Amado Road as legally described on Exhibit "A", and as depicted on
the Site Plan attached hereto as Exhibit "B", incorporated herein by reference. The
Operations Covenant was recorded on March 6, 2015, as Document No. 2015-
0090568, (the "Original Covenant").
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 1 OF 11 0 2
C. At the time of the execution of the Original Covenant, City was under contract with
Owner, as successor in interest, pursuant to that certain Purchase and Sale
Agreement, (Agreement No. 6329), as amended, originally approved by the City
Council on March 6, 2013, and originally executed by and between the City and CDI
Ventures, LLC, a California limited liability company, ("CDI"), to convey fee title real
property interest in the Site for the purposes of developing a new first class hotel on
the Site.
D. The Original Covenant was entered into by and be n City and Owner's affiliate,
Equi-Cap. However, at the time of execution of the al Covenant, neither Owner
nor Equi-Cap had any real property interest i ite. Amendment No. 1 dated
March 5, 2014, to Agreement No. 6329 co
Praetor Investments, LLC, a
California limited liability company, ("Praet as th ccessor in interest to CDI.
Amendment No. 2 to Agreement No. 6 ated Octo 2014, confirmed that
Selene Palm Springs, LLC, a Califor ted liability co was the successor
in interest to Praetor. It is the intenti the Parties to ac ledge that Selene
Palm Springs, LLC, a California limite 'IIty co ny, as r herein, is the
owner of any and all rights and to t pursuant his Restated
Covenant.
E. On August 26, 2016, City a omplet a real property transaction
consummated by A reement No. 29, ity co ed fee title interest in the
Site to Owner pu hat cert Gran eco as Document No. 2016-
0367646.
F. On June 7, 201 City uncil a ed Resolution No. 24236, approving an
amend o Fina opme istrict 333 proposed by Owner, revising
the to a ass to ject consisting of 169 hotel rooms, to
b ate d as am I" bran I y the Dream Hotel Group, (the "Dream
Ho r "Project"). Pro pprove y the City Council also includes 34 multi-
famil dominium entia its. It is the intention of the Parties to identify the
Dream as the "fi lass hotel" that will benefit from participation in the
Program p nt to this stated Covenant.
G. In accordance he s approval of the Dream Hotel on June 7, 2017, Owner
will submit const awings for the Dream Hotel to the City for review and
approval on or befo ecember 31, 2017, and will be prepared to commence with
demolition of existing surface improvements and grading operations on the Site on
or before December 31, 2017.
H. Pursuant to Chapter 5.26 of the Municipal Code, Owner must demonstrate that the
Hotel is "under construction" prior to December 31, 2017. The Parties hereby
acknowledge that in light of the City's recent approval of the amendment to Planned
Development District 333 on June 7, 2017, Owner will not be in a position to
demonstrate that the Hotel is "under construction" prior to December 31, 2017, and it
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 2 OF 14
103
is the intention of the Parties to provide for an extension of time for Owner to
demonstrate such compliance pursuant to this Restated Covenant.
I. The Parties acknowledge that the Dream Hotel, as entitled and approved, will qualify
as a new First Class Hotel under and pursuant to the provisions of Chapter 5.26,
and further, the Parties hereby agree that pursuant to the terms of this Restated
Covenant, the obligation to demonstrate that the Dream Hotel will be "under
construction" prior to December 31, 2017, in accordance with Chapter 5.26 shall be
extended eighteen (18) months to June 30, 2019. O r further agrees that it shall:
(i) prepare construction drawings for the vertical "c d shell" of the Dream Hotel,
and will submit these construction drawings to Ity for review and approval for
building permit on or before April 30, 2018• ed with construction of the
underground parking facility and the foun t for ertical construction of the
Dream Hotel not later than April 1, 20 i) comme ith construction of the
vertical "core and shell" of the Dr otel by Dece 31, 2018; and (iv)
complete construction of the Dream H y June 30, 2020, s such completion
date is otherwise further modified in ordan with an ndment to the
Purchase and Sale Agreeme entered int he City and er (identified
as Agreement No. 6329, a by actio a City Council o the City, and
whereby the completion date i sary pre ite to complying with the terms
of this Restated Covenant. It is in of the ies to incorporate herein this
Agreement the rev' d obligati date omm ment and completion of
construction of t Hotel, a that ' ted under operation by the
dates of com men comp sta rein this Recital, the Dream
Hotel will quali new t Class and be a itled to benefits thereof under
and pursuant to rovi s of Ch r 5.26 of the Municipal Code and this
Agree
J. E as the allo ursua ection 7.12 of this Restated Covenant,
O understan ag that, to the extent Owner does not construct a
"Drea tel" brand el, a rsues construction of an alternatively branded
hotel, s tematively nded I will not qualify as a new First Class Hotel, and
shall not b titled to benefits thereof under or pursuant to the provisions of
Chapter 5.2 the icipal Code and this Agreement. Accordingly, this
Agreement will n er effect, and City shall have no obligations hereunder.
K. City and Owner no sire to place restrictions upon the use and operation of the
Hotel, in order to ensure that the Hotel shall be operated continuously as a First
Class Hotel available for short-term rental for the term of this Restated Covenant.
L. City and Owner also agree that in return for participation in the Program, Owner
shall agree to operate the Hotel as a "Dream Hotel" brand hotel; participate in the
Palm Springs Convention Center's Committable Rooms Program; and provide City
with a minimum of eight (8) room-nights per month for official City use; and, City
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FOR HOTEL INCENTIVE PROGRAM
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agrees to share a percentage of Transient Occupancy Tax Increment with Owner
pursuant to the Program guidelines.
M. The City finds that no further environmental review is required in connection with the
approval of this Restated Covenant, in that in connection with City approval of the
entitlements related to the Project on June 7, 2017, the City Council approved a
mitigated negative declaration, and the City finds that this mitigated negative
declaration is the controlling environmental document for the Project, and that no
further environmental review is necessary.
NOW, THEREFORE, for good and valua nsideration, the receipt and
sufficiency of which are hereby acknowledged, hereby conveys to the City
the Operating Covenants described herein Ci reby agrees to provide
Participant with funds as provided under the am and a forth hereinafter.
A EI
STATEMENT OF OPE G NANTS
1.1. OPERATION AND OVENA eginning on or before June 30,
2020, Owner covenants to opera" and u e Dream Hotel in accordance
with this Agreement. All uses con to Site, ding, without limitation, all
activities undertaken Owner uant Ag ent shall, in all material
respects, conform is of th gr Pa Springs Municipal Code.
The parties under d and a that t er ma ek to amend this Agreement
pursuant to certain and ditions ated herein, and that in the event of City
approval of such an a m tel id ied by Owner with a flag or brand apart
from the el m Ell O is duties hereunder. Absent such an
amen ere er ration, nce and use of a Dream Hotel shall be
a con preceden wn eceipt o ny and all consideration or benefit under
the Pro and hereun
1.2 EL USE. Own hereby agrees that the Project is to be owned,
managed, and ted as ream Hotel" brand hotel in a first-class manner, and the
Project's participa in the gram shall continue in accordance with the terms of the
Program, for a term irty years commencing upon the date Participant, as an
assignee of Owner's b of participation in the Program, first receives from the City
the Owner's share of transient occupancy tax revenues pursuant to the Program, or
until Participant has received from the City the total sum of fifty million dollars
($50,000,000) if that occurs prior to the expiration of said thirty years, unless Owner's
participation in the Program is terminated prior thereto in accordance with this
Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a)
and Sections 7.9, 7.11, and 7.15 of this Covenant, during the Term, City shall pay to
Participant on behalf of Owner, within thirty days after receipt from Owner of twelve
monthly payments made by Owner to the tax administrator per Section 3.24.080 of the
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 4 OF 14
105
agrees to share a percentage of Transient Occupancy Tax Increment with Owner
pursuant to the Program guidelines.
M. The City finds that no further environmental review is required in connection with the
approval of this Restated Covenant, in that in connection with City approval of the
entitlements related to the Project on June 7, 2017, the City Council approved a
mitigated negative declaration, and the City finds that this mitigated negative
declaration is the controlling environmental document for the Project, and that no
further environmental review is necessary.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Owner hereby conveys to the City
the Operating Covenants described herein, and City hereby agrees to provide Owner
with funds as provided under the Program and as set forth hereinafter.
ARTICLE I
STATEMENT OF OPERATING COVENANTS
1.1. OPERATION AND USE COVENANT. Beginning on or before June 30,
2020, Owner covenants to operate, maintain, and use the Dream Hotel in accordance
with this Agreement. All uses conducted on the Site, including, without limitation, all
activities undertaken by the Owner pursuant to this Agreement shall, in all material
respects, conform to requirements of this Agreement and Palm Springs Municipal Code.
The parties understand and agree that the Owner may seek to amend this Agreement
pursuant to certain terms and conditions as stated herein, and that in the event of City
approval of such an amendment, a hotel identified by Owner with a flag or brand apart
from the Dream Hotel may serve to fulfill Owner's duties hereunder. Absent such an
amendment hereto, Owner's operation, maintenance and use of a Dream Hotel shall be
a condition precedent to Owner's receipt of any and all consideration or benefit under
the Program and hereunder.
1.2 HOTEL USE. The Owner hereby agrees that the Project is to be owned,
managed, and operated as a "Dream Hotel" brand hotel in a first-class manner, and the
Project's participation in the Program shall continue in accordance with the terms of the
Program, for a term equal to thirty years commencing upon the date Owner first
receives from the City the Owner's share of transient occupancy tax revenues pursuant
to the Program, or until Owner has received from the City the total sum of fifty million
dollars ($50,000,000) if that occurs prior to the expiration of said thirty years, unless
Owner's participation in the Program is terminated prior thereto in accordance with this
Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a)
and Sections 7.9, 7.11, and 7.15 of this Covenant, during the Term, City shall pay to
Owner, within thirty days after receipt from Owner of twelve monthly payments made by
Owner to the tax administrator per Section 3.24.080 of the Municipal Code, an amount
equal to seventy-five percent (75%) of the adjusted tax rate of those payments made to
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FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
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Municipal Code, an amount equal to seventy-five percent (75%) of the an amount equal
to seventy-five percent of the adjusted tax rate of those payments made to the City. City
acknowledges and agrees that City has reviewed proposed development and
operational plans for the Dream Hotel and concluded that such plans are in substantial
compliance with and will satisfy First Class Hotel requirements of the City and Chapter
5.26 of the Municipal Code.
1.3 HOUSING USES PROHIBITED. Excepting therefrom the 34 multi-family
residential condominium units approved as part of the ject, none of the 169 hotel
rooms in the Project will at any time be utilized as a ansient residential property
including dormitory, fraternity or sorority house, roo ouse, nursing home, hospital,
sanitarium, or trailer court or park without the Cit nsent which consent may be
given or withheld in its sole and absolute discr 'o
1.4 CONVERSION OF PROJE xcepting ther the 34 multi-family
residential condominium units approved rt of the Project, In of the Project will
at any time be owned by a cooperative ho Corp ion, nor the Owner take
any steps in connection with the onversion o tel rooms ch ownership
or uses to condominiums, or t ther form ership, without a prior written
approval of the City Council whi al may ven or withheld in its sole and
absolute discretion.
TICL
WA NTIE OVE S
2.1 . WARRA VEN S. For the Term of this Agreement, the
Owner h cents, ant d agrees as follows:
1. r omplet the City's application for the Hotel
tions Incen Pro Since the Dream Hotel will be a new hotel, City
has rmined the nsie cupancy Tax Base to be used to calculate the
Transl ccupanc x Incre ent shall be zero dollars ($0.00), and the Owner
accepts Transie ccupancy Tax Base.
2. by agrees to subscribe to the Palm Springs Convention
Center's Comm Rooms Program or any similar successor program as
identified by the ity Manager without being obligated to incur any additional
costs or expenses.
3. Upon City's prior request, Owner shall provide the City at no cost
eight (8) rooms for one (1) night (or 4 rooms for 2 nights) other than Friday or
Saturday nights each month for use for City purposes as approved or designated
by the City Manager, provided that such use by the City shall be subject to the
rooms being available at the time of the City's request. Such accommodations
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FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
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106
the City. City acknowledges and agrees that City has reviewed proposed development
and operational plans for the Dream Hotel and concluded that such plans are in
substantial compliance with and will satisfy First Class Hotel requirements of the City
and Chapter 5.26 of the Municipal Code.
1.3 HOUSING USES PROHIBITED. Excepting therefrom the 34 multi-family
residential condominium units approved as part of the Project, none of the 169 hotel
rooms in the Project will at any time be utilized as a non-transient residential property
including dormitory, fraternity or sorority house, rooming house, nursing home, hospital,
sanitarium, or trailer court or park without the City's prior consent which consent may be
given or withheld in its sole and absolute discretion.
1.4 CONVERSION OF PROJECT. Excepting therefrom the 34 multi-family
residential condominium units approved as part of the Project, no part of the Project will
at any time be owned by a cooperative housing corporation, nor shall the Owner take
any steps in connection with the conversion of the 169 hotel rooms to such ownership
or uses to condominiums, or to any other form of ownership, without the prior written
approval of the City Council which approval may be given or withheld in its sole and
absolute discretion.
ARTICLE2
WARRANTIES AND COVENANTS
2.1. WARRANTIES AND COVENANTS. For the Term of this Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
1. Owner has completed the City's application for the Hotel
Operations Incentive Program. Since the Dream Hotel will be a new hotel, City
has determined the Transient Occupancy Tax Base to be used to calculate the
Transient Occupancy Tax Increment shall be zero dollars ($0.00), and the Owner
accepts such Transient Occupancy Tax Base.
2. Owner hereby agrees to subscribe to the Palm Springs Convention
Center's Committable Rooms Program or any similar successor program as
identified by the City Manager without being obligated to incur any additional
costs or expenses.
3. Upon City's prior request, Owner shall provide the City at no cost
eight (8) rooms for one (1) night (or 4 rooms for 2 nights) other than Friday or
Saturday nights each month for use for City purposes as approved or designated
by the City Manager, provided that such use by the City shall be subject to the
rooms being available at the time of the City's request. Such accommodations
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OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 5 OF 14
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shall include all services and amenities for which the Owner would normally
collect transient occupancy taxes but will not include services and amenities that
are optional to the transient and for which the transient is not required to pay a
transient occupancy tax. City shall be responsible for any transient occupancy
taxes for any occupancy provided to City under the provisions of this paragraph.
Notwithstanding anything in this Agreement to the contrary, if the City does not
use rooms during any month, then its right to use rooms with respect to that
month shall expire at the end of that month and shall not accrue; provided,
however, if the City was unable to use rooms soI because Owner's Hotel had
no rooms available when the City requested m in accordance with this
Section 2.1.3, then, the City's right to use shall not expire and may be
used by the City in a subsequent month.
ARTI
MAI ANCE
3.1. MAINTENANCE.
1. Mainteriancefthiiiibon. Ow or itself and its successors and
assigns, hereby covenants s to m n and repair or cause to be
maintained and repaired th ite II rela on-site improvements and
landscaping t includin witho ' atio uildings, parking areas,
lighting, sig in a fi cl o and repair, free of rubbish,
debris and r hazar o perso g the s e, and in accordance with all
applicable la les, o ances a regulations of all federal, state, and local
bodie nd age .urisdi at Owner's sole cost and expense.
S nce pa ncl but not be limited to, the following: (i)
ping sh val; (II re and replacement of all shrubbery,
tings, and r la aping in healthy condition; and (iii) the repair,
re ement and iping sphalt or concrete paving using the same type of
mat originally in led, t end that such paving at all times be kept in a
level a ooth co on. In addition, Owner shall be required to maintain the
Project i h a m r as to avoid the reasonable determination of a duly
authorized I o City that a public nuisance has been created by the
absence of ad aintenance such as to be detrimental to the public health,
safety or genera Ifare or that such a condition of deterioration or disrepair
causes appreciable harm or is materially detrimental to property or improvements
within one thousand (1,000) feet of such portion of the Site.
2. Parking and Driveways. The driveways and traffic aisles on the Site
shall be kept clear and unobstructed at all times.
3. Right of Entry. In the event Owner fails to maintain the Site in the
above-mentioned condition, and satisfactory progress is not made in correcting
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FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
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107
the condition within thirty (30) days from the date of written notice from City (such
notice shall reasonably identify the required maintenance), City may, at City's
option, and without further notice to Owner, declare the unperformed
maintenance to constitute a public nuisance. Thereafter, either City or its
employees, contractors, or agents, may cure Owner's default by entering upon
the. Site and performing the necessary landscaping and/or maintenance in
accordance with Section 3.1.1 above. The City shall give Owner, its
representative, or the residential manager reasonable notice of the time and
manner of entry, and entry shall only be at such . s and in such manner as is
reasonably necessary to carry out this Agree Owner shall pay such costs
as are reasonably incurred by City for suc ntenance, including attorneys'
fees and costs.
4. Lien. If any costs incur City un " '- ection 3 above are not
reimbursed within thirty (30) days Owner's receip ity's written request
for reimbursement, the same sh a deemed delinq and the amount
thereof shall bear interest thereafter rate a lower o percent (10%)
per annum or the legal imum unti and all de ent amounts,
together with said intere is and re le attorney's fees, shall be an
obligation of Owner as we . n and c with power of sale, upon the
property interests of Owner, d ts, iss nd profits of such property.
City may bring a ction at la ains r obll d to pay any such sums or
foreclose the st Ow 's pro tere Any such lien may be
enforced b by ity follo rd f a Notice of Default of Sale
given in the ner an a req y law as n the case of a deed of trust;
such sale to b du c in accor a with the provisions of Section 2924, et
se Calif app le to the exercise of powers of sale in
dee rust, =er manner permitted by law.
Any mon lie vided for herein shall be subordinate to any bona
fi rtgage or of covering an ownership interest or leasehold or
sub- hold estat and t y portion of the Site, and any purchaser at any
foreclo or truste sale (as well as any deed or assignment in lieu of
foreclosur rustee' le) under any such mortgage or deed of trust shall take
title free fro monetary lien, but otherwise subject to the provisions
hereof; provide fter the foreclosure of any such mortgage and/or deed of
trust, all other as sments provided for herein to the extent they relate to the
expenses incurred subsequent to such foreclosure, assessed hereunder to the
purchaser at the foreclosure sale, as owner of the subject Site after the date of
such foreclosure sale, shall become a lien upon such Site upon recordation of a
Notice of Assessment or Notice of Claim of Lien as herein provided. In the event
of any such foreclosure, City (or successor) agrees to and shall recognize and
honor any existing commercial (non-transient occupancy) leases in effect with
respect to portions of the Project, provided that commercial tenants of such
AMENDED I RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 7 OF 14
108
leases agree to subordinate and attorn to City (or successor) as the new landlord
with respect to such leases.
ARTICLE4
COMPLIANCE WITH LAWS
4.1. COMPLIANCE WITH LAWS. Owner shall comply with all ordinances,
regulations and standards of the City and City applicable to the Site. Owner shall
comply with all rules and regulations of any assessment district of the City with
_.._........:.
jurisdiction over the Site.
ARTICLE 5
NONDISCRIMINATION
5.1. NONDISCRIMINATION. There Shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed,
religion, gender, sexual orientation,._gender identity, gender expression,; marital status,
national origin, ancestry, physical or mental disab llt or medical condition in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part
thereof, nor shall Owner, or any person claiming„under orithrough it, establish or permit
any such practice or es of discrimination or segregation with reference to the
selection, location, or occupancy of guests=or vendees of the Site, or any
part thereof.
ARTICLE6
CO NTS N WITH THE LAND
COVENA TO WITH THE LAND. Owner hereby subjects the
Site to th venants, re clar ation %drestrictions set forth in this Agreement. City
and Owner by de it es intent that all such covenants, reservations,
and restriction II be dee d covenants running with the land and shall pass to and
be binding upon wner' ccessors in title to the Site; provided, however, that on
the termination of ent said covenants, reservations and restrictions shall
expire. All covenants t regard to technical classification or designation shall be
binding for the benefit o e City, and such covenants shall run in favor of the City for
the entire term of this Agreement, without regard to whether the City is or remains an
owner of any land or interest therein to which such covenants relate. Each and every
contract, deed or other instrument hereafter executed covering or conveying the Site or
any portion thereof shall conclusively be held to have been executed, delivered and
accepted subject to such covenants, reservations, and restrictions, regardless of
whether such covenants, reservations, and restrictions are set forth in such contract,
deed or other instrument.
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 8 OF 14
109
City and Owner hereby declare their understanding and intent that the burden of
the covenants set forth herein touch and concern the land in that Owner's legal interest
in the Site is rendered less valuable thereby. City and Owner hereby further declare
their understanding and intent that the benefit of such covenants touch and concern the
land by enhancing and increasing the enjoyment and use of the Project by the intended
beneficiaries of such covenants, reservations, and restrictions, and by furthering the
public purposes for which the City was formed.
Owner, in exchange for the City entering into thi reement, hereby agrees to
hold, sell, and convey the Site subject to the terms s Agreement. Owner also
grants to the City the right and power to enrc foe the of this Agreement against the
Owner and all persons having any right, title or ' the Site or any part thereof
while such party owns the Site. No party hav liability or obligation in
connection with any breach occurring while arty is no owner of the Site.
Within fifteen (15) business days request of Owner, shall execute and
provide to Owner an estoppel certificate, i form roved by City Attorney of
the City, confirming whether or of Owner is r of any obli s under this
Agreement and identifying any r cure.
A E7
IND NIFIC
7.1. IND FICA Own es for If and its successors and
assigns to indemnl efend, nd hold rmless City and its respective officers,
members, officials, e e nts, teers, and representatives from and
against abili I m to or by any third party relating to
devel an rats f the Owner, excepting only any such loss,
liabilit aim, or ju t a solely of the intentional wrongdoing or gross
neglige f City or i spe officers, officials, employees, members, agents,
volunteers, epresentat . Ow urther agrees for itself, and its successors and
assigns to in nify and nd an hold harmless the City, its respective officers,
members, offic employ , agents, volunteers, and representatives from and
against any loss, ty, c s, damages, penalties, losses, costs, expenses, injuries
and/or liabilities arisi laims that Owner's participation in the Program creates a
public work for prevaili age purposes thereby requiring the payment of prevailing
wages and this obligation shall apply regardless of whether or not the claim, damage,
penalty, loss, cost, expense, injury and/or liability complained of arises out of or relates
in any way to any negligence on the part of City. Owner, while in possession of the
Site, and each successor or assign of Owner while in possession of the Site, shall
remain fully obligated for the payment of property taxes and assessments in connection
with the Site. The foregoing indemnification, defense, and hold harmless agreement
shall only be applicable to and binding upon the party then owning the Site or applicable
portion thereof.
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OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
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110
7.2. ATTORNEYS' FEES. In the event that a party to this Agreement brings an
action against the other party hereto by reason of the breach of any condition, covenant,
representation or warranty in this Agreement, or otherwise arising out of this
Agreement, the prevailing party in such action shall be entitled to recover from the other
reasonable expert witness fees, and its reasonable attorney's fees and costs.
Attorney's fees shall include attorney's fees on any appeal, and in addition a party
entitled to attorney's fees shall be entitled to all other reasonable costs for investigating
such action, including the conducting of discovery.
7.3. AMENDMENTS. This Agreement shall mended only by a written
instrument executed by the parties hereto or their s sors in title, and duly recorded
in the real property records of the County of Rive
7.4. NOTICE. Any notice require a given h nder shall be made in
writing and shall be given by personal ry, certified or stered mail, postage
prepaid, return receipt requested, at the resses specified b or at such other
addresses as may be specified in writing by arties eto:
City: City Springs
3200 'tz Canyo y
Palm S 92262
Attn: Cit na
Copy to: f Palm i
32 , Tahq you
Pal prings, 2262
ttorne
r: e Palm LLC
91 Olympi vd., Suite 412
ever Is, CA 90212
epho 10-877-3110
Lauri ibby
Copy to: i-Cap, LLC
190 W. Olympic Blvd., Suite 412
Beverly Hills, CA 90212
Telephone: 310-877-3110
Attn: Lauri Kibby
The notice shall be deemed given three (3) business days after the date of
mailing, or, if personally delivered, when received.
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO. 6642
PAGE 10 OF 14
1 � �
7.5. SEVERABILITYM/AIVER/INTEGRATION
1 . Severability. If any provision of this Agreement or portion thereof, or the
application to any person or circumstances, shall to any extent be held invalid,
inoperative, or unenforceable, the remainder of the provisions, or the application of such
provision or portion thereof to any other persons or circumstances, shall not be affected
thereby; provided, that if any material terms or provisions of these Operating Covenants
are rendered invalid, void and/or unenforceable, or due to changes in the law such
terms or provisions would materially alter the terms of transactions contemplated
herein, the parties agree to meet and negotiate in go to attempt to reform these
Operating Covenants to accomplish the intent of th S.
2. Waiver. A waiver by either part e p ance of any covenant or
condition herein shall not invalidate this Ag nt nor sh be considered a waiver
of any other covenants or conditions, no the delay or fo- rance by either party
in exercising any remedy or right be con d a waiver of, or a toppel against, the
later exercise of such remedy or right.
3. Integration. This ent cont entire Agreem between the
parties and neither party relies o rranty o esentation not contained in this
Agreement.
4. Third Rad No thir rty b ries intended, and the only
parties who are en ' ce the is Operating Covenants are the
City, Mortgagees, cipant their re a succe rs and assigns.
7.6. GOVER L s Agr ent shall be governed by the laws of the
State of d is visi of Government Code Section 53083.
COUN R This Ag ent may be executed in any number of
counter each of sha stitute one original and all of which shall be one
and the sa strument.
7.8. INATIO his Agreement may be terminated only (i) by and upon
expiration of the (ii) utual written agreement of the parties, and (iii) by and
pursuant to the pro Section 7.9 or 7.10 below. In the event of any such
termination, Owner (or ccessor, as applicable) shall not be obligated to return any
amounts previously paid o it by the City pursuant to the Program.
7.9 DEFAULT BY OWNER. If at any time during the Term, City contends that
Owner has committed a material default with respect this Agreement, e.g., by failing to
operate the Dream Hotel as a first class "Dream Hotel' brand hotel, City shall deliver to
Owner written notice of default which specifies in detail all facts alleged by City to
constitute such default. For a period of thirty days thereafter, Owner will have the right
to commence and complete cure of the alleged default; provided, however, if the
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 11 OF 14
112
alleged default is of such a nature as to reasonably require more than sixty days to
cure, and the Parties so agree, Owner will have such addition time as is reasonably
necessary to complete such cure. Subject to Section 7.11 below, if Owner fails to timely
cure such default, City shall then have the right to terminate this Agreement. (To the
extent of any inconsistency between the provisions of this Section 7.9 and the
provisions of Section 3.1 above, the provisions of this Section 7.9 shall prevail.)
7.10 DEFAULT BY CITY. If at any time during the Term, Owner contends that
City has committed a material default with respect this eement, Owner may deliver
to City written notice of default which specifies in de facts alleged by Owner to
constitute such default. For a period of thirty days fter, City will have the right to
commence and complete cure of the alleged de 'ded, however, if the alleged
default is of such a nature as to reasonably r mo n sixty days to cure, and
the Parties so agree, City will have such n time as asonably necessary to
complete such cure. Subject to Sectio below, if City to timely cure such
default, Owner shall then have the right to inate this Agreem exercise any and
all other rights and remedies available at la in a and ea such rights and
remedies shall be cumulative an of exclusiv .
7.11 MORTGAGE PROM A ythin this Agreement to the contrary
notwithstanding, with respect to a c mortga r deed of trust given in good
faith and for value and encumberin Dr otel ( age"), any holder thereof
that has delivered copy o ch r Mo ge and current contact
information ("Mo ") a entit r' an efits in accordance with the
following:
1. ackn gree at the rights and obligations of Owner
under t ' ma or a val by City, be conditionally assigned
by O o any ee curity ormance of Mortgage obligations.
2. While any gag ains in effect, City will not amend or modify this
Agreemen any mate respe ithout receiving prior written approval from
Mortgagee, approval not be unreasonably withheld, delayed or conditioned;
provided, howe ilure b rtgagee to provide written approval or disapproval (and
if disapproval the r ns for) within thirty days of delivery of request therefor shall
be deemed to constit val by Mortgagee.
3. While any Mortgage remains in effect, in the event City delivers to Owner
of any notice of default as referenced in either Section 3.1 or 7.9 above, City shall
concurrently deliver a copy thereof to Mortgagee.
4. Delivery of any such notice of default notwithstanding, City will not
terminate or initiate or pursue any action to terminate this Agreement as long as
Mortgagee diligently (i) declares a default by Owner under the Mortgage, (ii) pursues
foreclosure and/or other appropriate actions under the Mortgage, (iii) pays to City all
AMENDED/RESTATED
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FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 12 OF 14
13
amounts that would otherwise have been payable by Owner to City, and (iv) cures non-
monetary defaults.
7.12 Operator Provisions. City acknowledges and agrees that operational
obligations of Owner may, with or without consent of City, be assigned by Owner to any
entity owned or wholly controlled by Owner or its Members or the Dream Hotel so long
as the hotel remains a "Dream Hotel" brand hotel.
Except as specified herein, in the event that the Dream Hotel brand hotel to be
developed hereunder ceases to operate as a Dre Hotel brand hotel, Owner's
benefits accruing pursuant to the Program will,-A,' inate, effective immediately.
% r
However, in the event of Dream Hotel unilaterp1W
t easing operation at the Site, or
Owner terminating Dream Hotel for cause afte( at�east five,�'5) years of operation as a
Dream Hotel brand hotel (in either case, a Dream Hotb[4, ,.rmination Event"), then
Owner shall have the right to apply to the'Rrvity for approval cif,n amendment to this
Restated Covenant, which amendment shatf provide for the resdmpion of said benefits
pursuant to the Program. The City will conSiE�er any suchapplicatidifi or an amendment
at a public hearing provided that the City maps ination, in an',exercise of the
City s sole discretion, that the fl9grbrand of hiet�lat will operate or' s proposed to
operate at the Site as a replacerde a Dream�Qiel brand hotel is commensurate
with or superior to Dream Hotel's rC re an�Sition as of this Agreement's
Effective Date. The parties understaW_ nd that O tte r has no right to or specific
expectation of any arrtftnt to this Restate v_ e�ant sut3.sequent to a Dream Hotel
Termination Event&,',,;
x,. a, ,
k .
Developer sha) �t ve the,'duty to pro e the City with written notice of any actual
or potentialDream Hoe Even mediately upon Owner's determination
that a D� e Term7na�ofi Eve s tin Place or is reasonably likely to take
place. �otice ill incft a withou ' I tion Owner's identification of the flag or
9 �5
brandlS actual r; ten�gN eplacemont hotel proposed as the basis for an
amendmat t. iereunder, a reIe� ata to assist the City in determining whether the
replacemen`fiptel is consent wi he quality standard required by this Restated
Covenant. Fu , Owner c'1'6' s that Owner shall reimburse City for the cost of City
procurement of a. ydy, by qualified consultant, of the proposed replacement hotel,
and whether said 1 Ce AIR is consistent with the requirements of this Restated
Covenant. anti«
�,
Upon City's approval of an amendment to this Restated Covenant, approving the
replacement for the Dream Hotel brand hotel, and, in connection therewith, such
replaced Hotel Operator may assume all or part of Owner's Hotel operation obligations
under this Agreement; provided, however, Owner shall retain ultimate responsibility for
such Hotel operation obligations. City agrees that while any Hotel Operator agreement
is in effect, and provided that City has been put on notice of such agreement and
received contact information for such Operator, in the event City delivers to Owner of
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 13 OF 14
114
any notice of default as referenced in either Section 3.1 or 7.9 above, City shall
concurrently deliver a copy thereof to the Operator.
7.13 COOPERATION. Each party agrees to and shall do and perform such
other and further acts and properly execute and deliver such other and further
documents as may be reasonably necessary, expedient or convenient to implement
and/or effectuate the intents and purposes hereof. City and Owner agree to cooperate
with each other and/or with any Mortgagee or proposed Mortgagee, in a manner
consistent with concepts and principles of good faith, flair dealing and commercial
reasonableness, with respect to consideration, implementation and execution of any
modification(s) to this Agreement reasonably requeste by the City, Owner, Mortgagee
or proposed Mortgagee.
7.14 REASONABLE APPROVALS. Whenever this Agreement requires or calls
for the approval or consent of any party her ty;such approval shall not be unreasonably
withheld, delayed or conditioned.
7.15 BINDING ARBITRATION. In the ven -,,o-f any dlspufeyor controversy
arising out of or relating to this f?�greement, oel each or perforhiance of it, the
parties shall reasonably attempt fo resolve_such dig or controversy without resort to
third party review or resolution The_part is-shall fi&4- and confer on any such
dispute or controversy. Such meetings) st jolude and rtcipal of the Owner and, at
the discretion of they, they include the Cityrer anlorthe City Council, either
as a whole or throuh'an adHoc subconi�► tteMeslaed by the City Council. Upon a
determination by f C re�, arties Y t they aW Will be ufiable to resolve the dispute or
controversy on their oven, then the parties hell submit the dispute, controversy or any
remaining unresolved nietterA b,, ! tO n arbitration, to be held in the Coachella Valley,
and be ,corsdtcted pursua} dx theTormerel Arbitration Rules of the American
Arbitration Association' , ->
7 1fi'x _INCORPONkION - RECITALS AND EXHIBITS. Each of the recitals
set forth aba' 'a and each otrthe exhrb s-attached hereto are agreed to and made part of
this Agreemenf
tom. -
7.17 AUTHORITY Each party represents and warrants to the other that such
party has full right, pour, h-d-rauthority to sign, execute and enter into this Agreement.
[SIGNATURES ON NEXT PAGE]
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 14 OF 14
1� 5
IN WITNESS WHEREOF, the City and Owner have executed this Operations
Covenant by duly authorized representatives on the date first written hereinabove.
"CITY"
THE CITY OF PALM SPRINGS,
a municipal corporation and charter city
By:
David H. Ready, City Manager
ATTEST:
Kathleen D. Hart, Interim City Clerk
APPROVED AS TO FORM:
Edward Z. Kotkin, Ci
ER"
Sel Palm Springs, LLC, a California limited
bill mpany
By:
Lauri Kibby for CDI Ventures, LLC
Managing Member
By:
Abdul Q. Lalani for Qaiser Capital, LLC
Managing Member
[END OF SIGNATURES]
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 15 OF 14
116
EXHIBIT "A"
LEGAL DESCRIPTION
SECTION 14, TOWNSHIP 4 SOUTH,RANGE 4 EAST, SAN BERNARDINO MERIDIAN,
LEGAL DESCRIPTION
BLOCKS 103, 105 AND 106 OF BUREAU OF LAND MANAGEMENT PLAT CA270040S0040E0, DATED JUNE
27, 1957, IN SECTION 14, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO MERIDIAN, IN THE
CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE,STATE OF CALIFORNIA,ACCORDING TO THE
OFFICIAL PLAT THEREOF,AND IS MORE PARTICULARLY DESCRIBED AS FALLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 106,
THENCE ALONG THE WESTERLY LINE OF SAID LOTS 106 AND 103, NORTH 00503'35"WEST
645 16 FEET MORE OR LESS TO THE NORTHWEST CORNER OF SAID LOT 103:
THENCE ALONG THE NORTHERLY LINE OF SAID LOT 103, SOUTH 89043'40" EAST 354,25 FEET
MORE OR LESS TO THE NORTHEAST CORNER OF SAID LOT 103,
THENCE ALONG THE EASTERLY LINE OF SAID LOT 103,SOUTH 00"05'5r EAST 330.05 FEET
MORE OR LESS TO THE SOUTHEAST CORNER OF SAID LOT 103.
THENCE ALONG THE NORTHERLY LINE OF SAID LOT t05. SOUTH 89"49'25" EAST 352.97 FEET
MORE OR LESS TO THE NORTHEAST CORNER OF SAID LOT 105.
THENCE ALONG THE EASTERLY LINE OF SAID LOT 105, SOUTH 0000610"EAST 315.17 FEET
MORE OR LESS TO THE SOUTHEAST CORNER OF SAID LOT 105,
THENCE ALONG THE SOUTHERLY LINES OF SAID LOTS 105 AND 106, NORTH 89646'17"WEST
707 68 FEET TO THE POINT OF BEGINNING;
SAID ABOVE DESCRIBED AREA IN METES AND BOUNDS CONTAINS 7.80 ACRES, MORE OR
LESS,AND INCLUDES PORTIONS OF ADJACENT ALLEYS AS VACATED IN DOCUMENT NUMBER
651 FROM THE CITY OF PALM SPRINGS.AND IS SUBJECT TO ALL COVENANTS,RIGHTS,
RIGHTS-OF-WAY,ALLEY WAYS,AND EASEMENTS OF RECORD, INCLUDING AMADO ROAD,
NORTH CALLE ALVARADO,AND NORTH AVENIDA CABALLEROS RIGHTS OF WAY.
THIS DOCUMENT WAS PREPARED BY
ME OR UNDER MY DIRECTION, SAND S
BASED ON RECORD INFORMATION. &W € Lew
a
Frn�uvx�adoroR
No 7070
PHILLIP K, FOMOTOR.P,L,S.
TF flf (�PLFIJ'
AMENDED RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
EXHIBIT"A"
117
EXHIBIT °B"
SITE PLAN
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AMENDED/RESTATED
OPERATIONS COVENANT
�.r FOR HOTEL INCENTIVE PROGRAM
r.� AGREEMENT NO. 6642
W EXHIBIT"B"
FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
THE CITY OF PALM SPRINGS
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attention: City Clerk
(Space Above This Line for Recorder's Office Use Only)
AMENDED AND RESTATED
OPERATIONS COVENANT
AGREEMENT-NO. 6642
THIS AMENDED AND RESTATED OPERATIONS COVENANT AND
DECLARATION OF COVENANTS AND RESTRICTIONS (the "Agreement" or
Restated Covenant ) is made and entered into-this 18th'day of October, 2017, by and
between the CITY OF PALM SPRINGS, a AnidoaI corporation and charter city
("City'), by and through its City Council,.and Selene',PaIm Springs, LLC, a California
limited liability company, ("Owner").
REC, ITAl<S
A. The City of Palm'Springs adopted Chaptet 5.26 of its'Municipal Code in December,
2007 to provide a 'Hotel Operations Incentive Program ("Program") for the operation,
maintenance and expansion Of the inventory of quality and first class hotels within
the City that`..enhance",.thOO 'tourist;and travel experience for visitors to the City,
maximize the use'of the City's Convention, Center, provide attractive and desirable
visitor serving facil'ities,andge periences 'a'nd assist the City in achieving its tourism
goals.,(Chapter 5.26 of,"the MUpcipal Code is incorporated herein by reference and
defined terms therein shall, un less" otherwise indicated, have the same meanings
herein.)
B. On December IT, 2014,e€City and Equi-Cap, LLC, a California limited liability
company, ("Equi`Cap"),.entered into that certain Operations Covenant for a first
class new hotel to contain approximately 205 hotel rooms identified as the Selene
Palm Springs Resort, (the "Original Hotel"), to be developed on that certain real
property, (the "Site"), which is generally located at the northeast corner of Calle
Alvarado and Amado Road as legally described on Exhibit "A", and as depicted on
the Site Plan attached hereto as Exhibit "B", incorporated herein by reference. The
Operations Covenant was recorded on March 6, 2015, as Document No. 2015-
0090568, (the "Original Covenant").
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 1 OF 14
119
C. At the time of the execution of the Original Covenant, City was under contract with
Owner, as successor in interest, pursuant to that certain Purchase and Sale
Agreement, (Agreement No. 6329), as amended, originally approved by the City
Council on March 6, 2013, and originally executed by and between the City and CDI
Ventures, LLC, a California limited liability company, ("CDI"), to convey fee title real
property interest in the Site for the purposes of developing a new first class hotel on
the Site.
D. The Original Covenant was entered into by and between City and Owner's affiliate,
Equi-Cap. However, at the time of execution of the Original Covenant, neither Owner
nor Equi-Cap had any real property interest in the .Site. Amendment No. 1 dated
March 5, 2014, to Agreement No. 6329 confirmed that Praetor Investments, LLC, a
California limited liability company, ("Praetor"), was the successor in interest to CDI.
Amendment No. 2 to Agreement No. 6329<dated October 1, 2014, confirmed that
Selene Palm Springs, LLC, a California limited liability company, was the successor
in interest to Praetor. It is the intentlonof the Parties to acknowledge that Selene
Palm Springs, LLC, a California limited liability company, as Owner herein, is the
owner of any and all rights in and to the Program, pursuant to this Restated
Covenant. `
E. On August 26, 2016, City and Owner completed<tbe real property transaction
consummated by Agreement No. 6329, and .City conveyed fee title interest in the
Site to Owner pursuant to that certailn,Grant Deets recorded as Document No. 2016-
0367646.
F. On June 7, 20171 the City'Council adopted Resolution No. 24236, approving an
amendment to Final Planned Development bistrict 333 proposed by Owner, revising
the Origina['Hotel,-to a`first�class new hotel project consisting of 169 hotel rooms, to
be operated as a "Dream`Hotel" brand hotel by the Dream Hotel Group, (the "Dream
Hotel";or "Project"). The Protect approved by the City Council also includes 34 multi-
family condominium residential units. It is the intention of the Parties to identify the
Dream Hotel as the "flrsf;cIass neW hotel" that will benefit from participation in the
Program pursuant to this Restated Covenant.
G. In accordance with the City's approval of the Dream Hotel on June 7, 2017, Owner
will submit construction 'drawings for the Dream Hotel to the City for review and
approval on or before December 31, 2017, and will be prepared to commence with
demolition of existing surface improvements and grading operations on the Site on
or before December 31, 2017.
H. Pursuant to Chapter 5.26 of the Municipal Code, Owner must demonstrate that the
Hotel is "under construction" prior to December 31, 2017. The Parties hereby
acknowledge that in light of the City's recent approval of the amendment to Planned
Development District 333 on June 7, 2017, Owner will not be in a position to
demonstrate that the Hotel is "under construction" prior to December 31, 2017, and it
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 2 of 14
120
is the intention of the Parties to provide for an extension of time for Owner to
demonstrate such compliance pursuant to this Restated Covenant.
I. The Parties acknowledge that the Dream Hotel, as entitled and approved, will qualify
as a new First Class Hotel under and pursuant to the provisions of Chapter 5.26,
and further, the Parties hereby agree that pursuant to the terms of this Restated
Covenant, the obligation to demonstrate that the Dream Hotel will be "under
construction" prior to December 31, 2017, in accordance with Chapter 5.26 shall be
extended eighteen (18) months to June 30, 2019. Owner further agrees that it shall:
(i) prepare construction drawings for the vertical "core,and shell" of the Dream Hotel,
and will submit these construction drawings to the City for review and approval for
building permit on or before April 30, 2018; (ii) proceed with construction of the
underground parking facility and the foundation for the vertical construction of the
Dream Hotel not later than April 1, 2018; (iii) commence with construction of the
vertical "core and shell" of the Dream Hotel by December 31, 2018; and (iv)
complete construction of the Dream Hotel by June 30, 2020, unless such completion
date is otherwise further modified in accordance :with an amendment to the
Purchase and Sale Agreement entered into between the City and Owner (identified
as Agreement No. 6329, approved by action of.-the City Council of the City, and
whereby the completion date is a necessary prerequisite to complying with the terms
of this Restated Covenant. It is the intention of the Parties to incorporate herein this
Agreement the revised obligation dates for commencement and completion of
construction of the Dream.Hotel, and,,that if completed and under operation by the
dates of commencement-and completion as'stated ,herein this Recital, the Dream
Hotel will qualify as a new First Class Hotel and be entitled to benefits thereof under
and pursuant to the provisions of Chapter 5.26 of the Municipal Code and this
Agreement.
J. Except as otherwise alloWbQd pursuant`to Section 7.12 of this Restated Covenant,
Owner understand acid agrees that, to the extent Owner does not construct a
"Dream Hotel" brand hotel, aho, p,ursues construction of an alternatively branded
hotel, such.alternatively'branded hotel will not qualify as a new First Class Hotel, and
shall not be entitled to ahybenefits thereof under or pursuant to the provisions of
Chapter 5.26 of the Municipal Code and this Agreement. Accordingly, this
Agreement will be of no further effect, and City shall have no obligations hereunder.
ur
K. City and Owner now desire to place restrictions upon the use and operation of the
Hotel, in order to ensure that the Hotel shall be operated continuously as a First
Class Hotel available for short-term rental for the term of this Restated Covenant.
L. City and Owner also agree that in return for participation in the Program, Owner
shall agree to operate the Hotel as a "Dream Hotel" brand hotel; participate in the
Palm Springs Convention Center's Committable Rooms Program; and provide City
with a minimum of eight (8) room-nights per month for official City use; and, City
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PACE 3 OF 14
121
agrees to share a percentage of Transient Occupancy Tax Increment with Owner
pursuant to the Program guidelines.
M. The City finds that no further environmental review is required in connection with the
approval of this Restated Covenant, in that in connection with City approval of the
entitlements related to the Project on June 7, 2017, the City Council approved a
mitigated negative declaration, and the City finds that this mitigated negative
declaration is the controlling environmental document for the Project, and that no
further environmental review is necessary.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Owner hereby conveys to the City
the Operating Covenants described herein, and City hereby agrees to provide Owner
with funds as provided under the Program and as set forth hereinafter.
ARTICLE I
STATEMENT OF OPERATING COVENANTS
1.1. OPERATION AND ,USE '.COVENANT. Beginning on or before June 30,
2020, Owner covenants to operate, maintain., and use the Dream Hotel in accordance
with this Agreement. All uses conducted'on''the Site, including, without limitation, all
activities undertaken by the Owner pursuant'to this Agreement shall, in all material
respects, conform to requirements of this Agreement and,Palm Springs Municipal Code.
The parties understand and agree that thkib` er may seek to amend this Agreement
pursuant to certain terms and conditions as stated herein, and that in the event of City
approval of such an amendment, a hotel identified by Owner with a flag or brand apart
from the Dream .Hotel may serve to fulfill Owner's duties hereunder. Absent such an
amendment hereto, Owner's operation, maintenance and use of a Dream Hotel shall be
a condition precedent=to Owner's receipt of any and all consideration or benefit under
the Program and hereunder:
1.2 HOTEL USE. The Owner hereby agrees that the Project is to be owned,
managed, and operated as a"'Dream Hotel" brand hotel in a first-class manner, and the
Project's particlpatior? inthe.Program shall continue in accordance with the terms of the
Program, for a term equal to thirty years commencing upon the date Owner first
receives from the City the`Owner's share of transient occupancy tax revenues pursuant
to the Program, or until Owner has received from the City the total sum of fifty million
dollars ($50,000,000) if that occurs prior to the expiration of said thirty years, unless
Owner's participation in the Program is terminated prior thereto in accordance with this
Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a)
and Sections 7.9, 7.11, and 7.15 of this Covenant, during the Term, City shall pay to
Owner, within thirty days after receipt from Owner of twelve monthly payments made by
Owner to the tax administrator per Section 3.24.080 of the Municipal Code, an amount
equal to seventy-five percent (75%) of the an amount equal to seventy-five percent of
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 4 OF 14
122
the adjusted tax rate of those payments made to the City. City acknowledges and
agrees that City has reviewed proposed development and operational plans for the
Dream Hotel and concluded that such plans are in substantial compliance with and will
satisfy First Class Hotel requirements of the City and Chapter 5.26 of the Municipal
Code.
1.3 HOUSING USES PROHIBITED. Excepting therefrom the 34 multi-family
residential condominium units approved as part of the Project, none of the 169 hotel
rooms in the Project will at any time be utilized as a non-transient residential property
including dormitory, fraternity or sorority house, rooming house, nursing home, hospital,
sanitarium, or trailer court or park without the City's prior consent which consent may be
given or withheld in its sole and absolute discretion.
1.4 CONVERSION OF PROJECT. Excepting therefrom the 34 multi-family
residential condominium units approved as part of the Project,no part of the Project will
at any time be owned by a cooperative dousing corporation, nor shall the Owner take
any steps in connection with the conversion of the169 hotel rooms to such ownership
or uses to condominiums, or to any other form of ownership, without the prior written
approval of the City Council which approval may;be.given or withheld in its sole and
absolute discretion.
ARTICLE2,_
WARRANTIES AND
;COVENANTS
2.1. WARRANTIES AND COVENANTS. For the Term of this Agreement, the
Owner hereby represents, covenants,warrants and agrees as follows:
1. Owner has complet6d,_the City's application for the Hotel
Operations Incentive Program. Sincethe Dream Hotel will be a new hotel, City
has determined the"Transi4ht Occupancy Tax Base to be used to calculate the
Transient Occupancy Tax Increment shall be zero dollars ($0.00), and the Owner
accepls,such Transierit'Occupancy Tax Base.
.{g
2. Owner hereby agrees to subscribe to the Palm Springs Convention
Center's Cornmittable"Rooms Program or any similar successor program as
identified by the C_ity`Manager without being obligated to incur any additional
costs or expenses.'
3. Upon City's prior request, Owner shall provide the City at no cost
eight (8) rooms for one (1) night (or 4 rooms for 2 nights) other than Friday or
Saturday nights each month for use for City purposes as approved or designated
by the City Manager, provided that such use by the City shall be subject to the
rooms being available at the time of the City's request. Such accommodations
shall include all services and amenities for which the Owner would normally
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 5 OF 14
123
collect transient occupancy taxes but will not include services and amenities that
are optional to the transient and for which the transient is not required to pay a
transient occupancy tax. City shall be responsible for any transient occupancy
taxes for any occupancy provided to City under the provisions of this paragraph.
Notwithstanding anything in this Agreement to the contrary, if the City does not
use rooms during any month, then its right to use rooms with respect to that
month shall expire at the end of that month and shall not accrue; provided,
however, if the City was unable to use rooms solely because Owner's Hotel had
no rooms available when the City requested a room in accordance with this
Section 2.1.3, then, the City's right to use rooms shall not expire and may be
used by the City in a subsequent month.
ARTICLE3
MAINTENANCE
3.1. MAINTENANCE.
1. Maintenance Obligation. Owner, for itself and its successors and
assigns, hereby covenants and'agrees to maintain and repair or cause to be
maintained and repaired the Site,and all related on-site improvements and
landscaping thereon, including, without .limitation, buildings, parking areas,
lighting, signs and walls in a first class condition and repair, free of rubbish,
debris and other hazards to persons using the same, and in accordance with all
applicable laws, rules, ordinances and regulations of all federal, state, and local
bodies and agencies having jurisdiction, at Owner's sole cost and expense.
Such maintenance and repair shall include, but not be limited to, the following: (i)
sweeping and trash removal; (ii).the'care and replacement of all shrubbery,
plantings, and other landscaping .in a 'healthy condition; and (iii) the repair,
replacement and restripih6 of asphalt or concrete paving using the same type of
material originally i_ talled;46,the end that such paving at all times be kept in a
level and smooth con i ion. In addition, Owner shall be required to maintain the
Project'in such a mariner as to avoid the reasonable determination of a duly
authorized;official of the City that a public nuisance has been created by the
absence of adequate maintenance such as to be detrimental to the public health,
safety or general welfare or that such a condition of deterioration or disrepair
causes appreciable harm or is materially detrimental to property or improvements
within one thousand (1,000) feet of such portion of the Site.
2. Parking and Driveways. The driveways and traffic aisles on the Site
shall be kept clear and unobstructed at all times.
3. Right of Entry. In the event Owner fails to maintain the Site in the
above-mentioned condition, and satisfactory progress is not made in correcting
the condition within thirty (30) days from the date of written notice from City (such
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 6 OF 14
124
notice shall reasonably identify the required maintenance), City may, at City's
option, and without further notice to Owner, declare the unperformed
maintenance to constitute a public nuisance. Thereafter, either City or its
employees, contractors, or agents, may cure Owner's default by entering upon
the Site and performing the necessary landscaping and/or maintenance in
accordance with Section 3.1.1 above. The City shall give Owner, its
representative, or the residential manager reasonable notice of the time and
manner of entry, and entry shall only be at such times and in such manner as is
reasonably necessary to carry out this Agreement. Owner shall pay such costs
as are reasonably incurred by City for such maintenance, including attorneys'
fees and costs.
4. Lien. If any costs incurred by City under Section 3 above are not
reimbursed within thirty (30) days after Owner's receipt of City's written request
for reimbursement, the same shall; be deemed delinquent, and the amount
thereof shall bear interest thereafter"_at a rate of the lower of ten percent (10%)
per annum or the legal maximum until paid. Any and all delinquent amounts,
together with said interest, costs and reasonable attorney's fees, shall be an
obligation of Owner as well as a lien and charge, with power of sale, upon the
property interests of Owner, and the rents, issues and profits of such property.
City may bring an action at IaN againstOwner obligated to pay any such sums or
foreclose the lien against Owner's property interests. Any such lien may be
w,.
enforced by sale by the City following recordation of a'Notice of Default of Sale
given in the manner and time required 15 law as;in the case of a deed of trust;
such sale to be conducted,in accordance with the provisions of Section 2924, et
seq., of the California ClvilS Code, applicable to the exercise of powers of sale in
mortgages and deeds of trust, or inn any other manner permitted by law.
Any monetary lien provided for herein shall be subordinate to any bona
fide.,mortgage or deed of trust covering an ownership interest or leasehold or
sub-leasehold estate''in and io any portion of the Site, and any purchaser at any
foreclosure or trustee's sale (as well as any deed or assignment in lieu of
foreclosure or trustee's dale) under any such mortgage or deed of trust shall take
title free from any suc►i�monetary lien, but otherwise subject to the provisions
hereof; provided that,''ofter the foreclosure of any such mortgage and/or deed of
trust, all other a"ssessments provided for herein to the extent they relate to the
expenses incurred subsequent to such foreclosure, assessed hereunder to the
purchaser at the foreclosure sale, as owner of the subject Site after the date of
such foreclosure sale, shall become a lien upon such Site upon recordation of a
Notice of Assessment or Notice of Claim of Lien as herein provided. In the event
of any such foreclosure, City (or successor) agrees to and shall recognize and
honor any existing commercial (non-transient occupancy) leases in effect with
respect to portions of the Project, provided that commercial tenants of such
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 7 OF 14
125
leases agree to subordinate and attorn to City (or successor) as the new landlord
with respect to such leases.
ARTICLE4
COMPLIANCE WITH LAWS
4.1. COMPLIANCE WITH LAWS. Owner shall comply with all ordinances,
regulations and standards of the City and City applicable to the Site. Owner shall
comply with all rules and regulations of any assessment district of the City with
jurisdiction over the Site.
ARTICLE 5
NONDISCRIMINATION
5.1. NONDISCRIMINATION. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed,
religion, gender, sexual orientation, gender identity;gender expression, marital status,
national origin, ancestry, physical or mental disability,'-or medical condition in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part
thereof, nor shall Owner, or any person claiming under or`through it, establish or permit
any such practice or practices of discrimination or,.,segregation with reference to the
selection, location, number, use or occupancy'ofigtie6ts or vendees of the Site, or any
part thereof.
ARTICLE6
COVENANTSIO RUN WITH THE LAND
6.1. COVENANTS TOAUN WITH THE LAND. Owner hereby subjects the
Site to the covenants, reservations; and restrictions set forth in this Agreement. City
and Owner hereby declare°their express intent that all such covenants, reservations,
and restrictions shall be deeried covenants running with the land and shall pass to and
be binding upon the Owner's"successors in title to the Site; provided, however, that on
the termination of phis Agreement said covenants, reservations and restrictions shall
expire. All covenants withaLA regard to technical classification or designation shall be
binding for the benefit of the City, and such covenants shall run in favor of the City for
the entire term of this Agreement, without regard to whether the City is or remains an
owner of any land or interest therein to which such covenants relate. Each and every
contract, deed or other instrument hereafter executed covering or conveying the Site or
any portion thereof shall conclusively be held to have been executed, delivered and
accepted subject to such covenants, reservations, and restrictions, regardless of
whether such covenants, reservations, and restrictions are set forth in such contract,
deed or other instrument.
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 8 OF 14
126
City and Owner hereby declare their understanding and intent that the burden of
the covenants set forth herein touch and concern the land in that Owner's legal interest
in the Site is rendered less valuable thereby. City and Owner hereby further declare
their understanding and intent that the benefit of such covenants touch and concern the
land by enhancing and increasing the enjoyment and use of the Project by the intended
beneficiaries of such covenants, reservations, and restrictions, and by furthering the
public purposes for which the City was formed.
Owner, in exchange for the City entering into this Agreement, hereby agrees to
hold, sell, and convey the Site subject to the terms of this Agreement. Owner also
grants to the City the right and power to enforce the.terms of this Agreement against the
Owner and all persons having any right, title or interest in the Site or any part thereof
while such party owns the -Site. No party, shall have any liability or obligation in
connection with any breach occurring while such party is not the owner of the Site.
Within fifteen (15) business days after request of Owner, City shall execute and
provide to Owner an estoppel certificate, in the form approved by the- City Attorney of
the City, confirming whether or not Owner is in breach of any obligations under this
Agreement and identifying any required cure.
ARTICLE 7
INDEMNIFICATION.
7.1. INDEMNIFICATION. Owner agrees for itself and its successors and
assigns to indemnify, 'defend, and hold -harmless City and its respective officers,
members, officials, employees, ,agents, volunteers, and representatives from and
against any loss, liability, claim, 'or judgment .to or by any third party relating to
development and/or,operation of the Project by Owner, excepting only any such loss,
Iiability,•claim, or judgment arising solely out of the intentional wrongdoing or gross
negligence of City or its respective,officers, officials, employees, members, agents,
volunteers; or,, representative`s. Owner further agrees for itself, and its successors and
assigns to indemnify and defend and hold harmless the City, its respective officers,
members, officials,,,employees, agents, volunteers, and representatives from and
against any loss, liability, claims, damages, penalties, losses, costs, expenses, injuries
and/or liabilities arising=out 6f,claims that Owner's participation in the Program creates a
public work for prevailing ',wage purposes thereby requiring the payment of prevailing
wages and this obligation shall apply regardless of whether or not the claim, damage,
penalty, loss, cost, expense, injury and/or liability complained of arises out of or relates
in any way to any negligence on the part of City. Owner, while in possession of the
Site, and each successor or assign of Owner while in possession of the Site, shall
remain fully obligated for the payment of property taxes and assessments in connection
with the Site. The foregoing indemnification, defense, and hold harmless agreement
shall only be applicable to and binding upon the party then owning the Site or applicable
portion thereof.
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 9 OF 14
127
7.2. ATTORNEYS' FEES. In the event that a party to this Agreement brings an
action against the other party hereto by reason of the breach of any condition, covenant,
representation or warranty in this Agreement, or otherwise arising out of this
Agreement, the prevailing party in such action shall be entitled to recover from the other
reasonable expert witness fees, and its reasonable attorney's fees and costs.
Attorney's fees shall include attorney's fees on any appeal, and in addition a party
entitled to attorney's fees shall be entitled to all other reasonable costs for investigating
such action, including the conducting of discovery.
7.3. AMENDMENTS. This Agreement shall be amended only by a written
instrument executed by the parties hereto or their successors in title, and duly recorded
in the real property records of the County of Riverside.
7.4. NOTICE. Any notice required to be given hereunder shall be made in
writing and shall be given by personal delivery, certified or registered mail, postage
prepaid, return receipt requested, at the addresses specified below, or at such other
addresses as may be specified in writing by the parties hereto:
City: City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs,CA-92262
Attn: City Manager
Copy to: City of Palm Springs
3200`E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: City Attorney
Owner: Selene Palm Springs, LLC
9190.W. Olympic Blvd., Suite 412
Beverly Hills, CA 90212
Telepho ne: 310-877-3110
Attu: Lauri Kibby
YT'i
Copy to: ;Equi-Cap, LLC
9190 W. Olympic Blvd., Suite 412
Beverly Hills, CA 90212
Telephone: 310-877-3110
Attn: Lauri Kibby
The notice shall be deemed given three (3) business days after the date of
mailing, or, if personally delivered, when received.
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 10 OF 14
128
7.5. SEVERABILITY/WAIVER/INTEGRATION
1. Severability. If any provision of this Agreement or portion thereof, or the
application to any person or circumstances, shall to any extent be held invalid,
inoperative, or unenforceable, the remainder of the provisions, or the application of such
provision or portion thereof to any other persons or circumstances, shall not be affected
thereby; provided, that if any material terms or provisions of these Operating Covenants
are rendered invalid, void and/or unenforceable, or due to changes in the law such
terms or provisions would materially alter the terms of the transactions contemplated
herein, the parties agree to meet and negotiate in good faith to attempt to reform these
Operating Covenants to accomplish the intent of the parties.
2. Waiver. A waiver by either party,,of the performance of any covenant or
condition herein shall not invalidate this Agreement nor shall it be considered a waiver
of any other covenants or conditions, nor shali"the delay or forbearance by either party
in exercising any remedy or right be considered a waiver of, or an estoppel against, the
later exercise of such remedy or right.
3. Integration. This Agreement contains the entire Agreement between the
parties and neither party relies on any warranty or representation not contained in this
Agreement.
4. Third Parties. No third party beneficiaries are intended, and the only
parties who are entitled to 'enforce the provisions of these Operating Covenants are the
City, Mortgagees, Owner and their respective successors and assigns.
7.6. GOVERNING LAW' This Agreement shall be governed by the laws of the
State of Califomia.and is subject to the provisions of Government Code Section 53083.
7.7. COUNTERPARTS.;: This Agreement may be executed in any number of
counterparts, each of which shall constitute one original and all of which shall be one
and the same.instrument.
7.8. TERMINATION. .This Agreement may be terminated only (i) by and upon
expiration of the Term, (ii) by mutual written agreement of the parties, and (iii) by and
pursuant to the provisior)ys.of'Section 7.9 or 7.10 below. In the event of any such
termination, Owner (or its successor, as applicable) shall not be obligated to return any
amounts previously paid fo it by the City pursuant to the Program.
7.9 DEFAULT BY OWNER. If at any time during the Term, City contends that
Owner has committed a material default with respect this Agreement, e.g., by failing to
operate the Dream Hotel as a first class "Dream Hotel' brand hotel, City shall deliver to
Owner written notice of default which specifies in detail all facts alleged by City to
constitute such default. For a period of thirty days thereafter, Owner will have the right
to commence and complete cure of the alleged default; provided, however, if the
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 11 OF 14
129
alleged default is of such a nature as to reasonably require more than sixty days to
cure, and the Parties so agree, Owner will have such addition time as is reasonably
necessary to complete such cure. Subject to Section 7.11 below, if Owner fails to timely
cure such default, City shall then have the right to terminate this Agreement. (To the
extent of any inconsistency between the provisions of this Section 7.9 and the
provisions of Section 3.1 above, the provisions of this Section 7.9 shall prevail.)
7.10 DEFAULT BY CITY. If at any time during the Term, Owner contends that
City has committed a material default with respect this Agreement, Owner may deliver
to City written notice of default which specifies in detail, all facts alleged by Owner to
constitute such default. For a period of thirty days thereafter, City will have the right to
commence and complete cure of the alleged default; provided, however, if the alleged
default is of such a nature as to reasonably require more than sixty days to cure, and
the Parties so agree, City will have such addition time as is`reasonably necessary to
complete such cure. Subject to Section,7,Jl below, if City fails to timely cure such
default, Owner shall then have the right to terminate this Agreement or exercise any and
all other rights and remedies available at law and in equity, and each of such rights and
remedies shall be cumulative and not exclusive.
7.11 MORTGAGE PROVISIONS: Anything 1h this Agreement to the contrary
notwithstanding, with respect to any°recorded mortgage or deed of trust given in good
faith and for value and encumbering the Dream Hotel ("Mortgage"), any holder thereof
that has delivered to City, a copy of such recorded Mortgage and current contact
information ("Mortgagee") will be entitled ,rights 'an`d benefits in accordance with the
following:
1. City acknowledges,and agrees,;that the rights and obligations of Owner
under this Agreement may,-,with' or"without approval by City, be conditionally assigned
by Owner to any Mortgagee as security for performance of Mortgage obligations.
2. While any Mortgage remains in effect, City will not amend or modify this
Agreement in ,any material �.resp6bt.`without receiving prior written approval from
Mortgagee, which approval 'may not be unreasonably withheld, delayed or conditioned;
provided, however,failure by Mortgagee to provide written approval or disapproval (and
if disapproval the reasons therefor) within thirty days of delivery of request therefor shall
be deemed to constitute`appr val by Mortgagee.
3. While any Mortgage remains in effect, in the event City delivers to Owner
of any notice of default as referenced in either Section 3.1 or 7.9 above, City shall
concurrently deliver a copy thereof to Mortgagee.
4. Delivery of any such notice of default notwithstanding, City will not
terminate or initiate or pursue any action to terminate this Agreement as long as
Mortgagee diligently (i) declares a default by Owner under the Mortgage, (ii) pursues
foreclosure and/or other appropriate actions under the Mortgage, (iii) pays to City all
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 12 of 14
130
amounts that would otherwise have been payable by Owner to City, and (iv) cures non-
monetary defaults.
7.12 Operator Provisions. City acknowledges and agrees that operational
obligations of Owner may, with or without consent of City, be assigned by Owner to any
entity owned or wholly controlled by Owner or its Members or the Dream Hotel so long
as the hotel remains a "Dream Hotel" brand hotel.
Except as specified herein, in the event that the Dream Hotel brand hotel to be
developed hereunder ceases to operate as a Dream Hotel brand hotel, Owner's
benefits accruing pursuant to the Program will, terminate, effective immediately.
However, in the event of Dream Hotel unilaterally ceasing operation at the Site, or
Owner terminating Dream Hotel for cause after at least five'(5) years of operation as a
Dream Hotel brand hotel (in either case, a "Dream Hotel;Termination Event"), then
Owner shall have the right to apply to the City for approval of an amendment to this
Restated Covenant, which amendment shall provide for the resumption of said benefits
pursuant to the Program. The City will consider any such application for an amendment
at a public hearing provided that the City makes a determination, in an exercise of the
City's sole discretion, that the flag or brand of hotel that will operate or is proposed to
operate at the Site as a replacement for the Dream Hotel brand hotel is commensurate
with or superior to Dream Hotel's market 'share and position as of this Agreement's
Effective Date. The parties understand and agree that Owner has no right to or specific
expectation of any amendment to this Restated Covenant subsequent to a Dream Hotel
Termination Event.
Developer shall have the duty to provide the City with written notice of any actual
or potential Dream Hotel Termination ,Event immediately upon Owner's determination
that a Dream Hotel Termination Event has, taken place or is reasonably likely to take
place. That notice shall,,include .without limitation Owner's identification of the flag or
brand of an actual or potential replacement hotel proposed as the basis for an
amendment hereunder, and relevant data to assist the City in determining whether the
replacement`hotel is consistent with ,the quality standard required by this Restated
Covenant. Further, Owner covenants that Owner shall reimburse City for the cost of City
procurement of a study, by a .qualified consultant, of the proposed replacement hotel,
and whether said 'replacement is consistent with the requirements of this Restated
Covenant.
Upon City's approval of an amendment to this Restated Covenant, approving the
replacement for the Dream Hotel brand hotel, and, in connection therewith, such
replaced Hotel Operator may assume all or part of Owner's Hotel operation obligations
under this Agreement; provided, however, Owner shall retain ultimate responsibility for
such Hotel operation obligations. City agrees that while any Hotel Operator agreement
is in effect, and provided that City has been put on notice of such agreement and
received contact information for such Operator, in the event City delivers to Owner of
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PACE 13 of 14
any notice of default as referenced in either Section 3.1 or 7.9 above, City shall
concurrently deliver a copy thereof to the Operator.
7.13 COOPERATION. Each party agrees to and shall do and perform such
other and further acts and properly execute and deliver such other and further
documents as may be reasonably necessary, expedient or convenient to implement
and/or effectuate the intents and purposes hereof. City and Owner agree to cooperate
with each other and/or with any Mortgagee or proposed Mortgagee, in a manner
consistent with concepts and principles of good faith, fair dealing and commercial
reasonableness, with respect to consideration, implementation and execution of any
modification(s) to this Agreement reasonably requested by the City, Owner, Mortgagee
or proposed Mortgagee.
7.14 REASONABLE APPROVALS. Whenever this Agreement requires or calls
for the approval or consent of any party hereto, such approval shall not be unreasonably
withheld, delayed or conditioned.
7.15 BINDING ARBITRATION. In the-event of any dispute or controversy
arising out of or relating to this Agreement, or the breach or performance of it, the
parties shall reasonably attempt to resolve such dispute or controversy without resort to
third party review or resolution. The parties shall first meet and confer on any such
dispute or controversy. Such meeting(s) shall include any principal of the Owner and, at
the discretion of the City, may include the City Manager and/or the City Council, either
as a whole or through an`ad hoc subcommittee'designated by the City Council. Upon a
determination by the parties that they are'`O,will be unable to resolve the dispute or
controversy on their own, then the parties shall submit the dispute, controversy or any
remaining unresolved matter to binding arbitration, to be held in the Coachella Valley,
and be conducted pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.
7.16 INCORPORATION'OF RECITALS AND EXHIBITS. Each of the recitals
set forth above>and each of the exhbits,attached hereto are agreed to and made part of
this Agreement:
7.17 AUTHORITY. . Each party represents and warrants to the other that such
party has full right, power and authority to sign, execute and enter into this Agreement.
[SIGNATURES ON NEXT PAGE]
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PAGE 14 of 14
IN WITNESS WHEREOF, the City and Owner have executed this Operations
Covenant by duly authorized representatives on the date first written hereinabove.
"CITY"
THE CITY OF PALM SPRINGS,
a municipal corporation and charter city
By:
David H. Ready, City Manager
ATTEST:
Kathleen D. Hart, Interim City Clerk
APPROVED AS TO FORM:
Edward Z. Kotkin, City Attorney
"OWNER"
Selene Palm Springs, LLC, a California limited
liability company
By:
Lauri Kibby for CDI Ventures, LLC
Managing Member
By:
Abdul Q. Lalani for Qaiser Capital, LLC
Managing Member
[END OF SIGNATURES]
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
PACE 15 OF 14
1�3
EXHIBIT "A"
LEGAL DESCRIPTION
SECTION 14, TOWNSHIP 4 SOUTH,RANGE 4 EAST, SAN BERNARDINO MERIDIAN.
LEGAL DESCRIPTION
BLOCKS 103, 105 AND 106 OF BUREAU OF LAND MANAGEMENT PLAT CA270040SO040E0, DATED)UNE
27, 1957, IN SECTION 14,TOWNSHIP 4 SOUTH, RANGF 4 EAST, SAN BERNARDINO MERIDIAN,IN THE
CITY OF PALM SPRINGS,COUNTY OF RIVERSIDE, STATE OF CALIFORNIA,ACCORDING TO THE
OFFICIAL PLAT THEREOF,AND IS MORE PARTICULARLY DESCRIBED AS FALLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 106.
THENCE ALONG THE WESTERLY LINE OF SAID LOTS 106 AND 103. NORTH 00°03'35"WEST
64516 FEET MORE OR LESS TO THE NORTHWEST CORNER OF SAID LOT 103:
THENCE ALONG THE NORTHERLY LINE OF SAID LOT 103, SOUTH 89°43'40"EAST 354.25 FEET
MORE OR LESS TO THE NORTHEAST CORNER OF SAID LOT 103,
THENCE ALONG THE EASTERLY LINE OF SAID LOT 103,SOUTH 00005'56"EAST 330.05 FEET
MORE OR LESS TO THE SOUTHEAST CORNER OF SAID LOT 103,
THENCE ALONG THE NORTHERLY LINE OF SAID LOT t05 SOUTH 89049'25"EAST 352,97 FEET
MORE OR LESS TO THE NORTHEAST CORNER OF SAID LOT 105;
THENCE ALONG THE EASTERLY UNE OF SAID LOT 105,SOUTH 00"06'10"EAST 315.17 FEET
MORE OR LESS TO THE SOUTHEAST CORNER OF SAID LOT 105,
THENCE ALONG THE SOUTHERLY LINES OF SAID LOTS 105 AND 106, NORTH 89-461T'WEST
707-68 FEET TO THE POINT OF BEGINNING;
SAID ABOVE DESCRIBED AREA IN METES AND BOUNDS CONTAINS 7,80 ACRES,MORE OR
LESS,AND INCLUDES PORTIONS OF ADJACENT ALLEYS AS VACATED IN DOCUMENT NUMBER
651 FROM THE CITY OF PALM SPRINGS,AND IS SUBJECT TO ALL COVENANTS,RIGHTS.
RIGHTS-OF-WAY,ALLEY WAYS,AND EASEMENTS OF RECORD,INCLUDING AMADO ROAD,
NORTH CALLE ALVARADO,AND NORTH AVENIDA CABALLEROS RIGHTS OF WAY,
THIS DOCUMENT WAS PREPARED BY
ME OR UNDER MY DIRECTION, c6fl AND g
BASED ON RECORD INFORMATION.
� Op
FYn��,PR fCM10ibP
PHILLIP K. FOMOTOR,P,L.S. -- ---- ^yTR of `P`#op��
AMENDED I RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
EXHIBIT"A"
134
EXHIBIT "B°
SITE PLAN
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AERIAL VIER'
AMENDED/RESTATED
OPERATIONS COVENANT
FOR HOTEL INCENTIVE PROGRAM
AGREEMENT NO.6642
C.n EXHIBIT"B"
DREAM HOTEL
AMENDED & RESTATED
OPERATIONS COVENANT
CITY OF PALM SPRINGS
OFFICE OF THE CITY MANAGER
MARCUS L. FULLER
ASSISTANT CITY MANAGER
NOVEMBER 15, 2017
KAISER MARSTON ANALYSIS
DREAM HOTEL
GROSS NEW REVENUES
_ 9
Property Ta $81645,200
Sales Tax $161475,600
TransientOccupancy Taxi $95,004,500
.,' $120,125,300
Table — KMA Analysis
(No Measure D Sales Tax, Measure J Extended)
KAISER MARSTON ANALYSIS
DREAM HOTEL
GROSS NEW REVENUES
. Property Tax $896459200
■■ $1672269300
Transient Occupancy Tait
$959004,500
$119,8763000
Table — KMA Analysis — City Revision
(Measure D Sales Tax, Measure J Sales Tax Ends in 2037)
KAISER MARSTON ANALYSIS
DREAM HOTEL
GROSS NEW REVENUES
Amount
. Property Tax $87645,200
_ - - $2055949300
Transient Occupancy Tax $95,004,500
. $1247244,000
Table — KMA Analysis — City Revision
(Measure D Sales Tax, Measure J Sales Tax Extended)
KAISER MARSTO N ANALYSIS
DREAM HOTEL TOT REVENUE
TOT TOT Rebate
Year Payment (75% of
Room Absorption of Absorption Net New TOT
Revenues (13.5%) 12.1%) Rooms Loss Payments
2020 $ 10,795,000 $ 1,457,300 $ 979,600 10% $ 145,700 $ 332,000
2021 $ 13,416,000 $ 1,811,200 $ 1,217,500 10% $ 181,100 $ 412,600
2022 $ 16,532,000 $ 2,231,800 $ 1,500,300 5% $ 111,600 $ 619,900
2023 $ 17,488,000 $ 2,360,900 $ 1,587,000 5% $ 118,000 $ 655,900
2024 $ 17,925,000 $ 2,419,900 $ 1,626,700 5% $ 121,000 $ 672,200
2025 $ 18,373,000 $ 2,480,400 $ 1,667,300 0% $ - $ 813,100
2026 $ 18,832,000 $ 2,542,300 $ 1,709,000 0% $ - $ 833,300
2027 $ 19,303,000 $ 2,605,900 $ 1,751,700 0% $ - S 854,200
■ 2028 _$ 19.786,"0A0%2 #,100_, $ 1 795 6Qj _ ■ _0% $_ _ �� ___� _8k,5o0
Maxif_ 4IM80,oCt ",t7,8o "P A�IP 1-%% P_ST� ff_$1arr[l at
2030 $ 20.7787,000 7' 2,�06,200 T' 1787440(S 0% $ a �717,70
$50 20Z1111$ 21,307,000 $ 2,876,4%p $ 1,43,100 0% $ 942,800
rr'll 111 oo1"'P-24nVji P_(,j2 to Y P_2 r /A $ 966,400
folf "� 77A ool 7' "27db" 72M1,5bI . "7r. '$ $ 990,600
2034 $ 22,945,000 $ 3,097,600 $ 2,082,300 0% $ - $ 1,015,300
2035 $ 23,519,000 $ 3,175,100 $ 2,134,300 0% $ $ 1,040,800
2036 $ 24,107,000 $ 3,254,400 $ 2,187,700 0% $ $ 1,066,700
2037 $ 24,710,000 $ 3,335,900 $ 21242,400 0% $ $ 1,093,500
2038 $ 25,327,000 $ 3,419,100 $ 2.298,400 0% $ - $ 1,120,700
2039 $ 25,961,000 $ 3,504,700 $ 2,356,000 0% $ - $ 1,148,700
2040 $ 26,610,000 $ 3,592.400 $ 2.414,900 0% $ - $ 1,177,500
2041 $ 27,275,000 $ 3,682,100 $ 2,475,200 0% $ - $ 1,206,900
2042 $ 27,957,000 $ 3,774,200 $ 2,537,100 0% $ $ 1,237,100
2043 $ 28,656,000 $ 3,868,600 $ 2,600,500 0% $ $ 1,268,100
2044 $ 29,372,000 $ 3,965,200 $ 2,665,500 0% $ $ 1,299,700
2045 $ 30,106,000 S 4,064,300 $ 497,100 0% $ $ 3,567,200
2046 $ 30,859,000 $ 41166,000 $ - 0% $ $ 4,166,000
2047 $ 31,630,000 $ 41270,100 $ - 0% $ $ 4,2707100
2048 $ 32,421,000 $ 4,376,800 $ - 0% $ $ 4,376,800
2049 $ 33,232,000 $ 41486,300 $ - 0% $ - $ 4,486,300
$703,737,000 $ 95,004,500 $ 50,000,000 $ 677,400 $ 44,327,100
KAISER MARSTON ANALYSIS
VIRGIN HOTEL NET NEW REVENUE
Property Tax Sales Tax
Total
-�j� $1643300 $3251400 $3327000 $821 ,700
$2185700 $4049400 $4127600 $1 ,0359700
$2233100 $498,400 $6197900 $1 ,3419400
$227,600 $510,900 $655,900 $1 ,394,400
$232,200 $523,700 $672,200 $11428,100
-�i $3803600 $582,400 $494863300 $5,4491300
$8,645,200 $16,226,300 $44,3271100 $691198,600
a
CITY COUNCIL STAFF REPORT
DATE: November 15, 2017 NEW BUSINESS
SUBJECT: APPROVAL OF AN AMENDED AND RESTATED HOTEL OPERATIONS
COVENANT WITH SELENE PALM SPRINGS, LLC, FOR THE DREAM
HOTEL PROJECT LOCATED AT THE NORTHEAST CORNER OF
CALLE ALVARADO AND EAST AMADO ROAD
FROM: David H. Ready, City Manager
BY: Marcus L. Fuller, Assistant City Manager
SUMMARY
Selene Palm Springs, LLC, a California limited liability company, ("Developer"), is
prepared to initiate construction of the Dream Hotel located on a 7.8 acre property at the
northeast corner of Calle Alvarado and Amado Road. On October 18, 2017, the City
Council approved Amendment No. 8 to the Purchase and Sale Agreement with the
Developer, revising the performance schedule for construction of the Dream Hotel.
Specifically, the City Council has agreed to extend a deadline to December 31, 2018,
for commencement with construction of the vertical "core and shell" of the Dream Hotel.
Accordingly. the Developer has requested an extension for participation in the City's
Hotel Operations Incentive Program (the `Program") to June 30, 2019.
The action to be considered by Council is the approval of an Amended and Restated
Hotel Operations Covenant with the purpose of extending the deadline for participation
in the Program to June 30, 2019.
Selene Palm Springs, LLC.. a California limited liability company, is managed by CDI
Ventures, LLC, a California limited liability company, and Qaiser Capital, LLC, a
Galifern+a Texas limited liability company, with a third member consisting of Calsprings
Properties, LLC, a California limited liability company. The principle managing members
are Lauri Kibby and Abdul Lalani.
According to the Developer, the financial interests of the principal businesses are
represented as follows: CDI Ventures, LLC is owned by Lauri Kibby with a 90%
interest, and by William Goldberg with a 10% interest Qaiser Capital LLC, is owned by
Abdul Lalani with 100% interest; and Calsprings Properties LLC, is owned by Sant
Singh Chatwal, owner of the Dream Hotel Group.
A
1
�f�oAA/1 ,��t�wl 11115111
City Council Staff Report
November 15, 2017-- Page 2
Dream Hotel Project—Amended Operations Covenant
RECOMMENDATION:
1. Approve an Amended and Restated Hotel Operations Covenant (Agreement No.
6642) with Selene Palm Springs, LLC, a California limited liability company, for the
Dream Hotel located at the northeast corner of Calle Alvarado and East Amado
Road: and
2. Authorize the City Manager or designee to take all actions needed to execute these
actions.
BACKGROUND:
On October 18, 2017, the City Council approved amendments to the Purchase and Sale
Agreement ("PSA") and a related Services Agreement (`SA") for the purpose of
developing and maintaining the Dream Hotel, a First Class Superior Hotel (Four stars),
on a 7.8 acre parcel previously owned by the City located at the northeast corner of
Calle Alvarado and East Amado Road (the "Property"). A copy of the October 18, 2017,
staff report is included as Attachment 1 for reference.
The Dream Hotel was previously approved by the City Council to participate in the City's
Hotel Operations Incentive Program (the "Program'). On December 17, 2014, the City
Council held a public hearing in accordance with Government Code Section 53083, and
approved a Hotel Operations Covenant related to the Selene Palm Springs Resort (now
identified as the Dream Hotel), extending to it participation in the Program.
As noted in the staff report from October 18, 2017, the Developer is prepared to move
forward with construction of the Dream Hotel, and Council agreed to a revised
performance schedule that reflects the following activities on or before the following
milestone dates:
• December 2017 — Site mobilization, commencement of site clearing and
grading:
• December 2017 — Submittal of construction drawings for the underground
garage and foundation for the Dream Hotel;
• April 1, 2018 — Submittal of construction drawings for the "core and shell" of the
Dream Hotel,
• April 1, 2018 — Commencement of construction of the underground garage and
foundation for the Dream Hotel,
• December 31, 2018 — Completion of construction of the underground garage and
foundation for the Dream Hotel;
• December 31, 2018 — Commencement of construction of the "core and shell" of the
Dream Hotel;
• June 30, 2020 — Completion of the Dream Hotel