HomeMy WebLinkAbout7/19/2017 - STAFF REPORTS - 5.B. 40�PALM Sp4
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N CITY COUNCIL STAFF REPORT
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DATE: JULY 19, 2017 NEW BUSINESS
SUBJECT: EXTENSION OF THE HOTEL OPERATIONS INCENTIVE PROGRAM
DEADLINE FOR COMMENCEMENT OF CONSTRUCTION OF THE
VIRGIN HOTEL, LOCATED ON BLOCK B-1 OF THE DOWNTOWN PALM
SPRINGS SPECIFIC PLAN, AT THE SOUTHEAST CORNER OF
BELARDO ROAD AND THE EXTENSION OF E. ANDREAS ROAD
WESTWARD, UNTIL DECEMBER 31, 2019
FROM: David H. Ready, City Manager
BY: Edward Z. Kotkin, City Attorney
SUMMARY
Developer Grit Development, LLC has requested an extension of the deadline for
commencement of construction provided in the City's Hotel Operations Incentive Program
("Program"). The developer's project is the Virgin Hotel. The City allowed the transfer of
an Operations Covenant, originally granted to the AC Marriott Hotel project on December
30, 2014, to the Virgin Hotel as follows. On May 4, 2016, this Council approved an
Amended and Restated Operations Covenant ("Amended Covenant") granting the Virgin
Hotel the Program's maximum benefit. Even the best hotel projects attracted to Palm
Springs are on Program timelines for entitlement and development. The Program
deadline for commencement of the entitled hotel Virgin's construction is December 31,
2017. Construction of the Virgin will not commence by that date, and the Developer views
the extension requested as necessary if the project is to proceed.
RECOMMENDATION:
Approve an extension of the Hotel Operations Incentive Program deadline for
commencement of construction for Virgin Hotel, located on Block B-1 of the Downtown
Palm Springs Specific Plan, at the southeast corner of Belardo Road and the extension
of E. Andreas Road westward, until December 31, 2019.
ITEM NO.�. (3. .
City Council Staff Report
July 19, 2017-- Page 2
EXTENSION OF HOTEL OPERATIONS INCENTIVE PROGRAM, VIRGIN HOTEL
STAFF ANALYSIS:
In 2005 and 2006, the City spent forty-five million dollars ($45,000,000.00) to renovate
and expand the Convention Center, and make it more competitive with similar-sized
venues in the Western United States. In 2008, the City Council adopted the Hotel
Operations Incentive Program, codified in Chapter 5.26 of the Palm Springs Municipal
Code ("PSMC"), to help finance new hotels and the renovation of existing hotels in the
City. Chapter 5.26. The program has worked, stimulating extensive investment in new
and improved hotels. In 2008 hotel generated revenue to the City was approximately
thirteen million dollars ($13,000,000). For the current fiscal year, that revenue has
increased to approximately twenty-nine million dollars ($29,000.000). The Council has
extended the program, which was originally set to expire at the end of December 2012,
and extended program deadlines for projects on a case-by-case basis.
On May 4, 2016, this Council approved the Amended Covenant at the request of the
owner of the hotel site, granting the Virgin Hotel the Program's maximum benefit, seventy-
five percent (75%) of the adjusted transient occupancy tax revenue paid to the City of
Palm Springs for a period of thirty (30) years, or up to a sum of fifty million dollars
($50,000,000.00), whichever occurs first. In doing so, the Council acknowledged the
Virgin Hotel as a future asset of the community consistent with the Program.
PSMC Section 5.26.020 states in relevant part that a "[n]ew hotel," "first class new hotel,"
and "comfort new hotel" means a hotel or first class hotel or comfort hotel that . . . is under
construction prior to December 31, 2017." The developer of the Virgin Hotel has
developed the Kimpton, set to open this autumn, prior to commencing work on the Virgin,
and is now ready to proceed with its second significant downtown hotel project. That said,
the Virgin's development will likely not be a rapid process.
Grit Development is mindful of the Virgin's important location, near the City's new
downtown park, and next to the Kimpton, opening in the near future. The developer bases
its anticipated schedule moving forward upon its recent experience in building the
Kimpton, and requests that the City approve a two (2) year extension of the Program
deadline for the commencement of construction of its "first class new hotel." Staff has
engaged a consultant and undertaken extensive analysis of the economic benefit of the
Virgin to the community, and recommends approval of the extension requested. The
developer has outlined a process of proceeding from interior and construction documents,
through plan check, putting this project out to bid, and commencing construction that it
estimates will take as much as seventeen (17) months. The developer estimates that its
upfront investment in this project, prior to pulling its first building permit, will be four million
five hundred thousand dollars ($4,500,000.00). The developer notes that this amount
does not include funds already dedicated to property purchase, construction of an
underground valet parking garage, costs of the project's entitlements, and defense costs
11 02
City Council Staff Report
July 19, 2017--Page 3
EXTENSION OF HOTEL OPERATIONS INCENTIVE PROGRAM, VIRGIN HOTEL
of a lawsuit now concluded. The developer is preparing to begin the development
process, and seeking to protect its investment to date. Part of that preparation is this
request. In requesting an extension of the Program deadline that affords it extra time to
commence construction, the developer notes the economic and geo-political uncertainty
of the present times.
In its communication to the City related to this request for an extension, the developer
notes (i) the high value of the worldwide Virgin brand, with its established and successful
sales and distribution power, its reputation for great customer service, and its vast social
media presence, (H)the nature of this project which it indicates will be a landmark building
and asset to the community, (iii) the two hundred (200) new permanent jobs it indicates
this project will bring, and (iv) and the additional tax revenue and tourist/visitor dollars
that this project will bring to the City. The developer also explains that the new Palm
Springs Virgin is a part of the brand's roll-out of a total of twelve to fifteen (12-15) hotels,
and that Palm Springs will be the fourth (4th) U.S. location, expected to open in late 2020.
In explaining the unique nature of the Virgin, the developer provided the following
comment:
Our new hotel in Palm Springs will be re-defining the hotel stay as a service%xperience,
not just a room. We will do this through a variety of signature elements which work
together to foster a Virgin Hotel community and sense of through a variety of signature
elements which work together to foster a Virgin Hotel community and sense of belonging
and transform the traditional transient relationship between guest and hotel. Virgin Hotels
will define its communal spaces by building on experience the brand has gained in
operating award-winning Clubhouses around the world- unique spaces where our guests
can, nourish and refresh themselves, meet other interesting people, get work done, or
just enjoy the unique energy of Palm Springs.
While the developer has been professional, positive and optimistic in all of its statements
to the City about moving forward with the Virgin Hotel, this project will not proceed without
the Virgin receiving the benefit of the Program.
The Virgin and other aspects of the downtown project exist under a cloud as a
consequence of the criminal complaint filed against the project's original owner and
developer and a former Mayor. City staff would not recommend that the Council consider
an extension of a deadline that confirms and extends a prior commitment to share
adjusted transient occupancy tax rate revenue with that absent compelling reasons to do
so. Accordingly, staff engaged the services of Keyser Marston Associates to evaluate the
significance of the Virgin Hotel in downtown Palm Springs as an economic matter.
Keyser Marston's report, attached to this report as ATTACHMENT 1, provides the Council
with insight into the positive economic impact of the Virgin Hotel in downtown Palm
Springs, comprehensively analyzed in the context of a number of different scenarios. The
report speaks for itself, but it is fair to summarize the report by stating that the full buildout
of the downtown project, including the Virgin Hotel is preferable to any other potential
scenario analyzed. The executive summary notes that "[i]f the project is delayed, the
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City Council Staff Report
July 19, 2017 -- Page 4
EXTENSION OF HOTEL OPERATIONS INCENTIVE PROGRAM, VIRGIN HOTEL
potential revenues vary widely depending on whether the Virgin Hotel can still be
developed."
ALTERNATIVES:
Reject this extension of the City's Hotel Operations Incentive Program deadline for
commencement of construction for the Virgin Hotel.
Reject this extension of the City's Hotel Operations Incentive Program deadline for
commencement of construction for the Virgin Hotel under the terms recommended, but
direct staff as to the terms under which the extension would be approved.
Reject this extension of the City's Hotel Operations Incentive Program deadline for
commencement of construction for the Virgin Hotel, but direct the staff to negotiate with
the developer, and return to the Council, no later than the end of October 2017, with a
second amended and restated operating covenant for the Virgin Hotel, pursuant to the
City's general and charter authority. This new covenant(i)would be considered at a public
hearing and recorded against the property if approved by the Council, in accordance with
the City's general and charter authority, and (Y) would provide the Project with a newly
negotiated rebate of adjusted transient occupancy tax revenue paid to the operator of the
Virgin Hotel.
There is no guaranty or even indication that the developer would accept any of these
alternatives and move forward to build the Virgin Hotel.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:
The extension of the City's Hotel Incentive Program considered at this time is not a
"project" for purposes of the California Environmental Quality Act (CEQA), as that term is
defined by CEQA guidelines (Guidelines) section 15378. This action is organizational or
administrative activity by the City of Palm Springs in furtherance of its police power, and
will not result in a direct or indirect physical change in the environment, per section
15378(b)(5) of the Guidelines.
BUSINESS PRINCIPAL DISCLOSURE
A search of records available through the Secretary of State of California shows that as
of May 2, 2017, the developer of the Virgin Hotel, Grit Development, LLC, was a company
managed by a single manager, Michael Braun. The company name is new, with the prior
name having been "Wessman Holdings, LLC." Mr. Braun was a manager or member of
Wessman Holdings as reflected in a Statement of Information filed with the Secretary of
State on April 28, 2017. As of November 3, 2016, Wessman Holdings, LLC had more
than one manager, and Mr. Braun was engaged as such at that time. Previously, as of
October 25, 2015, Mr. Braun and John Wessman were both managers of Wessman
Holdings, LLC. John Wessman filed the articles of organization of Wessman Holdings,
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City Council Staff Report
July 19, 2017 -- Page 5
EXTENSION OF HOTEL OPERATIONS INCENTIVE PROGRAM, VIRGIN HOTEL
LLC on January 24, 2002.
The owner of the Virgin site is DTPS B 3, LLC, with articles of organization filed by John
Wessman on April 1, 2015. Per a statement of information filed on May 4, 2017, Michael
Braun is the manager or member of DTPS B 3, LLC. Palm Springs Promenade, LLC was
the owner of the site at the time of the Amended Covenant, and according to information
received from the developer, remains the majority owner of DTPS B 3, LLC. Also per the
developer, other owners/members of DTPS B 3, LLC include Michael Braun, Grit
Development, LLC, Octavio Fernandez, a trust affiliated with John Wessman, and Mr.
Wessman himself as a retired passive owner.
Per an amendment to its articles of organization filed on January 4, 2017, Michael Braun
became a member of Palm Springs Promenade, LLC, and there are other unnamed
managers of the LLC. The most recent filing with the Secretary of State for Palm Springs
Promenade, LLC on May 23, 2017 confirms that Michael Braun remains a manager or
member. The owners of Palm Springs Promenade, LLC beyond DTPS B 3, LLC are John
Wessman and his family.
FISCAL IMPACT:
Extension of the Program to this project will affirm the hotel operator's entitlement to a
rebate of seventy-five percent (75%) of the adjusted transient occupancy tax revenue for
thirty (30) years or until the operator has been paid fifty million dollars ($50,000,000),
whichever event occurs first. The extensive revenue that staff anticipates the Virgin will
generate is documented and analyzed in the Keyser Marston report attached to this
report.
C�
i
Edward Z. Kotkin, Marcus L. Fuller, MPA, P.E., P.L.S.,
City Attorney Assistant ECit
David H. Ready, Esq
City Manager VDireorfCommunity
ic Development
Attachments:
1. Keyser Marston Report
05
>E�J.
KEYSER MARSTON ASSOCIATES
ADVISORS IN PUBLIC/PRIVATE REAL ESTATE DEVELOPMENT
MEMORANDUM
ADVISORS IN: To: David Ready, PhD, City Manger
Real Estate
Redevelopment City of Palm Springs
Affordable Housing
Economic Development
SAN FRANCISCO From: James Rabe
A.Jerry Keyser
Timothy C.Kelly
Kate Earle Funk cc: Marcus Fuller, Assistant City Manager
Debbie M.Kern
Reed T.Kawahara Edward Kotkin, City Attorney
David Doezema
Los ANGELES Date: July 13, 2017
Kathleen H.Head
James A.Rabe
Gregory D.Soo-Hoo
Kevin E.Engstrom Subject: Fiscal Review—Palm Springs Promenade
Julie L.Romey
SAN DIEGO
Paul C.Marra
At your request, Keyser Marston Associates, Inc. (KMA) undertook a review and made
projections of the key public revenues (property taxes, local sales taxes and transient
occupancy taxes) that might be generated as a result of the development of the
Downtown Palm Springs Project (the "Project') by Palm Springs Promenade, LLC,
(Promenade) under various alternatives. The City of Palm Springs (City) requested this
analysis to assist its decision-making process regarding completion of the Project under
three potential scenarios: 1) by Promenade inclusive of the full development and
occupancy of Blocks A, B, C, D, F and G. and the Kimpton and Virgin Hotels; 2) by
Promenade excluding completion of interior tenant spaces of Blocks B and C retail
buildings, excluding development of Blocks D, F, and G, and excluding the Virgin Hotel;
and 3) by an Alternative Developer inclusive of the full development and occupancy of
Blocks A, B, C, D, F and G, the Kimpton Hotel, but excluding the Virgin Hotel
As KMA understands the situation, Promenade entered into a Project Financing
Agreement(the "PFA")with the City of Palm Springs on September 7, 2011. Pursuant to
the terms and conditions of the PFA, the City agreed to pay Promenade: (1) an agreed
fair market value price of$32,000,000 for acquisition of certain real property interests
defined as 'Public Assets", including: new public streets, existing surface and
underground parking facilities, and vacant land for future development; and (2) a fixed
500 SOUTH GRAND AVENUE,SUITE 1480 i LOS ANGELES,CALIFORNIA 90071 > PHONE 213.622.8095
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David Ready, City of Palm Springs July 13, 2017
Fiscal Review— Palm Springs Promenade Page 2
price of$11,000,000 for construction of all required public improvements as stipulated in
the PFA.
EXECUTIVE SUMMARY
The Promenade is a mixed-use located in downtown Palm Springs. The former
shopping mall that occupied the site has been demolished. The Promenade is currently
under construction on Parcels A. B and C and portions of the development on these
parcels have been completed.
Scope of Development
When the development of these parcels is complete, the development will have
approximately:
• 77,400 square feet of street-oriented retail and restaurant space
• 16,400 square feet of office space
• 33 residential apartments
• 152-room Kimpton Hotel
The proposed development program for the entire project is approximately:
• 111.700 square feet of street-oriented retail and restaurant space
• 16,400 square feet of office space
• 30,000 square feet of grocery and gym/fitness space
• 121 residential units
• 153-room Kimpton Hotel
• 145-room Virgin Hotel
A more detailed breakout of the scope of development is provided in Summary Table 1.
Analysis
For this analysis KMA has considered three alternatives:
• Proposed Development—The project proceeds as currently envisioned to full
buildout.
• Reduced Development—The project development ceases upon completion of
the current activities on Blocks A, B and C.
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David Ready, City of Palm Springs July 13, 2017
Fiscal Review—Palm Springs Promenade Page 3
• Alternative Developer—There is a significant delay in the completion of the
project as Promenade either recapitalizes the project, or another developer
acquires the assets and completes the project.
These alternatives provide a reasonable range of alternatives and financial outcomes for
the City to consider in its evaluation and deliberation. An important consideration that is
addressed in the Alternative Developer alternative, is that the Virgin Hotel might not go
forward if the project is further delayed.
Promenade currently contemplates completing the project by 2024. The listing of when
the various parcels are completed is shown in Summary Table 1. The Alternative
Developer analysis examines a delayed project with the Virgin Hotel that is completed in
2026, and a further delayed project without the Virgin Hotel that is completed in 2027.
In preparing this analysis, KMA reviewed information provided by Promenade including:
development costs, projected sales for the various retail and restaurant spaces, and
hotel room rates and other sales at the hotels. KMA reviewed this information and also
consulted outside third-party data sources as well as KMA's files for similar projects and
uses. The assumptions used in the analysis were compiled from all of the above
sources. Based on this data, KMA established an optimistic scenario and a conservative
scenario for each of the alternatives discussed above.
In preparing this analysis, KMA took into account that some hotel stays will be
"transferred"from existing hotels in the early years. Also, these hotels are subject to
operating covenants that require a certain quality and allow for a rebate of 75% of the
specified transient occupancy tax.
Summary of Results
The public revenues are shown in the lower half of Summary Table 2. To provide
several perspectives, KMA has summarized the public revenues in one year of
operation, the total revenues generated over a 30-year period, and the net present value
of that 30-year revenue flow.
KMA has shown the projected key public revenues for 2021, the year after completion
and opening of the Virgin Hotel. In 2021 for the Proposed Development alternative, the
City is projected to receive between $2,003,000 and $2,144,000 in key public revenues.
If development stops at completion of Blocks A, B and C, then public revenues are only
$1,410,000 to $1,525,000, approximately$600,000 less than the proposed project. The
revenue reduction is similar if the project is delayed because the Virgin Hotel opens
later.
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David Ready, City of Palm Springs July 13, 2017
Fiscal Review— Palm Springs Promenade Page 4
Over the longer time period, the difference to the City between the Proposed
Development and the Reduced Development gets larger. Over a 30-year term, the
optimistic scenario of the Proposed Development provides $111.8 million of revenues to
the City. Over the same period, the optimistic scenario for the Reduced Development
provides nearly $63.3 million to the City, approximately $48.5 million less. The
differential is similar for conservative scenarios of these two alternatives; the Reduced
Development generates $42.5 million less ($58.6 million versus $101.1 million).
On a present value basis discounted at 7.0%, the Proposed Development is worth
between $37.6 million and $41.4 million. The Reduced Development is worth $22.8
million and $24.7 million, a $14.8 million to $16.7 million differential.
If the project is delayed, the potential revenues vary widely depending on whether the
Virgin Hotel can still be developed. If the Virgin Hotel and development on Blocks D, F
and G are delayed by approximately two years, then the revenue reduction is only about
$5.7 million ($111.8 million versus $106.1 million). On a net present value basis, the
difference is $3.4 million ($41.4 million versus $38.0 million).
The differences are much larger if the Virgin Hotel is not built. In that case, the total
revenues are only $71.7 million versus $101.1 million in the Conservative Scenario of
the Proposed Development alternative, a reduction of$29.4 million. On a net present
value basis, the revenue loss is $11.0 million ($37.6 million versus $26.6 million).
BACKGROUND
Promenade provided KMA with its current scope of development and its timeframes for
moving forward with the Project. The City also provided the Specific Plan for the area as
additional information. The overall scope of development and development timing is
shown in Summary Table 1.
Proposed Project
The Promenade is a mixed-use development located in downtown Palm Springs. An
enclosed shopping mall previously occupied the site. The shopping mall has been
demolished, and Promenade has completed and/or nearly completed development on
Blocks A, B and C of the Project. Only limited activity has occurred on Blocks D, F and
G. The initial development on Blocks A, B and C consists of retail, residential and office
uses in addition to a Kimpton Hotel. The scope of this initial development is shown
below.
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David Ready, City of Palm Springs July 13, 2017
Fiscal Review—Palm Springs Promenade Page 5
Street-oriented retail 56,121 square feet
Street-oriented restaurant 21,284 square feet
Office space 16,400 square feet
Residential 33 apartment units
Kimpton Hotel 153 rooms plus 7,000 square feet of
retail and restaurant
Based on information provided by Promenade, the development on Blocks D, F and G
will add additional retail and restaurant space, grocery store, gym/fitness facility, and
additional residential units. A Virgin Hotel is planned for additional development on
Block B. The total proposed scope of development is shown below.
Street-oriented retail 89,121 square feet
Street-oriented restaurant 22,534 square feet
Office space 16,400 square feet
Residential 88 apartment units and 33 units of
condo or apartment
Kimpton Hotel 153 rooms plus 7,000 square feet of
retail and restaurant
Grocery & Gym 30,000 square feet
Virgin Hotel 145 rooms plus 10,500 square feet of
retail and restaurant
Development Alternatives
For purposes of evaluating what could happen to the development of the Project
depending on City actions, KMA has considered three general alternatives.
• Proposed Development— Development of the Project proceeds as currently
envisioned to full buildout, inclusive of the Kimpton and Virgin Hotels.
• Reduced Development— Development of the Project ceases upon completion
of the current activities on Blocks A, B and C. The Virgin Hotel is not
constructed.
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David Ready, City of Palm Springs July 13, 2017
Fiscal Review— Palm Springs Promenade Page 6
• Alternative Developer—There is a significant delay in the completion of the
Project as Promenade either recapitalizes the Project, or another developer
acquires the assets and completes the Project. Under this scenario, the Virgin
Hotel may or may not be constructed.
The Reduced Development alternative seems to have a low probability, but provides a
useful lower bound on the revenue projections for the City. If payments to Promenade
pursuant to the PFA were to end, it seems unlikely that development of the Project will
stop. It is assumed that Promenade would attempt to "salvage" the Project by
completion portions underway, and by attracting new capital to complete remaining
portions. The Alternative Developer scenario is a more likely response whereby
development of the Project is delayed, while Promenade pursues new capital, or
Promenade enters into agreements with an alternative developer to complete the
Project. One issue relates to the Virgin Hotel. The current agreement has start date
obligations (which appear to have passed), which allow Virgin to leave the project. KMA
has considered this delayed project completion with and without the Virgin Hotel.
Development Timing
Based on the information provided by Promenade, the development of Blocks A, B and
C will be completed in 2017. The Virgin Hotel would be completed by 2020, and Blocks
D, F and G completed between 2022 and 2024 as shown in Summary Table 1.
In the Alternative Developer alternative, if completion of the Project is not significantly
delayed and Virgin Hotel remains in the Project, then KMA assumed that the Virgin Hotel
would be completed by 2023 and Blocks D, F and G completed between 2024 and 2026.
This is an overall two-year delay in project completion.
If the Project is delayed further and the Virgin Hotel is not constructed for any reason,
then KMA assumed that Blocks D, F and G would be completed in 2026 and 2027. That
is a four-year delay for Block D, and an overall three-year delay in the Project.
Key Assumptions
KMA has made a number of assumptions in preparing this analysis. The assumptions
p P P 9 Y P
are based upon information provided by Promenade in addition to KMA's review of third
party data sources such as International Council of Shopping Centers (ICSC), CBRE
hotel data publications for the Coachella Valley, Smith Travel Research data for hotels in
Palm Springs, and KMA's files for comparable commercial, hotel and mixed-use
projects. KMA has assumed a 2.5% annual inflation rate.
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David Ready, City of Palm Springs July 13, 2017
Fiscal Review—Palm Springs Promenade Page 7
For this analysis, KMA has set out an optimistic scenario and a conservative scenario in
each alternative. The two scenarios establish a reasonable bound on the assumptions
that underlie each alternative.
The key assumptions are shown in the upper half of Summary Table 2.
Taxable Sales
Promenade provided estimates of sales for the various retail tenants and tenant types
for the project. Notwithstanding that Promenade's projections include sales obligations
in the tenant leases, their projections seem aggressive for long-term projections of City
revenues. KMA reviewed its files and ICSC data for sales productivity for non-anchor
tenants in West Coast Malls. KMA's sales per square foot assumptions are shown
below.
Optimistic Conservative
Scenario Scenario
Street-oriented retail $900 per SF $800 per SF
Street-oriented restaurant $900 per SF $750 per SF
Grocery &Gym $275 per SF $200 per SF
Hotel commercial $800 per SF $700 per SF
These sales volumes are still quite high on a per square foot basis, but the space
allocated to non-anchor tenants in malls and in this project is smaller than normal.
Given typical gross sales volumes for these types of tenants, the sales per square foot
are expected to be higher than normal.
For the office component of the project, KMA has assumed taxable sales of$40 per
square foot. Based on ICSC's most recent survey of office workers,' suburban office
worker annual taxable spending during the day near work, amounts to approximately
$20 per square foot, approximately 50% of the KMA assumption. The other$20 per
square foot recognizes that a small number of office activities generate taxable sales.
Hotel Revenues
Promenade provided assumptions with respect to the projected room rates for the
Kimpton Hotel and the Virgin Hotel. Both of these hotels are high quality hotels and are
expected to be rated four-diamond by AAA. KMA also reviewed CBRE's projections on
room rates and occupancy rates for the Coachella Valley in general, Palm Springs in
particular, and Smith Travel Research data for four hotels in downtown Palm Springs.
Office-Worker Retail Spending in a Digital Age, 2012
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Fiscal Review— Palm Springs Promenade Page 8
KMA has also evaluated several Kimpton Hotels in the last couple of years and that data
was taken into account. The KMA estimates of Revenue per Available Room (Revpar)
for the two hotels are shown below.
Revpar— Revpar—
Optimistic Conservative
Scenario Scenario
Kimpton Hotel $143.91 $139.92
Virgin Hotel $156.64 $149.03
Revpar is equal to total room revenues for the year divided by the number of rooms and
the number of days in the year. It represents the average revenue per room per day for
a hotel. In the general Palm Springs market, the Kimpton Revpars are reflective of an
average daily rate between $200 and $205 per night. The Virgin Hotel average daily
rate is between $213 and $223 per night.
ANALYSIS
KMA has projected the primary public revenues (property tax, sales tax and transient
occupancy tax) for the six scenarios. The projections for each scenario are provided in
Attachments A through F.
Attachment A Proposed Development—Optimistic Scenario
Attachment B Proposed Development—Conservative Scenario
Attachment C Reduced Development— Optimistic Scenario
Attachment D Reduced Development— Conservative Scenario
Attachment E Alternative Developer—Optimistic Scenario
Attachment F Alternative Developer—Conservative Scenario
Within each attachment, there are six or seven tables, depending on whether the
scenario includes the development of the Virgin Hotel.
Table 1 Key City Public Revenues
Table 2 Allocation of Property Tax Revenues
Table 3 Sales Tax Revenues
Table 4 Transient Occupancy Tax
Table 5 Off-Site Visitor Spending— Kimpton Hotel
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For the three scenarios that include a Virgin Hotel, Table 6 is titled, Off-Site Visitor
Spending—Virgin Hotel.
The last table (Table 6 or 7 depending on the scenario) computes the transient
occupancy tax (TOT) retained by the City. The two hotels meet the requirements of the
City's hotel assistance program. Under the program, high quality hotels that meet the
requirements are eligible to receive 75% of the specified TOT for a period of 30 years or
a maximum rebate of$50 million, whichever comes first.
Property Tax Revenues
Under the existing agreements, Promenade is required to build a high quality project.
The buildings are Type 1 construction (steel frame), which is generally seen as a high
rise construction technique. It is much more expensive than Type 5 wood frame
construction. KMA has toured the site and reviewed Promenade's construction
estimate. Based on other projects that KMA has reviewed, Promenade's current
construction budget appears reasonable, and those values have been used in this
analysis to estimate assessed value and property tax revenues.
The first phase of construction is estimated to have an assessed value at completion of
$111.3 million. If the full project is built out, the assessed value estimate is $251.5
million. If the Virgin Hotel is not built, then the estimated assessed value at completion
of the Project is $184.0 million.
The City is allocated 22.69% of the 1.0% basic levy. At completion of the first phase, the
assessed value of the Project is estimated at $111.3 million, as shown in Table 2 of each
Attachment. The local property tax would be $1,113,400, of which the City would
receive $252.580. Assessed values and property tax revenues are assumed to increase
at 2.0% per year.
As additional phases of the project come on line, the assessed value and property taxes
will increase.
Sales Tax Revenues
Purchases at retail stores and restaurants are subject to the California sales tax. The
sales tax remitted to by the City by the State is an amount equal to 1.0% of the amount
of the purchases. This project will generate sales tax revenues from three sources,
purchases at the stores and restaurants included in the project (including purchases in
the hotels), purchases by visitors staying at the hotels and purchases by employees
working in the stores, restaurants and office buildings. The employee purchases are
assumed to be covered within the sales tax assumptions for each use.
W07003.P&JAR'.emm
17170.007.001 14
David Ready, City of Palm Springs July 13, 2017
Fiscal Review— Palm Springs Promenade Page 10
The project at completion of the first phase has 101.350 square feet of space in the
street-oriented retail and restaurant, and retail and restaurant space in the Kimpton Hotel
generating taxable sales. As shown in Table 3 of the optimistic scenarios, the first year
taxable sales from these uses are $76.4 million (see Attachment A—Table 3A). In the
conservative scenarios, the taxable sales from these uses are $66.8 million (see
Attachment B—Table 3B).
Taxable sales are also generated by the hotel guests. KMA has compiled data from a
number of sources to estimate the allocation of each dollar spent by visitors to the
hotels. This baseline spending factor is computed in Table 5 of each Attachment for the
Kimpton Hotel and Table 6 for the Virgin Hotel (if included in the project). On average,
visitors spend 24.2% of each dollar on food and beverage and 15.5% on retail
purchases. KMA has also adjusted for sales that occur in the hotel, which have already
been counted and an allowance for purchases that occur outside the City.
In the first year, purchases by visitors to the Kimpton Hotel in the optimistic scenarios
amount to $7.62 million (see Attachment A- Table 3A). As a result, total taxable sales
are $84.0 million and the local sales tax is $840,000 in the optimistic scenarios. In the
conservative scenarios, the total taxable sales amount to $74.2 million and the sales tax
revenues amount to $742,100 (see Attachment B—Table 3).
Transient Occupancy Tax
The City collects a transient occupancy tax equal to 13.5% of the gross room revenues
at hotels defined as "Group Meeting Hotel", defined as a hotel with at least 125 rooms,
with meeting space for 125 people, and which reserves hotel rooms for group sales.
Total room revenues and the gross TOT are calculated in Table 4 of each Attachment. It
is assumed that it takes two years for the hotels to reach stabilized occupancy, so the
revenues per available room in these years are lower than the stabilized room revenues
discussed above in the Assumptions section. The revenues per room in the third year
are higher due to effects of inflation.
In reviewing projections for hotel occupancy in the Coachella Valley and the Palm
Springs area, the opening of the two hotels and the likely opening of a new Spa Hotel
will 'transfer" some visitor stays from existing hotels to these hotels. This is a short-term
effect which KMA estimates will dissipate over the first five years of operation. KMA has
assumed that the transfer is 10% for the first two years and 5% for next three years. In
the first year, the gross TOT in the optimistic scenarios is $812,700 (see Table 7 of
Attachments A. C or E). The 10% transfer amount is $81,300. For the conservative
scenarios, the first year gross TOT is $787,900 (see Table 7 in Attachments B, D or F).
1707D03.PS.JAR:emm
nn0.007.Wl 15
David Ready, City of Palm Springs July 13, 2017
Fiscal Review—Palm Springs Promenade Page 11
As noted previously, the Kimpton and Virgin Hotels are being developed consistent with
a City program that incentivizes the development of"First Class New Hotels". Under the
program, the City rebates 75% of the specified TOT for a period of up to 30 years, or
until the developer receives $50 million. The computations of the rebate and the
remainder retained by the City are shown in Table 6 or 7 of each attachment. In the first
year, the gross TOT in the optimistic scenarios is $812,700. The 75% rebate to
Promenade is $546,300. Taking into account the approximately $81,300 of TOT that
was transferred from other hotels, the net TOT retained by the City in the first year is
$185,100 (see Attachment A-Table 7A).
SUMMARY OF RESULTS
The development of the Promenade will provide an increase in revenues to the City. For
illustrative purposes, KMA has shown the projected key public revenues for 2021, the
year after completion and opening of the Virgin Hotel, based on the current schedule. In
addition, KMA estimates the total revenues over a 30-year period from 2018 through
2047, and the net present value of those revenues. The public revenues are shown in
the lower half of Summary Table 2.
In 2021 for the Proposed Development alternative, the City is projected to receive
between $2,003,000 and $2,144,000 in property tax, sales tax and TOT revenues. If
development stops at completion of Blocks A, B and C. then public revenues are only
$1,410,000 to $1,525,000, approximately $600,000 less than the proposed project. The
revenue reduction is similar if the project is delayed because the Virgin Hotel opens
later. In comparison to the Reduced Development and Alternative Developer
alternatives, in the Proposed Development alternative, property taxes are approximately
$156,000 greater, sales tax approximately $200,000 higher, and TOT approximately
$240,000 higher.
Over the longer time period, the difference to the City between the Proposed
Development and the Reduced Development gets larger. Over a 30-year term, the
optimistic scenario of the Proposed Development provides $111.8 million of revenues to
the City. Over the same period, the optimistic scenario for the Reduced Development
provides nearly $63.3 million to the City, approximately $48.5 million less. The
differential is similar for conservative scenarios of these two alternatives; the Reduced
Development generates $42.5 million less ($58.6 million versus $101.1 million).
On a present value basis discounted at 7.0%, the Proposed Development is worth
between $37.6 million and $41.4 million. The Reduced Development is worth $22.8
million and $24.7 million, a $14.8 million to $16.7 million differential.
1707003.PS.JAR'.gmm e
17170,007.001 a
David Ready, City of Palm Springs July 13, 2017
Fiscal Review— Palm Springs Promenade Page 12
If the project is delayed, the potential revenues vary widely depending on whether the
Virgin Hotel can still be developed. If the Virgin Hotel and development on Blocks D, F
and G are delayed by approximately two years, then the revenue reduction is only about
$5.7 million ($111.8 million versus $106.1 million). On a net present value basis, the
difference is $3.4 million ($41.4 million versus $38.0 million).
The differences are much larger if the Virgin Hotel is not built. In that case, the total
revenues are only $71.7 million versus $101.1 million in the Conservative Scenario of
the Proposed Development alternative, a reduction of$29.4 million. On a net present
value basis, the revenue loss is $11.0 million ($37.6 million versus $26.6 million).
1707003.PS.JAR:b m' _ 1'7
17170.O T001
SUMMARY TABLET
KEY ASSUMPTIONS FOR ALTERNATIVES
PALM SPRINGS PROMENADE-PUBLIC REVENUES
PALM SPRINGS,CALIFORNIA
Proposer)Development Reducer)Development Altemative Developer
Optimistic Conservative Optimistic Conservative Optimistic Conservative
Scenario Scenario Scenario Scenario Scenario Scenario
Scope of Development
Streetonented Retail SF 89,121 89,121 56,621 56,621 89,121 87,621
Streetonented Restaurant SF 22,534 22,534 21,284 21,284 22,534 21,284
Grocery B Gym(SF) 30,000 30 WO 30,000 30,OW
Office(SF) 16,400 16,400 16,4W 16,400 16,400 16,400
Kimpton Hotel(rooms) 153 153 153 153 153 153
Virgin Hotel(roams) 145 145 145
Hotel Commercial(SF) 17,500 17,Wl) SOW 7,000 17,500 7,D00
Apartments(units) 88 88 33 33 8B 88
ApartmernslCondas(units) 33 33 33 33
Year of Completion
Virgin Hotel 2020 2020 2023
Black D 2022 2022 2024 2026
Block F 2023 2023 2025 2026
Block G 2024 2024 2026 2027
Development CoaWalue
Blocks A,B,C $111,337,000 $111.337,000 $111,337,WO $111,337,0W $111,337,000 $111337,000
Virgin Hotel $6759O0W $67,590,OW $67,590,000
Stock0 $13250,000 $13,250.000 $13,250,000 $13,250,000
Blo&F $40,2W,OW $40,200.000 $40,2W,000 540,200,000
StockG $19250,000 $19,250,000 $19,250,00 $19.250,000
Total CostValue $251,627.000 $251,627,0W 5111,337,000 S171,337,000 $261,627,000 $184,037,000
Prepared by:Keyser Mandan Assodales,Inc.
Filemme:PS Promenade Summary;711W2017;jar
�_v
SUMMARY TABLE 2
SUMMARY OF ALTERNATIVES
PALM SPRINGS PROMENADE-PUBLIC REVENUES
PALM SPRINGS,CALIFORNIA
Proposed Development Reduced Development Alternative Developer
Optimistic Conservative Optimistic Conservative Optimistic Conservative
Scenario Soared o Scenario Scenario Scenario Scenario
Scope of Development-Key Public Revenue Generators
Street-oriented Retail SF 89,121 89,121 56,621 56,621 89,121 87,621
Street-oriented Restaurant SF 22,534 22,534 21,284 21,284 22,534 21,284
Office SF 16,400 16,400 16,4W 16,400 16,400 16.400
Hotel-Kimpton(Rooms) 153 153 153 153 153 153
Hotel-Virgin(Rooms) 145 145 0 0 145 0
Public Revenue Parameters($2017)
Retail Seles/SF $900.00 $800.00 $900.00 $800.00 $900.00 $800.00
Restaurant Sales/SF $900.00 $750.00 $900.00 $750.00 $900.00 $750.00
Office SaleslSF(incl.worker purchases) 540.00 540.00 540.00 540.00 $40.00 $40.00
Hotel-Kimplon Revpar-stabilized $143.91 $139.92 $143.91 $139.92 $143.91 $139,92
Hotel-Virgin Revpar-stabilized $156.64 $149.03 $156.64
Public Revenues-2021
City Property Taxes $424.420 $424,420 $268,030 $268,030 $268,030 $268.030
City Sales Tax $1,146,700 $1022,500 $932,100 $826,100 $932,100 $826,100
Net City Transient Occupancy Tax(TOT) S573.2100 55600 32S 4.600 31$ 5,500 32 600 315 5.500
Total $2,144,320 $2,002.520 $1,524.730 $1,409,630 $1.524,730 $1,409.630
Public Revenues-30 Years
City Pmpedy Taxes $21,188,910 $21,188,910 $10,246,310 $10,246,310 $19,894,510 $14,682,310
City Sales Tax $60,618,0011 151,063,500 $37,9(33.500 $33,895,6011 $58,408,500 $42,267900
Net City Transient Occupancy Tax(TOT) $29.974AW $28839300 $15.13300D $14.711,500 $27,777,200 $14.711,501)
Total $111,781,710 $101,091,710 $61 $59,603,410 $106,090,210 $71,661,710
Net Present Value @7.0% $41,436,900 $37,565,100 $24,680,200 $22,527,600 $37.971,300 $26,629,900
Prepared by Kayser version Assoames,Inc.
Filename'.PS Promenade Summary;7113/2017;jar
i9
Attachment A
Palm Springs Promenade
Public Revenue Analysis
Proposed Development Program
Optimistic Scenario
20
TABLE 1A
KEY CITY PUBLIC REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Total City City Total
Prop" Property Sales Net City
Year Taxes 1 Taxes t Taxes 2 City TO 3 Revenues
Allocation% 22.69
2018 $1,113,400 $252,580 $840,000 $185,100 $1.277,680
2019 1,135,600 257,610 877,500 229,900 1,365.010
2020 1,834,300 416,120 1,102,600 518.000 2,036,720
2021 1,870,900 424,420 1,146,700 573,200 2,144,320
2022 2,040,900 462,980 1,276,800 675,800 2,415,580
2023 2,483,700 563,430 1.512,400 754,200 2,830,030
2024 2,725,800 618,350 1,665,000 772,900 3,056,250
2025 2,780,400 630,740 1,706,600 858,800 3,196,140
2026 2,836,000 643,350 1,749,300 880,200 3,272,850
2027 2,892,700 656,220 1,793,000 902,300 3,351,520
2028 2.950,500 669,330 1,837,900 924,900 3,432,130
2029 3,009,600 682,730 1,883,800 947,900 3,514,430
2030 3,069,700 696,370 1,930,900 971,600 3,598,870
2031 3,131,100 710,300 1,979,200 996,000 3,685,500
2032 3,193,800 724,520 2,028,700 1,020,900 3,774,120
2033 3,257,600 738,990 2,079,400 1,046,400 3.864,790
2034 3,322,800 753,780 2,131,400 1,072,500 3,957,680
2035 3,389,200 768,850 2.184,700 1,D99,300 4,052,850
2036 3,457,000 784,230 2,239,300 1,126,800 4,150,330
2037 3,526,200 799,930 2,295,300 1,155,000 4,250,230
2038 3,596,700 815,920 2,352,600 1,183,800 4,352,320
2039 3,668,600 832,230 2,411,500 1,213,500 4,457,230
2040 3,742,000 848,880 2,471,700 1,243,800 4,564,380
2041 3,816,8O0 865,850 2,533,500 1,274,900 4,674,250
2042 3,893,200 883,180 2,596,900 1,306,800 4.786,880
2043 3,971,000 900,830 2,661,800 1,339,400 4,902,030
2044 4,050,500 918,870 2,728,300 1,372,900 5,020.070
2045 4,131,500 937,240 2,796,600 1.407,200 5,141,040
2046 4,214,100 955,980 2,866,500 1,442,400 5.264,880
2047 4,298.40D 975,100 2,938.100 1,478.400 5,391600
Total $93,404,000 $21,188,910 $60.618,000 $29,974,800 $111,781,710
NPV @ 7% $35,176,100 $7,979,800 $22,585,400 $10,1371,700 $41,436,900
1. See Table 2
2. See Table 3
3. See Table 4
21
Prepared by:Keyser Marston Associates,Inc.
Filename+public revenue analysis-Optimistic 12.1;Pub Revs;7/1 31201 7;Jar
TABLE 2A
ALLOCATION OF PROPERTY TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS, CALIFORNIA
Incremental
Component Property Assessed Property City
Year Completed Valuation Valuation Tax Base Allocation s
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 Hotel $67.590.000 183,425,000 1,834,300 416,120
2021 $0 187,093,500 1,870,900 424,420
2022 Block D $13,250,000 204,085,400 2,040,900 462,980
2023 Block F $40,200,000 24B,367,100 2,483,700 563,430
2024 Block G $19,250,000 272,584,400 2,725,800 618,350
2025 $0 278,036,100 2,780,400 630,740
2026 $0 283,596,800 2,836,000 643,350
2027 $0 289,268,700 2,892,700 656,220
2028 295,054,100 2,950,500 669,330
2029 300,955,200 3,009,600 682,730
2030 306,974,300 3,069.700 696,370
2031 313,113,800 3,131,100 710,300
2032 319,376,100 3,193,800 724,520
2033 325,763,600 3,257,600 738,990
2034 332,278,900 3,322,800 753,780
2035 338,924,500 3.389,200 768,850
2036 345,703,000 3.457,000 784,230
2037 352,617,100 3,526,200 799,930
2038 359,669,400 3,596,700 815,920
2039 366,862,800 3,668,600 832,230
2040 374,200,100 3,742,000 848,880
2041 381,684.100 3,816,800 865,85D
2042 389,317,800 3,893,200 883,180
2043 397,104,200 3,971,000 900,830
2044 - - 405,046,300 4,050,500 918,870
2045 413.147,200 4,131,500 937,240
2046 421,410,100 4,214,100 955,980
2047 429,838,300 4,298,400 975,100
TOTAL $93,404,000 $21,188,900
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. L'
Filename:public revenue analysis-Optimistic Prop Tax;7/12/2017;jar
TABLE 3A
SALES TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Developed On Site Kimpton Virgin
Commercial Taxable Visitor Visitor City
Year Square Footage Sales 1 Taxable Sales 2 Taxable Sales 0 Sales Tax
Allocation% 1-00%
2018 101,305 $76,371,000 $7,626,400 $840,000
2019 101,305 78.280.000 9,473,500 877,500
2020 114,555 91,662,000 10,697,300 $7,896,800 1,102,600
2021 114.555 93,954,000 10,964,700 9.747,700 1,146,700
2022 144,555 105,409,000 11.238.800 11,034,300 1,276,800
2023 164,555 128,410,000 11,519,800 11,310,200 1,512,400
2024 175,555 143.101,000 11,807.800 11,593,000 1,665,000
2025 175,555 146,678,000 12,103.000 11,882,800 1,706,600
2026 175.555 150,345,000 12,405,600 12,179,900 1,749,300
2027 175,555 154,104,000 12,715,700 12,484,400 1,793,000
2028 175,555 157,957,000 13,033,600 12.796,500 1,837,900
2029 175,555 161,906.000 13,359,400 13,116,400 1,883,800
2030 175,555 165,954,000 13,693,400 13,444,300 1,930,900
2031 175.555 170,103,000 14,035,700 13.780,400 1,979,200
2032 175,555 174,356,000 14,386,600 14,124,900 2,028,700
2033 175.555 178,715,000 14,746,300 14,478,000 2.079,400
2034 175,555 183.183,000 15,116,000 14,840,000 2,131,400
2035 175.555 187,763,000 15,492,900 15,211,000 2.184,700
2036 175,555 192,467.000 15,880,200 15.591,300 2.239,300
2037 175,555 197,268,000 16.277,200 15,981,100 2,295,300
2038 175,555 202,200,000 16,684,100 16,380,600 2,352,600
2039 175,555 207,255,000 17,101,200 16,790.100 2.411,500
2040 175,555 212,436,000 17,528,700 17,209,900 2,471,700
2041 175,555 217,747,000 17,966,900 17,640,100 2,533,500
2042 175,555 223,191,000 18,416,100 18,081,100 2,596,900
2043 175,555 228,771.000 18,876,500 18,533,100 2.661.800
2044 175,555 234,490,000 19,348,400 18,996,400 2,728,300
2045 175,555 240,352,000 19,832,100 19,471,300 2,796,600
2048 175,555 246,361,000 20,327,900 19,958,100 2.866.500
2047 175,555 252,520,000 20,836,100 20,457,100 2,938,100
TOTAL $60,618,000
1. Taxable sales estimated at$900 ISF for retail space,69W ISF for restaurant space,$800 f 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
23
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-Optimistic Sales Tax;711212017;jar
TABLE 4A
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA ,
Kimpton Revenue per Revenue per
Project Hotel Available Annual Room Virgin Hotel Available Annual Room
Year Rooms Room ' Revenues Rooms Room 2 Revenues TOT Revenues
2018 153 $107.80 $6,020.000 $0 $812,700
2019 153 $133.90 7.478,000 0 1,D09,500
2020 153 $151.20 8,444,000 145 $123.75 61549,000 2.024,100
2021 153 $154.98 8,655,D00 145 $152.75 8,084,000 2,259,800
2022 153 $158.85 8,871,DD0 145 $172.90 9,151,000 2,433,000
2023 153 $162.83 9,093,000 145 $177.22 9,380,000 2.493,900
2024 153 $166.90 9,320,000 145 $181.65 9,614,000 2,556.100
2025 153 $171.07 9,553,000 145 $186.19 9,854,000 2,619.900
2026 153 $175.35 9,792,000 145 $190.85 10,101,000 2,685,600
2027 153 $179.73 10,037,D00 145 $195.62 10,353,000 2,752,700
2028 153 $184.22 10.288,000 145 $200,51 10,612,000 2.821,500
2029 153 $188.83 10,545,000 145 $205.52 10,877.000 2,892,000
2030 153 $193.55 10,809,000 145 $21 D.66 11,149,000 2,964,300
2031 153 $198.39 11,079,000 145 $215.93 11,428.000 3,038,400
2032 153 $203.35 11,356,000 145 $221.33 11,714,000 3,114,500
2033 153 $208.43 11,640.000 145 $226.86 12,007,000 3.192,300
2034 153 $213.64 11,931.000 145 $232.53 12,307,000 3,272,100
2035 153 $218.98 12,229,000 145 $238.34 12,614,000 3,353,800
2036 153 $224.46 12,535,000 145 $244.30 12,930.000 3,437,800
2037 153 $230.D7 12,848,000 145 $250.41 13,253,10DD 3,523,600
2038 153 $235.82 13,169,000 145 $256.67 13,584,000 3,611,700
2039 163 $241.72 13,499,000 145 $263.09 13,924,000 3,702,100
2040 153 $247.76 13,836,000 145 $269.66 14,272,000 3,794,600
2041 153 $253.95 14.182,000 145 $276.41 14,629,000 3,889,500
2042 153 $260.30 14,537,000 145 $283.32 14,995,000 3,986,800
2043 153 $266.61 14,900,000 145 $290.40 15,389,OD0 4,086,30D
2044 153 $273A8 15,272.000 145 $297.66 15,754,000 4.188,500
2045 153 $28D.32 15,654,000 145 $305.10 16,147,000 4,293,100
2046 153 $287.32 16,046,000 145 $312.73 16,551.000 4.400,600
2047 153 $294.51 16.447,000 145 $320.55 16,965,000 4,510,600
Total
$93,721,400
1.KMA estimate based on review of developer information,other Kanpwn Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA estimate based on review of developer information,comparable hotel information and CBRE information for Coachella Valley.
Revenue per avaaable room is equal to total annual room revenues divided by the Mal number of rooms divided by 365 days
3. Based on City's 13.5%transient occupancy tax(TOT)rate.
h�
Preapred by.Keyser Marston Associates,Inc.
Filename:public revenue analysis-Optimistic 12.1 Hotel Stays;711312017;jar
TABLE 5A
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized '
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,583,940 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.W8.317 6.3%
Total Hotel Guest Expenditures $44,576.465 100.0%
Total Non-Lodging Spending $34,992,525 78.6%
Stabilized Subject to 3 Taxable
II. Non-Lodging Expenditures Subject to Sales Tax Spending($) 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 $34,97D,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) °
Net New Off-Site Taxable Sales $10,697,300
Sales Tax @ 1.0% $107,000
1 Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Conventions Bureaus, CBRE
and Dean Runyan Associates.
t Based on stabilized Year 3 market rate room revenues plus 13.5%TOT,
3 KMA assumption based on previous hotel experience.
" Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
u5
Prepared by:Keyser Marston Associates, Inc.
Filename:public revenue analysis-Optimistic Kimpton Vlstor Spending;7112/2017;jar
TABLE 6A
OFF SITE VISITOR SPENDING-VIRGIN HOTEL
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,885,911 x 21.5%
Food&Beverage 11,127,397 24.2%
Retail Sales 7,104,061 15.5%
Ground Transportation 2,115,125 4.6%
Arts,Entertainment&Recreatlon 12,828,694 27.9%
Other Purchases 2,896,802 6.3%
Total Hotel Guest Expenditures $45,980,980 100.0%
Total Non-Lodging Spending $36,095,070 78.5%
Stabilized Subject to 3 Taxable
II. Non-Lodging Expenditures Subiect to Sales Tax Spending($) Sales Tax Spending
Food&Beverage $11,127,397 50% $5,563,699
Retail Sales 7,104,061 75% 5,328,046
Ground Transportation 2,115,125 0% 0
Arts, Entertainment&Recreation 12.828,694 5% 641,435
Other Purchases 2 896 802802 50% 1,448,401
Total Non-Lodging Spending $36,072,079
Total Non-Lodging Taxable Spending 36.0% $12,981.580
111. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,981,580
(Less)Transfers and Purchases Outside City (1,947,237)"
Net New Off-Site Taxable Sales $11,034,300
Sales Tax @ 1.0% $110,000
' Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Convention Bureaus,CBRE
and Dean Runyan Associates.
z Based on stabilized Year 3 market rate room revenues plus 13.5%TOT,
3 KMA assumption based on previous hotel experience.
Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs
G6
TABLE 7A
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
------ Kimpton Hotel ---- ----- Virgin Hotel --
Project Room TOT Pat. Room TOT Pct.
Year Revenues TOT Rebate Transfer Transfer' Net TO Revenues TOT Rebate Transfer Transfer' Net TOT
2018 $6.020,000 $812.700 $546,300 10.0% $81,300 $185,100 $0 s0 $0 $0 $0
2019 7,478,000 1,009,500 678,600 10.0% 101,000 229,900 0 0 0 0 0
2020 8,444,000 1,139,900 766,300 5.0% 57,000 316,600 6,549,000 584,100 594,300 10.0% 88,400 201,400
2021 8,655,000 1,168,400 785,400 5.0% 58,400 324,600 8,084,000 1.091,300 733,600 10.0% 109.100 248,600
2022 8,871,000 1,197,600 805,000 5.0% 59,900 332,700 9,151,000 1,235,400 830,500 5.D% 61,800 343,100
2023 9,093,000 1.227,600 825200 0 402.400 9,380,000 1,266,300 851,200 5.0% 63.300 351,800
2024 9,320.000 1.258,200 845.800 0 412.400 9,614,000 1,297.900 872,500 5.0% 64,900 360,500
2025 9,553,000 1,289.700 866,900 0 422,800 9,854,000 1,330,300 894,300 0 436,000
2026 9,792,000 1.321.900 888,600 0 433,3X1 10,101,000 1,363.600 916,700 0 446,900
2027 10,037,000 1,355,000 910.900 0 444,100 10,353,000 1.397,700 939,500 0 458,200
2028 10,288,D00 1,388,900 933,600 0 455.300 10,612,000 1,432,800 963,000 0 469,600
2029 10,545,D00 1,423,600 957,000 0 466,600 10,877,000 1.468,400 987,100 0 481,300
2030 10,809,00D 1,459.200 980,900 0 478.300 11,149,000 1,505,100 1,011,800 0 493,300
2031 11,079,000 1,495,700 1.005,400 0 490.300 11,428,000 1,542.800 1,037,100 0 505,700
2032 11,356,000 1,533.100 1.030,600 0 502.500 11,714,000 1,581,400 1,063,000 0 518,400
2033 11,640,000 1,571,400 1.056.300 0 515,100 12,007,000 1,620,900 1,089,600 0 531,300
2034 11.931,000 1,610,700 1.082,700 0 528,000 12,307.000 1,661.400 1.116,900 0 544.500
2035 12,229.000 1,650,900 1,109.800 0 541,100 12,614,D00 1,702,900 1,144,700 0 558,200
2036 12,535,000 1.692.200 1,137,600 0 554,600 12,930,000 1.745,600 1,173,400 0 572,200
2037 12,848.000 1.734,500 1.166,000 0 568,500 13,253.000 1,789,200 1,202,700 0 556,600
2038 13,159,000 1,777,800 11195,100 0 582,700 13,584,000 1,833,800 1,232,700 0 601,100
2039 13,499,000 1,822,400 1,225.000 0 597,4D0 13,924,000 1,879,700 1.263.600 0 $16,100
2040 13,836,D00 1,867,900 1,255,600 0 612,3D0 14,272,000 1,926,70D 1,295.200 0 631,500
2041 14,182.000 1.914,600 1,287,000 0 627,600 14.629,000 1,974,900 1,327,600 0 647,300
2042 - 14,537,000 1.962,500 1,319.200 0 6431300 14,995.000 2,024.300 1,360,800 0 663,500
2043 14,900,000 2,011.500 1,352,200 0 659,300 15,36%000 2,074,800 1,394,700 0 680,100
2044 15.272,000 2,061,700 1,385,900 0 675,800 15.754,000 2,128,800 1,429.700 0 697,100
2D45 15,654,000 2,113,300 1,420,600 0 692.700 16,147,000 2,179,800 1,465,300 0 714,500
2046 16,046,000 2.166,200 1,456,200 0 710.000 16,551,000 2,234.400 1.502,000 0 732,400
2047 18.447,000 2,220,300 491. 2,600 9 727 700 16,965,000 2,290.30 D 1 S39,60 4 750,700
Total $350,065,000 $47,258.900 $31.768.300 $357,600 315,133,D00 $344,167,000 $46,462,400 $31,233,100 $387,500 $14,841,8D0
1. KMA essumptm of mom slays that would othelwlse occur at other hotels in Palm Springs
Attachment B
Palm Springs Promenade
Public Revenue Analysis
Proposed Development Program
Conservative Scenario
28
TABLE I
KEY CITY PUBLIC REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Total City City Total
Property Property Sales Net City
Year Taxes 1 Taxes 1 Taxes 2 City TO 3 Revenues
Allocation% 22,69%
2018 $1,113,400 $252,580 $742,100 $179,500 $1,174,180
2019 1,135.600 257,610 776,800 223,300 1,257,710
2020 1,834,300 416,120 982,2D0 502,900 1,901,220
2021 1,870,900 424,420 1,022,5D0 555,600 2,002,520
2022 2,040,900 462,980 1,056,800 649,900 2,169,680
2023 2,483,700 563.430 1,264,200 726,800 2,553,430
2024 2,725,800 618,350 1,397,900 743,900 2,760,150
2025 2,780,400 630,740 1,432,800 825,900 2,889,440
2026 2,836,000 643,350 1,468,600 846,600 2,958,550
2027 2,892,700 656,220 1,505,300 867,700 3,029,220
2028 2,950,500 669,330 1,543,000 889,400 3,101,730
2029 3,009,600 682,730 1.581,500 911,500 3,175,730
2030 3,069,700 696,370 1,621,100 934,400 3,251,870
2031 3,131,100 710,300 1,661,600 957,800 3,329,700
2032 3,193,800 724,520 1,703,100 951,700 3,409.320
2033 3,257,600 738,990 1,745,700 1,DD6,300 3,490,990
2034 3,322,800 753,780 1,789,400 1,031,400 3,574,580
2035 3,389,200 768,850 1,834,100 1,057,200 3,660.150
2036 3,457,000 784,230 1,879,900 1,083,600 3,747,730
2037 3,526,200 799,930 1.926,900 1.110,600 3,837,430
2038 3,596,700 815,920 1,975,100 1,138,300 3,929,320
2039 3,668,600 832,230 2,024,500 1,166,800 4,023,530
2040 3,742,000 848,880 2,075,100 1,196,100 4.120,080
2041 3,816,800 865,860 2,127.000 1,225,900 4,218,750
2042 3,893,200 883,180 2,180,200 1,256,700 4,320,080
2043 3,971,000 900,830 2,234,700 1,288,100 4,423,630
2044 4,050,500 918,870 2.290,500 1,320,200 4,529,570
2045 4,131,500 937,240 2,347,800 1,353,300 4,638,340
2046 4,214,100 955,980 2,406,500 1.387,100 4,749,580
2047 4,298.400 975,100 2,466,600 1,421,800 4,863,500
Total $93,404,000 $21,188,910 $51.063,500 $28,839,300 $101,091,710
NPV Q 7% $35.176,100 $7,979,800 $19,118,400 $10,466,90D $37.565,100
1. See Table 2
2. See Table 3
3. See Table 7
29
Prepared by.,Keyser Marston Associates,Inc.
Filename:public revenue analysis-Conservative;Pub Revs;7113=17;jar
TABLE 2B
ALLOCATION OF PROPERTY TAX REVENUES
PALM SPRINGS PROMENADE
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 $252,560
2019 $0 113,563,700 1,135,600 257,610
2020 Virgin Hotel $67,590,000 183,425,000 1,834,300 416,120
2021 $0 187,093,500 1,870,900 424,420
2022 Block D $13.250,000 204,085,400 2,040,900 462,980
2023 Block F $40,200,000 248,367,100 2.483,700 563.430
2024 Block G $19,250,000 272,584,400 2,725,800 618,350
2025 $0 278,036,100 2.780,400 630,740
2026 $0 283,596,800 2,836,000 643,350
2027 $0 289,268,700 2,892,700 656,220
2028 295,054,100 2,950,500 669,330
2029 300,955,200 3,009,600 682,730
2030 306,974,300 3.069,700 696.370
2031 313,113,800 3,131,100 710,300
2032 319,376.100 3,193,800 724,520
2033 325,763,600 3,257,600 738,990
2034 332,278,900 3,322,800 753,780
2035 338,924,500 3.389,200 768.850
2036 345,703,000 3,457,000 784,230
2037 352,617.100 3,526,200 799,930
2038 359,669,400 3,596,700 815,920
2039 366,862,800 3,668,600 832,230
2040 374,200,100 3,742,000 848,880
2041 381.684,100 3,816,800 865,850
2042 389,317.800 3,893,200 883,180
2043 397,104,200 3,971,000 900,830
2044 405,046,300 4,050.500 918,870
2045 413,147,200 4,131,500 937,240
2046 421,410,100 4,214,100 955,980
2047 429,838,300 4,298.400 975,100
TOTAL $93,404,000 $21,188.900
1. Project Value based on KMA review of developer costs td date and comparable projects
2. City share of property taxes provided by City staff.
Prepared:Keyser Marston Associates, Inc. 30
Filename:public revenue analysis-Conservative Prop Tax;7J12/2017;jar
TABLE 313
SALES TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Developed On Site Klmpton Virgin
Commercial Taxable Visitor Visitor city
Year Square Footage Sales t Taxable Sales 2 Taxable Sales 3 Sales Tax
Allocation% 1.00%
2018 101,305 $66,816,000 $7,393,400 $742,100
2019 101,305 68,486.000 9,197,400 776,800
2020 114,555 80,166,000 10,399,600 $7,652,100 982,200
2021 114,555 82,171,000 10,659,80,0 9,416.200 1,022,500
2022 144.655 84,255,000 10.926.100 10,497,800 1,056,800
2023 164.555 104,463,000 11,199,300 10,760,200 1,264,200
2024 175.565 117.279,000 11,479,300 11.029,200 1,397,900
2025 175,555 120.210,000 11,766,300 11,304,900 1,432.800
2026 175,555 123,215,000 12,060.500 11,587,500 1,468,600
2027 175,555 126,294,000 12,362.000 11.877,200 1,505,300
2028 175,555 129,451,000 12,671,100 12,174,100 1.643,000
2029 175,555 132,687,000 12,987,900 12,478,500 1,581,500
2030 175,555 136,004,000 13,312.600 12,790.500 1,621,100
2031 175,555 139,404,000 13.645,400 13.110,300 1,661,600
2032 175.655 142,889,000 13,986,500 13,438,100 1,703,100
2033 175,555 146,461,000 14,336.200 13,774,100 1,745.700
2034 176,655 150,123,000 14,694,600 14,118,500 1,789,400
2035 175.555 153,876,000 15,062,000 14,471,500 1,834,100
2036 176.655 157.723,000 15,438,600 14,833,300 1,879,900
2037 175,555 161,666,000 15.824,600 15,204,100 1,926,900
2038 175,555 166,708,000 16,220,200 15,584.200 1,975,100
2039 175,555 169,851,000 16,625,700 15,973.800 2,024,500
2040 175,555 174,097,000 17,041,300 16,373,100 2,075,100
2041 175,555 178,449,000 17,467,300 16,782,400 2,127,000
2042 175,555 182,910,000 17,904.000 17,202,000 2,180,200
2043 175,555 187,483,000 18,351,600 17,632,100 2.234,700
2044 175,555 192.170,000 18,810,400 18,072,900 2,290.500
., 2045 176,555 196.974,000 19.280,700 18,524,700 2,347,800
2046 175,555 201,898,000 19,762,700 18.987,800 2,406,500
2047 175,555 206,945,000 20,256,800 19,462,500 2,466,600
TOTAL $51,063,500
1. Taxable sales estimated at$900/SF for retail space,$900/SF for restaurant space,$800/SF for hotel commercial space and$40 I SF for
office space.Taxable sales estimates include employee spending during work hours.
2. See Table 5
3. See Table
31
Prepared by Keyser Marston Associates,Inc.
Filename:public revenue analysis-Conservative Sales Tax;71122017;jar
TABLE 4B
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Revenue per Revenue per
Project Hotel Available Annual Room Virgin Hotel Available Annual Room
Year Rooms Room ' Revenues Rooms Room Z Revenues TOT Revenues 2
2018 153 $104,50 $5.836,000 $787,900
2019 153 $130.00 7.260,000 980,100
2020 153 $147.00 8,209,000 145 $119.90 $8,346,000 1,964,900
2021 153 $150.68 8,414,000 145 $147.55 7.809,000 2,19D,100
2022 153 $154.44 8,625,D00 145 $164.50 8,706,000 2,339,700
2023 153 $158.30 8,840,000 146 $168.61 8,924,000 2,398,100
2024 153 $162.26 91061.000 145 $172.83 9,147,000 2,458,100
2025 153 $166.32 9,288,000 145 $177.15 9,376.000 2,519,600
2026 153 $170.47 9,520,000 145 $181.58 9,610.000 2,582,600
2027 153 $174.74 9.758.000 145 $186.12 9,850,000 2,647,100
2028 153 $179.11 10,D02,000 145 $190.77 10,096,000 2,713,200
2029 153 $183.58 10,252,000 145 $195,54 10,349,ODO 2,781,100
2030 153 $188.17 10,508,000 145 $200.43 10,60B4O00 2,B50,700
2031 153 $192.88 10,771,000 145 $205.44 1D,873,000 2,921,900
2032 153 $197.70 11,040,000 145 $210,57 11,145,000 2.995,000
2033 153 $202.64 11,316,000 145 $215.84 11,423,000 3,069,800
2034 153 $207.71 11,599,000 145 $221.23 11,709.000 3,146,600
2035 153 $212-90 11,889,000 145 $226.77 12,002,000 3.225,300
2036 153 $218.22 12,187,000 145 $232.43 12,302.000 3,306,000
2037 153 $223.68 12,491,000 145 $238.25 12,609,000 3,388,500
2038 153 $229.27 12,804,000 145 $244.20 12,924,000 3,473,300
2039 153 $235.00 13,124,000 145 $250.31 13,247,000 3,560,100
2040 153 $240.88 13,452,000 145 $256.56 13,579,000 3,649,200
2041 153 $246.90 13,788,OD0 145 $262,98 13,91B4O00 3.740,300
2042 153 $253.07 14,133,000 145 $269,55 14.266.000 3,833.900
2043 153 $259.40 14.486.000 145 $276.29 14.623,000 3.929,7DO
2044 153 $265.88 14,848,000 145 $28320 14.988,000 4,027,900
2045 153 $272.53 15,219.000 145 $290.28 15,363,000 4,128.600
2046 153 $279.34 15,600.000 145 $297.54 15.747,000 4,231,800
2047 153 $286.33 15,990,000 145 $304.97 16.141,000 4,337,700
Total $90,178,800
1.KMA estimate based on review of developer Information,other Kunpion Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA estimate based on review of daveloper'ofonnation,comparable hotel information and CBRE information for Coachella Valley.
Revenue per available roam is equal to total annual room revenues divided by the total number of rooms divided by 365 days
3. Based on Citys 13-5%transient occupancy tax(TOT)rate.
C,J
Preapred by:Keyser Marston Associates,Inc.
Rename:public revenue analysis-Conservative-121 Hotel Slays;M32017;jar
TABLE 56
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized '
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,317,215 Z 21.5%
Food&Beverage 10,487,284 24.2%
Retail Sales 6,695,394 15.5%
Ground Transportation 1,993,451 4.6%
Arts, Entertainment&Recreation 12,090,712 27.9%
Other Purchases 2,730,161 6.3%
Total Hotel Guest Expenditures $43,335,884 100.0%
Total Non-Lodging Spending $34,018,669 78.5%
Stabilized Subject to s Taxable
Il. Non-Lodging Expenditures Subject to Sales Tax Spending($) Sales Tax Spending
Food&Beverage $10,487,284 50% $5,243,642
Retail Sales 6,695,394 75% 5.021.546
Ground Transportation 1,993,451 0% 0
Arts, Entertainment&Recreation 12,090,712 5% 604,536
Other Purchases 2,730,161 50% 1,365,080
Total Non-Lodging Spending $33,997,001
Total Non-Lodging Taxable Spending 36.0% $12,234,803
III. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,234,803
(Less)Transfers and Purchases Outside City (1,835,221)
Net New Off-Site Taxable Sales $10,399,600
Sales Tax @ 1.0% $104,000
1 Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Conventions Bureaus, CBRE
and Dean Runyan Associates.
2 Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA assumption based on previous hotel experience.
" Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
Prepared by:Keyser Marston Associates,Inc. 33
Filename:public revenue analysis-Conservative Kimpton Astor Spending;711 212 01 7;jar
TABLE 613
OFF SITE VISITOR SPENDING-VIRGIN HOTEL
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized
1. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,405.173 a 21.5%
Food&Beverage 10,586,288 24.2%
Retail Sales 6,758,601 15.5%
Ground Transportation 2,012,270 4.6%
Arts, Entertainment&Recreation 12,204,853 27.9%
Other Purchases 2,755,934 6.3%
Total Hotel Guest Expenditures $43,744,991 100.0%
Total Non-Lodging Spending $34,339,818 78.5%
Stabilized Subject to 3 Taxable
11. Non-Lodaina Expenditures Sublect to Sales Tax Spending($) Sales Tax Spending
Food&Beverage $10,586,288 50% $5,293,144
Retail Sales 6.758,601 75% 5,068,951
Ground Transportation 2,012,270 0% 0
Arts, Entertainment&Recreation 12,204,853 5% 610,243
Other Purchases 2,755,934 50% 1,377.967
Total Non-Lodging Spending $34,317,946
Total Non-Lodging Taxable Spending 36.0% $12,350.305
111. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,350,305
(Less)Transfers and Purchases Outside City (1,852,546)a
Net New Off-Site Taxable Sales $10,497,800
Sales Tax @ 1.0% $105,000
' Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Convention Bureaus, CBRE
and Dean Runyan Associates.
z Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA assumption based on previous hotel experience.
Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs
34
TABLE 7S
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Hotel .--.- --- Virgin Hotel ----
Project Room TOT Pct. Room TOT Pct
Year Revenues TOT Rebate Transfer Transfer' Net TO Revenues TOT Rebate Transfer Transfer' Net TOT
2018 $5,836,1)00 $787,900 $529.600 10.0% $78,800 $179,500 s0 $0 $0 $0 $0
2019 7,260,000 980.100 658,800 10.0% 98,000 223,300 0 0 0 0 0
2020 8,209,000 1,108,209 745,000 5.0% 55.400 307,800 6.346,000 856,700 575,900 10.0% 85,700 195,100
2021 8,414.000 1,135,900 763,600 5.0% 56,800 315,5D0 7,809,000 1.054.200 708,700 10.0% 105,400 240,100
2022 8,625.000 1,164,400 782,700 5.0% 58,200 323,500 8,7D6,D00 1,175.300 790,100 5.0% 58,800 326,400
2023 8.840,000 1,193.400 B02,200 0 391,200 8,924,D00 1.204.700 B09,900 5.0% 60.200 334.600
2024 9,061,000 1.223,200 522,300 0 400.900 9,147.000 1,234,800 830,100 5.0% 61,700 343,000
2025 9,288,000 1,253,900 842,900 0 411,000 9,376,0D0 1,265.800 850,900 0 414,900
2026 9.520,000 1,285,200 663,900 0 421,300 91610,000 1,297,400 872,100 0 425.300
2027 9,758,000 1,317,300 885,500 0 431,800 9.850,000 1,329,800 893,900 0 435,900
2028 10,002.000 1,350,300 907,700 0 442,600 10,096.000 1,363,000 916,200 0 446,800
2029 10,252,000 1,384,000 930,400 0 453,600 10,349,000 1,397,100 939,200 0 457,900
2030 10,508,000 1,418,600 953,600 0 465,000 10,608,000 1.432,100 962.700 0 469.400
2031 10,771,000 1,454,100 977,500 0 476.600 10,873.000 1,467,900 986,700 0 481,200
2032 11,040,000 1,490,400 1,001,900 0 488,500 11,145,000 1,504.600 1.011,400 0 493,200
2033 11,316,000 -1,527,700 1,026,900 0 500,800 11,423,000 1,542,100 1,036,600 0 505,500
2034 11,599,000 1,565,900 1,052,600 0 513,300 11,709,000 1,580,700 1.062.600 0 518,100
2035 11,889.000 1,605,000 1,078,900 0 526,100 12,002,000 1,620,300 1.089,200 0 531,100
2036 12.187.000 1,645,200 1,106,000 0 539,200 12,302,000 1,660,800 1,116,400 0 544,400
2037 12,491,000 1,686,300 1,133,600 0 552.700 12,609,000 1,702,200 1.144,300 0 557,900
2038 12,804,000 1,728,500 1,162,000 0 566,500 12,924,000 1,744.700 1,172,900 D 571,800
2039 13,124,000 1,771,700 1,191.000 0 580,700 13,247,000 1.788,300 1,202,200 0 586,100
2040 13,452.000 1,816,000 1,220,800 0 595,200 13.579,000 1,833.200 1,232,300 0 600,900
2041 13,788,000 1,861,400 1,251.300 0 610,100 13,918,000 1.878,900 1,263,100 0 615,800
2042 14,133,000 1,9D8,000 1,282,600 0 625,400 14,266,000 1.925,900 1.294,600 0 631,300
2043 14,486,000 1,955,600 1,314,600 0 641.000 14,623,000 1,974,100 1,327,000 0 647,100
2044 14,848,000 2,004,500 1,347,500 0 657,000 14.988,000 2,023,400 1.360,200 0 663,200
2045 15.219,000 2,054,600 1,381,100 0 673,500 15,363,000 2,074,000 1.394,200 0 679,800
2046 15.600,000 2,106,D00 1,415,700 0 690,300 15,747,000 2.125,800 1,429,000 0 696.800
2047 15990.000 2158700 1-451,100 g 707,500 16.141.000 2,179.000 1,464,800 4 714200200
Total $340,310,000 $45,942,000 $30,883,300 $347,200 $14,711,500 $327,68D,000 $44,236,800 $29,737.200 $371.800 $14,127.800
1. KMA assumption of roam slays that would dherwise occur at doer hotels In Palm Springs
w
GJ4
Attachment C
Palm Springs Promenade
Public Revenue Analysis
Reduced Development Program
Optimistic Scenario
36
TABLE'IC
KEY CITY PUBLIC REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Total City City Total
Property Property Sales Net City
Year Taxes ' Taxes ' Taxes 2 City TOT 3 Revenues
Allocation% 22.69%
2018 $1,113,400 $252,580 $840,000 $185,100 $1,277,680
2019 1,135,600 257,610 877,500 229,900 1,365,010
2020 1.158,400 262,790 909,300 316,600 1,488,690
2021 1,181,500 268,030 932,100 324,600 1,624,730
2022 1,205,100 273,380 955,400 332,700 1,561,480
2023 1,229.300 279,870 979.300 402,400 1,660,570
2024 1,253,800 284,430 1,003,700 412,400 1,700,530
2025 1,278,900 290,120 1,028,800 422,800 1,741,720
2026 1,304,500 295,930 1.054,600 433,300 1,783,830
2027 1,330,600 301,850 1,080,900 444,100 1,826,850
2028 1,357,200 307,880 1,107,900 455,300 1,871,080
2029 1,384,300 314,030 1,135,600 466,600 1,916,230
2030 1,412,000 320,320 1,164,000 478,300 1,962,620
2031 1,440,300 326.740 1,193,100 490,300 2,010,140
2032 1,469,100 333,270 1.223,000 502,500 2,058,770
2033 1,498,400 339,920 1,253,500 515,100 2,108,520
2034 1.528,400 346,720 1.284,900 528,000 2,159,620
2035 1,559,000 353,660 1,317,000 541.100 2.211,760
2036 1,590,200 360,740 1,349,900 554,600 2,265,240
2037 1,622,000 367,950 1,383,700 568,500 2,320,150
2038 1,654,400 375,300 1,418,300 582,700 2,376,300
2039 1,687,500 382,810 1,453,700 597,400 2,433,910
2040 1,721,200 390,460 1,490,100 612,300 2,492,860
2041 1,755,700 398,280 1,527.300 627,600 2,553,180
2042 1,790,800 406,250 1,565,500 643,300 2,615,050
2043 1,826,600 414,370 1,604,600 659,300 2,678,270
2044 1,863,100 422,650 1,644,700 675,800 2,743.150
2045 1,900,400 431,110 1,685,900 692,700 2,809,710
2046 1,938,400 439,730 1,728,000 710,000 2,877,730
2047 1,977,200 448.530 177. 1,200 727,700 2,947.430
Total $45.167,300 $10,246,310 $37,963,500 $15,133,000 $63,342,810
NPV @ 7% $18,156,600 $4,118,900 $14,874,700 $5,686,700 $24,680,200
1. See Table 2
2. See Table 3
3. See Table 6
Prepared by Keyser Marsion Associates,Inc. 37
Filename:public revenue analysis-small project-Optimistic 12.1;Pub Revs;711 312 01 7;jar
TABLE 2C
ALLOCATION OF PROPERTY TAX REVENUES
PALM SPRINGS PROMENADE
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 Hotel $0 115,835,000 1,158,400 262,790
2021 $0 118,151,700 1,181,500 268,030
2022 Block D $0 120,514.700 1,205,100 273,380
2023 Block F $0 122,925,000 1,229,300 278,870
2024 Block G $0 125,383,500 1,253,800 284,430
2025 $0 127,891,200 1,278,900 290,120
2026 $0 130,449,000 1,304,500 295,930
2027 $0 133,058,000 1,330,600 301,850
2028 135,719,200 1,357,200 307,880
2029 138,433,600 1,384,300 314,030
2030 141,202,300 1,412,000 320,320
2031 144,026,300 1,440,300 326,740
2032 146,906,800 1,469,100 333,270
2033 149,844,900 1,498,400 339,920
2034 152.841,800 1,528,400 346,720
2035 155,898,600 1,559,000 353,660
2036 159,016,600 1,590,200 360,740
2037 162,196,900 1,622,000 367,950
2038 165,440,800 1,654,400 375.300
2039 168,749,600 1,687,500 382,810
2040 172,124,600 1,721,200 390,460
2041 175,567,100 1,755,700 398.280
2042 179,078,400 1,790,800 406,250
2043 182,660,000 1,826,600 414,370
2044- - - 186,313,200 1,863,100 422,650
2045 190.039,500 1,900,400 431,110
2046 193,840,300 1,938,400 439,730
2047 197,717,100 1,977,200 448,530
TOTAL $45,167,300 $10,246,300
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. 38
Filename:public revenue analysis-small project-Optimistic Prop Tax;7/1212017;jar
TABLE 3C
SALES TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Developed On Site Kimpton Virgin
Commercial Taxable Visitor Visitor City
Year Square Footage Sales ' Taxable Sales 2 Taxable Sales Sales Tax
Allocation% 1.00%
2018 101.305 $76,371,000 $7,626.400 $840,000
2019 101,305 78,280,000 9,473,500 877,500
2020 101,305 80,237,000 10,697,300 $0 909,300
2021 101,306 82,243,000 10.964,700 0 932,100
2022 101,305 84,299,000 11,238,800 0 955,400
2023 101,305 86,406.000 11,519,800 0 979,300
2024 101,305 88,566,000 11,807,800 0 1,003,700
2025 101,305 90,781,000 12,103,000 0 1,028,800
2026 101,305 93,050,000 12,405,600 0 1,054,600
2027 101,305 95,376,000 12,715,700 0 1,080,900
2028 101,305 97,760,000 13,033,600 0 1,107,900
2029 101,305 100,204,000 13,359,400 0 1,135,600
2030 101,305 102,709,000 13,693,400 0 1,164,000
2031 101,305 105,277,000 14,035,700 0 1,193,100
2032 101,306 107,909,000 14,386,600 0 1,223,000
2033 101,305 110,607,000 14,746,300 0 1.253.500
2034 101,306 113,372,000 15,115,000 0 1,284,900
2035 101,306 116.206.000 15,492,900 0 1,317,000
2036 101,305 119,111,000 15,880,200 0 1,349,900
2037 101,305 122,069,000 16,277,200 0 1,383,700
2038 101.305 126,141.000 16,684.100 0 1,418,300
2039 101,305 128,270,000 17,101,200 0 1,453,700
2040 101,305 131,477,000 17,528,700 0 1,490,100
2041 101,305 134,764.000 17,966,900 0 1,527,300
2042 101,305 138,133,000 18,416,100 0 1,565,500
2043 101,305 141,586,000 18,876,500 0 1.604,600
2044 101,305 145,126,000 19,348,400 0 1,644,700
2045 101,305 _ 148.754,000 19,832,100 0 1,685,900
2046 101,305 152,473,000 20,327,900 0 1,728,000
2047 101,305 156,285,000 20,836,100 0 1,771,200
TOTAL $37,963,500
1. Taxable sales estimated at$900/SF for retail space,$900/SF for restaurant space,$800/SF for hotel commercial space and$401 SF for
office space.Taxable sales estimates include employee spending during work hours.
2. See Table 5
39
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-small project-Optimistic Sales Tax;7/11212017;jar
TABLE 4C
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Revenue per Revenue per
Project Hotel Available Annual Room Virgin Hotel Available Annual Room
Year Rooms Room ' Revenues Rooms Room 2 Revenues TOT Revenues 3
2018 153 $107.80 $6.020,000 $812,7DO
2019 153 1;133.90 7,478,000 1,009,500
2020 153 $151.20 8,444.000 0 $0.00 $0 1,139,900
2021 153 $154.98 8,655,D00 0 $0.00 0 1,166,400
2022 153 $158.85 8,871.000 0 $0.00 0 1.197,600
2023 153 $162,83 9,093.000 0 $0.00 0 1,227,600
2024 153 $166.90 9,320,000 0 $0,00 0 1,258,200
2025 153 $171.07 9,553,D00 0 $0.00 0 1,289,700
2026 153 $175.35 9,792.000 0 $0,00 0 1,321,900 -
2027 153 $179.73 10,037,000 0 $0.00 0 1,355,000
2028 153 $184.22 10,288,000 0 $0.00 0 1,38B,900
2029 153 $188.83 10,545,000 0 $0.00 0 1.423,600
2030 153 $193.55 10,809.000 0 $0.00 0 1,459,200
2031 153 $198.39 11,079,000 0 $0.00 0 1,495,70D
2032 153 $203.35 11,356,D00 0 $0.00 0 1,533,100
2033 153 $208.43 11,640,000 0 $0,00 0 1,571,400
2034 153 $213.64 11,931,000 0 $0.00 0 1,610,700
2035 153 $218.98 12,229,000 0 $0.00 0 1,650,900
2036 153 $224A6 12,535,DOO 0 $0.00 0 1,692,200
2037 153 $230.07 12,848,DOO 0 $0.00 0 1,734,500
2038 153 $235.82 13,169,000 0 $0.00 0 1,777,800
2039 153 $241.72 13,499,D00 0 $0.00 0 1,822,400
2040 153 $247.76 13,836,000 0 $0,00 0 1,867,900
2041 153 $253,95 14,162,000 0 $0.00 0 1,914,600
2042 153 $260.30 14,537.000 0 $0.00 0 1,962,500
2043 153 $266.81 14,900,000 0 $0.00 0 2,011,500
2044 153 $273.48 15,272,000 0 $D.00 0 2,061,700
2045 153 $28D.32 15,654,000 0 $0.00 0 2,113,300
2046 153 $287.32 16,046,000 0 $0.00 0 2,166,200
2047 153 $294.51 16,447.000 0 $0.00 0 2.220,300
Total $47,258,900
1.KMA estimate based on review of developer information,other Kimpton Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA estimate based on review of developer information,comparable hotel information and CBRE information for Coachella Valley.
Revenue per available room is equal to total annual room revenues divided by the total number of rooms divided by 365 days
3. Based on Cilys 13.5%bansientoccupancy tax(TOT)rate.
Cp
Pmapred by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-small project-Optimistic Hotel Slays:711300171 jar
TABLE SC
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized '
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,583.940 ' 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 $34,992,525 78.5%
Stabilized Subject to 3 Taxable
11. Non-Lodaina Expenditures Subject to Sales Tax Spending($) 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
Ill. 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
Sales Tax @ 1.0% $107.000
Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Conventions Bureaus, CBRE
and Dean Runyan Associates.
3 Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
5 KMA assumption based on previous hotel experience.
Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
Prepared by:Keyser Marston Associates,Inc. 41.
Filename:public revenue analysis-small project-Optimistic Kimpton Vistor Spending;711 212 01 7;jar
TABLE 6C
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
------ Kimpton Hotel ----
Project Room TOT Pet
Year Revenues TOT Rebate Transfer Transfer' Net TOT
2018 $6,020,000 $812.700 $546,300 10.0% $81,300 $185,100
2019 7,478.000 1.009,500 678,600 10.0% 101,000 229,900
2020 8,444,000 1,139,900 760,300 5.0% 57,000 316,500
2021 8,655,000 1,168,400 785,400 5.0% 58,400 324,600
2022 8,871,000 1,197,600 805,000 5.0% 59,900 332,700
2023 9,093,000 1,227,600 825,200 0 402,400
2024 9,320,000 1,258,200 845.800 0 412,400
2025 9,553,000 1,289,700 866,900 0 422,800
2026 9,792,000 1,321,900 888,600 0 433,300
2027 10.037,000 1.355,000 910.900 0 444,100
2028 10,288,000 1,388,900 933,600 0 455,300
2029 10,545,000 1,423,600 957,000 0 466,600
2030 10,809,000 1,459,200 980,900 0 478,300
2031 11,079,000 1,495,700 1,005.400 0 490,300
2032 11,356,000 1,533,100 1,030,600 0 502,500
2033 11,640,000 1,571.400 1.056,300 0 515,100
2034 11,931,000 1.610,700 1,082,700 0 528,000
2035 12,229,000 1,650,900 1.109,800 0 541,100
2036 12,535,000 1,692,200 1,137,600 0 554,600
2037 12,848,000 1,734.500 1,166,000 0 568,500
2038 13,169,000 1,777,800 1,195,100 0 582,700
2039 13,499,000 1,822,400 1,225,000 0 597,400
2040 13,836.000 1,867,900 1,255,600 0 612,300
2041 14,182,000 1,914.600 1,287,000 0 627.600
2042 14,537,000 1,962,500 1,319,200 0 643,300
2043 14,900,000 2,011,500 1,352.200 0 659,300
2044 15,272,000 2.061.700 1,385,900 0 675,800
2045 15,654,000 2,113,300 1.420,600 0 692,700
2046 16,M,000 2,166,200 1,456,200 0 710,000
2047 16.447,000 2,22D 300 1,492 600 0 727,700
Total $350,065.000 $47,258,900 $31,768,300 $357,600 $15,133,000
IN 1. KMA assumption of room stays that would otherwise occur at other hotels in Palm Springs
Attachment D
Palm Springs Promenade
Public Revenue Analysis
Reduced Development Program
Conservative Scenario
43
TABLE 1D
KEY CITY PUBLIC REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Total City City Total
Property Property Sales Net City
Year Taxes 1 Taxes 1 Taxes 2 City TO 3 Revenues
Allocation% 22.69%
2018 $1,113,400 $252,580 $742,100 $179,500 $1,174,180
2019 1,135,600 257,610 776,800 223,300 1,257,710
2020 1,158,400 262,790 806,000 307,800 1,376,590
2021 1,181,500 268,030 826,100 315,500 1,409,630
2022 1,205,100 273,380 846,800 323,500 1,443,680
2023 1,229,300 278,870 868.000 391,200 1,538,070
2024 1,253,800 284,430 889,700 400,900 1,575,030
2025 1,278,900 290,120 911.900 411,000 1,613,020
2026 1,304,500 295,930 934,700 421,300 1.651,930
2027 1,330,600 301,850 958,100 431,800 1.691,750
2029 1,357,200 307,880 982,000 442.600 1,732,480
2029 1,384,300 314,030 1,006,600 453,600 1,774,230
2030 1,412,000 320,320 1,031,700 465,000 1,817,020
2031 1,440,300 326,740 1,057,500 476,600 1,860,840
2032 1,469,100 333,270 1,084,000 488,500 1,905,770
2033 1.498,400 339,920 1,111,100 500,800 1,951.820
2034 1,528.400 346,720 1,138,800 513,300 1.998.820
2035 1,559,000 353,660 1,167,300 526,100 2,047,060
2036 1,590,200 360.740 1,196,500 539,200 2,096.440
2037 1,622,000 367.950 1,226,400 552,700 2,147,050
2038 1,654,400 375,300 1,257,100 566,500 2,198,900
2039 1,687,500 382,810 1,288.500 580,700 2,252,010
2040 1,721,200 390,460 1,320,700 595,200 2,306,360
2041 1,755,700 398,280 1,353,700 610,100 2,362,080
2042 1,790,800 406,250 1,387,600 625,400 2,419.250
2043 1.826.600 414,370 1,422,300 641,000 2,477,670
2044 1,863,100 422.650 1,457,800 657,000 2,537,450
2045 1,900,400 431,110 1.494,300 673,500 2,598,910
2046 1,938,400 439.730 1.531,600 690,300 2,661,630
2047 1,977.200 448,530 1,569.900 707,600 2,726,030
Total $45,167,300 $10,246,310 $33,645,600 $14,711,500 $58,603,410
NPVQ7% $18,156,600 $4,118,900 $13,180,900 $5,527,800 $22,827,600
1. See Table 2
2. See Table 3
3. See Table 6
44
Prepared by:Keyser Marston Associates,Inc-
Filename:public revenue analysis-small project-Conservative 12.1;Pub Revs;7/13/2017;jar
TABLE 2D
ALLOCATION OF PROPERTY TAX REVENUES
PALM SPRINGS PROMENADE
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 Hotel $0 115,835,000 1,158.400 262,790
2021 $0 118,151,700 1,181.500 268,030
2022 Block D $0 120,514,700 1,205.100 273,380
2023 Block F $0 122,925,000 1,229,300 278,870
2024 Block G $0 125,383.500 1,253,800 284,430
2025 $0 127,891,200 1,278,900 290,120
2026 $0 130,449,000 1,304,500 295,930
2027 $0 133,058,000 1,330,600 301,850
2028 135,719,200 1,357,200 307,880
2029 138,433,600 1,384,300 314,030
2030 141,202,300 1,412,000 320.320
2031 144,026,300 1,440,300 326,740
2032 146,906,800 1,469,100 333,270
2033 149,844,900 1,498,400 339,920
2034 152,841,800 1,528,400 346,720
2035 155,898,600 1,559,000 353,660
2036 159,016,600 1,590,200 360,740
2037 162,196,900 1,622,000 367,950
2038 165,440,800 1,654,400 375,300
2039 168,749,600 1,687,500 382,810
2040 172,124,600 1,721,200 390,460
2041 175,567,100 1.755,700 398,280
2042 179,078,400 1,790,806 406,250
2043 182,660,000 1,826,600 414,370
2044 - - - - 186,313,200 1,863,100 422,650
2045 190,039,500 1,900,400 431,110
2046 193,840,300 1,938,400 439,730
2047 197,717,100 1,977,200 448.530
TOTAL $45,167,300 $10,246,300
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.
45
Prepared:Keyser Marston Associates, Inc.
Filename:public revenue analysis-small project-Conservative Prop Tax;7112/2017:jar
TABLE 3D
SALES TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Developed On Site Kimpton Virgin
Commercial Taxable Visitor Visitor City
Year Square Footage Sales t Taxable Sales 2 Taxable Sales Sales To
Allocation% 1.00%
2018 101,305 $66,816,000 $7,393,400 $742,100
2019 101,305 68.486,000 9,197,400 776,800
2020 101,305 70.199,000 10,399,600 $0 806,000
2021 101,305 71,954,000 10,659,600 0 826,100
2022 101,305 73,752,000 10,926.100 0 846,800
2023 101,305 75,596,000 11,199.300 0 868,000
2024 101,305 77,486,000 11,479,300 0 889,700
2025 101,305 79,423,000 11,766,300 0 911,900
2026 101,305 81,409,000 12.060.500 0 934,700
2027 101,305 83,444,000 12,362,000 0 958,100
2028 101,305 85,530,000 12,671,100 0 982.000
2029 101,305 87,668,000 12,987,900 0 1,006,600
2030 101,305 89,860,000 13,312,600 0 1,031,700
2031 101,305 92,107,000 13,645,400 0 1,057,500
2032 101,305 94,410,000 13,986,500 0 1,084,000
2033 101,305 96,770.000 14,336,200 0 1,111,100
2034 101,305 99,189,000 14,694,600 0 1,138,800
2035 101,305 101,669,000 15,062,000 0 1,167,300
2036 101,305 104,211,000 15.438,600 0 1,196,500
2037 101,305 106,816,000 15,824,600 0 1,226,400
2038 101.305 109,486,000 16,220,200 0 1,257,100
2039 101,305 112,223,000 16,625,700 0 1.288.500
2040 101.305 115,029,000 17,041,300 0 1,320,700
2041 101,305 117,905,000 17,467,300 0 1.353.700
2042 101,305 120,853,000 17,904,000 0 1,387,600
2043 101,305 123,874,000 18,351,600 0 1,422,300
2044 101,305 126,971,000 18,810,400 0 1.457.800
2045 101,305 „730,145,OOD 19,280,700 0 1,494.300
2046 101,305 133,399,000 19,762,700 0 1,531,600
2047 101,305 136,734.000 20,256,800 0 1,569.900
TOTAL $33,645,600
1. Taxable sales estimated at$900/SF 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
46
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-small project-Conservative Sales Tax;7/12/2017;jar
TABLE 4D
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Revenue per Revenue per
Project Hotel Available Annual Room Virgin Hotel Available Annual Room
Year Rooms Room ' Revenues Rooms Room a Revenues TOT Revenues '
2018 153 $104.50 $5,836,ODO $787,900
2019 153 $130.00 7,260,000 980,100
2020 153 $147.00 8.209,000 0 $0.00 $0 1.108,200
2021 153 $150.68 B,414,000 0 $0.00 0 1,135.900
2022 153 $154.44 B,625,000 0 $0.00 0 1.164,400
2023 153 $158.30 B,840,000 0 $0.00 0 1,193,400
2024 153 $162.26 9,061,000 0 $0.00 0 1.223,200
2025 153 $166.32 9,288,ODO 0 $0-00 0 1,253,900
2026 153 $170.47 9,520.000 0 $0.00 0 1,285,200
2027 153 $174-74 9,758,000 0 $0.00 0 1,317,30D
2028 153 $179.11 10,002.000 0 $0.00 0 1,350,300
2029 153 $183.58 10,252,000 0 $0.00 0 1,384,000
2030 153 $188.17 10.508,000 0 $0.00 0 1,418,600
2031 153 $192.8B 10,771,000 0 $0.00 0 1,454,100
2032 153 $197.70 11,040,000 0 $0.00 0 1,490,400
2033 153 $202-64 11.316,000 0 $0.00 0 1,527.700
2034 153 $207.71 11,599,000 0 $0.00 0 1,565,900
2035 153 $212.90 11,889.000 0 $0.00 0 1,605,000
2036 153 $218.22 12.187.000 0 $0,00 0 1,645,200
2037 153 $223.68 12,491,000 0 $0.00 0 1,686,300
2038 153 $229.27 12,804,000 0 $0.00 0 1,728,500
2039 153 $235.00 13,124,000 0 $0.00 0 1,771.700
2040 153 $240.88 13,452,000 0 $0.00 0 1.816,000
2041 163 $246,90 13,788,000 0 $0.00 0 1,861,400
2042 153 $253.07 14,133,000 0 $0.00 0 1,908,000
2043 153 $259.40 14,486,000 0 $0.00 0 1,955,600
2044 153 $265.88 14.848.000 D $0.00 0 2,004,500
2045 153 $272.53 15.219,000 0 $0.00 0 2,054.600
2046 153 $279.34 15,600,000 0 $0,00 0 2,106,000
2047 153 $286-33 15,990,000 0 WOO 0 2,158,700
Total
$45,942,000
1.KMA estimate based on review of developer information,other Kimplon Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA estimate based on review of developer Information,comparable hotel information and CBRE information for Coachella Valley.
Revenue per available room is equal to total annual room revenues divided by the total number of rooms divided by 365 days
3. Based on Citys 13.5%transient occupancy tax CrOT)rate.
Preapred by Keyser Marston Associates,Inc.
Filename:public revenue analysis-small project-Conservative Hotel Stays;7/1212017;jet
TABLE SD
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized
1. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,317,215 3 21.5%
Food& Beverage 10,487,284 24.2%
Retail Sales 6,695,394 15.5%
Ground Transportation 1,993,451 4.6%
Arts, Entertainment&Recreation 12.090,712 27.9%
Other Purchases 2,730 161 U!3
Total Hotel Guest Expenditures $43,335,884 100.0%
Total Non-Lodging Spending $34,018.669 78.5%
Stabilized Subject to 3 Taxable
It. Non-Lodaina Expenditures Subject to Sales Tax Spending($) Sales Tax Spending
Food&Beverage $10,487,284 50% $5,243,642
Retail Sales 6,695.394 75% 5.021,546
Ground Transportation 1.993,451 0% 0
Arts, Entertainment&Recreation 12,090,712 5% 604,536
Other Purchases 2730,161 50% 1,365,080
Total Non-Lodging Spending $33.997,001
Total Non-Lodging Taxable Spending 36.0% $12,234,803
III. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,234,803
(Less)Transfers and Purchases Outside City (1,835,221)4
Net New Off-Site Taxable Sales $10.399,600
Sales Tax @ 1.0% $104,000
r 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 assumption based on previous hotel experience.
Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
Prepared by:Keyser Marston Associates,Inc. 48
Filename:public revenue analysis-small project-Conservative Kimpton Vislor Spending;711 212 01 7;jar
TABLE 6D
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
-- Klmpton Hotel --
Project Room TOT Pct.
Year Revenues TOT Rebate Transfer Transfer' Net TOT
2018 $5,836.000 $787,900 $529.600 10.0% $78,800 $179,500
2019 7,260,000 980,100 658,800 10.0% 98,000 223.300
2020 8,209,000 1,108,200 745,000 5.0% 56,400 307,800
2021 8,414,000 1,135,900 763,600 5.0% 56,800 315,500
2022 8,625,000 1,164,400 782.700 5.0% 58,200 323,500
2023 8,840,000 1,193,400 802,200 0 391,200
2024 9,061.000 1,223,200 822,300 0 400,900
2025 9,288,000 1.253,900 842,900 0 411.000
2026 9,520,000 1,285,200 863,900 0 421,300
2027 9,758,000 1.317,300 885,500 0 431,800
2028 10,002,000 1,350,300 907,700 0 442,600
2029 10,252,000 1,384,000 930,400 0 453,600
2030 10,508.000 1,418,600 953,600 0 465,000
2031 10.771,000 1,454,100 977,500 0 476.600
2032 11,040,000 1,490,400 1,001,900 0 488,500
2033 11,316,000 1,527,700 1,026,900 0 500,800
2034 11,599,000 1,565,900 1,052,600 0 513,300
2035 11,889,000 1,605,000 1,078,900 0 526,100
2036 12,187,000 1,645,200 1,106,000 0 539,200
2037 12,491,000 1,686,300 1,133,600 0 552,700
2038 12.804,000 1,728,500 1,162,000 0 566,500
2039 13,124,000 1,771,700 1,191,000 0 580,700
2040 13,452,000 1.815,000 1,220,800 0 595.200
2041 13,788,000 1,861,400 1,251,300 0 610,100
2042 14,133,000 1,908,000 1,282,600 0 625,400
2043 14,486,000 1,955,600 1,314,600 0 641,000
2044 14,848,000 2,004,500 1.347.500 0 657,000
2046 15,219,000 2.054,600 1,381.100 0 673,500
2046 15,600,000 2.106,000 1,415,700 0 690,300
2047 15,990,000 2,158,700 14 1100 9 707600
Total $340,310,000 $45,942,000 $30,883,300 $347,200 $14,711.500
A
CD 1. KMA assumption of room stays that would otherwise occur at other hotels in Palm Springs
Attachment E
Palm Springs Promenade
Public Revenue Analysis
Alternative Developer Program
Optimistic Scenario
50
TABLE IE
KEY CITY PUBLIC REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Total City City Total
Property Property Sales Net City
Year Taxes 1 Taxes 1 Taxes 2 City T07 3 Revenues
Allocation% 22.69%
2018 $1,113,400 $252,580 $840,000 $185,100 $1,277,680
2019 1,135,600 257,610 877,500 229,900 1,365,010
2020 1,158,400 262.790 909,300 316,600 1,488,690
2021 1,181,500 268,030 932,100 324,600 1,524,730
2022 1,205,100 273,380 955,400 332,700 1,561,4B0
2023 1,905,200 432.200 1,181,300 603,800 2,217,300
2024 2,075,800 470,900 1,227,300 661,000 2,359,200
2025 2,519,300 571,510 1,366,500 765,900 2,703,910
2026 2,762,200 626,610 1,620,000 785,100 3,031,710
2027 2,817,400 639,130 1,784,100 804,600 3,227,830
2028 2,873,700 651,910 1,828,700 891,300 3,371,910
2029 2.931,200 664,950 1.874,500 913,500 3,452,950
2030 2,989,800 678,240 1,921.300 936,500 3,536,040
2031 3,049,600 691,810 1,969,400 959,900 3,621,110
2032 3,110,600 705,650 2,018,600 983,800 3,708.050
2033 3,172,800 719,760 2,069,100 1,008,400 3,797,260
2034 3,236,300 734,160 2,120,800 1,033,700 3,888,660
2035 3,301,000 748,840 2,173,800 1.059,500 3,982.140
2036 3,367,100 763,830 2,228,200 1,085,900 4,077,930
2037 3,434,400 779,100 2,283,900 1,113,000 4,176,000
2038 3,503,100 794,690 2,341,000 1,140,900 4,276,590
2039 3,573,100 810,570 2,399,500 1,169,600 4,379,670
2040 3,644,600 826,790 2,459,500 1,198,800 4,485,090
2041 3,717,500 843,320 2,520,900 1,228.700 4,592,920
2042 3,791,800 860.180 2,584,000 1,259,400 4,703,580
2043 3,867,700 877,400 2,648,600 1,290,800 4,816,800
2044 3,945,000 894,930 2,714,800 1,323,100 4,932,830
2045 4,023,900 912,830 2,782,700 1,356,200 5,051,730
2046 4,104,400 931,090 2,852,200 1,390,100 5,173.390
2047 4,186,500 949,720 2,923.500 1,424,800 5,298.020
Total $87,698,000 $19,894,510 $58,408,500 $27.777,200 $106,080,210
NPV @ 7% $31.778,600 $7,209,100 $21.113.000 $9,649,300 $37,971,300
1, See Table 2
2. See Table 3
3. See Table 7
Prepared by:Keyser Marston Associates,Inc. J 1
Filename:public revenue analysis-new Developer-Oplimistic 12.1;Pub Revs;711312017;jar 1
TABLE 2E
ALLOCATION OF PROPERTY TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS, CALIFORNIA
Incremental
Component Property Assessed Property city
Year Completed Valuation Valuation Tax Base Allocation s
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 $0 115,835,000 1,158,400 262,790
2021 $0 118,151,700 1,181,500 268,030
2022 $0 120,514,700 1.205,100 273,380
2023 Virgin Hotel $67,590,000 190,515,000 1,905,200 432,200
2024 Block D $13,250,000 207,575,300 2,075,800 470,900
2025 Block F $40,200,000 251,926,800 2,519,300 571,510
2026 Block G $19,250,000 276,215,300 2,762,200 626,610
2027 $0 281,739,600 2,817,400 639,130
2028 287,374,400 2,873,700 651.910
2029 293,121,900 2,931,200 664,950
2030 298,984,300 2,989,800 678,240
2031 304,964,000 3,049,600 691,810
2032 311,063,300 3,110,600 705,650
2033 317,284,600 3,172,800 719,760
2034 323,630,300 3,236,300 734,160
2035 330,102,900 3,301,000 748,840
2036 336,705,000 3,367,100 763,830
2037 343,439,100 3,434,400 779,100
2038 350,307,900 3,503,100 794,690
2039 357,314,100 3.573,100 810,570
2040 364,460,400 3.644,600 826,790
2041 371,749,600 3,717,500 843,320
2042 379,184,600 3,791,800 860,180
2043 386,768,300 3,867.700 877,400
2044 394,503,700 3,945,000 894.930
2045 402,393.800 4,023,900 912,830
2046 410,441,700 4,104,400 931,090
2047 418,650,500 4,186,500 949,720
TOTAL $87,698,000 $19,894,500
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. 52
Filename:public revenue analysis-new Developer-Optimistic Prop Tax; 7/12/2017;jar
TABLE 3E
SALES TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Developed On Site Kimpton Virgin
Commercial Taxable Visitor Visitor City
Year Square Footage Sales 1 Taxable Sales Y Taxable Sales 3 Sales Tax
Allocation% 1.00
2018 101,305 $76,371,000 $7,626,400 $840,000
2019 101,305 78,280,000 9,473,500 877,500
2020 101,305 80,237,000 10,697,300 909,300
2021 101,305 82,243,000 10,964,700 932,100
2022 101,305 84.299.000 11,238.800 955,400
2023 114,555 98,710,000 11,519,800 7,896,800 1,181,300
2024 114,555 101.178.000 11,807,800 9.747,700 1.227,300
2025 144,555 113,514,000 12,103,000 11,034,300 1,366,500
2026 164,555 138,283,000 12,405,600 11,310.200 1,620,000
2027 175,555 154,104,000 12,715,700 11,593,000 1,784,100
2028 175,555 157,957,000 13,033,600 11,882,800 1,828,700
2029 175.555 161.906.000 13,359,400 12,179,900 1,874,500
2030 175.555 165,954,000 13,693,400 12,484,400 1,921,300
2031 175,555 170,103,000 14,035,700 12,796,500 1,969,400
2032 175,555 174,356,000 14,386,600 13,116,400 2,018,600
2033 175,555 178,715,000 14,746,300 13,444,300 2,069,100
2034 175,555 183,183,000 15,115,000 13,780,400 2,120,800
2035 175,555 187,763,000 15,492,900 14,124,900 2,173,800
2036 175,555 192,457,000 15,880,200 14,478,000 2,228,200
2037 175,555 197,268,000 16,277,200 14,840,000 2,283,900
2038 175,555 202.200.000 16.684,100 15,211,000 2,341,000
2039 175,555 207,255,000 17,101,200 15,591,300 2,399,500
2040 175,555 212,436,000 17,528,700 15,981,100 2,459,500
2041 175,555 217,747,000 17,966,900 16,380,600 2,520,900
2042 175,555 223,191,000 18,416,100 16,790,100 2,584,000
2043 175.555 228,771,000 18,876,500 17,209,900 2,648,600
2044 175,555 234.490,000 19,348,400 17,640,100 2,714,800
2045 175,555 240,352,000 19,832,100 18,081,100 2,782,700
2046 175,555 246,361,000 20,327,900 18.533,100 2.852,200
2047 175,555 252,520,000 20,836,100 18,996,400 2,923500
TOTAL $58,408,500
1. Taxable sales estimated at$900/SF 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
53
Prepared by Keyser Marston Associates,Inc.
Filename:public revenue anatysis-new Developer-Optimistic Sales Tax;7112/2017;jar
TABLE 4E
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Revenue per Revenue per
Project Hotel Available Annual Room Virgin Hotel Available Annual Room
Year Rooms Room ' Revenues Rooms Room 2 Revenues TOT Revenues a
2018 153 $107.80 $6,020,000 $812,700
2019 153 $133-90 7,478,000 1,009,500
2020 153 $151.20 8.444,000 1.139.900
2021 153 $154.98 8,655,000 1,168,400
2022 153 $158.85 8,871,000 0 1,197,600
2023 153 $162-83 9.093,000 145 $123.75 6,549,000 2,111.700
2024 153 $166.90 9,320,000 145 $152.75 8,084,000 2,349,500
2025 153 $171.07 9,553,000 145 $172.90 9.151,000 2,525,000
2026 153 $175.35 9,792,D00 145 $177.22 9,380,000 2,588,200
2027 153 $179.73 10.037,000 145 $181.65 9,614,000 2,652,900
2028 153 $184.22 10,288,000 145 $186.19 9,854,000 2,719,200
2029 153 $188.83 10,545,000 145 $190.85 10,101,000 2,787,200
2030 153 $193.55 10,809,000 145 $195.62 10,353,000 2,856,900
2031 153 $196.39 11.079,000 145 $200.51 10.612.000 2,928,300
2032 153 $203.35 11,356.000 145 $205.52 10,877,000 3,001,500
2033 153 $208.43 11,640,000 145 $210.66 11,149,ODO 3,076.500
2034 153 $213.64 11,931,000 145 $215.93 11,428,ODO 3.153,500
2035 153 $218.98 12,229,000 145 $221.33 11,714,000 3,232,300
2036 153 $224.46 12.535,000 145 $226.86 12,007,000 3.313,200
2037 153 $230.07 12,848,000 145 $232,53 12.307.000 3,395,900
2038 153 $235.82 13,169,000 145 $238.34 12,614,000 3,48D,700
2039 153 $241.72 13,499,000 145 $244.30 12,930,000 3,567,900
2040 153 $247.76 13,836,000 145 $250.41 13.253,000 3.657.000
2041 153 $253-95 14,182.600 145 $256.67 13,564,000 3,749,400
2042 153 $260.30 14,537,000 145 $263.09 13,924.000 3,842,200
2043 153 $266.81 14,900,000 145 $269.66 14,272,000 3,938,200
2044 153 $273.48 15.272.000 145 $276.41 14,629,000 4,036,600
2045 153 $280.32 15,654,000 145 $283.32 14,995,000 4,137,600
2046 153 $287.32 16,046,000 145 $290.40 15.369,000 4.241,000
2047 153 $294.51 16,447,000 145 $297.66 15,754.000 4,347,100
Total
$87,016,600
1.KMA estimate based on review of developer Information,other Kimpton Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA esfimale based on review of developer information,comparable hotel information and CBRE information for Coachella Valley.
Revenue per available room is equal to tool annual room revenues divided by the total number of rooms divided by 365 days
3. Bared on Cllys 13.5%transient occupancy tax(TOT)rate.
Cl
rF�
Preapred by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-new Developer-Optimistic Hotel Stays;7112/2017;jar
TABLE 5E
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized '
I. Expenditures of Hotel Guests Spending ($) 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 $34,992,525 78.5%
Stabilized Subject to s Taxable
II, Non-Lodging Expenditures Subject to Sales Tax Spending($) 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 (1,887,768)
Net New Off-Site Taxable Sales $10,697,300
Sales Tax @ 1.0% $107,000
' Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Conventions Bureaus, CBRE
and Dean Runyan Associates.
] Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA assumption based on previous hotel experience.
Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
a5
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-new Developer-Optimistic Kimpton Vistor Spending;7/12/2017;jar
TABLE 6E
OFF SITE VISITOR SPENDING-VIRGIN HOTEL
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Stabilized '
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,886,911 3 21.5%
Food&Beverage 11,127,397 24.2%
Retail Sales 7,104,061 15.5%
Ground Transportation 2,115,125 4.6%
Arts, Entertainment&Recreation 12,828,694 27.9%
Other Purchases 2,896.802 6.3%
Total Hotel Guest Expenditures $45,980,980 100.0%
Total Non-Lodging Spending $36,095,070 78.5%
Stabilized Subject to 3 Taxable
II. Non-Lodging Expenditures Subiect to Sales Tax Spending($) Sales Tax Spending
Food&Beverage $11,127,397 50% $5,563,699
Retail Sales 7,104,061 75% 5,328,046
Ground Transportation 2,115,125 0% 0
Arts, Entertainment&Recreation 12,828,694 5% 641.435
Other Purchases 2,896 802 50% 1,448 401
Total Non-Lodging Spending $36,072,079
Total Non-Lodging Taxable Spending 36.0% $12,981,580
III. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,981,580
(Less)Transfers and Purchases Outside City (1,947,237)
Net New Off-Site Taxable Sales $11,034,300
Sales Tax @ 1.0% $110,000
. . . ' Estimates by KMA based on research by Palm Springs,Anaheim and Orange County Convention Bureaus, CBRE
and Dean Runyan Associates.
s Based on stabilized Year 3 market rate room revenues plus 13.5%TOT.
3 KMA assumption based on previous hotel experience.
Assumes a deduction of 15%for transfers and sales taking place outside the City of Palm Springs
56
TABLE 7E
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
-- Kimpton Hotel ---- Virgin Hotel --
Project Room Revenues TOT Pot, Room Revenues TOT Pot.
Year After Transfer TOT Rebate Transfer Transfer' NetTOT Aker Transfer TOT Rebate Transfer Transfer, Net TOT
2018 $6,020,000 $812,700 $546,300 10.0% $81.300 $185,100 $0 s0 $0 $D $0
2019 7,478,000 1,009,500 678.600 1D.0% 101,000 229,900 0 0 0 0 0
2020 8.444,900 1.139,900 766.300 5.0% 57,000 316,600 0 0 0 0 0
2021 8,655,000 1,168,400 785,400 5.0% 58,400 324.600 0 0 0 0 0
2022 8,871,000 1,197,600 805,000 5.0% 59,900 332.700 0 0 0 0 0
2023 9,093,000 1,227,600 825,200 0 402,400 6,549,000 884.100 594,300 10.0% 88,400 201,400
2024 9,320,600 1,258,200 846,800 0 412,400 8,084,000 1.091.300 733,600 10.0% 109,100 248,600
2025 9.553,000 1,289,700 866,900 0 422,800 9,151,D00 1,235,400 8301500 5.0% 61,800 343,100
2026 9,792,OD0 1.321.900 888,600 0 433,300 9,380,000 1,266,300 851.200 5.0% 63,300 351,800
2027 10,037,000 1,355,000 910,900 0 444.100 9.614,000 1,297,900 872.500 5.09/. 64,900 360,500
2028 10.288,000 1,388,900 933,600 0 455,3D0 9.854,000 1,330,$00 894,300 0 436.000
2029 10,545,000 1,423,600 957,000 0 466,600 10,101,000 1,363.600 916,700 0 446,900
2030 10,809,000 1,459,200 980.900 0 478,3D0 10.353.000 1,397,700 939,500 0 458.200
2031 11,079,000 1,495,700 1,005,400 0 490,300 10,612,000 1,432,600 963,000 0 469,600
2032 11,356,000 1,533,100 1.030,600 0 502.500 10,677,000 1,468,400 987,100 0 481,300
2033 11,640,000 1,571,400 1,D56,300 0 515.100 11.149,000 1,505.iD0 1,011,800 0 493.300
2034 11,931,000 1,610,700 1,082,700 0 528,0D0 11,428.000 1,542.800 1,037,100 0 505.700
2035 12,229,000 11650.900 1,109,800 0 541,1D0 11,714,000 1,581,400 1,063.000 0 518,400
2036 12,535.000 1,692,200 1,137.600 0 554,600 12,007.000 1,620,900 11089,600 0 531,300
2037 12,848,000 1,734,500 1,166,000 0 568,500 12.307.000 1.661.400 1,116.900 0 544,500
2038 13,169.000 1.777.800 1.195.100 0 582,700 12,614,000 1.702.900 1,144,700 0 558,200
2039 13.499,000 1.822,400 1,225.000 0 597,400 12,930,000 1,745,600 1,173,400 0 572,200
2040 13,836,000 107,900 1,255,60D 0 612,300 13.253,000 1.789.200 1,202,700 0 586,500
2041 14.182,000 1.914,600 1.287,000 0 627,600 13,584,000 1.833.800 1,232,700 0 601,100
2042 14,537.000 1.962.500 1,319,200 0 843,300 13,924.000 1,879,700 1,263,600 0 616.100
2043 _ 14,900,000 2,011,500 1,352,200 0 659,300 14,272,000 1.926,700 1,295,200 0 631,500
20" 15,272,D00 2.061,700 1,385,900 0 675,800 14,629,000 1,974,900 1,327,600 0 647,300
2045 15,654,000 2,113,300 1,420,600 0 692.700 14.995,000 2,024,300 1,360,800 0 663.500
2046 16.D46,D00 21166200 1,456,200 0 710,000 15,369,000 2,074,800 1.394,700 0 680,100
2047 16.447.000 22. 20.300 1,492,600 0 727700 15.754000 2,126,800 itt� 0 697.100
Total $350,095.000 $47,258,900 $31.768,300 $357,600 $15,133.000 $294,504,000 $39,757.900 $26,726,200 $387.500 $12,644,200
1. KMA aseunprlon of room Slays ihalvmAd mhenvise=w ar doer holds in Palm Sodnp
Q1
Attachment F
Palm Springs Promenade
Public Revenue Analysis
Alternative Developer Program
Conservative Scenario
TABLE 1F
KEY CITY PUBLIC REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Total City City Total
Property Property Sales Net City
Year Taxes ' Taxes ' Taxes 2 City TOT s Revenues
Allocelion% 22.69%
2018 $1,113,400 $252,580 $742,100 $179.500 $1,174,180
2019 1,135,600 257,610 776,800 223,300 1,257,710
2020 1.158,400 262,790 806,000 307,800 1,376,590
2021 1,181,500 268.030 826,100 315,500 1,409,630
2022 1.205,100 273,380 846,800 323,500 1,443,680
2023 1,229,300 278,870 868,000 391,200 1,538,070
2024 1,253,800 284,430 889,700 400,900 1,675,030
2025 1,278,900 290,120 911,900 411,000 1,613,020
2026 1,839,000 417,180 1,129,900 421,300 1,968,380
2027 2,068,300 469,200 1,268,100 431,800 2,169,100
2028 2,109,600 478.570 1,299,800 442,600 2,220,970
2029 2,151,800 488,140 1,332,300 453.600 2,274,040
2030 2,194,900 497,920 1,365,600 465.000 2.328,620
2031 2,238,800 507,880 1,399,700 476,600 2,384,180
2032 2,283,500 518,020 1,434,700 488,500 2,441,220
2033 2,329,200 528,380 1,470,600 500,800 2,499,780
2034 2,375,800 538,960 1,507,300 513,300 2,559,560
2035 2,423,300 549,730 1,545,000 526,100 2,620,830
2036 2,471,800 560,730 1.583,700 539.200 2,683,630
2037 2,521,200 571,940 1,623,200 552,700 2,747,840
2038 2,571,600 583,370 1.663,800 566,500 2.813.670
2039 2,623,100 595,060 1,705,400 580,700 2,881,160
2040 2,675,500 606,940 1,748,100 595,200 2,950,240
2041 2,729,000 619,080 1,791,800 610,100 3,020,980
2042 2,783,600 631,470 1.836,600 625,400 3,093,470
2043 2,839,300 644,100 1,882,500 641,000 3,167,600
20" 2,896,100 656,990 1,929.500 657,000 3,243,490
2045 2,954,000 670,120 1,977,800 673,500 3,321,420
2046 3,013,100 683,530 2,027,200 690,300 3,401,030
2047 3.073 300 697,190 2,077,900 707,60D 3,482,690
Total $64,721,800 $14,682,310 $42,267,900 $14.711,500 $71,661,710
NPV @ 7% $23.911,300 $5,424.300 $15,677,600 $5.527,800 $26,629,800
I. See Table 2
2, See Table 3
3. See Table 6
59
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-New Developer-Conservative 12.1;Pub Revs;711 Y2017;jar
TABLE 2F
ALLOCATION OF PROPERTY TAX REVENUES
PALM SPRINGS PROMENADE
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 $0 115,835,000 1,158,400 262,790
2021 $0 118,151,700 1,181,500 268,030
2022 $0 120,514.700 1.205,100 273,380
2023 $0 122,925,000 1,229,300 278,870
2024 $0 125,383,500 1,253,800 284,430
2025 $0 127,891,200 1,278.900 290,120
2026 Block D and F $53,450,000 183,899,000 1,839,000 417,180
2027 Black G $19,250,000 206,827,000 2,068,300 469,200
202B 210,963,500 2,109,600 478,570
2029 215,182,800 2,151,800 488,140
2030 219,486,500 2,194,900 497,920
2031 223,876,200 2,238,800 607,880
2032 228,353,700 2,283,600 518,020
2033 232,920.800 2,329,200 528,380
2034 237,579,200 2,375,800 538,960
2035 242,330,800 2,423,300 549,730
2036 247,177.400 2,471,800 560,730
2037 252,120,900 2,521,200 571.940
2038 257,163,300 2,571,600 583,370
2039 262,306,600 2,623,100 595,060
2040 267,552,700 2,675,500 606,940
2041 272,903,800 2,729,000 619,080
2042 278,361,900 2,783,600 631,470
2043 283,929,100 2.839,300 644,100
2044 - - 289,607,700 2.896.100 656,990
2045 295,399,900 2,954,000 670,120
2046 301,307,900 3,013,100 683,530
2047 307,334,100 3,073,300 697,190
TOTAL $64,721.800 $14,682,310
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. 60
Filename:public revenue analysis-New Developer-Conservallve Prop Tax;711 212 01 7;jar
TABLE 3F
SALES TAX REVENUES
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Developed On Site Kimpton Virgin
Commercial Taxable Visitor Visitor City
Year Square Footage Sales r Taxable Sales 2 Taxable Sales Sales Tax
Allocation% 1.00%
2018 101,305 $66,816,000 $7,393,400 $742,100
2019 101,305 68.486,000 9,197,400 776,800
2020 101,305 70,199.000 10,399,600 $0 806,000
2021 101,305 71,954,000 10,659,600 0 826.100
2022 101,305 73,752,000 10,926,100 0 846,800
2023 101,305 75,596,000 11,199,300 0 868,000
2024 101,305 77,486,000 11,479.300 0 889,700
2025 101,305 79,423,000 11,766,300 0 911,900
2026 151,305 100,933.000 12,060,500 0 1,129,900
2027 162,305 114,446,000 12.362,000 0 1,268,100
2028 182,305 117,307,000 12,671,100 0 1,299,800
2029 162,305 120,240.000 12,987,900 0 1.332,300
2030 162,305 123,246,000 13,312,600 0 1,365,600
2031 182,305 126,327,000 13,645,400 0 1,399,700
2032 162,305 129.486.000 13.986,500 0 1,434,700
2033 102,305 132,722,000 14,336,200 0 1,470,600
2034 162,305 136,040,000 14,694,600 0 1,507,300
2035 162,305 139,441,000 15,062,000 0 1,545,000
2036 162,305 142,927,000 15,438,600 0 1.583,700
2037 162,305 146,500,000 15,824,600 0 1,623,200
2038 162,305 150,163,000 16,220,200 0 1,663,800
2039 162,305 153,917,000 16,625,700 0 1,705,400
2040 162.305 157,765,000 17,041,300 0 1,748,100
2041 162,305 161,709,000 17.467,300 0 1,791,800
2042 162,305 165,752,000 17,904,000 0 1,836,600
2043 162,305 169,896,000 18,351,600 -- 0 1,882.500
2044 162,305 174,143,000 18,810,400 0 1,929,500
2045 162.305 178,497,000 19,280,700 0 1,977,800
2046 162,305 182,959,000 19,762,700 0 2,027,200
2047 162,305 187,533,000 20,256.800 0 2,077.90
0
TOTAL $42,267,900
1. Taxable sales estimated at$900/SF for retail space,$9001SF for restaurant space,$800/SF for hotel commercial space and$401 SF for
office space-Taxable sales estimates include employee spending during work hours.
2. See Table 5
6Y
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-Nev;Developer-Conservative Sales Tax;7112/2017:jar
TABLE 4F
TRANSIENT OCCUPANCY TAX
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
Kimpton Revenue per Revenue per
Project Hotel Available Annual Room Virgin Hotel Available Annual Room
Year Rooms Room r Revenues Rooms Room 2 Revenues TOT Revenues 3
2018 153 $104.50 $5,836,600 $787,900
2019 153 $130-00 7,260,000 980,100
2020 153 $147.00 8,209,000 0 $0.00 $0 1,108,200
2021 153 $150.68 8,414,000 0 $0.00 0 1,135,900
2022 153 $154.44 8,625,000 0 $0.00 0 1,164,400
2023 153 $158.30 8,940,000 0 $0.00 0 1,193,400
2024 153 $162-26 9,051,000 0 $D.00 0 1,223,200
2025 153 $166.32 9,288,000 0 $0.00 0 1.253,900
2026 153 $170.47 9.520,000 0 $0.00 0 1.285,200
2027 153 $174.74 9,758,000 0 $0.00 0 1,317,300
2028 153 $179-11 10,002,000 0 $0.00 0 1,350,300
2029 153 $183.58 10,252,000 0 $0.00 0 1,384,000
2030 153 $188.17 10.508,000 0 $0.00 0 1,418.600
2031 153 $192.88 10,771,000 0 $0.00 0 1.454,100
2032 153 $197.70 11,040,000 0 $0.00 0 1,490,400
2033 153 $202.64 11,316,000 0 $0.00 0 1,527,700
2034 153 $207.71 11,599,000 0 $0.00 0 1,565,900
2036 153 $212.90 11,889,000 0 $0.00 0 1,605,000
2036 153 $21822 12,187,000 0 $0.00 0 1,645,200
2037 153 $223.68 12,491,000 0 $0.00 0 1,686,300
2038 153 $229.27 12,804,000 0 $0.00 0 1,728,500
2039 153 $235,00 13,124,000 0 $0.00 0 1,771,700
2040 153 $240.88 13,452,000 0 $0.00 0 1,816,000
2041 153 $246,90 13,788,000 0 $0.00 0 1,861,400
2042 153 $253.07 14,133,000 0 $0.00 0 1,908,000
2043 153 $259.40 14.486,000 0 $0.00 0 1,956,500
2044 153 $265.88 14,848,000 0 $0.00 0 2,004,500
2045 153 $272-53 15,219,000 0 $0.00 0 2,D54,600
2046 153 $279.34 15,600,000 0 $0.00 0 2,106,000
2047 153 $286.33 16,990,000 0 $0.00 0 2,158 700
Total $45,942,000
1.KMA estimate based on review of developer information,other Kimpwn Hotel and comparable hotel information and CBRE information for Coachella Valley.
2.KMA estimate based on review of developer information,comparable hotel information and CBRE information for Coachella Valley.
Revenue per available room is equal to total annual room revenues divided by the total number of rooms,divided by 365 days
3. Based on Citys 13.5%transient occupancy tax(TOT)rate.
Preapred by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-New Developer-Conservative Hotel Stays;711212017:jar
TABLE SF
OFF SITE VISITOR SPENDING-KIMPTON GUESTS
PALM SPRINGS PROMENADE
PALM SPRINGS, CALIFORNIA
Stabilized
I. Expenditures of Hotel Guests Spending($) Share of Total
Accomodations $9,317,215 Z 21.5%
Food &Beverage 10,487,284 24.2%
Retail Sales 6,695,394 15.5%
Ground Transportation 1,993,451 4.6%
Arts, Entertainment& Recreation 12,090.712 27.9%
Other Purchases 2,730,161 6.3%
Total Hotel Guest Expenditures $43,335.884 100.0%
Total Non-Lodging Spending $34,018,669 78.5%
Stabilized Subject to a Taxable
11. Non-Lodaina Expenditures Sublect to Sales Tax Spending($) Sales Tax Spending
Food&Beverage $10,487,284 50% $5,243,642
Retail Sales 6,695,394 75% 5.021,546
Ground Transportation 1.993,451 0% 0
Arts, Entertainment& Recreation 12,090,712 5% 604,536
Other Purchases 2,730 161 50% 1.365.080
Total Non-Lodging Spending $33,997,001
Total Non-Lodging Taxable Spending 36.0% $12,234,803
III. Net New Off-Site Taxable Sales
Total Off-Site Taxable Spending $12,234,803
(Less)Transfers and Purchases Outside City (1,835,221) 4
Net New Off-Site Taxable Sales $10,399,600
Sales Tax @ 1.0% $104,000
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.
a KMA assumption based on previous hotel experience.
° Deduction of 15%of the stabilized merchandise sales,which are assumed to come from hotel guests.
63
Prepared by:Keyser Marston Associates,Inc.
Filename:public revenue analysis-New Developer-Conservative Kimpton Vislor Spending;7/12/2017;jar
TABLE W
EFFECT OF TRANSIENT OCCUPANCY TAX REBATE
PALM SPRINGS PROMENADE
PALM SPRINGS,CALIFORNIA
--- Kimpton Hotel --•-•-
Project Room Revenues TOT Pct.
Year After Transfer TOT Rebate Transfer Transfer' Net TOT
2018 $5,836,000 $787,900 $529.600 10.0% $78,800 $179.500
2019 7,260,000 980,100 658,800 10.0% 98.000 223,300
2020 8,209,000 1,108.200 745,000 5.00/ 55,400 307,800
2021 8,414,000 1,135,900 763.600 5,0% 56,800 315,500
2022 8,625,000 1,164,400 782,700 5.0% 58,200 323,500
2023 8,840,000 1,193,400 802,200 0 391,200
2024 9,061,000 1,223,200 822,300 0 400,900
2025 9,288,000 1,253,900 842,900 0 411,000
2026 9,520,000 1,285,200 863,900 0 421,300
2027 9,758,000 1,317,300 885,500 0 431,800
2028 10.002,000 1.350,300 907,700 0 442,600
2029 10,252,000 1.384,000 930,400 0 453,600
2030 10,508,000 1,418,600 953,600 0 465.000
2031 10,771,000 1,454,100 977,500 0 476,600
2032 11,040,000 1,490,400 1.001,900 0 488,500
2033 11,316,000 1,527,700 1,026,900 0 500,800
2034 11.599,000 1,565,900 1,052.600 0 513,300
2035 11,889,000 1,605,000 1,078,900 0 526,100
2036 12,187,000 1,645,200 1,106,000 0 539,200
2037 12.491,000 1,686,300 1,133,600 0 552,700
2038 12,804,000 1,728,500 1,162,000 0 566,500
2039 13.124.000 1,771,700 1,191,000 0 580,700
2040 13,452,000 1,816,000 1.220,800 0 595,200
2041 13,788,000 1,861,400 1,251.300 0 610,100
2042 14,133,000 1,908.000 1,282,600 0 625,400
2043 14,486,000 1,955,600 1,314,600 0 641,000
2044 14,848,000 2,004,500 1,347.500 0 657,000
2045 15,219,000 2.054,600 1,381.100 0 673,500
2046 15,600,000 2,106,000 1,415,700 0 690,300
2047 15,990,D00 2,158,700 1.45V00 Q 707,600
Total $340.310,000 $45,942,000 $30.883,300 $347,200 $14,711,500
1. KMA assumption of room slays that would otherwise occur at other hotels in Palm Springs
°' July 19, 2017 RECEIM�D
O Q 'i'i ')F P A L H SPR1'r•
n
City of Palm Springs 2117 JUL 19 PM 1= 59
(D Mr. Mayor and Members of the City Council
Q Fii t tir 71ic rt C"_,
�
N
Q
l J Greetings
Q C
Tonight you will discuss extending the hotel incentives once awarded to the AC by Marriott and
C (n then transferred to the Virginwhen the AC was relocated to another site of the master
� 7C7
0 plan. It is my hope that this becomes the beginning of a give and take between Grit Development
and the Citizens of Palm Springs.
n �.
D [n First, is construction funding in place for the Virgin Hotel? If not, why extend the incentive
N program?
rn �
Next,The Town and Country Center is within the project master plan.The owner accepted class
one historic status on this property. He has city approval to make the restoration/reuse of the
0 Town and Country Center the final phase of City Center. It is proposed to include the AC by
Q Marriott on its site.Wessman agreed to not build the third hotel until PS Resorts gives a green
chi light that the market is ready.The rebuild/recreation of The Spa Hotel could delay the industry's
approval of the AC by Marriott for years or decades into the future.
Q
CJ
While I would encourage you to move the restoration of the Town and Country to the top of the
list, I believe you have the right of offer the incentive extension based upon Grit Development
accepting conditions.
n
0
1
Town and Country Center face lift:
ON
ON Work should be a list similar to mine, but subject to Historic Site Board approval.
V • A complete professional paint job of all exterior surfaces, in time period colors.
o • All ground floor windows not in a occupied retail store shall be covered with an
approved wrap.
C • All storefronts on Palm Canyon Drive shall be replaced with y p approved doors and
windows.
• Remove the restaurant patio restoring the courtyard entrance.
• Relandscape courtyard.
• Remove any electrical wires or conduits or plumbing attached to exterior walls unless
permitted.
• Install a sign program to tell the story of the center currently it's just a dead center
• Install tenant signage upon approval of a sign program
I expect Grit to fast track this effort to clean up its property neglect of this part of the Master
plan. I would set a deadline of January 31, 2018. We the people of Palm Springs have invested
heavily in this project.The new Rowan visitors deserve better than "some slumlord" must own
that center across from the beautiful City Center. Please expect Michael Braun to be a good neighbor and clean up the Town and Country. It is planned to sit many years before a true 711I
7
rebirth. Tonight's approval offers you a tool you do not have everyday AW(Ont,1 HP