HomeMy WebLinkAbout1/7/2015 - STAFF REPORTS - 4.A. � �ppLMSA4
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Cq<�FORN�P CITY COUNCIL STAFF REPORT
DATE: January 7, 2015 UNFINISHED BUSINESS
SUBJECT: APPROVE AMENDMENT TO THE CITY'S SPECIAL ECONOMIC
DEVELOPMENT FOCUS INCENTIVE AREAS PROGRAM GUIDELINES
AND AMEND THE FISCAL YEAR 2014-15 BUDGET TO APPROPRIATE
FUNDS FOR THE AGREEMENT
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
The City Council adopted the "Special Economic Development Focus Incentive Areas
Program" in 2013 for areas north of Tachevah and South of Ramon. In November,
2014, the City Council appropriated $250,000 for the Fagade Improvement Program
portion of the program, while making it City-wide (the 2014 Program). This action would
appropriate an additional $300,000 for the 2013 Program, making it available to the
Interior Remodel and "Major Properties" programs. There is some additional activity in
the South end area that may qualify and which could be the last eligible properties
under the Major Properties program.
RECOMMENDATION:
1. Adopt Resolution No , "A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR THE
2014-15 FISCAL YEAR TO PROVIDE $250,000 FOR THE INCENTIVE GRANT
AGREEMENT."
2. Adopt Resolution No , "A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE GUIDELINES FOR
THE "SPECIAL ECONOMIC DEVELOPMENT FOCUS INCENTIVE PROGRAM
AREAS."
3. Authorize the City Manager to execute all documents related to the Special
Economic Development Focus Incentive Areas Program.
STAFF ANALYSIS:
On July 3, 2013, the City Council adopted Resolution 23413 approving the creation of
two Special Economic Development Focus Incentive Areas generally located on the
ITEM NO.4A,
City Council Staff Report
January 7, 2015 -- Page 2
Major Catalyst Project Remodel Grant Program
major corridors south of Ramon Road and north of Tachevah Road, along the
entryways into the Downtown and Uptown areas. On September 4, 2013, the City
Council adopted Resolution No. 23433, amending the budget for Fiscal Year 2013-14 to
provide the $1,000,000 in funding for the Special Economic Development Focus
Incentive Areas.
The Special Focus Incentive Area Program is a collection of several City incentives to
create an inducement to redevelop vacant properties or spur stalled development
projects in the area. The four types of investments that the City approved include:
• assisting stalled vacant land projects
• renovating and repositioning major vacancies as catalyst projects
• creative uses of the Hotel Incentive Program for small, dilapidated hotels
• extending the Facade Improvement and Interior Remodel programs for the area
In November, 2014, City Council appropriated additional funds and amended the
boundaries for the Facade Improvement Program, making it City-wide but keeping the
limit to $5,000 per applicant.
Staff has reviewed the previous completed Major Projects and determined several
things: in all these projects there were significant "hurdles" for the space to be
competitive in the commercial market, mainly due to the relatively high cost per square
foot of renovation vs. the current competitiveness of the location within the Palm
Springs market. However, each operator brought an advantage to the project beyond
financial strength (live music, new restaurant concepts, critical mass to the area), and
provided the City with ideal opportunities to assist the surrounding areas through these
projects.
Program Guidelines
One component of the existing catalyst projects program — for key, hard to fill spaces —
was for the City to provide up to $30.00 per square foot of grant funding toward the
property improvements, based on a 3:1 match with the applicant (private:public) up to a
maximum of $250,000. It is a "major" catalyst program because the total project
expenditure, including the public funds, must be at least $1,000,000, excluding property
acquisition. Unlike the Interior Remodel Program, which eligibility was based strictly on
the location of the business and the anticipated use of the funds, applicants to the Major
Properties Program must submit a much more detailed application demonstrating the
experience of the Owner/Operator of the business, significant leverage of the public
money in the form of developer equity and business debt, and a solid plan for opening
and operating.
�L
City Council Staff Report
January 7, 2015-- Page 3
Major Catalyst Project Remodel Grant Program
In a handful of cases the project could reach $1,000,000 in remodel costs, but the
owners would hope it would be slightly less. The Program's firm expenditure threshold
of$1,000,000 for eligibility in the Major Projects program then presents a conundrum for
any owner: spend $1,000,000 to be eligible for a $250,000 reimbursement, or spend
$999,999 and only be eligible for $30,000 ($5,000 in Fagade Incentive and $25,000 in
Interior Remodel).
Because there are few remaining properties that could be eligible as a Major Catalyst
project in the 2013 Incentive Program in terms of size, location, and business closure,
staff recommends a modification to program's expenditure threshold in this category:
keep the $250,000 maximum and keep the 3:1 private-to-public leverage requirement,
but allow the eligibility to remain in place (up to $250,000) for remodels from $500,000
to $1,000,000, on a "sliding scale" basis. Several examples of this change are shown
below:
1. The Owner spends $1,250,000 on the project and receives a reimbursement of
$250,000 (the maximum amount, and 4:1 leverage).
2. The Owner spends $1,000,000 on the project and receives a reimbursement of
$250,000 (the maximum amount, and 3:1 leverage).
3. The Owner only spends $800,000 on the project and receives a reimbursement
of$200,000 (based on 3:1 leverage).
4. The Owner only spends $600,000 on the project and receives a reimbursement
of$150,000 (based on 3:1 leverage).
In the end, it slightly widens the number of eligible projects that could qualify, without
compromising the leverage requirements in the existing program.
While overall, the Program has a solid track record in leveraging over $6,000,000 in
private investment in historically under-invested areas in the City over the past year,
there is still work to be done in both areas. In the South end, the area seen resurgence
in commercial activity largely through restaurants assisted through the Incentive
Program: Appetito Cal-Italian Deli, Hacienda Cantina, Miro's, New York Company
Restaurant and Bernie's Lounge and Supper Club. Bernie's recently had a major fire,
resulting in the closure of the business, but the owners intend to reopen in the space or
in a different location.
There is evidence that the positive spillover effects of the program are beginning to be
felt, with the recent announcement of the sale of the Curve Hotel to a pair of investors
from San Francisco with plans to significantly upgrade the property, along the lines of
the Ace Hotel or Saguaro Hotel, as well as pending sale of the Travelodge with plans to
upgrade as well.
03
City Council Staff Report
January 7, 2015-- Page 4
Major Catalyst Project Remodel Grant Program
One large property in that that would likely be eligible under the Major Projects program
would be the former Lyons English Grill.
An additional change described in the Resolution is amending the guidelines for the
Fagade Improvement Program to make that program available Citywide. The Council
gave direction on November 19, 2014 to do so, and this formalizes that by resolution.
FISCAL IMPACT:
The Special Focus Area Incentive Program represented a significant commitment by the
City as a way to encourage new business investment in the project area. This Budget
Resolution would appropriate a new $300,000 from Fund Balance for this Program.
Furthermore, neither action (amending the guidelines or appropriating additional funds)
makes any findings regarding any applicant's approval or entitlement status. Once submitted
and reviewed, all Agreements under this program would require approval at a noticed public
hearing by the City Council at a future date.
J n Ray o d, irector Cathy Valh Horn, Economic
Development Administrator
David H. Ready, City Manager
Attachments: Resolution
Budget Resolution
04
Resolution No.
Page � 1
RESOLUTION NO.
A RESOLUTION OF CITY COUNCIL OF THE
CITY OF PALM SPRINGS, CALIFORNIA,
AMENDING THE GUIDELINES FOR THE
"SPECIAL ECONOMIC DEVELOPMENT
FOCUS INCENTIVE PROGRAM AREAS"
WHEREAS, the City Council has determined the general welfare and
material well being of the residents of the city of Palm Springs depend in large
measure upon the growth and expansion of the commercial corridors in the city; and
WHEREAS, the City Council has determined that the operation,
maintenance, and expansion of the inventory of quality commercial development,
including hotels and first class hotels, restaurants, clubs, markets, and other retail
activity in the city of Palm Springs will create desirable visitor serving facilities that
will contribute to the growth and expansion of tourism and travel opportunities in the
city, provide employment opportunities for the residents of the city, and promote and
enhance the economy of the city; and
WHEREAS, it is in the best interest of the city of Palm Springs to induce
and encourage the operation, and maintenance of hotel and other commercial
facilities that would not otherwise exist, thereby creating new sources of tax
revenues for the city's general fund which supports the public services that the city
provides its residents; and
WHEREAS, the authority granted and the purposes to be accomplished
by this Resolution are properly local governmental and public purposes for which
public funds can be expended and that the operation, maintenance, and expansion
of the inventory of quality and first class hotels and catalytic projects is of paramount
importance to the city of Palm Springs, its residents, and businesses.
WHEREAS, the City Council has determined that the focus area has a
higher rate of stalled development projects, undeveloped vacant lots, significant and
large vacancies, and generally a need for fagade improvement and interior
remodeling; and
WHEREAS, on July 3, 2013, the City Council determined that with the
general economic health of the city, combined with renewed interest in these study
areas, means that any incentive program the City would develop would have a
reasonable chance of having a catalytic effect on nearby development, as well as
the assisted project, and have a good chance of "paying for itself' over time, and
adopted the "Special Economic Development Focus Incentive Program Areas"; and
WHEREAS, based on the success of the core program and recent
program data, the City Council desires to amend the program guidelines in two
05
Resolution No.
Page 12
ways: calculating the eligibility for the "Major Need-Based Assistance for Renovating
Major Vacancies as Catalyst Projects" portion of the program, and amending the
boundaries of the Fagade Improvement Program Citywide.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Palm
Springs, does resolve as follows:
Section 1. The Recitals set forth above are true and correct and incorporated
herein by reference.
Section 2. The guidelines to the Special Economic Development Focus
Incentive Program Areas ("Program Areas"), as described in Exhibit "A" to this
resolution, are hereby amended as described.
Section 3. The City Manager or designee is authorized to take all actions
necessary to implement this Resolution, including without limitation, the
development of program guidelines, evaluation criteria, performance metrics,
application forms, covenants and agreements; and any action approved by this
Resolution.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council
of the City of Palm Springs, California, on this 7th day of January, 2015.
DAVID H. READY
CITY MANAGER
ATTEST:
JAMES THOMPSON
CITY CLERK
06
Resolution No.
Pagc 13
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, James Thompson, City Clerk of the City of Palm Springs, California,
hereby certify that Resolution No. was adopted by the Palm Springs City
Council at a regular meeting held on the 7th of January, 2015, and that the same was
adopted by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAMES THOMPSON
CITY CLERK
07
Resolution No.
Pa 14
Exhibit "A"
To Resolution No.
The amendments to the Program are:
Major Project Eligibility
The paragraph in the "Major Need-Based Assistance for Renovating Major Vacancies as
Catalyst Projects" application, shown as follows:
"The threshold for investment in a project that would qualify for this assistance would be
$1,000,000, excluding the cost of purchasing the land or building, or leasing the property.
Additionally, the Applicant must show that the project has a feasibility "gap", or the
difference between the proposed investment necessary to make the project "work" and the
amount of investment that could be reasonably be supported by an equity investment at a
standard return on investment."
shall be amended to:
"The threshold for investment in a project that would qualify for this assistance would be
$500,000, excluding the cost of purchasing the land or building, or leasing the property.
The grant has a $250,000 maximum for projects with a total expenditure above $1,000,000
and all projects in this category retain the leverage requirement, remodels from $500,000 to
$1,000,000 shall be eligible under this section on a "sliding scale" basis, maintaining the 3:1
private-to-public leverage. Additionally, the Applicant must show that the project has a
feasibility "gap", or the difference between the proposed investment necessary to make the
project "work" and the amount of investment that could be reasonably be supported by an
equity investment at a standard return on investment."
Facade Improvement Program Boundaries
The geographic eligibility for the Facade Improvement Program shall be in any legally
permitted commercial area in the City.
08
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET
FOR THE 2014-15 FISCAL YEAR.
WHEREAS, Resolution No. 23560 approving the budget for the Fiscal Year 2014-15
was adopted on June 4, 2014; and
WHEREAS, the City Manager has recommended, and the City Council desires to
approve, certain amendments to said budget.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS
DOES HEREBY RESOLVE that the Director of Finance is authorized to record inter-fund
cash transfers as required in accordance with this Resolution, and that Resolution No.
23560, adopting the Fiscal Year 2014-15 budget is hereby amended as follows:
SECTION 1. ADDITIONS
Fund Activity Account Amount
001 1400 59422 $300,000
General Fund Com & Economic Eco Dev
Development Incentive Focus
Purpose: Establish funding for
SECTION 2. SOURCE
Fund Activity Account Amount
001 29031 $300,000
General Fund Fund Balance
ADOPTED THIS DAY OF 2015.
David H. Ready, City Manager
ATTEST:
James Thompson, City Clerk 0 9
Resolution No.
Page 2
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
James Thompson, City Clerk
City of Palm Springs, California
10
Jay Thompson
From: Ginny Foat
Sent: Tuesday,January 06, 2015 4:11 PM
To: 'Ginny Foat';Jay Thompson
Subject: FW:4.A. Business Incentive -Townie Bagels (new location on Sunny Dunes)
Importance: High
From: Thirteen Palms lmailto:relaxCalthitteenpalms.com]
Sent: Tuesday, January 06, 2015 12:23 PM
To: Mary Sue Allen
Cc: William Post; Rick Hutcheson; Paul Lewin; Ginny Foat; Steve Pougnet; Chris Mills; DEBORAH BELLEAU; Nicholas
Daniels; David Winton; George Zander; Dick Miller; iimmvg(ubdc.rr.com; reggie(obc-collective.com;
taylorburdgeCalgmail.com; Stacy.Wiedmaier(ftark.edu
Subject: Re: 4.A. Business Incentive -Townie Bagels (new location on Sunny Dunes)
Thanks for sending this around Bill and Mary Sue,
I am thrilled at having Townie Bagels join the businesses in the Warm Sands Business District. I agree with Bill
it will be a meeting place for neighbors and businesses as well as being a destination further expanding the
opportunities for the burgeoning business district.
I certainly hope the city council can revisit their support of this block as well as the whole business district. I
invite the council to come see what is happening in the neighborhood and how another commercial destination
is developing in the city.
Best,
Fred Ross
Board Member - WSNO
Fred Ross, Proprietor
952 East Parocela Place,Palm Sptings,CA 92264
760.413.2910 relaxes-thirteen palm..com
" Corn
On Jan 6, 2015, at 11:18 AM, Mary Sue Allen <msallen6na msn.com>wrote:
I whole heartedly agree with Bill. Townie Bagels will be a great addition to our neighborhood, any support they can get
to assist with renovations will help to support and grow the Warm Sands Business District.
We appreciate your consideration.
O//07/.�O / 5
t ='TENt *.A
Mary Sue Allen
Board Member-WSNO
From: William Post [ma!Ito:bdoost@yahoo.com]
Sent: Tuesday, January 6, 2015 10:13 AM
To: Rick Hutcheson; Paul Lewin; Ginny Foat; Steve Pougnet; Chris Mills
Cc: DEBORAH BELLEAU; Nicholas Daniels; David Winton; Fred Ross; Mary Sue Allen; George Zander; Dick Miller;
iimmyg@dc.rr.com; reaaie@c-collective.com; taylorburdge@gmail.com; Stacy.Wiedmaier@park.edu
Subject: 4.A. Business Incentive -Townie Bagels (new location on Sunny Dunes)
Dear Mayor and City Council,
I am writing you today about item 4.A. on your agenda tomorrow night. When the idea of a North/South Palm
Canyon Drive business incentive program became a reality over a year ago you thankfully included the one
block of businesses on Sunny Dunes in my neighborhood, Warm Sands. I really appreciated the opportunity
for my neighborhood's businesses to benefit.
Since then the long established Tlaquepaque Mexican Restaurant moved from their Sunny Dunes
location. They were like an "anchor store' for this area and a real loss. There has been some concern about
who might move into this space and when because this location sets the tone for the nearby business
community.
We are now very excited to learn Townie Bagels will be renovating the space and moving in! Townie Bagels is
Palm Springs based local bakery. The owners have been active members of our community. I can remember
seeing them at PSNIC picnics as well as other events. A business such as this will provide a meeting place for
residents and I believe will really transform the area. Townie might also become a meeting place for the
neighborhood organization as well as future Warm Sands business association meetings.
I know the owners of Townie, Bill and Andy have spoken to our Economic Development Department in the
past and were told funds were not available for this extensive renovation. I hope you have or will consider
them when voting on 4.A.
I've copied my Warm Sands Neighborhood board on this email to show you the 100%support for this and they
may also send you a note of support.
Thank you for your consideration,
William Post
Chair-Warm Sands Neighborhood Organization
Bill Post
431 South Palm Canyon Drive, #202
Palm Springs, CA 92262
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