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Cq</FORN�P CITY COUNCIL STAFF REPORT
DATE: SEPTEMBER 17, 2014 UNFINISHED BUSINESS
SUBJECT: APPROVE (1) AMENDMENT NO. 4 TO THE PROJECT FINANCING
AGREEMENT WITH PALM SPRINGS PROMENADE, LLC TO PROVIDE
FOR VARIOUS CHANGES TO THE SITE PLAN, ADJUSTMENTS TO
THE PERFORMANCE SCHEDULE AND DEVELOPER OBLIGATIONS,
AND THE PERMANENT ACQUISITION BY THE CITY OF THE EVENT
AREA SPACE FOR THE REDEVELOPMENT OF CERTAIN REAL
PROPERTY AT 123 NORTH PALM CANYON DRIVE, AND (2) AN
EASEMENT FOR THE BENEFIT OF BLOCK A FOR AN ELEVATOR
AND FOUR PARKING SPACES
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
On September 29, 2011, the City and Palm Springs Promenade, LLC ("Developer")
entered into a Project Financing Agreement ("PFA"), which related to financing,
development, redevelopment, creation, and refurbishment of Public and Private
Improvements in the Desert Fashion Plaza area of downtown Palm Springs.
The Parties have entered three previous PFA Amendments. This Amendment to the
PFA approves certain changes to the Site Plan, clarifies the parties' understanding of
the effects of various lawsuits on the Project schedule, provides for the City to acquire
the land designated for the Event Area in order to keep it under permanent City control,
allows the Developer to build additional underground parking spaces at the Site, and
provides for other changes related to the Developer's responsibilities regarding public
restrooms, and changes certain terms necessary for project financing.
RECOMMENDATION:
1. Approve Amendment No. 4 to the Project Financing Agreement No. 6144 with
Palm Springs Promenade, LLC; and
ITE�A NO.
City Council Staff Report
September 17, 2014-- Page 2
PFA Amendment No. 4
2. Approve an Easement for the benefit of Block B for an elevator and four parking
spaces;
3. Authorize the City Manager to execute all documents to effectuate the
Amendment. A6144.
Background
This report summarizes the previous amendments made to the PFA and describes the
changes proposed in PFA Amendment No. 4, and describes a proposed easement for
certain tenants within Block A.
Amendment No. 1.
The first PFA Amendment was a technical change related to the deposit of funds at
Project Escrow Closing, and reconciling that with the issuance of the bonds.
Amendment No. 2.
In October, 2012, the second amendment updated the original Project Site Plan and
Project Description. In the Updated Site Plan, certain Blocks were re-designated and
accurately described the evolved project. In addition, as part of the Amendment, the
Parties approved some changes in land uses, including the creation of an Event Area
on (re-lettered) Block E, which replaced the movie theatres included in the PFA.
The Event Area was intended to be operated as such for a period of at least ten years
and cooperation with each other would occur to retain the services of a person or entity
("Event Coordinator") to schedule, stage, or otherwise provide special events. At the
end of the ten year period, the Developer could, subject to normal City design and
entitlement approvals, develop and use Block E for any purposes authorized by the
Specific Plan, which would mean the City would only have the use of the Event Area for
10 years.
Amendment No. 2 also included a change in the Project Description to allow for the
proposed Kimpton Hotel in Block C-1, a 160+/- room high end, first class hotel.
The Amendment also changed how Block H-2 was to be prioritized. H-2 is one of the
parcels acquired by the City under the PFA that could be used for a future Art Museum
expansion. Under the Amendment, the portions of Block H-2 which do not include
subsurface parking facilities are to be redeveloped as follows: (i) demolish and remove
all existing improvements (i.e., concrete surface areas, walls, pavers, landscaping, etc.),
(ii) level the site with fill dirt, (iii) install new landscaping (grass, shrubs, trees, irrigation),
and (iv) install (on immediately adjacent areas for the benefit of subsurface parking) a
new stairwell and mechanical exhaust ventilation system. Such work authorized under
02
City Council Staff Report
September 17, 2014— Page 3
PFA Amendment No. 4
Amendment #2, is currently being undertaken by Developer at the City's cost but
without any profit or markup.
Amendment No. 3.
The third PFA Amendment further updated the Site Plan's boundary of Block C and
Block C-1, for the purpose of designing the corner block.
Amendment No. 4.
PFA Amendment No. 4 (PFA 4) covers a number of project-related issues. These
include:
Site Plan and Tentative Parcel Map
The Fourth Amendment includes a revised Site Plan as indicated on Exhibit A, and a
tentative parcel map ("TPM") as indicated on Exhibit B. PFA 4 changes Block A from
being remodeled to being replaced with two new buildings, Block A and new Block A-1.
A 30 foot wide pedestrian "paseo" will be created, aligned to match on the south with
proposed Market Street and on the north with an existing entry into the adjacent Hyatt
Hotel when Block A-1 is developed. The Hyatt Hotel entry is anticipated to be changed
from an interior (currently, a roll-up door between two buildings) to an exterior entry that
will give the hotel a new presence in the project.
Block A calls for a 3 story structure, well within Specific Plan height parameters, and will
contain retail and restaurant uses at ground level, with office uses on the second and
third floors. The Developer has submitted revised plans for Block A, while Block A-1 will
be designed and developed as part of a future Phase 2 of the Project.
In terms of Blocks B and B-1, the original Site Plan contemplated layout configurations,
land uses, and improvements that have evolved over time as well. Updated concepts
for Block B call for a combined one-story/two-story structure which will contain retail and
restaurant uses. Block B is in the design approval process, and Block B-1 will be
designed and developed as part of future phase 2.
Block E, originally planned for 65,000-70,000 square feet of commercial space plus 165
upper level residential units, is now planned for 50,530 square feet of public open
space.
Effect of Lawsuits
In PFA 4 the Parties acknowledge that the three lawsuits against the project constituted
"force majeure" occurrences. On January 29, 2014, the City entered into a Settlement
03
City Council Staff Report
September 17, 2014-- Page 4
PFA Amendment No. 4
Agreement of any and all claims relating to Block C and the Kimpton Hotel. The Parties
therefore have amended times for performance by the Developer in accordance with the
PFA from February 19, 2013, to July 8, 2014, for Blocks A and B. The Amendment
also limits future "force majeure" occurrences on blocks where all required discretionary
entitlements have been approved.
Event Area
PFA 4 reaffirms Block E as public open space, which shall be conveyed by Developer
and acquired by City, for $4,500,000 based on a valuation report of $5,300,000
performed by CBRE Appraisal Services. The CBRE value is based upon the existing
Specific Plan density and land use allowance, and the entitlement of the parcel for
65,000-70,000 square feet of commercial space plus 165 upper level residential units.
The City would pay the agreed discounted price of $4,500,000 at close of escrow. City
shall operate and maintain the Block E property as public open space. With the addition
of new open space in the project, including the 50,530 square foot Event Area, Blocks
A, B, C, and E will now feature 147,094 square feet of open space vs. the 53,432
square feet called for in the Specific Plan, a 275% increase over what was originally
planned.
The City shall own, operate and maintain the Block E property as public open space,
and as an active and vibrant area for staging community and public events such as
concerts, movies, farmers markets, public gatherings, or community events. The City
shall retain the right to contract with a third party ("Event Coordinator") to operate the
Event Center. Such management could extend to SMG, the operator of the Palm
Springs Convention Center, and PS Resorts, the group of local hoteliers charged with
creating special events in Palm Springs could participate as well. In terms of the design
of the Event Area, the City has received offers from Stiletto Entertainment (Barry
Manilow's company) and Goldenvoice to assist with the design of the center.
Given the proximity to future residential and hotel development on the Site, the
Developer shall convey to City a noise easement over the Project for music, fireworks,
etc., between the hours of 8:00 a.m. and 10:30 p.m. The City, as the owner of Block E
would convey to the Developer for the benefit of Blocks C-1 and F, a similar noise
easement.
Use of Block E and Ability of City to Dispose of Block E
The City will commit to operate Block E as public open space for staging community
and public events until at least January 1, 2044, or when O'Donnell Golf Club ceases
operation, whichever comes first. At any time thereafter, the City may choose to sell or
lease Block E for any use or purpose, however, before the City can sell or lease Block
E, it must offer to sell or lease it back to the Developer on the same terms and
conditions offered by a third party. Although the City will likely maintain the area as an
04
City Council Staff Report
September 17, 2014— Page 5
PFA Amendment No. 4
open Event Space, this provision is included to give future City Councils' flexibility
should circumstances change or warrant a modification of use.
Additional On-Site Parkinq
The Developer has agreed that funds received from the sale of Block E shall be
deposited in the Private Improvement Escrow Fund and will be used solely to construct
approximately 200+/- new underground parking spaces below surface areas of Blocks B
and B-1, Market Street, and Andreas Street. Such new spaces are depicted on Exhibit
C, and will be constructed concurrently with the new streets in the project area. The
public benefit of the construction of the private spaces is that it increases the total
amount of parking on site by about 20%. This is important especially as the City begins
to program the Event Center, which will be a large parking user.
Public Restrooms
The Original PFA called for the construction of Public Restrooms in the project. This
Amendment clarifies the Developer's requirement to design and construct in Block C
public restroom facilities fully compliant with all applicable laws including physical
disability access requirements. Moreover, the Developer will convey an easement for
the use and operation of these facilities to the City, which will also require City
maintenance.
In addition, the Developer will install restroom utility services in the streets adjoining the
Event Area and provide connections stubbed 5 feet into Block E at locations designated
by the City. It is anticipated that the City will then at its cost construct such restroom
facilities as it deems necessary or appropriate to accommodate activities at the Event
Area.
Performance Trust Deed.
As part of the Original PFA, the Developer provided the City with a Performance Trust
Deed to secure its obligations to complete the Private Improvements. In order to
accommodate funding of construction loans for the project, the City will incrementally re-
convey the Performance Trust Deed on a parcel by parcel basis concurrently with the
recordation of any loan to fund Private Improvements on each parcel, as long as 100%
of the costs to complete the improvements are fully funded by the construction loan
and/or Developer funds as determined by the lender and reviewed by The City Manager
or the City Manager's designee. Developer has agreed that expenditures from any
such loan will require prior approval of the IFC Agent, as contemplated by original
requirements of the PFA.
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City Council Staff Report
September 17, 2014-- Page 6
PFA Amendment No. 4
Amendment of Grant Deed for Parking.
PFA #4 also allows the Parties to agree to amend the Grant Deed conveying the
Parking Facilities allowing the City discretion to prohibit overnight parking (as the City
Council may designate by resolution) in Block A between the hours of 3:00 a.m. and
6:00 a.m. The City may determine the location of the restricted parking.
Easement for Benefit of Block A
Although the City owns the underground parking areas below Block A, the Developer is
negotiating a lease for a major tenant for a portion of that Block. This tenant has a need
for an elevator, storage, and four parking spaces. The proposed easement will be over
the City parking area in Block A for this purpose. The developer will install additional
parking spaces to essentially make up for the loss of spaces provided under this
easement.
Fiscal Analysis
The Event Area land acquisition ($4,500,000) and subsequent construction (TBD —
anticipated in the $1,000,000 range) under PFA #4 will be funded through a
combination of Measure J Land Acquisition Funds (set aside through previously
approved multi-year budget allocations) and from the Quimby-Parks Fund.
Measure J specifically allows for the acquisition and development of parks and
parkland, and the Quimby Fund — a developer fee — was created to allow cities to
acquire and develop parks, recreational and open spaces.
David H. Ready, Ci Joh ay ond, Dire or of
mmunktjA Economic Development
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Douglas C. Holland
City Attorney
Attachments:
1. Revised Site Plan (Exhibit A)
2. Tentative Parcel Map ("TPM") (Exhibit B)
3. Revised Underground Parking Plan (ExhibitC)
4. Fourth Amendment to Project Financing Agreement (PFA 4)
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City Council Staff Report
September 17, 2014-- Page 6
PFA Amendment No. 4
Amendment of Grant Deed for Parking.
PFA #4 also allows the Parties to agree to amend the Grant Deed conveying the
Parking Facilities allowing the City discretion to prohibit overnight parking (as the City
Council may designate by resolution) in Block A between the hours of 3:00 a.m. and
6:00 a.m. The City may determine the location of the restricted parking.
Easement for Benefit of Block A
Although the City owns the underground parking areas below Block A, the Developer is
negotiating a lease for a major tenant for a portion of that Block. This tenant has a need
for an elevator, storage, and four parking spaces. The proposed easement will be over
the City parking area in Block A for this purpose. The developer will install additional
parking spaces to essentially make up for the loss of spaces provided under this
easement.
Fiscal Analysis
The Event Area land acquisition ($4,500,000) and subsequent construction (TBD —
anticipated in the $1,000,000 range) under PFA #4 will be funded through a
combination of Measure J Land Acquisition Funds (set aside through previously
approved multi-year budget allocations) and from the Quimby-Parks Fund.
Measure J specifically allows for the acquisition and development of parks and
parkland, and the Quimby Fund — a developer fee — was created to allow cities to
acquire and develop parks, recreational and open spaces.
1
4'4,n -/
David H. Ready, Ci Joh ay ond, Direc or of
�^ mmu Economic Development
Dougla C. Holland
City Attorney
Attachments:
1. Revised Site Plan (Exhibit A)
2. Tentative Parcel Map ("TPM") (Exhibit B)
3. Revised Underground Parking Plan (Exhibit C)
4. Fourth Amendment to Project Financing Agreement (PFA 4)
09
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FOURTH AMENDMENT TO PFA
This FOURTH AMENDMENT TO PFA ("Fourth Amendment'), made effective
as of the date fully executed, is by and between the City of Palm Springs, a California
municipal corporation and charter city ("City"), and Palm Springs Promenade, LLC, a
California limited liability company ("Developer"), with reference to the following:
RECITALS
A. PFA. On or about September 29, 2011, the City and Developer entered
into a Project Financing Agreement ("PFA"), which related to financing, development,
redevelopment, creation, and refurbishment of Public and Private Improvements in the
DFP Area of downtown Palm Springs. (The PFA, and all documents attached to and/or
executed pursuant to the PFA, are incorporated herein by reference as though set forth in
full, and defined terms therein shall, unless otherwise indicated, have the same meanings
herein.)
B. First, Second and Third Amendments. Prior to the effective date hereof,
City and Developer entered into a First Amendment to PFA ("First Amendment'), a
Second Amendment to PFA ("Second Amendment'), and a Third Amendment to PFA
("Third Amendment'). (Said First, Second and Third Amendments are incorporated
herein by reference as though set forth in full, and defined terms therein shall, unless
otherwise indicated, have the same meanings herein.)
C. Fourth Amendment. The parties now desire to enter into this Fourth
Amendment.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Site Plan and TPM. As of the effective date of this Fourth Amendment,
the Site Plan for the DFP Area is as indicated on Exhibit A attached hereto, and the
tentative parcel map ("TPM") for the DFP Area is as indicated on Exhibit B attached
hereto. The parties agree that, upon request by Developer made at any time before
recordation of a final map pursuant to the TPM, the DFP Property may be legally divided
and functionally organized, in a manner generally consistent with divisions, functions and
conditions of approval applicable to the TPM, by way of lot line adjustments, easement
grants and reservations, and certificates of compliance, rather than by way of recordation
of a final map for the TPM.
2. Force Majeure Occurrences. With respect to the Project, the parties
acknowledge that (a) three lawsuits have been commenced, (b) two of said lawsuits have
been dismissed, and (c) one lawsuit, i.e., a Petition for Writ of Mandamus filed by
Advocates for Better Community Development ("ABCD"), Riverside Superior Court
Case No. RIC 1302004, received a Court issued Denial of Petition on April 4, 2014. The
last day ABCD could appeal the Denial of Petition was July 8, 2014 and such appeal was
dfppfafourthamenddch09.11.2014 1 10
not filed. The parties acknowledge and agree that such lawsuits constituted force majeure
occurrences and suspended and tolled times for performance by Developer from February
19, 2013 to July 8, 2014. The parties further acknowledge and agree that on or about
January 29, 2014, the City entered into a Settlement Agreement with ABCD pursuant to
which, among other things, ABCD filed a dismissal with prejudice in the Superior Court
Action of any and all claims relating to Block C and the hotel (i.e., the Kimpton Hotel
previously approved by the City on Block C-1). The Parties acknowledge that multiple
discretionary entitlements have been approved by the City and additional discretionary
entitlements will be submitted to the City for review and approval. The Parties agree
that any litigation filed against any portion of the Project for which all discretionary
entitlements have not been approved shall not constitute force majeure occurrences and
suspend and toll times for performance by Developer for any Block within the Project
for which all discretionary permits have been approved or has been otherwise approved
and vested. For the purposes of this Section 2, the term "discretionary entitlement" does
not include ministerial permits
3. Block E. The parties agree that Block E, as shown on the attached Site
Plan, shall be conveyed by Developer and acquired by City in fee and without condition
or limitation except as expressly provided in this Section 3 of this Amendment No. 4.
Block E shall be improved, used, operated, and maintained in accordance with the
following:
A. Escrow. Within 10 days after execution of this Fourth
Amendment, an escrow ("Escrow") shall be opened with a local escrow office of First
American Title Insurance Company ("Escrow Holder"), and Escrow instructions,
consistent with this Fourth Amendment and as reasonably requested by Escrow Holder,
shall be promptly executed and delivered by the parties. The close of Escrow shall occur
within 30 days after opening, and Block E will then be conveyed by Developer to City in
accordance with the terms hereof.
B. Value. Prior to execution of this Fourth Amendment, City
requested and received a Valuation Report dated January 17, 2014, which valued Block E
at the sum of $5,300,000. Notwithstanding such Valuation Report, City will pay
$4,500,000 for Block E and such sum will be delivered at close of Escrow. Said funds
shall be used to create additional parking to the extent provided in Section 3.13(1) below.
(1) Additional Parking. Developer agrees that all funds
received per Section 3.13 above, will be deposited directly into the Private Improvement
account and be released, upon authorizations from the IFC Agent and will be used to
construct approximately 188+/- new underground parking spaces below surface areas of
Blocks B and B-1, Market Street, and Andreas Street. Such new spaces are depicted on
Exhibit C attached hereto and will be constructed approximately concurrently with
streets to be constructed in the DFP Area. Deposit of the funds per Section 3.13 above
into the Private Escrow Improvement account and use of such funds as provided in this
paragraph will satisfy the Developer's obligation to deposit $2,000,000.00 into the
Private Escrow Account as required under Section 2.8(6) of the PFA.
1 �
Uppfafourthamenddeh09.11.2014 2
(2) Use of Parking. Such new parking spaces will be
designated for use by occupants of development constructed within Blocks A, B, B-1, C,
C-1, D, F, and G, and the guests and invitees of the occupants of such development.
C. Title. Prior to execution of this Fourth Amendment, City received
a current Preliminary Title Report ("PTR") issued by First American Title Insurance
Company ("Title Company") covering Block E, and copies of all recorded exceptions to
title shown by the PTR. City has approved the PTR and all such exceptions, and will
take title subject to such exceptions and standard title insurance policy exclusions and
exceptions. At close of Escrow, City will receive a CLTA title insurance policy issued
by the Title Company in the face amount of$4,500,000,
D. Pro e . Block E is currently in process of demolition and
removal of existing surface improvements. Subsequent thereto, Developer shall, at no
cost to the City, do the following: (i) complete public streets to be located adjacent to
Block E, i.e., Belardo Road and Main Street, with all appropriate utilities, including
without limitation, water, sewer, gas, telecommunications including cable television, and
electric utility services installed in said streets; (ii) install connections for such utility
services, stubbed five (5) feet into the Block E site at locations designated by the City
Manager; (iii) convey good and marketable title to Block E to City, consistent with the
provisions of Section LA(1)(b) of the Project Financing Agreement and this Amendment
No. 4; and (iv) deliver physical possession of Block E to City in the form of a clean dirt
site. Following such delivery, City shall, at its cost, install and maintain the following
within the Block E property: public restrooms, appropriate hardscape, landscape,
perimeter and ancillary lighting, security systems, irrigation systems, access
improvements, and electrical, sewer and audio-visual infrastructure. Such installation
work by City will be coordinated so as to be completed approximately concurrently with
completion of Private Improvements on Blocks C and/or C-1.
E. Use of Block E. Subsequent to installation of the Block E
improvements pursuant to Subsection D above„ City shall, at its cost, own, operate and
maintain, in a neat, clean, attractive, safe, functional and first class condition, the Block E
property as public open space, and as an active and vibrant area for staging community
and public events such as concerts, movies, farmers markets, public gatherings, or
community events of any kind or nature on or adjacent to (per Section 3.17 below) Block
E until at least January 1, 2044 or the date on which the O'Donnell Golf Club ceases
operations at the O'Donnell Golf Course, whichever event occurs first. At any time after
such date, the City may sell or lease Block E for any use or purpose as the City may
determine. Before City may sell or lease Block E to a third party or entity, or any
portion thereof as provided herein, the City shall first offer Block E or the portion
thereof, to Developer on the same terms and conditions as are offered by the third party.
Developer shall have 30 days during which to accept said offer. If Developer does not
accept said offer within said period, City shall be free to accept the third-party offer. If
City does not enter into an agreement with the third party on said terms and conditions
and close the transaction within 120 days, City's right to sell or lease Block E or any
portion thereof to the third party shall expire and the procedure described in this Section
12
dfppfaf6urthamenddch09.11.2014 3
shall again be applicable. Nothing herein shall prohibit or limit the right or the ability of
the City to contract with one or more third parties to perform any of the City's obligations
pursuant to the terms of this Section E, regardless of whether such agreement is
characterized as a contract for services, a lease, or any other label or description.
F. Noise Easement. Developer, as the owner of Blocks C-1 and F,
shall convey to City, and agents, employees, contractors, and designees, a noise easement
over the Project, including without limitation, for the staging, conducting, or allowing of
events as described above and the residual effects of such events, which may include loud
music, loudspeakers, fireworks, vibrations, debris, and other noise or activities, and
closure of all or parts of New Main Street between the westerly alignment of Belardo
Road and Museum Drive so long as such closure does not interfere with access to Parcel
5, which may disturb or disrupt any owner, tenant, or guest within the Project, between
the hours of 8:00 am and 10:30 pm. In the event the City ceases to use Block E for event
uses, the City shall terminate the noise easement provided in this Section. City, as the
owner of Block E, shall convey to Developer, as the owner of Blocks C-1 and F, a similar
noise easement.
G. Escrow Costs. Escrow costs and the premium for the title
insurance policy shall be paid for by City. Property taxes and assessments shall be
prorated between the parties at close of Escrow.
H. Prior Provisions. The provisions of Section 3 of the Second
Amendment relating to Block E are superseded and replaced by the provisions of Section
3 of this Fourth Amendment.
4. Blocks A and A-1. As leasing discussions have occurred, it became clear
that because of concerns about the height of proposed retail facilities, commercial tenants
were opposed to locating in the Block A building that was originally scheduled to remain
in place. As a result, and after examination of various alternatives, it has been
determined that such building should be replaced with two new buildings, one on Block
A and one on Block A-1, as depicted on the attached Site Plan. Updated concepts for
Block A call for a 3 story structure, well within Specific Plan height parameters, which
will contain retail and restaurant uses at ground level, with office and other uses on the
second and third floors. Developer intends to submit revised plans for Block A at or
prior to execution of this Fourth Amendment. Block A-1 will be designed and developed
as part of future phase 2. When Block A-1 is developed, a 30 foot wide pedestrian paseo
will be created, and it will be aligned to match on the south with proposed Market Street
and on the north with an existing entry into the adjacent Hyatt Hotel.
5. Blocks B and B-1. The Site Plan attached to the original PFA
contemplated layout configurations, land uses, improvements, etc., that have evolved and
changed over time as pursuit of the Project, and negotiations and discussions with
potential tenants, end users, design consultants and the City have occurred. Block E,
originally planned for 65,000-70,000 square feet of commercial space plus 165 upper
level residential units, is now planned for 50,530 square feet of public open space.
13
dfppfafourtha enddch09.11.2014 4
Increasing open space (and completely eliminating Private Improvements) in Block E
logically justifies decreasing open space (and increasing Private Improvements) in nearby
Blocks B and B-1. Updated concepts for Block B call for a two story structure which
will contain retail and restaurant uses. Developer intends to submit revised plans for
Block B at or prior to execution of this Fourth Amendment. Block 13-1 will be designed
and developed as part of future phase 2.
6. Block C Public Restrooms. Developer agrees, within a building in Block
C, to design and construct at its cost, at a location within such building reasonably
acceptable to City, public restroom facilities for women consisting of at least four (4)
stalls and related wash basins and facilities, and public restroom facilities for men
consisting of at least two stalls, two urinals, and related wash basins and facilities, fully
compliant with all applicable laws, including without limitation physical disability access
requirements, and connect same to requisite utilities (water, power, sewer). Developer
shall convey easement or leasehold title to the restrooms space and improvements to the
City in a form acceptable to the City Manager, and thereafter and at all times the City
shall operate and maintain such facilities in a neat, clean, attractive, safe, functional, and
first class condition.
7. Maintenance of Streets, Sidewalks and Other Common Areas. Within the
Project and DFP Area, once constructed and accepted (a) City shall, at its sole cost and
expense, operate and maintain all street and sidewalk areas and all landscaping and other
improvements, e.g., utilities normally maintained by City, located therein, and (b)
Developer shall, at its sole cost and expense, operate and maintain all other common
areas and improvements and landscaping therein, all as shown on Exhibit"D."
8. Performance Trust Deed. As part of the PFA, Developer provided City
with a Performance Trust Deed to secure obligations of Developer under the PFA to
complete Private Improvements. The parties acknowledge that plans for development of
the Project have evolved and changed over time, and that such changes, while
significantly improving the overall Project, greatly increase Developer costs. Such
increased costs can only be funded by substantial construction loans, and such loans can
only be obtained if the City releases the Performance Trust Deed. The City is strongly in
support of such changes and has agreed, and hereby does agree, to incrementally
reconvey the Performance Trust Deed on a parcel by parcel basis concurrently with the
recordation of any loan to fund all Private Improvements on each such parcel to be
constructed within the DFP Area, so long as 100% of the costs to complete such
improvements are fully funded by the construction loan and/or Developer funds as
determined by the lender and reviewed by the City Manager or the City Manager's
designee at a location in the Coachella Valley identified by the lender In turn, Developer
has agreed, and hereby does agree, that expenditures from any such loan will require
prior approval of the IFC Agent, as contemplated by original requirements of the PFA.
9. Development Agreement. At any time, upon request by Developer, City
and Developer shall exert and use commercially reasonable best efforts to prepare,
finalize, execute and implement a Development Agreement, as statutorily authorized by
i4
Uppfafourthamenddeh09.11.2014 5
Section 65864, et seq. of the California Government Code, pursuant to which, among
other things, Developer will obtain vested rights to construct and operate, in whole or in
part, improvements contemplated for construction and development within areas covered
by the Project and the Specific Plan. In connection with any such efforts and
Development Agreement, City agrees to cooperate and proceed without charge, e.g.,
without imposition of fees, costs or exactions, upon or against Developer or the Project.
10. Amendment of Grant Deed for Parking. The Parties agree to amend the
Grant Deed conveying the Parking Facilities as provided in the PFA to allow the City
Council with the discretion to prohibit parking in the underground parking area in Block
A between the hours of 3:00 am and 6:00 am as the City Council may designate by
resolution.
11. Effect of Fourth Amendment. To the extent provided and/or contemplated
herein, the terms, provisions, covenants, and conditions of the PFA (and all documents
attached to and/or executed pursuant thereto) and the First, Second and Third
Amendments, are deemed amended and superseded. Except to the extent provided and/or
contemplated herein, the terms, provisions, covenants and conditions of the PEA (and all
documents attached to and/or executed pursuant thereto) and the First, Second and Third
Amendments, shall remain in effect as originally written.
12. Incorporation of Recitals and Exhibits. Each of the recitals set forth
herein and each of the exhibits and documents attached hereto are incorporated herein by
reference and made a part hereof as though set forth in full.
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment and made it effective as and when specified above.
DEVELOPER: PALM SPRINGS PROMENADE, LLC
A California limited liability company
By:
Title:
Dated:
CITY: CITY OF PALM SPRINGS
A California municipal corporation and charter city
By:
Title:
Dated:
ATTEST:
City Clerk
APPROVED AS
TO LEGAL FORM:
City Attorney
35
dfppfafourthamenddch09.11.2014 6
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF PALM SPRINGS, CALIFORNIA, APPROVING
AMENDMENT NO. 4 TO THE PROJECT FINANCING
AGREEMENT BETWEEN THE CITY AND PALM SPRINGS
PROMENADE, LLC; AND FINDING NO ADDITIONAL
ENVIRONMENTAL REVIEW IS REQUIRED.
The City Council of the City of Palm Springs, California, finds:
A. The City, as lead agency, prepared the Museum Market Plaza Specific Plan EIR
(the "Specific Plan EIR"). The Specific Plan EIR analyzed the potential environmental
impacts of the proposed Museum Market Plaza Specific Plan pursuant to the California
Environmental Quality Act, Public Resources Code Sections 21000 et seq. and
California Code of Regulations, Title 14, Sections 15000 et seq. ("CEQA"). The Specific
Plan EIR concluded that the Museum Market Specific Plan would have significant and
unavoidable effects on the environment.
B. On December 9, 2009, the City Council for the City of Palm Springs made
findings, adopted a Mitigation Monitoring and Reporting Program, adopted a Statement
of Overriding Considerations, and certified the Specific Plan EIR pursuant to the
provisions of CEQA. On that date, the City Council also adopted the Museum Market
Plaza Specific Plan, conditioned on compliance with the mitigation measures in the
Specific Plan EIR/ Mitigation Monitoring and Reporting Program. The redevelopment of
the Desert Fashion Plaza site was specifically contemplated by the Museum Market
Specific Plan and analyzed in the Specific Plan EIR.
C. On September 29, 2011, the City and Palm Springs Promenade, LLC, entered
into a Project Financing Agreement applicable to the financing, development,
redevelopment, creation and refurbishment of public and private improvements in
downtown Palm Springs at the Desert Fashion Plaza site within the Specific Plan area
which included, among other things, a site plan and project description depicting the
proposed improvements.
D. The City and Palm Springs Promenade, LLC, subsequently developed a Second
Amendment to the Project Financing Agreement which included a revised site plan and
project description (the "Second Amendment').
E. Pursuant to the Second Amendment, the redevelopment of the Desert Fashion
Plaza site will include, among other things: a hotel of approximately 170 rooms at the
P���kiOr�G� ��►Al
RESO-4m Amendment PFA
northeast corner of Belardo Road and Tahquitz Canyon Way in lieu of a commercial
office building; an "Event Area" west of Belardo in lieu of a movie theater; and
reconstruction of two lots east of North Museum Drive and the Palm Springs Art
Museum, to include new landscaping and related hardscape and other improvements
(collectively the "Modified Project").
F. The City, as lead agency, determined that the Modified Project was within the
scope of the Specific Plan EIR and would not result in any new significant effects, a
substantial increase in the severity of previously identified significant effects, or require
any new mitigation measures or alternatives requiring major revisions in the Specific
Plan EIR. The City, therefore, prepared an Addendum to the Specific Plan EIR (the
"Addendum"). (Public Resources Code § 21166; CEQA Guidelines §§ 15162, 15164).
G. On October 17, 2012, the City Council for the City of Palm Springs approved the
Addendum, found that the Modified Project conformed to the Museum Market Specific
Plan, and approved the Second Amendment.
H. On December 19, 2012, the City Council approved a Third Amendment to the
Project Financing Agreement which included further minor revisions to the Modified
Project including, among other things: a minor reconfiguration of Main Street such that
Main Street is no longer curved between North Museum Drive and Belardo Road, but
rather is straight between North Museum Drive and Belardo Road, an increase in the
total number of hotel rooms from 170 rooms to 185 rooms (some of which will now be
located in Block C-1), the further set back of the second story of the Block B building,
and certain changes in uses listed on the Site Plan (the "Third Amendment").
I. On December 19, 2012, the City Council also approved the following
entitlements for the project: Tentative Tract Map No. 36446 to subdivide 13.6 acres into
fourteen lots for development and four lots for public infrastructure (streets) located at
the northwest corner of Palm Canyon Drive and Tahquitz Canyon Way; Major
Architectural Approval Case No. 3.3605 for development of lands located at the
northwest corner of North Palm Canyon and Andreas Road (new): Block "A"; Major
Architectural Approval Case No. 3.3606 for development of lands located at the
northwest corner of North Palm Canyon and "New Main Street": Block "B'; Major
Architectural Approval Case No. 3.3607 for development of lands located along the
westerly frontage of North Palm Canyon Drive, south of "New Main Street": Block "C";
and Planned Development District Case No. 5.1290 / PDD 361 for development of a
hotel of approximately 185 rooms, restaurants, meeting rooms, retail uses and ancillary
uses in excess of 60 feet in height located at the northeast corner of West Tahquitz
Canyon Way and Belardo Road (new): Block "C-1" (collectively, the "Entitlements").
J. On December 19, 2012, the City found that the Third Amendment and the
Entitlements were within the scope of the Specific Plan EIR and the Addendum, and
AESO-e Amendment PFA
none of the circumstances triggering further environmental review had occurred.
(Public Resources Code § 21166; California Code of Regulations § 15162).
K. On May 27, 2014, Palm Springs Promenade, LLC submitted a revised
architectural application (Case 3.3605-MAJ) for the construction of a three story
commercial building on the easterly half of Block A located at the northwest corner of N.
Palm Canyon Drive and Andreas Road and a one story.
L. The revised architectural application (Case No. 3.3605-MAJ) are generally
consistent with the Museum Market Plaza Specific Plan development standards
approved by the City Council on December 2, 2009 and analyzed in the Specific Plan
EIR.
M. The Planning Commission on June 25, 2014 in its Resolution No. 6412
approving Case No. 3.3605-MAJ determined that no further environmental review is
required pursuant to Public Resources Code Sec. 21166 and California Code of
Regulations, Title 14, Section 15162.
N. The Planning Commission has also considered a revised architectural
application, Case No. 3.606-MAJ, for a two story retail commercial building on the
easterly half of Block B located on the northwest corner of N. Palm Canyon Drive and
"New Main Street. The Planning Commission on September 5, 2014 in its Resolution
6436 approving Case No. 3.3606-MAJ determined that no further environmental review
is required pursuant to Public Resources Code Sec. 21166 and California Code of
Regulations, Title 14, Section 15162.
O. The City Council on September 17, 2014 reviewed and considered a 4th
Amendment to the Project Financing Agreement that further refines the manner in which
the first phase of the Specific Plan will be implemented and how certain enhanced
facilities will be financed. These revisions are described in the City Council Staff
Report, dated September 17, 2014 and the 4th Amendment to the Project Financing
Agreement attached to the Staff Report.
P. The City finds that the 4th Amendment to the Project Financing Agreement is
within the scope of the Specific Plan EIR and the Addendum for the following reasons:
(1) The proposed building heights, densities, and uses are within those analyzed in the
project EIR and Addendum and therefore there is no anticipated increase in project
impacts, particularly with respect to any visual impacts, traffic, or trip generation; (2)
The proposed change which provides that the open space will be owned by the City
rather than the Developer is merely a change in ownership, not usage, and therefore
will not create any new environmental impacts that were not previously analyzed; (3)
City ownership in lieu of City right to use Block E for only ten years ensures that the
public open space to be maintained on Block E will be of benefit and available for public
RES04'Amendment PFA
use for at least thirty years under the terms of the 4th Amendment; and (4) The 4th
Amendment also provides a source of funding the construction of additional on-site
parking that will benefit the Project and ensure availability of public parking within the
City owned parking structure; therefore no further CEQA review is required.
Q. Except as otherwise expressly provided in the Fourth Amendment (underground
parking under Block B-1), nothing herein shall be considered as an approval of any
development proposal for Blocks A-1, B-1, D, F, or G of the Project and such
development shall be subject to all required or appropriate environmental studies and
review when or if development is proposed on such Blocks.
NOW, THEREFORE, the City Council of the City of Palm Springs resolves:
SECTION 1. The Fourth Amendment to the Project Financing Agreement is approved
and the City Manager is authorized to execute the Second Amendment in a final form
approved by the City Attorney.
SECTION 2. The City finds that the 4th Amendment to the Project Financing
Agreement is substantially within the scope of the Specific Plan EIR and the Addendum
and was fully analyzed under CEQA at the time of the December 19, 2012 decision to
approve the Entitlements and none of the circumstances triggering further
environmental review have occurred since the adoption of the Addendum: (i) there are
no substantial changes in the project requiring major revisions of the Specific Plan EIR
and Addendum due to the involvement of new significant environmental effects or a
substantial increase in the severity of previously identified significant effects; (ii) there
are no substantial changes with respect to the circumstances under which the project is
being undertaken which will require major revisions of the Specific Plan EIR and
Addendum due to the involvement of new significant environmental effects or a
substantial increase in the severity of previously identified effects; and (iii) there is no
new information of substantial importance, which was not known and could not have
been known with the exercise of reasonable diligence at the time the Specific Plan EIR
and Addendum were certified showing that: (a) the project will have one or more
significant effects not discussed in the Specific Plan EIR and Addendum; (b) significant
effects previously examined will be substantially more severe than shown in the Specific
Plan EIR and Addendum; (c) mitigation measures or alternatives previously found not
feasible would in fact be feasible, and would substantially reduce one or more
significant effects of the project, but the mitigation measures or alternatives have not
been adopted; or (d) mitigation measures or alternatives considerably different from
those analyzed in the Specific Plan EIR and Addendum would substantially reduce one
or more significant effects on the environment, but the mitigation measures or
alternatives have not been adopted. No further environmental review is required.
(Public Resources Code § 21166; California Code of Regulations § 15162.)
RE804'Amendment PFA
PASSED, APPROVED, and ADOPTED this 17`h day of September, 2014
David H. Ready, City Manager
ATTEST
Jay Thompson, City Clerk
RESO-4' Amendment PFA
Low Offices of Babak Naficy
September 16, 2014
Via U.S. Mail and Email
Palm Springs City Council
City of Palm Springs, c/o City Clerk o
3200 E.Tahquitz Canyon Way
Palm Springs, California 92262 c
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RE: City Council Meeting Agenda Item 4.B.-Amendment No. 4 to
Project Financing Agreement with Palm Springs Promenade,
un a0s s93 09<6 LLC
lax. 805.593 0946
Councilmembers,
Regrettably, I am required to write to you again on behalf of Advocates for Better
Community Development ("ABCD") to oppose the proposed amendments to the
Museum Market Plaza Project and object to the City's continued enabling the
project applicant (Wessman) to continue to substantially change the project with
little or no public input or environmental review. This process started even
before the Specific Plan was approved, when the applicant came to you to ask for
permission to "renovate" the Fashion Plaza instead of faithfully implementing the
provisions and vision of the Specific Plan. Over the public's objection, the city
agreed.
After many of hours of public testimony,visioning sessions, hundreds if not
thousands of hours of staff work, and planning commission hearings, the City
finally approved a Specific Plan in 2009. But three years later, in October 2012,
the City unceremoniously made major concessions to the applicant by agreeing to
essentially tear out the heart of the Specific Plan -- the public plaza on Block B--
based on the applicant's representation that he intended to implement a
"renovation plan" on the theory that existing buildings on Block A would be
retained. The City made other major concessions to the applicant, including
additional hotel rooms, elimination of the residential component of the project,
and increased height to 100 feet. By December 2012, the project was changed
again.
q/r7hy
Palm Springs City Council
September 16, 2014
Page 2 of 5
Less than two years later, the City is again considering even more changes to the
project, including the elimination of Block A and the underground parking, and
the gift of public funds to secure an event center/public plaza, an amenity which
the Specific Plan never envisioned the City would have to pay for.
Incredibly, the City foisted these major changes on the public at the proverbial 1Ith hour,
leaving the public virtually no time to analyze, digest and comment on these major
changes to the project and the proposed gift of public funds to the applicant. Surely the
City has been in negotiations with the applicant for months over the details of these
proposed arrangements, yet the public is only afforded a few days to consider and
comment on these proposals. The City's actions shows profound disregard for
transparency and demonstrates utter contempt for the public and for public participation
and oversight in the City's fiscal affairs.
The City cannot proceed with the proposed action because the Agenda Notice is
misleading and inadequate, in that it does not adequately put the public on notice of the
issues that will be discussed and decided in connection with the proposed action.
The Report claims the applicant would build 200+/- parking spots beneath block B, but the
PFAAmendment#4 obligates the applicant only to build 188 spots.
As explained below, the City may not approve these proposed changes and the
amendments to the PFA because the previous approvals are null and void. This is because
the City's approval of the development plan, the Second Amendment to the PFA and the
Addendum were all based on a"conformity review" which in turn was premised on the
applicant's representation that he intended to implement a renovation plan that retained the
building on Block A. Now that the applicant has demolished the Block A building and
proposes to construct entirely new buildings,the previous "conformity determination" is
void because the project can no longer be described as a renovation plan.
ABCD, moreover, opposes the Fourth Amendment to the PFA on the grounds that it
amounts to a gift of public funds. According to the Specific Plan, to which the applicant
agreed, as well as the original PFA, the Museum Market Plaza was to include a central
public plaza on land that would remain in the applicant's ownership. This would have cost
the City nothing. But now, the City proposes to pay the applicant $4,500,000.00 to acquire
the event area. This amounts to a gift of public funds because the public gets nothing more
than what the Specific Plan called for. The proposal therefore is also inconsistent with the
Specific Plan, which implicitly required the applicant to build and maintain a central
plaza/event space at no extra cost to the City's residents.
Finally, the City may not approve the Fourth Amendment to the PFA also because it is not
clear how the proposal affects traffic and noise. Pursuant to CEQA, the City may not
approve the Fourth PFA Amendment without evaluating the impact on traffic and noise.
Palm Springs City Council
September 16, 2014
Page 3 of 5
The previous approvals are null and void
In 2012, the City approved the development of mixed-use buildings on Block B, despite
the fact the Specific Plan envisioned a central plaza with only 4((X) square feet of
development on Block B. The City approved the applicant's request based on a so-called
conformity review. At the applicant's request, prior to its adoption, the Specific Plan was
amended to specifically acknowledge that Wessman may choose to renovate all or part of
the then-existing Fashion Plaza rather than demolish and rebuild the structures. In 2012,
Wessman decided to take advantage of this provision by proposing a revised renovation
plan which retained the buildings on Block°A, but converted the central plaza in Block B to
over 90,(XX)square feet of mixed-use development. In October 2012, the City concluded
this"renovation plan" was in conformity with the renovation plan that was recognized in
the Specific Plan. Thus, in 2012 the applicant contended that its proposed project qualified
as a renovation plan because he represented to the City that he would retain the building on
Block A.
The following excerpt from the applicant's brief in the trial court illustrates this point:
7 The application for architectural approval on Block A shows that it seeks approval
8 for demolition of facades only,with the intent that existing floor plates will remain, and
9 no additional square footage would be added. [AR 7177.1 The site plan for block A
10 provided as part of the architectural application [AR 74081 shows the same proposed
91 structure on Block A as was shown on the Downtown Palm Springs Project site•plan
12 reviewed by the Council on October 17, 2012 as part of its conformity review and
13 approval of the Addendum [AR 176.J The application for architectural approval on Block
14 A was approved by Resolution 23267 adopted on December 19, 2012 [AR 323-366.]
The City therefore approved the Second Amendment to the PEA, the EIR Addendum and
each of the Architectural Applications the City approved for Blocks A. B and C, as well as
the tentative map and the PDD for the Block C hotel, on the basis the conformity review it
conducted on October 17, 2012. This conformity review included the applicant's promise
that the open space on Block F would be developed at the applicant's expense and retained
and made available for public use for at least ten years. Now that the project can no longer
be described as a renovation plan, all approvals based on the City's conformity review are
null and void.
The following excerpt from the Staff Report for the October 17. 2012 City Council
hearing, at which the City approved the Second Amendment to the PFA and the EIR
Addendum based on the conformity review, illustrates this point:
Palm Springs City Council
September 16, 2014
Page 4 of 5
The proposal may be seen as a renovation of the existing mall because of the
retention of a building and the existing parking facilities. These significant
existing facilities provide a basis for evaluating the proposal as a "renovation
project" as defined by the Specific Plan. The proposal may also be seen as a
further variation of the plan determined by the City Council in 2009 to be
conforming to the Specific Plan
The City now proposes to amend the Financing Agreement, thereby revising the site plan
and permitting the applicant to demolish the building on Block A in its entirety. This
proposed action is entirely inconsistent with, and supersedes the City's October 12. 2012
conformity determination,which as I have explained, was the basis for all project
approvals. Accordingly, to the extent that the approvals were based on a superseded
conformity determination, all approvals including Resolutions No. 23266, 23267, 23268,
23269, and 23270 are null and void. Before the project can go forward, the City must
undertake de novo analysis of the Project's consistency with the Specific Plan independent
of the conformity review provision, which no longer applies. At a minimum, the City must
explain why the 2012 conformity review still applies.
The proposed action amounts to an impermissible gift of public funds to the developer
Under the terms of the Specific Plan, the City and its residents would have had the benefit
of a public plaza on Block B while the developer retained ownership of the parcel. The
construction of the necessary improvements such as landscaping and a water fountain
according to the Specific Plan specifications, moreover, was the developer's responsibility.
Subsequently, the City agreed to eliminate the public plaza and permit 90,000 square feet
of commercial development on Block B, but Block E was to be converted to a public space
for a minimum of 10 years, again while the developer retained ownership (ie. no cost to
the tax payers) but agreed to give the City license to use the space for public purposes.
Under this arrangement, the developer was required to implement the necessary
improvements and share maintenance costs. According to the Staff Report:
In lieu of a movie theater on Block E, the Developer is proposing that an Event
Area be provided for use by both the City and Developer for 10 years. The use
arrangements will be worked out between the parties in the future. The Developer
will be responsible for making appropriate improvements to the Event Area and
the City will be responsible for installing certain event equipment related to the
staging of events and performances.
Under the current proposal, the developer would be paid 4.5 million dollars for the same
space that he had already agreed to make available to the public, and he is no longer
responsible for paying for any of the "appropriate improvements" he had previously
agreed to make. This new arrangement therefore constitutes an illegal gift of public funds
to the developer.
It should also be noted that it appears that the new subterranean parking in Block B would
Palm Springs City Council
September 16, 2014
Page 5 of 5
be privately owned by the applicant, not subject to the Grant Deed for Parking. As such,
the City may not be in control of this parking.
The City must undertake environmental review of the proposed action
The Staff Report does not even mention CEQAor whether the proposed action requires
any further environmental review. Because the proposed action changes the Specific Plan
in ways that could affect the environment, the City must refrain from considering the
proposed actions until it has undertaken supplemental environmental review as required by
CF,QA. The City must undertake an environmental review of the proposed "noise
easements"on noise.. and the impact of the newly proposed parking in Block B on traffic
and circulation.
The proposed "noise easement"also appears to violate the City's responsibility to
implement its own noise ordinance. Moreover, the proposed "noise easement" violates the
terms of the mitigation measures required and adopted in connection with the Specific
Plan, which in relevant part provides:
Future on-site development shall comply with all relevant development standards
and Palm Springs Municipal Code requirements to ensure that grading and
construction activities and site operations do not create adverse noise impacts
beyond the site boundaries as specified in the Noise Ordinance 81. Construction
activities shall incorporate feasible and practical techniques,which minimize the
noise impacts on adjacent uses, such as the use of mufflers and intake silencers
no less effective than originally equipped per City Policy NS3.11. (FIR at III-
149)
Conclusion
At a minimum, the City should put this proposed action on hold until the public has had a
meaningful opportunity to review and comment on these proposals. The City, moreover,
must ensure that the public notice for the proposed action meaningfully describes the
proposed actions for the benefit of the public. Substantively, while ABCD applauds the
City's efforts to create an open space/event area. the proposed purchase of Block E is an
unnecessary gift of public funds on a project to which the City has already donated
considerable financial assistance at the public's expense. If the City insists on following
this path, at a minimum it must consider whether the previous approvals and entitlements,
which were based on the premise that the project is a renovation plan, are still valid.
Finally, the City may not consider project approvals until it has conducted supplemental
environmental review as required by CEQA.
Sincerely,
/13/ab ak Na� �/ ! I
Babficy
Counsel for ABCD
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Emily Perri Hemphill
Attorney-at-Law
P.O.Box 1008
Rancho Mirage,CA 92270
760-880.4292
ephemphill(a aol.com
September 17, 2014
Mayor&Council
City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
RE: Response to Babak Naficy re: Amendment 4 to the PFA
Dear Mayor& Council:
This office represents Palm Springs Promenade, LLC. At tonight's Council
meeting, the Council will be considering an amendment to the Project Financing
Agreement for the Museum Market Plaza, and related revisions to the site plan. The purpose of
this letter is to respond to the comments submitted by ABCD via a letter from their attorney, Babak
Naficy. I therefore ask that this letter be included as part of the administrative record in this matter.
Much of Mr. Naficy's letter attempts to re-argue, yet again, actions which the
Council has taken in the past related to this project. It is important to note that Mr. Naficy had the
full opportunity to litigate those claims, and lost. It is therefore irrelevant to raise those same issues
again.
Mr. Naficy makes the claim, with utterly no legal support of any kind, that the
Council's past actions are retroactively void because the situation with respect to Block A has
changed. The Council's decisions are based upon the facts as they exist at the time of the
decision. Mr. Naficy offers no legal authority, as indeed none exists, to say that when facts
change, any prior decision, no matter how long ago it was made, is suddenly void. Therefore, his
concept that decisions made over a year ago based on the facts at the time must now be undone
because the facts have changed is unsupported in the law and invalid. This is particularly true in a
case such as this one, when the applicant has invested significant time and money in reliance on
those decisions.
Mr. Naficy's original claim in his failed litigation was that the Council did not have
the right to treat the revised plan as a renovation plan, and therefore, the conformity review was
improper. As was pointed out in the litigation, the °renovation plan" as defined in the original
specific plan did require significant demolition, but like that approved renovation plan, the current
plan still preserves the multi-million dollar parking structure and constructs the revised buildings
around that base structure. The Council therefore has the right to continue to treat this as a
renovation plan.
Mr. Naficy then tries to claim that the City's payment for conveyance of Block E is
a gift of public funds. This ignores the basic constitutional principal that government cannot take
private property without paying just compensation. Apparently Mr. Naficy believes that the
obligation to have open space in Block E was tantamount to the City's right to take the property
O,9 I i-i I toi` -
yrt=N^ 4- 43.
without compensation. This is obviously not supported by the law, and neither is it supported by
the facts.
The previous plan for Block E was that it would be owned by the Developer, and
preserved as open space for 10 years. In the prior litigation on this matter, Mr. Nafcy made a
claim that this was inadequate as the open space needed to be preserved in perpetuity. By
purchasing the property, the City is doing just that, and yet ABCD still complains. The fact is, the
City, under the fourth amendment to the PFA, is purchasing Block E, giving the City all the
incidences of ownership, and under the Constitution, the City must pay just compensation for
acquisition of such private property. In determining value of property when a City acquires it, the
value is to be established based on the property's highest and best use in its current condition. In
determining the value in such a case, the City's intended use is not to be taken into account. In
this case, that value was established by the City's outside consultant at $5.3 million. Mr. Naficy's
creative claim of a gift of public funds is therefore without merit.
ABCD next argues that the City must perform a CEQA analysis. However, under
CEQA, once the City has certified an EIR, it cannot require further environmental review unless
there is a change in the circumstances of the project or a change in the project that makes the
earlier review inadequate because there are new impacts or increased severity in the impacts
previously identified. As the staff report indicates, the issue at hand does not create new impacts,
nor does it increase the severity of impacts already assessed. Building heights are well within the
limits of the building heights anticipated in the EIR. Building densities are also within the limits
analyzed in the EIR, and the basic road structure remains basically the same, with minor
improvements. Therefore, it is reasonable for the City to conclude that there are no additional
traffic issues that need to be analyzed. The project uses remain the same as those analyzed, and
therefore it is reasonable to conclude that there are no new noise issues generated by the
proposed project that were not already analyzed. The fact that the City is asking for a noise
easement in favor of the public open space is merely a precaution to avoid any concerns around
public events held on Block E, it is not evidence that there is any more noise issue than was
analyzed previously. Under these conditions, the City is entitled to rely upon its previous CEQA
analysis and no additional analysis is required, or indeed even permitted, under CEQA.
Sincerely,
&,.�t &�
Emily Perri Hemphill
. 'Wow
doope . R E S 0 R T S
September 16, 2014
Aftab Dada
CHAIRMAN OF
THE BOARD
City of Palm Springs
3400 Tahquitz Canyon Drive Tim Ellis
Palm Springs, CA 92264 VICE CHAIRMAN
Dear Mayor and Council Members: Marie-Helene Morowafi
SECRETARY
On behalf of the PS Resorts Board of Directors we would like to express our----
support of the downtown revitalization project and entertainment center. Brandon McCudey
TREASURER
It is our mission at PS Resorts to initiate and pursue sustainable event (s)
for Palm Springs. We feel this event center will add a unique venue to the
downtown experience, creating an opportunity for live music and
performances such as the Tachevah concert in the spring.
Additionally, this project will enhance the downtown area and create new
opportunities driving revenue for the local hotels, restaurants and retail
shops. Groups like Wanderlust (a yoga & music festival) that we lost due
to lack of outdoor meeting space in 2014 will be able to meet in Palm
Springs generating business for the city during our off-peak and peak
times.
We are in support of Measure J funds being used for this downtown
project and feel overall this will also help to restore & boost the econom
in ou area.
S" rely,
Tim EI is
S e skai PS Resorts Vice Chairman
190 Amado Road Palm Springs, CA 92262 760-275-0963 wANV`9-RES0RTS.com
09`"7/z04-
. -'4 4,6
PALM SPRINGS
ART MUSEUM
Date: 09/17/2014
To: Mayor and Members of City Council —City of Palm Springs
From: Harold J. Meyerman, Chairman of the Board, Palm Springs Art Museum
On behalf of the Board of the Palm Springs Art Museum, Executive Vice Chair, Mr. Matzner and
myself, as the appointed members to represent the Museum in matters of this kind, we
applaud tonight's action by the City of Palm Springs that will support and enhance the
Museum's ability to serve the community of and, visitors to Palm Springs.
The Art Museum is one of the premier attractions in Palm Springs with more than 180,000
visitors annually. We credit our success to the generous and devoted support of our many
benefactors and the general public.
The Palm Springs Art Museum is now recognized globally as a leading mid-sized Museum. The
Museum serves as a significant cultural resource for the City of Palm Springs. Our new
Architectural and Design Center, with major City support, will be ready to open officially,
November 8. The huge additions to our collection and the recent renovation of our
Administrative Building, all confirm our growth and the requirement for additional parking and
space for future expansion.
Successful and timely completion of Museum Market Plaza will provide long awaited, direct
access to the Museum from Palm Canyon that represented one of three issues we have raised
with you over the years. The two remaining issues: additional parking and space for expansion
remain of major concern. Thank you, Mr. Mayor and City Council, for constructively addressing
these issues.
The two hundred new underground parking spaces made possible with your vote tonight is a
home run. Acquiring the open space across the 0street from the Museum for permanent
community event space represents a grand slam. I urge you to support this important action.
Sincerely,
Harold J. Meyerman
Chairman
a,7/1 71y014
PO Box 2310, 101 Museum Drive,Palm Springs,CA 92263-2310 760-322-4800 infoapsmuseum.org psmuseum.org
ITEM 4.6.
Judy Deertrack
1333 South Belardo Road, Apt 510
Palm Springs, CA 92264
Wednesday,September 17, 2014
To the City Council
Palm Springs, California
RE: ITEM 4.B. APPROVE AMENDMENT NO. 4 TO THE PROJECT
FINANCING AGREEMENT WITH PALM SPRINGS PROMENADE, LLC TO
PROVIDE FOR VARIOUS CHANGES TO THE SITE PLAN, ADJUSTMENTS
TO THE PERFORMANCE SCHEDULE AND DEVELOPER OBLIGATIONS
AND THE PERMANENT ACQUISITION BY THE CITY OF THE EVENT AREA
SPACE FOR THE REDEVELOPMENT OF CERTAIN REAL PROPERTY AT
123 NORTH _P_ALM CANYON DRIVE, AND APPROVE AN EASEMENT FOR
THE BENEFIT OF BLOCK_A FOR AN ELEVATOR AND FOUR PARKING_
SPACES: RECOMMENDATION: 1) Approve Amendment No. 4 to the
Project Financing Agreement No. A6144 with Palm Springs Promenade,
LLC; 2) Approve an Easement for the benefit of Block B for an elevator
and four parking spaces; and 3) Authorize the City Manager to execute
all documents to effectuate the Amendment. A6144.
TO WHOM IT MAY CONCERN:
This letter expresses my concerns that the City of Palm Springs has bypassed important public rights
and processes required under the State of California Planning and Development laws, and the
California Environmental Quality Act (CEQA) in implementing the Downtown Specific Plan (MMPSP).
Most importantly, I feel that the MMPSP has become privatized as a matter between the City Council
and the Project Applicant(Developer) without sufficient information and input from the general public.
Over the years, the project has radically evolved into new planning components that were never
discussed or anticipated in the early parts of plan review; nor have those changes received
subsequent environmental review.
I believe the last public hearings on the permits issued for the various plots under this plan were
somewhere around December 2012. Since then, there have been radical alterations in use of the
blocks, open space, massing, height, bulk, and setbacks, view shed, historic preservation, traffic
impacts, parking, and financing, but the City of Palm Springs has NEVER had a subsequent public
hearing, nor have these changes ever received environmental review.
The modifications to the land use entitlements have been processed under Agenda Item 4 as
"Unfinished Business" of the City—and this is a sad relegation of the City's top priority and the right of
its citizenry to give proper input. Project review since 2012 has been an architectural matter under
either"design conformity review," or changes to the Project Financing Agreement(PFA). The agenda
under Item 4 does not allow public comments, but relegates the general public to speak under
General Public Commentary off the MMPSP Agenda. This is unprecedented in my experience for the
implementation of a Downtown Specific Plan.
o9/i7lZr) -7
2
California has legislated the Specific Plan process with enough specificity that its implementation
varies little from City to City, and most of the procedures are standardized. The General Plan rules
as the constitution for all future development, and its explicit standards cannot be violated, even by
Charter Cities. Specific Plans create a sharper focus and interpretation of the General Plan policies,
and dictate standards specific to the commercial area under development, and it is a conceptual
stage — but once adopted, the plan is implemented through land use entitlements, and that is a very
concrete and important time to tie down the details of the development. There is a sharp contrast
between the conceptual standards of a Specific Plan, and its implementing tools — and 1 do believe
this is where the City has failed to grasp the full public responsibility of proper land entitlement,
hearings, and environmental updates.
ENVIRONMENTAL/SITE PLAN REVIEW: Once adopted, a Specific Plan is implemented in stages,
but the original environmental review is comprehensive and avoids deferment. All elements of the
project must be assessed. Environmental review of a Specific Plan, like the plan itself, tends to
assess the broad outlines of the conceptual vision; secondary review is always necessary.
With plan implementation, later supplemental environmental review ties down to specifics. The
project details are processed through LAND USE ENTITLEMENTS, both as tract maps and either a
CUP or PDD, often processed through approved "engineered site plans" that are so detailed, the
project can be built to spec from the exhibit itself. It is no longer a guessing game, and the general
public is not looking at pretty but amorphous visions or possibilities. This implementation happens
early on, and ties down the specific environmental impacts. If these site plans are approved (always
at a hearing), and are later significantly revised, the site plan comes back to the decision maker and
the general public in a public hearing context, and the changes from the previous approval are clearly
earmarked, with explanation.
So, there are stages: (1) adoption of the Specific Plan and its EIR, (2) approval of tract maps and
land entitlements (CUP/PDD) with design review, and supplemental environmental review (and
hearings), and (3) possible revisions to the permits (CUP/PDD), design review, and environmental
assessment to cover major subsequent revisions in project design and/or land entitlement (with
hearings). This standardized process is what the City has bypassed, for whatever reason.
For example, there is a broad idea of how to assess and handle view shed impacts, but until the
location and height of a specific building is decided upon, one cannot know the true impact, and there
is a need for later assessment. A project is not allowed to morph into something quite different than
originally reviewed, with the differences explained as a broad envelope of possibilities that retain
flexibility over time to respond to unseen market forces. The City appears to have tied environmental
review to an "envelope of possibilities," and that is not CEQA. Nor should the City approve a CUP or
PDD as a project where it can later change the density, mass, and height of the buildings at will,
between different Blocks without considering it a major revision; for that changes the Project
Description, and also should be processed as a major revision to the PDD or CUP (public hearing).
PROJECT FINANCE AGREEMENT: This is the fourth amendment to the PFA. I am concerned that
rather than implementing this Specific Plan through land use entitlements (CUP and/or PDD) that
engineer the project components through site plans with development standards, height, massing,
density, function, and land use, with public components (open space) --the City has created "design
in flux," that is very confusing.
The greater part of these changes have been processed as conceptual design variations that are
adapting to unseen market forces identified (but not discussed) by the City and the Developer. So,
rather than public hearings we are getting "design conformity review," and changes to the financing
3
agreement. Unfortunately, neither of these tools were meant to vest land use entitlements on
projects. A PFA and Design Review are absolutely supplemental to a land use entitlement process.
They are the finishing touches, not the conduits for approval.
PFA AMENDMENT NO. 4: 1 have several concerns with the Fourth Amendment to the PFA:
(1) The City has committed to pay the Developer $42 million for a parking garage. I am not sure of
the project parking evaluation over time, but it appears that the development creates the need for
over 1,000 parking spaces, under the parking ordinance, and (I am not sure), there is a possibility
that the City has waived the parking requirement, allowing the Developer to use the facility that
was just sold to the City. This would destroy the value of the purchase. Nor do I believe parking
requirements can be so waived. PFA#4 requires the developer to build 200 additional spaces.
What I believe is needed is a proper environmental review of parking for the project as a whole,
including an assessment of waiving parking within the public venue, and then allowing the
Developer to use the public space in place and instead of meeting the ordinance requirement.
(2) The CBRE Appraisal is based upon a specific plan density and land use allowance on Block E
that conforms to a previous but outmoded approval of 65,000 — 70,000 sf of commercial retail
with 165 upper level residential units. This results in a commercial valuation of$5.2 million, for a
purchase price of $4.5 million. However, the planned density for Block E has been transferred
over to the receiving lots of Blocks A and B, which has increased the commercial value of those
lots. That would downgrade Block E to open space evaluation, and it loses the full commercial
valuation. The Developer cannot expect that all three of the lots - two receiving lots and the
parent lot on a density transfer will retain the original higher value. The transferring lot is going to
have a decrease in value. That is not reflected in the appraisal.
(3) The City is purchasing a lot within this Specific Plan through a PFA. Unless the City has entered
a Joint Venture with the Developer, this exempts the lot from the Project Description of the
Specific Plan. The boundaries of the adopted Specific Plan have changed significantly, and (as
we can already see), the density has been transferred onto other lots remaining within the Plan.
This would entail a Specific Plan Amendment, a Joint Venture Agreement, and possibly other
supplemental permits. It certainly requires public review, because by implementing this change
through a PFA, the public input is bypassed, and the City is committing itself to a purchase with
no commitment to a specific project at all, other than the amorphous description of a PFA, which
is not the mechanism to create and receive public input for a major public park.
(4) The City's commitment is until 2044 or until the O'Donnell Golf Club ceases operations. The golf
club could technically cease operations next week. What happens to the $4.5 million
investment?
(5) The PFA allows for waiver of the Noise Ordinance as it relates to the Developer, and probably by
extension, to his prospective retail and office clients. Has there been an assessment of how this
noise exemption will affect the sale and lease terms of the downtown project? Is it fair to exempt
the downtown from noise restrictions, and impose those noise restrictions on other commercial
areas within the City? Is it legal?
Thank you for your kind attention to my concerns, as always. I know the City is extremely sensitive to
this matter, and it saddens me to use my skills to question rather than celebrate this as a marvelous
achievement to our Downtown development. However, I have dedicated my life to public rights and
participation, and I strongly believe that you are dedicated to that as well. Please share these
decisions with us, and trust in our involvement. Thank you for your hard work.
With regard,
Judy Deertrack
Bette OCamb
From: PSHA Administrator <adminpsha@gmail.com>
Sent: Tuesday, September 16, 2014 12:40 PM
To: Bette OCamb
Subject: Letter from PSHA
Attachments: Measure J Request-Event Center.9-15-1409162014.pdf
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Hi Bette -
Attached is a letter from Martin Greenwood, PSHA President for the Mayor and City Council. This letter
supports the use of Measure J Funds to purchase the Event Center from Wessman Development.
I also believe someone will be reading the letter at tomorrow's Council meeting.
Please let me know if I can answer any questions for you.
Thanks,
Tamara Stevens
Administrative Consultant
Palm Springs Hospitality Association
P.O. Box 4507
Palm Springs, CA 92263
Phone: 1-760 835-4957
AdminPSHA(aA¢mail.com
www.palmsprinashospitglily.org
1
P.O. Box 4507 - Palm Springs, CA 92263
760-835-4957
AdrninPSHA@%p2Acgm - wwW 4irrtspringshospitality.com
September 15, 2014
Mayor Steve Pougnet
Council Persons: Rick Hutcheson, Ginny Foat, Paul Lewin, Chris Mills
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Dear Mayor and Council Members:
The PSHA and PSRA Board of Directors requests the City of Palm Springs give strong
consideration to purchasing the Event Center area from Wessman Development. With the
stipulation that funds from the sale be used for much needed additional parking spaces for
the downtown project, we feel this is a great opportunity for both the City, the project
itself and our local businesses.
We are excited to see the progress that is being made downtown and support the use of
the City's Measure 1 funds to purchase the Event Center area.
Thank you for your tho htful consideration of our request.
Warp R gar¢s,
1
Martin Gree 4y�d�
President
Palm Springs Hospitality Association