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HomeMy WebLinkAbout23018 RESOLUTION NO. 23018 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A PROJECT FINANCING AGREEMENT WITH PALM SPRINGS PROMENADE, LLC FOR THE REDEVELOPMENT OF CERTAIN REAL PROPERTY AT 123 NORTH PALM CANYON DRIVE, COMMONLY KNOWN AS THE DESERT FASHION PLAZA. A6144. WHEREAS, the Property currently known as the Desert Fashion Plaza was constructed on the site of the former Desert Inn in 1966 and was originally called the Desert Inn Fashion Plaza; and WHEREAS, in 1984 the City of Palm Springs and the Community Redevelopment Agency assisted the Edward J. DeBartolo Company renovate and expand the mall, including constructing a new store for Saks Fifth Avenue and developing an expanded I. Magnin space; and WHEREAS, due to its lack of retail success, the Desert Fashion Plaza went into foreclosure in late 1996, with the total defaulted loans at $51,698,096; and WHEREAS, in early 1998, AZ Partners purchased the property for $13.5 million and proposed a $35-million redevelopment of the Desert Fashion Plaza; and WHEREAS, in 1999 lender Excel Legacy Corp., terminated AZ Partners and proposed its own $64-million renovation of the Desert Fashion Plaza; and WHEREAS, in mid-2000, Excel opted to sell the mall instead of developing it and in late 2001 Wessman Development Company (the "Developer") acquired the Desert Fashion Plaza from Excel; and WHEREAS, a City Council Subcommittee was formed in 2004, to work with the Developer, and as part of its collaboration the City undertook demographic and movie theater market analysis and City officials participated in tenant meetings and worked on structuring a financial assistance package for the redevelopment of the property; and WHEREAS, comprehensive redevelopment plans were submitted by the Developer in April 2007, called Palm Grove; and WHEREAS, in April, 2008, the Developer submitted the Museum Market Plaza plan, which replaced the Palm Grove plan; and WHEREAS, on May 21, 2008, the City Council initiated a Specific Plan review process and directed staff to report on the conformance of the draft Museum Market Resolution No. 23018 Page 2 Plaza Specific Plan with the Palm Springs General Plan, Downtown Design Guidelines and Palm Springs Zoning Code; and WHEREAS, on November 18, 2009, the City Council certified an Environmental Impact Report, adopted a Statement of Overriding Consideration and Findings of Fact, and adopted the Museum Market Plaza Specific Plan ("Specific Plan"), including Amendments to the Palm Springs General Plan and the Palm Springs Zoning Code; and WHEREAS, on December 2, 2009, the City adopted the Specific Plan as Ordinance 1764, and the Redevelopment Agency adopted the Specific Plan as the Design for Development for the Redevelopment Area Plan. In approving the Specific Plan and the Design for Development, the Council and Agency expressed their belief that the adoption of the Specific Plan and Design for Development would provide a template for the redevelopment of the property with private development; and WHEREAS, in January, 2010, the City and Developer began to negotiate a Development Planning Agreement ("DPA") that would provide essentially a set of mutually agreeable assumptions, timelines, and general requirements for the negotiation of both a Development Agreement and Owner's Participation Agreement for the redevelopment of the Desert Fashion Plaza; such efforts were not fruitful until February 2011; and On August 9, 2010, the City Attorney's Office, on behalf of the Redevelopment Agency, advised the Developer that the Agency was unwilling to wait indefinitely for the Developer to propose and demonstrate financial capacity to redevelop the Desert Fashion Plaza; and On September 22, 2010, the City Council and Agency (1) authorized the completion of an appraisal of the Property, (2) solicited a Request for Proposals, and (3) directed staff to identify potential alternatives for financing any Agency or City participation in any approved project or the purchase of the Property; and WHEREAS, in December, 2010, the Agency Board authorized the Executive Director to make an offer to purchase the entire property, beginning a sequence of events that could have lead to an eminent domain action on the part of the Agency; and WHEREAS, the parties acknowledge that redevelopment of the DFP Area pursuant to the Specific Plan is critical to restoring economic vitality to downtown Palm Springs, and that successful redevelopment will require public-private participation as provided and contemplated herein. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs, as follows: SECTION 1. The above recitals are true and correct and incorporated herein. Resolution No. 23018 Page 3 SECTION 2. The Project Financing Agreement and associated agreements by and between the City of Palm Springs and Palm Springs Promenade, LLC, attached and incorporated herein by reference, are hereby approved. SECTION 3. Proiect Description. Under this Project Financing Agreement the Developer shall construct Phase I of the Revitalization Plan project, which includes the demolition of most of the retail properties of the mall, the development of new retail buildings on Palm Canyon Drive, a new Museum Way from Palm Canyon Drive to the Art Museum, a new Andreas Road from Palm Canyon Drive to Belardo Road, a reconnection of Belardo Road, new public spaces, and new movie theaters. The Project Description for the Agreement covers Phase I . of the Revitalization Plan, which is the portion of the project covered in the feasibility analysis but does not include the future buildings on Blocks D, E, or G. Later phases of the Project may occur years later. A significant part of the structure under the Agreement shall be the acquisition of certain real property at the site. These include: (1) the real property containing the above ground parking structure, as well as the surface and underground level of the parking at the southwest corner of the site; (2) the underground parking structure beneath the developed shopping center; (3) the two possible "museum expansion" sites; (4) the improved streets created by the project described as the Museum Street and the Belardo extension; and (5) new public restrooms. The City's development cost would include the cost of constructing public streets and the refurbishing of the underground parking structure. SECTION 4. Existing Site. The existing Desert Fashion Plaza is spread over 13 acres, located between North Palm Canyon Drive, Tahquitz Canyon Way, Museum Drive, and Belardo Road. The current development has more than 288,000 square feet of enclosed retail and circulation space, including 115,000 square feet of three former anchor tenants — Saks Fifth Avenue (50,000 square feet), I. Magnin (40,000 square feet), and Bank of America (25,000 square feet). SECTION 5. Street Grid. The entire street grid created by the Project and conveyed to the City will be designed with landscaping, architectural shading and decorative interlocking pavers, and no curbs, to maximize its use for events. All of the street grid will be available to be closed off for special events and public Resolution No. 23018 Page 4 activities. It is appropriate urban public space for an urban environment. SECTION 6. Parking. The project also includes 1,061 parking spaces (282 at-grade, 670 below-grade, and 109 above-grade). A parking garage accessed from Museum Drive is located in the site's northwest corner. An underground parking garage extends from beneath the northern portion of the property to its southwest corner. All parking structure improvements shall be undertaken by the City upon its acquisition of the property. Some reconfiguration of the parking structure shall also be necessary, in order to allow the construction of Belardo Road and the new Andreas Road on grade, as well as some new building pads on grade. SECTION 7. Museum Parcels. The City shall acquire two parcels as potential Palm Springs Art Museum sites, located at the far western end of the project. One parcel, Block H-2, shall be restored to "original" landscaped condition, free of debris and repainted, broken concrete repaired. The other parcel, Block H- 1, shall be filled and returned to a level site condition. Under the Agreement, the City shall receive the land from the Developer and negotiate with the Museum on a separate development project. SECTION 8. Public Restrooms. There is a provision for the creation of public restrooms within the project, which the City would operate and maintain. The Agreement contains a legal description of the restroom space which the City would purchase and construct. SECTION 9. Terms of Project Financing Agreement. The total development cost of Phase I of the Revitalization Plan is in excess of $100 million, which includes hard and soft costs as well as property acquisition. The Agreement provides for an estimated amount of City participation, including the construction of public infrastructure and the acquisition of certain public properties described in Section 3 of this Resolution, of approximately $43 million. SECTION 10. The City has structured the project contribution as follows: 1. The City would deposit the amount of $32 million in a project-related escrow account, under the terms described below; and Resolution No. 23018 Page 5 2. The City would undertake the construction of the streets and the improvement of the parking facilities, at an estimated cost of$11 million; and 3. In return for its contribution toward making the Project economically feasible, the City would receive title to all of the Project's parking (surface, underground, and structure) as well as the land underneath the streets and the restroom site and building; and 4. As part of the security for the City under the Project Financing Agreement, the City will secure a Performance Deed of Trust with a Trustee against the Desert Fashion Plaza property, to be available if the Developer fails to proceed with constructing the project. SECTION 11. Phase I of the Revitalization Plan sets a schedule for completion of the core and shell improvements (retail and office along Palm Canyon, the street infrastructure, the museum expansion sites, and the movie theaters) by December 2014. SECTION 12, California Environmental Quality Act. Pursuant to the California Environmental Quality Act (CEQA), the City Council finds that concurrently with approval of the Specific Plan, the Council approved and adopted Resolution 22625, which certified an Environmental Impact Report for the Specific Plan. Such Resolution included, without limitation, the making of amendments to the General Plan and Zoning Ordinance of the City, the making of certain findings relative to environmental effects identified in the EIR, the adoption of a Statement of Overriding Considerations, and the adoption of a Mitigation Monitoring Plan and Reporting Plan. The Resolution also included the incorporation of the Renovation Plan as an option, i.e., a potential "phase one" for remodeling the DFP Area. SECTION 13. General Plan Conformance. The Project substantially conforms to the Palm Springs General Plan, specifically the adopted Museum Market Plaza Specific Plan, because the proposed Revitalization Plan meets both the guiding principles and the development standards and guidelines of the Specific Plan through a mix of retail commercial, resort hotel and residential uses on a grid of pedestrian-oriented streets and open spaces that together provide a fully functioning downtown core that integrates well with surrounding streets and land uses. Resolution No. 23018 Page 6 SECTION 14. Zoning Code Compliance. Staff has analyzed the proposed Agreement against these findings, which require that the Agreement: i. Is consistent with the objectives, policies, general land uses and programs specified in the general plan and any applicable specific plan; The Project Financing Agreement cites the Museum Market Plaza Specific Plan as the land use plan to be used in the development of the affected property. The Specific Plan was adopted by the City Council in November 2009 as both a General Plan and Zoning amendment for the subject sites. Consequently, the Project Financing Agreement can be determined to be consistent with the objectives, policies, general land uses and programs of the City's adopted land use documents. ii. Is compatible with the uses authorized in, and the regulations prescribed for, the land use district in which the real property is located; The Museum Market Plaza Specific Plan sets forth the authorized uses and prescribed regulations for the land use district in which the subject property is located. The Project Financing Agreement specifically cites this Specific Plan as the controlling land use document for future development. Consequently the proposed Agreement can be determined to be compatible with the authorized uses and prescribed land use regulations. iii. Is in conformity with public convenience, general welfare and good land use practice; The proposed Project Financing Agreement will provide for the implementation of the Museum Market Plaza Specific Plan and thereby provide a comprehensive redevelopment of the center of City's downtown area. The coordinated arrangement of buildings, roads, open space, parking and existing surrounding land uses is provided for in this Specific Plan in a manner which assures the long-term environmental, economic and social well being of the community. Consequently, the proposed Project Financing Agreement can be determined to be in conformity with public convenience, general welfare and good land use practice. Resolution No. 23018 Page 7 iv. Will not be detrimental to the health, safety and general welfare; The Project Financing Agreement will implement both the Museum Market Plaza Specific Plan as well as the associated Mitigation Measures of the certified Environmental Impact Report that was prepared for the Specific Plan. Consequently, the proposed Project Financing Agreement can be determined to not be detrimental to the health, safety and general welfare of the community and surroundings. V. Will not adversely affect the orderly development of property or the preservation of property values. The Project Financing Agreement is specifically intended to provide for the orderly development of property in the downtown by establishing a means to implement the Museum Market Plaza Specific Plan. Further, the comprehensive redevelopment of the site as provided by the Agreement will provide a stable long-term development environment for the site and surroundings, thereby reducing uncertainty for the property owner, owners of adjacent properties and the community. Consequently, the proposed Project Financing Agreement can be determined to not adversely affect the orderly development of property or the preservation of property values. SECTION 15. The City Council of the City of Palm Springs authorizes the City Manager or his designee to execute, in the name of the applicant, the required documents. ADOPTED THIS 7" DAY of SEPTEMBER, 2011. David H. Ready,�i anager ATTEST: mes Thompson, City Clerk Resolution No. 23018 Page 8 CERTIFICATION 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. 23018 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 September 7, 2011, by the following vote: AYES: Councilmember Foat, Councilmember, Hutcheson, Councilmember Mills, Mayor Pro Tern Weigel, and Mayor Pougnet. NOES: None. ABSENT: None. ABSTAIN: None. mes Thompson, City Clerk r City of Palm Springs, California aq jZr 2011