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HomeMy WebLinkAbout10/5/2011 - STAFF REPORTS - 4.A.Sales Tax Revenue Percentage Generated by Visitors City of Palm Springs Estimated Sales Taxes Generated by Noncitizens of Palm Springs: Peak Season 67% Annual Average 55% Off Season 48% Nonconfidential Estimate Summaries Sources of data: MuniServices Sales Tax Capture & Gap Analysis Report (confidential) Transient Occupancy Tax returns for 2010-2011 (confidential) Sales data obtained from individual hotels & businesses (confidential) 1' Even with "near perfect" agreements there is usually a fair amount of compromise.... thus requiring a balance between positive and negative. The main problem (amongst many) with this resolution tonight is that by asking the City Manager to publicly carry the banner forth for Prop 1, it is reasonable to assume that the negatives in this agreement will never be heard. There is a Proponents Group which is already felling several forests to get the word out. To add the weight and time (which of course equals money) of City Hall to this election ensures that the voice of any opposition will be drowned in the process. As an American who cherishes the right to free and open debates and elections, this is a travesty. I have already received "educational" materials on the measure from City Hall which were so monolithic in their bias that they were practically duplicates of those paid for by the proponents. They were enough to save those proponents the cost of a mailing. This resolution will promote one point of view without ever "educating" the public to both sides of the story, encouraging freedom of thought. And putting salaried people to the task is a misuse of taxpayers' money. Is this how the tax -increase revenue will be misused, too? Thank you for allowing THIS freedom of expression, Roxann Ploss Ovh6« Cone Couricilmember Feat: My objections to this agreement/tax increase run the gamut from major to minor so this may be a somewhat disjointed reply to your inquiry as to why I oppose this Measure J. but please know that the collective impact of all of what follows is, for me, substantial to overcome. Objections to Measure J. Originally, when I first heard of the possibility of an agreement on the Desert Fashion Plaza .... even though it would probably require an added tax to pay for it,1 was in favor of ft. Anything other than, as I said to the mayor at the time, a sales tax. Sales taxes are regressive and, in this economy hard to defend. 1) It is misleading when the Proponents say "of course, no taxes are paid on food so your groceries are OK". The last time 1 went marketing, I bought toilet paper, dog food, a box of soda cans and Windex. AO of them were taxable. Since most people do their marketing at one -stop shops, of COURSE their sales taxes will go up. 2) I bought my new refrigerator at Lowe's. Since delivery and installation is also free at Pacific Sales (and the selection better), I would seriously consider driving to Palm Desert then to buy big ticket items. The $20 I would have saved on the extra tax would pay for the gasofine...AND I'd have more choices. The amount of money I spent on the appliance was equal to a 5-day stay at the Hilton; so tourist OR local ..... we ALL will get hit. 3) Fast food restaurants charge sales taxes. Lower income homes frequent these places, often a couple of times a week. Even the HOMELESS, who have no access to refrigeration, spend money at McDonald's, Burger King or others. THEY pay sales taxes, too. 4) The feds used their stimulus package to bailout banks, mortgage companies and investment houses. The banks are sitting on the money; the CEO's are collecting their bonuses and, this past month, increased salaries. The stimulus ... for the people ... was pretty much a failure. That's pretty much my feeling about what this Measure is expected to do: bail out the private sector which will reap any potential reward and give little benefit to "little guy". Were the 1% increase to go SOLELY to the maintenance, repair and upgrade (to solar, for instance) of our infrastructure, jobs would be created/saved, money would circulate and the town would be improved. 5) Stated another way: Econ 101 tells us that the "trickle -down" theory of economics doesn't work. Concentrating such an enormous amount of money in one privately owned business, regardless of the so- called guarantees, is very risky. Conversely, if that same amount is spread around more equitably, more jobs are created, more money circulates. 1"62M 6) In a capitalistic society (which we are .... more in theory than in fact), the risk private industry is what the profit. It we are to bail out WD and share in its risk, them just as R was with the auto industry, there should be payback. Although my primary philosophical/economdc objection is the most basic (about this tax being regressive), the bulk of complaints have to do with the face of the project itself: l) Since I have been actively/audibly involved with the City, Mr. Wessman's track record has not been too laudable. There has always been an objectionable, last-minute revelation which either makes the whole project unacceptable or unsellable. His idea of highly dense (and highly "high") buildings has gone against the renowned fabric of Palm Springs. He wants a whole new city with whole new branding; That's fine if he can find another town which doesn't already have a "brand". Examples: a) The demolition of Bullocks Wilshire ("too many termites" was given as the reason) b) St. Baristo c) The efforts to bulldoze the 100 North block of Palm Canyon 6 Indian d) The "benign neglect" of DFP and Town Center, in pursuit of goal fisted above (c) e) Boulders Q Crescendo g) The "boutique" hotel on Tahquitz h) The attempt to cram twenty rondos behind Santa Fe Federal (I looked at a satellite photo of that property recently and STILL cannot see how he could force those in there without literally l R..,, ` .. the Bank!) Q The myriad of renderings for DPP over the last decade. 2) Then: have been many missed or extended deadlines. 3) There has been the ignoring of guidelines, codes he helped to create! 4) He has let several properties go back to the bank. 5) He's stated that it's impossible to get financing without City partnership. Is there any indication thus far that the full amount of independent financing will be available to him WITH the passage of this measure? Will "his" money be held in the same or similar escrow account so the City Is assured the project will be completely funded? 6) The April 2015 completion date has been reported and thus, as far as the public is concerned, Is in cement. Since he can't start, he says, until the votes are counted, mid -November 2011 through mid -April 2015 equals 3 years and 5 months. Without going out on a limb here, my memories of PS construction cast doubts on that date. The time for architectural/structural designs, committee meetings, public response, inevitable return visits to committees and Council (unless, of course, approvals are to be rubber-stamped), application for permits, demolition, the allowance for ANY work stoppages, inspections, scaffolding, creating sheets, etc, etc, would seem to take more than 3 [/a years!!! According to Wessman quoted in the Desert Sun, that date is projected for the building only; storefronts will NOT be move -in ready. That will take more time. 7) Questions abound: a) What if major delays are encountered about two years in? Thusfar, the City has been eager to tell the voter: that the time factor is GUARANTEED and that Mr. Wessman agrees. So .... in that scenario, would the City take over half -way through? Dees it look for a new buyer? Does it grant Mr. Wessman an extension? b) Will WD use only local subcontractors and labor so that money will immediately begin to circulate within the community? Will purchases of building materials be made locally? (I hear the answer to I creed to see what percentage of that money will go where BEFORE I vote on the increase. To answer with "we don't know what time expenses will be so far in advance" would again be specious. The condition of our infrastructure is pretty well mown; streets. reroofing, sidewalks, tree trimming, repainting, award= salaries..... all of these have been budgeted before. I'm not asking for a dollars S cents figure, but how the money will be divided , " .6 . ,, : wise. B) We've been soothed with the promise that there will be a sevewperson oversight committee to make sure the money is not misspent. This is a case of "once bumeddwice sorry". How will the committee be chosen? How will it be empowered? Or are they strictly advisory? How many people/groups can veto their decisions/advice? How public will their defiberadons (and, in fact, their appointments) be? lust rising the term "oversight committee" doesn't reassure me; D.C. has LOTS of those! 10) When eminent domain WAS on the table, the City accepted an appraisal of the DFP presented by Mr. Wessman. Real estate is a gamble even in the best of times. Real esfata investors are never guaranteed a profit. The Bill of Rights demands "fair market value" but "fair" simply cannot be determined by anyone affiliated with the owner. Given the disrepair/neglect of DFP over the past decade, the economy and the lack of interest in mails generally, other appraisers have noted that Mr. Wessman's evaluation of the property was probably 3 times too high. Naturally, as a businessman, Mr. Wessman would HATE to lose money on an investment ..... but that is today's reality. Yet, HIS number was apparently the one used in all negotiations. 11) From the time of the that presentation of an agreement, I've been dissatisfied with the lack of at least token reaavrhhennt of city monde at least SOMEwhere down the fine. H Mr. Wessman sells immediately upon completion and realizes a maim profit (and given that he is being "gifted" with 43 mill. off the top of a "100 mill. project", a major profit could well be realized), shouldn't same of that money come back to City coffers? Dr, H ALL of the stems are rented, shouldn't 1 % of the monthly fees come to the City? ANYthing? 12) As 1 understand it, no completion bond has been demanded. Does that mean that any potential default will result in City ownership of whatever is campletrd? Is the purchase price of the land under the parking lots deducted from the appraised value? is any money distributed from the escrow account deducted from the contracted value of the property? If for instance, S 11 m. Is handed over for the sbuudure, for the two pieces of land and for the pouring of streets, curbs, etc., does that mean that the "fair market value (that some have placed between $21 and 30 mill .... far below WD's quoted value) will be reduced by $I im?? And by whatever other monies is "given" to WD for bulldozing and prepping the property? H so, wouldn't that met that, in case of default, eminent domain on the whole properly would only cane to around S 1 D-20 million at the worst???? both will be "no, we MUST go to outside, trained sources".) If "no", doesn't that mean that a LOT of that locally collected sales tax money will be leaving the area upon distribution? c) What happens if, God forbid, Mr. Wessman who is not very young and has had some issues with health, should become incapacitated? Has Mr. Braun been given full authority to continue? Have the backers signed off on that? Will there be delays while pecking order is sorted out? d) At what point, ff at all, must Mr. Wessman share a Hsi of signed contracts for individual storefronts to make sure that then: WILL be income, WILL be sales taxes forthcoming? e) If, for any reason, the renovation of DFP completely STOPS, will the 1% charged to the public ALSO stop? The voters are being asked to add this extra tax for a specific purpose; should that purpose "disappear", shouldn't the tax disappear as well? (One answer I was given was "the people have the right to place an initiative on the ballot at any time". Knowing the time, effort and expense needed to do this, that seemed like a specious answer to ME!) f) What are the taxpayers getting for Orel money? The land urxler a parking structure, in need of repair, and STILL being paid for by the citizens. Repeated often these days is the statement: "oh, that's a misconception; we are NOT buying back the structure we already pay for". That's true, but that is also misleading. We still have about 10 years worth of payments on that bond issue (according to Mr. Ready at a PSNIC meeting sin months ago) and now we'll pay another percentage on I Imillion to get the land too! Parking will be free but the repairs on the structure will not. VERY good for WD; not quite as equitable for the voters of PS. g) One MUST ask the question why NOTHING has been done by WD over the past more-than-atiecads??? Six years ago, even FOUR years ago, when the economy was better, the argument that he has uses now (that "private development is impossible without public partnership") simply did not apply. Yet he continued to hold the public hostage over the DFP, using his woeful lack of visible efforts to either maintain the structures or to finance anything new as leverage to get what he wanted on other projects. And we are now asked to pay for that wasted decade .... and the bullying. h) According to the accounts thusfar, WD can't get any other financing until "the voters make up their minds in November". That is asking us to commit to something with no commensurate financial commitment on WD's part. He owns the land; he will say that is what he is bringing to the table. Bid that is no assurance that he is going to get ALL of the financing necessary to complete the project. I want to see HIS commitment before I vote. i) Given his track record, I was alarmed by City Council's decision to table: any discussion of eminent domain for three years. H the project isn't on schedule at the end of year one .... or even eighteen months.... It's highly unlikely that WD will meet the deadline. Shouldn't Plan B be under discussion TANG before a default occurs? 8) A problem (for me) exists with the surplus monies. In theory, the HALF of the collected money each year is to be used for: infrastructure, maintenance, returning city offices to a full week, police 8 safety, etc. Returning the PSPD, PSFD, Parks S Rec, Animal Shelter, etc. to a 5-day schedule would require most of that all by itself! Bringing back the jail? Also expensive. IS) BTW, mentioning the "two tittle parcels of land" for the museum expansion, will those be GIVEN to the museum, sold or exchanged for something? If "sold", has a price been set, will it be sold at the REAL assessed value or just a token amount? 14) From the outset, I have never agreed with the need for two new streets. One in particular serves no real purpose other than to give Wessman Development more square footage of street front stores. 15) Ws will pay for the parking which will be bee. Nice; everyone appreciates more parking! But the main benefactor again would be WD which would be offering buyers easier access to the DFP stores. Yet, the City continues to add to its own outgo for maintenance. 16) In every rendition WD has presented over the past four years, the Bank of America building was to be bulldozed. So, apparently, whether the City has any . , :. , : t or not. B of A will go. So why has he not do it now..... so that seasonal tourists will not be inconvenienced in, for example, March or April? And at his expense? 17)According to the agreement, there is no obligation to go on to Phase 11... which pretty much guarantees that the same situation with delays 6 demands will crop up in another decade. IS)Given the press this has gotten since the beginning of the year, the primary focus has ALWAYS been the DFP. Again, cynically, that makes the addition of "how to use the EXTRA money" seems like an afterthought mainly to avoid the necessity of a 2/3 vote. We all know the money was intended from the outset for this partnership; the help for our failing infrastructure therefore has the APPEARANCE of being an afterthought or just electoral propaganda. Mr. Wessman 6 Wessman Q : L .. : are in business. He knew the facts when he bought the Desert Fashion Plaza. He knew then and now what he was doing to surrounding businesses by 1) Not repairing the buildings 2) Insisting on short leases so that businesses would leave 3) Not actively looking (until recently) for new tenants. His disrespect for other business people and for the town of Palm Springs was destructive. Money, not responsibility, has always been the key. While I applaud his "deal" which will give us an architectural museum downtown, cynically, I find the timing of that agreement to be suspect. It is unconscionable to ask the public to willingly give in to these tactics particularly since several guarantees are not in place. One of the nails in the coffin for me was to find Mr. Keller's name as one of the "important" proponents of this Measure..... right after getting $100,000 from the City. Is he paying for his advocacy with HIS money or the taxpayers? THAT one doesn't pass the small test, I'm afraid. RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, IN SUPPORT OF MEASURE "J," A LOCAL REVENUE MEASURE, FOR THE NOVEMBER 8, 2011, GENERAL MUNICIPAL ELECTION. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS FINDS: A. Pursuant to Article XIIIC of the Constitution of the State of California, and Sections 200 and 201 of the Charter of the City of Palm Springs, the City Council ordered Measure "J" be submitted to the qualified electors of the City at the November 8, 2011, General Municipal Election, on whether to approve a local one percent (1%) Transactions, Sales, and Use Tax for a period of twenty-five (25) years. B. Commencing in FY 1992-93, the State of California has required local agencies, including cities, to remit a portion of their respective property tax revenues for deposit in an Education Revenue Augmentation Fund ("ERAF") maintained in each county to augment and subsidize the State's obligation to fund elementary and secondary schools in the state. This is a permanent shift of 17.5% of the City's general fund property tax revenues and amounted to $3.5 million in FY 2010-11. C. Additional shifts in property taxes to ERAF from cities and other local agencies were required for FY 2004-05 and FY 2005-06. D. These ERAF reallocations of property taxes from the City and the City of Palm Springs. Redevelopment Agency have cost City over $52 million dollars in general fund revenues and the Redevelopment Agency over $7.7 million dollars E. During the past three years, like all other cities in the Coachella Valley, and throughout the State of California, Palm Springs has seen significant decreases in annual revenues which challenge the ability of the City to continue to provide essential City programs and projects at the levels the community expects and deserves. F. The City has met this severe challenge by restructuring the City's organization and implementing cost -saving approaches, reduced the City's budget by more than $10 million annually, eliminated over 100 positions, imposed employee furloughs, reduced salaries for the City Council and City employees, eliminated nearly all capital replacement expenditures, and closed a fire station and the City Jail. G. The State of California has recently passed legislation that forced the City of Palm Springs Redevelopment Agency to pay the State approximately $3.9 million, as Sacramento legislators have again attempted to balance the State budget by taking local revenues to fund the State's constitutional mandates and obligations. H. Over the last 20 years, the State of California has systematically manipulated, altered, and realigned local government revenues, eroding the ability of the City and the Redevelopment Agency to fund and provide to our residents needed ITEM NO. �A Resolution No. Page 2 programs and services and has dramatically impaired the ability of the City and the Redevelopment Agency to fund and construct vital and necessary public improvements and projects. I. After extensive public discussion and community input, the City Council determined that a general tax, approved and ratified by the City's voters as an independent source of revenue that can not be taken by Sacramento, is the most prudent, fair, and appropriate method of providing revenues to meet the expectations and needs of the Palm Springs community. Measure "J" was unanimously placed on the ballot by the Palm Springs City Council to provide a source of local revenue for essential public projects and programs. J. Measure "J," which adds just one penny to each dollar spent in Palm Springs by both residents and visitors, is the fairest way to increase local revenue, and does not apply to food, groceries, prescription medications, admission charges to theaters, amusement parks, sporting events and golf courses. K. Measure "J" contains a sunset provision to automatically expire and includes fiscal accountability provisions such as annual independent financial audits, and such audits shall be public. L. The City Council has initiated a Measure "J" Oversight Commission to oversee and monitor all revenues and expenditures of Measure "J" funds and to make recommendations to the City Council. M. The City Council recognizes that the passage of Measure "J," a general tax measure, will result in additional general tax revenues that the City can use for any governmental use or purpose as allowed under law. The City Council also prides itself on its citizen engagement and responsiveness to the community's needs, and recognizes that new revenues sources such as Measure "J" should address the community's priorities, including the enhancement of neighborhood services and safety, revitalizing Downtown, and reinvesting in streets and parks, which all would be eligible programs for Measure "J" funding. N. Measure "J" is a locally enacted measure, so the revenues from Measure "J" will be under local control and Sacramento cannot raid any Measure "J" funds. O. Without Measure "J" and the revenue it would produce, the City will not have sufficient local and protected revenue to adequately fund high priority citizen driven projects such as the economic revitalization of Downtown, street maintenance and repair, and library and parks improvements. P. The time to act is now ... while construction and interest rates are low, and failure to maintain City facilities and infrastructures adds to the future costs of repair and replacements. m Resolution No. Page 3 Q. The City Council notes and concurs with the observations of the Desert Sun that Measure "J" "provides funding necessary to invest in the city's future, providing both infrastructure support for the residential population and the gentrification of the downtown area. This is wise investment spending... . Opportunity doesn't come readily and timing is key. Let's unlock the potential that this 1-cent sales tax will bring to the redevelopment of Palm Springs." THE CITY COUNCIL OF THE CITY OF PALM RESOLVES: SECTION 1. The City Council hereby strongly supports Measure "J," a local revenue measure, at the Palm Springs General Municipal Election on November 8, 2011. SECTION 2. The City Manager is authorized to disseminate this resolution and information through appropriate City communication devices and methods provided or maintained by the City Manager for the dissemination of information to the residents of the City. SECTION 3. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Resolution; and this Resolution shall take effect immediately upon adoption. PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY COUNCIL THIS 5T" DAY OF OCTOBER, 2011. STEPHEN P. POUGNET. MAYOR ATTEST: JAMES THOMPSON, CITY CLERK Resolution No. Page 4 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on October 5, 2011, by the following vote: AYES: NOES: ABSENT: ABSTAIN: JAMES THOMPSON, CITY CLERK City of Palm Springs, California a