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Home My WebLink About5/18/2005 - STAFF REPORTS (17) CITY COUNCIL MAY 18, 2005 CONSENT CALENDAR SUBJECT: SECOND AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE WITH SDC, LLC FOR DEVELOPMENT OF THE TAHQUITZ CREEK RESORT HOTEL FROM: David H. Ready, City Manager BY: Community & Economic Development Department SUMMARY: The City Council will consider approving a Second Amendment providing a six- month extension of the Exclusive Agreement to Negotiate with SDC, LLC for development of the Tahquitz Creek Resort Hotel to be located at the Tahquitz Creek Golf Course on Golf Club Drive. RECOMMENDATION; Adopt Minute Order No. , approving Amendment No. 2 to Agreement No. A4713 with SDC, LLC providing a six-month extension of the Exclusive Agreement to Negotiate for the development of the Tahquitz Creek Resort Hotel. STAFF ANALYSIS: On June 4, 2003 the City entered into a one-year Exclusive Agreement to Negotiate with SDC, LLC for development of the Tahquitz Creek Resort Hotel and Timeshares to be located at the Tahquitz Creek Golf Course on Golf Club Drive. As originally envisioned, the project was to include both timeshare units and a hotel. Given that the City's subsequent ongoing discussions with the Desert Water Agency during the initial negotiation period were inconclusive relative to land needed for a portion of the timeshares portion of the project, the ability of the City and SDC, LLC to proceed beyond preliminary design concepts for the project were limited. Nonetheless, SDC, LLC continued its aggressive efforts toward securing a future hotel and timeshare operator for the eventual project although no firm commitments could be made prior to site control being accomplished. As a result, in May 2004, the one-year term of the exclusive negotiation period was extended an additional year to allow for the Developer and City to continue discussions relative to the design, future operators and financial arrangements for the project. During this extended period of negotiations, as a result of continued site control issues, the decision was made to eliminate the timeshare portion of the project and to limit the discussions to the design and construction of the new hotel, relocation of current maintenance facilities and the construction of a new clubhouse facility. The City's objectives in the project continued to include the development of a quality hotel that would capitalize on the Palm Springs name, the quality golf courses and other amenities in the community; to increase hotel d ITEM MO. room nights in the City, thereby increasing Transient Occupancy Tax (TOT) revenues; and to maximize the usage of its 36 holes of City-owned golf. The developer continued preliminary design discussions with an architectural team and worked to secure interest in the site from an established national hotel operator. The current Exclusive Agreement to Negotiate acknowledges the current long- term management agreement and lease with Arnold Palmer Golf Management Company relating to the daily management of Tahquitz Creek Golf Course and provides for the future Lease and Development Agreement to be structured consistent with that management agreement. The Developer's preliminary financial projections for construction and operation of the hotel have been reviewed by the City's financial consultant on the project, Keyser Marston, but the ability of the City and Developer to finalize design of the clubhouse and maintenance facilities has been delayed by a recent application by Ironwood Golf Group to assume Palmer's management responsibilities at the course. Appropriate input by the eventual operator of the course needs to be considered in the design and amenities of the golf course facilities, which in turn, impact the economics of the Lease and Development Agreement. The only provision of the Agreement that is modified through this Second Amendment is extending the period of time for negotiations by an additional six months. Upon completion of exclusive negotiations, the specific terms of the deal would be included in the Lease and Development Agreement for subsequent consideration and approval by the City Council. All other approval processes normally required of a project of this type would also be required (i.e. environmental review, Planning Commission approval, etc.). FISCAL IMPACT: No fiscal impact. 9munity . Ra d, Director David H. Ready, City.Ma�ger onomic Development c� Attachments: 1, Minute Order 2. Second Amendment to Exclusive Agreement to Negotiate SECOND AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE#A4713 WITH SDC, LLC FOR THE DEVELOPMENT OF THE TAHQUITZ CREEK RESORT HOTEL THIS SECOND AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE #A4713 ("Second Amendment") is entered into this _ day of , 2005 (the "Effective Date") by and between the CITY OF PALM SPRINGS ("City") and SDC, LLC ("Developer'). RECITALS The parties enter into this Second Amendment on the basis of the following facts, understandings, and intentions: A. On June 4, 2003, City and Developer entered into that certain Exclusive Agreement to Negotiate #A4713 ("Original Agreement") pursuant to which Developer and City agreed to negotiate the business terms and design details of hotel and timeshare facilities which will maximize the value from and of the Tahquitz Creek Golf Course ("Tahquitz Creek GC") and cause the modernization of the Tahquitz Creek GC clubhouse ("Project")within a portion of the existing Tahquitz Creek GC and the adjacent Whitewater Wash. B. On May 19, 2004, City and Developer extended the Period of Exclusive Negotiation under the Original Agreement for one (1) year until June 3, 2005. C. City and Developer desire, for the period set forth herein, to continue negotiating diligently and in good faith to prepare a Lease and Development Agreement ("LDA') whereby the Developer would develop the Project's hotel and clubhouse facilities. D. City and Developer desire to amend the terms of the Original Agreement as more particularly described herein. NOW, THEREFORE, the recitals contained above are incorporated herein by reference and the Original Agreement is hereby amended as follows: 1. Section 2.A. "Period of Exclusive Negotiation" is hereby extended by an additional six(6) months and amended to read as follows: "The City and Developer agree that the period of negotiation shall be thirty (30) months extending from June 4, 2003, the date the Original Agreement was signed by the City, until December 3, 2005. The City and Developer agree that, for such period, the City will not enter into any agreement with any other entity for the development of the Site nor shall Developer pursue a similar project within three miles of the Project site." 2. Full Force and Effect. Except as expressly stated herein, all other terms of the Original Agreement shall remain in full force and effect. IN WITNESS HEREOF the City and Developer have executed this Second Amendment as of the date first written above. "CITY" ATTEST: CITY OF PALM SPRINGS, CALIFORNIA, a municipal corporation By: By: City Clerk City Manager AP P 6Vr rAS TO F Mailing Address: 7 V �/� City of Palm Springs �C(t'y Attorney 3200 Tahquitz Canyon Way Palm Springs, CA 92262 Attn: Community & Economic Development Director "DEVELOPE " SDC, LLC By;, /�j,� 1 r/(�7dtarized Si ature) rr' Print Name: ot- ip �. Print Title: , ��{ CALIFORNIA ...IC ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA COUNTY OF On before me,, ,"DATE NAME,TITLE OF bFFICER E.G. JANE NOTARY PUBLIC" personally appeared, R_, aark personally known tome(or proved tome rr thu basis of satiolcw1u,y evidcnoG)to be the person(s+ whose name(eris/afe subscribed to the within instrument and acknowledged to me that he/GW they executed the same in his/her-/their authorized capacityklee3, and that by his/ho0hoir signatureWon the instrument the person.W,orthe entity upon behalf of which the personW acted, executed the instrument. WITNESS my hand and official sea[. ARDIS LYNN MANNING Commission#1314691 Notary Public-California Riverside County ras��'1 23,2005 s�.� (SEAL) mycomm Evi N�OTJAV;iLI('31IGNATURE Pam OPTIONAL INFORMATION u,`'i `; TITLE OR TYPE OF DOCUMENT DATE OF DOCUMENT NUMBER OF PAGES SIGNER(S)OTHER THAN NAMED ABOVE MINUTE ORDER NO. APPROVAL OF AMENDMENT NO. 2 TO AGREEMENT NO. A4713 WITH SDC, LLC, PROVIDING A SIX-MONTH EXTENSION OF THE EXCLUSIVE AGREEMENT TO NEGOTIATE FOR THE DEVELOPMENT OF THE TAHQUITZ CREEK RESORT HOTEL I HEREBY CERTIFY that this Minute Order approving Amendment No. 2 to Agreement No. A4713 with SDC, LLC providing a six-month extension of the Exclusive Agreement to Negotiate for the development of the Tahquitz Creek Resort Hotel was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 18th day of May 2005. James Thompson, City Clerk