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Home My WebLink About5/19/2004 - STAFF REPORTS (6) DATE: MAY 19, 2004 TO: CITY COUNCIL FROM: DIRECTOR OF COMMUNITY& ECONOMIC DEVELOPMENT FIRST AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE WITH SDC, LLC FOR DEVELOPMENT OF THE TAHQUITZ CREEK RESORT HOTEL AND TIMESHARES RECOMMENDATION: It is recommended that the City Council approve the First Amendment providing a one-year extension of the Exclusive Agreement to Negotiate with SDC, LLC for development of the Tahquitz Creek Resort Hotel and Timeshares. SUMMARY: 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 located on Golf Club Drive. Given that the City's subsequent ongoing negotiations with the Desert Water Agency relative to land needed for a portion of the project have yet to be finalized, the ability of the City and SDC, LLC to proceed beyond preliminary design concepts for the project have been limited. As a result, more affirmative steps toward negotiating the details of a Lease and Development Agreement have been limited as well. Nonetheless, SDC, LLC has continued its aggressive efforts toward securing a future hotel and timeshare operator for the eventual project although no firm commitments can be made prior to site control being accomplished. It is therefore necessary to extend the term of the exclusive negotiation period to allow for the Developer and City to continue discussions relative to the design, future operators and financial arrangements for the future project. BACKGROUND: The City of Palm Springs expanded the operation of its Legends Golf Course in 1995 through construction of the adjacent Tahquitz Creek Golf Resort Course. The new Tahquitz Creek Golf Course was designed by renowned golf course architect Ted Robinson and features modern golf course design amenities typically reserved by architects for private developments. Both the golf course and associated clubhouse operations have been managed on behalf of the City by the Arnold Palmer Golf Management Company (APGMC) since the opening of the Resort Course in 1995. In July 2000 the City undertook an informal "Request for Qualifications" process to identify developers interested in constructing and managing a resort hotel at the Tahquitz Creek Golf Resort. The City's objectives in the project were to develop a quality destination resort that would capitalize on the quality golf courses, the Palm Springs name and other amenities in the community; to increase hotel 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. Unfortunately, no responses were received from the development community upon conclusion of the RFQ process in August 2000. In December 2001, the City received correspondence from William E. Swank, Sr. representing SDC LLC expressing an interest in opening discussions with the City that could lead to the development of a resort complex at Tahquitz Creek. The projectwas envisioned as including both a hotel and timeshare component, building upon the developer's prior successful completion of public/private partnerships for three hotel projects in cooperation with the City of Palm Desert and the City of La Mirada. The Developer is now building a timeshare project at the Landmark Golf Resort in Indio. During calendar years 2002 and 2003, City staff met with the Developer on numerous occasions to further explore his proposed development concept and the potential merits of entering into an Exclusive Right to Negotiate Agreement for the proposed project. In early 2003 staff and an outside surveying consultant completed significant research to more specifically outline the potential site boundaries of the proposed project. During this time, the developer also began preliminary design discussions with an architectural team and worked to secure interest in the site from an established national hotel operator. To continue those efforts and provide the necessary "standing" with prospective hotel and timeshare operators, the City entered into a one-year Exclusive Agreement to Negotiate with SDC, LLC on June 4, 2003. The City's subsequent ongoing negotiations with the Desert Water Agency relative to land needed for a portion of the project have yet to be finalized. As a result, the ability of the City and SDC, LLC to proceed beyond preliminary design concepts has been limited. More affirmative steps toward negotiating the details of a Lease and Development Agreement have been limited as well. Nonetheless, SDC, LLC has continued its aggressive efforts toward securing a future hotel and timeshare operator for the eventual project although no firm commitments can be made prior to site control being accomplished. Even so, a major national brand has continued to express interest in the site. It is therefore necessary to extend the term of the exclusive negotiation period to allow for the Developer and City to continue discussions relative to the design, future operators and financial arrangements for the future project. The project is currently envisioned as including the development of a hotel, timeshare units, modernization and/or replacement of the current club house; relocation of the maintenance facility, bike path and driving range; and completion of other improvements to the golf course as necessitated by the project. More specific project details and the financial arrangements for the City leasing the site to the Developer and the Developer's construction of the various project components would be subject to further negotiations during the extended exclusive negotiation period. 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. 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 Lease and Development Agreement to be structured consistent with that management agreement. All other approval processes normally required of a project of this type would also be required (i.e. environmental review, Planning Commission approval, etc.). The only provision of the Original Agreement that is modified through this Amendment is extending the period of time for negotiations YA01ft__ from one year to two years to gain the additional time needed to put together the deal. Staff and the Developer hope that the issue with DWA will be resolved. zvo&t JOH J S. R YMO Dire tof Comm ity& Economic Development APPROVED. - m City Manager ATTACHMENTS: 1. First Amendment to Exclusive Agreement to Negotiate 2. Minute Order FIRST AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE#4713 WITH SDC, LLC FOR THE DEVELOPMENT OF THE TAHQUITZ CREEK RESORT HOTEL AND TIMESHARES THIS FIRST AMENDMENT TO EXCLUSIVE AGREEMENT TO NEGOTIATE #4713 ("First Amendment") is entered into this _ day of 2004 (the "Effective Date") by and between the CITY OF PALM SPRINGS ("City') and SDC, LLC ("Developer"). RECITALS The parties enter into this First 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 #4713 ("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. 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 as hotel and timeshare facilities. C. 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 twelve (12) months and amended to read as follows: "The City and Developer agree that the period of negotiation shall be twenty-four (24) months extending from June 4, 2003, the date the Original Agreement was signed by the City, until June 3, 2005. The City agrees 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 WIVNf'S8 HUR2pF Ure City and bovelopor have excautod Ihis FIrst amendment as of the riche fill wotlan Al,ave. "OffY" Il1'1''kx,ST; CITY OF PALM SPRINGS, CALIFORNIA, B munlrJp61 corporallOn Illy, AP ) ROVE.iD AS TO "QRiv1: Mailing Addreesa, City or Patin springs Iiy 32W Tahquitx Canyon Wily P®llri springs. CA 92262 A*.- Comrnunity&lioonomic Cmvolopmortt bif"W "DEVELOPER' SbC, I.LC 0Y. larlmd Sigrtaw Prot Name: Nnt True. Aga18 LYNN MANNING Commloalm+a 1314491 NuUry Fwbllc-CaArornla Rhlmalda Count' MyConm,Vapoo Jul23.2009 MINUTE ORDER NO. APPROVAL OF FIRST AMENDMENT PROVIDING A ONE-YEAR EXTENSION TO THE EXISTING EXCLUSIVE AGREEMENT TO NEGOTIATE #4713 WITH SDC, LLC FOR THE DEVELOPMENT OF THE TAHQUITZ CREEK RESORT HOTEL AND TIMESHARES I HEREBY CERTIFY that this Minute Order, approving the First Amendment providing a one-year extension to the existing Exclusive Agreement to Negotiate with SDC, LLC for the development of the Tahquitz Creek Resort Hotel and Timeshares was approved by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 1g`hday of May 2004. PATRICIA A. SANDERS City Clerk