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HomeMy WebLinkAboutEstablish - Unite Palm Desert Economic Relief Hospitality Program and GuidelinesSTAFF REPORT CITY OF PALM DESERT ECONOMIC DEVELOPMENT DEPARTMENT MEETING DATE: September 10, 2020 PREPARED BY: Wayne Olson, Senior Development Analyst Thomas Soule, Tourism and Marketing Manager REQUEST: Authorize the establishment of the UNITE Palm Desert Economic Relief - Hospitality Program and corresponding program guidelines Recommendation By Minute Motion: 1) Authorize the establishment of the UNITE Palm Desert Economic Relief - Hospitality Program (the "Program") and corresponding program guidelines; 2) Approve as to form the Unite Palm Desert Hospitality Program Reimbursement Agreement; 3) Authorize the City Manager to execute any and all documents required to implement the Program; 4) Authorize the City Attorney to make non -substantive changes to the Program guidelines and reimbursement agreement. Funds in the amount of $900,000 were appropriated from the Economic Development Reserve Fund to fund this Program as repurposed. Executive Summary On May 14, 2020, the City Council approved the Unite Palm Desert Economic Relief Program, allocating $2M in five Focus Areas to support community economic relief as a result of the COVID-19 pandemic. Focus Area 3, the Hospitality Program ("the Program") includes $900,000 of funding to assist local hotels in the form described in the attached guidelines. The proposed Program goal is to enable the City to provide support to the Palm Desert hospitality sector in response to COVID-19 impacts and to assist with economic recovery. To do so, staff proposes the Program, which entails the City offering a "buy WAStaff Reports - Shared\Staff Reports 09-10-2020\4 - City Clerk 9-10-20\UPO Hospitality Program\SR 9 10 21 Hospitality Program-Final.doc Staff Report UNITE Palm Desert — Focus Area 3: Hospitality Program September 10, 2020 Page 2 of 3 two nights, get a third free" reimbursement incentive. The intent of the program is to generate tourism, incent additional hotel stays across the City, as well as to generate additional TOT and sales tax to the City generated by increased spending in our local economy. Encouraging visitors to not just stay overnight in Palm Desert, but to stay for an extra night courtesy of the City, supports every Palm Desert business by providing them with potential customers and the opportunity to increase their revenue. Hotels will be reimbursed up to a not -to -exceed amount that will be assigned to individual hotels upon participation (see attached Hotel Funding Allocation spreadsheet). In order to be reimbursed, hotels must meet the accompanying Program guidelines. Additionally, participating hotels are required to submit documentation that demonstrates that the hotel offered a third -night stay for free to a guest, along with two full -priced (rack rate) room night stays. The hotel must pay all Transient Occupancy Taxes (TOT) for all three -night stays at the rack rate for each night. Additional details, requirements, and prohibitions are provided in the attached Program guidelines. Program Guidelines The attached Program guidelines make up the rules, responsibilities, and processes for the Hospitality Program for City Council's consideration. To summarize, a participating hotel will sign the attached funding agreement, which enrolls them in the reimbursement program. The program is intended to cover all hotels within Palm Desert city limits; however, participation is voluntary. Once enrolled, hotels may submit the required paperwork demonstrating that the hotel offered a free third night stay in conjunction with two previously consecutive room nights for an individual guest. Certain limitations apply, such as a guest may not receive more than one free night per visit, regardless of how many nightly stays are accrued. However, a guest may receive a free night on separate and distinct future visits. Short term rentals (STRs) are not allowed to participate in the program. During Phase I of the program (September 1, 2020 — January 2, 2021), participating hotels will be allotted a not -to -exceed amount based on a calculation of property rooms to the total universe of available rooms within Palm Desert (see attached Hotel Funding Allocation spreadsheet). Fractional ownership or timeshare properties are allotted half of their reported rooms. Any unused dollars from non -participating hotels will be allocated to Phase II of the program. Phase II (January 3, 2021 — June 30, 2021) of the program will pool all remaining unused dollars from participating and non -participating hotels. Starting January 3, 2021, all requests for third night reimbursements will be on a first -come -first -served basis until Program funds are depleted. WAStaff Reports - Shared\Staff Reports 09-10-2020\4 - City Clerk 9-10-20\UPD Hospitality Program\SR 9 10 21 Hospitality Program-Final.doc Staff Report UNITE Palm Desert — Focus Area 3: Hospitality Program September 10, 2020 Page 3 of 3 Marketinq Each participating hotel will be free to promote itself as part of this program, but the City will also support the program with the full force on its tourism media plan, which was approved by City Council on August 27, 2020. This media plan seeks to reach prospective visitors in Los Angeles, Orange County, and San Diego with the third - night -free message, encouraging them to discover Palm Desert as an ideal desert getaway destination. Not only is this program an incentive to choose Palm Desert over other competing destinations, but it also provides an opportunity for word of mouth that will help build Palm Desert's long-term brand as a safe, welcoming option for a quick weekend trip. Fiscal Impact On May 14, 2020, the Council authorized repurposing $2M from the Palm Desert Incentive Program to fund the UNITE Palm Desert Economic Recovery program. $1 M of the $2M has been allocated to the emergency loan program. $900,000 of the $2M was earmarked for the Hospitality Program. Another $50,000 was directed to Priority One CV, for CSU expansion efforts. The remaining $50,000 is earmarked for a community partners program to be introduced at a future Council meeting. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW Ma4.1i,w Al vv re�z Poo& N/A Robert W. Martin Alvarez Janet M. Moore Director of Director of Finance Hargreaves Economic City Attorney Development City Manager Lauri Aylaian: Attachment: Hospitality Program Guidelines Hotel Reimbursement Agreement Hotel Funding Allocation Spreadsheet ASSISTANT CITY MANAGER N/A Andy Firestine Assistant City Manager W.\Staff Reports - Shared\Staff Reports 09-10-2020\4 - City Clerk 9-10-20\UPD Hospitality Program\SR 9 10 21 Hospitality Program-Final.doc City of Palm Desert Unite Palm Desert Economic Recovery Program (UPDERP) Focus Area 3 — Hospitality Reimbursement Program Guidelines 1. Background On May 14, 2020, the City Council approved the Unite Palm Desert Economic Relief Program (UPDERP), allocating $2M in five Focus Areas to support community economic relief as a result of the impacts of the COVID-19 pandemic. Focus Area 3, the Hospitality Reimbursement Program includes $900,000 of funding to local Hotels in the form described in these guidelines (the "Program"). On September 10, 2020, the Program was authorized so that the City can provide support to Palm Desert Hotels in response to COVID impacts and to assist with economic recovery. To do so, the City is offering a "buy two nights, get a third free" incentive. The intent of the program is to generate tourism, incent additional Hotel nights across the City, as well as to generate additional TOT and sales tax to the City generated by increased spending in our local economy. Hotels will be reimbursed up to a not -to -exceed amount that will be assigned to individual Hotels upon participation. In order to be reimbursed, Hotels must meet the accompanying Program guidelines. Additionally, participating Hotels are required to submit documentation that demonstrates that the Hotel offered a third night stay for free to a guest, along with two full -priced (rack rate) room night stays. The Hotel must pay all Transient Occupancy Taxes (TOT) for all three -night stays at the rack rate for each night. Additional details, requirements, and prohibitions are provided herein. These Program guidelines are intended to ensure programmatic and fiscal consistency as well as to clarify the roles and responsibilities of the participants. The City reserves the right to revise these guidelines. 2. Eligible Hotel Properties Hotel Property ("Hotel') shall meet all of the qualifying criteria, as follows: 2.1. Location Hotel must be located within the jurisdictional limits of Palm Desert. The City is responsible for qualifying the location. W:\Staff Reports - Shared\Staff Reports 09-10-2020\4 - City Clerk 9-10-20\UPD Hospitality Program\UPD Hospitality Program Guidelines - FINAL - 9 10 20.docx UPDERP Focus Area 3 - Hospitality Reimbursement Program Guidelines September 10, 2020 Page 2 of 7 2.2. Type Hotels must be operating as a licensed Hotel facility and may include Hotels that operate as partial ownership (sometimes referred to as "timeshare"). Short term rentals (STR) are not allowed to participate in the program. The City is solely responsible for verifying property types that are eligible to be invited to participate. 2.3. Hotel Contact Information Hotel must provide: • the address of the physical property of the Hotel, • the contact information and address of the management company of the Hotel (if different from the physical property); • the contact information of the owner of the Hotel (if different from the management company); • current operating license; • insurance information; • and, any other appropriate staff contact information for the Hotel. 2.4. Hotel Riaht to Participate Participation is optional. Hotels meeting the qualifications of the Program guidelines may participate but are not required to participate. However, if a Hotel chooses not to participate as of the program start date (see 4.1. below) the Hotel will not qualify for any reimbursement in either Phase I or Phase II of the Program (i.e., no late entry). Funding allocated to a non -participating Hotel will be returned to a pool for use during Phase II of the program (see 3.3 below). Participation in Phase I is required for participation in Phase II. 3. Eligible Reimbursements 3.1. Conditions of Reimbursement A participating Hotel may receive reimbursement of third room night stays in the amount of $99 per eligible third room night stay, up to an assigned, aggregated not -to -exceed amount (see 3.4 to review the not -to -exceed formula structure) which meet the following criteria: • When the third of three -night stays is free to the guest after two previous night stays are paid at full price; and, • When the previous two night stays are immediately prior to and consecutive with, the third -night stay; and, UPDERP Focus Area 3 - Hospitality Reimbursement Program Guidelines September 10, 2020 Page 3 of 7 o Third -night stays may not be bundled; i.e., if an occupant rents and pays for four nights, the program will not reimburse two free nights. No more than one room night stay may be reimbursed per guest/per discrete visit, regardless of the number of full -price paid nights beyond the two nights described herein ■ Examples: • A guest stays for two consecutive nights, the third consecutive night is free. • A guest stays for four consecutive nights, only one night is free. • A guest stays for two consecutive nights, the third consecutive night is free; then the guest returns for a separate, discrete and serial two -night stay, the third serial night is free. • A guest stays for 10 serial nights, only one night is offered free. When all taxes are paid for all room nights, including the "free" (third) night stays, calculated based upon the full room rate that would be charged if not for a third free night, as provided for in City Ordinance, and based on the City's current TOT, as defined in Section 3.28.030 of the Palm Desert Municipal Code as of the date of the execution of the program agreements; See restrictions, 3.2 for additional prohibitions. 3.2. Restrictions and Prohibitions to Reimbursement The following restrictions apply: • No reimbursement will occur for third -night stays prior to the beginning of Phase I (see 3.3 below); • Any third night stays after the termination of Phase I (see 3.3 below) will be reimbursed on a first -come, first -served basis until Program funds are depleted; • Program funds are made available by action of the City Council, whose approval is subject to change without notice; • Third -night stays may not be bundled; i.e., if an occupant rents and pays for four nights, the program will not reimburse two free nights. No more than one room night stay may be reimbursed per guest/per discrete visit, regardless of the number of full -price paid nights beyond the two nights described herein; • Short term rentals are prohibited from participating in the program and will not be reimbursed under any circumstances; UPDERP Focus Area 3 - Hospitality Reimbursement Program Guidelines September 10, 2020 Page 4 of 7 A fractional ownership property's (i.e., "timeshares") not -to -exceed amount will be calculated at 50% of their room total, see 3.4 below; Rooms that are not charged TOT will not be reimbursed; No reimbursement will exceed $99, regardless of the amount charged for the third night. (Resort and parking fees may be charged for third -night stay, but are not subject to additional reimbursement from the City.) 3.3. Term 3.3.1. "Phase I" Third -night stay reimbursements from September 11, 2020 through January 1, 2021, will be considered for eligible reimbursement, up to the assigned not -to - exceed amount. Remaining Program funds that are not used by participating or non -participating Hotels will be pooled for use in Phase II. 3.3.2. "Phase II" Third night stay reimbursements starting from January 2, 2021, will be considered for eligible reimbursement on a first -come -first -served basis and reimbursed until Program funds are depleted. Hotels that do not participate in Phase I, are ineligible to participate in Phase ll. 3.4. Reimbursement Calculations Reimbursements will be calculated as follows: • For reimbursement calculation, the total amount of 3rd free room night stays will be multiplied by $99. o For demonstration purposes, a Hotel that documents 200, 3rd free room night stays, that Hotel will receive $19,800 for the reimbursement period, (i.e., 200 * $99 = $19,800). • Hotels will be designated a not -to -exceed amount using the following calculation: o For demonstration purposes, (total facility rooms/total City universe of eligible rooms)*900,000. A Hotel with 152 rooms: (152/5254)-$900,000 = $26,037 or 263 eligible third room night stays for the entirety of Phase I. Timeshares get 50% of their eligible room nights. o For demonstration purposes, a timeshare facility with 300 rooms will receive a not -to -exceed allocation of 150 rooms: (150/5254)-$900,000 = $25.694.71 or 257 third room night stays for the entirety of Phase I. UPDERP Focus Area 3 - Hospitality Reimbursement Program Guidelines September 10, 2020 Page 5 of 7 • Once the not -to -exceed amount is reached for an individual facility, that Hotel's participation in the program terminates and the participating Hotel is ineligible for any future reimbursements under this program. 4. Roles and Responsibilities The following roles and responsibilities are presented chronologically and concurrently. 4.1. Submittal of Documentation ("Opt -in Period") Application to the program is in the form of an executed funding agreement to be supplied by the City, to the Hotel, upon request. The Hotel will return an executed copy of a funding agreement, along with any required documentation in support of the funding agreement (i.e., insurance, see 2.3 above, and 4.5, below) to City Hall prior to October 30, 2020 (the "Opt -in Period"). The funding agreement must be executed in duplicate (two copies), with original signatures ("wet" signatures), by an authorized member of the organization (including owner if required), and each signature must be separately notarized. 4.2. Fundina Aareement Review and Approval The City will subsequently review and process all valid, executed funding agreements from participating Hotels. City execution of the funding agreement will occur within 21 days for all complete and valid funding agreements. The City will return an original funding agreement with original signatures to the Hotel. Participation in the Program and any reimbursement (4.3, below) is contingent upon review, approval, and full execution by all parties to the agreement. Once approved, the Hotel may begin the Reimbursement Process outlined below. 4.3. Reimbursement Process 4.3.1. The Hotel will deliver all required and necessary reimbursement documentation (the "Reimbursement Request", see 4.3.2, below), to the City, not more frequently than monthly. The City will review and approve each participating Hotel's set of documentation accordingly. This step serves as the final review by the City to ensure that the appropriate support documentation programmatically qualifies the Hotel for reimbursement. A checklist of documentation to be included in the Reimbursement Request is provided in 4.3.2., below. Any incomplete Reimbursement Request will be returned by City staff and any clarification required for completion will be submitted to the City for review at that time. UPDERP Focus Area 3 - Hospitality Reimbursement Program Guidelines September 10, 2020 Page 6 of 7 4.3.2. Reimbursement Reauest The participating Hotel will submit an invoice to the City for the amount of third - night rooms as described herein. The City will issue payments in the approved amounts within 30 days. Reimbursement Requests shall include: 4.3.2.i. Documentation and proof of third -night stays on a monthly basis, in both detail and aggregate, such that it can be easily determined that an authentic third -night was offered for free, following the full price payment for two nights immediately prior to, consecutive with the third night. 4.3.2.ii. Documentation of payment of Transient Occupancy Tax as based on the City's current TOT, as defined in Section 3.28.030 of the Palm Desert Municipal Code as of the date of the execution of the program agreements; 4.3.2.iii. An invoice that aggregates and matches exactly the monthly reimbursement accounting provided in 4.3.2.i., above and that includes the remaining balance of the Hotel's not -to -exceed amount, before and after payment of the invoice. Following the termination of Phase I, Phase II documentation delivered via US Mail to City Hall will be time -stamped according to the postal mark. Invoices will be considered on a first -come -first -served basis and must include: 4.3.3. A Phase II Reimbursement Request in the form described above that includes proof of third -night stays on a monthly basis, in both detail and aggregate, such that it can be easily determined that an authentic third -night was offered for free, following the full price payment of two nights immediately prior to, serial and continuous with the third night. 4.3.4. Documentation and proof of payment of TOT tax as provided for in City Ordinance, and based on the City's current TOT, as defined in Section 3.28.030 of the Palm Desert Municipal Code as of the date of the execution of the program agreements; 4.3.4.i Invoice which aggregates and matches exactly the monthly reimbursement accounting provided in 4.3.2.iii. 4.3.4.i.a. No invoice will be paid once funds are Program funds are depleted. The City reserves the right to request additional supporting documentation and/or deny any Reimbursement Request lacking support documentation. UPDERP Focus Area 3 - Hospitality Reimbursement Program Guidelines September 10, 2020 Page 7 of 7 Payment will be made within approximately 30 days of City approval of a complete Reimbursement Request. 4.4. Marketina Participating Hotels are responsible for all marketing, reserving, booking, and accounting for their rooms and costs associated with the same. The City may also provide a Citywide, coordinated marketing campaign. 4.5. Insurance Hotels will be required to provide evidence of insurance per terms of the funding agreement. No reimbursement shall be made until such time as insurance documentation is provided to the City. 5. Other These Program guidelines incorporate all federal, state, and local regulations and requirements related to operation of a Hotel. All Hotels must be in full compliance with all regulations, codes, and laws. Hotels must be in good standing with the City, including being current in remittance of Transient Occupancy Tax, and not having any outstanding municipal code violations. The City reserves the ultimate and final right to evaluate the documentation and may withhold a portion or all of the payments until necessary supporting documentation is provided. Program funds are based on eligibility and are subject to change without notice. City of Palm Desert Unite Palm Desert Economic Relief Program (UPDE Hospitality Reimbursement Program Agreement This Hospitality Reimbursement Program Agreement ("Agreement") is made by and between the City of Palm Desert ("City") and the hotel property owner ("Hotel Property Owner") on behalf of the hotel property identified and acknowledged in this Agreement ("Hotel Property"). Recitals Whereas, the Palm Desert City Council approved Hospitality Reimbursement Program Guidelines, as may be amended from time to time, on 2020, including program guidelines incorporated herein ("Program"); and Whereas, Hotel Property Owner wishes to participate in the Program for the Hotel Property Therefore, Hotel Property Owner agrees under the penalty of perjury to the following: 1. Hotel Property Owner confirms that all information provided in Hotel Contact Information (Exhibit A) is complete and accurate. 2. Hotel Property Owner owns the Hotel Property identified in Exhibit A. 3. Hotel Property identified in Exhibit A is located within the jurisdictional limits of the City. 4. Hotel Property Owner agrees to provide the support documentation identified in the Program Guidelines for reimbursement, as well as any other information related to the Program reasonably requested by the City. 5. Agreement may not be amended or assigned by either party without the prior written consent of the other party. 6. Agreement shall inure to the benefit of and be binding upon successors and assigns of the parties. 7. Agreement shall be deemed a contract made under the laws of the State of California and for all purposes shall be governed by and construed in accordance with laws of the State of California. Hotel Property Agreement Page 2 of 4 8. City makes no representations as to the tax implications of the Program. The City is unable to provide legal or tax advice to Hotel Property Owner and encourages Hotel Property Owner to seek appropriate professional advice on the federal and state tax implications of any funds received from the City under the Program. 9. This Agreement constitutes the entire Agreement between the City and Hotel Property Owner under this Agreement, and it supersedes all prior or contemporaneous communications and proposals, whether electronic, oral or written between City and Hotel Property Owner with respect to this Agreement. 10. To the fullest extent permitted by law, Hotel Property Owner shall defend, indemnify and hold the City, its officials, officers, employees, volunteers, and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, violations of State law, in any manner arising out of, pertaining to, or incident to any acts, errors or omissions, or willful misconduct of Hotel Property Owner, its officials, officers, employees, sub -consultants or agents in connection with the performance of Hotel Property Owner, the Program or this Agreement, including without limitation the payment of all expert witness fees, attorney's fees and other related costs and expenses except such loss or damage caused by the sole negligence or willful misconduct of the City. 11. All recitals are incorporated herein. By signature of the Agreement, Hotel Property Owner hereby agrees to the terms and conditions herein and of the Program and acknowledges that submission of this information does not guarantee reimbursements for its Hotel Property. Reimbursement Not To Exceed Phase I Hotel Property Address: Hotel Property Name (if applicable): Hotel Property Owner Name: Hotel Property Owner Signature: Date: Hotel Property Agreement Page 3 of 4 Exhibit A Hotel Property Contact Information Hotel Property Owner must provide: • The address of the physical property of the hotel, • The contact information and address of the management company of the hotel (if different from the physical property); • The contact information of the owner of the hotel (if different from the management company); • Current City business license; • Insurance information from Section 5.5 of the Program Guidelines; • A completed W9; and • Any other appropriate staff contact information of the hotel. Hotel Property Agreement Page 4 of 4 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of On before me, Date personally appeared Here Insert Name and Title of the Officer Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature Place Notary Seal Above Signature of Notary Public OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. 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