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HomeMy WebLinkAbout1993-12-20IN:MUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING MONDAY, DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I. CALL TO ORDER Mayor Wilson convened the meeting at 3:00 p.m. II. PLEDGE OF ALLEGIANCE - Councilmember Jean M. Benson III. INVOCATION - Councilman Richard S. Kelly IV. ROLL CALL Present: Councilmember Jean M. Benson Mayor Pro-Tempore Buford A. Crites Councilman Richard S. Kelly Councilman Walter H. Snyder Mayor S. Roy Wilson Also Present., Bruce A. Altman, City Manager David J. Erwin, City Attorney Sheila R. Gilligan, City Clerk Carlos L. Ortega, Director of Redevelopment Agency/A.C.M. Ramon A. Diaz, Director of Community Development/A.C.M. Richard J. Folkers, Director of Public Works/A.C.M. Paul W. Shillcock, Director of Economic Development/A.C.M. Paul Gibson, Director of Finance MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 70 * * * * * * * * V. CONSENT CALENDAR A. MINUTES of the Regular City Council Meetings of November 25 and December 9, 1993. Rec: Approve as presented. B. RESOLUTION NO. 93-109 - A Resolution of the City Council of the City of Palm Desert, California, Authorizing the Emergency Services Coordinator to Act as the City's Agent for the Hazard Mitigation Program for the 1993 Storms. Rec: Waive further reading and adopt. Upon motion by Kelly, second by Snyder, the Consent Calendar was approved by unanimous vote of the City Council. VI. ORAL COMMUNICATIONS - A None VII. RESOLUTIONS None VIII. ORDINANCES For Introduction: None For Adoption: A. ORDINANCE NO. 732 - AN ORDINANCE OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTION 10.48.240 TO CHAPTER 10.48 OF THE PALM DESERT MUNICIPAL CODE REQUIRING HANDICAP ACCESSIBLE PARKING. Mr. Altman reported that there had been no changes to the ordinance since its first reading, and staff recommended adoption. Mayor Wilson introduced Mr. Jim Collins of State Office of. 2 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Mr. Collins addressed the City Council in support of the ordinance before it. He said it was lacking in some areas but those areas could be addressed in the future. Councilman Crites moved to waive further reading and adopt Ordinance No. 733 with direction to staff to begin working with Mr. Collins on the areas he felt could be improved in the future. Councilman Kelly seconded the motion, and it carried by unanimous vote. B. ORDINANCE NO. 734 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADOPTING BY REFERENCE RIVERSIDE COUNTY ORDINANCE NO. 630.3 AMENDING RIVERSIDE COUNTY ORDINANCE NO. 630 REGULATING THE KEEPING AND CONTROL OF DOGS AND CATS AND PROVIDING FOR THE CONTROL AND SUPPRESSION OF RABIES. Mr. Altman reported that there had been no changes to the ordinance since it was introduced; he recommended adoption. Upon motion by Snyder, second by Benson, Ordinance No. 734 was adopted by unanimous vote of the City Council. IX. CONSENT ITEMS HELD OVER None X. NEW BUSINESS None XI. CONTINUED BUSINESS A. REOUEST FOR APPROVAL OF AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 1992-1993 FOR THE CITY OF PALM DESERT (Continued from the Meeting of December 9, 1993). Upon motion by Kelly and second by Benson, the statements were received and filed by unanimous vote of the City Council. B. PROGRESS REPORT - PALM DESERT CUP SENIOR TENNIS TOURNAMENT (Continued from the Meeting of December 9, 1993). Mr. Shillcock reviewed the staff report and recommendation. He noted that the Promotion Committee had received a report and had voted unanimously to support the staff recommendation. 3 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilmember Benson moved to approve the second payment of $4,000 so that the tournament can continue with promotion of the event. Councilman Snyder seconded the motion, and it carried by unanimous vote. Mayor Wilson convened the Redevelopment Agency meeting at 3:09 p.m. for joint consideration on the following item: C. INFORMATION ITEM: SECTION FOUR OVERVIEW, PUBLIC/PRIVATE PROJECTS SUMMARY AND RDA PROJECT BUDGET - JOINT ITEM WITH THE PALM DESERT REDEVELOPMENT AGENCY (Continued from the Meeting of December 9, 1993). The following is a transcriot of this portion of the meeting Mayor Wilson stated that the next item is an Informational Item, Section Four Overview, Public/Private Projects Summary and RDA Project Budget - Joint Item with Palm Desert Redevelopment Agency and the City Council. Mr. Altman - Bruce Altman: Yes, Mr. Mayor and Council people. This is something everybody's been working on for quite some time so we're quite excited tonight to bring you all up to date - where we're at, where we hope to head, and get some guidance from you folks to move forward. With that, we're going to call Larry Thrall to kind of kick off the presentation. There will be a variety of people coming up to talk to you, after which we'll move into the budgeted projects we've shown and have some discussion. Larry Thrall: Thank you, Bruce, and thank you, Mr. Mayor and Council. As Bruce said, we're very happy to be here. There's been a lot of work and effort that's taken place since we last briefed you on the status of the project, which was in August. Since then we've been able to accomplish some very important things we think in seeing this project move forward. You'll hear in a few minutes from representatives of the Southwest Museum and we're very pleased with the progress there where we have entered into an exclusive negotiation with them for the City of Palm Desert. You may be aware that they're being courted by a number of cities in the greater Los Angeles area, but this discussion is exclusively with Palm Desert and one of the Trustees, Mr. Puman will go into that in detail with you. We just, in the last few days, have concluded a Memo of Understanding with the Marriott Hotel Corporation and that also is of vital importance. What we want to do today is I'll give you a little overview of the progress that's been made and then we're going to walk you through some of the planning alternatives we've been looking at and give you a sense of the direction we're going there. This is the evolution, of the result of an evolution of thinking, but we need to get your involvement and obviously ultimately your consent and approval. We want to bring you up to date, in a little more detail, on the discussion with the most important other members of this venture - Marriott, the Southwest Museum and the Bishop Estate. -We've been able, based on the progress we've made so far, as you can see from the plans as you'll see when it's introduced to you and you know from who our neighbors are across the street, it is very 4 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * important that we reach agreements in principle with Marriott and that has allowed us to do certain economic analysis for you. The other thing we're going to try to present to you today is an overview of the financial summary of the implications of this project for the City. Again, we're pleased with all the progress. We still have a considerable ways to go but we believe all the major pieces are coming into place and wanting to give you that report this afternoon. We'll end that with kind of a where we go from here, so you can see how the efforts have been organized among our group. I want to say this, that we've thoroughly enjoyed all of the help and cooperation we've had from the city staff. The ideas here, we're very proud of the progress and we're very proud of the thoughtfulness with which they've been done and we hope you will see that we've tried to create something that should really provide tremendous long-term benefits to the city. That prospectus, that notion that we focus on long-term benefits has really been something that staff has continued to beat into us on a daily basis and I think they've succeeded and I hope we show you that. With that introduction, I would like to let me colleague, Lon Ruben, and our planners take you through briefly where we have come in the planning process. Lon Ruben: Mr. Mayor, Members of the Council, I'm Lon Ruben, 77-5703 Springfield Lane, #3D, Palm Desert. I'm pleased to be back before you again with substantial progress on Section 4. The first order of business today is to unveil some planning alternatives that we're working on at the moment. We had presented to you a plan in August and we've been through an evolution of planning alternatives and we had the opportunity to take a look and slow down our progress because in the planning we determined it would be necessary to file an EIR and it would be necessary for us to take more time about the project. So this gave us the opportunity to take a look at it. What we've come up with, I'll introduce the planners to you again, we've had an opportunity to do in looking at it is to come up with a plan that would provide for the City of Palm Desert more sources of long-term revenue and that would be fully a resort complex complimentary to the Marriott. The thinking that went into this was partly influenced by the fact that many of our expectations about the site have even been enhanced with, now we have the possibility of having the Southwest Museum on the site. So all the various forces that have caused us to work on the site have evolved into this present plan which we are planning to take to the Planning Commission Study Session for the first week in January. We'll get to that later on. In the meantime, I'm going to hand out to you some of the material regarding this particular plan while Mike Doty and Ken Ryan from PBR can take you through the essentials of the plan. Mayor Wilson: In view of the fact that we're getting land use maps here I wonder if you could turn that rendering toward the audience so the audience can follow along. Mayor Wilson: Oh, I see you do have a marker. A little bit more so more of the audience can see it. We can still see it. That's good. 5 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Ken Ryan, PBR Planning: Mr. Mayor, members of the Council, my name is Ken Ryan with the planning firm of PBR. We, of course, are working with the City and Palm Desert Golf Partners preparing what we envision to be a showcase resort development project for the Section Four Project Area. We 're extremely excited about the progress that's been made to date and the special qualities we think and the opportunities that are there to develop really a showcase project for the City. What I thought I'd do is give a brief overview from the design standpoint of how we got to where we are today for today's update and the progress that's been made. You'll notice that later in the agenda we're going to talk a little bit about where we go from here. But give a little brief update of where we've been since the last time we presented a preliminary land plan for you and the concept today and then get into it a little bit, walk you through the plan, look at some of the specific elements associated with the current concept and then, of course, be happy to answer any questions and respond to any comments you might have. Since the last workshop when we did get together and look at the preliminary land plan, we have gone through an area of process and Larry and Ron have touched on that in terms of finding the concept, incorporating a number of influences that have already been talked about here this evening - Marriott's involvement. We're extremely excited about the incorporation of the Southwest Museum. Several other items that have also influenced the plan include the work that occurred with the sports park and we've accommodated that. We, of course, have been working pretty closely with city staff and reflective of their input in terms of developing a plan for this site and also in preparation of environmental work that will need to be included as part of the EIR process. We've got a lot of technical information that's been prepared since the last time we were before you - traffic analysis, biology analysis, engineering input - all those things have helped influence the plan and shape the concept as it is today. We've also moved forward with developing what we see as not only a showcase resort development program including golf, hotel, conference center facilities, but also in terms of creating additional value for the city and looking at creating recurring revenues for the city, there are a couple of things I'd like to highlight that have changed significantly from the last time we went over the plan. First of all, in conjunction with providing greater recurring revenue, we have eliminated, and when we go to the plan you'll see this, we've eliminated the residential, single-family detached, the condominium element included earlier on as part of the development program. That's done a couple of things for us. Earlier on, the plan was a good plan. This is a better plan. The reason why is that we've got a little more flexibility in terms of eliminating that portion of the development program. It's freed up a lot of the uses that earlier were a little bit forced because of all the things included in the development program, so we're real excited about that. The second thing that you'll notice when we go through the land plan and I'm going to refer to it now, there was an earlier version we looked at which included a spine road from Country Club Drive all the way up to Frank Sinatra -Drive. Well, primarily as a result of eliminating that residential component from the development program, our traffic consultant has indicated from a traffic flow standpoint that spine road probably won't be 6 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * necessary and that's done a couple of things that's helped us in terms of the concept for the plan as well. First of all, the city's tournament golf course which we'll get into in a second is located in the north half of the project, running east and west. This part of the project is where the city's golf course is located and it's roughly defined by this halfway point through the project. But by not having that spine road connect all the way north through the project, we believe there's obviously a much better golf experience. It's a good golf course with the road, but it's better without it. We also, of course, by not having to put that spine road through the project eliminate any infrastructure clash associated with that element of the plan. Additionally, from a design standpoint we like to refer to a great exclusivity of the heart of the project and the focal point of the project which is the club house, the luxury hotel and conference center, and rather than a through road running through the site, we think it's a better experience and arrival sequence, and some things that I'll refer to in a moment, relative to how the plan lays out. Regarding the specific elements of the plan itself and where we are today, starting with golf, there are two returning nine golf course 18 hole golf courses designed as part of the project. We've already referenced the city course, that's located in the north half of the project - the city's tournament golf course - and then, a resort golf course located in the southern half which revolves around the Marriott timeshare expansion plan. Both courses, when we walk through them, you'll notice the relationships between the land uses and the golf course is extremely important. We tried to maximize that golf experience, whatever uses are included throughout the project intertwine that a relate the golf with the various land uses and we think that's very important. We think it's also important to note at this juncture that we've provided at this level the conceptual layout for the golf course. Our area of expertise is looking at relationships between those land uses and between the golf course, you'll see location of sandtraps, water features, tees and greens, but a golf course architect is going to change this plan a little bit. The next step after the conceptual level is for the golf course architect to come in. Our goal is to provide him with the right envelope for the golf course, but my point here is I don't want you to get too fixated on exactly how the golf course lays out right now, because the golf course architect, Dr. Michael Herson (Spelling?) and PGA professional John Cook will be defining that. They'll move Par 5's, they'll move Part 4's a little bit. But we did want to highlight the course so you'll get a feel of how it relates to the rest of the land uses and how that course currently plays. We know we're pretty close in terms of how the course is going to lay out. Relative to the city's course in the north half of the project, all uses adjacent to that golf course take advantage of the golf course relationships, as I've indicated. Within the context of the overall project, one of the things we'll be preparing in conjunction with the approval documents, not only an EIR but a (unclear) concept plan that will have architecture, landscape architecture, and all those design features which will be very important to successful long- term implementation of the project, will be in overall themes. There'll be entryways, there'll be signage, we'll come back to you with detailed information relative to that, about what is the design statement for this overall project. But there's also an opportunity and our golf 7 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * course architect is moving forward with this concept, to identify a design theme for each of these courses to give some pizzazz to the two courses included within the project. The current thought process on the city's tournament course is to establish a natural native desert golf course and we think that's kind of an exciting theme to be moving forward with. You'll notice on the north half of the project, you won't see a lot of water. In fact, the thought process is let's conserve water as part of the concept for that city tournament golf course and take advantage of that opportunity from not only a design standpoint, but from a water conservation standpoint. For the resort course for the Marriott timeshares, the concept on that is more of a lakes course and so we think there's two distinct themes that can make this project very exciting from that standpoint. Walking you through on the north course, both courses revolve and focus on a shared club house facility, driving range, practice facility - as indicated earlier, both returning nines, the front nine for the tournament course would play 1,2,3,4,5,6,7,8, and return back to the club house for the ninth hole. The back nine would play 10, 11,12,13,14,15,16,17, and 18 again coming back to take advantage of the relationship to the golf club house. We're currently at about 176 acres to the golf course. That's the desirable number that our golf course architect has asked us to provide him with an envelope. He'll be fine-tuning that and that's the next step in coming up with a preferred plan over the next few weeks that will serve as our project description for moving forward with environmental documentation and the development concept plan document. The resort course takes advantage of the timeshare component of the plan as part of Marriott,and plays in this manner: 1,2,3,4,5,6,7,8 and 9 coming back to the club house. The back nine - 10,11,12,13,14,15,16,17,and 18 returning to the club house. One of the things we think is very special and exciting about the plan is, in fact we just touched on it a little bit, this relationship of golf and club house and conference center and luxury hotel, this is the luxury hotel site and conference center. We think that the arrival sequence relative to that part of the project is something which will be quite spectacular. We're taking advantage of the existing access across the street from the Desert Springs Marriott Hotel. The primary access to the project would come along this main road and the experience would be, we think, very special. We've currently located the Southwest Desert Museum and theme retail in association with that museum project from an architecture and landscape architecture standpoint, something we'd want to handle very carefully and make sure it's high quality and we think there's an opportunity to do that. So, when you enter the project, you'd be coming by the Southwest Desert Museum, you'd be experiencing golf, we'd have a logical access to the Marriott timeshares, which is this brown area you see located to the left and to the right of the entryway. You'd have gate -guarded access and then from that point up to the club house, convention center and luxury hotel, you'd have golf on your right and golf on your left, a bridge or water feature - this is conceptual at this point, but we think that experience on arrival and the site planning for those three facilities could really be something very special. The Marriott timeshares we've talked a little bit about already. We're currently reflecting their criteria for what they want to see in terms of timeshare products. We're at 62 acres and 60 was just about the number they were looking for. We can fine tune that if it needs to be exactly 60, but the thrust of the concept for the timeshare 8 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * is to maximize golf frontage relative to the products. We also have in some cases an internal amenity that satisfies that. You'll notice when you look at the plan closely there's a tennis facility and health club house facility which is also associated with the timeshare development. The access to the timeshare as I indicated is gate -guarded off the main primary entryway. It's also been designed so if it's phased in either 30,20,10 or any combination of how that timeshare can be implemented can be handled in the current design for the project. We've also provided for emergency access in this location and it can also be accommodated in this location as well. While we're still talking about roadway and access, one of the things we did look at is the potential for if we get down the road and there does need to be a secondary access, we've currently designed the project to accommodate either an emergency road or a secondary access in this location that could happen if need be relative to the traffic analysis which will be prepared in conjunction with the environmental documentation. Councilmember Benson: Where would that other road be? Ken Ryan: Right about in that location right there. At this point, though, the information and the direction that we're getting from our traffic consultant is that it's not necessary and so we've provided for at a minimum fire accesses that would need to occur if there needs to be a second fire access, we could easily accommodate it at that location. The plan also reflects the current desert marketplace commercial that's located at Cook and Country Club. As I indicated a little bit earlier, we sited an area that would be appropriate for the Desert Museum. The site also includes 9 1/2 acres of office -professional along in this area along Country Club Drive. We think that's appropriate, particularly in light of the adjacent land uses associated with that area. It's got the health care and a church that's under construction and we believe that that's an appropriate use given the current uses along Country Club Drive. The designated hotel site at the corner of Cook and Frank Sinatra - there's a couple of criteria for that and that is easy access and visibility. But very similar to how this is treated as the main entry to the project, this will be one of the first things that people see when the Cook Street Improvements take place relative to I-10, so we think from a landscape architecture and from an architecture standpoint, this will be a very important area that again as part of our development concept plan document treats architecture and landscape architecture and those design considerations very carefully. We're envisioning very high quality hotel use at that location. One of the other things you'll see in some of the call outs on the plan is also pedestrian access. We're exploring those opportunities to tie in not only internally to the project pedestrian and golf cart access, but also tying that into linkages throughout the community. One of the things we've also showed from the conceptual standpoint is that the main entry across from Desert Springs Hotel is potential access for pedestrian and golf cart, perhaps an underpass, and that's obviously going to have to go through some detailed engineering work to see if that's possible, but that was one of the specific things that was included in the direction most recently in a signed agreement with Marriott's. 9 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I think the last thing I would highlight is that the sports park has also been added into the project and kind of goes full circle with some of the opening comments about eliminating the residential. This has given us a little more flexibility in laying out what we think it a very special project and we've got a pretty good buffer between this part and either hotel use here or timeshare use - we're looking at about 3 or 4 fairways of golf now and we think that that works much better than it did much better originally in the last plan we presented to you. That is an overview of the plan and I'd be happy to answer any questions you might have. Mayor Wilson: Do councilmembers have any questions? Councilmember Benson: On the hotel, what size hotel would that be. Ken Ryan: The current hotel in the center of the project would be a 15-acre, luxury hotel. That's something that's in detailed site planning and when we get into the development concept plan document, will have to be something that is addressed in terms of height limit, number of rooms. Right now the acreage we've provided for both of those uses, and actually staff asked us to go through this exercise and identify what is the criteria for a luxury hotel and both of those designations from an acreage standpoint are, what we envision, the requirements to do a real high -end hotel - a 5 star, 4 star hotel. I know I didn't answer your question exactly, but we're not sure in terms of the total number of rooms or stories and that's something that would get addressed as part of our development concept plan. Councilmember Benson: My other question is, on the timeshares - how many do the Marriott have now on that other piece of property? Bruce Altman: Do you recall how many they have on the current site? Ken Ryan: They have two phases what they call DS Villas 1 & 2. They're completed DSV 1 and that's 238 and they are about to start on DSV 2 which is 276. However, the agreement that we're entering into with them will call for them just to construct enough units at DSV 2 to keep their program going so they don't have any interruption in the program, and we are working with them to have them move over and start on DSV 3 which is in Section Four as soon as possible. It is our benefit, the City's benefit and Marriott's benefit we think, to have them building in the new Section Four as soon as possible. Councilmember Benson: How much acreage are they sitting on now. Bruce Altman: What acreage? Ken Ryan: There's 62 acres shown on the plan.... 10 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilmember Benson: No, I know that - I'm talking about the existing acreage they have Ken Ryan: I don't know, but I know their density is about 10 units to the acre so if their total number is 570 or thereabouts, it would be in the mid-50 range. I don't have their exact numbers. Mayor Wilson: Any other questions? Councilman Crites: On the golf courses proposed, when will those come back to us for specific comments? For instance, I think my personal perceptions are that your comments are well taken on the desert theme. We get beat over the head by the rest of the State of California for wasting water constantly and I don't care if an acre of golf doesn't use any more water than an acre of homes, we still get beat over the head. So I want time to sit down and do some very specific questions - are we maximizing the kinds of return in terms of water use, landscaping and all the rest of that to where if there are a variety of good golf course environmental golf course awards that we can walk away with every one that exists. Ken Ryan: Councilman, this will occur probably starting in the month of February. Our plan, and I'll get into our planning schedule is hopefully to elicit community support and community comment and Planning Commission and come back to you with a determination of what we call a preferred plan, which would form the foundation for the environmental documentation. Once the plan is set into a preferred plan, and is proceeding through the environmental process, the golf course architect would begin his details design development and at that time these issues would be reached. However, our golf course architect has been beat over the head enough by your compatriot, Mr. Kelly, so that he knows very well what the policy of the City of Palm Desert is with regard to this zeroscape and into Councilman Crites: Apparently he knows that zeroscape is good enough for local residents, but apparently zeroscape isn't very good for those that come to visit and that should be a discussion item. Ken Ryan: Right Councilman Crites: I notice the water all sets with visitors and not with homes and I think that's flat wrong. That's thinking of 15 years ago and it's foolishness and we're going to have some good chats about that then. Ken Ryan: OK. I just wanted to make a couple of comments on this before we get to the next subject and that is with respect to the sports park. All of our consultants working with the new plan have now come up with that it is a compatible use with our present plan. There was some discussion before that may have led you to believe that we were not. This plan, with the restrictions in place on the sports park by the Planning Commission, would enable us to achieve all our objectives without compromise. If we don't have any other questions 11 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * on the Master Plan at this time, I would like to take this opportunity to introduce to you Michael Pumen, a Trustee of the Southwest Museum, and Tom Wilson, who is executive director of the Southwest Museum, who will make a progress report on the two studies that you and the Bishop Estate have commissioned for the Southwest Museum and to give you an overview on the type of articles that are contained in their collection. We are extremely hopeful and extremely pleased to have the Southwest Museum be a part of the project in Section Four. With that, I'll turn it over to Michael and Tom. Michael Pumen, Trustee of Southwest Museum: Mayor Wilson, Councilmembers, it is our pleasure to meet with you today and spend a few minutes with you. You've met Dr. Wilson before when he addressed you. This is my first opportunity to address all of you in a formal session. It is our real pleasure to be here because of the very exciting opportunity that is presented for the Southwest Museum and I think what's so exciting in the discussions we've had to date is we've apparently had the good fortune to identify something that in every way is a win -win situation. That's of course what we're studying and we have to verify that. You have to verify that and certainly the Bishop Estate, certainly the museum has to make sure, but I think we've gone this far in the process as smoothly and with as much hope as we can possibly imagine. I would like to give you a little bit of background in terms of the process that brings us together. I'm a vice president of the Board of Trustees of the Southwest Museum. I've been active with the museum for quite a number of years and the particular capacity that brings me here is I am chair of the Museum's Long-range Planning Committee. That Committee was formulated 3 or 4 years ago. I was instrumental in actually creating the Committee and what brought that Committee into existence was the fact that the Southwest had just completely outgrown its current facilities. In that regard, the Museum is the oldest museum in Los Angeles. It was founded in 1907. We are in facilities that were constructed between 1912 and 1914, at least the original building. We added a wing about 20 or 30 years ago and a library in the late 70s, a three story library. But, the long and short of it is that we've totally outgrown the space we have in our current facilities and the problem is also the opportunity. The problem is we have 250,000 of truly the greatest artifacts that reflect the history of American Indians in this country and Canada, and that includes Alaska, North Slope and also our collections go down through Central America and South America. Again, the problem is the opportunity because we have less than 5 % of our collection on display. Unlike perhaps many other museums that have a lot of collections not on display, but those collections are not of the quality level of what is on display, the depth of our collections is so deep and so strong that many, many, many of our best items are not displayed at all. That's the opportunity. This process, again, began 3 years ago. We went through a series of studies of our own locations, its potential in terms of developing it further, and what the alternatives were. Eventually, the entire Board of Trustees came to the consensus to explore the option of moving the museum rather than trying to work with our current location. It was chosen 12 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * before anybody dreamed of freeways or certain other important influences that reflect our lives in the 1990s. And, out of that process, came consultations with fundraising consultants, with feasibility planners, we had a set of professional studies done, which led up to the issuance last July 1st of this year, of a Request For Proposals in which we were seeking proposals from the City of Los Angeles and other cities in the greater Los Angeles area, and also in the other Southern California counties. We included within that Riverside County, San Bernardino County, Orange County and Ventura County and we mailed to a little over 200 cities and also private developers. The response was astounding. We had 80 responses that at least addressed the threshold. The threshold we asked for was at least we'd need free land in a location suited for a major national museum. We received about 80 proposals and these were preliminary responses due several months ago. About 50 of those were from municipalities. The rest were from developers and some were joint private/public proposals. We have now received final responses to that. We're going to choose the best of those to explore; but, and this is what I think is the great opportunity here, what has come out of this process is I think a very good bit of good timing, good luck in that sense, in that we identified a second opportunity and that is to have a second location of the Southwest Museum. And that, of course, came to our attention when Lon Ruben read in the L.A. Times the story about our RFP, Request for Proposals, he called Larry Thrall. Larry talked to Harrison Price and eventually me and we began these discussions. The concept we've come up with is this: Again, the collections we have in storage are capable of supporting two, or for that matter more than two but we're talking about two in this period of time, two locations. The irony would be that if a location were developed here along the lines we're talking about a location here would have facilities which would simply far outstrip, in terms of what they offer the public, our present facilities. We still are going forward on a parallel course with relocation of the Los Angeles facilities within the greater Los Angeles area and we're going in the next several months, narrow it down to five locations that we'll study more seriously within the Board; that is, analyze further and eventually come down to one. However, the Palm Desert opportunity, I believe, is so unique that we have a great enthusiasm and, again, we've entered into an exclusive discussion with Palm Desert. The time frame we're on is such that all the parties would make a decision, "go" or "no go" with respect to doing a facility in Palm Desert before we would make our choice within the greater Los Angeles area. I mention this because one implication is we're not going to locate within Los Angeles in a way that competes with what might be done within Palm Desert. I think what works so well is that we're talking about different attendance markets, that is, lack of competition between the two facilities. Instead, for the Southwest Museum, it's an opportunity to reach an entirely different audience with very little competitive overlap. With that, we're going to go through three presentations very briefly. We're going to show you about twenty slides to give you some sense of what the museum's collection is and then, very briefly, Dr. Wilson is going to summarize the draft report which we've received from the Harrison Price Company. As you know, that's a study of both the attendance to be expected here and proper sizing of the museum and also initial design 13 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * considerations. I will then give a status report of the ongoing but not yet completed funding study which is being conducted by Gary W. Phillips & Associates. With that, let me move immediately to the slide presentation. This is a slide of our present facility. It doesn't show a wing going out behind it and it doesn't show the library, but if you look at the tower, that tower is seven stories. Each of those seven stories, floor to ceiling, is packed with artifacts in storage. The type of artifacts we'll soon see. These five Navajo textiles are on public display - these are all classic Navajo textiles which in recent decades have become extremely collectible and, in fact extremely valuable. The one on the left is a classic Navajo poncho, probably 1840 to 1860. About thirty of them are in existence. Compare that to Van Goughs, of which there are a couple of hundred in existence. On the right is a transitional second or third phase Navajo chiefs blanket, which were desired by Plains Indians in the early 1800s and mid-1800s and that's why they're called chief s blankets. When the first Americans moving west saw them it was always Plains Indian chiefs who had these blankets. Now these particular artifacts, which in a sense may be the predecessors of what we now see the Hopi Indians calling Kachina Dolls. These are from about 1300, they're Anasazi and they are just about unique in terms of nothing that is exactly comparable exists. There are very few, what they call prehistoric examples, of these types of figures. Prehistoric meaning basically the period before Columbus and the Spanish got to the Americas. This also is a prehistoric piece, an Anasazi probably about 14 or 15 inches diameter. The cultures which would make these were at their height in about 1000-1300 AD. We have about 11,000 prehistoric and historic pottery pieces, of which this is one. The Navajo blankets I showed you, we have about 3,000 textiles which are focused on our Navajo blanket and early rug collections which include Hopi wearing apparel, Zuni blankets and going up Alaska Chilcot(Spelling?) blankets and others form down in Central and South America. These two pieces of pottery were made about 1900 by a woman who is considered to have been the epitome of the arts in terms of American Indian pottery making. Her name was Nampiou (spelling?) and these particular pieces are also captured in historic photographs with her as the artisan. This is a Hopi Kachina, one of the finer Kachina dolls in existence. In terms of artistic power, I don't think I have to say more - just looking at it you can appreciate that. This particular basket is by a woman who some consider to be the finest basket maker that has lived, in terms of American Indian basketry. It's a Washoe basket and the name of the woman who made it is (unclear). Her Anglicized name was Luisa Kaiser and she was recognized in mid-life for the fineness of her basket making. All her living expenses were paid for and her family sustained by Abe Cohen in Carson City, Nevada, and her baskets were sold as high -end works of art in the early 1900s. Now we're moving into Northern California. This is the Hoopa (Spelling?) headdress used in dances. It would be made out of deerskin and feathers and other materials such as leather. It would be used in association with this which is a Hoopa Indian dance basket. It would be used among other things in the white deer dance and there are relatively few of these in existence and we've recently entered into discussions to make these available to the Hoopa in their contemporary revival of some of the dances. We have a number of these in the collection. This is from the Central Valley, actually getting up into the Sierra Nevadas. The tribe is Mono and its 14 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * motifs are characteristic of the baskets of the Central Valley. It's probably about 11-12 inches in diameter - extremely fine work. By the way, we have about 13,000 baskets. This is an Apache woman's top which she would wear and it gives you a sense of the desert cultures which characterize the Apache. These particular moccasins will be moving further East, actually they're from the Eastern plains or even the Western woodlands, probably east of the Mississippi. Based on the beads, these are probably late 1800s. This particular tobacco bag is a wonderful example. Probably about one out of a hundred 19th century beaded Plains Indian bags have figures on them. Sometimes they're done artistically, sometimes not so artistically. This is about as fine as they come and the picture here is basically a courting ceremony with the two figures on the right wearing a blanket. This shield goes back earlier, probably mid-1800s, made out of buffalo trade cloth, feathers. Often those would be eagle feathers - the ones at the top maybe. This is a southern plains high boots - women's boots. Usually the Kiowa, the Comanche, the Arapahos would have boots such as these. Those are silver medallions going up and down. This particular basket has motifs, now we're getting up into the Wasau tribe in Oregon, this particular basket has motifs that go way into the early part of the 1800s and are remarkably similar to the several baskets withthe same motifs that Lewis and Clark brought back when they traveled west in about 1803-1805. This is a photograph from some of the collections held in our library which has a tremendous collection of early historic photographs of American Indians. The library also has a very complete collection of Americana beyond the American Indian. By the way, the white things she's wearing, I guess they're beads but they may be (unclear) shells too. This would be probably up along Washington State or that area. The last two slides are representative of our northwest coast collections and this one is actually from southeast Alaska. It's part of a headdress, well back into the 1800s. That's abalone shells surrounding the outside and part of the interior design. I believe this is the last slide - the two house posts here are from the mid-19th century. They were two of the four house posts which would have supported a Hidah(spelling?) community house from the Queen Charlotte Islands. They are massive - this is really a two story hall here and the other two house posts are in different museums, one is up in Alaska - I think both of them maybe - but these two are in our northwest coast hall. By the way, just to the left you can see part of a blanket in the display case. The upper of the two items - that's the Chilcot blanket made out of cedar bark and mountain goat hair. These are very,very few slides to present a collection of 250,000 artifacts but they're demonstrative of what our museum contains. Our collection is one of the three or four most extensive and deepest and most important collections of American Indian art in the world. Perhaps another example of it is that not too many years ago, about 5 or 6 years ago, we had a grant to study our Plains Indian collection. We were able to bring in scholars from across the United States and their conclusion upon viewing what we have in storage is that we have the finest and deepest collection of Plains Indian art west of the Mississippi. With that, that concludes our slide show and I'll let Tom briefly indicate what the results have been of the Harrison Price Company study. Tom Wilson: Thank you for that presentation. Mr. Mayor, Councilmembers, I am Tom Wilson, Director of the Southwest Museum, 234 Museum Drive, Los Angeles. Just last 15 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * week we received a draft report of the Harrison Price Company in collaboration with Barry Howard, Ltd., which examined the attendance and financial outlook for the Southwest Museum so I'm just going to very briefly give you an overview of the issues that the analysis examined and then give you some of the more specific, sort of bullated, sort of results that I think are of most germane interest to us this afternoon. First an overview of what the study analyzed. It looked at the site and the market environment including a regional overview, hotel -motel inventory, regional sales activity and regional attractions,etc. It also analyzed available market support both residents and tourists, as well as population trends and school enrollment. Another major area of analysis focused on potential market capture and attendance and illustrative physical planning, guidelines such as exhibit space requirements, building space allocations, parking and staffing requirements. Finally, the report proposed preliminary financial analysis including estimated operating revenues and expenses for Southwest Museum, Palm Desert. Within this structure, as I said, I'd like to give you a few highlights but to just characterize it generally as quite an optimistic report on the possibilities of developing a Southwest Museum in Palm Desert at the location suggested. You're all familiar with the population of the area, demographics, the regional attractions and so forth so I'm not going to go into that except to say there's a fairly comprehensive analysis in the report. It does highlight, I think a very favorable position of Palm Desert within the desert communities and particularly of this particular site. The report looked at aggregate market support for 1997 and estimated there would be residents market, the permanent market in the desert, at that time will be about 307,000 persons and the seasonal market about 150,000, which is about a half million people. The tourist market in 1997 would be about 4.6 million visitors which yields a total market support of over 5 million persons. The estimated market capture, and the way the report characterized all these analysis with a low end estimate, a probable estimate and a high end estimate. The report suggests that we would have a market capture of the resident market of between 8 - 10% and the tourist market of 2.5-5 %. The bottom line and the most important feature for us in that regard is attendance and that translates, once you remove the school attendance which presumably would be free, yields an attendance of 150,000 persons - low, 179,000 - probable, and 205,000 high- end visitations. That's with a museum of approximately 31,000 square feet that dedicates 21,000 square feet to public exhibition space and about 3,000 square feet to a store. It has a staff of about 20 full time equivalents. The preliminary financial analysis is based on earned income and it suggests an almost balanced budget based only on earned income because museums typically support themselves both with earned income and with non -earned income areas. In the areas of earned income, admissions based on the attendance estimates, there is merchandise sales which is based on an $8-$12 per person spending when they come through the museum; and catering and special events based on four events per year and memberships of 2,500 to 3,500 per year. Those areas of earned income will yield revenues yearly of between 2 million to 3.5 million dollars. The expense side of this goes from about 2.1 to 3.5 million dollars. In other words, earned incomes would not quite cover expenses at the low end of this scale; however, as I said this study did not consider those areas of non -earned income, sources which normally would provide at least 30% of revenue in a museum. That 16 MINUTES - - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * includes grants from Federal, State and municipal agencies, from foundations all over California, gifts such as from annual appeals and from other things like that and, of course, endowment support which is very important for any museum. So, in other words, once you add the non -earned income sources to the projections based on earned income in the report, you get a fairly optimistic projection for the possibility of running a very interesting museum here in the desert. So, in conclusion, I think the report suggests that we have here one of the best sites in the desert and certainly in the best community in the valley. We have very promising potential attendance figures. We have yields of almost balanced budgets on the basis of earned income which would go over the top when we take into consideration the non - earned income, and finally we have the opportunity of working with the Palm Springs Desert Museum, the Cahuilla Aqua Caliente band, other Indian groups in the desert and other cultural institutions not only in Palm Desert, but in the whole desert area from Palm Springs to Indio. So, Mr. Mayor, that concludes my summary of the Harrison Price Company and as soon as we get back to them and the draft is into a final edition, we will of course make that available to you. Mayor Wilson: Thank you, Dr. Wilson. Does the Council have any questions? Tom Wilson: Let me speak briefly about the other study underway. That's the study by Gary W. Phillips & Associates - the funding study. What that is testing is what support we might expect from the priva to sector if this project were to go forward. That study will not be complete until probably the end of January; however, it is well under way and the initial reception based on interviews done to date in the study has been very good. We have encouraging reports back. In terms of a quantitative report, we don't have that yet. That's something that's pulled together when the study is completed, but at least for this point in the process, we've been very encouraged by Mr. Phillips in terms of how it's going. Very briefly, I want to spend about a sentence on each of three points. Dr. Wilson mentioned school children. School children don't generate revenue for a museum, but they are an absolutely essential part of the museum. If we're to have a Southwest Museum, Palm Desert, one thing that is available and accessible for all the school children of the greater Coachella Valley is the opportunity to visit. And I guess I think back to my own childhood - those few memories you have clearly from childhood, for me some of the best memories are visits to museums, in my case back in Pittsburgh, Pennsylvania, but we'd like to make that opportunity available for children of this valley. Again, Dr. Wilson mentioned our cooperation with the Cahuilla Indians out here; in Los Angeles we go to great lengths to work with the urban American Indian population there. We also have marketplaces where, over weekends, some of the finest contemporary artists from Hopi, from Zuni, from the Navajo nation, from the Rio Grande Pueblos, come to participate in marketplace events and this setting, in our view, would be ideal for that type of activity. I think in closing what brings us together is that truly if I were to look at everyplace within the desert community and say "What site works for this concept?", I think this is the best site. I can't imagine one that might work better and that's why we're engaged in these serious discussions. We will 17 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * certainly go forward and we're most excited about the prospect. If the Council has any questions for Dr. Wilson or myself, we'd be happy to respond. Lon Ruben: Mr. Mayor, I'm going to ask Larry Thrall to give you a brief report on a little more substance on the progress we have made both with the Marriott Corporation and the Bishop Estate. Larry Thrall: Thank you, Lon. First, I want to emphasize how excited we are about the Southwest Museum prospect. It's something that we talked a lot to the people at the museum about, and it offers us an opportunity to do something really unique here and we're all dedicated to bringing a great sense of quality to this. I don't know if you've had an opportunity to look at Gary Phillips' little brochure he put together, but he talks about the creation of a new tradition and 1 really think that's what we have the opportunity to do. I believe that the Indian marketplaces and the museum also will provide for an environment for Native Americans that is special and dignified for them, for their own cultural activities and interests. I believe you will see this grow where the events that take place there will become a great tradition in this entire area. From the planning standpoint, every one of us are dedicated to seeing to it we create an environment for the museum to really prosper and to capture all those feelings. We're real proud of the fact that we have the opportunity to discuss it with you. We think there are some very exciting prospects. It's not lost on our other friends that want to be our partners in this,either. Mr. Bill Marriott has taken a personal interest in this project over the last few weeks. The entire Marriott Corporation, I think, sees a great opportunity here to continue the successes they've already had in Palm Desert. Timeshare is a business that has been re -invented by Marriott. They've taken something that has not had a good reputation and they've changed it to a product that is extremely successful and, I think very properly, highly regarded. We're working very closely with them now that we've entered into a Memo of Understanding. Those Memos are, of course, not legally binding agreements but they represent the hard work and good intentions of both sides. The Marriott people wanted me to express to you that they're very excited about this. They're very excited about being part of the entire atmosphere created, including the museum. We want to see this project evolve now and every phase of it representing the kind of quality that can be achieved. The Bishop Estate, as one of the Trustees visited a week or so ago, also shares the enthusiasm for seeing this section of land be developed in a way that represents long term commitment to quality and value. You must remember their mission is also very long term. As is the support of education of Native Americans who happen to live in Hawaii, we haven't reached a conclusion with them on their participation. Their staff has suggested and recommended to their five Trustees that they would like to invite members of the Council and the staff to Hawaii to see them. This is a very aloha tradition and I hope we're able to pursue that early in January. Again, I send their enthusiasm for the kind of thing that's being done here. They live in an environment where not every city is the most friendly 18 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * environment for them to exist in; however, when they see a city that has led this area and is still doing that by looking at creating things like the off ramp at Cook and communication with the rapid transit system in Los Angeles. All these things we all find very encouraging. Having said all of that, I think next we'd like to give you a little summary of what this means financially. Lon, you can put up the charts so the audience can participate in this. First, I want to explain to you that it's difficult in the middle of the planning process for us to give you precise numbers, or exact numbers. What we're attempting to do is to give you a picture of the goals that we're trying to achieve and we're trying to do it in a way that represents a conservative first step. If we come back in the future and our numbers look a whole lot worse than this, then you would be duly embarrassed by that. We're trying to take it a step at a time. Councilman Crites: Mr. Thrall, it might be appropriate since everyone seated in this section of the room has obviously been through parts of this a number of times, but I suspect that there are people in the audience who are not aware of the preliminary base for all this - that is, city land ownership patterns and so on and so forth, the reasons we're looking at these partnerships in terms of long term investments. So, I think it would be appropriate to take a minute or two and just preview before you get there....normally, this isn't our business about profit and everything, our business is about approval and environmental issues and traffic,etc. Whereas, with this process, our business is about profit along with all the other things. Mayor Wilson: Mr. Thrall, would you like me to start with it and then you can pull in.... Larry Thrall: Yes, thank you very much. Mayor Wilson: For the benefit of the audience, let me give you a little overview as all of these things that you've seen, the entire Section's development, the Southwest Desert Museum, the public and private golf course, etc., the sports complex. All of this is a part of an effort by the city to look to the future and ways to generate money and why do we do that? Let me give you a little background. Palm Desert is a no property tax city. The property taxes you pay go to the County of Riverside and special districts. They do not go to run city services. Homeowners pay a $48 a year assessment for free paramedic services and a superior fire protection program, and that's it. The rest of the taxes that the city gets comes not just from the residents of Palm Desert, but from anyone who visits and spends money in our city. We get one cent of the seven plus cents sales tax charged on commercial products. We've been very fortunate that we have an outstanding business community in this town that provides us with good revenue from that basis. We also get 10% of hotel bed tax revenue that goes to the cities. Those are our two main sources. Now, it's good enough to provide the services this city needs today but for the last several years the State of California has been looking at our commercial base, our revenue sources and has been making noise to the effect that they'd like to take away that one penny of the sales tax from areas that 19 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * generate commercial sales tax revenue. If that happens, it will devastate this community as far as being able to provide services to the residents and provide the quality of life that we have so long strived for. So, we could do several things. We could do as other cities have done - sit back and wait for that financial disaster to hit and then start taxing the community. As you know, many cities in the State of California are now taxing utilities. You pay high utility costs in the summer. Well, cities are now getting into the action of taking a tax on that money and putting it into their coffers. This city council does not believe in additional taxation. It does not believe in utility taxes. We have basically gone to the drawing boards and looked at ways that we can look to the future to generate revenue. And we've turned to the private sector, which has been the free enterprise system in this country and has been very successful - it has made this country. We've looked at that and we're basically attempting to partnership with successful organizations like the Bishop Foundation in Hawaii that does a lot of long term development, and we're looking to turn Section 4 into a quality recreational facility that will be the showcase of the nation. That is why the next agenda item deals with a sports complex. It is not a set of baseball fields. It is quality and will be the most high quality softball complex ever built in the United States. That is why we didn't go for any museum - we want the Southwest Desert Museum. We want the very best for this Section, so we can get a good return on our investment. That is why we're in this discussion tonight, looking at partnering with the private sector to make money to provide the services this community needs for its citizens without raising taxes. Mr. Thrall, you can pick it up from there and talk about it from the Bishop Foundation. Councilman Crites: I think we ought to add that the key piece from the city's perspective has been our ability to acquire most of the land base. Mayor Wilson: We have acquired over the years, we've been land banking out in the North sphere. We own a number of acres in this Section and that would be our participation in this joint venture with land that we have acquired over the years. Councilman Crites: Rather than selling land and making a profit, we're trying to devise methods by which to permanently get back monies that the State, under any contingency, can never touch. Larry Thrall: I certainly think that those are very important remarks to put this in the proper context because the goals that we have been assigned in working with the city through its staff are exactly that. We have attempted to create something where the city will be able to participate on a long term value in the created by the city's prior acquisition of land and your continuing support of the project. Unlike I think what would have been the case in years past, the city simply to stimulate some activity coming into town, or to gain, and in this case you have the opportunity to gain in the short term by simply being a seller. What we have attempted to structure here is something that allows for the creation of the years to come an asset that will provide the city with very significant, continuing long term income flow. Lon, if you can put up the charts - let's use that one first. 20 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * What we have here is,again, an illustration for you of what we're trying to accomplish. We call it a conservative approach because what this really does it look at the arrangement we have made with Marriott and describes to you the long term impact on your income flows. The result from that and the combination of that with the Desert Springs Marketplace. What we would point out to you is that these income streams are in three separate categories. The Desert Springs Marketplace you know is under construction now. The second phase of the Desert Springs Marketplace, we hope and believe, will be based around the Southwest Museum. We want to see something of great quality there. We believe we can create a Santa Fe West, a Taos West environment. We will allow that to grow, we think its very compatible with the existing retails. In each case, we have an independent economic study done. In this case, Charles Robert Lusk (Spelling?) & Associates have done it for us. But that second phase will grow around the museum and the special quality provided by the museum. You will see the line representing the Desert Springs Marketplace income and that reflects a slow and steady growth. We're not projecting some aggressive or absurd increases in income. The next category that I would point to is the golf income. All of us recognize that there are a tremendous number of golf courses in the area already and that how many golf courses does not predict success, particularly economically. We attempted to design the relationship with this golf course to try to make it a conservative and reliable ongoing source of income. In doing that, what we have structured is the notion that our primary players are across the street at the Marriott complex and in the future will be on our side of the street at the timeshare. We're offering them where, when they buy an interest they will also buy a right to play on the golf course. This is the golf course on the south. The city is, of course, not affected by this. The results of it are that we create from that a steady, reliable flow of annual fee income for the golf course, together with an initial initiation fee - all of modest numbers, but when taken in the multiples the time share provides - provide a reliable ongoing stream of income. We offer the participants in that a very substantial, a 50% discount, of what they'd otherwise pay. We think this balance provides the best mixture of elements. We think its better for the city and better for the timeshare that they know they have a bargain on the one hand and you, on the other hand, know you have steady sources of income. If golf play goes down elsewhere, you still have your built-in play in this particular arrangement. These are all tentative and subject to your final approvals, but we've worked closely with the staff to provide ways of insuring long term income and insuring high quality long term income. In addition to that you will see in blue on the chart what we refer to an amenity and Mello -Roos fee. Mellow -Roos may be too loose a description, but is a special tax that would apply only to the timeshare owners within this project because our philosophy has been that the city has created the environment and invested the capital in the past to make this happen and we want to see compensation. When we say amenities, we creating a wonderful amenity for this entire project, the city is, and we feel its perfectly fair and we've been able to work out arrangements with Marriott so there are ongoing fees that will be payable as a result of that. In addition to that, we don't reflect on this chart the cash flow the city will receive from the sale of property, because we do in fact still sell property. We 21 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * have not included anything other than the results of applying this philosophy to the timeshare units. We completely believe that the land plan you've seen here will facilitate the development of a couple more hotels and conference centers within this property. But I can't predict for you exactly when that's going to take place. I will tell you this, the day is closer in my opinion than it was six months ago. We're seeing a revival of interest of capital in high quality projects. This will happen. In addition, we will be applying these same concepts to the further development of the property. Again, trying to find ways to assure the city receives ongoing long term income. We feel very comfortable in telling you that over the period of the next 5 or 10 years, the quality we all intend to see created here - these numbers will improve because of other structures that will be built. Again, we wanted to give you a feel of the economic potential or value of the things that have been established to date. Here, this is a cash flow for the city alone, the city and redevelopment agency, using the same basic assumptions I gave you before. This is every five years - I wish those numbers were every year, but they're not. But, again, you can see in large terms the kind of possibilities that this project should provide to the city. Again, we believe it will do more but we see the income per year going from the 3 to the 5 to the 6, 7, to the 8 million dollars a year category. We believe these to be sound numbers and your staff pursues them with us in excruciating detail with us regularly, but we believe that we have properly labeled it as conservative. The evolution of this entire project....I would make a couple of footnotes that I want you to have in mind. We still have within all the numbers you see other things we have to do and accommodate in terms of some of the project costs. We're still not there, so when you do IRR's (Rates of Return) like we've thrown up here, again we try to be conservative but they are to illustrate to you the return on the capital investment of the city in the private sector would be considered very appropriate. They'd be considered good. In fact, if we were doing it on our own we'd finance about 3/4 of this and when you finance something, the IRR's go up dramatically. If you were making comparisons with a private sector, you'd have financing assumptions in here and these IRR's would be much higher. By any measure, I think the financial arrangements that have been accomplished to this date are very sound and they offer a very fair return to the city. I think we are proud of the fact that we're beginning to create some real maximization, or at least some high levels of utilization of the value of it. I think one of the things you heard earlier was direction to go away from single family housing and condominium land, of which there is plenty, and concentrate here on building some things that are special, are the things that we're trying to accomplish. Any questions on any of the financial analysis? Masyor Wilson: Any questions from Council? Larry Thrall: I'm going to let Lon, and Lon works every day at the scheduling and trying to make sure we get things done, so he's better equipped than I to describe that to you. I just want to conclude this lengthy presentation with a "where we go from here". Where we go from here is there is a schedule which Larry is passing out to members of the Council. We have prepared a schedule of where we see the project moving. We know that all of you are 22 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * most anxious to get city's championship tournament golf course under construction. We know we face going through an entitlement and an EIR process but in consultation with the city planning department, we've come up with a schedule that says if we diligently pursue our activities during the month of January in coming up with a preferred plan with Planning Commission input and then coming back to Council. We propose to file environmental documents in January. We can be through with the process by June and get certification by July and this would keep us on the track of being able to get at least one of the golf courses under construction before Fall. We will be coming to you next month. We're working with your staff in coming up with a complete budget for the EIR and environmental certification process and we're also working on agreements between the city and us, the developer, and further meetings with the Bishop Estate. We want to conclude this presentation wishing you all a very Merry Christmas and a Happy New Year and we know we're going to see you next month. Mayor Wilson: Thank you, Mr. Ruben. Bruce Altman: Just by way of summary, I wanted to commend the folks that have been working with us here, plus all members of the staff for probably putting in about 60% to 80% of their time right now to make this thing really happen for the city. You know, combined effort between all of us. I think the Marriott thing is the significant thing because we do have a signed agreement with the Marriott and with the staff saying this is what we'll propose to the Council. The numbers you see here are not figments of the imagination, but numbers we can agree upon. The other thing we did also tonight, was the Council was concerned about, we've got Section Four, but we've also have a lot of other things going on in the City of Palm Desert so how do they stack up? So that's the next presentation, and that's the memo dated December 20th from Mr. Ortega and myself to the Council and the Redevelopment Board. I think what I'll try to do is give a quick summary of this and then respond to any questions you folks have. I think on the plus side of it, we project a revenue for 115 million dollars for the time period we're talking about. The bottom line expenditure we're projecting to do all the very things in this chart is 112 million. Which means we'll have almost 3 million more revenue than expenses if you do all the things on the sheet. Now, tonight we're not going to ask you to do all the thing on the sheet but we tried to bring back the things that you folks have been working on for quite some time. And let you know do we have the funding capacity to do it, and if not where do we go from there? So, I think that's the overview but some of the highlights we have are some of the Section Four work that we need to do yet. We have money in there for the infrastructure for the golf courses, for some of the site work and so forth. We have the working capital monies here, we've got money for the sports park in here. We've got money, let's see - I'm still looking - the Cook Street Interchange, the big contribution when the freeway overpass goes in, the municipal golf course and cultural 23 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * amenities is up on top - 10.5 million. On the bottom is the 13.5 for the other golf course we're talking about this evening. The public golf course, the championship course, will not be shared with the Bishop. That will be strictly our golf course. Revenues from that will strictly be ours so you'll have a separate performa on that one. There's money in here for two things that we suggested moving back five years - the people mover and the parking facilities at the Town Center. You will note that's around 6.6 million and 3.6 million. The reason we're suggesting that is, you know, some of the time frames for development of the commercial kind of coincide with it, so we're not recommending to proceed with that at this time. We've talking about a Civic Center restaurant. If you want to do it, we put a million dollars in here. Again, we're not asking you to approve it tonight. But something would come back to you as some kind of a proforma, we'd have to evaluate it and see if this is what you want to do. We've got 7 million dollars in here to finish El Paseo. You know, which is the old Sun Lodge Colony where we have people wanting to develop and this would provide monies to at least go in and purchase the land to try to participate to make this happen, if the Council desires. Monterey Bridge - we put a million and a half in here. As you know, we've got CVAG money. Rancho Mirage hasn't really ponied up to the table, so we've got that constraint we're facing yet. But if we can get them to come through, you know, we've got the where with all to make that happen. I know last time it rained you folks wanted to see that happen. Let's see, El Paseo you got, Civic Center....The public infrastructure Project Area 1 - let's see, Dave, what was that again? The 1.2 million - do you recall? David Yrigoyen: That was to include in the overall Section Four also. Bruce Altman: OK, that's part of the Section Four also. Dennis, why don't you give the clarification on that? Dennis Coleman: The 1.2 million dollars for public infrastructure has to do with part of the, if we decide to go ahead with the Ahmanson deal with the Desert Crossing. Bruce Altman: Yeah, that's right, this is the other piece of that. The rail station, we didn't put a lot of money in at this stage. I did have a meeting last week with the Pal Springs City Manager and the Indio City Manager and CVAG. We were trying to figure out if there was some joint position we can take to get the train out here - that's Number 1 goal. If we do, then we're saying "let's have three stations". But initially, maybe just a place they can stop at all three locations. So,this,at least, will be some money to press forward with the grant. On the other side, many of these things - the amphitheater is done, although we'll be coming back in with some of the monies left over here to propose some kind of a canopy for it shortly like we talked about at SpringFest. And also some kind of covering on the rose garden. But those aren't big, substantial monies - we'll be able to do that. The Tri-Cities Sports Park - we did get approval from the other cities now..they're going to pay us. Indian Wells is going to give us the money - it will be on the next Cove agenda, so that's a real plus and we're already proceeding with it. The tennis courts are done, the gym is all completed, 24 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * the Civic Center signage, I think is looking good. The Cook Street Bridge- this is pretty well completed at this stage. The library's got its fund in here, the Corp Yard's in here, Cal State land is in here, Country Club medians are in here, reimbursement of the storm drains for North Portola and other land acquisitions that you folks have been authorizing. Like I say, staffs real pleased that we've got all this for you. We feel comfortable that, if these are the things you want to do, we can bring back programs to make them happen. If you want to do other things, then you'd have to make some trade-offs. Mayor Wilson: A question - the Via Paseo project that you have on your list here. It seems to me that's something that we've all agreed for a number of years now is very important to bring the vitality of El Paseo together and to unite both ends. I guess I'm a little frustrated that it seems to be dragging a little bit. I would hope that would be given a high priority and would be moving forward. Bruce Altman: Definitely. I think the big problem with that one, Mr. Mayor, is the staff feels comfortable we can come up with 7 million dollars. Beyond that, we don't feel real comfortable. So, if that's the direction, to try to work a deal up within that parameter, then I think we can expedite it very quickly and be back at your next meeting. Mayor Wilson: Bring us something, whatever the best deal is for the city I think is what we want. Mr. Kelly, you wanted to speak? Councilman Kelly: I don't see the aquatics in here. Bruce Altman: Well, it isn't because that was never formally brought into the table just like everything else. You know, you can bring it up, but that never came to us like...you know Ali Baba made a presentation at that time..(unclear). We try to take things that were in the belt by some kind of a Council vote. Councilman Kelly: I'd like to speak to that because that doesn't sound quite right to me. It's been on the agenda of the Parks & Recreation Commission now for six months and the Parks & Recreation Commission passed a Resolution saying that they felt that aquatics should have a higher priority than pay for play softball. I don't understand why that's not a part of this package. Mayor Wilson: I think it should be part of the package, Bruce. You need to look at it. I was called by several Parks & Rec Commissioners the other day and I explained to them that the pay for play ballfield is a financial arrangement. I also found out from them that they don't rank our municipal golf course at all - that's not a priority to them at all. I told them that's part of our development of Section Four as the ball park is and that this is different from their pure assessment of recreational needs to the community. So, I do think we need to recognize their request. Their Number 1 priority is a fountain for the youth in the park 25 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * and, second, is aquatic. Third, is the pay for play ballfield and they say they don't even rank the golf course, but that's another matter. Bruce Altman: We'll be happy to come up with some kind of a number for you. You know, showing an olympic size pool. Ray, I think, has some background, don't you Ray? Ray Janes: Yes, as far as the funding for any aquatic center is concerned, what you have here is basically Redevelopment Agency funding. We do have funding available, depending on the cost of course, from developer fees - recreation fees - as well as contributions from other agencies. Bruce Altman: Well, but I'm not talking about the (unclear), I'm saying do you have the where with all so we can give an intelligent scoping to the Council next time. I think that's what we want to do. Councilmember Benson: I would think that it's very important that pool is back in there as well as the tennis courts which we know are done and the gymnasium, but the swimming pool is what we're lacking out there. Bruce Altman: Yeah, we'll get this (unclear) and your consensus and we'll come back at the next meeting with an estimate with what it would take to get it in and operative. That pretty much would.... Councilman Kelly: We must have at least fourteen baseball diamonds and we don't have a swimming pool. Bruce Altman: We'll be happy to come in with that. Are there any other things... Councilman Crites: About El Paseo, for a second. Are we going to have any discussion on that issue tonight, or is this it? Is this the time for such a thing? Bruce Altman: I think now would be a good time to discuss it. Mayor Wilson: It's not on the agenda. Otherwise...it's on right now. Councilman Crites: I certainly, without a lot more data, would not be in a position to authorize staff to go spend 7 million dollars in order to bring some project back. I don't have the foggiest what we're getting for 7 million, and why 7 million is good, and why it shouldn't be 1 million or no million, or more, or anything else. So, to say that 7 million is a goal is something I'm not the least bit comfortable with. Secondly, all of us have been all of a sudden in the last week or so been, at least initially, approached by a number of organizations all of whom are interested in developing that El Paseo site. I think we need to be fair to the developer who has been negotiating and looking at that issue and at the same time, I'm not 26 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * interested in spending any extra money because of one developer if somebody else can do the same package for us, or a better package, with a much better deal. So, between now and whenever this comes back in January, there needs to be some sorting out of who we are and aren't going to be dealing with. And, if there are competing offers or if there is only one thing on the table and that is the option we have, and such stuff as that. This needs some sorting out. Bruce Altman: Yes, let me give a little background. I just asked the City Attorney and we really have to deliberate in open session on the topic. So let's kind of cover some of the scenarios while we're on the topic. Mr. Wilmot (spelling?) and the folks, including Saks Fifth Avenue, came out here and met with the organization a couple of times saying they want to come onto the site, onto the El Paseo site. Saks, in fact, wrote a letter to that effect. The fact that was presented to the city staff was in order to make it happen, the land price was too high so they wanted some assistance with the land price. So we looked at it in that context and said staffwise, we could recommend up to 7 million to purchase the land if everything else took place. If, in fact, Saks is signed up and they're going to come in, during the course of the (unclear) a combined transaction and if there's no other money laid on the table by the city with a tough time frame. At this stage the developer would come back and ask for more, beyond the 7 million and we, staff, felt we couldn't do that. So I think what we're asking you tonight...the staff position would be to authorize us, if you so choose, to try to work something out for the land (unclear). I think that would be what the developer that's been working for the longest period of time with Saks Fifth Avenue is looking for. Whether Saks is with another developer, we don't know because we have the letter from Saks saying they're with the first one I described. I think we have to presume that's where they are until that deal is set aside. Mayor Wilson: Is that 7 million secured with land? Does it generate profit from the development? How do we make our 7 million back? Councilman Crites: In this case we would own the land. If nothing happened on it, I guess we'd still own the land. You know, we have to form some more points too. We have to get some basic marching orders from you. We would just kind of probe the waters to see if anything even (unclear) Councilman Kelly: ....we would lease it? Councilman Snyder: I think there's several opportunities of how we would handle it. The situation is that the program on El Paseo needs to be accomplished. El Paseo needs this program to revitalize El Paseo and keep it moving. As the developer who has been working on it the longest, he has been working with the staff and the Redevelopment people trying to come up with a method to accomplish this and accomplish this in a reasonable, early time. When the price of the property fluctuated around, there was some meetings with the Redevelopment Agency saying is it possible if we could possibly purchase the property to 27 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * assist the developer to get it going. Saks is extremely interested in getting it going because they want to be able to start breaking ground so that they will have this ready for business a year from November, the start of the season. It's important for us to try to put the package together so that we can indeed meet Saks' requirements and get the program going. Where we're at now, is that the Redevelopment Agency and the Planning people are looking at working with the proposal that has been submitted by the developer which I have seen and, to me, it's excellent. But we're only looking at a proposal, there's been no definition made because it can't be made until it can be brought to this Council. What they're trying to do now is to put together the package, determine what participation the city will have, if any, and at this moment the participation is that we would purchase the land. 7 million dollars is merely...that's as high as you can go. We don't know what the land will cost but Carlos and other people are in negotiations to determine what we're looking at. I think it's an excellent proposal. If other developers are interested and want to participate, they'll have their opportunity to submit their proposals also. It's just that we have been working on it a long time, it's starting to materialize, it's starting to be ready to be submitted formally and it was important that when we looked at the amount of money we're talking about using, that we put that amount in this so you'd know the total package. That's what we've been asking for on this Council for some time - all the various things we're going to get into, and do we have enough money to do it, and so therefore list what we're doing. And this is one of the lists of this overall view. Councilman Kelly: Especially what you just said has to do with us to position ourselves to create another flow of income. Councilman Snyder: Absolutely right. If that thing does what it's supposed to do, it will be a keystone. Councilman Crites: No disagreement with anything that's been said. But none of that comes even close to answering my question. Councilman Snyder: I don't know what your question is. Councilman Crites: I have watched this Council say "no" to approving a possible expenditure of $1,000 because we didn't have good data to show that something might cost up to that. We're asking to set a maximum of 7 million dollars and I don't think it's anymore a secret. Now somebody knows we might pay up to that, I suspect all of a sudden that's about the amount we're going to be asked to pay. I don't have any piece of paper anywhere in my world that tells me why 7 million dollars is still within the feasibility range for doing this sort of project. Bruce Altman: Let me say that Saks Fifth Avenue happens to be a store in a different category than anything we've dealt with. You know, Nordstrom's if you want them to come in you pay 26 million dollars. Saks, if you want them to come in, they will not pay for the 28 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * site. That's basically what it boils down to. They would be the nucleus of the whole picture. Maybe one thing is, you know Councilman Snyder has been working on this since he was the Mayor. Maybe you should appoint another person from the Council to sit down with Carlos and I and see if we can strategize and brainstorm this to bring other people along. Mayor Wilson: The direction I hear is for you to sit down and pull together the pieces and bring to all of us on the Council the best financial deal that we can get. I think there are two factors to be concerned with. One is I think we want to develop that property as quickly as possible with the highest quality project as possible, but we also want to have a good business arrangement if we're going to participate financially. Or, a proposal where we don't participate financially. So if you can bring those options to us - maybe a couple of proposals and we will decide. But I think it should come quickly because we may lose that 1995 window that Walt talked about. Councilman Crites: The only problem I can see, and I'm not disagreeing with what you're saying, the only possible problem is that Saks Fifth Avenue has put us on notice that they're dealing with Mr. Wilmot, not with Westinghouse. So I'm not sure what the ethics are to go beyond where Saks says they're coming. If we go to someone else to say "what would you, if this were the case.." Mayor Wilson: That's for you to investigate. If that's an exclusive with one developer, then that's the information you bring to us. Bruce Altman: No problem. So we'll come back with it very shortly then. You know the Ahmanson one is a separate agenda item tonight, but there are other ones on this list you want to talk about. Councilman Kelly: What's the situation with the new law going into effect January 1st related to the El Paseo Ahmanson problem. Bruce Altman: I believe El Paseo is no problem. Is that right, Dave? Because its (unclear) area? City Attorney Dave Erwin: That's exactly it. Bruce Altman: So that's not impacted by the....I think the only thing would be the time table of when they would open. Councilman Crites: So the other projects on here we can deal with as we come to, and choose to or not to participate. Bruce Altman: Yeah, anything else... 29 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilman Kelly: They all require individual approval. Bruce Altman: Yes, individual action is your approving budgets on various projects and so forth. I think that's pretty much the summary of those numbers. If there are no more questions... Mayor Wilson: Any other questions on this agenda item, which was for information. No action necessary. Bruce Altman: But I want to thank the staff for putting this thing together. I know you folks were wondering if we'd ever get it to you. It was like moving crap game or something. There were so many different variables, but I think they've got a good report here for us. Councilman Snyder: I'd like to say before we close this item that the work the staff has done on very complex and unusual situations for a city has been excellent. I am extremely pleased with the attitude of all the people involved that we are going to be a progressive city and we are going to look at these kinds of things that they're setting in front of us and I'd like to compliment the staff and all the people who work with the staff for putting together an extremely interesting program for us to get going on, and create the best damn city ever. Councilman Kelly: Too bad every citizen in the city couldn't hear it. D. REOUEST FOR CONSIDERATION OF AN AGREEMENT (CONTRACT NO. R08150) BETWEEN THE REDEVELOPMENT AGENCY AND ODEKIRK PARTNERS ENABLING THE DEVELOPMENT OF A PUBLIC/PRIVATE SPORTS COMPLEX - JOINT ITEM WITH THE PALM DESERT REDEVELOPMENT AGENCY (Continued from the Meeting of December 9, 1993). KEY BAA Bruce A. Altman, City Manager JW John Wohlmuth, Assistant to the City Manager RSK Richard S. Kelly, Councilman SRW S. Roy Wilson, Mayor JMB Jean M. Benson, Councilmember BAC Buford A. Crites, Mayor Pro-Tempore PS Paul W. Shillcock, Director of Economic DevelopmentlA.C.M. WHS Walter H. Snyder, Councilman JAE Judge Arnold H. Einbinder GF Gerald Forrest, Silver Sands Racquet Club BH Barbara Hassett, Desert Falls Country Club DY David Yrigoyen, Redevelopment Agency Assistant RO Rich Odekirk 30 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * JA John Archer, Silver Sands Racquet Club WS William Swank, Developer GL Greg Lupensky ROO Ronald Odekirk GP Gary Pasquitz ED Edward Byk DB Debbie Byk LS Lynda Schruben, Fast Frame WH Wayne Hancock EB Edward Byk DJE David J. Erwin, City Attorney DS David Spriggs SRW: The next item then, we'll move on in our agenda to Request for Consideration of an Agreement (Contract No. R08150) Between the Redevelopment Agency and Odekirk Partners Enabling the Development of a Public/Private Sports Complex. Before I turn this over to staff for a report, I do want to make one item clear. We are not here tonight to discuss the location of this project. That is being assessed as part of an environmental assessment as to what the impacts of the location on Section Four that we have spent the last two hours discussing - what the entire project, what the environmental impacts will be and how they relate to each other. That will be assessed and what we're here to discuss tonight is the contractual agreements whereby we will require certain things of the developer as an agreement to be a partner with the city, to share revenue from this development. So with that, I'll call on Mr. Altman for a presentation. BAA: Thank you, Mr. Mayor and Councilmembers. Mr. Wohlmuth's going to give us a hand here to make a presentation. He's done a lot of work with it, but so has Mr. Shillcock and a whole army of others. John volunteered tonight. JW: Honorable Mayor, Members of the City Council, at the November 17th City Council Meeting, Council directed staff to bring back an agreement between the Odekirks and the City of Palm Desert. Working with the Redevelopment legal counsel, the agreement states, if the proposal is approved by the City Council and Board, that we will utilize the 5% allowance for private activity provided by the non-taxable bond issue. There are a couple of important parts to this agreement. Staff has prepared a legal description of the 21 acres on the property, east side of Portola Avenue, 750 south of Frank Sinatra Drive. We give you that legal description because that is where we're working with planners for Section Four and allowing them to proceed with the design of Section Four and the golf course. In addition, staff has been working with the Odekirks on several business points. In your packets and the exhibits are changed a bit in terms of the titles of the exhibits, the same documents exist, is an exhibit that was prepared by RDA legal counsel and there 31 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * are two Exhibit A and Exhibit B, as a part of that exhibit. I know it's confusing but Exhibit A is the legal description, Public Works staff has just completed the legal description for this piece of property and Exhibit B is the business points that staff and the Odekirks have been working on before you tonight for consideration. The other basis format to the exhibit has been prepared by RDA legal counsel. Basically, the business points have been agreed upon between the city and the Odekirks with one exception, and that's the buy-out agreement. However, as of last Friday we did get a buy-out provision that staff recommends. Staff recommends the buy-out provision that's in your packet; however, we don't have a problem with the buy-out provision that they brought to us as of last Friday. The buy-out provision the staff recommends was basically a buy-out provision that would enable the developers or the Odekirks one million dollars at the time of buy-out plus the highest profit for any year and a two-year notice. That is what staff recommended.. I'm sorry, that is the final part to that agreement. We would first try to Odekirks, or the project, on a mutually -agreeable site. That is what staff recommended and that is what's in your packets. The Odekirks presented the city on Friday with another option that we could, as staff, we could support. And that basically is that the parties, well I'll read it to you... "In the event the city desires to utilize the sports park site for a higher and better use, we are proposing, the Odekirks are proposing, the parties will each make a good faith effort to relocate the sports park to a mutually agreeable location. In the event the parties cannot mutually agree on a new location, then the city will have the sole right to unilaterally decide on a new location and to cause relocation of the park. Item 2 says that all relocation costs will be borne by the City of Palm Desert if we choose to do that." That is the buy-out provision that the Odekirks presented to the city as of Friday and we, as staff, don't have a problem with that. All of the other business points we have agreed upon and this agreement is basically an agreement to agree upon form. In other words, there are two acts that need to take place before the final agreement can be entered into. Those two acts are approval of the project is subject to the EIR certification and 2) the public hearing allowing the Redevelopment Agency to lease the land. Those two actions can take place at the time the EIR is completed. But basically, what staff is asking the Council tonight, if you so approve this project, would allow staff and the Odekirks to proceed with this project, and to continue working subject to the certification of the EIR and the land lease. RSK: I don't understand what you just said. JW: We have an agreement in the packet that is an agreement to agree between the city and the Odekirks. We cannot develop and enter into a development agreement tonight until we certify the EIR, that's at the end of the EIR process, and #2, hold a public hearing enabling the RDA to lease the land to the developer. Those are two actions to take place and they have to take place, according to legal counsel, at the end of the EIR process. RSK: What's the use of having a public hearing later if we're going to approve it tonight. JW: The city feels, and the Odekirks feel, that we need to make this decision tonight in order to proceed with the project, proceed planning the project, proceed negotiations on the project. There's certain negotiations that have to take place and a lot of work that has to go into this final agreement, or 32 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * the development agreement, prior to the certification of the EIR and the land lease. And if we don't have time to work on this agreement, or if the Council doesn't want to see this project then we won't work on it. If you want us to, we will negotiate with the Odekirks and complete the process. BAA: I think too the other part, excuse me, John, was that at last Council meeting the Council directed us to do exactly what we have here. You directed us to come back with a contract for your consideration with the Odekirks. In working on that contract, that's when we found out some of these legal constraints, you know, by the Redevelopment attorney saying that you couldn't finally adopt it until the process was through. On the other hand, if the Council doesn't like the deal points then you say you don't want these deal points, then it wouldn't go into the EIR process because you would have said it's not a suitable deal. So it's a Catch 22, but that's how we're trying to work through legally and meet the constraints that you folks gave us. SRW: Mr. Wohlmuth, I did not see and is it in this agreement, that this is a 30 year land lease with the land reverting and the project reverting back to the city in 30 years. Is that... JW: That is correct. The agreement states that the city will formalize 1) a land lease and 2) a share in the 2.8 million dollars the city is putting up on investment and it is a 30 year deal. In every case we own the land and in every case 30 years the project's ours. SRW: And I guess I'm not totally convinced that we need a buy-out clause if, indeed, we maintain ownership of the property and we will basically take over the project in a specified period of time. I can see us negotiating for several years and then the lease runs out. Could you give me an example of where a buy-out clause would be necessary earlier than the 30 year time period? JW: Staff basically was working on one main consideration but I think there are a lot of minor considerations. And that main consideration is a higher and better use of the property. If the site is to be used by a higher and bigger use for the property and would enable the city to receive higher rates of return, perhaps we can relocate the facility and accomodate the sports park in another location and utilize Section Four for something that would return more revenues to the City of Palm Desert. The minor issues could be environmental, could be as a part of the development of the North Sphere, issues of the use of the 21 acres. SRW: Thank you. JMB: If this was approved tonight and it was not certified in the EIR and you say the process is going on for the next several months while they do the EIR, who's paying for that? JW: The EIR JMB: Not the EIR, but all the work the developer's supposedly is going to be doing. He's paying for that? To get certified? 33 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * JW: Yes, the city doesn't have an agreement with the developer at this time. Any monies that he's putting into the project is coming out of his pocket. BAC: If I may go back, all of this may or may not make sense to somebody who's heard it a number of times but if I was seated in this room and had not I would wonder what this was all about. So, start from stratch. It's an agreement to lease to an organization for a period of 30 years a piece of land - 20 acres. What are they paying per year for that lease? JW: If I may, I would.... BAA: I think Paul Shillcock could answer... JW: Yeah, I'd leave that to Paul Shillcock. BAC: That needs to be thought through again. . SRW: What their payment is, what the lease states, what the profit-sharing is... BAC: There's not a thing about any of that in our packets. PS: Mr. Mayor, Members of the Council. It was a couple of months ago, actually many months ago, when we first started on the process that the major business points were brought to you. At which time conceptually you approved those and they would be included in any legal documents drawn up. RSK: I didn't memorize mine though. PS: I will review them for you. There are two aspects of the project. One is the lease of city -owned land and the second is the loaning of funds to pay partially for the construction of the facility. The lease of the land, the amount to be paid, will be based on gross receipts. We should say using the philosophy that the better the more successful the development is, the greater the return to the city will be. In allowing for a start-up period, the lease rate will for the first five years or until there's 2 million dollars in gross receipts at the gate, the lease will be zero dollars. Starting in that sixth year, or when that 2 million dollars is achieved, the lease rate is 6% of the gross. It goes up to 7% when 2 1/2 million dollars is reached and it progresses to 10% over the life of the project. That is at the point of gross revenues of 5 million dollars or more. The construction financing is also based on the same philosophy - that the more successful the project, the more revenue is generated for the city. However the financing cost starts immediately, the first dollar that changes hands interest will be charged on that even during the construction period. That interest rate starts at 5 1/2 %, which exceeds somewhat the rate we are currently earning on our long term investments and it goes up to the point when gross income. exceeds 3 1/2 million -dollars or more, the interest rate is 9%. 34 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BAC: Now that interest rate is the interest rate on the money that the city loans to... PS: Yes, it is the rate charged on the outstanding balance at any time during the life of the project. BAC: So on the low. end of the dollars that we are asked to loan, it's 5 1 /2 % interest and at the high end, it is 9%. PS: Correct SRW: Any other questions for staff at this time? BAC: A couple of them. The projects often say they're going to cost "x" and then by the time all is said and done, they cost "x plus". Who in this proposed project carries the potential "plus" cost? PS: Mr. Mayor, members of the Council, the agreement specifically states there's a maximum amount of funds that will be loaned to the developer of 2.8 million dollars. If construction costs should exceed that, it will be the responsibility of the developer to make up the difference. BAC: OK. And the developer was asked to put in one million dollars, is that correct? SRW: Is that up front or PS: Yes, his million is to be spent first. BAC: Now our money is something - if this thing doesn't work - our money is secured by obviously the land and by the facility. RSK: No, we own the land BAC: That's what I mean. We still have the land and we then own the facility. RSK: What secures it is... BAC: The facility, right. RSK: We own the land already. BAC: Well, they're gone from the land is what I mean. In that case then, what security does the developer have for their one million dollars? PS: Mr. Mayor, members of the Council. There is no security. That is completely unsecured funds. It's risk or venture capital. The way the language states.... 35 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BAC: They can't put a lien on the facility, on the property, on the anything that's in it in order to get some of their money back? PS: The agreement states that the city can be the only lien holder on that property for the improvements. No one else can place a lien on that. JMB: What is the value? SRW: What did we pay for it? PS: We've had some appraisals done and I'm told that the approximate value of the property in Section Four varies, depending on the size of the property and the exact location, but is somewhere in the neighborhood of $49,000-$50,000 an acre. RSK: Well, of course I don't agree with that because once we develop that it's worth more like 5 million dollars and I can show you that on paper. (unclear)..an appraiser, just based on what the lots would sell for. But I have another question besides that. When you talk about us receiving interest, we're receiving interest only on the 2.8 million dollars as we pay it out? PS: Correct RSK: But we don't get any payment or lease for the land - what do we get for the land? PS: The land..the lease for the land which are the payments, start upon.. RSK: The payments are for the 2.8 million. PS: There's also a lease payment, which is a separate payment. RSK: What's the lease for the land? PS: The lease of the land varies with gross income from 6 to 10% of the gross income. RSK: When does that start? PS: It starts either when the gross receipts reach the 2 million dollar point, or... RSK: So if they don't reach a certain point in gross income, we don't get anything for the land. PS: Or year five, whichever comes first. RSK: Then we don't get anything for the land then? 36 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * PS: In year five you would even if they didn't reach the 2 million dollars gross. SRW: Any other questions of staff? I have a card here from someone in the audience who would like to speak - Judge Arnold Einbinder(Spelling?) JAE: Yes, I'm Judge Arnold H. Einbinder, Retired, living at 549 Desert Falls Drive East, Palm Desert, California, 92211. Mr. Mayor and members of the Council, I have to acknowledge my naivety and also my failure to comprehend the connection or disconnection between the Council and the Redevelopment Agency. I know you all sit as the Redevelopment Agency and you all sit as the Council, but I'm terribly confused and I'm confused in this way. Some weeks ago I was in attendance before the City Council at which time this matter, the project and the particular part of the project of the Odekirk Partnership and the sports complex, came up before the Council. It was decided that night, prior to the time that the Council met, that the project would not go forward that night, or any action on that project would not go forward. And that an environmental impact report would then be required of this project before any action was taken. I, being naive, presumed then thought that was the end until it came before the Planning Commission again and there was an environmental impact report that was passed upon, and that it would come back to the City Council for approval of disapproval as the matter would require. I didn't know that at the same time this project was going on through the Redevelopment Agency. We weren't notified of that because the same requirements are not present in that the notification goes out to the various agencies and developments in the area with regards to a Redevelopment Agency project as it is with regard to the Council actions. And so, our Association wasn't notified about this particular event that was taking place. Now, I grant from what I believe, December 9th was a Council meeting... SRW: And a Redevelopment Agency meeting both. JAE: Well, but it was on a Thursday and I guess I'd been toldbefore by the Council, and properly so, that if you want to be up on things you look at what's happening at the Council meetings or at least get a copy of the agenda. But again, I'm objecting to it only in the sense that I believe everybody at that meeting believed the same thing that I did, that this was a project that would not go forward unless and until there was an environmental impact report. Now, I just want to make one other point. My understanding was that this project came up before the Council as a separate and distinct project that evening, not as part of the whole Section Four sphere project. And it was my understanding further that the Council then acted by taking that part of the project and lumping it back into the whole project for an environmental impact report. Now the reason I say that is because I believe that by doing so, and I grant this may not be conducive to something that is before the Council today, but by doing so you diminish the impact that this particular project would have by itself when you encompass it within the whole project. SRW: Let me try to respond to some of your questions. You're absolutely right that the final approval of this project depends on the EIR and that will be with public hearings down the road. What we're considering tonight is only whether or not we agree or disagree on the business points. There's no sense for the developer to spend money on an environmental impact report if this 37 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Council says "we don't want to do business with you". So that's the direction we're... we are either going to agree or agree to disagree tonight. Secondly, your other point of putting it in with the other projects in Section Four, it does not diminish the impact of this. It looks at the cumulative impacts of all of the activity on the Section and gives us much better data as to how to judge the impacts of not only this project, but the golf courses, the museum and all the other things that are proposed for that site. So we'll have much better data to go on by putting this project in with that one. BAC: Mr. Mayor, I'd like to mention to the Judge that the issue that we have delayed inappropriately, at least from my perception, for environmental study is a land use decision. Those issues that have to be subject to public notice and such things as that when we are actually going to do something to the land. We can approve a hundred of what's setting before us this evening, or reject them as the case may be. That has zero impact on a piece of dirt without a land use decision. It is the land use decision that was commented on in meetings past, to be delayed. It is the land use decision that is delayed. It is the land use decision that is the ley to accepting, rejecting, doing whatever is appropriate with this particular part of a wide number of projects. JAE: I agree, the only comment I would make is in my limited experience with municipalities, I have found that once they enter into an agreement they find it very difficult to get themselves out. BAC: That's why you don't sign anything that's legally binding. JAE: Thank you very much. SRW: Thank you, Judge. GF: May I ask one question? SRW: Yes. You may come forward. Please state your name and address for the record. GF: I am Gerald Forrest, 10 Las Crusas, which is the Silver Sands Racquet Club. I've only got one short question gentlemen. Has anybody, and I'm sure you have, seen the track record for Odekirk and partners? Their financial track record? Their previous, what do you call it, living up to commitments? Because a million dollars is nothing today. We have to put up public funds of 2.8 million. The track record of Palm Desert investing money hasn't been too great as you'll remember the (unclear) Nuevas. I don't know how many millions. So I would say a lot of caution should be exercised. SRW: Let me comment to you. Our track record is very good investing money. That's why you don't pay property taxes to the City of Palm Desert, or utility taxes or anything else. We live with plenty of services in this community and we have a very large investment of money and that's why we can look at some of these investments. Number 2, that is why we have attorneys drawing up 38 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * an agreement that will hold the city basically harmless. Remember, we retain the land if anything goes wrong with the track record of the Odekirks, we will own this facility in toto, and we will own it with an unsecured amount of contributions from the developer that has to be paid up front before we spend a dime. BAC: I'd make one other comment. I don't think anyone on this Council would every diminish the significance of what happened to us a couple of years ago with the Wymer scandal in which this city along with a number of other cities in this valley, along with almost a hundred cities nationwide, were the victims of a fraud. And we have done our very best to learn some things from that and we're also in the process of doing a variety of things to retrieve most, if not all, of those funds. But I guess I call your attention to another thing; the previous part of what we heard this evening. I would bet you could go all over at least the County of Riverside, if not most of Southern California, and not find one other municipality that was able to set down and look at how should they, appropriately within the next five years, spend 100 million dollars that they have. Not that they have to get, but 100 million dollars that has come to them from ongoing redevelopment monies, and so on and so forth. As one member of this, and this goes way back before I became a member of this, I'm proud of my colleagues and people who have preceded them and our staff for arranging a position in which we can go out to look at, whether it's the Southwest Museum or municipal golf course or swim facilities or a nine million dollar public library, or a whole variety of other things. There are very few places left in California in which a community has the funds to walk up and say "we're going to build a library" and turn around a build the best one that we can find in this part of California. BAA: One other point, Mr. Mayor. At your last Council meeting where we brought the staff report in. We have a background check program called Lexus Nexus and we indicated as part of this process we had run the Odekirks and whoever else was involved in it through them which tells every business dealing they've had, the history of their background, etc., before anybody signs any agreements. So that is part of our background checks. SRW: Thank you, Mr. Altman. I see someone else would like to speak. If you'd come forward and state your name and address for the record, please. BH: My name is Barbara Hassett, I live at 238 Desert Falls Drive East. I have spoken before the Council before on this. But I was very impressed this evening with what I heard about the museum, the cooperation with the Marriott and what is happening. The only thing that is still very seriously disturbing me is that everything we are hearing is bringing revenue. The sports park does not pay anything for five years unless they get 2 million dollars. It seems that we are giving everything and getting nothing in return. Unless it is a success and I hope it is a success. I don't object to the project, I object to the location. I object to our money being spent this way and if it isn't a success, we're left with a white elephant that we really don't want. It was made very clear, I think, by a lot of residents they don't want that there. 39 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * SRW: If I may respond. You might stay there because you might want to respond and comment on my comments. First of all, a little misunderstanding. The minute we loan the 2.8 million, we will start receiving interest on our money at a higher rate than we get currently investing through the County Treasurer. Point Number Two, the second point is that since this city incorporated.. when we first incorporated all the youth of this community played baseball and soccer, Little League and so forth at the College of the Desert football field. They divided it into ball parks. We built the sports complex on Cook Street where the high school now sits and we no sooner had that built when we had all the youth groups coming to us saying there are not enough recreational facilities, baseball fields, Little League field, for the community. We then, and we're in the process of building much closer, a four baseball field complex right out here in the Civic Center site which is directly across the street from Monterey Country Club. And that will not be enough to service the needs of this community as far as youth recreational activities. Now then, let's take worse case scenario. This doesn't work, we don't make money on it, we have not lost anything. We have a million dollar contribution to the development of three Little League fields for our community and that's a good investment as far as I'm concerned. BH: I agree with you it's a very good investment. But my point is that will only happen if it is not successful. Unless I am mistaken, I have been made very well aware that the kids aren't going to use this park for Little League except for playoffs. SRW: That's right. We're going into it as a business deal but our fall -back is that if it doesn't work, it is a bad business deal, we have a million dollar contribution toward building the next ball complex for the youth of this community. BAC: I'd add, if I might, one other comment. This is not particularly about the ballfields but if we enter into some kind of arrangement to secure Saks Fifth Avenue in order to help anchor El Paseo and it doesn't work, we have that issue. If we build two golf courses and they're competing again quadzillion other golf courses in this valley and if they don't work....one of the issues you're hearing and it probably makes all of us, I know it makes me, less comfortable than a lot of other things, is that we're doing things that are not the traditional things that cities do which is to say you can't build it over thirty feet high, and if you're going to build it you have to build a street this wide, and you also have to put in this kind of grass and not this kind and so on and so forth. We're entering into being business people. In this case, primarily not with tax money that comes from us as we pay property taxes, but redevelopment funds which are funds that otherwise would end up in the State of California. We have probably one of the best redevelopment agencies in the whole State. I think that in terms of money that we receive that we're what in the State of California? Number what? DY: We're 16th in the State. BAC: We're 16th in the State of California. If you think of how many cities there -are in the State of California, we're certainly not 16th in terms of size, thank God. So we have parlayed our way into a lot of money that can only be used in certain kinds of ways because it is redevelopment money. 40 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * And one of the businesses of this body is to do our best to find a way to use that money in a way that 20 years from now, after any of us...or 5 years or 2 years...when we're all gone, people can sit back here and say here comes the dollars. And the issue before us is whether or not this is, along with a bunch of other ones, a good business proposition. And like all of them, if they don't work whether. it's this or any of the other ones, you'll have the same appropriate comments. RSK: (unclear) a public hearing SRW: It's not a public hearing but we welcome anyone else who would like to speak to come forward. Then this gentlemen back here after this.... RO: Mayor Wilson, City Council. My name is Rich Odekirk, 4360 Lisbon Way. I wasn't sure if I was going to get up and address you this evening but based on some of the comments you're getting, I think it's important that I make a couple of comments to you and remind you of a few things. SRW: Would you restate that, I had a hard timing hearing RO: I was saying that I wasn't necessarily going to get up this evening and talk but,based on the fact that some of our opponents have gotten up to say some things, there are some things I want to remind you of and I'm going to make them brief so I don't keep you a long time. But over 18 months ago, your city staff and I began discussions and planning to bring the City of Palm Desert the most unique and the nicest quality sports complex that will ever be built. Designed by Disney people, our project promises to be of such quality that you and its citizens will be proud of it. As a City Council you've agreed and understood every step of the way what a service we will be providing in Palm Desert. You have seen and studied materials that show that not only will we be providing recreation to our local citizens, which basically does not exist now except golf and tennis, but that we will also be helping our Number 1 industry, tourism, bringing in out-of-town tournaments, traveling tournaments in softball, basketball, soccer and pro beach volleyball. In fact, our first year will bring more visitors to this valley than the entire convention business brings in during the same amount of time. Your staff has passed on to you an economic study the college did which detailed the positive economic influence our project has. Mr. Shillcock is very familiar with that study if you're not. Let me remind you that we've taken our project to all the groups and committees that you appointed and asked us to - the Promotion Committee, the Economic Development Committee, the Parks & Rec Committee - and they all unanimously endorsed us without a single "no" vote. And your Planning Commission approved us 5-0. The Chamber of Commerce loves our project and you've liked it through approving this concept, the business points and the location in three different Council meetings. Your city staff has researched and analyzed this project and they recommend approval. You have seen or heard from hundreds of citizens and supporters at either our public hearings or in letters. You have been shown how practically every faction of this community wants this complex. You've heard from El Paseo merchants and the Town Center Mall, from restaurant owners and hotel operators, from churches and charities, from athletes of all ages ranging from Little Leaguers to wheelchair athletes to senior citizen athletes. And, finally, you've heard from the head of every youth sports league in the valley asking you to 41 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * approve this project. Even those who have opposed us up to this point have told you they thought it was a good project. They took issue with the location. Some of our supporters are here tonight and I've asked that they all not get up and speak. I don't think it's necessary that they take up much of your time. You're aware of this support. My attorney, Len Crandall, is here. My partner, who happens to be my father, is here and we're glad to answer any of your questions. I wanted to bring up some of those points. Thank you. SRW: Any questions? No questions - There's a gentlemen in the back who would like to speak. JA: Thank you for listening to me. My name is John Archer. I live at 75 Birdie Way in Silver Sands. And the way I understand this project is that although the money lent to the developer will begin to earn interest immediately, the land will not gain any rent to the city - no rent will come in - until a certain volume of business is done there. And, just using..because of a little easy arithmetic..I used a gross of $2,500,000 dollars before the city began to show a reasonable return on the value of the land. If the project does a gross of $2,500,000 that's roughly $7,000 a day for 360 days. Presuming, even in Palm Desert, it will rain a few days and it probably won't do anything on Christmas or New Years Day. That is roughly 200 people at $35 a day apiece being spent in the project, or 400 people at $17.50 apiece being spent in the project. And I just sincerely hope that if this project goes through that this type of volume is, in fact, done on the property. But that is a whole lot of folks spending a whole lot of money before the city gets a return on the value of their land. Thank you. SRW: Thank you, your point is well taken. There is one other aspect to that. It's that we don't receive lease payment until it reaches 2 million dollars, or the fifth year. And if they don't reach that, they start paying the lease payments on the fifth year. JA: I understand that. Thank you. WS: My name is William Swank. I live at 5550 Riviera Drive, La Quinta. I'm a development partner in the project north of Frank Sinatra between Cook and Portola. I think that the city and the staff and the leadership as been demonstrated by the City Council should be commended. And I think the developer of the golf courses and the hotel and conference center has done an outstanding job. You're getting into the business side of the transaction now so you're going to have to start putting on another couple of hats. I look at that site, 21 acre site, and I see 21 acres with about 2,000 lineal feet of frontage on a major golf course. I think it's a giveaway to put a million dollar value on that piece of property. If that property isn't worth 5 million dollars wholesale, I'll eat my hat. And to enter into an agreement where you have one million in land, 2.8 million dollars in city contribution, that is skewing the financial data on this thing. Because the real contribution of the city is 5 million dollars in land and 2.8 million dollars in cash. That is what the land is worth. So, I don't have any problem with the sport complex as such. I do have a problem with the location. Our project is on one of the highest elevations of Palm Desert. It overlooks this complex. I don't want to get into the details, I'm only going to stick to the economic side of this thing just for one moment because I might not get another chance. I've been a hotel developer for 42 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 35 years. That's my core business and I can tell you the room nights that's been projected that this complex will bring have been grossly overstated. Because I cannot go out and build a hotel unless I have a full Big 8 feasibility study. There's nothing like that been done on this project. I could not go out and get financing from any private source, or institutional source, if I did not have a full feasibility study, a full appraisal, a full cost breakdown, detailed plans and specifications, full entitlements. All of these things I have to have before I can go any place to get financing. We have a hotel site that's on the corner of Frank Sinatra and Cook. There was 125 foot strip of land there, a gap between us and the prolongation of Cook. Cook was going to have to bend. We didn't think that was right so we went out and we paid $125,000 an acre for that 125 feet so we could donate it to the city, so the thing would go through straight. We have completely designed the North sphere sewerage system. It's all complete, it's ready to go to bid. I'm telling you we've done all these things, we haven't come up here and asked for one single penny from the city. Nor are we going to ask for one single penny from the city. All our plans have been approved 100%. We've worked quietly, we haven't made a lot of noise. We haven't because we don't believe that's the way to work. I take no pleasure at all in standing up here before you tonight. I say that if this project goes ahead the prudent thing for the city to do is to at least have a Big 8 study from one of the Big 8 firms, look at this economic data. Because when I go to the lender, the lender doesn't believe me. He wants a free and independent opinion and he's entitled to it. And you're entitled to no less. Now, finally, you have a magnificent project here. I think you know that everybody is to be commended. Even the Odekirks are to be commended for the quality of their designs before me right here on this table. But, if you're going to get into the business of real estate development, don't give land away because that is the worst thing you can do. To wait five years to recover any kind of money from the land is, I don't know anybody who would do it. And if you took that land and got the true value of what it was worth, you'd have the money free and clear and you could build the whole thing. And you'd have enough land so you could expand it. You cannot expand it here. It's choked in and projections I've seen have been based upon three parks and then maybe expanding it. Well, that part has .been discarded because they don't have enough room. So I don't think there's enough critical mass here to promote the kind of activity that is needed to support and pay for this project. Finally, I just want to emphasize that I take no pleasure at all in having to come before you. But it would pain me greatly if this project is moved ahead based upon a one million dollar land contribution where the land is worth at least 5 million. You don't have to take my word for it. You can go out and ask any knowledgeable real estate developer. And you're going to say, well OK this is going to bring other benefits for the city. But I'm challenging those benefits because that is my core business. I've been in the hotel business for 35 years and developed them all over the world, and we know exactly where our people are coming from. The bed tax is a very,very important increment for the city. We know that and so we are prepared and we're moving ahead with our plans to develop our hotel and we hope, you know, that we can deliver on our promises and we're not asking for one single penny - we're doing it all ourselves. Thank you very much. SRW: Thank you Mr. Swank. I might point out Mr. Swank is developing a very high-class, very fine project, north of Frank Sinatra Drive and has been a good team player with the city for a number of years now. I'd like to point out one thing, though, that we're not giving away that land. We're 43 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * retaining it and the city basically is not in the land sales business. We have been land banking and we know the value of the land will continue to go up and want to bank the land. That's why we're taking back possession of this land after "x" period of time. I want to also point out to those who are concerned about the fact that there's a possibility we will not get revenue from that land for a five year period. We haven't gotten revenue from that land for the last five years since we owned it. So it either sits vacant and brings no revenue, or we do a joint venture and we take a risk that we're going to make money on it. The gentleman here wishes to speak. GL: Mayor Wilson and City Council, my name is Greg Lupensky, my address is 1420 Country Club Drive. Behind me you see a group of supporters for the sports complex. We came prepared to stand up and each of us voice his support but the Odekirks have asked that we don't do this, to spare you a lot of time. Instead, I am speaking on behalf of not only those of us who are here, but many others who cannot be here today. You've already heard from many of us in other public hearings. You've received our letters. We're here to remind you that despite that this project is taking a long time to be approved, the supporters of it are behind it more than ever. You've heard a lot of citizens in this community, business people, youth league representatives, and athletes of all ages say "please don't forget us". We're not rich and we're not country club residents. Many of us do like golf, for much of the year it's just too expensive. This sports complex will give us a great opportunity for recreation. We will support and use it. Palm Desert is turning into a nice city to raise a family. Please help make it a better place by remembering the young adults of this community. Thank you. SRW: Thank you. ROO: My name is Ronald Odekirk. I'm a partner with Rick in the proposed project. I'd like to respond to Mr. Swank's concerns. He says he's an experienced hotel man and that he knows his business. We're experienced in the sports business and we know our business. The numbers we projected for this park are conservative. We know we can generate the tournaments, visitors, we know we can generate the special events and activities and the tourism figures, we feel, are easily obtainable and we have a lot of research to back that up. Asking for a Big 8 study, this business has been studied by the Arthur Anderson Company. We did a feasibility study on this location and this park by one of the experts in this business and included in that feasibility study was some analysis of the sports park business by the Arthur Anderson Company. In their research, they looked at 10 to 12 private parks around the country and gave us the formulas they used in determining the operating costs and their...(unclear) research..(unclear)...and the income of the project. Now we were asked early on in this project to be conservative in our estimates. I want to assure you that the income figures that we're projecting are very easily attainable. We expect the normal occupancy of this park to be done within three years the projection we gave to the city, so that we weren't promising more than we could deliver. Instead, our lease payments would start at 1.8 million, not at 2 million. We have a projection which shows that we're going to achieve that in the third year. - 44 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * We've got an expert with us tonight that has been working on another source of revenue for this park. He's a gentlemen that's been involved in the sport business, he's involved with corporate sponsors and advertising people. I'd like to have him say just a word and the reason for doing this is to make you comfortable that the figures we're projecting for this park are going to be there. Like any business, we've had to look at the elements of this business. We've determined that our location is the best. We've got a community that attracts visitors, has wonderful tourist attractions. We have weather so this park can be utilized year-round. We have a design that's unsurpassed in the sports business and will attract customers. It will control the cost and it will promote the concessions business, which is a big part of our profit. The management team we've put together is experienced. We have the knowledge and ability to promote this business and to run it properly and to maintain it properly. And we hope we have the support of the local government. Now we know the demand is here. We know that we can make this a profitable project and I can (unclear) you the comfort levels of telling you about 14 or 15 parks that our management team has visited around the country, starting with Twin Creeks in Sunnyvale, the Tucson project, Miller Woods in Kansas City, two parks in Cincinnati which are very successful, The Indianapolis park, two parks in Detroit - the Liberty Park and the Hansen Park- The Hainesville, Illinois, Eulis, Texas, El Paso, Hutchison, .Kansas. In that Hutchison, Kansas park, that softball facility is the major industry of the town. There are new parks being built right now which are management team is involved with in Poway, it's opening up for business. There's a new park in San Clemente that we're running, there's a new park being proposed for the City of Irvine. There's new parks in Rancho Cucamonga. This is a good business. There's a demand for this, sports, that's not being met. We're going to gear our business primarly to young adults. We will have it available for special events for youth, but our park frees up the use of the rest of the facilities in the town so that the youth can be served. We will make it available for special events, but ours is going to be meeting a need that isn't being met right now. I'd like to take a moment to introduce Gary here, who's one of our marketing people involved. BAC: Mr. Odekirk, I have a question for you. I have no doubt about your sincerity about the fact that you're going to turn a profit, we're going to turn a profit, the kids will pay softball and all the rest of that. Mr. Swank's comment was a very specific one and in response, did a Big 8 accounting firm do a specific study on this park on this location. ROO: No, they did a study on the softball business. And one of our management team was involved, but you're right... BAC: I understand. The answer to Mr. Swank's question in your perception is "no, it has not been done". ROO: Yes, that's true. We did a lot of our own research and we have one of our management team is the leading expert in the recreation business but we didn't do a Big 8 study of our own. We did have the city staff visit two parks and review the financial aspects of that. 45 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * GP: Mr. Mayor, City Council, my name is Gary Pasquitz. I've been hired by the Odekirks to coordinate basically the corporate sales and special marketing for the project. I work with a company called Cal -Hi Sports which handles marketing and special events throughout the State of California. Basically, in the sports marketing industry right now what a lot of companies are trying to do is not pay premium prices that are involved in projects such as the NFL, the NBA, etc. Instead they're focusing toward the grassroots efforts, projects like this which attract a lot of people in their target markets. What we're trying to do is target companies like Coke, Pepsi, Reebok, Nike, Upper Deck, (unclear), Wilsons, to become involved with this thing both as advertising partners and as a promotional partner. To come in here and bring special events like pro volleyball, nationally televised softball games in here. Two companies, Nike and Reebok have even expressed interest in making it a concept store type deal in the concession stands where they're selling all their various brands of equipment for this thing. They believe in this project, they want to get involved from the ground up. Basically, right now (unclear)..coming in with special events and corporate advertising generating over $250,000 a year in the first year alone with that number increasing just from the sponsors special events as the national television coverage comes in to benefit both the park and the city. Thank you very much. SRW: Thank you. Please come forward and state your name and address. ROO: I'll just make one last comment. The advertising revenues that Gary is working on are not included in our projections and would be added to that. So we have projections expecting that we are going to do another $200,000 - $250,000 additional revenue on this park just from that source. SRW: Thank you. Your name and address, sir. EB: Mayor and City Council, my name is Edward Byk. I live at 57 Verde Way, Palm Desert. I've made notes as I've heard some of the comments here tonight. My first comment is that the balance of that program sounds just fantastic - the golf courses, the timeshare and everything and the gentlemen presenting that always emphasized the beauty and the high-class atmosphere of that Section Four development. The development of this pay for play is diametrically opposed to that. You have mentioned that if it's not successful the city will take it over, but the city doesn't require that type of project for young kids to play softball or Little League baseball. They don't need 70 foot towers, they don't need all the clubhouse being built. SRW: When you say "towers", what do you mean by "towers" EB: Lighting towers SRW: We have them on our site here next to the Monterey Country Club. BAC: Mr. Mayor, it would be appropriate...just finish his... SRW: OK. I just want to correct the record that we do allow them. 46 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * EB: I'm not saying you don't allow them, but are you allowing them in that Section Four where you're having the golf courses and timeshares. I didn't think so. The buyout provision, I've been told tonight, the reason for that was in case you found a higher or better use. You might also find a less desirable use and that's the reason you might want to buy it out. If it's unsuccessful, nobody else would take it .over, you would have it for softball fields. The. Judge back there mentioned the environmental impact report being done on the entire project rather than just on the pay for play and certainly the pay for play is maybe 5% or 10%, or whatever it is, of the entire project. If the whole project is as excellent as it seems, the balance of it, it would be hard for a small portion of it to cause it to be thrown out. So it certainly is advantageous to the Odekirks for that to be included in the entire EIR. The comment was made that the interest of 5 1/2% was less than what you've been getting on your long term money from the County, but I would suggest that maybe it's more. What I would suggest the security of your long term money with the County is a lot better. And, finally, in the Desert Sun yesterday there was an article about the Redevelopment program in Indian Wells which also effects Palm Desert and I'd just like to read a short portion of it. SRW: I think we all read that. EB: Yeah, I'm sure you did and it's just a very short portion... RSK: Go ahead and read it. I didn't read it. EB: Well, it says "Opponents of the subsidy have garnered support from Richard Gann, President of Paul Gann's Citizen's Committee, son of the co -creator of Proposition 13. In literature mailed throughout the State, Gann described Indian Well's subsidy of the reserve as one of the worst current abuses of redevelopment power in the State. Redevelopment was supposed to be used as a tool to benefit the poor by building affordable housing and by removing blight in slum areas. Instead, it has become more and more a private banking system funded by the taxpayers." I don't think we want to be included in that. Thank you very much. SRW: Thank you for your comments. Is there anyone else? Yes Ma'am. DB: I'll make this a family affair. My name is Debbie Byk. I live at 57 Verde Way at Silver Sands. You talk about wanting upscale development or further development on El Paseo. Yet you're putting in a project that is an absolutely downgrade to the area. You listen to the commercialization of all different companies coming in to sell their wares. You're talking about beer and wine being sold on this property. Where concession money will be a large percentage of their income. This is a downgrading of an area where the surrounding area could be upscale homes, the people who are going to be shopping at the Saks Fifth Avenues or the El Paseos. You're not going to get further development, I think Mr. Swank is sort of locked into what he's doing. But this particular property is a downgrading. So, I am opposed to it. I don't see the lights, the 75 foot high lights, in there unless the palm trees are 75 feet high, I don't know. But this is a very disturbing factor as far as the residents of my area are concerned. And I just hope 47 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * that you consider our feelings. You know, I receive a notice for this...(tape changed)...the Planning Commission was in the summer, nobody was here. We're at Christmas week now, all my friends have gone to visit their relatives - there's nobody here. People just can't come to this place when you are discussing this matter, the people who are opposed to it. And I think there has to be a better way to accommodate these people, particularly meeting at 3 o'clock in the afternoon. Now, Mr. Odekirk says he's gone to all these different places to sell his idea. He has not come to any of the local residents to talk about it. And I don't know, is he afraid that he's going to get the opposition that he expects? Why hasn't he done that? This project does not belong, I think it's great, put it someplace else. It does not belong in this lovely serene atmosphere that you Council people are approving, which my hats off to you you've done a great job on everything here. You listened to us when we didn't want the Walmart or the sports bar or the theater complex. Those same people do not want this here, so please - I'm speaking for many,many people even though they're not here. Thank you very much. SRW: If I could, Ma'am, one of the reasons.... This will be heard again and there will be an opportunity for your neighbors to come forward when we look at the land use aspect of this of whether this is the right site. DB: What is the rationale now to go into a contract? Why is there such a rush right now to go into this contract? SRW: If we tell the developer tonight that we do not agree to the business points, then he does not have to spend money and work on an environmental impact report for this site. We owe that to the developer to give him a yes or a not, we agree to agree or we agree to disagree. DB: Have you done the same thing with Mr. Thrall and Mr. Ruben on the development of the other property? SRW: Yes, didn't you hear their presentation. DB: There is a signed agreement? SRW: We're doing the exact same thing with them, yes. DB: At this time? Or it has been done? SRW: I think if you heard Mr. Thrall indicate we are putting together the contract points as part of the entire project. But let me suggest to you one thing. You mentioned beer and wine. You happen to have one of the busiest nightclubs closer to your location than this - that's Costas, which is across the street from you. They serve harder liquor than beer and wine. Number Two, I would like for you....one of the reasons the light standards may not look as high as...we're going to require this to be sunken. This will not be on flat land. And I'd like to suggest to you that you go out and look at what is 500 feet away from Desert Horizons Country Club, and that is a tennis 48 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * complex very much like this, smaller in scale, except they allow concerts there and we aren't going to allow concerts here. Those concerts bring in thousands of people, the neighbors to my...I have heard no one from Desert Horizons complaining about the tennis complex which is right adjacent to the Indian Wells Golf complex and the Hyatt Hotel. DB: Which went in first, I really don't know? SRW: It went in as part of the hotel and part of the.... DB: Was Desert Horizons there first? SRW: Yes DB: Also, I have to say that Costas has a much lower capacity than what we're anticipating... BAC: Mr. Mayor, this selling or not selling of this project, I'm not sure is an appropriate part of this hearing. And I'd also suggest that as this EIR process comes towards completion, that associations such as yours should ask not only potentially the proposed developers of this complex, but the developers of the entire rest of Section Four and its components, to do an individual presentation.... DB: They have, Mr. Ruben has addressed our Board. BAC: No, I mean after this. Now, it's on the chart, it's on the board, we begin to see what the word "traffic" looks like. We can begin to see what all of the other parts. There will be clubhouses, bars and hotels there and this and that, and there will be.... I'm not arguing the pros or cons of anything but I would think that it would be a responsible thing and for staff to facilitate those kinds of presentations to be made to all of the surrounding property owners associations well before any of these issues come to us for land use decisions. DB: But is it...it is my understanding that if an environmental impact study is positive and then the contract goes into effect. BAC: No, it comes back. The whole thing, positive, negative, mixed, whatever. All of these projects come back to us for land use hearings. DB: So we have another shot. BAC: You have another opportunity for comment. There may be things, you know, by that time you may love sports parks and dislike museums or visa versa. You know what I mean. By the time you start looking at traffic and everything, that will be a good time to put all of that together. I think that staff and project developers should do this for all of the parts of that. 49 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *.* * * * * * * DB: Well, wouldn't Mr. Odekirk be quite upset if you do sign this thing tonight and then it comes to a point... SRW: We're not signing anything. We're merely agreeing or disagreeing. DB: But he's going to be spending all this money and then if it's turned down, then it's out the window, right? So, why.... SRW: Mr. Thrall has the same problem and all developers do, yes. DB: All right, thank you very much. SRW: There's two more comments. If you would come forward so you can speak soon as the Judge... JAE: Judge Einbinder again - I've already given the information to the Clerk with regard to my address. But I only want to make this statement. You continually, Mr. Mayor, make the statement and everybody else has, Mr. Crites has too, that you're not doing anything tonight. That isn't what the agenda says. That's why I'm here. The agenda says," By minute motion approve the agreement and authorize the Chairman", which is you, Mr. Wilson, I believe, "to execute same." Now, if this wasn't there, was this saying the consideration of the agreement, if you're going to be SRW: Very good point. Let me read what isn't on your agenda - what the recommendation is and maybe that will clarify for you. "Consider the agreement between the Redevelopment Agency and Odekirk Partners, enabling the development of a public/private sports complex with the following conditions: 1) If the agreement is approved, the City will use the 5 % allowance provided by the non-taxable bonds; 2) The agreement sets numerous points which will be implemented in a ground lease and operating agreement; the agency shall direct staff to place these points as Exhibit "A" in a formal contract when" and this I think is what you'd alluding to, "the agency certifies the environmental impact report and the agency has held a public hearing for consideration of the ground lease." So those two, three and four, are the things that I think you're concerned about. They have to take place before the agreement is executed. JAE: No,no, I saw that. That's part of it. You see, again I have to re-emphasize what I said before, and that is that once you enter into an agreement, and that's what it says you are supposed to be directed to do, is "execute the agreement". 1 think the language is clear. You were, if you all agreed, supposed to approve the agreement and then you, as Chairman, were to execute it. Certainly that conditions, I'm not saying it didn't and I understand there are conditions subsequent so that if they did happen then we're fine, the agreement was held and if they didn't happen then it would be void. My statement is though, again, once you sign an agreement no matter how many conditions are there my limited exposure to municipalities for five years, would dictate that once you enter into the agreement no matter how many exceptions there are, no matter how many 50 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * conditions there are, you will find yourselves reluctant to get out of it. And I just want to emphasize that. RSK: I happen to think you're right. I agree with you. JAE: Thank you. Thank you very much. SRW: The lady in the second row, 1 think. LS: I don't know what kind of voice I have tonight. My name is Lynda Schruben, I work at Fast Frame. I live in the Palm Desert area and have now for 3 1/2 years. I've been a resident otherwise part time for 8 years. I certainly pay my share of property taxes. We also pay taxes for, thank goodness, a profitable business. I have a number of comments to make. I'll keep mine brief also. This is not the first time I've spoken. I've taken quite a bit of time off work this afternoon to come here in what is otherwise absolutely our busiest time of the year. So there are a lot of people who are out of town on vacation, or home visiting other family members. I'm trying to do business in this community and I love it to death. I know all of you fairly well and I'm here to speak and for all the right reasons for the proposed..to approve the proposed sports park here. I'm also representing the Palm Desert Chamber of Commerce which I've been an active member for the last 3 1/2 years. I've also been on the Board of Directors for the past year and a half. I'm also now part of the Executive Board of Directors. This has come to us numerous ways, numerous committees, and every one of them has unanimously approved the project. As a small business owner in this community, needless to say we are for business, we are for small business, we are for the profitability of each and everyone of them. Part of the things....I'll just make it very brief and then I'll get out of here...my business depends on the continued success of the local economy in general. We all know that tourism is what drives our economy. Building another golf course or shopping center may or may not increase tourism. But the proposed sports park will. It's a new, innovative idea. I love it. It will bring a new group of visitors to our valley who will spend their money here. It's now time to address the needs of those who keep the economy going and on behalf of the business community, I would like to let you know that a doggone huge percentage of us unanimously approve of this project. Thank you. SRW: Thank you. There's another gentlemen who wishes to speak. WH: My name is Wayne Hancock, 7314 Sequera Ct, Palm Desert. I'm here speaking both as a resident of Palm Desert and City Director for National Junior Basketball. I have a couple of comments to make and I know this sports complex as I understand it probably is targeted more towards adults than children, but there will be some benefits from this, probably more for baseball than basketball. Nevertheless, there is a social aspect to what you're considering tonight that I haven't heard anyone else speak on and I wanted to take a moment to do it. First of all, I am in favor of what you're undertaking here. I hope you approve it. I think it's visionary. I think it's needed. I have made a decision that in my spare time I've been working with youth sports and spend a lot of hours every week on it. And I see a lot of the problems that we all hear about everyday. It's trite 51 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * almost to talk about it, but the problems with families and family values and the violence in our society. It's rather sad to say because historically people who know me know I'm not a jock and I, at times in my life, didn't particularly give that much credence to sports. But it seems like today, and maybe partly because of the marketing that's taken place in the Michael Jordans and the others that are bigger than God in our society, it almost seems like sports is the only thing that keeps some of these kids on the straight and narrow. I tell you, in our program the kids that are there tend to be the kids you want to have around your community. They're not the skaters, the saggers, the gang bangers and it seems like those just don't get involved in youth sports. The ones who do, we hope we can keep them there and keep them on the straight and narrow. To the extent this kind of a project can help in any way to help any of the youth sports in our community, I think it is of great benefit. And I encourage you folks to pass this and work towards this project and others like it. We have a real problem in our community. We don't have enough in the way of facilities. Anything you can do will be helpful. Thank you. SRW: Thank you. EB: The name is Edward Byk. I spoke before. I just want to clarify one point. If the EIR comes back favorable and then a public hearing is held about the ground lease, if at that point the Council turns down the ground lease even though the EIR is favorable, that you can do that and there will be no obligation to the Odekirks, the money they've spent on the EIR or anything else? SRW: Let me turn to our City Attorney for ....there he is. DE: The answer to the question is, there would be no obligation at least as the agreement appears to be written at the present time. EB: I'd like to, you know, confirm that. Thank you. DS: My name is Dave Spriggs, 2 La Jolla, Palm Desert. I think one point that we're kind of missing tonight is that nobody is really against the project, but a lot of us are against where it is at. Not to divide the city, but if you go down the wash everything on that side of the wash is all homeowners associations, elderly people 50-70, whatever you want to call it. None of us are going to use this and most of us don't want it in our project. Thank you. SRW: Seeing no one else wishing to address the Council, I'll ask the Council if they have questions, comments, whatever and start with whoever.... JMB: I just would like to say to my junior colleague at the other end there that for the past 20 years we have done very well with our investments and keeping our money and that's because we didn't give it away. We've built up a reserve that now we are at a point we have some we can do something with. But it was very prudent management the past twenty years that Roy and Walt and Kelly,too, have been a part of the (unclear).. So that's why we have it today and I don't feel that we've had success over the last twenty years and I, for one, don't think this is a 52 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * sound investment agreement. And the location I'm not arguing with. There are places in town it could go. My concern is the city putting in 2.8 for their 1. If it's such a successful, and will be, such a successful operation, I see no reason the same as other developers that they can't get the money from investors and backers that believe in it. And therefore they could do the project. So I just don't believe that it's good for the city for that kind of money. I don't believe that the youth, as been projected here, are the ones that are going to benefit. If that was the case, I'd rather spend 2.8 million and build some other ballfields that the city did own and that would provide the youth, and not the people coming in from all Southern California to play ball on our fields. This is not a local program. It's a pay for play and that's exactly what it is. And what we've provided in the past for children is ballfields where they can play. This is not a youth sports complex. That's my comment. SRW: Thank you. Mr. Snyder? Mr. Crites. BAC: Well, I'm going to suggest that we add a fifth condition, at least, before we even consider that. This condition would read as follows... There are four contingency issues that are listed at the bottom of page 3. I listened very closely to Mr. Swank. I've also listened very closely to the Odekirks and I believe both sides are firmly convinced that they're correct. I think Mr. Swank and other people who have thought about this are convinced that they have the expertise and that this is not a good investment and if you read through the documents, both from the Odekirks and from people they've hired, and from people at the college business center and so on and so forth - and people from the Chamber of Commerce, an economic development committee that's composed of people we have appointed because they have business expertise - they believe it is a sound investment. So Contingency 5, if others so decide, would read as follows: "Approve the agreement and authorize the Chairman to execute same subject to the following conditions - 1,2,3,4 and Number 5 would be 'Contingent upon completion of a contract with', I believe Bruce said there are only 6 left, 'a Big 6 accounting firm to independently confirm that the proposal is a 'sound business decision' that carries a high probability of providing an appropriate rate of return to the city and our Redevelopment Agency on its lease of land and loan of money.' I suspect that if the project's a good project, it will pass that test. And if the project is not, it should not pass that test and that's the only comment I'm going to make on that. The other issues have a lot to do with location and various things like that and we shall argue whether light towers are good or bad, or anything else. The only thing I'm talking about is the financing agreement. Period. There's comment at least to throw out to my colleagues. SRW: Mr. Kelly. RSK: Well, first, we keep saying it's not the location but we're talking about finances. But if you're financing a car and you're talking about it, you can't keep from talking about the car too. No matter what you do, the finances are directly related to the product. And I agree with the Judge that when it comes back to us, they'll tell us we already approved it. So if we approve it tonight there's no doubt in my mind that it's approved. And I believe in providing good facilities for the youth and I've heard it said that if you're going to live in a city, you have to expect to provide 53 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * those kinds of things. And I agree with that. We provided lights at the high school on the football field, lights at the high school on four baseball diamonds, lights on Magnesia Falls are on at midnight when I come home sometimes, lights at the football field of College of the Desert, lights at the baseball field at College of the Desert, horrible lights at the golf complex and we just, a couple of months ago, voted to put four baseball diamonds and lights at the Civic Center park. I'd say we've done our share. And the real crux of the thing is that I cannot, in good conscience, vote to finance something when I'm going to put lights into a residential neighborhood to provide softball for some other community because you'll be lucky if 20% of the people that participate in that ballpark come from Palm Desert. There won't be 20%. If you depend on Palm Desert, you could not build it. It would not pay with players just from Palm Desert. You have to draw from the entire Coachella Valley and from Southern California. Voting for lights for our own use at the Civic Center, a lot of people opposed that and we voted for it anyway. It was for our own youth. But to vote for financing something that's going to bring lights into a residential community, people have to live with that who don't play softball at all, and on top of that we're going to put it in a community and I'll bet there's not one single Council member here who would like to have that across the street from their home. And we talk a lot about protection of hillsides. Why do we want to protect the hillsides, to protect the quality of life of the people in Palm Desert, that's why we want to protect the hillsides and now we're going to turn around and we're not going to protect the citizens that live out there. I could never vote for anything like that anywhere in a residential neighborhood. SRW: Thank you, Mr. Kelly. Do you have your voice back, yet? WHS: As most of you know, I've been working diligently for a long time on finding way to invest the city's monies so we won't wind up like to many of the cities here in the valley, not having the amount of money to do the things we want to do to make this a city that I want to live in. To do this, you do indeed find yourself in positions where you're trying to analyze whether this is a good business proposition, or isn't a good business proposition and is this something the city wants? We're in this situation a little bit because when we got involved in area four we started land banking so that we would produce the area and the ability to enter into the kind of agreements that you've heard tonight in various ways with the Marriott, the Bishop Trust and so forth. You also get involved in some that are not as beautiful as others. It's a very difficult thing to analyze whether or not you have indeed created a project that fits the category of something that will bring us funding for the city, bring us a better place to live. We have heard, in the many meetings that we've had, from both sides of this program. We've heard many people. We've heard, as somebody pointed out, from the Economic Development Cmmittee, the Chamber of Commerce, are all in favor of this project and in their opinion it is something that will add to the city. We've also heard from people who are saying that it is a downgrading of our city and will not add. It's a difficult call because I am deep into, and I am strongly in favor of, our city finding a way to become a business city; to create programs that will bring money to us and create programs that will invigorate our business areas. The things we're talking about doing to El Paseo, the things that will bring people here to walk down the street. I've heard many merchants tell me "if you have enough people walking by my store, I'll have the responsibility of trying to get them to come in 54 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * the store." And I think that's part of our responsibility, to attempt to keep people walking down the street so that you have a chance to get them to enter your store. I have serious doubts about this program, but I think that if we add Number 5 to our list that my colleague set forth, maybe that will create the analysis that some of us seem to think we need. And I think if we do that, I'd have to take a strong look and let this program continue after that matter was solved. SRW: Mr. Crites, do you want to make your motion with the amendment? Item 5? BAC: Are my colleagues clear on what that amendment signifies? SRW: Yes, you're asking for a Big 6... BAC: In part in response to Councilmember Benson's concern that this is not a good investment. I want to stick it out to an independent firm that doesn't suffer from.... RSK: When you do that, are you going to figure in the 5 million dollars worth of land? BAC: I'll let them do it and, Dick, I'm not going to get into an argument with you about which way to value land. I'm going to let them do it the same way that I would....let me finish please. RSK: I didn't say that. I was stipulating that they include that. BAC: No, they can run it both ways as far as I'm concerned. The same way that so far I haven't gotten into the midst of how we value the land for the rest of Section Four. I don't know how we're valuing it in terms of what we do with the Marriott timeshares, I don't know how we're valuing it in terms of what we do in terms of golf facilities, I don't know how we're going to value it in terms of that - whether we value it in terms of what wepaid for it, whether we value it in terms of what it would be worth when everything around it is built, or we value it both ways, whatever. I'm not going to sit and try to figure out a way to kill the project, just out of a way to do it. And I'm not going to sit down and find a way to pass the project, out of sheer way of doing it. I'm going to leave the darn thing and let the people take a look at it who are in the business of doing that. RSK: I've seen a lot of people do that and come up with some real prejudiced results here. BAC: Well, Dick, if you can't take it out to an independent firm and use that, then I don't know.... RSK: (unclear).. trying to get a loan on it. BAC: That's the kind of analysis that we go into a loan on. Dick, what I'm doing is looking at....you know if Arthur Anderson came back and said this was the greatest thing in the world, you wouldn't accept it. And I think that's fair deal. And if they came back and maybe said something else, 55 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * maybe somebody else wouldn't accept the negative news, whatever it is. I just want this out there and then people can argue about what it means. RSK: Can I say one more.... SRW: You may. RSK: The fact of the matter is the whole thing is on the location and for my concern, it doesn't make any difference how it comes back because I won't spend money on a project that going to deteriorate the quality of life of the people who lives there. BAC: And, Dick, that's a separate issue and I happen to think that you may be flat wrong on that, so we'll differ on that. I can think of some other things out there that might deteriorate the quality of life, so we may differ on that issue but at least we'll have some economic analysis. So, I would propose then... shall I reread that, is that appropriate or necessary? SRW: Does the City Clerk have from the first reading the addition of Number 5? Pardon? The motion to by Minute Motion adopt all of the things on our agenda plus Item 5. Will you restate Item 5, Mr. Crites? BAC: Contingent upon completion of a contract with a Big 6, or however there are left, firm to independently confirm that the proposal is a sound business decision that has a high probability of providing an appropriate rate of return to the city and/or redevelopment agency on its lease of the land and its loan of money. Notice I didn't specify amounts on either side of that issue to allow them flexibility to do that. SRW: Do I have a second to the motion? RSK: I will second the motion. SRW: We've had enough discussion. Please vote. SRG The motion carries by a 3-2 vote with Councilmembers Benson and Kelly voting "NO". XII. OLD BUSINESS None XIII. REPORTS AND REMARKS A. CITY MANAGER None 56 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B. CITY ATTORNEY Mr. Erwin requested a Closed Session of the City Council and Redevelopment Agency for the purpose of discussing real property transaction more commonly known as the Morelli FA 11JyI_1 ty. C. MAYOR AND MEMBERS OF THE CITY COUNCIL Mayor Pro-Tempore Crites asked where the 911 Committee stood and whether or not staff was trying to get a full report. He said he felt that the City should hire a consultant to go through and see how we can implement our own system and how much that would cost. Mayor Wilson agreed and asked that staff bring back a report on how much a consultant would cost. Upon motion by Benson, second by Crites, and unanimous vote of the Council, discussion of the Parks and Wild Life Bond Act was added to the agenda as an item that had arisen after the agenda was posted. Mayor Pro-Tempore Crites said that this was the California Bond Initiative that puts $15 Million into the Santa Rosa Mountain National Scenice area for land acquisitions. He recommended that the City adopt a resolution similar to that of the League of California Cities in support of the initiative. Mayor Pro-Tempore Crites moved to adopt the position of the League of California Cities and Councilmember Benson seconded the motion. Motion carried by a 4-1 vote with Councilman Snyder voting "NO". Councilmember Benson advised that Morris Air had started flying into Palm Springs as of December 16, 1993, as a result of the efforts of the C.V.B. Airline Task Force. She said the airline was pleased with early bookings and with Southwest Airlines' intent to purchase Morris, the Task Force was hoping for better things in the future. o City Council Requests for Action: None o City Council Committee Reports: None XIV. AWARDS, PRESENTATIONS, AND APPOINTMENTS 57 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * XV. PUBLIC HEARINGS A. REOUEST FOR CONSIDERATION OF DESERT CROSSING DISPOSMON, DEVELOPMENT AND IMPLEMENTATION AGREEMENT - JOINT PUBLIC HEARING WITH THE PALM DESERT REDEVELOPMENT AGENCY (Continued from the Meeting of December 9, 1993). Key SRW Mayor/Chairman S. Roy Wilson BAA Bruce A. Altman, City Manager DY Dave Yrigoyen, RDA Administrative Assistant TRL Ted Lennon, Lowe Enterprises GH Greg Hoxworth, Lowe Enterprises JMB Jean M. Benson, Councilmember/RDA Boardmember RSK Richard S. Kelly, Councilman/RDA Boardmember BAC Buford A. Crites, Mayor Pro-Tempore/RDA Vice Chairman DH Don Hedlund WHS Walter H. Snyder, Councilman/RDA Boardmember EB Edward Benson SRG Sheila R. Gilligan, City Clerk/Agency Secretary SRW Mr. Altman, please give us a staff report. BAA Yes, Mr. Mayor and Council people, Mr. Yrigoyen is going to cover this one for us. DY Yes, Mr. Mayor and members of the City Council. At our last meeting, we discussed the items of contention with regard to the need for the public hearing. We have today Mr. Lennon and Mr. Greg Hoxworth with Lowe Development to give us a short presentation on the proposed development. Basically what I wanted to do before that is... staff has been meeting diligently with Lowe Development and Ahmanson representatives to try and come up with a final agreement. That has been something that we still need to continue to do. So, therefore, we have asked that we amend the recommendation as presented today to read as follows, and if you'll read with me, and that recommendation would be that the Agency Board approve the recommendation subject to the provision that the form of the agreement is what is being approved and that the Executive Director would be authorized to execute a final negotiated agreement that contains the following provisions with any particular clarifications which Council would add thereto. Provisions would be: a) to provide for some assistance in the negotiation and acquisition of the property; b) that the final agreement contain a requirement providing for a recovery mechanism of any funding assistance provided by the Agency; and c) that the final agreement contain a covenant that the land for site area one which requires the use of the land as an auto park for a period of one year; and d) that 58 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * the developer be required to replace any major tenant which relocates to the proposed center from any location within the City; e) that the Agency assist the development with $2.5 million for assistance to pay for infrastructure fees for site area number two and $400,000 for site area number one as needed, subject to Item "b" above; and f) that the Agency require the developer to develop the center in certain increments prior to such assistance. You will find many of these provisions in the current form of the agreement. Because of the recommendation that the Agency is asking that the Council and Agency Board adopt tonight, the purpose of this is to just merely provide a clarification that these agreements would stay in the final form of the agreement and that the Agency Board would give us that authorization to execute the final wording in the negotiation of that. With that, if you have any questions or if you would like to have Mr. Lennon or Mr. Hoxworth give us a presentation on the project and then take questions up later, that would be fine also. SRW Are there any questions before we have the presentation? Seeing none, Mr. Lennon. TRL Thank you. Mr. Mayor and members of the Council. My name is Ted R. Lennon. I reside at 72-058 Clancy Lane in Rancho Mirage. I'm a principal with Lowe Enterprises, and we represent Ahmanson Commercial Development, the owners of the 50-acre Desert Crossing site, the 12-acre site in the corner of El Paseo and 111, and the El Paseo 10-acre site that was mentioned earlier tonight. I'm here before you tonight requesting approval of amendments and a covenant to the DDIA agreement that was executed by the City and Ahmanson I believe in 1990. The amendments to the DDIA have been negotiated by Lowe and the staff over the past two months, through the weekend, and as early as this morning. In return for a substantial commitment by the RDA for a portion of the public improvement costs on the Desert Crossing site, the City requires Ahmanson to meet short term leasing and construction obligations. In summary, the amendments require Ahmanson to perform immediately. To receive the RDA commitment, they will create a major cash flow in both tax dollars, tax increment dollars, and sales tax dollars as well. Ahmanson, besides agreeing to commit and risk substantial funds, and we're talking in the neighborhood of about $54 million in costs in this project to include land costs, in order to benefit from the RDA investment, has agreed to restrict its development rights on the Highway 111 and El Paseo site, that's the 12-acre site, these are some of the major gives that we've negotiated with the City, and in other words the City will have the opportunity with our cooperation and possibly a third party to create an auto park on that site if the City so wishes. As most people know, an auto park on that site can generate tremendous dollar revenue to the City. On the other hand, as developers, it is not the highest and best use of the property for us. But for the sake of this agreement and this vote tonight, we've committed to for one year to limit the use of that site for an auto park. In addition, we've agreed to sell that site on an option basis to the City during that year for what we believe to be a below -market rate. Further, Ahmanson will relieve the RDA, and this is important, of some restrictive language in the DDIA regarding the $5 million parking commitment that currently exists on El Paseo. And as I understand that, the RDA has asked us to change the wording which would allow the City to better raise more bonds, and it frees up other commitments from the City to allow them to do some of the other projects you're working on. And we've agreed in this agreement to go along with the City on that, subject to getting a positive vote. 59 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * As a final vote in our negotiation, we've agreed, this is a last minute thing that the staff had strongly recommended and we had acquiesced to at the last minute, and as a final point, we have agreed to reimburse the City for its original investment should proceeds from the sale of the Desert Crossing project exceed normal returns on a project of this magnitude. This would be a negotiated item. We would review each of the costs, each of the sales points, and we would review the proforma on the project. We just expect reasonable returns; above that, we would share and pay back that money. Now this investment, as we get into it a little further, this investment really recoups itself in something like the third year as this project starts generating upwards of $2.5 million a year to the City. So this is over and above the return to the City. This is money that could give the original money back, even though we're talking about returning the money to the City within three to four years of starting the project. I'd like to walk you through this in a little more detail. Before I do that, I'm going to have Greg Hoxworth walk you through the current plans, the adjustments that have been made recently, and summarize that. Thank you. GH Thanks, Ted. Greg Hoxworth, 1911 Meadowbrook Lane, Altadena, California. Good evening, ladies and gentlemen. Let's quickly walk you through the plans; I think everybody's pretty familiar, but there have been a few changes since you last have seen them. I forgot my laser light show here. Locating the site, here's Fred Waring, 111, this is the 50-acre site, and here is the 12- acre site we were talking about for the auto park. The key items in the plan are relocation of Painters Path which currently cuts through the site like that up to a full modern road that will be at the back of the site, well landscaped, separating it from the site. Fox's easement would then use the new Painters Path to access his property. We've revised the plans in terms of trying to improve the landscaping, the feel. We have heavy berming and landscaping here in the front, we have the major art and water feature that we'll talk about, a grand entry into the shopping center. The key to this center, and today this is referred to as a power center, talking about major tenants, not lots of small shops. These deals would be made basically before construction starts. Our commitment is to build over 300,000 square feet in the first year, I mean the first two years, and this whole site is now 500,000 square feet, so that would be the majority of it. JMB Which section would be built first? GH We'd probably start from this way, going this way. Ideally, we'll build the whole thing at one time, but the agreement allows for it to come in over time. RSK Which would go first? GH Well, we have deals pending with many of the tenants, all the tenants at least across the top. And then as you go down this way, this could be a later phase. Ideally, we'll do it all at one time. JMB How about the ones at the front, are they in the first phase? 60 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * GH Some of them. Ideally, the goal is to build all the project at one time. JMB Yeah, I know that, but I just want to know what's going to sit out there if it isn't. Are those buildings on 111 and that, are they all going to be built before you go to the back, or are you going to do the back first? GH The key is starting at the back. Some of these will be built initially, some of them may come in over time in our plan. Currently, the key to financing this type of project is to have the major boxes, the larger tenants, in place, they're the credit tenants. Again, the key to the power center concept is not to have lots of smaller stores like you see in adjoining projects around Palm Desert where there is some vacancy. We have less than 5 % of this entire site in small stores, so it'll basically be these major stores. We've redesigned, upgraded, the facades I think from the last time and most recently just upgraded the Target facade with the Planning Commission last week, and I think we finalized that. Down here, without going into it unless somebody has questions, we have more details of the entries to the majors and the landscaping and the sidewalks, and all that will be detailed out. Are there any other questions? I could go into a lot more detail, but I think that covers the highlights. SRW Any questions from Council? TRL Over here, which I'll take down initially, this is a rendering of the front entrance off Highway 111 across from Toys-R-Us, and this is a rendering, this is our second edition of an Art -In -Public - Places treatment we've worked out with the Art Committee. We've been before them twice now, and the current plan is that on this corner of land as you come into Palm Desert, we will focus a true -looking Moroccan water oasis at this point, and the artwork will be done with camels, close to life size. RSK Are those camels going to be brass? What are they going to be made out of? TRL We don't know yet. RSK You don't know if they're going to be a casting? TRL No, we don't now yet. We've gotten to the point with the Art Committee, and I'm dealing with about 20 different artists who deal in different mediums, and so we don't know that yet. Do you have a casting foundry or a suggestion? RSK It's going to be a big job. TRL Yeah, a very big job, I know. Per square foot they charge by the height, and so I've designed a couple of camels kneeling down and one of them laying down, and a baby camel I added that I didn't have before I got their prices. 61 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * RSK You didn't put two humps on them either, did you? TRL That's negotiable. Okay, we have some cheat sheets over here to kind of walk you through. I have the same notes in front of me here, and I wanted to explain the deal, to kind of walk through it briefly because it is...it's not complicated to us, I've been working with it for three months. The DDIA amendments that we're requesting, and I want to point out that we're talking about reimbursements for public improvements, these aren't for normal development infrastructure costs, these are for public improvements, public improvements that most properties in the City of Palm Desert are already afforded, and that being flood control, there's been talk about maybe the City wouldn't do this for small people and so forth, but for a big project like this, these public improvements are massive, and they amount to somewhere in the neighborhood of over $5 million. And so what we're requesting is that $2.5 million be contributed by the Redevelopment Agency to kick this project off. In addition, with phase two kicking off, and it's put on as a different item, we're requesting up to $400,000 for the golf cart, pedestrian, and bicycle bridge, and that would be at this area. JMB It's only pedestrians and golf carts, not a car bridge? TRL No. Whether it's a car bridge or not will kind of be up to the Redevelopment Agency based on the development of the 12-acre site. The important thing, I think the issue that was of concern and has always been of concern before, is that there not be a car bridge that came off of Painters Path (unclear) and what this does is to keep traffic from having to go clear out to 111 and out to the busy intersections while traveling back and forth to the project. So the intent is to keep them off of Painters Path, which has always been a concern. JMB But the car bridge is coming across Painters Path? BAC No, it's in the project, in the middle of the project. TRL This is Painters Path up here, it's clear up here. At one time there was discussion about a bridge, and that brought quite an uproar (unclear). JMB Well, I know, but when you brought it down to the lower one, where it is now, it was only to be a golf cart, not a car bridge. RSK But if it's a car bridge then when we put something there, people can go back and forth between the projects without getting on the Highway, which is a big advantage. BAC Well, we can debate that when we get to it because the next issue is, yeah, but then they can also slip through a parking lot and get from x to y. It's not an issue right now. RSK I know, but they can only go in a golf cart... 62 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * JMB Well, I think that there's an issue with the people from Sandpiper that that not be a car bridge. BAC Right, but I mean that's not a decision we're making with this vote. TRL And I talked to one of the gentlemen at Sandpiper, I talked to Mr. Vincent about it and explained to them, and I know he was satisfied with this. So the issue is not to create cars onto Painters Path and that's what we've tried to avoid. But it's important in design of the two sites and making them work together to be able to bridge over to get vehicles back and forth between the two sites. Another portion of the amendment is the condemnation of the Fox easement, and some of you know a little about it, and Greg explained it a little bit, but (unclear) easement right here comes down from the property from the Fox development (unclear). That project had a easement to the original Painters Path road which basically came through here when Painters Path was the old Highway 111. And our solution to that problem, we're relocating Painters Path, making it a viable street with about a million dollars cost in doing that in public improvements so that that becomes (unclear) The issue about a covenant to create an auto park, I don't know if you all understand that. But basically, at the City's request and an interested developer, the City wanted the option to consider that and to take it through the public process. That appears to be a potential positive business venture for the City. We've agreed under all these conditions to cooperate on that basis and we will do so. Developer's obligations - Number one, we're obligated to build these public improvements with our cash up front; we ask for reimbursement. We have certain deadlines we have to meet to get into this money. We have to succeed with a majority of leasing, tying up leases on the sites in a very short time period after the legal work on the condemnation is done. We have to complete the improvements in a set time, and we have to get this project up and running and producing income to the City in a short period of time; otherwise, we have to give that money back. So we've made major commitments to this project to make it happen, to make it a cash generator for the City, to make it a positive project as conditioned for getting the assistance up front. Public art is listed next on there. You've seen some of that work we're doing. I think thanks to the City Council this center, through all its planning stages in coming here, you've added some real "peopleness" to this power center site. I think the pedestrian areas, the landscaping, the berming, the trellis work, and the architecture I think is something to be proud of as people come into the City, and it's going to fill up one of the major open spaces in the City, the entry and the commercial core area. Our other obligations I've mentioned already is to hold open the 12-acre site. We have to replace any local major tenants that would move to this project. And our other obligations we've now agreed to do (you can go ahead and move that) is, as I've mentioned to you that wasn't even on the board because we had not agreed to that with the City, was to negotiate a proforma that was, 63 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * we would say, barely reasonable and just a fair return to the developer and that we would share in proceeds above that to get the initial $2.5 million returned to the City. JMB To go back one minute... TRL Sure. JMB ...on replacing the tenants that move in there. The replacement for them would be found prior to the moving... TRL I think that's the understanding. Is that your understanding, Greg? GH Yes. JMB You wouldn't sign a lease with them for the new center until you had somebody to take their vacated spot... GH If we did sign a lease, it would be contingent upon the replacement. They couldn't leave, leaving the space vacant for any period of time. There may be a short period of time where you know you have to refit a store, you know, the replacement store wants a different type of interior, so there may be a couple months there where no one's in the store while work and construction's being done, but otherwise there won't be any vacancy between the switch. TRL I'd like to go with what we feel are major benefits to the City. First, and a very important thing, is I think this will really solidify Palm Desert as the retail center of the Coachella Valley. With this center going in and the direction you're taking on the El Paseo project, I think this is really the retail center of the Valley, and that's going to be so for the next ten to twenty years. I think that's positive. We feel, and I think most of the people in this City feel, that competition is good, new competition, new architecture, better architecture, is always good for a city. It's nice to wait until all the stores are totally filled up and so forth, but we believe competition is good. We think that this project will generate additional traffic for the existing stores. I've had good talks with Doug Simmons when he was involved, and he's convinced it's good for the City, and we feel it will definitely generate a great deal of traffic, especially for some of the restaurants right there at Restaurant Row I think could use some help. I think this project will generate a good deal for them. We had a professional company do an analysis and obviously those are always subject to review and whether they're conservative enough and so forth. But they show when this project is up and operating in two to three years, $1.8 million annually in sales tax revenues. They show $670,000 annually to the RDA. As I mentioned, this project pays back the investment very, very, very fast. The other numbers that we've done, that revenue has a net present value at a seven percent rate that's worth $31 million to the City to have this project. Each year it's put off being developed, that's money that doesn't come back and might happen later. We feel this is a strong window right 64 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * now. We have tenants interested who are going to make a quick decision to maybe go other places in the Valley. It's time to put this project together right now. There are many other revenues, fees, sales taxes, etc. The next really important item is jobs. This project, the construction of this project, the operation of this project, the servicing of this project, generates a tremendous amount of jobs. We're talking 300 full-time equivalent jobs in construction during construction. We're talking about on -site 1200 full-time and part-time jobs. We're talking the related service jobs, those would be the people that come in and service the air conditioning, the janitorial, all the other types of work -- another 200 jobs. You have an owner and developer committed to go forward, with your commitment. We've worked in a day care center at your prompting; I think that will be a terrific part of this project. We will be paying up front something like $2.9 million in fees to the City, planning/grading fees, signalization fees...pardon me?...Art-In-Public-Places, even a two -hump camel, if that's required. The auto park, as we mentioned, if that goes through the public process and is approved and is put together, a tremendous money generator to the City. The income stream from this RDA, if this money is released to us, should be a funding item for a lot of other projects. The numbers here are not hard to figure out, these stores know what they're doing coming in. It generates a lot of money, so within two years, immediately I believe there's like $170,000, $180,000 coming in just stepping on the site. That money can be used for many other projects. We feel this is the highest and best use of the site. We think it's a winner for the City, for us. We have a tremendous response. I should point out one of the reasons a project like this can be done in today's economy is these are mostly all credit tenants, which is very unusual in today's world. However, they operate on a very set set of formats. They won't pay for certain things, they'll only have certain limits going in, they don't pay a lot of money, they take big spaces, they run a tight operation, and they're not very flexible. This project needs this assistance to go forward. We do have a lot of interest. Our commitments with Target, etc., are tied to this commitment, and they know that; that's why they had come to the last meeting. Why now? The first big question is AB1290. There's a 12/31/93 deadline to be able to work out an arrangement to assist a project like this and go forward. After this, in the near future, until this law ever changes, this opportunity will not exist again. It's not something that I think you have to worry about setting a precedent on; it is a one-time thing and should be looked at that way. As I mentioned already, the tenants are ready. They may locate other places. They're committed to go forward with the financing available for this project. We have a quality owner. I say we, jointly, we have a quality owner. Ahmanson's been I think a good person to the City. I know they've been generous in their contributions to The Living Desert and the different areas and hope to continue to be that way. You know our firm; we've done a number of local projects, and what's exciting is the fast financial returns to the City. This is a good business deal.. There's no games, there's no what if s, has anyone ever done one of these before; this is big money, and it's quick money return on your investment. 65 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The window on the world regarding the auto park thing, I know we have an interested developer. It's not a normal auto park site, but it might be rare. This would be a boutique auto site. There's a rare short-term window. The arrangement would have to be agreed on immediately. Why now? Potential future redistribution of sales tax. That's everybody's worry, you know, do we do a project for sales tax? I say yes, you do it now, and going around and talking to all the people that know and how they think this thing's going to come about when it gets to the State level and so forth, is that those who have projects now, those that have deals now, are most probably going to keep most of those deals. And future deals will then be redistributed. Each new deal you do would be redistributed. Now you all know that if they pulled all your sales tax, you still do have a large body in population that you would get a majority of that redistributed back to you. But most people, and I can't guarantee this and you have your own sources, but most people feel that it's very important that what you have, what you have generated, where you start, and what infrastructure you're responsible for keeping up will weigh heavily on the point of the demarcation if in fact this does happen. So I think that's another good reason to assist this project and get it going; it's a very important business decision. The RDA, I mentioned before, it's not on there, it's another item I thought about, the RDA would like assistance in releasing some of the language that is in our current DDIA agreement, and with this cooperation we've agreed to do that, and David can speak more to that if you have a question about that, exactly what their intent is. Summarizing...we need the amendments as have been negotiated, and we know we need to finish negotiating a few of the items. I think the City's a tough negotiator but fair, and I know we're a fair negotiator, and I know that we can work out the final details. We both have the intent to make this a binding agreement, and I'm sure our attorneys can work that out. We feel we have the support of the City staff, we've enjoyed the give and go, it's been enjoyable and we think we have their support. We have the support of the City's Economic Development Council. We promise to do a good job and to create many jobs. Ahmanson's going to be making something like a $50 million plus investment in the City, the City's going to be required to spend $2.5 million as part of the public improvements, the City's going to get a net present value for doing that almost immediately because they're guaranteed that this project gets built as one of the conditions of the thing of roughly $30 million. They're going to generating a $2.5 million a year cash flow, combination of RDA and sales tax. In closing, the City will benefit financially, aesthetically, and as a role model setting standards for people centers with golf cart use, public art, and children day care centers. I thank you for your attention. SRW Thank you, Mr. Lennon. BAC One quick question. Is this center a participant should the City choose to do a Peoplemover? 66 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * TRL That is already part of the existing agreement. BAC And remains a part? TRL That is correct. SRW Any other questions of Mr. Lennon? If not, the public hearing is still open, and we will take testimony now from anyone who would like to speak in favor of this project. DH Honorable Mayor and City Councilmembers. My name is Don Hedlund, and I'm appearing at the request of Dave Tschopp, who is chairman of the Council -appointed Economic Development Advisory Committee whose members, of which I am one, have requested that a representative of the Committee personally appear before the Council to express the Committee's unanimous recommendation of the Desert Crossing project and that RDA assistance be granted in the amount requested by the developer. Our recommendation of the project is based on economic considerations and data that shows the project will have a positive impact on the local economy. It was the consensus of the Committee that: 1) the proposed Desert Crossing is an appropriate use of the RDA funds in that it will generate a measurable return in fees and recurring sales tax revenue to the City in excess of the initial RDA investment; 2) it will solidify Palm Desert's leadership position in retailing by adding to the spectrum of retail sales opportunities currently offered in our City; and 3) create additional long-term jobs for local residents. In addition, Desert Crossing is an attractive economically viable development, but if RDA help is withheld, this revenue producing subject will not go forward. The result could be far less desirable projects (unclear). The Committee believes that the overall economic impact of the proposed Desert Crossing is positive and recommends the Council approval. On behalf of the EDAC, I thank you for the opportunity to be of assistance and thank you for your time. Thank you. I read it, I didn't write it. I believe it and I think it is excellent all the way through. To refresh your memories, I first came to work in the desert 67 years ago. I was one of the members of Bruce Altman's 2000 Committee. I was also a member of Bruce's Blue Ribbon Committee, and they continued me into the EDAC, and so I have been with the EDAC from its inception. We do have a home in Palm Desert. Our only interest is spending money in Palm Desert. We do not take any revenue from here. I'm just reciting this to show besides what Dave wrote here. Unfortunately, Dave had to be out of town, so he couldn't give this; I said yes. It's been a long evening. I like your patience. I couldn't be a City Councilmember; I wouldn't have the patience to sit up there and listen to all the (I didn't say it) that goes on. Thank you very much. SRW Thank you, Don. Is there anyone else present who would like to speak in favor of this project? Is there anyone present who would like to speak in opposition to this project? Seeing none, I'll declare the public hearing closed and ask the Council for comments and direction. We'll start at this end this time. BAC I think that everything that's been said makes good sense and now that we have an agreement through Redevelopment that will eventually make us whole in terms of our initial investment so 67 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * that it becomes, in essence, a loan of whatever period of time it takes to get it back rather than a cash subsidy about which I have real problems, I'm comfortable. SRW Mr. Kelly. JMB Could you explain again how that's going to be paid back, over what time period. BAC That's something yet that staff has to negotiate the exact details of. DY That's correct. Mr. Lennon presented us a formula by which he proposed that there would be a payback based on certain baseline numbers. Staff is looking at that formula to determine what that will be in terms of payback and how that will affect our payback position. We just received that formula this morning and the numbers this morning and they are going to give us a readout chart that we will begin to analyze and probably work on through the holidays to try and get this all... JMB But that will come...we will have a chance to see what that is... DY If you want to get together as a group before December 31... BAA I don't think (unclear) to see what the format is... JMB Not the format. I mean what period... BAC My perception would be that Item B on this sheet we were handed this evening says here's what needs to happen and that we allow staff the freedom to negotiate with the developer to obtain the best way of doing that. I mean, I'm comfortable with that and comfortable with the developer and so on and so forth. This gives the parameters, that it is a loan and so on and so forth rather than a subsidy, and if it takes four years or it takes seven, I'm comfortable with that. SRW Mr. Lennon, did you want to comment on that discussion? TRL I'll wait. SRW Mr. Kelly, comments? RSK I think it's important to have that anchor there. As far as formula, I'm willing to let the staff work that out. And I would very much like to see a car dealership there, and I guess I have a little concern over... Councilmember Benson mentioned the road, that we're going to put that in the same time we put this project in so Mr. Benson can walk down to the center without swimming the wash? TRL I think in our negotiations, the Redevelopment Agency has the call on when that goes in and the justification of it, so that would be up to the City. 68 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * RSK I think it would be nice if it went in fairly soon. DY Our provision indicated that if the Agency and the City deemed that to be necessary then that would be what we would propose as part of the $400,000. SRW Mr. Snyder, do you have any comments? WHS I'm ready to make a motion whenever you call for it. SRW Mrs. Benson? JMB Thank you. Well, I certainly feel more comfortable knowing we'll get our money back and that it's not an outright gift of $2.5 million or whatever it amounts to here. I feel better that we would be getting it back at some point. I know the site has to go for retail; we can't restrict that. So I guess I don't really have any other comments on it at this point. SRW Thank you. A motion would be in order. WHS I move that we approve the proposal in accordance with the items listed on our Agenda and that we move forward immediately. SRW That includes this white... WHS ...items here... TRL Mr. Mayor? SRW Is there a second and then we'll... BAC Assuming that the items on this are indeed part of the City's program, I would so second. SRW Mr. Lennon. TRL I would like to clarify Item B one minute because we don't like to go forward with a yes and not have a misunderstanding. Our commitment along with giving up all 8the other areas was that we agreed to provide a proforma to the City, it was a fair proforma, to give back land costs and a small profit on the project, and that we would share revenues over that so there'd be no windfall, there'd be no "we're getting a "gimmee" and we're pulling a lot of money out of this project", that we would share any of the profits with the City until they got their money back. If the project is not successful, if we lose money on the project, you are at risk that you don't get the money back. Now you do get it out of the sales tax, but I wanted that clear. We had talked with the City before, we had had language in that talked about it as some way it comes back and so forth, and we've been clear in our proposal that we gave the City, I want to be fair on that, we are saying 69 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * that the money goes up, we will negotiate a proforma with the City to get just a reasonable profit back, and that all the monies above that we will share with the City. Is that correct, Dave? DY And as I indicated, we're looking at that proposal. If Council has a concern with regards to the return of that money, I think they should so stipulate that at this point in time. If the intention is that we definitely in some form get that money back, then they should indicate that so that we make that a provision. TRL But I'd like you to understand...we're not...that doesn't fit in these numbers, these numbers are so slim to come forward...this is a very marginal project, and we're telling you that if there's profits in it, we would share that money back. The subsidy is required... BAC What you're on now, I do want to talk about the project then. If that's where we are, then we need to start spending some time here. TRL I would love to have gotten it approved and (unclear) push this thing off, but this is the truth of the matter, and that was the result of our negotiations. SRW Thank you for that clarification, and that would be... so the motion on the floor basically is interpreted that way. I will open up the public hearing. Mr. Benson, do you have some comments? BAC I want to withdraw my second to start with. Okay, I'll leave my second to work on it. EB My name is Edward Benson, 1106 Sandpiper. I would like to ask Mr. Lennon just to clarify...are you sure that you're going to be able to get ahold of the Fox property? TRL To get ahold of it? EB I mean, to be able to use it. Right now, there's an easement, right? TRL That's correct. Part of the DDIA amendment is the condemnation of that property, and everything is subject to that happening, that hasn't happened. EB Alright, thank you. SRW Thank you. Any other comments since this new information came out? If not, I'll close the public hearing again. Mr. Crites? BAC I don't think we are being unreasonable, and I would ask that staff be given direction to...we're not trying to say it has to be done within a year or two years or something, but at some fair time that we be made whole. Some of the things, as an example, that the developer has suggested to us is things that they are giving in order to get this money are things that they should be darn glad 70 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * to give. The piece of property, as an example, on the other side of the Channel that they're saying "well, we'll give it up for an auto dealership for a year" has been a dead dog lying in the sun for 15 years that you haven't been able to get anything and be darn happy to get an auto park there. That's not giving away a thing. The El Paseo change in order to get us out from under the bond issue in terms of the parking garage and so on will probably make it more likely that we could come around and fund the $7 million or $6 million or $2 million or whatever it is that needs to be done there. That's a good deal for Ahmanson. We always hear, whether it is "this won't work without an Albertsons" or "it won't work without movie theaters", to take us back to something from earlier this evening, or "it won't work without extra density", and so on, and to and behold, or "it won't open until it's 11 o'clock at night with lights, or whatever it is, and I'll be darned, they usually do. Ahmanson has owned this piece of land for nigh well 30 years. The economic market is not good in land. They can choose to do a little bit less. I understand that Mr. Lennon's in a hard place in terms of Target wants to pay for a box and nothing more; on the other hand, Target's going to make a pile of money out of this, and so I respect his idea that we split some profit out of that and Target makes their profit and then we take a portion of what's there. But at some final point the philosophy that we were talking about earlier about loaning money to get money back, this thing happens without us loaning a penny. We get the sales tax and all the rest of that anyway, which I suspect will happen. Give them a good deal, make it reasonable, but at some point (unclear). JMB Well, if I understand what you just said, that if you have to...if you build phase one and find it's not going to be feasibly possible to go on to phase two and you walk away, we don't get our money back. TRL First of all, phase one will be something like 70-80% of the project, and in our proposal, in this proposal, you will automatically have at least 80% of the site. I think we're required to have over 400,000 feet completed to make this subsidy good, so you're guaranteed a 400,000 square foot center. Now, we had talked about in negotiating that we would guarantee the sales... you know, we talked about working on that basis, of guarantee, but...I mean, that is good money. The key is that this is a very, very marginal project. They did not start out to develop this; we convinced them that this was a developable deal with the monies to go forward. It is critical that it happen, and I'm saying that we're not looking to make a lot of money, we're willing to bear those numbers with the City and to pay the upside if there's an upside...you see, one of the key things...you talk about cap rates when you sell these things...incidentally, in our proposal we would pay the City back upon sale of the project, it's not a long drawn -out thing, and the intent is to sell soon. If it is drawn out and we have to hold the property, we said we'd have the option we'd call in an appraiser and value the property and pay the City at that time on the commitment as well. But I think this is not a normal...this is such a cash producer for the City, it is not a big cash producer as a development, it's not a normal deal that you would normally find. It's unusual that Ahmanson, the developer/land owner, would go forward and make this thing happen. So we're saying you've got a tremendous amount of return on your investment, very fast in this project, that's guaranteed by the obligations you've put on us to produce this cash register. And it's not, you know, a normal deal, and if there was huge numbers, I would be saying that we'd work 71 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * something out, we'd make it a long term loan or something or we maybe wouldn't have been asking for it in the first place. But it is really required for this project and the project is not in a position to guarantee the payback of it at the marginal level that the thing is at. If it has any reasonable returns, it will share those returns with the City, and that's the proposal we made. JMB That's not paying back...if that isn't a guarantee that we will get our money back. TRL That is correct. But what I'm saying you're guaranteed of is having a 400,000 foot center that's going to generate $2 million a year in revenues when it opens the gates. We can't build it unless it's leased up. It's going to be generating those monies right off the bat. BAC If it generates all that money, somebody's bound to make a nickel. TRL But it's based on the cap rate, which is right now around 10%. If, in the real world, cap rates go down around 8, 7 1/2 where they've been in the past, that place could be worth a whole lot more money, and we'd all have more money coming out of it, but that is not where numbers are today. BAA I was going to make a suggestion, Mr. Mayor, I was just talking to Dave, which is along the same line, thought. I would suggest that you say that you want all the money back at the very latest upon the sale of the property and then work forward to see how we could get it back quicker. I mean, that way you're saying you want it back totally some day. GH I wanted to clarify one point in terms of the ownership. Ahmanson Commercial Development Company closed on this land either in late '89 or early 1990. They bought it from the Ahmanson Family Trust which was represented by Wells Fargo Bank, and so I know that it was an arm's length transaction because of the Trust and those things. So there are two different entities involved; unfortunately, the names are the same and are often confused. So that is a clarification. So in terms of the company, Ahmanson Commercial Development, it has a very high value on this land from not only, one, purchasing it, but taking it through the process of entitlements, having it under contract for a long period of time in which other people held it, so interest accrued on the property. So, we are dealing with not a low-cost basis in terms of the current ownership. The other thing to note is that there is an immediate return of the City's money, and initially some of these discussions on this subsidy came out of the idea of all the fees that are generated initially from the project (now, with the increase of the size of the project, almost $2.9 million). Those fees will be paid to the City as construction starts, as we go through, and those are immediate income to the City, those aren't taken into account. BAC Aren't some of those fees, as an example, signalization fees, where we go buy a signal and such things? GH A few of those... 72 MINUTES - ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BAC I mean, it's not as if all that money goes in our General Fund to be spent on school children next year. GH No, I would think a large percentage of it does. BAC Making (unclear) GH I think the initial request came from the point of possibly deferring some of the fees. SRW Okay, thank you. Basically, I'd like to ask Mr. Hedlund a question. The issue that we're bogged down with is a guarantee that the $2.5 million comes back to the City and that it's merely a loan, or, and I guess my question to you, you, as a representative of the EDAC, is, was your recommendation based on this being a loan or being an investment to get the project off the ground? DH Personally, I feel it's an investment to get the project off the ground. But, I did not have any fear about the money being returned to the City. Incidentally, we were the largest mortgage banker in the pacific northwest. We handled a lot of financing of similar nature. We had the largest property management firm. So I'm not talking out of the side of my head. That's all. I also live in Sandpiper, and as long as that 12 acres remains in a park or a business setup, I've got a dream for it I know will never come through. We should have a think tank there and corporate offices, one story. It can be done if we go to work on it. Does that answer your question? SRW So, your committee's recommendation was not contingent on the City getting their loan back... DH No. SRW ...but on an investment in the property. DH No. SRW Thank you. That answers my question. What's the pleasure? We have a motion on the floor. We could entertain amendments to the motion. Or we could vote on the motion and if it fails try another. BAC Roy, Bruce had a suggestion. I don't know if folks had a chance to respond to it. SRW Bruce's suggestion, as I understand it, was to amend this to indicate that at the time of the sale of the property that the investment be returned... BAA Yes. SRW Mr. Lennon, would you respond to that suggestion from your... 73 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * RSK We would work the formula out as they suggested, but also have a lien on the property for when it's sold. SRW In other words, the formula that you are trying to negotiate with staff would be worked out but at the time of sale of the property, the remainder of that money... RSK If we didn't have the money back. SRW ...would be returned. TRL No, let me explain it once more. What we agreed to do besides... SRW No, I think we understand what you agreed to. Mr. Altman has proposed another wrinkle, and we want your response. TRL But what Bruce is proposing is exactly how the document is worded now, and what we're saying is that that is not acceptable, that doesn't work. RSK But what we're saying is that we would work that arrangement, it would be tied to the profit, as you're suggesting, but that we would have, if it was unsuccessful down the line, then we would have a lien on the property for the amount that wasn't paid back. What problem would that be to you since you would be selling the property anyway? That sounds like a very good deal for you, to me it sounds like it. To me it sounds like it would solve your problem and our problem. GH It would probably be a problem to finance that. I believe the issue there is in essence what we're going back to. You're asking for a guarantee that the $2.5 million be repaid; i.e., become a lien on the property. The property, if it is troubled, if it doesn't generate a good return, it will be just that much harder to pay that money back. RSK Are you planning on selling it real soon? GH Ahmanson's business is trying to get out of the real estate business. RSK Well, that's the problem is that you don't like that agreement because you might want to sell it in a year or less. GH That is one idea. What we initially offered in these discussions was that we would guarantee the repayment of it through the sales tax and the RDA dollars for a specific period of time. We've agreed to that guarantee. BAC Well, I'm comfortable with amending the motion to include the City -Manager's suggestion. 74 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * TRL We can't solve our problem with that as a requirement. The money's not in it to guarantee...the money's there if the profits are there to pay it. SRW What's the pleasure of the Council? BAC I just said I was comfortable with Bruce's suggestion to give them yet another way to delay it until sale of the project and such things as that. And I understand that, you know, Ahmanson has traded this from hand to another, and if somebody's already BAC ...it's what Downey and everybody else kept telling us about stuff, and I'm stubborn about it myself, I guess. SRW Other comments from the Council, discussion? WHS I only have one comment. I have a proposal that we go ahead with this program and that all of the things that we listed here be accomplished and that as the finalization of the negotiation, staff will work towards getting us the best program that we have discussed here which would get our money back after the thing realizes a profit. I think otherwise we're going to hold this program up and we're going to let a relatively small number of dollars jeopardize a major program that could wind up costing us a lot more than what we're arguing about. I, too, want our money back, and I think that the staff can negotiate a proper wording that will assure us if the thing goes we'll get our money back; if it doesn't, we'll all have to take a bit of a lashing. SRW Any other comments? I feel the same way. I think that, indeed, if the project is a failure, we run the risk of losing that $2.5 million as far as a return on the investment, but we have, I think, several months, the infrastructure will still be there. The staff and the developer have negotiated this agreement for some time now, and I would hate to see us try to renegotiate it at the last minute when the project, I think, the timing of this project is essential. And I, too, hope we get our money back, but I think that the arrangements as discussed, that the negotiation points, is a good one and it's worthy of our risk. So I would support the motion. Is there any other discussion? If not, I'll call for a vote on the motion. SRG I'm assuming the Mayor voted "yes". SRW Yes. SRG The motion carries by a 3-2 vote, with Councilmembers Benson and Crites voting "no". XVI. ORAL COMMUNICATIONS - B None 75 MINUTES ADJOURNED PALM DESERT CITY COUNCIL MEETING DECEMBER 20, 1993 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * XVH. ADJOURNMENT Upon motion by Crites, second by Kelly, and unanimous vote of the Council/Agency, Mayor Wilson adjourned the meeting to Closed Session at 6:15 p.m. He reconvenend the meeting at 6:25 p.m. with no action announced. Adjourn to Closed Session pursuant to Government Code Section 54956.8, Real Property Transactions, 54956.9(a), (b), and (c), Existing, Threatened, and Pending Litigation. Convene Redevelopment Agency Meeting. ATTEST: �HEILA R. GIL'AN, CITY OF PALM DESERT, ORNIA 76