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HomeMy WebLinkAbout2000-03-23MINUTES REGULAR PALM DESERT REDEVELOPMENT AGENCY MEETING THURSDAY, MARCH 23, 2000 CIVIC CENTER COUNCIL CHAMBER * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I. CALL TO ORDER Vice Chairman Ferguson convened the meeting at 4:03 p.m., noting that Chairman Crites and Member Kelly were expected to arrive at the meeting within the next 10 to 15 minutes. II. PLEDGE OF ALLEGIANCE - Member Robert A. Spiegel III. INVOCATION - Member Jean M. Benson IV. ROLL CALL Present: _ Member Jean M. Benson Vice Chairman Jim Ferguson Member Richard S. Kelly (arrived at 4:25 p.m.) Member Robert A. Spiegel Chairman Buford A. Crites (arrived at 4:29 p.m.) Also Present: Ramon A. Diaz, City Manager David J. Erwin, City Attorney Sheila R. Gilligan, Acting Assistant City Manager Rachelle D. Klassen, Acting City Clerk Carlos L. Ortega, RDA Executive Director Richard J. Folkers, ACM/Director of Public Works Gary Bitterman, Director of Building and Safety Phil Drell, Director of Community Development Paul S. Gibson, Director of Finance/City Treasurer V. ORAL COMMUNICATIONS None MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * VI. CONSENT CALENDAR A. MINUTES of the Regular Meeting of the Redevelopment Agency of March 9, 2000. Rec: Approve as presented. B. CLAIMS AND DEMANDS AGAINST THE AGENCY TREASURY - Warrant Nos. 42RDA, 43RDA, 42-Housing, 43-Housing, and 42HA. Rec: Approve as presented. Upon motion by Spiegel, second by Benson, the Consent Calendar was approved as presented by a 3-0 vote, with Member Kelly and Chairman Crites ABSENT. VII. CONSENT ITEMS HELD OVER None VIII. RESOLUTIONS None IX. NEW BUSINESS None X. CONTINUED BUSINESS None XL OLD BUSINESS None XII. REPORTS, REMARKS, AND AGENCY BOARD ITEMS REQUIRING ACTION A. EXECUTIVE DIRECTOR Mr. Ortega noted the items for Closed Session listed on the Agenda. He said some would be in conjunction with the City Council. 2 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B. AGENCY COUNSEL Reauest for Closed Session: Conference with Real Property Negotiator pursuant to Government Code Section 54956.8: 1) Property: Land located in Section 4 - Desert Willow - Palm Desert, CA Negotiating Parties: Agency: Carlos L. Ortega/David Yrigoyen Property Owner: Palm Desert Redevelopment Agency Under Negotiation: x Price x Terms of Payment 2) Property: APN 628-150-001; APN 628-050-002; APN 628-050-018; APN 628-260-058 Negotiating Parties: Agency: Carlos L. Ortega/Palm Desert Redevelopment Agency Property Owner: Orrin M. Homme/Steven Marc/Pamela Clerihan Under Negotiation: x Price x Terms of Payment 3) Property: 20 acres at the Northeast corner of Frank Sinatra Drive/Cook Street, Palm Desert, CA Negotiating Parties: Agency: Carlos L. Ortega/David Yrigoyen Property Owner: Palm Desert Redevelopment Agency Under Negotiation: x Price x Terms of Payment C. CHAIRMAN AND MEMBERS OF THE AGENCY None With Agency Board concurrence, Chairman Crites adjourned the meeting at 6:15 p.m. for dinner and Closed Session. He reconvened the meeting at 7:06 p.m. XIII. AWARDS, PRESENTATIONS, AND APPOINTMENTS None 3 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * XIV. PUBLIC HEARINGS A. REOUEST FOR APPROVAL OF THE SALE OF MOBILE HOME LOT NO. 79 (APN 622-351-079-3) LOCATED AT 43-155 PORTOLA AVENUE (PORTOLA PALMS MOBILE HOME PARK) AT FAIR MARKET VALUE (JOINT CONSIDERATION WITH THE PALM DESERT CITY COUNCIL). Mr. Diaz stated that this public hearing should be considered jointly with the Palm Desert Redevelopment Agency. Housing Manager Teresa LaRocca reviewed the staff report, noting that the selling price for Lot #79 would be $24,500. She said this would make a total of 17 lots sold to date, with six still unsold but with tenants on them, and 17 vacant remaining lots. She offered to answer any questions. Mayor/Chairman Crites declared the public hearing open and invited testimony in FAVOR of or OPPOSED to this request. No testimony was offered, and he declared the public hearing closed. Councilman/Member Kelly moved to: 1) Waive further reading and adopt City Council Resolution No. 00-25, authorizing the Palm Desert Redevelopment Agency to sell mobile home lot number 79 (APN 622-351-079-3) located at 43-155 Portola Avenue (Portola Palms Mobile Home Park) at fair market value; 2) waive further reading and adopt Redevelopment Agency Resolution No. 389, making and finding that the sales price for the lot is not less than its fair market value in accordance with the highest and best use under the Redevelopment Plan for Project Area No. 1 Amended. Motion was seconded by Ferguson and carried by unanimous vote. B. CONSIDERATION OF CONFERENCE HOTEL DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE PALM DESERT REDEVELOPMENT AGENCY AND THE DESERT WILLOW CONFERENCE CENTER PARTNERSHIP (JOINT CONSIDERATION WITH THE PALM DESERT CITY COUNCIL). Mayor/Chairman Crites noted that this was a joint public hearing with the Palm Desert Redevelopment Agency. Mr. Ortega reviewed the staff report, noting that the purpose of the public hearing was to receive public comment on the agreement before the Council/Redevelopment Agency and the proposed sale of Redevelopment Agency land. He said the public hearing was advertised on March 8th and 15th, and the agreement and consultant's report had been available to the public since March 8th. He said this involved the sale of 16.8 acres by the Agency, which would be developed as a conference hotel. He noted the developer was available to answer any questions. The project would be a full -service hotel consisting of 250 hotel units and approximately 64,000 square feet of public spaces and meeting rooms, restaurants, and hotel retail. There would be approximately 28,000 square feet of meeting space, 405 parking 4 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * spaces, and a three -level parking structure. He said one of the conditions of the agreement was that the plans and specifications be submitted to the City to obtain a conditional use permit. There were also requirements for the Agency to be able to review all the financing commitments and construction contract. He added that this was an agreement to agree and an agreement to close an escrow if certain conditions are met by the developer. The agreement provides the developer with one year from the date of execution of the agreement to provide all of those things. In addition, if the developer meets all of the condition and the escrow is closed for the transfer of the land, there are requirements that the project be built, and there are provisions for reversion if the project is not built within a specific period of time. There was also a penalty clause if the project is not completed within a specific period of time, and the developer would be charged a daily penalty amount. He noted that the agreement recommended that the sale of the parcel be for $1.00. In accordance with Redevelopment law, an analysis had been prepared that justified the sales price. Also in accordance with Redevelopment law, the property was required to be sold at fair market value (or fair reuse value if the terms and conditions and requirements placed for the development of the project could not justify the fair market value). Mayor/Chairman Crites declared the public hearing open and invited testimony in FAVOR of or OPPOSED to this request. MR. RALPH DAVIS, a resident of Montecito, stated that the residents of his community had concerns with the way this development would affect them due to its closeness to their homes. He said their concerns were primarily with the height of the buildings, placement of the buildings on the site, light pollution, noise pollution, and security. He questioned how the measurements were done and stated that the pads had been built up from the previous grading for the golf courses. He said from his home, it looked as if they had been built approximately 20 feet higher. MR. TIM SULLIVAN, resident of Deergrass Drive in Palm Desert, General Manager of Marriott's Desert Springs Resort, said he was also speaking on behalf of the Marriott Corporation as the lead Marriott executive in the Coachella Valley. He questioned the wisdom of a hotel development in Palm Desert in light of the current dismal hotel environment in the Coachella Valley. He noted that the aggregate occupancy of the major hotels was approximately 65 % and declining. He said he respected the free market. If someone wants to come to the Valley and develop a hotel, he would wish them well and would treat them as a respectful competitor. However, he opposed the idea of the City selling 16 acres of beautiful land to a developer for $1.00. He said in his view and in the view of Marriott, that was nothing less than the City underwriting a direct competitor to Marriott. He said he also spoke for the 1,500 associates working at Marriott's Desert Springs and the 3,000 Marriott associates in the Coachella Valley. He said these are not great times in the hotel business, it continues to be a scramble in the hotel business, and selling this land for $1.00 would create a competitive imbalance, disrupt the existing competitive context, and provide anyone that comes into that site with an undue competitive advantage. He added that the reason people are not 5 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * coming in and paying fair market value for land in the Coachella Valley to develop new hotels and resorts was because there is not the demand to fill these new hotels and resorts. Mayor Pro-Tem/Vice Chairman Ferguson asked Mr. Sullivan how he would define a competitor to the Marriott's Desert Springs. MR. SULLIVAN stated that Marriott competes both in the Valley and outside of the Valley. The competitors outside the Valley would be Scottsdale, San Diego, and Las Vegas. Within the Valley, the competitive set was defined as the La Quinta Resort, the Hyatt, Renaissance Esmeralda, Rancho Las Palmas, Westin Mission Hills, and the Ritz Carlton Hotel in Rancho Mirage. He said when he mentioned the aggregate occupancy of 65%, this was the group of hotels to which he referred. MR. ROBERT SONNENBLICK addressed the Council/Agency Board as a partner in the company wishing to develop this property. He said members of his firm had the opportunity to meet with City staff and some of the local people, including residents of Montecito who would be the most closely affected. He said the conference center project was a two-story project. In terms of blocking views, the two-story conference center being proposed was virtually no different than the new clubhouse at Desert Willow. The conference center hotel had been intentionally moved to the side closest to the Montecito development so as to not block views. The design had been done in the same architectural motif as the new clubhouse as well so that everything would blend together. He said they had tried to be a good neighbor to the existing residents. With regard to comments by Mr. Sullivan, he said there were two things in the hotel business that needed to be looked at. One was occupancy, and the other was room rates with occupancy. He agreed with Mr. Sullivan as far as who the competing hotels are in the Coachella Valley. He noted that room rates at $175.00 per night average meant that during the high season, they had to be at approximately $225.00. He said Hilton was going to be the operator of the conference center, and if Hilton did not feel that the economics warranted doing what was proposed, there would not be $64 million put at risk in the deal. He said he wished to stress the difference between a resort hotel, such as the Marriott, and a conference center hotel which was geared toward groups of corporate travelers coming in for conferences and meetings. This project would not have the usual types of amenities such as tennis courts and three-story high lighting that would bother the neighbors. With regard to the security issue, he said security was a big issue to them as well, and one of the things they would do is to provide a security fence around the project. He offered to answer any questions. Upon question by Councilman/Member Spiegel, Mr. Sonnenblick confirmed that the plan was to have 250 hotel rooms at over $250,000 per room (based on the $64 million figure). MR. SONNENBLICK stated that with regard to the issue of the purchase price of the land, this hotel should generate approximately $2 million per year to the City of Palm Desert. 6 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Mayor Pro-Tem/Vice Chairman Ferguson asked where this hotel would be in Mr. Sullivan's competitive set. Mr. Sonnenblick stated they were projecting on the conference center to be toward the lower third of room rates in the competitive set mentioned by Mr. Sullivan. He said when people come in for a conference, they are not just looking at room rates — they also commit to a large food and beverage commitment as well, with several meals per day being catered on site. Mayor Pro-Tem/Vice Chairman Ferguson asked what the competitive set of the resort hotel across the way, and Mr. Sonnenblick responded that it was similar to Mr. Sullivan's list and included Marriott's Desert Springs, the Ritz Carlton, La Quinta Resort, Westin Mission Hills, Hyatt Grand Champions, Givenchy Spa, and the new Miramonte Hotel. Mayor Pro-Tem/Vice Chairman Ferguson stated that when Marriott came to the city to build its hotel facility, they did not ask for anything by way of land. Over $3 million in sales tax was generated per year by the Marriott, and the City did not give them anything. He said he felt it was necessary to come up with a public nexus of benefit to justify some $3 million in land. Mayor/Chairman Crites stated that Mr. Sullivan never said this would not be a good deal for the City. What Mr. Sullivan said was that it did not start both of these projects out with the same set of costs, and that is what Mayor Pro-Tem/Vice Chairman Ferguson was talking about. MR. SONNENBLICK stated that in order to get financing in 1985, which was what the Marriott had to do to construct its facility and open in 1987, the world was very different than it is today. It was very easy for developers to go out and get 85 % to 90 % of cost financing, and they could then afford to have large land and building costs. However, today's financing was such that developers can only get 60 % to 65 % of project cost at the most. He said if he was able to borrow 90% of costs like he could in 1985, he would offer to pay full dollar for the land. With regard to the comment relative to employment, he said it was very hard for him to believe that opening a 250-room conference center hotel would put anyone out of work at the Marriott. Mayor Pro-Tem/Vice Chairman Ferguson stated that his point was that we have a very economic and productive partner in the Marriott, and the City gave them nothing. He said he believed the City could have the same thing with this new project. He said his hangup was not on the land per se, it was more on why this three -star project would take an upper third of the four -star competitive set. He said the City had invested a considerable amount of money in Desert Willow and was looking at a four- or five-star property on the resort hotel pad. He said he wondered why this was being done in piecemeal fashion instead of stepping back and taking a look at both parcels and possibly some additional land to bring the height of the resort hotel down and master plan the entire site to make it a quality, homogeneous star type development throughout rather than having a five-star and a three -star sandwiched by a $6 million clubhouse. 7 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilmember/Member Benson asked Mr. Ortega what the land would be worth if the City were to sell it. Mr. Ortega responded that looking at the purchase price plus infrastructure, it would be approximately $1.3 million. He added that market value is what you are allowed to put on it given the restrictions and conditions. MR. REID SANFORD, 23 Taylor Avenue, Palm Desert, Montecito Development, echoed the comments of Mr. Davis and said he felt they were important issues. He said he took issue with Mr. Sonnenblick's comparison to the present clubhouse, which he felt was beautiful and did not impact the views of the neighbors. He said the reason it did not impact the views was because it is behind the large platform and mound on which the conference center was going to built. He said the original proposal for this site was a seven -story hotel, which really offended the adjacent residents. He noted that Finding #1 under the Real Estate Analysis Services Co. report stated that "The Property is currently completely unimproved, and the development of the Project will assist in the elimination of blight in the area." He said he felt the blight depended on what direction one looks, and there is a beautiful view from Montecito. MR. WILLIAM HARRIS, 40-640 Ventana Court, Palm Desert, asked if the residents would maintain tee times at the resort and if they would be guaranteed. Mayor Pro-Tem/Vice Chairman Ferguson stated that although he could not guarantee it in the future, this Council had discussed the issue and wanted the residents to be able to play both -- Desert Willow courses, even with the hotels. MR. HARRIS asked where the work force would come from since there is already a shortage of hotel workers in the Valley. Mayor/Chairman Crites stated that when the Marriott was first built, they used to bus people from their resorts in the Los Angeles Basin so they had enough workers. He said the issue of coming up to speed from zero with workers is always an issue for any major development and would be for this development as well. MR. FRANK GARAHAN, Calliandra Street, Palm Desert, stated he would like to respond to some of the comments made by the developer regarding the type of customer they are attracting. He said he felt they were disingenuous in terms of the current reality. He said Mr. Sonnenblick characterized the type of customer being conference center customers and corporate group customers unlike that of other hoteliers in the Valley. He said he was the General Manger of the Rancho Las Palmas resort in addition to being a resident of Palm Desert, and he assured the Council that the customers this resort is trying to attract would be precisely the same customers that all of the hotels in the competitive set are attracting at the same time of year. With no further testimony offered, Mayor/Chairman Crites declared the public hearing closed. 8 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilman/Member Kelly stated that the Marriott was one of the most favorite businesses in the Coachella Valley. He said the City must deal with what the economic climate is today if it wants to continue development as planned. He said if it were not for Mr. Bill Bone, the Marriott Desert Springs Resort & Spa would not be here in Palm Desert. He noted that just because someone asks the City for something does not necessarily mean they will get it. The City did not propose a seven -story hotel at this site, but the City's Master Plan shows a conference center hotel. Unless the City wants to junk the project and start all over again, it has to deal with what the realities are today. He said he felt the Council had a responsibility to follow the plan that it has had for the last three years. Mayor Pro-Tem/Vice Chairman Ferguson stated that he was delighted that Mr. Sonnenblick was going to be building whatever is decided upon because he knew Mr. Sonnenblick does first-rate work and would deliver a quality project. He said he was also mindful of the fact that the City had spent not just the last three years on hotels but the last 14 years master planning Desert Willow, a lot of it due to the vision of Councilman/Member Kelly and the rest of the Council at that time. He said it was always envisioned to have two golf courses, a conference center, and a resort hotel. He said he was not sure in the year 2000, given the current economic client and the hotel industry, whether the Council has to stick, line and verse, to that formula. His concern was not whether there will be a hotel (because there would be one), his concern was that it has taken 14 years so far and does not have to be decided at this meeting. He said he would rather it be done right, and several things alarmed him at this meeting. One was doing the project piecemeal. He did not want to do the conference center site, then the resort hotel site — he would rather do one integrated master plan. There is a Master Plan that has a five -story limit on its hotel, and the Council was asked at this meeting to approve a site study to go to a seven -story hotel. He said if there was a better way to do this, he was open to consider it. He did feel the City can get the quality product it wants, there is enough land to put it on without going over five stories, and the product he was looking for would not be in direct competition with the hotel competitive set as described. He said he was not prepared to vote on the matter at this meeting, and there are large policy issues left to be addressed. Councilmember/Member Benson agreed and said it worried her that it had taken almost 27 years for the City of Palm Desert to get where it is today, and she did not feel it was necessary to cover every piece of land in the City just because it is City -owned land. She said she felt the Council needed to look very carefully at what is put on that property and when. Councilman/Member Spiegel thanked the Marriott Desert Springs and said the income from this facility was twice what the City receives from all the residences in the City in real estate taxes. He said a lot of the amenities in the City, such as the skateboard park, are directly related to the Marriott Hotel. He reiterated what Mr. Sonnenblick said relative to investments being a lot different in 1985 than they are today. He said limited partnerships were easy to come by because of the big tax writeoff. He said according to the report from the Redevelopment Agency, it was not unique in today's marketplace for cities to work with 9 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * developers. He agreed with Mayor Pro-Tem/Vice Chairman Ferguson that he would like to see the entire site at least planned, if not developed, at one time. He said he would like to see this matter continued so that the Council can get a better feeling on the plan. Mayor/Chairman Crites stated that the issues of grading, pad height, original height, placement, etc. were real and significant issues, but this meeting was not the time they would be addressed. He said they would be addressed when someone brings in an actual project with all the various and sundry components. He said those answers needed to be there when staff comes back to the Council with a report and recommendation for a project. He agreed with his colleagues that it was important to try and have a plan for both of those pads at the same time. It was also important to see if the height of the pad for the proposed seven -story hotel could be lowered. He agreed the world had changed since the early 1980s; however, when Marriott came in just a year or two ago with plans for The Courtyard and the Residence Inn, they paid money for hotel pads. He said it felt that as you go up the scale of luxury, you go down the scale of profit in terms of what people are willing to pay, and then cities are supposed to subsidize those at a higher rate. He said he was still looking for a more equitable way to reach financial arrangements on this. Mayor Pro-Tem/Vice Chairman Ferguson suggested that if this is continued, before it is brought back the Council might wish to consider asking several of its colleagues to sit down with Mr. Ortega and Mr. Sonnenblick to try and resolve issues brought up at this meeting. Mayor/Chairman Crites asked if the City Manager would be included in these discussions, and Mayor Pro-Tem/Vice Chairman Ferguson agreed. Upon question by Mayor/Chairman Crites, Mr. Erwin noted that the public hearing had been closed. Mr. Ortega stated that with the Redevelopment Agency, there has to be a proposed agreement in order to call for a public hearing. Mr. Erwin stated that if the Council/Agency was going to continue with this matter as a public hearing, it needed to continue it to a specific date. Councilman/Member Spiegel stated he felt it would be best to re -advertise the public hearing. Mayor/Chairman Crites reopened the public hearing. Councilman/Member Spiegel moved to continue this matter for 30 days, with two Councilmembers to be appointed to work with appropriate staff and the developer to resolve issues discussed at this meeting. Motion was seconded by Benson and carried by unanimous vote. 10 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING MARCH 23, 2000 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilman/Member Kelly suggested that Councilman/Member Spiegel and Mayor Pro-Tem/Vice Chairman Ferguson be the appointees to work on this matter. Both agreed. With Council concurrence, Councilman/Member Spiegel and Mayor Pro-Tem/Vice Chairman Ferguson were appointed to work with appropriate staff and the developer to resolve issues discussed at this meeting. XV. ADJOURNMENT With Agency Board concurrence, Chairman Crites adjourned the meeting at 9:08 p.m. to Closed Session. He reconvened the meeting at 10:11 p.m. and immediately adjourned with no action announced from Closed Session. ATTEST: BUFORI}-(. CRITES, CHAIRMAN RAC1 ELLE D. KLASSEN, ACTING CITY CLERK CITY OF PALM DESERT, CALIFORNIA 11