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2005 03 15 RDA Minutes LA GUINTA REDEVELOPMENT AGENCY MINUTES MARCH 15, 2005 A regular meeting of the La Guinta Redevelopment Agency was called to order by Chairman Osborne. PRESENT: Board Members Adolph, Henderson,Perkins, Sniff, Chairman Osborne ABSENT: None PUBLIC COMMENT - None CLOSED SESSION - None The Agency recessed to and until 7:00 P.M. 7:00 P.M. PUBLIC HEARINGS 1. JOINT PUBLIC HEARING BETWEEN THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY TO CONSIDER ADOPTION OF A RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SAM'S REAL ESTATE BUSINESS TRUST REGARDING 9.59 ACRES OF AGENCY-OWNED COMMERCIAL PROPERTY GENERALLY LOCATED SOUTHWEST OF THE INTERSECTION OF HIGHWAY 111 AND DUNE PALMS ROAD. Community Development Director Evans presented the staff report. The Chairman declared the PUBLIC HEARING OPEN at 7:21 p.m. Agency Counsel Jenson advised Community Redevelopment Law requires a public hearing for disposition of the property but the public hearing also provides an opportunity for the Agency to get an overview of what will be presented to the Planning Commission when they consider the Site Development Permit. Redevelopment Agency Minutes 2 March 15, 2005 In response to Board Member Sniff, Ms. Jenson confirmed any member of the Council or Redevelopment Agency can request that the Site Development Permit be brought before the Council. Mike Birkland, 4740 Huffner Street, San Diego, representing Sam's Real Estate, presented a brief overview of how the project relates to the existing Super Wal-Mart Center. In response to Board Member Henderson, Mr. Birkland confirmed they have tried to coordinate the access points with the property owners to the east, and there is potential for a future traffic signal at the south access. Board Member Adolph inquired about the gas station previously proposed by Wal-Mart, and Mr. Birkland indicated that is no longer proposed and the area will be used for parking. Howard Hardin, 1000 Lakes Drive, West Covina, architect for Sam's Club, reviewed the architectural style and features of the building. In response to Chairman Osborne, Mr. Hardin stated the Sam's Club building will have one entrance/exit. In response to Board Member Sniff, Mr. Hardin indicated the 136,000 square-foot building will have a sloped flat-roof and an interior ceiling. Board Member Adolph asked if parapets would be used to screen the mechanical equipment on the roof, and if screening would be provided for storage containers at the rear of the building. Mr. Hardin confirmed parapets will be used on the roof , and stated no storage containers are proposed to be used. In response to Board Member Henderson, Mr. Hardin confirmed the landscape plan indicates seven palm trees along the front of the building. He stated the landscaping at the rear of the property will match the dense landscaping along the rear of the Wal-Mart store. Board Member Sniff commented on the need to use mature plants in the landscaping. In response to Chairman Osborne, Mr. Hardin confirmed the parking spaces will be double-lined. -- ..------ ._~---_._-_.- Redevelopment Agency Minutes 3 March 15, 2005 In response to Board Member Sniff, Mr. Hardin reviewed the access to the loading dock area. Tom Mulcahey, 79-350 Desert Rock Court, noted the public hearing notice did not indicate the hearing was for a Sam's Club, and asked who will own the property. Ms. Jenson advised the Purchase and Sale Agreement is with Sam's Real Estate Business Trust, which she assumes is a division of Sam's Club. Mr. Mulcahey expressed concern about the increased traffic, and asked if the property was offered to competing operations. Ms. Jenson stated an RFP was not done, which is why the matter was scheduled as a public hearing. She indicated the property was not offered to any other entity. Mr. Mulcahey expressed objection to the Sam's Club project because it's a part of Wal-Mart, who pays low wages to their employees. He would prefer having a business there that pays higher wages and generates less traffic. He questioned needing another gas station, and asked about the property cost and the selling price. Ms. Jenson stated the property cost $12 per square foot and is being sold at $12.25 per square foot. Mr. Mulcahey suggested a clause be included in the agreement for IIright of re-entry for condition broken" should Sam's Club fail to maintain the 'property. Ms. Jenson advised the Redevelopment Agency will have a right to repurchase the property under certain conditions. Kay Wolff, 77-227 Calle Ensenada, expressed concern about the increased traffic, and having another big box store in the City. She commented on Wal-Mart's employment practices and world-wide control of certain markets. She feels the residents are looking for variety of shopping opportunities, ease of movement, no-hassle access to businesses, and high standards. She believes the City should be selective in who it sells the property to and what type of business it allows. She stated she doesn't want to see blemishes on the "Gem of the Desert." Redevelopment Agency Minutes 4 March 15, 2005 There being no further requests to speak, the Chairman declared the PUBLIC HEARING CLOSED at 7:46 p.m. RESOLUTION NO. RA 2005-001 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF LA QUINTA, CALIFORNIA, APPROVING A PURCHASE AGREEMENT BETWEEN THE lA QUINTA REDEVELOPMENT AGENCY AND SAM'S REAL ESTATE BUSINESS TRUST FOR THE PROPERTY lOCATED AT THE INTERSECTION OF HIGHWAY 111 AND DUNE PALMS ROAD. It was moved by Board Members Henderson/Sniff to adopt Resolution No. RA 2005-001 as submitted. Ms. Jenson advised the resolution includes authorization for the Executive Director and Agency Counsel to approve changes and for the Executive Director to execute all required documents. Motion carried unanimously. 2. JOINT PUBLIC HEARING BETWEEN THE CITY COUNCil AND THE REDEVELOPMENT AGENCY TO CONSIDER ADOPTION OF A RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT BETWEEN THE LA QUINT A REDEVELOPMENT AGENCY AND STAMKO DEVELOPMENT COMPANY LP REGARDING AN APPROXIMATELY 2.64 GROSS ACRE PARCEL OF AGENCY-OWNED COMMERCIAL PROPERTY lOCATED SOUTHWEST OF THE INTERSECTION OF HIGHWAY 111 AND DUNE PALMS ROAD. The Chairman declared the PUBLIC HEARING OPEN at 7:54 p.m. Community Development Director Evans presented the staff report, and indicated a close study has been done on the traffic impacts to make sure the traffic signals and intersections will work. He added the Dune Palms Road access will help relieve traffic congestion from the shopping center. Board Member Sniff referenced an error on Page 1 of the staff report, noting $26.86 per net acre should be changed to $26.86 per square foot. In response to Board Member Adolph, Agency Counsel Jenson advised the sale of this property and the property sold to Sam's Club more ~ - Redevelopment Agency Minutes 5 March 15, 2005 than offsets the $5.8 million the Agency borrowed from the General Fund .for the commercial portion of the Hammer property but it does not cover the total purchase price of the Hammer property, which was approximately $14 million. She noted a profit will be received on the commercial part of the property, and the Agency will own and use the residential part for affordable housing. The commercial portion was purchased with General Fund monies so the excess will not go into the housing but rather to the Redevelopment Agency. Tom Mulcahey questioned the selling price of this property in comparison to the Sam's Club property. Ms. Jenson explained this property is appraised higher because of the Highway 111 frontage. There being no other requests to speak, the Chairman declared the PUBLIC HEARING CLOSED at 8:02 p.m. RESOLUTION NO. RA 2005-002 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINT A, CALIFORNIA, APPROVING AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BETWEEN THE lA QUINTA REDEVELOPMENT AGENCY AND STAMKO DEVELOPMENT COMPANY lP FOR THE PROPERTY lOCATED AT THE INTERSECTION OF HIGHWAY 111 AND DUNE PALMS ROAD. It was moved by Board Members Sniff/Adolph to adopt Resolution No. RA 2005-002 as submitted and subject to changes approved by the Executive Director and Agency Counsel and authorizing the Executive Director to execute the required documents. Motion carried unanimously. PUBLIC COMMENT - None CONFIRMATION OF AGENDA - Confirmed APPROVAL OF MINUTES MOTION - It was moved by Board Members Sniff/Henderson to approve the Redevelopment Agency Minutes of March 3, 2005 as submitted. Motion carried unanimously. Redevelopment Agency Minutes 6 March 15, 2005 CONSENT CALENDAR 1. APPROVAL OF DEMAND REGISTER DATED MARCH 15, 2005. 2. TRANSMITTAL OF TREASURER'S REPORT DATED JANUARY 31, 2005. 3. TRANSMITTAL OF REVENUE & EXPENDITURES REPORT DATED JANUARY 31,2005. 4. APPROVAL OF EMERGENCY REPAIRS TO IRRIGATION PUMP STATION AT SilverRock RESORT. 5. APPROVAL OF CONTRACT AMENDMENT WITH HEINBUCH GOLF, llC FOR CONSTRUCTION MANAGEMENT SERVICES FOR SilverRock RESORT. 6. APPROVAL OF A CONTRACT CHANGE ORDER TO WEITZ GOLF FOR QUANTITY ADJUSTMENTS FOR GOLF COURSE NO.1 AT SilverRock RESORT, PROJECT NO. 2002-07C. MOTION - It was moved by Board Members Sniff/Adolph to approve the Consent Calendar as recommended. Motion carried unanimously. BUSINESS SESSION 1. CONSIDERATION OF GOLF COURSE CHANGES AND IMPROVEMENTS PER PGA SPECIFICATIONS FOR SilverRock RESORT GOLF COURSE NO.1. There were no changes to the staff report as submitted and on file in the City Clerk's Office. MOTION - It was moved by Board Members Henderson/Sniff to authorize the City Manager to allocate $ 71 ,000 from contingency within the golf course operations contract to construct modifications to native areas, bunkers, secondary drainage, and tee landscape areas. Motion carried unanimously. --'-'-'-~ - --~_. ------ -..---- - ------ --- -- Redevelopment Agency Minutes 7 March 15, 2005 2. CONSIDERATION OF AN EXCLUSIVE NEGOTIATION AGREEMENT BETWEEN THE lA QUINTA REDEVELOPMENT AGENCY AND DDC DESERT DEVELOPMENT INC. FOR DEVELOPABLE PARCELS WITHIN SilverRock RESORT. Assistant Executive Director Weiss presented the staff report. Robert lowe, 709 Latimer Road, Pacific Palisades, representing DDC Desert Development Inc., gave a brief overview of their company and its accomplishments. Ted lennon, 45-780 Silverspur Trail, Palm Desert, stated they intend to bring a high quality proposal before the Agency, and look forward to receiving the Agency's input at the first workshop meeting. As the project moves forward, they will provide staff and the Agency a weekly update and will be available to the public to keep them informed as well. Board Member Henderson asked about the advantages or disadvantages between four-star and five-star hotels. Mr. Lowe stated the differences are fine points in the finishes, which add additional significant costs and result in higher rates. Some minor service differences also exist but because of the way they run their four-star properties, there is very little difference in services to guests. He confirmed a five-star operation can be done under four stars. He believes this property should be upgraded and creative in its design as a full service hotel but one step ~elow from a rate point of view at the high end. Board Member Henderson stated she believes the hotel will be market- driven. She asked where he thinks the market is on a large hotel, and how much the restrictions on the project will hold it back. Mr. Lennon stated he feels one of the major holdbacks is having a 250-350 room hotel with only 10,000 square feet of meeting space. Additionally, financing is a problem because of the room-rate restriction of 75 % of the comparable rate at the La Quinta Hotel. Council Member Henderson asked if the market is there for a full-size hotel without the restrictions. Mr. Lennon stated there has been no new hotel construction in the Valley for some time because the utility bills and summer room rates Redevelopment Agency Minutes 8 March 15, 2005 make it difficult to run a hotel in the Valley during the summer. Their initial idea would be to start with a high-quality, boutique hotel that could be financed immediately. He feels there is some advantage to having lower rates in the beginning. Mr. Lowe stated the resorts being built today include some condominium hotel financing features because it makes a resort hotel financially viable in today's environment. It's very important financially to come up with a plan that blends traditional hotel units with hotel condominium units. He indicated structuring the land deal so the project gets some help in the beginning is a common way that hotels are speeded up in the market today. In response to Board Member Perkins, Mr. Lennon stated they feel a parcel of land near the temporary clubhouse is a good place to start ·with a 200-room key hotel. Board Member Perkins asked whàt they would propose if a 200-room hotel is successful and more rooms are needed. Mr. Lennon stated their intent, once the hotel is started, is to start designing the next phase of hotels in 2009 when the restrictions are lifted. He stated they believe the second golf course is needed to make a large hotel work. In response to Board Member Adolph, Mr. Lennon stated they intend to start master planning the site immediately but noted there is no bridge to the current boutique hotel site and the backside is undeveloped. They propose putting a small hotel on the casitas site that ties into condominium hotel units and provides 200 key rooms. Board Member Adolph indicated he doesn't have a problem with that concept if the problems with KSL can't be resolved. He feels DDC's willingness to commit resources, 30 years of experience in the Valley, and financial capability are key factors in believing they are going to work together with the City. He indicated he is pleased with the way this is going. Board Member Sniff stated he feels it's difficult to judge the firm's abilities and quality of service without having an opportunity to interview the other firms. He asked what projects they have done in the Valley that are of this nature, size, and dimension. -- -""""--'~-"-- '-" --'-- Redevelopment Agency Minutes 9 March 1 5, 2005 Mr. Lennon indicated they developed the Shadow Mountain Resort and Racquet Club, The Terraces condominiums at the Vintage Club, and they took over two projects from Crocker Bank. . They are currently completing The Reserve in Indian Wells, starting on the Stone Eagle project in Palm Desert, and have completed the Desert Crossings and Desert Gardens shopping centers. In further response to Board Member Sniff, Mr. Lennon stated DDC will make money on this project by selling the condominiums for a profit and creating hotels of value greater than the cost to build them. They will also receive income from operating the hotels. As for the City, it will receive transient occupancy tax (TOT) from the room rentals, sales tax from the retail, and increased tax'revenues from tax increment monies. There could also be monthly fees equivalent to TOT should there be mutual agreement that there is a, small project that should be done fractionally. He foresees it taking 6-8 years to complete the project, and their intent is to retain management of the property. Board Member Sniff referenced Project Capitalization and City/Agency Support on Page 58, and inquired about the contribution of land. Mr. Lowe stated during the next 90 days of detailed planning process, they will identify, with greater specificity, the use of each parcel· and relate an economic arrangement between them and the City that produces profit for them and a long-term revenue stream for the City. Board Member Sniff stated ,he understood they would be requesting all of the land except for the first golf course. Mr. Lowe stated all of the land will be within their master development so they and the City can plan and implement the resort center of the City in a fully innovative way. Board Member Sniff questioned how the City is going to come out on the project if DDC possesses the land, and the City provides key improvements, and TOT rebates. Mr. Lennon stated the intent is for some combination of those things to make this work. DDC will have the right to negotiate on the land but the City may retain ownership and long-term leases on some of the sites, DDC may acquire some of the land, and the City may contribute some of the land as part of the deal for hotel sites that are harder to finance. Redevelopment Agency Minutes 10 March 15, 2005 Board Member Sniff voiced concern that once an initial commitment is made, the process would become, to some degree, inexorable with an implied commitment. Mr. Lennon noted DDC will have to fulfill obligations in each phase before being allowed to continue to the next phase, and if they don't meet their obligations, the City can terminate the contract and start renegotiating. Board Member Sniff inquired as to what their general idea is for the property, and if they propose developing the second golf course. Mr. Lennon responded the final sites will rely on what is successful on the first few sites. They will need to co"nsider the size of the master hotel, and determine if the conference center should be freestanding to allow service to all of the hotels or be incorporated. As for the retail area, it could be some form of a commercial village of retail and office space with artist lofts and maybe some residential to become a living community. As for the second golf course, the City can develop it but there may be a situation where it makes sense to do something different with the golf course or a hotel operation running the golf course. They would like to be a partner in helping to design the golf course but have no preconceived ideas. Their overall concept is a series of hotels and retail facilities that fit together. Mr. Lowe commented on the need to optimize the long-term success of a complex re~ort project by operating the key parts together as much as possible. Their concept is to deliver a planned-development project and operate it on that basis. It's not necessary that DDC operate the golf course but the project will be more successful if all components are operated with the same goals in mind. He confirmed there are no five-star hotels in the Valley, and stated some would question there being good examples of four-star quality hotels here. He indicated they have not built any hotels in the Valley but have projects worth $ 2 billion in various stages of development that are very similar to this project. Board Member Sniff noted enhancement of the City's revenue stream is one of the main purposes of this project with the hotel being a major part of that. He asked what type of hotel they envision for the project. - ---- --- --..-.---...-------- Redevelopment Agency Minutes 11 March 15, 2005 Mr. Lowe stated there will probably be three or four different types of hotels, and will begin with a casitas-style boutique hotel. On the major hotel site, they hope a combination common-name hotel and convention hotel units will be feasible after the first phase has been proven. All of the hotels will all be high quality and the sites on the south end could be developed into a high quality hotel but with a limited service style. He confirmed 10,000 square feet of meeting space is sufficient for a boutique hotel but a convention hotel requires 40,000-60,000 square feet of meeting space. In response to Board Member Adolph, Mr. Lowe stated some of the casitas will be privately owned but not have permanent residents, and be operated as part of the hotel. He added blending the two financing techniques makes the project more financially feasible. Board Member Sniff noted it's similar to the Embassy Suites, and asked if he thinks that trend will not change in the near or distant future. Mr. Lowe stated he believes the blending of conventionally-financed hotels with investor-condominium financed units is a long-term trend that not likely to change in the foreseeable future. Board Member Sniff inquired about their meetings with the Agency to get input. Mr. Lennon stated the agreement identifies at least three meetings within the first 90 days. They will meet with staff on a weekly basis and meet with the Agency as often as the Agency desires. At the end of 90 days, they hope to have a master plan that 90% are agreeable to. In response to Chairman Osborne, Mr. Lowe stated they operate both flag and independent hotels, and go through a careful analysis to determine what value a flag hotel might bring to the property. A flç¡g hotel will generally cost 4% to 7% of revenues, so it's important to make sure sufficient additional revenue is there to make a flag hotel economically viable. They have determined in most of their projects that it's more economically feasible to operate without a flag hotel but bring one in when they feel it will work. They feel it's fairly clear that the casitas hotel in the first phase should not be a flag hotel. Redevelopment Agency Minutes 12 March 15, 2005 Chairman Osborne requested the special meeting proposed for April 6th be postponed two weeks to April 20th due to his tax business workload. After a brief discussion, the Agency concurred to extend the' 90-day planning process to accommodate the extra two weeks. Board Member Sniff questioned the amount of time DDC proposes meeting with the Agency in comparison to the time they will be meeting with staff. Mr. Lowe stated they are willing to meet with the Agency as often as needed. Economic Development Consultant Spevacek noted the proposed meeting scheduled was developed by staff and not by DDC. He confirmed residents will have an opportunity to provide input at the meeting with the Agency. In response to Board Member Sniff, Mr. Lennon reviewed the local team that will be working on this project along with members of their Los Angeles office and their headquarters in Denver, Colorado. RESOLUTION NO'. RA 2005-003 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF lA QUINT A, CALIFORNIA, APPROVING AN EXCLUSIVE NEGOTIATION AGREEMENT BETWEEN THE A·GENCY AND DDC DESERT DEVELOPMENT, INC. FOR THE PROPERTY lOCATED AT THE SOUTHWEST CORNER OF JEFFERSON STREET AND AVENUE 52. It was moved by Board Members Henderson/Perkins to adopt Resolution No. RA 2005-003 as amended (with appropriate language to accommodate the 90 + days). Motion carried with Board Member Sniff voting NO. 3. CONSIDERATION OF A REQUEST FOR QUALIFICATIONS FOR THE DESIGN, DEVELOPMENT, AND OPERATIONS OF MULTI-FAMilY HOUSING ON 15.4 ACRES OF AGENCY-OWNED PROPERTY lOCATED NORTHWEST OF THE INTERSECTION OF AVENUE 48 AND DUNE PALMS ROAD. Community Development Director Evans presented the staff report. -- --~-- ---'~-"-'-- - - - - --~- -- --- Redevelopment Agency Minutes 13 March 15, 2005 Board Member Henderson asked if energy efficiency background is included as a qualification, to which Mr. Evans responded that it can be added. She stated she would like for it to be added. Agency concurred. MOTION - It was moved by Board Members Sniff/Henderson to approve the Request for Qualifications (RFQ) to residential developers and operators for Dune Palms Residential Project (Hammer Property), and authorize staff to circulate the RFQ as amended to include experience in energy efficiency construction. Chairman Osborne noted language in the document indicates extreme care will be taken in the design to make sure there is no overlay of lighting or sight into the development to the south. Mr. Evans confirmed that will be addressed during the design phase. Motion carried unanimously. STUDY SESSION - None CHAIR AND BOARD MEMBERS' ITEMS - None ADJOURNMENT There being no further business, it was moved by Board Members Sniff/Henderson to adjourn. Motion carried unanimously. Respectfully submitted, ~~.~ JUNE S. GREEK, Secretary City of La Quinta, California