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2005 04 20 RDA Minutes LA QUINTA REDEVELOPMENT AGENCY SPECIAL MEETING MINUTES APRIL 20, 2005 A special meeting of the La Quinta Redevelopment Agency was called to order at 7:00 p.m. by Chairman Osborne who led the audience in the Pledge of Allegiance. PRESENT: Board Members Adolph, Henderson, Perkins, Sniff, Chairman Osborne ABSENT: None PUBLIC COMMENT - None CONFIRMATION OF AGENDA City Attorney Jenson reported staff had considered adding an item regarding United Irrigation that came up during public comment at the April 19'" meeting, but emergency items are not supposed to be added to special meeting agendas. Therefore, the City Manager will execute the change orders for the dispute and bring it back to Council for ratification. Anthony Cunzio, of United Irrigation, expressed appreciation to staff for helping to resolve this issue. STUDY SESSION . :_,. DISCUSSION REGARDING DEVELOPMENT CONCEPTS PURSUANT TO THE EXCLUSIVE NEGOTIATION AGREEMENT BY AND BETWEEN THE . LA QUINT A REDEVELOPMENT AGENCY AND DDC DESERT DEVELOPMENT, INC. FOR DEVELOPABLE PARCELS WITHIN SilverRock RESORT. Assistant Executive Director Weiss presented the staff report. Ted Lennon, 47-827 Silverspur Trail, Palm Desert, President of Lowe Destination Development Corporation (DOC), Desert Operations, stated they believe the site is a three-star location, and feel responsible for making it a special place. He introduced their team members as follows: Tom Cullen, Chief Operating Officer and Senior Redevelopment Agency Special Meeting Minutes 2 April 20, 2005 Vice President; Rob Lowe, President of Lowe DOC; Gil Martinez and Michael Angus, of GiI Martinez Associates; Don Ziebell, President of Oz Architects; Michael Hardesty, Executive Vice President of Lowe DDC; and John Fitzpatrick, Project Executive with Lowe DOC. Don Ziebell, 6615 N. Scottsdale Road, Scottsdale, Arizona, President of Oz Architects, gave a brief overview of projects they have developed with DDC. Mr. Lennon reviewed their development concepts for the site, divided into eight areas. He stated they envision starting Phase I with a 204- room boutique hotel consisting of one and two-bedroom units in area 1, and requested feedback on their ideas for the ranch house part of the site. Those ideas consisted of either a world class spa or a La Quinta-themedhistorical restaurant. Area 2 consists of a combined conference center/community center, a 300-room feature hotel, mixed-use retail area, and resort casitas or four-star hotel, and in area 3 they envision a low profile VIP golf cottage addition to the hotel. Area 4 could have a two or three-story, three to four-star hotel, resort casitas, or residence club'. He noted area 7 is the second golf course, which they suggest be shorter and more colorful. He stated area 5 is the golf clubhouse, and area 6 is the driving range, with a possible fitness center or short-game school. He noted area 8 is the civic park area, and should be looked at for other venues such as the arts festival. In response to Board Member Perkins, Mr. Lennon stated most of the buildings would be plastered with textured stone, which helps keep ,the .noise down. Area rugs would also be used in areas with a lot of stone and wood. As for the number of hotels they envision, he stated they are looking at approximately 1,000 units. He feels the economic market will continue to be there if the project is done right, and that there is a need for fine hotel rooms in a master-planned resort. He confirmed the project will be subject to ADA regulations, and stated they are looking to include an electric-car shuttle system. Board Member Henderson asked if they envision the hotels to be separately-owned properties that are unique but compatible to the project. Mr. Lennon responded, "Yes." He added the hotels will be seeking a slightly different market. The casitas in Phase I would be part of one hotel, and there would be a relationship between the hotels for booking purposes. ----..- -._..._...._--~_. --- Redevelopment Agency Special Meeting Minutes 3 April 20, 2005 Board Member Henderson asked how Transient Occupancy Tax (TOT) would be affected if the units are ownership properties. Mr. Lennon stated it will be important for management purposes to have the units available for rent, and they will need to do a good job to make sure the owners want to participate in the rental program. Board Member Henderson referenced the northeast corner of the site, and asked if they see it as the best place for parking or more appealing for real estate than the southeast corner. Mr. Lennon agreed it's a góod location for parking or other public uses, such as an activity center for art sales. He agreed it's more appealing than the southeast corner, but he doesn't feel the busy corner would be good for a hotel. Board Member Henderson commented she would hate to miss something at that corner that should have been considered. She indicated she is very impressed with what they've shown, and feels the potential for having five individually-personalized properties for guests to pick from is exciting. In response to Board Member Adolph, Mr. Lennon stated they envision approximately 1 ,000 rooms as follows: 205 rooms in the dogbone area; 300 rooms in the feature hotel; 300 keys in the area to the south; and 200-250 keys in area 4. He noted 600 may be rental hotels and 300-400 are residence club timeshares paying equivalent TOT fees. He believes the area will support that many rooms if the . mix is right. He stated' if a large percentage of the mix is resort casitas, they don't need the same revenue to operate. Board Member Adolph stated his concern is overdeveloping and not being able to rent the rooms, and is looking to DOC to let the Agency know if a 1 ,000 rooms is the proper mix. Mr. Lennon stated it's a little premature for them to know at this point. Having the feature hotel 80% hotel rooms and 20% penthouse saleable investor-owned suites, can make it financially feasible without needing the same revenues for the hotel rooms. Board Member Adolph asked if they envision a good mix of the casitas being privately owned and the others tied into the hotel for rental Redevelopment Agency Special Meeting Minutes 4 April 20, 2005 purposes, to which Mr. Lennon responded, "Yes." Mr. Adolph asked about the retail area. Mr. Lennon stated he feels the retail area will be the hardest to pull off, and that the mixed use will be important. They are checking the market to see what restaurants and shops can be brought in. Board Member Adolph stated he believes retail businesses will come if the people are there, and that it's important for the retail to be developed along with the hotels so the guests that are not golfing will have a place to enjoy themselves. Mr. Lennon stated he believes the trend in the better hotels is to have outlying restaurants. Board Member Adolph inquired if the areas on the map are in order of development. Mr. Lennon stated they recommend starting with area 1 but the other areas are only for identifying the locations. Board Member Adolph agreed the northeast corner is prime property but voiced concern about having a lot of traffic there during events like the Arts Festival. Chairman Osborne asked if he feels their concept for the site will work with the existing room rate constraints. He also asked if they are looking at any specific flag hotels. Mr. Lennon stated he feels their concept will work because the owners will know they are under market for a better product for a short period of time. As for flag hotels, he stated they are not opposed to looking at them if it makes sense for the project, and they have talked to some. Michael Hardesty, Vice President with DDC, stated they are in the business of creating brands or signature pro'perties, and would plan to do that to the maximum extent possible on this site. He indicated they operate a 'lot of signature properties very successfully but are not opposed to affiliating with a flag hotel if it makes sense for a particular opportunity. He noted the internet has helped to put independent properties on a level playing field as it relates to marketing. ------- Redevelopment Agency Special Meeting Minutes 5 April 20, 2005 Chairman Osborne asked their thoughts about the square footage of the retail area. Mr. Lennon stated he feels that area needs the most immediate work for them to respond properly, and is also an area that needs to be developed in balance with the rooms that are created. They are testing the market to find out what five-star names may be interested and that will help determine how much other space is needed. He noted there are a few anchor tenants that will draw other retailers. Chairman Osborne asked if having 1 ,000 rooms will call for a need to put some major effort in the traffic flow. Mr. Lennon stated he feels a good shuttle system will keep traffic flow, okay. He also noted the area can be walked, and some of the units may have their own golf carts. Chairman Osborne stated he likes the way the areas are put together, and agrees the second golf course should be simpler to play. In response to Board Member Perkins, Mr. Lennon stated there could be three or four hotels at buildout, and that it would be better to have 1,000 keys with 600 rooms. He stated they could operate all of the hotels, or there could be a joint venture with the Ritz Carlton. As for the architecture, he noted the Agency has control on everything that is built. He indicated they have 75 days to get a concept together for Phase 1 and 90 days to negotiate a deal. They hope to break ground next summer on the first site, and would like to have a pre-sell trailer by the first of the year. Board Member Henderson asked if he feels the market is ready for a 300-room hotel. Mr. Lennon stated he feels the top penthouse floors need to be saleable to make it work financially, and to be ready in 2009. He nqted the first phase will set the stage for quality but the hotel built in 2009/2010 will be the signature hotel. Board Member Henderson asked if he feels a market study will be needed. Mr. Lennon stated their primary investors will require additional marketing studies. Redevelopment Agency Special Meeting Minutes 6 April 20, 2005 Board Member Henderson stated she agrees a flag hotel is not as important as it was, and asked if they would be interested if another developer comes along that wants to do a joint venture on his signature property. Mr. Lennon stated they would be interested if it fits into their master plan. Board Member Henderson noted the Agency has already adopted an over~1I architecture style for the site. As for the ranch site, she feels it's important not to destroy it, and feels what has been done to it has not hurt it. It is currently called a retreat, and envisioned to be used for community activities with some type of restaurant site. She stated she can see the possibility of having an exclusive restaurant located there but doesn't want to lose it as a spa site. Board Member Perkins stated he would like to see the ranch site uniqueness preserved and kept different from the rest of the. development. Mr. Lennon stated he understands it's important for the community to continue to be able to share the historical area. Board Member Adolph spoke in support of maintaining the ambiance of the ranch site, and noted the community feels the site belongs to them as opposed to the hotel chains. He feels having an exclusive restaurant there would destroy the area. He asked if they contemplate having two and three-bedroom, privately-owned casitas, to which Mr. Lennon responded, "Yes." Mr. Adolph stated he believes there is a market for it. Chairman Osborne asked about the timing. for the permanent clubhouse. Mr. Lennon stated it's been their experience that clubhouses come on board about two years after the golf course. He feels it's important to see how the current facility operates, and would like to come back on this issue. He noted everything needs to be looked at collectively. Board Member Osborne stated he agrees with what has been said about the ranch site. He asked about having a golf museum at SilverRock. -- Redevelopment Agency Special Meeting Minutes 7 April 20, 2005 Mr. Lennon stated he feels a golf museum would be a luxury. He doesn't know how big it would be, and commented on the possibility of incorporating it into a high-tech golf shop. He feels there will be a long list of community wishes to think through, and noted a lot of the things are costly and don't generate revenue. Chairman Osborne asked if they see any funding for the 1 ,000 rooms coming from the City. Mr. Lennon stated there will be almost no funding from the City for the casita-type product because the' funding usually comes when it's pure hotel generated. He stated it's premature to determine the funding at this point. The money won't all come from the City, and it won't all come from DDC. Chairman Osborne asked how they view the golf course operations. Mr. Lennon stated most four or five-star hotels won't come in unless they have control of the golf course. DDC would like to have a say as to how the course is managed and would like to operate it if the opportunity arises. He stated the second course might be different. They could maybe bring in a partner that requires ownership of the second course. In response to Board Member Henderson, GiI Martinez, of GMA, confirmed he has reviewed the architectural influence materials with DOC but he doesn't know if they have seen materials on the temporary clubhouse that The Dahlin Group developed. Board Member Henderson asked about diverting the canal water through the hotel property. Mr. Weiss stated staff has discussed it with CVWD, and they have indicated it would be an arduous process and very expensive. The decision was made not to pursue it as part of the lake system. Mr. Lennon stated he feels a water theme would be very important for a high-level resort in this area. Mr. Weiss inquired about having another meeting on May 18th. Board Member . Adolph asked if they would have more detail on Phase 1 at that meeting, to which Mr. Lennon responded, JlYes." Mr. Adolph suggested they work with Mr. Martinez on what has already Redevelopment Agency Special Meeting Minutes 8 April 20, 2005 been done with him, and referenced the need to see something in general terms. Council concurred to scheduled a special meeting on May 18, 2005. ADJOURNMENT There being no further business, it was moved by Board Members Henderson/Adolph to adjourn. Motion carried unanimously. Respectfully submitted, ~-Ø.~ JUNE S. GREEK, Secretary City of La Quinta, California --------0____- __ _