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2005 06 15 RDA Minutes LA QUINT A REDEVELOPMENT AGENCY SPECIAL MEETING MINUTES JUNE 15, 2005 A special meeting of the La Quinta Redevelopment Agency was called to order at 7:03 p.m. by Chairman Osborne. PRESENT: Board Members Adolph, Henderson, Perkins, Sniff, Chairman Osborne ABSENT: None PUBLIC COMMENT - None STUDY SESSION 1 . DISCUSSION REGARDING DEVELOPMENT CONCEPTS PURSUANT TO THE EXCLUSIVE NEGOTIATION AGREEMENT BY AND BETWEEN THE LA QUINT A REDEVELOPMENT AGENCY AND (DDC) DESERT DEVELOPMENT CORPORATION, INC. FOR DEVELOPABLE PARCELS WITHIN SilverRock RESORT. Assistant Executive Director Weiss presented the staff report. He introduced Frank Spevacek who addressed the components of the project and how they relate to its financing. He explained the areas where (DOC) Desert Development Corporation, Inc. may need assistance from the agency such as parking structures, completion of the second golf course and the permanent clubhouse. He also advised he would be meeting with the Agency's attorneys to identify the project's requirement as it relates to payment of minimum wage. Agency Member Adolph questioned the reason Mr. Spevacek had used the word "may" concerning the Agency's receiving Transient Occupancy Tax (TOT). He asked if there was any question about the Agency or City being able to collect the TOT. Mr. Spevacek responded the City would definitely be receiving TOT revenues. He said perhaps his presentation became confusing in the area of Condominium Hotels because they could produce either TOT or the Amenity Fee revenue. Redevelopment Agency Special Meeting Minutes 2 June 15, 2005 Agency Member Sniff questioned why the agency would want to encourage the building of a Condominium Hotel rather than a regular type of hotel that does produce TOT. He also questioned if there would be the possibility of a Phase Seven which would provide for large luxury private homes. Mr. Spevacek said luxury home sites have never been discussed during the planning process as a component of this property. He reported that the master plan, as adopted by the Agency, did not include home sites; it was specifically designed as a golf resort. He also explained that any land sale income derived, would go back to the Redevelopment Agency which couldn't use that revenue to pay City General Fund costs. He said during the discussions that took place at the initial concept stages for this development it was confirmed the Agency has the ability, through Project Area No.1, to do anything it chooses on this site without having to sell the land. Mr. Spevacek advised, if the Agency has any interest in adding a luxury home component and the sale of any portion of the site, that should be put on the table at this time. Agency Member Sniff asked if general fund monies are being used in any way for the project at this time. Assistant Executive Director Weiss replied, general fund monies are being used currently for operations of the Arnold Palmer Classic Golf Course.. In response to Agency Member Sniff, he advised that monies from the sale of any of the property would be returned to the Redevelopment Agency and could not be used by the City's General Fund for redevelopment purposes. Agency Member Henderson stated her recollection was, as the Agency developed the master plan for this project, there was a negative attitude toward using any of the land for home sites. She said the emphasis was to develop uses that would generate TOT and she is not in any way interested in changing direction at this time. She said her understanding of the loans the City's General Fund has made to the Redevelopment Agency were loans to expedite funding of projects such as the Library. She said her understanding is by having the loans to the Agency outstanding; it creates a larger pass-through to the RDA. Should those loans be paid back to the General Fund, as Redevelopment Agency Special Meeting Minutes 3 June 15, 2005 Agency Member Sniff suggests, it would reduce the size of the pass- through to the RDA and it would ultimately end up going to the County. She said she also has been advised when the increment comes to the RDA in "out years" it could then flow back to the General Fund. Mr. Spevacek confirmed that her summary was correct. She also pointed out the plan does call for high-end Condos which will somewhat satisfy the desire for high-end homes on the property. She felt since they are going to be sold to individual investors will help to underwrite the cost of the major hotel. Agency Member Henderson said she was happy to see the potential involvement the Agency will have with the project to help move it forward. She acknowledged that these are ideas the Agency might be addressing in the future. Agency Member Perkins said he has concerns about the inclusion of high-end residential homes because at some point the City looses control over that property and the income from them would be one- time revenue. He still favors a development that will yield TOT and Amenity Fees over a longer period of time. Agency Member Adolph asked about the parking area space at the Boutique Hotel. ' He expressed concern if there is enough space for guests to park in the parking structure for the facility or if there was the need to utilize all of the parking adjacent to the casitas as well. Agency Member Adolph questioned the trade-off of being able to get six condos in a half acre site versus one $1 million home in the same half acre site. He said he does agree however with Council Member Perkins that the Agency has, from the start, always looked at this site to produce continuing income. Agency Member Adolph asked about expediting the development of the permanent clubhouse. Mr. Weiss said he feels the staff can make that a priority and start work immediately, if that is the wish of the Agency. Agency Member Henderson asked if there is a possibility DOC would be interested in a design/build contract for construction of the Redevelopment Agency Special Meeting Minutes 4 June 15, 2005 permanent clubhouse. Mr. Weiss said in-house staff has been considering that possibility. Agency Member Sniff asked what the potential cost of the permanent clubhouse might be. He also questioned the cost of the second golf course and the cost to the Agency for providing the infrastructure. He also expressed concern that there were no numbers (even hypothetical) for the cost of a convention facility. Assistant Executive Director Weiss said this information is contained in some of the previous analyses. He said staff has provided the agency with costs in the past and that money has been set aside for the permanent clubhouse in the amount of $8 million and an additional $640,000 for the design. He said staff feels it would be appropriate to work with the developer to determine what the needs are for the clubhouse and what other amenities the Agency has considered that might be incorporated in this facility. He said the early estimates (given about three years ago) for the second golf course were in the $10 million range. He said the second golf course is anticipated to be shorter and not as difficult, more of a resort course. He said there are ways to achieve further economies such as design/build projects. He said the staff can regenerate all of the early estimates if that is the desire of the Agency. Mr. Spevacek said at the present time, the Environmental Impact Review (EIR) allows 10,000 square feet of meeting or convention facilities on the site. The EIR was approved in 2002 when the property was purchased. He also stated, when the agreement was reached with Lowe Enterprises, staff configured it so the Agency would have a great deal of input in the various phases. He stated staff did not want to take the liberty of preparing a complete master plan design, the cost analysis, and then present it to the agency. Now the dilemma seems to be that the agency members are experiencing frustration not knowing the costs upfront of any approvals. Chairman Osborne stated in respect to the parking, he feels a cost benefit analysis should be done in the near future to help the agency know the best direction to proceed. Regarding the condo financing, he recalled that other developers who are doing this kind of project are structured so the units can only be used for periods of 30 days at a time. Mr. Spevacek said, in the existing development agreements and Redevelopment Agency Special Meeting Minutes 5 June 15, 2005 DDA's the owner cannot stay there longer than 30 days and the units cannot be used as a permanent residence. He also reported, Lowe Enterprises has presented a concept, which staff will be exploring with legal counsel. In one instance, requirements have been imposed on one of their projects by the California Coastal Commission, dictating the development must be a resort, serving visitors, and a non- residential use. Chairman Osborne asked if there are methods, other than land sales and rents, to produce income for the RDA. Mr. Spevacek said the only other source of revenue would be the tax increment itself that the development would generate. Based upon today's best estimates the total developed value would be roughly $275 million. Chairman Osborne stated he also has concerns regarding the cost of infrastructure and what will be required. Mr. Spevacek replied the discussions to-date have been, the Agency will put the backbone system in for sewer, water, gas, electric, telephone and cable TV. The developer will be responsible to run the laterals to connect to those utilities. Secondly, he said as to the roadway system, the Agency would be responsible for the road that comes in from Jefferson and the road that will run from the canal to Avenue 54. The third element will be the building pads are to be defined. Ted Lennon, 47-827 Silverspur Trail, Palm Desert, President of Desert Development Corporation, Inc. (DDC), he hopes he can clarify many of the good points that have been brought up. Starting with parking, he said they need to be sure adequate parking is installed. The master plan 'at the start of planning the core area (Phase 2) provides for 90% underground parking. As they go through the presentation, some of that percentage has been brought above ground and it will be more economically feasible with some structure parking. Parking costs for an on-site parking space runs about $1,500 to $2,000 graded with asphalt installed. He said for two or three level parking above-ground the cost goes from $15,000 to $17,000 per space and below-ground the cost goes up to more like $25,000 per space. He feels they have searched for places to tuck in some structure parking that won't result in a lot of big, ugly parking facilities. Redevelopment Agency Special Meeting Minutes 6 June 15, 2005 Mr. Lennon then addressed the infrastructure issue saying the basic philosophy is to get the utilities to the pads and then turn the pads over to DOC and they'll take it from there. The exception would be if they have to do a lot of above or underground parking they would probably need help to accomplish the pure hotel parts of the project. The first phase of the project has almost all the infrastructure to the site, so they are ready now to meet with the architects and engineers to finalize costs and the Agency will have all that information before finalizing a contract. He said many favor a TOT project but there are a number of alternative hotel projects being built now. He explained the importance of an amenity fee is it works with two kinds of properties. The properties they are talking about as well as club residences, time share and fractional programs. He said basically their goal is to analyze what mix of hotel types will provide the best income over time. He explained their analysis will include showing, for example, how a resort casita may cost $300,000 and sell for over $500,000, thus creating increased increment and when it's utilized as a hotel room it creates TOT. He said they will show how it gets to the Agency and City's bottom line. He addressed the suggestion to create residential lots within the development and said a major goal of the ultimate project is to get people on the golf courses to help pay for them. He said using the land up for large estate properties won't accomplish that, but guests will, and that is how the City can afford to provide their citizens with municipal courses and rates. He said the development would be more conducive to a higher density development if all the hotels were not included and that would become another phase seven or eight. He said that might be a consideration later in the project if the City decided to generate land sales. He reiterated it was DDC's mission to create long-term reoccurring revenue. He explained their proposal is to try to structure the various uses so they pay for themselves and so the Agency does not have to write a check for each stage of the project. He said this is a partnership and their goal is to share the benefits. He said the booklet they have distributed with a yellow dot on it is the new material on the boutique hotel and they will walk the agency members through the master project and hopefully get consensus Redevelopment Agency Special Meeting Minutes 7 June 15, 2005 about what they need to make the final presentation on July 19th. He said they will take the boutique hotel up to another level. He said another architectural firm, Hill Glazier, who they have worked with on three other properties is also going to be joining the team on this boutique hotel. After presenting the new material to the Agency Members he started by showing Area Two and said they have now broken it further into parts A, B, C, and D. He said they have also done some thematic statements after listening to the input from the Council. He said this will continue to evolve. Area One contains the boutique hotel and the old ranch house (the temporary clubhouse). A more family-friendly pool has been created at the West end of the property. Regarding Area Two where the large lake joins the property had a free-standing conference center. After some consideration and discussions they feel it makes more sense to put the conference center and the community center, performing arts facility in the area between the Hotel and the Retail Village. He views the Resort Retail Center and the Club Residence Project as one project. He said the Club Residence may be a larger project with a more family-friendly design. He introduced Gil Martinez of GMA to walk the Agency through this portion of the property. GiI Martinez showed the new area A, the hotel area which is planned to have villas along the waters' edge. In the previous plan the Conference Center occupied this location. He said behind the area is a parking area which at this time is planned for a two-story parking structure. He said the hotel is projected to have 300 keys and will be all view-oriented rooms with a sunset bar and open-air feeling restaurant on the top floor. He said the pool is in front with a pier that might provide for boat rides on the lake. He showed the location of a "kids camp" with water slide, lazy river, waterfall and playground. There is an area for valet parking to be primarily used for check-ins. There is an area with a sophisticated pool that will contain the high- end villa units. Redevelopment Agency Special Meeting Minutes 8 June 15, 2005 He displayed the conference center area and said it has been designed to be expanded into a convention center if that develops to be the best use. He showed the planned parking structure and said they could actually place a building on top of it to expand the use to a convention center or performing arts center in the future. He described a theme-oriented waterfront restaurant at a point with a commanding view of the lake, mountains, and sunsets. To the left of the restaurant is an outdoor amphitheater that might double as a conference center/entertainment center venue. Mr. Martinez then presented to Area C, the retail area, which will feature a "main street" with angled parking suggesting an older village with retail and restaurant uses. He showed some spaces on either side of the village area that could be at-ground, or an above- or under- ground parking structure. Agency Member Perkins questioned a portion of the area that appears to be in the lake. Mr. Martinez said it is an island with a waterfall that will create a foreground and background effect from the restaurants. He showed the area designated as Area 0, time-share condominiums designed to be two-story units with double master bedrooms. They are located on the lake and currently they have parking within the area, close to the units. Mr. Lennon said this area is also flexible and may be designed as a boutique hotel, or a residence club, as the project evolves. He also made the point that the parking structure is located so as guests enter from Jefferson, they proceed to a circle that takes them directly to the hotel and they don't drive past the parking structure. He also said they are considering a theme that utilizes a boardwalk all along the lake. Mr. Martinez showed the waterfall location where they have created another restaurant site. He said fundamentally all three restaurants will have lake, mountain, golf course views. All of the restaurants are planned to be indoor-outdoor restaurants that can open up to take Redevelopment Agency Special Meeting Minutes 9 June 15, 2005 advantage of the wonderful sunny days and can be fully enclosed for too hot or overcast days. He also pointed out where pools and other amenities are located throughout Phase Two and emphasized they have tried to incorporate view corridors throughout the project. Agency Member Sniff suggested a direction symbol and a scale be placed on the map for orientation. He also asked about the traffic pattern of the area and suggested that be added to the plans. Chairman Osborne asked how large the retail area will be. Mr. Martinez responded the total square footage will end up about 80,000 square feet and may contain uses other than retail such as offices and perhaps a museum. Mr. Lennon said they will bring in a retail specialty team to make in- depth recommendations for this area. He said they will be able to better answer Mr. Osborne's question as the design develops. In response to Agency Member Sniff, Mr. Martinez said there will be a top-floor restaurant in the hotel and possibly two on the first floor, like a grill and perhaps a fine-dining restaurant. Mr. Lennon commented that the trend in today's hotel industry is to have a good basic restaurant that can do breakfast, lunch and dinner in the hotel and the better restaurants outside the main building. He commented this gives the guests a sense of destination. Mr. Martinez then discussed Area Three east of the hotel and surrounded by the second golf course. This area is planned for resort villas for larger parties containing four bedrooms. They would look like large luxury homes and could also be a resident's club area. There will be a special, estate feeling with large pilasters and gate at the entrance. He said each unit would have its own pool and amenities. The major hotel will provide all of the regular services such as room- service, cleaning, catering, etc. Area Four was covered by Mr. Martinez who explained this is the area closest to Jefferson and Avenue 54. He described a three-story condo hotel or resident's club with on-site parking provided at grade. This would also have all its own amenities, pools, etc. Redevelopment Agency Special Meeting Minutes 10 June 15, 2005 Agency Member Adolph questioned how close the closest building will be to Jefferson. Mr. Martinez responded 400 to 500 feet, and suggested, should the Agency desire, they could erect some sight poles to demonstrate the effect on the view from Jefferson. Chairman Osborne asked if the development has overall height limitations. Assistant Executive Director Weiss said the limitations are those contained in the General Plan, but there may be a Specific Plan done for this project to give it some flexibility. Mr. Martinez then reviewed Areas Six and Eight. He said the area shows a park use and the rectangular designations shown represent soccer fields. There are also four baseball diamonds shown. He stressed the design shown is not a suggested use but was done to show the size relationship of the 42 acre parcel. He said he understands the entire "park" area has been dedicated for parking for tournaments and special events. Mr. Martinez then described the area along Ave. 52 which is the "driving range" area where they have shown a performance center and a practice area in that location. He outlined the circulation pattern that would work on a "non-event" day. The park could be accessed from Avenue 52 and from Jefferson Street, which will both utilize a cul-de-sac at the entrance area to the park with a gate to lock off that area. This will permit traffic to safely turn back when this area is not open. He showed the "event" circulation that would utilize the parking area as well as a turn-around area where spectators can be bussed in from other areas and dropped off. He explained this design takes traffic pressure off of the clubhouse area. Mr. Lennon explained he had compiled a list of uses for the clubhouse area, which might be very unique, such as a golf performance center and a short game school. He suggested this could contain three holes that, if designed properly, could also be utilized for parking and if the City is going to consider a golf museum, this might be a good location for that as well. He envisioned this location could support car shows, charity auctions, and product introductions that require a tented secure area. He listed Art Festival, Art Mart, Special Events, Volleyball (a sand-volleyball tournament) and also cautioned that as the sizes of other areas are finalized, a few holes of golf may need to go in that area to complete the second course. He felt a retail center might even be a possibility with small quaint specialty shops to Redevelopment Agency Special Meeting Minutes 11 June 15, 2005 support the condo developments and even the neighboring communities. Agency Member Perkins asked about areas Five and Seven. Mr. Lennon explained that Area Five is the clubhouse and Seven is the second golf course. Agency Member Sniff said he thinks it is very important to support the Arts within the area, (the Arts Foundation, the potential for a performing theater, or museum). He questioned how the canal is going to be treated. He also asked if the site has sufficient electrical service. Public Works Director/City Engineer Jonasson responded that the system north of the canal has been sized to handle the electrical needs of anything to be built in that area, including the boutique hotel. He explained that the theory behind having the major hotel and other developments next to the lakes was to have the ability to bring utilities in from Jefferson Street. He said the hotel area may require additional circuits be brought from Jefferson and possibly from Avenue 54. He stressed that when the area south and east of the canal are fully planned another analysis will need to be done with 110. He explained this can't be completed until they know what will actually be placed on the site. Mr. Lennon stated they have met with The Keith Companies and are in the process of getting all of that analyzed so they can provide staff with the numbers. In response to the question regarding the canal, he said a berming technique will be utilized to hide it and they will also take the proper steps to make it safe. Agency Member Adolph asked staff to remind 110 that the aesthetics are very important on this project and the placement of transformers needs to be done so they can be hidden with landscaping or other kinds of treatments. He questioned the parking areas and felt the 45 acres and the triangular portion below the Jefferson entrance were designated for event parking. Mr. Lennon explained those areas will still be used for parking, but they can be designed to support other uses as well. He asked the members to go over the thematic plan at their leisure and asked them Redevelopment Agency Special Meeting Minutes 12 June 15, 2005 to consider the design and architectural examples contained In the materials they provided the members. RECESS: The recessed at 8:52 p.m. The Chairman reconvened the meeting at 9:00 p.m. Don Ziebell, of Oz Architects presented the Boutique Hotel as it has evolved since the last presentation. He outlined the major change in the public portion of the hotel which has been dropped down to the lake level. He said the top portion of the parking structure is now at grade level and from the golf course side the back of the wall and heavy landscaping would be all that is seen. He showed the service level of the structure is also dropped down so it is out of sight. He said they will be encouraging guests to utilize the shuttles and enjoy the walking aspects of the site. He showed an upgraded "family pool" at the end of the site. He explained how the units have been redesigned to undulate along the golf course and they will do some modification of grade to break up the roof line appearance. He stressed the generous sizes of the units as well as the emphasis they have placed on large vista windows and the placement of the function rooms and public spaces. He pointed out the design technique of separating the buildings to give more of a village feel. He also said the function areas are all one-story at the lake level so there is less impact on the views from the golf course. He advised all of the units are designed to be hotel units and they've increased the size of some of the units. He showed some of the in-door, out-door treatments they have incorporated to deliver the unique high-end experience they want to establish. Agency Member Sniff asked what the room rates are expected to be. Mr. Lennon quoted $325 to $450. He explained the owners of the units will be buying them as investment property and the room rates will be justified because they will be providing a luxury experience not simply a hotel room. Agency Member Sniff questioned why there are not wider eaves as he has suggested in the past. Mr. Ziebell said they will take that suggestion into consideration. ~- ~._.- ~ . . Redevelopment Agency Special Meeting Minutes 13 June 15, 2005 He pointed out some of the common themes will be to utilize fountains, extensive landscaping, tile, wrought iron and small courtyards. Mr.Ziebell outlined some of the materials and treatments under consideration and said there will be a mixture of wall fountains, small garden fountains, center fountains, reflecting pools, etc. all of which will create a pleasant "white noise." Chairman Osborne asked if they had come up with a proposed name for the project yet. Mr. Lennon said they are leaning toward the name "The Fountains at SilverRock." Agency Member Henderson stated she would like to see something very unique running through the project. She felt something along the lines of repeating the logo on elements such as the fountains, the walls, the key building door features, etc. Agency Member Perkins said he is very pleased with the results that have been shown. He reminded the Agency that this resort will be seen through the eyes of visitors, who are not saturated with all the natural beauty of the site, the climate, and the ambiance of the desert. He urged the developers to continue with what they have been doing. Agency Member Adolph mentioned that all of the water elements will require a good deal of effort to keep the lakes pristine. Agency Member Sniff followed up with comments about the lack of abundant water becoming a serious problem in the desert. Chairman Osborne, said he also agrees the developers are doing a great job so far and encouraged them to continue through to their final design in the direction they have been going. Mr. Lennon summarized by saying they will be finalizing the Boutique Hotel but would like to have the Agency's direction about the other areas of the site after the meeting of July 19th. CHAIR AND BOARD MEMBERS' ITEMS - None Redevelopment Agency Special Meeting Minutes 14 June 15, 2005 ADJOURNMENT There being no further business, it was moved by Board Members Sniff/Adolph to adjourn at 9:47 p.m. Motion carried unanimously. Respectfully submitted, ~-R1.~ JUNE S. GREEK, Agency Secretary City of La Quinta, California