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2005 12 20 RDA Minutes LA QUINTA REDEVELOPMENT AGENCY MINUTES DECEMBER 20, 2005 A regular meeting of the La Quinta Redevelopment Agency was called to order by Chairman Osborne. PRESENT: Board Members Adolph, Henderson, Sniff, Chairman Osborne ABSENT: Board Member Perkins PUBLIC COMMENT - NONE CLOSED SESSION 1 . Conference with the Agency's real property negotiator, Thomas P. Genovese, pursuant to Government Code Section 54956.8 concerning potential terms and conditions of acquisition and/or disposition of a portion of 525 ± acres located at the southwest corner of Avenue 52 and Jefferson Street. Property owner/negotiator: Theodore Lennon, DDC Desert Development, Inc. 2. Conference with the agency's real property negotiator, Doug Evans, pursuant to Government Code Section 54956.8 concerning potential terms and conditions of acquisition and/or disposition of real property identified as AP 609-040-007, property owner/negotiator, Mike Sollenberger and AP 609- 040-005, property owner/negotiator, Testa Family Partnership. RECESS: The Redevelopment Agency recessed AT 2:06 P.M. to Closed Session to and until the hour of 3:00 p.mo RECONVENE The meeting was reconvened at 4: 18 p.m. with all members with the exception of Agency Board Member Perkins. PUBLIC COMMENT - None CONFIRMATION OF AGENDA - Confirmed Redevelopment Agency Minutes 2 December 20, 2005 APPROVAL OF MINUTES MOTION - It was moved by Agency Board Members Sniff/Adolph to approve the Redevelopment Agency Minutes of December 6, 2005 as submitted. Motion carried unanimously with Agency Board Member Perkins ABSENT. CONSENT CALENDAR 1. APPROVAL OF DEMAND REGISTER DATED DECEMBER 20, 2005. 2. RECEIVE AND FILE REVENUE AND EXPENDITURE REPORT DATED OCTOBER 31, 2005. 3. RECEIVE AND FILE TREASURER'S REPORT DATED OCTOBER 31,2005. 4. APPROVAL OF LA QUINT A REDEVELOPMENT AGENCY FINANCIAL REPORTS IN ACCORDANCE WITH SECTION 33080 OF THE HEALTH AND SAFETY CODE. 5. APPROVAL TO REJECT ALL BIDS FOR THE SilverRock SOIL STABILIZATION PROJECT NO. 2002-07M. MOTION - It was moved by Board Members Sniff/Adolph to approve the Consent Calendar as 'recommended. Motion carried unanimously with Agency Board Member Perkins ABSENT. 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, INC., FOR DEVELOPABLE PARCELS WITHIN SilverRock RESORT. Executive Director Tom Genovese introduced Frank Spevacek, Contract Redevelopment Director, who presented the staff report and outlined the purpose of the Study Session. He stated it was to get into more detail regarding how a condominium hotel can work as the feature hotel and how it benefits the owners and the City. Ted lennon, of lowe's Desert Development, addressed the Council and showed a graphic display of the feature hotel as it has evolved to- date. He explained that because the infrastructure plans were not firm - - ...._-_._~._- --- ------ Redevelopment Agency Minutes 3 December 20, 2005 originally as to where roads would go, etc., they commissioned the Jacobson Hardy Group to insure the second golf course will also be a great course and will fit in well with all of the other elements of the Master Plan for the next phase. He said they also have been working with Bob Altevers who, in his opinion, is one of the best clubhouse architects available. He said the City staff has worked very well with them on a very complicated project. Mr. Lennon then described the change in the site for the Major Hotel and the plans for the Clubhouse. He described how the first hole of the new course will depart from the clubhouse. He said the best advice available has been to make the clubhouse smaller, super- quality, and with lots of elegant outdoor space around it that can accommodate larger events. He then outlined the features of the clubhouse which will include an event room that can be divided into two spaces, a player's lounge/grille room and bar, men's and ladies locker rooms, a golf shop and the other amenities required such as kitchen, rest rooms, and administrative space. In all, the clubhouse will be about 16,000 square feet with underground cart storage of about 8,600 square feet. Mr. Lennon displayed a rendering of the retail area which was also designed by Mr. Altevers. He explained the parking would consist of 194 surface spaces and the retail area would also share a parking structure with the hotel. He outlined the concept for the Black Box conference/theater which could become a public endeavor with the developer donating the land, the City donating some seed money and the community groups getting behind fundraising to make a community playhouse a reality. He said the area would contain three one-and one-half story, stand-alone theme restaurants. The other buildings would be two-story and could accommodate a gourmet market, general store, specialty shops like Tommy Bahamas, etc. on the first floor with office/retail on the second story. He said one of their goals has been to introduce some very unique ideas into the area and they are showing a 19th hole and putting course which will have tee locations at the retail village and near the hotel. He explained as guests check in they will be given a personalized silver golf ball to use sometime during their stay. They can try to either score a hole-in-one or closest to the pin that day; with appropriate prizes from the hotel or merchants in the retail village. This could also be used by local charities for fund-raising efforts. He said the major resort and conference center will be Redevelopment Agency Minutes 4 December 20, 2005 integrated with the hotel and spa, the retail village, and the resort casitas all being clustered together. He previewed the design elements of the major hotel and described the change that has been made is in the orientation so all the hotel rooms will have views and the views are away from rooftops and toward the mountain only. Gil Martinez of GMA addressed the changes to the master plan. He stated the original master plan was designed with built-in flexibility. He said the team working with Desert Development, are in his opinion, the best in the business. Mr. Martinez pointed out the routing concept has been flipped with the back nine and the front nine reversed, to produce better flow and a view corridor reflecting all golf as guests enter from Jefferson St. He said he believes all the changes are . improvements. Mr. Martinez then addressed the orientation of the major hotel and pointed out that the views are all kept pristine without any rooftops intruding into the natural landscape. Mr. lennon introduced Roger Beck, the manager of Squaw Creek Resort, who displayed a number of photos of the site there and outlined how that facility operates as a Condominium Hotel. He observed the creation of a profitable resort at the Inn at Squaw Creek was achieved by offering hotel ownership to investors and users. He said the advantage is in attracting the necessary capital to allow the type of extensive resort amenities which appeal to the owners, hotel guests, and the groups that invest. Mr. Beck described the type of guest accommodations at Squaw Creek and said this type of unit is very important to the guests. He said the lock-off bedrooms are 279 square-foot rooms and they are like any other high-quality hotel room. He then outlined the meeting and banquet spaces as well as the spa and resort facilities. He said 91 % of the owners have signed up for the rental program. He said all of the units are pretty evenly divided between the three- bedroom and the one-bedroom units. He said the program is a two- year agreement that actually allows the Hotel to schedule and book for up to almost a three-year period. He explained the typical conference bookings are done twelve to eighteen months in advance. The way the program works for the owners is that they sign an agreement each year to let the hotel know a year in advance what the owner's scheduled vacation use will be and they are then committed to that schedule. Should an owner call and ask to change the schedule and Redevelopment Agency Minutes 5 December 20, 2005 come another time, they sometimes can't use their unit if it is booked already and comparable accommodations aren't available to move the guests to. He explained that the hotel's portion of rental revenue helps the owners, since it is used to help offset the owner's expenses for upkeep and improvements. He stated the Resort at Squaw Creek has become the highest producer of TOT in the North Lake Tahoe Area and Country. In 2004, the resort produced Transient Occupancy Tax in the amount of $1,540,000 when it was operating as a pure hotel and this year they project they will be paying $10,981,000. Mr. Lennon said the first phase boutique hotel costs are being estimated at $101,000,000 and the feature hotel is being estimated at $257,000,000. He said the TOT for the boutique hotel reflected in their last Performa showed about a $932,000 income and the feature hotel is looking to be about $2.2 million, or approximately $3 million dollars/annually from the two hotels. Bob Lowe, spoke about the concept of independent hotels and about Desert Development's strategy. He pointed out that Lowe's DDC owns independently positioned hotels as well as "flagged" hotels. He said they really prefer the independent hotels but they look at the demands, the locations, and other unique factors. He explained Lowe's is recommending, at this time, the boutique hotel and the major hotel be positioned as independent hotels. He felt one or two of the properties located at the southerly end of the property could or should be "flag" hotels. He also spoke regarding the longevity of Lowe Enterprises. He said they are a 33-year old company that has been committed to a long- term organization led by very excellent young executives. He said they have a strong commitment to the desert and to the SilverRock Resort project. Agency Member Henderson questioned about the property's ability to handle conventions. She asked if the size of the unit kitchens would be as small as described at Squaw Creek. Mr. Lennon responded the unit's are designed for convenience only and not for someone to live in year-round. They would not accommodate cooking a large holiday dinner nor would they provide the amount of closet space that would be expected in a year-round dwelling. They are designed to be investment properties that offer benefits and income to the owners and offer a high quality hotel product to the typical guests. Redevelopment Agency Minutes 6 December 20, 2005 Agency Member Henderson questioned if the boutique hotel and the major hotel are going to be tied into each other. Mr. Lennon said the goal is to have the spas complement one another and if lowe's builds and operates both, they will definitely have tie-ins such as complementary cross bookings. Marketing and joint efforts would be wise even if they had separate operators. Member Henderson asked about the noise and privacy considerations in the event the owner may be using their two-bedroom unit with one of the bedrooms locked off and rented at the time. Mr. lennon responded that the construction will be the same as is required of any high-end hotel with noise barrier walls and double connecting solid doors. Agency Board Member Adolph stated his major concern is with the City's own ordinances which regulate the height of buildings within La Quinta and he doesn't like the thought of violating them. Agency Board Member Adolph asked about the fairways being parallel to Avenue 52. Mr. lennon responded they are aware of this issue and will make the necessary adjustments. Agency Board Member Adolph asked Mr. Beck about some of the condos in Squaw Valley and said he felt they have a barracks-like look. Mr. Beck replied they are not affiliated with the Squaw Creek Inn and, in fact, are the competition's product in Squaw Valley. Agency Board Member Sniff asked about the retail area stating he didn't feel it would draw the gourmet customers during the heat of the summer. Mr. Lennon responded they are being very careful about the retail mix and are planning for uses for the second floor that might include office space, artist's lofts, etc. He also said they have projected for the 700 rooms between the two hotels on an annual basis. Agency Member Sniff asked what the room rates are estimated to be and the reply was they would be in the $210/per night price range. Agency Board Member Sniff asked for three creative ideas that they have worked out for this property that will make it stand out. Mr. lennon listed the boardwalk all along the lake, the energy efficient shuttle service that will tie all the areas together, incorporating the fun element of the short-shot hole over the water with the special SilverRock balls, incorporating a community theater element, as well as creating the evening spots to enjoy, not only for the hotel guests ~ _._---_..~._-_.- ....- -- Redevelopment Agency Minutes 7 December 20, 2005 but for the whole community. In response to Agency Member Sniff's question, Mr. Lennon said what they will do to make the hotel a great hotel, is a matter of their experience in the hotel business, having a great staff, a great setting that already exists, and superbly designed amenities. Agency Member Sniff asked about how they will handle the prime time and the conflict with the owners and guests wanting to use the rooms at the same time. Mr. Lennon reiterated the people they will be selling these units to; are buying them as investments and should they not wish to go into the rental program they will be paying a fee to the City similar to TOT. He said the industry has proven that the investors want their units to work for them as investments and understand the resorts have prime seasons where the best return on their investments come from using them as guest space. He also said the units are not all one-bedroom units, there will be two- and three-bedroom units as well, where the owner can use their space with one or two bedrooms locked off to be used as hotel space. Agency Board Member Pro Tem Sniff asked what would happen to the properties if Lowe Enterprises sells the Company. Mr. Lennon replied this isn't something they are anticipating, but on a hypothetical basis his answer would be, "the same thing that happens when anyone sells a business." New owners would take over and run the business as it has been designed to operate. Mr. Lowe commented that in the past ten years all of the major hoteliers have sold i.e. The Ritz, Sheraton, Weston, and all of the major players, but the hotel business goes on. The need and the desire to use resorts and hotels goes on and he stated should they have any kind of a financial problem in the future, the City would still have a tremendous asset, built by Lowe's DOC, and which could be run by whomever the City would choose. Agency Board Member Henderson asked staff how this project would be coming back to them specifically with regard to the number of stories the hotel(s) would have. Community Development Director Evans stated this would have to be decided at the time the Council was asked to approve a Specific Plan. Agency Board Member Henderson stated that rhetorically speaking, if height were to become an issue, there is still the 40 acres located at the Northeast corner of the site that could be used for the golf course Redevelopment Agency Minutes 8 December 20, 2005 if the hotel would have to grow horizontally to achieve the number of rooms that make economic sense. Mr. Spevacek said one of the reason's this Study Session was proposed was to allow this type of information to be expressed. He said with use of the Master Plan and the meetings held since July they had hoped to gain this type of input from the Council. Chairman Osborne asked about the size of the hotel's fifth floor noting it is much smaller at 15,000 square feet than the rest of the floors. Mr. Lennon responded that it is just the center core treatment and the square footage can be moved around as the plans are being refined. Director Evans noted that the area described is not very large and there is efficiency in a vertically designed hotel as opposed to one spread out which requires more walking for service staff as well as the guests. Mr. Spevacek commented that the height of the floor also usually commands higher revenue as far as sales of units is concerned. Board Member Adolph stated the Council at this point is dealing with concepts and he feels the company has done what the Agency has asked for. Chairman Osborne asked about the clubhouse and if it is of sufficient size to serve 36 holes. Mr. lennon responded looking at the locations and the budget. They felt their main focus should be to make it a very high-quality product since there are other meeting spaces planned for the project. He pointed out the larger the clubhouse, the higher the air conditioning costs involved. With the proper design to accommodate large gatherings in tented outdoor spaces he feels this is a sensible approach. Chairman Osborne asked for clarification on the theater financing. Mr. lennon stated if they donate the land and are able to manage the building, the City may choose to give the organizations some seed money to get started and then the remaining funding should become a community effort. He also confirmed they feel $3 million is a reasonable estimate for TOT for the two projects the boutique hotel and the major hotel project as outlined, not the remaining properties to the south. Chairman Osborne said his overriding concern is that the Agency Members know the agency's remaining costs and obligations to the Redevelopment Agency Minutes 9 December 20, 2005 project are as a whole and if the $3 to $5 million In TOT will be a sufficient return on the City's investment. Mr. Lennon said there are still the other two sites to calculate into the TOT income, about a half million in annual sales tax revenue, and the property should generate 41,000 rounds of golf per year. Agency Member Henderson stated she is very pleased with the presentation today and the work to-date. City Attorney Kathy Jenson stated it is the Agency's position that the conditions regarding the hotel rooms generated at the time of purchase are now terminated since KSL has transferred ownership. It is in litigation, but she wanted the record to reflect that that is the agency's position. Mr. Spevacek closed comments with the observation that the Agency has, with other DDA's, included the Agency having the right to approve any sale and that could be explored in this instance. RECESS: The meeting was recessed for the dinner hour at 6:08 p.m. BUSINESS SESSION - None CHAIR AND BOARD MEMBERS' ITEMS - None PUBLIC HEARINGS - None The Redevelopment Agency recessed to Closed Session as delineated on Page 1 at . The Redevelopment Agency meeting was reconvened with no decisions being made in Closed Session which require reporting pursuant to Section 54957.1 of the Government Code (Brown Act). Redevelopment Agency Minutes 10 December 20, 2005 ADJOURNMENT There being no further business, it was moved by Board Members Sniff/Adolph to adjourn. Motion carried unanimously with Board Member Perkins ABSENT. Respectfully submitted, ~4.~ JUNE S. GREEK, Secretary City of la Quinta, California --~ --..- -- ~- - _. -,--~