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2019 Development Agreements - Annual ReportCity of La Quinta CITY COUNCIL MEETING: October 1, 2019 STAFF REPORT AGENDA TITLE: RECEIVE AND FILE ANNUAL REPORT OF ACTIVE DEVELOPMENT AGREEMENTS RECOMMENDATION Receive and file annual report of active development agreements. EXECUTIVE SUMMARY The La Quinta Municipal Code requires annual Council review of active development agreements (DA). Five active development agreements were identified; Centre Pointe, Legacy Villas, Village Park Animal Hospital, Signature at PGA West, and SilverRock Resort development projects. The Centre Pointe development is currently out of compliance and under the terms of the DA, they are required to pay mitigation fees. FISCAL IMPACT Centre Pointe development has not paid the mitigation fees which total $26,050. BACKGROUND/ANALYSIS The periodic review of DAs by Council is required at least every 12 months from the date the DA was entered into until the expiration of the agreement. Five active DAs have been identified (Attachment 1). Of the five, Village Park Animal Hospital, was determined to be in full compliance with no further obligations. The remaining agreements are summarized in the table below: STUDY SESSION ITEM NO. 1 205 Active Development Agreements Project Name Applicant Project Description Effective Date Status 1 Centre Pointe CP Development La Quinta, LLC 50-acre Mixed-use development at SEC of Washington Street and Miles Avenue July 17, 2003, December 18, 2003 (Expires 2053) Not in Compliance 2 Legacy Villas Centex Homes 280 residential units at NWC of Coachella and Eisenhower November 20, 2003 (Expires 2053) Compliance 3 Signature (PGA West) Villas, Haciendas, Estates Crown Pointe Partners, LLC 264 condo/townhome units at PGA West August 18, 2008 (Expires 2058) Compliance 4 SilverRock Resort SilverRock Development Company, LLC Development of the SilverRock Resort including luxury hotel, lifestyle hotel, luxury branded residential, shared services and conference center, and mixed-use village. November 18, 2014 (expires November 18, 2044) Compliance The Centre Pointe, Legacy Villas and Signature developments are within the Tourist Commercial District, which is intended for and permits land uses that include specialized commercial tourist-oriented uses and resort activity that generate transit occupancy tax (TOT) revenue. DAs were executed for these projects for a per unit payment to the City for the potential loss of anticipated TOT revenue, since these sites were developed for residential uses instead of a traditional tourist commercial use, such as a hotel. 206 Centre Pointe The Centre Pointe development includes 42 acres at the southeast corner of Washington Street and Miles Avenue. In December 2003, a Disposition and Development Agreement (DDA) with the La Quinta Redevelopment Agency was adopted and this redevelopment property was sold to the developer. A DA with the City was also adopted. The DA and DDA included construction of Casitas that are subject to a one-time payment and annual mitigation fees to the City, unless the City receives $546,131 minimum annual transient occupancy tax (TOT) for three consecutive years generated by the development (Attachment 2). To date, 40 Casitas have been constructed. These are presently known as La Quinta Desert Villas (HOA). The City has invoiced the HOA for the annual mitigation fees since 2016, however, no payments have been received. The Finance Department has reported that the TOT threshold has not been met and therefore, mitigation fees are required to be paid. The HOA requested TOT information for Homewood Suites in 2018 via a public records request. Information was given to the HOA that showed TOT amounts less than $546,131. To date, no response from the HOA has been received. Therefore, the HOA is currently not in compliance with their mitigation payment obligations. Additional requirements of the DDA include schedules of performance for certain pieces of the development. Currently, the second restaurant parcel and the remainder of the Casitas development have not been constructed per their performance schedules and therefore are not in compliance with the DDA. Staff has spoken with the owners of the second restaurant parcel and the Casitas development. They are willing to negotiate changes to the DDA and work with the City to facilitate development of their properties. Staff has also spoken with the HOA property management company who has stated that they are willing to negotiate to resolve the mitigation payment to the City. Notices of default will be issued if negotiations are not productive. Legacy Villas and Signature The Legacy Villas and Signature developments are in compliance with mitigation payment obligations of their respective DAs. Summaries of these DAs are provided as Attachments 3 and 4. SilverRock Agreements in place for SilverRock consist of a DA and a Purchase, Sale and Development Agreement (PSDA) which were entered into in November 2014 (Attachment 5). The PSDA was recently amended in November 2018 to modify the development schedule, clarify requirements for selling planning areas 7, 8 and 9, identify a phasing plan for master site infrastructure improvements, update project budgets and define ownership structures for the SilverRock Development Company (SDC). With the acquisition of a construction loan for the project, certain milestones needed to be revised to meet the loan requirements. The construction lender requires both the Montage and Pendry 207 to open at the same time, which affects the construction schedule for both hotels. This requires a time extension to complete both hotels and as a result, the Pendry would open 3 years sooner than anticipated in the original agreement. SDC is making progress toward meeting deadlines in their development schedule. Mass grading of the site is anticipated to be completed by early November. A Tentative Tract Map for the Montage Residences has been submitted. Building permits are on-track for submittal in October of 2019 with construction of the Montage Hotel and Spa, Conference Center, Pendry Hotel and Montage Golf Clubhouse anticipated to begin in February 2020. Prepared by: Cheri Flores, Planning Manager Approved by: Danny Castro, Design and Development Director Attachments: 1.Map of developments with active development agreements 2.Centre Pointe Development Agreement Summary 3.Legacy Villas Development Agreement Summary 4.Signature Development Agreement Summary 5.SilverRock Resort Development Agreement Summary 208 CENTRE POINTE LEGACY VILLAS SILVERROCK SIGNATURE VILLAGE PARK ANIMAL HOSPITAL SH-111 MADISON ST54TH AVEWASHINGTON ST48TH AVE EISENHOWER DRJEFFERSON ST52ND AVE MILES AVE 50TH AVE MONROE STJEFFERSON STEISENHOWER DR 50TH AVE Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS,USDA, USGS, AeroGRID, IGN, and the GIS User Community Development Agreement Project Locations ¯ September 2019 ATTACHMENT 1 209 210 Center Pointe Development Agreement (DA2003-0006) Project Description: 134 room hotel, 136 condo/casita units, residential development of 54 detached homes, 14 market rate homes, 2 restaurants, medical office, surgical facility, 132 suite retirement community, 72 suite assisted living, and a 32 bed memory care facility. Applicant: Center Pointe Development LQ, LLC Case No.: Development Agreement 2003-006, Ord 385, 409, 423, 455 and 504 (4 DA amendments approved) Disposition and Development Agreement (7 amendments) Related Case: Specific Plan 2001-055, EA 2001-436, 2011-617 Effective Dates: December 18, 2003, Expires December 18, 2053 (50 YEARS) Terms: •Developer to construct 134 guest room hotel, 136 condo/casitas units, 13 courtyard cluster villas, 54 unit residential development, 14 market rate homes, 40 affordable homes, two restaurants, medical office/ surgical facility, 26 sanctuary villas. •Development of a Casitas HOA •Developer constructs a neighborhood park. •Contribution towards landscape improvements •Payment of Mitigation fees o One-time mitigation fee Casitas: $1,500 for each unit with payment due upon the first close of escrow Sanctuary Villas: $2,150 for each unit with payment due upon the first close of escrow o Annual mitigation fees: Casitas and Sanctuary Villas: $150 for each unit sold to a purchaser to be paid each July 1. Fee shall not be required for any operative year in which the City has received transient occupancy taxes derived from the Suites Hotel parcel, casitas parcel, and sanctuary villas parcel which equals or exceeds $546,131 for the applicable operative year o If City received minimal annual TOT ($546,131) in each of three consecutive operative years, the Casitas and Sanctuary Villas HOA’s obligation to pay the annual mitigation fee shall be terminated. •Public Facilities Fee: 5% of rental amount if rented for a period of time over 30 days ATTACHMENT 2 211 •Sanctuary Villas later removed from the development plan (DA Amendment 2) •DA Amendment 4 replaced the development of single-family residential homes with a senior living facility, The Palms, consisting of 132 retirement suites, four single-story duplex cottages, 72 assisted living suites, and 32 beds for memory care. Status: Out of compliance with one-time and annual mitigation payments for Casitas Units and performance schedules for construction of 2nd restaurant and remaining Casitas Units •Casitas Units (partially constructed) •Applebee’s restaurant (complete) •Homewood Suites by Hilton La Quinta (complete) •The Palms La Quinta retirement community (complete) •Eisenhower Medical Center (complete) •2nd sit-down restaurant (vacant, never constructed) •Pioneer Park (complete) To view the documentation for the CP Development La Quinta LLC Disposition and Development Agreements please click here 212 Second Restaurant Parcel La Quinta Desert Villas Remainder of Casitas Development 213 214 LEGACY VILLAS DA TERMS (DA 2003-007) Project description: 280 unit Residential Resort on 44.61 Acres Applicant: Centex Homes Case No.: Development Agreement 2003-007, Ordinance 389 Related Case: Specific Plan 2003-065, Site Development Permit 2003-778, Environmental Assessment 2003-478, Tentative Tract Map 31379 Effective Dates: Development Agreement is considered effective on December 12, 2003 and expires December 11, 2053 (50 YEARS). Terms: •A one-time mitigation fee of $2,500 per unit constructed in the project due on or before the date the building permit is issued for each unit. •Annual mitigation fee which is collected by the HOA at $1,000 per year per unit that has been sold to an owner. The HOA then forwards to the City of La Quinta. •The Annual mitigation fee is reduced from $1,000 to $500 per year if the City receives TOT from rental units in the project that exceeds $500,000 for three consecutive years during the term of the Development Agreement and can be totally eliminated if the City has received TOT from rental units in the Project in excess of $1,000,000 for any three consecutive operating years during the life of the Development Agreement. •Any rentals are subject to TOT. •Rental Tracking System by HOA. Status: Compliance Amount invoiced for 2018/19 is $376,767.60 To view the Centex Homes Development Agreement please click here ATTACHMENT 3 215 216 EDENROCK (SIGNATURE) DA TERMS (DA2006-011) Project Description: 264 condo/townhome units (83 Courtyard Homes, duplexes, 79 Manor Homes, triplexes, and 102 Village Homes, sixplexes) on 41.95 acres. Applicant: Crowne Pointe Partners, LLC Case No.: Development Agreement 2006-011, Ordinance 457 Related Case: SP 83-002, Amendment No. 6, GPA 2006-107, ZC 2006-127, Tentative Tract Map 33226, SDP 2006-852 Effective Dates: August 18, 2008 and expires August 18, 2058 (50 YEARS) Assignment and Assumption Agreement entered into March 24, 2014, assigned to RREF-CWC LaQ, LLC Purpose: Development Agreement entered into for purposes of payment to City a per unit upfront payment for potential loss of anticipated general fund revenues from “Transient Occupancy Tax” as a result of the use of the site for a residential resort instead of a traditional tourist commercial use such as a 1,000 room resort hotel, conference center and 100,000 square feet of resort retail. Key points of the Agreement: •Compliance with Conditions of Approval •Recordation of Covenants, Conditions and Restrictions •Payment to the City for each unit 0.75% of the developer’s full sale price of the unit upon close of escrow, inclusive of all developer-installed options and upgrades, with the amount of such sales price verified by the City. •Payment of Fair Share Improvements as identified in mitigation measures 11.0-3 and 11.0-4 of the project EIR. Status: Compliance •38 units have been constructed, no construction at this time •Mitigation fees have been collected for constructed units To view the Crowne Pointe Partners Development Agreement please click here ATTACHMENT 4 217 218 AUGUST 2019 SILVERROCK DA TERMS (DA 2014-1001) Project description: Development of a resort development as follows: Area Project Components Acres Units PA 1 Modification of existing Golf Course 173 PA 2 Montage Luxury hotel with spa and fitness center (170,000 sq. ft) 17 140 PA 3 Montage Luxury branded residential homes 14 35 PA 4 Shared service/conference facility 7.5 PA 5 Pendry Lifestyle hotel (170,000 sq. ft.) 10.5 200 PA 6 Pendry Lifestyle branded residential development 10 66 PA 7 Mixed-Use Village Area 1 10.5 150 PA 8 Resort Residential Village 22.5 160 PA 9 Mixed Use Village Area II (80 units) 15 80 PA 10A-1 Golf Course and Clubhouse 51.5 25 PA 10A-2 Residential 13.5 46 PA 10A-3 Residential 5 23 PA 10B-1 Golf Course 62 40 PA 10B-2 Residential 5.5 19 PA 10B-3 Residential 4.5 20 PA 10B-4 Residential 7 34 PA 10B-5 Residential 5.5 22 PA 10B-6 Residential 5.5 24 PA 11 Public Park 22 PA 12 Arroyo, Trails, Canal & Streets 53.5 Total 525 1084 Applicant: SilverRock Development Company, LLC Case No.: Development Agreement 2014-1001, Ordinance 520 Related Cases: SDP 2016-0005, SDP 2016-0009 Effective Dates: •Development Agreement approved on November 18, 2014 •Purchase Sale and Development Agreement (PSDA) entered into on November 19, 2014 and expires November 19, 2044 (30 YEARS). •Amendment 1 to the PSDA was entered into on October 29, 2015 •Amendment 2 to the PSDA was entered into on April 18, 2017 •Amendment 3 to the PSDA was entered into on November 28, 2018 Purpose (Amendment 3 of PSDA): Amends areas of the original PSDA that have changed based on changes in the project; Modifies the development schedule; updates project budgets and define ownership structures for the SilverRock Development Company (SDC). Amendment No. 3 also gives SDC the ability to sell and transfer planning areas 7, 8 and 9 under certain conditions. ATTACHMENT 5 219 AUGUST 2019 Key points of the Agreement: •Establishment of a vested right to execute and fulfill the development program in accordance with the SilverRock Resort Specific Plan and applicable zoning regulations. •Permit and development impact fees are to be paid in accordance with those fees in force and effect as of the effective date of the Agreement. •Any non-city development fees, such as the CVMSHCP or TUMF fees, will be collected at the rate in effect at the standard time of collection. •Developer is responsible for executing development in accordance with identified development program. •Developer acknowledges responsibility for CEQA mitigation monitoring. •The Agreement is to be reviewed at least annually in order to ensure compliance with provisions. •Use the Ahmanson House as temporary clubhouse, in lieu of constructing a temporary clubhouse, until the permanent clubhouse is operational. •Master Site Infrastructure Improvements Phasing Plan amended. Status: Compliance •Golf Course realigned •Site Development Permits for PA 2, 3, 4, 5, 6 and 10A approved •Master Site Infrastructure Improvements Phasing Plan approved •Grading underway To view the SilverRock DA, please click here To view Amendment #3 to the PSDA, please click here 220