2025-09 SilverRock - Econ Dev Subsidy Rpt (GC 53083 &52201)SUMMARY REPORT PURSUANT TO
CALIFORNIA GOVERNMENT CODE SECTIONS 53083 & 52201
ON A
REINSTATED AND AMENDED DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF LA QUINTA
AND
TBE RE ACQUISITION CO II LLC
AN AFFILATE OF
TURNBRIDGE EQUITIES
The following Summary Report has been prepared pursuant to California Government Code
Sections 53083 and 52201. The report sets forth certain details of the proposed Reinstated and
Amended Development Agreement, and related agreements (Agreement) between the following
parties:
1. The City of La Quinta (City), a California municipal corporation and charter city;
2. TBE RE Acquisition Co II LLC, a Delaware limited liability company an affiliate of
Turnbridge Equities (Developer).
The Agreement requires the City to provide a development incentive to the Developer for the
purpose of constructing the Siver Rock Resort Area, which includes a hotel, condominiums,
single-family residences, spa, public golf course clubhouse and complimentary amenities. The
project is located on an approximately 134-acre site in the City of La Quinta (Phase 1 Property).
This summary report considers only the proposed Agreement. The purpose of this Agreement
is to effectuate economic development in the City.
The following Summary Report is based upon the information contained within the Agreement,
and is organized into the following six sections:
I. Identity of the Developer: This section provides the name and address of the
Developer.
II. Salient Points of the Agreement: This section summarizes the major responsibilities
imposed on the Developer and the City by the Agreement.
III. Economic Incentives Provided and Cost of the Agreement: This section details the
economic incentives provided and the costs incurred by the City to implement the
Agreement.
IV. Consideration Received and Comparison with the Economic Incentives Provided:
This section describes the financial compensation to be received by the City.
1
2509003.LQ.kee
18994.007.001
V. Creation of Economic Opportunity and Public Purpose: This section explains how
the Agreement will assist in creating economic opportunity in the City.
VI. Job Creation: This section describes the number of full-time, part-time and temporary
jobs created under the Agreement.
This report and the Agreement are to be made available for public inspection prior to the
approval of the Agreement.
I. IDENTITY OF DEVELOPER
Information on the Developer is provided below:
TBE RE Acquisition CO II LLC an affiliate of Turnbridge Equities
TBE RE Acquisition Co II LLC
c/o Turnbridge Equities
4 Bryant Park, Suite 200
New York, New York 10018
II. SALIENT POINTS OF THE AGREEMENT
A. Project Description
At the time of this Report, the Phase 1 Property is subject to a voluntary "Debtor -In -Possession"
bankruptcy proceeding, as referenced in the Agreement. The Developer's acquisition of the
Phase 1 Property, and subsequent development of the Project, is contingent on the bankruptcy
court authorizing the sale of the Phase 1 Property. On the Phase 1 Property the Developer will
construct (approximately) the following improvements that are identified as Phase 1A and 1B in
the Agreement (collectively "Phase 1"):
1. Luxury Resort Hotel - 154-room resort with supporting amenities (e.g. pool, lobby, etc.)
2. Banquet Facilities - 21,600 square feet of meeting and banquet space
3. Spa - 21,000 square foot amenity
4. Condominium Units - 70 Luxury Branded units
5. Luxury Branded Single Family Residences - 122 for -sale residences with 29 units in
Phase 1A and 93 in Phase 1B
6. Public Golf Clubhouse - 16,200 square foot facility for the existing public Arnold Palmer
Classic Golf Course (Golf Course)
2
2509003.LQ.kee
18994.007.001
7 Residential Clubhouse - 15,000 square foot facility with pools for use by residential
owners
A subsequent project phase (Phase 2) is contingent upon the completion of the Luxury Resort
Hotel and Public Golf Clubhouse being constructed and open for business to the general public,
which includes the conveyance of the City -owned Golf Course and Ahmanson Ranch Property,
and, upon the valid exercise of an option to purchase, the Phase 2 Property from the City.
Together, this City -owned property is approximately 380 acres, including the existing Golf
Course and Ahmanson Ranch House, and with anticipated improvements that contemplate an
18-hole private golf course, 253 residential units and 40,000 square feet of commercial
development.
B. Developer Responsibilities
The Agreement requires the Developer to accept the following responsibilities:
1. Developer shall develop or cause the development of the Project on the Property in
accordance with this Agreement and other Project Approvals, the Project Description,
Site Maps, Scope of Work for all Project Components, and within commencement and
completion dates of the Project Components pursuant to the Schedule of Performance
stated to be Project Milestones;
2. Developer shall have the obligation to apply for and obtain, at its own cost and expense,
any and all permits, licenses, approvals and entitlements for the development of the
Project;
3. Commencing upon the date of the close of escrow for Developer's acquisition of the
Property, Developer shall pay prior to delinquency all ad valorem real estate taxes and
assessments on the Property;
4. Developer shall not use or otherwise sell, transfer, convey, assign, lease, leaseback or
hypothecate the Property, the Project that would cause the exemption of the payment of
all or any portion of real or personal property taxes otherwise assessable regarding the
Property;
5. Provide commitment letter or similar instrument (which it is acknowledged may be non-
binding) from the proposed Permitted Hotel Operator for the Luxury Hotel Project
Component, Luxury Condominium and Luxury Single Family Residences (depending on
which Project Component(s) Developer elects to undertake at the appliable time);
6. The Final Project Budget for the applicable Project Component;
7. The proposed financing plan generally identifying financing sources for all private and
public improvements proposed for the Project Components on the Phase 1A Property,
which financing plan is consistent with the Final Project Budget;
3
2509003.LQ.kee
18994.007.001
8. Developer covenants, for itself, its successors and assigns, that the Developer shall
commence and complete the construction of the Project on the Property within the
approximate (or, with respect to Project Milestones, the dates) time period for such
actions set forth in the Schedule of Performance;
9. Except for the TOT rebate as provided for in the TOT Covenant Agreement and the
potential premium purchase price for the City -Owned Option Property as provided for in
the Option Agreement, all costs and expenses for the undertaking and completing the
Project, including, without limitation, constructing all Project Components, all legally
imposed on- and off -site improvements, and providing all utilities therefor, shall be borne
by Developer at its sole cost, expense, and liability;
10. Developer shall assume the responsibility and be solely responsible for determining
whether or not laborers employed relative to the construction of the Project must be paid
the prevailing per diem wage rate for their labor classification;
11. Developer shall have at least one luxury hotel with first-class amenities and uses
complementary to the Golf Course and surrounding SilverRock Resort Area, as
approved by City as part of the Project Approvals; and
12. Developer shall operate and maintain the Golf Course and Ahmanson Ranch House in
first-class condition and will continue to provide one-third of the available tee times at a
reduced rate for City residents.
C. City Responsibilities
The Agreement imposes the following responsibilities on the City:
1. The financial assistance provided to Developer by City shall be the TOT rebate as
provided for in the TOT Covenant Agreement and the potential purchase price for the
City -Owned Option Property as provided for in the Option Agreement, and the transfer of
the City -Owned Golf Course Property and City -Owned Ahmanson Ranch as provided in
the Agreement;
2. City shall transfer to Developer the City -Owned Golf Course Property and City -Owned
Ahmanson Ranch Property pursuant to and upon Developer's satisfaction of the
Agreement provisions;
3. The City shall disburse to the Developer an amount equal to ninety percent (90%) of the
Transient Occupancy Tax from the Project received by the City for 10 years and sixty
percent (60%) of the TOT received for a subsequent five years. The City payments will
expire 15 years after the Developer receives authorization from the City for occupancy
and use of all hotel rooms in the Luxury Hotel or the Luxury Hotel Operations
Commencement Project Milestone Date as detailed in the Transient Occupancy Tax
Revenue Sharing Agreement; and
4
2509003.LQ.kee
18994.007.001
4. The City shall have timely performed all of the obligations required by the terms of the
Agreement.
III. ECONOMIC INCENTIVES PROVIDED AND COST OF THE AGREEMENT
The City is providing economic incentives to facilitate the development of the Project. The
incentives include:
1. TOT Revenue Sharing — The City has an agreement to share a portion of the Transient
Occupancy Taxes (TOT) generated by the Project. The Project will generate nightly TOT
sales from the 150 hotel keys and the Developer anticipates approximately 46
residences will be available for short-term/overnight stays. The Developer will receive
the following as an economic incentive:
a. Years 1-10: 90% of TOT generated by the Project
b. Years 11-15: 60% of TOT generated by the Project
The TOT sharing is limited to the actual revenue generated by the Development; there
are no fixed payments. Therefore, the incentive will be solely based on Project
performance and the TOT it generates. The Developer anticipates the Project will
support an average daily rate (ADR) for the hotel rooms of $1,350 at stabilization in Year
4 (65% occupancy) and the residences a $6,850 ADR at stabilization in Year 4 (28%
occupancy). These rates reflect a significant premium over the market area. If this level
of performance is achieved, the City's economic incentive is $106.6 million over 15
years, having a present value of $64.8 million assuming an 8.0% discount rate.
2. Golf Course, Ahmanson Ranch House & Phase 2 Property — The Developer has the
option to purchase the Phase 2 Property if certain conditions outlined in the Agreement
are met. Since obtaining ownership in 2002/03, the City costs for acquisition,
infrastructure improvements (e.g. public roads), Golf Course construction and
operating/maintenance costs (e.g. Golf Course operating shortfalls) for the Phase 2
Property are estimated to be $89.0 million. The Agreement sets the Option Price at $17
million, which includes land for future development. The Agreement also provides for the
conveyance of the existing Golf Course and the Ahmanson Ranch House.
The Option Price reflects the fair reuse value of the property required for the Developer
to achieve their target return on investment when considering the covenants, conditions
and development costs associated with the Project improvements. Cushman &
Wakefield conducted an appraisal of the Phase 2 Property with a date of value of June
11, 2025. The appraisal valued the property at $47.8 million based on its highest and
best use, which is generally in -line with the proposed development program in the
Agreement and the existing specific plan. The difference between the fair market value
and the Option Price indicates a $30.8 million incentive is being provided.
5
2509003.LQ.kee
18994.007.001
3. Debtor in Possession Credit Agreement (DIP Agreement) - The purpose of the DIP
Agreement is to provide the Debtors that own, in bankruptcy, the Phase 1 Property with
liquidity to wind down their estates and prosecute a plan of liquidation that will enhance
the distribution to secured creditors. The City provided an initial Credit Agreement of
$11.0 million that was upsized by the amount of $1.0 million to $12.0 million in
aggregate, with the potential for additional funding of another $1.0 million if approved by
the City Council. The City conservatively estimates repayment of the credit facility at
$5.5 million, indicating a potential additional $7.5 million incentive.
Present Value of Project Economic Incentives
TOT Revenue Sharing
Golf Course, Ahmanson Ranch House, Phase 2 Property
DIP Credit Agreement
Total Economic Incentives
$64,809,000
$30,800,000
$7,500,000
$103,109,000
IV. CONSIDERATION RECEIVED AND COMPARISON WITH THE ECONOMIC
INCENTIVES PROVIDED
The City expects to receive a significant increase in transient occupancy tax, sales tax and
property tax from the development of the Project. Table 1 shows the projected City revenues
generated by the Project over a 30-year term. The revenues are summarized below:
1. Transient Occupancy Tax (TOT) — The current City TOT rate is 11 % of room revenues
for the hotel keys and 10% for the branded residences. As noted previously, the ADR
for the hotel keys is $1,350 and the residences is $6,850 at stabilization. At this level of
performance, the Project will generate room revenues of $77.7 million at stabilization,
equating to $8.25 million in annual TOT revenue, totaling to $355.2 million over 30
years. Assuming an 8% discount rate, the net present value of this revenue is $119.9
million.
2. On -Site Sales Tax — The City receives 1.0% of the taxable sales generated by the
Project as a base amount. The City also collects an additional 1.0% in sales tax
revenue through its Measure G. As a full -service, luxury hotel, the Project will generate
strong food & beverage sales. The sales in these departments are projected to be $35.4
million at stabilization, equating to $708,000 in annual sales tax, totaling to $30.5 million
over 30 years. Assuming an 8% discount rate, the net present value of this revenue is
$10.3 million.
3. Property Tax — The City receives approximately 7% of the general property tax levy of
1.0% of assessed value, with the balance of the collected property taxes going to other
taxing jurisdictions. Assuming Project costs, the assessed value of the Project is
estimated at $803 million. At this level of value, the Project will generate $597,000 in
6
2509003.LQ.kee
18994.007.001
annual property tax at stabilization, totaling $22.8 million over 30 years. Assuming a 8%
discount rate, the net present value of this revenue is $8.3 million.
The Project is projected to generate total revenues of $408.5 million over 30 years with a
present value of $138.5 million, assuming an 8.0% discount rate.
Present Value of Gross City Revenues - 30 Years
Transient Occupancy Taxes $119,913,000
Sales Tax $10,278,000
Property Tax $8,297,000
Present Value of Gross City Revenues $138,488,000
Per the Agreement, the City's TOT revenue sharing payment is limited to 90% of TOT received
for ten years and 60% of TOT received for five subsequent years ($106.6 million). Based on the
current projections, the net City revenues over 30 years are $301.9 million, which have a
present value of $73.7 million.
Present Value of Net City Revenues - 30 Years
Gross City Revenues $138,488,000
(Less): TOT Incentive Payments ($64,809,000)
Present Value of Net City Revenues $73,679,000
V. CREATION OF ECONOMIC OPPORTUNITY AND PUBLIC PURPOSE
The City of La Quinta has determined that encouraging economic development, including
private investment that involves creation of new jobs and income in the City provides an
important public benefit and serves an important public purpose. The Development Agreement
is consistent with the applicable objectives, policies, general land uses, and programs of the La
Quinta General Plan as follows:
1. The proposed project continues the SilverRock Specific Plan development and includes
elements of recreation, tourist commercial and residential uses to provide a high -quality
project consistent with the General Plan and SilverRock Specific Plan.
2. A balanced and varied economic base which provides a broad range of goods and
services to the City's residents and the region.
3. The proposed project continues the development of the SilverRock Specific Plan area as
a resort development to support the City's economic base.
7
2509003.LQ.kee
18994.007.001
In addition, the Project will promote the following guiding principles of the City's Economic
Development Strategic Plan:
1. Develop a year-round, recession resistant economic base in La Quinta through business
attraction, expansion and retention. The proposed improvements will provide
opportunities for hotel guests, golf course users and residents to visit the City throughout
the year.
2. Stimulate expansion of La Quinta's hotel/resort/hospitality industries. The Project will
include a high end, luxury hotel and accompanying residential units with consistent
branding.
3. Encourage recreational and cultural events that promote La Quinta's quality of life and
support existing economic base. The construction of the new golf course clubhouse and
promotion/management of the Ahmanson Ranch House will achieve these goals.
4. Maintain a stake in regional economic development by supporting initiatives that lead to:
Increased educational opportunities that support local job creation. The Project will
generate 445 total jobs (full-time equivalents).
Other important goals and objectives that are satisfied by the Project are:
1. Construction of the Project is expected to generate a substantial number of construction
jobs, estimated to be 2,500 to 3,000.
2. Potential increase in private investment because of the public investment in this Project.
3. Increased number of visitors to the City, which will spend money on dining, retail and
entertainment activities in the City.
VI. JOB CREATION
The Project is projected to create the following number of temporary jobs during construction,
and full-time and part-time jobs during operation. It is estimated that 2,500 to 3,000 temporary
construction jobs will be created during the construction period. After opening, the Developer
indicates the Project will create 445 total jobs (full-time equivalents).
Attachment
8
2509003.LQ.kee
18994.007.001
TABLE 1
ESTIMATED CITY REVENUES
SILVEROCK PROJECT
LA QUINTA, CALIFORNIA
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
30 Years
Total
NPV @ 8.0%
Room
Revenue
$33,389,000
$38,303,000
$43, 081, 000
$48,150,000
$49,594,000
$51, 082, 000
$52,615,000
$54,193, 000
$55,819,000
$57,493,000
$59,218,000
$60,995,000
$62,825,000
$64,709,000
$66,651,000
$68,650,000
$70,710,000
$72,831,000
$75,016,000
$77,266,000
$79,584,000
$81, 972, 000
$84,431,000
$86,964,000
$89,573,000
$92,260,000
$95,028,000
$97,879,000
$100,815,000
$103,840,000
TOT Revenue
Residential
Revenue
$16,927,000
$23,517,000
$26,451,000
$29,548,000
$30,435,000
$31,347,000
$32,288,000
$33,256,000
$34,254,000
$35,282,000
$36,340,000
$37,430,000
$38,553,000
$39,710,000
$40,901,000
$42,128,000
$43,392,000
$44,694,000
$46,034,000
$47,415,000
$48,838,000
$50,303,000
$51,812,000
$53,367,000
$54,968,000
$56,617,000
$58,315,000
$60,064,000
$61,866,000
$63,722,000
TOT
$5,365,000
$6,565,000
$7,384,000
$8,251,000
$8,499,000
$8,754,000
$9,016,000
$9,287,000
$9,565,000
$9,852,000
$10,148,000
$10,452,000
$10,766,000
$11,089,000
$11,422,000
$11, 764, 000
$12,117,000
$12,481,000
$12,855,000
$13,241,000
$13,638,000
$14,047,000
$14,469,000
$14,903,000
$15,350,000
$15,810,000
$16,285,000
$16,773,000
$17,276,000
$17,795,000
$355,219,000
$119,913,000
Gross Sales Tax
Hotel F&B
Sales Sales Tax
$23,093,000 $462,000
$27,531,000 $551,000
$31,427,000 $629,000
$35,408,000 $708,000
$36,470,000 $729,000
$37,568,000 $751,000
$38,695,000 $774,000
$39,856,000 $797,000
$41,052,000 $821,000
$42,283,000 $846,000
$43,552,000 $871,000
$44,858,000 $897,000
$46,204,000 $924,000
$47,590,000 $952,000
$49,018,000 $980,000
$50,488,000 $1,010,000
$52,003,000 $1,040,000
$53,563,000 $1,071,000
$55,170,000 $1,103,000
$56,825,000 $1,137,000
$58,530,000 $1,171,000
$60,286,000 $1,206,000
$62,094,000 $1,242,000
$63,957,000 $1,279,000
$65,876,000 $1,318,000
$67,852,000 $1,357,000
$69,888,000 $1,398,000
$71,985,000 $1,440,000
$74,144,000 $1,483,000
$76,369,000 $1,527,000
$30,474,000
$10,278,000
Assessed
Value
$803,000,000
$819,060,000
$835,441,000
$852,150,000
$869,193,000
$886,577,000
$904,309,000
$922,395,000
$940,843,000
$959,660,000
$978,853,000
$998,430,000
$1,018,399,000
$1,038,767,000
$1,059,542,000
$1,080,733,000
$1,102,348,000
$1,124,395,000
$1,146,883,000
$1,169,821,000
$1,193,217,000
$1,217,081,000
$1,241,423,000
$1,266,251,000
$1,291,576,000
$1,317,408,000
$1,343,756,000
$1,370,631,000
$1,398,044,000
$1,426,005,000
Estimated Property Tax
City
Share
$562,000
$573,000
$585,000
$597,000
$608,000
$621,000
$633,000
$646,000
$659,000
$672,000
$685,000
$699,000
$713,000
$727,000
$742,000
$757,000
$772,000
$787,000
$803,000
$819,000
$835,000
$852,000
$869,000
$886,000
$904,000
$922,000
$941,000
$959,000
$979,000
$998,000
$22,805,000
$8,297,000
Proposed
Subsidy
($4,829,000)
($5,909,000)
($6,646,000)
($7,426,000)
($7,649,000)
($7,879,000)
($8,114,000)
($8,358,000)
($8,609,000)
($8,867,000)
($6,089,000)
($6,271,000)
($6,460,000)
($6,653,000)
($6,853,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($106,612,000)
($64,809,000)
City Revenues
Gross Net
$6,389,000 $1,560,000
$7,689,000 $1,780,000
$8,598,000 $1,952,000
$9,556,000 $2,130,000
$9,836,000 $2,187,000
$10,126,000 $2,247,000
$10,423,000 $2,309,000
$10,730,000 $2,372,000
$11,045,000 $2,436,000
$11,370,000 $2,503,000
$11,704,000 $5,615,000
$12,048,000 $5,777,000
$12,403,000 $5,943,000
$12,768,000 $6,115,000
$13,144,000 $6,291,000
$13,531,000 $13,531,000
$13,929,000 $13,929,000
$14,339,000 $14,339,000
$14,761,000 $14,761,000
$15,197,000 $15,197,000
$15,644,000 $15,644,000
$16,105,000 $16,105,000
$16,580,000 $16,580,000
$17,068,000 $17,068,000
$17,572,000 $17,572,000
$18,089,000 $18,089,000
$18,624,000 $18,624,000
$19,172,000 $19,172,000
$19,738,000 $19,738,000
$20,320,000 $20,320,000
$408,498,000 $301,886,000
$138,488,000 $73,679,000