Downtown Revitalization FAQ

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Downtown Revitalization Plan
Frequently Asked Questions/Responses
August 28, 2014


Site Plan Questions

Where is the Project located?

The existing Desert Fashion Plaza is spread over 13 acres, located between North Palm Canyon Drive, Tahquitz Canyon Way, Museum Drive, Belardo Road, and Amado Road. The previous shopping mall had more than 288,000 square feet of enclosed retail and circulation space, including 115,000 square feet of three former anchor tenants — Saks Fifth Avenue (50,000 square feet), I. Magnin (40,000 square feet), and Bank of America (25,000 square feet).
What is the new street configuration?

There will be a new connection between Palm Canyon Drive and the Palm Springs Art Museum, as well as a new reconnection of Belardo Road from Tahquitz through the project. In addition, the Project will reconstruct Andreas Road from Palm Canyon Drive to Belardo.

What are the features of the plan?

The Project will contain a new state of the art retail and restaurant spaces in three retail blocks. In the original site plan, the Block A building (closest to the Hyatt) was originally scheduled to remain in place and be remodeled. However, as leasing discussions with potential first class tenants have occurred, it is clear that most tenants have concerns about the retail ceiling heights, and have been opposed to locating in Block A. Therefore, the building will be replaced with two new buildings, one on Block A and one on new Block A-1, as depicted on the Site Plan. Block A calls for a 3 story structure, well within Specific Plan height parameters, and will contain retail and restaurant uses at ground level, with office uses on the second and third floors. Developer intends to submit revised plans for Block A prior to execution of this Fourth Amendment. Block A-1 will be designed and developed as part of future Phase 2 of the Project. When Block A-1 is developed, a 30 foot wide pedestrian “paseo” will be created, aligned to match on the south with proposed Market Street and on the north with an existing entry into the adjacent Hyatt Hotel. The Hyatt Hotel entry will be changed from an interior (it was a roll-up door between two buildings) to an exterior entry that will give the hotel a new presence in the project.

In terms of Blocks B and B-1, the original Site Plan contemplated layout configurations, land uses, and improvements that have evolved over time as negotiations with potential tenants and end users have occurred. Block B calls for a single story structure which will contain retail and restaurant uses. The Developer intends to submit revised plans for Block B in the near future. Block B-1 will be designed and developed as part of future phase 2.

Block C, closest to Tahquitz, will also feature a one-story retail building along Palm Canyon Drive. The October, 2012 amendment also included a change in the Project Description to allow for a proposed six story Kimpton Hotel in Block C-1, a 160+/- room high end, first class hotel. The hotel will feature a four story residential “annex” at the north end of Block C.

All streets will be finished with decorative interlocking pavers and no curbs, and will contain submersible bollards that can be electronically raised so that interior streets and other areas can be used for special events and functions as needed; all new public areas will be enhanced with landscaping, public art and sculpture to serve as a place for pedestrian activities and public functions.

Pursuant to the 2011 agreement the developer and City entered into, the City acquired all of the parking on the site, as well as the two “museum pads” (Blocks H-1 and H-2) that would be open green space. The Original PFA called for the construction of Public Restrooms in the project.

The October 2012 amendment updated the original Project Site Plan with an Updated Site Plan and Project Description. The amendment also created an Event Area on (relettered) Block E, which replaced the movie theatres included in the PFA. The Event Area is intended to be operated as such for a period of at least ten years.

On Block E, City shall, at its cost, own, operate and maintain, in a neat, clean, attractive, safe, functional and first class condition, public open space, and an active and vibrant area for staging community and public events such as concerts, movies, farmers markets, public gatherings, or community events. The City shall retain the right to contract with one or more third parties to perform any of the City's obligations pursuant to the terms of this Amendment.

Is there sufficient public plaza space in the design?

Already, in 2012 the developer demolished property at the most valuable corner – the former Bank of America Building at the 100% corner in downtown – to create a public space at least 90-100’ deep there. For nearly 20 months, the temporary “park” created at the vacant Bank of America site was the home of the iconic “Forever Marilyn” sculpture, a 26’ tall painted bronze sculpture of Marilyn Monroe by American artist J. Seward Johnson.

The entire street grid created by the project and purchased by the City through the Project Funding Agreement is also being designed with landscaping, architectural shading and decorative interlocking pavers, and no curbs, to maximize its use for events. All of it will be available to be closed off for special events and public activities. Additionally, the new plan creates a 50,000 square foot event center, located at the northwest corner of the project, across from the Art Museum, which includes and expands one of the two “museum pads” purchased by the City. The event center will be open green space for a long period of time.

Is there adequate parking for the Revitalization Plan?

The project includes approximately 1,061 parking spaces (282 at-grade, 670 below-grade, and 109 above-grade). A multi-level parking garage accessed from Museum Drive is located in the site's northwest corner. The underground parking garage extends from beneath the northern portion of the property to its southwest corner. Even at full build out of the plan, there is anticipated to be adequate public parking to serve the Project without adversely impacting the remainder of the Downtown area.

Why isn’t the new through-street to the Palm Springs Art Museum pedestrian only?

The Museum Market Plaza Specific Plan, the controlling land use document for this project, shows a vehicular street through to the museum. The new Andreas Road and the new Belardo extension are all vehicular: the intent is to re-integrate this block – which has been merged into a monolithic “superblock” – back into the downtown street grid. That requires full circulation, including vehicles. However, all streets in the Project will be designed with landscaping, architectural shading and decorative interlocking pavers, and no curbs, to maximize its use for events. All of them will be available to be closed off for special events and public activities, when needed.

How does the amount of proposed housing compare to the Museum Market Plaza Specific Plan?

The Revitalization Plan being proposed by Wessman actually includes several mixed use residential buildings, in Blocks A-1, B-1, and C-1. Some of those buildings will be built in future phases. Therefore, there could ultimately be several hundred residential units on the site: fewer than the “up to 900” residential units approved in the Specific Plan but nonetheless a significant and more feasible commitment to residential development.

How much space did the City end up owning?

The City ended up acquiring just over 50% of the surface land area on the site, or about 299,000 square feet. In addition, it acquired another 85,000 square feet of parking garage and underground parking structures.

Community Participation Questions

What was the community participation and input into the Downtown Revitalization Plan?
In late 2010, as the City was considering eminent domain on the Desert Fashion Plaza, the City Council wanted to include a greater level of potential public uses, amenities, facilities, and services in the project than would otherwise be considered in any private development program or project. The Council felt a strong need for community participation and input.

To that end, the Council approved a community input process to occur during January and February, 2011. The City Council hired MIG, Inc. to conduct community design workshops to help determine the community “vision” for the mall. The first workshop held was held on January 26, and approximately 200 people attended. The 2nd and 3rd community workshops were held in February, 2011 with the final meeting the largest of the three.

Since the time the City and developer have worked collaboratively on the project, the full project entered the City’s normal design review and entitlement process. In June, 2011, the project footprint was reduced at the urging of the Planning Commission, which urged the developer to remove the buildings on the east side of Palm Canyon Drive.

When the project site plan was finalized and the event center (which replaced the movie theatres) and new Kimpton Hotel were revealed to be part of the project, in October 2012, a large public workshop was held once again at the Convention Center with another 200 people in attendance. The feedback on the new plan was overwhelmingly positive. Later, some dissatisfaction with the “skin” of the hotel by the public and the City Council led to that approval being withheld until early 2013, once the developer could refine the building with more appropriate architecture.

Later, in 2013 and 2014, more refined architecture of Blocks A and B returned to the City and was reviewed by the Architectural Advisory Committee, the Planning Commission, and City Council. Some criticism of the architecture of new Block A (which replaced the existing building, which in the original plan was to be kept with a new façade) led the developer to once again redesign the exterior architecture to make it more “Palm Springs.” Since the redesign in the summer of 2014 the design community has been complimentary once again about the project.

Public Benefit Questions 

When completed, what public benefits does the proposed Downtown Revitalization Plan provide to the City?

The public-private partnership that would facilitate the development of the Project would create public benefits in many different ways. These include:

1. Additional property taxes, transient occupancy taxes, and sales taxes generated by the Project; and
2. The elimination of blight at a key location in the city; and
3. Spillover benefits from the increased vitality and economic activity in the entire Downtown.

The estimated project cost, today, is about $150 million. In terms of property taxes, it is estimated that in 2016, the year this Project is complete, the Project would produce approximately $1,200,000 in property taxes, to be shared by all of the taxing agencies (the City, the County, the School District, and other public agencies). The City receives about a quarter of gross property tax as its “allocation.” At full stabilization, this Project would produce over $350,000 per year in property taxes for the City.

Additional property tax benefits would come with the development of the Phase II improvements on Blocks D, F, and G. Assuming they are completed by the “stabilization” year 2021, those buildings would produce additional property tax revenue. Therefore, ultimately, the Revitalization Plan would produce in excess of $600,000 per year in property taxes for the City.

In terms of sales taxes, even at the current rate the Project is estimated to produce over $615,000 per year for the City. This does not include the additional Measure J revenues (1% sales tax) revenues from the project. Combined, then, at stabilization the project could produce over $1,230,000 per year in sales taxes for the City. There are no sales tax sharing agreements and the City keeps all the revenue.

In terms of hotel revenue, the Kimpton Hotel is in the City’s Hotel Incentive Program. Given the industry-wide difficulty in financing new hotel construction, in 2008 the City developed a program whereby it will share a portion of the Transient Occupancy Tax (TOT) collected by an operator of a new hotel (the program also applies to remodels, in a slightly different form) for a period of time. Still, the amount of net TOT the City would collect from the Kimpton, even after the Incentive Program payment, would be significant.

Additionally, the ultimate development of residential units in Phase II and Class A office space in the Downtown in the later part of Phase I and in Phase II will also help begin to shape Downtown into a true 24-hour community, where residents really can live, shop, dine, play and even work.

Wouldn’t the increased tax revenue from the tenants of the Project's newly developed street-front square-footage alone able to pay for the roads, parking garages and public areas funded by the city?

While the taxes received as direct public benefits from the Project would be significant and welcome by the City, it is incorrect to say that the tax revenue from the Project’s tenants alone would be able to pay for the roads, parking garages and public areas funded by the City. Even if the City’s projections were accurate, the entire tax revenue stream would only support about $20 million in public investment. Every previous Desert Fashion Plaza redevelopment proposal has had a shortfall between the “after-development value” and the cost to construct due to the difference in cost between building the Project and the value of the property based on those future rents.

Have other communities experienced benefits from similar projects?

It has been the experience of other communities which have undertaken major, transformative projects that the indirect benefits often exceed the direct benefits, even when the community retains all the tax revenues from the project itself. Communities have found that street reconstruction and public improvement projects also facilitate private investment in downtowns, with the downtown retail vacancy rate falling even with addition of new retail square footage, and that average rents increase significantly during that time. Downtown Palm Springs is actually beginning from a stronger economic base than many such communities, but a doubling of property values in the area, based on dramatically improved sales in the Downtown, is quite conceivable.

Other significant mixed-use projects find that their average visitor spends many times the national average per visit. The creation of a desirable shopping and entertainment destination combined with higher-end retail tenants is a formula for increased economic benefit area-wide.

Other spillover benefits of entertainment-oriented projects include new restaurants opening nearby and existing businesses showing increased sales. Most communities also found that their projects expanded the number and types of businesses and enhanced the economic vitality of the community, added additional housing to downtown, and reused underutilized or blighted areas.

What about job creation?

An investment of more than $100 million in the Phase I project would also create hundreds of construction jobs as well as hundreds of permanent jobs in the community. Typically, the number of construction jobs created by a project ranges from 12 to 15 jobs per million dollars of construction expenditure.

Financial Analysis Questions 

Was any retail marketing study provided to justify project?

The City and the developer have undertaken a number of retail assessments of the site over the past 10 years, using, among others, the Buxton Companies of Fort Worth, Texas, to identify potentially suitable tenants. Buxton is one of the country’s leading retail analytics firms. In addition, the developer is undertaking a comprehensive retail branding and recruitment effort as part of this project. So far, there has been significant quality tenant interest in the site and leases are currently under negotiation. Tenants will be announced as leases begin to be finalized and executed.