CITY COUNCIL STAFF REPORT
DATE: November 12, 2025 PUBLIC HEARING SUBJECT: A PUBLIC HEARING REGARDING THE CONSIDERATION OF
ECONOMIC SUBSIDY REPORTS BETWEEN THE CITY OF PALM
SPRINGS AND EIGHT HOTEL OWNERS/OPERATORS PURSUANT TO
GOVERNMENT CODE SECTION 53083
FROM: Scott C. Stiles, City Manager
BY: Office of Economic Development
SUMMARY:
As a condition of compliance with the reporting requirements established under Assembly Bill 562 (Gov. Code, § 53083), the City is required to prepare and make publicly available Economic Development Subsidy Reports for qualifying economic development agreements. These reports provide transparency regarding public subsidies granted by the City and include information on the amount of each subsidy, the purpose, projected and actual tax revenues, and job creation outcomes.
The Economic Development Subsidy Reports were prepared in accordance with Gov.
Code, § 53083. Each report covers a hotel project that participates or participated in the City’s Hotel Operations Incentive Program and reflects data on Transient Occupancy Tax (TOT) revenues, incentive payments, and net tax revenues accruing to the City over the reporting period.
Additionally, a housekeeping matter is included in the form of revising a Covenant Agreement for the Yara Hotel adjusting the baseline to revised data. (The Yara Hotel incentive is not yet subject to the AB562 because it has not yet participated in the program for a full five year term.)
RECOMMENDATION:
1) Conduct a public hearing;
2) Approve and accept the Economic Development Subsidy Reports prepared pursuant to Gov. Code, § 5308 (Attachments A through H); and, 3) Authorize the City Manager to execute any necessary steps to implement. 4) Approve a Covenant Agreement baseline adjustment from $102,481.21 to $38,396.99 for the Yara Hotel, originally approved by the City Council in February of 2025 (Attachment I) and to be dated to the approval date of February 13, 2025
City Council Staff Report
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Economic Subsidy Reports
and authorize the City Manager and City Attorney to make conforming and non- conforming changes to effectuate the Agreement.
STAFF ANALYSIS:
The City Council adopted Chapter 5.26 of the Palm Springs Municipal Code in December 2007 (amended on May 15, 2013) to provide a Hotel Operations Incentive Program, (the "Program"), for the operation and maintenance of hotel facilities that enhance the tourist and travel experience for visitors to the City, maximize the use of the City's Convention Center, provide attractive and desirable visitor serving facilities and experiences, and assist the City in achieving its tourism goals. The program was subsequently extended to December 31, 2028 in following actions by the City Council.
Each participating hotel operator applied to participate in the City’s Hotel Operations Incentive Program and provided documentation demonstrating eligibility under the program’s criteria. The participating hotels have completed qualifying renovation or construction projects intended to enhance the City’s visitor-serving accommodations and support continued economic activity within the hospitality sector. Each property operates under an executed Hotel Operations Covenant Agreement ensuring the hotel will be operated and maintained in accordance with the program requirements.
Consistent with the provisions of the Program, and as a condition of the Hotel Operations Covenant Agreement, each participating hotel operator was required to place restrictions upon the use and operation of the hotel, in order to ensure that the hotel was operated and maintained continuously as a hotel available for short-term rentals. Pursuant to the Program guidelines, each qualifying renovation project was eligible for a fifty percent (50%) incentive payment based on the increase in Transient Occupancy Tax (“TOT”) revenues generated in excess of the TOT revenues paid to the City annually prior to commencement of the renovation (the “TOT Base”).
The TOT Base established the benchmark for calculating the incremental TOT revenues eligible for an incentive payment under the Program. The term of each Hotel Operations Covenant Agreement was determined based on the date the qualifying improvements were completed and made operational, consistent with the Program guidelines governing the duration of incentive participation.
State Law Requirement
In accordance with the reporting requirements under Gov. Code, § 53083, the City is required to prepare and make publicly available Economic Development Subsidy Reports for each project receiving an economic development subsidy. These reports provide transparency regarding the public benefits and fiscal impacts of the City’s Hotel Operations Incentive Program and must include information related to the amount of the subsidy, the public purpose served, the projected and actual TOT revenues, and job creation outcomes. Pursuant to state law, a five-year report is required within five years of the approval of each subsidy, and for subsidies with a term of ten years or more, a final City Council Staff Report
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Economic Subsidy Reports
report and public hearing are required at the conclusion of the subsidy term. Each report must be made available to the public and presented at a duly noticed public hearing before the City Council.
Pursuant to state law, a five-year report is required within five years of the approval of each subsidy. The five-year report must include:
The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiaries of the economic development subsidy;
The start and end dates and schedule for the economic development subsidy; A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the City as a result of the subsidy;
The net tax revenue accruing to the City as a result of the economic development subsidy; and
The net number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
For an economic development subsidy with a term of ten (10) years or more, Section 53083(e)(2) requires that the City hold a public hearing at the conclusion of the subsidy and prepare a written report containing the information described above, in written form available to the public and through the City’s website, if applicable. This final report shall summarize the cumulative results of the subsidy over its entire term, including the total amount of the subsidy provided, the total tax revenue generated, and the overall employment impact resulting from the project.
ENVIRONMENTAL ASSESSMENT:
The requested City Council action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The requested action is limited to approving and excepting the subsidy reports, and is exempt from CEQA pursuant to Section 15378(b), in that a “Project” does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
ALIGNMENT WITH STRATEGIC PLANNING:
Approval of this action supports City Council strategic plan to provide quality of life, and well maintained community infrastructure for City residents.
FISCAL IMPACT:
Pursuant to the Agreements, the City rebated $13,282,849.11 to the participating hotels.
City Council Staff Report
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Economic Subsidy Reports
After accounting for the rebate, the net tax revenue retained by the City totaled $10,262,572.40.
Hotel Name City Rebated Revenue Retained
By The City
Palm Mountain Resort $ 1,225,258.61 $ 1,225,258.60
Triada Palm Springs, Autograph
Collection $779,142.29 $779,142.33
Palm Springs Hotel $492,322.91 $492,322.91
Alcazar Palm Springs $428,821.35 $428,821.35
Rowan Hotel $8,681,262.66 $5,532,532.58
Skylark Hotel $188,606.41 $188,606.42
The Arrive Hotel $1,166,783.87 $1,295,237.19
Dive Palm Springs $320,651.01 $320,651.02
Total $ 13,282,849.11 $ 10,262,572.40
REVIEWED BY:
Department Director: Wayne Olson
City Attorney; Jeffrey S. Ballinger
City Manager: Scott Stiles
ATTACHMENTS:
A. Triada Palm Springs, Autograph Collection, Economic Development Subsidy Report B. Palm Mountain Economic Development Subsidy Report
C. Palm Springs Hotel Economic Development Subsidy Report D. Skylark Hotel Economic Development Subsidy Report
E. Rowan Hotel Economic Development Subsidy Report
F. Dive Palm Springs Economic Development Subsidy Report G. The Arrive Hotel Economic Development Subsidy Report H. Alcazar Palm Springs Economic Development Subsidy Report I. Corrected Covenant Agreement for Yara Hotel