CITY COUNCIL STAFF REPORT
DATE: April 22, 2026 PUBLIC HEARING
SUBJECT: CONDUCT A PUBLIC HEARING UNDER SECTION 53083 OF THE
CALIFORNIA GOVERNMENT CODE TO APPROVE A HOTEL
OPERATIONS COVENANT BETWEEN THE CITY OF PALM SPRINGS
AND 312 MONTE VISTA, LLC, DBA THE CACTAI PALM SPRINGS,
PURSUANT TO PALM SPRINGS MUNICIPAL CODE CHAPTER 5.26
(HOTEL OPERATIONS INCENTIVE PROGRAM) AND LOCATED AT 312 CAMINO MONTE VISTA (APN 507-030-008)
FROM: Scott C. Stiles, City Manager
BY: Economic Development
SUMMARY:
This item satisfies the requirements of California Government Code Section 53083 and requests City Council approval of an economic development subsidy in the form of a Hotel Operations Covenant Agreement (“Covenant”) with 312 Monte Vista, LLC, dba The Cactai Palm Springs (“Operator”) (Attachment A), in support of a completed hotel renovation project located at 312 E Camino Monte Vista, Palm Springs (APN 507-030- 008) (“Property”).
RECOMMENDATION:
1. Open the public hearing and receive public testimony.
2. Approve a Hotel Operations Covenant Agreement with 312 Monte Vista, LLC, dba The Cactai Palm Springs.
3. Authorize the City Manager or designee to make non-substantive changes and execute all necessary documents related to the subsidy.
BUSINESS PRINCIPAL DISCLOSURE:
The property is owned by 312 Monte Vista, LLC, a California limited liability company. A Public Integrity Disclosure Form (Attachment B) has been submitted identifying the ownership structure, including Joel Milne, Joey Milne, Brendan Gawlik, and Stanton Properties LLC and its members.
City Council Staff Report
April 22, 2026 -- Page 2
Hotel Operations Covenant – The Cactai Palm Springs
BACKGROUND:
The City of Palm Springs adopted Chapter 5.26 of the Palm Springs Municipal Code in 2007 establishing the Hotel Operations Incentive Program (“Program”) to support the operation and maintenance of hotel facilities that enhance tourism, support convention center utilization, and strengthen the local economy. The Program was subsequently amended in 2019 to re-establish eligibility for renovation hotel projects and extended in 2023 through December 31, 2028.
California Government Code Section 53083 requires that prior to approving an economic development subsidy of $100,000 or more, the City must conduct a public hearing and provide specified information regarding the subsidy.
On January 20, 2025, 312 Monte Vista, LLC applied to the Program for its hotel property, The Cactai Palm Springs, located at 312 E Camino Monte Vista. The project consists of a ten (10)-room boutique hotel and qualifies as a renovation project under the Program.
The renovation project commenced in May 2023 and was completed in October 2024.
STAFF ANALYSIS:
The Operator has completed a qualifying renovation project with a total investment of approximately $538,804.26, equating to approximately $53,880 per room, exceeding the Program’s minimum requirement of $5,000 per room under Sec 5.26.
Improvements include (photos, Attachment C):
Full interior renovation of guest rooms (finishes, furnishings, fixtures, appliances) Exterior repainting and landscaping improvements
Upgraded signage and guest amenities
Pool and common area enhancements
Pursuant to the Covenant, the Operator agrees to:
Operate the property as a hotel for a term of ten (10) years Maintain the hotel in a first-class condition
Participate in the Palm Springs Convention Center Committable Rooms Program Provide up to two (2) room nights per month for City use, subject to availability In exchange, the City agrees to provide an economic development subsidy in the form of a Transient Occupancy Tax (TOT) increment rebate, consistent with Program guidelines.
This application is being considered under Sec 5.26 of the Municipal Code because the applicant began the process prior to approval of Sec. 5.27. There is no net effect in consideration under 5.26 since the split in 5.26 is the same under Base Tier in 5.27.
City Council Staff Report
April 22, 2026 -- Page 3
Hotel Operations Covenant – The Cactai Palm Springs
GOVERNMENT CODE SECTION 53083 DISCLOSURES:
Consistent with the provisions of the Program, the Operator now agrees to place restrictions upon the use and operation of the hotel, to ensure that the Project shall be operated and maintained continuously as a hotel available for short-term rentals. The hotel operator also agrees to participate in the Palm Springs Convention Center's Committable Rooms Program and provide designated room-nights per month for official City use. City will share a percentage of Transient Occupancy Tax Increment with Operator pursuant to the Program guidelines.
As noted above, California Government Code Section 53083 requires a public hearing for economic development subsidies where expenditure of public funds is in the amount of one hundred thousand dollars ($100,000) or more, for the purpose of stimulating economic development within the jurisdiction of a local agency. Accordingly, before approving such economic development subsidies, the local jurisdiction is to provide specific information in written form available to the public, and through its Internet Web site.
For the Cactai Palm Springs, the information is as follows:
1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
Operator is a single purpose entity domiciled in the State of California doing business from 312 E Camino Monte Vista, Palm Springs, CA 92262. The Agent for service of process to Operator is The Cactai Hotel, doing business at 312 E Camino Monte Vista, Palm Springs, CA 92262.
2. The start and end dates, and schedule, if applicable, for the economic development subsidy.
If approved, the Covenant would provide an economic subsidy to Operator through a term of ten (10) years, or until the Operator has received $538,804.26 pursuant to the Program, whichever event occurs first.
3. 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 local agency as a result of the economic development subsidy.
A. The Program provides operating assistance to hotels in the form of a rebate of adjusted transient occupancy tax (“Adjusted TOT”) at a fixed level for existing hotels that meet Program criteria. The City Council has adopted the Phase II Renovation Project Program for improvement projects constructed by an City Council Staff Report
April 22, 2026 -- Page 4
Hotel Operations Covenant – The Cactai Palm Springs
existing hotel that invests no less than the equivalent of five thousand dollars ($5,000) per room, including this project.
B. Per the Program, the existing hotel project planned by Operator is rebated 50% of adjusted TOT for ten (10) years or until the rebate totals $538,804.26, whichever comes first. For purposes of the Covenant, an existing Hotel is defined as a property improvement project constructed by an existing hotel that invests no less than the equivalent of five thousand dollars ($5,000) per room.
The renovation project must commence no more than twelve (12) months after the City’s execution of the Operation Covenant Agreement and be completed no later than December 31, 2025.
C. The public funds to be spent if the City approves this Covenant will be the staff costs of administration, and statutorily mandated reporting through the term of the Program rebate/subsidy.
4. A statement of the public purposes for the economic development subsidy.
A. The City Council established an incentive program for the operation and maintenance of quality and first-class hotel facilities which enhance the tourist and travel experience for visitors to the City of Palm Springs, 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. In the implementation of this program, the City Council determined: (1) The general welfare and material wellbeing of the residents of the City of Palm Springs depend in large measure upon the growth and expansion of the tourism and travel industries in the City; (2) The operation, maintenance, and expansion of the inventory of quality hotels and first class hotels in the City of Palm Springs will create desirable visitor serving facilities that will contribute to the growth and expansion of tourism and travel opportunities in the City, ensure utilization of the City’s convention center, provide employment opportunities for the residents of the City, and promote and enhance the economy of the City; (3) It is in the best interest of the City of Palm Springs to induce and encourage the operation and maintenance of hotel facilities that would not otherwise exist, thereby creating new sources of tax revenues for the City’s general fund which supports the public services that the City provides its residents; and (4) The authority granted and the purposes to be accomplished are properly local governmental and public purposes for which public funds can be expended and that the operation, maintenance, and expansion of the inventory of quality and first class hotels is of paramount importance to the City of Palm Springs, its residents, and businesses. (Ord. 1730 § 2, 2008)
B. No less than five thousand dollars ($5,000) per room, or if the project includes any common area or amenity, or any other area for guest use at the hotel, the amount of the investment shall not be less than the amount, if any, invested in rooms, added to the total number of rooms at the hotel that will exist at the end of the project multiplied by five thousand dollars ($5,000).
City Council Staff Report
April 22, 2026 -- Page 5
Hotel Operations Covenant – The Cactai Palm Springs
C. The Project would help beautify the neighborhood through and implement energy saving and sustainable components.
5. Projected tax revenue to the local agency as a result of the economic development subsidy.
A. Per the Program, the City will receive 50% of Adjusted TOT for ten (10) years or until the rebate to the Operator totals $538,804.26, whichever comes first.
After ten (10) years the City will receive 100% of the TOT revenue (Adjusted TOT plus Unadjusted TOT). Sales tax from the project is projected to be $768,690 over the 10-year term.
6. Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
The Operator anticipates increasing employment by one (1) full-time position and four (4) part-time positions, for a total of 3 FTEs. The estimated annual payroll for employees and contracted maintenance services is estimated to be $200,000.
ENVIRONMENTAL ASSESSMENT:
This action is not a “project” under the California Environmental Quality Act (CEQA) pursuant to Section 15378(b)(5), as it represents administrative activity that will not result in a direct or indirect physical change in the environment.
ALIGNMENT WITH STRATEGIC PLANNING:
Citywide Goal:
Support a vibrant economy, including tourism and hospitality sectors.
Economic Development Strategic Framework:
Principle C: Bolster Core Industries
Principle 2: Reinvigorate the Business Climate
Activation Priority IV: Economic Development Toolkit
Action Item B2.2: Implement incentive tools to support business investment and expansion
This project directly supports reinvestment in existing hospitality assets and strengthens the City’s tourism economy.
FISCAL IMPACT:
The Operator’s investment of $538,804.26 qualifies them for incentive under 5.26:
City Council Staff Report
April 22, 2026 -- Page 6
Hotel Operations Covenant – The Cactai Palm Springs
Illustrative structure:
Baseline: $9,804.45
Increment: $X
Years 1 up to 10, City receives: $9,804.45 + (X / 2)
Operator receives: X / 2
Beyond maximum payment: City receive 100% of TOT
The total subsidy shall not exceed $538,804.26 for not greater than ten (10) years, whichever occurs first.
Following the incentive period, the City will receive 100% of all TOT revenues, including both baseline and incremental amounts.
REVIEWED BY:
Department Director: Wayne Olson
Finance Director: Kristopher J. Mooney
City Manager: Scott Stiles
ATTACHMENTS:
A. Covenant Agreement
B. Business Disclosure Form
C. Photos of Project