CITY COUNCIL STAFF REPORT
DATE: MAY 12, 2026 BUSINESS & LEGISLATIVE
SUBJECT: PUBLIC MEETING TO ESTABLISH THE PALM SPRINGS TOURISM
INFRASTRUCTURE DISTRICT
FROM: Scott C. Stiles, City Manager
BY: Department of Finance and Treasury
SUMMARY:
Holding a public meeting will result in a public hearing on May 27, 2026, on the formation of the Palm Springs Tourism Infrastructure District (PSTID) and the levy assessments on lodging businesses, at the request of lodging business owners.
RECOMMENDATION:
Hold a public meeting on the formation of the Palm Springs Tourism Infrastructure District (PSTID).
BACKGROUND:
The PSTID is a benefit assessment district proposed to create a revenue source to help fund capital improvements and debt service programs for Palm Springs lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed businesses. The proposed PSTID includes all lodging businesses available for public occupancy, existing and in the future, located within the boundaries of the City of Palm Springs (City).
Lodging business owners decided to pursue formation of the PSTID in order to create a revenue source devoted to increasing demand for overnight visitation to Palm Springs as a tourist, meeting, and event destination. If established, the PSTID would generate approximately $4,100,000 on an annual basis for capital improvements and debt service programs intended to increase visitation and increase the desirability of the Palm Springs Convention Center as a tourist, meeting, and event destination.
City Council Staff Report
May 12, 2026 -- Page 2
Public Meeting to Establish the Palm Springs Tourism Infrastructure District STAFF ANALYSIS:
TOURISM INFRASTRUCTURE DISTRICTS
Tourism Infrastructure Districts (TIDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow assessed business owners to organize their efforts to increase tourism. Business owners within the TID fund the TID, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TID.
TID benefits:
Funds cannot be diverted for other government programs. They are customized to fit the needs of each destination. They allow for a wide range of services, including capital improvements, destination marketing, tourism promotion, and sales lead generation. They are designed, created, and governed by those who will pay the assessment. They provide a stable funding source for tourism promotion.
In California, TIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between TIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TID. The City Council adopted Ordinance No. 2124 (Ordinance), establishing Chapter 3.29 of the Palm Springs Municipal Code, which modifies the 94 Law to allow the City to pledge assessment revenues to bond repayment and other obligations for a term of up to thirty (30) years, but in no event shall the repayment exceed forty (40) years. The PSTID is proposed to be established pursuant to the provisions of the 94 Law and the Ordinance.
MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment A), submitted by the lodging business owners, includes the proposed boundary of the PSTID, a service plan and budget, and a proposed means of governance. The PSTID will include all lodging businesses available for public occupancy, existing and in the future, located within the boundaries of the City.
The annual assessment rate is one percent (1%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on: stays of more than twenty-eight (28) consecutive days; any person as to whom or any occupancy as to which it is beyond the power of the City to impose the assessment herein provided; any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty; and stays pursuant to contracts executed prior to July 1, 2026.
The proposed PSTID will have a term equal to the number of years necessary to pay off City Council Staff Report
May 12, 2026 -- Page 3
Public Meeting to Establish the Palm Springs Tourism Infrastructure District the bonds, which is expected to occur thirty (30) years after the effective date of the assessment, but in no event will occur beyond forty (40) years from the date of issuance of the first series of bonds, beginning July 1, 2026, or as soon as possible thereafter.
The City will be responsible for collecting the assessment on a monthly basis from each assessed business. If funds allow, any excess revenue collected in excess of what is needed to pay principal and interest on the bonds or other obligations issues or incurred shall be forwarded to PS Resorts to fund marketing and sales programs, in accordance with the Management District Plan. The City shall be paid a fee of up to three percent (3%) of the amount of assessment collected to cover its costs of collection and administration.
PSTID FORMATION PROCESS
City Council Staff Report
May 12, 2026 -- Page 4
Public Meeting to Establish the Palm Springs Tourism Infrastructure District FISCAL IMPACT:
None immediately. The City will receive a fee of up to three percent (3%) of the amount collected to cover its costs of administration. Because the PSTID programs are intended to increase visitation to the City, there may be an increase in Transient Occupancy Tax and Sales Tax Collections.
REVIEWED BY:
Department Director: Kristopher J. Mooney
City Attorney: Jeffrey S. Ballinger
City Manager: Scott Stiles
ATTACHMENTS:
A. Management District Plan
B. Palm Springs Tourism Infrastructure District FAQs