CITY COUNCIL STAFF REPORT
DATE: MAY 27, 2026 PUBLIC HEARING
SUBJECT: RESOLUTION DECLARING RESULTS OF MAJORITY PROTEST
PROCEEDINGS TO ESTABLISH THE PALM SPRINGS TOURISM
INFRASTRUCTURE DISTRICT
FROM: Scott C. Stiles, City Manager
BY: Department of Finance and Treasury
SUMMARY:
Holding the final hearing, declaring results of the majority protest proceedings, and adopting this Resolution (Attachment A) will result in the formation of the Palm Springs Tourism Infrastructure District (PSTID) and the levy of assessments on lodging businesses.
RECOMMENDATION:
1) Hold a final hearing, declaring results of majority protest proceedings; and 2) Adopt a Resolution entitled, “A RESOLUTION OF THE CITY COUNCIL (COUNCIL) OF THE CITY OF PALM SPRINGS (CITY) DECLARING RESULTS
OF MAJORITY PROTEST PROCEEDINGS AND ESTABLISHING 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
City Council Staff Report
May 27, 2026 -- Page 2
Public Hearing to Establish the Palm Springs Tourism Infrastructure District programs intended to increase visitation and increase the desirability of the Palm Springs Convention Center as a tourist, meeting, and event destination.
At a later time, the City Council will be asked to authorize bonds to be issued by the City for the benefit of the lodging businesses within the PSTID to finance the costs of the Convention Center improvements. Assessments shall be levied until the final maturity of the bonds, which shall not exceed 30 years from the date of the issuance of the first series of bonds to finance the capital improvements, but in no case will the collection period exceed 40 years in order to pay the bonds. Pursuant to Ordinance No. 2124 (Ordinance), adding Chapter 3.29 to the Palm Springs Municipal Code, which enables the City Council to authorize, and establish the procedures for, the use of assessment revenues generated by the District for the payment of bonds, notes, loans, interim certificates, debentures, installment purchase agreements, leases, and other obligations that the City issues or incurs. Assessments levied to the pay the principal and interest on any bond shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt.
The primary objective is to ensure Palm Springs remains a top-tier global destination by increasing demand for room night sales through investing in Convention Center and pedestrian improvements with benefits to the lodging industry as follows:
A stronger Convention Center will attract more conventions which results in more rooms booked which benefits the entire lodging ecosystem — group hotels, small hotels, and short term rentals (STR’s) alike.
Palm Springs convention demand regularly exceeds traditional hotel room block capacity (“compression factor”). Palm Springs does not have enough rooms in any sector to accommodate large scale conventions. Ex: Large scale conventions can host up to 4,500 attendees.
Our lodging mix of large hotels, small hotels, and STR’s are a critical part of Palm Springs’ convention lodging inventory and competitive advantage. Increased demand creates higher occupancy, longer stays, more midweek demand, and more year-round visitation.
Meeting planners increasingly seek flexible lodging options and authentic guest experiences and the Convention Center promotes all sectors to meeting planners. A do-nothing scenario indicates that the City of Palm Springs will lose 17,500 room nights per year. With a full investment scenario in the Convention Center project, we anticipate a gain of 31,500 incremental room nights per year (page 84 of the CSL Study in Attachment E)
Short term rentals have significant room for growth – the City’s annual limit of 26 – 36 rental contracts per STR permit has been reached by only approximately 9% of operators, meaning the majority of STRs have unused capacity to absorb the demand from the increase in Convention Center activity.
City Council Staff Report
May 27, 2026 -- Page 3
Public Hearing to Establish the Palm Springs Tourism Infrastructure District
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 destination marketing, tourism promotion, sales lead generation, and capital improvements. 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.
MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment B) 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 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 City Council Staff Report
May 27, 2026 -- Page 4
Public Hearing to Establish the Palm Springs Tourism Infrastructure District needed to pay principal and interest on the bonds or other obligations issued 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
April 8, 2026 RESOLUTION OF INTENTION HEARING (COMPLETED) Upon the submission of a written petition signed by the business owners in the established PSTID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to establish the PSTID by the adoption of a resolution expressing its intention to establish the PSTID.
Petition Status: Petitions in favor of PSTID formation were submitted by assessed businesses, which represent more than fifty percent (50%) of the total PSTID assessment. This majority petition allowed the Council to initiate proceedings for PSTID formation at the April 8, 2026 meeting.
No later than
April 12, 2026 NOTICE (COMPLETED)
The 94 Law requires the City to mail written notice to the owners of all businesses proposed to be assessed within the PSTID.
Mailing the notice begins a mandatory forty-five (45) day period in which assessed business owners may protest PSTID
formation.
May 12, 2026 PUBLIC MEETING (COMPLETED)
Allow public testimony on the formation of the PSTID and levy of assessments. No Council action required.
May 27, 2026 FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the proposed PSTID which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
City Council Staff Report
May 27, 2026 -- Page 5
Public Hearing to Establish the Palm Springs Tourism Infrastructure District If the Council, following the public hearing, decides to establish the proposed PSTID, the Council shall adopt a resolution of formation.
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. Resolution
B. Management District Plan
C. Frequently Asked Questions from May 12, 2026 Public Meeting D. PowerPoint of May 12, 2026 Public Meeting
E. Conventions, Sports & Leisure International (CSL) Study (June 8, 2023)