55575.38190\45222571.1
CITY COUNCIL STAFF REPORT
DATE: AUGUST 26, 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 THE WR PALM MOUNTAIN RESORT, LP PURSUANT TO
MUNICIPAL CODE CHAPTER 5.26 OF THE CITY’S HOTEL
OPERATIONS INCENTIVE PROGRAM
FROM: Scott C. Stiles, City Manager
BY: Office of Economic Development
SUMMARY:
This action seeks to conduct a public hearing regarding the approval of an economic development subsidy in the form of TOT Operations Covenant Agreement with The Palm Mountain Resort & Spa in support of the renovation of their property located at 155 S.
Belardo Road, Palm Springs.
RECOMMENDATION:
1) Open the public hearing and receive public testimony. 2) Approve a Hotel Operations Covenant Agreement with The Palm Mountain Resort located at 155 S. Belardo Road, Palm Springs.
3) Authorize the City Manager and City Attorney to make non-substantive changes and execute all necessary documents related to the subsidy.
BUSINESS PRINCIPAL DISCLOSURE:
The property is owned by WR Palm Mountain Resort LP. A Public Integrity Disclosure form is provided as Attachment A.
BACKGROUND:
The City Council adopted Chapter 5.26 of the Palm Springs Municipal Code in December 2007 (amended on May 15, 2013, February 6, 2019, and September 14, 2023), implementing a Hotel Operations Incentive Program (“Program”) for the operation and maintenance of hotel facilities that enhance the tourist and travel experience for visitors
City Council Staff Report
August 26, 2026 -- Page 2
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
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.
In October 2013, Section 53083 was added to the California Government Code. Section 53083 states that before granting an economic development subsidy, each local agency shall provide public notice and conduct a hearing regarding the economic development subsidy. "Economic development subsidy" under Section 53083 means any expenditure of public funds or loss of revenue to a local agency 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, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits.
STAFF ANALYSIS:
Operator has committed to a property improvement project that will invest no less than the equivalent of five thousand dollars ($5,000) per room. The renovation project was completed in Winter 2026. Upon City Council approval and after the City’s execution of the Operations Covenant Agreement (Attachment B), The Palm Mountain Resort & Spa will provide satisfactory documentation certifying its recent renovation and completion of the project as a qualified renovation under the Program.
Palm Mountain Resort & Spa is located at 155 S. Belarado Road and consists of 142 total hotel rooms. The renovation project included upgraded amenities to improve the guest experience. The renovation included full interior renovation of all guest rooms, including painting and installing wallpaper, new furnishings, refinished bathtubs, blinds and appliance replacement, as well as the installation of a new roof on one of the buildings.
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. In turn, the 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.
City Council Staff Report
August 26, 2026 -- Page 3
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
For Palm Mountain Resort & Spa, 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 155 S. Belardo Road, Palm Springs, CA 92262. The Agent for service of process to Operator is WR Palm Mountain Resort LP, doing business at 155 S.
Belardo Road, 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 $6,469,870.24 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 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 $6,469,870.24, 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 Operations Covenant Agreement and be completed no later than December 31, 2028.
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 the Program for the operation and maintenance City Council Staff Report
August 26, 2026 -- Page 4
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
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. To qualify for the Program, an Operator must invest 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).
C. The Project would help beautify the neighborhood 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 $6,469,870.24, whichever comes first.
After ten (10) years the City will receive 100% of the TOT revenue (Adjusted TOT plus Unadjusted TOT).
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 zero (0) full-time positions and City Council Staff Report
August 26, 2026 -- Page 5
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
zero (0) part- time positions, for a total of zero (0) FTEs. The estimated construction jobs created were twenty (20) .
Project Description
The Palm Mountain Resort & Spa is located at 155 S. Belardo Road and consists of total 142 hotel rooms. The project location is shown below in Figure 1.
Figure 1
City Council Staff Report
August 26, 2026 -- Page 6
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
No square footage additions were added to the existing Palm Mountain Resort & Spa buildings. All improvements occurred within the current footprint of the site and were completed on all guest rooms as part of the Project. Additionally, The Palm Mountain Resort & Spa expects renovations, upgrades, and enhancements to bring a heightened level of experience to the guests, thereby increasing occupancy, revenues and tax receipts.
Images of the upgrades are provided below.
Premium Pool View Balcony King Room
City Council Staff Report
August 26, 2026 -- Page 7
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
Premium Pool Side Patio Double Double
City Council Staff Report
August 26, 2026 -- Page 8
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
Accessible Deluxe Patio King
Classic King Room
City Council Staff Report
August 26, 2026 -- Page 9
The Palm Mountain Resort & Spa Operations Covenant
55575.38190\45222571.1
ENVIRONMENTAL ASSESSMENT:
The extension of the Program considered at this time is not a “project” for purposes of the California Environmental Quality Act (CEQA), as that term is defined by CEQA guidelines (Guidelines) section 15378. This action is organizational or administrative activity by the City of Palm Springs in furtherance of its police power and will not result in a direct or indirect physical change in the environment, per section 15378(b)(5) of the Guidelines.
ALIGNMENT WITH STRATEGIC PLANNING:
Quality of Life, Advance Economic Development – Stimulate investment in activities that create living wage employment opportunities and increase livability of the community.
FISCAL IMPACT:
An amount equal to 50% of transient occupancy tax increment derived from the Palm Mountain Resort & Spa, over the annual base amount, will be paid to the Operator for a ten-year period. The maximum pay-out to the recipient cannot exceed $6,469,870.24 over the 10-year period.
REVIEWED BY:
City Attorney: Jeff Ballinger
City Manager: Scott Stiles
ATTACHMENTS:
A. Public Integrity Disclosure Form
B. Hotel Operations Covenant Agreement – Palm Mountain Resort & Spa