Council approves two boutique-hotel TOT incentive covenants for Terra and Cacti

At public hearings the council approved operations covenants for two small boutique hotels that completed qualifying renovations and applied under the city's hotel incentive program.

Wayne Olson summarized both proposals: the Terra Palm Springs (888 North Indian Canyon LLC) completed renovations totaling about $1,049,150 and the covenant would rebate 50% of the hotel's TOT increment for up to 10 years capped at the project cost; the operator also agrees to provide up to two room nights per month for city use. The hotel's baseline TOT average was 0, so staff said the rebate would be incremental revenue for the city.

The Cacti Palm Springs (Monte Vista LLC) is a 10-room hotel with an approximately $538,000 renovation; the covenant uses the same 50%-for-10-years structure capped at the renovation cost and includes two room nights per month for city use. Both applications were processed under the city's prior code section (5.26) because they applied before the new 5.27 code took effect; staff told council there is no financial difference between the two code versions for these applicants.

Council asked staff to report later on how city-use room nights are tracked and whether the program is using rooms effectively. Both covenants were approved by the council.

Next steps: staff to finalize covenants, monitor use of allotted room nights, and produce a report on utilization if council desires.