Fate of Palm Springs’ long-planned Orchid Tree hotel up in the air; apartment idea floated

The developer of a long-delayed Palm Springs luxury hotel project has filed documents with the city proposing a seven-story, 308-unit apartment complex on the downtown-adjacent site instead, the city attorney says.

However, the city council is set to meet Monday to discuss a proposal to get the hotel plans back on track, which City Attorney Jeffrey Ballinger said he is optimistic both sides will agree to.

A city staff report ahead of that meeting details the proposed renegotiation of the incentives the city has agreed to pay the developer if the hotel is completed, which staff is recommending the council approve to get the stalled project going again.

What is the Orchid Tree project?

The Orchid Tree Resort & Spa would include 74 hotel rooms, a restaurant, a spa and meeting space on a 3.65-acre site northwest of the intersection of Belardo and Baristo roads. The site is currently home to an abandoned church and inn, and plans call for the resort to incorporate the church and several existing bungalows. The project dates back to 2014 but has been set by numerous delays.

Nearly five years ago, in late 2018, council members were already getting fed up with delays to a hotel plan first approved by the planning commission in 2016.

In December 2018, as Weintraub requested a one-year extension of some deadlines, Councilmember Lisa Middleton said: “I think we are down to the last extension. I am not going to encourage Mr. Weintraub to think we can come back at the end of 2019 and ask for 2020.”

Where did the apartment idea come from?

Developer Richard Weintraub first mentioned the possibility of scrapping the stalled hotel project in favor of a residential building during a February meeting at which the city had first considered renegotiating the financial incentives for a hotel.

At one point during the February meeting, Councilmember Jeffrey Bernstein asked Weintraub about an earlier comment he had made that if the city didn’t agree to the incentives he wanted, he would move to build an affordable housing development there instead.

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When Bernstein asked if that was something Weintraub was planning on, Weintraub responded he would consider it.

“We will have to look at our options, but that’s correct, yes,” he said. “I do think the zoning allows for it under the California emergency housing ordinance.”

Ballinger’s staff report says Weintraub and his companies filed a request for the apartment complex May 23.

Those documents propose what Ballinger describes as a seven-story, 308-unit development in which 62 units would be restricted to mandate making them affordable to low-income families in Palm Springs. Ballinger wrote that he and other city staff are reviewing that filing and plan to respond to it in accordance with state housing laws. The documents show the seven-story structure would take up the bulk of the site, although a portion on the west end containing a historic church and several bungalows would be preserved. It is unclear from the report what portion would be used for.

What’s Happening Monday?

The subject of Monday’s council meeting is not the housing development but a proposal to renegotiate an agreement that would see the city pay Weintraub a large share of the lodging tax revenue initially generated by a hotels as an incentive to complete it.

That agreement, which was initially signed in 2021, required that Weintraub meet certain deadlines for the project, which he has not met. However, Weintraub has since attempted to invoke a “force majeure” provision of the contract, arguing he doesn’t have to live up to the deadlines because market conditions outside his control make it impossible to get financing for a hotel now.

The proposed modifications to the agreement include the following:

• A new set of construction milestones Weintraub would have to follow. The first is that Weintraub would need to submit an updated schematic plan for the city to review within 90 days. The agreement does not include a date when the hotel would have to be completed but instead lays out deadlines based on steps in the process. For example, the hotel would need to be completed 40 months after the start of construction.

• The agreement would allow Weintraub to delay the payment of certain fees until the hotel has been open for three years, with interest to be paid on the deferred fees.

• The city would allow what Ballinger describes as a “certain number” of planned hotel units to instead be sold as condominiums. He wrote that up to five units would be exempt from collecting lodging taxes.

• A revision of language in the contract to allow for the hotel to carry one of four luxury hotel brands: 1 Hotel; Leading Hotels of the World; Relais & Chateaux; or Auberge. The hotel had originally slated to be an Auberge hotel. Ballinger wrote that the change was being requested to provide flexibility as the previous language was causing concern to lenders.

Ballinger wrote in the staff report that city staff believes the revisions will allow the project to get back on track, without the city agreeing to other modifications to the agreement Weintraub had requested in February, including that the city gave the developer 100% of lodging tax revenue generated by the project up to $50 million, rather than 75%.

The new proposal comes after the council directed city staff to hold discussions with Weintraub about how to alter the agreement to get the hotel project moving forward again. But the council signaled that it would likely not agree to share 100% of lodging taxes, which has never been done before. Some council members also said they were concerned about the deferral fee, although Ballinger said that had been done in another case.

Ballinger also wrote that while he thinks the city has legal grounds to argue Weintraub is in default, “moving forward with a revised agreement will avoid the costs and delays to the project associated with proving that default in court.”

In an interview, Ballinger said he is optimistic that an agreement will be reached to get the original plan back on track.

“I think it’s safe to say that he (Weintraub) has indicated his interest in moving forward with the hotel project if we can get an agreement in place to get him back on track,” Ballinger said. “At the last council meeting I think the council indicated support for that as well.”

Paul Albani-Burgio covers breaking news and the city of Palm Springs. Follow him on Twitter at @albaniburgiop and via email at [email protected].

This article originally appeared on Palm Springs Desert Sun: Fate of planned Orchid Tree hotel in Palm Springs may be decided soon