Palm Springs council approves Orchid Tree hotel covenant with new neighborhood safeguards

The Palm Springs City Council on April 23 approved a hotel operations covenant for the Orchid Tree property that sets a schedule of development milestones and rebates 75% of the hotel's transient-occupancy tax (TOT) to the owner until $50 million is rebated or 30 years pass.

The covenant covers a newly constructed 72-room luxury hotel, restoration of historic bungalows and a two-story church on the site, and up to 16 condominium units that will not be part of the hotel's room pool. City staff estimated the project could generate about $26,500,000 in sales tax over the agreement term and roughly 70 on-site jobs with an estimated $1,500,000 in annual payroll.

City economic development director Wayne Olsen summarized the deal as a framework of incentives and obligations intended to ensure the project’s completion, including a performance bond posted by the developer equal to full construction cost and milestone-based cure provisions. Olsen told council the agreement anticipates the hotel opening by the end of 2029 and said missed milestones could lead to forfeiture of the TOT incentive.

Neighbors pressed council during the public hearing for stronger enforceable penalties after more than a decade of delays and visible deterioration at the site. Brian Hurd, president of the San Cristo Condominium Owners Association, said, “We think this project is preferable to any possible alternative uses of the property” but asked for “financial penalties during the preconstruction period.” Tempe, an HOA leader from the Historic Tennis Club neighborhood, urged council to “help us get this done” and praised the performance bond in the draft agreement.

Owner Richard Weintraub defended his record and the developer’s investments, saying his team has spent “well over a million dollars on plans” and agreed to post the performance bond and make the site improvements. Weintraub told the council he would not provide an up-front nonrefundable deposit sought by some neighbors but said he was “willing to move forward with this tonight” under the negotiated terms.

Council members and staff negotiated additional, specific neighborhood protections before the final approval. The council added or clarified requirements that were incorporated into the covenant: continuous on-site, in-person security from 7 p.m. to 7 a.m.; monthly pest-control treatment; prompt graffiti removal (within 48 hours of report); and a near-term perimeter beautification plan. Under the added schedule the developer must submit a beautification plan within 10 days for city-manager review (72 hours for review) and complete installation within 30 days of approval. The schedule of performance also now requires the developer to provide 50% complete construction drawings within five months after final entitlements and the conclusion of the appeal period. The council directed staff to have the final documents executed within seven days.

The covenant retains the performance-bond safeguard and milestone cure provisions the city sought. City staff said the bond size and the milestone schedule were intended to reduce the risk of “demolition by neglect” and provide a public, council-level forum to review any alleged defaults rather than resolving them in closed session.

The council approved the agreement in a public vote after the additional conditions were accepted and the final agreement was to be executed promptly.

For now, the project will proceed to planning and entitlement review under the new timetable. Council members said they expected staff and neighborhood leaders to monitor compliance closely and asked staff to explore ways to accelerate the entitlement schedule where feasible.