Palm Springs council adopts economic development framework; directs overhaul of hotel (TOT) incentive program

Palm Springs '025 '0Nov. 24 '0— The Palm Springs City Council voted unanimously Tuesday to adopt a data-driven economic development strategic framework and asked staff to update the city's hotel transit-occupancy-tax incentive program, directing staff to return an ordinance for council consideration.

The council's action follows a presentation by consultants from Civil Economics, who summarized resident and business engagement and recommended a five-pronged framework focused on (1) internal city capacity, (2) a clearer business climate, (3) diversifying beyond tourism, (4) nurturing emerging industry clusters and (5) strengthening community assets and infrastructure. The consultants said the finalized framework contains 93 action items, including 38 short-term "quick wins" and 43 medium-term initiatives.

"People love this city," consultant Adam Fowler said during the presentation, summarizing resident survey responses and the city's tourism asset. He and his partner also highlighted concerns raised by respondents about housing affordability, public shade and permitting friction.

Why it matters: The plan is intended to give City Hall a consistent set of priorities and measurable steps so Palm Springs can attract investment and broaden its tax base while addressing local needs for housing and infrastructure. Under the plan, staff will prioritize actions and build implementation metrics to track outcomes.

What was proposed for hotels: Staff described an updated TOT incentive structure that would move to tiered investments calculated by dollars invested per hotel room (per-key) and propose covenant agreements tied to certificates of occupancy. To help projects overcome current high construction and labor costs, staff proposed front-loading the developer share of the incremental TOT in the early years (an example staff shared was a 90% developer / 10% city split for an initial five-year period), with bonus categories for historic properties and convention-serving hotels.

"If there is a new hotel or a renovation with a certificate of occupancy, then they get the incentive," Wayne Olson, the city's chief economic development officer, said, explaining the covenant-and-certificate approach designed to ensure incentives deliver real built outcomes.

Council response and questions: Council members asked how representative the engagement was, how many residents and businesses responded, and whether specific stakeholder interview lists would be shared. Consultants said resident survey responses were roughly in the 590s (they cited ~592 in places and noted variation in reporting), business responses were in the low hundreds and that they conducted more than 20 stakeholder interviews; they also described limitations in representation and pledged to provide more detailed respondent information on request.

Several council members pressed staff on financing and implementation. "One overriding question and concern I have is where is the commitment for funding?" Council member Bernstein said, asking that the council consider how to resource the plan so it does not gather dust on a shelf. Staff and council members agreed the plan will require prioritization and possible inclusion of items in the FY26 budget.

Public input: Earlier in the meeting, local residents and business owners urged better outreach and emphasized affordability. "I didn't hear about the survey," said Felina Daniels, a small-business owner, asking for more inclusive engagement. Other commenters, including hotel operators, praised the framework and the proposed TOT incentive as a potential tool to spur renovations and new construction.

Formal action: After discussion, Council member Bernstein moved, and Council member Reddy seconded, a motion to approve the economic development strategic framework as a guiding policy document and to direct staff to update the hotel/TOT incentive program and return an ordinance for council consideration. The city clerk recorded a roll-call vote of 5-0 in favor; the motion carried.

Next steps: Staff said it will return with a draft ordinance amending the hotel incentive program (staff suggested January as a possible target for returning the ordinance) and provide additional documentation on survey respondents and stakeholder interviews. Council members also asked staff to consider vacancy incentives, district-based designations, workforce partnerships with College of the Desert and other institutions, and measures to expand year-round economic activity.

The meeting adjourned to the next regular meeting on Dec. 10, 2025, and closed in memory of actor Udo Kier.

Sources: Council meeting presentation and public meeting transcript, Nov. 24, 2025.