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Council approves revised hotel and spa incentive program with phased waiver for new construction
Summary
Council approved updates to the hotel and spa incentive program to broaden eligibility, tie incentives to improvements that increase tourism demand, and add a six-year phased TOT waiver for ground-up hotel or spa development.
The City Council voted unanimously Dec. 2 to approve revisions to the city’s hotel and spa incentive program intended to better support tourism-related investment in Desert Hot Springs.
City staff outlined three principal changes: broaden program eligibility so more lodging types may qualify; require operational hotels and spas to make specific tourism-driving improvements to receive incentives; and add a new pathway that offers phased transient occupancy tax (TOT) waivers for ground-up hotel or spa development (100% TOT waiver years 1–2, 50% in years 3–4, 25% in years 5–6).
Staff said the program will continue to offer a 100% TOT waiver for two years for nonoperational properties but recommended improved marketing and a dedicated staff liaison to boost participation. The proposal keeps a city manager approval limit of $100,000 for incentives; any incentive above that would require a Council review with an economic development subsidy report.
Council members on the subcommittee described prior challenges with the earlier program, noting the need to ensure incentives fund improvements that demonstrably increase TOT rather than minor cosmetic repairs. One councilmember said the revised list of qualifying improvements "is actual concrete evidence that will increase TOT" and argued the changes make the program easier for staff to administer. After discussion, the council moved to adopt the ordinance updating the incentive program; the motion passed unanimously.
The ordinance updates are intended to attract new investment, support reopening of dormant properties and preserve the city's financial exposure within verified private investment levels.
