Palm Springs’ Virgin Hotel ‘postponed’ due to COVID-19, could be replaced with condos, city says
Citing economic setbacks caused by the coronavirus pandemic, developers of the the proposed Virgin Hotel in downtown Palm Springs have “postponed” the project, city staff said during Thursday’s Palm Springs City Council meeting.
As a result, the hotel could be replaced with a 62-unit condominium complex, officials said.
“Grit Development and the Virgin Hotel developer have mutually agreed to postpone the project due to COVID-19 impacts on the national economy and on the hospitality industry specifically,” Assistant City Manager Marcus Fuller told council members.
He added that they “have agreed to replace … existing hotel plans on that site with a residential project that will energize the downtown project.”
The proposed 62-unit development was reviewed on Tuesday by the city’s Architectural Advisory Committee. It shares the same architect behind the Kimpton Rowan Palm Springs hotel, Fuller said.
“Because it’s in the downtown specific plan, the City Council will actually review and approve this as a final action,” Fuller added.
The development site is 0.84 acres and is bound by Andreas Road, Belardo Road and Museum Way.
“The residential building is 82,862-square feet in area and includes 62 condominium units (a reduction in scope from the 112,862-square feet, 142-room Virgin Hotel),” according to a staff report from Tuesday’s meeting. “The building is six stories and 60 feet in height.”
City staff urged the AAC to recommend approval to the Planning Commission.
In a letter to the city, dated April 14 — just under a month after Gov. Gavin Newsom imposed a shutdown order that closed non-essential businesses across California in an effort to slow the spread of COVID-19 — Grit Development President Michael Braun said his company believes downtown “is now ready for a high-end multi-family condominium building to support local retail and restaurants in the downtown core.”
“America’s 77 million baby boomers are getting ready to move and they want to live in an active and cultural interesting place with a warm climate,” he stated. “The targeted demographic are baby boomers with high disposable income looking to downsize from their big homes and permanently relocate to Palm Springs.”
He went on to say that the “current health crisis has painfully disclosed the risk of urban living in the big city.”
“While additional hotel rooms bring many weekend visitors to downtown, additional residents with high disposable income will add more vibrancy not only during the weekend, but every day of the year to our downtown,” he added.
City gives budget update, council discusses projects
Also during Thursday’s meeting, Fuller said the Andaz Palm Springs hotel is moving through the Chapter 11 bankruptcy process and is expected to complete it by the end of October.
“They’ve identified, essentially, an interested buyer who is participating in that bankruptcy process,” Fuller said.
The hotel landed in bankruptcy court in July with plans to sell off the property amid $50 million in claims.
The project broke ground in 2015, but several factors including design and financial issues halted its progress. Lawsuits also accumulated from subcontractors who said they had worked on the Andaz Palm Springs project but weren’t paid.
Hotel: Andaz Palm Springs falls into bankruptcy with $50M in claims; new buyer lined up
In a budget update, City Manager David Ready said the city has received an unexpected $15 million windfall attached to the previous year’s budget.
Because of the pandemic shutdown, Palm Springs believed it would not have enough money to pay off its expenditures in the 2019-20 fiscal year. So, in order to balance that budget, the city froze nearly $10 million in expenditures and used at least $14 million in unrestricted reserves from its general fund.
It also offset an anticipated deficit for the current fiscal year 2020-21 budget by using millions in reserves and savings in other areas.
Since then, though, the city has found that it didn’t lose as much money because of the pandemic as it initially expected.
“That certainly is some good news that we have additional revenues,” Ready said, “but I would just note that as you recall, to make sure we would end last fiscal year not in a deficit and because of COVID, we needed to bring in approximately $14 million from general fund reserves.”
More information about the budget will be presented at the Sept. 24 council meeting, Ready said.
In other business, the council also adopted several resolutions pertaining to easements and agreements related to a longstanding project to widen Indian Canyon Drive from two to six lanes between the Union Pacific railroad bridge and Garnet Avenue.
Construction: These Coachella Valley road projects developed while the pandemic kept you indoors
The project calls for removing the existing two-lane bridge and constructing a new six-lane bridge, a city staff report stated.
The city has been working to deliver the project since 2000, according to a city staff report. Environmental reviews and approvals have caused extensive delays.
“The city has recently obtained authorization from Caltrans to proceed with construction of the project,” a staff report stated. “As a result, extension of right-of-way agreements will be required to ensure none of these agreements lapse while in construction.”
One of the items was a pipeline crossing agreement related to the potential construction of a new sewer line within Indian Canyon Drive from Tramview Road to Garnet Avenue.
“The opportunity to construct the sewer line will only occur at the time the (Union Pacific Railroad) bridge is demolished and reconstructed, as the sewer line (if constructed) must pass underneath the UPRR” a staff report stated. “If the sewer line is not constructed as part of and at the same time as the project, it will be practically infeasible to construct it later after the new UPRR bridge is constructed and in place.”
According to the city, the bridge project could begin construction in June 2021 and be finished in December 2023.
The city also approved traffic-calming requests from various neighborhoods including Desert Highland Gateway Estates and Demuth Park. The traffic-calming initiatives have been in the works for several years, according to a staff report.
The new measures include the installation of speed humps on:
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Tramview Road between Eastgate Road and El Dorado Boulevard
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Rosa Parks Road between Eastgate Road and El Dorado Boulevard
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Mesquite Avenue between El Cielo Road and Mountain View Drive
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Mesquite Avenue between Park Access Road and Nueva Vista Drive
The council also adopted a resolution designating the Las Palmas Liquor Store building at 1595 N. Palm Canyon Drive as a Class 1 historic resource.
“The building is significant because of its expressive ‘Googie’ style architecture, reflecting the growth of the automobile culture in the post-World War II period,” a city staff report stated.
And, last month, the council voted ito establish an equity and social justice committee. During Thursday’s meeting, council members discussed forming the committee and who might serve on it.
Council members indicated their support for having community members and some members of the Human Rights Commission serve on the committee.
“We have a powerful Human Rights Commission and this is an issue that is right in the center of what it is that we’ve asked them to do,” Councilwoman Lisa Middleton said. “I think this is going to be really empowering to the entire the Human Rights Commission.”
Project: Virgin Hotel project in Palm Springs likely to have its opening date delayed until 2024
Hotels: What’s up with all the hotel delays in Palm Springs? Mayor Geoff Kors gives updates
Previous reporting by Desert Sun business reporter Melissa Daniels was used in this article.
Shane Newell covers breaking news and the western Coachella Valley cities of Palm Springs, Cathedral City and Desert Hot Springs. He can be reached at [email protected], (760) 778-4649 or on Twitter at @journoshane.
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