1. City of Palm Springs
Desert Fashion Plaza
Community Presentation
March 23, 2011

2. DeBartolo History
The mall was never fully leased.
I. Magnin and Silverwoods were closed in the late 1980s, leaving Saks as the only anchor.
Other quality retailers failed or moved.
DeBartolo supported a successful local initiative to allow a card room at the property in 1995.
The mall went into foreclosure in late 1996.
3. Foreclosure/AZ Partners Purchase
Total defaulted loans were $51,698,096.
South Plaza was $30,562,591.
North Plaza was$21,135,505.
The Hyatt Hotel was not included in the default or the sale.
AZ Partners paid$13,500,000 total.
Paid $8,100,000 for the South Plaza.
Paid $5,400,000 for the North Plaza.
Sale closed on March 27, 1998.
AZ hoped to start redevelopment mid-1998.
4. AZ Partners Proposed Project
Plans were to expand the mall to over 350,000 sq. ft. and remove the roof. AZ Partners plan was a $35-million expansion.
Main entrance to be open air plaza with outdoor dining, shops and gathering places.
Plans included a 3,000-seat cinema and a 2,400-seat live theatre.Metropolitan Theaters agreed to go into the I. Magnin space.
Idea was to be more visible to traffic andcompatible with the village atmosphere.
Project renamed The Promenade.
5. Tenants Depart under AZ Partners
Some retailers, such as Iris and Neil's, had second stores in Palm Desert.
Ann Taylor moved to The Gardens on El Paseo.
La Mariposa and Aristokatz reopened in Plaza Mercado on Palm Canyon Drive.
6. AZ Replaced by Excel Legacy
In 1999 Excel Legacy Corp. terminated AZ Partners and announced its own $64-million renovation of the Fashion Plaza.Excel was already 96% owner/lender of the project.
Mall would be renamed to Desert Walk.
They would raze much of the center to make way for the new development.
7. Excel Legacy
New development partner was MBK Southern California Ltd.
New tenants would include a two-story multiplex theater, food court, gourmet market, restaurants and various specialty shops.
Work was expected to begin in 2000 and be completed in 2001.
8. Excel Legacy
In 2000 Excel decided to sell the mall instead of developing it.
Their asking price was $25 million.
There were a number of parties that looked at the mall but the price was not warranted.
Wessman Development acquired the mall in late 2001.
9. Partnership with Wessman
Original plan was Spanish-Mediterranean with Plaza Mercado Architect.
Saks announced before escrow closed that it was closing the store.
10. Partnership with Wessman
Theaters were critical to the proposed lifestyle center.
Signature Theaters bought, renovated the Courtyard Theaters, crowding out other operators.
Market needed to evolve for tenants to locate if the project had restaurants and entertainment.
11. Retail/Entertainment Competition
In 2001 The River opened in Rancho Mirage, offering an entertainment option to residents and visitors in a master-planned environment, complete with a Borders and a 12-screen cineplex, which became the highest-grossing cinema in the desert.The opening of a Cheesecake Factory in early 2005 further enhanced the dining and entertainment options at the center.
12. Partnership with Wessman
Council Subcommittee worked with Wessman.
City did demographic and movie theater market analysis.
City participated in tenant meetings and structured financial assistance package.
In 2003, City did major streetscape/parking improvements.
13. Demographic Matches
Good Demographic Matches based on income, age and lifestyle:
Avenue
Pottery Barn
Tommy Bahama
Ann Taylor
The Gap
Bad Demographic Matches based on income, age and lifestyle:
Crate & Barrel
Williams-Sonoma
Restoration Hardware
Sur La Table
Z Gallerie
14. Shopping Center Conferences
15. Earlier Wessman Proposals
Residential component with some condos and townhomes.
Focus was a central plaza for events such as concerts and art fairs.
New street would be opened up between Palm Canyon Drive and Museum Drive; the street could be closed for events.
Bank of America building, I. Magnin store and some of the "back" retail space would be demolished.
16. Early Wessman Plans
17. Early Wessman Plans
Plan featured streets through the project, multi-story buildings
Height and density were concerns
Photo: Wessman Development
18. Other Factors/Projects
City undertook Downtown Urban Design Plan, which included downtown design guidelines, in 2005.
A citizen referendum that could have limited heights downtown was proposed in 2005.
In 2005, Cirque Dreams proposed a temporary theatre at the back of the site to stage cirque-style performances.
19. Downtown Urban Design Plan
20. Downtown Urban Design Plan
Plan received lots of community input including charettes.
Provided design and development guidance for the downtown core.
21. Downtown Urban Design Plan
Articulated a need for greater east-west linkages in downtown.
Proposed design guidelines for the development of new projects.
Reaffirmed existing height limits in downtown, except for the three catalyst projects (Fashion Plaza, Port Lawrence, Ramon/Palm Canyon) which had a 60 limit.
22. Cirque Dreams
23. Cirque Dreams opened late 2005
Photo: Palm Springs Chamber of Commerce, Dick Taylor Productions
24. Cirque Dreams closed in late 2006
25. Palm Grove - Submitted April 2007
14 separate buildings, 20-74 feet high
65 to 75 new stores and restaurants, plus a gym, a pharmacy and hundreds of condos.
Museum Way and Belardo cut through project.
Featured a 2-acre palm grove, open space with a stage and smaller restaurants.
Plans included the layout of the buildings.Contemporary architecture, submitted after site plan approved by City Council.
26. Museum Market Plaza - April, 2008
Buildings could reach 79 feet.
Also included a central public plaza with condos, offices, retail and entertainment.
Up to 955 condos, 400,000 square feet of retail and up to 620 hotel rooms, in a formula that traded retail square footage for hotel rooms or condos.
If there were 620 hotel rooms, there would be fewer condos and retail square footage.
The plan gave the developer the flexibility to build what the market could bear.
27. Specific Plan Process
Specific Plan process commenced in 2008 and concluded with the adoption of the Specific Plan in December 2009.
The Specific Plan includes a road through the mall and through the Town & Country Center.
28. Specific Plan Community Outreach
29. Specific Plan (SP)
Intended to give developers the flexibility to propose a wide variety of land uses and accommodate them in an orderly manner.
Accommodated both a demo and build approach and the remodel of the mall.
Determined the street configuration for the Specific Plan area.
30. Specific Plan
Allowed uses included retail and entertainment, hotel, and residential.
Specific Plan also allowed for open space and public gathering spaces.
31. SP Renovation Plan
Wessman Development
32. SP Approved Blocks and Streets
33. Conceptual Architecture Remodel Plan
34. January-June, 2010
Specific Plan was approved by the City in December, 2009.
City Council directed staff tonegotiate an Owner Participation Agreement with Wessman.Negotiations occurred from January through June, 2010.
35. Council Action Sept. 22, 2010
City Council approved undertaking appraisal of the property.
Council established a schedule for community input visioning and the technical details of making an offer to purchase the property.
36. How could the City pay for acquisition and renovation?
Through an agreement with another developer such as a Disposition and Development Agreement; or
Through a tax assessment created by a vote of the people.
37. Vote of the People
A special election could be held to ask voters approve a tax increase to raise revenue for the Project.Examples include:
Sales Tax
Utility Users Tax
Parcel Tax (flat, equal assessment against all properties)
Ad Valorem taxes (property tax assessed proportionately against the value of property)
38. Example: Sales Tax Increase
Goal was to provide for the purchase and development of the Desert Fashion Plaza property. The City could issue bonds to raise the funds, which could be paid for by an increase in the Sales Tax.Any proposed Sales Tax would be less than 1 cent.
The increase could either be cent or cent, with the term increased to raise a larger amount.
39. Council Actions December 2010
Directed Attorney to make offer to purchase
Called for public workshops in January and February
Ballot Measure would need to be placed on the ballot by the first Council meeting in March
Special election would have been held on June 7
40. January 2011
Offer made to Wessman on purchase
Counter offers received and negotiation meeting held
City hired MIG, Inc. to conduct community design workshops to determine community vision
First workshop held 200 people attended
41. February 2011
Second and third MIG Community Design workshops held final meeting was the largest of the three
Council Subcommittee meets with Wessman, recommends new partnership approach
Wessman amends site plan to incorporate input from Community Design workshops
City, Wessman begin negotiating on Development Agreement, Project Financing Agreement
42. Community Design Process
43. Community Conceptual Plan
44. Elements of Community Plan
East-West connection between Palm Canyon Drive and the Museum, as well as Belardo Road connection
Open space plaza along Museum Drive
Movie theaters could move into the northern part of the mall
Hyatt could get a ballroom
Museum expansion sites on either side of roadway, across from Museum
New or remodeled retail space along Palm Canyon
45. Elements of Wessman Plan
East-West connection between Indian Canyon Drive and the Museum
Movie theaters moved into the northern part of the mall
Hyatt would get a 10,000 s.f. ballroom
I. Magnin building would be used for fitness center, entertainment use
Museum expansion sites on either side of roadway, across from Museum
New open space at the corner (Bank of America)
46. Wessman New Conceptual Plan
47. Evolution of Wessman Plans
48. March 2011
Council held Study Session to receive recommended plan from MIG and discuss Wessman plan
Draft site plan selected and will begin moving forward through entitlement process
Negotiation meetings continue with Subcommittee, staff and Wessman
First look by Planning Commission on March 23
49. April 2011
Financial Analysis of project to occur
Development Agreement drafted and prepared for Planning Commission
Project Financing Agreement drafted
Ballot language, tax calculations prepared
50. May 2011
Planning Commission Public Hearing on Development Agreement
Project Financing Agreement finalized
51. June 2011
Development Agreement, Project Financing Agreement finalized
Ballot language, tax calculations finalized, ready for adoption
52. Why Public Funding?
The project has always had a gap, from the original AZ Partners deal, the Excel Legacy deal, and earlier Wessman deals
It would have a gap even if the City didnt require any additional design features
Gap is due to the difference in cost between rebuilding the center (or tearing down and building new) and the capitalized value of the property based on future rents
It costs more to build than it will be worth
53. How Much Public Funding?
The exact amount will be determined based on costing the final design and projecting future rents
54. How Would Funding Be Structured?
Deal still being negotiated but City could acquire fullyimproved public streets, the future museum expansion parcels and most or all of the project parking
One outcome could be permanent free parking at the site
Another outcome would be Citys ability to assist the Museum in expanding their facilities at the site