RES-2015-202RESOLUTION NO. 2015 - 2 0 2
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ANAHEIM ESTABLISHING A HOTEL
INCENTIVE PROGRAM AND DETERMINING SAID
ACTION IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT PURSUANT TO
CEQA GUIDELINES SECTIONS 15060(c)(2) AND
15060(c)(3) AND NOT A PROJECT UNDER
SECTION 15378
WHEREAS, the general welfare and material well-being of the residents of the City of
Anaheim ("City") depend, in part, upon the growth and expansion of the tourism industry in the
City, with net tax revenue from the Anaheim Resort providing nearly 24% of the City's general
fund budget: and
WHEREAS, the operation, maintenance, and expansion of the inventory of Luxury
Hotels in the City will promote and enhance the economy of the City, enhance the capacity of the
City with regard to the provision of core municipal services and the revitalization of
neighborhoods, and assist the City in achieving its tourism goals by, among other things,
providing attractive and desirable visitor serving facilities and experiences that will directly and
indirectly contribute to the growth and expansion of tourism opportunities in the City,
encouraging the maximum utilization of the Anaheim Convention Center, increasing the quality
and value to those attending the Anaheim Convention Center events, providing employment
opportunities for the residents of the City, and increasing transient occupancy tax revenues
available for the benefit of the City, as a whole. Capitalized terms used in this Resolution shall
have the respective meanings set forth below: and
WHEREAS, consistent with the above, the City desires to incentivize operation of
Luxury Hotels in the City by establishing the Hotel Incentive Program to provide economic
assistance equal to a portion of the transient occupancy tax revenues generated by Luxury Hotels
which, but for the Hotel Incentive Program, would not operate within the City: and
WHEREAS, the City Council finds and determines that the implementation of the Hotel
Incentive Program is a municipal affair which is (i) consistent with the City's economic goals
and strategies, (ii) a matter of City-wide importance, (iii) necessary for the preservation and
protection of the public health, safety and/or welfare of the community, and (iv) in accord with
the public purposes and provisions of applicable State and local laws and requirements; and
WHEREAS, the City Council finds and determines that the implementation of this Hotel
Incentive Program through the consideration and potential approval of Operating Covenant
Agreements will provide economic incentives to encourage the development, construction and
operation of Luxury Hotels and the renovation of Existing Hotels to qualify as Renovated AAA
Four Diamond Hotels within the City which will, in turn, (i) provide desirable and attractive
experiences for both local residents and tourists, (ii) promote job creation opportunities in the
City, (iii) indirectly encourage other property owners to upgrade and enhance properties,
(iv) maintain and enhance a consistent business friendly environment, (v) generate net increased
transient occupancy tax revenue to the City which will assist in the revitalization of
neighborhoods and support the public servicesprovided by the City to its residents, visitors, and
businesses, and (vi) increase the economic competitiveness of the City; and
WHEREAS. the City Council finds and determines that the establishment of the Hotel
Incentive Program, by the adoption of this Resolution, is not subject to the California
Environmental Quality Act of 1970, as amended (Public Resources Code Section 21000 el seq.;
herein referred to as "CEQA"), pursuant to Sections 15060(c)(2) and l 5060(c)(3) of the State of
California Guidelines for Implementation of the California Environmental Quality Act
(California Code of Regulations, Title 14, Chapter 3; herein referred to as the "CEQA
Guidelines"), because it will not result in a direct or reasonably foreseeable physical change in
the environment and is not a "project" as defined in Section 15378 of the CEQA Guidelines.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Anaheim
that the foregoing recitals are true and correct and constitute a substantive part of this Resolution.
BE IT FURTHER RESOLVED that the Hotel Incentive Program is established as
follows:
Section 1. Definitions. For the provisions of this Resolution, the following
definitions shall apply:
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a. "AAA Four Diamond Hotel(s)" means a Hotel(s) which provides
physical features and operational services which meet or exceed. as determined by the City
Manager acting in his/her sole and absolute discretion, the rating criteria established for AAA
Four Diamond Hotels or higher by the American Automobile Association. By way of guidance
and not as a limitation on the City Manager's exercise of his/her sole and absolute discretion, the
Minimum Development Standards for AAA Four Diamond Hotels and a list of the Brands and
Flags which traditionally qualify for AAA Four Diamond Hotel status are attached hereto and
incorporated herein by reference as Exhibit A and Exhibit B, respectively. In addition to
meeting or exceeding the Minimum Development Standards, Luxury Hotels shall also be
required to expend the following Minimum Furniture. Fixture and Equipment Costs and
Minimum Shell Costs:
(1) For a New AAA Four Diamond Hotel; the Shell Costs shall be not
less than Two Hundred Twenty -Five Thousand Dollars ($225,000) per Guestroom and the
Furniture. Fixtures and Equipment Costs shall be not less than Thirty Thousand Dollars
($30.000) per Guestroom.
(2) For a Renovated AAA Four Diamond Hotel, the Shell Costs shall
be not less than One Hundred Thousand Dollars ($100,000) per Guestroom and the Furniture,
Fixture, and Equipment Costs shall be not less than Thirty Thousand Dollars ($30,000) per
Guestroom.
AAA Four Diamond Hotel(s) do not include Hotels operating on or before
December 31, 2014 which are not Renovated AAA Four Diamond Hotels, nor does it include
property, including both Existing Hotels and/or undeveloped land, that is/are currently the
subject of an agreement with the City which agreement provides economic incentives or a
financing mechanism for the construction and/or operation of a Hotel.
b. "Applicable Transient Occupancy Tax Rate' means the lesser of the
current rate of Transient Occupancy Tax. as applicable from time to time, or fifteen percent
(15%). The Applicable Transient Occupancy Tax Rate shall apply for the calculation of any and
all Incentive Payments without regard to any increases, at any time. in the rate of the Transient
Occupancy Tax.
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C. "Base Transient Occupancy Tax" means the average annualized
Transient Occupancy Tax paid to the City with respect to an Existing Hotel for the last thirty-six
months prior to the date on which the Owner of an Existing Hotel and the City enter into an
Operating Covenant Agreement under the Qualified Renovation Program. Base Transient
Occupancy Tax shall be increased (but not decreased) annually on the anniversary date of the
Operating Covenant Agreement based on the cumulative changes in the CPI from the date of the
Operating Covenant Agreement.
d. "Brand" means the entity whose Flag is used to identify the Hotel.
e. "City Manager" means the City Manager of the City or his/her designee.
f. "Convention Center" means the Anaheim Convention Center.
g. CPI" means the Consumer Price Index -All Urban Consumers for the Los
Angeles -Orange -Riverside County Average, Subgroup "All Items" (1982-1984 = 100) as
established by the Bureau of Labor Statistics of the U.S. Department of Labor.
h. "Existing Hotel" means a building that was constructed, occupied, and
used as a Hotel, or portion thereof, on or before December 31, 2014.
i. "Flag' means the distinctive name of a Hotel that, by virtue of its
distinctive name; is identified by specific physical and operational features so that guests are
assured that they will receive a specified level of service and amenities wherever the property is
located.
j. "Furniture, Fixtures and Equipment" means movable furniture. fixtures
or other equipment that have no permanent connection to the structure of a building or utilities
within the Hotel, as well as operational supplies. More specifically, furniture, fixtures and/or
equipment would include decorative items, wall coverings, flooring treatment, window
treatments, casework, furnishings & accessories, furniture. data communications equipment,
voice communications equipment, audio visual communications equipment, electronic
surveillance equipment. electronic detection and alarm equipment, commercial equipment,
foodservice equipment, entertainment equipment, athletic & recreational equipment, collection
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and disposal equipment. Operational supplies include all supplies needed for the operation of the
hotel, such as stationery, computer equipment and accessories,guestroom TV's and mounts.
alarm clocks in rooms, linen, pillows, maids' carts and supplies, trash cans. all items for the hotel
restaurant, bar, banquet and conference facilities (including china, utensils, glasses, etc.).
Furniture. Fixtures and Equipment shall also include, for purposes of "Furniture, Fixtures and
Equipment Costs," taxes, freight, warehouse expense, installation fees and purchasing agent fees.
k. "Furniture, Fixtures and Equipment Costs" mean the actual and direct
third party costs of all Furniture, Fixtures and Equipment. For the purpose of determining
Minimum Furniture. Fixtures, and Equipment Costs, Furniture, Fixtures and Equipment Costs
shall be adjusted annually on January 1 of each year to reflect changes in the CP], commencing
January 1, 2016.
L "Guestroom(s)" means a room or suite within a Hotel intended for
Transient Occupancy by guests for compensation.
Ill. "Hotel" means any building containing 250 or more Guestrooms.
n. "Hotel Incentive Program" means the program set forth in this
Resolution to encourage and incentivize the development, construction and operation of Luxury
Hotels and the renovation of Existing Hotels to qualify as Renovated AAA Four Diamond
Hotels.
o. "Hotel Operator" means franchisee, manager. lessee. or licensee with
whom an Owner has a contract to operate the Luxury Hotel pursuant to a franchise, management,
lease, or license arrangement.
p. "Incentive Payments" are the payments made by the City to an Owner
pursuant to an Operating Covenant Agreement and described in Section 4 hereof.
q. "Luxury Hotel'' means a New AAA Four Diamond Hotel and/or a
Renovated AAA Four Diamond Hotel, as applicable.
r. "Minimum Development Standards" are described in Exhibit '`A.'
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S. "Minimum Furniture, Fixtures, and Equipment Cost' are those
identified in the definition of AAA Four Diamond Hotel(s), as adjusted annually.
t. "Minimum Shell Costs" are those identified in the definition of AAA
Four Diamond Hotel(s), as adjusted annually.
U. "Ne-tv AAA Four Diamond Hotel(s)" means a AAA Four Diamond
Hotel(s) that was (were) not operating in the City as of December 31 . 2014 and is (are) not a
Renovated AAA Four Diamond Hotel.
V. "New Hotel" means a Hotel that commences operation on or after
January l , 2015.
w. "Open(s)(ing)(ed) for Business" or "Opening" means the day on which a
Luxury Hotel opens for business to the general public.
X. "Operating Covenant Agreement(s) means the agreement(s) described
in Section 3 hereof.
Y. "Operating Period" is the period commencing on the Opening of the
Luxury Hotel and terminating on the twentieth (20th) anniversary date of the Opening.
Z. "Owner" means the person or entity who is the owner of a Hotel or a site
upon which a Hotel is to be constructed, whether in the capacity of fee simple owner, lessee, sub-
lessee, mortgagee in possession, licensee, franchisee, or any other capacity, or the assignee or
designee of such Owner.
aa. "Prevailing Wage Statutes" means Labor Code Section 1770, et seq.
bb. "Qualified Renovation Program" means a program undertaken by the
Owner of an Existing Hotel which proposes to convert from a Hotel with an American
Automobile Association rating of less than Four Diamonds to a AAA Four Diamond Hotel.
cc. "Renovated AAA Four Diamond Hotel(s)" means a Hotel which
qualifies as a AAA Four Diamond Hotel under the Qualified Renovation Program.
dd. "Shell Costs" mean actual and direct third party costs of all materials,
labor" equipment associated with the construction of the Hotel as determined by the City
Manager, acting in his/her sole and absolute discretion. Items excluded from Shell Costs
include, without limitation. site costs, parking costs, Furniture. Fixtures and Equipment Costs,
architectural" engineering, permits and fees" legal, accounting" taxes, sale or lease commissions,
marketing expenses, initial operating capital and other indirect costs, as well as the developer
overhead. For purposes of determining Minimum Shell Cost in the definition of AAA Four
Diamond Hotel(s), Shell Costs shall be adjusted annually on January l of each year to reflect
changes in the CPL, commencing January 1, 2016.
ee. "Site Control" means being the Owner of an Existing Hotel or a site on
which a Luxury Hotel is proposed.
ff. "Temporary Closure"" means a period of time" no longer than reasonably
necessary for repairs, reconstruction or resolution of maintenance issues, but in no event longer
than two hundred (200) days.
gg. "Transient Occupancy" means an uninterrupted stay of no more than
twenty-eight consecutive calendar days.
fill. "Transient Occupancy Tax" means the transient occupancy tax levied
and collected pursuant to Chapter 2.12 of Title 2 of the Anaheim Municipal Code, as it may be
amended from time to time [and held in the City's general fund for unrestricted use].
Chapter 2.12 of the Anaheim Municipal Code, as it may be amended from tirne to time, is
referred to therein and herein as the "Transient Occupancy Tax Code," provided, that, in no
event, shall an amendment of the Transient Occupancy Tax Code after the date of this Resolution
result in an increase in the Applicable Transient Occupancy Tax Rate.
ii. "Transient Occupancy Tax Increment' means the annual difference
between (i) the Base Transient Occupancy Tax and (ii) the amount of Transient Occupancy Tax
paid to the City based on the Applicable Transient Occupancy Tax Rate with respect to a
Renovated AAA Four Diamond Hotel each year during the Operating Period.
V]
Section 2. Participation in the Hotel Incentive Program. An Owner that wishes to
participate in the Hotel Incentive Program must first submit to the City Manager, the following:
a. Evidence of Site Control.
b. Description of development team, including, the development entity, the
architect(s), interior designer, landscape architect, and other professional disciplines related to
the construction and operation of the Luxury Hotel for the purposes of confirming that the Hotel
will be a Luxury Hotel when Opened for Business.
C. Conceptual Operating Plan and design of the Luxury Hotel for the purpose
of confirming that the Hotel will be a AAA Four Diamond Hotel when Opened for Business.
d. Evidence of interest by a Brand, Flag, and Hotel Operator in operating a
Luxury Hotel within the City.
The City Manager shall determine, acting in his/her sole and absolute discretion, the
sufficiency of the submittals.
Section 3. Operating Covenant Agreement. If, based on the information provided
pursuant to Section 2 above, the City Manager is satisfied that the Owner is likely to Open and
operate a Luxury Hotel, then the City Manager may further decide in his/her discretion to
negotiate an Operating Covenant Agreement with the Owner. Any Operating Covenant
Agreement that may be negotiated by the City Manager shall be subject to consideration by, and
shall not be effective unless approved by, the City Council. In considering a proposed Operating
Covenant Agreement, the City Council may approve, deny or modify such proposed agreement
acting in its sole and absolute discretion, following compliance with all required and applicable
law (including. but not limited to, Government Code Section 53083 and the California
Environmental Quality Act). Nothing herein creates an obligation on the part of the City to
negotiate and/or approve an Operating Covenant Agreement. The Operating Covenant
Agreement will contain, among other items that the City Manager may impose. the following:
a. A recordable covenant by the Owner to operate and maintain the Luxury
Hotel as a AAA Four Diamond Hotel for not less than the Operating Period.
b. An obligation on the part of the City to make Incentive Payments
contingent upon compliance by the Owner with the Operating Covenant Agreement.
C. An obligation on the part of the Owner to comply with the Prevailing
Wage Statutes.
d. An obligation on the part of the Owner to use good faith efforts to hire
local residents and contract with local subcontractors. suppliers and other businesses.
e. An obligation on the part of the owner to ensure that all journeymen and
apprentices comply with all State labor laws and that the workforce on site meet a specific ratio
of apprenticeship program graduates and of OSHA certified workers; along. with the presence of
at least one site safety manager with OSHA 30 -hour certification.
f. Indemnities by the Owner in favor of the City and related parties as to:
(1) the condition of the site:
(2) litigation concerning entitlements and/or enforceability of the
Operating Covenant Agreement; and
(3) Prevailing Wage Statutes.
g. Agreement. assumption of risk and waiver by the Owner that. if the
Operating Covenant Agreement is approved by the City prior to consideration by the City of any
land use, entering into the Operating Covenant Agreement does not commit the City to consider
or undertake acts or activities requiring subsequent independent exercise of discretion, including,
but not limited to; the approval of any development proposal (including a Luxury Hotel project)
or land use approval governing the site where the Luxury Hotel is proposed. The Owner shall
agree that the City retains discretion on potential future actions to approve, deny, modify, and
consider alternatives to a proposed project. as well as to impose adequate mitigation measures as
may be required by the California Environmental Quality Act.
h. A covenant and agreement by the Owner for itself, its successors. assigns
or designees. that during the term of the Operating Covenant Agreement the business and any of
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its employees shall not discriminate against any person on the basis of sex. marital status, race,
color. religion. ancestry. national origin. physical handicap, sexual orientation, or domestic
partnership status.
i. An acknowledgement by the parties that the only remedy for default is
specific performance and that monetary damages are not available to the Owner for any City
default.
Section 4. Further Terms to be Included in the Operating Covenant
Agreement—Incentive Payments.
a. Confirmation that the Luxury Hotel is Operating, as a AAA Four Diamond
Hotel. Upon completion of a Hotel with respect to which an Operating Covenant Agreement has
been entered into. the Owner shall provide to the City, at Owner's sole cost and expense. an
independent third party audit. by an auditor approved by the City, confirming that the Hotel is
operating or will operate as a AAA Four Diamond Hotel. The City shall approve or reject the
results of such audit acting in its reasonable discretion.
b. Incentive Payments for New AAA Four Diamond Hotel. Upon the
confirmation described in Subsection a. of this Section 4, the City shall pay Incentive Payments
to an Owner of a New AAA Four Diamond Hotel. pursuant to an Operating Covenant
Agreement, in an amount equal to seventy percent (70%) of the Transient Occupancy Tax
collected and reâ–ºnitted to the City during the Operating Period based on the Applicable Transient
Occupancy Tax Rate with respect to such New AAA Four Diamond Hotel.
C. Incentive Payments for Renovated AAA Four Diamond Hotel. Upon the
confirmation described in Subsection a. of this Section 4, the City shall pay Incentive Payments
to an Owner of a Renovated AAA Four Diamond Hotel pursuant to an Operating Covenant
Agreement, in an amount equal to fifty percent (50%) of the Transient Occupancy Tax Increment
collected and remitted to the City during the Operating Period with respect to such Renovated
AAA Four Diamond Hotel.
d. Termination of Incentive Payments. Incentive Payments shall terminate,
and the Operating Covenant Agreement shall so provide. upon the expiration of the applicable
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Operating Period or at such time as the Luxury Hotel ceases to operate as a AAA Tour Diamond
Hotel for reasons other than Temporary Closure; provided that the Incentive Payments shall
terminate upon any closure unless the Owner notifies the City, in writing, of any Temporary
Closure within ten (10) days of the initial occurrence of the onset of such condition or conditions
that cause such a Temporary Closure.
Section 5. No Pledge. Provisions for the making of Incentive Payments pursuant to
the Operating Covenant Agreement shall not be deemed to constitute a pledge of any particular
funds by the City, but instead an obligation contingent upon the operation of a Luxury Hotel.
Section 6. Annual Administrative Review. The City Manager shall cause a review
of the Hotel Incentive Program each year, or sooner if warranted, and if amendment or
termination is warranted, present a proposed amendment to the Hotel Incentive Program to the
City Council for its consideration.
Section 7. Administrative Rules and Regulations. Consistent with the intent and
goals of this Hotel Incentive Program, the City Manager may adopt administrative rules and
regulations for implementation and furtherance of the requirements of this program.
Section 8. Automatic Termination. This Resolution shall automatically terminate
on the fifth (5"') anniversary date of approval of this Resolution unless extended by the City
Council.
THE FOREGOING RESOLUTION is approved and adopted by the City Council of the
City of Anaheim this 16 day of June -., 2015 by the following roll -call vote:
AYES: Mayor Pro Tem Kring and Council Members Murray and
Brandman
NOES: Mayor Tait and Council Member Vanderbilt
ABSENT: None
ABSTAIN: None
CITY OF ANAHEIM (2
By
MAYOR OF THE CITY OF ANAHEIM
ATT - T:
Qa6j6ND,-- -
CITY CLERK OF THE CfTY 0 -ANAHEIM
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EXHIBIT B
LIST OF BRANDS
City of Anaheim
Qualifying AAA 4 Diamond Plus Hotels
Andaz Hotels
Armani Hotels
Conrad Hilton Hotels
Curio Hilton Hotels
Edition by Marriott Hotels
Fairmont Hotels & Resorts
Four Seasons Hotels & Resorts
Grand Hyatt Hotels
Hyatt Regency Hotels
InterContinental Hotels
JW Marriott
Kimpton Hotels
Le Meridien Hotels
Luxury Collection Hotels
Leading Hotels
Loews Hotels & Resorts
Mandarin Oriental Hotels
Montage Hotels & Resorts
Oberoi Hotel & Resorts
Omni Hotels & Resorts
Pendry Hotels
Park Hyatt Hotels
Preferred Hotels
Ritz-Carlton
SLS Hotels
Sofitel
Tribute Hotels
W Hotels
Waldorf Astoria Hotels
Westin Hotels & Resorts
ME