Measure J on the November ballot was placed there by the Palm Springs City Council. It asks taxpayers to approve a 1% Sales Tax hike on purchases of goods in the city. The tax is expected to generate $8 million annually, totaling $200 million, over a 25 year period. All tax money will be placed in the City’s General Fund where it will be available for any approved purpose.

The City Council has already decided that half the Sales Tax money will be used for renovation of the privately owned Desert Fashion Plaza property. It has been agreed with plaza owner John Wessman to provide him with $43 million under a financing arrangement that allows him to keep that money along with all profits he may earn from plaza renovation. No repayment is required!

The other half of the Sales Tax money will remain in the General Fund awaiting City Council decisions about its use. Several suggestions have been made and some are listed on the Measure J ballot. However, no documented plans exist for the money that will be left sitting in the General fund.

BACKGROUND

The Desert Fashion Plaza is a downtown eyesore and in need of renovation. The owner, John Wessman, reportedly claims he needs public funds in order to perform partial Desert Fashion Plaza renovation - estimated to cost $81 million. Palm Springs Redevelopment Agency does not have the funds needed and neither does the City’s General Fund. The reason that the Measure J - 1% Sales Tax hike is on the ballot is to raise funds from taxpayers for plaza renovation.

FINANCING AGREEMENT

The Palm Springs City Council has approved an ordinance authorizing a new Financing Agreement with developer John Wessman. It requires the City to pay $43 million, representing a majority of the costs, for the first phase of Desert Fashion Plaza renovation. In exchange for its gift of taxpayer funds the City will receive two small parcels, of undetermined value, viewed as potential Palm Springs Art Museum expansion sites. Otherwise it will not receive additional investment value benefits from the $43 million in taxpayer funds that will be turned over to John Wessman for plaza renovation.

The new Financing Agreement requires the City to do the following: 

• Undertake to pay $1,450,000 refurbishment costs together with all future maintenance expenses for the Desert Fashion Plaza underground parking structure (ramps, driveways, connection tunnel, approaches, elevators and escalators) and operate it as a “free public parking” facility;
• Construct and maintain five (5) blocks of new streets within the 13 acre plaza site;
• Assume maintenance responsibilities for five (5) new public restrooms located on the plaza site;
• Pay up to $11 million for parking structure refurbishment and new streets’ construction costs.
• Deposit $32 million into an Escrow Account for use in payment of Desert Fashion Plaza renovation costs.

The Financing Agreement requires developer John Wessman to construct or renovate buildings on Palm Canyon Drive and a new Theater Complex structure in the rear. He will make an initial $2 million deposit into the Escrow account, but will make no further investment until all escrow funds have been used. He is free to sell the property at any time and the only requirement is that renovation work be completed. There is no requirement for him to undertake Phase Two construction work and finish plaza renovation. He is not required to repay any taxpayer funds received nor share any revenues or profits with the City.

Phase One of the Desert Fashion Plaza renovation project is scheduled for completion by 2015.