TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Scott Agajanian, Economic Development Director
PREPARED BY: Martha Samaniego, Management Analyst
SUBJECT:
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Second Amendment to the Transient Occupancy Tax Revenue Sharing Agreement
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RECOMMENDATION
recommendation
Authorize the City Manager to execute the Second Amendment to the Transient Occupancy Tax Revenue Sharing Agreement with Olympus Real Estate Holdings, LTD., a Texas limited partnership, dba The Murrieta Hot Springs Resort & Spa.
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PRIOR ACTION/VOTE
On June 15, 2021, after conducting the required economic development subsidy hearing, the City of Murrieta and Olympus Real Estate Holdings, LTD., a Texas limited partnership, dba The Murrieta Hot Springs Resort & Spa, entered into a Transient Occupancy Tax Sharing Agreement (Vote: 5-0).
On March 21, 2023, the City Council authorized the First Amendment to the Transient Occupancy Tax Revenue Sharing Agreement with Olympus Real Estate Holdings, LTD, a Texas limited partnership, dba The Murrieta Hot Springs Resort & Spa (Vote: 5-0).
CITY COUNCIL GOAL
Aggressively pursue economic development.
BACKGROUND
The City of Murrieta (City) has identified attracting tourism and leisure opportunities that draw residents and visitors as an Economic Development Goal in the City’s General Plan. One of the supporting policies listed to meet this goal is to encourage the development of tourism and leisure opportunities that attract residents and visitors, including a full-service resort that incorporates local amenities and attractions, such as the mineral hot springs.
In 2020, the Economic Development Department began a dialogue with Olympus Real Estate Holdings, LTD, a Texas limited partnership, dba The Murrieta Hot Springs Resort & Spa (Developer). This conversation progressed, with the Developer purchasing property located at 39401 - 39407 Murrieta Hot Springs Road, Murrieta, CA 92563 (APN: 913-150-008, 913-130-051, 913-130-052, 913-130-053, 913-130-054, 913-130-055, 913-130-056, and 913-150-016). They have renovated and now operate a hot springs resort within the City.
The tourism, travel, and economic impact created through this resort has a substantial effect on the city. This resort also generates a revenue stream for Murrieta in the form of Transit Occupancy Tax (TOT) and tourism spending that benefits the community.
At the time of purchase, in order to assist the Developer with financing this project, Olympus Real Estate Holdings, LTD (dba The Murrieta Hot Springs Resort & Spa), requested a TOT Revenue Share agreement with the City that would provide them with fifty percent (50%) of the TOT collected for fifteen (15) years unless the Agreement is terminated beforehand (Attachment 1). After that point, all TOT revenue from the resort would be retained by the City of Murrieta.
The City entered into an economic development subsidy pursuant to Government Code Section 53083 after making a report on the proposed agreement available and conducting a public hearing. The report is available on the ’Citys website <https://www.murrietaca.gov/DocumentCenter/View/5901/PH2-for-MHS-TOT-Sharing-Agmt_City-Council-6-15-21-Presentation?bidId=>. It identifies the entity to benefit from the agreement, the duration of the agreement, a description of the subsidy and the public purpose for its creation, the projected tax revenues to be received by the City as a result of the project, and the estimated number of jobs to be created.
On February 28, 2023, the City and Developer entered into the First Amendment to the agreement to make minor modifications to the Agreement (Attachment 2). The parties now desire to further amend the contract to eliminate the Developer’s obligation to seek a Specific Plan Amendment as described in this Second Amendment (Attachment 3). This was originally a request of the city but is not deemed necessary for this project moving forward. All other terms of the Agreement remain unchanged.
FISCAL IMPACT
There is no fiscal impact, as this item provides clarification to a referenced term in the agreement.
ATTACHMENTS
1. Murrieta Hot Springs TOT Agreement
2. Amendment No. 1 to Murrieta Hot Springs TOT Agreement
3. Amendment No. 2 to Murrieta Hot Springs TOT Agreement