In a booming Palm Springs, residents see both promise and threat

A crane at a construction site in Palm Springs. To some, the city’s efforts to help developers revitalize its aging downtown have spurred a long-overdue move into the future. Others see a threat to the city’s unique charm and say developers have grown too powerful.

Sept. 8, 2015 3:45 AM PT

Reporting from Palm Springs — The signs of a downtown construction boom are everywhere here — the cranes, the tractors, the posters promising modern new hotels and restaurants.

City incentives in recent years have spurred hundreds of millions of dollars of investments that are transforming the landscape of this desert oasis, once considered Hollywood’s playground.

To some, the city’s efforts to help developers revitalize its aging downtown have spurred a long-overdue move into the future.

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“We’re in a very historic renaissance that’s going on,” said Mayor Pro Tem Paul Lewin. “And it doesn’t happen by accident. It happens because we work really hard to encourage people to invest in our city.”

Others see a threat to the city’s unique charm and say developers have grown too powerful.

“People like to come here because it’s an escape from the city, but this council is putting, basically, a miniature Century City in the heart of town,” said Frank Tysen, who owns a downtown boutique hotel.

Palm Springs’ development push came to center stage last week when the FBI raided City Hall after allegations of ties between the mayor and a developer who has been behind large projects and proposals in the city.

Though federal agents have been tight-lipped about their purpose, the raid came after reports in the Desert Sun newspaper that Mayor Steve Pougnet was working as a consultant for developer Richard Meaney when he voted to sell city property to Meaney and another investor. Pougnet has since said the vote was a mistake and has declined to run for another term, though he has also said he will not resign from office.

Pougnet told the Desert Sun he was hired to educate Meaney on local development, including a sales tax meant to spur downtown development and other revitalization projects. Separate from the property deal, the developer last year benefited from a $250,000 city economic development grant meant to help redevelop vacant properties and provide incentives to stalled projects. Pougnet abstained from that decision, according to city records.

The state Fair Political Practices Commission has launched an investigation into the relationship between the mayor and developer.

Meaney did not return calls asking for comment.

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On Friday, Pougnet’s attorney, Malcolm Segal, said the mayor is confident that when the inquiry is over it will find that “none of his actions violated any rules, ethical rules, regulations or laws.”

Even as he has come under criticism, Pougnet has vigorously touted his role in encouraging development in the city.

Pougnet is “very proud of the progress that Palm Springs has made over the past eight years … and he’s hopeful that this inquiry won’t sidetrack his efforts,” Segal said.

In its heyday, in the 1950s, ‘60s and ‘70s, Palm Springs drew visitors from around the world to the Coachella Valley. But in recent years, it has often been overshadowed by swank new developments in neighboring towns such as Palm Desert and Rancho Mirage.

Many here have long argued that the city center was in desperate need of revitalization. Palm Springs was hard hit by the recession, but development, particularly downtown, had slowed to a crawl as far back as the late 1980s. Far from the Hollywood hot spot it once was, the city is now seen by some in younger generations as a stodgy retirement community.

“There hasn’t been a hotel built in 25 years,” said Lewin, the mayor pro tem, who acts as mayor in Pougnet’s absence and who grew up in Palm Springs. “I’m 44 years old and I don’t remember the last time I saw a crane in the city.”

There was enough agreement on the need for new growth that in 2011, a majority of voters approved a 1% sales tax increase to revitalize downtown and maintain community services.

The money has helped spur one of downtown’s largest projects: the redevelopment of the city’s long-shuttered former mall into three blocks of stores, restaurants, office space and a Kimpton Hotel.

To encourage new development, the city has offered several incentives. Under one program, it agreed to rebate up to $50 million in occupancy taxes to the Kimpton Hotel, though the amount will depend on room rentals. (The hotel is not connected to the land at the center of the corruption allegations.)

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Michael Braun, senior vice president and principal of Wessman Development, which is developing the hotel, said it “would have not been financially feasible without the incentive programs offered by the city of Palm Springs.”

“We started planning this hotel in 2011, a time when the hotel industry was struggling and nobody in their right mind would have started spending money on plans to build such a risky project,” he said.

Critics say the city has given away too much.

“The developers have been really treated too well,” said Tysen, who owns Casa Cody Inn, a historic boutique hotel that dates to the early 20th century. He worries that some of the new projects are changing the town’s character.

“Palm Springs is popular because we have the charm of a village, and this is absolutely awful,” he said.

Geoff Kors, a candidate for City Council, praised the city’s development efforts but said it may be time to re-examine some incentives.

“Palm Springs has worked to attract development and did a good job of that in a very challenging economy,” he said. “But the economy is different now, and I think those programs need to be evaluated in light of the current conditions.”

He has called for more transparency in the city so residents can better track local government.

Lisa Middleton, chair of the Organized Neighborhoods of Palm Springs, which is made up of 37 local neighborhood organizations, said the FBI raid on City Hall marked “a very sad day in our community.” But, like the mayor, she hoped it would not detract from the city’s development.

As recently as 2010, the city was forced to lay off police and other employees and shut its jail and a fire station to help close a large budget deficit.

“That was a very difficult time,” she said. Now, “we’ve seen a tremendous surge in the number of new businesses opening, in the number of new restaurants, new hotels. This has been a period in which Palm Springs is extremely popular as a destination.”

“There are some residents who would like to strike that balance with less growth,” she added. “But I think most residents are very proud of the dynamism that has come to Palm Springs.”

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