DHS City Council Special Study Session - Downtown

Public Comments

Don Sholty said that temporary fencing should be rented by the city and placed around any demolition site that the city owned before demolition begins and kept there until the site is safe. He said it is important for the safety of the general public and children especially.

Russ Martin reminded us that the Coachella Valley Coalition would meet Thursday, January 22 at 6 PM in the Carl May.

Commercial Real Estate Panel

The main part of the meeting was an informal panel discussion with seven Coachella Valley people in the commercial real estate business: Ingrid Baddour who is with Baddour Real Estate, I believe; Steve Lyle of Lyle Commercial; Sam Spinello of Spinello Companies; Stu Bailey from Sunrise Community Bank; Matt Johnson of Wilson Johnson Commercial Real Estate; Richard Krieb of Canyon National Bank and who is a DHS resident; and finally David Dangwillo of Pacific Western Bank.

Rudy Acosta had prepared a list of 8 questions for the panel on the state of the commercial real estate market which formed the structure for the presentation. There's no way I could attempt to record all the back and forth without a video camera, so I'll just mention a few highlights.

Steve Lyle said that now is a good time to assemble parcels. He (or someone) said that Palm Desert and Palm Springs had assembled parcels over the years, meaning that sometimes they paid high prices, sometimes low.

Mayor Pro Tem Matas wanted to know if any of those on the panel thought that the bottom would drop out of the commercial real estate market as it has from the residential market. After some hemming and hawing and "we don't have a crystal ball" (Don Sholty and I want to know who forgot to tell them to bring the crystall ball!) some of them sort of said they thought the commerical real estate market would NOT crash like residential. The telling remark from Sam Spinello, I think, was that they aren't creating any more commercial land in downtown.

Different members of the city council revealed piecemeal that the main issue that had been the reason behind this special study session was the appraisal of Haidet's six parcels at $1,100,000. The panel was asked, without seeing the property or the appraisal, could that high figure possibly be correct; and what can the city council do if it thinks an appraisal is out of line, other than simply wait six months and get a new appraisal.

The general answer was the city council was on the right path in assembling parcels, and that they should keep their eye on the goal: a revitalized downtown. The panel advised that if they thought an appraisal was too high or if an owner was reluctant to sell, they could take a pass on that one and go buy other parcels from other more motivated owners and then come back to the problem property later.

Rudy Acosta explained that even though the three parcels of Haidet's that are on First Street would appear to be residential, they are zoned commercial, so the appraiser is required to appraise them as commercial real estate, thereby increasing their value. Ms. Badour did a back-of-the-envelope calculation, knowing only the rough square footage of the property and came up with a figure of about $860,000, and pointed out that $1 million or $1.1 million is not very much more than that for a key chunk of parcels in the middle of the block between Palm and Cactus.

Steve Lyle said he couldn't see any reason to pay over value for property when the city had the power of eminent domain at hand. He tossed that notion around a couple of times with the casual air of someone who doesn't have to worry about re-election. Finally, Councilmember Baker told him that language like that is not used in Desert Hot Springs city government.

In response to the question: "As a public agency, what can or should we be doing to position Desert Hot Springs for the eventual economic turn around?" several members of the panel repeated the same thing: continue to assemble parcels, continue the annexation project, deal with any environmental issues, get the infrastructure in, so that when a commercial real estate investor comes along they can do their work fast. Matt Johnson said that while the bottom isn't falling out of commercial real estate, it's an uncertain market and that assembling parcels adds some certainty.

Annual Fire Code Inspections

Fire Chief David Avila spoke for a short time on a proposed program that would have a cadre of fire marshalls conducting annual fire inspections of commercial and rental properties in Desert Hot Springs. They would start out focusing on cordial relations with business and property owners, seeking voluntary compliance. Citations would only be used for recalcitrant owners who refused to correct violations. In the process of fire inspections, other suspected violations of, say, health codes or building codes would be referred to appropriate departments. I assume that also means that if any suspected criminal activity were spotted, that would be reported to the police as well. How many of our parolees live in rented housing?

This program will come up on a future council agenda for approval.

Facade Improvements

The meeting wrapped up with a presentation on the proposed facade improvement program. Any business in the downtown redevelopment zone is eligible, but priority will be focused on those businesses around Palm and Pierson first. Mr. Acosta explained that he is drawing on experience with the Palm Desert facade improvement program, which was improved upon and used in Indio, and now he's going to improve on that and use it in Desert Hot Springs.

We got a Powerpoint presentation that included the rules and parameters. The facade program would deal strictly with facades only, no interior improvements, no roofs, no code violations. The presentation included photos of before and after facades in other cities. The effect in those photos was mostly that of a cleaning and freshening and bringing up to current styles. It was not to put a uniform face on all storefronts.

A property owner could give the city a 5-year lien on his facade. The city would then do the work and maintain it for five years. Or, if the owner preferred, rather than giving the city a lien he could do the work himself. Or the property owner could refuse to participate at all.

A single property would be eligible for reimbursement of up to $40,000 or $667 per lineal foot. The $667 figure is based on an assumption of a 60-foot frontage, although most businesses in downtown DHS have less. Any facade that required more than $40,000 or $667 per foot could be approved by the city council. $750,000 from the bond issue has been set aside for facade improvement. I think it was Eric Pontius who did the math and pointed out that $40,000 gazinta $750,000 only a little more than 18 times, and more than 18 properties needed improvement. Mr. Acosta said the program was not restricted to the $750,000 bond money, but additional RDA funds could be allocated.