Council Gives Marriott $1 Million Tax Rebate

The Palm Desert City Council voted on Thursday to partner with the as part of a strategy to open a water park, which hotel officials believe will help draw families to the resort during the slow summer months.

In a 3-2 vote, the council voted to give the Marriott a rebate of $1 million of its transient occupancy tax (TOT) once the park is open. Councilwomen Cindy Finerty and Jean Benson were opposing.

Under the proposal, Marriott will be given back the additional revenue generated by the water park until the refund reaches $1 million. The process could take several years, accoridng to Ken Schwartz, general manager of the Desert Springs resort.

The refund on the bed tax revenue will only kick in if revenue exceeds the previous quarter, which gives the resort an incentive to fill its rooms, according to Councilwoman Jan Harnik.

"If they don’t increase, they get nothing," Harnik said.

The water park, which would be located on the property located at Country Club Drive and Cook Street, is expected to cost $10 million and would generate up to $11.5 million in additional revenue over five years, according to Schwartz.

The park would feature a tower with several water slides, a toddler area, a surfing zone and a family zone inside with video games and other forms of entertainment such as pool and air hockey tables, he said.

The water park is aimed at attracting more families to the resort during the sluggish summer months.

By voting for the rebate, Palm Desert's 9 percent TOT rate would remain the same. A 2 percent hike had been one of three proposals the council considered to meet Marriott's $1 million request.

"Right now we charge (hotels a) 9 percent (TOT)," Mayor Bob Spiegel said. "We’re the lowest in the valley. The second lowest is Rancho Mirage at 10 percent. If we went up 2 percentage points, we would be the same as La Quinta.”

The council agreed now was not the time to consider a TOT hike, and moved forward with the rebate. The third option, which the council also rejected, was to take the $1 million out of the general fund.

Finerty strongly objected to any of the proposals.

"I want to be able to help the Marriott, but a payback, a tax credit of $1 million is extreme and excessive in these tough economic times," Finerty said.

She warned her council members that the Sheriff's Department, which contracts with Palm Desert for its policing services, is facing budget cuts and an increase in the number of .

"How is that going to affect our city when we have people who really should be in jail running through our streets?" Finerty said.

Benson also opposed giving the Marriott a tax break.

"Once we start on the road of giving back TOT we start on a very slippery slope," Benson said. "It isn’t something in the city’s benefit."

She added that she supports a water park, but would rather see reduced development fees.

"If you want to be in our city, we’re willing to work with you and we’re not going to give you money for a private business," Benson said.

Marriott asked for the tax credit as part of an effort to attract other financers for the project. The water park would not be open to the public. Only guests of the hotel would be allowed to use it, according to Schwartz.