Economic Benefits Add Up for La Quinta

Coral Mountain Resort presents an opportunity to improve finances for the City of La Quinta.

Development impact fees and construction permits will bring immediate benefits and revenue to the City, along with the addition of hundreds of construction jobs.

Once completed, the hotel and vacation rentals will generate Transient Occupancy Tax revenue. The restaurant, bar and retail establishments will provide much-needed services for the area, create jobs, and contribute additional sales tax money to the City of La Quinta.

Coral Mountain will help solve a multimillion-dollar tax problem the City faces each year. Due to existing liabilities when the Andalusia and Trilogy communities were annexed into La Quinta, the City does not receive any property tax money on those properties to pay for general and emergency services such as police and fire. The result: a $3.7 million annual budget deficit that must be covered out of the City’s General Fund. This situation is expected to continue for 11 more years, or until the bond debt from the former County Redevelopment Area is paid off and the City can begin to receive property taxes. Coral Mountain pays a Mitigation Fee, plus will generate enough taxes to fully pay its own way on City-service costs and generate a surplus of more than $2 million annually.

Why Coral Mountain makes economic sense for the City of La Quinta:

Millions of dollars in development impact and building permit fees for construction will be generated.

Sales tax from commercial development on the site, including The Corner neighborhood commercial site at Avenue 58 and Madison Street, as well as onsite Wave Basin operations, food and beverage, and hotel retail and services, will add to the City’s General Fund.

The hotel rooms and carefully programmed and managed short-term vacation rentals will create significant Transient Occupancy Tax income for the City.

The development will also enhance the City’s capacity to attract new businesses to the area, expanding the local economy. Coral Mountain is proactively addressing a crisis in local power capacity by agreeing to front the cost of specific improvements at Imperial Irrigation District’s Avenue 58 substation. The upgrades will exceed Coral Mountain’s power needs by 75%, solving capacity problems that threaten future development.

FAQs

Coral Mountain will deliver significant local economic benefits for the City of La Quinta through job creation and taxes contributing to General Fund revenue.

  • The project will create both temporary and permanent jobs.
  • The value of construction is estimated to be $1.2 billion, which will create good-paying jobs for vendors and tradespeople over five to seven years for the first phase alone.
  • The amenities, hotel, and community maintenance and management operations will create more than 200 permanent jobs.

General Fund revenue for the City will be created from several sources:

  • Millions of dollars in development impact and building permit fees for construction will be generated.
  • Sales tax from commercial development on the site, including The Corner neighborhood commercial site at Avenue 58 and Madison Street, as well as onsite Wave Basin operations, food and beverage, and hotel retail and services.
  • Transient Occupancy Taxes. The hotel rooms and carefully programmed and managed short-term vacation rentals will create significant TOT income for the City.

The Coral Mountain Specific Plan area (including the proposed Wave property, Andalusia, and Trilogy) is within the boundary of the former County Thermal Airport Redevelopment Area (RDA). As such, the County of Riverside retains all property taxes paid for the retirement of outstanding bond debt until at least the mid-2030s.

This means that none of the existing developments in the former RDA boundary pay for City emergency and general services. The cost of these services, estimated at $2,125 per home annually, generates a City budget deficit of approximately $3.7 million. The City currently must make up this deficit from other General Fund revenue sources.

When the Specific Plan area was annexed in the early 2000s, the City studied the fiscal impacts and considered imposing a supplemental tax assessment on all homes. However, it deferred and opted not to take this step.

Coral Mountain would avoid this undesirable condition by paying its own way for the cost of City services. A Fiscal Impact Analysis conducted by the City indicates that Coral Mountain’s tax generation exceeds the cost of services. Excess proceeds can be applied to budget shortfalls associated with the other neighborhoods in the Specific Plan area.

Yes. Coral Mountain will provide homeowners the option, but not the obligation, to put their homes in a rental pool when not in use. We do not expect that all Coral Mountain homeowners will opt to participate, consistent with those in other La Quinta neighborhoods.

Homes placed in the rental system will generate Transient Occupancy Tax (TOT) revenue for the City. This is especially meaningful because the City does not currently receive any property tax revenue to pay for basic safety and governmental services within the historic Coral Mountain Specific Plan area (which also includes Andalusia and Trilogy). The County of Riverside retains all property tax proceeds in those developments to retire debt from the Thermal Airport Redevelopment Area. This has been the case since annexation in 2002-2003 and is expected to continue through 2033.

Yes. The project is conditioned to pay its fair share of improvement costs for all infrastructure, not just traffic-related items. This will be accomplished by either the developer physically making the improvements or through fees that the developer pays as part of the permit process. Examples are the City’s Development Impact Fees or Transportation Uniform Mitigation Fees (TUMF), which the City collects. The TUMF is managed by the Coachella Valley Association of Governments, which oversees inter-city and county transportation planning matters.

Yes. Coral Mountain has agreed to front the cost of specific substation improvements at Imperial Irrigation District’s Avenue 58 substation, resulting in additional capacity that exceeds Coral Mountain’s own power needs by 75%. Coral Mountain would be paid back over time as other new users connect to the system, and existing customers would benefit from increased system reliability.