Dream Hotel project falls further behind schedule as Palm Springs council reviews progress

A yearslong and much-stalled effort to bring a hotel to the northwest corner of Avenida Caballeros and East Amado Road is yet again falling behind schedule, according to a report presented to the Palm Springs City Council on Wednesday. 

The project has missed deadlines this year that were set as part of a performance schedule agreement between the city and the developer in response to earlier delays. Those details were not revealed when The Post asked city officials for an update on the project last month.

For nearly two decades, the Dream Hotel project has gone through various iterations and stages of the planning process, while facing repeated timeline delays and a recent $80 million cost overrun as of last year. 

The project was first approved as a mixed-use development featuring a hotel and residential condos in 2007. Over the past two decades, the project has gone through various iterations and stages of the planning process. In June 2017, a 170-unit hotel and 35 residential condos were approved for the site, though the unit mix has since been adjusted to 155 hotel rooms and 89 condos and townhomes.

In response to years of lagging progress on the project, the city entered a settlement and development agreement with hotel developer Selene Palm Springs, LLC in 2023. That agreement included a performance schedule with certain milestone deadlines laid out for the developer and community outreach commitments such as monthly neighborhood meetings and providing regular updates about the project’s timeline. 

In March of this year, the city council approved an amendment to this agreement that revised the performance schedule by pushing back deadlines for the developer. It also expanded the number of milestone or checkpoint deadlines to nine from the original three, beginning with site investigative work and ending with the hotel’s opening.

That amendment “was the result of efforts by the Developer to advance the project, including preparation of construction drawings and finalization of construction details, visits by City officials to the Dream Headquarters and with ownership, correspondence between the City and the developer, and discussions focused on schedule compliance,” according to a staff report prepared for Wednesday’s meeting. 

Under that amendment, the developer was required to have 80% of construction drawings completed by March 31, 2026 — two years after the March 2024 date established in the earlier agreement. Site investigation work was supposed to start by March 30, with the first model room complete by April 30. Under the amended timeline, the target completion date is Dec. 2028, pushed back from Dec. 2026. 

But the project is not moving forward on schedule in line with the agreement. The developer did submit construction drawings by the end of March, but the project has been through multiple rounds of plan checks as it is “a rather substantial set of drawings” and a “highly complex project,” assistant city manager Flinn Fagg said Wednesday. 

The developer missed a July deadline to submit a guaranteed maximum price for the development’s cost, as well as a deadline to complete the first model room by April 30 (work on the model room started before the milestone date and is now nearing completion). 

Part of the reason for the uncertainty is due to the design of the building, and a recent use change for part of the project that meant it didn’t meet certain life safety requirements related to staircases and exits. Part of the project that was intended to be used for residential condominiums has since changed to condominium hotel units, which changes the use from residential to commercial and comes with different code requirements, according to Fagg. The developer is currently working to resolve the issue, according to Fagg. 

The developer still intends to start construction by Oct. 1, according to Fagg, and at this time is not requesting to extend the milestone dates that target the completion of construction or hotel opening. By Oct. 15, the developer is expected to have new construction drawings for a plan that meets code requirements, with a guaranteed maximum price submitted by March 2027. 

Wednesday’s presentation was only an informational item that provided city council with the opportunity to give direction to staff on next steps. 

“This is 20 years of missed dates, missed opportunities,” said City Councilmember Ron deHarte, who asked that the city consider reducing TOT rebate amounts for the developer in response to missed deadlines.

City staff will next look into potential penalties for missed deadlines in the performance schedule and potentially bring a new amended agreement forward to council. 

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