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HomeMy WebLinkAboutInfo Report - Hotel Market Demand Analysis-StudyCITY OF PALM DESERT ECONOMIC DEVELOPMENT DEPARTMENT STAFF REPORT REQUEST: INFORMATIONAL REPORT ON PALM DESERT HOTEL MARKET DEMAND ANALYSIS/STUDY SUBMITTED BY: Rudy Acosta, Assistant City Manager DATE: December 10, 2015 CONTENTS: Proposal — PKF Consulting Recommendation Receive and File Background In accordance with the `Envision Palm Desert Strategic Plan', staff has been pursuing interest from hotel developers for hotel development opportunities throughout various areas within our city. When meeting with developers (and brokers), regional demographic reports, city marketing documents, zoning and real estate information is presented to the developers in support of our marketing effort. However, to date, one critical document has been missing from the hotel marketing toolbox, a `Hotel Market Demand Analysis/Study'. Therefore, staff recently sought and received proposals to perform the necessary Study from three of the hotel industry's top analytical firms listed as follows; `PKF' Consulting (Los Angeles) at $24,000, `HVS' (Los Angeles) (who did not submit) and, 'CSL' (Minneapolis) at $40,000. Original conversations with each firm indicated the cost for the Study would be in the range of $40k-$55k. Council is aware that City purchasing policies would require a formal RFQ/RFP process to obtain proposals in this range. However, in the interim of developing the RFQ/RFP document, staff obtained a copy of the recent 2016 Southern California `Lodging Forecast' that was developed by PKF Consulting. Staff immediately contacted PKF to argue that the `Lodging Forecast' contained relevant and current base data that should not require new effort to produce the Palm Desert Study. PKF agreed and responded by lowering their original 'verbalized' estimate by $21 k with their formal submittal. PKF, now owned by CBRE, is considered amongst the nation's top commercial real estate analytical firms and is often used by developers in the hotel industry when evaluating potential regions and/or sites for their hotel development investments. Their proposal amount ($24,000) allowed staff to proceed with the Study under the City Manager's approval in mid -November. Staff Report Palm Desert Hotel Market Demand Analysis/Study December 10, 2015 Page 2 of 2 Discussion When completed, the 'Study' will determine the potential market demand for hotel development within the city of Palm Desert. Specifically, the Study will assist city staff with the following information: • Determining the size (or sizes) of hotel(s) that could be supported in Palm Desert • Determining suitable development sites within the City's strategic areas • Determining the market position of the hotel(s) • Provide projections of achievable occupancy and room rates for the hotel markets The regional PKF Managing Director will visit and tour the City with staff on December 3, 2015 as a part of their information gathering process. It is expected that the completed Study will be delivered to City Hall within the first week of January 2016. The final document will ultimately assist staff efforts in both the planning and recruitment process for hotel developments along the 1-10 Corridor, Highway 111, El Paseo and, Desert Willow areas of Palm Desert. Fiscal Analysis: The proposal amount of $24,000.00 will be allocated from the Economic Development Department account 1104430-4309102. Submitted by: c Rudy K Acosta, Assistant City Manager Approval: n M. Wohlmuth, City Manager C:\USERS\RMCCORMICK\APPDATA\LOCAL\MICROSOFT\WINDOWS\TEMPORARY INTERNET FILES\CONTENT.OUTLOOK\8L4XVFY4\STAFFREPORTHOTEL FEASI B ILITYSTU DY2015REV. DOCX COMMERCIAL REAL ESTATE SERVICES PKF CONSULTING USA A C9AE COMPANY Bruce Baltin Managing Director Sent via email: racosta@cityofpalmdesert.org November 4, 2015 Mr. Rudy Acosta Assistant City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Dear Mr. Acosta: CBRE HOTELS The World's Leading Hotel Experts. CBRE, Inc. Valuation & Advisory Services 400 South Hope Street, 25' Floor Los Angeles, CA 90071 +1 213 613 3370 Office Bruce. Baltin@pkfc.com Bruce.Baltin@cbre.com www.cbrehotels.com I www.akfc.com In accordance with your request, we are pleased to submit this proposal for professional services in connection with a market demand analysis study that would identify hotel development opportunities within four key strategic areas within the City of Palm Desert, California. We understand that you are exploring opportunities to attract hotels and maximize development within the defined areas, and that you are interested in assessing the current and anticipated market support for the placement of hotels within the defined areas, and would like us to assist you in determining the demand for and market feasibility of hotels within the City of Palm Desert. Based on discussions with you, the four strategic areas are as follows: Desert Willow, the Interstate 10 Corridor, Highway 111, and, the upscale El Paseo district. To assist you in your planning process, we will be pleased to conduct a study to ascertain the potential market demand for proposed hotel facilities. Assuming that sufficient market support is indicated, our analysis will assist you in determining the size of hotel that could be supported, sites within the specific strategic areas that would likely be suitable for development, and the market position of the hotel or hotels, given our understanding of the composition of the regional hotel market. We would also provide you with a projection of potentially achievable occupancy and room rates for the proposed hotel(s). PKF CONSULTING USA I CBRE HOTELS As a point of background, we would like to provide you with a brief overview of our Firm. PKF Consulting USA I CBRE Hotels ("PKF/CBRE") is part of CBRE, the World's largest real estate services company. P PKF/CBRE is authorized to provide the services outlined in this proposal through its affiliates. PKF/CBRE is a national firm of management consultants, appraisers, real estate brokers and industry specialists who provide a full range of services to the hospitality and tourism industries. Headquartered in San Francisco, the Firm has offices in Boston, New York, Philadelphia, Portland, Maine, Atlanta, Miami, Washington, D.C., Houston, Dallas, Indianapolis, Los Angeles, Seattle, Sacramento, and Bozeman with nearly 100 professionals and support staff. Mr. Rudy Acosta City of Palm Desert Proposed Hotel Development Page 2 Our Firm is comprised of two integrated divisions which provide consulting and research services to the hospitality industry. Consulting Our consulting group provides advisory services and industry expertise to help our private and public sector clients in planning, developing, managing, financing, problem -solving, improving operations, and valuing hotels and other hospitality assets, as well as destinations. Our engagements range from market and financial feasibility studies to investment structuring, and from appraisals to asset management. Our consulting group is constantly providing clients both large and small with the most constructive and valuable advice in the industry, performing feasibility and market studies, acquisition due diligence and valuations involving hotels, resorts, restaurants, golf courses, and a variety of mixed -use developments and other hospitality products. We have the distinct advantage of being the only hospitality consulting firm with its own, proprietary database of U.S. hotel financial statistics. Research PKF Hospitality Research owns the database for Trends® in the Hotel Industry, the statistical review of U.S. hotel operations which first appeared in 1935 and has been published every year since. PKF's professionals use the Trends® database to assist their clients in making informed decisions. In addition, the Trends® data is used to produce custom financial reports for clients that enable them to benchmark hotel revenues, expenses, and profits. Beginning in 2007, PKF unveiled its powerful Hotel Horizons®, an economics -based hotel forecasting model that projects five years of supply, demand, occupancy, ADR, and RevPAR for the U.S. lodging industry. Hotel Horizons® reports are published on a quarterly basis for 59 markets and six national chain - scales. With a long-standing tradition of tracking and forecasting the lodging industry, our Research Group has the technical capacity to conduct custom research, the analytical skills to interpret the data, and the access necessary to gather confidential performance information from the industry. PKF Consulting USA Services include: ■ Asset Management and Management Company Selection ■ Real Estate Appraisals and Business Valuation ■ Market and Financial Feasibility Studies ■ Litigation Support and Expert Testimony ■ Acquisition Due Diligence ■ Operational Studies ■ Tourism and Recreational Studies ■ Resort and Recreation Services ■ Conference, Convention, and Public Assembly Facilities ■ Financial Benchmarking ■ Econometric Forecasting ■ Custom Research Mr. Rudy Acosta City of Palm Desert Proposed Hotel Development Page 3 Local Market Knowledge Our Firm has conducted numerous appraisals and market demand studies for existing and proposed hotels in the Coachella Valley and specifically in the City of Palm Desert. Given the historical role of PKF Consulting in the hospitality and real estate industries, and our knowledge of the local market, we are of the opinion that there is no firm that can provide the services available through us. More background and information on our Firm can be obtained from our web site at www.pkfc.com. METHODOLOGY The study will be conducted in phases and the work program will be concerned with the determination of current and potential future lodging demand in the market area, the assessment of existing and potential future supply and the share of the market that could reasonably be attained by the proposed hotel, and our facilities recommendations. Our work plan for the study will be as follows. AREA REVIEW We will gather and analyze relevant economic data regarding the market area to determine whether the overall economic environment in the area appears to be suitable for hotel development. We will examine correlations between key economic factors and the demand for lodging and will utilize any available forecasts of these indicators in our evaluation of potential future demand. We will perform primary market research in the site area, consisting of interviews with key demand generators, inspection and evaluation of competition and discussions with persons familiar with development patterns and the local hotel market. Among those with whom we will conduct such interviews a re: ➢ Managers of tourist attractions ➢ Owners and managers of potentially competitive lodging facilities ➢ Government officials in zoning, development and transportation ➢ Major employers in the area ➢ Convention and Visitors Bureau representatives On the basis of the foregoing research, we will prepare estimates of future growth in demand for, and the supply of lodging facilities in the market area. We will analyze historical economic growth in the area and the characteristics of each of the principal segments of demand for hotels. Then, using the information gathered in our research, we will estimate growth in demand for each market segment and project demand for each of the next five years, expressed in terms of room nights. The abovementioned analysis will serve as the basis to determine if there is demand to support a new hotel given the current supply of lodging opportunities in the regional market area, and if so, what is the maximum size of a facility that could be supported. ANALYSIS OF THE SITE LOCATIONS This part of the study is designed to evaluate the potential sites within each of the four key strategic areas in terms of their opportunities and constraints for development. Some of the factors to be examined include: ➢ Access ➢ Visibility Mr. Rudy Acosta City of Palm Desert Proposed Hotel Development Page 4 ➢ Ambiance ➢ Present utilization ➢ Topography ➢ Relationship to demand generators ➢ Relationship to area amenities ➢ Advantages/disadvantages of the site versus the major competitors FACILITIES RECOMMENDATIONS As part of our analysis, and within each of the four key strategic areas, we will make preliminary recommendations as to proposed hotel facilities, including: • Number, type, and mix of guest rooms • Restaurant and lounge facilities, if appropriate • Banquet and meeting space requirements • Other facilities and amenities These recommendations are intended to provide you with the basis for the types of hotels that would be suitable for each specific area, including a design program for the recommended hotels. MARKET SHARE ESTIMATES The focus here will be on estimated demand for the subject hotels. Upon completion of the estimate of market area supply and demand for the future, we will estimate the share of the market that the proposed facilities should reasonably be expected to capture for the hotel's first five years of operation on an individual basis. Based upon an analysis of the sources of demand available to the subject properties and their estimated competitive position, we will estimate the average daily room rate that could potentially be achieved in a representative year, in current value dollars, and over the first five years of operation of each of the respective subject hotels. Since the estimated operating results will be based on estimates and assumptions that are subject to uncertainty and variation, we will not represent them as results that will actually be achieved. REPORT We will codify our conclusions into a draft of a report designed for your internal use in reviewing the proposed developments. The draft report will be for the internal use of you and other members of the planning team and for discussion purposes with us. Once you have reviewed the draft report, we will be pleased to review it with you, address any additional questions or concerns necessary, and then finalize the report. Our final report may be used in connection with the RFQ/RFP process, primary mortgage financing or in connection with negotiation of a lease, franchise or management agreement. LIMITATIONS OF THE STUDY Our final report will be subject to the attached terms and conditions. Mr. Rudy Acosta City of Palm Desert Proposed Hotel Development Page 5 PROFESSIONAL FEES Our professional fees for the assignment based on our current hourly billing rates and an estimate of the hours required will be $24,000 including any out of pocket expenses incurred in performance of the assignment such as travel of our representatives while in the field, long distance telephone, computer costs and photocopying. As is customary in assignments of this nature, we request a retainer of $12,000 at the start of the assignment. The remainder of our fees and expenses will be billed and payable on a progress basis. Any hours expended due to changes in the scope of the assignment will be billed at the following normal hourly billing rates listed below: Per Hour Managing Director $400 - $450 Director 250 - 350 Senior Consultant 220 - 250 Consultant 150 - 200 STUDY TIMETABLE Based on our present scheduling, we could commence the assignment within one to two weeks of receiving your authorization to proceed. We anticipate providing you with a draft of our full report within three to four weeks of starting the assignment. APPROVAL AND ACCEPTANCE If the foregoing correctly states the nature of the work you wish undertaken at this time, and arrangements are satisfactory, please sign a copy of this proposal and return it to us, together with the requested retainer, as our authorization for the assignment. If, on the other hand, you have any questions, please do not hesitate to call on us. We appreciate having the opportunity to submit this proposal and look forward to working with you and your associates on this most interesting assignment. Sincerely, PKF Consulting USA I CBRE Hotels X By Bruce Baltin Managing Director Mr. Rudy Acosta City of Palm Desert Proposed Hotel Development Page 6 TERMS AND CONDITIONS I . The Terms and Conditions herein are part of an agreement for consulting services (the "Agreement" ) between CBRE, Inc. (the "Consultant") and the client signing this Agreement, and for whom the consulting services will be performed (the "Client"), and shall be deemed a part of such Agreement as though set forth in full therein. The Agreement shall be governed by the laws of the state where the consulting office is located for the Consultant executing this Agreement. 2. Client shall be responsible for the payment of all fees stipulated in the Agreement. Payment of the consulting fee and preparation of an consulting report (the "Consulting Report, or the "report") are not contingent upon any predetermined value or on an action or event resulting from the analyses, opinions, conclusions, or use of the Consulting Report. Final payment is due as provided in the Proposal Specifications Section of this Agreement. If a draft report is requested, the fee is considered earned upon delivery of the draft report. It is understood that the Client may cancel this assignment in writing at any time prior to delivery of the completed report. In such event, the Client is obligated only for the prorated share of the fee based upon the work completed and expenses incurred (including travel expenses to and from the job site), with a minimum charge of Errorl Reference source not found.. Additional copies of the Consulting Reports are available at a cost of $250 per original color copy and $100 per photocopy (black and white), plus shipping fees of $30 per report. 3. If Consultant is subpoenaed or ordered to give testimony, produce documents or information, or otherwise required or requested by Client or a third party to participate in meetings, phone calls, conferences, litigation or other legal proceedings (including preparation for such proceedings) because of, connected with or in any way pertaining to this engagement, the Consulting Report, the Consultant's expertise, or the Property, Client shall pay Consultant's additional costs and expenses, including but not limited to Consultant's attorneys' fees, and additional time incurred by Consultant based on Consultant's then -prevailing hourly rates and related fees. Such charges include and pertain to, but are not limited to, time spent in preparing for and providing court room testimony, depositions, travel time, mileage and related travel expenses, waiting time, document review and production, and preparation time (excluding preparation of the Consulting Report), meeting participation, and Consultant's other related commitment of time and expertise. Hourly charges and other fees for such participation will be provided upon request. In the event Client requests additional consulting services beyond the scope and purpose stated in the Agreement, Client agrees to pay additional fees for such services and to reimburse related expenses, whether or not the completed report has been delivered to Client at the time of such request. 4. Consultant shall have the right to terminate this Agreement at any time for cause effective immediately upon written notice to Client on the occurrence of fraud or the willful misconduct of Client, its employees or agents, or without cause upon 30 days written notice. 5. In the event Client fails to make payments when due then, from the date due until paid, the amount due and payable shall bear interest at the maximum rate permitted in the state where the office is located for the Consultant executing the Agreement. In the event either party institutes legal action against the other to enforce its rights under this Agreement, the prevailing party shall be entitled to recover its reasonable attorney's fees and expenses. Each party waives the right to a trial by jury in any action arising under this Agreement. 6. Consultant assumes there are no major or significant items or issues affecting the Property that would require the expertise of a professional building contractor, engineer, or environmental consultant for Consultant to prepare a valid report. Client acknowledges that such additional expertise is not covered in the Consulting fee and agrees that, if such additional expertise is required, it shall be provided by others at the discretion and direction of the Client, and solely at Client's additional cost and expense. 7. In the event of any dispute between Client and Consultant relating to this Agreement, or Consultant's or Client's performance hereunder, Consultant and Client agree that such dispute shall be resolved by means of binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association, and judgment upon the award rendered by an arbitrator may be entered in any court of competent jurisdiction. Depositions may be taken and other discovery obtained during such arbitration proceedings to the some extent as authorized in civil judicial proceedings in the state where the office of the Consultant executing this Agreement is located. The arbitrator shall be limited to awarding compensatory damages and shall have no authority to award punitive, exemplary or similar damages. The prevailing party in the arbitration proceeding shall be entitled to recover its expenses from the losing party, including costs of the arbitration proceeding, and reasonable attorney's fees. Client acknowledges that Consultant is being retained hereunder as an independent contractor to perform the services described herein and nothing in this Agreement shall be deemed to create any other relationship between Client and Consultant. This engagement shall be deemed concluded and the services hereunder completed upon delivery to Client of the Consulting Report discussed herein. 8. All statements of fact in the report which are used as the basis of the Consultant's analyses, opinions, and conclusions will be true and correct to Consultant's actual knowledge and belief. Consultant does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information or the condition of the Property furnished to Consultant by Client or others. The conclusions and any permitted reliance TERMS AND CONDITIONS (continued) on and use of the Consulting Report shall be subject to the assumptions, limitations, and qualifying statements contained in the report. 9. Consultant shall have no responsibility for legal matters, including zoning, or questions of survey or title, soil or subsoil conditions, engineering, or other similar technical matters. The report will not constitute a survey of the Property analyzed. 10. Client shall provide Consultant with such materials with respect to the assignment as are requested by Consultant and in the possession or under the control of Client. Client shall provide Consultant with sufficient access to the Property to be analyzed, and hereby grants permission for entry unless discussed in advance to the contrary. 11. The data gathered in the course of the assignment (except data furnished by Client) and the report prepared pursuant to the Agreement are, and will remain, the property of Consultant. With respect to data provided by Client, Consultant shall not violate the confidential nature of the Consultant -Client relationship by improperly disclosing any proprietary information furnished to Consultant. Notwithstanding the foregoing, Consultant is authorized by Client to disclose all or any portion of the report and related data as may be required by statute, government regulation, legal process, or judicial decree, including to appropriate representatives of the Appraisal Institute if such disclosure is required to enable Consultant to comply with the Bylaws and Regulations of such Institute as now or hereafter in effect. 12. Unless specifically noted, in preparing the Consulting Report the Consultant will not be considering the possible existence of asbestos, PCB transformers, or other toxic, hazardous, or contaminated substances and/or underground storage tanks (collectively, "Hazardous Material) on or affecting the Property, or the cost of encapsulation or removal thereof. Further, Client represents that there is no major or significant deferred maintenance of the Property that would require the expertise of a professional cost estimator or contractor. If such repairs are needed, the estimates are to be prepared by others, at Client's discretion and direction, and are not covered as part of the Consulting fee. 13. In the event Client intends to use the Consulting Report in connection with a tax matter, Client acknowledges that Consultant provides no warranty, representation or prediction as to the outcome of such tax matter. Client understands and acknowledges that any relevant taxing authority (whether the Internal Revenue Service or any other federal, state or local taxing authority) may disagree with or reject the Consulting Report or otherwise disagree with Client's tax position, and further understands and acknowledges that the taxing authority may seek to collect additional taxes, interest, penalties or fees from Client beyond what may be suggested by the Consulting Report. Client agrees that Consultant shall have no responsibility or liability to Client or any other party for any such taxes, interest, penalties or fees and that Client will not seek damages or other compensation from Consultant relating to any such taxes, interest, penalties or fees imposed on Client, or for any attorneys' fees, costs or other expenses relating to Client's tax matters. 14. Consultant shall have no liability with respect to any loss, damage, claim or expense incurred by or asserted against Client arising out of, based upon or resulting from Client's failure to provide accurate or complete information or documentation pertaining to an assignment ordered under or in connection with this Agreement, including Client's failure, or the failure of any of Client's agents, to provide a complete copy of the Consulting Report to any third party. LIMITATION OF LIABILITY. EXCEPT TO THE EXTENT ARISING FROM SECTION 16 BELOW, OR SECTION 17 IF APPLICABLE, IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS AFFILIATE, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR CONTRACTORS BE LIABLE TO THE OTHER, WHETHER BASED IN CONTRACT, WARRANTY, INDEMNITY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT OR OTHERWISE, FOR ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, INCIDENTAL OR INDIRECT DAMAGES AND AGGREGATE DAMAGES IN CONNECTION WITH THIS AGREEMENT FOR EITHER PARTY (EXCLUDING THE OBLIGATION TO PAY THE FEES REQUIRED HEREUNDER) SHALL NOT EXCEED THE GREATER OF THE TOTAL FEES PAYABLE TO CONSULTANT UNDER THIS AGREEMENT OR TEN THOUSAND DOLLARS ($10,000). THIS LIABILITY LIMITATION SHALL NOT APPLY IN THE EVENT OF A FINAL FINDING BY AN ARBITRATOR OR A COURT OF COMPETENT JURISDICTION THAT SUCH LIABILITY IS THE RESULT OF A PARTY'S FRAUD OR WILLFUL MISCONDUCT. 15. Client shall not disseminate, distribute, make available or otherwise provide any Consulting Report prepared hereunder to any third party (including without limitation, incorporating or referencing the Consulting Report , in whole or in part, in any offering or other material intended for review by other parties) except to (i) any third party expressly acknowledged in a signed writing by Consultant as an "Intended User" of the Consulting Report provided that either Consultant has received an acceptable release from such third party with respect to such Consulting Report or Client provides acceptable indemnity protections to Consultant against any claims resulting from the distribution of the Consulting Report to such third party, (ii) any third party service provider (including rating agencies and Client's auditors) using the Consulting Report in the course of providing services for the sole benefit of Client, or (iii) as required by statute, government regulation, legal process, or judicial decree. In the event Consultant consents, in writing, to Client incorporating or referencing the Consulting Report in any offering or other materials intended for review by other parties, Client shall not distribute, file, or otherwise make such materials available to any such parties unless and until Client has provided Consultant with complete copies of TERMS AND CONDITIONS (continued) such materials and Consultant has approved all such materials in writing. Client shall not modify any such materials once approved by Consultant. In the absence of satisfying the conditions of this paragraph with respect to a party who is not designated as an Intended User, in no event shall the receipt of an Consulting Report by such party extend any right to the party to use and rely on such report, and Consultant shall have no liability for such unauthorized use and reliance on any Consulting Report. In the event Client breaches the provisions of this paragraph, Client shall indemnify, defend and hold Consultant, and its affiliates and their officers, directors, employees, contractors, agents and other representatives (Consultant and each of the foregoing an "Indemnified Party" and collectively the "Indemnified Parties"), fully harmless from and against all losses, liabilities, damages and expenses (collectively, "Damages") claimed against, sustained or incurred by any Indemnified Party arising out of or in connection with such breach, regardless of any negligence on the part of any Indemnified Party in preparing the Consulting Report. 16. In the event Client incorporates or references the Consulting Report, in whole or in part, in any offering or other material intended for review by other parties, Client shall indemnify, defend and hold each of the Indemnified Parties harmless from and against any Damages in connection with (i) any transaction contemplated by this Agreement or in connection with the consulting or the engagement of or performance of services by any Indemnified Party hereunder, (ii) any actual or alleged untrue statement of a material fact, or the actual or alleged failure to state a material fact necessary to make a statement not misleading in light of the circumstances under which it was made with respect to all information furnished to any Indemnified Party or made available to a prospective party to a transaction, or (iii) an actual or alleged violation of applicable law by Client (including, without limitation, securities laws) or the negligent or intentional acts or omissions of Client (including the failure to perform any duty imposed by law); and will reimburse each Indemnified Party for all reasonable fees and expenses (including fees and expenses of counsel) (collectively, "Expenses") as incurred in connection with investigating, preparing, pursuing or defending any threatened or pending claim, action, proceeding or investigation (collectively, "Proceedings") arising therefrom, and regardless of whether such Indemnified Party is a formal party to such Proceeding. Client agrees not to enter into any waiver, release or settlement of any Proceeding (whether or not any Indemnified Party is a formal party to such Proceeding) without the prior written consent of Consultant (which consent will not be unreasonably withheld or delayed) unless such waiver, release or settlement includes an unconditional release of each Indemnified Party from all liability arising out of such Proceeding. 17. Time Period for Legal Action. Unless the time period is shorter under applicable law, except in connection with paragraphs 16 and 17 above, Consultant and Client agree that any legal action or lawsuit by one party against the other party or its affiliates, officers, directors, employees, contractors, agents, or other representatives, whether based in contract, warranty, indemnity, negligence, strict liability or other tort or otherwise, relating to (a) this Agreement or the Consulting Report, (b) any services or studies under this Agreement or (c) any acts or conduct relating to such services or studies, shall be filed within two (2) years from the date of delivery to Client of the Consulting Report to which the claims or causes of action in the legal action or lawsuit relate. The time period stated in this section shall not be extended by any incapacity of a party or any delay in the discovery or accrual of the underlying claims, causes of action or damages.