HomeMy WebLinkAboutRes 98-45 and 359 - Development Agt. RDA to PDH Associates LLC. Summary Report PALM DESERT REDEVELOPMENT AGENCY
INTEROFFICE MEMORANDUM6T1 m
c
DATE: APRIL 23, 1998
TO: CITY MANAGER, HONORABLE MAYOR AND MEMBERS OF TH COY i
COUNCIL, HONORABLE CHAIRMAN AND MEMBERS OF ,
REDEVELOPMENT AGENCY BOARD
FROM: DAVE YRIGOYEN, REDEVELOPMENT MANAGER
SUBJECT: DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN ALM
DESERT REDEVELOPMENT AGENCY TO PDH ASSOCIATES .L.t. A D
SUMMARY REPORT
Recommendation:
That the City Council/Agency Board open the joint public hearing and following testimony,
take the following actions:
1. That the City Council adopt Resolution No. 98-45 - a resolution of the City of
Palm Desert approving the sale by the Palm Desert Redevelopment Agency to PDH
Associates, L.L.C. of approximately 11.3 acres of real property south of Frank Sinatra
and west of Cook Street.
2. That the Agency Board adopt Resolution No. 359 - a resolution of the Palm
Desert Redevelopment Agency approving the sale to PDH Associates, L.L.C. of
approximately 11.3 acres of real property south of Frank Sinatra and west of Cook
Street.
Background:
This report summarizes the terms and conditions of that certain Disposition and Development
Agreement (the "DDA") between the Palm Desert Redevelopment Agency (the "Agency") and
"PDH Associates, L.L.C. (the "Developer") concerning the proposed sale of certain real
property by the Agency to PDH. The report is created to comply with the requirements of
California Health and Safety Code Section 33433.
A. Summary of DDA
The Agency is the owner of certain real property in the City of Palm Desert, generally
bounded on the north by Frank Sinatra Drive, and on the east by Cook Street. Such
property is generally described in Tentative Tract Map No. 28450. The Agency
proposes to develop, or cause to be developed, on such real property, a Residence
Inn and Courtyard by Marriott of approximately 280 rooms. The area in question is
currently unimproved and is bounded on the western and southern sides by the
Desert Willow North Golf Course. The development of the project described below will
eliminate blight conditions.
CITY COUNCIL ACTION
APPROVED ' DENIED
RECEIVED OTHER
DDA -PALM DESERT REDEVELOPMENT AGENCY MEETI DATE
&PDH ASSOCIATES L.L.C.SUMMARY REPORT 1YES• ;� ,,c1c � t i r
APRIL 23, 1998 �rJES• (� () " ' J
PAGE 2 b�
. BSENT: w--,
ABSTAIN:
VERIFIED BY: '(2/
B. The Subject Property -`ricrinal on File with ^ity Clerk' s Office
The Agency proposes to sell to PDH approximately 11 .3 acres of the northeastern
portion of the Desert Willow Development identified as Lot 1 of Tentative Tract No.
28450. PDH proposes to develop a Residence Inn of approxiomately 130 units and a
Courtyard by Marriott of 153 hotel rooms. The real property contained in this
description is referred to as the "Subject Property."
1. Purchase Price of the Subject Property
The purchase price for the Subject Property shall be $3,049,000.00, or $6.19
per square foot. The terms shall be all cash due upon close of escrow with a
$10,000.00 deposit upon opening of escrow.
2. Obligations of the Agency
The Agency/City will be obligated to maintain the Desert Willow Golf Course in
a condition compatible with the standard of maintenance of resort golf courses
and in accordance with the maintenance guidelines developed by the City, for a
period of 20 years. Limit the development of other hotel developments as
identified in the DDA, for a period of 5 years with a right of first refusal in the
development of other similar types of hotels for the second five year period.
3. Obligations of Developer
The Developer will be obligated to construct a Residence Inn and Courtyard by
Marriott or similar type of hotel facility, maintaining such facility for a period of
20 years. The Developer will be open for business by May 1, 1999 or face a
penalty for such non-opening of $1 ,000.00 per day.
4. Financial Analysis of the DDA
Attached hereto as Exhibit 1 is a financial analysis of this transaction performed
by Real Estate Analysis Services Co. ("REASCO"). Such analysis is hereby
incorporated by reference.
REVIEWED AND CONCUR:
Dave Yri yen E ecut a Director
Redev opment Manager
City Manager
mh
RESOLUTION NO. 98-45
A RESOLUTION OF THE CITY OF PALM DESERT APPROVING THE
SALE BY THE PALM DESERT REDEVELOPMENT AGENCY TO PDH
ASSOCIATES,L.L.C. OF APPROXIMATELY 11.3 ACRES OF REAL
PROPERTY SOUTH OF FRANK SINATRA AND WEST OF COOK
STREET
THE CITY COUNCIL OF THE CITY OF PALM DESERT HEREBY FINDS,
DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. On April 23, 1998,the City Council of the City of Palm Desert and the
Palm Desert Redevelopment Agency (the"Agency")held a duly noticed joint public hearing on
the approval of the Agency's proposed sale of certain real property (the "Property") located in
the Agency's Project Area No. 2, as described in that certain Disposition and Development
Agreement(the"DDA")between the Agency and PDH Associates, L.L.C., at which time all
persons desiring to comment on or ask questions concerning the sale of the Property to PDH
Associates, L.L.C. were given the opportunity to do so. Prior to the public hearing, information
concerning the Agency's proposed sale of the Property to PDH Associates, L.L.C.,was available
for public inspection in the offices of the City of Palm Desert at 73-510 Fred Waring Drive, Palm
Desert, California 92260,between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday.
Notice of the public hearing was published in the Palm Desert Post on April 8, 1998 and
April 15, 1998.
Section 2. The City Council has reviewed and considered all written and oral
comments, questions and concerns regarding the Agency's proposed conveyance of the Property
to PDH Associates, L.L.C. received prior to and at the public hearing on said conveyance.
Section 3. The environmental impacts of the Agency's proposed sale of the
Property to PDH Associates, L.L.C. for the development of improvements thereon was analyzed
in the Final Environmental Impact Report for the Section Four North Sphere Project(the"EIR").
The City certified the EIR by Resolution No. 94-119, "Resolution of the City Council of the City
of Palm Desert, California, Certifying an Environmental Impact Report for a proposed Section
Four Site Plan Bounded by Frank Sinatra Drive on the North, Cook Street on the East, Country
Club Drive on the South, and Portola Avenue on the West."
Section 4. The DDA provides that PDH Associates, L.L.C., shall have the right to
construct certain improvements on the Property as therein described, including, among other
things, a Residence Inn and Courtyard by Marriott and associated amenities.
Section 5. The Agency has obtained an evaluation of the fair market value of the
Property from REASCO, who has determined that the fair market value of the Property, at the
highest and best use of the Property is approximately $
1
RESOLUTION NO. 98-45
Section 6. Project Area No. 2 is an area which has previously been identified in
the Redevelopment Plan as a blighted area.. The area has previously been determined to create a
social and economic burden on the community which cannot reasonably be expected to be
reversed or alleviated by private enterprise or governmental action, or both, without
redevelopment. In addition, Project Area No. 2 contains vacant and under-utilized properties and
properties which suffer from economic dislocation, deterioration or disuse, including depreciated
or stagnant property values and impaired investments. Project Area No. 2 is characterized by the
existence of inadequate public improvements,public facilities and open spaces which cannot be
remedied by private or governmental action without redevelopment.
Section 7. The City Council hereby finds that the sale of the Property pursuant to
the DDA will assist in the elimination of blight by PDH Associates,L.L.C.'s construction of the
improvements described in the DDA on previously vacant,under-utilized land,which will
remedy the lack of adequate public improvements, assist in the revitalization of Project Area No.
2,encourage private sector investment and create job opportunities, all for the health, safety and
welfare of the residents and taxpayers of the City.
Section 8. The City Council hereby finds that the consideration to be paid by
PDH Associates, L.L.C. is not less than the fair market value of the Property at its highest and
best use in accordance with the Redevelopment Plan for Project Area No. 2 of the Agency.
Section 9s The City Council hereby approves the DDA and the sale of the
Property to PDH Associates,L.L.C. in accordance with the terms and conditions of the DDA
pursuant to the requirements of Health and Safety Code Section 33433(b).
PASSED,APPROVED and ADOPTED this 23rd day of April, 1998.
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
Attest:
Sheila R. Gilligan, City Clerk
2
RESOLUTION NO. 359
A RESOLUTION OF THE PALM DESERT REDEVELOPMENT
AGENCY APPROVING THE SALE TO PDH ASSOCIATES,L.L.C. OF
APPROXIMATELY 11.3 ACRES OF REAL PROPERTY SOUTH OF
FRANK SINATRA AND WEST OF COOK STREET
THE PALM DESERT REDEVELOPMENT AGENCY HEREBY FINDS,
DETERMINES,RESOLVES AND ORDERS AS FOLLOWS:
Section 1. On April 23, 1998,the City Council of the City of Palm Desert and the
Palm Desert Redevelopment Agency(the"Agency")held a duly noticed joint public hearing on
the approval of the Agency's proposed sale of certain real property (the"Property") located in
the Agency's Project Area No. 2, as described in that certain Disposition and Development
Agreement(the"DDA")between the Agency and PDH Associates, L.L.C., at which time all
persons desiring to comment on or ask questions concerning the sale of the Property to PDH
Associates, L.L.C. were given the opportunity to do so. Prior to the public hearing, information
concerning the Agency's proposed sale of the Property to PDH Associates,L.L.C., was available
for public inspection in the offices of the City of Palm Desert at 73-510 Fred Waring Drive, Palm
Desert, California 92260,between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday.
Notice of the public hearing was published in the Palm Desert Post on April 8, 1998 and April
15, 1998.
Section 2. The Agency has reviewed and considered all written and oral
comments, questions and concerns regarding the Agency's proposed conveyance of the Property
to PDH Associates, L.L.C. received prior to and at the public hearing on said conveyance.
Section 3. The environmental impacts of the Agency's proposed sale of the
Property to PDH Associates,L.L.C. for the development of improvements thereon was analyzed
in the Final Environmental Impact Report for the Section Four North Sphere Project(the"EIR").
The City certified the EIR by Resolution No. 94-119, "Resolution of the City Council of the City
of Palm Desert, California, Certifying an Environmental Impact Report for a proposed Section
Four Site Plan Bounded by Frank Sinatra Drive on the North, Cook Street on the East, Country
Club Drive on the South, and Portola Avenue on the West."
Section 4. The DDA provides that PDH Associates,L.L.C., shall have the right to
construct certain improvements on the Property as therein described, including, among other
things, a Residence Inn and Courtyard by Marriott and associated amenities.
Section 5, The Agency has obtained an evaluation of the fair market value of the
Property from REASCO, who has determined that the fair market value of the Property, at the
highest and best use of the Property is approximately $ .
1
RESOLUTION NO. 359
Section 6. Project Area No. 2 is an area which has previously been identified in
the Redevelopment Plan as a blighted area.. The area has previously been determined to create a
social and economic burden on the community which cannot reasonably be expected to be
reversed or alleviated by private enterprise or governmental action, or both, without
redevelopment. In addition, Project Area No. 2 contains vacant and under-utilized properties and
properties which suffer from economic dislocation,deterioration or disuse, including depreciated
or stagnant property values and impaired investments. Project Area No. 2 is characterized by the
existence of inadequate public improvements,public facilities and open spaces which cannot be
remedied by private or governmental action without redevelopment.
Section 7. The Agency hereby finds that the sale of the Property pursuant to the
DDA will assist in the elimination of blight by PDH Associates, L.L.C.'s construction of the
improvements described in the DDA on previously vacant,under-utilized land, which will
remedy the lack of adequate public improvements, assist in the revitalization of Project Area No.
2,encourage private sector investment and create job opportunities, all for the health, safety and
welfare of the residents and taxpayers of the City.
Section 8. The Agency hereby finds that the consideration to be paid by PDH
Associates, L.L.C. is not less than the fair market value of the Property at its highest and best use
in accordance with the Redevelopment Plan for Project Area No. 2 of the Agency.
Section 9. The Agency hereby approves the DDA and the sale of the Property to
PDH Associates, L.L.C. in accordance with the terms and conditions of the DDA pursuant to the
requirements of Health and Safety Code Section 33433(b), and the Chairman,Vice Chairman or
Executive Director are authorized to execute the DDA and such other documents and
agreements, including escrow instructions,recommended by the Executive Director to facilitate
and implement terms and conditions of the DDA.
PASSED,APPROVED and ADOPTED this 23rd day of April, 1998.
AYES:
NOES:
ABSENT:
ABSTAIN:
Attest: Chairman
Sheila R. Gilligan, Secretary
2
REASCO REAL ESTATE ANALYSIS SERVICES CO.
POST OFFICE BOX 2809, PALM DESERT, CALIFORNIA 92261
TELEPHONE: (760) 340-1429; FAX: (760) 340-2041
March 26, 1998
Mr. Carlos L. Ortega Copy to: Dave Yrigoyen
Executive Director
PALM DESERT REDEVELOPMENT AGENCY
CITY OF PALM DESERT
73-510 Fred Waring Drive
Palm Desert, California 92260
REFERENCE: Proposed Sale Of Land To PDH
SUBJECT: Report Pursuant To Section 33433 Of The California Health And Safety Code
Dear Mr. Ortega,
Section 33433 of the California Health and Safety Code stipulates that before any property of the Agency, acquired
directly or indirectly with tax increment funds, is sold or leased for development purposes pursuant to the
redevelopment plan, the sale or lease shall first be approved by the legislative body by resolution after public
hearing.The land the Agency proposes to sell to PDH falls into the category covered by Section 33433.
I have prepared a comprehensive report (included as an attachment to this letter) which is required in order to
comply with Section 33433. Pursuant to the report, I have concluded that the following findings can be included
in the resolution approving the sale:
FINDING #1: The Property is currently completely unimproved, and the development of the Project will
assist in the elimination of blight in the area.
FINDING #2: Sale of the Property is consistent with the implementation plan adopted pursuant to Section
33490 of the California Health and Safety Code.
•
FINDING #3: The consideration is not less that the fair reuse value.
The rationale for these findings can be found in the attached report.
Yours truly,
0/(11
eonard R. Wolk, President
Real Estate Analysis Services Company (REASCO)
"LTR C33'/22 26-Mar-98 02:50 PM
REPORT PURSUANT TO SE_ . .ON 33433 OF THE CALIFORNIA kLTH AND SAFETY CODE
— page 1 —
This report was prepared to comply with the requirements of California Health and Safety Code Section 33433.
The report contains the following sections: Section 1, A summary of the terms and conditions of the proposed
Disposition and Development Agreement (the "DDA") between the Palm Desert Redevelopment Agency (the
"Agency") and PDH Associates LLC, a Utah limited liability company ("PDH") concerning the proposed acquisition by
PDH of certain real property owned by the Agency; Section 2, The cost of the DDA to the Agency; Section 3, The
estimated value of the interest to be conveyed, determined at the highest and best uses permitted under the
Redevelopment Plan; Section 4, The estimated value of the interest to be conveyed, determined at the use and with
the conditions, covenents and development costs required by the DDA (the "reuse value"); and Section 5,
Recommended Findings to be included in the resolution approving the sale.
SECTION 1: Summary of the DDA:
,► Reference is made to the DDA for full particulars of any provision described herein, and in the event
of any inconsistency between the provisions herein and the DDA, the DDA shall control.
A. The Subject Property:
The Agency is the owner of certain real property (the "Property") in the City of Palm Desert (the "City") located
at the northeast corner of Cook Street and Frank Sinatra Drive, northeast of and adjacent to the Agency's
Desert Willow Golf Resort at Palm Desert project, within a mile of Interstate 10 and four miles from State Route
111. The Property is comprised of approximately 11.3 acres, and is legally described in Exhibit A, attached
herein.
B. Purchase and sale of the Property:
1. The Agency proposes to sell the Property to PDH for a purchase price of $3,049,000 ($269,637 per acre;
$6.19 per square foot), on which PDH intends to construct two hotels (the "Project").
2. The purchase price shall be payable, as follows: Within 2 business days after the DDA has been fully
executed, PDH shall make a $10,000 earnest money deposit into an interest bearing escrow account,
to be credited to the purchase price. Prior to or on the close of escrow, PDH shall deposit into escrow the
remainder of the purchase price; escrow shall close by April 24, 1998. The accrued interest shall be
credited to the purchase price; however if escrow does not close by April 24, 1998 due to a default by
PDH, then the Agency shall receive the $10,000 deposit plus all the interest accruing after April 24, 1998.
Refer to Article 2 of the DDA for further details.
C. The hotel franchise agreement:
1. PDH has submitted a franchise application to Marriott International, Inc. ("Marriott") to operate a Marriott
Residence Inn and a Marriott Courtyard Hotel on the Property (collectively the "Marriott Franchise
Agreement"). PDH expects that Marriott will approve the Marriott Franchise Agreement prior to the close
of escrow for PDH's purchase of the Property. The Marriott Franchise Agreement will run for at least
twenty years, subject to customary termination rights. If the Marriott Franchise Agreement is terminated
for any reason, PDH will obtain the Agency's approval before entering into a new franchise agreement
with any other hotel company. Refer to Section 4.1 of the DDA for further details.
"LTR C33"/18 26-Mar-98 02:50 PM
26—Mar-98 ..."LTR C33"...Prepared by: REASCO — P.O. Box 2809, Palm Desert, CA 92261; (760) 340-1429.
REPORT PURSUANT TO SL_ . ION 33433 OF THE CALIFORNIA . ._ALTH AND SAFETY CODE
— page 2 —
SECTION 1: Summary of the DDA (continued):
io Reference is made to the DDA for full particulars of any provision described herein, and in the event
of any inconsistency between the provisions herein and the DDA, the DDA shall control.
D. Development of the Property:
1, PDH shall open the Residence Inn for business by May 1, 1999; if not, PDH shall pay damages
to the Agency in an amount equal to $1,000 per day thereafter until the Residence Inn opens for business.
2. PDH shall open the Courtyard Hotel for business by May 1, 1999 ; if not, PDH shall pay damages to the
Agency in an amount equal to $1,000 per day thereafter until the Courtyard Hotel opens for business.
3.The total cost of constructing the Project, including the costs for developing and constructing all the
improvements shall be borne by PDH. Agency's only responsibility shall be to provide rough graded
building pads; PDH shall pay for all other infrastructure costs.
Refer to Article 3 of the DDA for further details.
E. Limitations on transfers and security interests:
1. Prior to the issuance of a Certificate of Occupancy for the Project, PDH shall not sell, assign, transfer,
mortgage, hypothecate or convey (collectively a "Transfer") the Property or any of PDH's rights or
obligations pursuant to the DDA without the Agency's prior written consent.
2. After a Certificate of Occupancy has been issued for the entire Project, PDH may transfer the Project to a
Transferee provided that: (1). The transfer will not result in the termination of the existing hotel franchise
agreement; (2). The Transferee has the experience and other necessary characteristics, (as determined
by the Agency) to manage and operate the Project; and (3). The Transferee assumes all obligations of
PDA pursuant to the DDA.
Refer to Article 4 of the DDA for further details.
F. Use of the Property:
1. For the duration of the CC&R's (which are described in Article 5 of the DDA) the Property may be used
only for the development and operation of limited service and/or extended stay hotel facilities together
with a free standing restaurant.
2.The Property, including the landscaping, shall be maintained in a manner substantially comparable to the
highest level of maintenace provided to resort style Residence Inn and Courtyard Hotels by Marriott,
respectively. If the Marriott Franchise Ageement is terminated, the Property, including the landscaping,
shall be maintained in a manner substantially comparable to the highest level of maintenance provided to
other resort style, limited service or extended stay hotel facilities in the Coachella Valley.
Refer to Article 5 of the DDA for further details.
"LTR C33"/19 26-Mar-98 02:50 PM
26—Mar-98 ..."LTR C33"...Prepared by: REASCO — P.O. Box 2809, Palm Desert, CA 92261; (760) 340-1429.
•
REPORT PURSUANT TO SE_ ON 33433 OF THE CALIFORNIA _ ___4LTH AND SAFETY CODE
— page 3 —
SECTION 2: Cost of the agreement (the 'DDA') to the Agency:
The cost of the DDA to the Agency is comprised of 3 components: (1). The land acquisition cost; (2)..The cost of any
improvements to be provided by the Agency; and (3). The expected interest on the source of funds to finance the
agreement.(the"land carry cost').
A. Land acquisition cost:
The Agency purchased the Property in March, 1994 as part of a larger purchase of approximately 115 acres,
at a purchase price of $50,248 per acre. Thereforeethe land acquisition cost can be expressed, as follows:
ACRES SQ. FT.
1. Amount of land 11.31 492,567
2. Cost/acre; /sq. ft. $50,248 $1.15
3. Total cost $568,193 $568,193
B. Cost of any improvements to be provided by the Agency:
Agency will rough grade the Property at a cost of$1.10 per cubic yard. The amount of rough grading required
is 73,501 cubic yards, therefore the rough grading cost will be $80,851 (73,501 x $1.10).
C. Calculation of the expected land carry cost:
DOLLAR AMOUNT
1. Agency's cost for the land::
a.Total amount $568,193
b. Per acre $50,248
2. The Agency's estimated cost of funds rate 6.125%
3. Land acquisition date 16—Mar-94
4. Expected escrow close date 24—Apr-98
5.Term until expected escrow close (years) 4.11
6. Estimated interest cost (NPV) per acre $10,617
7.Times number of acres 11.31
8. Land carry cost $120,055
D. Total cost of the DDA to the Agency:
PER ACRE PER SQ. FT.
OF LAND OF LAND
DOLLAR AMOUNT SOLD SOLD
1. Land cost $568,193 $50,248 $1.15
2. Plus improvement cost $80,851 $7,150 $0.16
3. Plus land carry cost $120,055 $10,617 $0.24
4.Total cost of the DDA to the Agency $769,099 $68,015 $1.55
"LTR C33"/20 26-Mar-98 02:50 PM
26—Mar-98 ..."LTR_C33"...Prepared by: REASCO — P.O..Box 2809, Palm Desert, CA 92261; (760) 340-1429.
•
REPORT PURSUANT TO SE ON 33433 OF THE CALIFORNIA ALTH AND SAFETY CODE
- page 4 —
SECTION 3: The estimated value of the interest to be conveyed, determined at the highest and best uses
permitted under the Redevelopment Plan:
Knowledgeable real estate professionals have concluded that (1). Because of its location and zoning, the Property
has a valuation of about $75,000 per acre; and (2). That the land price for hotels such as the Marriott Residence Inn
and Courtyard should be in the $5.00 per square foot range. Therefore, the estimated value of the interest to be
conveyed (the Property) determined at the highest and best permitted uses can be expressed, as follows:
ACRES SQ. FT.
1. Amount of land to be conveyed 11.31 492,567
2. Estimated value/acre; /sq. ft. $217,800 $5.00
3. Total estimated value $2,462,835 $2,462,835
SECTION 4: The estimated value of the interest to be conveyed, determined at the use and with the
conditions, covenants and development costs required by the DDA (the 'Fair Reuse Value'):
The terms and conditions of the DDA stipulate that PDH will pay $6.19 per square foot, or $269,637 per acre
for the Property, and that they shall build only a Marriott Residence Inn and a Marriott Courtyard Hotel and a free
standing restaurant on the Property. Therefore, the consideration and the Fair Reuse Value of the Property are both
equal to $6.19 per square foot, or $269,637 per acre .
SECTION 5: Findings to be included in the resolution approving the sale:
The resolution shall contain the following findings: (1). The sale or lease of the property will assist in the elimination
of blight; (2). The sale or lease of the property is consistent with the implementation plan adopted pursuant to
Section 33490 of the California Health and Safety Code; and one of the following two additional findings: (3). The
consideration is not less than the fair market value at its highest and best use in accordance with the Redevelopment
Plan or (4). The consideration is not less than the fair reuse value at the use and with the covenants and conditions
and development costs authorized by the sale.
The following findings can be included in the resolution approving the sale:
FINDING #1: The Property is currently completely unimproved, and the development of the Project will
assist in the elimination of blight in the area.
FINDING #2: Sale of the Property is consistent with the implementation plan adopted pursuant to Section
33490 of the California Health and Safety Code.
FINDING #3: The consideration is not less that the fair reuse value.
"LTR C33"/21 26-Mar-98 02:50 PM
26—Mar-98 ..."LTR C33"...Prepared by: REASCO — P.O. Box 2809, Palm Desert, CA 92261; (760) 340-1429.
DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
PALM DESERT REDEVELOPMENT AGENCY
AND
PDH ASSOCIATES LLC
DATED
APRIL 23, 1998
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 1
Section 1.1 Definitions 1
1.1.1 Affiliate 2
1.1.2 Agency 2
1.1.3 Agency Board 2
1.1.4 Agreement 2
1.1.5 City 2
1.1.6 City Council 2
1.1.7 Certificate of Occupancy 2
1.1.8 Close of Escrow 2
1.1.9 Close of Escrow Date 2
1.1.10 Default 2
1.1.11 Desert Willow Project 2
1.1.12 Escrow 2
1.1.13 Escrow Holder 2
1.1.14 Hazardous Materials 2
1.1.15 Improvements 3
1.1.17 Party 3
1.1.18 Permitted Exceptions 3
1.1.19 Plans and Specifications 3
1.1.20 Project 4
1.1.21 Property 4
1.1.22 Schedule of Performance 4
1.1.23 Scope of Development 4
ARTICLE 2 PURCHASE AND SALE OF THE PROPERTY 4
Section 2.1 Purchase and Sale 4
Section 2.2 Purchase Price 4
Section 2.3 Opening and Closing of Escrow 4
Section 2.4 Condition of Title: Title Insurance 5
Section 2.5 Escrow Charges 6
Section 2.6 Conditions to Close of Escrow 6
Section 2.7 Escrow Holder 7
Section 2.8 Condition of the Property 8
Section 2.9 Deposit into Escrow 10
2.9.1 Agency's Deposits into Escrow 10
2.9.2 PDH's Deposits into Escrow 11
Section 2.10 Authorization to Record Documents and Disburse Funds 11
Section 2.11 Escrow's Closing Actions. 11
-6-
980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Section 2.12 Environmental Indemnity 12
Section 2.13 Additional Instructions 12
ARTICLE 3 DEVELOPMENT OF THE PROPERTY 12
Section 3.1 Development of the Project 12
Section 3.2 Agency's Right to Review Plans and Specifications 13
Section 3.3 Preliminary Site Plan 13
Section 3.4 Basic Concept Drawings 13
Section 3.5 Preliminary Drawings 0 13
Section 3.6 Landscaping and Finish Grading 13
Section 3.7 Final Construction Drawings and Related Documents 14
Section 3.8 Approval of Construction Plans 14
Section 3.9 Construction Contract 14
Section 3.10 Construction Loan 14
Section 3.11 Changes in Construction Drawings 15
Section 3.12 Cost of Construction 15
Section 3.13 Rights of Access 15
Section 3.14 Local. State and Federal Laws 15
Section 3.15 City and Other Governmental Agency Permits and Approvals 15
Section 3.16 Anti-discrimination During Construction 15
Section 3.17 Taxes.Assessments. Encumbrances and Liens 16
Section 3.18 No Agency Created 16
Section 3.19 Consent by City 16
Section 3.20 Plans and Data 16
Section 3.21 Certificates of Occupancy 16
ARTICLE 4 LIMITATIONS ON TRANSFERS AND SECURITY INTERESTS 16
Section 4.1 Hotel Franchise Agreement 16
Section 4.2 Restriction on Transfer of PDH's Rights and Obligations 17
Section 4.3 Mortgages and Deeds of Trust 18
Section 4.4 Rights of Holders 18
Section 4.5 Noninterference with Holders 18
ARTICLE 5 USE OF THE PROPERTY 19
Section 5.1 Use of Property 19
Section 5.2 Maintenance 19
Section 5.3 Obligation to Refrain from Discrimination 20
Section 5.4 Form of Nondiscrimination and Non-Segregation Clauses 20
Section 5.5 CC&Rs 21
ARTICLE 6 EVENTS OF DEFAULT. REMEDIES AND TERMINATION 21
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Section 6.1 Defaults--Definition 21
Section 6.2 Remedies in the Event of Default 22
6.2.1 Remedies Prior to the Close of Escrow 22
6.2.2 Remedies for Default After the Close of Escrow 22
Section 6.3 Liberal Construction 23
Section 6.4 No Personal Liability 23
Section 6.5 Rights and Remedies are Cumulative 23
Section 6.6 Inaction Not a Waiver of Default 23
Section 6.7 Force Majeure 23
ARTICLE 7 INSURANCE: INDEMNITY 24
Section 7.1 Insurance 24
Section 7.2 Indemnity 25
ARTICLE 8 GENERAL PROVISIONS 25
Section 8.1 Notices 25
Section 8.2 Construction 26
Section 8.3 Interpretation 26
Section 8.4 Time of the Essence 26
Section 8.5 Warranty Against Payment of Consideration for Agreement 27
Section 8.6 Attorneys' Fees 27 •
Section 8.7 Entire Agreement, Waivers and Amendments 27
Section 8.8 Severability 27
Section 8.9 Headings 27
Section 8.10 No Third Party Beneficiaries other than the City 27
Section 8.11 Governing Law: Jurisdiction: Service of Process 28
Section 8.12 Survival 28
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
DISPOSITION AND DEVELOPMENT AGREEMENT
THIS DISPOSITION AND DEVELOPMENT AGREEMENT ("Agreement"), dated
as of April 23, 1998, is entered into by and between the PALM DESERT REDEVELOPMENT
AGENCY, a public body, corporate and politic (the "Agency"), and PDH ASSOCIATES LLC, a Utah
limited liability company ("PDH").
RECITALS
This Agreement is entered into with reference to the following facts:
A. The purpose of this Agreement is to effectuate the Redevelopment Plan for Project Area 2
of the Agency (the "Redevelopment Plan"), in the City of Palm Desert, California, by facilitating
improvements to real property within the Project Area(as defined below).
B. The Redevelopment Plan has been approved and adopted by Ordinance No. 509 of the
City of Palm Desert adopted July 15, 1987.
C. The Agency is a public body, corporate and politic, exercising governmental functions
and powers, and organized and existing under the Community Redevelopment Law of the State of
California.
D. Construction of the.Project will assist in the elimination of blight in the Project Area,
provide additional jobs, and substantially improve the economic and physical conditions in the Project
Area in accordance with the purposes and goals of the Redevelopment Plan.
E. The land uses specified in this Agreement and the provisions relating to construction of
the Project are consistent with the provisions of the Redevelopment Plan and each of its applicable
elements.
F. A material inducement to the Agency to enter into this Agreement is the agreement by
PDH to pay the amounts to the Agency or the City as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants
contained in this Agreement the parties hereto agree as follows:
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
•
ARTICLE 1 DEFINITIONS.
Section 1.1 Definitions. The following terms as used in this Agreement shall have the
meanings given unless expressly provided to the contrary:
1.1.1 Affiliate means an entity that controls, is controlled by, or is under common
control with PDH, and, if a subsidiary, PDH holds at least a 50% interest in the economic interests in
such entity.
1.1.2 Agency means the Palm Desert Redevelopment Agency, a public body, corporate
and politic, exercising governmental functions and powers, and organized and existing under the
Community Redevelopment Law of the State of California.
1.1.3 Agency Board means the board of directors of the Palm Desert Redevelopment
Agency.
1.1.4 Agreement means this Disposition and Development Agreement.
1.1.5 City means the City of Palm Desert, a municipal corporation.
1.1.6 City Council means the City Council of the City of Palm Desert, a municipal
corporation.
1.1.7 Certificate of Occupancy means a certificate issued by the City of Palm Desert
pursuant to the City's building code as defined in such code approving a Hotel or restaurant, as the case
may be, for use by occupants.
1.1.8 Close of Escrow is defined in Section 2.3.
1.1.9 Close of Escrow Date for the Property means the date upon which the Agency by
grant deed shall convey title to the Property to PDH and such grant deed is recorded in the Official
Records of the County of Riverside in accordance with this Agreement.
1.1.10 Default is defined in Section 6.1.
1.1.11 Desert Willow Project means the Desert Willow at Palm Desert Resort Project, a
development consisting of approximately 500 acres and including two public golf courses, residential
and hotel uses. The Desert Willow Project encompasses only the real property located within Tract
28450, as per Map recorded in Book 264, Pages 4 through 15, inclusive, of Maps, Official Records,
Riverside County, California.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
•
1.1.12 Escrow is defined in Section 2.3.
1.1.13 Escrow Holder means First American Title Company, or another licensed escrow
holder mutually selected by the Parties.
1.1.14 Hazardous Materials means any chemical, material or substance now or hereafter
defined as or included in the definition of"hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic substances," "pollutant or
contaminant," "imminently hazardous chemical substance or mixture," "hazardous air pollutant," "toxic
pollutant," or words of similar import under any local, state or federal law or under the regulations
adopted or publications promulgated pursuant thereto applicable to the Property, including, without
limitation: the Comprehensive Environmental Response, Compensation and Liability Act of I980, 42
U.S.C. §9601, et seq. ("CERCLA"); the Hazardous Materials Transportation Act, as amended, 49
U.S.C.§ 1801, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq.;
and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq. The term
"Hazardous Materials" shall also include any of the following: any and all toxic or hazardous
substances, materials or wastes listed in the United States Department of Transportation Table (49 CFR
172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and in
any and all amendments thereto in effect as of the Close of Escrow Date; oil, petroleum, petroleum
products (including, without limitation, crude oil or any fraction thereof), natural gas, natural gas liquids,
liquified natural gas or synthetic gas usable for fuel, not otherwise designated as a hazardous substance
under CERCLA; any substance which is toxic, explosive, corrosive, reactive, flammable, infectious or
radioactive (including any source, special nuclear or by-product material as defined at 42 U.S.C. § 2011,
et seq.), carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any
governmental authority; asbestos in any form; urea formaldehyde foam insulation; transformers or other
equipment which contain dielectric fluid containing levels of polychlorinated byphenyls; radon gas; or
any other chemical, material or substance (i) which poses a hazard to the Property, to adjacent
properties, or to persons on or about the Property, (ii) which causes the Property to be in violation of any
of the aforementioned laws or regulations, or(iii) the presence of which on or in the Property requires
investigation, reporting or remediation under any such laws or regulations.
1.1.15 Improvements means all buildings, landscaping, infrastructure, utilities, and other
improvements to be built on the Property, or any part thereon, as described in the Scope of
Development, which shall include such buildings, landscaping and infrastructure as necessary to obtain a
franchise to operate the Property as a franchisee of Residence Inn and Courtyard by Marriott.
1.1.16 Limited Service -- Extended Stay Hotel means as follows: (i) Limited Service
means a hotel that is not a full service hotel, such as one that has banquet facilities and more than one
full service restaurant, and (ii) an Extended Stay Hotel is a hotel that is marketed and oriented to patrons
for stays longer than customary in full service hotels. Residence Inns, as they are currently operated and
marketed, shall be a benchmark for comparing a hotel to a Limited Service Hotel, and Courtyards by
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Marriott, as they are currently operated and marketed, shall be a benchmark for comparing a hotel to an
Extend Stay Hotel.
1.1.17 Party means any party to this Agreement. The "Parties" means all parties to this
Agreement.
1.1.18 Permitted Exceptions are defined in Section 2.4.5.
1.1.19 Plans and Specifications means all Basic Concept Drawings, Preliminary
Drawings, landscaping and grading plans, engineering drawings, Final Construction Drawings, and any
other plans or specifications required for construction of the Project (as such capitalized terms are used
in Article 3).
1.1.20 Project means the development of the Property with the Improvements and
operation thereof as a Residence Inn and Courtyard by Marriott franchise, together with a free-standing
restaurant, as described in this Agreement and the Scope of Development.
1.1.21 Property is that certain real property to be developed by PDH described in Exhibit
A, attached hereto and incorporated by reference herein.
1.1.22 Schedule of Performance means the schedule on Exhibit B.
1.1.23 Scope of Development means the description of the Project set forth in Exhibit C.
ARTICLE 2 PURCHASE AND SALE OF THE PROPERTY.
Section 2.1 Purchase and Sale. Subject to and in accordance with the terms and conditions
hereinafter set forth, the Agency agrees to sell to PDH, and PDH agrees to purchase from the Agency,
fee simple title to the Property.
Section 2.2 Purchase Price. The purchase price for the Property to be paid by PDH (the
"Purchase Price") shall be the sum Three Million Forty-Nine Thousand Dollars ($3,049,000). The
Parties acknowledge that the Property contains approximately 492,567 gross square feet. The Purchase
Price shall be payable as follows: Within two (2) business days after the full execution of this
Agreement by both parties, PDH shall deposit with Escrow Holder the sum of Ten Thousand and 00/100
Dollars ($10,000.00) as earnest money ("Deposit"). PDH shall deposit the balance of the Purchase Price
with Escrow Holder prior to the Close of Escrow. All funds held by Escrow Holder on Deposit, or
otherwise, shall be held in an interest bearing account with all interest credited to PDH, invested as
directed by PDH, and applied to the Purchase Price; provided, however, if escrow does not close by May
1, 1998 due to PDH's Default, then the Agency shall receive all accrued interest on such escrow deposit
accruing after May 1, 1998.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Section 2.3 Opening and Closing of Escrow. Within five (5) business days after the Agency's
approval of this Agreement, the Agency and PDH shall cause an escrow (the "Escrow") to be opened
with Escrow Holder for the sale of the Property by the Agency to PDH. The Parties shall deposit with
Escrow Holder a fully executed duplicate original of this Agreement which shall serve as the escrow
instructions for the Escrow. The Agency and PDH shall provide such additional escrow instructions as
shall be necessary and consistent with this Agreement. Escrow Holder is authorized to act under this
Agreement and to carry out its duties as Escrow Holder hereunder. Escrow shall close (the "Close of
Escrow") on or before 45 days after the Opening of Escrow. By written notice to the Agency, PDH shall
be entitled to set the Close of Escrow Date on any business day which is at least five (5) business days
after PDH approves or waives its due diligence conditions set forth in Sections 2.6.1, 2.6.2 and 2.6.3,
below, but in no event later than May 1, 1998.
Section 2.4 Condition of Title; Title Insurance.
2.4.1 PDH has received from First American Title Company ("Title Company"), a
preliminary report for CLTA Owner's Standard Coverage Policy for the Property ("Preliminary
Report"), setting forth all liens, encumbrances, easements, restrictions, conditions, pending litigation,
judgments, administrative proceedings, and other matters affecting the Agency's title to the Property
(each an "Exception"), together with copies of all documents relating to Exceptions referred to in the
Preliminary Report. PDH shall approve or disapprove each Exception shown on the Preliminary Report
within ten (10) business days after the Opening of Escrow. Any title Exceptions that are approved or
accepted by PDH are referred to as "Permitted Title Exceptions."
2.4.2 PDH has received an ALTA survey of the Property prepared by a registered
surveyor or professional engineer("Survey"). PDH shall deliver a copy of such Survey to the Agency.
PDH shall approve or disapprove each encroachment, overlap, or boundary line dispute, or any other
matter that materially and adversely affects title to the Property or that violates any law, rule, or
regulation reflected on the Survey (each an "Exception") within ten (10) business days after the Opening
of Escrow. All matters that are shown on the Survey and to which PDH does not object in the foregoing
10 business day period shall be referred to as "Permitted Survey Objections."
2.4.3 Any monetary liens and special assessments affecting the Property, other than
current non-delinquent real property taxes not then due and payable, are hereby disapproved (a
"Monetary Disapproved Exception"). The Agency authorizes Escrow Holder to disburse from the cash
portion of the Purchase Price any proceeds otherwise disbursable to the Agency upon the Close of
Escrow, the sum sufficient to discharge any Monetary Disapproved Exception.
2.4.4 If any title or survey Exception other than a Monetary Disapproved Exception is
disapproved or deemed disapproved (each a "Non-Monetary Disapproved Exception"), then the Agency
may, at the Agency's option, exercisable at the Agency's sole and absolute discretion, within thirty (30)
days following expiration of the 10 business day period provided under Section 2.4.1 and Section 2.4.2,
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
above, elect to use its best efforts to cause each Non-Monetary Disapproved Exception to be discharged,
satisfied, released, or terminated, as the case may be, of record, and in a form that is reasonably
satisfactory to PDH, all at the Agency's sole cost and expense. If the Agency makes such election, then
the Agency shall have until the Close of Escrow to cause same to be discharged. The Agency shall
notify PDH as soon as reasonably possible if the Agency reasonably believes that the Agency will
succeed or not succeed in causing any such Non-Monetary Disapproved Exception to be removed at the
Close of Escrow, and shall keep PDH informed as to the progress of the Agency's efforts in that regard.
If the Agency is unable to obtain a discharge, satisfaction, release, or termination
of a Non-Monetary Disapproved Exception, or if the Agency does not elect to do so, then PDH shall
have the right to:
2.4.4.1 waive the Non-Monetary Disapproved Exception and proceed with
Closing, accepting title to the Property subject to the Non-Monetary Disapproved Exception,
without any price reduction, (at which time such Exception shall be deemed a Permitted
Exception), or
2.4.4.2 terminate this Agreement, in which event both PDH and the Agency shall
be relieved of all further obligation and liability to each other under this Agreement and all the
funds and documents deposited with Escrow Agent shall be promptly refunded or returned, as
the case may be, by Escrow Agent to the depositing party, less escrow cancellation fees of$500. •
2.4.5 At the Close of Escrow,the Agency shall convey title to the Property to PDH (or
its Permitted Assignee) by grant deed substantially in the form attached hereto as Exhibit D and
incorporated herein by this reference (the "Grant Deed"). Title to the Property shall be conveyed subject
to (i) non-delinquent current real property taxes and assessments not yet due for the tax year during
which the conveyance occurs, (ii) all Permitted Title Exceptions and Permitted Survey Exceptions, (iii)
the covenants, conditions and restrictions benefiting and burdening the Property as described in this
Agreement and the CC&R's (as defined in Section 5.5 hereof), and(iv) anyother matters�, which arise
out of the actions of PDH or its agents and representatives (collectively, the "Permitted Exceptions").
PDH agrees to approve or disapprove any title exceptions within 10 business days after the Opening of
Escrow. The Agency shall cause to be removed by the Close of Escrow all Monetary Disapproved
Exceptions and shall use its best reasonable efforts to remove or cause to be removed by the Close of
Escrow any Non-Monetary Disapproved Exceptions, but if the Agency is unable to remove any Non-
Monetary Disapproved Exception(s), then the Agency shall not be in breach hereof but PDH shall have
the right to terminate this Agreement.
2.4.6 At the Close of Escrow, the Agency shall, at the Agency's sole cost and expense,
cause to be delivered to PDH a CLTA Owner's Standard Policy of Title Insurance, Form 1970B, or its
equivalent, issued by First American Title Company (or another title company mutually approved by the
Parties) (the "Title Company") in favor of PDH in the amount of the Purchase Price, insuring that title is
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
vested in PDH free and clear of all liens, easements, covenants, conditions, restrictions, and other
encumbrances of record, other than the Permitted Exceptions for the Property. PDH may obtain one or
more extended coverage policies of title insurance or special endorsements at its own cost.
Section 2.5 Escrow Charges. The Agency shall be responsible for any recording fees,
documentary and local transfer taxes, and one-half of any customary escrow fees and charges arising
hereunder. PDH shall be responsible for one-half of any customary escrow fees.
Section 2.6 Conditions to Close of Escrow. The obligation of the Agency and PDH under this
Agreement to close Escrow shall be subject to the satisfaction or waiver of each of the following
conditions:
2.6.1 PDH's approval of the physical condition of the Property, which PDH shall
approve or disapprove by written notice delivered to the Agency within thirty (30) days after the
Opening of Escrow.
2.6.2 The City's adoption of general and specific plan amendments and zoning of the of
the Property to the appropriate use and density for the Project.
2.6.3 PDH's approval of the condition of title to the Property as described in
Section 2.4.
2.6.4 That there shall not be any threat at the Close of Escrow of condemnation of the
Property by any entity with the power of eminent domain.
2.6.5 That as of the Close of Escrow the representations and warranties of the Agency
contained in this Agreement are all true and correct.
2.6.6 The Agency's delivery of all documents required to be delivered by the Agency
pursuant to Section 2.9 hereof.
2.6.7 The Title Company shall have committed to issue an ALTA (1990) extended
coverage Owner's Title Insurance Policy, with any endorsements requested by PDH, and with liability
equal to the Purchase Price, showing fee simple title to the Property vested in PDH or PDH's assignee or
designee, subject only to the Permitted Exceptions, at the Close of Escrow.
2.6.8 As of the Closing Date, no litigation or proceedings shall have been instituted or
g P 8
shall be pending or threatened challenging the development of the Project, the zoning of the Property or
the general or specific plan amendments referred to in Section 2.6.2.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
•
Section 2.7 Escrow Holder.
2.7.1 Escrow Holder is authorized on the Close of Escrow to:
(i) Pay and charge the Agency and PDH, as applicable, for any fees, charges and
costs payable under this Article, as set forth on the settlement statements approved by the Parties.
Before such payments are made, Escrow Holder shall notify the Agency and PDH of the fees, charges,
and costs necessary to close under the Escrow, by delivering draft settlement statements to the Parties
for their mutual approval.
(ii) Disburse funds and deliver the deeds and other documents to the parties entitled
thereto or for whose benefit they are written.
(iii) Record the Grant Deed.
2.7.2 Any amendment of these escrow instructions shall be in writing and signed by
both the Agency and PDH. At the time of any amendment, Escrow Holder shall agree to carry out its
duties as escrow holder under such amendment.
2.7.3 Escrow Holder is instructed to send copies of notices, demands and
communications between the Parties to or from the Agency or to or from PDH, to both parties to the
addresses and in the manner established in Section 8.1 of this Agreement.
Section 2.8 Condition of the Property.
2.8.1 PDH shall have the right, for the period commencing with the date hereof through
the date that is 30 days after the Opening of Escrow, to approve or disapprove the physical condition of
the Property. During such period, PDH is hereby granted permission to enter onto the Property for the
purpose of performing a Phase I Environmental Assessment, and inspecting and testing the soil to
determine the adequacy and quality of the underlying soil to meet its building requirements. PDH shall
indemnify, hold harmless, and defend the Agency against and hold the Agency and the Property
harmless from, all losses, costs, damages, liabilities, liens, and expenses, including, without limitation,
reasonable attorney fees, arising out of such entry and activities by PDH and its agents, employees, or
contractors, prior to the Close of Escrow, except to the extent any such losses, costs, damages, liabilities,
and expenses arise out of the gross negligence or willful acts of the Agency.
2.8.2 The Agency shall convey the Property to PDH in an "as is" condition, and except
for those representations and warranties expressly set forth in this Agreement, the Agency makes no
warranty whatsoever to PDH as to the condition of any portion of the Property, including whether the
Property contains any Hazardous Materials. Subject to the provisions of Section 2.8.1, PDH has
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
inspected the Property and has determined that the Property is suitable for PDH's purposes. PDH
acknowledges and agrees:
2.8.2.1 The Agency has made no representation or warranty with respect to the
Property except for those representations and warranties contained in this Agreement, and that
prior to the Close of Escrow, the Agency will make no representations and warranties with
respect to the Property other than those contained in this Agreement.
-2.8.2.2 It is purchasing the Property with the ultimate objective of demolishing
the existing improvements and constructing new improvements thereon.
2.8.2.3 Its decision to purchase the Property will be based on the results of its
analysis and the reports it obtains during the period described in Section 2.8.1 hereof.
2.8.2.4 The Agency has made no representation or warranty as to the accuracy or
completeness of any reports and other materials prepared by persons other than the Agency and
delivered by the Agency to PDH, and PDH is not relying on the accuracy and completeness of
any such reports and other materials prepared by persons other than the Agency.
2.8.2.5 Except as specifically provided in this Agreement, the Agency has made
no representation or warranty with respect to the use, fitness for a particular reason, zoning,
value, improvements, square footages or any other condition of the Property.
2.8.2.6 The Agency shall have disclosed to PDH promptly after the execution of
this Agreement all material adverse conditions, defects and other matters relating to the Property
of which the Agency has actual knowledge which, in the Agency's sole judgment, would have a
material adverse impact upon the Property; provided that the foregoing disclosure obligation
shall apply only to the Property itself, and not to general or local economic or market conditions.
Except for the Agency's representations, warranties and covenants contained in this
Agreement, PDH is purchasing the Property in "AS-IS," "WHERE-IS" condition "WITH ALL
FAULTS." PDH agrees that the Agency has no obligation to remedy any faults, defects, or other
adverse conditions described in any report or other material obtained by PDH or delivered by the
Agency to PDH, including the remediation of any Hazardous Material on the Property.
2.8.3 The Agency re
presents resents and warrants to PDH as of the date of this Agreement and
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as of the Close of Escrow Date that:
2.8.3.1 The Agency has taken all actions required pursuant to its charter
documents to duly authorize the execution and performance of this Agreement and the execution
and performance of all of the closing documents set forth herein.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
2.8.3.2 The Agency's execution and performance of this Agreement and the
closing documents will not violate any provision of any mortgage, lease, contract, agreement,
order,judgment or decree by which the Agency is bound. After the execution of this Agreement,
the Agency's performance of its obligations under this Agreement and the closing documents
will not require the consent of any federal, state or local court or governmental authority, or any
other person or entity.
2.8.3.3 This Agreement is valid and enforceable against the Agency in
accordance with its terms and each instrument to be executed by the Agency pursuant to this
Agreement will, when executed and delivered, be enforceable in accordance with its terms,
subject to bankruptcy, insolvency and similar laws affecting creditors' rights generally.
2.8.3.4 There are no currently pending, and to the Agency's best knowledge,
there are no threatened or proposed, suits, actions, proceedings or investigations against or
initiated by the Agency which relate to or affect the Property, including without limitation any
suits or proceedings challenging the development of the Project or relating to any change of the
zoning laws or the general or specific plan amendments applicable to the Property.
For the purposes of this Agreement, the "actual knowledge" or"best knowledge" of the Agency
shall be limited to the actual knowledge of Carlos Ortega and David Yrigoyen, and no knowledge shall
be implied or imputed to the Agency beyond the actual knowledge of such individuals.
2.8.4 PDH represents and warrants to the Agency as of the date of this Agreement and
as of the Close of Escrow Date that:
2.8.4.1 PDH Associates LLC is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Utah.
2.8.4.2 PDH has duly authorized the execution and performance of this
Agreement and the execution and performance of all of the closing documents set forth herein.
2.8.4.3 PDH's execution and performance of this Agreement and the closing
documents will not violate any provision of any mortgage, lease, contract, agreement,
instrument, order,judgment or decree by which PDH is bound.
2.8.4.4 This Agreement is valid and enforceable against PDH in accordance with
its terms and each instrument to be executed by PDH pursuant to this Agreement will, when
executed and delivered, be enforceable in accordance with its terms, subject to bankruptcy,
insolvency and similar laws affecting creditors' rights generally.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
2.8.5 The Agency hereby covenants and agrees to notify PDH promptly in writing in
the event that the Agency receives notice of the initiation or threat of any suit or proceeding challenging
the development of the Project or relating to any change of the zoning laws or the general or specific
plan amendments applicable to the Property.
Section 2.9 Deposit into Escrow.
2.9.1 Agency's Deposits into Escrow. The Agency hereby covenants and agrees to
deliver to Escrow Holder prior to the Close of Escrow the following instruments and documents, the
delivery of each of which shall be a condition of the Close of Escrow:
2.9.1.1 A Grant Deed duly executed and acknowledged by the Agency granting
and conveying to PDH good and marketable title to the Property. Said Grant Deed shall be in the
form attached hereto as Exhibit D;
2.9.1.2 The Agency's affidavit as contemplated by California Revenue and
Taxation Code §18662 ("Withholding Affidavit");
2.9.1.3 A Certification of Non-Foreign Status in accordance with I.R.C. Section
1445 (the "FIRPTA Certificate"); and
2.9.1.4 Such proof of the Agency's authority and authorization to enter into this
transaction as the Title Company may reasonably require in order to issue PDH's policy of title
insurance.
2.9.2 PDH's Deposits into Escrow. PDH shall deposit with Escrow Holder, on or prior
to the Close of Escrow, the balance of the Purchase Price in accordance with Section 2.2.
Section 2.10 Authorization to Record Documents and Disburse Funds.
Escrow Holder is hereby authorized to record the documents and disburse the funds and
documents called for hereunder upon the Close of Escrow, provided each of the following conditions has
then been fulfilled:
2.10.1 The Title Company can issue in favor of PDH an ALTA Extended Coverage
Owner's Policy of Title Insurance, with liability equal to the Purchase Price, showing the Property vested
in PDH subject only to the Permitted Title Exceptions.
2.10.2 The Agency shall have deposited in Escrow the documents required pursuant to
Section 2.9, and PDH shall have deposited in Escrow the Purchase Price as provided in Section 2.2
along with PDH's share of Escrow closing costs.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
2.10.3 The Agency and PDH have confirmed to Escrow Holder that all of the other
closing conditions set forth in Section 2.6 have been satisfied or waived in writing.
Unless otherwise instructed in writing, Escrow Holder is authorized to record at the Close of Escrow any
instrument delivered through this Escrow if necessary or proper for issuance of PDH's policy of title
insurance.
Section 2.11 Escrow's Closing Actions. On the Close of Escrow, Escrow Holder shall close
Escrow as follows:
2.11.1 Record the Grant Deed (marked for return to PDH) with the Riverside County
Recorder(which shall be deemed delivery to PDH);
2.11.2 Issue the Title Policy or cause the Title Company to issue the Title Policy;
2.11.3 Prorate taxes, assessments, rents, and other charges as of the Close of Escrow in
accordance with the settlement statements approved by the Parties.
2.11.4 Disburse to the Agency the Purchase Price less prorated amounts and charges to
be paid by or on behalf of the Agency;
2.11.5 Charge PDH for those costs and expenses to be paid by PDH pursuant to this
Agreement and disburse any net funds remaining after the preceding disbursements to PDH;
2.11.6 Prepare and deliver to both PDH and the Agency one signed copy of Escrow
Holder's closing statement showing all receipts and disbursements of the Escrow; and
2.11.7 Deliver to PDH the FIRPTA Certificate and the Withholding Affidavit.
Section 2.12 Environmental Indemnity. PDH shall indemnify, protect, defend and hold
harmless the City (as a third party beneficiary) and the Agency, and the Agency's officials, officers,
attorneys, employees, consultants, agents, and representatives, from and against any and all claims,
liabilities, suits, losses, costs, expenses and damages, including but not limited to attorneys' fees and
costs, arising out of any claim for loss or damage to any property, including the Property, injuries to or
death of persons, or for the cost of cleaning up the Property and removing Hazardous Materials or toxic
substances, materials and waste therefrom, by reason of contamination or adverse effects on the environ-
ment, or by reason of any statutes, ordinances, orders, rules or regulations of any governmental entity or
agency requiring the clean-up of any Hazardous Materials caused by or resulting from any Hazardous
Material, or toxic substances or waste existing on or under, any portion of the Property acquired by PDH
that were not located on or under such property on or before the acquisition of such property by PDH.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Section 2.13 Additional Instructions. The Parties shall execute appropriate escrow instructions,
prepared by the Escrow Holder, which are not inconsistent herewith. If there is any inconsistency
between the terms hereof and the terms of the escrow instructions, the terms hereof shall control unless
an intent to amend the terms hereof is expressly stated in such instructions.
•
ARTICLE 3 DEVELOPMENT OF THE PROPERTY.
Section 3.1 Development of the Project. PDH shall develop, or cause to be developed, the
Project on the Property, in accordance with the Scope of Development, the Schedule of Performance, all
requirements of the City's Municipal Code, and any and all applicable federal, state and local laws, rules
and regulations in connection with such construction, any conditions of approval required by the City
(including conditions of approval for the subdivision of the Property), the Plans and Specifications, and
all terms, conditions and requirements of this Agreement. If PDH fails to open the Project for business
by May 1, 1999, as a Residence Inn and Courtyard by Marriott, then PDH shall pay damages to the
Agency for such failure to open by such date in the sum of$1,000.00 per day thereafter, until it opens
for business. Such payment shall be due within 10 days after receipt of demand therefor from the
Agency. Such the covenant to open by May 1, 1999, set forth herein shall be subject to extensions due
to delays in construction caused by reason of any Force Majeure Delay (as defined in Section 6.7). In
the event of a Force Majeure Delay, PDH's nonperformance shall be excused and the May 1, 1999 date
shall be extended, by the number of days constituting the Force Majeure Delay. The Agency Board
shall have the right to waive all or a portion of the $1,000.00 per day in damages in the Agency Board's
sole and absolute discretion.
Section 3.2 Agency's Right to Review Plans and Specifications. In connection with
construction of the Project, PDH shall comply in all respects with Plans and Specifications approved by
the Agency or the City in accordance with this Agreement. The Agency shall have the right to review
all Plans and Specifications for the Improvements to ensure that the Improvements are constructed to a
high quality as described in the Scope of Development in the Agency's reasonable judgment. If Plans
and Specifications (including Basic Concept Drawings, Preliminary Drawings, and Final Construction
Drawings) are approved by the City Council or its applicable subdivisions (such as the Planning
Commission, Department of Building and Safety and/or the Department of Public Works), then such
Plans and Specifications shall be deemed approved by the Agency.
Section 3.3 Preliminary Site Plan. By the date set forth in the Schedule of Performance, PDH
shall prepare and submit to the Agency, for the Agency's review and written approval, a Preliminary Site
Plan and related documents for the Property, which Preliminary Site Plan shall be consistent with the
Scope of Development.
Section 3.4 Basic Concept Drawings. By the date set forth in the Schedule of Performance,
PDH shall prepare and submit to the Agency, for the Agency's review and written approval, Basic
Concept Drawings and related documents for the Property, which plans and drawings shall be consistent
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
with the Scope of Development. PDH may make changes and modifications to the Basic Concept
Drawings only after obtainingthe Agency's prior written consent, which consent shall encs g Y not unreasonably
be withheld or delayed. The construction of the Improvements on the Property shall be as generally
established in the Basic Concept Drawin
gs ngs except for such changes as may be mutually agreed upon
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PDH and the Agency. Approved Basic Concept Drawings will be the basis for preparation of
Preliminary Drawings and to initiate further detail and design features on a larger scale.
Section 3.5 Preliminary Drawings. PDH shall prepare and submit to the Agency, for the
Agency's review and written approval, Preliminary Drawings based upon the Scope of Development and
the Basic Concept Drawings. The Preliminary Drawings shall include, but not be limited to, floor plans,
a site plan, elevations, and specifications for the Project.
Section 3.6 Landscaping and Finish Grading. PDH shall prepare and submit to the Agency,
for the Agency's review and written approval, final landscaping and finish grading plans for the Project,
which shall be included with the Final Construction Drawings.
Section 3.7 Final Construction Drawings and Related Documents. After receipt of the
Agency's approval of Preliminary Drawings, PDH shall prepare and submit to the Agency, for the
Agency's review and written approval, Final Construction Drawings for the applicable development
phase of the Project, which shall include complete construction documents, site development elevations,
final landscaping plans, finish grading plans, and related documents. The Final Construction Drawings
shall be in sufficient detail necessary to obtain building permits.
Section 3.8 Approval of Construction Plans. The Agency shall approve or disapprove such
plans, drawings, and related documents referred to in Sections 3.3 through 3.7 above, in a timely
fashion. Any disapproval shall state in writing the reasons for disapproval. PDH, upon receipt of a
disapproval, shall revise such portion of the plans, drawings or related documents in a manner that
satisfies the reasons for disapproval and shall resubmit such revised portions to the Agency as soon as
possible after receipt of the notice of disapproval. The Agency shall approve or disapprove such revised
portions in the same manner as provided in this Agreement for approval or disapproval of plans,
drawings, and related documents initially submitted to the Agency. Any items submitted to and
approved by the Agency shall not be subject to subsequent disapproval by the Agency.
Section 3.9 Construction Contract. PDH shall retain one or more reputable and financially
responsible general contractors (each, a "General Contractor") to undertake the construction of the
Project. Each General Contractor shall be acceptable to and approved in writing by the Agency, licensed
in California, and experienced in completing the improvements to be constructed at the Property by
PDH. On or before the date set forth in the Schedule of Performance, PDH shall enter into a written
contract or contracts (the "Construction Contracts") with the General Contractor(s) for performing the
work constituting the construction of all of the Project. Each such Construction Contract shall be a
guaranteed maximum cost contract insuring construction of the improvements for a fixed price, subject
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
to such reasonable adjustments as are customarily allowed with respect to construction contracts, and
shall obligate the General Contractor to commence and complete such construction in accordance with
this Agreement and all applicable federal, state and local laws, rules and regulations. Each such
Construction Contract shallprovide for retention of at least 10percent from each progress payment
P g PY
(except there shall be no retention for any items excused from retention as specified in the Construction
Contract) until the final payment and said final payment shall not be paid to the General Contractor until
the portion of the Project covered by such Construction Contract shall have been completed to PDH's
satisfaction, and PDH shall have obtained all appropriate lien waivers from the General Contractor and
its subcontractors, or bonds acceptable to PDH in form and amount, insuring against loss arising from
any mechanics', laborers', materialmen's or other like liens filed against the Property.
Section 3.10 Construction Loan. On or before the date set forth therefor in the Schedule of
Performance, PDH shall submit to the Agency, for approval by the Agency's Executive Director(which
approval will not be unreasonably withheld or delayed), evidence of construction financing commitment
for the Project. Adequate financing shall consist of binding construction loan commitments and
commitments of equity funds in an aggregate amount equal to all hard costs of designing and
constructing the Improvements of the Project and all soft costs for owning and operating the Project
until maturity of the construction loan, as shown on the Proforma and Construction Budget. If PDH fails
to provide the Agency with proof of adequate financing by the date set forth in the Schedule of
Performance, then the Agency shall have the option of terminating this Agreement and the Agency shall
be released from any and all further obligations to PDH under the terms of this Agreement.
Section 3.11 Changes in Construction Drawings. If PDH desires to make any material changes
in the Final Construction Drawings and related documents after their approval by the Agency, PDH shall
submit the proposed changes to the Agency for its approval. If approved, the Agency shall notify PDH
of such approval in writing within 30 days after submission to the Agency. PDH shall revise such
portions as are disapproved and resubmit them to the Agency within 30 days of receipt of written
disapproval.
Section 3.12 Cost of Construction. The cost of constructing the Project, including the costs for
developing and constructing the Improvements thereon, shall be borne by PDH.
Section 3.13 Rights of Access. In addition to those rights of access to and across the Property
to which the Agency and the City may be entitled by law, members of the staffs of the Agency and the
City shall have a reasonable right of access to the Property, without charge or fee, at any reasonable
time, upon reasonable notice to PDH (which may be telephonic notice to William Swank, Sr., or his
construction foreman) to inspect the work being performed at the Property. PDH may require that a
representative from PDH accompany the Agency's or City's staff members during any such inspection.
Section 3.14 Local. State and Federal Laws. PDH shall carry out the construction of the
Improvements on the Property in conformity with all applicable laws, including all applicable federal
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and state occupation, safety and health standards. PDH represents and warrants that all of the
Improvements to be constructed by PDH shall be constructed in compliance with the current City and
State of California standards and laws.
Section 3.15 City and Other Governmental Agency Permits and Approvals. Before
commencement of construction or development of any work of improvement on the Property, PDH shall
(at PDH's expense) secure, or cause to be secured, any and all permits which may be required by the City
or any other governmental agency having jurisdiction over such construction or development.
Section 3.16 Anti-discrimination During Construction. PDH, for itself and its successors and
assigns, agrees that it shall not discriminate against any employee or applicant for employment because
of age, sex, marital status, race, handicap, color, religion, creed, ancestry, or national origin in the
construction of the Improvements.
Section 3.17 Taxes.Assessments. Encumbrances and Liens. PDH shall pay when due all real
property taxes and assessments assessed or levied on portions of the Property from time to time owned
by PDH.
Section 3.18 No Agency Created. In performing this Agreement, PDH is an independent
contractor and not the agent of the Agency or the City. The Agency and the City are not agents of PDH.
Neither the Agency nor the City shall have any responsibility whatsoever for payment to any contractor
or supplier of PDH. PDH shall not have any responsibility whatsoever for payment to any contractor or
supplier of the Agency or the City.
Section 3.19 Consent by City. Any consent or approval by the Agency required by this article
shall be deemed satisfied or given to the extent the City consents or approves any such matter or issues a
discretionary permit or approval.
Section 3.20 Plans and Data. If this Agreement is terminated for any reason, then PDH shall
deliver to the Agency, without cost or expense to the Agency, copies of any and all maps, architecture,
engineering, subdivision approvals, permits, entitlements, rights, contracts, plans, drawings, studies,
designs, reports, surveys, and data pertaining to the Project and its development (collectively, "Site
Designs") which are in the possession of PDH, together with a bill of sale therefor. The Site Designs
shall then be the sole property of the Agency and may be used by the Agency, free of all claims or
interests of PDH or any other person, other than the interest therein held by PDH's construction lender,
whose interest shall be on a parity with that of the Agency in the Site Designs. The Agency may use,
grant, license or otherwise dispose of the Site Designs to any person for development of the Project or
any other purpose, subject to the rights of PDH's construction lender.
Section 3.21 Certificates of Occupancy. Upon PDH's completion of the construction of the
Project, PDH will apply to the City for one or more Certificates of Occupancy for the Improvements.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
The City's issuance of final Certificate(s) of Occupancy for the Improvements shall constitute the
acknowledgement of the Agency and the City that PDH has complied in all respects with its
development obligations set forth in Article 3 of this Agreement.
ARTICLE 4 LIMITATIONS ON TRANSFERS AND SECURITY INTERESTS.
Section 4.1 Hotel Franchise Agreement. Prior to the execution of this Agreement, PDH has
submitted a franchise application to Marriott International, Inc. ("Marriott")to operate a Residence Inn
and Courtyard by Marriott at the Property (collectively, the "Marriott Franchise Agreement"). PDH
expects to have the Marriott Franchise Agreement approved by Marriott prior to the Close of Escrow,
The Marriott Franchise Agreement will run for a minimum of 20 years, subject to customarytermination
rights. PDH will not exercise its rights to terminate the Marriott Franchise Agreement prior to its
expiration date without the Agency's prior approval, which will not be unreasonably withheld or
delayed. In the event that the Marriott Franchise Agreement is terminated for any reason, PDH will
obtain the Agency's approval, which will not be unreasonably withheld or delayed, prior to entering a
new franchise agreement with any other hotel company. The Marriott Franchise Agreement(as long as
it remains effective), and any substitute hotel franchise agreement entered into for the Project by PDH
(or its successor-in-interest) in accordance with this Section 4.1, is referred to herein as the"Hotel
Franchise Agreement."
Section 4.2 Restriction on Transfer of PDH's Rights and Obligations.
4.2.1 Prior to issuance of a Certificate of Occupancy for the Project, PDH shall not sell,
assign, transfer, mortgage, hypothecate, or convey (collectively, a "Transfer")the Property or any part
thereof or any of PDH's rights or obligations hereunder, without the Agency's prior written consent,
which consent may be granted or withheld in the Agency's sole and absolute discretion, except for the
execution of one or more mortgages, deeds of trust and related instruments securing PDH's construction
loan. PDH acknowledges that the identity of PDH is of particular concern to the Agency, and it is
because of PDH's identity that the Agency has entered into this Agreement with PDH. Except for any
Transferee approved by the City pursuant to Section 4.1 or this Section 4.2, and except for any Holder
(defined in Section 4.3)that has taken possession of the Property, no voluntary or involuntary successor
in interest of PDH shall acquire any rights or powers under this Agreement. No transfer or assignment
of PDH's interest hereunder without the Agency's prior written approval shall be deemed to release PDH
from the obligations of PDH hereunder.
4.2.2 Subject to Section 4.3 below, after the issuance of a Certificate of Occupancy for
the entire Project, and the opening of the Project for business, PDH shall have the right to Transfer the
Property to any party (a"Transferee") provided that:
4.2.2.1 such Transfer will not result in the termination of the existing Hotel
Franchise Agreement with respect to the Project;
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4.2.2.2 the Transferee (and/or its management company, if any) has the
experience, quality, character,trade record, financial ability and reputation, as determined by
Agency in its reasonable business judgment, to manage and operate the Project; and
4.2.2.3 the Transferee assumes in writing all obligations of PDH set forth in this
Agreement (except those pursuant to Articles 2 and 3, which shall be deemed satisfied upon the
Close of Escrow and the issuance of final Certificate(s) of Occupancy for the Improvements,
respectively).
In the event that PDH desires to Transfer the Property pursuant to this Section 4.2.2, PDH
will so notify the Agency, and will provide the Agency with all pertinent information regarding the
Transferee, including evidence from Marriott (or any successor hotel franchise company) that such
Transfer will not result in the termination of the Hotel Franchise Agreement. The Agency will approve
or disapprove the Transferee (in its reasonable business judgment)within thirty (30) days after receipt of
written notice of PDH's intention to make the Transfer. Upon the completion of any Transfer to a
Transferee approved by the Agency as provided in this Section 4.2.2, the Transferee shall assume all of
PDH's rights and obligations under this Agreement, and PDH shall be released from all further liabilities
and obligations under this Agreement.
Section 4.3 Mortgages and Deeds of Trust. Notwithstanding any provisions of Section 4.2 to
the contrary, PDH shall have the right to mortgage or hypothecate its interest in the Property and the
Project pursuant to one or more mortgages, deeds of trust, sales and leaseback, or any other form of en-
cumbrance or conveyance required for any reasonable method of financing from an institutional lender
approved by the Agency (which approval shall not unreasonably be withheld), for the purpose of
securing loans of funds to be used for financing the direct and indirect costs of the Project (including
land development costs, reasonable and customary developer fees, loan fees and costs, and other normal
and customary project costs), or for refinancing the construction financing with permanent financing.
Any institutional lender of record holding any such mortgage, deed of trust, or other security instrument
authorized by this Agreement shall be referred to as a"Holder."
Section 4.4 Rights of Holders. The Agency shall deliver a copy of any notice or demand to
PDH concerning any breach or default by PDH under this Agreement to each Holder who has previously
made a written request to the Agency for special notice hereunder. Any notice of breach or default by
PDH shall not be effective against any such Holder unless given to such Holder. Such Holder shall have
the right at its option to cure or remedy any such default and to add the cost thereof to the secured debt
and the lien of its security interest. If such breach or default can only be remedied or cured by such
Holder upon obtaining possession, such Holder may remedy or cure such breach or default within a
reasonable period of time after obtaining possession, provided such Holder seeks possession with
diligence through a receiver or foreclosure. Such Holder shall be permitted to undertake or continue the
construction or completion of the Improvements beyond the extent necessary to conserve or complete
the Improvements.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Section 4.5 Noninterference with Holders. The provisions of this Agreement do not limit the
right of Holders to foreclose or otherwise enforce any mortgage, deed of trust, or other security
instrument encumbering all or any portion of the Property, and the Improvements thereon, or to pursue
any remedies for the enforcement of any pledge or lien encumbering such portions of the Property. In
the event of a foreclosure sale under any such mortgage, deed of trust or other lien or encumbrance, or
sale pursuant to any power of sale contained in any such mortgage or deed of trust, the purchaser or
purchasers and their successors and assigns, and such portions of the Property shall be, and shall
continue to be, subject to all of the conditions, restrictions and covenants of all documents and
instruments recorded pursuant to this Agreement, including, without limitation, the restrictions set forth
in the grant deed on such property from the Agency to PDH. The Agency agrees to execute such further
documentation regarding the rights of any Holder as is customary with respect to construction or
permanent financing,as the case may be, to the extent that such documentation is reasonably requested
by any Holder and is reasonably approved by the Agency.
ARTICLE 5 USE OF THE PROPERTY.
Section 5.1 Use of Property.
5.1.1 For the duration of the CC&R's described in Section 5.5, the Property and any
portion thereof may be used only for the development and operation of Limited Service -- Extended Stay
Hotel facilities together with a free standing restaurant; provided, however, in the event of a major
casualty after the issuance of final Certificate(s) of Occupancy, that, subject to the Agency's reasonable
approval, PDH may elect to rebuild the Property for another hospitality use that is not prohibited by the
CC&R's or any deed restriction on the Property.
5.1.2 The covenants and agreements set forth in this Article 5 shall burden the Property
and shall run with the land for the benefit of the Agency and its successors and assigns as the owner of
the Lot 2 of Tract 28450 (the "Golf Course Parcel"), and the benefits of these covenants and restrictions
shall run with the Golf Course Parcel; provided, however, that the covenants and agreements set forth in
this Section 5.1 and Section 5.2 shall expire 20 years after the Close of Escrow. The Agency and its
successor-in-interest in the Golf Course Parcel may obtain by appropriate legal action specific
performance of these covenants and restrictions and injunctive relief prohibiting the breach of such
covenants and restrictions.
5.1.3 The Agency will agree in the CC&Rs and by an appropriate deed restriction to the
Golf Course Parcel, that the Agency and its successors-in-interest as owner of the Golf Course Parcel
shall maintain the golf course situated on the Golf Course Parcel in a first class condition typical of
resort courses in the Palm Desert area at the time of the parties' execution of this Agreement. This
covenant shall burden the Golf Course Parcel and shall run with the land for the benefit of PDH and its
successors and assigns as the owner of the Property, and the benefits of these covenants and restrictions
shall run with the Property; provided, however, that this covenant shall expire 20 years after the Close of
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
Escrow. PDH and its successors-in-interest as owners of the Property may obtain by appropriate legal
action specific performance of this covenant and injunctive relief prohibiting the breach of such
covenant.
Section 5.2 Maintenance. PDH will agree in the CC&Rs, that for a period of 20 years from
the Close of Escrow, PDH and its successors in interest as owners of the Property shall maintain the
Property (including landscaping) in a manner substantially comparable to the highest level of
maintenance provided to other resortostyle Residence Inns and Courtyards by Marriott, respectively, of
similar age as the Project. In the event that the Marriott Franchise Agreement is terminated or expires,
then for the duration of the foregoing 20 year period, the Property shall be maintained in a manner
substantially comparable to the highest level of maintenance provided to other resort style Limited
Service -- Extended Stay Hotel facilities in the Coachella Valley, of similar age as the Project. In
addition, the CC&R's shall also provide for PDH to maintain its own perimeter landscaping on the side
of the Property adjacent to the public streets, and to maintain perimeter landscaping on both sides of the
fence separating the Property from the Golf Course (as well as the fence itself). PDH shall also provide
its own security for the Property, but shall coordinate same with the security provided for the portions of
Desert Willow controlled by the Agency or the City or their successors or assigns.
Section 5.3 Obligation to Refrain from Discrimination. PDH covenants and agrees for itself
and its successors and assigns, and for every successor in interest to the Property, or any part thereof,
and their rights under this Agreement, that there shall be no discrimination against or segregation of any
person, or group of persons, on account of sex, marital status, age, handicap, race, color, religion, creed,
national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the Property, and PDH (itself or any person claiming under or through PDH) shall not establish or
permit any such practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, subleases, or vendors of the Property
or any portion thereof
Section 5.4 Form of Nondiscrimination and Non-Segregation Clauses. PDH shall refrain
from restricting the rental, sale or lease of the Property or any portion thereof, on the basis of sex, age,
handicap, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds,
leases or contracts shall contain or be subject to substantially the following nondiscrimination or non-
segregation clauses:
1. In deeds: "The grantee herein covenants by and for himself, his heirs, executors,
administrators and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of sex, marital
status, race, age, handicap, color, religion, creed, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself
or any person claiming under or through him, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
tenants, lessees, subtenants, subleases or vendors in the land herein conveyed. The foregoing covenants
shall run with the land."
2. In leases: "The lessee herein covenants by and for himself, his heirs, executors,
administrators and assigns, and all persons claiming under or through him, and this lease is made and
accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of persons on
account of sex, marital status, race, age, handicap, color, religion, creed,national origin or ancestry, in
the leasing, subleasing, transferring, use, or enjoyment of the land herein leased, nor shall the lessee
himself, or any person claiming under or through him, establish or permit any such practice or practices
of discrimination or segregation with reference to the selection, location, number, use or occupancy, of
tenants, lessees, sublessees, subtenants or vendees in the land herein leased."
3. In contracts relating to the sale or transfer of the Property, or any interest therein: "There
shall be no discrimination against or segregation of any person or group of persons on account of sex,
marital status, race, age, handicap, color, religion, creed, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or
any person claiming under or through him, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy, of
tenants, lessees, subtenants, sublessees or vendees of the land."
Section 5.5 CC&Rs. The obligations and restrictions set forth in Sections 5.1, 5.2, 5.3, and
5.4 shall be set forth in an Agreement of Covenants, Conditions and Restrictions (the "CC&Rs"), in
form and in substance that shall be subject to the approval of PDH and the Agency's Executive Director.
The CC&R's shall also provide for PDH to maintain its own perimeter landscaping on the side of the
Property adjacent to the public streets, and to maintain both sides of the fence separating the Property
from the Golf Course. PDH shall also provide its own security for the Property, but shall coordinate
same with the security provided for the portions of Desert Willow controlled by the Agency or the City
or their successors or assigns. Except with respect to covenants and restrictions regarding non-
discrimination, the CC&Rs shall terminate 20 years after the Close of Escrow. The CC&Rs will contain
a provision binding upon the Agency, for itself and all of its successors-in-interest as owners of any of
the currently unimproved parcels currently owned by the Agency within the Desert Willow Project,
prohibiting the development of any Limited Service -- Extended Stay Hotel or motel within the Desert
Willow Project. This restriction shall remain in place until the earlier to occur of: (i) the 5th anniversary
of the Close of Escrow, or(ii)the date upon which PDH or its successor-in-interest ceases operating a
Limited Service -- Extended Stay Hotel on the Property, or(iii)the breach by PDH of its obligation to
open a Residence Inn and Courtyard by Marriott on the Property by May 1, 1999 (subject to extension as
provided in the last sentences of Section 3.1). After expiration of the period described in the preceding
sentence, PDH shall have a right of first refusal, for a period of 5 years, to purchase any portion of
Desert Willow that the Agency intends to sell to another party for the purpose of constructing and
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
operating a Limited Service -- Extended Stay Hotel on such other property, which right of first refusal
shall be exercised, if at all, within 30 days following the Agency's delivery of a term sheet setting forth
the purchase price for such property and the terms and conditions of the obligation to construct and/or
operate such property. There shall be no restrictions on the Agency's ability to sell other property in the
Desert Willow project for purposes other than a Limited Service -- Extended Stay Hotel, and PDH shall
execute and record any releases reasonably requested by the Agency if necessary to enable the Agency
to sell such property for such other purposes, or if the right of first refusal is not exercised by PDH
within the 30 day period provided in the preceding sentence.
ARTICLE 6 EVENTS OF DEFAULT, REMEDIES AND TERMINATION.
Section 6.1 Defaults--Definition.
Occurrence of any or all of the following shall constitute a default ("Default") under this
Agreement:
6.1.1 Any breach of this Agreement by any Party involving the payment of money, and
the continuance of such breach for a period of thirty (30) days after the non-defaulting Party has
given written notice to the defaulting Party, as specified in Section 8.1;
6.1.2 A breach of any material term of this Agreement by any Party not involving the
payment of money and failure of such Party to cure such breach within thirty (30) days after the
non-defaulting Party has given written notice to the defaulting Party; provided, however, if such
breach is not reasonably curable within such thirty (30) day period,then such Party shall be
deemed in Default only if such Party does not commence to cure such breach within such thirty
(30) day period and thereafter fails to diligently prosecute such breach to completion;
6.1.3 PDH's Transfer(as defined in Section 4.2), or the occurrence of any involuntary
Transfer, of the Property or any part thereof or interest therein, or any rights or obligations of
PDH under this Agreement, in violation of this Agreement;
6.1.4 PDH's failure or refusal to keep in force and effect any material permit or
approval with respect to construction of the Project, and PDH's failure to cure such breach within
thirty (30) calendar days after notice from the Agency of PDH's breach; provided, however, if
such breach is not reasonably curable within such thirty (30) day period, then PDH shall be
deemed in Default only if PDH does not commence to cure such breach within such thirty (30)
day period and thereafter fails to diligently prosecute such breach to completion;
6.1.5 Filing of a petition in bankruptcy by or against any Party or appointment of a
receiver or trustee of any property of any Party, or an assignment by any Party for the benefit of
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
creditors, or adjudication that such Party is insolvent by a court, and the failure of such Party to
cause such petition. appointment, or assignment to be removed or discharged within 90 days.
Section 6.2 Remedies in the Event of Default.
6.2.1 Remedies Prior to the Close of Escrow. In the event of a Default by any Party
prior to the Close of Escrow, the non-defaulting Party shall have the right to terminate this Agreement
provided it is not in breach of its obligation under this Agreement, by delivering written notice thereof to
the defaulting Party and to Escrow Holder, subject to the rights of the defaulting Party to cure such
Default as provided in Section 6.1. Such Party may seek against the defaulting Party any available
remedies at law or equity, including but not limited to, the right to receive damages or to pursue an
action for specific performance.
6.2.2 Remedies for Default After the Close of Escrow. In the event of a Default by any
Party after the Close of Escrow, and prior to the issuance of a Certificate of Occupancy, a non-defaulting
party shall be entitled to the following remedies, as applicable:
A defaulting Party shall be liable to the non-defaulting Party for all damages, costs and losses
incurred by the non-defaulting Party, and the non-defaulting Party may seek against the
defaulting Party any available remedies at law or equity, including but not limited to the right to
receive damages or to pursue an action for specific performance.
Section 6.3 Liberal Construction. The rights established in this Article are to be interpreted in
light of the fact that the Agency will convey the Property to PDH for development and operation of the
Project thereon and not for speculation in undeveloped land or for construction of different
improvements. PDH acknowledges that it is of the essence of this Agreement that PDH is obligated to
complete all Improvements comprising the Project.
Section 6.4 No Personal Liability. No representative, agent, attorney, consultant, or employee
of the Agency shall personally be liable to the PDH or any successor in interest of PDH, in the event of
any Default or breach by the Agency, or for any amount which may become due to PDH or any
successor in interest, on any obligation under the terms of this Agreement.
Section 6.5 Rights and Remedies are Cumulative. The rights and remedies of the parties are
cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude
the exercise by it, at the same time or different times, of any other rights or remedies for the same default
or any other default by the non-defaulting Party.
Section 6.6 Inaction Not a Waiver of Default. Any failures or delays by either Party in
asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of
any such rights or remedies, or deprive either such Party of its rights to institute and maintain any
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980409 JAR E140-S.JAR PALM DESERT -- PDH DDA P6402-0001.59
actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or
remedies. The acceptance by a Party of less than the full amount due from the other Party shall not
constitute a waiver of such Party's right to demand and receive the full amount due, unless such Party
executes a specific accord and satisfaction.
Section 6.7 Force Majeure. Notwithstanding anything to the contrary in this Agreement,
either Party's unexcused material failure to complete the Improvements required by such Party to be
completed according to this Agreement, the Scope of Development, and Schedule of Performance shall
be a breach hereof, provided, however, nonperformance shall be excused when performance is prevented
or delayed by reason of any of the following forces reasonably beyond the control of such party (a
"Force Majeure Delay"): (i) actual, industry wide delay or failure to perform by PDH affecting all
similar works of construction in the Coachella Valley, California, area, attributable to any strike, lockout
or other labor or industrial disturbance (whether or not on the part of the employees of either party
hereto), civil disturbance, future order claiming jurisdiction, act of the public enemy, war, riot, sabotage,
blockade, embargo, inability to secure customary materials, supplies or labor through ordinary sources
by reason of regulation or order of any government or regulatory body; (ii) delay attributable to the
failure of PDH to secure building permits and approvals (including any failure to obtain a temporary
certificate of occupancy) within the same time period that normally prevailed for obtaining such permits
and approvals at the time this Agreement was negotiated, which time period the Agency and PDH
hereby stipulate to be (_) weeks; or(iii) delay attributable to lightning, earthquake, fire, storm,
hurricane, tornado, flood, washout, explosion, or any other similar industry-wide cause beyond the •
reasonable control of the party from whom performance is required, or any of its contractors or other
representatives. Any prevention, delay or stoppage due to any Force Majeure Delay shall excuse the
performance of the party affected for a period of time equal to any such prevention, delay or stoppage
(except the obligations of either party to pay money to the other party or to close escrow).
ARTICLE 7 INSURANCE; INDEMNITY.
Section 7.1 Insurance.
7.1.1 PDH shall obtain and maintain at no cost or expense to the Agency, with a
reputable and financially responsible insurance company reasonably acceptable to the Agency,
commercial broad form general public liability insurance, insuring against claims and liability for bodily
injury, death, or property damage arising from the construction, use, occupancy, condition, or operation
of the Property, which insurance shall provide combined single limit protection of at least $3,000,000.
Such insurance policy shall name the City and the Agency and their council members, board members,
officers, employees, consultants, independent contractors, attorneys and servants as additional insureds.
7.1.2 Before commencement of any demolition or construction work by PDH on any
portion of the Property owned by PDH, PDH shall obtain and maintain in force until completion of such
work (i) "all risk" builder's risk insurance, including coverage for vandalism and malicious mischief, in a
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form and amount and with a company reasonably acceptable to the Agency, and (ii) workers' compensa-
tion insurance covering all persons employed by PDH in connection with work on the Project, or any
portion thereof During the construction of Improvements on any portion of the Property by PDH, such
builder's risk insurance shall cover improvements in place and all material and equipment at the job site
furnished under contract, but shall exclude contractors', subcontractors', and construction managers' tools
and equipment and property owned by contractors' and subcontractors' employees.
7.1.3 PDH shall also furnish or cause to be furnished to the Agency evidence
satisfactory to the Agency that any contractor with whom it has contracted for the performance of work
on the Property or otherwise pursuant to this Agreement carries workers' compensation insurance as
required by law.
7.1.4 With respect to each policy of insurance required above, PDH and each of PDH's
general contractors shall furnish to the Agency an endorsement to the insurance policy on the insurance
carrier's form setting forth the general provisions of the insurance coverage. The required certificate
shall be furnished by PDH prior to commencement of construction of any Improvements.
7.1.5 All such policies required by this Section shall be nonassessable and shall contain
language to the effect that (i)the policies cannot be canceled or materially changed except after thirty
(30) days' written notice by the insurer to the Agency, and (ii) the Agency shall not be liable for any
premiums or assessments. All such insurance shall have deductibility limits which shall be
commercially reasonable.
Section 7.2 Indemnity. From and after the execution of this Agreement, PDH hereby agrees
to indemnify, defend, protect, and hold harmless the Agency and the City and any and all agents,
employees and representatives of the Agency and the City, from and against all losses, liabilities, claims,
damages (including foreseeable or unforeseeable consequential damages), penalties, fines, forfeitures,
costs and expenses (including all reasonable out-of-pocket litigation costs and reasonable attorney's fees)
and demands of any nature whatsoever, related directly or indirectly to, or arising out of or in connection
with:
(i) the development of the Improvements on the Property or the use, ownership,
management, occupancy, or possession of the Property,
(ii) any breach or Default by PDH hereunder, or
(iii) any of PDH's activities on the Property (or the activities of PDH's agents, employees,
lessees, representatives, licensees, guests, invitees, contractors, subcontractors, or independent
contractors on the Property),
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regardless of whether such losses and liabilities shall accrue or are discovered before or after termination
or expiration of this Agreement, except to the extent such losses or liabilities are caused solely and
exclusively by the gross negligence or intentionally wrongful acts of the Agency. PDH shall defend, at
its expense, including attorneys' fees,the Agency and the City, and the Agency's and the City's council
members, board members, officers, agents, attorneys, consultants, independent contractors, servants and
employees in any legal action based upon such alleged acts or omissions. The Agency and the City may
in their discretion participate in the defense of any such legal action.
ARTICLE 8 GENERAL PROVISIONS.
Section 8.1 Notices. All notices and demands shall be given in writing by certified mail,
postage prepaid, and return receipt requested, or by personal delivery. Notices shall be considered given
upon the earlier of(a)personal delivery, or(b)one business day following deposit or delivery with a
nationally recognized overnight courier delivery charges prepaid, or(c)three(3)business days
following after deposit or delivery shown on the return receipt in the United States mail, postage
prepaid, certified or registered,return receipt requested. A copy of all notices delivered prior to the
Close of Escrow shall be sent to Escrow Holder. Notices shall be addressed as provided below for the
respective Party; provided that if any Party gives notice in writing of a change of name or address,
notices to such Party shall thereafter be given as demanded in that notice:
The Agency: Mr. Carlos L. Ortega
Executive Director
Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
(Telephone: 760-346-0611)
(Facsimile: 760-341-6372)
with a copy to: Richards, Watson& Gershon
A Professional Corporation
333 South Hope Street, 38th Floor
Los Angeles, California 90071
Attention: Jeffrey A. Rabin and William L. Strausz
(Telephone: 213-626-8484)
(Facsimile: 213-626-0078)
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
•
•
PDH: PDH Associates LLC
c/o Cirque Property L.C.
136 East South Temple,#1500
Salt Lake City, UT 84111
Attention: J. Gregory Hale
(Telephone: 801-521-4470)
(Facsimile: 801-521-4474)
With a copy to: Mr. William E. Swank, Sr.
Architect
SDC Hotels,LLC
55-550 Riviera Drive
La Quinta, California 92253
(Telephone: 760-771-3110)
(Facsimile: 760-564-2862)
Section 8.2 Construction. The Parties agree that each Party and its counsel have reviewed and
revised this Agreement and that any rule of construction to the effect that ambiguities are to be resolved
against the drafting Party shall not apply in the interpretation of this Agreement or any amendments or
exhibits thereto. This Agreement shall be construed as a whole according to its fair language and
common meaning to achieve the objectives and purposes of the Parties.
Section 8.3 Interpretation. In this Agreement the neuter gender includes the feminine and
masculine, and singular number includes the plural, and the words "person" and "party" include
corporation,partnership, firm,trust, or association where ever the context so requires.
Section 8.4 Time of the Essence. Time is of the essence of this Agreement.
Section 8.5 Warranty Against Payment of Consideration for Agreement. PDH warrants that it
has not paid or given, and will not pay or give,to any third person, any money or other consideration for
obtaining this Agreement, other than normal costs of conducting business and costs of professional
services such as architects, engineers and attorneys.
Section 8.6 Attorneys' Fees. If any Party brings an action to enforce the terms hereof or
declare its rights hereunder,the prevailing Party in any such action shall be entitled to its reasonable
attorneys' fees to be paid by the losing Party as fixed by the court. If either the Agency or the City,
without fault, is made a Party to any litigation instituted by or against PDH,then PDH shall defend the
City and/or the Agency against and save it harmless from all costs and expenses including reasonable
attorney's fees incurred in connection with such litigation. If PDH, without fault, is made a Party to any
litigation instituted by or against the Agency or the City,then the Agency shall defend PDH against and
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980409 JAR E140-S.JAR PALM DESERT -- PDH DDA P6402-0001.59
save it harmless from all costs and expenses including reasonable attorney's fees incurred in connection
with such litigation.
Section 8.7 Entire Agreement, Waivers and Amendments. The Agreement may be executed
in duplicate originals. Escrow Holder may accept escrow instructions in counterparts. This Agreement,
together with all attachments and exhibits hereto, and all agreements executed pursuant hereto,
constitutes the entire understanding and agreement of the Parties. This Agreement integrates all of the
terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous
agreements between the Parties with respect to the subject matter hereof. No subsequent agreement,
representation or promise made by either Party hereto, or by or to any employee, officer, agent or -
representative of either Party, shall be of any effect unless it is in writing and executed by the Party to be
bound thereby. No person is authorized to make, and by execution hereof PDH and the Agency
acknowledge that no person has made, any representation, warranty, guaranty or promise except as set
forth herein; and no agreement, statement, representation or promise made by any such person which is
not contained herein shall be valid or binding on PDH or the Agency.
Section 8.8 Severability. Each and every provision of this Agreement is, and shall be
construed to be, a separate and independent covenant and agreement. If any term or provision of this
Agreement or the application thereof shall to any extent be held to be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to circumstances other than
those to which it is invalid or unenforceable, shall not be affected hereby, and each term and provision of
this Agreement shall be valid and shall be enforced to the extent permitted by law.
Section 8.9 Headings. All section headings and subheadings are inserted for convenience
only and shall have no effect on the construction or interpretation of this Agreement. The references in
this agreement to "Section" shall refer to the sections of this Agreement unless it is clear from the
context that another meaning is intended.
Section 8.10 No Third Party Beneficiaries other than the City. The City shall be a named third
party beneficiary of this Agreement. This Agreement is made and entered into for the sole protection
and benefit of the Parties, the City and their successors and assigns. No other person shall have any
right of action based upon any provision of this Agreement.
Section 8.11 Governing Law; Jurisdiction: Service of Process. This Agreement and the rights
of the Parties shall be governed by California law. The Parties consent to the exclusive jurisdiction of
the California Superior Court for the County of Riverside. If any legal action is commenced by PDH
against the Agency, or by Agency against PDH, service of process on the Agency shall be made by
personal service upon the executive director or secretary of the Agency, or in such other manner as may
be provided by law. If any legal action is commenced by Agency against PDH, service of process on
PDH shall be made by personal service on the President of PDH, or in such other manner as may be
provided by law. PDH agrees, for the benefit of the Agency, that it shall designate an agent for service
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
of process in the State of California in the manner prescribed by law, and if it fails to do so,the
Secretary of State of the State of California is designated as agent for PDH,with full authority to receive
such service of process on its behalf, which designation and authorization shall survive the Close of
Escrow and be irrevocable.
Section 8.12 SmLal. The provisions hereof shall not terminate but rather shall survive any
conveyance hereunder and the delivery of all consideration.
•
IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement as of the
. day and year first above written.
"PDH": "The Agency":
PDH ASSOCIATES LLC, PALM DESERT REDEVELOPMENT
A Utah limited liability company AGENCY, a public body,corporate and politic
By: Cirque Property L.C.,
a Utah limited liability company By:
its managing member Chairperson
ATTEST: •
By: .
Secretary
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
•
LIST OF EXHIBITS
Exhibit A. -- Legal Description
Exhibit B. -- Schedule of Performance
Exhibit C. -- Scope of Development •
Exhibit D. -- Grant Deed
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
EXHIBIT A.
LEGAL DESCRIPTION
Lot 1 of Tract 28450. Palm Desert, Riverside County, California, as per Map recorded in Book 264,
Pages 4 through 15, inclusive, of Maps, Official Records, Riverside County, California.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
EXHIBIT B.
SCHEDULE OF PERFORMANCE
1 Agency's Publication of Notice of Public Hearing April 1998 and April
1998
2 . Execution of the DDA by PDH, and tender to the Agency By April 23, 1998
3 Approval of the DDA by Agency Board April 23, 1998
4 PDH's deposit of$10,000 with Escrow(Section 2.2) Within 2 days after the
Agency's execution of the
Agreement
5 PDH's approval or disapproval of Preliminary Title Report Within 10 business days after
Opening of Escrow
6 PDH's approval or disapproval of Survey Prior to the Close of Escrow
7 PDH's approval or disapproval of the physical condition of the Within 30 days after Opening
Property of Escrow
8 Close of Escrow Within 45 days after Opening
of Escrow [on or before
• May 1, 1998]
9 PDH's delivery of Basic Concept Drawings Done
10 PDH's delivery of Preliminary Drawings Done •
11 PDH's delivery of Landscaping and Grading Plans By: April_, 1998
12 PDH's delivery of Final Construction Drawings By: April 15, 1998
13 PDH's delivery of Construction Loan Commitment By: May 1, 1998
14 Commencement of Construction of the Project By May 15, 1998
15 Completion of construction of the Residence Inn and opening By: December 1998
of the Project for business
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16 Completion of construction of the Courtyard and opening of By: January. 1999
the project for business
•
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980409 JAR E140-S.JAR PALM DESERT -- PDH DDA P6402-0001.59
EXHIBIT C.
SCOPE OF DEVELOPMENT
Construction and operation of a 130 suite Residence Inn by Marriott, and a 153 room Courtyard
by Marriott Hotel, and a free standing restaurant. The Project will be built in an architectural style
consistent with other Residence Inns and Courtyard by Marriott hotels in the southwestern United States,
as approved by Marriott International and the City of Palm Desert.
•
The Residence Inn shall offer a "residential atmosphere" with spacious suites featuring 50% -
more space than an ordinary hotel room. The hotel will have studio and two bedroom suites with living
rooms, work desks, fireplaces in the two bedroom suites, fully equipped kitchens and separate eating
areas, patios or balconies, sleeping quarters, and baths. They will also provide daily complementary
breakfast buffet, evening social hour, weekly poolside barbecue, grocery shopping services, 24 hour
staff, and daily housekeeping. The hotel will also have meeting rooms, swimming pool,whirlpools and
a sports court.
The Courtyard by Marriott hotel will be a moderately priced hotel. Spacious rooms will feature
sitting areas, large work desks,two phones with data ports and in-room coffee. The hotel will also
feature cooked to order breakfast or a healthy breakfast buffet. The hotel will also have meeting rooms,
swimming pool,whirlpool and exercise room.
•
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
EXHIBIT D.
FORM OF GRANT DEED
Recording Requested by:
Palm Desert Redevelopment Agency
And when recorded return to •
. and mail tax statements to:
Assessor's Parcel Map No.:
Exempt from Recording Fees Pursuant to G.C. 6103
GRANT DEED •
The undersigned grantor(s) declare(s):
Documentary transfer tax is $
FOR A VALUABLE CONSIDERATION,receipt of which is hereby acknowledged,
PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic
hereby GRANTS to
the following described real property (the "Property") located in the City of Palm Desert,
County of Riverside, State of California:
Lot 1 of Tract 28450, Palm Desert, Riverside County, California, as per
Map recorded in Book 264, Pages 4 through 15, inclusive, of Maps,
Official Records, Riverside County, California.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
SUBJECT TO, all easements, covenants, conditions, restrictions, and rights of way of record.
RESERVING AND EXCEPTING THEREFROM,the following easements for ingress and egress
over the portion of the Property described in Exhibit 1, attached hereto and incorporated by reference
herein, for the use and benefit of the real property described as Lot 2 of Tract 28450, as per Map
recorded in Book 264, Pages 4 through 15, inclusive, of Maps, Official Records, Riverside County,
California(the "Benefitted Parcel"),which easements shall run with the land and burden the above-
referenced property and run to the benefit of the Benefitted Parcel.
•
1 This Grant of the Property is subject to the Redevelopment Plari for Project Area
2 of the Palm Desert Redevelopment Agency and pursuant to a Disposition and Development
Agreement(the "Agreement")entered into by and between Grantor and Grantee dated April 23, 1998,
the terms of which are incorporated herein by reference. A copy of the Agreement is available for public
inspection at the offices of the Grantor, 73-510 Fred Waring Drive, Palm Desert,California 92260. The
Property is conveyed further subject to all easements,rights of way,covenants, conditions, restrictions,
reservations and all other matters of record.
2. Grantee, its successors and assigns shall not build,construct, operate or sell a
timeshare project or vacation club units from the Property.
3. The Grantee covenants by and for itself, its representatives, its successors and
assigns and every successor in interest to the Property or any part thereof,that during construction of
improvements and thereafter the Grantee shall not use or permit the use of the Property in violation of
the Redevelopment Plan for Project Area 2, as adopted by the City of Palm Desert by its Ordinance No.
509 of the City of Palm Desert adopted July 15, 1987. The Grantee further covenants and agrees for
itself, and its successors and its assigns,that for a period of 20 years after the date of recordation of this
Deed,the Grantee, such successors, and such assignees shall use the Property and every part thereof only
for only for the construction of the Improvements (as defined in the Agreement)thereon and use thereof
for which the Improvements are designed, and any other uses expressly permitted by the Agreement.
The Grantee further covenants and agrees that upon completion of the any Improvements described in
the Agreement, for a period of 20 years after the date of recordation of this Deed,the Grantee shall
maintain such Improvements (including landscaping) in good condition and repair and in the manner
substantially comparable to the highest level of maintenance provided to other resort style Residence
Inns and Courtyards by Marriott,respectively, of similar age as the Improvements. In the event that the
owner's Franchise Agreement with Marriott is terminated or expires,then, for the duration of the
foregoing 20-year period,the Property shall be maintained in a manner substantially comparable to the
highest level of maintenance provided to other resort style limited service or extended stay hotel
facilities in the Coachella Valley.
4. By acceptance hereof, Grantee agrees, for itself, its successors and assigns,to
refrain from restricting the rental, sale or lease of the Property on the basis of race, color, creed, religion,
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
ancestry, sex,marital status,national origin or age of any person in the sale, lease, sublease,transfer,
use, occupancy,tenure or enjoyment of the Property, nor shall the Grantee itself or any persons claiming
under or through it establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location,number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees in the Property. The foregoing covenants shall run with the land.
All deeds, leases or contracts entered into with respect to the Property.shall contain or be
subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds: "The grantee herein covenants by and for himself or herself, his or
her heirs, executors, administrators and assigns, and all persons claiming under or through them,
that there shall be no discrimination against or segregation of, any person or group of persons on
account of race,color, creed,religion, national origin, sex, marital status, age or ancestry in the
sale, lease, sublease,transfer, use,occupancy,tenure or enjoyment of the land herein conveyed,
nor shall the grantee himself or herself,or any person claiming under or through him or her,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location,number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the land herein conveyed. The foregoing covenants shall run with the land."
(b) In leases: "The lessee herein covenants by and for himself or herself,his or
her heirs, executors, administrators and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions: That there
be no discrimination against or segregation of any person or group of persons, on account of age,
race, color, creed, religion, sex,marital status, national origin, or ancestry, in the leasing,
subleasing, transferring, use or occupancy,tenure or enjoyment of the land herein leased nor
shall the lessee himself or herself,or any person claiming under or through him or her,establish
or permit any such practice or practices of discrimination or segregation with reference to the
selection, location,number, use or occupancy of tenants, lessees, sublessees, subtenants or
vendees in the land herein leased."
(c) In contracts: "There shall be no discrimination against or segregation of, any
person, or group of persons on account of race,color, creed, religion, age,national origin, sex,
marital status or ancestry in the sale, lease, sublease, transfer,use, occupancy,tenure or
enjoyment of the land,nor shall the transferee himself or herself or any person claiming under or
through him or her, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees of the land."
The foregoing shall be a covenant running with the land for the benefit of, and as a burden upon the
property described herein.
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
5. All covenants contained in this Grant Deed shall run with the land and shall be
binding for the benefit of Grantor and its successors and assigns and such covenants shall run in favor of
the Grantor and for the entire period during which the covenants shall be in force and effect, without
regard to whether the Grantor is or remains an owner of any land or interest therein to which such
covenants relate. The Grantor, in the event of any breach of any such covenants, shall have the right to
exercise all of the rights and remedies provided herein or otherwise available, and to maintain any
actions at law or suits in equity or other property proceedings to enforce the curing of such breach. The
covenants contained in this Grant Deed shall be for the benefit of and shall be enforceable only by the
Grantor and its successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of the date set forth below.
Dated:
PALM DESERT REDEVELOPMENT AGENCY, a public body,
corporate and politic
By:
Chairman
Attest:
Secretary
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59
State of California }
}
County of }
On , 19 , before me, , a Notary Public,
personally appeared
, personally known to me (or proved to me on the basis of
satisfactory evidence)to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that
by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
(seal)
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980409 JAR E140-5.JAR PALM DESERT -- PDH DDA P6402-0001.59