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HomeMy WebLinkAboutRes OB-085 (2)OVERISGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: AUTHORIZATION TO EXECUTE THE DISPOSITION AGREEMENT FOR THE PROPERTY AT THE NORTHEAST CORNER OF SHADOW MOUNTAIN AND LARKSPUR LANE, PALM DESERT, CALIFORNIA (APN 627-262-008 AND APN 627-262-011, PROPERTIES 7a AND 7b OF THE LONG RANGE PROPERTY MANAGEMENT PLAN) WITH EL PASEO HOTEL, LLC. SUBMITTED BY: Ruth Ann Moore, Economic Development Manager PROPERTY El Paseo Hotel, LLC BUYER: 3941 Park Drive Suite 20-308 El Dorado Hills, CA 95762 DATE: July 28, 2014 Public Notice CONTENT: Resolution No. OB- 085 Disposition Agreement (Contract No. SA33850) Appraisal Recommendation Waive further reading and adopt Resolution No. OB - 085, APPROVING the Disposition Agreement for the property located at the northeast comer of Shadow Mountain Drive and Larkspur Lane, Palm Desert, California with El Paseo Hotel, LLC, in the amount of $2,200,000 (appraised value). Background In June of 2006, the former Palm Desert Redevelopment Agency acquired the property through assignment by William DeLeeuw and Larkspur Hotel, LLC (former developer). The Agency then entered into an Exclusive Negotiation Agreement (ENA) with Larkspur Hotel, LLC in April of 2007 to develop a hotel on the site. The former developer received entitlements for the site but due to the recession was unable to secure financing for the project and after several extensions; all agreements were terminated with the former developer. With the elimination of the Redevelopment Agency and renewed interest in the site by hotel developers, a Request For Proposals (RFP) was circulated and by the deadline in April of 2012, one submittal was received from West River, Inc. (Robert Leach) and the development team known as El Paseo Hotel, LLC (Developer). G: rda Ruth Ann Moore word data STAFF REPORTS Oversight Board El Paseo Hotel land sale 7-28-14.doc Staff Report — Oversight Board Sale of Property- Larkspur Land July 28, 2014 Page 2 of 3 The Successor Agency's Long Range Property Management Plan (LRPMP) was approved by the Department of Finance (DOF) on June 2, 2014 and the subject properties are referenced as 7a and 7b on the LRPMP. The developer is ready to proceed with the purchase of the property and the development of a hotel. The hotel will consist of the following: • 154 room boutique hotel with a 4-Star rating • Restaurant and lounge that serves three daily meals and room service • Pool and spa • Ballroom • Underground parking garage If the Disposition Agreement for the property is approved by the Oversight Board and the DOF, the developer will be required to finish all entitlement work, have proof of financing, permit approvals and completed negotiation with a hotel flag prior to the close of escrow. If all approvals are secured, the developer anticipates breaking ground in April of 2015 and opening the hotel 18 months later. Discussion In anticipation of the sale of the property, staff requested a current appraisal for the property. Performed by Lidgard & Associates, Inc., the appraisal (see attached) complies with the reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a). The valuation study consisted of: • An inspection of the subject property, • Review of ordinances adopting the existing Development Agreement on the property, • Discussions with City officials regarding development potential of the subject parcels, • Review of public records, • Research and collection of comparable market data in the immediate and general subject market area, and • Valuation employing applicable methodology based on an analysis of the comparable market data. The property has been appraised by Lidgard & Associates, Inc. at $2,200,000 (Two Million, Two Hundred Thousand Dollars). Staff is seeking authorization to execute a purchase and sale agreement (Disposition Agreement) in the amount of $2,200,000 and to open escrow so the developer can complete the design and entitlement work and meet all requirements of the agreement. G: rda Ruth Ann Moore word data.STAFF REPORTS Oversight Board El Paseo Hotel land sale 7-28-I4.doc Staff Report - Oversight Board Sale of Property- Larkspur Land July 28, 2014 Page 3 of 3 Fiscal Impact The subject properties were listed on the LRPMP to be sold for fair market value. The LRPMP requires that all proceeds of the sale be distributed as property taxes to the affected taxing entities, in accordance with the terms of the California Health and Safety Code, Section 34191.5 (c)(2)(B). Each taxing entity including the City will receive a portion of the proceeds based on their respective tax rate. Submitted By: th Ann Moore/ Ecopon is Development Manager Paul Gibson Director of Finance Approval: /4qhn M. Wohlmuth, City Manager Department He M rtin Alvarez Director of Economic Development ZT;l K�C Rudy Acosta Assistant City Manager n ,,,,,, - (4 -01 bra.►�d1 h(nnwmor) P BY OVERSIGHT BOARD air ON - a-8- 2a I '-f-' VERIFIED BY Original on file with City Clerk's Office G:`rda\Ruth Ann Moore\word dataSTAFF REPORTS \ Oversight Board El Paseo Hotel land sale 7-28-14.doc Staff Report — Oversight Board Sale of Property- Larkspur Land July 28, 2014 Page 3 of 3 Fiscal Impact The subject properties were listed on the LRPMP to be sold for fair market value. The LRPMP requires that all proceeds of the sale be distributed as property taxes to the affected taxing entities, in accordance with the terms of the California Health and Safety Code, Section 34191.5 (c)(2)(B). Each taxing entity including the City will receive a portion of the proceeds based on their respective tax rate. Submitted By: th Ann Moore Eco oniic Development Manager Paul Gibson Director of Finance Approval: J Y /John M. Wohlmuth, City Manager Department He Martin Alvarez Director of Economic Development Rudy Acosta Assistant City Manager G rda Ruth Ann Moore word data STAFF REPORTS Oversight Board El Paseo Hotel land sale 7-28-14.doc NOTICE OF ADJOUNED REGULAR MEETING OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY Proposed Adoption of: A Resolution Directing the Execution of a Disposition Agreement with El Paseo Hotel, LLC for the Property Located at Northeast Corner of Shadow Mountain and Larkspur Lane, Palm Desert, California (APN 627-262-008 and 627-262-011, Properties 7a, 7b) Pursuant to the Approved Long Range Property Management Plan Date: July 28, 2014 Time: 1:30 P.M. or as soon thereafter as the matter may be heard Place: Administrative Conference Room, located at Palm Desert City Hall, 73-510 Fred Waring Drive, Palm Desert, California NOTICE IS HEREBY GIVEN that at the meeting of the Oversight Board (the "Oversight Board") of the Successor Agency to the Palm Desert Redevelopment Agency (the "Successor Agency") to be held on July 28, 2014, at 1:30 P.M., or as soon thereafter as possible, the Oversight Board will consider the adoption of a resolution directing the execution of a Disposition Agreement with El Paseo Hotel, LLC for the property located at northeast corner of Shadow Mountain and Larkspur Lane, Palm Desert, California (APN 627-262- 008 and 627-262-011, Properties 7a, 7b), pursuant to the approved Long Range Property Management Plan. Such Long Range Property Management Plan has been approved previously by the Oversight Board and the California State Department of Finance. Interested persons are invited to attend this meeting and be heard regarding this matter. An individual who challenges any decision regarding the proposed action in court may be limited to raising only those issues such individual or someone else raised at the meeting described in this notice or in written correspondence delivered to the Oversight Board at, or prior to, the meeting. Due to the time constraints and the number of persons wishing to give oral testimony, time restrictions may be placed on oral testimony at the meeting regarding the proposal. Any interested person may wish to make comments in writing to assure that the relevant views are expressed adequately. Written comments may be submitted to the Oversight Board prior to the time set for the meeting, to the attention of the Secretary of the Oversight Board at 73-510 Fred Waring Drive, Palm Desert. Further information may be obtained by contacting Martin Alvarez, Dir. of Economic Development, at 73-510 Fred Waring Drive, Palm Desert, or by telephone at (760) 346-0611, Ext 467or by email at malvarez@cityofpalmdesert.org. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in an Oversight Board meeting, please contact the Office of the City Clerk of the City of Palm desert at (760) 346- 0611. Notification at least 48 hours prior to the meeting or time when services are needed will assist the Oversight Board staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting or service. Assisted hearing devices will he available at this hearing without prior notification .141 Dated this day , 2014 R elle D. Klassen, 1 Secretary to the Successor Agency to the Palm Desert Redevelopment Agency RESOLUTION NO. 0a - 085 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION OF A DISPOSITION AGREEMENT FOR PROPERTY LOCATED AT NORTHEAST CORNER OF SHADOW MOUNTAIN AND LARKSPUR LANE, PALM DESERT, CA (APN 627- 262-008 AND 627-262-011, PROPERTIES 7a and 7b OF THE LONG RANGE PROPERTY MANAGEMENT PLAN) WITH EL PASEO HOTEL, LLC RECITALS: A. Pursuant to AB X1 26 (enacted in June 2011), as modified by the California Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., 53 Cal. 4th 231 (2011), the Palm Desert Redevelopment Agency (the "Former Agency") was dissolved as of February 1, 2012 and the Successor Agency was established, and the Oversight Board to the Successor Agency (the "Oversight Board") was constituted. B. AB 1484 (enacted June 2012) amended and supplemented AB X1 26 (AB X1 26 and AB 1484, together, being referred to below as the "Dissolution Act"). C. Pursuant to the Dissolution Act, the Successor Agency is tasked with winding down the affairs of the Former Agency. D. Pursuant to Section 34175(b) of the California Health and Safety Code ("HSC"), all real properties of the Former Agency transferred to the control of the Successor Agency by operation of law. E. On May 5, 2014, the Oversight Board adopted Resolution No. OB-073, approving a long-range property management plan (the "LRPMP") which addresses the disposition of the real properties owned by the Successor Agency. F. As indicated in the DOF's letter dated June 2, 2014, the DOF has approved the LRPMP. G. Pursuant to HSC Section 34191.3, the DOF-approved LRPMP shall govern, and supersede all other provisions of the Dissolution Act relating to, the disposition and use of the real property assets of the Former Agency. H. Pursuant to the approved LRPMP, the Oversight Board authorizes the execution of a Disposition Agreement with El Paseo Hotel, Inc. for Properties 7a and 7b of the LRPMP (APN 627-262-008 and 627-262-011) in the amount of $2,200,000.00 (fair market value). -1- RES. NO. OB - 085 I. In accordance with the terms of California Health and Safety Code Section 34191.5(c)(2)(B), the proceeds of this property sale will distributed as property taxes to the affected taxing entities. J. The Oversight Board is adopting this Resolution to direct the execution of the Disposition Agreement with El Paseo Hotel, LLC for fair market value as directed by the approved LRPMP. K. Notice of the proposed action presented in this Resolution was posted on the Successor Agency's website (being a page on the City's website) and at three public places: beginning on JULY 18, _, 2014. NOW, THEREFORE, THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct. Section 2. The Oversight Board hereby authorizes and directs the Successor Agency to complete the execution of the Disposition Agreement with El Paseo Hotel, LLC for fair market value as directed by the approved LRPMP. The Chair (or in the Chair's absence, the Vice Chair) of the Board of Directors of the Successor Agency is hereby authorized to execute the Disposition Agreement to complete the disposition of the properties. Section 3. The members of the Oversight Board and officers and staff of the Successor Agency are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable to effectuate this Resolution. -2- RES. NO. OB - 085 Section 4. This Resolution shall become effective in accordance with HSC Section 34181(f). APPROVED and ADOPTED this 28TH day of JULY , 2014. AYES: NOES: ABSENT: ABSTAIN: ROBERT A. SPIEGEL, CHAIR ATTEST: RACHELLE D. KLASSEN, SECRETARY OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY -3- CONTRACT NO. SA33850 DISPOSITION AGREEMENT THIS DISPOSITION AGREEMENT ("Agreement"), dated as of , 2014 (the "Effective Date") is entered into by and among the SUCCESSOR AGENCY OF THE PALM DESERT REDEVELOPMENT AGENCY, a public entity ("SARDA"), and EL PASEO HOTEL, LLC, a California limited liability company (the "Developer"). RECITALS This Agreement is entered into with reference to the following facts: A. The Successor Agency of the Palm Desert Redevelopment Agency ("SARDA") owns that certain real property located at the northeast corner of Shadow Mountain Drive and Larkspur Lane, Palm Desert, California, which is more particularly described in Exhibit A attached to this Agreement and incorporated herein by this reference ("Property"). The City of Palm Desert, a California municipal corporation (the "City") desires to have SARDA sell the Property to either the City (for transfer to a developer) or directly to a developer for the development of a boutique hotel project. In January 2012, City issued a Request for Proposals ("RFP") for development of a boutique hotel on the Property. B. Developer responded to the RFP with a proposal to develop and construct a 154 room hotel project, as more particularly described on Exhibit B (the "Project"). C. On February 28, 2013, the City entered into an Exclusive Right to Negotiate Agreement (the "ENA") for the purchase of the Property and development of the Project by the Developer. D. Pursuant to the ENA, Developer desires to acquire the Property and develop, construct and operate thereon the Project. E. SARDA desires to sell the Property to the Developer on the terms and conditions set forth herein. NOW, THEREFORE, the Parties hereto agree as follows: 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 Agreement means this Disposition Agreement. 1.1.2 Approved Exceptions has the meaning defined in Section 2.5.1. 1.1.3 City means the City of Palm Desert, a municipal corporation, exercising governmental functions and powers, and organized and existing under the laws of the State of 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 California. The principal office of the City is located at 73-510 Fred Waring Drive, Palm Desert, California 92260. 1.1.4 Closing has the meaning defined in Section 2.3.2. 1.1.5 Closing Date means the date upon which SARDA by grant deed shall convey title to the Property to the Developer and such grant deed is recorded in the Official Records of the County of Riverside. 1.1.6 Developer means El Paseo Hotel, LLC, a California limited liability company. The principal office for Developer is 3941 Park Drive, Suite 20-308, El Dorado Hills, CA 95762. 1.1.7 Development Agreement means that certain Development Agreement dated July 10, 2008, between the City and Larkspur Associates, LLC, a California limited liability company ("Larkspur"), and recorded as Document No. 2008-0419294 in the Official Records of Riverside County, California, as amended by that certain [First Amendment to Development Agreement] dated as of , 2014, between the City and the Developer, as assignee of Larkspur. 1.1.8 Escrow has the meaning defined in Section 2.3.1. 1.1.9 Escrow Holder means First American Title Co. The principal office for the Escrow Holder for purposes of this Agreement is located at 1610 Arden Way, Sacramento, CA 95815. 1.1.10 Four -Star Hotel means a hotel where either of the following shall apply: (1) the hotel has or will meet the requirements of a brand included within the "Luxury" or "Upscale" segments as defined by J.D. Power and Associates; or (2) the hotel satisfies or will satisfy the published requirements sufficient for a ranking of no less than four (4) stars in the most recent annual awards list published by AAA or Mobil Travel Guides. 1.1.11 Grant Deed has the meaning defined in Section 2.5.2. 1.1.12 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 1980, 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) 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 and in any and all amendments thereto in effect as of the date of the close of any escrow; oil, petroleum, petroleum products (including, without limitation, crude oil or any fraction thereof), natural gas, natural gas liquids, liquefied 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 biphenyl's; 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. 1.1.13 Improvements means the improvements to be constructed on the Property in accordance with the Plans and Specifications. 1.1.14 Outside Date has the meaning defined in Section 2.3.2. 1.1.15 Party means any party to this Agreement. The "Parties" shall be all parties to this Agreement. 1.1.16 Permits means any and all permits required by any governmental agency for the construction of the Improvements on the Property, including without limitation, any building permit, demolition permit, site work permit, landscaping permit and/or underground utility permit. 1.1.17 Plans and Specifications means the plans and specifications approved (or deemed approved) by the City for construction of the Improvements. 1.1.18 Project means the development and construction of a 154 room hotel on the Property, as more particularly described on Exhibit B hereto. 1.1.19 Property has the meaning defined in Recital A. 1.1.20 Purchase Price has the meaning defined in Section 2.1. 1.1.21 Released Parties has the meaning defined in Section 2.8. 1.1.22 SARDA means the Successor Agency of the Palm Desert Redevelopment Agency, a public entity. 1.1.23 Title Company has the meaning defined in Section 2.5.3. 1.1.24 Title Report has the meaning defined in Section 2.5.1. 1.1.25 Transaction Costs means all attorney's fees, staff time, appraisal costs, and costs of financial advisors and other consultants incurred by either Party. 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 ARTICLE 2. PURCHASE AND SALE OF THE PROPERTY Section 2.1 Purchase and Sale. SARDA agrees to sell the Property to the Developer, and the Developer agrees to purchase the Property from SARDA, for the sum of Two Million, Two Hundred Thousand Dollars ($2,200,000) (the "Purchase Price"). The Purchase Price shall be paid in cash on the Closing Date. Section 2.2 Payment of Purchase Price. Prior to the Close of Escrow, Developer shall deposit or cause to be deposited with Escrow Holder, by a certified or bank cashier's check made payable to Escrow Holder or a confirmed federal wire transfer of funds, the Purchase Price, plus an amount sufficient to pay all other fees and expenses payable by Developer hereunder. Section 2.3 Escrow. 2.3.1 Opening of Escrow. Within five (5) days after the Parties' full execution hereof, the Developer and SARDA shall open an escrow (the "Escrow") with the Escrow Holder for the transfer of the Property to the Developer. The Parties shall deposit with the Escrow Holder a fully executed duplicate original of this Agreement, which shall serve as the escrow instructions (which may be supplemented in writing by mutual agreement of the Parties) for the Escrow. The Escrow Holder is authorized to act under this Agreement, and to carry out its duties as the Escrow Holder hereunder. 2.3.2 Close of Escrow. "Close of Escrow" or "Closing" means the date Escrow Holder causes the Grant Deed (as hereinafter defined) to be recorded in the Official Records of the County of Riverside and delivers the Purchase Price (less any escrow or other costs payable by SARDA) to SARDA. Close of Escrow shall occur before the date that is April 1, 2015 ( ) days after the Effective Date (the "Outside Date"). If for any reason other than a default by SARDA or Developer the Closing does not occur on or before the Outside Date, as it may be extended as herein provided, this Agreement shall automatically terminate and all documents and monies previously deposited into the Escrow shall be promptly returned to the appropriate Party and each Party shall pay its portion of any Escrow charges and fees in connection with such termination. Possession of the Property shall be delivered to the Developer on the Close of Escrow. 2.3.3 Delivery of Closing Documents. SARDA and Developer agree to deliver to Escrow Holder, at least two (2) days prior to the Close of Escrow, the following instruments and documents, the delivery of each of which shall be a condition precedent to the Close of Escrow: 2.3.3.1 The Grant Deed, duly executed and acknowledged by SARDA, conveying a fee simple interest in the Property to Developer, subject only to the Approved Exceptions (as defined in Section 2.5.1); 2.3.3.2 SARDA's affidavit as contemplated by California Revenue and Taxation Code § 18662; 2.3.3.3 A Certification of Non -Foreign Status signed by SARDA in accordance with Internal Revenue Code Section 1445; and 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA3385O 2.3.3.4 Such proof of SARDA's and Developer's authority and authorization to enter into this transaction as the Title Company may reasonably require in order to issue the Fee Title Policy (as hereinafter defined). SARDA and the Developer further agree to execute such reasonable and customary additional documents, and such additional escrow instructions, as may be reasonably required to close the transactions which are the subject of this Agreement pursuant to the terns of this Agreement. Section 2.4 Conditions to Close of Escrow. The obligations of SARDA and Developer to close the transactions which are the subject of this Agreement shall be subject to the satisfaction or waiver in writing of each of the following conditions: 2.4.1 For the benefit of SARDA, the Developer shall have deposited the balance of the Purchase Price, together with such funds as are necessary to pay for costs, expenses and fees payable by Developer hereunder. 2.4.2 For the benefit of SARDA and the City, the Developer shall have delivered to SARDA and the City (i) a copy of an executed commitment letter from a lender, pursuant to which the lender has committed to finance the construction of the Improvements on the Property, (ii) evidence satisfactory to SARDA and the City that all conditions to the Developer's obtaining such financing have been satisfied, (iii) evidence satisfactory to SARDA and the City that said financing will close concurrently with the Closing, and (iv) evidence satisfactory to SARDA and the City that the Developer has an amount of equity which, in addition to the loan proceeds to be available pursuant to such financing, is sufficient to complete the Project. 2.4.3 For the benefit of SARDA and the City, the Developer has received final approved Plans and Specifications for the Project, has received all other governmental approvals as may be necessary for the construction of the Project, and all conditions to the issuance of building permits for the construction of the Project have been satisfied, excepting only the payment of any permit fees. 2.4.4 For the benefit of SARDA and the City, the Developer has furnished to SARDA a copy of a hotel operating agreement with a hotel operator which shall obligate the operator to operate the hotel as a Four -Star Hotel, and which agreement and hotel operator are reasonably acceptable to the SARDA and the City. 2.4.5 For the benefit of the Developer, all actions and deliveries to be undertaken or made by SARDA on or prior to the Closing Date shall have occurred, as reasonably determined by the Developer. 2.4.6 For the benefit of SARDA and the Developer, the Parties shall have executed and delivered to Escrow Holder all documents and funds required to be delivered to Escrow Holder under the terms of this Agreement. 2.4.7 The representations and warranties of SARDA and Developer contained in this Agreement shall be true and correct in all materials respects as of the Closing Date. 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 2.4.8 Title Company shall be irrevocably committed to issuing in favor of the Developer thc Fee Title Policy, in form and substance, and with endorsements, reasonably acceptable to the Developer, all as provided in Section 2.5.3. 2.4.9 For the benefit of the SARDA and the City, the City and Developer shall have executed and recorded the [First Amendment to Development Agreement], or simultaneously with the Close of Escrow will execute and record thc [First Amendment to Development Agreement], which shall permit the development and construction of the Improvements as contemplated by this Agreement. 2.4.10 For the benefit of SARDA, no event of default by the Developer under the Development Agreement, or default by the Developer under this Agreement, shall have occurred and be continuing. Section 2.5 Condition of Title; Title Insurance. 2.5.1 Prior to Effective Date of this Agreement, Developer was provided a copy of the Preliminary Title Report dated May 13, 2014 (Order No.614681255) prepared by Lawyers Title Company (the "Title Report"). All of the exceptions set forth in the Title Report are deemed to be approved by the Buyer (the "Approved Exceptions"). 2.5.2 At the Close of Escrow, the Developer shall receive title to the Property by grant deed substantially in the form attached hereto as Exhibit C and incorporated herein by this reference (the "Grant Deed"). 2.5.3 At Closing, the Developer shall receive a CLTA Owner's Standard Coverage Policy of Title Insurance, or, if the Developer so elects, an ALTA Owner's Extended Coverage Policy of Title Insurance (whichever the Developer so elects, the "Fee Title Policy"), together with all endorsements requested by the Developer, issued by Lawyers Title Company ("Title Company") in the amount of the Purchase Price, insuring that title to the Property is free and clear of all liens, easements, covenants, conditions, restrictions, and other encumbrances of record except (a) current taxes and assessments of record, but not any overdue or delinquent taxes or assessments, (b) the matters set forth or referenced in the Grant Deed, and (c) the Approved Exceptions. Section 2.6 Escrow and Title Charges; Prorations. 2.6.1 The Developer shall pay all documentary transfer taxes, all title insurance coverage and endorsements premiums, all costs of any survey, and any and all other usual and customary costs, expense and charges relating to the escrow and conveyance of title to the Property, including without limitation, recording fees, document preparation charges and escrow fees. Each party shall be responsible for its own Transaction Costs. 2.6.2 All non -delinquent and current installments of real estate and personal property taxes and any other governmental charges, regular assessments, or impositions against the Property on the basis of the current fiscal year or calendar year shall be pro -rated as of the Close of Escrow based on the actual current tax bill. If the Close of Escrow shall occur before the tax rate is fixed, the apportionment of taxes on the Close of Escrow shall be based on the tax 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 rate for the next preceding year applied to the latest assessed valuation after the tax rate is fixed, which assessed valuation shall be based on the Property's assessed value prior to the Close of Escrow and SARDA and Developer shall, when the tax rate is fixed, make any necessary adjustment. All prorations shall be determined on the basis of a 365-day year. Developer will be liable for all real property taxes and assessments (including any supplemental assessments) allocable to the Property after the Close of Escrow. Section 2.7 Due Diligence Period; Access. 2.7.1 Inspections. Prior to the Effective Date of this Agreement, Developer has been given an opportunity to inspect the Property. Section 2.8 Condition of the Property. The Property shall be conveyed from SARDA to the Developer on an "AS IS" condition and basis with all faults and Developer agrees that SARDA has no obligation to make repairs, replacements or improvements thereto. Except as expressly and specifically provided in this Agreement, the Developer and anyone claiming by, through or under the Developer hereby waives its right to recover from and fully and irrevocably releases SARDA and the SARDA's employees, representatives, agents, advisors, servants, attorneys, successors and assigns, and all persons, firms, corporations and organizations acting on the SARDA's behalf (the "Released Parties") from any and all claims, responsibility and/or liability that the Developer may now have or hereafter acquire against any of the Released Parties for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to the matters pertaining to the Property described in this Section 2.8. This release includes claims of which the Developer is presently unaware or which the Developer does not presently suspect to exist which, if known by the Developer, would materially affect the Developer's release of the Released Parties. If the Property is not in a condition suitable for the intended use or uses, then it is the sole responsibility and obligation of the Developer to take such action as may be necessary to place the Property in a condition suitable for development of the Project thereon. Except as specifically provided in this Agreement and without limiting the generality of the foregoing, SARDA MAKES NO REPRESENTATION OR WARRANTY AS TO (i) VALUE OF THE PROPERTY; (ii) THE INCOME TO BE DERIVED FROM THE PROPERTY; (iii) THE HABITABILITY, MARKETABILITY, PROFITABILITY, MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OF THE PROPERTY; (iv) THE MANNER, QUALITY, STATE OF REPAIR OR CONDITION OF THE PROPERTY; (v) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (vi) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION OR POLLUTION LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS; (vii) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER OR ADJACENT TO THE PROPERTY; (viii) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; OR (ix) WITH RESPECT TO ANY OTHER MATTER, DEVELOPER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY AND REVIEW INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTY, DEVELOPER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION AND NOT ON ANY INFORMATION 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 PROVIDED OR TO BE PROVIDED BY SARDA. The Developer acknowledges that SARDA has made all disclosures and provided all notices to the Developer in accordance with Health and Safety Code Section 25359.7. DEVELOPER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ("SECTION 1542"), WHICH IS SET FORTH BELOW: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." BY INITIALING BELOW, DEVELOPER HEREBY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVERS AND RELEASES. Developer's Initials The waivers and releases by Developer herein contained shall survive the Close of Escrow and the recordation of the Grant Deed and shall not be deemed merged into the Grant Deed upon its recordation. Section 2.9 Escrow Holder. 2.9.1 Escrow Holder is authorized to: (a) Pay and charge the Developer for all fees, charges and costs payable by the Developer under this Article. Before such payments are made, the Escrow Holder shall notify SARDA and the Developer of the fees, charges, and costs necessary to close the Escrow; (b) Pay and charge SARDA for any amounts required to be paid by SARDA pursuant to Section 2.6 above. Before such payments are made, the Escrow Holder shall notify SARDA and the Developer of the fees, charges, and costs necessary to close the Escrow; (c) Disburse funds and deliver the Grant Deed and other documents to the Parties entitled thereto when the conditions of the Escrow and this Agreement have been fulfilled by SARDA and the Developer; and (d) Record the Grant Deed and any other instruments delivered through the Escrow, if necessary or proper, to vest title in the Developer in accordance with the terms and provisions of this Agreement. 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 2.9.2 Any amendment of these escrow instructions shall be in writing and signed by both SARDA and the Developer. At the time of any amendment, Escrow Holder shall agree to carry out its duties as escrow holder under such amendment. 2.9.3 All communications from the Escrow Holder to SARDA or the Developer shall be directed to the addresses and in the manner established in Section 4.2 of this Agreement for notices, demands and communications between SARDA and the Developer. 2.9.4 The liability of the Escrow Holder under this Agreement is limited to performance of the obligations imposed upon it under this Article, and any amendments hereto agreed upon by Escrow Holder. Section 2.10 Additional Instructions. The Parties shall execute appropriate supplemental escrow instructions, prepared by the Escrow Holder, which arc 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. EVENTS OF DEFAULT, REMEDIES AND TERMINATION. Section 3.1 Default; Remedies. 3.1.1 Generally. In the event of a breach or default under this Agreement by either Developer or SARDA, prior to the Close of Escrow, the non -defaulting Party shall have the right to terminate this Agreement by providing thirty (30) days written notice thereof to the defaulting Party. If such breach or default is not cured within such thirty (30) day period (other than a failure by SARDA to convey the Property at the Close of Escrow, for which there shall be no cure period), this Agreement and the Escrow for the purchase and sale of the Property shall terminate. Such termination of the Escrow by a non -defaulting Party shall be without prejudice to the non -defaulting Party's rights and remedies against the defaulting Party at law or equity; provided, however, any action for damages by the Developer shall be limited to the Developer's out -of pocket costs and expenses hereunder, and shall not include any consequential or special damages it may suffer including without limitation those related to profits relating to the Project. In the event of a default under this Agreement after the Close of Escrow, 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 pursue an action for specific performance, but in no event shall such non -defaulting Party be entitled to receive any consequential or special damages. 72500.00758 \8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 Section 3.2 No Personal Liability. No representative, employee, attorney, agent or consultant of SARDA shall personally be liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by SARDA, or for any amount which may become due to the Developer, or any successor in interest, on any obligation under the terms of this Agreement. Section 3.3 Legal Actions. 3.3.1 Institution of Legal Actions. Any legal actions brought pursuant to this Agreement must be instituted in either the Superior Court of the County of Riverside, State of California, or in an appropriate municipal court in that County. 3.3.2 Applicable Law. The laws of'the State of California shall govern the interpretation and enforcement of this Agreement. Section 3.4 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, 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 other party. Section 3.5 Inaction Not a Waiver of Default. Except as expressly provided in this Agreement to the contrary, any failure or delay 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 actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. ARTICLE 4. GENERAL PROVISIONS Section 4.1 Indemnity. 4.1.1 The Developer shall indemnify, defend, protect, and hold harmless SARDA and the City and any and all agents, employees, attorneys and representatives of SARDA and the City, from and against all losses, liabilities, claims, damages (including 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) possession of the Property, Developer's use, ownership, management, occupancy, or (ii) any breach or default of the Developer hereunder, (iii) any of the Developer's activities on the Property (or the activities of the Developer's agents, employees, lessees, representatives, licensees, guests, invitees, contractors, subcontractors, or independent contractors on the Property), including without limitation the construction of any Improvements on the Property, 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 (iv) the presence or clean-up of Hazardous Substances on, in or under the Property to the extent the same was caused by Developer or Developer's affiliates, or, (v) any other fact, circumstance or event related to the Developer's performance hereunder, or which may otherwise arise from the Developer's ownership, use, possession, improvement, operation or disposition of the Property, regardless of whether such damages, losses and liabilities shall accrue or are discovered before or after termination or expiration of this Agreement, or before or after the conveyance of the Property. Developer's indemnity obligations set forth in this section shall not extend to any damages, losses, or liabilities incurred by SARDA or the City to the extent such losses or liabilities are caused by or contributed to by the negligent or intentionally wrongful act of SARDA or the City, as finally determined by a court of competent jurisdiction. 4.1.2 The indemnity obligations described in this Section 4.1 shall survive the recordation of the Grant Deed and the termination of this Agreement. Section 4.2 Notices. All notices and demands shall be given in writing by certified mail, postage prepaid, and return receipt requested, by nationally recognized overnight courier or by personal delivery. Notices shall be considered given upon the earlier of (a) personal delivery, (b) three (3) business days following deposit in the United States mail, postage prepaid, certified or registered, return receipt requested or (c) the next business day after deposit with a nationally reorganized overnight courier, in each instance addressed to the recipient as set forth below. 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: SARDA: Developer: Successor Agency of the Palm Desert Redevelopment Agency c/o City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Attn: City Manager El Paseo Hotel, LLC 3941 Park Drive Suite 20-308 El Dorado Hills, CA 95762 Attention: Robert Leach Section 4.3 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. Section 4.4 follows: Developer's Warranties. The Developer warrants and represents to SARDA as 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA3385O 4.4.1 The Developer has full power and authority to execute and enter into this Agreement and to consummate the transactions contemplated hereunder. This Agreement constitutes the valid and binding agreement of the Developer, enforceable in accordance with its terns. Neither the execution nor delivery of this Agreement, nor the consummation of the transactions covered hereby, nor compliance with the terns and provisions hereof, shall conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any agreement or instrument to which the Developer is a party. 4.4.2 As of the Close of Escrow, the Developer will have inspected the Property and will be familiar with all aspects of the Property and its condition, and will accept such condition. 4.4.3 The Developer 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 4.5 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 4.6 Time of the Essence. Time is of the essence of this Agreement. Section 4.7 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 SARDA, or the Developer, without fault, is made a party to any litigation instituted by or against the other Party, such other Party shall defend it against and save it harmless from all costs and expenses including reasonable attorney's fees incurred in connection with such litigation. Section 4.8 Extension of Times of Performance. Nonperformance hereunder by the Developer shall be excused when performance is prevented or delayed by reason of any of the following forces reasonably beyond the control of such party: (i) war, insurrection, riot, flood, severe weather, earthquake, fire, casualty, acts of public enemy, governmental restriction, litigation, acts or failures to act of any governmental or quasi -governmental agency or entity, including SARDA, or public utility, or any declarant under any applicable conditions, covenants, and restrictions affecting the Property, or (ii) inability to secure necessary labor, materials or tools, strikes, lockouts, delays of any contractor, subcontractor or supplier. In the event of an occurrence described in clauses (i) and (ii) above, such nonperformance shall be excused and the time of performance shall be extended by the number of days the matters described in clauses (i) and (ii) above prevent or delay performance. Section 4.9 Approvals by SARDA and the Developer. Unless otherwise specifically provided herein, wherever this Agreement requires SARDA or the Developer to approve any contract, document, plan, proposal, specification, drawing or other matter, such approval shall not unreasonably be withheld, conditioned or delayed. 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA3385O Section 4.10 Entire Agreement, Waivers and Amendments. This Agreement, together with all attachments and exhibits hereto, constitutes the entire understanding and agreement of the Parties. Except as otherwise provided herein, 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 the Developer and SARDA 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 the Developer or SARDA. Section 4.11 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 4.12 Survival. Except as otherwise expressly provided herein, the provisions hereof shall not terminate but rather shall survive any conveyance hereunder and the delivery of all consideration. Section 4.13 Representations of SARDA. SARDA warrants and represents to the Developer as follows: (a) SARDA has full power and authority to execute and enter into this Agreement and to consummate the transactions contemplated hereunder. This Agreement constitutes the valid and binding agreement of SARDA, enforceable in accordance with its terms. Neither the execution nor delivery of this Agreement, nor the consummation of the transactions covered hereby, nor compliance with the terms and provisions hereof, shall conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any agreement or instrument to which SARDA is a party. (b) The Property is not presently the subject of any condemnation or similar proceeding, and to SARDA's knowledge, no such condemnation or similar proceeding is currently threatened or pending. (c) To SARDA's knowledge, there are no management, service, supply or maintenance contracts affecting the Property which shall affect the Property on or following the Close of Escrow. (e) To SARDA's knowledge, there are no leases affecting the Property. 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 (f) SARDA has not received any written notice from any governmental entity regarding the violation of any law or governmental regulation with respect to the Property except as may have been disclosed to the Developer. Section 4.14 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same instrument. Section 4.15 Joint and Several Obligation. If the Developer is comprised of more than one individual or entity, the obligations and liabilities of such individuals or entities under this Agreement shall be joint and several. Section 4.16 Third Party Beneficiary. The City is hereby made an express third party beneficiary of this Agreement. Section 4.17 Broker's Commission. Developer represents and warrants to SARDA that it has entered into an agreement under which a brokerage commission is being paid to Worlow & Associates and due or payable upon close of escrow with respect to the transaction contemplated hereby. The commission to Worlow & Associates is the sole responsibility of the Developer. Developer represents no other commissions, finder's fees or other compensation is being paid regarding the land sale. SARDA represents and warrants to Developer that it has not entered into any agreement under which a brokerage commission, finder's fee or other compensation would be due and payable with respect to the transaction contemplated hereby. Each Party hereby agrees to indemnify, defend, and hold the other harmless from any and all costs (including reasonable attorney's fees), liabilities and damages incurred by such Party by reason of any breach or inaccuracy of the representations and warranties contained in this Section 4.17. The provisions of this Section 4.17 shall survive the Closing. [Signature Page is Next Page] 72500.00758 \8 763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 IN WITNESS WHEREOF, the Parties hereto have entered into this agreement as of the day and year first above writtcn. "Developer" EL PASEO HOTEL, LLC, a California limited liability company By: Name: Title: "SARDA": SUCCESSOR AGENCY OF THE PALM DESERT REDEVELOPMENT AGENCY By: Name: Its: ATTEST: RACHELLE D. RLASSEN, SECRETARY 72500.0075818763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 Exhibit A Exhibit B Exhibit C LIST OF EXHIBITS Legal Description of the Property Project Description Form of Grant Deed 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY [LEGAL DESCRIPTION TO BE CONFIRMED] ALL OF LOTS 6 AND 7, A PORTION OF LOT 1 AND A PORTION OF LOT 5 IN BLOCK Q OF PALM DESERT UNIT NO. 1, AS PER MAP RECORDED IN BOOK 21, PAGES 50 TO 54 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 7; THENCE ON THE EASTERLY LINE OF SAID LOT 7 AND ITS SOUTHERLY PROLONGATION, SOUTH 0°08'35" EAST, 400.00 FEET TO THE NORTHERLY LINE OF SHADOW MOUNTAIN DRIVE, 60.00 FEET WIDE; THENCE ON SAID NORTHERLY LINE, 500 SOUTH 89°44'35" WEST, 199.96 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 20.00 FEET; THENCE NORTHWESTERLY ON SAID CURVE THROUGH A CENTRAL ANGLE OF 90°06'50", A DISTANCE OF 31.46 FEET TO THE EASTERLY LINE OF LARKSPUR LANE, 60 FEET WIDE; THENCE TANGENT TO SAID CURVE AND ON THE EASTERLY LINE, NORTH 00°08'35" WEST, 379.96 FEET TO THE NORTHWEST CORNER OF SAID LOT 7; THENCE ON THE NORTHERLY LINE OF SAID LOT 7, NORTH 8944'35" EASTER, 62.11 FEET; THENCE LEAVING SAID NORTHERLY LINE, NORTH 66°04'55" EAST, 96.85 FEET; THENCE NORTH 73°15'25" EAST, 36.83 FEET; THENCE SOUTH 13°49'41" EAST, 19.88 FEET; THENCE SOUTH 12°31'53" WEST, 30.76 FEET TO THE AFOREMENTIONED NORTHERLY LINE OF LOT 7; THENCE ON SAID NORTHERLY LINE, NORTH 89°44'35" EAST, 36.01 FEE TO THE POINT OF BEGINNING. A-1 P6402-02011968018 v5. doc 72500.0075818763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 Exhibit B PROJECT DESCRIPTION B-1 P6402-0201\968018v5.doc 72500.00758\8763639.2 DRAFT 6/4/14 EXHIBIT C RECORDING REQUESTED BY: SUCCESSOR AGENCY OF THE PALM DESERT REDEVELOPMENT AGENCY c/o CITY OF PALM DESERT 73-510 Fred Waring Drive Palm Desert, California 92260 Attn: City Manager AND WHEN RECORDED RETURN TO: CONTRACT NO. SA33850 [The undersigned Grantor declares that this document is exempt from Recording Fees pursuant to California Government Code Section 6103] GRANT DEED THE UNDERSIGNED GRANTOR DECLARES: FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the SUCCESSOR AGENCY OF THE PALM DESERT REDEVELOPMENT AGENCY, a public entity ("Grantor"), hereby grants to EL PASEO HOTEL, LLC, a California limited liability company ("Grantee"), that certain real property described in Exhibit A attached hereto (the "Site") and incorporated herein by this reference, together with all of Grantor's right, title and interest in and to all easements, privileges and rights appurtenant to the Site, excepting therefrom any public rights of way or easements. The Site is conveyed further subject to all easements, rights of way, covenants, conditions, restrictions, reservations and all other matters of record. P6402-02011968018v5.doc 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 IN WITNESS WHEREOF, Grantor has caused this Grant Deed to be executed, as of this day of , 2014. DATED: P6402-0201\968018v5.doc 72500.00758\8763639.2 DRAFT 6/4/14 , 2014 GRANTOR: SUCCESSOR AGENCY OF THE PALM DESERT REDEVELOPMENT AGENCY By: Name: Its: CONTRACT NO. SA33850 Exhibit A LEGAL DESCRIPTION (LEGAL DESCRIPTION TO BE CONFIRMED] ALL OF LOTS 6 AND 7, A PORTION OF LOT 1 AND A PORTION OF LOT 5 IN BLOCK Q OF PALM DESERT UNIT NO. 1, AS PER MAP RECORDED IN BOOK 21, PAGES 50 TO 54 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 7; THENCE ON THE EASTERLY LINE OF SAID LOT 7 AND ITS SOUTHERLY PROLONGATION, SOUTH 0°08'35" EAST, 400.00 FEET TO THE NORTHERLY LINE OF SHADOW MOUNTAIN DRIVE, 60.00 FEET WIDE; THENCE ON SAID NORTHERLY LINE, 500 SOUTH 89°44'35" WEST, 199.96 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 20.00 FEET; THENCE NORTHWESTERLY ON SAID CURVE THROUGH A CENTRAL ANGLE OF 90°06'50", A DISTANCE OF 31.46 FEET TO THE EASTERLY LINE OF LARKSPUR LANE, 60 FEET WIDE; THENCE TANGENT TO SAID CURVE AND ON THE EASTERLY LINE, NORTH 00°08'35" WEST, 379.96 FEET TO THE NORTHWEST CORNER OF SAID LOT 7; THENCE ON THE NORTHERLY LINE OF SAID LOT 7, NORTH 8944'35" EASTER, 62.11 FEET; THENCE LEAVING SAID NORTHERLY LINE, NORTH 66°04'55" EAST, 96.85 FEET; THENCE NORTH 73°15'25" EAST, 36.83 FEET; THENCE SOUTH 13°49'41" EAST, 19.88 FEET; THENCE SOUTH 12°31'53" WEST, 30.76 FEET TO THE AFOREMENTIONED NORTHERLY LINE OF LOT 7; THENCE ON SAID NORTHERLY LINE, NORTH 89°44'35" EAST, 36.01 FEE TO THE POINT OF BEGINNING. P6402-0201\968018v5.doc 72500.00758\8763639.2 DRAFT 6/4/14 CONTRACT NO. SA33850 State of California County of Riverside } } On , before me, a notary public, personally appeared who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (seal) P6402-0201 \968018v5.doc 72500.00758\8763639.2 DRAFT 6/4/14 APPRAISAL REPORT LAND VALUE STUDY SUCCESSOR AGENCY OWNERSHIP HOTEL DEVELOPMENT SITE 45-400 LARKSPUR LANE PALM DESERT, CALIFORNIA Date of Report May 9, 2014 Effective Date of Appraisal April 28, 2014 Prepared for CITY OF PALM DESERT 73-510 Fred Waring Drive Palm Desert, California 92260 Prepared by Scott A. Lidgard, MAI, CCIM LIDGARD AND ASSOCIATES, INC. 2592 North Santiago Boulevard Orange, California 92867-1862 Report Reference No. 7488 LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS May 9, 2014 Ruth Ann Moore Economic Development Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260 Subject: Land Value Study Successor Agency Ownership Hotel Development Site 45-400 Larkspur Lane Palm Desert, California Dear Ms. Moore: In accordance with your request and authorization, I have completed an The valuation study consisted of (1) an inspection of the subject property from the adjacent rights -of -way, (2) a review of various ordinances adopting Development Agreement 07-02, (3) discussions with City officials regarding development potential of the subject parcel, (4) a review of public records, (5) the research and collection of comparable market data in the immediate and general subject market area, (6) a valuation employing applicable methodology based on an analysis of the comparable market data, and (7) preparation of this formal narrative appraisal report in summation of the activities outlined above. The subject property is located at the northeast corner of Shadow Mountain Drive and Larkspur Lane, within the Downtown District of the City of Palm Desert. The site is situated in close proximity to the El Paseo commercial corridor, has an effectively rectangular land configuration, generally level topography, and contains 91,476 square feet of land area. The parcel is conditionally entitled for the development of a four -star boutique hotel having a maximum of 154 units/keys consisting of two fully integrated components including a (1) three-story four -star boutique hotel with 106 rooms, and (2) a two-story condominium complex containing a total of 16 hotel suites, each having three bedroom lockout rooms. The maximum number of keys for the project is limited to 154. Long Beach Office: 3353 Linden Avenue Suite 200 Long Beach, CA 90807 - 4503 appraisal studyof the above -referenced property.2592nge SantiagoCannty Blvd. Orange, CA 92867 - 1862 Telephone.. (562) 988-2926 (714) 633-8441 Facsimile: (714) 633-8449 TiOGARD AND ASSOCIATES Real Ramie Appraisral and Con allniuun II*iGORPORATEl Ruth Ann Moore Economic Development Manager City of Palm Desert May 9, 2014 Page 2 The project also includes 203 underground automobile parking spaces, restaurant, gift shop, conference/meeting rooms, spa, and amenities including roofdeck pool/bar, garden, and patios. 11 of the 16 condominium hotel units will include roofdeck patios. It is understood that the condominium component has been eliminated from the project with the approval of the planning commission. Reference the accompanying appraisal report for a complete description of the subject property and valuation analysis process. The purpose of this appraisal study is to express an estimate of market value of the unencumbered fee simple interest in the subject underlying land parcel as presently entitled for hotel development. Market value, as defined in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), is defined as follows: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby- 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." The intended use of this report is to assist the City of Palm Desert in sale negotiations with a private developer as well as submittal to the State finance department for approval of same. Intended users are City officials and consultants thereof for the explicit purpose and intent indicated above. This report is not intended to be distributed to, or relied upon by, third parties. After considering the various factors which influence value, the fair market value of the subject property, in as -is condition, as of April 28, 2014, is as follows: TWO MILLION TWO HUNDRED THOUSAND DOLLARS $2,200,000. L1DGARD AND ASSOCIATES Rrai Rstair Appraisal and Consultation INCORPORATED Ruth Ann Moore Economic Development Manager City of Palm Desert May 9, 2014 Page 3 This appraisal complies with the reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a). This report contains a moderate level of detail with respect to the market data, appraisal methodology, and reasoning supporting the analysis, opinions, and conclusions. It contains sufficient information for the purpose, intent, client, and intended users for which it is written. This report is submitted in triplicate as well in electronic format transmitted via email. I have retained a file copy. If you require any additional information from our file, please do not hesitate to contact the undersigned. Very truly yours, LIDGARD AND ASSOCIATES, INC. Scott A. Lidgard, MAI, CCIM Certified General Real Estate Appraiser California Certification No. AG 004014 Renewal Date: March 13, 2016 SAL:sp LIDGARD AND ASSOCIATES INCORI'ORATBD Rad Eskth Appraisal and C.ortuliaLion TABLE OF CONTENTS Title Page Letter of Transmittal Table of Contents PREFACE Executive Summary Location Map Date of Value Purpose of the Appraisal Intent and Users of the Appraisal Property Rights Appraised Appraiser's Certification Scope of the Appraisal Assumptions and Limiting Conditions Terms and Definitions SUBJECT PROPERTY DESCRIPTION Vestee Property Address Legal Description Plat Map Site Description Existing Improvements Assessment Data Ownership History Neighborhood Environment VALUATION ANALYSIS Highest and Best Use Analysis Valuation Methods Sales Comparison Approach Final Estimate of Market Value Exposure Time LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS TABLE OF CONTENTS (Continued) MARKET DATA Summary of Land Value Indicators Market Data Location Map Land Sales Data and Photographs ADDENDA Additional Subject Property Photographs Legal Description of Subject Property Development Agreement Coachella Valley Regional Description Qualifications of Appraiser LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS PREFACE LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS EXECUTIVE SUMMARY PURPOSE OF APPRAISAL: CLIENT IDENTIFICATION: DATE OF VALUE: DATE OF REPORT: PROPERTY ADDRESS: APPARENT VESTEE: SITE DESCRIPTION: Land area: Land shape: Zoning: Estimation of market value of the unencumbered fee simple interest in the subject land parcel as presently entitled for a resort hotel development. City of Palm Desert April 28, 2014 May 9, 2014 45-400 Larkspur Lane Palm Desert, California Successor Agency to the Palm Desert Redevelopment Agency APN: 627-262-008: 3,485 sq.ft. APN: 627-262-011: 87.991 sq.ft. Total land area: 91,476 sq.ft. Effectively rectangular land configuration. The parcel is conditionally entitled for the development of a four -star boutique hotel having a maximum of 154 units/keys consisting of two fully integrated components including a (1) three-story four -star boutique hotel with 106 rooms, and (2) a two-story condominium complex containing a total of 16 hotel suites, each having three bedroom lockout rooms. The maximum number of keys for the project is limited to 154. The project also includes 203 underground automobile parking spaces, restaurant, gift shop, conference/meeting rooms, spa, and amenities including roofdeck pool/bar, garden, and patios. 11 of the 16 condominium hotel units will include roofdeck patios. It is understood that the condominium component has been eliminated from the project with the approval of the planning commission. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 1 EXECUTIVE SUMMARY (Continued) SITE DESCRIPTION: (Continued) Soil contamination: None known or observed by appraiser, however, a comprehensive soil study was not provided for review. The subject property has been appraised herein as though free of soil contaminants, if any. Present use: Vacant land parcel entitled for a four -star boutique hotel development. Assessor's No.: 627-262-008, 011 EXISTING IMPROVEMENTS: There are no building or other on -site improvements having significant monetary value located within the boundaries of the subject property. HIGHEST AND BEST USE: Hotel development. VALUATION ANALYSIS: Sales Comparison Approach: Cost -Summation Approach: Income Capitalization Approach: RECONCILIATION: FINAL ESTIMATE OF VALUE: $2,200,000. Not applicable. Not applicable. The Sales Comparison Approach is the only approach considered applicable in the subject case. The Cost -Summation Approach and Income Capitalization Approach have not been applied for reasons discussed in the Valuation Analysis Section. $2,200,000. LIDGARD AND ASSOCIATES APPRA1SERS-CONSULTANTS 2 DATE OF VALUE The date of value employed in this report, and all opinions and computations expressed herein, are based on April 28, 2014, said date being generally concurrent with the valuation analysis process. PURPOSE OF THE APPRAISAL The purpose of this appraisal report is to express an estimate of the market value of the subject property, absent any liens, leases, or other encumbrances, as of the date of value set forth above. The definition of market value is set forth in the following portion of this section following the heading "Definition of Market Value" Further, it is the purpose of this appraisal report to describe the subject property, and to render an opinion of the highest and best use based on (1) the character of existing and potential development of the property appraised, (2) the requirements of local governmental authorities affecting the subject property, (3) the reasonable demand in the open market for properties similar to the subject property, and (4) the location of the subject property considered with respect to other existing and competitive districts within the immediate subject market area. Further, it is the purpose of this appraisal report to provide an outline of certain factual and inferential information which was compiled and analyzed in the process of completing this appraisal study. INTENT AND USERS OF APPRAISAL The intended use of this report is to assist the City of Palm Desert in negotiations with the private developer. Intended users are City officials and consultants thereof for the explicit purpose and intent indicated above. This report is not intended to be distributed to, or relied upon by, third parties. PROPERTY RIGHTS APPRAISED The property rights appraised herein are those of the unencumbered fee simple interest. Fee simple is defined as, 'Absolute ownership by any other Interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat" LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 3 CERTIFICATION The undersigned does hereby certify, except as otherwise noted in this appraisal report, that: I have personally inspected the subject property; I have no present or contemplated future interest in the real estate which is the subject of this appraisal report. Also, I have no personal interest or bias with respect to the subject matter of this appraisal report, or the parties involved in this assignment. My engagement in this assignment, and the amount of compensation, are not contingent upon the reporting or development of pre -determined values or direction in value that favors (1) the cause of the client, (2) the amount of the value opinion, (3) the attainment of predetermined/stipulated results, or (4) the occurrence of a subsequent event directly related to the intended use of this appraisal. To the best of my knowledge and belief, the statements of fact contained in this appraisal report, upon which the analyses, opinions, and conclusions expressed herein are based, are true and correct. This appraisal report sets forth all of the assumptions and limiting conditions (imposed by the terms of this assignment or by the undersigned), affecting my personal, impartial, and unbiased professional analyses, opinions, and conclusions. The analyses, opinions, and conclusions, were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, and the Code of Professional Ethics. As of the date of this report, I have completed the requirements of the continuing education program of the State of California. Further, duly authorized representatives of the State, as well as the Appraisal Institute, have the right to review this report. I have not performed services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Jason P. Boyer provided real property appraisal assistance to the person signing this report with respect to data collection, and report preparation No others assisted in the preparation of the analyses, conclusions, and opinions of this appraisal study. Scott A. Lidgard, MAI, CCIM Certified General Real Estate Appraiser California Certification No. AG 004014 Renewal Date: March 13, 2016 Date: May 9, 2014 LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 4 SCOPE OF THE APPRAISAL The appraiser, in connection with the following appraisal study, has: 1. Been retained, and has accepted the assignment, to make an objective analysis/valuation study of the subject property and to report, without bias, his estimate of fair market value. The subject property is particularly described in the following portion of this report in the section entitled Subject Property Description. 2. Toured the general area by automobile to acquaint himself with the extent, condition, and quality of nearby developments, sales and offerings in the area, density and type of development, topographical features, economic conditions, trends toward change, etc. 3. Walked within the subject property, and some of the nearby neighborhood, to acquaint himself with the current particular attributes, or shortcomings, of the subject property. 4. Completed an inspection of the subject for the purpose of becoming familiar with certain physical characteristics. 5. Made a visual observation concerning public streets, access, drainage, and topography of the subject property. 6. Obtained information regarding public utilities and sanitary sewer available at the subject site. 7. Made, or obtained from other qualified sources, calculations on the area of land contained within the subject property. Has made, or caused to be made, plats and plot plan drawings of the subject property, and has checked such plats and plot plan drawings for accuracy and fair representation. 8. Taken photographs of the subject property, together with photographs of the immediate environs. 9. Made, or caused to be made, a search of public records for factual information regarding the recent sales of the subject property, and for recent sales of comparable properties. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 5 SCOPE OF THE APPRAISAL (Continued) 10. Has viewed, confirmed the sale price, and obtained certain other information pertaining to each sale property contained in this report. 11. Reviewed current maps, zoning ordinances, and other material for additional background information pertaining to the subject property, and sale properties. 12. Attempted to visualize the subject property as it would be viewed by a willing and informed buyer. 13. Interviewed various persons, in both public and private life, for factual and inferential information helpful in this appraisal study. 14. Formed an opinion of the highest and best use applicable to the subject property appraised herein. 15. Formed an estimate of market value of the unencumbered fee simple interest in the subject property, as presently entitled for the development of a 154 room boutique hotel, as of the date of value expressed herein. 16. Prepared and delivered this appraisal report, in triplicate, in summation of all the activities outlined above. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 6 ASSUMPTIONS AND LIMITING CONDITIONS This appraisal is made with the following understanding as set forth in items No. 1 through 18, inclusive: 1. That liability of Lidgard and Associates, Inc., along with the specific appraiser responsible for this report, is limited to the client only and to the fee actually received by the firm. There is no accountability, obligation or liability to any third party reader/user of this report. In the event this appraisal report is delivered to anyone other than the client for whom this report was prepared, it is the client's responsibility to make such party and/or parties aware of all limiting conditions and assumptions of this assignment and related discussions. 2. That in the event the client or any third party brings legal action against Lidgard and Associates, Inc., or the preparer of this report, and the appraiser prevails, the party initiating such legal action shall reimburse Lidgard and Associates, Inc. and/or the appraiser for any and all costs of any nature, including attorney's fees, incurred in their defense. 3. This appraisal report is intended to comply with reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a). It contains a moderate level of detail with respect to the market data, appraisal methodology, and reasoning supporting the analysis, opinions, and conclusions. This report contains sufficient information for the intended use and users for which it was written. 4. That title to the subject property is assumed to be good and merchantable. Liens and encumbrances, if any, have not been deducted from the final estimate of value. The vesting was obtained from County Records, or other sources, and has been relied upon as being accurate. The subject property has been appraised as though under responsible ownership. The legal description is assumed accurate. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 7 ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 5. That the appraiser assumes there are no hidden or unapparent conditions of the subject property, subsoil, structures, or other improvements, if any, which would render it more or less valuable. Further, the appraiser assumes no responsibility for such conditions or for the engineering which might be required to discover such conditions. That mechanical and electrical systems and equipment, if any, except as otherwise may be noted in this report, are assumed to be in good working order. The property appraised is assumed to meet all governmental codes, requirements, and restrictions, unless otherwise stated. 6. That no soils report, topographical mapping, or survey of the subject property was provided to the appraiser; therefore information, if any, provided by other qualified sources pertaining to these matters is believed accurate, but no liability is assumed for such matters. Further, information, estimates and opinions furnished by others and contained in this report pertaining to the subject property and market data were obtained from sources considered reliable and are believed to be true and correct. No responsibility, however, for the accuracy of such items can be assumed by the appraiser. 7. That unless otherwise stated herein, it is assumed there are no encroachments, easements, soil toxics/contaminants, or other physical conditions adversely affecting the value of the subject property. 8. That no opinion is expressed regarding matters which are legal in nature or other matters which would require specialized investigation or knowledge ordinarily not employed by real estate appraisers, even though such matters may be mentioned in the report. 9. That no oil rights have been included in the opinion of value expressed herein. Further, that oil rights, if existing, are assumed to be at least 500 feet below the surface of the land, without the right of surface entry. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 8 ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 10. That the distribution of the total valuation in this report between land and improvements, if any, applies only under the existing program of utilization. The separate valuations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 11. That the valuation of the property appraised is based upon economic and financing conditions prevailing as of the date of value set forth herein. Further, the valuation assumes good, competent, and aggressive management of the subject property. 12. That the appraiser has conducted a visual inspection of the subject property and the market data properties. Should subsequent information be provided relative to changes or differences in (1) the quality of title, (2) physical condition or characteristics of the properties, and/or (3) governmental restrictions and regulations, which would increase or decrease the value of the subject property, the appraiser reserves the right to amend the final estimate of value. 13. That the appraiser, by reason of this appraisal, is not required to give testimony in court or at any governmental or quasi -governmental hearing with reference to the property appraised, unless contractual arrangements have been previously made therefor. 14. That drawings, plats, maps, and other exhibits contained in this report are for illustration purposes only and are not necessarily prepared to standard engineering or architectural scale. 15. That this report is effective only when considered in its entire form, as delivered to the client. No portion of this report will be considered binding if taken out of context. 16. That possession of this report, or a copy thereof, does not carry with it the right of publication, nor shall the contents of this report be copied or conveyed to the public through advertising, public relations, sales, news, or other media, without the written consent and approval of the appraiser, particularly with regard to the valuation of the property LIDGARD AND ASSOCIATES APPRA1SERS-CONSULTANTS 9 ASSUMPTIONS AND LIMITING CONDITIONS (Continued) appraised and the identity of the appraiser, or the firm with which he is connected, or any reference to the Appraisal Institute, or designations conferred by said organizations. 17. That the form, format, and phraseology utilized in this report, except the Certification, and Terms and Definitions, shall not be provided to, copied, or used by, any other real estate appraiser, real estate economist, real estate broker, real estate salesman, property manager, valuation consultant, investment counselor, or others, without the written consent and approval of Scott A. Lidgard. 18. That this appraisal study is considered completely confidential and will not be disclosed or discussed, in whole or in part, with anyone other than the client, or persons designated by the client. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 10 TERMS AND DEFINITIONS Certain technical terms have been used in the following report which are defined, herein, for the benefit of those who may not be fully familiar with said terms. MARKET VALUE for Fair Market Value): Market value is sometimes referred to as Fair Market Value; the latter is a legal term, and a common synonym of Market Value. Market value as defined in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) is defined as follows: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." SALES COMPARISON APPROACH: One of the three accepted methods of estimating Market Value. This approach consists of the investigation of recent sales of similar properties to determine the price at which said properties sold. The information so gathered is judged and considered by the appraiser as to its comparability to the subject property. Recent comparable sales are the basis for the Sales Comparison Approach. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 11 TERMS AND DEFINITIONS (Continued) COST -SUMMATION APPROACH: Another accepted method of estimating Market Value. This approach consists of estimating the new construction cost of the building and yard improvements and making allowances for appropriate amount of depreciation. The depreciated reconstruction value of the improvements is then added to the Land Value estimate gained from the Sales Comparison Approach. The sum of these two figures is the value indicated by the Cost - Summation Approach. INCOME CAPITALIZATION APPROACH: The Income Capitalization Approach consists of capitalizing the net income of the property under study. The capitalization method studies the income stream, allows for (1) vacancy and credit loss, (2) fixed expenses, (3) operating expenses, and (4) reserves for replacement, and estimates the amount of money which would be paid by a prudent investor to obtain the net income. The capitalization rate is usually commensurate with the risk, and is adjusted for future depreciation or appreciation in value. DEPRECIATION: Used in this appraisal to indicate a lessening in value from any one or more of several causes. Depreciation is not based on age alone, but can result from a combination of age, condition or repair, functional utility, neighborhood influences, or any of several outside economic causes. Depreciation applies only to improvements. The amount of depreciation is a matter for the judgment of the appraiser. HIGHEST AND BEST USE: Used in this appraisal to describe that private use which will (1) yield the greatest net return on the investment, (2) be permitted or have the reasonable probability of being permitted under applicable laws and ordinances, and (3) be appropriate and feasible under a reasonable planning, zoning, and land use concept. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 12 SUBJECT PROPERTY DESCRIPTION LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS SITE DESCRIPTION LOCATION: Northeast corner of Shadow Mountain Drive and Larkspur Lane, within the Downtown Business District of the City of Palm Desert. MAP COORDINATES: Thomas Bros. Map Page 848, Grid F-1. CENSUS TRACT: Property located in Government Census Tract No. 451.17. LAND SHAPE: Effectively rectangular land configuration; see highlighted portion of plat map on the opposite page. DIMENSIONS: Various and numerous dimensions; reference plat map. LAND AREA: The subject property consists of two individually assessed land parcels which have been vested with the Palm Desert Redevelopment Agency or successor agency for over ten years. The total land area is as follows: APN: 627-262-008: APN: 627-262-011: Total land area: TOPOGRAPHY: Effectively level topography. DRAINAGE: SOIL STABILITY: 3,485 sq.ft. 87.991 sq.ft. 91,476 sq.ft. Appears to be adequate; there are no depressions or low areas within the subject boundaries which would cause a water ponding condition during the raining season. Appears to be adequate based on the existing and other surrounding develop- ments in the immediate area. It should be noted, however, that a soils report was not provided for review. A soils study will be required prior to future development. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 2 SITE DESCRIPTION (Continued) SOIL CONTAMINATION: ACCESS: None known or observed, however, a soils study has not been provided for review. The subject property has been appraised as though free of soil contaminants. The subject property has 179.96 lineal feet of frontage along Shadow Mountain Drive, and 379.96 feet along Larkspur Lane. RIGHTS -OF -WAY WIDTH: Shadow Mountain Drive: 66 feet. Larkspur Lane: 60 feet. STREET SURFACING: Asphalt paved traffic lanes. CURB AND GUTTER: Concrete curb and gutter (each side of each street). SIDEWALK: None along subject frontage. Installation of a concrete sidewalk will be required as part of a future highest and best use development. STREET LIGHTS: Mounted on ornamental standards. PUBLIC UTILITIES: Water, gas, electric power, and telephone are available at the site. SANITARY SEWER: Available at site. ENCROACHMENTS: None apparent. EASEMENTS: A title report pertaining to the subject property was not provided for review. Easements, if existing, are assumed to be located along property boundaries which would not interfere with a future highest and best use development. It is assumed there are no "cross -lot" or "blanket" easement encumbering the subject property. EARTHQUAKE FAULT: The subject property is not located within the Alquist-Priolo special earthquake fault study zone. The greater southern California area, LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 3 SITE DESCRIPTION (Continued) EARTHQUAKE FAULT: (Continued) FLOOD HAZARD AREA: however, is generally prone to earthquakes and other seismic disturbances. No studies have been provided for review. No respon- sibility is assumed for the possible impact on the subject property of seismic activity and/or earthquakes. The subject parent property is located within Zone X, per data issued by the Federal Emergency Management Agency. Zone X is an area determined to be outside the 500- year flood area and protected by levy from a 100-year flood. Property is depicted on Flood Map Panels 06065C2207G and 06065C2209G, dated August 28, 2008. ILLEGAL USES: None apparent. PRESENT USE: Vacant land parcel entitled for a four -star boutique hotel development. ZONING: Development of the subject property is governed by Ordinance No. 341 originally adopted on August 11, 1983 and subsequently amended on December 7, 1989 by Ordinance No. 589. Said ordinances are collectively referred to as the Development Agreement Ordinance. Further, Ordinance No. 1158 adopted by Palm Desert City Council on July 16, 2008 pertains to Development Agreement 07-02 between the City of Palm Desert and Larkspur Associates, LLC, a California Limited Liability Company. The development plan comprises a four -star boutique hotel with a maximum of 154 units/keys consisting of two fully integrated components including a (1) three-story four - star boutique hotel with 106 rooms, and (2) a two-story condominium complex containing LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 4 SITE DESCRIPTION (Continued) ZONING: (Continued) HIGHEST AND BEST USE: a total of 16 hotel suites, each having three bedroom lockout rooms. The maximum number of keys for the project is limited to 154. The project also includes 203 underground automobile parking spaces, restaurant, gift shop, conference/meeting rooms, spa, and amenities including roofdeck pool/bar, garden, and patios. 11 of the 16 condominium hotel units will include roofdeck patios. It is understood that the developer has downsized the project to include the hotel component with 154 guest rooms. The condominium complex has been eliminated from the project. The project is specifically described as DA 07-02, PP 07-1 1, and CUP 07-14. Based on discussions with City officials, future development of the site must substantially adhere to the Development Agreement Ordinance. The reader is referred to the first portion of the Valuation Analysis Section for a detailed discussion regarding the highest and best use of the subject property. EXISTING IMPROVEMENTS COMMENT: There are no building or other on -site improvements having significant monetary value located within the boundaries of the subject property. ASSESSMENT DATA ASSESSOR'S PARCEL NO.: 627-262-008, 011 ASSESSED VALUATIONS: Not applicable; vested with public entity. TAX CODE AREA: 18006 and 18031. LIDGARD AND ASSOCIATES APPRAISERS -CONS It LTA N TS 5 ASSESSMENT DATA (Continued) TAX YEAR: REAL ESTATE TAXES: SPECIAL ASSESSMENTS: OWNERSHIP HISTORY COMMENT: 2013-2014 Not applicable; vested with public entity.* Not applicable; vested with public entity. * In the event the subject property is sold -transferred to a private party, the real estate taxes will be adjusted to approximately 1.15% of the sale -transfer price, plus special assessments, per Proposition 13. In the absence of a sale -transfer, the maximum allowable annual increase in the assessed valuations is 2%. Ownership of the subject property was conveyed from the City of Palm Desert to the Successor Agency to the Palm Desert Redevelopment Agency by quitclaim deed recorded December 11, 2012 as Document No. 601610. There has been no market related transaction involving the subject property in recent years. It is understood that the Successor Agency intends to convey title to the property to a developer upon approval from the State Finance Department. NEIGHBORHOOD ENVIRONMENT COMMUNITY: The City of Palm Desert was incorporated November 26, 1973 as a general law city, governed under California's State regulations. The City's designation was amended by Citywide referendum in 1997 from a general law to a charter city as a means of preserving the historical principals of self governance. The Palm Desert City Council consists of five councilpersons elected at large for four-year terms; the mayor is appointed from among LIDGARD AND ASSOCIATES APPRA1SERS-CONSULTANTS 6 NEIGHBORHOOD ENVIRONMENT (Continued) COMMUNITY: (Continued) the council members. The City Council enacts City ordinances, establishes policies, represents the public, maintains inter- governmental relations, and exercises general oversight over the affairs of City government including the Redevelopment Agency, Financing Authority, Housing Authority, and Parking Authority. Palm Desert is situated within the Coachella Valley of the Colorado Desert, surrounded by the San Jacinto Mountains to the east and the Santa Rosa Mountains to the south. Neighboring communities include Indio, Thousand Palms, La Quinta, Indian Wells, Rancho Mirage, Cathedral City, and Palm Springs. Interstate 10 is the primary freeway accessing the greater Coachella Valley region. Predominant intersecting streets entering the City of Palm Desert include Washington Street, Cook Street, Portola Avenue, Monterey Avenue, and Highway 111. The City of Palm Desert encompasses 27 square miles; the elevation is 220 feet above sea level. The total permanent resident pop- ulation within City limits is reported at 48,445 persons. Seasonal residents are reported at 32,000 persons. The average household size is approximately 2.08 persons. The median household income is $67,328, and the per capita income is $42,339. The Palm Desert labor market is allocated between a primary market area (30-mile radius), and a secondary market area (60- mile radius). The top ten private employers within the City of Palm Desert, as of 2010, are summarized as follows: LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 7 NEIGHBORHOOD ENVIRONMENT (Continued) COMMUNITY: (Continued) No. of Employer Employees JW Marriott Desert Springs Golf Resort 2,000 Universal Protection Services 1,500 Guthy-Renker 825 Securitas 700 Desert Arc 400 Wal-Mart 350 Marriot Desert Springs Villas 304 Macy's 301 Toscana Country Club 300 Bighorn Golf Club 250 There are a total of 17 hotels and 20 shopping centers/plazas located within the City boundaries. The predominant hotels include Embassy Suites, Fairfield Inn, JW Marriott Desert Springs Resort and Spa, Marriott Shadow Ridge, Shadow Mountain Resort, Best Western Palm Desert Resort, etc. Predominant shopping centers include the El Paseo shopping district, Westfield Shoppingtown, Palm Desert, Desert Crossing, and the Desert Gateway anchored by Super Walmart and Sam's Club. The Palm Springs International Airport is the hub of the transportation network for the Coachella Valley region. The airport facility serves nine airlines including four major and five regional carriers. Recent airport improvements include a 60,000 square foot terminal building, expansion of the runway, and state-of-the-art taxi/bus holding facilities. The Union Pacific Railroad runs parallel to Interstate 10, and offers Amtrak trans -continental service. Bus transportation within the City limits is provided by Greyhound and Sunline Systems. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 8 NEIGHBORHOOD ENVIRONMENT (Continued) COMMUNITY: (Continued) LOCATION: LAND USES: The Coachella Valley region offers a wide variety of cultural, recreational, educational, and entertainment options. The subject property is located toward the center portion of the City of Palm Desert, adjacent to unincorporated County territory. Neighboring and adjoining communities include the Cities of Indio, La Quinta, Indian Wells, Rancho Mirage, Cathedral City, and Palm Springs. Land uses in the general area are quite varied, and include multi -tenant commercial retail and office oriented developments, multiple family residential uses, single family residential subdivisions, and resort communities. Predominant land uses include the Havenwood Country Club, Palm Desert Resort Country Club, Indian Ridge Country Club, Palm Desert Country Club, Indian Wells Tennis Garden, Palm Royale Country Club, Bermuda Dunes Country Club, Christian School of the Desert High School, and the Sun City retirement community. El Paseo Drive is Downtown Palm Desert's main shopping street. The area has evolved into an upscale shopping district featuring 150 boutiques, art galleries, and restaurants. Based on a tour of the general subject vicinity, the overall compatibility of existing land uses is rated good. No substantial adverse conditions were noted which would have a measurable impact on the value of the subject property. BUILT-UP: Effectively 65% built-up. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 9 NEIGHBORHOOD ENVIRONMENT (Continued) OCCUPANCY: PRICE RANGE: Residential: Commercial: Industrial: 55±% owners 45±% tenants 30±% owners 70±% tenants 35±% owners 65±% tenants Commercial land parcels within the greater Coachella Valley region generally range from $15.00 to exceeding $30.00 per square foot of land area. The upper range of value pertains primarily to prominent commercial corner locations, whereas the lower range consists of large unimproved acreage land parcels. Improved single family residential properties generally range in value from $300,000 to exceeding $600,000. The lower value range primarily consists of 2-bedroom/1-bathroom dwellings, whereas the upper value range includes three and four bedroom dwellings located within resort developments. Multiple family residential properties are within a much broader value range; smaller complexes such as duplexes and triplexes, generally range from $350,000 to exceeding $650,000. Larger multiple family residential complexes range in value in excess of several million dollars. Improved commercial properties range in value from approximately $500,000 for single tenant, typically owner -user facilities, to exceeding several million dollars including large multi -tenant commercial facilities anchored by national tenants. Improved single family and low density multiple family residential developments generally range from $250,000 to exceeding LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 10 NEIGHBORHOOD ENVIRONMENT (Continued) PRICE RANGE: (Continued) $500,000. Improved commercial properties range in value from $500,000 to exceeding $1,000,000. AGE RANGE: PRIDE OF OWNERSHIP: OTHER: COMMENT: The age range of all types of improved properties is rather broad. Single family residential properties generally range in age from effectively new to exceeding 40 years. There are numerous commercial properties which have been recently built in the immediate area. Overall pride of ownership in the general subject market area, evidenced by an ongoing maintenance program, is rated above average. The availability and adequacy of public facilities, transportation, and commercial retail facilities is rated average. The City of Palm Desert provides police and fire protection to the subject district. The reader is referred to a detailed description of the Coachella Valley Region in the Addenda Section. See Valuation Analysis in the following section. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 11 VALUATION ANALYSIS LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS VALUATION ANALYSIS The purpose of this valuation study is the estimation of market value of the unencumbered fee simple interest in the subject underlying land parcel as presently entitled for a boutique hotel development. The property has been appraised as of April 28, 2014. Prior to the application of the appraisal process, which in this case employs the Sales Comparison Approach as applied to land value, it is necessary to consider and analyze the highest and best use of the subject property. HIGHEST AND BEST USE ANALYSIS: Highest and best use is defined in The Appraisal of Real Estate, by the Appraisal Institute, 14th Edition, Page 332, as: "The reasonably probable use of property that results in the highest value." In the process of forming an opinion of highest and best use, consideration must be given to various environmental and political factors such as zoning restrictions, probability of zone change, private deed restrictions, location, land size and configuration, topography, and the character/quality of land uses in the immediate and general subject market area. There are three basic criteria utilized in the highest and best use analysis of a property as if vacant, as well as presently improved. The three criteria are summarized as follows: 1. Physically possible. 2. Legally permissible. 3. Financially feasible. The foregoing are typically considered sequentially; for example, a specific use may prove to be maximally productive, however, if it is not legally permissible, or physically possible, its productivity is irrelevant. Physically Possible: The physical possibility of developing a specific property is governed, in part, by the size, shape, area, and terrain of the property in question. The availability of public utilities is also an important consideration in the analysis of a property's overall development potential. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 1 VALUATION ANALYSIS (Continued) HIGHEST AND BEST USE ANALYSIS: (Continued) Physically Possible: (Continued) Additional physical considerations are warranted when analyzing the highest and best use of the subject property, as presently improved. The size, architectural design, and condition of the existing building improvements are important elements, and may have a substantial impact on the highest and best use of a property, as presently improved. Legally Permissible: Legally permissible uses are determined, in part, by a community's general plan, zoning requirements, local building codes, and private deed restrictions. The general plan of a community is established to assure continuity of development within the community and the surrounding area. There is usually a consistency between the general plan of a community and the various zone classifications. The zone classification sets forth the various types of development allowed within a specific zone district. Zoning requirements typically constitute the available choices of development for a property. Local building codes are generally addressed as part of the zone classification, and include items such as maximum building densities, building height restrictions, setback and parking requirements, etc. Private deed restrictions relate to mutual agreements under which a property was acquired. Said restrictions may prohibit certain types of development. Financially Feasible; Those uses which meet the first two criteria, i.e. physically possible and legally permissible, are further analyzed in order to determine which uses produce an adequate return on the investment. The specified use is considered financially feasible if the net income capable of being generated is enough to satisfy the required rate of return and provide a return on the land. Among those uses which are considered financially feasible, that use which produces the highest price, or value, consistent with the required rate of return, is considered the highest and best use of the property. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 2 VALUATION ANALYSIS (Continued) HIGHEST AND BEST USE ANALYSIS: (Continued) Conclusion: The subject property has a nonsignaiized corner location at the intersection of two secondary streets within the Downtown Business District of Palm Desert. The site is situated in close proximity to the El Paseo commercial corridor, has an effectively rectangular land configuration, generally level topography, and contains 91,476 square feet of land area. Site prominence/exposure, along with vehicular accessibility of the subject parcel is rated average. All public utilities such as water, gas, electric power, telephone, as well as public sewer are available at the site. The physical characteristics of the subject parcel are considered adequate to accommodate a variety of legally permissible uses. Development of the subject property is governed by Ordinance No. 341 originally adopted on August 11, 1983 and subsequently amended on December 7, 1989 by Ordinance No. 589. Said ordinances are collectively referred to as the Development Agreement Ordinance. Further, Ordinance No. 1 158 adopted by Palm Desert City Council on July 16, 2008 pertains to Development Agreement 07-02 between the City of Palm Desert and Larkspur Associates, LL_C, a California Limited Liability Company. The development plan comprises a four -star boutique hotel with a maximum of 154 units/keys consisting of two fully integrated components including a (1) three-story four -star boutique hotel with 106 rooms, and (2) a two-story condominium complex containing a total of 16 hotel suites, each having three bedroom lockout rooms. The maximum number of keys for the project is limited to 154. The project also includes 203 underground automobile parking spaces, restaurant, gift shop, conference/meeting rooms, spa, and amenities including roofdeck pool/bar, garden, and patios. 11 of the 16 condominium hotel units will include roofdeck patios. It is understood that the condominium component has been removed from the project with the approval of the planning commission. Based on a paired sales analysis involving entitled and unentitled land parcels within the greater Southern California Region, the value attributable to development entitlements can command premiums ranging between 20% and 40% of the otherwise unencumbered fee simple value. This condition does not hold true for the proposed subject development due to current economic conditions as well as extraordinary costs associated with the necessity of constructing a subterranean parking garage. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 3 VALUATION ANALYSIS (Continued) HIGHEST AND BEST USE ANALYSIS: (Continued) Conclusion: (Continued) Specifically, estimated costs to construct the subterranean parking garage have been reported at $3,382,599, which reflects an additional cost of $21,965 per guest room based on the 154-room boutique hotel as proposed. In contrast, a scaled down hotel development containing approximately 75 guest rooms would not require construction of the garage structure. The required number of automobile parking spaces could be provided via a surface parking lot, thus substantially reducing the cost of construction. As stated, however, future development of the property must adhere to standards and specifications set forth in the development agreement. In light of the foregoing, the existing development agreement and accompanying entitlements are considered having a negative impact on the value of the subject land parcel. While a 154 guest room boutique hotel development is physically possible and legally permissible, it is not necessarily feasible or maximally productive with respect to the monetary return on the investment. The limited development opportunities have been assigned particular consideration in the analysis of the subject land parcel. VALUATION METHODS: There are three conventional methods (approaches) which can be used to estimate value. They are the Sales Comparison Approach, Cost -Summation Approach, and Income Capitalization Approach. Following is a brief description of each approach to value. Sales Comparison Approach: This approach consists of the investigation of recent sales of similar properties to determine the price at which said properties sold. The information so gathered is judged and considered by the appraiser as to its comparability to the subject property. Recent comparable sales, either vacant land or improved properties, are the basis for the application of the Sales Comparison Approach. Cost -Summation Approach: The Cost -Summation Approach consists of estimating the construction cost new of the building and yard improvements and making allowances for the appropriate amount of accrued LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 4 VALUATION ANALYSIS (Continued) VALUATION METHODS: (Continued) depreciation. The depreciated reconstruction value of the improvements is then added to the land value estimate. The sum of these two figures is the value indicated by the Cost - Summation Approach. Income Capitalization Approach: The Income Capitalization Approach consists of the capitalizing of net income of the property under appraisement. The capitalization methodology studies the income stream, allows for (1) vacancy and credit loss, (2) fixed expenses, and (3) oper- ating expenses. The value indicated by the Income Capitalization Approach represents the money which would be paid by a prudent investor to obtain the net income capable of being generated by the property. The capitalization rate is usually commensurate with the inherent risk. Inasmuch as the subject property consists of an effectively vacant land parcel readily available for commercial development, the Sales Comparison Approach, as applied to commercial land value, is the only approach considered applicable in the subject case. SALES COMPARISON APPROACH: The Sales Comparison Approach takes into account properties which have sold in the open market. This approach, whether applied to vacant or improved property, is based on the Principle of Substitution which states, "The maximum value of a property tends to be set by the cost of acquiring an equally desirable substitute property, assuming no costly delay is encountered in making the substitution." Thus, the Sales Comparison Approach attempts to equate the subject property with sale properties by analyzing and weighing the various elements of comparability. The Sales Comparison Approach was applied after conducting an investigation of market data (land sales) in the greater subject market area. The reader is referred to the Market Data Section for comprehensive information pertaining to each sale property employed herein. Reference the Market Data Map on the following page for an illustration of the location of the various sale properties. LIDGARD AND ASSOCIATES APPR A1SERS-CONSULTANTS 5 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Primary indicators studied included sales of commercial zoned land parcels as well as land sales construction cost estimates and depreciation schedules. Other elements considered included (1) pride of ownership exhibited by an aggressive and on -going maintenance program, and (2) trends toward change evidenced by private redevelopment and remodeling, or gradual continued building degeneration in certain areas. The knowledge and understanding of present and historical value patterns and trends affecting the local real estate market are based on the observation of market conditions and the appraisal of other commercial properties, as well as information obtained from various sources which include the following: • Owners: Interviews were conducted with owners of properties in the general research area to determine various market trends, and value patterns. • Tenants: Interviews were conducted with various tenants of properties located within the immediate subject market area. • Real estate brokers and salespersons: A number of active brokers and salespersons within the greater subject market area were interviewed regarding existing and historical lease and sales data, as well as value patterns and trends. • Public officials: Various public officials were interviewed regarding (1) existing or proposed projects which have an impact on real property values, (2) economic trends, (3) level of public services, (4) zone classifications and building standards, and (5) property tax structure and assessment districts. • Published data: Information was gathered and studied regarding population, unemployment levels, employment centers, commercial/residential sales data as well as rental data, and other demographic and economic factors. Land Value: Following is a summary of those sales considered helpful when estimating the value of the subject underlying land parcel. LIDGARD AND ASSOCIATES APPRAISiRS-CONSULTANTS 6 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Street Data Date Zoning Land Size Alley Corner Frontaae Sale Price $ Per SF A. 4-1 1 VC 24,084 sf no no 202 feet $ 635,000. $26.37 S/S Main St., 180' E/O Desert Club Dr., La Quinta B. 5-11 PC-4 54,886 sf* no yes 597 feet $1,550,000. $28.24 NWC State Hwy. 111 and Fred Waring Dr., Palm Desert C. 5-12 CN 51,836 sf no yes 440 feet $1,500,000. $28.94 SEC State Hwy. 111 and Mirage Rd., Rancho Mirage D. 12-12 R-2 35,082 sf no yes 360 feet $ 425,000. $12.11 NEC Tahquitz Canyon Wy. and Cerritos Dr., Palm Springs E. 10-13 CR 34,848 sf no yes 323 feet $ 900,000. $25.83 NEC State Hwy. 111 and Depot Dr., La Quinta F. 1-14 R-3 40,500 sf no no 300 feet $ 860,000. $21.23 S/S Larrea St., 730.18' W/O Portola Ave., Palm Desert G. 3-14 R-3 37,752 sf* no no 132 feet $ 675,000. $17.88 N/S Vista Chino, 514' W/O State Hwy. 111 Palm Springs * Net land area, exclusive of future required street dedication. The land sale properties surveyed are located within the general subject vicinity, and represent the most recent comparable land sale transactions. The properties range in size from 24,084 to 54,886 square feet of land area. The overall purchase prices range from $425,000 to $1,550,000, reflecting a range of $12.1 1 to $28.94 per square foot of land area. Due to the absence of a representative number of land sale properties having recently sold within the immediate subject market area, it was necessary to expand the (1) chronological time frame, and (2) geographic search area to include nearby communities of La Quinta, Rancho Mirage, and Palm Springs. Particular consideration has been assigned to general location and immediate environmental influences in the analysis of the individual sale properties. The foregoing sale transactions represent the most recent and comparable properties available for analysis. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 7 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) All of the sales employed herein conveyed title to the fee simple interest, and represent arm's length transactions. Financing terms of each sale are considered generally typical of the subject market area. Adjustments for property rights conveyed, conditions of sale, and financing terms, therefore, are not warranted. Market Conditions: Certain of the land sales data considered extended over a time period back to the second quarter of 2011. The time frame permitted the development of a rather comprehensive real estate market profile. The sales employed in this report are set forth in chronological order, and took place between April, 2011 and March, 2014. Virtually all types of real estate within the greater Southern California region experienced relatively high levels of value appreciation throughout 2003 to the first half of 2006. The lack of available properties offered for sale, along with the expansion of subprime lending practices, have been the primary reasons for the unprecedented rate of real estate appreciation, particularly with respect to single family and low density multiple family residential properties. While the appreciation rate pertaining to residential properties began to subside in the middle part of 2006, the market for commercial and industrial properties, along with vacant land parcels continued to thrive. The destabili- zation of the residential market was caused by numerous factors including (1) increasing interest rates, (2) an oversupply of properties available for sale, (3) the tightening of credit markets wherein difficulty of obtaining financing began, and (4) the lack or diminishing confidence level regarding future value appreciation for residential properties. Within the past four to five years, both the local and national economies have suffered a major housing and credit crisis which has had a significant impact on market activity involving all types of real property. The lack of financing options available for purchase and refinancing activities has had a detrimental impact on demand and value. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 8 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Market Conditions: (Continued) Based on market research findings and analysis of the immediate and general subject vicinity, it is apparent that values of commercial properties continued to appreciate through the last quarter of 2007 despite the meltdown of the residential market. Interviews with active real estate brokers and salespersons indicate that commercial and industrial properties, including vacant land parcels, have declined in value substantially since the peak period. As stated, appreciating conditions occurred throughout the first three quarters of 2007 and leveled off during the fourth quarter thereof. Due to the lack of financing options and overall uncertainty regarding credit markets, the declining trend gained significant momentum in the last quarter of 2008 and throughout the first quarter of 2009. It is apparent that market conditions have stabilized since the second half of 2010. There has been an increase in the demand for vacant land parcels within the past several months. The increased demand has resulted in a slight upward value trend. This condition has been considered in the analysis of the individual land sale properties employed herein. Elements of Comparability: After viewing each of the sale properties, and obtaining certain information pertinent to land value, the appraiser analyzed the various elements of comparability for each sale property which, among others, include the following: General location. Immediate environmental influences. Zoning. Vehicular and pedestrian access. Vehicular and pedestrian traffic. Availability of public alley. Overall developability. Site frontage/depth ratio. Site prominence and exposure. Proximity to freeway. A Relative Comparison Analysis (RCA) has been conducted between the individual comparable properties and the subject property. The RCA is a qualitative technique for analyzing comparable sales, and is a valuable tool employed to illustrate whether the characteristics of a comparable property are inferior, superior, or similar to those of the property under appraisement. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 9 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Elements of Comparability: (Continued) The Relative Comparison Analysis is similar to paired data analysis without the use of arbitrary or unsupportable quantitative adjustments. This technique acknowledges the imperfect nature of the subject real estate market. The primary objective is to bracket the subject property between the comparable sales with respect to the similarity, superiority, and inferiority thereof. Superior elements of comparability of an individual sale property would reflect a downward adjustment to the value indication thereof. Conversely, inferior elements suggest an upward adjustment. Additionally, it is important to note that the above elements of comparability were not assigned equal weight in making the analysis of each property. The general location, immediate environmental influences, vehicular accessibility, site conditions, site prominence/exposure, and land plottage were considered the most important factors in the subject case, as follows: General Location: Social, economic, and governmental forces have a substantial influence on property values. Locational factors considered include, but are not limited to, demographics such as proximity to housing, schools, employment centers, transportation facilities, as well as quality of public services, proximity to freeway corridors, enforcement of codes, and median income levels. Immediate Environmental Influences: Considered with respect to the density and quality of existing developments within the immediate proximity to a specific property. By contrast, immediate environmental influences represent a myopic consideration of location as opposed to more generalized characteristics considered with respect to general location. Vehicular Accessibility: Commercial and industrial properties rely heavily on vehicular accessibility. Generally, corner locations with multiple access points command higher values than interior parcels having single point ingress/egress. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 10 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value:(Continued) Elements of Comparability: (Continued) Site Conditions: This factor is considered with respect to the condition of the property at the time of the sale. While certain properties are acquired based on the underlying land value, often times improvements exist on the site which either contribute or detract from the value. In many instances, an additional expense must be incurred to demolish existing improvements which expense increases the cost of the underlying land. In contrast, however, a nominally improved property may be receiving income for an interim period during the planning and entitlement phase of a future development. Site Prominence/Exposure: Commercial retail and office properties, along with certain industrial uses, rely heavily on site prominence/exposure as a means of attracting customers and clients. The advertising exposure along commercial thoroughfares can also be beneficial to industrial and business park oriented properties. In general terms, signalized corner parcels offer superior prominence/exposure than interior sites. Additionally, heavily traveled corridors are preferred by commercial uses over secondary collector streets. Land Area: The functional utility or desirability of a site often varies depending on the types of contemplated uses. Different prospective uses have ideal size and shape characteristics that influence value as well as highest and best use. The purchase price per square foot of land area can fluctuate greatly depending on the size of property. Smaller parcels lend themselves to a higher degree of market participants capable of purchasing and developing the sites. Due to the precept of "economies of scale", it is the general consensus that smaller parcels tend to sell on a higher per square foot basis than larger parcels. In light of the variation in land size among the sale properties employed herein, particular consideration has been assigned to land area in the analysis. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 11 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Elements of Comparability: (Continued) Overall marketability of each sale property was also considered. Marketability is the practical aspect of selling a property in view of all the elements constituting value, and certain economic and financing conditions prevailing as of the date of sale. All of the sale properties employed herein are considered having generally similar marketability as the subject property. Sales Comparison Analysis: Following are comments regarding the various sale properties employed herein. Data A Located on the south side of Main Street, beginning 180 feet east of Desert Club Drive, La Quinta. The site was vacant at the time of sale and was acquired by the City of La Quinta in order to consolidate adjacent parcels for future development. There are no immediate development plans. The parcel has an interior (versus corner) location, effectively rectangular land configuration, level topography, 202 lineal feet of street frontage, and contains 24,084 square feet of land area. The purchase price was $635,000, all cash. The deed recorded April 7, 2011 as Document No. 153590. While the City of La Quinta was the purchaser, this sale represents an open market transaction without any undue influence. Further details regarding the transaction are summarized as follows: Grantor: James F. Kelly Trust Grantee: City of La Quinta Assessor's Parcel No.: 770-124-002, 003 Data B Located at the northwest corner of State Highway 1 1 1 and Fred Waring Drive, Palm Desert. The site is located across the intersection from the subject parent property. The property was LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 12 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Sales Comparison Analysis: (Continued) vacant at the time of sale; the buyer constructed a Red Lobster restaurant facility subsequent to the sale. The parcel has a prominent signalized corner location along the Highway 111 corridor, irregular land configuration, effectively level topography, 597 lineal feet of street frontage, and contains 57,935 square feet of land area. The purchase price was $1,550,000, all cash. The deed recorded May 4, 2011 as Document No. 196255. Further details regarding the transaction are summarized as follows: Grantor: Three Dog Properties, LLC Grantee: N & D Restaurants, Inc. Assessor's Parcel No.: 640-020-046 Data C Located at the southeast corner of Mirage Road and State Highway 1 1 1, Rancho Mirage. The site was improved with an older commercial building which was demolished and cleared from site subsequent to the sale. The buyer is presently constructing an automobile dealership facility. The parcel has a nonsignalized corner location, effectively rectangular land configuration, level topography, 440 lineal feet of street frontage, and contains 51,836 square feet of land area. The purchase price was $1,500,000, which included a concurrent first trust deed note of $1,500,000 with the City of Rancho Mirage at 5% interest amortized over 20 years. While the seller is the City of Rancho Mirage, the sale represents an open market transaction. There was no undue influence on the purchase price due to the public agency involvement. The sale price was established by an appraiser. The deed recorded May 25, 2012, as Document No. 242111. Further details regarding the transaction are summarized as follows: Grantor: City of Rancho Mirage Grantee: Desert European Motorcars, Ltd. Assessor's Parcel No.: 684-200-024 LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 13 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Sales Comparison Analysis: (Continued) Data D Located at the northeast corner of Tahquitz Canyon Way and Cerritos Drive, Palm Springs. The site was vacant at the time of sale; the buyer intends to construct a residential condominium development comprising nine dwelling units. The parcel has a nonsignalized corner location, effectively rectangular land configuration, generally level topography, 360 lineal feet of street frontage, and contains 35,082 square feet of land area. The property was originally offered for sale at $525,000 and was on the market 51 days. The purchase price was $425,000, all cash. The deed recorded December 28, 2012 as Document No. 635234. Further details regarding the transaction are summarized as follows: Grantor: Tahquitz 2000 Ventures, Inc. Grantee: Gerard J. & Janet J. Biegel Assessor's Parcel No.: 502-075-001, 002 Data E Located at the northeast corner of State Highway 111 and Depot Drive, La Quinta. The site was vacant at the time of sale and was acquired for speculation and future value appreciation. There are no immediate development plans. The parcel has a relatively prominent signalized corner location at the intersection of larger shopping center development, effectively trapezoidal land configuration, level topography, 323 lineal feet of street frontage, and contains 34,848 square feet of land area. The property was originally offered for sale at $1,000,000 and was on the market 99 days. The purchase price was $900,000, all cash. The deed recorded October 18, 2013 as Document No. 498595. Further details regarding the transaction are summarized as follows: Grantor: 99( Only Stores Grantee: Ava Property Investments, LLC Assessor's Parcel No.: 600-010-023 LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 14 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Sales Comparison Analysis: (Continued) Data F Located on the south side of Larrea Street, beginning 730.18 feet west of Portola Avenue, Palm Desert. The site was vacant at the time of sale and was acquired for speculation and future value appreciation. The parcel has an interior (versus corner) location, rectangular land configuration, effectively level topography, 300 lineal feet of street frontage, and contains 40,500 square feet of land area. The purchase price was $860,000, which included $150,000 cash down to a concurrent first trust deed note of $710,000 with a private lender. The cash down payment represents 17% of the total purchase price. The deed recorded January 22, 2014 as Document No. 24495. Further details regarding the transaction are summarized as follows: Grantor: Breznock Family Trust Grantee: Larrea Partners, LLC Assessor's Parcel No.: 627-273-003, 004 Data G Located on the north side of Vista Chino, beginning 514 feet west of State Highway 1 1 1, Palm Springs. The site was vacant at the time of sale and as acquired for speculation and future value appreciation. The parcel has an interior (versus corner) location, rectangular land configuration, effectively level topography, 132 lineal feet of street frontage, and contains 37,752 square feet of land area. The purchase price was $675,000, all cash. The deed recorded March 10, 2014 as Document No. 87923. Further details regarding the transaction are summarized as follows: Grantor: Landau Development Co., Inc. Grantee: Gain, LP Assessor's Parcel No.: 504-310-011 LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 15 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Sales Comparison Analysis: (Continued) Reference the Market Analysis Comparison Grid set forth on the following facing page. The sale properties have been compared to the subject property with consideration assigned to property rights conveyed, date of sale, financing terms, along with the various elements of comparability. By way of review and comparison, the subject parcel has a nonsignalized corner location, effectively rectangular land configuration, generally level topography, and contains 91,476 square feet of land area. While the site is fully entitled for hotel development, said entitlements are judged to have a negative impact on value due to extraordinary costs associated with constructing a semi -subterranean parking garage. Reference the detailed discussion regarding same on Pages 3 and 4 of this section. In addition to the consummated sale transactions discussed herein, research was expanded to include four reasonably comparable land parcels presently offered for sale within the general subject market area, as follows: Street Asking Days on Data Zoning Land Size Corner Frontaae Price $ Per SF Market 1. R-3 37,462 sf no 177 feet $ 799,000. $21.33 413 E/S Arbonia Tr., 107.85' N/O Candlewood St., Palm Desert 2. 0 48,352 sf no 474 feet $1,500,000. $31.02 90 N'Iy/S State Hwy. 111, 341.34' W'ly/O Country Club Dr., Rancho Mirage 3. CG 80,586 sf yes 565 feet $2,250,000. $27.92 8 S'Iy/S State Hwy. 111, 180± 'W'ly/O Magnesia Falls Rd., Rancho Mirage 4. CG 75,002 sf no 320 feet $2,500,000. $33.33 1,268 S'Iy/S State Hwy. 1 1 1, 630.55' W'ly/O Magnesia Falls Rd., Rancho Mirage The properties surveyed range in size from 37,462 to 80,586 square feet of land area. The overall asking prices range from $799,000 to $2,500,000, reflecting $21.33 to $33.33 per square foot of land area. The marketing times range between 8 and 1,268 days. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 16 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value: (Continued) Sales Comparison Analysis: (Continued) All of the consummated sale transactions employed herein were considered helpful in the land valuation analysis of the subject property. The purchase price per square foot of land area has been utilized herein as the primary indication of value inasmuch as it is most commonly utilized by market participants. Following is a summary relating the overall comparability of the individual sale properties to the subject property. Overall Data Comparability $ Per SF D far inferior $12.11 G inferior $17.88 F similar $21.23 Subject - - - - $24.00 E similar $25.83 A similar $26.37 B superior $28.24 C superior $28.94 After considering the various elements of comparability, as well as economic and financial conditions prevailing during the consummation of the various sale properties, when compared to current market conditions, it is the appraiser's opinion that the unencumbered fee simple market value of the subject site is estimated at $24.00 per square foot of land area, as follows: 91,476 SF @ $24.00 = $2,195,424. Adjusted: $2,200,000. FINAL ESTIMATE OF MARKET VALUE: Based on the foregoing valuation study, the unencumbered fee simple market value of the subject property, as of the date of value employed herein, is estimated at $2,200,000. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 17 VALUATION ANALYSIS (Continued) EXPOSURE TIME: Exposure time is defined in the 2014-2015 Edition of the Uniform Standards of Professional Appraisal Practice as the `estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal" Exposure time is a retrospective opinion based on an analysis of past events assuming a competitive and open market. The reasonable exposure time is a function of price, time, and use, not an isolated opinion of time alone. The exposure time of a particular property is a direct function of supply and demand within a particular market segment. Generally, a higher demand results in a shorter marketing period. During the course of extensive market research, interviews were conducted of parties involved in the transactions regarding the sale properties employed in the Sales Comparison Approach. Based on said interviews, as well as interviews with a number of real estate brokers and other market participants, the exposure time estimated for the subject property, assuming an aggressive and comprehensive marketing program, is estimated at approximately six to nine months. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 18 MARKET DATA LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS MARKET DATA SUMMARY LAND VALUE INDICATORS: Street Data Date Zoning Land Size Alley Corner Frontaae Sale Price $ Per SF A. 4-1 1 VC 24,084 sf no no 202 feet $ 635,000. $26.37 S/S Main St., 180' E/O Desert Club Dr., La Quinta B. 5-11 PC-4 54,886 sf* no yes 597 feet $1,550,000. $28.24 NWC State Hwy 111 and Fred Waring Dr., Palm Desert C. 5-12 CN 51,836 sf no yes 440 feet $1,500,000. $28.94 SEC State Hwy 111 and Mirage Rd., Rancho Mirage D. 12-12 R-2 35,082 sf no yes 360 feet $ 425,000. $12.1 1 NEC Tahquitz Canyon Wy. and Cerritos Dr., Palm Springs E. 10-13 CR 34,848 sf no yes 323 feet $ 900,000. $25.83 NEC State Hwy 111 and Depot Dr., La Quinta F. 1-14 R-3 40,500 sf no no 300 feet $ 860,000. $21.23 S/S Larrea St., 730.18' W/O Portola Ave., Palm Desert G. 3-14 R-3 37,752 sf* no no 132 feet $ 675,000. $17.88 N/S Vista Chino, 514' W/O State Hwy. 111 Palm Springs * Net land area, exclusive of future required street dedication. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 1 LEGAL DESCRIPTION OF SUBJECT PROPERTY LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS Branch :NAO,User :T149 Comment: Station Id :QRQQ EXHIBIT A LEGAL DESCRIPTION (APN: 627-262-008, 627-262-011) THAT CERTAIN PORTION OF LAND SITUATED IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS: ALL OF LOTS 6 AND 7, A PORTION OF LOT 1 AND A PORTION OF LOT 5 IN BLOCK Q OF PALM DESERT UNIT NO. 1, AS PER MAP RECORDED IN BOOK 21, PAGES 50 TO 54 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 7; THENCE ON THE EASTERLY LINE OF SAID LOT 7 AND ITS SOUTHERLY PROLONGATION, SOUTH 0°08'35" EAST, 400.00 FEET TO THE NORTHERLY LINE OF SHADOW MOUNTAIN DRIVE, 60.00 FEET WIDE; THENCE ON SAID NORTHERLY LINE, 500 SOUTH 89°44'35" WEST, 199.96 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 20.00 FEET; THENCE NORTHWESTERLY ON SAID CURVE THROUGH A CENTRAL ANGLE OF 90°06'50", A DISTANCE OF 31.46 FEET TO THE EASTERLY LINE OF LARKSPUR LANE, 60 FEET WIDE; THENCE TANGENT TO SAID CURVE AND ON THE EASTERLY LINE, NORTH 00°08'35" WEST, 379.96 FEET TO THE NORTHWEST CORNER OF SAID LOT 7; THENCE ON THE NORTHERLY LINE OF SAID LOT 7, NORTH 89°44'35" EAST, 62.11 FEET; THENCE LEAVING SAID NORTHERLY LINE, NORTH 66°04'55" EAST, 96.85 FEET; THENCE NORTH 73°15'25" EAST, 36.83 FEET; THENCE SOUTH 13°49'41" EAST, 19.88 FEET; THENCE SOUTH 12°31'53" WEST, 30.76 FEET TO THE AFOREMENTIONED NORTHERLY LINE OF LOT 7; THENCE ON SAID NORTHERLY LINE, NORTH 89°44'35" EAST, 36.01 FEET TO THE POINT OF BEGINNING. P6402.0001\1331424vI.doc RIVERSIDE,CA Document: QD 2012.601610 -41- Page 3 of 4 Printed on 4/23/2014 10:29:55 AM DEVELOPMENT AGREEMENT LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS RECORDING REQUESTED BY, AND WHEN RECORDED, MAIL TO: City Clerk's Office City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260-2578 FOR THE BENEFIT OF THE CITY OF PALM DESERT - NO FEE - 6103 OF THE GOVT. CODE DOC # 2008-0419294 07/31/2008 08:00A Fee:NC Page 1 of 25 Recorded in Official Records County of Riverside Larry U. Idard Assessor County Clerk 8 Recorder 11111111111111111111111111111111111111111111111111111 S R U PAGE SIZE M A L • t\. . DA MISC LONG RFD COPY 465 426 PCOR NCOR SMF Development Agreement 07-02 Between City of Palm Desert, California and Larkspur Associates, LLC a California Limited Liability Company Legal Description of Property 45-400 Larkspur Lane/APN: 627-262-008 and 627-262-011 ORDINANCE NO. 1158 (Case Nos. DA 07-02, PP 07-11, and CUP 07-14) Dated: hZ =h r1d 8-111r �iioz JJ'1d 3C ia'='._ 33133() S, y813 -4 , 1 July 10, 2008 (Title of Document) IT. CTY _, rJ ro ON C EXAM UN 7✓n 030 ORDINANCE NO. 1158 CASE N0. DA 07-02 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Palm Desert 73-626 Highway 111 Palm Desert CA 92260 Attn: City Clerk Exempt from recording fees pursuant to Govt. Code Section 27383 (Space above for recorder's use) DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT (this "Agreement") is made and entered into as of this loth day of July , 2008, by and between the City of Palm Desert, California, a municipal corporation organized and existing under the laws of the State of Califomia (the "City), and LARKSPUR ASSOCIATES, LLC ("Developer"), with reference to the following facts, understandings and intentions of the parties: RECITALS: A. These Recitals refer to and utilize certain capitalized terms which are defined in this Agreement. The parties intend to refer to those definitions in conjunction with the use thereof in these Recitals. B. Government Code Sections 65684 through 65869.5 inclusive (the "Development Agreement Legislation") authorize the City to enter into development agreements in connection with the development of real property within its jurisdiction. On August 11, 1983, the City enacted by Ordinance No. 341, as amended on G:\Planning\Tony Bagato\Word Files \Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordlnance.doc 2 ORDINANCE NO. 1158 December 7, 1989 by Ordinance No. 589 (collectively, the "Development Agreement Ordinance"), procedures and requirements for the consideration of development agreements thereunder pursuant to the Development Agreement Legislation. C. Developer is the owner of a legal or equitable interest in the Property and is entitled to have filed the application for and to enter into this Agreement. The Project consists of the future development of the Property. The Property is located at an important location in the City and the coordinated development of the Project pursuant to this Agreement represents an important and mutually beneficial economic development and land usage planning opportunity for the City and Developer. D. The City has determined that the development of the Project as contemplated by this Agreement is consistent with and in furtherance of the development goals, policies, general land uses and development programs of the City as set forth in the City's General Plan, Commercial Core Area Specific Plan and is consistent with the existing zoning affecting the Properties. E. City has further determined that entry into this Agreement will further the goals and objectives of the City's land use planning policies by, among other things, encouraging investment, providing precise and supplemental criteria for the uses, design, circulation and development of the Property, including flexibility in land use options which may be altered in order to respond to future changes in the surrounding areas, eliminating uncertainty in planning for, and securing orderly processing and development of the Project. The benefits conferred on the City by Developer herein will (i) insure consistent, comprehensive planning which will result in aesthetically pleasing, environmentally harmonious, and economically viable development within the City; (ii) provide for the creation of a high quality, aesthetically pleasing entry statement for the City; (iii) provide for the construction of storm water system improvements vital to the City; and (iv) further the development objectives of the City in an orderly manner, all of which will significantly promote the health, safety and welfare of the residents of the City. In exchange for these benefits to the City, Developer desires to receive the assurance that it may proceed with the Project in accordance with the Development Plan attached to this Agreement as Exhibit "A", and at a rate of development of its choosing, subject to the terms and conditions contained in this Agreement. F. Pursuant to Section 65867.5 of the Development Agreement Legislation, the City Council has found and determined that: (i) this Agreement implements the goals and policies of the City's General Plan, provides balanced and diversified land uses, and imposes appropriate standards and requirements with respect to land development and usage in order to maintain the overall quality of life and the environment within the City; (ii) this Agreement is in the best interests of and not detrimental to the public health, safety and general welfare of the City and its residents; (iii) adopting this Agreement is consistent with the City's General Plan, and each element thereof and the Commercial Core Area Specific Plan, and constitutes a present exercise of the City's police power; and (iv) this Agreement is being entered into G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 3 ORDINANCE NO. 1158 pursuant to and in compliance with the requirements of Government Code Section 65867 of the Development Agreement Legislation. G. By adopting this Agreement, the City Council has elected to exercise certain governmental powers at the present time rather than deferring such actions until an undetermined future date and has done so intending to bind the City and the City Council and intending to limit the City's future exercise of certain governmental powers, to the extent permitted by law. H. This Agreement has undergone extensive review by the City's staff, the Planning Commission and the City Council. 1. In order to effectuate the foregoing, the parties desire to enter into this Agreement. AGREEMENT NOW, THEREFORE, pursuant to the authority contained in the Development Agreement Legislation, and in consideration of the mutual covenants and promises of the parties herein contained, the parties agree as follows: DEFINITIONS. Defined Terms. Each reference in this Agreement to any of the following terms shall have the meaning set forth below for each such term. Agreement. This Development Agreement. Building Ordinances. Those building standards, of general and uniform application throughout the City and not imposed solely with respect to the Property, in effect from time to time that govern building and construction standards within the City, including, without limitation, the City's building, plumbing, electrical, mechanical, grading, sign, and fire codes. City Council. The legislative body of the City of Palm Desert. Development Plan. Development Plan means the development and associated amenities, and on -site and off -site improvements, as permitted under and described in the Development Plan (Exhibit "A"), to be constructed on the Property, as the same may hereafter be further refined, enhanced or modified pursuant to the provisions of this Agreement. Effective Date. The date on which the Enacting Ordinance becomes effective. Enactina Ordinance. Ordinance 1158 , enacted by the City Council on July 10 , 2008, approving this Agreement. G:\Pianning\tony Sagato\Word Files\Formats\Staff Reports\PP\PP 07.11, CUP 07-14, DA 07-02 Larkspur Associates\City CounciPDA Ordinance.doc 4 ORDINANCE NO. 1158 Existina Land Use Ordinances. The Land Use Ordinances in effect as of the Effective Date. Four -Star Hotel and Four -Star Hotel Standards. Four -Star Hotel shall mean a hotel where either of the following shall apply: (1) the hotel has or will meet the requirements of a brand included within the "Luxury" or "Upscale" segments as defined by J.D. Power and Associates; or (2) the hotel satisfies or will satisfy the published requirements sufficient for a ranking of no less than four (4) stars in the most recent annual awards list published by AAA or Mobil Travel Guides. The City Council may, by resolution, adopt alternative standards as may be necessary. Four -Star Hotel Standards shall mean the standards of a Four -Star Hotel. Hotel Manaaer. Hotel Manager means a reputable and experienced hotel management company or operator who shall have at least five (5) consecutive years of experience in the hotel management business in hotels that meet the Four Star Hotel Standards and have no fewer than ten (10) other properties (each in separate cities, or distinct and separate projects in any given city, nationally or internationally) under current management. Land Use Ordinances. The ordinances, resolutions, codes, rules, regulations and official policies of the City duly adopted and on file in the Office of the City Clerk, governing the development of the Property, including but not limited to, the permitted uses of land, the density and intensity of use of land, and the timing of development, all as applicable to the development of the Property. Specifically, but without limiting the generality of the foregoing, Land Use Ordinances shall include the City's General Plan, the City's zoning ordinance and the City's subdivision code, but shall exclude the Building ordinances. Mortaaae. A mortgage, deed of trust, sale and leaseback arrangement in which all or a part of the Property, or an interest in it, is sold and leased back concurrently, or other transactions in which all or a part of the Property, or an interest in it, is pledged as security, contracted in good faith and for fair value. Municipal Code means the Palm Desert Municipal Code. Personal Use means the use or occupancy of a unit by a Unit Owner, or when a guest of an Unit Owner does not rent and pay for the Owner's unit through the hotel Manager. Use of a unit arising out of an exchange program with an affiliated hotel property shall be subject to Transient Occupancy Tax based on the equivalent daily rental value for that room exchanged free of charge or otherwise reduced in the program and shall not be considered personal use by the owner; provided, however, that no provision herein shall be deemed to permit a timeshare, fractional, or other vacation ownership unit if otherwise prohibited by this Agreement or the Municipal Code. Proiect. The development and associated amenities, and on -site and off - site improvements, as permitted under and described in the Development Plan (Exhibit G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City CounciWDA Ordinance.doc 5 ORDINANCE NO. 1158 "A"), to be constructed on the Property, as the same may hereafter be further refined, enhanced or modified pursuant to the provisions of this Agreement. Property. The real property and any improvements thereon which is described in Exhibit `B" to this Agreement. Transient Occuciancv Tax means the tax described and subject to the provisions of Chapter 3.28 of the Municipal Code, as may be amended from time to time. Unit Owner means an individual or entity that acquires any ownership interest in, and holds title to, one or more condominium hotel units within the Project. Term: Amendment. Term. The term of this Agreement (the "Term") shall commence on the Effective Date and shall terminate on the ten (10) year anniversary date of the Effective Date, unless sooner terminated or extended as hereinafter provided. Amendment. The parties to this Agreement at their sole discretion and by their mutual written consent may from time to time amend the provisions and terms of this Agreement and the Exhibits hereto. Any amendment to this Agreement or the Exhibits hereto as provided herein shall be effected only upon compliance with the procedures for amendment, if any, required by the Development Agreement Legislation and the Development Agreement Ordinance. The City shall, after any such amendment takes effect, cause an appropriate notice of such amendment to be recorded in the official records of the County of Riverside. General Development of the Proiect Pr oject. The Project is defined and described in the Development Plan attached to this Agreement as Exhibit "A". Developer shall have the vested right to develop the Project in accordance with, and development of the Project during the Term shall be govemed by, the Development Plan and, to the extent not inconsistent with or modified by the Development Plan, the Existing Land Use Ordinances. Developer's right to develop the Property in accordance with this Section 3.1 shall be without regard to future ordinances, resolutions, rules, regulations and policies of the City or referenda of the voters of the City, including, without limitation, those with respect to moratoriums for utility service, other than ordinances, resolutions, rules, regulations and policies of the City which limit or condition the rate, timing or sequencing of development of the Property and which are required solely as a result of then existing shortages of utility service capacity or facilities. Buildina Permits and Other Approvals and Permits. Subject to (a) Developer's compliance with this Agreement, the Development Plan, the Existing Land Use Ordinances and the Building Ordinances, and (b) payment of the usual and G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City CounciADA Ordinance.doc 6 ORDINANCE NO. 1158 customary fees and charges of general application charged for the processing of such applications, permits and certificates and for any utility connection, or similar impact fees and charges of general application then in effect, the City shall process and issue to Developer upon application therefore all necessary use permits, building permits, occupancy certificates, and other required permits for the construction, use and occupancy of the Project, or any portion thereof, as applied for, including connection to all utility systems under the City's jurisdiction and control (to the extent that such connections are physically feasible and that such utility systems are capable of adequately servicing the Project). Procedures and Standards. The standards for granting or withholding permits or approvals required hereunder in connection with the development of the Project shall be governed as provided herein by the standards, terms and conditions of this Agreement and the Development Plan, and to the extent not inconsistent therewith, the Existing Land Use Ordinances, but the procedures for processing applications for such permits pre -approvals (including the usual and customary fees of general application charged for such processing) shall be governed by such ordinances and regulations as may then be applicable and which are consistent with the Development Plan. Effect of Aareement. This Agreement shall constitute a part of the Enacting Ordinance, as if incorporated by reference therein in full. The parties acknowledge that this Agreement is intended to grant Developer the right to develop the Project pursuant to specified and known criteria and rules as set forth in the Development Plan and the Existing Land Use Ordinances, and to grant the City and the residents of the City certain benefits which they otherwise would not receive. This Agreement shall be binding upon the City and its successors in accordance with and subject to its terms and conditions notwithstanding any subsequent action of the city, whether taken by ordinance or resolution of the City Council, by referenda, initiative, or otherwise. The parties acknowledge and agree that by entering into this Agreement and relying thereupon, the Developer has obtained, subject to the terms and conditions of this Agreement, a vested right to proceed with its development of the Project in accordance with the proposed uses of the Property, the density and intensity of development of the Property and the requirements and guidelines for the construction or provision of on -site and off -site improvements as set forth in the Development Plan and the Existing Land Use Ordinances, and the City has entered into this Agreement in order to secure the public benefits conferred upon it hereunder which are essential to alleviate current and potential problems in the City and to protect the public health, safety and welfare of the City and its residents, and this Agreement is an essential element in the achievement of those goals. Operating Memoranda. The parties acknowledge that refinements and further development of the Project may demonstrate that changes are appropriate with respect to the details and performance of the parties under this Agreement. The parties desire to retain a certain degree of flexibility with respect to those items covered in general terms under this Agreement. If and when the parties mutually find that changes, G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 7 ORDINANCE NO. 1158 adjustments, or clarifications are appropriate to further the intended purposes of this Agreement, they may, unless otherwise required by law, effectuate such changes, adjustments, or clarifications without amendment to this Agreement through one or more operating memoranda mutually approved by the parties, which, after execution, shall be attached hereto as addenda and become a part hereof and may be further changed and amended from time to time as necessary. The City Manager is authorized to approve such an operating memorandum on behalf of the City without further approval of the City Council. Unless otherwise required by law or by this Agreement, no such changes, adjustments, or clarifications shall require prior notice or hearing, public or otherwise. Specific Criteria AoDlicable to Development of the Proiect. Applicable Ordinances. Except as set forth in the Development Plan and subject to the provisions of Section 4.2 below, the Existing Land Use ordinances shall govem the development of the Property hereunder and the granting or withholding of all permits or approvals required to develop the Property; provided, however, that (a) Developer shall be subject to all changes in processing, inspection and plan -check, impact fees and charges imposed by City in connection with the processing of applications for development and construction upon the Property so long as such fees and charges are of general application and are not imposed solely with respect to the Property, (b) Developer shall abide by the Building ordinances in effect at the time of such applications, and (c) Developer and/or Operator of the project shall comply with all ordinances relating to operation including but not limited to Transient Occupancy Tax. Amendment to Applicable Ordinances. In the event that the Palm Desert zoning ordinance is amended by the City in a manner which provides more favorable site development standards for the Property or any part thereof than those in effect as of the Effective Date, Developer shall have the right to notify the City in writing of its desire to be subject to all or any such new standards for the remaining term of this Agreement. If City agrees, by resolution of the City Council or by action of a City official whom the City Council may designate, such new standards shall become applicable to the Property or portions thereof. Should City thereafter amend such new standards, upon the effective date of such amendment, the original new standards shall continue to apply to the Property as provided above, but Developer may notify City in writing of its desire to be subject to all or any such amended new standards and City may agree in the manner above provided to apply such amended new standards to the Property. Easements: Abandonments. City shall cooperate with Developer in connection with any arrangements for abandoning existing utility or other easements and the relocation thereof or creation of any new easements within the Property necessary or appropriate in connection with the development of the Project; and if any such easement is owned by City, City shall, at the request of Developer and in the manner and to the extent permitted by law, take such action and execute such documents as may be necessary to abandon existing easements and relocate them, as necessary or appropriate in connection with the development of the Project, all at the cost and expense of the Developer. In addition, to the extent that temporary or permanent easements on G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Councit,DA Ordinance.doc 8 ORDINANCE NO. 1158 property adjacent or in close proximity to the Property will be required in order for Developer to develop all or portions of the Project, the City shall cooperate with Developer in efforts to obtain or secure any such required easements. Heiaht Requirements. Buildings constructed on the Property as part of the Project shall not exceed a height of thirty-seven feet (37') at the parapets or forty-two feet (42') at the tower in accordance with the Development Plan. The height limits shall be measured in the manner of other height limits under Title 25 of the Municipal Code. Parkina Requirements. The Project shall provide a minimum of two hundred three (203) parking spaces in accordance with the Development Plan. Density Requirements. The Project shall not exceed a density of one hundred fifty four (154) hotel rooms/keys that may be allocated within the components of the Project as provided in the Development Plan. LEED Reauirements. Developer shall design, develop and construct the Project as required to secure the "Silver" or higher designation, as selected by the Developer in the exercise of its reasonable discretion, as established by the U.S. Green Building Council under the Leadership in Energy and Environmental Design ("LEED") program. Cooling Station Capacity. An emergency backup power generator onsite capable of cooling the Project shall be installed and maintained as part of the Project. The Project shall be used as a "cooling station" for the City in the event of power outage. Hotel Requirements. The requirements of this Section 4.9 and Section 4.10 are necessary to preserve the commercial nature of the Property and insure that the Project retains its character as a four -star boutique commercial hotel. While the project contains condominium units in addition to more traditional hotel units, the condominium units are commercial hotel condominium units and are not intended to, nor shall be used, as long- term residential units. The Developer shall comply with and use the property in accordance with the restrictive covenants set forth in Section 5.1 of the Disposition and Development Agreement between the Developer and the Redevelopment Agency of the City of Palm Desert dated on or about the date of this Agreement and pertaining to the Property. One hundred (100) percent of the condominium units shall be made available as rental units for hotel guests by the Hotel Manager when not being used by the Unit Owner for the Unit Owner's Personal Use (as defined in Section 1.14 of this Agreement). The Unit Owners, through the CC&Rs shall assign their units to the Hotel Manager for the purposes of rental to transient guests when not being used for Personal Use. G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City CounciRDA Ordinance.doc 9 ORDINANCE NO. J.s$ A Unit Owner shall be allowed to use the unit for Personal Use no more than two (2) weeks between November 1st and May 1st of each year and for no more than two (2) weeks between May 2nd and October 31 st of each year without paying the Transient Occupancy Tax. Every condominium unit shall be subject to the Transient Occupancy Tax, except for Personal Use described above, and each condominium unit shall be made available to hotel guest for transient use. No condominium unit shall be rented or let for more than twenty-nine (29) consecutive days. No condominium unit shall be used or converted into any form of permanent residence. No condominium unit shall be used as a timeshare, factional or other vacation ownership as such terms are defined in Business and Professions Code Section 11212, as may be amended from time to time. The Developer shall enter into a contract for operation of the Project with a reputable and experienced hotel manager or operator who shall have at least five (5) consecutive years of experience in the hotel management business in hotels that meet the Four Star Hotel Standards and have no fewer than ten (10) other properties (each in separate cities, or distinct and separate projects in any given City, nationally or internationally) under current management ("Hotel Manager"). The applicant shall provide the Director of Community Development with appropriate documentation to demonstrate that the Hotel Manager meets the requirements of this subsection. Any future changes in the Hotel Manager shall require review and approval by the Director of Community Development. The Director of Community Development may modified the standards for the Hotel Manager upon finding that the Hotel Manager has comparable experience meeting the interests served by the standards. The Hotel Manager shall ensure that all portions of the hotel are maintained and operated in accordance with the Four Star Hotel Standards, including but not limited to the condominium units, lobby and hallways, front desk, concierge services, landscape and open space areas, parking, banquet/ballroom facilities, conference, restaurant, retail, recreational, and spa facilities, and other amenities and improvements. Conditions. Covenants and Restrictions. The Developer shall prepare and submit to the City CC&R's governing the Project, including the condominium portion of the Project. The CC&R's must be approved by the Community Development Director and the City Attorney and recorded against the Property in the Riverside County Recorder's Office prior to the issuance of a certificate of occupancy for the Project or any portion thereof. All CC&R's shall include the following provisions: The CC&R's shall specifically include the provisions of Section 4.8 and 4.9 of this Agreement and shall incorporate by reference the terms of this G:\Planning\Tony Bagato\Word Files\Formats\Statf Reports\PP\PP 07-11, CUP 07-14, OA 07-02 Larkspur Associates\City CounciADA Ordlnance.doc 10 ORDINANCE NO, 1158 Agreement and the Disposition and Development Agreement for the Property adopted on the same date as this Agreement. The CC&R's shall give the approved Hotel Manager the right, power and obligation to enforce the Four Star Hotel Standards including, without limitation, the right to enter any portion of the hotel and condominium units, and any individual condominium units upon sale or assignment of the Unit, to cure any failure to meet the Four Star Hotel Standards. The Hotel Manager shall provide transient rental services to all owners of the condominium units. The CC&Rs shall provide that the Unit Owners shall assign their units to the Hotel Manager for the purposes of rental to transient guests when not being used for Personal Use. The CC&R's shall give the Hotel Manager the exclusive right to provide to the condominium hotel, the property, and to unit owners, lessees and other occupants, any or all "on property" services commonly provided at Four -Star Hotels, restaurants and resorts, including without limitation, reservation programs, maid and housekeeping services, maintenance, laundry and dry cleaning, room service, catering and other food and beverage services, massage, personal training and other spa services. The use of such services, if offered, shall be conditioned upon payment of such charges or fees as may be imposed on unit owners or hotel guests by the Hotel Manager. Unit owners shall be required to enter into a unit maintenance agreement with the Hotel Manager, to be approved by the Director of Community Development. The CC&R's shall for the authority, but not the obligation, of the City to enforce, in its discretion, the provisions of the Development Plan and this Agreement. Subject to applicable California general law and Department of Real Estate regulations, the CC&R's shall provide that the obligation to pay the Transient Occupancy Tax shall constitute a lien by the City on the units for the amount owed, including any permitted penalties or interest, and that the City shall have the right, but not the duty, to foreclose on any such liens through equitable or legal proceedings. The CC&R's shall provide that they shall not be amended without the prior written approval of the Director of Community Development. Completion of Hotel and Condo -Hotel Components of Proiect. Developer shall complete construction of the hotel component of the Project prior to or concurrently with completion of construction of the condominium component of the Project. The City shall not issue a certificate of occupancy for the condominium component of the Project, or any part thereof, until the hotel component of the Project is completed and eligible for an unrestricted certificate of occupancy from the City and all other applicable requirements for issuance of a certificate of occupancy for the condominium component of the Project have been fulfilled. Art in Public Places. The City and Developer desire to cooperate with each other to secure the introduction and integration of public art into the Project for the purpose of enhancing the image of the City and the Project. Developer shall, at the request of the G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PPPPP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 11 ORDINANCE NO. 1158 City, provide such easements upon the Property as may be reasonably required for the installation and maintenance of such public art. The location of such easements shall be mutually approved by the City and Developer. In addition to providing such easements as may be reasonably required for the installation and maintenance of such public art, Developer shall pay to the City in lieu art fees at the time of and in connection with the development of the Property, or portions thereof, in accordance with the fee levels and other payment and procedural requirements of Chapter 4.10 of the Municipal Code of the City lawfully imposed at the time of development of the Property, or portions thereof. Periodic Review of Compliance. In accordance with Govt. Code Section 65865.1, the Department of Community Development/Planning Staff shall review this Agreement at least each calendar year during the term of this Agreement. At such periodic reviews, Developer must demonstrate its good faith compliance with the terms of this Agreement. Developer agrees to furnish such evidence of good faith compliance as the City, and after reasonable exercise of its discretion and after reasonable notice to Developer, may require. Permitted Delays: Supersede by Subseauent Laws. Permitted Delays. In addition to any other provisions of this Agreement with respect to delay, Developer and City shall be excused from performance of their obligations hereunder during any period of delay caused by acts of mother nature, civil commotion, riots, strikes, picketing, or other labor disputes, shortage of materials or supplies, or damage to or prevention of work in process by reason of fire, floods, earthquake, or other casualties, litigation, acts or neglect of the other party, any referendum elections held on the Enacting Ordinance, or the Land Use Ordinances, or any other ordinance effecting the Project or the approvals, permits or other entitlements related thereto, or restrictions imposed or mandated by governmental or quasi - governmental entities, enactment of conflicting provisions of the Constitution or laws of the United States of America or the State of Califomia or any codes, statutes, regulations or executive mandates promulgated thereunder (collectively, "Laws") , orders of courts of competent jurisdiction, or any other cause similar or dissimilar to the foregoing beyond the reasonable control of City or Developer, as applicable. Each party shall promptly notify the other party of any delay hereunder as soon as possible after the same has been ascertained. The time of performance of such obligations shall be extended by the period of any delay hereunder. Supersedure of Subsequent Laws or Judicial Action. The provisions of this Agreement shall, to the extent feasible, be modified or suspended as may be necessary to comply with any new Law or decision issued by a court of competent jurisdiction (a "Decision"), enacted or made after the Effective Date which prevents or precludes compliance with one or more provisions of this Agreement. Promptly after enactment of any such new Law, or issuance of such Decision, the parties shall meet and confer in good faith to determine the feasibility of any such modification or suspension based on the effect such modification or suspension would have on the purposes and intent of this G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Councfl\DA Ordinance.doc 12 ORDINANCE NO. 1158 Agreement. In addition, Developer and City shall have the right to challenge the new Law or the Decision preventing compliance with the terms of this Agreement. In the event that such challenge is successful, this Agreement shall remain unmodified and in full force and effect, except that the Term shall be extended, in accordance with Section 7.1 above, for a period of time equal to the length of time the challenge was pursued. Events of Default; Remedies; Termination. Events of Default. Subject to any extensions of time by mutual consent in writing, and subject to the provisions of Section 7.1 above regarding permitted delays, the failure of either party to perform any material term or provision of this Agreement shall constitute an event of default hereunder ("Event of Default") if such defaulting party does not cure such failure within ninety (90) days following receipt of written notice of default from the other party; provided, however, that if the nature of the default is such that it cannot be cured within such ninety (90) day period, the commencement of the cure within such ninety (90) day period and the diligent prosecution to completion of the cure shall be deemed to be a cure within such period. Any notice of, default given hereunder shall specify in detail the nature of the alleged Event of Default and the manner, if any, in which such Event of Default may be satisfactorily cured in accordance with the terms and conditions of this Agreement. During the time periods herein specified for cure of a failure of performance, the party charged therewith shall not be considered to be in default for purposes of termination of this Agreement, institution of legal proceedings with respect thereto, or issuance of any permit, map, certificate of occupancy, approval or entitlement with respect to the Project. Remedies. Upon the occurrence of an Event of Default, the nondefaulting party shall have such rights and remedies against the defaulting party as it may have at law or in equity, including, but not limited to, the right to terminate this Agreement or seek mandamus, specific performance, injunctive or declaratory relief but not the right to damages. Notwithstanding the foregoing and except as otherwise provided in Section 8.4 hereof, if either Developer or City elects to terminate this Agreement as a result of the occurrence of an Event of Default, such proceeding of termination shall constitute such party's exclusive and sole remedy, and with respect to such election City and Developer hereby waive, release and relinquish any other right or remedy otherwise available under this Agreement or at law or equity. Waiver; Remedies Cumulative. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party shall not constitute waiver of such party's right to demand strict compliance by such other party in the future. All waivers must be in writing to be effective or binding upon the waiving party, and no waiver shall be implied from any omission by a party to take any action with respect to such Event of Default. No express written waiver of any Event of Default shall affect any other Event of Default, or cover any other period of time specified in such express waiver. G:\Planning\Tony Bagato\Word Files\Fo►mats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 13 ORDINANCE NO. 1158 Effect of Termination. Termination of this Agreement by one party due to the other party's default, or as a result of the exercise of the right of termination provided to the Developer under Section 8.2 hereof, shall not affect any right or duty emanating, from any approvals, permits, certificates or other entitlements with respect to the Property or the Project which were issued, approved or provided by the City prior to the date of termination of this Agreement. If City terminates this Agreement because of Developer's default, then City shall retain any and all benefits, including money, land or improvements conveyed to or received by the City prior to the date of termination of this Agreement, subject to any reimbursement obligations of the City. If Developer terminates this Agreement because of City's default, or as a result of the exercise of the right of termination provided to the Developer under Section 8.2 hereof, then Developer shall be entitled to all of the benefits arising out of, or approvals, permits, certificates or other entitlements, on account of, any Exactions paid, given or dedicated to, or received by, City prior to the date of termination of this Agreement. Except as otherwise provided in this Section 8.4, all of the rights, duties and obligations of the parties hereunder shall otherwise cease as of the date of the termination of this Agreement. If this Agreement is terminated pursuant to any provision hereof, then the City shall, after such action takes effect, cause an appropriate notice of such action to be recorded in the official records of the County of Riverside. The cost of such recordation shall be borne by the party causing such action. Third Party Actions. Any court action or proceeding brought by any third party to challenge this Agreement or any permit or approval required from City or any other governmental entity for development or construction of all or any portion of the Project, whether or not Developer is a party defendant to or real party defendant in interest in such action or proceeding, shall constitute a permitted delay under Section 7.1. Encumbrances on Property. Discretion to Encumber. The parties hereto agree that this Agreement shall not prevent or limit Developer, in any manner, at Developer's sole discretion, from encumbering the Property or any portion thereof or any improvements thereon with any mortgage, deed of trust or other security device ("Mortgage") securing financing with respect to the Property. The City acknowledges that the lenders providing such financing may require certain modifications to this Agreement, and the City agrees upon request, from time -to -time, to meet with Developer and/or representatives of such lenders to negotiate in good faith any such request for modification. City further agrees that it will not unreasonably withhold its consent to any such requested modification. Mortaaae Protection. This Agreement shall be superior and senior to the lien of any Mortgage. Notwithstanding the foregoing, no breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any Mortgage made in good faith and for value, and any acquisition or acceptance of title or any right or interest in or with respect to the Site orany portion thereof by a Mortgagee (whether pursuant to a G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP1PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 14 ORDINANCE NO. ills Mortgage, foreclosure, trustee's sale, deed in lieu of foreclosure or otherwise) shall be subject to all of the terms and conditions of this Agreement. Mortaaaee Not Obligated. Notwithstanding the provisions of Section 9.2, no Mortgagee will have any obligation or duty under this Agreement to perform the obligations of Developer or other affirmative covenants of Developer hereunder, or to guarantee such performance, except that to the extent that any covenant to be performed by Developer is a condition to the performance of a covenant by City, the performance thereof shall continue to be a condition precedent to City's performance hereunder. Estoppel Certificates. Either party may, at any time, and from time to time, deliver written notice to the other party requesting such party to certify in writing that, to the knowledge of the certifying party, (i) this Agreement is in full force and effect and a binding obligation of the parties, (ii) this Agreement has not been amended or modified, or if so amended or modified, identifying such amendments or modifications, and (iii) the requesting party is not in default in the performance of its obligations under this Agreement, or if in default, describing therein the nature and amount of any such defaults. A party receiving a request hereunder shall execute and return such certificate within thirty (30) days following the receipt thereof city acknowledges that a certificate hereunder may be relied upon by transferees, assignees and lessees of the Developer and the holders of any Mortgage. Transfers and Assignments: Effect of Agreement on Title. Riahts and Interests Appurtenant. The rights and interests conveyed as provided herein to Developer benefit and are appurtenant to the Property. Developer has the right to sell, assign and transfer any and all of its rights and interests hereunder and to delegate and assign any and all of its duties and obligations hereunder. Such rights and interests hereunder may not be sold, transferred or assigned and such duties and obligations may not be delegated or assigned except in compliance with the following conditions: Said rights and interests may be sold, transferred or assigned only together with and as an incident of the sale, lease, transfer or assignment of the portions of the Property to which they relate, including any transfer or assignment pursuant to any foreclosure of a Mortgage or a deed in lieu of such foreclosure. Following any such sale, transfer or assignment of any of the rights and interests of Developer under this Agreement, the exercise, use and enjoyment thereof shall continue to be subject to the terms of this Agreement to the same extent as if the purchaser, transferee or assignee, were Developer hereunder. Covenants Run with Land. All of the provisions, agreements, rights, powers, standards, terms, covenants and obligations contained in this Agreement shall be binding upon the parties and their respective heirs, successors (by merger, consolidation, or otherwise) and assigns, devisees, lessees, and all other persons acquiring any rights or interests in G:\Planning\Tony 8agato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 15 ORDINANCE NO. 1158 the Property, or any portion thereof, whether by operation of laws or in any manner whatsoever, and shall inure to the benefit of the parties and their respective heirs, successors (by merger, consolidation or otherwise) and assigns; All of the provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land pursuant to applicable law; Each covenant to do or refrain from doing some act on the Property hereunder (A) is for the benefit of and is a burden upon every portion of the Property, (B) runs with such lands, and (C) is binding upon each party and each successive owner during its ownership of the Property or any portions thereof, and shall benefit each party and its lands hereunder, and each such other person or entity succeeding to an interest in such lands-, Notices. Any notice to either party shall be in writing and given by delivering the same to such party in person or by sending the same by registered or certified mail, return receipt requested, with postage prepaid, to the following addresses: If to City: City Clerk of the City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 If to Developer: Larkspur Associates LLC 73626 Highway 111 Palm Desert, CA 92260 Either party may change its mailing address at any time by giving written notice of such change to the other party in the manner provided herein. All notices under this Agreement shall be deemed given, received, made or communicated on the date personal delivery is affected or, if mailed, on the delivery date or attempted delivery date shown on the return receipt. Indemnification. Developer's Obliaation. Developer will defend, indemnify and hold the City and its elected officials, officers and employee free and harmless from any Toss, cost or liability (including, without limitation, liability arising from injury or damage to persons or property, including wrongful death and worker's compensation claims) which results from (i) any obligation which arises from the development of the Property including, without limitation, obligations for the payment of money for material and labor; (ii) any failure on G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City CounciWDA Ordinance.doc 16 ORDINANCE NO. 1158 the part of Developer to take any action which he is required to take as provided in this Agreement; (iii) any action taken by Developer which he prohibited from taking as provided in this Agreement and (iv) any claim which results from any willful or negligent act or omission of Developer. 12.2 Environmental Assurances. Developer shall indemnify and hold the city, its officers, agents and employees free and harmless from any liability deriving from the City's execution or performance of this Agreement, based or asserted, upon any act or omission of Developer, its officers, agents, employees, contractors, subcontractors and independent contractors for any violation of any federal, state or local law, ordinance or regulation relating to hazardous or toxic materials, industrial hygiene, or environmental conditions created by Developer or its officers, agents or employees, contractors, subcontractors and independent contractors after the Effective Date on, under which the Property, including, but not limited to soil and groundwater conditions, and Developer shall defend, at its expense, including attorneys fees, the City its officers, agents and employees in any action based or asserted upon any such alleged act or omission. The City may in its discretion participate in the defense of any such action. The provisions of this Section shall survive the termination or expiration of this Agreement. Miscellaneous Relationship of Parties. It is understood that the Project is a private development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contractor. It is further understood that none of the terms or provisions of this Agreement are intended to or shall be deemed to create a partnership, joint venture or joint enterprise between the parties hereto. Consents. Unless otherwise herein provided, whenever approval, consent, acceptance or satisfaction (collectively, a "consent') is required of a party pursuant to this Agreement, it shall not be unreasonably withheld or delayed. Unless provision is otherwise specified in this Agreement or otherwise required by law for a specific time period, consent shall be deemed given within thirty (30) days after receipt of the written request for consent, and if a party shall neither approve nor disapprove within such thirty (30) day period, or other time period as may be specified in this Agreement or otherwise required by law for consent, that party shall then be deemed to have given its consent. If a party shall disapprove, the reasons therefor shall be stated in reasonable detail in writing. This Section does not apply to development approvals by the City. Not a Public Dedication. Except as otherwise expressly provided herein, nothing herein contained shall be deemed to be a gift or dedication of the Property, or of the Project or any portion thereof, to the general public, for the general public, or for any public use or purpose whatsoever, it being the intention and understanding of the parties that this Agreement be strictly limited to and for the purposes herein expressed for the development of the Project as private property. G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 17 ORDINANCE NO. 1158 Severabilitv. If any term, provision covenant or condition of this Agreement shall be determined invalid, void or unenforceable by judgment or court order, the remainder of this Agreement shall remain in full force and effect, unless enforcement of this Agreement as so invalidated would be unreasonable or grossly inequitable under all the relevant circumstances or would frustrate the purposes of this Agreement. Exhibits. The following Exhibits, to which reference is made herein, are deemed incorporated into this Agreement in their entirety by reference thereto: Exhibit A Exhibit B Description of Project Legal Description of the Property Entire Agreement. This written Agreement and the Exhibits hereto contain all the representations and the entire agreement between the parties with respect to the subject matter hereof. Except as otherwise specified in this Agreement and the Exhibits hereto, any prior correspondence, memoranda, agreements, warranties or representations are superseded in total by this Agreement and Exhibits hereto. Governina Law: Construction of Aareement. This Agreement, and the rights and obligations of the parties, shall be governed by and interpreted in accordance with the laws of the state of California. The provisions of this Agreement and the Exhibits hereto shall be construed as a whole according to their common meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives and purposes of the parties hereunder. The captions preceding the text of each Section, subsection and the Table of Contents hereof are included only for convenience of reference and shall be disregarded in the construction and interpretation of this Agreement. Wherever required by the context, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine or neuter genders, or vice versa. Sianature Pages. For convenience, the signatures of the parties of this Agreement may be executed and acknowledged on separate pages which, when attached to this Agreement, shall constitute this as one complete Agreement. Time. Time is of the essence of this Agreement and of each and every term and condition hereof. Prevailina Partv's Attomev's Fees and Costs. If any party to this Agreement shall fail to perform any of its obligations hereunder, or if a dispute arises with respect to the meaning or interpretation of any provision hereof or the performance of the obligations of any party hereto, the defaulting party or the party not prevailing in such dispute, as the case may be, shall promptly pay any and all costs and expenses (including without limitation, all court costs and reasonable attorneys' fees and expenses) incurred by the other party with respect to such to such dispute or in enforcing or establishing its rights hereunder. Notwithstanding the foregoing, City shall not be required to pay any costs or expenses (including without limitation, reasonable attorneys' fees and G:\Planning\Tony Begato\Word Fiies\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 18 ORDINANCE NO. 1158 expenses) which Developer may incur in respect of any hearing held pursuant to Section 7 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. Attest: DEVELOPER: LARKSPUR ASSOCIATES, LLC, a California limited liability company By: Name: De L e e u i Title: M44r.4J, .Hems,`eq By: Name: Title: CITY: CITY OF PALM DESERT, CALIFORNIA, a municipal corporation organized and existing under the laws of the State of California B Aldip . RAC . LLE D. KLA�5S N, CITY CLERK CITY OF PALM DESERT, CALIFORNIA n.g G:\Planning\Tony Bagato\Word Files\Formats\Statf Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 19 ORDINANCE NO. • 115B State of California County of Riverside II j) On t,tLf : 9 C before me, ei 1 —r. r�1 , a notary public, personally appeared 1 L&) t LI io:r k i--e-e-a LO who roved to me on the basis of satisfactory evidence to be the person ja whose narfe( is/a-4 subscribed to the within instrument and acknowledged to me that he/she ey executed the same in his/heeir authorized capacity(ies), and that by his/ ''Fir signatures on the instrument the person(s) or the entity upon behalf of which the personW acted, executed the instrument. 1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. V1N ignature (seal) fOM ALVAREZ comm. # 1660611 NOTARY PU8UC.CMEORNL PINES IOE COUNTY Ny Comm. Expires APRIL 73, 2010 .:. I, G:\Planning\Tony Bagato1Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Assoclates\City CouncitlDA Ordinance.doc 20 ORDINANCE Na 1158 State of California } } County of Riverside } On July 16, 2008 before me, M. Gloria Martinez a notary public, personally appeared Jean M. Benson and Rachelle D. Klassen who proved to me on the basis of satisfactory evidence to be the person0 whose name® i subscribed to the within instrument and acknowledged to me that hO/sre executed the same in i(s/p( /t ei authorized capaci , and that by hi's/pf = t signature] on the instrument the persons or the entity upon behalf of which the persoacted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (seal) M. GLORIA MARTINEZ Commission # 1697036 Notary Public - California t Riverside County My Comm. Expires Oct 29, 2010t G:\Planning\Tony Bagato\Word Flles\FormatssStaff Reports\PP\PP 07.11. CUP 07-14, DA 07.02 Larkspur Associates\City CounciADA Ordinance.doc 21 ORDINANCE NO. 1158 EXHIBIT "A" DEVELOPMENT PLAN/PROJECT DESCRIPTION The Development Plan and Project Description shall consist of the following: 1. The Developer shall develop, build and operate a Four -Star boutique hotel with a maximum of 154 units/keys consisting of two fully integrated components: (1) a three-story Four Star boutique hotel with one hundred six (106) hotel rooms; and (2) a two-story condominium project consisting a maximum of sixteen (16) condominium hotel suites each with three (3) bedroom lockout rooms (forty-eight keys maximum) as specifically described the City's approvals of DA 07-02, PP 07-11 and CUP 07-14, and the site plans approved therein. 2. The maximum number of keys for the Project shall be one hundred fifty four (154). The Project also includes a two hundred three (203) underground parking spaces, a restaurant area, gift shop, conference and meeting rooms, spa, and amenities including a roof deck pool and bar, roof deck garden and roof deck patios on eleven (11) of the sixteen (16) condominium hotel units. 3. Subsequent land use approvals in accordance with the terms of this Development Agreement. 4. The Project is located at 45-400 Larkspur Lane, Palm Desert, California, APNs 627-262-008 and 627-262-011. G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 22 ORDINANCE NO. 1158 EXHIBIT "B" LEGAL DESCRIPTION OF PROPERTY ALL OF LOTS 6 AND 7, A PORTION OF LOT 1 AND A PORTION OF LOT 5 IN BLOCK Q OF PALM DESERT UNIT NO. 1, AS PER MAP RECORDED IN BOOK 21, PAGES 50 TO 54 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 7; THENCE ON THE EASTERLY LINE OF SAID LOT 7 AND ITS SOUTHERLY PROLONGATION, SOUTH 0°08'35" EAST, 400.00 FEET TO THE NORTHERLY LINE OF SHADOW MOUNTAIN DRIVE, 60.00 FEET WIDE; THENCE ON SAID NORTHERLY LINE, 500 SOUTH 89°44'35" WEST, 199.96 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 20.00 FEET; THENCE NORTHWESTERLY ON SAID CURVE THROUGH A CENTRAL ANGLE OF 90°06'50", A DISTANCE OF 31.46 FEET TO THE EASTERLY LINE OF LARKSPUR LANE, 60 FEET WIDE; THENCE TANGENT TO SAID CURVE AND ON THE EASTERLY LINE, NORTH 00°08'35" WEST, 379.96 FEET TO THE NORTHWEST CORNER OF SAID LOT 7; THENCE ON THE NORTHERLY LINE OF SAID LOT 7, NORTH 8944'35" EASTER, 62.11 FEET; THENCE LEAVING SAID NORTHERLY LINE, NORTH 66°04'55" EAST, 96.85 FEET; THENCE NORTH 73°15'25" EAST, 36.83 FEET; THENCE SOUTH 13°49'41" EAST, 19.88 FEET; THENCE SOUTH 12°31'53" WEST, 30.76 FEET TO THE AFOREMENTIONED NORTHERLY LINE OF LOT 7; THENCE ON SAID NORTHERLY LINE, NORTH 89°44'35" EAST, 36.01 FEE TO THE POINT OF BEGINNING. G:\Planning\Tony Bagato\Word Files\Formats\Staff Reports\PP\PP 07-11, CUP 07-14, DA 07-02 Larkspur Associates\City Council\DA Ordinance.doc 23 [This page has intentionally been left blank.] ORDINANCE NO. 1158 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, APPROVING A DEVELOPMENT AGREEMENT FOR A NEW THREE-STORY 106-ROOM BOUTIQUE HOTEL AND TWO-STORY CONDOMINIUM UNIT INCLUDING SIXTEEN 3-BEDROOM LOCKOUT ROOMS (48 KEYS MAXIMUM) TOTALING A MAXIMUM OF 154 UNITS/KEYS, EXHIBIT "A" ATTACHED. CASE NO. DA 07-02 WHEREAS, the Planning Commission by its Resolution No. 2477 has recommended approval of Case No. DA 07-02; and WHEREAS, at said public hearings, said City Council heard and considered all testimony and arguments of all interested persons. WHEREAS, the City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN, AS FOLLOWS: SECTION 1: That the Development Agreement 07-02, Exhibit "A" attached, by Ordinance No. 1158 is hereby approved. SECTION 2: That the City Clerk of the City of Palm Desert, Califomia, is hereby directed to publish this ordinance in the Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and effect thirty (30) days after its adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the Palm Desert City Council, held on this 10th day of July 2008, by the following vote, to wit: AYES: FERGUSON, FINERTY, KELLY, SPIEGEL, and BENSON NOES: NONE ABSENT: NONE ABSTAIN: NONE ATTEST: RA LE D. KLASSEW CITY CLERK CITY OF PALM DESERT, CALIFORNIA -1-��-01? N M. BENSON, MAYOR DOCUMENT TO WHICH THIS CERTIFICATE 18 ATTACHED. IS CERTIFIED TO SE A FULL, TRUE AND CORRECT COPY OF THE ORIGINAL ON FILE AND ON RECORD IN �i Dated:I.4 • .1d ASSEN, dry Clerk fps d- c� - . ;r. COACHELLA VALLEY REGION DESCRIPTION LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS REGIONAL DATA The value of real property is influenced by the attributes and utility of land and physical improvements, as well as inter -relationships of markets and demographic forces, transportation, government, environmental influences and other factors. Said factors influence the location and density of population distribution and activities in certain areas and regions over others. COACHELLA VALLEY REGION: Coachella Valley is located in the easterly portion of the County of Riverside. Coachella Valley consists of 13 individual communities including Palm Springs, Desert Hot Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, La Quinta, Indio, Coachella, Bermuda Dunes, Thousand Palms, Mecca, and Thermal. The current population of Coachella Valley is 336,398 persons, which represents a growth of 45.7% since 1990, and 175.5% since 1980. The Coachella Valley population represents approximately 20% of the entire Riverside County population. The current labor work force is estimated at 1 1 1,900± persons, which represents approximately 33% of the entire Coachella Valley population. 17% of the remaining population consists of persons 65 years and older; 25% represents persons 18 years and younger. The demographic make- up of Coachella Valley is summarized as follows: Population by Race Caucasian: African -American: Hispanic: Other: 47.8% 2.0% 46.4% 3.9% Population bvAae Under 18 years: 18-44 years: 56-65 years: 65 & over: 29.4% 31.8% 20.3% 17.4% The population of Coachella Valley is forecasted to increase at a rate of 6% per annum, which rate would more than double the current population in approximately 20 years. The median household income is $31,735; the median family income is $37,119. The per capita income is estimated at $17,347. Tourism and agriculture are major forces in the Coachella Valley's economy. There are over 270 hotels containing approximately 15,800 hotel rooms and over 85 golf courses. The total annual economic impact of tourism is estimated to exceed 1 billion dollars. The agricultural industry accounts for approximately 58,000 acres. The four major crops include grapes, citrus, dates, and vegetables. The total annual economic impact of agriculture is estimated at slightly below 1 billion dollars. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS REGIONAL DATA (Continued) COACHELLA VALLEY REGION: (Continued) While tourism and agriculture are dominant economic forces, the greater Coachella Valley has a relatively diverse economic base. The distribution of work force is segregated among the following industries: Agriculture & mining: Construction: Manufacturing: Education: Wholesale trade: 12,637 11,967 2,550 7,747 1,496 Retail trade: Finance/real estate: Services: Government: Distribution: 23,765 5,589 33,129 6,474 5,434 There are a number of major manufacturing and non -manufacturing firms located within Coachella Valley. The individual corporations, along with their respective products/services, are summarized as follows: Manufacturing Employment Employers VIAYSS Design MTC Spates Fabricators Menage Furniture Tvoe of Business Medical equipment Marble products Roof trusses Furniture Non -manufacturing Employment Emplovers Peter Rabbit Fox Desert Hospital Eisenhower Hospital Renaissance Esmeralda Resort Vons Companies Type of Business Agriculture Health Health Tourism Retail Employers Armtec Products Guy Evans, Inc. Palm Springs Golf Co. U. S. Filter Tvoe of Business Defense Cabinetries Golf equipment Water treatment Employers Marriott Desert Springs Palm Springs School District La Quinta Hotel Westin Mission Hills Resort Sunrise Company Type of Business Tourism Education Tourism 'Tourism Developer Coachella Valley sits atop a vast underground lake, thus providing an abundant water supply. The average maximum temperature is 107.8° with an average minimum temperature of approximately 53.7°. The average annual rainfall is 5.20 inches. Coachella Valley has three school districts; there are a total of 33 elementary schools, 12 middle schools, and nine high schools. Higher education is provided by (1) College of the Desert, a community college accredited for AA degrees, (2) California State University, San Bernardino -satellite campus, LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS REGIONAL DATA (Continued) COACHELLA VALLEY REGION: (Continued) (3) University of California, Riverside, a one -hour drive from Coachella Valley, (4) the University of California Riverside A. Gary Anderson School of Management, and (5) University of California Riverside Campus in Palm Desert. There is a wide variety of community services and facilities. Medical care is provided by the Desert Hospital, Eisenhower Medical Center, John F. Kennedy Memorial Hospital, Canyon Springs Hospital, and Heart Institute of the Desert. Cultural facilities and special events include the Palm Springs Desert Museum, Annenberg Theater, McCallum Theater (Bob Hope Cultural Center), The Living Desert, National Data Festival, La Quinta Arts Festival, U. S. Polo Open, Palm Springs Film Festival, and a number of annual golf tournaments. Recreational facilities include over 105 golf courses, the Palm Springs Aerial Tramway, polo grounds, natural hiking trails, a water park, casinos, and the newly completed Indian Wells Championship Tennis Facility. Transportation in Coachella Valley is provided for by a variety of means. The Palm Springs Regional Airport has direct service for many major western and midwestern cities. The commercial air carriers include American Airlines, Delta, Northwest, Continental, and Alaska Skywest. The Bermuda Dunes Airport supports commuter flights serving Los Angeles, Ontario, San Diego and Phoenix. Thermal Airport provides a base for privately owned noncommercial aircraft. Passenger rail service is available via Amtrak. Freight rail service is provided by Union Pacific Railroad which offers a direct link -up with the Mexican National Railroad. Bus service is provided by Greyhound Bus Lines. There are a number of trucking lines which serve the Coachella Valley. Primary highways include Interstate 10, State Highway 1 1 1, and State Highway 86. LIDGARD AND ASSOCIATES APPRA1SHRS-CONSULTANTS QUALIFICATIONS OF APPRAISER LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS BACKGROUND AND QUALIFICATIONS Scott A. Lidgard, MAI, CCIM President of LIDGARD AND ASSOCIATES INCORPORATED Full service appraisal firm encompassing all types of real property including commercial, industrial, complex residential, and special use properties. Scott A. Lidgard has over 25 years experience in the appraisal of real property for various clients including public agencies, corporations, law firms in connection with litigation support, accountants, and private clients. OFFICE ORGANIZATIONAL STRUCTURE: Principal Appraiser: Market Research Analyst: Market Research Analyst: Market Research Assistant: Office Administrator: Office Assistant: Scott A. Lidgard Jason T. Clayton Jason Boyer Mayra Villegas-Garcia Sarah A. Petty Kelly M. Lidgard PROFESSIONAL ORGANIZATION AFFILIATIONS: MAI Designated Member of the Appraisal Institute (Member No. 11715). CCIM (Certified Commercial Investment Member) designated member of the CCIM Institute (Member No. 11262). STATE CERTIFICATION: Certified General Real Estate Appraiser by the Office of Real Estate Appraisers, State of California. Certificate No. AG004014. BROKER'S LICENSE: Licensed California Real Estate Broker (License No. 00825141). EXPERT WITNESS: Qualified as an expert on Real Property Valuation in the Los Angeles, Orange, San Bernardino, and Riverside County Superior Courts, as well as Federal Bankruptcy Court. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS BACKGROUND AND QUALIFICATIONS (Continued) ACADEMIC BACKGROUND California State University, Fullerton B.A., Business Administration, emphasis in real estate finance. Successfully completed various educational courses and seminars sponsored by the Appraisal Institute, as well as other real estate and business organizations. BUSINESS AFFILIATIONS: Appraisal Experience: President, Lidgard and Associates, Inc., Orange, California, established October 1, 1997. Vice President, R. P. Laurain & Associates, Inc., Long Beach, California, between 1984 and 1997. Real Estate Sales Associate, Merrill Lynch Realty, Placentia, California, between 1982 and 1984. BOARD OF DIRECTORSHIPS: Sergeant at Arms, Long Beach Rotary President, Belmont Estates HOA, Orange Vice President, Canyon Rim Villas HOA, Anaheim Hills Treasurer, Orchard Owner's Association, Orange Board of Directors, Villa Heights HOA, Villa Park APPRAISAL SERVICES RENDERED: Real estate appraisal services performed on projects for the following public agencies and private corporations, since 1984: Cities: City of Anaheim City of Garden Grove City of Azusa City of Glendora City of Baldwin Park City of Hawaiian Gardens City of Bell City of Highland City of Bellflower City of Huntington Park City of Bell Gardens City of Indio City of Brea City of Irvine City of Carson City of La Mirada City of Cathedral City City of La Habra City of Costa Mesa City of La Quinta City of Diamond Bar City of Laguna Hills City of Downey City of Long Beach City of Fullerton City of Lynwood City of Mission Viejo City of Montclair City of Monterey Park City of Murrieta City of Ontario City of Palm Desert City of Palm Springs City of Pasadena City of Pico Rivera City of Placentia City of Pomona City of Rancho Mirage City of Redondo Beach LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL SERVICES RENDERED (Continued) Cities: (Continued) City of Rialto City of Riverside City of San Clemente City of San Bernardino City of San Juan Capistrano City of Santa Ana City of Santa Clarita City of Signal Hill City of Stanton City of Tustin City of Upland City of Whittier City of West Covina City of Yorba Linda City of Victorville Redevelopment Agencies: Baldwin Park Redevelopment Agency Bell Redevelopment Agency Bell Gardens Redevelopment Agency Buena Park Redevelopment Agency Carson Redevelopment Agency Cathedral City Redevelopment Agency El Monte Redevelopment Agency Garden Grove Redevelopment Agency Glendale Redevelopment Agency Huntington Beach Redevelopment Agency Huntington Park Redevelopment Agency Inglewood Redevelopment Agency La Puente Redevelopment Agency Long Beach Redevelopment Agency Los Angeles Community Redevelopment Agency Norwalk Redevelopment Agency Ontario Redevelopment Agency Palm Desert Redevelopment Agency Rialto Redevelopment Agency Riverside Redevelopment Agency San Bernardino Redevelopment Agency Signal Hill Redevelopment Agency West Covina Community Development Commission Whittier Redevelopment Agency Yorba Linda Redevelopment Agency Other Government Agencies: Calleguas Municipal Water District County of Los Angeles, Internal Services Division County of Riverside Inland Empire Utilities Agency Long Beach Unified School District Los Angeles County Sanitation District Los Angeles Unified School District Orange County Transportation Authority Palm Springs Unified School District LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL SERVICES RENDERED (Continued) Other Government Agencies: (Continued) Placentia Unified School District Port of Long Beach Port of Los Angeles Resolution Trust Corporation Riverside County Transportation Commission State of California U. S. Department of Navy U. S. Marshal Service Victor Valley Wastewater Reclamation Authority Financial Institutions: American First Federal Credit Union Farmers and Merchants Bank First Federal Bank First Federal Credit Union Fiscal Federal Credit Union Harbor Bank Long Beach Bank Mineral King National Bank Northern Trust Bank Queen City Bank Sumitomo Bank, Ltd. Union Bank Asset Management Companies: Amresco, Inc. American Residential Mortgage Corporation BEI Management, Inc. Emerson International Equitable Real Estate Investment Management EQ Services Icon Associates Independence One Pacific Southwest Partners Private Companies/Corporations: Allstate Insurance Company Best, Best & Krieger, LLP Bonnie, Hopkins & Bastardi, LLP Bridgestone/Firestone, Inc. Black & Vetch Corporation Buchalter Nemer, A Professional Corporation Burke, Williams & Sorenson, LLP California Eminent Domain Law Group LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL SERVICES RENDERED (Continued) Private Companies/Corporations: (Continued) Carl Karcher Enterprises Chapman University Century Law Group Daley & Heft, LLP Eastman Kodak Company Ferro Corporation Flagstar Companies Guild Financial Hahn & Hahn, LLP Harbor Chevrolet Inland Partners Corporation Kaufman and Broad Latham & Watkins, Attorneys at Law Long Beach Memorial Medical Center Madden, Jones, Cole & Johnson, Attorneys at Law Oliver, Vose, Sandifer, Murphy & Lee Pan Pacific Development Rutan & Tucker, LLP Scotsdale Insurance Snell & Wilmer, Attorneys at Law T.R.W. The Trust for Public Land Westport Packers Windes and McClaughry, Accountancy Corporation Wise, Wiezorek, Timmons & Wise, Attorneys at Law LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS APPRAISAL REPORT LAND VALUE STUDY SUCCESSOR AGENCY OWNERSHIP HOTEL DEVELOPMENT SITE 45-400 LARKSPUR LANE PALM DESERT, CALIFORNIA I I I r e r • Bob Hope Dr ) oa. 'Desert D,-1V ,.. ,- -o .,- t. co Park---- \ s•Fred Waring Dr 1) 0 JL Clancy Rancho Mirage I! II (\CiSu Hovey In W rijk °Verbenia Rd as Lomas San Remo Ln I , Dr • j C • n 0 (.) ro Fred Waring &Edina Way c San Gorgonio \flay 7 ° 1-4 Camino Arroyo Nlioyley Ln • Lir • .1://ten;;;- " *C1*-cc4 IQ Merle Dr 0 m Gary Ave it 41VIagnesta Fatts.Park Civic Center Park c<" rin St .<0 z riPa Im Desert Ister Dr Goleta Ave- 9., alina Way 1faru-tutril De Anza Way El Pes-eo--7/ FT E ,-. . 0 Lalieft St Coh,..ra PPitahaY8 -s' //I Joshua Tree St c.2. . c- Juniper St • ar, 'AE, , '/ ., , , .i.„. 47 Ironwood SF — .--=, N .0 :- i."c•--:------- , . / Ratph Willow St Grapevine St Cap Homme Adams Park v_ . _......: Amber _ Calltandra St Ironwood ._.... —1! f Somera Rd Park ,t‘ Sun \•• . ,.-..-.,--- Bel Air Rd > ,,C-- i , 4 , --- Living Desert Wildlife Botanical Pk -'1,r. 4, - ID 3 ii 77 Living Desert ..D ° Wildlife Botanical Pk Or portola Ave Jut_ Akievnd ro Dr - _))It rn 0 f, DiWtdiewood St :) L:-._--_-_.:: ied----i ot,_ i try,.....1-,-,;:i --• JC*trefFiitj 1 s ,,K ---1.--"' cy w --7:-1 r iota inchan Wells 3" 0 Dr Marrake4° 0 mi 0.2 LIDGARD AND ASSOCIATES A PPR Altili RS-CONSULTANTS 0 4 0 6 0 8 1 1 2 SUBJECT PROPERTY Aerial view of subject property situated at the northeast corner of Shadow Mountain Drive and Larkspur Lane, within the Downtown Business District of the City of Palm Desert. See additional photographs of the subject property in the Addenda Section. VESTEE: PROPERTY ADDRESS: LEGAL DESCRIPTION: Successor Agency to the Palm Desert Redevelopment Agency Mailing address: 73-510 Fred Waring Drive Palm Desert, California 92260 Telephone: c/o Ruth Ann Moore Economic Development Manager (760) 776-6441 45-400 Larkspur Lane Palm Desert, California Portions of Lots 1 and 5 and all of Lots 6 and 7, Block Q, Palm Desert Unit 1, per map recorded in Book 21, Page 50 through 54 of Maps, in the office of the County Recorder, County of Riverside, California. Reference a complete metes and bounds legal description in the Addenda Section. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 1 kr- 1. PASEO LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS I 'jib+[ ik y i 4476b �ur tt" raj 0'1 f '=k �� J or a.; git .% re t • 4,1 'AMA .• 3 LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS $12.11 Pierson Blvd North Pa Springs 111 Pal S ri met Dos Pma Come4s Ma Joshua Tree National Park Joshua Tree Wilderness Sky Valley Subject Property i-- Coachella a, Valley Vista Chino ')o,.. Preserve Rimion l'cy s Thousand \ Palms Dinah Mere Pr •OM CA I F I A pt Ranch Catheclrai Mirage City Thomas ,Mountain San Bernardino National Forest 371 Santa Rosa Indian Reservation Anza-Borrego Desert State Park $28 24 Cahui 5 nyon Crest Taylor Pinyon Pines Santa Rosa .l.toentato Willis Palms Hidden Palms Pushawalla Palms Macom Palms B ra Palms — . (..) Bermuda Myo t a E Dunes _i_ Im I - sert Pam Desert Country 111 'Indian Wells • ...hscoator, luda Dunes Airport Indill.° 11 - - Cu Aven• 4858_ Avenue 50 50th Ave a Qui ta cp Ave Airport Blvd 62nd Ave oCoache 111 Thermal 86 Valerie Martinez Onehundred alms . LIDGARD AND ASSOCIATES APPRAISFRS-CONSULTANTS 0 m: 2 4 6 8 cc 0 z 0 cc a 0 >- I J Q 2 1- W cc o - o co • o N ▪ o • co 4fl @ a E N 0) a) 0 00� 0 a m o (3). E 'Edo -9) 0 a)coO a ro 0-N E • 44) m � w Q 0 N co 0 co E U i Purchase price: Purchase price per sq. ft.: Property rights conveyed: standard sale standard sale standard sale standard sale standard sale standard sale standard sale Conditions of sale: no adjustment no adjustment no adjustment no adjustment no adjustment no adjustment no adjustment Conds. of sale consideration: ro O 17% cash down 100% financed Sale terms: 3/10/2014 1/22/2014 10/18/2013 12/28/2012 5/25/2012 0 N r Date of sale: ro E N slyly. inferior 0 0) c 0 0) C Market conditions: no adjustment no adjustment slt. upward adj. upward adj. upward adj. upward adj. m a O Market conditions adj.: 13 mi. northwest E O 6 1 /4 mi. southeast 11 mi. northwest 3 mi. northwest 1 1 /2 mi. northwest 5 1/2 mi. southeast Proximity to subject property: 0 0 0) C CO • d (0 m O m@@ ° ,o 0 3 cc E m -E E E a m ro O C 'N C .N .N .N .N N C C O (A m 9) r} 00 a C N ' ro E N slyly. inferior slt Iy. inferior 0) a m (/) C O O O O O) O)I ((0 ( General location: Imm. environ. influ.: `m m v E - • co N CO 0 L6 CO dwnwrd. adj. dwnwrd. adj. dwnwrd. adj. dwnwrd. adj. (Y) ro O ro ro ro @ -0� O ro cc E - 0 E E E E a 0 () C fn (A N N • C N cE U `ro `@ 8 (0 8 8 EEEEEE () N (A fN N T `ro m ro m m `ro ° N ccE E E E E E a ro N N N N TO far inferior ° O • E E E E - E E a E a N5NNN'CT).� ...(7) .(7) .55 N .N com • 3 a .E E E E E E a E a (0 In 3 8(n (n (A .(7) fD N N a m co O (1) at available Public utilities dwnwrd. adj. U • ro ° `o_ > E - 0 E - E E - E a a) E (!) C (A .N N (A N C () • N N ✓ i _0 (a )T a 0) - ' O 0 Land area (sq. ft.): Land area consideration: E O a E a) c 0 N 0 O O Accessibility: not valued Entitlements: eff. rectangular Land shape: Topography: Site conditions: Overall developability: Site prominence/exposure: Overall comparability: PlersorL I North Pa Springs met $12.11 Joshua Tree National Park j ^ Joshua Tree Wilderness Sky Valley qi,a Caliente I.R. $17.88 Dos Palmas Corners $28.94 Thomas M• ountain San Bernardino National Forest nyon Crest Taylor Santa Rosa Indian Reservation Anza-Borrego Desert State Park P▪ inyon Pines $28.24 Subject Property Coachella Valley Preserve Thousand Palms Willis Palms Hidden Palms Pushawalla Palms Macom Palms Bermuda Myo Dunes_ Palm Desert Im ieSert Country it " .Indian Wells $21.23 LIDGARD AND ASSO�:.A-ii, APPRAISERS -CONSULTANTS O mi 2 ht(XreN �nSPu:Nx"r� $25.83 52nd Ave tu d o. Airport Blvd tlN 4 0 oache Thermal 86 Valerie Martinez Onehundred alms $26.37 6 8 MARKET DATA A South side of Main Street, beginning 180 feet east of Desert Club Drive, La Quinta. GRANTOR: James F. Kelly Trust APN: 770-124-002, 003 GRANTEE: City of La Quinta LAND SIZE: 24,084 sq.ft. SALE DATE: April 7, 2011 ZONING: VC DOC. NO.: 153590 CORNER: No SALE PRICE: $635,000. DOC. STAMPS: $698.50 H & B USE: Commercial PRESENT USE: Vacant land TERMS: All cash IMPROVEMENTS: None at time of sale. ENTITLEMENTS: None ST. FRONTAGE: 202 feet VALUE INDICATION: $26.37 per SF land. DATE INSPECTED: October 30, 2012 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 2 wTC (P0,44131) 1 t I •�ul 6 I116 MARKET DATA A (Continued) CALLE TAMPICO PAR. to AVENUE - s-* -a--- m i r to* TN!- O tANE y "" " ~ ` VENIURP- C� t POR PARS p 11 11 101,13 11 i 10 Kam' } i4 I ® I ® ': J r,a amp IRA min tl. MUM IN Oe• wvr 14 p 11 N ®I ®9 ® ® im N 11 OZTA VERIFICATION: Document of public record, Multiple Listing Service, and Debbie Powell, City of La Quinta. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 3 MARKET DATA B Northwest corner of State Highway 1 1 1 and Fred Waring Drive, Palm Desert. Building in photograph constructed subsequent to the sale. GRANTOR: Three Dog Properties, LLC APN: 640-020-046 GRANTEE: N & D Restaurants, Inc. LAND SIZE: 54,886 sq.ft. SALE DATE: May 4, 2011 ZONING: PC-4 DOC. NO.: 196255 CORNER: Yes SALE PRICE: $1,550,000. DOC. STAMPS: $1705.00 H & B USE: Commercial PRESENT USE: Restaurant use TERMS: All cash IMPROVEMENTS: None at time of sale. ENTITLEMENTS: None ST. FRONTAGE: 607 feet VALUE INDICATION: $28.24 per SF land. DATE INSPECTED: October 30, 2012 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 4 MARKET DATA B (Continued) ex ij x aaOe idewc.... 1 _55 now, igo- Pea. Ow VERIFICATION: Document of public record, CoStar Comps, and Jim Auther, broker representing grantee. LIDGARD AND ASSOCIATES AP PRAISP.RS-CONSULTANTS 5 MARKET DATA C Southeast corner of State Highway 1 1 1 and Mirage Road, r-cii i i i iviu Qyc. GRANTOR: City of Rancho Mirage GRANTEE: SALE DATE: May 25, 2012 DOC. NO.: 242111 SALE PRICE: $1,500,000. H & B USE: Commercial TERMS: Conventional ENTITLEMENTS: None ST. FRONTAGE: VALUE INDICATION: $28.94 per SF land. APN: Desert European Motorcars LAND SIZE: ZONING: CORNER: DOC. STAMPS: PRESENT USE: 684-200-024 51,836 sq.ft. CN Yes $1,650.00 Auto dealership under const. IMPROVEMENTS: None at time of sale. 440 feet DATE INSPECTED: October 30, 2012 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 6 MARKET DATA C (Continued) STATE HIGHWAY • 111 rP- ,.,-,-r. fro. 0'1 •JM • a TM etr•m6 a a LOT 11 f si M a TPA LOT C a ! rs� a Mel ..or a.a ROAD VERIFICATION: Document of public record, CoStar Comps, and Kirk Watts, representative of grantor. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 7 MARKET DATA D Northeast corner of Tahquitz Canyon Way and Cerritos Drive, Palm Desert. GRANTOR: GRANTEE: SALE DATE: DOC. NO.: SALE PRICE: H & B USE: Tahquitz 2000 Vent., Inc. APN: 502-075-001, 002 Gerard & Janet Biegel LAND SIZE: 35,082 sq.ft. December 28, 2012 ZONING: R-2 635234 CORNER: Yes $425,000. DOC. STAMPS: $467.50 Residential PRESENT USE: Vacant land TERMS: All cash IMPROVEMENTS: None at time of sale. ENTITLEMENTS: None ST. FRONTAGE: 360 feet VALUE INDICATION: $12.1 1 per SF land. DATE INSPECTED: April 25, 2014 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 8 MARKET DATA D (Continued) VERIFICATION: Document of public record, CoStar Comps, and Dean Sipe, broker representing grantor. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 9 MARKET DATA E Northeast corner of State Highway 1 1 1 and Depot Drive, La Quinta. GRANTOR: 99(C Only Stores APN: 600-010-023 GRANTEE: Ava Property Inv., LLC LAND SIZE: 34,848 sq.ft. SALE DATE: October 18, 2013 ZONING: CR DOC. NO.: 498595 CORNER: Yes SALE PRICE: $900,000. DOC. STAMPS: $990.00 H & B USE: Commercial PRESENT USE: Vacant land TERMS: All cash IMPROVEMENTS: None at time of sale. ENTITLEMENTS: None ST. FRONTAGE: 323 feet VALUE INDICATION: $25.83 per SF land. DATE INSPECTED: April 25, 2014 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 10 MARKET DATA E (Continued) VERIFICATION: Document of public record, Multiple Listing Service, and Barbara Armendariz, broker representing grantor. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 11 MARKET DATA F South side of Larrea Street, beginning 730.18 feet west of Portola Avenue, Palm Desert. GRANTOR: Breznock Family Trust APN: 627-273-003, 004 GRANTEE: Larrea Partners, LLC LAND SIZE: 40,500 sq.ft. SALE DATE: January 22, 2014 ZONING: R-3 DOC. NO.: 24495 CORNER: No SALE PRICE: $860,000. DOC. STAMPS: $946.00 H & B USE: Residential PRESENT USE: Vacant land. TERMS: 17% cash down IMPROVEMENTS: None at time of sale. ENTITLEMENTS: None ST. FRONTAGE: 300 feet VALUE INDICATION: $21.23 per SF land. DATE INSPECTED: April 25, 2014 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 12 MARKET DATA F (Continued) A DO.,.. I. 0 N.. Ma NY c t t I o . :r.„....r .., / fa • • a VERIFICATION: Document of public record and CoStar Comps. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 13 MARKET DATA G 4 North side of Vista Chino, beginning 514 feet west of State Highway 1 1 1, Palm Springs. GRANTOR: Landau Devel. Co., Inc. APN: 504-310-011 GRANTEE: Gain, LP LAND SIZE: 37,752 sq.ft. SALE DATE: March 10, 2014 ZONING: R-3 DOC. NO.: 87923 CORNER: No SALE PRICE: $675,000. DOC. STAMPS: $742.50 H & B USE: Residential PRESENT USE: Vacant land. TERMS: All cash IMPROVEMENTS: None at time of sale. ENTITLEMENTS: None ST. FRONTAGE: 132 feet VALUE INDICATION: $17.88 per SF land. DATE INSPECTED: April 25, 2014 BY: Scott A. Lidgard, MAI LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 14 MARKET DATA G (Continued) l "' " nth J L 111 M14N a,1F • VERIFICATION: Document of public record and CoStar Comps. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS 15 ADDENDA LI DGARD AND ASSOCIATES A.PPRA/3P_Rw .0.01.1 fAiNT% See Photo No. 1 on first page of Subject Property Section. PHOTO NO. 2: View looking northeasterly at the subject property from the intersection of Shadow Mountain Drive and Larkspur Lane. PHOTO NO. 3: View looking southeasterly at the subject property from Larkspur Lane. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANT'S PHOTO NO. 4: View looking northwesterly at the subject property from Shadow Mountain Drive. PHOTO NO. 5: View looking southwesterly across the subject property from the northeasterly most portion thereof. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS STREET SCENE 1: View looking north along Larkspur Lane from the intersection of Shadow Mountain Drive. STREET SCENE 2: View looking east along Shadow Mountain Drive from the intersection of Larkspur Lane. LIDGARD AND ASSOCIATES APPRAISERS -CONSULTANTS