HomeMy WebLinkAboutSares Regis - Lomas de Arena, LP /��'�'� PALM DESERT REDEVELOPMENT AGENCY
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TO: RACHELLE KLASSEN, CITY CLERK �� �'
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FROM: JESSICA GONZALES, MANAGEMENT Af�-���k-F.01� � ° ��.,�;
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DATE: MAY 18, 2006
SUBJECT: APPROVE THE FIRST AMEfVDMENT TO THE HOUSING AGREEMENT
BY AND BETWEEN THE CITY OF PALM DESERT AND SARES REGIS
ALSO KNOWN AS LOMAS �E ARENA, L. P.
The above item is being requested to be continued until the June 22, 2006 Council
Meeting. Staff is working on the requests made at the original meeting on April 27,
2006 and needs more time to complete a full report.
Thank you.
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APPROVED: �(�' -�~
VE YRIGOI��FI, DIRECTOR OF REDEVELOPMENT
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C1T?Y OF PALM DESE�T;� ;r:�.,.« .�, � � ���
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With staff directed to provide a report on
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how the City will be made whole with the u e � ^ ~� -✓"��
of said funds � what provisions would be re uired t accom lish same. 4-0 (� �
REQUEST: APPROVE TH� FIRS�f AM�NDMENT TO T�g�l��� ��
AGREEMENT BY AND BETWEEN THE CITY OF PALM DESERT ,
AND SARES REGIS ALSO KNOWN AS LOMAS DE ARENA, L.P. i
SUBMITTED BY: JANET M. MOORE, HOUSING AUTHORITY ADMINISTRATOR �
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DATE: APRIL 27, 2006
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CONTENTS: FIRST AMENDMENT TO THE HOUSING AGREEMENT
ASSIGNMENT
COPY OF THE ORIGINAL AGREEMENT DATED MAY 27, 2004 '�
Recommendation:
By Minute Motion that the City Council:
1. Approve the First Amendment to the Housing Agreement between
the City of Palm Desert and Sares Regis (also known as Lomas De
Arena, L.P.) dated May 27, 2004, authorizing an option for the
payment of an in lieu fee in the amount of$9,600,000.
2. Authorize the City Manager to execute any additional documents to
facilitate the amendment as presented.
Executive Summarv:
Approval of this request will amend the Housing Agreement between the City of Palm Desert and
Sares Regis("Developer")also known as Lomas De Arena, a Delaware Limited Partnership, dated
May 27, 2004, in order to include an in lieu payment option of$9,600,000. The original Agreement
requires the developer to provide 64 residential units to moderate income households at an
affordable housing cost. Failure to approve the Amendment will require the developer to perform
the original obligations of the Agreement.
Discussion:
In May of 2004, Sares Regis entered into a Housing Agreement with the City of Palm Desert in
order to effectuate a change of zone.The Agreement required the developer to rent or sell 64 units
within the development, now known as The Enclave, to households of moderate income. During
the original negotiations of the housing agreement an in lieu fee was discussed, however, it did not
make it into the final agreement. The developer has since opted for the condominium conversion
and will seli the units instead of operating the units as a rental project.
As a rental project, the onus is on the developer or owner to maintain the units as affordable. The
City's involvement is limited to monitoring. In afor-sale developmentthe subsequent sales become
the responsibility of the City such as Desert Rose. Where there are no restrictions on increases to
uncontrolled fees and charges such as homeowners association fees or interest rates it will limit
the affordability after the initial sales requiring the City to expend monies for resales to ensure
G^,RUA��Pam•Lmn\\i'pdocsVM11M`itaff report\First Amcndment to Agru;mcnt Sarcs Regis.upd
Staff Report
Sares Regis - First Amendment to the Housing Agreement
April 27, 2006
Page 2 of 2
continued affordability. The City is also taske� with monitoring the restrictions in the 45 year
affordability covenantthatwould include violations,foreclosures, bankruptcies, HOA non-payments,
and facilitating resales.
The "First Amendment"will add an in lieu fee option for the development in the aggregate amount
of $9,600,000. The fee would be paid in an initial payment of 10% with the remaining amount to
be secured by a Trust Deed against the property, payable in equal installments at close of escrow
for each of the 320 units in the development.
Moderate income housing is desirable in the Cifiy, and payment of the in lieu fee will provide the
City the flexibility to do some long range planning to develop, acquire, or rehabilitate affordable
housing units for all income levels. The Redevelopment Agency has demonstrated that more
households can be assisted at lower incomes for the same amount of money based on the
experience of its own rental properties. Because the subsidies that are required for very low and
low income households are excessive in this market, it is very difficult for new market rate
developments to support anything other than maderate income housing, although, more very low
and low income units are needed than moderate.
Rising construction costs have also affected the market drastically, however, the City can
programmatically subsidize rents for low income families (60% of the county median) in existing
independently owned market rate units at a cost of approximately$200,000 per year for 64 units.
The City might also utilize a First Time Homebuyer Program that could provide silent seconds to
approximately 96 moderate income individuals who would like to purchase a home anywhere in the
City. This will accomplish another goal of dispersing affordable housing throughout the City.
In the event the Amendment is approved and the developer exercises the option to pay the in lieu
fee, the City will be able to utilize the funding to assist the targeted incomes that are most
appropriate for the City's overall need as opposed to just moderate income households.
Because of this, staff recommends approval of the First Amendment to the Agreement in order to
provide the option of an lieu fee.
Submitted by: Depa ent Head:
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Ja st . Moore Dave Yrigoy
Ho ' g Authority Administrator Director o edevelopment/Housing
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Approval: ' ��
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G� .� r ��,l � ,l�t� �r �"L' �-.
Justin McC rthy; ACM/Redevelopment Paul Gibson, Director of Finance
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Carlos Ortega, ecutive Director
G'QtD.•\\Patty I.eon`,\i'pdocsJMM11`staff report\First Amendment to Agrecment Sares Rcgis.w�pd
RECORDING REQUESTED BY
AND WHEN RECORD�D MAIL TO:
SARES•REGIS GROUP
18802 Bardeen Avenue
Irvine, California 92612-1521
Attention: Michael J. Winter
(Space Above For Recorder's Use)
FIRST AMENDMENT TO HOUSING AGREEMENT
This FIRST AMENDMENT TO HOUSING AGREEMENT("Amendment") is made and entered
into as of April_, 2006, by and betvveen LOMAS DE ARENA, L.P., a Delaware limited partnership
("Property Owner"), and the CITY OF PALM DESERT, a municipal corporation organized and existing
under the laws of the State of California(the "City").
RECITALS
A. Property Owner is the owner of that certain real property located within the City of Palm
Desert, California, more particularly described in Exhibit "A" attached hereto(the "Property").
B. Property O��vner is developing the Property as a 320-unit residential condominium project
to be commoniy known as The Enclave(the "Project").
C. On or about May 27, 2004, Property Owner and the City entered into that certain
Housing Agreement(the "Housing Agreement"). The Housing Agreement was approved by the City
Council of the City of Palm Desert on May 27, 2004, pursuant to City Ordinance No. 1066 ("Ordinance
1066"). The Housing Agree�nent and Ordinance l 0E6 were recorded as Instrument No. 2004-0623203 in
the Official Records of Riverside County. Pursuant to the terms of the Housing Agreement, at least
twenty percent(20%)of the units(i.e., 64 units)constructed in the Project(each, a "Unit")are required to
be sold as "affordable units" (as defined in the Housing Agreement).
D. Property Owner has requested that the City accept payment of a fee in lieu of
performance of all obligations imposed upon Property Owner under the Housing Agreement.
E. Property Owner and the City wish ta amend the Housing Agreement to provide Property
O�vner with the option to make payments to the City in connection with the sale of each Unit in lieu of
performance of, and in exchange for the release by the City of Property Owner from, all obligations
imposed upon Property Owner under the Housing Agreement. Terms not otherwise defined in this
Amendment shall have the meanings attributed to them in the Housing Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
ackno�vledged, Property Owner and the City hereby amend the Housing Agreement and agree as follo���s:
7 i2996 02ip(;
S7�:�5-304;4-I 1-0G�jwk�lag
1. In-Lieu Pavment O�tion.
(a) Grant of Option. The City hereby grants to Property Owner the option
("Option")to pay a fee in the cumulative amount of Nine Million Six Hundred Thousand Dollars
($9,600,000)(the "In-Lieu Payment"), which payment shall be accepted by the City in lieu of
performance by Property Owner of, and in exchange for the release by the City of Property Owner from,
all obligations imposed upon Property Owner under the Housing Agreement. If Property Owner elects to
exercise the Option, Property Owner will do so by pi•oviding the City with��ritten notice of such election
within ten (10) business days following written notice from the City that the City has obtained final and
unappealable approval of this Amendment from the City Council of the City of Palm Desert(the
"Approval Date"). Property Owner and the City agree to execute and deliver to each other counterpart
originals of this Amendment within five (5) business days following the Approval Date.
(b) Deliver of In-Lieu Payments. Within ten (l0)days following tlie Approval Date,
Property Owner and the City shall execute mutually acceptable escrow instructions and shall establish an
escro�v(the "Escrow")with Fidelity National Title Company("Escrow Holder"). Within thirly(30)days
following the Approval Date(the "Outside Option Date"), Property Owner shall deposit with Escrow
Holder the sum of Nine Hundred Sixty Thousand Dollars($960,000), which amount represents ten
percent(10%) of the total In-Lieu Payment amount(the "Initial Payment"). Concurrently with the
delivery of the Initial Payment, Property Owner shall deliver to Escro�v Holder a Promissory Note in the
principal amount of Eight Million Six Hundred Forty Thousand Dollars($8,640,000) (the "Note"), in the
form attached hereto as E�hibit "B", made by Property Owner in favor of the City, and Property Owner
shall also deposit with Escro��Holder a Long Form Deed of Trust and Assignment of Rents(the "Deed of
Trust"), in the form attached hereto as Exhibit"C", executed by Property Owner, as trustor, in favor of the
City, as beneficiary, which Deed of Trust shall encumber the Property and secure tlle obligations of
Property Owner to the City under the Note. The Note shall be for a term of seven (7)years, shall be non-
interest bearing, and may be prepaid in part or in full at any time without penalty or premium. The
Escrow Holder shall transfer the Initial Payment to the City upon recordation of the Deed of Trust. While
no regular monthly payments shall be required under the Note, Property Owner will be required to make
principal reduction payments in the amount of Twen�_y Seven Thousand Dollars ($27,000) in connection
���ith the closing of the sale of each Unit(each, a"Unit Sale Payment"). Each Unit Sale Payment shall be
delivered to Escro��Holder directly from the escrow through ��hich the applicable Unit is sold.
(c) Subordination of Deed of Trust and Partial Reconveyances. The City hereby
agrees, and the Deed of 7'rust shall provide, that the City will subordinate the Deed of Trust to the lien of
all existing or future lenders and investors providing funds for the purpose of developing the Project, and
agrees to execute such documents as are commercially reasonable and necessary or required to effectuate
such subordination. As and when provided hereinbelow, the City shall deliver to Escro�v Holder partial
reconveyances of the Deed of Trust for each Unit(each, a "Partial Reconveyance"), as well as a full
reconveyance of the Deed of Trust(the "Full Reconveyance"), all properly executed and acknowledged.
Partial Reconveyances will be delivered by the City to Escrow Holder on a project phase basis. Property
Owner shall provide the City with a written request for Partial Reconveyances for those Units in the phase
of the Project specified in Property O��ner's written request. Within thirty(30)days following receipt of
such request,the City shall deliver to Escrow Holder the Partial Reconveyances for those Units in the
specified phase. Property Owner may request Partial Reconveyances for not more than one(1)phase of
the Project in any fifteen (15) day period. At any time following closing of the sale of ninety percent
(90%}or more of Units within the Project,within thirty(30) days following written request by Property
Owner, the City shall deliver the Full Reconveyance to Escrow Holder. Upon receipt of a Unit Sale
Payment, Escrow Holder shall release and deliver to Property Owner the Partial Reconveyance for the
corresponding Unit. Upon full repayment of the Not�, Escrow Holder shall release and deliver to
Property Owner the Full Reconveyance.
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(d) Effectiveness of Exercise of O�tion. Property Owner's exercise of the Option
shall become effective only upon(i)recordation of the Deed of Trust, and (ii) receipt and recordation(if
applicable)of such other documents as are necessary to effectuate the subordination of the Deed of Trust
as provided above, at which time Escrow Holder shall release the Initial Payment to the City. If, for any
reason,the conditions to the effective exercise of the Option are not satisfied on or prior to the Outside
Option Date,the Option provided to the Property Owner pursuant to Section 1 hereof shall terminate, and
this Amendment shall be of no further force or effect; provided that such failure shall under no
circumstances constitute a default or breach by Property Owner under the terms of the Housing
Agreement or provide a basis for recourse against or recovery from Property Owner.
(e) Payment in Full. Upon full repayment of the Note, the Housing Agreement shall
automatically terminate without further action required by either party, and Property Owner shall be
deemed released from all obligations and liability thereunder.
2. Miscellaneous. Except to the extent the Housing Agreement is modified by this
Amendment, the remaining terms and provisions of the Housing Agreement shall remain unmodified and
in full force and effect. In the event of conflict between the terms of the Housing Agreement and the
terms of this Amend�nent, the terms of this Amendment shall prevail. This Amendment may be executed
in counterparts, each of which shall be deemed an original, but all of which,together, shall constitute one
in the same Amendment. This Amendment shall be interpreted and construed only by the contents
hereof, and there shall be no presumption or standard of construction in favor of or against either party.
This Amendment shall be construed and enforced in accordance with,and governed by, the laws of the
State of California. Invalidation of any of the provisions contained herein or the application thereof to
any person or entity by judgment or court order shall in no way affect any of the other provisions hereof,
or the application thereof to any other person or entity and the same shall remain in full force and effect.
The individuals signing this Amendment on behalf of each party hereby warrant and represent to the other
party(a)that they have the power and authority to bind the entity for which they are signing, (b)that the
sianatories are all of the signatories for the respective party necessary for the full and valid execution of
this Amendment for such party, (c)that all corporate, partnership or other action necessary for the
respective party to execute, bind and perform under the terms of this Amendment have been duly taken,
and (d)that no other signature, act or authorization is necessary to bind the respective party. Except as
provided elsewhere in this Amendment, the terms, covenants and conditions herein contained shall be
binding upon and inure to the benefit of the heirs, successors,transferees and assigns of the parties. In the
event of any conflict between the provisions of this E�mendment and the provisions of the Housing
Agreement, the provisions of this Amendment shall govern.
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IN WITNESS WHEREOF,the parties have�xecuted this Amendment as ofthe date and year first
set forth above.
LOMAS DE ARENA, L.P.,
a Delaware limited partnership
By: SRG Lomas,L.P.,
a California limited partnership
Its: General Partner
By: Regis Homes, LLC,
a California limited liability company
lts: General Partner
By: Regis Homes, L.P.,
a California limited partnership
Its: Sole Member
By: Regis Contractors, [nc.,
a California corporation
Its: General Partner
�Y=
Name:
Title:
CITY OF PALM DLSERT,
a municipal corporation
By:
Name:
Title:
Approved as to form:
By:
Name:
Title:
Attest:
By:
Name:
Title:
77299C,.01.%OC
57335-304%4-1 I-OG-jw�'lag "�'
STATE OF CALIFORNIA )
) ss.
COUI�TTY OF ORANGE )
On , before me,_ , a Notary Public in and
for said state, personally appeared , personally known to me (or
proved to me on the basis of satisfactory evidence)to be the person(s)whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s)acted, executed the instrument.
WITNESS my hand and official seal.
S ignature Seal
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On , before me, , a Notary Public in and
for said state, personally appeared , personally known to me (or
proved to me on tlle 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 tllat by his/her/their signature(s)on the instrument the person(s),or the
entity upon behalf of which the person(s)acted, eaecuted the instrument.
WITNESS my hand and official seal.
Signature Seal
772996.02iOC
S 73 35-304/4-1 I-06.�j wki lag
LEGAL DESCRIPTION OF PROPERTY
PARCEL 1:
PARCEL 3 OF PARCEL MAP 27213, IN THE GITY OF PALM DESERT, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA,AS SHOWN BY MAP ON FILE IN BOOK 17T PAGES 1
AND 2 OF PARCEL MAPS, RECURDS OF RI4'ERSIDE COUNTY, CALtFORNIA.
Assessor's Parcel No: 653-260-021-5
PARCEL 2:
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIF�RNIA,
COUNTY OF RlVERSlDE, CITY OF PALM DESERT, DESCRIBED AS FOLLOWS:
THAT P�RTION OF THE SOUTH 1470.00 FEET OF TNE SOUTHWEST QUARTER OF
SECTION 29, TOWNSHIP 4 SOUTH, RANGE�EAST, SAN BERNARDtNO BASE AND
MERIDIAN, DESCRiBED AS FOLLOWS:
THAT PORTION OF PARCEL 2 OF PARCEL MAP NO. 27213,AS SHOW N BY MAP ON FILE
IN BOOK 177 PAGE{S} 1 AND 2, OF PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY,
CA�IFORNlA, LYING WESTERLY OF THE FOLLOWlNG DESCRIBED LINE:
BEGINNING AT A POINT ON THE SOUTHERLY LINE OF SAID PARCEL 2 DISTANT NORTH
89°53' 30" EAST, 800.00 FEET FROM THE MOST SOUTHERLY, SOUTHWEST CORNER OF
SAID PARCEL 2,AND RUNNING THENCE NORTH 00°01'31"WEST, AND PARALLEL WITH
THE WESTERLY LINE OF SAID PARCEL 2,A DISTANCE OF 1415.00 FEET T�A POINT 4N
THE NORTHERLY LINE OF SAID PARCEL 2.
SAID PROPERTY IS ALSO SHOWN AS PARCEL A OF CERTIFICATE OF COMP�IANCE
(WAIVER OF PARCEL MAP PWM �0-19j REGORDED�CTt�BER 2�, 2000 AS INSTRUMENT
NO. 00-414900 OF OFFICIAL RECORDS.
Assessor's Parcel No: 653-260-029-3
7?299GA�-0C EXHIBIT"A"
57335-304/4-I I-06,'jwk,9ag -j-
DEED OF TRUST
7?299C,.O��OC EXHIBIT"C"
57335-304%4-1 I-06�jwk-lag -I-
NOTE
�„����o,;� EXHIB[T"B"
57335-304,�4-11-06,�jwl:,�lag -�-
ASSIGNMENT OF HUUSING AGREEMENT
This ASSIGNMENT OF HOUSING AGREEMENT ("Assignment") is entered into and
effective as of April _, 2006 (the "Effective Date"), by and between SARES•REGIS GROUP, a
California general partnership ("Assignor"), LO�_VIAS DE ARENA, L.P., a Delaware limited
partnership ("Assignee"), and the CITY OF PALM DESERT, a municipal corporation (the
"City"), with respect to the following:
RECITALS
A. Assignee, successor-in-interest to Assignor, is the owner of that certain real
property located within the City of Palm Desert, California (the "Property"). The Property is
being developed as a 320-unit residential condominium project to be commonly known as The
�nclave (the "Project").
B. On or about May 27, 2004, Assignor and the City entered into that certain
Housing Agreement (the "Housing Agreement"). The Housing Agreement was approved by the
City Council of the City of Palm Desert on May 27, 2004, pursuant to City Ordinance No. 1066
("Ordinance 1066"). The Housing Agreement and Ordinance 1066 were recorded as Instrument
No. 2004-06232Q3 in the Official Records of Riverside County.
C. Assignor desires to assign all of i�_s right, title and interest in and to the Housing
Agreement to Assignee, and Assignee desires to accept such assignment and assume the
obligations of Assignor thereunder, all as provided hereinbelow.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the parties
hereby agree as follows:
1. Assi�nment of Housin�greement. Assignor hereby assigns, transfers, conveys
and delivers to Assignee all of Assignor's right, title and interest in and to the Housing
Agreement, and Assignee hereby accepts such assignment. The City hereby acknowledges and
agrees that Assignor is hereby released from any and all liability and/or obligation under the
Housing Agreement.
2. Assumption of Obligations. Concurrently with acceptance of the foregoing
assignment, Assignee hereby assumes and shall perform, pay and discharge, as and when due, all
of the obligations, covenants, terms, conditions and agreements of Assignor under the Housing
Agreement from and after the Effective Date.
3. Consent to Assi nment. The City hereby consents and approves the assignment
by Assignor to Assignee as provided for in this Assignment.
77 3499.01;OC
S i 33�-304.%4-10-06)wk%l�g
4. Miscellaneous.
(a) Effect of Assi n� ment. Except as set forth in this Assignment, all terms
and conditions of the Housing Agreement shall remain unmodified and in full force and effect.
(b) Time of Essence. Time is of the essence of each and every term,
condition, obligation and provision hereof.
(c) Counterparts. This Assig;zment may be executed in one or more
counterparts, including facsimile counterparts, each of which shall be deemed an original, but all
of w�hich, taken together, shall constitute the same Assignment.
(d) Applicable Law. This Assignment shall be governed by and construed
and enforced in accordance with the laws of the State of California, without regard to conflicts of
law principles.
(e) Successors and Assigns. This Assignment shall be binding upon and inure
to the benefit of the successors and assigns of the respective parties thereto.
IN WIT�IESS WHEREOF, this Assignrr_ent has been executed as of the day and year set
forth above.
"Assignor" SARES•REGIS GROUP,
a California general partnership
By: Sares Company,
a Californi�corporation
Its: General Partner
By:
Name:
Title:
By: Regis-Stack Partners,
a California general partnership
Its: General Partner
By: The Regis Group,
a California corporation
Its: Managing Partner
By:
Name:
Title:
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S73 i 5-30�%4-10-OG�jwk%I�g -2-
"Assignee" LOMAS DE ARENA, L.P.,
a Delaware limited partnership
By: SRG Lomas, L.P.,
a California limited partnership
Its: General Partner
By: Regis Homes, LLC,
a California limited liability company
Its: General Partner
By: Regis Homes, L.P.,
a California limited partnership
Its: Sole Member
By: Regis Contractors, Inc.,
a California corporation
Its: General Partner
By:
Name:
Title:
773499.01!OC
57335-304/4-I 0-06,j wlo'la� -�-
"City" CITY OF PALM �ESERT,
a municipal corporation
By:
Name:
Title:
Approved as to form:
Bv:
Name:
Title:
Attest:
By:
I�Tame:
Title:
�73499.01:OC
S73 i 5-304;4-10-D6�j wk�l ag _t�_
��QI�I'AT�� ��o ��6�
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F°�OUS�NG ��R��M���
TH{S Agreement �s entered into this 27th , day of �� , 200�,
befinreen sarPs Regls G�°up (hereirafter "Property Owner") and the City of �afrr;
Desert, (hereinafter "City"}, a municipal corpora�ion organized and existing under th�
laws of the state of California.
REGITALS :
This Agreeme�t is predicated upon the following facts:
A. Property Owner is owner of �ertain real property focated within the City of
Palm Desert, California, which property is described in Exhibit A attached hereto and
made a part hereof (hereinafter "Property"). In consideration of the Property Owner
entering into this Agreement, City has granted approval of general plan amendment
through a general plan update) from low density residential (3-5 dwelling units per acre)
to high density residential (10-22 units,per acre), a change of zone from PR-5 (pfanned
residential, five units per acre) to PR 13 (planned residential, 13 units per acre), a
precise plan/conditional use permit, incfuding a height exception to allow a 27 foot high
roof element, and tentative tract map for a�{artment) condominium purposes to construct
320 residential apartment condominium units.
B. City has approved an increas� in the permitted maximum density from five
dwelling units per acre to a maximum of 13 dwelling units per acre in return for providing
dwelling units affordable to moderate incorr�e occupants.
C. As a condition of said approv�l, City has required that a specified number
of units associated with the project be set �side at an affordabfe housing cost to certain
households.
NOW, THEREFORE, the parties agree:
1. Definitions. In this Agreement, unless the context otherwise requires:
(a) "City" is the City of Palm Deserf.
(b) "Project" is the development to be constructed in the City pursuant
to Precise P1anlConditional Use Pemiit 03-06.
(c) "Property Owner" means the person having a fegal or equitable
interest in the real property as dEscribed in paragraph 3 and includes tt�e
Property Owner's successors in interest and assigns.
(d} "Real Propertv" is the r�al property referred to in paragraph 2.
(e) "Usefuf Life of the Proje�t" is 55 years.
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�RDIi�i�i�� I�0 0 1066 �� � �
Z, �escrir�tior� of Rea! PropertV� T�e real pro�e�y wk�ich is the s�abjec� cf fh�s
Agreemerf is described �n Exhibit A.
3. Interest of Property Owner. �roperty Owner represents that he has a i`�!I
legal and equitable interest in the Rea! Property and that all other persans holding legal
or equitabie inYerests in the Property are fc� be bound by the Agreement.
4. Assiqnmenf. The rights of the Property Owner under this Agreement may
not be transferred or assigned by the Property Owner prior to the completion of the
c�nstruction of the Project unless the written consent of the City is first obtained, which
consent shall not be unreasonably withheld. The City sha{{ have finro weeks from the
date of receipt of the request to respond. Upon the .completion of the Project as
evidenced by the issuance of a certificate of occupancy therefor, the written consent of
the City shall no longer be required to transfer the rights of the Property Owner under
this Agreement to any successor in interest in the Real Property. Upon the assignment
of this Agreement by the Property Owner tc� a successor in interest in the Real Property,
the City agrees that it will look solely to su�h successor in interest to thereafter perform
all of the covenants, terms and conditions uf this Agreement and the assigning Property
Owner shall be released from liability accruing under this Agreement from and after the
effective date of such assignment. Notwithstanding the foregoing, the Property Owner
and its assignees shall have the right to colfaterally assign this Agreement without the
City's consent to Property Owner's (end�sr in connection with the financing of this
Projecf.
5. Binding effect of Aqreement. The burdens and the benefits of the
Agreement shall constitute covenants that sha11 run with the Rea1 Property and shall be
binding upon and inure to the benefit of the successors in interest to the Real Property.
6. Relationship of parties. Ifi is understood that the contractual relationship
between the City and Property Owner is such that the Property Owner is not an agent of
the City.
7. Affordable Units.
(a) City has amended the general plan and granted a change of zone
increasing the permitted maximum density on the property from five units per
acre to 13 units per acre. Based ori these amendments, the City has approved
the Precise Plan / Conditional U�e Permit 03-06 for a 320-unit apartment
/condominium project, including a height exception to allow a 27-foot high roof
element on the Property. In exchange for increasing the permitted density from
five units per acre to 13 units per acre, the Property Owner agrees to set aside
20% ofi totaf projeci unifis as units �ffordabie to moderafe income housenolds.
The exchange is required pursuant to the goals and objectives of the General
Plan with respect to the provision of affordable housing. The project's affordable
housing requirement shall therefore be established at 64 units. For the entire
period that the Project is operated as an apartment project, at feast 6A� urtits in
the Project shall be rented to and shall be affordable to moderate-income families
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�t 100, 105, 11 G and 115 percent cf area me�ian i�cor��e on G p,�orafed ��sis
per ur�if sizes for fhe lJsefu! Life of the Project, as follows:
No. of Units °la of Income
7 @ up to 100%
32 @ 10� -- �05%
19 @ 106 -- 110°l0
6 @ 111 -- 115%
64
If i� the event the F'roperty Owner, after fifteen (15) days of
vacancy, cannot fill an affordable ur�it at the required leve{ of affor�ability, and it
has made such vacant unit(s) available to moderate income families from the
City's Housing Authority's tenant waiting list, the Property Owner wil! be
permitted to fill such vacant afforda��le unit(s) with moderate income tenants at
higher incomes. No mcre than six of the sixty-four units will be permitted to be
occupied outside the permitted afforc�ability levels at any given time without prior
written consent of 'the City's Housing Authority adrninistrator.
(b) ;b) If the Project is later converted to condominium units, af
least 64 units in the Project shall be sold to and shall thereafter be affordable to
moderate income families at 100, 105, 110 and 115 percent of area median
income on a prorated basis per unit sizes for the longer of 45 years or remaining
Useful Life of the Project.
The 64 affordable units shall be further designated as follows:
T�TAL
AFFORDABLE UNITS
One (1) Bedroom Units 19
Two (2) Bedroom Units 39
Three (3) Bedroom Units 6 -
64
(c) Maximum rental rates f��r such affordabfe units shafl be set by the
Pal.m Desert Housing Authority purs.�ant to state law at the time the units first
become available for rent. Annual rent increases sha11 not exce�d the increases �
permitted by state law.
(d) Sales prices in the �ffordable units sha!! be set by the Pa!m Desert
Redevefopment Agency pursuant to state law an amount such that the units will
qualify as affordable to moderate income persons pursuar�t to sfate law.
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�e f ��ty sf�al! caus� th� !'al�n Dese�f t�ec�eve(opm�r,� Agency i�
provide se�ond frust deed �inanci:lg fo buyers to secure 4�-year afrordability
vovenanis. Th2 amount of such financing shall be at the sole and absolufe
discretion of the Rgency.
{� Subsequent sales �f any affordabie ur�its shali be subject to resale
contrais substanfially in the form of the deed restricfions attache� hereta �s
Exhibifi " A ", which wili assure that said units may only be sold or rented to
incorr�e qualified persons provided fior in this paragraph 7.
(g) Property Owner or its assigned management agent shali be
responsible for determining the eligibility of prospective tenants in the affordable
units.
(h) Property Owner shall advise the City in writing prior to obtaining
building permit regarding the meth��d to be used to satisfy affordable housing
requirement of the project.
(i) Property Owner shall riot discriminate on the basis of race, color or
creed, sex, or national origin.
(j) Chanqe in Proiect. Pr��perty Owner hereby agrees that prior to the
initial compietion of the Project as evidenced by the issuance of a certificate of
occupancy, no change, modificatior, revision or alteration may be made in the
approved precise plan without review and approval by the City and those
agencies and departmenfis of the Cii.y approving the plan in the first instance. A
change, modification, revision or alteration in the approved precise
plan/conditional use permit prior to the initial completion of the Project is not
effective until the parties amend this Agreement to incorporate it.
(k) Hold Harmless. Property Owner agrees to and shall hold the City,
its officers, agents, consultants, employees and representatives harmless from
any liability for damage or claims for damage which may arise from the direct or
indirect operations of the Property Owner or those of his contracfor,
subcontractor, agent, employee or other person acting on his behalf which
relates to the Project. Property Ownpr agrees to and shall defend the City and its
officers, agents, employees and representatives from third party a�tions for
damages caused or alleged to have been caused by reason of Property Owner's
activities in connection with the Project.
This hold harmfess agreeme�t applies to all third party damages and .
cl�im� for dam�ges su�fered, or allec�ed to have beer� suff�red, �y reasor� o; ihe
operation referre� to in this paragraph, regardless of whether or not the City
prepared, supplied, or approved plans or specifications or both for the Project.
Property Owner further agr-ees to indemnify, hold harmless, pay alI costs
and provide a defense for City in any action challenging fhe validity of this
Agreement.
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(1) Periodic Revievv of C�ompliance with Aqreeme�'�. So (ong as fhe
�roject is ar� apartment project, fihe Properfiy Owner s�ail, at his expe�nse,
prepare an annual reporf and �eliver such report fo the City regarding
compliance wifh the affordable housing provisions o� this Agreemenf. The City
may inspect the affordable units pursuant to appiicabie law regarding
inspections. The Cit;� may, at the expense of the Property Owner, cause to be
performed an audifi of the affordabl� units in the Projecf.
(m) Amendment or Canc�:llation of Agreement. This Agreement may
be amended or canceled in whoie o� in part by mutual consent o#the parties.
(n) Enforcement. Unle�s amended or canceled as provided in
paragraph (m), this Agreement is er�forceable by any party to it notwithstanding a
change in the applicable general or specific plan, zoning, subdivision, or building
regulations adopted by City whicFi alter or amend the rules, regufations or
policies governing permitted uses oF the land, density, design, improvement and
construction standards and specific��tions.
(o) Events of Default. Property Owner is in default under this
Agreement upon the happening of one or more of the following events or
conditions:
(i) If a warranty, r�presentation or statement set forth in this
Agreement by Property Owner to City is false or proves to have been faise
in any materiai respect when it was made;
(ii) A determination by the City that Property Owner has not
complied with any term or condition of this Agreement.
(iii) Property Owner's failure to maintain the Real Property in
substantially the same condition as it exists on the date that City issues
the Certificate of Occupancy vvith respect to the Project ordinary wear and
tear and casualty excepted.
(iv) Property Owner':s failure to appear in and defend any action
or proceeding purporting to affect the rights or powers of City under the
terms of this Agreement, anci to pay al{ costs and expenses, including
attorneys' fees in a reasonable sum, in any such action or proceeding in
which City may appear.
(p) Procedure upon Defauif. if the City determines that the Property
�wner is in clefault, the City shall nc►fiify the Property Ovrrner i� writing as to rhe
nature of the default. Property Owner has 30 days upon receipt of such
notification to take and complete remedial action. If Property Owner fails to take
and complete remedial action within t:he 30-day period described above, the Gifiy
may pursue all legal and equitable remedies the City may have af (aw or in
equity, and City shail be entitled to specific performance and enforcement of
each and every term, condition and covenant set forth herein.
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���I�RT�E NO� 1�6� �� �
(q) Uarr�aqes upon �ancellatior�, Terminafian �f l�qre�emenf. i�� ��
evenf shall �ropert,� �wner be zntitled to any damages agai�st the City i�por�
terrr�ination of this Agreement or exercise by City of its rights ui�der fhis
agreement.
(r) Attornev's Fees and Costs. If legai action by eirher party is brought
b�cause of br�ach of this Agreemer,t or to entor�e a provision of this Agreer�ent,
fhe prevailing parfy is entitled to reasonabie attorneys' fees and court costs.
(s) Notices. Alf notices required or provided for under this Agreement
shall be in writing and delivered ir� p�rson or sent by certified mail, postage
prepared. Notice required lo be given to City shall:be addressed as follows: City
Manager, City of Palm Desert, 73-510 Fred VVaring Drive, Palm Desert,
California 92260.
Notices required to be given to Property Owner shall be addressed as
follows:
Sares Regis Group, c/o Greg Albert, 18825 Bardeen Avenue, Irvine, California
92612.
A party may change the address by giving notice in writing to the other
party and therefore notices shall k>e addressed and transmitted to the nevv
address.
(t) (i) Rules of Constructic�n and Miscellaneous Items. The singular
includes the plural; the masculine gender includes the feminine; "shall" is
mandatory, "may" is permissive.
(ii) If there is more than one signer of this Agreement, on behal; of
the Property Owner, obiigations are joint and several.
(u} Duration of Aqreement. This Agreement shall remain in effect
during the Useful Life of the Project.
(v) Apqlicable Law. This ��greement shall be construed according to
the laws of the State of California.
(w) Severabilitv. If any porfion of this Agreement is for any reason held
fo be unenforceable, such determination shall not affect the validity of the
remaining portions.
(x) Authoritv. Each of the �arties hereto covenants and agrees that it
has the legal capacity to enter into this Agreement contained herein, that each
Agrepment is binding upon that party and that this Agreement is executed by a
duly a�thorized afficial acting in his ofi�ciai capacity.
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I�I W#TfVE�S V`J�-iERE�F ��i� F,grE���r!er�t h�s bee� execUfeG by fhe pa�zie5 ��
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Approved as to form: CITY (�F PALi1� DE�ERT,
A Municipal Corporation
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Dave E in, City Attorney �ber� Ao sp�e i, ��r
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