HomeMy WebLinkAboutRes 08-61 and 548 DDA W.DeLeeuw & Larspur Assoc., LLC CITY OF PALM DESERT/PALM DESERT REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: ADOPTION OF CITY COUNCIL RESOLUTION NO. 08-��AND
AGENCY RESOLUTION NO. 54R APPROVING A DISPOSITION
AND DEVELOPMENT AGREEMENT BETWEEN THE PALM
DESERT REDEVELOPMENT AGENCY AND WILLIAM DELEEUW
AND LARKSPUR ASSOCIATES, LLC
SUBMITTED BY: JUSTIN MCCARTHY, ACM FOR REDEVELOPMENT
DATE: JUNE 26, 2008
CONTENTS: CITY COUNCIL RESOLUTION NO. 08-��
AGENCY RESOLUTION N0.548
DISPOSITION AND DEVELOPMENT AGREEMENT
HEALTH & SAFETY CODE SECTION 33433 REPORT
PROJECT PRO FORMA WORKSHEET
SITE MAP
Recommendation:
That the City Council/Agency Board open the joint public hearing and following
testimony, take the following action:
That the City Council:
1. Waive further reading and adopt Resolution No. 08-�, a resolution of the
City Council of the City of Palm Desert approving a Disposition and
Development Agreement between the Palm Desert Redevelopment Agency
and William DeLeeuw and Larkspur Associates, LLC concerning real
property owned by the Agency in the City of Palm Desert and generally
described as 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.
That the Agency Board:
2. Waive further reading and adopt Resolution No. 54s , a resolution of the
Palm Desert Redevelopment Agency approving a Disposition and
Development Agreement among the Agency and William DeLeeuw and
Larkspur Associates, LLC concerning real property owned by the Agency in
the City of Palm Desert and general'y located on the east side of Larkspur
Lane between Shadow Mountain Drive and EI Paseo.
Staff Report
Adoption of City/Agency Resolutions Approving DDA between Agency, William DeLeuuw
and Larkspur Associates LLC
Page 2 of 5
June 26, 2008
Discussion:
Redevelopment Agency staff have negotiated a Disposition and Development
Agreement (the "DDA") with the Larkspur Associates, LLC (the "Develope�") for the
development of a 154-room integrated boutique hotel and condominium hotel project on
2.1 acres at the northeast corner of Larkspur Drive and Shadow Mountain Drive.
The DDA is the product of negotiations authorized under an Exclusive Negotiation
Agreement (ENA) befinreen the Agency and the Developer. The Developer had secured
a contract to acquire the "Stein" property and had advanced the $600,000 down
payment. In the ENA, the Developer assigned its rights to acquire the property to the
Agency subject to negotiation of a DDA for the hotel project and payment of ENA fees
to the Agency.
The project is a four star full service boutique hotel consisting of 106 hotel rooms and 16
condominium hotel units. The condominium hotel units provide three lockout rooms
each, adding 48 rental rooms, to be integrated with the hotel project for a total of 154
hotel rental units. The condominiums facilitate the financing of the project while meeting
the City's requested design objective of presenting a residential image fronting on
Shadow Mountain Drive.
The project includes public space for a lobby, restaurant, gift shop and bar, a spa, and
conference and meeting rooms. In addition to small private pools for the suites, there
will be three large pools for the hotel and a roof deck garden. The project includes
underground parking with a minimum of 203 parking spaces, and will be able to park
over 210 vehicles using valet parking.
The project will be built to the "Silver" Leadership in Energy and Environmental Design
(LEED) standard. The Developer intends to make portions of the hotel available to the
public as a cool facility in the event of an area power outage, and will be providing
natural gas back-up power to maintain electrical service in such an event. Additionally,
the project will include solar photovoltaic for alternative energy.
The principals of Larkspur Associates, LLC, have owned and operated four hotels since
1985 ranging in size from 100 to 300 rooms in various resort communities. In addition,
the principals have developed or managed over 100 residential and commercial
properties with a total development value of $250 million. The team has experience
developing in Palm Desert with development of the 512-unit Sevilla apartment complex
located on Country Club Drive.
G1rdaUustin McCarthy\Word F�les\staffrpts�Larkspur DDA StaH Report.tlot
Staff Report
Adoption of City/Agency Resolutions Approving DDA between Agency, William DeLeuuw
and Larkspur Associates LLC
Page 3 of 5
June 26, 2008
The project will be financed through the sale of the condominium units using
conventional mortgages with owners putting their units into the hotel renta� pool and
with conventional commercial real estate financing for the boutique hotel. The owners of
the condominiums will be granted two weeks occupancy in season and two weeks
occupancy out of season without being subject to payment of hotel taxes. The
Developer's financing and hotel operator will be subject to review and approval by the
Agency prior to close of escrow on the land.
The Developer has already advanced $600,000 toward the purchase of the property
and will have paid the Agency an estimated $532,000 in ENA fees by the close of
escrow. Further, the Developer is in escrow to acquire property adjacent to the hotel
site, as an open space amenity for the hotel, at an additional investment of$500,000.
The project will provide a projected $900,000 plus in annual transient occupancy tax
and $72,000 in primary and secondary sales tax per year to the City's General Fund.
While EI Paseo is served by only 270 hotel/motel rooms within walking distance, this
project will represent the first four star level hotel within walking distance of EI Paseo.
Based on a survey of Rodeo Drive in Beverly Hills, California (1,355 hotel rooms) and
Old Town in Scottsdale, Arizona (1,478 hotel rooms), it appears that EI Paseo may be
underserved in hotel rooms given its level of shopping and dining amenities. Both of the
surveyed shopping districts are served by limited service and upscale hotels.
Summary of the DDA
Agency and/or City Requirements:
• The Agency proposes to sell the Property to the Larkspur Associates, LLC for the
sum of Four Million Five Hundred Twenty-Seven Thousand Dollars ($4,527,000)
plus all accrued and unpaid ENA Fees (the "Purchase Price"). The Purchase
Price is equal to the Five Million Dollar ($5,000,000) Original Purchase Price for
the Property under the Purchase Agreement, less the Six Hundred Thousand
Dollar ($600,000) "Deposit" paid by the Developer under the original Purchase
Agreement, plus the One Hundred Twenty-Seven Thousand Dollars ($127,000)
advanced by the Agency for broker's fees required to close escrow.
Partnership Requirements:
• Develop the project in accordance with the Scope of Development, the Schedule
of Performance and all requirements of the City's Municipal Code; and open the
hotel for business by a certain date.
G UdaUustin McCaAhy\Word Fiies\staffrpts\Larkspur DDA Slaff Reporl.dot
Staff Report
Adoption of City/Agency Resolutions Approving DDA between Agency, William DeLeuuw
and Larkspur Associates LLC
Page 4 of 5
June 26, 2008
• The Developer agrees to pay all costs, expenses and fees associated with the
development and construction of the Project, including the costs of developing
and constructing the improvements thereon.
Conditions to be satisfied by Partnership before Land is conveyed:
• The Developer shall prepare and submit to the Agency for review and approval
the Plans and Specifications.
• The Developer shall obtain a financing commitment and any and all permits
required by the City and/or any other governmental agency required for the
development of the Project. The Agency shall have approved the form and
content of the financing commitment.
• The Developer shall furnish the hotel operating agreement to the Agency and the
Agency shall have approved the form and content of the agreement and identity
of the hotel operator.
• The Developer shall furnish loan documents to the Agency, and the Agency shall
have approved their form and content.
• The Developer shall furnish construction contracts, performance bonds and labor
and material labor bonds, and a construction budget to the Agency, and the
Agency shall have approved their form and content.
• The Developer shall furnish to the Agency duplicate originals or appropriate
certificates of insurance policies as required in Section 7.1 of the DDA.
The Developer shall commence construction of improvements within 30 days after the
close of escrow and complete the project within 550 days after the commencement of
construction.
GVdaWuslin McCaAhy\Word Files�staffrpts\Larkspur DDA Staff Report.dol
Staff Report
Adoption of City/Agency Resolutions Approving DDA between Agency, William DeLeuuw
and Larkspur Associates LLC
Page 5 of 5
June 26, 2008
The Report
The report pursuant to Health and Safety Code Section 33433 has been prepared with
an analysis of this transaction and is attached hereto.
Submitted by: Approval:
• � �GG���
Ju ' cCarthy Carlos L. Ort a
CM f r Redevelop ent City Manag /Executive Director
mh
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+��T�ZE'IED BY° ,�,._.�..,.Y„�,.,_�,._.._
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* Adopted Res. Nos. 08-61 and 548, including concurrence that William DeLeeuw's name
be deleted as a separate signatory on the DDA and related documentation so that it
conforms to the Development Agreement. 5=0
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NOTICE OF�Jb�'P'C�'���'���`�Y THE CITY COUNCIL OF THE CITY OF PALM
DESERT AND THE PALM DESERT REDEVELOPMENT AGENCY REGARDING THE
PROPOSED APPROVAL OF A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
BETWEEN THE AGENCY AND WILLIAM DELEEUW AND LARKSPUR ASSOCIATES, LLC
CONCERNING REAL PROPERTY OWNED BY THE AGENCY IN THE CITY OF PALM
DESERT AND GENERALLY DESCRIBED AS 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
NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Desert and the Palm Desert
Redevelopment Agency (the "Agency") will hold a joint JOINT PUBLIC HEARING to consider the
approval of a Disposition and Development Agreement(the "DDA") by and between the Agency and
William DeLeeuw, an individual, and Larkspur Associates, LLC, a Nevada limited liability company
(collectively, the "Developer") in connection with the proposed disposition to the Developer of property
owned by the Agency and common}y known as 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 in the City of Palm Desert (the "Property") and located within the
Agency's Project Area No. 1(the "Project Area"). The DDA generally provides for the Agency to sell the
Property to the Developer for development of an integrated three-story Four Star boutique hotel and two-
story condominium project consisting of 106 hotel rooms and a maximum of 16 condominium suites,
together with a spa, conference and meeting rooms, pools, a roof deck garden, roof deck patios, an
underground parking structure and public space to be used as lobby, restaurant, gift shop and bar areas
(the "Project").
The Joint Public Hearing will be held at a joint meeting of the Palm Desert City Council and the
Palm Desert Redevelopment Agency as follows:
�,,r
, D;ATE: June 26,200� `�`=�'�
TIME: 4:00 P.M.
PLACE: Council Chamber, City Hall
73-510 Fred Waring Drive
Palm Desert,CA 92260
The following documents are available for public inspection and copying, at a cost not to cxceed thc cost
of duplication, at the Office of the City Clerk/Agency Secretary, 73-510 Fred Waring Drive, Palm Descrt,
California 92260:
1. A Summary Report which describes and specifies:
a. The cost of the DDA to be incurred by the Agency;
b. The estimated value of the Property, determined at the highest and best uses
permitted under the Redevelopment Plan for the Project Area;
c. The estimated value of the Property, determined at the use and with the conditions,
covenants, and development costs required by the DDA;
d. The sale price for the Property under the DDA;
P6402-OOOf\1059640v2
e. If the purchase price is less than the fair market value of Property determined at the
highest and best use consistent with the Redevelopment Plan for the Project Area,
an explanation of the reasons for the difference; and
f. An explanation of why the proposed sale of the Property will assist in the
elimination of blight in the Project Area.
2. A copy of the proposed DDA to be executed by and between the Agency and the
Developer.
All interested persons are invited to attend and provide testimony and comments to the Agency and City
Council.
In compliance with the American with Disabilities Act, if you need special assistance to
participate in an Agency or City Council meeting or other services offered by the Agency or City, please
contact the City Clerk's office at 73-510 Fred Waring Drive, Palm Desert, California 92260. Notification
at least 48 hours prior to the meeting or time when services are needed will assist the Agency and City
staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting or
service.
Dated this 9`h day of June, 2008.
/s �Rac elle D. Klassen, City lerk
City of Palm Desert
P6402-0001\]059640v2
RESOLUTION NO. 08- 61
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT APPROVING A DISPOSITION AND DEVELOPMENT
AGREEMENT BETWEEN THE PALM DESERT REDEVELOPMENT
AGENCY AND WILLIAM DELEEUW AND LARKSPUR ASSOCIATES,
LLC CONCERNING REAL PROPERTY OWNED BY THE AGENCY IN
THE CITY OF PALM DESERT AND GENERALLY DESCRIBED AS 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
RECITALS:
WHEREAS, in order to effectuate the provisions of the Redevelopment Plan (the
"Redevelopment Plan") for Project Area No. 1 (the "Project Area") the Palm Desert
Redevelopment Agency (the "Agency") proposes to enter into a Disposition and
Development Agreement with William DeLeeuw, an individual, and Larkspur
Associates, LLC, a Nevada limited liability company (collectively, the "Developer"), a
copy of which agreement has been presented to the City Council at this meeting and is
on file with the Secretary of the Agency (the "DDA"), providing for the disposition of
property owned by the Agency, generally described as 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 in the City of Palm
Desert (the "Property"), to the Developer, and the development of the Property by the
Developer with an integrated three-story Four Star boutique hotel and two-story
condominium project consisting of 106 hotel rooms and a maximum of 16 condominium
suites, together with a spa, conference and meeting rooms, pools, a roof deck garden,
roof deck patios, an underground parking structure and public space to be used as
lobby, restaurant, gift shop and bar areas (the "Project"); and
WHEREAS, the City Council of the City of Palm Desert has previously
determined that the Project Area is an area in which the combination of conditions of
blight is so prevalent and so substantial that there is a reduction of, or lack of, proper
utilization of the area to such an extent that it constitutes a serious physical and
economic burden on the community which cannot reasonably be expected to be
reversed or alleviated by private enterprise or governmental action, or both, without
redevelopment. Among other things, the Project Area contains vacant and underutilized
properties, properties which suffer from depreciated or stagnant property values and
impaired investments, and deteriorated, aged and obsolete buildings. Such conditions
tend to further deterioration and disuse because of the lack of incentive to landowners
and their inability to improve, modernize or rehabilitate their property while the condition
of the neighboring property remains unchanged; and
WHEREAS, the sale of the Property pursuant to the DDA is expected to
implement the purposes of the Redevelopment Plan for the Project Area by causing the
development of the Project in accordance with the Redevelopment Plan; and
P6402-0001\I059328v2
WHEREAS, Health and Safety Code Section 33433 requires that before any
property of the Agency acquired in whole or in part with tax increment revenue is sold
for development pursuant to the Redevelopment Plan, such sale shall first be approved
by the City Council after a public hearing; and
WHEREAS, Health and Safety Code Section 33433 also requires that a
Summary Report be made available for public inspection; and
WHEREAS, the Summary Report and the proposed DDA have been made
available for public inspection in the manner required by Health and Safety Code
Section 33433; and
WHEREAS, the City Council has conducted a duly noticed joint public hearing
with the Palm Desert Redevelopment Agency pursuant to Health and Safety Code
Section 33433 with respect to the DDA;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM
DESERT HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. Based on the evidence presented to the City Council,
including the Summary Report prepared pursuant to Health and Safety Code Section
33433, the City Council hereby finds and determines that (i) the sale of the Property
pursuant to the DDA will assist in the elimination of blight in the Project Area; (ii) the
sale of the Property pursuant to the DDA is consistent with the Agency's Implementation
Plan for the Project Area adopted pursuant to Health and Safety Code Section 33490;
and (iii) [the consideration for the Property is not less than the fair market value of the
Property at its highest and best in accordance with the Redevelopment Plan.]
Section 2. The DDA is exempt from the California Environmental
Quality Act ("CEQA") pursuant to 14 CCR Section 15061(b)(3). CEQA compliance will
be undertaken in conjunction with the permitting process that the Developer must
complete pursuant to the DDA.
Section 3. The City Council hereby approves the DDA and the
Executive Director of the Agency is hereby authorized and directed, for and in the name
and on behalf of the Agency, to execute and deliver the DDA in substantially the form
P6402-0001\1059328v2 2
on file with the Agency Secretary, with such additions thereto or changes or insertions
therein as may be approved by the Executive Director (such approval to be conclusively
evidenced by such execution and delivery).
PASSED, APPROVED AND ADOPTED this 26th day of June 2008 by the
following vote to wit:
AYES:
NOES:
ABSENTS:
ABSTAINS:
Jean M. Benson, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
P6402-0001\1059328v2 3
RESOLUTION NO..548
A RESOLUTION OF THE PALM DESERT REDEVELOPMENT
AGENCY APPROVING A DISPOSITION AND DEVELOPMENT
AGREEMENT AMONG THE AGENCY AND WILLIAM DELEEUW AND
LARKSPUR ASSOCIATES, LLC CONCERNING REAL PROPERTY
OWNED BY THE AGENCY IN THE CITY OF PALM DESERT AND
GENERALLY LOCATED ON THE EAST SIDE OF LARKSPUR LANE
BETWEEN SHADOW MOUNTAIN DRIVE AND EL PASEO
RECITALS:
WHEREAS, in order to effectuate the provisions of the Redevelopment Plan (the
"Redevelopment Plan") for Project Area No. 1 (the "Project Area") the Palm Desert
Redevelopment Agency (the "Agency") proposes to enter into a Disposition and
Development Agreement with William DeLeeuw, an individual, and Larkspur
Associates, LLC, a Nevada limited liability company (collectively, the "Developer"), a
copy of which agreement has been presented to the Agency at this meeting and is on
file with the Secretary of the Agency (the "DDA"), providing for the disposition of
property owned by the Agency in the Project Area, generally located on the east side of
Larkspur Lane between Shadow Mountain Drive and El Paseo (also described as 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) in the City of Palm Desert (the "Property"), to the Developer, and the
development of the Property by the Developer with an integrated three-story Four Star
boutique hotel and two-story condominium project consisting of 106 hotel rooms and a
maximum of 16 condominium suites, together with a spa, conference and meeting
rooms, pools, a roof deck garden, roof deck patios, an underground parking structure
and public space to be used as lobby, restaurant, gift shop and bar areas (the "Project");
and
WHEREAS, the City Council of the City of Palm Desert has previously
determined that the Project Area is an area in which the combination of conditions of
blight is so prevalent and so substantial that there is a reduction of, or lack of, proper
utilization of the area to such an extent that it constitutes a serious physical and
economic burden on the community which cannot reasonably be expected to be
reversed or alleviated by private enterprise or governmental action, or both, without
redevelopment. Among other things, the Project Area contains vacant and underutilized
properties, properties which suffer from depreciated or stagnant property values and
impaired investments, and deteriorated, aged and obsolete buildings. Such conditions
tend to further deterioration and disuse because of the lack of incentive to landowners
and their inability to improve, modernize or rehabilitate their property while the condition
of the neighboring property remains unchanged; and
WHEREAS, the sale of the Property pursuant to the DDA is expected to
implement the purposes of the Redevelopment Plan for the Project Area by causing the
development of the Project in accordance with the Redevelopment Plan; and
P6402-0001\1062977v1.doc
WHEREAS, Health and Safety Code Section 33433 requires that before any
property of the Agency acquired in whole or in part with tax increment revenue is sold
for development pursuant to the Redevelopment Plan, such sale shall first be approved
by the City Council after a public hearing; and
WHEREAS, Health and Safety Code Section 33433 also requires that a
Summary Report be made available for public inspection; and
WHEREAS, the Summary Report and the proposed DDA have been made
available for public inspection in the manner required by Health and Safety Code
Section 33433; and
WHEREAS, Health and Safety Code Section 33431 provides that the
Agency may sell property without public bidding after a public hearing; and
WHEREAS, the Agency has conducted a duly noticed joint public hearing with
the City Council pursuant to Health and Safety Code Sections 33431 and 33433 with
respect to the DDA;
NOW, THEREFORE, THE PALM DESERT REDEVELOPMENT AGENCY
HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. Based on the evidence presented to the Agency, including
the Summary Report prepared pursuant to Health and Safety Code Section 33433, the
Agency hereby finds and determines that (i) the sale of the Property pursuant to the
DDA will assist in the elimination of blight in the Project Area; (ii) the sale of the
Property pursuant to the DDA is consistent with the Agency's Implementation Plan for
the Project Area adopted pursuant to Health and Safety Code Section 33490; and (iii)
the consideration for the Property is not less than the fair market value of the Property
at its highest and best in accordance with the Redevelopment Plan.
Section 2. The DDA is exempt from the California Environmental
Quality Act ("CEQA") pursuant to 14 CCR Section 15061(b)(3). CEQA compliance will
be undertaken in conjunction with the permitting process that the Developer must
complete pursuant to the DDA.
Section 3. The Agency hereby approves the DDA and the Executive
Director of the Agency is hereby authorized and directed, for and in the name and on
behalf of the Agency, to execute and deliver the DDA in substantially the form on file
P6402-0001 \ 1062977v l .doc 2
with the Agency Secretary, with such additions thereto or
as may be approved by the Executive Director (such
evidenced by such execution and delivery).
PASSED, APPROVED AND ADOPTED this
following vote to wit:
AYES:
NOES:
ABSENTS:
ABSTAINS:
ATTEST:
Rachelle D. Klassen, Secretary
changes or insertions therein
approval to be conclusively
26th day of June 2008 by the
Jean M. Benson, Chairman
P6402-0001 \ 1062977v1.doc 3
DISPOSITION
AND DEVELOPMENT
AGREEMENT
PALM DESERT REDEVELOPMENT AGENCY
"Agency"
WILLIAM DeLEEUW
and
LARKSPUR ASSOCiATES, LLC
"Developer"
, 2008
P6402-0201\96A018v5.doc
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS..................................................................................................2
SECTION1.1 DEFINITIONS........................................................................................................ 2
ARTICLE 2. PURCHASE AND SALE OF THE PROPERTY .......................................... 5
S�:C"I�ION Z.1 PURCHASE AND SALf:........................................................................................... S
SECI�ION 2.2 PAYM�:NT OF PIJRCHASE PRICE............................................................................ S
SF.C:TION 2.3 ESCROW............................................................................................................... S
SECTION 2.4 CONDITIO�S TO CI.OSE OF ESCROW..................................................................... 7
SEC:T101 2.5 CO\DITIO\OF TITLE; SURV�Y;TITLE INSURANCE.............................................. 7
SECTION 2.6 ESCROW AND TITL�.CHARGES; PRORATIONS....................................................... 9
SF:CTION 2.7 DUE DILIGEN('E PERIOD; AcCEss........................................................................ 9
SECT[ON 2.8 CONDI"�ION OF THE PKOPERTY............................................................................. 9
SEc:T[o� 2.9 Esr.Row Ho[.nE:K............................................................................................... 11
Sk:CTIO\2.10 ADDI"I'[OtiAL INSTRUCTIO\S .......................................................................... 1 1
Sr•.cT[o;�2.1 ] ENA FEEs...................................................................................................... 12
ARTICLE 3. DEVELOPMENT OF THE PROPERTY.................................................... 12
SECTION 3.1 SCOPE OF DEVELOPMENT................................................................................... 12
SEC"I'[ON 3.2 AGENCY'S RIGEIT TO REVIEW PLANS AND SPECIFICAl�lO'`5............................... 12
SF.CTION 3.3 APPROVA[.OF CO\STRUCTION PLANS ............................................................... 13
SECTION 3.4 CHAtiGES I'�l CONSTRUC7�ION DRAWINGS........................................................... 13
SECTION 3.5 CONSTRiJCTION DOCU�IENTS ............................................................................ 13
SECTION 3.6 HOTEL OPF.RA"riNG AGREEMENT ....................................................................... 14
SECl�ION 3.7 COST OF CONSTRL;c'T�otv ................................................................................... 14
SE('T[O:v`3.g CONSTR�C,TION SCHEDULE................................................................................ 14
SE:C"['[O\ 3.9 PROGRESS OF CONSTRI;C"I'ION ........................................................................... 14
SEC"I'ION 3.10 R[GF�TS OF ACCESS ........................................................................................ 14
SECTION 3.1 1 LOCAL, STATE AND FEDERAL LAWS.............................................................. 14
SECTION 3.12 NOND[SCRIMINATION DURING CONSTRI;C"I'ION............................................. 1 S
SF('TION 3.13 CERT[F[CATI�:OF COMPLETION....................................................................... 1 S
ARTICLE 4. LIMITATIONS ON TRANSFERS AND SECURITY INTERESTS........ 15
SECTION 4.1 LIMITATION AS TO TRANSFER OF THE PROPERTY AND ASSIGNMENT OF
AGREEMF'�"1' ..................................................................:................................... 15
SECTION 4.2 SECURITY FIVANCMG; R[GH-[�OF HOLDERS....................................................... 16
ARTICLE 5. USE OF THE PROPERTY............................................................................ 17
SECTIO\5.1 L1SE.................................................................................................................... 17
SEC1'IOti 5.2 MAINTENANCE OF THE PROPERTY ..................................................................... 17
SEC�r�oti 5.3 �BI.IGATION TO REt�RA[N FROM DISCRIMINar[orr............................................. 18
S�c�rioti 5.4 FORM OF NONDISCRI:v1ItiATlOI� AND NONSEGREGATION CLAUSES.................... 18
SECTION S.S RESTRICTIVE COVENANT................................................................................... 19
SECTION 5.6 EFFECT AND DURA"I�ION OF COVENANTS............................................................ 19
1
P6402-0201�968018v5.doc
ARTICLE 6. ARTICLE EVENTS OF DEFAULT, REMEDiES AND
TERMINATION............................................................................................. 20
SECTION 6.1 DEFAL'LTS--DLFINITION..................................................................................... ZO
SEC'"CION 6.2 REMEDIFS Iti THE EVENT Of�DEFAULT............................................................... 21
SECTIO�i 6.3 NO PERSONAL LIAB[I.[TY................................................................................... 21
SECTION 6.4 LFGAL AC1'IO'�5................................................................................................. 22
SEC�CION f).5 RIG�I-I�S A:vD REMEDIES ARE CL'MU[.A7'IVE ........................................................ ZZ
SECTION 6.6 AGENCY'S REMEDIES ........................................................................................ 22
$EC"rION 6.7 1NACTIOti NOT A WAIVFR OF DEFAUL"r............................................................. 22
SECTION 6.8 AGENCY REVGRSIO�' RIGfI1�S............................................................................. 22
ARTICLE 7. GENERAL PROVISIONS............................................................................. 24
SECTIO\' 7.1 INSURANCE. ....................................................................................................... 24
SECTION 7.2 IT;DEMNITY. ....................................................................................................... 26
SF('TION 7.3 NO'r1C'ES............................................................................................................. 2�
SECTION 7.4 CONSTRUCTION.................................................................................................. 28
SEC1�I0\ 7.5 DEVELOPER'S WARRANTIF.S.............................................................................. ZH
SECTION 7.6 INTERPRETAT[O'� ............................................................................................... 28
SECTION 7.7 TIME OE THE ESS�.i�('E ....................................................................................... 2g
SECTIO?�� 7.H ATTORNEYS' FEES............................................................................................. 2g
SECI�ION 7.9 ENt�ORCED DELAY: EXTENSION OF TIMES OF PERFORMANCF........................... 29
SECTION 7.1 O APPROVAI.S BY AGENCY AND THE DEVELOPER............................................. 29
SECTION 7.1 1 DEVELOPER'S PRIVATE UNDERTAKING ......................................................... 29
SECTIO;� 7.12 EN"CIRE AGRF:EMENT,WAIVERS AND A;vIENDMENTS ..................................... 29
SFCTio�v 7.13 SEVERABILI�rY ............................................................................................... 29
SECTION 7.14 SiJRVIVAI....................................................................................................... 30
SEC"fION 7.1 S REPRESLNTATIONS OF AGE�;CY..................................................................... 30
SECTION 7.1b COUNTERPAR"CS............................................................................................. 30
SEC�I'ION 7.17 10IN"f AND SEVERAI.OB[.IGAI�IO'.� ................................................................. 3O
SECTIO\ 7.1 H BROKER'S COMMISSION ................................................................................ 3O
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DISPOSITION AND DEVELOPMENT AGREEMENT
THIS DISPOSITION AND DEVELOPMENT AGREEMENT
("Agreement"), dated as of , 2008 (the"Effective Date") is entered
into by and among the PALM DESERT REDEVELOPMENT AGENCY, a public body,
corporate and politic (the "Agency"), and WILLIAM DELEEUW, an individual, and
LARKSPUR ASSOCIATES, LLC, a Nevada limited liability company (collectively, the
"Developer").
RECITALS
This A�-eement is entered into with reference to the following facts:
A. Agency is a public body, corporate and politic, exercising governmental
functions and powers, and organized and existing under the Community Redevelopment Law of
the State of California. The purpose of this Agreement is to effectuate the Redevelopment Plan
for Project Area No. 1, as amended, of Agency(the"Project Area") in the City of Palm Desert,
California, by facilitating the development of real property within the Project Area.
B. The Agency acquired that certain property located in the City of Palm
Desert, California, and described in Exhibit A attached hereto (the "Property"), on April 11,
2007, pursuant to that certain Assignment and Assumption Agreement For Purchase and Sale of
Real Property and Escrow Instructions, by and between the Ageney and Larkspur Associates,
LLC ("Larkspur") (the "Assignment"). The Assignment assigned to Agency all of Larkspur's
right, title and interest in and to that certain Agreement For Purchase and Sale of Real Property
and Escrow Instructions, dated as of June 15, 2006, by and between Larkspur and Joseph H.
Stein, Jr. and Joyce P. Stein, Trustees under Declaration of Trust dated November 23, 1993, as to
an undivided 76% interest, Christina L. Segel, a married woman, as her sole and separate
property (who acquired title as Christina L. Stein, an unmarried woman), as to an undividcd 12%
interest; and Michael Landes and Stephanie S. Landes, as Trustees of the Michael Landes and
Stephanie S. Landes Revocable Trust dated May 20, 2005, as to an undivided 12% interest (the
"Purchase Agreement"). The purchase price for the Site under the Purchase Agreement was Five
Million Dollars ($5,000,000) (the "Original Purchase Price"). At the closing of the purchase of
the Property under the Purchase Agreement, (i) Larkspur had previously funded Six Hundred
Thousand Dollars ($600,000) as the"Deposit" under the Purchase Ageement which was applied
to the Original Purchase Price and Larkspur funded Twenty-Three Thousand Dollars ($23,000)
for the partial payment of broker's fees, and (ii) the Agency paid Four Million Four Hundred
Thousand Dollars ($4,400,000) of the Original Purchase Price, and funded One Hundred
Twenty-Seven Thousand Dollars ($127,000) for the partial payment of broker's fees.
C. Developer desires to acquire the Property from Agency and develop,
construct and operate thereon the project ("Project"), as described in Exhibit F attached hereto
(the"Improvements").
D. The Project will assist in the elimination of blight in the Project Area and
will substantially improve the economic and physical conditions in the Project Area in
accordance with the purposes and goals of the Redevelopment Plan.
P6402-020 I 1968018 v5.doc
E. The Agency has determined that the land uses specifted in this Agreement
and the provisions relating to development of the Project specified in this Agreement are
consistent with the provisions of the Redevelopment Plan and each of its applicable elements.
F. A material inducement to the Agency to enter into this Agreement is the
agreement by the Developer to develop the Project within a limited period of time, and the
Agency would be unwilling to enter into this Agreement in the absence of an enforceable
commitment by the Developer to develop the Project within such period of time.
NOW, THEREFORE, the Parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
Secti�n 1.1 Definitions. The following terms as used in this Agreement shall have the
meanings given unless expressly provided to the contrary:
1.1.I A�means the Palm Desert Redevelopment Agency, a public body,
corporate and politic, exercising governmental functions and powers, and organized and existing
under the Community Redevelopment Law of the State of California, with full power and
authority to execute this Agreement. The principal office of the Agency is located at 73-510
Fred Waring Drive, Palm Desert, California 92260.
1.l.2 A�;reement means this Disposition and Development Agreement.
1.1.3 Certificate of Completion means a certificate described in Section 3.13, to
be provided by the Agency to the Developer upon satisfactory completion of construction of the
Improvements.
1.1.4 Certificate of OccupancY means the approval by the appropriate City
official on the"building permit card" for the Improvements, but shall not include any City
approvals for the contemplated use by any tenant or purchaser of any of the Property.
l.1.5 Citv 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
California. The principal office of the City is located at 73-510 Fred Waring Drive, Palm Desert,
California 92260.
1.l.6 Closin�:has the meaning defined in Section 2.3.2.
1.1.7 Closin� Date means the date upon which the Agency 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.
1.1.8 Community Redevelopment Law means Section 33000 et. seq. of the
Health and Safety Code of the State of California.
1.1.9 Completion Datc has the meaning defined in Section 3.1.1.
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I.1.l 0 Construction Bud�et shall mean the budget for construction of the
Improvements attached hereto as Exhibit I.
1.i.1 I Deemed Disapproved Exceptions has the meaning defined in Section
2.5.1.
1.1.12 Default has the meaning defined in Section 6.1.
I.1.13 Develo�er means collectively, William DeLeeuw, an individual and
Larkspur Associates, LLC, a Nevada limited liability company. The principal offices for
Larkspur Associates is 75656 Via Serena, Indian Wells, California 92210 and for William
DeLeeuw is 5723 Desert View Drive, La Jolla, California.
1.1.14 Development Agreement means that certain Development Agreement
dated on or about the Effective Date by and between the City and the Developer and pertaining
to the Property.
1.1.15 Disapproved Exception has the meaning defined in Section 2.5.1.
1.1.l6 Due Dili�ence Period has the meaning defined in Section 2.7.1.
1.i.17 ENA Fees means the fees described in Section 7 of that certain Exclusive
Negotiating Agreement by and among the Parties and dated as of April 1 l, 2007 (as amended,
the"ENA"), plus all other costs and expenses payable by Developer under the ENA.
l.1.18 Escrow has the meaning defined in Section 2.3.1.
1.1.19 Escrow Holder means Chicago Title Company (Rhonda Renzema, Escrow
Officer). The principal office of the Escrow Holder for purposes of this Ageement is 560 East
Hospitality Lane, San Bernardino, California 92408; Telephone: (909) 384-7827; Fax: (909)
384-7858.
1.1.20 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 thc
most recent annual awards list published by AAA or Mobil Travel Guides.
1.1.21 Grant Deed has the meaning defined in Section 2.5.2.
1.1.22 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
Rcsponse, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et seq. ("CERCLA"); the
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Hazardous Materials Transportation Act, as amended, 49 U.S.C. � 1801, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq.; and the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq. The term "Hazardous
Materials" shall also include any of the following: any and all toxic or hazardous substances,
materials or wastes listed in the United States Department of Transportation Table(49 CFR
172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302)
and in any and all amendments thereto in effect as of the date of the close of any escrow; oil,
petroleum, petroleum products (including, without iimitation, crude oil or any fraction thereofl,
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 othcrwise hazardous and is or becomes regulated by any governmental authority; asbestos in
any form; urea formaldchyde 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.
1.1.23 Holder has the meaning defined in Section 4.2.2.
1.1.24 Improvements means the improvements described in Section 3.1.
1.1.25 Outside Date has the meaning defined in Section 2.3.2.
1.1.26 Partv means any party to this Agreement. The "Parties" shall be all parties
to this Agreement.
1.1.27 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.
1.1.28 Plans and Specifications means the plans and specifications approved (or
deemcd approved)by the City for construction of the Improvements.
1.l.29 Pro'ect means the construction of the Improvements on the Property in
accordance with the Plans and Specifications.
l.1.30 Project Area means the Redevelopment Project No. 1, as amended, of the
Agency.
1.1.3] Property has the meaning defined in Recital C.
1.1.32 Purchase Price has the meaning defined in Section 2.1.
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1.1.33 Redevelopment Plan means the Redevelopment Plan for the Projcct Area,
as it may be amended from time to time. This Agreement shall be subject to the provisions of
the Redevelopment Plan which are incorporated herein by this reference and made a part hereof
as though fully set forth herein.
1.1.34 Released Parties has the meaning defined in Section 2.8.
1.1.35 Restrictive Covenant Period means the period commencing on the date of
completion of construction of the Improvements on the Property and ending on the seventy-fifth
(75`h) anniversary of the date of commencement of operation described in Section 5.1.
1.1.3G Schedule of Performance means the schedule attached hereto as Exhibit B
and incorporated herein by this reference.
1.1.37 Survey has the meaning defined in Section 2.5.1.
1.1.38 Title Companv has the meaning dcfined in Section 2.5.3.
1.1.39 Title Report has the meaning defined in Section 2.5.1.
1.l.40 Title Review Period has the meaning defined in Section 2.5.1.
I.1.41 Transaction Costs means all attorney's fees, staff time, appraisal costs, and
costs of financial advisors and other consultants incurred by either Party.
ARTICLE 2. PURCHASE AND SALE OF THE PROPERTY
Scction 2.1 Purchase and Sale. The Agency agrees to sell the Property to the Developer, and
the Developer agrees to purchase the Property from the Agency, for the sum of Four Million
Five Hundred Twenty-Seven Thousand Dollars ($4,527,000.00) plus all accrued and unpaid
ENA Fees (the "Purchase Price"). The Purchase Price is equal to the Five Million Dollar
(�5,000,000) Original Purchase Price for the Property under the Purchase Agreement, less the
Six Hundred Thousand Dollar($600,000) "Deposit"paid by the Developer under the Purchase
Agreement, plus the One Hundred Twenty-Seven Thousand Dollars ($127,000) paid by the
Agency for broker's fees, all as described in Paragraph B of the Recitals hereto. The Purchase
Price shall be paid in cash on the Closing Date.
Section 2.? Pavment 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, and all
ENA Fees which are due and payable as of the Close of Escrow.
Section 2.3 Escrow.
2.3.1 Opening of Escrow. Within five(5) days after the Parties' full execution
hereof, the Developer and the Agency shall open an escrow (the "Escrow") with the Escrow
Holder for the transfer of thc Property to the Developer. The Parties shall deposit with the
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P6402-0201\968018v5.doc
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 the Agency) to the Agency. Close of Escrow shall occur before the date that is one hundred
eighty(180) days after the Effective Date (the"Outside Date"). The Parties agree that if the
issuance of the Permits is delayed beyond the Outside Date by action, or inaction, of the City, the
County of Riverside or other governmental entity having jurisdiction over the Project, and such
action or inaction does not result from an act or failure to act by the Developer, then the Outside
Date shall be extended for the length of such delay but not to exceed ninety(90) days. The
Agency abrees to work with the Developer in good faith to facilitate the issuance of the Permits.
If for any reason other than a default by the Agency 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 dclivcred to the Developer on the Close of Escrow.
2.3.3 Deliveryof Closing Documents.
2.3.3.1 The Agency 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:
2.3.3.1.1 The Grant Deed, duly executed and
acknowledged by the Agency and accepted by Developer, conveying a fee simple interest in the
Property to Developer, subject only to such exceptions to title as Developer may have approved
or have been deemed to approve pursuant to Section 2.5.1;
2.3.3.1.2 The Agency's affidavit as contemplated by
California Revcnue and Taxation Code §18662;
2.3.3.1.3 A Certification of Non-Foreign Status signed by
Agency in accordance with Internal Revenue Code Section 1445; and
2.3.3.1.4 Such proof of the Agency'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).
The Agency 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 terms of this Agreement.
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Sectic�n 2.4 Conditions to Close of Escrow. The obligations of the Agency 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 the Agency, 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(including but not limited to the ENA Fees
which are payable upon the Close of Escrow).
2.4.2 For the benefit of the Agency, all actions and deliveries to be undertaken
or made by Developer on or prior to the Closing Date as set forth in the Schedule of Performance
shall have occurred, as reasonably determined by the Agency.
2.4.3 For the benefit of the Developer, all actions and deliveries to be
undertaken or made by the Agency on or prior to the Closing Date shall have occurred, as
reasonably determined by the Developer.
2.4.4 For the benefit of the Agency and the Developer, all Agency approvals
required per the Schedule of Performance to be obtained prior to the Closing Date shall have
been so obtained.
2.4.5 For the benetit of the Agency and the Developer, the Parties shall have
cxecuted and delivered to Escrow Holder all documents and funds required to be delivered to
Escrow Holder under the terms of this Agreement.
2.4.6 The representations and warranties of Agency and Developer contained in
this Ageement shall be true and correct in all materials respects as of the Closing Date.
2.4.7 Title Company shall be irrevocably committed to issuing in favor of the
Developer the Fee Title Policy, in form and substance, and with endorsements, reasonably
acceptable to the Developer, all as provided in Section 2.5.3.
2.4.8 For the benefit of the Agency, the City and Developer shall have executed
and recorded the Development Agreement, or simultaneously with the Close of Escrow will
execute and record the Development A�-eement, which shall permit the development and
construction of the Improvcmcnts as contcmplatcd by this Agreement.
2.4.9 For the benefit of the Agency, 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; Survey; Title Insurance.
2.5.1 Within two (2) days after the Effective Date, the Agency shall deliver to
the Developer any survey ("Survey") of the Property in the Agency's possession. Within ten
(10) days after the Effective Date, the Agency shall deliver to the Developer, for the Developer's
review and approval, a current preliminary title report covering the Property(the "Title Report")
and legible copies of any instruments noted as exceptions thereon. The Developer shall approve
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P6402-0201\968018v5.doc
or disapprove the Survey and each exception shown on the Title Report in writing within fifteen
(15) days after Developer's receipt of thc Titic Report (the "Title Review Period"). Should
Developer fail to disapprove the Survey and any title exceptions within said fifteen (15) day
period, the Survey and all title exceptions referenced in the Title Report shall be deemed
approved by Developer. The Developer's approval of the Survey and the title exceptions
reflected in the Title Report shall not be unreasonably withheld. The Agency shall be under no
obligation to remove any exception or encumbrance on title which is disapproved by Developer
(a "Disapproved Exception"), but the Agency agrees to cooperate in good faith with Developer
in Developer's efforts to eliminate any Disapproved Exception, provided the Agency is not
obligated to pay any sums to the holder of such Disapproved Exception to obtain the release
thereof(subject to the last paragraph of this Section 2.5.1). If Developer is unable to obtain a
discharge, satisfaction, release, or termination of a Disapproved Exception, or if the Agency does
not elect to do so, then Developer shall have the right, on or prior to the expiration of the Title
Review Period to:
(a) waive the Disapproved Exception and proceed to the Close of
Escrow, accepting title to the Property subject to the Disapproved Exception, or
(b) terminate this Agreement, in which event Developer and the
Agency shall be relieved of all further obligation and liability to the other under this
Agreement.
Notwithstanding the foregoing, on or before the Closing Date, the Agency
shall remove any mortgage, deed of trust, unpaid or delinquent taxes or assessments, or
mechanic's or judgment liens on the Property ("Deemed Disapproved Exceptions"). The
Developer shall have no obligations to object to any Deemed Disapproved Exceptions which
shall automatically be Disapproved Exceptions that the Agency must remove, at its own expense,
as a condition to Closing.
2.5.2 At the Close of Escrow, the Developer shall receive title to the Property by
�-ant 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 receivc 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 Dcveloper, issued by Chicago Titic Company
("Title Company") in the amount of the Purchase Price, insuring that title to the Property is free
and clear of all Disapproved Exceptions, all Deemed Disapproved Exceptions and att 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) such other encumbrances as the
Developer approves in writing including those reflected in the Title Report for the Property
approved by Developer, or as are deemed approved by Developer as provided in Section 2.5.1.
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PG402-0201\968018v5.doc
Section 2.6 Escrow and Title Char�es; Prorations.
2.6.1 The Developer shall pay all documentary transfer taxes, all titic 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
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 Agency 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.
Section 2.7 Due Dili�ence Period; Access.
2.7.1 During the period (the "Due Diligence Period") commencing on the
Effective Date and ending at 5:00 p.m. on the date which is fifteen (15) days after the Effective
Date, Developer may inspect the Property as necessary to approve (i) all zoning and land use
matters relating to the Property, (ii) to approve the physical condition of the Property and (iii) to
satisfy any due diligence requirements of Developer's construction lender. Subject to the terms
of a Right of Entry Agreement, the form of which is attached hereto as Exhibit D (the"Right of
Entry AgreemenY'), Developer and its agents shall have the right to enter upon the Property
during the Due Diligence Period to make inspections and other examinations of the Property and
the improvements thereon, including without limitation, the right to perform surveys, soil and
geological tests of the Property and the right to perform environmental site assessments and
studics of the Property. Prior to Developer's entry and investigation of the Property, the Parties
shall execute the Right of Entry A��reement. The Agency shall cooperate in any manner
reasonably necessary for Developer to conduct such due diligence review during the Due
Diligence Period. In the event Developer does not approve of the condition of the Property by
written notice to the Agency prior to the expiration of the Due Diligence Period, this Agreement
shall terminate, and except as otherwise expressly stated in this A�-eement, neither Party shall
have any further rights or obligations to the other Party.
2.7.2 The Agency has delivered to the Developer copies of those certain
documents related to the Property which are listed in Exhibit E attached hereto (collectively, the
"Property Documents").
Scction 2.8 Condition of the Property. The Property shall be conveyed from the Agency to
the Developer on an "AS IS" condition and basis with all faults and Developer agrees that
Agency has no obligation to make repairs, replacements or improvements thereto. Except as
expressly and specifically provided in this A�-eement, the Developer and anyone claiming by,
through or under the Developer hereby waives its right to recover from and fully and irrevocably
9
P6402-0201��)68018v5.doc
rcleases the Agency and the Agency's employccs, representativcs, agents, advisors, scrvants,
attorneys, successors and assigns, and all persons, firms, corporations and organizations acting
on the Agency's behalf(the "Released Parties") from any and all claims, responsibility and/or
liability that the Devcloper may now have or hereaftcr 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 affcct 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, THE AGENCY MAKES NO REPRESENTATION OR
WARRANTY AS TO (i) VALUE OF THE PROPERTY; (ii) THE INCOME TO BE DERtVED
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 CONDIT[ON 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
PROTECT[ON OR POLLUTION LAWS, RULES, REGULAT[ONS, 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 HAV[NG BEEN GIVEN THE
OPPORTUNITY TO INSPECT THE PROPERTY AND REV[EW INFORMATION AND
DOCUMENTATION AFFECTING THE PROPERTY, DEVELOPER IS RELYING SOLELY
ON ITS OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH
INFORMAT[ON AND DOCUMENTATION AND NOT ON ANY INFORMATION
PROVIDED OR TO BE PROVIDED BY THE AGENCY. The Developer acknowledges that
the Agency 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 FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
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BY [NITIALING BELOW, DEVELOPER HEREBY WAIVES THE PROVISIONS OF
SECT[ON 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 the Agency and the Developer of the fees, charges, and costs necessary to
close the Escrow;
(b) Pay and charge the Agency for any amounts required to be paid by
the Agency pursuant to Section 2.6 above. Before such paytnents are made, the Escrow Holder
shall notify the Agency 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 the Agency 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.
2.9.2 Any amendment of these escrow instructions shall be in writing and
signed by both the Agency and the Developer. At the time of any amendment, Escrow Holder
shall agree to carry out its duties as escrow holder under sueh amendment.
2.9.3 All communications from the Escrow Holder to the Agency or the
Developer shall be directed to the addresses and in the manner established in Section 7.3 of this
Agreement for notices, demands and communications between the Agency 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 are not inconsistent herewith. If
there is any inconsistency between the terms hereof and the terms of the escrow instructions, the
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terms hereof shall control unless an intent to amend the terms hereof is expressly stated in such
instructions.
Section 2.1 1 ENA Fees. The Agency and Developer hereby agree that the ENA Fees shall be
payable by the Developer to the Agency, as provided in Section 7 of the ENA, until and upon the
Close of Escrow or the earlier termination of this Agreement.
ARTICLE 3. DEVELOPMENT OF THE PROPERTY
Section 3.1 Scope of Development.
3.1.1 The"Improvements" to be completed by Developer shall be those
described on Exhibit F attached hereto and incorporated herein by this reference. The Developer
shall, subject to force majeure delays as provided in Section 7.9 below, commence construction
of the Project no later than the date thirty (30) days after the Closing. Subject to force majeure
delays as provided in Section 7.9 below, and as more fully set forth in the Schedule of
Perfor►nance, the Project shall be completed by no later than five hundred fifty(550) days after
the commencement of construction (the "Completion Date"). The construction of the hotel
portion of the Project shall be completed prior to the issuance by the City of certificates of
occupancy for the condominium portion of the Project. Developer shall not unreasonably
postpone the construction or completion of the Project. The Improvements shall be designed for
commercial use and shall comply with all zoning and general plan requirements applicable to the
Property. In addition, Developer shall design, develop and construct the Improvements 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.
3.1.2 The Developer shall construct the Improvements, and all associated public
infrastructure improvernents required by the City pursuant to its conditions of approval, if any,
and all parking areas and landscaping, in accordance with and within the limitations established
therefore in this Agreement and as required by the City. The Developer shall also comply with
any and all applicable federal, state and local laws, rules and regulations, and any applicable
mitigation measures adopted pursuant to the California Environmental Quality Act. The Agency
shall cooperate in all reasonable respects, at no out-of-pocket cost to the Agcncy, with thc
Developer's pursuit and acquisition of permits and approvals for the Project from all applicable
governmental and quasi-governmental agencics and public utilities.
Scction 3.2 Agencv's Right to Review Plans and Specifications. In connection with design of
the lmprovements, the Developer shall submit basic concept drawings, preliminary plans,
landscaping plans, and final plans and specifications to the Agency for the Agency's review and
approval, which review and approval shall not be unreasonably delayed, conditioned or withheld.
Concept drawings shall consist of all building elevations, rendered in the same format as
submitted by the Developer to the City's Planning Department; a site plan delineating all
circulation patterns, parking areas, free standing and/or monument signage locations, and set
backs; and a conceptual landscape plan, all on standard 18"x24" sheets. Preliminary plans shall
consist of the same plans in the same format in preliminary design status as identified in a
standard American Institute of Architects design contract, with the addition of a material
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schedule/color board for the buildings, a plant material schedule for thc landscapc plan, and the
dimensions and faces of all proposed signs. Final plans and specifications shall consist of the set
of construction documents from which the Project will be built. The Developer shall construct
the Improvements in substantial compliance with the plans and specifications approved by the
Agency.
Sectic�n 3.3 Approval of Construction Plans. The Agency shall reasonably approve or
disapprove such plans, drawings, and related documents referred to in Section 3.2 within the
time periods provided in the Schedule of Performance. Any failure by the Agency to respond
within such time period shall constitute approval by the Agency. Any disapproval shall state in
writing the reasons for disapproval. The Agency may not disapprove any preliminary or final
plans unless such plans are materially inconsistent with, or contain material information with
respect to the Improvements which was not contained or reflected in, any concept drawings or
plans or specifications previously submitted to and approved, or deemed approved, by the
Agency. The Developer, upon receipt of a disapproval, shall revise such portion of the plans,
drawings or related documents in a manner that satisfies the reasons for disapproval and shall
resubmit such revised portions to the Agency as soon as possible after receipt of the notice of
disapproval. The Agency shall approve or disapprove such revised portions in the same manner
and within the same time limits as provided in this Agreement for approval or disapproval of
plans, drawings, and related documents initially submitted to the Agency. All approvals or
disapprovals to be made by the Agency pursuant to this Article 3 shall be made by the Executive
Director of the Agency or the Executive Director's designated staff inembers and such approvals
or disapprovals are separate and apart from any other revicw and approval requircd by other City
departmcnts through the entitlement and permit process.
Section 3.4 Chan�s in Construction Drawin�s. If the Developer desires to make any
material changes in the construction drawings and related documents after their approval by the
Agency, the Developer shall submit the proposed changes to the Agency for its reasonable
approval. The Agency shall approve or disapprove such revised portions in the same manner and
within the same time limits as provided in this Agreement for approval or disapproval of plans,
drawings, and related documents initially submitted to the Agency.
Sectic�n i.5 Construction Documents. Prior to the date set forth in the Schedule of
Performance, the Developer shall provide to the Agency a copy of the construction budget and
the construction contract (the"Construction Contract"), which Construction Contract shall
obligate a reputable and financially responsible general contractor (the"General Contractor"),
licensed in California and experienced in completing the type of improvements contemplated by
this A�-eement, to commence and complete the development of the Project in accordance with
this Agreement, and all applicable laws, with the funds available for the Project. The
construction budget shall be reasonably acceptable to the Agency, and the Construction Contract
shall be in form and substance reasonably acceptable to the Agency, and shall set forth a cost of
construction, including fees to the General Contractor, consistent with the funding available to
and obtained by the Developer to pay the cost of constructing the Improvements. The Agency
shall also have the right to confirm that the Construction Contract will conform to the budget and
cost breakdown approved by the Developer's construction lender. Developer shall obtain
performance bonds and labor and material payment bonds covering the performance of the
General Contractor and such principal subcontractors for the Improvements as Agency may
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designate, and a�nees to cause the Agency to be named as a co-obligee thereon. The terms of the
performance bonds and labor and material payment bonds and the bonding company shall be
reasonably acceptable to Agency, and all required bonds and the contracts which they cover shall
have been duly recorded or filed in accordance with applicable California law.
Section 3.6 Hotel Operatin� Agreement. Prior to the date set forth in the Schedule of
Performance, the Developer shall submit a hotel operating agreement to the Agency, which hotel
operating a�-eement shall obligate a four-star rated or better hotel operator to operate the hotel
portion of the project as a four-star rated or better hotel, and shall comply with the requirements
of Section 4.9(h) of the Development A�-eement. The form and substance of the hotel operating
agreement and the identity of the hotel operator shall be reasonably acceptable to the Agency.
Sectian 3.7 Cost of Construction. The cost of constructing all Improvements and all public
infrastructure improvements relating to the Project or required by the City or Agency in
connection with the Project, if any, shall be borne by the Developer and all such expenditures
shall be made by the Developer consistent with the Construction Budget.
Scction 3.8 Construction Schedule. Subject to force majeure delays as provided in Section
7.9, the Develaper shall begin and complete all construction within the times specified in the
Schedule of Performance.
Section 3.9 Progress of Construction. During construction of the Improvements on the
Property, the Developer shall submit to the Agency within fifteen (15) days following each
request of the Agency therefore(which requests shall be submitted no more frequently than
monthly), a written report of the progress to date of the construction. The reports shall be in the
same form and in the same detail as are normally prepared for internal reports of the Developer.
The report shall be in such form and detail as to reasonably inform the Agency of the status of
construction to date, and shall include a reasonable number of photo�-aphs (if so requested by
the Agency) taken since the last report by the Developer.
Scction �.10 Rights of Access. In addition to those rights of access to and across the Property
to which the Agency and the City may be entitled by law, members of the staffs of the Agency
and the City shall have a reasonable right of access to the Property, without charge or fee, at any
reasonable time, to inspect the work being performed at the Property.
Section 3.1 1 Local, State and Federal Laws. The Developer shall carry out the construction of
the Improvements in conformity with all applicable laws, including all applicable federal, state
and local occupation, safety and health laws, rules, regulations and standards. Without limiting
the foregoing, Developer shall construct or causc the Improvements to be constructed in full
compliance with all applicable provisions of state, federal and local prevailing wage laws and all
rules and regulations promulgated pursuant thereto. Developer agrees to indemnify, defend and
hold Agency harmless from and against any cost, expense, claim, charge or liability relating to or
arising directly or indirectly from any breach by or failure of Developer or its contractor(s) or
agents to comply with such laws, rules or regulations. The indemnification obligations described
in this Section 3.11 shall survive the recordation of the Grant Deed and the termination of this
Agreement.
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Scction 3.12 Nondiscrimination During Construction. The Developer, for itself and its
successors and assigns, agrees that it shall not discriminate against any employee or applicant for
employment because of age, sex, marital status, race, handicap, color, religion, creed, ancestry,
or national origin in the construction of the improvements constituting the Improvements.
Sectioc� 3.1� Certificate of Completion. After(i) completion of all construction and
development by the Developer of all of the improvements constituting the Improvements for the
Property, and the infrastructure public improvements for the Project, (ii) the Developer has
obtained a final Certificate of Occupancy for all of the Improvements relating to the Property and
(iii) the Developer has caused a notice of completion (as described in California Civil Code
Section 3093) with respect to the Project to be recorded in the Official Records of Riverside
County, California, the Agency shall, following written request by the Developer, promptly
furnish the Developer with a Certificate of Completion for the Improvements. The Certificate of
Completion shall be in the form attached hereto as Exhibit G and incorporated herein by this
reference. The Agency shall not unreasonably withhold, condition or delay the issuance of a
Certificate of Completion. The Certificate of Completion shall be, and shall so state that it is, a
conclusive determination of satisfactory completion by the Devetoper of all of the construction
obligations under this Agreement as to the Project.
3.13.1 If the Agency refuses or fails within ten (10) days after receipt of a written
request from the Developer to issue a Certificate of Completion, the Agency shall providc the
Developer with a written statement of the reasons the Agency refused or failed to furnish a
Certificate of Completion. The statement shall also specify the actions the Developer must take
to obtain a Certificate of Completion for the applicable Improvements. If the reason for such
refusal is confined to the immediate availability of specific items or material for landscaping, and
the costs of completion does not exceed Fifty Thousand Dollars ($50,000.00), the Agency shall
issue its Certificate of Completion upon the Developer's depositing with the Agency cash or an
irrevocable standby letter of credit issued by a bank or other financial institution acceptable to
the Agency in an amount equal to the fair value of the work not yet completed as determined by
the Agency. The determination of fair value shall be made by the Agency in the exercise of its
reasonable judgment.
3.l 3.2 Such Certificate of Completion shall not constitute evidence of
compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage,
trust deed or other security instrument. Such Certificate of Completion shall not be construed as
a notice of completion as described in California Civil Code Section 3093.
ARTICLE 4. LIMITATIONS ON TRANSFERS AND SECURITY INTERESTS
Section 4.1 Limitation As To Transfer of the Propertv and Assignment of A�reement. Prior
to the Agency's issuance of the Certificate of Completion for the Property, the Developer shall
not (i) transfer its rights and obligations under this Agreement or(ii) sell, assign, transfer,
encumber, pledge or lease the Property without the Agency's prior written consent, which
consent may be �-anted or withheld at the sole and absolute discretion of the Agency. The
Developer acknowledgcs that the idcntity of the Developer is of particular concern to the
Agency, and it is because of the Developer's identity that the Agency has entered into this
Agreement with the Developer. Except as provided in this Agreement, no voluntary or
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involuntary successor in interest of the Developer shall acquire any rights or powers under this
Agreemcnt in violation of the terms hereof. This prohibition shall not be deemed to prevent the
(i) granting of easements or permits to facilitate the devclopment of the Property, or(ii) any
mortgage or deed of trust permitted by this Agreement. Upon the Agency's issuance of a
Certificate of Completion for the Property, the Developer may only transfer the Property to any
transferee so long as the transferee agrees to all of the applicable covenants and conditions set
forth in Article 5 of this Agreement, and any such transfer of the Property after the issuance of
the Certificate of Completion shall be subject to the provisions of Section 5.1 and the prior
written consent of Agency, which shall not be unreasonably withheld, conditioned or delayed.
Section 4.2 Security Financing; Ri�ht of Holders.
4.2.1 No Encumbrances Except Mort�g,es, Deeds of Trust, Convevances or
Other Convevance for Financin� For Develo�ment.
4.2.1.1 Notwithstanding Section 4.1 or any other provision herein to
the contrary, only mortgages, deeds of trust, sales and leaseback, or any other form of
encumbrance or conveyance required for construction and permanent financing which are
provided by institutional lenders and are in each case approved as to form and substance by the
Agency in the exercise of its sole discretion are permitted prior to the issuance of a Certificate of
Completion for the Property and the expiration of the Restrictive Covenant Period, but only for
the purpose of securing loans of funds to be used for financing the direct and indirect costs of the
development of the Project (including reasonable and customary developer fees, loan fees and
costs, and other normal and customary project costs), and only if(i) the aggregate principal
amount of such loans made to Developer does not exceed eighty percent (80%) of the total of the
land and construction costs described in the Construction Budget, and (ii) each such loan secured
by the Property shall expressly allow for its prepayment or assumption (upon payment of a
market standard prepayment or assumption fee) by and at the option of the Agency upon the
exercise of its reversionary rights provided in Section 6.8.
4.2.1.2 The words "mortgage" and "deed of trust" as used herein
include all other appropriate modes of financing commonly used in real estate acquisition,
construction and land development. Any reference herein to the "holder"of a mortgage or deed
of trust shall be deemed also to refer to a lessor under a sale and leaseback.
4.2.2 Notice of Default to Mort��e, Deed of Trust or Other Security [nterest
Holders; Ri t to Cure.
Whenever the Agency shall deliver a notice or demand to the Developer with
respect to any breach or default by the Developer in completion of development of the Project or
otherwise, the Agency shall at the same time deliver a copy of such notice or demand to each
holder of record of any first mortgage, deed of trust or other security interest authorized by this
Agreement who has previously made a written request to the Agency for special notice
hereunder(a "Holder"). No notice of default to the Developer shall be effective against any such
Holder unless given to such Holder as aforesaid. Such Holder shall (insofar as thc rights of the
Agency are concerned) have the right, at such Holder's option, within sixty(60) days after
receipt of the notice, to cure or remedy any such default and to add the cost thereof to the
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security interest debt and the lien of its security interest; provided, however, that if longer than
sixty (60) days is required to cure such default, such longer period shall be granted to Holder,
provided that Holder diligently pursues such cure during such longer period. If such default shall
be a default which can only be remedied or cured by such Holder upon obtaining possession of
the Property, such Holder shall seek to obtain possession of the Property with diligence and
continuity through a receiver or otherwise, and shall remedy or cure such default within a
reasonable period of time as necessary to remedy or cure such default of the Developer.
4.2.3 Noninterference with Holders.
The provisions of this Agreement do not limit the right of Holders to
foreclose or otherwise enforce any mortgage, deed of trust, or other security instrument
encumbering the Property and the improvements thereon, or the right of Holders to pursue any
remedies for the enforcement of any pledge or lien encumbering the Property; provided,
however, that in the event of a foreclosure sale under any such mortgage, deed of trust or other
lien or encumbrance, or sale pursuant to any power of sale contained in any such mortgage or
deed of trust, the purchaser or purchasers and their successors and assigns, and the Property,
shall be, and shall continue to be, subject to all of the conditions, restrictions and covenants of
this Agreement and all documents and instruments recorded pursuant hereto. Eurther, Agency
hereby agrees to reasonably subordinate its rights under Section 6.8 below to any Holder,
provided that (i) the Holder will not be permitted to construct any improvements on the Property
other than the Improvements, and (ii) the Improvements shall not be used for any purpose or use
other than as permitted by Section 5.1 below.
ARTICLE 5. USE OF THE PROPERTY
Section 5.l Use. The Developer covenants and agrees for itself, and its successors and its
assigns, that the Developer, such successors, and such assignees shall use the Property, and every
part thereof; only for the construction of the Improvements thereon, and until the end of the
Restrictive Covenant Period the Property and the Improvements shall be used and continuously
operated by Developer(or an entity controlled by or under the common control of Developer and
reasonably acceptable to the Agency) (i) only as an integrated hotel and condominium project as
described in Exhibit F attached hereto, and (ii) in full compliance with the provisions of
Section 4.9 and 4.10 of the Development Agreement which, by this reference, are incorporated
herein. The use and operation of the Property as an inte��rated hotel and condominium project
shall commence no later than ninety(90) days following the completion of construction of all of
the Improvements constituting the Project. The foregoing covenant to use and operate the
Property as an integrated hotel and condominium project shall run with the land for the benefit of
the Agency and the Project Area for the purpose of protecting the interest of the community, and
shall be binding on the Developer and all successors in interest of the Developer. The foregoing
use covenant shall run in favor of the Agency without regard to whether the Agency has been,
remains or is an owner or holder of any land or interest in the Project Area. The Agency shall
have the right to assign all of its rights and benefits hereunder to the City.
Section 5.2 Maintenance of the PropertX. After completion of the Project, the Developer, and
the Devcloper's transferees, successors and assigns, shall maintain the Property and the Project
(including landscaping) in good and clean condition and repair.
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Scctic»1 5.3 Obl�ation to Refrain from Discrimination. The Dcveloper covenants and agrecs
for itself, its successors and assigns, and for every successor in interest to the Property or any
part thereof, that there shall be no discrimination against or segregation of any person, or group
of persons, on account of sex, marital status, age, handicap, race, color, religion, creed, national
origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the Property, and the Developer(itself or any person claiming under or through the Developer)
shall not establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees of the Property or any portion thereof.
Scction 5.4 Form of Nondiscrimination and Nonse�regation Clauses. The Developer shall
refrain from restricting the rental, sale or lease of the Property or any portion thereof, on the
basis of sex, age, handicap, rnarital status, race, color, religion, creed, ancestry or national origin
of any person. All deeds, leases or contracts entered into with respect to the Property shall
contain or be subject to substantially the following nondiscrimination/nonsegregation clauses:
5.4.1 In deeds: "The Grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California
Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the premises herein conveyed, nor shall the Grantee himself or herself, or any person claiming
under or through him or her, establish or permit any practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees in the premises herein conveyed. The foregoing
covenants shall run with the land.
Notwithstanding the immediately preceding paragraph, with respect to
familial status, said paragraph shall not be construed to apply to housing for older persons, as
defined in Section 12955.9 of the California Government Code. With respect to familial status,
nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of
Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of
Section 12955 of the California Government Code shall apply to said paragraph."
5.4.2 In leases: "The lessee herein covenants by and for himself or herself, his
or her heirs, executors, administrators and assi�ms, and all persons claiming under or through him
or her, and this lease is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or se��regation of any person or group of persons, on
account of any basis listed in subdivision (a) or(d) of Section 12955 of the California
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.Z of the California
Government Code, in the leasing, subleasing, transferring, use or occupancy, tenure or
enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person
claiming under or through him or her, establish or permit any such practice or practices of
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discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased.
I�lotwithstanding the immediately preceding paragraph, with respcct to
familial status, said paragraph shall not be construed to apply to housing for older persons, as
defined in Section 12955.9 of the California Government Code. With respect to familial status,
nothing in said paragaph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d)of
Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of
Section 12955 of the California Government Code shall apply to said paragraph."
5.4.3 ln contracts: "The contracting party or parties hereby covenant by and for
himself or herself and their respective successors and assigns, that there shall be no
discrimination against or segregation of any person or group of persons, on account of any basis
listed in subdivision (a) or(d) of Section 12955 of the California Government Code, as those
bases are defined in Sections 12926, 12926.1, subdivision (m) and paragaph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the contracting
party or parties, any subcontracting party or parties, or their respective assigns or transferees,
establish or permit any such practice or practices of discrimination or se�-egation.
Notwithstanding the immediately preceding paragraph, with respect to
familial status, said paragraph shall not be construed to apply to housing for older persons, as
defined in Section 12955.9 of the California Government Code. With respect to familial status,
nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, S1.10, 51.11, and
799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of
Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of
Section 12955 of the California Government Code shall apply to said paragraph."
Secticm 5.5 Restrictive Covenant. In order to insure the Developer's compliance with the
covenants set forth in Sections 5.1, 5.2, 5.3, and 5.4 hereof, such covenants shall be set forth in
the Grant Deed.
Sectioc� 5.(, Effect and Duration of Covenants. The following covenants shall be binding
upon the Property and Developer and its successors and assigns, each of which shall be set forth
with particularity in any document of transfer or conveyance by the Developer:
(1) The Redevelopment Plan, which shall remain in effect until
expiration of the Redevelopment Plan, as the same may be extended from time to time;
(2) The use requirements set forth in Section 5.1 shall remain in effect
for the Restrictive Covenant Period;
(3) The maintenance and the non-discrimination and non-se�egation
requirements set forth in Sections 5.2, 5.3 and 5.4 shall remain in effect in perpetuity; and
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(4) Easements to the Agency, City or other public agencies for utilities
existing as of the execution of this Agreement, which shall remain in effect according to their
terms.
ARTICLE 6. ARTICLE EVENTS OF DEFAULT, REMEDIES AND TERMINATION
Scctic�n 6.l Defaults--Definition. Occurrence of any or all of the following shall constitute a
default ("Default") under this A��reement:
6.1,1 The Developer's failure to commence construction of the Improvements
or to complete construction of the Improvements in accordance with the time parameters set
forth in the Schedule of Performance, provided that such failure is not due to causes beyond the
Developer's reasonable control as provided in Section 7.9 hereof; or
6.1.2 The Developer's sale, lease, or other transfer, or the occurrence of any
involuntary transfer, of the Property or any part thereof or interest therein in violation of this
Agreement; or
6.1.3 The suspension of work on the Property, or any other Improvements
required to be performed by the Developer, in a material fashion, for a period of thirty(30)
consecutive days, unless such suspension is due to causes beyond the Developer's reasonable
control as provided in Section 7.9 hereof; or
6.1.4 The Developer's neglect, failure or refusal to keep in force and effect any
permit or approval with respect to development of the Project, unless such failure is due to
causes beyond the Developer's reasonable control as provided in Section 7.9, or any policy of
insurance required hereunder, and the Developer's failure to cure such breach within sixty(60)
days after receipt of written notice from the Agency of the Developer's breach; or
6.1.5 Filing of a petition in bankruptcy by or against the Developer or
appointment of a receiver or trustee of any property of the Developer, or an assignment by the
Developer for the benefit of creditors, or adjudication that the Developer is insolvent by a court,
and the failure of the Developer to cause such petition, appointment, or assignment to be
removed or discharged within ninety (90) days; or
6.1.6 The Developer's failure to perform any requirement or obligation of
Developer set forth herein or in the Schedule of Performance on or prior to the date for such
performance set forth herein or in the Schedule of Performance(subject to delays pursuant to
Section 7.9), and the failure of the Developer to cure or perform such obligation or requirement
within thirty (30) days after written notice from the Agency of such delinquency; or
6.1.7 The Developer's failure to maintain the Property for the purposes and for
the period provided in Section 5.2, unless such failure is due to causes beyond the Developer's
reasonable control as provided in Section 7.9, and the failure of the Developer to cure such
failure within ninety(90) days after written notice from the Agency.
6.1.8 The Developer's failure to use and operate the Property and the
Improvements as provided in Section 5.1 during the Restrictive Covenant Period, and the failure
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of the Developer to cure such failure within thirty(30) days after written notice from the
Agency.
6.1.9 An Event of Default (as defined in the Development Agreement) by the
Developer shall have occurred under the Development Agreement.
Scction 6.2 Remedies in the Event of Default.
6.2.1 Remedies Generallv. ln the event of a breach or default undcr this
Agreement by either Developer or Agency, 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 the Agency 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. In
addition, the Agency shall have the right to cause title to the Property(and all improvements
thereon) to revert to the Agency as set forth in Section 6.8 below.
6.2.2 Liberal Construction. The rights established in this Agreement are to be
interpreted in light of the fact that the Agency will convey the Property to the Developer for
development and operation of the Project thereon and not for speculation in undeveloped land or
for construction of different improvements. The Developer acknowledges that it is of the
essence of this Agreement that the Developer is obligated to complete all [mprovements
comprising the Project.
Section G.3 No Personal Liabilitv. Except as specifically provided herein to the contrary, no
representative, employee, attorney, agent or consultant of the Agency or City shall personally be
liable to the Developer, or any successor in interest of the Developer, in the event of any Default
or breach by the Agency, 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.
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Section 6.4 Le�al Actions.
6.4.1 Institution of Le�al Actions. Any legal actions brought pursuant to this
Agreement must be instituted in either the Superior Court of the County of Riversidc, State of
California, or in an appropriate municipal court in that County.
6.4.2 Applicable Law. The laws of the State of California shall govern the
interpretation and enforcement of this Agreement.
6.4.3 Acceptance of Service of Process. [f any legal action is commenced by
the Developer against the Agency, service of process on the Agency shall be made by personal
service upon the Executive Director or Secretary of the Agency, or in such other manner as may
be provided by law. If any legal action is commenced by the Agency against the Developer,
service of process on the Developer shall be made by personat service upon the Developer, or in
such other manner as may be provided by law, whether made within or without the State of
California.
Section 6.i 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.
Scction G.6 A encv's Remedies. If any Event of Default by Developer occurs, then the
Agency shall be entitled to all remedies available at law or in equity, including, without
limitation, specific performance and, to the extent applicable, the exercise of the Agency's right
of reversion contained in Section 6.8.
Scction 6.7 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
remeclics.
Scction 6.x A ency Reversion Ri ts. If the Developer fails to commence or complete the
Project by the dates provided in the Schedule of Performance, or shall fail to comply with the use
covenants contained in Section 5.1, then, at the option of the Agency, title to the Property
(including all improvements thereon) shall revert to the Agency as provided in the Grant Deed
and Agency shall have all of Dcveloper's rights to possession of the Property; provided,
however:
6.8.1 Such reversion right shall be subject and subordinate to the lien and rights
of any Holder, but each Holder must agree to forbear from exercising its rights and remedies
with respect to defaults by Developer under its loan from such Holder for a period of at least nine
(9) months after reversion of title to the Property to the Agency; the foregoing will not, however,
prohibit the Holder from: (i) sending, recording or publishing notices of default, notices of sale
and other notices required by law as prerequisites to a valid foreclosure sale; (ii) proceeding with
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any or all of its rights or remedies with respect to the Property if, after the reversion, Agency has
received written notice from the Holder that Agency has failed to pay property taxes or
assessments payable on the Property and arising after the reversion, maintain insurance after the
reversion or maintain the Property after the reversion, in each case as required by the loan
documents for the loan, and such failure has continued for more than sixty(60) days after such
written notice; or(iii) proceeding against guarantors of the loan.
6.8.2 Upon the revcsting in the Agency of title to the Property, the Agency
shall, pursuant to its responsibilities under state law, use reasonable efforts to resell the Property
as soon and in such manner as the Agency shall find feasible and consistent with the objectives
of the Community Redevelopment Law and the Redcvelopmcnt Plan to a qualified and
responsible party or parties (as determined by the Agency), who will assume the obligation of
making or completing the improvements for the Property required by this Agreement, or such
other improvements in their stead as shall be satisfactory to the Agency and in accordance with
the uses specified for the Project, or any part thereof, in the Redevelopment Plan. Upon such
resale of the Project, or any part thereof, the net proceeds thereof shall be applied:
6.8.2.1 First, to repayment in full of the outstanding balance of the
Holder's loan;
6.8.2.2 next, to reimburse the Agency on its own behalf or on behalf of
the City of all costs and expenses incurred by the Agency or City, including salaries of personnel
engaged in such action, in connection with the management and resale of the Property(but less
any income derived by the Agency from the sale of the Property, or any part thereof, in
connection with such management); all taxes, assessments, and water and sewer and other utility
charges, insurance costs, security costs, and other carrying costs with respect to the Property or
any part thereof; any payments made or necessary to be made to discharge or prevent from
attaching or being made any subsequent encumbrances or liens due to obligations, defaults or
acts of the Developer, its successors or transferees; any expenditures made or obligations
incurred with respect to the making or completion of the a��reed improvements or any part
thereof on the Property, or any part thereof; and any amounts otherwise owing to the Agency by
the Developer and its successor or transferces.
6.8.3 Any balance remaining after such reimbursements shall be retained by the
Agency as its property.
6.8.4 The rights cstablished in this Section 6.8 are to be interpreted in light of
the fact that the Agency will convey the Property to the Developer solely for development and
use in accordance with this Agreement.
6.8.5 If the Property is not sold by Agency within nine (9) months after
reversion to the Agency, or the proceeds of the sale are not sufficient to pay all sums due the
Holder, then the Agency shall have thirty(30) days to purchase the Holder's loan for a sum equal
to all principal and accrued interest due thereunder(excluding penalties and excluding interest at
a rate in excess of the rate of interest in effect prior to the Developer's default). If Agency does
not so purchase the Holder's loan, the Holder may proceed with its rights and remedies under its
loan documents, including, without limitation, foreclosure.
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6.8.6 In the event of a default or breach by the Developer of a Holder's loan that
is cured by the Agency, or payment of sums by Agency to a Holder in excess of the net proceeds
of a sale of the Property by the Agency after obtaining title by reversion, the Agency shall be
entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency
in curing the loan default, the sum of payments by Agency to such Holder, and, all costs and
expenses incurred by the Agency in reselling the Property.
ARTICLE 7. GENERAL PROV[SIONS
Section 7.1 Insurance.
7.1.1 Time for Compliance. At the time provided in the Schedule of
Performance, the Developer shall provide evidence satisfactory to the Agency that it has secured
all insurance required under this Section 7.l. [n addition, Developer shall not allow any
contractor or subcontractor to commence work on the Project until it has provided evidence
satisfactory to the Agency that the contractor and/or subcontractor has secured all insurance
required under this Section 7.1.
7.l.2 Minimum Requirements. Throughout the construction of the
Improvements on the Property and until the Agency issues the Certificate of Completion,
Developer shall, at its sole expense, maintain insurance against claims for injuries to persons or
damage to property which may arise from or in connection with the demolition or construction
activities on the Property by the Developer, its agents, representatives, employees, contractors or
subcontractors. The Developer's contractor shall require all of its subcontractors to maintain the
same insurance throughout the construction of the Improvements on the Property and until the
Agency issues the Certificate of Completion. Such insurance shall meet at least the following
minimum levels of�coverage:
7.1.2.1 Minimum Sco�e of Insurance. Coverage shall be at least as
broad as the latest version of the following: (1) General Liabiliry: Insurance Services Office
Commercial General Liability coverage (occurrence form CG 0001); (2)Automobile Liability:
Insurance Services Office Business Auto Coverage form number CA 0001, code 1 (any auto);
(3) Workers' Compensation and Employers'Liability: Workers' Compensation Insurance
reyuired by the Labor Code of the State of California and Employer's Liability Insurancc; and
(4) Builders%All Risk: Builders'/All Risk insurance covering all risks of loss, including
explosion, collapse, underground excavation and removal of lateral support (and including
earthquakes and floods if requested by the Agency).
7.1.2.2 Minimum Limits of Insurance. Developer shall maintain limits
no less than: (1) General Liability: Two Million Dollars ($2,000,000) per occurrence for bodily
injury, personal injury and property damage. The general aggregate limit shall apply separately
to the Project and shall be Four Million Dollars ($4,000,000); (2)Automobile Liabiliry: One
Million Dollars (51,000,000) per accident for bodily injury and property damage; (3) Workers'
Compensation and Employer's Liabiliry: Workers' compensation limits as required by the Labor
Code of the State of California and Employers Liability limits of One Million Dollars
($1,000,000) per accident for bodily injury or disease; and (4) Builders'/All Risk: Completed
value of the Improvements.
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7.1.3 Insurance Endorsements. The insurance policies shall contain the
following provisions, or Developer shall provide endorsements on forms supplied or approvcd
by the Agency to add the following provisions to the insurance policies:
7.1.3.1 General Liability. (1) The Agency and the City and their
respective council members, directors, officials, officers, employees, agents and volunteers
(collectively, the "Insured Parties") shall be covered as additional insureds with respect to the
Project or operations performed by or on behalf of the Developer and its contractor and
subcontractors, including materials, parts or equipment furnished in connection with the Project;
and (2) the insurance coverage shall be primary and non-contributing insurance with respect to
the Insured Parties, or if excess, shall stand in an unbroken chain of coverage in excess of the
Developer's scheduled underlying coverage. Any insurance or self-insurance maintained by the
Insured Parties shall be excess of the Developer's insurance and shall not be called upon to
contribute to it.
7.1.3.2 Automobile Liabilitv. (1) The Insured Parties shall be covered
as additional insureds with respect to the ownership, operation, maintenance, use, loading or
unloading of any auto owned, leased, hired or borrowed by the Developer or for which the
Developer is responsible; and (2) the insurance coverage shall be primary insurance with respect
to the Insured Parties, or if excess, shall stand in an unbroken chain of coverage in excess of the
Developer's scheduled underlying coverage. Any insurance or self-insurance maintained by the
Insured Parties shall be excess of the Developer's insurance and shall not be called upon to
contribute to it in any way.
7.1.3.3 Workers' Com�ensation and Emplover's Liability Covera�.
The insurer shall agree to waive all rights of subrogation against the Insured Parties for losses
paid under the terms of the insurance policy which arise from work performed by the Developer
and its contractors and subcontractors.
7.1.4 All Coverages. Each insurance policy required by this Section 7.1 shall be
nonassessable endorsed to state that: (1) coverage shall not be suspended, voided, reduced or
canceled except after thirty(30) days prior written notice, by certified mail, return receipt
requested, has been given to the Agency; and (2) any failure to comply with reporting or other
provisions of the policies, including breaches of warranties, shall not affect coverage providcd to
the Insured Parties.
7.1.5 Separation of Insureds; No Special Limitations. All insurance required by
this Section 7.1 shall contain standard separation of insureds provisions. In addition, such
insurance shall not contain any special limitations on the scope of protection afforded to the
lnsured Parties.
7.1.6 Deductibles and Self-Insurance Retentions. Any deductibles or self-
insured retentions must be declared to and approved by the Agency. Developer shall guarantee
that, at the option of the Agency, either: (1) the insurer shall reduce or eliminate such deductibles
or self-insured retentions with respect to the Insured Parties; or(2) the Developer shall procure a
bond guaranteeing payment of losses and related investigation costs, claims and administrative
and defense expenses.
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7.1.7 Acceptability of Insurers. Insurance is to be placed with insurers
authorized to do business in the State of California and with a minimum "Best's" Insurance
Guide rating of"A-:VI." Self-insurance will not be considered to comply with these insurance
specifications.
7.1.8 Verification of Coverage. Developer shall furnish Agency with certificates
of insurance and endorsements effecting coverage required by this Section 7.1. The certificates
and endorsements for each insurance policy shall be si�med by a person authorized by that
insurer to bind coverage on its behalf, and shall be on forms supplied or approved by the
Agency. All certificates and endorsements must be received and approved by the Agency at the
time provided in the Schedule of Performance. The Agency reserves the right to require
complete, certified copies of all required insurance policies, at any time.
7.1.9 Subcontractors. All subcontractors performing work on the Project shall
ineet the requirements of this Section 7.1 before commencement of any demolition or
construction work on the Project. In addition, the contractor shall include all subcontractors as
insureds under its policies or shall furnish separate certificates and endorsements for each
subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated
herein. The contractor may furnish insurance that meets all the specifications of this Section 7.1
to all of its subcontractors though use of a "Developer Controlled Insurance Program" or"Wrap-
up" program, subject to approval by the Agency.
Section 7.2 Indemnitv.
7.2.1 The Developer shall indemnify, defend, protect, and hold harmless the
Agency and the City and any and all agents, employees, attorneys and representatives of the
Agency 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
whatsocver, related directly or indirectly to, or arising out of or in connection with:
(i) Developer's use, ownership, management, occupancy, or
possession of the Property,
(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,
(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
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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 extcnd to any
damages, losses, or liabilities incurred by the Agency or the City to the extent such losses or
liabilities are caused by or contributed to by the negligent or intentionally wrongful act of the
Agency, as finally determined by a court of competent jurisdiction.
7.2.2 The indemnity obligations described in this Section 7.2 shall survive the
recordation of the Grant Deed and the termination of this Agreement.
Section 7.3 Notices. All notices and demands shall be given in writing by ccrtified 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:
Agency: Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn: Justin McCarthy
Telephone: (760) 776-6412
Facsimile: (760) 341-6372
with a copy to: Richards, Watson & Gershon
355 South Grand Avenue, 40th Floor
Los Angelcs, California 90071
Attention: Jim G. Grayson
Telephone: (213) 626-8484
Fax: (213) 626-0078
Developer: Larkspur Associates, LLC
75656 Via Screna
Indian Wells, California 92210
Attention: William DeLeeuw
Telephone: (888) 756-2448
Fax: (858) 454-9627
and
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William DeLeeuw
5723 Desert View Drive
La Jolla, California 92037
Telephone: (858) 454-2196
Fax: (858) 454-9627
with a copy to:
Telephone:
Fax:
Section 7.4 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 A��reement or any
amendments or exhibits thereto.
Section 7.5 Developer's Warranties. The Developer warrants and represcnts to the City and
the Agency as follows:
7.5.1 The Dcveloper has full power and authority to execute and enter into this
Agreement and to consummate the transactions contemplated hereunder. This Ageement
constitutes the valid and binding agreement of the Developer, 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 the Developer is a party.
7.5.2 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.
7.5.3 The Dcvcloper 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 7.6 Internretation. 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.
Sectic�n 7.7 Time of the Essence. Time is of the essence of this Agreement.
Section 7.8 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 thc losing Party as fixed by the court. If the Agency, or
the Developer, without fault, is made a party to any litigation instituted by or against the other
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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 7.9 Enforced Delay: Extension of Times of Performance. Notwithstanding anything
to the contrary in this Agreement, unexcused material failure to complete the Improvements
required to be completed according to this Agreement on or prior to the Completion Date shall
constitute a Default hereunder; provided, however, nonperformance shall be excused when
performance is prevented or delayed by reason of any of the following forces reasonably beyond
the control of such party: (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 the Agency, 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.
Sectic�n 7.10 Approvals bv Ageney and the Developer. Unless otherwise specifically provided
herein, wherever this Agreement requires the Agency 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.
Scction 7.1 1 Developer's Private Undertaking. The development covered by this A�eement is
a private undertaking, and the Developer shall have full power over and exclusive control of the
Property while the Developer holds title to the Property; subject only to the limitations and
obligations of the Developer under this Ageement and the Redevelopment Plan.
Section 7.12 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 A�-eement 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 madc by either Party hereto, or by or to any employcc,
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 the Agency acknowledge that no person has made, any representation,
warranty, guaranty or promise except as set forth herein; and no agreement, statement,
representation or promise made by any such person which is not contained herein shall be valid
or binding on the Developer or the Agency.
Sectio�l 7.l 3 Severabilitv. 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
29
��ao2-o2ot�<x�sot H�s.����
hereby, and each term and provision of this Agreement shall be valid and shall be enforced to the
extent permitted by law.
Section 7.14 Survival. The provisions hereof shall not terminate but rather shall survive any
conveyance hereunder and the delivery of all consideration.
Sectic�n 7.15 Representations of A�v. The Agency warrants and represents to the
Developer as follows:
(a) The Agency has full power and authority to execute and enter into this
Agreement and to consummate the transactions contemplated hereunder. This A�-eement
constitutes the valid and binding agreement of the Agency, 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 the Agency is a party.
(b) The Property is not presently the subject of any condemnation or similar
proceeding, and to the Agency's knowledge, no such condemnation or similar proceeding is
currently threatened or pending.
(c) To the Agency'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 except as set forth in attached Exhibit H.
(d) The Agency has not authorized any broker or finder to act on its behalf in
connection with the sale and purchase hereunder and the Agency has not dealt with any broker or
finder purporting to act on behalf of the Agency or otherwise.
(e) To the Agency's knowledge, there are no leases affecting the Property.
(fl The Agency 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 7.16 Counterparts. This Agreement may be executed in several counterparts, cach of
which shall be deemed an original, and all of such counterparts together shall constitute one and
the same instrument.
Sectioil 7.17 Joint and Several Obli a�tion. 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 7.18 Broker's Commission. Developer represents and warrants to Agency that it has
not entered into any agreement under which a brokerage commission, finder's fee or other
compensation would be due or payable with respect to the transaction contemplated hereby.
Agency 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
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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 7.18. The provisions of this
Section 7.18 shall survive the Closing.
[Signature Page is Next Page]
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IN WITNESS WHEREOF, the Parties hereto have entered into this agreement as
of the day and year first above written.
"Developer"
LARKSPUR ASSOCIATES, LLC, a Nevada
limited liability company
By:
Name:
Title:
WILLIAM DeLEEUW, an individual
"Agency"
PALM DESERT REDEVELOPMENT
AGENCY, a public body, corporate and politic
By:
Name: Jean M. Benson
Title: Chairman
ATTEST:
Rachelle D. Klassen, Secretary
APPROVED AS TO FORM:
Richards, Watson & Gershon,
a professional corporation
By:
Agency Attorney
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LIST OF EXHIBITS
Exhibit A Legal Description of the Property
Exhibit B Schedule of Performance
Exhibit C Form of Grant Deed
Exhibit D Form of Right of Entry Agreement
Exhibit E Property Documents
Exhibit F Improvemcnts
Exhibit G Form of Certificate of Completion
Exhibit H List of Service Contracts
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EXHIBIT A
LEGAL DESCRIPTION OF THE 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 SA[D LOT 7 AND ITS SOUTHERLY PROLONGATION, SOUTH
0°08'35" EAST, 400.00 FEET TO THE NORTHERLY LINE OF SHADOW MOUNTAIN
DR[VE, 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'S0", A
DISTANCE OF 31.46 FEET TO THE EASTERLY LINE OF LARKSPUR LANE, 60 FEET
W1DE; 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'S5" 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'S3" 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
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EXHIBIT B
SCHEDULE OF PERFORMANCE
Action Date
Deposit— Developer shall deliver the Deposit to Within 5 days after full execution this
Escrow Holder. Agreement.
Opening of Escrow— Escrow Holder shall open Within 5 days after full execution this
an escrow for conveyance of the Pro erty. A lreement.
Approval of Title— Developer shall approve or Within 15 days after Developer's receipt of
disapprove matters affecting title to the Property. preliminary report, survey, and underlying
documents noted as title exceptions in the
preliminar report.
Due Diligence Period—Developer shall Within I S days after the Effective Date.
determine the feasibility of the Property and the
Project, and investigate any and all issues which
may affect such feasibility.
Close of Escrow— Agency shall convey title to Within 180 days from the Effective Date.
the Property to Developer, and Developer shall
acce t such conve ance.
Submission—Plans and Specifications— Within 150 days of the Effective Date.
Developer shall prepare and submit to Agency for
review and a roval the Plans and S ecifications.
Approval —Plans and Specifications— Prior to the Close of Escrow
Agency shall approve or disapprove the
Plans and Specifications.
Financing Commitment and Permits— Prior to the Close of Escrow.
Developer shall obtain a financing
commitment and any and all Permits
required by City and/or any other
governmental agency required for the
development of the Project. The Agency
shall have approved the form and content
of thc financing commitmcnt.
Hotel Operating Agreement— Developer Prior to the Close of Escrow.
shall furnish the hotel operating agreement
to the Agency and Agency shall have
approved the form and content of the
agreement and the identity of the hotel
operator. The hotel operator shall meet the
requirements of Section 4.9(h) of the
Develo ment Agreement.
Loan Documents — Developer shall furnish Prior to the Close of Escrow.
loan documents to Agency and Agency
shall have a roved their form and content.
Construction Documents — Develo er shall Prior to the Close of Escrow.
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Action Date
furnish construction contracts, performance
bonds and labor and material labor bonds
and a construction budget to Agency and
Agency shall havc approved their form and
content.
Certificates of Insurance— Developer shall Prior to the Close of Escrow.
furnish to Agency duplicate originals or
appropriate certificates of insurance
policies re uired by Section 7.1.
Commencement of Construction— Within 30 days after the Close of Escrow.
Developer shall commence construction of
the Im rovements.
Completion of Construction. Within 550 days after the commencement of
construction of the Improvements.
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EXHIBIT C
RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN TO:
Palm Desert Redevclopmcnt Agcncy
73-510 Frcd Waring Drive
Palm Desert, California 92260
Attn: Justin McCarthy
(The unders�Kned Grnntor declares that�hLs doci�men[is exempt from Dnccrmentury Tran�Jer Ta.r
purstrnirt t��Revenue and Tarntion Cnde Sertion !!92 nnd rs eremptJrom Recording Fees pinsuan�to CnlJnntin Government
Cnde Section 6/03/
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES:
FOR VALUABLE CONSIDERAT[ON, receipt of which is hereby
acknowledged, the PALM DESERT REDEVELOPMENT AGENCY, a public bocly, corporate
and politic ("Grantor"), hereby��rants to WILLIAM DeLEEUW, an individual and LARKSPUR
ASSOCIATES, LLC, a Nevada limited liability company(collectively, "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.
This Grant Deed of the Site is subject to the Redevelopment Plan and the
provisions of a Disposition and Development Agreement (the "Agreement"} entered into by and
between Grantor and Grantee dated , 2008, the terms of which are
incorporated herein by reference. A copy of the Agreement is available for public inspection at
the offices of the Grantor, 73-510 Fred Waring Drive, Palm Desert, California 92260. The Site
is conveyed further subject to all easements, rights of way, covenants, conditions, restrictions,
reservations and all other matters of record, and the following conditions, covenants and
agreements.
1. The Site as described in Exhibit A is conveyed subject to the condition
that the Grantee covenants and agrees for itself, and its successors and its assigns, that the
Grantee, such successors, and such assignees shall commence and complete construction of the
Improvements (as defined in the Agreement) on or before the dates provided in the Agrcement,
and use the Site, and every part thereof, only for the continuous operation of an integrated hotel
and condominium project as described in Section 5.1 of the Agreement for the Restrictivc
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Covenant Period (as dcfined in Section 1.1.34 of the Agreement). The foregoing covenants to
construct and to use and operatc the Property as an integrated hotel and condominium project
shall run with the land for the benefit of the Grantor and for the purpose of protecting the interest
of the community, and shall be binding on the Grantee and all successors in interest of the
Grantee. The foregoing covenants shall run in favor of the Grantor without regard to whether the
Grantor has been, remains or is an owner or holder of any land or interest in the Project Area
No. 1 of the Grantor. The Grantor shall have the right to assign all of its rights and benefits
hereunder to the City of Palm Desert. Upon the violation of either of the foregoing covenants of
construction and use, Grantor may, at its option, cause the title to the Site (and all improvements
thereon) to revert to the Grantor as provided in Section 6.8 of the A��-ecment.
2. The Site is conveyed subject to the condition that:
(a) The Grantee covenants and agrees for itself, its successors and
assigns, and every successor in interest to the Site, that after completion of the Project (as
defined in the Agreement), the Grantee, and the Grantee's transferees, successors and assigns,
shall maintain the Site and the Project (including landscaping) in good and clean condition and
repair.
(b) The Grantee covenants and agrees for itself, its successors and
assigns, and for every successor in interest to the Site or any part thereof, that there shall be no
discrimination against or segregation of any person, or group of persons, on account of sex,
marital status, age, handicap, race, color, religion, creed, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, and the Grantee(itself
or any person claiming under or through the Grantee) shall not establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site or
any portion thereof.
(c) Grantee covenants and agrees, for itself, its successors and assigns,
and for every successor in interest to the Site or any part thereof, to refrain from restricting the
rental, sale or lease of the Site on the basis of race, color, creed, religion, ancestry, sex, marital
status, national origin or age of any person in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyrnent of the Site, nor shall the Grantec themselves or any persons claiming under
or through them establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, or vendees in the Site.
(d) All deeds, leases or contracts entered into with respect to the
Property shall contain or be subject to substantially the following
nondiscrimination/nonsegregation clauses:
(i) In deeds: "Thc Grantee herein covenants by and for
himself or herself, his or her heirs, executors, administrators and assigns, and all persons
claiming under or through them, that there shall be no discrimination against or segregation of,
any person or group of persons on account of any basis listed in subdivision (a) or(d) of
Section 12955 of the California Government Code, as those bases are defined in Sections 12926,
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12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the Grantee himself
or herself, or any person claiming under or through him or her, establish or permit any practice
or practices of discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein
conveyed. T'he foregoing covenants shall run with the land.
Notwithstanding the immediately preceding paragraph, with
respect to familial status, said paragraph shall not be construed to apply to housing for older
persons, as defined in Section 12955.9 of the California Government Code. With respect to
familial status, nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4,
51.10, 51.11, and 799.5 of the California Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 5 I and Section 1360 of the California Civil Code and subdivisions
(n), (o) and (p) of Section 12955 of the California Government Code shall apply to said
paragraph."
(ii) In leases: "The lessee herein covenants by and for himsclf
or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under
or through him or her, and this lease is made and accepted upon and subject to the following
conditions: That there shall be no discrimination against or segregation of any person or group
of persons, on account of any basis listed in subdivision (a) or(d) of Section 12955 of the
California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision
(m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California
Government Code, in the leasing, subleasing, transferring, use or occupancy, tenure or
enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person
claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublcssees, subtenants or vendees in the premises herein leased.
Notwithstanding thc immediately preceding paragraph, with
respect to familial status, said paragraph shall not be construed to apply to housing for older
persons, as defined in Section 12955.9 of the California Government Code. With respect to
familial status, nothing in said paragc-aph shall be construcd to affect Sections 51.2, 51.3, 51.4,
51.10, 51.11, and 799.5 of the California Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions
(n), (o) and (p) of Section 12955 of the California Government Code shall apply to said
para�aph."
(iii) In contracts: "The contracting party or parties hereby
covenant by and for himself or herself and their respective successors and assigns, that there
shall be no discrimination against or segregation of any person or group of persons, on account
of any basis listed in subdivision (a) or(d) of Section 12955 of the California Government Code,
as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in
thc sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall
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the contracting party or parties, any subcontracting party or parties, or their respective assigns or
transferees, establish or permit any such practice or practices of discrimination or segregation.
Notwithstanding the immediately preceding paragraph, with
respect to familial status, said para�-aph shall not be construed to apply to housing for older
persons, as defined in Section 12955.9 of the California Government Code. With respect to
familial status, nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4,
51.10, 51.1 1, and 799.5 of the California Civil Code, relating to housing for senior citizcns.
Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions
(n), (o) and (p) of Section 12955 of the California Government Code shall apply ta said
para��raph."
3. All covenants and agreements contained in this Grant Deed shall run with
the land and shall be binding for the benefit of Grantor and its successors and assigns and such
covenants shall run in favor of the Grantor and for the entire period during which the covenants
shail be in force and effect as provided in the Agreement, without regard to whether the Grantor
is or remains an owner of any land or interest therein to which such covenants relate. The
Grantor, in the event of any breach of any such covenants, shall have the right to exercise all of
the rights and remedies provided herein or otherwise available, and to maintain any actions at
law or suits in equity or other property proceedings to enforce the curing of such breach. The
covenants contained in this Grant Deed shall be for the benefit of and shall be enforceable only
by the Grantor and its successors and assigns.
4. The covenants contained in Paragraph 2 of this Grant Deed shall remain in
effect in perpetuity.
5. This Grant Deed 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.
[Signatures appear on next page.]
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IN WITNESS WHEREOF, Grantor and Grantee have caused this Grant Dccd to bc
executed and sealcd, as of this day of , 20_
GRANTOR: PALM DESERT REDEVELOPMENT
AGENCY, a public body, corporate and politic
By:
Name:
Title:
ATTEST:
Secretary
GRANTEE: LARKSPUR ASSOCIATES, LLC, a Nevada
limited liability company
By:
Name:
Title:
WILLIAM DeLEEUW, an individual
GS
P6402-0201\96R018v5.doc
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)
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 si�mature(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)
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State of California f
�
r
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/hcr/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 para�-aph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
C-7
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Exhibit A
LEGAL DESCRIPTION
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:
BEGINN[NG 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 SOUT'H 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'S0", 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'S5" 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'S3" 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 BEG[NNING.
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EXHIBIT D
RIGHT OF ENTRY AND ACCESS AGREEMENT
THIS RIGHT OF ENTRY AND ACCESS AGREEMENT (herein called this
"Agreement") is made and entered into as of , 2008, by the PALM
DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic (herein called
"Grantor"), and WILLIAM DeLEEUW, an individual, and LARKSPUR ASSOCIATES,
LLC, a Nevada limited liability company(collectively, herein called "Grantee").
WITNESSETH:
WHEREAS, Grantor is the owner of the real property more particularly described on
Exhibit A, which exhibit is attached hereto and incorporated herein by reference (herein called
the "Property");
WHEREAS, concurrently with the execution of this Ageement, Grantor and Grantee
contemplate entering into a Disposition and Development Agreement related to the Property (the
"Disposition A��reement");
WHEREAS, Grantee has requested the right of entry upon and access to the Property
for the purpose of undertaking tests, inspections and other due diligence activities (herein called
the "Due Diligence Activities") in connection with the proposed acquisition by Grantee of the
Property;
WHEREAS, Grantor has agreed to grant to Grantee, and Grantee has agreed to accept
from Grantor, a non-exclusive, revocable license to enter upon the Property to perform the Due
Diligence Activities in accordance with the terms and provisions of this Agreement;
WHEREAS, Grantor and Grantee desire to execute and enter into this Agreement for the
purpose of setting forth their ageement with respect to the Due Diligence Activities and
Grantee's entry upon the Property.
NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual
covenants and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor and Grantee do hereby
covenant and a��ree as follows:
1. Access bv Grantee.
(a) Subject to Grantee's compliance with the terms and provisions of this
Agreement, until the earlier to occur of(i) , 2008; or(ii) the
earlier termination of this Agreement, Grantee and Grantee's agents, employees, contractors,
representatives and other designees (herein coltectively called "Grantee's Designees") shall have
the right to enter upon the Property for the purpose of conducting the Due Diligence Activities.
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(b) Grantee expressly agrees as follows: (i) any activities by or on behalf of
Grantee, including, without limitation, the entry by Grantee or Grantee's Designees onto the
Property in connection with the Due Diligence Activities shall not damage the Property in any
manner whatsoever or disturb or interfere with the rights or possession of any tenant on the
Property, (ii) in the event the Property is altered or disturbed in any manner in connection with
the Due Diligence Activities, Grantee shall immediately return the Property to the condition
existing prior to the Duc Diligence Activities, and (iii) Grantee, to the extent allowed by law,
shall indemnify, defend and hold Grantor harmless from and against any and all claims,
liabilities, damages, losses, costs and expenses of any kind or nature whatsoever(including,
without limitation, attorneys' fees and expenses and court costs) suffered, incurred or sustained
by Grantor as a result of, by reason of, or in connection with the Due Diligence Activities or the
entry by Grantee or Grantee's Designees onto the Property; provided, however, that in no event
shall Grantee be liable for any liabilities, damages, losses, costs or expenses of any kind or
nature that relate, directly or indirectly, to (y) consequential or punitive damages; or(z) matters
that are merely discovered, but not exacerbated, by Grantee. Notwithstanding any provision of
this Agreement to the contrary, Grantee shall not have the right to undertake any invasivc
activities or tests upon the Property, or any environmcntal testing on the Property beyond the
scope of a standard "Phase I" investigation, without the prior written consent of Grantor of a
workplan for such "Phase II" or invasive testing. If Grantor does not respond or reject any
workplan within ten (10) days of Grantee's delivery of the written workplan proposal to Grantor
pursuant to the notice provisions of this A��reement, then Grantor shall be deemed to have
approved the submitted workplan and Grantee may proceed with such testing. If Grantor rejects
such proposed workplan in whole or in part, then this Agreement shall become null and void at
the sole option of Grantee, which option must be exercised by Grantee's giving Grantor written
notice on or before the expiration of the Due Diligence Period, as defined in the Disposition
Agreement.
2. Lien Waivers. Upon receipt of a written request from Grantor, Grantee will
provide Grantor with lien waivers following completion of the Due Diligence Activities from
each and every contractor, materialman, engineer, architect and surveyor who might have lien
rights, in form and substance reasonably satisfactory to Grantor and its counsel. Grantee hereby
indemnifies Grantor from and against any claims or demands for payment, or any liens or lien
claims made against Grantor or the Property as a result of the Due Diligence Activities.
3. Insurance. Grantee shall, and shall cause all of Grantee's Designees performing
the Due Diligence Activities to, procure or maintain a policy of commercial general liability
insurance issued by an insurer reasonably satisfactory to Grantor covering each of the Due
Diligence Activities with a single limit of liability(per occurrence and aggregate) of not less than
$1,000,000.00, and to deliver to Grantor a certificate of insurance evidencing that such insurance
is in force and effect, and evidencing that Grantor has been named as an additional insured
thereunder with respect to the Due Diligence Activities. Such insurance shall be maintained in
force throughout the term of this Agreement.
4. Successors. To the extent any rights or obligations under this Agreement remain
in effect, this Agreement shall be binding upon and enforceable against, and shall inure to the
benefit of, the parties hereto and their respective heirs, legal representatives, successors and
permitted assigns.
D-2
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5. Limitations. Grantor does not hereby convey to Grantee any right, title or interest
in or to the Property, but merely grants the specific rights and privileges hereinabove set forth.
6. Notices. Whenever any notice, demand, or request is required or pertnitted under
this Agreement, such notice, demand, or request shall be in writing and shall be delivered by
hand, be sent by registered or certified mail, postage prepaid, return receipt requested, or shall bc
sent by nationally recogr►ized commercial courier for next business day delivery, to the addresses
set forth below the respective executions of the Parties hereof, or to such other addresses as are
specified by written notice given in accordance herewith, or shall be transmitted by facsimile to
the number for each party set forth below their respective executions hereof, or to such other
numbers as are specified by written notice given in accordance herewith. All notices, demands,
or requests delivered by hand shall be deemed given upon the date so delivered; those givcn by
mailing as hereinabove provided shall be deemed given on the date of deposit in the United
States Mail; those given by commercial courier as hereinabove provided shall be deemed given
on the date of deposit with the commercial courier; and those given by facsimile shall be deemed
given on the date of facsimile transmittal. Nonetheless, the time period, if any, in which a
response to any notice, demand, or request must be given shall commence to run from the date of
receipt of the notice, demand, or request by the addressee thereof. Any notice, demand, or
request not received because of changed address or facsimile number of which no notice was
given as hereinabove provided or because of refusal to accept delivery shall be deemed received
by the party to whom addressed on the date of hand delivery, on the date of facsimile transmittal,
on the first calendar day after deposit with commercial courier, or on the third calendar day
following deposit in the United States Mail, as the case may be.
7. Assi m�, ment. This Agreement may be assigned by Grantee, in whole or in part.
8. Governin ��, Law. This A�-eement shall be construed, enforced and interpreted in
accordance with the laws of the State of California.
9. 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.
10. No Recordin�A�reemcnt or Memorandum of A�reement. In no evcnt shall
this A�neement or any memorandum hereof bc recorded in the Official Records of Riversidc
County, California, and any such recordation or attempted recordation shall constitute a breach
of this Agreement by the party responsible for such recordation or attempted recordation.
D-3
��ao2-ozo i����xo t s�-s.����
IN WITNESS WHEREOF, Grantor and Grantee have caused this Agreement to be
executed and sealcd, all the day and year first written above.
GRANTEE:
LARKSPUR ASSOCIATES, LLC, a Nevada
limited liability company
By:
Name:
Title:
WILLIAM DeLEEUW, an individual
Address for notices: Larkspur Associates, LLC
75656 Via Serena
Indian Wells, California 92210
Attention: William DeLeeuw
Telephone: (888) 756-2448
Fax: (858) 454-9627
and
William DeLeeuw
5723 Desert View Drive
La Jolla, California 92037
Telephone: (858) 454-2196
Fax: (858) 454-9627
With a copy to:
Attn:
Telephone No.:
Facsimile No.:
(Signatures continued )
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P6402-0201�968018v5.doc
GRANTOR:
PALM DESERT REDEVELOPMENT AGENCY,
a public body, corporate and politic
By:
Name:
Title:
Address for notices: Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn: Justin McCarthy
Telephone: (760) 776-6412
Facsimile: (760) 341-6372
With a cop.v to: Richards, Watson & Gershon
355 South Grand Avenue, 40th Floor
Los Angeles, California 90071
Attn.: Jim G. Grayson, Esq.
Telephone No.: (213) 626-8484
Facsimile No: (213) 626-0078
D-5
PG402-0201�96801Rv5.doc
Exhibit A
LEGAL DESCRIPTION
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 1N 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 [TS 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 BEGINN[NG 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'S0", 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'S5" EAST, 96.85
FEET; THENCE NORTH 73°15'25" EAST, 36.83 FEET; THENCE SOUTH 13°49'4l" EAST,
19.88 FEET; THENCE SOUTH 12°31'S3" WEST, 30.76 EEET TO THE AFOREMENT[ONED
NORTHERLY L[NE OF LOT 7; THENCE ON SAID NORTHERLY LINE, NORTH
89°44'35" EAST, 36.01 FEE TO THE POINT OF BEGINNING.
D-6
P6402-0201\968018 v5.doc
EXHIB[T E
PROPERTY DOCUMENTS
E-1
P6402-0201�968018v5.doc
EXH[BIT F
IMPROVEMENTS
The Developer shall develop, build and operate a boutique Four-Star Hotel with a maximum of
154 units/keys consisting of two fully inte��rated 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. The maximum number of
keys shall be one hundred fifty four(154). The Improvements shall also include two hundred
three (203) underground parking spaces, a restaurant area, gift shop, conference and mecting
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. ln addition to the foregoing,
the lmprovements shall comply in all respects with the requirements of the Development
Agreement.
F-1
PG402-0201�96R018vs.a��
EXHIBIT G
RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN TO:
Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Dcsert, California 92260
Attn: Justin McCarthy
CERTIFICATE OF COMPLETION
This Certificate of Completion is given this_day of , 20_, with
reference to the following matters:
A. The PALM DESERT REDEVELOPMENT AGENCY, a public body
corporate and politic (the"Agency") and WILLIAM DeLEEUW, an individual and LARKSPUR
ASSOCIATES, LLC, a Nevada limited liability company (collectively, the"Developer") entered
into a certain Disposition and Development Agreement dated as of , 2008
(the"Agreement"), which Agreement provides, in Section 3.13 thereof, that the Agency shall
furnish the Developer with a Certificate of Completion upon satisfactory completion of the
lmprovements (as described in the Agreement) on the real property described therein as the
Property(the"Site"), which certificate shall be in such form as to permit it to be recorded in the
Recorder's Office of Riverside County; and
B. The Certificate of Completion shall be conclusive determination of
satisfactory completion of the construction Improvements required with respect to the Site; and
C. The Agency has determined that the construction of the Improvements has
been satisfactorily performed; and
NOW, THEREFORE, the Parties to this instrument hereby provide as follows:
1. As provided in the A�-eement, the Agency does hereby certify that the
construction of the Improvements on the Site has been satisfactorily performed and completed.
2. This Certificate shall not constitute evidence of compliance with or
satisfaction of any obligation of the Developer to any holder of a mortgage, or deed of trust or
any insurer of a mortgage, or deed of trust securing money loaned to finance the improvements
or any part thereof, nor does it constitute evidence of payment of any promissory note or
G-1
P6402-0201\96801Av5.doc
performance of any deed of trust provided by the Developer to the Agency under the Agreement
or otherwisc.
PALM DESERT REDEVELOPMENT
AGENCY, a public body, corporate and politic
By:
Name:
Title:
ATTEST:
Secretary
G-2
r�bao2-ozo i���vso t s�-s.do�
State of California }
l
1
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 paragaph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
G-3
E��o2-o2oi���bgoi x�-s.do�
EXHIBIT H
LIST OF SERVICE CONTRACTS
NONE.
H-1
P6402-0201�968018v5.doc
EXHIBIT I
CONSTRUCTION BUDGET
[TO BE PROV[DED BY DEVELOPER AND APPROVED BY AGENCY]
I-1
P6402-0201�968018v5.doc
REASCO REAL ESTATE ANALYSIS SERVICES CO.
73413 BROKEN ARRUW TRAIL TEL: (760) 340-1429
POST OFFICE BOX 2809 FAX: (760) 340-2041
PALM DESERT, CALIFORNIA 92261 CELI.: (760) 567-6093
EMAIL: I�RWREASCO(g�AOL.COM
June 11, 2008
Ms Ruth Ann Moore Copies to: Mr. Justin McCarthy
Economic Development Manager Mr. David Yrigoyen
PALM DESERT REDEVELOPMENT AGENCY
CITY OF PALM DESERT
73-510 Fred Waring Drive
Palm Desert, California 92260
REFERENCE: Proposed Sale Of Agency Property To William De Leeuw and Larkspur
Associates, Collectively the Developer
SUBJECT: Report Pursuant To Section 33433 Of The California
Health And Safetv Code
NOTE 1: This report is based on the terms and conditions of the Disposition and
Development Agreement (the "AgreemenY') Dated , 2008 between the
Palm Desert Redevelopment Agency (the "Agency") and the Developer.
NOTE 2: This report is a revision of the earlier one dated June 6, 2008.
Dear Ms. Moore,
Section 33433 of the California Health and Safety Code stipulates that before any property of
the Agency, acquired directly or indirectly with tax increment funds, is sold or leased (or
otherwise conveyed)for development purposes pursuant to the redevelopment plan, the
conveyance shall first be approved by the legislative body by resolution after public hearing.
The property the Agency proposes to sell to the County falls into the category covered by
Section 33433.
MY 33433 REPORTS/"33433 FOR LARKSPUR(4)' 17-Jun-08 11:36 AM
REAL ESTATE ANALYSIS SERVICES COMPANY
- PAGE2 -
June 11, 2008
LETTER TO: Ms Ruth Ann Moore
REFERENCE: Proposed Sale Of Agency Property To William De Leeuw and Larkspur
Associates, Collectivelv the Developer
SUBJECT: Report Pursuant To Section 33433 Of The California
Health And Safetv Code
We have prepared a comprehensive report, which is required in order to comply with Section
33433. Pursuant to the report, we have concluded that the following findings can be included in the
resolution approving the Agreement:
FINDING #1: The Sale of the Property and subsequent development of the
improvements thereon will assist in the elimination of blight in the
Project Area, provide additional jobs and substantially improve the
public services and the economic and physical conditions in the
Project Area in accordance with the purposes and goals of the
Redevelopment Plan.
� Explanation may be found in page 8.
FINDING #2: The Sale of the Property is consistent with the implementation
plan adopted pursuant to Section 33490 of the California Health and
Safety Code.
FINDING #3: The consideration is not less that the Fair Market Value of the Property,
at the highest and best uses permitted under the Redevelopment Plan.
The rationale for these findings can be found in the report which is an attachment
to this letter.
Sincerely,
Leo�n,a,raL R. W o�l,l�
Leonard R. Wolk, President
Real Estate Analysis Services Company (REASCO)
MY 33433 REPORTSP33433 FOR LARKSPUR(4)' 17-Jun-0B 11:36 AM
33433 REPORT ON THE PROPOSED SALE OF
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE 1 -
SECTION 1 - A summary of the significant business points of the Agreement between
the Agency and the Developer concerning the proposed sale of the Subject Property,
owned by the Agency, to the Developer.
Reference is made to the Agreement for full particulars of any provision described
herein. In the event of any inconsistency between the provisions herein and the
Agreement, the Agreement shall control.
A. The Subiect Propertv:
1. The Agency owns fee title to certain unimproved real property (the "Property") in Project
Area 1 of the City of Palm Desert (the "City"). The Property is located on the east side of
Larkspur Lane, between Shadow Mountain Drive and EI Paseo.
2. The Property is legally described in Exhibit A of the Agreement and its size is
approximately 2.1 acres, or 91,476 spuare feet.
B. Purchase and Sale of the Propertv:
1. Agency acquired the Property on April 11, 2007 for $4,527,000, pursuant to the
Assignment and Assumption Agreement For Purchase and Sale of Real Property by and
between Agency and Larkspur Associates LLC ("Larkspur") (the "Assignment").
2. The Assignment assigned to Agency all of Larkspur's right, title and interest in and to an
agreement for purchase of the Property, dated June 15, 2006, between Larkspur and the
then owner of the Property (the "Purchase AgreemenY').
3. The purchase price for the Property under the Purchase Agreement was $5,000,000 (the
"Original Purchase Price") for which Larkspur had previously funded $600,000, as a deposit.
which was applied to the Original Purchase Price at closing. At closing, Larkspur also
funded a $23,000 partial broker fee payment.
4. Subject to the terms and conditions of the Agreement, Agency agrees to sell the Property
to Developer, and Developer agrees to purchase the Property from Agency, for the sum of
$4,527,000 plus all accrued and unpaid Exclusive Negotiating Agreement ("ENA")* fees
(the "Purchase Price").
5. The Purchase Price is equal to the $5,000,000 Original Purchase Price, less the
$600,000 deposit paid by Developer, plus $127,000 paid by Agency as partial payment of
brokers'fees.
'�`The ENA Agreement was fully executed on April 1 1, 2007. During the ENA
Period, Developer will pay an annual fee to Agency, calculated as the produci
of(1), ihe Ciiy's Investment Rate (as adjusied from time to iime) plus 300
basis points and (2), ihe Purchase Price.
�► Refer io the ENA Agreement (on file in the City Clerk`s office) for further detAils.
MY 33433 REPORTSC33433 FOR LARKSPUR(4)" 17-Jun-08 11:36 AM
33433 REPORT ON THE PROPOSED SALE OF
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE2 -
SECTION 1 - Summary of the significant business points of the Agreement (continued):
B. Purchase and Sale of the Propertv (continued):
6. Pavment of the Purchase Price:
a. Prior to the close of escrow, Developer will pay the Purchase Price plus an amount
sufficient to pay all other fees and expenses payable by Developer including all
ENA fees which are due and payable at escrow close.
-.► Refer io Article 2 of ihe Agreemeni for further details about Purchase and Sale
of the Properiy, including conditions to escrow opening and closing.
C. Due Diliqence Period:
1. During the period beginning with the date the Agreement is fully executed by Agency
Agency and Developer (the "Effective Date") and endinq at 5:00 PM 15 days thereafter,
(the "Due Diligence Period"), Developer may enter and inspect the Property, as necessary,
to approve all zoning and land use matters and the physical condition of the Property; and tc
satisfy any due diligence requirements by Developer's construction lender.
—► Re fer to Article 2, Section 2.7 of the Agreemenr for further deiails about the
Due Diligence Period,
D. Condition of the Propertv:
1. Agency shall deliver the Property to Developer at close of escrow in an AS IS
condition. If the condition of the Property is not suitable for its intended use, then it is
the sole responsibility of Developer to take such action as to transform the Property
into a condition suitable for development of the Improvements thereon.
-.► Refer io Article 2, Seciion 2.8 of the Agreement for further details about the
Condiiion of the Properiy.
E. Development of the Propertv:
1. The Improvements to be completed by Developer shall be those described in the
Scope of Development - Exhibit F of the Agreement.
2. Construction of the Improvements shall begin within 30 days after escrow close, and the
Project shall be completed no later than 550 days after construction has begun (the
"Completion Date").
3. The construction of the hotel portion of the Project shall be completed before issuance
by the City of certificates of occupancy for the condominium portion of the Project.
.►Significani performance milestones for Developer may be found in the
Schedule of Performance, Exhibit B of the Agreemeni.
--► Refer to Article 3 of the Agreemeni for furiher deiails about Developmeni
of ihe Property.
MY 33433 REPORTSP33433 FOR LARKSPUR(4)' 17-Jun•08 11:36 AM
33433 REPORT ON THE PROPOSED SALE OF
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE3 -
SECTION 1 - Summary of the significant business points of the Agreement (continued):
E. Development of the Propertv (continuedl:
3. The cost of constructing all the Improvements and all public infrastructure improvements
relating to the Project, or required by the City or Agency in connection with the Project, if an�
shall be borne by Developer, consisent with the Construction Budget.
F. Hotel Operatinq Apreement:
1. Prior to the date set forth in the Schedule of Performance, Developer shall submit a Hotel
Operating Agreement (the "HOA") to Agency.
2. The HOA shall obligate a four-star-rated or better hotel operator to operate the hotel
portion of the Project as a four-star or better hotel.
3. The form and substance of the HOA shall be reasonably acceptable to Agency.
G. Certificate of Completion:
1. After construction and development of all the Improvements and the public infrastructure
improvements for the Project have been completed, and Developer(1). has received a final
Certificate of Occupancy for all the Improvements relating to the Property; and (2). has
caused a Notice of Completion for the Improvements to be recorded in the Official Records
of Riverside County, California, then Agency shall furnish Developer with a Certificate of
Completion for the Improvements. �Exhibii G of the Agreement.
� Refer to Article 3, Section 3. l3 of the Agreemeni for further details about the
Certificaie of Compleiion.
H. Limitations on Transfers and Securitv Interests:
1. Prior to Agency issuing a Certificate of Completion for the Property, Developer shall not
transfer its rights and obligations under the Agreement, or sell, assign, transfer, encumber,
pledge or lease the Property or the Improvements without the Agency's prior written conseni
which consent may be granted or withheld at the sole and absolute discretion of the Agency
2. Developer acknowledges that the identity of Developer is of particutar concern to Agency,
and it is because Developer's identity that Agency has entered into the Agreement with
Developer.
� Refer to Article 4 of ihe Agreemeni for further details about the Limitaiions on
Transfers and Securiiy Inierests.
MY 33433 REPORTS/'33433 FOR LARKSPUR(4)' 17-Jun-08 11:36 AM
33433 REPORT ON THE PROPOSED SALE OF AGENCY
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE4 -
SECTION 1 - Summary of the significant business points of the Agreement (continued):
I. Use of the Propertv:
1. Use - Developer covenants and agrees for itself, and for its successors and assigns, that
the Property shall be used and continually operated by Developer (or an entity controlled by,
or under the common control of Developer and reasonably acceptable to Agency) only as ar
integrated hotel and condominium project, as decribed in Exhibit F of the Agreement.
2. The use and operation of the Property as an integrated hotel and condominium project
shall begin no later than 90 days following completion of all the Improvements constituting
the Project.
�Refer to Ariicle 5, Section 5. 1 of ihe Agreement for further details about
Use of the Property.
3. Maintenance of the PropertY - After completion of the Project, Developer and
Developer's transferees and assigns, shall maintain the Property and the Project (including
landscaping) in good and clean condition and repair.
4. Condominium use - During the Restrictive Covenant Period (the period beginning
on the date construction of the Improvements on the Property has been completed, and
ending on the 75th anniversary of the date operation of the Project commenced), 100% of
the Project's condominium units must be made available as rental units for hotel guests
when not being used by the unit's owner for his personal use. A condominium unit owner
may use his unit each year, for his personal use, for no more than 2 weeks between
November 1 and May 1, and for no more than 2 additional weeks between May 2 and
October 31, without paying the City's Transient Occupacy Tax. Every condominium unit sha
be subject to the City's Transient Occupancy Tax except for personal use just described,
and each condominium unit shall be made available to hotel guests for transient use.
No condominium unit shall be: (1). rented for more than 29 consecutive days; (2). used or
converted into any form of permanent residence; or (3). used as a timeshare, fractional or
other vacation ownership.
5. The Restrictive Covenant - In order to insure Developer's compliance with the
covenants set forth in Article 5, Sections 5.1 through 5.4 of the Agreement, the covenants
will be included in the Grant Deed.
—► Refer to Article 5, Section 5.7 of the Agreement for further details about
the Restrictive Covenanr.
MY 33433 REPOR7S/`33433 FOR LARKSPUR(4)" 17-Jun-08 11-36 AM
33433 REPORT ON THE PROPOSED SALE OF AGENCY
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE 5 -
SECTION 1 - Summary of the significant business points of the Agreement (continued):
J. Events of Default, Remedies and Termination:
1. The occurrences which constitute a Default are described in Article 6, Section 6.1. of
the Agreement.
2. In the event of a Default by any Party to the Agreement prior to or after the Close of
Escrow, the non-defaulting Party may pursue any and all of the remedies provided in
Article 6, Section 6. 2 of the Agreement.
-►Refer io Arricle 6 of the Agreement for furiher deiails about Default,
Remedies and Terminaiion.
K. Aqencv's Reversion Riqhts:
1. If Developer fails to commence or complete the Project by the dates provided in the
Schedule of Performance, or shall fail to comply with the use covenants contained in
Article 5, Sections 5.1 and 5.5 of the Agreement, then, at Agency's option, title to the
Property (including all the Improvements thereon) shall revert to Agency, as provided in the
Grant Deed.
� Re fer to Article 6, Section 6.8 of the Agreement for further details aboui
Agency's Reversion Righis.
MY 33433 REPORTS/'33433 FOR LARKSPUR(4)" 17-Jun-0B 17�.36 AM
33433 REPORT ON THE PROPOSED SALE OF AGENCY
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE6 -
SECTION 2 - Cost of the Agreement to the Agency:
Agency's cost consists of the projected ENA fees to be paid by Developer, less the projected
interest on the source of funds used to finance the land acquisition cost.
A. Aqencv's land acquisition cost for the Subject Property:
NOTE: Agency's purchase was funded from Agency's Project Area 1 tax
increment funds, which are invested and draw interest at the appropriate
LAIF rate.
1. Agency purchased the Property on April 11, 2007 at a purchase price of$4,527,000,
which included $127,000 for the partial payment of the brokers' fees.
B. Developer's ENA pavments to Aqencv:
YEAR --► 2007 2008
1. Purchase amount $4,527,000 $4,527,000
2. Times average interest rate 8.151% 6.072%
3. Annual ENA payment $368,996 $274,876
4. Projected total ENA payment through
escrow close date* _ $643,872
C. Aqencv's proiected lost interest revenue on the funds used to purchase the Propertv:
YEAR � 2007 2008
1. Purchase amount $4,527,000 $4,527,000
2. Plus previous year's interest - $233,186
3. Total amount $4,527,000 $4,760,186
3. Times average interest rate 5.151% 3.072%
4. Annual interest revenue (ost $233,186 $146,229
5. Total interest lost through
escrow close date* _ $379,415
�'Projected escrow c/ose date is June 30, 2008.
D. Aqencv's net qain (cost):
1. ENA payments $643,872
2. Less lost interest ($379,415)
3. Net gain (cost) $264,457
MY 33433 REPORTS/'33433 FOR LARKSPUR(4)' 17-Jun-08 11:36 AM
33433 REPORT ON THE PROPOSED SALE OF AGENCY
AGENCY'S LARKSPUR PROPERTY TO THE DEVELOPER
- PAGE7 -
SECTION 3 - The estimated value of the interest to be conveyed (the unimproved
Property) determined at the highest and best use permitted under the
Redevelopment Plan (the "Fair Market Value").
1. Pursuant to a recent appraisal, the current estimated Fair Market Value of the interest
to be conveyed is $4,735,000 ($2,254,762 per acre or $51.76 per square foot).
Section 4 - The estimated value of the interest to be conveyed (the unimproved
Property) determined at the use and with the conditions, covenants and development
costs required by the Agreement (the "Reuse Value"):
1. Pursuant to a residual land value analysis that was prepared for the interest to be conveyed
the Reuse Value is $5,150,000 ($2,452,381 per acre or $56.30 per square foot).
Section 5 - Aqency's Consideration:
1. The consideration is comprised of the purchase price $4,527,000, plus the 600 000
down payment Developer paid on the Original Purchase Price, plus the aggregate of the
Exclusive Negotiating Period (the "ENA") payments Developer will make to Agency.
2. The ENA period began April 11, 2007 and will end when the Agreement is formally
approved or disapproved by the Agency.
3. The projected aggregate ENA payment will be 643 872.
4. Therefore, the net consideration can be expressed, as follows:
a. The purchase price $4,527,000
b. The Developer's down payment $600,000
c. The projected aggregate ENA payments $643,872
d. Total $5,770,872
MY 33433 REPORTS/'33433 FOR LARKSPUR(4)' 17-Jun-08 11:36 AM
33433 REPORT ON THE PROPOSED SALE OF AGENCY
AGENCY'5 LARKSPUR PROPERTY TO THE DEVELOPER
- PAG E 8 -
Section 6 - Comparison of Fair Market Value of the interest to be conveyed
with the Consideration:
1. Fair Market Value of the interest to be conveyed $4,735,000
2. The net consideration $5,770,872
Section 7 - Findings to be included in the resolution approving the transaction:
FINDING #1: The Sale of the Property and subsequent development of the
Improvements thereon will assist in the elimination of blight in the
Project Area, provide additional jobs and substantially improve the
public services and the economic and physical conditions in the
Project Area in accordance with the purposes and goals of the
Redevelopment Plan.
♦The City Council had previously determined that ihe Project Area exhibits
condiiions of blighi so prevaleni and substantial thai there is a reduciion of
proper uiilization of the area that constitutes a serious physical, social and
economic burden on the community, which can only be alleviated by
redevelopment.
The development of the Property by the Developer with an integraied hotel
and condominium project: (1), will create about 100 full and part time jobs;
(2). will improve public services in the Project Area; and (3). will cause the
development of currently vacant and underutilized properiy in ihe Project
Area in accordance with the purposes and goals of the Redevelpment Plan.
FINDING #2: The sale of the Property is consistent with the implementation
plan adopted pursuant to Section 33490 of the California Health
and Safety Code.
FINDING #3: The consideration is not less that the Fair Market Value, at the highest
and best uses permitted under the Redevelopment Plan.
INDEX OF CALCULATION PAGES:
1. Agency's lost interest revenue on Project Area 1
tax increment funds used to purchase the property.......Page 9.
MY 33433 REPORTS/`33433 FOR LARKSPUR(4)' 17-Jun-0B 11:36 AM
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