HomeMy WebLinkAboutSA35570 and A - ENA - 128-Acre - Lewis Land Developers LLCCONTRACT NO. SA35570A
SUCCESSOR AGENCY TO THE PALM DESERT
REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: AUTHORIZATION TO ENTER INTO AN EXCLUSIVE
NEGOTIATION AGREEMENT (ENA) AND NEGOTIATE A
PURCHASE AND SALE AGREEMENT (PSA) WITH LEWIS LAND
DEVELOPERS, LLC TO SELL THE SUCCESSOR AGENCY
OWNED PROPERTY KNOWN AS THE 128-ACRE SITE
LOCATED GENERALLY SOUTH OF GERALD FORD DRIVE AND
EAST OF PORTOLA AVENUE
SUBMITTED BY: Martin Alvarez, Director of Economic Development
DATE: July 28, 2016
CONTENTS: Exclusive Negotiation Agreement
Purchase and Sale Agreement
Property Appraisal / Location Map
Recommendation
By Minute Motion:
1. Authorize the Executive Director to execute an Exclusive Negotiating
Agreement with Lewis Land Developers, LLC to negotiate the sale of the
Successor Agency owned property known as the 128-acre Property (APN
694-300-001, 002, 005, 014, 015 / 694-310-002, 003, 006) located south
of Gerald Ford Drive and east side of Portola Avenue.
2. Authorize the Executive Director to make non-substantive changes and
execute a Purchase and Sale Agreement with Lewis Land Developers,
LLC at fair market value for the sale of the Successor Agency owned
property known as the 128-acre Property (APN 694-300-001, 002, 005,
014, 015 / 694-310-002, 003, 006) after approval has been received from
the Oversight Board and State Department of Finance.
Executive Summary
Approval of staff's recommendation will authorize the Executive Director to execute a 5-
month Exclusive Negotiation Agreement with Lewis Land Developers, LLC to negotiate
the sale of the Successor Agency owned properties known as 128-acre site, located
south of Gerald Ford Drive and east side of Portola Avenue. The approval will also
allow the Executive Director to negotiate and finalize a purchase and sale agreement for
fair market value (appraised value) for submission to the Oversight Board and the State
Department of Finance for approval.
Staff Report
Sell APNs APN 694-300-001,002,005,014,015 / 694-310-002,003,006: LRPMP 128-acre Site
July 28, 2016
Page 2 of 5
Backqround
On June 2, 2014 the Successor Agency's Long Range Property Management Plan
(LRPMP) was approved by the State Department of Finance. The subject parcel is
identified as the 128-acre Site on the approved LRPMP and is located south of Gerald
Ford Drive and east of Portola Avenue. The site consists of eight separate parcels
totaling 128.95 acres of vacant land. Approximately 104 acres are zoned Planned
Residential (5-Units/acre) and 25 acres are zoned 20 units/acre (see location map).
The LRPMP requires the site to be sold at fair market value, with the sale proceeds
returning to the existing taxing entities.
Discussion
To facilitate the property disposition of the 128-acre Site, the Successor Agency staff
prepared a Request for Qualifications/Proposals (RFQ/P). The RFQ/P requested
proposals from qualified respondents having the ability to master plan, entitle and
acquire the entire 128-acre site. The RFQ/P requested that respondents provide the
following information:
• A detailed list of 5 similar sized projects master planned within the last 15 years
• A description of experience processing similar sized undeveloped land through a
City's entitlement process
• A conceptual land use plan identifying potential property yield, type of uses and
residential products, proposed circulation, sustainable design principles,
community amenities and the incorporation of a minimum 10 acres (200 units) of
affordable housing integrated into the community design.
On July 10, 2015, the Successor Agency received responses from seven respondents.
The RFQ/P submittals were reviewed by a team of City staff members that included a
representative of the Public Works, Planning, and Economic Development Departments
as well as a representative from Raimi & Associates (City's General Plan Consultant).
The RFQ/P's were reviewed and scored based on a series of criteria identified in the
RFQ/P, including but not limited to firm experience, proposed land use concept,
circulation, sustainability concepts and affordable housing integration. After evaluation
of the proposals, the evaluation team ranked the proposals in the following order:
1. Lewis Operatinq Corp/Palm Communities
2. Noble & Company
3. Family Development (opted out)
4. G.H.A.
5. Richland Communities/Coachella Valley Housing Coalition
6. Global Investment &Development
7. Somis Investments
Following the review and ranking of the proposals, staff scheduled interviews with the
top four respondents. Prior to the interview date, Family Development notified staff of
G:\Econ Development\Martin Alvarez\SA PropeRy Sales\128-Acres\SARDA\128 SARDA SR 7-28-16.doc
Staff Report
Sell APNs APN 694-300-001,002,005,014,015 / 694-310-002,003,006: LRPMP 128-acre Site
July 28, 2016
Page 3 of 5
their decision to opt out of consideration to acquire the site. On September 1, 2015,
staff interviewed the remaining three respondents highlighted above. The interview
evaluations were conducted again by representatives from Public Works, Planning,
Economic Development, and City Manager Departments as well as a representative
from Raimi & Associates (City's General Plan Consultant). The respondents were given
the opportunity to present the key elements of their qualifications, conceptual land use
plan and any unique features identified in their proposals. The evaluation team scored
the presentations based on firm experience, land use concept, circulation, sustainability
concepts and the integration of an affordable housing component. The evaluation
results concluded that Lewis Operating Group and Palm Communities (affordable
housing developer) were the highest ranking respondents.
After selecting Lewis Operating Corp. (Lewis) to move forward with the acquisition of
the site, staff met with Lewis to outline the next steps in the process. Staff identified that
an Exclusive Negotiating Agreement would be prepared, identifying a due diligence
period that would be necessary to evaluate the site and prepare a fair market appraisal.
During the fall of 2015, staff met with Lewis several times to outline the required steps
necessary to acquire the site and discuss the City's expectations with regards to the
affordable housing requirements. During these meetings, staff informed Lewis of the
City's desire to incorporate the City General Plan Affordable Housing requirements into
the development of the 128-acre site.
As part of the Successor Agency's negotiations, staff identified the need to build 200
units of affordable housing on 10-acres. Although the RFQ/P identified a requirement to
set a side/plan for 10-acres of affordable housing, City staff initiated negotiations with
Lewis to require the following:
Construction of a minimum of 50 out of the 200 units during Lewis' construction
of their first 90 acres of market rate residential development ($4.OM)
The development of the remaining 28 acres would be placed on hold until the
final 150 affordable housing units were under construction.
Contribution of $1.00/square foot Housing Mitigation Fee for each market rate
residential unit built (approximately $1.3M)
During the fall and winter of 2015, staff met with Lewis on numerous occasions to
strategize on ways to finance an affordable housing project using tax credits, affordable
housing mitigation fees or other state and federal grants available in the market. This
process consumed months of time and created a delay in finalizing and the execution of
an Exclusive Negotiating Agreement. Although Lewis provided options to finance an
affordable housing, including tax credits, the property location ranks low in consideration
of tax credits due to the lack of amenities in the general area. In order to rank high for
tax credit consideration, the property must be close to amenities such as transportation,
schools, parks and jobs. At this time the property is not in close proximity to these types
of amenities that would benefit future affordable housing residents.
G:\Econ Development\Martin Alvarez\SA Property Sales\128-Acres\SARDA\128 SARDA SR 7-28-16.doc
Staff Report
Sell APNs APN 694-300-001,002,005,014,015 / 694-310-002,003,006: LRPMP 128-acre Site
July 28, 2016
Page 4 of 5
During this time, staff engaged Capital Realty Analyst to prepare a fair market appraisal
of the site. Staff's direction to the appraiser was to include consideration of the
following City requirements:
• Developer shall construct 50 affordable units (not just set a side land) during the
development of the first 80 out of 121.95 acres of market rate residential
development ($4M).
• Developer will pay $1.00/square foot Housing Mitigation Fee for each market rate
residential unit (approximately $1.3M).
The housing mitigation fee is not a requirement by City ordinance, but can be
negotiated as an impact fee as part of a City/Developer Development Agreement.
Although both the affordable housing construction requirement and the housing
mitigation fee created a significant financing and project feasibility gap, both staff and
Lewis worked diligently to review possible solutions during the spring of 2016.
Upon completion of the appraisal analysis, the appraiser concluded that the City's
requirements to have the developer build a minimum of 50 affordable housing units and
pay the $1.00/square foot housing mitigation up front, devalued the property from
$13,085,000 to $5,730,000. After evaluation of the appraisal and direction from the
Interim City Manager, staff decided to remove these affordable housing requirements
from the land valuation process and revert the land sales price back to a standard fair
market appraisal. Although the developer will not be required to construct the
affordable housing units, they will be required to set aside/plan for 200 affordabte units
on 10 acres as part of the existing General Plan Housing Element and zoning
requirements. The appraisal of the property without imposed affordable housing
requirement is $13,085,000 (fair market value).
To proceed with the disposition of the subject property, staff has prepared an Exclusive
Negotiation Agreement (ENA) and a Purchase and Sale Agreement (PSA) for your
consideration. Below is a summary of the ENA/PSA terms:
ENA Terms:
• ENA shall be effective upon mutual execution and shall continue until the earlier
of;
o The ENA being superseded by a fully executed PSA
o December 31, 2016.
• Developer shall provide a cash deposit in the amount of $125,000.00 which can
be applied toward the purchase price identified in the PSA.
• Successor Agency shall pay for the cost to prepare a fair market appraisal.
• Successor Agency and the Developer shall work in good faith to negotiate the
sale/acquisition of the property and prepare a PSA to be presented to the
Oversight Board and State Department of Finance (DOF) for approval.
G:\Econ Development\Martin Alvarez\SA Property Sales\128-Acres\SARDA\128 SARDA SR 7-28-16.doc
Staff Report
Sell APNs APN 694-300-001,002,005,014,015 / 694-310-002,003,006: LRPMP 128-acre Site
July 28, 2016
Page 5 of 5
PSA Terms:
• Purchase price (fair market value)- $13,085,000.00
• Deposit in the amount of $125,000.00 carried over from ENA deposit
• Escrow shall open within (3) business days after complete execution of the PSA
• Developer shall master plan the 128.95 acres and setting aside 10 acres (200
units) for future affordable housing
• Escrow shall close within 18-months of mutual execution of the PSA
Staff recommends that the Executive Director be authorized to make non-substantive
modifications and finalize both the ENA and PSA for submission of approval to the
Oversight Board and the State Department of Finance. Upon approval of the PSA by
the Oversight Board and State Department of Finance, staff recommends that the
Executive Director be authorized to execute the PSA and effectuate the sale of the
property to Lewis Land Developers, LLC.
Fiscal Analvsis
The property is listed on the LRPMP to be sold for fair market value. The LRPMP
requires that all proceeds of the sale be distributed as property taxes to the affected
taxing entities, in accordance with the terms of the California Health and Safety Code,
Section 34191.5 (c)(2)(B). Each taxing entity including the City will receive a portion of
the proceeds based on their respective tax rate.
Submitted B �
Martin Alvarez
Director of Economic Development
Reviewed:
Ja t Moore
Director of Finance
Department Head:
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G:\Econ Development\Martin Alvarez\SA Property Sales\128-Acres\SARDA\128 SARDA SR 7-28-16.doc
CONTRACT NO. SA35570
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
(Lewis Land Developers, LLC)
This Exclusive Right to Negotiate Agreement ("Agreement") is made this day of
July, 2016, by and between the SUCCESSOR AGENCY TO THE PALM DESERT
REDEVELOPMENT AGENCY, a public entity ("SARDA") and LEWIS LAND
DEVELOPERS, LLC, a Delaware limited liability company ("Developer"). SARDA and
Developer are sometimes individually referred to herein as a"Party" and collectively as the
"Parties." This Agreement is entered into with regards to the following recited facts:
RECITALS
A. SARDA owns that certain real property totaling approximately 128.95 acres,
which is more particularly described in Exhibit "A" attached to this Agreement and incorporated
herein by this reference and which can be described as APNs 694-300-001, -002, -005, -014, and
-015, and 694-310-002, -003, and 006 ("Property"). SARDA is interested in selling the Property
to Developer, and Developer is interested in acquiring the Property.
B. SARDA is autharized to enter into this exclusive right to negotiate Agreement
with Developer for the purpose of selling the Property. The primary purpose of this Agreement
is to establish a period during which the Parties may begin exploring the feasibility of the
development of the Property (the "Project"), and negotiate the terms of a Purchase and Sale
Agreement (the "PSA") as provided herein. Developer has represented its willingness and
ability to begin to undertake certain studies, plans, and other activities necessary to define the
scope of development and determine the feasibility of the Project. Such studies and plans to be
prepared during the course of this Agreement shall serve as the basis for entering into a PSA
between SARDA and Developer. SARDA is willing to enter into a period of exclusive
negotiations with Developer concerning Developer's potential development of the Project and
the terms of the PSA, subject to the terms and conditions of this Agreement.
TERMS
l. Effective Date. This Agreement shall become effective on the date ("Effective Date") when
this Agreement has been executed and delivered by SARDA and Developer. The term of this
Agreement shall commence on the Effective Date and shall continue thereafter until the earlier
of: (1) this Agreement is superseded by a fully executed PSA; (2) this Agreement is terminated
as provided herein; or (3) December 31, 2016 (`Bxclusive Negotiation Period"). Subject to
Section 22, during the Exclusive Negotiation Period, SARDA shall not solicit or entertain offers
or proposals from other parties concerning the Property. The Exclusive Negotiation Period may
be extended upon the mutual written agreement of the SARDA and Developer and, unless sooner
terminated pursuant to the terms of Section 9 or Section 10 hereof, shall be automatically
extended during the Consideration Period (as hereafter deiined). Without limiting the foregoing,
any such extension for up to 90 days may be approved by the Executive Director of SARDA,
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CONTRACT NO. SA35570.
provided any extension of more than 90 days shall require approval of the SARDA Board of
Directors.
2. Exclusive and Good Faith Negotiations. SARDA and Developer agree for the Exclusive
Negotiation Period to act and negotiate in a reasonable, diligent and good faith manner, and on
an exclusive basis, to comply with the terms and conditions set forth in this Agreement and to
complete the tasks set forth in Sections 4, 5 and 6, respectively, subject to the following
provisions:
2.1 The term "exclusive basis" as used in this Agreement shall preclude SARDA,
during the Exclusive Negotiation Period, from (a) soliciting, accepting for review and analysis,
evaluating, entertaining or considering, on a direct or indirect basis, formal or informal offers or
proposals from persons or entities other than Developer that relate to or concern the acquisition,
entitlement or development of the Property ("Other Proposals"), and (b) or negotiating,
discussing or meeting with any other party or entity with respect to any such Other Proposals.
2.2 SARDA and the City of Palm Desert ("City") shall not be precluded by this
Agreement from furnishing to other persons or entities unrelated to Developer information in the
possession of SARDA and/or City which they are required by law to furnish or, subject to the
terms of Section 2.1, which they would otherwise normally furnish to persons requesting
information from SARDA and/or City concerning their activities, goals and matters of a similar
nature. Any such information to be provided by SARDA and/or City relating to this Agreement,
the PSA, the Property ar the Project, or Developer's rights and interests therein, shall not be
disclosed without advance written notice to Developer affording Developer the opportunity to
appropriately limit such disclosure and ensure such disclosure complies with the terms of this
Agreement.
2.3 SARDA and City shall not be precluded by this Agreement from undertaking any
actions otherwise required by law, or mandated by any agency of the State of California.
3. Tests/ Surveys. During the Feasibility Period (as hereafter deiined), Developer shall have
the right, in its sole and absolute discretion, but shall not be required, to inspect and conduct tests
and surveys on and with respect to the Property, and SARDA shall provide Developer reasonable
access to the Property for such inspections, tests and surveys. Said foregoing inspection and
testing may include, but shall not be limited to, soil borings, soil and water sampling, soil
compaction assessment, environmental assessment and similar or related physical or invasive
testing. Any inspection or testing shall be at Developer's sole cost and be done with reasonable
notice to SARDA and with SARDA's reasonable concurrence. Such inspection and testing shall
be conducted at a reasonable time and in a reasonable manner. Developer shall be responsible
for any personal injury or property damage resulting from its negligence, gross negligence, or
willful misconduct in connection with Developer's inspection and testing of the Property,
provided that in no event shall Developer have responsibility or liability under this Agreement
for legally required disclosure or any pre-existing conditions affecting the Property (including,
without limitation, the discovery or existence of hazardous substances or other physical
conditions that may require remediation by SARDA or limit or restrict the use or development of
the Property or effect its value, in, on or about the Property and associated groundwater). Prior to
any on-site inspections, Developer shall provide SARDA a current certificate of insurance for
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CONTRACT NO. SA3557Q
commercial general liability coverage in an amount not less than $1,000,000 that names SARDA
and City as additional insureds.
4. Negotiation of Purchase and Sale Agreement. Following commencement of the
Feasibility Period, both SARDA and Developer shall exercise reasonable, diligent and good faith
efforts to negotiate and agree upon the final form of the PSA. Except as otherwise agreed to by
the Parties in writing, this Agreement shall automatically terminate if the Parties have not
reached agreement on the form of the PSA pursuant to and in accordance with the terms of this
Agreement (the "Party Approvals") by December 31, 2016. Party Approvals shall be
documented by written notification of each Party to the other. Without limiting the obligation of
the Parties to act and negotiate in a reasonable, diligent and good faith manner, nothing herein (a)
shall be deemed to be a representation by SARDA or Developer that a mutually acceptable PSA
will be concluded, (b) shall impose any obligation on City to approve any project entitlements or
provide any financial or other assistance to Developer for the Project or the Property, or (c) shall
be deemed to be a guarantee or representation that (i) the PSA will be approved by SARDA's
Oversight Board (the "Oversight Board Approval"), which entity must approve the PSA and/or
the sale of the Property, (ii) the PSA will be approved by the California Department of Finance
("DOF Approval") (Oversight Board Approval and DOF Approval are collectively referred to
herein as the "Governmental Approvals"), which entity must approve the PSA and/or the sale of
the Property, or (iii) any project entitlements (if any are required) will be approved by the City's
governing boards. Developer further acknowledges that receipt of Oversight Board Approval is
subject to the sole and absolute discretion of the SARDA Oversight Board, receipt of DOF
Approval is subject to the sole and absolute discretion of the California Department of Finance
and that receipt of any project entitlements (if any are required) is subject to the sole and
absolute discretion of the City's governing boards and all other governmental entities with
jurisdiction over the Property and the Project. In connection with the foregoing, Developer
acknowledges that the processing and pursuit of any project entitlements (if any are required)
will include all public hearings, public meetings, notices, factual fndings and other
determinations required by applicable law in connection therewith. Once the Party Approvals
have been obtained, SARDA shall promptly pursue Oversight Board Approval and DOF
Approval (and Developer shall reasonably cooperate with SARDA in connection therewith).
SARDA shall utilize its best efforts to obtain such Oversight Board Approval and DOF Approval
as soon as practicable once the Party Approvals have been obtained. SARDA agrees to execute
the PSA within iifteen (15) days after both Oversight Board Approval and DOF Approval have
been obtained, but SARDA shall not execute the PSA until Oversight Board Approval and DOF
Approval have been obtained. The period commencing with the Party Approvals and ending
upon either the (A) iinal and unconditional rejection of the sale of the Property in accordance
with the Party Approvals by SARDA's Oversight Board or the California Department of
Finance, or (B) the date of DOF Approval following Oversight Board Approval, is referred to
herein as the "Consideration Period".
5. Developer and SARDA Tasks During Feasibility Period. During the Feasibility Period,
the Parties shall, at their sole cost and expense, undertake the following tasks. It shall be within
the sole and absolute discretion of Developer to engage architects, engineers, consultants, and
other third parties of its choosing to discharge its responsibilities under this Section and in this
Agreement:
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CONTRACT NO. SA35570.
5.1 Purchase Deposit. Within three (3) business days after the mutual execution of
this Agreement, Developer shall deposit in an account (which, at Developer's election, may be
interest bearing) with Foresite Escrow (the "Escrow Agent"), a cash deposit in the amount of
One Hundred Twenty Five Thousand Dollars ($125,000.00) (the "Purchase Deposit"). Interest
accruing on the Purchase Deposit shall be for the benefit of Developer. In the event that the
parties enter into a PSA with respect to Developer's acquisition of the Property from SARDA in
accordance with the terms hereof, the Purchase Deposit shall be applied to any deposits required
under the PSA.
5.2 Property Valuation. The purchase price for the Property in the PSA shall be the
Fair Market Value of the Property as determined by a qualified appraiser with at least 5 years'
experience valuing commercial properties who is active in the local market that is selected by
SARDA, with input from Developer ("Appraiser"), which determination of Fair Market Value of
the Property shall be based upon the current physical condition and existing zoning of the
Property. The Appraiser shall be retained by SARDA at its sole cost and expense within five (5)
days of the mutual execution of this Agreement and shall be charged with determining the Fair
Market Value of the Property ("Appraisal") within thirty (45) days of retention in accordance
with the applicable terms of this Agreement. Developer shall have a period of thirty (30) days
following Appraiser's determination of the Fair Market Value of the Property to notify SARDA
in writing whether it approves the Appraisal and elects to continue with negotiations of the PSA
for Developer's acquisition of the Property and its evaluation of the Property in accordance with
the terms of this Agreement or to terminate this Agreement. Developer's failure to deliver
written notice of termination (the "Termination Notice") shall be deemed Developer's election to
continue with the negotiations of the PSA for Developer's acquisition of the Property and its
evaluation of the Property in accordance with the terms of this Agreement.
5.3 Property Information. SARDA shall promptly provide to Developer all
documents, materials, agreements, studies and reports in SARDA's possession or control
concerning the Property, including without limitation, all consulting and engineering, work
product, plans and specifications, reports, surveys, site plans, title reports and related
documentation, utility agreements and will serve letters, plats, maps, permits, approvals,
authorizations, traffic reports, soils and geotechnical reports, environmental assessments and
reports and the like (the "Property Information"). In connection with the foregoing, SARDA
shall obtain and deliver to Developer a current preliminary title report from Lawyer's Title
(Riverside) that is applicable to the Property.
5.4 Feasibility Period. Developer shall have from the mutual execution of this
Agreement until ninety (90) days following receipt of the Governmental Approvals (the
"Feasibility Period") to evaluate the Property Information, to approve the state of title to the
Property and, subject to the terms of and without prejudice to Developer's rights under Section 3,
to conduct any other due diligence inspections and investigations that it desires.
5.5 Purchase A�reement. Upon commencement of the Feasibility Period, and subject
to the terms of Section 4 hereof, Developer and SARDA shall negotiate in good faith the form
and terms of the PSA consistent with the terms set forth below.
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CONTRACT NO. SA35570.
(a) Buyer: Developer or an affiliate thereof, including any affiliated assignee
of such party. Developer intends to form and capitalize a single purpose limited liability
company to purchase the Property and develop the Project.
(b) Purchase Price: The Purchase Price for the Property shall be determined
per Section 5.2 and shall be paid in cash at close of escrow.
(c) Title and Escrow: Title will be with Lawyer's Title (Riverside) and
Escrow to be with Foresite Escrow (Palm Desert). The state of title to the Property shall be
evaluated by Developer during the Feasibility Period.
(d) Condition of Property: At closing, and as conditions to Developer's
obligation to close the escrow under the PSA, SARDA shall deliver the Property to Developer
vacant, subject only to the permitted title exceptions approved by Developer pursuant to the
terms of the PSA, absent a SARDA default with all SARDA representations and warranties true
and correct, with Oversight Board Approval and DOF Approval, and with the Property in
substantially the same physical condition that existed as of the date of the PSA.
(e) Closing and Costs: At Closing, (i) real estate taxes shall be prorated
between Developer and SARDA as of the closing date, and (ii) all other closing costs and
prorations shall be paid by county custom.
( fl As Is Purchase: Developer is purchasing the Property in its existing
condition, `AS-IS, WHERE-IS, WITH ALL FAULTS', subject to the truth and accuracy of any
SARDA representations and warranties contained in the PSA.
(g) Brokers: The PSA will provide that SARDA will pay to Edward J.
Schiller of Innovative Land Concepts, Inc. ("Schiller") a finder's fee equal to 1% of the Purchase
Price, subject to approval by SARDA's Oversight Board and the California Department of
Finance. Developer through a separate agreement has agreed to pay Schiller, at its own expense,
an additional finder's fee. The PSA shall also state that affiliates of Developer and certain of
their employees are licensed brokers or salesperson by the California BRE but that they are not
acting in their capacity as licensees and are not to receive any commission for this transaction.
Each of the parties will indemnify the other party in the PSA against any claims for brokerage
commissions or similar fees, except as otherwise expressly provided for in the PSA.
(h) Affordable Housing Integration Requirements. The PSA will provide
that the Buyer to specifically acknowledge and agree that the Property is subject to the affordable
housing integration requirements as described in the Request for Qualifications/Proposals far
Successor Agency to the Palm Desert Redevelopment Agency Property Disposition dated May 1,
2015, as amended by Addendum No. 1 dated May 26, 2015 and Addendum No. 2 dated June 15,
2015.
(i) Additional Terms: Developer's escrow deposits shall be consistent with
Section 5.6 below. The Purchase Deposit shall be the required escrow deposits under the PSA.
The PSA shall include any other terms and conditions that are typical for the subject transaction.
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CONTRACT NO. SA35570
5.6 Notice to Proceed. On or before the end of the Feasibility Period and if
Developer elects to proceed with the transaction, Developer shall notify SARDA and the Escrow
Agent in writing of such decision (the "Notice to Proceed") and shall deliver a counterpart of the
PSA to SARDA that has been duly executed by Developer. If Developer fails to timely deliver
the Notice to Proceed or delivers a termination notice, Escrow Agent shall immediately release
the Purchase Deposit, including any interest earned thereon (if any), to Developer and this
Agreement shall be terminated and of no further effect. If Developer delivers a Notice to
Proceed to SARDA, the Purchase Deposit shall be applicable to the Purchase Price and shall be
non-refundable to Developer except in the event that the transaction does not close due to a
default by SARDA, the failure of a buyer closing condition as set forth in the PSA or pursuant to
the express terms of the PSA. Interest, if any, accruing on the Purchase Deposit shall be for the
beneiit of Developer. In the event the Governmental Approvals are not obtained, Escrow Agent
shall immediately release the Purchase Deposit, including any interest earned thereon (if any), to
Developer and this Agreement shall be terminated and of no further effect.
5.7 Hazardous Materials/Histarical Artifacts/Environmental Conditions. Developer
shall have no responsibility under this Agreement to make any determination as to the existence
of hazardous materials, historical artifacts or any biological or other environmental conditions on
the Property nor shall have it liability or responsibility for hazardous materials, historical
artifacts, or any biological or other environmental conditions on the Property discovered during
Developer's investigation or testing of the Property.
6. SARDA Tasks During Exclusive Negotiation Period.
6.1 Pursuant to Section 5.2, SARDA shall provide Developer with the required
information.
6.2 Upon commencement of the Feasibility Period, and subject to the terms of
Section 4 hereof, exercise reasonable, diligent and good faith efforts to negotiate and agree with
Developer upon the form of the PSA consistent with the terms set forth herein.
6.3 In order to satisfy one of the closing conditions of Section 4 and Section 5.4(d),
SARDA shall diligently and in good faith pursue the Oversight Board Approval and the DOF
Approval following receipt of the Party Approvals.
7. Acknowledgments and Reservations.
7.1 No Further Obli ation. SARDA and Developer agree that, if this Agreement
expires or is terminated for any reason other than a default of a Party, neither SARDA nar
Developer shall be under any obligation, nor have any liability to the other Party or any other
person regarding the acquisition of the Property or the construction of the Project, except as set
forth in an executed PSA.
7.2 Development Standards and Design Controls. Certain development standards and
design controls for the Project may be established between Developer and City, but it is
understood and agreed between the Parties that the Project must conform to all City and other
applicable governmental development, land use and architectural regulations and standards, as
�
81097.00000�29089056.2
CONTRACT NO. SA35570
supplemented with any variances granted by City. Drawings, plans, and specifications for the
Project shall be subject to the approval of City through the standard development application
process for projects within the City. Nothing in this Agreement shall be construed as the
approval of any plans or specifications for the Project or of the Project itself by the City.
7.3 Further Infarmation. SARDA reserves the right to reasonably obtain further
information, data, and commitments to ascertain the ability and capacity of Developer to develop
and operate the Property and/or the Project. Developer acknowledges that it may be requested
to make certain financial disclosures to SARDA, its staff, legal counsel, or other consultants, as
part of the financial due diligence investigations of SARDA relating to the potential construction
of the Project by Developer and that any such disclosures may become public records. SARDA
shall maintain the coniidentiality of financial information of Developer to the extent allowed by
law.
8. Disclosures and Cooperation. SARDA and Developer shall generally cooperate with each
other and supply such documents and information as may be reasonably requested by the other
Party to facilitate the negotiations. Unless precluded by law, SARDA shall keep confidential all
proprietary information provided by Developer to SARDA.
8.1 Only PSA Binds SARDA and Developer. Each Party acknowledges and agrees
that, except for those binding obligations set forth in this Agreement, neither Party will be bound
by any statement, promise or representation made by that Party (and in the case of SARDA by
City staf� during the Exclusive Negotiation Period or arising from or related to the Project on
the Property, and that each Party shall be legally bound only upon the approval of the PSA by
SARDA's governing board and after Oversight Board Approval and DOF Approval.
8.2 No Representations About Future Agreements. Each Party further acknowledges
and agrees that nothing in this Agreement nor each Party's cooperation in satisfying its
obligations under this Agreement shall be deemed a promise, representation or guaranty that the
Parties will reach any future agreement, enter into a PSA or , in the case of SARDA, that City
will approve any project entitlements (if any are required).
9. Default.
9.1 Cure. Failure or delay by either Party to perform any material term or provision
of this Agreement and to cure such failure within any applicable cure period shall constitute a
default under this Agreement. If the Party who is claimed to be in default by the other Party
cures, corrects or remedies the alleged default within fifteen (15) calendar days after receipt of
written notice specifying such default, such Party shall not be in default under this Agreement,
with the understanding that, if such default is curable but cannot reasonably be cured within such
fifteen (15) calendar days, the cure period shall be extended to up to ninety (90) calendar days so
long as the cure shall have been commenced within such fifteen (15) calendar days and diligently
pursued thereafter. The notice and cure period provided in the immediately preceding sentence
shall not, under any circumstances, extend the Exclusive Negotiation Period. If there are less
than fifteen (15) days remaining in the Exclusive Negotiation Period, the cure period allowed
pursuant to this Section 9 shall be automatically reduced to the number of days remaining in the
Exclusive Negotiation Period.
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81097.00000�29089056.2
CONTRACT NO. SA35570,
9.2 Notice. The Party claiming that a default has occurred shall give written notice of
default to the Party claimed to be in default, specifying the alleged default. Delay in giving such
notice shall not constitute a waiver of any default nor shall it change the time of default.
However, the injured Party shall have no right to exercise any remedy for a default under this
Agreement, without first delivering written notice of the default.
9.3 Breach. If a default of either Party remains uncured for more than fifteen (15)
calendar days following receipt of written notice of such default (as such cure period may be
extended pursuant to Section 9.1), a"breach" of this Agreement by the defaulting Party shall be
deemed to have occurred. In the event of a breach of this Agreement (other than a breach of an
indemnity), the Party who is not in default shall have, as its sole remedy, the right to terminate
this Agreement by serving written notice of termination on the Party in breach, but without
prejudice to any express rights or remedies the Party may have under this Agreement or at law
(including equitable relie�. In the event of breach of an indemnity, damages shall be limited to
actual damages, and neither Party shall have the right to compensatory, special, or consequential
damages from the breaching Party.
10. Termination. This Agreement shall terminate upon the occurrence of any of the following:
(a) the end of the Exclusive Negotiation Period, subject to any extensions approved by the
Parties pursuant to Section 1; (b) the execution of a PSA by the Parties following Oversight
Board Approval and DOF Approval; (c) termination of this Agreement by any Party pursuant to
Section 9; (d) the Developer determining in its reasonable and good-faith discretion, reasonable
evidence of which is to be provided to SARDA, and notifying SARDA in writing that it has
elected to terminate this Agreement due to the physical condition of the Property or
development, entitlement, financing, feasibility (including the prospects far obtaining Oversight
Board Approval and DOF Approval) and/or operation issues; (e) Developer has elected to
terminate this Agreement pursuant to Section 5.6; or (� failure of Developer to make the
Purchase Deposit or Additional Deposit within thirty (30) days of written request by SARDA.
11. Prohibition Against Assignment. The qualifications and identity of Developer and its
principals are of particular concern to SARDA. It is because of these qualifications and identity
that SARDA has entered into this Agreement with Developer. During the Exclusive Negotiation
Period, no voluntary or involuntary successor-in-interest of Developer shall acquire any rights or
powers under this Agreement, nor sha11 Developer assign all or any part of this Agreement,
without the prior written approval of SARDA, which approval SARDA may grant, withhold, or
deny in its sole and absolute discretion; provided, however, that the SARDA shall not assess a
fee for such approval. Notwithstanding the previous sentence, Developer may transfer its rights
under this Agreement to any entity controlled directly or indirectly by any of the principals of
Developer listed on Exhibit "B" attached hereto without approval of the SARDA. Except as
otherwise expressly provided herein, any purported transfer of this Agreement, voluntarily or by
operation of law, shall be null and void and shall confer no rights whatsoever upon any purported
assignee or transferee, unless otherwise approved in writing by SARDA pursuant to this Section
12. General Provisions.
12.1 Governin� Law; Jurisdiction and Venue. This Agreement shall be interpreted and
enforced in accordance with the provisions of California law in effect at the time it is executed,
:
81097.00000�29089056. 2
CONTRACT NO. SA35570 -
without regard to conflicts of law provisions, and as such laws may be amended from time to
time during the Exclusive Negotiation Period. Any action brought concerning this Agreement
shall be brought in the appropriate court for the County of Riverside, California.
12.2 Solicitation and Conflicts of Interest. For the term of this Agreement, no member,
ofiicer or employee of SARDA or City, during the term of his or her service with SARDA or
City, shall have any direct or indirect interest in this Agreement or obtain any present or
anticipated material benefit arising therefrom.
12.3 No Third Party Beneficiaries. SARDA and Developer expressly acknowledge
and agree that they do not intend, by their execution of this Agreement, to beneiit any persons or
entities not signatory to this Agreement, with the sole exception of the City as to certain
provisions herein, including, without limitation, any brokers representing the Parties to this
transaction. The foregoing shall not be deemed to release Developer from any obligation it may
have to pay commissions or brokerage fees which it may be obligated to pay pursuant to any
other contract to which Developer may be a party. No person or entity not a signatory to this
Agreement, other than the City, shall have any rights or causes of action against SARDA, City or
Developer arising out of or due to SARDA and Developer's entry into this Agreement. Third
parties, for the purposes of this Section 12.3, shall include persons to whom fees are paid for
professional services, if rendered by attorneys, financial consultants, accountants, engineers,
architects and other consultants.
12.4 Notices and Demands. All notices or other communications required or permitted
between the Parties under this Agreement shall be in writing, and may be: (a) personally
delivered, (b) sent by United States registered or certiiied mail, postage prepaid, return receipt
requested, (c) sent by facsimile and/or electronic transmission, confirmed by same day mailing
of a"hard" copy, ordinary first class mail, postage prepaid, or (d) sent by nationally recognized
overnight courier service (e.g., Federal Express), addressed to the Parties at the addresses
provided below, subject to the right of either Party to designate a different address for itself by
notice similarly given. Any notice given by registered or certified United States mail shall be
deemed to have been given on the second business day after the same is deposited in the United
States mail. Any notice personally delivered or delivered by facsimile or overnight courier
service (e.g., Federal Express), shall be deemed given upon receipt of the same by the Party to
whom the notice is given.
To SARDA: Successor Agency to the Palm Desert Redevelopment
Agency
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: Executive Director
Facsimile: 760-341-6372
With copy to: Best Best & Krieger LLP
74-760 Highway 111, Suite 200
Indian Wells, CA 92210
Attn: Robert Hargreaves
Facsimile: 760-340-6698
�
81097.00000\29089056.2
CONTRACT NO. SA35570
To DEVELOPER: Lewis Land Developers, LLC
1156 North Mountain Avenue
Upland, CA 91785
Attn: John M. Goodman
Facsimile: 909-949-6720
With copy to: Lewis Management Corp.
1156 North Mountain Avenue
Upland, CA 91785
Attn: General Counsel
Facsimile: 909-949-6725
12.5 Entire Agreement. This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter hereof and supersedes all agreements, representations,
warranties, statements, promises andlor understandings, whether oral or written. This Agreement
may only be amended by the written consent of the Parties.
12.6 Severabilitv. In the event that any of the provisions, or portions thereof, of this
Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the
validity and enfarceability of the remaining provisions, or portions thereof, shall not be affected
and shall remain in full force and effect.
12.7 Hold Harmless. Developer shall defend, indemnify, and hold harmless SARDA,
City and their respective officials, officers, employees, consultants, contractors and agents
(collectively, "Indemnitees") from and against any and all actual and alleged claims, losses,
damages, fines, costs, penalties, expenses (including reasonable attorneys' fees, costs of experts
and other litigation expenses), and liabilities of any type or nature, including those related or due
to death or injury to any person and injury to any property, proximately resulting from any
negligent acts or omissions by Developer or any of its officers, employees, agents, or
subcontractors related to the activities described or contemplated by this Agreement. No
officials, officers, employees, consultants, contractors or agents of SARDA or City shall be
personally liable to Developer, any voluntary or involuntary successors or assignees, or any
lender or other party holding an interest in the Project or the Property, in the event of any default
or breach by SARDA or City, or for any amount which may become due to Developer or to its
successors or assignees, or on any obligations arising under this Agreement. No officials,
officers, employees, consultants, contractors or agents of Developer shall be personally liable to
City or SARDA in the event of any default or breach by Developer, or for any amount which
may become due to SARDA or City, or on any obligations arising under this Agreement.
12.8 Real Estate Commissions. Each of the Parties hereto represents and warrants to
the other that it has not employed or utilized the services of any broker, salesperson, or finder in
connection with the matters described in this Agreement except as described in Section 5.5(g),
and each of said Parties agrees to indemnify, defend (including reasonable attorneys' fees and
costs), save and hold harmless the other from and against any and all claims, demands, costs,
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81097.00000�29089056.2
CONTRACT NO. SA35570
expenses, and liability arising out of any claims for a brokerage commission or other
compensation made by any broker or brokers, salespersons or iinders purporting to represent the
indemnifying party or claiming by, through or under the indemnifying party in connection with
the transaction contemplated by this Agreement, except with respect to the commission
described in Section 5.5(g) to be paid by SARDA.
12.9 Attarne�' Fees. In the event that either Party brings any legal action to interpret
or enforce any provision of this Agreement, the prevailing Party in that action shall be entitled to
receive, in addition to all other relief available to it, its costs of litigation and reasonable
attorney's fees, including costs and fees incurred on appeal and in enforcing any judgment which
may be rendered on the underlying action.
12.10 Waivers. No waiver of any breach of any term or condition contained in this
Agreement shall be deemed a waiver of any preceding or succeeding breach of such term or
condition, or of any other term or condition contained in this Agreement. No extension of the
time for performance of any obligation or act, no waiver of any term or condition of this
Agreement, nor any modification of this Agreement shall be enforceable against any Party unless
made in writing and executed by all Parties.
12.11 Construction. Headings at the beginning of each section and sub-section of this
Agreement are solely far the convenience of reference of the Parties and are not a part of this
Agreement. Whenever required by the context of this Agreement, the singular shall include the
plural and the masculine shall include the feminine and vice versa. This Agreement shall not be
construed as if it had been prepared by one or the other of the Parties, but rather as if the Parties
prepared this Agreement. Unless otherwise indicated, all references to sections are to this
Agreement. All exhibits referred to in this Agreement are attached to this Agreement and
incorporated into this Agreement by this reference. If the date on which the Parties are required
to take any action pursuant to the terms of this Agreement is not a business day of City, as
appropriate, the action shall be taken on the next business day of City.
12.12 Counterpart Ori ig nals. This Agreement may be executed in counterparts which,
when taken together, shall constitute but one and the same instrument.
[Signatures on Following Page]
-11-
81097.00000�29089056.2
CONTRACT NO. SA35570
SIGNATURE PAGE TO
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
(Lewis Land Developers, LLC)
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto on
the day and year iirst written above.
SARDA:
DEVELOPER:
SUCCESSOR AGENCY TO THE PALM
DESERT REDEVELOPMENT AGENCY, a
public entity
:
Executive Director
LEWIS LAND DEVELOPERS, LLC,
a Delaware limited liability company
By: LEWIS MANAGEMENT CORP.,
a Delaware corporation, Its sole manager
By: _
Name:
Its:
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81097.00000�29089056.2
CONTRACT NO. SA35570
EXHIBIT A
LEGAL DESCRIPTION
Approximately 128.95 acres known as APNs 694-300-001, -002, -005, -014, and -015, and 694-
310-002, -003, and 006 in the City of Palm Desert, County of Riverside, California
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81097.00000\29089056.2
CONTRACT NO. SA35570
EXHIBIT B
Lewis Principals
Richard A. Lewis
Robert E. Lewis
Roger G. Lewis
Randall W. Lewis
John M. Goodman
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81097.00000�29089056.2
CONTRACT NO. SA35570A
REAL ESTATE PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This Real Estate Purchase and Sale Agreement and Joint Escrow Instructions (this
"Agreement"), dated for reference purposes only as of , 2016 is entered into
between LEWIS LAND DEVELOPERS, LLC, a Delaware limited liability company ("Buyer"),
and the SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY
("Seller"), for the purchase and sale of that certain real property consisting of approximately
128.95 acres located in the City of Palm Desert, County of Riverside ("County"), State of
California, known as A.P. Nos. 694-300-001, 694-300-002, 694-300-005, 694-300-014, 694-
300-015, 694-310-002, 694-310-003 and 694-310-006 (the "Property"), as legally described on
Exhibit A attached hereto and identiiied on the map attached hereto as Exhibit A-1. As used
herein the term "Property" shall include all of Seller's right, title and interest in and to all
entitlements, easements, mineral rights, oil and gas rights, water, water rights, air rights,
development rights and privileges appurtenant thereto and all improvements located thereon,
excepting any right, title or interest to any public rights of way or public easements. The term
"Seller" or "Successor Agency" or "Agency" in all cases herein refers to the Successor Agency
to the Palm Desert Redevelopment Agency and the term "City" as used herein means the City of
Palm Desert, a municipal corporation. The term "Effective Date" as used in this Agreement shall
be the date of State Approval of this Agreement as set forth in Recital G.
RECITALS
This Agreement is entered into with reference to the following facts:
A. Pursuant to AB X 1 26 (which became effective at the end of June 2011), as
modiiied by the California Supreme Court's decision in California Redevelopment Association,
et al. v. Ana Matosantos, et al. (53 Cal. 4th 231(2011)), the Palm Desert Redevelopment Agency
(the "Redevelopment Agency") was dissolved as of February 1, 2012 and the Agency was
constituted to wind down the affairs of the former Redevelopment Agency; and
B. AB 1484 (which became effective at the end of June 2012) amended and
supplemented AB Xl 26 (AB Xl 26 and AB 1484, together, being referred to below as the
"RDA Dissolution Act"); and
C. Pursuant to the RDA Dissolution Act, all assets, properties, contracts, leases,
books and records, buildings, and equipment of the former Redevelopment Agency have been
transferred to the control of the Agency; and
D. Agency owns the fee interest in the Property; and
E. Buyer desires to purchase the Property; and
F. On August 1, 2016, the Oversight Board adopted its Resolution No.
approving this Agreement (the "Oversight Board Approval"); and
G. On , 2016, the State of California, Department of Finance
("DOF") approved this Agreement as required by the RDA Dissolution Act (the "State
81097.00000�290900601 1
CONTRACT NO. SA35570A
Approval"). Seller and Buyer agree that such approval by DOF is a condition to the execution
and enforceability of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. PURCHASE PRICE: The purchase price for the Property shall be Thirteen
Million Eighty-iive Thousand and no/100 Dollars ($13,085,000.00) (the "Purchase Price") to be
paid all cash to Seller at Closing, less the Deposit made by Buyer pursuant to Section 2.
2. DEPOSIT: Buyer has previously deposited a cash sum equal to One Hundred
Twenty-five Thousand Dollars ($125,000) (the "Deposit") in escrow (the "Escrow") with
Foresite Escrow at41995 Boardwalk, Suite G-2, Palm Desert, CA 92211, Attn: Esther Lopez
("Escrow Holder"). The Deposit shall be held in the Escrow until the Feasibility Deadline (as
deiined in Section 10 below) with the interest earned thereon inuring to the beneiit of Buyer. If
on or before the Feasibility Deadline, Buyer delivers to Seller and Escrow Holder written notice
approving the feasibility of the Property, the Deposit shall thereafter be non-refundable to Buyer,
except as otherwise set forth in this Agreement, and shall remain in Escrow until the Closing or
earlier termination of this Agreement, and provided further that until the Closing occurs or until
Seller receives the Deposit as liquidated damages pursuant to Section 7.E. hereof, Buyer shall be
deemed the owner of the Deposit, and Seller and its successors and assigns shall not be entitled
to withdraw from Escrow or to receive from Escrow all or any part of the Deposit. If this
Agreement is terminated or deemed terminated on or before the Feasibility Deadline, Seller
hereby authorizes Escrow Holder to immediately release the Deposit (and all of the interest
earned on the Deposit) to Buyer without any additional documentation required from the parties.
Seller releases Escrow Holder from all liability in connection with the release of the Deposit to
Buyer in accordance with the preceding sentence, and following such release of the Deposit,
neither party shall have any further rights or obligations hereunder (other than those arising from
a party's breach of this Agreement). The Deposit shall be credited against the Purchase Price at
the Closing.
3. INDEPENDENT CONSIDERATION. Within three (3) business days
following the mutual execution and delivery of this Agreement to Escrow, Buyer shall deposit
into Escrow the amount of One Hundred Dollars ($100.00) (the "Independent Consideration").
The Independent Consideration shall be non-refundable to Buyer as independent consideration
for the rights and options extended to Buyer hereunder, including, without limitation, the right
and option to terminate this Agreement as provided herein. The Independent Consideration shall
be disbursed to Seller immediately following Buyer's deposit thereof into Escrow. In all
instances under this Agreement in which Buyer elects to terminate or is deemed to have
terminated this Agreement and the Deposit is returned to Buyer, Seller shall retain the
Independent Consideration when the Deposit is returned to Buyer. The Independent
Consideration shall not be applicable to the Purchase Price or treated as consideration given by
Buyer for any purpose other than as provided herein. The parties agree that it is their intention
that the amount of the Independent Consideration is sufficient consideration, as such term is
deiined in Steiner v. Thexton, 48 Cal. 4th 411 (2010). Buyer and Seller hereby acknowledge and
confirm that they have had an opportunity to review this provision with their respective,
independent counsel.
81097.00000�29090060.1 2
CONTRACT NO. SA35570A
4. FAIR MARKET VALUE; NO SUBSIDY BY SELLER; NO AGENCY
OBLIGATIONS. Buyer and Seller acknowledge and agree that the Purchase Price represents
the current fair market value of the Property. Buyer and Seller further acknowledge and agree
that neither Seller not City, in their regulatory capacity or otherwise, has provided or agreed to
provide any subsidy to the Buyer in connection with Buyer's acquisition, development, use
and/or operation of the Property, nor is there any plan to provide any such subsidy to the Buyer.
5. ESCROW:
A. Closing. Buyer and Seller shall open escrow with Escrow Holder
within three (3) business days after complete execution of this Agreement. Escrow shall close on
the date (the "Closing Date" or "Closing") which is eighteen (18) months after the State
Approval, provided the Closing Date may be extended by the Executive Director as set forth in
Section 9. Buyer may elect to close the Escrow before the Closing Date upon thirty (30) days
prior written notice to Seller.
B. Escrow Instructions; Costs. The provisions hereof shall constitute joint
instructions to Escrow Holder to consummate the purchase in accordance with the terms and
provision hereof. The parties shall execute such additional escrow instructions, not inconsistent
with the provisions hereof, as may be deemed reasonably necessary to carry out the intentions of
the parties as expressed herein; provided, however, if the provisions of any such additional
instructions contradict with the provisions of this Agreement, then the provisions of this
Agreement shall control. At Closing, (i) real estate t�es shall be prorated between Buyer and
Seller as of the closing date, and (ii) all other closing costs and prorations shall be paid by county
custom.
C. Deposit of Documents.
(1) At or before the Closing, Seller shall deposit into escrow the duly
executed and acknowledged Deed (defined below) conveying the Property to Buyer;
(2) At or before the Closing, Buyer shall deposit into escrow the funds
necessary to close this transaction; and
(3) Seller and Buyer shall each deposit such other instruments as are
reasonably required by the "Title Company" (defined below) or otherwise required to close the
escrow and consummate the purchase of the Property in accordance with the terms hereof.
D. Prorations. The Current T�es shall be prorated as of the Closing Date
based on the t� assessor's most recent tax bill for the Property except all delinquent taxes and
assessments shall be paid by Seller. The parties shall cooperate in good faith following the
Closing (and outside of the Escrow) to reconcile any prorations made at the Closing that do not
accurately reflect the actual prorated cost ar revenue. All prorations of amounts for which Seller
is responsible but which Buyer pays or agrees to pay in the future shall be credited against the
Purchase Price.
81097.00000�29090060.1 3
CONTRACT NO. SA35570A
E. Balance of Purchase Price. Not later than one (1) business day prior to
Closing, Buyer shall deposit with Escrow Holder in immediately available funds the balance of
the Purchase Price, together with such other amounts as may be required in order to pay Buyer's
share of closing costs and prorations.
F. Closin�Procedure. Upon receipt of all funds and instruments described in
this Section 5, and upon satisfaction or waiver of all contingencies and conditions set forth in this
Agreement, Escrow Holder shall:
(1) Record the Grant Deed in the Official Records of Riverside
County, California.
(2) Issue the Title Policy (as defined below) to the Buyer.
(3) Deliver the Purchase Price to Seller, less any costs and expenses
shown on the closing statements approved by Seller and Buyer, which costs and expenses shall
be disbursed as instructed by Seller and Buyer in escrow instructions delivered to Escrow Holder
prior to the Closing Date.
6. TITLE: Buyer has procured that current preliminary title report respecting the
Property issued by Lawyer's Title/Commonwealth Land Title Company in Riverside, CA (the
"Title Company") attached hereto as Exhibit B, along with legible copies of the documentation
evidencing all exceptions shown therein (the "Title Report"). Within thirty (30) days following
the Effective Date, Buyer shall disapprove in writing any exceptions contained in the Title
Report to which Buyer objects (the "Disapproved Exceptions"); all exceptions not so objected
to by Buyer in writing shall be referred to as "Approved Exceptions". Seller shall have ten (10)
days after Buyer delivers such notice to advise Buyer if Seller will agree to remove any of such
Disapproved Exceptions from title. If Seller does not so agree in writing to remove all of the
Disapproved Exceptions, then, until the Feasibility Deadline, Buyer may elect to terminate this
Agreement and recover the Deposit previously made and any interest actually earned thereon, in
which event the parties shall have no further rights or obligations hereunder; or, alternatively,
Buyer may elect to waive its objection to those Disapproved Exceptions in which event such
Disapproved Exceptions will be deemed to be Approved Exceptions. At the Closing, Seller shall
convey its fee interest in and to the Property to Buyer (or to such other Lewis Management Corp.
affiliated entity as may be specified in Buyer's escrow instructions and approved by Agency) by
deed in a form reasonably mutually acceptable to Buyer and Seller (the "Deed"). Title to the
Property shall be subject only to (i) a lien for then current taxes, bonds and assessments not yet
delinquent and (ii) the Approved Exceptions (collectively, the "Permitted Exceptions").
Immediately following recordation of the Deed, Escrow Holder shall issue to Buyer an A.L.T.A.
Standard Coverage Owner's policy of title insurance, with coverage in the amount of the
Purchase Price for the Property, showing fee simple title to the Property vested in Buyer, subject
only to the Permitted Exceptions (the "Title Policy"). Buyer may elect to obtain an extended
coverage policy at Buyer's cost.
81097.00000�29090060.1 4
CONTRACT NO. SA35570A
7. "AS-IS" PURCHASE; RELEASE OF SELLER; LIQUIDATED DAMAGES
A. Buyer's Independent Investi a�. Buyer represents and warrants to
Seller that Buyer shall, prior to the Feasibility Deadline, perform a diligent and thorough
inspection and investigation of each and every aspect of the Property, either independently or
through agents of Buyer's choosing, including, without limitation, the following matters
(collectively, the "Property Conditions"):
(1) All matters relating to title including, without limitation, the existence,
quality, nature and adequacy of Seller's interest in the Property and the existence of physically
open and legally sufficient access to the Property.
(2) The zoning and other legal status of the Property, including, without
limitation, the compliance of the Property or its operation with any applicable codes, laws,
regulations, statutes, ordinances and private or public covenants, conditions and restrictions, and
all governmental and other legal requirements such as taxes, assessments, use permit
requirements and building and fire codes.
(3) The quality, nature, adequacy, and physical, geological and environmental
condition of the Property (including soils and any groundwater), and the presence or absence of
any Hazardous Materials in, on, under or about the Property or any other real property in the
vicinity of the Property. As used in this Agreement, "Hazardous Material" shall mean any
material that, because of its quantity, concentration or physical or chemical characteristics, is
now or hereafter deemed by any federal, state or local governmental authority to pose a present
or potential hazard to human health or safety or to the environment.
(4) The suitability of the Property for Buyer's intended use of the Property.
(5) The economics and development potential, if any, of the Property.
(6) All other matters of material significance affecting the Property.
B. Hazardous Materials Disclosure. California law requires sellers to disclose
to buyers the presence or potential presence of certain Hazardous Materials. Accordingly, Buyer
is hereby advised that occupation of the Property may lead to exposure to Hazardous Materials
such as, but not limited to, gasoline, diesel and other vehicle fluids, vehicle exhaust, office
maintenance fluids, tobacco smoke, methane and building materials containing chemicals, such
as formaldehyde. By execution of this Agreement, Buyer acknowledges that the notices and
warnings set forth above satisfy the requirements of California Health and Safety Code
Section 25359.7 and related statutes.
C. As-Is Purchase. Buyer specifically acknowledges and agrees that Seller is
selling and Buyer is purchasing Seller's interest in the Property on an "as-is with all faults" basis.
Buyer is relying solely on its independent investigation and not on any representations or
warranties of any kind whatsoever, express or implied, from Seller or its agents as to any matters
concerning the Property, its suitability for Buyer's intended uses or any of the Property
Conditions. Seller does not guarantee the legal, physical, geological, environmental or other
conditions of the Property, nor does it assume any responsibility for the compliance of the
81097.00000�29090060.1 5
CONTRACT NO. SA35570A
Property or its use with any statute, ordinance or regulation. It is Buyer's sole responsibility to
determine all building, planning, zoning and other regulations relating to the Property and the
uses to which it may be put.
D. Affordable Housin��ration Requirements. Buyer specifically
acknowledges and agrees that the Property is subject to the affordable housing integration
requirements as described in the Request for Qualifications/Proposals for Successor Agency to
the Palm Desert Redevelopment Agency Property Disposition dated May 1, 2015, as amended
by Addendum No. 1 dated May 26, 2015 and Addendum No. 2 dated June 15, 2015
(collectively, the "RFQ"), a copy of which is attached hereto as Exhibit C.
E. Release/Indemnitv. Buyer shall defend, indemnify, and hold harmless
Seller, the City and their respective officials, officers, employees, consultants, contractors and
agents (collectively, "Indemnitees") from and against any and all actual and alleged claims,
losses, damages, fines, costs, penalties, expenses (including reasonable attorneys' fees, costs of
experts and other litigation expenses), and liabilities of any type or nature, including those
related or due to death or injury to any person and injury to any property, proximately resulting
from any negligent acts or omissions by Buyer related to the activities described or contemplated
by this Agreement. No officials, officers, employees, consultants, contractors or agents of Seller
or City shall be personally liable to Buyer, any voluntary or involuntary successors or assignees,
or any lender or other party holding an interest in the Property, in the event of any default or
breach by Seller or City, or for any amount which may become due to Buyer or to its successors
or assignees, or on any obligations arising under this Agreement. No officials, officers,
employees, consultants, contractors or agents of Buyer shall be personally liable to City or Seller
in the event of any default or breach by Buyer, or for any amount which may become due to
Seller or City, or on any obligations arising under this Agreement.
The provisions of this Section 7.E. shall survive the Closing hereunder or the termination
of this Agreement and shall not be merged into the Deed.
F. LIQUIDATED DAMAGES: BUYER AND SELLER AGREE THAT IF,
AFTER THE FEASIBILITY DEADLINE, BUYER DEFAULTS ON ITS OBLIGATION TO
PURCHASE THE PROPERTY PURSUANT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, THE DAMAGES TO SELLER WOULD BE DIFFICULT AND
IMPRACTICAL TO DETERMINE. ACCORDINGLY, BUYER AND SELLER HAVE
AGREED TO FIX AS LIQUIDATED DAMAGES THE DEPOSIT OF $125,000 SPECIFIED
IN SECTION 2, AND SUCH AMOUNT SHALL BE PAYABLE TO SELLER AS
LIQUIDATED DAMAGES, AND SHALL CONSTITUTE SELLER'S SOLE AND
EXCLUSIVE REMEDY FOR SUCH DEFAULT. BUYER AND SELLER AGREE THAT
THIS LIQUIDATED DAMAGES PROVISION IS REASONABLE UNDER THE
CIlZCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE, GNEN THE DIFFICULTY
AND IMPRACTICALITY OF DETERMINING SELLER'S DAMAGES, THE COSTS OF
NEGOTIATING AND DRAFTING THIS AGREEMENT, PERFORMING SELLER'S
OBLIGATIONS HEREUNDER, KEEPING THE PROPERTY OUT OF THE
MARKETPLACE, COSTS OF SEEKING ANOTHER BUYER AND OTHER COSTS
INCURRED IN CONNECTION HEREWITH. PAYMENT OF SUCH AMOUNT TO SELLER
81097.00000\29090060.1 O
CONTRACT NO. SA35570A
AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY
UNDER CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT INSTEAD, IS
INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO
SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE. SELLER HEREBY
WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. SELLER
AGREES THAT THESE LIQUIDATED DAMAGES SHALL BE IN LIEU OF ANY OTHER
MONETARY RELIEF OR OTHER REMEDY, INCLUDING WITHOUT LIMIT'ATION
SPECIFIC PERFORMANCE, TO WHICH SELLER OTHERWISE MIGHT BE ENTITLED
UNDER THIS AGREEMENT, AT LAW OR IN EQUITY. BUYER AND SELLER
SPECIFICALLY ACKNOWLEDGE THEIR AGREEMENT TO THE FOREGOING
LIQUIDATED DAMAGES PROVISION BY INITIALING THIS SECTION IN THE
APPROPRIATE SPACES PROVIDED BELOW:
Buyer's Initials Seller's Initials
8. POSSESSION; MAINTENANCE OF PROPERTY: Seller shall deliver to
Buyer possession of the Property immediately on Closing, free of all uses, tenancies and
occupancies unless approved by Buyer. Until possession is delivered to Buyer, subject to
Buyer's authorization to enter the Property as set forth in Section 10, Seller agrees, at its sole
cost and expense, to maintain and keep the Property and all the improvements thereon in not less
than the same order and condition as they are on the date this Agreement is executed by Seller.
Pending the Closing, Seller shall continue to manage and operate the Property and maintain
insurance covering the Property in substantially the same manner as Seller has managed and
operated the Property for the last twelve (12) months, and shall not commit waste or otherwise
materially and adversely affect the Property.
9. EXECUTIVE DIRECTOR AUTHORITY: The Executive Director of the
Agency ("Executive Director") shall have the authority to take all actions and execute all
documents required or necessary for the Agency to perform its obligations under this Agreement,
to extend each of the Closing Date or Feasibility Deadline for up to 90 days (or for an additional
period beyond said 90 days with the approval of the Board of Directors of Seller), and to
otherwise complete the Closing and conveyance of the Property to Buyer pursuant to this
Agreement. Further, Executive Director may execute any entitlement applications in connection
with the Buyer's future use of the Property, where the signature of the Agency is required as the
owner of the Property.
10. DUE DILIGENCE/AUTHORIZATION TO ENTER/SELLER DOCUMENTS:
Buyer shall have until the date that is ninety (90) days following the Effective Date (the
"Feasibility Deadline") to determine the feasibility of the Property for Buyer's intended use in
Buyer's sole discretion by its delivery of its written notice of feasibility approval (the "Buyer
Feasibility Approval") to Seller and Escrow Holder on or before 5:00 p.m. Pacific Time on or
before the Feasibility Deadline. Buyer's failure to deliver to Seller and Escrow Holder the Buyer
Feasibility Approval on or before the Feasibility Deadline shall automatically be deemed to
constitute Buyer's termination of this Agreement.
Upon the Effective Date of this Agreement, Buyer may enter upon the Property until the
earlier of the Closing or termination of this Agreement to conduct any investigation, test, study
81097.00000\29090060.1 %
CONTRACT NO. SA35570A
or analysis related to the development thereof, including, but not limited to, soils studies, Phase I
andlor Phase II toxic studies, engineering studies, tree surveys, archeological studies, biological
studies, utilities and constraints study, hydrology studies and any other matters necessary to
evaluate the development of the Property. Buyer shall pay all costs with respect to such studies
and tests and shall be solely responsible for the disposal of any soil samples (including any
Hazardous Materials or other wastes in these samples), which obligation shall survive the
termination of this Agreement. Buyer shall exercise due care, follow best commercial practices
in connection with such entry and testing, and shall comply with all laws, ordinances, rules,
regulations, orders and the like in connection with any entry onto or testing of the Property.
Prior to any entry onto the Property, Buyer shall obtain and maintain, and shall require that its
agents, consultants, contractors and representatives (collectively, the "Agents") to obtain and
maintain in full force during the term of this Agreement, at Buyer's sole cost and expense, a
policy of comprehensive liability insurance, including property damage, which will insure
Agency, City and their respective officers, members, employees and agents against liability for
injury to persons, damage to property, and death of any person arising in connection with Buyer
or its Agents entry upon the Property and/or conducting of tests or studies thereon. The policy
shall be approved as to form and insurance (including approval of the insurance company) by the
Agency, and shall be in an amount not less than One Million Dollars ($1,000,000). Buyer shall
provide Agency with a certificate for any insurance policy required hereunder, including an
endorsement that states that the policy will not be cancelled except after thirty (30) days' notice
in writing to Agency and names the additional insureds as required herein. Buyer shall provide
Agency with evidence of such insurance coverage prior to any entry onto the Property by Buyer
or its Agents. Following any such tests or studies, Buyer shall leave the Property in substantially
similar condition as of the Effective Date of this Agreement, and Buyer shall indemnify, defend
and hold harmless Seller, City, and their respective officers, members, employees and agents
from and against any liabilities, claims, damages (including injury or damage to person or
property), losses, costs, expenses and fees (including reasonable attorneys' and experts' fees and
costs) to the extent resulting from the entry, inspections and studies conducted by Buyer and its
Agents on, under, or about the Property, except that Buyer shall have no liability under this
Section 10 for, and no obligation to remedy, any liabilities, claims, damages, costs, expenses,
fees, conditions or defects on or under the Property to the extent (i) not caused by Buyer or its
Agents, (ii) resulting from any conditions or defects discovered during Buyer's investigations
and inspections, including the discovery of any Hazardous Materials and the results or iindings
of any tests, or (iii) to the extent resulting from the acts or omissions of Seller, or Seller's agents,
engineers, contractors, consultants and representatives. Without limiting the foregoing, Buyer
shall have no liability for any diminution in the value of the Property resulting from the activities
excluded in (ii) above, provided in the event Buyer or its Agents discover any toxic or Hazardous
Materials on or under the Property, Buyer and its Agents shall cease any further investigation in
that area of the Property, notify Seller by phone and email within twenty four (24) hours of that
discovery, exercise reasonable due care so as not to exacerbate that condition and properly
dispose of any soils samples which contain such toxic or Hazardous Materials. Nothing in this
Section is intended to limit or modify the indemnity contained in Section 7.E. The foregoing
indemnity shall survive beyond the Closing, or, if the sale is not consummated, beyond the
termination of this Agreement.
To the extent Seller has not previously done so, Seller shall make available to Buyer for
Buyer's review and inspection, during the term of this Agreement at the office of Seller and upon
81097.00000�29090060.1 $
CONTRACT NO. SA35570A
at least twenty-four (24) hours' prior notice, and in each case to the extent the materials are in the
Seller's possession or control, copies of all soil and hydrology reports, environmental or toxic
material reports, biological reports, archeological reports, engineering reports, traffic studies,
environmental impact studies, or any public records which concern the Property (collectively the
"Documents"). Buyer shall have the right, at Buyer's cost, to make copies of the Documents for
Buyer's review and approval but if this Agreement is terminated, Buyer shall, upon the written
request of Seller, return all such Documents and copies to Seller. Seller makes no representation
or warranties whatsoever regarding the existence, availability, completeness or accuracy of the
Documents. Buyer shall promptly deliver to Seller copies of any reports relating to any testing
or other inspection of the Property performed by Buyer or its agents, employees or contractors
(the "Buyer Work ProducY'), but shall not deliver copies of any such reports to any other
person or entity without Seller's prior written approval. Seller acknowledges and agrees that any
and all of the Buyer Work Product is provided by Buyer for informational purposes only and do
not constitute representations or warranties of Buyer of any kind, including any representations
and warranties concerning the accuracy or completeness of any information in the Buyer Work
Product.
11. CONDITIONS TO BUYER'S PERFORMANCE: Buyer's obligations to
purchase the Property under this Agreement are subject to Buyer's written approval of the
following conditions precedent ("Buyer's Closing Conditions"), but Buyer shall have the right
to waive any such condition(s) in writing within the time period specified in such condition, or if
not specified, prior to the Closing. If Buyer waives any of Buyer's Closing Conditions, then
Seller shall be relieved of any further obligation or liability, including any representation or
warranty, in connection with such condition. In the event Buyer determines that any such
condition is objectionable, unacceptable, or cannot be satisfied within the period specified below,
or if no time period is specified then prior to Closing, Buyer may, in its sole and absolute
discretion, fail to approve said condition. In such event, then (without limiting Buyer's remedies
in the event of a breach of this Agreement by Seller which are provided in Section 21 below) the
Deposit and all interest earned thereon while in Escrow, shall be returned immediately to Buyer
by Escrow Holder, and neither party shall have any further rights or obligations hereunder. If the
Closing occurs and Buyer has failed to disapprove of any of the following Buyer's Closing
Conditions, then such condition(s) shall be deemed waived.
A. Feasibilit.�X. Buyer's approval of the feasibility of the Property for
Buyer's intended use in accordance with Section 10 prior to the Feasibility Deadline.
B. Truth and Accuracy of Seller's Representations and Warranties. Seller's
representations and warranties as set forth in this Agreement shall be true and correct on the
Effective Date of this Agreement and on the Closing Date.
C. Title. Escrow Holder is irrevocably and unconditionally committed to
issue to Buyer the Title Policy with no exceptions to coverage other than the Permitted
Exceptions, and no person or entity has any right to use or occupy the Property, except as shown
in any Permitted Exceptions in the Title Policy.
D. State A�roval. Seller shall have obtained State Approval of this
Agreement.
81097.00000\290900601 9
CONTRACT NO. SA35570A
E. Seller's Other Obligations. Seller shall have performed all of its other
covenants and obligations as set forth in this Agreement.
12. CONDITIONS TO SELLER'S PERFORMANCE: The following are
conditions precedent to Seller's obligation to sell the Property to Buyer "Seller's Closing
Conditions"):
A. Seller shall have obtained State Approval of this Agreement.
B. Buyer shall have received final approval (beyond any challenge or appeal
period with no challenge or appeal then pending) of all necessary land-use approvals,
authorizations and entitlements, to develop the Property consistent with the RFQ and Buyer's
proposal dated July 10, 2015, a copy of which is attached hereto as Exhibit D.
C. Buyer shall have performed all of its obligations hereunder and all of
Buyer's representations and warranties shall be true and correct.
Each of Seller's conditions precedent are intended solely for the benefit of Seller and is deemed
to be material to and of the essence of this Agreement. If any of Seller's conditions precedent
are not satisfied as provided above, Seller may, at its option, terminate this Agreement. In such
event, then (without limiting Seller's remedies) the Deposit and all interest earned thereon while
in Escrow, shall be delivered to Seller by Escrow Holder except in the event that Seller
terminates this agreement pursuant to Section 12.A, in which case such amounts shall be
returned immediately to Buyer by Escrow Holder, and neither party shall have any further rights
or obligations hereunder. If the Closing occurs and Seller has failed to disapprove of any of
Seller's Closing Conditions, then such condition(s) shall be deemed waived.
13. SELLER'S REPRESENTATIONS AND WARRANTIES: Seller hereby
makes the representations and warranties set forth in this Agreement far the benefit of Buyer and
its successors and assigns for a period of six (6) months from and after the Closing Date, after
which Seller's representations and warranties will be of no further force or effect. Seller shall
notify Buyer in writing within ten (10) business days after Seller's Executive Director receives
actual knowledge that any representation or warranty has become untrue or misleading in light of
information obtained by Seller after the Effective Date of this Agreement, and if such ten (10)
business day period would expire after the Closing, then the Closing shall be extended until the
expiration of the ten (10) business day period. As used herein, "Seller's knowledge" shall mean
the present actual, not constructive, knowledge of Seller's current Executive Director, without
any investigation or inquiry or duty to do so. All representations and warranties contained in the
Agreement shall be deemed remade at Closing except as otherwise disclosed to Buyer in writing,
shall survive the Closing for the prescribed six month period and shall not merge with the Deed.
A. To Seller's knowledge, there is no litigation, arbitration or proceeding
pending, or threatened, before any court or administrative agency ar any other condition that
relates to or affects the Property, Seller's perfarmance hereunder, Buyer's intended use of the
Property, ar which will result in a lien, charge, encumbrance or judgment against any part of or
any interest in the Property, except (i) as disclosed in the Title Report, or (ii) as otherwise
disclosed to Buyer in writing.
81097.00000�29090060.1 1 �
CONTRACT NO. SA35570A
B. To Seller's knowledge, the Property is not in violation of any federal, state
or local law, statute, regulation, code or ordinance.
C. Seller is not a foreign person, foreign corporation, foreign partnership,
foreign trust or foreign estate, as those terms are deiined in the Internal Revenue Code Section
1145 and any related regulations and Seller is exempt from the withholding obligations imposed
by California Revenue and Taxation Code Sections 18805, 18815, and 26131.
D. To Seller's knowledge, no person or entity has the right to use, occupy,
possess or reside on the Property except as disclosed in the Title Report and Seller has not, to
Seller's knowledge, nor has City, to Seller's knowledge, granted any person or entity any such
rights .
14. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Buyer represents and warrants that it is a limited liability company duly
organized under the laws of Delaware, in good standing and authorized to conduct business in
State of California, has the capacity and full power and authority to enter into and carry out the
agreements contained in and the transactions contemplated by this Agreement, and that this
Agreement has been duly authorized and executed by Buyer, and upon delivery to and execution
by Seller, shall be a valid and binding agreement of Buyer.
B. There is no action, suit, arbitration, unsatisfied order or judgment,
government investigation or proceeding pending or, to the actual knowledge of Buyer threatened,
against Buyer which, if adversely determined, could individually or in the aggregate materially
interfere with the consummation by Buyer of the transaction contemplated by this Agreement.
The term "actual knowledge" means the present actual, not constructive, knowledge of Robert
Martin without any further investigation or inquiry or duty to do so.
C. In compliance with Executive Order 13224 and the USA Patriot Act of
2001, Buyer and Seller each affirmatively represents and warrants to the other that (a) neither it,
nor any of its officers, directors, or principals, has committed or supported terrorist acts; or (b)
neither it, nor any of its officers, directors, or principals is identified on the list of Specially
Designated Nations and Blocked Persons generated by the Office of Foreign Assets Control.
15. COMMISSIONS: Seller will pay to Edward J. Schiller of Innovative Land
Concepts, Inc. ("Schiller") a finder's fee equal to one percent (1°Io) of the Purchase Price, subject
to (i) approval by the Oversight Board and the California Department of Finance and (ii) the
Close of Escrow for the Property by Buyer. Buyer through a separate agreement has agreed to
pay Schiller, at its own expense, an additional finder's fee. Buyer and/or business entities
affiliated with Buyer, and certain of their employees is/are a BRE licensee(s) but Buyer is acting
solely as a principal in this transaction. Buyer was represented primarily by Robert Martin
(Broker License No.00963777) who is an employee of Lewis Management Corp., an affiliate of
Seller, and such licensee is not receiving any commission or fee as a licensee in this transaction
and is representing Buyer only. Other than disclosed above, each party represents to the other
that it has not dealt with any broker, agent, or fnder for which a commission or fee is payable
with respect to the Property or this Agreement, and each party shall indemnify, defend and hold
81097.00000�29090060.1 1 1
CONTRACT NO. SA35570A
harmless the other from any claims, demands, liabilities, or judgments for commissions or fees
arising from such party's breach of this Section. The foregoing indemnification, defense and
hold harmless obligations of the parties shall survive Closing and any termination of this
Agreement.
16. FOREIGN INVESTOR DISCLOSURE: Seller understands that if Seller is
unable to certify that it is U.S. citizen or a resident of the State of California at the time of the
Closing, Buyer shall be entitled to withhold from the purchase price such amounts as are
necessary to satisfy Buyer's withholding obligations under the Foreign Investment in Real
Property Tax Act and under California Revenue and T�ation Code Sections 18805, 18815 and
26131.
17. FUTURE LEASES, COMMITMENTS AND ENCUMBRANCES: From and
after the Effective Date of this Agreement, except to the extent required by law or otherwise,
Seller shall not (a) execute, modify and/or approve any leases, contracts or commitments
affecting the Property that would extend beyond the Closing Date without Buyer's written
approval; which approval may be given or withheld in Buyer's sole discretion; or (b) voluntarily
encumber the Property with any liens, encumbrances or other instruments creating a cloud on
title or securing a monetary obligation with the Property.
18. CONDEMNATION/CASUALTY: If after the Effective Date of this Agreement
and prior to the Closing all or any part of the Property is taken or threatened to be taken by
eminent domain or condemnation or is destroyed by fire, earthquake or other casualty, Buyer
may elect either (a) to terminate this Agreement as to the entire Property, in which event all the
Deposit and interest earned thereon while in Escrow, shall be returned to Buyer, and this
Agreement shall be null and void and of no further force or effect, or (b) to consummate
purchase of the Property as herein provided, in which event Seller shall pay or assign to Buyer
all condemnation awards or payments in respect of the Property and/or all insurance proceeds
paid or payable to Seller as a consequence of such casualty. If this Agreement is terminated in
full pursuant to this Section 18, neither party shall have any further rights, duties, obligations or
liabilities, at law or in equity, arising out of or relating to this Agreement except for those that
specifically survive termination of this Agreement pursuant to other provisions hereof.
19. NO RECORDING: Neither this Agreement nor any memorandum or short form
thereof may be recorded by Buyer.
20. AMENDMENTS: This Agreement expresses the agreement of the parties. There
are no other understandings, oral or written, which in any manner alter or enlarge its terms. This
Agreement supersedes any and all prior agreements between the parties hereto regarding the
Property. Seller and Buyer agree to execute such additional documents as may be reasonable
and necessary to carry out the provisions of this Agreement. This Agreement may be amended,
but only in writing and only if such writing is executed by both parties.
21. BUYER'S REMEDIES; NO MONEY DAMAGES: If Seller defaults on its
obligation to deliver title to the Property to Buyer in the manner required hereby or otherwise
breaches this Agreement, Buyer shall have the right to seek specific performance of this
Agreement or Buyer may terminate this Agreement, in which case Buyer shall be entitled to an
81097.00000\29090060.1 12
CONTRACT NO. SA35570A
immediate return of the Deposit and any interest earned thereon while in the Escrow and Buyer
shall have no further right to seek damages. The failure of Buyer to receive approval of any
applicable development permits, maps, or other entitlements for the Property shall not constitute
a default or breach of Seller's obligations contained in this Agreement. Buyer acknowledges that
Seller would not have entered into this Agreement if doing so would subject it to the risk of
incurring liability in money damages, either for breach of this Agreement, anticipatory breach,
repudiation of the Agreement, or for any actions with respect to its negotiation, preparation,
implementation ar application. The parties further acknowledge that money damages and
remedies at law generally are inadequate, and specific performance is the most appropriate
remedy for the enforcement of this Agreement and should be available to Buyer. Therefore, the
parties hereby acknowledge and agree that it is a material part of Buyer's consideration to Seller
that Seller shall not be at any risk whatsoever of liability for money damages relating to or
arising from this Agreement, and except for the express indemnity obligations hereunder and
non-damages remedies, including the remedy of specific performance, Buyer, for itself, its
successors and assignees, hereby release Agency, the City and their respective officers,
members, employees and agents from any and all claims, demands, actions, or suits of any kind
or nature arising out of any liability, known or unknown, present or future, including, but not
limited to, any claim or liability, based or asserted, pursuant to Article I, Section 19 of the
California Constitution, the Fifth and Fourteenth Amendments of the United States Constitution,
or any other law or ordinance which seeks to impose any money damages, whatsoever, upon the
parties because the parties entered into this Agreement, because of the terms of this Agreement,
or because of the manner of implementation or performance of this Agreement.
22. ATTORNEYS' FEES: If this Agreement ar the transaction contemplated herein
gives rise to a lawsuit or other legal proceeding between the parties hereto, the prevailing party
shall be entitled to recover its costs and reasonable attorneys' fees and costs of litigation in
addition to any other judgment of the court.
23. ASSIGNMENT: Without Seller's consent, Buyer's rights and obligations
hereunder may be assigned to a partnership, corporation, limited liability company or other entity
that is controlled directly or indirectly by any one or more of Richard Lewis, Robert Lewis,
Roger Lewis, Randall Lewis or John Goodman (the "Lewis Principals"), including without
limitation, any entity in which the Lewis Principals (or any one or more of them) own at least
51% or more of the voting or financial interest of such entity and in which Buyer or the Lewis
Principals (or any one or more of them) is the manager thereo�, provided that Buyer notifies
Seller in writing within ten (10) business days of such assignment, and provided that said
assignee assumes all of the obligations of Buyer under this Agreement and agrees to perform all
the obligations of Buyer hereunder as if such assignee were the original Buyer hereunder. Any
such assignee shall have all the benefits, including rights to specific performance, damages, and
enforcement of Seller's representations and warranties that Buyer has under this Agreement. No
such assignment, however, shall relieve Buyer of any of its obligations hereunder. "Financial
Interest" means any interest in the profits and/or losses of, and/or equity in, such entity.
24. NOTICES: All notices or tender required or permitted herein shall be in writing
and shall be sent to the address set forth below (or such other address as a party may hereafter
designate for itself by written notice to the other parties as required hereby) of the party for
whom such notice or communication is intended:
81097.00000\29090060.1 13
CONTRACT NO. SA35570A
If to Seller:
Successor Agency to the Palm Desert Redevelopment Agency
Attention: Executive Directar
City of Palm Desert
739510 Fred Waring Drive
Palm Desert, CA 92260
Fax: 760-341-6372
With copy to:
Best Best & Krieger LLP
Attn: Robert Hargreaves
74-760 Highway 111, Suite 200
Indian Wells, CA 92210
FAX: 760-340-6698
If to Buyer:
Attn: John M. Goodman
Lewis Land Developers, LLC
c/o Lewis Management Corp.
1156 North Mountain Avenue
Upland, CA 91786
P. O. Box 670
91785-0670
Telephone: (909) 985-0971
Fax: (909) 949-6700
With copy to:
Attn: General Counsel
Lewis Management Corp.
1156 North Mountain Avenue
Upland, CA 91786
P. O. Box 670
91785-0670
Telephone: (909) 985-0971
Fax: (909) 949-6725
Any such notice or communication shall be sufficient if sent by registered or certified mail,
return receipt requested, postage prepaid; by hand delivery; by overnight courier service; or by
f� is receipt is confirmed by the recipient. Any such notice or communication shall be effective
81097.00000\29090060.1 14
CONTRACT NO. SA35570A
on the business day delivered to the office of the addressee or upon refusal of such delivery, or
three business days after deposit by first class mail. Notice transmitted after 5:00 p.m. or on
Saturday or Sunday shall be deemed to have been given on the next business day. Should any
act or notice required hereunder fall due on a weekend or holiday, the time for performance shall
be extended to the next business day.
25. MISCELLANEOUS:
A. Section headings contained herein are included solely for convenience of
reference and shall in no way affect the construction of this Agreement.
B. Time is of the essence of this Agreement.
C. This Agreement shall be governed by the laws of the State of California.
D. Each party shall execute, acknowledge, and deliver, after the Effective
Date of this Agreement, including at or after closing, such further assurances, instruments and
documents as the other may reasonably request in order to fuliill the intent of this Agreement and
the transactions contemplated hereby.
E. If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full
force and effect and shall in no way be impaired or invalidated, and the parties agree to substitute
for the invalid or unenforceable provision a valid and enforceable provision that most closely
approximates the intent and economic effect of the invalid or unenforceable provision.
F. This Agreement may be executed in counterparts, and transmitted by
facsimile by and to each of the parties, and each such counterpart shall be deemed an original,
and all of them together shall constitute a single instrument.
G. If a party hereto believes the other party is in breach or default under this
Agreement, the non-breaching party shall deliver written notice of the alleged breach or default
to the other party, and the other party shall have ten (10) business days after receipt of such
written notice in which to cure the breach or default, and if the breach or default is actually cured
within such ten (10) business day period, the breaching party shall not be in breach or default
under this Agreement by reason of the matter(s) alleged in the non-breaching party's notice that
have been so cured.
H. Except as expressly set forth herein, this Agreement is not intended nor
shall it be construed to create any third party beneficiary rights in any person who is not
expressly made a party and signatory hereto.
I. If Buyer executes this Agreement before Seller, such execution and
delivery of the Agreement shall be deemed an offer to buy the above described Property for the
price and upon the terms and conditions herein stated.
INTENTIONALLY LEFT BLANK;
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81097.00000�29090060.1 15
CONTRACT NO. SA35570A
SELLER
Successor Agency
to the Palm Desert Redevelopment Agency
BUYER
Lewis Land Developers, LLC, a Delaware limited
liability company
By: _
Name:
Title:
Date:
Approved as to Form:
By:
Name:
Title: Special Legal Counsel
Date:
Attest:
By:
Name:
Title: City Clerk
Date:
By: Lewis Management Corp.,
a Delaware corporation, Its Manager
By:
Name:
Title:
Date:
List of Exhibits
A Description of Property
A-1 Map of Property
B Title Report
C. Request for Qualiiications/Proposals for Seller
D. Buyer's Response to Request for Qualifications/Proposals
81097.00000�29090060.1 1O
CONTRACT NO. SA35570A
The undersigned representative of Escrow Holder hereby accepts the foregoing instructions and
agrees to comply with them in connection with the purchase and sale of the Property.
Escrow Holder:
Foresite Escrow
Effective Date
By:
Authorized Representative
81097.00000�29090060.1 1 %
CONTRACT NO. SA35570A
Exhibit A
Description of the Property
[to be inserted]
81097.00000�29090060.1 1 $
CONTRACT NO. SA35570A
Exhibit A-1
Map of Property
[to be inserted]
81097.00000�29090060.1 19
CONTRACT NO. SA35570A
Exhibit B
Title Report
[to be inserted]
81097.00000�29090060.1 20
CONTRACT NO. SA35570A
Exhibit C
Request for Qualifications/Proposals for Seller
81097.00000�29090060.1 2 1
CONTRACT NO. SA35570A
Exhibit D
Buyer's Response to Request for Quali�cations/Proposals
81097.00000�29090060.1 22
CONTRACT NO. SA35570A
81097.00000�29090060.1 23
����%� Future 132 Acre Request For Proposals to be Released Summer 2015
�_.
r �� � For info Contact:
� �,� City of Palm Desert - Economic Development Department (760) 346-0611
°° � �
cr�RM�
Q132AcreSite P- Public Institution P.R. - Planned Residential P.C.D_ - Planned Communi4v nP�Pi���„P.,f viciNirr Mnr
128.95-Acres of Vacant Land
South Side of Gerald Ford Drive, West of Portola
Avenue, City of Palm Desert, Riverside County,
CA.
Appraisal Report
Market Value
Fee Simple Estate, As-Is
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Prepared For:
The City of Palm Desert
Attn: Mr. Martin Alvarez
73-510 Fred Waring Drive
Palm Desert, CA92260
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CRA File No. 15-4162
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Effective Date of Appraisal:
Apri I 1, 2016 I
� �
June 29, 2016
The Cityof Palm Desert
Attn: Mr. Martin Alvarez
73-510 Fred Waring Drive
Palm Desert, CA 92260
RE: The Market Value of the Fee Simple Estate in 128.95-Acres of Vacant Land, Located
Along the South Side of Gerald Ford Drive, West of Portola Avenue, City of Palm Desert,
Riverside County, CA; Otherwise Known as APNs: 694-300-001, 2, 5, 14, 15; 694-310-
002, 3, and 6; Riverside County, CA
Dear Mr. Alvarez,
At your request and authorization, I have prepared this appraisal report, setting forth my opinion
of the market value of the fee simple estate in the subject property as of April 1, 2016. Per your
request, the following market value estimates are provided:
� Ma rket Va I ue "As Is"
The intended use of the report is for internal use. The intended user is the Client. No other use
or users are intended. My report identifies the subject property and its market area, and presents
the market data and analysis leading to the final estimate of value. This report is subject to the
requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice
of the Appraisal Institute. The appraisal report is intended to comply with the appraisal guidelines
of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1898 ("FIRREA"),
and the Uniform Standards of Appraisal Practice ("USPAP"), adopted by the Appraisal Standards
Board of the Appraisal Foundation.
I have personally inspected the subject property. I have located and reviewed current sales and
listings of comparable properties in the subject neighborhood and competing areas, and have
analyzed the data in order to arrive at my estimate of market value. Based upon the available
data, I conclude that the market value of the fee simple estate in the subject property as of April
1, 2016 is as follows:
$13,085,000
Thirteen Million Eighty-Five Thousand Dollars
The market value estimate in this appraisal report is based upon the following Extraordinary
Assumptions and Hypothetical Conditions:
Extraordinary Assumptions:
� None
Hypothetical Conditions:
`� None
The use of the above captioned Extraordinary Assumptions and Hypothetical Conditions might
have affected the assignment results. The undersigned have no personal interest either present
or contemplated in the subject property and certify that no fee received or to be received for the
employment of my services is in any way contingent upon the the opinions reported herein. I
hope you find the details of the appraisal report relevant to your decisions. Thank you for the
opportunity to be of service.
Respectfully Submitted
Capital RealtyAnalysts
�
/►,�l l�'
Michael A. Scarcella, MAI
78015 Main Street, Suite 207
La Quinta, CA 92253 „�,
(760) 564-6222
mike@realtyadvisor.com
State Certification No. AG019463
Expiration Date: October 24, 2017
Part I— Introduction, Summary of Important Facts and Conclusions
Table of Contents
Tableof Contents ..................................................................................
Certification...........................................................................................
Summary of Important Facts and Conclusions .....................................
Identification of Client and Intended Users ......................................
Statement of Intended Use .....................................................
Identification of the Subject Real Estate .................................
Property Rights Appraised ......................................................
Definition of Market Value .....................................................
Effective Date of Value Opinion ..............................................
Extraordi na ry Ass umptions .....................................................
Hypothetical Conditions ..........................................................
General Assumptions and Limiting Conditions .......................
Scopeof Work .........................................................................
Personal Property or Other Items that are Not Real Property
History, Including Prior Sales and Current Offers or Listings..
Market Area, City, Neighborhood, and Location Data ...............
Regional Analysis .....................................................................
CityData ..................................................................................
Land Description
........................
........................
........................
........................
........................
........................
.............................
.............................
.............................
.............................
.............................
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.............................
.............................
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................................................................................
ImprovementDescription ......................................................................
Taxes and Assessment Data ....................................................
MarketAnalysis ...........................................................................
Highestand Best Use ..................................................................
Sales Comparison Approach .......................................................
Estimate of Exposure Time .....................................................
Addendum
..............................
..............................
.................. 4
.................. 5
.................. 6
................ 11
................ 11
................ 11
................ 11
................ 11
................ 12
................ 12
................ 12
................ 12
................ 14
................ 15
................ 15
................ 15
................ 15
................ 19
................ 23
................ 32
................ 32
................ 33
................ 36
................................................. 39
................................................. 47
�OCapital Realty Analysts, 2016 Page 4
Part I— Introduction, Summaryof Important Facts and Conclusions
Certification
I certify to the best of my knowledge and belief:
� The statements of fact contained in this report are true and correct.
� The reported analyses, opinions and conclusions are limited only by the reported assumptions and
limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and
conclusions.
�- I have no present or prospective interest in the property that is the subject of this report and no
personal interest with respect to the parties involved.
"%�- I have performed no services as an appraiser or in any other capacity regarding the property that is
the subject of this report within the three-year period immediately preceding acceptance of this
assignment.
`� I have no bias with respect to the property that is the subject of this report or to the parties involved
with this assignment.
�- My engagement in this assignment was not contingent upon developing or reporting predetermined
results.
� My compensation for completing this assignment is not contingent upon the development or reporting
of a predetermined value or direction in value that favors the cause of the client, the amount of the
value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly
related to the intended use of this appraisal.
�
�
My analyses, opinions, and conclusions were developed, and this report has been prepared in
conformity with the Uniform Standards of Professional Appraisal Practice.
I have made a personal inspection of the property that is the subject of this report.
No one provided significant real property appraisal assistance to the person signing the certification.
The reported analyses, opinions, and conclusions were developed, and this report has been prepared,
in conformity with the requirements of the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute.
The use ofthis report is subject to the requirements ofthe Appraisal Institute relating to review by it's
duly authorized representatives.
� As ofthis report, I Michael A. Scarcella, MAI have completed the continuing education program ofthe
appraisal institute.
� I have not previously appraised the property that is the subject of this report.
Michael A. Scarcella, MAI
�, ��
78015 Main Street, Suite 207
La Quinta, CA 92253
(760) 564-6222
mi ke@rea Ityadvisor.com
State Certification No. AG019463
Expiration Date: October 24, 2017
�OCapital Realty Analysts, 2016 Page 5
Part I— Introduction, Summaryof Important Facts and Conclusions
Summary of Important Facts and Conclusions
Client: The City of Palm Desert
Attn: Mr. Martin Alvarez
73-510 Fred Waring Drive
Palm Desert, CA92260
Intended The Cityof Palm Desert
Users: Attn: Mr. Martin Alvarez
73-510 Fred Waring Drive
Palm Desert, CA92260
Intended Use: The intended use of the report is for internal use
Property Type: Vacant Land
Location: South side of Gerald Ford Drive, west of Portola Avenue, Palm Desert, CA.
Identification: APN: 694-300-001, 2, 5, 14, 15; 694-310-002, 3, and 6: Riverside County, CA
Zoning: According to the Zoning Map of the City of Palm Desert, the subject parcels
are zoned P.R.-S, P.R.-20, and P.R.-22; Planned Residential. A zoning map is
included in the Site Data section of this report.
General Plan: According to the General Plan Map of the City of Palm Desert, the subject
parcels have a general plan designation of C-R/H, Resort Hotel, and R-L, Low
Density Residential. A general plan map is included in the Site Data section of
this report.
Site Description: According to the Riverside County Assessor's data, the site size of the subject
property is 128.95-acres. A breakdown of the site by parcel is included in the
Site Data section of this analysis.
Improvement
Description:
Highest and
Best Use As
Vacant:
None
Hold for investment until such time as speculative development becomes
financially feasible.
�OCapital Realty Analysts, 2016 Page 6
Part I— Introduction, Summaryof Important Facts and Conclusions
Highest and N/A, the subject parcels are vacant
Best Use As
Improved:
Property Rights Fee Simple Estate
Appraised:
Final Value $13,085,000
Estimate:
Introduction
The subject property consists of 8 legal parcels of vacant land, totaling 128.95-acres. The parcels
are owned by the Redevelopment Agency of the City of Palm Desert. An approximately 10-acre
portion of the site is designated for 200 low income housing units. All of the parcels were
acquired over 3-years prior to the date of value. As a consequence of the dissolution of
Redevelopment Agency's in California, the City put out an RFQ/P in May of 2015, requesting
proposals to acquire the subject property. The successful respondent was Lewis Homes; who is
currently in the process of negotiating a development agreement with the city to acquire and
develop the property. Lewis Homes is planning to deed the 10-acre low income housing site to
Palm Communities, and develop the remainder with master infrastructure to support detached
single-family home development, and/or planning area sales to other builders.
An interesting feature of the subject property is the requirement that 200 affordable apartment
style housing units be developed on an approximately 10-acre portion of the subject property.
The city has identified a portion of the site along the westerly line for the affordable housing site.
In addition, the city has indicated that zone changes and general plan amendments will be
provided to accommodate the approved plan for this site. The city has imposed the following
condition on the property:
� Developer will be required to set aside 10-acres of the 128.95-acres for affordable
housing. This requirement includes having to provide a development ready 10-acre
affordable housing project pad with utilities to the site.
Currently, the city is exploring the possibility of selling the parcels, which generated the
requirement for this analysis. All photos were taken by the appraiser, unless otherwise noted.
The report format generally follows the report format suggested by The Appraisal of Real Estate,
14rh Edition (figure 31.2, p. 658).
�OCapital Realty Analysts, 2016 Page 7
Part I— Introduction, Summary of Important Facts and Conclusions
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Subject property viewing northwest from Portola Av�_r�u._
�OCapital Realty Analysts, 2016 Page 8
Subject Property viewing SE from near the NWC of the site
Part I— Introduction, Summaryof Important Facts and Conclusions
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�OCapital Realty Analysts, 2016 Page 9
Street scene viewing W along Gerald Ford Drive, subject at left
Street scene viewing E along Gerald Ford Drive, subject at right
Part I— Introduction, Summary of Important Facts and Conclusions
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�OCapital Realty Analysts, 2016 Page 10
Street scene viewing N along Portola Avenue, subject at left
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