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HomeMy WebLinkAboutA8608 - RESORTS PALM SPRINGS LLC dba SANTIAGO RESORT2021-0465604 08/04/2021 11:47 AM Fee: $ 0.00 Page 1 of 24 FREE RECORDING REQUESTED BY Recorded in official Records AND WHEN RECORDED MAIL TO: County of Riverside Peter Aldana Assessor -County Clerk -Recorder THE CITY OF PALM SPRINGS 'lll �'��11111111 K�Y� 3200 E. Tahquitz Canyon Way ,ZL V Palm Springs, CA 92262 Attention: City Clerk t5 (Space Above This Line for Recorder's Office Use Only) OPERATIONS COVENANT THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement" or "Covenant") is made and entered into this _&Pday of ft7UAl , 2074, by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city ("City"), and RESORTS PALM SPRINGS, LLC, a California Limited Partnership ("Owner" or "Participant"). RECITALS: A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in December, 2007 to provide a Hotel Operations Incentive Program ("Program") for the operation and maintenance of Hotel facilities that enhance the tourist and travel experience for visitors to the City, maximize the use of the City's Convention Center, provide attractive and desirable visitor serving facilities and experiences, and assist the City in achieving its tourism goals. B. On May 15, 2013 and February 6, 2019, the City of Palm Springs amended Chapter 5.26 of its Municipal Code to include a Hotel Operations Incentive Program ("Program") for the operation and maintenance of small and boutique Hotel facilities that enhance the tourist and travel experience for visitors to the City, that assist the City in achieving its tourism goals. C. On March 19, 2019, Owner applied for the Program and has provided satisfactory documentation certifying its recent renovation project as a qualified renovation program under the Program. Resorts Palm Springs, LLC DBA Santiago Resort ("Owner's Hotel" or "Project"), generally located at 650 East San Lorenzo Road, Palm Springs, California, consists of twenty-four (24) total hotel rooms on that certain real property located in the City of Palm Springs, County of Riverside, State of California, more particularly described in Exhibit "A" attached hereto and incorporated herein by reference (the "Site"). D. City and Owner now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as a hotel available for short-term rental for the term of this Agreement. E. City and Owner also agree that in return for participation in the Program, Owner shall agree to operate the Project as a hotel; participate in the Palm Springs Convention Center's Committable Rooms Program; and provide City with a minimum of two (2) room -nights per month month for official City use; and, City agrees to share a percentage of Transient Occupancy Tax Increment with Owner pursuant to the Program guidelines. E. The City finds that the approval of this Covenant is Categorically Exempt from CEQA under Section 15301 of the California Administrative Code as the Hotel Operations Incentive Program applicable to Owner's Hotel applies to the operation, repair, maintenance, or minor alteration of existing structures, facilities, mechanical equipment involving no material expansion of use beyond that previously existing. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Participant hereby conveys to the City the Operating Covenants described herein and City hereby agrees to provide Participant with funds as provided under the Program and as set forth hereinafter. ARTICLE 1 STATEMENT OF OPERATING COVENANTS 1.1. OPERATION AND USE COVENANT. Owner covenants to operate, maintain, and use the Owner's Hotel in accordance with this Agreement. All uses conducted on the Site, including, without limitation, all activities undertaken by the Owner pursuant to this Agreement shall conform to requirements of this Agreement and Palm Springs Municipal Code (PSMC). 1.2. HOTEL USE. The Owner hereby agrees that the Project is to be owned, managed, and operated as a comfort hotel (as defined by 5.26.020 of the PSMC) in a first-class manner, and the Project's participation in the Program shall continue in accordance with the terms of the Program, for a term equal to ten 10 years, commencing upon the date Owner first receives from the City the Owner's share of transient occupancy tax revenues pursuant to the Program unless and until Owner's participation in the Program is terminated prior thereto in accordance with this Agreement (the "Term"). 1. Housing Uses Prohibited. None of the rooms in the Project will at any time be utilized as a non -transient residential property including dormitory, fraternity or sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the City's prior consent which consent may be given or withheld in its sole and absolute discretion. 2. Conversion of Project. No part of the Project will at any time be owned by a cooperative housing corporation, nor shall the Owner take any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership, without the prior written approval of the City Council which approval may be given or withheld in its sole and absolute discretion. 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-1I/dme/1ry-5-2-13/cvh -2- FOR HOTEL INCENTIVE PROGRAM ARTICLE 2 WARRANTIES AND COVENANTS 2.1. WARRANTIES AND COVENANTS. For the Term of this Agreement, the Owner hereby represents, covenants, warrants and agrees as follows: 1. Owner has completed the City's application for the Hotel Operations Incentive Program. The City has determined the Transient Occupancy Tax Base to be used to calculate the Transient Occupancy Tax Increment shall be $74,333.28, and the Owner accepts such Transient Occupancy Tax Base. 2. Owner hereby agrees to subscribe to the Palm Springs Convention Center's Committable Rooms Program or any similar successor program as identified by the City Manager without being obligated to incur any additional costs or expenses. 3. Upon City's prior request, Owner shall provide the City at no cost two (2) rooms for one (1) night (or one room for two nights) each month for use for City purposes as approved or designated by the City Manager, provided that such use by the City shall be subject to the rooms being available at the time of the City's request. Such accommodations shall include all services and amenities for which the Owner would normally collect transient occupancy taxes but will not include services and amenities that are optional to the transient and for which the transient is not required to pay a transient occupancy taxes. City shall be responsible for any transient occupancy taxes for any occupancy provided to City under the provisions of this paragraph. Notwithstanding anything in this Agreement to the contrary, if the City does not use rooms during any month, then its right to use rooms with respect to that month shall expire at the end of that month and shall not accrue; provided, however, if the City was unable to use rooms solely because Owner's Hotel had no rooms available when the City requested a room in accordance with this Section 2.1.3, then, the City's right to use rooms shall not expire and may be used by the City in a subsequent month. ARTICLE 3 MAINTENANCE 3.1. MAINTENANCE. 1. Maintenance Obligation. Owner, for itself and its successors and assigns, hereby covenants and agrees to maintain and repair or cause to be maintained and repaired the Site and all related on -site improvements and landscaping thereon, including, without limitation, buildings, parking areas, lighting, signs and walls in a first class condition and repair, free of rubbish, debris and other hazards to persons using the same, and in accordance with all applicable laws, rules, ordinances and regulations of all federal, state, and local bodies and agencies having jurisdiction, at Owner's sole cost and expense. Such maintenance and repair shall include, but not be limited to, the following: (i) sweeping and trash removal; (ii) the care and replacement of all shrubbery, plantings, 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/Iry-5-2-I3/cvh -3- FOR HOTEL INCENTIVE PROGRAM and other landscaping in a healthy condition; and (iii) the repair, replacement and restriping of asphalt or concrete paving using the same type of material originally installed, to the end that such paving at all times be kept in a level and smooth condition. In addition, Owner shall be required to maintain the Property in such a manner as to avoid the reasonable determination of a duly authorized official of the City that a public nuisance has been created by the absence of adequate maintenance such as to be detrimental to the public health, safety or general welfare or that such a condition of deterioration or disrepair causes appreciable harm or is materially detrimental to property or improvements within one thousand (1,000) feet of such portion of the Site. 2. Parking and Driveways. The driveways and traffic aisles on the Site shall be kept clear and unobstructed at all times. 3. Right of Entry. In the event Owner fails to maintain the Site in the above - mentioned condition, and satisfactory progress is not made in correcting the condition within thirty (30) days from the date of written notice from City (such notice shall reasonably identify the required maintenance), City may, at City's option, and without further notice to Owner, declare the unperformed maintenance to constitute a public nuisance. Thereafter, either City or its employees, contractors, or agents, may cure Owner's default by entering upon the Site and performing the necessary landscaping and/or maintenance in accordance with Section 3.1.1 above. The City shall give Owner, its representative, or the residential manager reasonable notice of the time and manner of entry, and entry shall only be at such times and in such manner as is reasonably necessary to carry out this Agreement. Owner shall pay such costs as are reasonably incurred by City for such maintenance, including attorneys' fees and costs. 4. Lien. If any costs incurred by City under Section 3 above are not reimbursed within thirty (30) days after Owner's receipt of City's written request for reimbursement, the same shall be deemed delinquent, and the amount thereof shall bear interest thereafter at a rate of the lower of ten percent (10%) per annum or the legal maximum until paid. Any and all delinquent amounts, together with said interest, costs and reasonable attorney's fees, shall be an obligation of Owner as well as a lien and charge, with power of sale, upon the property interests of Owner, and the rents, issues and profits of such property. City may bring an action at law against Owner obligated to pay any such sums or foreclose the lien against Owner's property interests. Any such lien may be enforced by sale by the City following recordation of a Notice of Default of Sale given in the manner and time required by law as in the case of a deed of trust; such sale to be conducted in accordance with the provisions of Section 2924, et seq., of the California Civil Code, applicable to the exercise of powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. Any monetary lien provided for herein shall be subordinate to any bona fide mortgage or deed of trust covering an ownership interest or leasehold or subleasehold estate in and to any Site approved by City pursuant to the Agreement, and any purchaser at any foreclosure or trustee's sale (as well as any deed or assignment in lieu of foreclosure or trustee's sale) under any such mortgage or deed of trust shall take title free from any such monetary lien, but otherwise subject to the provisions hereof; provided 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/1ry-5-2-13/cvh -4- FOR HOTEL INCENTIVE PROGRAM that, after the foreclosure of any such mortgage and/or deed of trust, all other assessments provided for herein to the extent they relate to the expenses incurred subsequent to such foreclosure, assessed hereunder to the purchaser at the foreclosure sale, as owner of the subject Site after the date of such foreclosure sale, shall become a lien upon such Site upon recordation of a Notice of Assessment or Notice of Claim of Lien as herein provided. ARTICLE 4 COMPLIANCE WITH LAWS 4.1. COMPLIANCE WITH LAWS. Owner shall comply with all ordinances, regulations and standards of the City and City applicable to the Site. Owner shall comply with all rules and regulations of any assessment district of the City with jurisdiction over the Site. ARTICLE 5 NONDISCRIMINATION 5.1. NONDISCRIMINATION. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, gender, sexual orientation, gender identity, gender expression, marital status, national origin, ancestry, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, nor shall Owner, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of guests or vendees of the Site, or any part thereof. 1. Owner certifies and represents that, during the performance of the Agreement, the Owner and any other parties with whom it may contract shall adhere to the City's non-discrimination and equal benefits as provided pursuant to Ordinance No. 1896 in the Palm Springs Municipal Code Section 7.09.040 to assure that applicants and employees are treated equally and are not discriminated against because of their actual or perceived race, color, religion, ancestry, national origin, disability, medical condition, marital status, domestic partner status, sex, gender, gender identity, gender expression, or sexual orientation. Recipient further certifies that it will not maintain any segregated facilities. 2. Owner shall, in all solicitations or advertisements for applicants for employment placed by or on behalf of this Agreement state that it is an "equal opportunity employer" or that all qualified applicants will receive consideration for employment without regard to their actual or perceived race, color, religion, ancestry, national origin, disability, medical condition, marital status, domestic partner status, sex, gender, gender identity, gender expression, or sexual orientation. 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-1 I/dme/hy-5-2-13/cvh -5- FOR HOTEL INCENTIVE PROGRAM 3. Owner shall certify that it has not, in the performance of this Agreement, discriminated against applicants or employees because of their actual or perceived race, color, religion, ancestry, national origin, disability, medical condition, marital status, domestic partner status, sex, gender, gender identity, gender expression, or sexual orientation. 4. If requested to do so by the Contract Officer, Owner shall provide the City with access to copies of all of its records pertaining or relating to its employment practices, except to the extent such records or portions of such records are confidential or privileged under state or federal law. 5. Owner agrees to recruit Coachella Valley residents initially and to give them preference, if all other factors are equal, for any new positions which result from the performance of this Agreement and which are performed within the city. The Contract Officer may agree to modify requirement where it is in conflict with federal or state laws or regulations. 6. Nothing contained in this Agreement shall be construed in any manner so as to require or permit any act which is prohibited by law. ARTICLE 6 COVENANTS TO RUN WITH THE LAND 6.1. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Site to the covenants, reservations, and restrictions set forth in this Agreement. City and Owner hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon. the Owner's successors in title to the Site; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire. All covenants without regard to technical classification or designation shall be binding for the benefit of the City, and such covenants shall run in favor of the City for the entire term of this Agreement, without regard to whether the City is or remains an owner of any land or interest therein to which such covenants relate. Each and every contract, deed or other instrument hereafter executed covering or conveying the Site or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations, and restrictions are set forth in such contract, deed or other instrument. City and Owner hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that Owner's legal interest in the Site is rendered less valuable thereby. City and Owner hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by the intended beneficiaries of such covenants, reservations, and restrictions, and by furthering the public purposes for which the City was formed. 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/1ry-5-2-13/cvh -6- FOR HOTEL INCENTIVE PROGRAM Owner, in exchange for the City entering into the Agreement, hereby agrees to hold, sell, and convey the Site subject to the terms of this Agreement. Owner also grants to the City the right and power to enforce the terms of this Agreement against the Owner and all persons having any right, title or interest in the Site or any part thereof while such party owns the Site. No party shall have any liability or obligation in connection with any breach occurring while such party is not the owner of the Site. Within fifteen (15) business days after request of Owner, City shall execute and provide to Owner an estoppel certificate, in the form approved by the City Attorney of the City, confirming whether or not Owner is in breach of any obligations under this Agreement and identifying any required cure. ARTICLE 7 INDEMNIFICATION 7.1. INDEMNIFICATION. Owner agrees for itself and its successors and assigns to indemnify, defend, and hold harmless City and its respective officers, members, officials, employees, agents, volunteers, and representatives from and against any loss, liability, claim, or judgment to or by any third party relating to development and/or operation of the Project by Owner, excepting only any such loss, liability, claim, or judgment arising solely out of the intentional wrongdoing or gross negligence of City or its respective officers, officials, employees, members, agents, volunteers, or representatives. Owner further agrees for itself, and its successors and assigns to indemnify and defend and hold harmless the City, its respective officers, members, officials, employees, agents, volunteers, and representatives from and against any loss, liability, claims, damages, penalties, losses, costs, expenses, injuries and/or liabilities arising out of claims that Owner's participation in the Program creates a public work for prevailing wage purposes thereby requiring the payment of prevailing wages and this obligation shall apply regardless of whether or not the claim, damage, penalty, loss, cost, expense, injury and/or liability complained of arises out of or relates in any way to any negligence on the part of City. Owner, while in possession of the Site, and each successor or assign of Owner while in possession of the Site, shall remain fully obligated for the payment of property taxes and assessments in connection with the Site. The foregoing indemnification, defense, and hold harmless agreement shall only be applicable to and binding upon the party then owning the Site or applicable portion thereof. 7.2. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any condition, covenant, representation or warranty in this Agreement, or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable expert witness fees, and its reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, including the conducting of discovery. 7.3. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Riverside. 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/hy-5-2-13/cvh -7- FOR HOTEL INCENTIVE PROGRAM 7.4. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: City: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attn: City Manager Copy to: Best, Best & Krieger, LLP 655 West Broadway, 15th Floor San Diego, CA 92101 Attn: Jeffrey S. Ballinger, Esq. Owner: Resorts Palm Springs, LLC 650 East San Lorenzo Road Palm Springs, CA 92262 The notice shall be deemed given three (3) business days after the date of mailing, or, if personally delivered, when received. 7.5. SEVERABILITY/WAIVER/INTEGRATION 1. Severability. If any provision of this Agreement or portion thereof, or the application to any person or circumstances, shall to any extent be held invalid, inoperative, or unenforceable, the remainder of the provisions, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby; provided, that if any material terms or provisions of these Operating Covenants are rendered invalid, void and/or unenforceable, or due to changes in the law such terms or provisions would materially alter the terms of the transactions contemplated herein, the parties agree to meet and negotiate in good faith to attempt to reform these Operating Covenants to accomplish the intent of the parties. 2. Waiver. A waiver by either party of the performance of any covenant or condition herein shall not invalidate this Agreement nor shall it be considered a waiver of any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. 3. Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/Iry-5-2-13/cvh -8- FOR HOTEL INCENTIVE PROGRAM 4. Third Parties. No third party beneficiaries are intended, and the only parties who are entitled to enforce the provisions of these Operating Covenants are the City, Mortgagees, Participant and their respective successors and assigns. 7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California. 7.7. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. 7.8. TERMINATION. This Agreement may be terminated only (i) by and upon expiration of the Term, (ii) by mutual written agreement of the parties, and (iii) by and pursuant to the provisions of Section 7.9 or 7.10 below. In the event of any termination of this Covenant, Owner (or its successor, as applicable) shall not be obligated to return any amounts previously paid to it by the City pursuant to the Program. 7.9. DEFAULT BY OWNER. If at any time during the Term, City contends that Owner has committed a material default with respect this Agreement, e.g., by failing to operate the Hotel as a Comfort Hotel, City shall deliver to Owner written notice of default which specifies in detail all facts alleged by City to constitute such default. For a period of sixty days thereafter, Owner will have the right to commence and complete cure of the alleged default; provided, however, if the alleged default is of such a nature as to reasonably require more than sixty days to cure, and the Parties so agree, Owner will have such addition time as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if Owner fails to timely cure such default, City shall then have the right to terminate this Agreement. (To the extent of any inconsistency between the provisions of this Section 7.9 and the provisions of Section 3.1 above, the provisions of this Section 7.9 shall prevail.) 7.10 DEFAULT BY CITY. If at any time during the Term, Owner contends that City has committed a material default with respect this Agreement, Owner may deliver to City written notice of default that specifies in detail all facts alleged by Owner to constitute such default. For a period of thirty days thereafter, City will have the right to commence and complete cure of the alleged default; provided, however, if the alleged default is of such a nature as to reasonably require more than thirty days to cure, and the Parties so agree, City will have such addition time as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if City fails to timely cure such default, Owner shall then have the right to terminate this Agreement or exercise any and all other rights and remedies available at law and in equity; and each of such rights and remedies shall be cumulative and not exclusive. 7.11 MORTGAGE PROVISONS. Anything in this Agreement to the contrary notwithstanding, with respect to any recorded mortgage or deed of trust given in good faith and for value and encumbering the Hotel ("Mortgage"), any holder thereof that has delivered to City a copy of such recorded Mortgage and current contact information ("Mortgagee") will be entitled rights and benefits in accordance with the following: 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-1I/dme/Iry-5-2-13/cvh -9- FOR HOTEL INCENTIVE PROGRAM 1. City acknowledges and agrees that the rights and obligations of Owner under this Agreement may, with or without approval by City, be conditionally assigned by Owner to any Mortgagee as security for performance of Mortgage obligations. 2. While any Mortgage remains in effect, City will not amend or modify this Agreement in any material respect without receiving prior written approval from Mortgagee, which approval may not be unreasonably withheld, delayed or conditioned; provided, however, failure by Mortgagee to provide written approval or disapproval (and if disapproval the reasons therefor) within thirty days of delivery of request therefor shall be deemed to constitute approval by Mortgagee. 3. While any Mortgage remains in effect, in the event City delivers to Owner of any notice of default as referenced in either Section 3.1 or 7.9 above, City shall concurrently deliver a copy thereof to Mortgagee. 4. Delivery of any such notice of default notwithstanding, City will not terminate or initiate or pursue any action to terminate this Agreement as long as Mortgagee diligently (i) declares a default by Owner under the Mortgage, (ii) pursues foreclosure and/or other appropriate actions under the Mortgage, (iii) pays to City all amounts that would otherwise have been payable by Owner to City, and (iv) cures non -monetary defaults. 7.12 Operator Provisions. City acknowledges and agrees that operational obligations of Owner may, with or without consent of City, be assigned by Owner to any entity owned or wholly controlled by Owner or its Members or Hotel Operator of Owner's choice, and, in connection therewith, such Hotel Operator may assume all or part of Owner's Hotel operation obligations under this Agreement; provided, however, Owner shall retain ultimate responsibility for such Hotel operation obligations. City agrees that while any Hotel Operator agreement is in effect, and provided that City has been put on notice of such agreement and received contact information for such Operator, in the event City delivers to Owner of any notice of default as referenced in either Section 3.1 or 7.9 above, City shall concurrently deliver a copy thereof to the Operator. 7.13 RESERVED. 7.14 Cooperation. Each party agrees to and shall do and perform such other and further acts and properly execute and deliver such other and further documents as may be reasonably necessary, expedient or convenient to implement and/or effectuate the intents and purposes hereof. City and Owner agree to cooperate with each other and/or with any Mortgagee or proposed Mortgagee, in a manner consistent with concepts and principles of good faith, fair dealing and commercial reasonableness, with respect to consideration, implementation and execution of any modification(s) to this Agreement reasonably requested by the City, Owner, Mortgagee or proposed Mortgagee. 7.15 Reasonable Approvals. Whenever this Agreement requires or calls for the approval or consent of any party hereto, such approval shall not be unreasonably withheld, delayed or conditioned. 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-I I/dme/hy-5-2-13/cvh -10- FOR HOTEL INCENTIVE PROGRAM 7.16 Binding Arbitration. In the event of any dispute or controversy arising out of or relating to this Agreement, or the breach or performance of it, the parties shall reasonably attempt to resolve such dispute or controversy without resort to third party review or resolution. The parties shall first meet and confer on any such dispute or controversy. Such meeting(s) shall include any principal of the Owner and, at the discretion of the City, may include the City Manager and/or the City Council, either as a whole or through an ad hoc subcommittee designated by the City Council. Upon a determination by the parties that they are or will be unable to resolve the dispute or controversy on their own, then the parties shall submit the dispute, controversy or any remaining unresolved matter to binding arbitration, to be held in the Coachella Valley, and be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association. 7.17 Incorporation of Recitals and Exhibits. Each of the recitals set forth above and each of the exhibits attached hereto are agreed to and made part of this Agreement. 7.18 Authority. Each party represents and warrants to the other that such party has full right, power and authority to sign, execute and enter into this Agreement. [END -- SIGNATURES ON NEXT PAGE] 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/hy-5-2-13/cvh -11- FOR HOTEL INCENTIVE PROGRAM EXHIBIT "A" LEGAL DESCRIPTION OF SITE That certain real property located in the City of Palm Springs, County of Riverside, State of California, more particularly described as: LOTS 16 & 17 BLK D MB 022/076 TAHQUITZ RIVER ESTATES 2 LOT 16 BLOCK D SUBDIVISIONNAME TAHQUITZ RIVER ESTATES 2 LOTTYPE LOT RECMAPTYPE MAP BOOK MAPPLATB 022 MAPPLATP 076 LOT 17 LOTTYPE LOT ASSESSOR'S PARCEL NO.508-191-012 EXHIBIT "A" OPERATIONS COVENANT 915229.03/OC FOR HOTEL INCENTIVE PROGRAM 370971-00003/2-10-1I/dme/Iry -I- IN WITNESS WHEREOF, the City and Owner have executed this Operations Covenant by duly authorized representatives on the date first written hereinabove. A EST: Awl. City Clerk APPROVED AS TO FORM: BEST, BEST & KRIEGER By:I1� Jeffrey . Balli ger, Esq. City Attorney "CITY" THE CITY OF PALM SPRINGS, a municipal corporation and charter city 4 J► By: &,-, I Yu--- NAe: ry-AfJ*L--► Title: Yt^ a&j a 6-1 N tr- ^ „BLr2— Name: Title: [END OF SIGNATURES] �rZS fL4ivn �r j� 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-11/dme/Iry-5-2-13/cvh -12- FOR HOTEL INCENTIVE PROGRAM CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California 1 County of if II�e On deal before me, WeVV 6irlt M, 4%W6`4C, J✓U7�y ��1dli� Date Here Insert Name and Title of the Officer personally appeared cJ!!1r/N eZ11r__T0W Nome(s) of Signer(s) who proved to me on the basis of satisfactory evidence o be the person(s) whose names Is are subscribed to the within instrument and acknowledged to me that(h/she/they executed the same in i /her/their authorized capacity(ies), and that b hi her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. o M MONIQUE M. LOMELI ! No PubhC • California i '-' _ • Riverside County > y 3-0rr Commission r 2267330 Mv Comm. Expires Nov 17, 2022 Place Notary Notary Seal and/or Stamp Above I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature Sign re of Notary Public A nT1A�� A I Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: 6kPCeA74>A1S G'OY6�V,01VT Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian of Conservator ❑ Other: Signer is Representing: ©2017 National Notary Association Number of Pages: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian of Conservator ❑ Other: Signer is Representing: CALIFORNIA ALL-PURPOSE ACKNOW LE DGM E NT CIVIL CODE r41189 s1�.ee�1................[•rx^.+'.�• A notary public or other officer completing this eertifc2m verifies only the identity of the individual who signed the dzW= to which this eerufirate is attached, and not the truddalness, aecltracy of validity of that docaffient State of California I CAmtu,.ofAld4r ��� c On before m D art Name and Title of the Of4cer ayyL" Name(sl of Sivnerfs) who proved to me on the basis of satisfactory evidence to be the person(s) whose names) is/are subscribed to the within instrument and admowledged to me that he/she/they executed the same in his/her/their authorized capacity(w,), and that by his/her/their signature(s) on the instrument the person(s� or the entity upon behalf of which the person(s)acted, executed the instrument. I certify t d=—?MA.1Y OF PERJURY under the laws of the State of Califoaria that the foregoing paragraph true and correct. IT my se gnature Sian ure ofary Public Place Notary SealAbove OPTIONAL Though this section is gptional, completing this information can deter altefaff f the document or �reattachmform to unintended doct. Description of Attached Docum TI ��C �i( �)�N r, Title or of Docurnent: V Doctmz Date: Number of Pages: Signer(s) Other Than Named Above: (Claimed bySignerfs) ❑ Corporate Officer —Titlgs): ❑ Partner — ❑ Imuted ❑ General ❑ Individual ❑ AURwAyju Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other Simet.7s Representing &b='., ,NA= ❑ Corporate Officer —Titles): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other Representing 02014ATatiamal NotazyAssodation•>wa.IslationalNotary.org • 1-800-USNOTARY (1-800-876-6827) Item#5907 915229.03/OC OPERATIONS COVENANT 370971-00003/2-10-1 I /dme/Iry-5-2-13/cvh - l 3 - FOR HOTEL INCENTIVE PROGRAM California All -Purpose Certificate of Acknowledgment A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of S.S. On '2-6, 7-02/ before me,'�� Nah,e of Notary Public, idle personally appeared �� v `c01V; .,f Signer (1) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS C m7hnd d offici e< i OPTIONAL INFORMATION 4 �: MATANAELJACQUES r Notary Public - California Riverside County • y Comm. # 2330559 ` �„ Mmm. Expires Jul 30, 2024 " r ? he infor— u , in th, sectio rs rrot required by law, it could prevent fraudulent remove, lent u q^rument and may prove useful to persons relying on the attached document Description of Attached Document The preceding Certificate of Acknowledgment is attached to a document titled/for the purpose of containing pages, and dated The signer(s) capacity or authority is/are as: Individual(s) ❑ Attomey-in-fact ❑ Corporate Officers) ❑ Guardian/Conservator ❑ Partner - Limited/General ❑ Trustee(s) ❑ Other: representing: Additional Information -diiii Method of Signer Identification Proved to me on the basis of satisfactory evidence: ❑ form(s) of identification credible witness(es) Notarial event is detailed in notary journal on: Page # Entry # Notary contact: Other ❑ Additional Signer ❑ Signer(s) Thumbprints(s) © 2009-2015 Notary Learning Center - All Rights Reserved You can purchase copies of this form from our web site at www.TheNotarysStore.com �1 A Q V N r c4OFcCITY COUNCIL STAFF REPORT DATE: SEPTEMBER 24, 2020 PUBLIC HEARING SUBJECT: CONDUCT A PUBLIC HEARING UNDER SECTION 53083 OF THE CALIFORNIA GOVERNMENT CODE TO APPROVE A HOTEL OPERATIONS COVENANT BETWEEN THE CITY OF PALM SPRINGS AND RESORTS PALM SPRINGS, LLC, A CALIFORNIA LIMITED COMPANY, (SANTIAGO RESORT HOTEL) PURSUANT TO THE CITY'S HOTEL OPERATIONS INCENTIVE PROGRAM FROM: David H. Ready, City Manager BY: Community & Economic Development Department SUMMARY As a condition of receiving the benefits of the City's Hotel Operations Incentive Program, an operator is required to execute and record an Operations Covenant (Attachment 1) on the property to ensure that the hotel will be operated and maintained continuously as a hotel consistent with the Hotels Operations Incentive Program. This action is to approve the Operations Covenant agreement with Resorts Palm Springs, LLC (Owner) for the Santiago Resort Hotel, located at 650 East San Lorenzo Road. RECOMMENDATION: 1) Open the public hearing and receive public testimony; 2) Approve a Hotel Operations Covenant Agreement with Resorts Palm Springs, LLC for the Santiago Resort Hotel located at 650 East San Lorenzo Road; 3) Authorize the City Manager to execute all necessary documents. BACKGROUND: The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in December, 2007 (Ordinance 1730, effective January 2008) to create the Hotel Operations Incentive Program. The original program required a minimum investment of $15,000 per room, or $1 million minimum investment to qualify for 50% share of the TOT increment for 10 years. This program ended in 2014. On February 6, 2019, the City Council amended Chapter 5.26 to re-establish the Hotel Operations Incentive Program specifically for the renovation of existing hotels. The new program, referred to as the Phase II Renovation Project (Program), eliminated the MNO..,,,,.. " City Council Staff Report September 24, 2020-Page 2 Hotel Operations Covenant -Santiago Resort Hotel -Public Hearing minimum investment required and lowered the cost per room to allow smaller hotels unable to meet such requirements to participate. The revised Program is structured as follows: • TOT percentage is limited to 50% of net new TOT revenue. Class I Historic Sites receive 75% of the net new TOT revenue. Net new TOT revenue is the amount of transient occupancy tax a hotel owes the City annually, minus the TOT base (the annual average TOT from the hotels prior three years of operation). For the Santiago Hotel the TOT base is $132,251. • The TOT base will be adjusted on an annual basis at a rate of 3%, or increase in the "Consumer Price Index Los Angeles -Long Beach -Anaheim, All Items, 1982- 84=100 base, All Urban Consumers (CPI-U)," whichever is higher. • The amount of TOT rebated to hotels under the Program cannot exceed the amount of the hotel renovation investment. • Share period is limited to 10 years. • The Phase II Renovation Project is not be available for construction of new hotels. • Total renovation costs must be equal to $5,000 per room. • There is no overall minimum investment. For example a hotel with 25 rooms could invest $5,000 per room for a total investment of $125,000. Under the previous program a minimum investment of $1,000,000 would have been required precluding participation by smaller hotels or lower investment renovation projects. • All other provisions of the original Hotel Operations Incentive Program ordinance would remain unmodified. STAFF ANALYSIS: Resorts Palm Springs, LLC applied for the Program on March 19, 2019 and has committed to a property improvement project that will invest no less than the equivalent of five thousand dollars ($5,000.00) per room. The renovation project is currently underway and will be completed no later than December 31, 2023. Upon City Council approval and after the City's execution of the Operation Covenant Agreement, Resorts Palm Springs, LLC will provide satisfactory documentation certifying its renovation and completion of the project as a qualified renovation under the Program. E City Council Staff Report September 24, 2020-Page 3 Hotel Operations Covenant -Santiago Resort Hotel -Public Hearing Project Description The Santiago Resort Hotel is located at 650 East San Lorenzo Road and consists of 24 total hotel rooms. The project location is shown in Figure 1. Figure 1 The Project site is approximately 0.72 acres and is located on the north side of East San Lorenzo Road and Random Road. Once called the Matador Inn during the 1960s, Santiago Resort was developed over 25 years ago in the early 1990's. The improvement project (Project) will update crucial functions by implementing energy - efficient and sustainable components as well as aesthetic features of the hotel. All doors and aluminum windows will be replaced with high efficiency modern vinyl windows and doors. All 24 guest bathrooms will be upgraded using sustainable modem materials, energy -efficient fixtures, and other enhancements. The property's landscaping will be updated with new LED lighting and desert landscaping requiring less water, reducing the carbon footprint and the amount of energy used. Locally designed and built fumiture will replace 25-year-old pieces bringing a modern, streamlined eco-conscience design to the property's look and appeal (Attachment 2). M City Council Staff Report September 24, 2020-Page 4 Hotel Operations Covenant -Santiago Resort Hotel -Public Hearing No square footage additions are proposed to the Santiago Resort Hotel buildings. All improvements will occur within the current footprint of the site and be completed on all guest rooms as part of the Project. Additionally, Resorts Palm Springs, LLC expect the renovations, upgrades, and enhancements to bring a heightened level of experience to their guests, thereby increasing occupancy, revenues and tax receipts. Consistent with the provisions of the Program, Owner agrees to place restrictions upon the use and operation of the hotel, in order to ensure that the Project shall be operated and maintained continuously as a hotel available for short-term rentals. The Owner also agrees to participate in the Palm Springs Convention Center's Committable Rooms Program and provide designated room -nights per month for official City use. City will share a percentage of Transient Occupancy Tax Increment with Owner pursuant to the Program guidelines. Government Code 53083 Public Hearing Requirement In October 2013, Section 53083 was added to the California Government Code. Section 53083 states that before granting an economic development subsidy, each local agency shall provide public notice and conduct a hearing regarding the economic development subsidy. "Economic development subsidy" under Section 53083 means any expenditure of public funds or loss of revenue to a local agency in the amount of one hundred thousand dollars ($100,000) or more, for the purpose of stimulating economic development within the jurisdiction of a local agency, including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits. Each local agency shall, before approving any economic development subsidy within its jurisdiction, provide all of the following information in written form available to the public, and through its Internet Web site, if applicable. For Resorts Palm Springs, LLC, the information is as follows: 1. The business entity that is the beneficiary of the economic development subsidy: Resorts Palm Springs, LLC, 650 East San Lorenzo Road, Palm Springs, CA 92262. 2. The start and end dates and schedule, if applicable, for the economic development subsidy: If approved, the Covenant would provide an economic subsidy to Owner through a term of ten (10) years, or until the Owner has received $685,000.00 pursuant to the Program, whichever event occurs first. 3. A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to the local agency as a result of the economic development subsidy: 4 City Council Staff Report September 24, 2020-Page 5 Hotel Operations Covenant -Santiago Resort Hotel -Public Hearing A. The Program provides operating assistance to hotels in the form of a rebate of adjusted transient occupancy tax ("Adjusted TOT") at a fixed level for existing hotels that meet Program criteria. The City Council has extended the Program, which was originally set to expire at the end of December 2012, and adopted the Phase II Renovation Project Program for improvement project constructed by an existing hotel that invests no less than the equivalent of five thousand dollars ($5,000.00) per room, including this project. B. Per the Program, the existing hotel Project planned by Owner, is rebated 50% of Adjusted TOT for ten (10) years or until the rebate totals $685,000.00, whichever comes first. For purposes of the Covenant, an existing Hotel is defined as a property improvement project constructed by an existing hotel that invests no less than the equivalent of five thousand dollars ($5,000.00) per room. The renovation project must commence no more than twelve months after the City's execution of the Operation Covenant Agreement, and be completed no later than December 31, 2023. C. The public funds to be spent if the City approves this Covenant will be the staff costs of administration, and statutorily mandated reporting through the term of the Program rebate/subsidy. 4. A statement of the public purposes for the economic development subsidy: A. The Owner represents that absent the Program rebate, the planned twenty-four (24) room renovation Project cannot be feasibly completed. The City Council has identified renovation of an existing Hotel, inclusive of a property improvement program undertaken by a property that was constructed, occupied, and used as a hotel on or before January 1, 2006, enhances the tourist and travel experience for visitors by providing attractive and desirable facilities and assists the City in achieving its tourism goals. No less than five thousand dollars ($5,000) per room, or if the project includes any common area or amenity, or any other area for guest use at the hotel, the amount of the investment shall not be less than the amount, if any, invested in rooms, added to the total number of rooms at the hotel that will exist at the end of the project multiplied by five thousand dollars ($5,000.00). B. The Project would help beautify the neighborhood through and implement energy saving and sustainable components. All doors and aluminum windows will be replaced with high efficiency modem vinyl windows and doors. All 24 guest bathrooms will be upgraded using sustainable modem materials, energy -efficient fixtures, and other enhancements. The property's landscaping will be updated with new LED lighting and desert landscaping requiring less water, reducing the carbon footprint and the amount of energy used. 5. Projected tax revenue to the local agency as a result of the economic development subsidy: 5 City Council Staff Report September 24, 2020-Page 6 Hotel Operations Covenant -Santiago Resort Hotel -Public Hearing A. Per the Program, the City will receive 50% of Adjusted TOT for ten (10) years or until the rebate to the Owner totals $685,000.00, whichever comes first. It is estimated the City will receive $104,448 of Adjusted TOT annually during the first ten years of the Project's operations. After ten (10) years the City will receive 100% of the TOT revenue. B. In addition to Adjusted TOT revenue received, it is estimated that the Project will yield $14,898 of non -TOT tax revenue per year, e.g., property tax, "on -site" sales tax on purchases by guests, utility taxes, etc. 6. Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time and temporary positions: Owner data indicates that the Project will create as many as two (2) to three (3) new full-time jobs, and hiring over 70 local tradespeople to complete the Project improvements. An unknown number of part-time and temporary jobs are anticipated in order to maintain the level of service to guests and visitor's requisite at a First Class Hotel. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The Planning Commission determined that this project was exempt from consideration under the California Environmental Quality Act on a number of grounds. The extension of the City's Hotel Incentive Program considered at this time is not a "project" for purposes of the California Environmental Quality Act (CEQA), as that term is defined by CEQA guidelines (Guidelines) section 15378. This action is organizational or administrative activity by the City of Palm Springs in furtherance of its police power, and will not result in a direct or indirect physical change in the environment, per section 15378(b)(5) of the Guidelines. BUSINESS PRINCIPAL DISCLOSURE: The property is owned by Resorts Palm Springs LLC — Fred Ross and James Hansen are the Principals of the LLC. A Public Integrity Disclosure form is provided as ATTACHMENT 3. FISCAL IMPACT: An amount equal to 50% of transient occupancy tax increment derived from the Santiago Resort Hotel, over the annual base amount, will be paid to the Owner up to the initial investment amount, or for a ten-year period, whichever occurs first. C. City Council Staff Report September 24, 2020-Page 7 Hotel Operations Covenant -Santiago Resort Hotel -Public Hearing SUBMITTED: C Jay Vi ,- UMAldor Marcus L. Fuller, MPA, P. ., P.L.S. Comm i & Economic Development Assistant City Manager/City Engineer David H. Ready, Esq., P City Manager Attachments: 1. Hotel Operations Covenant Agreement -Resorts Palm Springs, LLC 2. Project Images 3. Public Integrity Disclosure Form N l64_'41FORN� CITY OF PALM SPRINGS OFFICE OF THE CITY CLERK 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 323-8204 CERTIFICATE OF ACCEPTANCE THIS IS TO CERTIFY that the interest in real property conveyed by OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND RESTRICTIONS Real property in the City of Palm Springs, County of Riverside, State of California, as described: Land described in Exhibit "A" APN:508-191-012 Dated: February 16, 2021 From, Resort Palm Springs, LLC Dba Santiago Resort Grantor, to the City of Palm Springs, a municipal corporation and charter city, Grantee, is hereby accepted by the City Clerk of said City of Palm Springs, on this atn day of August, 2021, pursuant to authority granted by the City Council of said City, by Resolution No. 20255 made on the 16th day of January, 2002, and the Grantee consents to recordation thereof by the City Clerk, its duly authorized officer. Dated at Palm Springs, California, this 4th day of August 2021. WHONY M CITY CLERK