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HomeMy WebLinkAboutA7246 - DTPS-B-3, LLC (Virgin Hotel)Cindy Berardi From: Tonya Nelson Sent: Tuesday, December 4, 2018 4:11 PM To: David Newell; Tabitha Richards Cc: Cindy Berardi Subject: RE: Virgin Hotel Development Agreement Hi David, I spoke with Eddie and he does not have a copy of the executed agreement. I reached out to Tabi, and she said she will check to see if she has a copy. Thankyou, Tonya Nelson City of Palm Springs Office of City Attorney 760-323-8219 From: David Newell Sent: Tuesday, December 4, 2018 3:51 PM To: Tonya Nelson <Tonya.Nelson@palmspringsca.gov> Cc: Cindy Berardi <Cindy.Berardi@ pal mspringsca.gov> Subject: RE: Virgin Hotel Development Agreement Hi Tonya, Any update from Eddie? Thank you, David From: Tonya Nelson Sent: Monday, December 03, 2018 3:52 PM To: David Newell Cc: Cindy Berardi Subject: RE: Virgin Hotel Development Agreement David, I just spoke with Cindy, and it is possible we do not have an executed agreement. However, Eddie is out of the office today, so I will double check with him when he returns tomorrow. 7hankyou, Tonya Xefson City of Talm Springs Office of City -Attorney 760-323-8219 From: David Newell Sent: Monday, December 3, 2018 3:27 PM To: Tonya Nelson<Tonya.Nelson @palmspringsca.gov> Subject: RE: Virgin Hotel Development Agreement Thanks Tonya. I don't have a date. The developer sent the attached to me but the document appears incomplete per Cindy's email reply. From: Tonya Nelson Sent: Monday, December 03, 2018 3:25 PM To: David Newell Subject: RE: Virgin Hotel Development Agreement Hi David, I will check, do you know when the agreement was executed? qfiankyou, Tonya Nelson City of Pafm Springs Office of CityAttorney 760-323-8219 From: David Newell Sent: Monday, December 3, 2018 3:21 PM To: Tonya Nelson<Tonya.Nelson@palmsprinpsca.pov> Subject: Virgin Hotel Development Agreement Hi Tonya, We are working on an amendment to the Virgin Hotel Development Agreement which was approved by Council on 11/29/17. Do you know if Eddie might have a copy of the signed, executed version? I checked with the City Clerk's office (Cindy Berardi) and they don't have a copy. Here's a link to the staff report: https://destinyhosted.com/agenda publish.cfm?id=72567&mt=CC&get month=11&get year=2017&dsp=agm&seq=38 2&rev=0&ag=62&In=2480&nseq=383&nrev=0&pseq=&prev=#ReturnTo2480 Thank you, David A. Newell, AICP, MPA Associate Planner City of Palm Springs Department of Planning Services 32oo East Tahquitz Canyon Way Palm Springs, California 92262 Office: (760) 323-8245 1 Fax: (760) 322-8360 E-mail: david.newellCa)palmspringsca.gov Cindy Berardi From: Cindy Berardi Sent: Monday, December 3, 2018 1:13 PM To: David Newell Subject: RE: Virgin Hotel Development Agreement, Case 5.1427 I don't find an executed copy of the Development Agreement in our files. I noticed the signature page of the Development Agreement Jeanette provided is actually for the Operations Covenant for the Hotel Incentive Program (see the footer at the bottom of the signature page) which would also indicate it would not have been signed by the City if provided to us that way. Cynthia A. Berardi, CIVIC Chief Deputy City Clerk City of Palm Springs P. O. Box 2743 Palm Springs, CA 92263 (760) 323-8204 From: David Newell Sent: Thursday, November 29, 2018 3:50 PM To: Cindy Berardi <Cindy.Berardi@pal mspringsca.gov> Subject: FW: Virgin Hotel Development Agreement, Case 5.1427 Hi Cindy, Do you know if we ever signed & executed the Development Agreement associated with Ordinance 1940? Attached is what the developer provided. Thank you, David From: Jeanette Sanborn [mailto:JeanetteCaagritps.coml Sent: Wednesday, November 28, 2018 3:34 PM To: David Newell; Michael Braun Subject: RE: Virgin Hotel Development Agreement, Case 5.1427 David I have the final copy with our signatures, so far I can't find a fully executed copy. I have ordered the labels and will let you know when ready. When you get a hold of a fully executed copy please forward to us. Thanks From: David Newell [mailto:David. Newelk-Opalmspringsca.gov] Sent: Tuesday, November 27, 2018 7:38 AM To: Michael Braun; Jeanette Sanborn Cc: Elly Subject: Virgin Hotel Development Agreement, Case 5.1427 Michael, Good morning. RECORDING REQUESTED BY: CITY OF PALM SPRINGS AND WHEN RECORDED MAIL TO: CITY OF PALM SPRINGS OFFICE OF THE CITY CLERK 3200 E. TAHQUITZ CANYON WAY PALM SPRINGS, CA 92262 to Gove SPACE ABOVE FOR RECORDER'S USE ONLY not apply DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA Title of Document THIS AREA FOR RECORDER'S USE ONLY DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT (this "Agreement" or "Development Agreement") is entered into by and between the City of Palm Springs, a California Charter City and municipal corporation, ("City"), and DTPS B-3, LLC, a California Limited Liability Company ("Developer"), pursuant to California Government Code § 65864 et secl. RECITALS A. Development Agreement Statute. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the Legislature of the State of California has enacted California Government Code § 65864 et se . (the "Development Agreement Statute"), which authorizes City to enter into an agreement with any person having a legal or equitable interest in real property regarding the development of such property. This Development Agreement has been processed, considered, and executed in accordance with the procedures and requirements as set forth in the Development Agreement Statute. B. City Ordinance. Pursuant to Government Code section 65865(c), City has adopted Ord. 1829 § 3, 2013; Ord. 1294, 1988 [PSMC § 94.08.001 (the "Development Agreement Ordinance"), that set forth rules and regulations establishing procedures and requirements for consideration of development agreements. The parties acknowledge and agree that: a. This Agreement will assure adequate public facilities at the time of development. b. This Agreement will assure development in accordance with City's land use policies and goals specified in, and is consistent with the General Plan and the Specific Plan referenced below. C. This Agreement will provide for orderly growth consistent with the City's General Plan, and other public policies. d. This Agreement is intended to provide certainty in the development approval process by vesting the permitted uses, densities and intensity of use with respect to the subject property. e. The execution of this Agreement furthers the public health, safety and general welfare of the community. C. Description of the Project and Project Site. Developer represents and warrants that it has a legal interest in certain real property as legally described in Exhibit "A" attached hereto and incorporated by this reference herein (the "Project Site"). The development of the Virgin Hotel on the Project Site, along with all related public and private improvements and obligations, is the "Project." D. City Council Actions: Existing Entitlements. Prior to the City's approval of this Agreement, the City Council, after public hearings and extensive environmental analysis, approved the following entitlements, which entitlements are also the subject of this Agreement: a. Specific Plan Amendment, Case No. 5.1204 SP, adopted April 20, 2016, by Ordinance No. 1889, designating Block B-1 as a 0.84 acre parcel for commercial or residential land uses, including development of a Virgin brand hotel use up to a maximum height of 69 feet subject to approval of a Development Agreement. b. Major Architectural Application, Case No. 3.3908-MAJ, approved April 20, 2016, by Resolution No. 24003, for construction of a six -story, 112,862 square foot building with 142-room resort hotel and ground floor commercial retail located on Specific Plan Block B-1. C. Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, transferring the rights and obligations of an Operations Covenant for an AC Hotel previously approved for Block F to the Virgin Hotel located on Block B-1. The above Entitlements have been approved subject to various conditions and requirements with which Developer will be required to comply in order to develop the Project Site ("Conditions of Approval"). The approvals described above, including without limitation the Conditions of Approval as referenced in this Recital and this Agreement, are referred to herein as the "Entitlements" and have been reviewed and approved in accordance with the Municipal Code, California Environmental Quality Act, California Public Resources Code Section 21000 et seq. and the implementing regulations promulgated thereunder (Title 14, California Code of Regulations Section 15000 et seq.) (in the aggregate, "CEQA"), and all other applicable local, state, and federal laws and regulations. The Entitlements, Conditions of Approval, and this Agreement shall be collectively referred to as "the Project Approvals." E. Substantial Costs to Developer. Developer will incur substantial costs in order to comply with the Project Approvals and to construct the Virgin brand hotel specifically required by the City to assure development of the Project Site in accordance with the terms of this Agreement. F. Vesting of Rights. In exchange for the benefits to City described in the preceding Recitals, together with the other public benefits that will result from the development of the Project, Developer will receive by this Agreement assurance that it may proceed with the Project in accordance with the "Applicable Law" (defined below) and therefore desires to enter into this Agreement. G. Public Hearings, Findings. On November 15, 2017, the City of Palm Springs Planning Commission and City Council held a duly noticed joint public hearing to consider Developer's application for this Agreement. Upon the review of all documents and information presented by staff, the consideration of all public testimony, in favor and against this Agreement, and discussion The Planning Commission recommended, and 2 the City Council approved the following findings with respect to this Agreement: a. Is consistent with the objectives, policies, general land uses and programs specified in the general plan and any applicable specific plan; b. Is compatible with the uses authorized in, and the regulations prescribed for, the land use district in which the real property is located; C. Is in conformity with public convenience, general welfare and good land use practice; d. Will not be detrimental to the health, safety and general welfare; e. Will not adversely affect the orderly development of property or the preservation of property values. H. Branding. The parties understand and agree that Developer's commitment and duty hereunder to develop the Project as a Virgin brand hotel represents an essential and material inducement to City to enter into this Agreement and extend consideration to the Developer. I. Ordinance. On November 29, 2017, Council adopted Ordinance No. 1940 approving this Agreement and authorizing the City Manager to execute the Agreement. The Ordinance was effective on December 29, 2017, a copy of Ordinance No. 1940 is attached hereto as Exhibit "B". AGREEMENT NOW, THEREFORE, in consideration of the promises, covenants, and provisions set forth herein, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: ARTICLE 1. DEFINITIONS SECTION 1.1. "Agreement" shall mean this Development Agreement by and between Developer and City, effective as of the date noted herein on . SECTION 1.2. "Applicable Law" shall have that meaning set forth in Section 7.03 of this Agreement. SECTION 1.3. "Changes in the Law" shall have that meaning set forth in Section 7.08 of this Agreement. SECTION 1.4. "City" is the City of Palm Springs, a California Charter City and municipal corporation. 3 SECTION 1.5. "Conditions of Approval' shall have that meaning set forth in Section 4.04 of this Agreement. SECTION 1.6. "Default" shall have that meaning set forth in Section 11.01 of this Agreement. SECTION 1.7. "Default Notice" shall have that meaning set forth in Section 11.01 of this Agreement. SECTION 1.8. "Deficiencies" shall have that meaning set forth in Section 10.02 of this Agreement. SECTION 1.9. "Developer" is DTPS B-3, LLC, a California Limited Liability Company. SECTION 1.10. "Development Agreement Ordinance" shall have that meaning set forth in Recital B of this Agreement. SECTION 1.11. "Development Agreement Statute" shall have that meaning set forth in Recital A of this Agreement. SECTION 1.12. "EIR" shall mean the Final Environmental Impact Report certified by City Council on November 18, 2009, State Clearinghouse No. 2008061084, adopted by Resolution No. 22625, and the Notice of Determination filed with the Office of Planning and Research and the Riverside County Clerk on December 3, 2009; Addendum No. 1 to the Final Environmental Impact Report approved by City Council on October 17, 2012, adopted by Resolution No. 23238; and Addendum No. 2 to the Final Environmental Impact Report approved by City Council on April 20, 2016, adopted by Ordinance No. 1889. SECTION 1.13. "Entitlements" shall have that meaning set forth in Recital D of this Agreement. SECTION 1.14. "Effective Date" shall have that meaning set forth in Section 3.01 of this Agreement. SECTION 1.15. "Excusable Delay" shall have that meaning set forth in Section 11.04 of this Agreement. SECTION 1.16. "Force Majeure" shall have that meaning set forth in Section 11.04 of this Agreement. SECTION 1.17. "Judgment' shall have that meaning set forth in Section 10.02 of this Agreement. SECTION 1.18. "Project' is defined above. 4 SECTION 1.19. "Project Approvals" shall have that meaning set forth in Recital D of this Agreement. SECTION 1.20. "Prompt Review" means review of all plans, specifications, and applications by Developer in accordance with Section 7.11, below. SECTION 1.21. "Reasonable Progress" shall mean commercially reasonable efforts by Developer to complete construction of the Project, and completion of all executory obligations herein within ten years in accordance with Section 7.10, below. SECTION 1.22. "Term" shall have that meaning set forth in Section 3.02 of this Agreement. SECTION 1.23. "Virgin Termination Event" shall have that meaning set forth in Section 4.03 of this Agreement. ARTICLE 2. INCORPORATION OF RECITALS. Section 2.01. Recitals. The true and correct Recitals set forth above, the introductory paragraph preceding the Recitals, and all defined terms set forth and exhibits referenced in both, are hereby incorporated by this reference into this Agreement, as material facts upon which the parties have relied in entering this Agreement, as if set forth herein in full. ARTICLE 3. EFFECTIVE DATE ANC TERM Section 3.01. Effective Date. This Agreement shall become effective as of the date when the Ordinance through which this Agreement is approved takes effect and the City executes this Agreement (the "Effective Date"). Section 3.02. Term. The term of this Agreement (the "Term") shall commence upon the Effective Date and continue in effect until December 31, 2021, unless the Term is terminated or modified as set forth in this Agreement or by mutual consent of the parties hereto. ARTICLE 4. OBLIGATIONS OF DEVELOPER Section 4.01. Obligations of Developer Generally. In consideration of City entering into this Agreement, Developer agrees that it will comply with this Agreement and with all Project Approvals. The parties acknowledge and agree that City's agreement to perform and abide by the covenants and obligations of City set forth in this Agreement is a material consideration for Developer's agreement to perform and abide by its long term covenants and obligations, as set forth herein. 5 Section 4.02. Compliance with Proiect Conditions. a. In accordance with recommendations of the Planning Commission, and required by the City Council in its consideration of this Agreement on November 15, 2017, the Developer shall comply with the following conditions: 1. Submit a construction staging plan to the City Engineer demonstrating that Market Street will remain open for pedestrian access during construction on Block B-1. 2. Developer shall be. required to replace the water feature originally required on Block C/C-1 that was replaced with public art on the condition that a new water feature would be provided on Block B-1. Submit architectural renderings and plans for a water feature to be installed on Block B-1 for review and approval by the Downtown Subcommittee. The water feature shall be installed and functional prior to issuance of a certificate of occupancy of the Virgin Hotel. 3. Submit a valet parking plan for review and approval by the City Engineer, providing for an alternative pick-up/drop-off point for hotel valet service when N. Palm Canyon Drive is closed for events. 4. Submit an interim plan for treatment and use of Block B-1 for review and approval by the Downtown Subcommittee; the interim plan may include temporary structures and uses. The interim plan shall be submitted within 90 days of the effective date of the agreement. b. In addition to any and all obligations contained in this Agreement, Developer shall comply with and fulfill any and all Conditions of Approval. The Development of the Project and Project Site shall be governed by the terms of the Conditions of Approval and this Agreement. The Conditions of Approval and this Agreement shall, to the fullest extent possible, be read and considered as fully integrated documents, and shall be interpreted so as to avoid inconsistencies, comply with all applicable federal and state laws and City Law, and ensure that the objectives of the parties will be fully realized. Section 4.03. Hotel Operations Covenant. In consideration of City entering into this Agreement, Developer agrees to terminate the Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, and that it will comply with the terms and conditions of the Operations Covenant approved and included concurrent herewith, in substantially the form attached hereto and incorporated by this reference herein as Exhibit "C." Further, Developer covenants and agrees that it shall commence construction of the 142-room Virgin Hotel not later than March 31, 2020, complete vertical construction of the 142-room Virgin Hotel not later than December 31, 2021, obtain a certificate of occupancy by January 31, 2022, and begin operation of the Hotel no later than March 1, 2022. Developer further agrees that the Project Site will be owned, managed, and operated only as a Virgin brand hotel (and no other hotel flag or brand), as a First Class Hotel, in accordance with the requirements of Chapter 5.26 of the Palm Springs Municipal Code and the Operations Covenant. Operation of a Virgin brand hotel is a mandatory condition to Developer's continued participation in the City's Hotel Operations Incentive Program pursuant to Chapter 5.26 of the Palm Springs Municipal Code (the "Program"). 6 Except as specified herein, in the event that the Virgin brand hotel to be developed hereunder ceases to operate as a Virgin brand hotel, Developer's benefits accruing pursuant to the Program will terminate, effective immediately. However, in the event of Virgin unilaterally ceasing operation at the Project site, or Developer terminating Virgin for cause after at least five (5) years of operation as a Virgin brand hotel (in either case, a "Virgin Termination Event"), then Developer shall have the right to apply to the City for approval of an amendment to this Agreement and the Operations Covenant recorded concurrent herewith, which amendment shall provide for the resumption of said benefits pursuant to the Program. The City will consider any such application for an amendment at a public hearing provided that the City makes a determination, in an exercise of the City's sole discretion, that the flag or brand of hotel that will operate or is proposed to operate at the Project Site as a replacement for the Virgin brand hotel is commensurate with or superior to Virgin's market share and position as of this Agreement's Effective Date. The parties understand and agree that Developer has no right to or specific expectation of any amendment to this Agreement subsequent to a Virgin Termination Event. Developer shall have the duty to provide the City with written notice of any actual or potential Virgin Termination Event immediately upon Developer's determination that a Virgin Termination Event has taken place or is reasonably likely to take place. That notice shall include without limitation Developer's identification of the flag or brand of an actual or potential replacement hotel proposed as the basis for an amendment hereunder, and relevant data to assist the City in determining whether the replacement hotel is consistent with the quality standard stated in this Section 4.03. Further, Developer covenants that Developer shall reimburse City for the cost of City procurement of a study, by a qualified consultant, of the proposed replacement hotel, and whether said replacement is consistent with the requirements of this Section 4.03. Nothing in this Agreement is intended to supersede, terminate, modify or otherwise affect any provision of the Conditions of Approval, except to the extent that a provision of this Agreement is in direct conflict with a provision of such Conditions of Approval. Then, and only in that event, the provisions of this Agreement shall prevail over the contradictory provisions of the Conditions of Approval. The execution of this Agreement by the parties hereto shall in no way otherwise affect the validity of any or all of the provisions of the Conditions of Approval. ARTICLE 5. OBLIGATIONS OF CITY Section 5.01. Obligations of City Generally. In consideration of Developer entering into this Agreement, City agrees that it will comply with the terms and conditions of this Agreement. The parties acknowledge and agree that Developer's agreement to perform and abide by its covenants and obligations set forth in this Agreement is a material consideration for the City's agreement to perform and abide by the long term covenants and obligations of the City, as set forth herein. Section 5.02. Hotel Operations Covenant. In consideration of Developer entering into this Agreement, City agrees to terminate the Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, and that it will comply with the terms and conditions of the Operations Covenant included herewith as Exhibit "C", and agrees that, provided Developer commences construction of the 142-room Virgin Hotel not later than March 31, 2020, completes construction of the 142-room Virgin Hotel not later than December 31, 2021, and Developer owns, manages, and operates the Project Site as a Virgin Hotel in a first-class manner, in accordance with the requirements of Chapter 5.26 of the Palm Springs Municipal Code and the Operations Covenant, City will pay Developer its share of transient occupancy tax revenues pursuant to the Hotel Operations Incentive Program (the "Program"). Operation of a Virgin brand hotel is a mandatory condition to City's continued payment to Developer of its share of transient occupancy tax revenues pursuant to the Program. The parties understand and agree that to the extent the Virgin brand hotel no longer operates as a Virgin brand hotel, or if Virgin ceases operation at the Project site, or is terminated for cause by Developer after at least five years of operation as a Virgin brand hotel, then City's payments to Developer of its share of transient occupancy tax revenues will cease upon the date by which the Virgin brand hotel is operated as any other flag or brand of hotel, unless an amendment to this Agreement and the Operations Covenant recorded concurrent herewith, is approved by the City Council which provides for a substitute operator that is of a first class quality that is commensurate with or superior to Virgin's market share and position as of this Agreement's Effective Date. If such a substitute operator is approved by the City Council, the benefits accruing pursuant to the Program will continue as described herein. ARTICLE 6. COOPERATION —IMPLEMENTATION The parties agree to cooperate in good faith to implement this Agreement. ARTICLE 7. STANDARDS, LAWS AND PROCEDURES GOVERNING THE PROJECT Section 7.01. Vested Right to Develop. Developer shall have a vested right to build out the Project through the Term on the Project Site in accordance with the terms and conditions of the Project Approvals. Section 7.02. Permitted Uses Vested by This Agreement. The permitted land use of the Project Site, the density and intensity of use of the Project Site, the maximum height, bulk and size of proposed buildings, provisions for reservation or dedication of land for public purposes and the location of public improvements, the general location of public utilities, and other terms and conditions of development applicable to the Project, are set forth in the Project Approvals. Section 7.03. Applicable Law. This Agreement will be construed and enforced in accordance with the laws and regulations of the State of California. Applicable provisions of federal and state law, the Palm Springs Municipal Code, any uncodified ordinances adopted by the City, the Uniform Codes referenced below in Section 7.04, and the rules, regulations, official policies, standards and specifications applicable to the Project, including without limitation the terms and conditions of the Project Approvals and the Operations Covenant approved concurrent herewith, shall in the aggregate constitute "Applicable Law" with respect to this Agreement. Further, with respect to any matter not addressed by the terms and conditions of the Project Approvals, those rules, regulations, official policies, standards and specifications (including City ordinances and resolutions) governing permitted uses, building locations, timing of construction, densities, design, heights, fees, exactions, and taxes in force and effect on the Effective Date of this Agreement shall represent "Applicable Law." Section 7.04. Uniform Codes. City may apply to the Project Site, at any time during the Term, the then current Uniform building construction, fire or other codes, as the same may be adopted or amended from time to time by City, and City's then current design and construction standards for public improvements, as the same may be adopted or amended from time to time, provided any such uniform code or standard has been adopted and uniformly applied by City on a citywide basis, and provided that no such code or standard is adopted for the purpose of preventing or otherwise limiting construction of all or any part of the Project. Section 7.05. No Conflicting Enactments. Except as provided in Section 7.04 and herein, City shall not impose on the Project (whether by action of the City Council or by City sponsored initiative or referendum, or other means) any ordinance, resolution, rule, regulation, standard, directive, condition or other measure (each individually, a "City Law") that is in conflict with Applicable Law, or the Project Approvals, or that reduces the development rights or assurances provided by this Agreement with respect to the Project. Without limiting the generality of the foregoing, (i) the City may at any time adopt any City Law reasonably deemed necessary and appropriate by the City, in an exercise of absolute discretion, to address a significant public health or safety issue, and (ii) any City Law shall be deemed to conflict with Applicable Law, or the Project Approvals, or reduce the development rights provided hereby if it would accomplish any of the following results, either by specific reference to the Project, or as part of a general enactment which applies to or effects the Project. a. Change any land use designation or permitted use of the Project Site existing as of the Effective Date of this Agreement; b. Limit or control the availability of public utilities, services or facilities or any privileges or rights to public utilities, services, or facilities (for example, water rights, water connections or sewage capacity rights, sewer connections, etc.) for the Project, unless such limitation is necessary to address a dangerous condition or health and safety issue; c. Limit or control the location of buildings, structures, grading, or other improvements of the Project in a manner that is inconsistent with or more restrictive than the limitations included in the Project Approvals; d. Limit or control the rate, timing, phasing or sequencing of the approval, development or construction of all or any part of the Project in any manner inconsistent with the Project Approvals; e. Apply to the Project any City Law otherwise allowed by this Agreement that is not uniformly applied on a citywide basis, or throughout City's entire "downtown" as City may reasonably define that term, to substantially similar types of development projects and project sites; f. Result in Developer having to substantially delay construction of the Project or require the issuance of additional permits or approvals by the City other than those required by the Project Approvals or Applicable Law; g. Substantially increase the cost of constructing or developing the Project or any portion thereof; h. Establish, enact, increase, or impose against the Project or Project Site any fees, taxes (including without limitation general, special and excise taxes), assessments, liens or other monetary obligations other than those specifically permitted by this Agreement; Impose against the Project any condition, dedication or other exaction not specifically authorized by the Project Approvals or Applicable Law; j. Grant any development right, entitlement or approval for any portion of the Property that will reduce, limit or encumber Developer's rights hereunder, or k. Unreasonably limit the timing, processing or procuring of applications and approvals, If City attempts to apply to the Project a City Law that Developer believes to conflict with Applicable Law or the Project Approvals, Developer shall provide to City in writing a notice describing the legal and factual basis for Developer's position. The parties shall meet and confer within thirty (30) days after the date of such written notice with the objective of attempting to arrive at a mutually acceptable solution to this disagreement. If no mutually acceptable solution can be reached, either party may take such action as may be permitted under Section 11.07, below. Section 7.06. Initiatives and Referenda. a. To the maximum extent permitted by law and except as otherwise specified herein, if any new provision of Applicable Law, whether a City Law or not, is enacted or imposed by initiative or referendum, or by the City Council directly or indirectly in connection with any proposed initiative or referendum after the Effective Date, which new provision of Applicable Law or City Law would conflict with Applicable Law in force and effect as of the Effective Date, or the Project Approvals, or otherwise reduce the development rights provided by this Agreement, such City Law shall not 10 apply to the Project. b. Without limiting the generality of any of the foregoing and to the maximum extent permitted by law, no moratorium or other limitation (whether relating to the rate, timing, phasing or sequencing of development) affecting building permits or other entitlements to which Developer is entitled pursuant to the Project Approvals shall apply to the Project. c. To the maximum extent permitted by law, City shall take reasonable actions to prevent any City Law from invalidating or prevailing over all or any part of this Agreement, and City shall cooperate with Developer and shall undertake such reasonable actions as may be necessary to ensure this Agreement remains in full force and effect. d. City shall not support, adopt or enact any City Law, or take any other action which would violate the express provisions or spirit and intent of this Agreement or the Project Approvals. e. Developer reserves the right to challenge in court any City Law that is enacted after the Effective Date of this Agreement that would conflict with Applicable Law or this Agreement or reduce the development rights provided by this Agreement. Section 7.07. Environmental Mitigation. The EIR, inclusive of its addenda, prepared, adopted, approved by the City as lead agency, in relation to the Project Entitlements and pursuant to CEQA, adequately addresses the potential environmental impacts under this Agreement. In particular, there are no substantial changes to the Project or the Project Site, or circumstances under which the Project is to be regulated and developed under this Agreement when viewed against Applicable Law, including the terms and conditions of the Project Approvals. Further, there is no new information of substantial importance that requires preparation of another CEQA document pursuant to CEQA Guidelines Section 15162. The vesting of Applicable Law is exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because there is no possibility that this Agreement will have any significant direct, indirect, or cumulative environmental impacts apart from or beyond those already analyzed, addressed, and mitigated as stated in the environmental documentation prepared and adopted/approved pursuant to CEQA. The parties understand that the EIR was intended to be used in connection with all of the Project Approvals needed for the Project, including this Agreement. Section 7.08. State and Federal Law. As provided in California Government Code §65869.5, this Agreement shall not preclude the application to the Project of changes in laws, regulations, plans or policies, to the extent that such changes are specifically mandated and required by changes in state or federal laws or regulations, or by any regional governmental agency that, due to the operation of state law, has binding legal authority on City ("Changes in the Law"). In the event Changes in the Law prevent or preclude compliance with one or more provisions of this Agreement, such provisions of 11 the Agreement shall be modified or suspended, or performance thereof delayed, as may be necessary to comply with Changes in the Law, and City and Developer shall take such action as may be required pursuant to this Agreement including, without limitation, Article 10 (Cooperation -Implementation) and Section 11.04 (Force Majeure and Excusable Delays; Extension of Time of Performance). Not in limitation of the foregoing, nothing in this Agreement shall preclude City from imposing on Developer any fee specifically mandated and required by state or federal laws and regulations, provided that nothing shall limit Developer's ability to challenge such laws and the imposition of such fees. Section 7.09. Timing of Project Construction and Completion. a. Project Timing. The parties acknowledge that Developer cannot predict the timing, rate, order or actual timing with certainty. The timing, order and rate of development shall be in Developer's sole discretion, except as otherwise provided in the Project Approvals. b. In light of the foregoing, the parties agree that Developer shall be able to develop the Project in accordance with Developer's own time schedule as such schedule may exist from time to time. In particular, and not in limitation of any of the foregoing, since the California Supreme Court held in Pardee Construction Co. v. the City of Camarillo, 37 Cal.3d 465 (1984), that the failure of the parties therein to consider and expressly provide for the timing of development resulted in a later -adopted initiative restricting the timing of development to prevail over such parties' agreement, it is the parties' desire to avoid that result by acknowledging that Developer shall have the right to develop the Project at such rate and at such times as Developer deems appropriate within the exercise of its subjective business judgment, provided that such schedule is consistent with this Agreement. c. The Developer shall use its best efforts to meet the agreed performance schedule attached hereto, and incorporated by this reference herein as Exhibit "D". Developer understands that City has entered this Agreement relying upon Developer's representations in Exhibit "D" as a material inducement to do so. Notwithstanding the provisions of Subsection 7.09.b., the parties understand and agree that any significant deviation from the agreed performance schedule in the absence of the occurrence of a force majeure event or excusable delay, shall be considered by City during an Annual Review conducted pursuant to Section 7.10. Section 7.10. Annual Review. City shall, at least every twelve (12) months during the term of this Agreement, review the extent of good faith substantial compliance by Developer and Landowner with the terms of this Agreement. The review may specifically include a review of whether Developer is making Reasonable Progress. To assess such progress, the City Planning Director may require, or the Developer may submit, at any time subsequent to the execution of this Agreement, and as frequently as annually thereafter, a development planned schedule showing a completion schedule that amends Exhibit "D." Reasonable Progress shall take into account market conditions, commercial realities, the sensitivities of adjacent residents and prudent construction 12 practices. Reasonable Progress is expressly subject to City's obligation of Prompt Review specified in Section 7.11, below. City may charge fees as necessary to cover the costs of conducting the annual review. Such periodic review shall be limited in scope to compliance with the terms of this Agreement pursuant to California Government Code Section 65865.1. Said review shall be diligently completed. Notice of such annual review shall include the statement that any default discovered by such review may result in termination of this Agreement as provided herein. A finding by City of good faith compliance by Developer and Landowner with the terms of the Agreement shall conclusively determine said issue up to and including the date of said review. City shall deposit in the mail or fax to Developer and/or Landowner a copy of all staff reports and, to the extent practical, related exhibits concerning contract performance at least seven (7) calendar days prior to such periodic review. Developer or Landowner shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before the City Council and, if the matter is referred to a City Planning Commission, before said Commission Section 7.11 Prompt Review by the City. City and Developer shall cooperate and use commercially reasonable efforts to timely review and approve the development design review process, building plan review process, improvement plan review process, within sixty (60) days of receipt of any application therefor. Review of any application provided by this subparagraph shall not be deemed to waive any of the Applicable Law pertaining to review or approval of such application, including, but not limited to, a public hearing, if any, required therefore. In the event the Parties agree to use an expedited process to perform any review pursuant to this subparagraph, Developer authorizes the imposition of City Fees paid to the City sufficient to cover City's estimated costs of utilizing City staff, retaining an outside consultant or any combination thereof in order to expedite the review process. Any such process shall terminate upon the expiration or termination of this Agreement or the issuance of the final certificate of occupancy for development within the Project, whichever occurs first. Section 7.12. Prevailinq Wage Laws. Developer covenants that it shall comply with California's prevailing wage laws codified at California Labor Code §1770 et seq. in the development of the Project at the Project Site, and shall contractually require its contractors to do the same. Developer is seeking a determination by the California Department of Industrial Relations that this compliance is not required by law. In the event that Developer procures such a determination as a final and non -appealable matter of law, Developer shall provide the City with written notice of same, and Developer's covenant per this Section 7.12 shall become void. ARTICLE 8. AMENDMENT AND OPERATING MEMORANDA Section 6.01. Amendment. This Agreement may be amended from time to time, in whole or in part, by mutual written consent of the parties hereto or their successors in interest, in accordance with the Development Agreement Statute and the Development Agreement Ordinance. 13 Section 8.02. Operating Memoranda. The provisions of this Agreement require a close degree of cooperation between the City and the Developer. The development of the Project may demonstrate that clarifications to this Agreement and Project Approvals are appropriate with respect to the details of performance of the City and the Developer. To the extent allowable by law, the Developer shall retain a certain degree of flexibility as provided herein with respect to all matters, items and provisions covered in general under this Agreement, except for those which relate to the (i) term; (ii) permitted uses; (iii) density or intensity of use; or (iv) development standards or height, except as otherwise permitted by the Palm Springs Zoning Code. When and if the Developer finds it necessary and appropriate to make changes, adjustments or clarifications to minor matters, items or provisions not related to any of these four (4) enumerated areas, and the City determines, in an exercise of the City's absolute discretion, that the requested change, adjustment or clarification is consistent with the City's interest in the Project, and that no public interest is served by an amendment to this Agreement, the Parties shall effectuate such changes, adjustments or clarifications through operating memoranda approved by the parties in writing, inclusive of reference to this Section 8.02. Operating memoranda are not intended to constitute an amendment to this Agreement but mere ministerial clarifications; therefore public notices and hearings shall not be required. The City Manager shall be authorized, upon consultation with and approval of, the City Council Project Sub -Committee and the Developer, to determine whether a requested clarification may be effectuated pursuant to this Section or whether the requested clarification is of such character to constitute an amendment to this Agreement which requires compliance with the provisions of Section 8.01 above. The City shall report the entry into each operating memorandum at the first annual review taking place after execution of the operating memorandum in question. ARTICLE 9. ASSIGNMENT, TRANSFER AND NOTICE Section 9.01. Assignment (General). Developer's rights and obligations hereunder and with respect to the Project Approvals shall not be assigned or transferred, except that on thirty (30) days written notice to City, Developer, may assign all or a portion of Vested Party's rights and obligations thereunder to any person or persons, partnership or corporation who purchases all or a portion of Vested Party's right, title and interest in the Project Site, provided such assignee or grantee assumes in writing each and every obligation of Developer hereunder yet to be performed, and further provided that Developer obtains the consent of City to the assignment, which consent shall not be unreasonably withheld. Any assignment pursuant to this Article 9 shall name Developer, as assignor, of any and all rights and obligations hereunder in accord with the nature and scope of the assignment in question. Section 9.02. Requirements of Notice. Consent. Provided the Developer's thirty (30) day notice includes the assumption by the assignee or grantee, the consent of the City or withholding thereof shall be determined by the City Council at a public meeting. The notice to City shall include the identity of any such assignee and a copy of the written assumption of the assignor's obligations hereunder pertaining to the portion assigned or transferred. After such notice and the receipt of such consent, the assignor shall have no further obligations or liabilities hereunder. 14 Section 9.03. Assignment to Affiliate as a Matter of Right. Notwithstanding anything in this Article 9, the parties understand and agree that Developer shall be permitted as a matter of right to assign all or a portion of Developer's rights and obligations hereunder to any person or entity that individually or collectively, directly or indirectly, controls, is controlled by, or is under common control with Developer, so long as Developer's right, title and interest in the Project Site, or corresponding portion thereof, is transferred to such an affiliated person or entity prior to or concurrent with such assignment, and such an affiliated person or entity assumes in writing each and every obligation of Developer hereunder as to the Project or Project Site, or corresponding portion thereof, yet to be performed. City shall not have the authority to withhold consent to such an assignment pursuant to this Section 9.03. Section 9.04. Limits of Liability. To the extent the Developer's responsibilities are transferred in good faith to another person or entity, Developer shall be free from any and all liabilities accruing on or after the date of any assignment or transfer with respect to those obligations assumed by a transferee pursuant to a Transfer Agreement. No breach or default hereunder by any person succeeding to any portion of Developer's obligations under this Agreement shall be attributed to Developer, nor may Developer's rights hereunder be canceled or diminished in any way by any breach or default by any such person. ARTICLE 10. COOPERATION IN THE EVENT OF LEGAL CHALLENGE Section 10.01. Cooperation. a. In the event of any administrative, legal or equitable action or other proceeding instituted by any person not a party to this Agreement challenging the validity of any provision of this Agreement, the Hotel Operations Covenant, or any Project Approval, the parties shall cooperate in defending such action or proceeding. The parties shall use best efforts to select mutually agreeable legal counsel and experts to defend such action, and Developer shall pay all compensation and costs and expenses incurred for such legal counsel and experts; provided, however, that such compensation shall include only compensation paid to counsel not otherwise employed as City staff and shall exclude, without limitation, City Attorney time and overhead costs and other City staff overhead costs and normal day-to-day business expenses incurred by City. In the event City and Developer are unable to select mutually agreeable legal counsel to defend such action or proceeding, each party may select its own legal counsel. b. The parties agree that this Section 10.01 shall constitute a separate agreement entered into concurrently, and that if any other provision of this Agreement, or the Agreement as a whole, is invalidated, rendered null, or set aside by a court of competent jurisdiction, the parties agree to be bound by the terms of this section, which shall survive such invalidation, nullification or setting aside. 15 Section 10.02. Waiver of Challenges to Project Approvals. a. As a condition precedent to receiving the benefits of this Agreement, Developer, its successors in interest, transferees, assignees, etc., expressly waive any legal or equitable right to challenge any Project Approvals or other act, entitlement, fee, or approval expressly set forth in this Agreement, including without limitation, all acts of protest pursuant to California Government Code Sections 66008 and 66009 as to any fee against which Developer has vested in accordance with this Agreement. b. The parties agree that this Section 10.02(b) shall constitute a separate agreement entered into concurrently, and that if any other provision of this Agreement, or the Agreement as a whole, is invalidated, rendered null, or set aside by a court of competent jurisdiction, the parties agree to be bound by the terms of this section, which shall survive such invalidation, nullification or setting aside. ARTICLE 11. DEFAULT; REMEDIES; TERMINATION, DISPUTES Section 11.01. Defaults. Any failure by either party to perform any term or provision of this Agreement, which failure continues uncured for a period of thirty (30) days following written notice of such failure from the other party (unless such period is extended by mutual written consent), shall constitute a default under this Agreement ("Default"). Any notice given pursuant to the preceding sentence ("Default Notice") shall specify the nature of the alleged failure and, where appropriate, the manner in which said failure satisfactorily may be cured. If the nature of the alleged failure is such that it cannot reasonably be cured within such 30 day period, then the commencement of the cure within such time period, and the diligent prosecution to completion of the cure thereafter, shall be deemed to be a cure within such 30 day period. Upon the occurrence of a Default under this Agreement, the non -defaulting party may institute legal proceedings to enforce the terms of this Agreement or, in the event of a material Default, terminate this Agreement. If the Default is cured, then no Default shall exist and the noticing party shall take no further action. Section 11.02. Termination. If City elects to consider terminating this Agreement due to a material Default of Developer, then City shall give a notice of intent to terminate this Agreement. The parties agree that a significant deviation from the agreed performance schedule, in the absence of the occurrence of a force majeure event or excusable delay, shall be a material default hereunder. City shall give written notice of termination of this Agreement to Developer by certified mail and this Agreement shall thereby be terminated sixty (60) days thereafter. Section 11.03. Default by City or Developer. In the event that City or Developer defaults under the terms of this Agreement, the City or Developer shall have all rights and remedies provided herein or under law. 16 Section 11.04. Force Majeure and Excusable Delay Extension of Time of Performance. In addition to specific provisions of this Agreement, neither party shall be deemed to be in Default where delays in performance or failures to perform are due to, and a necessary outcome of, war, insurrection, strikes or other labor disturbances, walk- outs, riots, floods, earthquakes, fires, casualties, acts of God, restrictions imposed or mandated by other governmental entities (including new or supplemental environmental regulations), enactment of conflicting state or federal laws or regulations, judicial decisions, or similar basis for excusable performance which is not within the reasonable control of the party .to be excused (collectively and each a "Force Majeure" event). Litigation attacking the validity of this Agreement or any of the Project Approvals, or any permit, ordinance, entitlement or other action of a governmental agency other than City necessary for the development of the Project pursuant to this Agreement, shall also be deemed to create an excusable delay as to Developer (collectively "Excusable Delay"). The party whose performance is prevented or delayed by such event of Force Majeure or Excusable Delay shall give prompt written notice thereof to the other party and both parties shall have agreed that performance is appropriately excused or delayed pursuant to this Section 11.04. In the event of Force Majeure or Excusable Delay, the parties shall memorialize in writing the extension of time for the performance of any obligation whose performance has been so prevented or delayed. The term of any such extension shall be equal to the period of the Excusable Delay or Force Majeure event, or such other period as may be mutually agreed upon by both parties. Section 11.05. Legal Action. Either party may, in addition to any other rights or remedies, institute legal action to cure, correct, or remedy any default, enforce any covenant or agreement herein, enjoin any threatened or attempted violation thereof, recover damages for any default, enforce by specific performance the obligations and rights of the parties hereto, or to obtain any remedies consistent with the purpose of this Agreement. Section 11.06. California Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California. Venue for any action shall be in Riverside County, California. Section 11.07. Resolution of Disputes. With regard to any dispute involving development of the Project, the resolution of which is not provided for by this Agreement or Applicable Law, Developer and City shall, at the request of the other party, meet with that other party, and shall attempt in good faith to resolve any such dispute. Nothing in this Section 11.07 shall in any way be interpreted as requiring that Developer or City reach an agreement with regard to those matters being addressed, nor shall the outcome of these meetings be binding in any way on City or Developer unless expressly agreed to by the parties to such meetings. Any dispute that is the subject of a meeting pursuant to this Section 11.08 shall be referenced during an Annual Review_ Section 11.08. Attorneys' Fees. In any legal action or other proceeding brought by either party to enforce or interpret a provision of this Agreement, each party shall bear its own costs and expenses, including attorneys' fees. 17 Section 11.09. Hold Harmless. Developer shall, at its sole expense, defend and hold City and its elected and appointed officers, agents, employees, and representatives harmless from all claims, costs, and liabilities for any personal injury, death, or property damage which arises directly or indirectly as a result of the construction of the Project, the Project Site, or of operations performed under this Agreement by Developer or by Developer's contractors, subcontractors, agents or employees, whether such operations were performed by Developer or any of Developer's contractors, subcontractors, agents, or by any one or more persons directly or indirectly employed by or acting as agent for Developer or any of Developer's contractors or subcontractors. Developer's duty hereunder shall include without limitation any claim arising from or related to Developer's duties under Section 7.12 hereof. Nothing in this section shall be construed to mean that Developer shall hold City harmless from any claims of personal injury, death or property damage arising from, or alleged to arise solely from, any negligent or intentional act, or failure to act, on the part of City, its elected and appointed representatives, officers, agents and employees. This hold harmless agreement applies to all damages or claims for damages suffered or alleged to have been suffered by reason of the operations referred to in this section regardless of whether or not City prepared, supplied or approved plans or specifications, or both, for the Project and/or Project Site. The parties agree that this Section 11.09 shall constitute a separate agreement entered into concurrently herewith, and that if any other provision of this Agreement, or the Agreement as a whole, is invalidated, rendered null, or set aside by a court of competent jurisdiction, the parties agree to be bound by the terms of this section, which shall survive such invalidation, nullification or setting aside. ARTICLE 12. NO AGENCY, JOINT VENTURE OR PARTNERSHIP It is specifically understood and agreed to by and between the parties hereto that: (i) the subject development is a private development; (H) City has no interest or responsibilities for, or duty to, third parties concerning any improvements until such time, and only until such time, that City accepts the same pursuant to the provisions of this Agreement or in connection with the various Project Approvals; (iii) Developer shall have full power over and exclusive control of the Project herein described, subject only to the limitations and obligations of Developer under this Agreement, the Project Approvals and Applicable Law; and (iv) City and Developer hereby renounce the existence of any form of agency relationship, joint venture or partnership between City and Developer and agree that nothing contained herein or in any document executed in connection herewith shall be construed as creating any such relationship between City and Developer. 18 ARTICLE 13. MISCELLANEOUS Section 13.01. Enforceability. City and Developer agree that unless this Agreement is amended or terminated pursuant to the provisions of this Agreement, this Agreement shall be enforceable by any party hereto, notwithstanding any change hereafter enacted or adopted (whether by ordinance, resolution, initiative, or any other means) in any applicable general plan, specific plan, zoning ordinance, subdivision ordinance, or any other land use ordinance or building ordinance, resolution or other rule, regulation or policy adopted by City that changes, alters or amends the rules, regulations and policies applicable to the development of the Project Site at the time of the approval of this Agreement as provided by California Government Code Section 65866. Section 13.02. Severability. If any term or provision of this Agreement, or the application of any term or provision of this Agreement to a particular situation, is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining terms and provisions of this Agreement, or the application of this Agreement to other situations, shall continue in full force and effect unless amended or modified by mutual consent of the parties. Notwithstanding the foregoing, if any material provision of this Agreement, or the application of such provision to a particular situation, is held to be invalid, void or unenforceable, either City or Developer may (in their sole and absolute discretion) terminate this Agreement by providing written notice of such termination to the other party. Section 13.03. Other Necessary Acts. Each party shall execute and deliver to the other all such other further instruments and documents as may be reasonably necessary to carry out the Project Approvals and to provide and secure to the other party the full and complete enjoyment of its rights and privileges hereunder. Section 13.04. Construction. Each reference in this Agreement to this Agreement or any of the Project Approvals shall be deemed to refer to the Agreement or the Project Approvals as they may be amended from time to time, whether or not the particular reference refers to such possible amendment. This Agreement has been reviewed and revised by legal counsel for both City and Developer, and no presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. Section 13.05. Other Miscellaneous Terms. The singular shall include the plural; the masculine gender shall include the feminine, "shall' is mandatory; "may" is permissive. If there is more than one signer of this Agreement, the signer obligations are joint and several. Section 13.06 Covenants Runninq with the Land. All of the provisions contained in this Agreement shall constitute covenants or servitudes which shall run with the land comprising the Project Site and the burdens and benefits hereof shall be binding upon and inure to the benefit of the parties and their respective heirs, successors in interest, transferees and assignees, representatives, lessees, and all other persons acquiring all or a portion of the Project or the Project Site, or any interest therein, whether by 19 operation of law or in any manner whatsoever. All of the provisions contained in this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to California law including, without limitation, Civil Code Section 1468. Section 13.07. Notices. Any notice or communication required hereunder between City or Developer must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail) by registered or certified mail (return receipt requested), or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any party hereto may at any time, by giving ten (10) days written notice to the other party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the parties at their addresses set forth below: If to the City, to: David H. Ready, Esq., Ph.D. City Manager 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 322-8362 David. Ready@paimsprings-ca.gov With Copies to: Edward Z. Kotkin City Attorney 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 323-8299 Edward.Kotkin@palmspringsca.gov If to Developer, to: Michael Braun DTPS B-3, LLC 201 N. Palm Canyon Drive, Suite 201 Palm Springs, CA 92262 20 Section 13.08. Entire Agreement, Counterparts and Exhibits. This Agreement is executed in duplicate, each of which is deemed to be an original. This Agreement consists of twenty-two (22) pages and four (4) exhibits which constitute in full, the final and exclusive understanding and agreement of the parties, and supersede all negotiations or previous agreements of the parties with respect to all or any part of the subject matter hereof. Section 13.09, Waiver. Any waivers of the provisions of this Agreement or any breach of covenants or conditions contained in this Agreement shall be effective only if in writing and signed by the appropriate authorities of City and Developer. A waiver of one provision or breach shall not be considered as a continuing waiver, shall not constitute a waiver of any other conditions or covenants and shall not operate to bar or prevent the other party from declaring a forfeiture or exercising its rights for any succeeding breach of either the same or other condition or covenant. Section 13.10. Recordation of Development Agreement. No later than ten (10) days after the ordinance through which the City approves this Agreement is adopted on second reading, the City Clerk shall record an executed copy of this Agreement in the Official Records of the County of Riverside. Section 13.11. No Third Party Beneficiaries. No person or entity shall be deemed to be a third party beneficiary hereof and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than City and Developer, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 13.12. Titles of Parts and Sections. Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of this Agreement's provisions. Section 13.13. Discretion of City. City's execution of this Agreement in no way limits the discretion of City in the permit or approval process in connection with any site plan approvals, subsequent entitlements, land use decisions, construction or improvements which are within City's jurisdiction, except to the extent expressly and unequivocally stated herein. Section 13.14, Representations of Authority. As to each person signing this Agreement on behalf of an entity, all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and he or she has been authorized to sign this Agreement and bind the party on whose behalf he or she signs. [SIGNATURES ON NEXT PAGE] 21 IN WITNESS WHEREOF, the City and Owner have executed this Operations Covenant by duly authorized representatives on the date first written hereinabove. ATTEST: Anthony J. Mejia, City Clerk APPROVED AS TO FORM: Edward Z. Kotkin, City Attorney "CITY„ THE CITY OF PALM SPRINGS, a California municipal corporation and charter city 22 David H. Ready, City Manager "OWNER" DTPS B-3, LLC, a C is limited liability company in [END OF SIGNATURES] P. Fernandez, Manager OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 15 OF 15 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 Riverside On t 1 2018 before me, Jeanette L. Sanborn, Notary Public, (insert name and title of the officer) personally appeared Michael Braun and Octavio Fernandez 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 h0she/they executed the same in #i~their authorized capacity(ies), and that by hisAw/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) JEANETTE L. SAN80RN NotaryPublic- California z 9j Riverside County Commission R 2206006 My Comm. Expires Aug 16, 2021 EXHIBIT A REAL PROPERTY DESCRIPTION Parcel 3 as shown on Parcel Map 36446, as per Map recorded in Book 238, Pages 31 through 34 of Maps, records of Riverside County, California. Exhibit "A" EXHIBIT B ORDINANCE NO. 1940 FOLLOWS THIS PAGE Exhibit "B" ORDINANCE NO. 1940 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A DEVELOPMENT AGREEMENT WITH DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, RELATED TO CONSTRUCTION OF THE VIRGIN HOTEL LOCATED ON BLOCK B-1 OF THE DOWNT V1IN PALM SPRINGS SPECIFIC PLAN AT THE NORTHEAST CORNER OF BELARDO ROAD AND MUSEUM WAY (CASE NO. 5.1204 SP AMEND, CASE NO. 3.3908 MAJ, AND CASE NO. 5.1427 DA). City Attorney's Summary This Ordinance approves a Development Agreement for a term extending through March 31, 2022, unless otherwise terminated or modified as set forth in the Development Agreement, vesting the discretionary entitlements associated with the Virgin Hotel, identified by Case No.'s 5.1204 SP and 3.3908 MAJ. Pursuant to the terms of the Development Agreement, provided the Developer complies with the required performance schedule, the Developer will be entitled to participate in the Hotel Operations Incentive Program in accordance with Chapter 5.26 of the Municipal Code. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS FINDS AND DETERMINES AS FOLLOWS: A. On December 2, 2009, the City Council made findings, adopted a Mitigation Monitoring and Reporting Program, adopted a Statement of Overriding Considerations, and certified the Museum Market Specific Plan Environmental Impact Report ("Specific Plan EIR') and adopted Ordinance 1764, thereby approving the Museum Market Plaza Specific Plan ("Specific Plan") which covers the land use, development standards and design guidelines for the Specific Plan area. B. On January 13, 2016, February 3, 2016, March 2, 2016, and April 6, 2016, the City Council considered amendments to the Specific Plan, including changing the document name to "Downtown Palm Springs Speck Plan", modifications of land uses within the different Blocks, adjustments to building heights and other various amendments and changes. C. Palm Springs Promenade, LLC, a California limited liability company, predecessor in interest to DTPS B-3, LLC, a California limited liability company, ('Applicant') filed an application with the City, pursuant to the Speck Plan and Section 94.04.00 of the Zoning Code, for a Major Architectural Application (Case No. 3.3908-MAJ) to allow the construction of a Virgin brand new hotel consisting of a six -story, 112,862-square Ordinance No. 1940 Page 2 foot building with 142-room resort hotel and ground floor commercial -retail on Specific Plan Block B-1 located at the northeast corner of Belardo Road and Museum Way, (APN 513-560-044) ("Project"), D. On April 20, 2016, the Architectural Advisory Committee voted 4-2 to recommend conditional approval of the Project to the Planning Commission. E. On October 28, 2015, November 12, 2015, December 9, 2015, January 13, 2016, and April 20, 2016, a public hearing to consider the Project was held by the Planning Commission in accordance with applicable law. F. On April 20, 2016, the Planning Commission geld a public hearing receiving testimony and made a recommendation of approval of the Project to the City Council. G. On April 20, 2016, the City Council carefully reviewed and considered all of the evidence presented in connection with the public hearing to consider the Project, including, but not limited to, the staff report, and all written and oral testimony presented, and adopted Resolution No. 24003 approving the Project. H. Pursuant to Section I.C. of the Downtown Palm Springs Specific Plan, in its adoption of Resolution No. 24003 on April 20, 2016, the City Council found that the Project complies with the Specific Plan's guiding principles as follows: The highest quality development which provides an exciting and safe living, working and shopping experience for all. The Project will enhance the experience of those living, working and shopping within the Specific Plan area. Amenities such as dining, meeting space and lounge areas are proposed. Commercial space provides excitement along street frontages and the pedestrian paseo, Market Street. A high -end hotel brand will operate the property. Consequently, the development will be of high -quality and provide an exciting and safe living, working and shopping experience for all. 2. Connections from the Palm Springs Art Museum to the Resort/Convention Center. In order to achieve connections between the Art Museum and Resort/Convention Center, the Specific Plan sets development standards for new developments. The proposed building incorporates adequate sidewalk areas and building separation space consistent with the Specific Plan requirements. Thus, the Project meets connections requirements envisioned by this finding. Ordinance No. 1940 Page 3 3. The development of retail commercial development which successfully mixes national and regional chain stores with local businesses, focused on the major roadways which bound the site, including North Palm Canyon, Indian Canyon, Tahquitz Canyon and Belardo. The Project will allow commercial retail stores on street frontages and provide overnight accommodations for tourists and visitors to the City. The hotel operator is a national brand that will enhance the development. Other commercial space within the building may be operated by regional chains or a local business. 4. A balance of commercial and residential development which assures the success of the area by increasing the number of homes in the downtown, thereby increasing the customer base of the commercial uses. The proposed commercial use provides overnight, short-term accommodations for tourists and visitors. Such guests are expected to increase customer base of commercial uses downtown. While no residential is proposed on this block, it may be permitted in other locations within the Specific Plan area. Thus, the Project aids in the balance of commercial and residential development and assists in the success of the area. 5. The development of residential units which relate synergistically to the commercial development around them, and encourage a pedestrian lifestyle with little use for the automobile. No residential use is approved as part of the Project. However, the hotel will have overnight guests that relate synergistically to the surrounding commercial development. With the location in the heart of downtown, it is expected that these guests will walk to their destinations and avoid automobile use when unnecessary. 6. The development of additional resort hotels which provide luxury accommodations and increase the visitors to the City's downtown. The proposed resort hotel will provide luxury accommodations and increase the visitors to the City's downtown. With international recognition, the operator is expected to attract greater activity to the area and would be the first location for its brand in the Coachella Valley. 7. View corridors to the mountains at Museum Way and Andreas Road through the site shall be created, while views to the mountains from Tahquitz Canyon Way shall be preserved or enhanced to the greatest extent possible. View corridors of mountains are provided with building separation on Museum Way and Andreas Road. With varying widths along Museum Way, there will be at least 70-feet between buildings to enhance mountain views. Additionally, the 69-foot building is setback from Palm Canyon Drive, which will further preserve views. Ordinance No. 1940 Page 4 8. The Downtown Palm Springs project is pedestrian oriented and all buildings must be sensitively designed to the human scale with active, pedestrian friendly frontages on the ground floor. Structures are to be massed to reduce their visual dominance and preserve view corridors. The built form is to be effectively permeated with public and private open spaces, thereby avoiding the creation of overwhelming and impenetrable mega -blocks. The Project provides adequate pedestrian space and is sensitively designed to the human scale. The pedestrian experience is provided between the building and street curb in an area ranging from 12 to 28-feet in width, which enables sufficient space for circulation, planters and outdoor dining. The proposed building reaches a height of 69-feet, and is massed/scaled appropriately from Palm Canyon Drive to ensure it does not create an overwhelming and impenetrable mega -block. I. Pursuant to Section 94.04.00(D) of the Palm Springs Zoning Code, in its adoption of Resolution No. 24003 on April 20, 2016, the City Council found: The City Council has examined the material submitted with the architectural approval application and has examined specific aspects of the design and determined the Project will (1) provide desirable environment for its occupants; (2) is compatible with the character of adjacent and surrounding developments, and (3) aesthetically it is of good composition, materials, textures and colors. City Council evaluation is based on consideration of the following: 1. Site layout, orientation, location of structures and relationship to one another and to open spaces and topography. Definition of pedestrian and vehicular areas, i.e., sidewalks as distinct from parking lot areas, The Project proposes a new six -story building with pedestrian circulation around all sides. Pedestrian pathways will be separated from vehicular streets with curbs and landscape treatment. Pavers, landscaping and sidewalk fumiture will provide an enhanced experience on the site. Sidewalks and other walkways are provided to accommodate the change in topography across the site. Pedestrian access is provided to the underground parking via stairways and elevators. 2. Harmonious relationship with existing and proposed adjoining developments and in the context of the immediate neighbor -hood l community, avoiding both excessive variety and monotonous repetition, but allowing similarity of style, if warranted, The proposed structure is an L-shaped configuration surrounding a second floor pool deck. The height is lower than the hotel to the south. The proposed architecture is of a contemporary style consistent with surrounding development, but introduces design elements, colors and materials of a higher quality than the existing development in the vicinity. The selection of design elements differs from those of Ordinance No. 1940 Page 5 the adjacent blocks within the Downtown Palm Springs Specific Plan area, yet they contribute to the overall identity of an up -scale contemporary center. 3. Maximum height, area, setbacks and overall mass, as well as parts of any structure (buildings, walls, screens, towers or signs) and effective concealment of all mechanical equipment; The proposed building's overall height will be 69-feet. Exterior elevations show projections at building edges. Mass is divided with exterior building articulation. A large void above the second floor pool deck reduces overall building bulk. Rooftop mechanical will be concealed from view. 4. Building design, materials and colors to be sympathetic with desert surroundings; 5. Harmony of materials, colors and composition of those elements of a structure, including overhangs, roofs, and substructures which are visible simultaneously, The building architecture is contemporary in style, with a color and material palette that introduces muted color tones, with limited use of accent colors via metal, concrete and glass. Covered walkways for outdoor seating, pedestrian circulation and solar control are integrated into the building design. 6. Consistency of composition and treatment; The building design uses consistent forms and treatments across each elevation. The contemporary elements interact with each other in a consistent and rhythmic manner. 7. Location and type of planting, with regard for desert climate conditions. Preservation of specimen and landmark frees upon a site, with proper irrigation to insure maintenance of all plant materials; A landscape plan has been submitted and includes a mix of common tree and plant materials used in drought tolerant environments, as well as some identified by Table II1-5, Landscape Palette, of the Specific Plan, 8. Signs and graphics, as understood in architectural design including materials and colors, Pursuant to Chapter 93.20 of the Palm Springs Municipal Code, the Applicant will be required to submit a sign program for the Project meeting the architectural design standards of the Speck Plan. J. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the Legislature of the State of California has enacted California Government Code § 65864 et seq. (the "Development Agreement Statute"), which authorizes City to Ordinance No. 1940 Page 6 enter into an agreement with any person having a legal or equitable interest in real property regarding the development of such property. This Development Agreement has been processed, considered, and approved in accordance with the procedures and requirements as set forth in the Development Agreement Statute., and K. The Applicant has submitted a request for a Development Agreement (Case 5.1427 DA) to establish conditions, terms and obligations for the development of the Project. L. Pursuant to Government Code section 65865(c),.the City of Palm Springs previously adopted Ord. 1829 § 3, 2013; Ord. 1294, 1988 [PSMC § 94.08.00], that set forth rules and regulations establishing procedures and requirements for consideration of development agreements. This Development Agreement has been processed, considered, and approved in accordance with the procedures and requirements as set forth in the City's Ordinances and Municipal Codes. M. A notice of a public hearing of the Planning Commission of the City of Palm Springs, California to consider the proposed Development Agreement was given in accordance with applicable law, and on November 15, 2017, the Planning Commission carefully reviewed and considered all of the evidence presented in connection with the hearing on the proposed Development Agreement for the Project, including but not limited to the staff report, and all written and oral testimony presented, and voted 6-0 to recommend approval of the proposed Development Agreement for the Project, with recommendations for amendment, to the City Council. N. A notice of public hearing of the City Council of the City of Palm Springs, California to consider the proposed Development Agreement was given in accordance with applicable law and on November 15, 2017, the City Council held a public hearing in accordance with applicable law, and carefully reviewed and considered all of the evidence presented in connection with the hearing on the proposed Development Agreement for the Project, including but not limited to the staff report, all written and oral testimony presented, and the Planning Commission's recommendations. O. On December 2, 2009, the City Council certified the Final Environmental Impact Report (TEIR") for the Specific Plan EIR, and adopted CEQA Findings and Statement of Facts, a Statement of Overriding Considerations, and a Mitigation Monitoring Program; and enacted by Ordinance No. 1764 and Resolution No. 22625, the Museum Market Plaza Specific Plan. P. On October 17, 2012, the City Council certified an Addendum to the Specific Plan FEIR (Addendum #1), and approved a Conformity Review for implementation of a revised Downtown Revitalization Plan entitled "Downtown Palm Springs" as conforming to and being consistent with the approved Museum Market Plaza Specific Plan. Ordinance No. 1940 Page 7 Q. On March 2, 2016, and reaffirmed on April 6, 2016, the City Council adopted Resolution No. 23977, certifying an Addendum to the Specific Plan FEIR (Addendum #2), redesignated as the Downtown Palm Springs Specific Plan, finding that Addendum #2 prepared for the Downtown Palm Springs Specific Plan appropriately described the impacts of the Downtown Palm Springs Specific Plan, including construction of the proposed land uses (inclusive of the Virgin Hotel proposed on Block B-1), and also finding that: Changes in the Downtown Palm Springs Specific Plan would not result in a new significant impact not previously analyzed in the FEIR and its addenda, nor result in any new mitigation measures beyond those proposed in the FEiR and its addenda, insofar as the FEIR analyzed a more intense project, and impacts associated with the revisions in the Specific Plan Amendment will either be reduced or be equivalent to those analyzed in the EIR Addendum. 2. Changes in the Downtown Palm Springs Specific Plan, inclusive of the Virgin Hotel proposed on Block B-1, will not result in an increase in the severity of an environmental impact, and no change to the proposed mitigation measures is required, since reductions in project intensity will not result in significant changes in potential impacts, particularly those associated with transportation and traffic. 3. Changes in the Downtown Palm Springs Specific Plan, inclusive of the Virgin Hotel proposed on Block B-1, will not result in a feasible project alternative or mitigation measure not considered in the certified EIR or the EIR Addendum. 4. The FEIR Addendum #2 was prepared in conformance with the requirements of the California Environmental Quality Act. 5. The City Council considered the information contained in the certified FEIR, FEIR Addendum No. 1 and FOR Addendum No. 2 prior to approving the Downtown Palm Springs Specific Plan, inclusive of the Virgin Hotel proposed on Block B-1. 6. The FEIR Addendum #2 reflected the City Council's independent judgment and analysis. R. The Project is considered a "project" pursuant to the terms of the Califomia Environmental Quality Act ("CEQA"), and the City Council finds that no further environmental documentation beyond the documentation prepared in conjunction with the Speck Plan EIR and subsequently approved Addenda for the Project is required because: (i) there are no substantial changes in the project that will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; (ii) there are no substantial changes with respect to the circumstances under which the project is being undertaken which will require major revisions of the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; and (iii) there is no Ordinance No. 1940 Page 8 new information of substantial importance which was not known and could not have been known with the exercise of reasonable diligence at the time the EIR was certified showing that; (a) the project will have one or more significant effects not discussed in the EIR; (b) significant effects previously examined will be substantially more severe than shown in the EIR; (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible, and would substantially reduce one or more significant effects of the project, but those mitigation measures or alternatives have not been adopted; or (d) mitigation measures or alternatives considerably different from those analyzed in the EIR would substantially reduce one or more significant effects on the environment, but the mitigation measures or alternatives have not been adopted. (Public Resources Code section 21166; CEQA Guidelines section 15162.) NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. The findings and determinations reflected above are all true and correct, and are incorporated by this reference herein as the cause and foundation for the action taken by and through this Ordinance. SECTION 2. The Specific Plan Final EIR and its Addenda are the controlling environmental documents for the Council's consideration of the Development Agreement for the Project. SECTION 3. The Development Agreement complies with the provisions of the Palm Springs Municipal Code PSMC § 94.08.00, as follows: a. The Development Agreement is consistent with the objectives, policies, general land uses and programs specified in the general plan and any applicable specific plan. The Development Agreement is consistent with the City of Palm Springs General Plan in that the Development Agreement directly reflects the land use approved through the Downtown Palm Springs Specific Plan Case No. 5.1204-SP and Major Architectural Application Case No. 3.3908-MAJ by the City Council, and the land use is permitted in the General Plan Land Use Element and the Specific Plan. b. The Development Agreement is compatible with the uses authorized in, and the regulations prescribed for, the land use district in which the real property is located. The Project is consistent with the Specific Plan, because the Specific Plan designation for the site is for various land uses, including Retail Goods, Personal Services, Food and Beverage Services, Services for Groups, Office and Related, Residential, Tourist and Related Services, Public and Semi-public, and compatible accessory uses. The Specific Plan allows for construction of up to two hotels with a maximum of 300 hotel rooms located west of Palm Canyon Drive. The City Council previously approved a Preliminary Planned Development District for a 6-story hotel Ordinance No, 1940 Page 9 on Block C-1 of the Specific Plan, Case No. 5.1290 PD-361), with a total of 155 hotel rooms. The Project was approved with a maximum of 142 hotel rooms, establishing a maximum of 297 hotel rooms located west of Palm Canyon Drive, and is thus consistent with the Specific Plan in terms of density. c. The Development Agreement is in conformity with public convenience, general welfare and good land use practice. The Development Agreement is in conformance with established City goals, objectives, and regulations outlined in the City's General Plan, the Speck Plan, and the City's Zoning Ordinance. d. The Development Agreement will not be detrimental to the health, safety and general welfare. The Development Agreement is not detrimental to the health, safety, and welfare of the community in that all established zoning and development standards continue to be applicable. e. The Development Agreement will not adversely affect the orderly development of property or the preservation of property values. The Development Agreement reflects the approved conditions of approval of the Project which serve to insure the preservation of property values in the vicinity. SECTION 4. The Development Agreement is hereby approved in exchange for the following mutual benefits: a. The Development Agreement will assure adequate public facilities at the time of development. b. The Development Agreement will assure development in accordance with City's land use policies and goals c. The Development Agreement will provide for orderly growth consistent with the City's General Plan, and other public policies. d. The Development Agreement is intended to provide certainty in the development approval process by vesting the permitted uses, densities and intensity of use with respect to the subject property. e. The execution of the Development Agreement furthers the public health, safety and general welfare of the community. SECTION 5. Approval of the Virgin Hotel Development Agreement. The City Council hereby approves the Virgin Hotel Development Agreement, the text. of which is set forth in the document entitled "Development Agreement by and between City of Palm Springs and DTPS B-3, LLC, a California limited liability company, for Downtown Ordinance No. 1940 Page 10 Palm Springs Specific Plan Block B-1, "Virgin Hotel," Case No. 5.1204 SP AMEND, Case No. 3.3908 MAJ, Case No. 5.1427 DA," and authorizes execution thereof by the City Manager. The provisions of this section shall apply to all property described on Exhibit "A". SECTION 6. The Palm Springs Zoning Code § 94.08 is hereby amended by adding Section 94.08.10 to read as follows: "Section 94.08.10 Virgin .Hotel Development Agreement A. Virgin Hotel Development Agreement 1. Purpose. The purpose of this section is to establish a development agreement to guide the orderly development and improvement of that portion of the city previously developed as the Desert Fashion Plaza and now identified as Block B-1 of the Downtown Palm Springs Specific Plan, which is located north of Museum Way, south of Andreas Road, east of Belardo Road, and west of Palm Canyon Drive, in the Northeast One -Quarter of Section 15, Township 4 South, Range 4 East, San Bernardino Base and Meridian, in the City of Palm Springs as legally described on Exhibit "A" of the Development Agreement, attached to the Ordinance codified in this section and incorporated herein by reference. The property is designated as part of the Downtown Palm Springs Specific Plan which allows for a mix of approved land uses including Commercial, Retail, .High Density Residential, Open Space/Public Space and Resort development generally consistent with the Central Business District ("CBD") land use designation in the general plan, as applicable. Hereafter, the property shall also be designated "Development Agreement No. 6" or "DA6" which shall be an overlay designation incorporating the restrictions of the "Virgin Hotel Development Agreement'. The Virgin Hotel Development Agreement replaces within said property the usual development standards otherwise applicable to the property. The Virgin Hotel Development Agreement provides for ultimate development of a new Virgin -brand First Class Hotel consisting of a six -story 112,862 square foot commercial building of up to 69-feet with 142-room resort hotel and ground floor commercial retail, and is consistent with the General Plan and Specific Plan objectives, policies, and programs of the City. 2. Adoption of Virgin Hotel Development Agreement. There is adopted the Virgin Hotel Development Agreement, the text of which is set forth in the document entitled "Development Agreement by and between City of Palm Springs and DTPS B-3, LLC, a California limited liability company, for Downtown Palm Springs Specific Plan Block B-1, "Virgin Hotel," Case No. 5.1204 SP AMEND, Case No. 3.3908 MAJ, Case No. 5.1427 DA," included with the ordinance which codified this section, which agreement is incorporated in this section by reference. The provisions of this section shall apply to all property described on Exhibit "A" attached to the Development Agreement and incorporated herein by reference. 3. Property Development and Other Standards. The property which is subject to the Virgin Hotel Development Agreement shall be maintained in accordance with all policies, requirements, regulations, and provisions set forth in the Virgin Hotel Ordinance No. 1940 Page 11 Development Agreement. The developer's performance of its obligations under the Virgin Hotel Development Agreement shall be subject to annual review as provided therein. SECTION 7. The Official Zoning Map of the City of Palm Springs is hereby amended by reclassifying the property from Case 5.1204-SP AMEND to being subject to the Virgin Hotel Development Agreement "Development Agreement No. 6" or "DA6," all of that real property described in Exhibit "A". SECTION 8. EFFECTIVE DATE. This Ordinance shall be in full force and effect thirty (30) days after passage. SECTION 9. PUBLICATION. The City Clerk is hereby ordered and directed to certify to the passage of this Ordinance, and to cause the same or a summary thereof or a display advertisement, duly prepared according to law, to be published in accordance with law. PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY COUNCIL THIS 29TH DAY OF NOVEMBER, 2 ROBERT MOON, MAYOR ATTEST: L _ KATHLEEN D. HART, MMC INTERIM CITY CLERK Ordinance No. 1940 Page 12 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS) I, KATHLEEN D. HART, Interim City Clerk of the City of Palm Springs, do hereby certify that Ordinance No. 1940 is a full, true, and correct copy, and was introduced at a regular meeting of the Palm Springs City Council held on November 15, 2017, . and adopted at a regular meeting held on November 29, 2017, by the following vote: AYES: Councilmember Mills, Mayor Pro Tern Foat, and Mayor Moon NOES: Councilmembers Kors and Roberts ABSENT: None ABSTAIN: None RECUSED: None A4:3=�� KATHLEEN D. HART, MMC INTERIM CITY CLERK EXHIBIT C OPERATIONS COVENANT FOLLOWS THIS PAGE Exhibit "C" FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: THE CITY OF PALM SPRINGS 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attention: City Clerk (Space Above This Line for Recorder's Office Use Only) OPERATIONS COVENANT THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is made and entered into this day of 2018, by and between the CITY OF PALM SPRINGS, a California municipal corporation and charter city ("City"), by and through its City Council, and DTPS B-3, LLC, a California limited liability company, ("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, maintenance and expansion of the inventory of quality and first class hotels within the City 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. (Chapter 5.26 of the Municipal Code is incorporated herein by reference and defined terms therein shall, unless otherwise indicated, have the same meanings herein.) B. On May 4, 2016, City and Palm Springs Promenade, LLC, a California limited liability company, entered into an Amended and Restated Operations Covenant for the 142- room Virgin Hotel located on Block B-1 of the Downtown Palm Springs Specific Plan, transferring certain rights and obligations from a previously approved Operations Covenant for an AC Hotel located on Block F of the Downtown Palm Springs Specific Plan. The Amended and Restated Operations Covenant was recorded on August 5, 2016, as Document No. 2016-0334951. C. On November 10, 2016, Palm Springs Promenade, LLC, a California limited liability company, transferred its ownership of Block B-1 of the Downtown Palm Springs Specific Plan to DTPS B-3, LLC, a California limited liability company, by that certain Grant Deed recorded November 21, 2016, as Document No. 2016-0518167, and is the currently vested title owner of Block B-1 of the Downtown Palm Springs Specific Plan. OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 1 OF 15 D. Pursuant to Chapter 5.26 of the Municipal Code, and the Amended and Restated Operations Covenant, Owner must commence construction of the Virgin Hotel prior to December 31, 2017. The Parties hereby agree that pursuant to a separate Development Agreement between the City and Owner related to construction of the Virgin Hotel, approved by the City pursuant to California Government Code § 65864 et seq. and Municipal Code Section 94.08.00 on , 2018, and recorded on or about even date herewith, (the "Development Agreement"), Owner will not commence construction of the Virgin Hotel prior to December 31, 2017, and it is the intention of the. Parties to terminate the Amended and Restated Operations Covenant, and to enter into a new Operations Covenant consistent with a revised performance schedule for construction of the Virgin Hotel identified in the Development Agreement. E. Pursuant to this Operations Covenant Agreement by and between City and Owner, (as successor in interest to Palm Springs Promenade, LLC, a California limited liability company), as of the date first written hereinabove, (the "Agreement"), the previously approved Amended and Restated Operations Covenant recorded on August 5, 2016, as Document No. 2016-0334951, is hereby terminated and no longer effective. All rights and obligations as identified in said Amended and Restated Operations Covenant are rescinded. F. Owner holds fee title to certain real property, (the "Site"), which is depicted as Block B-1 within the Downtown Palm Springs Specific Plan on the Site Plan attached hereto as Attachment "A", and legally described as Parcel 3 on the Legal Description attached hereto as Attachment_ "IT', attached hereto and incorporated herein by reference. The Site, which is located in the downtown area of the City of Palm Springs, California, is fully entitled for development of a First Class new Virgin Hotel, and pursuant to this Agreement, Owner has agreed to construct and maintain a Virgin brand hotel meeting the definition of a new "First Class Hotel" consisting of one hundred forty two (142) total hotel rooms (the "Virgin Hotel" or "Project"). G. The Parties acknowledge that the Virgin Hotel, as entitled and approved, will qualify as a new First Class Hotel under and pursuant to the provisions of Chapter 5.26, and further, the Parties hereby agree that pursuant to the terms of this Agreement, the obligation to commence construction of the Virgin Hotel prior to December 31, 2017, in accordance with Chapter 5.26 shall be extended to March 31, 2020, unless such commencement date is otherwise further modified in accordance with the terms of the Development Agreement. Owner further agrees that it shall complete vertical construction of the Virgin Hotel, without delay, by December 31, 2021; obtain a certificate of occupancy by January 31, 2022, and begin operation of the Hotel no later than March 1, 2022 unless such completion date is otherwise further modified in accordance with the terms of the Development Agreement, and whereby the completion date is a necessary prerequisite to complying with the terms of this Agreement. It is the intention of the Parties to incorporate herein this Agreement the revised obligation dates for commencement and completion of construction of the Virgin Hotel, and that if completed and under operation by the dates of OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 2 OF 15 commencement and completion as stated herein this Recital, the Virgin Hotel will qualify as a new First Class Hotel and be entitled to benefits thereof under and pursuant to the provisions of Chapter 5.26 of the Municipal Code and this Agreement. H. Owner understand and agrees that, to the extent Owner does not construct a Virgin brand hotel, and pursues construction of an alternatively branded hotel, such alternatively branded hotel will not qualify as a new First Class Hotel, and shall not be entitled to any benefits thereof under or pursuant to the provisions of Chapter 5.26 of the Municipal Code and this Agreement. Accordingly, this Agreement will be of no further effect, and City shall have no obligations hereunder. I. City and Owner now desire to place restrictions upon the use and operation of the Virgin Hotel, in order to ensure that the Virgin Hotel shall be operated continuously as a First Class Hotel available for short-term rental for the term of this Agreement. J. City and Owner also agree that in return for participation in the Program, Owner shall agree to operate the Virgin Hotel as a hotel; participate in the Palm Springs Convention Center's Committable Rooms Program; and provide City with a minimum of six (6) room -nights per month for official City use; and, City agrees to share a percentage of Transient Occupancy Tax Increment with Owner pursuant to the Program guidelines. K. The City finds that no further environmental review is required in connection with the approval of this Agreement, in that in connection with City approval of the entitlements, findings were made that the Virgin Hotel would be consistent with the approved Specific Plan and certified EIR, and that neither a subsequent EIR, supplemental EIR, or EIR Addendum would be necessary. 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 l STATEMENT OF OPERATING COVENANTS 1.1. OPERATION AND USE COVENANT. Beginning on March 1, 2022, Owner covenants to operate, maintain, and use the Virgin 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, in all material respects, conform to requirements of this Agreement and Palm Springs Municipal Code. The parties understand and agree that the Owner may seek to amend this Agreement pursuant to certain terms and conditions as stated in the Development Agreement, and that in the event of City approval of such an amendment, a hotel identified by Owner OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 3 OF 15 with a flag or brand equal or superior to the Virgin Hotel may serve to fulfill Owner's duties hereunder. Absent such an amendment hereto, Owner's operation, maintenance and use of a Virgin Hotel shall be a condition precedent to Owner's receipt of any and all consideration or benefit under the Program and hereunder. 1.2 HOTEL USE. The Owner hereby agrees that the Project is to be owned, managed, and operated as a Virgin Hotel 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 thirty years commencing upon the date Owner first receives from the City the Owner's share of transient occupancy tax revenues pursuant to the Program, or until Owner has received from the City the total sum of fifty million dollars ($50,000,000) if that occurs prior to the expiration of said thirty years, unless Owner's participation in the Program is terminated prior thereto in accordance with this Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a) and Sections 7.9, 7.11, and 7.16 of this Covenant, during the Term, City shall pay to Owner, within thirty days after receipt from Owner of twelve monthly payments made by Owner to the tax administrator per Section 3.24.080 of the Municipal Code, an amount equal to seventy- five percent of the adjusted tax rate of those payments made to the City. City acknowledges and agrees that City has reviewed proposed development and operational plans for the Virgin Hotel and concluded that such plans are in substantial compliance with and will satisfy First Class Hotel requirements of the City and Chapter 5.26 of the Municipal Code. 1.3 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. 1.4 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. ARTICLE2 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. Since the Virgin Hotel will be a new hotel, City has determined the Transient Occupancy Tax Base to be used to calculate the OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 4 OF 15 Transient Occupancy Tax Increment shall be zero dollars ($0.00), 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 six (6) rooms for one (1) night (or 3 rooms for 2 nights) other than Friday or Saturday 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 tax. 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. ARTICLE3 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, 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 OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 5 OF 15 Project 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. The foregoing notwithstanding, Owner shall not be obligated to maintain any street or sidewalk areas, or landscaping therein, which are to be maintained by the City pursuant to a Project Financing Agreement executed by the City (as amended). 2. Parkinq 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. OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 6 OF 15 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 portion of the Site, 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 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. In the event of any such foreclosure, City (or successor) agrees to and shall recognize and honor any existing commercial (non -transient occupancy) leases in effect with respect to portions of the Project, provided that commercial tenants of such leases agree to subordinate and attorn to City (or successor) as the new landlord with respect to such leases. ARTICLE4 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 CITY OFFICERS AND EMPLOYEES, CONFLICT OF INTEREST, AND NOW DISCRIMINATION 5.1. NON -LIABILITY OF CITY OFFICERS AND EMPLOYEES. No officer or employee of the City shall be personally liable to the Owner, or any successor -in - interest, in the event of any default or breach by the City or for any amount which may become due to the Owner or to its successor, or for breach of any obligation of the terms of this Agreement. 5.2 CONFLICT OF INTEREST. Owner acknowledges that no officer or employee of the City has or shall have any direct or indirect financial interest in this Agreement nor shall Owner enter into any agreement of any kind with any such officer or employee during the term of this Agreement and for one year thereafter. Owner warrants that Owner has not paid or given, and will not pay or give, any third party any money or other consideration in exchange for obtaining this Agreement. OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 7 OF 15 5.3 COVENANT AGAINST DISCRIMINATION. a. In connection with its performance under this Agreement, Owner shall not discriminate against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a "prohibited basis"). Owner shall ensure that applicants are employed, and .that employees are treated during their employment, without regard to any prohibited basis. Owner's actions and omissions hereunder shall not incorporate any discrimination arising from or related to any prohibited basis in any Owner activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; provision of benefits, rates of pay or other forms of compensation; and selection for training, including apprenticeship. Owner shall fully comply with the provisions of Palm Springs Municipal Code Section 7.09.040 relating to non-discrimination in city contracting. b. Owner shall not discriminate against or segregate any person, or group of persons, on account of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a "prohibited basis") 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. 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 OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 8 OF 15 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. Owner, in exchange for the City entering into this 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. Developer is seeking a determination by the California Department of Industrial Relations that compliance with California's prevailing wage laws codified at California Labor Code §1770 et seq. in the development of the Project is not required by law. In the event that Developer procures such a determination as a final and non -appealable matter of law, Developer shall provide the City with written notice of same. Absent the City's acknowledged written receipt of such a determination, 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 OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 9 OF 15 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. 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: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attn: City Attorney Owner: DTPS B-3, LLC 201 N. Palm Canyon Drive, Suite 201 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. OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 10 OF 15 7.5. SEVERAB I LITYfWAIVER/I NTEG RATION 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. 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 and is subject to the provisions of Government Code Section 53083. 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 such termination, 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 Virgin Hotel as a first class Virgin brand 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 thirty 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 OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 11 OF 15 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 which 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 sixty 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 Virgin 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- 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 not terminate or initiate or pursue any act Mortgagee diligently (i) declares a defaL foreclosure and/or other appropriate act amounts that would otherwise have been monetary defaults. ,e of default notwithstanding, City will not )n to terminate this Agreement as long as t by Owner under the Mortgage, (ii) pursues ms under the Mortgage, (iii) pays to City all payable by Owner to City, and (iv) cures non - OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 12 OF 15 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 the Virgin Hotel so long as the hotel remains a Virgin brand hotel; or, pursuant to amendment of this Agreement pursuant to certain terms and conditions as stated in the Development Agreement, and that in the event of City approval of such an amendment, a substitute Hotel Operator identified by Owner with a flag or brand equal or superior to the Virgin Hotel, and, in connection therewith, such substitute 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 LIMITATION ON HOTEL DEVELOPMENT. Owner agrees that Owner shall not apply for and Owner shall not be issued a building permit for any hotel within the boundaries of the Downtown Palm Springs Specific Plan, as may be amended from time to time, including without limitation Block K thereof, until a certificate of occupancy has been issued for the first class new Virgin Hotel as provided in this Agreement. 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. 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, OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM PAGE 13 OF 15 7Y ",Zip elk "-a m y o n r fr, -wN�i na i a, -a n, - . . . -- I I— EXHIBIT D PERFORMANCE SCHEDULE DATE ACTIVITY November 15, 2017 City Council — Approval of Development Agreement; Introduction and First Reading of Ordinance November 29, 2017 City Council — Second Reading and Adoption of Ordinance December 29, 2017 Effective Date of Ordinance and Development Agreement March 31, 2018 Finalize Capital Commitment; Initiate preparation of Construction Drawings July 31, 2019 Full and Complete Construction Drawings Submittal to City for Building Permit Application September 30, 2019 Complete Building Plan Check Review November 30, 2019 Complete General Contractor Bidding Process January 31, 2020 Complete Property Appraisal; Secure Construction Loan Funding March 31, 2020 Issuance of City Building Permit December 31, 2021 Complete Vertical Construction January 31, 2022 Obtain Final Building Permit Inspections; Issuance of City Certificate of Occupancy; Turn -Over of Virgin Hotel to Operator March 1, 2022 Grand Opening of Virgin Hotel Exhibit "D" Cindy Berardi From: David Newell Sent: Tuesday, February 26, 2019 11:03 AM To: Cindy Berardi Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Attachments: Grit --Virgin Hotel First Amendment to Development Agreement 1.23.19.docx; Grit -- Virgin Hotel Development Agreement FINAL 11-9-17.docx From: David Newell Sent: Monday, February 4, 2019 5:57 PM /i/�(i✓����.�!` Iw�� To: Marcus Fuller <Marcus.Fuller@palmspringsca.gov> 13. Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov>y Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Did you get everything to wrap this up? If not, let me know and I'll work on it. From: Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Sent: Thursday, January 31, 2019 9:46 AM To: David Newell<David.Newell@palmspringsca.gov> Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment From: Edward Kotkin Sent: Thursday, January 31, 2019 9:44 AM To: Marcus Fuller <Marcus.Fuller@palmspringsca.gov>; Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov> Subject: RE: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Here's the original DA that was never signed, and the revised first amendment. Edward Z. Kotkin, City Attorney Gt pPUN sppi s City of Palm Springs 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262 �'Quroaa►`P " Office: 760.323.8205 •:• Fax: 760.322.8332 •:• Email: Edward.Kotkin@palmspringsca.gov From: Marcus Fuller <Marcus.Fuller@pa lmspringsca.gov> Sent: Thursday, January 31, 2019 8:38 AM To: Edward Kotkin <Edward.Kotkin@palmspringsca.gov>; Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov> Subject: RE: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Importance: High Is there a final version of the Virgin Hotel DA Amendment that was prepared following Council's approval? I recall they revised the extension to 2 years? Please provide a clean PDF copy of the approved amendment so I can forward to Michael Braun for signature. CA, 04 F114 CALIFQRi�ltA Like no puce else." Marcus L. Fuller, MPA, PE, PLS Assistant City Manager/City Engineer City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 322-8380 Marcus. Fuller(a1palmsprin clsca.go v From: Edward Kotkin <Edward.Kotkin@palmspringsca.gov> Sent: Thursday, January 17, 2019 11:45 AM To: Marcus Fuller <Marcus.Fuller@palmspringsca.gov> Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment For your files....... From: Edward Kotkin Sent: Thursday, January 17, 2019 11:45 AM To: Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Cindy Berardi <Cindy.Berardi @pa lmspringsca.gov> Subject: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Flinn, Here's the ordinance and the First Amendment to the Agreement. Please note that the First Amendment is ALSO EXHIBIT "A" to the Ordinance!!!! PLEASE ALSO NOTE THE NEW TITLE OF THE ORDINANCE FOR THE STAFF REPORT AND THE ACTUAL AGENDAI I I I Edward Z. Kotkin, City Attorney ! PALM 8,p City of Palm Springs 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262 Cq�,�OA�P Office: 760.323.8205 -:- Fax: 760.322.8332 s- Email: Edward.Kotkin@palmspringsca.gov RECORDING REQUESTED BY. CITY OF PALM SPRINGS AND WHEN RECORDED MAIL TO: CITY OF PALM SPRINGS OFFICE OF THE CITY CLERK 3200 E. TAHQUITZ CANYON WAY PALM SPRINGS, CA 92262 SPACE ABOVE FOR RECORDER'S USE ONLY nt to Government Code Section 6103, recording fees shall not apply FIRST AMENDMENT TO DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA Title of Document THIS AREA FOR RECORDER'S USE ONLY FIRST AMENDMENT TO DEVELOPMENT AGREEMENT THIS FIRST AMENDMENT TO DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA ("Frist Amendment") is entered into by and between the City of Palm Springs, a California charter city and municipal corporation, and DTPS B-3, LLC, a California limited liability company, pursuant to California Government Code § 65864 et seg. RECITALS A. Development Agreement as Adopted. On November 29, 2017, the City Council of Palm Springs, California adopted Ordinance No. 1940 approving that certain "DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA" (the "Development Agreement"). B_ On December 5, 2018, the Applicant submitted this First Amendment to the City, proposing to modify the Performance Schedule in the Development Agreement with respect to construction, extending certain dates. C. The Planning Commission considered the First Amendment at a duly noticed public hearing on December 12, 2018. In accordance with applicable law, the Planning Commission carefully reviewed and considered all of the evidence presented in connection with the hearing on the First Amendment, including but not limited to the staff report, and all written and oral testimony presented. The Planning Commission voted to recommend conditional approval of the First Amendment to the City Council. D. The City Council considered the First Amendment at a duly noticed public hearing on January 9, 2019. In accordance with applicable law, the City Council carefully reviewed and considered all of the evidence presented in connection with the hearing on the First Amendment, including but not limited to the staff report, and all written and oral testimony presented. The City Council made findings in compliance with State law, including but not limited to the California Environmental Quality Act, and the Palm Springs Zoning Code, and approved the First Amendment as modified, to provide for a modification of the Performance Schedule with respect to construction, extending certain dates by two (2) years, and making additional revisions to the Development Agreement as originally adopted on November 29, 2017, said modification and revisions being memorialized in this First Amendment. 1.8.19 FIRST AMENDMENT TO VIRGIN DEVELOPMENT AGREEMENT 1 FIRST AMENDMENT NOW, THEREFORE, in consideration of the promises, covenants, and provisions set forth herein, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: ARTICLE 1. DEFINITIONS. SECTION 1.1. "City" is the City of Palm Springs, a California Charter City and municipal corporation. SECTION 1.2. "City Council" means the City Council of the City of Palm Springs. SECTION 1.3. "Developer" is DTPS B-3, LLC, a California limited liability company. SECTION 1.4. "Development Agreement" means that certain "DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA" approved by the City Council of November 29, 2017 via the adoption of Ordinance No. 1940. SECTION 1.5. First Amendment. "Effective Date" shall have that meaning set forth in Section 3.01 of this SECTION 1.6. "First Amendment" means this this "FIRST AMENDMENT TO DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA" approved by the City Council of January 23, 2019 via the adoption of Ordinance No. 1973. SECTION 1.7. "Planning Commission" means the Planning Commission of the City of Palm Springs. SECTION 1.8. "Term" shall have the meaning set forth in Section 3.02 of this First Amendment' this meaning of "term" shall replace and supersede the meaning set forth in the Development Agreement. ARTICLE 2. CONSTRUCTION, INCORPORATION OF RECITALS. Section 2.1. Development Agreement Remains in Full Force and Effect. This First Amendment is supplemental to the Development Agreement, and is by reference made part of said Development Agreement. All of the definitions, terms, conditions, and provisions of the Development Agreement, unless specifically modified herein, shall continue in full force and effect. In the event of any conflict or inconsistency between the provisions of this First Amendment and any of the provisions of the Development Agreement, the provisions of this 1.17.19 First Amendment to Virgin Development Agreement 2 First Amendment shall in all respects govern and control. Section 2.2. Recitals. The true and correct Recitals set forth above, the introductory paragraph preceding the Recitals, and all exhibits referenced in both, are hereby incorporated by this reference into this First Amendment, as material facts upon which the parties have relied in entering this First Amendment, as if set forth herein in full. ARTICLE 3. EFFECTIVE DATE AND TERM. Section 3.1. Effective Date. This First Amendment shall become effective as of the date when the Ordinance through which this First Amendment is approved takes effect, and the City executes this First Amendment (the "Effective Date"). Section 3.2. Term. The term of the Development Agreement shall continue upon the Effective Date of this First Amendment, and shall continue in effect until March 1, 2024, unless the Term is terminated or modified as set forth in the Development Agreement or by mutual consent of the parties hereto. ARTICLE 4. PERFORMANCE SCHEDULE. Section 4.1. Performance Schedule for Development Agreement. The following "PERFORMANCE SCHEDULE" shall replace and supersede the Performance Schedule in EXHIBIT "D" to the Development Agreement. DATE ACTIVITY 11 /15/2017 City Council — Approval of Development Agreement; Introduction and First Reading of Ordinance 12/06/2017 City Council — Second Reading and Adoption of Ordinance 01/05/2018 Effective Date of Ordinance and Development Agreement 03/31 /2018 Finalize Capital Commitment; Initiate pre aration of Construction Drawings 03/31 /2019 Complete clean-up of the Project Site to eliminate any nuisance condition, and install art viewable by the public 07/31 /2021 Complete Construction Drawings Submittal to City for Building Permit Application 09/30/2021 Complete Building Plan Check Review 11/30/2021 Complete General Contractor Bidding Process 01/31/2022 Complete Property Appraisal; Secure Construction Loan Funding 03/31/2022 Issuance of City Building Permit 12/31/2023 Complete Vertical Construction 01/31/2024 Obtain Final Building Permit Inspections; Issuance of City Certificate of Occupancy; Turn -Over of Virgin Hotel to Operator 03/01/2024 Grand Opening of Virgin Hotel 1.17.19 First Amendment to Virgin Development Agreement ARTICLE 5. AMENDMENTS TO TEXT OF DEVELOPMENT AGREEMENT REGARDING HOTEL OPERATIONS COVENANT. Section 5.1. Hotel Operations Covenant. The first paragraph of Section 4.03 of the Development Agreement shall be amended in its entirety, to reflect and be consistent with the modification of EXHIBIT "D," the Performance Schedule, and to read as follows: Section 4.03. Hotel Operations Covenant. In consideration of City entering into this Agreement, Developer agrees to terminate the Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, and that it will develop the Project and comply with the terms and conditions of the Operations Covenant approved and included concurrent herewith, in substantially the form attached hereto and incorporated by this reference herein as Exhibit "C." Further, Developer covenants and agrees that it shall secure a building permit for vertical construction of the core and shell of the 142-room Virgin Hotel not later than March 31, 2022, complete vertical construction of the 142-room Virgin Hotel not later than December 31, 2023, obtain a certificate of occupancy by January 31, 2024, and begin operations of the Hotel no later than March 1, 2024. Developer further agrees that the Project Site will be owned, managed, and operated only as a Virgin brand hotel (and no other hotel flag or brand), as a First Class Hotel, in accordance with the requirements of Chapter 5.26 of the Palm Springs Municipal Code and the Operations Covenant. Operation of a Virgin brand hotel is a mandatory condition to Developer's continued participation in the City's Hotel Operations Incentive Program pursuant to Chapter 5.26 of the Palm Springs Municipal Code (the "Program'). Section 5.2. Hotel Operations Covenant. Section 5.02 of the Development Agreement shall be amended in its entirety, to reflect and be consistent with the modification of EXHIBIT "D," the Performance Schedule, and to read as follows: Section 5.02. Hotel Operations Covenant. In consideration of Developer entering into this Agreement, City agrees to terminate the Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, permit the development of the Project in accordance herewith, and that it will comply with the terms and conditions of the Operations Covenant included herewith as Exhibit "C", and agrees that, provided Developer secures a building permit for vertical construction of the core and shell of the 142-room Virgin Hotel not later than March 31, 2022, completes construction of the 142-room Virgin Hotel not later than December 31, 2023, and Developer owns, manages, and operates the Project Site as a Virgin Hotel in a first- class manner, in accordance with the requirements of Chapter 5.26 of the Palm Springs Municipal Code and the Operations Covenant, City will pay Developer its share of transient occupancy tax revenues pursuant to the Hotel Operations Incentive Program (the "Program'). Operation of a Virgin brand hotel is a mandatory condition to City's continued payment to Developer of its share of transient occupancy tax revenues pursuant to the Program. The parties understand and agree that to the extent the Virgin brand hotel no longer operates as a Virgin brand hotel, or if Virgin ceases operation at the Project site, or is terminated for cause by Developer after at least five years of 1.17.19 First Amendment to Virgin Development Agreement operation as a Virgin brand hotel, then City's payments to Developer of its share of transient occupancy tax revenues will cease upon the date by which the Virgin brand hotel is operated as any other flag or brand of hotel, unless an amendment to this Agreement and the Operations Covenant recorded concurrent herewith, is approved by the City Council which provides for a substitute operator that is of a first class quality that is commensurate with or superior to Virgin's market share and position as of this Agreement's Effective Date. If such a substitute operator is approved by the City Council, the benefits accruing pursuant to the Program will continue as described herein. ARTICLE 6. COVENANT AGAINST NON-DISCRIMINATION. Section 6.1. Covenant against Non -Discrimination. Section 4.04 is added to the Development Agreement, to read as follows: Section 4.04. Covenant against Non -Discrimination. In connection with its performance under this Development Agreement, including without limitation performance under the Development Agreement, Developer shall not discriminate against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a "prohibited basis'). Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis. As a condition precedent to City's lawful capacity to enter this First Amendment, including without limitation all provisions of the Development Agreement that remain in force and effect, and in executing this First Amendment, Developer certifies that its actions and omissions hereunder shall not incorporate any discrimination arising from or related to any prohibited basis in any Developer activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that Developer is in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non-discrimination in city contracting. ARTICLE 7. PREVAILING WAGE. Section 7.1. Prevailing Wage Laws. Section 7.12 of the Development Agreement is amended in its entirety, to read as follows: Section 7.12 Prevailing Wage Laws. In accordance with Labor Code section 1781(a)(2), Developer acknowledges that the City has expressly indicated to the Developer and persons associated with the Developer that in the event Developer receives any consideration, pursuant to the Operations Covenant approved concurrent with the Development Agreement and/or Chapter 5.26 of the Palm Springs Municipal Code, laborers employed relative to the construction of the Project must be paid the prevailing per diem wage 1.17.19 First Amendment to Virgin Development Agreement 5 rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. and Palm Springs Municipal Code Section 7.06.030(1). The Developer agrees with the City that the Developer shall assume the responsibility and be solely responsible for payment of the prevailing per diem wage rate for their labor classification. The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 4.9, which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY. " BYINITIALING BELOW, THEDEVELOPERKNOW/NGLYANDVOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.12. Developer's Initials Additionally, in accordance with this Section 7.12, the Developer shall indemnify, defend with counsel acceptable to the City and hold the City harmless against any claims, pursuant to Labor Code Sections 1726 and 1781, which claims arise from or relate to this Development Agreement or the construction or operation of the Project. IN WITNESS WHEREOF, the City of Palm Springs California, a California Charter City and municipal corporation, has authorized the execution of this First Amendment in duplicate by its City Manager and attestation by its City Clerk, and approved by the Council of the City on the day of January, 2019, and Developer has caused this First Amendment to be executed by its authorized representative. SIGNATURES FOLLOW 1.17.19 First Amendment to Virgin Development Agreement 6 "CITY" City of Palm Springs Date: APPROVED AS TO FORM: in Edward Z. Kotkin City Attorney APPROVED BY CITY COUNCIL: Date: Agreement No. By: David H. Ready, PhD, Esq. City Manager ATTEST Anthony J. Mejia, MMC City Clerk Corporations require two notarized signatures. One signature must be from Chairman of Board, President, or any Vice President. The second signature must be from the Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or Chief Financial Officer. "DEVELOPER" DTPS B-3, LLC, a California limited liability company By By Signature (Notarized) Signature (Notarized) Michael Braun, Manager Octavio P. Hernandez, Manager Printed Name/Title Printed Name/Title 1.17.19 First Amendment to Virgin Development Agreement 7 RECORDING REQUESTED BY: CITY OF PALM SPRINGS AND WHEN RECORDED MAIL TO: CITY OF PALM SPRINGS OFFICE OF THE CITY CLERK 3200 E. TAHQUITZ CANYON WAY PALM SPRINGS, CA 92262 SPACE ABOVE FOR RECORDER'S USE ONLY Pursuant to Government Code Section 6103, recording fees shall not apply DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLG, A CALIFORNIA LIMITED LIABILITY COMPANY DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427 DA Title of Document THIS AREA FOR RECORDER'S USE ONLY DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT (this "Agreement" or "Development Agreement") is entered into by and between the City of Palm Springs, a California Charter City and municipal corporation, ("City"), and DTPS B-3, LLC, a California Limited Liability Company ("Developer"), pursuant to California Government Code § 65864 et seq. RECITALS A. Development Agreement Statute. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the Legislature of the State of California has enacted California Government Code § 65864 et seq. (the "Development Agreement Statute"), which authorizes City to enter into an agreement with any person having a legal or equitable interest in real property regarding the development of such property. This Development Agreement has been processed, considered, and executed in accordance with the procedures and requirements as set forth in the Development Agreement Statute. B. City Ordinance. Pursuant to Government Code section 65865(c), City has adopted Ord. 1829 § 3, 2013; Ord. 1294, 1988 [PSMC § 94.08.00] (the "Development Agreement Ordinance"), that set forth rules and regulations establishing procedures and requirements for consideration of development agreements. The parties acknowledge and agree that: a. This Agreement will assure adequate public facilities at the time of development. b. This Agreement will assure development in accordance with City's land use policies and goals specified in, and is consistent with the General Plan and the Specific Plan referenced below. C. This Agreement will provide for orderly growth consistent with the City's General Plan, and other public policies. d. This Agreement is intended to provide certainty in the development approval process by vesting the permitted uses, densities and intensity of use with respect to the subject property. e. The execution of this Agreement furthers the public health, safety and general welfare of the community. C. Description of the Project and Project Site. Developer represents and warrants that it has a legal interest in certain real property as legally described in Exhibit "A" attached hereto and incorporated by this reference herein (the "Project Site"). The development of the Virgin Hotel on the Project Site, along with all related public and private improvements and obligations, is the "Project." 1 D. City Council Actions; Existinq Entitlements. Prior to the City's approval of this Agreement, the City Council, after public hearings and extensive environmental analysis, approved the following entitlements, which entitlements are also the subject of this Agreement: a. Specific Plan Amendment, Case No. 5.1204 SP, adopted April 20, 2016, by Ordinance No. 1889, designating Block B-1 as a 0.84 acre parcel for commercial or residential land uses, including development of a Virgin brand hotel use up to a maximum height of 69 feet subject to approval of a Development Agreement. b. Major Architectural Application, Case No. 3.3908-MAJ, approved April 20, 2016, by Resolution No. 24003, for construction of a six -story, 112,862 square foot building with 142-room resort hotel and ground floor commercial retail located on Specific Plan Block B-1. C. Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, transferring the rights and obligations of an Operations Covenant for an AC Hotel previously approved for Block F to the Virgin Hotel located on Block B-1. The above Entitlements have been approved subject to various conditions and requirements with which Developer will be required to comply in order to develop the Project Site ("Conditions of Approval"). The approvals described above, including without limitation the Conditions of Approval as referenced in this Recital and this Agreement, are referred to herein as the "Entitlements" and have been reviewed and approved in accordance with the Municipal Code, California Environmental Quality Act, California Public Resources Code Section 21000 et seq. and the implementing regulations promulgated thereunder (Title 14, California Code of Regulations Section 15000 et seq.) (in the aggregate, "CEQA"), and all other applicable local, state, and federal laws and regulations. The Entitlements, Conditions of Approval, and this Agreement shall be collectively referred to as "the Project Approvals." E. Substantial Costs to Developer. Developer will incur substantial costs in order to comply with the Project Approvals and to construct the Virgin brand hotel specifically required by the City to assure development of the Project Site in accordance with the terms of this Agreement. F. Vesting of Rights. In exchange for the benefits to City described in the preceding Recitals, together with the other public benefits that will result from the development of the Project, Developer will receive by this Agreement assurance that it may proceed with the Project in accordance with the "Applicable Law" (defined below) and therefore desires to enter into this Agreement. G. Public Hearings, Findings. On November 15, 2017, the City of Palm Springs Planning Commission and City Council held a duly noticed joint public hearing to consider Developer's application for this Agreement. Upon the review of all documents and information presented by staff, the consideration of all public testimony, in favor and against this Agreement, and discussion The Planning Commission recommended, and 2 the City Council approved the following findings with respect to this Agreement: a. Is consistent with the objectives, policies, general land uses and programs specified in the general plan and any applicable specific plan; b. Is compatible with the uses authorized in, and the regulations prescribed for, the land use district in which the real property is located, C. Is in conformity with public convenience, general welfare and good land use practice; d. Will not be detrimental to the health, safety and general welfare; e. Will not adversely affect the orderly development of property or the preservation of property values. H. Branding. The parties understand and agree that Developer's commitment and duty hereunder to develop the Project as a Virgin brand hotel represents an essential and material inducement to City to enter into this Agreement and extend consideration to the Developer. I. Ordinance. On Council adopted Ordinance No. approving this Agreement and authorizing the City Manager to execute the Agreement. The Ordinance becomes effective on a copy of the Ordinance is attached hereto as Exhibit "B". AGREEMENT NOW, THEREFORE, in consideration of the promises, covenants, and provisions set forth herein, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: ARTICLE 1. DEFINITIONS SECTION 1.1. "Agreement" shall mean this Development Agreement by and between Developer and City, dated , 2017. SECTION 1.2. "Applicable Law" shall have that meaning set forth in Section 7.03 of this Agreement. SECTION 1.3. "Changes in the Law" shall have that meaning set forth in Section 7.08 of this Agreement. SECTION 1.4. "City" is the City of Palm Springs, a California Charter City and municipal corporation. 3 SECTION 1.5. "Conditions of Approval" shall have that meaning set forth in Section 4.04 of this Agreement. SECTION 1.6. Agreement. SECTION 1.7. of this Agreement. SECTION 1.8. this Agreement. SECTION 1.9. Company. "Default" shall have that meaning set forth in Section 11.01 of this "Default Notice" shall have that meaning set forth in Section 11.01 "Deficiencies" shall have that meaning set forth in Section 10.02 of "Developer" is DTPS B-3, LLC, a California Limited Liability SECTION 1.10. "Development Agreement Ordinance" shalt have that meaning set forth in Recital B of this Agreement. SECTION 1.11. "Development Agreement Statute" shall have that meaning set forth in Recital A of this Agreement. SECTION 1.12. TIR" shall mean the Final Environmental Impact Report certified by City Council on November 18, 2009, State Clearinghouse No. 2008061084, adopted by Resolution No. 22625, and the Notice of Determination filed with the Office of Planning and Research and the Riverside County Clerk on December 3, 2009; Addendum No. 1 to the Final Environmental Impact Report approved by City Council on October 17, 2012, adopted by Resolution No. 23238; and Addendum No. 2 to the Final Environmental Impact Report approved by City Council on April 20, 2016, adopted by Ordinance No. 1889. SECTION 1.13. "Entitlements" shall have that meaning set forth in Recital D of this Agreement. SECTION 1.14. "Effective Date" shall have that meaning set forth in Section 3.01 of this Agreement. SECTION 1.15. "Excusable Delay" shall have that meaning set forth in Section 11.04 of this Agreement. SECTION 1.16. "Force Majeure" shall have that meaning set forth in Section 11.04 of this Agreement. SECTION 1.17. "Judgment" shall have that meaning set forth in Section 10.02 of this Agreement. SECTION 1.18. "Project" is defined above. ,, SECTION 1.19. "Project Approvals" shall have that meaning set forth in Recital D of this Agreement. SECTION 1.20. "Prompt Review" means review of all plans, specifications, and applications by Developer in accordance with Section 7.11, below. SECTION 1.21. "Reasonable Progress" shall mean commercially reasonable efforts by Developer to complete construction of the Project, and completion of all executory obligations herein within ten years in accordance with Section 7.10, below. SECTION 1.22. "Term" shall have that meaning set forth in Section 3.02 of this Agreement. SECTION 1.23. "Virgin Termination Event" shall have that meaning set forth in Section 4.03 of this Agreement. ARTICLE 2. INCORPORATION OF RECITALS. Section 2.01. Recitals. The true and correct Recitals set forth above, the introductory paragraph preceding the Recitals, and all defined terms set forth and exhibits referenced in both, are hereby incorporated by this reference into this Agreement, as material facts upon which the parties have relied in entering this Agreement, as if set forth herein in full. ARTICLE 3. EFFECTIVE DATE AND TERM Section 3.01. Effective Date. This Agreement shall become effective as of the date when the Ordinance through which this Agreement is approved takes effect and the City executes this Agreement (the "Effective Date"). Section 3.02. Term. The term of this Agreement (the "Term") shall commence upon the Effective Date and continue in effect until December 31, 2021, unless the Term is terminated or modified as set forth in this Agreement or by mutual consent of the parties hereto. ARTICLE 4. OBLIGATIONS OF DEVELOPER Section 4.01. Obligations of Developer Generally. In consideration of City entering into this Agreement, Developer agrees that it will comply with this Agreement and with all Project Approvals. The parties acknowledge and agree that City's agreement to perform and abide by the covenants and obligations of City set forth in this Agreement is a material consideration for Developer's agreement to perform and abide by its long term covenants and obligations, as set forth herein. 5 Section 4.02. Compliance with Project Conditions. In addition to any and all obligations contained in this Agreement, Developer shall comply with and fulfill any and all Conditions of Approval. The Development of the Project and Project Site shall be governed by the terms of the Conditions of Approval and this Agreement. The Conditions of Approval and this Agreement shall, to the fullest extent possible, be read and considered as fully integrated documents, and shall be interpreted so as to avoid inconsistencies, comply with all applicable federal and state laws and City Law, and ensure that the objectives of the parties will be fully realized. Section 4.03. Hotel Operations Covenant. In consideration of City entering into this Agreement, Developer agrees to terminate the Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, and that it will comply with the terms and conditions of the Operations Covenant approved and included concurrent herewith, in substantially the form attached hereto and incorporated by this reference herein as Exhibit "C." Further, Developer covenants and agrees that it shall commence construction of the 142-room Virgin Hotel not later than March 31, 2020, complete vertical construction of the 142-room Virgin Hotel not later than December 31, 2021, obtain a certificate of occupancy by January 31, 2022, and begin operation of the Hotel no later than March 1, 2022. Developer further agrees that the Project Site will be owned, managed, and operated only as a Virgin brand hotel (and no other hotel flag or brand), as a First Class Hotel, in accordance with the requirements of Chapter 5.26 of the Palm Springs Municipal Code and the Operations Covenant. Operation of a Virgin brand hotel is a mandatory condition to Developer's continued participation in the City's Hotel Operations Incentive Program pursuant to Chapter 5.26 of the Palm Springs Municipal Code (the "Program"). Except as specified herein, in the event that the Virgin brand hotel to be developed hereunder ceases to operate as a Virgin brand hotel, Developer's benefits accruing pursuant to the Program will terminate, effective immediately. However, in the event of Virgin unilaterally ceasing operation at the Project site, or Developer terminating Virgin for cause after at least five (5) years of operation as a Virgin brand hotel (in either case, a "Virgin Termination Event'), then Developer shall have the right to apply to the City for approval of an amendment to this Agreement and the Operations Covenant recorded concurrent herewith, which amendment shall provide for the resumption of said benefits pursuant to the Program. The City will consider any such application for an amendment at a public hearing provided that the City makes a determination, in an exercise of the City's sole discretion, that the flag or brand of hotel that will operate or is proposed to operate at the Project Site as a replacement for the Virgin brand hotel is commensurate with or superior to Virgin's market share and position as of this Agreement's Effective Date. The parties understand and agree that Developer has no right to or specific expectation of any amendment to this Agreement subsequent to a Virgin Termination Event. Developer shall have the duty to provide the City with written notice of any actual or potential Virgin Termination Event immediately upon Developer's determination that a Virgin Termination Event has taken place or is reasonably likely to take place. That notice shall include without limitation Developer's identification of the flag or brand of an actual or potential replacement hotel proposed as the basis for an amendment hereunder, and relevant data to assist the City in determining whether the replacement hotel is consistent with the quality standard stated in this Section 4.03. Further, Developer covenants that Developer shall reimburse City for the cost of City procurement of a study, by a qualified consultant, of the proposed replacement hotel, and whether said replacement is consistent with the requirements of this Section 4.03. Nothing in this Agreement is intended to supersede, terminate, modify or otherwise affect any provision of the Conditions of Approval, except to the extent that a provision of this Agreement is in direct conflict with a provision of such Conditions of Approval. Then, and only in that event, the provisions of this Agreement shall prevail over the contradictory provisions of the Conditions of Approval. The execution of this Agreement by the parties hereto shall in no way otherwise affect the validity of any or all of the provisions of the Conditions of Approval. ARTICLE 5. OBLIGATIONS OF CITY Section 5.01. Obligations of City Generally. In consideration of Developer entering into this Agreement, City agrees that it will comply with the terms and conditions of this Agreement. The parties acknowledge and agree that Developer's agreement to perform and abide by its covenants and obligations set forth in this Agreement is a material consideration for the City's agreement to perform and abide by the long term covenants and obligations of the City, as set forth herein. Section 5.02. Hotel Operations Covenant. In consideration of Developer entering into this Agreement, City agrees to terminate the Amended and Restated Operations Covenant, Agreement No. 6641, approved May 4, 2016, and that it will comply with the terms and conditions of the Operations Covenant included herewith as Exhibit "C", and agrees that, provided Developer commences construction of the 142-room Virgin Hotel not later than March 31, 2020, completes construction of the 142-room Virgin Hotel not later than December 31, 2021, and Developer owns, manages, and operates the Project Site as a Virgin Hotel in a first-class manner, in accordance with the requirements of Chapter 5.26 of the Palm Springs Municipal Code and the Operations Covenant, City will pay Developer its share of transient occupancy tax revenues pursuant to the Hotel Operations Incentive Program (the "Program"). Operation of a Virgin brand hotel is a mandatory condition to City's continued payment to Developer of its share of transient occupancy tax revenues pursuant to the Program. The parties understand and agree that to the extent the Virgin brand hotel no longer operates as a Virgin brand hotel, or if Virgin ceases operation at the Project site, or is terminated for cause by Developer after at least five years of operation as a Virgin brand hotel, then City's payments to Developer of its share of transient occupancy tax revenues will cease upon the date by which the Virgin brand hotel is operated as any other flag or brand of hotel, unless an amendment to this Agreement and the Operations Covenant recorded concurrent herewith, is approved by the City which provides for a substitute operator that is of a first class quality that is commensurate with or superior to Virgin's market share and position as of this Agreement's Effective Date. If such a substitute operator is approved by the City, the benefits accruing pursuant to the Program will continue as described herein. ARTICLE 6. COOPERATION — IMPLEMENTATION The parties agree to cooperate in good faith to implement this Agreement. ARTICLE 7. STANDARDS, LAWS AND PROCEDURES GOVERNING THE PROJECT Section 7.01. Vested Right to Develop. Developer shall have a vested right to build out the Project through the Term on the Project Site in accordance with the terms and conditions of the Project Approvals. Section 7.02. Permitted Uses Vested by This Agreement. The permitted land use of the Project Site, the density and intensity of use of the Project Site, the maximum height, bulk and size of proposed buildings, provisions for reservation or dedication of land for public purposes and the location of public improvements, the general location of public utilities, and other terms and conditions of development applicable to the Project, are set forth in the Project Approvals. Section 7.03. Applicable Law. This Agreement will be construed and enforced in accordance with the laws and regulations of the State of California. Applicable provisions of federal and state law, the Palm Springs Municipal Code, any uncodified ordinances adopted by the City, the Uniform Codes referenced below in Section 7.04, and the rules, regulations, official policies, standards and specifications applicable to the Project, including without limitation the terms and conditions of the Project Approvals and the Operations Covenant approved concurrent herewith, shall in the aggregate constitute "Applicable Law" with respect to this Agreement. Further, with respect to any matter not addressed by the terms and conditions of the Project Approvals, those rules, regulations, official policies, standards and specifications (including City ordinances and resolutions) governing permitted uses, building locations, timing of construction, densities, design, heights, fees, exactions, and taxes in force and effect on the Effective Date of this Agreement shall represent "Applicable Law." Section 7.04. Uniform Codes. City may apply to the Project Site, at any time during the Term, the then current Uniform building construction, fire or other codes, as the same may be adopted or amended from time to time by City, and City's then current design and construction standards for public improvements, as the same may be adopted or amended from time to time, provided any such uniform code or standard has been adopted and uniformly applied by City on a citywide basis, and provided that no such code or standard is adopted for the purpose of preventing or otherwise limiting construction of all or any part of the Project. Section 7.05. No Conflictinq Enactments. Except as provided in Section 7.04 and herein, City shall not impose on the Project (whether by action of the City Council or by City sponsored initiative or referendum, or other means) any ordinance, resolution, rule, regulation, standard, directive, condition or other measure (each individually, a "City Law") that is in conflict with Applicable Law, or the Project Approvals, or that reduces the development rights or assurances provided by this Agreement with respect to the Project. Without limiting the generality of the foregoing, (i) the City may at any time adopt any City Law reasonably deemed necessary and appropriate by the City, in an exercise of absolute discretion, to address a significant public health or safety issue, and (ii) any City Law shall be deemed to conflict with Applicable Law, or the Project Approvals, or reduce the development rights provided hereby if it would accomplish any of the following results, either by specific reference to the Project, or as part of a general enactment which applies to or effects the Project. a. Change any land use designation or permitted use of the Project Site existing as of the Effective Date of this Agreement; b. Limit or control the availability of public utilities, services or facilities or any privileges or rights to public utilities, services, or facilities (for example, water rights, water connections or sewage capacity rights, sewer connections, etc.) for the Project, unless such limitation is necessary to address a dangerous condition or health and safety issue; c. Limit or control the location of buildings, structures, grading, or other improvements of the Project in a manner that is inconsistent with or more restrictive than the limitations included in the Project Approvals; d. Limit or control the rate, timing, phasing or sequencing of the approval, development or construction of all or any part of the Project in any manner inconsistent with the Project Approvals; e. Apply to the Project any City Law otherwise allowed by this Agreement that is not uniformly applied on a citywide basis, or throughout City's entire "downtown" as City may reasonably define that term, to substantially similar types of development projects and project sites; Result in Developer having to substantially delay construction of the Project or require the issuance of additional permits or approvals by the City other than those required by the Project Approvals or Applicable Law; g. Substantially increase the cost of constructing or developing the Project or any portion thereof, h. Establish, enact, increase, or impose against the Project or Project Site any fees, taxes (including without limitation general, special and excise taxes), assessments, liens or other monetary obligations other than those specifically permitted by this Agreement; Impose against the Project any condition, dedication or other exaction not specifically authorized by the Project Approvals or Applicable Law; O] j. Grant any development right, entitlement or approval for any portion of the Property that will reduce, limit or encumber Developer's rights hereunder, or k. Unreasonably limit the timing, processing or procuring of applications and approvals. If City attempts to apply to the Project a City Law that Developer believes to conflict with Applicable Law or the Project Approvals, Developer shall provide to City in writing a notice describing the legal and factual basis for Developer's position. The parties shall meet and confer within thirty (30) days after the date of such written notice with the objective of attempting to arrive at a mutually acceptable solution to this disagreement. If no mutually acceptable solution can be reached, either party may take such action as may be permitted under Section 11.07, below. Section 7.06. Initiatives and Referenda. a. To the maximum extent permitted by law and except as otherwise specified herein, if any new provision of Applicable Law, whether a City Law or not, is enacted or imposed by initiative or referendum, or by the City Council directly or indirectly in connection with any proposed initiative or referendum after the Effective Date, which new provision of Applicable Law or City Law would conflict with Applicable Law in force and effect as of the Effective Date, or the Project Approvals, or otherwise reduce the development rights provided by this Agreement, such City Law shall not apply to the Project. b. Without limiting the generality of any of the foregoing and to the maximum extent permitted by law, no moratorium or other limitation (whether relating to the rate, timing, phasing or sequencing of development) affecting building permits or other entitlements to which Developer is entitled pursuant to the Project Approvals shall apply to the Project. c. To the maximum extent permitted by law, City shall take reasonable actions to prevent any City Law from invalidating or prevailing over all or any part of this Agreement, and City shall cooperate with Developer and shall undertake such reasonable actions as may be necessary to ensure this Agreement remains in full force and effect. d. City shall not support, adopt or enact any City Law, or take any other action which would violate the express provisions or spirit and intent of this Agreement or the Project Approvals. e. Developer reserves the right to challenge in court any City Law that is enacted after the Effective Date of this Agreement that would conflict with Applicable Law or this Agreement or reduce the development rights provided by this Agreement. 10 Section 7.07. Environmental Mitigation. The EIR, inclusive of its addenda, prepared, adopted, approved by the City as lead agency, in relation to the Project Entitlements and pursuant to CEQA, adequately addresses the potential environmental impacts under this Agreement. In particular, there are no substantial changes to the Project or the Project Site, or circumstances under which the Project is to be regulated and developed under this Agreement when viewed against Applicable Law, including the terms and conditions of the Project Approvals. Further, there is no new information of substantial importance that requires preparation of another CEQA document pursuant to CEQA Guidelines Section 15162. The vesting of Applicable Law is exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because there is no possibility that this Agreement will have any significant direct, indirect, or cumulative environmental impacts apart from or beyond those already analyzed, addressed, and mitigated as stated in the environmental documentation prepared and adopted/approved pursuant to CEQA. The parties understand that the EIR was intended to be used in connection with all of the Project Approvals needed for the Project, including this Agreement. Section 7.08. State and Federal Law. As provided in California Government Code §65869.5, this Agreement shall not preclude the application to the Project of changes in laws, regulations, plans or policies, to the extent that such changes are specifically mandated and required by changes in state or federal laws or regulations, or by any regional governmental agency that, due to the operation of state law, has binding legal authority on City ("Changes in the Law"). In the event Changes in the Law prevent or preclude compliance with one or more provisions of this Agreement, such provisions of the Agreement shall be modified or suspended, or performance thereof delayed, as may be necessary to comply with Changes in the Law, and City and Developer shall take such action as may be required pursuant to this Agreement including, without limitation, Article 10 (Cooperation -Implementation) and Section 11.04 (Force Majeure and Excusable Delays; Extension of Time of Performance). Not in limitation of the foregoing, nothing in this Agreement shall preclude City from imposing on Developer any fee specifically mandated and required by state or federal laws and regulations, provided that nothing shall limit Developer's ability to challenge such laws and the imposition of such fees. Section 7.09. Timing of Proiect Construction and Completion. a. Project Timing. The parties acknowledge that Developer cannot predict the timing, rate, order or actual timing with certainty. The timing, order and rate of development shall be in Developer's sole discretion, except as otherwise provided in the Project Approvals. b. In light of the foregoing, the parties agree that Developer shall be able to develop the Project in accordance with Developer's own time schedule as such schedule may exist from time to time. In particular, and not in limitation of any of the foregoing, since the California Supreme Court held in Pardee Construction Co. v. the City of Camarillo, 37 Cal.3d 465 (1984), that the failure of the parties therein to consider and expressly provide for the timing of development resulted in a later -adopted initiative 11 restricting the timing of development to prevail over such parties' agreement, it is the parties' desire to avoid that result by acknowledging that Developer shall have the right to develop the Project at such rate and at such times as Developer deems appropriate within the exercise of its subjective business judgment, provided that such schedule is consistent with this Agreement. c. The Developer shall use its best efforts to meet the agreed performance schedule attached hereto, and incorporated by this reference herein as Exhibit "D". Developer understands that City has entered this Agreement relying upon Developer's representations in Exhibit "D" as a material inducement to do so. Notwithstanding the provisions of Subsection 7.09.b., the parties understand and agree that any significant deviation from the agreed performance schedule in the absence of the occurrence of a force majeure event or excusable delay, shall be considered by City during an Annual Review conducted pursuant to Section 7.10. Section 7.10. Annual Review. City shall, at least every twelve (12) months during the term of this Agreement, review the extent of good faith substantial compliance by Developer and Landowner with the terms of this Agreement. The review may specifically include a review of whether Developer is making Reasonable Progress. To assess such progress, the City Planning Director may require, or the Developer may submit, at any time subsequent to the execution of this Agreement, and as frequently as annually thereafter, a development planned schedule showing a completion schedule that amends Exhibit "D." Reasonable Progress shall take into account market conditions, commercial realities, the sensitivities of adjacent residents and prudent construction practices. Reasonable Progress is expressly subject to City's obligation of Prompt Review specified in Section 7.11, below. City may charge fees as necessary to cover the costs of conducting the annual review. Such periodic review shall be limited in scope to compliance with the terms of this Agreement pursuant to California Government Code Section 65865.1. Said review shall be diligently completed. Notice of such annual review shall include the statement that any default discovered by such review may result in termination of this Agreement as provided herein. A finding by City of good faith compliance by Developer and Landowner with the terms of the Agreement shall conclusively determine said issue up to and including the date of said review. City shall deposit in the mail or fax to Developer and/or Landowner a copy of all staff reports and, to the extent practical, related exhibits concerning contract performance at least seven (7) calendar days prior to such periodic review. Developer or Landowner shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before the City Council and, if the matter is referred to a City Planning Commission, before said Commission Section 7.11 Prompt Review by the City. City and Developer shall cooperate and use commercially reasonable efforts to timely review and approve the development design review process, building plan review process, improvement plan review process, within sixty (60) days of receipt of any application therefor. Review of any application provided by this subparagraph shall not be deemed to waive any of the Applicable Law pertaining to review or approval of such application, including, but not limited to, a public 12 hearing, if any, required therefore. In the event the Parties agree to use an expedited process to perform any review pursuant to this subparagraph, Developer authorizes the imposition of City Fees paid to the City sufficient to cover City's estimated costs of utilizing City staff, retaining an outside consultant or any combination thereof in order to expedite the review process. Any such process shall terminate upon the expiration or termination of this Agreement or the issuance of the final certificate of occupancy for development within the Project, whichever occurs first. Section 7.12. Prevailing Wage Laws. Developer covenants that it shall comply with California's prevailing wage laws codified at California Labor Code §1770 et seq. in the development of the Project at the Project Site, and shall contractually require its contractors to do the same. Developer is seeking a determination by the California Department of Industrial Relations that this compliance is not required by law. In the event that Developer procures such a determination as a final and non -appealable matter of law, Developer shall provide the City with written notice of same, and Developer's covenant per this Section 7.12 shall become void. ARTICLE 8. AMENDMENT AND OPERATING MEMORANDA Section 8.01. Amendment. This Agreement may be amended from time to time, in whole or in part, by mutual written consent of the parties hereto or their successors in interest, in accordance with the Development Agreement Statute and the Development Agreement Ordinance. Section 8.02. Operating Memoranda. The provisions of this Agreement require a close degree of cooperation between the City and the Developer. The development of the Project may demonstrate that clarifications to this Agreement and Project Approvals are appropriate with respect to the details of performance of the City and the Developer. To the extent allowable by law, the Developer shall retain a certain degree of flexibility as provided herein with respect to all matters, items and provisions covered in general under this Agreement, except for those which relate to the (i) term; (ii) permitted uses; or (iii) density or intensity of use. When and if the Developer finds it necessary and appropriate to make changes, adjustments or clarifications to minor matters, items or provisions not related to any of these three (3) enumerated areas, and the City determines, in an exercise of the City's absolute discretion, that the requested change, adjustment or clarification is consistent with the City's interest in the Project, and that no public interest is served by an amendment to this Agreement, the Parties shall effectuate such changes, adjustments or clarifications through operating memoranda approved by the parties in writing, inclusive of reference to this Section 8.02. Operating memoranda are not intended to constitute an amendment to this Agreement but mere ministerial clarifications; therefore public notices and hearings shall not be required. The City Manager shall be authorized, upon consultation with and approval of, the Developer, to determine whether a requested clarification may be effectuated pursuant to this Section or whether the requested clarification is of such character to constitute an amendment to this Agreement which requires compliance with the provisions of Section 8.01 above. The City shall report the entry into each operating memorandum at the first 13 annual review taking place after execution of the operating memorandum in question. ARTICLE 9. ASSIGNMENT, TRANSFER AND NOTICE Section 9.01. Assignment (General). Developer's rights and obligations hereunder and with respect to the Project Approvals shall not be assigned or transferred, except that on thirty (30) days written notice to City, Developer, may assign all or a portion of Vested Party's rights and obligations thereunder to any person or persons, partnership or corporation who purchases all or a portion of Vested Party's right, title and interest in the Project Site, provided such assignee or grantee assumes in writing each and every obligation of Developer hereunder yet to be performed, and further provided that Developer obtains the consent of City to the assignment, which consent shall not be unreasonably withheld. Any assignment pursuant to this Article 9 shall name Developer, as assignor, of any and all rights and obligations hereunder in accord with the nature and scope of the assignment in question. Section 9.02. Requirements of Notice. Consent. Provided the Developer's thirty (30) day notice includes the assumption by the assignee or grantee, the consent of the City or withholding thereof shall be determined by the City Council at a public meeting. The notice to City shall include the identity of any such assignee and a copy of the written assumption of the assignor's obligations hereunder pertaining to the portion assigned or transferred. After such notice and the receipt of such consent, the assignor shall have no further obligations or liabilities hereunder. Section 9.03. Assignment to Affiliate as a Matter of Right. Notwithstanding anything in this Article 9, the parties understand and agree that Developer shall be permitted as a matter of right to assign all or a portion of Developer's rights and obligations hereunder to any person or entity that individually or collectively, directly or indirectly, controls, is controlled by, or is under common control with Developer, so long as Developer's right, title and interest in the Project Site, or corresponding portion thereof, is transferred to such an affiliated person or entity prior to or concurrent with such assignment, and such an affiliated person or entity assumes in writing each and every obligation of Developer hereunder as to the Project or Project Site, or corresponding portion thereof, yet to be performed. City shall not have the authority to withhold consent to such an assignment pursuant to this Section 9.03. Section 9.04. Limits of Liability. To the extent the Developer's responsibilities are transferred in good faith to another person or entity, Developer shall be free from any and all liabilities accruing on or after the date of any assignment or transfer with respect to those obligations assumed by a transferee pursuant to a Transfer Agreement. No breach or default hereunder by any person succeeding to any portion of Developer's obligations under this Agreement shall be attributed to Developer, nor may Developer's rights hereunder be canceled or diminished in any way by any breach or default by any such person. 14 ARTICLE 10. COOPERATION IN THE EVENT OF LEGAL CHALLENGE Section 10.01. Cooperation. a. In the event of any administrative, legal or equitable action or other proceeding instituted by any person not a party to this Agreement challenging the validity of any provision of this Agreement, the Hotel Operations Covenant, or any Project Approval, the parties shall cooperate in defending such action or proceeding. The parties shall use best efforts to select mutually agreeable legal counsel and experts to defend such action, and Developer shall pay all compensation and costs and expenses incurred for such legal counsel and experts; provided, however, that such compensation shall include only compensation paid to counsel not otherwise employed as City staff and shall exclude, without limitation, City Attorney time and overhead costs and other City staff overhead costs and normal day-to-day business expenses incurred by City. In the event City and Developer are unable to select mutually agreeable legal counsel to defend such action or proceeding, each party may select its own legal counsel. b. The parties agree that this Section 10.01 shall constitute a separate agreement entered into concurrently, and that if any other provision of this Agreement, or the Agreement as a whole, is invalidated, rendered null, or set aside by a court of competent jurisdiction, the parties agree to be bound by the terms of this section, which shall survive such invalidation, nullification or setting aside. Section 10.02. Waiver of Challen_qes to Project Approvals. a. As a condition precedent to receiving the benefits of this Agreement, Developer, its successors in interest, transferees, assignees, etc., expressly waive any legal or equitable right to challenge any Project Approvals or other act, entitlement, fee, or approval expressly set forth in this Agreement, including without limitation, all acts of protest pursuant to California Government Code Sections 66008 and 66009 as to any fee against which Developer has vested in accordance with this Agreement. b. The parties agree that this Section 10.02(b) shall constitute a separate agreement entered into concurrently, and that if any other provision of this Agreement, or the Agreement as a whole, is invalidated, rendered null, or set aside by a court of competent jurisdiction, the parties agree to be bound by the terms of this section, which shall survive such invalidation, nullification or setting aside. ARTICLE 11. DEFAULT; REMEDIES; TERMINATION; DISPUTES Section 11.01. Defaults. Any failure by either party to perform any term or provision of this Agreement, which failure continues uncured for a period of thirty (30) days following written notice of such failure from the other party (unless such period is extended by mutual written consent), shall constitute a default under this Agreement ("Default"). Any notice given pursuant to the preceding sentence ("Default Notice") shall 15 specify the nature of the alleged failure and, where appropriate, the manner in which said failure satisfactorily may be cured. If the nature of the alleged failure is such that it cannot reasonably be cured within such 30 day period, then the commencement of the cure within such time period, and the diligent prosecution to completion of the cure thereafter, shall be deemed to be a cure within such 30 day period. Upon the occurrence of a Default under this Agreement, the non -defaulting party may institute legal proceedings to enforce the terms of this Agreement or, in the event of a material Default, terminate this Agreement. If the Default is cured, then no Default shall exist and the noticing party shall take no further action. Section 11.02. Termination. If City elects to consider terminating this Agreement due to a material Default of Developer, then City shall give a notice of intent to terminate this Agreement. The parties agree that a significant deviation from the agreed performance schedule, in the absence of the occurrence of a force majeure event or excusable delay, shall be a material default hereunder. City shall give written notice of termination of this Agreement to Developer by certified mail and this Agreement shall thereby be terminated sixty (60) days thereafter. Section 11.03. Default by City or Developer. In the event that City or Developer defaults under the terms of this Agreement, the City or Developer shall have all rights and remedies provided herein or under law. Section 11.04. Force Majeure and Excusable Delay; Extension of Time of Performance. In addition to specific provisions of this Agreement, neither party shall be deemed to be in Default where delays in performance or failures to perform are due to, and a necessary outcome of, war, insurrection, strikes or other labor disturbances, walk- outs, riots, floods, earthquakes, fires, casualties, acts of God, restrictions imposed or mandated by other governmental entities (including new or supplemental environmental regulations), enactment of conflicting state or federal laws or regulations, judicial decisions, or similar basis for excusable performance which is not within the reasonable control of the party to be excused (collectively and each a "Force Majeure" event). Litigation attacking the validity of this Agreement or any of the Project Approvals, or any permit, ordinance, entitlement or other action of a governmental agency other than City necessary for the development of the Project pursuant to this Agreement, shall also be deemed to create an excusable delay as to Developer (collectively "Excusable Delay"). The party whose performance is prevented or delayed by such event of Force Majeure or Excusable Delay shall give prompt written notice thereof to the other party and both parties shall have agreed that performance is appropriately excused or delayed pursuant to this Section 11.04. In the event of Force Majeure or Excusable Delay, the parties shall memorialize in writing the extension of time for the performance of any obligation whose performance has been so prevented or delayed. The term of any such extension shall be equal to the period of the Excusable Delay or Force Majeure event, or such other period as may be mutually agreed upon by both parties. 16 Section 11.05. Legal Action. Either party may, in addition to any other rights or remedies, institute legal action to cure, correct, or remedy any default, enforce any covenant or agreement herein, enjoin any threatened or attempted violation thereof, recover damages for any default, enforce by specific performance the obligations and rights of the parties hereto, or to obtain any remedies consistent with the purpose of this Agreement. Section 11.06. California Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California. Venue for any action shall be in Riverside County, California. Section 11.07. Resolution of Disputes. With regard to any dispute involving development of the Project, the resolution of which is not provided for by this Agreement or Applicable Law, Developer and City shall, at the request of the other party, meet with that other party, and shall attempt in good faith to resolve any such dispute. Nothing in this Section 11.07 shall in any way be interpreted as requiring that Developer or City reach an agreement with regard to those matters being addressed, nor shall the outcome of these meetings be binding in any way on City or Developer unless expressly agreed to by the parties to such meetings. Any dispute that is the subject of a meeting pursuant to this Section 11.08 shall be referenced during an Annual Review. Section 11.08. Attorneys' Fees. In any legal action or other proceeding brought by either party to enforce or interpret a provision of this Agreement, each party shall bear its own costs and expenses, including attorneys' fees. Section 11.09. Hold Harmless. Developer shall, at its sole expense, defend and hold City and its elected and appointed officers, agents, employees, and representatives harmless from all claims, costs, and liabilities for any personal injury, death, or property damage which arises directly or indirectly as a result of the construction of the Project, the Project Site, or of operations performed under this Agreement by Developer or by Developer's contractors, subcontractors, agents or employees, whether such operations were performed by Developer or any of Developer's contractors, subcontractors, agents, or by any one or more persons directly or indirectly employed by or acting as agent for Developer or any of Developer's contractors or subcontractors. Developer's duty hereunder shall include without limitation any claim arising from or related to Developer's duties under Section 7.12 hereof. Nothing in this section shall be construed to mean that Developer shall hold City harmless from any claims of personal injury, death or property damage arising from, or alleged to arise solely from, any negligent or intentional act, or failure to act, on the part of City, its elected and appointed representatives, officers, agents and employees. This hold harmless agreement applies to all damages or claims for damages suffered or alleged to have been suffered by reason of the operations referred to in this section regardless of whether or not City prepared, supplied or approved plans or specifications, or both, for the Project and/or Project Site. 17 The parties agree that this Section 11.09 shall constitute a separate agreement entered into concurrently herewith, and that if any other provision of this Agreement, or the Agreement as a whole, is invalidated, rendered null, or set aside by a court of competent jurisdiction, the parties agree to be bound by the terms of this section, which shall survive such invalidation, nullification or setting aside. ARTICLE 12. NO AGENCY, JOINT VENTURE OR PARTNERSHIP It is specifically understood and agreed to by and between the parties hereto that: (i) the subject development is a private development; (H) City has no interest or responsibilities for, or duty to, third parties concerning any improvements until such time, and only until such time, that City accepts the same pursuant to the provisions of this Agreement or in connection with the various Project Approvals; (W) Developer shall have full power over and exclusive control of the Project herein described, subject only to the limitations and obligations of Developer under this Agreement, the Project Approvals and Applicable Law; and (iv) City and Developer hereby renounce the existence of any form of agency relationship, joint venture or partnership between City and Developer and agree that nothing contained herein or in any document executed in connection herewith shall be construed as creating any such relationship between City and Developer. ARTICLE 13. MISCELLANEOUS Section 13.01. Enforceability. City and Developer agree that unless this Agreement is amended or terminated pursuant to the provisions of this Agreement, this Agreement shall be enforceable by any party hereto, notwithstanding any change hereafter enacted or adopted (whether by ordinance, resolution, initiative, or any other means) in any applicable general plan, specific plan, zoning ordinance, subdivision ordinance, or any other land use ordinance or building ordinance, resolution or other rule, regulation or policy adopted by City that changes, alters or amends the rules, regulations and policies applicable to the development of the Project Site at the time of the approval of this Agreement as provided by California Government Code Section 65866. Section 13.02. Severability. If any term or provision of this Agreement, or the application of any term or provision of this Agreement to a particular situation, is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining terms and provisions of this Agreement, or the application of this Agreement to other situations, shall continue in full force and effect unless amended or modified by mutual consent of the parties. Notwithstanding the foregoing, if any material provision of this Agreement, or the application of such provision to a particular situation, is held to be invalid, void or unenforceable, either City or Developer may (in their sole and absolute discretion) terminate this Agreement by providing written notice of such termination to the other party. 18 Section 13.03. Other Necessary Acts. Each party shall execute and deliver to the other all such other further instruments and documents as may be reasonably necessary to carry out the Project Approvals and to provide and secure to the other party the full and complete enjoyment of its rights and privileges hereunder. Section 13.04. Construction. Each reference in this Agreement to this Agreement or any of the Project Approvals shall be deemed to refer to the Agreement or the Project Approvals as they may be amended from time to time, whether or not the particular reference refers to such possible amendment. This Agreement has been reviewed and revised by legal counsel for both City and Developer, and no presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. Section 13.05. Other Miscellaneous Terms. The singular shall include the plural; the masculine gender shall include the feminine; "shall" is mandatory; "may" is permissive. If there is more than one signer of this Agreement, the signer obligations are joint and several. Section 13.06. Covenants Running with the Land. All of the provisions contained in this Agreement shall constitute covenants or servitudes which shall run with the land comprising the Project Site and the burdens and benefits hereof shall be binding upon and inure to the benefit of the parties and their respective heirs, successors in interest, transferees and assignees, representatives, lessees, and all other persons acquiring all or a portion of the Project or the Project Site, or any interest therein, whether by operation of law or in any manner whatsoever. All of the provisions contained in this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to California law including, without limitation, Civil Code Section 1468. Section 13.07. Notices. Any notice or communication required hereunder between City or Developer must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail) by registered or certified mail (return receipt requested), or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any party hereto may at any time, by giving ten (10) days written 19 notice to the other party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the parties at their addresses set forth below: If to the City, to: David H. Ready, Esq., Ph.D. City Manager 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 322-8362 David.Ready@palmsprings-ca.gov With Copies to: Edward Z. Kotkin City Attorney 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 323-8299 Edward. Kotkin@palmspringsca.gov If to Developer, to: Michael Braun DTPS B-3, LLC 201 N. Palm Canyon Drive, Suite 201 Palm Springs, CA 92262 Section 13.08. Entire Agreement, Counterparts and Exhibits. This Agreement is executed in duplicate, each of which is deemed to be an original. This Agreement consists of twenty-one (21) pages and four (4) exhibits which constitute in full, the final and exclusive understanding and agreement of the parties, and supersede all negotiations or previous agreements of the parties with respect to all or any part of the subject matter hereof. Section 13.09. Waiver. Any waivers of the provisions of this Agreement or any breach of covenants or conditions contained in this Agreement shall be effective only if in writing and signed by the appropriate authorities of City and Developer. A waiver of one provision or breach shall not be considered as a continuing waiver, shall not constitute a waiver of any other conditions or covenants and shall not operate to bar or prevent the other party from declaring a forfeiture or exercising its rights for any succeeding breach of either the same or other condition or covenant. Section 13.10. Recordation of Development Agreement. No later than ten (10) days after the ordinance through which the City approves this Agreement is adopted on second reading, the City Clerk shall record an executed copy of this Agreement in the Official Records of the County of Riverside. Section 13.11. No Third Party Beneficiaries. No person or entity shall be deemed to be a third party beneficiary hereof and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than City and Developer, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 20 Section 13.12. Titles of Parts and Sections. Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of this Agreement's provisions. Section 13.13. Discretion of City. City's execution of this Agreement in no way limits the discretion of City in the permit or approval process in connection with any site plan approvals, subsequent entitlements, land use decisions, construction or improvements which are within City's jurisdiction, except to the extent expressly and unequivocally stated herein. Section 13.14. Representations of Authority. As to each person signing this Agreement on behalf of an entity, all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and he or she has been authorized to sign this Agreement and bind the party on whose behalf he or she signs. [SIGNATURES ON NEXT PAGE] 21 IN WITNESS WHEREOF, the City of Palm Springs California, a California Charter City and municipal corporation, has authorized the execution of this Development Agreement in duplicate by its City Manager and attestation by its City Clerk, and approved by the Council of the City on the day of 2017, and Developer has caused this Agreement to be executed by its authorized representative. Date: APPROVED AS TO FORM: in Edward Z. Kotkin City Attorney APPROVED BY CITY COUNCIL: Date: Agreement No. "CITY" City of Palm Springs David H. Ready, PhD, Esq. City Manager ATTEST Kathleen D. Hart, MMC Interim City Clerk Corporations require two notarized signatures. One signature must be from Chairman of Board, President, or any Vice President. The second signature must be from the Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or Chief Financial Officer. "DEVELOPER" DTPS B-3, LLC, a California limited liability company By Signature (Notarized) Signature (Notarized) Michael Braun, Manager Octavio P. Hernandez, Manager Printed Name/Title Printed Name/Title 22 EXHIBIT A REAL PROPERTY DESCRIPTION Parcel 3 as shown on Parcel Map 36446, as per Map recorded in Book 238, Pages 31 through 34 of Maps, records of Riverside County, California. Exhibit "A" EXHIBIT B ORDINANCE NO. FOLLOWS THIS PAGE Exhibit "B" EXHIBIT C OPERATIONS COVENANT FOLLOWS THIS PAGE Exhibit "C" EXHIBIT D PERFORMANCE SCHEDULE DATE ACTIVITY November 15, 2017 City Council — Approval of Development Agreement; Introduction and First Reading of Ordinance December 6, 2017 City Council — Second Reading and Adoption of Ordinance January 5, 2018 Effective Date of Ordinance and Development Agreement March 31, 2018 Finalize Capital Commitment; Initiate preparation of Construction Drawings July 31, 2019 Complete Construction Drawings Submittal to City for Building Permit Application September 30, 2019 Complete Building Plan Check Review November 30, 2019 Complete General Contractor Bidding Process January 31, 2020 Complete Property Appraisal; Secure Construction Loan Funding March 31, 2020 Issuance of City Building Permit December 31, 2021 Complete Vertical Construction January 31, 2022 Obtain Final Building Permit Inspections; Issuance of City Certificate of Occupancy; Turn -Over of Virgin Hotel to Operator March 1, 2022 Grand Opening of Virgin Hotel Exhibit "D" Cindy Berardi From: David Newell Sent: Tuesday, February 26, 2019 11:03 AM To: Cindy Berardi Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Attachments: Hotel Incentive Operations Covenant Amend 1 EZK 2.5.19 (CLEAN).docx From: Flinn Fagg <Flinn. Fagg@palmspringsca.gov> Sent: Tuesday, February 5, 2019 11:06 AM To: David Newell<David.Newell@palmspringsca.gov> Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment FYI From: Edward Kotkin Sent: Tuesday, February 5, 2019 10:52 AM To: Marcus Fuller <Marcus.Fuller@palmspringsca.gov>; Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov> Subject: RE: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Here you are. Don't forget that we need to execute and record the covenant approved 11.29.17 (just like the original development agreement), along with this document. ?ABM Edward Z. Kotkin, City Attorney t sa City of Palm Springs " 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262 Office: 760.323.8205 •:• Fax: 760.322.8332 - Email: Edward.Kotkin@palmspringsca.gov sfoa� From: Marcus Fuller <Marcus.Fuller@ paImspringsca.gov> Sent: Monday, February 4, 2019 6:32 PM To: Edward Kotkin <Edward.Kotkin@palmspringsca.gov>; Flinn Fagg <Flinn.Fagg@paImspringsca.gov> Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov> Subject: RE: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Eddie, can you provide the updated amendment 1 to the operations covenant? iK CALIFOR; I Like no place else:" Marcus L. Fuller, MPA, PE, PLS Assistant City Manager/City Engineer City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 322-8380 Marcus. Fuller(d oalmsprinasca.aov 1 From: Edward Kotkin <Edward.Kotkin@palmspringsca.gov> Sent: Thursday, January 31, 2019 9:44 AM To: Marcus Fuller <Marcus.Fuller@palmspringsca.gov>; Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov> Subject: RE: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Here's the original DA that was never signed, and the revised first amendment. Edward Z. Kotkin, City Attorney t pALM 30 4�y City of Palm Springs N 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262 Office: 760.323.8205 •'r Fax: 760.322.8332 ❖Email: Edward.Kotkin@palmspringsca.gov • C'pl IPO N��P From: Marcus Fuller <Marcus.Fuller@palmspringsca.gov> Sent: Thursday, January 31, 2019 8:38 AM To: Edward Kotkin <Edward.Kotkin@palmspringsca.gov>; Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Tabitha Richards <Tabitha.Richards@palmspringsca.gov> Subject: RE: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Importance: High Is there a final version of the Virgin Hotel DA Amendment that was prepared following Council's approval? I recall they revised the extension to 2 years? Please provide a clean PDF copy of the approved amendment so I can forward to Michael Braun for signature. a 04� 1K CALIFORP1iA Like no place else." Marcus L. Fuller, MPA, PE, PLS Assistant City Manager/City Engineer City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 (760) 322-8380 Marcus. Fuller(&palmspringsca._gov From: Edward Kotkin <Edward.Kotkin@palmspringsca.gov> Sent: Thursday, January 17, 2019 11:45 AM To: Marcus Fuller <Marcus.Fuller@palmspringsca.gov> Subject: FW: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment For your files....... From: Edward Kotkin Sent: Thursday, January 17, 2019 11:45 AM To: Flinn Fagg <Flinn.Fagg@palmspringsca.gov> Cc: Cindy Berardi <Cindy.Berardi@palmspringsca.gov> Subject: First Amendment to Virgin Development Agreement - Ordinance 1973 + First Amendment Flinn, Here's the ordinance and the First Amendment to the Agreement. Please note that the First Amendment is ALSO EXHIBIT "A" to the Ordinance!!!! PLEASE ALSO NOTE THE NEW TITLE OF THE ORDINANCE FOR THE STAFF REPORT AND THE ACTUAL AGENDA!!!! aA►M Edward Z. Kotkin, City Attorney t s„ o .� City of Palm Springs " 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262 •C'4420 M1p�p Office: 760.323.8205 •: Fax: 760.322.8332 •:• Email: Edward.Kotkin@palmspringsca.gov FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: THE CITY OF PALM SPRINGS 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attention: City Clerk (Space Above This Line for Recorder's Office Use Only) AMENDMENT NO. 1 TO OPERATIONS COVENANT FOR THE VIRGIN HOTEL APPROVED ON NOVEMBER 29, 2017 THIS AMENDMENT NO. 1 TO THE OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Amendment") is made and entered into this day of , 2019, by and between the CITY OF PALM SPRINGS, a California municipal corporation and charter city ("City"), by and through its City Council, and DTPS B-3, LLC, a California limited liability company, ("Owner"). RECITALS: A. On November 29, 2017, the City Council adopted Ordinance No. 1940, approving that certain "DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF PALM SPRINGS AND DTPS B-3, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY FOR DOWNTOWN PALM SPRINGS SPECIFIC PLAN BLOCK B-1, "VIRGIN HOTEL" CASE NO. 5.1204 SP AMEND CASE NO. 3.3908 MAJ, CASE NO. 5.1427" (the "Development Agreement"). B. The Development Agreement included and incorporated City approval an Operations Covenant and Declaration of Covenants and Restrictions (the "Operations Covenant") for the Virgin Hotel, the development of which was the subject of the Development Agreement (the "Virgin Hotel"). The City and Owner drafted and agreed upon the Operations Covenant pursuant to the Hotel Operations Incentive Program (the "Program"), in accordance with Chapter 5.26 of the Palm Springs Municipal Code ("PSMC"). C. On January 9, 2019, the City Council held a public hearing in accordance with PSMC Section 94.08.00.A.16 of the Palm Springs Zoning Code. The Council completed its an annual review of the Development Agreement, and considered and approved the Owner's request for an amendment to the Development Agreement extending the construction timeline in the performance schedule for the Virgin Hotel by two (2) years. On that same date, the Council also considered and approved this Amendment to the Operations Covenant in accordance with applicable State law, the PSMC (including AMENDMENT NO. 1 TO OPERATIONS COVENANT FOR THE VIRGIN HOTEL APPROVED ON NOVEMBER 29, 2017 Page 1 of 4 without limitation Chapter 5.26), and Section 300 of the City's Charter. The Operations Covenant as hereby amended is referenced below as the "Amended Covenant." D. Recital G of the Operations Covenant, which Operations Covenant will be recorded in the Official records of Riverside County on even date with this Amendment, acknowledged that the Virgin Hotel, as entitled and approved, would qualify as a new "First Class Hotel" under and pursuant to the provisions of Chapter 5.26. Recital G also reflected the Owner's obligation to commence construction of the Virgin Hotel prior to December 31, 2017, in accordance with PSMC Chapter 5.26, would be extended to March 31, 2020, unless such commencement date was otherwise further modified in accordance with the terms of the Development Agreement. E. This Amendment memorializes in the Amended Covenant the two (2) year extensions to the performance schedule in the Development Agreement as amended, approved by the City Council on January 9, 2019. F. The City Council has approved and entered the Operations Covenant and this Amendment thereto pursuant to various provisions of State law, the PSMC, and Section 300 of the City Charter. G. Approval of this Amendment does not represent a "project" for purposes of the California Environmental Quality Act ("CEQA"), as that term is defined by CEQA guidelines section 15378; this Amendment is an organizational or administrative activity that will not result in a direct or indirect physical change in the environment, per section 15378(b)(5) of the CEQA guidelines. NOW, THEREFORE, in consideration of the mutual covenants, conditions, and promises herein contained, the receipt and sufficiency of which is expressly acknowledged and confessed, the parties hereby agree as follows: AMENDMENT SECTION 1. Recital G of the Operations Covenant is hereby amended in its entirety to read: "G.The Parties acknowledge that the Virgin Hotel, if constructed as entitled and approved, will qualify as a new "First Class Hotel" under and pursuant to the provisions of Palm Springs Municipal Code Chapter 5.26. Further, the parties hereby agree that pursuant to the terms of this Amendment, Owner's obligation to commence construction of the Virgin Hotel prior to December 31, 2017 shall be extended to March 31, 2022, unless such commencement date is otherwise further modified in accordance with the terms of the Development Agreement as amended, and by a future amendment to this Amended Covenant. Owner further agrees that it shall complete vertical construction of the Virgin Hotel, without delay, by December 31, 2023; obtain a certificate of occupancy by AMENDMENT NO. 1 TO OPERATIONS COVENANT FOR THE VIRGIN HOTEL APPROVED ON NOVEMBER 29, 2017 Page 2 of 4 January 31, 2024, and begin operation of the Hotel no later than March 1, 2024 unless such completion date is otherwise further modified in accordance with the terms of the Development Agreement as amended, and whereby the completion date is a necessary prerequisite to complying with the terms of this Amended Covenant. It is the intention of the parties to incorporate in this Amended Covenant the revised obligation dates for commencement and completion of construction of the Virgin Hotel, and agree that if completed and operating by the dates of commencement and completion as stated in this Recital, the Virgin Hotel will qualify as a new "First Class Hotel" and be entitled to benefits thereof under and pursuant to applicable State law, the provisions of Chapter 5.26 of the Municipal Code, City Charter Section 300, and this Amendment." SECTION 2. Section 1.1 of the Operations Covenant is hereby amended in its entirety to read: 1.1. OPERATION AND USE COVENANT. Beginning on March 1, 2024, Owner covenants to operate, maintain, and use the Virgin Hotel in accordance with this Agreement as amended. All uses conducted on the Site, including, without limitation, all activities undertaken by the Owner pursuant to this Amended Covenant shall, in all material respects, conform to requirements of this Amended Covenant, and Palm Springs Municipal Code. The parties understand and agree that the Owner may seek to further amend this Amended Covenant pursuant to certain terms and conditions as stated in the Development Agreement, and that in the event of City approval of such an additional amendment, a hotel identified by Owner, with a flag or brand equal or superior to the Virgin Hotel, may serve to fulfill Owner's duties hereunder. Absent such a future amendment hereto, Owner's operation, maintenance and use of a Virgin Hotel shall be a condition precedent to Owner's receipt of any and all consideration or benefit under the Program and hereunder." SECTION 3. All terms, conditions, and provisions of the "Operations Covenant and Declaration of Covenants and Restrictions for the Virgin Hotel approved on November 29, 2017" and recorded on even date herewith, unless specifically modified herein, shall continue in full force and effect. In the event of any conflict or inconsistency between the provisions of this Amendment, and any provisions of the "Operations Covenant and Declaration of Covenants and Restrictions for the Virgin Hotel approved on November 29, 2017," the provisions of this Amendment shall in all respects govern and control. SECTION 4. Each of the persons executing this Amendment on behalf of one of the parties hereto warrants that (i) such party is duly organized and existing, (H) they are duly authorized to execute and deliver this Amendment on behalf of said party, (iii) by their execution of this Amendment, such party is formally bound to the provisions of this Amendment, and that (iv) entry into this Amendment does not violate any provision of any other agreement to which said party is bound. AMENDMENT NO. 1 TO OPERATIONS COVENANT FOR THE VIRGIN HOTEL APPROVED ON NOVEMBER 29, 2017 Page 3 of 4 IN WITNESS WHEREOF, the City and Owner have executed this AMENDMENT NO. 1 TO OPERATIONS COVENANT FOR THE VIRGIN HOTEL APPROVED ON NOVEMBER 29, 2017 by duly authorized representatives on the date first written hereinabove. ATTEST: Anthony J. Mejia, City Clerk APPROVED AS TO FORM: Edward Z. Kotkin, City Attorney "CITY" THE CITY OF PALM SPRINGS, a California municipal corporation and charter city 91 David H. Ready, City Manager "OWNER" DTPS B-3, LLC, a California limited liability company in LM Michael Braun, Manager Octavio P. Fernandez, Manager [END OF SIGNATURES] AMENDMENT NO. 1 TO OPERATIONS COVENANT FOR THE VIRGIN HOTEL APPROVED ON NOVEMBER 29, 2017 Page 4 of 4