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HomeMy WebLinkAboutITEM 4A - VIRGIN HOTEL DA (382_4A Addtl Material)CITY OF PALM SPRINGS OFFICE OF THE CITY CLERK This is a legislative draft copy of development agreement highlighting the changes as noted in the staff report. All changes directed by the City Council at the November 15, 2017, meeting have been incorporated . This is the same document that was distributed in the agenda packet. Staff has not made any changes to the document since the posting of the agenda. November 29, 2017 Additional Materials Item 4A 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, 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 FO.R 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: 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 rconditions 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 "8". 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. ucity" 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 1.1 0. "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. 2008061 084, 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. uTerm" shall have that meaning set forth in Section 3.02 of this Agreement. SECTION 1.23. uVirgin 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. s Section 4 .02. Compliance with Project 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 Virg i n 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 temporarv structures and uses. The interim plan shall be submitted within 90 days of the effective date of the agreement. L 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 Virg i n 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 . 7 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 i mplement 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 8 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 UApplicable 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; 9 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; i. 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 bv 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. 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. 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 (ivJ 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 three (3four (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 1 0.02. 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 1 0.02(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; (ii) 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 Appro.vals 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 Necessarv 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 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 (1 0) 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@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 8-3, LLC 201 N. Palm Canyon Drive, Suite 201 Palm Springs, CA 92262 20 Section 13.08. Entire Agreement. Countemarts and Exhibits. This Agreement is executed in duplicate, each of which is deemed to be an original. This Agreement consists of twenty one (21two (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 13.1 0. 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 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------- ~2018, and Developer has caused this Agreement to be executed by its authorized representative. Date:. ________________________ _ APPROVED AS TO FORM: By:~--~~~~--------­ Edward Z. Kotkin City Attorney APPROVED BY CITY COUNCIL: Date: ___ Agreement No. "CITY" City of Palm Springs By: _____________ __ David H. Ready, PhD, Esq. City Manager ATTEST By: _____________ __ 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 --------~~~~~~~--------·BY Signature (Notarized) Michael Braun. Manager Printed Name/Title Signature (Notarized) Octavia P. Hernandez. Manager 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" DATE November 15, 2017 December 6, 2017 January 5, 2018 March 31, 2018 July 31, 2019 September 30, 2019 November 30, 2019 January 31, 2020 March 31, 2020 December 31, 2021 January 31, 2022 March 1, 2022 EXHIBIT D PERFORMANCE SCHEDULE ACTIVITY City Council -Approval of Development Agreement; Introduction and First Reading of Ordinance City Council -Second Reading and Adoption of Ordinance Effective Date of Ordinance and Development Agreement Finalize Capital Commitment; Initiate preparation of Construction Drawings Full and Complete Construction Drawings Submittal to City for Building Permit Application Complete Building Plan Check Review Complete General Contractor Bidding Process Complete Property Appraisal; Secure Construction Loan Funding Issuance of City Building Permit Complete Vertical Construction Obtain Final Building Permit Inspections; Issuance of City Certificate of Occupancy; Turn-Over of Virgin Hotel to Operator Grand Opening of Virgin Hotel Exhibit "D" TO: cc: FROM: DATE: CITY OF PALM SPRINGS MEMORANDUM OFFICE OF THE CITY CLERK Edward Z. Kotkin City Attorney David H. Ready, Esq., Ph.D. City Manager Kathleen D. Hart, MMC Interim City Clerk November 28, 2017 SUBJECT: 11-15-2017, City Council Meeting Transcription Item A, Virgin Hotel Discussion (a portion only) Per our discussion, at the request of Councilmember Kors, I have prepared a transcription of a portion of the Virgin Hotel Item, November 15,2017, City Council Meeting. Councilmember Kors I obviously take some exception to a potential bribe being a technicality, but everyone's entitled to their opinion. When we voted to transfer the TOT from the Marriott to the Virgin, which we did, we were assured we were not waiving, potentially not waiving our 1090 claims. In every agreement we've done since, we've had language . So I want to ask the City Attorney -by combining the TOT program, which we have never done before, with the development agreement we are effectively voting to waive any 1090 claims we may have. Is that correct? City Attorney Kotkin I'm loathe to offer legal advice in response to one Councilmember's questions, since the entire Council is the holder of the attorney-client privilege. I apologize, my comments, my legal analysis, I'm very happy to offer that. If there's a vote that I answer that question, I ... Councilmember Kors Anyone object to him answering the question? [Mayor and Councilmembers response] Ok. You now have a majority. Memo to City Attorney Kotkin Verbatim Minutes (a portion only) Item A, Virgin Hotel Development Agreement City Attorney Kotkin Great. Terrific. There's a verbal majority. I appreciate that. Thank you very much. Mayor Moon We're all listening . City Attorney Kotkin Page2 I appreciate that. Certainly with respect to this transaction, in the event that the agreements that are before the Council this evening are approved as they're presented in the staff report there would be no feasible way for the City of Palm Springs to seek to recover the potential share of TOT that might be realized by this property through a court proceeding . That is a right that today, under the existing agreements .... my analysis is indicating that we would have that capacity. Councilmember Kors No, he is giving us his opinion ... Chris. He is not saying guaranteed . Well , that's not his opinion. City Attorney Kotkin I will qualify my comments, because I have spoken with Councilmember Mills as well, and I will certainly say that with respect to the recovery under 1092, that as a practical matter, that type of a legal action is a challenging undertaking 100%, and that in a certain sense, regardless of the path that the Council chooses, any attorney that tells you "you 're gonna get that money back" [Councilmember Kors, concurrently: "No guarantees, understood") would be absolutely foolish . We'd be wrong to do that. Councilmember Kors So we are effectively taking it off the table. City Attorney Kotkin I would say if you approve these agreements as they're presented you're removing the potential to recover that future money. Again, that's not money that the City has ever spent or given anybody. It is future money. Councilmember Kors Ok, and just so it's clear. There's no reason we need to have the TOT agreement in this development agreement. So if they were separate, we could do the development agreement without that, that's correct as well. City Attorney Kotkin You could, in theory remove the TOT covenant from the development agreement, convey the consideration in the development agreement that is given to the developer in a separate document and extend the TOT in a new covenant the way we have in conjunction with this development agreement. But it's far from certain, in my opinion, Memo to City AttOI'ney Kotkin Verbatim Minutes (a portion only) Item A, Virgin Hotel Development Agreement Page3 that that course of action would be any more likely to preserve the recovery potential under 1092. It's far from certain. Councilmember Kors The best course of action to do that, would be to pass an ordinance extending the TOT for the three (3) hotels that want them separate and apart from this development agreement. Correct? City Attorney Kotkin If I were charting your course to preserve the City's recovery rights with respect to 1092 of the Government Code, as to any of these issues with respect to hotel projects I would recommend that you do so in a project neutral, non-specific way by changing the ordinance that provides for the program itself. That is certainly something that could be done, and would obviate the need, potentially, for extensions of the TOT deadline for the commencement of construction with respect to hotel rooms. /kdh November 29,2017 Mr. David Ready City Manager City of Palm Springs 3200 E Tahqultz Canyon Way Palm Springs CA 92262 Dear Mr. Ready: John Wessman 676 County Road 202 Durango, CO 81301. As you are aware, in February 2017, I formally retired and completely withdrew from management of GRIT Development llC (f/k/a Wessman Holdings llC) and all other related Wessman owned entities. I have turned over management of GRIT Development LLC to Michael Braun as the sole manager. Management of the various Downtown entities (Palm Springs Promenade LLC and all DTPS LLCs) to Michael Braun and Octavia Fernandez as co-managers of the LLCs. Michael and his team are responsible for all elements of management Including organizational and entity structure. After well over SO years of construction and development and considering the day to day stress of this Industry I have determined that it is time to take some time for myself. I have completed most of my vision for downtown Palm Springs. Michael and his team are more than capable of seeing the Downtown project and others to fruition adding his own signature. I wish them well. As to the Virgin Hotel, this has always been Michael's project. From initial contact with Virgin to date this has been his project. In order to simplify his obtaining equity partners, bank financing and now request of Council I have made the following decision. · I will relinquish all financial interest in the Virgin Hotel Project held by DTPS B3 LLC . This Includes all capital ownership as well as participation in profits and losses from operations of the hotel. I will hold no direct ownership of DTPS 83 llC. As to indirect ownership, I have disclaimed my rights to receive profits from the operation of the Virgin Hotel, whether those profits come through the Wessman Family Trust, Grit Development, LLC or Palm Springs Promenade, Inc. I trust the above satisfies your needs as to documentation of my commitment not to participate in DTPS 13 dir ctlfor indirectly. \~ ) I Terri Milton From: Sent: To : Cc: Subject : robert@robertjulianstone .com <rjuliansf@aol.com> Sunday, November 19, 2017 4:14PM Edward Kolkin; Robert Moon; Geoff Kors; JR Roberts ; Chris Mills; Ginny Foat CityCierk Council Session of Nov . 15 ·Brown Act Violations· Cure and Correct Notice Mayor Moon, Councilmembers Kors, Roberts, Mills, and Foat Palm Springs City Council Dear Legislators, This letter is to call your attention to what I believe was a substantial violation of a central provision of the Ralph M. Brown Act, one which may jeopardize the finality of the action taken by the Palm Springs Planning Commission and Palm Springs City Council. The nature of the violation is as follows : In its meeting of November 15, 2017, the Planning Commission and City Council took action to approve a Joint Development Agreement for the Virgin Hotel. This action was the first Public Hearing on the Agenda for November 15, 2017 and it was agendized as Item A - a joint meeting of the Planning Commission and the City Council. The Staff Report for the Public Hearing omitted the names of the LLC sponsors of the Virgin Hotel and failed to disclose that the proposed Joint Development Agreement Required the City to relinquish its right to recover between $31 and $50 million in TOT rebates should the project sponsor (now indicted for felony bribery) be convicted . The action taken on November 15, 2017 was not in compliance with the Brown Act because there was no adequate notice to the public on the posted agenda for the meeting that the matter acted upon would be discussed, and there was no finding of fact made by the City Council or Planning Commission that urgent action was necessary on a matter unforeseen at the time the agenda was posted . In the event it appears to you that the conduct of the Planning Commission and/or City Council specified herein did not amount to the taking of action, I call your attention to Section 54952 .6, which defines "action taken" for the purposes of the Act expansively, i.e. as "a collective decision made by a majority of the members of a legislative body, a collective commitment or promise by a majority of the members of a legislative body to make a positive or negative decision, or an actual vote by a majority of the members of a legislative body when sitting as a body or entity, upon a motion, proposal, resolution, order 1 or ordinance." In this instance, the Planning Commission approved the Joint Development Agreement unanimously, and the City Council approved it with a 3/2 vote. As you are aware, the Brown Act creates specific agenda obligations for notifying the public with a "brief description" of each item to be discussed or acted upon, and also creates a legal remedy for illegally taken actions-namely, the judicial invalidation of them upon proper findings of fact and conclusions of law. Pursuant to that provision (Government Code Section 54960.1 }, I demand that the Palm Springs Planning Commission and City Council cure and correct the illegally taken action as follows: 1. Invalidate the approvals of the Joint Development Agreement for the Kimpton Hotel, and withdraw from any commitments that were made to the project sponsor on November 15,2017 2. Remove the "second reading" of Council's November 15, 2017 vote from the Agenda for the Special City Council Session currently scheduled for November 29, 2017 at 8 p.m. 3. Re-calendar this item for a future Public Hearing, making sure that the revised Staff Report includes all the names of the members of the sponsoring LLC. Also revise the Staff Report to show how the Joint Development Agreement currently being proposed requires the city to relinquish its right to recover between $31 and $50 million in TOT rebates for the Virgin Hotel. These crucial facts were never made available to the public at any time before the November 15, 2017 Public Hearing. Make sure that all the relevant information for the new Public Hearing is published and provided to the public within the timeframes specified by the Brown Act. As provided by Section 54960.1, you have 30 days from the receipt of this demand to either cure or correct the challenged action or inform me of your decision not to do so. If you fail to cure or correct as demanded, such inaction may leave me no recourse but to seek a judicial invalidation of the challenged action pursuant to Section 54960.1, in which case I would also ask the court to order you to pay my court costs and reasonable attorney fees in this matter, pursuant to Section 54960.5. Respectfully yours, Robert J. Stone 4328 Indigo St. 2