HomeMy WebLinkAbout1/18/2017 - STAFF REPORTS - 2.B. A.
p P.IM
sp9
iy
O
V N
a +
+ Fo
aouco w'a
Cq<IFORN,P City Council Staff Report
DATE: JANUARY 18, 2017 PUBLIC HEARING
SUBJECT: CONDUCT A PUBLIC HEARING UNDER SECTION 53083 OF THE
CALIFORNIA GOVERNMENT CODE TO APPROVE A HOTEL
OPERATIONS COVENANT BETWEEN THE CITY OF PALM SPRINGS
AND ALCAZAR PALM SPRINGS, LLC, A CALIFORNIA LIMITED
COMPANY, (ALCAZAR PALM SPRINGS HOTEL) PURSUANT TO THE
CITY'S HOTEL OPERATIONS INCENTIVE PROGRAM, AND
DETERMINATION OF A CEQA CATEGORICAL EXEMPTION
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
As a condition of receiving the benefits of the City's Hotel Operations Incentive
Program, a hotel operator is required to execute and record a Hotel Operations
Covenant Agreement on the property to ensure that the hotel will be operated and
maintained continuously as a hotel consistent with the Hotels Operations Incentive
Program. This action requests the City Council to approve a Hotel Operations Covenant
Agreement with Alcazar Palm Springs, LLC, for the Alcazar Palm Springs Hotel located
at 622 N. Palm Canyon Drive. The principles of Alcazar Palm Springs, LLC, are Tara
Lazar and Marco Rossetti.
RECOMMENDATION:
1) Open the public hearing and receive public testimony;
2) Approve a Hotel Operations Covenant Agreement, (Agreement No. ), with
Alcazar Palm Springs, LLC for the Alcazar Palm Springs Hotel located at 622 North
Palm Canyon Drive; (A )
3) Authorize the City Manager to execute all necessary documents.
ITEM NO. a• B•
City Council Staff Report
January 18, 2017 -- Page 2
Alcazar Hotel Operations Covenant
STAFF ANALYSIS:
The City Council adopted Chapter 5.26 of the Palm Springs Municipal Code in
December 2007 (amended on May 15, 2013) to provide a Hotel Operations
Incentive Program, (the "Program"), for the operation and maintenance of hotel
facilities that enhance the tourist and travel experience for visitors to the City,
maximize the use of the City's Convention Center, provide attractive and desirable
visitor serving facilities and experiences, and assist the City in achieving its tourism
goals.
Alcazar Palm Springs, LLC, applied to participate in the Program on February 17,
2015, and has provided satisfactory documentation certifying that its recent renovation
project qualifies as a renovation under the Program. The Alcazar Palm Springs Hotel
is located at 622 North Palm Canyon Drive and consists of 34 total hotel rooms. The
project location is shown in Figure 1.
y
9
l
Figure 1
02
City Council Staff Report
January 18, 2017-- Page 3
Alcazar Hotel Operations Covenant
A 500 feet radius vicinity map from the property is shown in Figure 2.
.. I R. 3 .�
� J
3
i•"'»;t
ZEN
N � s
■■ 0 r G
Figure 2
Prior to renovations, the Alcazar Palm Springs Hotel had 34 hotel rooms; no additional
hotel rooms were constructed as a part of the renovations. The renovations included
both exterior and interior improvements. Exterior redesign included complete repaint of
the building exterior, landscaping, and full renovation of the interior spaces, including all
rooms, the lobby and restaurant. Interior renovation included paint, flooring, plumbing
fixtures, doors and hardware, HVAC equipment, furniture, window treatments,
appliances and television/WIFI services.
Consistent with the provisions of the Program, and as a condition of the Hotel
Operations Covenant Agreement, Alcazar Palm Springs, LLC, will be required to place
restrictions upon the use and operation of the hotel, in order to ensure that the
hotel is operated and maintained continuously as a hotel available for short-term
rentals. Alcazar Palm Springs, LLC, will also be required to participate in the Palm
03
City Council Staff Report
January 18, 2017 -- Page 4
Alcazar Hotel Operations Covenant
Springs Convention Center's Committable Rooms Program and provide designated
room-nights per month for official City use. Pursuant to the Program guidelines,
this renovation qualified for a 50% incentive payment for increased Transient
Occupancy Tax ("TOT") revenues in excess of the TOT revenues paid to the City
annually prior to commencement of the renovations (the "TOT Base").
In this case, the City has determined that the TOT Base for the Alcazar Palm Springs
Hotel was the average of TOT revenue paid to the City over a three year period pre-
dating the renovations, between 2008 and 2010, resulting in a TOT Base of $74,333.
The City has also determined that the renovations were sufficiently completed by
January 1, 2016, to allow the Alcazar Palm Springs Hotel to receive increased TOT
revenues, and that the share of TOT increment in excess of the TOT Base with the City
would commence on that date. Therefore, the proposed Hotel Operations Covenant
Agreement will have a term effective from January 1, 2016, through December 31,
2025.
Renovations to the Alcazar Palm Springs Hotel were constructed over a period of time
initiated in 2011 and completed in 2015, pursuant to contracts pre-dating the state's
requirements for payment of prevailing wage rates. However, to ensure the City is
protected from any liability, Section 7.1 "Indemnification" of the proposed Hotel
Operations Covenant Agreement requires Alcazar Palm Springs, LLC, to indemnify and
defend the City against any "...claims that Owner's participation in the Program creates
a public work for prevailing wage purposes thereby requiring the payment of prevailing
wages and this obligation shall apply regardless of whether or not the claim, damage,
penalty, loss, cost, expense, injury and/or liability complained of arises out of or relates
in any way to any negligence on the part of City."
State Law Requirement
In October 2013, Section 53083 was added to the California Government Code
requiring that the City, before granting an economic development subsidy, provide
public notice and hold a public hearing regarding the specific economic development
subsidy. "Economic development subsidy' under Section 53083 means any
expenditure of public funds or loss of revenue to a local agency in excess of $100,000
for the purpose of stimulating economic development within the City, including, but
not limited to, bonds, grants, loans, loan guarantees, enterprise zone or
empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax
abatements, tax exemptions, and tax credits.
Pursuant to this regulation, prior to granting an economic development subsidy, the City
is required to provide specific information in written form available to the public. In
this case, for Alcazar Palm Springs, LLC, the following public information disclosure
is required:
04
City Council Staff Report
January 18, 2017 -- Page 5
Alcazar Hotel Operations Covenant
1. The business entity that is the beneficiary of the economic development
subsidy: Alcazar Palm Springs, LLC, 622 North Palm Canyon Drive, Palm
Springs, CA 92262.
2. The start and end dates and schedule, if applicable, for the economic
development subsidy: The H ote I Operations Covenant Agreement starts on
January 1, 2016, and ends December 31, 2025.The "start date" of the Hotel
Operations Covenant Agreement is the date at which the renovation project is
deemed fully completed and the calculation of the TOT increment commences.
3. A description of the economic development subsidy is the rebate of a 50%
share of Transient Occupancy Tax ("TOT") increment collected annually and
calculated as follows: Commencing January 1, 2016, and through the termination
on December 31, 2025, the subsidy shall be based on annual TOT collections,
subtracted from the established TOT Base of$74,333; 50% of any TOT increment
above the TOT Base of $74,333 shall be payable directly to Alcazar Palm
Springs, LLC. The City receives 50% of additional TOT increment above the TOT
Base.
4. A statement of the public purposes for the economic development subsidy: The
City has confirmed that Alcazar Palm Springs, LLC's, operation and maintenance
of the hotel facilities improvements enhances the tourist and travel experience for
visitors by providing attractive and desirable facilities and assists the City in
achieving its tourism goals.
5. Projected tax revenue to the local agency as a result of the economic
development subsidy: The City shall continue to receive as a minimum the TOT
Base of $74,333 annually, and no loss of revenue through TOT increment sharing
below the TOT Base shall occur. The City conservatively estimates a total net
cumulative increase in TOT revenue of $420,000 over the ten year period after
payment of the TOT increment rebate of 50% to Alcazar Palm Springs, LLC.
6. Estimated number of jobs created by the economic development subsidy,
broken down by full-time, part-time and temporary positions: Alcazar Palm
Springs, LLC, has reported that the renovations to the Alcazar Hotel increased
employment by 3 full-time positions and generated 157 construction positions.
ENVIRONMENTAL IMPACT:
Section 21084 of the California Public Resources Code requires Guidelines for
Implementation of the California Environmental Quality Act ("CEQA"). The Guidelines
are required to include a list of classes of projects which have been determined not to
have a significant effect on the environment and which are exempt from the provisions
of CEQA. In response to that mandate, the Secretary for Resources identified classes
05
City Council Staff Report
January 18, 2017-- Page 6
Alcazar Hotel Operations Covenant
of projects that do not have a significant effect on the environment, and are declared to
be categorically exempt from the requirement for the preparation of environmental
documents. In accordance with Section 15301 "Existing Facilities," Class 1 projects
consist of the operation, repair, maintenance, permitting, leasing, licensing, or minor
alteration of existing public or private structures, facilities, mechanical equipment, or
topographical features, involving negligible or no expansion of use beyond that existing
at the time of the City's determination. The City has determined that approval of the
Hotel Operations Covenant Agreement applicable to the renovations completed for the
Alcazar Palm Springs Hotel is considered categorically exempt from CEQA.
FISCAL IMPACT:
Prior to renovations and re-branding of the Alcazar Palm Springs Hotel, the City
received an annual average of TOT payments of $74,333 over the three-year period
from 2008 to 2010. This amount has been determined as the TOT Base in accordance
the Hotel Operations Covenant Agreement. Following completions of renovations to the
Alcazar Palm Springs Hotel, increased TOT payments to the City have been received,
and commencing January 1, 2016, through December 31, 2025, the City will equally
share the TOT increment above the TOT Base with Alcazar Palm Springs, LLC. On the
basis of TOT payments received after completion of the renovations and re-branding of
the Alcazar Hotel from 2011 through 2016, it is estimated the City will receive a total net
cumulative increase (after payment of the 50% TOT increment rebate) of $420,000 over
the 10 year term of the Hotel Operations Covenant Agreement.
SUBMITTED:
i
Diana . Shay us . Fuller, MPA, P.E., P.L.S.
Redevelopment Coordinator Assistant City Manage City Engineer
Geoff y Kiehl Dougla C. Holland
Director of Finance & Treasurer City Atthriney
David H. Ready, Esq., Ph
City Manager
Attachments: Hotel Operations Covenant Agreement-Alcazar Palm Springs, LLC
06
ATTACHMENT 1
07
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 ,
2017, by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city
("City"), and ALCAZAR PALM SPRINGS, LLC ("Owner").
RECITALS :
A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in
December, 2007 to provide a Hotel Operations Incentive Program ("Program") for the operation
and maintenance of Hotel facilities that enhance the tourist and travel experience for visitors to
the City, maximize the use of the City's Convention Center, provide attractive and desirable
visitor serving facilities and experiences, and assist the City in achieving its tourism goals.
B. On February 17, 2015, Owner applied for the Program and has provided
satisfactory documentation certifying its recent renovation project as a qualified renovation
program under the Program. Alcazar Palm Springs Hotel ("Owner's Hotel" or "Project"),
generally located at 622 North Palm Canyon Drive, Palm Springs, California, consists of thirty-
four (34) total hotel rooms on that certain real property located in the City of Palm Springs,
County of Riverside, State of California, more particularly described in Exhibit"A" attached
hereto and incorporated herein by reference (the "Site").
C. City and Owner now desire to place restrictions upon the use and operation of the
Project, in order to ensure that the Project shall be operated continuously as a hotel available for
short-term rental for the term of this Agreement.
D. City and Owner also agree that in return for participation in the Program, Owner
shall agree to operate the Project as a hotel; participate in the Palm Springs Convention Center's
Committable Rooms Program; and provide City with a minimum of two (2) room-nights per
month for official City use; and, City agrees to share a percentage of Transient Occupancy Tax
Increment with Owner pursuant to the Program guidelines.
E. The City finds that the approval of this Covenant is Categorically Exempt from
CEQA under Section 15301 of the California Administrative Code as the Hotel Operations
Incentive Program applicable to Owner's Hotel applies to the operation, repair, maintenance, or
90229.03/OC OPERATIONS COVENANT 06
3 709 71-0000 3/2-10-1 Ldm,J, FOR HO'PEL I.NCEN I IV E PROGRAM
minor alteration of existing structures, facilities, mechanical equipment involving no material
expansion of use beyond that previously existing.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Participant hereby conveys to the City the Operating
Covenants described herein and City hereby agrees to provide Participant with funds as provided
under the Program and as set forth hereinafter.
ARTICLE 1
STATEMENT OF OPERATING COVENANTS
1.1. OPERATION AND USE COVENANT. Owner covenants to operate, maintain,
and use the Owner's Hotel in accordance with this Agreement. All uses conducted on the Site,
including, without limitation, all activities undertaken by the Owner pursuant to this Agreement
shall conform to requirements of this Agreement and Palm Springs Municipal Code(PSMC).
1.2. HOTEL USE. The Owner hereby agrees that the Project is to be owned,
managed, and operated as a comfort hotel (as defined by 5.36.020 of the PSMC) in a first-class
manner, and the Project's participation in the Program shall continue in accordance with the
terms of the Program, for a term equal to ten 10 years, commencing upon the date Owner first
receives from the City the Owner's share of transient occupancy tax revenues pursuant to the
Program unless and until Owner's participation in the Program is terminated prior thereto in
accordance with this Agreement(the "Term").
1. Housing Uses Prohibited. None of the rooms in the Project will at any
time be utilized as a non-transient residential property including dormitory, fraternity or
sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park
without the City's prior consent which consent may be given or withheld in its sole and
absolute discretion.
2. Conversion of Project. No part of the Project will at any time be owned
by a cooperative housing corporation, nor shall the Owner take any steps in connection
with the conversion to such ownership or uses to condominiums, or to any other form of
ownership, without the prior written approval of the City Council which approval may be
given or withheld in its sole and absolute discretion.
ARTICLE 2
WARRANTIES AND COVENANTS
2.1. WARRANTIES AND COVENANTS. For the Term of this Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
1. Owner has completed the City's application for the Hotel Operations
Incentive Program. The City has determined the Transient Occupancy Tax Base to be
used to calculate the Transient Occupancy Tax Increment shall be $74,333.28, and the
Owner accepts such Transient Occupancy Tax Base.
915229.03/OC OPERATIONS COVENANT n9
370971-00003/2-10-11/dme/try-5-2-13/c0 -2- FOR HOTEL INCENTIVE PROGRAM
2. Owner hereby agrees to subscribe to the Palm Springs Convention
Center's Committable Rooms Program or any similar successor program as identified by
the City Manager without being obligated to incur any additional costs or expenses.
3. Upon City's prior request, Owner shall provide the City at no cost two (2)
rooms for one (1) night (or one room for two nights) 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 taxes. City shall be responsible for
any transient occupancy taxes for any occupancy provided to City under the provisions of
this paragraph. Notwithstanding anything in this Agreement to the contrary, if the City
does not use rooms during any month, then its right to use rooms with respect to that
month shall expire at the end of that month and shall not accrue; provided, however, if
the City was unable to use rooms solely because Owner's Hotel had no rooms available
when the City requested a room in accordance with this Section 2.1.3, then, the City's
right to use rooms shall not expire and may be used by the City in a subsequent month.
ARTICLE 3
MAINTENANCE
3.1. MAINTENANCE,
1. Maintenance Obligation. Owner, for itself and its successors and assigns,
hereby covenants and agrees to maintain and repair or cause to be maintained and
repaired the Site and all related on-site improvements and landscaping thereon, including,
without limitation, buildings, parking areas, lighting, signs and walls in a first class
condition and repair, free of rubbish, debris and other hazards to persons using the same,
and in accordance with all applicable laws, rules, ordinances and regulations of all
federal, state, and local bodies and agencies having jurisdiction, at Owner's sole cost and
expense. Such maintenance and repair shall include, but not be limited to, the following:
(i) sweeping and trash removal; (ii) the care and replacement of all shrubbery, plantings,
and other landscaping in a healthy condition; and (iii) the repair, replacement and
restriping of asphalt or concrete paving using the same type of material originally
installed, to the end that such paving at all times be kept in a level and smooth condition.
In addition, Owner shall be required to maintain the Property in such a manner as to
avoid the reasonable determination of a duly authorized official of the City that a public
nuisance has been created by the absence of adequate maintenance such as to be
detrimental to the public health, safety or general welfare or that such a condition of
deterioration or disrepair causes appreciable harm or is materially detrimental to property
or improvements within one thousand(1,000) feet of such portion of the Site.
2. Parkin¢ and Driveways. The driveways and traffic aisles on the Site shall
be kept clear and unobstructed at all times.
91522R03/OC OPERATIONS COVENANT 10
370971-00003/2-10-11/d.r✓I,-5-243/cvh -3- FOR HOTEL INCENTIVE PROGRAM
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 attorneys fees, shall be an obligation of Owner as well as a lien and
charge, with power of sale, upon the property interests of Owner, and the rents, issues
and profits of such property. City may bring an action at law against Owner obligated to
pay any such sums or foreclose the lien against Owner's property interests. Any such lien
may be enforced by sale by the City following recordation of a Notice of Default of Sale
given in the manner and time required by law as in the case of a deed of trust; such sale to
be conducted in accordance with the provisions of Section 2924, et seq., of the California
Civil Code, applicable to the exercise of powers of sale in mortgages and deeds of trust,
or in any other manner permitted by law.
Any monetary lien provided for herein shall be subordinate to any bona fide
mortgage or deed of trust covering an ownership interest or leasehold or subleasehold
estate in and to any Site approved by City pursuant to the Agreement, and any purchaser
at any foreclosure or trustee's sale (as well as any deed or assignment in lieu of
foreclosure or trustee's sale) under any such mortgage or deed of trust shall take title free
from any such monetary lien, but otherwise subject to the provisions hereof; provided
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.
915229.03/OC OPERATIONS COVENANT
390991-00003/2-10-1 Pdm 11 -5-2-13/cvh -4- FOR HOTEL INCEN TIVE PROGRAM
ARTICLE 4
COMPLIANCE WITH LAWS
4.1. COMPLIANCE WITH LAWS. Owner shall comply with all ordinances,
regulations and standards of the City and City applicable to the Site. Owner shall comply with
all rules and regulations of any assessment district of the City with jurisdiction over the Site.
ARTICLE 5
NONDISCRIMINATION
5.1. NONDISCRIMINATION. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, religion, gender,
sexual orientation, gender identity, gender expression, marital status, national origin, ancestry,
physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Site, or any part thereof, nor shall Owner, or any person
claiming under or through it, establish or permit any such practice or practices of discrimination
or segregation with reference to the selection, location, number, use or occupancy of guests or
vendees of the Site, or any part thereof.
ARTICLE 6
COVENANTS TO RUN WITH THE LAND
6.1. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Site to
the covenants, reservations, and restrictions set forth in this Agreement. City and Owner hereby
declare their express intent that all such covenants, reservations, and restrictions shall be deemed
covenants running with the land and shall pass to and be binding upon the Owner's successors in
title to the Site; provided, however, that on the termination of this Agreement said covenants,
reservations and restrictions shall expire. All covenants without regard to technical classification
or designation shall be binding for the benefit of the City, and such covenants shall run in favor
of the City for the entire term of this Agreement, without regard to whether the City is or remains
an owner of any land or interest therein to which such covenants relate. Each and every contract,
deed or other instrument hereafter executed covering or conveying the Site or any portion thereof
shall conclusively be held to have been executed, delivered and accepted subject to such
covenants, reservations, and restrictions, regardless of whether such covenants, reservations, and
restrictions are set forth in such contract, deed or other instrument.
City and Owner hereby declare their understanding and intent that the burden of the
covenants set forth herein touch and concern the land in that Owner's legal interest in the Site is
rendered less valuable thereby. City and Owner hereby further declare their understanding and
intent that the benefit of such covenants touch and concern the land by enhancing and increasing
the enjoyment and use of the Project by the intended beneficiaries of such covenants,
reservations, and restrictions, and by furthering the public purposes for which the City was
formed.
91522U3/0C OPERATIONS COVENANT I2
370971-000032-10-11/dme/Iry-5-2-13/cvh -5- FOR HOTEL INCENTIVE PROGRAM
Owner, in exchange for the City entering into the Agreement, hereby agrees to hold, sell,
and convey the Site subject to the terms of this Agreement. Owner also grants to the City the
right and power to enforce the terms of this Agreement against the Owner and all persons having
any right, title or interest in the Site or any part thereof while such party owns the Site. No party
shall have any liability or obligation in connection with any breach occurring while such party is
not the owner of the Site.
Within fifteen (15) business days after request of Owner, City shall execute and provide
to Owner an estoppel certificate, in the form approved by the City Attorney of the City,
confirming whether or not Owner is in breach of any obligations under this Agreement and
identifying any required cure.
ARTICLE 7
INDEMNIFICATION
7.1. INDEMNIFICATION. Owner agrees for itself and its successors and assigns to
indemnify, defend, and hold harmless City and its respective officers, members, officials,
employees, agents, volunteers, and representatives from and against any loss, liability, claim, or
judgment to or by any third party relating to development and/or operation of the Project by
Owner, excepting only any such loss, liability, claim, or judgment arising solely out of the
intentional wrongdoing or gross negligence of City or its respective officers, officials,
employees, members, agents, volunteers, or representatives. Owner further agrees for itself, and
its successors and assigns to indemnify and defend and hold harmless the City, its respective
officers, members, officials, employees, agents, volunteers, and representatives from and against
any loss, liability, claims, damages, penalties, losses, costs, expenses, injuries and/or liabilities
arising out of claims that Owner's participation in the Program creates a public work for
prevailing wage purposes thereby requiring the payment of prevailing wages and this obligation
shall apply regardless of whether or not the claim, damage, penalty, loss, cost, expense, injury
and/or liability complained of arises out of or relates in any way to any negligence on the part of
City. Owner, while in possession of the Site, and each successor or assign of Owner while in
possession of the Site, shall remain fully obligated for the payment of property taxes and
assessments in connection with the Site. The foregoing indemnification, defense, and hold
harmless agreement shall only be applicable to and binding upon the party then owning the Site
or applicable portion thereof.
7.2. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action
against the other party hereto by reason of the breach of any condition, covenant, representation
or warranty in this Agreement, or otherwise arising out of this Agreement, the prevailing party in
such action shall be entitled to recover from the other reasonable expert witness fees, and its
reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal,
and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for
investigating such action, including the conducting of discovery.
7.3. AMENDMENTS. This Agreement shall be amended only by a written
instrument executed by the parties hereto or their successors in title, and duly recorded in the real
property records of the County of Riverside.
915229.03/OC OPERATIONS COVENANT 13
370971-000032-10-1 I/dme9ry-5-2-13/c�h -6- FOR HOTEL INCENTIVE PROGRAM
7.4. NOTICE. Any notice required to be given hereunder shall be made in writing and
shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt
requested, at the addresses specified below, or at such other addresses as may be specified in
writing by the parties hereto:
City: City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: City Manager
Copy to: Woodruff, Spradlin& Smart, LLP
555 Anton Boulevard, Suite 1200
Costa Mesa, CA 92626
Attn: Douglas C. Holland, Esq.
Owner: Alcazar Palm Springs, LLC
622 North Palm Canyon Drive
Palm Springs, CA 92262
The notice shall be deemed given three (3) business days after the date of mailing, or, if
personally delivered, when received.
7.5. SEVERABILITY/WAIVER/INTEGRATION
1. Severability. If any provision of this Agreement or portion thereof, or the
application to any person or circumstances, shall to any extent be held invalid,
inoperative, or unenforceable, the remainder of the provisions, or the application of such
provision or portion thereof to any other persons or circumstances, shall not be affected
thereby; provided, that if any material terms or provisions of these Operating Covenants
are rendered invalid, void and/or unenforceable, or due to changes in the law such terms
or provisions would materially alter the terms of the transactions contemplated herein, the
parties agree to meet and negotiate in good faith to attempt to reform these Operating
Covenants to accomplish the intent of the parties.
2. Waiver. A waiver by either party of the performance of any covenant or
condition herein shall not invalidate this Agreement nor shall it be considered a waiver of
any other covenants or conditions, nor shall the delay or forbearance by either party in
exercising any remedy or right be considered a waiver of, or an estoppel against, the later
exercise of such remedy or right.
3. Integration. This Agreement contains the entire Agreement between the
parties and neither party relies on any warranty or representation not contained in this
Agreement.
915229.03/OC OPERATIONS COVENANT 14
39097I-000032-10-11/dm/Iry-5-2-13;ivh -7- FOR HOTEL INCENTIVE PROGRAM
4. Third Parties. No third party beneficiaries are intended, and the only
parties who are entitled to enforce the provisions of these Operating Covenants are the
City, Mortgagees, Participant and their respective successors and assigns.
7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of California.
7.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one original and all of which shall be one and the
same instrument.
7.8. TERMINATION. This Agreement may be terminated only (i) by and upon
expiration of the Term, (ii) by mutual written agreement of the parties, and (iii) by and pursuant
to the provisions of Section 7.9 or 7.10 below. In the event of any termination of this Covenant,
Owner (or its successor, as applicable) shall not be obligated to return any amounts previously
paid to it by the City pursuant to the Program.
7.9. DEFAULT BY OWNER. If at any time during the Term, City contends that
Owner has committed a material default with respect this Agreement, e.g., by failing to operate
the Hotel as a Comfort Hotel, City shall deliver to Owner written notice of default which
specifies in detail all facts alleged by City to constitute such default. For a period of sixty days
thereafter, Owner will have the right to commence and complete cure of the alleged default;
provided, however, if the alleged default is of such a nature as to reasonably require more than
sixty days to cure, and the Parties so agree, Owner will have such addition time as is reasonably
necessary to complete such cure. Subject to Section 7.11 below, if Owner fails to timely cure
such default, City shall then have the right to terminate this Agreement. (To the extent of any
inconsistency between the provisions of this Section 7.9 and the provisions of Section 3.1 above,
the provisions of this Section 7.9 shall prevail.)
7.10 DEFAULT BY CITY. If at any time during the Term, Owner contends that City
has committed a material default with respect this Agreement, Owner may deliver to City written
notice of default that specifies in detail all facts alleged by Owner to constitute such default. For
a period of thirty days thereafter, City will have the right to commence and complete cure of the
alleged default; provided, however, if the alleged default is of such a nature as to reasonably
require more than thirty days to cure, and the Parties so agree, City will have such addition time
as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if City fails to
timely cure such default, Owner shall then have the right to terminate this Agreement or exercise
any and all other rights and remedies available at law and in equity, and each of such rights and
remedies shall be cumulative and not exclusive.
7.11 MORTGAGE PROVISONS. Anything in this Agreement to the contrary
notwithstanding, with respect to any recorded mortgage or deed of trust given in good faith and
for value and encumbering the Hotel ("Mortgage"), any holder thereof that has delivered to City
a copy of such recorded Mortgage and current contact information ("Mortgagee") will be entitled
rights and benefits in accordance with the following:
915229.03/OC OPERATIONS COVENANT C
370971-00003/2-10-11/dme/Iry-5-2-13/cvh 'g' FOR HOTEL INCENTIVE PROGRAM 7
1. City acknowledges and agrees that the rights and obligations of Owner
under this Agreement may, with or without approval by City, be conditionally assigned by
Owner to any Mortgagee as security for performance of Mortgage obligations.
2. While any Mortgage remains in effect, City will not amend or modify this
Agreement in any material respect without receiving prior written approval from Mortgagee,
which approval may not be unreasonably withheld, delayed or conditioned; provided, however,
failure by Mortgagee to provide written approval or disapproval (and if disapproval the reasons
therefor) within thirty days of delivery of request therefor shall be deemed to constitute approval
by Mortgagee.
3. While any Mortgage remains in effect, in the event City delivers to Owner
of any notice of default as referenced in either Section 3.1 or 7.9 above, City shall concurrently
deliver a copy thereof to Mortgagee.
4. Delivery of any such notice of default notwithstanding, City will not
terminate or initiate or pursue any action to terminate this Agreement as long as Mortgagee
diligently (i) declares a default by Owner under the Mortgage, (ii) pursues foreclosure and/or
other appropriate actions under the Mortgage, (iii) pays to City all amounts that would otherwise
have been payable by Owner to City, and (iv) cures non-monetary defaults.
7.12 Operator Provisions. City acknowledges and agrees that operational obligations
of Owner may, with or without consent of City, be assigned by Owner to any entity owned or
wholly controlled by Owner or its Members or Hotel Operator of Owner's choice, and, in
connection therewith, such Hotel Operator may assume all or part of Owner's Hotel operation
obligations under this Agreement; provided, however, Owner shall retain ultimate responsibility
for such Hotel operation obligations. City agrees that while any Hotel Operator agreement is in
effect, and provided that City has been put on notice of such agreement and received contact
information for such Operator, in the event City delivers to Owner of any notice of default as
referenced in either Section 3.1 or 7.9 above, City shall concurrently deliver a copy thereof to the
Operator.
7.13 RESERVED.
7.14 Cooperation. Each party agrees to and shall do and perform such other and
further acts and properly execute and deliver such other and further documents as may be
reasonably necessary, expedient or convenient to implement and/or effectuate the intents and
purposes hereof. City and Owner agree to cooperate with each other and/or with any Mortgagee
or proposed Mortgagee, in a manner consistent with concepts and principles of good faith, fair
dealing and commercial reasonableness, with respect to consideration, implementation and
execution of any modification(s) to this Agreement reasonably requested by the City, Owner,
Mortgagee or proposed Mortgagee.
7.15 Reasonable Approvals. Whenever this Agreement requires or calls for the
approval or consent of any party hereto, such approval shall not be unreasonably withheld,
delayed or conditioned.
915229.03,OC OPERATIONS COVENANT 16
370971-000032-10-11/dmeTry-5-2-13,cvh -9- FOR HOTEL INCENTIVE PROGRAM
7.16 Binding Arbitration. In the event of any dispute or controversy arising out of or
relating to this Agreement, or the breach or performance of it, the parties shall reasonably
attempt to resolve such dispute or controversy without resort to third party review or resolution.
The parties shall first meet and confer on any such dispute or controversy. Such meeting(s) shall
include any principal of the Owner and, at the discretion of the City, may include the City
Manager and/or the City Council, either as a whole or through an ad hoc subcommittee
designated by the City Council. Upon a determination by the parties that they are or will be
unable to resolve the dispute or controversy on their own, then the parties shall submit the
dispute, controversy or any remaining unresolved matter to binding arbitration, to be held in the
Coachella Valley, and be conducted pursuant to the Commercial Arbitration Rules of the
American Arbitration Association.
7.17 Incorporation of Recitals and Exhibits. Each of the recitals set forth above and
each of the exhibits attached hereto are agreed to and made part of this Agreement.
7.18 Authority. Each party represents and warrants to the other that such party has full
right, power and authority to sign, execute and enter into this Agreement.
[END -- SIGNATURES ON NEXT PAGE]
915229.03/OC OPERATIONS COVEN AN[
370971-W0032-10-11/dme/Iry-5-2-13/cvh -10- FOR HOTEL INCENTIVE PROGRAM 17
IN WITNESS WHEREOF, the City and Owner have executed this Operations Covenant
by duly authorized representatives on the date first written hereinabove.
"CITY"
THE CITY OF PALM SPRINGS,
a municipal corporation and charter city
By:
City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
WOODRUFF, SPRADLIN & SMART
By:
Douglas C. Holland, Esq.
City Attorney
"OWNER"
By:
Name:
Title:
By:
Name:
Title:
[END OF SIGNATURES]
915229.03/OC OPERATIONS COVENANT p
370971-00003/2-10-11/dmedI -5-2-13'cvh FOR HOTEL INCENTIVE PROGRAM O
CALIFORNIA ALL-PURPOSE ACKNOWLE DGME NT CIVIL CODE 41189
A notary pablic or other offices completmg this certificate verifies only the idminy of due imfividual who signed the
dp&1Ft8&at to whichdIucertificate isanached, and notthe truthfulness,accuracy,or validity ofthat document
State of califorria
cotmo,of I
on before me-
Date Here Insert Name and Title of the Officer
Name(s) of Sicnens)
who proved to me on the basis of satisfactory evidence to be the persort(s) whose names) ivare
subscribed to the within instmment and acknowledged to me that her she,they executed the same in
hu`her their authorized capacity(=),and that by his'hex=thee sippatLn*s)on the instrument the person(s),
or the entity upon behalf of which the permn(s)acted,executed the instrument.
i certifv imdcr„YESAL"a OF PERJURY under the laws
of the State of California that the foregoing paragraph
is true and correct.
WITNESS my bU.4,4gid official seal.
Signature
Signature of Notary Public
Place Notary SealAbove
OPTIONAL
Though this section is optional,completing this information can deteralteration of the document or
�I ts(reattachment of this form to an unintended document_
Description of Attached Document
Title or .T.Yik>;-d Document: Document Date:
NV bex of Pages: Signex(s) Other Than Named Above:
Capa aches)Claimed by Sianer(si
❑Corporate Officer—Tide's): ❑Corporate Officer—Title(s):
❑Partner— ❑Limited ❑General ❑Partner— ❑Limited ❑General
❑Individual ❑MWwAy„R Fact ❑Individual ❑Attorney m Fact
❑Trustee ❑Gnaxdian or Conservator ❑Trustee ❑Guardian or conservator
❑Other: ❑ Other:
Stwex..Lc Representing: S.iMg3,,.I.s Representing.
Q20192atioml Notary Assodation-xuv.NationalNotary-ors • 1-800-USNOTARY (1-800-87"927) Itemii5907
915229.03/OC OPERATIONS COVENANT 0
370971-00003/2-10-1 Vdma7y-5-2-13/c0 -12- FOR HOTEL INCENTIVE PROGRAM l
EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
That certain real property located in the City of Palm Springs, County of Riverside, State
of California, more particularly described as:
1.09 ACRES M/L IN POR LOTS 16, 17, 18&19 BLK B MB 016/045 PALM SPRINGS ESTATES 2
ASSESSOR'S PARCEL NO.505-303-037
EXHIBIT"A" OPERATIONS COVENANT
9 1 52 29 01/OC FOR HOTEL INCENTIVE PROGRAM 2 0
3/0971-00003/2-10-11/1me4y -1-
CITY OF PALM SPRINGS
PUBLIC NOTIFICATION
Date: January 18, 2017
Subject: Alcazar Palm Springs Hotel
Hotel Incentive Program
AFFIDAVIT OF PUBLICATION
I, Kathleen D. Hart, MMC, Interim City Clerk, of the City of Palm Springs, California, do
hereby certify that a copy of the attached Notice was published in the Desert Sun on
January 7, 2017.
1`declare under penalty of perjury that the foregoing is true and correct.
Kathleen D. Hart, MMC
Interim City Clerk
AFFIDAVIT OF POSTING
I, Kathleen D. Hart, MMC, Interim City Clerk, of the City of Palm Springs, California, do
hereby certify that a copy of the attached Notice was posted at City Hall,
3200 E. Tahquitz Canyon Drive, on the exterior legal notice posting board, and in the Office
of the City Clerk on January 5, 2017.
1dec�lare under penalty of perjury that the foregoing is true and correct.
2✓T��a-A ��
Kathleen D. Hart, MMC
Interim City Clerk
z�
NOTICE OF PUBLIC HEARING
CITY COUNCIL
CITY OF PALM SPRINGS
HOTEL INCENTIVE PROGRAM
ALCAZAR PALM SPRINGS, LLC (ALCAZAR PALM SPRINGS HOTEL)
622 NORTH PALM CANYON DRIVE
NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs,
California, will hold a public hearing at its meeting of January 18, 2017. The City
Council meeting begins at 6:00 p.m., in the Council Chamber at City Hall,
3200 E. Tahquitz Canyon Way, Palm Springs.
The purpose of this hearing is to consider approving a Hotel Operations Covenant with
Alcazar Palm Springs, LLC, (The Alcazar Palm Springs Hotel) at
622 North Palm Canyon Drive in accordance with Chapter 5.26 of the Palm Springs
Municipal Code to provide a Hotel Operations Incentive Program for the operation and
maintenance of hotel facilities that enhance the tourist and travel experience for visitors
to the City, maximize the use of the City's Convention Center, provide attractive and
desirable visitor facilities and experiences, and assist the City in achieving its tourism
goals.
The Owner applied for the Hotel Operations Incentive Program on February 17, 2015,
and has provided satisfactory documentation certifying its recent renovation project as a
qualified renovation under the program; therefore, pursuant to the provisions of Chapter
5.26 of the Municipal Code, City and Owner now desire to place restrictions upon the
use and operation of the Hotel for a 10-year period and 50% share of the transient
occupancy tax increment collected.
REVIEW OF INFORMATION: The staff report and other supporting documents
regarding this matter are available for public review at City Hall between the hours of
8:00 a.m. and 6:00 p.m., Monday through Thursday. Please contact the Office of the
City Clerk at (760) 323-8204 if you would like to schedule an appointment to review
these documents.
At the hearing any person may present oral or written testimony. The City Council will
consider all objections or protests, if any, for approval of the Agreement.
Response to this notice may be made verbally at the Public Hearing and/or in writing
before the hearing. Written comments may be made to the City Council by letter
(for mail or hand delivery) to:
Kathleen D. Hart, MMC
Interim City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
22
Any challenge in court of the proposal may be limited to raising only those issues raised
at the public hearing described in this notice, or in written correspondence delivered to
the City Clerk at, or prior to, the public hearing. (Government Code Section
65009(b)(2)).
An opportunity will be given at said hearing for all interested persons to be heard.
Questions regarding this case may be directed to Diana Shay at (760) 323-8260.
Si necesita ayuda con esta carta, porfavor Ilame a la Ciudad de Palm Springs y puede
hablar con Felipe Primera telefono (760) 323-8215/3.. ,
11�1- TJ
Kathleen D. Hart, MMC
Interim City Clerk
Z3
The Desert Sun '
750 N Gene Autry Trail Certificate of Publication
Palm Springs, CA 92262 RECEIVED
760-7784578/Fax 760-778-0731 CITY OF PALM SPRING'-
State Of California as: .M7 JAH 12 AM 11, 53
County of Riverside
OFFICE OF THE CITY CLER
Advertiser: CITY OF PALM SPRINGS/LEGALS
PO BOX 2743
PALM SPRINGS CA 92263
Order# 0001843815
1 am over the age of 18 years old, a citizen of
the United States and not a party to,or have
interest in this matter. I hereby certify that the
attached advertisement appeared in said
newspaper(set in type not smaller than non
pariel)in each and entire issue of said
newspaper and not in any supplement thereof
on the following dates, to wit:
Newspaper:The Desert Sun
1/7/2017 ra-p,00i d ' � out�aL RSAMp S Li
4�^�^.mrY s r+ b�H07E M
p NGS dTE
^ pftp�/iR.P SP+RIaWi PALM
NAIL H� SPA t' i
y 6,WORTH PALM GN,h'p D F�o x3,a 1
HOME IS NE EBV IVEN that the dty C_o_--unnr�]I'��n� a C' at r� e
py o 3i' it i�Rle'✓zt'm��s' all
tC'alffdYni§U'AINII fi'fE'�`T+�Rc'-Fie to
toub I" Ypmi�d^ f, ode
I acknowledge that I am a principal clerk of thetcsttthe,,A aiar gtm, srof g:'f+otap
printer of The Desert Sun, printed and I ep nce ytrFh aptErAsr ln%s Pafmspdngs
era-
published weekly in the City of Palm Springs, p 9 ratldns Imes the gr fo4weopI
R � dLa+'el�n
lion and `ai^t?h nce of hotel fabf+ tat nha ontTl:�i,,
County of Riverside, State of California.The p-Mir e'4df-p tq'the�ctcy; ml�:d ha-° eg �radd
�enter prohd - ctyvE apd desn le v75ifaglitie5�d
Desert Sun was adjudicated a Newspaper of iZt? weCmi^gas, g mt°unsh afa y f � Ys w t
The Own rap pie tlye Hotel;0 ratmns Iptenb r on Feb
general circulation on March 24, 1988 b the lots an ee� ;a d sa fa o y omfim atjup tl1yT Rstt -�:e
9 Y4�_ ar. tg� r ntf. "PE
iPoUon eW hi Pr To V
p ctpspvqua d ner now
Superior Court Of the County Of Riverside, -10 the.paavisionybf{ apter,5 b of the dtu idoal Poh ft
o Jsegnd P �]e
State of California Case No. 191236. "arn ottupangtax�r eft I_ nd
F, +report and owe ortin a is
rrI�g vaJa a or pabl�rev,(esy a M1Y alJ Fen he
hasR ofR "a' j m:,:MpPday
' xhtoT Th lddr }.'" fSie tacf life
I Offia"df'f 'K er a 3 '�041f Y 'wjc NRko ea�Zap
ntPo£h9t4rR BcumEntFe - ppi•�j
At lh e�nr}g.any n�rpe, Pr en nd"rSt if written a y
Coun,i +,'I mPside�all'S ecflPns o protest;rlf any,fursaD !ovaI�yX"'`bA9�re,^'
I declare under penalty of perjury that the menu T 7"es eraA i " ' i ea"ng anN°""
Resporoe.to. Ijlsn a be aegv comments a u0 A5JtaC¢rtorhhe tCry:',
foregoing is true and correct. Executed on .r tr - ttht is
this 7th day NUARY, 2017 in Palm rm aCe
E.TaRed
Springs, Ca r ia. alin Spring
An Ilepee_.ih;tourte;'ropasa ma be
^ °'s
y eribtd ina ff� r n n,d�oone
s a lerk tat or �6, 2. :hedng.
e 4e
a .y fi d))qd" Iheann9 fio I tm€dC¢�tsl
on ar i g qel
i se iNaY be Ci d cirq fRA.rh. � l�
j ¢ce 0 a;y'�u�a con�a csr au Port vo llarRe
lam Pi er gfo"o(760)33
ukd( 2
Declarant � ' r