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C4`IFOvt CITY COUNCIL STAFF REPORT
DATE: July 6, 2016 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 COLT'S LODGE, LLC, A LIMITED LIABILITY CORPORATION
(COLT'S LODGE) PURSUANT TO THE CITY'S HOTEL OPERATIONS
INCENTIVE PROGRAM.
FROM: David H. Ready, City Manager
BY: Community & Economic Development
SUMMARY
As a condition of receiving the benefits of the City's Hotel Operations Incentive Program,
an operator is required to execute and record an Operations Covenant on the property to
ensure that the hotel will be operated and maintained continuously as a hotel consistent
with the Hotels Operations Incentive Program. This action is to approve one such
agreement.
RECOMMENDATION:
1) Open the public hearing and receive public testimony
2) Approve a Hotel Operations Covenant with Colt's Lodge, LLC located at 1586 East
Palm Canyon Drive;
3) Authorize the City Manager to execute all necessary documents.
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
("Program") for the operation and maintenance of hotel facilities that enhance the tourist
ITEM NO. \ (� _
City Council Staff Report
(July 6, 2016) -- Page 2
(Hotel Operations Covenant-Colt's Lodge—Public Hearing)
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. The 2013 amended ordinance required that
an existing hotel renovation project be under construction no later than December 31,
2014, and completed no later than December 31, 2015.
Colt's Lodge is located at 1586 East Palm Canyon Drive and consists of 11 hotel rooms.
The Owner applied for the Hotel Incentive Program on December 26, 2013 and has
provided satisfactory documentation certifying its renovation project is a qualified
renovation under the Program. The renovation project started in June 1, 2014 and was
completed July 1, 2015, in compliance with the Program timeline. The Owner is also in
compliance with the Program investment criteria, exceeding the minimum investment
requirement of $15,000 per room.
The renovation of the hotel property consisted of interior and exterior improvements,
including landscape enhancements for water conversation measures. New electrical and
plumbing upgrades were completed in all rooms and lobby, along with new HVAC units,
hardwood floors, painting, furnishings, French doors, and accessory finishes. Exterior
improvements included stucco siding, shutters, tile roofing, pool deck refinish, alfresco
terrace, misting system and stone sculptures, by Roger Hopkins. The renovation project
increased the room count from 10 to 11.
Consistent with the provisions of the Program, the Owner now agrees to place restrictions
upon the use and operation of the hotel, in order to ensure that the Project shall be
operated and maintained continuously as a hotel available for short-term rentals. The
hotel operator also agrees to participate in the Committable Rooms Program and provide
designated room-nights per month for official City use. The City will share a percentage
of Transient Occupancy Tax increment with the Owner pursuant to the Program
guidelines.
State Law Requirement
In October, 2013, Section 53083 was added to the California Government Code. Section
53083 states that before granting an economic development subsidy, each local agency
shall provide public notice and conduct a hearing regarding the economic development
subsidy. "Economic development subsidy" under Section 53083 means any expenditure
of public funds or loss of revenue to a local agency in the amount of one hundred
thousand dollars ($100,000) or more, for the purpose of stimulating economic
development within the jurisdiction of a local agency, including, but not limited to, bonds,
grants, loans, loan guarantees, enterprise zone or empowerment zone incentives, fee
waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax
cred its.
Each local agency shall, before approving any economic development subsidy within its
02
City Council Staff Report
(July 6, 2016) -- Page 3
(Hotel Operations Covenant-Colt's Lodge—Public Hearing)
jurisdiction, provide all of the following information in written form available to the public,
and through its Internet Web site, if applicable.
For Colt's Lodge, LLC, the information is as follows:
1. The business entity that is the beneficiary of the economic development subsidy:
Colt's Lodge, LLC (Jon R. Nelson and Frank M. Young) 1586 East Palm Canyon
Drive, Palm Springs, California 92262
2. The start and end dates and schedule, if applicable, for the economic development
subsidy: The Operations Covenant starts on July 1, 2015 and ends June 30, 2025.
The "start date" of the Operations Covenant 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, including the estimated total
amount of the expenditure of public funds by, or of revenue lost to the local agency
as a result of the economic development subsidy: The subsidy is the rebate of a
50% share of Transient Occupancy Tax (TOT) increment collected annually and
calculated as follows: after the start date (7/1/2015) the subsidy is based on TOT
collections for the year, minus the established base; 50% of any increment is
payable to Colt's Lodge, LLC. Without the TOT incentive, the project would not have
been done and there would be no shared TOT increment expenditure or revenue
loss.
4. A statement of the public purposes for the economic development subsidy: The City
has confirmed that Colt's Lodge, LLC, 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 keeps its "base" TOT, the average of the prior three years annual
TOT collected. Even with a portion of the increment being shared with the applicant,
the City conservatively still projects an average of $12,000 net annual increase in
TOT revenue over the ten year period.
6. Estimated number of jobs created by the economic development subsidy, broken
down by full-time, part-time and temporary positions: The hotel increased
employment by three (3) full time positions, one (1) part time position, and twenty
nine (29) construction jobs during the remodel period.
03
City Council Staff Report
(July 6, 2016)-- Page 4
(Hotel Operations Covenant-Colt's Lodge-Public Hearing)
FISCAL IMPACT:
An amount equal to 50% of transient occupancy tax increment derived from Colt's Lodge,
over the annual base amount, will be paid to the Owner for a ten year period.
Lauri Aylaian, Director �— Cathy Van Mom, Administrator
Community & Economic Development Community & Economic Development
David H. Ready, City Ma
Attachments:
Hotel Operations Covenant— Colt's Lodge
Vicinity Map
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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 Recorders Office Use Only)
OPERATIONS COVENANT
THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND
RESTRICTIONS ("Agreement" or "Covenant") is made and entered into this 15` day of July, 2016,
by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city ("City"),
and Colt's Lodge, LLC, a California Limited Partnership ("Owner" or"Participant").
RECITALS:
A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in December,
2007 to provide a Hotel Operations Incentive Program ("Program") for the operation and
maintenance of Hotel facilities that enhance the tourist and travel experience for visitors to the City,
maximize the use of the City's Convention Center, provide attractive and desirable visitor serving
facilities and experiences, and assist the City in achieving its tourism goals.
B. On December 26, 2013 Owner applied for the Program and has provided
satisfactory documentation certifying its recent renovation project as a qualified renovation project
under the Program. Colt's Lodge ("Owner's Hotel" or "Project"), generally located at 1586 East
Palm Canyon Drive, consists of eleven (11) 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
minor alteration of existing structures, facilities, mechanical equipment involving no material
expansion of use beyond that previously existing.
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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 Owner with funds as provided under
the Program and as set forth hereinafter.
ARTICLE 1
STATEMENT OF OPERATING COVENANTS
1.1. OPERATION AND USE COVENANT. Upon occupancy, Owner covenants to
operate, maintain, and use the Colt's Lodge in accordance with this Agreement. All uses conducted
on the Site, including, without limitation, all activities undertaken by the Owner pursuant to this
Agreement shall, in all material respects, conform to requirements of this Agreement and Palm
Springs Municipal Code (PSMC).
1.2. HOTEL USE. The Owner hereby agrees that the Project is to be owned, managed,
and operated as a hotel (as defined by 5.36.020 of the PSMC) in a first-class marmer, 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 tar 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 Proiect. 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 $10,869.90, and the Owner
accepts such Transient Occupancy Tax Base.
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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 1 room for 2 nights) other than Friday or Saturday nights each
month for use for City purposes as approved or designated by the City Manager, provided
that such use by the City shall be subject to the rooms being available at the time of the
City's request. Such accommodations shall include all services and amenities for which the
Owner would normally collect transient occupancy taxes but will not include services and
amenities that are optional to the transient and for which the transient is not required to pay
a transient occupancy 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 the next subsequent month.
ARTICLE 3
MAINTENANCE
3.1. MAINTENANCE.
1. Maintenance Obli ag tion. 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, amenities, 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 irrigation, shrubbery,
plantings, and other landscaping to maintain it 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 clearly marked and in a
level and smooth condition. In addition, Owner shall be required to maintain the Property
in such a manner as to avoid the reasonable determination of a duly authorized official of
the City that a public nuisance has been created by the absence of adequate maintenance
such as to be detrimental to the public health, safety or general welfare or that such a
condition of deterioration or disrepair causes appreciable harm or is materially detrimental
to property or improvements within one thousand (1,000) feet of such portion of the Site.
2. Parking and Driveways. The driveways and traffic aisles on the Site shall be
kept clear and unobstructed at all times.
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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 (which notice shall
reasonably identify the required maintenance), City may, at City's option, and without
further notice to Owner, declare the unperformed maintenance to constitute a public
nuisance. Thereafter, either City or its employees, contractors, or agents, may cure Owner's
default by entering upon the Site and performing the necessary landscaping and/or
maintenance in accordance with Section 3.1.1 above. The City shall give Owner, its
representative, or the residential manager reasonable notice of the time and manner of entry,
and entry shall only be at such times and in such manner as is reasonably necessary to carry
out this Agreement. Owner shall pay such costs as are reasonably incurred by City for such
maintenance, including attorneys' fees and costs.
4. Lien. If any costs incurred by City under Section 3 above are not reimbursed
within thirty (30) days after Owner's receipt of City's written request for reimbursement, the
same shall be deemed delinquent, and the amount thereof shall bear interest thereafter at a
rate of the lower of ten percent (10%) per annum or the legal maximum until paid. Any and
all delinquent amounts, together with said interest, costs and reasonable attorney's fees,
shall be an obligation of Owner as well as a lien and charge, with power of sale, upon the
property interests of Owner, and the rents, issues and profits of such property. City may
bring an action at law against Owner obligated to pay any such sums or foreclose the lien
against Owner's property interests. Any such lien may be enforced by sale by the City
following recordation of a Notice of Default of Sale given in the manner and time required
by law as in the case of a deed of trust; such sale to be conducted in accordance with the
provisions of Section 2924, et seq., of the California Civil Code, applicable to the exercise
of powers of sale in mortgages and deeds of trust, or in any other manner permitted by law.
Any monetary lien provided for herein shall be subordinate to any bona fide
mortgage or deed of trust covering an ownership interest or leasehold or subleasehold estate
in and to any Site approved by City pursuant to the Agreement, and any purchaser at any
foreclosure or trustee's sale (as well as any deed or assignment in lieu of foreclosure or
trustee's sale) under any such mortgage or deed of trust shall take title free from any such
monetary lien, but otherwise subject to the provisions hereof, provided that, after the
foreclosure of any such mortgage and/or deed of trust, all other assessments provided for
herein to the extent they relate to the expenses incurred subsequent to such foreclosure,
assessed hereunder to the purchaser at the foreclosure sale, as owner of the subject Site after
the date of such foreclosure sale, shall become a lien upon such Site upon recordation of a
Notice of Assessment or Notice of Claim of Lien as herein provided.
ARTICLE 4
COMPLIANCE WITH LAWS
4.1. COMPLIANCE WITH LAWS. Owner shall comply with all ordinances,
regulations and standards of the City applicable to the Site. Owner shall comply with all rules and
regulations of any assessment district of the City with jurisdiction over the Site.
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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.
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.
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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.
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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: Office of the City Attorney
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: City Attorney
Owner: Colt's Lodge, LLC
1586 East Palm Canyon Drive
Palm Springs, CA 92262
Attn: Jon R. Nelson or Frank M. Young
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.
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4. Third Parties. No third party beneficiaries are intended, and the only parties
who are entitled to enforce the provisions of these Operating Covenants are the City,
Mortgagees, Participant and their respective successors and assigns.
7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State of
California and is subject to the provisions of Government Code Section 53083.
7.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one original and all of which shall be one and the same
instrument.
7.8. TERMINATION. This Agreement may be terminated only (i) by and upon
expiration of the Term, (ii) by mutual written agreement of the parties, and (iii) by and pursuant to
the provisions of Section 7.9 or 7.10 below. In the event of any 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 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 anytime 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:
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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.
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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 Authori . 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]
10 14
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:
David H. Ready, Esq., Ph.D.
City Manager
ATTEST:
James Thompson
City Clerk
APPROVED AS TO FORM:
WOODRUFF, SPRADLIN & SMART
By:
Douglas C. Holland, Esq.
City Attorney
"OWNER"
By.
Name: Jon R. Nelson
Title:
By:
Name: Frank M. Young
Title:
[END OF SIGNATURES]
II � 5
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the truthfulness,accuracy, or validity of that document.
State of California )
County of )
On before me,
Date Here Insert Name and Title of the Officer
personally appeared
Name(s) of Signer(s)
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies),and that by his/her/their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s)acted, executed the instrument.
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
Signature of Notary Public
Place Notary Seal Above
OPTIONAL
Though this section is optional, completing this information can deter alteration of the document or
fraudulent reattachment of this form to an unintended document.
Description of Attached Document
Title or Type of Document: Document Date:
Number of Pages: Signer(s) Other Than Named Above:
Capacity(ies)Claimed by Signer(s)
Signer's Name: Signer's Name:
Corporate Officer—Title(s): Corporate Officer— Title(s):
Ll Partner— Limited I�General Partner— Limited General
7 Individual n Attomy in Fact L Individual ❑ Attorney in Fact
Trustee Fl Guardian or Conservator Trustee El Guardian or Conservator
❑ Other: 0 ❑ Other: ❑
Slgner Is Signer Is Representing:
"d a Iona o ary ssocta ion�wwty. a tons o ary.org� - - ' = - - em
12 16
EXHIBIT "A"
LEGAL DESCRIPTION
APN: 508-453-006-7
Lot 1 of Rancho Royale, Tract No. 2, in the City of Palm Springs, County of Riverside, State of
California as shown by Map on file in Book 20, Page 61 of Maps, Records of Riverside County,
California.
OPERATIONS COVENANT
915229.03/OC FOR HOTEL INCENTIVE PROGRAM 17
370971-00003/2-10-1 Vdmeflry
1
11 A'
LODGE
1586 E. Palm Canyon Drive
Palm Springs, CA
�i
E Deepwell Rd
da lancha in,
Srrr
1♦!
-{
CITY OF PALM SPRINGS
PUBLIC NOTIFICATION
Date: July 6, 2016
Subject: Hotel Incentive Program, Colt's Lodge, LLC
AFFIDAVIT OF PUBLICATION
I, Kathie Hart, MMC, Chief Deputy City Clerk, of the City of Palm Springs, California, do
hereby certify that a copy of the attached Notice of Public Hearing was published in the
Desert Sun on June 25, 2016.
1 declare under penalty of perjury that the foregoing is true and correct.
IC�
Kathie Hart, MMC
Chief Deputy City Clerk
AFFIDAVIT OF POSTING
1, Kathie Hart, MMC, Chief Deputy City Clerk, of the City of Palm Springs, California, do
hereby certify that a copy of the attached Notice of Public Hearing 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 June 23, 2016.
1 declare under penalty of perjury that the foregoing is true and correct.
14m&
Kathie Hart, MMC
Chief Deputy City Clerk
19
NOTICE OF PUBLIC HEARING
CITY COUNCIL
CITY OF PALM SPRINGS
HOTEL INCENTIVE PROGRAM
NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs,
California, will hold a public hearing at its meeting of July 6, 2016. 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
Colt's Lodge, LLC, located at 1586 E. 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 December 26, 2013,
and started construction on June 1, 2014. The renovation project consisted of interior
and exterior improvements, including landscape enhancements, new electrical and
plumbing upgrades, new HVAC units, hardwood floors, painting, furnishings, French
doors, and accessory finishes. Exterior improvements included stucco siding, shutters,
tile roofing, pool deck refinish, alfresco terrace, a misting system, and stone sculptures.
The renovation project increased the room count from 10 to 11.
Construction was completed and the hotel reopened on July 1, 2015, thereby complying
with 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 a
50% share of the increase in transient occupancy tax (TOT) 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.
20
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:
James Thompson, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
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 may be directed to Lauri Aylaian at (760) 323-8228.
Si necesita ayuda con esta carta, porfavor Ilame a la Ciudad de Palm Springs y puede
hablar con Felipe Primera telefono (760) 323-8253.
ames Thompson, City Clerk
21
The Desert Sun -
750N Gene Autry Trail Certificate of Publication �
Palm Springs,CA 92262 RECEIVED
OF PALM'�IV SPRiHGS
760-778-4578/Fax 760-778-4731 _
State Of California ss: 016 JUN 29 AN 8: 54
County of Riverside
)AMES TFiO.FiPSOFi
CITY CLERK
Advertiser: CITY OF PALM SPRINGS/LEGALS
PO BOX 2743
PALM SPRINGS CA 92263
Order# 0001385817
irro 932 > , T
(r NOTICE.bF PUBUCHEARI�'lG ;
` "• s-• a'OTYCOUNCIL .,. i ,i
CITY OF PALM SPRINGS -
NOTICE 15 HEREBY GIVEN HOTEL INCENTIVE
INCENTIVE PROGRAM
Qhfornia wil did a Citythe Council of the City of Palm Spring,
l b public hearing at ns meating yf July¢ 2016 The Cry Council meeting begm4 at 6:00 p.m m the Council Chamber at Ci H h 3200 {
I am over the age of 18 years old, a citizen of y5,Tahquita Canyyon wa)I Palm.Spriggs -.b a
:-he(tdrpdre, tui h' "g 5J t' consider approving B,Hotel Opp'er'%I ,,Cove
the United States and not a party to,or have :no with C61's,Lndqa 1LLC'lorated at 7586E=Palm Canyon'brive, in accord;ah(e With[hapte'c52d ofth'e Palm Spnpgs Munidr Code to prq'vide-a,MoteI
interest in this matter. I hereby certify that the Operatmns Incentive Program fpr the operation and mamtenance=of o4¢I fa-'cilhies that enlyance the Soutirtpnd}ravel ezperi2nrn for wsrtprstb Sh€iClty;attached advertisement appeared in said fsiawmiae the use ofsihe clry s CodverJtio'I Venter,pjovrae attr�c[lye and desij;ls J facilrties'-and expe1lence;,and the City ity'achievm9'Its}burism newspaper(set in type not smaller than non gpals 17 assist
oriel In each and entire issue of said The owner plied for the Hotel:operations in on
on December
panel) 26'2gla an started construRion on June 1;2014.The renovation Tiro ect con.
newspaper and not in an supplement thereof listed of iinteijpt'a`ntlt exteribrimprovemapts, inNudipgg landseaPe"erlh5nce-Y Pp hfents new xledtical and plumbing upgrades,•new HVAo•unit
flpors, painting,,furmshin s s,=hardwood
On the following dates,t0 WIT: 9, French doors, and accessory finishes. Exterior im-
pfoYements mduetl stucco sitl rig,shutte s,file roofingg pool deck refinish al-
res pterrace a'misting system,anil stone sculptures jrhe pr
Newspaper:The Desert Sun creasg�the400m ourrt,fmmJo toll ,renovation ed in.
RJ .;
C6nstruaion'ivacoM'preteE and file hotel reoperietl qn July 72015,Shareliy complying with the,provisions of Chapter 5 26pf thf Mun(npal toile Utyy ariyy
Owner now desire to place restrictipns upon the use and operetidin the'Ho'a 6/25/2016 ,fora t0 year period,and a SO%share of the Increase in transientoccrrpancy tax
ROT)co leRed _
1REVIEW Of INFOfIMATION. The staff report and,other supportngdocuments
regarding tins"mat}er are available for public rev),ew at GtyHall--a en the
hbJof 8 g0 a:M.�anr1600 p M.,Monday'through;T�hurstlay.,Pleasegontact the
'Office 6f the City clerk at p6o)323-B206 If}sou would Ifke to schedule an ap poi/fitment tb4eview these documents ,.r•
I acknowledge that I am a principal clerk Of the At the hearFen any person may.present oral or written tertim0. The City
Councl willconslder all gbJections.or protests„dahy;for approval o♦Ythe Agree printer of The Desert Sun, printed and Menf.
Response to this notice may be.made verbally at the PubliIc Hearing apd/op in
published Weekly In the City Of Palm Springs, writing hefore'the hearing Written comments maybe Mad!to the Crty Couhcil
County of Riverside, State of California.The byleter(for mail or hand delivery)to w tr;': ..l. 0 n ,
James Thompson,City Clerk
Desert Sun was adjudicated a Newspaper of , ; 3200 E;Tahgm4 Canyon way
r i Pabp Springs,CA 92262
general circulation on March 24, 1988 by the Any challenge ,n court of the proposal may be limited to raising only those is-sues raised at the public hearing described In Ymsnotrce,or m,wri;ten corre-
Superior Court Of the County Of Riverside, spondence delivered to the Cittyy Clerk at, or prior to the public'hearing.
(Government Cade Seciign 650psi%)(2)
State of California Case No. 191236. he p'portunlry,will be yrven at said hearing"fill all m[eresteQ periops-to`6e
8228' Questions regdrdmg this May.be directed tg Lauri Aylalan'at(760),323-
Si
Sp
netesita ayyuu
hablar
Aa con esta rarta pdrfavor�Ila"m'e a udad de Pavlm rings-y
ppuede cop Fel pe Primes telefono (]6g) 323
J1253.
fames Thompson City Clark
I declare under penalty of perjury that the t '"' r` .. ,. ,.
foregoing is true and correct. Executed on
this 25th day of JUNE, 2016 in Palm s -
Springs,California.
Declarant
i
1r6-16 Published6Q5J2076_
Ic.. _