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HomeMy WebLinkAboutA6239 - SYDELL PALM SPRINGS LLC OPERATIONS COVENANT FOR HOTEL OPERATIONS INCENTIVE PROGRAM AT 1800 EPC f ' COC N 0012-00S7S42 -' 06/27/2012 PLEASE COMPLETE THIS INFORMATION Customer Copy Label RECORDING REQUESTED BY: The paper to which this label is CITY OF PALM SPRINGS if f fixed has not been compared with the recorded document AND WHEN RECORDED MAIL TO: Larri W Ward County o Riverside CITY OF PALM SPRINGS Assessor, County Clerk & Recorder OFFICE OF THE CITY CLERK 3200 E.TAHQUITZ CANYON WAY PALM SPRINGS,CA 92262 S R U PAGE SIZE DA MISC LONG RFD COPY 1 1 ExnM Pursuant to Government Code Section E M A L 465 426 PCOR NCOR SMF NCHG CTY UNIrx � OPERATIONS COVENANT ON LEASEHOLD INTEREST Between CITY OF PALM SPRINGS. AND SYDELL PALM SPRINGS, LLC Title of Document THIS AREA FOR RECORDER'S USEONLY FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: THE CITY OF PALM SPRINGS 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attention=Cit_y-Clerk ------ (Space Above This Line for Recorder's Office Use Only) OPERATIONS COVENANT ON LEASEHOLD INTEREST - .- THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND RESTRICTIONS (this "Agreement") is made and entered into this 1 st day of May, 2012, by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city (the "City"), and Sydell Palm Springs LLC, a Delaware limited liability company("Operator"). RECITALS : A. The City adopted Chapter 5.26 of its Municipal Code in January, 2008 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. B. Operator has applied for the Program and has provided satisfactory documentation certifying its recent renovation project as a "Qualified Renovation Program" under the Program. Operator is the owner of the Saguaro Palm Springs ("Operator's Hotel" or the "Project"), consisting of approximately two hundred forty-five (245) total hotel rooms, and is the Lessee of that certain real property generally located at 1800 East Palm Canyon Drive 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 Operator now desire to place restrictions upon the use and operation of the Project and the Operator's leasehold interest, 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 Operator also agree that in return for participation in the Program, Operator shall agree to operate the Project as a hotel; participate in the Palm Springs Convention Center's Committable Rooms Program; and provide City with up to six (6) room-nights per month for official City use; and, City agrees to share a percentage of Transient Occupancy Tax Increment with Operator pursuant to the Program guidelines. E. The City finds that the approval of this Agreement is categorically exempt from CEQA under Section 15301 of the California Administrative Code as the Hotel Operations Incentive Program applicable to Operator's Hotel applies to the operation, repair, maintenance, or OPERATIONS COVENANT FOR HOTEL INCENTIVE 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 Operator hereby commits to the City to undertake the covenants described herein (the "Operating Covenants") and the City hereby agrees to provide the Operator with funds as provided under the Program and as set forth hereinafter. ARTICLE 1 STATEMENT OF OPERATING COVENANTS 1.1. OPERATION AND USE COVENANT. Operator covenants to operate, maintain, and use the Operator's Hotel in accordance with this Agreement. All uses conducted on the Site, including, without limitation, all activities undertaken by the Operator pursuant to this Agreement, shall conform to requirements of this Agreement and the Program. 1.2. HOTEL USE. The Operator hereby agrees that the Project is to be owned, managed, and operated as a hotel in a first-class manner, and the Project's participation in the Program shall continue in accordance with the terms of the Program, for a term equal to ten (10) years, commencing upon the date Operator first receives from the City the Operator's share of transient occupancy tax revenues pursuant to the Program, unless and until Operator'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 Operator take any steps in connection with the conversion to cooperative housing or condominium ownership, or to any other similar 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 Operator hereby represents, covenants, warrants and agrees as follows: 1. Operator has completed the City's application for the Program. The City has determined that the Transient Occupancy Tax Base to be used to calculate the Transient Occupancy Tax Increment shall be four hundred forty-five thousand, nine OPERATIONS COVENANT -2- FOR HOTEL INCENTIVE PROGRAM hundred ninety-eight dollars ($445,998.00) and the Operator accepts such Transient Occupancy Tax Base. 2. Operator 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-the-C—ity's-prior-request—Oper-ator-shal-l-provide-the-C—i-ty-at no-eost up to six (6) rooms for one night (or one or more rooms for a total of six (6) room-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 Operator would normally collect transient occupancy taxes but will not include services and amenities that are optional to transient guests and for which transient guests are not required to pay 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 because Operator'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. Operator, 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 Operator'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. 2. Parking and Driveways. The driveways and traffic aisles on the Site shall be kept clear and unobstructed at all times. 3. Right of Termination. In the event Operator fails to maintain the Site in the above-mentioned condition, and satisfactory progress is not made in correcting the OPERATIONS COVENANT -3- FOR HOTEL INCENTIVE PROGRAM 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 upon notice to Operator, terminate this Agreement. ARTICLE 4 COMPLIANCE WITH LAWS 4.1. COMPLIANCE WITH LAWS. Operator shall comply with all ordinances, regulations and standards of the City applicable to the Site. Operator 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, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, nor shall Operator, 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 INDEMNIFICATION 6.1. INDEMNIFICATION. Operator 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 relating in any manner to the Project, excepting only any such loss, liability, claim, or judgment arising out of the intentional wrongdoing or gross negligence of the City or its respective officers, officials, employees, members, agents,. volunteers, or representatives. Operator, while in possession of the Site, and each successor or assign of Operator 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. 6.2. 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 party 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. OPERATIONS COVENANT -4- FOR HOTEL INCENTIVE PROGRAM 6.3. 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. 6.4. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, recognized overnight courier, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other --addr-esses-as-may-be-specified-in-writingby-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. Operator: Sydell Palm Springs LLC c/o Sydell Group Ltd. 30 West 26 h Street,.121h Floor New York, NY 10010 Attn: General Counsel The notice shall be deemed given three (3) business days after the date of mailing, one (1) business day after sending by recognized overnight courier, or, if personally delivered, when received (or receipt is denied). 6.5. 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 the Operating Covenants are rendered invalid, void and/or unenforceable, or changes in the law would materially alter the terms of the transactions contemplated herein, the parties agree to meet and negotiate in good faith to attempt to reform the 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. OPERATIONS COVENANT _5_ FOR HOTEL INCENTIVE PROGRAM 3. Integration.tion. This Agreement contains the entire agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 4. Third Parties. No third party beneficiaries are intended, and the only parties who are entitled to enforce the provisions of this Agreement are the City, any mortgagees that may succeed to Operator's leasehold interest under the ground lease between-Operator--and-fee-owner-o the-Site-or-a-repiacem-ent-thereof,-Operator-and-each of their respective successors and assigns. 6.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California. 6.7. 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. 6.8. TERMINATION. The City may elect to terminate this Agreement pursuant to Section 3.1.3 hereof. Operator may elect to terminate its participation in the Program and this Agreement by providing written notice to the City (a) if the City fails to deliver to Operator any amounts owed to Operator pursuant to the Program within thirty (30) days after Operator's written request for payment or (b) in its sole discretion for any reason during the term of this Agreement. In the event of any early termination of this Agreement, Operator (or its successor, as applicable) shall not be obligated to return any amounts previously paid to it by the City pursuant to the Program. 6.9. OPERATIONS COVENANT LIMITED TO LEASEHOLD INTEREST. The restrictions, obligations, covenants, and benefits of this Agreement only apply to the Operator and the Operator's leasehold interest in the Site and do not apply to or burden in any way the fee owner's interest in the Site. [END -- SIGNATURES ON NEXT PAGE] OPERATIONS COVENANT -6- FOR HOTEL INCENTIVE PROGRAM IN WITNESS WHEREOF, the City and Operator have executed this Agreement 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 City Manager ATTEST: APPROVED BY CITY COUNCIL City Clerk APPROVED AS TO FORM: WOODRUFF, LIN & SMART APPROVED BY CITY COUNCIL By: t,I'l.11 Dougl s Holland City Attorney "OPERATOR" SYDELL PALM SPRINGS LLC, a Delaware li ' d liability company By: N : Joshua Babbitt le: Vice President [END OF SIGNATURES] OPERATIONS COVENANT -7- FOR HOTEL INCENTIVE PROGRAM ACKNOWLEDGMENT State of California ) County of ) On , before me, , (insert name of notary) Notary Public,personally appeared , 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 (Seal) ACKNOWLEDGMENT State of 6gWiAf ) County of ) On , before me, n , .insert n o notary) Notary Public, personally appeared , who proved to me on the basis of satisfa ry evidenc o 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 m hand and official seal. LAUREN P.kli"IAUCH 5' NOTARY PUBUC,:State of New York No.09SM1 31836 Qualified in Que*( ea my rommiccion ExpireS Signatur !/ OPERATIONS COVENANT -9- FOR HOTEL INCENTIVE PROGRAM � iH' htcF °J �y`F LARRY W. WARD Recorder P.O.Box 751 COUNTY OF RIVERSIDE Riverside,CA 92502-0751 ASSESSOR-COUNTY CLERK-RECORDER (951)486-7000 f C www.riversideacr.com AR'n-csc�` NOTARY CLARITY Under a provisions of GovernmentCode 27361.7, 1 certify under the penalty of penury that the notary seal on .the document to which this statement is attached reads as follows: Name of Notary: LAUREN P. SCHMAUCH Commission #: 01 SC5031836 Place of Execution: COUNTY OF NEW YORK, N.Y_ Date Commission Expires: August 15, 2014 Date: . Signature: Print Name: /FELIP PRIMERA ACR 186P-AS4RE0(Rev.09/2006) Available in Alternate Formats j, j 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: THE SOUTH 521 FEET OF THE WEST HALF OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 24, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN. EXHIBIT"A" OPERATIONS FOR HOTELCOVENANT INCENTIVE PROGRAM -I- I ' 6 ACKNOWLEDGMENT OF INSTRUMENT (Cal. Civil Code Section 1181) State of California ) County of Riverside ) SS. City of Palm Springs ) On June 25, 2012, before me, JAMES THOMPSON, CITY CLERK, CITY OF PALM SPRINGS CALIFORNIA, personally appeared DAVID H. READY, who I personally know is the CITY MANAGER of the CITY OF PALM SPRINGS whose name is subscribed to the within instrument and acknowledged to me and that he executed the same in his/her official and authorized capacity on behalf of the City of Palm Springs, a California Charter City. 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 the official seal of the City of Palm Springs, California, this 25t" day of June, 2012: �OF p A LM S,, iy V U! M C * I,pYA1lO Y C441Folt Signature: AMES THOMPSON, CITY CLERK City of Palm Springs, California Title or Type of Document: -Operations Covenant— Sydell Palm Springs, LLC Document Date: June 1, 2012 Number of Pages: 10 Hotel Incentive Program 2013 Ai)G 2 t`I i IC' 54 Remodeled Hotels s.�rro„�.• RELEASE FORM I, (undersigned), represent the ownership ("Hotel Owner") of the Saguaro Palm Springs Hotel, which is a participant in the City of Palm Springs Hotel Incentive Program. The Operations Covenant documenting the Agreement was recorded in the Official Records of the County of Riverside on 06/27#/2012 I agree that the base year of Transient Occupancy Tax for the Hotel is $445,998.00 which represents the average of the three years prior to the Qualifying Renovation Project. The three years were the period 07/01/2008 to 06/30/2011 . I agree that the current year's TOT paid by the hotel is $645,252.04 (total TOT), and that under the terms of the Covenant the Owner is entitled to receive 50% of the difference between the current year's TOT and the Base Year. That amount is $99,627.02 The Covenant provides that the Owner shall receive the rebate for a period of 10 years, subject to other performance provisions in the Covenant. This payment is year 1 of 10. This letter hereby releases the City from any liability for disputed base year calculations, TOT percentage calculations, current TOT year calculations, or for any prior year's payment not received by the Owner. I agree that the facts stated above are true and accurate and represent the best judgment of the Owner as to the correct amount. I further attest that I have the authority to provide such a release to the City. Hot epr en tive erification: Date: 07/31/2013 Sioaturf- 0W.tV2W3 5myt RActtV qT — 6e&W-e - MA oIg&(Q Print Name and Title City of Palm Springs Verification: Date: 07/31/2013 Signature Cathy Van Horn, Economic Development Administrator Print Name and Title City of Palm Springs Community& Economic Development • 3200 E.Tahquitz Canyon Way, Palm Springs,CA 92262 Phone: 760-323-8175 9 Email:Cathv.van horn @ Palms orinasca.aov DOC # 2012-0297942 06/27/2012 02:57P Fee:NC Page 1 of 12 PLEASE COMPLETE THIS INFORMATION Recorded in Official Records RECORDING REQUESTED BY. County of Riverside Larry W. Ward CITY OF PALM SPRINGS Assessor, County Clerk & Recorder AND WHEN RECORDED MAIL TO: IIIIII it II I III II I I IIII I IIII III IIIII I III CITY OF PALM SPRINGS OFFICE OF THE CITY CLERK 3200 E.TAHQUITZ CANYON WAY PALM SPRINGS,CA 92262 E PAGE SIZE DA MISC LONG RFD COPY Pursuant to Government Code Section E 465 426 PCOR NCOR SMF NCHG �jexnM T CTY UNI Soo �� OPERATIONS COVENANT ON LEASEHOLD INTEREST Between CITY OF PALM SPRINGS AND SYDELL PALM SPRINGS, LLC Title of Document THIS AREA FOR RECORDER'S USE ONLY 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 ON LEASEHOLD INTEREST Aba THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND RESTRICTIONS (this "Agreement") is made and entered into this 1 st day of May, 2012, by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city (the "City"), and Sydell Palm Springs LLC, a Delaware limited liability company("Operator"). RECITALS : A. The City adopted Chapter 5.26 of its Municipal Code in January, 2008 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. B. Operator has applied for the Program and has provided satisfactory documentation certifying its recent renovation project as a "Qualified Renovation Program" under the Program. Operator is the owner of the Saguaro Palm Springs ("Operator's Hotel" or the "Project"), consisting of approximately two hundred forty-five (245) total hotel rooms, and is the Lessee of that certain real property generally located at 1800 East Palm Canyon Drive 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 Operator now desire to place restrictions upon the use and operation of the Project and the Operator's leasehold interest, 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 Operator also agree that in return for participation in the Program, Operator shall agree to operate the Project as a hotel; participate in the Palm Springs Convention Center's Committable Rooms Program; and provide City with up to six (6) room-nights per month for official City use; and, City agrees to share a percentage of Transient Occupancy Tax Increment with Operator pursuant to the Program guidelines. E. The City finds that the approval of this Agreement is categorically exempt from CEQA under Section 15301 of the California Administrative Code as the Hotel Operations Incentive Program applicable to Operator's Hotel applies to the operation, repair, maintenance, or 11111111111111111 1111111111111111111111111111111111111 IIII IIII IIIIII IIIII III IIIII IIII IIII 06 2�1 20 f 12257P FOR HOTFOL INCENTIVE PCOVENANT OGRAM 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 Operator hereby commits to the City to undertake the covenants described herein (the "Operating Covenants") and the City hereby agrees to provide the Operator with funds as provided under the Program and as set forth hereinafter. ARTICLE 1 STATEMENT OF OPERATING COVENANTS I.1. OPERATION AND USE COVENANT. Operator covenants to operate, maintain, and use the Operator's Hotel in accordance with this Agreement. All uses conducted on the Site, including, without limitation, all activities undertaken by the Operator pursuant to this Agreement, shall conform to requirements of this Agreement and the Program. 1.2. HOTEL USE. The Operator hereby agrees that the Project is to be owned, managed, and operated as a hotel in a first-class manner, and the Project's participation in the Program shall continue in accordance with the terms of the Program, for a term equal to ten (10) years, commencing upon the date Operator first receives from the City the Operator's share of transient occupancy tax revenues pursuant to the Program, unless and until Operator'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 Operator take any steps in connection with the conversion to cooperative housing or condominium ownership, or to any other similar 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 Operator hereby represents, covenants, warrants and agrees as follows: I. Operator has completed the City's application for the Program. The City has determined that the Transient Occupancy Tax Base to be used to calculate the Transient Occupancy Tax Increment shall be four hundred forty-five thousand, nine IIIIII IIII II IIIII IIIII IIII IIIIII IIIII II IIIII IIII IIII �9130 f 12� 0E57F OPERATIONS COVENANT -2- FOR HOTEL INCENTIVE PROGRAM hundred ninety-eight dollars ($445,998.00) and the Operator accepts such Transient Occupancy Tax Base. 2. Operator 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 the City's prior request, Operator shall provide the City at no cost up to six (6) rooms for one night (or one or more rooms for a total of six (6) room-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 Operator would normally collect transient occupancy taxes but will not include services and amenities that are optional to transient guests and for which transient guests are not required to pay 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 because Operator'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 Obli ag tion. Operator, 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 Operator'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. 2. Parking and Driveways. The driveways and traffic aisles on the Site shall be kept clear and unobstructed at all times. 3. Rieht of Termination. In the event Operator fails to maintain the Site in the above-mentioned condition, and satisfactory progress is not made in correcting the IIIIII IIIIIII IIIII IIIII IIII IIIIII IIIII III IIIII IIII IIII 201 es. 40 f9 2 OPERATIONS COVENANT -3- FOR HOTEL MCENTIVE PROGRAM 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 upon notice to Operator, terminate this Agreement. ARTICLE 4 COMPLIANCE WITH LAWS 4.1. COMPLIANCE WITH LAWS. Operator shall comply with all ordinances, regulations and standards of the City applicable to the Site. Operator 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, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, nor shall Operator, 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 INDEMNIFICATION 6.1. INDEMNIFICATION. Operator 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 relating in any manner to the Project, excepting only any such loss, liability, claim, or judgment arising out of the intentional wrongdoing or gross negligence of the City or its respective officers, officials, employees, members, agents, volunteers, or representatives. Operator, while in possession of the Site, and each successor or assign of Operator 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. 6.2. 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 party 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. IIIIIIIIIIIIIIIIIIIII IIIII IIII IIIII III IIIII IIIIII� 06101501f912457P OPERATIONS COVENANT -4- FOR HOTEL INCENTIVE PROGRAM 6.3. 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. 6.4. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, recognized overnight courier, 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. Operator: Sydell Palm Springs LLC c/o Sydell Group Ltd. 30 West 26t' Street, 12a' Floor New York,NY 10010 Attn: General Counsel The notice shall be deemed given three (3) business days after the date of mailing, one (1) business day after sending by recognized overnight courier, or, if personally delivered, when received (or receipt is denied). 6.5. SEVERABILITY/WAIVERANTEGRATION 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 the Operating Covenants are rendered invalid, void and/or unenforceable, or changes in the law would materially alter the terms of the transactions contemplated herein, the parties agree to meet and negotiate in good faith to attempt to reform the 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. IIIIII IIIIIII IIIII IIII IIII IIIIII IIIII III IIIII IIII IIII 96/�1 60 f 19 57P 4 OPERATIONS COVENANT "5_ FOR HOTEL INCENTIVE PROGRAM 3. Integration.tion. This Agreement contains the entire agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 4. Third Parties. No third party beneficiaries are intended, and the only parties who are entitled to enforce the provisions of this Agreement are the City, any mortgagees that may succeed to Operator's leasehold interest under the ground lease between Operator and fee owner of the Site or a replacement thereof, Operator and each of their respective successors and assigns. 6.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California. 6.7. 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. 6.8. TERMINATION. The City may elect to terminate this Agreement pursuant to Section 3.1.3 hereof. Operator may elect to terminate its participation in the Program and this Agreement by providing written notice to the City (a) if the City fails to deliver to Operator any amounts owed to Operator pursuant to the Program within thirty (30) days after Operator's written request for payment or (b) in its sole discretion for any reason during the term of this Agreement. In the event of any early termination of this Agreement, Operator (or its successor, as applicable) shall not be obligated to return any amounts previously paid to it by the City pursuant to the Program. 6.9. OPERATIONS COVENANT LIMITED TO LEASEHOLD INTEREST. The restrictions, obligations, covenants, and benefits of this Agreement only apply to the Operator and the Operator's leasehold interest in the Site and do not apply to or burden in any way the fee owner's interest in the Site. [END -- SIGNATURES ON NEXT PAGE] IIIIIIIIIIII IIIII IIIII IIII IIIIII IIIII III IIIII IIII IIII es z0120 f9i94s?P OPERATIONS COVENANT -6- FOR HOTEL INCENTIVE PROGRAM IN WITNESS WHEREOF, the City and Operator have executed this Agreement 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 City Manager ATTEST: APPROVED BY CITY COUNCIL nl bra 1`18b 4�b ll WA City Clerk � APPROVED AS TO FORM: TIACA FS —7• WILSQt� G rjy WOODRUFF, LIN & SMART APPROVED BY CITY COUNCIL By: Jeia a� I�ba�1 Dougl s Holland City Attorney "OPERATOR" SYDELL PALM SPRINGS LLC, a Delaware li d liability company By: eN : Joshua Babbitt le: Vice President [END OF SIGNATURES] IIII IN 06 201 PO f9 19457P OPERATIONS COVENANT -7- FOR HOTEL INCENTIVE PROGRAM ACKNOWLEDGMENT State of California ) County of ) On before me, (insert name of notary) Notary Public, personally appeared 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 (Seal) ACKNOWLEDGMENT State of G '� W..,aMI ) County of All ) On , ", 9 before me, 1"A 1 i l l / 7 Notary Public,personally appeared 446 who proved to me on the basis of satisfagEry evidenc o 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. LAUREN P:SC*AUCF NOTARY PUBLIC,State of New ork No.OISCS031836 Qualrfied in Q1Yeerle C my Q Cnmr•:cclrr Expire3 Signatur ( ea a�111111111 IN 11111111111 II 111111111 IN eE q9 fs 12 �257F OPERATIONS COVENANT -9- FOR HOTEL INCENTIVE PROGRAM m LARRY W.WARD Recorder P.O.Box 751 COUNTY OF RIVERSIDE Riverside,CA 92502-0751 ASSESSOR-COUNTY CLERK-RECORDER (951)486-7000 v~v.riversideacr.com NOTARY CLARITY Under the provisions of Government Code 27361.7, 1 certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: LAUREN P. SCHMAUCH Commission #: 01 SC5031836 Place of Execution: COUNTY OF NEW YORK, N.Y. Date Commission Expires: August 15, 2014 Date: CO h-71 /17/ Signature: Print Name: FELIP PRIMERA IIIII II III I III IIIII I IIIIII I II III IIII II III es1z0110of 1227E ACR 186P-AS4RE0(Rev.09/2006) Available in Alternate Formats 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: THE SOUTH 521 FEET OF THE WEST HALF OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 24, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN. III IIIIIII IIII IIIII(IIIII III IIIII 111111111111111 0E 201 21 f 1257E EXHIBIT"An OPERATIONS COVENANT FOR HOTEL INCENTIVE PROGRAM ACKNOWLEDGMENT OF INSTRUMENT (Cal. Civil Code Section 1181) State of California ) County of Riverside ) ss. City of Palm Springs ) On June 25, 2012, before me, JAMES THOMPSON, CITY CLERK, CITY OF PALM SPRINGS CALIFORNIA, personally appeared DAVID H. READY, who I personally know is the CITY MANAGER of the CITY OF PALM SPRINGS whose name is subscribed to the within instrument and acknowledged to me and that he executed the same in his/her official and authorized capacity on behalf of the City of Palm Springs, a California Charter City. 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 the official seal of the City of Palm Springs, California, this 25th day of June, 2012: �OQ 9ALM Sp i2 Q Y N rS . 9</F0IL Signature: AMES THOMPSON, CITY CLERK City of Palm Springs, California Title or Type of Document: -Operations Covenant— Sydell Palm Springs, LLC Document Date: June 1, 2012 Number of Pages: 10 1111111111 11111111111111111111111111111111111111111 aE,ei z0 of 12 P �z o£ �z