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HomeMy WebLinkAbout12/17/2014 - STAFF REPORTS - 1.F. QALM Sp c V N o.,a...Eo..� .` CITY COUNCIL STAFF REPORT CQ4IFOR��P DATE: December 17, 2014 PUBLIC HEARING SUBJECT: CONDUCT A PUBLIC HEARING UNDER SECTION 53083 OF THE CALIFORNIA GOVERNMENT CODE TO APPROVE TWO HOTEL OPERATIONS COVENANT WITH PALM SPRINGS PROMENADE, LLC FOR THE CONSTRUCTION OF A 135 ROOM MARRIOTT AC HOTEL AT THE SOUTHWEST CORNER OF "NEW MAIN STREET" AND BELARDO ROAD AND EQUI-CAP, LLC FOR THE CONSTRUCTION OF THE 205-ROOM SELENE PALM SPRINGS RESORT AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, PURSUANT TO THE CITY'S HOTEL OPERATIONS INCENTIVE PROGRAM 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, 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 two such agreements in accordance with Chapter 5.26 of the Palm Springs Municipal Code. RECOMMENDATION: 1. Open the public hearing and receive public testimony; 2. Approve a Hotel Operations Covenant Agreement with Palm Springs Promenade, LLC for a 135-room Marriott AC Hotel located at the southwest corner of "New Main Street" and Belardo Road, in the Downtown Revitalization Project; 3. Approve a Hotel Operations Covenant Agreement with Equi-Cap, LLC for the 205-room Selene Palm Springs Resort located at the northeast corner of Calle Alvarado and Amado Road; 4. Authorize the City Manager to execute all documents to effectuate the two Covenants. (, ITEM NO. `` City Council Staff Report December 17, 2014-- Page 2 Hotel Operations Covenant—Marriott AC and Selene Palm Springs STAFF ANALYSIS: These two hotel projects are eligible to participate in the City's Hotel Incentive Program, adopted in early 2008 to facilitate the development of new hotels and the refurbishment of existing hotels in the City. Hotel Incentive Program The City of Palm Springs has been on a remarkable upswing in the last seven or eight years, with renewed worldwide media attention, and the widespread sense of how much improved everything is — neighborhoods, downtown, uptown, hotels, everything. Leading the way in the City's resurgence is its hotel stock. Its resurgence can be traced to the City Council's actions to create the Hotel Incentive Program. In 2005 and 2006, the City had just spent $45 million to renovate and expand the Convention Center, which is the local economy's key to being a "seven day a week" economy. The response from planners was very positive, but they didn't have the same reaction to the local hotel stock. All of the City's major hotels were severely outdated. The Riviera had just closed. The City hadn't seen a new luxury hotel built in over 25 years, and its own economic study said that 1,000 new hotel rooms were needed near the Convention Center to make it more competitive with similar-sized venues in the West. In 2008, the City Council adopted the Hotel Incentive Program, primarily to help "close the gap" in financing new hotels in the City. What's true nationally is stark in seasonal markets like Palm Springs: it costs more to build a hotel than it is worth. Every hotel developer in the country looks for outside sources of funding to get a hotel built. Often hotels include a time share component or a major condominium development, with the hope that the profit from these ancillary uses can be monetized in the development capital for the hotel. One approach available to the City was simple. The City adopted Chapter 5.26 of the Municipal Code in December, 2007 (Ordinance 1730, effective January 2008) to provide an incentive program for the operation and maintenance of quality and first class hotel facilities which enhance the tourist and travel experience for visitors to the city of Palm Springs, 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. In it, the City agreed to rebate a portion of the transient occupancy tax (TOT) to a developer of a new hotel for a period of time, as additional cash flow to the project. Both sides hoped that the stream of additional revenue could help fill the financing gap for new hotel projects. However, knowing that the existing hotel stock needed an infusion of investment, the City also extended the Program to existing hotels — even small hotels. These renovations helped the City transform into an exciting new destination. The first hotel assisted in this effort was the Wyndham, which through the efforts of its then-new owners became the Renaissance, a major important upgrade for the City. That was accomplished with former Redevelopment Agency assistance. 02 City Council Staff Report December 17, 2014 -- Page 3 Hotel Operations Covenant—Marriott AC and Selene Palm Springs The renovation aspect of the Incentive Program has been extraordinary successful, generating in excess of a $250 million investment in the renovation and upgrading of hotel properties throughout the City. This type of development has had a positive and significant effect on tourism in the City, with other positive spillover effects, and continues at a strong pace, even today. The first Hotel Incentive Program hotel assisted was the Colony Palms, soon followed by the Riviera, and then the Hyatt, Saguaro, Hilton, and the Hard Rock. In addition, several small properties participated, including hotels as small as The Bearfoot Inn, at 11 rooms. In fact, several of the newest and most exciting hotel "re-openings" -- the Sparrows Lodge, the Skylark, and recently The Palm Springs Hotel and the Triada Resort and Spa -- were made feasible by the Program. The new Arrive Hotel, now under construction, is in the program, too. There is no doubt that without the Hotel Incentive Program Palm Springs would not be as successful as it is today. The program allows the City to not put any up-front money into a project, and for a share of new or increased revenues from a development project, incentivize high quality, transformative development that would have been impossible otherwise. It's a win for the project, and the results so far have shown it's definitely a win for the citizens. The first paragraph of Section 5.26.040(a), "First Class New Hotels," was modified in 2011 as follows: (a) First Class New Hotels. The City shall pay to an operator of a first class new hotel an amount equal to seventy-five percent (75%) of the adjusted tax rate. Such payments shall be made for thirty years or until the operator has been paid fifty million dollars, whichever event occurs first. The Marriott AC Hotel and the Selene Palm Springs Resort, as proposed by the Developers and approved by the City, are qualified as First Class New Hotels and entitled to the provisions of Section 5.26.040(a) of the ordinance. Consistent with the provisions of the Program, the two Operators now agree to place restrictions upon the use and operation of the hotels, in order to ensure that the Project shall be operated and maintained continuously as a hotel available for short-term rentals. The two hotel operators also agreed in the Covenants to participate in the Palm Springs Convention Center's Committable Rooms Program and each provide designated room- nights per month for official City use. City will share a percentage of Transient Occupancy Tax Increment with Owner pursuant to the Program guidelines. The Hotel Operations Covenants as approved by the City fall under Section 53083 and are approved at Public Hearings. - 03 City Council Staff Report December 17, 2014-- Page 4 Hotel Operations Covenant—Marriott AC and Selene Palm Springs For Palm Springs Promenade, LLC (Marriott AC), the information is as follows: 1. The business entity that is the beneficiary of the economic development subsidy: Palm Springs Promenade, LLC, 555 South Sunrise Way, Suite 200, Palm Springs, CA 92264. 2. The start and end dates and schedule, if applicable, for the economic development subsidy: The Operations Covenant starts on January 1, 2015 and ends December 31, 2044. However, the "start date" of the Operations Covenant is the date at which the construction project is deemed fully completed and the collection of the TOT 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 75% share of Transient Occupancy Tax (TOT) collected annually calculated as follows: after the start date (estimated 5/1/16) the subsidy is based on TOT collections for the year; 75% of the TOT is payable to For Palm Springs Promenade, LLC. 4. A statement of the public purposes for the economic development subsidy: The City has confirmed that for Palm Springs Promenade, 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 25% of the TOT. Even with a portion of the increment being shared with the applicant, the City conservatively still projects an average of $150,000 of City TOT revenue per year over the thirty year period. 6. Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time and temporary positions: The development of the hotel will create no fewer than 100 positions, and a number of construction jobs during the construction period. For Equi-cap, LLC (Selene Palm Springs Resort), the information is as follows: 1. The business entity that is the beneficiary of the economic development subsidy: Equi-cap, LLC, 550 South Hope Street, Suite 2640, Los Angeles, CA 90071. 2. The start and end dates and schedule, if applicable, for the economic development subsidy: The Operations Covenant starts on January 1, 2015 and ends December 31, 2044. However, the "start date" of the Operations Covenant is the date at which the construction project is deemed fully completed and the collection of the TOT commences. 04 City Council Staff Report December 17, 2014 -- Page 5 Hotel Operations Covenant—Marriott AC and Selene Palm Springs 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 75% share of Transient Occupancy Tax (TOT) collected annually calculated as follows: after the start date (estimated 5/1/16) the subsidy is based on TOT collections for the year; 75% of the TOT is payable to For Palm Springs Promenade, LLC. 4. A statement of the public purposes for the economic development subsidy: The City has confirmed that for Equi-Cap, LLC (Selene Palm Springs), 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 25% of the TOT. Even with a portion of the increment being shared with the applicant, the City conservatively still projects an average of$225,000 of City TOT revenue over the thirty year period. 6. Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time and temporary positions: The development of the hotel will create no fewer than 100 positions, and a number of construction jobs during the construction period. FISCAL IMPACT: The incentive is provided on a reimbursement basis to these Developers. For cash flow purposes, Finance will segregate the portion of the TOT due to each Developer from the TOT available as general City revenue, though it is all booked as revenue to the City. At the Average Daily Rate for its comparable set and at an occupancy rate that is slightly but not significantly higher than the City average, each of the Developers would likely receive a TOT reimbursement of $600,000 per year or more over the life of the subsidy. The remaining revenue to the City is "new" revenue, however, and available for general City services. Jo Ray and rector David H. Ready, C' r Attachments: Hotel Operations Covenant: 05 CITY OF PALM SPRINGS PUBLIC HEARING NOTIFICATION ,..,: Date: December 17, 2014 Subject: HOTEL OPERATIONS COVENANT AGREEMENT MARRIOTT AC HOTEL 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 December 6, 2014. 1 declare under penalty of perjury that the foregoing is true and correct. \WvvJ 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 December 4, 2014. 1 declare under penalty of perjury that the foregoing is true and correct. 1L"-M Kathie Hart, MMC Chief Deputy City Clerk 06 NOTICE OF PUBLIC HEARING CITY COUNCIL CITY OF PALM SPRINGS HOTEL OPERATIONS COVENANT AGREEMENT APPROVAL OF ECONOMIC DEVELOPMENT SUBSIDY SELENE PALM SPRINGS HOTEL (DOLCE HOTEL) NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs, California, will hold a public hearing at its meeting of December 17, 2014. 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 Agreement in accordance with Chapter 5.26 of the Palm Springs Municipal Code to provide a Hotel Operations Incentive Program for the Selene Palm Springs Hotel (Dolce Hotel) 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 hotel is located at the northeast corner of Amado Road and Calle Alvarado. 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. COMMENTS: At the hearing any person may present oral or written testimony. The City Council will consider all objections or protests, if any, to the Agreement. Response to this notice can 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 of the proposed in court 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 John Raymond 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. es Thompson, City Clerk 07 CITY OF PALM SPRINGS PUBLIC HEARING NOTIFICATION (V Date: December 17, 2014 Subject: HOTEL OPERATIONS COVENANT AGREEMENT SELENE PALM SPRINGS HOTEL (Dolce Hotel) 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 December 6, 2014. 1 declare under penalty of perjury that the foregoing is true and correct. �L1� a 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 December 4, 2014. 1 t1 `` declare under penalty of perjury that the foregoing is true and correct. Kathie Hart, MMC Chief Deputy City Clerk 08 NOTICE OF PUBLIC HEARING CITY COUNCIL CITY OF PALM SPRINGS HOTEL OPERATIONS COVENANT AGREEMENT APPROVAL OF ECONOMIC DEVELOPMENT SUBSIDY MARRIOTT AC HOTEL NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs, California, will hold a public hearing at its meeting of December 17, 2014. 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 Agreement in accordance with Chapter 5.26 of the Palm Springs Municipal Code to provide a Hotel Operations Incentive Program for the Marriott AC Hotel 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 hotel is located at the southwest corner of Belardo Road and New Main Street in the Downtown Revitalization Project. 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. COMMENTS: At the hearing any person may present oral or written testimony. The City Council will consider all objections or protests, if any, to 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: James Thompson, City Clerk 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Any challenge of the proposed in court 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 John Raymond 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. es Thompson, City Clerk 09 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" or "Covenant") is made and entered into this 19th day of November, 2014, by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city ("City"), and Palm Springs Promenade, LLC, a California limited liability company ("Owner" or"Participant"). RECITALS : A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in December, 2007 to provide a Hotel Operations Incentive Program ("Program") for the operation, maintenance and expansion of the inventory of quality and first class hotels within the City that enhance the tourist and travel experience for visitors to the City, maximize the use of the City's Convention Center, provide attractive and desirable visitor serving facilities and experiences, and assist the City in achieving its tourism goals. (Chapter 5.26 of the Municipal Code is incorporated herein by reference and defined terms therein shall, unless otherwise indicated, have the same meanings herein.) B. Owner holds fee title to certain real property ("Site"), which is depicted as Block F on the Site Plan attached hereto as Exhibit"A", and legally described as Parcel 5 on the Parcel Map attached hereto as Exhibit `B". The Site, which is located in the downtown area of the City of Palm Springs, California, is fully entitled for development of a first class new hotel to contain approximately 135 hotel rooms ("Hotel" or "Project"). Owner has applied for the Program and has provided satisfactory documentation confirming that the AC Hotel, as entitled and approved and when completed and under operation, will qualify as a new first class hotel and be entitled to benefits thereof under and pursuant to provisions of Chapter 5.26 of the Municipal Code and this Agreement. 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 six (6) room-nights per DCHRevise d11.13.20] 10 4 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 no further environmental review is required in connection with the approval of this Covenant in that in connection with City approval of entitlements, finding were made that the Project would be consistent with the approved Specific Plan and certified EIR and that neither a subsequent EIR, supplemental EIR, or EIR Addendum would be necessary. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Participant hereby conveys to the City the Operating Covenants described herein and City hereby agrees to provide Participant with funds as provided under the Program and as set forth hereinafter. ARTICLE 1 STATEMENT OF OPERATING COVENANTS 1.1. OPERATION AND USE COVENANT. Upon occupancy, Owner covenants to operate, maintain, and use the AC Hotel in accordance with this Agreement. All uses conducted on the Site, including, without limitation, all activities undertaken by the Owner pursuant to this Agreement shall, in all material respects, conform to requirements of this Agreement and Palm Springs Municipal Code. 1.2. HOTEL USE. The Owner 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 thirty years commencing upon the date Owner first receives from the City the Owner's share of transient occupancy tax revenues pursuant to the Program, or until Owner has received from the City the total sum of fifty million dollars if that occurs prior to the expiration of said thirty years, unless Owner's participation in the Program is terminated prior thereto in accordance with this Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a) and Sections 7.9, 7.11, and 7.16 of this Covenant, during the Term, City shall pay to Owner, within thirty days after receipt from Owner of each monthly payment made by Owner to the tax administrator per Section 3.24.080 of the Municipal Code, an amount equal to seventy-five percent of each such payment. City acknowledges and agrees that City has reviewed proposed development and operational plans for the Hotel and concluded that such plans are in substantial compliance with and will satisfy first class Hotel requirements of the City and Chapter 5.26 of the Municipal Code. 1. 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. OPERATIONS COVENANT jwkimpincentagreetit -2- FOR HOTEL INCENTIVE PROGRAM 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. Since the Hotel will be a new hotel, City has determined the Transient Occupancy Tax Base to be used to calculate the Transient Occupancy Tax Increment shall be zero, and the Owner accepts such Transient Occupancy Tax Base. 2. Owner hereby agrees to subscribe to the Palm Springs Convention Center's Committable Rooms Program or any similar successor program as identified by the City Manager without being obligated to incur any additional costs or expenses. 3. Upon City's prior request, Owner shall provide the City at no cost six (6) rooms for one (1) night (or 3 rooms for 2 nights) other than Friday or Saturday nights each month for use for City purposes as approved or designated by the City Manager, provided that such use by the City shall be subject to the rooms being available at the time of the City's request. Such accommodations shall include all services and amenities for which the Owner would normally collect transient occupancy taxes but will not include services and amenities that are optional to the transient and for which the transient is not required to pay a transient occupancy 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 Oblieation. 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 12 OPERATIONS COVENANT jwkimpinaentagreeiii '3- FOR HOTEL INCENTIVE PROGRAM 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 Project in such a manner as to avoid the reasonable determination of a duly authorized official of the City that a public nuisance has been created by the absence of adequate maintenance such as to be detrimental to the public health, safety or general welfare or that such a condition of deterioration or disrepair causes appreciable harm or is materially detrimental to property or improvements within one thousand (1,000) feet of such portion of the Site. The foregoing notwithstanding, Owner shall not be obligated to maintain any street or sidewalk areas, or landscaping therein, which are to be maintained by the City pursuant to a Project Financing Agreement executed by the City(as amended). 2. Parking and Driveways. The driveways and traffic aisles on the Site shall be kept clear and unobstructed at all times. 3. Right of Entrv. In the event Owner fails to maintain the Site in the above- mentioned condition, and satisfactory progress is not made in correcting the condition within thirty (30) days from the date of written notice from City (such notice shall reasonably identify the required maintenance), City may, at City's option, and without further notice to Owner, declare the unperformed maintenance to constitute a public nuisance. Thereafter, either City or its employees, contractors, or agents, may cure Owner's default by entering upon the Site and performing the necessary landscaping and/or maintenance in accordance with Section 3.1.1 above. The City shall give Owner, its representative, or the residential manager reasonable notice of the time and manner of entry, and entry shall only be at such times and in such manner as is reasonably necessary to carry out this Agreement. Owner shall pay such costs as are reasonably incurred by City for such maintenance, including attorneys' fees and costs. 4. Lien. If any costs incurred by City under Section 3 above are not reimbursed within thirty (30) days after Owner's receipt of City's written request for reimbursement, the same shall be deemed delinquent, and the amount thereof shall bear interest thereafter at a rate of the lower of ten percent (10%) per annum or the legal maximum until paid. Any and all delinquent amounts, together with said interest, costs and reasonable attorney's fees, shall be an obligation of Owner as well as a lien and charge, with power of sale, upon the property interests of Owner, and the rents, issues and profits of such property. City may bring an action at law against Owner obligated to pay any such sums or foreclose the lien against Owner's property interests. Any such lien may be enforced by sale by the City following recordation of a Notice of Default of Sale given in the manner and time required by law as in the case of a deed of trust; such sale to be conducted in accordance with the provisions of Section 2924, et seq., of the California OPERATIONS COVENANT 13 jwkimpincentagreeiii -4- FOR HOTEL INCENTIVE PROGRAM 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 portion of the Site, and any purchaser at any foreclosure or trustee's sale (as well as any deed or assignment in lieu of foreclosure or trustee's sale) under any such mortgage or deed of trust shall take title free from any such monetary lien, but otherwise subject to the provisions hereof; provided that, after the foreclosure of any such mortgage and/or deed of trust, all other assessments provided for herein to the extent they relate to the expenses incurred subsequent to such foreclosure, assessed hereunder to the purchaser at the foreclosure sale, as owner of the subject Site after the date of such foreclosure sale, shall become a lien upon such Site upon recordation of a Notice of Assessment or Notice of Claim of Lien as herein provided. In the event of any such foreclosure, City (or successor) agrees to and shall recognize and honor any existing commercial (non-transient occupancy) leases in effect with respect to portions of the Project, provided that commercial tenants of such leases agree to subordinate and attom to City (or successor) as the new landlord with respect to such leases. 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, 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 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 14 OPERATIONS COVENANT jwkimpincentag a ni -5- FOR HOTEL INCENTIVE PROGRAM 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 this Agreement, hereby agrees to hold, sell, and convey the Site subject to the terms of this Agreement. Owner also grants to the City the right and power to enforce the terms of this Agreement against the Owner and all persons having any right, title or interest in the Site or any part thereof while such party owns the Site. No party shall have any liability or obligation in connection with any breach occurring while such party is not the owner of the Site. Within fifteen (15) business days after request of Owner, City shall execute and provide to Owner an estoppel certificate, in the form approved by the City Attorney of the City, confirming whether or not Owner is in breach of any obligations under this Agreement and identifying any required cure. ARTICLE 7 INDEMNIFICATION 7.1. INDEMNIFICATION. Owner agrees for itself and its successors and assigns to indemnify, defend, and hold harmless City and its respective officers, members, officials, employees, agents, volunteers, and representatives from and against any loss, liability, claim, or judgment to or by any third party relating to development and/or operation of the Project by Owner, excepting only any such loss, liability, claim, or judgment arising solely out of the intentional wrongdoing or gross negligence of City or its respective officers, officials, employees, members, agents, volunteers, or representatives. 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. OPERATIONS COVENANT 15 jwkimpincemagrmn -6- FOR HOTEL INCENTIVE PROGRAM 7.2. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any condition, covenant, representation or warranty in this Agreement, or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable expert witness fees, and its reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, including the conducting of discovery. 7.3. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Riverside. 7.4. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: City: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attn: City Manager Copy to: Woodruff, Spradlin& Smart, LLP 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 Attn: Douglas C. Holland, Esq. Owner: John Wessman 555 South Sunrise Way, Suite 200 Palm Springs, CA 92264 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 i Q OPERATIONS COVENANT i 6 jwkimpincenwgreeiii -7- FOR HOTEL INCENTIVE PROGRAM any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. 3. Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 4. Third Parties. No third party beneficiaries are intended, and the only parties who are entitled to enforce the provisions of these Operating Covenants are the City, Mortgagees, Participant and their respective successors and assigns. 7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California and is subject to the provisions of Government Code Section 53083. 7.7. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. 7.8. TERMINATION. This Agreement may be terminated only (i) by and upon expiration of the Term, (ii) by mutual written agreement of the parties, and (iii) by and pursuant to the provisions of Section 7.9 or 7.10 below. In the event of any such termination, Owner (or its successor, as applicable) shall not be obligated to return any amounts previously paid to it by the City pursuant to the Program. 7.9 DEFAULT BY OWNER. If at any time during the Term, City contends that Owner has committed a material default with respect this Agreement, e.g., by failing to operate the Hotel as a first class hotel, City shall deliver to Owner written notice of default which specifies in detail all facts alleged by City to constitute such default. For a period of thirty days thereafter, Owner will have the right to commence and complete cure of the alleged default; provided, however, if the alleged default is of such a nature as to reasonably require more than sixty days to cure, and 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 which specifies in detail all facts alleged by Owner to constitute such default. For a period of thirty days thereafter, City will have the right to commence and complete cure of the alleged default; provided, however, if the alleged default is of such a nature as to reasonably require more than sixty days to cure, and the Parties so agree, City will have such addition time as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if City fails to timely cure such default, Owner shall then have the right to terminate this Agreement or exercise any and all other rights and remedies available at law and in equity, and each of such rights and remedies shall be cumulative and not exclusive. OPERATIONS COVENANT 1 jwkimpincentagreeiii -8- FOR HOTEL INCENTIVE PROGRAM 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: 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 tp cooperate with each other and/or with any Mortgagee 18 OPERATIONS COVENANT jwkimpin"niageeiii -9- FOR HOTEL INCENTIVE PROGRAM or proposed Mortgagee, in a manner consistent with concepts and principles of good faith, fair dealing and commercial reasonableness, with respect to consideration, implementation and execution of any modification(s) to this Agreement reasonably requested by the City, Owner, Mortgagee or proposed Mortgagee. 7.15 Reasonable Approvals. Whenever this Agreement requires or calls for the approval or consent of any party hereto, such approval shall not be unreasonably withheld, delayed or conditioned. 7.16 Binding Arbitration. In the event of any dispute or controversy arising out of or relating to this Agreement, or the breach or performance of it, the parties shall reasonably attempt to resolve such dispute or controversy without resort to third party review or resolution. The parties shall first meet and confer on any such dispute or controversy. Such meeting(s) shall include any principal of the Owner and, at the discretion of the City, may include the City Manager and/or the City Council, either as a whole or through an ad hoc subcommittee designated by the City Council. Upon a determination by the parties that they are or will be unable to resolve the dispute or controversy on their own, then the parties shall submit the dispute, controversy or any remaining unresolved matter to binding arbitration, to be held in the Coachella Valley, 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. 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: 1. 9 OPERATIONS COVENANT jwkimpincenlageeiii -1 Q- FOR HOTEL INCENTIVE PROGRAM WOODRUFF, SPRADLIN & SMART By: Douglas C. Holland, Esq. City Attorney "OWNER" By: Name: Title: By: Name: Title: [END OF SIGNATURES] OPERATIONS COVENANT 20 jwkimpincentagreeiii 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 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) OPERATIONS COVENANT 21 jwkimpincentageeni -12- FOR HOTEL INCENTIVE PROGRAM 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" or "Covenant") is made and entered into this 17th day of December, 2014, by and between the CITY OF PALM SPRINGS, a municipal corporation and charter city ("City"), and Equi-Cap, LLC, a California limited liability company ("Owner" or "Participant"). RECITALS : A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in December, 2007 to provide a Hotel Operations Incentive Program ("Program") for the operation, maintenance and expansion of the inventory of quality and first class hotels within the City that enhance the tourist and travel experience for visitors to the City, maximize the use of the City's Convention Center, provide attractive and desirable visitor serving facilities and experiences, and assist the City in achieving its tourism goals. (Chapter 5.26 of the Municipal Code is incorporated herein by reference and defined terms therein shall, unless otherwise indicated, have the same meanings herein.) B. Owner holds fee title to certain real property ("Site"), which is generally located at the northeast corner of Calle Alvarado and Amado Road as depicted on the Site Plan attached hereto as Exhibit "A", and legally described on Exhibit "B". The Site, which is located in the downtown area of the City of Palm Springs, California, is fully entitled for development of a first class new hotel to contain approximately 205 hotel rooms ("Hotel" or "Project"). Owner has applied for the Program and has provided satisfactory documentation confirming that the Selene Palm Springs Resort, as entitled and approved and when completed and under operation, will qualify as a new first class hotel and be entitled to benefits thereof under and pursuant to provisions of Chapter 5.26 of the Municipal Code and this Agreement. 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 eight (8) room-nights per DCHRevise d11.13.201 22 4 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 no further environmental review is required in connection with the approval of this Covenant in that in connection with City approval of entitlements related to the project, approved a mitigated negative declaration on November 20, 2013 and the City finds that this mitigated negative declaration is the controlling environmental document for this project and neither a subsequent EIR, supplemental EIR, or EIR Addendum is necessary. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Participant hereby conveys to the City the Operating Covenants described herein and City hereby agrees to provide Participant with funds as provided under the Program and as set forth hereinafter. ARTICLE 1 STATEMENT OF OPERATING COVENANTS 1.1. OPERATION AND USE COVENANT. Upon occupancy, Owner covenants to operate, maintain, and use the Selene Palm Springs Resort 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. 1.2. HOTEL USE. The Owner 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 thirty years commencing upon the date Owner first receives from the City the Owner's share of transient occupancy tax revenues pursuant to the Program, or until Owner has received from the City the total sum of fifty million dollars if that occurs prior to the expiration of said thirty years, unless Owner's participation in the Program is terminated prior thereto in accordance with this Agreement (the "Term"). Subject to Palm Springs Municipal Codes Section 5.26.040(a) and Sections 7.9, 7.11, and 7.16 of this Covenant, during the Term, City shall pay to Owner, within thirty days after receipt from Owner of each monthly payment made by Owner to the tax administrator per Section 3.24.080 of the Municipal Code, an amount equal to seventy-five percent of each such payment. City acknowledges and agrees that City has reviewed proposed development and operational plans for the Hotel and concluded that such plans are in substantial compliance with and will satisfy first class Hotel requirements of the City and Chapter 5.26 of the Municipal Code. 1. Housine 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. 23 OPERATIONS COVENANT j '2- FOR HOTEL INCENTIVE PROGRAM 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. Since the Hotel will be a new hotel, City has determined the Transient Occupancy Tax Base to be used to calculate the Transient Occupancy Tax Increment shall be zero, and the Owner accepts such Transient Occupancy Tax Base. 2. Owner hereby agrees to subscribe to the Palm Springs Convention Center's Committable Rooms Program or any similar successor program as identified by the City Manager without being obligated to incur any additional costs or expenses. 3. Upon City's prior request, Owner shall provide the City at no cost eight (8) rooms for one (1) night (or 4 rooms for 2 nights) other than Friday or Saturday nights each month for use for City purposes as approved or designated by the City Manager, provided that such use by the City shall be subject to the rooms being available at the time of the City's request. Such accommodations shall include all services and amenities for which the Owner would normally collect transient occupancy taxes but will not include services and amenities that are optional to the transient and for which the transient is not required to pay a transient occupancy 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 OPERATIONS COVENANT 24 j -3- FOR HOTEL INCENTIVE PROGRAM 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 Project in such a manner as to avoid the reasonable determination of a duly authorized official of the City that a public nuisance has been created by the absence of adequate maintenance such as to be detrimental to the public health, safety or general welfare or that such a condition of deterioration or disrepair causes appreciable harm or is materially detrimental to property or improvements within one thousand (1,000) feet of such portion of the Site. The foregoing notwithstanding, Owner shall not be obligated to maintain any street or sidewalk areas, or landscaping therein, which are to be maintained by the City pursuant to a Project Financing Agreement executed by the City (as amended). 2. Parking and Driveways. The driveways and traffic aisles on the Site shall be kept clear and unobstructed at all times. 3. Right of Entry. In the event Owner fails to maintain the Site in the above- mentioned condition, and satisfactory progress is not made in correcting the condition within thirty (30) days from the date of written notice from City (such notice shall reasonably identify the required maintenance), City may, at City's option, and without further notice to Owner, declare the unperformed maintenance to constitute a public nuisance. Thereafter, either City or its employees, contractors, or agents, may cure Owner's default by entering upon the Site and performing the necessary landscaping and/or maintenance in accordance with Section 3.1.1 above. The City shall give Owner, its representative, or the residential manager reasonable notice of the time and manner of entry, and entry shall only be at such times and in such manner as is reasonably necessary to carry out this Agreement. Owner shall pay such costs as are reasonably incurred by City for such maintenance, including attorneys' fees and costs. 4. Lien. If any costs incurred by City under Section 3 above are not reimbursed within thirty (30) days after Owner's receipt of City's written request for reimbursement, the same shall be deemed delinquent, and the amount thereof shall bear interest thereafter at a rate of the lower of ten percent (10%) per annum or the legal maximum until paid. Any and all delinquent amounts, together with said interest, costs and reasonable attorney's fees, shall be an obligation of Owner as well as a lien and charge, with power of sale, upon the property interests of Owner, and the rents, issues and profits of such property. City may bring an action at law against Owner obligated to pay any such sums or foreclose the lien against Owner's property interests. Any such lien may be enforced by sale by the City following recordation of a Notice of Default of Sale given in the manner and time required by law as in the case of a deed of trust; such sale to be conducted in accordance with the provisions of Section 2924, et seq., of the California OPERATIONS COVENANT 25 j -4- FOR HOTEL INCENTIVE PROGRAM 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 portion of the Site, and any purchaser at any foreclosure or trustee's sale (as well as any deed or assignment in lieu of foreclosure or trustee's sale) under any such mortgage or deed of trust shall take title free from any such monetary lien, but otherwise subject to the provisions hereof, provided that, after the foreclosure of any such mortgage and/or deed of trust, all other assessments provided for herein to the extent they relate to the expenses incurred subsequent to such foreclosure, assessed hereunder to the purchaser at the foreclosure sale, as owner of the subject Site after the date of such foreclosure sale, shall become a lien upon such Site upon recordation of a Notice of Assessment or Notice of Claim of Lien as herein provided. In the event of any such foreclosure, City (or successor) agrees to and shall recognize and honor any existing commercial (non-transient occupancy) leases in effect with respect to portions of the Project, provided that commercial tenants of such leases agree to subordinate and attorn to City (or successor) as the new landlord with respect to such leases. 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, 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 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 OPERATIONS COVENANT j -5- FOR HOTEL INCENTIVE PROGRAM 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 this Agreement, hereby agrees to hold, sell, and convey the Site subject to the terms of this Agreement. Owner also grants to the City the right and power to enforce the terms of this Agreement against the Owner and all persons having any right, title or interest in the Site or any part thereof while such party owns the Site. No party shall have any liability or obligation in connection with any breach occurring while such party is not the owner of the Site. Within fifteen (15) business days after request of Owner, City shall execute and provide to Owner an estoppel certificate, in the form approved by the City Attorney of the City, confirming whether or not Owner is in breach of any obligations under this Agreement and identifying any required cure. ARTICLE 7 INDEMNIFICATION 7.1. INDEMNIFICATION. Owner agrees for itself and its successors and assigns to indemnify, defend, and hold harmless City and its respective officers, members, officials, employees, agents, volunteers, and representatives from and against any loss, liability, claim, or judgment to or by any third party relating to development and/or operation of the Project by Owner, excepting only any such loss, liability, claim, or judgment arising solely out of the intentional wrongdoing or gross negligence of City or its respective officers, officials, employees, members, agents, volunteers, or representatives. 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. OPERATIONS COVENANT 2 J -6- FOR HOTEL INCENTIVE PROGRAM 7.2. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any condition, covenant, representation or warranty in this Agreement, or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable expert witness fees, and its reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, including the conducting of discovery. 7.3. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Riverside. 7.4. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: City: City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Attn: City Manager Copy to: Woodruff, Spradlin & Smart, LLP 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 Attn: Douglas C. Holland, Esq. Owner: 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 28 OPERATIONS COVENANT j -7- FOR HOTEL INCENTIVE PROGRAM exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. 3. Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 4. Third Parties. No third party beneficiaries are intended, and the only parties who are entitled to enforce the provisions of these Operating Covenants are the City, Mortgagees, Participant and their respective successors and assigns. 7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California and is subject to the provisions of Government Code Section 53083. 7.7. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. 7.8. TERMINATION. This Agreement may be terminated only (i) by and upon expiration of the Term, (ii) by mutual written agreement of the parties, and (iii) by and pursuant to the provisions of Section 7.9 or 7.10 below. In the event of any such termination, Owner (or its successor, as applicable) shall not be obligated to return any amounts previously paid to it by the City pursuant to the Program. 7.9 DEFAULT BY OWNER. If at any time during the Term, City contends that Owner has committed a material default with respect this Agreement, e.g., by failing to operate the Hotel as a first class hotel, City shall deliver to Owner written notice of default which specifies in detail all facts alleged by City to constitute such default. For a period of thirty days thereafter, Owner will have the right to commence and complete cure of the alleged default; provided, however, if the alleged default is of such a nature as to reasonably require more than sixty days to cure, and the Parties so agree, Owner will have such addition time as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if Owner fails to timely cure such default, City shall then have the right to terminate this Agreement. (To the extent of any inconsistency between the provisions of this Section 7.9 and the provisions of Section 3.1 above, the provisions of this Section 7.9 shall prevail.) 7.10 DEFAULT BY CITY. If at any time during the Term, Owner contends that City has committed a material default with respect this Agreement, Owner may deliver to City written notice of default which specifies in detail all facts alleged by Owner to constitute such default. For a period of thirty days thereafter, City will have the right to commence and complete cure of the alleged default; provided, however, if the alleged default is of such a nature as to reasonably require more than sixty days to cure, and the Parties so agree, City will have such addition time as is reasonably necessary to complete such cure. Subject to Section 7.11 below, if City fails to timely cure such default, Owner shall then have the right to terminate this Agreement or exercise any and all other rights and remedies available at law and in equity, and each of such rights and remedies shall be cumulative and not exclusive. 29 OPERATIONS COVENANT j -8- FOR HOTEL INCENTIVE PROGRAM 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: 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 tenninate 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 tp cooperate with each other and/or with any Mortgagee or proposed Mortgagee, in a manner consistent with concepts and principles of good faith, fair 30 OPERATIONS COVENANT j -9- FOR HOTEL INCENTIVE PROGRAM dealing and commercial reasonableness, with respect to consideration, implementation and execution of any modification(s) to this Agreement reasonably requested by the City, Owner, Mortgagee or proposed Mortgagee. 7.15 Reasonable Approvals. Whenever this Agreement requires or calls for the approval or consent of any party hereto, such approval shall not be unreasonably withheld, delayed or conditioned. 7.16 Binding Arbitration. In the event of any dispute or controversy arising out of or relating to this Agreement, or the breach or performance of it, the parties shall reasonably attempt to resolve such dispute or controversy without resort to third party review or resolution. The parties shall first meet and confer on any such dispute or controversy. Such meeting(s) shall include any principal of the Owner and, at the discretion of the City, may include the City Manager and/or the City Council, either as a whole or through an ad hoc subcommittee designated by the City Council. Upon a determination by the parties that they are or will be unable to resolve the dispute or controversy on their own, then the parties shall submit the dispute, controversy or any remaining unresolved matter to binding arbitration, to be held in the Coachella Valley, 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. 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 OPERATIONS COVENANT 31 j -10- FOR HOTEL INCENTIVE PROGRAM By: Douglas C. Holland, Esq. City Attorney "OWNER" By: Name: Title: By: Name: Title: [END OF SIGNATURES] OPERATIONS COVENANT 32 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 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) 33 OPERATIONS COVENANT j -12- FOR HOTEL INCENTIVE PROGRAM RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A HOTEL OPERATIONS INCENTIVE COVENANT WITH EQUI-CAP, LLC FOR THE CONSTRUCTION OF A 205 ROOM SELENE PALM SPRINGS RESORT HOTEL AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD. The City Council of the City of Palm Springs, California, finds: A. On December 17, 2014, the City Council conducted a public hearing pursuant to California Government Code Section 53083, has received a report from staff that satisfies the requirements of Government Code Section 53083, and has determined that the grant of incentives as provided in the proposed Hotel Operations Covenant is consistent with and in furtherance of the goals, purpose, and requirements of PSMC Section 5.26. B. On July 18, 2007, the City Council made findings, adopted a Mitigated Negative Declaration ("MND"), adopted a Mitigation Monitoring and Reporting Program ("MMRP"), approved Planned Development District ("PD 333") and Tentative Tract Map ("TTM 35236") for the development of 145 residential units and a 200-room hotel and parking structure on an approximately 10.47 acre parcel (the "Project'). The mitigation measures in the MND, MMRP, and entitlements were made a condition of approval for the Project. The City filed a Notice of Determination on July 23, 2007. C. On November 20, 2013, the City Council approved an amendment to PD 333 and an amendment to TTM 35236 (collectively, the "Amendment'). Generally, the Amendment modified the Project by reducing the number of residential units from 145 to 50, reducing the height of the Project by four feet, modifying the hotel parking structure, and modifying the site and lot configuration. The Amendment reduced the overall intensity of the Project as compared to the previously approved Project as analyzed in the MND. D. Prior to approving the Amendment, the City considered whether any further environmental review would be required. The City prepared an environmental evaluation and determined that none of the circumstances triggering further environmental review have occurred: (i) there are no substantial changes in the Project requiring major revisions of the MND due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; (ii) there are no substantial changes with respect to the (2f 17j2.o1�-I� Hotel Incentive Covenmt-Kimpton �-r�� 1 •J= '��5OLU7'l Ott �� circumstances under which the Project is being undertaken which will require major revisions of the MND due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified effects; and (iii) there is no new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the MND was certified showing that: (a) the Project will have one or more significant effects not discussed in the MND; (b) significant effects previously examined will be substantially more severe than shown in the MND; (c) mitigation measures or alternatives previously found not feasible would in fact be feasible , and would substantially reduce one or more significant effects of the Project, but the mitigation measures or alternatives have not been adopted; or (d) mitigation measures or alternatives considerably different from those analyzed in the MND would substantially reduce one or more significant effects on the environment, but the mitigation measures or alternatives have not been adopted. On this basis, the City prepared an Addendum to the MND. No further environmental review is required. (Public Resources Code Section 21166; California Code of Regulations, Title 14 Section 15162.) E. The City Council also finds that the Hotel Operations Covenant is a method of financing in part the hotel contemplated and approved as Planned Development District 333 and Tentative Map No. 35236Case 3.3785 and is therefore within the scope of the Specific Plan EIR and the Addendum and therefore no further CEQA review is required. NOW, THEREFORE, the City Council of the City of Palm Springs resolves: SECTION 1. The Hotel Operations Covenant with Palm Springs Promenade, LLC for the construction of a 135 room Marriott AC Hotel at the southwest corner of New Main and Belardo Road is approved. SECTION 2. The City Council finds that the Hotel Operations Covenant is within the scope of the Mitigated Negative Declaration and was fully analyzed under CEQA at the time of the July 18, 2007 and November 20, 2013 decisions to approve the project and none of the circumstances triggering further environmental review have occurred since such approvals: (i) there are no substantial changes in the project requiring major revisions of the Mitigated Negative Declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; (ii) there are no substantial changes with respect to the circumstances under which the project is being undertaken which will require major revisions of the Mitigated Negative Declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified effects; and (iii) there is no new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the Mitigated Negative Declaration was certified showing that: (a) the project will have one or more significant effects not discussed in the MND; (b) significant effects previously examined will be substantially more severe than shown in the MND; (c) Hotel Incentive Covenatt-Kimpton mitigation measures or alternatives previously found not feasible would in fact be feasible, and would substantially reduce one or more significant effects of the project, but the mitigation measures or alternatives have not been adopted; or (d) mitigation measures or alternatives considerably different from those analyzed in the MND would substantially reduce one or more significant effects on the environment, but the mitigation measures or alternatives have not been adopted. No further environmental review is required. (Public Resources Code § 21166; CEQA Guidelines § 15162.) PASSED, APPROVED, and ADOPTED this 17th day of December, 2014. David H. Ready, City Manager ATTEST Jay Thompson, City Clerk Hotel Incentive Covenant-Kimpton RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A HOTEL INCENTIVE COVENANT WITH PALM SPRINGS PROMENADE, LLC FOR THE CONSTRUCTION OF A 135 ROOM MARRIOTT AC HOTEL AT THE SOUTHWEST CORNER OF NEW MAIN STREET AND BELARDO ROAD. The City Council of the City of Palm Springs, California, finds: A. The City, as lead agency, prepared the Museum Market Plaza Specific Plan EIR (the "Specific Plan EIR"). The Specific Plan EIR analyzed the potential environmental impacts of the proposed Museum Market Plaza Specific Plan pursuant to the California Environmental Quality Act, Public Resources Code Sections 21000 et seq. and California Code of Regulations, Title 14, Sections 15000 et seq. ("CEQA"). The Specific Plan EIR concluded that the Museum Market Specific Plan would have significant and unavoidable effects on the environment. B. On December 9, 2009, the City Council for the City of Palm Springs made findings, adopted a Mitigation Monitoring and Reporting Program, adopted a Statement of Overriding Considerations, and certified the Specific Plan EIR pursuant to the provisions of CEQA. On that date, the City Council also adopted the Museum Market Plaza Specific Plan, conditioned on compliance with the mitigation measures in the Specific Plan EIR/ Mitigation Monitoring and Reporting Program. The redevelopment of the Desert Fashion Plaza site was specifically contemplated by the Museum Market Specific Plan and analyzed in the Specific Plan EIR. C. On September 29, 2011, the City and Palm Springs Promenade, LLC, entered into a Project Financing Agreement applicable to the financing, development, redevelopment, creation and refurbishment of public and private improvements in downtown Palm Springs at the Desert Fashion Plaza site within the Specific Plan area which included, among other things, a site plan and project description depicting the proposed improvements. D. The City and Palm Springs Promenade, LLC, subsequently developed a Second Amendment to the Project Financing Agreement which included a revised site plan and project description (the "Second Amendment'). E. Pursuant to the Second Amendment, the redevelopment of the Desert Fashion Plaza site will include, among other things: a first class hotel of approximately 170 JTJ 1-7 ( >�1� Hotel Incentive Covenmt-Kimpton t�6pLuTr oW pC rooms at the northeast corner of Belardo Road and Tahquitz Canyon Way in lieu of a commercial office building; that such hotel if maintained as a first class hotel would qualify with the provisions of the City's Hotel Incentive Ordinance (PSMC Chapter 5.26); an "Event Area" west of Belardo in lieu of a movie theater; and reconstruction of two lots east of North Museum Drive and the Palm Springs Art Museum, to include new landscaping and related hardscape and other improvements (collectively the "Modified Project"). F. The City, as lead agency, determined that the Modified Project was within the scope of the Specific Plan EIR and would not result in any new significant effects, a substantial increase in the severity of previously identified significant effects, or require any new mitigation measures or alternatives requiring major revisions in the Specific Plan EIR. The City, therefore, prepared an Addendum to the Specific Plan EIR (the "Addendum"). (Public Resources Code § 21166; CEQA Guidelines §§ 15162, 15164.). G. On October 17, 2012, the City Council for the City of Palm Springs approved the Addendum, found that the Modified Project conformed to the Museum Market Specific Plan, and approved the Second Amendment. H. On December 19, 2012, the City Council approved a Third Amendment to the Project Financing Agreement which included further minor revisions to the Modified Project including, among other things: a minor reconfiguration of Main Street such that Main Street is no longer curved between North Museum Drive and Belardo Road, but rather is straight between North Museum Drive and Belardo Road, an increase in the total number of hotel rooms from 170 rooms to 185 rooms (some of which will now be located in Block C-1), the further set back of the second story of the Block B building, and certain changes in uses listed on the Site Plan (the "Third Amendment"). I. On December 19, 2012, the City Council also approved the following entitlements for the project: Tentative Tract Map No. 36446 to subdivide 13.6 acres into fourteen lots for development and four lots for public infrastructure (streets) located at the northwest corner of Palm Canyon Drive and Tahquitz Canyon Way; Major Architectural Approval Case No. 3.3605 for development of lands located at the northwest corner of North Palm Canyon and Andreas Road (new): Block "A"; Major Architectural Approval Case No. 3.3606 for development of lands located at the northwest corner of North Palm Canyon and "New Main Street": Block "B'; Major Architectural Approval Case No. 3.3607 for development of lands located along the westerly frontage of North Palm Canyon Drive, south of "New Main Street": Block "C and Planned Development District Case No. 5.1290 / PDD 361 for development of a hotel of approximately 185 rooms, restaurants, meeting rooms, retail uses and ancillary uses in excess of 60 feet in height located at the northeast corner of West Tahquitz Canyon Way and Belardo Road (new): Block "C-1" (collectively, the "Entitlements"). Hotel Incentive Covenmt-Kimpton J. On September 19, 2014, the City Council approved the Fourth Amendment to the Project Financing Agreement and found that the Fourth amendment was substantially within the scope of the and none of the circumstances triggering further environmental review had occurred. (Public Resources Code § 21166; CEQA Guidelines § 15162). K. A CEQA Evaluation dated November 5, 2014 from Terra Nova Planning & Research reviewed the proposed 135 room Marriott Hotel at the southwest corner of New Main Street and Belardo Road and determined that the project was in substantial compliance with the approved Specific Plan, that the environmental review and studies prepared in conjunction with the Specific Plan adequately addressed the environmental effects of the project, that a subsequent EIR was not required because the impacts of the proposed project have been analyzed, that no new impacts have been identified, and that no new information changes the conditions under which the project will be implemented. L. On November 12, 2014, the Planning Commission at a public meeting, reviewed the Major Architectural Application Case 3.3785 and found that prior environmental assessments, including the Specific Plan EIR and Addendum adequately address any environmental impacts of the application for Case 3.3785 and that no additional environmental review was required; and conditions made by the Planning Commission have been incorporated in the project; and approved the Major Architectural Application for the project. M. No appeal of the Planning Commission decision was filed and pursuant to the provisions of the Palm Springs Municipal Code, the decision of the Planning Commission became a final decision. The City Council finds that the Marriott AC Hotel as approved pursuant to the various entitlements described in this Resolution, meets the requirements established in PSMC Chapter 5.26 for a new first class hotel and is eligible for the City's hotel operations incentive program. N. On December 17, 2014, the City Council conducted a public hearing pursuant to California Government Code Section 53083, has received a report from staff that satisfies the requirements of Government Code Section 53083, and has determined that the grant of incentives as provided in the proposed Hotel Operations Covenant is consistent with and in furtherance of the goals, purpose, and requirements of PSMC Section 5.26. O. The City Council also finds that the Hotel Operations Covenant is a method of financing in part the hotel contemplated and approved as Case 3.3785 and is therefore within the scope of the Specific Plan EIR and the Addendum and therefore no further CEQA review is required. Hotel Incentive Covenart-Kimpton NOW, THEREFORE, the City Council of the City of Palm Springs resolves: SECTION 1. The Hotel Operations Covenant with Palm Springs Promenade, LLC for the construction of a 135 room Marriott AC at the southwest corner of New Main and Belardo Road is approved. SECTION 2. The City Council finds that the Hotel Operations Covenant is within the scope of the Specific Plan EIR and the Addendum and was fully analyzed under CEQA at the time of the December 19, 2012 decision to approve the Entitlements and none of the circumstances triggering further environmental review have occurred since the adoption of the Addendum: (i) there are no substantial changes in the project requiring major revisions of the Specific Plan EIR and Addendum due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; (ii) there are no substantial changes with respect to the circumstances under which the project is being undertaken which will require major revisions of the Specific Plan EIR and Addendum due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified effects; and (iii) there is no new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the Specific Plan EIR and Addendum were certified showing that: (a) the project will have one or more significant effects not discussed in the Specific Plan EIR and Addendum; (b) significant effects previously examined will be substantially more severe than shown in the Specific Plan EIR and Addendum; (c) mitigation measures or alternatives previously found not feasible would in fact be feasible, and would substantially reduce one or more significant effects of the project, but the mitigation measures or alternatives have not been adopted; or (d) mitigation measures or alternatives considerably different from those analyzed in the Specific Plan EIR and Addendum would substantially reduce one or more significant effects on the environment, but the mitigation measures or alternatives have not been adopted. No further environmental review is required. (Public Resources Code § 21166; CEQA Guidelines § 15162.) PASSED, APPROVED, and ADOPTED this 17th day of December, 2014. David H. Ready, City Manager ATTEST Jay Thompson, City Clerk Hotel Incentive Covenmi-Kimpton The Desert sun Certificate of Publication 750 N Gene Autry Trail Palm Springs, CA 92262 760-778-4578/Fax 760-778-4731 2914 DEC 15 PM 2: 35 State Of California ss: JA' S Tk u. County of Riverside CITY cLt;t;< . Advertiser: CITY OF PALM SPRINGS/LEGALS PO BOX 2743 PALM SPRINGS CA 922632 2000503697 No 1915 I am over the ears age of 18 old, a citizen Of the United NOTICE OF PUBLIC NEARING 9 Y CITY COUNCIL States and not a party to, or have interest in this matter, I CITY OF PALM SPRINGS - - hereby certify that the attached advertisement appeared HOTEL OPERATIONS COVENANT in said newspaper set in type not smaller than non AGREEMENT ( yp pariel) APPROVAL OF ECONOMIC DEVELOPMENT in each and entire issue of said newspaper and not in any -SELENE-PALM SPRIN SUBSIDY supplement thereof On the following dales,to wit: GS HOTEL - (COLD E HOTEL) NOTICE I$HEREBY GIVEN that the City.Council Newspaper: .The Desert Sun of the City of Palm Springs California will hold a - Gubic headn -,at-its,m8ming of December 17 ' 201� The Ch'Oouncll Meeting beginsat 800 pm;In a Council Chamber at Clry Nall . 9200 E.Tahquitz Canyon way Palm Springs. _ 12/6/2019 The Purpose of this hearing Is to consider epprov- .Inge Hotel OperaHons:Covenant Agreement In ec cordance wit Chapter 526 M the Palm Springs, Municipal Code 10 pro'1 3 a Hmel Qp-nuions fn centive Progrem for the Selene Pelm 3prings'Ho- tat (Gotta.Hotel) for the operatidn and Mainte- nance of hotel acllMlea that enhance that dat ' antl If vel expetlence for visitors M Me Clty mazl _ mize the use of the Gtya Convention Ce ter,pre wtle ettraciNa an0 tleslra0to-ahOr fard I-s,Bhtl I acknowledge that I am a principal clerk of the rou mxee antl aselst the CIry fa achieving its g p p printer of goals. The hotel is located at Me ng i The Desert Sun, printed and published weekly in the City east cornerm Amatl0 Roatl and Co le Alvarado. of Palm Springs, County Of Riverside, State of California. REVIEW OF INFORMATION: The staff report and other suppportingp documents regarding tl11s The Desert Sun was adjudicated a newspaper of general matter are available for pubiic review et Cly Hell be are me hours of 8:00 a.m.and 8:00 p.m, circulation on March 24, 1988 by the Superior Court Of the MondfYNroupgh Thursdayy.Please con tact the"• County of Riverside, State of California Case No. nce of.the City Olerk'at'.(760) 32a-3204 g Y'ou wouto lik u he ule an.appolMmam to M ew 191236. these documents. COMMENTS:. At the hearing any person mey present oral or written testimony.The Gtv Councl I declare under penalty of perjury that the foregoing is true will consider all oblections'or protests ff any to the Agreement. Res ones to this roll ccee cen'he rlie P and correct. Executed on this 6ih day of December, 2014 mg be made ve lly at me ubiH Hearing an In'w R. fore we hearing Nbr written comments may be 1 del etle to Ne_City Council by letter(for mail or hantl in Palm Spring mia. delwery)1o: _ James Thompson City Clark - 3200 E.Tahquitz de m Way Palm Springs,CA g2262, challe a of the prOpaced In court m;(be lim ad la sing Only,hose Issues ralsad at the R . public hearing described In this nolice,or n wrfl wrres77undence dallvered to the Cily clerk at or wlan Or, tO the ppublic heanrM..(GovemmeM Code 8echon&5005(b)(2)) D tar Ys SlgOatur An opportunity--will be given at ealtl hearing for all Interested persons to ha heats.Qusatlons regard- `, in g this case may be duaMed tO John Raymond at (780)323-9228. IS nar"I'M 3yuda con este carte,podavpr aarr(e a` is Ciudad de'Palm Spd s YY VVuede hablar con ' 1 _ Felipe Pdmere t.lefano(750)323-8253 James Thompson,City Clerk Published:l7%G14 The Desert Sun Certificate of Publication 750 N Gene Autry Trail Palm Springs, CA 92262 _ 760-778-4578/Fax 760-778-4731 ' 2014 DEC 15 PM 2- 35 State Of California ss: J A i :-S T H(i. .. . County of Riverside CITY GLE ;ri Advertiser: CITY OF PALM SPRINGS/LEGALS PO BOX 2743 PALM SPRINGS CA 922632 2000503701 No 1g16 - -NOTICE OF PUBLIC HEARING CITY CIL I am over the age of 18 years old, a Citizen Of the United CITY OF PALCOUNM SPRINGS Slates and not a party to, or have interest in this matter. I HOTELOPERATIONS COVENANT hereby certify that the attached advertisement appeared AGREEMENT APPROVAL OF ECONOMIC DEVELOPMENT in said newspaper (set in type not smaller than non panel) SUBSIDY - in each and entire issue of said newspaper and not In any _ MARRIOTT AC HOTEL supplement thereof on the following dates,to Wit: NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs,Calgpmla will hold a public hearing9 at Its meeting.of December 17 14. The C'Ity Council meetlyg begins et B:OG Newspaper; .The Desert Sun p m.,m Me Council Chamberat Ciry Hall, at E. ahqultz Canyon Way Palm Suring,: The purpose of this hearing is to consider apppprov- . Ing a Hotel 000orations Covenam Agreemeaff Ac- 12/6/2019 cordance with GIMPler,5.26 of the Palp1 Soro9s Municipal Code to provitle a Hotel Ppalm Sns Ia cenfive Program for the Marriott AC Hotel for thee. operation and maintenance of hotel facilities that enhance the fount and travel experience for vial-' tors to'146 City maximize the use of the City,-Convention Center,provitle attractive and desires ble vishorfadINNance xperiences'and assist the C"rly in achieving hs tourism goals, `the hotel t the-catetl at.the souMweat corner of Belardo Road; and New Main Street in the Downtown Revitalize-. I acknowledge that I am a principal clerk of the printer of _lion Proem The Desert Sun, printed and published weekly in the City REVIEW OF INFORMATION. The staff reporti - and other suppom documents a eta r this rt .of Palm Springs, County of Riverside, State of California. ,at ere a4ala rliJ, cumublic review at pry Hall The Desert Sun was adjudicated a newspaper of general between the hours of Boo a.m. and 600 p.m,' Monday thou gg�ryh Tnursday:ple,se contact the yOoF-r circulation on March 24, 1988 by the Superior Court of the wale Belo schClarkdule an 760) 323-8220 rit rx` County of Riverside, State of Califomia Case No. these documents... 191236. COMMENTS At the hear an present oral or written teatim0i Vyp.The City.Coursqn:ncil WI Agreement RtyeesCpI G W this noi,I mny,to I declare under penalty of perjury that the foregoing is true made verbauy at Ne Publk'Heanng anNor in writ Ing before}ha hearing.Wnhencommerdsmay be:-' and correct. Executed on this 6th day of December, 2014 made totha I Councilbyletter(formailmaybe,' tlegvery)t0, orhand in Palm Sprin omia. James Thompson City Clerk 3200 E.Tahquitz Canyon Way Palm Springs,CA 92262 � Any challenge of the ProPoNdI in wuA may be limited to raising poly those issues raised at the public hearing tleapnbea in IN notice,or In wmfen 0orres77ontlenceaNvered toahI Ciry Clerk at or; pprior to the pputilic hearing. (Governrtrem Cade'. Section 6500g(bJ(2)j. ec nt'S Si na M,OPsPreontivmly will be given at said hearing for all ^ parsons to be heard Questions regard-, in this case may be directed to John Raymontl at Si necesha ayuda con Not cart, po�avor Ilene a Is Cludatl de Palm Spnn y pueda hablar con F Felipe Prime a telefpr(o(760)323 6253, F \ X '-Jaris Thompson City Pa611ahed:1216n4.-� -,.