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RIO Clmtv Council Staff Re art
Date: February 16, 2011 CONSENT CALENDAR
Subject: ACCEPTANCE OF OPERATIONS COVENANT FROM PACIFICA
COLONY PALMS, THE OPERATOR OF THE COLONY PALMS HOTEL,
PURSUANT TO THE CITY'S HOTEL OPERATIONS INCENTIVE
PROGRAM.
From: David H. Ready, City Manager
Prepared by: Douglas Holland, City Attorney
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 Hotel Operations Incentive Program. The operator of the
Colony Palms has applied for the Program and has agreed to be bound by the
proposed Operations Covenant.
RECOMMENDATION:
Accept the Operations Covenant between the City and Pacifica Colony Palms in
conjunction with the City's Hotel Operations Incentive Program.
STAFF ANALYSIS:
The City Council adopted Chapter 5.26 of Palm Springs Municipal Code in December,
2007 to provide a Hotel Operations Incentive Program ("Program") for the operation and
maintenance of Hotel facilities that enhance the tourist and travel experience for visitors
to the City, maximize the use of the City's Convention Center, provide attractive and
desirable visitor serving facilities and experiences, and assist the City in achieving its
tourism goals.
Pacifica Colony Palms, on behalf of its Colony Palms Hotel, has applied for the Program
and has provided satisfactory documentation certifying its recent renovation project as a
qualified renovation program under the Program. The Colony Palms Hotel is located at
572 N. Indian Canyon Drive and consists of fifty-six (56) total hotel rooms.
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City Council Staff Report
February 16, 2011 - Page 2
Colony Palms Operations Covenant
Consistent with the provisions of the Program, Pacifica Colony Palms now desires to
place restrictions upon the use and operation of the Colony Palms Hotel, in order to
ensure that the Project shall be operated and maintained continuously as a hotel
available for short-term rentals.
Pacifica Colony Palms has also agreed in the Covenant to participate in the Palm
Springs Convention Center's Committable Rooms Program and provide City with a
minimum of two 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.
FISCAL IMPACT:
An amount equal to 50% of transient occupancy tax derived from the Colony Palms
Hotel, over the annual base amount of $73,850.00, will be paid to the Pacifica Colony
Palms for ten years.
SUBMITTED:
Douglas"Holland David H. Ready
City Attorney City Manager
Attachment: Covenant Agreement
Q
FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
THE CITY OF PALM SPRINGS
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Attention: City Clerk
(Space Above This Line for Recorder's Office Use Only)
OPERATIONS COVENANT
THIS OPERATIONS COVENANT AND DECLARATION OF COVENANTS AND
RESTRICTIONS ("Agreement") is made and entered into this day of ,
, by and between the CITY OF PALM SPRINGS, a municipal corporation and
charter city ("City"), and PACIFICA COLONY PALMS, LLC, a California limited liability
company("Owner").
RECITALS :
A. The City of Palm Springs adopted Chapter 5.26 of its Municipal Code in
December, 2007 to provide a Hotel Operations Incentive Program ("Program") for the operation
and maintenance of Hotel facilities that enhance the tourist and travel experience for visitors to
the City, maximize the use of the City's Convention Center, provide attractive and desirable
visitor serving facilities and experiences, and assist the City in achieving its tourism goals.
B. Owner has applied for the Program and has provided satisfactory documentation
certifying its recent renovation project as a qualified renovation program under the Program.
The Colony Palms Hotel ("Owner's Hotel" or "Project"), generally located at 572 N. Indian
Canyon Drive, Palm Springs, California, consists of fifty-six (56) total hotel rooms on that
certain real property located in the City of Palm Springs, County of Riverside, State of
California, more particularly described in Exhibit "A" attached hereto and incorporated herein by
reference(the "Site").
C. City and Owner now desire to place restrictions upon the use and operation of the
Project, in order to ensure that the Project shall be operated continuously as a hotel available for
short-term rental for the term of this Agreement.
D. City and Owner also agree that in return for participation in the Program, Owner
shall agree to operate the Project as a hotel; participate in the Palm Springs Convention Center's
Committable Rooms Program; and provide City with a minimum of two room-nights per month
for official City use; and, City agrees to share a percentage of Transient Occupancy Tax
Increment with Owner pursuant to the Program guidelines.
E. The City finds that the approval of this Covenant is Categorically Exempt from
CEQA under Section 15301 of the California Administrative Code as the Hotel Operations
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Incentive Program applicable to Owner's Hotel applies to the operation, repair, maintenance, or
minor alteration of existing structures, facilities, mechanical equipment involving no material
expansion of use beyond that previously existing.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Participant hereby conveys to the Agency the Operating
Covenants described herein and Agency hereby agrees to provide Participant with funds as
provided under the Program and as set forth hereinafter.
ARTICLE 1
STATEMENT OF OPERATING COVENANTS
1.1. OPERATION AND USE COVENANT. Owner covenants to operate, maintain,
and use the Owner's Hotel in accordance with this Agreement. All uses conducted on the Site,
including, without limitation, all activities undertaken by the Owner pursuant to this Agreement
shall conform to requirements of this Agreement and Palm Springs Municipal Code.
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 ten (10)
years, commencing upon the date Owner first receives from the City the Owner's share of
transient occupancy tax revenues pursuant to the Program unless and until Owner's participation
in the Program is terminated prior thereto in accordance with this Agreement(the "Term").
1. Housing Uses Prohibited. None of the rooms in the Project will at any
time be utilized as a non-transient residential property including dormitory, fraternity or
sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park
without the City's prior consent which consent may be given or withheld in its sole and
absolute discretion.
2. Conversion of Project. No part of the Project will at any time be owned
by a cooperative housing corporation, nor shall the Owner take any steps in connection
with the conversion to such ownership or uses to condominiums, or to any other form of
ownership, without the prior written approval of the City Council which approval may be
given or withheld in its sole and absolute discretion.
ARTICLE 2
WARRANTIES AND COVENANTS
2.1, WARRANTIES AND COVENANTS. For the Tenn of this Agreement, the
Owner hereby represents, covenants, warrants and agrees as follows:
1. Owner has completed the City's application for the Hotel Operations
Incentive Program. The City has determined the Transient Occupancy Tax Base to be
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used to calculate the Transient Occupancy Tax Increment shall be $73,850.00, and the
Owner accepts such Transient Occupancy Tax Basc.
2. Owner hereby agrees to subscribe to the Palm Springs Convention
Center's Committable Rooms Program or any similar successor program as identified by
the City Manager without being obligated to incur any additional costs or expenses.
3. Upon City's prior request, Owner shall provide the City at no cost two
rooms for one night (or one room for two nights) other than Friday or Saturday nights
each month for use for City purposes as approved or designated by the City Manager,
provided that such use by the City shall be subject to the rooms being available at the
time of the City's request. Such accommodations shall include all services and amenities
for which the Owner would normally collect transient occupancy taxes but will not
include services and amenities that are optional to the transient and for which the
transient is not required to pay a transient occupancy taxes. City shall be responsible for
any transient occupancy taxes for any occupancy provided to City under the provisions of
this paragraph. Notwithstanding anything in this Agreement to the contrary, if the City
does not use rooms during any month, then its right to use rooms with respect to that
month shall expire at the end of that month and shall not accrue; provide, 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 2.1.4, then, the City's right to
use rooms shall not expire and may be used by the City in a subsequent month.
ARTICLE 3
MAINTENANCE
3.1. MAINTENANCE.
1. Maintenance Obligation. Owner, for itself and its successors and assigns,
hereby covenants and agrees to maintain and repair or cause to be maintained and
repaired the Site and all related on-site improvements and landscaping thereon, including,
without limitation, buildings, parking areas, lighting, signs and walls in a first class
condition and repair, free of rubbish, debris and other hazards to persons using the same,
and in accordance with all applicable laws, rules, ordinances and regulations of all
federal, state, and local bodies and agencies having jurisdiction, at Owner's sole cost and
expense. Such maintenance and repair shall include, but not be limited to, the following:
(i) sweeping and trash removal; (ii) the care and replacement of all shrubbery, plantings,
and other landscaping in a healthy condition; and (iii)the repair, replacement and
restriping of asphalt or concrete paving using the same type of material originally
installed, to the end that such paving at all times be kept in a level and smooth condition.
In addition, Owner shall be required to maintain the Property in such a manner as to
avoid the reasonable detennination 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.
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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
specifically identify the required maintenance), City may, at City's option, and as its sole
and exclusive remedy, 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 five percent (5%) per annum or the legal
maximum until paid. Any and all delinquent amounts, together with said interest, costs
and reasonable attorney's fees, shall be an obligation of Owner as well as a lien and
charge, with power of sale, upon the property interests of Owner, and the rents, issues
and profits of such property. City may bring an action at law against Owner obligated to
pay any such sums or foreclose the lien against Owner's property interests. Any such lien
may be enforced by sale by the City following recordation of a Notice of Default of Sale
given in the manner and time required by law as in the case of a deed of trust; such sale to
be conducted in accordance with the provisions of Section 2924, et seq., of the California
Civil Code, applicable to the exercise of powers of sale in mortgages and deeds of trust,
or in any other manner permitted by law.
Any monetary lien provided for herein shall be subordinate to any bona fide
mortgage or deed of trust covering an ownership interest or leasehold or subleasehold
estate in and to any Site approved by City pursuant to the Agreement, and any purchaser
at any foreclosure or trustee's sale (as well as any deed or assignment in lieu of
foreclosure or trustee's sale) under any such mortgage or deed of trust shall take title free
from any such monetary lien, but otherwise subject to the provisions hereof; provided
that, after the foreclosure of any such mortgage and/or deed of trust, all other assessments
provided for herein to the extent they relate to the expenses incurred subsequent to such
foreclosure, assessed hereunder to the purchaser at the foreclosure sale, as owner of the
subject Site after the date of such foreclosure sale, shall become a lien upon such. Site
upon recordation of a Notice of Assessment or Notice of Claim of Lien as herein
provided.
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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, sex,
marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Site, or any part thereof, nor shall Owner, or any person claiming
under or through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of guests or
vendees of the Site, or any part thereof.
ARTICLE 6
COVENANTS TO RUN WITH THE LAND
6.1. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Site to
the covenants, reservations, and restrictions set forth in this Agreement. City and Owner hereby
declare their express intent that all such covenants, reservations, and restrictions shall be deemed
covenants running with the land and shall pass to and be binding upon the Owner's successors in
title to the Site; provided, however, that on the termination of this Agreement said covenants,
reservations and restrictions shall expire. All covenants without regard to technical classification
or designation shall be binding for the benefit of the City, and such covenants shall run in favor
of the City for the entire term of this Agreement, without regard to whether the City is or remains
an owner of any land or interest therein to which such covenants relate. Each and every contract,
deed or other instrument hereafter executed covering or conveying the Site or any portion thereof
shall conclusively be held to have been executed, delivered and accepted subject to such
covenants, reservations, and restrictions, regardless of whether such covenants, reservations, and
restrictions are set forth in such contract, deed or other instrument.
City and Owner hereby declare their understanding and intent that the burden of the
covenants set forth herein touch and concern the land in that Owner's legal interest in the Site is
rendered less valuable thereby. City and Owner hereby further declare their understanding and
intent that the benefit of such covenants touch and concern the land by enhancing and increasing
the enjoyment and use of the Project by the intended beneficiaries of such covenants,
reservations, and restrictions, and by furthering the public purposes for which the City was
formed.
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Owner, in exchange for the City entering into the Agreement, hereby agrees to hold, sell,
and convey the Site subject to the terms of this Agreement. Owner also grants to the City and
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 days after request of Owner, City shall execute and provide to Owner an
estoppel certificate 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 relating in any manner to the Project excepting only any such loss, liability, claim, or
judgment arising out of the intentional wrongdoing or gross negligence of 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.
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
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Copy to: Woodruff, Spradlin & Smart, LLP
555 Anton Boulevard, Suite 1200
Costa Mesa, CA 92626
Attn: Douglas C. Holland, Esq.
Owner: Pacifica Colony Palms
c/o Pacifica Capital
700 Main Street, Suite 6A
Venice, CA 90291
Attn. Britten Shuford
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/1NTEGRATION
1. Severability. If any provision of this Agreement or portion thereof, or the
application to any person or circumstances, shall to any extent be held invalid,
inoperative, or unenforceable, the remainder of the provisions, or the application of such
provision or portion thereof to any other persons or circumstances, shall not be affected
thereby; provided, that if any material terms or provisions of these Operating Covenants
are rendered invalid, void and/or unenforceable, or due to changes in the law such terms
or provisions would materially alter the terms of the transactions contemplated herein, the
parties agree to meet and negotiate in good faith to attempt to reform these Operating
Covenants to accomplish the intent of the parties.
2. Waiver. A waiver by either party of the performance of any covenant or
condition herein shall not invalidate this Agreement nor shall it be considered a waiver of
any other covenants or conditions, nor shall the delay or forbearance by either party in
exercising any remedy or right be considered a waiver of, or an estoppel against, the later
exercise of such remedy or right.
3. Integrration. 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
Agency, City, Mortgagees, Participant and their respective successors and assigns.
7.6. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of California.
7.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one original and all of which shall be one and the
same instrument.
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RIID LIl IT[:i --.-..,.,...
TERMINATION. Owner may elect to terminate its participation in the Program and this
Agreement by providing written notice to the City (a) if the City fails to deliver to Owner any
amounts owed to Owner pursuant to the Program within thirty (30) days after Owner's written
request for payment or (b) in its sole discretion for any reason prior to the fifth (5t'') anniversary
of the date of 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
Douglas C. Holland, Esq.
City Attorney
"OWNER"
PACIFICA COLONY PALMS, LLC, a
California limited liability company
By:
Name:
Title:
By:
Name:
Title:
915229.03/0C OPERATIONS COVENAN •
370971-00003/1-28-11/dnie/lry -8- FOR HOTEL,INCENTIVE PROGRAT
ACKNOWLEDGMENT
State of California )
County of )
On , before me,
Notary Public, personally appeared (insert name of notary)
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,
Notary Public, personally appeared (insert name of notary)
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)
915229.03/0C +
OPERATIONS COVENANT 370971-00003/1-28-I1/dme/Iry _O_
FOR MITI.TNCT;NTTVF uwirn A A,
r
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)
915229,03/Oc , 42
OPI,RA'1'lONs COVENP�i�
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EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
That certain real property located in the City of Palm Springs, County of Riverside, State
of California, more particularly described as:
EXHIBIT"A" OPERATIONS COVENA 4 :.
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