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HomeMy WebLinkAbout7/30/2008 - STAFF REPORTS - 1.E. ;Of p PLM sA4 ry U N k „ C�NOAA160,n" 9<AFORN�pA COMMUNITY REDEVELOPMENT AGENCY/CITY COUNCIL STAFF REPORT DATE: JULY 30, 2008 JOINT PUBLIC HEARING SUBJECT: APPROVAL OF AMENDMENT NO. 1 TO A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RE: LOFT PARTNERS PALM SPRINGS, LLC, A DELAWARE LIMITED LIABILITY CORPORATION, FOR A 7.8+ ACRE AGENCY-OWNED PARCEL AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, MERGED REDEVELOPMENT PROJECT AREA #2, AMENDING THE SCHEDULE OF PERFORMANCE, APPROVING A LEASE IN FURTHERANCE OF CONVEYANCE AND ACCEPTING A NOTE FROM THE DEVELOPER FOR THE AMOUNT OF DEVELOPMENT FEES, FOR THE DEVELOPMENT OF A 200-ROOM MONDRIAN HOTEL, 50 CONDO- HOTEL UNITS AND 150 CONDOMINIUMS, AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE ALL DOCUMENTS RELATED TO THE AGREEMENT FROM: David H. Ready, City Manager BY: Community & Economic Development Department SUMMARY This action is to approve an Amendment to a Disposition and Development Agreement with Re: Loft Partners Palm Springs, LLC (the "Developer") for a 7.8+ acre parcel across Amado Road from the Palm Springs Convention Center for the development of a 200-room Mondrian Hotel, 50 condo-hotel units, and up to 150 condominiums. The Developer owns an adjacent 2.7 acre parcel which is part of the overall project site. The City entered an Exclusive Agreement to Negotiate with the Developer in February, 2006, and the Agency approved the DDA in December, 2007 for the project. These amendments change several of the performance milestones in the Schedule of Performance, though the start of construction date and the completion date remain unchanged. In addition, the Agency will lease the Developer the Property during the construction period, rather than requiring the Developer to close on the purchase prior to construction commencing. Finally, the Agency will cover a portion of the development fees payable to the City during the construction period, but take a note Item No. 1 • E • CRA/City Council Staff Report July 30, 2008-- Page 2 Re: Loft Partners Palm Springs, LLC DDA Amendment from the Developer for the anticipated amount. Both the transfer of title on the land and the repayment of the Fee Note shall occur within six (6) months of the issuance of a Certificate of Occupancy on the hotel project. RECOMMENDATION: 1. Adopt Resolution No. " A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AMENDMENT N0. 1 TO A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RE: LOFT PARTNERS PALM SPRINGS, LLC, A DELAWARE LIMITED LIABILITY CORPORATION, FOR A 7.8+ ACRE AGENCY-OWNED PARCEL AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, MERGED REDEVELOPMENT PROJECT AREA #2, AMENDING THE SCHEDULE OF PERFORMANCE, APPROVING A LEASE IN FURTHERANCE OF CONVEYANCE AND ACCEPTING A NOTE FROM THE DEVELOPER FOR THE AMOUNT OF DEVELOPMENT FEES, FOR THE DEVELOPMENT OF A 200-ROOM MONDRIAN HOTEL, 50 CONDO- HOTEL UNITS AND 150 CONDOMINIUMS, AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE ALL DOCUMENTS RELATED TO THE AGREEMENT" 2. Adopt Resolution No. "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, CONCURRING WITH THE AGENCY'S APPROVAL OF AMEENDMENT NO. 1 TO A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RE: LOFT PARTNERS PALM SPRINGS, LLC, FOR A 7.8+ ACRE AGENCY-OWNED PARCEL AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, MERGED REDEVELOPMENT PROJECT AREA #2, FOR THE DEVELOPMENT OF A MONDRIAN HOTEL WITH 200 ROOMS AND 50 CONDO-HOTEL UNITS, AND 150 CONDOMINIUMS" FISCAL IMPACT The change in the project milestones creates no financial impact to the Agency. The change in the structure of the land transaction shifts the payment to the Agency of the $4,675,000 price for the land until after the hotel is constructed. In the meantime, the Agency and Developer will enter a fair market lease for the property. The amount of the Fee Note is approximately $2,000,000, meaning the Agency would cover those costs for the project until after the hotel is constructed. The project's value is estimated at more than $100 million, which will provide considerable tax increment to Merged Project Area #2 of the Agency. In addition, the project will generate significant transient occupancy and sales taxes. Most importantly, the supply of First Class Hotel rooms in proximity and available to the Convention 00.0002 CRA/City Council Staff Report July 30, 2008-- Page 3 Re: Loft Partners Palm Springs, LLC DDA Amendment Center will help ensure the success of that facility, which is critical to the overall tourism economy of the City. Joh S. Ra mo�dj Director of Thomas J. Wilson, Assistant City Co muni & E6&homic Development Manager, Development Services David H. Ready, Exe irector Attachments: Agency Resolution City Resolution Amendment No. 1 to the Disposition and Development Agreement Lease in Furtherance of Conveyance o© 00C,. PALM aF w s°� �I 'aim Sp ri g s Office of the Cioy Clerk Taupn° 3200 r T:ihquiry (:mynn Wry ^ Palm Spans, Coliforrim 92262 FpRN"P Tel: (760) i'i-H'0 " F.u: (760) i22-Sii2 • Wc6 wwwpalmyprims-ca,,;Uv NOTICE OF CONTINUANCE NOTICE IS HEREBY GIVEN that the regular meeting of July 18, 2008, Public Hearing Item No. I.E. JOINT PUBLIC HEARING WITH RESPECT TO THE APPROVAL OF AMENDMENT NO. 1 TO DEVELOPMENT AGREEMENT NO. A0527C WITH RE: LOFT PARTNERS PALM SPRINGS, LLC, ON 7.8 ACRES AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, MERGED REDEVELOPMENT PROJECT AREA NO. 2, FOR THE DEVELOPMENT OF THE MONDRIAN HOTEL By a majority vote (3-0-2, Mills and Foat absent) the Public Hearing was continued to Wednesday, July 30, 2003, Council Chamber, 3200 E. Tahquitz Canyon Way, at 6:00 p.m., or as soon thereafter as possible. AFFIDAVIT OF POSTING State of California ) County of Riverside ) ss. City of Palm Springs ) I, James Thompson, Assistant Secretary/City Clerk of the Community Redevelopment Agency/City of Palm Springs, California, certify this Notice of Continuance was posted at or before 5.30 p.m., July 17, 2008, as required by established policies and procedures. mes Thompson ssistant Secretary/City Clerk NOTICE Or CONT- Mondrian DOA 07-16.08.doc Posc Office Box 2743 ° Palm Springs, California 92263-2743 0 0 0 0 2 RESOLUTION NO. A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AMENDMENT NO. 1 TO A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RE: LOFT PARTNERS PALM SPRINGS, LLC, A DELAWARE LIMITED LIABILITY CORPORATION, FOR A 7.8+ ACRE AGENCY-OWNED PARCEL AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, MERGED REDEVELOPMENT PROJECT AREA #2, AMENDING THE SCHEDULE OF PERFORMANCE, APPROVING A LEASE IN FURTHERANCE OF CONVEYANCE AND ACCEPTING A NOTE FROM THE DEVELOPER FOR THE AMOUNT OF DEVELOPMENT FEES, FOR THE DEVELOPMENT OF A 200-ROOM MONDRIAN HOTEL, 50 CONDO-HOTEL UNITS AND 150 CONDOMINIUMS, IN A FORM ACCEPTABLE TO THE AGENCY COUNSEL, AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE ALL DOCUMENTS RELATED TO THE AGREEMENT ------------------- WHEREAS, the Community Redevelopment Agency of the City of Palm Springs, California ("Agency") is constituted under the Community Redevelopment Law (California Health and Safety Code Section 33000 et. sew[ ) to carry out the purpose as the redevelopment in the City of Palm Springs ("the City"); and WHEREAS, the Re: Loft Partners Palm Springs, LLC ("Developer") has received Planned Development District approval from the City of Palm Springs to develop a First Class Hotel on a 7.8+ acre Agency owned site under the terms of an Exclusive Agreement to Negotiate; and WHEREAS, expansion of the hotel inventory in proximity to the City's Convention Center, especially in the First Class Hotel category, is an objective of the City and Agency to increase the vitality of the downtown area, the Convention Center, and the tourism industry; and WHEREAS, Section 33430 of the Community Redevelopment Law allows that an agency may, for purposes of redevelopment, sell, lease, exchange, subdivide, transfer, assign, pledge, encumber by mortgage or deed of trust, or otherwise dispose of any real or personal property or any interest in property; and aaaa�� WHEREAS, the Agency considered the staff report, and all the information, testimony and evidence provided and approved the Disposition and Development Agreement on December 19, 2007. WHEREAS, the Parties desire to amend certain terms of the Disposition and Development Agreement, and have published a Notice of Public Hearing for the meeting of July 30, 2008. NOW, THEREFORE, BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs as follows: SECTION 1. The above recitals are true and correct and incorporated herein. SECTION 2. Pursuant to the California Environmental Quality Act (CEQA), the Community Redevelopment Agency finds as follows: In connection with the approval of the Planned Development District application, a Mitigated Negative Declaration was prepared in compliance with CEQA, the State CEQA Guidelines and the City's CEQA procedures. The Community Redevelopment Agency finds that there are no changes in the effects of the proposed project or the circumstances in which it is being carried out, which require any modification of the Environmental Assessment/Mitigated Negative Declaration and finds that it adequately discusses the potential significant environmental effects of the proposed project (land use, traffic/circulation, parking, air quality, noise, aesthetics, geology/soils, water quality, drainage, public utilities, public safety, archaeological/historic resources and light and glare). The Community Redevelopment Agency further finds that the Environmental Assessment/Mitigated Negative Declaration reflects its independent judgment. a) The Developer proposes to construct a Mondrian Hotel consisting of at least 200 hotel rooms and at least 50 condo-hotel units, and no more than 150 condominiums on the Site. The Developer shall construct all of the improvements at Developer's sole cost. b) The Developer shall pay to Agency the appraised value for the Agency's parcels, the sum of Four Million Six Hundred Seventy Five Thousand Dollars ($4,675,000). 0 0 a 6 C 6 C) The Agency finds that the Developer's Project on the Site is not a public work under the applicable provisions of California Labor Code Sections 1720 et seq. SECTION 3. The Developer is required to make certain street improvements in keeping with City codes. Such offsite improvements are imperative to this project and include reconstructing streets, curbs, gutters, and sidewalks along Amado Road and Calle Alvarado; undergrounding utilities; and providing drainage around the project. This project improves a corner of Merged Project Area #2 and will increase tax increment to the Agency. SECTION 4. The Agency hereby finds and determines as follows: a) The property is currently developed as the Convention Center North Parking Lot. The Convention Center is a major community tourism asset and was completed and dedicated December 31, 1987 and contained approximately 110,000 square feet. In 1992, the City completed a 47,000 square foot expansion to the facilities. The City expanded the Convention Center once again in 2004-2005, adding another 100,000 square feet. b) The DDA advances the purposes of the Community Redevelopment Law by reversing or alleviating any serious physical, social, and economic burden on the Community which cannot reasonably be expected to be reversed or alleviated by private enterprise acting alone. The sale of the property will facilitate the development and upgrade of the property, placing the property in the hands of a first class hotel operator, in order to develop new transient occupancy and sales tax revenue, and attract additional commercial development within the City, increasing the City's tax base. c) The DDA advances the purposes of the Community Redevelopment Law by eliminating blight and promoting the health, safety and general welfare of the people of Palm Springs. SECTION 5. The proposed project is consistent with the Implementation Plan for Merged Redevelopment Project 0006'Ct7 Area #2, insofar as this project will increase tax increment and increase the City's tourist business by developing a destination resort and creating an architecturally inviting project adjacent to a significant community tourism asset. SECTION 6. Based on foregoing reasons, this Amendment No. 1 to the DDA is hereby approved and incorporated herein by this reference. SECTION 7. The Executive Director of the Agency, or his designee, is authorized to execute all necessary documents, in a form approved by the Agency Counsel. PASSED, APPROVED, AND ADOPTED THIS DAY OF JULY, 2008. STEVE POUGNET, CHAIRMAN ATTEST: James Thompson, City Clerk CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, do hereby certify that Resolution No. is a full, true and correct copy, and was adopted at a regular meeting of the Palm Springs City Council on the day of , 2008, by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk City of Palm Springs, California RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, CONCURRING WITH THE AGENCY'S APPROVAL OF AMENDMENT NO. 1 TO A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RE: LOFT PARTNERS PALM SPRINGS, LLC, FOR A 7.8+ ACRE AGENCY-OWNED PARCEL AT THE NORTHEAST CORNER OF CALLE ALVARADO AND AMADO ROAD, MERGED REDEVELOPMENT PROJECT AREA #2, FOR THE DEVELOPMENT OF A MONDRIAN HOTEL WITH 200 ROOMS AND 50 CONDO HOTEL UNITS, AND 150 CONDOMINIUMS, IN A FORM ACCEPTABLE TO THE AGENCY COUNSEL NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs that it concurs with the Community Redevelopment Agency's Approval of a Disposition and Development Agreement with Re: Loft Partners Palm Springs, LLC for a 7.8+ Acre Parcel at the Northeast Corner of Calle Alvarado and Amado Road, Merged Redevelopment Project Area #2, for the Development of a Mondrian Hotel with 200 Rooms and 50 Condo-Hotel Units, and 150 Condominiums, PASSED, APPROVED, AND ADOPTED THIS DAY OF JULY, 2008. STEVE POUGNET, CHAIRMAN ATTEST: James Thompson, City Clerk CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, do hereby certify that Resolution No. is a full, true and correct copy, and was adopted at a regular meeting of the Palm Springs City Council on the day of , 2007, by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk City of Palm Springs, California aaaa ��- Re. Loft Partners Apartmenis,Palm Springs RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: 2 Community Redevelopment Agency of the 3 City of Palm Springs P.O. Box 2743 4 Palm Springs, CA 92263 Attn: Assistant Secretary 5 6 SPACE ABOVE THIS LINE FOR RECORDERS USE 7 S FIRST AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT, 9 AGENCY FEE NOTE, AND LEASE. IN FURTHERANCE OF CONVEYANCE 10 BETWEEN 11 THE COMMUNITY REDEVELOPMENT AGENCY 12 OF THE CITY OF PALM SPRINGS 13 AND 14 RE: LOFT PARTNERS PALM SPRINGS LLC 15 16 PALM SPRINGS MERGED REDEVELOPMENT PROJECT AREA NO. 2 17 1$ This First Amendment to the Disposition and Development Agreement, 19 Promissory Note and Lease in Furtherance of Conveyance (the "First Amendment") zu is entered into effective this day of , 2008, by 21 and between the Community Redevelopment Agency of the City of Palm Springs 22 (hereafter referred to as the "AGENCY') and Re: Loft Partners Palm Springs, LLC a 23 California limited partnership (hereafter referred to as the "DEVELOPER"). 24 5 RECITALS 26 WHEREAS, the AGENCY and the DEVELOPER entered into a 27 28 Disposition and Development Agreement ("DDA") dated 2008; 1of5 Re,Loft Partners Aparlmcnts,Palm Springs 1 WHEREAS, pursuant to the DDA, DEVELOPER proposed to develop a 2 a four star Mondrian hotel, including no less than 200 hotel roams, 50 condominium- 3 hotel units, 10,000 square feet of "under-roof' meeting space, no more than 150 4 condominium units, and on-site parking which meets the requirements of the City s (the "Project") on certain identified parcels of approximately 10.3 acres located on 6 the northeast corner of Calle Alvarado and Amado Road, in the City of Palm Springs 7 including two Agency-owned parcels and one parcel acquired from a member of the s Agua Caliente Band of Cahuilla Indians, more particularly described in the attached 9 Exhibit A; 10 WHEREAS, under the terms and conditions of the DDA, the AGENCY has 11 agreed to DEVELOPER land with a value of $4,675,000 (the "Agency Parcels") and 12 provide for certain public improvements funds at a cost not to exceed $2,000,000 13 (the "Public Improvements") in construction and permanent financing; and 14 WHEREAS, the PARTIES have agreed to reset certain milestone dates 15 contained in Schedule C, Schedule of Performance, provided such changes to not 16 amend the date for the completion of the hotel project; and 17 WHEREAS, the DEVELOPER has experienced cost increases in the 1s development of the Project due to a variety of factors including an increase in the 19 cost of capital, building materials, utility connections, ADA compliance and 20 landscaping costs that were not anticipated at the start of the construction; and 21 WHEREAS, the DEVELOPER desires to lease the Agency Parcels from 22 Agency during the construction period, and agrees to make a Note to the Agency 23 (the "Fee Note") in the amount of $2,000,000 for the value of certain development 24 fees payable to the City of Palm Springs, including [list fees to be deferred]; 25 NOW, THEREFORE, in consideration of the foregoing, and the promises and 26 mutual covenants and conditions hereinafter set forth, the AGENCY and the 27 DEVELOPER do hereby agree as follows: 2s 2ors Re: Loft Partners Apaitments,Min Springs 1 1. The Schedule C, Schedule of Performance, is hereby amended as 2 shown in the Amended Schedule of Performance. 3 2. The Developer hereby agrees to an Agency Fee Note payable to the 4 Agency no later than six months from the receipt of a Certificate of 5 Occupancy for the hotel, in the amount of$2,000,000. r 3. This Agency agrees to make payments to the City of Palm Springs 7 from the proceeds of the Fee Note on behalf of the project, for the s following fees, charges, and costs of the project: 9 4. The Lease in Furtherance of Conveyance for the Agency Parcels is 10 hereby approved. 11 5. All other terms and conditions of the DDA remain unmodified and in full 12 force and effect. 13 This Agreement may be signed by the different parties hereto in counterparts, 14 each of which shall be an original but all of which together shall constitute one and 15 the same agreement. 16 17 is 19 !/ 20 21 !! 22 /! 23 24 // 25 H 26 IN WITNESS WHEREOF, the AGENCY and the DEVELOPER have executed this 27 First Amendment as of the date first above written. 2s 3or5 a��ii Re: Loll Partners Apartments,Palm Springs I ATTEST: COMMUNITY REDEVELOPMENT AGENCY 2 OF THE CITY OF PALM SPRINGS, 3 CALIFORNIA 4 5 By: By: G Assistant Secretary Chairman 7 s 9 APPROVED A5 TO FORM 10 11 12 By: 13 Agency Counsel 14 Re: Loft Partners Apartments, L.P., 15 a California limited partnership 16 By: Oasi Development, a California limited partnership, 17 Its General Partner is By: 19 Lauri Kibby, Managing Member 20 By: 21 Bill Goldberg, Member 22 23 (All signatures on this page need to be notarized) 24 25 26 27 28 4of5 000I, Re Loft Partners Aparlmcnls,Palm Springs STATE OF CALIFORNIA COUNTY OF On before me, (here insert name and title of the officer), personally appeared personally known to me (or 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. WITNESS my hand and official seal. Signature (Seal) STATE OF CALIFORNIA COUNTY OF On before me, (here insert name and title of the officer), personally appeared personally known to me (or 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. WITNESS my hand and official seal. Signature (Seal) 5ofs 000016 ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE Items Completed Time for Agreement Estimated Performance Reference Date 1. Developer executes and delivers DDA to On or before December Agency 19, 2007 2. Agency holds public hearing on DDA December 19, 2007 3. Agency approves or disapproves DDA and, if On or before December December approves, executes DDA 31, 2007 31,2007 4. Submission—Certificates of Insurance. The Within 30 days after January 31, Developer shall furnish to the Agency execution of this 2008. duplicate originals or appropriate certificates Agreement by the of bodily injury and property damage Agency. insurance policies. 5. Approval —Certificates of Insurance. Agency Within IQ days after February shall approve or disapprove Developer's receipt thereof by the 10, 2008. submission of appropriate certificates of Agency. bodily injury and property damage insurance policies. 6. Submission of Hotel Management Agreement. At least 7 days prior to (Section 402) July 23, The Developer shall submit the Hotel approval of DDA 2007 Management Agreement to the Agency Amendment No. 1 Counsel for review and approval. 7. Approval of Hotel Management Agreement. Within 30 days after (Section 402) August 23, The Agency Counsel shall approve or receipt thereof by the 2008 disapprove the Developer's Hotel Agency. Management Agreement. Items to Be Performed Time for Agreement Estimated Performance Reference Date 8. Execution of DDA Amendment. Lease in Immediately upon August 6, Furtherance of Conveyance. and Agency Fee approval of Agency Fee 2008 Note. The Developer shall execute and Note, Lease,and DDA deliver to Agency the Agency Fee Note in the, Amendment by amount of the estimated development fees to Agency. be covered by such Note; executed copies of Amendment No. 1 to DDA; and executed copies of Lease in Furtherance of Conveyance. It is understood that the Commencement Date of the Lease is covered by Item No. 19 of this Schedule. 9. Submission—Evidence of Equity Capital and Within 15 days after (Section 220) August 15, Mortgage Financing. The Developer shall execution of this 2008 submit to the Agency Counsel for review and Agreement by the approval evidence of equity capital and Agency and the financing necessary for the development of Developer. the Site. 10. Recordation of Agency Fee Note, Agency Within 15 days of August 15, shall cause Agency Fee Note and Deed of approval of 2008 Trust to be recorded with the Riverside Amendment No. 1 to County Recorder. Such Agency Note shall be the DDA by the subordinated to the Construction Financing Agency. and Permanent Financing and Agency may record Subordination Agreements from time to time. 11. Approval—Evidence of Equity Capital and Within 30 days after (Section 220) September Fuiazicing. The Agency shall approve or receipt of executed 15,2008 disapprove the Developer's evidence of equity Agency Fee Note by capital and financing. the Agency. 12. Submission—Amended and Final Planned Within 120 days after (Section November _Development District Annlication/Amended approval of 303). 30, 2008 Tentative Tract Mom. Developer shall prepare Amendment No. 1 by and submit to the City Planning and the Agency. Engineering Departments for review and approval an Amended and Final PDD and Amended Tentative Map application and related documents containing the overall plan for development of the Site. The City process includes the Architectural Advisory Committee, Planning Commission, and City Council approval. Such Amended and Final PDD/Amended Map application shall include final Site Plan, Architectural Plans, Landscaping and Grading Plans,Lighting Plans, and other plans necessary to approve the Planned Development District. 13. Approval—Amended and Final Planned Within 60 days after (Section 303) January 'al, Development District and Amended Tentative receipt thereof by the 2009 Tract May The City shall approve or City. disapprove the Developer's Amended and Final PDD/Amended Tentative Tract Map submissions and related documents. 14. Submission—Hotel Construction(BuildinO Within 270 days after (Section 304) October 31, Plans and Grading Plan/Final Subdivision approval by the City of 2009 Man. The Developer shall prepare and the Final Planned submit to the City for review and approval Development District Final Hotel Building Plans and Grading Plan and Final Map. for the site and submit Final Map for approval. 15. Title Report. Agency delivers to Developer Within 30 days after June 30, Preliminary Title Report. the approval of 2009 Amended and Final Planned Development District. 16. Approval or DisaDproval of Title Excc tions. Within 15 days after July 15, Developer approves or disapproves title delivery of Preliminary 2009 exceptions. Title Report to Developer. 17. Notice to Developer on Title Exceptions. Within 15 days after July 31, Agency delivers notice to Developer as to receipt of Developer's 2009 whether it will cure disapproved exceptions notice 18. A roval—Hotel Construction(Building) Within 60 days after (Section 305) Plans and Grading Plan. The City shall receipt thereof by the approve or disapprove Final hotel Building City. Plans and Grading Plans and Final Subdivision Map. 19, Commencement of Lease in Furtherance of Upon receipt of City November Conveyance. The Coimmencement Date of development permits 30, 2009 Lease shall be upon receipt of all Building, by Developer. Grading and other development permits from the City of Palm Springs. 20, Land Use Approvals and Permits. The Within 30 days after all (Section 3l1) December Developer shall furnish evidence that all City permits are 31, 2009 discretionary land use or regulatory approvals received by Developer. and permits for the development of the Site, including approvals of final subdivision map and health department approvals,have been obtained. 21. Commencement of Constriction of On a schedule that will (Section 307) January 1, Developer's Improvements. Within 60 days coordinate with the 2010 after receipt of development permits by the Developer's Developer,construction shall commence on constriction schedule. the improvements to be constructed on the Site. 22, Completion of Construction of Developer's Within the specified (Section 307) June 1, Improvements The Developer shall complete months after 2011 constriction of the improvements to be commencement thereof constricted on the Site. by the Developer Hotel 1 S months after Condo/Hotel Units commencement of construction _18_ months after commencement of construction 23. Issuance—Certificate of Completion. The Promptly after (Section 323) June 15, Agency shall famish the Developer with a completion of all 2011 Certificate of Completion on the Hotel constriction required to Development. be completed by the Developer on the site 000020 and upon written request thereof by the Developer. 24. Opening of Escrow. The Agency shall open Within 180 days after (Section 202) December an escrow for conveyance of the Conveyance the City issues a 1, 201 l Parcel to the Developer. Certificate of Occupancy for the I•iotel, 25. Deposit of Purchase Price and Other Re uired No more than 15 days (Section 212) December Sums. The Developer shall deposit the after the Opening of 15, 2011 Purchase Price of the Agency Parcel, the Escrow. balance due on the Agency tree Note, and other required sums into escrow. 26. Deposit of Grant Deed. The Agency shall At least 15 days prior to (Section 211) December deposit the grand deed for the Agency Parcel close of escrow. 15, 2011 into escrow. 27. Escrow Fees and Charges. Escrow Agent One (1)week prior to December gives notice of fees, charges, and costs to Closing. 20, 2011 close Escrow. 28. Close of Escrow,recordation and delivery of As soon as possible December documents. The Agency shall convey fee title upon Receipt of All 31, 2011 to the Agency Parcel to the Developer, and documents required to the Developer shall accept such conveyance. close. (See below for The Escrow Agent shall cause the Grant Deed additional documents.) and Deed of Trust to be recorded with the Riverside County Recorder. The Lease in Furtherance of Conveyance shall be terminated and the Agency shall record a Substitution of Trustee and Full Reconveyance to release the Agency Fee Note and Deed of Trust from title. It is understood that the foregoing Schedule of Performance is subject to all of the terns and conditions set forth in the text of the Agreement. While this summary of the items of performance in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement as it pertains to milestone dates, this Schedule shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by both Developer and Agency. A failure by either party to enforce a breach of any particular time provision shall not be construed as a waiver of any other time provision. The Executive Director of Agency shall bave the authority to approve extensions of time without Agency Board action not to exceed a cumulative total of 180 days as provided in Section 903. DOCUMENTS TO BE DEPOSITED INTO ESCROW Deposits into Escrow by Agency: Executed Deed On or before 1:00 p.m. on the last 406.3 business day preceding the Closing Date Estoppel Certificate On or before 1:00 p.m. on the last 406.3 business day preceding the Closing Date Payment of Agency's share of Escrow On or before 1:00 p.m. on the last 406.3; 410 Costs. business day preceding the Closing Date Taxpayer ID Certificate Prior to Closing Date 406.3 FIRPTA Certificate Within 15 days after opening 406.1 Deposits into Escrow by Developer: Estoppel Certificate On or before 1:00 p.m. on the last 406.4 business date preceding the Closing Date Deed of Trust and Promissory Note on On or before 1:00 p.m, on the last 406A Phase 11 Parcel business date preceding the Closing Date Payment of Developer's Share of Escrow On or before 1:00 p.m. on the last 406.4; 410 Costs business date preceding the Closing Date Certificates evidencing insurance Prior to closing, site preparation 507 or construction Agency or Developer, as case may be,may Within 30 days after date 411.2; 801 cure any condition to closing disapproved established therefor, or date of or waived; or may cure any default breach, as the case may be Close of Escrow for the Site; recordation As soon as possible, but not later 405; 406 and delivery of documents than r Agency issues Certificate of Completion Within 30 days of written request 514 for the Site. by Developer, and Developer's satisfactory completion of all improvements on the Site. LEASE IN FURTHERANCE OF CONVEYANCE BETWEEN THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS AND RE: LOFT PARTNERS PALM SPRINGS LLC PALM SPRINGS MERGED REDEVELOPMENT PROJECT AREA NO. 2 THIS LEASE is entered into on this _ 301h day of July, 2008 and made effective on the date described in Section below ("Term") effective on the cotmnencement date here-in defined, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS ("Landlord"), a California public body and government, and RE: LOFT PARTNERS PALM SPRINGS, LLC ("Lessee"), a Delaware Limited Liability Company. Landlord and Tenant are referenced in the aggregate as the "Parties" and sometimes, when a provision applies to each of them individually, as a"Party." Recitals A. Landlord is the owner of certain real property generally located at the northeast corner of Amado Road and Calle Alvarado (APN: 508 034 012, 508 034 013, 508 034 014) in the City of Palm Springs, County of Riverside, State of California ("Agency Parcel") and as more specifically described on Exhibit "A"to this Lease. B. The Parties entered into a Disposition and Development Agreement approved tby the Agency on December 19, , 2007 ("Original DDA") for the purpose of effectuating the Amended and Restated Redevelopment Plan (the "Redevelopment Plan") for the Palm Springs Merged Redevelopment Project Area No. 2 (the "Project") and adopted plans and policies of the City of Palm Springs ("City"), including the restoration and rehabilitation of private and public properties, elimination of blight, the renewal and enhancement of a vibrant commercial and tourist core near the City's downtown area, and ensuring the availability of conference and hotel uses near the Convention Center by providing for the disposition and development of the Site, an area of land that includes the Agency Parcel, that is included within the boundaries of the Project (the "Project Area") with a hotel and condominium project (the "Development"). C. Concurrently with this Lease, the Parties have entered into Amendment No. 1 to the DDA ("Amendment"). The Original DDA provided that the Lessee as the Developer of the Site, would pay to the Agency the full purchase price of the Agency Parcel in two installments, one at the time the development permits for the Development of the Hotel Site were issued and the second payment, for the Phase 11 parcel, twelve (12) months after completion of the hotel construction. The Amendment provides that the Agency convey fee title and the Developer pay the full purchase price for the Agency Parcel and the balance due on the Agency Fee Note, and any other scans owed at a date six (6) months after the Certificate of Occupancy for the Hotel is issued by the City of Palm Springs. Upon the closing of the sale o f the Agency Parcel, this Lease shall be terminated and the Agency shall cause to be recorded the Grant Deed transferring title and a Substitution of Trustee and Full Reconveyance to release the Agency Fee Note and Deed of Trust from title. In approving the Amendment, the Agency found that a Lease in Furtherance of Conveyance subject to the terms provided in this Lease constitutes a market transaction that provides the Agency with reasonable income from its property pending completion of the sale of the Agency Parcel to Lessee. The Agency fiirther found that the deferral of the purchase of the Agency Parcel subject to the terms of this Lease does not constitute a subsidy or contribution towards the development of the Development and is a market rate alternative financing arrangement that is fair to both Parties and consistent with the goals and policies of the Redevelopment Plan, D. The Agency has agreed to grant a lease in furtherance of and pending conveyance by deed .for the Agency Parcel to the Lessee and the Lessee has agreed to enter into this Lease. NOW, THEREFORE, in consideration of the terms and conditions set forth herein, Landlord and Tenant agree as follows: Agreement 1. Agency Parcel. a. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Agency Parcel. b. Tenant accepts the Agency Parcel in an "As Is" condition without any representations or warranties being made by Landlord. Landlord expressly disclaims any warranty or representation with regard to the condition, safety or security of the Agency Parcel or the suitability of the Agency Parcel for Tenant's intended use. 2. Use of Agency Parcel. a. Generally. Tenant shall use and occupy the Agency Parcel solely for the proposes of developing and operating the Development. b. Compliance with Laws. Notwithstanding the foregoing Section 2(a), Tenant shall not cause or permit the Agency Parcel to be used in any way that: (i) constitutes a violation of any law, ordinance, or governmental regulation or order regulating the manner of use by Tenant of the Agency Parcel (including, without limitation, any law ordinance, regulation or order relating to Hazardous Materials), (ii) constitutes a nuisance or waste, or (m) increases the cost of any insurance relating to the Agency Parcel paid by Landlord. Tenant shall obtain, at its sole cost and expense, all governmental permits, licenses and authorizations of whatever nature required by any governmental agencies having jurisdiction over Tenant's use of the Agency Parcel. Further, Tenant, at its sole cost, will comply with all applicable governmental laws and regulations in connection with its operations within the City of Palm Springs. Tenant will also comply with any and all reasonable rules and regulations promulgated by Landlord. c. Hazardous Materials. Tenant shall not cause or permit any Hazardous Materials to be generated, produced, brought upon, used, stored, treated or disposed of in or 598665 1 000024 about the Agency Parcel by Tenant, its agents, employees, contractors, sublessees or invitees in violation of any applicable laws, codes, ordinances or regulations governing the same. As used in this Lease, the term "Hazardous Materials" means any flammable items, explosives, radioactive materials, hazardous or toxic substances, material or waste or related materials, including any substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials" or "toxic substances" now or subsequently regulated under any applicable federal, state or local laws or regulations, including without limitation petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia compormds and other chemical products, asbestos, PCBs and similar compounds, and including any different products and materials which arc subsequently found to have adverse effects on the environment or the health and safety of persons. T'emi The term of this Lease shall be for Thirty (30) fears (the "Term"). The Commencement Date of Lease shall be upon receipt of all Building, Grading and other development permits from the City of Palm Springs(the "Commencement Date"). 2. Vacating the Premises; Tenant shall provide Landlord at least thirty (30) days notice prior to vacating the Agency Parcel. Possession of the Agency Parcel, including all structures, building, and/or improvements thereon, shall be surrendered to Landlord immediately upon surrender or termination of this Lease. 3. Taxes. a. Real Property Taxes. Should the property interest conveyed by this Lease be subject to real property taxation and/or assessments, Tenant shall pay, before delinquency, all lawful taxes, assessments, fees or charges which may be levied by the State, County, City, or any other tax or assessment-levying body upon the Agency Parcel and any improvements thereon- b. Personal Property Taxes. Tenant shall pay all taxes charged against trade Fixtures, ffrrnishings, equipment or any other personal property belonging to Tenant. Tenant shall use commercially reasonable efforts to have personal property taxed separately from the Agency Parcel. If any of Tenant's personal property is taxed with the Agency Parcel and paid by Landlord, Tenant shall reimburse Landlord the taxes for the personal property within Fifteen (15) days after Tenant receives a written statement from Landlord fox such personal property taxes, together with reasonable evidence showing the amount of personal property taxes paid by Landlord. A. Utilities. Tenant shall pay, directly to the appropriate supplier, the cost of all natural gas, heat, light, power, sewer service, telephone, water, refuse disposal and all other utilities and services used at the Agency Parcel, or supplied to the Agency Parcel at Tenant's request. 5. Rent. a. Tenant shall commence paying rent the first calendar day of the month following the Commencement Date. b. Tenant shall pay the Landlord the sum of Eleven Thousand, Six Hundred and Eighty-Eight Dollars (S11,688.00) per month for the first thirty-six (36) months following Stltl665.1 00025 the Commencement Date or the sixth (6111) month anniversary of the issuance of a certificate of occupancy for the hotel portion of the Development, whichever event occurs first. Commencing on the 37"' month following the Commencement Date or upon the sixth month anniversary of the issuance of the certificate of occupancy for the hotel portion of the Development, Tenant shall pay the Landlord the sum of Thirty Five Thousand Dollars per month, the guaranteed minimum monthly rent ("GMMR"), subject to periodic adjustment as provided in subsection (c) of this Section 6. C. Commencing with the fifth annual anniversary of the Commencement Date, and every five (5) years thereafter, the GMMR shall be adjusted upward by the same percentage as the cost of living index has changed during the said five (5) year period with a maximum 15% increase for any adjustment period, provided that in no event shall the adjusted minitnum rental be less than the GMMR as last determined pursuant to the provisions of this subsection. The cost of living index to be used is that reflected by the Revised Consumer Price Index for Urban Wage Earners and Clerical Workers, all items, Los Angeles -Anaheim - Riverside, California (1982-84 = 100) published by the Bureau of Labor Statistics of the U.S. Deparhnent of Labor. If, for any reason whatsoever, there is any change in the method of calculation or formulation of said price index, or if that index shall no longer be published, then another index generally recognized as authoritative shall be substituted by agreement. In any event, the base used by any new index shall be reconciled to the 1982-84 Index.. d. Rent for any period which is less than one month shall be a prorated portion of the monthly installment based upon a thirty day month. Rent shall be paid to Landlord without deduction or offset, in lawful money of the United States of America and at such place as Landlord may from time to time designate in writing. 6. Late Charges. Tenant acknowledges that late payment of rent or other sums due will cause Landlord to incur costs, the exact amount of which will be difficult to ascertain. Accordingly, if any installment of rent or any other sum due form the Tenant is not received by Landlord within five (5) days of the date on which it is due, Tenant shall pay to Landlord as additional rent the lesser of the maximum amount allowed by law, or five percent (5%) of such overdue amount. In addition, Tenant shall pay Landlord any attorneys' fees or notice/process service fees incurred by Landlord by reason of Tenant's failure to pay rent or other charges when due hereunder. In addition, all unpaid amounts shall accrue interest from the date due the lesser of the maximum rate allowed by law, or 10%per aamum until paid. 7. Improvements, Maintenance. and Repairs. The Parties agree that the Leased Premises shall be developed, used, and maintained in compliance with the terms of the DDA. 8. Indemnity. As a material part of the consideration to Landlord, Tenant shall indemnify, defend (with counsel acceptable to Landlord) and hold Landlord harmless from any loss, damage, injury, accident, casualty, liability, claim, cost or expense (including, but not limited to, reasonable attorneys' fees) of any kind or character to any person or property (collectively, "Claims") arising from or related to Tenant's use of the Agency Parcel before, during, and after the Tenn, the conduct of Tenant's business and/or any act or omission of Tenant, its employees, agents, contractors or invitees. Tenant shall not be liable for such Claims to the extent and in the proportion that the same is ultimately determined to be attributable to the sole gross negligence or intentional misconduct of Landlord. All indemnity obligations under 5666651 this Section shall survive the expiration or termination of this Lease. Landlord shall not be liable for any loss or theft of any property on the Agency Parcel. 9. Risk of Loss. Landlord shall not be liable for injury to any person or for any damage to personal property sustained by Tenant or others that are caused by any defects to the Agency Parcel, or any service facilities or due to the happening of accident, including any damage caused by water, wind storm, or by any gas, steam, electrical wiring, sprinkler system, plumbing, heating or conditioning apparatus; or acts or omissions of co-tenants or other occupants of the Agency Parcel, or hereafter occurring therein or due to any part or appurtenance thereof, including any and all furniture, fixtures, and equipment of Tenant becoming out of repair, or from any act or omission of Tenant. 10. Default and Remedies- Holding Over• and Relocation Assistance. a. Events of Default. Should Tenant be in default with respect to any monetary obligation pursuant to the tenns of this Lease for a period of(30 days) days, or should Tenant vacate or abandon the ,Agency Parcel then Landlord may treat any such event as a material breach of this Lease and in addition to any or all other rights or remedies of Landlord provided by law, Landlord shall have the tight, at Landlord's option, without further notice or demand of any kind to Tenant, or any other person, to declare the Term ended and to re-enter and take possession of the Agency Parcel and remove all persons therefrom. Upon event of default, Landlord will provide notice of intent to call a default and Lessee shall have 15 days to cure default. b. Termination of Lease. Should Landlord elect to terminate this Lease pursuant to Section 10.a. of this Lease, "Events of Default," Landlord may recover from Tenant all damages caused as a result of Tenant's default- C. Holdin Over. If Tenant shall hold oven the Agency Parcel after expiration of the Term or any extension thereof, such holding over shall be construed to be only a tenancy from month-to-month subject to all of the covenants, conditions and obligations contained in this Lease with a monthly rent as set forth herein and provided, however, that nothing in this paragraph shall be construed to give Tenant any rights to so hold over or to continue in possession oIthe Agency Parcel without the consent of Landlord. d. No Relocation Assistance. Tenant acknowledges and agrees that Landlord has no obligation to Tenant under the California Relocation Assistance and Real Property Acquisition statutes and guidelines. If any such obligation is owed, the consideration provided herein by Landlord to Tenant, including, but not limited to, the maintenance obligations assumed by Landlord and the improvements made by the Landlord to the Agency Parcel, constitutes sufficient and adequate consideration for any such obligations owed under California Relocation Assistance and Real Property Acquisition statutes and guidelines. Tenant hereby waives and forever releases Landlord, including its successors, officers, employees, attorneys, agents, representatives and anyone else acting on Landlord's behalf, oC and from any and all claims, demands, actions or causes of action, obligations, liabilities, or claims for further compensation, known or unknown, based upon or relating to the facts or allegations and circumstances arising 388665.1 G O O G 2 j from Landlord's prior acquisition of the Property. By such release, Landlord expressly waives its rights, if any, under California Civil Code Section 1542 which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." Tenant's Initials 11. Waiver. Any waiver by Landlord of any default or breach of any covenant, condition, term, and agreement contained in this Lease, shall not be construed to be a waiver of any subsequent or other default or breach. The rights, powers, options, privileges, and remedies available to Landlord under this Lease shall be cumulative. 12. Attorneys' Fees. Should either party to this Lease have to resort to litigation to enforce any provision of this Lease, the prevailing party shall be entitled to its attomeys' fees and reasonable costs incurred in litigating any dispute. 13. Inspection. Landlord and its representatives, employees, agents or independent contractors may enter and inspect the Agency Parcel or any portion of the Agency Parcel or any improvements on the Agency Parcel at any time during business hours and at other times after Landlord has provided Tenant with 48 hours advanced notice for any purpose Landlord reasonably deems necessary. 14. Prohibition on Assigmnent and Subletting. Tenant shall have the same rights as prescribed under Section_of the DDA to assign, sublet or otherwise transfer its interest under this Lease. 15. Notices. All notices, demands and requests which may be given or which are required to be given by any party to this Agreement must be personally delivered or sent first class U.S. mail to the following: To Landlord: The Community Redevelopment Agency of the City of Palm Springs 3200 Tahquitz Canyon Way Palm Springs, CA 92262 Attn: Executive Director To Tenant: Re: Loft Partners 16. No Principal/Agent Relationship. Nothing contained in this Lease shall be construed as creating the relationship of principal and agent, or of partnership or joint venture between Landlord and Tenant. 599665.1 000328 17. Complete Agreement. This Lease constitutes the entire agreement between Landlord and Tenant pertaining to the subject matter of this Lease and supersedes all prior and contemporaneous agreements, representations and understandings of Landlord and Tenant, oral or written. IS- Modification. No supplement, modification, amendment or change in any terms of this Lease shall be binding on the Parties unless in writing and executed by Tenant and Landlord. 19. Applicable Law and Venue. This Lease shall be construed and enforced in accordance with, and governed by, the laws of the State of California. The parties consent to the jurisdiction of the California courts with venue in Riverside County. 20. Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 21. Miscellaneous. The headings o f this Lease are for purposes of reference only and shall not limit or define the meaning of any provision. The above Recitals are an integral part of this Lease. IN WITNESS WHEREOF, Landlord and Tenant have executed this instrument as of the Effective Date. 58R665J Q HM LANDLORD TENANT By: By: By: By: ATTEST: APPROVED AS TO FORM: 5886651 1 P fti Ck (7 AGENCY FEE NOTE $2,000,000 Palm Springs, California FOR VALUE RECEIVED, RE: LOFT PARTNERS PALM SPRINGS, LLC, a California limited partnership ("Maker"), promises to pay the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Holder") at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92262, or at such other address as Holder may direct from time to tirne in writing, the stun of One Million Five Hundred Thousand Dollars ($2,000,000.00) (the "Note Amount"), together with interest thereon at the rate set forth herein. All sums payable hereunder shall be payable in lawful money of the United States of America. This Promissory Note ("Agency Fee Note") is made in connection with the provision by the Holder of funds equal to the Agency Fee Note pursuant to that certain Disposition and Development Agreement by and among Maker and Holder, dated as of 2008 (as amended the "Agreement"). 1. Interest Rate. Simple interest shall accrue on the Note Amount from the date of disbursement at the rate of three percent (3%) per aimum, or as determined necessary to maintain a market rate loan, but in no event greater than the maximum interest rate permitted by law. 2. Terri. The term of this Agency Fee Note shall be for thirty-six months, but shall expire on the date One Hundred Eighty (180) Days after the Certificate of Completion on the Mondrian Hotel is received. 3. Repavrnent. The principal amount of the Note Amount, plus all interest then accrued upon the Note Amount, shall be immediately due and payable upon (i) any default of the Agreement,which is not cured within the time set forth in Section of the Agreement. 4. Prepayment of Agency Fee Note Amount. Maker may prepay to Holder the full Note Amount, together with all accrued and unpaid interest thereon at the rate set forth in Section 1 hereof, at any time prior to the due date of the Note Amount without penalty. 5. Application of Payments. Each payment hereunder shall be credited first to interest then accrued and the remainder, if any, to principal. Interest shall cease to accrue upon principal so credited. 6. Security, This Agency Fee Note is secured by a deed of trust by and between Maker, as trustor and Holder, as beneficiary (the "Deed of Trust" Attachment No. _ to the Agreement). 7. Holder May Assi Rr. Holder may, at its option, assign its right to receive payment under this Agency Fee Note without necessity of obtaining the consent of the Maker. 8, Maker Assignment Prohibited. In no event shall Maker assign or transfer any portion of this Agency Fee Note without the prior express written consent of the Holder, which consent may be given or withheld in the Holder's sole discretion. 25035v4 1 9. Attorneys' Tees and Costs. In the event that any action is instituted with respect to this Agency Tee Note, the non-prevailing party promises to pay such sums as a court may fix for court costs and reasonable attorneys' fees. Holder's right to such Fees shall not be limited to or by its representation by staff counsel, and such representation shall be valued at customary and reasonable rates for private sector legal services. 10. Non-Waiver. Failure or delay in giving any notice required hereunder shall not constitute a waiver of any default or late payment, nor shall it change the time for any default or payment. 11. Successors Bound. This Agency Fee Note shall be binding upon the parties hereto and their respective heirs, successors and assigns. 12. Terms. Any terns not separately defined herein shall have the same meanings as set forth in the Agreement. 13. Non-Recourse. Notwithstanding anything to the contrary herein contained, (i) the liability of Maker shall be limited to its interest in the Site and any rents, issues, and profits arising from the Site and, in addition, with respect to any obligation to hold and apply insurance proceeds, proceeds of condemnation or other monies hereunder, any such monies received by it to the extent not so applied in accordance with the terms of this Note; (ii) no other assets of Maker shall be affected by or subject to being applied to the satisfaction of any liability which Maker may have to Holder or to another person by reason of this Note; and (iii) any judgment, order, decree or other award in favor of Holder shall be collectible only out of, or enforceable in accordance with, the terms of this Nate by termination or other extinguishment of Maker's interest in the Site. Notwithstanding the foregoing, it is expressly understood and agreed that the aforesaid limitation on liability shall in no way restrict or abridge Maker's continued personal liability for: (A) fraud or willful or grossly negligent misrepresentation made by Maker in connection with this Note or any of the Agency Agreements; (B) misapplication of(a) proceeds of insurance and condemnation or (b) rent received by Maker under rental agreements entered into for any portion of the Site after default of the Note; (C) the retention by Maker of all advance rentals and security deposits of tenants not refunded to or forfeited by such tenants; or (D) the indemnification undertakings of Maker under the Agency Agreements. 25035v4 2 600022 000v2 "MAKER" RE: LOFT PARTNERS PALM SPRINGS, LLC a California limited partnership BY: Oasi Development Its General Partner Date Name: Title: "HOLDER" COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic Date Executive Director ATTEST: Agency Secretary Agency Counsel 25035v4 0 0 0 G v 3 ATTACFIMENT NO. 7 RE: LOFT PARTNERS PALM SPRINGS, LLC DEED OF TRUST [On Following Pages] 25D35v4 O00Ocr�y ! RTJDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is executed this day of , 2008, by RE: LOFT PARTNERS PALM SPRINGS, LLC, a California limited partnership, herein "Trustor," in favor of the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic, herein the "Beneficiary,") the same parties to that certain form Deed of Trust With Assignment of Rents, of even date hereto, to which this Rider is attached. This Rider is made a part of and is incorporated into said Deed of Trust. This Rider shall supersede any conflicting term or provision of the form Deed of Trust to which it is attached. Reference is made to the following agreements and documents: (i) Agency Fee Note by and between Trustor and Beneficiary, dated on or about the date set forth above, the repayment of which by Trustor is secured by this Deed of Trust (the "Agency Fee Note"); (ii) Disposition and Development Agreement by and between Truster, and Beneficiary, dated , 2008, providing for Trustor's development of the Property; and (iii) Agreement Containing Covenants, dated 2003, by and between Truster and Beneficiary, providing for the use, operation, and maintenance of the Property("Agreement Containing Covenants"). The parties hereto agree: 1. Pro pert - The estate subject to this Deed of Trust is Trustor's fee estate in the real property legally described in the Deed of Trust (the "Property"). In addition, Trustor grants to beneficiary a security interest in all of Trustor's rights, title, and interest in and to the following: (a) All present and future inventory and equipment, as those terms are defined in the California Commercial Code, and all other present and fixture personal property of any kind or nature whatsoever, now or hereafter located at, upon or about the Property or used or to be used in connection with or relating or arising with respect to the Property and/or the use thereof or any improvements thereto, including without limitation all present and fixture furniture, furnishings, Fixtures, goods, tools, machinery, plumbing and plumbing material and supplies, concrete, lumber, hardware, electrical wiring and electrical material and supplies, heating and air conditioning material and supplies, roofing material and supplies, window material and supplies, doors, paint, drywall, insulation, cabinets, ceramic material and supplies, flooring, carpeting, appliances, fencing, landscaping and all other materials, supplies and property of every kind and nature. (b) All present and future accounts, general intangibles, chattel paper, contract rights, deposit accounts, instruments and documents as those terms are defined in the California Commercial Code, now or hereafter relating or arising with respect to the Property and/or the use thereof or any improvements thereto, including without limitation: (i) all rights to the payment of money, including escrow proceeds arising out of the sale or other disposition of all or any portion of the Property; (ii) all architectural, engineering, design and other plans, specifications and drawings relating to the development of the Property and/or any construction thereon; (iii) all use pennits, occupancy permits, construction and building permits, and all other permits and approvals required by any governmental or quasi-governmental authority in connection with the development, construction, use, occupancy or operation of the Property; (iv) any and all 25035v4 agreements relating to the development, construction, use, occupancy and/or operation of the Property between Trustor and any contractor, subcontractor, project manager or supervisor, architect, engineer, laborer or supplier of materials; (v) all lease, rental or occupancy agreements and payments received thereunder; (vi) all names under which the Property is now or hereafter known and all rights to carry on business under any such names or any variant thereof; (vii) all trademarks relating to the Property and/or the development, construction, use, occupancy or operation thereof; (viii) all goodwill relating to the Property and/or the development, construction, use, occupancy or operation thereof; (ix) all insurance proceeds and condemnation awards arising out of or incidental to the ownership, development, construction, use, occupancy or operation of the Property; (x) all reserves, deferred payments, deposits, refunds, cost savings, bonds, insurance policies and payments of any kind relating to the Property; (xi) all loan commitments issued to Trustor in connection with any sale or financing of the Property; (xii) all water stock, if any, relating to any Property and all shares of stock or other evidence of ownership of any part of of interest in any Property that is owned by Trustor in common with others; and(xiii) all supplements, modifications and amendments to the foregoing. (c) All fixtures located upon or within the Property or now or bereafter attached to, installed in, or used or intended for use in connection with the Property, including without limitation any and all partitions, generators, screens, awnings, boilers, furnaces, pipes, plumbing, elevators, cleaning, call and sprinkler systems, fire extinguishing apparatus and equipment, water tanks, heating ventilating, air conditioning and air cooling equipment, and gas and electric machinery and equipment. (d) All present and future accessories, additions, attachments, replacements and substitutions of or to any or all of the foregoing- (e) All cash and noncasb proceeds and products of any and all of the foregoing, including without limitation all monies, deposit accounts, insurance proceeds and other tangible or intangible property received upon a sale or other disposition of any of the foregoing. 2. Obligations Secured. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): (a) Payment to Beneficiary of all indebtedness at any time owing under the terms of the Agency Pee Note; (b) Payment and perfonxtance of all obligations of Trustor under this Deed of Trust, the Disposition and Development Agreement, and the Agreement Containing Covenants; (c) Payment and performance of all future advances and other obligations of Trustor or any other person, firm, or entity with the approval of Trustor, may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and (d) All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced. 25035v4 3. Obligations. The term "obligations" is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured Obligations. 4. Incorporation. All terms of the Agency Fee Note and the Secured Obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of all of the foregoing documents. 5. Mortgagee-in-Possession. Neither the assignment of rents set forth in the Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise liable in any manner with respect to the Property, unless Beneficiary, in person or by agent, asstunes actual possession thereof. Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement with Trustor, or the entering into possession of the Property by such receiver, be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise liable in any manner with respect to the Property. 6. No Cure. In the event Beneficiary collects and receives any rents under the Deed of Trust upon any event of default hereof, such collection or receipt shall in no way constitute a curing of such default. 7. Opportunity to Cure. Truster's failure or delay to perform any Tenn or provision of this Deed of Trust constitutes a default under this Deed of Trust; however, Trustor shall not be deemed to be in default if(i) Trustor cures, corrects, or remedies such default within thirty (30) days after receipt of a notice specifying such failure or delay, or (ii) for such defaults that cannot reasonably be cured, corrected, or remedied within thirty (30) days, if Trustor commences to cure, correct, or remedy such failure or delay within thirty (30) days after receipt of a written notice specifying such failure or delay, and diligently prosecutes such cure, correction or remedy to completion. Beneficiary shall give written notice of default to Trustor, specifying the default complained of by Trustor. Copies of any notice of default given to Trustor shall also be delivered to any permitted lender and the limited partner of Trustor, if they have requested in writing to receive such notice. Beneficiary may not institute proceedings against Trustor until thirty(30) days after giving such notice or such longer period of time as may be provided herein. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default. Except as otherwise expressly provided in this Deed of Trust, any failure or delay in giving such notice or in asserting any of its rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive either party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 25035v4 00002 Q 00 7 u In the event of any inconsistency in the terms of this Rider and the provisions set forth in the standard deed of trust recorded in the Recorder's Office of the County of Riverside, the terms of this Rider shall control. 8. Possession Upon Default. Subject to Section 7 above, upon the occurrence of a default, and after delivery of notice and the expiration of all applicable cure periods, Beneficiary may, at its option, without any action on its part being required and without in any way waiving such default, take possession of the Property and have, hold, manage, lease and operate the same, on such terms and for such period of time as Beneficiary may deem proper, and may collect and receive all rents and profits, with full power to make, from time to time, all alterations, renovations, repairs or replacements thereto as may seem proper to Beneficiary, and to apply such rents and profits to the payment of(a) the cost of all such alterations, renovations, repairs and replacements, and all costs and expenses incident to taking and retaining possession of the Property, and the management and operation thereof, and keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other liens which rimy be prior in lien or payment of the Note, and premiums for insurance, with interest on all such items; and (c) the indebtedness secured hereby, together with all costs and attorney's fees, in such order or priority as to any of such items as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any amounts received by Trustor or its agents in the performance of any acts prohibited by the terms of this assignment, including, but not limited to, any amounts received in connection with any cancellation, modification or amendment of any lease prohibited by the terms of this assignment and any rents and profits received by Trustor after the occurrence of a default shall be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving any portion of such trust funds shall receive the same in trust for Beneficiary as if such person had actual or constructive notice that such funds were impressed with a trust in accordance therewith. 9. Receiver. In addition to any and all other remedies of Beneficiary set forth under this Deed of Trust or permitted at law or in equity, if a default shall have occurred, Beneficiary, to the extent penmitted by law and without regard to the value, adequacy or occupancy of the security for the Agency Fee Note and other slurs secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Property and to collect all rents and profits and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction by ex pane application and without notice, notice of hearing being hereby expressly waived. The expenses, including receiver's fees, attorneys' fees, costs and agent's compensation, incurred pursuant to the power herein contained shall be secured by this Deed of Trust. 10. Security Agreement. This Deed of Trust also constitutes a Security Agreement with respect to all personal property in which Beneficiary is granted a security interest hereunder, and Beneficiary shall have all of the rights and remedies of a secured paity under the Uniform Commercial Code as enacted in California (the "California Uniform Comineicial Code") as well as all other rights and remedies available at law or in equity. Trustor hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and appoints Beneficiary the attorney-in-fact of Trustor, to execute, deliver and, if appropriate, to file with the appropriate filing officer or office such security agreements, financing statements, continuation 25035v4 statements or other instruments as Beneficiary may request or require in order to impose, perfect or continue the perfection of, the lien or security interest created hereby. Trustor and Beneficiary agree that the filing of a financing statement in the record normally having to do with personal property shall never be construed as in any way derogating from or impairing the lien of this Deed of Trust and the intention of Trustor and Beneficiary that everything used in connection with the operation or occupancy of the Properly is and at all times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as real property or goods which are or are to become fixtures, irrespective of whether (i) any such item is physically attached to the buildings and improvements on the Property; (ii) serial numbers are used for the better identification of certain equipment items capable of being filed by the Beneficiary; or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Such mention in the financing statements is declared to be for the protection of the Beneficiary in the event any court or judge shall at any time hold that notice of Beneficiary's priority of interest must be filed in the California Commercial Code records to be effective against a particular class of persons, including, but not limited to, the federal government and any subdivision or entity of the federal government. Trustor covenants and agrees to reimburse Beneficiary for any costs incurred in filing such financing statement and any continuation statements. Upon the occurrence of default hereunder, and after delivery of notice and the expiration of all applicable cure periods, Beneficiary shall have the right to cause any of the Property which is personal property and subject to the security interest of Beneficiary hereunder to be sold at any one or more public or private sales as permitted by applicable law, and Beneficiary shall further have all other rights and remedies, whether at law, in equity, or by statute, as are available to secured creditors under applicable law, specifically including without limitation the right to proceed as to both the real property and the personal property contained within the Property as permitted by Uniform Commercial Code Section 9501(4), including conducting a unified sale thereof. Any such disposition may be conducted by an employee or agent of Beneficiary or Trustee. Any person, including both Trustee and Beneficiary, shall be eligible to purchase any part or all of such property at any such disposition. This Deed of Trust constitutes a fixture filing under Sections 9313 and 9402(6) of the California Uniform Commercial Code, as amended or recodified frorn time to time. 11. Notices. Demands, and Communications. Formal notices, demands, and communications between Trustor and Beneficiary shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To Beneficiary: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, California 92262 Attn: Executive Director 25035v4 000929 With a copy to: Woodruff Spradlin & Snxart, LLP 555 Anton Boulevard, Suite Costa Mesa, California 92 Attn: Douglas C. Holland, Esq. To Trustor: RE: LOFT PARTNERS PALM SPRINGS, LLC, a California limited partnership c/o Oasi Development Attn: General Partner Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed shall be deemed effective on the second business day following deposit in the United States mail. Such written notices, demands, and coinmunications shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. [SIGNATURES TO FOLLOW] IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Truster's acknowledgment hereinbelow, to be effective for all purposes as of the day and year first set forth above. TRUSTOR: RE: I,.OFT PARTNERS PALM SPRINGS, LLC, a California limited partnership By: Oasi Development Its General Partner By: Its 2i033v4 �i EXHIBIT "A" LEGAL DESCRIPTION Real property located in the City of Palm Springs, County of Riverside, State of California, legally described as: 25035v4 �a��4