Loading...
HomeMy WebLinkAbout12/19/2007 - STAFF REPORTS - 2.P. °Fp ALM SA? .y V N M "C or.onnm� p t' °"`'� CITY COUNCIL STAFF REPORT DATE: DECEMBER 19, 2007 CONSENT ITEM SUBJECT: APPROVE INDEMNITY AGREEMENT BETWEEN THE CITY AND PALM HILLS LAND CORPORATION AND PALM HILLS COMPANY FROM: David H. Ready, City Manager BY: Douglas Holland, City Attorney RECOMMENDATION: APPROVE INDEMNITY AGREEMENT BETWEEN THE CITY AND PALM HILLS LAND CORPORATION AND PALM HILLS COMPANY. STAFF ANALYSIS: In July of 2004, the City approved several development entitlements, including a general plan amendment, a specific plan, a planned development district, a tentative parcel map, a tentative subdivision map, and a development agreement related to the development of approximately 900 acres of land in the area of the City commonly referred to as Palm Hills. In August of 2004, the Sierra Club and the Center for Biological Diversity filed a lawsuit challenging the adequacy of the environmental impact report for the project. In addition, a referendum petition was circulated on the general plan amendment and the general plan was ultimately placed before the voters for consideration. On March 8, 2005, the voters disapproved the general plan amendment, thereby rendering the other entitlements for Palm Hills inconsistent with the general plan. It is this Office's opinion that all of the other entitlements are invalid and of no force or effect and that the lawsuit challenging the environmental documentation is moot. The Sierra Club and the Center for Biological Diversity, however, are concerned that the City and the developer might attempt to use the certified environmental impact report for subsequent development entitlements and avoid the need to perform separate environmental analysis for such projects. The proposed indemnity agreement, in addition to providing for the reimbursement of the City's costs in the pending litigation by the initial developers and $a3UI I I Item No. n . P . City Council Staff Report December 19, 2007 Indemnity Agreement re Palm Hills the current owner of the property, formally recognizes that as a result of the referendum the environmental impact report and the other entitlements approved in conjunction with the 2004 project are no longer in effect and should be terminated. Upon receipt of the reimbursement amount (approximately $45,000.00), this Office will submit to the Council appropriate actions for the rescission or repeal of the applicable entitlements related to the Palm Hills development project approved by the Council in July of 2004. FISCAL IMPACT: If the agreement is approved, the City would recover its costs expended to date in the defense of the litigation, currently estimated at approximately $45,000.00. Dougla (land, City Attorney David H. Ready, Cit r r Attachment: Indemnity Agreement 5394111 aaaa ? INDEMNITY AGREEMENT.' between THE CITY OF PALM SPRINGS and PALM HILLS LAND CORP. A California corporation and PALM HILLS COMPANY, LLC A Delaware limited liability company 70OD154.i 70D50376.1 �7 2DEMNITY AGREEMENT THIS LNDFMNITY AGREEMENT ("Indemnity Agreement" or"Agreement") is entered into on November 2,2007,by the CITY OF PALM SPRINGS(the"City"),a municipal corporation, and PALM HILLS LAND CORP.,a California corporation("Palm hills Corp.'),and PALM HILLS COMPANY, LLC, a Delaware limited liability company ("Patin Mills, LLC") (collectively "Developers"). The City and Developers collectively are referred to as the"Parties"and individually as a"Party"in this Agreement. RECITALS: A. WHEREAS,on or about July 21,2004,the City and Palrn Hills Corp.entered into a Development Agreement entitled Development Agreement No. 4 or DA4 ("Development Agreement") for the development of the Developers'propeny consisting of an approximately 906 acre site in Palm Springs, California known as Palm Hills (the "Property"), pursuant to the development plan in the Development Agreement(`Project"). B. W-IEREAS, in connection with same, the City approved the following land use approvals: (1)General Plan Amendment,Case No, 5-0732,(2)Pahn Bills Specific Plan(Planning Area#1), Case No. 5-0732,(3)Planned Development District No. 258, Case No.5-0926-PD-258, (4) Tentative Parcel Map 29101, and (5) Tentative Tract Map 29100 for the development of approximately 900 acres more or less in the southeastern portion ofPahn Springs(the"PDD Area") and at the same time certified the Environmental Impact Report No. 98061043 ( Ex') by Resolution No. 20993 (collectively"Entitlements")- C. WHEREAS,Section 13 of the Development Agreement provides that the Developer Palm Hills Corp-agrees to indemnify the City and its elective boards,commissions,officers,agents and employees and to hold and save them and each of them harmless from any and all actions,suits, claims,liabilities,etc.(including but not limited to attorneys'fees and costs)against the City and/or agent for any such Claims or Litigation (as those terms are defined in Section 1.10 of the Development Agreement)and shall be responsible for anyjudgment arising therefrom(collectively, the`Indemnity Obligations")- D. WHEREAS,Section 13.3 ofthe Development Agreementprovides that all indemnity provisions set forth therein shall survive termination of the Development Agreement for anyreason other than City's default. E. WHEREAS, on or about August 5, 2004, Sierra Club and Center for Biological Diversity filed a Petition for Writ of Administrative and Traditional Mandate in the Riverside Superior Court, Case No, INC 044852, to invalidate the Entitlements and set aside the OR ("Lawsuit"). F. WHEREAS, on or about Mareb 8, 2005, the City's approval of the General Plan Amendment was set aside by way of a referendum ("Referendum"), rendering the Entitlements inconsistent with the General Plan and therefore invalid and of no force or effect. 0100310009/5=.2 70050[54.1 70050376.1 0 G. WHEREAS,because the effect of the Referendum has been to render the) ntitlements inconsistent with the General Plan and without value, the question has arisen as to whether the Lawsuit is moat. H, WHEREAS,Sierra Club and Center for Biological Diversity have taken die position that the City and the Developers may by to use the certified EIR,and the entitlements identified in subparagraphs (2)-(5) of Recital Paragraph B, above, that were not the subject matter of the Referendum(collectively"Remaining Entitlements"),and have decided to proceed with the Lawsuit to invalidate the certified EIR and Remaining Entitlements. I. WHEREAS, on or about May 26, 2004, Developer Palm Fulls, LLC became an interested party in the Lawsuit by executing an agreement whereby Palm Bills,LLC was assigned, inter alia: (i)the right to purchase the Property; and(h)Palm Hills Corp.'s rights and obligations under the Development Agreement, including the Indemnity Obligations (the "Assignment Agreement"). By executing this IndemnityAgreemeat Palm Hills Corp,acknowledges that it has no objection to the parties entering into this Indemnity Agreement. J. WHEREAS,the Developers and the City have agreed that the most cost effective way of obtaining a dismissal of the Lawsuit is for the City to recognize formally that,as a result of the Referendum,the Remaining Entitlements are inconsistent with the General Plan and are therefore invalid and terminated. K. WHEREAS,the City has also agreed to vacate its approval of Resolution No.20993, which certified the EIR,in light of the fact that the Remaining Entitlements were rendered invalid as a result of the Referendum. NOW, THEREFORE, in consideration of the foregoing,the City and Developers agree as follows: 1. Pursuant to Section 13 ofthe Development Agreement,Palm Hills,LLC agrees to pay all attorneys' fccs and costs incurred by the City in connection with the Lawsuit. The amount incurred to date is equal to $45,277.59 ("Payment") and is due and payable within fifteen days of execution of this Agreement with check made payable to City of Palm Springs, 2. Upon receipt of the Payment, the City will place on the agenda of the next City Council meeting, for its council's consideration to take all additional steps necessary to formally vacate or otherwise set aside as invalid and of no force or effect, the following Resolutions and Ordinances concerning the Project: a. Resolution No.20993 certifying the Final Environmental Impact Report as complete, adopting the Statement of Facts and Findings, adopting the Statement of Overriding Considerations, and adopting the Mitigation Monitoring Program For the Project; b, Resolution No. 20995 approving the Palm Hills Specific Plan; 70050376.1 2 i I C. Resolution No.20996 approving the Preliminary Plan Development District 258, Tentative Parcel Map No.29100, and Tentative Tract Map No.29101 for the 906- acre development proposed on property owned by Palm Hills Corp.; d. Ordinance No, 1657 approving a Change of Zone;and e. Ordinance No. 1658 approving the Development Agreement. The City Attorney's office will recommend to the City Council that it formally vacate or otherwise set aside as invalid and of no force or effect each of the above-referenced Resolutions and Ordinances. 3. Palm Hills, LLC agrees that payment pursuant to Paragraph 1 above does not affect its obligation,as defined in Section 13 of the Development Agreement,to pay any additional costs or damages incurred in the future by the City, including, without limitations, any claims or actions brought by Sierra Club,or any otherparty for recovery of its costs and attorneys'fees alleging that it is entitled to such cosis and fees as the alleged prevailing party in the Lawsuit. 4. Scope of Palm Hills LLC's Indemnity Obligations. The City and Palm Hills,LLC acknowledge and agree that the Indemnity Agreement simply reiterates Palm Hills,LLC's hidermtity Obligations to the City set forth in Section 13 of the Development Agreement and does not in any manner expand or otherwise alter those obligations. Because of the Assignment Agreement referred to in Recital 1, above, Pahn Hills Corp. shall have no liability to Palm Hills, LLC for any of the obligations set forth in the Development Agreement,including the Indemnity Obligations. Further, Palm Hills,LLC shall be responsible for the payment of any fees or costs awarded against Palm Fulls Corp. in connection with the Lawsuit. The City does not waive its right to recover payment of any fees or costs from Palm Hills Corp- pursuant to the Development Agreement which the City is unable to recover from Palm Hills,LLC. 5. Construction of Indemnity Agreement. The language of this Indemnity Agreement shall be construed as a whole and given its fair meaning. The captions of the sections and subsections are for convenience only and shall not influence construction.This IndeinmityAgreement shall be governed by the laws of the State of California. This Indemnity Agreement shall not be deemed to constitute the surrender or abrogation of the City's governmental powers over the Developers' Property_ 6. Severability.If any provision of this Indcrimity Agreement is adjudged invalid,void or unenforceable, that provision shall not affect, impair, or invalidate any other provision, unless such judgment affects a material part of this Indemnity Agreement. 7. Attorneys'Fees. If any Party to this Agreement is required to initiate or defend any claims,actions or proceedings,the prevailing party in such action or proceeding,in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to its reasonable attorneys'fees and costs incurred in those action(s) or proceeding(s). 8. No Third Farts Beneficiaries, The only parties to this Indemnity Agreement are Developers and City. There are no third party beneficiaries and this Indemnity Agreement is not intended,and shall not be construed to benefit or be enforceable by any other person whatsoever. 74050376.1 3 000806 9_ Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. 10. C_ountemarts. This Indemnity Agreement may be executed by the Parties in counterparts which counterparts shall be construed together and have the same effect as if all of the Parties had executed the same instrument. It. Authority to Execute.The persons executing this Indemnity Agreement on behalf of the Parties hereto warrant that (i) such Party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Indemnity Agreement on behalf of said Party, (iii) by so executing this Indemnity Agreement, such Party is formally bound to the provisions of this Indemnity Agreement, (iv) the entering into of this Indemnity Agreement does not violate any provision of any other Agreement to which said Party is bound and(v)there is no litigation or legal proceeding which would prevent the Parties from entering into this Agreement. 12, Waivor. Failure by a Party to insist upon the strict performance of any of the provisions of this Indemnity Agreement by the other Party,or the failure by a Party to exercise its rights upon the default of the other Party,shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Indemnity Agreement thereafter. 13. Notice, (a)To Developers.Any notice required or permitted to be given bythe Cityto the Developers under this Indemnity Agreement shall be in writing and delivered personally to Developers or mailed with postage fully prepaid,registered or certified mail,return receipt requested, addressed as follows: Pahn Hills Land Corp. Palm lElls Company,LLC 175 W.Jackson Blvd., Suite 400 c/o The Ginn Company Chicago, Illinois 60604 One Hammock Beach Parkway Attention: Edmund J. O'Connor Palm Coast,FL 32137 Attn: Edward R. Ginn III With a copy to: With a copy to: Cox, Castle&Nicholson LLP Manatt,Phelps&Phillips,LLP 2049 Century Park East,28th Floor 695 Town Center Drive, 14th Floor Los Angeles CA 90067-3284 Costa Mesa, California 92626 Attention:Kenneth B. $ley,Esq. Attention: Susan K.Ilori,Esq, Schlecht, Shevlia&Shoenberger,ALC 801 E. Tahquitz Canyon Way, Suite 100 Pahn Springs, California 92262 Attention:James M. Schlecht,Esq. 70050376.1 4 or such other address as Developers may designate in writing to the City. (b) To the Citv. Any notice required or permitted to be given by the Developers to the City under this Indemnity Agreement shall be in writing and delivered personally to the City Clerk or mailed withpostage fullyprepaid,registered or certified mail,return receipt requested, addressed as follows: City of Palm Springs 3200 Tahquitz Canyon Way Pahn Springs, California 92262 Attention: Planning Director With a copy to: Woodruff, Spradlin&Smart 555 Anton Boulevard,Suite 1200 Costa Mesa,California 92626 Attn: Douglas C.Holland,City Attorney or such otber address as the City may designate in writing to Developers. Notices provided pursuant to this Section shall be deemed received at the date of delivery as shown on the affidavit of personal service or the Postal Service receipt. 14, Further Actions and Instruments.Each of the Parties shall cooperate with and provide reasonable assistance to the other to the extent necessary to implement this Indemnity Agreement. Upon the request of either Party at any time, the other Party shall promptly execute, with acknowledgment or affidavit if and file or record such required instruments and writings and take any actions as may be reasonably necessary to implement this Indemnity Agreement or to evidence or consummate the transactions contemplated by this Indemnity Agreement, 15. Recitals, The recitals hi this Indemnity Agreement constitute part of this Indemnity Agreement and each Party shall be entitled to rely on the truth and accuracy of each recital as an inducement to enter into this Tndernnity Agreement. 16. Entire Agreemont. This Indemnity Agreement constitutes the entire agreement between the Parties with respect to the subject matter of this Indemnity Agreement, and this Indemnity Agreement supersedes all previous negotiations,discussions,and agreements between the Parties concerning the matters set forth in the Indemnity Agreement, No parol evidence ofanyprior or other agreement shall be permitted to contradict or vary the terms of this Indemnity Agreement. 70050376,1 5 rn IN WTI NESS WMREOF,the City and Developers have executed this Indemnity Agreement on the date first above written. CITY OF PALM SPRINGS BY: MAYOR ATTEST: CITY CLERK Approved as to farm City Aft omey "AEVFLOPE °B PALM O a California cotp BiY: "b : _ 7. O'CONNOR,President BY: MARY JANE O'CONNOR, Secretary [Sipatures continued on next page] 70050376.1 6 I IN WTINBSS'VaIEREOP,the City and Developers have executed this TndemnityAgreemertt on the date first above written CITY OF PALM SPRINGS BY: MAYOR ATTEST: CITY CLERK Approved as to form City Attorney "DEVELOPER" PALM HILLS LAND CORP.,a California corporation BY; EDMUND 7. O'CONNOR,President r BY: MARy&]FANS O'CONNOR,Secretary [Signatures continued on next page] 70050376.1 6 0 0 0 0 A{ "DEVELOPER" PALM FIILLS COMPANY,LLC, a Delaware limited liability company 13y: GINN-PALM HILLS MANAGER, LLC, a Delaware limited liability company �p Edward R. Ginn II ,Mauagcr 7o050154.1 7 0000±1�