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HomeMy WebLinkAbout6/2/2004 - STAFF REPORTS (6) DATE: JUNE 2, 2004 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT APPROVAL OFAN OWNER PARTICIPATION AGREEMENT WITH WESSMAN DEVELOPMENT COMPANY FOR THE DEVELOPMENT OF A BOUTIQUE HOTEL AT THE SOUTHEAST CORNER OF CAHUILLA ROAD AND TAHQUITZ CANYON WAY;AND APPROVING A LETTER WITHDRAWING AN OFFER TO PURCHASE FROM FRANCES WINTER OF BEVERLY HILLS, CALIFORNIA, A SINGLE FAMILY RESIDENCE AT 141 SOUTH CAHUILLA ROAD RECOMMENDATION: It is recommended that (1) the Agency approve an Owner Participation Agreement with Wessman Development Company for the purpose of facilitating the development of a boutique hotel; and, approving a letter withdrawing an offer to purchase a property at 141 South Cahuilla Road in Palm Springs, from Frances Winter of Beverly Hills. SUMMARY: At the time the Agency was creating the Oasis (Tennis Club) Project Area in 1983-84, Frances Winter brought suit against the Agency to ensure that her home would never be acquired through condemnation. A Settlement Agreement dated May 4, 1988 reached with Ms. Winter prevented the Agency from ever pursuing eminent domain while she owned the property, but gave the Agency a right of first refusal to purchase if she received an offer and chose to sell. Ms. Winter received an offer in December, 2003 and considered selling, but was required to give the Agency 30 days to respond. On January 26, 2004 the Agency replied in writing that it was exercising its option to acquire the property by matching the offer that had been accepted. In addition to the purchase price, the Agency had to agree to certain non-financial provisions related to not destroying or altering the building, and applying for permanent historic preservation status for the building. The purpose of acquiring the property was to help facilitate the development of a boutique hotel on the adjacent vacant parcel to the north. The Agency now wishes to withdraw the offer to Ms. Winter and approve an Owner Participation Agreement with Wessman Development Company that would encourage the development of the boutique hotel on the site Wessman owns through the conceptual transfer of certain development rights from the Winter property to the Wessman property. The OPA will include a consent and release by the owners of the Casa Cody Country Inn to the hotel's conceptual plan; they would be free then to close on the sale with Ms. Winter and renovate the property for use within their hotel. BACKGROUND: When the Oasis redevelopment project area was created in 1983-84, Frances Winter sued the Agency to ensure that her home would never be acquired through condemnation. She was concerned the Agency intended to clear all the properties on her block for a major development, since some of the adjacent properties had been razed by the abatement cra - process leaving vacant lots. A Settlement Agreement ("Agreement") dated May 4, 1988 with Ms.Winter prevented the Agency from pursuing eminent domain while she owned the property, but gave the Agency a right of first refusal if she received an offer and chose to sell. The adjacent property owner to the north, John Wessman (d/b/a/Wessman Development Company), had inquired about Agency assistance in acquiring the Winter property in 2000, but was informed about the terms of the Settlement Agreement and the Agency's inability to use eminent domain. He continued to express interest in the property over the past few years while he has planned a boutique hotel on the vacant property, and asked to be informed if the Agency ever had the ability to purchase the property. Ms. Winter did receive an offer in December, 2003 from the adjacent property owners, Frank Tysen and Therese Hayes, owners of Casa Cody Country Inn at 175 South Cahuilla (collectively, "Casa Cody"). Casa Cody desired to use the Winter property to expand the inn, giving it additional rooms and more outdoor event space. Under the terms of the Agreement, if Ms. Winter received from any third party a proposal in writing to purchase the property which she is prepared to accept, she shall provide Notice to the Agency and the Agency"shall have a right of first refusal for a period of thirty(30)days after the receipt of Frances Winter's Notice in which to notify Frances Winter in writing whether it agrees to purchase the Property for the same price and on the same terms and conditions as the offer made by the third party."Her attorney did so in a letter to the Executive Director dated December 27, 2003. At its January 21, 2004 meeting, the Agency voted to exercise its option with Frances Winter and purchase the property at the same price and on the same terms and conditions as provided in the third party offer. On January 26th the Agency replied in writing that it was exercising its option to acquire the property by matching the offer that had been accepted. The offer stated the Agency was prepared to open an escrow and close on the property within 60 days of the escrow opening. In addition to the purchase price, the Agency must agree to certain non-financial provisions related to not destroying or altering the building, and applying for permanent historic preservation status for the building. An action went before the Agency in March to approve an escrow with Ms. Winter. In addition, the City would have had to approve a loan to the Agency the $425,000 to close the sale. Based on the concerns of Casa Cody and the Tennis Club neighbors, the Agency decided to postpone a decision a decision on the project until both Wessman and Casa Cody have had an opportunity to negotiate a compromise; therefore, the escrow between Casa Cody and Winter is on hold but not cancelled, and the Agency has never opened an escrow with Ms. Winter. The crux of the compromise is that Casa Cody would be allowed to acquire and use the Winter property, but some of the development rights to the property would be transferred to Wessman through an Owner Participation Agreement with the Agency ("OPA")for the purpose of developing a high-end, boutique hotel on the corner parcel. In return for the Agency rescinding its offer on the Winter property, Casa Cody would execute a "consent" to the overall conceptual plan proposed by Wessman and agree not to challenge or participate in a challenge to the project provide the project does not create more impact to Casa Cody than what is described in the OPA's Scope of Development. The OPA requires that the project would still need to go through the normal City development process, with a Conditional Use Permit application going to Planning Commission and (possibly) the City Council. Casa Cody has participated in the process of conceptualizing the hotel project with Agency staff and has provided feedback to Wessman on their concerns. While Casa Cody has a number of concerns,their primary concern was the setback of the project from the property line of the Winter property and the possibility that the building could obstruct most of the view to the north from it or even Casa Cody. While very little view to the north exists on the Winter property because the house is only 3' from the property line and runs most of the depth of the property, Wessman has attempted to accommodate those concerns by doing several things: 1. Orienting the main building north-to-south along Cahuilla to reduce the width of the hotel building along the Winter property line and not obscure mountain views from it or Casa Cody. 2. Pulling the building further back from the Winter property line (it is now 20'; it was at 5') to create more distance between properties. 3. Stepping the top floor back, with a patio, to reduce the height and scale of the building at the rear setback. Wessman has produced a conceptual plan that features a four story hotel in a modern architectural style, with a rear pool and deck area located mainly at the South and west of the property. Therefore, most of the frontage along the south and west property lines, abutting the Winter property line and the Le Vallauris parking lot, have the open space/pool area rather than buildings. The mass of the building is pulled toward the Tahquitz and Cahuilla. The "transfer of development rights" concept would allow Wessman to propose additional units on his site (36,900 s.f.) that he would have built on the Winter property, giving him the right to propose up to 51 rooms total (the hotel plan in the OPA contains 48 rooms). Some relief on the rear setback, along the Winter property line, is also contemplated as well as the ability to count the Winter property toward the open space calculation. There remain issues of overall building height, parking requirements and other required setbacks, which will be addressed through the development process. M - e-3 The action before the Agency is to approve an Owner Participation Agreement with Wessman to allow him to go forward with the project. Contained within the OPA is the consent and release by Casa Cody; the consent, as stated above, is limited to the project described in the Scope of Development or one that would create less potential impact on the Casa Cody or Winter property. In addition, a letter withdrawing the Agency's offer to Ms. Winter is also included for approval; since the Agency had not approved any agreements to acquire the property, and notice of intent was made by letter, only a letter should be necessary to notify Ms. Winter's attorney that the Agency does not intend to proceeeee�d1 with the purchase of the propert✓. No escrow needs to be cancelled. JOrHN . RAYM pi or of Coi ity and Economic Development Executive Director ATTACHMENTS: 1. Agency Resolution 2. Owner Participation Agreement 3. Letter to Lawrence F. Meyer, Esq. OWNER PARTICIPATION AGREEMENT THIS OWNER PARTICIPATION AGREEMENT ("Agreement") is entered into this _day of 2004, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, a public body, corporate and politic, whose offices are located at 3200 East Tahquitz Canyon Way, Palm Springs, California 92262 ("Agency") and John Wessman dba Wessman Holdings LLC, a California limited liability corporation, whose offices are located at 1555 South Palm Canyon Drive, G-106, Palm Springs, California, 92264 ("Participant"). The Agency and the Participant hereby agree as follows: WHEREAS, this Agreement pertains to the development of certain properly at the southwest corner of Tahquitz Canyon and Cahuilla Road (the "Site") which is owned by Participant; and WHEREAS, the parcel adjacent to the site to the south is known as the Winters Parcel, and the parcel to the south of the Winters Parcel is owned by Frank Tysen and Therese Hayes, and is occupied by a 23-room hotel known as Casa Cody; and WHEREAS, Participant has proposed the development of a hotel on the Site but believes the project could be enhanced by incorporating the Winters Parcel in the Project. Participant projects transient occupancy tax revenue to the City of $300,000 annually, as well as tax increment revenue to the Agency of$50,000 per year; and WHEREAS, Tysen would also like to incorporate the Winters Parcel in Casa Cody, and made an offer to acquire the Winters Parcel; and on December 12, 2003, entered into an escrow, #1123 at Liberty Escrow,to purchase the same; and WHEREAS, Agency has a first right of refusal to acquire the Winters Parcel pursuant to that certain agreement dated May 4, 1988, which Agency attempted to exercise after being informed of the Tysen offer; and WHEREAS, the parties believe that a compromise can be reached satisfactory to objectives of all parties by(i) the Agency entering this Agreement for the development of a hotel by Participant, (ii) assuring a more intense development by Participant by transferring development rights from the Winters Parcel (which has restricted development opportunity due to the existence of a historic structure), (iii) Tysen consenting to the hotel project, and (iv) the Agency withdrawing its effort to acquire the Winters Parcel so that Tysen can proceed with its acquisition. NOW, THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS. 1.1. Cam. The term "City" shall mean the CITY OF PALM SPRINGS, a chartered municipal corporation, having its offices at 3200 East Tahquitz Canyon Way, Palm Springs, California 92262. CWP, . S' nmmi^sr 7n7 1.2. Consent to Project. The term "Consent to Project" shall mean that certain Consent attached hereto as Exhibit E and incorporated herein by this reference. 1.3. Executive Director. The term "Executive Director" shall mean the Executive Director of Agency. 1.4. Project. The term "Project" shall mean the hotel project to be constructed by the Participant upon the Site more particularly described on Exhibit "B" attached hereto and incorporated herein by reference. 1.5. Redevelopment Plan. The term 'Redevelopment Plan" shall mean the Amended and Restated Redevelopment Plan for Merged Redevelopment Project Area No. 1 ('Project Area") as adopted by Ordinance No. 1584 of the City Council of City on May 31, 2000, as amended from time to time. A copy of the Redevelopment Plan is on file in the office of the City Clerk of the City. The Redevelopment Plan is incorporated herein by this reference and made a part hereof as though fully set forth herein. 1.6. Schedule of Performance. The term "Schedule of Performance" shall mean that certain Schedule attached hereto as Exhibit "C" and incorporated herein by reference. 1.7. Site or Property. The teen "Site" or 'Property" shall mean that certain real property owned by Participant located on North Palm Canyon Drive in the City of Palm Springs, State of California, more particularly described on Exhibit "A" attached hereto and incorporated herein by reference. 2. PURPOSE OF AGREEMENT. The purpose of this Agreement is to effectuate the Redevelopment Plan for the Project Area by developing the Site as a hotel within the Project Area. The development of the Site which is located within the Project Area, and the fulfillment generally of this Agreement are in the best interests of the City and the welfare of its residents and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and regulations, under which the Project has been undertaken and is being assisted. The Palm Springs economy is based on tourism. It is therefore a further purpose of this Agreement to add a unique, high class hotel to the City's hotel inventory to compliment and further expand the tourism industry. This will also assist the City's economics. With a projected 48 rooms and 70 percent occupancy and rates averaging $250 per night, projected transient occupancy tax revenues exceed $300,000 and tax increment to the Agency exceeding $50,000 per year. Finally, it is a purpose of this Agreement to create a mechanism for the transfer of development rights from the Winters Parcel to the site. With Mr. Tysen's support for this concept, the Agency is willing to forego the exercise of its right of first refusal to acquire the Winters Parcel. Said support shall be evidenced by the Consent to Agreement attached hereto as Exhibit E. c �� � -2- 1003/012/30897.02 3. CONSTRUCTION OF THE PROJECT. 3.1. Plans and Specifications. The Participant shall construct the Project upon the Site in accordance with construction drawings, working specifications and related documents that have been submitted to and approved by the Agency in advance and in writing according to the description in Exhibit "B". 3.2. Permits. Before commencement of construction of the Project, Participant shall obtain any and all permits and approvals which inay be required by the City or any other governmental agency with jurisdiction. 3.3. Governmental Approvals. Notwithstanding anything herein contained to the contrary, it is expressly understood by the parties hereto that the Agency makes no representations or warranties with respect to the approvals required by any other governmental entity or with respect to approvals hereinafter required from the City or the Agency. NOTWITHSTANDING THE GENERALITY OF THE FOREGOING, IT IS EXPRESSLY ACKNOWLEDGED THAT THE PROJECT WILL REQUIRE LAND-USE APPROVAL BY THE CITY AND NOTHING HEREIN, INCLUDING THE DESCRIPTION OF THE PROJECT IN EXHIBIT B AND THE APPROVAL OF THE AGREEMENT BY THE AGENCY, SHALL LIMIT THE DISCRETION OF THE CITY BY ITS PLANNING COMMISSION AND CITY COUNCIL TO APPROVE, CONDITIONALLY APPROVE OR DISAPPROVE THE PROJECT. The Agency reserves full police power authority over the Project and the Participant acknowledges that the City retains such full police power as well. Nothing in this Agreement shall be deemed to be a prejudgment or commitment with respect to such items nor to guarantee that such approvals or permits will be issued within any particular time or with or without any particular conditions. 3.4. Costs of Construction. The cost of constructing the Project shall be borne by the Participant. 3.5. Construction Schedule. Participant shall submit the construction drawings, working specifications and related documents for approval by the Agency on or before the date set forth in the Schedule of Performance. Construction of the Project shall commence on or before the date set forth in the Schedule of Performance and shall be completed within the time set forth in the Schedule of Performance except as mutually agreed in writing by Participant and Agency. The Project shall be deemed complete upon the issuance of a Certificate of Completion as provided in Section 3.9, or upon notification to the Participant by the Agency's Director of Community Development that rehabilitation of the Project is complete, whichever occurs first. cmew7 -3- ]nn3/019i30897 69 3.6. Right of Access. Representatives of Agency and City shall have the reasonable right of access to the Site during the period of construction for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed. 3.7. Nondiscrimination During Construction. Participant, for itself and its successors and assigns, agrees that during the rehabilitation of the Project, Participant will not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex,marital status, ancestry or national origin. 3.8. Certificate of Completion. Upon written request by Participant, and upon satisfactory completion of the Project, Agency shall issue to Participant a Certificate of Completion. The Certificate of Completion shall be, and shall so state, a conclusive determination of satisfactory completion of the Project required by this Agreement, and a full compliance with the terms of this Agreement relating to commencement and completion of the Project. After the date Participant is entitled to issuance of the Certificate of Completion, and notwithstanding any other provision of this Agreement to the contrary, any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site shall not (because of any such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by the covenants that survive the issuance of the Certificate of Completion, as set forth in the CC&RS. The Certificate of Completion is not a notice of completion as referred to in California Civil Code Section 3093. 3.9. Insurance and Indemnification. (a) Insurance. Prior to the commencement of any construction by Participant of the Project, Participant or its contractor for the work hereunder, shall procure and maintain in a form and content satisfactory to Agency, during the entire tenn of construction, the following policies of insurance: (i) Comprehensive General Liability Insurance. A policy of comprehensive general liability insurance written on a per occurrence basis in an amount not less than either (i) a combined single limit of ONE MILLION DOLLARS ($1,000,000.00) or (ii) bodily injury limits of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) per person, ONE MILLION DOLLARS ($1,000,000.00) per occurrence and ONE MILLION DOLLARS ($1,000,000.00) products and completed operations and property damage limits of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) per occurrence and ONE MILLION DOLLARS ($1,000,000.00) in the aggregate. (ii) Worker's Compensation Insurance. A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure and provide legal defense for both the Participant, Agency and the City against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by the Participant in the course of carrying out the work or services contemplated in this Agreement. (iii) Automotive Insurance.I A policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily -4- 1003/012/30897.02 injury liability limits of $250,000.00 per person and $500,000.00 per occurrence and property damage liability limits of $100,000.00 per occurrence and $250,000.00 in the aggregate or (ii) combined single limit liability of $500,000.00. Said policy shall include coverage for owned, non-owned, leased and hired cars. (iv) Builder's Risk Insurance. A policy of "builder's risk" insurance covering the full replacement value of all of the improvements to be constricted by Participant pursuant to this Agreement. All of the above policies of insurance shall be primary insurance and shall name Agency, City, and their officers, employees and agents as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against Agency, City, and their officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days prior written notice by registered mail to Agency and City. In the event any of said policies of insurance are cancelled, the Participant or its contractor shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Executive Director. No work or services under this Agreement shall commence until the Participant has provided Agency with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders are approved by Agency. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Risk Manager of the City("Risk Manager") due to unique circlmnstances. Participant shall provide in all contracts with contractors, subcontractors, architects and engineers that said contractor, subcontractor or engineer shall maintain the policies of insurance required to be maintained pursuant to this Section. The Participant agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which the Participant may be held responsible for the payment of damages to any persons or property resulting from the Participant's activities or the activities of any person or persons for which the Participant is otherwise responsible. (b) Indemnification. During the period of construction of any of the improvements pursuant to this Agreement and until such time as is issued a Certificate of Completion for the Project, Participant agrees to and shall indemnify and hold the Agency and the City harmless from and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss, or damage whatsoever caused to any person or to the property of any person which shall occur on the Site and which shall be directly or indirectly caused by the acts done thereon or any errors or omissions of the Participant or its agents, servants, employees or contractors. CR �- �` -5- 1003/012/30997.02 4. USE OF THE SITE. Participant covenants and agrees that it shall devote the Site to hotel use which is consistent with the Redevelopment Plan, the applicable zoning restrictions, and this Agreement. 5. ENFORCEMENT. 5.1. Events of Default. In the event either party defaults in the performance or observance of any covenant, agreement or obligation set forth in this Agreement, and if such default remains uncured for a period of thirty (30) days after written notice thereof shall have been given by the non-defaulting party, or, in the event said default cannot be cured within said time period, the defaulting party has failed to commence to cure such default within said thirty (30) days and diligently prosecute said cure to completion, then the non-defaulting party shall declare an event of default to have occurred hereunder. 5.2. Remedies. The Agency's sole remedy for Participant's violation of this Agreement shall be termination, in which case Participant shall have no further rights hereunder. Participant specifically acknowledges that Agency is entering into this Agreement for the purpose of assisting in the redevelopment of the Site and not for the purpose of enabling Participant to speculate with land. 5.3. No Waiver. Waiver by either party of the performance of any covenant, condition or promise shall not invalidate this Agreement, nor shall it be considered a waiver of any other covenant, condition or promise. Waiver by either party of the time for performing any act shall not constitute a waiver of time for performing any other act or an identical act required to be performed at a later time. The delay or forbearance by either party in exercising any remedy or right as to any default shall not operate as a waiver of any other default or of any rights or remedies or to deprive such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 5.4. Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. 5.5. Attorneys' Fees. In the event of litigation between the parties arising out of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred in addition to whatever other relief to which it may be entitled. N � � �� -6- 1003/012/30897.02 6. MISCELLANEOUS. 6.1. Governing Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 6.2. Notices. Formal notices, demands, and communications between Agency, City and Participant shall be sufficiently given if personally delivered or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth above. All notices shall be deemed to be received as of the earlier of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing in the United States Postal System in the manner described in this Section. 6.3. Conflicts of Interest. No member, official, or employee of Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his personal interests or fie interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. 6.4. Nonhiability of Agency Officials and Employes. No member, official, employee, or consultant of Agency or City shall be personally liable to Participant, or any successor in interest of Participant, in the event of any default or breach by Agency or for any amount which may become due to Participant or to its successor, or on any obligations under the terms of this Agreement. 6.5. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 6.6. Assurances to Act in Good Faith. Agency and Participant agree to execute all documents and instruments and to take all action and shall use their best efforts to accomplish the purposes of this Agreement. Agency and Participant shall each diligently and in good faith pursue the satisfaction of any conditions or contingencies subject to their approval. 6.7. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 6.8. Force Maieure. The time within which Participant or the Agency shall be required to perform airy act under this Owner Participation Agreement shall be extended by a period of time equal to the number of days during which performance of such act is delayed due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, natural disasters, Acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental restrictions on priority, initiative or referendum, moratoria, processing with governmental agencies other than City or Agency, unusually severe weather, or any other similar causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of the enforced delay -7- C N 11 1003/012/30897.02 and shall commence to run from the time of the commencement of the cause, if written notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause. Any act or failure to act on the part of a party shall not excuse performance by that party. CF -8- 1003/012/30897.02 IN WITNESS WHEREOF the Agency and Participant have executed this Agreement as of the date first written above. "AGENCY" COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ATTEST: By: Executive Director By: Secretary APPROVED AS TO FORM: ALESHIRE &WYNDER, LLP Dav d J. s iire, Esq., Agency Counsel "PARTICIPANT" ��SSf✓/D.�j'L llv� !�� By: Its: By: Its: -9- 1003/012/30897.02 EXHIBIT "A" LEGAL DESCRIPTION OF THE SITE THAT CERTAIN REAL PROPERTY LOCATED IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA AS MORE PARTICULARLY DESCRIBED AS FOLLOWS: EXHIBIT A PARCEL 1: LOTS 1, 2, 3 AND 4 IN BLOCK 8 OF PALM SPRINGS, AS SHOWN BY MAP ON FILE IN BOOK 9 PAGE 432 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA ALSO ALL THAT PORTION OF THE WESTERLY 8 FEET OF ORANGE AVENUE, AS SHOWN BY SAID MAP AND NOW KNOWN AS CAHUILLA ROAD WHICH LIES SOUTHERLY OF THE NORTHERLY LINE OF SAID LOT 1, EXTENDED EASTERLY AND NORTHERLY OF THE SOUTHERLY LINE OF SAID LOT 4, EXTENDED EASTERLY AS ABANDONED BY RESOLUTION OF THE BOARD OF SUPERVISORS OF RIVERSIDE COUNTY, ON MARCH 1, 1926, A CERTIFIED COPY OF THE RESOLUTION OF ABANDONMENT RECORDED MARCH 10, 1926 IN BOOK 667 PAGE 29 OF DEEDS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 2: THE EAST HALF OF LOT 24 AND THE EAST 24.2 FEET OF LOT 21 OF ALL IN BLOCK 8 OF PALM SPRINGS, AS SHOWN BY MAP ON FILE IN BOOK 9 PAGE 432 OF MAPS, RECORDS OF SAN DIEGO COUNTY, CALIFORNIA EXHIBIT "B" DESCRIPTION OF PROJECT The Project consists of a three and four-story, 48-unit, high-end boutique hotel project. The Site Plan is attached to this Exhibit as Bl. The first floor includes administrative and recreational areas, four hotel suite units, and parking. The second and third floors include 37 hotel rooms (17 and 20). The fourth floor would include 7 large hotel units, one exceeding 500 sq. ft. and the others 1000 sq. ft. The hotel will be of the caliber of a W Hotel but on a smaller scale, such as the Hotel Healdsdburg in the Valley of the Moon adjacent to the Sonoma Valley region of the Northern California or The Inn at the Market in Seattle or the Camelback Gardens Hotel in Telluride. The projected daily rate per room is in the $200-$300 range. The anticipated construction cost of the Project will exceed Seven Million Dollars ($7,000,000.00). The architecture will be contemporary, urban style with the use of block, steel and other natural materials. The hotel will be positioned on the site with 20 feet clearance from the northerly boundary of the Winters Parcel, with extensive landscaping between the properties. Amenities would be those typical of a boutique hotel: outstanding rooms with W hotel quality furnishings and beds, a pool with spa, a workout/gym room, and if space permits, a small restaurant. The entrance will be a sweeping arch with tile or stamped concrete off of Tahquitz Canyon Way. Parking will be below grade in so far as possible with 22 spaces provided. The remainder of the required spaces will be provided by recorded covenant at the Fashion Plaza across the street. The Project contemplates a unique transfer of development rights, as it is proposed that the historic residential stricture on the Winters Parcel will remain. The table below shows the R-3 development standards, the development proposed in the Project, and the development which would be allowed on the Site single or on both properties together. 0 EXHIBIT 'B" TO OWNER PARTICIPATION AGREEMENT 1003/012/30897.02 Criteria R-3 Development Proposed Project Allowed Project Allowed Project Standard Yield on Wessman's Yield on Both Project Properties Combined Minimum Lot 20,000 s.£ Meets standard 20,000 s.f.minimum 20,000 s.f.minimum Size minimum lot size (36,900 s.f) lot size lot size Density 1:1,000 s.f. 48 units 36 units 51 units Building Height 30' over no more 4 stories(42-44') 30' over no more than 30' over no more without High than 50%of ground 50%of ground floor than 50%of ground Rise Ordinance floor area area. floor area. Open Space 45% 22,950 s.f.before bay 22,950 s.f.before bay If all of Winter were under R-3 parking and driveways parking and driveways counted(as part of a Standard(not (approx. 16,000 s.f.)0 (approx. 16,000 s.f.)— total of 51,900 s.f.)as High Rise) comes close to 45% comes close to 45% "open space"then open space would be about 61% Parking 1 for each room up 22 spaces on site, Would need 48 spaces Would need 51 to 50 rooms; 0.75 remainder by covenant spaces for each room over 50 rooms The construction of the Project will require construction of walls and installation of landscaping along the southern boundary of the Site and partially on the Winters Parcel. Participant shall enter into an agreement with the property owner concerning walls, fencing and landscaping in such area, and specifying the method of construction. hiterference with business operation on the Winters Parcel shall be minimized. NOTWITHSTANDING THE GENERALITY OF THE FOREGOING, IT IS EXPRESSLY ACKNOWLEDGED THAT THE PROJECT WILL REQUIRE LAND-USE APPROVAL BY THE CITY AND NOTHING HEREIN, INCLUDING THE DESCRIPTION OF THE PROJECT IN EXHIBIT B AND THE APPROVAL OF THE AGREEMENT BY THE AGENCY, SHALL LIMIT THE DISCRETION OF THE CITY BY ITS PLANNING COMMISSION AND CITY COUNCIL TO APPROVE, CONDITIONALLY APPROVE OR DISAPPROVE THE PROJECT. • I Co EXHIBIT "B" TO OWNER PARTICIPATION AGREEMENT 1003/012/30897.02 + fit! t� ry + Nei N�uY PoY' r � a ���? ant �• a ; )r j rs �Jl � e F'S Y i=n t xmS z e� , EXHIBIT "C" SCHEDULE OF PERFORMANCE Description Date 1. Conceptual Planning with Architect 3 months from the execution date of this agreement 2. Preliminary Architectural Drawings 3 months [6 months from the [Ready for City Submittal] execution date of this agreement] 3. Architectural and PDD Approvals 6 months [12 months from the ' execution date of this agreement] 4. Final Architectural Constniction Drawings 6 months [18 months from the execution date of this agreement] 5. Building Department Review 3 months [21 months from the execution date of this agreement] 6. Financing 3 months [24 months from the execution date of this agreement] 7. Construction 12 month [36 months from the execution date of this agreement] The above time requirements may be lengthened by up to 180 days (cumulatively) at the discretion of the Executive Director where Participant is proceeding in good faith to perform under this Agreement. c raa - 18 EXHIBIT "D" CERTIFICATE OF COMPLETION FREE RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: THE PALM SPRINGS REDEVELOPMENT AGENCY 3200 E. Tahquitz Canyon Way Palm Springs, California 92262 Attn: Executive Director (Space Above This Line For Recorder's Office Use Only) CERTIFICATE OF COMPLETION WHEREAS, by an Owner Participation Agreement (hereinafter referred to as the "Agreement") dated , 2004, by and between THE REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS (hereinafter referred to as "Agency"), and Wilco Development, (hereinafter referred to as "Participant"),- Participant has redeveloped the real property (the "Site"), legally described on Exhibit 1 attached hereto and incorporated herein by reference, according to the terms and conditions of said Agreement; and WHEREAS, pursuant to Section 3.7 of the Agreement, promptly after completion of all construction work to be completed by Participant upon the Site, and upon request by Participant, Agency shall firmish Participant with a Certificate of Completion in such form as to permit it to be recorded in the Official Records of the County of Riverside; and WHEREAS, the issuance by Agency of the Certificate of Completion shall be conclusive evidence that Participant has complied with the terms of the Agreement pertaining to the redevelopment of the Site; and WHEREAS, Participant has requested that Agency Furnish Participant with the Certificate of Completion; and WHEREAS, Agency has conclusively determined that the redevelopment of the Site has been satisfactorily completed as required by the Agreement; and WHEREAS, the Agreement provided for certain covenants to run with the land, which covenants were incorporated in a Declaration of Covenants, Conditions and Restrictions (the "Declaration"); e 19 EXHIBIT "D" TO OWNER PARTICIPATION AGREEMENT Page 1 of 3 1003/012/30897.02 NOW, THEREFORE: 1. As provided in the Agreement, Agency does hereby certify that redevelopment of the Site has been fully and satisfactorily performed and completed, and that such redevelopment is in full compliance with said Agreement. 2. This Certificate shall not constitute evidence of Participant's compliance with the Declaration, the provisions of which shall continue to run with the land. 3. This Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Participant to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance construction work on the Site, or any part thereof. Nothing contained herein shall modify in any way any other provision of said Agreement. 4. This Certificate is not a Notice of Completion as referred to in California Civil Code Section 3093. 5. Except as stated herein, nothing contained in this instrument shall modify in any way any other provisions of the Agreement or any other provisions of the documents incorporated therein. IN WITNESS WHEREOF, Agency has executed this Certificate as of this _ day of 1200. THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS By Executive Director CrawE�BIT "D" ��,e �d TO OWNER PARTICIPATION AGREEMENT Page 2 of 3 1003/012/30897.02 1 EXHIBIT 0°D" LEGAL DESCRIPTION OF SITE [TO BE INSERTED] (2 EXHIBIT "D" TO OWNER PARTICIPATION AGREEMENT Page 3 of 3 1003/012/30897.02 EXHIBIT "E" CONSENT TO PROJECT Pursuant to the Settlement Agreement dated May 4, 1988, the Palm Springs Community Redevelopment Agency has a first right to acquire that certain parcel identified as the Winters Parcel, located on North Patin Canyon Drive and adjacent to the Property described in the foregoing agreement. Frank Tysen and Therese Hayes ("Tysen"), owners of the Casa Cody which is adjacent to the Winters Parcel to the south, on 175 South Cahuilla made an offer to acquire the Winters Parcel_and the Agency responded on January 26, 2004 attempting to exercise their right to acquire the Winters Parcel. The Agency is prepared to abandon its effort to acquire the Winters Parcel if Tysen is willing to permit a transfer of certain development rights from the Winters Parcel to the parcel to the north owned by John Wessman ("Wessman Parcel"), which is the subject of this OPA. Tysen has reviewed the OPA and the development plan contained within the Scope of Development. The parties understand that the Project must go through the City of Palm Springs' regular development approval process. Tysen, on behalf of owners of the Tysen Parcel, has reviewed and understands the Project and will consent to the development of the Project if it is consistent with the Scope of Development and will not create impacts on the Tysen and Winters Parcels beyond those which would arise from the development of the Project in accordance with the Scope of Development. Nothing herein shall be deemed to affect in any manner the right of the City to disapprove, alter or approve the development plan for the Project, whether consistent or inconsistent with this OPA. In addition, the parties acknowledge that the Project contemplates in some degree the transfer of development rights from the Winters Parcel to the Site. Tysen intends to renovate the structure with the four existing guest quarters to become four hotel units and will preserve the exterior of the historic structure in accordance with the Seller's condition of sale. Accordingly, upon acquisition, Tysen will record a Covenant agreement surrendering development rights on the Winters Parcel beyond those necessary for his proposed renovation of the existing structure. Approved this day of , 2004 Prank Tysen Y ` Therese H yes EXHIBIT "E" TO OWNER PARTICIPATION AGREEMENT 1003/012/30897.02 RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AN OWNER PARTICIPATION AGREEMENT WITH JOHN WESSMAN, D/B/A WESSMAN DEVELOPMENT COMPANY, FOR THE DEVELOPMENT OF A BUITIQUE HOTEL AT THE SOUTHEAST CORNER OF CAHUILLA RAOD AND TAHQUITZ CANYON WAY, MERGED AREA#1 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. seq.) to carry out the purpose as the redevelopment agency in the City of Palm Springs ("City"); and WHEREAS, on May 4, 1988, the Community Redevelopment Agency entered into a Settlement Agreement with Frances Winter ("Owner") related to eminent domain of a property at 141 South Cahuilla Road whereby if Owner received from any third party a proposal in writing to purchase the property which Owner is prepared to accept, Owner shall provide Notice to the Agency and the Agency shall have a right of first refusal for a period of thirty (30) days after the receipt of Owner's Notice in which to notify Owner in writing whether it agrees to purchase the Property for the same price and on the same terms and conditions as the offer made by the third party; and WHEREAS, Owner gave Notice of intent to sell on December 27, 2003, and on January 26 the Agency replied in writing that it was exercising its option to acquire the property by matching the offer that had been accepted; and WHEREAS, the third party offer contained provisions such that the Buyer must agree to certain non-financial conditions related to not destroying or significantly altering the building,and applying for permanent historic preservation status for the building; and WHEREAS the Agency's intent in acquiring the Winter property was to facilitate the development of a luxury boutique hotel of at least 40 rooms on the adjacent property to the north, which would have then included the Winter property, but opted to pursue a negotiated development strategy with Winter's two neighbors; and WHEREAS, the Agency has negotiated an Owner Participation Agreement with Wessman to facilitate the development of a 48-room boutique hotel on Wessman's property, with the consent and release from Frank Tysen and Therese Hayes, owners of the adjacent Casa Cody Country Inn (collectively, "Casa Cody"); and WHEREAS, the Agency has considered the staff report, and all the information, testimony and evidence provided at its regularly scheduled meeting of May 19, 2004. 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. The Developer proposes to construct a new high-end hotel on the 36,900 s.f. parcel at the southwest corner of Cahuilla Road and Tahquitz Canyon Way, and seeks accommodation through the code to transfer some of the development rights from the adjacent Winter property, which the Agency has foregone a legal opportunity to purchase. SECTION 3. The Agency proposes, through this Owner Participation Agreement,to help the Owner facilitate the development of a 48-rom room hotel in style and quality similar to a "W" hotel. The project still needs to go through the Planning approval process. The Owner, in turn, shall commit to a development schedule, as well as a maximum development "envelope". Other requirements shall be placed on the project by the City in the entitlement process, including, but not limited to, a parking covenant to run with the land on the Owner's property at the Desert Fashion Plaza. The Agency shall obtain a consent and release of the maximum development envelope from the neighboring property owners, Casa Cody. The agreement shall have a schedule of three (3) years. SECTION 4. The Agency does hereby find and determine as follows: (a) The Owner's property was originally developed in the 1920's or 1930's and by the early 1980's was razed and has remained vacant for over 20 years; the Winter property was purchased by the Winter family in the 1930's and has been in family ownerships for nearly 70 years; the Winter family desires to see the home preserved and has opted to place a preservation covenant on the property, severely restricting what a buyer may do with the property, which has caused the Owner and Agency to seek other avenues for the development of a hotel. (b) The OPA effectuates the purposes of the Community Redevelopment Law by reversing or alleviating any serious physical, social, and economic burden of the Community which cannot reasonably be expected to be reversed or alleviated by private enterprise acting alone, in that the OPA will facilitate the redevelopment of the hotel site by causing the reconstruction and upgrade of the property and locating at the property a first class hotel, in order to increase transient occupancy tax revenue and attract additional high- end hotel and retail development within the City and increase the City's tax base. (c) The OPA effectuates the purposes of the Community Redevelopment Law as it is intended to eliminate blight and promote the health,safety and general welfare of the people of Palm Springs. C `c SECTION 5. The proposed project is consistent with the Amended and Restated Redevelopment Plan for Merged Area#1, insofar as this project will increase tax increment and will expand hotel opportunities and transient occupancy tax. It will increase the City's commercial sector by locating a high-end boutique hotel at the boundary of the City's downtown and Tennis Club area, in order to capture ever more affluent visitors to the downtown and create additional retail demand in Palm Springs. SECTION 6. Based on foregoing reasons, this OPA is hereby approved and incorporated herein by this reference. SECTION 7. The Chairman of the Agency is authorized to execute all necessary documents, in a form approved by the Agency Counsel. ADOPTED this day of , 2004. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Chairman REVIEWED &APPROVED cme ..