2018-11-07 (02) SRR TOT Sharing AgrmtAGREEMENT TO SHARE TRANSIENT OCCUPANCY TAX REVENUE
This AGREEMENT TO SHARE TRANSIENT OCCUPANCY TAX REVENUE (the
"Agreement") is entered into this day of 2018, by and between the
CITY OF LA QUINTA, a California municipal corporation and charter city ("City"), and
SILVERROCK PHASE I, LLC, a Delaware limited liability company ("Participant")
(individually a "Party" and collectively the "Parties").
RECITALS
A. City and Participant are parties to that certain Purchase, Sale, and
Development Agreement (the "PSDA"), pursuant to which City has agreed to sell to
Participant certain real property in the City of La Quinta, County of Riverside, State of
California (the "Development Property"), and Participant has agreed to develop and
cause to be operated thereon a commercial project containing hotels and associated
amenities, branded residential units, a mixed use village, and a resort residential village
(the "Development Project").
B. Pursuant to the PSDA, (i) City has agreed to convey to Participant fee title
to a portion of the Development Property designated in the PSDA and in the site map
attached hereto and incorporated herein as Exhibit "A" as PA 5 (the "Site"), and (ii)
Participant has agreed to develop on the Site the hotel defined in the PSDA as the
Lifestyle Hotel (the "Hotel").
C. Pursuant to the PSDA, Participant is required to enter into a hotel
management agreement and all ancillary agreements, including, without limitation, a
technical services agreement, hotel brand licensing agreement, and use and access
development agreement (collectively, a "Hotel Management Agreement"), with a City -
approved hotel operator (the "Hotel Manager"), who shall be responsible for the
management and operation of the Hotel pursuant to the terms of the Hotel Management
Agreement.
D. In consideration for Participant's execution of an Agreement Containing
Covenants, Conditions, and Restrictions Affecting Real Property substantially in the form
attached hereto and incorporated herein as Exhibit" 13" (the "Covenant Agreement"), City
has agreed to make certain periodic payments to Participant to assist Participant in the
continued operation of the Hotel, in an amount equal to a portion of the transient
occupancy tax generated by the Hotel (the "Transient Occupancy Tax"), subject to and
in accordance with the other terms and conditions set forth in this Agreement and the
Covenant Agreement.
E. By its approval of this Agreement, the City Council of City has found and
determined as follows: (i) that the value to City of Participant's performance of its
obligations set forth in the Covenant Agreement in each fiscal year during which City
payments are to be made (in terms of economic revitalization, generation of additional
local tax revenues that will help to fund vital public services, provision of expanded and
more accessible hotel guest rooms and related amenities for persons wishing to visit the
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City of La Quinta for business or pleasure, and job growth and retention) will be not less
than the amount of such payments; and (ii) that the imposition of the covenants and use
restrictions upon the Site pursuant to the Covenant Agreement in exchange for the
payments to be made by City constitutes a valid public purpose.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this
reference, and for other good and valuable consideration, the receipt and sufficiency of
which is acknowledged by both Parties, City and Participant hereby agree as follows:
1. Defined Terms. Any capitalized terms contained in this Agreement, which
are not defined in this Agreement, shall have the meanings ascribed to such terms in the
Covenant Agreement.
2. Execution and Recordation of Covenant Agreement. Concurrently with
City's and Participant's execution of this Agreement, Participant shall fill in the blanks,
date, and execute, with signatures notarized, the Covenant Agreement. At the "Phase 2
Closing" (as that term is defined in the PSDA), Participant shall record the Covenant
Agreement against the Site and provide a copy of the recorded Covenant Agreement to
City. City agrees to cooperate in the recordation of the Covenant Agreement against the
Site, at no cost to City, and the City Manager or his designee is hereby authorized on
behalf of City to execute all documents and take all actions necessary or appropriate to
implement this Agreement.
3. Termination of Agreement. This Agreement shall automatically terminate
and be of no further force or effect upon termination of the Covenant Agreement, in
accordance with the terms thereof. City shall, within ten (10) days following the
termination of this Agreement, cause the Covenant Agreement to be released from record
title to the Site by recording in the Official Records of Riverside County such documents
as a nationally recognized title company shall reasonably require for such purpose.
4. Assignment. Except as otherwise set forth in the Covenant Agreement or
otherwise in connection with a transfer or transfers of interests in the Development
Property and/or the Development Project allowable pursuant to Section 603 of the PSDA,
Participant shall not assign, hypothecate, encumber, or otherwise transfer any of its rights
and/or obligations set forth in this Agreement and/or the Covenant Agreement to any
other person or entity without City's prior written consent, which consent City may grant
or withhold in its sole and absolute discretion.
5. Cooperation in the Event of Legal Challenge: Validation Action. In the event
any third party files an action seeking to invalidate this Agreement or the Covenant
Agreement or seeking any equitable remedy that would prevent the full performance
hereof or thereof, City and Participant agree to cooperate in the defense of such action.
Such cooperation shall include, without limitation: (i) an agreement by each Party to not
default or allow a compromise of said action without the prior written consent of the other
Party; (ii) an agreement by each Party to make available to the other Party all non-
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privileged information necessary or appropriate to conduct the defense of the action; and
(iii) an agreement by each Party to make available to the other Party, without charge, any
witnesses within the control of the first Party upon reasonable notice who may be called
upon to execute declarations or testify in said action. Participant shall pay all of City's
costs and expenses (including reasonable attorney's fees) and City shall have the sole
right to select its legal counsel; provided however, Participant shall have the right,
exercisable upon written notice to City, to retain counsel of Participant's choice, but
subject to City's reasonable approval, to defend City against any such third party action,
in which event Participant shall not be responsible for any costs incurred by City in
connection with the defense of such third party action.
In addition to the foregoing, if Participant delivers a written request for such action
to City (c/o the City Manager) not later than thirty (30) days after the date the City Council
of City approves this Agreement at a public meeting, City shall file an action in Riverside
County Superior Court pursuant to California Code of Civil Procedure Section 860 et seq.
to validate this Agreement and the Covenant Agreement and each and every one of its
and their provisions. In such event, City and Participant shall reasonably cooperate in
drafting the complaint, briefs, the proposed judgment of validation, and such other
pleadings, documents, and filings as may be required or desirable in connection with the
validation action. City and its legal counsel shall file and prosecute the validation action,
but shall reasonably coordinate and cooperate with Participant concerning the drafting of
pleadings and other documents and with regard to the litigation strategy to be employed.
Participant shall reimburse City within fifteen (15) days after written demand therefor for
all reasonable costs ("Costs") of the validation action actually incurred by City. Costs
include without limitation, reasonable attorney's fees, filing fees and court reporter fees
(if any), costs of publication and to effectuate service of process, reasonable
photocopying and other reproduction charges, travel time and mileage expenses, and
other costs and expenses reasonably incurred by City. In the event of an appeal of such
action, the Parties shall cooperate with respect to the appeal to the same extent as at the
Superior Court level of the proceedings.
Upon the entry of a final non -appealable judgment of any court with jurisdiction
invalidating or enjoining the performance of any material covenant set forth in this
Agreement or the Covenant Agreement, this Agreement and the Covenant Agreement
shall automatically terminate without the need of further action by either Party, except that
any reimbursement obligations of either Party shall survive such termination.
6. Compliance with Laws. During the entire Operating Period, Participant shall
cause the Hotel to be operated on the Site in conformity with all applicable federal, state,
and local laws, ordinances, and regulations, the requirements of the PSDA, and any other
discretionary permits issued by City for the Hotel, including, without limitation, all of the
conditions of approval issued in connection therewith.
Nothing herein constitutes a representation or warranty by City that the
construction of the Hotel was not a "public work" or otherwise subject to California Health
and Safety Code Sections 33423 through 33426, or Chapter 1 of Part 7 of the California
Labor Code (commencing with section 1720), and all applicable statutory and regulatory
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provisions related thereto, and Participant expressly waives any right of reimbursement
for any "increased costs" under California Labor Code Section 1781 or otherwise with
respect to the Hotel or Participant's development thereof. Participant shall indemnify,
defend, and hold City and City's representatives, volunteers, officers, officials, members,
employees, and agents harmless, including, but not limited to, litigation costs, expert
witness fees, and reasonable attorneys' fees, from and against any and all claims
pertaining to the payment of wages in connection with Participant's development of the
Hotel on the Site or failure to comply with federal or state labor laws, regulations, or
standards.
7. Compliance with Hotel Management Agreement, During the entire
Operating Period, Participant shall cause the Hotel to be operated on the Site in
conformity with all of the requirements set forth in the Hotel Management Agreement.
8. Representation and Warranty Regarding Hotel. As of the Commencement
Date, Participant represents and warrants to City that (i) the Hotel Management
Agreement is in full force and effect, (ii) Participant is not in material default of any of its
obligations under the Hotel Management Agreement, and (iii) there are no existing
conditions or occurrences that, with the passage of time, would constitute a material
default under the Hotel Management Agreement.
9. Integration and Amendment. This Agreement and the Covenant Agreement
attached hereto constitute the entire agreement by and between the Parties pertaining to
the specific subject matter hereof, and supersede all prior agreements and
understandings of the Parties with respect thereto. This Agreement may not be modified,
amended, or otherwise changed except by a writing executed by both Parties.
10. Notices. Notices to be given by City or Participant hereunder may be
delivered personally or may be delivered by certified mail or by reputable overnight
delivery service providing a delivery confirmation receipt, with mailed notices to be
addressed to the appropriate address(es) hereinafter set forth or to such other
address(es) that a Party may hereafter designate by written notice. If served by overnight
delivery service or certified mail, service will be considered completed and binding on the
Party served on the date set forth in the confirmation or certification receipt. If delivered
personally, service will be considered completed and binding on the Party served on the
date of such personal delivery.
If notice is to City: City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Frank J. Spevacek, City Manager
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with a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attention: William H. Ihrke, City Attorney
If notice is to Participant: SilverRockPhase I, LLC
c/o The Robert Green Company
3551 Fortuna Ranch Road
Encinitas, CA 92024
Attention: Robert S. Green, Jr.
11. Authority toExecute. The person(s) executing this Agreement on behalf of
each of the Parties hereto represent and warrant that (i) such Party is duly organized and
existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of
said Party, (iii) by so executing this Agreement such Party is formally bound to the
provisions of this Agreement, and (iv) the entering into this Agreement does not violate
any provision of any other agreement to which such Party is bound.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed an original
and all of which, when taken together, shall constitute one and the same instrument.
13. Legal Actions. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California without regard to conflict of
law principles.
In addition to any other rights or remedies and subject to the restrictions in this
Agreement, including without limitation in Section 5 and in this Section 13, either Party
may institute legal action to seek specific performance of the terms of this Agreement, or
to cure, correct or remedy any default, or to obtain any other legal or equitable remedy
consistent with the purpose of this Agreement. City shall also have the right to pursue
damages for Participant's defaults but in no event shall Participant be entitled to recover
damages of any kind from City, except for damages up to, but not exceeding, the amount
that Participant would have received under this Agreement but for City's default of its
covenants under this Agreement, but excluding damages for economic loss, lost profits,
or any other economic or consequential damages of any kind. Such legal actions must
be instituted in the Superior Court of the County of Riverside, State of California, or in the
Federal District Court in the Central District of California. In the event of any litigation
between the Parties hereto, the prevailing Party shall be entitled to receive, in addition to
the relief granted, its reasonable attorney's fees and costs and such other costs incurred
in investigating the action and prosecuting the same, including costs for expert witnesses,
costs on appeal, and for discovery.
14. Nonliability of City Officials. No member, official or employee of City shall
be personally liable to Participant, or any successor in interest, in the event of any Default
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or breach by City or for any amount which may become due to Participant or its
successors, or on any obligations under the terms of this Agreement or the Covenant
Agreement.
[End — Signature page follows]
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IN WITNESS WHEREOF, City and Participant have executed this Agreement to
be effective as of the date first set forth above.
Date:-79, 2018
ATTEST: r
By: t/'j"W V( z
MONIKA RADEVA, City Clerk
City of La Quinta, California
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
By
William H. Ihrke, City Attorney
[Signature page continues next page]
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"City"
CITY OF LA QUINTA,
a California municipal corporation and charter
city
k, City Manager
"Participant"
SILVERROCK PHASE I, LLC, a Delaware
limited liability company
By: The Robert Green Company,
a California corporation
Its: Manager
Date: , 2018 By.
Name: Robert S. Green, Jr.
Its: President and Chief Executive
Officer
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EXHIBIT "A"
SITE MAP
882/015610-0065
776263Z1 a11/06/18 EXHIBIT "A"
WIM1, :
AGREEMENT CONTAINING COVENANTS CONDITIONS AND RESTRICTIONS
AFFECTING REAL PROPERTY
[See following document]
882/015610-0065
7762632.1 a11/06/18 EXHIBIT NO. 1
EXHIBIT NO. 2
SAMPLE FORM OF ESTIMATED NOI NOTICE
E FAMM 19 d MN NADI)
Dale:
Reclilfed Annual Return:
E6111naleoArrnualNO] w1M Payment Pellod Adlvals OrEslfnates
1 at PAVI Mnt PM Wdl NM Flatlsa
al or esllmama wi
image oTeslimaie(jarmluai ml
of meeood to as"ie Rery rre0 All a I %iurrl
Paid 10 Ck
iFliaYaklas7ie '.b r 1Ewile (9S% o"OT bald to ire)
tn11 needed 10 a^.rl Wile Reou Intl An1:ra7 Fwrn (P3finell Perpd 1;
%MI availaDl2 tr reaafe (Parme•4 pewa I-,
un1 nKOed 10 N lINe Re4Ilie dA.r.Fual i;Min
2 na P1Ymarlt Parton tam notioa
1.115 d201a
$ 9,350,000
IN! T.
17.M., 2023%1 3313% 25,905 100.0m
11,387 $ 141,618 $ 234,682 $ 202,312 S 7KI0,000
$ 121,357
$ 285,000
$ 700,000
161
2n0
I 3rd 11.
annial
Actual or estimated 1301 5 1300,000
1 1200000
1 1.6 D.= 20 000
5 5A0,000
Percezllage0TeMimi AedannuaIMD1 23.81%
19.05%
25to% 31.75%
100M%
Amourilneeded to achieve "Oed Annual ItUrn S 726A90
$ 550.952
1$ 774,603 96a2st
$ 3,050,000
70Tpaid 10Cily a 300.000
S 200.000
Amount available loriebale (95%OTTOTPaid 10Clly1 3 255.000
$ 190,000
AggRgafe amauaAnezdedlda0nrtve RegiW Annual Fftm (Panen Per►aos 1W) S 1.3VA43
,Aggregele amouMava[Wl? Arnebale l:PaprnenlPerbds 1 &2y 5 175.0"
.Amount needed to achieve led AMU31 Feturn S 3.050.000
Total0ovenan! Paymerd trPaymenil PeTlodr, l &2 A *sseTotaww $ 475,000
ILess1stPayment PerbdCovenaAPaymern $ 121,3a7
Covenant ParneM dale 2nd Palmenl Per= $ 353,613
as FMAt Mod 11D] notim
pa -I
ft Perim
19 Quarter
2rp arler
3wTamer 41r1 gaber
al1331
it oresllmale l 1a01 1,500,00a
S 1.205,100
1 TWO5 2,500,
$ &2230.000
e-twge oTefillmaledannua I M01 16.29%
lA63%
35,59% 33.19%
10000'
u71 needed 10 aAWVe ReWlled Arrnaral Relurm $ 210,366
$ 168293
S 420,732 $ 380,610
$ 1,150,000
Daa» CRI s 300,000
s ro0,003
06
unlav31lao*tTlet>,ale 195%OTTOTpat toC.Ry $ 285,000
$ 190,000
SWOM
4gO7e amount needed toachieve Required Annual Relum (Pgrne fl Periods W) $ 799,390
e:ppamount avaliablelbrreiale(PapnerilPerbdsl-3p $ 1,045,000
unl needed ID achieve ReyllledAMUaI ftturn $ 1,150,000
ICovenaMPayrnen!lorPaymengPellodsl-3isWAeroTaDmv $ 799,390
161PayInenIPerodC0MWOPayrMnl $ 121,387
2nd Palm2m Pedal CovenarA Pay-nei1 S 353b13
FnarA Parment 0,Y"Pa-F-WA Perim S 324.390
wilt Psi mflnt P*nod im nntla a 14 nnual
pa r me m FWw
lslquagef
2M quarter
3ro quarter
An quaiier
annual
ActuaIMol
s 1.1R3.000
s I,2a0.000
s 3,000,000
5o" ^a
$ a,650,000
Peroentagreorabivalannual MI
17.3t%
11111%
3AA15%
3110%
10(100114
Amountneeded la achieve Ref} lied An ival Felurrl
S
121.357
$ 97,110
$ 242,775
S 2:5 1.8
$ 700,000
TOT pa Id to Cltj
5
300,0o0
5 200,000
s 600,000 1
S sTrorz
Amouvltavall blel0riebate 06%oTTOTpaallloCRyu
S
266.000
$ 120,000
$ 570,000
S 516.325
Aggregate amounineededloachieve RegJlred Amnjai Relum (Papel PerFxs 1-4)
$
700,000
.Aggla[aale a noiFA avalInle 7r reaarx jPaf'nmiPerbda il.)
$ 1,561,325
Am0-ill neeoM 17 a:nlete Red Ile9 A'ill Jai F191,rM
$
700,000
ratal0ovenant Payment 7irPaymenlPerlods1-t161t r6T&We
$
700,000
ILe55151Pa/mentPe70dC0Yea3MPaymelyd
S
121,3a7
(Less 2nd Payment Period OmmnarA Payment
3
353,613
Le6s3MPajmenIPeWd00wa'nanlPaymeeA
$
324,390
actual amounts 10 be Tit" 11
e MIME d a rr oLMIS to be t11w in
au o"ervatye66e1rcabu6ie
882/015610-0065
77626321 all/06/18 EXHIBIT NO. 2