2021-04-07 SRR Dev Co - Notice of Default by City to PSDAta Qu�fra
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April 7, 2021
VIA E-MAIL AND
REGISTERED FIRST CLASS MAIL
RETURN RECEIPT REQUESTED
SilverRock Development Company, LLC
c/o The Robert Green Company
3551 Fortuna Ranch Road
Encinitas, CA 92024
Attention: Robert Green
Re: Notice of Default of Purchase, Sale, and Development Agreement
Dear Mr. Green:
As the record reflects, the City of La Quinta ("City") and SilverRock Development
Company, LLC, ("Developer") entered into a Purchase, Sale, and Development
Agreement on or about November 19, 2014 ("Original PSDA"), as amended by that
certain Amendment No. 1 to PSDA dated on or about October 29, 2015 ("Amendment
No. 1 "), that certain Amendment No. 2 to PSDA dated on or about April 18, 2017
("Amendment No. 2"), and that certain Amendment No. 3 to PSDA dated on or about
November 28, 2018 ("Amendment No. 3" and collectively referred to as the "PSDA") for
the SilverRock Resort Project ("Project"). Under the most recent amendment, the
Developer and City memorialized the results of lengthy negotiations to modify the
Schedule of Performance (as defined in Amendment No.3 and attached thereto as
Exhibit "E") to facilitate the development and operation of the Project.
The Schedule of Performance sets forth times by which the Developer must start and
complete specific items of performance. As negotiated by the parties, the Schedule of
Performance includes (in part) the following tasks, and start and completion dates, for
specific Construction of Project Components:
4 Qa
Item of Performance Start Completion*
Prepare and submit to City for approval,
3 months
Prior to start of construction
and obtain City's approval of, Project
prior to
of applicable Project
Component (or portion thereof)
anticipated
Component or portion
Design/Construction Development
start of
thereof.
Drawings
construction
of
applicable
Project
Component
or portion
thereof.
Developer satisfies all conditions to
N/A
Prior to start of construction
develop set forth in Section 304 of
of applicable Project
Agreement
Component
Luxury Hotel
8/01/19
12/31/20
(PA 2)
Luxury Branded Residential
12/31/19
4 years after start.
Development
Project Component'*
(PA 3)
considered complete when
70% of units are complete.
Conference and Shared Services
8/1/19
12/31/20
Facility
(PA 4)
Lifestyle Hotel
8/1/19
12/31/20
(PA 5)
Lifestyle Branded Residential
12/31/19
4 years after start.
Development
(PA 6)
Project Component**
considered complete when
70% of units are complete.
-k U1IIPIeuon gates or iimerrames iistea in this table are the outside dates permissible under
Amendment No. 3 and are subject to the terms of Amendment No. 3.
As of the date of this letter, the Developer has not met the above -highlighted start and
completion dates. Therefore, pursuant to Section 501 of the Original PSDA, which
remains binding and operative pursuant to Section 17.1 of Amendment No. 3, the City
hereby declares the Developer in "Default" of its obligations under the PSDA. This letter
serves as written notice of the Default, and any cure of the Default is governed by
Section 501 of the PSDA.
In consideration of the aforementioned items of Default, and the fact that there are
several other items on the schedule that may become delinquent, the City demands the
following to be completed within 30 days of issuance of this written notice as
"commencement of cure":
• The Developer must prepare and bring to the Council for consideration, after
consultation and negotiation with the City Manager, Designated Staff, and City
Attorney, proposed amendments to the PSDA that would result in the Developer
being able to pull permits for precise grading (and possibly building permits or
other permits) to commence construction and, with due diligence, continuously
perform the project components which are now (or likely to become) in Default
under the current Schedule of Performance;
• The Developer must prepare and bring to the Council for consideration, after
consultation and negotiation with the City Manager, Designated Staff, and City
Attorney, a financing commitment, which may include an assignment to any
current lender or equity investor that agrees to the terms and conditions of the
PSDA (subject to the proposed amendments described above) and all other
agreements and documents pertaining to the Project; and
• The financing commitment must allow the Developer to commence construction
and, with due diligence, continuously perform the project components which are
now (or likely to become) in Default under the current Schedule of Performance,
and the amendments would not become effective unless and until any
supplemental financing would be closed and lender guarantees those funds.
Any revised Schedule of Performance, and the proposed amendments described above,
must meet with the approval of the City Manager, Designated Staff, City Attorney, and
Council. If so approved, the proposed amendments may serve as a cure of the Default
identified by this written notice, as long as performance under the approved
amendments is continuous with due diligence until the construction of all project
components in Default are completed.
Please be prepared to outline and implement a strategy with an associated definitive
schedule to execute the Project. Should you have any questions and to schedule a
meeting, please contact me at (760) 777-7100.
Sincerely,
Jon Mc °iTlen
,CiFa n a g e r
cc: William H. Ihrke, City Attorney
Clinton L. Blain, Attorney at Law
3990 Old Town Avenue, Suite B-101
San Diego, CA 92110
Attention: Clinton Blain, Esq.