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2021-06-04 Rutan Response to LQ Hospitality Group to Release Bonds William H. Ihrke E-mail: bihrke@rutan.com June 4, 2021 Rutan & Tucker, LLP | 18575 Jamboree Road , 9 th Floor Irvine , CA 92612 | 714-641-5100 | Fax 714 -546-9035 Orange County | Palo Alto | San Francisco | www.rutan.com 698/015610-0006 16568118.3 a06/04/21 VIA ELECTRONIC MAIL Brent D. Ellsworth, P.C. 4445 East Holmes Avenue Suite 106 Mesa, AZ 85206-3398 Email: brent@brentellsworthlaw.com Re: City of La Quinta - Marriott Residence Inn Dear Mr. Ellsworth: As you are aware, our office serves as the City Attorney’s office for the City of La Quinta (“City”). This letter is sent in response to your letter dated May 21, 2021 on behalf of your client, LQ Hospitality Group (“LQ”), seeking release from the City of the bond requirement set forth in the conditions of approval for the above-referenced project, which included the May 28, 2019 Subdivision Improvement Agreement (“SIA”) between LQ and the City, for development of a Residence Inn by Marriot on property owned by LQ in the City (“LQ Property”). As you are also aware, the LQ Property is adjacent to the Komar Desert Center property (“Komar Property”) and a vacant property owned by the City (“City Property”). The LQ Property and the City Property are subject to the Dune Palms Specific Plan, as amended, by SP Amendment 2018- 0002, adopted on February 12, 2019 by City Council Resolution 2019-002 (“Dune Palms Specific Plan”). The Traffic Impact Analysis (“TIA”) prepared for the Dune Palms Specific Plan references “Reciprocal Access with Possible Future Commercial Development” identified in the Komar Desert Center Specific Plan, SP 2005-075, adopted on January 3, 2006, by City Council Resolution 2006-003 (“Komar Specific Plan”). The Conditions Of Approval for Site Development Permit 2018-0007 (“SDP”) adopted March 12, 2019 and the Conditions Of Approval for Tentative Parcel Map 2018-0003 (“TPM”) adopted March 12, 2019 for the LQ Property both include the requirement for an offer of dedication of a reciprocal easement for access, ingress, egress, and parking access across the LQ Property, as specified in conditions #13 and #14 respectively (“Reciprocal Easement”). The Reciprocal Easement is intended to benefit not only the adjacent property to the Residence Inn, but the Residence Inn property itself, by granting the property owners and their respective invitees, including Residence Inn hotel guests, access over the adjacent properties without concern that such access will be blocked by an adjacent property owner. Brent D. Ellsworth, P.C. June 4, 2021 Page 2 698/015610-0006 16568118.3 a06/04/21 Pursuant to the SIA, LQ issued certain payment and performance bonds (“Bonds”) in order to guarantee LQ’s construction of the improvements required by the SIA, including for “Future Access to Adjacent Property to the East” (“Easement Improvements”). The SIA provides that the Bonds for the Easement Improvements “shall remain in place indefinitely until called upon or released by [the] City.” Our office’s understanding from City Staff is that, during the construction of the Residence Inn, the City and LQ explored options for LQ’s completion of its part of the Easement Improvements and subsequent release of its Bonds vis-a-vis the City’s willingness to impose on the developer of the City Property an obligation to secure the reciprocal easement over the Komar Property. Additionally, our office’s understanding is that this accommodation by the City did not—and does not—relieve or release the LQ Property from meeting the conditions of approval regarding the Reciprocal Easement. Hence, City Staff provided you the NOTICE OF MEMORIALIZING RECIPROCAL ACCESS, ETC. (the “Notice”), which is in a form approved by the City Manager, for LQ review and signature and eventual recordation to memorialize the LQ Property’s compliance with the conditions of approval. Please be aware that, upon City Staff’s and my recommendation, the La Quinta City Council approved at its Regular Meeting on May 4, 2021, release of the Bonds “upon recordation of an instrument approved by the City Manager to memorialize the reciprocal access to the [Komar Property].” The official Minutes (from the May 18, 2021 Regular Meeting approved by the City Council) reflect the approval as follows: MOTION – A motion was made and seconded by Councilmembers Peña/Radi to approve Consent Calendar Item No. 7 accepting the off-site and on-site improvements associated with Parcel Map No. 37683, Residence Inn Marriott; authorize staff to release performance security upon recordation of an instrument approved by the City Manager to memorialize the reciprocal access to the Komar Desert Center; and direct staff to release, after recordation of the instrument to memorialize reciprocal access to the Komar Desert Center, the labor and materials security 90 days after City Council acceptance of the improvements. Motion passed unanimously. Absent meeting the condition approved by the City Council, the Bonds may not be released because the conditions of approval have not been met, and the provision in the SIA to retain the Bonds until the Easement improvements are secured over the Komar Property remain in place. As outlined in the emails to LQ from Carlos Flores on May 6 and 7, 2021, LQ may complete its portions of the Easement Improvements to secure release of the Bonds. We trust that LQ understands the City’s desire to keep a good working relationship between the parties, and to this end, our office would appreciate LQ fully complying with the applicable Brent D. Ellsworth, P.C. June 4, 2021 Page 3 698/015610-0006 16568118.3 a06/04/21 conditions of approval, the SIA, and implementation for early release of the Bonds by executing, notarizing, and returning the Notice as soon as possible. If you have any questions concerning the contents of this letter, please do not hesitate to contact me. Very truly yours, RUTAN & TUCKER, LLP William H. Ihrke WHI:lr cc: City Manager’s Office Director of Design & Development Dept.