2023-09-19 SilverRock - City Acknowledgement of PSDA Terms to RAF Pacifica Loan Opportunity Fund ISILVERROCK DEVELOPMENT COMPANY, LLC
September 19, 2023
Mr. Jon McMillen
City Manager
City of La Quinta
78495 Calle Tampico
La Quinta, CA 92253
Re: Purchase, Sale and Development Agreement (as amended, "PSDA") by and between the CITY
OF LA QUINTA, a California municipal corporation and charter city (the "City"), SILVERROCK
DEVELOPMENT COMPANY, LLC, a Delaware limited liability company ("Developer")
Dear Jon:
Preliminarily, please note th.at terms used in this letter and not otherwise defined have the
definitions given in the PSDA, as amended by Amendment Nos. 1, 2, 3, and 4.
As you know from our recent discussions, Developer's finance plan for the overall Silver Rock
Resort Area has several components. One component is an approximately up to $25 million loan
with initial gross loan amount of $12.5 million (the "$25 million loan" or "loan") secured by deed
of trust (as described in Section 311, and specifically Sections 311.1-311.6, of the original PSDA)
recorded against Planning Areas 7, 8 and 9 (Parcels 10, 11 and 12 of Parcel Map No. 37202, Filed
in Book 242, Pages 72 through 87 of Marcel Maps, in the Office of the County Recorder of
Riverside County, California (the "PA 7,8,9 Property").
This loan will be used to (i) pay the standard closing costs associated with the loan transaction,
(ii) create a holdback (the "Completion Holdback") in the approximate amount of $700,000.00
for the purpose of funding the costs to complete the planning, application, and City -processing
for approval of the development plan and site development permit(s) for the PA 7,8,9 Property,
(iii) create a restricted reserve in the amount of $458,000.00 (the "Restricted Reserve"),
(iv) create a real estate tax fund in the amount of $143,304.39 (the "Tax Fund" and together with
the Completion Holdback and the Restricted Reserves, the "Lender Holdbacks"), and (v) the
balance of this loan, in an amount to be determined but not to be less than $10,000,000, first will
be used to pay off and remove all mechanic's liens (other than those of the two general
contractors) recorded against the Phase 1A Property and the Phase 1B Property (as defined in
PSDA Amend. No. 2) (the "Mechanic's Liens Payoffs"). The deed of trust shall secure only the
amount of the loan described in this letter and shall not secure any other financing previously
obtained or to be obtained by Developer for the Project. At the request of the prospective lender
of the $25 million loan, I am seeking your acknowledgement of certain terms of the PSDA which
will relate to the loan and the secured interest affecting the PA 7,8,9 Property.
343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543
Mr. Jon McMillen
September 19, 2023
Page 2
First, the lender will require that the borrower under the loan be a new entity. Therefore, the
PA 7,8,9 Property will be transferred to such new entity in accordance with Section 603.1(b) as
amended in Paragraph 5 of Amend. No. 3 of the PSDA. The lender is seeking acknowledgment
that such a transfer is permitted. To accommodate this, the PA 7,8,9 Property will be transferred
to a new entity directly or indirectly owned or controlled by the Developer and which will satisfy
the requirements set forth in Section 603.1(d) as amended in Paragraph 6.1 of Amend. No. 4 of
the PSDA.
Second, the lender will want to obtain from the City the Subordination Agreement called for in
Section 7(g) of the Option Agreement affecting the PA 7,8,9 Property, recorded in the Riverside
County Recorder's Office on November 11, 2018 as Instrument No. 2018-0464677 (the "PA 7,8,9
Property Option Agreement") but also will want the Subordination Agreement to contain terms
referring to the cure rights of lender under Sections 311.3 and 311.6 of the original PSDA and
terms addressing Lender's and its successor's rights to complete the development and/or
transfer the subject property after obtaining title through enforcement of the lender's rights. The
lender seeks the City's acknowledgement that the City will provide such Subordination and by
signing below, the City hereby acknowledges and agrees it will provide such Subordination,
subject to the terms hereof and the Subordination Agreement being in form and substance
satisfactory to the City. It is understood, and the City requires, that such Subordination
Agreement would be delivered into a closing escrow and would be effective only upon recording
and would be recorded only upon the condition that the balance of the loan, after payment of
closing costs, the Lender Holdbacks described above, and the Mechanic's Liens Payoffs described
above (whether such Mechanic's Liens Payoffs are made available for immediate disbursement
or are deposited into said escrow and either used at closing to pay the above-described
mechanic's liens and/or are held in said escrow or sub -escrow for such payment when an
unresolved lien amount is resolved and ready for payment). The Developer shall deliver to the
City, and the City shall have the right to review and comment on, the escrow instructions for said
escrow or sub -escrow that would facilitate the distribution of the balance of the loan for the
above-described Mechanic's Liens Payoff.
Third, Paragraph 2 of PSDA Amendment No. 4 and Section 311.1 of the PSDA call for Developer
to provide to the City Manager evidence of Developer's financing. Developer has provided the
City Manager a term sheet dated August 3, 2023 from Keillor Capital and a sources and uses
spreadsheet for the above described loan and the City Manager (a copy of the proposed sources
and uses are attached hereto as Exhibit A). The lender is seeking your acknowledgement that
such information is, for purposes of this $25 million loan only, adequate evidence of the subject
loan for the purpose of proceeding with the full documentation and closing of such $25 million
loan, and that no further approval of the subject loan by the City is required at this time; and by
signing below, the City hereby approves the subject loan; provided that upon closing of escrow
of the $25 million loan, a complete set of executed loan documents (including the recorded deed
343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543
Mr. Jon McMillen
September 19, 2023
Page 3
of trust) shall be delivered to the City Manager and/or City Attorney, if requested by the City
Manager or City Attorney, for the purpose of confirming the provisions in this letter are
adequately documented and binding contractual obligations of the parties in said loan
documents.
To facilitate the further engagement of the lender in the loan process, Developer is requesting
your acknowledgement on behalf of the City of the above three items. Thank you very much for
your consideration of this request. Please let us know if you would like to discuss this further.
Most Sincerely,
SILVERROCK DEVELOPMENT COMPANY, LLC
a Delaware limited liability company
By: The Robert Green Company,
a California corporation, its manager
By: ��—
Robert S. Gree
President
ledged as to third, fourth and fifth paragraph above on behalf of City of La Quinta:
Jon
illen, City Manager
cc. Bill Ihrke, City Attorney
qaolaoa3
343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543
Mr. Jon McMillen
September 19, 2023
Page 3
of trust) shall be delivered to the City Manager and/or City Attorney, if requested by the City
Manager or City Attorney, for the purpose of confirming the provisions in this letter are
adequately documented and binding contractual obligations of the parties in said loan
documents.
To facilitate the further engagement of the lender in the loan process, Developer is requesting
your acknowledgement on behalf of the City of the above three items. Thank you very much for
your consideration of this request. Please let us know if you would like to discuss this further.
Most Sincerely,
SILVERROCK DEVELOPMENT COMPANY, LLC
a Delaware limited liability company
By: The Robert Green Company,
a California corporation, its manager
By: SIGNED IN COUNTERPART
Robert S. Green. Jr.
President
Acknowledged as to third, fourth and fifth paragraph above on behalf of City of La Quinta:
9/20/2023
Jon McMillen, City Manager
cc. Bill Ihrke, City Attorney
343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543
The Robert Green Company
Talus La Quinta
PA 7,88 z9
Financing with Keillor Capital
Sources & Uses
!Loan funding
Exhibit A
Sources and Uses
Sources
12,500,000
Uses
Closing costs TBD
Holdback for 7,8 & 9 SDP 700,000
1 Other lender holdback 457,924
' Property tax impound 143,304
Contingency for closing costs 100,000
Total 12,500,000 TBD
Funds to pay mechanics liens TBD*
*Not to be Tess than $10,000,000
The estimate set forth above with regard to "closing costs" is a rough estimate of such costs
as of the date of this letter from SilverRock Development Company to the City Manager
of the City of La Quinta. The aggregate amount of such closing costs, and components thereof,
are subject to change, shall not be final until the loan has closed, and are not limited by this
sources and uses estimate.
343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543