2024-08-01 SDC - City CONFIRMATION of PSDA DEFAULT & Failure to Cure Notice--- i. .�i.11 •{ .NI,1 .-.__..--
August 1, 2024
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: Failure to Cure Notice and Confirmation of Default
Purchase, Sale, and Development Agreement
Robert:
This letter serves to memorialize that, as of July 31, 2024, SilverRock Development
Company, LLC ("SDC") did not cure the Defaults as more specifically described in that
certain letter from the City, dated July 1, 2024, a copy of which is attached hereto (the
"City's July 1 Notice of Default"; additionally, aII capitalized words in this letter shall have
the same meanings ascribed to them in the City's July 1 Notice of Default unless
otherwise noted). Therefore, pursuant to Section 501 of the Original PSDA, SDC is in
default, with no right to cure, and SDC no longer has any rights as "Developer" under the
PSDA.
Specifically, SDC has not, and cannot, perform the Defaults noted in the July 1, 2024
Notice of Default: (a) failure to deliver a copy to the City Attorney and City Manager of all
loan documents in a sufficiently final draft form for the Bridge Loans and Recapitalization
Loans by June 30, 2024, and (b) failure to close on the Recapitalization Loans with the
Recapitalization Lenders by June 30, 2024.
Furthermore, the City is compelled to correct a material misstatement made in a letter,
dated August 1, 2024 (12:01 am), from the Robert Green Company, promulgating that
SDC has the authority to determine whether CMG, one of multiple parties to the MOU "has
no further rights, liabilities, or obligations under the MOU or the PSDA or in connection
with the Developer -Held Properties." As clearly explained in the City's July 1 Notice of
Default, "Provided that Developer and Developer's affiliated entities perform, and
perform to completion, under [MOU] ... , Developer shall be deemed by the City to be
taking actions to cure the Defaults identified in the Notice of Default." [Emphasis added.]
18495 Calle Tampico 1 la quiata, California 82253 1760.7f7,7U00 I www.laquintacagov
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SDC did not perform under the MOU, which frustrated the ability for not only SDC to
complete its obligations for assignment of rights and properties to CMG, but frustrated all
parties' ability to perform. In fact, SDC willfully took unauthorized actions to prevent the
parties to the MOU from being able to perform.
As referenced in the July 10, 2024 Cease and Desist Demand from the City Attorney's
Office, SDC, without the City's knowledge or approval, executed and recorded mechanics
liens for the benefit of SDC (or SDC -affiliated entities) and deeds of trust for unknown,
unauthorized, and unapproved purported financing sources of the Project. The "Purported
Secured Interests" as described in the Cease and Desist Demand were willfully in violation
of the City's rights under Sections 211, 311.1, and other sections of the PSDA, which
require SDC (or any SDC entity) to obtain the City's prior approval for any financing of the
infrastructure improvements and various project components in connection with the
Project. In other words, SDC was required to obtain the City's prior approval before
recording any of the Purported Secured Interests, but SDC failed to do so—and SDC
continues to defy the City's demand to remove these unauthorized documents from record
title on any of the properties.
Given the bad faith under which SDC has acted since the City's July 1 Notice of Default—
where SDC took actions and wrote statements in direct contradiction to the manner in
which SDC was instructed to cure the default for failing to close by June 30, 2024 on the
Recapitalization Loans—the City has no choice but to declare that SDC is in full breach of
the PSDA and that SDC no longer has any rights as "Developer" under the PSDA.
Moreover, the actions taken by SDC to frustrate the performance of the parties under the
MOU, coupled with the August 1, 2024 Robert Green Company letter, provide clear
evidence that SDC does not have the capacity or ability to perform the obligations of the
"Developer" as defined in the PSDA.
Finally, pursuant to Sections 508 and 509 of the Original PSDA and Section 7.1 of
Amendment No. 5, the City retains and reserves all of its rights cumulatively, and does
not waive any other default(s) that Developer may otherwise now or in the future have by
delivery of this letter.
Should SDC have any questions, you may contact me at (760) 777-7100.
on McMillen
City Manager
78495 Calle Tanpico 1 la Ouinla, California 92253 1 160.777 7000 1 www,iaquintacagov
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cc: Bill Ihrke, City Attorney (via email)
Parties listed:
The Robert Green Company
343 Fourth Ave
San Diego, CA 92101
Attention: Robert Green
robert@therobertgreencompany.com
Crosbie Gliner Schiffman et al.
12750 High Bluff Drive, Suite 250
San Diego, California 92130
Attention: Dana Schiffman
Attention: Thomas Crosbey
dschiffman@cgs3.com
tcrosbie@cgs3.com
Caldarelli Hejmanowski Page & Leer
3398 Carmel Mountain Road
Suite 250
San Diego, CA 92121
Attention: William Caldarelli, Esq.
wjc@chpllaw.com
Clinton L. Blain, Attorney at Law
3990 Old Town Avenue,
Suite B-101
San Diego, CA 92110
Attention: Clinton Blain, Esq.
Michelman & Robinson, LLP
10880 Wilshire Blvd.
19th Floor
Los Angeles, CA 90024
Attn: Edward D. Vaisbort, Esq.
Attn: Eric Rans, Esq.
evaisbort@mrllp.com
ERans@mrllp.com
Abbey, Weitzenberg, Warren
& Emery
100 Stony Point Rd, Ste. 200
Santa Rosa, CA 95401
Attn: Mitchell B. Greenberg,
Esq.
mgreenberg @abbeylaw.com
Watt, Tieder, et al., LLP
4 Park Plaza, Suite 1000
Irvine, CA 92614
Attn: David McPherson
Email: dmcpherson@watttieder.com
Finch, Thornton & Baird, LLP
4747 Executive Drive
San Diego, CA 92121
Attn: Andrea L. Petray
Email: apetray@ftblaw.com
Rodriguez Wright LLP
Attn: Stephen M. Wright, Esq.
Email: swright@rodriguezwright.com
78495 CaIIE Tampico 1 to Ouinta, California 92253 1760.777,7009 1 www,laquintaca,gov
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First Pathway Partners
Attn: Dan Wycklendt
311 E. Chicago Street, Suite
Milwaukee, WI 53202
510
Keillor Capital
Attn: Eric Keillor
2429 W. Coast Hwy, suite 210
Newport Beach, CA 92663
Silver Arch Capital
Attn: Jeff Wolfer
411 Hackensack Ave,
Suite 803
Hackensack, NJ 07601
Ziegler Investment Banking
Attn: Aaron Gadouas
One North Wacker Drive,
Suite 2000
Chicago, Illinois 60606
76495 Calle Tampico I La 0uinta, California 92253 1 766,777,76601 www,laquintaca.guv
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c:ALIFORNIA
July 1, 2024
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
Amendment No. 5
Robert:
As public records reflect, the City of La Quinta ("City") and SilverRock Development Company,
LLC ("Developer" or "SDC"), 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"), that certain Amendment No. 3
to PSDA dated on or about November 28, 2018 ("Amendment No. 3"), that certain Amendment
No. 4 dated on or about October 12, 2021 ("Amendment No. 4") and that certain Amendment
No. 5 dated on or about November 16, 2023 ("Amendment No. 5" and collectively referred to as
the "PSDA") for the SilverRock Resort Project, renamed Talus project (the "Project"). Under
Amendments Nos. 4 and 5, the Developer and City memorialized the City -approved Revised
Capitalization that was then presented to the City by Developer.
Revised Capitalization & Schedule of Performance
Recital K, Sections 2 and 3, and the revised Schedule of Performance of Amendment No. 5
address Developer's obligations with respect to the "Bridge Loans," "Recapitalization Lenders,"
and "Recapitalization Loans" (all as defined therein). Additionally, pursuant to Sections 2 and
7.9 of Amendment No. 5, Developer had the obligations to deliver to the City Attorney and City
Manager for review a copy of all loan documents in a sufficiently final draft form relating to the
Bridge Loans and Recapitalization Loans.
78495 Calle larnpico I La brig, California 92253 1760.777.7000 I www.laquinfaca.gov
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CALIFORNIA -
Pursuant to the revised Schedule of Performance in Amendment No. 5, Developer was to use
diligent efforts to complete the closing of the Recapitalization Loans by January 1, 2024;
provided, however, that, pursuant to Section 3 of Amendment No. 5 and Footnote 1 of the
revised Schedule of Performance, Developer had until June 30, 2024, as the outside date to
close on the Recapitalization Loans.
Default and Cure
YOU ARE HEREBY ON NOTICE that, pursuant to Section 501 of the Original PSDA, which
remains binding and operative pursuant to Section 7.1 of Amendment No. 5, the City hereby
declares the Developer in "Default" of its obligations under the PSDA. This letter serves as
written Notice of the Default and cure of the Default is governed by Article 500, and specifically
Section 501, of the Original PSDA. In accordance with Section 501, Developer shall have thirty
(30) days from receipt of this Notice of Default to cure the Defaults referenced herein: (a) failure
to deliver a copy to the City Attorney and City Manager of all loan documents in a sufficiently
final draft form for the Bridge Loans and Recapitalization Loans, and (b) failure to close on the
Recapitalization Loans with the Recapitalization Lenders.
Provided that Developer and Developer's affiliated entities perform, and perform to completion,
under that certain MEMORANDUM OF UNDERSTANDING AND AGREEMENT RELATING TO
DEFAULT AND DEVELOPER REQUIREMENTS ("MOU") dated May 24, 2024 ("MOU"), by and
among the City, Developer (and Developer's affiliated entities), Poppy Bank ("Poppy"); Cypress
Point Holdings, LLC ("Cypress"), RD Olson Construction, Inc. ("Olson"), Granite Construction
Company ("Granite"), Montage North America, LLC ("Montage"), and Christopher M. George
("CMG," and collectively, all parties to the MOU are referred to as the "MOU Parties"), Developer
shall be deemed by the City to be taking actions to cure the Defaults identified in the Notice of
Default.
Additionally, the City hereby retains and reserves any and all rights and remedies available at
law or in equity, including those available under any and all provisions of the MOU, that certain
AGREEMENT TO WAIVE AND MODIFY NOTICE AND CURE PERIOD (PURCHASE, SALE,
AND DEVELOPMENT AGREEMENT) (Cypress Point Holdings LLC Trustee Notice), dated
February 7, 2024, between City and Developer (the "Waiver And Modification Agreement"), and
the PSDA (including Amendment No. 5), due to Developer's Default and any and all anticipatory
default(s). Additionally, pursuant to Sections 508 and 509 of the Original PSDA and Section 7.1
of Amendment No. 5, the City retains and reserves all of its rights cumulatively, and does not
18495 Calle Tampico 1 la 9ci ta, California 92253 1388.TIT .72501 www.laquintaoa.gov
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waive any other default(s) that Developer may otherwise now or in the future have by delivery
of this Notice of Default.
Should you have any questions and to schedule a meeting, please contact me at (760) 777-
7100.
Jo + illen
City Manager
cc: Bill Ihrke, City Attorney (via email)
Clinton L. Blain, Attorney at Law
3990 Old Town Avenue,
Suite B-101
San Diego, CA 92110
Attention: Clinton Blain, Esq.
Crosbie Gliner Schiffman et al.
12750 High Bluff Drive, Suite 250
San Diego, California 92130
Attention: Dana Schiffman
Attention: Thomas Crosbey
dschiffman@cgs3.com
tcrosbie@cgs3.com
Caldarelli Hejmanowski Page & Leer
3398 Carmel Mountain Road
Suite 250
San Diego, CA 92121
Attention: William Caldarelli, Esq.
wlc@chpllaw.com
Michelman & Robinson, LLP
Abbey, Weitzenberg, Warren
10880 Wilshire Blvd.
& Emery
19th Floor
100 Stony Point Rd, Ste. 200
Los Angeles, CA 90024
Santa Rosa, CA 95401
Attn: Edward D. Vaisbort, Esq.
Attn: Mitchell B. Greenberg, Esq.
Attn: Eric Rans, Esq.
evaisbort@mrllp.com
mgreenberg@abbeylaw.com
ERans( rnrllp.com
19495 Calle Tampico I la Quiota, Califania 92253 1100,1770001 wwvrlaqulntaca.guv
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CAI_IFORNI A.
First Pathway Partners
Keillor Capital
Attn: Dan Wycklendt
Attn: Eric Keillor
311 E. Chicago Street, Suite 510
2429 W. Coast Hwy, suite 210
Milwaukee, WI 53202
Newport Beach, CA 92663
Silver Arch Capital
Ziegler Investment Banking
Attn: Jeff Wolfer
Attn: Aaron Gadouas
411 Hackensack Ave,
One North Wacker Drive,
Suite 803
Suite 2000
Hackensack, NJ 07601
Chicago, Illinois 60606
78495 Calle Tampico I la (koala, California 922531 750.777.70091 wwwlaquvacagrA
From: Jon McMillen
Sent: Thursday, August 1, 2024 8:40 PM
To: Robert S. Green Jr. (robert@therobertgreencompany.com)
Cc: Dana Schiffman; Tom Crosbie; wjc@chpllaw.com; Edward D. Vaisbort (LA); Eric Rans
(OC); mgreenberg@abbeylaw.com; Monika Radeva; Bill Ihrke; David McPherson;
apetray@ftblaw.com; swright@rodriguezwright.com
Subject: Re: Notice of Default of Purchase, Sale, and Development Agrement
Attachments: Notice of Default - SDC Failure to Close Recap Financing July 1_ 2024 _Singed
(20804339.1).pdf; Failure to Cure - Breach Notice .pdf
Good Evening Robert, Please see attached Failure to Cure Notice and Confirmation of Default. Please contact me
to discuss.
Regards
CALIFORNIA
Jon McMillen 1 City Manager
City of La Quinta
78495 Calle Tampico 1 La Quinta, CA 92253
Ph. 760.777.7030
www.laquintaca.gov
www.playinlaquinta.com
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