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2025 Legacy Villas at LQ HOA - Settlement AgrmtSETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release (hereinafter the "Agreement") is entered by and between the CITY OF LA QUINTA, a California municipal corporation ("City") and LEGACY VILLAS AT LA QUINTA HOMEOWNERS ASSOCIATION ("HOA"), and is binding and effective as of the Effective Date (defined below). The City and HOA are referred to jointly hereinafter individually as a "Party" and collectively as the "Parties." The Parties enter into this Agreement with reference to the following: RECITALS A. WHEREAS, on or about November 20, 2003, Centex Homes, a Nevada General Partnership, dba Centex Destination Properties (the "Centex") and the City entered into a Development Agreement and recorded into the Riverside County Recorder's Office on December 12, 2003 as Document No. 2003-972732, as assigned by that certain Assignment and Assumption Agreement by and between Centex as assignor, and HOA as assignee, recorded on November 14, 2005 as Document No. 2005-0943064 (the "Development Agreement"). B. WHEREAS, the Development Agreement provides a base annual Mitigation Fee of $1,000.00 per year per residential unit for each unit sold to an individual owner subject to a Consumer Price Index adjustment. The Mitigation Fee may be reduced to $500 per year per Unit if the City receives transient occupancy tax (the "TOT") from short-term vacation rentals located in the Legacy Villas project in an amount of $500,000 (Level One Goal/Threshold) for three (3) consecutive years. The Mitigation Fees are subject to annual CPI adjustments, and as such are currently $1,609.35 for full Mitigation or $804.68 for Level One Goal. C. WHEREAS, the City agrees TOT Level One Goal has been met for the three (3) consecutive years of Fiscal Years ("FYs") 2021/22, 2022/23, and 2023/24. D. WHEREAS, the City also agrees that the Mitigation Fee shall be invoiced at the reduced Level One Goal amount noted above, starting in FY2023/24, and shall not revert to the full amount for the remaining life of the agreement, but will be subject to continued CPI adjustments as specified. E. WHEREAS, on or about September 24, 2024, the HOA sent a settlement letter claiming that it should not have an obligation to pay the full Mitigation Fee for FY 2019/20 due to COVID-19 and alleged discrepancies between the City's and HOA's records relating to rental report to individual Units, for Fiscal Year 2020/21, such that the HOA contends that it met the Level One Goal for FY 2020/21, and therefore the three (3) consecutive years should have been measured from that point. F. WHEREAS, on or about November 7, 2024, the City sent a response letter entitled "Legacy Villas at La Quinta Homeowners Association Transient Occupancy Tax Mitigation Fee Counteroffer for TOT Mitigation Payment Owed by Legacy Villas" stating the City's position has been and remains that COVID-19 is irrelevant to the Mitigation Fee payment obligation and that the City's records are accurate. -1- G. WHEREAS, without admitting liability and solely for the purpose of resolving their dispute, the HOA and the City agree to settle their dispute of this matter on the terms set forth herein. NOW THEREFORE, in consideration of the Recitals above, which are a substantive part of this Agreement and incorporated by this reference, and the mutual covenants set forth herein, the Parties agree as follows: 1. Settlement Terms. A. Settlement Payment. In consideration of and pursuant to the terms and conditions set forth in this Agreement, HOA shall pay a total of $567,434.34 ("Settlement Amount") to resolve the outstanding Mitigation Fees for FYs 2019/2020, 2020/21, 2022/23, and for the current period of FY 2023/24,1 by a check made payable to "City of La Quinta." B. Delivery and Deposit of Check. The City acknowledges that HOA has delivered a check with the Settlement Amount. Upon successful deposit by the City of the check, with good and sufficient funds in the amount of the Settlement Amount, the City shall have received payment and satisfaction in full for any and claims or disputes that HOA has asserted or could have asserted against the City, and the City has asserted or could have asserted against the HOA, in connection with the outstanding Mitigation Fees for prior Fiscal Years up to and including the period of FY 2023/24. 2. No Admission of Fault. Upon full performance by the Parties to this Agreement of their respective obligations set forth above, this Agreement is intended to be and is a compromise between the Parties, and nothing in this Agreement shall be interpreted, used, or construed as an admission of fault or wrongful conduct of any kind by any of the Parties. All such liability and wrongdoing alleged against any Party is denied by the other Party. 3. Release. a. Full and General Release. In consideration for the agreements as set forth herein, and except for any rights of the Parties or either Party expressly retained under this Agreement, HOA and City, on behalf of themselves and their respective successors, assigns, officials, directors, officers, employees, insurers, lenders, lien holders, attorneys, agents, and other representatives, do hereby release the other Party from any and all claims, actions and causes of action, obligations, liabilities, indebtedness, breaches of duty, claims for injunctive and other equitable relief, suits, liens, losses, costs or expenses, including attorney's fees, of any nature whatsoever, known or unknown, fixed or contingent as of the date of execution of this Agreement relating to the outstanding Mitigation Fees for prior Fiscal Years up to and including the period of FY 2023/24 (the "Released Claims"). The Release Claims expressly do not include, and nothing 1 While not expressly referenced in the September 24 or November 7, 2024 settlement letters identified in Recitals D and E of this Agreement, the City will also include the total payment of $567,434.34 as covering TOT Mitigation Fee amounts the City shows as being owed from FYs 2008/09-2015/16 in the amount of $92,156.95 and FY 2016/17 in the amount of $639.46. -2- in this Agreement does or shall be deemed as, a release of any claims, actions and causes of action, obligations, liabilities, indebtedness, breaches of duty, claims for injunctive and other equitable relief, suits, liens, losses, costs or expenses or both, not related to the outstanding Mitigation Fees for prior Fiscal Years up to and including the period of FY 2023/24. b. Waiver of Civil Code Section 1542: By releasing and forever discharging the Released Claims both known and unknown as above provided, the Parties expressly waive any rights under California Civil Code section 1542, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." HOA and City waive and relinquish any rights and benefits that they have or may have under California Civil Code section 1542. HOA and City have performed a full and complete investigation of the facts pertaining to this Agreement, and HOA and City acknowledge and agree that they are aware that they may hereafter discover facts in addition to or different from those which they now know or believe to be true with respect to the subject matter of the Released Claims, but it is their intention hereby to fully and finally forever settle and release any and all matters, disputes and differences, known or unknown, suspected and unsuspected, which now exist, may exist or heretofore have existed, as against each other, arising out of the Released Claims. 4. Effective Date of Agreement. This Agreement shall be binding and effective as of the later date of the signing party on the signature page of this Agreement, which later date shall be the "Effective Date" of this Agreement. 5. Entire Agreement. This Agreement forms the entire agreement of the Parties and supersedes any and all prior agreements or understandings, if any, between them pertaining to the subject matter hereof, and shall not be modified or altered except by a subsequent written agreement signed pursuant to Section 13 below. This Agreement shall be binding upon and shall inure to the benefit of the Parties, their respective successors, assigns, officials, directors, officers, employees, insurers, lenders, lien holders, attorneys, agents, and other representatives. The Parties agree that, except as necessary for handling their respective finances or as may be required by law, the Parties shall not disclose the terms of this Agreement to any third parties without the other Party's written consent to such disclosure; in explanation of the foregoing, and not a limitation thereof, HOA expressly acknowledges and agrees that the City is subject to and governed by the California Public Records Act (Government Code section 7920.000 et seq. ("Act")), and the City does not need to obtain HOA' s consent when disclosure of this Agreement or its terms are subject to and governed by the Act. -3- 6. Representations and Warranties. HOA hereby expressly represents and warrants that it has not transferred or assigned or attempted to transfer or assign any of the Released Claims that are subject to this Agreement. No claim of subrogation may be brought against the City under any of the other Released Claims, and HOA expressly agrees to waive any subrogation rights against the City related to any of the Released Claims. The persons signing this Agreement hereby represent and warrant that they have the power and authority to bind any Party on whose behalf this Agreement is signed. HOA acknowledges and agrees that the City is materially relying upon the representations and warranties of HOA set forth in this Agreement. If any of HOA's representations and warranties as set forth herein are found to be untrue or inaccurate either at the signing of this Agreement or with the passage of time, or both, then such untrue or inaccurate representation and warranty shall be a material default and the basis for a breach of this Agreement. 7. Controlling Law. This Agreement shall be interpreted and construed in accordance with the laws of the State of California without regard to conflict of law principles. 8. Attorneys' Fees and Costs. The Parties shall bear all of their own respective costs and attorneys' fees incurred relating to this Agreement. In the event that a Party is required to initiate or defend any litigation relating to or arising out of this Agreement, the prevailing Party shall be entitled to recover from the other Party its actual attorneys' fees, expert witness fees, costs of investigation and preparation, and other costs and expenses related thereto. 9. Severability If any provision or part of this Agreement is held, determined, or adjudicated to be invalid, unenforceable or void for any reason, each such provision shall be severed from the remaining provisions of the Agreement and shall not affect the validity and enforceability of such remaining provisions. 10. Review of Agreement. The Parties each acknowledge and represent that they have read this Agreement, that they have had the opportunity to consult with their respective attorneys concerning its contents, that the Agreement is being executed solely in reliance on their respective judgment, belief, and knowledge of the matters set forth herein and on the advice of their respective attorneys, and that they enter this Agreement freely and voluntarily. Additionally, the persons signing this Agreement hereby represent and warrant that they have the power and authority to bind the Party on whose behalf this Agreement is signed. 11. Neutral Interpretation. The Parties agree that all parts of this Agreement shall in all cases be construed as a whole according to their fair meaning and shall not be construed strictly for or against any Party hereto. -4- 12. Modification. This Agreement shall not be modified, amended or supplemented unless such modifications, amendments or supplements are in writing and signed by the Party to be charged. 13. City Manager Authorization to Execute and Implement this Agreement. The City Manager, on behalf of the City, shall have the authority to sign this Agreement, to enter into any implementing document or modification, amendment, or supplement, and to take any actions necessary or property to effectuate the implementation of this Agreement and its terms. 14. Counterparts. This Agreement may be executed in counterparts and by facsimile, electronic mail or other electronic delivery, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Agreement on the date set forth below. Date: February 9, 2025 Date: February 10 , 2025 ATTEST: Monika Radeva City Clerk APPROVED AS TO FORM By: ‘atet.... .2 L/-- William H. Ihrke City Attorney LEGAC `VILLAS AT LA QUINTA HOMED `l' ERS ASSO IATIO k Ii By: Da iel ried President CITY OF LA QUINTA By: -5- on McMillen City Manager