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Watermark Villas/Golf Tunnel 04P.O. Box 1504 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 M. Katherine Jenson Direct Dial: (714) 641-3413 E-mail: kjenson@rutan.com Mr. Matthew Hladek Watermark Villas La Quinta LLC 79-090 Calle Brisa La Quinta, CA 92253 June 3, 2004 Re: Watermark Villas Tunnel - Initial Deposit Agreement Dear Mr. Hladek: (760) 777-7000 FAX (760) 777-7101 Watermark Villas La Quinta, LLC ("Watermark") has requested that the City of La Quinta ("City") and the La Quinta Redevelopment Agency ("Agency") consider entering into a tri-party agreement with Watermark to facilitate the installation of a tunnel crossing from Watermark Villas to the SilverRock Resort, within a public right-of-way across Avenue 52 near the roundabout ("Tunnel Project"). Pursuant to the formal request received from Watermark on May 12, 2004, for consideration of the Tunnel Project, the City and Agency will commence to take the steps necessary, at Watermark's expense, so that the City and Agency will be able to consider the Tunnel Project and determine whether or not they wish to approve a tri-party agreement to facilitate the project. Watermark has indicated that it is prepared to reimburse the City and Agency for all costs associated with the City's and the Agency's consideration of the Tunnel Project, in addition to the entire cost of the Tunnel Project, if the City and Agency determine in the future to approve the Tunnel Project and the tri-party agreement. This letter serves as an "Initial Deposit Agreement" by and between Watermark, the City and Agency. To assist the City and Agency in undertaking their consideration of whether or not to approve the Tunnel Project and the tri-party agreement, Watermark agrees to provide the City and Agency with an initial deposit in the amount of $20,000 ("Initial Deposit"). The Initial Deposit shall be deposited with the City, to the attention of the Finance Director, on or before the Effective Date of this Initial Deposit Agreement. The Effective Date shall be the date that Watermark returns a signed copy of its acceptance of the Initial. Deposit Agreement to the Agency. The Initial Deposit shall be used to reimburse the City and Agency for all costs incurred by the City and/or Agency in the consideration of the Tunnel Project. Watermark shall be 119/015610-0002 510768.01 a06/03/04 Matthew Hladek June 3, 2004 Page 2 responsible for replenishing the deposit to the $20,000 level within ten (10) days of the City or Agency's request for replenishment. The costs, which will be reimbursed from the account, are all of costs incurred by the City or Agency relating to the. Tunnel, including, but not limited to, expenses incurred for the following: Development Coordinator (Roy Stephenson); Landscape Architect; Planning (GMA); Engineering (TKC); and Legal (Rutan & Tucker, LLP). It is anticipated that the Tunnel Project and the tri-party agreement will be presented to the City and Agency for approval in the future. Watermark, the City and Agency understand that the City and Agency is each reserving the right to exercise discretion as to all matters over which the City and Agency are, by law, entitled or required to exercise discretion. By executing this Initial Deposit Agreement, the City and Agency are not committing or agreeing to undertake any activity requiring the subsequent discretion of the City or Agency, or any department of the City or Agency. City and Agency execution of this Initial Deposit Agreement is merely an agreement to allow the necessary work to be completed, at Watermark's expense, to bring the Tunnel Project and the tri-party agreement matters forward for City and Agency consideration. Nothing in this Initial Deposit Agreement shall be deemed to constitute a commitment by the City or Agency to approve the Tunnel Project or the tri-party agreement, or a prejudgment of the matters required to be considered as part of the decision whether or not to approve the Tunnel Project or tri-party agreement. Very truly yours, LA QUINTA REDEVELOPMENT AGENCY Thomas P. Genovese, Executive Director APPROVED AS TO FORM: By: AJ �4 ;L M atherine Jenson, City Attorney/Agency Counsel 119/015610-0002 510768.01 a06/03/04 Matthew Hladek June 3, 2004 Page 3 ACCEPTANCE OF INITIAL DEPOSIT AGREEMENT: WATE VILLAS LA UINTA, LLC f By;.. Date: ©y atthew Hladek 119/015610.0002 510768.01 a06/03/04 � $ �� (� Cam. � .n