Point Happy Lots, LLC/Devel. Improv. Agree. 14THIS DEVELOPMENT IMPROVEMENT AGREEMENT ("Agreement") is made and
entered into as of January 21, 2014 ("Effective Date") by and between the CITY OF LA
QUINTA, a municipal corporation operating pursuant to a Charter adopted by it as authorized by
the State of California ("City") and POINT HAPPY LOTS, LLC, a Colorado Limited Liability
Company registered to conduct business in the State of California ("PHL"). City and PHL are
sometimes referred to herein separately as a "Party" and jointly as the "Parties."
RECITALS
A. PHL is the current owner in fee of that certain real property located in the City,
Riverside County ("County"), California ("State"), described in Exhibit "A" ("Property"). The
Property currently consists of 29 vacant lots within the Point Happy residential development.
B. On January 12, 2005, City and PH Ranch, LLC, ("PH Ranch', a prior owner of
the Property, caused to be recorded Tract Map 31348 ("Map")in the Office of the County
Recorder of the County. The Property, along with adjoining property previously built and sold
and together with the recorded Map and approved Conditions of Approval, has been referred to
from time to time as the "The Estates at Point Happy." For clarity purposes, the Property,
including adjoining property previously built and sold, the Map and the Conditions of Approval
shall be referred to herein simply as the "Project."
C. While under the ownership and control of PH Ranch, certain initial actions were
taken to commence development of the Project. Those actions included posting with the City
certain labor and material bonds and performance bonds (collectively, the "Bonds") issued by
ARCH Insurance Company ("Arch") in favor of the City as beneficiary for certain improvements
related to the Project, some of which are subdivision improvements (referred to herein as "On -
Site Improvements") and some of which are improvements within the public rights -of -way
(referred to herein as "Off -Site Improvements") (the On -Site Improvements and the Off -Site
Improvements are sometimes referred to herein collectively as the "Improvements"). A majority
of the Improvements were completed by PH Ranch. A punch -list of on -site and off -site
improvements remain incomplete for the Project. Copies of the outstanding punch lists are set
forth in Exhibit `B" (On -Site Improvements) and Exhibit "C" (Off -Site Improvements) hereto.
Collectively, the on -site and off -site punch lists shall be referred to as "Punch List Items."
D. PH Ranch defaulted on its obligations to complete the Punch List items and
subsequently lost ownership of the Property. A dispute then arose between Arch and the City
regarding the completion of Punch List Items, and the City filed suit against Arch. A settlement
was reached according to terms set forth in that certain "Settlement Agreement" dated
JAM 3-2. 2-04 , whereby Arch agreed to pay to the City $250,000.00 (the "Bond Fund") in
final and complete settlement of all obligations of Arch's concerning the Project, and City agreed
to accept the Bond Fund in full settlement. Said funds are to be collected by the City, and
placed in a separate City account for use as specified in this Agreement.
E. City desires that the Punch List Items be completed and has proposed to PHL that
City will make available to PHL a portion of Bond Fund if PHL agrees to complete the Punch
List Items.
F. PHL has agreed to complete the Punch List Items, with the exception that the City
will complete Item No. 14 on the On -Site Punch List, the permitting and installation of a flapgate
at the Whitewater Channel, unless the City, within it sole and absolute discretion, determines to
waive the requirement of the flapgate for the Project. The Punch List Items, minus No. 14 on
the On -Site Punch List, shall be referred to as the "PHL Punch List".
G. The Parties agree on the appropriate use of the Bond Fund, including the use of
the fund to first compensate the City for its attorney's fees spent in its litigation with Arch
regarding the Improvements, to secondly cover the City's cost to install the flapgate, and lastly to
cover PHL's expenses in completing the PHL Punch List.
Based on the foregoing Recitals, and in consideration of the covenants, terms and
conditions set forth hereinafter, the Parties agree as follows:
AGREEMENT:
Recitals.
1.1 Recitals True and Correct. The Recitals are true and correct.
1.2 Defined Terms. All defined terms therein are adopted below.
2. PHL Punch List: Flaneate; Use of Bond Fund.
2.1 Licensed Contractors. PHL shall enter into a contract or contracts with
licensed and insured contractors in the State of California to perform the work required to
complete the PHL Punch List. Through such licensed contractors, PHL shall cause the
completion of the PHL Punch List at its costs, subject to reimbursement as provided herein. To
the extent that the remaining balance of the Bond Funds is insufficient to cover the costs of the
PHL Punch List items, PHL shall be not be entitled to reimbursement for said costs.
2.2 Flaneate. City shall be solely responsible for obtaining all permits and
installing the flapgate pursuant to On -Site Punch List Item No. 14. City may use the proceeds of
the Bond Fund for design, engineering, permitting and construction costs of the flapgate as set
forth below. City shall not withhold or delay the issuance of any permits for the Project based on
the timing or progress of its installation of the flapgate. The City shall prepare a reasonable
estimate for amount of the Bond Funds the City anticipates needing to complete the City's
obligations under this Agreement for the flapgate and segregate those funds in order to preserve
the funds necessary to complete the flapgate. The City, in its sole and absolute discretion, may
determine to waive the requirement for the flapgate for this Project if it subsequently determines
that the flapgate is infeasible or unnecessary.
2.3 Insurance. PHL agrees to require its contractors to carry a policy of
Commercial General Insurance naming City and PHL as additional insureds as to the PHL Punch
List Items, with coverages in accordance with the terms specified in Exhibit "D."
2.4 Construction Schedule. PHL shall complete the PHL Punch List prior to
any new Certificate of Occupancy being issued in the Project. If the PHL Punch List is not
complete prior to the time PHL desires to receive a building permit within the Project, PHL shall
be required to enter into the City's standard form Subdivision Improvement Agreement for the
uncompleted PHL Punch List Items and post appropriate security assuring the City the PHL
Punch List will be complete. In establishing the amount of security needed, the City shall
consider the remaining funds in the Bond Fund available for the PHL Punch List Items, thus
reducing the amount of security needed. PHL shall have no obligation to post security if the
PHL Punch List items are completed before it receives a building permit within the project.
PHL, on behalf of itself and its successors in interest, agree that with regard to On -Site Punch
List Items No. 9, no Certificate of Occupancy may be granted for any structure on a lot adjacent
to the hillside unless the On -Site Punch List Item No. 9 has been completed in compliance with
the requirements applicable to that improvement.
2.5 Exuedited Reviews and Approvals. City agrees to provide reasonably
expedited review for all plans (both new and as refreshed as previously approved plans) and for
any permit applications that require City approvals or issuance. This reasonably expedited
review and approval process shall be coordinated through a contact person at the City designated
by the City Manager.
2.6 Mutual Assistance. The Parties agree to assist one another, and their
respective contractors, as reasonably necessary and possible, with the processing of all permits
and applications with Coachella Valley Water District ("CV WD") and all other public agencies
and public utility companies necessary in connection with the Punch List Items.
2.7 Prevailing Wages. As City is a charter city and has elected under its
charter not to be subject to the State's prevailing wage requirements, construction contracts
entered into by PHL and General Contractor requiring the use of the Bond Fund shall not be
required to be subject to such prevailing wage requirements. However, due to SB 7, the
requirement to pay prevailing wages in the City may change for contracts awarded in 2015. PHL
shall be required to comply with all laws in completing the PHL Punch List items, including
prevailing wages if it becomes applicable to the work in the future.
2.8 Attorneys Fees. City shall first use the proceeds of the Bond Fund to
reimburse itself for its actual attorneys fees and costs associated with its litigation with Arch that
led to the creation of the Bond Fund. ("Attorney's Fees"). No attorney's fees shall be deducted
from the Bond Fund for litigation expenses incurred following the dismissal of the Arch
Insurance litigation and no cost allocation for staff time or non -legal expenses shall be paid for
with proceeds from the Bond Fund, except as provided for in the Agreement.
2.9 Default. In the event of a default under this Agreement by PHL, the City
may use proceeds from the Bond Fund as compensation for costs incurred by the City to
complete the Punch List Items. In addition, PHL shall be responsible for all costs incurred by
the City in completing the PHL Punch List items to the extent that the costs exceed the available
Bond Funds.
follows:
Bond Fund; Payment of Construction Invoices.
3.1 Priority and Use of Bond Fund. The Bond Fund shall first be utilized as
3.1.1 First, to pay the Attorney's Fees.
3.1.2 Second, City shall reserve a reasonable amount of the remaining
Bond Fund to pay for the installation of the flapgate. To the extent funds reserved for the City's
installation of the flapgate exceed the City's actual costs, those funds shall be released and made
available to reimburse PHL for actual expenses incurred to complete the items on the PHL Punch
List. If for any reason the City determines not to install the flapgate, the remaining funds being
held for the flapgate shall be available for reimbursement to PHL for the costs of completing the
PHL Punch List items.
3.1.3 The balance of the Bond Fund shall be used to reimburse PHL for
its actual expenses incurred to complete the items on the PHL Punch List.
3.2 No City Liability. The City shall have no liability for any construction or
other costs which exceed the balance of the Bond fund.
i
3.3 Payment of Bond Fund Available for PHL Punch List Items. The City
shall pay to PHL (or to the entity specified in an approved assignment and assumption
agreement) the portion of the Bond Funds available as reimbursement for the PHL Punch List
items once both of the following have occurred: (1) the PHL Punch List items have been
completed to the satisfaction of the Public Works Director and accepted by the City Council,
which acceptance shall be agendized promptly once the Public Works Director is satisfied with
the performance; and (2) the contractor(s) performing PHL Punch List items have repaired any
damages caused by the contractor(s) in completing the PHL Punch List items. If the flapgate
construction is not completed as of the time of the payment, PHL acknowledges that the City
will withhold funds sufficient to cover the costs of the flapgate design, engineering, permitting
and construction. If any of the withheld Bond Funds remain after the completion of the flapgate,
those funds shall be promptly paid to PHL (or to the entity specified in an approved assignment
and assumption agreement).
4. Insurance.
4.1 Commercial General Liability Insurance. PHL shall require its contractors
to carry the insurance coverage (at a minimum) described in Exhibit "D" in full force at all times
during construction of the PHL Punch List, with City and PHL named as additional insureds.
5. Fees, Deposits. Refunds and Reimbursements.
5.1 Fees: Deposits. In completing the PHL Punchlist items, PHL shall be
entitled to full credit for all fees and deposits previously made for or on behalf of the Project
(assuming that the review or approval to which the fees and deposits applied are still valid), and
in the event City has raised or increased such fee or deposit requirement after the date originally
made, then PHL shall be required to pay or deposit only the difference between the original paid
fee or deposit and the new fee or deposit.
6. Notices.
6.1 Acceptable Methods for Notice. All notices, consents and
communications to a Party shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand with a signed delivery receipt requested, (b) sent by facsimile (with receipt
confirmed), provided a copy is mailed on the same day by registered mail, return receipt
requested, or (c) received by the addressee, if sent by U.S. Mail or Express Mail, Federal Express
or other express delivery service (receipt requested), in each case, to the appropriated addresses
and telecopier numbers set forth below (or to such other addresses or telecopier numbers as a
Party or might designate as to itself by notice to the others).
6.2 To the City: All notices to the City shall be delivered to the following:
Frank Spevacek
City Manager
City of La Quinta
78495 Calle Tampico
La Quinta, CA 92253
Telephone: (760) 777-7030
Facsimile: (760) 777-7155
Email: citymanagersoffice@la-quinta.org
with copy to
M. Katherine Jenson
Rutan & Tucker, LLP
611 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Telephone: (714) 641-3413
Facsimile: (714) 546-9035
Email: kjenson@rutan.com
6.3 To PHL:
Joseph Rivani
Point Happy Lots, LLC
3470 Wilshire Blvd., Ste. 1020
Los Angeles, CA 90010
Telephone: (213) 365-0005
Facsimile: (213) 365-0405
Email: JRivani@GIDLLCO.COM
with copy to
Robert A. Bemheimer
Robert A. Bernheimer, APLC
45025 Manitou Drive, Suite 3
Indian Wells, CA 92210
Telephoner (760) 360-7666
Facsimile: (760) 776-1760
Email: Rob@RobBemheimer.com
7. Assignment. PHL may, in its sole discretion, assign all or any part of its benefits
and/or obligations in this Agreement to any future purchaser of the remainder of the Project,
without the express written consent of the City, through a formal assignment and assumption
agreement executed by PHL, the City, and the assignee. PHL shall notify the City in writing
within 10 days of any such assignment and present executed assignment and assumption
agreement in a form approved by the City Attorney. To the extent any part of this Agreement
references PHL, such reference shall become the obligation of any assignee the City has been
notified about. The Parties recognize that a future assignment may include assigning obligations
from PHL to a future assignee, while keeping benefits, including, but not limited to,
reimbursements from the Bond Fund, to PHL.
8. General Provisions.
8.1 Applicable Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State.
8.2 Equitable Remedies. Each Party shall, in addition to all other rights
provided herein or as may be provided by law, be entitled to all equitable remedies including
those of specific performance and injunction, to enforce its rights hereunder.
8.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same document.
8.4 No Partnership. Nothing herein shall constitute or be construed to be or
create a partnership or joint venture between the City on the one hand and either PHL or General
Contractor on the other.
8.5 Entire Agreement. This Agreement, together with any Exhibits referred to
herein, each of which is hereby incorporated in this Agreement and made a part hereof, embodies
the entire agreement and understanding between the Parties and supersedes all prior agreements
and understandings between them with respect thereto.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
POINT HAPPY LOTS, LLC, a Colorado
limited liability company
By:&/&/
seph 'vani, Manager
CITY OF LA QUINTA, a munici
City Manager
Attest to City Marfager's Signature:
By:V��QA.(��(,�/�
Susan Maysels, City erk
I .' , ; ; ' EXHIBIT "A"
Property Description
The Property referred to in the within Agreement is that certain real property located in the City
of La Quinta, Riverside County, California, more particularly described as:
LEGAL DESCRIPTION
Real property in the City of La Quinta, County of Riverside, State of California, described as
follows:
LOTS 25, 1 THROUGH 7 INCLUSIVE, 33 THROUGH 38 INCLUSIVE, 40 THROUGH 47 INCLUSIVE,
AND LOTS 66 THROUGH 72, INCLUSIVE, LOTS A THROUGH D, INCLUSIVE, H, 1 AND K OF
AMENDED TRACT MAP NO. 31348, FILED ON SEPTEMBER 22, 2005, IN BOOK 390 OF MAPS,
PAGES 1 THROUGH 7, INCLUSIVE AS DOCUMENT NO. 2005-0783716 IN THE OFFICIAL
RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA.
APN: 643-240-066-1, 643-240-001-2 through 643-240-007-8, 643-240-032-0 through 643-240-
037-5, 643-240-039-7, 643-240-040-7, 643-240-041-8, 643-240-046-3 through 643-240-048-5,
643-250-029-9, 643-250-030-9, 643-250-018-9, 643-250-019-0, 643-250-020-0, 643-250-021-1
through 643-250-024-4, 643-240-044-1, 643-250-027-7, 643-240-050-6, 643-250-026-6 and
643-250-028-8
EXHIBIT `°B"
On -Site Punch List
Isar Na
Irerr Daarrlpam
Oiw
Acesptdd,
ORepair
chipped curb & guncr throughout project limits, as needed,
'
ORemove
concrete splatter on all finished concrete surfaces throughout project limits, as needed.
Oa
-grade all eroded slopes within Lots G and K (Retention Basins).
4
onstruct 5 R. wide by 6' Thk. Cane. Swale w/6 x 6. 10 x 10 W. W.M., Per Station E-E on Shed 2 as shown on the
roved Rough Gmding Plens (plan set m.04113).
O
orrnruct 114 ton by 12-inch Deep Rip-mp Energy Disdpator as shown on the approved Rough Grading Plans (plan set no.
113).
6;
nmrmu t Retaining Wall per seperate permit ns shown on the approved Rough Grading Plans (pin act no. 04113).
onsUuci 3-hoL Asphalt Concrete over 3+nch Aggregate Base as shown on We approved Rough Grading Plans (pion set no.
113).
6 _
nshuch &inch Asphalt Concrete Dike per City of La Quirda SUL 204 as shown on the approved Rough Grading Plans (plan
no. 04113).
O
High -Energy, Rock -Fall Protection Bader By Gcobrugg or equal by sepemro permit as shown on the approved
Grading Plans (plan ace no. (34113).
78
hssW16inch PVC (SCH 40) Drain Pipe as, shown on the approved Rough Grading Plans (plan sad no. 04113).
nstal164nc h NDS Amiss Grate Model NDS-90 or equal as shown on the approved Rough Grading Plans (plan al no.
113}
14
r1w11 Landscape Impmvements within Common Area Lots G, H, and K.
73
react Mr. David Sawyer, Planning Manager at (760) 777-7125 for acceptance of landscape improvements
ubm t plan to Coachella Valley Word Dhalhict in Install Flapgare at Whiummer Channel; as shown on Sheet I of 7 of the
10
Moved Storm Drain Improvement Plans (plan set no. 05090).
15
nstmct Manhole per City of La Quits, Sid. 340 on Bradshaw Tri. at smion 22+35.16 of shorts, line'D' as shown on the
vd Storm Dra n Impsovemem Pima (plan adm. 05090).
V]
fore A'w
far• VeAwpd.
Dare
Arcpted
1g
Scum all grate assemblies at all CMP risers as shown on the approved Stem Drain Improvement Plans (plan set no. 05090).
Remove all plant; weeds, trees, M. to insum installation ofatonn drain improvements within the bovom of all mention
basins.
16
Construct Stairway Access to Retention Basins, Lots G, J, and K; as shown on the approved Storm Drain Improvement Plans
(Plan set W. 05090).
19
Instal Rip -rap Class No. I, Method B Placement per CaITRANS Spec. (Depth. 2.5y; as shown on the approved Storm Drain
Improvement Plans (plan ad no. 05090).
O
Install Driveways per City Std. Dwg. No. 221 at all vaunt lots: as shown on the approved On -site Street Improvement Plans
plan set no. 05999).
21
Paint 'STOP' per CalTRANS St. Plan A24D; as shown on the approved On -site Street Imprevuunt Plans (plan act W.
05098).
aint Stop Bar 12-inch per CalTRANS Sid. Plan A24E; as shown on the approved On -site Street Improvwncnt Plans (plan set
05098).
23
Install blue reflective pavement market at all Fire Hydrants as clown on the approved On -site Street Improvement Plans
plan ad W. 05098).
24
Install R-1 'S3'OP' signs (30 x 30) and post per CaITRANa Std. as shown on the approved On -site Street Improvement Plana
(plan set M. 05098).
25
install R-10 sign per CsITRANs Sid. as shown on the approved On -site Street Improvemem Plans (plan set no. 05098).
T-
Install Type'H' Marker per CaITRANs Std. as clown on the approved On -site Street Improvement Plans (plan set M.
5098).
27
d Curb Outlet (W-5) per City of La Quint Std. 320 v shown on the approved On -site Sneer I�rovemrnt Plans
(Cons
plan
(plan set W. 05098).
Install K.I Type marker per CaITRANs Sid plan A73A u shown on the approved On -site Street Improvement Plans (plan
Set W. 05098).
29
On vacant lots I through 7 remove all constrodion material and debris.
30Provide
a long-temt stabilization an all vacant lob per the approved Dust Migittion plan (plan ad no. 04024).
35
39
35
10
EXHIBIT "C"
Off -Site (Punch List
Grout all cracks and patch chips on all concrete work throughout project limits.
2. Remove all concrete splatter on concrete improvements throughout project limits.
3. Remove and replace sidewalk panel at approximately station 145+00 along
Washington Street per the approved Offsite Street Improvement plans (Plan Set No.
05096).
4. Remove existing sidewalk panels between stations 147 +40 through station 147 +91
along Washington Street per the approved Mite Street Improvement plans (Plan
Set No. 05096):
5. Due to the removal of the existing sidewalk panels per item no. 4, the owner must
contact the Planning Department for approval of design and installation of
landscaping improvement.
6. Remove and replace sidewalk panel at approximately station 149 + 52 along
Washington Street per the approved Offsite Street Improvement plans (Plan Set No.
05096).
7. Construct concrete panel at the traffic signal pole base -to provide ADA/pedestrian
access to the pedestrian push button. Traffic signal pole base is located at the
southwest comer of Washington Street and Point Happy Way.
11
Exhibit "D"
EXHIBIT "E"
Insurance Requirements
General
Prior to the beginning of and throughout the duration of the Work, General Contractor will
maintain insurance in conformance with the requirements set forth below. General Contractor
will use existing coverage to comply with these requirements. If that existing coverage does not
meet the requirements set forth here, it will be amended to do so. General Contractor
acknowledges that the insurance coverage and policy limits set forth in this section constitute the
minimum amount of coverage required. Any insurance proceeds available to City in excess of
the limits and coverage required in this Contract and which is applicable to a given loss, will be
available to City.
General Contractor shall submit coverage verification for review and approval by the City upon
execution of the Contract.
The Notice to Proceed with the Work under this Contract will not be issued, and the General
Contractor shall not commence work, until such insurance has been approved by the City. The
General Contractor shall not allow any subcontractors to commence work on its subcontract
until all similar insurance required of the subcontractor has been obtained and verified by
General Contractor. Such insurance shall remain in full force and effect at all times during the
prosecution of the Work and until the final completion and acceptance thereof.
General Contractor shall provide the following types and amounts of insurance:
Commercial General Liability Policy
Commercial General Liability Insurance using Insurance Services Office "Commercial General
Liability" policy form CG 00 01 or the equivalent. Defense costs must be paid in addition to
limits. Limits shall be no less than Two Million Dollars ($2,000,000) per occurrence for all
covered losses and no less than Four Million Dollars ($4,000,000) general aggregate.
General Contractor's policy shall contain no endorsements limiting coverage beyond the basic
policy coverage grant for any of the following:
a. Explosion, Collapse or Underground Hazard(X CU).
b. Products and Completed Operations.
C. Pollution liability.
d. Contractual liability.
12
Coverage shall be applicable to City for injury to employees of. contractors, subcontractors or
others involved in the project. Policy shall be endorsed to provide a separate limit applicable to
this project.
Workers' Compensation Insurance
Workers' Compensation on a state -approved policy form providing statutory benefits as required
by law with employer's liability limits no less than $1,000,000 per accident for all covered
losses.
Business Auto Policy
Business Auto Coverage on ISO Business Auto Coverage form CA 00 0106 92 including
symbol 1 (Any Auto) or the equivalent. Limits shall be no less than $1,000,000 per accident,
combined single limit. If General Contractor owns no vehicles, this requirement may be satisfied
by a non -owned auto endorsement to the general liability policy described above.
Excess or Umbrella Liability Insurance
Excess or Umbrella Liability Insurance (Over Primary) if used to meet limit requirements,
shall provide coverage at least as broad as specified for the underlying coverage. Any such
coverage provided under an umbrella liability policy shall include a drop down provision
providing primary coverage for liability not covered by primary but covered by the umbrella.
Self -insured retentions are not permitted. Coverage shall be provided on a "pay on behalf' basis,
with defense costs payable in addition to policy limits. There shall be no cross liability exclusion
precluding coverage for claims or suits by one insured against another. Coverage shall be
applicable to City for injury to employees of General Contractor, subcontractors or others
involved in the Work. The scope of coverage provided is subject to approval of City following
receipt of proof of insurance as required herein. Limits are subject to review but in no event less
than $1,000,000 per occurrence and aggregate.
Insurance procured pursuant to these requirements shall be written by insurers that are authorized
carvers in the state of California and with an A.M. Best rating of A- or better and a minimum
financial size of VII.
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