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2019 Codorniz HOA - Mitigation Fee Settlement Agrmt-1- SETTLEMENT 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 CODORNIZ MAINTENANCE 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: R E C I T A L S A. WHEREAS the HOA seeks to recalculate the annual mitigation fee (“Mitigation Fee”) on a going forward basis; B. WHEREAS the City finds that it is in interest of the public to recalculate the HOA’s Mitigation Fee on a going forward basis; C. WHEREAS the Consumer Price Index (“CPI”) – All Urban Consumers, not seasonally adjusted, for the index formerly known as LA-Riverside-Orange County increase from 2015 to 2017 was 243.434 to 256.210 or 5.68%; D. WHEREAS the CPI increase over 2018 for the All Urban Consumers, not seasonally adjusted, for the newly formed index known as Riverside-San Bernardino-Ontario is 100.000 to 102.732 or 2.73%; and E. WHEREAS the Parties have come to a consensus regarding the calculation of the HOA’s Mitigation Fee on a going forward basis; 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.Obligations of the City. A. City shall calculate the baseline rate of the HOA Mitigation Fee for 2015 as $250.00 per lot sold by HOA on a pro rata basis. B. City shall calculate the new baseline rate of the HOA Mitigation Fee for 2018 as $264.21 per lot, because $250 x 5.68% = $14.21 and $14.21 + $250 = $264.21. C. City shall calculate the 2018 HOA Mitigation Fee to be $271.43 per lot sold by HOA, pro rata, because $264.21 x 2.73% = $7.22 and $7.22 + $264.21 = $271.43. D. City calculates the total amount owed by the HOA for the Mitigation Fee for 2018 as $32,991.02. -2- E. The City therefore calculates the total amount due and owing by HOA for the Mitigation Fee to be $149,588.97, which adds the 2018 amount ($32,991.02) to the previously agreed-upon amounts for 2012-2016 ($89,195.90) and year 2017 ($27,402.05). F. Commencing January 1, 2018, the City shall adjust the annual payment every year rather than every three years. Adjustments (whether an increase or decrease) in the annual payment shall be based upon the 12-month average of the Consumer Price Index – All Urban Consumers, not seasonally adjusted, for Riverside-San Bernardino-Ontario (or successor Index) for the prior calendar year. Adjustments shall be calculated to three decimal points, rounding to the nearest hundredth. G. The City shall only assess the annual payment against Lots that have been sold by Declarant to a private third-party purchaser. The City shall calculate the annual payment pro rata from the date of sale of a Lot by Declarant through build out. H. The City shall bill Association for the prior calendar year no later than March 1 of the following year. I. If the HOA obtains the requisite number of votes from the homeowners with voting authority to approve the First Amendment (defined below), then the City Manager, no later than thirty (30) days after the HOA delivers written notice of the results of the homeowner vote pursuant to Section 2.A below, will schedule an agenda item for the City Council to approve a resolution exactly in the form attached to this Agreement (the “Resolution”), which Resolution will, among other provisions therein, adopt that certain First Amendment to Declaration of Covenants, Conditions, and Restrictions, and Reservation of Easements for Codorniz Maintenance Association exactly in the form attached to this Agreement (the “First Amendment”), wherein the Resolution and First Amendment reflect the total amount due and owing by HOA for the Mitigation Fee from 2012 to 2018, inclusive. 2. Obligations of HOA. A. Until all Lots have been sold by the Declarant, no later than January 31 of each year, the Association shall provide the City with the dates that any Lots were sold by Declarant during the prior calendar year. B. The Association shall pay the annual mitigation fee no later than March 30 of each year. C. Upon the complete execution of this Agreement, the HOA shall commence and diligently pursue to completion, pursuant to the HOA’s voting process and approval requirements and California law, a vote of the homeowners on whether to approve the First Amendment. Upon completing the voting process, the HOA shall notify the City in writing of the results of the vote. D. No later than thirty (30) days after the City Council adopts the Resolution described in Section 1.F above, the HOA agrees to pay in one lump sum the total amount of $149,588.97 for the HOA Mitigation Fee for years 2012 to 2018, inclusive, as negotiated and approved by the Parties. -3- 3. No Admission of Fault. Upon full performance by the Parties to this Agreement of their respective obligations set forth in Sections 1 and 2 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. 4. Release. a. Full and General Release. In consideration for the agreements as set forth herein, the 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 (the “Release”). b. Waiver of Civil Code Section 1542: By releasing and forever discharging 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.” The HOA and City waive and relinquish any rights and benefits that they have or may have under section 1542 of the Civil Code of the State of California. The HOA and City have performed a full and complete investigation of the facts pertaining to this Agreement, and the 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 this Release, 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 that certain Declaration of Covenants, Conditions, Restrictions, and Reservation of Easements (the “CC&Rs”). 5. Effective Date of Agreement. This Agreement shall be binding and effective as of the latest date on the signature page of this Agreement, which date shall be the “Effective Date” of this Agreement. -4- 6. Entire Agreement. This Agreement (along with the CC&Rs and First Amendment) form 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. 7. Representations and Warranties. The HOA hereby expressly represents and warrants that they have 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 the HOA expressly agree to waive any subrogation rights against the City related to any of the other 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. The HOA acknowledges and agrees that the City is materially relying upon the representations and warranties of the HOA set forth in this Agreement. If any of the 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. 8. 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. 9. 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(ies) its actual attorneys’ fees, expert witness fees, costs of investigation and preparation, and other costs and expenses related thereto. 10. 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. 11. 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 -5- of the matters set forth herein and on the advice of their respective attorneys, and that they enter this Agreement freely and voluntarily. 12. 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. 13. 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. 14. Counterparts. This Agreement may be executed in counterparts and by facsimile or other electronic delivery, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. [signatures on next page] -7- EXHIBITS RESOLUTION AND FIRST AMENDMENT (Attached) RESOLUTION NO. 2020 – 026 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, APPROVING MODIFICATIONS TO CODORNIZ MAINTENANCE ASSOCIATION FEE AND FIRST AMENDMENT TO DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS, AND RESERVATION OF EASEMENTS WHEREAS, on 3rd day of August, 2004, the City Council held a duly- noticed public hearing to consider a request of RJT Homes, LLC for a Specific Plan 2004-070 establishing design guidelines and development standards for the property located at the southeast corner of Avenue 52 and Jefferson Street, more particularly described as: APNs 772-410-021 and 772-410-022; and WHEREAS, upon hearing and considering all testimony and arguments, if any, of all interested person desiring to be heard, the City Council adopted Resolution No. 2004-085 approving Specific Plan 2004-070 for the reasons set forth in the resolution, subject to the attached Conditions of Approval; and WHEREAS, Condition of Approval No. 75 of said resolution sets certain requirements for the Declaration of Covenants, Conditions, and Restrictions and Reservation of Easements (CC&Rs) for the project, including the requirement that the CC&Rs shall be subject to the review and approval of the City Attorney. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of La Quinta, California, as follows: SECTION 1. As of January 1, 2018, the baseline amount of the annual payment owing by the Codorniz Maintenance Association to the City is $264.21. SECTION 2. Commencing January 1, 2018, the annual payment shall be adjusted every year rather than every three years. SECTION 3. Adjustments (whether an increase or decrease) in the annual payment shall be based upon the 12-month average of the Consumer Price Index – All Urban Consumers, not seasonally adjusted, for Riverside-San Bernardino-Ontario (or successor Index) for the prior calendar year. EXHIBIT A Resolution No. 2020 – 026 Modification to Codorniz Maintenance Association Fee & First Amendment to Declaration of CC&Rs Adopted: July 21, 2020 Page 2 of 5 SECTION 4. Adjustments shall be calculated to three decimal points, rounding to the nearest hundredth. SECTION 5. The annual payment shall only accrue against Lots that have been sold by Declarant to a private third-party purchaser. The City shall calculate the annual payment pro rata from the date of sale of a Lot by Declarant through build out. Until all Lots have been sold by the Declarant, no later than January 31 of each year, the Codorniz Maintenance Association shall provide the City with the dates that any Lots were sold by Declarant during the prior calendar year. SECTION 6. Payment for the prior calendar year shall be billed by the City no later than March 1 of the following year. Payment by the Association shall be due no later than March 30. SECTION 7. The First Amendment to the CC&Rs for Codorniz Maintenance Association attached hereto as “Exhibit A” and incorporated by this reference, is hereby approved. SECTION 8. This Resolution and incorporated First Amendment to the CC&Rs shall go into effect upon adoption. SECTION 9. The City Manager is hereby authorized to execute, on behalf of the City of La Quinta, any agreements, amendments, or other implementing documents to effectuate the approval of this Resolution and the subject matter herein. PASSED, APPROVED, and ADOPTED at a regular meeting of the La Quinta City Council held on this 21st day of July 2020, by the following vote: AYES: Council Members Fitzpatrick, Peña, Radi, Sanchez, Mayor Evans NOES: None ABSENT: None ABSTAIN: None Resolution No. 2020 – 026 Modification to Codorniz Maintenance Association Fee & First Amendment to Declaration of CC&Rs Adopted: July 21, 2020 Page 4 of 5 EXHIBIT A FIRST AMENDMENT TO DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTION, AND RESERVATION OF EASEMENTS CODORNIZ MAINTENANCE ASSOCIATION 1. Article I, Section 5(a) of the Declaration of Covenants, Conditions and Restrictions, and Reservation of Easements (“Declaration”) is proposed to be amended as follows: Section 5. “Assessments” shall be used as a generic term which shall mean and refer to the following: (a) “Regular Assessment” shall mean and refer to an annual charge against each Owner and his respective Lot representing a portion of the Common Expenses of the Association. This Regular Assessment shall also include an annual mitigation payment to the City of for each Lot. The annual mitigation fee was imposed by the City as a condition of approval for the re-zoning of the development from commercial to medium-high density residential. Notwithstanding anything to the contrary herein, this payment shall not accrue until a Lot has been sold by the Declarant. As of January 1, 2018, the baseline amount of the mitigation fee is $264.21. Commencing January 1, 2018, the annual payment shall be adjusted every year based upon the 12-month average of the Consumer Price Index – All Urban Consumers, not seasonally adjusted, for Riverside-San Bernardino-Ontario (or successor Index) for the prior calendar year. Payment for the prior calendar year shall be billed by the City no later than March 1 of the following year. Payment by the Association shall be due no later than March 30. Resolution No. 2020 – 026 Modification to Codorniz Maintenance Association Fee & First Amendment to Declaration of CC&Rs Adopted: July 21, 2020 Page 5 of 5 2. Article XIX, Section 7(b) of the Declaration is proposed to be amended as follows: Section 7. Amendments. (b) Amendments by Association. Except as otherwise provided herein and all applicable provisions of law (e.g., the provisions of California Civil Code Section 1363.03 regarding secret ballots), this Declaration may be amended only by an affirmative vote of Owners representing not less than a majority of the Class A voting power and the Class b voting power of the Association. At such time when the Class B membership shall cease and be converted to Class A membership, any and all amendments to this Declaration shall be enacted by requiring the vote or written assent of Owners representing both: (a) a majority of the total voting power of the Association, and (b) a majority of the total votes of Members, other than the Declarant; provided, however, that the percentage of the voting power necessary to amend a specific provision shall not be less than the percentage of affirmative votes prescribed for action to be taken under said provision, and no amendment of a provision of this Declaration which requires the approval or consent of Declarant may be made without the written approval of Declarant (e.g., provisions pertaining to the resolution of Disputes, Maintenance Guidelines, Maintenance Manual, Maintenance Recommendations, etc.). Any Owner or the Association may petition the Superior Court of the County where the Project is located for an order reducing the necessary percentage required under this Section to amend this Declaration; provided, however, that under no circumstances shall any provision requiring the consent of the Declarant be amended without such consent. The procedure for effecting this petition is set forth in Section 1356 of the California Civil Code, as the same may be amended, from time to time. 3. The remaining portions of the Declaration shall remain in full force and effect.