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HomeMy WebLinkAboutContract 1567 ORIGiNAL - � � TRANSIENT OCCUPANCY TAX SHARING AGREEMENT (DOUBLETREE) This Transient Occupancy Tax Sharing Agreement ("Agreement") is entered into by and between the CITY OF CATHEDRAL CITY, a municipal corporation of the State of California (the "City") and T Alliance One Palm Springs, LLC, a California limited liability company (the "Owner"), and is dated for reference purposes as of March Lb 2013. Each of the foregoing parties may be referred to hereafter as a "Party," and jointly as the "Parties." RECITALS WHEREAS, the general welfare and material well-being of the residents of the City depend in great measure upon the hotel, motel and other rental properties (hereinafter, collectively referred to as "Visitor Facilities") within the City which are made available on a temporary rental basis to visitors to the City, which, in turn, .generate transient occupancy tax ("TOT") revenues to the City under Chapter 3.25 (the "TOT Program") of the Cathedral City Municipal Code (the "Code") to help pay for necessary services to the City's residents and,to the Visitor Facilities; and WHEREAS, the opening, operation, and expansion of new and existing Visitor Facilities within the,City (i) will attract additional visitors, (ii) will generate TOT revenues to the City's General Fund, (iii) will likely generate increased sales tax revenues to the City due to purchases and activities undertaken by visitors with other businesses within the City, and (iv) will enhance the quality of the Visitor Facilities available to the public and the City's residents; and WHEREAS, the City wishes to induce and encourage the opening, operation, renovation, remodeling, upgrading, and expansion of new and existing Visitor Facilities, thereby assisting the City in achieving its goals related to the development of said Visitor Facilities and creating new sources of TOT revenue for the City's general fund which supports the public services that the City provides to its residents and to said Visitor Facilities; and WHEREAS, the City desires to enable Visitor Facility development and/or rehabilitation in the City by sharing with the owners thereof a portion of the increased transient occupancy tax revenues generated by new, expanding and rehabilitated Visitor Facilities; and WHEREAS, the State of California's adoption of ABx1 26 and AB 1484 and the resulting.elimination of redevelopment agencies and forms of assistance which could be . provided by redevelopment agencies has created the necessity for the City to provide said incentive; and 1 WHEREAS, the City Council, in order to incentivize the opening of new Visitor Facilities and the expansion or rehabilitation/renovation of existing Visitor Facilities, added the TOT Program to the Code to provide for partial rebates of incremental transient occupancy tax to qualifying new and existing Visitor Facilities; and WHEREAS, the Owner proposes to acquire the ground leasehold interest in the existing Dora! Desert Princess Hotel (the "Hotel") located in the City on the property legally described in Exhibit "A" attached hereto and incorporated herein by reference, with the purpose of rehabilitating the Hotel, and rebranding of the Hotel as a DoubleTree by Hilton, and seeks the involvement of the City in order to make the rehabilitation of the Hotel financially feasible, in,the form of assistance authorized by the TOT Program; and WHEREAS, the Hotel has been underperforming relative to the rest of the hospitality market and suffers from deferred maintenance, and dated and worn conditions, all of which conditions can be remedied by rehabilitation; and WHEREAS, after a duly noticed public hearing as required by the TOT Program, and the consideration by the City Council of the Tax Sharing Report, which is incorporated herein by reference, prepared in accordance with the TOT Program, and consideration of such other matters as may have been presented during said public hearing, the City Council finds that the rehabilitation of the Hotel would cause an increase in visitors to the Hotel, and further finds that the Hotel is an Approved Business, as defined in the TOT Program, with which the City may enter into this Agreement. TERMS AND CONDITIONS NOW, THEREFORE, in consideration of the mutual promises and covenants of the Parties set forth herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged by the Parties, the Parties agree as set forth hereinafter. Section 1. Incorporation of Recitals; Definitions. The Parties agree that each of the foregoing Recitals are true and correct and incorporate each of the Recitals in this Agreement by reference thereto. The defined terms used in this Agreement which are not otherwise defined herein shall have the meaning ascribed to such terms in the TOT Program. Section 2. Findings. a. The City finds that the Owner has met and satisfied the Participation Requirements set forth in the TOT Program, and is an Approved Business for the purposes of the said Program. . 2 lA b. The City finds that the Owner's proposed rehabilitation of the Hotel, and its rebranding to a better known chain such as the DoubleTree by Hilton, and the proposed assistance to the Owner for the Hotel, as set forth in the Tax Sharing Report, are (i) necessary in order to make the rehabilitation of the Hotel financially feasible and (ii) substantially likely to generate new TOT revenues not presently being generated within the City, and (iii) that entering into this Agreement for the sharing of the Transient Occupancy Tax Increment (as defined below) with the Owner is in the best interests of the City and its residents within the meaning of the TOT Program. c. The City finds the benefit to the City of Transient Occupancy Tax Sharing of the Transient Occupancy Tax Increment, calculated in the time and manner described in this Agreement, using a Transient Occupancy Tax Sharing percentage of fifty percent (50%) of the Transient Occupancy Tax Increment for a maximum period of 17 (seventeen) years is consistent with the intent and purpose of the TOT Program. Section 3. Prerequisites for Receipt by Owner of Tax Sharing. The following are conditions precedent to the City's obligation to share Transient Occupancy Tax Increment with the Owner: a. The Owner (or any Owner Related Party, as defined below) will acquire full title to the Hotel from its current owner within six (6) months of the Effective Date (as defined hereinafter). Notwithstanding anything in this Agreement which may be construed or interpreted to the contrary, the Parties hereby acknowledge and agree that Owner is only acquiring a ground leasehold interest in the Hotel and the Property and that all references in this Agreement to the Owner acquiring the Hotel or the Property shall be deemed to refer to Owner acquiring the ground leasehold interest in the Hotel and the Property. Based on the foregoing, neither Party shall, without the written consent of the other, record this Agreement (or cause it to be recorded) or any memorandum hereof in the official records of the county in which the Property is located. b. The Owner shall have entered into a Franchise Agreement with Hilton Hotels to allow the Owner (or Owner Related Party or their designee) to operate a DoubleTree by Hilton on the Property (the "Franchise Agreement"). c. On or prior to June 1, 2014 Owner (or Owner Related Party or their designee, as applicable) shall have caused the Hotel Opening (as defined below) to have occurred; provided, however, that failure to meet said date shall not be a breach of the terms of this Agreement by Owner but shall delay the commencement of the Transient Occupancy Tax Sharing period pursuant to Section 4(a). Notwithstanding the foregoing, the City's obligation hereunder to share Transient Occupancy Tax may, at the City's election, terminate if the Hotel Opening does not occur on or before October 1, 2014. As used herein, "Hotel Opening" shall mean: (i) Owner (or the applicable 3 • Owner Related Party) shall have completed (or caused to be completed) those improvements expressly required by Hilton as a condition to opening the Hotel as a DoubleTree by Hilton (the "Hotel Improvements"), and (ii) the occurrence of the "grand" opening of the Hotel as a DoubleTree by Hilton, which shall occur no more than 60 days after the Hotel first begins operating as a DoubleTree. As used herein, "Owner Related Party" shall mean Owner, any of its affiliates, subsidiaries, or parent entities, or any other entity controlled by, controlling, or under common control with Owner, directly or indirectly, or any other entity that is, directly or indirectly, controlled by the person or entity that exerts ultimate control over Owner as of the Effective Date or by a family member of any such person. d. The Parties agree that no signature on the part of the City can be deemed authorized until the City Council has given final approval in open session of the terms of this Agreement, all in accordance with the provisions of the TOT Program. Section 4. Terms Related to Calculation of Tax Sharing. a. The term of the Transient Occupancy Tax Sharing period shall be for a period of 17 years and shall commence on the later to occur of (such commencement date, the 'TOT Sharing Commencement Date"): (i) January 1, 2014, or (ii) the date on which the Hotel Opening occurs provided that, if the Hotel Opening occurs later than October 1, 2014, the City has granted an extension to Owner with respect to the time frame for completion of the Hotel Improvements in accordance with and to the extent required under the terms of this Agreement. Payments from the Transient Occupancy Tax Increment shall be made by the City to the Owner on an annual (calendar year) basis, with each such payment being required to be made on or before the date that is • thirty (30) days from the date on which the City's Finance Department receives the monthly TOT report and remittance from the Owner for December of the subject year. Notwithstanding any language, in this Agreement to the contrary, the Owner shall faithfully file monthly reports, together with their accompanying remittances, as required by the City's current procedures, or otherwise obey said procedures as they may change from time to time. By way of example only: if the City receives the December report and remittance from the Owner on January 28 of the year following the subject year, the payment of the Transient Occupancy Tax Increment for the foregoing calendar year shall be made by the City to the Owner on or before February 28 of the following year. If the TOT Sharing Commencement Date begins on a date other than the'January 1 of the year, the first annual payment of Transient Occupancy Tax Sharing shall be for the number of months, commencing on the first day of the month following the TOT Sharing Commencement Date, remaining in the year during which the TOT Sharing Commencement Date falls. 4 b. The Parties agree that "Transient Occupancy Tax Increment", as used in this Agreement, shall mean, for any given calendar year, the amount by which the TOT receipts, as determined from the City's records, for the Hotel for said calendar year exceed the Base Amount. As used herein, the "Base Amount" shall be an amount equal to the amount set forth in Exhibit "B" hereto, subject to the terms expressed in said exhibit, which amount equals the average annual amount of the TOT receipts received by the City, as determined from the City's records, from the Hotel during the three (3) full calendar years prior to the date of Owner's acquisition of the Hotel, which the Parties expect to occur in 2013. Therefore, the calculation in Exhibit "B" uses calendar years 2010,2011 and 2012. During the term of the Transient Occupancy Tax Sharing period, the Base Amount shall not change from the amount set forth above, unless the acquisition of the Hotel by the Owner occurs after December 31, 2013, in which case the three years used as a basis for calculating the Base Amount will change. The calculation of the Base Amount is set forth on Exhibit "B" attached hereto and incorporated herein by reference, which assumes acquisition of the Hotel during calendar year 2013. As noted, this Base Amount may change if acquisition of the Hotel occurs after December 31, 2013. The Parties agree that the "Transient Occupancy Tax Sharing" amount shall mean an amount equal to fifty percent (50%) of the Transient Occupancy Tax Increment for any given calendar year, which Transient Occupancy Tax Sharing amount shall be payable for a period of seventeen (17) years, subject to the provisions of this Agreement. By way of example only, if: (i) the TOT receipts from the Hotel for calendar year 2014 are $100,000, and (ii) the Base Amount is $60,000, then the Transient Occupancy Tax Increment for calendar year 2014 would be $40,000 and the Transient Occupancy Tax Sharing amount for calendar year 2014 would be $20,000 (50% of $40,000). c. The `yearly' period for measurement of Transient Occupancy Tax Increment shall be each calendar year. If necessary to reach the full seventeen (17) year term of the Transient Occupancy Tax Sharing period, the final month or months shall be prorated. d. The Parties acknowledge that the information from which the City's Finance Department calculates the Transient Occupancy Tax Increment is based upon reports filed by the. Owner or Owner's designated operator of the Hotel. Accordingly, the Owner agrees to provide the City's Finance Department with accurate occupancy reports, at such frequency as the City's procedures may from time to time require of the Hotel. The City's Finance Department may adopt such procedures, audits or required reports as are reasonable or necessary to enable the Finance Department to accurately calculate the Transient Occupancy Tax Increment. The annual payment of the Transient 'Occupancy Tax Sharing amount shall be.based on information which is as accurate as can be reasonably obtained by the Parties. The Parties agree that past 5 payments of the Transient Occupancy Tax Sharing amount are subject to adjustment if further information indicates that any payment was inaccurate. Section 5. Operating Covenants. Following Owner's acquisition of the leasehold interest in the Hotel and the Property,,Owner (or the applicable Owner Related Party) shall comply with the following covenants (the "Operating Covenants"): a. Owner covenants and agrees for itself, its successors, its assigns, and every successor in interest to the. Property, or any portion thereof, that from and after the Hotel Opening, Owner shall cause the Property to be used in a manner consistent with the services and amenities required to be provided by Owner pursuant to the Franchise Agreement entered into between Owner and Hilton with respect to operating the Hotel as a DoubleTree by Hilton, together with all necessary or desirable ancillary uses, including, without limitation, parking (together, the "Intended Use"), except for such exceptions to such covenant as may be provided under the terms of the Franchise Agreement. Owner covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property, or any portion thereof, that upon completion of the Hotel Improvements, Owner shall devote the Property to the Intended Use for the shorter of (i) a period of seventeen (17) years following the TOT Sharing Commencement Date,. or '(ii) the term of the Transient Occupancy Tax Sharing Agreement. No other use of the Property shall occur without the prior written approval of the City, which approval shall be given or withheld at the sole discretion of the City. b. Owner covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property and/or the Hotel, or any part thereof, that Owner, such successors and such assigns, shall maintain in good condition the improvements on the Property in all material respects, shall keep the Property materially free from any accumulation of debris or waste material, and shall maintain in a neat, orderly, healthy and good condition any landscaping required by the City during its normal approval processes to be planted on the Property, or placed on the Property by Owner in its own determination. c. Owner covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property and/or the Hotel, or any part thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, or on the basis of domestic partnership status or arrangement, lifestyle choice, or sexual orientation in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property and the Hotel; nor shall Owner, itself or 6 any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property or the Hotel. Notwithstanding any provision of this paragraph, none of the cited statutes shall apply to the extent that they deal with housing of any kind. d. The City may review the creation of a landscape and lighting district in the area where the Property is to be located, or, alternatively, the annexation of the Property into an existing City district. Such a district would assist the City in paying for the lighting and landscaping in the area, thus enabling it to install and maintain such amenities to the general benefit of the area and the specific benefit of the Property. Such a district would equitably apportion the costs among the benefited land owners. Owner covenants and agrees, for itself and its successors and assigns, and on behalf of any and all Tenants, that it will participate in such a district for the life of the district, will vote in favor of its formation, or for annexation into an existing district, as applicable, if a vote is required, will otherwise support and not oppose the formation of the district or the annexation, and will pay when due the assessments apportioned to it. The Owner agrees to include a similar provision to every lease of any portion of the Property to a Tenant such that the Tenant's obligations are essentially identical to the Owner's. e. The City may also review the formation of a business improvement district in the area where the Property is to be located. Such a district would provide assistance to all businesses within the district for a variety of purposes, each of which would be designed to generate patronage for such businesses. Such a district would assess business owners in the district on an equitable basis for its share of the costs expended for the mutual benefit of the businesses in the area. Owner covenants and agrees, for itself and its successors and assigns, that it will participate in such a district for the life of the district, will vote in favor of its formation if a vote is required, will otherwise support and not oppose the formation of the district and will pay when due the assessments apportioned to it. The Owner agrees to include a similar provision to every lease of any portion of the Property to a Tenant such that the Tenant's obligations are essentially identical to the Owner's. f. The City is deemed the beneficiary of the terms and provisions of the Operating Covenants for and in its own right and for the purposes of protecting the interests of the community. The City shall have the right, if the Operating Covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or such other proper proceedings to enforce the curing of such breaches to which it or any other beneficiary of such covenants may be entitled, including, without limitation, to specific performance, damages and injunctive relief, all subject to any notice and or cure periods set forth in this Agreement. In addition, at the City's sole discretion, any breach of the Operating Covenants, after the passage of applicable 7 notice and/or cure periods, shall be deemed a material breach of the Agreement, permitting the City to terminate the Agreement. In addition to the foregoing, Owner agrees that the Hotel Improvements shall, in all material respects, be constructed in accordance with all City building and permit requirements, and, in all material respects, shall be constructed in accordance with the applicable requirements of any other governmental agency having jurisdiction over any aspect of the development and construction of the Hotel. Section 6. Indemnification; Release. a. Section 3.25.030 of the Code requires that the Owner provide the City with an indemnification agreement. The Parties agree that this Section 6 shall satisfy the requirement of that section. b. The indemnification provided in this section shall survive the termination for any reason of the term of this Agreement for a period of five (5) years from the end of said term. c. The Owner agrees to indemnify and hold the City, and its elected officials, officers, employees, agents, and attorneys harmless from and against all damages, judgments, orders, rulings, costs, expenses and fees (collectively, the "Claims") arising from or related to any act or omission of the Owner in material breach of Owner's obligations under this Agreement; provided; however, that in no event shall the Owner's indemnification obligations as set forth in this paragraph (c) include any Claims to the extent arising from the gross negligence or intentional misconduct of City. d. The Owner releases the City from any Claims arising from any inability of the City to legally collect transient occupancy tax, share occupancy tax, or any other act or omission, including any state statute or regulation to which the City is subject, which is beyond the City's sole control. e. The Owner waives any right which it might have or accrue at any time during the effective period of any provision of this Agreement, including these indemnification provisions, or its exhibit(s), to pursue any legal or equitable remedy or Claim against the City, other than for non-payment of the Owner's share of Transient Occupancy Tax Increment calculated under and otherwise due under the provisions of this Agreement. Section 7. Termination of Agreement by City. The City shall have the right to terminate its obligations under this Agreement if: (i) the Owner breaches any promise, obligation, covenant or duty under this Agreement or of its exhibit(s) in any material respect, including, without limitation, the failure of Owner to cause the Hotel Opening to occur on or before October 1, 2014, (ii) or Owner 8 providing transient occupancy tax information that is not accurate in any material respect, all in accordance with this Agreement, or (iii) if and to the extent the City's consent is expressly required under the terms of this Agreement, any assignment or transfer of Owner's rights under..the groundlease, the Franchise Agreement, or this Agreement without City's consent. In addition, if an assignment or transfer is made in violation of the terms of this Agreement, any Transient Occupancy Tax Increment paid to Owner (or any party who took assignment or transfer of any of the rights provided. under this Agreement to Owner where such assignment or transfer was in violation of the provisions of this Agreement).after the date of said prohibited Assignment shall be returned to City within 15 days of City's written demand therefor, given in accordance with the notice provisions of this Agreement. In order to terminate this Agreement, the City shall first provide thirty (30) days' notice to the Owner, given in accordance with the notice requirements set forth in Section 8 hereof. Said notice shall indicate the reason that City has declared a termination of the Agreement, and shall indicate, if applicable, what steps must be taken to cure the referenced breach of the Agreement or of any attachment hereto. If, at the end of the thirty (30) day notice period, all breaches have not been corrected, the City shall have the right, at its sole option, to deem the Agreement terminated without further notice or action by the City; provided, however, that in the event said breach is not reasonably susceptible to cure within said thirty (30) day period, and provided, further, that Owner commences its cure efforts within said thirty (30) day period and diligently pursues said cure efforts thereafter, then said thirty (30) day period shall be extended as reasonably necessary to accommodate a cure of the underlying breach(es). Section 8. Miscellaneous Provisions. a. All findings and decisions of the City Council taken in connection with the application of the Owner to participate in the Program shall be deemed to be reasonable and supported by an adequate and appropriate record. No such findings or decisions shall be subject to challenge or be the subject of any Claim by the Owner. Any action taken by the City, including, but not limited to, the termination of this Agreement under the provisions hereof, shall be at the sole option of the City and in its sole and absolute discretion, unless a different standard is otherwise specifically indicated. The Owner acknowledges that City would not have entered into this Agreement in the absence of this covenant by the Owner. b. All exhibits attached to this Agreement are deemed to be incorporated into • this Agreement by reference. c. The Owner agrees to execute any additional documents, forms, notices, applications or other documents which City reasonably determines to be necessary to carry out the intent of this Agreement and/or the intent and provisions of applicable portions of the Code. The City agrees to execute any additional documents, forms, 9 notices, applications or other documents which Owner reasonably determines to be necessary to carry out the intent of this Agreement. d. The Parties agree that, should any provision, section, paragraph, sentence or word of this Agreement be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of legislation, the remaining provisions, sections, paragraphs, sentences and words of this Agreement shall remain in full force and effect and the Parties agree in good faith to immediately amend this Agreement in such a way as to provide alternative provisions, sections, paragraphs, sentences or words as to carry out the intent of this, Agreement and/or the TOT Program. e. The Owner shall pay prior to delinquency all real property taxes and assessments assessed and levied on or against the Hotel and/or the property on which it is located at all times during the term of the Transient Occupancy Tax Sharing, and all sums due under any mortgage or loan, the repayment of which is secured by the Hotel and/or the property. f. The Owner shall not, prior to the end of the term of the Tax Increment Sharing arrangement, without prior written approval of the City, which approval may be given or withheld at the absolute discretion of the City, assign or attempt to assign this Agreement or any right herein. Notwithstanding the foregoing, the City agrees that the City's consent shall not be required in connection with: (i) an assignment of, this Agreement in connection with the sale of the Hotel to a third party and where the assignee has entered into a new franchise agreement with Hilton (or where Hilton has approved said assignee's assumption of Owner's then existing franchise agreement) to continue to operate the Hotel as a DoubleTree by Hilton, (ii) an assignment of this Agreement to any Owner Related Party, (iii) the assignment, sale, transfer, or other conveyance of any direct or indirect ownership interests in Owner to any Owner Related Party, (iv) the granting by Owner of any mortgage, deed of trust, or other security interest in and to the Property, the Hotel, and/or this Agreement to a Lender (as defined below) in connection with any financing or refinancing to be secured by the Hotel, the Property, and/or this Agreement or any portion thereof, including, but not limited to, a collateral assignment of this Agreement by Owner to any such Lender, (v) any assignment or other transfer or conveyance of this Agreement, the Hotel, or the Property to a Lender or its designee pursuant to a foreclosure or foreclosure related action (including a deed in lieu thereof), or (vi) a transfer, sale or other similar conveyance of the Hotel or the Property to a third party where Owner elects to retain its interest in and to this Agreement; provided, however, that in connection with any such transfer, sale or other similar conveyance described in this clause (vi), Owner shall have delivered (or caused to be delivered to City) a certificate executed by the transferee wherein said transferee expressly acknowledges that the transfer, sale or other 10 conveyance of the Hotel or the Property does not include a transfer of the Owner's rights pursuant to this Agreement. The City further agrees that in connection with a sale of the Hotel to a third party that is not described in clause (i) above, it will permit an assignment of this Agreement in connection with any such third-party sale provided that the applicable third party-transferee provides the City with such financial or other information as the City deems reasonably necessary to enable it to adequately evaluate the experience and ability of the third party to operate the Hotel in an effective and profitable manner, and in compliance with the terms of this Agreement, including, but not limited to, Section 5. Nothing herein shall prohibit, or be deemed to prohibit, the grant of limited easements or permits to facilitate the completion of the Hotel Improvements. As used in this Agreement, "Lender"shall mean' a market-recognized institutional lender that customarily makes loans secured by commercial property. g. With respect to any default by the other Party occurring after the Effective Date, including, without limitation, with regard to a breach during the period of Transient Occupancy Tax Sharing or the term of the indemnification provided in this Agreement to the City by the Owner, the non-breaching Party may institute legal action to cure, correct or remedy any default, providing that such action is not otherwise prohibited or restricted by the provisions of this Agreement, to recover any damages arising from such breach or to obtain any other remedy consistent with the purposes of this Agreement, and further provided that notice is given in accordance with this Agreement. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in any other appropriate court in that County, or in the Federal District Court in the Central District of California. h. The 'laws of the State of California shall govern the interpretation and enforcement of this Agreement. i. Except with respect to any rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. A waiver of a requirement shall not constitute an ongoing waiver of that requirement in the future. Any waiver of a right must be in writing to be enforceable. j. Any and all notices, demands or communications submitted by any Party to the other Party pursuant to or as required by this Agreement shall be proper if in writing and dispatched by messenger for immediate personal delivery, or by registered or certified United States mail, postage prepaid, return receipt requested, to the principal office of the City and Developer, as applicable, as designated in Section 1.03(a) and Section 1.03(b) hereof. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return 11 receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days after it is placed in the United States mail as heretofore provided. k. Any notices to any Party required to be given under this Agreement, or given by a Party for other reasons, shall be sent to: Owner: do T2 Development, LLC Ryan Phelps 620 Newport Center Drive, 14th Floor Newport Beach, CA 92660 Attn: Managing Member City: City of Cathedral City 68-700 Avenida Lalo Guerrero Cathedral City, CA 92234 Attn: City Manager With a copy to: Green, de Bortnowsky& Quintanilla, LLP 23801 Calabasas Rd., Ste. 1015 Calabasas, CA 91302 Attn: Charles R. Green I. No elected official, officer, employee or agent of the City having any conflict of interest, direct or indirect, related to this Agreement and/or the acquisition and improvement of the Hotel shall participate in any decision relating to this Agreement. m. The Owner warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section, shall not include persons to whom fees are paid for professional services if rendered by attorneys, financial or other consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Owner. For the purposes of this paragraph, third parties shall include any elected official, officer, employee or agent of the City. n. No elected official, official or officer, employee, agent or attorney of the City shall be personally liable to the Owner, its members or principals, or any successor in interest, or any other party or person whatsoever, in the event of any default or breach by the City or for any amount which may become due to the Owner or to its successors, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, officer, employee or attorney. o. In addition to specific provisions of this Agreement, performance by either Party hereunder shall not be deemed to be in default where delays or defaults are due 12 to war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of public enemy; epidemics; quarantine restrictions; freight embargoes or lack of transportation; weather-caused delays; inability to secure necessary labor, materials or tools; acts of the other Party other than as permitted or required by the terms of this Agreement; acts or failure to act of any public or governmental agency or entity other than as permitted or required by the terms of this Agreement (except that action or failure to act by the City shall not extend the time for the City to act unless such extension is otherwise expressly authorized herewith) unless such action or failure to act is the result of a lawsuit or injunction, or any other causes beyond the control or without the fault of the Party claiming an extension of time to perform. Any extension of time for any such cause hereunder shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Party within thirty (30) calendar days of the commencement of the cause. Times of performance under this Agreement may also be extended by mutual agreement in writing by and between the City and the Owner. p. The City shall have the right at all reasonable times and, at the City's sole cost and expense, to inspect and/or audit those books and records of the Owner directly related to the calculation of the Transient Occupancy Tax Increment. The City may elect to conduct such an audit using the City's personnel or by retaining a third-party outside auditor. In either case, the City may not exercise its audit rights hereunder more than once in any twelve (12) month period; provided, however, that if, as a result of any such audit, the City discovers a significant discrepancy in the Transient Occupancy Tax Increment for a year during the term of the Transient Occupancy Tax Sharing arrangement, then the City may exercise its audit rights hereunder up to two (2) times in any twelve (12) month period if City elects not to terminate this Agreement. In the event that the City elects to engage an outside auditor, then any such outside auditor shall be a third-party independent auditor reasonably approved by Owner and the costs and expenses of said third-party auditor shall be paid for by the City. Notwithstanding the foregoing, if, as a result of any such audit, the audit reveals a significant discrepancy in the Transient Occupancy Tax Increment for a year during the term of the Transient Occupancy Tax Sharing arrangement, then Owner shall be required to promptly reimburse the City for the reasonably costs and expenses of the City incurred in connection with the applicable audit. Matters learned by the City in the course of such inspections shall not be disclosed to third parties unless required by law or unless otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights by the City hereunder. q. The City Manager of the City is authorized to sign on his own authority amendments to this Agreement which are of routine or technical nature, including extensions of time deadlines. In the case of deadlines, the cumulative time of 13 extensions granted by the City Manager shall not exceed six (6) months. Thereafter, City Council approval of extensions shall be required. The City's, including, without limitation, the City Manager's, consent to any request for the extension of a time deadline shall not be unreasonably withheld, conditioned, or delayed. r. Each Party represents and warrants the following: they have carefully read this Agreement, and in signing this Agreement and agreeing to be bound by the same, they have received independent legal advice from legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement, and they have freely signed this Agreement and agreed to be bound by it without any reliance upon any agreement, promise, statement or representation by or on behalf of the other Party, or its respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. This Agreement shall be interpreted as though prepared jointly by both the Owner and the City. s. If either Party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, seeks the resolution of disputes, or is made a party to any action or proceeding brought by a third party with respect to the Agreement, the Program or the participation in either by either Party, then as between the Owner and the City, the prevailing Party shall be entitled to recover as an element of its costs of suit or resolution of disputes, and not as damages, its reasonable attorneys' fees as fixed by the Court or other forum for resolution of disputes as may be agreed upon by the Parties in such action or proceeding or in a separate action or proceeding brought to recover such attorneys' fees. t. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. u. Unless otherwise indicated with respect to a requirement, all time frames for performance of an act required or permitted by this Agreement shall be calendar days. Time frames measured in months shall be calculated with reference to the actual number of days in the relevant months. Annual time frames shall mean a period of 365 days. v. This Agreement shall be executed in four (4) duplicate originals each of which is deemed to be an original. This Agreement constitutes the entire understanding and agreement of the Parties. The Parties may sign this Agreement in counterparts. W. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the Parties with respect to all or any part of the subject matter hereof. • 14 x. All waivers of the provisions of this Agreement and all amendments hereto must be in writing and signed by the appropriate representatives of the City and/or the Owner. y. The "Effective Date" of this Agreement is the last day on which all required signatures have been affixed to this Agreement, or the date on which the City Council votes in open session to approve this Agreement, whichever occurs later. z. There shall be no third party beneficiaries of this Agreement and nothing in this Agreement, express or implied, is intended to or shall confer upon any person or entity (other than the Parties hereto and their successors or assigns) any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] 15 WHEREFORE, the Parties�Aintending to be bound hereby, have affixed their authorized signatures to thi S' Ta°1aring Agreement. CITY: OWNER: CITY OF CATHEDRAL CITY, T ALLIANCE ONE PALM SPRINGS, LLC, a municipal corporation a California limited liability company 4t. By: 1;. ,,k: Date: , 2013 By: T2 Management, LLC City anager a California limited liability company, It's Manager a . _ ,//���I��1� By: - 3 Date: Al- r , 2013 Pa Hammers me: Mike Patel City Clerk Title: Manager Approved as to form: GREEN, DE BORTNOWSKY & QUINTANILLA, LLP City Attorney Charles R. Green OATH/0046-49/D O C/1-9.D O C 4/3/13 230 crg 16 EXHIBIT "A" To Tax Sharing Agreement [DOUBLETREE] (Attach legal description of Property) EXHIBIT"A" EXHIBIT "B" To Tax Sharing Agreement [DOUBLETREE] Calculation and Establishment of Base Amount Calendar Year TOT Remitted 2010 $345,242 2011 $365,570 2012 $347,303 AVG $352,705 The above calculation assumes acquisition of hotel during calendar 2013. Should acquisition of hotel occur in an subsequent calendar year,these calculations would change . EXHIBIT"B"—Page 1