HomeMy WebLinkAbout2008-048840a�
RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:
Ciry of Arroyo Grande
P.O. Box 550
214 East Branch Street
Arroyo Grande, CA 93420
Attention: Steve Adams, City Manager
JULIE RODEW'" 0
San Luis Obispo Co�ly—Clerk/Recorder
flecortled al Ihe �eqtlest ol
Public
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9/30/2006
11:20 AM
ooca: 2008048840
I IIII IIIIIIIIIIIIIIIIIIIIIII
Titles: 1 Pages: � 6
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DECLARATION OF COVENANTS, CONDITIONS. AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY
This DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY ("CovenanY') is entered into as of this aibT� day of
AVGNS? , 200 8, by and between the CITY OF ARROYO GRANDE, a California general law city
and municipal corporation ("City"), and ARROYO HOTEL, LLC, a California limited liability company
("Owner") (individually a "Party" and collectively the "Parties").
RECITALS
A. Owner is the owner of that certain real property located generally at 1400 West Branch
Street, in the City of Arroyo Grande, County of San Luis Obispo, State of Califomia, which is more
particularly described in the legal description attached hereto as E�chibit "A" and incorporated herein by
this reference (the "Site").
B. On or about August 26, 2008, City and Owner entered into that certain unrecorded
agreement captioned "Agreement to Enter Into Covenant to Operate and Pay Compensation Based on
Transient Occupancy Ta�c Revenue [Hampton Inn & Suites]" (the "AgreemenY') authorizing the
recordation of this Covenant against the Site upon the timely satis£action of the "Covenant Conditions"
identified therein.
C. Subject to the terms and conditions hereof, Owner has agreed to develop and operate a
Hampton Inn and Suites Hotel on the Site.
D. In consideration for Owner's encumbrance of the Site by this Covenant and Owner's
performance of its obligations hereunder, City has agreed to make certain payments to Owner, the amount
of which is measured by the Transient Occupancy Tax generated by the Hampton Hotel and received by
the City from other Transient Occupancy Tvc payors in the City above a Threshold Amount. City and
Owner have agreed that the amounts required to be paid by City to Owner hereunder during each Year of
the Operating Period provided for herein is a fair exchange for the consideration to be furnished by
Owner to City in that Yeaz.
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COVENANTS
Based upon the foregoing Recitals, whic
acknowledged by the Parties as true and correct,
receipt and sufficiency of which is acknowledged
follows:
h aze incorporated herein by this reference and aze
and for other good and valuable consideration, the
by both PaRies, City and Owner hereby agree as
1: DEFINED TERMS.
The following terms when used in this Covenant shall have the meanings set forth below:
The term "AgreemenY' shall have the meaning ascribed in Recital B of this Covenant.
The term "Annual Reimbursement Cap AmounY' shall have the meaning ascribed in Section -
4.1.1(b).
The term "Commencement Date" shall have the meaning ascribed in Section 2 of this Covenant.
The term "Corporate Successor" shall mean (i) any entity which is controlled by or under
common control with Owner, or (ii) any successor by merger, acquisition or corporate reorganization of
Owner and that will operate a facility similaz in size, operation, transient occupancy volume and all other
material aspects to the Hampton Hotel (as defined below) on the Site.
The term "Covenant Payments" shall mean the amounts to be paid by City to Owner with respect
to each twelve-month period during the Operating Period for which a Covenant Payment is due and
payable.
The term "Covenant Payments Cap AmounY' shall have the meaning ascribed in Section 4.1.1(c)
of this Covenant.
The term "DefaulY' shall have the meaning ascribed in Section 5.1 of this Covenant.
The term "Effective Date" shall mean the date this Covenant is executed by the latter of the two
Parties to sign, which date shall be inserted in the preamble to this Covenant.
The term "Force Majeure" is defined in Section 6.4 below.
The term "Hampton HoteP' shall refer to the specified hotel use authorized by the Land Use
Approvals approved by the City in or about June 2006 permitting the Site to be developed, constructed
and operated with the Hampton Hotel and related permitted uses.
The term "Holder" shall have the meaning ascribed in Section 5.1(b) of this Covenant.
The term "Land Use Approvals" shall mean those discretionary land use entitlements approved
by the City in or about June 2006 permitting the Site to be developed, constructed and operated as an
approximate _ room hotel.
The term "Operate" or "Operation" means not less than eighry percent (80%) of the hotel rooms
in the Hampton Hotel are available for transient occupancy to the geneml public except for such
reasonable interruptions as may be incidental to the conduct of its business.
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The term "Operating Period" refers to the period between the Commencement Date and the
Termination Date.
The term "Permitted Assignee" means a"Corporate Successor" to Owner.
The term "Permitted Closure" means periods of Force Majeure and such period or periods
aggregating up to not more than one (1) yeaz associated with any renovation of the Site.
The term "Site" shall have the meaning ascribed in Recital A of this Covenant.
The term "Termination Date" shall mean the date that is the eazliest of (i) the date that is five (5)
years following the Commencement Date; (ii) the date that the Covenant Payments Cap Amount is paid
in full; or (iii) the date on which this Covenant is terminated pursuant to Sections 5.2 or 53, as applicable.
The term "Transient Occupancy Tax" shall mean taxes received by and paid to the City pursuant
to Arroyo Grande Municipal Code chapter 3.24.
2. CONDITION TO OWNER'S RIGHT TO RECENE COVENANT PAYMENTS.
21 Onenine Date; Commencement Date. As a condition precedent to Owner's right to
receive the Covenant Payments, Owner shall open or cause said Hampton Hotel to be opened for business
to the public (excluding any "pre-opening" periods or similar special periods) not later than the Outside
Date defined in Section 2.2, all in compliance with the Land Use Approvals. The date on which the
aforesaid condition is satisfied shall constitute the "Commencement Date," at which time Owner's
obligations pursuant to Section 3 of this Covenant and City's obligations pursuant to Section 4 of this
Covenant, to the extent applicable, shall commence. Owner shall notify the Ciry in writing of the
Commencement Date and City shall confirm its agreement to the Commencement Date in writing. The
Parties' written confirmation of the Commencement Date shall be deemed paR of this Covenant and
incorporated herein.
2.2 Outside Date. Norivithstanding any other provision set forth in this Covenant, and
subject to extension for events of force majeure as provided in Section 6.4, if the condition set forth in the
first sentence of the preceding paragraph is not satisfied on or before the date that is three (3) months after
the execution of the Agreement ("Outside Date"), this Covenant shall automatically terminate and in such
event, neither Party shall have any further rights against or obligations to the other Party arising out of
this Covenant, except for Owner's indemnity obligations set forth in Section 3.6 which shall survive the
termination of this Covenant.
23 Ooeratine Condition. If Owner or a Permitted Assignee ceases to operate the Hampton
Hotel on the Site other than by reason of a Permitted Closure, then this Agreement shall terminate as of
the date such Operation is discontinued (other than by reason of a Permitted Closure) and no further
payments by City shall be due under Section 4.1.
3. OWNER'S OBLIGATIONS.
3.1 Continuous Operation; Site As Point of Sale. Owner covenants and agees to
continuously operate the Hampton Hotel on the Site, or to cause said Hampton Hotel to be continuously
operated on the Site, dwing normal business hours (except for Permitted Closures) during the entire
Operating Period. Owner covenants and agrees to report to the applicable govemment authoriry, or cause
the reporting of to the applicable governmental authority, all transient occupancy, sales, and use taxes
from occupancy, sales, and use occurring on the Site as being generated from the Site.
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3.2 Use Restriction. During the entire Operating Period, the Site shall not be put to any use
other than the operation of the Hampton Hotel and incidental related uses that comply with the Land Use
Entitlements and applicable provisions of City's Municipal Code.
33 Maintenance and Repair of Site; Landscapin�. During the entire Operating Period,
Owner, at its sole cost and expense, shall keep and maintain the Site and the improvements thereon and
all facilities appurtenant thereto in first class condition (as judged by other developments of similar
quality located in Santa Bazbara and San Luis Obispo counties) and keep free from accumulations of
debris, weeds, graffiti, and waste materials, with landscaping in a healthy condition, and shall othenvise
fully comply with the Site's landscape and maintenance standards established in the Land Use Approvals
and Municipal Code. During such period, Owner shall not abandon any portion of the Site or leave the
Site unguuded or unprotected, and shall not otherwise act or fail to act in such a way as to unreasonably
increase the risk of any damage to the Site or of any other impairment of City's interest set forth in this
Covenant.
3.4 Comnliance with Laws. During the entire Operating Period, Owner shall construct and
operate the Hampton Hotel on the Site in conformity with all applicable federal, state (including without
limitation the California Civil Code, the Califomia Government Code, the California Health & Safety
Code, the California Labor Code, the Califomia Public Resources Code, and the California Revenue &
Tazcation Code), and bcal laws, ordinances, and regulations (including without limitation the City's
Transient Occupancy Tax).
3S Non-Discrimination. In the development and operation of the Hampton Hotel, Owner
agrees not to violate applicable laws that prohibit discrimination against any person or class of persons on
the basis of any impermissible classification including but not limited to gender, marital status, race,
color, creed, mental or physical disabiliry, religion, age, ancestry, or national origin.
3.6 Indemnification of Ciri.
3.61 Owner shall indemnify, defend, assume all responsibility for, and hold the City,
and the City's officers, officials, employees, agents, representatives, and volunteers, hazmless from any
and all claims, demands, damages, defense costs or liability of any kind (including attorneys' fees, expert
witness fees, and litigation and court costs), that arise from the construction, development, or operation of
the Site, including but not limited to the death or injury to any person or damage to any property, or arise
from this Covenant (other than those damages caused by the breach of the Agreement by City or by the
gross negligence or willful misconduct of the City or by the City's officers, o�cials, employees, agents,
representatives, or volunteers acting in an official capacity), including, but not limited to, Owner's failure
to pay, if required, prevailing wages on the construction and development of the Site and any poRion
thereof. Owner shall be solely responsible for determining and effectuating compliance with prevailing
wage laws, and the City makes no representation as to the applicability or non-applicability of any of such
laws to the development and construction of the Site or any part thereo£ Owner hereby expressly
acknowledges and agrees that the City has not previously affirmatively represented to Owner or its
contractor(s), in writing or otherwise, in a call for bids or otherwise, that the development or construction
of a Hampton Hotel is not a"public work," as defined in Section 1720 of the Labor Code. The foregoing
Owner indemnity of City shall include any and all loss, liability, damage, claim, cost, expense and/or
"increased costs" (including attomeys' fees, court and litigation costs, and fees of expert witnesses) that
results or azises in any way from any of the following: (i) the noncompliance by Owner or its
contractor(s) or any subcontractor(s) of any applicable local, state and/or federal law, including, without
limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the
requirement to pay state prevailing wages and hire apprentices); (ii) the implementation of Section 1781
of the Labor Code, as the same may be amended from time to time, or any other similaz law; and/or (iii)
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failure by Owner or its contractor(s) or any subcontractor(s) to provide any required disclosure or
identification as required by Labor Code Section 1781, as the same may be amended from time to time, or
any other similaz law. The term "increased costs," as used in this Section 8 shall have the meaning
ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing
indemnity shall survive termination of this Agreement and shall continue after completion of the
construction and development of the Site.
3.6.2 Owner shall indemnify, defend, assume all responsibility for, and hold the City,
and the City's officers, officials, employees, agents, representatives, and volunteers, harmless (including
attomeys' fees, expert witness fees, and litigation and court costs), from and against any claim, action,
suit, proceeding, damage, liability, deficiency, fine, penalry, or punitive damage (including, without
limitation, expert witness fees and reasonable attorneys' fees) (collectively, "Environmental Claims"),
resulting from, arising out of, or based upon (a) the presence, release, use, generation, discharge, storage
or disposal of any Hazardous Materials on, under, in or about, or the transpoRation of any such Hazardous
Materials to or from, the Site, or (b) the violation, or alleged violation, of any present or future statute,
ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release,
discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from,
the Site. "Environmental Law" shall mean all applicable past, present or future federal, state and local
statutes, regulations, directives, ordinances, common law, and rules, which pertain to environmental
matters, contamination of any type whatsoever, or health and safety matters, as such have been amended,
modified or supplemented from time to time (including any present and future amendmenu thereto and
re-authorizations thereo�, including, without limitation, those relating to: (a) the manufacture,
processing use, distribution, treatment, storage, disposal, generation or transportation of Hazardous
Materials; (b) air, soil, surface, subsurface, surface water and groundwater; (c) the operation and closure
of underground storage tanks; (d) health and safety of employees and other persons; and (e) noufication
and record keeping requirements relating to the foregoing. Without limiting the above, Environmental
Laws also include the following: (a) the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. §§ 9601 et seq.), as amended ("CERCLA"); (b) the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act (42 U.S.C. §§6901 et seq.), as amended
("RCRA"); (c) the Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C. §§ 11001
et seq.), as amended; (iv) the Clean Air Act (42 U.S.C. §§ 7401 et seq.), as amended; (d) the Clean Water
Act (33 U.S.C. §§1251 etseq.), as amended; (e) the Toxic Substances Control Act (15 U.S.C. §§ 2601 et
seq.), as amended; (� the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), as
amended; (g) the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §§ 136 et seq.), as
amended; (h) the Federal Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), as amended; (i) the
Federal Radon and Indoor Air Quality Research Act (42 U.S.C. §§ 7401 et seq.); Q) the Occupational
Safety and Health Act (29 U.S.C. §§ 651 et seq.), as amended; and (k) any state, county, municipal or
bcal statutes, laws or ordinances similar or analogous to (including counterparts o� any of the statutes
listed above. The foregoing indemnity shall survive termination of this Covenant and shall continue afrer
completion of the construction and development of the Site.
3.6.3. Owner shall indemnify, defend, assume all responsibility for, and hold the City,
and the City's officers, officials, employees, agents, representatives, and volunteers, harmless (including
attorneys' fees, expert wimess fees, and litigation and court costs), from and against any claim, action,
suit, proceeding, damage, liability, deficiency, fine, penalty, or punitive damage (including, without
limitation, expert witness fees and reasonable attomeys' fees), azising out of any obligation for payment
of any real estate or broker's commission or finder's fee in connection with this Covenant, or Owner's
acquisition or development of the Site. The foregoing indemniry shall survive termination of this
Covenant and shall continue after completion of the construction and development of the Site.
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4. OBLIGATIONS OF CITY.
4.1 Covenant Pavments to Owner.
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4.1.1 Amount of Covenant Pavments; Covenant Payments Cap Amount. In
consideration for Owner's undertakings pursuant to this Covenant and the encumbrance of Owner's
interest in the Site pursuant to this Covenant, City shall make the following Covenant Payments to Owner
during the Operating Period subject to the following terms and conditions:
(a) At the conclusion of each twelve (12) month period following the
Commencement Date (until the Termination Date), City shall determine all of the following:
(i) if the total City Transient Occupancy Tax revenue received by and
paid to City by all Transient Occupancy Tax payors during such twelve (12) month period exceeds by
Fifty Thousand Dollazs ($50,000) the total City Transient Occupancy Tax revenues received by and paid
to City by all Transient Occupancy Tax payors for the twelve (12) month period immediately prior to the
Commencement Date,
(ii) if the Transient Occupancy Tax received by and paid to City from the
operation of the Hampton Hotel on the Site during such twelve (12) month period is at least Fifly
Thousand Dollazs ($50,000) ("Threshold AmounY'); and
(iii) if the Owner complied with its obligations set forth in Section 3
during the entire applicable twelve (12) month period, as described in Section 4.2 below.
(b) If City determines that the conditions in clauses (i), (ii) and (iii) of the
preceding subparagaph (a) have been met, City shall (in accordance with Section 4.13) reimburse Owner
One Dollar ($1.00) for every Two Dollazs ($2.00 ) that is in excess of ffie Threshold Amount (the
"Annual Reimbursement PaymenY'); provided, however that in no event shall the Annual Reimbursement
Payment for the first twelve-month period during the Operating Period be greater than the sum of Fifty
Thousand Dollazs ($50,000); in no event shall the Annual Reimbursement Payment for the second
twelve-month period be greater than the sum of Twenty-Five Thousand Dollus ($25,000); and in no
event shall the Annual Reimbursement Payment for each of the three subsequent twelve-month periods be
greater than the sum of Fifty Thousand Dollazs ($50,000) (each, an "Annual Reimbursement Payment
Cap AmounY'). There shall be no carry-over to a subsequent year of any reimbursement amount earned
but not paid because it exceeds the applicable Mnual Reimburseme�t Payment Cap Amount set forth in
the precedent sentence. City shall have no obligation to make any Annual Reimbursement Payment if the
Threshold Amount is not attained even if such Threshold Amount is never attained during the Operating
Period.
(c) Notwithstanding any other provision set forth in this Covenant to the
contrary, in no event shall the total sum of all Annual Reimbursement Payments made by City to Owner
exceed the sum of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) (the "Covenant Payments
Cap AmounY').
(d) Notwithstanding any other provision set forth in this Covenant to the
contrary, even in the event the Threshold Amount has not been reached at the end of the Operating
Period, and/or even in the event the Covenant Payments Cap Amount has not been reached at the end of
the Operating Period, this Covenant shall terminate and City shall have no further obligation after that
time to make any further or additional Covenant Payments.
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4.1.2 Source of Pavments. The Annual Reimbursement Payment shall be payable from
any source of funds legally available to City, including City's general fund. In this regazd, it is
understood and agreed that the Transient Occupancy Tax that is generated from the Hampton Hotel and
other Transient Occupancy Tax payors is being used merely as a measure of the amount of the Covenant
Payments that may be periodically owing by City to Owner under this Covenant, if applicable as set forth
above, and that City is not pledging any poRion of the Transient Occupancy Tax generated from the Site
to Owner or any other general funds monies.
4.13 Payment Procedure.
(a) Not later than thirty (30) days after the end of the first twelve month
period following the attainment of the Threshold Amount, City shall pay the Annual Reimbursement
Payment for said twelve month period to Owner. Each such payment shall be accompanied by a
statement identifying (i) the amount of Transient Occupancy Ta�c upon which the Annual Reimbursement
Payment amount was calculated and (ii) a cumulative total comparing how the Annual Reimbursement
Payment in question, together with all prior Annual Reimbursement Payments, if any, relate to the
Covenant Payment Cap Amount.
(b) It is understood and agreed by the Parties that the amount of City's
Annual Reimbursement Payments to Owner shall be based upon the amount of Transient Occupancy Ta�c
that City shall have been able to reasonably confirm it actually has received from the within fifteen (15)
days prior to the applicable payment date. In addition, if, after any such Annual Reimbursement Payment
is made (or not made because the conditions for payment were not met), either City or Owner obtains
information that the amount of City's payment was in error, the Party obtaining such information shall
promptly notify the other Party and shall provide such detailed information as may be necessary to
explain the discrepancy. The discrepancy then shall be taken into consideration by means of an
adjustment to the next Annual Reimbursement payment to be made by City (either an additional payment
in the event City has underpaid a prior Annual Reimbursement Payment that is due or a credit against the
subsequent Annual Reimbursement Payment in the event City has overpaid); provided, however, that in
the event (i) an adjustment needs to be made in excess of Ten Thousand Dollars ($10,000), or (ii) the
Annual Reimbursement Payment in question is the final one to be made under this Covenant, the Party
entitled to said sum shall be entitled to deliver a written notice to the other Party requesting an immediate
adjushnent and in such event the other Party shall make an appropriate payment within fifteen (IS) days
from receipt of said notice.
41.4 Books and Records. Upon the written request of either Party, the other Party
shall make available for inspection (at City Hall in the event of a review of City records and at Owner's
place of business in Arroyo Grande in the event of a review of Owner's records) such of its books and
records as the requesting Party may reasonably determine must be reviewed in order determine whether
the correct amount of Annual Reimbursement Payments have been made or are being made hereunder.
Notwithstanding the foregoing, CiTy shall not be required to produce any books or records that it is
prohibited from producing by law and Owner shall not be required to produce information that violates
the statutorily prescribed privacy rights of individual customers.
4.1.5 No Acceleration; Prepavment Permitted. It is acknowledged by the Parties that
any payments by City provided for in this Covenant are in consideration for the performance by Owner
during the time period(s) for which payments are due. Therefore, City's failure to timely make any
payments or City's failure to perform any of its other obligations hereunder shall not cause the
acceleration of any anticipated future Annual Reimbursement Payments by City to Owner.
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4.2 Additional Condition Precedent to Citds Obli ations. In addition to the provisions set
forth in Section 2 of this Covenant, City's obligation to make the Covenant Payments pursuant to Section
4.1 of this Covenant for any twelve month period during the Operating Period shall be contingent and
conditional upo� Owner's performance of its obligations set forth in Section 3 of this Covenant during
such hvelve month period.
5. DEFAULTS AND REMEDIES.
5.1 Defaults.
(a) Subject to Force Majeure (Section 6.4), the occurrence of any of the
following shall constitute a Default:
(i) the failure by either Party to perform any obligation of such
Party for the payment of money under this Covenant if such failure is not cured within fifteen (15)
calendaz days after the nonperforming Party's receipt of written notice from the other Party that such
obligation was not performed when due; or
(ii) the failure by either Party to perform any of its obligations (other
than obligations described in clause (i) of this Section 5.1) set forth in this Covenant, if such failure is not
cured within thirty (30) days after the nonperforming Party's receipt of written notice from the other Party
or, if such failure is of a nature that cannot reasonably be cured within thirty (30) days, the failure by such
Party to commence such cure within thirty (30) days and thereafter diligently and continuously prosecutes
such cure to completion; or
(iii) any representation or warranty by a Party set forth in this
Covenant proves to have been inconect in any material respect when made; or
(iv) the Hampton Hotel is materially damaged or destroyed by fire or
other casualty during the Operating Period and Owner fails to commence restoration of the improvements
within a six (6) months or thereafter fails to diligently and continuously proceed to complete such
restoration in accordance with this Covenant; or
(v) Owner is enjoined or otherwise prohibited by any govemmental
agency from occupying the Site during the Operating Period and such injunction or prohibition continues
unstayed for ninety (90) days or more for any reason.
(b) In the event Owner fails to perform any of ifs obligations under this
Covenant and City sends a notice of such failure to Owner, concurrently therewith Ciry shall send a copy
of such notice to any moRgagee or deed of trust holder with respect to the Site (herein the "Holder") (the
name and address of which Holder shall be furnished by Owner or such Holder to City) and the Holder
shall have the same period of time as is available to Owner to remedy such breach or failure under this
Covenant. City shall accept any proper cure of a breach or failure tendered by the Holder.
5.2 Citv's Remedies Upon Default bv Owner. Upon the occurrence of any Default by
Owner, and after Owner's receipt of written notice of default and expiration of the time for Owner to cure
such Default as provided in Section 5.1, City may at its option:
(i) suspend the payment of Annual Reimbursement Payments
otherwise due and payable to Owner hereunder for the period that Owner remains in Default. If City has
so suspended its payments in accordance with the terms of this clause (i), then upon Owner's cure of such
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Default, City shall resume its payment obligations, but shall have no obligation to make payments for any
twelve month period or portion thereof during which City's obligation to make payments was so
suspended; or
(ii) if the Default continues uninterrupted for a period of six (6)
months, City may terminate this Covenant, in which case City's obligation to make payments to Owner
for any period of time after the occurrence of the Default shall be fully and finally terminated and
dischuged.
In no event, however, shall City have the right (i) to specifically enforce Owner's covenants set
forth in Section 3 of this Covenant, (ii) to seek damages other than by offset of future Annual
Reimbursement Payments otherwise due hereunder, or (iii) to prevent Owner's lawful conversion of the
Site to another lawful use (even if such use would be inconsistent with this Covenant).
53 Owner's Remedies Unon Default bv Citv. Upon the occurrence of any Default by Ciry,
and after City's receipt of written notice of Default from Owner and expiration of the time for City to cure
such Default as provided in Section 5.1, Owner may terminate this Covenant by written notice to City
and/or seek whatever legal or equitable remedies may be available to Owner, subject to the provisions of
Section 4.1.5; provided, however, that norivithstanding anything in the foregoing to'the conVazy, in no
event shall Owner be entitled to obtain damages of any kind from City for lost profits or any other
economic or consequential damages of any kind other than any amount of Annual Reimbursement
Payment to which Owner was entitled but which was not paid by City to Owner.
5.4 Cumulative Remedies: No Waiver. Except as expressly provided herein, the
nondefaulting Party's rights and remedies hereunder aze cumulative and in addition to all rights and
remedies provided by law from time to time and the exercise by the nondefaulting Party of any right or
remedy shall not prejudice such Party in the exercise of any other right or remedy. None of the provisions
of this Covenant shall be considered waived by either Party except when such waiver is delivered in
writing. No waiver of any Default shall be implied from any omission by City to take action on account
of such Default if such Default persists or is repeated. No waiver of any Default shall affect any Default
other than the Default expressly waived, and any such waiver shall be operative only for the time and to
the extent stated. No waiver of any provision of this 'Covenant shall be construed as a waiver of any
subsequent breach of the same provisioa A Party's consent to or approval of any act by the other Party
requiring further consent or approval shall not be deemed to waive or render unnecessary the consenting
Party's consent to or approval of any subsequent act. A Party's acceptance of the late performance of any
obligation shall not constitute a waiver by such Party of the right to require prompt performance of all
further obligations. A Pazty's acceptance of any performance following the sending or filing of any
notice of Default shall not constitute a waiver of that Pazty's right to proceed with the exercise of its
remedies for any unfulfilled obligations. A Party's acceptance of any partial performance shall not
constitute a waiver by that Party of any rights relating to the unfulfilled portion of the applicable
obligation.
5.5 Limitations on Citv's Liabilitv. Owner acknowledges and agrees that: (i) this Covenant
shall not be deemed or construed as creating a partnership, joint venture, or similaz association beriveen
Owner and City, the relationship between Owner and Ciry pursuant to this Covenant is and shall remain
solely that of contracting PaRies, that the development and operation of the Hampton Hotel is a private
undertaking, and City neither undedakes nor assumes any responsibility pursuant to this Covenant to
review, inspect, supervise, approve, or inform Owner of any matter in connection with the development
or operation of the Hampton Hotel on the Site other than as expressly provided for herein, including
matters relating to azchitects, designers, suppliers, or the materials used by any oF them; and Owner shall
rely entirely on its own judgment with respect to such matters; (ii) by viRue of this Agreement, City shall
103Y02460D-ODDI
'/59536.04 a0fl28/08 '9'
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not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or
property resulting from any construction on, or occupancy or use of, the Site, whether arising from:
(a) any defect in any building, grading, landscaping, or other onsite or offsite improvement; (b) any act or
omission of Owner or any of Owner's agents, employees, independent contractors, licensees, lessees, or
invitees; or (c) any accident on the Site or any fire or other casualty or hazard thereon; and (iii) by
accepting or approving anything required to be performed or given to City under this Covenant, including
any certificate, survey, appraisal, or insurance policy, City shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute
a warranty or representation by City to anyone.
6. GENERAL PROVISIONS.
61 Inte�ration and Amendment. This Covenant constitutes the entire agreement by and
between the Parties pertaining to the subject matter hereof, and supersede all prior agreements and
understandings of the Parties with respect thereto. This Covenant may not be modified, amended,
supplemented, or otherwise changed except by a writing executed by both Parties.
6.2 Caotions. Section headings used in this Covenant are for convenience of reference only
and shall not affect the construction of any provisions of this Covenant.
63 Bindin� Effect; Successors and Assigns; Assi nn ments. This Covenant shall run with the
land and shall be binding upon and inure to the benefit of, the Parties and their respective successors and
assigns, as limited by this Section 63. Except as such assignment relates to Holder, the Owner shall not
assign, hypothecate, encumber or otherwise transfer, either voluntarily, involuntarily or by operation of
law, its rights or obligations as set forth in this Covenant without first obtaining the City's written
consent, which may be give� or denied or conditioned in the City's sole and absolute discretion. Owner
may assign its right to receive the Covenant Payments to any Holder for security purposes or to any lessee
or business owning and operating the Hampton Hotel on the Site. In the event of an assignment for
security purposes to a Holder, City agrees that this Covenant be subordinated to the lien of said Holder's
deed of trust or mortgage and City agrees to cooperate with Owner in executing an appropriate
subordination agreement. In the event of any assignment that is consented to in writing by the City, the
references in this Covenant to "Owner" shall be deemed to refer to the assignee.
6.4 Force Majeure. Notwithstanding any other provision set forth in this Covenant to the
contrary, in no event shall a Party be deemed to be in Default of its obligations set forth herein where
delays or failures to perform are caused by circumstances without the fault and beyond the reasonable
control of such Par[y, which circumstances shall include, without limitation, fire/casualty losses; strikes;
litigation; unusually severe weather, inability to secure necessary labor, materials, or tools; delays of any
contractor, subcontractor, or supplier; unjustified acts or failure to act by Ciry or other govemmental
agency in the processing of plans or permits or inspection or approval of the construction of the Hampton
Hotel project; litigation by third Parties challenging the validity or enforceability of the Agreement or this
Covenant or the Land Use Approvals and acts of god (collectively, "force majeure"). Adverse market
conditions or Owner's inability to obtain financing or approval to operate the Hampton Hotel shall not
constitute events of force majeure. In the event of an event of force majeure, the Party so delayed shall
notify the other Party of the circumstances and cause of the delay within a reasonable time period afrer
commencement of the delay, it shall keep the other Party informed at reasonable intervals upon request
regarding the stams of its efforts to overcome said delay, and it shall exercise commercially reasonable
diligence to perForm as soon as practicable thereafrer.
6.5 Notices. Notices to be given by City or Owner hereunder may be delivered personally or
may be delivered by prepaid, certified mail, return receipt requested, or by reputable pre-paid same-day or
to3vozaboo�oao�
]59536.04 a08/28/OS -1 �-
... ..
overnight delivery service providing a delivery conformation receipt, with notices to be addressed to the
appropriate address(es) hereinafter set forth or to such other address(es) that a Party may hereafrer
designate by written notice. Notices given by personal delivery shall be effective upon receipt. Notices
delivered by same-day or ovemight delivery service or by certified mail shall be effective on delivery or
attempted delivery as shown on the delivery confirmation receipt or postal retum receipt.
If notice is to City: City: City of Arroyo Grande
P.O. Box 550
214 East Branch Street
Arroyo Grande, CA 93421
Attention: Steve Adams, City Manager
with a copy to: City of Arroyo Grande
P. O. Box 550
214 East Branch Street
Arroyo Grande, CA 93421
Attention: Timothy J. Carmel, CiTy Attomey
If notice is to Owner: Arroyo Hotel, LLC
Attn: Michael S. Gallegos, Managing Member
8910 University Center Lane, Suite 100
San Diego, CA 92122
with a copy to: American Property Management Corp.
8910 University Center Lane, Suite 100
San Diego, CA 92122
Attention: William C. Littlefield
6.6 Further Acts. Each Party agrees to take such further actions and to execute such other
documents as may be reasonable and necessary in the performance of its obligations hereunder reserving
to City, however, its lawful discretionary and police power authority. Without limiting the generality of
the foregoing, upon the expiration or termination of the Operating Period, City will exewte and deliver
such instruments as may be prepared by Owner at Owner's expense to release the cloud upon title to the
Site created by this Covenant; provided, however, that any such document shall be in a form and with
content reasonably acceptable to the City Attomey of City.
6.7 Third Party Beneficiazies. With the exception of the specific provisions set forth in this
Covenant for the benefit of Holder, there are no intended third party beneficiaries under this Covenant
and no such other third parties shall have any rights or obligations hereunder.
6.8 Leeal Advice. Each Party represents and warrants to the other the following: they have
carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right
which they may have; they have received independent legal advice from their respective 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 without any reliance
upon any agreement, promise, statement or representation by or on behalf of the other Party, or their
respective agents, employees or attomeys, except as specifically set forth in this Agreement, and without
duress or coercion, whether economic or otherwise.
6.9 Govemine Law; Litigation Matters. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California without regard to conflict of law principles.
�o3voxaboo-000�
�s9sse.oa,osawos -11-
... `.
If either Party commences an action against the other Party in connection with this Agreement, the
prevailing party shall be entitled to recover from the losing party its expeR witness fees (if any), its
reasonable litigation costs and expenses including, without limitation, litigation costs, and its reasonable
attomeys' fees. The Superior Court of the County of San Luis Obispo shall have the exclusive
jurisdiction of any litigation between the Parties.
6.10 Nonliabiliri of City Officials. No officer, official, employee, agent, representative, or
volunteer of City shall be personally liable to Owner or any successor in interest, in the event of any
default or breach by City or for any amount which may become due to Owner or its successors, or on any
obligations under the terms of this Agreement.
611 Counteroarts. This Covenant may be executed in two or more counterparts, each of
which when so executed and delivered shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument.
[Signatures contained on next page.]
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059536.01 a08/28/OS -1 Z-
�
.�
IN WI7'NESS WHEREOF, the Parties have executed this Covenant to be effective as of the
Effective Date.
"CITY"
CITY OF ARROYO GRANDE,
a California municipal corporation
ATTEST:
-----`°� �
Kelly Wetmdre, Clerk
APPROVED AS TO FORM:
By: '
Timo y J. Caz 1 ' Attorney
By: �
Stev Adams, City Manager
`<Owner>
ARROYO HOTEL, LLC,
By: Arroyo Grande Inn-Vestment, LLC
Its: Sole Member and Manager
By: Armada Hotel Investment, LLC
Its: Manager
By:
Michael S. GalleP s,
Managing Meml3er
103�/024600.0001
759536.04 e0620Po8 -13-
�..
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
�
On September 3, 2008, before me, Patricia Gallegos, personally appeared Michael S.
Gallegos proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/a�e subscribed to the within instrument and aclrnowledged to me that
he/ske/%he� executed the same in his/�/ikei� authorized capacity(3es), and that by
his/kee/Ekei� signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERNRY under the laws of the State oF California that
the foregoing paragraph is true and conect.
WITNESS my hand and official seal.
, �L t � ' ` r\\\ �,;J
. .,�
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IA O lE
ComnNwbn i 17A977r
� �Y RibNC � CAflfontlo j
1an dpo Counly
�M��6P��P?Z.2011
My Commission Expires: September 22, 2011
r..
EXHIBIT "A"
LEGAL DESCRIPTION
�
1031/O1A600-OOOI
]59536.04 a08/28/OS
�
LEGAL DESCRIPTION
�
THE LAND REFERRED TO HEREiN BELObV IS SITUATcD IN THE CITY OF.4RROY0 GRA.MDE, COUN7Y OF SAN
LUIS OBISPO, STATE OF CALIFORNIA AND IS DESCRI6ED AS FOLLOINS:
PARCEL 1:
Parcel B of ParCel Mep No. AG•79-268, in the City of .4rroyo Grande, County of San luis Obispo, State of
Califomia, according to map recorded Januzry l4, ]981 in Book 30, Page 11 of Parcei hiaps and as per
Cert�ficate of Correction recorded April 5, iS83 in Book 2a76, Page 114 of Official Records, in the office ofthe
County Recorder of said County.
PARCEL 2:
A portion of we5t Brancl7 Street adjacent to Parcel B of Parcel Map AG-79-268, in the City of Arroyo Grande,
County of San Luis Obispo, Sta[e of California, according to nap recorded in Book 30, Page 11 of Parcel Ftaps,
in the o�ce of the County Recorder of said County, more particularty described as folbws:
Commencing at the most WesYerly corner of said Parcel B, said corner being a�o a point on a curve, concave
[o the Northeast, with a radius ct 957.00 feet, radial to said point bear5 NoRh 22° 28' S3" Easr,
thence Southeasterly abng said curve, being also the Southerly line of said Parcel B and the Northerty righh
of-way tine of West &anch Street, through a cenVal angle of Ol° O3' 22" and an arc leng;h of 17.08 feet to a
point of bngency, said point of tangency being also the true po;nt of beainning;
thence continuing abng said Sou[herly line and said Northerly right-of-w�ay line, South 75° 22' S2" East, a
disYZnce of 299.:8 feet to the Westerly [erminus of a curve, concave to the Northwes[, with a radius of 15
feet;
;hence continuing abng said Southerly line znd szid Northerly right-of-way line, Eas:erly and Northezsterty
aiong said curve, througM a ceMral anole oI 92° ST fi0" and an arc length of�83fsfeet :o a po+ntt3f [�s�;
tfience South 11° 40' D8" west, along said Southerly projection of the Easterly line of said Parcel 8, runnina
parallel to and 30 feee distant Westerly from the centerline of Camino Mercado, a disiance of 1.62 feet to the
Northeastery tertninus of a curve, concave to [he Nerth�ves*., with a radius ef ZS fe=t;
thence Southwesterty along said curve, through a central angle of ?1° 57' 40" and an arc lenath of 40.13 f�t
to a point of tangency;
ihence North 76° 22' 12" 1Nes[, abng a line parallei to and 31 feet dis�ant fror� the centeriine of west Branch
Street, a distance of 185.83 feet to the Eanerly terminus of a curve, concave to the Northeast, with a radius of
°57 feet;
thence continuing abng said parallel Iine, Northwesterly along said curve, throuah a ceniral angle of 06° 49'
43", and an arc length of 114.D6 feet to the true point of beginning,
as atrandoned by Resolution recorded September 15, 1982 in Book 2432, Page 493 of Official Records, which
would pass under Section 831 of the Civii Code of the State of falifornia, by a conveyance of Parcel 9 of Parcel
Map AG-79-268.
APN: 007-771-063
END OF DOCUI�ENT