2021-05-27 City Council - Full Agenda-2278 — Barstow City Council, September 18, 2023

BARSTOW CITY COUNCIL

CITY COUNCIL CHAMBERS
220 EAST MOUNTAIN VIEW STREET
BARSTOW, CA 92311
MAY 27, 2021
5:30 PM
(HANDICAPPED ACCESSIBLE)
AGENDA

SPECIAL MEETING
Agenda-May 27, 2021

Page 1 of 4 ends

MAYOR
Paul Anthony Courtney

COUNCILMEMBERS
Barbara Mae Rose
James M. Noble
Marilyn Dyer Kruse
Timothy R. Silva

ELECTED CITY CLERK
Andrea Flores

ELECTED CITY TREASURER
Michael Lewis

PLANNING COMMISSIONERS
Andrew Ziemer
Beatrice Lint
Miguel Morales
Rodney Brand Jr.

Juanantonio Delucas

BARSTOW FIRE PROTECTION

DISTRICT
A Subsidiary District of the City of
Barstow
Paul Anthony Courtney
Barbara Mae Rose
James M. Noble
Marilyn Dyer Kruse
Timothy R. Silva
IMPORTANT NOTICE REGARDING MAY 27, 2021

SPECIAL MEETING
This meeting is being conducted utilizing teleconferencing and/or electronic means consistent with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19 pandemic. The Council Chambers will have limited seating available on a first-come, first-served basis for members of the public to attend the meeting in person. All persons visiting City facilities shall wear face masks and observe social distancing protocols.

For members of the public wishing to view the meeting you may watch via the city website at www.barstowca.org by accessing this link
http://barstowcityca.iqm2.com/Citizens/Default.aspx
OR View on our Local Spectrum Cable channel 6.

For members of the public wishing to participate in the meeting virtually, you may access the city council meeting via webinar using your land line phone, smart phone, tablet, or computer, by using the following information:

To join the webinar from your smartphone, tablet or computer, click the link below:
https://zoom.us/j/91708607852?pwd=Z0Y5akpwOHNIUFBMUmRhaU81TU9iUT09 Or Access via Audio only Telephone Dial:
1 669 900 9128 or 1 253 215 8782 or 1 346 248 7799
Webinar ID: 917 0860 7852
Passcode: 428765
For members of the public wishing to provide public comments virtually:

During the webinar: To provide comment, click “Raise Hand” icon in zoom webinar to request to speak on a specific item, or when Public Comment is being taken (dial *9 to raise hand if accessing via voice phone only). When it is your turn to speak, you will be removed from mute and allowed to make public comments for up to three (3) minutes.

Email: Submit comments by email to the City Clerk at
[email protected]. Comments will provided to the City Council and maintained for the public record. Public comments received in writing will not be read aloud at the meeting. Comments must be received by 2:30 p.m. on May 27, 2021. Your information will not be shared with the public, nor are you required to share your information (your name will be used as part of the record for public comments). The City Council and staff thank you for your cooperation during these unprecedented times. If you have any questions regarding participation in the City Council/Barstow Fire Protection District meeting, please call 760-255-5122.

Agenda-May 27, 2021

Page 2 of 4 ends

CLOSED SESSION 5:30 PM
CALL TO ORDER:

PLEDGE OF ALLEGIANCE:

ROLL CALL:
 Council Member Timothy Silva
 Council Member Barbara Rose
 Council Member Marilyn Kruse
 Mayor Pro Tem James Noble
 Mayor Paul Courtney
CODE OF ETHICS: AS YOUR ELECTED GOVERNING BOARD WE WILL REMEMBER THE "CODE OF ETHICS" THAT WE VOLUNTARILY AND UNANIMOUSLY APPROVED. DURING THIS MEETING WE WILL TREAT EACH OTHER AND THE PUBLIC WITH PATIENCE, CIVILITY AND COURTESY. THE DECISIONS

MADE TONIGHT WILL BE FOR THE BENEFIT OF THE BARSTOW COMMUNITY AND NOT FOR PERSONAL GAIN.

PUBLIC COMMENT - CLOSED SESSION: THIS IS THE TIME AND PLACE FOR THE GENERAL

PUBLIC TO ADDRESS THE GOVERNING BOARD ON MATTERS WITHIN THEIR JURISDICTION THAT ARE ON THE CLOSED SESSION AGENDA. SPEAKERS ARE ASKED TO LIMIT THEIR COMMENTS TO THREE MINUTES. ALL REQUESTS TO SPEAK MUST BE RECEIVED PRIOR TO THE AGENDA ITEM BEING ADDRESSED. TO PROVIDE COMMENT VIRTUALLY, CLICK “RAISE HAND” OR DIAL “9” TO REQUEST TO SPEAK WHEN PUBLIC COMMENT IS BEING TAKEN. WHEN IT IS YOUR TURN TO

SPEAK, YOU WILL BE REMOVED FROM MUTE AND ALLOWED TO MAKE PUBLIC COMMENTS FOR UP TO THREE (3) MINUTES. IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS NOTICE MUST BE GIVEN TO THE CITY CLERK.

CLOSED SESSION AGENDA ITEMS:

1. CONFERENCE WITH LEGAL COUNSEL
Recommended Action:

REPORT OF CLOSED SESSION:

CALL TO ORDER – REGULAR MEETING 6:30 PM (or immediately following adjournment of Closed Session if adjourned after 6:30 PM)
PLEDGE OF ALLEGIANCE:

ROLL CALL:
 Council Member Timothy Silva
 Council Member Barbara Rose
 Council Member Marilyn Kruse
 Mayor Pro Tem James Noble
 Mayor Paul Courtney
Agenda-May 27, 2021

Page 3 of 4 ends

INVOCATION:

PARTICIPATION IS INVITED: IF YOU WISH TO BE HEARD ON ANY ITEM ON THE AGENDA

INCLUDING ANY ITEM ON THE CONSENT CALENDAR, PLEASE SO INDICATE BY FILLING OUT A “REQUEST TO SPEAK” FORM AND HAND TO THE CITY CLERK. TO PROVIDE COMMENT VIRTUALLY, CLICK “RAISE HAND” OR DIAL “9” TO REQUEST TO SPEAK WHEN PUBLIC COMMENT IS BEING TAKEN. WHEN IT IS YOUR TURN TO SPEAK, YOU WILL BE REMOVED FROM MUTE AND ALLOWED TO MAKE PUBLIC COMMENTS FOR UP TO THREE (3) MINUTES. IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS NOTICE MUST BE GIVEN TO THE CITY CLERK.

CODE OF ETHICS: AS YOUR ELECTED GOVERNING BOARD WE WILL REMEMBER THE "CODE OF ETHICS" THAT WE VOLUNTARILY AND UNANIMOUSLY APPROVED. DURING THIS MEETING WE WILL TREAT EACH OTHER AND THE PUBLIC WITH PATIENCE, CIVILITY AND COURTESY. THE DECISIONS

MADE TONIGHT WILL BE FOR THE BENEFIT OF THE BARSTOW COMMUNITY AND NOT FOR PERSONAL GAIN.

REVIEW AND APPROVAL OF AGENDA: THIS IS THE TIME FOR MEMBERS OF THE GOVERNING BOARD TO CALL FOR REARRANGING THE ORDER OF THE AGENDA; ADDING ITEMS TO OR REMOVING ITEMS FROM THE AGENDA; OR REMOVING ITEMS FROM THE CONSENT CALENDAR FOR DISCUSSION AND/OR SEPARATE ACTION.

PUBLIC COMMENT: THIS IS THE TIME AND PLACE FOR THE GENERAL PUBLIC TO ADDRESS THE

GOVERNING BOARD ON MATTERS WITHIN THEIR JURISDICTION THAT ARE NOT CURRENTLY ON THE AGENDA. STATE LAW PROHIBITS THE GOVERNING BOARD FROM ADDRESSING ANY ISSUE NOT PREVIOUSLY INCLUDED ON THE AGENDA. THE GOVERNING BOARD MAY RECEIVE COMMENT AND SET THE MATTER FOR A SUBSEQUENT MEETING. SPEAKERS ARE ASKED TO LIMIT THEIR COMMENTS TO THREE MINUTES. ALL REQUESTS TO SPEAK MUST BE RECEIVED PRIOR TO THE AGENDA ITEM BEING ADDRESSED. TO PROVIDE COMMENT VIRTUALLY, CLICK “RAISE HAND” OR DIAL “9” TO REQUEST TO SPEAK WHEN PUBLIC COMMENT IS BEING TAKEN. WHEN IT IS YOUR

TURN TO SPEAK, YOU WILL BE REMOVED FROM MUTE AND ALLOWED TO MAKE PUBLIC COMMENTS FOR UP TO THREE (3) MINUTES. IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS NOTICE MUST BE GIVEN TO THE CITY CLERK.

BUSINESS OF THE COUNCIL/COUNCIL COMMITTEE REPORTS:

BUSINESS / ACTION ITEMS:

2. RECONSIDERATION OF THE AGREEMENT BETWEEN THE CITY AND HOTEL

INVESTMENT GROUP AND CONSIDERATION OF AN ALTERNATE AGREEMENT BETWEEN

THE CITY AND HOTEL INVESTMENT GROUP
Recommended Action:

Staff recommends that City Council approve the agreement between Hotel Investment Group and the City utilizing the alternative incentive option proposed by the developer.

DEFERRED ITEMS: (ITEMS PREVIOUSLY TABLED OR PULLED FROM CONSENT CALENDAR WILL BE CONSIDERED BY THE GOVERNING BOARD AT THIS TIME).

STAFF REPORTS:

POLICE CHIEF COMMENTS:

FIRE CHIEF COMMENTS:

Agenda-May 27, 2021

Page 4 of 4 ends

CITY MANAGER / DISTRICT ADMINISTRATOR COMMENTS:

ADJOURNMENT:

Individuals electing to later challenge any items listed herein will be limited to addressing only those issues raised at any public hearing or in written correspondence received by the Governing Board prior to the meeting.

Materials related to an item on this Agenda submitted to the Governing Board after distribution of the agenda packet area available for public inspection in the City Clerk's Office at 220 East Mountain View Ste. A, Barstow, CA 92311 during normal business hours.

The City of Barstow, in complying with the Americans with Disabilities Act (ADA), requests individuals who require special accommodations to access, attend and/or participate in the City meeting due to disability, to please contact the City Clerk’s Office (760) 255-5122, at least one business day prior to the scheduled meeting to ensure that we may assist you.

I hereby certify, UNDER PENALTY OF PERJURY that this agenda has been posted 72 hours prior to the stated meeting in a place accessible to the public.

Posted on the 20Th day of May, 2021.

Special Meeting
05/27/21 05:30:PM
Maria Chavez
Doc ID: 4651

CLOSED SESSION AGENDA ITEM
AGENDA MATTER:

CONFERENCE WITH LEGAL COUNSEL
EXECUTIVE SUMMARY:

DISCUSSION:

FISCAL IMPACT:

RECOMMENDED ACTION:

Conference with Legal Counsel; Anticipated Litigation
(Gov. Code § 54956.9(d)(2),(e)(1)) A point has been reached where, in the opinion of the City Council on the advice of its legal counsel, based on the below described existing facts and circumstances, there is a significant exposure to litigation against the City. Facts and circumstances that might result in litigation but which the City believes are not yet known to potential plaintiffs. 1 Packet Pg. 5
Packet Pg. 6
Communication: Public Comments (PUBLIC COMMENT)
Packet Pg. 7
Communication: Public Comments (PUBLIC COMMENT)
Packet Pg. 8
Communication: Public Comments (PUBLIC COMMENT)
Special Meeting
05/27/21 05:30 PM
Finance
Marc Puckett
Contract
Doc ID: 4653

AGENDA ITEM
AGENDA MATTER:

RECONSIDERATION OF THE AGREEMENT BETWEEN THE CITY AND HOTEL INVESTMENT

GROUP AND CONSIDERATION OF AN ALTERNATE AGREEMENT BETWEEN THE CITY AND

HOTEL INVESTMENT GROUP
EXECUTIVE SUMMARY:

After the May 17th Council meeting based on questions raised in the public City Council meeting, the development group contacted staff to express their continued interest and desire to build the Marriott hotel properties in Barstow and presented an alternative incentive option they believe may be more amenable to City Council. City staff has reviewed the two incentive options for the proposed development of the two hotel properties totaling 181 rooms. Both options provide the City with approximately $43 million in new revenue over the project life. However, the alternative option recommended by staff is expected to provide the City with an additional $1,000,000 more in new revenue over the first option. The total new revenue received by the City during the first five years is anticipated to be approximately $3.6 million under the recommended option.

DISCUSSION:

Since the first quarter of 2019, City staff have been discussing the possibility with Hotel Investment Group of their firm constructing two Marriott hotels in the city under an innovative shared footprint design. This would be the first Marriott hotel property in the City. One of the two connected hotels would be an extended-stay hotel. Combined, the two hotels would have 181 hotel rooms. The construction cost of this project is anticipated to be $32,000,000 (renderings are attached).

Both incentive options are the results of long discussions and intensive negotiations between the City and the developer. Due to the specialized nature of the legal analysis and review needed for hotel developments associated with negotiating and preparing development agreements, the City employed an attorney from Rutan and Tucker to represent the City’s interests in these discussions. Hiring specialized legal counsel for negotiating development agreements is common practice. It is also common practice to require the developer to pay the cost of the City’s legal counsel to minimize financial risks to the City should the project not proceed. The level and types of incentives requested during these discussions were narrowed down through negotiations to those presented herein.

Initially, the developer proposed an incentive option to assist the developer with financing of the property that included a payment to the developer of an amount equal to the transient occupancy taxes collected and remitted to the City for years 1-3. Since the City would be remitting an amount equal to the TOT received, there would be no additional cost to the City. For years 4 and 5, the City would remit to the developer an amount equal to 85% of the TOT collections. Beginning year 6, there would be no further remittance to the developer. During years 1-5 of operation, the City would receive approximately $2,616,000 in new revenue from this development, net of the remittance to the developer. Thereafter, 2 Packet Pg. 9
Special Meeting
05/27/21 05:30 PM
Finance
Marc Puckett
Contract
Doc ID: 4653

AGENDA ITEM
new revenue to the City would be approximately $1,100,000 increasing annually. The City participation in the development incentive would be capped at $2,400,000.

Subsequent to the May 17 City Council meeting, the developer proposed an alternative incentive option that they believe may be more amenable to City Council. Under this alternative, the City would remit to the developer $40,000 per month for 60 months. The developer would commit to remitting the full TOT collections annually to the City. If the TOT collections dropped below $40,000 in any month during this first 60 month period, the amount remitted would be reduced to equal the TOT collections for that month.

Per this option, the estimated new revenue to the City in the first 5 years would be approximately 3,620,000. Thereafter, new revenue to the City would be approximately $1,100,000 increasing annually.

The City participation in the development would be capped at $2,400,000.

Staff reviewed both incentive options in great detail. Some economic benefits are the same under both incentive options.

Under both options, the City’s incentive payment is contingent on a variety of conditions that must be satisfied by the developer. Most notably, the developer takes the risks associated with constructing and then commencing operations of a national brand hotel - a Marriott. Presuming the developer meets the contingency requirements, under either option the City would receive a significant amount of new revenue. This new revenue is paid by transient travelers passing through the community which lowers the tax burden on City residents. After the incentive period, both options generate approximately $1,100,000 in new revenue increasing annually. The City participation would be capped at $2,400,000 under each option. Also, contractors working on the $32,000,000 project would pay sales tax to the City for construction material costs. The project also generates 600 temporary construction jobs (approx. 150 FTEs) over the eighteen month construction cycle and 50 permanent jobs when completed.

However, although the total incentive is intended to be the same under either option (capped at $2,400,000 per the development agreement), the structure of the two incentive options discussed varies significantly. This amount was arrived at in discussions with the developer when discussing the revenue stream necessary to secure financing of the project. The type of incentive requested is a common ask for hotel developers.

Under the first incentive option, the assumptions the developers based their proposal upon included assuming annual TOT collections of between $442,000 - $527,000. After researching this assumption, staff determined that for similar Lenwood properties, the City is currently collecting $4,000 per room annually on average (disclosure of specific information for each hotel is protected by confidentiality agreements with the businesses and by laws governing its disclosure). Using this metric, the City may expect to receive approximately $724,000 in transient occupancy taxes annually from this development.

Under either option, the remittances to the developer are limited to $2,400,000 through the development agreement, but under the first option, staff believes that it will take less than the five years (approximately 3 years, 5 months) as proposed by the developer to reach that level of remittance. Thereafter, the City would receive 100% of the TOT. Under the first option, the City would also receive less new revenue ($2,616,000 versus 3,620,000) than during the first five years under the alternative. After year 5, new revenues would be equal under both options at about $1,100,000 increasing annually.

Under the alternative incentive option, the City would receive 100% of transient occupancy taxes from day one. The City would remit to the developer $40,000 for 60 months. If the TOT fell below $40,000 in any month, the amount remitted would be reduced to equal the TOT monthly collections. This option is expected to provide the City with $1,000,000 more ($3,620,000 versus $2,616,000) in new revenue during the first five years of operation of the project. Due to the anticipated $1,000,000 in additional new 2 Packet Pg. 10
Special Meeting
05/27/21 05:30 PM
Finance
Marc Puckett
Contract
Doc ID: 4653

AGENDA ITEM
revenue during the first five years, staff is recommending this alternative incentive option.

Staff also prepared a fiscal analysis for each option (attached). This fiscal analysis is prepared using standard metrics for project costing for development proposals. The fiscal analysis estimates the annual new revenues to the City for each project year and the total new revenues to the City over the project life.

Each new source of revenue has been estimated using conservative assumptions. Property tax revenue estimates were based upon the expected project appraisal of $36,000,000. This value would become the base year taxable value. Using this valuation, the property owners would pay about $432,000 in property taxes in the first year either through a supplemental assessment or as part of their initial property tax bill.

Of that amount, the City would receive approximately $134,388 for City of Barstow and Barstow Fire Protection District taxes. Thereafter, the base year amount would increase at the rate of 2% per year (Prop. 13 limitation). Property tax collections are assumed to increase at the same 2% rate as the taxable valuation.

Again, TOT estimates were developed using actual averages of TOT collections for similar Lenwood hotels based upon the 2019 fiscal year (pre-COVID). Per this data, the City is collecting slightly more than $4,000 per room in TOT taxes annually for similar hotels. The fiscal analysis assumes no increases in room rates over the project life. It is expected that room rates over the project life will increase resulting in significantly more new TOT revenues than projected within the financial analysis.

The City levies and collects sales tax at the rate of 1% for both the Local sales tax and Measure Q tax.

These tax collections are estimated based upon averages for certain local eateries. Due to the proprietary nature of this information, disclosure of specific data for individual restaurants is prohibited by state law. The development project is anticipated to have a full service restaurant in the shared lobby area of both hotels. In addition, there will be large conference rooms and banquet facilities. The City will receive sales tax and Measure Q taxes from the restaurant, catering and banquet activities. The sales tax and Measure Q taxes collected from these activities are expected to increase dramatically over the project life. However, the financial analysis projects no increases from this new revenue source.

Over the project life, new revenues to the City are estimated to be in the range of $42-43 million.

However, due to the conservative nature of these estimates, the actual revenue collections over the project life more likely will be around $50 million.

FISCAL IMPACT:

Based on the incentive option approved, new revenues to the City would vary as follows:

Under the first option, the developer would pay transient occupancy taxes (TOT) to the City. Based on the amount of TOT remitted to the City, the City would then make a payment, from any source of funding available, to the developer in an amount equal to the amount of TOT remitted for years 1-3. Since the City would be remitting an amount equal to the TOT received, there would be no additional cost to the City.

For years 4 and 5, the City would remit to the developer an amount equal to 85% of the TOT collections.

Beginning year 6, there would be no further remittance to the developer. During years 1-5 of operation, the City would receive approximately $2,616,000 in new revenue, net of the TOT payments. Thereafter, new revenue to the City would be approximately $1,100,000 annually from the project. The total remittance to the developer from the City would be capped at $2,400,000. 2 Packet Pg. 11
Special Meeting
05/27/21 05:30 PM
Finance
Marc Puckett
Contract
Doc ID: 4653

AGENDA ITEM
The developer also proposed an alternative incentive option. Under this option, the City would remit to the developer $40,000 per month for 60 months. The developer would commit to remitting the full TOT collections to the City. If the TOT collections dropped below $40,000 in any month during this 60 month period, the amount remitted to the developer would be reduced to equal the TOT collections for that month. Per this option, the estimated new revenue to the City in the first 5 years would be approximately 3,620,000. Thereafter, new revenue to the City would be approximately $1,100,000 increasing annually.

The City participation in the development would be capped at $2,400,000.

In addition to tax generated from the operation of the hotels, the City would also receive tax from the contractors during the construction phase of the $32,000,000 project. The contractors would pay sales tax on the construction material costs.

This project is anticipated to generate 600 temporary construction jobs and 50 permanent jobs.

Additional tax benefits will accrue from the addition of these jobs and ancillary spending in the Lenwood area
RECOMMENDED ACTION:

Staff recommends that City Council approve the agreement between Hotel Investment Group and the City utilizing the alternative incentive option proposed by the developer. 2 Packet Pg. 12
Approval of Agreement Between CoB and Hotel Investment Group for Marriott Hotel Fiscal Impact Over Project Life of 40 years
Construction cost - $32,000,000
Estimated Property Appraisal at completion - $36,000,000 Proj. Life Prop. Tax TOT Sales Tax Meas. Q DIF/Permits Total New Year 1% (1) 12.5% (2)(3) 1% (3) 1% (3) Various Revenue to CoB 1 $134,388 $0 100,000 100,000 $700,000 1,034,388
2 137,076 0 100,000 100,000 0 337,076
3 139,817 0 100,000 100,000 0 339,817
4 142,614 108,600 100,000 100,000 0 451,214
5 145,466 108,600 100,000 100,000 0 454,066 2,616,561
6 148,375 724,000 100,000 100,000 0 1,072,375
7 151,343 724,000 100,000 100,000 0 1,075,343
8 154,370 724,000 100,000 100,000 0 1,078,370
9 157,457 724,000 100,000 100,000 0 1,081,457
10 160,606 724,000 100,000 100,000 0 1,084,606
11 163,818 724,000 100,000 100,000 0 1,087,818
12 167,095 724,000 100,000 100,000 0 1,091,095
13 170,436 724,000 100,000 100,000 0 1,094,436
14 173,845 724,000 100,000 100,000 0 1,097,845
15 177,322 724,000 100,000 100,000 0 1,101,322
16 180,869 724,000 100,000 100,000 0 1,104,869
17 184,486 724,000 100,000 100,000 0 1,108,486
18 188,176 724,000 100,000 100,000 0 1,112,176
19 191,939 724,000 100,000 100,000 0 1,115,939
20 195,778 724,000 100,000 100,000 0 1,119,778
21 199,693 724,000 100,000 100,000 0 1,123,693
22 203,687 724,000 100,000 100,000 0 1,127,687
23 207,761 724,000 100,000 100,000 0 1,131,761
24 211,916 724,000 100,000 100,000 0 1,135,916
25 216,155 724,000 100,000 100,000 0 1,140,155
26 220,478 724,000 100,000 100,000 0 1,144,478
27 224,887 724,000 100,000 100,000 0 1,148,887
28 229,385 724,000 100,000 100,000 0 1,153,385
29 233,973 724,000 100,000 100,000 0 1,157,973
30 238,652 724,000 100,000 100,000 0 1,162,652
31 243,425 724,000 100,000 100,000 0 1,167,425
32 248,294 724,000 100,000 100,000 0 1,172,294
33 253,260 724,000 100,000 100,000 0 1,177,260
34 258,325 724,000 100,000 100,000 0 1,182,325
35 263,491 724,000 100,000 100,000 0 1,187,491
36 268,761 724,000 100,000 100,000 0 1,192,761
37 274,136 724,000 100,000 100,000 0 1,198,136
38 279,619 724,000 100,000 100,000 0 1,203,619
39 285,211 724,000 100,000 100,000 0 1,209,211
40 290,916 724,000 100,000 100,000 0 1,214,916
Totals $8,117,302 $25,557,200.00 $4,000,000.00 $4,000,000.00 $700,000.00 $42,374,501.72 Footnotes:
1) Base taxable value = $36m multiplied by CoB and BFPD share of tax levy increased annually by Prop. 13 limit of 2% 2) TOT collections based on 181 room development times avg. annual per room collections of $4k (for similar hotels). 3) No inflation factors included for future years tax collections 4) Contractors will pay sales tax to City for construction material cost 5) Job creation is estimated at 600 temporary construction jobs and 50 permanent jobs

2.a
Packet Pg. 13
Attachment: Marriott Hotel New Tax Revenue Analysis2.1 (4653 : Development Agreement for Marriott Hotels) Approval of Agreement Between CoB and Hotel Investment Group for Marriott Hotel - OPTION 2 Fiscal Impact Over Project Life of 40 years
Construction cost - $32,000,000
Estimated Property Appraisal at completion - $36,000,000 Proj. Life Prop. Tax TOT Sales Tax Meas. Q DIF/Permits Total New Year 1% (1) 12.5% (2)(3)(6) 1% (3) 1% (3) Various Revenue to CoB 1 $134,388 $244,000 100,000 100,000 $700,000 1,278,388
2 137,076 244,000 100,000 100,000 0 581,076
3 139,817 244,000 100,000 100,000 0 583,817
4 142,614 244,000 100,000 100,000 0 586,614
5 145,466 244,000 100,000 100,000 0 589,466 3,619,361
6 148,375 724,000 100,000 100,000 0 1,072,375
7 151,343 724,000 100,000 100,000 0 1,075,343
8 154,370 724,000 100,000 100,000 0 1,078,370
9 157,457 724,000 100,000 100,000 0 1,081,457
10 160,606 724,000 100,000 100,000 0 1,084,606
11 163,818 724,000 100,000 100,000 0 1,087,818
12 167,095 724,000 100,000 100,000 0 1,091,095
13 170,436 724,000 100,000 100,000 0 1,094,436
14 173,845 724,000 100,000 100,000 0 1,097,845
15 177,322 724,000 100,000 100,000 0 1,101,322
16 180,869 724,000 100,000 100,000 0 1,104,869
17 184,486 724,000 100,000 100,000 0 1,108,486
18 188,176 724,000 100,000 100,000 0 1,112,176
19 191,939 724,000 100,000 100,000 0 1,115,939
20 195,778 724,000 100,000 100,000 0 1,119,778
21 199,693 724,000 100,000 100,000 0 1,123,693
22 203,687 724,000 100,000 100,000 0 1,127,687
23 207,761 724,000 100,000 100,000 0 1,131,761
24 211,916 724,000 100,000 100,000 0 1,135,916
25 216,155 724,000 100,000 100,000 0 1,140,155
26 220,478 724,000 100,000 100,000 0 1,144,478
27 224,887 724,000 100,000 100,000 0 1,148,887
28 229,385 724,000 100,000 100,000 0 1,153,385
29 233,973 724,000 100,000 100,000 0 1,157,973
30 238,652 724,000 100,000 100,000 0 1,162,652
31 243,425 724,000 100,000 100,000 0 1,167,425
32 248,294 724,000 100,000 100,000 0 1,172,294
33 253,260 724,000 100,000 100,000 0 1,177,260
34 258,325 724,000 100,000 100,000 0 1,182,325
35 263,491 724,000 100,000 100,000 0 1,187,491
36 268,761 724,000 100,000 100,000 0 1,192,761
37 274,136 724,000 100,000 100,000 0 1,198,136
38 279,619 724,000 100,000 100,000 0 1,203,619
39 285,211 724,000 100,000 100,000 0 1,209,211
40 290,916 724,000 100,000 100,000 0 1,214,916
Totals $8,117,302 $26,560,000.00 $4,000,000.00 $4,000,000.00 $700,000.00 $43,377,301.72 Footnotes:
1) Base taxable value = $36m multiplied by CoB and BFPD share of tax levy increased annually by Prop. 13 limit of 2% 2) TOT collections based on 181 room development times avg. annual per room collections of $4k (for similar hotels). 3) No inflation factors included for future years tax collections 4) Contractors will pay sales tax to City for construction material cost 5) Job creation is estimated at 600 temporary construction jobs and 50 permanent jobs 6) CoB will provide expense offset of $40k per month for 60 months - Total commitment $2.4m 7) If TOT falls below $40k in any month, the expense offset is reduced to an amount equal to monthly TOT collections.

2.b
Packet Pg. 14
Attachment: Marriott Hotel New Tax Revenue Analysis2.2 (4653 : Development Agreement for Marriott Hotels) 1 258067.1

CITY OF BARSTOW

REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT (“Agreement”) is entered into as of May 27, 2021, by and between the City of Barstow, a California municipal corporation, (the “City”) and Barstow Hospitality, LLC, a California Limited Liability Company (the “Hotel Operator”). City and Hotel Operator are sometimes individually referred to as “Party” and collectively as “Parties.”

RECITALS
A. Hotel Operator controls certain real property (Assessor’s Parcel Number:
0428-351-08) in the City, on which the Hotel Operator intends to operate an approximately 181 room hotel project (“Project”). The Hotel Operator anticipates that the Project, once available to be occupied, will generate transient occupancy taxes (“TOT”) to the City during the Project’s operation, in addition to increased real estate taxes and sales taxes generated by the anticipated increased visitation to the Project and the City.

B. To offset anticipated costs and expenses during the first years of operation of the Project, the City has agreed to reimbursement to Hotel Operator of an amount equal to the TOT generated by the Project over a five (5) year period, with the total reimbursement not exceeding $2.400,000.00 (the “Reimbursement Cap.”).

C. The City has determined that this reimbursement agreement with the Hotel Operator, in accordance with the terms and conditions set forth herein and as contemplated by this Agreement, is of public benefit and contributes to the general welfare of its citizens based on the terms and conditions herein because the Project:
(1) Will create both temporary and permanent operational jobs, (2) Increase capital investment, property values and overall tax revenues including real property and sales tax revenues, and (3) Serve as an economic catalyst to the City by expanding the lodging options and amenities which support tourism.

AGREEMENT
NOW, THEREFORE, based on the foregoing Recitals, which are a substantive part of this Agreement and incorporated herein by reference, the City and Hotel Operator agree as follows:

Section 1. Reimbursement Commitment & Term; Conditions on Payment.

A. In consideration for the Hotel Operator costs and expenses for operating the Project and the other conditions and covenants provided for herein, upon the satisfaction of the conditions in Section 2 of this Agreement (defined as the “Reimbursement Obligation Conditions”), the City shall reimburse to Hotel Operator

2.f
Packet Pg. 18
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 2 258067.1
amounts equal to the City’s then current transient occupancy tax receipts, levied and collected pursuant to Revenue and Taxation Code section 7280 et seq. and applicable provisions of the Barstow Municipal Code and any City policies and procedures, from the Project (“TOT Receipts”). To clarify the reimbursement obligation in this Agreement, the amount of the reimbursement shall be calculated based the City’s TOT Receipts, but payments made to the Hotel Operator under this Agreement shall be from any sources of funds available to the City by law for payment of contractual obligations. As more specifically set forth in this Agreement, the amount of the City’s reimbursement obligation to the Hotel Operator shall be one hundred percent (100%) of the amount of TOT Receipts through years 1 through 3 and eighty-five percent (85%) of the TOT Receipts through operating years 4 through 5 as collected from the Project. For reference purposes only, the amounts presently estimated for the TOT Receipts are as follows:

Year 1 $442,927 100%.

Year 2 $496,922 100%
Year 3 $527,988 100%
Year 4 $467,383 85%
Year 5 $494,103 85%
The total amount of the TOT Receipts, applying the above-referenced percentages, is presently estimated to be Two Million Four Hundred Twenty Nine Thousand Three Hundred and Twenty Four Dollars ($2,429,324.00) (“Total Estimated Reimbursement TOT Amount”). The Parties acknowledge that the actual amount of the TOT Receipts generated from the Project might vary. Therefore, the above numbers are for sample purposes only. The total amount of the actual TOT Receipts, applying the above-referenced percentages and confirmed after collection and verification by the City of the TOT Receipts, shall be referred to herein as the “Total Actual Reimbursement Amount,” and the actual monthly TOT Receipts, applying the abovereferenced percentages in the applicable monthly period for the applicable year after collection and verification by the City, shall be referred to herein as the “Monthly Actual Reimbursement Amount.”
B. Subject to the terms and conditions of this Agreement, the City shall pay to the Hotel Operator, from any sources of funds available to the City by law for payment of contractual obligations, the Monthly Actual Reimbursement Amount each month until the City has paid to the Hotel Operator the Total Actual Reimbursement Amount. Payment of the Monthly Actual Reimbursement Amount shall commence on the first day of the month (the “Reimbursement Commencement Date”) following the first full month after (i) the satisfaction of the Reimbursement Obligation Conditions and (ii) the City has collected and verified for that first full month (and pro-rated amount, if any, from the prior month to that first full month) the TOT Receipts from the Project, and from thereon shall continue for sixty (60) months following the Reimbursement Commencement Date of the Monthly Actual Reimbursement Amounts (the last date is referred to herein as the “Reimbursement Termination Date,” and the entire

2.f
Packet Pg. 19
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 3 258067.1
reimbursement period from the Reimbursement Commencement Date until the Reimbursement Termination Date is referred to herein as the “Reimbursement Term”).

Notwithstanding any provision hereof to the contrary, the Total Actual Reimbursement Amount shall not exceed the Reimbursement Cap. Moreover, once the total of all Monthly Actual Reimbursement Amounts paid by City to Hotel Operator equals the Reimbursement Cap, City shall have no further obligation to provide any additional payments to Hotel Operator.

C. The Hotel Operator shall at all times remit to the City all TOT Receipts from the Project in accordance with applicable provisions of the Barstow Municipal Code and any City policies and procedures. After collection and verification of the amounts remitted by the Hotel Operator of the TOT Receipts for the preceding month (and, for the first full month, the pro-rated amount, if any, from the prior month to that first full month), the City shall pay to the Hotel Operator the Monthly Actual Reimbursement Amount no later than the first (1st) day of the month after the full month immediately following the month for which the TOT Receipts have been remitted by the Hotel Operator and verified by the City. By way of explanation of the foregoing sentence, if the City receives the remittance of the TOT Receipts from the Hotel Operator for the month of March, the City shall pay to the Hotel Operator the Monthly Actual Reimbursement Amount for March no later than first (1st) day of May immediately following that March. If the first (1st) day of a month falls on a Saturday, Sunday, federal or state official holiday, or a day when Barstow City Hall is closed for business, the Monthly Actual Reimbursement Amount shall be paid by the City to the Hotel Operator on the next business day.

D. At the end of each year after the Reimbursement Commencement Date, either the City or Hotel Operator may request a review of year-to-date remittances and TOT Receipts from the Project to verify the prior-year’s reimbursement amounts were correctly calculated and paid. Additionally, either the City or Hotel Operator may request an audit, performed by an independent licensed auditor selected by the requesting Party, to review and verify that any reimbursement amounts were correctly calculated and paid. In the event that any such review or audit discloses that an overpayment was made by the City for any Actual Monthly Reimbursement Amount, the Hotel Operator shall return to the City within ninety (90) days of the disclosure date the amount of the overpayment; in the event that any such review or audit discloses that an underpayment was made by the City for any Actual Monthly Reimbursement Amount, the City shall pay to the Hotel Operator within ninety (90) days of the disclosure date the amount of the underpayment. For any over- or underpayment disclosed pursuant to a review or audit, the Hotel Operator may return to the City the amount of the City’s overpayment by offset, with the City reducing in the amount of the overpayment the amount of a subsequent(s) reimbursement payment.

2.f
Packet Pg. 20
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 4 258067.1
any room rate, service fee, or other consideration received for renting hotel rooms at the Project. The accounting records shall cover no less than the entire Reimbursement Term. The City shall have the right, upon no less than five (5) days’ prior notice to the Hotel Operator, to inspect any and all accounting records to review and verify the gross and net revenues from the Project for purposes of confirming any reimbursement made under this Agreement were in the correct amounts as set forth herein. This Subsection (E) shall survive the expiration of the Reimbursement Term and the termination of this Agreement.

Section 2. Conditions to Reimbursement. The obligation of the City to commence and thereafter continue to make any payment of the Monthly Actual Reimbursement Amount is contingent upon the satisfaction by the Hotel Operator of the following conditions precedent (each, a “Reimbursement Obligation Condition” and collectively “Reimbursement Obligation Conditions”):

A. Before granting the payment of any Monthly Actual Reimbursement Payment, the City shall have prepared an economic development subsidy report and hold a public hearing in accordance with Government Code section 53083; the report shall include updated information from the Hotel Operator regarding the estimated number of jobs created by the commencement and continuous operations of the Project, broken down by full-time, part-time, and temporary positions at the hotel once operations have commenced; and
B. The Hotel Operator commences the commercial operation of the Project as a hotel in accordance with this Agreement and any other permits and approvals issued by the City, which commencement of commercial operations shall occur within ninety (90) days of the issuance of a Certificate of Occupancy by the City; and C. Upon commencement of commercial operations, the Project is continuously operated as a Nationally Recognized Franchise Hotel Brand during the entire five-year Reimbursement Term, subject to delay in continuous operations only due to an Event of Force Majeure as defined in Section 8 of this Agreement; and D. The Hotel Operator is not in default or breach of this Agreement, nor is the Hotel Operator in violation of any federal, state, or local law; and E. The Hotel Operator is not in bankruptcy or in receivership, either voluntarily or by operation of law, under any federal or state law; this includes no filing by or against Hotel Operator of a petition for relief under the Bankruptcy Reform Act of 1978 or any bankruptcy or debtor relief law, and no general assignment by Hotel Operator for the benefit of creditors or the appointment of any receiver or trustee of all or any portion of the assets of the Hotel Operator.

The Reimbursement Obligation Conditions set forth in Subsections (C), (D), and (E) above shall be continuing obligations of the Hotel Operator for the entire

2.f
Packet Pg. 21
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 5 258067.1
Reimbursement Term. In the event that the Hotel Operator fails to meet any one of these Reimbursement Obligation Conditions at any time during the Reimbursement Term, the City shall have no obligation to pay to the Hotel Operator a Monthly Actual Reimbursement Amount for any and all months that the Hotel Operator fails to meet one or more of these Reimbursement Obligation Conditions in Subsection (C), (D), or (E).

Section 3. Public Benefit/Public Purposes. The City Council has determined that encouraging economic development, including private investment that involves creation of new jobs and income in the City, or the retention of existing jobs and income that would otherwise be lost or be unavailable to the residents of the City, is a valid exercise of the City’s powers and serves important public purposes. By authorizing the City to enter into this Agreement, the City Council has determined that the benefits accruing as a result of the transactions contemplated by this Agreement are for legitimate and important public purposes, including without limitation, the public purposes identified in Recital C of this Agreement.

Section 4. No Obligation to Develop or Operate. Both Parties acknowledge that the Project is currently in the planning stages, and the Hotel Operator shall have no liability to City, and City shall have no obligation to Hotel Operator for any reimbursement payment, under this Agreement, if the Project is not opened and operated a hotel as described in this Agreement and any permits and approvals issued by the City relating to the use and operation of the Project. Nothing in this Agreement is intended to or shall be construed to limit the discretion of the City to consider the merits of such an application according to applicable law. Nothing in this Agreement shall authorize any hotel development before compliance with the Planning and Zoning Law, the City’s municipal code, the California Environmental Quality Act (Public Resources Code § 21000 et seq. [“CEQA”]), the CEQA Guidelines (14 Cal. Code Reg. § 15000 et seq.), and other applicable laws, policies and procedures. The City intends to consider in good faith all requested future permits and approvals as may be needed for the Project.

Section 5. Indemnification.

A. The City shall indemnify, defend, and hold harmless the Hotel Operator, and its officers and employees, from all demands, claims, actions and damages, of whatever type or nature, including all costs of defense and attorneys’ fees, to any person or property arising out of or caused by the City’s breach of this Agreement, except for any demands, claims, actions and damages caused by the Hotel Operator’s active negligence or willful misconduct.

B. The Hotel Operator shall indemnify, defend, and hold harmless the City, and its officials, officers and employees, from all demands, claims, actions and damages, of whatever type or nature, including all costs of defense and attorneys’ fees, to any person or property arising out of or caused by the Hotel Operator’s breach of this Agreement, except for any demands, claims, actions and damages caused by the City’s active negligence or willful misconduct.

2.f
Packet Pg. 22
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 6 258067.1
Section 6. Default.

A. Defaults. Any one or all of the following events shall constitute a default by the Hotel Operator if not cured within thirty days (30) after notice by the City, or, if cure cannot be completed within 30 days, then the Hotel Operator commences cure within thirty (30) days and diligently performs any and all action necessary to cure the default within ninety (90) days:

1. Any misleading statement, misrepresentation or warranty of Hotel Operator herein or in any other writing at any time furnished by Hotel Operator to City that materially harms the City or materially diminishes the benefit of the Agreement to the City;

2. Nonperformance by the Hotel Operator when due of any of the obligations described herein, or failure to perform any obligation or covenant contained herein, including but not limited to the failure of the Hotel Operator to remit timely to the City any and all TOT Receipts from the Project;

3. The filing by or against Hotel Operator of a petition for relief under the Bankruptcy Reform Act of 1978 or any bankruptcy or debtor relief law; and 4 A general assignment by Hotel Operator for the benefit of creditors or the appointment of any receiver or trustee of all or any portion of the assets of Hotel Operator.

5. Failure to comply with any requirement imposed on Hotel Operator by any applicable land use or other permit or approval for the Project.

B. Remedies. In addition to any other rights or remedies, any party may institute legal action to cure, correct or remedy any default, to enforce any provision herein, or to enjoin any threatened or attempted violation, including but not limited to actions for declaratory relief, specific performance, injunctive relief, and relief in the nature of mandamus. All the remedies described herein shall be cumulative and not exclusive of one another, and the exercise of any one or more of the remedies shall not constitute a waiver of election with respect to any other available remedy.

City and Hotel Operator agree that, notwithstanding any other language in this Agreement, damages would not be an adequate or appropriate remedy if City or Hotel Operator fails to carry out their obligations under this Agreement. Therefore, specific performance of this Agreement is the only remedy which would compensate Hotel Operator if City fails to carry out its obligations under this Agreement, and City hereby agrees that Hotel Operator shall be entitled to specific performance in the event of a default by City hereunder. Further, specific performance of this Agreement is the only remedy which would compensate City if Hotel Operator fails carry out its obligations under this Agreement.

2.f
Packet Pg. 23
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 7 258067.1
Section 7. Compliance with Governmental Regulations. Hotel Operator shall, at its sole cost and expense, comply with all applicable municipal, county, state and federal laws, rules, regulations and ordinances now in force, or which may hereafter be in force, pertaining to its activities contemplated under this Agreement, including, but not limited to: issuance of building and use permits and compliance with all federal and state labor laws (collectively, “Laws”).

Section 8. Miscellaneous Provisions.

A. Transfer or Assignment. The Hotel Operator may assign or transfer this Agreement, and the rights and obligations herein, only upon receiving the City’s prior written consent to such assignment, which shall not be unreasonably withheld. No later than ninety (90) days prior to the proposed assignment or transfer, the Hotel Operator shall delivery written notice to the City. The City shall have the right to consider, among other factors related to any proposed assignee or transferee, the professional experience and financial ability to own and operate a hotel like the Project. If the City approves the assignment or transfer, the Hotel Operator shall deliver to the City the assignee’s/transferee’s official business name, address, e-mail, address for service of process, contact person, and any other information that the City may require to confirm the receipt of TOT Receipts as contemplated by this Agreement.

B. Interest of Members of City. No member of the City Council and no other officer, employee or agent of the City who exercises any functions or responsibilities in connection with the carrying out of the City’s work shall have any personal interest, direct or indirect, in this Agreement.

C. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflict of law principles. The Parties hereby consent to the jurisdiction and venue for resolution of any dispute to be in a federal or state court of competent jurisdiction in San Bernardino County, California.

D. Time of the Essence. Time is of the essence of each and every provision of this Agreement.

E. Notices. Notices or other communications given under this Agreement shall be in writing and shall be served personally or transmitted by overnight courier (such as FedEx), or by first class mail, postage prepaid. Notices shall be deemed received either at the time of actual receipt or, if mailed by first class mail in

2.f
Packet Pg. 24
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 8 258067.1
accordance herewith, on the third (3rd) business day after mailing, whichever occurs first.

Notices shall be directed to the Parties at the following addresses or at such other addresses as the parties may indicate by notice:

City: City of Barstow
220 East Mountain View St., Suite A
Barstow, CA 92311
Attn: City Manager
Hotel Operator: Barstow Hospitality, LLC
1650 Hotel Circle North, Suite 110
San Diego, CA 92108
F. Headings. The titles and headings of the various sections of this Agreement are intended solely for reference and are not intended to explain, modify or place any interpretation upon any provision of this Agreement.

G. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such or the remaining provisions of this Agreement.

H. Waiver. No waiver of any provision of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executing in writing by the Party making the waiver.

I. Number and Gender. As used in this Agreement, the masculine, feminine or neuter gender, and the singular or plural number, shall each include the others whenever the context so indicates or requires.

J. Further Assurances. The Parties shall execute, acknowledge, file or record such other instruments and statements and shall take such additional action as may be necessary to carry out the purpose and intent of this Agreement.

K. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties’ respective heirs, legal representatives, successors and assigns.

L. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior or contemporaneous agreements, representations, warranties and understandings of the Parties concerning the subject matter contained herein, written or oral. No change, modification, addendum or amendment to any

2.f
Packet Pg. 25
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 9 258067.1
provision of this Agreement shall be valid unless executed in writing by each Party hereto.

M. Attorneys’ Fees. In the event of any litigation arising out of this Agreement, the prevailing Party in such action shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and costs paid or incurred in good faith. The “prevailing party,” for purposes of this Agreement, shall be deemed to be that Party who obtains substantially the result sought, whether by settlement, dismissal or judgment.

N. Amendment. This Agreement may be amended only by a written instrument signed by both City and the Hotel Operator.

O. Force Majeure. The Hotel Operator’s obligation pursuant to this Agreement to continuously operate the Project as a hotel may be extended because of any forced closures due to unforeseeable causes beyond the control and without the fault or negligence of the Hotel Operator, including acts of God or of the public enemy, fires, earthquakes, floods, pandemic or epidemic, quarantine restrictions, riots, strikes, or freight embargoes, if the Hotel Operator notifies the City within ten (10) days of the commencement of such delay. The City shall ascertain the facts and the extent of delay, and extend of the time of the forced delay. Upon the conclusion of any event of force majeure causing the delay, the Hotel Operator shall immediately re-commence continuous operation of the Project as a hotel. The City shall have no obligation to pay a Monthly Actual Reimbursement Amount for any month during which the Hotel Operator did not operate the Project in compliance with this agreement due to a force majeure delay. The City and Hotel Operator agree to extend the term as needed to account for any such force majeure delays.

P. City Manager Authority. The City Manager, or authorized designee, shall have the authority, on behalf of the City, to execute this Agreement, to negotiate and enter into any amendments to this Agreement, interpret any provisions of this Agreement, and execute any implementing documents or instruments in furtherance of this Agreement, provided such action is consistent with the terms and conditions of this Agreement and approvals by the City Council for the use and operation of the Project. Nothing in this Subsection (P) shall prevent the City Manager from presenting to the City Council for consideration any documents, agreements, amendments, or instruments, or other items, relating to this Agreement.

2.f
Packet Pg. 26
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 10 258067.1
Q. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties hereto have executed this instrument as of the day and year first above written.

CITY: HOTEL OPERATOR:

City of Barstow, Barstow Hospitality, LLC,
a California municipal corporation a California Limited Liability Company By: _____________________________ By: _____________________________ Name: James Hart Name: Bhavesh Patel
Title: City Manager Title: Manager
ATTEST: __________________________
Name: Andrea Flores
Title: City Clerk
APPROVED AS TO LEGAL FORM:
____________________________
Name: Matthew Summers
Title: City Attorney

2.f
Packet Pg. 27
Attachment: Marriott-Barstow_TOT Reimbursement Agreement (4653 : Development Agreement for Marriott Hotels) 1 258067.1

CITY OF BARSTOW

B. To offset anticipated costs and expenses during the first years of operation of the Project, the City has agreed to provide an economic subsidy to Hotel Operator in the amount of $2,400,000.00, paid in monthly increments as set forth herein over a five (5) year period, contingent on Hotel Operator operating a Nationally Recognized Franchise Hotel Brand and such other conditions as set forth herein.

AGREEMENT
NOW, THEREFORE, based on the foregoing Recitals, which are a substantive part of this Agreement and incorporated herein by reference, the City and Hotel Operator agree as follows:

Section 1. Reimbursement Commitment & Term; Conditions on Payment.

A. In consideration for the Hotel Operator costs and expenses for operating the Project and the other conditions and covenants provided for herein, and only upon the satisfaction of the conditions in Section 2 of this Agreement (defined as the

2.g
Packet Pg. 28
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 2 258067.1
“Reimbursement Obligation Conditions”), the City shall reimburse to Hotel Operator the amount of $2,400,000.00 (the “Total Reimbursement Amount”), to be paid on a monthly basis in the amount of $40,000.00 per month (the “Monthly Reimbursement Amount”) for a 60 month period, plus any additional months added due to application of the provisions of Section 1(B) below, as more fully described herein Payments made to the Hotel Operator under this Agreement shall be from any sources of funds available to the City by law for payment of contractual obligations.

B. Upon The Hotel Operator commencing the commercial operation of the Project as a hotel it shall be subject to paying to City amounts equal to the City’s then current transient occupancy tax, levied and collected pursuant to Revenue and Taxation Code section 7280 et seq. and applicable provisions of the Barstow Municipal Code and any City policies and procedures, based upon income generated by the Project (“TOT Receipts”).The Monthly Reimbursement Amount shall be reduced in any month during the Reimbursement Term in which the TOT Receipts are less than $40,000.00 by an amount equal to the difference between the Monthly Reimbursement and the TOT Receipts for such month (the “Monthly Actual Reimbursement Amount”). The Monthly Reimbursement Amount shall not be increased in the event TOT Receipts for a given month exceed the Monthly Reimbursement Amount. However, it is the expectation of the Parties that the total of the Monthly Actual Reimbursement Amount for each 12 month period during the Reimbursement Term (the “Annualized Reimbursement”) will equal $480,000.00 and that the TOT Receipts for each such period (the “Annualized TOT Receipts”) will exceed $480,000.00. Accordingly, at the end of each 12 month period during the Reimbursement Term (each an “Agreement Anniversary Date”), a true up shall occur (the “True Up”) by which if by operation of this Agreement the Annualized Reimbursement is less than $480,000.00, but the Annualized TOT Receipts exceed $480,000.00, then an additional reimbursement payment shall be made by City to Hotel Operator in an amount that will cause the total Annualized Reimbursement for such period to equal $480,000.00 (the “True Up Payment.”) At the time of the true up, if both the Annualized Reimbursement and the Annualized TOT Receipts are less than $480,000.00 (the (“Reimbursement Deficit”), the Reimbursement Term shall be extended by a one month for every $40,000.00, or portion thereof, of the Reimbursement Deficit, until such time as the Reimbursement Deficit is fully paid.

C. Subject to the terms and conditions of this Agreement, the City shall pay to the Hotel Operator, from any sources of funds available to the City by law for payment of contractual obligations, the Monthly Actual Reimbursement Amount each month until the City has paid to the Hotel Operator the Total Reimbursement Amount.

Payment of the Monthly Actual Reimbursement Amount shall commence on the first day of the month (the “Reimbursement Commencement Date”) following the first full month after (i) the satisfaction of the Reimbursement Obligation Conditions (as defined in Section 2 of this Agreement) and (ii) the City has collected and verified for that first full month (and pro-rated amount, if any, from the prior month to that first full month) the TOT Receipts from the Project, and from thereon shall continue for sixty (60) months,

2.g
Packet Pg. 29
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 3 258067.1
plus any additional months added due to application of the provisions of Section 1(B) above, following the Reimbursement Commencement Date of the Monthly Actual Reimbursement Amounts (the last date is referred to herein as the “Reimbursement Termination Date,” and the entire reimbursement period from the Reimbursement Commencement Date until the Reimbursement Termination Date is referred to herein as the “Reimbursement Term”). Notwithstanding any provision hereof to the contrary, the Total Reimbursement Amount shall not exceed $2,400,000.00.

D. At the end of each year after the Reimbursement Commencement Date, either the City or Hotel Operator may request a review of year-to-date remittances and TOT Receipts from the Project to verify the prior-year’s reimbursement amounts were correctly calculated and paid. Additionally, either the City or Hotel Operator may request an audit, performed by an independent licensed auditor selected by the requesting Party, to review and verify that any reimbursement amounts were correctly calculated and paid. In the event that any such review or audit discloses that an overpayment was made by the City for any Actual Monthly Reimbursement Amount, and such error is not addressed by the annual True-Up, the Hotel Operator shall return to the City within ninety (90) days of the disclosure date the amount of the overpayment; in the event that any such review or audit discloses that an underpayment was made by the City for any Actual Monthly Reimbursement Amount, and such error is not addressed by the annual True-Up, the City shall pay to the Hotel Operator within ninety (90) days of the disclosure date the amount of the underpayment. For any over- or underpayment disclosed pursuant to a review or audit, the Hotel Operator may return to

2.g
Packet Pg. 30
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 4 258067.1
the City the amount of the City’s overpayment by offset, with the City reducing in the amount of the overpayment the amount of a subsequent(s) reimbursement payment.

E. The Hotel Operator shall retain for no less than four (4) years after the Reimbursement Termination Date a complete set of accounting records for the operations of the Project, including gross and net revenues received from payment of any room rate, service fee, or other consideration received for renting hotel rooms at the Project. The accounting records shall cover no less than the entire Reimbursement Term. The City shall have the right, upon no less than five (5) days’ prior notice to the Hotel Operator, to inspect any and all accounting records to review and verify the gross and net revenues from the Project for purposes of confirming any reimbursement made under this Agreement were in the correct amounts as set forth herein. This Subsection (E) shall survive the expiration of the Reimbursement Term and the termination of this Agreement.

2.g
Packet Pg. 31
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 5 258067.1
1978 or any bankruptcy or debtor relief law, and no general assignment by Hotel Operator for the benefit of creditors or the appointment of any receiver or trustee of all or any portion of the assets of the Hotel Operator.

The Reimbursement Obligation Conditions set forth in Subsections (C), (D), and (E) above shall be continuing obligations of the Hotel Operator for the entire Reimbursement Term. In the event that the Hotel Operator fails to meet any one of these Reimbursement Obligation Conditions at any time during the Reimbursement Term, the City shall have no obligation to pay to the Hotel Operator a Monthly Actual Reimbursement Amount for any and all months that the Hotel Operator fails to meet one or more of these Reimbursement Obligation Conditions in Subsection (C), (D), or (E).

Section 5. Indemnification.

2.g
Packet Pg. 32
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 6 258067.1
B. The Hotel Operator shall indemnify, defend, and hold harmless the City, and its officials, officers and employees, from all demands, claims, actions and damages, of whatever type or nature, including all costs of defense and attorneys’ fees, to any person or property arising out of or caused by the Hotel Operator’s breach of this Agreement, except for any demands, claims, actions and damages caused by the City’s active negligence or willful misconduct.

Section 6. Default.

5. Failure to comply with any requirement imposed on Hotel Operator by any applicable land use or other permit or approval for the Project.

City and Hotel Operator agree that, notwithstanding any other language in this Agreement, damages would not be an adequate or appropriate remedy if City or Hotel

2.g
Packet Pg. 33
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 7 258067.1
Operator fails to carry out their obligations under this Agreement. Therefore, specific performance of this Agreement is the only remedy which would compensate Hotel Operator if City fails to carry out its obligations under this Agreement, and City hereby agrees that Hotel Operator shall be entitled to specific performance in the event of a default by City hereunder. Further, specific performance of this Agreement is the only remedy which would compensate City if Hotel Operator fails carry out its obligations under this Agreement.

Section 7. Compliance with Governmental Regulations. Hotel Operator shall, at its sole cost and expense, comply with all applicable municipal, county, state and federal laws, rules, regulations and ordinances now in force, or which may hereafter be in force, pertaining to its activities contemplated under this Agreement, including, but not limited to: issuance of building and use permits and compliance with all federal and state labor laws (collectively, “Laws”).

Section 8. Miscellaneous Provisions.

D. Time of the Essence. Time is of the essence of each and every provision of this Agreement.

E. Notices. Notices or other communications given under this Agreement shall be in writing and shall be served personally or transmitted by overnight courier

2.g
Packet Pg. 34
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 8 258067.1
(such as FedEx), or by first class mail, postage prepaid. Notices shall be deemed received either at the time of actual receipt or, if mailed by first class mail in accordance herewith, on the third (3rd) business day after mailing, whichever occurs first. Notices shall be directed to the Parties at the following addresses or at such other addresses as the parties may indicate by notice:

K. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties’ respective heirs, legal representatives, successors and assigns.

2.g
Packet Pg. 35
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 9 258067.1
herein, written or oral. No change, modification, addendum or amendment to any provision of this Agreement shall be valid unless executed in writing by each Party hereto.

M. Attorneys’ Fees. In the event of any litigation arising out of this Agreement, the prevailing Party in such action shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and costs paid or incurred in good faith. The “prevailing party” for purposes of this Agreement, shall be deemed to be that Party who obtains substantially the result sought, whether by settlement, dismissal or judgment.

N. Amendment. This Agreement may be amended only by a written instrument signed by both City and the Hotel Operator.

2.g
Packet Pg. 36
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for 10 258067.1
Q. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties hereto have executed this instrument as of the day and year first above written.

CITY: HOTEL OPERATOR:

2.g
Packet Pg. 37
Attachment: Marriott-Barstow_TOT Reimbursement Agreement; second option with flat monthly payment (4653 : Development Agreement for

Barstow City CouncilSeptember 18, 2023

Barstow City Council
September 18, 2023