Palm Desert City Council
February 27, 2025

AGREEMENT FOR PROPERTY MANAGEMENT SERVICES
THIS AGREEMENT FOR PROPERTY MANAGEMENT SERVICES (this
“Agreement”) is made and entered into as of February 27, 2025, by and between the PALM DESERT HOUSING AUTHORITY, a public body, corporate and politic having a principal place of business at 73-510 Fred Waring Drive, Palm Desert, California, (the "Authority") and National Community Renaissance, LLC, a California Nonprofit Corporation, having a principal place of business at 9692 Haven Avenue, Suite 100, Rancho Cucamonga, California 91730 (the "Manager"). The Authority and the Manager may be referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS
A. The Authority is a public body, corporate and politic, designated to be the operator of those certain real properties described on Exhibit A attached hereto and incorporated herein by this reference (the "Properties").

B. The Manager is engaged in the business of managing, maintaining, repairing, operating and leasing apartment buildings, and has represented to the Authority that the Manager is experienced and competent in said business.

C.The Authority and the Manager desire to enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and of the mutual and dependent covenants contained in this Agreement, the Parties agree as follows:

1. Effective Date. The effective date of this Agreement (the "Effective Date") shall be July 1, 2025.

2. Appointment. The Authority hereby appoints the Manager and the Manager accepts appointment as the manager of the Properties on the terms and conditions set forth in this Agreement. The Parties acknowledge and agree that this Agreement is only a Management Agreement between the Parties, that the Parties are not joint venturers or partners, and that the Manager shall not be deemed to be an employee of the Authority. The Manager shall at all times be an independent contractor. The Manager agrees and covenants that it is not entitled to and will not take any tax position that is inconsistent with being a service provider to the Authority with respect to the Properties. By way of example only, the Manager hereby agrees and covenants that it will not claim any depreciation or amortization deduction, investment tax credit, or deduction for any payment of rent with respect to the Properties or any portion thereof.
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3. Professional Management Standards and the Administrative Plan. (a) The Manager agrees to exert its best efforts, to furnish the services of its organization, and to exercise the highest degree of professional competence in managing the Properties and to provide the Authority with the economic return consistent with proper management under the guidelines provided by Authority for affordable housing.
(b) The Manager shall manage, maintain, repair, operate and lease the Properties consistent with other multi-unit apartment complexes or similar type properties in the surrounding vicinity with comparable facilities and amenities. (c) Notwithstanding the authority granted to the Manager by this Agreement, the Manager agrees to abide by those standards and instructions that Authority may issue from time to time in connection with the Administrative Plan (the “Administrative Plan”). In the event of any inconsistency between this Agreement and the Administrative Plan, this Agreement shall control. The Administrative Plan adopted by Resolution No. HA-100, a copy of which shall be on file with the City Clerk, and any amendments thereto, include the statements of policies of the Authority for the purpose of property operations.
(d) The Manager hereby covenants and agrees to use the Manager's best efforts to actively manage, maintain, repair, operate and lease the Properties at their maximum potential, considering the Authority’s guidelines for affordable housing and the Administrative Plan. Manager will provide copies of any procedural manuals created for the purpose of implementing said Administrative Plan.
(e) The Manager shall be responsive to all tenant requests and concerns in a timely manner and shall make its best efforts to satisfy tenant requests and concerns at on-site offices. The Manager shall make its best efforts to notify Authority of tenant requests and concerns which are likely to be expressed by a tenant directly to the Authority. The Manager shall establish policies in order to address tenant requests and concerns and resolution in the event of a dispute in accordance with the Administrative Plan.
(f) Each of the Properties having sixteen (16) or more units shall have a member of the Manager’s management staff that shall live on-site, and serve as the caretaker for the Property at which they live. The Authority shall not be responsible for furnishings, equipment, postage, utilities, telephone, or such other ancillary costs of the on-site staff. The specific apartment shall be approved by the Authority prior to occupancy by staff. All other Properties having less than sixteen (16) units shall have a caretaker that lives on-site. All Properties will have an emergency contact available seven days a week, 24 hours a day.
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4. Periodic Requirements
The Manager shall perform the following:
(a) Not less than once each week:
(i) A member of the Manager’s management staff will walk each property in its entirety to identify any items of concern that may or may not be visible from frequently traveled thoroughfare and prepare a detailed report of findings to be provided to Authority weekly.
(ii) Inspect all mechanical and physical systems located on the Properties and provide a report to Authority of said inspections monthly, or immediately if finding is of an emergency nature.
(b) Not less than once during every calendar month:
(i) Analyze the occupancy level of the Properties.
(ii) Analyze the financial condition of the Properties including, without limitation, cash flow, income, expenses, average turnover and turnover cost, and per unit average cost.
(iii) Provide Authority with a report regarding the status of maintenance and repair projects including those in process, upcoming, completed, and those that have not been completed or which are recommended and have not yet been implemented, and which are to be carried over to the next fiscal year. (c) Not less than once annually on or before February 1st:
(i) Prepare and deliver to Authority a comprehensive financial budget plan (Plan), described in Section 18, including reserve accounts where applicable, for the Properties for the upcoming fiscal year operations July 1 to June 30. (ii) Examine the general condition of the Properties, prepare a list of needed repairs and maintenance, and deliver that list to Authority along with the estimated costs for review. Once reviewed by Authority, incorporate estimations into the Plan. Said list will include all items identified by the Manager and be prioritized by the Manager in order of necessity. (i.e. Critical, Health and Safety, Necessary, Preventative, etc.)
(d) The Manager will notify Authority of work, supplies, services, maintenance, or repairs (emergency or otherwise) that were not included in the current operating budget but that may be necessary prior to the next operating budget year:
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(i) On or before December 1
st of each year, the Manager will
provide Authority a report of necessary budget adjustments to be made for work that was pre-approved by the Authority and estimates of anticipated work that is necessary and any justification.
(ii) In the event there are items that have not been included in the Plan or in Section 4(d)(i), above, then as necessary, the Manager will provide a report of those items by priority to the Authority. Authority staff will determine whether said requests should be forwarded as a special item to the Palm Desert Housing Authority Board (the “Authority Board”).
(e) On the basis of the information gathered pursuant to Sections (a)-(d) of this Section 4, the Manager shall recommend in writing amendments and updates to the Administrative Plan at least once annually on or before February 1st. The proposed amended Administrative Plan, together with any recommendations of the Manager for achieving maximum economic return of the Properties in light of the affordable housing requirements of the Properties, shall be submitted to the Authority. The Manager will continually review the Administrative Plan for the purpose of keeping the Authority advised of necessary or desirable changes.
(f) Crime-Free Multi Housing Program. Throughout the term of this Agreement, the Manager covenants and agrees to participate in and fully complete the City’s Crime-Free Multi Housing Program for the Properties. Evidence of compliance with this requirement shall be forwarded annually to the Authority within said twelve (12) month period.

5. Determination of Performance Criteria. The Parties have developed various performance criteria categories which will be used to evaluate the performance of the Manager. Such performance criteria categories are described on Exhibit G attached hereto and incorporated herein by reference.
(a) For each performance standard (as set forth in Request for Proposals, “Performance Standards”) that is not met in a given month by the Manager, the Authority may retain a portion of the monthly base fee owed to the Manager for the applicable month (the “Fee Retention”), as set forth below:
i. The Fee Retention shall be equal to 10% of the monthly base fee for each of the following performance standards that the Manager fails to meet in a given month: (i) Tenant Accounts Receivable, (ii) Vacancy rate, (iii) Vacant Unit Turn-around, and (iv) Work Order completion time. For the avoidance of doubt, when calculating the Fee Retention, a separate 10% retention shall apply for each performance standard that the Manager has failed to meet in a given month. For example, if the Manager fails to meet three of the above listed performance standards in a given month, the Fee Retention for that month would be 476
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30%.
ii. The Authority shall be entitled to retain 10% of the monthly base fee for each performance standard that the Manager has failed to meet in a given month until the Manager’s failure to meet such performance standard has been cured. A failure to meet a performance standard set forth in subsection (i) above shall be deemed cured when the cumulative average of performance of the applicable performance standard in the previous four month period is equal to the applicable performance standard. For example, if the Manager fails to achieve the necessary vacancy rate standard of [5%] (or the then applicable vacancy rate standard) in a given month, such failure to meet the vacancy rate standard shall not be deemed cured until the average of vacancy rate performance standards for a four month period is greater than or equal to [5%] (or the then applicable vacancy rate standard).

Once a Manager’s failure to meet a given performance standard has been cured, the Manager shall be entitled to payment of any fee retained for that performance standard.

6. Term. The Parties agree that the term ("Term") of this Agreement shall be for 60 months, commencing July 1, 2025, and ending June 30, 2030, and may be extended in accordance with the provisions of Section 28 below. Following the initial term of the contract, the Authority may opt to extend the contract for two (2) additional terms of three (3) years each term and expiring June 30, 2036. Contract extensions may be exercised contingent upon satisfactory performance and at the sole discretion of the Housing Authority, and in accordance with the provisions of Section 28 below.

Notwithstanding the foregoing, Manager shall have the right to enter the Properties during the Transition Period, pursuant to the terms of that certain Management Transition Addendum to Agreement for Property Management Services (the “Addendum”), attached hereto and incorporated herein by reference.

7. On-Site Management Office. The Authority shall provide adequate space on the Properties for a management office in accordance with Exhibit C attached hereto and incorporated herein by this reference. The Manager shall prepare and submit designs and budget for pre-approval to furnish and/or refurbish the management offices.

The Authority shall pay all approved expenses related to such office, including, but not limited to, furnishings, equipment, postage, office supplies, electricity, telephone, answering service, and security monitoring services, if any. The Authority shall retain ownership of all of the foregoing purchases.

8. Information on the Properties. The Manager acknowledges that it has been furnished with any available building plans and specifications as well as environmental reports, if available, for each of the Properties. The Manager also acknowledges that it has received copies of any available manufacturer's preventive maintenance schedules, guarantees and warranties pertinent to the fixtures, mechanical equipment, and appliances used in the operation of the Properties. The Manager shall maintain files for 477
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each of the Properties with current plans and specifications, environmental reports, manufacturer's preventive maintenance schedules, guarantees and warranties pertinent to any new installations, repairs, fixtures, appliances as well as any equipment, used in the operation of the Properties.

9. Familiarity With Equipment. The Manager has become thoroughly familiar with the character, location, construction, layout, plan and operation of the Properties, and especially of the electrical, heating, plumbing, air conditioning and ventilation systems, and all other mechanical equipment, and the Manager shall maintain such familiarity.

10. Leasing. The Manager will act as the Authority's exclusive agent in leasing the dwelling units (each, a “Unit”, and collectively, the "Units") in the Properties. The following provisions will apply:
(a) The Manager shall use all reasonable efforts to keep the Properties leased by procuring tenants for the Properties and negotiating and executing on behalf of the Authority all leases for the Units. The Manager is authorized to enter into and execute initial leases with tenants for a minimum term of six (6) months and a maximum term of 12 months without the further written approval of the Authority. The Authority shall provide the Manager with income and rent guidelines for each of the Properties annually or as frequently as Department of Housing and Community Development (“HCD”) issues adjustments to the Riverside County Median Income levels. Such guidelines shall include a provision for utility allowances, if applicable, as set by the Riverside County Housing Authority which are in effect at the time the rents are established. Any lease for a shorter or longer period shall require the prior written consent of the Authority. The Manager shall also submit on or before the 10th of each month to the Authority copies of all notices terminating any tenant leases and all notices to vacate served on any tenant prior to the expiration of the lease term or after the expiration of the lease term if tenancy has converted to month-to-month, together with an explanation for the applicable notice. The Manager shall provide Authority with the equipment detail of each Unit annually for the purpose of determining the proper utility allowances by March 1st of each year. (b) The Manager shall lease all the Units in accordance with the terms of this Agreement, in compliance with all applicable federal, state, and local laws, in accordance with the Administrative Plan and any further direction from the Authority. (c) The Manager will be responsible for screening and selection of existing and prospective tenants in accordance with affordable housing guidelines and applicable federal, State and local laws. The Manager will follow the tenant selection policy described in the Administrative Plan and will show the Properties to all prospective tenants who qualify under the Authority’s affordable guidelines based on the waiting list policy and Unit availability.
(d) The Manager will prepare and verify eligibility certifications and recertifications in accordance with the guidelines established by the Authority. Rents will 478
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be adjusted pursuant to the Rent Setting Policy of the Authority adopted by Resolution HA-62, a copy of which shall be on file with the City Clerk, and any amendments thereto. (e) The Manager shall not decline to lease any Unit on the Properties to a prospective tenant, or otherwise discriminate, on the basis of race, color, national origin, ancestry, sex, gender, gender identity, gender expression, religion, physical or mental disability, genetic information, marital status, familial status, sexual orientation, or any other classification then protected by law.
(f) Prior to executing any lease with a tenant, the Manager shall obtain the written consent of the prospective tenant to perform a complete background check, and shall perform same, including: (1) investigate the financial ability and history of the prospective tenant to pay rent, (2) perform necessary credit checks, (3) obtain references from employers and prior landlords, (4) verify the income of tenants as specified in the Administrative Plan, (5) verify all matters that are required to be checked by federal and/or state law, in accordance with the type of affordable funding involved, and (6) verify those matters that may and should be checked to ensure and promote the safety and welfare of all tenants of the Properties, the Manager’s staff and the public. A non-exclusive list of the required and permissive verifications, consent language and sampling of reputable online resources are set forth in Exhibit K, as may be modified by changes in applicable law. The Manager shall comply at all times with applicable federal, state and local law in all aspects of the tenant screening and application process.

11. Security Deposits. The Manager will collect, deposit, and disburse security deposits in accordance with the terms of each tenant's lease. The amount of each security deposit will be as specified in the Administrative Plan or applicable law. The collection and disbursement of security deposits will also be governed by the then applicable state and local laws. All tenant security deposits will be placed in one or more trust accounts separate from all other accounts and funds of the Manager and/or the Authority. The security account or accounts will be established at a bank as specified by the Authority whose deposits are insured by an agency of the United States government.

The security deposit account or accounts will be carried in the Authority's name and designated on record as “PDHA Security Deposit Account” and in addition, the Director of Finance of the City of Palm Desert (the "Director of Finance"), his/her designees, and up to four designated representatives of the Manager shall be included as signatories to the security deposit account or accounts. The balance of the security deposit account or accounts shall not be used to pay general operating expenses without the written consent of the Authority. Notwithstanding the foregoing, security deposits received must be documented and accounted for at all times and the Manager must comply with any applicable state and local laws concerning interest payments on security deposits. The number and structure of security deposit accounts is set forth in Exhibit D attached hereto and incorporated herein by this reference.

12. Collection of Rents and Other Receipts. The Manager will collect when due all rents, charges and other amounts receivable on the Authority's account in connection with the management, maintenance, repair, operation, and leasing of the Properties. 479
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Such receipts (except for tenants’ security deposits, which will be handled as specified in Section 11 above) will be deposited in an account or accounts (the “General Operating Account”), separate from all other accounts and funds, of the Manager, at the bank as specified by the Authority whose deposits are insured by an agency of the United States Government. This account or accounts will be carried in the Authority's name and designated on record as “PDHA General Operating Account" and in addition, the Financial Operations Manager, the Director of Finance, his/her designees, and up to four designated representatives of the Manager shall be included as signatories to this account, or accounts. The number and structure of operating accounts is set forth in Exhibit D attached hereto and incorporated herein by this reference.

13. Enforcement of Leases. The Manager will ensure full compliance by each tenant with the terms of that tenant's lease. Involuntary termination of tenancies shall comply with all applicable laws and regulations. The Manager is designated as the Authority’s agent with the right to enter and take possession of the Units, in accordance with applicable law, and shall lawfully terminate any tenancy when, in the Manager's reasonable judgment, sufficient cause (including, but not limited to, nonpayment of rent) for such termination occurs under the terms of the tenant's lease. For this purpose, the Manager is authorized to consult with legal counsel qualified to bring unlawful detainer actions and to execute notices to vacate and judicial pleadings incident to such actions.

The Manager shall keep the Authority informed of such actions and follow such direction as the Authority may provide for the conduct of any such action. Attorney’s fees and costs incurred in connection with unlawful detainer actions will be paid out of the General Operating Account as an expense of the Properties. Notwithstanding the foregoing, the Manager is at all times ultimately responsible for the enforcement of leases. Payment by the Authority of legal fees and costs incurred in connection with unlawful detainer actions does not create an attorney-client relationship between the Authority and the Manager’s unlawful detainer legal counsel.

14. Maintenance and Repair. The Manager will maintain the Properties in good, clean, safe and sanitary condition in accordance with the Administrative Plan and local codes and in a condition acceptable to the Authority at all times. This will include, but not be limited to, cleaning, painting, plumbing, grounds care, and such other maintenance and repair works as may be necessary, subject to any limitations imposed by the Authority in addition to those contained herein. The Manager will ensure all vendors maintain the required licensing, insurance, permits, and approvals for any work performed in accordance with this Agreement, as well as all local, state, and federal codes and regulations. The Manager will maintain an on-site property entry log for all vendors.

Incident thereto, the following provisions will apply:
(a) The Manager will complete preventative maintenance activities in the most cost effective and efficient manner as possible, while maintaining the quality of the Properties.
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(b) The Manager will contract in compliance with Section 21 hereof with qualified independent contractors for the maintenance and repair of roofs, air-conditioning and heating systems, and for extraordinary repairs beyond the capability of regular maintenance employees.
(c) The Manager is aware of the requirements of California Labor Code Section 1720 et seq., 1770 et seq., and California Code of Regulations, Title 8, Section 16000 et seq. (“Prevailing Wage Laws”) which require the payment of prevailing wage rates and the performance of other requirements on “public works” and “maintenance” projects. The projects performed under this contract may be subject to compliance monitoring and enforcement by the Department of Industrial Relations. If the services are being performed as part of an applicable “public works” or “maintenance” project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, the Manager agrees to fully comply with such Prevailing Wage Laws, including but not limited to requirements related to public works contractor registration and maintenance and submittal of certified payroll records. The Authority shall provide the Manager with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. The Manager shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the services and shall post copies of the Manager’s principal place of business and at the project site. The Manager shall defend, indemnify, and hold the Authority, its elected official officers, employees, and agents free and harmless from any claim or liability arising of any failure or alleged failure to comply with the Prevailing Wage Laws. (d) The Manager will systematically receive and investigate all service requests from tenants, take such action thereon as may be warranted and will keep records of the same. Service requests will be addressed within four working days; provided, however, emergency requests will be received and serviced on a 24-hour basis.

The Manager shall promptly investigate and respond to serious complaints as appropriate, and shall comply with all applicable federal and state laws in connection with same, including but not limited to the requirements of the Fair Employment and Housing Act and other applicable fair housing laws, and shall promptly report such complaints and the Manager’s response thereto to the Authority. The Manager shall advise tenants to report to law enforcement all complaints involving actual or threatened criminal activity.

The Manager shall provide the Authority with a monthly summary of all serious complaints received by the Manager. This summary shall include a brief description of each complaint and the Manager’s response thereto.
(e) The Manager is authorized to purchase while complying with the provisions of Section 21, on behalf of the Authority, all materials, equipment, tools, appliances, supplies and services necessary for proper maintenance and repair. The Authority shall retain ownership of all said materials, equipment, tools, appliances and supplies.
(f) Notwithstanding any of the foregoing provisions, the prior written approval of the Authority will be required for any maintenance or repair project in which 481
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the overall cost is expected to exceed $15,000 for labor, materials, and/or otherwise in connection with the maintenance and repair of the Properties. This limitation does not apply to recurring expenses within the limits of the operating budget or to emergency repairs involving manifest danger to persons or property, or that are required to avoid suspension of any necessary service to the Properties. In the latter event, the Manager will inform the Authority in writing of the facts as promptly as possible. For purposes herein, “recurring expenses” shall include utilities, pest control, laundry services, pool services, courtesy patrol, regulatory permits, and vermin extermination. (g) The Manager shall enter into all service contracts (such as pool maintenance/repair, laundry, vermin extermination and landscape maintenance) in accordance with Section 21 and maintain all required permits and approvals on equipment, pools, facilities, etc. for each of the Properties. (h) The Manager shall not undertake any work of construction or any work which would modify or change the exterior of any building or grounds.

15. Utilities and Services. The Manager will make arrangements for water, electricity, gas, sewage and trash disposal, telephone and cable service for the Properties. The Manager will enter into such contracts as may be necessary to secure such utilities, acting as Manager for the Authority.

16. Employees.
(a) All personnel of the Manager involved with the management, maintenance, repair, operation or leasing of the Properties will be employees of the Manager and will be hired, paid, directed, supervised, and discharged by the Manager.

The Manager will provide sufficient resources (staff and/or services) in order to fulfill its obligations to the Authority under the terms of this Agreement. All costs associated with hiring and discharging of such employees will be borne by the Manager. The Manager warrants that it has established employment policies in accordance with employment laws and said policies include a drug free workplace or similar substance abuse policy, a zerotolerance violence in the workplace policy and all other policies mandated by state and Federal law. The Manager warrants that all of its employees meet all qualifications, licensing and code requirements, applicable to completing assigned tasks. The Manager warrants that training will be provided to employees as may be required by local, state or federal law and will be conducted by an individual or entities qualified to provide such training. It is understood that, subject to sub-Sections (b) and (c), below, all direct costs associated with employees working "on-site" and specifically identified on Exhibit F will be borne by the Authority to include their direct salary (but not bonuses or overtime that have not been preapproved by the Authority), Social Security taxes, employment taxes, medical insurance, Pension Plan, Worker's Compensation, uniforms, Housing allowance and other benefits (if applicable). The Authority shall have the right to interview and approve the hiring of any prospective site managers or regional (non-site specific) staff included in Exhibit “F”. Only the cost of those positions set forth on Exhibit F shall be paid by the Authority. Positions may be added, deleted or modified from Exhibit F based on 482
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property need with approval of the Manager and the Executive Director of the Authority.

Notwithstanding the foregoing, all personnel of the Manager are exclusively the employees of the Manager, and not of the Authority.
(b) The Manager shall have full and exclusive responsibility and liability for payment of all federal, state and local payroll taxes and for contributions for unemployment insurance, Social Security (FICA) and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages, or other remuneration paid or payable by the Manager to its employees engaged in any work in connection with this Agreement or indicated herein, for the payment of which the Authority will reimburse the Manager, subject to the written approval of the Finance Director. The Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. The Manager agrees to save and hold the Authority harmless from all claims for penalties, interest, or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities. (c) Upon ten days demand from the Authority, the Manager shall cause any employee of the Manager to be removed from the Properties, including any corporate employee not included on Exhibit F, at the Manager's sole cost and expense. (d) The Manager shall be solely responsible for the methods and means of managing its personnel to achieve the desired results. Authority’s authority over and involvement in the Manager’s employment matters shall be limited consistent with the Manager’s status as sole employer of its employees.

17. Disbursements from General Operating Account.
(a) From the funds collected and deposited by the Manager in the General Operating Account pursuant to Section 12 above, the Manager will make or request the following disbursements promptly when payable:
(i) The Manager shall request from the Director of Finance of the Authority reimbursement to the Manager for the actual compensation payable to employees specified in “Exhibit F”, together with the actual cost of the medical insurance, dental insurance, life insurance, Workers Compensation insurance, and taxes and assessments payable to local, state and federal governments actually paid by Manager in connection with the employment of such employees, as determined by the Manager and approved by the Director of Finance of the Authority, or his/her designees. The Manager shall be required to provide the Director of Finance of the Authority, or his/her designee, with financial statements or other documentation, as may be reasonably requested by the Director of Finance of the Authority, or his/her designee, substantiating the requested reimbursement.
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(ii) Notwithstanding the provisions of sub-Section (a)(i), above, the Manager shall make disbursements of all sums otherwise due and payable by the Authority as expenses of the Properties authorized to be incurred by the Manager under the terms of this Agreement, including compensation payable to the Manager, pursuant to Section 27 below, for its services hereunder.
(iii) All checks between $2,500 and $4,999 shall require at least two signatures. All checks over $5,000 shall require at least two signatures, one of which must be the signature of an authorized representative of the Authority. a. Check requests for second signature must be
accompanied by adequate documentation to ensure that vendor limits are not exceeded. (iv) All wire transfers will be initiated by the Director of Finance of the Authority or his/her designee.
(b) Except for the disbursements mentioned in Section 12 above, funds will be disbursed or transferred from the General Operating Account only as the Authority may from time to time direct in writing. The Manager reimbursement checks in excess of $500 shall require signatures of both the authorized signatory of the Manager and the Finance Director of the Authority or his/her designee.
(c) In the event the balance in the General Operating Account is at any time insufficient to pay disbursements due and payable under Section 17(a) above, the Manager will inform the Authority prior to disbursing funds of that fact and the Authority’s Director of Finance will then remit to the Manager sufficient funds to cover the delinquency. In no event will the Manager be required to use its own funds to pay such disbursements that are directly related to the operation of the Properties. (d) The Authority will pay for or reimburse to the Manager only those expenses that are expressly authorized by this Agreement to be borne by the Authority.

Any expenses incurred by the Manager as a result of any legal judgment or administrative ruling against the Manager or its officers, employees or agents, or any monetary settlement in lieu of same to resolve any dispute, or the costs incurred by the Manager in connection therewith, including attorneys' fees for advice to or defense of the Manager, shall be the sole responsibility of the Manager. In the event any Authority monies have been disbursed for this purpose, the Manager shall immediately reimburse the Authority.

The Authority may, in its sole discretion, elect to pay or reimburse the Manager for all or a portion of such expenses and/or costs if the Authority deems that to be in the best interests of the Authority or the community which it serves or to promote the public health, safety and/or welfare, and only upon written agreement between the Authority and the Manager, signed by each of the Parties.

18. Budgets. The Manager will prepare and submit annual operating budgets for the Properties in forms satisfactory to the Director of Finance, which budgets shall include but not be limited to the following: Current Year Final Budget Adopted; Current Year Expected Actual; Upcoming Year Budget Request; Detailed Descriptions for any 484
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marginal deviations from Current Year; Detailed Descriptions for any Capital Expenditures for each Property; including Reserve Accounts where applicable; and Exhibit F described above. Except as permitted under Section 14(e) above, annual disbursements for operating expenses will not exceed the amount authorized by the approved budget without the prior written consent of the Authority. The Manager shall prepare a recommended operating budget for each fiscal year during the term of this Agreement, and shall submit to the Authority by March 1st of each year for the following fiscal year (July 1 to June 30). Additionally, the Manager shall prepare and submit to the Authority a budget for each fiscal year thereafter covering the period from July 1 through the next following June 30. Each year of the term the Authority will promptly inform the Manager of any changes incorporated in the approved budget, and the Manager will keep the Authority informed of any material anticipated deviation from the receipts or disbursements stated in the approved budget. The Manager may, upon the written request and after receipt of written approval of the Authority, make disbursements exceeding the budgeted allowances within the budgeted categories for the Properties.

19. Records and Reports. In addition to any requirements specified in the Administrative Plan or other provisions of this Agreement, the Manager will have the following responsibilities with respect to accounts and reports:
(a) The Manager will establish and maintain, on a modified accrual basis, a comprehensive system of records, books and accounts in a manner satisfactory to the Authority. All records, books and accounts will be subject to examination at reasonable hours by any authorized representative of the Authority. The Manager shall maintain the books and records in good condition and order and shall preserve the books and records for such time-period as the Authority would be legally required to preserve and maintain the books and records.
(b) The Manager will be subject to a quarterly review and an annual audit conducted by a firm of the Authority's choice. The Manager agrees to make available all applicable records to the Authority's auditors for annual review. The report will be prepared in accordance with generally accepted auditing standards. The audit report submitted by the audit firm will also be subject to a single audit at the Authority's discretion. The preparer’s services will be an expense of the Authority. (c) The Manager will furnish information as may be requested by the Authority from time to time with respect to the financial, physical or operational condition of the Properties, including, without limitation: (i) calculation and billing rent and other tenant charges; (ii) maintaining accounts receivable and delinquency records; (iii) maintaining rent rolls; (iv) processing and paying operating and capital invoices; (v) recording activity and comparing such activity to budgeted amounts; (vi) reconciling all expenditures; (vii) remitting excess funds to the Authority and requesting needed funds from the Authority; (viii) processing payroll for personnel employed in the discharge of this Agreement and in compliance with taxing authorities and other reporting requirements associated with payroll; and (ix) reports detailed in Exhibit I. 485
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(d) By the 15th day of each month, the Manager will furnish the Authority with an itemized list of all delinquent accounts, including general operating accounts, as of the tenth day of the same month.
(e) The Manager shall submit to the Authority’s Finance Director those reports set forth in Exhibit H on the periodic basis set forth in Exhibit H. Reports designated as “monthly” on Exhibit H shall be submitted by the 15th day of each month; reports designated as “quarterly” shall be submitted by the 15th day of every third month, and reports designated as “annual” shall be submitted at the end of the fiscal year or the end of the calendar year as set forth on Exhibit H. In explanation but not limitation of the foregoing, the monthly reports to be submitted include: a statement of receipts and disbursements during the previous month; a schedule of accounts receivable and payable; reconciled bank statements for all accounts maintained by the Manager on behalf of the Authority reflecting disbursements and deposit amounts as of the end of the previous month; a copy of general ledger account transactions and monthly aggregate utility consumption by utility; and such other matters relative to the management, operation, and maintenance of the Properties including actual income and expense balances compared to budgeted or expected results as required by the Finance Director of Authority. Additional reports may be requested throughout the year as the Authority deems necessary.
(f) On the 15th day of each month, the Manager will submit to the Authority the reports listed on Exhibit I attached hereto and incorporated herein by reference, to assist the Authority in determining compliance with that certain Stipulation for Entry of Judgment in case number Indio 51124 as consolidated with case numbers Indio 51143 and 51159 which has been provided to the Manager. (g) Confidentiality. All books, records, operating statements, leases, and other material or information relevant to the operation or financial nature of the Properties shall be maintained in the strictest confidence and shall not be available to any employee or salesperson of any affiliate of Manager, nor to any other party without the prior written consent of the Authority or under compulsion of law (e.g., subpoena).

20. Fidelity Bond. The Manager will place the Properties on a master fidelity bond, which provides blanket coverage equal to two months gross rent potential. The bond will provide coverage for all principals and agents of the Manager and all persons who participate directly or indirectly in the management of the Properties and their assets, accounts and records. The premiums for such a bond will be paid and borne by the Manager. Specifically, coverage for the Manager, including all applicable persons in the Manager's employ, will be paid by the Manager, and coverage for the Authority’s personnel, if applicable, will be paid by the Authority. Said fidelity bond shall be issued by a company which is reasonably acceptable to the Authority, and the Manager shall deliver to the Authority a copy of said fidelity bond upon execution by the Authority of this Agreement.
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21. Bids, Discounts, Rebates or Commissions. The Authority and the Manager agree to adhere to the City of Palm Desert’s purchasing policy procedures set for the in Ordinance No. 1392 of the City of Palm Desert, and any amendments thereto, when obtaining contract materials, supplies and services for the Properties and to secure and credit to the Properties all discounts, rebates and commissions obtainable with respect to purchases, service contracts and all other transactions on behalf of the Properties. The Manager agrees that no goods and services shall be purchased from individuals, related companies and companies having a financial or pecuniary interest (a "conflict-of-interest") with the Manager. All vendor accounts shall be opened in the Authority's name, upon prior written approval of the Authority.

The Manager will develop detailed scopes of work, materials, supplies, equipment and contractual services for any work or repair the cost of which may exceed $15,000 for a single Unit or project. The Manager shall comply with the procedures set forth in Ordinance No. 1392 of the City of Palm Desert, and any amendments thereto, in connection with the purchase of any materials, supplies, equipment and contractual services to be paid for by the Authority under this Agreement.

Copies of all required bids and documentation of all other written or verbal cost comparisons made by the Manager shall be made part of the records of the Properties and shall be retained for three years from the date the work was completed or as required by the City of Palm Desert’s Retention Policy. This documentation shall be subject to inspection by the Authority, or its designee and the Manager agrees to submit such documentation upon request. Further, the Manager shall annually submit a report to the Authority describing the outcome of all bidding procedures, which report shall include the names of all bidders and the amount of their bids and shall indicate to which bidder the contract was awarded.

The Manager agrees to make available to the Authority, when requested, all records of the Manager, which relate to the provision of goods or services to the Authority whenever funds from the Properties have been used to pay for such goods and/or services (other than management services).

22. Resident Services Program. The Manager will be responsible for carrying out any resident retention or social services program described in the Administrative Plan and any other program or service that may become available that are in the best interest of the residents or community to promote public health, public safety or tenant welfare.

23. Resident - Management Relations. The Manager will establish quarterly meetings with tenants at Properties containing 150 or more units to encourage and promote communication and tenants’ initiatives.

24. Defense, Indemnity and Hold Harmless Agreement. Except for losses arising out of Manager’s sole negligence, gross negligence, or willful misconduct, or covered by insurance required by section 25, the Manager and Authority agree that the Manager , and their respective officials, officers, employees, and agents including the 487
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Manager (collectively “Indemnitees”) should, to the extent permitted by law, be fully protected against any loss, injury, damage, complaint, claim, lawsuit, cost, expense, attorneys fees, litigation costs, defense costs, court costs or any other cost arising out of or in any way related to the Manager’s performance of this Agreement. Accordingly, the provisions of this defense, indemnity and hold harmless provision are intended by the Parties to be interpreted and construed to provide the fullest protection possible under the law to the Indemnitees. The Manager shall be named as an additional insured under Authority’s comprehensive liability policy covering the Properties. All obligations under this provision shall be paid by the Authority as they are incurred by the Manager. The Authority shall defend the Manager, and bear the expense thereof, with lawyers approved by the Manager, such approval which shall not be unreasonably withheld.

25. Professional Services Insurance Requirements.
(a) The Manager shall not commence work under this Agreement until it has provided evidence satisfactory to the Authority that it has secured all insurance required under this Section. In addition, the Manager shall not allow any subcontractor to commence work on any subcontract until it has provided evidence satisfactory to the Authority that the subcontractor has secured all insurance required under this section. (b) Automobile Liability Insurance. The Manager shall maintain automobile liability insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Manager arising out of or in connection with Work to be performed under this Agreement, including $1,000,000 combined single limit for each accident including coverage for any owned, hired, nonowned or rented vehicles. (c) Professional Liability (Errors & Omissions). The Manager shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of $2,000,000 per claim and policy shall not exclude discrimination, fair housing, American with Disabilities act, and sexual molestation violations. Any policy inception date, continuity date, or retroactive date must be before the effective date of this Agreement and the Manager agrees to maintain continuous coverage through a period no less than three years after completion of the services required by this Agreement. Covered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.). If coverage is written on a claims-made basis, the retroactive date shall precede the effective date of the initial Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement. (d) Workers’ Compensation/Employers' Liability Insurance. The Manager shall procure and maintain Workers' Compensation insurance complying with California workers’ compensation laws, including statutory limits for workers’ 488
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compensation and an Employer’s liability limit of $1,000,000 per accident or disease.

Unless otherwise agreed, this policy shall be endorsed to waive any right of subrogation as respects the Authority, the Successor Agency to the Palm Desert Redevelopment Agency, the City of Palm Desert, and their respective officials, officers, employees, volunteers, and agents.
(e) Fidelity Coverage. Consultant shall provide evidence of fidelity coverage on a blanket fidelity bond or other acceptable form. Limits shall be no less than $1,000,000 per occurrence.
(f) Cyber Liability Insurance. Consultant shall procure and maintain Cyber Liability insurance with limits of $1,000,000 per occurrence/loss, which shall include the following coverage:
i. Liability arising from the theft, dissemination and/or use of confidential or personally identifiable information; including credit monitoring and regulatory fines arising from such theft, dissemination, or use of the confidential information.
ii. Network security liability arising from the unauthorized use of, access to, or tampering with computer systems.
iii. Liability arising from the failure of technology products (software) required under the contract for consultant to properly perform the services intended. iv. Electronic Media Liability arising from personal injury, plagiarism or misappropriation of ideas, domain name infringement or improper deep-linking or framing, and infringement or violation of intellectual property rights. v. Liability arising from the failure to render professional services. (g) Employment Practices Liability. The Manager shall maintain employment practices liability insurance in the minimum amount of $1,000,000 per occurrence/$2,000,000 general aggregate.
(h) Evidence of Insurance. The Manager shall provide evidence of the insurance required herein, satisfactory to the Authority, consisting of certificate(s) of insurance evidencing all of the coverages required by this Agreement. In addition, the Manager agrees to provide complete copies of all policies of insurance to the Authority annually or upon request. The Certificate(s) shall reflect that the insurer will provide 30- days notice of any cancellation or modification of coverage to the Additional Insureds, per the terms of the policy. The Manager agrees to require its insurer to modify the certificates to delete any exculpatory wording stating that failure of the insurer to mail written notice of cancellation imposes no obligation, and to delete the word "endeavor" with regard to any notice provisions. All insurance coverage and limits provided pursuant to this Agreement shall apply to the full extent of the policies involved, available or applicable.

Nothing contained in this Agreement or any other agreement relating to the Authority or its operations shall limit the application of such insurance coverage. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf and are to be provided on standard ISO forms noted above. All endorsements are to be received and approved by the Risk Manager prior to the commencement of work. 489
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(h) No Limitation on other Insurance. Requirements of specific coverage features or limits contained in this Section 25 are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only and is not intended by any Party to be all inclusive, or to the exclusion of other coverage, or a waiver of any type.
(i) Subrogation. All general or auto liability insurance coverage provided pursuant to this Agreement, or any other agreements pertaining to the performance of this Agreement, shall not prohibit the Manager, its employees, or agents, from waiving the right of subrogation prior to a loss. The Manager hereby waives all rights of subrogation against the Authority, the Successor Agency to the Palm Desert Redevelopment Agency, and the City of Palm Desert.
(j) Authority's Right to Purchase Replacement Insurance. In the event any policy of insurance required under this Agreement does not comply with these requirements or is canceled and not replaced, the Authority has the right but not the duty to obtain the insurance it deems necessary and any premium paid by the Authority will be promptly reimbursed by the Manager.
(k) Proof of Insurance. The Manager shall provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with other policies providing at least the same coverage. Such proof will be furnished not more than 72 hours after the expiration of the coverage(s). Any actual or alleged failure on the part of the Authority or any other of the Additional Insureds under these requirements to request or obtain proof of insurance required under this Agreement in no way waives any right or remedy of the Authority or any other of the Additional Insureds, in this or any other regard.
(l) Subcontractor Proof of Insurance.
(i) Subcontractors Performing Recurring Work or Work in Excess of $2,500. The Manager shall require all subcontractors or other parties which provide (i) recurring services to the Properties, or (ii) services in excess of $2,500 in a six month Period (a "Major Subcontractor") to the Properties to provide the same minimum insurance coverage required of the Manager and Workers Compensation insurance to conform with the requirements of this section. The Manager agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. The Manager agrees that upon request, all agreements with Major Subcontractor, or others with whom the Manager contracts with on behalf of the Authority, will be submitted to the Authority for review. For purposes of this Section a contractor or party hired for the work shall be deemed to be performing "recurring work" in the event that contractor or party hired performs in excess of a single segregated or discrete project in any six-month period. The Manager agrees to obtain certificates evidencing such coverage and to make reasonable efforts to ensure 490
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that such coverage is provided as required herein. Failure of the Authority to request copies of such agreements will not impose any liability on or constitute waiver by the Authority of its rights hereunder. The Manager agrees to require that no contract used by any Major Subcontractor, or contracts the Manager enters into on behalf of the Authority, will reserve the right to charge back to the Authority the cost of insurance required by this Agreement.
(ii) Subcontractors Performing Nonrecurring Work or Work Less Than or Equal to $2,500. The Manager shall require all subcontractors or other parties which provide (i) nonrecurring services to the Properties, and (ii) services in an amount not to exceed $2,500 in a six-month Period (a "Nonrecurring Subcontractor") to provide Commercial General Liability insurance in the amounts set forth below and Workers Compensation insurance to conform with the requirements of this section. For purposes of Section 25, a contractor or party hired for the work shall be deemed to be providing "nonrecurring work," so long as that contractor or party hired for the work does not perform more than a single segregated or discrete project in a six-month period. In the event a Nonrecurring Subcontractor performs more than a single discrete project in a six-month period or work exceeding $2,500 in value, that Nonrecurring Subcontractor shall lose its status as a “Nonrecurring Subcontractor” and shall be automatically deemed a “Major Subcontractor”. The liability limits for Nonrecurring Subcontractors shall provide no less than $500,000 per occurrence for all coverages and $500,000 in the general aggregate.

The Manager agrees to verify such coverage and make reasonable efforts to ensure that such coverage is provided as required herein. The Manager agrees to require that no contract used by any Nonrecurring Subcontractor, or contracts the Manager enters into on behalf of the Authority, will reserve the right to charge back to the Authority the cost of insurance required by this Agreement. The Manager agrees that upon request, all agreements with Nonrecurring Subcontractors, or others with whom the Manager contracts on behalf of the Authority, will be submitted to the Authority for review. Failure of the Authority to request copies of such agreements will not impose any liability on the Authority nor constitute a waiver of the rights of the Authority hereunder.

26. Compliance With Governmental Orders. The Manager will take such action as may be necessary to comply promptly with any and all governmental orders or other requirements affecting the Properties, whether imposed by federal, state, county or municipal authority. Notwithstanding the foregoing, the Manager shall take no such action so long as the Authority is contesting, or has affirmed its intention to contest, any such order or requirement. The Manager will notify the Authority in writing of all notices of such orders or other requirements as soon as possible from the time of their receipt.

27. Manager's Compensation. The Manager will be compensated for its services under this Agreement by monthly management fees. Such fees will be payable on the first day of each month, in arrears, for the services provided in the prior month for the term of this Agreement. For the purpose of this Section, the term ‘occupied units’ shall include those Units which are currently leased, on notice to vacate, or temporarily vacant due to a move out. For the avoidance of doubt ‘occupied units’ shall not include 491
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units occupied by the Manager’s management staff pursuant to Section 3(f). The Management Fee (“Fee”) shall be calculated monthly according to the following schedule:
(a) In the case of occupied units, each such monthly fee shall be in the amount of $63.00 per Unit per month commencing on July 1, 2025, and an increase of 3% commencing on July 1, 2027, and biannually every January 1st thereafter for the remainder of the Term of this Agreement including contract extensions, if any); except as follows:
(i) For Units where a Notice of Termination of Tenancy (“Notice”) was provided by the tenant as required (30 calendar day notice) and a Unit remains vacant for 30 calendar days or more, the Manager will not be entitled to the monthly fee, except in those circumstances where the vacancy is the result of the Authority’s leasing process for affordable Units.
(ii) For Units where no Notice was given, the tenant chose to ‘quit’ or the tenant skipped, and a Unit remains vacant for 45 calendar days or more, the Manager will not be entitled to the monthly fee.
(b) In the case of unoccupied Units (except those Units described in Section 27(c-e) below), each such monthly fee shall be as follows:
(i) $63.00 per Unit per month for the first four months for Units that have been determined, in the Authority’s sole and absolute discretion, to be ‘unrentable’ or ‘down’ due to physical condition or damage. Unless otherwise determined by the Authority, the Manager is expected to repair said Units within the four months. If the Manager fails to repair units within the given time, no fee will be paid until the unit is available for occupancy.
(ii) No Fee will be paid for Units that are unrentable or down due to action or inaction by the Manager.
(c) In the case of Units that are newly constructed or newly renovated which will be added to Exhibit A, the Fee shall be $10 per Unit per month commencing at such time as the construction/renovation has reached 90% completion as determined by the contractor’s billing until Certificate of Occupancy, in the case of new Units, or Certificate of Completion, in the case of renovated Units, is issued. (d) In the case of Units which were ‘down’, as described in Section 27(b)(i) and direction has been given to the Manager by the Authority not to repair said Units, commencing with the fifth month, the Fee shall be reduced to $20 per Unit per month until the Manager is no longer responsible for said Units. (e) Except as otherwise expressly provided in this Agreement, all employees not identified in Exhibit F and other overhead expenses of the Manager (including but not limited to costs of office supplies and equipment, postage, 492
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transportation, travel expenses for managerial personnel and telephone services) will be borne by the Manager. All services for management, accounting, and reporting, with exception of the Authority's requested annual audit, shall be borne by the Manager.

In addition to the Management Fee, the site employees for the Properties shall be paid based on the Employee Salaries listed on Exhibit F attached hereto and incorporated herein by this reference.

28. Termination.
(a) Authority Termination for Convenience. Authority may terminate this Agreement for convenience (a “Termination for Convenience”) by giving not less than 180 days written notice of termination. The notice of termination shall specify that the termination is for the convenience of the Authority. Upon a Termination for Convenience, the Authority shall continue to pay the Manager for all work performed up to the date of the Termination for Convenience. The Manager shall be compensated only for those services that have been satisfactorily rendered to the Authority until the date of the Termination for Convenience, and the Manager shall be entitled to no further compensation. Authority shall not be liable for any post-termination costs, lost profits, or other alleged damages resulting from a Termination for Convenience. (b) Termination For Cause: Either Party may terminate this Agreement with cause (a “Termination for Cause”) by giving written notice to the other Party not less than 90 days prior to the date of Termination for Cause. Any such written notice for cause shall specify the default or cause for termination. If the default or cause for termination specified has not been cured within 21 days of receipt of the notice, this Agreement shall terminate on the date of termination set forth in the notice. Upon termination, the Manager shall be compensated only for those services that have been satisfactorily rendered to the Authority until the date of the Termination for Cause, and the Manager shall be entitled to no further compensation.
(c) Termination at End of Term/Extension: At least ninety (90) days prior to the automatic termination of this Agreement (the “Negotiation Period”), and unless either Party has given timely notice under this Section prior thereto, the Parties shall initiate negotiations for a new agreement for Property Management Services and use best efforts and engage in good faith negotiations to finalize such agreement and obtain final approval thereof prior to the automatic termination of this Agreement. In the event such good faith efforts are not completed before the expiration of the Term, or in the event either Party gives notice to the other during the Negotiation Period of its decision not to enter into a further term, this Agreement may be extended for not more than ninety (90) days after the giving of such notice or June 30, 2030, whichever is later, upon the written authorization of the Executive Director of the Authority. Good faith negotiations may include an extension of this Agreement up to an additional forty-eight (48) months provided that any such extension shall require the authorization of the Authority Board and shall be in writing, as an Amendment to this Agreement, signed by both Parties. 493
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Nothing herein shall prevent the Housing Authority Board from electing to issue a Request for Proposal for Property Management Services in lieu of negotiating with Manager. (d) Bankruptcy. In the event that a petition in bankruptcy is filed by either of the Parties, or in the event that either Party makes an assignment for the benefit of creditors to take advantage of any insolvency act, this Agreement shall automatically terminate.
(e) Sale of Properties. This Agreement shall automatically terminate, upon the sale of the Properties, or as to any Property, on the sale of such Property, except that, this provision shall not apply in the event of a sale, transfer, or re-conveyance by and between the former Palm Desert Redevelopment Agency, the Authority, the Successor Agency to the Palm Desert Redevelopment Agency, the City of Palm Desert, and/or any related or successor agency or entity.
(f) Addition of Properties. In the event the Authority adds a property to its operations portfolio, the Manager and Authority’s designee may agree in writing to amend Exhibit A for the inclusion of said property. Such amendment shall be subject to the terms and conditions herein from the effective date of the amendment. (g) Exchange of Documents. Upon termination of this Agreement, the Manager will submit to the Authority any financial statements requested by the Authority and, after the Parties have accounted to each other with respect to all matters outstanding as of the date of termination, the Authority will furnish the Manager security in form and principal amount satisfactory to the Manager against any obligations or liabilities which the Manager may properly have incurred on behalf of the Authority hereunder. All of the cash trust accounts, investments, equipment and records for the Properties will be turned over to the Authority within 30 days of the date this Agreement is terminated. The Parties hereby covenant and agree that the Authority shall own the books and records for the Properties and that the Manager shall hold the books and records for the Properties for the benefit of the Authority for an agreed upon period at the time of termination.

29. Manager's Indemnification. Subject to the Manager's indemnification obligations hereunder as set forth in Section 24, the Parties understand and agree:
(a) That the Authority has assumed and will maintain its responsibility and obligation through the Term of this Agreement for the finances and the financial marketability of the Properties; and
(b) That the Manager shall have no obligation, responsibility or liability to fund authorized costs, expenses, or accounts other than those funds generated by the Properties themselves or provided to the Properties or to the Manager by the Authority.

In accordance with the foregoing, the Authority agrees that the Manager shall have the right at all times to withdraw payment of its compensation, as provided for under Section 27 of this Agreement, from the General Operating account or accounts, immediately when such compensation is due and without regard to other property obligations or expenses 494
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conditioned on the Manager having satisfactorily discharged all duties and responsibilities under this Agreement. Moreover, the Authority hereby indemnifies the Manager and agrees to hold it harmless with respect to costs, expenses, accounts, liabilities and obligations of the Properties during the Term of this Agreement and further agrees to guarantee to the Manager the payment of its compensation under Section 27 of this Agreement during the Term of this Agreement to the extent that the Operating and Maintenance Account for the Properties are insufficiently funded for this purpose. Failure of the Authority at any time to abide by and to fulfill the foregoing shall be a breach of this Agreement entitling the Manager to obtain from the Authority, upon demand, full payment of all compensation owed to the Manager through the date of such breach.

30. Prohibition Against Assignment and Subcontracting Management Services.

The Manager shall not assign this Agreement or subcontract any management or other services, without the express prior written consent of the Authority.

31. Notices. Except as otherwise provided by law, any and all notices or other communications required or permitted by this Agreement or by law to be served on or given to either Party to this Agreement by the other Party shall be given in writing. All such notices or other communications shall be deemed duly served and given when personally delivered to the Party to whom they are so directed, or in lieu of personal service when deposited in the United States mail, first-class postage prepaid, addressed to the respective Party as set forth below:

To the Authority:

Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attention: Housing Manager
To the Manager:

National Community Renaissance
9692 Haven Avenue, Suite 100
Rancho Cucamonga, CA 91730
Attention: Michael Ruane, President
Either Party may change its address for the purpose of this Section 31 by giving written notice of the change to the other Party in the manner provided in this Section.

32. General Provisions.
(a) Binding on Successors and Assigns. At all times, this Agreement will inure to the benefit of and constitute a binding obligation upon the Parties and their respective successors and assigns.
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(b) Entire Agreement and Allowable Changes. This Agreement (including the Addendum) constitutes the entire Agreement between the Authority and the Manager with respect to the management and operation of the Properties, and all prior agreements between the Authority and the Manager regarding the subject matter of this Agreement (including the Addendum) are hereby superseded and replaced.

Changes hereto must be made by supplemental written agreement signed by the Parties.

Exhibits hereto may be amended as necessary by the written agreement of the Parties. (c) Attorneys' Fees. If any litigation is commenced between the Parties concerning the Properties, this Agreement, or the rights and duties of either Party with respect to this Agreement, the Party prevailing in the litigation shall be entitled, in addition to any other relief that may be granted in the litigation, to reasonable attorneys' fees and costs.
(d) Ambiguities. Each Party and their counsel have participated fully in the drafting of this Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not apply in interpreting this Agreement. (e) Severability of Agreement. If a court or an arbitrator of competent jurisdiction holds any provision of this Agreement to be illegal, unenforceable or invalid in whole or in part for any reason, the validity and enforceability of the remaining provisions, or portions of them will not be affected.
(f) Approval by Authority. Whenever a provision of this Agreement requires the delivery of documents or reports, notifications, determinations, reimbursements or requests for funding, review, authorization or approval of the Authority, such approval may be given by the Executive Director of the Authority or his/her designee, unless Authority Board action is specified in this Agreement. (g) Word Usage. Unless the context clearly requires otherwise, (a) the plural and singular shall each be deemed to include the other; (b) the masculine, feminine, and neuter genders shall each be deemed to include the others; (c) "shall," "will," or "agrees" are mandatory, and "may" is permissive; (d) "or" is not exclusive; and (e) "includes" and "including" are not limiting.
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IN WITNESS THEREOF, the Parties have executed this Agreement on the date first above written.

AUTHORITY:

PALM DESERT HOUSING AUTHORITY,
a public body, corporate and politic
By: _____________________________
Jan Harnik, Chairperson
ATTEST:
______________________________,
Anthony J. Mejia, Secretary
APPROVED AS TO FORM:
__________________________________
Special Counsel
MANAGER:

NATIONAL COMMUNITY
RENAISSANCE, a California Nonprofit
Corporation
By: _________________________
Title: _________________________
By: __________________________
Title: _________________________
497

EXHIBIT A
(PROPERTIES)

PALM DESERT HOUSING AUTHORITY

AFFORDABLE HOUSING UNITS
498

EXHIBIT B
[intentionally omitted]
499

EXHIBIT C

MANAGEMENT OFFICES
Location of Management Offices
One Quail Place
(located in management office)
Las Serenas
(located in management office)
Catalina Gardens
(located in management office)
Desert Pointe
(located in management office)
California Villas
(located in management office)
Laguna Palms
(located in management office)
Carlos Ortega Villas
(located in management office)
Locations Managed
One Quail Place
Las Serenas and La Rocca Villas
Catalina Gardens, The Pueblos, Candlewood Apartments, and Sagecrest Senior Desert Pointe, Taos Palms and Neighbors Apartments
California Villas
Carlos Ortega Villas
Laguna Palms and Palm Village Apartments
500

EXHIBIT D

DEPOSIT ACCOUNTS
The following security deposit accounts shall be maintained by the Manager for the benefit of the Authority:

TO BE PROVIDED BY THE CITY’S FINANCE DEPARTEMNT.

The following operating deposit accounts shall be maintained by the Manager for the benefit of the Authority:

TO BE PROVIDED BY THE CITY’S FINANCE DEPARTEMNT.
501

EXHIBIT E

NON-COLLUSIVE AFFIDAVIT FORM

AFFIDAVIT
State of California )
)ss.

County of Riverside )
___________________________, being first duly sworn, deposes and says:

That he is ___________________________, the party making the foregoing proposal or bid, that such proposal or bid is genuine and not collusive or sham; that said bidder has not colluded, conspired, connived or agreed, directly or indirectly, sought by agreement or collusion, or communication or conference, with any person, to fix the bid price or affiant, or of any other bidder or to fix any overhead profit or cost element of said bid price, or that of any other bidder or to secure any advantage against the _________________________________________ or any person interested in the proposed contract, and that all statements in said proposal or bid are true.

Signature of Person Making Affidavit:
____________________________________
Subscribed and sworn to me this _______ day of __________________, 20___ My commission expires __________________, 20___
Notary Public Signature:_______________________
Official Seal:
502

EXHIBIT F

PROPERTY STAFFING & SALARY RANGES
To be provided annually with the property budgets.
503

EXHIBIT G

PERFORMANCE CRITERIA

1. PROPERTY PORTFOLIO NET OPERATING INCOME COMPARISON
a. Current Budget Year: July - June
b. Budgeted vs. Actual = Variance
c. Vacancy Rate Analysis

2. RESPONSE TO RESIDENT COMPLAINTS
a. Response to service requests/turnaround time
b. Response to resident complaints and concerns - monthly meetings c. Response to resident complaints and concerns at site office

3. COMPLIANCE WITH AGREEMENT
a. Define any notable gross disparities from the Agreement on the following:
i. Report preparation and submittal promptness
ii. Responsiveness to Authority requests
iii. Method of accounting

4. CAPITAL IMPROVEMENTS SCHEDULE
a. Deferred Capital Improvement Schedule
b. Capital Improvement Program
c. Maintenance and general appearance of properties

5. OPERATIONS
a. Operational procedures to be audited:
i. Compliance with Stipulation
ii. Compliance with all laws including those related to property management, Fair Housing, and housing authorities
iii. Recertification
iv. Internal controls
v. Contract controls

6. ACCOUNTING AUDIT
a. Review of Annual Audit Findings
b. Quarterly Audits

7. AFFORDABLE HOUSING PROGRAM
a. Housing Authority goals
b. Management Company goals
504
Exhibit G

c. Program implementation
d. Compliance with local, state, and Federal regulations e. Tenant Household Income Analysis

8. RESIDENT RELATIONS
a. Review summary responses of any resident surveys
b. Establishment of Tenant Exit Survey

9. GENERAL
a. General overview of previous operational year
505

EXHIBIT H

LIST OF FINANCIAL REPORTS REQUIRED
Monthly Reports

1. Payroll register and invoices (may be submitted after every payroll or monthly).

2. Management Fee Report that includes Vacancies/Current Rental Activity submitted with invoice.

3. Disbursement/Expense Journals for each check run.

4. General Ledgers for all Properties.

5. Check Registers for all Properties.

6. Monthly Bank Reconciliations with Outstanding Check Registers.

7. Balance Sheets and/or Trial Balances for all Properties.

8. Rent Rolls for all Properties.

9. Delinquent A/R for all Properties.

10. Prepaid Listing for all Properties.

11. Income Statements with Monthly Budget Variance as well as Annual Variance.

12. Monthly Adjusting Journals.

13. Cash Receipts Journals.

Quarterly Reports

1. Security Deposit List for all Properties (If not included in the monthly rent roll)

2. Status Report on Items over 90 days (Requests to the Board for write offs, etc.)
506
Exhibit H

Annual Reports Required
At Fiscal Year End:

1. Schedule of Accounts Payable

2. Schedule of Accounts Receivable

3. Inventory of all Agency and Authority personal property and readily removable fixtures attached to the Properties.

4. Preliminary sets of Monthly closing reports, when requested.

5. Once audited, Final Set of all June Closing Reports

6. Schedule of Security Deposits Matching the Cash Held

7. The Report described in Section 21
At Calendar Year End:

1. Copies of the transmittals for Federal Reporting Requirements for W-2's and 1099's
Analytical Reports:

1. Upon request of the Authority, reports analyzing various information required in the above Financial Reports (May include summaries of all properties and/or multi-year information).
507

EXHIBIT I
Leasing Reports:

1. Monthly Occupancy and Average Rent Statement

2. Monthly Net Operating Income Statement

3. Replacement Lists maintained continuously due at least once annually on June 30.

4. Resident Demographics Report

5. Service Request and Serious Complaints

6. Other reports as requested or as necessary to perform the requirements of the Agreement.
508

EXHIBIT J
On-going services requiring written cost estimates will adhere to the City of Palm Desert’s purchasing policy procedures set for the in Ordinance No. 1392 of the City of Palm Desert, and any amendments thereto as required in Section 21 of the Management Agreement as well as for services listed below:

1. Landscape Contracts
a. Monthly Services
b. Annual Services including tree trimming, overseeding, and perennial flowers

2. Pest Control

3. Pool Services

4. Replacement Carpet and Vinyl

5. Laundry Services

7. Air Conditioning/Heating Unit Servicing, Cleaning, and Replacement Services

8. Carpet Cleaning

9. Flooring and Housekeeping Cleaning Services

10. Environmental Testing and Cleaning Services

11. Moving Company Services

12. Golf Cart Repair and Maintenance Services

13. Courtesy Patrol Services

14. Towing Services

15. Solar Maintenance Services

16. Elevator Maintenance Services
509

EXHIBIT K

NON-EXCLUSIVE LIST OF REQUIRED AND PERMISSIVE BACKGROUND CHECK

INFORMATION BY TYPE OF FUNDING
Source of
Information
Information Federal Funds Involved Federal Funds Not Involved Investigation Disclosure &
Consent
Investigation Disclosure &
Consent
Law
Enforcement
Agencies
Illegal Drug Use Required Housing
Authority must
require &
applicant must
consent
May obtain Must notify
applicant, if
basis for denial
Drug use that Interferes
with Health & Safety of
Others
Required Housing
Authority must
require &
applicant must
consent
May obtain Must notify
applicant, if
basis for denial
Sex Offenses Required Housing
Authority must
require &
applicant must
consent
May obtain Must notify
applicant, if
basis for denial
“Serious” crimes
 Murder,
mayhem, rape,
burglary
 Hate crimes
 Offenses such as
firearms,
explosives
 Felonies
involving drugs,
alcohol
 Domestic
Violence
Required Housing
Authority must
require &
applicant must
consent
May obtain Must notify
applicant, if
basis for denial
Juvenile Records Prohibited N/A Prohibited N/A
Arrests Not Resulting in
Conviction
Prohibited N/A Prohibited N/A
State /
Federal
Government
Social Security Numbers Required Housing
Authority must
require &
applicant must
consent
May obtain Application
must indicate
disclosure is
voluntary
Citizenship / Residency Required Housing
Authority must
require &
Prohibited N/A. But if
Housing
Authority has
510
Exhibit K

applicant must
consent
unsolicited
evidence that
applicant is
undocumented,
it must reject
the application.

Income / Family
composition & tax info,
to verify eligibility
Required Housing
Authority must
require &
applicant must
consent
Required Housing
Authority must
require &
applicant must
consent.

Credit
Agencies
Investigative Consumer
Report
 Credit History
 Character
 Reputation
 Personal
Characteristics
 Mode of Living
May Obtain Housing
Authority must
notify
applicant
May Obtain Housing
Authority must
notify applicant
 Convictions
 Civil Actions
 Tax Liens
 Outstanding
Judgements
May Obtain
but only if
credit
agency has
verified
information
with 30 days
of disclosure
Housing
Authority must
notify
applicant
May Obtain
but only if
credit
agency has
verified
information
with 30 days
of disclosure
Housing
Authority must
notify applicant
 Bankruptcies
more than 10
years prior
 Civil judgement
more than 7
years old
Prohibited N/A Prohibited N/A
Public
Records
Obtained
from Other
Sources;
Interviews
with
Neighbors,
Friends &
Associates
Relevant background
information
 Creditworthiness
 Credit Standing
 Credit Capacity
 Civil Actions
 Convictions
 Tax Liens
 Outstanding
Judgements
 Character
May Obtain Must notify
applicant, if
basis for
denial.

Consent
recommended.

May Obtain Must notify
applicant, if
basis for denial.

Consent
recommended.
511
Exhibit K

 General
Reputation
 Personal
Characteristics
 Mode of Living
In addition to credit reporting agencies, background check information may be obtained from Westlaw, Lexis, DataQuick, Merlin, Choice Point, and similar reputable resources.

SAMPLE CONSENT BY APPLICANT
“I understand that the Housing Authority or its agent will perform a background check as a part of determining eligibility, including but not limited to obtaining information concerning my employment, credit history, benefits, income, assets, and criminal history, and by my signature below, I hereby authorize the Housing Authority or its agent to do so.”“I certify that the statements on this application are true and complete to the best of my knowledge and belief and I understand that they will be verified. I understand that any false statements made on this application or failure to make any required disclosures may cause me to be disqualified from initial or continuing eligibility for housing assistance and may result in eviction. I further understand that I am under a continuing obligation to inform the Housing Authority or its agent of any changes to any of the information provided in this Application, and that failure to promptly inform the Housing Authority or its agent of any changes may cause me to be disqualified from initial or continuing eligibility for housing assistance and may result in eviction.”
512
DRAFT for Discussion

MANAGEMENT TRANSITION ADDENDUM TO

AGREEMENT FOR PROPERTY MANAGEMENT SERVICES

THIS ADDENDUM TO AGREEMENT FOR PROPERTY MANAGEMENT SERVICES (this “Addendum”), dated as of February 27, 2025, is attached to and made part of the foregoing Agreement for Property Management Services (the “Agreement”) entered into as of even date herewith by and between the PALM DESERT HOUSING AUTHORITY, a public body, corporate and politic (the “Authority” or “PDHA”), and National Community Renaissance, LLC, a California Nonprofit Corporation (the “National CORE”), and supplements the Agreement as follows:

1. To enable a smooth transition of property management responsibilities from current provider Falkenberg/Gilliam and Associates (“Current Manager”), the current property manager, to National CORE, the Parties hereby enter into this Addendum to allow National CORE to complete the following tasks prior to the Effective Date of the Agreement (i.e., July 1, 2025), during the period beginning the date of execution of this Addendum, and ending June 30, 2025 (collectively, the “Transition Period”):
a. Personnel Evaluation: Meet and evaluate all the current office and maintenance staff for the Properties (as defined in the Agreement); gather all necessary information regarding existing issues at the Properties requiring the attention of National CORE; conduct background checks of Current Manager staff who will be seeking employment with National CORE at the Properties, in accordance with state and federal law; and, at the discretion of National CORE and with the approval of PDHA pursuant to Section 16(a) of the Agreement, hire any current provider employees currently working at the Properties to serve as National CORE employees.
b. Cross Training: Conduct thorough training of all Current Manager employees who will be hired as National CORE employees on all applicable National CORE policies and procedures, including without limitation on the use of software tools and work order tablets.
c. Assistant Regional Supervisor: Allow the National CORE Regional Supervisor, along with the National CORE Assistant Regional Supervisor, or other National CORE management staff in charge of overseeing National CORE operations at the Properties, to walk all Properties, and meet with all PDHA staff members working onsite at the Properties.
d. Meetings: Participate in weekly property management meetings with PDHA and Current Manager, and monthly City of Palm Desert Housing Commission meetings.
e. Deep Knowledge: Familiarize the National CORE Regional Supervisor and National CORE Assistant Regional Supervisor on all current and upcoming projects and maintenance items for each Property, and all resident-related issues (including, without limitation, legal suits brought by tenants or former tenants) that are in process.
513
DRAFT for Discussion

f. Staff Onboarding: Onboard all staff members through National CORE human resource programs, including, without limitation, with respect to payroll, benefits, health and dental insurance programs.
g. PDHA Systems: Set up PDHA management and operations systems, including without limitation with respect to accounting, finance, occupancy, resident relations, maintenance, computer systems, and tablet training for all maintenance staff.

2. As compensation for National CORE’s work during the Transition Period, the Authority shall, in total, pay the sum of Ten and No/100 Dollars ($10).

3. If National CORE or any of its agents, employees, consultants, contractors or subcontractors enter the Properties during the Transition Period, then such entry shall be subject to all of National CORE’s obligations regarding indemnity and insurance under the Agreement. Anything herein to the contrary notwithstanding, neither National CORE nor any of its approved contractors shall be permitted to access the Properties, or any part thereof, during the Transition Period unless and until National CORE has provided to PDHA the necessary insurance certificate(s) evidencing that National CORE has procured and is maintaining the insurance policies and coverages required to be maintained by National CORE pursuant to the terms of this Addendum.
[Signature Page to Follow]
514
DRAFT for Discussion

THIS ADDENDUM was entered the 27th day of February, 2025.

Authority:

PALM DESERT HOUSING AUTHORITY,
a public body, corporate and politic
By: _____________________________,
Jan Harnik, Chairperson
ATTEST:
_______________________________,
Anthony J. Mejia, Secretary
APPROVED AS TO FORM:
_______________________________
Special Counsel
Manager:

NATIONAL COMMUNITY
RENAISSANCE, a California Nonprofit
Corporation
By: _____________________________
Title: ___________________________
By: ____________________________
Title: ___________________________
515
516

CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 27, 2025
PREPARED BY: Cesar Lopez, Associate Engineer
Richard D. Cannone, AICP, Director of Development Services SUBJECT: ALPHA HOLDINGS - ACCEPT PUBLIC IMPROVEMENTS AND RELEASE

RELATED BONDS, AND ACCEPT A MAINTENANCE BOND
RECOMMENDATION:

1. Accept public improvements for Alpha Holdings.

2. Release the following bonds:
a Faithful Performance Bond in the amount of $64,723.00 b Labor and Materials Bond in the amount of $32,361.60
c Grading Bond in the amount of $61,139.00.

3. Accept the Maintenance Bond in the amount of $6,500.00 BACKGROUND/ANALYSIS:

On September 15, 2020, the Planning Commission approved Resolution No. 2780, approving a Precise Plan (PP19-0010) for an 18,434-square-foot, two-story light industrial building on a 1.21- acre property at 73725 Dinah Shore Drive. Per the resolution, bonds for public improvements were required before the issuance of the grading permit (PG21-0010). The following bonds were submitted at the time of grading approval:
 Public Improvements:
o $64,723.00 for Faithful Performance
o $32,361.60 for Labor & Materials
 Grading:
o $61,139.00
On January 9, 2025, the Public Works Department confirmed the completion of all public improvements. The Engineer of Record also submitted a Letter of Certification verifying compliance. Project requirements are documented in the approved grading plan (PG21-0010) and the Engineer’s Estimate. A Record Drawing of the improvements is on file with the Development Services Department.

Per Palm Desert Municipal Code Section 26.28.140, a 10% Maintenance Bond is required for one year after completion. The developer has submitted a $6,500.00 bond for this purpose.

Legal Review:

This report has been reviewed by the City Attorney’s Office. 517
City of Palm Desert

FINANCIAL IMPACT:

With the approval of this action, the City of Palm Desert will be responsible for the maintenance of public improvements, including streets, storm drains, and sidewalks. Costs to maintain these improvements are estimated to be approximately $729 annually.

ATTACHMENTS:

1. Vicinity Map

2. Faithful Performance and Labor and Material Bonds

3. Grading Bond

4. Receipt for Maintenance Bond
518
Spyder Circle
Dinah Shore Drive
ck Kelly Drive
Warhol Ln
Perugino Ter Perugino Ter
Spyder Circle
Dinah Shore Drive
Pasini Ter
Dick Kelly Drive
Spyder Circle Durer Pl
Dinah
Sh
ore
Drive
asini Ter
Raphael Dr
Union Pacifi c RR
10 Union Pacifi c RR
Dinah Shore
Drive
Raphael
Dr
Dinah Shore Drive
Vicinity Map
0 0.02 0.04 0.08 mi
0 0.03 0.07 0.13 km
1:2,257
N

1.21Acres
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578

CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 27, 2025
PREPARED BY: Ryan Lamb, Senior Project Manager
SUBJECT: APPROVE CONCEPTUAL DESIGN OF NEW LIBRARY FACILITY RECOMMENDATION:

Approve the $30 million conceptual design option for the New Library Facility.

BACKGROUND/ANALYSIS:

On October 12, 2023, the City Council voted to withdraw from the Riverside County Library System so that the City may operate it as a municipal library, effective July 1, 2024. The City began operating from the current facility on July 1, 2024 and has a 5-year lease with the Desert Community College District, which should be sufficient time to design and fully construct the new City library on city-owned land.

On March 28, 2024, Richärd Kennedy Architects (RKA) was awarded the contract for Conceptual Design Services for a New Library Facility.

RKA developed two (2) conceptual designs for the project:
 $20 million option based on the previously approved project budget  $30 million option based on anticipation of Measure G’s passage, which would increase the project budget
Both options were presented to the Library Advisory Committee on November 7, 2024. The committee's feedback was incorporated into the design, and a revised version was presented on December 9, 2024. At that meeting, the committee voted unanimously to recommend presenting the conceptual designs to the City Council.

On February 13, 2025, the City Council hosted a Study Session to learn about the progress of a New Library Facility planned for the Civic Center campus. Staff presented site plans for both options, architecture for the proposed building, and discussed how the building would be used and integrated into the Civic Center. The facility is intended to provide:
 A new home for the Palm Desert Library
 Community space for public events and shared space for CVAG, Veterans Services, and Friends of the Library
 Visitor Center, Café, and Community Room with adjacent Demonstration Kitchen for a unique experience for visitors and residents
The conceptual design for the new facility was positively received by the City Council. City staff are proposing to move the $30 million option forward to construction. 579
City of Palm Desert
Approve Conceptual Design of New Library Facility

$20M Option $30M Option
Total Floor Area – 16,856 gsf Total Floor Area – 25,892 gsf Shared Spaces:
 Veterans Services
 Friends of the Library
 CVAG Meetings
Shared Spaces:
 Veterans Services
 Friends of the Library
 CVAG Meetings
 Special Programs “Green Room”
 Maker Space
 Visitor Center
 Café
 Demonstration Kitchen
Not Included:
 Special Programs “Green Room”
 Maker Space
 Visitor Center
 Café
 Demonstration Kitchen
RKA is under contract for architectural services through the Schematic Design phase, which includes taking the project through entitlements. RKA will develop bridging documents in preparation for a Design-Build firm to complete Construction Documents and build the facility.

Legal Review:

This report has been reviewed by the City Attorney’s office.

Appointed Body Recommendation:

Library Advisory Committee - December 9, 2024: Recommend presenting conceptual design to City Council.

FINANCIAL IMPACT:

Funding sources have been identified and will be included in the FY 2025-26 Annual Budget Request and 5-Year CIP Plan. Current expenditures are being paid from the funds deposited by the County of Riverside as part of the transition.

Project - CFA00027
New Library Facility Budget Expenditures
Available
Budget
*Funding Source: Capital Bond Funds (451) $20,000,000
**Funding Source: Library Capital Project Funds (452) $4,000,000 *Funding Source: Future Tfer from Measure G Funds
(110) $6,000,000
Conceptual Design (Richärd Kennedy Architects) $642,865 Traffic Study (HR Green) $67,570
Cost Estimating (Anser Advisory) $20,620
580
City of Palm Desert
Approve Conceptual Design of New Library Facility

Survey (TKE Engineering) $48,100
Total Project Budget $30,000,000 $779,155 $29,220,84
5 *The $20M in Bonds and $6M in Measure G Funds will be requested as part of the FY 2025-26 Annual Budget Request
**Capital Funds returned from County
ATTACHMENTS:

1. New Library - Conceptual Design Presentation
581
582

NEW LIBRARY FACILITY
City Council
February 27, 2025
Conceptual Design
583
2 LIBRARY PLANNING
City Council Study Session: February 13, 2025
• Formation of Library Taskforce and Library Advisory Committee • Contracting of Library consultants
-Margaret Sullivan Studios: Community Outreach and Library Programming -Richärd Kennedy Architects: Design Services
• Parkview Building project site
• Withdrawal agreement with County of Riverside
• New 5-year lease with COD
• Library Advisory Committee recommendations
584
3 585
4 Shared Spaces: • Veterans Services • Friends of the Library • CVAG Meetings • Special Programs “Green Room” • Maker Space Additional Community Spaces: • Visitor Center • Café • Demonstration Kitchen $30M Budget  Cost estimates reconciled with Architect’s estimator and Construction Manager
586
5 587
6 588
7 589
8 PROJECT BUDGET
Library Description 451 452 110 TOTAL*
451 – Capital Improvement Bond Proceeds $20,000,000 $20,000,000 452 – Library Capital Project Fund Contribution from County $4,000,000 $4,000,000 110 - Future Measure G Revenue $6,000,000 $6,000,000
Total Project Funds Available $30,000,000
Less: Contracts/Expenditures
Conceptual Design (Richärd Kennedy Architects) ($642,865) Traffic Study (HR Green) ($67,570)
Cost Estimating (Anser Advisory) ($20,620)
Survey (TKE Engineering) ($48,100)
Total Contracts/Expenditures ($779,155)
Balance Available* $29,220,845
*The $20M in Bonds and $6M in Measure G Funds will be appropriated with the 2025-26 Annual Budget Request 590
9 NEXT STEPS
• Conceptual Design Approval – Feb. 27, 2025
• Schematic Design Phase (Q1 2025 – Q2 2025)
• Entitlements
• Planning Commission
• Architectural Review Commission
• Design-Build
• Design Development & Construction Documents Phase (Q2 2025 – Q4 2025) • Demolition of Parkview Building (Q1 2026)
• New Construction (estimated completion – Q4 2027)
591
10 Questions?
592

CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 27, 2025
PREPARED BY: Gary Shaffer, Director of Library Services Chris Escobedo, Assistant City Manager
SUBJECT: PROVIDE DIRECTION ON LIBRARY OPERATIONS AND FOUNDATION

CONSIDERATIONS
RECOMMENDATION:

Provide direction on Library Operations and Foundation Considerations.

BACKGROUND/ANALYSIS:

On July 1, 2024, the City of Palm Desert officially assumed library operations from the County of Riverside and Library Systems & Services (LSS). As public libraries seek to enhance community support and programming opportunities, some communities have found that library foundations can prove to be helpful towards this end.

A library foundation can serve as a strategic resource to support new initiatives by:

1. Functioning as a legal, nongovernmental nonprofit organization to receive and distribute privately sourced donations.

2. Expanding eligibility for grants limited to qualified nonprofit entities.

3. Offering investment flexibility to optimize financial contributions.

4. Providing a platform for fundraising to support programs, capital projects, and long-term financial stability.

5. Engaging experienced professionals dedicated to full-time fundraising and fostering a culture of philanthropy.

6. Broadening the network of potential contributors beyond traditional community supporters.

7. Increasing the library’s visibility through foundation-funded programs and events.

8. Boosting donor confidence by enabling contributions through a nonprofit, tax-deductible structure.

Recognizing these potential benefits, on August 22, 2024, the City Council authorized the formation of a 501(c)(3) nonprofit, the Palm Desert City Foundation. To move forward with incorporation, the City must finalize board appointments and complete necessary legal filings.

On January 23, 2025, the City Council conducted a study session to interview potential board members. Following these interviews, the Council requested a temporary pause to refine the Foundation’s vision, mission, goals, responsibilities, and overall purpose to ensure clear expectations for prospective board members.
593
City of Palm Desert
Determine Direction on Establishment of City Foundation

Subsequently, the City Council requested further clarification on the necessity of the Foundation and the extent of additional fundraising needs, given the City's current financial position. The approval of Measure G in November 2024—a one-cent sales tax—has provided additional funding for library construction, public safety, public works, and other capital projects, potentially reducing the need for supplemental fundraising pending Council direction.

While some municipal libraries engage in external fundraising to enhance program offerings and other services, the City Council retains the authority to allocate General Fund resources to support library operations without the need for additional fundraising efforts. Furthermore, the City may explore collaboration with existing nonprofit organizations to achieve similar fundraising benefits while minimizing administrative costs and responsibilities.

City Council Direction Requested
Staff seeks City Council guidance on the following options:

1. Pause the establishment of the Palm Desert City Foundation and explore potential partnerships with existing nonprofit organizations. Staff could conduct outreach, assess viable partners, and report back with recommendations.

2. Move forward by adjusting the base Library budget as needed. Staff is in the process of finalizing the Library’s operational needs and possible programmatic enhancements for the FY 25-26 budget discussion with the City Council. As staff prepares for year two of overseeing the Library operation, a much improved financial picture has emerged regarding the Library’s ongoing needs, as well as the property tax stream from the prior County negotiations. Staff is in the process of building a base budget to demonstrate the ongoing requisite costs of the Library, as well as developing supplemental requests for the City Council to consider, which pairs with the Foundation discussion well.

3. Proceed with establishing the Foundation and continue selecting board members to support initial library fundraising efforts.

This decision will help determine the most effective approach to sustaining and enhancing library services while aligning with the City’s financial and strategic priorities.

Legal Review:

This report has been reviewed by the City Attorney’s Office FINANCIAL IMPACT:

There is no direct financial impact with this action. Should the City Council opt to proceed with forming a Foundation, the Library Department has allocated funds in the FY 2024-25 Annual Budget for initial filing fees, with ongoing costs to be determined and budgeted as necessary. 594

CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 27, 2025
PREPARED BY: Chris Escobedo, Assistant City Manager
SUBJECT: RESOLUTION OF CONCERN REGARDING SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT’S PROPOSED AMENDMENTS TO
RULES 1111 AND 1121, PHASING OUT GAS WATER HEATERS AND

FURNACES
RECOMMENDATION:

Adopt a Resolution entitled “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM

DESERT, CALIFORNIA, EXPRESSING CONCERN REGARDING THE SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT’S PROPOSED AMENDMENTS TO RULES 1111 AND 1121, PHASING OUT GAS WATER HEATERS AND FURNACES.”
BACKGROUND/ANALYSIS:

The South Coast Air Quality Management District (South Coast AQMD) has proposed amendments to Rules 1111 and 1121, targeting the reduction of nitrogen oxides (NOx) emissions from natural gas-fired furnaces and water heaters. These amendments aim to transition toward zero-emission electric appliances, thereby improving air quality in the region.

Summary of the Proposed Amendments
Rule 1111: Expands its scope to include previously unregulated units, such as wall furnaces, floor furnaces, and commercial furnaces up to 2,000,000 British Thermal Units per hour (Btu/hr).

The amendments establish future deadlines by which new installations must utilize zeroemission electric appliances, with different timelines for new construction and existing buildings.

Rule 1121: Establishes zero-emission electric requirements for new installations of natural gasfired water heaters, with compliance deadlines varying between new and existing buildings.

While the proposed amendments aim to improve air quality, concerns have been raised by several cities and organizations within the South Coast AQMD territory. At the February 13 meeting of the Palm Desert City Council, the Council expressed concerns regarding the proposed amendments and requested that staff provide additional information along with a proposed resolution for the Council’s consideration.

Key concerns include:
 High Up-Front Costs: While incentives exist, homeowners and renters may still face significant out-of-pocket expenses when transitioning to electric appliances.  Potential Grid Strain: Increased reliance on electric heating could place additional demand on California’s electric grid, particularly during peak usage periods. 595
City of Palm Desert
(Approve a Resolution of Concern Regarding SCAQMD Proposed Amendments to Rules 1111 and 1121)

 Implementation Challenges: Ensuring a smooth transition may require additional infrastructure improvements, trained installers, and public awareness campaigns.  Consumer Choice and Feasibility: Some stakeholders emphasize the need to maintain consumer choice, suggesting that a complete shift to zero-emission appliances may not be feasible for all consumers due to technological readiness and infrastructure limitations.

The South Coast AQMD board has recognized the potential financial impact on homeowners and renters and has delayed the adoption of the proposed rules. The board has also directed South Coast AQMD staff to conduct additional outreach and further develop incentive and rebate programs to reduce costs for homeowners. The implementation schedule has been postponed, with South Coast AQMD considering delaying compliance until 2029 (subject to change).

Additionally, South Coast AQMD is launching the Go Zero Pilot Incentive Program to encourage the adoption of zero-emission heating appliances. The program allocates:
 $9 million for single-family properties
 $5 million each for multi-family properties and small businesses  $2 million for installer training, outreach, and resident support to ease the transition The South Coast AQMD Stationary Source Committee is scheduled to consider the proposed rules at its March 21, 2025, meeting, with the full South Coast AQMD board set to review the rules, based on the committee’s recommendations, on May 2, 2025.

The Coachella Valley Association of Governments (CVAG) Energy & Sustainability Committee received a report from South Coast AQMD at its February 13, 2025, meeting. City staff reached out to CVAG staff for additional information. While CVAG has not formally weighed in on the matter, it has participated in South Coast AQMD’s working group on the proposed amendments. CVAG reports that key changes are being considered to mitigate the impact of the transition to zero-emission appliances; however, further details will not be available until early March 2025.

City staff has prepared the attached resolution for Council consideration to express concerns regarding the proposed rules.

Legal Review:

This report has been reviewed by the City Attorney’s Office.

FINANCIAL IMPACT:

There is no financial impacts associated with this action.

ATTACHMENT:

1. Resolution
596
RESOLUTION NO. 2025-____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM

DESERT, CALIFORNIA, EXPRESSING CONCERN REGARDING THE
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT’S PROPOSED
AMENDMENTS TO RULES 1111 AND 1121, PHASING OUT GAS WATER

HEATERS AND FURNACES
WHEREAS, The South Coast Air Quality District (SCAQMD) is a regional air pollution control agency representing Los Angeles, Orange, Riverside, and San Bernardino counties with responsibility for regulating stationary sources of air pollution; and
WHEREAS, The SCAQMD is considering two rules that would have a significant impact on up to 17 million South Coast homeowners, renters and businesses: Rule 1111 would regulate air emissions from gas-powered central furnaces; and Rule 1121 would regulate air emissions from residential-type, natural gas-powered water heaters; and WHEREAS, Rules 1111 and 1121 would impose additional costs to consumers and while incentives exist, homeowners and renters may still face significant out-ofpocket expenses when transitioning to electric appliances; and WHEREAS, Housing affordability throughout California is and will remain a top public policy priority for the City of Palm Desert for the foreseeable future. Local governments are being pressured to build more housing – specifically, housing that people can afford. Any regulations that increase these costs deserve careful scrutiny to ensure that the increased costs are met with an equal or greater amount of benefit to the consumer; and
WHEREAS, The SCAQMD’s water heater and furnace mandates will impose a significant increase in electricity demand on California’s electric grid. Transitioning to allelectric water heaters and furnaces means an increased demand on an electric grid that has not proven capable of consistently meeting existing demand. Water heaters and furnaces are essential elements in any house, apartment, or business. Millions of new electric water heaters and furnaces would draw power from the grid and raise the risk of power brownouts or outages; and
WHEREAS, The incentive and rebate programs require easier access and use for homeowners and renters, greater coordination with cities is needed to have homeowners/renters access these incentives and rebates, and the proposed amendments need to be softened and relaxed to lessen the impact to homeowners and renters.
597
Resolution No. 2024-____ Page 2
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, California, as follows:

SECTION 1. Rules 1111 and 1121 will have a negative impact as proposed and impose significant costs on millions of Southern California homeowners, renters, and businesses who are already struggling with rising costs.

SECTION 2. The City of Palm Desert opposes Proposed Amended Rules 1111 and 1121 and urges the SCAQMD to delay consideration until the proposed amendments lessen the impact on properties and allow for streamlined eligibility of incentives and rebates before deciding to enact these amendments.

ADOPTED ON ________________, 2025.

JAN HARNIK
MAYOR
ATTEST:

ANTHONY J. MEJIA

CITY CLERK
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that Resolution No. 2024-__ is a full, true, and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Desert on _______________________, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSED:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Desert, California, on ___________________.

ANTHONY J. MEJIA

CITY CLERK
598

CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 27, 2025
PREPARED BY: Anthony J. Mejia, City Clerk
SUBJECT: ORDINANCE AMENDING THE PALM DESERT MUNICIPAL CODE TO

UPDATE, CLARIFY, AND CODIFY BYLAWS AND GENERAL
PROVISIONS FOR THE CITY’S BOARDS, COMMISSIONS,

COMMITTEES, AND TASK FORCES
RECOMMENDATION:

Introduce an Ordinance entitled,” AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

PALM DESERT, CALIFORNIA, AMENDING THE PALM DESERT MUNICIPAL CODE TO

UPDATE, CLARIFY, AND CODIFY BYLAWS AND GENERAL PROVISIONS FOR BOARDS, COMMISSIONS, COMMITTEES, AND TASK FORCES.”
BACKGROUND/ANALYSIS:

The City Council Subcommittee on Boards and Commissions, composed of Councilmember Pradetto and Mayor Harnik, met with staff on January 17, 2025, to discuss proposed updates to the municipal code governing the City’s appointed bodies. The subcommittee expressed support for the recommended changes, which aim to ensure alignment with priorities, improve efficiency, and address concerns raised by staff liaisons.

The ordinance updates several key areas, including:
 Finance Committee – The updated language clarifies that the Finance Committee may review and provide recommendations on fiscal and investment policies only when specifically referred by the City Council. This change resolves previous conflicts where members introduced investment policy discussions that were not within the intended scope.  Resource Preservation & Enhancement Committee (RPEC) – The Environmental Sustainability Plan and Greenhouse Gas Inventory referenced in the committee’s bylaws are outdated and no longer used by staff. Additionally, the committee had been meeting without clear agenda items, leading to discussions outside its intended scope. To improve focus, RPEC will now meet on an as-needed basis, convening only when the City Council refers specific items or when staff determines committee input is beneficial.  Eligibility Requirements – To prevent potential conflicts of interest, the ordinance prohibits relatives of City employees and officials from serving on any appointed body and establishes a 12-month waiting period after an employee leaves City service before their relatives may be eligible to serve.
599
City of Palm Desert
Update to Boards, Commissions, Committees, and Task Forces

 Standardized Membership – The ordinance establishes a seven-member standard for most appointed bodies to improve consistency and efficiency. This affects the Civic Engagement Committee (reduced from 12), Library Advisory Committee (increased from five plus two alternates), and Parks and Recreation Committee (reduced from nine). The Planning Commission remains at five members. No current members will be removed; reductions will occur gradually through attrition, which may result in some incumbent members not being reappointed when their terms expire.
 Meeting Schedules – Several committees have adjusted their meeting schedules based on workload and necessity. Below are the changes:

Committee Current Schedule New Schedule
Public Safety Committee Monthly Every other month
Civic Engagement Committee Quarterly Semi-annually
Homelessness Task Force Every other month Semi-annually Cultural Resources
Preservation Committee Monthly Every other month
Library Advisory Committee Monthly Quarterly
Resource Preservation &
Enhancement Committee
Quarterly, up to every
other month As-needed
These changes ensure that meetings occur only when necessary, improving efficiency while maintaining transparency and community engagement.

Legal Review:

This report has been reviewed by the City Attorney’s Office.

FINANCIAL IMPACT:

There is minimal fiscal impact associated with the publication of the ordinance. Adjustments to meeting schedules may result in minor cost savings related to staff time and administrative expenses.

ATTACHMENTS:

1. Draft Ordinance – Redline Version

2. Draft Ordinance – Clean Version
600
ORDINANCE NO. _________

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM

DESERT, CALIFORNIA, AMENDING THE PALM DESERT

MUNICIPAL CODE TO UPDATE, CLARIFY, AND CODIFY

BYLAWS AND GENERAL PROVISIONS FOR BOARDS,

COMMISSIONS, COMMITTEES, AND TASK FORCES
The City Council of the City of Palm Desert, California, does hereby ordain as follows:

Section 1. Amendment to Municipal Code. Palm Desert Municipal Code Chapter 2.16 Finance Committee of Title 2 Administration and Personnel, is hereby amended as follows:
“CHAPTER 2.16 FINANCE COMMITTEE

2.16.020 Purpose.

The Finance Committee shall advise the city council and work to promote and enhance fiscal responsibility, accountability, integrity, and transparency., and to recommend fiscal and investment policies for city council consideration.

2.16.050 Responsibilities.

The Finance Committee shall reviews and, if necessary, advises the city council on auditing and internal controls; financial reporting; investments; municipal debt and refunding;, financial reporting, investments, municipal debt and refunding, and such other financial matters as referred by the city council. The committee may review and provide recommendations on fiscal and investment policies only when specifically referred by the city council.functions as the city council may request.” Section 2. Amendment to Municipal Code. Palm Desert Municipal Code Chapter 2.34 Boards, Commissions, Committees, and Task Forces – General Provisions of Title 2 Administration and Personnel, is hereby amended as follows:
“Chapter 2.34 BOARDS, COMMISSIONS, COMMITTEES, AND TASK FORCES – GENERAL PROVISIONS

2.34.030 Eligibility.

B. City Employees. City employees are not eligible to serve as a membermembers on of an appointed body.

C. Relatives of City Employees and Officials. A relative of a city employee or city council member shall not serve on any appointed body if it could entail reviewing one another’s workbe eligible to serve on any appointed body and shall remain ineligible 601
for 12 months following the employee’s separation from city employment.

1. “Relative” includes mother, father, sister, brother, spouse, domestic partner, daughter, son, mother-in-law, father-in-law, sister-in-law, brother-in-law, daughter-in-law, son-in-law, grandmother, grandfather, granddaughter, grandson, aunt, uncle, first cousin, nieces, and nephews.

2. “Review” means the appointed body has oversight responsibilities, such as the Finance Committee, or its decision may be appealed to the city council; however, it does not include the routine sending of recommendations from the appointed body to the city council.

Section 3. Amendment to Municipal Code. Chapter 2.58 Parks and Recreation Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.58 PARKS AND RECREATION COMMITTEE

2.58.020 Members.

The parks and recreation committee shall be comprised composed of sevennine regular members from the community. Additionally, a representative from Desert Recreation District, Family YMCA of the Desert, and any other organization that has an interest in parks and recreation are encouraged to attend.” Section 4. Amendment to Municipal Code. Chapter 2.60 Public Safety Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.60 PUBLIC SAFETY COMMITTEE

2.60.040 Meetings.

The Public Safety Committee may hold monthly meetings every other month at such a dateday, time, and place as set by cCommittee resolution or minute order.” Section 5. Amendment to Municipal Code. Chapter 2.62 Civic Engagement Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.62 CIVIC ENGAGEMENT COMMITTEE

2.62.030 Members.

The Ccivic Eengagement Ccommittee shall be comprised composed of up to twelveseven members and should represent reflect a cross- section of the community.

2.62.040 Meetings.
602
The Civic Engagement Committee may hold meetings quarterly semi-annually on at a date, time, and place as set by cCommittee resolution or minute order.” Section 6. Amendment to Municipal Code. Chapter 2.66 Resource Preservation & Enhancement Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.66 RESOURCE PRESERVATION & ENHANCEMENT

COMMITTEE

2.66.020 Purpose.

The purpose of the Resource Preservation & Enhancement Committee is to provide recommendations to the city council on policies and initiatives related to sustainability, resource conservation, and environmental stewardshipoversee the implementation of the Environmental Sustainability Plan (“Plan”) and Greenhouse Gas Inventory as approved by the city council and recommend to the city council any changes to this Plan.

2.66.040 Meetings.

The Resource Preservation & Enhancement Committee shall meet on an asneeded basis at the direction of the City Council or when City staff determines that committee input would be beneficial for a specific project or policy matter.may meet quarterly, up to bi-monthly, on a date, time, and place as set by Committee resolution or minute order.

2.66.050 Responsibilities.

The Resource Preservation & Enhancement Committee shall advise the city council on sustainability and resource conservation efforts as they relate to city policies, programs, and projects. Its responsibilities include providing input on sustainability and environmental policies, programs, and initiatives referred by the city council, as well as reviewing and offering recommendations on specific projects or policy proposals identified by city staff or the city council. The committee shall serve as a resource for evaluating best practices in environmental sustainability when requested and collaborate with stakeholders to support community engagement efforts related to environmental preservation when directed by the city council. The committee shall meet only when specific items are referred for review and consideration by the city council or when city staff identifies a project that would benefit from committee feedback.It shall be the responsibility of the Resource Preservation & Enhancement Committee to make recommendations to the city council with respect to matters concerning the City’s programs and targets in achieving identified actions in Environmental Sustainability Plan (“Plan”) and Greenhouse Gas Inventory. The Committee shall have the authority and responsibility to review staff reports and recommendations from City staff, offer comment and feedback, and help develop appropriate policies and actions to meet the Plan’s goals.”
603
Section 7. Amendment to Municipal Code. Chapter 2.70 Homelessness Task Force of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.70 HOMELESSNESS TASK FORCE

2.70.040 Meetings.

The Homelessness Task Force may hold meetings bi-monthlysemi-annually regular meetings at a date, time, and place as set by tTask fForce resolution or minute order.”
Section 8. Amendment to Municipal Code. Palm Desert Municipal Code Title 29 Cultural Resources, Chapter 29.30 Cultural Resources Preservation Committee, is hereby amended as follows:
“Chapter 29.30 CULTURAL RESOURCES PRESERVATION COMMITTEE

29.30.030 Meetings.

The Cultural Resources Preservation Committee may hold monthly regular meetings every other month at a datesuch day, time, and place as set by cCommittee resolution or minute order.”
Section 9. Amendment to Municipal Code. Section 2.74.070 Library advisory committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.74 PUBLIC LIBRARY

2.74.070(C) Members. The committee shall be comprised composed of five seven community members and up to two alternate members.

2.74.070(D) Meetings. The committee may hold monthly regular meetings quarterly at such a date, time, and place as set by committee resolution or minute order.

Section 10. Severability. If any section, subsection, clause or phrase of this Ordinance or any part thereof is for any reason held to be invalid, unconstitutional, or unenforceable by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of the Ordinance. The City Council declares that it would have passed each section, subsection, paragraph, sentence, clause, or phrase thereof, irrespective of the fact that any one or more section, subsection, sentence, clause or phrase would be declared invalid, unconstitutional or unenforceable.

Section 11. CEQA. The City Council hereby finds and determines that this Ordinance is exempt from CEQA pursuant to State CEQA Guidelines section 15061(b)(3) 604
because it can be seen with certainty that the Ordinance would not have the potential or possibility for causing a significant effect on the environment. Specifically, the proposed changes to the Municipal Code are primarily procedural and administrative in nature.

Moreover, the changes are technical in nature and do not allow for specific development.

In reviewing the Ordinance the City Council has exercised its independent judgment and has reviewed and considered the Ordinance in light of all testimony received, both oral and written. Therefore, based upon the entire administrative record, the City Council hereby determines that no further environmental review is required for the Ordinance.

SECTION 12. Publication. The City Clerk of the City of Palm Desert, California, is hereby directed to publish a summary of this Ordinance in the Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and effective thirty (30) days after its adoption.

ADOPTED ON ___________________, 2025.

JAN HARNIK
MAYOR
ATTEST:

ANTHONY J. MEJIA

CITY CLERK
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, California, do hereby certify that Ordinance No. ____ is a full, true, and correct copy, and was introduced at a regular meeting of the Palm Desert City Council on _________, 2025, and adopted at a regular meeting of the City Council held on __________, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSED:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Desert, California, on ____________________.

ANTHONY J. MEJIA

CITY CLERK
605
606
ORDINANCE NO. _________

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM

DESERT, CALIFORNIA, AMENDING THE PALM DESERT

MUNICIPAL CODE TO UPDATE, CLARIFY, AND CODIFY

BYLAWS AND GENERAL PROVISIONS FOR BOARDS,

COMMISSIONS, COMMITTEES, AND TASK FORCES
The City Council of the City of Palm Desert, California, does hereby ordain as follows:

Section 1. Amendment to Municipal Code. Palm Desert Municipal Code Chapter 2.16 Finance Committee of Title 2 Administration and Personnel, is hereby amended as follows:
“CHAPTER 2.16 FINANCE COMMITTEE

2.16.020 Purpose.

The Finance Committee shall advise the city council and work to promote and enhance fiscal responsibility, accountability, integrity, and transparency.

2.16.050 Responsibilities.

The Finance Committee shall review and, if necessary, advise the city council on auditing and internal controls, financial reporting, investments, municipal debt and refunding, and other financial matters as referred by the city council. The committee may review and provide recommendations on fiscal and investment policies only when specifically referred by the city council.”
Section 2. Amendment to Municipal Code. Palm Desert Municipal Code Chapter 2.34 Boards, Commissions, Committees, and Task Forces – General Provisions of Title 2 Administration and Personnel, is hereby amended as follows:
“Chapter 2.34 BOARDS, COMMISSIONS, COMMITTEES, AND TASK FORCES – GENERAL PROVISIONS

2.34.030 Eligibility.

B. City Employees. City employees are not eligible to serve as members of an appointed body.

C. Relatives of City Employees and Officials. A relative of a city employee or city council member shall not be eligible to serve on any appointed body and shall remain ineligible for 12 months following the employee’s separation from city employment.
607

1. “Relative” includes mother, father, sister, brother, spouse, domestic partner, daughter, son, mother-in-law, father-in-law, sister-in-law, brother-in-law, daughter-in-law, son-in-law, grandmother, grandfather, granddaughter, grandson, aunt, uncle, first cousin, nieces, and nephews.

Section 3. Amendment to Municipal Code. Chapter 2.58 Parks and Recreation Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.58 PARKS AND RECREATION COMMITTEE

2.58.020 Members.

The parks and recreation committee shall be composed of seven regular members from the community. Additionally, a representative from Desert Recreation District, Family YMCA of the Desert, and any other organization that has an interest in parks and recreation are encouraged to attend.”
Section 4. Amendment to Municipal Code. Chapter 2.60 Public Safety Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.60 PUBLIC SAFETY COMMITTEE

2.60.040 Meetings.

The Public Safety Committee may hold meetings every other month at a date, time, and place as set by committee resolution or minute order.” Section 5. Amendment to Municipal Code. Chapter 2.62 Civic Engagement Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.62 CIVIC ENGAGEMENT COMMITTEE

2.62.030 Members.

The Civic Engagement Committee shall be composed of seven members and should reflect a cross-section of the community.

2.62.040 Meetings.

The Civic Engagement Committee may hold meetings semi-annually at a date, time, and place as set by committee resolution or minute order.” Section 6. Amendment to Municipal Code. Chapter 2.66 Resource Preservation & Enhancement Committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
608
“Chapter 2.66 RESOURCE PRESERVATION & ENHANCEMENT

COMMITTEE

2.66.020 Purpose.

The purpose of the Resource Preservation & Enhancement Committee is to provide recommendations to the city council on policies and initiatives related to sustainability, resource conservation, and environmental stewardship.

2.66.040 Meetings.

The Resource Preservation & Enhancement Committee shall meet on an asneeded basis at the direction of the City Council or when City staff determines that committee input would be beneficial for a specific project or policy matter.

2.66.050 Responsibilities.

The Resource Preservation & Enhancement Committee shall advise the city council on sustainability and resource conservation efforts as they relate to city policies, programs, and projects. Its responsibilities include providing input on sustainability and environmental policies, programs, and initiatives referred by the city council, as well as reviewing and offering recommendations on specific projects or policy proposals identified by city staff or the city council. The committee shall serve as a resource for evaluating best practices in environmental sustainability when requested and collaborate with stakeholders to support community engagement efforts related to environmental preservation when directed by the city council. The committee shall meet only when specific items are referred for review and consideration by the city council or when city staff identifies a project that would benefit from committee feedback.” Section 7. Amendment to Municipal Code. Chapter 2.70 Homelessness Task Force of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.70 HOMELESSNESS TASK FORCE

2.70.040 Meetings.

The Homelessness Task Force may hold meetings semi-annually at a date, time, and place as set by task force resolution or minute order.” 609
Section 8. Amendment to Municipal Code. Palm Desert Municipal Code Title 29 Cultural Resources, Chapter 29.30 Cultural Resources Preservation Committee, is hereby amended as follows:
“Chapter 29.30 CULTURAL RESOURCES PRESERVATION COMMITTEE

29.30.030 Meetings.

The Cultural Resources Preservation Committee may hold meetings every other month at a date, time, and place as set by committee resolution or minute order.” Section 9. Amendment to Municipal Code. Section 2.74.070 Library advisory committee of Title 2 Administration and Personnel of the Palm Desert Municipal Code is hereby amended as follows:
“Chapter 2.74 PUBLIC LIBRARY

2.74.070(C) Members. The committee shall be composed of seven community members.

2.74.070(D) Meetings. The committee may hold meetings quarterly at a date, time, and place as set by committee resolution or minute order.

Section 10. Severability. If any section, subsection, clause or phrase of this Ordinance or any part thereof is for any reason held to be invalid, unconstitutional, or unenforceable by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of the Ordinance. The City Council declares that it would have passed each section, subsection, paragraph, sentence, clause, or phrase thereof, irrespective of the fact that any one or more section, subsection, sentence, clause or phrase would be declared invalid, unconstitutional or unenforceable.

Section 11. CEQA. The City Council hereby finds and determines that this Ordinance is exempt from CEQA pursuant to State CEQA Guidelines section 15061(b)(3) because it can be seen with certainty that the Ordinance would not have the potential or possibility for causing a significant effect on the environment. Specifically, the proposed changes to the Municipal Code are primarily procedural and administrative in nature.

Moreover, the changes are technical in nature and do not allow for specific development.

In reviewing the Ordinance the City Council has exercised its independent judgment and has reviewed and considered the Ordinance in light of all testimony received, both oral and written. Therefore, based upon the entire administrative record, the City Council hereby determines that no further environmental review is required for the Ordinance.

SECTION 12. Publication. The City Clerk of the City of Palm Desert, California, is hereby directed to publish a summary of this Ordinance in the Desert Sun, a newspaper of general circulation, published and circulated in the City of Palm Desert, California, and shall be in full force and effective thirty (30) days after its adoption. 610
ADOPTED ON ___________________, 2025.

JAN HARNIK
MAYOR
ATTEST:

ANTHONY J. MEJIA

CITY CLERK
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, California, do hereby certify that Ordinance No. ____ is a full, true, and correct copy, and was introduced at a regular meeting of the Palm Desert City Council on _________, 2025, and adopted at a regular meeting of the City Council held on __________, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSED:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Desert, California, on ____________________.

ANTHONY J. MEJIA

CITY CLERK
611
612

CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 27, 2025
PREPARED BY: Mariela Salazar, Management Analyst, Economic Development SUBJECT: PUBLIC HEARING REGARDING THE ECONOMIC SUBSIDY REPORT

AND AN AGREEMENT FOR DISBURSEMENT AND USE OF FUNDS

BETWEEN THE CITY OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA PURSUANT TO
GOVERNMENT CODE SECTION 53083; CONSIDERATION OF
RECOMMENDATION:

1. Hold the Public Hearing.

2. Approve the allocation of $200,000 from the Invest Palm Desert Program for financial assistance towards the reconstruction of Papa Dan’s Pizza and Pasta.

3. Adopt a Resolution entitled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

PALM DESERT, CALIFORNIA, ACCEPTING THE ECONOMIC DEVELOPMENT SUBSIDY REPORT PREPARED PURSUANT TO GOVERNMENT CODE SECTION 53083

REGARDING AN AGREEMENT FOR DISBURSEMENT AND USE OF FUNDS BY AND BETWEEN THE CITY OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA.

4. Adopt a Resolution entitled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

PALM DESERT, CALIFORNIA, APPROVING AN AGREEMENT FOR DISBURSEMENT

AND USE OF FUNDS BY AND BETWEEN THE CITY OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA.

5. Authorize the Director of Finance to transfer $200,000 from the Business Enhancement Program Account No. 4254430-4387500 to Account No. 4254430-4393000 for the approved amount.

6. Find that the above activities do not constitute a project under the California Environmental Quality Act (CEQA) and alternatively are categorically exempt from review under section 15301 (Existing Facilities)

7. Direct staff to file and post a Notice of Exemption consistent with the above-stated CEQA findings within five (5) working days of this approval.

8. Authorize the City Manager or designee to execute all documents required to effectuate the funds.

BACKGROUND/ANALYSIS:

Invest Palm Desert is the City of Palm Desert’s Economic Development incentive program that provides a dedicated funding source for business support services. Invest Palm Desert was established to enhance the City of Palm Desert’s ability to promote economic development, facilitate the growth of businesses that provide high-quality jobs, ensure a strong economic base to support services to its residents, aid in the diversification of the City’s economy, and promote an improved quality of life within the City. The program is open to all Palm Desert based businesses and potential business looking to locate within the City. 613
City of Palm Desert
PAPA DAN’S PIZZA AND PASTA REDEVELOPMENT ________________________________

As the result of a fire and complete destruction of the business, Papa Dan’s owner, Ira Mosley, has applied for assistance through the City’s Invest Palm Desert Program. Papa Dan’s Pizza and Pasta has been a cornerstone of the Palm Desert community for 40 years serving as a gathering place for residents and visitors. The restaurant has been a local fixture known for its family-friendly environment and quality food. On April 17, 2024, the Plaza de Monterey Shopping Center experienced a fire, resulting in the destruction of a building that housed five (5) businesses including Papa Dan’s. This destruction of this building led to a complete halt in operations leaving forty-five (45) employees without work. Papa Dan’s was able to secure a new tenant space within the same center; however, the owners are facing extensive financial challenges in covering new construction costs.

Papa Dan’s is requesting approval of financial assistance in the amount of $200,000 from the Invest Palm Desert Program. The following Capital Improvements expenditures are identified in table A below:

Under the Invest Palm Desert Program, Papa Dan’s qualifies for the Capital Improvement incentive due to its location in a Planned Commercial location and the supporting documents for financial assistance. The Capital Improvement requirement states: “Applicants may apply for a matching grant of 1:1 from the City up to a dollar amount that totals 50% of the requested hard costs of permanent capital improvements or rehabilitation. Permanent capital improvements can include elements such as facade enhancements, interior capital improvements, or other hard costs associated with rehabilitation, renovation, or redevelopment of a commercial or industrial building or structure”.

The agreement with Papa Dan’s for use of City funds includes a local source provision that requires Papa Dan’s to contract and purchase necessary equipment from Palm Desert based businesses. With at least 1% of sales tax generated by use of Palm Desert based businesses the City can expect approximately $4,938 to be remitted back to the City. The local source provisions also ensure that several Palm Desert based businesses also benefit from use of these City funds, as view on table B.

Expense Amount Source
Cornerstone Restaurant Supply and Design $397,730.84
Signarama $12,770.07
Placencia Mirror and Glass $44,770.00
Contribution Amount
Insurance $650,000.00
Potential City Contribution $200,000.00
Private Equity (Ira) $167,166.00
Loans/Private Entities $461,939.63
Total Cost of Contributions $1,440,105.63
614
City of Palm Desert
PAPA DAN’S PIZZA AND PASTA REDEVELOPMENT ________________________________

Picard $71,954.72 Insurance/Private Equity
S&G Plumbing Services $38,500.00
Innovation Building and Design $874,380.00 Insurance/Private Equity Total $1,440,105.63
The approved funding from the Invest Palm Desert Program provides a significant contribution toward recovery, but additional financial support is essential to bridge the gap and expedite the rebuilding process. Supporting Papa Dan’s through this recovery effort aligns with the City’s commitment to fostering a vibrant local economy, aiding small businesses, and maintaining the economic vitality of key commercial areas.

The reconstruction of Papa Dan’s will also generate positive economic ripple effects, including the return of 40-45 jobs for employees and the attraction of patrons back to the area, which will benefit surrounding businesses.

Agreement Protections:

The agreement between the City of Palm Desert and Fine Quality Foods Inc. (Papa Dan’s Pizza and Pasta) contains the following protections for the City:

1. Use of Funds: The funds disbursed by the City must only be used for capital improvements specified in Table B and cannot be used for other purposes.

2. Conditions Precedent to Disbursement: The City has several conditions that must be met before disbursing funds, including certifications and evidence of compliance by the Recipient. This gives the City control over the allocation and use of funds.

3. Local Contracting Requirement: The Recipient must contract businesses located in Palm Desert, ensuring economic benefit to the local economy.

4. Minimum Investment: The Recipient is required to invest at least $1.2 million in the reconstruction of the business.

5. Five-Year Operating Requirement: The Recipient must operate continuously for at least five years. If the business fails to commence operations or ceases operation within this period, the City can demand repayment of $100,000, secured by a clawback agreement.

6. Right to Inspect and Audit: The City retains the right to inspect and audit the Recipient’s records to ensure compliance. The City can access land, facilities, or improvements related to the use of funds.

7. Indemnification: The Recipient must indemnify the City against any liabilities arising from the use of funds or the implementation of the agreement. 615
City of Palm Desert
PAPA DAN’S PIZZA AND PASTA REDEVELOPMENT ________________________________

These clauses ensure that the City maintains oversight, control, and protection in case of noncompliance or improper use of funds.

If Papa Dan’s were to be sold during the duration of the 5-year agreement, the agreement and terms will be passed on to the new owner. The agreement also includes provisions about tax responsibility, non-discrimination, and assignment restrictions.

Legal Review:

This report has been reviewed by the City Attorney’s Office.

CEQA REVIEW:

Staff recommends the City council determine that the actions are not subject to the California Environment Quality Act (“Public Resources Code section 21000 et seg.) (“CEQA”) because they do not qualify as a “project” under CEQA. The State CEQQA Guidelines provide that “[a]n activity is not subject to CEQA if… the activity is not a project as defined in section 15378.” (State CEQA Guidelines, § 15060(c).) Here, the actions do not qualify as a “project” as defined in State CEQA Guidelines section 15378 for at least two different reasons:

First, Section 15378 defines a project as an activity that “has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” (State CEQA Guidelines, § 15378(a).) Here, the acceptance of the EDS Report and approval of an agreement to disburse funds to assist a restaurant with interior improvements will not result in any physical changes to the environment. Accordingly, the actions are not a “project” subject to CEQA. (State CEQA Guidelines, § 15060(c).) Second, Section 15378 explicitly excludes from its definition of “project” the following: “organizational or administrative activities of governments that will not result in indirect physical changes in the environment.” (State CEQA Guidelines, § 15378(b)(5).) The actions constitute a organizational or administrative activity that will not result in a physical change in the environment, and it therefore is not subject to CEQA. (lbid.)
Even if the actions were considered a “project” subject to CEQA, they would be categorially exempt pursuant to State CEQA Guidelines section 15301. Class 1 (Existing Facilities). Class includes the “operation, repair, maintenance, or minor alteration of existing private structures... involving negligible or no expansion of existing or former use.” While section 15301 provides examples, such as “interior or exterior altercations,” it does not limit the scope of eligible project to those examples. The proposed actions involve modifications to the interior of a private structure. The improvements are confined to the existing private space and do not introduce new uses or intensify current operations. Therefore, the actions meet the criteria for the Class 1 categorial exemption which is shown in table A, allocating funds towards these capital improvements.

Further, none of the exceptions outlined in CEQA Guidelines section 15300.2 apply. There is no possibility of a significant cumulative impact as staff does not anticipate that other projects of the same type will take place at the project site or in the surrounding area. The property does not present any usual circumstances such as unusual resources, an unusual location, or unusual 616
City of Palm Desert
PAPA DAN’S PIZZA AND PASTA REDEVELOPMENT ________________________________

physical qualities inherent to the project site that might result in significant impacts. The project area is developed and does not contain any environmentally sensitive areas. The project would not damage any scenic resources, including trees, historic buildings, rock outcroppings or similar resources, within a highway officially designated as a state scenic highway. The project is not located on a hazardous waste site or any other site included on a list complied pursuant to Government Code section 65962.5 and the proposed project will not cause a substantial adverse impact change in the significance of a historical resource because there are no historical resources near the proposed project such that project impacts would not have any substantial adverse changes in the significance of a historical resource.

A notice of exemption (NOE) will be filed with the County Recorder’s Office and submitted to the State Clearinghouse within five (5) workdays should the project receive final approval.

FINANCIAL IMPACT:

Based on Papa Dan’s historical sales tax revenues, staff projects the establishment will generate approximately $100,000 in sales tax revenue for the City in the next 5 years. To support the restaurant and its employees, staff is requesting City Council’s approval for financial assistance in the amount of $200,000 to aid in the reconstruction of Papa Dan's.

Additionally, once Papa Dan’s is in operation for 10 years, the City is expected to recover the full $200,000 investment.

Funds are available in the Business Enhancement Program and may be transferred to Account No. 4254430-4393000 for this purpose.

ATTACHMENTS:

1. Papa Dan’s Invest Palm Desert Application

2. Letter to City Council

3. Capital Improvements Supporting Documents

4. Papa Dan’s Agreement for Recipients of Funds

5. Papa Dan’s Economic Subsidy Report

6. Papa Dan’s Resolution Approving Agreement

7. Papa Dan’s Resolution Accepting Economic Subsidy Report 617
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A-1

ECONOMIC DEVELOPMENT SUBSIDY REPORT
(GOVERNMENT CODE SECTION 53083)

REGARDING AN AGREEMENT FOR DISBURSEMENT AND USE OF FUNDS

BETWEEN THE CITY OF PALM DESERT
AND
FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA IN CONNECTION WITH THE RE-ESTABLISHMENT OF PAPA DAN’S PIZZA AND PASTA AT 73011 COUNTRY CLUB DRIVE F-1, PALM DESERT, CA 92270
Pursuant to Government Code Section 53083, the City Council of the City of Palm Desert must hold a noticed public hearing and, prior to the public hearing, provide all of the following information in written form available to the public including through the City’s website, regarding a proposed economic development subsidy to be provided by the City of Palm Desert (“City”) pursuant to an Agreement for Disbursement and Use of Funds (“Agreement”) by and between the City and Fine Quality Foods, Inc. dba Papa Dan’s Pizza and Pasta (“Business”).

This Economic Development Subsidy Report (“Report”) is being published on the City’s website in advance of the public meeting to be held on February 27, 2025. The purpose of this Report is to provide the information to inform the public about the subsidy provided under the Agreement, as required pursuant to Government Code Section 53083. This Report shall remain available to the public and posted on the City’s website until the end of the economic development subsidy, as further described in Section 2 below.

1. The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy.

This Agreement is between the City and Fine Quality Foods, Inc. dba Papa Dan’s Pizza and Pasta, who will own and operate the business benefitting from the economic development subsidy.

2. The start and end dates and schedule, if applicable, for the economic development subsidy.

The Agreement will go before the City Council on February 27, 2025. The Agreement will commence upon execution by both parties, following approval by City Council. The Business is required to operate for a period of five (5) years. The operational requirements of the Agreement will end five (5) years from the commencement of operation of the Business (the deadline for which is July 1, 2025, at the latest), unless earlier terminated pursuant to the terms of the Agreement. The Agreement itself does not have an explicit end-date. The subsidy is provided in a lump-sum up front upon the Business meeting certain conditions of funding.

3. A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy.
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The economic development subsidy to be provided by the City consists of a payment to be made by the City to the Business, from the Invest Palm Desert Program for capital improvements. The amount of Two Hundred Thousand ($200,000) will be disbursed once approved by the City Council and once the City staff administering the Agreement have determined the funding conditions are satisfied.

4. A statement of the public purposes for the economic development subsidy.

The public purposes for the economic development subsidy include: (i) restoring a long-lasting community fixture; (ii) the contribution to the economic vitality of the City; (iii) generation of increased transient occupancy, sales and use taxes and other revenue to the City; (iv) creation and provision of additional jobs in the City; and (v) otherwise improve economic and physical conditions in the City. Taken together, these benefits would enhance the quality of facilities, goods and services available to the City and its residents, such as police, fire, street maintenance, and parks and recreation programs.

5. The projected tax revenue to the local agency as a result of the economic development subsidy.

Based on historical sales tax revenues, staff projects that Papa Dan’s will generate approximately $100,000 in sales tax revenue to the City in the next 5 years. The City is anticipated to net over $87,000 in sales tax revenue over the next 5 years. The total amount of $200,000 will be replenished within a 10-year period.

6. Estimated number of jobs created by the economic development subsidy, broken down by fulltime, part-time, and temporary positions.

It is anticipated that a total of 40-45 full-time positions will be created as a result of the City’s economic development subsidy of the capital improvement project for the Papa Dan’s Pizza and Pasta Restaurant. All jobs created are anticipated to be full-time, no part-time or temporary positions are estimated at this time.
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RESOLUTION NO. __________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM

DESERT, CALIFORNIA, ACCEPTING THE ECONOMIC DEVELOPMENT

SUBSIDY REPORT PREPARED PURSUANT TO GOVERNMENT CODE
SECTION 53083 REGARDING AN AGREEMENT FOR DISBURSEMENT

AND USE OF FUNDS BY AND BETWEEN THE CITY OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA

AND FIND THAT THE ACTIVITY DOES NOT CONSTITUTE A PROJECT

UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)

AND ALTERNATIVELY IS CATEGORICALLY EXEMPT FROM REVIEW
UNDER SECTION 15301.

WHEREAS, the City of Palm Desert ("City") and Fine Quality Foods, Inc., a Nevada corporation, d/b/a Papa Dan’s Pizza and Pasta (“Papa Dan’s”) have negotiated an Agreement for Disbursement and Use of Funds ("Agreement") to disburse funds from the City’s Invest Palm Desert Program to assist with rebuilding Papa Dan’s restaurant at 73011 Country Club Drive F-1 in the City, which has operated within the City for over 40 years and recently burned down in a fire; and
WHEREAS, pursuant to that Agreement, Papa Dan’s is committed to opening and to continue operating an Italian restaurant in the City for a five (5) year period; and WHEREAS, Papa Dan’s has also covenanted to, among other things, use the funds to purchase equipment and services from local vendors based in the City; and WHEREAS, based on information provided by City staff, and other such written and oral evidence, as presented to the City, the City finds and determines that the allocation of funds to Papa Dan’s pursuant to the Agreement is reasonably related to a legitimate governmental purpose in that the retention of the restaurant will provide numerous public benefits including:
 Generating substantial revenue for the City through additional Local Sales Tax Revenue which may be used by the City for the funding of necessary public services and facilities, including but not limited to, public safety services and facilities, public improvements and recreational opportunities that otherwise may not be available to the community for many years; and  Papa Dan’s is a highly successful restaurant who will be committed to maintaining the restaurant in the City of Palm Desert which will ensure the retention and creation of jobs and provide opportunity for additional job growth throughout the term of this Agreement; and
 Entering into this Agreement and retaining the restaurant may attract additional businesses and investment in the community due to increased services and economic activity in the area; and
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 Retaining this business within the City will create jobs, maintain economic diversity in the community and stimulate the economic recovery of the City by generating new opportunities for economic growth within the region; and  Retaining Papa Dan’s' operations within the City will generate substantial revenue for the City, allow for the retention of jobs, and result in community and public improvements that might not otherwise be available to the community for many years; and
WHEREAS, in accordance with Government Code Section 53083, the City provided certain information in written form to the public and on its website, a copy of which is attached hereto as Exhibit A and incorporated herein by this reference, and held a noticed public hearing on February 27, 2025 to consider all written and oral comments on the Economic Development Subsidy Report; and
WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert as follows:

SECTION 1. Incorporation of Recitals. The foregoing recitals are true and correct, and are incorporated herein and made an operative part of this Resolution.

SECTION 2. Findings. The City Council additionally finds and determines that (a) there are identifiable public purposes fulfilled by the Agreement, as set forth in the Recitals, that outweigh the benefit to private persons; and (b) the findings set forth in this Resolution are based upon substantial written and oral evidence presented to the City Council.

SECTION 3. The City Council hereby finds that pursuant to the California Environmental Quality Act ("CEQA") (Pub. Res. Code, § 21000 et seq.) and the State CEQA Guidelines (Cal. Code Regs, tit. 14 § 15000 et seq.), acceptance of the Economic Development Subsidy (EDS) Report is not a "project" for purposes of CEQA and therefore is not subject to CEQA review.

State CEQA Guidelines section 15378 defines a “project” as an activity that “has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” (State CEQA Guidelines, § 15378(a).) Here, the acceptance of the EDS Report to provide funding to a restaurant for interior improvements will not result in any physical changes to the environment. Accordingly, it does not meet the definition of a “project” subject to CEQA. (State CEQA Guidelines, § 15060(c).) In addition, section 15378(b) explicitly excludes certain activities from the definition of a ‘project.’ Specifically, section 15378(b)(5) states that “organizational or administrative activities of governments that will not result in direct 664
or indirect physical changes in the environment” are not considered projects. The acceptance of the EDS Report is an administrative activity that does not result in physical changes to the environment and is therefore not subject to CEQA.

Even if the action were considered a “project” subject to CEQA, it would qualify for a categorically exemption pursuant to State CEQA Guidelines Section 15301, Class 1, (Existing Facilities). Class 1 consists of the “operation, repair, maintenance or minor alteration of existing private structures … involving negligible or no expansion of existing or former use.” Section 15301 provides some, but does not limit project scope to, examples of such projects, including “interior or exterior alterations”. The acceptance of the EDS Report involves modifications to the interior of a private structure, which are confined to the existing space and do not introduce new uses or intensify current operations. Therefore, the project meets the criteria for the Class 1 categorical exemption.

Further, none of the exceptions outlined in CEQA Guidelines section 15300.2 apply. There is no potential for significant cumulative impacts, as staff does not anticipate other similar projects at the project site or in the surrounding area. The property does not present any unusual circumstances, such as unique environmental resources, an unusual location, or physical characteristics that could result in significant impacts. The project area is fully developed and does not contain environmentally sensitive areas. The project would not damage any scenic resources, including trees, historic buildings, rock outcroppings, or similar features, within a highway officially designated as a state scenic highway. The project site is not located on a hazardous waste site or any other site included on a list compiled pursuant to Government Code section 65962.5. Lastly, the proposed project will not cause a substantial adverse change in the significance of a historical resource, as no such resources are present near the project site that could be impacted.

Staff is directed to prepare, execute, and file a Notice of Exemption with the County Clerk and the State Clearinghouse within five (5) working days of the project’s approval and adoption of this resolution.

SECTION 4. Acceptance of Economic Development Subsidy Report. The City Council finds and determines that this Economic Development Subsidy Report is in compliance with applicable law and specifically Government Code Section 53083.

SECTION 5. Custodian of Records. The documents and materials associated with this Resolution that constitute the record of proceedings on which these findings are based are located at Palm Desert City Hall 73510 Fred Waring Drive Palm Desert, CA 92260. The City Clerk is the custodian of records for the record of proceedings.

SECTION 6 Severability. If any provision of this Resolution is held invalid, the remainder of this Resolution shall not be affected by such invalidity, and the provisions of this Resolution are severable.

SECTION 7. Effective Date. This Resolution shall become effective immediately upon its adoption.
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The City Clerk of the City of Palm Desert shall certify as to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 27th day of February 2025.

JAN HARNIK, MAYOR
ATTEST:

ANTHONY MEJIA, CITY CLERK
APPROVED AS TO LEGAL FORM:

BEST BEST & KRIEGER LLP

CITY ATTORNEY
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STATE OF CALIFORNIA

COUNTY OF RIVERSIDE CITY OF

PALM DESERT
)
)
)
I, ANTHONY MEJIA, City Clerk of the City of Palm Desert, DO HEREBY CERTIFY that foregoing Resolution No. 2025-XX was duly passed and adopted by the City Council of the City of Palm Desert at their regular meeting held September __, 2023 by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
(SEAL)

ANTHONY MEJIA, CITY CLERK
The foregoing is the original of Resolution No. 2025-## duly passed and adopted by the Palm Desert City Council at their regular meeting held February 27, 2025.

ANTHONY MEJIA, CITY CLERK
(SEAL)
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EXHIBIT A

ECONOMIC DEVELOPMENT SUBSIDY REPORT
[Attached behind this cover page]
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1 AGREEMENT FOR DISBURSEMENT AND USE OF FUNDS BETWEEN
THE CITY OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA
This Agreement for Disbursement and Use of Funds (“Agreement”) is entered into this 27 day of February, 2025, by and between the CITY OF PALM DESERT (“City”) and Fine Quality Foods Inc. dba Papa Dan’s Pizza and Pasta, a corporation, (“Recipient”). City and Recipient are sometimes referred to individually as Party and collectively as Parties.

RECITALS
A. City has created the Invest Palm Desert Program (“Program”) which establishes a Program fund and allows businesses to apply for money for capital improvements and emergency assistance from the City’s Program fund. The Program’s goals are to enhance the City’s ability to promote economic development, facilitate the growth of businesses that provide high-quality jobs, ensure a strong economic base to support services to City residents, aid in the diversification of the City’s economy, and promote an improved quality of life within the City.

C. Recipient has owned and operated an Italian restaurant in the City for forty years, however, in 2024 a fire destroyed Recipient’s restaurant. Recipient has secured a new tenant space located at 73011 Country Club Drive F-1, Palm Desert, CA 92270 (“Property”), within the same shopping center as the prior restaurant’s location, and Recipient seeks to re-establish Recipient’s restaurant within the City.

D. Recipient has submitted a request to City for disbursement of Program funds, to be used only for such capital improvements as specified in Exhibit “A”, attached hereto and incorporated herein by reference.

D. City has considered Recipient’s request and desires to approve the disbursement of Two Hundred Thousand Dollars ($200,000.00) of Program funds (the “Funds”) to Recipient, to be used only for such capital improvements as specified in Exhibit “A”, subject to the terms and conditions set forth herein.

E. The City has determined this Agreement serves a public purpose because the continued operation of the Property will enhance economic development in the City, facilitate the growth of a business that provides high-quality jobs to residents, ensure a strong economic base to support services to City residents, aid in the diversification of the City’s economy, promote an improved quality of life within the City, and provide additional tax revenue to the City that will assist the City in providing services to its residents. The City has further determined that the public benefit derived from this Agreement outweighs any private benefit derived from this Agreement.
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2 AGREEMENT

1. Disbursement and Use of Funds. Subject to the terms and conditions of this Agreement, within 30 days of City’s receipt of an invoice from Recipient, City shall disburse the Funds to Recipient in a manner convenient to City. Recipient shall use the Funds only for such capital improvements as specified in Exhibit “A”, at Recipient’s new Italian restaurant located at the Property (the “Business”), and shall not use the Funds for any other purpose.

2. Conditions Precedent to Disbursement. City’s obligation to perform under this Agreement and to disburse the Funds is subject to the following conditions being satisfied and the City’s receipt and approval of the following certifications, documents or materials, each of which shall be in a form and substance satisfactory to the City in its sole and absolute discretion:
a. Recipient shall have made a request to City for the Funds via an invoice detailing how Funds will be used and allocated, which vendors are being purchased from, hired, or otherwise utilized in compliance with Section 3, and containing a signed certification from Recipient that invoices have not been submitted, and will not be submitted, for payment or reimbursement of those particular uses from any other source; b. Recipient shall have provided certification to City that Recipient has incurred expenses to obtain the capital improvements the Funds will be used for, or is otherwise contractually bound to incur such expenses;
c. Recipient shall have provided evidence to City that Recipient is in compliance with Section 4 of this Agreement; and
d. No Default or Event of Default has occurred and remains uncured. “Default” means any event or condition which, with the passage of time or the giving of notice or both, would constitute and Event of Default (as defined below). The occurrence of any of the following shall be deemed to be a default hereunder (each an “Event of Default”):
i. any default or breach of any of the terms, provisions, and obligations of the Recipient pursuant to this Agreement, and such default or breach is not cured by Recipient within fifteen (15) days from receipt of written notice thereof from City;
ii. commencement of any case under the Bankruptcy Code, Title 11 of the United State Code, or commencement of any other bankruptcy arrangement, reorganization, receivership, custodianship, or similar proceeding under any federal, state, or foreign law by or against Recipient and with respect to any such case or proceeding that is involuntary, and such case or proceeding is not dismissed within sixty (60) days of the filing thereof; iii. Recipient shall fail to make any payment in respect of any of its indebtedness when due (whether at maturity or upon acceleration) or within any applicable grace period, or any other event or condition shall occur which results in acceleration of the maturity of such indebtedness;
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3 iv. A judgment or order for the payment of money shall be rendered against Recipient, which would have a material adverse effect on Recipient, or any of its business or operations and such judgment or order shall continue unsatisfied and unstayed for a period of thirty (30) days;
v. the occurrence of any event (including, without limitation, a change in the financial condition, business, or operations of Recipient for any reason whatsoever) that materially and adversely affects the ability of Recipient to perform any of its obligations under this Agreement;
vi. commencement of any action or proceeding which seeks as one of its remedies the dissolution of Recipient which is not being defended diligently and in good faith by Recipient, but in any event such action or proceeding must be terminated within ninety (90) days following its commencement; or
vii. A material portion of the property of Recipient is attached, levied upon, or otherwise seized by legal process, and such attachment, levy, or seizure is not quashed, stayed, or released within thirty (30) days of the date thereof.

3. Local Contracting Requirement. Recipient shall only contract with businesses located in the City of Palm Desert in the course of Recipient’s utilization of the Funds for the purposes allowed by this Agreement. Recipient shall not spend the Funds with any business which is not located in the City of Palm Desert. Failure to comply with this section will, in addition to other applicable legal and equitable consequences, result in Recipient’s ineligibility for future City funding.

4. Minimum Investment. Recipient shall invest a minimum of One Million, Two Hundred Thousand Dollars ($1,200,000.00) into Recipient’s Business. Prior to submitting an invoice for disbursement of Funds, Recipient shall submit evidence satisfactory to City in City’s sole and absolute discretion that Recipient has complied, or will comply, with this Section.

Recipient shall not be eligible to receive Funds and City shall not be obligated to disburse the Funds until City has received such evidence and determined it is satisfied that Recipient has complied or will comply with this Section. Failure to comply with this section will, in addition to other applicable legal and equitable consequences, result in Recipient’s ineligibility for future City funding.

5. Five Year Operating Requirement. Recipient covenants and agrees for itself, its successors, assigns, and every successor in interest to Recipient’s Business:
a. To commence operations of the Business at the Property in such a manner as to generate sales tax by July 1, 2025.
b. To continuously use and operate the Business for a period of at least five years from the date of the Businesses’s opening to the public. The Business shall be open for a full day’s regular business hours twelve months per year, and at least five days every week. The Business may be closed on federal holidays. 671
4 c. Damages for Failure to Comply. If the Business fails to commence operations by the time period set forth in Section 5.a., or in any way or for any period of time ceases continuous operations in City’s sole judgment within five years from the date of the Businesses’s opening, then City may demand repayment of, and Recipient shall immediately refund to City, One Hundred Thousand Dollars ($100,000.00) of the Funds (the “Clawback Amount”). The Clawback Amount will be secured by that certain security agreement executed concurrently herewith and in a form attached hereto as Exhibit “B”.
d. Recipient’s Covenant to Use Property In Accordance With Agreement.

Recipient covenants and agrees for itself, its successors and assigns and all voluntary and involuntary successors in interest to Recipient’s interest in the Business or the Property or any part thereof, that the Property shall, for the Term, be put to no use other than operation of the Business.

6. Maintenance of Records. Recipient shall keep, preserve, and maintain, for a period of at least six years commencing on the date of City’s initial disbursement of Funds to Recipient, all documents and records of any kind relating to Recipient’s use of the Funds.

7. Right to Inspect and Audit. The City may inspect and audit all of Recipient’s documents and records relating to the Recipient’s use of the Funds to ensure compliance with this Agreement and to ensure Recipient uses the Funds for authorized purposes. Recipient shall make such documents and records available to City, at the place and in the manner and form specified by City, within 15 days following City’s request for such documents and records.

Recipient shall furthermore grant City’s employees or agents access to any land, facilities, or improvements relating to Recipient’s use of the Funds, within a reasonable amount of time after City issues written notice to Recipient requesting such access.

8. Prevailing Wage Laws. Recipient is aware of the requirements of California Labor Code Sections 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on certain "public works" and "maintenance" projects. Recipient understands and agrees that it is Recipient’s obligation to determine if Prevailing Wage Laws apply with regard to the Recipient’s use of Funds under this Agreement. Recipient agrees to fully comply with such Prevailing Wage Laws, if applicable.

Recipient shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It is the intent of the parties to effectuate the requirements of sections 1771, 1774, 1775, 1776, 1777.5, 1813, and 1815 of the Labor Code within this Agreement, and Recipient shall therefore comply with such Labor Code sections to fullest extent required by law. It shall be mandatory upon the Recipient and all of Recipient’s contractors to comply with all California Labor Code provisions, which include but are not limited to prevailing wages, employment of apprentices, hours of labor and debarment of contractors and subcontractors.

9. Indemnification. The Recipient shall Indemnify the City, its elected and appointed officials, its officers and employees, attorneys, contractors, and volunteers (together, the “City 672
5 Indemnitees”) from and against any and all liabilities, including without limitation all claims, losses, damages, penalties, fines, and judgments, associated investigation and administrative expenses, and defense costs, including but not limited to reasonable attorneys’ fees, court costs and costs of alternative dispute resolution, (“Liabilities”) of any kind or nature relating to the subject matter of this Agreement or the implementation thereof, including without limitation, the obligations to proceed in accordance with applicable law as set forth in sections 8 and 10, and for any damages to property or injuries to persons, including accidental death (and attorney’s fees and costs), which may be caused by acts or omissions of the Recipient under this Agreement, whether such activities or performance thereof be by the Recipient or by anyone directly or indirectly employed or contracted by the Recipient and whether such damage shall accrue or be discovered before or after termination of this Agreement. The Recipient shall not be liable for property damage or bodily injury if and to the extent such property damage or bodily injury is directly and proximately caused by the sole or gross negligence or willful misconduct of the City Indemnitees.

The Recipient shall have the obligation to defend any such action covered by this Section; provided, however, if and to the extent that Recipient determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, after consultation with and reasonable consent from the City, Recipient shall compromise or settle such action in a way that fully protects City from any Liabilities. In this regard, Recipient’s obligation to defend shall include the right to hire (subject to the reasonable written approval by the City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Recipient and/or City. If Recipient defends any such action, as set forth above, it shall Indemnify the City Indemnitees from and against any Liabilities assessed or awarded against any of them by way of judgment, order, decree, settlement, or stipulation.

All rights, duties and obligations of this indemnification shall survive the termination or expiration of this Agreement.

10. Compliance with Law. Recipient shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local government (including those of the City). If Recipient’s failure to comply with applicable laws, ordinances, codes, or regulations results in a claim for damage or liability to City, Recipient shall be responsible for defending, indemnifying, and holding the City harmless as provided in this Agreement.

11. Taxes. Recipient acknowledges and agrees that Recipient shall be responsible for any and all taxes that are associated in any way to the receipt or use of the Funds.

12. Authority to Enter Agreement. Recipient and City each respectively represent, covenant, and warrant that they are authorized to enter into and execute this Agreement and to bind each respective Party.

13. Entire Agreement. This Agreement contains the entire agreement between the Parties related to the matters specified herein, and supersedes any prior oral or written statements or agreements between the Parties related to such matters. 673
6 14. Agreement Binding on Successors. This Agreement, together with all obligations, terms, covenants, and conditions herein, shall be binding upon the heirs, executors, administrators, personal representatives, successors in interest and assigns of the Recipient.

Whenever the term “Recipient” is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.

15. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.

16. No Third Party Beneficiaries. All of the covenants contained in this Agreement are for the express benefit of each and all such Parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed.

17. Laws of California. This Agreement is made in the State of California, under the Constitution and laws of such State, and shall be construed and enforced in accordance with the laws of such State.

18. Assignment. The rights, obligations, and interests of Recipient shall not be assignable or transferable without the prior written consent of the City. Any attempted assignment without the prior written consent of the City shall be null and void.

19. Severability. If any section, clause or phrase of this Agreement or the application thereof to any Party or any other person or circumstance is for any reason held to be invalid by a court of competent jurisdiction, it shall be deemed severable, and the remainder of the Agreement or the application of such provisions to any other Party or to other persons or circumstances shall not be affected thereby. Each Party hereby declares that it would have entered into this Agreement, and each subsection, sentence, clause and phrase thereof, irrespective that one or more sections, subsections sentences, clauses or phrases or the application thereof might be held invalid.

20. Recipient’s Covenant Not to Discriminate. Recipient covenants by and for itself, himself or herself, its, his or her heirs, executors, administrators, and assigns, and all Persons claiming under or through it, him or her, and this Agreement is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any Person or group of Persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property nor shall Recipient, itself, himself or herself, or any Person claiming under or through it, him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the Property.

21. Relationship Between City and Recipient. It is hereby acknowledged that the relationship between the City and the Recipient is not that of a partnership or joint venture and 674
7 By:

Name:

Title:
that the City and the Recipient shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, the City shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Business. The Recipient agrees to indemnify, hold harmless and defend the City, to the same extent as set forth in Section 9 above, from any claim made against the City arising from a claimed relationship of partnership or joint venture between the City and the Recipient with respect to the development, operation, maintenance or management of the Property or the Business.
[signatures on the following page]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.

CITY OF PALM DESERT
By:

City Manager
APPROVED AS TO FORM:

By:

Isra Shah
City Attorney
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A-8

EXHIBIT A
Approved Use of Funds
(Attachment Behind This Page)
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A-9

EXHIBIT B
Form of Security Agreement
(Attachment Behind This Page)
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RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM

DESERT, CALIFORNIA, APPROVING AN AGREEMENT FOR

DISBURSEMENT AND USE OF FUNDS BY AND BETWEEN THE CITY
OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S

PIZZA AND PASTA AND FIND THAT THE ACTIVITY DOES NOT

CONSTITUTE A PROJECT UNDER THE CALIFORNIA

ENVIRONMENTAL QUALITY ACT (CEQA) AND ALTERNATIVELY IS
CATEGORICALLY EXEMPT FROM REVIEW UNDER SECTION 15301.

WHEREAS, the City of Palm Desert ("City") and Fine Quality Foods, Inc., a Nevada corporation, d/b/a Papa Dan’s Pizza and Pasta (“Papa Dan’s”) have negotiated an Agreement for Disbursement and Use of Funds ("Agreement") to disburse funds from the City’s Invest Palm Desert Program to assist with rebuilding Papa Dan’s restaurant at 73011 Country Club Drive F-1 in the City, which has operated within the City for over 40 years and recently burned down in a fire; and
WHEREAS, pursuant to that Agreement, Papa Dan’s is committed to opening and to continue operating an Italian restaurant in the City for a five (5) year minimum period; and
WHEREAS, Papa Dan’s has also covenanted to, among other things, use the funds to purchase equipment and services from local vendors based in the City; and WHEREAS, based on information provided by City staff, and other such written and oral evidence, as presented to the City, the City finds and determines that the allocation of funds to Papa Dan’s pursuant to the Agreement is reasonably related to a legitimate governmental purpose in that the retention of the restaurant will provide numerous public benefits including:
• Generating substantial revenue for the City through additional Local Sales Tax Revenue which may be used by the City for the funding of necessary public services and facilities, including but not limited to, public safety services and facilities, public improvements and recreational opportunities that otherwise may not be available to the community for many years; and • Papa Dan’s is a highly successful restaurant who will be committed to maintaining the restaurant in the City of Palm Desert which will ensure the retention and creation of jobs and provide opportunity for additional job growth throughout the term of this Agreement; and
• Entering into this Agreement and retaining the restaurant may attract additional businesses and investment in the community due to increased services and economic activity in the area; and
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• Retaining this business within the City will create jobs, maintain economic diversity in the community and stimulate the economic recovery of the City by generating new opportunities for economic growth within the region; and • Retaining Papa Dan’s' operations within the City will generate substantial revenue for the City, allow for the retention of jobs, and result in community and public improvements that might not otherwise be available to the community for many years; and
WHEREAS, in accordance with Government Code Section 53083, the City provided certain information in written form to the public and on its website (the “Report”) and held a noticed public hearing on February 27, 2025 to consider all written and oral comments on the Agreement and the Report and concluded said hearing on that same date, and the City subsequently accepted the Report by resolution; and WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert as follows:

SECTION 1. Incorporation of Recitals. The foregoing recitals are true and correct, and are incorporated herein and made an operative part of this Resolution.

SECTION 2. Findings. The City Council additionally finds and determines that (a) there are identifiable public purposes fulfilled by the Agreement, as set forth in the Recitals, that outweigh the benefit to private persons; and (b) the findings set forth in this Resolution are based upon substantial written and oral evidence presented to the City Council.

SECTION 3. The City Council hereby finds that pursuant to the California Environmental Quality Act ("CEQA") (Pub. Res. Code, § 21000 et seq.) and the State CEQA Guidelines (Cal. Code Regs, tit. 14 § 15000 et seq.), approval of the Agreement is not a "project" for purposes of CEQA and therefore is not subject to CEQA review.

State CEQA Guidelines section 15378 defines a “project” as an activity that “has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” (State CEQA Guidelines, § 15378(a).) Here, the approval of an agreement to disburse funds to assist a restaurant with interior improvements will not result in any physical changes to the environment. Accordingly, it does not meet the definition of a “project” subject to CEQA. (State CEQA Guidelines, § 15060(c).) In addition, section 15378(b) explicitly excludes certain activities from the definition of a ‘project.’ Specifically, section 15378(b)(5) states that “organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment” are not considered projects. The approval of the Agreement is an administrative activity that does not result in physical changes to the environment and is therefore not subject to CEQA. 680
Even if the action were considered a “project” under CEQA, it would still qualify for a categorical exemption under State CEQA Guidelines section 15301, Class 1 (Existing Facilities). Class 1 includes the “operation, repair, maintenance, or minor alteration of existing private structures … involving negligible or no expansion of existing or former use.” While section 15301 provides examples, such as “interior or exterior alterations,” it does not limit the scope of eligible projects to those examples. The approval of the agreement involves modifications to the interior of a private structure. The improvements are confined to the existing space and do not introduce new uses or intensify current operations. Therefore, the project meets the criteria for the Class 1 categorical exemption.

Further, none of the exceptions outlined in CEQA Guidelines section 15300.2 apply. There is no potential for significant cumulative impacts, as staff does not anticipate other similar projects at the project site or in the surrounding area. The property does not present any unusual circumstances, such as unique environmental resources, an unusual location, or physical characteristics that could result in significant impacts. The project area is fully developed and does not contain environmentally sensitive areas. The project would not damage any scenic resources, including trees, historic buildings, rock outcroppings, or similar features, within a highway officially designated as a state scenic highway. The project site is not located on a hazardous waste site or any other site included on a list compiled pursuant to Government Code section 65962.5. Lastly, the proposed project will not cause a substantial adverse change in the significance of a historical resource, as no such resources are present near the project site that could be impacted.

Staff is directed to prepare, execute, and file a Notice of Exemption with the County Clerk and the State Clearinghouse within five (5) working days of the project’s approval and adoption of this resolution..

SECTION 4. Approve Agreement. The City Council hereby approves the Agreement in substantially the form attached to this Resolution as Exhibit A. The City Council hereby authorizes the City Manager, or designee, with concurrence of the City Attorney, to execute said Agreement. The City Manager is hereby authorized to take any additional steps necessary to facilitate the intent of this action.

SECTION 4. Implementation. The City Manager or designee is hereby authorized and directed to, on behalf of the City, execute any and all documents in accordance with this Resolution and applicable law.

SECTION 5. Custodian of Records. The documents and materials associated with this Resolution that constitute the record of proceedings on which these findings are based are located at Palm Desert City Hall 73510 Fred Waring Drive Palm Desert, CA 92260. The City Clerk is the custodian of records for the record of proceedings.

SECTION 6. Severability. If any provision of this Resolution is held invalid, the remainder of this Resolution shall not be affected by such invalidity, and the provisions of this Resolution are severable.
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SECTION 7. Effective Date. This Resolution shall become effective immediately upon its adoption.

The City Clerk of the City of Palm Desert shall certify as to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 27th day of February 2025.

JAN HARNIK, MAYOR
ATTEST:

ANTHONY MEJIA, CITY CLERK
APPROVED AS TO LEGAL FORM:

BEST BEST & KRIEGER LLP

CITY ATTORNEY
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STATE OF CALIFORNIA

COUNTY OF RIVERSIDE CITY OF

PALM DESERT
)
)
)
I, ANTHONY MEJIA, City Clerk of the City of Palm Desert, DO HEREBY CERTIFY that foregoing Resolution No. 2025-XX was duly passed and adopted by the City Council of the City of Palm Desert at their regular meeting held February 27, 2025 by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ANTHONY MEJIA, CITY CLERK
(SEAL)
The foregoing is the original of Resolution No. 2025-## duly passed and adopted by the Palm Desert City Council at their regular meeting held February 27, 2025.

ANTHONY MEJIA, CITY CLERK
(SEAL)
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EXHIBIT A

AGREEMENT FOR DISBURSEMENT AND USE OF FUNDS
[Attached behind this cover page]
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1 AGREEMENT FOR DISBURSEMENT AND USE OF FUNDS

BETWEEN THE CITY OF PALM DESERT AND FINE QUALITY FOODS, INC. DBA PAPA DAN’S PIZZA AND PASTA
This Agreement for Disbursement and Use of Funds (“Agreement”) is entered into this 27 day of February, 2025, by and between the CITY OF PALM DESERT (“City”) and Fine Quality Foods Inc. dba Papa Dan’s Pizza and Pasta, a corporation, (“Recipient”). City and Recipient are sometimes referred to individually as Party and collectively as Parties.

RECITALS
A. City has created the Invest Palm Desert Program (“Program”) which establishes a Program fund and allows businesses to apply for money for capital improvements and emergency assistance from the City’s Program fund. The Program’s goals are to enhance the City’s ability to promote economic development, facilitate the growth of businesses that provide high-quality jobs, ensure a strong economic base to support services to City residents, aid in the diversification of the City’s economy, and promote an improved quality of life within the City.

C. Recipient has owned and operated an Italian restaurant in the City for forty years, however, in 2024 a fire destroyed Recipient’s restaurant. Recipient has secured a new tenant space located at 73011 Country Club Drive F-1, Palm Desert, CA 92270 (“Property”), within the same shopping center as the prior restaurant’s location, and Recipient seeks to re-establish Recipient’s restaurant within the City.

D. Recipient has submitted a request to City for disbursement of Program funds, to be used only for such capital improvements as specified in Exhibit “A”, attached hereto and incorporated herein by reference.

D. City has considered Recipient’s request and desires to approve the disbursement of Two Hundred Thousand Dollars ($200,000.00) of Program funds (the “Funds”) to Recipient, to be used only for such capital improvements as specified in Exhibit “A”, subject to the terms and conditions set forth herein.

E. The City has determined this Agreement serves a public purpose because the continued operation of the Property will enhance economic development in the City, facilitate the growth of a business that provides high-quality jobs to residents, ensure a strong economic base to support services to City residents, aid in the diversification of the City’s economy, promote an improved quality of life within the City, and provide additional tax revenue to the City that will assist the City in providing services to its residents. The City has further determined that the public benefit derived from this Agreement outweighs any private benefit derived from this Agreement. 685
2 AGREEMENT

1. Disbursement and Use of Funds. Subject to the terms and conditions of this Agreement, within 30 days of City’s receipt of an invoice from Recipient, City shall disburse the Funds to Recipient in a manner convenient to City. Recipient shall use the Funds only for such capital improvements as specified in Exhibit “A”, at Recipient’s new Italian restaurant located at the Property (the “Business”), and shall not use the Funds for any other purpose.

2. Conditions Precedent to Disbursement. City’s obligation to perform under this Agreement and to disburse the Funds is subject to the following conditions being satisfied and the City’s receipt and approval of the following certifications, documents or materials, each of which shall be in a form and substance satisfactory to the City in its sole and absolute discretion:
a. Recipient shall have made a request to City for the Funds via an invoice detailing how Funds will be used and allocated, which vendors are being purchased from, hired, or otherwise utilized in compliance with Section 3, and containing a signed certification from Recipient that invoices have not been submitted, and will not be submitted, for payment or reimbursement of those particular uses from any other source; b. Recipient shall have provided certification to City that Recipient has incurred expenses to obtain the capital improvements the Funds will be used for, or is otherwise contractually bound to incur such expenses;
c. Recipient shall have provided evidence to City that Recipient is in compliance with Section 4 of this Agreement; and
d. No Default or Event of Default has occurred and remains uncured. “Default” means any event or condition which, with the passage of time or the giving of notice or both, would constitute and Event of Default (as defined below). The occurrence of any of the following shall be deemed to be a default hereunder (each an “Event of Default”):
i. any default or breach of any of the terms, provisions, and obligations of the Recipient pursuant to this Agreement, and such default or breach is not cured by Recipient within fifteen (15) days from receipt of written notice thereof from City; ii. commencement of any case under the Bankruptcy Code, Title 11 of the United State Code, or commencement of any other bankruptcy arrangement, reorganization, receivership, custodianship, or similar proceeding under any federal, state, or foreign law by or against Recipient and with respect to any such case or proceeding that is involuntary, and such case or proceeding is not dismissed within sixty (60) days of the filing thereof;
iii. Recipient shall fail to make any payment in respect of any of its indebtedness when due (whether at maturity or upon acceleration) or within any applicable grace period, or any other event or condition shall occur which results in acceleration of the maturity of such indebtedness;
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3 iv. A judgment or order for the payment of money shall be rendered against Recipient, which would have a material adverse effect on Recipient, or any of its business or operations and such judgment or order shall continue unsatisfied and unstayed for a period of thirty (30) days;
v. the occurrence of any event (including, without limitation, a change in the financial condition, business, or operations of Recipient for any reason whatsoever) that materially and adversely affects the ability of Recipient to perform any of its obligations under this Agreement;
vi. commencement of any action or proceeding which seeks as one of its remedies the dissolution of Recipient which is not being defended diligently and in good faith by Recipient, but in any event such action or proceeding must be terminated within ninety (90) days following its commencement; or
vii. A material portion of the property of Recipient is attached, levied upon, or otherwise seized by legal process, and such attachment, levy, or seizure is not quashed, stayed, or released within thirty (30) days of the date thereof.

3. Local Contracting Requirement. Recipient shall only contract with businesses located in the City of Palm Desert in the course of Recipient’s utilization of the Funds for the purposes allowed by this Agreement. Recipient shall not spend the Funds with any business which is not located in the City of Palm Desert. Failure to comply with this section will, in addition to other applicable legal and equitable consequences, result in Recipient’s ineligibility for future City funding.

4. Minimum Investment. Recipient shall invest a minimum of One Million, Two Hundred Thousand Dollars ($1,200,000.00) into Recipient’s Business. Prior to submitting an invoice for disbursement of Funds, Recipient shall submit evidence satisfactory to City in City’s sole and absolute discretion that Recipient has complied, or will comply, with this Section.

Recipient shall not be eligible to receive Funds and City shall not be obligated to disburse the Funds until City has received such evidence and determined it is satisfied that Recipient has complied or will comply with this Section. Failure to comply with this section will, in addition to other applicable legal and equitable consequences, result in Recipient’s ineligibility for future City funding.

5. Five Year Operating Requirement. Recipient covenants and agrees for itself, its successors, assigns, and every successor in interest to Recipient’s Business:
a. To commence operations of the Business at the Property in such a manner as to generate sales tax by July 1, 2025.
b. To continuously use and operate the Business for a period of at least five years from the date of the Businesses’s opening to the public. The Business shall be open for a full day’s regular business hours twelve months per year, and at least five days every week. The Business may be closed on federal holidays.
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4 c. Damages for Failure to Comply. If the Business fails to commence operations by the time period set forth in Section 5.a., or in any way or for any period of time ceases continuous operations in City’s sole judgment within five years from the date of the Businesses’s opening, then City may demand repayment of, and Recipient shall immediately refund to City, One Hundred Thousand Dollars ($100,000.00) of the Funds (the “Clawback Amount”). The Clawback Amount will be secured by that certain security agreement executed concurrently herewith and in a form attached hereto as Exhibit “B”. d. Recipient’s Covenant to Use Property In Accordance With Agreement.

Recipient covenants and agrees for itself, its successors and assigns and all voluntary and involuntary successors in interest to Recipient’s interest in the Business or the Property or any part thereof, that the Property shall, for the Term, be put to no use other than operation of the Business.

6. Maintenance of Records. Recipient shall keep, preserve, and maintain, for a period of at least six years commencing on the date of City’s initial disbursement of Funds to Recipient, all documents and records of any kind relating to Recipient’s use of the Funds.

7. Right to Inspect and Audit. The City may inspect and audit all of Recipient’s documents and records relating to the Recipient’s use of the Funds to ensure compliance with this Agreement and to ensure Recipient uses the Funds for authorized purposes. Recipient shall make such documents and records available to City, at the place and in the manner and form specified by City, within 15 days following City’s request for such documents and records. Recipient shall furthermore grant City’s employees or agents access to any land, facilities, or improvements relating to Recipient’s use of the Funds, within a reasonable amount of time after City issues written notice to Recipient requesting such access.

8. Prevailing Wage Laws. Recipient is aware of the requirements of California Labor Code Sections 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on certain "public works" and "maintenance" projects. Recipient understands and agrees that it is Recipient’s obligation to determine if Prevailing Wage Laws apply with regard to the Recipient’s use of Funds under this Agreement.

Recipient agrees to fully comply with such Prevailing Wage Laws, if applicable. Recipient shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It is the intent of the parties to effectuate the requirements of sections 1771, 1774, 1775, 1776, 1777.5, 1813, and 1815 of the Labor Code within this Agreement, and Recipient shall therefore comply with such Labor Code sections to fullest extent required by law. It shall be mandatory upon the Recipient and all of Recipient’s contractors to comply with all California Labor Code provisions, which include but are not limited to prevailing wages, employment of apprentices, hours of labor and debarment of contractors and subcontractors.

9. Indemnification. The Recipient shall Indemnify the City, its elected and appointed officials, its officers and employees, attorneys, contractors, and volunteers (together, the “City 688
5 Indemnitees”) from and against any and all liabilities, including without limitation all claims, losses, damages, penalties, fines, and judgments, associated investigation and administrative expenses, and defense costs, including but not limited to reasonable attorneys’ fees, court costs and costs of alternative dispute resolution, (“Liabilities”) of any kind or nature relating to the subject matter of this Agreement or the implementation thereof, including without limitation, the obligations to proceed in accordance with applicable law as set forth in sections 8 and 10, and for any damages to property or injuries to persons, including accidental death (and attorney’s fees and costs), which may be caused by acts or omissions of the Recipient under this Agreement, whether such activities or performance thereof be by the Recipient or by anyone directly or indirectly employed or contracted by the Recipient and whether such damage shall accrue or be discovered before or after termination of this Agreement. The Recipient shall not be liable for property damage or bodily injury if and to the extent such property damage or bodily injury is directly and proximately caused by the sole or gross negligence or willful misconduct of the City Indemnitees.

The Recipient shall have the obligation to defend any such action covered by this Section; provided, however, if and to the extent that Recipient determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, after consultation with and reasonable consent from the City, Recipient shall compromise or settle such action in a way that fully protects City from any Liabilities. In this regard, Recipient’s obligation to defend shall include the right to hire (subject to the reasonable written approval by the City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Recipient and/or City. If Recipient defends any such action, as set forth above, it shall Indemnify the City Indemnitees from and against any Liabilities assessed or awarded against any of them by way of judgment, order, decree, settlement, or stipulation.

All rights, duties and obligations of this indemnification shall survive the termination or expiration of this Agreement.

10. Compliance with Law. Recipient shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local government (including those of the City). If Recipient’s failure to comply with applicable laws, ordinances, codes, or regulations results in a claim for damage or liability to City, Recipient shall be responsible for defending, indemnifying, and holding the City harmless as provided in this Agreement.

11. Taxes. Recipient acknowledges and agrees that Recipient shall be responsible for any and all taxes that are associated in any way to the receipt or use of the Funds.

12. Authority to Enter Agreement. Recipient and City each respectively represent, covenant, and warrant that they are authorized to enter into and execute this Agreement and to bind each respective Party.

13. Entire Agreement. This Agreement contains the entire agreement between the Parties related to the matters specified herein, and supersedes any prior oral or written statements or agreements between the Parties related to such matters. 689
6 14. Agreement Binding on Successors. This Agreement, together with all obligations, terms, covenants, and conditions herein, shall be binding upon the heirs, executors, administrators, personal representatives, successors in interest and assigns of the Recipient. Whenever the term “Recipient” is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.

15. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.

16. No Third Party Beneficiaries. All of the covenants contained in this Agreement are for the express benefit of each and all such Parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed.

17. Laws of California. This Agreement is made in the State of California, under the Constitution and laws of such State, and shall be construed and enforced in accordance with the laws of such State.

18. Assignment. The rights, obligations, and interests of Recipient shall not be assignable or transferable without the prior written consent of the City. Any attempted assignment without the prior written consent of the City shall be null and void.

19. Severability. If any section, clause or phrase of this Agreement or the application thereof to any Party or any other person or circumstance is for any reason held to be invalid by a court of competent jurisdiction, it shall be deemed severable, and the remainder of the Agreement or the application of such provisions to any other Party or to other persons or circumstances shall not be affected thereby. Each Party hereby declares that it would have entered into this Agreement, and each subsection, sentence, clause and phrase thereof, irrespective that one or more sections, subsections sentences, clauses or phrases or the application thereof might be held invalid.

20. Recipient’s Covenant Not to Discriminate. Recipient covenants by and for itself, himself or herself, its, his or her heirs, executors, administrators, and assigns, and all Persons claiming under or through it, him or her, and this Agreement is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any Person or group of Persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property nor shall Recipient, itself, himself or herself, or any Person claiming under or through it, him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the Property.

21. Relationship Between City and Recipient. It is hereby acknowledged that the relationship between the City and the Recipient is not that of a partnership or joint venture and 690
7 that the City and the Recipient shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, the City shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Business. The Recipient agrees to indemnify, hold harmless and defend the City, to the same extent as set forth in Section 9 above, from any claim made against the City arising from a claimed relationship of partnership or joint venture between the City and the Recipient with respect to the development, operation, maintenance or management of the Property or the Business.
[signatures on the following page]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.

CITY OF PALM DESERT
By:

City Manager
APPROVED AS TO FORM:

By:

Isra Shah
City Attorney
By:

Name:

Title:
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A-8

EXHIBIT A
Approved Use of Funds
(Attachment Behind This Page)
Expense Amount Source
Cornerstone Restaurant Supply and Design $397,730.84
Signarama $12,770.07
Placencia Mirror and Glass $44,770.00
Picard $71,954.72 Insurance/Private Equity
S&G Plumbing Services $38,500.00
Innovation Building and Design $874,380.00 Insurance/Private Equity Total $1,440,105.63
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A-9

EXHIBIT B
Form of Security Agreement
(Attachment Behind This Page)
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1 SECURITY AGREEMENT
This Security Agreement (“Agreement”) is made and entered into as of the __ day of _______, 20__, by and between _________________________ (''Debtor''), and the City of Palm Desert (''Secured Party''), as follows:

For value received, the Debtor grants to the Secured Party a security interest in (i) the property and interests in property described on Exhibit A attached hereto and incorporated herein by reference, and (ii) all proceeds thereof (such personal property and proceeds are referred to herein collectively as the “Collateral”).

This security interest is granted for the purpose of securing the obligations of the Debtor pursuant to that certain Agreement for Disbursement and Use of Funds, of even date herewith, executed by Debtor and Secured Party (the “Funding Agreement”), pursuant to which the Debtor is required to pay the Secured Party a clawback amount of One Hundred Thousand Dollars ($100,000.00) if Debtor fails to comply with the requirements set forth in the Funding Agreement (the “Obligations”).

The Debtor warrants, covenants, and agrees as follows:

1. Title. Except for the security interest granted by this Agreement or as otherwise permitted in writing by Secured Party, the Debtor has, or on acquisition will have, full title to the Collateral free from any lien, security interest, encumbrance, or claim, and the Debtor will, at the Debtor's cost and expense, defend any action that may affect the Secured Party's security interest in, or the Debtor's title to, the Collateral.

2. Financing Statement. No financing statement covering the Collateral or any part of it or any proceeds of it is on file in any public office (except for those approved by Secured Party in its sole discretion). The Debtor hereby authorizes the Secured Party to file such financing statements and continuation statements and other notices, instruments, documents, agreements or consents in such offices as are or shall be necessary or as the Secured Party may determine to be appropriate to create, perfect and establish the priority of the security interest granted by this Agreement in any and all of the Collateral. At the Secured Party's request, the Debtor will pay the filing fees required for all necessary financing statements in forms satisfactory to the Secured Party and will further execute all other instruments deemed necessary by the Secured Party.

3. Sale, Lease, or Disposition of Collateral. Except in the ordinary course of business, the Debtor will not, without the written consent of the Secured Party, sell, contract to sell, lease, encumber, or dispose of the Collateral or any interest in it until this Agreement and all Obligations secured by it have been fully satisfied.

4. Protection of Collateral. The Debtor will not use the Collateral in violation of any statute or ordinance.

5. Taxes and Assessments. The Debtor will pay promptly when due all taxes, assessments and fees on the Collateral, or any part of the Collateral.

6. Reimbursement of Expenses. At the option of the Secured Party, following not less 694
2 than ten (10) days written notice to Debtor (unless a shorter or longer period is otherwise expressly provided in any other agreement between the Secured Party and Debtor, or except in the case of an emergency) the Secured Party may discharge taxes, liens, interest, or perform or cause to be performed for and on behalf of the Debtor any actions and conditions, obligations, or covenants that the Debtor has failed or refused to perform, and may pay for any actions to preserve the Collateral, and may enter the premises where the Collateral or any part of it is located and cause to be performed as agent and on the account of the Debtor any acts that the Secured Party may deem necessary for the proper preservation of the Collateral or any part of it.

Any and all sums expended by the Secured Party under this paragraph, including but not limited to, attorneys' fees, court costs, agent's fees, or commissions, or any other costs or expenses, shall bear interest from the date of payment at the rate of twelve percent (12%) per annum.

7. Payment & Termination. The Debtor will pay the Obligations secured by this Agreement if and as required in accordance with the terms and provisions of the Funding Agreement. This Agreement will terminate upon the performance of all obligations of Debtor to Secured Party and the termination of the Funding Agreement.

8. Change of Place of Business. The Debtor will promptly notify the Secured Party of any change of the Debtor's principal place of business, or place where records concerning the Collateral are kept.

9. Attorney-in-Fact. The Debtor appoints the Secured Party as the Debtor's attorney-infact to do each and every act that the Debtor is obligated by this Agreement to do, and to exercise all rights of the Debtor in the Collateral and to make collections and to execute any and all papers and instruments and to do all other things necessary to preserve and protect the Collateral and to make collections and to protect the Secured Party's security interest in the Collateral.

10. Time of Performance and Waiver. In performing any act under this Agreement and the Funding Agreement secured by it, time shall be of the essence. The Secured Party's acceptance of partial or delinquent payments, or the failure of the Secured Party to exercise any right or remedy, shall not constitute a waiver of any obligation of the Debtor or right of the Secured Party and shall not constitute a waiver of any other similar default that occurs later.

11. Default. The Debtor shall be in default under this Agreement on the occurrence of any of the following events or conditions:
(a) Any default under the Funding Agreement;
(b) Any warranty, representation, or statement made or furnished to the Secured Party by or on behalf of the Debtor proves to have been false in any material respect when made or furnished;

(c) Sale or encumbrance to or of any of the Collateral in violation of this Agreement, or the making of any levy, seizure, or attachment of or on the Collateral; or (d) Failure of the security interest granted by this Agreement to create a valid and perfected security interest or lien.

12. Remedies. On the occurrence of any event of default, and at any later time, the 695
3 Secured Party may declare all obligations secured due and payable immediately, and may proceed to enforce payment and exercise any and all of the rights and remedies provided by the California Commercial Code as well as other rights and remedies either at law or in equity possessed by the Secured Party.

The Secured Party may require the Debtor to assemble the Collateral, or the books, records and contracts relating to the Collateral and make it or them available to the Secured Party at any place to be designated by the Secured Party that is reasonably convenient to both parties.

Unless the Collateral threatens to decline rapidly in value, the Secured Party will give the Debtor reasonable notice of the time and place of any public sale or of the time after which any private sale or any other intended disposition of the Collateral is to be made. The requirements of reasonable notice shall be met if the notice is mailed, postage prepaid, to the address of the Debtor shown at the beginning of this Agreement at least ten days before the time of the sale or disposition. Expenses of retaking, holding, preparing for sale, selling, or the like shall include the Secured Party's reasonable attorneys' fees and legal expenses.

13. Jury Waiver. TO THE EXTENT PERMITTED BY LAW, DEBTOR HEREBY

VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES

ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR

AMONG DEBTOR AND SECURED PARTY ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT. THIS

PROVISION IS A MATERIAL INDUCEMENT TO SECURED PARTY TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER FINANCING DOCUMENTS.

14. Miscellaneous Provisions.
(a) Governing Law; Venue: This Agreement is delivered in the State of California and governed by California law (without giving effect to its laws of conflicts). Any legal action or proceeding with respect this Agreement shall only be brought in a state or federal court located in Riverside County, California. By the execution and delivery of this Agreement , the Debtor submits to and accepts, for itself and in respect of its property, generally and unconditionally, the jurisdiction of such courts. The Debtor waives any claim that the State of California is not a convenient forum or the proper venue for any such legal action or proceeding.
(b) Parties Bound: This Agreement shall be binding on and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns as permitted by this Agreement. (c) Attorneys' Fees: Should any litigation or arbitration be commenced between the parties to this Agreement concerning the Collateral, this Agreement, or the rights and duties of either party in relation to them, the prevailing party shall be entitled to a reasonable sum as reimbursement for his or her attorneys' fees and legal expenses. (d) Severability: In case any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability of that provision shall not affect any other provision of this Agreement, and this Agreement shall be construed as if the invalid, 696
4 illegal, or unenforceable provision had never been contained in it. (e) Entire Agreement: This Agreement constitutes the only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this Agreement.
(f) Definitions: All terms used in this Agreement that are defined in the California Commercial Code shall have the same meaning in this Agreement as in the Code. [SIGNATURES FOLLOW THIS PAGE]
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6 EXHIBIT A
Description of Personal Property Collateral
(a) All personal property (including, without limitation, all goods, supplies, equipment, furniture, furnishings, fixtures, machinery, machine tools, motors, equipment controls, attachments, parts, inventory, and chemicals) in which Debtor now or hereafter acquires an interest or right, together with any interest of Debtor in and to personal property which is leased or subject to any superior security interest, and all books, records, leases and other agreements, documents, and instruments of whatever kind or character; (b) All fees, income, rents, issues, profits, earnings, receipts, royalties, and revenues which, after the date hereof and while any portion of the obligations of Debtor to Secured Party remains unpaid or unperformed, may accrue from such personal property or any part thereof, or which may be received or receivable by Debtor from any hiring, using, letting, leasing, subhiring, subletting, subleasing, occupancy, operation, or use thereof; (c) All of Debtor's present and future rights to receive payments of money, services, or property, accounts and other accounts receivable, deposit accounts, chattel paper, notes, drafts, contract rights, instruments, general intangibles, payment intangibles, and principal, interest and payments due on account of goods sold or leased, services rendered, loans made or credit extended, together with title to or interest in all agreements, documents, and instruments, evidencing, securing or guarantying the same;
(d) Debtor's rights under all insurance policies covering any of the aforesaid collateral and all proceeds, loss payments, and premium refunds payable regarding the same; (e) All causes of action, claims, compensation, and recoveries for any damage to, destruction of, or condemnation or taking of any of the aforesaid collateral; and (f) All proceeds, increases, substitutions, replacements, additions, and accessions of the aforesaid collateral.
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