2013-16-Minutes for Meeting December 20,2012 Recorded 1/11/2013COUNTY OFFICIAL
NANCYUBLANKENSHIP, COUNTY CLERKDS
COMMISSIONERS' JOURNAL 01~11~2013 11:40:43 AM
II I I I II II Illl 11 l l 11 11 llll III
2013-1•
Do not remove this page from original document.
Deschutes County Clerk
Certificate Page
Deschutes County Board of Commissioners
1300 NW Wall St., Suite 200, Bend, OR 97701-1960
(541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org
MINUTES OF WORK SESSION
DESCHUTES COUNTY BOARD OF COMMISSIONERS
THURSDAY, DECEMBER 20, 2012
Present were Commissioners Anthony DeBone, Alan Unger and Tammy Baney.
Also present was Tom Anderson, Interim County Administrator; Erik Kropp,
Deputy County Administrator; Nick Lelack, Community Development; and Mark
Pilliod, John Laherty and Laurie Craghead, County Counsel. Also present were
Liz Dickson, attorney with Hurley Re PC, representing Pronghorn Intangibles; Joe
Willis of Schwabe, Williamson & Wyatt, representing the previous developer,
Casilli; and Randy Koss of Pronghorn Intangibles.
The meeting was called to order at 2:20 p.m.
1. Consideration of Approval of an Amendment to the Pronghorn
Improvement Agreement.
Liz Dickson, attorney for the applicant, said her clients are in an awkward spot
because much of their plans need to be kept confidential at this time. The
Commissioners could come out individually to look at the property if desired.
Mark Pilliod stated that they are just interested in the basics, and how her client
got to the current cost of the project. Randy Koss, representing Pronghorn
Intangibles, said they have met with contractors and others to discuss the
project on a broad scale. Ms. Dickson said a drawing was provided of the
rooms and their approximate size and amenities. The original plan was to build
units on the Hotel A site and more on the Hotel B site. They may move these
around to make the best possible arrangement for the market.
Mr. Koss added that the resort manager might have much to say about this;
Conde Nast named them the best resort management in their field. They have
discussed architects and are preparing to bring in one of them.
Minutes of Board of Commissioners' Work Session Thursday, December 20, 2012
Page 1 of 3
Ms. Dickson said the finish level of these hotels is unlike anything found in
Central Oregon. They will take advantage of the sun and views. Their
standards are very high. The right kind of support services have to be provided
as well.
Commissioner Baney asked about the timeline of five years or completion by
the end of 2018. She wants assurances that this will move forward. Mr. Koss
stated that they wanted to use a number that they know they can meet. They
take this contract very seriously. They are working on room concepts and hope
to start soon. Ms. Dickson said this agreement is based on compromise.
Commissioner Baney stated that the developer cannot use the state of the
economy to delay things; the climate now is known. Ten years ago, it was not
clear what was coming.
Mr. Koss stated they have had to work hard on this situation over the past year,
clearing up issues regarding ownership, foreclosures, liens, taxes and so on.
Mr. Pilliod referred to page 2, next to the last paragraph regarding the first deed
of trust being held by the County. On page 8, 14.2, it speaks to the first deed of
trust but the language is different; it needs to reflect the language in the recital.
Ms. Dickson agreed.
Ms. Dickson feels this document is appropriate, but there is some terminology
in the trust deed that does not match what is in the agreement. The contract will
govern.
Mr. Willis, representing Casilli, confirmed the current language, and thanked
the County Legal staff for its hard work on a complicated matter.
BANEY: Authorize Interim County Administrator signature of the Agreement
and Legal Counsel's signature on related documents relating to
litigation, on behalf of the County, including adjustments discussed
and agreed to at this meeting.
UNGER: Second.
VOTE: BANEY: Yes.
UNGER: Yes.
DEBONE: Chair votes yes.
Minutes of Board of Commissioners' Work Session Thursday, December 20, 2012
Page 2 of 3
2. Other Items.
None were discussed.
Being no further discussion, the meeting adjourned at 2:40 p.m.
DATED this Day of = d 'u' 2M for the
Deschutes County Board of Commissione s.
4401,04w-
Anthony DeBone, Chair
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ATTEST:
Recording Secretary
Alan Unger, Vice Chair
ay~- -
Tammy Baney, Commi ner
Minutes of Board of Commissioners' Work Session Thursday, December 20, 2012
Page 3 of 3
n
Deschutes County Board of Commissioners
1300 NW Wall St., Suite 200, Bend, OR 97701-1960
(541) 388-6570 - Fax (541) 385-3202 - www.deschutes.ora
WORK SESSION AGENDA
DESCHUTES COUNTY BOARD OF COMMISSIONERS
1:30 P.M., THURSDAY, DECEMBER 20, 2012
1. Consideration of Approval of an Amendment to the Pronghorn Improvement
Agreement - Mark Pilliod
2. Other Items
PLEASE NOTE: At any time during this meeting, an executive session could be called to address issues relating to ORS 192.660(2) (e), real
property negotiations; ORS 192.660(2) (h), litigation; ORS 192.660(2)(d), labor negotiations; or ORS 192.660(2) (b), personnel issues.
Meeting dates, times and discussion items are subject to change. All meetings are conducted in the Board of Commissioners' meeting rooms at
1300 NW Wall St., Bend unless otherwise indicated. If you have questions regarding a meeting, please call 388-6572.
Deschutes County meeting locations are wheelchair accessible.
Deschutes County provides reasonable accommodations for persons with disabilities.
For deaf, hearing impaired or speech disabled, dial 7-1-1 to access the state transfer relay service for TTY.
Please call (541) 388-6571 regarding alternative formats or for further information.
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REVIEWED
LEGAL COUNSEL
For Recording Stamp Only
After Recording Return to:
Deschutes County Community Development
117 NW Lafayette
Bend, OR 97701
2012 AMENDMENT TO IMPROVEMENT AGREEMENT
Deschutes County Document No. 2012-671
(Overnight Lodging)
This Amendment to Improvement Agreement ("Agreement"), relates to the construction and
installation of Required Improvements (as defined herein) to be constructed in the Pronghorn
Destination Resort, hereafter referred to as "Resort," as required in the conditions of approval
identified in:
Findings and Decisions for Deschutes County File Nos. M-02-1, Final Master Plan for a
destination resort (the "Master Plan");
SP-02-49, Site Plan for visitor-oriented lodging, eating and meeting facilities;
SP-08-2, Site Plan for hotel, extended by E-10-15; and
SP-08-4, Site Plan for hotel, extended by E-10-14;
by and between DESCHUTES COUNTY, OREGON, a political subdivision of the State of
Oregon, herein after referred to as "County;" and PRONGHORN INTANGIBLES LLC, a Hawaii
limited liability company ( "Owner"), as owner of Resort's Hotel Site A, and Hotel Site B,
(collectively 'Future Development Sites", defined herein) and signify agreement to this
Agreement by signing below.
This Agreement is effective upon signature of all parties.
RECITALS
WHEREAS, Owner is the owner of a fee simple interest in the Future Development Sites
and the successor to land use approvals and corresponding requirements; and
WHEREAS, Owner's predecessor in title ("Prior Owners") and County entered into an
Improvement Agreement (Overnight Lodging) recorded in the Official Records of Deschutes
County at 2002-68693 as amended and restated pursuant to that certain 2008 Amendment to
Improvement Agreement (Overnight Lodging) recorded at 2008-22062 (collectively referred to
as the "Original Improvement Agreement"); and
Page 1 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
WHEREAS, Owner intends to comply with County conditions of development approval,
including but not limited to the obligation to construct overnight lodging units (such "overnight
lodging units" or "overnight units" are defined in Deschutes County Code ("DCC") 18.04.030) on
Future Development Sites, hereinafter the "Required Improvements" as further defined in
Section 4 of this Agreement; and
WHEREAS, pursuant to the Original Improvement Agreement, Prior Owners, in whole or
in part, deposited funds to be held in a trust account (the "Trust Account") with the County in the
amount of Seven Million Four Hundred Thousand Dollars ($7,400,000), as financial assurance
to guarantee that the obligation to build the overnight lodging units would be fulfilled on the
designated sites in compliance with Deschutes County Code ("DCC") Section 18.124.050; and
WHEREAS, the current balance of the Trust Account funds (including accrued interest)
is approximately $9,3 million; and
WHEREAS, DCC Section 18.113.110, related code provisions, and prior agreements
between County and Prior Owners provide that County may utilize the financial assurance
provided to pursue completion of the Required Improvements (as defined herein); and
WHEREAS, the deadline under the Original Improvement Agreement to complete
construction of the overnight lodging units on Hotel Site A (Tax Account 16131613000500) has
expired, and Owner desires to enter into this Agreement with County such that the obligations
running with the Future Development Sites are not in default, and Owner desires to bring the
Resort into full compliance with all land use approvals and legal requirements; and
WHEREAS, the effectiveness of this Agreement is expressly conditioned on (i) the
dismissal of the lawsuit identified as Case No 12CV0489, Casilli v. Deschutes County, et. al.;
and (ii) the release by Gerald S. Casilli and Jeanne L. Casilli, Trustees of the Casilli Revocable
Trust UTA dated October 15, 1996 and Gerald S. Casilli, individually, of any and all claims to
the funds in the Trust Account; and
WHEREAS, County agrees to release all of the Trust Account funds toward construction
on the Phase 1 Site, defined herein and pursuant to the terms of this Agreement, and including
but not limited to land use permitting professional expenses and fees, professional architectural
expenses, professional engineering expenses, (collectively "soft costs") and Owner will pay for
the balance of the costs associated with completion of construction on the Future Development
Sites,; and
WHEREAS, Owner commits to providing financial assurance for timely completion of the
Required Improvements in the form of conveyance to the County of a First Trust Deed over the
land which constitutes the first of the two Future Development Sites (the "Phase 1 Site") and all
fixtures and improvements constructed thereon, which First Trust Deed shall name County as
beneficiary and shall be delivered to the County, free and clear of encumbrances not approved
by the County as financial assurance for completion of all Required Improvements (as defined
herein); and
WHEREAS, the Phase I Site, upon completion of construction of the overnight units
thereon, shall contain at least sixty percent (60%) of the overnight units required of Owner under
the Required Ratio (as defined herein), and
Page 2 of 18 AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012.671
WHEREAS, it is the intention of the parties that upon an Event of Default (defined
below), County, as beneficiary under the Trust Deed, shall after giving required notice to Owner
be immediately entitled to exercise any and all of remedies under Oregon law including, without
limitation, foreclosure of the Trust Deed with the power of sale, free from the claim or lien of any
person or entity; and
WHEREAS, DCC 18.113.060(D)(2) and the Master Plan currently contain requirements
that are more stringent than Oregon Revised Statutes, requiring that the Owner construct
overnight units in numbers calculated by a ratio of at least two (2) permanent dwellings per each
one (1) overnight lodging unit; and the Parties have contemplated amending DCC to allow a
ratio of not less than two and one-half (2 1/2) permanent dwellings per each one (1) overnight
lodging unit and the County may or may not hereafter approve such amendment, the result of
which will be referenced herein as the "Required Ratio" as applicable; and
WHEREAS, the Required Improvements under this Agreement do not constitute a Public
Improvement as the term is defined in ORS 279A.010(1)(cc);
NOW, THEREFORE,
AGREEMENT
IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES above mentioned, for and
in consideration of the mutual promises hereinafter stated, as follows:
Recitals. The Recitals to this Agreement set forth above are hereby incorporated herein
as if fully set out, shall constitute contractual provisions and are not mere recitals.
2. Real Property Description. The real property subject to this Agreement, is described
on attached Exhibit A, also known as Tax Lots 1613160000300, 161316D000500, and
Tesana lots as described herein, all incorporated by this reference.
3. Exhibits. The exhibits set forth below and attached to the Agreement are hereby
incorporated herein by reference:
3.1. Exhibit A - Legal Description of Future Development Sites and Tesana;
3.2. Exhibit B -Trust Deed.
3.3 Exhibit C - Sample Draw Form
4. Identification of Required Improvements.
4.1. Owner shall install and complete, or cause to be installed and completed the
Required Improvements, as set forth in SP-08-2 and SP-084, and as they each
may be amended in the future by Owner application and County approval, to the
extent that the same remain to be completed.
Page 3 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
4.2. Provided that the Required Improvements satisfy the definition of an "overnight
lodging unit" and comply with County site plan approval(s), Owner shall have the
ability to design the type of product (e.g., conventional multi-story hotel, lodge,
villa, etc.) to be constructed on the Future Development Sites and submit
applications to either amend the County site plan approvals listed in Section 4.1.
or submit new site plan applications accordingly for County review and approval.
4.3 It is further acknowledged by the Parties that Owner may opt to construct a
portion of the Required Improvements on other property within the Resort, but
such construction shall not count toward Owners obligation to build 60% of the
Required Improvements in Phase 1. Further, Owner shall not be entitled to use
the Trust Account proceeds for construction of these units built on other
properties within the Resort. Owner shall still be required to pledge the title of
Phase 1's site into trust by execution of a Trust Deed as described herein as
financial assurance. If Owner constructs some or all such Required
Improvements on other properties with the Resort, such units shall be deducted
from the total number of Required Improvements which Owner is obligated to
construct,
4.4 The provisions of Section 4.3 are subject to the following conditions:
4.4.1 Locating required overnight lodging on property other than the Future
Development Sites may require land use application to and approval by the
County.
4.4.2 Nothing contained in Section 4.3 shall be construed as requiring County
approval of extensions to Construction Phases or Deadlines outlined in Section
5.4 of this Agreement.
4.4.3 Notwithstanding the exercise of rights contained in Section 4.3 and
subject to Section 5.8 of this Agreement, all Required Improvements shall be
completed no later than December 31, 2018.
5. Construction of Required Improvements; Status Reports.
51 The number of Required Improvements that Owner shall construct is 142 units if
the Required Ratio remains at 2:1, or if Owner receives County land use
approval for a Required Ratio of 2.5:1, Owner shall construct 104 units; in either
event, said number may be subject to change due to matters changing the
number of residential lots in the Resort, such as approved consolidation of
residential lots.
5.2 The Required Improvements shall be constructed in accordance with applicable
building and specialty codes and regulations, and the design and construction
plans and specifications approved by the County.
5.3. Owner shall engage consultants and contractors who shall cause Phase 1 Site
(which, upon completion of construction of the overnight lodging units thereon,
shall contain not less than 60% of the total number of units comprising the
Required Improvements), to be designed, constructed, inspected and receive
Page 4 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
occupancy approval from the County and/or the State of Oregon not later than
June 30, 2017, ("Phase 1 Completion Date"), unless extended by mutual
agreement of the Parties.
5.4. Timeline for Construction of Required Improvements
Construction Phase
Deadline
Phase 1 Conceptual Plans
December 31, 2013
Phase 1 Construction Drawings
December 31, 2014
Phase 1 Commencement
June 30, 2015
Phase 2 Conceptual Plans
June 30, 2015
Phase 2 Construction Drawings
June 30, 2016
Phase 1 Completion
June 30, 2017
Phase 2 Commencement
June 30, 2017
Phase 2 Completion
Dec. 31, 2018
As the Timeline depicted above demonstrates ("Timeline"), Owner shall cause
Phase 2 to be designed, constructed, inspected and receive occupancy approval
from the County and/or the State of Oregon not later than December 31, 2018
("Phase 2 Completion Date"), unless extended by mutual agreement of the
Parties.
5.5. Owner shall promptly and without delay and at no cost to the County repair all
facilities and all real property wherever located, damaged during any
construction-related activities.
5.6. As used herein, the term "Applicable Completion Date" shall mean and refer to
the Phase 1 Completion Date when the context indicates that construction of
Phase 1 is at issue and it shall mean and refer to the Phase 2 Completion Date
when the context indicates that construction of Phase 2 is at issue.
5.7. Commencing in June, 2013, Owner shall provide County with quarterly updates
(on June 30, September 30, December 31 and March 31 of each year),
regarding its progress in completing the Required Improvements.
5.7.1. Such updates shall be submitted in writing and shall be submitted to the
Deschutes County Community Development Department ("CDD") or such
other contact as County designates in writing, and may be presented, to
the Board of County Commissioners ("Board") by a representative of
Owner at a regularly scheduled Board Business Meeting or Work
Session.
5.7.2 In advance of such meeting or work session Owner shall permit CDD and
CDD's consultant (at County's cost) to enter the Property for purposes of
verifying information contained in each update.
5.7.3. Each update shall, at a minimum, include specific information regarding
the following:
Page 5 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
5.7.3.1. The percentage of the Required Improvements completed to
date;
5.7.3.2. Any changes in the anticipated cost and an updated timeline to
complete the Required Improvements;
5.7.3.3. Details and explanation of any changes in the construction
timeline from the date of this Agreement and/or the date of the
last update provided to the Board; and
5.7.3.4. Any other information County may reasonably request.
5.8. Parties acknowledge that the Timeline depicted in section 5.4 above assumes
that third parties will not interfere in Owner's performance.
5.8.1. In the event Owner is delayed at any time in the progress of constructing
the Required Improvements by the action of any fire, adverse weather
conditions, unavoidable casualties, acts of God, any third party unrelated
to Owner, or any other causes beyond Owner's control, then Owner may
request extension of performance of specific tasks and for specific
periods of time that directly relate to the nature and impact of the specific
interference. Owner's inability to obtain financing is deemed to be within
Owner's control.
5.8.2. Unless the County, in its reasonable discretion, determines that the
Owner's request is being made in bad faith, County shall approve said
request and memorialize the modification in writing.
6. Reserved
7. License to Enter and Remain on Property.
7.1. Owner hereby grants County and County's employees, engineers, consultants,
agents, contractors, subcontractors and suppliers license to come onto and
remain on such portions of the Future Development Sites as necessary to make
inspections of the Required Improvements.
7.2. In addition to any other remedies contemplated herein, from and after the
occurrence of an Event of Default, County or its employees, engineers,
consultants, agents, contractors, subcontractors and suppliers may enter onto
and remain on the applicable portions of the Future Development Sites and may
cause the applicable portion of the Required Improvements to be installed and
completed.
7.3. Any funds held by the County in Trust may be applied toward completion costs.
8. Ingress and Egress. Prior to or contemporaneous with recording any instrument
conveying any platted lot located on the Future Development Sites, Owner shall provide
each purchaser with legal rights of ingress and egress to the platted lot.
Page 6 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT DC Contract No. 2012-671
9. No County Guarantee. County does not guarantee that any of the Required
Improvements referred to in this Agreement will be constructed, maintained or operated.
10. License to Use Permits, Specifications and Plans.
10.1. Upon an Event of Default, Owner shall, upon request of the County, license or
assign to County all applicable contracts, permits, plans, specifications, shop
drawings, instruments, and approvals, and other documents necessary or useful
in the completion of or related in any manner to the applicable portion of the
Required Improvements (the "Documents").
10.2. Owner shall be responsible for providing within any contracts for supply or labor
and materials used in connection with constructing the Required Improvements
that such contract rights are assignable by Owner, but Owner is not responsible
for providing terms to assure compliance with public contracting rules.
10.3 Upon County's request pursuant to Section 10.1, Owner shall cause delivery of
physical possession of such Documents to the County.
10A Owner's obligations shall extend only to those Documents that relate to the
portion of the Required Improvements that have not been satisfactorily
completed as specified by the Applicable Completion Date.
10.5 County may assign the license referred to in this section for any purpose related
to completion of the Required Improvements without further approval from
Owner.
11. No Third Party Beneficiaries.
11.1. The Parties named herein are the only parties to this Agreement and are the only
parties entitled to enforce its terms, except as rights and responsibilities run with
the land to successors in title or legal responsibility.
11.2. Nothing in this Agreement gives or provides any benefit or right, whether directly,
indirectly, or otherwise, to third persons unless such third persons are individually
identified by name in this Agreement and expressly described as intended
beneficiaries of this Agreement.
12. Restoration of Monuments. Owner shall restore any monument erected or used for the
purpose of designating a survey marker or boundary of any town, tract, plat or parcel of
land which monument is broken, damaged, removed or destroyed, during the course of
work provided for or anticipated by this Agreement, whether intentional or otherwise, by
Owners or Owner's agents, employees or independent contractors.
13. Costs of Inspection. Owner shall pay to County the usual and customary costs incurred
by County in the inspection of the completed Required Improvements plus any fees,
such as plan check fees and structural, electrical, plumbing and other specialty codes
inspection fees normally associated with the review and inspection of any improvements
on the real property.
Page 7 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
14. Security for Required Improvements.
14.1. As security for Owner's obligations to complete the Required Improvements,
upon determination by the Owner as to which Future Development Site will be
developed first, but in any event, not later than June 1, 2013 , Owner shall
execute a First Trust Deed, in the form attached as Exhibit B, on the Phase 1
Site (whichever of the two hotel sites, previously referenced as A or B, is
developed first, to include at least 60% of the Required Improvements which
shall be recorded in the official records of Deschutes County . In the event
Owner needs to change said determination for unforeseen reasons (site
limitations, etc.), Owner may replace the recorded. t Trust Deed with a
replacement Trust Deed for the other site on or before December 31, 2013
(Deadline for Phase 1 Conceptual Pians , subject to County approval, and such
approval shall not be unreasonably withheld.
14.2. The First Trust Deed shall name County as beneficiary, and shall convey the
Phase I Site and all fixtures and improvements constructed or to be constructed
thereon, and all rents accruing therefrom, to the trustee of County's choice in
trust, free of any liens or encumbrances created or suffered by Owner, with
power of foreclosure, sale and any other remedies permitted by applicable law.
14.3. Owner estimates that the value of the Phase 1 Site, together with the completed
improvements and fixtures, will exceed the current value of the Trust Account
(i.e., $9,300,000).
14.4 Owner expressly acknowledges the validity and enforceability of the First Trust
Deed, and waives any right to challenge the First Trust Deed or any of the
County's rights thereunder based upon the nature of the obligation secured.
14.5 Except as otherwise provided herein, from and after County's acceptance of First
Trust Deed Owner shall have no right to require County to accept any other form
of equivalent financial assurance to secure performance of Required
Improvements.
15. Owner's Obligation for Costs.
15.1. Parties expressly acknowledge, understand, and agree that this Agreement shall not
relieve parties from the obligation to complete and fully pay for the Required Improvements and
other costs and fees set forth in this Agreement and in the Deschutes County Code. The
parties acknowledge that County shall also receive the Trust Deed for Phase 1 real property as
described herein. :The-value-to be attributed to the land ('Land Value for §uch property in.2012
shall. be asset forth in the Stipulated General Judgment in Oregon Tax Court Cases, Proomhorn
lntan9ibl_e UC. v. Deschutes County Assessor, Case No, 120379N and Pronqhorn
Development CompanyLLC_v. Deschutes County Assessor, Case.No. 120319N_ Thereafter,
the Land Value in future nears, shall be established at the Real-Market Value in effect at the time
of the foreclosure of the First Trust Deed.T T
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Page 8 of 18 AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
15.2. If there is an Event of Default prior to award of Phase 1 contract setting
maximum price for Phase 1 construction, Owner shall pay to County the
anticipated shortage to complete Required Improvements at a rate of $140,000
per unit after crediting the value of the Trust Account and. 'ard_Valu_e.
15.3 If there is an Event of Default after award of Phase 1 contract setting maximum
price for Phase 1 construction, Guaranteed Maximum Price shall determine the
per unit cost of construction, and Owner shall pay to County the anticipated
shortage to complete Required Improvements after crediting the value of the
Trust Account-and . Land Value.
15.4 If there is an Event of Default before award of Phase 2 contract setting maximum
price for the Phase 2 construction, Owner shall pay to County the anticipated
shortage to complete Required Improvements at a rate of $140,000 per unit, after
crediting the value of the Trust Account remaining, if any and Land Value .
15.5 If there is an Event of Default after award of Phase 2 contract setting maximum
price for Phase 2 construction, Guaranteed Maximum Price shall determine the
per unit cost of construction, and Owner shall pay to County the anticipated
shortage to complete Required Improvements after crediting the value of the
Trust Account remaining, if any, q11 ,Land Value.
16. Release of Security or Obligation. After the Required Improvements have been
inspected and approved by the County Community Development Department, County
shall release the respective security within fifteen (15) days of Owner's written request..
17. Trust Account Releases for Phase 1 Construction
17.1. The Trust Account fund amounts to approximately $9.3 million and will continue
to accrue interest until such time as all of the funds in the Trust Account have
been expended in accordance with this Agreement.
17.2. Owner shall submit conceptual plans and construction drawings for each phase
in accordance with the timeline set forth in Section 5, above.
17.3. Construction drawings shall include a construction budget, including a
Guaranteed Maximum Price ("GMP") which shall be approved in advance by
Parties in writing for the total project budget.
17.4 "Proportional Contributions" for the Parties shall be calculated as follows:
GIMP - Trust Account = Shortage
County shall be responsible for contributing the Trust Account sum and Owner
shall be responsible for contributing the Shortage sum. Proportional percentage
allocations for Parties shall be determined as follows:
Page 9 of 18 - AMENDMENT TO IMPROVE=MENT AGREEMENT - DC Contract No. 2012-671
Proportional Contribution for County: Trust Account /_GMP
Proportional Contribution for Owner:,Shortage / GMP
Each Party shall be required to pay its respective Proportional Contribution
Percentage for each draw request paid.
For example, if
GMP = $10,000,000
County= $ 8.800.000" (88% of total GMP)
Owner = $ 1,200,000 (12% of total GMP)
.This reflects $500.000 reduction in Trust Account per Sec. 17.19 bellow
17.5. GMP phases shall be divided into commonly used phases of construction.
17.6. The phases of construction shall be divided pursuant to the Sample Draw Form
attached as Exhibit C to this Agreement. (This form is provided as a general
example with values provided for illustrative purposes only.)
17.7. Separate budget amounts shall be specified and agreed upon by the Parties in
writing prior to commencement of each phase of work.
17.8. Owner will submit draw requests to County for payment of the construction costs
from Trust Account. Provided however, nothing contained herein shall be
construed as obligating the County for any costs, other than the funds contained
in the Trust Account.
17.9. Owner shall submit a draw requests, from time to time, but in no event more than
once during any calendar month, to the County.
17.10. The draw requests shall provide a detailed explanation of the work for which the
funds are being requested.
17.11. At no time shall County remit funds for work not yet completed.
17.12 Owner shall provide to County all invoices from contractors, sub-contractors, and
suppliers with each draw request to allow verification of costs and work
performed.
17.13 Owner shall provide to County all lien releases, whether conditional or
unconditional, to verify payment status of invoices received.
17.14 The project architect shall independently review all draw requests and shall
physically inspect work completed to verify work is completed prior as set forth in
the draw request.
1715. Architect's certification of same shall be provided to County by Owner with each
draw request.
Formatted. No underline
Formatted: No underline
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Page 10 of 18- AMENDMENT TO IMPROVEMENT AGREEMENT -DC Contract No. 2012-671
17.16. Within fifteen (15) days after receipt, the County shall examine each draw
request to insure compliance with the requirements set forth herein.
17.17. Provided that the requirements set forth herein have been satisfied and Owner is
not in default under this Agreement, County and Owner shall remit their
Proportional Contributions as defined above, on a percentage basis for each
draw request from Contractor, Draw request shall be based on all work
completed to date. Owner shall submit request for draw, which shall include a
deduction for retainage to be held until completion of construction. Retainage
held back by the County shall be five percent (5%) of County's Proportional
Share of total work completed to date. .
17.18. Upon County issuance of a final certificate of occupancy and Owner's
submission to County of all certificates of payment and lien releases for Phase 1,
County shall release the County Retention, together with the balance of funds in
the Trust Account, including accrued interest thereon, to Owner.
17.19 Parties acknowledge that there will be significant non-construction costs involved
in the completion of the Required Improvement including but not limited to land
use planning, design and engineering, inspections, permits, fees and costs,
customarily referenced as "soft costs", and these will be paid by Owner with
reimbursement from the Trust Account in an amount of $500,000 to be paid upon
issuance of building permits for Phase 1.
18. Reserved
19. Successors in Interest.
19.1. The original of this Agreement shall be recorded with the Deschutes County
Clerk and shall be a condition and covenant that shall run with the Future
Development Sites, binding heirs, successors, and assigns.
19.2. It is the intent of the parties that the provisions of this Agreement shall be binding
upon the parties to this Agreement, and, their respective successors, heirs,
executors, administrators, and assigns, and any other party deriving any right,
title or interest in or to the Future Development Sites, including any mortgagee or
other secured party in actual possession of said Future Development Sites by
foreclosure or otherwise or any person taking title from such security holder.
19.3. Upon completion of all of the Required Improvements, , County shall release the
Future Development Sites from the development conditions and covenants
subsisting under this Agreement.
20. Binding Authorization. By signature on this Agreement, each signatory, signing in a
representative, capacity certifies that the signer is authorized to sign the Agreement on
behalf of and bind the signer's principal.
21. Expiration.
Page 11 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
21.1 Unless otherwise extended, this Agreement shall expire twelve (12) months after
the completion of all Required Improvements or December 31, 2019, whichever
is earlier, or by County's express written release of Owner from this Agreement.
21.2. Notwithstanding the foregoing, this Agreement shall survive until the conclusion
of any claim or dispute arising from or under this Agreement.
213 Upon expiration, the parties agree to execute a document in recordable form,
formally evidencing such expiration.
22. Survival. Parties' rights under this Agreement, including County's right to pay the full
costs and expenses of completing the Required Improvements and repairs or
replacements required herein along with any licenses granted in this Agreement and any
costs of enforcement of this Agreement, shall survive the expiration of this Agreement to
the extent the Owner's obligations hereunder have not been satisfied in full before such
expiration.
23. No Agency.
23.1. It is agreed by and between the Parties that Owner is expressly not carrying out
a function on behalf of County, and County does not have the right of direction or
control of the manner in which Owner complete performance under this
Agreement nor does County have a right to exercise any control over the
activities of the Owner beyond those allowed under building and land use codes.
23.2. Neither Owner nor its members is an officer, employee or agent of County as
those terms are used in ORS 30.265.
24. No Joint Venture or Partnership. County is not, by virtue of this Agreement, a partner
or joint venturer with Owner in connection with the Future Development Sites, and shall
have no obligation with respect to Owner debts or other liabilities of each and every
nature.
25. Liens.
25.1 Owner shall pay as due all claims for work done on and for services rendered Or
material furnished to the Future Development Sites and shall keep the Future
Development Sites free from liens.
25.2. If Owner fails to pay any such claims or to discharge any lien, County may do so
and collect the cost from Owner.
25.3. County's payment of claims and discharge of liens shall not constitute a waiver of
any right or remedy that County may have on account of Owner's failure to
complete the Required Improvements or failure to observe the terms of this
Agreement.
26. Indemnification. Owner shall be responsible for any and all injury to any and all
persons or property caused directly or indirectly by reason of any and all activities of
Owner under this Agreement and on the Future Development Sites; and further agrees
to defend, indemnify and save harmless County, its officers, agents and employees from
Page 12 of 18 w AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
and against all claims, suits, actions, damages, costs, losses and expenses in any
manner, and by whomever brought resulting from, arising out of, or connected with any
such injury.
27. Attorney Fees and Costs. In the event an action or suit or proceeding, including appeal
therefrom, is brought for failure to complete the Required Improvements or to observe
any of the terms of this Agreement, parties shall be entitled to recover, in addition to
other sums or performances due under this Agreement, reasonable attorney's fees and
costs as the court may adjudge in said action, suit, proceeding or appeal.
28. Waiver.
281. Waiver of the strict performance of any provision of this Agreement shall not
constitute the waiver of any other provision or of the Agreement.
28.2. No waiver may be enforced against the County unless such waiver is in writing
and signed by the County.
29. Compliance with provisions, requirements of Federal and State laws, statutes,
rules, regulations, executive orders and policies. Debt Limitation.
29.1. This Agreement is expressly subject to the debt limitation of Oregon counties set
forth in Article XI, Section 10, of the Oregon Constitution.
29.2. Any provisions herein, which would conflict with the law, are deemed inoperative
to that extent.
29.3. Additionally, Parties shall comply with any requirements, conditions or limitations
arising under the any Federal or State law, statute, rule, regulation, executive
order and policy applicable to the Required Improvements.
29.4. If this Agreement is in any manner construed to constitute the lending of the
County's credit or constitute a debt of County in violation of Article XI, Section 10,
of the Oregon Constitution, this Agreement shall be void. The parties agree and
covenant not to assert otherwise, that this Agreement does not constitute the
lending of the County's credit nor constitute a debt of County in violation of Article
XI, Section 10, of the Oregon Constitution
30. No Inducement. No representations, statements, warranties have induced the making
and execution of this Agreement, or Agreements other than those herein expressed.
31. Governing Law.
31.1. This Agreement shall be governed by and construed in accordance with the laws
of the State of Oregon without regard to principles of conflicts of law.
31.2. Any claim, action, suit or proceeding (collectively, "Claim") between County and
Owner that arises from or relates to this Agreement shall be brought and
conducted solely and exclusively within the Circuit Court of Deschutes County for
the State of Oregon; provided, however, if a Claim shall be brought in a federal
Page 13 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
forum, then it shall be brought and conducted solely and exclusively within the
United States District Court for the District of Oregon in Eugene, Oregon.
31.3. PARTIES, BY SIGNING BELOW, HEREBY CONSENT TO THE IN PERSONAM
JURISDICTION OF SAID COURTS. The parties agree that the UN Convention
on International Sales of Goods shall not apply.
32. Severability. If any term or provision of this Agreement is declared by a court of
competent jurisdiction to be void, invalid or unenforceable, the validity of the remaining
terms and provisions shall not be affected, and the rights and obligations of the parties
shall be construed and enforced as if this Agreement did not contain the particular term
or provision held void, invalid unenforceable.
33. Counterparts.
33.1. This Agreement may be executed in several counterparts, all of which when
taken together shall constitute one Agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
33.2. Each copy of this Agreement so executed shall constitute on original.
33.3. If this Agreement is signed in counterpart, each counterpart shall be recorded as
provided herein for the recording of this Agreement and each counterpart shall
be noted on the recorded plat map.
34. Notice-
34.1. Expect as otherwise expressly provided in this Agreement, any communications
between the Parties hereto or notices to be given hereunder shall be given in
writing to Owners or County at the address or number set forth below or to such
other addresses or numbers as either party may hereafter indicate in writing.
Delivery may be by personal delivery, facsimile, or mailing the same, postage
prepaid.
34.2. Communication or notice by personal delivery shall be deemed delivered when
actually given to the designated person or representative.
343. Any communication or notice sent by facsimile shall be deemed delivered when
the transmitting machine generates receipt of the transmission.
34.4. To be effective against County, such facsimile transmission shall be confirmed by
telephone notice to County's Director of Administrative Services.
34.5. Any communication or notice mailed shall be deemed delivered five (5) days
after mailing. Any notice under this Agreement shall be mailed by first class
postage or delivered as follows:
Page 14 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
To Own r:
Prong m Intangibles LLC
c/o The Resort Group LLC
1100 Al~kea Street, 2r Floor
Honolul , Hawaii 96813
Fax No.
To:
Pron h m Resort
c% Ran Koss President
65600 Pron horn Club Dr.
B !1~, OR 97701
35. Default,
To County:
Deschutes County Administrator
Tom Anderson, Interim Deschutes County
Administrator
Deschutes County Administration
1300 NW Wall St., Ste. 200
Bend, OR 97701
Fax No. 541-388-4752
351 Upon failure of the Owner to comply with the requirements of this Agreement,
County shall notify Owner of said default and provide Owner with one hundred
twenty (120) days to either cure such default or procure a completion [surety]
bond for the completion of construction of the Required Improvements (the
"Completion Bond"). If Owner fails to obtain the Completion Bond, in the time
period set forth above, it shall be deemed an "Event of Default" which shall
permit the County to pursue any and all available legal remedies including,
without limitation, withholding of permits, injunctive relief, specific performance,
damages, and/or any remedies under the First Trust Deed. If Owner does
obtain the Completion Band in a timely manner, the County shall release the
respective security within fifteen (15) days of Owner's written request.
35.2 Should the County, upon an Event of Default, choose to exercise its rights under
the First Trust Deed, the unsatisfied obligation owed to County and secured by
the First Trust Deed (hereinafter, the "Unsatisfied Obligation") shall a,;,
L, to 110%, of tiw, f a7rif1;:{t;714'p coo (is (41 `?~Nr'.il s-r(.. trlFs f r!:}i.1rGEi,~ Ir~i},~;:~v :6 be
established as set forth in Section 15 above.
353 ! Upon foreclosure of the First Trust Deed County shall be entitled to participate in
the sale of the Phase 1 Site pind to credit bid at that sale any amount up to the (Formatted: Font color; Auto
combined total of (a) the unsatisfied obligation, (b) the County's fees and
expenses incurred in exercising its rights under the First Trust Deed, and (c) any
other amount to which County is entitled under this Agreement or the First Trust
Deed.
35.43:: t1 It f sls:;r.; ti rrc a3 ari a :'•.;a,.r1 ~s{` r, t . ;rr.i t r cart fruCji~ l on tia
tY)l{Irtiyy( r47 il, , i}ti)+:)t% ili 'ref rti . c' sx ti rYIE',r~. jr~'o thoi~, fo) frig }u~ £';6 o)
( n`ir.l~ t d:>l rsrk r t t)z C-.n i .f,;E we ,Ier tires Ag?,, a i, l.r r
<>ns. It `N:,; of tYle.}aYa,~ 1(a Will
to lhf, f;Std:Vc ( $1~ 0,000 p i;2 will, sri 81 )_rrl, is c3 f:, tt.lf:
of (:;o u',tlno su(,4 lrrl~ yr As an example, if Phase 2 consists of
forty units, the est~mak-d coF4Unsatisfied Obligation of construction would be
$5,600,000. The parties agree and acknowledge that, until a GMP is prepared,
calculation of the dollar amount of Owner's obligations by this method is
Page 15 of 18 AMENDMENT TO IMPROVEMENT AGREEMENT DC Contract No. 2012-671
reasonable in light of the anticipated or actual harm caused by Owner's default
under this Agreement, the difficulties of proof of loss, and the inconvenience or
nonfeasability of obtaining an adequate remedy. The parties further acknowledge
and agree that any amounts calculated by use of this method (including, without
limitation, costs of construction, damages and/or the Unsatisfied Obligation) are
not unreasonably large and do not constitute a penalty.
35.5 _ The Parties acknowl tde that tFie remedies contained herein do not change the
schedule in Section 5.
36. Time Is of the Essence. Time is of the essence of each and every provision of this
Agreement.
37. Captions.
37.1. The captions contained in this Agreement were inserted for the convenience of
reference only.
37.2. Captions do not, in any manner, define, limit, or describe the provisions of this
Agreement or the intentions of the parties.
38. Merger Clause.
38.1. This Agreement and the attached exhibits constitute the entire agreement
between the parties with respect to the subject matter hereof and, where it
conflicts, supersedes any and all prior or contemporaneous negotiations and/or
agreements among the parties, whether written or oral, concerning the subject
matter of this Agreement which are not fully expressed herein.
38.2. All understandings and agreements between the parties and representations by
either party concerning this Agreement are contained in this Agreement.
38.3. This Agreement shall bind all parties and its terms may not be waived, altered,
modified, supplemented, or amended in any manner except by written instrument
signed by all parties.
38A, Except as otherwise expressly provided herein, any written waiver, consent,
modification or change shall be effective only when in writing and signed by the
parties in the specific instance and for the specific purpose given.
Page 16 of 18 AMENDMENT TO IMPROVEMENT AGREEMENT DC Contract No. 2012-671
39, Effect of Agreement. This Agreement shall amend and has restated in their entirety
the terms and requirements of the Original Improvement Agreement with respect to
overnight lodging, and, accordingly, upon full execution of this Agreement, the terms of
the Original Improvement Agreement that related to overnight lodging shall be deemed
to have been superseded hereby.
40. The Deschutes County Board of Commissioners by appropriate and sufficient action has
officially authorized the Interim County Administrator to execute this Agreement on
behalf of Deschutes County.
COUNTY:
Dated this of . 2012
TOM ANDERSON
Interim Coun y Administrator
STATE OF OREGON )
) ss.
County of Deschutes )
Before me, a Notary Public, personally appeared TOM ANDERSON, Interim County
Administrator of Deschutes County, Oregon and acknowledged the foregoing instrument on
behalf of Deschutes County, Oregon.
DATED this - day of , 2012.
Notary Public for Oregon
My Commission Expires:
ADDITIONAL. SIGNATURES TO FOLLOW ON NEXT PAGE
Page 17 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671
Pronghorn Intangibles LLC,
a Hawaii limited liability company
By:
Randy Koss, in his capacity as
For Pronghorn Intangibles LLC
STATE OF OREGON
County of Deschutes
ss
Before me, a Notary Public, personally appeared Randy Koss and acknowledged the
foregoing instrument on behalf of Pronghorn Intangibles LLC as its
DATED this day of 2012.
Notary Public for Oregon
My Commission Expires:
I ip-tqaja'i cnt V tli~;; runy_hprn resUr111t',~~rn ove.ment 3~raemen a r ~r~de-'' a pmverc_ar a~ e~:_r'a 12 resZ3'~~ prn~ yner;~ ra
' 12 20 12 1 ) r]ev draft d(? x
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Page 18 of 18 - AMENDMENT TO IMPROVEMENT AGREEMENT - DC Contract No. 2012-671