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HomeMy WebLinkAbout12 Res 2021-02 University Park Reimbursement AgreementMEETING DATE: PREPARED BY: REQUEST: Recommendation STAFF REPORT CITY OF PALM DESERT FINANCE DEPARTMENT January 14, 2021 Veronica Tapia, Senior Management Analyst Adopt Resolution No. 2021-02 approving and authorizing a deposit and reimbursement agreement and approving and affirming the engagement of certain financing professionals in connection with the formation of City of Palm Desert Community Facilities District No. 2021-1 (University Park) and the proposed issuance of special tax bonds to refund City of Palm Desert Community Facilities District No. 2005-1 (University Park) Special Tax Bonds, Series 2006A. That the City Council waive further reading and adopt Resolution No. 2021-02, approving, substantially as to form, and authorizing a deposit and reimbursement agreement and approving and affirming the engagement of certain financing professionals in connection with the formation of City of Palm Desert Community Facilities District No. 2021-1 (University Park) and the proposed issuance of special tax bonds to refund City of Palm Desert Community Facilities District No. 2005-1 (University Park) Special Tax Bonds, Series 2006A. Strategic Plan Approval of the University Park deposit and reimbursement agreement supports the Land Use, Housing and Open Space Priority 2 by providing a funding mechanism to assist in financing further development of University Park. Executive Summary The City's Goals and Policies for Community Facilities Districts (the "CFD Policy") requires a developer to advance and deposit funds with the City to compensate the City for its non -contingent costs incurred in connection with processing an application or petition for formation of, and issuance of special tax bonds, by a community facilities district ("CFD") under the Mello -Roos Community Facilities Act of 1982. The Developer has requested that the City form a new CFD ("CFD 2021-1") to implement a coordinated plan of refunding of the current City of Palm Desert 2005-1 (University Park) ("CFD 2005- 1") within which the Developer's property is located, and the issuance by the City of Palm Desert of a new Series 2021 bond in order to achieve special tax savings and finance additional facilities required as conditions of its development. This is a necessary step in facilitating the financing needs of University Park Investors, LLC ("UPI"). January 14, 2021 - Staff Report Adopt Res. 2021-02, Approving the Deposit and Reimbursement Agreement with UPI Page2of3 Background CFD 2005-1 issued two series of debt in 2006 and 2007 with a combined par amount of $67.915 million. The repayment of that debt is a burden that is carried by the property owners within the boundaries of CFD 2005-1. In early 2016, the City authorized a bond call of all of the outstanding 2007 series and part of the outstanding 2006 series using unspent bond proceeds. After the bond call, there was $31,130,000 remaining of the 2006 series, of which $26,250,000 currently remains outstanding. At the time of issuance, it was anticipated that the properties would be developed with a mix of residential, commercial, office, and open space. Due to timing, market conditions and subsequent market downturn, only about 23% of the properties in CFD 2005-1 have been developed to date. The remaining 77% is now owned by UPI (63%) and the remaining 6 parcels (14%), are owned by other parties. UPI has completed the entitlement process with the Planning Department and submitted their grading plan with the intent to begin grading in early 2021. While actively engaged in the development process, UPI has also requested that staff assist with refunding the outstanding debt if sufficient savings can be recognized. In 2019, staff began the process of refunding the CFD 2005-1 bonds at the request of the UPI. However, prior to completing the issuance, UPI decided to delay the refunding to an unspecified date. Because of UPI's significant share of property within CFD 2005-1 and related special tax burden, its participation in the refunding is essential to the issuance of refunding bonds. UPI has been working through various issues with legal and staff, and wishes to move forward with the refunding. UPI has requested the City to implement a financing plan that includes the formation of CFD 2021-1 as an overlapping community facilities district for its property with a new debt component, as well as a coordinated plan of refunding consisting of the issuance of an initial series of CFD 2021- 1 Bonds and the concurrent issuance by CFD 2005-1 of Series 2021 refunding bonds (together, the "Refunding Bonds"). UPI has determined that this financing plan would be the most advantageous to their project, and it would also facilitate the issuance of future new money bonds for facilities required for UPI's project without affecting the special taxes for the other properties within CFD 2005-1. The City of Palm Desert CFD Policy requires a developer to advance and deposit funds with the City to compensate the City for its non -contingent costs incurred in connection with processing an application or petition for formation of, and issuance of special tax bonds, by a CFD. Any unspent or uncommitted funds from the deposit may be refunded to the developer upon issuance of the bonds. In order to facilitate the formation of CFD 2021-1 and the preliminary work required for the issuance of the Refunding Bonds, the finance team must be re-engaged to perform January 14, 2021 - Staff Report Adopt Res. 2021-02, Approving the Deposit and Reimbursement Agreement with UPI Page 3 of 3 the various associated duties, as previously approved on September 10, 2020. The team consists of the following professionals: Del Rio Advisors, LLC, as municipal advisor; Richards, Watson & Gershon, A Professional Corporation, as bond counsel; Best Best & Krieger LLP, as disclosure counsel; Willdan Financial Services, as Special Tax Consultant; Capital Realty Analysts, as appraiser; Empire Economics, Inc., as Absorption Consultant; and Piper Sandler & Co, Inc., as Underwriter. The requested deposit is based on the non -contingent costs as proposed by the team. Staff recommends approval of the deposit and reimbursement agreement, as well as re- affirmation of the financing team to facilitate the financing needs of UPI and implement its proposed financing plan. If the agreement is approved, staff expects to bring forward for City Council consideration and approval additional items in the next several months relating to formation of CFD 2021-1 and the issuance of the Refunding Bonds. Fiscal Analysis The costs of formation of CFD 2021-1 and issuance of the Refunding Bonds (including the underwriter's discount, compensation to the Municipal Advisor, Bond Counsel, Disclosure Counsel, Special Tax Consultant and other costs, i.e. staff costs, printing costs for the official statement) may be paid from proceeds of the Refunding Bonds, if and when issued. If the Refunding Bonds are not issued, any non -contingent costs will be paid by the developer pursuant to the deposit and reimbursement. The savings generated by the refunding will benefit the current and future property owners within the University Park CFD. LEGAL REVIEW FINANCIAL Approved as to Form DEPT. REVIEW REVIEW ?'#1ooz& ?'#1ooz& Robert W. Hargreaves Janet M. Moore City Attorney Director of Finance Janet M. Moore Director of Finance Interim City Manager, Randy Bynder: Reuuly Synder ASSISTANT CITY MANAGER Andy Firestine Andy Firestine Assistant City Manager CITY COUNCILACTION ATTACHMENTS: Resolution No. 2021-02 APPROVED ti',DENIM) CFD Deposit Agreement WEIVED OTHER Plot cloieA keS . (W)01-I - 0 2. MEETING DA AYES:J Z►'fJk,. , 11h1,N . e.J nilDtild.,+KFl! i NOES: iyU`Z- ABSENT: �D- ABSTAIN: AJ/JflP- VERIFIED BY• r-l IM5 R Original on File with Cityrk'c Office RESOLUTION NO. 2021-02 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, APPROVING AND AUTHORIZING A DEPOSIT AND REIMBURSEMENT AGREEMENT AND APPROVING AND AFFIRMING THE ENGAGEMENT OF CERTAIN FINANCING PROFESSIONALS IN CONNECTION WITH THE FORMATION OF CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK) AND THE PROPOSED ISSUANCE OF SPECIAL TAX BONDS TO REFUND CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY PARK) SPECIAL TAX BONDS, SERIES 2006A RECITALS: WHEREAS, pursuant to Section 53312.7 of the Mello -Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.), as amended (the "Act"), the City Council (the "City Council") of the City of Palm Desert (the "City") on October 13, 2005, by Resolution No. 05-86, adopted the City's Goals and Policies for Community Facilities Districts (the "CFD Policy"); and WHEREAS, pursuant to the Act, the City Council previously conducted proceedings in 2005 and 2006 to establish the City of Palm Desert Community Facilities District No. 2005-1 (University Park) ("CFD 2005-1") and to authorize the levy of special taxes by CFD 2005-1 and the issuance of special tax bonds by CFD 2005-1 to finance certain public improvements and development fees used for public improvements, which proceedings included an election held on January 12, 2006, pursuant to which the qualified electors within CFD 2005-1 unanimously approved the levy of such special taxes and issuance of such special tax bonds by CFD 2005-1; and WHEREAS, the City Council of the City, pursuant to Resolution No. 06-33 adopted on March 23, 2006, approved the issuance by CFD 2005-1 of its Special Tax Bonds, Series 2006A (the "Prior CFD 2005-1 Bonds"), and on May 9, 2006, CFD 2005-1 issued the Prior CFD 2005-1 Bonds in the original aggregate principal amount of $50,000,000, of which $26,250,000 in aggregate principal amount presently remains outstanding; and WHEREAS, the boundaries of CFD 2005-1 are depicted on the boundary map for CFD 2005-1 recorded in Book 64 of the County of Riverside Maps of Assessment and Community Facilities Districts, at page 78, in the County Recorder's Office as Instrument No. 2005-0904136, on November 1, 2005, which map is hereby incorporated by reference; and WHEREAS, University Park Investor, LLC (the "Developer"), in connection with its proposed development of certain real property, comprised of parcels located within the City known as Assessor's Parcel Numbers 694-190-010, 694-190-053, 694- 190-055, 694-190-037, 694-190-070, 694-190-072, 694-190-079, 694-190-031, 694-200- -1- P6401-1052\2486250v2.doc RWG DRAFT 12/30/20 Resolution No. 2021-02 013, and 694-200-014 (the "Project"), has requested the City to form a community facilities district pursuant to the Act, to be designated "City of Palm Desert Community Facilities District No. 2021-1 (University Park)" ("CFD 2021-1"); and WHEREAS, the Developer intends to submit to the City an application or petition (the "Petition") requesting that the City consider the formation of CFD 2021-1, the levy of special taxes by CFD 2021-1, and the issuance of bonds in one or more series by CFD 2021-1 (collectively, the "CFD 2021-1 Bonds") under the Act in order to finance or refinance, as applicable, certain public improvements and development fees used for public improvements; and WHEREAS, the Project is located within CFD 2005-1 and comprises approximately 174 acres of the approximately 260 total acres of land within CFD 2005-1; and WHEREAS, in 2019, the Developer requested the City to refund the remaining outstanding Prior CFD 2005-1 Bonds for debt service savings, which was refunding process was subsequently postponed at the Developer's request; and WHEREAS, on September 10, 2020, at the Developer's request, the City Council authorized the City Manager and the Director of Finance to reinstate a team of financing professionals for the refunding of the Prior CFD 2005-1 Bonds for debt service savings, which financing plan was proposed by the Developer to include the formation of CFD 2021-1 encompassing the Project to facilitate the issuance of future new money bonds for facilities required for the Project without affecting the special taxes for the other properties within CFD 2005-1; and WHEREAS, to refund the outstanding Prior CFD 2005-1 Bonds for debt service savings, the benefits of which will accrue to the property owners within CFD 2005- 1 through reduced special taxes, the Developer and the City desire to implement a coordinated plan of refunding consisting of the issuance of an initial series of CFD 2021- 1 Bonds (the "Initial CFD 2021-1 Bonds") and the concurrent issuance by CFD 2005-1 of its Special Tax Refunding Bonds, Series 2021 (the "CFD 2005-1 Series 2021 Bonds"); and WHEREAS, the CFD Policy requires the Developer to advance and deposit funds with the City to compensate the City for its non -contingent costs incurred in connection with the Developer's proposed financing plan, including the Petition, the formation of CFD 2021-1, and the issuance of CFD 2021-1 Bonds and the CFD 2005-1 Series 2021 Bonds; and WHEREAS, pursuant to Section 53314.9 of the Act and the CFD Policy, the City and the Developer desire to enter into a Deposit and Reimbursement Agreement (the "Deposit Agreement") in order to provide for the advance of funds by the Developer to cover the City's costs incurred in connection with the Petition, the formation of the CFD 2021-1, and the issuance of CFD 2021-1 Bonds and the CFD 2005-1 Series 2021 Bonds, and to provide for the repayment to the Developer of such funds advanced, without -2- P6401-1052\2486250v2.doc Resolution No. 2021-02 interest, from the proceeds of the CFD 2021-1 Bonds or the CFD 2005-1 Series 2021 Bonds, as applicable, or if and to the extent that such costs are paid directly from the proceeds of the CFD 2021-1 Bonds or the CFD 2005-1 Series 2021 Bonds, as applicable, for the return to the Developer of any unexpended or uncommitted portion of such funds advanced; and WHEREAS, the form of the proposed Deposit Agreement is on file with the City Clerk of the City (the "City Clerk"); and WHEREAS, to facilitate the formation of CFD 2021-1 and the preliminary work required for the issuance of the Initial CFD 2021-1 Bonds and the CFD 2005-1 Series 2021 Bonds, the City Council desires to approve and affirm the appointment and employment of a team of financing professionals; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES HEREBY RESOLVE, FIND, DECLARE AND ORDER AS FOLLOWS: Section 1. Recitals. The above recitals, and each of them, are true and correct. Section 2. Deposit Agreement. The Deposit Agreement, proposed to be entered into by and between the City and the Developer, in the form presented at this meeting and on file with the City Clerk, is hereby approved. Each of the Mayor, the Mayor Pro Tem (in the Mayor's absence), the City Manager, the Assistant City Manager (in the City Manager's absence), and any deputy of such officers (each, an "Authorized Officer"), acting singly, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Deposit Agreement in substantially said form, with such additions or changes as the Authorized Officer executing the same may approve in consultation with the City Attorney and Bond Counsel (such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof). Section 3. Appointment of Financing Team. The appointments of Del Rio Advisors, LLC, as municipal advisor; Richards, Watson & Gershon, A Professional Corporation, as bond counsel; Best Best & Krieger LLP, as disclosure counsel; Willdan Financial Services, as Special Tax Consultant; Capital Realty Analysts, as appraiser; Empire Economics, Inc., as Absorption Consultant; and Piper Sandler & Co, Inc., as underwriter, in connection with proposed formation of CFD 2021-1 and the proposed issuance of the Initial CFD 2021-1 Bonds and the CFD 2005-1 Series 2021 Bonds are hereby approved and affirmed. Section 4. Other Acts. The Authorized Officers, the Director of Finance, and the other officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to effectuate the purposes of this Resolution and the Deposit Agreement, and any such actions previously taken by such officers are hereby ratified and confirmed. -3- P6401-1052\2486250v2.doc Resolution No. 2021-02 Section 5. Effective Date. This Resolution shall take effect immediately upon adoption. PASSED, APPROVED and ADOPTED by the City Council of the City of Palm Desert, California, on this 14th day of January, 2021, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Grace L. Rocha, Acting City Clerk City of Palm Desert, California Kathleen Kelly, Mayor City of Palm Desert, California -4- P6401-1052\2486250v2.doc DEPOSIT AND REIMBURSEMENT AGREEMENT City of Palm Desert Community Facilities District No. 2021-1 (University Park) THIS DEPOSIT AND REIMBURSEMENT AGREEMENT (this "Agreement"), dated as of January 14, 2021, is by and between the CITY OF PALM DESERT, a California municipal corporation (the "City"), and UNIVERSITY PARK INVESTOR, LLC, a Delaware limited liability company (the "Developer"). RECITALS WHEREAS, in connection with the Developer's proposed development of certain real property, comprised of parcels located within the City known as Assessor's Parcel Numbers 694- 190-010, 694-190-053, 694-190-055, 694-190-037, 694-190-070, 694-190-072, 694-190-079, 694-190-031, 694-200-013, and 694-200-014 (the "Project"), the Developer has requested the City to form a community facilities district pursuant to the Mello -Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.), as amended (the "Act"), to be designated "City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the "CFD"); and WHEREAS, the Developer intends to submit to the City an application or petition (the "Petition") requesting that the City consider the formation of the CFD, the levy of special taxes (the "Special Taxes"), and the issuance of bonds in one or more series by the CFD (collectively, the "Bonds") under the Act in order to finance or refinance, as applicable, certain public improvements and development fees used for public improvements; and WHEREAS, the City's Goals and Policies for Community Facilities Districts (the "CFD Policy"), approved by the City Council on October 13, 2005 by its Resolution No. 05-86, requires the Developer to compensate the City for its costs incurred in connection with the Petition, the formation of the CFD, and the issuance of Bonds by the CFD; and WHEREAS, the City is willing to evaluate the Petition and pursue the formation of the CFD, levy of Special Taxes, and the issuance of Bonds by the CFD and the proposed expenditure of the proceeds thereof, provided that the Developer provides an advance and deposit of funds with the City pursuant to the CFD Policy and the Act, including Section 53314.9 therein, to cover the City's costs relating to the Petition, the formation of the CFD, and the issuance of Bonds by the CFD; and WHEREAS, the City and the Developer desire to enter into this Agreement pursuant to Section 53314.9 of the Act and the CFD Policy in order to provide for the advance of funds by the Developer to cover the City's costs incurred in connection with the Petition, the formation of the CFD, and the issuance of Bonds by the CFD, and to provide for the repayment to the Developer of such funds advanced, without interest, from the proceeds of the Bonds, or if and to the extent that such costs are paid directly from the proceeds of the Bonds, for the return of any unexpended or uncommitted portion of such funds advanced to the Developer. -1- revised 1/4/2021 P6401-1052\2483029 AGREEMENT: NOW, THEREFORE, for and in consideration of the foregoing and the mutual promises and covenants herein contained, and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: and correct. Section 1. Recitals. Each of the above recitals is incorporated herein and is true Section 2. The Deposit; Additional Advances. (a) The Developer will advance to and deposit with the City within a reasonable time following the City's approval and execution of this Agreement the amount of $250,000.00, which together with $15,000.00 previously advanced and deposited by the Developer with the City on November 19, 2020, shall be used by the City to pay the City's Initial Costs (as defined in Section 3(a) below) in connection with the Petition and conducting proceedings for the formation of the CFD, the issuance of an initial series of Bonds by the CFD, and the concurrent issuance of refunding bonds (the "Refunding Bonds") for debt service savings by City of Palm Desert Community Facilities District No. 2005-1 (University Park), in which the Project is located, pursuant to the Developer's proposed refunding and financing plan. Except for the bond counsel and financial advisor work relating to preparation of this Agreement and a preliminary financing schedule, for which the initial $15,000 advanced on November 19, 2020 was made, the City shall have no obligation to commence any work described in this Section 2(a) until the $250,000.00 further deposit described in this Section 2(a) has been duly received by the City. (b) If payment of the City's Initial Costs that have already been incurred by the City, as determined by the Director of Finance of the City, would cause the Developer's deposit to fall below an amount mutually agreed upon in writing between the Developer and the Director of Finance with respect to the subject scope of work (the "Replenishment Security"), the City Manager or the Director of Finance of the City shall make a written demand upon the Developer for an additional deposit of moneys. With respect to the Initial Costs incurred by the City in connection with the scope of work described above in Section 2(a), the Replenishment Security shall be $100,000.00. The Developer hereby agrees to advance any additional amounts (each, an "Additional Deposit") necessary to pay any Initial Costs incurred by the City, in excess of the amounts of the advances and deposits described in Section 2(a) above (each individually and together, as the context may require, the "Initial Deposit") minus the amount of the Replenishment Security, within thirty (30) days of written demand by the City Manager or the Director of Finance of the City. The Initial Deposit and any Additional Deposit shall be referred to as the "Deposits" and may be commingled with other funds of the City for purposes of investment and safekeeping, but the City shall at all times maintain records as to the expenditures of the Deposits. Notwithstanding the foregoing, the City Manager may direct City staff and consultants to cease all work related to the Petition, the formation of the CFD, and the issuance of the Bonds and the Refunding Bonds until the Additional Deposit so demanded has been received by the City. -2- P6401-1052\2483029 Section 3. Use of Funds; Return of Deposits; Reimbursement. The Deposits shall be administered as follows: (a) City's Discretion to Draw Upon Deposits to Pay Initial Costs. The City may draw upon the Deposits from time to time to pay for the actual costs incurred for any authorized purpose in connection with the Petition, the formation of the CFD, and the issuance of the Bonds and the Refunding Bonds, including, without limitation, (i) the fees and expenses of any consultants to the City engaged in connection with the Petition, the formation of the CFD, and the issuance of the Bonds and the Refunding Bonds, including an engineer, special tax consultant, financial advisor, bond counsel, disclosure counsel, and any other consultant reasonably deemed necessary or advisable by the City, (ii) the costs of appraisals, market absorption and/or feasibility studies and other reports reasonably deemed necessary or advisable by the City in connection with the formation of the CFD and issuance of the Bonds and the Refunding Bonds, (iii) the costs of publication of notices, preparation and mailing of ballots and other costs related to any hearing, election or other action or proceeding undertaken in connection with the Petition, the formation of the CFD, and the issuance of the Bonds, (iv) reasonable charges for City staff time incurred in connection with the Petition, the formation of the CFD, and the issuance of the Bonds by the CFD and the Refunding Bonds, including a reasonable allocation of City overhead expense related thereto, and (v) any and all other actual costs and expenses incurred by the City in connection with the Petition, the formation of the CFD, and the issuance of the Bonds and the Refunding Bonds (collectively, the "Initial Costs"). (b) Discretionary Payment by City of Initial Costs from City Funds; Handling of Deposits. In lieu of drawing upon the Deposits as provided in Section 3(a) above, the City may in its sole discretion determine to pay all of the Initial Costs from its own monies and hold the Deposits as collateral for reimbursing itself for such Initial Costs until Bonds are issued or a termination of proceedings for the issuance of Bonds or the Refunding Bonds as described in Section 3(d) below occurs. If the City elects to proceed under this subsection (b) and Bonds are issued, at the sole discretion of the City's bond counsel, the City may (i) reimburse itself directly from proceeds of the Bonds or the Refunding Bonds, as applicable, for such Initial Costs as the City has paid from its own monies, and (ii) return to the Developer the entire amount of the Deposits within ten (10) business days after the date of issuance and delivery of the Bonds or the Refunding Bonds, as applicable. If the City elects to proceed under this subsection (b) and the City's bond counsel declines to approve reimbursement to the City of the Initial Costs from proceeds of the Bonds or the Refunding Bonds, as applicable, or if Bonds or Refunding Bonds are not issued, the City shall reimburse itself from the Deposits for such Initial Costs as the City has paid from its own monies, and return any unused portion of the Deposits to the Developer in accordance with Section 3(d) below. (c) Issuance of Bonds; Handling of Deposits. Subject to Section 3(b) above and Section 3(e) below, as applicable, if Bonds are issued under the Act that are secured by Special Taxes levied upon land within the CFD or if Refunding Bonds are issued, the City may provide for repayment to the Developer, without interest, all amounts charged against the Deposits to be made solely from the proceeds of the Bonds or the Refunding Bonds, as applicable, subject to the approval of the City's bond counsel in its sole discretion and only to the extent otherwise permitted under the Act. On or within ten (10) business days after the date of issuance and delivery of the Bonds or the Refunding Bonds, as applicable, the City shall return the then unexpended portion of -3- P6401-1052\2483029 the Deposits to the Developer, without interest, less an amount equal to any Initial Costs incurred by the City that are subject to payment under Section 3(a) or reimbursement to the City under Section 3(b) above but have not yet been so paid or reimbursed. If the City's bond counsel declines to approve repayment to the Developer of amounts charged against the Deposits from proceeds of the Bonds or the Refunding Bonds, as applicable, the City shall return any unused portion of the Deposits to the Developer in accordance with Section 3(d) below. (d) Termination of Proceedings to Issue Bonds; Handling of Deposits. If Bonds or the Refunding Bonds, as applicable, are not issued, the City shall, within ten (10) business days after (i) the Developer has advised the City in writing that it has abandoned such proceedings or (ii) the adoption by the City Council of a resolution electing to terminate proceedings under the Act with respect to the issuance of the Bonds or the Refunding Bonds, as applicable, return the then unexpended portion of the Deposits to the Developer, without interest, less an amount equal to any Initial Costs incurred by the City that are subject to payment under Section 3(a) or reimbursement to the City under Section 3(b) above but have not yet been so paid or reimbursed. (e) City's Option to Pay Initial Costs from Bond Proceeds; Handling of Deposits. Without limiting the foregoing, any or all of the Initial Costs may at the City's option in its sole discretion (subject to the approval of the City's bond counsel, in its sole discretion) be paid directly to the respective payees from proceeds of the Bonds or the Refunding Bonds, as applicable, upon the issuance and delivery thereof, with the unexpended Deposits (or unexpended portions thereof, as applicable) to be administered in accordance with the second sentence of Section 3(c) above. Section 4. Agreement Not Debt or Liability of City. This Agreement shall constitute a debt and liability of the CFD upon its formation. Unless it has elected to do so pursuant to Section 3(b) above, the City shall not be obligated to advance any of its own funds to pay Initial Costs or any other costs incurred in connection with the Petition, the formation of the CFD, or the issuance of the Bonds or the Refunding Bonds. No member of the City Council of the City and no officer, employee or agent of the City shall to any extent be personally liable hereunder. Section 5. No Obligation to Form CFD or Issue Bonds. The Developer acknowledges and agrees that formation of the CFD and the issuance of the Bonds or the Refunding Bonds shall be in the sole discretion of the City. No provision of this Agreement shall be construed as an agreement, promise or warranty of the City to form the CFD or issue the Bonds or the Refunding Bonds. Section 6. Accounting. The Director of Finance of the City shall provide the Developer with a written accounting of moneys expended under this Agreement, within ten (10) business days of the receipt by the Director of Finance of the City of a written request therefor submitted by an authorized officer of the Developer. No more than one accounting will be provided in any calendar month, and the cost of providing the accounting shall be charged to, or reimbursed to the City from, the Deposits or proceeds of the Bonds or the Refunding Bonds, as applicable. Section 7. Indemnification. The Developer hereby agrees to indemnify, defend (with counsel acceptable to the City), protect and hold harmless the City and the CFD and -4- P6401-1052\2483029 their respective elective or appointive boards, council members, officers, employees, and agents (the "Indemnified Parties") from any and all claims, rights, grievances, demands, debts, liabilities, obligations, costs, expenses, causes of action, actions, suits, proceedings, losses, expenses, or damages of any kind or nature, including attorneys' fees, whether known or unknown, existing or potential, anticipated or unanticipated, or which may hereafter be sustained, arising out of or in any way related to any breach by the Developer of this Agreement. This hold harmless agreement shall apply to all liability regardless of whether any insurance policies are applicable or insurance proceeds are available to the Developer. Any such policy limits do not act as a limitation upon the amount of indemnification to be provided by the Developer. Section 8. Attornev's Fees. Anything else in this Agreement notwithstanding, if any party brings an action to enforce the terms hereof or declare its rights hereunder, the prevailing party in any such action shall be entitled to its reasonable attorneys' fees to be paid by the losing party as fixed by the court. Section 9. Other Agreements. The obligations of the Developer hereunder shall be that of a party hereto. Nothing herein shall be construed as affecting the City's or the Developer's rights, or duties to perform their respective obligations, under other agreements, use regulations or subdivision requirements relating to the Project. This Agreement shall not confer any additional rights, or waive any rights given, by either party hereto under any development or other agreement to which they are a party. Section 10. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. References to section numbers are to sections in this Agreement, unless expressly stated otherwise. Section 11. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. Section 12. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. Section 13. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. Section 14. Le2a1 Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have -5- P6401-1052\2483029 freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. Section 15. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. Section 16. California Law. This Agreement shall be governed and construed in accordance with the laws of the State of California. The parties shall be entitled to seek any remedy available at law and in equity. Section 17. Severabilitv. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. Section 18. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Section 19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. [Signatures on following page] -6- P6401-1052\2483029 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above. CITY: DEVELOPER: CITY OF PALM DESERT, a California UNIVERSITY PARK INVESTOR, LLC, a municipal corporation Delaware limited liability company By: Kathleen Kelly, Mayor Attest: Grace L. Rocha, Acting City Clerk By: Name: Title: P6401-1052\2483029 -7- PORTOLA AVE. (ft XX Yia 11 st gl: 303T1o0 IS NO00 T 9 9 9 9 C9 9C 9 9 �?ei �i �YVSa au w waq��i'TTIT MMIPIOAEWHIE MEllattg lift p za Sa9AAP -INI1 ; Wa y "•1g8m8 6gq Q ;;P:it ilN --.-1 'NO O Oi TIV839 MEIROP, PACIFI AOO10NH331 US N000