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HomeMy WebLinkAbout2014-06-26 FA Regular Meeting Agenda� � � PRELIMINARY MINUTES PALM DESERT FINANCING AUTHORITY MEETING THURSDAY, MARCH 8, 2012 CIVIC CENTER COUNCIL CHAMBER 73510 FRED WARING DRIVE, PALM DESERT, CA 92260 I. CALL TO ORDER - 3:00 P.M. President Spiegei convened the meeting at 3:02 p.m. II. ROLL CALL Present: Commissioner Jean M. Benson Commissioner Cindy Finerty Commissioner Jan C. Harnik Vice President William R. Kroonen President Robert A. Spiegel Also Present: John M. Wohlmuth, City Manager David J. Erwin, City Attorney Justin McCarthy, Assistant City Manager Rachelle D. Klassen, City Clerk Russell Grance, Director of Building & Safety Lauri Aylaian, Director of Community Development Paul S. Gibson, Director of Finance/City Treasurer Janet M. Moore, Director of Housing Mark Greenwood, Director of Public Works Frankie Riddle, Director of Special Programs Stephen Y. Aryan, Risk Manager Bill Hunley, Battalion Chief, Palm Desert Fire/Riverside Co. Fire Dept./Cal Fire William Sullivan, Asst. Chief, Palm Desert Police/Riverside Co. Sheriff's Dept. Grace L. Mendoza, Deputy City Clerk On a motion by Kroonen, second by Finerty, and 5-0 vote of the Authority Board, President Spiegel adjourned the meeting to Closed Session of the City Council at 3:03 p.m. He reconvened the meeting at 4:00 p.m. PRELIMINARY MINUTES DRAFT PALM DESERT FINANCING AUTHORITY MEETING MARCH 8, 2012 Iil. CONSENT CALENDAR A. MINUTES of the Financing Authority Meeting of May 12, 2011. Rec: Approve as presented. Upon a motion by Finerty, second by Kroonen, and 5-0 vote of the Authority Board, the Consent Calendar was approved as presented. IV. CONSENT ITEMS HELD OVER None V. RESOLUTIONS None VI. NEW BUSINESS A. REQUEST FOR ADOPTION OF THE PALM DESERT STATEMENT OF INVESTMENT POLICY AS AMENDED (JOINT CONSIDERATION WITH THE PALM DESERT CITY COUNCIL, SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY, AND PALM DESERT HOUSING AUTHORITY). Deputy City Treasurer Thomas Jeffrey stated staff was requesting two amendments, the first substitutes the "RDA-Successor Agency, Palm Desert" for the former "Palm Desert Redevelopment Agency." The second request is to increase the concentration limit for local agency investment pools from 30% to 50%. Due to the elimination of the Redevelopment Agency, the arithmetic changed on how it's calculated. Councilmember/Director/Member/Commissioner Finerty stated it was wonderFul that the City is allowed to earn more than 50% than what it's currently earning in interest income. Councilmember/Director/Member/Commissioner Finerty moved to, by Minute Motion, concur with the recommendation of the Audit, Investment & Finance Committee and adopt the Palm Desert Statement of Investment Policy, as amended. Motion was seconded by Kroonen and carried by a 5-0 vote. VII. CONTINUED BUSINESS None 2 PRELIMINARY MINUTES PALM DESERT FINANCING AUTHORITY MEETING VIII. OLD BUSINESS �►'�l•Ti� IX. PUBLIC HEARINGS None DRAFT MARCH 8, 2012 X. REPORTS, REMARKS, AND AUTHORITY BOARD ITEMS REQUIRING ACTION A. CHIEF ADMINISTRATIVE OFFICER None B. AUTHORITY COUNSEL None C. PRESIDENT AND MEMBERS OF THE AUTHORITY None XI. ORAL COMMUNICATIONS - C None XII. ADJOURNMENT Upon a motion by Kroonen, second by Finerty, and 5-0 vote of the Authority Board, President Spiegel adjourned the meeting at 5:40 p.m. ROBERT A. SPIEGEL, PRESIDENT ATTEST: RACHELLE D. KLASSEN, SECRETARY PALM DESERT FINANCING AUTHORITY 3 CITY OF PALM DESERT FINANCE DEPARTMENT STAFF REPORT REQUEST: RECOMMEND THAT THE CITY COUNCIL APPROPRIATE, AND AUTHORIZE THE FINANCE DIRECTOR/TREASURER TO USE AND APPLY, $2.1 MILLION FROM THE ENERGY INDEPENDENCE FUND AND APPROXIMATELY $2.5 MILLION FROM THE GENERAL FUND TO PREPAY THE LEASE AGREEMENT WITH RESPECT TO, AND REDEEM, THE OUTSTANDING PALM DESERT FINANCING AUTHORITY ENERGY INDEPENDENCE PROGRAM, VARIABLE RATE DEMAND LEASE REVENUE BONDS, SERIES 2009 (FEDERALLY TAXABLE) SUBMITTED BY: PAUL S. GIBSON, FINANCE DIRECTOR DATE: June 26, 2014 Recommendation By Minute Motion, that the City Council: 1. Appropriate, and authorize the Finance Director/Treasurer to use and apply, $2.1 million from the Energy Independence Fund and approximately $2.5 million from the General Fund to prepay the Lease Agreement between the City and the Palm Desert Financing Authority with respect to, and redeem, the outstanding Palm Desert Financing Authority Energy Independence Program, Variable Rate Demand Lease Revenue Bonds, Series 2009 (Federally Taxable); and 2. Authorize the Mayor, City Manager, and Finance Director/Treasurer to execute any ancillary documents necessary to effectuate the actions taken herewith. Executive Summary On May 27, 2014, the Audit, Investment & Finance Committee approved recommending the City Council appropriate, and authorize the Finance Director/Treasurer to use and apply, $2.1 million from the Energy Independence Fund and approximately $2.5 million G:\Finance\Niamh Ortega\Investment Committee\Memos\Staff Report-Prepayment Of 2009 LIP Lease Revenue Bonds(Palm Desert)(3).Docx Staff Report Prepayment - Palm Desert Financing Authority Energy Independence Program Bonds June 26, 2014 Page 2 of 4 from the General Fund to prepay the Lease Agreement between the City and the Palm Desert Finance Authority Energy Independence Program. On August 31, 2009, the Palm Desert Financing Authority assisted the City's financing of the Energy Independence Program (EIP) by issuing the Authority's Energy Independence Program, Variable Rate Demand Lease Revenue Bonds, Series 2009 (Federally Taxable) (the "Bonds") in the original principal amount of $5,225,000. A five- year interest rate collar ("Interest Rate Collar"), which is a minimum and maximum interest rate achieved through a derivative agreement, was utilized as part of the financing structure to mitigate the City's risk of increasing variable interest rates during the first five years of the 20-year term of the Bonds. Early termination of the interest rate collar requires a breakage fee payable by the City. The City is currently paying a minimum interest rate of 1.93% on the Bonds due to the Interest Rate Collar and when combined with the Letter of Credit and Remarketing Fees is paying around 3.10%, while surplus City funds currently earn less than an average yield, as of the last monthly report, of 0.25%. In view of the September 1, 2014 expiration date of the Interest Rate Collar, staff recommends that the City Council appropriate, and authorize the Finance Director/Treasurer to use and apply, the following monies to prepay the Lease Agreement with respect to the Bonds on September 2, 2014: (i) $2.1 million from the Energy Independence Fund (leaving approximately $100,000 in the Energy Independence Fund for remaining EIP costs and administration expenses), and (ii) the balance of the prepayment amount (approximately $2.5 million) from the City's General Fund. Prepayment by the City of the Lease Agreement with respect to the Bonds will, in turn, cause a redemption and defeasance (i.e., retirement) of the Bonds, currently outstanding in principal amount of $4,655,000. Because the prepayment and redemption will occur after the September 1, 2014 expiration date of the Interest Rate Collar, the City will incur no breakage fees, and there is also no redemption premium incurred under the bond documents for redeeming the outstanding Bonds on September 2, 2014. The City has also explored refinancing the Bonds at a fixed interest rate on or after the expiration of the 5-year term of the Interest Rate Collar (i.e., September 1, 2014), staff has determined, in consultation with the City's financial advisor, Del Rio Advisors, LLC, that the expected fixed interest rate the City would pay of between 4% and 5.50% on the Bonds, as potentially refinanced in the current market, would still exceed the average yield currently earned by the City on its surplus General Fund monies, which as of the last monthly report, was 0.25%. Thus, staff recommends the prepayment and redemption of the outstanding Bonds as fiscally prudent measure. Background By proceedings undertaken in 2008 pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code, including the adoption of Resolution No. 08-89 on August 28, 2008, the City Council established the EIP. Among other things, G:\Finance\Niamh Ortega\Investment Committee\Memos\Staff Report-Prepayment Of 2009 EIP Lease Revenue Bonds(Palm Desert)(3).Docx Staff Report Prepayment - Palm Desert Financing Authority Energy Independence Program Bonds June 26, 2014 Page 3 of 4 Resolution No. 08-89 established a special trust fund held by the City called the "Energy Independence Fund." As authorized by Resolution No. 08-89, the EIP was initially funded by a transfer of monies from the General Fund to the Energy Independence Fund in the amount of $2.5 million. As noted above, the Authority issued and delivered the Bonds on August 31, 2009. The Bonds were issued to (i) reimburse the City for the entire amount of its $2.5 million advance to initially fund the Energy Independence Fund; (ii) finance the acquisition and construction or installation of distributed generation renewable energy sources and energy efficiency improvements on or in properties in the City pursuant to the EIP; and (iii) pay certain costs related to the issuance of the Bonds. As lease revenue bonds, the Bonds are secured by base rental payments from the City to the Authority under the Lease Agreement, equal to the principal and interest coming due on the Bonds. The City's base rental payments, in turn, are a General Fund obligation as to each year's base rental, equivalent to annual debt service requirements under the bond documents. The leased assets are 73-710 and 73-720 Fred Waring Drive located next to the Civic Center and adjacent to the City Civic Center Park. Each EIP assessment earns interest at a rate of 7%, which is included in the amounts levied for the assessments. The Bonds were issued at a weekly variable interest rate, on account of the fixed interest rate market in 2009 being too high for an economically desirable fixed-rate bond issuance. Given the 7% interest rate paid on EIP assessments by property owners, the Bonds needed to be issued with a lower interest rate in order for the EIP not to operate at a loss. Wells Fargo provided the Interest Rate Collar, which is a minimum and maximum interest rate, as part of the financing structure. The Interest Rate Collar allocates to Wells Fargo Bank the obligation to pay the actual variable interest rate on the Bonds, determined in accordance with the Indenture for the Bonds, while during the 5-year term of the Interest Rate Collar, the City pays to Wells Fargo Bank an interest rate on the Bonds ranging from a low interest rate (to be established at the time of the sale of the Bonds) of approximately 1.93% to a maximum interest rate of 5.25% per annum. The purpose of the Interest Rate Collar is to protect the City from increases in the variable interest rate on the Bonds above 5.25% per annum. In exchange for this risk mitigation, when the interest rates are below the 1.93% floor of the Interest Rate Collar, the City pays to Wells Fargo a minimum interest rate of 1.93%, which is paid in part by Wells Fargo to the owners of the Bonds (at the actual variable interest rate at the time) and retained in part by Wells Fargo (for the difference between the actual interest rate and 1.93%). Since variable rates have remained extremely low, the City is paying the floor rate of 1.93%. When you include both Letter of Credit and Remarketing Fees the City is paying an estimated interest rate of 3.10%, while surplus City funds currently earn less than an average yield, as of the last monthly report, of 0.25%. If the Interest Rate Collar is terminated prior to the expiration of the 5-year term on September 1, 2014, a breakage fee is payable to Wells Fargo. G:\Finance\Niamh Ortega\Investment Committee\Memos\Staff Report-Prepayment Of 2009 EIP Lease Revenue Bonds(Palm Desert)(3).Docx Staff Report Prepayment - Palm Desert Financing Authority Energy Independence Program Bonds June 26, 2014 Page 4 of 4 Thus, although the actual variable interest rates on the Bonds have been below the 1.93% floor of the Interest Rate Collar since the Bonds were issued in 2009, the City has had an economic disincentive (i.e., the breakage fee) to prepay the Bonds during the 5-year term of the Interest Rate Collar. Now that the scheduled expiration date of the Interest Rate Collar of September 1, 2014 is approaching, the prepayment and redemption of the outstanding Bonds is available to the City and the Authority without any Interest Rate Collar breakage fees, redemption premiums, or other prepayment fees relating to the Bonds. Moreover, as authorized by the City Council last year, the City is no longer accepting new EIP applications as of January 2014 and has opted to participate in the regional property assessed clean energy (PACE) program recently formed by the Coachella Valley Association of Governments (CVAG). Although it was originally contemplated that the City might refinance the Bonds at a fixed interest rate on or after the expiration of the 5-year term of the Interest Rate Collar (i.e., September 1, 2014), staff has determined, in consultation with the City's financial advisor, Del Rio Advisors, LLC, that the expected fixed interest rate the City would pay of between 4% and 5.50% on the Bonds, as potentially refinanced in the current market, would still exceed the average yield currently earned by the City on its surplus General Fund monies, which as of the last monthly report, was 0.25%. Thus, staff recommends the prepayment and redemption of the outstanding Bonds as fiscally prudent measure. Fiscal Impact Prepayment of the Lease Agreement between the City and the Palm Desert Financing Authority with respect to the outstanding Palm Desert Financing Authority Energy Independence Program will benefit the General Fund by earning a higher rate of return from 0.25% to 7%. In addition, the outstanding debt will be eliminated. Submitted by: Approval: Paul S. Gibson John . Wohlmuth City Treasurer/ Director of Finance City Manager CITY COUNCILA FTON APPROVED ..// DENIED RECEIVED OTHER •,. BY FlN AUTH6-0 MEET ATE 'a • ' / (96 • ( 10/ AYES: �Jl l QU1/ NOES: `� �'"'a " � �� P, ,o ABSENT: Att ABSTAIN: Q Q,_��',� � Original on 'hie with Cit Clerk's Office VERIFIED BY: 1�=�K/ Original on File with Cityark's Office G:\Finance\Niamh Ortega\Investment Committee\Memos\Staff Report-Prepayment Of 2009 EIP Lease Revenue Bonds(Palm Desert)(3).Docx NOTICE OF REDEMPTION PALM DESERT FINANCING AUTHORITY ENERGY INDEPENDENCE PROGRAM VARIABLE RATE DEMAND LEASE REVENUE BONDS, SERIES 2009 (FEDERALLY TAXABLE) NOTICE IS HEREBY GIVEN to the owners of the above-captioned bonds,dated August 31,2009(the"Bonds"), of the Palm Desert Financing Authority (the "Authority") in accordance with that certain Indenture, dated as of August 1, 2009(the"Indenture"), by and between the Authority and Wells Fargo Bank, National Association(the "Trustee"), pursuant to which such Bonds were originally issued on August 31, 2009, that all of the outstanding Bonds (except for the portion to be redeemed earlier by mandatory sinking fund redemption on September 1, 2014) in the aggregate principal amount of$4,485,000, have been called for redemption on September 2, 2014 (the"Redemption Date"), subject to the provisions of the succeeding paragraphs of this notice, and pursuant to the provisions of the governing documents of the Bonds. The Bonds called for redemption have the stated maturity dates, principal amounts, stated interest rates, and CUSIP numbers as set forth below: Maturity (September 1) Principal Amount Interest Rate CUSIP 2029 $4,485,000 Variable 69661P AN9 Pursuant to the Indenture, on the Redemption Date, the principal, at 100%, and interest accrued to the Redemption Date on such Bonds, without redemption premium (the "Redemption Price"), shall become due and payable,and from and after the Redemption Date, interest on the Bonds shall cease to accrue and be payable. Owners of the Bonds should surrender said Bonds on the Redemption Date at the following addresses: First Class/Registered/Certified Air Courier In Person Wells Fargo Bank.N.A. Wells Fargo Bank.N.A. Wells Fargo Bank.N.A. Corporate Trust Operations Corporate Trust Operations Northstar East Building P.O.Box 1517 N9303-121 608 2nd Ave.So., 12th Fl. Minneapolis,MN 55480-1517 6th&Marquette Avenue Minneapolis,MN Minneapolis,MN 55479 For Bonds surrendered by mail,the use of registered or certified mail is suggested. IMPORTANT NOTICE: ALL HOLDERS SUBMITTING THEIR BONDS MUST ALSO SUBMIT A FORM W-9. FAILURE TO PROVIDE A COMPLETED FORM W-9 MAY RESULT IN THE TWENTY-EIGHT PERCENT (28%) BACK UP WITHHOLDING PURSUANT TO THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003 AND BROKER REPORTING REQUIREMENTS. THE FORM W-9 MAY BE OBTAINED FROM THE INTERNAL REVENUE SERVICE. Neither the Authority nor the Trustee shall be held responsible for the selection or use of the CUSIP number, nor is any representation made as to its correctness indicated in this Notice of Redemption. It is included solely for convenience of the owners of the Bonds. Any error in the CUSIP number shall not affect the validity of the proceedings for redemption of the Bonds. DATED: July_, 2014 WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee on behalf of the Palm Desert Financing Authority P6401-1039\1709887v1.doc '11 -TY OF POE o [ sil 'i ,,t •�' ��� 73-510 FRED WAKING DRIVE � ' PALM DESERT, CALIFORNIA 9 2 2 60-2 5 7 8 TEL: 760 346-06 11 of agy� , info@cityofpalmdesert.org 197=f July 2, 2014 Attn: Ms. Lynn Love, Vice President—Sr. Relationship Manager Wells Fargo Bank,National Association Government& Institutional Banking 333 S. Grand Avenue Fifth Floor, Suite 5A Los Angeles, California 90071 Re: Palm Desert Financing Authority Energy Independence Program, Variable Rate Demand Lease Revenue Bonds, Series 2009; Letter of Credit No.NZS643515 Dear Ms. Love: In connection with the above-captioned bonds(the"Bonds")of the Palm Desert Financing Authority(the "Authority"),the City of Palm Desert(the "City") and Wells Fargo Bank,National Association (the "Credit Entity")entered into that certain Reimbursement Agreement, dated as of August 1, 2009,as amended by the First Amendment to Reimbursement Agreement, dated as of June 14, 2012(as amended, the "Reimbursement Agreement"). Among other things, the Reimbursement Agreement provided for the issuance by the Credit Entity, on August 31, 2009, of its Letter of Credit No. NZS643515, as amended on June 20, 2012(as amended,the"Letter of Credit"). Pursuant to Section 2(e)of the Reimbursement Agreement, the City hereby provides written notice to the Credit Entity of its election to terminate the Letter of Credit on September 2,2014. Capitalized terms used but not defined herein have the respective meanings ascribed to such terms in the Reimbursement Agreement. Please call if you have any questions with this notice of termination. Sincerely, John M. Wohlmuth City Manager, City of Palm Desert cc: Karla Suarez, Wells Fargo Bank,N.A. [Fax No. (213)253-7267] -1- c'b PRixrEoox 4t64Orbrn1039\1709914v2.doc .... OESET 00 7 3—5 1 0 FRED WARING DRIVE we' /2 I PALM DESERT, CALIFORNIA 92260-2578 •� _ " . TEL: 760 346-0611 f'�'.• info@cityofpalmdesert.org 1973 , July 2, 2014 Attn: Mr. Robert Schneider, Vice President Wells Fargo Bank,National Association 333 S. Grand Avenue Fifth Floor, Suite 5A Los Angeles, California 90071 Re: Palm Desert Financing Authority Energy Independence Program, Variable Rate Demand Lease Revenue Bonds, Series 2009, maturing on September 1, 2029 Dear Mr. Schneider: In connection with the issuance of the above-captioned bonds(the "Bonds"), the Palm Desert Financing Authority(the"Authority")and the City of Palm Desert(the "City")entered into that certain Lease Agreement, dated as of August 1, 2009(the "Lease Agreement"). Pursuant to Section 5.05(b)of the Lease Agreement,the City hereby provides written notice to Wells Fargo Bank,National Association, as trustee(the"Trustee"), of its election and execution of the option granted by the Authority pursuant to Section 5.05(b)to prepay in whole,on September 2, 2014,the principal components of the Base Rental payments relating to the Leased Property(except for the Base Rental payment due on September 1, 2014, which shall be paid on the earlier due date). In connection herewith,the City has deposited with the Trustee, by wire transfer,the amounts referred to in Section 5.05(b), consisting of(1) accrued interest on the principal component of Base Rental payments to be prepaid to the date of redemption of Bonds with the proceeds of such prepayment, plus(2)the principal component of any Base Rental payments to be prepaid, plus(3)the applicable redemption premium described in Section 4.03 of the Indenture, dated as of August 1, 2009, with respect to the Bonds(the"Indenture"), and plus(4)the amount of Collar Payments that will be due in connection with such prepayment. Capitalized terms used but not defined herein have the respective meanings ascribed to such terms in the Indenture. In connection with such prepayment,the Authority hereby requests the Trustee, on behalf of and at the expense of the Authority,to send no earlier than July 7, 2014 and no later than August 1, 2014, a notice of redemption to the Securities Depositories,the Information Services, and the respective registered Owners of the Bonds, at their respective addresses appearing on the Bond registration books maintained by the Trustee, all pursuant to Section 4.06 of the Indenture, for redemption on September 2, 2014. In consideration of the Trustee's agreement to issue the notice of redemption,the Authority agrees to indemnify and hold the Trustee harmless against any and all adverse claims, expenses and costs (except for any such claims, expenses and costs arising out of the negligence or misconduct of the Trustee) associated with the Trustee's issuance of such notice of redemption. Please call if you have any questions with this notice of prepayment and instruction letter. Sincerely, John M. Wohlmuth City Manager, City of Palm Desert Chief Administrative Officer, Palm Desert Financing Authority -1- f!� K4014 039\1709898v1.doc ro PR NTH ON Recording Requested by and when recorded return to: City of Palm Desert do Richards, Watson& Gershon 355 S. Grand Ave.,40th Floor Los Angeles, California 90071 Attention: Diana K. Chuang, Esq. (Space above this is for Recorder's use) Exempt from Recording Fees pursuant to California Government Code § 6103 Exempt from Documentary Transfer Tax pursuant to California Revenue and Taxation Code §§ 11922 QUITCLAIM DEED AND MEMORANDUM REGARDING TERMINATION OF SITE LEASE, LEASE AGREEMENT,MEMORANDUM OF LEASE AGREEMENT, AND ASSIGNMENT AGREEMENT This QUITCLAIM DEED AND MEMORANDUM REGARDING TERMINATION OF SITE LEASE, LEASE AGREEMENT, MEMORANDUM OF LEASE AGREEMENT, AND ASSIGNMENT AGREEMENT, dated as of September 2, 2014 (this "Quitclaim and Memorandum of Termination"), is entered into by and among the PALM DESERT FINANCING AUTHORITY, a joint powers agency duly organized and existing pursuant to the laws of the State of California (the "Authority"), the CITY OF PALM DESERT, a municipal corporation duly formed and existing under the laws of the State of California (the "City"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association duly organized and existing under the laws of the United States, as Trustee under the hereinafter mentioned Indenture(the "Trustee"). RECITALS A. Pursuant to the Site Lease, dated as of August 1, 2009 (the "Site Lease"), by and between the City and the Authority, the Authority leased from the City certain real property described in Exhibit A attached hereto (the "Real Property"). B. Pursuant to the Lease Agreement, dated as of August 1, 2009 (the "Lease Agreement"), by and between the Authority and the City, and the Memorandum of Lease Agreement, dated as of August 1, 2009 (the "Memorandum of Lease Agreement"), by and between the Authority and the City, the City subleased the Real Property, including the commercial office complex and all the other facilities and improvements thereon (collectively, the"Leased Property"), from the Authority. C. The Authority has issued its Energy Independence Program, Variable Rate Demand Lease Revenue Bonds, Series 2009 (the "Bonds") pursuant to the Indenture, dated as of P6401-1039\1709916v1.doc August 1, 2009 (the "Indenture"), by and between the Authority and Wells Fargo Bank, National Association, as trustee(the"Trustee"). D. Pursuant to the Assignment Agreement, dated as of August 1, 20009 (the "Assignment Agreement"), by and between the Authority and the Trustee, the Authority has assigned to the Trustee all of the right, title and interest of the Authority in the Lease Agreement (except for the Authority's rights to indemnification and payment or reimbursement for any costs or expenses thereunder), including the Authority's rights to receive "Base Rental" payments (as defined in the Lease Agreement) scheduled to be paid by the City under and pursuant to the Lease Agreement. E. Each of the Site Lease, the Memorandum of Lease Agreement, and the Assignment Agreement have been recorded at the offices of the County Recorder of the County of Riverside on August 28, 2009, as Document Nos. 2009-0450284, 2009-0450285, and 2009- 0450286,respectively. F. The City has now provided for the prepayment of Base Rental payments, in full, to effect a redemption of all of the remaining outstanding Bonds prior to the recordation hereof. G. Upon the prepayment by the City of Base Rental payments, in full, the Site Lease, Lease Agreement, Memorandum of Lease Agreement, and Assignment Agreement have terminated, and the parties hereto desire to record this Quitclaim and Memorandum of Termination in connection with such termination. NOW, THEREFORE, THE PARTIES HERETO ACKNOWLEDGE AND AGREE AS FOLLOWS: 1. Termination. The Site Lease, the Lease Agreement, the Memorandum of Lease Agreement, and the Assignment Agreement each have terminated on September 2, 2014. 2. Quitclaim. To the extent that the Trustee has any remaining right, title and interest in the Leased Property (including the land and any and all improvements on such land) whether through the Indenture or any other prior instrument, the Trustee releases and quitclaims such rights, title and interest to the City. 3. Governing Law. This Quitclaim and Memorandum of Termination shall be governed and construed by the laws of the State of California. -2- P6401-1039\1709916v1.doc 4. Counterparts. This Quitclaim and Memorandum of Termination may be executed in counterparts, and all such executed counterparts shall constitute the same instrument. It shall be necessary to account for only one set of such counterparts in proving this Quitclaim and Memorandum of Termination. IN WITNESS WHEREOF, the parties hereto have entered into this Quitclaim and Memorandum of Termination by their authorized signatories as of the date first written above. PALM DESERT FINANCING AUTHORITY By John M. Wohlmuth Chief Administrative Officer CITY OF PALM DESERT By Van Tanner Mayor WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By Robert Schneider Authorized Officer -3- P6401-1039\1709916v1.doc EXHIBIT A Legal Description of the Real Property PARCEL 1: ALL THAT PORTION OF TRACT NO. 19074-1, IN THE CITY OP PALM DESERT, AS SHOWN BY MAP ON FILE IN BOOK 141 PAGES 58 THROUGH 64, INCLUSIVE, OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF LOT "A" OF SAID TRACT NO. 19074-1; THENCE SOUTH 89° 51' 00"WEST ALONG THE NORTH LINE OF SAID LOT "A", A DISTANCE OF 406.00 FEET; THENCE LEAVING SAID NORTH LINE, NORTH 00° 09' 17"EAST ALONG A LINE PARALLEL WITH THE EAST LINE OF SAID TRACT NO. 19074-1, A DISTANCE OF 201.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING NORTH 00° 09' 17"EAST ALONG SAID PARALLEL LINE A DISTANCE OF 181.00 FEET; THENCE SOUTH 89° 50' 43"EAST,A DISTANCE OF 42.00 FEET; THENCE NORTH 00° 09' 17" EAST, ALONG A LINE PARALLEL WITH SAID EAST LINE OF SAID TRACT NO. 19074-1, A DISTANCE OF 76.00 FEET; THENCE NORTH 43°47' 18" EAST,A DISTANCE OF 147.81 FEET; THENCE SOUTH 89° 50' 43"EAST,A DISTANCE OF 228.00 FEET TO A POINT IN A LINE PARALLEL WITH AND DISTANT 34.00 FEET WESTERLY OF MEASURED AT RIGHT ANGLES TO THE EAST LINE OF SAID TRACT NO. 19074-1; THENCE SOUTH 00° 09' 17"WEST ALONG SAID PARALLEL LINE A DISTANCE OF 362.00 FEET TO A POINT IS NORTH 00° 09' 17" EAST, A DISTANCE OF 201.00 FEET FROM SAID NORTH LINE OF SAID LOT "A"; THENCE SOUTH 89° 51' 00" WEST ALONG A LINE PARALLEL WITH AND DISTANT 201.00 FEET NORTHERLY OF, MEASURED AT RIGHT ANGLES TO SAID NORTH LINE OF SAID LOT "A", A DISTANCE OF 372.00 FEET, TO THE TRUE POINT OF BEGINNING. PARCEL 2: ALL THAT PORTION OF TRACT NO. 19074-1, IN THE CITY OF PALM DESERT, AS SHOWN BY MAP ON FILE IN BOOK 141 PAGES 58 THROUGH 64, INCLUSIVE, OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF SAID LOT "A" OF SAID TRACT NO. 19074-1; A-1 P6401-1039\1709916v1.d°c THENCE SOUTH 89° 51' 00"WEST ALONG THE NORTH LINE OF SAID LOT "A", A DISTANCE OF 34.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 89° 51' 00"WEST ALONG SAID NORTH LINE A DISTANCE OF 372.00 FEET; THENCE LEAVING SAID NORTH LINE, NORTH 00° 09' 17"EAST, ALONG A LINE PARALLEL WITH THE EAST LINE OF SAID TRACT NO. 19074-1, A DISTANCE OF 201.00 FEET; THENCE NORTH 89° 51' 00" EAST,ALONG A LINE PARALLEL WITH THE NORTH LINE OF SAID LOT "A", A DISTANCE OF 372.00 FEET TO THE INTERSECTION WITH A LINE PARALLEL WITH AND DISTANT 34.00 FEET WESTERLY OF, MEASURED AT RIGHT ANGLES TO THE EAST LINE OF SAID TRACT NO. 19074-1; THENCE SOUTH 00° 09' 17"WEST ALONG SAID PARALLEL LINE A DISTANCE OF 201.00 FEET TO THE TRUE POINT OF BEGINNING. APN: 622-260-081 and 622-260-083 TRA 018-011 A-2 P6401-1039\1709916v1.doc State of California ) County of ) On ,before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) State of California ) County of ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) P6401-1039\1709916v1.doc State of California ) County of ) On , before me, , (insert name and title of the officer) Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) P6401-1039\1709916v1.doc