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HomeMy WebLinkAbout9/2/2015 - STAFF REPORTS - 2.H. ;OE PALM$ A 4 iy O Y N [/F ,s * �P aro"" City Council Staff Report ORN . DATE: September 2, 2015 CONSENT CALENDAR SUBJECT: APPROVE RENEWAL OF LETTER OF CREDIT FOR THE 2002 CERTIFICATES OF PARTICIPATION ISSUED TO FINANCE THE DOWNTOWN PARKING STRUCTURE FROM: David H. Ready, City Manager BY: Suzanne Harrell, City Financial Advisor SUMMARY In 2002, the City issued Taxable Variable Rate Demand Certificates of Participation (COPs) to finance the parking structure at the corner of Baristo Road and Indian Canyon Drive. The COPs bear interest at a short term variable rate, reset every 7 days. Owners of such short term variable rate debt can require the City to repurchase their COPS on 7 days' notice. The funds for such a purchase are provided under a letter of credit, and the City's remarketing agent then finds a new buyer to purchase the COPs and repay any draw on the letter of credit. The current Letter of Credit securing the COPs is issued by MUFG Union Bank (formerly Union Bank of California) and expires on October 31, 2015. MUFG Union Bank is offering to renew and extend the expiration date of the Letter of Credit to July 31, 2018. Staff is recommending approval of an amendment to the Reimbursement Agreement with MUFG Union Bank, which governs the terms of the Letter of Credit renewal, and associated Fee Agreement. RECOMMENDATION: 1. Approve First Amendment to Reimbursement Agreement for the 2002 Certificates of Participation issued for the Downtown Parking Structure. 2. Approve Fee Agreement with MUFG Union Bank. 3. Authorize the City Manager to execute all necessary documents. i iEM NO. City Council September 2, 2015 -- Page 2 Renewal of Letter of Credit STAFF ANALYSIS: The COPS were issued to finance the original downtown parking structure located at the corner of Baristo Road and Indian Canyon Drive. Because the City intended for much of the parking to be reserved for restaurants and possibly tenant employee parking, the COPs could not be issued as tax-exempt bonds. Taxable municipal bond interest rates were extremely high in 2002 when the COPS were issued, and it was determined that the most prudent way to finance the facility was to issue taxable variable rate debt. The interest rate is reset every 7 days, keeping the rate as low as possible. Because the interest rate is reset every 7 days, investors are provided an opportunity to sell their COPs back to the City every week. In order to maintain sufficient liquidity to purchase any COPs on short notice, the City secured a letter of credit with by MUFG Union Bank (formerly Union Bank of California) when the COPS were issued. If there was ever a draw on the letter of credit to fund the purchase of COPS, the remarketing agent finds new buyers for the COPS. The funds from the sale to a new buyer are used to repay the letter of credit. The typical term for a letter of credit is 3 years. The current Letter of Credit expires on October 31, 2015. MUFG Union Bank is offering to renew and extend the expiration date to July 31, 2018. Staff is recommending approval of an amendment to the Reimbursement Agreement with MUFG Union Bank, which governs the terms of the Letter of Credit renewal, and associated Fee Agreement. The fees are the same as the last renewal in 2012. FISCAL IMPACT: The current annual fee is 1.25% of the Letter of Credit amount (outstanding par amount of the COPs plus interest for 2 months), which decreases over time as the principal balance of the COPs is paid down. The fees are the same as the last renewal in 2012. Because of the current low interest rate environment, staff continues to explore methods to fix the interest rate on the COPs without increasing the financing cost to the General Fund. In the event that this cannot be completed prior to the current October 31, 2015 expiration date, it is prudent to enter into the agreement to extend the expiration of the Letter of Credit to July 31, 2018 on the same terms. 02 City Council September 2, 2015 -- Page 3 Renewal of Letter of Credit u ne Harrell Geoffrey Kiehl City Financial Advisor Director of Finance David H. Ready Dougl s C. Holland City Manager City Attorney Attachments: First Amendment to Reimbursement Agreement Fee Agreement 03 EXECUTION COPY FIRST AMENDMENT To REIMBURSEMENT AGREEMENT This FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT (this "Amendment") is dated September 30, 2015 (the "Amendment Date"), between the CITY OF PALM SPRINGS (the "City") and MUFG UNION BANK, N.A. (FORMERLY KNOWN AS UNION BANK OF CALIFORNIA, N.A.), a national banking association (the "Bank"). All capitalized terms used herein and not defined herein have the meanings set forth in the hereinafter defined Agreement. WITNESSETH WHEREAS, the City and the Bank have entered into the Reimbursement Agreement dated as of August 1, 2002, as amended and supplemented to date (as the same may be further amended, supplemented, modified or restated from time to time in accordance with the terms thereof, the "Agreement"); WHEREAS,pursuant to Section 7.02 of the Agreement, the Agreement may be amended to extend the Maturity Date by a written amendment thereto executed by the City and the Bank with written notice to the Trustee and the Remarketing Agent; and WHEREAS, the City has requested that the Bank extend the Maturity Date of the Letter of Credit and the Bank is willing to do so on the terms and conditions set forth in this Amendment. Now THEREFORE, in consideration of the premises, the parties hereto hereby agree as follows: 1. AMENDMENTS. Subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Agreement shall be and hereby is amended as follows: 1.01. The definition of "Maturity Date" set forth in Section 1.01 of the Agreement is amended and restated in its entirety as follows: "Maturity Date" means July 31, 2018, or such later date as agreed to by the City and the Bank pursuant to Section 2.08 hereof. 1.02. Section 1.01 of the Agreement is amended by adding thereto the following new defined terms to appear in the appropriate alphabetical order and to read as follows: "Amendment Effective Date" means July 28, 2015. "Amortization End Date" means the earlier to occur of (a) the third (3rd) anniversary of the date the related Tender Advance was made and (b) the date each Advance is required to be paid in full as provided in clause (A), (C), (D) or (E) of Section 2.05 hereof. Amendment to Reimbursement Agreement 04 4183307 "Amortization Payment Date" means, with respect to any Tender Advance (a) the earlier to occur of(i)the first Business Day to occur at least ninety (90) days after the date the related Tender Advance was made and (ii) the Stated Termination Date and, in either case, each three (3) month anniversary of such date (provided, however, if any such anniversary date is not a Business Day, the next succeeding day which is a Business Day) occurring thereafter prior to the related Amortization End Date and (b) the related Amortization End Date. "Amortization Period" means the period commencing on the date the related Advance is made and ending on the date on which the related Advance is payable in full pursuant to the terms of Section 2.05 hereof. "Anti-Corruption Laws" means all laws, rules, and regulations of any jurisdiction applicable to the City from time to time concerning or relating to bribery or corruption. "Applicable Law" means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of all governmental and non-governmental bodies, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity) and arbitrators. "Bank" means MUFG Union Bank, N.A. (formerly known as Union Bank of California, N.A.), a national banking association and its permitted successors and assigns. "Change in Law" means the occurrence, after the Closing Date, of any of the following: (a)the adoption or taking effect of any Law, including, without limitation Risk-Based Capital Guidelines, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, ruling, guideline, regulation or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, ruling, guidelines, regulations or directives thereunder or issued in connection therewith and (ii) all requests, rules, rulings, guidelines, regulations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities shall in each case be deemed to be a "Change in Law," regardless of the date enacted, adopted or issued. "Fee Agreement" means the Fee Agreement dated July 28, 2015, between the City and the Bank, as the same may be amended, supplemented, modified or restated from time to time. 2 05 "Governmental Approval" means an authorization, permit, consent, approval, license or exemption from, registration or filing with, or report to, any governmental or regulatory unit. "Governmental Authority" means the government of the United States of America or any other nation or any political subdivision thereof or any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, City, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or European Central Bank), or any arbitrator, mediator or other Person with authority to bind a party at law. "Parlicipant(s)" means any bank(s) or other financial institution(s) that may purchase from the Bank a participation interest in this Agreement, the Letter of Credit, the Fee Agreement and certain of the Related Documents pursuant to a participation agreement between the Bank and the Participant(s). "Risk-Based Capital Guidelines" means (a)the risk-based capital guidelines in effect in the United States of America, including transition rules, and (b) the corresponding capital regulations promulgated by regulatory authorities outside the United States of America including transition rules, and any amendment to such regulations. "Sanctions" means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State. "Sanctioned Country" means, at any time, a country or territory which is the subject or target of any Sanctions. "Sanctioned Person" means, at any time, (a) any Person listed in any Sanctions- related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person. "Taxes" means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto. 06 -3- 1.03. Section 2.03 of the Agreement is amended and restated in its entirety as follows: Section 2.03 Commissions. The City hereby agrees to pay, or cause to be paid, to the Bank the fees set forth in the Fee Agreement on the dates and in the amounts stated in the Fee Agreement, the terms of which Fee Agreement are incorporated herein by reference as if fully set forth herein. Any reference herein or in any other document to fees and/or other amounts or obligations payable hereunder shall include, without limitation, all fees and other amounts or obligations payable pursuant to the Fee Agreement, and any reference to this Agreement shall be deemed to include a reference to the Fee Agreement. 1.04. Section 2.05 of the Agreement is amended and restated in its entirety as follows: Section 2.05. Tender Advances. (a) In the event the Bank makes any payment under the Letter of Credit pursuant to a Tender Draft and the conditions set forth in Section 3.03 have been fulfilled, such payment shall constitute an Advance made by the Bank to the City on the date and in the amount of such payment, each such Advance being a "Tender Advance" and collectively the "Tender Advances." The unpaid principal amount of any Tender Advance and all accrued and unpaid interest thereon shall be repaid in accordance with the terms of Sections 2.06 and 2.07; provided that the City promises to repay the then unpaid amount of each Tender Advance to the Bank on the earliest to occur of: (A)the date on which the Letter of Credit is replaced by an Alternate Letter of Credit pursuant to the terms of the Trust Agreement; (B)the date on which any Certificates purchased by the Bank with funds disbursed under the Letter of Credit in connection with such Tender Draft are redeemed, prepaid or canceled pursuant to the Trust Agreement; (C) the date on which any Certificates purchased by the Bank with funds disbursed under the Letter of Credit in connection with the related Tender Draft are remarketed pursuant to the Trust Agreement and the Remarketing Agreement; (D) the Conversion Date and (E) the date on which the Available Amount of the Letter of Credit is permanently reduced to zero or the Letter of Credit is otherwise terminated (except as the result of the occurrence of the Stated Termination Date);provided that, if and until such Tender Advance is payable in full as provided above in this Section 2.05(a), each Tender Advance shall be payable by the City, in quarterly principal installments (each a "Quarterly Principal Payment") on each Amortization Payment Date related thereto (commencing on the first such date to occur after the making of the related Tender Advance), with the final installment in an amount equal to the entire then outstanding principal amount of such Tender Advance being due and payable on the related Amortization End Date. Each Quarterly Principal Payment shall be that amount which will result in equal (as nearly as possible) aggregate Quarterly Principal Payments over the applicable Amortization Period. (b)(i) Upon the Bank's honoring any Tender Draft, the Bank shall purchase the Bank Certificates in respect of which such Tender Draft is made, and the City shall cause the Trustee to hold such Bank Certificates for the benefit of 4 07 the Bank and register such Bank Certificates in the name of the Bank or its nominee, or to otherwise deliver such Bank Certificates as directed by the Bank pursuant to the Custody Agreement, which Bank Certificates may also be held in book-entry form as described in the Custody Agreement. During such time as the Bank is the owner of any Certificates, the Bank shall have all the rights granted to an owner of the Certificates under the Indenture and such additional rights as may be granted to the Bank hereunder. To the extent that the Bank actually receives payment in respect of any Bank Certificate held by the Bank, the Advance made in connection with the purchase of such Bank Certificate shall be deemed to have been reduced pro tanto, with the Bank crediting any payment on such Bank Certificate received, first, to the payment of any outstanding interest accrued on the related Tender Advance, and, second, to the payment of the principal of such Tender Advance. Any such payment or prepayment to be applied to principal of outstanding Tender Advances hereunder shall be applied to the prepayment of such Tender Advances in chronological order of their issuance hereunder and within each Tender Advance in inverse order of the Principal Payments payable thereon. Following the occurrence of an Event of Default, any payments received by the Bank hereunder or under the Bank Certificates shall be applied by the Bank to the payment of the Payment Obligations in such order as the Bank shall in its sole discretion determine. (ii) Bank Certificates shall bear interest at the Bank Rate from time to time in effect and shall be redeemed on each Amortization Payment Date and in the principal amounts equal to each Principal Payment payable by the City pursuant to Section 2.03(a) hereof, and each such payment made to redeem Bank Certificates which is received by the Bank shall be deemed to satisfy, on a dollar for dollar basis, the aggregate Principal Payment due on the date of such payment. 1.05. Section 2.12(i) of the Agreement is amended and restated in its entirety as follows: (i) any lack of validity or enforceability of the Letter of Credit, the Certificates, the Trust Agreement, the Lease Agreement, the Assignment Agreement, the Custody Agreement, the Remarketing Agreement, the Certificate Purchase Agreement, the Confirmation Agreement, the Confirming Letter of Credit, the Fee Agreement or any other agreement or instrument relating thereto (collectively the "Related Documents"); 1.06. Article II of the Agreement is amended by inserting the following Section 2.14 in the appropriate numerical order therein as follows: Section 2.14 Increased Costs. (a) Increased Costs Generally. If any Change in Law shall: s 08 (i) impose, modify or deem applicable any reserve, liquidity ratio, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, the Bank or any Participant; (ii) subject to the Bank or any Participant to any Taxes of any kind whatsoever with respect to this Agreement or the Letter of Credit, or change the basis of taxation of payments to the Bank or such Participant in respect thereof; or (iii) impose on the Bank or any Participant any other condition, cost or expense affecting this Agreement or the Letter of Credit; and the result of any of the foregoing shall be to increase the cost to the Bank or such Participant related to issuing or maintaining the Letter of Credit, or to reduce the amount of any sum received or receivable by the Bank or such Participant hereunder (whether of principal, interest or any other amount) then, upon written request of the Bank or such Participant, the City shall promptly pay to the Bank or such Participant, as the case may be, such additional amount or amounts as will compensate the Bank or such Participant, as the case may be, for such additional costs incurred or reduction suffered. (b) Capital Requirements. If the Bank or any Participant determines that any Change in Law affecting the Bank or such Participant or the Bank's or such Participant's parent or holding company, if any, regarding capital requirements, has or would have the effect of reducing the rate of return on the Bank's or such Participant's capital or the capital of such the Bank's or such Participant's parent or holding company holding, if any, as a consequence of this Agreement, or for maintaining the Letter of Credit, to a level below that which the Bank or such Participant or the Bank's or such Participant's parent or holding company could have achieved but for such Change in Law (taking into consideration the Bank's or such Participant's policies and the policies of the Bank's or such Participant's parent or holding company with respect to capital adequacy), then from time to time upon written request of the Bank or such Participant the City shall promptly pay to the Bank or such Participant, as the case may be, such additional amount or amounts as will compensate the Bank or such Participant or the Bank's or such Participant's parent or holding company for any such reduction suffered. (c) Certificates for Reimbursement. A certificate of the Bank or a Participant setting forth the amount or amounts necessary to compensate the Bank or any such Participant or the Bank's or any such Participant's parent or holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the City, shall be conclusive absent manifest error. The City shall pay the Bank or any such Participant, as the case may be, the amount shown as due on any such certificate within ten(10) days after receipt thereof. 019 -6- (d) Delay in Requests. Failure or delay on the part of the Bank or any such Participant to demand compensation pursuant to this Section shall not constitute a waiver of the Bank's or any such Participant's right to demand such compensation. (e) Survival. Without prejudice to the survival of any other agreement of the City hereunder, the agreements and obligations of the City contained in this Section shall survive the termination of this Agreement and the Letter of Credit and the payment in full of the Certificates and the obligations of the City thereunder and hereunder. 1.07. Section 5.2 of the Agreement is amended by inserting the following Section 5.02(i) in the appropriate numerical order therein as follows: (i) Immunity. To the fullest extent permitted by law, the City hereby agrees not to assert the defense of sovereign immunity in any legal proceeding to enforce or collect upon the obligations of the City under this Agreement or the Fee Agreement or the transactions contemplated hereby. 1.08.Section 6.01(a) of the Agreement is hereby amended and restated in its entirety as follows: (a) The City shall fail to pay any amount payable hereunder or under the Fee Agreement as and when due; or 1.09. Section 6.01(d) of the Agreement is hereby amended and restated in its entirety as follows: (d) The City shall fail to perform or observe any other term, covenant or agreement contained in any other section of this Agreement on its part to be performed or observed and any such failure shall remain unremedied for ten (10) days after the earlier to occur of (i) written notice thereof shall have been given to City by the Bank or (ii) actual knowledge thereof by the City; or 1.10. Section 6.01(e) of the Agreement is hereby amended and restated in its entirety as follows: (e) The City (i) defaults in any payment of any Debt beyond the period of grace, if any, provided in the instrument or agreement under which such Debt was created; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs or condition exists, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Debt to become due prior to its stated maturity; 10 -7- 1.11. Section 6.01 of the Agreement is amended by inserting the following Section 6.01(m) and (n) in the appropriate numerical order therein as follows: (m) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt of the City. (n) the entry or filing of one or more judgments, writs or warrants of attachment or of any similar process which, individually or in the aggregate, equal or exceed $5,000,000, shall be rendered against the City or against any of its property and the same shall not have been satisfied, stayed, vacated, discharged or bonded pending appeal for a period of sixty (60) days, or any action shall be taken by a judgment creditor to attach or levy upon any revenues or assets of the City to enforce any such judgment 1.12. Article VII of the Agreement is amended by inserting the following Sections 7.20, 7.21, 7.22, 7.23 and 7.24 in the appropriate numerical order therein as follows: Section 7.20. USA PATRIOT Act Notice. The Bank hereby notifies the City that, pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the City, which information includes the name and address of the City and other information that will allow the Bank to identify the City in accordance with the Act. Section 7.21. Disclosure of Information. The Bank may disclose to any of its affiliates and any permitted (actual or potential) assignee, transferee or participant any information about the City as the Bank considers appropriate. Section 7.22. OFAC. (a) The City will maintain in effect and enforce policies and procedures designed to ensure compliance by the City and its directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. (b) The City shall not use, and shall not allow the use of, the proceeds of any drawing under the Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto. Section 7.23. Assignment to Federal Reserve Bank. The Bank may at any time assign or pledge a security interest in all or any portion of its rights under this Agreement and the Fee Agreement to secure obligations of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the City of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, -8- 11 provided that any payment in respect of such assigned Payment Obligations made by the City to the Bank in accordance with the terms of this Agreement shall satisfy the City's Obligations hereunder in respect of such assigned Payment Obligation to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder. Section 7.24. Arm's Length Transaction. The City acknowledges and agrees that the transaction described in this Agreement is an arm's length commercial transaction between the City and the Bank in which(i) the Bank is acting solely as a principal and not as an advisor including, without limitation, a"Municipal Advisor" as such term is defined in Section 15B of the Securities and Exchange Act of 1934, as amended, and the related final rules (the "Municipal Advisor Rules"), agent or a fiduciary of the City, (ii) the Bank is relying on the bank exemption in the Municipal Advisor Rules, (iii) the Bank has not provided any advice or assumed any advisory or fiduciary responsibility in favor of the City with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (whether or not the Bank, or any affiliate of the Bank, has provided other services or advised, or is currently providing other services or advising the City on other matters), (iv) the Bank has financial and other interests that differ from those of the City and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary, for the City, or any other Person, (v) the Bank and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the City, and neither the Bank nor any of its Affiliates has any obligation to disclose any of such interests to the City and (vi) the City has consulted with its own financial, legal, accounting, tax and other advisors, as applicable, to the extent it deemed appropriate. To the fullest extent permitted by law, the City, hereby waives and releases any claims that it may have against the Bank or any of its affiliates with respect to any breach or alleged breach of City or fiduciary duty in connection with any aspect of any transactions contemplated hereby. Section 7.25. Certain Obligations Payable as Additional Rental. All fees and other payments (other than the obligation of the City to pay the Bank the principal of and interest on unreimbursed Payment Drafts and Tender Advances) which are required to be paid by the City hereunder constitute Additional Rental under and within the meaning of the Lease Agreement, which the City is obligated to pay as Additional Rental for the Property pursuant t Section 3.1(c)(vi) of the Lease Agreement. 2. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to the satisfaction of or waiver by the Bank of all of the following conditions precedent: 2.01. Delivery by the City of an executed counterpart of each of(i) this Amendment and (ii) the Fee Agreement dated the date hereof between the City and the Bank (the "Fee Agreement" and, together with the Amendment, the "Amendment Documents"). 2.02. The following statements shall be true and correct as of the date hereof: 12 -9- (a) the representations of the City contained in Article IV of the Agreement are true and correct on and as of the date hereof as though made on and as of such date (except to the extent the same expressly relate to an earlier date); and (b) no default or Event of Default has occurred and is continuing or would result from the execution of the Amendment Documents. 2.03. The Bank shall have received (a) resolutions of the City or other evidence which demonstrates that the City is authorized to enter into the Amendment Documents and (b) an incumbency certificate of the City with respect to the officers thereof authorized to execute the Amendment Documents. 2.04. The Bank shall have received a legal opinion of counsel to the City addressed to the Bank and in form and substance satisfactory to the Bank and its counsel. 2.05. Payment to the Bank promptly following receipt of an invoice of the reasonable legal fees and expenses of counsel to the Bank(in an amount estimated at $7,500). 2.06. All other legal matters pertaining to the execution and delivery of this Amendment shall be reasonably satisfactory to the Bank and its counsel. 3. REPRESENTATIONS OF THE CITY. In addition to the representations given in Article IV of the Agreement, the City hereby represents as follows: 3.01. The execution and delivery by the City of the Amendment Documents has been duly authorized by all necessary action of the City, and no further approval, authorization or consents are required by law or otherwise. The Amendment Documents and the Agreement, as amended hereby, constitute the legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally. Each of the Amendment Documents and the Agreement, as amended hereby, is or on the date hereof will be in full force and effect. 3.02. All consents, licenses, approvals, validations and authorizations of, and registrations, validations or declarations by or with any court or any Governmental Authority required to be obtained in connection with the execution, delivery, performance, validity or enforceability of the Amendment Documents and the Agreement, as amended hereby, have been obtained and are in full force and effect. 4. REQUEST FOR EXTENSION OF MATURITY DATE. The City hereby requests that the Bank extend the Maturity Date of the Letter of Credit to July 31, 2018, and the Bank, upon the effectiveness of this Amendment, the agrees to such -10- 13' request and the City agrees to deliver the written Notice of Extension of the Maturity Date to the Trustee and the Remarketing Agent substantially in the form attached hereto as Exhibit A to effectuate such extension. 5. MISCELLANEOUS. Except as specifically amended herein, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in any note, document, agreement, letter, certificate, the Agreement or any communication issued or made subsequent to or with respect to the Agreement, it being hereby agreed that any reference to the Agreement shall be sufficient to refer to, and shall mean and be a reference to, the Agreement, as hereby amended. In case any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. This Amendment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or by e-mail with a pdf copy or other replicating image attached, will be effective as delivery of a manually executed counterpart of this Amendment, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page. [SIGNATURE PAGE TO FOLLOW] -11- 14 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers as of the Amendment Date. MUFG UNION BANK,N.A. (FORMERLY KNOWN AS UNION BANK OF CALIFORNIA,N.A.) By Name Anne Kupfer Title Director CITY OF PALM SPRINGS By Name Title Signature Page to First Amendment to Reimbursement Agreement 15 EXHIBIT A FORM OF NOTICE OF EXTENSION The undersigned, a duly authorized officer of the CITY OF PALM SPRINGS (the "City"), hereby notifies the Trustee and the Remarketing Agent, pursuant to Section 2.08 of the Reimbursement Agreement, dated as of August 1, 2002 (the "Reimbursement Agreement") between the City and MUFG Union Bank, N.A. (formerly known as Union Bank of California, N.A.), that the Maturity Date has been extended from July 31, 2015 to July 31, 2018. All capitalized terms used herein and not defined herein have the meanings set forth in the Reimbursement Agreement. CITY OF PALM SPRINGS By Name Title is EXECUTION COPY FEE AGREEMENT DATED AS OF SEPTEMBER 30,2015 Reference is hereby made to (i) the Reimbursement Agreement dated as of August I, 2002, as amended and supplemented to date (the "Agreement"), between the CITY OF PALM SPRINGS (the "City") and MUFG UNION BANK, N.A. (FORMERLY KNOWN AS UNION BANK OF CALIFORNIA, N.A.) (the "Bank"), relating to the City of Palm Springs Taxable Variable Rate Demand Certificates of Participation, 2002 Series A (the "Certificates"), and (ii) the Irrevocable Letter of Credit dated August 1, 2002, as amended and supplemented to date (the "Letter of Credit"), issued by the Bank pursuant to the Agreement, supporting the Certificates. The purpose of this Fee Agreement is to confirm the agreement between the Bank and the City with respect to the Facility Fees (as defined below) and certain other fees payable by the City to the Bank. This Fee Agreement is the Fee Agreement referenced in the Agreement, and the terms hereof are incorporated by reference into the Agreement. ARTICLE 1. FEES. Section 1.1. Facility Fees. The City hereby agrees to pay or cause to be paid to the Bank in arrears on October 1, 2015 (for the period commencing on August 1, 2015, to but not including September 30, 2015) and on the first Business Day of each January, April, July and October (each, a "Quarterly Payment Date") occurring prior to the Stated Termination Date, and on the Stated Termination, for each day during the immediately preceding fee period, a non- refundable fee (the "Letter of Credit Fee") in an amount equal to the product of 1.25% per annum and Stated Amount for each day during such fee period (the "Commitment Fee Rate"). The Letter of Credit Fee shall be calculated on the basis of a year of 360 days and the actual number of days elapsed and shall be payable in immediately available funds. For purposes of this Section 1.1, "Stated Amount" means $7,046,858.63, as such amount may be permanently reduced from time to time in accordance with the Letter of Credit. Section 1.2. Transfer Fee. The City shall pay, or cause to be paid, to the Bank, upon each transfer of the Letter of Credit in accordance with its terms, a transfer commission equal to $2,000. A transfer is deemed to have occurred whenever the Trustee is replaced, substituted or changed as a result of sale, assignment, merger, consolidation, reorganization or an act of law. Section 1.3. Draw Fee. The City shall pay to the Bank upon each draw under the Letter of Credit a sum equal to $250, payable on the Draw Date. Section 1.4. Default Fee. The City shall pay, or cause to be paid, to the Bank during the period of any Event of Default hereunder, regardless of whether the Bank has exercised any of its remedies as described in Section 6.02 of the Agreement, a default fee based on the Available Amount in effect, from the date such Event of Default has occurred until the earlier of the date such Event of Default is cured or the date all obligations under the Agreement and hereunder have been paid in full, at the rate of 3% per annum. The default fee shall be payable monthly in arrears, on the last day of each month, and on the day the Event of Default is cured or, if earlier, Revised_Palm_Springs_Fee_Agmt_3820874 01 07.docx r .r 4183307 J the Stated Termination Date or the date on which all obligations due and owing under the Agreement and hereunder have been paid in full. Section 1.5. Confrming Credit Entity's Fee. All of the above fees are in addition to and not in lieu of any fees which may be charged by the Confirming Credit Entity. The City shall pay, or cause to be paid, to the Confirming Credit Entity its fees for providing the Confirming Letter of Credit, including but not limited to those fees set forth in Sections 2.02 and 2.07(b) of the Confirmation Agreement (or to the Bank, in reimbursement of amounts it paid in such regard). The annual fee is 0.25% and, as a courtesy, may be billed directly to the City by the Confirming Credit Entity. Section 1.6. Additional Rental. All of the above fees set forth in this Agreement shall be payable by the City as Additional Rental under the Lease Agreement. ARTICLE 11. MISCELLANEOUS. Section 2.1. Amendments. No amendment to this Fee Agreement shall become effective without the prior written consent of the City and the Bank. Section 2.2. Governing Law. THIS FEE AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER, AND FOR ALL PURPOSES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,THE LAWS OF THE STATE OF CALIFORNIA. Section 2.3. Counterparts. This Fee Agreement may be executed in two or more counterparts, each of which shall constitute an original, but when taken together shall constitute but one agreement and any of the parties hereto may execute this Fee Agreement by signing any such counterpart. This Fee Agreement may be delivered by the exchange of signed signature pages by facsimile transmission or by attaching a pdf copy to an email, and any printed or copied version of any signature page so delivered shall have the same force and effect as an originally signed version of such signature page. Section 2.4. Severability. Any provision of this Fee Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Section 2.5. No Disclosure. Unless required by law, the City shall not deliver or permit, authorize or consent to the delivery of this Fee Agreement to the Remarketing Agent or any other Person for delivery to the Municipal Securities Rulemaking Board unless the Bank provides its prior written consent. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 28 IN WITNESS WHEREOF, the parties hereto have caused this Fee Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. CITY OF PALM SPRINGS By: Name: Title: MUFG UNION BANK,N.A. (FORMERLY KNOWN AS UNION BANK OF CALIFORNIA,N.A.) By: Name: Anne Kupfer Title: Director [Signature Page to Fee Agreement] 19