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City Council/Financing Authority Staff Report
DATE: June 19, 2013 PUBLIC HEARING
SUBJECT: CITY COUNCIL AND FINANCING AUTHORITY APPROVAL OF
CITYWIDE ENERGY PROJECT FINANCING AND RELATED
AGREEMENTS AND DOCUMENTS AND MAKING CERTAIN
FINDINGS PURSUANT TO CALIFORNIA GOVERNMENT CODE
SECTION 4217.13.
FROM: David H. Ready, City Manager/Executive Director
BY: Suzanne Harrell, Financial Advisor
SUMMARY
In March 2013, the City Council authorized staff to prepare documentation for financing
the following Citywide Energy Conservation Measures: (1) City-wide lighting and
irrigation upgrades; (2) the decommissioning of the Sunrise Cogeneration Plant and (3)
the upgrade of the Municipal Cogeneration Plant central plant. The City's proposed
method of providing the public financing for such project costs is through a lease of
certain property and equipment to the City of Palm Springs Financing Authority
(Authority). Approval of the financing requires that both the City and the Authority adopt
resolutions after the City Council conducts a public hearing and makes certain findings.
If approved, the resolutions would authorize (1) entering into a lease agreement for the
financing of the Project in a principal amount not-to-exceed $18.5 million on certain
terms and conditions and (2) execution of various documents in connection with the
financing by the City Manager and Executive Director.
RECOMMENDATION:
1) Open the Public Hearing and accept public testimony.
Acting as the City Council:
2) Adopt Resolution No. "A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE
AGREEMENT, AN ESCROW AGREEMENT AND A PLACEMENT AGENT
AGREEMENT WITH RESPECT TO THE ACQUISITION, INSTALLATION, FINANCING,
INSTALLMENT SALE PURCHASE AND LEASING OF EQUIPMENT THAT
CONSTITUTES ENERGY CONSERVATION FACILITIES; APPROVING AND
ITEM NO.
City Council/Financing Authority
June 19, 2013— Page 2 of 7
Energy Conservation Measures Financing
AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND
DOCUMENTS REQUIRED IN CONNECTION THEREWITH; RATIFYING FINDINGS
PURSUANT TO SECTION 4217.13 OF THE CALIFORNIA GOVERNMENT CODE
WITH RESPECT TO SUCH ENERGY CONSERVATION FACILITIES; AND
AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
RESOLUTION."
Acting as the Financing Authority Board:
3) Adopt Resolution No. "A RESOLUTION OF THE GOVERNING BODY OF
THE CITY OF PALM SPRINGS FINANCING AUTHORITY, CALIFORNIA, APPROVING
AND AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY
LEASE, A LEASE AGREEMENT, AN ASSIGNMENT AGREEMENT FOR PROJECT
LEASE AND AN ASSIGNMENT AGREEMENT FOR EQUIPMENT LEASE WITH
RESPECT TO THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT
SALE PURCHASE AND LEASING BY THE CITY OF PALM SPRINGS, CALIFORNIA
OF EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES;
AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND
DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE
TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION."
STAFF ANALYSIS:
Financing the Energy Conservation Measures Project has three components: (1) City-
wide Lighting and Irrigation Upgrades; (2) the decommissioning of the Sunrise
Cogeneration Plant and (3) the replacement of the Muni Cogeneration Plant central
plant. The cost of producing energy at the Muni Plant is shared between the General
Fund and the Airport, since the Airport uses approximately 50% of the energy generated
by the Muni Plant, and the Airport will share in this cost component of the financing.
The financing is intended to be repaid from the savings that the City should realize from
the more energy-efficient equipment being installed, so that there is no overall net cost
to the City. The annual payments on the financing are expected to be roughly
equivalent to the reduction in energy costs each year.
The table of the following page provides an example of how this offset in costs and
savings works. In 2013-14, $3.441 million is budgeted for energy costs (gas, water,
electricity) and another $1.257 million for cogeneration fund O&M, for a total energy
budget of $4.698 million. This amount is allocated across various General Fund
departments and functions and the Airport. After the Project is installed, amounts
budgeted for energy costs are expected to be reduced in Fiscal Year 2016 by $783,000
and amounts budgeted for O&M costs are expected to be reduced in Fiscal Year 2016
by another $268,000, for a total cost reduction in these budget line items of $1,051,000.
This budget reduction will be offset by a lease payment of $1,018,000 to be allocated
among General Fund departments and the Airport. 02
City Council/Financing Authority
June 19, 2013— Page 3 of 7
Energy Conservation Measures Financing
General Fund
Functions" Airport Total
2013-14 Budgeted Energy Costs plus
Cogeneration Fund Operations $3,063,000 $1,635,000 $4,698,000
Reduction in Energy Costs/O&M (FY 2016) (816,000) (235,000) (1,051,000)
Net Energy Costs 2,247,000 1,400,000 3,647,000
New Lease Payments (FY 2016) 733,000 285,000 1,018,000
2015-16 Total New Budget for Energy $2,980,000 $1,685,000 $4,665,000
Change from Current Budget $ 83,000 $ (50,000) $ 33,000
Includes General Fund, Public Art, Parking, Fleet and Facilities Maintenance Funds
City staff has been working with Chevron Energy Solutions Company (Chevron) on
estimating the cost of the Project as well as the annual energy savings and the dollar
amount of those savings. A third party review determined that the savings of electricity
and natural gas and implementation cost estimates for both the Muni and Sunrise plants
appear reasonable.
The energy cost savings were projected by Chevron by applying an annual 4% inflation
factor to existing energy costs per Kwh, per therm for gas or per ccf for water. The
long-term projected dollar savings would decrease if the cumulative impact of actual
rate increases is higher than 4% each year, making the program more expensive.
However, the cumulative effect of a 4% annual increase translates to an overall 119%
increase in energy costs by the end of the program (Year 20). Given those factors, the
projection of energy savings in dollars seems reasonable over the life of the program,
but might not be achieved in any particular year.
Financing Structure
The City received two proposals for financing the Project. The first was from Green
Campus Partners LLC (Green Campus), and the second was from Crews and
Associates. The Green Campus proposal was for 20 years (18 operating years plus
two years for implementation of the program). The Crews and Associates proposal was
for 22 years.
Staff recommends the City Council accept the Green Campus financing proposal. The
extra two years of financing provided under the other proposal did not provide enough
cashflow to make a difference in the overall financing costs. Because the final payment
on the Green Campus financing is scheduled for July 1, 2033 -- which can be recovered
in the operating year 2033-34 -- the financing with Green Campus is effectively payable
over 21 fiscal years.
The City has financed many public improvements using lease revenue bonds issued by
the Authority, most recently for the Downtown Revitalization Project. Staff is
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City Council/Financing Authority
June 19, 2013— Page 4 of 7
Energy Conservation Measures Financing
recommending that lease financing be used as the method for funding this Project as
well.
To secure the lease payments that will ultimately provide for the repayment of the
financing, the City will enter into a Site and Facility Lease with the Authority. Under the
Site and Facility Lease, the City will lease the James O. Jessie Highland Unity Center to
the Authority. The City and the Authority will also enter into a Lease Agreement. Under
the Lease Agreement, the Authority will leaseback the Unity Center to the City, as well
as lease the new cogeneration plant equipment.
Instead of issuing bonds secured by these lease payments (as the City has done in the
past), the Authority will assign its rights to receive the lease payments to Green
Campus, in return for which Green Campus will provide funding for the Project. It is
likely that Green Campus will ultimately assign their interest in the lease payments to a
bank or other finance company.
The Project costs are summarized below:
Component Cost Rebates CIP Balance Net Cost
Lighting/Irrigation 4,439,058 (82,407) (80,000) 4,276,651
Muni Plant 9,389,909 (24,181) (20,000) 9,345,728
Sunrise Plant 3,678,876 (18,114) (340,000) 3,320,762
17,507,842 (124,702) (440,000) 16,943,140
The City has $440,000 in the Capital Projects Fund that had been budgeted for certain
Muni Plant repairs that will be applied to reduce the cost of the Project. Also, since
there are no savings until the Project is installed, lease payments due during the first 21
months will be funded from the net proceeds of the financing.
The breakdown of the total amount to be borrowed is as follows:
Prepaid Lease Payments $ 1,237,000
Cost of Issuance 190,000
Project Fund 16,943,140
$18,403,140
It is anticipated that the Lease Agreement will be executed in July 2013 and be paid
over a term of 20 years at an effective rate of 4%.
The one-time costs to issue the bonds are estimated at $190,000 for fixed costs of bond
counsel, title insurance, placement agent fees and other miscellaneous costs.
The City is proposing to enter into an agreement with Chevron that will include an
energy savings verification function for a period of 5 years. The Sustainability Fund will
contribute to the cost of the verification, estimated at $716,500 over the 5 year period.
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City Council/Financing Authority
June 19, 2013— Page 5 of 7
Energy Conservation Measures Financing
Findings
Because the financing is being authorized under Government Code Section 4217, the
City is required to hold a public hearing and make certain findings. Section 4217.13
requires that the City Council finds that funds for the repayment of the financing or the
cost of design, construction, and operation of the energy conservation facility, or both,
as required by the energy services contract with Chevron, are projected to be available
from funding that otherwise would have been used for purchase of electrical, thermal, or
other energy required by the City in the absence of the energy conservation facility.
Staff has prepared the table below, which shows that the available funding from energy
cost savings are projected to be sufficient to provide funding for the Project, in support
of the City Council's finding under Section 4217.13. The verification costs to be funded
by the Sustainability Fund are not included in the table.
FYE June Energy and Lease Net Savings
30 O&M Savings Payments
2014 $ - $ - $ -
2015 472,195 (280,000) 192,195
2016 1,051,413 (1,018,113) 33,300
2017 1,087,611 (1,053,650) 33,961
2018 1,125,183 (1,090,602) 34,581
2019 1,164,053 (1,128,884) 35,169
2020 1,204,406 (1,168,704) 35,703
2021 1,245,381 (1,209,879) 35,502
2022 1,287,036 (1,251,699) 35,337
2023 1,330,355 (1,295,368) 34,987
2024 1,374,743 (1,340,223) 34,520
2025 1,420,928 (1,387,074) 33,854
2026 1,469,634 (1,436,725) 32,909
2027 1,521,594 (1,489,990) 31,604
2028 1,576,224 (1,545,109) 31,115
2029 1,632,945 (1,602,551) 30,394
2030 1,691,838 (1,662,406) 29,433
2031 1,752,990 (1,724,768) 28,221
2032 1,816,486 (1,789,735) 26,751
2033 1,882,420 (1,857,408) 25,011
2034 1,950,884 1,927,893 22,991
$28,058,317 $ 27,260,780 $797,537
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City Council/Financing Authority
June 19, 2013 -Page 6 of 7
Energy Conservation Measures Financing
Authorizing Resolutions
As discussed above, in order to obligate the City to pay the Authority an amount equal
to the lease payments, the City will lease certain property and facilities to the Authority
pursuant to a Site and Facilities Lease, and the Authority will lease the property and
facilities, plus additional cogeneration plant equipment back to the City pursuant to a
Lease Agreement. This lease will secure the City's lease payments used by the
Authority. The Authority will assign the lease payments to the Green Campus pursuant
to an Assignment Agreement. The Project Fund moneys will be held during
construction under an Escrow Agreement with a trustee, to be requisitioned by the City
upon receipt of invoices for Project Costs.
The value of the property to be leased under the Lease Agreement must equal at least
$18.5 million, equivalent to the amount of financing. To achieve this value, the assets to
be leased are the James O. Jessie Highland Unity Center and surrounding property,
together with the new cooling tower to be installed at the Muni Plant.
In order to authorize the delivery of the Lease Agreement, the City Council and the
Authority Board have been presented with resolutions for their consideration. The City
Council resolution approves the form of the following documents in connection with the
financing:
• A Site and Facilities Lease between the City and the Authority;
• A Lease Agreement between the City and the Authority;
• An Assignment Agreement (Equipment Lease) between the Authority and Green
Campus;
• An Assignment Agreement (Project Lease) between the Authority and Green
Campus;
• An Escrow Agreement between the City, Green Campus and Deutsche Bank
Trust Company Americas; and
• A Placement Agent Agreement between the City and Green Campus.
The Authority Board resolution approves the form of the following documents:
• A Site and Facilities Lease between the City and the Authority;
• A Lease Agreement between the City and the Authority;
• An Assignment Agreement (Equipment Lease) between the Authority and Green
Campus; and
• An Assignment Agreement (Project Lease) between the Authority and Green
Campus.
Both resolutions authorize the execution of the various agreements by the City Manager
and Authority Executive Director, within certain parameters. These parameters are:
(1) the financing cannot exceed $18,500,000 and (2) the effective interest rate for the
financing must not exceed 4%.
06
City Council/Financing Authority
June 19, 2013— Page 7 of 7
Energy Conservation Measures Financing
FISCAL IMPACT:
The financing is intended to be repaid from the savings that the City should realize from
the more energy-efficient equipment being installed, so that there is no overall net cost
to the City. The annual payments on the financing are expected to be roughly
equivalent to the reduction in energy costs each year.
Suzanne Harrell, Financial Advisor David H. Ready, City
Attachments:
Resolutions
Site and Facilities Lease
Lease Agreement
Assignment Agreement (Equipment Lease)
Assignment Agreement (Project Lease)
Escrow Agreement
Placement Agent Agreement
07
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, APPROVING AND
AUTHORIZING THE EXECUTION AND DELIVERY OF A
SITE AND FACILITY LEASE, A LEASE AGREEMENT, AN
ESCROW AGREEMENT AND A PLACEMENT AGENT
AGREEMENT WITH RESPECT TO THE ACQUISITION,
INSTALLATION, FINANCING, INSTALLMENT SALE
PURCHASE AND LEASING OF CERTAIN EQUIPMENT
THAT CONSTITUTES ENERGY CONSERVATION
FACILITIES; APPROVING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF AGREEMENTS AND
DOCUMENTS REQUIRED IN CONNECTION THEREWITH;
RATIFYING FINDINGS PURSUANT TO SECTION 4217.13
OF THE CALIFORNIA GOVERNMENT CODE WITH
RESPECT TO SUCH ENERGY CONSERVATION
FACILITIES; AND AUTHORIZING THE TAKING OF ALL
OTHER ACTIONS NECESSARY TO THE
CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS RESOLUTION.
WHEREAS, the City of Palm Springs, California (the "City'), a municipal
corporation and charter city duly organized and existing under the laws of the State of
California, is authorized by the laws of the State of California to acquire, install, finance,
installment sale purchase and lease equipment that constitutes energy conservation
facilities and to enter into facility financing contracts and facility ground leases with
respect thereto; and
WHEREAS, the City desires to finance (a) the acquisition and installation of
lighting, mechanical, utility, water and other energy conservation measures on and to
certain of the City's public buildings and other facilities (the "Project') and (b) the
demolition and replacement of the City's existing Municipal Central Plant cogeneration
system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and
upgrades and related improvements (the "Equipment'), and the combined cost of the
Project and the Equipment shall not exceed $18,500,000; and
WHEREAS, in order to acquire and finance the Project and the Equipment, the
City proposes to enter into that certain Site and Facility Lease (the "Site Lease'), the
Lease Agreement (the "Lease Agreement'), the Equipment Schedule to and
incorporating the terms of the Lease Agreement (collectively, the "Equipment Lease')
and the Project Schedule to and incorporating the terms of the Lease Agreement
(collectively, the "Project Lease'), each with the City of Palm Springs Financing
Authority (the "Authority), and that certain Escrow Agreement (the "Escrow
08
Resolution No. _
Page 2
Agreement') with the Authority, Green Campus Partners, LLC, or its designee, as
Project Lease Assignee, Green Campus Partners, LLC, or its designee, as Equipment
Lease Assignee and the Escrow Agent therein identified, the form of each of which has
been presented to the City Council of the City at this meeting; and
WHEREAS, in order to obtain funds to finance the Project, the City has agreed to
lease certain real property to the Authority pursuant to the Site Lease, and the Authority
has agreed to lease such real property back to the City pursuant to the Project Lease,
in consideration for the payment of lease payments as provided by the Project Lease;
and
WHEREAS, in order to obtain funds to finance the acquisition and installation of
the Equipment, the City has agreed to lease the Equipment from the Authority, and the
Authority has agreed to arrange for and lease the Equipment to the City, in
consideration for the payment of lease payments as provided by the Equipment Lease;
and
WHEREAS, with respect to the placement of the Project Lease and the
Equipment Lease, the City proposes to enter into that certain Placement Agent
Agreement (the "Placement Agent Agreement') with Green Campus Partners, LLC, as
Placement Agent, the form of which has been presented to the City Council of the City
at this meeting; and
WHEREAS, pursuant to Section 4217.13 of the California Government Code
and other applicable provisions of law, the City has caused a Notice of Public Hearing
to be duly given by the City Clerk on June 4, 2013, a date at least two weeks prior to its
public hearing described therein, and has held such public hearing on the date hereof
concerning the City's entering into a facility ground lease and a facility financing
contract pursuant to Section 4217.13 and at the hearing has found and determined that
funds for the repayment of the financing of the Project and the Equipment to be
financed by the Project Lease and the Equipment Lease, respectively, are projected to
be available from amounts that otherwise would have been used for the purchase of
electrical, thermal or other energy required by the City in the absence of the Project or
the Equipment; and
WHEREAS, the City Council of the City of Palm Springs determines for the best
interest of the City and for the efficient and effective administration thereof to enter into
the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the
Escrow Agreement, the Placement Agent Agreement and the documentation related to
the financing of the Project and the Equipment for the acquisition, installation, financing,
installment sale purchase and leasing of the Project and the Equipment to be therein
described on the terms and conditions therein provided.
09
Resolution No. _
Page 3
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm
Springs, California, as follows:
SECTION 1. Defined Terms. Capitalized terms that are used, but not defined, in
this Resolution shall have the same meaning as when such terms are used in the
preambles to this Resolution.
SECTION 2. Approval of Financing Agreements. The form, terms and
provisions of the Site Lease, the Lease Agreement, the Project Lease, the Equipment
Lease, the Escrow Agreement and the Placement Agent Agreement (collectively, the
"Financing Agreements') are hereby approved in substantially the forms presented at
this meeting, with such insertions, omissions and changes as shall be approved by the
City Manager or other authorized official of the City executing the same, the execution
of such Financing Agreements being conclusive evidence of such approval. The City
Manager is hereby authorized and any such authorized official is hereby directed to
execute, and the City Clerk of the City is hereby authorized and directed to attest, each
of the Financing Agreements and to deliver each of the Financing Agreement to the
respective parties thereto. The combined cost of the Project and the Equipment
financed under the Project Lease and the Equipment Lease, respectively, shall not
exceed $18,500,000 and shall bear interest at a rate not to exceed 4.00% per annum.
SECTION 3. Ratification of Findings. The City Council of the City hereby ratifies
its finding and determination made at a public hearing held in accordance with the
provisions of Section 4217.13 of the California Government Code that funds for the
repayment of the financing of the Project and the Equipment to be financed by the
Financing Agreements are projected to be available from revenues resulting from
funding that otherwise would have been used for the purchase of electrical, thermal or
other energy required by the City in the absence of the Project and the Equipment.
This finding and determination is made in complete satisfaction of the requirements of
said Section 4217.13.
SECTION 4. Other Actions Authorized. The officers and employees of the City
shall take all action necessary or reasonably required by the parties to the Financing
Agreements to carry out, give effect to and consummate the transactions contemplated
thereby (including the execution and delivery of disbursement requests under the
Escrow Agreement and any tax certificate and agreement, as contemplated in the
Lease Agreement) and to take all action necessary in conformity therewith, including,
without limitation, the execution and delivery of any closing and other documents
required to be delivered in connection with the Financing Agreements.
SECTION 5. No General Liability. Nothing contained in this Resolution, any of
the Financing Agreements or any other instrument shall be construed with respect to
the City as incurring a pecuniary liability or charge upon the general credit of the City or
against its taxing power, nor shall the breach of any agreement contained in this
Resolution, any of the Financing Agreements or any other instrument or document
10
Resolution No._
Page 4
executed in connection therewith impose any pecuniary liability upon the City or any
charge upon its general credit or against its taxing power, except to the extent that the
lease payments under the Project Lease and the Equipment Lease are payable by the
City as provided therein.
SECTION 6. Appointment of Authorized City Representatives. The City
Manager of the City is hereby designated to act as authorized representative of the City
for purposes of the Financing Agreements until such time as the City Council of the City
shall designate any other or different authorized representative for purposes of the
Financing Agreements.
SECTION 7. Severability. If any section, paragraph, clause or provision of this
Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such section, paragraph, clause or provision shall not affect any of
the remaining provisions of this Resolution.
SECTION 8. Effective Date. This Resolution shall be effective immediately upon
its approval and adoption.
PASSED, APPROVED, AND ADOPTED BY THE PALM SPRINGS CITY
COUNCIL THIS 1gth DAY OF JUNE, 2013.
DAVID H. READY, City Manager
ATTEST:
JAMES THOMPSON, City Clerk
Resolution No. _
Page 5
CERTIFICATION
State of California )
County of Riverside ) ss.
City of Palm Springs)
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a
regular meeting of the City Council of the City of Palm Springs on the 19th day of
June, 2013, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAMES THOMPSON, City Clerk
City of Palm Springs, California
12
RESOLUTION NO.
A RESOLUTION OF THE GOVERNING BODY OF THE
CITY OF PALM SPRINGS FINANCING AUTHORITY, CITY
OF PALM SPRINGS, CALIFORNIA, APPROVING AND
AUTHORIZING THE EXECUTION AND DELIVERY OF A
SITE AND FACILITY LEASE, A LEASE AGREEMENT, AN
ASSIGNMENT AGREEMENT FOR PROJECT LEASE AND
AN ASSIGNMENT AGREEMENT FOR EQUIPMENT
LEASE WITH RESPECT TO THE ACQUISITION,
INSTALLATION, FINANCING, INSTALLMENT SALE
PURCHASE AND LEASING BY THE CITY OF PALM
SPRINGS, CALIFORNIA OF CERTAIN EQUIPMENT THAT
CONSTITUTES ENERGY CONSERVATION FACILITIES;
APPROVING AND AUTHORIZING THE EXECUTION AND
DELIVERY OF AGREEMENTS AND DOCUMENTS
REQUIRED IN CONNECTION THEREWITH; AND
AUTHORIZING THE TAKING OF ALL OTHER ACTIONS
NECESSARY TO THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS
RESOLUTION.
WHEREAS, the City of Palm Springs Financing Authority, California (the
"Authority'), a joint exercise of powers authority organized and existing under the laws
of the State of California, is authorized by the laws of the State of California to enter
into contracts to assist the City of Palm Springs, California (the "City') in connection
with the acquisition, installation, financing, installment sale purchase and leasing of
equipment that constitutes energy conservation facilities and to enter into facility
financing contracts and facility ground leases with respect thereto; and
WHEREAS, the City desires to finance (a) the acquisition and installation of
lighting, mechanical, utility, water and other energy conservation measures on and to
certain of the City's public buildings and other facilities (the `Project') and (b) the
demolition and replacement of the City's existing Municipal Central Plant cogeneration
system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and
upgrades and related improvements (the "Equipment'), and the combined cost of the
Project and the Equipment shall not exceed $18,500,000; and
WHEREAS, in order to acquire and finance the Project and the Equipment, the
Lessor proposes to enter into that certain Site and Facility Lease (the "Site Lease'), the
Lease Agreement (the "Lease Agreement'), the Equipment Schedule to and
incorporating the terms of the Lease Agreement (collectively, the `Equipment Lease')
and the Project Schedule to and incorporating the terms of the Lease Agreement
13
Resolution No.
Page 2
(collectively, the `Project Lease'), each with the City, the form of each of which has
been presented to the governing body of the Authority at this meeting; and
WHEREAS, in order to obtain funds to finance the Project, the City has agreed to
lease certain real property to the Authority pursuant to the Site Lease, and the Authority
has agreed to lease such real property back to the City pursuant to the Project Lease,
in consideration for the payment of lease payments as provided by the Project Lease;
and
WHEREAS, in order to obtain funds to finance the acquisition and installation of
the Equipment, the City has agreed to lease the Equipment from the Authority, and the
Authority has agreed to arrange for and lease the Equipment to the City, in
consideration for the payment of lease payments as provided by the Equipment Lease;
and
WHEREAS, the Authority has agreed to assign its rights under the Site Lease
and its rights to receive lease payments pursuant to the Project Lease to Green
Campus Partners, LLC, or its designee, as Project Lease Assignee, pursuant to that
certain Assignment Agreement for Project Lease (the `Project Lease Assignment') to
be entered into for the purpose of obtaining the funds required for the financing of the
Project, the form of which has been presented to the governing body of the Authority at
this meeting; and
WHEREAS, the Authority has agreed to assign its rights to receive lease
payments pursuant to the Equipment Lease to Green Campus Partners, LLC, or its
designee, as Equipment Lease Assignee, pursuant to that certain Assignment
Agreement for Equipment Lease (the "Equipment Lease Assignment') to be entered
into for the purpose of obtaining the funds required for the financing of the Equipment,
the form of which has been presented to the governing body of the Authority at this
meeting; and
WHEREAS, the governing body of the Authority determines for the best interest
of the Authority and the City to enter into the Site Lease, the Lease Agreement, the
Project Lease, the Equipment Lease, the Project Lease Assignment and the Equipment
Lease Assignment and the documentation related to the financing of the Project and
the Equipment for the acquisition, installation, financing, installment sale purchase and
leasing of the Project and the Equipment by the City to be therein described on the
terms and conditions therein provided.
NOW, THEREFORE, BE IT RESOLVED by the governing body of the City of
Palm Springs Financing Authority as follows:
SECTION 1. Defined Terms. Capitalized terms that are used, but not defined, in
this Resolution shall have the same meaning as when such terms are used in the
preambles to this Resolution.
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Resolution No.
Page 3
SECTION 2. Approval of Financing Agreements. The form, terms and
provisions of the Site Lease, the Lease Agreement, the Project Lease, the Equipment
Lease, the Project Lease Assignment and the Equipment Lease Assignment
(collectively, the "Financing Agreements') are hereby approved in substantially the
forms presented at this meeting, with such insertions, omissions and changes as shall
be approved by the Executive Director of the Authority or other authorized official of the
Authority executing the same, the execution of such Financing Agreements being
conclusive evidence of such approval. The Executive Director of the Authority is hereby
authorized and any such authorized official is hereby directed to execute, and the
Secretary or Assistant Secretary of the Authority is hereby authorized and directed to
attest, each of the Financing Agreements and to deliver each of the Financing
Agreements to the respective parties thereto.
SECTION 3. Other Actions Authorized. The officers and employees of the
Authority shall take all action necessary or reasonably required by the parties to the
Financing Agreements to carry out, give effect to and consummate the transactions
contemplated thereby and to take all action necessary in conformity therewith,
including, without limitation, the execution and delivery of any closing and other
documents required to be delivered in connection with any of the Financing
Agreements.
SECTION 4. No General Liability. Nothing contained in this Resolution, any of
the Financing Agreements or any other instrument shall be construed with respect to
the Authority as incurring a pecuniary liability or charge upon the general credit of the
Authority (the Authority having no taxing powers), nor shall the breach of any
agreement contained in this Resolution, any of the Financing Agreements or any other
instrument or document executed in connection therewith impose any pecuniary liability
upon the Authority or any charge upon its general credit.
SECTION 5. Appointment of Authorized Authority Representatives. The
Executive Director of the Authority is hereby designated to act as authorized
representative of the Authority for purposes of the Financing Agreements until such
time as the governing body of the Authority shall designate any other or different
authorized representative for purposes of the Financing Agreements.
SECTION 6. Severability. If any section, paragraph, clause or provision of this
Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such section, paragraph, clause or provision shall not affect any of
the remaining provisions of this Resolution.
SECTION 7. Effective Date. This Resolution shall be effective immediately upon
its approval and adoption.
15
Resolution No.
Page 4
PASSED, APPROVED, AND ADOPTED BY THE CITY OF PALM SPRINGS
FINANCE AUTHORITY THIS 19T" DAY OF JUNE, 2013.
DAVID H. READY, Executive Director
ATTEST:
JAMES THOMPSON, Secretary
City Clerk, City of Palm Springs
CERTIFICATION
State of California )
County of Riverside ) ss.
City of Palm Springs)
I, JAMES THOMPSON, Secretary of the City of Palm Springs Finance Authority
and City Clerk of the City of Palm Springs, hereby certify that Resolution No. is
a full, true and correct copy, and was duly adopted at a regular meeting of the
Governing Body of the City of Palm Springs Financing Authority on the 19th day of June,
2013, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAMES THOMPSON, Secretary
City Clerk, City of Palm Springs, California
Draft dated May 28, 2013
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall,A Professional Law Corporation
650 California Street, 18th Floor
San Francisco, California 94108
Attention:
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO
SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT
FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
SITE AND FACILITY LEASE
This SITE AND FACILITY LEASE (this ".Site Lease"), dated for convenience as of June 1,
2013, is between the CITY OF PALM SPRINGS, a municipal corporation and charter city duly
organized and existing under the laws of the State of California, as lessor (the "City"), and the
CITY OF PALM SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized
and existing under the laws of the State of California, as lessee (the "Authority");
BACKGROUND:
1. The City wishes to finance (a) the acquisition and installation of certain lighting,
mechanical, utility, water and other energy conservation measures on and to certain of the City's
public buildings and other facilities (the "Project") and (b) the demolition and replacement of
the City's existing Municipal Central Plant cogeneration system with a new 1.1 MW
cogeneration plant, mechanical and electrical systems and upgrades and related improvements
(the "Equipment").
2. The Authority has been organized for the purpose of acquiring, constructing and
financing various public capital improvements, and by leasing certain public capital
improvements, for the use, benefit and enjoyment of the public served by the City and is
authorized to enter into financing and lease documents for that purpose.
3. In order to provide funds to finance the Project and the Equipment, (a) the City has
agreed to lease to the Authority the land and improvements at any time situated thereon which
constitute the City's James O. Jessie Desert Highland Unity Center, which is located at
in Palm Springs, California, and is more particularly described in Appendix A
attached hereto and by this reference incorporated herein (such land and improvements being
herein referred to as the "Leased Real Property"), under this Site Lease; (b) the Authority has
agreed to lease the Leased Real Property back to the City under that certain Lease Agreement
dated as of June 1, 2013 (the "Agreement") between the Authority as lessor and the City as
lessee, and the Project Schedule dated June _, 2013 and entered into by the Authority and the
City pursuant thereto that incorporates by reference the terms of the Agreement (collectively
with such incorporated terms, the "Project Lease"), which Project Lease has been recorded
Site Lease 1 `7
9003194(Ub updated) t
concurrently herewith; and (c) the Authority has agreed to lease the Equipment to the City under
the Agreement and the Equipment Schedule dated June _, 2013 and entered into by the
Authority and the City pursuant thereto that incorporates by reference the terms of the
Agreement (collectively with such incorporated terms, the "Equipment Lease").
4. The Authority has assigned certain of its rights in, to and under the Project Lease
and its rights under this Site Lease to Green Campus Partners, LLC, or its designee (the "Project
Lease Assignee") under an Assignment Agreement (Project Lease) dated June, 2013, which
has been recorded concurrently herewith.
5. The Authority has assigned certain of its rights in, to and under the Equipment
Lease and its rights under this Site Lease to Green Campus Partners, LLC, or its designee (the
"Equipment Lease Assignee") under an Assignment Agreement (Equipment Lease) dated
June_, 2013, which has been recorded concurrently herewith.
6. The City is authorized to enter into a lease-leaseback arrangement and a lease
arrangement with the Authority to provide financing for the Project and the Equipment under
Section 4217.13 of the California Government Code.
AGREEMENT:
In consideration of the foregoing and the material covenants hereinafter contained, the
City and the Authority formally covenant, agree and bind themselves as follows:
Section 1. Lease of Leased Real Property. The City hereby leases to the Authority,
and the Authority hereby leases from the City, the Leased Real Property (as described in the
Recitals hereto and more fully in Appendix A hereto), on the terms and conditions hereinafter set
forth.
Section 2. Term; Possession. The term of this Site Lease commences, and the
Authority becomes entitled to possession of the Leased Real Property, as of the date of
recordation hereof. This Site Lease ends, and the right of the Authority hereunder to possession
of the Leased Real Property thereupon ceases, on the date on which all of the Project Lease
Payments under the Project Lease (as defined in the Recitals hereto) and all of the Equipment
Lease Payments under the Equipment Lease (as defined in the Recitals hereto) are paid in full, or
provision is made for such payment in accordance with the terms thereof, and the Project Lease
and the Equipment Lease have been discharged, but under any circumstances not later than
July 1, 2043.
Section 3. Rental. The Authority will pay to the City as and for rental of the Leased
Real Property hereunder, the amount of$1.00 to be paid on or before the date of execution and
delivery hereof, the receipt of which by the City is hereby acknowledged. No other amounts of
rental will be due and payable by the Authority for the use and occupancy of the Leased Real
Property under this Site Lease.
2 18
Section 4. Financing the Project and the Equipment; Sublease Back to the Authority.
The purpose for which the City agrees to lease the Leased Real Property to the Authority
hereunder is to enable the Authority to finance the acquisition and installation of the Project and
the Equipment. The Project and the Equipment will be acquired and installed in accordance with
the provisions of Article III of the Project Lease and the Equipment Lease, respectively. The
Authority hereby agrees to sublease the Leased Real Property back to the City under the Project
Lease and to lease the Equipment to the City under the Equipment Lease.
Section S. Assignments and Subleases. Unless the City is in default under the Project
Lease or the Equipment Lease, the Authority may not assign its rights under this Site Lease or
sublet all or any portion of the Leased Real Property, except as provided in the Project Lease,
without the prior written consent of the City. If the City is in default under the Project Lease or
the Equipment Lease, the successor in interest to the Authority may fully and freely assign and
sublease the Leased Real Property or any portion thereof, subject to this Site Lease.
Section 6. Substitution or Release of Property. If the City exercises its option under
Section 4.5 of the Project Lease and satisfies the conditions therein provided to substitute
property for the Leased Real Property in whole or in part, such substitution shall also
automatically operate to substitute property for the Leased Real Property which is leased
hereunder. If the City exercises its option under Section 4.6 of the Project Lease and satisfies the
conditions therein provided to release any portion of the Leased Real Property from the Project
Lease, such release shall also automatically operate to release property hereunder. The
description of the property which is leased under the Project Lease shall conform at all times to
the description of the property which is leased hereunder.
Section 7. Right of Entry. The City reserves the right for any of its duly authorized
representatives to enter upon the Leased Real Property, or any portion thereof, at any reasonable
time to inspect the same or to make any repairs, improvements or changes necessary for the
preservation thereof.
Section 8. Termination. The Authority agrees, upon the termination of this Site Lease,
to quit and surrender the Leased Real Property in the same good order and condition as the
Leased Real Property was in at the time of commencement of the term hereof, reasonable wear
and tear excepted, and agrees that all buildings, improvements and structures then existing upon
the Leased Real Property will remain thereon and title thereto shall vest thereupon in the City for
no additional consideration.
Section 9. Default. If the Authority is in default in the performance of any obligation
on its part to be performed under the terms of this Site Lease, which default continues for
30 days following notice and demand for correction thereof to the Authority, the City may
exercise any and all remedies granted by law, except that no merger of this Site Lease and of the
Project Lease will be deemed to occur as a result thereof and this Site Lease may not be
terminated by the City as a remedy for such default. Notwithstanding the foregoing, so long as
the Project Lease remains in effect, the City will continue to pay the Project Lease Payments to
the Project Lease Assignee (as defined in the Recitals hereto).
19
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In the event of the occurrence of an Event of Default under the Project Lease or the
Equipment Lease, the Authority may (i) exercise the remedies provided in the Project Lease and
the Equipment Lease, (ii) use the Leased Real Property for any lawful purpose, subject to any
applicable legal limitations or restrictions, and(iii) exercise all options provided herein.
Section 10. Amendments. The Authority and the City may at any time amend or modify
any of the provisions of this Site Lease, but only with the prior written consent of the Project
Lease Assignee and the Equipment Lease Assignee (as defined in the Recitals hereto).
Section 11. Quiet Enjoyment. The Authority at all times during the term of this Site
Lease will peaceably and quietly have, hold and enjoy all of the Leased Real Property, subject to
the provisions of the Project Lease and subject only to Permitted Encumbrances.
Section 12. Waiver of Personal Liability. All liabilities under this Site Lease on the part
of the Authority are solely corporate liabilities of the Authority as a joint powers authority, and
the City hereby releases each and every member and officer of the Authority of and from any
personal or individual liability under this Site Lease. No member or officer of the Authority or
its governing board is at any time or under any circumstances individually or personally liable
under this Site Lease for anything done or omitted to be done by the Authority hereunder.
Section 13. Taxes. The City will pay any and all assessments of any kind or character
and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Real
Property and any improvements thereon.
Section 14. Eminent Domain. If the whole or any par[ of the Leased Real Property, or
any improvements thereon, are taken by eminent domain proceedings, the interest of the
Authority will be the aggregate amount of the sum of the then unpaid principal components of
the Project Lease Payments payable under the Project Lease plus the Equipment Lease Payments
payable under the Equipment Lease and the balance of the award, if any, will be paid to the City.
The City hereby waives any and all rights that it has or may hereafter have to acquire the interest
of the Authority in and to the Leased Real Property through the eminent domain powers of the
City. The City hereby agrees, to the extent permitted by law, that the compensation to be paid in
any condemnation proceedings brought by or on behalf of the City with respect to the Leased
Real Property or any improvement thereon shall be in an amount not less than the sum of(a) the
total unpaid principal component of Project Lease Payments plus the interest component of
Project Lease Payments accrued to the date of payment of all Project Lease Payments under the
Project Lease plus (b) the total unpaid principal component of Equipment Lease Payments plus
the interest component of Equipment Lease Payments accrued to the date of payment of all
Equipment Lease Payments under the Equipment Lease.
Section 15. Partial Invalidity. If any one or more of the terms, provisions, covenants or
conditions of this Site Lease are to any extent declared invalid, unenforceable, void or voidable
for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of
which becomes final, none of the remaining terms, provisions, covenants and conditions of this
Site Lease will be affected thereby, and each provision of this Site Lease will be valid and
enforceable to the fullest extent permitted by law.
20
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Section 16. Notices. Any notice, request, complaint, demand or other communication
under this Site Lease must be given by first class mail or personal delivery to the party entitled
thereto at its address set forth below, or by telecopy, telex or other form of telecommunication, at
its number set forth below. Notice will be effective either (a) upon transmission by telecopy,
telex or other form of telecommunication, (b) 72 hours after deposit in the United States mail,
postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The
City, the Authority, the Project Lease Assignee and the Equipment Lease Assignee may, by
written notice to the other parties, from time to time modify the address or number to which
communications are to be given hereunder.
If to the Authority: City of Palm Springs Financing Authority
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attention:
If to the City: City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attention:
If to the Project Lease Assignee: Green Campus Partners, LLC
Raritan Plaza I
110 Fieldcrest Avenue
Edison,New Jersey 08837
Attention: Michael Horkey
Phone: (732) 917-2304
If to the Equipment Lease Assignee: Green Campus Partners, LLC
Raritan Plaza I
110 Fieldcrest Avenue
Edison,New Jersey 08837
Attention: Michael Horkey
Phone: (732) 917-2304
Section 17. Governing Law. This Site Lease is governed by the laws of the State of
California.
Section 18. Third Party Beneficiary. The Project Lease Assignee and the Equipment
Lease Assignee are each hereby made a third parry beneficiary hereunder with all rights of a
third party beneficiary.
Section 19. Binding Effect. This Site Lease inures to the benefit of and is binding upon
the Authority, the City and their respective successors and assigns, subject, however, to the
limitations contained herein.
5 21
Section 20. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Site Lease are for any reason held to be invalid, illegal or unenforceable in any
respect, then such provision or provisions will be deemed severable from the remaining
provisions contained in this Site Lease and such invalidity, illegality or unenforceability will not
affect any other provision of this Site Lease, and this Site Lease will be construed as if such
invalid or illegal or unenforceable provision had never been contained herein. The Authority and
the City each hereby declares that it would have entered into this Site Lease and each and every
other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or
more Sections, paragraphs, sentences, clauses or phrases of this Site Lease may be held illegal,
invalid or unenforceable.
Section 21. No Merger. Neither this Site Lease, the Project Lease nor any provisions
hereof or thereof shall be construed to effect a merger of the title of the City to the Leased Real
Property under this Site Lease and the City's leasehold interest therein under the Project Lease.
Section 22. Section Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any provision
of this Site Lease.
Section 23. Execution in Counterparts. This Site Lease may be executed in any number
of counterparts, each of which is an original but all together constitute one and the same
instrument. It is also agreed that separate counterparts of this Site Lease may be separately
executed by the Authority and the City, all with the same force and effect as though the same
counterpart had been executed by both the Authority and the City.
Section 24. Defined Terms. All capitalized terms used herein and not otherwise defined
herein (including in the Recitals hereto) have the respective meanings given those terms in the
Project Lease.
6 22
IN WITNESS WHEREOF, the City and the Authority have caused this Site and Facility
Lease to be executed by their respective officers thereunto duly authorized, all as of the day and
year first above written.
CITY OF PALM SPRINGS, CALIFORNIA
By
Name
Title
Attest:
Name:
Title:
CITY OF PALM SPRINGS FINANCING AUTHORITY
By
Name
Tile
23
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On June , 2013, before me, (Notary Public),
personally appeared
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person 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.
Notary's Signature (Seal)
24
ACKNoW EDGEMENTCITYOFPALMSPRUNG$CALIFomm
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On June , 2013, before me, (Notary Public),
personally appeared
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person 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.
Notary's Signature (Seal)
25
ACKNOWLEDGEMENT OF CITY OF PALM SPRINGS FINANCING A UTXORNY
APPENDIX A
DESCRIPTION OF THE LEASED REAL PROPERTY
The Leased Real Property consists of the land located in the County of Riverside, State of
California, which is described as follows, including all buildings, improvements and facilities at
any time situated thereon:
A-1
26
SITE AND FACILITY LEASE BETWEEN THE
CITY OF PALM SPRINGS FINANCING AUTHORITY
AND
CITY OF PALM SPRINGS,CALIFORNIA
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Site and Facility Lease,
dated as of June 1, 2013, between the City of Palm Springs, California, as lessor, and the City of
Palm Springs Financing Authority, as lessee (the "Authority"), is hereby accepted by the
undersigned officer on behalf of the Authority and the Authority consents to recordation thereof
by its duly authorized officer.
Dated as of June 1, 2013
CITY OF PALM SPRINGS FINANCING AUTHORITY
By
Name:
Title:
27
Draft dated May 28, 2013
LEASE AGREEMENT
Dated as of June 1, 2013
between
CITY OF PALM SPRINGS FINANCING AUTHORITY,
as lessor,
and
CITY OF PALM SPRINGS, CALIFORNIA,
as lessee
Lease Agreement 2
2208544
TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I DEFINITIONS;RULES OF INTERPRETATION..........................................................2
Section1.1. Definitions....................................................................................................2
Section 1.2. Interpretation................................................................................................9
ARTICLE 11 COVENANTS,REPRESENTATIONS AND WARRANTIES..........................................9
Section 2.1. Covenants, Representations and Warranties of the City..............................9
Section 2.2. Covenants, Representations and Warranties of the Authority...................I I
ARTICLE III DEPOSIT AND APPLICATION OF FUNDS;ACQUISITION AND
INSTALLATION OF THE EQUIPMENT AND THE PROJECT................................12
Section 3.1. Deposit and Application of Assignment Proceeds.....................................12
Section 3.2. Appointment of City as Agent of Authority..............................................13
Section 3.3. Acquisition, Installation and Financing of the Project and the
Equipment............................................................................................13
Section 3.4. Disposition of Excess Moneys...................................................................14
Section 3.5. Investment of Project Fund and Capitalized Interest Fund........................15
ARTICLE IV LEASE PAYMENTS; SUBSTITUTION AND RELEASE OF PROPERTY.......................15
Section 4.1. Lease of Leased Real Property and the Equipment...................................15
Section4.2. Term...........................................................................................................15
Section 4.3. Lease Payments..........................................................................................16
Section 4.4. Title to the Leased Real Property; Title to and Security
Interest in the Equipment and Funds ...................................................18
Section 4.5. Substitution of Property.............................................................................19
Section 4.6. Release of Property....................................................................................20
Section 4.7. Quiet Enjoyment........................................................................................21
Section4.8. No Merger..................................................................................................21
ARTICLE V MAINTENANCE,TAXES,INSURANCE AND OTHER MATTERS.............................21
Section 5.1. Maintenance, Utilities, Taxes and Assessments with respect
to the Leased Real Property.................................................................21
Section 5.2. Modification of Leased Property...............................................................22
Section 5.3. Public Liability and Property Damage Insurance......................................23
Section 5.4. Casualty Insurance.....................................................................................23
Section 5.5. Rental Interruption Insurance ....................................................................23
Section 5.6. Recordation of the Project Schedule; Title Insurance................................24
Section 5.7. Insurance Net Proceeds; Form of Policies.................................................24
Section 5.8. Installation of City's Personal Property.....................................................24
Section5.9. Liens...........................................................................................................25
Section 5.10. Environmental Covenants..........................................................................25
_i_ 29
Section 5.11. Taxes and Other Governmental Charges with respect to the
Equipment; Use and Maintenance of the Equipment..........................26
Section 5.12. Surety Bonds; City to Pursue Remedies Against Vendors and
TheirSureties.......................................................................................27
Section5.13. Advances....................................................................................................27
ARTICLE VI DAMAGE,DESTRUCTION AND EMINENT DOMAIN;USE OF NET
PROCEEDS...................................................................................................28
Section 6.1. Application of Net Proceeds......................................................................28
Section 6.2. Termination or Abatement Due to Eminent Domain.................................28
Section 6.3. Abatement Due to Damage or Destruction................................................29
Section 6.4. Insufficiency of Net Proceeds....................................................................29
ARTICLE VII OTHER COVENANTS..........................................................................................29
Section 7.1. Disclaimer of Warranties...........................................................................29
Section 7.2. Access to the Leased Real Property...........................................................30
Section 7.3. Risk of Loss; Release and Indemnification Covenants..............................30
Section 7.4. Assignment by the Authority.....................................................................31
Section 7.5. Assignment and Subleasing by the City ....................................................32
Section 7.6. Amendment of Leases................................................................................33
Section 7.7. Tax Covenants ...........................................................................................33
Section 7.8. Financial Statements..................................................................................34
Section 7.9. Vendor's Agreements; Warranties.............................................................34
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES ...............................................................34
Section 8.1. Events of Default Defined .........................................................................34
Section 8.2. Remedies on Default..................................................................................35
Section 8.3. No Remedy Exclusive................................................................................38
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses.....................................38
Section 8.5. No Additional Waiver Implied by One Waiver.........................................38
Section 8.6. Assignees to Exercise Rights.....................................................................38
ARTICLE IX PREPAYMENT OF LEASE PAYMENTS..................................................................38
Section 9.1. Security Deposit.........................................................................................38
Section 9.2. Optional Prepayment.................................................................................39
Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or
EminentDomain..................................................................................40
Section 9.4. Credit for Amounts on Deposit..................................................................40
ARTICLE X MISCELLANEOUS ..............................................................................................41
Section10.1. Notices.......................................................................................................41
Section 10.2. Binding Effect............................................................................................41
Section 10.3. Severability................................................................................................41
Section 10.4. Net-net-net Lease.......................................................................................42
-ii- 3 '0
Section 10.5. Third Party Beneficiary..............................................................................42
Section 10.6. Further Assurances and Corrective Instruments........................................42
Section 10.7. Execution in Counterparts..........................................................................42
Section 10.8. Applicable Law..........................................................................................42
Section 10.9. Authority and City Representatives...........................................................42
Section10.10. Captions.....................................................................................................42
EXHIBIT A Form of Equipment Schedule, including Equipment Lease Payment Schedule
EXHIBIT B Form of Project Schedule, including Project Lease Payment Schedule and
Description of Leased Real Property
31
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LEASE AGREEMENT
This LEASE AGREEMENT (this "Agreement"), dated as of June 1, 2013, between the CITY
OF PALM SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized and
existing under the laws of the State of California (the "Authority"), as lessor, and the CITY OF
PALM SPRINGS, a municipal corporation and charter city duly organized and existing under the
laws of the State of California(the "City"), as lessee,
WITNESSETH.
WHEREAS, all capitalized terms used, but not defined, in these Recitals shall have the
respective meanings set forth in Section 1.1 hereof, and
WHEREAS, the City wishes to finance (a) the acquisition and installation of certain
lighting, mechanical, utility, water and other energy conservation measures on and to certain of
the City's public buildings and other facilities and (b) the demolition and replacement of the
City's existing Municipal Central Plant cogeneration system with a new 1.1 MW cogeneration
plant, mechanical and electrical systems and upgrades and related improvements; and
WHEREAS, the Authority has been organized for the purpose of acquiring, constructing
and financing various public capital improvements, and by leasing certain public capital
improvements, for the use, benefit and enjoyment of the public served by the City and is
authorized to enter into financing and lease documents for that purpose; and
WHEREAS,in order to obtain funds to finance the Project, the City has agreed to lease the
Leased Real Property to the Authority by entering into the Site Lease (which has been recorded
concurrently with the Project Lease), and the Authority will lease the Leased Real Property back
to the City in consideration for the payment of Project Lease Payments as provided in the Project
Lease; and
WHEREAS, in order to obtain funds to finance the acquisition and installation of the
Equipment, the City has agreed to lease the Equipment from the Authority, and the Authority has
agreed to arrange for and lease the Equipment to the City, in consideration for the payment of
Equipment Lease Payments as provided in the Equipment Lease; and
WHEREAS,in order to raise the funds needed for financing the Project and the Equipment,
the Authority has assigned and transferred (a) the Assigned Project Lease Rights to the initial
Project Lease Assignee pursuant to the Project Lease Assignment, which has been recorded
concurrently herewith; and (b) the Assigned Equipment Lease Rights to the initial Equipment
Lease Assignee pursuant to the Equipment Lease Assignment; and
WHEREAS, the City is authorized to enter into a lease-leaseback arrangement and a lease
arrangement with the Authority to provide financing for the Project and the Equipment under
Section 4217.13 of the California Government Code;
32
Now, THEREFORE, in consideration of the foregoing and the mutual agreements and
covenants herein contained, the City and the Authority formally covenant, agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION
Section 1.1. Definitions. All terms defined in this Section 1.1 have the meanings herein
specified for all purposes of this Agreement(including the Recitals hereto) and each Lease.
"Agreement" means this Lease Agreement, dated as of June 1, 2013, between the
Authority (as lessor) and the City (as lessee), as originally executed or as hereafter amended
under any duly authorized and executed amendments hereto.
"Assigned Equipment Lease Rights" means all of the Authority's rights under the
Equipment Lease as lessor of the Equipment (excepting only the Authority's rights under
Sections 5.10, 7.3 and 8.4 of this Agreement), as more particularly described in the Equipment
Lease Assignment, that are assigned and transferred by the Authority to the initial Equipment
Lease Assignee pursuant to the Equipment Lease Assignment.
"Assigned Project Lease Rights" means all of the Authority's rights under the Project
Lease as sublessor of the Leased Real Property (excepting only the Corporation's rights under
Sections 5.10, 7.3 and 8.4 of this Agreement) and as lessee of the Leased Real Property under the
Site Lease, as more particularly described in the Project Lease Assignment, that are assigned and
transferred by the Authority to the initial Project Lease Assignee pursuant to the Project Lease
Assignment.
"Assigned Rights" means either Assigned Equipment Lease Rights or Assigned Project
Lease Rights, as applicable.
"Assignee" means either the Equipment Lease Assignee or the Project Lease Assignee,
as applicable.
"Assignment" means each of, and "Assignments" means both of, the Equipment Lease
Assignment and the Project Lease Assignment.
"Assignment Proceeds" means the Equipment Lease Assignment Proceeds and the
Project Lease Assignment Proceeds, collectively.
"Authority" means the City of Palm Springs Financing Authority, a joint exercise of
powers authority duly organized and existing under the laws of the State of California.
"Business Day" means a day other than a Saturday, Sunday or legal holiday, on which
banking institutions are not closed in the State of California.
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"Capitalized Interest Fund" means the fund by that name established and held by the
Escrow Agent for the benefit of the City under Sections 3.3(b) and 3.3(c) hereof and under the
Escrow Agreement, including the Equipment Lease Account and the Project Lease Account in
such Capitalized Interest Fund.
"City" means the City of Palm Springs, a municipal corporation and charter city duly
organized and existing under the laws of the State of California.
"Code" means the Internal Revenue Code of 1986, as amended. Each reference to a
Section of the Code herein shall be deemed to include the United States Treasury Regulations
proposed or in effect thereunder.
"Default Rate" means a rate of interest equal to the lesser of(a) 8%per annum or (b) the
maximum rate permitted by law.
"Delivery Costs" means (a) with respect to the Equipment Lease, the costs incurred in
connection with the execution and delivery of this Agreement, the Equipment Lease, the
Equipment Lease Assignment and the financing of the acquisition and installation of the
Equipment, including the initial Equipment Lease Assignee's origination fee, fees and expenses
of the financial advisor and the placement agent, fees and expenses of the Special Counsel, fees
of the initial Equipment Lease Assignee's counsel (not exceeding $�, filing and
recording costs and other similar fees and costs; and (b) with respect to the Project Lease, the
costs incurred in connection with the execution and delivery of this Agreement, the Site Lease,
the Project Lease, the Project Lease Assignment and the financing of the Project, including the
initial Project Lease Assignee's origination fee, fees and expenses of the financial advisor and
the placement agent, fees and expenses of the Special Counsel, fees of the initial Project Lease
Assignee's counsel (not exceeding $ , the title insurance premium and other costs related
to obtaining the title insurance policy, filing and recording costs and other similar fees and costs.
"Disbursement Request" means, with respect to the items of Equipment therein
described, a Disbursement Request substantially in the form attached as Schedule 1B to the
Escrow Agreement.
"Equipment" means the equipment and other property consisting of a new 1.1 MW
cogeneration plant, mechanical and electrical systems and upgrades and related improvements to
be acquired and installed at the City's existing Municipal Central Plant, and all replacements,
repairs, restorations, modifications and improvements thereof or thereto made pursuant to the
Equipment Lease. Whenever reference is made in this Agreement or the Equipment Lease to
Equipment, such reference shall be deemed to include all such replacements, repairs,
restorations, modifications and improvements of or to such Equipment.
"Equipment Costs" means the total cost of the Equipment, including demolition and
replacement of existing structures and improvements and site preparation required for the
installation of a replacement cogeneration plant, related costs such as freight, installation and
taxes, capitalizable costs, the interest components of the Equipment Lease Payments during the
period of acquisition and installation of the Equipment and Delivery Costs with respect to the
3 34
Equipment Lease incurred in connection with the acquisition, installation and/or financing of the
Equipment.
"Equipment Lease" means the Equipment Schedule and the terms of this Agreement that
are incorporated by reference into such Schedule, which shall constitute an independent lease
transaction that is separate from the Project Lease.
"Equipment Lease Assignee" means (a) initially, Green Campus Partners, LLC, a
Delaware limited liability company, or its designee, as assignee of the Assigned Equipment
Lease Rights pursuant to the Equipment Lease Assignment, and (b) any other entity to whom the
Assigned Equipment Lease Rights (or any interest therein) are assigned and transferred as
provided in Section 7.4.
"Equipment Lease Assignment" means the Assignment Agreement (Equipment Lease)
dated June _, 2013, between the Authority, as assignor, and the initial Equipment Lease
Assignee, as assignee, as originally executed or as thereafter amended under any duly authorized
and executed amendments thereto.
"Equipment Lease Assignment Proceeds" means the amount of proceeds from the
assignment and transfer of the Assigned Equipment Lease Rights in the aggregate amount of
$ which is to be applied as provided in Section 3.1(a).
"Equipment Lease Payment Date" means, with respect to the Equipment Lease Term,
January 1, April 1, July 1 and October 1 in each year, commencing October 1, 2013, that occurs
on or after the Lease Payment Commencement Date, on which the City is required to make an
Equipment Lease Payment under the Equipment Lease as specified in the Equipment Lease
Payment Schedule attached thereto.
"Equipment Lease Payments" means, with respect to the Equipment Lease, the basic
rental payments payable by the City pursuant to the Equipment Lease on the Equipment Lease
Payment Dates and in the amounts as specified in the Equipment Lease Payment Schedule,
consisting of a principal component and an interest component as provided therein.
"Equipment Lease Payment Schedule" means the Equipment Lease Payment Schedule
attached as Attachment A-1 to the Equipment Schedule.
"Equipment Lease Term" means the period that begins on the Funding Date and ends on
the first Business Day after the last scheduled Equipment Lease Payment Date, subject to
extension as provided in Section 3.03; provided that the Equipment Lease Term shall, in any
event, terminate no later than April 1, 2039.
"Equipment Schedule" means the Equipment Schedule substantially in the form of
Exhibit A attached hereto together with the Equipment Lease Payment Schedule substantially in
the form of Attachment A-1 attached thereto.
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"Escrow Agent" means , its successors and assigns, as holder of
the Project Fund and the Capitalized Interest Fund under the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement dated as of June 1, 2013,
among the City, the initial Equipment Lease Assignee, the initial Project Lease Assignee and the
Escrow Agent, relating to the administration of the Project Fund (including the separate
Equipment Lease Account and Project Lease Account therein) and the Capitalized Interest Fund
(including the separate Equipment Lease Account and Project Lease Account therein).
"Event of Default" means any of the events of default as defined in Section 8.1.
"Excess Equipment Funds" or "Excess Project Funds" when used with reference to the
Equipment Lease or the Project Lease, respectively, shall have the meaning set forth in
Section 3.4.
"Facility" means the buildings, facilities and other improvements located on the Site and
consisting generally of the James O. Jessie Desert Highland Unity Center, which is located at
in Palm Springs, California.
"Federal Securities" means any direct general non-callable obligations of the United
States of America (including obligations issued or held in book entry form on the books of the
Department of the Treasury of the United States of America), or obligations the timely payment
of principal of and interest on which are directly guaranteed by the United States of America.
"Fiscal Year" means each twelve-month period during the Equipment Lease Term and
the Project Lease Term commencing on July 1 in any calendar year and ending on June 30 in the
next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal
year period.
"Funding Date" means June _, 2013, which is the date on which the Assignment
Proceeds are deposited with the Escrow Agent in accordance with Section 3.1.
"Lease" means either of, and "Leases" means both of, the Equipment Lease and the
Project Lease.
"Lease Payments" means either Equipment Lease Payments or Project Lease Payments,
as applicable.
"Lease Payment Commencement Date" shall have the meaning set forth in the
Equipment Lease and the Project Lease, respectively.
"Lease Payment Date" means either an Equipment Lease Payment Date or a Project
Lease Payment Date, as applicable.
"Leased Real Property" means the Site and the Facility, collectively. From and after the
date of substitution of any property under Section 4.5 or release of any property under
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Section 4.6, the term "Leased Real Property" means the real property that remains subject to the
Project Lease following such substitution or release.
"Lease Servicer" for a Lease is defined in Section 7.4(b).
"Net Proceeds" means, with respect to either Lease, any eminent domain award
(including any proceeds of sale to a governmental entity under threat of the exercise of eminent
domain powers) or any insurance award under Section 5.4, paid with respect to the Leased Real
Property or the Equipment, as the case may be, to the extent remaining after payment therefrom
of all expenses incurred in the collection thereof.
"Permitted Encumbrances" means, as of any time and only with respect to the Leased
Real Property: (a) liens for general ad valorem taxes and assessments, if any, not then
delinquent, or which the City may permit to remain unpaid under Article V of this Agreement;
(b) the Site Lease, the Project Lease, the Project Lease Assignment and the Equipment Lease
Assignment; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor not
filed or perfected in the manner prescribed by law; (d)the exceptions disclosed in the title
insurance policy issued with respect to the Leased Real Property issued as of the Funding Date;
and(e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations,
covenants, conditions or restrictions which exist of record and which the City certifies in writing
to the Project Lease Assignee will not materially impair the use of the Leased Real Property for
its intended purposes under the Site Lease and the Project Lease.
"Project" means the acquisition and installation of certain lighting, mechanical, utility,
water and other energy conservation measures on, in and to certain of the City's public buildings
and other facilities, as more specifically described in the Vendor Agreement, but specifically
excluding the portion of the Work described in the Vendor Agreement that relates to the
acquisition and installation of the Equipment, which is being financed pursuant to the Equipment
Lease.
,'Project Costs" means, with respect to the Project, all costs of the acquisition and
installation thereof which are paid from moneys on deposit in the Project Lease Account in the
Project Fund, including but not limited to:
(a) all costs required to be paid to any person under the terms of any
agreement for or relating to the Project;
(b) obligations incurred for labor and materials in connection with the Project;
(c) the cost of performance or other bonds and any and all types of insurance
that may be necessary or appropriate to have in effect in connection with the Project;
(d) all costs of engineering, architectural services and other preliminary
investigation expenses, including the actual out-of-pocket costs for site investigations,
surveys, hazardous materials investigations, test borings, surveys, estimates, plans and
specifications and preliminary investigations therefor, development fees, sales
6 37
commissions, and for supervising construction, as well as for the performance of all other
duties required by or consequent to the Project;
(e) any sums required to reimburse the City for advances made on or after
, 2013 (i.e., the date on which a reimbursement resolution was adopted) for any
of the above items or for any other costs incurred and for work done, including but not
limited to administrative costs of the City,which are properly chargeable to the Project;
(f) all financing costs incurred in connection with the Project, including but
not limited to financing costs incurred in connection with the Project Lease and the
financing of the Project; and
(g) the interest components of the Project Lease Payments during the period
of acquisition and installation of the Project.
"Project Fund" means the fund by that name established and held by the Escrow Agent
for the benefit of the City under Section 3.3(d) and under the Escrow Agreement, including the
Equipment Lease Account and the Project Lease Account in such Project Fund.
"Project Lease" means the Project Schedule and the terms of this Agreement that are
incorporated by reference into such Schedule, which shall constitute an independent lease
transaction that is separate from the Equipment Lease.
"Project Lease Assignee" means (a) initially, Green Campus Partners, LLC, a Delaware
limited liability company, or its designee, as assignee of the Assigned Project Lease Rights
pursuant to the Project Lease Assignment, and (b) any other entity to whom the Assigned Project
Lease Rights (or any interest therein) are assigned and transferred as provided in Section 7.4.
"Project Lease Assignment" means the Assignment Agreement (Project Lease) dated
June _, 2013, between the Authority, as assignor, and the initial Project Lease Assignee, as
assignee, as originally executed or as thereafter amended under any duly authorized and executed
amendments thereto.
"Project Lease Assignment Proceeds" means the amount of proceeds from the
assignment and transfer of the Assigned Project Lease Rights in the aggregate amount of
$ which is to be applied as provided in Section 3.1(b).
"Project Lease Payment Date" means, with respect to the Project Lease Term, January 1,
April 1, July 1 and October 1 in each year, commencing October 1, 2013, that occurs on or after
the Lease Payment Commencement Date, on which the City is required to make a Project Lease
Payment under the Project Lease as specified in the Project Lease Payment Schedule attached
thereto.
"Project Lease Payments" means, with respect to the Project Lease, the basic rental
payments payable by the City pursuant to the Project Lease on the Project Lease Payment Dates
7_ 38
and in the amounts as specified in the Project Lease Payment Schedule, consisting of a principal
component and an interest component as provided therein.
"Project Lease Payment Schedule" means the Project Lease Payment Schedule attached
as Attachment B-1 to the Project Schedule.
"Project Schedule" means the Project Schedule substantially in the form of Exhibit B
attached hereto together with the Project Lease Payment Schedule substantially in the form of
Attachment B-1 attached thereto and the description of the Leased Real Property attached thereto
as Attachment B-2.
"Project Lease Term" means the period that begins on the Funding Date and ends on the
first Business Day after the last scheduled Project Lease Payment Date, subject to extension as
provided in Section 3.03;provided that the Project Lease Term shall, in any event, terminate no
later than July 1, 2043.
"Rental Period" means for each Lease Payment Date, the quarterly period from the first
day after the next preceding Lease Payment Date to (and including) such succeeding Lease
Payment Date; provided that the first Rental Period begins on the Funding Date and ends on
October 1, 2013.
"Securities Act"means the Securities Act of 1933, as amended.
"Site" means that certain parcel of real property situated in the County of Riverside,
State of California, more particularly described in Attachment B-2 attached to the Project
Schedule and made a part thereof.
"Site Lease" means the Site and Facility Lease dated as of June 1, 2013, between the
City as lessor and the Authority as lessee of the Leased Real Property, as originally executed or
as hereafter amended under any duly authorized and executed amendments and supplements
thereto.
,,Special Counsel" means (a) Jones Hall, A Professional Law Corporation, or (b) any
other attorney or firm of attorneys (acceptable to the Equipment Lease Assignee with respect to
the Equipment Lease or the Project Lease Assignee with respect to the Project Lease) of
nationally recognized expertise with respect to legal matters relating to obligations the interest on
which is excludable from gross income of the owners thereof for federal income tax purposes.
"Vendor" means Chevron Energy Solutions Company, a Division of Chevron U.S.A.
Inc., as contractor under the identified Vendor Agreement, and any other manufacturer, installer
or supplier of the Equipment or any other person as well as the agents or dealers of the
manufacturer, installer or supplier with whom the Authority or the City arranged acquisition and
installation of the Equipment.
"Vendor Agreement" means that certain Energy Services Contract dated as of
2013, between the City and Chevron Energy Solutions Company, a Division of
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Chevron U.S.A. Inc., and any other contract entered into by the City and any other vendor with
respect to the Project and the acquisition and installation of the Equipment.
Section 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressed
in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine
gender is for convenience only and include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and do not affect the meaning,
construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement; the words "herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
COVENANTS,REPRESENTATIONS AND WARRANTIES
Section 2.1. Covenants, Representations and Warranties of the City. The City makes
the following covenants, representations and warranties to the Authority as of the Funding Date:
(a) Due Organization and Existence. The City is a municipal corporation and
charter city duly organized and validly existing under the laws of the State of California,
has full legal right, power and authority under the laws of the State of California to enter
into this Agreement, the Leases, the Site Lease and the Escrow Agreement and to carry
out and consummate all transactions contemplated hereby and thereby, and by proper
action the City has duly authorized the execution and delivery of this Agreement, the
Leases,the Site Lease and the Escrow Agreement.
(b) Due Execution. The representatives of the City executing this Agreement,
the Leases, the Site Lease and the Escrow Agreement have been fully authorized to
execute the same under a resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. This Agreement, the Leases,
the Site Lease and the Escrow Agreement have been duly authorized, executed and
delivered by the City and constitute the legal, valid and binding agreements of the City
enforceable against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Agreement, the Leases,
the Site Lease and the Escrow Agreement, the consummation of the transactions herein
and therein contemplated and the fulfillment of or compliance with the terms and
conditions hereof, do not and will not conflict with or constitute a violation or breach of
or default (with due notice or the passage of time or both) under any applicable law or
9 40
administrative rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or
instrument to which the City is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the City,
which conflict, violation, breach, default, lien, charge or encumbrance would have
consequences that would materially and adversely affect the consummation of the
transactions contemplated by this Agreement, the Leases, the Site Lease and the Escrow
Agreement or the financial condition, assets,properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder
of any indebtedness of the City or of the voters of the City, and no consent, permission,
authorization, order or license of, or filing or registration with, any governmental
authority is necessary in connection with the execution and delivery of this Agreement,
the Leases, the Site Lease and the Escrow Agreement, or the consummation of any
transaction herein or therein contemplated, except as have been obtained or made and as
are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmental
authority pending or, to the knowledge of the City after reasonable investigation,
threatened against or affecting the City or the assets, properties or operations of the City
which, if determined adversely to the City or its interests, would have a material and
adverse effect upon the consummation of the transactions contemplated by or the validity
of this Agreement, either Lease, the Site Lease or the Escrow Agreement, or upon the
financial condition, assets, properties or operations of the City, and the City is not in
default with respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or other governmental authority, which default
might have consequences that would materially and adversely affect the consummation
of the transactions contemplated by this Agreement, either Lease, the Site Lease or the
Escrow Agreement or the financial condition, assets, properties or operations of the City.
(g) Essential Use. The Equipment and the Leased Real Property are essential
to the proper, efficient and economic operation of the City and serve an essential
governmental function of the City.
(h) Sufficiency of Equipment Lease Assignment Proceeds. The amount of
Equipment Lease Assignment Proceeds (i.e., $ ) is sufficient to pay all Equipment
Costs for acquisition and installation of the Equipment, the Delivery Costs relating to the
Equipment Lease and the interest component of Equipment Lease Payments to accrue
and be payable from the Funding Date to and including January 1, 2015.
(i) Sufficiency of Project Lease Assignment Proceeds. The amount of Project
Lease Assignment Proceeds (i.e., $ is sufficient to pay all Project Costs for the
Project, the Delivery Costs relating to the Project Lease and the interest component of
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Project Lease Payments to accrue and be payable from the Funding Date to and including
January 1, 2015.
0) Ownership of Real Estate where Equipment is Located; Negative Pledge.
The City is the fee owner of the real estate (including the Municipal Central Plant) where
the Equipment is and will be acquired, installed and located and has good and marketable
title thereto, and there exists no mortgage, pledge, lien, security interest, charge or other
encumbrance of any nature whatsoever on or with respect to such real estate. The City
shall not create, incur, assume or permit to exist any mortgage, pledge, lien, security
interest, charge or other encumbrance of any nature whatsoever on any of the real estate
(including the Municipal Central Plant) where the Equipment is or will be located or
enter into any agreement to sell or assign or enter into any sale/leaseback arrangement of
such real estate.
(k) No Prior Termination for Lack of Appropriation. No lease, rental
agreement, lease-purchase agreement, payment agreement or contract for purchase to
which the City has been a party at any time has been terminated by the City as a result of
insufficient funds being appropriated in any Fiscal Year. No event has occurred which
would constitute an event of default under any debt, revenue bond or obligation which
the City has issued during the past ten years.
Section 2.2. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties to the City as of the
Funding Date:
(a) Due Organization and Existence. The Authority is a joint exercise of
powers authority duly organized and existing under the laws of the State of California,
has full legal right, power and authority to enter into this Agreement, the Leases, the Site
Lease and the Assignments and to carry out and consummate all transactions
contemplated hereby and thereby, and by proper action of its governing board the
Authority has duly authorized the execution and delivery of this Agreement, the Leases,
the Site Lease and the Assignments.
(b) Due Execution. The representatives of the Authority executing this
Agreement, the Leases, the Site Lease and the Assignments are fully authorized to
execute the same under official action taken by the governing board of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Agreement, the Leases,
the Site Lease and the Assignments have been duly authorized, executed and delivered by
the Authority and constitute the legal, valid and binding agreements of the Authority,
enforceable against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Agreement, the Leases,
the Site Lease and the Assignments, the consummation of the transactions herein and
therein contemplated and the fulfillment of or compliance with the terms and conditions
hereof, do not and will not conflict with or constitute a violation or breach of or default
42
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(with due notice or the passage of time or both) under any applicable law or
administrative rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Authority is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the
Authority, which conflict, violation, breach, default, lien, charge or encumbrance would
have consequences that would materially and adversely affect the consummation of the
transactions contemplated by this Agreement, the Leases, the Site Lease and the
Assignments or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder
of any indebtedness of the Authority, and no consent, permission, authorization, order or
license of, or filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of this Agreement, either Lease, the Site
Lease or either Assignment, or the consummation of any transaction herein or therein
contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmental
authority pending or, to the knowledge of the Authority after reasonable investigation,
threatened against or affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its interests, would have a
material and adverse effect upon the consummation of the transactions contemplated by
or the validity of this Agreement, either Lease, the Site Lease or either Assignment, or
upon the financial condition, assets, properties or operations of the Authority, and the
Authority is not in default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or other governmental authority,
which default might have consequences that would materially and adversely affect the
consummation of the transactions contemplated by this Agreement, either Lease, the Site
Lease or either Assignment or the financial condition, assets, properties or operations of
the Authority.
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS;ACQUISITION AND INSTALLATION OF THE EQUIPMENT
AND THE PROJECT
Section 3.1. Deposit and Application of Assignment Proceeds. (a) Equipment Lease
Assignment Proceeds in the amount of$ shall be deposited with the Escrow Agent
on the Funding Date and applied as follows: (i) $ shall be deposited into the
Equipment Lease Account in the Project Fund and applied to pay Delivery Costs with respect to
the Equipment Lease to the persons entitled thereto pursuant to the Escrow Agreement;
(ii) $ shall be deposited into the Equipment Lease Account in the Capitalized
Interest Fund and applied, without further direction by the City, to pay the interest component of
Equipment Lease Payments that accrues and becomes payable from and after the Funding Date
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to (and including) January 1, 2015; and (iii) $ shall be deposited into the
Equipment Lease Account in the Project Fund and applied at the written direction of the City to
pay Equipment Costs pursuant to the Escrow Agreement.
(b) Project Lease Assignment Proceeds in the amount of $ shall be
deposited with the Escrow Agent on the Funding Date and applied as follows: (i) $
shall be deposited into the Project Lease Account in the Project Fund and applied to pay Delivery
Costs with respect to the Project Lease to the persons entitled thereto pursuant to the Escrow
Agreement; (ii) $ shall be deposited into the Project Lease Account in the
Capitalized Interest Fund and applied, without further direction by the City, to pay the interest
component of Project Lease Payments that accrues and becomes payable from and after the
Funding Date to (and including) January 1, 2015; and (iii) $ shall be deposited
into the Project Lease Account in the Project Fund and applied at the written direction of the City
to pay Project Costs pursuant to the Escrow Agreement.
Section 3.2. Appointment of City as Agent of Authority. The Authority hereby appoints
the City as its agent to carry out all phases of the Project and acquisition and installation of the
Equipment under and in accordance with the provisions hereof. The City hereby accepts its
appointment as agent of the Authority and assumes all rights, liabilities, duties and
responsibilities of the Authority regarding the Project and acquisition and installation of the
Equipment. The City, as agent of the Authority hereunder, will enter into, administer and
enforce all Vendor Agreements relating to the Project and the acquisition and installation of the
Equipment. The City will requisition the payment of Project Costs and Equipment Costs from
amounts held by the Escrow Agent in the Project Lease Account and the Equipment Lease
Account, respectively, in the Project Fund, pursuant to and in accordance with the Escrow
Agreement. All Vendor Agreements for, and all work relating to, the Project and the acquisition
and installation of the Equipment are subject to all applicable provisions of law relating to the
acquisition, construction, improvement and equipping of like facilities, equipment and property
by the City.
Section 3.3. Acquisition, Installation and Financing of the Project and the Equipment.
(a) As agent of the Authority, the City hereby agrees with due diligence to supervise and provide
for, or cause to be supervised and provided for, the Project and acquisition and installation of the
Equipment in accordance with the Vendor Agreement and other documents relating thereto and
approved by the City under all applicable requirements of law. The City shall cause the
Equipment to be delivered and installed at the location or locations specified in the Equipment
Schedule and pay any and all Equipment Costs and other delivery and installation costs in
connection therewith. When items of Equipment have been delivered and installed and are
available for the City's beneficial use and enjoyment, the City shall promptly accept such
Equipment and evidence such acceptance by executing and delivering to the Escrow Agent, for
approval by the Equipment Lease Assignee, a Disbursement Request as provided in the Escrow
Agreement. Once installed, no item of the Equipment will be moved or relocated from the
location specified for it in the Equipment Schedule without the Authority's prior written consent,
which consent shall not be unreasonably withheld. The Authority shall have the right at all
reasonable times during regular business hours to enter into and upon the property where the
Equipment is located for the purpose of inspecting the Equipment.
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(b) In order to ensure that moneys sufficient to pay the interest component of
Equipment Lease Payments to accrue and become payable from the Funding Date to and
including January 1, 2015 will be available when required, the Authority shall cause to be
deposited the sum of $ in a special account referred to as the "Equipment Lease
Account" in the Capitalized Interest Fund to be established by the Escrow Agent for the benefit
of the City as provided in the Escrow Agreement. The Escrow Agent shall disburse, without
further authorization from the City or the Authority, moneys in the Equipment Lease Account in
the Capitalized Interest Fund to pay the interest component of Equipment Lease Payments that
become due and payable on or prior to January 1, 2015.
(c) In order to ensure that moneys sufficient to pay the interest component of Project
Lease Payments to accrue and become payable from the Funding Date to and including January
1, 2015 will be available when required, the Authority shall cause to be deposited the sum of
$ in a special account referred to as the "Project Lease Account" in the Capitalized
Interest Fund to be established by the Escrow Agent for the benefit of the City as provided in the
Escrow Agreement. The Escrow Agent shall disburse, without further authorization from the
City or the Authority, moneys in the Project Lease Account in the Capitalized Interest Fund to
pay the interest component of Project Lease Payments that become due and payable on or prior
to January 1,2015.
(d) In order to ensure that moneys sufficient to pay the Equipment Costs and the
Project Costs will be available when required, the Authority shall cause to be deposited (i) the
sum of $ in a special account referred to as the "Equipment Lease Account" and
(ii)the sum of$ in a special account referred to as the "Project Lease Account, " both
such Accounts in the Project Fund to be established by the Escrow Agent for the benefit of the
City as provided in the Escrow Agreement. The Escrow Agent shall disburse moneys in the
Equipment Lease Account and the Project Lease Account in the Project Fund from time to time
to pay the Equipment Costs and the Project Costs, respectively (or to reimburse the City for
payment of such Costs made on or after 2013), upon delivery to the Escrow Agent
of written requests from the City which have been approved by the Equipment Lease Assignee in
the case of the Equipment Lease and the Project Lease Assignee in the case of the Project Lease,
each of which conforms to the requirements of the Escrow Agreement and is in substantially the
form set forth as Schedule 1B to the Escrow Agreement.
Notwithstanding anything in this Article III to the contrary, the City shall assure that
amounts in the Project Fund (including the Accounts therein) are expended solely in accordance
with the requirements of Section 7.7 relating to the observance of all tax provisions relating to
the Project and the acquisition and installation of the Equipment.
Section 3.4. Disposition of Excess Moneys. (a) Upon the determination by the City that
the acquisition and installation of the Equipment have been completed and accepted by the City,
the City shall notify the Equipment Lease Assignee and the Escrow Agent of such fact and will
request the Escrow Agent to close the Equipment Lease Account in the Project Fund and transfer
all remaining amounts therein ("Excess Equipment Funds") to the Equipment Lease Assignee
for payment of all or a portion of the Equipment Lease Payments due and owing under the
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Equipment Lease in the succeeding twelve months and any remaining amounts for prepayment
of Equipment Lease Payments pursuant to Section 9.2(b).
(b) Upon the determination by the City that the Project has been completed and
accepted by the City, the City shall notify the Project Lease Assignee and the Escrow Agent of
such fact and will request the Escrow Agent to close the Project Lease Account in the Project
Fund and transfer all remaining amounts therein ("Excess Project Funds") to the Project Lease
Assignee for payment of all or a portion of the Project Lease Payments due and owing under the
Project Lease in the succeeding twelve months and any remaining amounts for prepayment of
Project Lease Payments pursuant to Section 9.2(b).
Section 3.5. Investment of Project Fund and Capitalized Interest Fund. Amounts on
deposit in the Project Fund and the Capitalized Interest Fund may be invested in interest-bearing
instruments as set forth in written directions given to the Escrow Agent by the City from time to
time in accordance with the Escrow Agreement. Such amounts may be invested solely in
investments authorized for the investment of City funds under applicable charter provisions and
California law. Principal from each investment of moneys in the Project Fund and the
Capitalized Interest Fund shall be deposited directly into the appropriate Account in the Project
Fund and the Capitalized Interest Fund for disbursement under Section 3.3. Interest earnings
from each investment of moneys in the Project Fund and the Capitalized Interest Fund shall be
deposited directly into the appropriate Account in the Project Fund for disbursement under
Section 3.3. Neither the Authority, the Equipment Lease Assignee nor the Project Lease
Assignee has any liability or responsibility for any loss of moneys resulting from any investment
or the sale of any investment authorized by the City.
ARTICLE IV
LEASE PAYMENTS; SUBSTITUTION AND RELEASE OF PROPERTY
Section 4.1. Lease of Leased Real Property and the Equipment. (a) For and in
consideration of the application by the Authority of funds in accordance with Section 3.1(b), the
City has leased the Leased Real Property to the Authority under the Site Lease. For and in
consideration of the Project Lease Payments to be paid by the City under the Project Lease, the
Authority leases the Leased Real Property to the City, and the City leases the Leased Real
Property from the Authority, upon the terms and conditions set forth in the Project Lease.
(b) For and in consideration of the application by the Authority of funds in accordance
with Section 3.1(a) and the beneficial use and enjoyment of the Equipment to be acquired and
installed with the Equipment Lease Assignment Proceeds as provided in the Equipment Lease
and the Escrow Agreement, the City leases from the Authority the Equipment. For and in
consideration of the Equipment Lease Payments to be paid by the City under the Equipment
Lease, the Authority leases the Equipment to the City, upon the terms and conditions set forth in
the Equipment Lease.
Section 4.2. Term. (a) The Equipment Lease Term commences on the Funding Date
and ends on the date on which all of the Equipment Lease Payments have been paid in full. In
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the event that the obligation of the City to pay Equipment Lease Payments is abated for any
period under Section 6.3, the Equipment Lease Term shall extend until such time as all
Equipment Lease Payments have been paid in full; provided that the Equipment Lease Term
shall, in any event, terminate no later than April 1, 2039. The provisions of this Section 4.2(a)
are subject to the provisions of Section 6.2 relating to the taking in eminent domain of the
Equipment or any portion thereof.
(b) The Project Lease Tenn commences on the Funding Date and ends on the date on
which all of the Project Lease Payments have been paid in full. In the event that the obligation
of the City to pay Project Lease Payments is abated for any period under Section 6.3, the Project
Lease Term shall extend until such time as all Project Lease Payments have been paid in full;
provided that the Project Lease Term shall, in any event, terminate no later than July 1, 2043.
The provisions of this Section 4.2(b) are subject to the provisions of Section 4.5 relating to the
substitution of property, the provisions of Section 4.6 relating to the release of property and the
provisions of Section 6.2 relating to the taking in eminent domain of the Leased Real Property or
any portion thereof.
(c) The City may not terminate the Equipment Lease or the Project Lease as a remedy
for a default by the Authority under either or both thereof.
Section 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the
provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns,
beginning on the applicable Lease Payment Commencement Date the Lease Payments
(denominated into components of principal and interest)in the respective amounts for Equipment
Lease Payments and Project Lease Payments specified in the Equipment Lease Payment
Schedule and the Project Lease Payment Schedule, respectively, to be due and payable in
immediately available funds on the Lease Payment Dates specified in the Equipment Lease
Payment Schedule and the Project Lease Payment Schedule, as applicable. The Equipment
Lease Payments payable in any Rental Period are for the beneficial use and enjoyment of the
Equipment during such Rental Period, and the Project Lease Payments payable in any Rental
Period are for the beneficial use and occupancy of the Leased Real Property during such Rental
Period. The interest components of the Equipment Lease Payments have been calculated based
on an interest rate of %per annum, on the basis of a 360-day year of twelve 30-day months.
The interest components of the Project Lease Payments have been calculated based on an interest
rate of %per annum, on the basis of a 360-day year of twelve 30-day months.
(b) Effect of Prepayment. If the City prepays all Equipment Lease Payments or Project
Lease Payments in full under Section 9.2 or 9.3, the City's obligations under the Equipment
Lease with respect to such Equipment Lease Payments or under the Project Lease with respect to
such Project Lease Payments, as the case may be, will thereupon cease and terminate. If the City
prepays the Equipment Lease Payments or the Project Lease Payments in part but not in whole
under Section 9.2(b) or 9.3, the principal components of the remaining Equipment Lease
Payments or Project Lease Payments, as the case may be, will be reduced in inverse order of
Lease Payment Dates.
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(c) Rate on Overdue Payments. If the City fails to make any of the payments required
in this Section 4.3, the payment in default will continue as an obligation of the City until the
amount in default has been fully paid, and the City agrees to pay the same with interest thereon
at the Default Rate from the date of default to the date of payment.
(d) Fair Rental Value. The Equipment Lease Payments coming due and payable under
the Equipment Lease during each Rental Period thereunder constitute the total rental for the
Equipment for such Rental Period, and the City will pay the Equipment Lease Payments under
the Equipment Lease in each Rental Period for and in consideration of the right of the beneficial
use and enjoyment of, and the continued quiet use and enjoyment of, the Equipment during each
Rental Period. The Project Lease Payments coming due and payable under the Project Lease
during each Rental Period thereunder constitute the total rental for the Leased Real Property for
such Rental Period, and the City will pay the Project Lease Payments under the Project Lease in
each Rental Period for and in consideration of the right of the beneficial use and occupancy of,
and the continued quiet use and occupancy of, the Leased Real Property during each Rental
Period. The Authority and the City have agreed and determined that (i) the total Equipment
Lease Payments are not in excess of the fair rental value of the Equipment, and (ii) the total
Project Lease Payments are not in excess of the fair rental value of the Leased Real Property. In
making that determination, consideration has been given to the estimated fair market value of the
Leased Real Property as of the Funding Date, the estimated fair market value of the Equipment
at completion, the replacement costs of the Equipment and the Leased Real Property, the costs of
financing for the amounts to be deposited and applied pursuant to Section 3.1, other obligations
of the City and the Authority under the Equipment Lease and the Project Lease, the uses and
purposes which may be served by the Equipment and the Leased Real Property and the benefits
therefrom that will accrue to the City and the general public.
(e) Source of Payments; Budget and Appropriation. The Lease Payments are payable
from any source of legally available funds of the City, subject to the provisions of Section 3.3
and Articles VI and IX.
The City covenants to take such action as may be necessary to include all Lease
Payments in each of its annual budgets during the Equipment Lease Tenn and the Project Lease
Term and to make the necessary annual appropriations (including any supplemental
appropriations) from any source of legally available funds of the City for all such Lease
Payments which become due and payable during the period covered by each such budget. The
covenants on the part of the City contained herein are duties imposed by law and it is the duty of
each and every public official of the City to take such action and do such things as are required
by law in the performance of the official duty of such officials to enable the City to cant' out and
perform the covenants and agreements in each of the Leases agreed to be carried out and
performed by the City.
(f) Failure to Maintain Tax-Exemption. If an Assignee either (i) receives notice, in any
form, from the Internal Revenue Service; or (ii) reasonably determines, based on an opinion of
Special Counsel, in either case that such Assignee may not exclude the interest component of any
Lease Payment from gross income of the owner thereof for federal income tax purposes due to
the City's action or failure to take any action, then the City shall pay to the affected Assignee,
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within thirty (30) days after such Assignee notifies the City of such determination, the amount
which, with respect to Lease Payments previously paid under the related Lease and taking into
account all penalties, fines, interest and additions to tax (including all federal, state and local
taxes imposed on the interest component of all Lease Payments under the related Lease due
through the date of such event) that are imposed on Lease Payments as a result of the loss of the
exclusion, will restore to the affected Assignee the same after-tax yield on the transaction
evidenced by the related Lease (assuming tax at the highest marginal corporate tax rate) that it
would have realized had the exclusion not been lost. Additionally, the City agrees that upon the
occurrence of such an event, it shall thereafter pay additional rent on each succeeding Lease
Payment Date under the related Lease in such amount as will maintain such after-tax yield to the
affected Assignee.
Section 4.4. Title to the Leased Real Property; Title to and Security Interest in the
Equipment and Funds.
(a) Title to the Leased Real Property. The City shall hold fee title to the Leased Real
Property, subject to the Site Lease and other Permitted Encumbrances, including all additions
which comprise fixtures, repairs, replacements or modifications thereto, and subject to the
provisions of Section 5.2.
At all times during the Project Lease Term, the Authority shall hold leasehold title to the
Leased Real Property pursuant to the Site Lease and subject to the Project Lease. Upon the
termination of the Project Lease and the Equipment Lease (other than under Section 8.2(b) or
Section 8.2(c), respectively), all right,title and interest of the Authority in and to the Leased Real
Property shall be transferred to and vested in the City. Upon the payment in full of all Lease
Payments under both Leases, or upon the deposit by the City of security for such Lease
Payments as provided in Section 9.1, all right, title and interest of the Authority in and to the
Leased Real Property shall thereupon vest in the City for no additional consideration.
(b) Title to the Equipment. During the Equipment Lease Term, and so long as the City
is not in default under Article VIII hereof, all right, title and interest in and to each item of the
Equipment shall be vested in the City immediately upon its acceptance of each item of
Equipment, subject to the terms and conditions of the Equipment Lease. The City shall at all
times protect and defend, at its own cost and expense, its title in and to the Equipment from and
against all claims, liens and legal processes of its creditors, and keep all Equipment free and clear
of all such claims, liens and processes. Upon the payment in full of all Lease Payments under
both Leases, or upon the deposit by the City of security for such Lease Payments as provided in
Section 9.1, the Authority shall release its security interest in and to the Equipment granted under
this Section 4.4, as is and where is, without warranty of any kind other than as to the absence of
liens created by or through the Authority, and shall execute and deliver to the City such
documents as the City may reasonably request to evidence the release of the Authority's security
interest in the Equipment granted under this Section 4.4.
(c) Security Interest in Equipment and Funds. As additional security for the payment
and performance as and when due of all of the City's obligations under both Leases, the City
hereby grants to the Authority a first priority security interest constituting a first lien on (i) the
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Equipment, (ii) moneys and investments held from time to time in the Capitalized Interest Fund
and the Project Fund and (iii) any and all proceeds of any of the foregoing. The City authorizes
the Authority to file (and the City agrees to execute, if applicable) such notices of assignment,
chattel mortgages, financing statements and other documents, in form satisfactory to the
Authority, which the Authority deems necessary or appropriate to establish and maintain the
Authority's security interest in the Equipment, the Capitalized Interest Fund, the Project Fund
and the proceeds thereof, including such financing statements with respect to personal property
and fixtures under Article 9 of the California Commercial Code and treating such Article 9 as
applicable to entities such as the City.
(d) Treatment of Equipment as Personal Property. The City agrees that, as and to the
extent permitted by law, the Equipment is deemed to be and will remain personal property, and
will not be deemed to be affixed to or a part of the real estate on which it may be situated,
notwithstanding that the Equipment or any part thereof may be or hereafter become in any
manner physically affixed or attached to real estate or any building thereon.
Section 4.5. Substitution of Property. The City may, at any time after completion of the
Project and from time to time thereafter, substitute other real property similar in nature and
characteristics to the Leased Real Property (the "Substitute Property") for the Leased Real
Property or any portion thereof(the "Former Property"),provided that the City must satisfy all
of the following requirements which are hereby declared to be conditions precedent to such
substitution:
(a) The City has certified to the Authority and both Assignees that no Event
of Default has occurred and is continuing.
(b) The City has filed with the Authority and both Assignees, and caused to be
recorded in the office of the Riverside County Recorder, sufficient memorialization of an
amendment to the Project Schedule which adds to Attachment B-2 thereto and
Appendix A to the Site Lease to provide a description of such Substitute Property and
delete therefrom the description of such Former Property.
(c) The City has obtained a CLTA policy of title insurance which insures the
Authority's leasehold estate in such Substitute Property under the Site Lease and the
City's leasehold interest in such Substitute Property under the Project Lease, subject only
to Permitted Encumbrances, in an amount at least equal to the aggregate amount of the
principal component of the outstanding Project Lease Payments.
(d) The City has certified in writing to the Authority and both Assignees that
such Substitute Property (i)has an estimated value at least equal to the aggregate
principal amount of outstanding Project Lease Payments, (ii) serves the public purposes
of the City and constitutes property which the City is permitted to lease under the laws of
the State of California, and (iii)has been determined to be essential to the proper,
efficient and economic operation of the City and to serve an essential governmental
function of the City.
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(e) The City has obtained the prior written consent of both Assignees, which
consent shall not be unreasonably withheld.
(f) The Substitute Property does not cause the City to violate any of its
covenants, representations and warranties made herein.
(g) The Assignees have received an opinion of Special Counsel to the effect
that the substitution of the Leased Real Property will not constitute reissuance of any of
the Lease Payments under the Leases for federal income tax purposes.
(h) The Assignees have received an environmental survey or surveys with
respect to the Substitute Property, and other documents that the Assignees may
reasonably require; provided, however, that if the environmental studies have
recommended that remedial action be taken with respect to the Substitute Property so that
it will be in compliance with applicable environmental laws, the Authority, at the
direction of both Assignees, does not have an obligation or duty to accept the Substitute
Property as Leased Real Property until such time as the remedial action has been
completed and the Assignees have received assurances to their satisfaction that the
Substitute Property is in compliance with applicable environmental laws.
Upon the satisfaction of all such conditions precedent, the Project Lease Term will
thereupon end as to the Former Property and commence as to the Substitute Property, and all
references to the Former Property will apply with full force and effect to the Substitute Property.
The City is not entitled to any reduction, diminution, extension or other modification of the
Project Lease Payments whatsoever as a result of such substitution. The Authority and the City
will execute, deliver and cause to be recorded all documents required to discharge the Project
Lease, the Site Lease, the Project Lease Assignment and the Equipment Lease Assignment
against the Former Property, and to cause the Substitute Property to become subject to all of the
terms and conditions of the Project Lease, the Site Lease, the Project Lease Assignment and the
Equipment Lease Assignment.
Section 4.6. Release of Property. (a) After completion of the Project and with the prior
written consent of the Assignees, in the exercise of their respective sole and absolute discretion,
the City may, at any time and from time to time, release any portion of the Leased Real Property
from the Project Lease and the Site Lease (the "Released Property") provided that the City has
satisfied all of the following requirements which are hereby declared to be conditions precedent
to such release:
(i) The City has certified to the Authority and the Assignees that no Event of
Default has occurred and is continuing.
(ii) The City has filed with the Authority and the Assignees, and caused to be
recorded in the office of the Riverside County Recorder, sufficient memorialization of an
amendment to the Project Lease and the Site Lease that removes the Released Property
from the Project Lease and the Site Lease.
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(iii) The City has filed with the Authority and the Assignees an appraisal or
other written documentation prepared by a mutually agreeable third party that establishes
that the fair market value of the property which remains subject to the Project Lease and
the Site Lease following such removal is at least equal to the aggregate outstanding
principal amount of the Project Lease Payments, and the fair rental value of the property
which remains subject to the Project Lease and the Site Lease following such removal is
at least equal to the Project Lease Payments thereafter coming due and payable under the
Project Lease.
(iv) The Assignees have received an opinion of Special Counsel to the effect
that the release of the Leased Real Property will not constitute a reissuance of any of the
Lease Payments under the Leases for federal income tax purposes.
Upon the satisfaction of all such conditions precedent, the Project Lease Term will
thereupon end as to the Released Property. The City is not entitled to any reduction, diminution,
extension or other modification of the Project Lease Payments whatsoever as a result of such
release. The Authority and the City will execute, deliver and cause to be recorded all documents,
if any, required to discharge the Project Lease and the Site Lease of record against the Released
Property.
Section 4.7. Quiet Enjoyment. (a) Throughout the Project Lease Term, the Authority
will provide the City with quiet use and enjoyment of the Leased Real Property and the City will
peaceably and quietly have and hold and enjoy the Leased Real Property, without suit, trouble or
hindrance from the Authority, except as expressly set forth in the Project Lease. The Authority
shall, at the request of the City and at the City's cost,join in any legal action in which the City
asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so.
Notwithstanding the foregoing, the Authority has the right to inspect the Leased Real Property as
provided in Section 7.2.
(b) So long as the City is not in default under the Equipment Lease, neither the
Authority nor any entity claiming by, through or under the Authority, shall interfere with the
City's quiet use and enjoyment of the Equipment during the Equipment Lease Term.
Section 4.8. No Merger. It is the express intention of the Authority and the City that the
Project Lease and the obligations of the parties under the Project Lease are separate and distinct
from the Site Lease and the obligations of the parties thereunder, and that during the term of the
Site Lease and the Project Lease Tenn no merger of title or interest may occur or be deemed to
occur as a result of the respective positions of the Authority and the City under the Site Lease
and the Project Lease.
ARTICLE V
MAINTENANCE,TAXES,INSURANCE AND OTHER MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments with respect to the Leased
Real Property. Throughout the Project Lease Term, as part of the consideration for the rental of
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the Leased Real Property, and in order to ensure that the City maintain the Leased Real Property
in proper working order so that it may be used for its intended purpose, all improvement, repair
and maintenance of the Leased Real Property are the sole responsibility of the City, and the City
will pay for or otherwise arrange for the payment of all utility services supplied to the Leased
Real Property, which may include, without limitation, janitor service, security, power, gas,
telephone, light, heating, water and all other utility services, and will pay for or otherwise
arrange for the payment of the cost of the repair and replacement of the Leased Real Property
resulting from ordinary wear and tear or want of care on the part of the City or any assignee or
sublessee thereof. In exchange for the Project Lease Payments pursuant to the Project Lease, the
Authority agrees to provide only the Leased Real Property, as more specifically set forth in the
Project Lease. The City waives the benefits of subsections 1 and 2 of Section 1932,
Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does
not limit any of the rights of the City under the terms of the Project Lease.
The City will also pay or cause to be paid all taxes and assessments of any type or nature,
if any, charged to the Authority or the City affecting the Leased Real Property or the respective
interests or estates therein; provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of years,the City is
obligated to pay only such installments as are required to be paid during the Project Lease Term
as and when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit the taxes,
assessments or other charges so contested to remain unpaid during the period of such contest and
any appeal therefrom unless the Authority notifies the City that, in its reasonable opinion, by
nonpayment of any such items the interest of the Authority in the Leased Real Property will be
materially endangered or the Leased Real Property or any part thereof will be subject to loss or
forfeiture, in which event the City will promptly pay such taxes, assessments or charges or
provide the Authority with full security against any loss which may result from nonpayment, in
form satisfactory to the Authority and the Assignees.
Section 5.2. Modification of Leased Real Property. The City has the right, at its own
expense, to make additions, modifications and improvements to the Leased Real Property or any
portion thereof. All additions, modifications and improvements to the Leased Real Property will
thereafter comprise part of the Leased Real Property and become subject to the provisions of the
Project Lease. Such additions, modifications and improvements may not in any way damage the
Leased Real Property, or cause the Leased Real Property to be used for purposes other than those
authorized under the provisions of state and federal law; and the Leased Real Property, upon
completion of any additions, modifications and improvements made thereto under this Section,
must be of a value which is not substantially less than the value thereof immediately prior to the
making of such additions, modifications and improvements. The City will not permit any
mechanic's or other lien to be established or remain against the Leased Real Property for labor or
materials furnished in connection with any remodeling, additions, modifications, improvements,
repairs, renewals or replacements made by the City under this Section;provided that if any such
lien is established and the City first notifies the Authority of the City's intention to do so, the
City may in good faith contest any lien filed or established against the Leased Real Property, and
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in such event may permit the items so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom and will provide the Authority with full
security against any loss or forfeiture which might arise from the nonpayment of any such item,
in form satisfactory to the Authority. The Authority will cooperate fully in any such contest,
upon the request and at the expense of the City.
Section 5.3. Public Liability and Property Damage Insurance. The City shall maintain
or cause to be maintained, throughout the Equipment Lease Term and the Project Lease Term,
comprehensive general insurance in protection of the Authority, the City and their respective
members, officers, agents and employees. Such insurance must provide for indemnification of
said parties against direct or contingent loss or liability for damages for bodily and personal
injury, death or property damage occasioned by reason of the operation of the Leased Real
Property and the Equipment. Such insurance must provide coverage of at least $1,000,000 per
occurrence, $3,000,000 in aggregate and $5,000,000 excess liability and be subject to such
deductibles as the City deems adequate and prudent. Such insurance may be maintained as part
of or in conjunction with any other insurance coverage carried by the City, and may be
maintained in whole or in part in the form of a program of self-insurance by the City, or in the
form of the participation by the City in a joint powers authority or other program providing
pooled insurance. The City will apply the proceeds of such insurance toward extinguishment or
satisfaction of the liability with respect to which the net proceeds are paid.
Section 5.4. Casualty Insurance. The City shall procure and maintain, or cause to be
procured and maintained, at all times throughout the Equipment Lease Term and the Project
Lease Tenn, casualty insurance insuring the Facility and the Equipment against loss or damage
by fire and all other risks covered by the standard extended coverage endorsement then in use in
the State of California, and any other risks reasonably required by the Authority (except that in
no event is casualty insurance required to provide coverage for earthquake risk so long as such
insurance coverage is not, in the City's reasonable judgment, available on the open market from
reputable insurance companies at a reasonable cost). Such insurance shall be in an amount at
least equal to the greater of (a)the sum of the replacement value of the Facility plus the
replacement value of the Equipment or (b) the aggregate unpaid principal components of Lease
Payments under the Leases, and may be subject to such deductibles as the City deems adequate
and prudent. The City shall set aside in a segregated account funds sufficient to cover such
deductibles. In the event the City delivers Substitute Property pursuant to Section 4.5, such
coverage shall also include flood insurance coverage if the City would normally procure and
maintain flood insurance coverage for the Substitute Property and flood insurance coverage is
available at reasonable cost from reputable insurers in the reasonable judgment of the City. Such
insurance may be maintained as part of or in conjunction with any other insurance coverage
carried by the City, and may be maintained in whole or in part in the form of the participation by
the City in a joint powers authority or other program providing pooled insurance. The City shall
apply the Net Proceeds of such insurance as provided in Section 6.1.
Section 5.5. Rental Interruption Insurance. The City shall procure and maintain, or
cause to be procured and maintained, at all times throughout the Equipment Lease Term and the
Project Lease Term, rental interruption or use and occupancy insurance to cover loss, total or
partial, of the City's loss of beneficial use and enjoyment of the Facility or the Equipment or any
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substantial part of either thereof and caused by any and all perils insured under the casualty
insurance required by Section 5.4, in an amount at least equal to the sum of the maximum Lease
Payments under the Leases coming due and payable during any two consecutive Fiscal Years
during the remaining Equipment Lease Term and Project Lease Term. Such insurance may be
maintained as part of or in conjunction with any other insurance coverage carried by the City,
and may be maintained in whole or in part in the form of the participation by the City in a joint
powers authority or other program providing pooled insurance;provided that such insurance may
not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance,
if any, will be credited towards the payment of the Lease Payments allocable to the insured
affected portion of the Equipment and Leased Real Property as the same become due and
payable.
Section 5.6. Recordation of the Project Schedule; Title Insurance. The City shall, at its
expense, cause the Site Lease, the Project Schedule, the Project Lease Assignment and the
Equipment Lease Assignment to be recorded in the office of the Riverside County Recorder on
or before the Funding Date. Concurrent with such recordation, the City shall obtain a CLTA
leasehold lender's title insurance policy insuring the Authority's leasehold estate in the Leased
Real Property under the Site Lease and the City's leasehold interest in the Leased Real Property
under the Project Lease, in an amount at least equal to the original aggregate principal
components of the Project Lease Payments. All Net Proceeds received under such title insurance
policy will be credited towards the prepayment of the Project Lease Payments under Section 9.3.
Section 5.7. Insurance Net Proceeds; Form of Policies. All insurance policies (or
riders) required by this Article V shall be taken out and maintained with responsible insurance
companies organized under the laws of one of the states of the United States and qualified to do
business in the State of California. Each policy of insurance required by Sections 5.3, 5.4 and
5.5 shall name the Assignees as additional insureds and loss payees and shall include a lender's
loss payable endorsement for the benefit of the Assignees. The City shall pay or cause to be paid
when due the premiums for all insurance policies required by this Article V. All such policies
shall provide that the Assignees are given at least 10 days' notice of each alteration or expiration
of coverage, any intended cancellation thereof or reduction of the coverage provided thereby.
Neither Assignee is responsible for the sufficiency, adequacy or amount of any insurance or
self-insurance herein required and is fully protected in accepting payment on account of such
insurance or any adjustment, compromise or settlement of any loss. Before the expiration of any
such policy (or rider), the City shall furnish to the Assignees evidence that the policy has been
renewed or replaced by another policy conforming to the provisions of this Article V unless such
insurance is no longer obtainable, in which event the City shall notify the Assignees of such fact.
Section 5.& Installation of City's Personal Property. The City may at any time and
from time to time, in its sole discretion and at its own expense, install or permit to be installed
other items of equipment or other personal property in or upon the Leased Real Property. All
such items will remain the sole property of the City, in which neither the Authority nor the
Assignees have any interest, and may be modified or removed by the City at any time,provided
that the City must repair and restore any and all damage to the Leased Real Property resulting
from the installation, modification or removal of any such items. Nothing in either Lease
prevents the City from purchasing or leasing items to be installed under this Section under a
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lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as
security for the unpaid portion of the purchase price thereof, provided that no such lien or
security interest attaches to any part of the Leased Real Property.
Section 5.9. Liens. The City shall not, directly or indirectly, create, incur, assume or
suffer to exist any mortgage, deed of trust, security interest, pledge, lien, charge, encumbrance or
claim on or with respect to the Leased Real Property (including the charge upon property
purchased under conditional sales or other title retention agreements), other than Permitted
Encumbrances. Except as expressly provided in this Article, the City shall promptly, at its own
expense, take such action as may be necessary to duly discharge or remove any such mortgage,
pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same will arise at
any time. The City shall reimburse the Authority for any expense incurred by it in order to
discharge or remove any such mortgage, deed of trust, security interest, pledge, lien, charge,
encumbrance or claim. The City shall keep the Equipment free of all levies, liens and
encumbrances except those created by the Equipment Lease.
Section 5.10. Environmental Covenants. (a)Neither the Assignees nor the Authority
shall be obligated to monitor compliance of the Leased Real Property with applicable
environmental or other laws. Neither the Assignees nor the Authority shall have any obligations
or responsibility to foreclose or otherwise further involve itself with the Leased Real Property
under any circumstance, including any instance where either the Authority or either Assignee is
notified of any non-compliance of the Leased Real Property with applicable environmental or
other laws. The City represents that the Leased Real Property is currently in full compliance
with all applicable federal, state and local environmental laws. It is expressly understood that
neither the Assignees nor the Authority shall have the right or the obligation to monitor the
City's compliance with environmental laws. The City hereby further represents and warrants to
the Authority and each of the initial Assignees that the City, its officers, employees or agents
have neither ever caused or permitted and shall neither ever cause or permit Hazardous
Substances (as defined below) to be generated, placed, housed, located or disposed of on, under
or in the Leased Real Property, nor ever use the Leased Real Property as a dump site, permanent
or temporary storage site or transfer station for any Hazardous Substance. The City further
represents and warrants to the Authority and each of the initial Assignees that is shall not allow
any actual or alleged violation with respected to the Leased Real Property of any federal, state or
locate statute, ordinance, rule regulation or other law pertaining to Hazardous Substances.
(b) To the greatest extent permitted by law, the City agrees to hold harmless, indemnify
and defend the Authority and each of the Assignees from and against any claim, demand,
penalty, fee, lien, damage, loss expense or liability resulting from (i) any breach of the
representations and warranties made by it in this Section or any failure, for any reason to comply
with environmental laws, rules and regulations, including reasonable attorneys' fees and costs of,
or in preparation for, any trial or appellate review, and (ii) any actual or alleged Hazardous
Substance contamination, including the clean-up of Hazardous Substances from the Leased Real
Property or any other properties resulting from any activities on the Leased Real Property during
the City's ownership, possession or control of the Leased Real Property which directly or
indirectly result in the Leased Real Property or any other property being contaminated with
Hazardous Substances. This indemnity shall survive the termination of the Leases and shall
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continue to inure to the benefit of the Authority notwithstanding any assignment of its other
rights hereunder, as well as either Assignee of the Authority's rights hereunder; provided,
however, that the obligations of the City under this Section are specifically limited to payment
from such moneys of the City as are available at such time from the proceeds of insurance,
self-insurance and legally available funds.
(c) The Authority acknowledges that so long as the City operates the Leased Real
Property for purposes related to providing a public community center, any Hazardous Substance
generated, placed, housed or located on, under or in the Leased Real Property, in the ordinary
course of the City's operation of the Leased Real Property, shall not violate the Leases or the Site
Lease, so long as the City complies with all federal, State or local statues, ordinances, rules,
regulation or other laws applicable to the handling and disposal of such Hazardous Substances.
(d) As used herein, "Hazardous Substance" shall mean any hazardous, toxic or
dangerous substance, waste, material or underground storage tanks that are or may become
regulated under any federal, State or local statute, ordinance, rule, regulation or other law now or
hereafter in effect pertaining to environmental protection, contamination or clean-up.
Section 5.11. Taxes and Other Governmental Charges with respect to the Equipment;
Use and Maintenance of the Equipment. (a) The City and the Authority contemplate that the
Equipment will be used for a governmental or proprietary purpose of the City and that the
Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition
of any Equipment is nevertheless determined to be subject to taxation, the City shall pay when
due all taxes and governmental charges lawfully assessed or levied against or with respect to
such Equipment. The City shall pay such taxes or charges as the same may become due;
provided that, with respect to any such taxes or charges that may lawfully be paid in installments
over a period of years, the City shall be obligated to pay only such installments as accrue daring
the Equipment Lease Term.
(b) The City shall not install, use, operate or maintain the Equipment (or cause the
Equipment to be installed, used, operated or maintained) improperly, carelessly, in violation of
any applicable law or in a manner contrary to that contemplated by the Equipment Lease. The
City shall provide all permits and licenses, if any, necessary for the installation and operation of
the Equipment. The City shall pay all utility and other charges incurred in the use and
maintenance of the Equipment. In addition, the City agrees to comply in all respects with all
applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial
body; provided that the City may contest in good faith the validity or application of any such
law, regulation or ruling in any reasonable manner that does not, in the opinion of the Authority,
adversely affect the interest of the Authority in and to the Equipment or its interest or rights
under the Equipment Lease.
(c) The City shall maintain, preserve and keep the Equipment in good repair and
working order, in a condition comparable to that recommended by the manufacturer. The
Authority shall have no responsibility to maintain, repair or make improvements or additions to
the Equipment. In all cases during the Equipment Lease Term and the Project Lease Term and
prior to return of the Equipment to the Authority as provided in Section 8.2(c), the City agrees to
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pay any costs necessary for the manufacturer to re-certify the Equipment as eligible for
manufacturer's maintenance upon the return of the Equipment as provided for in such Section.
(d) The City shall not alter any item of Equipment or install any accessory, equipment
or device on an item of Equipment if that would impair any applicable warranty, the originally
intended function or the value of that Equipment. All repairs, parts, accessories, equipment and
devices furnished, affixed to or installed on any Equipment, excluding temporary replacements,
shall thereupon become subject to the security interest granted pursuant to Section 4.4.
Section 5.12. Surety Bonds; City to Pursue Remedies Against Vendors and Their Sureties.
The City shall secure from each Vendor directly employed by the City in connection with the
acquisition and installation of the Equipment, a payment and performance bond (a "Surety
Bond") executed by a surety company authorized to do business in the State of California,
having a financial strength rating by A.M. Best Company of "A-" or better, and otherwise
satisfactory to the Authority and naming the Equipment Assignee as a co-obligee in a sum equal
to the entire amount to become payable under each Vendor Agreement. Each bond shall be
conditioned on the completion of the work in accordance with the plans and specifications for
the Equipment and upon payment of all claims of subcontractors and suppliers. The City shall
cause the surety company to add the Equipment Assignee as a co-obligee on each Surety Bond,
and shall deliver a certified copy of each Surety Bond to the Authority and the Equipment
Assignee promptly upon receipt thereof by the City. Any proceeds from a Surety Bond shall be
applied in accordance with such Surety Bond to the payment and performance of the Vendor's
obligations in accordance with the related Vendor Agreement and, if for whatever reason such
proceeds are not so applied, then first to amounts due the Authority under the Equipment Lease,
and any remaining amounts shall be payable to the City.
In the event of a material default of any Vendor under any Vendor Agreement in
connection with the acquisition and installation of the Equipment or in the event of a material
breach of warranty with respect to any material workmanship or performance guaranty with
respect to the Equipment, the City shall promptly proceed to exhaust its remedies against the
Vendor in default. The City shall advise the Authority of the steps it intends to take in
connection with any such default. Any amounts received by the City in respect of damages,
refunds and adjustments or otherwise in connection with the foregoing shall be paid to the
Authority and applied against City's obligations under the Equipment Lease.
Section 5.13. Advances. If the City fails to perform any of its obligations under this
Article V, the Authority may, but shall be under no obligation to, take any necessary action to
cure the failure, including the advancement of money. All amounts so advanced by the
Authority shall constitute additional rent for the Equipment Lease Term or Project Lease Term,
as applicable, and the City covenants and agrees to pay such amounts so advanced by the
Authority with interest thereon from the date advanced until paid at a rate equal to the Default
Rate;provided, however, that any amount payable by the City pursuant to this Section 5.13 shall
be payable solely from moneys appropriated for such purpose by the City Council of the City in
its discretion, and failure to appropriate such moneys shall not constitute an Event of Default
under either Lease.
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ARTICLE VI
DAMAGE,DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS
Section 6.1. Application of Net Proceeds. The Net Proceeds of any taking of the Leased
Real Property or the Equipment or any portion of either thereof in eminent domain proceedings,
and the Net Proceeds of any insurance award with respect to the Leased Real Property or the
Equipment under Section 5.4, will be paid to the Authority to be applied as hereinafter set forth
in this Section 6.1.
If the Leased Real Property or the Equipment is taken in eminent domain proceedings at
any time during the Equipment Lease Term or the Project Lease Term, or if the Leased Real
Property or the Equipment is damaged or destroyed, the City shall as soon as practicable after
such event, with the prior written consent of the Authority, apply the Net Proceeds resulting
therefrom either to: (a) repair the Leased Real Property or the Equipment to full use; or
(b) replace the Leased Real Property or the Equipment, at the City's sole cost and expense, with
property of equal or greater value to the Leased Real Property or the Equipment immediately
prior to the time of such destruction or damage, such replacement Leased Real Property or
Equipment to be subject to the Authority's reasonable approval, whereupon such replacement
shall be substituted in the Equipment Lease or the Project Lease, as applicable, by appropriate
amendment. The City shall notify the Authority of which course of action it desires to take
within 15 days after the occurrence of such destruction or damage. The Authority may (but is
not required to) in its own name or in the City's name execute and deliver proofs of claim,
receive all such moneys, endorse checks and other instruments representing payment of such
moneys, and adjust, litigate, compromise or release any claim against the issuer of any such
policy, and the City hereby grants to the Authority a power of attorney coupled with an interest
to accomplish all or any of the foregoing. The Net Proceeds of all insurance payable with
respect to the Leased Real Property and the Equipment shall be available to the City and shall be
used to discharge the City's obligations under this Section.
Section 6.2. Termination or Abatement Due to Eminent Domain. If the Equipment or
the Leased Real Property is taken permanently under the power of eminent domain or sold to a
government threatening to exercise the power of eminent domain, the Equipment Lease Term or
the Project Lease Term, as applicable, will cease with respect thereto as of the day possession is
so taken. If less than all of the Equipment or the Leased Real Property is taken permanently, or
if the Equipment or the Leased Real Property is taken temporarily, under the power of eminent
domain, (a)the Equipment Lease or the Project Lease, as applicable, will continue in full force
and effect with respect thereto and will not be terminated by virtue of such taking and the parties
waive the benefit of any law to the contrary, and (b)there will be a partial abatement of
Equipment Lease Payments or Project Lease Payments, as the case may be, allocated thereto
based upon whether such event has occurred with respect to the Equipment or the Project, in an
amount to be determined by the City such that the resulting Equipment Lease Payments or
Project Lease Payments, as the case may be, represent fair consideration for the use, occupancy
and enjoyment of the remaining usable portions of the affected Equipment or affected Leased
Real Property.
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Section 6.3. Abatement Due to Damage or Destruction. The amount of Equipment
Lease Payments or Project Lease Payments will be abated during any period in which by reason
of damage or destruction (other than by eminent domain which is hereinbefore provided for)
there is substantial interference with the use, occupancy and enjoyment by the City of the
Equipment or the Leased Real Property or any portion of either thereof. The amount of such
abatement will be determined by the City such that the resulting Equipment Lease Payments or
Project Lease Payments, as the case may be, based upon whether such damage or destruction
occurs with respect to the Equipment or the Project, represent fair consideration for the use,
occupancy and enjoyment of the portions of the affected Equipment or the affected Leased Real
Property not damaged or destroyed. Such abatement will continue for the period commencing
with such damage or destruction and ending with the substantial completion of the work of
repair, replacement or reconstruction. In the event of any such damage or destruction, the
Equipment Lease or the Project Lease, as the case may be, will continue in full force and effect
and the City waives any right to terminate the Equipment Lease or the Project Lease by virtue of
any such damage and destruction. Notwithstanding the foregoing, there will be no abatement of
Equipment Lease Payments or Project Lease Payments under this Section 6.3 to the extent that
the proceeds of casualty insurance and rental interruption insurance are available to pay
Equipment Lease Payments and Project Lease Payments, as the case may be, which would
otherwise be abated under this Section 6.3, it being hereby declared that such proceeds and
amounts constitute a special fund for the payment of such Lease Payments.
Section 6.4. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in
full the cost of any repair or replacement referred to in Section 6.1, the City shall either
(a) complete such repair or replacement and pay any costs thereof in excess of the amount of the
Net Proceeds, or (b)pay or cause to be paid to the Authority the amount of the then applicable
prepayment price (including premium) under Section 9.3 with respect to the affected Equipment
or Leased Real Property, as the case may be, and, upon such payment, the Equipment Lease
Term or the Project Lease Term, as applicable, shall terminate and the Authority's security
interest in the Equipment or lien on the Leased Real Property shall terminate as provided in
Section 4.4;provided, however, that any amount payable by the City pursuant to this Section 6.4
shall be payable solely from moneys appropriated for such purpose by the City Council of the
City in its discretion, and failure to appropriate such moneys shall not constitute an Event of
Default under the affected Equipment Lease or Project Lease. The amount of the Net Proceeds,
if any, remaining after completing such repair or replacement or after paying the prepayment
price with respect to the affected Lease shall be retained by the City. If the City shall make any
payments pursuant to this Section, the City shall not be entitled to any reimbursement therefor
from the Authority nor shall the City be entitled to any diminution of the amounts payable under
the affected Lease.
ARTICLE VII
OTHER COVENANTS
Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO AGREEMENT,
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN,
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE
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USE CONTEMPLATED BY THE CITY OF THE EQUIPMENT OR THE LEASED REAL PROPERTY OR ANY
PORTION OF EITHER THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE EQUIPMENT OR THE LEASED REAL PROPERTY OR ANY PORTION OF EITHER THEREOF. THE CITY
ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY PORTION OF THE
EQUIPMENT OR THE LEASED REAL PROPERTY OR A DEALER THEREIN, THAT THE CITY LEASES THE
EQUIPMENT AND THE LEASED REAL PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE
AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no event shall the Authority be liable
for incidental, indirect, special or consequential damages, in connection with or arising out of
either Lease for the existence, furnishing, functioning or the City's use of the Equipment or the
Leased Real Property.
Section 7.2. Access to the Leased Real Property. The City agrees that the Authority, and
the Authority's successors or assigns, may at all reasonable times enter upon and to examine and
inspect the Leased Real Property or any part thereof. The Authority and the Authority's
successors and assigns have such rights of access to the Leased Real Property or any component
thereof as may be reasonably necessary to cause the proper maintenance of the Leased Real
Property in the event of failure by the City to perform its obligations under the Project Lease
with respect to such Leased Real Property;provided, however, that neither the Authority nor any
of its assigns have any obligation to cause such proper maintenance.
Section 7.3. Risk of Loss; Release and Indemnification Covenants. Whether or not
covered by insurance or self-insurance, the City hereby assumes all risk of loss of, or damage to
and liability related to injury or damage to any persons or property arising from the Equipment or
the Leased Real Property from any cause whatsoever, and no such loss of or damage to or
liability arising from the Equipment or the Leased Real Property shall relieve the City of the
obligation to make Lease Payments or to perform any other obligation under the Leases, except
as otherwise provided in Sections 6.2 and 6.3. Whether or not covered by insurance or self-
insurance, the City shall indemnify (to the fullest extent permitted by applicable law and subject
to the appropriation of moneys sufficient for the purpose) the Authority and the respective
Assignees, and their respective officers, agents, successors and assigns, against all liabilities,
obligations, claims, losses and damages, including legal fees and expenses, arising out of any of
the following:
(a) the use, maintenance, condition or management of, or from any work or
thing done on or in the Equipment or the Leased Real Property by the City,
(b) any breach or default on the part of the City in the performance of any of
its obligations under either Lease,
(c) any negligence, bad faith or willful misconduct of the City or of any of its
agents, contractors, servants, employees or licensees With respect to the Equipment or the
Leased Real Property, or
(d) any intentional misconduct or negligence of any sublessee of the City with
respect to the Equipment or the Leased Real Property.
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No indemnification is made under this Section or elsewhere in either Lease for willful
misconduct or negligence under either Lease by the Authority or either Assignee, or their
respective officers, agents, employees, successors or assigns. The provisions of this Section 7.3
shall continue in full force and effect notwithstanding the full payment of all obligations under
the Leases or the termination of the Equipment Lease Term or the Project Lease Term for any
reason.
Section 7.4. Assignment by the Authority. (a) The Authority has assigned and
transferred (i) the Assigned Equipment Lease Rights to the Equipment Lease Assignee pursuant
to the Equipment Lease Assignment and (ii) the Assigned Project Lease Rights to the Project
Lease Assignee pursuant to the Project Lease Assignment. The City hereby consents to each
such assignment and transfer. The Authority hereby directs the City, and the City hereby agrees,
to pay to the Equipment Lease Assignee all payments payable by the City pursuant to the
Equipment Lease under Section 4.3 and all amounts payable by the City pursuant to the
Equipment Lease under Article IX. Whenever in the Equipment Lease any reference is made to
the Authority and such reference concerns any Assigned Equipment Lease Rights, such reference
shall be deemed to refer to the Equipment Lease Assignee. The Authority hereby further directs
the City, and the City hereby agrees, to pay to the Project Lease Assignee all payments payable
by the City pursuant to the Project Lease under Section 4.3 and all amounts payable by the City
pursuant to the Project Lease under Article IX. Whenever in the Project Lease any reference is
made to the Authority and such reference concerns any Assigned Project Lease Rights, such
reference shall be deemed to refer to the Project Lease Assignee. Nothing in this Section 7.4 is
intended, or shall be construed, to entitle the Equipment Lease Assignee (in such capacity) to
assign or transfer any Assigned Project Lease Rights (or any interest therein) or to entitle the
Project Lease Assignee (in such capacity) to assign or transfer any Assigned Equipment Lease
Rights (or any interest therein).
(b) The Assigned Equipment Lease Rights and the Assigned Project Lease Rights, and
all proceeds therefrom, may be further assigned and reassigned in whole or in part to one or more
assignees or subassignees by an Equipment Lease Assignee (but only with respect to Assigned
Equipment Lease Rights) or a Project Lease Assignee (but only with respect to Assigned Project
Lease Rights), without the necessity of obtaining the consent of the City;provided, that any such
assignment, transfer or conveyance (i) shall be made only to investors each of whom the
transferor Assignee reasonably believes is a "qualified institutional buyer" as defined in
Rule 144A(a)(1) promulgated under the Securities Act or an "accredited investor" as defined in
Sections 501(a)(1), (2), (3) and (7) of Regulation D promulgated under the Securities Act and is
purchasing the related Assigned Rights (or any interest therein) for its own account with no
present intention to resell or distribute such Assigned Rights (or interest therein), subject to each
investor's right at any time to dispose of its Assigned Rights or any interest therein as it
determines to be in its best interests, (ii) shall not result in more than 15 owners of Assigned
Equipment Lease Rights or 15 owners of Assigned Project Lease Rights or the creation of any
interest in Assigned Equipment Lease Rights or Assigned Project Lease Rights in an aggregate
principal component that is less than $100,000 and (iii) shall not require the City to make Lease
Payments under either Lease, send notices or otherwise deal with respect to matters arising under
the Equipment Lease or the Project Lease with or to more than one trustee, owner, servicer or
other fiduciary or agent for a Lease (herein referred to with respect to each Lease as the "Lease
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Servicer") and any trust agreement, participation agreement or custodial agreement under which
multiple ownership interests in the Assigned Equipment Lease Rights or the Assigned Project
Lease Rights are created shall provide the method by which the owners of such interests shall
establish the rights and duties of a single Lease Servicer to act on their behalf with respect to
such Assigned Rights, including with respect to the exercise of rights and remedies on behalf of
such owners upon the occurrence of an Event of Default under the Equipment Lease or the
Project Lease, as the case may be. The Authority (including the initial Equipment Lease
Assignee pursuant to the Equipment Lease Assignment and the initial Project Lease Assignee
pursuant to the Project Lease Assignment) and the City hereby acknowledge and agree that the
restrictions and limitations on transfer as provided in this Section 7.4 shall apply to the first and
subsequent assignees and sub-assignees of any of the Assigned Rights(or any interest therein).
(c) No assignment, transfer or conveyance permitted by this Section 7.4 that changes
the Lease Servicer for a Lease or its payment instructions or mailing address shall be effective
until the City shall have received a written notice of assignment that discloses the name, payment
instructions and address of each such assignee;provided, that if such assignment is made to a
bank or trust company as trustee or paying agent for owners of certificates of participation, trust
certificates or partnership interests evidencing interests in the Assigned Equipment Lease Rights
or the Assigned Project Lease Rights, it shall thereafter be sufficient that the City receives notice
of the name, payment instructions and address of such bank or trust company that acts as the
Lease Servicer for such Lease. During the Equipment Lease Term and the Project Lease Term,
the City shall keep, or cause to be kept, a complete and accurate record of all such assignments in
form necessary to comply with Section 149 of the Code. The City shall retain all such notices as
a register of all Assignees for each Lease and shall make all payments to the Equipment Lease
Assignee or the Project Lease Assignee, as the case may be, or the Lease Servicer for a Lease
designated in such register. The City shall not have the right to, and shall not, assert against the
initial Equipment Lease Assignee, the initial Project Lease Assignee or any subsequent Assignee
any claim, counterclaim or other right that the City may have against the Authority. If an
Equipment Lease Assignee or a Project Lease Assignee notifies the City of its intent to assign the
related Assigned Rights (or any interest therein) to a different Lease Servicer, the City agrees
that it shall execute and deliver to the requesting Assignee a notice and acknowledgment of
assignment in form reasonably required by such Assignee within five (5) Business Days after its
receipt of such request.
Section 7.5. Assignment and Subleasing by the City. (a) After the date of recordation of
the Project Schedule, the City may sublease the Leased Real Property, or any portion thereof,
with the prior written consent of the Project Lease Assignee (which will not be unreasonably
withheld), and subject to all of the following conditions:
(i) The Project Lease and the obligation of the City to make Lease Payments
thereunder shall remain obligations of the City.
(ii) The City shall, within 30 days after the delivery thereof, fiunish or cause
to be furnished to the Authority and the Project Lease Assignee a true and complete copy
of such sublease.
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(iii) No such sublease by the City may cause the Leased Real Property to be
used for a purpose which is not authorized under the provisions of the laws of the State of
California.
(iv) The City shall furnish the Authority and the Project Lease Assignee with a
written opinion of Special Counsel to the effect that such sublease does not cause the
interest components of any Lease Payments under the Project Lease to become includable
in gross income for federal income tax purposes.
(b) None of the City's right, title or interest in, to and under the Equipment Lease, any
portion of the Equipment, the Escrow Agreement or the Equipment Lease Account in the Project
Fund or the Equipment Lease Account in the Capitalized Interest Fund may be assigned,
encumbered or subleased by the City for any reason, and any purported assignment,
encumbrance or sublease without the Authority's prior written consent shall be null and void.
Section 7.6. Amendment of Leases. The Equipment Lease may be amended by the
mutual consent of the City and the Authority, with the prior written consent of the Equipment
Lease Assignee. The Project Lease may be amended by the mutual consent of the City and the
Authority, with the prior written consent of the Project Lease Assignee. Prior to the effective
date of any such amendment, and as a condition precedent to the effectiveness thereof, the City
at its expense will obtain an opinion of Special Counsel to the effect that such amendment will
not adversely affect the exclusion from gross income of the interest component of any Lease
Payments under the related Equipment Lease or Project Lease, as the case may be, for federal
income tax purposes.
Section 7.7. Tax Covenants.
(a) Private Activity Bond Limitation. The City shall assure that proceeds of the Leases
are not used so as to cause the interest components of Lease Payments to satisfy the private
business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c)
of the Code.
(b) Federal Guarantee Prohibition. The City shall not take any action or permit or
suffer any action to be taken if the result of the same would be to cause the Lease Payments to be
"federally guaranteed"within the meaning of Section 149(b) of the Code.
(c) Rebate Requirement. The City shall take any and all actions necessary to assure
compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings,
if any, to the federal government, to the extent that such section is applicable to the Lease
Payments.
(d) No Arbitrage. The City shall not take, or permit or suffer to be taken by either
Assignee or otherwise, any action with respect to the proceeds of the Leases which, if such
action had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on the date of execution of the Leases would have caused the Leases to be
"arbitrage bonds"within the meaning of Section 148 of the Code.
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Section 7.8. Financial Statements. The City shall annually provide the Authority with
current financial statements, budgets and proof of appropriation for the ensuing Fiscal Year, and
such other financial information relating to the ability of the City to continue the Leases as may
be requested by the Authority or an Assignee.
Section 7.9. Vendor's Agreements; Warranties. The City covenants that it shall not in
any material respect amend, modify, rescind or alter any Vendor Agreement without the prior
written consent of the Authority. The Authority hereby irrevocably appoints the City its agent
and attorney-in-fact during the Equipment Lease Term, so long as the City shall not be in default
under the Equipment Lease, to assert from time to time whatever claims and rights (including
without limitation warranties) relating to the Equipment that the Authority may have against a
Vendor. The City's sole remedy for the breach of such warranty, indemnification or
representation shall be against the applicable Vendor of the Equipment, and not against the
Authority. Any such matter shall not have any effect whatsoever on the rights and obligations of
the Authority under the Equipment Lease, including the right to receive full and timely Lease
Payments thereunder. The City expressly acknowledges that the Authority makes, and has made,
no representations or warranties whatsoever as to the existence or the availability of such
warranties relating to the Equipment.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default Defined. Each of the following events constitutes an
Event of Default under the Equipment Lease and the Project Lease:
(a) Failure by the City to pay any Lease Payment under a Lease or other
payment required to be paid under a Lease at the time specified therein or to maintain
insurance as specified in Article V.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed under a Lease, other than as referred to
in the preceding subsection(a), for a period of 30 days after written notice specifying
such failure and requesting that it be remedied has been given to the City by the
Authority. However, if the City notifies the Authority that in its reasonable opinion the
failure stated in the notice can be corrected, but not within such 30 day period, the failure
will not constitute an Event of Default if the City commences to cure the failure within
such 30 day period and thereafter diligently and in good faith cures such failure in a
reasonable period of time.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure by
the City promptly to lift any execution, garnishment or attachment, or adjudication of the
City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by
the City into an agreement of composition with creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the City in any proceedings instituted
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under the provisions of the Federal Bankruptcy Code, as amended, or under any similar
acts which may hereafter be enacted.
(d) Any representation or warranty made by the City in a Lease proves to
have been false, incorrect, misleading, or breached in any material respect on the date
when made.
(e) With respect to the Equipment Lease, the occurrence of an Event of
Default under the Project Lease.
(f) With respect to the Project Lease, the occurrence of an Event of Default
under the Equipment Lease.
Failure on the part of the City to make any payment, transfer or disbursement provided
for in this Agreement or in the Escrow Agreement to be paid from moneys in the City's general
fund that are legally available and duly appropriated by the City Council of the City at its
discretion and not at its obligation shall not be a default or Event of Default under this
Agreement or the Escrow Agreement and no remedy is provided for any such failure.
Section 8.2. Remedies on Default. Whenever any Event of Default has happened and is
continuing, the Authority may exercise any and all remedies available under law or granted
under the Leases. Notwithstanding anything herein or in the Leases to the contrary, there is no
right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease
Payments not then in default to be immediately due and payable. Each and every covenant under
this Agreement and the Leases to be kept and performed by the City is expressly made a
condition and upon the breach thereof the Authority may exercise any and all rights granted
under this Agreement and the Leases; provided, that no termination of either Lease will be
effected either by operation of law or acts of the parties hereto, except only in the manner herein
expressly provided. Notwithstanding anything in this Article VIII to the contrary, the remedies
provided under this Section 8.2 may be exercised separately with respect to the Equipment Lease
or the Project Lease upon the occurrence of an Event of Default under either such Lease or may
be exercised with respect to both of the Leases as the respective Assignees may determine,
unless otherwise required by applicable California law. Upon the occurrence and during the
continuance of any Event of Default, the Authority may exercise each and every one of the
following remedies:
(a) Enforcement of Payments Without Termination. If the Authority does not
elect to terminate the Project Lease or the Equipment Lease in the manner hereinafter
provided for in subsection(b) or (c) of this Section, the City agrees to remain liable for
the payment of all Project Lease Payments and the performance of all conditions
contained in the Project Lease and the payment of all Equipment Lease Payments and the
performance of all conditions contained in the Equipment Lease, and the Authority may
take whatever action at law or in equity may appear necessary or desirable, to collect
each such Lease Payment as it becomes due under the Project Lease and the Equipment
Lease, as applicable, subject, however, in any case to the provisions of Sections 6.2 and
6.3;provided, that in no event shall the City be liable in any Fiscal Year for any amount
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in excess of the related Lease Payments shown for such Fiscal Year in the Project Lease
Payment Schedule or Equipment Lease Payment Schedule, as applicable. The City shall
reimburse the Authority for any deficiency arising out of the re-leasing or sale of the
Leased Real Property or the Equipment or portion of either thereof, or, if the Authority is
unable to re-lease or sell the Leased Real Property or the Equipment, then for the full
amount of all Project Lease Payments to the end of the Project Lease Term and the full
amount of all Equipment Lease Payments to the end of the Equipment Lease Term
(subject in any case to the provisions of Sections 6.2 and 6.3), but said Lease Payments
and/or deficiency will be payable only at the same time and in the same manner as
hereinabove provided for the payment of Lease Payments under the Project Lease and the
Equipment Lease, as the case may be, notwithstanding such entry or re-entry by the
Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the
purpose of effecting such re-entry or obtaining possession of the Leased Real Property or
the Equipment or portion of either thereof or the exercise of any other remedy by the
Authority.
The City hereby irrevocably appoints the Authority as the agent and attorney-in-
fact of the City to enter upon and re-lease the Leased Real Property upon the occurrence
and continuation of an Event of Default and to remove all personal property whatsoever
situated upon the Leased Real Property, to place such property in storage or other suitable
place in the State of California for the account of and at the expense of the City, and the
City hereby agrees to save harmless the Authority from any costs, loss or damage
whatsoever arising or occasioned by any such entry upon and re-leasing of the Leased
Real Property and the removal and storage of such property by the Authority or its duly
authorized agents in accordance with the provisions herein contained. The City agrees
that the terms of the Project Lease constitute full and sufficient notice of the right of the
Authority to re-lease the Leased Real Property in the event of such re-entry without
effecting a surrender of the Project Lease, and further agrees that no acts of the Authority
in effecting such re-leasing constitute a surrender or termination of the Project Lease
irrespective of the term for which such re-leasing is made or the terms and conditions of
such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the
City the right to terminate the Project Lease will vest in the Authority to be effected in
the sole and exclusive manner hereinafter provided for in subsection(b) of this Section.
The City agrees to surrender and quit possession of the Leased Real Property upon
demand of the Authority for the purpose of enabling the Leased Real Property to be re-let
under this paragraph. Any rental obtained by the Authority in excess of the unpaid Lease
Payments will be applied as a credit against future Lease Payments.
(b) Termination of Project Lease. If an Event of Default occurs and is
continuing under the Project Lease, the Authority at its option may terminate the Project
Lease and re-lease all or any portion of the Leased Real Property. If the Authority
terminates the Project Lease at its option and in the manner hereinafter provided on
account of default by the City (and notwithstanding any re-entry upon the Leased Real
Property by the Authority in any manner whatsoever or the re-leasing of the Leased Real
Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages
howsoever arising or occurring payable at the same time and in the same manner as is
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herein provided in the case of payment of Project Lease Payments. Any surplus received
by the Authority from such re-leasing will be applied as a credit against future Project
Lease Payments. Neither notice to pay rent or to deliver up possession of the premises
given under law nor any proceeding in unlawful detainer taken by the Authority will of
itself operate to terminate the Project Lease, and no termination of the Project Lease on
account of default by the City will be or become effective by operation of law, or
otherwise, unless and until the Authority has given written notice to the City of the
election on the part of the Authority to terminate the Project Lease. The City agrees that
no surrender of the Leased Real Property, or of the remainder of the Project Lease Term
or any termination of the Project Lease will be valid in any manner or for any purpose
whatsoever unless stated or accepted by the Authority by such written notice.
(c) Termination of Equipment Lease. If an Event of Default occurs and is
continuing under the Equipment Lease, the Authority at its option may terminate the
Equipment Lease and may enter the premises where the Equipment is located and retake
possession of the Equipment or require the City at the City's expense to promptly return
any or all of the Equipment to the possession of the Authority at such place within the
State of California as the Authority shall specify, and sell or lease such Equipment or, for
the account of the City, sublease such Equipment, and the City hereby agrees to save
harmless the Authority from any costs, loss or damage whatsoever arising or occasioned
by any such removal, storage or reconditioning of such property by the Authority or its
duly authorized agents in accordance with the provisions herein contained.
(d) Action with respect to the Escrow Agreement. The Authority may
terminate the Escrow Agreement and apply any moneys and investments (i) then held in
the Equipment Lease Account in the Capitalized Interest Fund and the Equipment Lease
Account in the Project Fund to Equipment Lease Payments due under the Equipment
Lease and (ii)then held in the Project Lease Account in the Capitalized Interest Fund and
the Project Lease Account in the Project Fund to Project Lease Payments due under the
Project Lease.
(e) Suit for Payment of Lease Payments. By action pursuant to the California
Code of Civil Procedure, or as otherwise provided by law, obtain the issuance of a writ of
mandamus enforcing, for each Fiscal Year seriatim during the entire balance of the
remaining Equipment Lease Term or Project Lease Term, as applicable, subject in any
case to the provisions of Sections 6.2 and 6.3, the duty of the City to appropriate and take
all other administrative steps necessary for the payment of Lease Payments and other
amounts due under the Equipment Lease or the Project Lease, as applicable.
(f) Proceedings at Law or In Equity. If an Event of Default occurs and,
continues under the Equipment Lease or the Project Lease, the Authority may take
whatever action at law or in equity may appear necessary or desirable to collect the
amounts then due and thereafter to become due thereunder or to enforce any other of its
rights thereunder.
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68
(g) Remedies as Secured Party. If an Event of Default occurs and continues
under the Equipment Lease, the Authority may take any and all actions to which it is
entitled as a secured party with respect to the Equipment.
(h) Remedies under the Site Lease. If an Event of Default occurs and
continues under the Project Lease, the Authority may exercise its rights under the Site
Lease.
Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority is intended to be exclusive and every such remedy is cumulative and in addition to
every other remedy given under the Leases or now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon the occurrence of any Event of
Default will impair any such right or power or will be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be deemed
expedient. hi order to entitle the Authority to exercise any remedy reserved to it in this
Article VIII it is not necessary to give any notice, other than such notice as may be required in
this Article VIII or by law.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. If either party to this
Agreement defaults under any of the provisions of the Leases and the non-defaulting party
employs attorneys or incurs other expenses for the collection of moneys or the enforcement or
performance or observance of any obligation or agreement on the part of the defaulting party
contained in the Equipment Lease or the Project Lease, the defaulting party agrees that it will on
demand therefor pay to the non-defaulting party the reasonable fees of such attorneys and such
other expenses so incurred by the non-defaulting party.
Section 8.5. No Additional Waiver Implied by One Waiver. If any agreement contained
in either Lease is breached by either party and thereafter waived by the other party, such waiver
will be limited to the particular breach so waived and will not constitute a waiver of any other
breach thereunder.
Section 8.6. Assignees to Exercise Rights. Such rights and remedies as are given to the
Authority under this Article VIII with respect to the Equipment Lease have been assigned by the
Authority to the Equipment Lease Assignee and with respect to the Project Lease have been
assigned by the Authority to the Project Lease Assignee, to each of which assignment the City
hereby consents. Such rights and remedies shall be exercised solely by the Equipment Lease
Assignee with respect to the Assigned Equipment Lease Rights and solely by the Project Lease
Assignee with respect to the Assigned Project Lease Rights.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
Section 9.1. Security Deposit. Notwithstanding any other provision of a Lease, the City
may on any date secure the payment of the Equipment Lease Payments or the Project Lease
Payments, as the case may be, in whole or in part by depositing with a trustee, escrow agent or
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other fiduciary selected by the City and acceptable to the Equipment Lease Assignee or the
Project Lease Assignee (as the case may be) an amount of cash, which shall be held in a
segregated trust or escrow fund under a trust or escrow agreement that is in form and content
acceptable to such Assignee, which cash so held is either (a) sufficient to pay such Lease
Payments, including the principal and interest components thereof, in accordance with the
Equipment Lease Payment Schedule or the Project Lease Payment Schedule, as applicable, or
(b) invested in whole or in part in non-callable Federal Securities in such amount as will, in the
opinion of an independent certified public accountant (which opinion must be in form and
substance, and with such an accountant, acceptable to the affected Assignee and addressed and
delivered to the affected Assignee), together with interest to accrue thereon and together with
any cash which is so deposited, be fully sufficient to pay such Equipment Lease Payments or
Project Lease Payments, as applicable, when due under Section 4.3(a) as the City instructs at the
time of said deposit;provided, however, that at or prior to the date on which any such security
deposit is established, the City shall deliver to the affected Assignee an opinion of Special
Counsel (in form and substance acceptable to the affected Assignee) to the effect that any such
security deposit will not adversely affect the excludability of the interest component of Lease
Payments under the related Lease from gross income of the owners thereof for federal income
tax purposes.
If the City posts a security deposit under this Section with respect to all unpaid Lease
Payments under a Lease, and notwithstanding the provisions of Section 4.2, (i)the Equipment
Lease Term or the Project Lease Term, as applicable, will continue, (ii) all obligations of the
City under the related Lease, and all security provided by such Lease for said obligations, will
thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be
made, all of the Lease Payments under the affected Lease from such security deposit and its
obligation provided in the next succeeding paragraph, and (iii)if such security deposit is made
with respect to the Project Lease, the Authority's leasehold interest in the Leased Real Property
will terminate on the date of said deposit automatically and without further action by the City or
the Authority. Said security deposit constitutes a special fund for the payment of Lease
Payments in accordance with the provisions of the Lease with respect to which such security
deposit is made.
Notwithstanding anything in this Section 9.1 or otherwise in the affected Lease to the
contrary, if the amount held in such security deposit shall at any time be insufficient (for
whatever reason) to pay Lease Payments when due in full as provided in clause (a) or (b), as
applicable, of the first paragraph of this Section 9.1, the City shall immediately pay to the
affected Assignee on the applicable due date or due dates the amount of any such shortfall from
funds legally available for such purpose.
Section 9.2. Optional Prepayment. (a) The City may exercise its option to prepay the
aggregate principal components of the Lease Payments under either or both Leases in whole, but
not in part, on any Lease Payment Date on or after July 1, 2023, by paying a prepayment price
equal to the aggregate principal components of the Lease Payments to be prepaid, together with
the principal and interest components of the Lease Payment required to be paid on such date,
plus a prepayment premium equal to two percent (2.00%) of the aggregate principal component
to be prepaid. The City shall give the Authority written notice of its intention to exercise its
_39_ 7
option to prepay Lease Payments under either or both of the Leases under this Section 9.2(a) not
less than 30 days in advance of the intended prepayment date.
(b) The City may exercise its option to prepay the principal components of the Project
Lease Payments or the Equipment Lease Payments, as applicable, in part solely from Excess
Project Funds or Excess Equipment Funds, respectively, under Section 3.4, on any Lease
Payment Date, by paying a prepayment price equal to the aggregate principal components of the
Lease Payments to be prepaid, together with the principal and interest components of such Lease
Payment required to be paid on such date, plus a prepayment premium equal to three percent
(3.00%) of the aggregate principal component to be prepaid. Prepayment in part of the unpaid
principal components of Lease Payments as provided in this Section 9.2(b) shall be applied to
reduce the principal components of Lease Payments in inverse order of the Lease Payment Dates
under the affected Lease.
Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall prepay the unpaid principal components of the Equipment Lease
Payments or the Project Lease Payments, as applicable, in whole on any date or in part on any
Lease Payment Date, from and to the extent of any Net Proceeds of insurance award or eminent
domain award allocated to the Project or the Equipment based upon whether the event of
damage, destruction or condemnation occurred with respect to the Project or the Equipment and
to be applied for purposes of such prepayment under Article VI, by paying a prepayment price
equal to (a) 103% of the aggregate principal components of the Project Lease Payments or the
Equipment Lease Payments, as applicable, to be prepaid if such prepayment date occurs prior to
July 1, 2023 and (b) 102% of the aggregate principal components of the Project Lease Payments
or the Equipment Lease Payments, as applicable, to be prepaid if such prepayment occurs on or
after July 1, 2023,plus in each case accrued interest on such prepaid principal components to the
prepayment date. The City shall give the Authority notice of prepayment of Lease Payments
under the affected Lease pursuant to this Section 9.3 not less than 30 days in advance of such
prepayment date. Prepayment in part of the unpaid principal components of Lease Payments as
provided in this Section 9.3 shall be applied to reduce the principal components of Lease
Payments in inverse order of the Lease Payment Dates under the affected Lease.
Section 9.4. Credit for Amounts on Deposit. If the City prepays the principal
components of the Project Lease Payments or the Equipment Lease Payments in full under
Section 9.3, such that the related Lease is discharged by its terms as a result of such prepayment,
at the written election of the City filed with the Project Lease Assignee or the Equipment Lease
Assignee, as the case may be, any or all amounts then on deposit in the Project Fund allocable to
the Project or the Equipment will be credited towards the amounts then required to be so prepaid
with respect to the Project Lease Payments or the Equipment Lease Payments, as the case may
be.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. Any notice, request, complaint, demand or other communication
under this Agreement or the Leases may be given by first class mail or personal delivery to the
parry entitled thereto at its address set forth below, or by facsimile transmission or other form of
telecommunication, at its number set forth below. Notice is effective either (a)upon
transmission by facsimile transmission or other form of telecommunication, (b) 72 hours after
deposit in the United States of America first class mail, postage prepaid, or (c) in the case of
personal delivery to any person, upon actual receipt. The Authority, the City, the Equipment
Lease Assignee or the Project Lease Assignee may, by written notice to the other parties, from
time to time modify the address or number to which communications are to be given hereunder.
If to the Authority: City of Palm Springs Financing Authority
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attention:
If to the City: City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attention:
If to the Equipment Lease Assignee: Green Campus Partners, LLC
Raritan Plaza I
110 Fieldcrest Avenue
Edison, New Jersey 08837
Attention: Michael Horkey
Phone: (732) 917-2304
If to the Project Lease Assignee: Green Campus Partners, LLC
Raritan Plaza I
110 Fieldcrest Avenue
Edison,New Jersey 08837
Attention: Michael Horkey
Phone: (732) 917-2304
Section 10.2. Binding Effect. This Agreement and each Lease inures to the benefit of and
is binding upon the Authority, the City and their respective successors and assigns.
Section 10.3. Severability. If any provision of this Agreement or a Lease is held invalid
or unenforceable by any court of competent jurisdiction, such holding does not invalidate or
render unenforceable any other provision hereof or thereof.
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Section 10.4. Net-net-net Lease. Each Lease is a "net-net-net lease" and the City hereby
agrees that the Lease Payments under each Lease are an absolute net return to the Authority, free
and clear of any expenses, charges or set-offs whatsoever.
Section 10.5. Third Party Beneficiary. The Equipment Lease Assignee is made a party
beneficiary under this Agreement and the Equipment Lease with all rights of a third party
beneficiary, and the Project Lease Assignee is made a party beneficiary under this Agreement
and the Project Lease with all rights of a third party beneficiary.
Section 10.6. Further Assurances and Corrective Instruments. The Authority and the
City will, from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description of the Equipment
leased (or intended so to be) under the Equipment Lease or the Leased Real Property leased (or
intended so to be) under the Project Lease or for carrying out the expressed intention of this
Agreement or either Lease.
Section 10.7. Execution in Counterparts. This Agreement, the Equipment Schedule and
the Project Schedule may be executed in several counterparts, each of which will be an original
and all of which will constitute but one and the same instrument.
Section 10.8. Applicable Law. This Agreement and each Lease is governed by and
construed in accordance with the laws of the State of California.
Section 10.9. Authority and City Representatives. Whenever under the provisions of this
Agreement or either Lease the approval of the Authority or the City is required, or the Authority
or the City is required to take some action at the request of the other, such approval or such
request will be given for the Authority by an authorized officer, employee or other representative
of the Authority designated and identified to the City (in form and substance acceptable to the
City) for such purpose and for the City by an authorized official, employee or other
representative of the City designated and identified to the Authority (in form and substance
acceptable to the Authority) for such purpose, and any party hereto will be authorized to rely
upon any such approval or request.
Section 10.10. Captions. The captions or headings in this Agreement or either Lease are
for convenience only and in no way define, limit or describe the scope or intent of any provisions
or sections of this Agreement or either Lease.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to
be executed in their respective names by their duly authorized officers, all as of the date first
above written.
CITY OF PALM SPRINGS FINANCING AUTHORITY,
as Lessor
By
Name
Title
CITY OF PALM SPRINGS, CALIFORNIA, as Lessee
By
Name
Title
Attest:
Name:
Title:
Signature Page to Lease Agreement 74
EXHIBIT A
FORM OF EQUIPMENT SCHEDULE
Re: Lease Agreement
Dated as of June 1, 2013
between
City of Palm Springs Financing Authority, as lessor,
and
City of Palm Springs, California, as lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them in the
above-referenced Lease Agreement(the "Agreement").
2. Equipment. The following equipment and other property constitutes the Equipment
hereby included under this Equipment Schedule entered into pursuant to the Agreement and to be
acquired and installed at the City's Municipal Central Plant located at in
Palm Springs, California:
[Equipment description to be provided.]
3. Payment Schedule.
(a) Lease Payment Commencement Date. The Lease Payment Commencement Date is
the date on which all of the Equipment is substantially available for the City's beneficial use and
enjoyment or April 1, 2015, whichever is later, which is the date the City becomes obligated to
commence payment of Equipment Lease Payments in accordance with the Equipment Lease
Payment Schedule attached hereto as Attachment A4. Prior to the Lease Payment
Commencement Date, the interest component of Equipment Lease Payments shown on the
Equipment Lease Payment Schedule shall be paid from amounts on deposit in the Equipment
Lease Account in the Capitalized Interest Fund under the Escrow Agreement.
(b) Equipment Lease Payments. The Equipment Lease Payments shall be in such
amounts and payable on such dates as set forth in the Equipment Lease Payment Schedule
attached to this Equipment Schedule as Attachment A-1. Lease Payments payable by the City
shall commence on the Lease Payment Commencement Date and prior thereto shall be paid from
amounts in the Equipment Lease Account in the Capitalized Interest Fund.
4. Lease of the Equipment. For and in consideration of the application by the
Authority of funds in accordance with Section 3.1(a) of the Agreement and the beneficial use and
enjoyment of the Equipment to be acquired and installed with the Equipment Lease Assignment
Proceeds as provided in the Equipment Lease and the Escrow Agreement, the City hereby leases
from the Authority the Equipment. For and in consideration of the Equipment Lease Payments
to be paid by the City under the Equipment Lease, the Authority hereby leases the Equipment to
the City, upon the terms and conditions set forth in the Equipment Lease created hereunder.
75
A-1
5. Representations, Warranties and Covenants. The City hereby represents, warrants
and covenants that its representations, warranties and covenants set forth in the Agreement are
true and correct on the Funding Date. The City further represents and warrants that no material
adverse change in the City's financial condition has occurred since June 30, 2012 (i.e., the end
date of its last audited annual financial statements).
6. Incorporation of the Agreement by Reference. The terms and provisions of the
Agreement (other than to the extent that they relate solely to the Project Schedule or the Project
therein described) are hereby incorporated into this Equipment Schedule by reference and made
a part hereof, and thereby create the separate Equipment Lease under the Agreement.
7. Equipment Lease Assignment Proceeds. The Equipment Lease Assignment
Proceeds equal $ and shall be deposited and applied as provided in Section 3.1(a)
of the Agreement.
8. Equipment Lease Term. The Equipment Lease Term shall be the period set forth in
Section 4.2(a) of the Agreement.
Dated: June , 2013.
LESSOR: LESSEE:
CITY OF PALM SPRINGS FINANCING AUTHORITY CITY OF PALM SPRINGS,CALIFORNIA
By By
Title Title
Attest:
By
Title
Counterpart No. of 3 manually executed and serially numbered counterparts. To
the extent that this Equipment Lease constitutes chattel paper (as defined in the California
Commercial Code), no security interest herein may be created through the transfer or possession
of any Counterpart other than Counterpart No. 1.
A2 76
ATTACHMENT A-1 TO
EQUIPMENT SCHEDULE
EQUIPMENT LEASE PAYMENT SCHEDULE
LEASE LEASE INTEREST PRINCIPAL
PAYMENT PAYMENT COMPONENT COMPONENT
DATE AMOUNT
77
EXHIBIT B
FORM OF PROJECT SCHEDULE
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall,A Professional Law Corporation
650 California Street, 18th Floor
San Francisco,California 94108
Attention:
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO
SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT
FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
Re: Lease Agreement
Dated as of June 1, 2013
between
City of Palm Springs Financing Authority, as lessor,
and
City of Palm Springs, California, as lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them in the
above-referenced Lease Agreement(the "Agreement").
2. The Project. The project financed under this Project Schedule consists of the
acquisition and installation of certain lighting, mechanical, utility, water and other energy
conservation measures on and to certain of the City's public buildings and other facilities, as
more specifically described in the Vendor Agreement.
3. Lease of Leased Real Property. For and in consideration of the Project Lease
Payments to be paid by the City under the Project Lease, the Authority hereby leases the Leased
Real Property to the City, and the City hereby leases the Leased Real Property from the
Authority, upon the terms and conditions set forth in the Project Lease created hereunder. The
Leased Real Property consists of the Site described in Attachment B-2 attached hereto and the
buildings, facilities and other improvements located on the Site that consist generally of the
James O. Jessie Desert Highland Unity Center.
4. Project Lease Payment Schedule.
(a) Lease Payment Commencement Date. The Lease Payment Commencement Date is
the effective date of the Site Lease and the Project Lease created under this Project Schedule,
which is the date the City becomes obligated to commence payment of Project Lease Payments
in accordance with the Project Lease Payment Schedule attached hereto as Attachment A-1.
Prior to April 15, 2015, the interest component of Project Lease Payments shall be paid from
B-1 78
amounts on deposit in the Project Lease Account in the Capitalized Interest Fund under the
Escrow Agreement.
(b) Project Lease Payments. The Project Lease Payments shall be in such amounts and
payable on such dates as set forth in the Project Lease Payment Schedule attached to this Project
Schedule as Attachment B-1. Project Lease Payments payable by the City shall commence on
the Lease Payment Commencement Date.
5. Representations, Warranties and Covenants. The City hereby represents, warrants
and covenants that its representations, warranties and covenants set forth in the Agreement are
true and correct on the Funding Date. The City further represents and warrants that no material
adverse change in the City's financial condition has occurred since June 30, 2012 (i.e., the end
date of its last audited annual financial statements).
6. Incorporation of the Agreement by Reference. The terms and provisions of the
Agreement (other than to the extent that they relate solely to the Equipment Schedule or the
Equipment therein described) are hereby incorporated into this Project Schedule by reference and
made a part hereof, and thereby create the separate Project Lease under the Agreement.
7. Project Lease Assignment Proceeds. The Project Lease Assignment Proceeds
equal S and shall be deposited and applied as provided in Section 3.1(b) of the
Agreement.
8. Project Lease Term. The Project Lease Term shall be the period set forth in
Section 4.2(b) of the Agreement.
Dated: June_, 2013.
LESSOR: LESSEE:
CITY OF PALM SPRINGS FINANCING AUTHORITY CITY OF PALM SPRINGS,CALIFORNIA
By By
Title Title
Attest:
By
Title
79
B-2
ATTACHMENT B-1 TO
PROJECT SCHEDULE
PROJECT LEASE PAYMENT SCHEDULE
LEASE LEASE INTEREST PRINCIPAL
PAYMENT PAYMENT COMPONENT COMPONENT
DATE AMOUNT
V
ATTACHMENT 14-2 TO
PROJECT SCHEDULE
DESCRIPTION OF SITE
The Site consists of the land located in the County of Riverside, State of California,
which is described as follows, including all buildings, improvements and facilities at any time
situated thereon:
81
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On June , 2013, before me, (Notary Public),
personally appeared
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person 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.
Notary's Signature (Seal)
82
ACKNOWLEDGEMENT OF C17T OF PALM SPRINGS FINANCING A UTHOR7TY,AS LESSOR
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On June _, 2013, before me, (Notary Public),
personally appeared
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person 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.
Notary's Signature (Seal)
ACKNOWLEDGEMENT OFCLTR'OFPALMSPRINGS,CALIFORNIA,ASLERREE 83
PROJECT SCHEDULE TO LEASE AGREEMENT BETWEEN THE
CITY OF PALM SPRINGS FINANCING AUTHORITY,AS LESSOR,
AND
CITY OF PALM SPRINGS,CALIFORNIA,AS LESSEE
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Project Schedule to that
certain Lease Agreement, dated as of June 1, 2013, between the City of Palm Springs Financing
Authority, as lessor, and the City of Palm Springs, California, as lessee (the "City"), is hereby
accepted by the undersigned officer on behalf of the City pursuant to authority conferred by
resolution of the City Council of the City adopted on , 2013, and the City consents to
recordation thereof by its duly authorized officer.
Dated June , 2013.
CITY OF PALM SPRINGS,CALIFORNIA
By
Name:
Title:
84
ASSIGNMENT AGREEMENT FOR EQUIPMENT LEASE
This ASSIGNMENT AGREEMENT FOR EQUIPMENT LEASE (this "Equipment Lease
Assignment") is made and entered into on , 2013, by and between the CITY OF PALM
SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized and existing
under the laws of the State of California (the "Authority"), and GREEN CAMPUS PARTNERS,LLC,
a Delaware limited liability company, as assignee (the `Assignee
BACKGROUND:
In the joint and mutual exercise of their powers, in consideration of the mutual covenants
herein contained, and for other valuable consideration, the parties hereto recite and agree as
follows:
1. The City of Palm Springs, California (the "City") wishes to finance the
demolition and replacement of the City's existing Municipal Central Plant cogeneration
system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and
upgrades and related improvements (the "Equipment").
2. In order to obtain funds to finance the Equipment, the City has agreed to
lease from the Authority and the Authority has agreed to arrange for and lease to the City
the Equipment pursuant to that certain Equipment Schedule dated , 2013 to that
certain Lease Agreement dated as of 1, 2013 (such Equipment Schedule and the
terms of such Lease Agreement incorporated therein by reference being herein
collectively referred to as the "Equipment Lease").
3. Under the Equipment Lease, the City is obligated to pay quarterly lease
payments (the "Equipment Lease Payments") in consideration of the lease by it of the
Equipment thereunder.
4. The Authority wishes to assign its rights under the Equipment Lease,
including but not limited to its right to receive and enforce the Equipment Lease
Payments, to the Assignee for the purpose of providing the funds required for the
financing of the Equipment.
5. Each of the parties has authority to enter into this Equipment Lease
Assignment, and has taken all actions necessary to authorize its officers to execute it.
AGREEMENT:
In consideration of the material covenants contained in this Equipment Lease
Assignment, the parties hereto hereby formally covenant, agree and bind themselves as follows:
3409732.01.Ol.doe 8 5
2208544
Section 1. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties to the Assignee as of
the date of this Equipment Lease Assignment:
(a) Due Organization and Existence. The Authority is a joint exercise of
powers authority duly organized and existing under the laws of the State of California,
has full legal right, power and authority to enter into the Equipment Lease and this
Equipment Lease Assignment and to carry out and consummate all transactions
contemplated hereby and thereby, and by proper action the Authority has duly authorized
the execution and delivery of the Equipment Lease and this Equipment Lease
Assignment.
(b) Due Execution. The representatives of the Authority executing the
Equipment Lease and this Equipment Lease Assignment are fully authorized to execute
the same under official action taken by the governing board of the Authority.
(c) Valid, Binding and Enforceable Obligations. The Equipment Lease and
this Equipment Lease Assignment have been duly authorized, executed and delivered by
the Authority and constitute the legal, valid and binding agreements of the Authority,
enforceable against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Equipment Lease and this
Equipment Lease Assignment, the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms and conditions hereof,
do not and will not conflict with or constitute a violation or breach of or default(with due
notice or the passage of time or both) under any applicable law or administrative rule or
regulation, or any applicable court or administrative decree or order, or any indenture,
mortgage, deed of trust, lease, contract or other agreement or instrument to which the
Authority is a party or by which it or its properties are otherwise subject or bound, or
result in the creation or imposition of any prohibited lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Authority, which conflict,
violation, breach, default, lien, charge or encumbrance would have consequences that
would materially and adversely affect the consummation of the transactions contemplated
by the Equipment Lease and this Equipment Lease Assignment or the financial condition,
assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder
of any indebtedness of the Authority, and no consent, permission, authorization, order or
license of, or filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of the Equipment Lease or this Equipment
Lease Assignment, or the consummation of any transaction herein or therein
contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmental
authority pending or, to the knowledge of the Authority after reasonable investigation,
86
-2-
threatened against or affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its interests, would have a
material and adverse effect upon the consummation of the transactions contemplated by
or the validity of the Equipment Lease or this Equipment Lease Assignment, or upon the
financial condition, assets, properties or operations of the Authority, and the Authority is
not in default with respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or other governmental authority, which default
might have consequences that would materially and adversely affect the consummation
of the transactions contemplated by the Equipment Lease or this Equipment Lease
Assignment or the financial condition, assets, properties or operations of the Authority.
Section 2. Assignment. The Authority hereby assigns to the Assignee all of the
Authority's rights under the Equipment Lease (excepting only the Authority's rights under
Sections 7.3 and 8.4 of the Equipment Lease), including but not limited to:
(a) the right to receive and collect all of the Equipment Lease Payments from
the City under the Equipment Lease,
(b) the right to receive and collect any proceeds of any insurance maintained
thereunder with respect to the Equipment,
(c) the right to exercise such rights and remedies conferred on the Authority
under the Equipment Lease as may be necessary or convenient (i)to enforce payment of
the Equipment Lease Payments and any amounts required to be applied to the
prepayment of the Equipment Lease Payments, or (ii) otherwise to protect the interests of
the Assignee in the event of a default by the City under the Equipment Lease, and
(d) all right, title and interest of the Authority in and to the Equipment Lease
Account in the Equipment Fund and the Equipment Lease Account in the Capitalized
Interest Fund, each of which has been established under the Escrow Agreement with
respect to the Equipment Lease.
The assignment made under this Section 2 is absolute and irrevocable, and without
recourse to the Authority.
Section 3. Acceptance. The Assignee hereby accepts the assignments made herein for
the purpose of securing the payments due under the Equipment Lease to, and the rights under the
Equipment Lease of, the Authority.
Section 4. Consideration; Deposit of Funds. In consideration of the assignment to the
Assignee of the Equipment Lease Payments and certain other rights of the Authority under
Section 2, the Assignee hereby agrees to deposit or cause to be deposited on the Funding Date
the amount of $ with , as escrow agent (the "Escrow Agent")
under that certain Escrow Agreement dated as of 1, 2013 (the "Escrow
Agreement"), among the City, the Assignee, the Project Lease Assignee (as defined in the
Escrow Agreement) and the Escrow Agent. Of this amount, the City will cause the Escrow
3_ 87
Agent to deposit (a) $ into the Equipment Lease Account in the Equipment Fund to be
applied to pay Delivery Costs with respect to the Equipment Lease to the persons entitled thereto
pursuant to the Escrow Agreement; (b) $ into the Equipment Lease Account in the
Capitalized Interest Fund to be applied, without further direction by the City, to pay the interest
component of Equipment Lease Payments that accrues and becomes payable from and after the
Funding Date to (and including) January 1, 2015; and (c) $ into the Equipment
Lease Account in the Equipment Fund to be applied at the written direction of the City to pay
Equipment Costs pursuant to the Escrow Agreement.
Section 5. Execution in Counterparts. This Equipment Lease Assignment may be
executed in any number of counterparts, each of which shall be deemed to be an original but all
together shall constitute but one and the same agreement. It is also agreed that separate
counterparts of this Equipment Lease Assignment may be separately executed by the Assignee
and the Authority, both with the same force and effect as though the same counterpart had been
executed by the Assignee and the Authority.
Section 6. Defined Terms. All capitalized terms used in this Equipment Lease
Assignment and not otherwise defined have the respective meanings given those terms in the
Equipment Lease.
Section 7. Binding Effect. This Equipment Lease Assignment inures to the benefit of
and binds the Authority and the Assignee, and their respective successors and assigns, subject,
however, to the limitations contained herein.
Section 8. Governing Law. This Equipment Lease Assignment shall be construed in
accordance with and governed by the Constitution and laws of the State of California.
88
-4-
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement for
Equipment Lease by their officers thereunto duly authorized as of the day and year first written
above.
CITY OF PALM SPRINGS FINANCING AUTHORITY,
as Assignor
By
Name:
Title:
GREEN CAMPUS PARTNERS,LLC,
as Assignee
By
Name:
Title:
89
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On , 2013, before me, (Notary Public),
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person 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.
Notary's Signature (Seal)
90
A CKNGWLEDGEMFN]'of CLTY OF PALM SPNNGS FINANCING AuTHGFUTY
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF NEW JERSEY
COUNTY OF MIDDLESEX
On , 2013, before me, (Notary Public),
personally appeared
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of New Jersey that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature (Seal)
91
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Chapman and Cutler LLP
595 Market Street,26th Floor
San Francisco,California 94105-2839
Attention: Darrell R. `Buzz"Larsen
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES TINDER SECTION 27383 OF THE CALIFORNIA
GOVERNMENT CODE.
ASSIGNMENT AGREEMENT FOR PROJECT LEASE
This ASSIGNMENT AGREEMENT FOR PROJECT LEASE (this "Project Lease Assignment") is
made and entered into on , 2013, by and between the CITY OF PALM SPRINGS
FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the
laws of the State of California (the "Authority"), and GREEN CAMPUS PARTNERS, LLC, a
Delaware limited liability company, as assignee (the "Assignee
BACKGROUND:
In the joint and mutual exercise of their powers, in consideration of the mutual covenants
herein contained, and for other valuable consideration, the parties hereto recite and agree as
follows:
1. The City of Palm Springs, California (the "City") wishes to finance the
acquisition and installation of certain lighting, mechanical, utility, water and other energy
conservation measures on and to certain of the City's public buildings and other facilities
(the "Project").
2. In order to obtain funds to finance the Project, the City has agreed to lease
to the Authority the land and buildings, facilities and other improvements thereon which
constitute the City's James O. Jessie Desert Highland Unity Center, which is located at
in Palm Springs, California, and is more particularly described in
Appendix A attached hereto and by this reference incorporated herein (such land and
buildings, facilities and other improvements thereon being herein referred to as the
"Leased Real Property"), under a Site and Facility Lease dated as of 1, 2013 and
recorded concurrently herewith, between the City as lessor and the Authority as lessee,
and the Authority has agreed to lease the Leased Real Property back to the City pursuant
to that certain Project Schedule dated , 2013 to that certain Lease Agreement
dated as of 1, 2013 (such Project Schedule and the terms of such Lease
Agreement incorporated therein by reference being herein collectively referred to as the
"Project Lease"), which Project Schedule has been recorded concurrently herewith,
between the Authority as lessor and the City as lessee.
3409050.01.0l.doc 92
2208544
3. Under the Project Lease, the City is obligated to pay quarterly lease
payments (the "Project Lease Payments") in consideration of the lease by it of the
Leased Real Property thereunder.
4. The Authority wishes to assign its rights under the Site Lease under the
Project Lease as sublessor to the City of the Leased Real Property, including but not
limited to its right to receive and enforce the Project Lease Payments, to the Assignee for
the purpose of providing the funds required for the financing of the Project.
5. Each of the parties has authority to enter into this Project Lease
Assignment, and has taken all actions necessary to authorize its officers to execute it.
AGREEMENT:
In consideration of the material covenants contained in this Project Lease Assignment,
the parties hereto hereby formally covenant, agree and bind themselves as follows:
Section 1. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties to the Assignee as of
the date of this Project Lease Assignment:
(a) Due Organization and Existence. The Authority is a joint exercise of
powers authority duly organized and existing under the laws of the State of California,
has full legal right, power and authority to enter into the Project Lease, the Site Lease and
this Project Lease Assignment and to carry out and consummate all transactions
contemplated hereby and thereby, and by proper action the Authority has duly authorized
the execution and delivery of the Project Lease, the Site Lease and this Project Lease
Assignment.
(b) Due Execution. The representatives of the Authority executing the Project
Lease, the Site Lease and this Project Lease Assignment are fully authorized to execute
the same under official action taken by the governing board of the Authority.
(c) Valid, Binding and Enforceable Obligations. The Project Lease, the Site
Lease and this Project Lease Assignment have been duly authorized, executed and
delivered by the Authority and constitute the legal, valid and binding agreements of the
Authority, enforceable against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Project Lease, the Site
Lease and this Project Lease Assignment, the consummation of the transactions herein
and therein contemplated and the fulfillment of or compliance with the terms and
conditions hereof, do not and will not conflict with or constitute a violation or breach of
or default (with due notice or the passage of time or both) under any applicable law or
administrative rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Authority is a party or by which it or its properties are otherwise
-2- 93
subject or bound, or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the
Authority, which conflict, violation, breach, default, lien, charge or encumbrance would
have consequences that would materially and adversely affect the consummation of the
transactions contemplated by the Project Lease, the Site Lease and this Project Lease
Assignment or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder
of any indebtedness of the Authority, and no consent, permission, authorization, order or
license of, or filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of the Project Lease, the Site Lease or this
Project Lease Assignment, or the consummation of any transaction herein or therein
contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or other governmental
authority pending or, to the knowledge of the Authority after reasonable investigation,
threatened against or affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its interests, would have a
material and adverse effect upon the consummation of the transactions contemplated by
or the validity of the Project Lease, the Site Lease or this Project Lease Assignment, or
upon the financial condition, assets, properties or operations of the Authority, and the
Authority is not in default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or other governmental authority,
which default might have consequences that would materially and adversely affect the
consummation of the transactions contemplated by the Project Lease, the Site Lease or
this Project Lease Assignment or the financial condition, assets, properties or operations
of the Authority.
Section 1. Assignment. The Authority hereby assigns to the Assignee all of the
Authority's rights under the Project Lease as sublessor of the Leased Real Property (excepting
only the Authority's rights under Sections 5.10, 7.3 and 8.4 of the Project Lease) and as lessee of
the Leased Real Property under the Site Lease, including but not limited to:
(a) the right to receive and collect all of the Project Lease Payments from the
City under the Project Lease,
(b) the right to receive and collect any proceeds of any insurance maintained
thereunder with respect to the Leased Real Property, or any eminent domain award (or
proceeds of sale under threat of eminent domain) paid with respect to the Leased Real
Property,
(c) the right to exercise such rights and remedies conferred on the Authority
under the Project Lease as may be necessary or convenient (i) to enforce payment of the
Project Lease Payments and any amounts required to be applied to the prepayment of the
3- 94
Project Lease Payments, or (ii) otherwise to protect the interests of the Assignee in the
event of a default by the City under the Project Lease, and
(d) all right, title and interest of the Authority in and to the Project Lease
Account in the Project Fund and the Project Lease Account in the Capitalized Interest
Fund, each of which has been established under the Escrow Agreement with respect to
the Project Lease.
The assignment made under this Section 2 is absolute and irrevocable, and without
recourse to the Authority.
Section 3. Acceptance. The Assignee hereby accepts the assignments made herein for
the purpose of securing the payments due under the Project Lease to, and the rights under the
Project Lease of,the Authority.
Section 4. Consideration; Deposit of Funds. In consideration of the assignment to the
Assignee of the Project Lease Payments and certain other rights of the Authority under Section 2,
the Assignee hereby agrees to deposit or cause to be deposited on the Funding Date the amount
of $ with , as escrow agent (the "Escrow Agent") under that
certain Escrow Agreement dated as of 1, 2013 (the "Escrow Agreement"), among
the City, the Assignee, the Equipment Lease Assignee (as defined in the Escrow Agreement) and
the Escrow Agent. Of this amount, the City will cause the Escrow Agent to deposit (a) $
into the Project Lease Account in the Project Fund to be applied to pay Delivery Costs with
respect to the Project Lease to the persons entitled thereto pursuant to the Escrow Agreement; (b)
$ into the Project Lease Account in the Capitalized Interest Fund to be applied, without
further direction by the City, to pay the interest component of Project Lease Payments that
accrues and becomes payable from and after the Funding Date to (and including) January 1,
2015; and(c) $ into the Project Lease Account in the Project Fund to be applied at
the written direction of the City to pay Project Costs pursuant to the Escrow Agreement.
Section 5. Execution in Counterparts. This Project Lease Assignment may be
executed in any number of counterparts, each of which shall be deemed to be an original but all
together shall constitute but one and the same agreement. It is also agreed that separate
counterparts of this Project Lease Assignment may be separately executed by the Assignee and
the Authority, both with the same force and effect as though the same counterpart had been
executed by the Assignee and the Authority.
Section 6. Defined Terms. All capitalized terns used in this Project Lease Assignment
and not otherwise defined have the respective meanings given those terns in the Project Lease.
Section 7. Binding Effect. This Project Lease Assignment inures to the benefit of and
binds the Authority and the Assignee, and their respective successors and assigns, subject,
however, to the limitations contained herein.
Section 8. Governing Law. This Project Lease Assignment shall be construed in
accordance with and governed by the Constitution and laws of the State of California.
4 95
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement for Project
Lease by their officers thereunto duly authorized as of the day and year first written above.
CITY OF PALM SPRINGS FINANCING AUTHORITY,
as Assignor
By
Name:
Title:
GREEN CAMPUS PARTNERS,LLC,
as Assignee
By
Name:
Title:
96
-5-
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On , 2013, before me, (Notary Public),
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person 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.
Notary's Signature (Seal)
97
ACKNOWLEDGEMENT OF C=OF PALM SPRINGS FINANCING AUTHORITY
ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF NEW JERSEY
COUNTY OF MIDDLESEX
On , 2013, before me, (Notary Public),
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of New Jersey that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary's Signature (Seal)
98
APPENDIX A
DESCRIPTION OF THE LEASED REAL PROPERTY
The Leased Real Property consists of the land located in the County of Riverside, State of
California, which is described as follows, including all buildings, improvements and facilities at
any time situated thereon:
99
Draft dated May 28, 2013
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Escrow Agreement"), dated as of June 1, 2013, is
entered into by and among GREEN CAMPUS PARTNERS, LLC, a Delaware limited liability
company (the "Equipment Lease Assignee"), GREEN CAMPUS PARTNERS, LLC, a Delaware
limited liability company (the "Project Lease Assignee"), the CITY OF PALM SPRINGS, a
municipal corporation and charter city duly organized and existing under the laws of the State of
California (the "City"), and Deutsche Bank Trust Company Americas, as escrow agent (the
"Escrow Agent").
Reference is made to that certain Lease Agreement dated as of June 1, 2013 (the
"Agreement"), between the City of Palm Springs Financing Authority, as lessor (the
"Authority"), and the City, as lessee, and (a) the Project Schedule dated June _, 2013 and
entered into by the Authority and the City pursuant thereto that incorporates by reference the
terms of the Agreement (collectively with such incorporated terms, the "Project Lease") and
relates to the financing of the acquisition and installation of lighting, mechanical, utility, water
and other energy conservation measures on and to certain of the City's public buildings and other
facilities (the "Project"); and (b) the Equipment Schedule dated June _, 2013 and entered into
by the Authority and the City pursuant thereto that incorporates by reference the terms of the
Agreement(collectively with such incorporated terms,the "Equipment Lease") and relates to the
financing of the demolition and replacement of the City's existing Municipal Central Plant
cogeneration system with a new 1.1 MW cogeneration plant, mechanical and electrical systems
and upgrades and related improvements (the "Equipment"). Reference is further made to (i)that
certain Assignment Agreement (Project Lease) dated June _, 2013 and between the Authority
and the Project Lease Assignee, under which the Authority has assigned certain of its rights
under the Project Lease to the Project Lease Assignee, including the right to receive Project
Lease Payments payable by the City under the Project Lease; and (ii) that certain Assignment
Agreement (Equipment Lease) dated June _, 2013 and between the Authority and the
Equipment Lease Assignee, under which the Authority has assigned certain of its rights under
the Equipment Lease to the Equipment Lease Assignee, including the right to receive Equipment
Lease Payments payable by the City under the Equipment Lease. It is a requirement of the
Project Lease that the funds for financing the Project and providing for payment of capitalized
interest during the installation period be deposited with the Escrow Agent hereunder for the
purpose of providing a mechanism for the application of such amounts to the payment of Project
Costs, Delivery Costs with respect to the Project Lease and such capitalized interest. It is further
a requirement of the Equipment Lease that the funds for financing the Equipment and providing
for payment of capitalized interest during the installation period be deposited with the Escrow
Agent hereunder for the purpose of providing a mechanism for the application of such amounts
to the payment of Equipment Costs, Delivery Costs with respect to the Equipment Lease and
such capitalized interest. Capitalized terms used in this Escrow Agreement and not otherwise
defined will have the respective meanings given such terms in the Project Lease and the
Equipment Lease (collectively,the "Leases
Escrow Agreement-Final 100
2208544
The parties agree as follows:
1. Payment of Delivery Costs. The City and the Assignee agree that (a) $ of
the amount deposited into the Project Lease Account in the Project Fund pursuant to Section 2(a)
hereof shall be used by the Escrow Agent for payment of Delivery Costs with respect to the
Project Lease to each payee listed as entitled to such payment in Schedule IA to this Escrow
Agreement and for which the Escrow Agent has received a written invoice; and (b) $
of the amount deposited into the Equipment Lease Account in the Project Fund pursuant to
Section 2(a) hereof shall be used by the Escrow Agent for payment of Delivery Costs with
respect to the Equipment Lease to each payee listed as entitled to such payment in Schedule lA
to this Escrow Agreement and for which the Escrow Agent has received a written invoice.
2. Creation of Project Fund, Capitalized Interest Fund and Accounts Therein.
(a) There is hereby created a special trust fund to be known as the "City of Palm Springs,
California, 2013 Project Fund" (the "Project Fund") to be held in trust by the Escrow Agent for
the purposes stated herein, for the benefit of the City, to be held, disbursed and returned in
accordance with the terms hereof. There is hereby created within the Project Fund a special trust
account to be known as the "Project Lease Account" and a separate special trust account to be
known as the "Equipment Lease Account. " On the date hereof, the City has caused (i) the
amount of$ to be transferred to the Escrow Agent for deposit into the Project Lease
Account in the Project Fund, and (ii) the amount of$ to be transferred to the Escrow
Agent for deposit into the Equipment Lease Account in the Project Fund.
(b) There is hereby created a special trust fund to be known as the "City of Palm
Springs, California, 2013 Capitalized Interest Fund" (the "Capitalized Interest Fund")to be held
in trust by the Escrow Agent for the purposes stated herein, for the benefit of the City, to be held,
disbursed and returned in accordance with the terms hereof. There is hereby created within the
Capitalized Interest Fund a special trust account to be known as the "Project Lease Account"
and a separate special trust account to be known as the "Equipment Lease Account. " On the date
hereof, the City has caused (i)the amount of$ to be transferred to the Escrow Agent
for deposit into the Project Lease Account in the Capitalized Interest Fund, and (ii)the amount of
$ to be transferred to the Escrow Agent for deposit into the Equipment Lease
Account in the Capitalized Interest Fund.
(c) The Escrow Agent shall invest and reinvest moneys on deposit in the Project Fund
and the Capitalized Interest Fund (including the Accounts in each thereof) in Qualified
Investments in accordance with written instructions received from the City. The City will be
solely responsible for ascertaining that all proposed investments and reinvestments are Qualified
Investments and that they comply with federal, state and local laws, regulations and ordinances
governing investment of such funds and for providing appropriate notice to the Escrow Agent for
the reinvestment of any maturing investment. Accordingly, neither the Escrow Agent, the
Project Lease Assignee nor the Equipment Lease Assignee has any responsibility for any
liability, cost, expense, loss or claim of any kind, directly or indirectly arising out of or related to
the investment or reinvestment of all or any portion of the moneys on deposit in the Project Fund
or the Capitalized Interest Fund, and the City agrees to and does hereby release the Escrow
Agent and the Project Lease Assignee and the Equipment Lease Assignee (collectively, the
2_ 101
"Assignees") from any such liability, cost, expenses, loss or claim. Interest on the Project Lease
Account and the Equipment Lease Account in the Project Fund will become part of such
respective Accounts, interest on the Project Lease Account and the Equipment Lease Account in
the Capitalized Interest Fund will become part of the Project Lease Account and the Equipment
Lease Account, respectively, in the Project Fund, and gains and losses on the investment of the
moneys on deposit in the Project Fund and the Capitalized Interest Fund will be borne by the
Project Fund and allocated pro rata to the Project Lease Account and the Equipment Lease
Account therein. For purposes of this Escrow Agreement, the term "Qualified Investments"
means any investments which meet the requirements of California Government Code
Sections 53600 et seq.
(d) Unless the Project Fund is earlier terminated in accordance with the provisions of
paragraph(e) below, amounts in the Project Fund will be disbursed by the Escrow Agent in
payment of amounts described in Section 3 upon receipt of written authorization(s) from the City
and approved by the Project Lease Assignee with respect to disbursements from the Project
Lease Account in the Project Fund and by the Equipment Lease Assignee with respect to
disbursements from the Equipment Lease Account in the Project Fund, as more fully described
in Section 3. If the amounts in either Account in the Project Fund are insufficient to pay such
amounts, the City will provide any balance of the funds needed to complete the Project and to
complete the acquisition and installation of the Equipment, as the case may be.
(e) The Project Fund will be terminated at the earliest of (i)the final distribution of
amounts in the Project Fund, (ii)written notice given by the City to the Escrow Agent under
Section 3.4 of the Leases requesting the Escrow Agent to close the Project Fund and apply all
Excess Project Funds and all Excess Equipment Funds in accordance with such Section 3.4 or
(iii) written notice given by either Assignee of the occurrence of a default or termination of the
related Lease.
(f) The Escrow Agent shall, without further direction from the City, disburse funds
from (i) the Project Lease Account in the Capitalized Interest Fund to the Project Lease Assignee
in the amounts and on each of the Lease Payment Dates shown under the column titled "Interest
Component" in Attachment B-1 to the Project Lease for the period commencing on the Funding
Date and ending on January 1, 2015, to pay the interest component of Project Lease Payments
when due on such Lease Payment Dates; and (ii) the Equipment Lease Account in the
Capitalized Interest Fund to the Equipment Lease Assignee in the amounts and on each of the
Lease Payment Dates shown under the column titled "Interest Component" in Attachment A-1 to
the Equipment Lease for the period commencing on the Funding Date and ending on January 1,
2015, to pay the interest component of Equipment Lease Payments when due on such Lease
Payment Dates. On January 2, 2015, any amounts then on deposit in the Project Lease Account
or the Equipment Lease Account in the Capitalized Interest Fund shall be transferred to the
Project Lease Account and the Equipment Lease Account, respectively, in the Project Fund and
the Capitalized Interest Fund shall thereupon close;provided, however, that if the Project Fund is
terminated earlier as provided in paragraph (e) above, all amounts then on deposit in the
Capitalized Interest Fund shall be transferred to the Project Fund and applied as provided in
paragraph (e) above.
3_ 102
(g) The Escrow Agent may act in reliance upon any writing or instrument or signature
which it, in good faith, believes to be genuine and may assume the validity and accuracy of any
statement or assertion contained in such a writing or instrument. The Escrow Agent is not liable
in any manner for the sufficiency or correctness as to form, manner of execution, or validity of
any instrument nor as to the identity, authority, or right of any person executing the same; and its
duties hereunder will be limited to the receipt of such moneys, instruments or other documents
received by it as the Escrow Agent, and for the disposition of the same in accordance herewith.
(h) Unless the Escrow Agent is guilty of gross negligence or willful misconduct with
regard to its duties hereunder, the City agrees to and does hereby release and indemnify the
Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits or
proceedings at law or in equity, or any other expense, fees or charges of any character or nature,
which it may incur or with which it may be threatened by reason of its acting as the Escrow
Agent under this Escrow Agreement; and in connection therewith, does to the extent permitted
by law indemnify the Escrow Agent against any and all expenses; including reasonable
attorneys' fees and the cost of defending any action, suit or proceeding or resisting any claim.
(i) The Escrow Agent may consult with counsel of its own choice and will have full
and complete authorization and protection with the opinion of such counsel. The Escrow Agent
will otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or
omissions of any kind unless caused by its willful misconduct.
0) The City has no responsibility to reimburse the Escrow Agent for its costs and
expenses, including those of the Escrow Agent's attorneys, agents and employees, incurred in
connection with the administration of the Project Fund and the Capitalized Interest Fund and the
performance of the Escrow Agent's powers and duties hereunder.
3. Undertaking and Supervising the Project and Acquisition and Installation of the
Equipment.
(a) Vendor Contracts; Purchase Orders. The City will arrange for, supervise and
provide for, or cause to be supervised and provided for, the Project with moneys available in the
Project Lease Account in the Project Fund as herein provided, and the acquisition and
installation of the Equipment with moneys available in the Equipment Lease Account in the
Project Fund as herein provided. Neither of the Assignees nor the Authority has any liability
under any of the vendor contracts or purchase orders. The City will obtain all necessary permits
and approvals, if any, for the Project and the Equipment, and the acquisition, installation,
operation and maintenance thereof.
(b) Authorized Project Fund Disbursements. Disbursements from the Project Lease
Account and the Equipment Lease Account in the Project Fund will be made for the purpose of
paying (including the reimbursement to the City for advances from its own funds to accomplish
the purposes hereinafter described, but only so long as such reimbursement would not adversely
affect the excludability of the interest component of Lease Payments from gross income for
federal income tax purposes)the Project Costs and the Equipment Costs, respectively.
-4-
103
(c) Requisition Procedure. Prior to disbursement from either the Project Lease
Account or the Equipment Lease Account in the Project Fund there shall be filed with the
Escrow Agent a requisition for such payment from such Account in the form of Disbursement
Request attached hereto as Schedule 113. Each such requisition will be signed by the
or other authorized representative of the City(an "Authorized Representative").
4. Deposit to Project Fund and Capitalized Interest Fund. The Authority will cause
the proceeds realized pursuant to the Project Lease Assignment and the Equipment Lease
Assignment to be deposited with the Escrow Agent on the Funding Date for disbursement in
accordance with this Escrow Agreement. The City agrees to pay any costs with respect to the
Project and the Equipment in excess of amounts available therefor in the Project Lease Account
and the Equipment Lease Account,respectively, in the Project Fund.
5. Excess Project Funds and Excess Equipment Funds. Following the final
disbursement from the Project Lease Account in the Project Fund upon completion of the Project
and the final disbursement from the Equipment Lease Account in the Project Fund upon
completion of acquisition and installation of the Equipment (as the case may be), or termination
of the Project Fund as otherwise provided herein, the Escrow Agent shall transfer any remainder
from the applicable Account in the Project Fund to the Project Lease Assignee or the Equipment
Lease Assignee, as the case may be, for application in accordance with Section 3.4 of the
respective Leases.
6. Security Interest. The Escrow Agent and the City acknowledge and agree that the
Project Fund (including the Accounts therein), the Capitalized Interest Fund (including the
Accounts therein) and all proceeds of either thereof are being held by the Escrow Agent for
disbursement or return as set forth herein. The City hereby grants to the Assignees a first priority
perfected security interest in the Project Fund and the Capitalized Interest Fund, and all proceeds
of either thereof, and all investments made with any amounts in the Project Fund and the
Capitalized Interest Fund. If the Project Fund or the Capitalized Interest Fund, or any part of
either thereof, is converted to investments as set forth in this Escrow Agreement, such
investments will be made in the name of the Escrow Agent and the Escrow Agent hereby agrees
to hold such investments as bailee for the Assignees so that the Assignees are deemed to have
possession of such investments for the purpose of perfecting its security interest.
7. Control of Project Fund and Capitalized Interest Fund. In order to perfect the
Assignees' security interest by means of control in (i)the Project Fund and the Capitalized
Interest Fund established hereunder, (ii) all securities entitlements, investment property and other
financial assets now or hereafter credited to the Project Fund or the Capitalized Interest Fund,
(iii)all of the City's rights in respect of the Project Fund and the Capitalized Interest Fund, such
securities entitlements, investment property and other financial assets, and (iv) all products,
proceeds and revenues of and from any of the foregoing personal property (collectively, the
"Collateral"),the City and the Escrow Agent further agree as follows:
(a) All terms used in this Section 7 which are defined in the California
Commercial Code (the "Commercial Code") but are not otherwise defined herein will
5 104
have the meanings assigned to such terms in the Commercial Code, as in effect on the
date of this Escrow Agreement.
(b) The Escrow Agent will comply with all entitlement orders originated by
either Assignee with respect to the Collateral, or any portion of the Collateral, without
further consent by the City.
(c) The Escrow Agent hereby represents and warrants that (i)the records of
the Escrow Agent show that the City is the sole owner of the Collateral, (ii)the Escrow
Agent has not been served with any notice of levy or received any notice of any security
interest in or other claim to the Collateral, or any portion of the Collateral, other than the
Assignees' claim under this Escrow Agreement, and (iii)the Escrow Agent is not
presently obligated to accept any entitlement order from any person with respect to the
Collateral, except for entitlement orders that the Escrow Agent is obligated to accept
from the Authority under this Escrow Agreement and entitlement orders that the Escrow
Agent, subject to the provisions of paragraph(e) below, is obligated to accept from the
City.
(d) Without the prior written consent of the Assignees, the Escrow Agent will
not enter into any agreement by which the Escrow Agent agrees to comply with any
entitlement order of any person other than the Assignees or, subject to the provisions of
paragraph(e) below, the City, with respect to any portion or all of the Collateral. The
Escrow Agent will promptly notify the Assignees if any person requests the Escrow
Agent to enter into any such agreement or otherwise asserts or seeks to assert a lien,
encumbrance or adverse claim against any portion or all of the Collateral.
(e) Except as otherwise provided in this paragraph(e) and subject to
Section 1(c) hereof, the Escrow Agent may allow the City to effect sales, trades, transfers
and exchanges of Collateral within the Project Fund and the Capitalized Interest Fund,
but will not, without the prior written consent of the Assignees, allow the City to
withdraw any Collateral from the Project Fund or the Capitalized Interest Fund. The
Escrow Agent acknowledges that either Assignee reserves the right, by delivery of
written notice to the Escrow Agent, to prohibit the City from effecting any withdrawals
(including withdrawals of ordinary cash dividends and interest income), sales, trades,
transfers or exchanges of any Collateral held in the Project Fund or the Capitalized
Interest Fund. Further, the Escrow Agent hereby agrees to comply with any and all
written instructions delivered by either Assignee to the Escrow Agent (once it has had a
reasonable opportunity to comply therewith) and has no obligation to, and will not,
investigate the reason for any action taken by either Assignee, the amount of any
obligations of the City to either Assignee, the validity of any of either Assignee's claims
against or agreements with the City, the existence of any defaults under such agreements
or any other matter.
(f) The City hereby irrevocably authorizes the Escrow Agent to comply with
all instructions and entitlement orders delivered by either Assignee to the Escrow Agent.
6 105
(g) The Escrow Agent will not attempt to assert control, and does not claim
and will not accept any security or other interest in, any part of the Collateral, and the
Escrow Agent will not exercise, enforce or attempt to enforce any right of setoff against
the Collateral, or otherwise charge or deduct from the Collateral any amount whatsoever.
(h) The Escrow Agent and the City hereby agree that any property held in the
Project Fund or the Capitalized Interest Fund will be treated as a financial asset under
such section of the Commercial Code as corresponds with Section 8-102 of the Uniform
Commercial Code, notwithstanding any contrary provision of any other agreement to
which the Escrow Agent may be a parry.
(i) The Escrow Agent is hereby authorized and instructed, and hereby agrees,
to send to the Assignees at their respective addresses set forth in Section 9 below,
concurrently with the sending thereof to the City, duplicate copies of any and all monthly
Project Fund and Capitalized Interest Fund statements or reports issued or sent to the City
with respect to the Project Fund and the Capitalized Interest Fund.
8. USA PATRIOT ACT. The parties acknowledge that in order to help the United
States government fight the funding of terrorism and money laundering activities, pursuant to
Federal regulations that became effective on October 1, 2003 (Section 326 of the USA
PATRIOT Act) all financial institutions are required to obtain, verify, record and update
information that identifies each person establishing a relationship or opening an account. The
parties to this Agreement agree that they will provide to the Escrow Agent such information as it
may request, from time to time, in order for the Escrow Agent to satisfy the requirements of the
USA PATRIOT Act, including but not limited to the name, address, tax identification number
and other information that will allow it to identify the individual or entity who is establishing the
relationship or opening the account and may also ask for formation documents such as articles of
incorporation or other identifying documents to be provided.
9. Miscellaneous. This Escrow Agreement may not be amended except in writing
signed by the City, the Escrow Agent and the Assignees. This Escrow Agreement may be
executed in one or more counterparts, each of which will be deemed to be an original instrument
and each will have the force and effect of an original and all of which together constitute, and
will be deemed to constitute, one and the same instrument. Notices hereunder will be made in
writing and will be deemed to have been duly given when personally delivered or when
deposited in the mail, first class postage prepaid, or delivered to an express carrier, charges
prepaid, or sent by facsimile with electronic confirmation, addressed to each party at its address
below:
If to the Escrow Agent: Deutsche Bank Trust Company
Americas
Attention:
Phone:
-7-
106
If to the City: City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, California 92262
Attention: City Manager
Phone: (760) 322-8362
If to the Project Lease Assignee: Green Campus Partners, LLC
Raritan Plaza I
110 Fieldcrest Avenue
Edison,New Jersey 08837
Attention: Michael Horkey
Phone: (732) 917-2304
If to the Equipment Lease Assignee: Green Campus Partners, LLC
Raritan Plaza I
110 Fieldcrest Avenue
Edison,New Jersey 08837
Attention: Michael Horkey
Phone: (732) 917-2304
-8-
107
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date
first above written.
CITY OF PALM SPRINGS, CALIFORNIA
By
Title:
Name:
GREEN CAMPUS PARTNERS,LLC,as Project
Lease Assignee
By
Name:
Title:
GREEN CAMPUS PARTNERS,LLC,as Equipment
Lease Assignee
By
Name:
Title:
Deutsche Bank Trust Company Americas, as
Escrow Agent
By
Name:
Title:
108
Signature Page to the Escrow Agreement
SCHEDULE IA
SCHEDULE OF DELIVERY COSTS
AUTHORIZED
PAYEE PURPOSE PAYMENT
109
A-1
SCHEDULEIB
FORM OF DISBURSEMENT REQUEST
Re: Lease Agreement dated as of June 1, 2013, between
City of Palm Springs, California, and
City of Palm Springs Finance Authority
In accordance with the terms of the Escrow Agreement dated as of June 1, 2013 (the
"Escrow Agreement") among Green Campus Partners, LLC, as project lease asssignee (the
"Project Lease Assignee"), Green Campus Partners, LLC, as equipment lease asssignee (the
"Equipment Lease Assignee"), City of Palm Springs, California (the "City"), and Deutsche
Bank Trust Company Americas, as escrow agent (the "Escrow Agent"), the undersigned hereby
requests the Escrow Agent pay the following persons the following amounts from the Project
Lease Account or the Equipment Lease Account(as described below) in the Project Fund created
under the Escrow Agreement(the "Project Fund") for the following purposes:
PAYEE'S NAME AND ADDRESS DOLLAR AMOUNT PURPOSE
The undersigned hereby certifies as follows:
(i) An obligation in the stated amount has been incurred by the City, and the
same is a proper charge against the Project Lease Account in the Project Fund for Project
Costs or the Equipment Lease Account in the Project Fund as described above and
provided in the Project Lease and the Equipment Lease, as applicable. Such obligation
either(a)has not been previously paid by the City, or(b)has been previously paid by the
City in an amount which is not less than the amount for which the City is requesting to be
reimbursed under this request. Attached hereto is the original invoice with respect to
such obligation or, if the City is requesting reimbursement, documentation evidencing
that the City has previously paid such obligation.
(ii) The undersigned, as Authorized Representative, has no notice of any
vendor's, mechanic's or other liens or rights to liens, chattel mortgages, conditional sales
contracts or security interest which should be satisfied or discharged before such payment
is made.
(iii) This requisition contains no item representing payment on account, or any
retained percentages which the City is, at the date hereof, entitled to retain.
110
B-1
(iv) The Leased Real Property is insured in accordance with the Project Lease
and the Equipment is insured in accordance with the Equipment Lease.
(v) No Event of Default, and no event which with notice or lapse of time, or
both, would become an Event of Default, under the Project Lease or the Equipment Lease
has occurred and is continuing at the date hereof.
(vi) No material adverse change in the District's financial condition has
occurred since the Funding Date.
Dated:
CITY OF PALM SPRINGS,CALIFORNIA
By
Name:
Title:
Disbursement of funds from the Project
Lease Account or the Equipment Lease
Account (as indicated above) in the Project
Fund in accordance with the foregoing
Disbursement Request hereby is authorized
GREEN CAMPUS PARTNERS,LLC,as Project
Lease Assignee (if applicable):
By:
Name:
Title:
GREEN CAMPUS PARTNERS,LLC,as
Equipment Lease Assignee (if
applicable):
By:
Name:
Title:
B_Z 11 1
PLACEMENT AGENT AGREEMENT
2013
City of Palm Springs
David H. Ready, City Manager
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
The undersigned, Green Campus Partners, LLC. (the "Placement Agent"), offers to enter
into the following agreement (this "Agreement") with the City of Palm Springs (the "City"),
which, upon acceptance by the City, will be binding upon the City and the Placement Agent.
The City acknowledges and agrees that (i) the placement of the Project Lease (as defined
below) pursuant to this Placement Agent Agreement is an arm's-length commercial transaction
between the City and the Placement Agent, (ii) in connection therewith and with the discussion,
undertakings and procedures leading up to the consummation of such transaction, the Placement
Agent is not acting as a fiduciary of or a financial advisor to the City, (iii) the Placement Agent
has not assumed (individually or collectively) an advisory or fiduciary responsibility in favor of
the City with respect to (iv) the offering of the Lease Financing or the process leading thereto
(whether or not the Placement Agent has advised or is currently advising the City on other
matters) or (v) any other obligation to the City except the obligations expressly set forth in this
Placement Agent Agreement, and (vi) the City has consulted with its own legal and other
professional advisors to the extent it deemed appropriate in connection with the offering of the
Project Lease.
Upon the terms and conditions and upon the basis of the representations, warranties and
agreements set forth herein, the Placement Agent and City hereby agree as follows:
1. Appointment of Placement Agent; Placement of the Project Lease.
(a) The City hereby appoints the Placement Agent to act, and the Placement
Agent hereby agrees to act, as the exclusive placement agent in connection with the private sale or
assignment of the City of Palm Springs Financing Authority's rights to received Lease Payments
under a Lease Agreement with the City, entered into for the purpose financing the acquisition and
installation of certain lighting, mechanical, utility, water and other energy conservation measures
on and to certain of the City's public buildings and other facilities and the replacement of the
City's existing Municipal Central Plant cogeneration system with a new 1.1 MW cogeneration
plant, mechanical and electrical systems and upgrades and related improvements (the "Project
Lease") and the Placement Agent hereby accepts such appointment. As compensation for its
services hereunder, the Placement Agent shall charge a flat fee of$100,000. At the closing of any
1 112
such sale,the City shall pay or cause to be paid such fee to the Placement Agent by wire transfer or
immediately available funds. The above fee does not include any services the Placement Agent
may render in the future to the City with respect to any offering or placement of municipal
securities other than the Project Lease.
(b) The Placement Agent will use its "best efforts" to place the Project Lease
with (1) a"qualified institutional buyer" as defined in Rule 144A promulgated under the Securities
Act of 1933, as in effect on the date hereof(the "Securities Act"); (2) an "accredited investor" as
defined in Sections 501(a)(1) through (3) of Regulation D promulgated under the Securities Act;
(3) an entity all of the investors in which are described in (1) or (2) above; or (4) a custodian or
trustee for a party described in (1), (2) or (3) above. This Agreement shall not give rise to any
expressed or implied commitment by the Placement Agent to purchase or place any of the Project
Lease.
2. Termination. The Placement Agent's authorization to carry out its duties
hereunder may be terminated by the City or the Placement Agent at any time with or without
cause, effective upon receipt of written notice to that effect by the other party; provided that the
Agreement shall be terminated on December 31, 2013.
3. Notices. Any notice or other communication to be given to any of the parties to
this Agreement may be given by delivering the same in writing as follows: to the City at 3200
Tahquitz Way, Palm Springs, CA 92262, attention: David Ready, City Manager; and to the
Placement Agent at Raritan Plaza I, 110 Fieldcrest Avenue, Edison,NJ 08837, , attention: James
F. Fuller.
4. Survival of Representations, Warranties and Agreements. This Agreement is
made solely for the benefit of the City and the Placement Agent, and no other person shall
acquire or have any right hereunder or by virtue hereof. All of the representations, warranties
and agreements of the City contained in this Agreement shall remain operative and in full force
and effect regardless of delivery of any payment for the Project Lease.
5. Counterparts. The Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the same instrument.
6. Effectiveness. This Agreement shall become effective upon the execution of the
acceptance hereof by a duly authorized signatory of the City, which acceptance hereof shall be
indicated on the signature page hereof, and shall be valid and enforceable as of the time of such
acceptance. This Agreement may be executed by facsimile transmission and in several
counterparts, each of which shall be regarded as an original and all of which shall constitute one
and the same document.
2 113
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Very truly yours,
GREEN CAMPUS PARTNERS, LLC
By:
Authorized Representative
Accepted and Agreed this_of June, 2013.
CITY OF PALM SPRINGS
By:
Authorized Representative
3 114
CITY OF PALM SPRINGS
PUBLIC NOTIFICATION
Date: June 19, 2013
Subject: APPROVE A LEASE AGREEMENT, AND RELATED LOAN
DOCUMENTS, WITH GREEN CAMPUS PARTNERS FINANCING TO
FUND ENERGY RELATED IMPROVEMENTS AT CITY FACILITIES
AFFIDAVIT OF POSTING
I, Kathie Hart, Chief Deputy City Clerk, of the City of Palm Springs, California, do hereby
certify that a copy of the attached Notice of Public Hearing was posted at City Hall,
3200 E. Tahquitz Canyon Drive, on the exterior legal notice posting board, and in the
Office of the City Clerk and at 5:32 p.m. on June 4, 2013.
I declare under penalty of perjury that the foregoing is true and correct.
�W y
Kathie Hart, CMC
Chief Deputy City Clerk
115
NOTICE OF PUBLIC HEARING
CITY COUNCIL AND FINANCING AUTHORITY
RESOLUTION ADOPTING CERTAIN FINDINGS AND APPROVE A LEASE
AGREEMENT, AND RELATED LOAN DOCUMENTS,
WITH GREEN CAMPUS PARTNERS FINANCING
TO FUND ENERGY RELATED IMPROVEMENTS AT CITY FACILITIES
NOTICE IS HEREBY GIVEN that the City Council and the Financing Authority, of the
City of Palm Springs, California, will hold a public hearing at its meeting of
June 19, 2013. The City Council meeting begins at 6:00 p.m., in the Council Chamber
at City Hall, 3200 E. Tahquitz Canyon Way, Palm Springs.
The purpose of this hearing is to take public comment and consider adopting a
resolution making certain findings and approving a Lease Agreement and related
necessary documents with the City of Palm Springs Financing Authority, whose rights to
receive lease payments under the Lease Agreement shall initially be assigned to Green
Campus Partners, LLC.
The proposed financing shall be in an amount not to exceed $18.5 million at an effective
interest rate not to exceed 4%, to fund the implementation of the energy related
improvements to City facilities in accordance with California Government Code Section
4217.10 to 4217.18.
REVIEW OF INFORMATION: The staff report and other supporting documents
regarding this matter are available for public review on or after, Thursday,
June 13, 2013, at City Hall between the hours of 8:00 a.m. to 6:00 p.m. Monday through
Thursday. Please contact the City Clerk's Department at (760) 323-8204 if you would
like to schedule an appointment to review these documents.
COMMENTS: Response to this notice can be made verbally at the Public Hearing
and/or in writing before the hearing. Written comments can be made to the City Council
and the Financing Authority by letter (for mail or hand delivery) to:
James Thompson, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Any challenge of the proposed project in court may be limited to raising only those
issues raised at the public hearing described in this notice, or in written correspondence
delivered to the City Clerk at, or prior, to the public hearing. (Government Code Section
65009(b)(2)).
An opportunity will be given at said hearing for all interested persons to be heard.
Questions regarding this case may be directed to Geoffrey Kiehl, Director of Finance, at
(760) 323-8229.
Si necesita ayuda con esta carta, porfavor [lame a la Ciudad de Palm Springs y puede
hablar con Nadine Fieger telefono (760) 323-8245.
.011"mes Thompson, City Clerk
ias
CITY OF PALM SPRINGS
NOTICE OF PUBLIC HEARING
Date: June 19, 2013
Subject: APPROVE A ENERGY SERVICE CONTRACT WITH CHEVRON
ENERGY SOLUTIONS COMPANY, AND RELATED LOAN DOCUMENTS
WITH GREEN CAMPUS PARTNERS FINANCING TO FUND ENERGY
RELATED IMPROVEMENTS AT CITY FACILITIES
AFFIDAVIT OF POSTING
I, Kathie Hart, Chief Deputy City Clerk, of the City of Palm Springs, California, do hereby
certify that a copy of the attached Notice of Public Hearing was posted at City Hall,
3200 E. Tahquitz Canyon Drive, on the exterior legal notice posting board, and in the
Office of the City Clerk and at 5:32 p.m. on June 4, 2013.
1 declare under penalty of perjury that the foregoing is true and correct.
Utz.w&
Kathie Hart, CMC
Chief Deputy City Clerk
NOTICE OF JOINT PUBLIC HEARING
CITY COUNCIL AND FINANCING AUTHORITY
CITY OF PALM SPRINGS
ENERGY SERVICE CONTRACT
CHEVERON ENERGY SOLUTIONS COMPANY/
GREEN CAMPUS PARTNERS FINANCING AGREEMENT
NOTICE IS HEREBY GIVEN that the City Council and the Financing Authority of the City of Palm
Springs, California, will hold a joint public hearing at its meeting of June 19, 2013. The City
Council meeting begins at 6:00 p.m., in the Council Chamber at City Hall, 3200 E. Tahquitz
Canyon Way, Palm Springs.
The purpose of this hearing is to take public comment and consider adopting a resolution making
certain findings, and approving an energy service contract with Chevron Energy Solutions
Company for the implementation of certain energy related improvements to City facilities in
accordance with California Government Code Sections 4217.10 through 4217.18. The City
Council shall adopt findings that provide, and the energy service contract shall require, that the
cost to the City to implement the energy related improvements per this contract will be less than
the anticipated marginal cost to the City of thermal, electrical, or other energy that would have
been consumed by the City in the absence of purchasing the energy improvements.
At the hearing, the City Council and Authority shall also take public comment, consider adopting a
resolution making certain findings and approving a Lease Agreement and related necessary
documents with the City of Palm Springs Financing Authority, whose rights to receive lease
payments under the Lease Agreement shall initially be assigned to Green Campus Partners,
LLC. The financing shall be in an amount not to exceed $18.5 million at an effective interest rate
not to exceed 4%, to fund the implementation of the energy related improvements to City facilities
in accordance with California Government Code Section 4217.10 to 4217.18.
REVIEW OF INFORMATION: The staff report and other supporting documents regarding this
matter are available for public review at the City Hall between the hours of 8:00 a.m. and 11:00
a.m. and 2:00 p.m. to 6:00 p.m. Monday through Thursday. Please contact the City Clerk's
Department at (760) 323-8204 if you would like to schedule an appointment to review these
documents.
COMMENTS: Response to this notice can be made verbally at the Public Hearing and/or in writing
before the hearing. Written comments can be made to the City Council by letter (for mail or hand
delivery) to:
James Thompson, City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Any challenge of the proposed project in court may be limited to raising only those issues raised at
the public hearing described in this notice, or in written correspondence delivered to the City Clerk
at, or prior, to the public hearing. (Government Code Section 65009(b)(2)).
An opportunity will be given at said hearing for all interested persons to be heard. Questions
regarding this case may be directed to Dave Barakian, Director of Public Works and City Engineer,
at (760) 323-8253 x8732.
Si necesita ayuda con esta carta, porfavor Ilame a la Ciudad de Palm Springs y puede hablar con
Nadine Fieger telefono (760) 323-8245.
mes Thompson, City Clerk