2004-3_CFD_Funding and Construiction Agreement Sewer

8/13/2019 2004-3_CFD_Funding and Construiction Agreement Sewer

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TABLE OF CONTENTS

ARTICLE I DEFINITIONS ................................................................................................. 1Section 1.1 Definitions .................................................................................................. 1

ARTICLE II FUNDING ........................................................................................................ 4Section 2.1 Proceedings ................................................................................................ 4Section 2.2 Bonds ......................................................................................................... 4Section 2.3 Proceeds ..................................................................................................... 4

ARTICLE III CONSTRUCTION OF PUBLIC FACILITIES ............................................... 5Section 3.1 Plans ........................................................................................................... 5Section 3.2 Construction ............................................................................................... 5Section 3.3 Relationship to Public Works .................................................................... 5Section 3.4 Contractor .................................................................................................. 5Section 3.5 Contracts and Change Orders .................................................................... 5Section 3.6 Construction Election ................................................................................. 5

ARTICLE IV ACQUISITION AND PAYMENT .................................................................. 6Section 4.1 Inspection ................................................................................................... 6Section 4.2 Agreement to Sell and Purchase Public Facilities ..................................... 6Section 4.3 Requests ..................................................................................................... 6Section 4.4 Payment Requests ...................................................................................... 7Section 4.5 Payment ...................................................................................................... 8Section 4.6 Restrictions on Payments ........................................................................... 9Section 4.7 Defective or Nonconforming Work ........................................................... 9Section 4.8 Modification of Discrete Components ....................................................... 9

ARTICLE V OWNERSHIP AND TRANSFER OF PUBLIC FACILITIES ....................... 9Section 5.1 Conveyance of Land and Easements for Receiving Agency ..................... 9Section 5.2 Evidence and Insurance ........................................................................... 10Section 5.3 Facilities Constructed on Private Lands .................................................. 10Section 5.4 Facilities Constructed on City Land ........................................................ 10Section 5.5 Maintenance and Warranties .................................................................... 10

ARTICLE VI INSURANCE ................................................................................................. 11Section 6.1 Requirements ........................................................................................... 11Section 6.2 Evidence of Insurance .............................................................................. 11


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ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS ................... 11Section 7.1 Covenants and Warranties of the Owner .................. ............................... 11Section 7.2 Indemnification and Hold Harmless ........................................................ 12

ARTICLE VIII GENERAL ..................................................................................................... 12Section 8.1 Consent .................................................................................................... 12Section 8.2 Liability of the City .................................................................................. 12Section 8.3 Audit ........................................................................................................ 13Section 8.4 Fees .......................................................................................................... 13Section 8.5 Notices ..................................................................................................... 13Section 8.6 Severability .............................................................................................. 13Section 8.7 Successors and Assigns ............................................................................ 13Section 8.8 Other Agreements .................................................................................... 14Section 8.9 Waiver ...................................................................................................... 14Section 8.10 Merger ...................................................................................................... 14Section 8.11 Parties in Interest ...................................................................................... 14Section 8.12 Amendment .............................................................................................. 14Section 8.13 Counterparts ............................................................................................. 14Section 8.14 Governing Laws ....................................................................................... 14

EXHIBIT A - ELIGIBLE PUBLIC FACILITIES LIST ............................................................ A-1EXHIBIT B - PAYMENT REQUEST NO. __ ..................................................................... B-1EXHIBIT C - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT .................... C-1

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THIS FUNDING, CONSTRUCTION AND ACQUISITION AGREEMENT, dated as ofSeptember 1, 2005 is by and between the City of Indio, a municipal corporation and a generallaw city (the City ) and Indio Land Ventures, LLC, a California limited liability company (theOwner ).

RECITALSWHEREAS, the City has undertaken proceedings to form the City of Indio Community

Facilities District No. 2004-3 (Terra Lago) (the District ), authorize the levy of special taxeswithin the District, and authorize the issuance of the Bonds pursuant to the Act to fund theacquisition and construction of the Public Facilities and related costs. The City will use theproceeds of the Bonds to, among other things, finance the Actual Cost of the Public Facilities.

WHEREAS, the Public Facilities are within the vicinity of or of benefit to the City, andthe City and the Owner will benefit from a coordinated plan of financing, design, engineeringand construction of the Public Facilities and the development of the land.

WHEREAS, the Owner and the City wish to finance the acquisition of the PublicFacilities and the payment therefor by entering into this Agreement for the acquisition of thePublic Facilities and payment for Discrete Components thereof as shown in Exhibit A hereto (asit may be amended and supplemented) with funds in the Improvement Fund.

WHEREAS, the City and the Receiving Agencies have determined that they will obtainno advantage from undertaking the construction of the Public Facilities, and that the provisionsof this Agreement require that the Public Facilities constructed by the Owner be constructed as ifthey had been constructed under the direction and supervision of the Receiving Agency.Notwithstanding the foregoing, upon mutual agreement of the City, the Owner and the ReceivingAgency, the City or its designee or Receiving Agency or its designee may construct any of thePublic Facilities, financed in whole or in part with funds in the Improvement Fund, as set forth inSection 4.6 below.

WHEREAS, in consideration of the mutual promises and covenants set forth herein, andfor other valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the City and the Owner agree that the foregoing recitals, as applicable to each, are true andcorrect and further make the agreements set forth herein.

ARTICLE IDEFINITIONS

Section 1.1 Definitions. The following terms shall have the meanings ascribed tothem in this Section 1.1 for purposes of this Agreement. Unless otherwise indicated, any otherterms, capitalized or not, when used herein shall have the meanings ascribed to them in the FiscalAgent Agreement (as hereinafter defined).

Acceptance Date means the date the Receiving Agency approves a Payment Request.


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Acceptable Title means title to land or interest therein, in form acceptable to theReceiving Agency, free and clear of all liens, taxes, assessments, leases, easements andencumbrances, whether or not recorded, other than exceptions that do not interfere with theactual or intended use of the land or interest therein.Act means the Mello-Roos Community Facilities Act of 1982, as amended, beingchapter 2.5, part 1,Division 2, Title 5, or the Government Code of the State of California.Actual Cost means the cost of a Public Facility or a Discrete Component, which cost

may include: (i) the actual hard costs for the construction of such Public Facility or DiscreteComponent, including labor, materials and equipment costs, (ii) the costs incurred in preparingthe Plans for such Public Facility or Discrete Component and the related costs of environmentalevaluations of the Public Facility or Discrete Component, (iii) the fees paid to governmentalagencies for obtaining permits, licenses or other governmental approvals for such Public Facilityor Discrete Component, (iv) professional costs associated with such Public Facility or DiscreteComponent, such as engineering, legal, accounting, inspection, construction staking, materialstesting and similar professional services; (v) costs directly related to the construction and/oracquisition of a Public Facility or Discrete Component, such as costs of payment, performanceand/or maintenance bonds, and insurance costs (including costs of any title insurance requiredhereunder); (vi) the value of any real property or interests therein ( Real Estate ) that (1) arerequired for the development of any Public Facility such as temporary construction easements,haul roads, etc., and (2) are required to be conveyed with the Public Facility, in an amount equalto the actual cost of the Real Estate purchased from such independent third party. The City shallnot purchase such Real Estate from the Owner. Actual Cost shall not include any internal oroverhead costs of Owner.

Affiliate means any entity owned, controlled or under common ownership or control byor with, as applicable, the Owner and includes all general partners of any entity which is apartnership. Control shall mean ownership of more than fifty percent (50%) of the voting powerof or ownership interest in the respective entity.

Agreement means this Funding, Construction and Acquisition Agreement, togetherwith any Supplement hereto.

Bonds means the bonds, notes or other indebtedness of the District issued to generateproceeds for the Improvement Fund.

CFD Report means the Community Facilities District Report prepared by the SpecialTax Consultant relating to the District.City means the City of Indio, California.Construction Election shall have the meaning set forth in Section 3.6 below.County means the County of Riverside, California.Director means the Director of Public Works of the City, or his designee acting as such

under this Agreement.

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Discrete Component means (i) a component of a Public Facility that the City and theReceiving Agencies have agreed can be separately identified, inspected and completed, and canbe the subject of a Payment Request hereunder, and (ii) categories of costs relating to eachPublic Facility as described in Exhibit A hereto.

District means City of Indio Community Facilities District No. 2004-3 (Terra Lago), acommunity facilities district organized and existing under the laws of the State of California.District Representative means the City Manager or his designee.Fiscal Agent means the fiscal agent identified in the Fiscal Agent Agreement, or any

successor thereto acting as fiscal agent under the Fiscal Agent Agreement.Fiscal Agent Agreement means a fiscal agent agreement between the City and theFiscal Agent, providing for, among other matters, the issuance of the Bonds and the

establishment of the Improvement Fund, as it may be amended or supplemented from time totime.

Improvement Agreement shall have the meaning set forth in Section 2.3 below.Improvement Fund means the Acquisition and Construction Fund and any account

within the Acquisition and Construction Fund established by a Fiscal Agent Agreement relatingto the issuance of the Bonds of the District, from which the Purchase Price of the PublicFacilities shall be paid and from which Actual Costs of the Public Facilities may be financed inaccordance with the Construction Election.

Owner means Indio Land Ventures, LLC, a California limited liability company.Payment Request means a document, substantially in the form of Exhibit B hereto, tobe used in requesting a payment of a Purchase Price.Plans means the plans, specifications, schedules and related construction contracts forthe Public Facilities and/or any Discrete Components thereof approved pursuant to applicable

standards of the applicable Receiving Agency. As of the date of this Agreement, the Citystandards for construction are incorporated in the City of Indio Standard Plan and aresupplemented from time to time by standards set forth in the Green Book, CALTRANS StandardPlan and Specification, Standard Specifications for Public Works Construction (SSPWC), of theSouthern California Chapter of the American Public Works Association and the SouthernCalifornia Districts of the Associated General Contractors of California.

Public Facility or Public Facilities means one or more of the public facilitiesdescribed in Exhibit A hereto which are eligible to be financed out of the Improvement Fund.

Purchase Price means the amount paid by the District for a Public Facility and/or anyDiscrete Components thereof in an amount equal to the Actual Cost of such Public Facility orDiscrete Component.


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ARTICLE IIICONSTRUCTION OF PUBLIC FACILITIES

Section 3.1 Plans. To the extent and at the time required by the ImprovementAgreements, the Owner shall cause Plans to be prepared for the Public Facilities. The Ownershall obtain the written approval of the Plans in accordance with applicable ordinances andregulations of the applicable Receiving Agencies.

Section 3.2 Construction. This Agreement shall not expand, limit or otherwise affectany obligation of the Owner under any Improvement Agreement. All Public Facilities shall beconstructed in accordance with the Improvement Agreements and the approved Plans. Unlessotherwise directed by the City or the City Attorney, any works, improvements, appliances, orfacilities authorized to be made, constructed, or acquired under this Agreement and the Act andwhich are not in existence and installed in place on or before the date of adoption of theResolution of Formation, shall be constructed pursuant to at least three (3) qualified bids for thecontracts by means of an informal bidding process reasonably acceptable to the City.Additionally, the construction contracts shall require the payment of the prevailing rate of perdiem wages for work of a similar character in the locality of the City and not less than theprevailing rate of per diem wages for holiday and overtime work, as provided in Section 1771 etseq. of the California Labor Code.

Section 3.3 Relationship to Public Works. This Agreement is for the acquisition ofthe Public Facilities and payment for Discrete Components thereof by the Receiving Agencyfrom moneys in the Improvement Fund and is not intended to be a public works contract. TheCity and the Owner agree that the Owner shall award all contracts for the construction of thePublic Facilities and the Discrete Components thereof to be constructed by the Owner, and thatthis Agreement is necessary to assure the timely and satisfactory completion of such PublicFacilities and the Discrete Components thereof.

From time to time at the request of the District Representative or the Owner, the Ownerand the District Representative shall meet and confer regarding matters arising hereunder withrespect to the Public Facilities, Discrete Components and the progress in constructing andacquiring the same, and as to any other matter related to the Public Facilities or this Agreement.

Section 3.4 Contractor. In performing this Agreement, the Owner is an independentcontractor and not an agent or employee of the City. The City shall not be responsible formaking any payments to any contractor, subcontractor, agent, consultant, employee or supplierof the Owner.

Section 3.5 Contracts and Change Orders. The Owner shall be responsible forentering into all contracts and any supplemental agreements (commonly referred to as changeorders ) required for the construction of the Public Facilities to be constructed by the Owner, andall such contracts and supplemental agreements shall be submitted to the Director.

Section 3.6 Construction Election. The Owner and City, or the Owner and aReceiving Agency, may mutually elect (the Construction Election ) to cause any or all of the


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Public Facilities or a Discrete Component thereof to be constructed by the City or ReceivingAgency, if applicable, and financed out of the Improvement Fund in accordance with the termsand conditions described in this Section 3.6 and the Improvement Agreements and subject to theavailability of sufficient funds, including the proceeds of the Bonds.

If the Owner and City, or the Owner and a Receiving Agency, make the ConstructionElection with respect to a Public Facility, the Owner shall transfer Acceptable Title to the land orright-of-ways then owned by the Owner on and over such real property on which the PublicFacility is to be constructed.

Upon completion of a Public Facility or Discrete Component thereof for which aConstruction Election has been made, payment shall be made pursuant to Section 4.4 below forany Actual Costs thereof incurred by the Owner prior to the Construction Election.

ARTICLE IV

ACQUISITION AND PAYMENTSection 4.1 Inspection. No payment hereunder shall be made by the City to the

Owner for a Public Facility or Discrete Component thereof until the Public Facility or DiscreteComponent thereof if applicable has been inspected by the City. Unless otherwise provided ina Supplement, the City shall make or cause to be made regular on going site inspections of thePublic Facilities to be acquired hereunder. For Public Facilities to be acquired by other publicentities or utilities the Owner shall be responsible for obtaining such inspections and providingwritten evidence thereof to the Director.

Section 4.2 Agreement to Sell and Purchase Public Facilities. The Owner herebyagrees to sell to the City, and the City hereby agrees to purchase from the Owner, the PublicFacilities, including the Discrete Components thereof, constructed by the Owner for theirrespective Purchase Prices, subject to the terms and conditions hereof. The City shall not beobligated to purchase any Public Facility until the Public Facility is completed and theAcceptance Date for such Public Facility has occurred; provided that the City has agreedhereunder to make payments to the Owner for Discrete Components of Public Facilities. TheOwner acknowledges that the Discrete Components have been identified for payment purposesonly, and that the City shall not accept a Public Facility of which a Discrete Component is a partuntil the entire Public Facility has been completed. The City acknowledges that the DiscreteComponents do not have to be accepted by the Receiving Agency as a condition precedent to thepayment of the Purchase Price therefor, but any such payment shall not be made until theDiscrete Component has been completed in accordance with the Plans therefor.

Section 4.3 Requests. In order to receive the Purchase Price for a completed PublicFacility or Discrete Component, inspection thereof under Section 4.1, if applicable, shall havebeen made and the Owner shall deliver to the District Representative and the Director: (i) aPayment Request in the form of Exhibit B hereto for such Public Facility or DiscreteComponent, and (ii) if payment is requested for a completed Public Facility, (a) if the propertyon which the Public Facility is located is not owned by the Receiving Agency at the time of therequest, a copy of the recorded documents conveying to the Receiving Agency Acceptable Title


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to the real property on, in or over which such Public Facility is located, as described in Section6.1 hereof, (b) a copy of the recorded notice of completion of such Public Facility (if applicable),and (c) an assignment of the warranties and guaranties for such Public Facility, as described inSection 5.5 hereof.

Section 4.4 Payment Requests. Upon receipt of a Payment Request (and allaccompanying documentation), the Director shall conduct a review in order to confirm that suchrequest is complete, that such Discrete Component or Public Facility identified therein wasconstructed substantially in accordance with the Plans therefor, and to verify and approve theActual Cost of such Discrete Component or Public Facility specified in such Payment Request.The Director may seek the assistance of the Special Tax Consultant in determining any of theforegoing. The Director shall conduct each such review in an expeditious manner and the Owneragrees to reasonably cooperate with the Director in conducting each such review and to providethe Director with such additional information and documentation as is reasonably necessary forthe Director to conclude each such review. For any Public Facilities to be acquired by anotherReceiving Agency, the Owner shall provide evidence acceptable to the Agency that such PublicFacilities are acceptable to such Receiving Agency. Within ten (10) business days of receipt ofany Payment Request, the Director shall notify the Owner whether such Payment Request iscomplete, and, if not, what additional documentation must be provided. If such PaymentRequest is complete, the Director will provide a written approval or denial of the request withinthirty (30) days of its submittal. If the Director disapproves any Payment Request, it shallprovide written notice of disapproval to the Owner within such thirty (30) day period stating inreasonable detail the reasons for such disapproval and the changes to the Payment Requestnecessary to obtain the Director's approval. The Director's review of any Payment Request shallbe made on a Public Facility and/or Discrete Component basis such that the Director shallapprove for payment any Public Facilities and/or Discrete Components covered by a PaymentRequest that comply with the requirements of this Agreement even if the Director disapprovesother Public Facilities and Discrete Components included as part of the same Payment Request.If the Director disputes the Actual Cost of any Public Facility or Discrete Component covered bythe Payment Request, the Director shall approve for payment an amount equal to the Actual Costthereof the Director determines is appropriate (which shall not be less than the amounts ofcontracts and change orders previously reviewed by the Director) and shall deliver notice ofdisapproval of the remaining amount. If the Director disapproves any revised Payment Request,the Director will provide a written notice of approval or denial to the Owner within ten (10)business days after receipt of the revised Payment Request, which notice shall describe inreasonable detail the reason for the denial, if applicable.

The Director shall only be entitled to withhold approval for payment of a DiscreteComponent (other than the final Discrete Component of any Public Facility) to be owned by theCity that is the subject of a Payment Request if (i) the Owner has not provided conditional lienreleases for labor and materials provided in connection with such Discrete Components(provided that this basis for disapproval shall not apply if the Owner has provided paymentbonds to the City or the applicable Receiving Agency in connection with the ImprovementAgreements or has provided bonds protecting the Receiving Agency from mechanics' liens byparties that have not provided lien releases in a form satisfactory to the Director), (ii) theDiscrete Component has not been constructed substantially in accordance with the Plans, (iii) the


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Director disputes the Actual Cost of any Public Facility or Discrete Component stated in thePayment Request or (iv) the Owner is delinquent in paying its special taxes.

The Director shall only be entitled to withhold approval for payment of any PublicFacility to be owned by the City (or the final Discrete Component of any such Public Facility) if(i) a notice of completion executed in the form described in California Civil Code Section 3093,has not been recorded for the Public Facility and final conditional lien releases for labor andmaterials provided in connection with such Public Facilities have not been submitted to theDirector (provided that this requirement shall not apply if the Owner has provided to the City apayment bond in connection with the Improvement Agreements or provides a bond protectingthe City from mechanics' liens made by parties that have not provided such lien releases in aform acceptable to the Director), (ii) the Public Facility has not been constructed substantially inaccordance with the Plans, (iii) the Director disputes the Actual Cost of any Public Facility orDiscrete Component stated in the Payment Request or (iv) the Owner is delinquent in paying itsspecial taxes.

The City shall only be entitled to withhold payment for any Public Facilities to be ownedby a Receiving Agency other than the City if the Owner does not provide the Director withevidence that the Receiving Agency has accepted the Public Facility.Nothing in this Agreement shall be deemed to prohibit the Owner from contesting ingood faith the validity or amount of any mechanics' or materialman's lien nor limit the remediesavailable to the Owner with respect thereto so long as such delay in performance shall not

subject the Public Facilities or any Discrete Portion thereof to foreclosure, forfeiture or sale. Inthe event that any such lien is contested, the Owner shall only be required to post or cause thedelivery of a bond in an amount equal to the amount in dispute with respect to any suchcontested lien, so long as such bond is drawn on an obligor and is otherwise in a form acceptableto the Director.

Section 4.5 Payment. Upon approval of the Payment Request (or any portion thereof)by the Director, the Director shall sign the Payment Request and forward the same to the DistrictRepresentative. Upon receipt of the approved Payment Request, the District Representativeshall, within five (5) business days of receipt of the approved Payment Request, cause the sameto be paid, to the extent of funds then on deposit in the Improvement Fund. Any approvedPayment Request not paid due to an insufficiency of funds in the Improvement Fund shall bepaid promptly following the deposit into the Improvement Fund of additional proceeds of theBonds, earnings on the Improvement Fund or other funds transferred pursuant to the FiscalAgent Agreement.

The Purchase Price paid hereunder for any Public Facility or Discrete Component shallconstitute payment in full for such Public Facility or Discrete Component, including, withoutlimitation, payment for all labor, materials, equipment, tools and services used or incorporated inthe work, supervision, administration, overhead, expenses and any and all other things required,furnished or incurred for completion of such Public Facility or Discrete Component, as specifiedin the Plans.


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Section 4.6 Restrictions on Payments. Notwithstanding any other provisions of thisAgreement, the following restrictions shall apply to any payments made to the Owner underSections 4.2 and 4.5 hereof:

A. Amounts of Payments. Payments for each Discrete Component or Public Facilitywill be made only in the amount of the Purchase Price for the respective Discrete Component orPublic Facility. The City understands that the CFD Report is an estimate based on the bestinformation available at that moment in time. The City agrees that the actual cost of a DiscreteComponent or Public Facility may fluctuate from the budgeted amounts. The City agrees thatthe owner has the latitude to increase or decrease the reimbursement of a Discrete Component orPublic Facility, as actual costs are determined. In no case will the total reimbursement to theowner exceed the total amount of funds derived from the sale of the bonds for such purpose.

Nothing herein shall require the City in any event (i) to pay more than the Actual Cost ofa Public Facility or Discrete Component; or (ii) to make any payment beyond the available fundsin the Improvement Fund for such Public Facilities or Discrete Components. The parties heretoacknowledge and agree that all payments to the Owner for the Purchase Prices of Facilities orDiscrete Components are intended to be reimbursed to the Owner for services provided or costsincurred by the Owner or moneys already expended or incurred by the Owner to third parties inrespect of such Public Facilities and/or Discrete Components.

B. Frequency. Unless otherwise agreed to by the Director, no more than one PaymentRequest shall be submitted in any calendar month although a Payment Request may relate tomore than one Public Facility or Discrete Component.

Section 4.7 Defective or Nonconforming Work. If any of the work done ormaterials furnished for a Public Facility or Discrete Component are found by the Director to bedefective or not in substantial accordance with the applicable Plans: (i) if such finding is madeprior to payment for the Purchase Price of such Public Facility or Discrete Componenthereunder, the Director may withhold payment therefor until such defect or nonconformance iscorrected, or (ii) if such finding is made after payment of the Purchase Price of such PublicFacility or Discrete Component, the Receiving Agency and the Owner shall act in accordancewith the applicable Improvement Agreement, if any.

Section 4.8 Modification of Discrete Components. Upon written request of theOwner, the Director shall consider modification of the description of any Discrete Component.Any such modification shall be subject to the written approval of the Director, which approvalthe Director may withhold in his sole discretion, and shall not diminish the overall PublicFacilities to be provided pursuant to the Improvement Agreements.ARTICLE V

OWNERSHIP AND TRANSFER OF PUBLIC FACILITIESSection5.1 Conveyance of Land and Easements for Receiving Agency.

Acceptable Title to all property on in or over which each Public Facility to be acquired by theReceiving Agency will be located shall be conveyed to the Receiving Agency by way of grant

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deed, quitclaim, or dedication of such property, or easement thereon, in accordance with theapplicable Improvement Agreement, if any. The Owner agrees to assist the Receiving Agency inobtaining such documents as are required to obtain Acceptable Title with respect to these PublicFacilities funded pursuant to this Agreement. Completion of the transfer of title to land shall beaccomplished prior to the payment of the Purchase Price for a Public Facility (or the last DiscreteComponent thereof) and shall be evidenced by recordation of the acceptance thereof by theReceiving Agency.

Section 5.2 Evidence and Insurance. Within fifteen (15) calendar days upon therequest of the City, the Owner shall furnish to the City a preliminary title report for such land notpreviously dedicated or otherwise conveyed to the City, for review and approval prior to thetransfer of Acceptable Title to a Public Facility to the City. Within ten (10) calendar days, theDirector shall approve the preliminary title report unless it reveals a matter which, in thejudgment of the Director, could materially affect the City's use of any part of the property oreasement covered by the preliminary title report for the purpose for which such property oreasement is being conveyed. In the event the Director does not approve the preliminary titlereport, the City shall not be obligated to accept title to such Public Facility or pay the PurchasePrice for such Public Facility (or the last Discrete Component thereof) until such objections totitle have been cured to the satisfaction of the Director. The failure of the Director to providewritten approval to the Owner shall be deemed to be a disapproval.

Section 5.3 Facilities Constructed on Private Lands. If any Public Facilities to beacquired are located on privately-owned land, the owner thereof shall retain title to the land andthe completed Public Facilities until acquisition of the Public Facilities under Article V hereof.Pending the completion of such transfer and where the Owner has received any payment for anysuch Public Facility or a Discrete Component thereof, the Owner shall be responsible formaintaining the land and any Public Facilities or Discrete Components in good and safecondition. Notwithstanding the foregoing, subject to the terms of the applicable ImprovementAgreement, upon written request of the Receiving Agency before payment for any DiscreteComponent of such a Public Facility, the Owner shall convey or cause to be conveyedAcceptable Title thereto in the manner described in Section 5.1 hereof.

Section 5.4 Facilities Constructed on City Land. If the Public Facilities to beacquired are on land owned by the City, the City hereby grants to the Owner a license to enterupon such land for purposes related to the construction (and maintenance pending acquisition) ofthe Public Facilities. The provisions for inspection and acceptance of such Public Facilitiesotherwise provided herein shall apply.

Section 5.5 Maintenance and Warranties. The Owner shall maintain each DiscreteComponent of any Public Facility constructed by the Owner in good and safe condition until theAcceptance Date of the Public Facility of which such Discrete Component is a part. Prior to theAcceptance Date, the Owner shall be responsible for performing any required maintenance onany completed Discrete Component or Public Facility constructed by the Owner. On or beforethe Acceptance Date of the Public Facility, the Owner shall assign to the Receiving Agency, tothe extent assignable, all of Owner's rights in any warranties, guarantees, maintenanceobligations or other evidence of contingent obligations of third persons with respect to suchPublic Facility. The Owner shall maintain or cause to be maintained each Public Facility

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constructed by the Owner for such period and for such purpose, all in accordance with theapplicable Improvement Agreement. After the Acceptance Date, the Owner shall not beresponsible for maintaining such Public Facility. Any warranties, guarantees or other evidencesof contingent obligations of third parties with respect to the Public Facilities to be acquired bythe City shall be delivered to the Director as part of the transfer of title.

ARTICLE VIINSURANCE

Section 6.1 Requirements. The Owner shall at all times prior to the final AcceptanceDate of all Public Facilities maintain deliver to the City evidence of and keep in full force andeffect or cause to be maintained delivered to the City evidence of and kept in full force andeffect, the insurance policies required pursuant to the Improvement Agreements.

All of the Owner's insurance policies shall contain an endorsement providing that writtennotice shall be given to the City at least 30 calendar days prior to termination, cancellation, orreduction of coverage in the policy and an endorsement extending coverage to the City and itsagents as an additional insured, in the same manner as the named insured as respects liabilitiesarising out of the performance of any work related to the Public Facilities. Such insurance shallbe primary insurance as respects the interest of the City, and any other insurance maintained bythe City shall be excess and not contributing insurance with the insurance required hereunder.

The foregoing requirements as to the insurance coverage to be maintained by the Ownerare not intended to and shall not in any manner limit or qualify the liabilities and obligationsassumed by the Owner under this Agreement.

Section 6.2 Evidence of Insurance. The Owner shall furnish to the City, from time totime upon request, a certificate of insurance regarding each insurance policy required to bemaintained by the Owner hereunder.

ARTICLE VIIREPRESENTATIONS WARRANTIES AND COVENANTS

Section 7.1 Covenants and Warranties of the Owner. The Owner represents andwarrants for the benefit of the City as follows:

A. Organization. The Owner is a California limited liability partnership is incompliance with the laws of the State of California and has the power and authority to own itsproperty and assets and to carry on its business as now being conducted and as nowcontemplated.

B. Authority. The Owner has the power and authority to enter into this Agreement andhas taken all action necessary to cause this Agreement to be executed and delivered and thisAgreement has been duly and validly executed and delivered by the Owner.

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C. Binding Obligation. This Agreement is a legal, valid and binding obligation of theOwner, enforceable against the Owner in accordance with its terms.D. Financial Records. Until one year after the final acceptance of all the Public

Facilities, the Owner covenants to maintain proper books of record and account for theconstruction of the Public Facilities and all costs related thereto. Such accounting books shall bemaintained in accordance with generally accepted accounting principles, and shall be availablefor inspection by the City or its agent at any reasonable time during regular business hours onreasonable notice.

E. Plans. The Owner represents that it has obtained or will obtain approval of the Plansfor the Public Facilities constructed by the Owner from all appropriate departments of the Cityand from any other public entity or public utility Receiving Agency from which such approvalmust be obtained. The Owner further agrees that the Public Facilities constructed by the Ownerhave been or will be constructed in compliance with such approved plans and specifications andany supplemental agreements (change orders) thereto, as approved in the same manner.

Section 7.2 Indemnification and Hold Harmless. The Owner shall assume thedefense of, indemnify, and hold harmless the City its officers, directors, employees and agentsand each of them, from and against all actions, damages, claims, losses or expenses of every typeand description to which they may be subjected or put, by reason of, or resulting from theOwner's non-payment under contracts between the Owner and its consultants, engineers,advisors, contractors, subcontractors and suppliers in the provision of the Public Facilities, or anyclaims of persons employed by the Owner or its agents to construct the Public Facilities.Notwithstanding the foregoing, no indemnification is given hereunder for any action, damage,claim, loss or expense directly attributable to the intentional acts or gross negligence of the City,or its officers directors, employees or agents hereunder or otherwise with respect to the PublicFacilities or payment therefor.

No provision of this Agreement shall in any way limit the Owner's responsibility forpayment of damages resulting from the operations of the Owner and its agents, employees orcontractors.

ARTICLE VIIIGENERAL

Section 8.1 Consent. This Agreement may be terminated by the mutual writtenconsent of the City and the Owner, and all or any portion of the moneys in the ImprovementFund may be used to pay for same, and the Owner shall have no claim or right to any furtherpayments for the Purchase Price of Public Facilities or Discrete Components hereunder, exceptas otherwise may be provided in such written consent.

Section 8.2 Liability of the City. The Owner agrees that the City's obligations tomake any payments hereunder are restricted entirely to the moneys, if any, in the ImprovementFund together with any amounts transferred thereto under the provisions of the Fiscal AgentAgreement and from no other source. No City Councilmember or City staff member, employee

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or agent shall incur any personal liability hereunder to the Owner or any other party by reason oftheir actions hereunder or execution hereof.Section 8.3 Audit. The City shall have the right, during normal business hours and

upon the giving of five (5) business days' prior written notice to the Owner, to review all booksand records of the Owner pertaining to costs and expenses incurred by the Owner in relation toany of the Public Facilities, and any bids taken or received for the construction thereof ormaterials therefor.

Section 8.4 Fees. In the event that any action or suit is instituted by any party againstthe other(s) arising out of this Agreement, the parties in whose favor final judgment shall beentered shall be entitled to recover from the other parties all costs and expenses of suit, includingreasonable attorneys' fees.

Section 8.5 Notices. Any notice, payment or instrument required or permitted by thisAgreement to be given or delivered to either party shall be deemed to have been received whenpersonally delivered, or transmitted by telecopy or facsimile transmission (which shall beimmediately confirmed by telephone and shall be followed by mailing an original of the samewithin twenty-four hours after such transmission), or three (3) business days following deposit ofthe same in any United States Post Office, registered or certified mail, postage prepaid,addressed as follows:

City: City of Indio100 Civic Center MallIndio, CA 92201Attention: City Manager

Owner: Indio Land Ventures, LLCc/o SunCal Companies, Inc.42-960 Golf Center ParkwayIndio, CA 92203Attention: Gary Williams

Each party may change its address or addresses for delivery of notice by deliveringwritten notice of such change of address to the other party.

Section 8.6 Severability. If any part of this Agreement is held to be illegal orunenforceable by a court of component jurisdiction, the remainder of this Agreement shall begiven effect to the fullest extent possible.Section 8.7 Successors and Assigns. This Agreement shall be binding upon and inure

to the benefit of the successors and assigns of the parties hereto. The Owner may assign theirrights pursuant to this Agreement to a purchaser (an Assignee ) of a portion or portions of theproperty which is/are located within the District (the Property ). The Owner may assign to theAssignee the responsibility for the construction of all or a portion of the Public Facilities whichremain to be constructed and the right to receive payment of the Purchase Price for PublicFacilities and Discrete Components thereof previously completed by the Owner. The Owner andAssignee shall provide to City such reasonable proof as it may require that such Assignee is the

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purchaser of such portion(s) of the Property. Such Assignee shall as a condition to receivingpayment of a Purchase Price, enter into an assignment and assumption agreement with the Cityand the Owner, in the form attached hereto as Exhibit C, whereby such Assignee agrees, exceptas may be otherwise specifically provided therein, to assume the obligations of the Ownerpursuant to this Agreement with respect to such Public Facilities and to be bound thereby.

Section 8.8 Other Agreements. The obligations of the Owner hereunder shall be thatof a party hereto. Nothing herein shall be construed as affecting the City's or Owner's rights, orduties to perform their respective obligations, under other agreements, use regulations orsubdivision requirements relating to the development. This Agreement shall not confer anyadditional rights, or waive any rights given, by either party hereto under any development orother agreement to which they are a party.

Section 8.9 Waiver. Failure by a party to insist upon the strict performance of any ofthe provisions of this Agreement by the other party, or the failure by a party to exercise its rightsupon the default of the other party, shall not constitute a waiver of such party' s right to insist anddemand strict compliance by the other party with the terms of this Agreement thereafter.

Section 8.10 Merger. No other agreement, statement or promise made by any party orany employee, officer or agent of any party with respect to any matters covered hereby that is notin writing and signed by all the parties to this Agreement shall be binding.

Section 8.11 Parties in Interest. Nothing in this Agreement, expressed or implied, isintended to or shall be construed to confer upon or to give to any person or entity other than theCity and the Owner any rights, remedies or claims under or by reason of this Agreement or anycovenants, conditions or stipulations hereof, and all covenants, conditions, promises, andagreements in this Agreement contained by or on behalf of the City or the Owner shall be for thesole and exclusive benefit of the City and the Owner.

Section 8.12 Amendment. This Agreement may be amended, from time to time, bywritten Supplement hereto and executed by the City and the Owner. Such Supplement mayprovide for, among other things, the acquisition of additional Public Facilities (includingDiscrete Components thereof).

Section 8.13 Counterparts. This Agreement may be executed in counterparts, each ofwhich shall be deemed an original.

Section 8.14 Governing Laws. This Agreement shall be governed by and construed inaccordance with the laws of the State of California.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day andyear first-above written.

CITY

CITY OF INDIO

By: _ Mayor

OWNERINDIO LANDVENTURES, LLC, a California limitedliability company

By:


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day andyear firstabove written.CITYCITY OF INDIO

By:Mayor

OWNER1NDIOLAND VENTURES, LLC, a California limitedliability company


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EXHIBIT AELIGIBLE PUBLIC FACILITIES LIST

The following public works cost categories are eligible for reimbursement/acquisition asdiscrete components of a Public Facility.

A 1


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Facilities to be Financed with Proceeds of the BondsUnder the Resolution of Intention and the Community Facilities District Report,the Community Facilities District is authorized to finance the following Public Facilities:

Street Facilities. Street Facilities consist of certain road andappurtenant drainage facilities required as a condition for the development of theproperty in the Community Facilities District, which will be owned by the City,and may include street improvements to Terra Lago Parkway, Lago VistaBoulevard, Lago Brezza Drive, Golf Center Parkway, Avenue 44 and Avenue 43.

Water Facilities. Water Facilities consist of certain water facilitiesrequired as a condition of development of the property in the CommunityFacilities District, which will be owned by Indio Water Authority, and mayinclude water improvements in Terra Lago Parkway, Lago Vista Boulevard, LagoBrezza Drive, Golf Center Parkway, Avenue 44.

Sewer Facilities Sewer Facilities consist of certain sewer facilitiesrequired as a condition of development of the property in the CommunityFacilities District, which will be owned by Valley Sanitary District, and mayinclude sewer improvements in Terra Lago Parkway, Lago Vista Boulevard, LagoBrezza Drive, Avenue 44 and Avenue 43.

Flood Control Facilities. Flood Control Facilities consist of certainflood control and storm water drainage facilities required as a condition for thedevelopment of the property in the Community Facilities District, which will beowned by the Coachella Valley Water District and may include storm drainimprovements to Terra Lago Parkway, Lago Vista Boulevard, Lago Brezza Drive,Golf Center Parkway.Estimated Facilities Costs The Bonds are anticipated to provide the following

amounts for the acquisition and construction of the Public Facilities:Street Facilities 1,382,530Water Facilities 1,694,946Sewer Facilities 1,322,867Flood Control Facilities 642,448Related Site Improvements 3,183,322

Total: 8,226,113


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EXHIBIT BPAYMENT REQUEST NO. __

The undersigned Indio Land Ventures, LLC (the Owner ) hereby requests payment inthe total amount of for the Public Facilities (as defined in the Funding,Construction and Acquisition Agreement by and between the City of Indio (the City ) and theOwner, and described in Exhibit A to that Agreement), all as more fully described in Attachment1 hereto. In connection with this Payment Request, the undersigned hereby represents andwarrants to the City and the District as follows:

1. He (she) is a duly authorized officer of the Owner, qualified to execute thisPayment Request for payment on behalf of the Owner and is knowledgeable as to the matters setforth herein.

2. To the extent that this payment request is with respect to a completed PublicFacility or Discrete Component, the Owner has submitted or submits herewith to the City, ifapplicable, as-built drawings or similar plans and specifications for the items to be paid for aslisted in Attachment 1 hereto with respect to any such Public Facility, and such drawings orplans and specifications, as applicable, are true, correct and complete.

3. All costs of the Public Facilities or Discrete Component for which payment isrequested hereby are Actual Costs (as defined in the Agreement referenced above) and have notbeen inflated in any respect. The items for which payment is requested have not been the subjectof any prior payment request submitted to the City.

4. Supporting documentation (such as third party invoices, lien releases andcancelled checks) is attached with respect to each cost for which payment is requested.5. The Public Facilities or Discrete Components for which payment is requested was

constructed in accordance with the requirements of the Acquisition Agreement.6. The Owner is in compliance with the terms and provisions of the Acquisition

Agreement and no portion of the amount being requested to be paid was previously paid.7. The Purchase Price for the Public Facilities or Discrete Component (a detailedcalculation of which is shown in Attachment 1 hereto for each Public Facility or Discrete

Component) has been calculated in conformance with the terms of Section 4.4 of the AcquisitionAgreement.

B-1


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I hereby declare under penalty of perjury that the above representations and warrantiesare true and correct.

Owner: CITY AND DISTRICT:INDIO LAND VENTURES, LLC Payment Request Approved for Submission toTrusteeBy: By:Authorized Representative of Owner Public Works DirectorDate: Date:

B-2


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ATTACHMENT 1SUMMARY OF PUBLIC FACILITIES AND DISCRETE COMPONENTS

TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __Ref. No. Facility/Discrete Actual Cost DisbursementComponent Requested

[List here all Facilities for which payment is requested,and attach support documentation]

B 3


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EXHIBIT CFORM OF

ASSIGNMENT AND ASSUMPTION AGREEMENT

Pursuant to a Funding Construction and Acquisition Agreement dated as of September 12005 (the Agreement) by and between the City of Indio ( City) and Indio Land Ventures,LLC, a California limited liability company (the Owner), which Agreement is herebyincorporated herein by this reference and for good and valuable consideration receipt of whichis hereby acknowledged, the undersigned agree as follows:

1. The assignment and assumption provided for under this Assignment andAssumption Agreement ( Assignment ) is made together with the sale, transfer or assignment ofall or a part of the property subject to the Agreement. The property sold, transferred or assignedtogether with this Assignment is included within the District and described in Attachment 1attached hereto and incorporated herein by this reference (the Subject Property ).

2. Indio Land Ventures, LLC, as the assignor hereof (the Assignor ) hereby grants,sells, transfers, conveys assigns and delegates to ( Assignee ), all ofAssignor's rights, title, interest, benefits, privileges, duties and obligations arising under or fromthe Agreement with respect to the Subject Property and the Public Facilities authorized to befunded with respect to the District.

3. Assignee hereby accepts the foregoing assignment and unconditionally assumesand agrees to perform all of the duties and obligations of Assignor arising under or from theAgreement as owner of the Subject Property.

4. The sale, transfer or assignment of the Subject Property and the assignment andassumption provided for under this Assignment are the subject of additional agreements betweenAssignor and Assignee. Notwithstanding any term, condition or provision of such additionalagreements, the rights of the City arising under or from the Agreement and this Assignment shallnot be affected, diminished or defeated in any way, except upon the express written agreement ofthe City.

5. Assignor and Assignee execute this Assignment pursuant to Section 8.7 of theAgreement, and the City evidences its consent to this Assignment by signing below.

C-1


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IN WITNESS WHEREOF, the parties have executed this Assignment on

ASSIGNOR:INDIO LAND VENTURES, LLC, a California limitedliability company

By:Authorized Signatory

ASSIGNEE:

By:Name:Title:

CITY:CITY OF INDIO

By:Its: City Manager

C-2


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