Loading...
HomeMy WebLinkAbout2010-09-28 City Council Item No. 05CITY OF LAKE LSII`IORX DREAM EXTREMEn REPORT TO CITY COUNCIL TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: ROBERT A. BRADY CITY MANAGER DATE: SEPTEMBER 28, 2010 SUBJECT: CUSTODY AGREEMENT WITH UNION BANK FOR CFD NO 2006-1 (SUMMERLY) Background The City utilizes Union Bank of California as the fiscal agent for the assessment districts and community facilities districts within the City. Union Bank monitors the funds within each of the districts and makes payments when required out of districts funds based on direction from the City. CFD No. 2006-1 has been levying special taxes since 2008 on the 10 lots that have been issued building permits. There is currently a balance of approximately $32,000 being held by the Finance Department. In addition, the new developer for the Summerly development has deposited $80,000 with the City to process proposed changes to CFD No. 2006-1. These changes include the potential reduction of the special tax rates within the CFD. Discussion In order to be consistent with the processing of CFD funds throughout the City's districts, City staff proposes the execution of a custody agreement with Union Bank for CFD No. 2006-1 (Summerly). As with all of the other CFD funds held, Union Bank will provide periodic activity and balance statements to the City and make payments from district funds based on direction from the City. This will reduce the effort required by City staff to monitor these funds and process payments, as those duties will be provided by Union Bank under the agreement. AGENDA ITEM NO. 5 Page 1 of 7 Custody Agreement - CFD No. 2006-1 (Summerly) September 28, 2010 Page 2 Fiscal Impact There is no fiscal impact directly associated with this item. The CFD special taxes and the deposit provided by the developer will cover the costs associated with the agreement. Recommendation 1.) Authorize the City Manager to execute the Custody Agreement between City and Union Bank of California for CFD No. 2006-1 (Summerly). Prepared by: James Riley Director of Ad i istrative Services Approved by: Robert A. Brady City Manager Page 2 of 7 Revised Draft CUSTODY AGREEMENT CFD 2006-1 (Summerly) This Custody Agreement, dated as of September, 2010 (this "Agreement"), is made between the City of Lake Elsinore Community Facilities District No. 2006-1 (Summerly), a municipal corporation (the "City"), and Union Bank, N.A. ("Bank") (the "Agreement"). TERMS AND CONDITIONS 1. APPOINTMENT AS AGENT City hereby appoints Bank as agent to act as custodian of funds, to be held in the Community Facility District 2006-1 administrative expense account ("Account") and Bank agrees to act as City's agent for such property according to the terms and conditions of this Agreement. For purposes of this Agreement, any action, authorization, approval, instruction or direction required to be taken or given by City hereunder shall be taken or given by the authorized representative of the City and his or her authorized designee as set forth together with the specimen signatures of such individuals. 2. HANDLING OF INCOME AND PRINCIPAL 2.1 Income. Bank shall collect the income, when paid on said funds, and hold it in Account until invested or otherwise disposed of pursuant to City's written instructions. 2.2 Principal. Bank shall collect principal of funds when paid on maturity, redemption, sale, or otherwise, and hold it in a demand deposit principal account until invested or otherwise disposed of pursuant to City's written instructions. 2.3 Collection Obligations. Bank shall diligently collect income and principal of which the Bank has received actual notice in accordance with normal industry practices. However, Bank shall be under no obligation or duty to take any action to effect collection of any amount if the securities or other funds upon which such amount is payable is in default, or if payment is refused after due demand unless the Bank has been adequately indemnified by City in advance. Bank, however, shall notify City promptly of such default or refusal to pay. 2.4 Additions to and Withdrawals from Account. Bank shall make all additions and withdrawals of funds to and from this Account only upon receipt of and pursuant to written instructions from City except for those withdrawals provided for in Section 4. Upon receipt of such order for each withdrawal, unless otherwise instructed in writing, Bank shall deliver the funds so withdrawn to City or to City's designee, upon an appropriate receipt or shall sell or liquidate such funds. Bank shall have no liability or responsibility with regard to the liquidation of funds necessary to fund any such withdrawal notice. 3. INVESTMENT OF PROPERTY 3.1 Directions by City. City shall have sole responsibility for the investment, review, and management of all funds held in this Account. Bank shall make all purchases, sales, conversions, exchanges, investments and reinvestments of funds held in this Account only upon receipt of and pursuant to written instructions from City. In the absence of any such instructions, Bank shall invest all cash in the Account in Blackrock T-Fund Institutional Shares Money Market Fund. Bank shall have no duty or obligation to review, or make Page 3 of 7 recommendations for, the investment and management of any funds held in this Account, including uninvested cash. 3.2 Handle Corporate Actions. Bank shall notify City of the receipt of notices of redemptions, conversions, maturities, exchanges, calls, puts, subscription rights, and scrip certificates ("Corporate Actions"). Bank need not monitor financial publications for notices of Corporate Actions and shall not be obligated to take any action without waiting for City's instruction. If a Corporate Action has a fixed expiration date, and Bank has not received written instructions regarding it from City five business days prior to such date, Bank shall take such action as it deems appropriate in its sole discretion. 3.3 Fractional Interests. Bank shall receive and retain all stock distributed by a corporation as a dividend, stock split, or otherwise. However, in connection therewith, if a fractional share is received, Bank shall sell such fractional share. 3.4 Use of Nominees. Bank shall have the right to hold all registered securities in the name of its nominee. 3.5 Use of Securities Depository. Bank may, in its discretion, deposit in a securities depository any securities, which, under applicable law, are eligible to be deposited. 4. PLEDGE OF SECURITIES City will not pledge securities held in Account. 5. PROXIES AND CORPORATE LITERATURE 5.1 Proxies. Bank shall forward all proxies and accompanying material issued by any company whose securities are held in the Account to City unless directed in writing not to do so. 5.2 Corporate Literature. Bank shall have no duty to forward or retain any other corporate material received by the Account unless required to do so by law. 5.3 Disclosure to Issuers of Securities. Unless City directs Bank in writing to the contrary, City agrees that Bank may disclose the name and address of the party with the authority to vote the proxies of the securities held in this Account as well as the number of shares held, to any issuer of said securities or its agents upon the written request of such issuer or agent in conformity with the provisions of the applicable law 6. STATEMENTS Bank shall have no responsibility to send confirmations of security transactions occurring in the Account to City. Each month, Bank shall send City a cash statement and an asset statement showing market values. The statements will show all income and principal transactions and cash, securities and other fund holdings. 7. USE OF OTHER BANK SERVICES City may direct Bank to utilize for this Account other services or facilities provided by Bank, its subsidiaries or affiliates. Such services shall include, but not be limited to (1) the purchase or sales of securities as principal to or from, or, (2) the placing of orders for the purchase, sale, exchange, investment or reinvestment of securities through any brokerage service conducted by, or (3) the placing of orders for the purchase or sale of units of any investment company managed or advised by Bank, UnionBanCal Corp., or their subsidiaries or affiliates. City hereby acknowledges that Bank will receive additional fees for such services in accordance with Bank's standard fee schedules, which shall be delivered to City from time to time. 8. INSTRUCTIONS 2 Page 4 of 7 All instructions from City shall be in writing, and shall continue in force until changed by subsequent instructions. Pending receipt of written authority, Bank may, in its absolute discretion at any time, accept oral, wired, or electronically transmitted instructions from City provided Bank believes in good faith that the instructions are genuine. 9. COMPENSATION The Bank shall be entitled to reasonable compensation for its services hereunder, as agreed to by the Bank and the City. Such compensation shall not be a charge against the Account, unless unpaid after 30 days from the Bank's billing date. Any amount unpaid after said 30 days shall be a lien against and paid from the Account. Any expenses, taxes and other charges or liabilities incurred by the Bank in the performance of its duties or by reason of its administration of the Account shall be paid by the Principal or its representatives and shall not be charged against the Account, unless unpaid after 30 days from the Bank's billing date. Any amount unpaid after said 30 days shall be a lien against and paid from the Account. 10. COST BASES AND DATES OF ACQUISITION City agrees to furnish Bank with the income tax cost bases and dates of acquisition of all investments held in the Account to be carried on its records. If City does not furnish such information for any such investment, Bank shall carry the investment at any such nominal value it determines, such value to be for bookkeeping purposes only. All statements and reporting of any matters requiring this information will use this nominal value. Bank shall have no duty to verify the accuracy of the cost bases and dates of acquisition furnished by City. Investments purchased in the Account shall be carried at cost. 11. LIMITED POWER OF ATTORNEY Bank is hereby granted a limited power of attorney by City to execute on City's behalf any declarations, endorsements, assignments, stock or bond powers, affidavits, certificates of ownership or other documents required (1) to effect the sale, transfer, or other disposition of investments held in the Account, (2) to obtain payment with respect to funds held in the Account, or (3) to take any other action required with respect to the investments held in the Account, and in the Bank's own name to guarantee as City's signature so affixed. 12. INDEMNIFICATION As additional consideration for the Bank's acceptance of this Account and Agreement to act as "Agent," City agrees to indemnify, and hold Bank, its officers, directors, employees and agents harmless from and against any and all losses, liabilities, demands, claims, and expenses, any attorney's fees and taxes (other than those based on Bank's net income) arising out of or in connection with this Agreement, or out of any actions of City or City's agents which are not caused by Bank's negligence or willful misconduct. This provision shall survive the termination of this Agreement and shall be binding upon each party's successors, assigns, heirs and personal representatives. 13. AMENDMENT AND TERMINATION OF AGREEMENT 13.1 Amendment. This Agreement may be amended only by a written agreement executed by Bank and City. 13.2 Termination. This Agreement shall terminate on 20 or may be terminated at any time prior by written notice from one party to the other. Such termination shall be effective immediately. Upon termination, Bank shall have a reasonable amount of time to transfer the Assessments held in the Account in accordance with the written instructions of City or the person or entity legally entitled to receive such property. 14. ENTIRE AGREEMENT 3 Page 5 of 7 This Agreement constitutes the entire Agreement between the parties. All previous agreements on this matter, whether written or oral, between the Bank and City, are hereby superseded, except any direction to Bank prohibiting it to disclose information to issuers of securities as provided in Section 5.3. 15. SINGULAR AND PLURAL If more than one person shall execute this Agreement, then where the context permits, singular pronouns shall be deemed to be plural personal pronouns. 16. GOVERNING LAW This agreement shall be governed by, and construed under, the laws of the State of California. 17. TAXATION OF ACCOUNT 17.1 W-9 Certification. City agrees to provide a completed W-9 or W-8 certification, as appropriate, to Bank. 17.2 City's Tax Identification Number is: 17.3 City's responsibility for Filing Tax Returns and Paving Taxes. City is responsible for filing any and all tax returns and for paying all taxes on cash, securities and income held in the Account. 18. NOTICES 18.1 Mailing of Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed as having been duly given on the date of service, if served personally on the party to whom notice is to be given, or on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows: City: Bank: Union Bank, N.A. 120 S. San Pedro Street, e Floor Los Angeles, CA 90012 Attn: Corporate Trust Department Fax: (213) 972-5694 18.2.1 Change of Address. Either be given by giving ten (10) party. 19. EFFECTIVE DATE party may change the address at which notice may days prior written notice of such change to the other This Agreement shall become effective upon the date of execution. City of Lake Elsinore, California 130 South Main Street Lake Elsinore, CA 92530 Attn: 4 Page 6 of 7 City: CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006-1 (Summerly) By: Title: of the City of Lake Elsinore, acting in its capacity as the legislative body of City of Lake Elsinore Community Facilities District 2006-1 (Summerly) Date: Bank UNION BANK, N.A., Agent By: Title: Vice President Date: 5 Page 7 of 7