CITY .

if"'F INDIO
100 CIVIC CENTER MALL INDIO, CA 92201 760.342.6500 FAX 760.342.6556 www.indio.org

October 16, 2006 Mr. Gary Williams Vice President SunCal Companies 74130 Country Club Drive Palm Desert, CA 92260 RE: Community Services District Improvement Area Two Mr. Williams: As you are aware, on August 2, 2006 the City Council approved a Resolution approving a Deposit and Reimbursement Agreement necessary to initiate Improvement Area Two Community Facilities District (CFD) Financing. Earlier today, you asked for clarifying language to specific wording contained in paragraph two of the analysis section reading, "staff is also negotiating with the Master developer for a contribution to the cost of certain water storage facilities needed to serve the Terra Lago development." This issue has been satisfied with the approval of the Resolution of Intention on September 20, 2006 (attached). Specifically, the Resolution of Intention staff report contains language in paragraph two of the analysis section outlining discretional monies in the amount of $1,750,000 which the City intends to allocate to new water storage facilities within the Terra Lago development. It is my understanding our negotiations are complete and both parties are satisfied. Should you have any questions or need additional information, please feel free to call me directly at (76 342-6560. Thank You,

Michael P. Busch Management Services Director

Attachments: Staff Report ROI: September 20, 2006 CC: File

INDIO CITY COUNCIL AGENDA REPORT

TO: FROM: DATE:

Glenn D. Southard, City Manager Jim L. Smith, Director of Engineering/Public Works September 20, 2006

SUBJECT: Resolution of Intention to Incur Bonded Indebtedness in the Amount Not to Exceed S33,500,000 within Improvement Area No. 2 of the City of Indio Community Facilities District No. 2004-3 (Terra Lago)

SUMMARY Community Facilities District No. 2004-3 (Terra Lago) was formed in July 2005. CFD No. 2004-3 (Terra Lago) contains two improvement areas corresponding to the two phases of development of homes contemplated by the Suncal Companies, the Master Developer. A total of 1,484 homes are expected to be built, 635 homes in Phase 1 and 849 homes in Phase 2. As part of the foiniation process, the City Council approved a Resolution of Intention to Incur Bonded Indebtedness in the Amount Not to Exceed $30,000,000 and $30,000,000 within Improvement Area No. 1 and Improvement Area No. 2, respectively, for a maximum bonded indebtedness limit of S60,000,000 for Community Facilities District No. 2004-3 (Terra Lago). In September 2005, the District issued Special Tax Bonds for Improvement Area No. 1 in the amount of $26,330,000. At that time, it was expected that the District would issue a second series of bonds in 2006 to finance certain public facilities related to Improvement Area No. 2. The bonds for Improvement Area No. 2, when issued, will be secured by Special Taxes levied on taxable parcels within Improvement Area No. 2. For City Council Agenda

ITEM NO. 7

ui-u NO. zUU4-3 (I erra Lam September 20, 2006 PAGE 2

At this time, in order to capitalize on the current additional bonding capacity expected to be generated by the Phase 2 development, the Master Developer is requesting that the amount of bonded indebtedness authorized to be incurred within Improvement Area No. 2 be increased from $30,000,000 to $33,500,000. In order to offset the increase in bonded indebtedness authorized for Improvement Area No. 2, staff is recommending that the authorized bonded indebtedness limit for Improvement Area No. 1 be reduced to $26,500,000, limiting the total authorized bonding capacity for the overall CFD to the original $60 million approved in 2005. The additional capacity realized from the proposed increase in bonded indebtedness for Improvement Area No. 2 will be divided equally between the Master Developer and the City. The Master Developer will use the additional proceeds to fund infrastructure costs of the development, while the City may use the proceeds for its own public facilities. STAFF RECOMMENDATION Staff recommends adopting the Resolution of Intention to Incur Bonded Indebtedness in the Amount Not to Exceed $33,500,000 within Improvement Area No. 2 of the City of Indio Community Facilities District No. 2004-3 (Terra Lago) and setting November 1, 2006 as the date for the public hearing and special election by property owners. ANALYSIS The Terra Lago development consists of two improvement areas corresponding with the two development stages of the project: Improvement Area No. 1 is expected to contain 635 homes and Improvement Area No. 2 is expected to contain 849 homes. Homesites within Improvement Area No. 1 have been sold to merchant builders and homes are under construction. The Master Developer is currently negotiating the sale of property within Improvement Area No. 2 with merchant builders. Construction of models and the first phase of production homes in Improvement Area No. 2 is expected to commence in early 2007. In connection with Improvement Area No. 2, special tax bonds are expected to be issued in December 2006. In addition to $1,000,000 funded with special tax bonds issued for Improvement Area No. 1, an additional $3,000,000 toward the

Ul-U NO. ZUU4-3 (I errs Lago) September 20, 2006 PAGE 3

cost of a fire station will be funded when the special tax bonds are issued for Improvement Area No. 2. Approximately 53,364,000 in City development impact fees for parks and streets will also be funded. The City's share of the additional bonding capacity of $1,750,000 can be used at the City's discretion for additional public facilities. The issuance of special tax bonds for Improvement Area No. 2 is expected to be considered by the City Council in November 2006. At this time it is requested that the amount of bonded indebtedness authorized to be incurred within Improvement Area No. 2 be increased from S30,000,000 to S33,500,000. In order to offset the increase in bonded indebtedness authorized for Improvement Area No. 2 and limit the bonded indebtedness for the Community Facilities District to $60,000,000 in total, the authorized bonded indebtedness limit for Improvement Area No. 1 would be reduced to $26,500,000. The additional capacity realized from the proposed increase in bonded indebtedness for Improvement Area No. 2 will be divided equally between the Master Developer and the City. The Master Developer will use the additional proceeds to fund infrastructure costs of the development, while the City will use the proceeds for its own public facilities. Prior to the issuance of the Improvement Area No. 2 Bonds, a determination will be made that the homes to be built within the CFD can support the estimated special taxes in the amount necessary to repay this second series of bonds and that such special tax does not cause the total effective tax rate (including ad valorem taxes, the City's CFD payment for public safety and all other special assessments) to exceed the maximum allowable rate of 2% of the estimated purchase price of homes in the CFD. It is estimated that the average special tax per house will be $2,500 for interior homes and $4,100 for view lot homes. FINANCIAL REVIEW The property owner posted a deposit in order to cover City costs incurred in connection with these change proceedings and for costs relating to the appraisal of property within Improvement Area No. 2. Approval of this resolution does not in any way commit the City to any financial contribution or liability to repay any bonded indebtedness issued by the CFD. The City's cost to administer the CFD annually will be reimbursed through annual special taxes charged to property owners.

CFD No. 2004-3 (Terra Lago) September 20, 2006 PAGE 4

The special tax bonds will fund approximately $3,364,000 of development impact fees of the City, $3,000,000 toward the cost of a fire station, and another $1,750,000 of other City public facilities, as well as sewer fees of Valley Sanitary District, school fees and certain of the Master Developer's infrastructure costs. LEGAL REVIEW The Mello-Roos Community Facilities Act of 1982 (the "Act") provides clear authority, in section 53318(c), for the initiation of the establishment of community facilities districts or changes thereto upon receipt by the City of a petition requesting the proceedings by the owners of not less than 10% of the area of land within the district. The City has received the signed petition from Land Ventures, LLC, the property owner of land within Improvement Area No. 2. The Act provides that, if there are less than 12 registered voters currently within the district, the vote to increase the bonded debt limit shall be by the landowners within such district and each landowner shall have one vote for each acre or portion of an acre of land owned within the district. This item has been reviewed by Don Hunt of Fulbright & Jaworski, L.L.P, the City's bond counsel. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Copies of this report are available at the City Hall public counter and the Indio Public Library. ALTERNATIVES 1. Determine not to adopt resolution of intention to incur bonded indebtedness in the amount not to exceed $33,500,000 within improvement Area No. 2 of the Terra Lago development.

CFD No. 2004-3 (Terra Lago) September 20, 2006 PAGE 5

Submitted by:

Financial Review:

e d,
Jim L. Smith, P.E. Director of Engineering/Public Works Michael P. Busch Management Services Director Reviewed by:

Don Hunt, Bond Counsel List of Attachments: A. Resolution of Intention to Incur Bonded Indebtedness in the Amount Not to Exceed $33,500,000 within Improvement Area No. 2 of the City of Indio Community Facilities District No. 2004-3 (Terra Lago)

ATTACHMENT "A"

RESOLUTION NO. RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF INDIO TO INCUR BONDED INDEBTEDNESS IN THE AMOUNT NOT TO EXCEED $33,500,000 WITHIN IMPROVEMENT AREA NO. 2 OF THE CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has received a petition from the landowner of Improvement Area No. 2 of the City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD") to institute proceedings to increase the amount of bonded indebtedness authorized to be incurred within Improvement Area No. 2 from $30,000,000 to $33,500,000, the proceeds of which will be used to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other governmental facilities, which are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD (the "Facilities"). NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LNDIO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: It is necessary to incur bonded indebtedness within Improvement Area No. Section 1. 2 of the CF'D in the amount not to exceed $33,500,000 to finance the costs of the Facilities for Improvement Area No. 2. The indebtedness will be incurred for the purpose of financing the costs of Section 2. designing, constructing and acquiring the Facilities, the acquisition of necessary equipment and property therefor and fulfilling contractual commitments and carrying out the powers and purposes of the CFD, including, but not limited to, the financing of the costs associated with the issuance of the bonds and all other costs necessary to finance the Facilities which are permitted to be financed pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the Government code of the State of California. Section 3. Improvement Area No. 2 shall pay for its bonded indebtedness.

It is the intent of the Council to authorize the sale of bonds in one or more Section 4. series in the maximum aggregate principal amount not to exceed $33,500,000 for Improvement Area No. 2 at a maximum interest rate not in excess of 12 percent per annum or such rate not in excess of the maximum rate permitted by law at the time the bonds are issued. The temi of the bonds shall be determined pursuant to a resolution of the Council authorizing the issuance of the bonds, but such term shall in no event exceed 40 years or such longer term as is then permitted by law.

45821073.1

As an off-set to the increase in amount of authorized bonded indebtedness Section 5. for Improvement Area No. 2, the amount of bonded indebtedness authorized to be incurred within Improvement Area No. 1 is hereby reduced to $26,500,000. A public hearing (the "Hearing") on the proposed increase in debt issue Section 6. shall be held on November 1, 2006 at 6:00 o'clock p.m., or as soon thereafter as practicable, at the chambers of the City Council of the City of Indio, 150 Civic Center Mall, Indio, California 92202. At the Hearing at the time and place set forth above, any interested Section 7. persons, including all persons owning land within Improvement Area No .2, may appear and be heard at the Hearing. The proposition to incur bonded indebtedness in the maximum aggregate Section 8. principal amount not to exceed $33,500,000 for Improvement Area No. 2 shall be submitted to the qualified electors of Improvement Area No. 2. A special election shall be conducted on November 1, 2006. The special election shall be conducted by hand delivered or mailed ballot election. The ballots shall be returned to the office of the election officer no later than 11:00 o'clock p.m. on November 1, 2006. The Clerk is hereby directed to publish a copy of this resolution, which Section 9. shall serve as notice ("Notice") of the Hearing and the special bond election, pursuant to Section 6061 of the Government Code in a newspaper of general circulation in the proposed CFD.

PASSED, APPROVED and ADOPTED this by the following votes: AYES: NOES:

day of

, 2006

GENE GILBERT, MAYOR ATTEST:

CYNTHIA HERNANDEZ CITY CLERK, CMC

TO: FROM:

CITY COUNCIL OF THE C11 Y OF 11NT)I0 INDIO LAND VENTURES, LLC

PETITION (INCLUDING CONSENT AND WAIVER) REQUESTING THE ESTABLISHMENT OF A COMMUNITY SERVICES DISTRICT The undersigned landowner does hereby certify under penalty of perjury that the following statements are all true and correct: The undersigned is authorized to represent the landowner identified below (the 1. "Landowner") and is its designated representative to petition the City Council (the "Council") of the City of Indio (the "City") and to give the consent and waiver contained herein with respect to City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD") formed under the provisions of the Mello-Roos Community Facilities Act of 1982 (the "Act"), being Chapter 2.5 of Part 1 of Division 2 of title 5 (commencing with Section 53311) of the California Government Code. 2. The undersigned hereby certify that as of the date indicated opposite his signature, the landowner listed herein is the owner of the property within Improvement Area No. 2 of the CFD described in Exhibit "A" hereto (the "Improvement Area No. 2"). Pursuant to a special election held within Improvement Area No. 2, the 3. Landowner has previously approved the incurring of bonded indebtedness in the amount of not to exceed $30,000,000 within Improvement Area No. 2. Due to changes in the development plan for Improvement Area No. 2, additional bonded indebtedness will need to be incurred within Improvement Area No. 2. The undersigned, pursuant to Section 53318 of the Act, hereby requests that 4. proceedings be commenced to increase the maximum authorized amount of bonded indebtedness within Improvement Area No. 2 to $33,500,000. 5. In accordance with the provisions of the Act, and specifically Sections 53326(a) and 53327(b) thereof allowing certain time and, conduct requirements relative to a special landowner election to be waived with the unanimous consent of all the landowners to be included in a community facilities district and concurrence of the election official conducting the election, the undersigned (i) expressly consents to the conduct of the special election at the earliest possible time and (ii) expressly waives any requirement to have the special election conducted within the time periods specified in Section 53326 of the Act or in the California Elections Code. The undersigned waives any requirement for the mailing of the ballot for the 6. special election and expressly agree that said election may be conducted by mailed or handdelivered ballot to be returned as quickly as possible to the designated election official, being the office of the City Clerk and the undersigned request that the results of said election be canvassed

45821143.1

and reported to the Council at the same meeting of the Council as the public hearing on the fatination of the CFD or the next available meeting. The undersigned expressly waives all applicable waiting periods for the election 7. and waives the requirement for analysis and arguments relating to the special election, as set forth in Section 53327 of the Act, and consents to not having such materials provided to the landowner in the ballot packet, and expressly waives any requirements as to the form of the ballot. The undersigned expressly waives all notice requirements relating to hearings and 8. special elections, whether by posting, publishing or mailing, and whether such requirements are found in the California Elections Code, the California Government Code or other laws or procedures, including but limited to any notice provided for by compliance with the provisions of Section 4101 of the California Elections Code. The undersigned hereby consents to and expressly waives any and all claims 9. based on any irregularity, error, mistake or departure from the provisions of the Act or other laws of the State and any and all laws and requirements incorporated therein, and no step or action in any proceeding relative to Improvement Area No. 2 or the special election therein shall be invalidated or affected by any such irregularity, error, mistake or departure. IN WITNESS WHEREOF, I hereunto set my hand this day of , 2006.

INDIO LAND VENTURES, LLC, a California limited liability company

Gary C. Williams Vice President SunCal Companies

FILED IN THE OFFICE OF THE CITY CLERK OF THE CITY OF INDIO THIS , 2006. DAY OF

City Clerk

45821143.1

REIMBURSEMENT AND DEDICATION AGREEMENT FOR PUBLIC IMPROVEMENTS

Terra Lago Master Planned Water Facilities Improvements February 21, 2006 This Reimbursement Agreement for Public Improvements (the "Agreement") is made this 1st day of March, 2006, by and between the City of Indio, a California Municipal Corporation ("City") and Indio Land Ventures, LLC, a California Limited Liability Company ("Developer"). City and Developer are sometimes referenced herein jointly as the "Parties" and each is sometimes alternatively referenced as a "Party." RECITALS A. Developer is the master developer of that certain real property commonly known as the Terra Lago Project and located in the City of Indio, County of Riverside, State of California (the "Property"). B. Developer is currently engaged in the project of developing the Property (the "Project") in conformance with the terms and conditions of City entitlements, including but not limited, to Tract Map No. 32341 (TM 32341) and that certain development agreement dated December 18, 1996 and recorded in the Official Records of Riverside County on September 18, 1998 (collectively, the "Conditions"). C. The Conditions require Developer to construct certain public improvements that benefit the Project and other properties within the area, subject to reimbursement by the City of certain resulting costs. D. Based on recent water analysis and water model Master Plan studies conducted by the City, upgrades to the water distribution system are needed to serve the Property and properties adjacent to the Property. E. City desires to have Developer design (in cooperation with City), construct, install, and dedicate to City certain public facilities related to the necessary upgrade of the water distribution system to serve and benefit the Property and properties adjacent to the Property (the "Water Facilities Improvements"), for which City will provide plan check, design review, and inspection services. The Water Facilities Improvements consist of two separate components, the construction of a domestic water pump station (the "Pump Station") and the construction of a 24-inch ductile iron water transmission main (the "Water Line"). The nature and scope of the Water Facilities Improvements are more specifically described in Exhibit A attached hereto and incorporated by reference herein.

REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS Page 1 of 20

F. Developer has requested that City enter into a reimbursement agreement to set forth the terms and conditions under which the City will reimburse Developer for design and construction of the Water Facilities Improvements. G. Developer's projected costs arising from and related to each component of the Water Facilities Improvements is reflected in the itemized list provided as Exhibit B, and incorporated herein. Developer's total projected costs related to design, construction, and installation of the Water Facilities Improvements, as reflected on Exhibit B and subject to approval of the Director of Public Works of the City, are hereinafter referred to as the "Estimated Costs." H. The Pump Station will be constructed on property currently owned by Developer (the "Pump Station Property"). The Pump Station Property is more particularly described in Exhibit C attached hereto and incorporated herein. I. City and Developer agree that the Water Facilities Improvements will not cause any actual or potential environmental impacts beyond those arising from and related to the Project and previously addressed in Environmental Assessment No. 04-11-404 relating to Developer's proposed development of the Property (the "Environmental Assessment"). J. City and Developer have agreed that Developer will construct the Water Facilities Improvements and dedicate the Water Facilities Improvements and Pump Station Property to City, City will provide design review, plan check, and inspection services. City will reimburse Developer from those funds related to the City of Indio Community Facilities District No. 2004-3 (hereinafter "CFD 2004-3") account attributable to Water Capital Improvement Fees (hereinafter "Available CFD Funds) for the cost of the Water Facilities Improvements, and City will accept the Water Facilities Improvements and Pump Station Property, all as provided in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, the receipt and legal sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 1. Agreement to Reimburse.

The Parties intend this Agreement to serve as the contract pursuant to which City shall reimburse Developer from funds related to the CFD 2004-3 account attributable Water Capital Improvement Fees for expenses incurred in the design, construction, and installation of the Water Facilities Improvements. The City shall pay said reimbursement in the amount of Developer's actual costs and expenses, which shall also include Developer's costs for a contract administrator / construction manager as set forth below in Section 4.2, for any unknown conditions encountered as set forth below in Section 4.6.1, if required, and for any design, construction and installation cost overruns attributable to any Force Majeure event, as that term is defined below in Section 5, in
REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS Page 2 of 20 _

conformance with the terms of this Agreement; however, said amount shall not exceed one hundred ten percent (110%) of the Estimated Costs (as approved by the Director of Public Works pursuant to Section 5, below), without approval of the City Council of the City of Indio and/or amendment to the Agreement (in either event, the "Reimbursement"). In making its commitment to the Reimbursement, City specifically declines to commit any funds attributable to interest. As a foundation for this Agreement and City's payment of the Reimbursement, the Parties agree that the Recitals above are true and correct and that they mutually accept same as binding contractual terms, incorporated by reference, together with Exhibits A, B, and C, and the definitions set forth, herein. 2. Design, Construction and Installation of Improvements and Water Facilities Improvements.

Developer shall be responsible for designing (in cooperation with City), constructing, and installing the Water Facilities Improvements. City shall provide plan check, design review, and inspection services. Developer shall submit plans, conforming to all applicable legal authority and standards, for the Water Facilities Improvements, in accord with established City policies and procedures and compliance with all applicable authority, to City's Director of Public Works (the "Director") for approval prior to construction. The construction and installation of the Water Facilities Improvements shall be to the City's satisfaction, reasonably exercised in its sole discretion. 3. Obligations of Developer. 3.1. Scope of Services

The obligations of Developer pursuant to this Agreement may collectively be referred to herein as "Services" or "Work." Developer may select a contractor or contractors (collectively, "Contractor") to assist in the construction and installation of the Water Facilities Improvements and to perform Services and Work hereunder. Developer shall be responsible for Contractor's compliance with and satisfaction of all of Developer's obligations underthis Agreement. As a material inducement to the City entering into this Agreement, Developer represents and warrants that Contractor is a provider of first class work and services and is experienced in performing the Work and Services contemplated herein. Developer also warrants and represents that all materials will be of good quality, fit for the purpose intended. 3.2. Compliance with Law and City Requirements. All Services rendered hereunder shall be provided in accordance with all ordinances, resolutions, statutes, rules, and regulations of the City and any Federal, State or local governmental agency having jurisdiction in effect at the time service is rendered. Developer understands and agrees that this Agreement shall not be construed or interpreted by City or any party as relieving Developer
REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS Page 3 of 20

of its general obligations arising from or related to the design (in cooperation with the City), construction and installation of public facilities and infrastructure, e.g., to provide City with various bonds (the "General Obligations"). 3.3. Licenses, Permits, Fees and Assessments.

Developer shall obtain at its/their sole cost and expense, subject to reimbursement, such licenses, permits and approvals as may be required by law for the performance of the Services required by this Agreement. Developer shall have the sole obligation to pay for any, fees, assessments and taxes, plus applicable penalties and interest, which may be imposed by law and arise from or are necessary for Developer's performance of the services required by this Agreement, and shall indemnify, defend and hold harmless City against any such fees, assessments, taxes penalties or interest levied, assessed or imposed against City hereunder. 3.4. Familiarity with Work.

By executing this Contract, Developer warrants that Developer: (a) has thoroughly investigated and considered the scope of Services to be performed, (b) has carefully considered how the Services should be performed, and (c) fully understands the facilities, difficulties and restrictions attending performance of the Services under this Agreement. If the services involve work upon any site, Developer warrants that it has or will investigate the site and is or will be fully acquainted with the conditions there existing, prior to commencement of Services hereunder. Should Developer discover any latent or unknown conditions, which will materially affect performance of Services hereunder, Developer shall immediately inform the Director of such fact and shall not proceed except at Developer's risk until written instructions are received from the "Contract Officer" as that term is defined below in Section 4.2 and, if necessary, the parties have mutually agreed to a revised Completion Date, as that term is defined below in Section 5. 3.5. Care of Work. Developer shall adopt reasonable methods during the life of the Agreement to furnish continuous protection to the Work, and the equipment, materials, papers, documents, plans, studies and/or other components thereof to prevent losses or damages, and shall be responsible for all such damages, to persons or property, unless such losses or damages are attributable to a Force Majeure event and/or are caused by the City's own negligence, until acceptance of the Work by City. 3.6. Further Responsibilities of Parties.

Both Parties agree to use reasonable care and diligence to perform their respective obligations under this Agreement. Both Parties agree to act in good faith to

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execute all instruments, prepare all documents and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless hereafter specified, neither of the Parties shall be responsible for the service of the other. 3.7. Prevailing Wage Laws.

In accordance with Labor Code Section 1770 et seq., the director of the Department of Industrial Relations of the State of California has ascertained a general prevailing rate of wages which is the minimum amount which shall be paid to all workers employed to perform the work pursuant to this Agreement. A copy of the general prevailing wage rate determination is on file in the Office of the City Clerk and is hereby incorporated in this Agreement. Developer shall be responsible for Contractors' compliance in all respects with the prevailing wage rates to all the laborers involved, and with California Labor Code Section 1770 et. seq., including the keeping of all records required by the provisions of Labor Code Section 1776 and the implementing administrative regulation. In accordance with the provisions of Labor Code Section 1810 et seq., eight (8) hours is the legal working day. 4. Coordination of Work and Services. 4.1. Principals of Developer.

The following principals of Developer are hereby designated as being the principals and representatives of Developer authorized to act in its behalf with respect to the Work specified herein and make all decisions in connection therewith: Gary Williams

It is expressly understood that the experience, knowledge, capability and reputation of the foregoing principals were a substantial inducement for City to enter into this Agreement. Therefore, the foregoing principals shall be responsible during the term of this Agreement for directing all activities of Developer and devoting sufficient time to personally supervise the Services hereunder. For purposes of this Agreement, the foregoing principals may not be replaced nor may their responsibilities be substantially reduced by Developer without the express written approval of City. 4.2. Contract Administrator / Construction Manager

At Developer's option, Developer may retain a contract administrator and/or construction manager to assist developer in coordination of the Work and

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Services. Upon retention of said contract administrator / construction manager, Developer shall submit to Director Developer's contract with the contract administrator / construction manager or such other documentation accurately showing the projected costs of said contract administrator / construction manager. Upon written approval of the Director, which approval shall not be unreasonably withheld, the projected costs of said contract administrator / construction manager shall be added to Developer's Estimated Costs, and the Reimbursement due to Developer shall be increased to reflect the additional costs of said contract administrator / construction manager. 4.3. Contract Officer.

The Contract Officer shall be such person as may be designated by the City Manager of City or the Director. It shall be the Developer's responsibility to assure that the Contract Officer is kept informed of the progress of the performance of the Services and the Developer shall refer any decisions which must be made by City to the Contract Officer. Unless otherwise specified herein, any approval of City required hereunder shall mean the approval of the Contract Officer. The Contract Officer shall have authority to sign all documents on behalf of the City required hereunder to carry out the terms of this Agreement. 4.4. Prohibition Against Assignment.

Neither this Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated or encumbered voluntarily or by operation of law, whether for the benefit of creditors or otherwise, by Developer without the prior written approval of City. In the event of any such unapproved transfer, including any bankruptcy proceeding, this Agreement shall be void. No approved transfer shall release the Developer or any surety thereof of any liability hereunder without the express consent of City. 4.5. Independent Contractor.

Developer and Contractor shall perform all services required herein as an independent contractor of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role. Neither Developer nor Contractor shall at any time or in any manner represent that it or any of its agents or employees are agents or employees of City. City shall not in any way or for any purpose become or be deemed to be a partner of Developer and/or Contractor in its/their business or otherwise or a joint venturer or a member of any joint enterprise with Developer and/or Contractor by virtue of this Agreement.

REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS Page 6 of 20 _

4.6.

Trenches or Excavations.

Pursuant to California Public Contract Code Section 7104, in the event the Work included in this Agreement requires excavations more than four (4) feet in depth, the following shall apply. 4.6.1. Developer shall promptly, and before the following conditions are disturbed, notify City, in writing, of any: (1) material that Developer believes may be material that is hazardous waste, as defined in Section 25117 of the Health and Safety Code, that is required to be removed to a Class 1, Class 11, or Class III disposal site in accordance with provisions of existing law; (2) Subsurface or latent physical conditions at a Work site different from those indicated; or (3) Unknown physical conditions at a Work site of any unusual nature, different materially from those ordinarily encountered and generally recognized as inherent in Work of the character provided for in the contract. 4.6.2. City shall promptly investigate the conditions, and if it finds that the conditions do materially so differ, or do involve hazardous waste, and cause a decrease or increase in Developer's cost of, or the time required for, performance of any part of the Work, Contract Officer shall call for a "Meeting" as that term is defined below in Section 5 and extend the "Completion Date" as that temi is defined below in Section 5 to a date mutually agreeable to the parties. 4.6.3. That, in the event that a dispute arises between City and Developer whether the conditions materially differ, or involve hazardous waste, or cause a decrease or increase in Developer's cost of, or time required for, performance of any part of the Work, Developer shall not be excused from the "Completion Date" as that term is defined below in Section 5, but shall proceed with all Work to be performed under this Agreement. Developer shall retain any and all rights provided either by this Agreement or by law that pertain to the resolution of disputes and protests between the Parties. 5. Term, Completion of Water Facilities Improvements, Progress Meetings, Force Majeure.

This Agreement shall become effective upon execution by the Parties and continue in full force and effect until final approval and acceptance of the Water Facilities Improvements by the City Council of City (the "Termination Date"). Time is of the essence in the performance of this Agreement. Upon approval of the final plans for the Water Facilities Improvements by the City, Developer shall forthwith submit a schedule of the Water Facilities Improvements (the "Work Schedule") and a revised Exhibit B reflecting the Developer's final Estimated Costs based on such approved plans to the Director for
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approval, along with a copy of all contracts with the Contractors. Developer covenants that its completion of the design, construction and installation of the Water Facilities Improvements (the "Completion") shall take place within sixty (60) days the Director's approval of the Work Schedule and the Estimated Costs (the "Completion Date"), subject to an extension of the Completion Date, under the terms and conditions provided by this Agreement. The Contract Officer, in order to monitor progress toward Completion, may from time to time require the attendance of Developer at meetings at City Hall ("Meetings") reasonably deemed necessary by City. The Developer may request a Meeting with the Contract Officer in the event that such a Meeting becomes, in Developer's opinion, warranted. Extensions as to the Completion Date must be approved in advance in writing by the Contract Officer. However, the Completion Date shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of Developer, including, but not restricted to, those items listed in Section 4.6.1 above, acts of God or of a public enemy, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes, acts of any governmental Agency other than City, and unusually severe weather (collectively "Force Majeure"), if Developer shall within ten (10) days of the commencement of such delay notify the Contract Officer in writing of the causes of the delay. Upon such written notice, the Contract Officer shall ascertain the facts and the extent of delay, and extend the Completion Date for the period of the forced delay to a date mutually agreeable to the Parties. 6. City Acceptance and Maintenance of Water Facilities Improvements.

City agrees to approve and accept the Water Facilities Improvements and to accept dedication of the Water Facilities Improvements and Pump Station Property upon Completion, inspection and any requisite peimit issuance. As used in this Agreement, acceptance of the Water Facilities Improvements and related dedications shall mean acceptance and approval by the City Council of City. Upon dedication of the Water Facilities Improvements and Pump Station Property to public use by Developer and acceptance by City, City agrees to maintain same. City further agrees to accept all liability arising out of ownership and operation of, the Water Facilities Improvements and Pump Station Property, except for liability directly caused by Developer. 7. Dedication Not a Taking

Developer and City expressly agree that the dedication required by the City pursuant to this Agreement is necessitated by the impacts and additional burdens placed upon the public and the City by the Project, and the dedication is roughly proportional in both nature and extent to the impacts of the Project. Developer hereby agrees that it is not entitled to, and hereby waives, any rights it may have to assert damages or claim just compensation, including attorney's fees, costs and expenses, under the Unites States or California Constitutions or federal or state law.

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8.

Insurance, Indemnification and Remedies. 8.1 Insurance. 8.1.1. Liability Insurance. Developer and/or Contractor shall procure and maintain, at its cost, and submit to the Contract Officer concurrently with its execution of this Agreement, comprehensive general liability insurance, inclusive of personal and public liability and personal injury/property damage insurance in the amount of one million dollars ($1,000,000.00) per occurrence, combined single limit, against all claims for injuries against persons or damages to property resulting from Developer's and/or Contractor's acts or omissions arising out of or related to Developer's and/or Contractor's performance under this Agreement. The insurance policy shall contain a severability of interest clause providing that the coverage shall be primary for losses arising out of Developer's and/or Contractor's performance hereunder and neither City nor its insurers shall be required to contribute to such loss. A certificate evidencing the foregoing and naming City and its officers and employees as additional insureds shall be delivered to and approved by City prior to commencement of the Services hereunder. 8.1.2. Automobile Insurance. Developer and/or Contractor shall carry automobile liability insurance of one million dollars ($1,000,000.00) per accident against all claims for injuries against persons or damages to property arising out of the use of any automobile by Developer and/or Contractor, its officers, any person directly or indirectly employed by Developer and/or Contractor, any agent or employee, or anyone for whose acts any of them may be liable, arising directly of indirectly of out of related to Developer's and/or Contractor's performance under this Agreement. The term "automobile" includes, but is not limited to, a land motor vehicle, trailer or semi-trailer designed for travel on public roads. The automobile insurance policy shall contain a severability of interest clause providing that coverage shall be primary for losses arising out of Developer's and/or Contractor's performance hereunder and neither City nor its insurers shall be required to contribute to such loss. A certificate evidencing the foregoing and naming City and its officers and employees as additional insured shall be delivered to and approved by City prior to commencement of the Services hereunder. 8.1.3. Workers' Compensation Insurance. Developer and/or Contractor shall carry Workers' Compensation Insurance as required by law.

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8.1.4. Effective Dates of Coverage. All insurance required by this Section 8.1 shall be kept in effect during the term of this Agreement and shall not be cancelled without thirty (30) days written notice to City of proposed cancellation. The procuring of such insurance of the delivery of policies or certificates evidencing the same shall not be construed as a limitation of Developer's and/or Contractor's obligation to indemnify City, its officers, employees, contractors, subcontractors, or agents. 8.2. Indemnification.

Developer shall defend, indemnify and hold harmless City, its elected officials, officers, employees, representatives, attorneys and agents, from and against any and all actions, suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and attorneys' fees for counsel acceptable to City (collectively "Claims"), for injury to or death of person(s), for damage to property (including City property) and for errors and omissions committed by Developer and/or Contractor, its/their officers, employees and agents, that arise out of or are related to Developer's and/or Contractor's negligent performance under this Agreement, except to the extent of such loss as may be caused by City's own negligence or that of its officers or employees. By way of clarification, Developer's duty to indemnify pursuant to this Section 8.2 shall extend to, without limitation, any and all Claims by other property owners and/or other developers relating to City's provision of water to said property owners and/or developers arising out of Developer's and/or Contractor's negligent performance under this Agreement and/or failure to complete the Water Facilities Improvements by the Completion Date. Developer's duty to indemnify pursuant to this Section 8.2 shall survive the Termination Date for a period of four (4) years. 8.3. Remedies.

In addition to any other remedies City may have hereunder, if Developer and/or Contractor fails to provide or maintain any insurance policies or policy endorsements to the extent and within the time herein required, City may, at its sole option, obtain such insurance and deduct and retain the amount of the premiums for such insurance from any sums due under this Agreement; order Developer and/or Contractor to stop Work and/or withhold any Reimbursement payment(s) that become due to Developer hereunder until Developer and/or Contractor complies with the insurance requirements; or may, at its sole option, terminate this Agreement. City's exercise of any of these remedies is in addition to any other remedies that City may have and nothing herein shall be construed to limit in any way Developer's responsibility for indemnification as set forth above.

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9.

Sufficiency of Insurer or Surety.

Insurance or bonds required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, the Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VU or better, unless such requirements are waived by City due to unique circumstances. In the event the Risk Manager of City ("Risk Manager") determines that the Work or Services to be performed under this Agreement creates an increased risk of loss to the City, Developer agrees that the minimum limits of the insurance policies required by Section 8 may be changed accordingly upon Developer's receipt of written notice from City; provided that the Developer shall have the right to appeal a determination of increased coverage to the City Council of City within ten (10) days of receipt of said notice. The City Manager of City may, in his/her sole discretion, waive or modify the insurance requirements set forth in Section 8 at the request of Developer. 10. Sources and Method of Reimbursement. 10.1. Source of Reimbursement Developer understands and agrees the Reimbursement shall be limited to the Available CFD Funds, and the City shall have no obligation to reimburse Developer from funds other than the Available CFD Funds. Developer understands and agrees that, pursuant to the terms of the CFD 2004-3 Financing Plan, any shortfall in financing the Water Facilities Improvements are the responsibility of Developer. Developer further understands and agrees that City shall also be entitled to reimbursement from the Available CFD Funds for any and all costs and expenses reasonably incurred by City relating to the design, construction, and installation of the Water Facilities Improvements. 10.2. Progress Payments.

Developer shall advance the full cost and pay all expenses arising from and related to designing, constructing, installing and providing for the inspection and permitting of the Improvements and the Water Facilities Improvements as specified by this Agreement. City shall make progress payments to Developer provided that Developer has first submitted to the Director, and the Director has approved, the Work Schedule and the Estimated Costs, including copies of all contracts with the Contractors, within fifteen (15) days of letting the work to the Contractor to perform the work. The Director shall not unreasonably withhold approval of the Work Schedule and Estimated Costs. Prior to the forty-fifth (45th) day following the commencement of the Water Facilities Improvements, provided that the Developer has submitted and the Director has approved the work schedule and cost estimate, there shall be paid to Developer a sum equal to
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ninety percent (90%) of the value of the actual work completed since the commencement of the Water Facilities Improvements as . determined by the City pursuant to such supporting information as may be reasonably required by City to document Developer's expenditures; and thereafter, prior to every forty fifth (45th) day as the Water Facilities Improvements progress, Developer shall be paid such sum as will bring the total payments received, since the commencement of the Water Facilities Improvements, as reasonably determined by the City (less all previous payments) to ninety percent (90%) of the value of the actual work completed. In no case shall the amount withheld by the City be of a value less than ten percent (10%) of the value of the work completed. Payments shall be made only be made upon submittal of required supporting documents and determination by the Director, or Director's designee, that the work for which payment is demanded has been performed in accordance with the terms of this Agreement, and that the amount demanded is due under the terms of this Agreement. The partial payments provided for herein shall not be considered as an acceptance of any part of the Work. 10.3. Final Accounting and Payment.

Upon completion of construction of the Water Facilities Improvements, Developer shall submit to City a final accounting to deteimine the total costs of the work. Developer shall also submit to City such supporting information as may be reasonably required by City to document Developer's expenditures on the Water Facilities Improvements. No earlier than thirty-five (35) days after acceptance of the Water Facilities Improvements by the City Council of the City and the recording of the Notice of Completion, and no later than sixty (60) days after said recording, City shall reimburse Developer for the actual costs incurred in constructing the Water Facilities Improvements (less all previous payments). City shall make such final payment to Developer after Developer has submitted all documents required to make a final accounting. 11. City Officials, Officers and Employees, Nondiscrimination. 11.1. Non-liability of City Officers and Employees. No official, officer or employee of the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer, or for breach of any obligation of the terms of this Agreement. 11.2. Conflict of Interest.

Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement.

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11.3. Covenant Against Discrimination. Developer covenants that, by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the performance of this Agreement. To the extent required by law, Developer and Contractor shall take affi iative action to insure that applicants are employed and that employees are treated during employment without regard to their race, color, creed, religion, sex, marital status, national origin, or ancestry. 12. Miscellaneous Provisions. 12.1. Enforcement Costs.

Developer shall reimburse City for any direct costs or expenses that City reasonably incurs, including City staff time and attorney's fees, in taking actions that Developer requests or requires City to take pursuant to this Agreement. 12.2. Notices.

All notices or other communications required or permitted hereunder shall be in writing and shall be either personally delivered (which shall include delivery by means of professional overnight courier service which confimis receipt in writing [such as Federal Express or UPS] ), sent by telecopier or facsimile ("Fax") machine capable of confirming transmission and receipt, or sent by certified or registered mail, return receipt requested, postage prepaid to the following parties at the following addresses or numbers:

If to City:

If to Developer:

City of Indio 100 Civic Center Mall Indio, California 92201 Attn: Jim Smith, Public Works Director Telephone: (760) 342-6580 Fax: (760) 342-6556

SunCal Companies 74-130 Country Club Dr., Ste. 101 Palm Desert, CA 92260 Attn: Gary C. Williams Telephone: (760) 601-3400 Fax: (760) 601-3421

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With copy to: Woodruff, Spradlin & Smart 701 South Parker St., Ste. 8000 Orange, CA 92868-4760 Attn: Edward Z. Kotkin, City Attorney Telephone: (714) 564-2635 Fax: (714) 565-2535

With a copy to:

Attn: Telephone: Fax:

Notices sent in accordance with this Section 12.2 shall be deemed delivered upon the: (a) date of delivery as indicated on the written confirmation of delivery (if sent by overnight courier service); (b) date of actual receipt (if personally delivered by other means); (c) date of transmission (if sent by telecopier or facsimile machine); or (d) date of delivery as indicated on the return receipt (if sent by certified or registered mail, return receipt requested). Notice of change of address shall be given by written notice in the manner detailed in this Section 14.2. 12.3. Breach and Remedies. Notwithstanding any provision of this Agreement to the contrary, Developer shall not be deemed to be in default under this Agreement with respect to any obligation owed to City, unless City shall have first delivered a written notice of any alleged default to Developer that specifies the nature of such default. If such default is not cured by Developer within thirty (30) days after receipt of such notice of default, or with respect to defaults that cannot be cured within such period, Developer fails to commence to cure the default within thirty (30) days after receipt of the notice of default, or thereafter fails to diligently pursue the cure of such default, City may elect to terminate this Agreement and withhold the Reimbursement from Developer. 12.4. Attorneys' Fees. If either party to this Agreement is required to initiate or defend or made a Party to any action or proceeding in any way connected with this Agreement, the prevailing party in such action or proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorney's fees. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, taking depositions and discovery and all other necessary costs the court allows which are incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment.

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12.5. Entire Agreement. This Agreement and the Exhibits herein contain the entire integrated agreement among the Parties. The Parties intend that this Agreement state their agreement in Any prior agreements, full to each and every one of its provisions. understandings, promises, negotiations or representations respecting the matters dealt with herein or the duties of any Party in relation thereto, not expressly set forth in this Agreement, are agreed by all Parties to be null and void. 12.6. Severability. If any term, provision, condition, or covenant of this Agreement, or the application thereof to any Party or circumstance, shall to any extent be held invalid or unenforceable, the remainder of the instrument, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby and each teiiii and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 12.7. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which constitute one and the same instrument. 12.8. Binding Effect. This Agreement shall be binding on and inure to the benefit of the Parties to this Agreement and their agents, servants, heirs, personal representatives, and successors, except as otherwise provided in this Agreement. 12.9. Governing Law and Venue. This Agreement and the legal relations between the Parties shall be governed by and construed in accordance with the laws of the State of California. Furthermore, the Parties agree to venue in the Indio Branch of the Consolidated Courts of Riverside County, California. 12.10. Mutual Covenants. The covenants contained herein, including those contained in the Recitals herein, are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the party benefited thereby of the covenants to be performed hereunder by such benefited party.

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12.11. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the Parties and their Successors. No other person or entity shall have any right of action based upon any provision of this Agreement. 12.12. Waiver. Failure by a Party to insist upon the strict performance of any of this Agreement's provisions by the other Party, or the failure by a Party to exercise its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter, and shall not be deemed a continuing waiver or a waiver of any subsequent breach of that or any other provision of this Agreement. 12.13. Headings. The headings in this Agreement are inserted for convenience only. They do not constitute part of this Agreement and shall not be used in its construction. 12.14. Jointly Drafted. It is agreed among the Parties that this Agreement was jointly negotiated and jointly drafted by the Parties and their respective counsel, and that it shall not be interpreted or construed in favor of or against any party solely on the ground that it drafted the Agreement. It is also agreed and represented by all Parties that said Parties were of equal or relatively equal bargaining power and that in no way whatsoever shall this Agreement be deemed to be a contract of adhesion, or unreasonable or unconscionable. 12.15. Independent Legal Counsel. Each Party acknowledges that it has been represented by independent legal counsel of its own choice throughout all of the negotiations that preceded the execution of this Agreement or has knowingly and voluntarily declined to consult legal counsel, and that each Party has executed this Agreement with the consent and on the advice of such independent legal counsel. 12.16. Further Cooperation. The parties herein agree to execute any and all agreements, documents or instruments as may be reasonably necessary in order to fully effectuate the agreements and covenants of the Parties contained in this Agreement, or to evidence this Agreement as a matter of public record, if required to fulfill the purposes of this Agreement. The Parties further agree to mutually cooperate with one another in carrying out the purposes of this Agreement.

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12.17. Enforceability. This Agreement shall not become binding and shall have no force and effect whatsoever until such time as it has been fully executed by and delivered to all of the parties hereto. IN WITNESS WHEREOF, the undersigned have executed and entered into this Agreement as of the date first written above. CITY OF INDIO INDIO VENT RES LLC

Gene Gilbert, Mayor

Bruce Eliff, Managing Paitn

ATTEST:

C),{thia Hernandez, City Clerk APPROVED AS TO FORM:

Edward Z.

ity Attorney

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EXHIBIT "A" Nature and Scope of Water Facilities Improvements Component No. 1 Pump Station Construct a domestic water pump station, in the immediate vicinity of the Terra Lago Golf Clubhouse to provide needed domestic and fireflow for the Trendwest time share community and residential neighborhoods directly to the east of the pump station site. The pump station will tie into an existing 18-inch transmission main and the proposed 24inch transmission main described below. Component No. 2 Water Line Construct approximately 4,900 linear feet of 24-inch ductile iron water transmission main from the intersection of Golf Center Parkway and Terra Lago Parkway, along Terra Lago Parkway to the proposed Pump Station site.

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EXHIBIT "B" Developer's Estimated Costs

COMPONENT Engineering / Design Services Water Line Pump Station TOTAL ESTIMATED COSTS

CONTRACTOR Stantech Chactaw Palm Springs Pump

ESTIMATED COST $81,750.00 $987,800.00 $998,230.00* $2,067,780*

* Estimated Costs are subject to change, pending approval by the Director of Public Works.

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EXHIBIT "C" Legal Description of Pump Station Property

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LEGAL DESCRIPTION

THAT PORTION OF LOT "E" OF TRACT MAP NO. 31631 RECORDED IN BOOK 363 OF MAPS, PAGES 32 THROUGH 37, INCLUSIVE, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: PARCEL "A" COMMENCING AT THE MOST SOUTHERLY COMMON CORNER OF LOTS "E" AND "BB" OF SAID TRACT MAP NO. 31631; THENCE SOUTH 6558'27" EAST 17.50 FEET; THENCE SOUTH 2020'07" EAST 7.07 FEET TO A POINT HEREINAFTER REFERRED TO AS POINT "A"; THENCE SOUTH 6520'07" EAST 30.74 FEET TO THE POINT OF BEGINNING; THENCE NORTH 2439'53" EAST 60.00 FEET; THENCE SOUTH 6520'07" EAST 45.00 FEET; THENCE SOUTH 2439'53" WEST 60.00 FEET; THENCE NORTH 6520'07" WEST 45.00 FEET TO THE POINT OF BEGINNING. SAID DESCRIBED PARCEL "A" CONTAINS 2,700 SQUARE FEET, MORE OR LESS. TOGETHER WITH AN EASEMENT 19.50 FEET WIDE FOR INGRESS AND EGRESS OVER AND ACROSS THAT PORTION OF LOT "B" OF TRACT MAP NO. 32462-1 OF MAPS, PAGES THROUGH , INCLUSIVE, RECORDS RECORDED IN BOOK OF RIVERSIDE COUNTY, CALIFORNIA, THE WESTERLY LINE OF SAID EASEMENT BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE AFOREMENTIONED POINT "A"; THENCE SOUTH 6520'07" EAST 43.49 FEET; THENCE SOUTH 2439'53" WEST 25.00 FEET TO TERMINUS THEREOF, ALSO BEING A POINT ON THE NORTHERLY RIGHT OF WAY LINE OF TERRA LAGO PARKWAY AS SHOWN ON SAID TRACT MAP NO. 32462-1.

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LEGAL DESCRIPTION

THE SIDELINES OF SAID EASEMENT SHALL BE LENGTHENED OR SHORTENED SO AS TO TERMINATE ALONG THE SOUTHERLY LINE OF HEREINABOVE DESCRIBED PARCEL "A" AND THE NORTHERLY RIGHT OF WAY LINE OF TERRA LAGO PARKWAY AS SHOWN ON SAID TRACT MAP NO. 32462-1. FOR GRAPHICAL PURPOSES SEE EXHIBIT "B" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF.

Prepared under the supervision of:

Date: Angela E. Dorf, P.L.S. #8010 Expires 12/31/06 STANTEC CONSULTING 73-733 Fred Waring Drive, Suite 100 Palm Desert, CA 92260 (760) 346-9844

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1 TRACT MAP NO. 3/631 MB 363/32-37

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