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Grant Thorton LLP/Review of Refunded Bonds 16QGrantThornton December 20, 2016 Mr. Frank Spevacek Successor Agency to the La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Dear Mr. Spevacek: Grant Thornton LLP 200 S 61" Street, Suite 1400 Minneapolis, MN 55402-1434 T 612.332.0001 F 612.332.8984 GranlThomton.com Ilnkd. in/GrantThorntonU S twi8er.comlGrantThom tonU S This letter (the "Engagement Letter") documents our mutual understanding of the arrangements between Hilltop Securities Inc. (the "Underwriter" or "Responsible Party") as advisor for and on behalf of the Successor Agency to the La Quinta Redevelopment Agency (the "Agency" or "Specified Party'), and Grant Thornton LLP ("Grant Thornton") for the services described herein. Scope of services Grant Thornton will apply certain agreed-upon procedures identified herein to certain bond schedules as described below (the "Subject Matter") solely for the purpose of assisting the Underwriter in connection with verifying the mathematical accuracy of certain schedules provided to us in connection with the issuance of the Agency's La Quinta Redevelopment Project Areas No. 1 and 2 Subordinate Tax Allocation Refunding Bonds 2016 Taxable Series A (the `Bonds") and the refunding of the Agency's outstanding La Quinta Redevelopment Project Area No. 2 Subordinate Taxable Tax Allocation Bonds, Series 2011 and LA Quinta Financing Authority's outstanding Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A (collectively referred to as the "Refunded Bonds"). Our engagement will be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. An agreed-upon procedures engagement consists of issuing a report of findings based on specific procedures performed on subject matter. Agreed-upon procedures are performed solely to assist specified parties in evaluating the subject matter as a result of a need or needs of specified parties. Because specified parties best understand their own needs, the specified parties assume responsibility for the sufficiency of the procedures. An agreed-upon procedures engagement does not constitute an audit, examination or a review, the objective of which is the expression of an opinion or limited assurance. Accordingly, agreed-upon procedures cannot be relied upon to disclose errors, fraud or illegal acts. However, in connection with the agreed-upon procedures, if matters come to our attention by other means that significantly contradict the Subject Matter (or written assertion related thereto), we will disclose those matters in our report. Our overall objective will be the completion of the agreed-upon procedures identified herein and the rendering of our report in the form of procedures and findings. Accordingly, we will not express an opinion or any other form of assurance. The sufficiency of the agreed-upon procedures is solely the responsibility of the Underwriter. Consequently, we accept no responsibility and make no representation regarding the sufficiency of the agreed-upon procedures either for the purpose for which our report has been requested or for any other GmR Thomton LLP U.S. member Firm of Grant Thornton International Ltd purpose. We will not perform procedures beyond the agreed-upon procedures identified herein or determine the differences between the agreed-upon procedures to be performed and the procedures that we would have determined to be necessary had we been engaged to perform another form of attest engagement. Our engagement is also subject to the additional terms outlined in Appendix A attached. Agreed-upon procedures The procedures Grant Thornton LLP will perform related to the Subject Matter are enumerated below: (1) We will recalculate the debt service requirements on the Refunded Bonds and the receipts from the United States Treasury Notes (the "T -Notes") and Strips (the "STRIPS") (collectively referred to as the "Open -Market Securities") delivered to the escrow accounts as shown in the schedules provided by the Underwriter. We will prepare two escrow account cash flow schedules confirming that the cash deposit to the escrow accounts and the receipts from the Open -Market Securities will be sufficient to pay the debt service requirements of the Refunded Bonds. As part of our engagement we will read the applicable pages from the following documents to confirm the information used in our calculations: (i) Official Statements for the Refunded Bonds to obtain the principal amounts, principal maturity dates, interest payment dates, interest rates and optional redemption date and price on the Refunded Bonds; and (ii) Trade confirmations for the Open -Market Securities to obtain the principal amounts, interest rates, maturity dates and purchase prices. Grant Thornton will report all findings from the application of the agreed-upon procedures. Standard billings Our estimated fees for this engagement will be $3,000 which includes all expenses. This quote includes only those services outlined above and any additional services such as appearing before judicial proceedings, governmental organizations, or the IRS, will be billed for separately. It is possible that because of unexpected circumstances, we may determine that we are unable to issue a report or complete the engagement. If, in our professional judgment, the circumstances necessitate, we may decline to issue a report and resign from the engagement prior to completion. Authorization This Engagement Letter, including Appendix A, sets forth the entire understanding between the Agency and Grant Thornton regarding the services described herein. If any portion of this Engagement Letter is held invalid, it is agreed that such invalidity shall not affect any of the remaining portions. Please confirm your acceptance of this Engagement Letter by signing below and returning a copy to us. Very truly yours, GRANT THORNTON LLP M. Joseph Smith Managing Director - Public Finance gvh Enc: Appendix A — Additional Terms Agreed and accepted by: Successor Agency to nta Redevelopment Agency Appendix A — Additional Terms Responsible party acknowledgment The Responsible Party acknowledges that it is responsible for the completeness, accuracy and reliability of the Subject Matter. In addition, the Responsible Party is responsible for • providing access to all documents, records and related information and to management and personnel with information of relevance pertaining to the Subject Matter and this engagement • disclosing to us all known matters contradicting the Subject Matter • disclosing to us any communications from regulatory agencies affecting the Subject Matter • providing any needed legal interpretations related to the procedures and findings. We will require the Responsible Party's cooperation to complete our services.. Specified party acknowledgment The Responsible Party and Specified Parties, must agree upon the procedures to be performed and take responsibility for the sufficiency of those procedures. The procedures we will perform to the Subject Matter, which are the Responsible Party's responsibility, are described in the letter. By accepting our report as part of the closing of this transaction each specified party has independently concluded that the agreed-upon procedures are sufficient for their purposes. Use and distribution of our report Our report is intended solely for the information and use of the Responsible Party and Specified Parties and is not intended to be, and should not be, used by anyone other than these specified parties. Accordingly, the use of our report will be restricted to such parties. When required by law or regulation, a regulatory agency as part of its oversight may require access to such report in which they are not named as a specified party. Unless required by law or regulation, the Responsible Party agrees not to distribute our report to non-specified parties (parties other than those identified in our report), without obtaining Grant Thornton's prior written permission. Further, our report should not be publicized or referred to in any document, electronic site or other forum, without our prior written consent. Grant Thornton may agree to add other parties as specified parties in Grant Thornton's sole discretion. It is important that you give us timely notice of the Responsible Party's intention to issue our report to non-specified parties, in order for us to obtain an affirmative written acknowledgment from the other parties of their understanding of the nature of the engagement, the criteria used in the engagement and the related report. We reserve the right to not add other parties as specified parties. Other costs Except with respect to a dispute or litigation between Grant Thornton, and the Responsible Party, and any of the Specified Parties our costs and time spent in legal and regulatory matters or proceedings arising from our engagement, such as subpoenas, testimony, or consultation involving private litigation, arbitration, industry or government regulatory inquiries, whether made at the Responsible Party's request or by subpoena, will be billed to the Responsible Party separately. Other matters Documentation The documentation for this engagement is the property of Grant Thornton and constitutes confidential information. We have a responsibility to retain the documentation for a period of time sufficient to satisfy any applicable legal or regulatory requirements for records retention. However, we may be requested to make certain documentation available to regulators, governmental agencies or their representatives ("Regulators") pursuant to law or regulations. If requested, access to the documentation will be provided to the Regulator(s) under the supervision of Grant Thornton personnel and at a location designated by us. Furthermore, upon request, we may provide photocopies of selected documentation to the Regulator(s). The Regulator(s) may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. The Responsible Party hereby acknowledges we will allow and authorizes us to allow the Regulator(s) access to, and photocopies of, the documentation in the manner discussed above. Electronic transmittals During the course of our engagement, Grant Thornton or the Responsible Party may need to electronically transmit confidential information to each other and to other entities engaged by either party. E-mail is a fast and convenient way to communicate. However, e-mail is not a secure means of communication and thus, confidentiality could be compromised. The Responsible Party agrees to the use of e-mail and other electronic methods to transmit and receive information, including confidential information, between Grant Thornton and the Responsible Party and between Grant Thornton, third -party service providers, other specified parties or other entities engaged by either Grant Thornton or the Responsible Party. Standards of performance and business risk allocations We will perforin our services in conformity with the terms expressly set forth in this Engagement letter, including all applicable professional standards. Accordingly, our services shall be evaluated solely on our substantial conformance with such terms and standards. Any claim of nonconformance must be clearly and convincingly shown. With respect to the services and this Engagement Letter, in no event shall the liability of Grant Thornton and its present, future and former partners, principals, directors, employees, agents and contractors for any claim, including but not limited to Grant Thornton's own negligence, exceed the fees it receives for the portion of the work giving rise to such liability. This limitation shall not apply to the extent that it is finally determined that any claims, losses or damages are the result of Grant Thornton's gross negligence or willful misconduct. In addition, Grant Thornton shall not be liable for any special, consequential, incidental or exemplary damages or loss (nor any lost profits, interest, taxes, penalties, loss of savings or lost business s opportunity) even if Grant Thornton was advised in advance of such potential damages. This paragraph and the paragraph directly below shall apply to any type of claim asserted, including contract, statute, tort, or strict liability, whether by the Responsible Party, Grant Thornton, or others. Further, the Responsible Party shall, upon receipt of written notice, indemnify, defend and hold harmless Grant Thornton and its present, future and former partners, principals, directors, employees, agents and contractors from and against any liability and damages (including punitive damages), fees, expenses, losses, demands, and costs (including defense costs) associated with any claim arising from or relating to the Responsible Party's knowing misrepresentations, false or incomplete information provided to Grant Thornton, or unauthorized use or disclosure of our report. In the event of any controversy or claim against Grant Thornton arising from or related to the services described herein, Grant Thornton shall be entitled, at its option, to defend itself from such controversy or claim and to participate in any settlement, administrative or judicial proceedings. If because of a change in the Responsible Party's status or due to any other reason, any provision in this Engagement letter would be prohibited by, or would impair our independence under, laws, regulations or published interpretations by governmental bodies, commissions, or other regulatory agencies, such provision shall, to that extent, be of no further force and effect and the Engagement Letter shall consist of the remaining portions. Dispute resolution Any controversy or claim arising out of or relating to the services, related fees or this Engagement Letter shall first be submitted to mediation. A mediator will be selected by agreement of the parties, or if the parties cannot agree, a mediator acceptable to all parties will be appointed by the American Arbitration Association ("AAA"). The mediation will proceed in accordance with the customary practice of mediation: In the unlikely event that any dispute or claim cannot be resolved by mediation, we both recognize that the matter will probably involve complex business or accounting issues that would be decided most equitably to us both by a judge hearing the evidence without a jury. Accordingly, to the extent now or hereafter permitted by applicable law, the Responsible Party and Grant Thornton agree to waive any right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to our services or this Engagement Letter. If the above jury trial waiver is determined to be prohibited by applicable law, then the parties agree that the dispute or claim shall be settled by binding arbitration. The arbitration proceeding shall take place in the city in which the Grant Thornton office providing the relevant services is located unless the parties mutually agree to a different location. The proceeding shall be governed by the provisions of the Federal Arbitration Act ("FAA") and will proceed in accordance with the then current Arbitration Rules for Professional Accounting and Related Disputes of the AAA, except that no pre -hearing discovery shall be permitted unless specifically authorized by the arbitrator. The arbitrator will be selected from AAA, JAMS, the Center for Public Resources or any other internationally or nationally -recognized organization mutually agreed upon by the parties. Potential arbitrator names will be exchanged within 15 days of the parties' agreement to settle the dispute or claim by binding arbitration, and arbitration will thereafter proceed expeditiously. The arbitration will be conducted before a single arbitrator, experienced in accounting and auditing matters. The arbitrator shall have no authority to award non -monetary or equitable relief and will not have the right to award punitive damages. The award of the arbitration shall be in writing and shall be accompanied by a well reasoned opinion. The award issued by the arbitrator may be confirmed in a judgment by any federal or state court of competent jurisdiction. Each party shall be responsible for their own costs associated with the arbitration, except that the costs of the arbitrator shall be equally divided by the parties. The arbitration proceeding and all information disclosed during the arbitration shall be maintained as confidential, except as may be required for disclosure to professional or regulatory bodies or in a related confidential arbitration.