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Resolution 3976 - Sewer Bond Refunding6 RESOLUTION NO. 3976 RESOLUTION RELATING TO SEWERAGE SYSTEM REVENUE BONDS, SERIES 1991; AUTHORIZING THE ISSUANCE AND TBE NEGOTIATED SALE THEREOF BE IT RESOLVED by the City Council of the City of Kalispell, Montana (the "City"), as follows: Section 1. Authorization. The City pursuant to authority conferred by Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as amended (the "Act"), and other laws of the State of Montana, has established and presently owns and operates a municipal sewerage system (the "System"). Under the provisions of the Act, the City is authorized to issue and sell its revenue bonds payable during a term not exceeding forty years from their date of issue, to provide funds for the reconstruction, improvement, betterment and extension of the System and to refund its revenue bonds issued for such purpose; provided that the bonds and the interest thereon are to be payable solely out of the net income and revenues to be derived from rates, fees and charges for the services, facilities and commodities furnished by the undertaking, and. are not to create any obligation for the payment of which taxes may be levied except to pay for services provided by the System to the City. Section 2. Outstanding Bonjs. In accordance with the authorization described in Section 1 and pursuant to Ordinance Nos. 859 and 1011 and Resolution Nos. 2861 and 3649, the City issued and sold the following bonds which are currently outstanding: Sewerage System Revenue Bonds, dated as of January 1, 1972; Sewerage System Revenue Bonds, dated as of July 1, 1976; Sewerage System Revenue Bonds, Series 1983, dated as of September 1, 1983, currently outstanding in the aggregate principal amount of $740,000 (the "Series 1983 Bonds"), and its Sewerage System Revenue Bonds, Series 1986, dated, as originally issued, as of June 1, 1986 (collectively, exclusive of the Series 1983 Bonds, the "Outstanding Bonds"), for the purpose of financing part of the costs of construction of improvements to the System. No other bonds or indebtedness are outstanding that are payable from revenues of the System. Section 3. The IMprovements. This Council has heretofore determined that further improvements and betterments to the System, including a new wastewater treatment plant and related appurtenances and improvements (the "Improvements"), are necessary and appropriate. The costs of the Improvements, including costs of engineering and construction and providing the required additional amounts in the reserve fund for the bonds, are presently estimated to be approximately $12,665,000 in excess of revenues and other funds available for the payment thereof. Section 4. Sources of Funding: Refunding the Refundd Bonds. It is proposed that the costs of the Improvements be paid from the following sources: approximately $5,820,000 from a grant that the City has received from the United States Environmental Protection Agency, approximately $4,818,000 from proceeds of revenue bonds to be issued to the Department of Natural Resources of the State of Montana under the State's Wastewater Treatment Works Revolving Fund Loan Program, established under Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended, and approximately $2,027,000 from proceeds of revenue bonds hereinafter authorized. It is also necessary and desirable as hereinafter determined to advance refund the Series 1983 Bonds from the proceeds of revenue bonds hereinafter authorized in the approximate principal amount of $828,000. The debt service savings to result from the refunding of the Series 1983 Bonds is presently estimated to approximate $9 7, 6 a ° , calculated on a present -value basis, and using a discount rate of 6.67 % over the term of the bonds herein authorized. rI 7l Section 5. Parity Bonds, In Section 4.03 of Ordinance No. 859, the City reserved the right to issue additional bonds payable from and secured by the net revenues of the System on a parity with the Outstanding Bonds on certain terms and conditions. Based on the net revenues of the System for the fiscal year ended June 30, 1990, adjusted as permitted by Section 4.03 to take into account the wastewater rate increase to take effect in April 1991, it appears that the City may issue $7,673,000 of additional parity lien bonds to finance the Improvements as described in Section 4 and to refund the Series 1983 Bonds under Section 4.03, not counting as outstanding in any future year the Series 1983 Bonds. it is hereby determined that the City is authorized to issue i $2.855,000 principal amount of additional bonds to finance a portion of the costs of the Improvements and to advance refund the Series 1983 Bonds, which bonds would be payable fromi and secured by the net revenues of the System on a parity with the Outstanding Bonds. This determination must be confirmed at the time the terms of the bonds herein authorized are established pursuant to Section 7. Section 6. jasuance and Negotiated-S-ala af_the Series 1991 Bonds. This Council has investigated the facts necessary and hereby finds, determines and declares it to be necessary and desirable for the City to issue its Sewerage System Revenue Bonds, Series 1991, in the maximum aggregate principal amount of $2,855,000 (the "Series 1991 Bonds") for the purposes of providing funds to refund in advance of their stated maturities all of the outstanding Series 1983 Bonds, to pay a portion of the costs of the Improvements and to pay costs of issuance of the Series', 1991 Bonds and of the refunding of the Series 1983 Bonds. The use of proceeds of a single issue of bonds to finance costs of the Improvements and to refund the Series 1983 Bonds is advantageous to and in the best interests of the City, and will result in lower issuance costs and debt service savings (in comparison with an issue solely to provide financing of the Improvements). The negotiated sale of the Series 1991 Bonds is necessary and expedient to enable) the City to evaluate the financial feasibility and legality of issuing the Series 1991 Bonds. Pursuant) to the authority recited in Sections 1 and 5, the City hereby authorizes the issuance and sale of the Series 1991 Bonds, in a maximum principal amount not to exceed $2,855,000, to D. A. Davidson & Co., of Great Falls, Montana (the "Purchaser"), at a price not less than the principal amount thereof plus accrued interest, and the terms thereof to be established pursuant to Section 7. Section 7. Terms of Series 1991 BQI]ds. The Series 1991 Bonds shall mature in the years 1992 through 2011, shall bear interest payable on each March 1 and September 1, commencing September 1, 1991. It is acknowledged that the purchase price of the Series 1991 Bonds, the principal amount of the Series 1991 Bonds, the maturity schedule of the Series 1991 Bonds, the provisions for redemption of the Series 1991 Bonds and the interest rates on the Series 1991 Bonds have not been determined as of the date of this resolution. The City Manager or, in the event of his absence or disability, the Mayor is hereby authorized to approve: (1) the purchase price of the Series 1991 Bonds; provided that the purchase price is not less than 100% of the principal amount of the Series 1991 Bonds; (2) the principal amount of the Series 1991 Bonds; provided that such principal amount is not.in excess of $2,855,000; (3) the principal amortization of the Series 1991 Bonds; provided that the Series 1991 Bonds mature in the years 1992 through 2011; (4) the provisions for redemption of the Series 1991 Bonds; and (5) the interest rates on the Series 1991 Bonds, which may include basic and additional interest; provided that the average net interest cost on the Series 1991 Bonds (which equals the total interest cost (including basic and additional interest, and deducting the premium, if any, if the purchase price exceeds the principal amount of the Series 1991 Bonds plus accrued interest) divided by the total "bond years") is not more than 7.375 %. The approval of.such officer of the terms of the Series 1991 Bonds shall be conclusively evidenced, assuming that such terms permit the Series 1991 Bonds to be issued on a parity with the Outstanding Bonds under Ordinance No. 859, by the execution of the Bond Purchase Agreement referred to in Section 9 containing terms in conformity with the foregoing limitations. These terms and other terms and conditions of the Series 1991 Bonds and provisions for the E WOO security thereof shall be confumed or established by a supplemental resolution to be adopted by this Council. Section S. Preliminary Official Statement. The City Manager and other officers of the City, in coopemdon with the Purchaser, are hereby authorized and directed to prepare on behalf of the City a preliminary official statement to be used by the Purchaser in offering the Series 1991 Bonds for sale to the public. Such preliminary official statement shall contain a description of the terms of the Series 1991 Bonds within the limitations set forth in Section 7, and as approved by the officer referred to therein, and such other information as shall be advisable and necessary to describe accurately the City and the security for, and terms and conditions of, the Series 1991 Bonds. The City Manager is hereby authorized on behalf of the City to deem the preliminary official statement neat "final" as of its date, in accordance with Rule 15c2.12(b)(1) under the Securities Exchange Act of 1934. Section 9. Road Purchase Agreement. When the terms of the Series 1991 Bonds have been established in accordance with Section 7, the Mayor and the City Clerk -Treasurer or, in the event of their absence or disability, the acting Mayor or the acting City Clerk -Treasurer, are hereby authorized and directed to enter into with the Purchaser a Bond Purchase Agreement, containing the agreement of the City to sell the Series 1991 Bonds to the Purchaser on the terms so established and such other incidental matters that the officers of the City executing said Bond Purchase Agreement find necessary and proper. Section 10. Effective Date. This resolution shall be in full force and effect from and after its final passage and approval according to law. Adopted by the City Council this 1 Sth day of March, 1991. Mayor Attest: �2 City lerk-Treasurer 1 M 9 CERTIFICATE AS TO RESOLUTION I, the undersigned, being the duly qualified and acting recording officer of the City of Kalispell, Montana (the "City") , hereby certify that the attached resolution is a true copy of Resolution No. 39761 entitled: "RESOLUTION RELATING TO SEWERAGE SYSTEM REVENUE BONDS, SERIES 1991; AUTHORIZING THE ISSUANCE AND THE NEGOTIATED SALE THEREOF" (the "Resolution"), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council of the City at a meeting on 3 1 B , 1991, and that the meeting was duly held by the City Council and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed WITNESS my hand officially this Z Bray of March , 1991. .,�Xa2t= , City Clerk -Treasurer 1