I01. Res. 5929 - BOI Loan - Woodland Park Playground EquipmentCity of Kalispell
KTeleALISPELL post Office Box 1997 -Kalispell, Montana 59903-1997
phone (406) 758-7701 Fax - (406) 758-7758
REPORT TO: Doug Russell, City Manager
FROM: Rick Wills, Finance Director
SUBJECT: Resolution No. 5929 — Authorizing Loan with the Montana Board of
Investments for Annual Purchases of Budgeted Equipment
MEETING DATE: August 19, 2019 — Regular Council Meeting
BACKGROUND: During those times when the borrowing rates have been
advantageous to the City, it has utilized the Montana Board of Investments (BOI) Intercap Loan
Program to assist it in making purchases of needed equipment. This helps the City in managing
the consistency of its cash flows. The use of this program was anticipated and calculated into the
fiscal year 2019 budget presented and approved by the Council.
The maximum amount of the loan is $100,000 and is for a term of up to five years. The initial
rate is 3.37% and may be adjusted annually by the BOI based upon the market. The City may
elect, at any time, to prepay the loan upon giving 30 days' notice. The interest obligation on the
loan begins upon making a draw and only to the extent of the draws that are made. As of this
date, the Parks Department has completed the purchase of equipment needed for replacement of
the Woodland Park Playground, for $97,772. It is the intent to make a draw on the loan for this
amount, thereby assisting the Parks Fund with its cash flows.
RECOMMENDATION: It is recommended that the City Council approve Resolution 5929,
a resolution authorizing participation in the Board of Investments of the State of Montana
Annual Adjustable Rate Tender Option Municipal Finance Consolidation Act Bonds (Intercap
Revolving Program), approving the form and terms of the loan agreement and authorizing the
execution and delivery of documents related thereto.
FISCAL IMPACT: The debt service on the loan proceeds is currently 3.37% and may be
adjusted annually. The City may elect to prepay the loan at any time if it becomes apparent that
the advantage of the cash flow control is outweighed by the cost of loan. The initial annual debt
service will be approximately $23,000.
Report compiled: August 13, 2019
ATTACHMENTS: Resolution 5929
Attorney Opinion Letter
(GENERAL FUND LOAN)
RESOLUTION AUTHORIZING PARTICIPATION IN THE INTERCAP
PROGRAM
CERTIFICATE OF MINUTES RELATING TO
RESOLUTION NO. 5929
Issuer: City of Kalispell
Kind, date, time and place of meeting: A regular meeting held on August 19, 2019 at 7 o'clock
p.m. in Kalispell, Montana.
Members present:
Members absent:
RESOLUTION NO. 5929
RESOLUTION AUTHORIZING PARTICIPATION IN THE BOARD OF INVESTMENTS
OF THE STATE OF MONTANA ANNUAL ADJUSTABLE RATE TENDER OPTION
MUNICIPAL FINANCE CONSOLIDATION ACT BONDS (INTERCAP REVOLVING
PROGRAM), APPROVING THE FORM AND TERMS OF THE LOAN AGREEMENT
AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED
THERETO.
I, the undersigned, being the fully qualified and acting recording officer of the public body
issuing the obligations referred to in the title of this certificate, certify that the documents attached
hereto, as described above, have been carefully compared with the original records of the public
body in my legal custody, from which they have been transcribed; that the documents are a correct
and complete transcript of the minutes of a meeting of the governing body at the meeting, insofar
as they relate to the obligations; and that the meeting was duly held by the governing body at the
time and place and was attended throughout by the members indicated above, pursuant to call and
notice of such meeting given as required by law.
WITNESS my hand officially as such recording officer this 19th day of August, 2019.
Its:
RESOLUTION NO. 5929
RESOLUTION AUTHORIZING PARTICIPATION IN THE BOARD OF INVESTMENTS
OF THE STATE OF MONTANA ANNUAL ADJUSTABLE RATE TENDER OPTION
MUNICIPAL FINANCE CONSOLIDATION ACT BONDS (INTERCAP REVOLVING
PROGRAM), APPROVING THE FORM AND TERMS OF THE LOAN AGREEMENT
AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED
THERETO
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS
FOLLOWS:
ARTICLE I
DETERMINATIONS AND DEFINITIONS
Section 1.01. Definitions. The following terms will have the meanings indicated below for
all purposes of this Resolution unless the context clearly requires otherwise. Capitalized terms used
in this Resolution and not defined herein shall have the meanings set forth in the Loan Agreement.
Adjusted Interest Rate means the rate of interest on the Bonds determined in accordance
with the provisions of Section 3.03 of the Indenture.
Authorized Representative shall mean the officers of the Borrower designated and duly
empowered by the Governing Body and set forth in the application.
Board shall mean the Board of Investments of the State of Montana, a public body corporate
organized and existing under the laws of the State and its successors and assigns.
Board Act shall mean Section 2-15-1808, Title 17, Chapter 5, Part 16, MCA, as amended.
Bonds shall mean the Bonds issued by the Board pursuant to the Indenture to finance the
Program.
Borrower shall mean the Borrower above named.
Indenture shall mean that certain Indenture of Trust dated March 1, 1991 by and between
the Board and the Trustee pursuant to which the Bonds are to be issued and all supplemental
indentures thereto.
Loan means the loan of money by the Board to the Borrower under the terms of the Loan
Agreement pursuant to the Act and the Borrower Act and evidenced by the Note.
Loan Agreement means the Loan Agreement between the Borrower and the Board,
including any amendment thereof or supplement thereto entered into in accordance with the
provisions thereof and hereof.
Loan Agreement Resolution means this Resolution or such other form of resolution that the
Board may approve and all amendments and supplements thereto.
Loan Date means the date of closing a Loan.
Loan Rate means the rate of interest on the Loan which is initially 3.37% per annum through
February 15, 2020 and thereafter a rate equal to the Adjusted Interest Rate on the Bonds and up to
1.50% per annum as necessary to pay Program Expenses.
Note means the promissory note to be executed by the Borrower pursuant to the Loan
Agreement, in accordance with the provisions hereof and thereof, in substantially the form set forth
in the Promissory Note, or in such form that may be approved by the Board.
Program shall mean the INTERCAP Program of the Board pursuant to which the Board
will issue and sell Bonds and use the proceeds to make loans to participating Eligible Government
Units.
Project shall mean those items of equipment, personal or real property improvements to be
acquired, installed, financed or refinanced under the Program as set forth in the Description of the
Project/Summary of Draws.
Trustee shall mean U.S. Bank National Association (formerly known as First Trust
Company of Montana National Association) and its successors.
Section 1.02. Authority. The Borrower is authorized to undertake the Project and is further
authorized by the Borrower Act to enter into the Loan Agreement for the purpose of obtaining a
loan to finance or refinance the acquisition and installation costs of the Project.
Section 1.03. Execution of Agreement and Delivery of Note. Pursuant to the Indenture and
the Board Act, the Board has issued and sold the Bonds and deposited a part of proceeds thereof in
the Loan Fund held by the Trustee. The Board has, pursuant to the Term Sheet, agreed to make a
Loan to the Borrower in the principal amount of $100,000.00 and upon the further terms and
conditions set forth herein, and as set forth in the Term Sheet and the Loan Agreement.
ARTICLE II
THE LOAN AGREEMENT
Section 2.01. Terms. (a) The Loan Agreement shall be dated as of the Loan Date, in the
principal amount of $100,000.00 and shall constitute a valid and legally binding obligation of the
Borrower. The obligation to repay the Loan shall be evidenced by a Promissory Note. The Loan
shall bear interest at the initial rate of 3.37% per annum through February 15, 2020 and thereafter
at the Adjusted Interest Rate, plus up to 1.50% per annum as necessary to pay the cost of
administering the Program (the Program Expenses). All payments may be made by check or wire
transfer to the Trustee at its principal corporate trust office.
(b) The Loan Repayment Dates shall be February 15 and August 15 of each year.
(c) The principal amount of the Loan may be prepaid in whole or in part provided that
the Borrower has given written notice of its intention to prepay the Loan in whole or in part to the
Board no later than 30 days prior to the designated prepayment date.
(d) The Prepayment Amount shall be equal to the principal amount of the Loan
outstanding, plus accrued interest thereon to the date of prepayment.
(e) Within fifteen days following an Adjustment Date, the Trustee shall calculate the
respective amounts of principal and interest payable by each Borrower on and with respect to its
Loan Agreement and Note for the subsequent August 15 and February 15 payments, and prepare
and mail by first class mail a statement therefor to the Borrower.
Section 2.02. Use and Disbursement of the Proceeds. The proceeds of the Loan will be
expended solely for the purposes set forth in the Description of the Project/Summary of Draws. The
proceeds from the sale of the Note to the Board shall remain in the Borrower's Account pending
disbursement at the request of the Borrower to pay the budgeted expenditures in anticipation of
which the Note was issued. Requests for disbursement of the Loan shall be made to the Board. Prior
to the closing of the Loan and the first disbursement, the Borrower shall have delivered to the Trustee
a certified copy of this Resolution, the executed Loan Agreement and Note in a form satisfactory to
the Borrower's Counsel and the Board's Bond Counsel and such other certificates, documents and
opinions as set forth in the Loan Agreement or as the Board or Trustee may require. The Borrower
will pay the loan proceeds to a third party within five business days after the date they are advanced
(except for proceeds to reimburse the Borrower for previously paid expenditures, which are deemed
allocated on the date advanced).
Section 2.03. Payment and Security for the Note. In consideration of the making of the Loan
to the Borrower by the Board, the provisions of this Resolution shall be a part of the Agreement of
the Borrower with the Board. The provisions, covenants and Agreements herein set forth to be
performed by or on behalf of the Borrower shall be for the benefit of the Board. The Loan
Agreement and Note shall constitute a valid and legally binding obligation of the Borrower and the
principal of and interest on the Loan shall be payable from the general fund of the Borrower, and
any other money and funds of the Borrower otherwise legally available therefor. The Borrower
shall enforce its rights to receive and collect all such taxes and revenues to insure the prompt
payment of the Borrower obligations hereunder.
Section 2.04. Representation Regarding the Property Tax Limitation Act. The Borrower
recognizes and acknowledges that the amount of taxes it may levy is limited by the state pursuant
to Section 15-10-402, et. seq. (the Property Tax Limitation Act). The Borrower is familiar with the
Property Tax Limitation Act and acknowledges that the obligation to repay the Loan under the
Agreement and Note are not exceptions to the provisions of the Property Tax Limitation Act. The
Borrower represents and covenants that the payment of principal of and interest on the Loan can
and will be made from revenues available to the Borrower in the years as they become due,
notwithstanding the provisions of the Property Tax Limitation Act.
Section 2.05. Levy and Appropriate Funds to Repay Loan. The Borrower agrees that in
order to meet its obligation to repay the Loan and all other payments hereunder that it will budget,
levy taxes for and appropriate in each fiscal year during the term of the Loan an amount sufficient
to pay the principal of and interest hereon within the limitations of the Property Tax Limitation
Act, as may be amended, and will reduce other expenditures if necessary to make the payments
hereunder when due.
ARTICLE III
CERTIFICATIONS, EXECUTION AND DELIVERY
Section 3.01. Authentication of Transcript. The Authorized Representatives are authorized
and directed to prepare and furnish to the Board and to attorneys approving the validity of the
Bonds, certified copies of this Resolution and all other resolutions and actions of the Borrower and
of said officers relating to the Loan Agreement, the Note, and certificates as to all other proceedings
and records of the Borrower which are reasonably required to evidence the validity and
marketability of the Note. All such certified copies and certificates shall be deemed the
representations and recitals of the Borrower as to the correctness of the statements contained
therein.
Section 3.02. Legal Opinion. The attorney to the Borrower is hereby authorized and directed
to deliver to the Board at the time of Closing of the Loan his or her opinion regarding the Loan, the
Loan Agreement, the Note and this Resolution in substantially the form of the opinion set forth in
the Attorney's Opinion.
Section 3.03. Execution. The Loan Agreement, Note, and any other document required to
close the Loan shall be executed in the name of the Borrower and shall be executed on behalf of
the Borrower by the signatures of the Authorized Representatives of the Borrower.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 19TH DAY OF AUGUST, 2019.
Mark Johnson
Mayor
ATTEST:
Aimee Brunckhorst, CMC
City Clerk
City of Kalispell
Charles A. Harball Office of City Attorney
City Attorney 201 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
August 23, 2019
Board of Investments
of the State of Montana
2401 Colonial Drive, 3rd Floor
P.O. Box 200126
Helena, MT 59620-0126
U.S. Bank National Association
Corporate Trust Services PD-WA-T7CT
1420 Fifth Avenue, 7th Floor
Seattle, WA 98101
Ladies and Gentlemen:
Tel 406.758.7709
Fax 406.758.7758
charball@kalispell.com
I have served as counsel to the City of Kalispell (the 'Borrower") in connection
with its participation in the INTERCAP Program (the "Program") of the Board of Investments of
the State of Montana (the 'Board"). Terms used herein which are defined in the Loan
Agreement, dated as of August 23, 2019 (the "Loan Agreement") between the Borrower and the
Board shall have the meanings specified therein. The resolution of the Borrower authorizing its
participation in the Program and the issuance of its Loan Agreement relating thereto is herein
referred to as the Loan Agreement Resolution.
I have examined, among other things:
i) the Borrower Act;
ii) the Loan Agreement dated as of August 23, 2019 and executed by
the Borrower;
iii) the Promissory Note (the "Note") dated as of August 23, 2019 and
executed by the Borrower;
iv) Resolution No. 5929 of the Borrower, dated the 19th day of
August, 2019 (the "Loan Agreement Resolution");
v) the proceedings of the Borrower with respect to the due execution
and delivery by the Borrower of the Loan Agreement and Note (the Program
Documents), and such certificates and other documents relating to the Borrower,
the Program Documents and the Loan Agreement Resolution of the Borrower,
and have made such other examination of applicable Montana law and a review of
Montana State Board of Investments
August 23, 2019
Page 2
the Borrower's actions with respect to applicable ordinances and resolutions as
we have deemed necessary in giving this opinion.
Based upon the foregoing, we are of the opinion that:
(a) The Borrower is a political subdivision duly organized and
validly existing under the laws and Constitution of the State of Montana
with full legal right, power and authority to enter into, execute and
perform its obligations under the Program Documents and to carry out and
effectuate the transactions contemplated thereunder.
(b) The execution of the Loan Agreement and Promissory Note
have been duly authorized and are valid, binding and enforceable against
the Borrower in accordance with its terms.
(c) The Loan Agreement Resolution of the Borrower has been
duly adopted and is valid, binding and enforceable against the Borrower in
accordance with its terms.
(d) The Borrower has taken all action required to be taken by it
to authorize the execution and delivery of and the performance of the
obligations contained in the Program Documents; and such authorization
is in full force and effect on the date hereof.
(e) The Borrower has complied with all applicable competitive
bidding requirements for the purchase, acquisition, and construction of the
Proj ect.
(f) All environmental permits necessary for the construction
and continued operation of the Project have been obtained.
(g) No consent, approval, authorization, order, filing,
registration, qualification, election or referendum, of or by any person,
organization, court or governmental agency or public body whatsoever is
required to be obtained by the Borrower in connection with the execution,
delivery and performance of the Program Documents or the
consummation of the other transactions effected or contemplated thereby.
(h) The execution, delivery and performance of the Program
Documents, and compliance with the provisions thereof will not conflict
with or constitute a breach of, a violation of, or default under, the
Constitution of the State of Montana, or any existing law, charter,
judgment, ordinance, administrative regulation, decree, order or resolution
of or relating to the Borrower and do not conflict with or result in a
Office of City Attorney
City of Kalispell
Montana State Board of Investments
August 23, 2019
Page 3
violation or breach of, or constitute a default under, any agreement,
indenture, mortgage, lease or other instrument, to which the Borrower is a
party or by which it is bound or to which it is subject.
(i) The Program Documents executed by the Borrower, when
delivered to the Board, will have been duly authorized and executed and
will constitute validly issued and legally binding obligations of the
Borrower according to their terms.
It is understood that the enforceability of the Program Documents may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the
enforcement or creditors rights.
PC: Finance
Sincerely,
Charles A. Harball
City Attorney
Office of City Attorney
City of Kalispell