Resolution 3649 - Issuance of $1,300,000 Sewerage System BondsRESOLUTION NO. 3 (--j 4 -)
RESOLUTION RELATING TO $1,300,000 SEWERAGE SYSTE14
REVENUE BONDS, SERIES 1986; AUTIHORTZINTG THE
ISSUANCE AND F IXING THE TEaMS AND CONDITIONS
THEREOF
BE IT REISIOLVED by the City Co.Uncil of the City of
Kalispell, Montana, as follows:
Section 1. Authorization and Recitals.
1.01. Authorization. Under the provisions of Montana
Code Annotated, Title 7, Chapter 7, Part 44, as amended (the
Act), the City is authorized to issue -and sell its revenue
bonds payable during a term not oxceeding forty years from
their date of issue, to provide funds for improvements,
extensions and additions to the City's municipal sewerage
system consisting of facilities for the collection and disposal
of sewage and storm water (the System); 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 System, and are not to create any obligation for the
payment of which ta::es may be levied except to pay for services
provided by the System to the City.
1.02. Outstanding Bonds. In April 1972, June 1976
and August 1983, the City issued and sold its Sewerage System
Revenue Bonds (the Outstanding Bonds), dated as of January 1,
1972, July 1, 1976, and September 1, 1983, in the aggregate
principal amounts of $200,000, $445,000 And $875,000,
respectively, for the purpose of financing improvements to the
System. The Outstanding Bonds were issued pursuant to the Act
and Resolution No. 2861, Ordinance No. 859'and Resolution
No. 3480, respectively, and are payable from the net revenues
of the System and constitute a parity first lien thereon. The
Outstanding Bonds are outstanding in the aggregate principal
amount of $1,300,000.
1,03. Improvement Progr8m, The City has determined
the necessity of making certain improvements to the municipal
sewerage system, including the construction of a new sanitary
sewer trunk and laterals and storm drainage improvements, (the
Improvements) to the System. The costs of the Improvements,
including engineering and financing costs, is presently
estimated to be $ 1,961,851 - .00Cost-_ of the Improvements in
excess of the proceeds of the Series 1986 Bonds herein
authorized available therefor will be paid from tax increment
revenues and bond proceeds now on hand.
1.04. Additignal Parity Bonds. The City reserved the
right under Section 4.03 of Ordinance No. 859 to issue
additional bonds for the purpose of financing improvements to
the System, which bonds may be made payable from and secured by
the net revenues of the System on a parity lien with the
Outstanding Bonds on certain terms and conditions. Michael
Fraser, Rate Consulting Engineer for the City, and Dain
Bosworth Incorporated, the Financial Consultant to the City,
have reviewed the provisions of Section 4.03 of Ordinance
No. 859 and the operations of the System and have advised the
City that it may issue $1,300,000 of additional parity lien
bonds to finance the Improvements under Ordinance No..859.
Based on said report and the review of the System's operations
and Ordinance No. 859 by officers of the City, it is hereby
determined that the City is authorized to issue $1,300,000
principal amount of additional bonds payable from and secured
by the net revenues of the System on a parity with the
Outstandina BondR.
1.05. Net RevenuQ5�ya! ��le. The City is authorized
to charge just and equitable rates, charges and rentals for all
services directly or indirectly furnished by the System, and to
pledge and appropriate to the Outstanding Bonds and the
Series 1986 Bonds herein authorized the net revenues to be
derived from the operation of the System, including
improvements, betterments or extensions thereof hereafter
constructed or acquired. The net revenues to be produced by
such rates, charges and rentals during the term of the Series
1986 Bonds herein authorized and the useful life of the
Improvements financed thereby will be more than sufficient to
pay the principal and interest when due on the Outstanding
Bonds and the Series 1986 Bonds, and to create and maintain
reasonable reserves therefor and to provide an allowance for
reT)lacement and dRorP_riAf-inn_ Pq vir�rni"
1.06. Sale of Sewerage sy*tem Revenue Bonds.
Pursuant to the authority recited in Sections 1.01 and 1.04 and
for the purposes of financing costs of the Improvements, the
City ratifies and confirms the issuance and sale of revenue
bonds to be designated as Sewerage System Revenue Bonds,
Series 1986 (the Series 1986 Bonds) in the aggregate principal
amount of $1,300,000 in accordance with the provisions of
Ordinance No. 859 and this Resolution. The Series 1986 Bonds
have been offered for sale and sold at public sale to D.A.
Davidson & Co., of Great Falls, Montana (the Purchaser), and
such sale is hereby ratified and confirmed.
Section 2. Series 1986 Bonds.
2.01. Denominations, Maturiti-eg, Basic Interest. The
Sewerage System Refunding Revenue Bonds, Series 1986, to be
issued hereunder, in the aggregate principal amount of
$1,300,000J.' shall be issued in fully registered form only, in
denominations of $5,000 or any integral multiple thereof of
single maturities, shall m - ature on June 15 in the following
respective years and amounts and shall bear basic interest from
June 1, 1986 to their respective maturities or prior dates upon
which they have been duly called for redemption at the rates
per annum set forth opposite such years and amounts, as follows:
Basic Basic
Year Amount Rate Year Amount Rate
1987 $20,000 7.00% 1997 $55,000 6.80%
1988 20,000 7.00 1998 65,000 6.90
1989 30,000 7.00 -1999 75,000 7.00
1990 30,000 7.00 2-000 85,000 7.00
1991 30,000 7.00 2001 95,000 7.05
1992 35,000 7.00 2002 95,000 7.10
1993 45,000 7.00 2003 95,000 7.10
1994 45,000 7.00 2004 100,000 7.10
1995 45,000 7.00 2005 135,000 7.10
1996 45,000 7.00 2006 155,000 7.10
2.02. Additional Interest, Certificates. All Series,
1986 Bonds shall bear additional interest at the rate of
one -and -one -quarter percent (1.25%) per annum for the period
from December 15, 1986 until June 15, 1987, payable June 15,
1987; and Series 1986 Bonds having stated maturity dates in'the
years 1988 through 2006 shall each bear additional interest at
the rate of one -and -one -quarter percent (1.25%) per annum, from
June 15, 1987 to December 15, 1987, payable December 15, 1987.
The additional interest on such Series 19WBonds shall be
represented by separate additional interest certificates (the
Certificates). One Certificate shall be issued to represent -
all additional interest to be paid on all such Series 1986
Bonds on each additional interest payment date.
2.03. Payment. The Series 1986 Bonds and the
Certificates shall be issuable only in fully registered form,
and the ownership of the Series 1986 Bonds and the Certificates
shall be transferred only upon the bond register of the City
hereinafter described. Basic interest on the Series 1986 Bonds
shall be payable on June 15 and December 15 in each year,
commencing December 15, 1986, to the owners of record of the
Series 1986 Bonds as such appear on the bond register as of the
close of business on the last day of the immediately preceding
month, whether or not such day is a business day. The basic
interest on, and, upon presentation and surrender thereof, the
principal of, each Series 1986 Bond, and, upon presentation and
surrender of any Certificate, the amount payable with respect
thereto, shall be payable in lawful money of the United States
of America by check or draft issued by the Registrar described
herein.
2.04. Dating Qf.Bonds and Certificates. Each Series
1986 Bond shall be dated, as originally issued, as of June 1,
1986, and each Certificate shall be dated, as originally
issued, as of June 1, 1986. Upon the original delivery of the
Series 1986 Bonds pursuant to Section 2.08 or upon the delivery
of a Series 1986 Bond upon an exchange or transfer pursuant to
Section 2.05, the Registrar shall date each Series 1986 Bond so
delivered as of the date of its authentication.
I
2.05. System 'of Registration. The City shall
appoint, and shall maintain, a bond registrar, transfer agent
and paying agent for the Bonds and the Certificates (the
Registrar). This Section . 2.05 shall establish a system of
registration for the Series 1986 Bonds as defined in the Model
Public obligations Registration Act of Montana. The effect of
registration and the rights and duties of the City and the
Registrar with respect thereto shall be as follows:
(a) Bond Register. The Registrar shall keep at its
principal office a Bond Register in which the Registrar
shall provide for the registration of ownership of Series
1986 Bonds and Certificates and the registration of
transfers and exchanges of Series 1986 Bonds and
Certificates entitled to be registered, transferred or
exchanged.
(b) Transfer of Series 1986 Bonds and Certificates.
Upon surrender for transfer of any Series 1986 Bond or
Certificate duly endorsed by the registered owner thereof
or accompanied by a written instrument of transfer, in form
satisfactory to the Registrar, duly executed by the
registered owner thereof or by an attorney duly authorized
by the registered owner in writing, the Registrar shall
authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Series 1986
Bonds of a like aggregate principal amount and maturity, or
a new Certificate of like amount and payment date and
representing the same additional interest period, as the
case may be, as requested by the transferor. The Registrar
may, however, close the books for registration of the
transfer of a Series 1986 Bond or portion thereof selected
for redemption.
(c) Exchange of Series 1986 Bonds. Whenever any
Series 1986 Bonds are surrendered by the registered owner
for exchange, the Registrar shall authenticate and deliver
one or more new Series 1986 Bonds of a like aggregate
principal amount and maturity, as requested by the
registered owner or the owner's attorney in writing.
(d) Cancellation. All Series 1986 Bonds and
Certificates surrendered upon any transfer or exchange
shall be promptly cancelled by the Registrar and thereafter
disposed of as directed by the City. .
(e) Improper or Unauthorized Transfer. When any
Series 1986 Bond or Certificate is presented to the
Registrar for transfer, the Registrar may refuse to
transfer the same until it is satisfied that the
endorsement on such Series 1986 Bond, Certificate or
separate instrument of transfer is legally authorized. The
Registrar shall incur no liability for its refusal, in good
faith, to make transfers which it, in its judgment, deems
improper or unauthorized.
(f) Persons Deemed Owners. The City and the
Registrar may treat the person in whose name any Series
1986 Bond or Certificate is at any time registered in the
Bond Register as the absolute owner of such Series 1986
Bond or Certificate, whether such Series 1986 Bond or
Certificate shall be overdue or not, for the purpose of
receiving payment of, or on account of, the principal of,
premium, if any, and basic interest on such Series 1986
Bond or the amount of such Certificate and for all other
purposes, and all such payments so made to any such
registered owner or upon the owner's order shall be valid
and effectual to satisfy and discharge the liability of the
City upon such Series 1986 Bond or Certificate to the
extent of the sum or sums to paid.
(g) Taxes, Fees and Charges. For every transfer or
exchange of a Series 1986 Bond (except for an exchange upon
a partial redemption of any Series 1986 Bond) or transfer
of any Certificate, the Registrar may impose a charge upon
the owner thereof sufficient to reimburse the Registrar for
any -tax, fee or other governmental charge required to'be
paid with respect to such transfer or exchanae-
(h) Mutilated, Lost, Stolen or Destroyed Series 1986
Bonds or Certificate . In case any Series 1986 Bond or
Certificate shall become mutilated or be lost, stolen or
destroyed, the Registrar shall deliver a new Series 1986
Bond or Certificate of like amount, number, maturity date
and tenor in exchange and substitution for and upon
cancellation of any such mutilated Series 1986 Bond or
Certificate or in lieu of and in substitution for any such
Series 1986 Bond lost, stolen or destroyed, upon the
payment of the reasonable expenses and charges of the
Registrar in connection therewith�; and, in the case of a
Series 1986 Bond or Certificate lost, stolen or destroyed,
upon receipt by the Registrar of evidence satisfactory to
it that such Series 1986 Bond or Certificate was lost,
stolen or destroyed, and of the ownership thereof, and upon
receipt by the Registrar of an appropriate bond of
indemnity in form, substance and amount satisfactory to it,
in.which both -the City and the Registrar shall be named as
obligees. All Series 1986 Bonds and Certificates so
surrendered to the Registrar shall be cancelled by it and
evidence of such cancellation shall be given to the City.
If the mutilated, lost, stolen or destroyed Series 1986
Bond or Certificate has already matured or such Series 1986
Bond has been called for redemption in accordance with its
terms, it shall not be necessary to issue a new Series 1986
Bond or Certificate before payment.
2.06.
First Trust Com
as the initial
Initial Registrar. The City hereby appoints
oany of Montana —0, of Billings I Montana
Registrar. The Mayor and City Clerk are hereby
authorized to execute and deliver, on behalf of the City, a
contract with the First Trust Company of Montana I as
Registrar. Upon merger or consolidation of the Registrar with
another corporation, if the resulting corporation is a bank or
trust company authorized by law to conduct such business, such
corporation shall be authorized to act as successor Registrar.
The City agrees to pay the re'asonable and customary charges of
the Registrar for the services performed. The City reserves
the right to remove any Registrar upon thirty (30) days' notice
and upon the appointment of a successor Registrar, in which
event the predecessor Registrar shall deliver all cash and
Series 1986 Bonds in its possession to the successor Registrar
and shall deliver the Bond Register to the successor
Registrar. On or before each principal or interest due date,
without further order of this Council, the City Treasurer shall
transmit to the Registrar, solely from moneys in the Revenue
Bond Account of the Sewerage System Fund available therefor,
moneys sufficient for the payment of all principal, premium, if
any, and interest then due on the Series 1986 Bonds.
2.07. Redemption. Series 1986 Bonds having stated
maturity dates in 1997 and later years are subject to
redemption at the option of the City, in inverse order of
maturities and in $5,000 principal amounts selected by lot
within a maturity, on June 15, 1996, or any interest payment
-date thereafter, at the principal amount thereof to be redeemed
plus interest accrued to the date of redemption. Notice -of
redemption shall be mailed to the Registrar and to the
registered owners of each Series 1986 Bond to be redeemed at
the addresses shown on the Bond Register, not less than thirty
(30) days before the redemption date; provided that any defect
in or failure to give such mailed notice shall not affect the
validity of the proceedings for any Series 1986 Bond not
affected thereby. Notice having been so mailed, the Series
1986 Bonds or portions of Series 1986 Bonds therein specified
shall be due and payable at the specified redemption date and
price, with accrued interest, and funds -for such payment being
held by or on behalf of the Registrar so as to be available
therefor, interest thereon shall cease to accrue, and such
Series 1986 Bonds or portions thereof shall no longer be
considered outstanding under this Resolution.
Series 1986 Bonds ' in a denomination larger than $5,000
may be redeemed in part in any integral multiple of $5,000.
The owner of any Series 1986 Bond redeemed in part will
receive, upon surrender to the Registrar of such Series 1986
Bond, a new Series 1986 Bond in principal amount equal to the
unredeemed portion of the Series 1986 Bond so surrendered. All
selections of Series 1986 Bonds for redemption by lot "shall be
made by the Registrar in $5,000 principal amounts.
I
I
I
I
2.08, Exegution and Delivery. The Series 1986 Bonds
and the Certificates s hall be executed in the name of the City
by the signatures of the Mayor and the City Clerk, and the
official seal of the City -shall be affixed thereto; provided
that all signatures and the seal may be printed facsimiles of
the originals thereof. On the reverse side of each Series 1986
Bond shall be printed a copy of the legal opinion to be
rendered by bond counsel, certified -by the facsimile signatures
of the Mayor and the City Clerk. In case any officer whose
signature or a facsimile Of whose signature appears on the
Series 1986 Bonds or Certificates shall cease to be such
officer before the delivery of any Series 1986 Bonds or
Certificates, such signature or facsimile shall nevertheless be
valid and sufficient for all Purposes, the same as if such
officer had remained in office until delivery. Notwithstanding
such execution, no Series 1986 Bond or Certificate shall be
valid or obligatory for any purpose or be entitled to any
security or benefit under Ordinance No. 859 or this Resolution
unless and until a certificate of authentication on such Series
1986 Bond or Certificate has been duly executed by the manual
Signature of an authorized representative of the Registrar.
Certificates of authentication on different Series 1986 Bonds
or Certificates need not be signed by the same representative.
The executed certificate of authentication on a Series 1986
Bond or Certificate shall be Conclusive evidence that it has
been authenticated and delivered under Ordinance No. 859 and
this Resolution. When the Series 1986 Bonds and Certificates
have been fully executed and authenticated, they shall be
delivered by the Registrar to the Purchaser upon payment of the
purchase price in accordance with the contract of sale
heretofore made and executed, and the Purchaser shall not be
obligated to see to the application of the purchase price.
Section 3. FQrms.
3,01. Form of Series 1986 Bonds. The Series 1986
Bonds shall be prepared in -Substantially the following form,
with such appropriate variations, omissions and insertions as
are permitted or required by Ordinance No. 859 or this
Resolution:
No.
Interest
Rate
[Face of the Series 1986 Bonds]
REGISTERED OWNER:
PRINCIPAL AMOUNT:
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
SEWERAGE SYSTEM REVENUE BOND
SERIES 1986
Date of
Maturity Original Issue
June 1, 1986
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
FOR VALUE RECEIVED, THE CITY OF KALISPELL (the City),
a duly organized municipal corporation located in Flathead
County, Montana, acknowledges itself to be specially indebted
and hereby promises to pay to the registered owner identified
above or registered assigns, solely from the Revenue Bond
Account Of its Sewerage System Fund, the principal amount
specified above on the maturity date specified above, or, if
this Bond is prepayable as stated below, on an earlier date on
which it shall have been duly called for redemption, upon
presentation and surrender hereof at the principal office of
the Bond Registrar hereinafter named, with basic interest
thereon, from June 1, 1986, or from such later date to which
interest has been paid or duly provided for, until the
Principal amount hereof is paid or until this Bond, if
prepayable, has been duly called for redemption, at the annual
interest rate specified above. Basic interest is payable
semiannually on June 15 and December 15 in each year,
commencing December 15, 1986, to the registered owner of this
Bond as such appears of record in the bond register as of the
close of business on the'last day (whether or not a business
day) of the immediately preceding month. Basic interest is
payable by check . or draft mailed by
in I as Bond Registrar,
Transfer Agent and Paying Agent, or its successor designated
under the Ordinance described herein (the Bond Registrar).
All Bonds of this series bear additional interest from
December 15, 1986 to June�115, 1987, at the rate of
one -and -one -quarter percent (1.25%) per annum; and Bonds of
this series having stated maturity dates in the years 1988
through 2006 each bear additional interest at the rate of
one -and -one -quarter percent (1.25%) per annum, from June 15,
1987 to December 15, 1987. The additional interest on all
Bonds of this series is represented by, and payable in
accordance with and upon presentation and surrender at the
principal office of the Bond Registrar of, separately
registered additional interest certificates. The principal of
and interest on this Bond are payable in lawful money of the
United States of America.
Additional provisions of this Bond are contained on
the reverse hereof and such provisions shall for all purposes
have the same effect as though fully set forth hereon.
This Bond shall not be valid or become obligatory for
any Purpose or be entitled to any security or benefit under the
Ordinance until the Certificate of Authentication hereon shall
have been executed by the Bond Registrar by the manual signature
of one of its authorized representatives.
IN WITNESS WHEREOF, the City of Kalispell, Flathead
County, Montana, by its City Council, has caused this Bond 'and
the Certificate on the reverse side hereof to be executed by
the facsimile signatures of the Mayor and the City Clerk and
has caused a facsimile of the official seal of the City to be
imprinted hereon.
(Facsimile Signature) (Facsimile Signature)
Mayor City Clerk
(Facsimile Seal)
CERTIFICATE OF AUTHENTICATION
This is one of the Sewerage System Revenue Bonds,
Series 1986 delivered pursuant to the Ordinance mentioned
within.
as Bond Registrar, Transfer Agent
and Paying Agent
B
Authorized Representative
I
This Bond is one of a series in the aggregate
principal amount of $1,300,000 (the Series 1986 Bonds), all of
like date of original issue and tenor except as to serial
number, interest rate, date, maturity date, denomination and
redemption privilege, and all issued for the purpose of
financing improvements to the City's municipal sewerage system
(the System), under authority of and in conformity with the
Constitution and laws of the State of Montana and the
ordinances and resolutions of the City, including Montana Code
Annotated, as amended, Title 7, Chapter 7, Part 44, and
Ordinance No. 859 and Resolution No. - duly enacted by the
City Council (collectively, the Ordinance). The Series 1986
Bonds are issuable only as fully registered bonds of a single
maturity, in denominations of $5,000 or any integral multiple
thereof. The Series 1986 Bonds are issued on a parity and are
equally and ratably secured by the Net Revenues of the System
with outstanding sewerage system revenue bonds of the City,
Series 1972, Series 1976 and Series 1983, dated as of
January 1, 1972, July 1, 1976 and September 1, 1983,
respectively (the Outstanding Bonds).
Reference is made to the Ordinance for a more complete
statement of the terms and conditions upon which the Series
1986 Bonds have been issued, the net revenues of the System
pledged and appropriated for the payment and security thereof,
the conditions upon which additional bonds may be issued under
the Ordinance and made payable from such net revenues on a
parity with the Outstanding Bonds and the Series 1986 Bonds or
otherwise, the conditions upon which the Ordinance may be
amended, the rights, duties and obligations of the City, and
the rights of the owners of the Series 1986 Bonds.
The Series 1986 Bonds maturing in the years 1987
through 1996 are not subject to redemption before maturity, but
Series 1986 Bonds having stated maturity dates in the years
1997 through 2006 are each subject to redemption at the option
of the City, in whole or in part, in inverse order of
maturities and in $5,000 principal amounts selected by lot
within a maturity, on June 15, 1996, and any interest payment
date thereafter, at a redemption price equal to the principal
amount of the Series 1986 Bonds to be redeemed plus interest
accrued to the date of redemption. Notice of redemption will
be mailed, not less than 30 days before the date fixed for
redemption, to the registered owner of each Series 1986 Bond to
be redeemed; provided that any defect in or failure to give
such mailed notice shall not affect the validity of the
proceedings for any Series 1986 Bond not affected thereby.
Upon partial redemption of any Series 1986 Bond, a new Series
1986 Bond or Bonds will be delivered to the registered owner
without charge, representing the remaining principal amount
outstanding.
This Bond is a negotiable investment security as
provided in the Montana Uniform Commercial Code. As provided
in the Ordinance and subject to certain limitations set forth
therein, this Bond is transferable upon the books of the City
at the principal office of the Bond Registrar, by the
registered owner hereof in person or by his attorney duly
authorized in writing, upon surrender hereof together with a'
written instrument of transfer satisfactory to the Bond
Registrar, duly executed by the registered owner or his
attorney; and may also be surrendered in exchange for Series
1986 Bonds of other authorized denominations. Upon such
transfer or exchange, the City will cause a new Series 1986
Bond or Bonds to be issued in the name of the transferee or
registered owner, of the same aggregate principal amount,
bearing interest at the same rate and maturing on the same
date, subject to reimbursement for any tax, fee or governmental
charge required to be paid with respect to such transfer or
exchange. -
The City and the Bond Registrar may deem and treat the
person in whose name this Bond is registered as the absolute
owner hereof, whether this Bond is overdue or not, for the
purpose of receiving payment and for all other purposes, and
neither the City nor the Bond Registrar shall be affected by
any notice to the contrary.
IT IS CERTIFIED, RECITED, COVENANTED AND AGREED that
the City has duly authorized and will forthwith construct and
complete the improvements to the System hereinabove described,
has fixed and established and will collect reasonable rates and
charges for the services and facilities afforded by the System
and has created a special Sewerage System Fund into which the
gross revenues of the System, including all additions thereto
and replacements and improvements thereof, will be paid, and a
separate and special Revenue Bond Account in that fund, into
which will be paid each month, from and as a first and prior
lien on the Net Revenues of the System then on hand, an amount
equal to not less than the sum of one -sixth of the interest due
within the next six months and one -twelfth of the principal due
within the next twelve months with respect to all Bonds secured
by the ordinance and payable from that Account, and in which
shall be established and maintained a reserve balance equal to
the maximum amount of principal and interest to become due on
the Series 1986 Bonds and all Outstanding Bonds in any
subsequent fiscal year; that the Revenue Bond Account will be
used only to pay the principal of and interest on the Series
1986 Bonds, the Outstanding Bonds and any other additional
Bonds issued pursuant to and secured by the Ordinance on a
parity therewith, and such rates and charges will from time to
time be made and kept sufficient, subject to regulations of the
Montana Public Service Commission, to provide gross income and
revenues adequate to. pay promptly the reasonable and current
expenses of operating and maintaining the System and to produce
in each fiscal year Net Revenues in excess of such current
expenses, equal to 125% of the maximum amount of principal and
interest payable from the Revenue Bond Account in any
subsequent fiscal year; that additional Bonds and refunding
Bonds may be issued and made payable from the Revenue Bond
Account on a parity with the Series 1986 Bonds and Outstanding
Bonds, upon certain conditions set forth in the Ordinance, but
no obligation will be otherwise incurred and made payable from
the Net Revenues of the System, whether or not such obligation
shall also constitute a general obligation and indebtedness of
the City, unless the lien thereof shall be expressly made
subordinate to the lien of the Series 1986 Bonds, the
Outstanding Bonds and additional parity Bonds on such Net
Revenues; that all provisions for the security of the holder of
this Bond set forth in the Ordinance will be punctually and
faithfully performed as therein stipulated; that all acts,
conditions and things required by the Constitution and laws of
the State of Montana and the ordinances and resolutions of the
City to be done, to exist, to happen and to be performed in
order to make this Series 1986 Bond a valid and binding special
obligation of the City according to its terms have been done,
do exist, have happened and have been performed as so required;
and that this Bond and the interest hereon are payable solely
from the Net Revenues of the System pledged and appropriated to
the Revenue Bond Account and do not constitute a debt of the
City within the meaning of any constitutional or statutory
limitation or provision and the issuance of the Series 1986
Bonds does not cause either the general or the special
indebtedness of the City to exceed any constitutional or
statutory limitation.
The following abbreviations, when used in the
inscription on the face of this Bond, shall be construed as
though they were written out in full according to applicable
laws or regulations:
TEN COM -- as tenants UNIF GIFT MIN ACT ...... Custodian ......
in common (Cust) (Minor)
TEN ENT as tenants
by the entireties
JT TEN -- as joint tenants
with right of
survivorship and
not as tenants in
common
under Uniform Gifts to
Minors Act ...............
(State)
I
I
I
Additional abbreviations may also be used.
AMOUNT: DOLLARS
FOR VALUE RECEIVED, THE CITY OF KALISPELL (the City), a
duly organized municipal. -corporation located in Flathead County,
Montana, will pay to the registered owner named above, or
registered assigns, on the date specified above the amount
stated above representing additional interest at the annual rate
specified above for the limited period specified above on the
Sewerage System Revenue Bonds, Series 1986, dated, as originally
issued, as of June 1, 1986, of the City, issued in the aggregate
principal amount of $1,300,000, to the extent such Bonds have
not been paid prior to said date. Such additional interest is
payable, in lawful money of the United States of America, upon
presentation and surrender of this Certificate at the principal
office of IF in
as Bond Registrar, Transfer
Agent and Paying Agent (the Registrar), or its successor
designated under the provisions of the Ordinance described
herein.
Additional provisions of this Certificate are contained
on the reverse hereof and such provisions shall for all purposes
have the same effect as though fully set forth herein.
This Certificate shall not be valid or become obli-
qatory for any purpose or be entitled to any security or benefit
under the Ordinance until the Certificate of Authentication
hereon shall have been executed by the Registrar by the manual
signature of one of its authorized representatives.
IN WITNESS WHEREOF, the City of Kalispell, Montana, by
its City Council, has caused this Certificate to be executed by
the facsimile signatures of the Mayor and the City Clerk and by
a facsimile of the official seal of the City, and has caused
this Certificate to be dated as of June 1, 1986.
CITY OF KALISPELL, MONTANA
(Facsimile Signature) (Facsimile Signature)
City Clerk (Facsimile Seal) Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates representing additional
interest on the Bonds delivered pursuant to the Ordinance
mentioned herein.
Bv
as Registrar
Authorized Representative
[Reverse of Certificates]
As provided in Ordinance No. 859 and Resolution No.
duly adopted by the City Council of the City (collectively, the
Ordinance), pursuant to which the Bonds and this Certificate
were issued, and subject to certain limitations set forth
therein, this Certificate is transferable upon the books of the
City at the principal office of the Registrar by the registered
owner hereof in person or by his attorney duly authorized in
writing, upon presentation hereof together with a written
instrument of transfer satisfactory to the Registrar, duly
executed by the registered owner or his attorney. Upon any such
transfer, the City will cause a new Certificate to be issued in
the name of the transferee, representing additional interest to
be paid at the same rate for the same period and on the same
date, subject to reimbursement for any tax, fee or governmental
charge required to be paid with respect to such transfer.
The City and the Registrar may deem and treat the
person in whose name this Certificate is registered as the
absolute owner hereof, whether this Certificate is overdue or
not, for the purpose of receiving payment and for all other
purposes, and neither the City nor the Registrar shall be
affected by any notice to the contrary.
ASSIGNMENT
FOR VALUED RECEIVED the undersigned hereby sells,
assigns and transfers unto
the within Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
attornev to transfer the within Bond on the books kept for
registration thereof, with full power of substitution in the
premises.
Date:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE:
SIGNATURE GUARANTEE
Signature(s) must be guaranteed
by a commercial bank or trust
company or by a brokerage firm
having a membership in one of
the major stock exchanges.
NOTICE: The signature to this
assignment must correspond
with the name as it appears
upon the face of the within
Bond in every particular,
without alteration,
enlargement or any change
whatsoever.
3.02. Certificate as to Lecral Ovinion. The following
certificate shall be printed on the reverse side of each Series
1986 Bond, following a full, true and correct copy of the text
of the legal opinion given at the time of delivery of the
Series 1986 Bonds:
We certify that the above is a full, true and
correct copy of the legal opinion on the issue of Bonds of
the City of Kalispell, Montana, which includes the within
Bond, dated as of the date of delivery of and payment for
the Bonds.
(Facsimile Signature) (Facsimile Signature)
City Clerk Mayor
3.03. Form of Certificates. The Certificates referred
to in Section 2.02 shall be prepared in substantially the
followina form:
No.
(Face of Certificates]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
REGISTERED ADDITIONAL INTEREST CERTIFICATE RELATING TO
I
SEWERAGE SYSTEM REVENUE BONDS
SERIES 1986 1
DATED, AS ORIGINALLY ISSUED, AS OF JUNE 1, 1986
Interest Period Additional Interest Rate Date of Payment
TEN COM as tenants UNIF GIFT MIN ACT ...... Custodian.....
in common (Cust) (Minor)
TEN ENT as tenants
by the entireties
under Uniform Gifts to
JT TEN as joint tenants Minors
with right of
survivorship and Act .........
not as tenants in (State
common
Additional abbreviations may also be used.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
the within Certificate
and all rights thereunder, and hereby irrevocably constitutes
and appoints
attorney to transfer
the within Certificate on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
PLEASE INSERT SOCIAL SECURITY
OR OTHER INDENTIFYING NUMBER
OF ASSIGNEE:
SIGNATURE GUARANTEE
Signature(s) must be
guaranteed by a commercial
bank or trust company or by
a brokerage firm having a
membership in one of the
major stock exchanges.
NOTICE: The signature to this
assignment must correspond
with the name as it appears
upon the face of the within
Certificate in every parti-
cular, without alteration,
enlargement or any change
whatsovever.
Section 4. Appropriation of Bond Proaeed-s--and Security
for the Series 1986 Bonds.
4.01. Proceeds. The proceeds of the Series 1986 Bonds
are appropriated to the Sewerage System Fund created by
Ordinance No. 859. Any accrued interest on the Series 1986
Bonds shall be credited to the Revenue Bond Account. The
balance of the proceeds of the Series 1986 Bonds shall be
credited to the Construction Account and applied to payment of
costs of the Improvements. Any proceeds of the Series 1986
Bonds to be applied to the acquisition of tangible property as
provided in Section 5.03(2) shall be segregated in a special
subaccount in the Construction Account and, until so applied,
shall be invested in accordance with the provisions of Section
5.03(2). .
4.02. Security for Series 1986 Bonds. The Series 1986
Bonds are issued under Section 4.03 of Ordinance No. 859 and
shall, with the Outstanding Bonds and any other additional bonds
issued under the provisions of said Section 4.03 or Section 4.02
of Ordinance No. 859, be equally and ratably secured by the
provisions of Ordinance No. 859 and this Resolution and payable
out of the net revenues appropriated to the Revenue Bond Account -
of the Sewerage System Fund, without preference or priority, all
as provided in Ordinance No. 859. The City shall keep, perform
and observe each and every one of its covenants and undertakings
set forth in Ordinance No. 859 and shall cause the Improvements
to be undertaken and completed expeditiously.
4.03. Reserve. The City has pursuant to Section 3.04
of Ordinance No. 859 established a reserve in the Revenue Bond
Account (the Reserve) to secure Bonds payable therefrom. The
City covenants and agrees to increase the balance in the
Reserve, by equal monthly payments commencing July 1986 and
concluding June 1989 from available Net Revenues of the System,
to an amount equal to the maximum amount of principal and
interest payable on the Outstanding Bonds and the Series 1986
Bonds in any future fiscal year and, from and after July .1989,
to maintain the Reserve in such amount.
4.04. Storm Sewer Charges. A portion of the
Improvements constitutes improvement of the portion of the
System relating to the collection of storm water. In Ordinance
No. 862, as amended by Ordinance No.IR�11, the City established a
procedure to assess the costs of improvements to the storm sewer
portion of the System against benefited properties. The City
hereby covenants and agrees that it will do and perform all acts
and things necessary to charge against benefited properties the
costs of the Improvements constituting storm sewer improvements
to be assessed in the following years and amounts:
Year
Amount
Year
Amount
1986
$31,756.93
1997
$33,392.50
1987
30,242.50
1998
36,667.50
1988
34,542.50
1999
34,567.50
1989
33,492.50
2000
37,467.50
1990
32,442.50
2001
1991
31, 392. 50'
2002
1992
30,342.50
2003
1993
34,292.50
2004
1994
32,892.50
2005
1995
31,492.50
2006
1996
35,092.50
The collections of all such storm sewe-r charges shall be
deposited in the Sewerage System Fund, as provided in Ordinance
No. 862, as amended by Ordinance No.1-011.
Section 5. Pending Federal Legislation.
5.01. Tax —Re-form Bill. This Council understands that
on December 17, 1985, the United States House of
Representatives passed H.R. 3838 (the Tax Reform Bill), which,
among other things, includes substantial additional
requirements which must be satisfied by the issuers of
municipal obligations (including obligations of the character
of the Series 1986 Bonds) in order that the interest on such
obligations be and remain exempt from federal income taxation.
In their current form, the provisions of the Tax Reform Bill
apply to municipal obligations issued after December 31, 1985.
To enhance the marketability of the Series 1986 Bonds, this
Council has determined it to be necessary and desirable and in
the best interests of the City to structure the Series 1986
Bonds and the application of the proceeds thereof in a manner
so as to comply with the requirements of the Tax Reform Bill
and, if Possible, to comply with the requirements of the Tax
Reform Bill as finally enacted, assuming that, as finally
enacted, it would apply to the Series 1986 Bonds.
5.02. General Covenants. The City covenants and
agrees with the owners from time to time of the Series 1986'
Bonds that it will,take, and will cause its officers, employees
or agents to take, all actions necessary to comply with the Tax
Reform Bill, and that it will not take or permit to be taken by
any of its officers, employees or agents any actions that would
cause interest on the Series 1986 Bonds to become subject to
federal income taxation under the Tax Reform Bill, until the
Tax Reform Bill is enacted or the 99th Congress adjourns sine
die without enactment of the Tax Reform Bill. In addition, the
City covenants and agrees with the owners from time to.time of
the Series 1986 Bonds that if the Tax Reform Bill is enacted
and its provisions are applicable to the Series 1986 Bonds,
(5) The City agrees that at no time during any Bond
Year (as hereinafter defined) shall it invest or cause to be
invested in nonpurpose obligations (other than obligations the
interest on which is exempt from federal income taxation under
Section 103 of the Code) with a yield higher than the yield of
the Series 1986 Bonds (determined in accordance with the Tax
Reform Bill) "gross proceeds" of the Series 1986 Bonds in
excess of 150 percent of the debt service on the Series 1986
Bonds for the Bond Year, and agrees further to reduce the
amount so invested within 30 days after the date any Series
1986 Bonds are redeemed during such Bond Year to an amount not
in excess of 150 percent of the debt service on the Series 1986
Bonds for the Bond Year, giving effect to such redemption;
provided that no sale or disposition of an'investment is
required if, but only so long as, the sale or disposition would
result in the realization of a loss for federal income tax
purposes that exceeds the amount which, but for such sale or
disposition, would at the time be rebated under the Tax Reform
Bill to the United States if a rebate payment were then due.
For purposes of this Subsection (6), "gross proceeds" of the
Series 1986 Bonds include, as of the date of determination:
(i) the Reserve Amount, and (ii) the amounts on deposit in the
Revenue Bond Account allocable to the Series 1986 Bonds in
excess of the amounts therein to be applied to the payment of
principal of or interest on the Series 1986 Bonds in the next
succeeding 12 months. The yield of a nonpurpose obligation
shall be determined in accordance with the Tax Reform Bill and
valued as if acquired for its fair market value at the time
such obligation is acquired with or attributable to gross
proceeds of the Series 1986 Bonds. As used herein, "Bond Year"
means a one-year period during which any Series 1986 Bonds are
outstanding commencing on the date of issue of the Series 1986
Bonds or the anniversary thereof and concluding on the day
before the next succeeding Bond Year or, for the final Bond
Year, the day before said anniversary date in the year 2006.
(6)(a) The City will make the determinations required.
by this paragraph (6) and shall rebate to the United
States, not less frequently than once each five years after
the date of issuance of the Series 1986 Bonds, an amount
equal to at least 90 percent of the Rebate Amount (as
hereinafter defined), and within 30 days after payment or
redemption of all of the Series 1986 Bonds, 100 percent of
the Rebate Amount, as required by the Tax Reform Bill and
any regulations promulgated thereunder. As used herein,
"Rebate Amount" means the amount required under the Tax
Reform Bill to be rebated to the United States, computed in
accordance with the provisions of the Tax Reform Bill and
any regulations promulgated thereunder.
(b) The City shall determine the Rebate Amount at
least every year and upon payment or redemption of all of
the Series 1986 Bonds, and shall file such determination,
together with any supporting documentation required to
calculate or evidence the Rebate Amount, in the office of
the Director of Finance. The City shall retain records of
such determinations until six years after the final payment
or redemption of the Series 1986 Bonds. Upon each such
determination, the City shall set aside the Rebate Amount
so determined, and shall separately account for the
earnings from the investment thereof, and such earnings
shall become part of the Rebate Amount.
(7) The City shall file with the Secretary of the
Treasury, not later than August 15, 1986, a statement
concerning the Series 1986 Bonds containing the information
required by the Tax Reform Bill.
(8) If legislation other than the Tax Reform Bill is
enacted or if the Department of the Treasury promulgates
amendatory or supplementary regulations and such legislation or
regulations are applicable to the Series 1986 Bonds, the City
covenants and agrees with the owners from time to time of the
Series 1986 Bonds that the City will take, and will cause its
officers, employees and agents to take, all actions necessary
to comply with the such legislation or regulations, and that it
will not take or permit to be taken by any of its officers,
employees or agents any action which would cause interest on
the Series 1986 Bonds to become subject to federal income
taxation under the provisions of such legislation or
J-r--Vu OL U11ZO.
that the City will take, and will cause its officers, employees
and agents to take, all actions necessary to comply with the
Tax Reform Bill as enacted, and that it will not take or permit
to be taken by any of its officers, employees or agents any
action which would cause interest on the Series 1986 Bonds to
become subject to federal income taxation under the provisions
of the Tax Reform Bill as enacted.
5.03. Specifig, Covenants. In furtherance of the
general covenants of the City contained in Section 5.02, the
City further agrees with the owners from time to time of the
Series 1986 Bonds, as follows:
(1) The City will spend not less than five percent of
the net proceeds of the Series 1986 Bonds within 30 days after
the date of issue of the Bonds, on costs of the Improvements,
and will expend all ot the proceeds of the Series 1986 Bonds,
including investment income therefrom, on costs of the
Improvements within three years after the date of issue of the
Series 1986 Bonds.
(2) The City shall not, after 30 days after the date
of issuance of the Series 1986 Bonds, invest or cause to be
invested the proceeds of the Series 1986 Bonds or investment
earnings thereon to be applied to the acquisition of tangible
property for the Improvements, including the acquisition of any
property as to which the City has entered into a contract with
a vendor or supplier, or to be applied to any costs of the
Improvements not described in paragraph (3) of this Section
5.03, at a yield greater than the yield of the Series 1986
Bonds (determined in accordance with the Tax Reform Bill).
(3) The City shall not invest or cause to be invested
the proceeds of the Series i986 Bonds or investment earnings
thereon to be applied to construction expenditures for the
Improvements, including payments to be made by the City to
contractors for the Improvements, at a yield greater than the
yield of the Series 1986 Bonds (determined in accordance with
the Tax Reform Bill) after the earlier of any of the following:
(a) construction of the Improvements is substantially
completed or abandoned, or I
(b) an amount equal to the proceeds of the Series
1986 Bonds has been expended by the City on the
Improvements, or
(c) the day which i's three years after the earlier of
(i) the date of issue of the Series 1986 Bonds, or (ii) the
date construction of the Improvements begins.
(4) As provided in Section 3.04, payment of principal
of and interest on the Series 1986 Bonds is secured by the
Reserve. The amount on deposit in the Reserve allocable to the
Series 1986 Bonds (the Reserve Amount) constitutes a reasonably
required reserve fund which may be invested without yield
limitation if the Reserve Amount does not at any time exceed
the Maximum Reserve Requirement, which is the lesser of:
M 15 percent of the original proceeds of the Series 1986
Bonds ($195,000), (ii) the maximum amount of principal and
interest payable on the.Series 1986 Bonds in any fiscal year,
or (iii) 125 percent of the average amount of principal and
interest payable on the Series 1986 Bonds in any fiscal year.
To ensure that the Reserve Amount never exceeds the Maximum
Reserve Requirement, the City agrees that following the payment
of Series 1986 Bonds on each June 15, the City will calculate
the Reserve Amount, and that, if the Reserve Amount exceeds the
maximum amount of principal and interest payable on the Series
1986 Bonds then outstanding in any future fiscal year, the City
will within 30 days thereafter either (a) reduce the Reserve
Amount so that it does not exceed such amount or (b) limit the
yield of the investments allocated to the Reserve Amount, to
the extent permissible under Ordinance No. 859, in excess of
such amount to the yield of the Series 1986 Bonds if and to the
extent such reduction or limitation is necessary to prevent the
Series 1986 Bonds from becoming "arbitrage bonds" within the
meaning of the Tax Reform Bill. In determining the Reserve
Amount, the City shall allocate amounts on deposit in the
Reserve to outstanding Bonds in proportion to their original
principal amounts.
5.04. 'Amendment of Resolution. The city reserves the
right to amend or modify the provisions of Sections 5.01, 5.02
or 5.03, if and to the extent that the City receives an opinion
of nationally recognized bond counsel that such amendment or
-Elie exemption from
modification-w-ili'not adversely affe&t
federal income taxation of the interest on the Series 1986
Bonds tinder then existing la�qs or regulations or any pending
legislation or regulations that are applicable to the Series
1986 Bonds.
section 6. Effec-tiVe Date. This resolution shall be
in full force and effect. from and after its passage.
Passed and adopted by the City Council Of the City Of
Kalispell, Montana, this 21 day of A -or i I F 1986.
ayo�r
Attest:
ri i v- Clerk
1, the undersigned, City Clerk of the City of Kalispell, certify that the foregoing
is a true copy of the Resolution passed by the city Council of the City of Kalispell,
Montana, at a reguldr meeting held
City Clerk of the City of Kalispell, Montana
I