Resolution 6136 - 2023 DNRC Water System Revenue BondsCERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
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 a Resolution entitled:
"RESOLUTION RELATING TO $19,854,000 WATER SYSTEM REVENUE BONDS (DNRC
DRINKING WATER STATE REVOLVING LOAN PROGRAM), CONSISTING OF (I) $1,000,000
SUBORDINATE LIEN TAXABLE SERIES 2023A BOND, (II) $10,000,000 TAX-EXEMPT SERIES
2023B BOND, AND (III) $8,854,000 TAX-EXEMPT SERIES 2023C BOND; AUTHORIZING THE
ISSUANCE AND FIXING THE TERMS AND CONDITIONS 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 regular meeting on June 19, 2023 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required by law; and that the Resolution has not as of the date hereof been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said meeting, the following City
Council members voted in favor thereof:
voted against the same:
abstained from voting thereon:
or were absent: Co tti' L o ►r
G-j C&V-i C'. ,
WITNESS my hand and seal officially this ( ° day of June, 2023.
SUPPLEMENTAL RESOLUTION
Relating to
$19,854,000
WATER SYSTEM REVENUE BONDS
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
$1,000,000 SUBORDINATE LIEN TAXABLE SERIES 2023A
$10,000,000 TAX-EXEMPT SERIES 2023B
$8,854,000 TAX-EXEMPT SERIES 2023C
CITY OF KALISPELL, MONTANA
Adopted: June 19, 2023
TABLE OF CONTENTS
(For convenience only, not a part of this Supplemental Resolution)
Page
ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES ..........................2
Section1.1. Definitions.............................................................................................................2
Section 1.2. Other Rules of Construction..................................................................................8
Section1.3. Appendices............................................................................................................9
ARTICLE II AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS ...........9
Section 2.1. Authorization and Findings...................................................................................9
Section 2.1.1. Consent of DNRC...........................................................................................10
Section 2.2. Representations...................................................................................................10
Section2.3. Covenants............................................................................................................13
Section 2.4. Covenants Relating to the Tax -Exempt Status of the State Bonds......................15
Section 2.5. Maintenance of System; Liens............................................................................16
Section 2.6. Maintenance of Existence; Merger, Consolidation, Etc.; Disposition of
Assets...................................................................................................................16
ARTICLE III USE OF PROCEEDS; THE 2023 Tank and Wells Project............................................17
Section 3.1. Use of Proceeds...................................................................................................17
Section 3.2. The 2023 Tank and Wells Project.......................................................................17
Section 3.3. 2023 Tank and Wells Project Representations and Covenants ...........................18
Section 3.4. Completion or Cancellation or Reduction of Costs of the 2023 Tank
RehabProject.....................................................................................................19
ARTICLEIV THE LOANS..................................................................................................................19
Section 4.1. The 2023 Loans; Disbursement of 2023 Loans...................................................19
Section 4.2. Commencement of Loan Term............................................................................22
Section 4.3. Termination of Loan Tenn..................................................................................22
Section 4.4. 2023 Loan Closing Submissions.........................................................................22
ARTICLE V REPAYMENT OF 2023 LOANS...................................................................................22
Section 5.1. Repayment of 2023 Loans...................................................................................22
Section 5.1.1. Interest and Surcharges...................................................................................22
Section 5.1.2. Repayment of 2023A Loan; Principal Forgiveness........................................23
Section 5.1.3. Repayment of 2023B Loan.............................................................................23
Section 5.1.4 Repayment of 2023C Loan.............................................................................24
Section 5.1.5. Details Regarding 2023 Loan Repayments....................................................24
Section 5.2. Additional Payments...........................................................................................25
Section5.3. Prepayments........................................................................................................25
Section 5.4. Obligations of City Unconditional......................................................................25
Section 5.5. Limited Liability..................................................................................................26
ARTICLE VI INDEMNIFICATION OF DNRC AND DEQ...............................................................26
ARTICLE VII ASSIGNMENT...............................................................................................................26
Section 7.1. Assignment by City .............................................................................................26
Section 7.2. Assignment by DNRC.........................................................................................26
Section 7.3. State Refunding Bonds........................................................................................26
ARTICLE VIII THE SERIES 2023 BONDS...........................................................................................27
Section 8.1.
Net Revenues Available......................................................................................27
Section 8.2.
Issuance and Sale of the Series 2023 Bonds........................................................27
Section8.3.
Terms...................................................................................................................27
Section 8.4.
Negotiability, Transfer and Registration.............................................................28
Section 8.5.
Execution and Delivery .......................................................................................28
Section8.6.
Form....................................................................................................................28
ARTICLE IX SECURITY FOR THE SERIES 2023 BONDS..............................................................28
ARTICLE X TAX MATTERS.............................................................................................................29
Section 10.1.
Use of 2023 Tank and Wells Project and System
...............................................29
Section 10.2.
General Covenant................................................................................................29
Section 10.3.
Arbitrage Certification.........................................................................................29
Section 10.4.
Arbitrage Rebate..................................................................................................29
Section 10.5.
Information Reporting.........................................................................................30
ARTICLE XI CONTINUING DISCLOSURE......................................................................................30
ARTICLE XII MISCELLANEOUS.......................................................................................................30
Section12.1.
Notices.................................................................................................................30
Section 12.2.
Binding Effect....................................................................................................31
Section12.3.
Severability ..........................................................................................................31
Section12.4.
Amendments........................................................................................................31
Section 12.5.
Applicable Law...................................................................................................31
Section 12.6.
Captions; References to Sections........................................................................31
Section 12.7.
No Liability of Individual Officers, Directors, Trustees or Council
Members..............................................................................................................31
Section 12.8.
Payments Due on Holidays.................................................................................31
Section 12.9.
Right of Others to Perform City's Covenants.....................................................32
Section 12.10.
Authentication of Transcript................................................................................32
Section 12.11.
Repeals and Effective Date.................................................................................32
APPENDIX A Description of the 2023 Tank and Wells Project .................................................... A-1
APPENDIX 13-1 Form of Series 2023A Bond............................................................................... B-1-1
APPENDIX B-2 Form of Series 2023B Bond............................................................................... B-2-1
APPENDIX B-3 Form of Series 2023C Bond............................................................................... B-3-1
APPENDIX C Additional Agreements, Representations and Covenants ...................................... C-1
APPENDIX D Compliance Certificate and Request...................................................................... D-1
RESOLUTION NO.6136
RESOLUTION RELATING TO $19,854,000 WATER SYSTEM REVENUE BONDS
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
CONSISTING OF (I) $1,000,000 SUBORDINATE LIEN TAXABLE SERIES 2023A
BOND, (II) $10,000,000 TAX-EXEMPT SERIES 2023B BOND, AND (III) $8,854,000
TAX-EXEMPT SERIES 2023C BOND; AUTHORIZING THE ISSUANCE AND
FIXING THE TERMS AND CONDITIONS THEREOF
RECITALS:
WHEREAS, pursuant to the Drinking Water State Revolving Fund Act, Montana Code Annotated,
Title 75, Chapter 5, Part 11, as amended (the "State Act"), the State of Montana (the "State") has established
a revolving loan program (the "Program") to be administered by the Department of Natural Resources and
Conservation of the State of Montana, an agency of the State (the "DNRC"), and by the Department of
Environmental Quality of the State of Montana, an agency of the State (the "DEQ"), and has provided that
a Drinking Water state revolving fund (the "Revolving Fund") be created within the state treasury and all
federal, state and other funds for use in the Program be deposited into the Revolving Fund, including, but
not limited to, all federal grants for capitalization of a state Drinking Water revolving fund under the Federal
Drinking Water Act (the "Safe Drinking Water Act"), all repayments of assistance awarded from the
Revolving Fund, interest on investments made on money in the Revolving Fund and payments of principal
of and interest on loans made from the Revolving Fund; and
WHEREAS, the Act provides that funds from the Program shall be disbursed and administered for
the purposes set forth in the Safe Drinking Water Act and according to rules adopted by the DEQ and the
DNRC; and
WHEREAS, the City of Kalispell, Montana (the `Borrower" or the "City"), has applied to the
DNRC for the 2023 Loans (as hereinafter defined) from the Revolving Fund to enable the City to finance,
refinance or reimburse itself for a portion of the costs of the 2023 Tank and Wells Project (as hereinafter
defined) which will carry out the purposes of the Safe Drinking Water Act and to pay costs of issuance of
the Series 2023 Bonds (as hereinafter defined); and
WHEREAS, the DNRC offered to make loans in the total principal amount of $19,854,000
available to the City, with one loan in the amount of $1,000,000 that is evidenced by the Series 2023A
Bond (as hereinafter defined) contemplated to be forgiven in the event the City satisfies certain conditions;
and
WHEREAS, the City intends at this time to issue bonds in three series, one a taxable Series 2023A
Bond in the maximum principal amount of $1,000,000 (the "Series 2023A Bond"), and the other two a Tax -
Exempt Series 2023B Bond in the maximum principal amount of $10,000,000 (the "Series 2023B Bond")
and a Tax -Exempt Series 2023C Bond in the maximum principal amount of $8,854,000 (the "Series 2023C
Bond," and together with the Series 2023B Bond, the "Series 2023 Tax -Exempt Bonds," and collectively
with the Series 2023A Bond, the "Series 2023 Bonds"), being used, along with other funds of the City, in
order to fund the 2023 Tank and Wells Project; and
WHEREAS, provided that the City complies with certain conditions for principal forgiveness, the
City's obligation to repay the Series 2023A Bond will be forgiven by the DNRC; and
A-1
WHEREAS, the City is authorized under applicable laws, ordinances and regulations to adopt this
Supplemental Resolution and to issue the Series 2023 Bonds to evidence the 2023 Loans for the purposes
set forth herein; and
WHEREAS, the repayment of the Series 2023 Tax -Exempt Bonds will be on a parity with the
Outstanding Bonds (as hereinafter defined).
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF KALISPELL,
MONTANA, AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1. Definitions. In this Supplemental Resolution, unless a different meaning clearly
appears from the context, the following terms shall have the following meanings:
"Accountant" or "Accountants" means an independent certified public accountant or a firm of
independent certified public accountants satisfactory to the DNRC.
"Act" means (i) with respect to the City, the Enabling Act, and (ii) with respect to the DNRC, the
State Act, as amended from time to time.
"Additional Bonds" means any bonds issued as parity bonds pursuant to Section 6.01 of the
Original Resolution.
"Administrative Expense Surcharge" means (i) in respect of the 2023B Loan and the 2023C Loan,
in any event, and (ii) in respect of the 2023A Loan, upon delivery of a Noncompliance Statement as
provided by this Supplemental Resolution, a surcharge equal to twenty-five hundredths of one percent
(0.25%) per annum on the outstanding principal amount of the 2023 Loans from the date of each advance
thereof, payable by the City on a Payment Date.
"Amended Resolutions" means Resolution Nos. 4603, 5202, and 5238 adopted by the City Council
on March 5, 2001, June 4, 2007, and September 4, 2007, respectively.
"Amended Series 2007B Bond" means the City's First Amended and Restated Water System
Revenue Bond (DNRC Drinking Water State Revolving Loan Program), Series 2007B, amended pursuant
to Resolution No. 5576, adopted by the City Council of the City on August 20, 2012, in the principal amount
of $1,340,000 and delivered to DNRC.
"Authorized DNRC Officer" means the Director or Deputy Director of the DNRC, and, when used
with reference to an act or document, also means any other individual authorized by resolution of the DNRC
to perform such act or sign such document. If authorized by the DNRC, an Authorized DNRC Officer may
delegate all or a portion of his authority as an Authorized DNRC Officer to another individual, and such
individual shall be deemed an Authorized DNRC Officer for purposes of exercising such authority.
"Bond Counsel" means any Counsel nationally recognized as experienced in matters relating to the
issuance by states or political subdivisions of tax-exempt obligations selected by the City and acceptable to
the DNRC.
"Bonds" means the Amended Series 2007B Bond, the Series 2017A Bond, the Series 2020A Bonds,
the Series 2020B Bonds, and the Series 2023 Tax -Exempt Bonds and any additional bonds to be issued on
a parity therewith pursuant to the Original Resolution.
"Business Day" means any day which is not a Saturday or Sunday, a legal holiday in the State or a
day on which banks in the State are authorized or required by law to close.
"City" or "Borrower" means the City of Kalispell, Montana, or any permitted successor or assign.
"Closing" means the date of delivery of the Series 2023 Bonds to the DNRC.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Documents" means any security agreement, guaranty or other document or agreement
delivered to the DNRC securing the obligations of the City under this Supplemental Resolution and the
Series 2023 Bonds. If no Collateral Documents secure such obligations, any reference to Collateral
Documents in this Supplemental Resolution shall be without effect.
"Committed Amount" means the aggregate amount of the 2023 Loans committed to be lent by the
DNRC to the City pursuant to Section 4.1 of this Supplemental Resolution, as such amount may be reduced
pursuant to Sections 3.2 and 3.4 of this Supplemental Resolution.
"Compliance Certificate and Request" means the certificate and request substantially in the form
of the attached Appendix D delivered by the DNRC to the City following the final advance of principal of
the 2023A Loan, to be completed, executed and delivered by the City to the DNRC pursuant to Section
5.1.2 of this Supplemental Resolution.
"Construction Account" means the account created in the Water System Fund pursuant to Section
7.02 of the Original Resolution.
"Consultant" means a nationally recognized consultant or firm of consultants, or an independent
engineer or firm of independent engineers, or an Accountant, which in any case is qualified and has skill
and experience in the preparation of financial feasibility studies or projections for facilities similar to the
System or the 2023 Tank and Wells Project, selected by the City and satisfactory to the DNRC.
"Council" means the City Council of the City.
"Counsel" means an attorney duly admitted to practice law before the highest court of any state
and satisfactory to the DNRC.
"Debt" means, without duplication, in respect of the System, (1) indebtedness of the City for
borrowed money or for the deferred purchase price of property or services; (2) the obligation of the City as
lessee under leases which should be recorded as capital leases under generally accepted accounting
principles; and (3) obligations of the City under direct or indirect guarantees in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in clause (1) or (2) above.
"Debt Service Account" means the account created in the Water System Fund pursuant to Section
7.04 of the Original Resolution.
"DEQ" means the Department of Environmental Quality of the State of Montana, an agency of the
State, or any successor to its powers, duties and obligations under the Act or the EPA Agreements.
"Determination Statement" means a Forgiveness Statement or Noncompliance Statement relating
to the Series 2023A Bond.
"DNRC" means the Department of Natural Resources and Conservation of the State of Montana,
an agency of the State, and any successor to its powers, duties and obligations under the State Act.
"Enabling Act" means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as amended
from time to time, which authorizes the City to own and operate the System, to undertake the 2023 Tank
and Wells Project and to issue the Series 2023 Bonds to finance costs of the 2023 Tank and Wells Project.
"EPA" means the Environmental Protection Agency, an agency of the United States of America,
and any successor to its functions under the Safe Drinking Water Act.
"EPA Agreements" means all capitalization grant agreements and other written agreements
between the DEQ, the DNRC and the EPA concerning the Program.
"EPA Capitalization Grant" means the grant of funds to the State by the EPA under Section 1452
of the Safe Drinking Water Act.
"Forgiveness Statement" means a written statement delivered to the City by the DNRC in response
to a Compliance Certificate and Request that the City's obligation to repay the principal of the Series 2023A
Bond is forgiven.
"Fund" or "Water System Fund" means the Water System Fund established pursuant to Section
7.01 of the Original Resolution.
"Government Obligations" means direct obligations of, or obligations the principal of and the
interest on which are fully and unconditionally guaranteed as to payment by, the United States of America.
"Governmental Unit" means governmental unit as such term is used in Section 145(a) of the Code.
"Indenture" means the Indenture of Trust, dated as of May 1, 1998, between the Board of
Examiners of the State and the Trustee, as such may be supplemented or amended from time to time in
accordance with the provisions thereof, pursuant to which, among other things, the State Bonds are to be
or have been issued.
"Loan Loss Reserve Surcharge" means (i) with respect to the 2023B Loan and the 2023C Loan, in
any event, and (ii) in respect of the 2023A Loan, upon the delivery of a Noncompliance Statement as
provided by this Supplemental Resolution, a surcharge equal to twenty-five hundredths of one percent
(0.25%) per annum on the outstanding principal amount of the 2023 Loans from the date of each advance
thereof, payable by the City on a Payment Date.
"Loan Term" means that period of time commencing and ending as set in Sections 4.2 and 4.3 of
this Supplemental Resolution.
"Net Revenues" means the gross revenues of the System remaining after the payment of operating
expenses of the System as more fully described in the Original Resolution and this Supplemental
Resolution.
4
"Noncompliance Statement" means a written statement delivered to the City by the DNRC that the
City's obligation to repay the principal of the Series 2023A Bond is not forgiven.
"Operating Account" means the account created in the Water System Fund pursuant to Section 7.03
of the Original Resolution.
"Opinion of Bond Counsel" means a written opinion of Bond Counsel.
"Original Resolution" means Resolution No. 4273, adopted by the Council on June 17, 1996, as
amended and supplemented by Resolution Nos. 4603, 4892, 5205, 5238, 5576, 5817, and 5959 adopted by
the Council on March 5, 2001, May 17, 2004, June 4, 2007, September 4, 2007, August 20, 2012, June 5,
2017, and January 6, 2020, respectively.
"Outstanding Bonds" means the Amended Series 2007B Bond, the Series 2017A Bond, the Series
2020A Bonds, the Series 2020B Bonds, and any other bonds that are Outstanding and issued on a parity
therewith, including, from and after its issuance, the Series 2023 Tax -Exempt Bonds.
"Parity Bonds" means the City's Outstanding Bonds; provided, however, that the repayment of the
Series 2023A Bond is junior and subordinate to the City's other Outstanding Bonds.
"Payment Date" means, with respect the 2023B Loan and 2023C Loan, each January I and July 1
during the term of each Series 2023B Bond and Series 2023C Bond on which a payment of interest or
principal and interest is due, as determined under this Supplemental Resolution and, if a Noncompliance
Statement is delivered with respect to the 2023A Loan, each January 1 and July I during the term of the
Series 2023A Bond on which a payment of interest or principal and interest is due, as determined under this
Supplemental Resolution.
"Person" means any Private Person or Public Entity.
"Private Person" means an individual, corporation, partnership, association, joint venture, limited
liability company, limited liability partnership, association, joint stock company, trust, or unincorporated
organization, except a Public Entity.
"Program" means the Drinking Water State Revolving Fund Program established by the State Act.
"Public Entity" means a State agency, municipality, city, town, county, irrigation district, county
water and sewer district, a soil conservation district, or other public body established by State law or an
Indian tribe that has a federally recognized governing body carrying out substantial governmental duties
and powers over any area.
"Rebate Account" means the account created in the Water System Fund pursuant to Section 7.09
of the Original Resolution.
"Recycled Money" means payments and prepayments of principal of loans made under the
Program, and any other amounts transferred to the Principal Subaccount in the Revenue Subaccount in the
State Allocation Account (as such terms are defined in the Indenture).
"Registrar" means, with respect to the Series 2023 Bonds, the Finance Director or any successor
appointed pursuant to this Supplemental Resolution, and, with respect to any other series of Bonds, the
Person or Persons designated by or pursuant to this Supplemental Resolution or a future supplemental
resolution to receive and disburse the principal of, premium, if any, and interest on the Bonds on behalf of
the City and to hold and maintain the Bond Register.
"Regulations" means the Treasury Department, Income Tax Regulations, as amended or any
successor regulation thereto, promulgated under the Code or otherwise applicable to the Series 2023 Bonds.
"Repair and Replacement Account" means the account created in the Water System Fund pursuant
to Section 7.07 of the Original Resolution.
"Reserve Account" means the account created in the Water System Fund pursuant to Section 7.05
of the Original Resolution.
"Reserve Requirement" means, as of the date of calculation, an amount equal to one-half the sum
of the highest amount of principal and interest payable on all outstanding Bonds (not including the Series
2023A Bond) in any one future fiscal year (giving effect to mandatory sinking fund redemption, if any).
The initial deposit to the Reserve Account for the Series 2023B Bond is $237,925 and for the Series 2023C
Bond is $210,525.
"Resolution" means the Original Resolution, as amended and supplemented by this Supplemental
Resolution and any other future supplemental resolutions.
"Revolving Fund" shall have the meaning set forth in the recitals hereof.
"Safe Drinking Water Act" means Title XIV of the Public Health Service Act, commonly known
as the Safe Drinking Water Act, 42 U.S.C. §§300f et seq., as amended, and all regulations, rules and
interpretations issued by the EPA thereunder.
"Series 2017A Bond" means the City's Water System Revenue Bond (DNRC Drinking Water State
Revolving Loan Program), Series 2017A, in the original aggregate principal amount of $2,984,000 issued
by the City to evidence the 2017A Loan.
"Series 2020A Bonds" means the City's Water System Revenue Bonds (DNRC Drinking Water
State Revolving Loan Program), Series 2020A, in the original aggregate principal amount of $385,000,
issued by the City to evidence the 2020A Loan.
"Series 2020B Bonds" means the City's Water System Revenue Bonds (DNRC Drinking Water
State Revolving Loan Program), Series 2020B, in the original aggregate principal amount of $2,598,000,
issued by the City to evidence the 2020B Loan.
"Series 2023 Bonds" means the Series 2023A Bond, the Series 2023B Bond and the Series 2023C
"Series 2023 Tax -Exempt Bonds" means the Series 2023B Bond and the Series 2023C Bond.
"Series 2023A Bond" means the City's Water System Revenue Bond (DNRC Drinking Water State
Revolving Loan Program), Subordinate Lien Taxable Series 2023A, in the original aggregate principal
amount of $1,000,000, issued by the City to evidence the 2023A Loan.
"Series 2023B Bond" means the City's Water System Revenue Bond (DNRC Drinking Water State
Revolving Loan Program), Tax -Exempt Series 2023B, in the original aggregate principal amount of
$10,000,000 issued by the City to evidence the 2023B Loan.
"Series 2023C Bond" means the City's Water System Revenue Bond (DNRC Drinking Water State
Revolving Loan Program), Tax -Exempt Series 2023C, in the original aggregate principal amount of
$8,854,000 issued by the City to evidence the 2023C Loan.
"State" means the State of Montana.
"State Act" means Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended from time
to time.
"State Bonds" means the State's General Obligation Bonds (Drinking Water State Revolving Fund
Program), issued or to be issued pursuant to the Indenture.
"Subordinate Obligations" means the Series 2023A Bond and any other subordinate obligation
issued under the Original Resolution.
"Supplemental Resolution" means this resolution of the City adopted on June 19, 2023.
"Surplus Account" means the account created in the Water System Fund pursuant to Section 7.08
of the Original Resolution.
"Surplus Net Revenues" means that portion of the Net Revenues in excess of the current
requirements of the Operating Account, the Debt Service Account and the Reserve Account.
"System" means the existing water system of the City and all extensions, improvements and
betterments thereof hereafter constructed and acquired, including the 2023 Tank and Wells Project.
"Trustee" means U.S. Bank Trust Company, National Association, in Seattle, Washington as
successor to U.S. Bank National Association or any successor trustee under the Indenture.
"2016 BAN" means the Bond Anticipation Notes, Series 2016, issued by the Montana Board of
Investments for the benefit of DNRC.
"2023 Loans" means, collectively, the 2023A Loan, the 2023B Loan, and the 2023C Loan made to
the City by DNRC pursuant to the Program in the maximum amount of the Committed Amount to provide
funds to pay costs of the 2023 Tank and Wells Project, fund the Reserve Requirement and pay costs of
issuance of the Series 2023 Bonds.
"2023 Tank and Wells Project" means the costs of the facilities, improvements and activities
financed, refinanced or the cost of which is being reimbursed to the City with proceeds of the 2023 Loans
as described in Appendix A hereto.
"2023A Committed Amount" means the amount of the 2023A Loan committed to be lent by the
DNRC to the City pursuant to Section 4.1 of this Supplemental Resolution, as such amount may be reduced
pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
"2023A First Advance" means the first advance of funds of the 2023A Loan by the DNRC to the
City in an amount of at least $100.
"2023A Loan" means the loan made to the City by the DNRC pursuant to the Program in the
maximum amount of the 2023A Committed Amount to provide funds to pay costs of the 2023 Tank and
Wells Project payable under the Program and to pay costs of issuance of the Series 2023A Bond.
"2023B Committed Amount" means the amount of the 2023B Loan committed to be lent by the
DNRC to the City pursuant to Section 4.1 of this Supplemental Resolution, as such amount may be reduced
pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
"2023B First Advance" means the first advance of funds of the 2023B Loan by the DNRC to the
City in an amount of at least $50,001.
"2023B Loan" means the loan made to the City by the DNRC pursuant to the Program in the
maximum amount of the 2023B Committed Amount to provide funds to pay costs of the 2023 Tank and
Wells Project payable under the Program, fund the Reserve Requirement for the Series 2023B Bond, and
to pay costs of issuance of the Series 2023B Bond.
"2023C Committed Amount" means the amount of the 2023C Loan committed to be lent by the
DNRC to the City pursuant to Section 4.1 of this Supplemental Resolution, as such amount may be reduced
pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
"2023C First Advance" means the first advance of funds of the 2023C Loan by the DNRC to the
City.
"2023C Loan" means the loan made to the City by the DNRC pursuant to the Program in the
maximum amount of the 2023C Committed Amount to provide funds to pay costs of the 2023 Tank and
Wells Project payable under the Program, fund the Reserve Requirement for the Series 2023C Bond, and
to pay costs of issuance of the Series 2023C Bond.
"Undisbursed Committed Amount" means any undisbursed Committed Amount which is not
required to pay costs of the 2023 Tank and Wells Project as provided in Section 3.4 in this Supplemental
Resolution.
Section 1.2. Other Rules of Construction. For all purposes of this Supplemental Resolution,
except where the context clearly indicates otherwise:
(a) All accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted government accounting standards.
(b) Terms in the singular include the plural and vice versa.
(c) All references to time shall refer to Kalispell, Montana time, unless otherwise
provided herein.
(d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders.
(f) "Or" is not exclusive, but is intended to permit or encompass one, more or all of
the alternatives conjoined.
Section 1.3. Appendices. Attached to this Supplemental Resolution and hereby made a part
hereof are the following Appendices:
Appendix A: a description of and estimated budget for the 2023 Tank and Wells Project;
Appendix B-1: the form of the Series 2023A Bond;
Appendix B-2: the form of the Series 2023B Bond;
Appendix B-3: the form of the Series 2023C Bond;
Appendix C: additional agreements and representations of the City; and
Appendix D: Compliance Certificate and Request.
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1. Authorization and Findings.
(a) Authorization. Under the provisions of the Enabling 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 or 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 general obligation for the
payment of which taxes may be levied except to pay for services provided by the undertaking to the City.
(b) The System. The City, pursuant to the Enabling Act and other laws of the State, has
established and presently owns and operates the System.
(c) The 2023 Tank and Wells Project. After investigation of the facts and as authorized by the
Enabling Act, this Council has determined it to be necessary and desirable and in the best interests of the
City to acquire and construct the 2023 Tank and Wells Project.
(d) OutstandingB. Pursuant to the Enabling Act and the Original Resolution, the City has
previously issued, and has outstanding, the Amended Series 2007B Bond, the Series 2017A Bond, the
Series 2020A Bonds, and the Series 2020B Bonds. The Amended Series 2007B Bond, the Series 2017A
Bond, the Series 2020A Bonds, the Series 2020B Bonds, and the Series 2023 Tax -Exempt Bonds are
payable from Net Revenues of the System. The Series 2023A Bond is payable solely out of Surplus Net
Revenues. No other bonds or indebtedness are outstanding that are payable from or secured by revenues
of the System.
(e) Additional Parity Bonds and Amendment to Section 6.01 of the Original Resolution. The
City reserved the right under Section 6.01 of the Original Resolution to issue Additional Bonds payable
from the Debt Service Account of the Fund on a parity as to both principal and interest with the outstanding
Bonds if certain conditions are complied with by the City. In no event shall any additional Bonds be issued
and made payable from the Debt Service Account if the City is then in default in any payment of principal
of or interest on any outstanding Bonds payable therefrom, or if there then exists any deficiency in the
balances required by the Original Resolution to be maintained in any of the accounts of the Fund, which
will not be cured or restored upon the issuance of the Additional Bonds. Based on a certificate executed or
to be executed by the Mayor, City Clerk and City Manager, or either of them, it is hereby determined that
the City is authorized to issue (i) $18,854,000 in aggregate principal amount of Additional Bonds pursuant
to Section 6.01 of the Original Resolution payable from and secured by the Net Revenues on a parity with
the outstanding Amended Series 2007B Bond, the Series 2017A Bond, the Series 2020A Bonds, and the
Series 2020B Bonds, and (ii) $1,000,000 in aggregate principal amount of Additional Bonds payable and
secured on a junior and subordinate basis to the repayment of the other Outstanding Bonds.
From and after the date of issuance of the Series 2023 Bonds, the provisions of this Section 2.1(e)
hereby amend all of the Resolutions for the Bonds such that the provisions of this Section 2.1(e) apply to
the issuance of Additional Bonds going forward for the City and the required debt service coverage ratio is
reduced from 125% to 110% for all Additional Bonds to be issued by the City in the future. In addition,
Section 6.01(D) is amended such that a report of an Independent Consultant shall now be a certificate signed
by the City Finance Officer or City Manager.
For purposes of the foregoing certificate, principal of and interest on the 2023A Loan are
disregarded. The City acknowledges and agrees that if it fails to deliver timely an acceptable Compliance
Certificate and Request as provided in Section 5.1 of this Supplemental Resolution as determined in the
sole and complete discretion of the DNRC or if a Noncompliance Certificate is delivered, then principal
and interest and surcharges will become due and owing on the Series 2023A Bond as provided in Section
5.1 of this Supplemental Resolution, and the City shall thereupon, and in any event no later than three (3)
months after delivery of a Noncompliance Statement, to the extent required by the Original Resolution
adjust its schedule of fees, rates, and charges applicable to the System to cause Net Revenues and Surplus
Net Revenues to be produced in an amount at least equal to that required by the Resolution.
Section 2.1.1. Consent of DNRC to Changes. The DNRC has agreed to the amendment of certain
provisions of the Original Resolution in connection with the amendment to 6.01 of the Original Resolution
relating to Additional Bonds and Subordinate Obligations.
Section 2.2. Representations. The City represents as follows:
(a) Organization and Authority. The City:
(i) is duly organized and validly existing as a municipal corporation and political
subdivision of the State;
(ii) has all requisite power and authority and all necessary licenses and permits
required as of the date hereof to own and operate the System and to carry on its current activities
with respect to the System, to adopt this Supplemental Resolution and to enter into the Collateral
Documents and to issue the Series 2023 Bonds and to carry out and consummate all transactions
contemplated by this Supplemental Resolution, the Series 2023 Bonds and the Collateral
Documents;
(iii) is a Governmental Unit and a Public Entity; and
(iv) has taken all proper action to authorize the execution, delivery and performance of
its obligations under this Supplemental Resolution, the Series 2023 Bonds and the Collateral
Documents and the incurrence of the Debt evidenced by the Series 2023 Bonds in the maximum
amount of the Committed Amount.
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(b) No Pending Litigation. There is no litigation or proceeding pending or, to the knowledge
of the City, threatened against or affecting the City in any court or before or by any governmental authority
or arbitration board or tribunal that, if adversely determined, would materially and adversely affect the
existence, corporate or otherwise, of the City, or the ability of the City to make all payments and otherwise
perform its obligations under this Supplemental Resolution, the Series 2023 Bonds and the Collateral
Documents, or the financial condition of the City, or the transactions contemplated by this Supplemental
Resolution, the Series 2023 Bonds and the Collateral Documents or the validity and enforceability of this
Supplemental Resolution, the Series 2023 Bonds and the Collateral Documents. If any such litigation
should be initiated or threatened, the City will forthwith notify in writing the DNRC, and will furnish the
DNRC a copy of all documents, including pleadings, in connection with such litigation. No referendum
petition has been filed with respect to any resolution or other action of the City relating to the 2023 Tank
and Wells Project, the Series 2023 Bonds or any Collateral Documents.
(c) Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the
execution and delivery of the Series 2023 Bonds and the Collateral Documents and the consummation of
the transactions provided for in this Supplemental Resolution, the Series 2023 Bonds and the Collateral
Documents and compliance by the City with the provisions of this Supplemental Resolution, the Series
2023 Bonds and the Collateral Documents, to the knowledge of the City:
(i) are within the powers of the City and have been duly authorized by all necessary
action on the part of the City; and
(ii) do not and will not result in any breach of any of the terms, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the City pursuant to any ordinance, resolution,
indenture, loan agreement or other agreement or instrument (other than this Supplemental
Resolution and any Collateral Documents) to which the City is a party or by which the City or its
property may be bound, nor will such action result in any violation of the provisions of any charter
or similar document, if applicable, any laws, ordinances, governmental rules or regulations or court
or other governmental orders to which the City, its properties or operations are subject.
(d) No Defaults. To the knowledge of the City, no event has occurred and no condition exists
that, upon execution and delivery of the Series 2023 Bonds and the Collateral Documents, would constitute
a default under this Supplemental Resolution or the Collateral Documents. To the knowledge of the City,
the City is not in material violation of any term of any agreement, bond resolution, trust indenture, charter
or other instrument to which it is a party or by which it or its property may be bound which violation would
materially and adversely affect the transactions contemplated hereby or the compliance by the City with
the terms hereof or of the Series 2023 Bonds and the Collateral Documents.
(e) Governmental Consent. To the knowledge of the City, the City has obtained or made all
permits, findings and approvals required to the date of adoption of this Supplemental Resolution by any
governmental body or officer for the making and performance by the City of its obligations under this
Supplemental Resolution, the Series 2023 Bonds and the Collateral Documents (including any necessary
water rate increase) or for the 2023 Tank and Wells Project, the financing or refinancing thereof or the
reimbursement of the City for costs thereof. To the knowledge of the City, no consent, approval or
authorization of, or filing, registration or qualification with, any governmental authority (other than those,
if any, already obtained) is required on the part of the City as a condition to adopting this Supplemental
Resolution, issuing the Series 2023 Bonds or entering into the Collateral Documents and the performance
of the City's obligations hereunder and thereunder. If a utility board or commission manages or controls
the System, such board or commission has agreed with the DNRC to abide by the terms of this Supplemental
Resolution and the Collateral Documents, including approving any necessary water rate increases.
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(f) Binding Obligation. This Supplemental Resolution, the Series 2023 Bonds and any
Collateral Documents to which the City is a party are the valid and binding special, limited obligations and
agreements of the City, enforceable against the City in accordance with their terms except to the extent that
the enforceability thereof may be limited by laws relating to bankruptcy, moratorium, reorganization,
insolvency or similar laws affecting creditors' rights and general principles of equity.
(g) The 2023 Tank and Wells Project. The 2023 Tank and Wells Project consists and will
consist of the facilities, improvements and activities described in Appendix A, as such Appendix A may be
amended from time to time in accordance with Article III of this Supplemental Resolution. The 2023 Tank
and Wells Project comprises facilities of a type that, as determined by the EPA, will facilitate compliance
with the national primary Drinking Water regulations applicable to the System or will otherwise
significantly further the health protection objectives of the Safe Drinking Water Act.
(h) The System. The System is a "community water system" within the meaning of the Act
and the Safe Drinking Water Act in that it is a public water system, comprising collection, treatment, storage
and distribution facilities for the provision to the public of water for human consumption, that serves not
less than 15 service connections used by year-round residents of the area served by the System or regularly
serves not less than 25 year-round residents.
(i) Full Disclosure. There is no fact that the City has not specifically disclosed in writing to
the DNRC that materially and adversely affects or (so far as the City can now foresee), except for pending
or proposed legislation or regulations that are a matter of general public information, that will materially
and adversely affect the properties, operations and finances of the System, the City's status as a Public
Entity and Governmental Unit, its ability to own and operate the System in the manner currently operated
or the City's ability to perform its obligations under this Supplemental Resolution, the Series 2023 Bonds
and the Collateral Documents and to pledge any revenues or other property pledged to the payment of the
Series 2023 Bonds.
0) Compliance With Law. To the knowledge of the City, it:
(i) is in compliance with all laws, ordinances, governmental rules and regulations and
court or other governmental orders, judgments and decrees to which it is subject and which are
material to the properties, operations and finances of the System or its status as a Public Entity and
Governmental Unit; and
(ii) has obtained all licenses, permits, franchises or other governmental authorizations
necessary to the ownership of the System and the operation thereof and agrees to obtain all such
licenses, permits, franchises or other governmental authorizations as may be required in the future
for the System and the operation thereof, which failure to obtain might materially and adversely
affect the ability of the City to conduct the operation of the System as presently conducted or the
condition (financial or otherwise) of the System or the City's ability to perform its obligations under
this Supplemental Resolution, the Series 2023 Bonds and the Collateral Documents.
(k) Outstanding Debt. Prior to the issuance of the Series 2023 Bonds, the City has the
following outstanding bonds payable solely from Net Revenues of the System: (i) the Amended Series
2007B Bond; (ii) the Series 2017A Bond; (iii) the Series 2020A Bonds; and (iv) the Series 2020B Bonds.
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Section 2.3. Covenants.
(a) Insurance. In addition to the requirements of the Original Resolution, the City at all times
shall keep and maintain with respect to the System property and casualty insurance and liability insurance
with financially sound and reputable insurers, or self- insurance as authorized by State law, against such
risks and in such amounts, and with such deductible provisions, as are customary in the State in the case of
entities of the same size and type as the City and similarly situated and shall carry and maintain, or cause
to be carried and maintained, and pay or cause to be paid timely the premiums for all such insurance. All
such insurance policies shall name the DNRC as an additional insured to the extent permitted under the
policy or program of insurance or risk coverage of the City. Each policy must provide that it cannot be
cancelled by the insurer without giving the City and the DNRC 30 days' prior written notice. The City
shall give the DNRC prompt notice of each insurance policy it obtains or maintains to comply with this
section and of each renewal, replacement, change in coverage or deductible under or amount of or
cancellation of each such insurance policy and the amount and coverage and deductibles and carrier of each
new or replacement policy. Such notice shall specifically note any adverse change as being an adverse
change. The City shall deliver to the DNRC at Closing a certificate providing the information required by
this section. To the extent that the City has risk coverage from the Montana Municipal Interlocal Authority
("MMIA") and includes the System on the City's schedule of property to be coverage by MMIA, then such
risk coverage shall be deemed to be acceptable insurance for the DNRC.
(b) Right of Inspection and Notice of Change of Location. The DNRC, the DEQ and the EPA
and their designated agents shall have the right at all reasonable times during normal business hours and
upon reasonable notice to enter into and upon the property of the City for the purpose of inspecting the
System or any or all books and records of the City relating to the System.
(c) Further Assurance. The City shall execute and deliver to the DNRC all such documents
and instruments and do all such other acts and things as may be necessary or required by the DNRC to
enable the DNRC to exercise and enforce its rights under this Supplemental Resolution, the Series 2023
Bonds and the Collateral Documents and to realize thereon, and record and file and re-record and refile all
such documents and instruments, at such time or times, in such manner and at such place or places, all as
may be necessary or required by the DNRC to validate, preserve and protect the position of the DNRC
under this Supplemental Resolution, the Series 2023 Bonds and the Collateral Documents.
(d) Maintenance of Security; Recordation of Interest.
(i) The City shall, at its expense, take all necessary action to maintain and preserve
the lien and security interest of this Supplemental Resolution and the Collateral Documents so long
as any amount is owing under this Supplemental Resolution or the Series 2023 Bonds;
(ii) The City shall forthwith, after the execution and delivery of the Series 2023 Bonds
and thereafter from time to time, cause this Supplemental Resolution and any Collateral Documents
granting a security interest in revenues or real or personal property and any financing statements or
other notices or documents relating thereto to be filed, registered and recorded in such manner and
in such places as may be required by law in order to perfect and protect fully the lien and security
interest hereof and thereof and the security interest in them granted by this Supplemental Resolution
and, from time to time, shall perform or cause to be performed any other act required by law,
including executing or causing to be executed any and all required continuation statements and
shall execute or cause to be executed any further instruments that may be requested by the DNRC
for such perfection and protection; and
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(iii) Except to the extent it is exempt therefrom, the City shall pay or cause to be paid
all filing, registration and recording fees incident to such filing, registration and recording, and all
expenses incident to the preparation, execution and acknowledgment of the documents described
in subparagraph (ii), and all federal or state fees and other similar fees, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of the Series 2023 Bonds
and the Collateral Documents and the documents described in subparagraph (ii).
(e) Additional Agreements. The City covenants to comply with all representations, covenants,
conditions and agreements, if any, set forth in Appendix C hereto.
(f) Financial Information. This Section 2.3(f) supplements, and is not intended to limit, the
requirements in the Original Resolution. The City agrees that for each fiscal year it shall furnish to the
DNRC and the DEQ, promptly when:
(i) the preliminary budget for the System, with items for the 2023 Tank and Wells
Project shown separately; and
(ii) when adopted, the final budget for the System, with items for the 2023 Tank and
Wells Project shown separately.
(g) Project Accounts. The City shall maintain 2023 Tank and Wells Project accounts in
accordance with generally accepted government accounting standards.
(h) Records. After reasonable notice from the EPA or the DNRC, the City shall make available
to the EPA or the DNRC such records as the EPA or the DNRC reasonably requires to review and determine
compliance with the Safe Drinking Water Act, as provided in Section 75-5-1113(1)(d) of the State Act.
(i) Compliance with Safe Drinking Water Act. The City has complied and shall comply with
all conditions and requirements of the Safe Drinking Water Act pertaining to the 2023 Loans and the 2023
Tank and Wells Project and shall maintain sufficient financial, managerial and technical capability to
continue to effect such compliance.
0) Compliance with DEO Requirements. The City shall comply with plan, specification and
other requirements for public water systems established by the DEQ, as required by Section 75-5-1113(1)(g)
of the Act.
Section 2.4. Covenants Relating to the Tax -Exempt Status of the State Bonds.
(a) The City covenants and agrees that it will not use or permit to be used any of the proceeds
of the Series 2023 Tax -Exempt Bonds or any other funds of the City in respect of the 2023 Tank and Wells
Project or the Series 2023 Tax -Exempt Bonds, directly or indirectly, in a manner that would cause, or take
any other action that would cause, any State Bond to be an "arbitrage bond" within the meaning of Section
148 of the Code or would otherwise cause the interest on the State Bonds to be included in gross income
for purposes of federal income taxation.
(b) The City agrees that it will not enter into, or allow any "related person" (as defined in
Section 147(a)(2) of the Code) to enter into, any arrangement, formal or informal, for the purchase of the
State Bonds or any other obligations of the DNRC in an amount related to the amount of the 2023B Loan
or the 2023C Loan or the portion of the 2023B Loan and 2023C Loan derived directly or indirectly from
proceeds of the State Bonds or that would otherwise cause any State Bond to be an "arbitrage bond" within
the meaning of Section 148 of the Code.
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(c) The City shall not use or permit the use of the 2023 Tank and Wells Project directly or
indirectly in any trade or business carried on by any Person who is not a Governmental Unit. For the
purpose of this subparagraph, use as a member of the general public (within the meaning of the Regulations)
shall not be taken into account and any activity carried on by a Person other than a natural person shall be
treated as a trade or business.
(d) Any portion of the 2023 Tank and Wells Project being refinanced or the cost of which is
being reimbursed was acquired by and is now and shall, during the term of the 2023B Loan and 2023C
Loan, be owned by the City and not by any other Person. Any portion of the 2023 Tank and Wells Project
being financed shall be acquired by and shall, during the term of the 2023B Loan and 2023C Loan, be
owned by the City and not by any other Person. Notwithstanding the previous two sentences, the City may
transfer the 2023 Tank and Wells Project or a portion thereof to another Governmental Unit which is also
a Public Entity if such transfer is otherwise permitted under the Resolution and if such organization agrees
with the DNRC to comply with Section 2.3(h), Section 2.3(i) and Section 2.4 of this Supplemental
Resolution and if the DNRC receives an Opinion of Bond Counsel that such transfer will not violate the
State Act or the Safe Drinking Water Act or adversely affect the exclusion of interest on the State Bonds
from gross income or purposes of federal income taxation. In addition, except as otherwise provided in the
Resolution or in any Collateral Documents, the City may sell or otherwise dispose of any portion of the
2023 Tank and Wells Project which has become obsolete or outmoded or is being replaced or for other
reasons is not needed by the City or beneficial to the general public or necessary to carry out the purposes
of the Safe Drinking Water Act.
(e) At the Closing of the 2023B Loan and 2023C Loan, the DNRC will, if necessary to obtain
the Opinion of Bond Counsel described in Section 7.05(a) of the Indenture, deliver to the City instructions
concerning compliance by the City with the arbitrage rebate requirements of Section 148 of the Code (the
"Arbitrage Rebate Instructions"). The City shall comply with the Arbitrage Rebate Instructions, if any,
delivered to it by the DNRC at Closing, as such Instructions may be amended or replaced by the DNRC
from time to time. The Arbitrage Rebate Instructions may be amended or replaced by new Arbitrage Rebate
Instructions delivered by the DNRC and accompanied by an Opinion of Bond Counsel to the effect that the
use of said amended or new Arbitrage Rebate Instructions will not adversely affect the excludability of
interest on the State Bonds or any Additional State Bonds (except State Bonds the interest on which the
State did not intend to be excluded from gross income for federal income tax purposes) from gross income
of the recipients thereof for federal income tax purposes.
(f) The City agrees that during the term of the 2023B Loan and 2023C Loan it will not contract
with or permit any Private Person to manage the 2023 Tank and Wells Project or any portion thereof except
according to a written management contract and upon delivery to the DNRC of an Opinion of Bond Counsel
to the effect that the execution and delivery of such management contract will not violate the State Act or
the Safe Drinking Water Act or adversely affect the exclusion of interest on State Bonds from gross income
or purposes of federal income taxation.
(g) The City may not lease the 2023 Tank and Wells Project or any portion thereof to any
Person other than a Nonexempt Person which agrees in writing with the City and the State not to cause any
default to occur under the Resolution; provided the City may lease all or any portion of the 2023 Tank and
Wells Project to a Nonexempt Person pursuant to a lease which in the Opinion of Bond Counsel delivered
to the DNRC will not cause the interest on the State Bonds to be included in gross income for purposes of
federal income taxation.
(h) The City shall not change the use or nature of the 2023 Tank and Wells Project if (i) such
change will violate the Safe Drinking Water Act, or (ii) so long as the State Bonds are outstanding unless,
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in the Opinion of Bond Counsel delivered to the DNRC, such change will not result in the inclusion in gross
income of interest on the State Bonds for federal income tax purposes.
Section 2.5. Maintenance of System; Liens. The City shall maintain the System, including the
2023 Tank and Wells Project, in good condition and make all necessary renewals, replacements, additions,
betterments and improvements thereto. The City shall not grant or permit to exist any lien on the 2023
Tank and Wells Project or any other property making up part of the System, other than liens securing Debt
where a parity or senior lien secures the Series 2023 Tax -Exempt Bonds; provided that this Section 2.5.
shall not be deemed to be violated if a mechanic's or contractor's lien is filed against any such property so
long as the City uses its best efforts to obtain the discharge of such lien and promptly reports to the DNRC
the filing of such lien and the steps it plans to take and does take to discharge of such lien.
Section 2.6. Maintenance of Existence; Merger Consolidation Etc.; Disposition of Assets.
The City shall maintain its corporate existence, except that it may consolidate with or merge into another
Governmental Unit or permit one or more Governmental Units to consolidate with or merge into it or may
transfer all or substantially all of its assets to another Governmental Unit and then dissolve if the surviving,
resulting or transferee entity (if other than the City) (i) is a Public Entity and (ii) assumes in writing all of
the obligations of the City under the Resolution, the Series 2023 Bonds and the Collateral Documents, and
(a) such action does not result in any default in the performance or observance of any of the terms, covenants
or agreements of the City under the Resolution, the Series 2023 Bonds and the Collateral Documents, (b)
such action does not violate the State Act or the Safe Drinking Water Act and does not adversely affect the
exclusion of interest on the Series 2023 Tax -Exempt Bonds or the State Bonds from gross income for
federal income tax purposes, and (c) the City delivers to the DNRC on the date of such action an Opinion
of Bond Counsel that such action complies with this Section 2.6. .
Other than pursuant to the preceding paragraph, the City shall not transfer the System or any portion
thereof to any other Person, except for property which is obsolete, outmoded, worn out, is being replaced
or otherwise is not needed for the operation of the System, unless the provisions of (a) and (b) of the
preceding paragraph are satisfied and the City delivers to the DNRC an Opinion of Bond Counsel to that
effect and, in addition, the DNRC consents to such transfer.
ARTICLE III
USE OF PROCEEDS; THE 2023 TANK AND WELLS PROJECT
Section 3.1. Use of Proceeds. The City shall apply the proceeds of the 2023 Loans solely as
follows:
(a) The City shall apply the proceeds of the 2023 Loans solely to the financing,
refinancing or reimbursement of costs of the 2023 Tank and Wells Project as set forth in Appendix
A hereto and this Section 3.1 and to pay costs of issuance of the Series 2023 Bonds. The 2023
Loans will be disbursed in accordance with Article IV hereof and Article VII of the Indenture. If
the 2023 Tank and Wells Project has not been completed prior to Closing, the City shall, as quickly
as reasonably possible, complete the 2023 Tank and Wells Project and expend proceeds of the 2023
Loans to pay costs of completing the 2023 Tank and Wells Project.
(b) No portion of the proceeds of the 2023 Loans shall be used to reimburse the City
for costs paid prior to the date of adoption of this Supplemental Resolution or a project the
construction or acquisition of which occurred or began earlier than June 1, 1993. In addition, if
any proceeds of the 2023 Loans are to be used to reimburse the City for 2023 Tank and Wells
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Project costs paid prior to the date of adoption of this Supplemental Resolution, the City shall have
complied with Section 1.150-2 of the Regulations in respect of such costs.
(c) Any Debt to be refinanced with proceeds of the 2023 Loans was incurred after
June 1, 1993, or with respect to a project the construction or acquisition of which began after June 1,
1993. No proceeds of the 2023B Loan or 2023C Loan shall be used for the purpose of refinancing
an obligation the interest on which is exempt from federal income tax or excludable from gross
income for purposes of federal income taxation unless the DNRC has received an Opinion of Bond
Counsel, satisfactory to it, to the effect that such refinancing will not adversely affect the exclusion
of interest on the State Bonds from gross income for purposes of federal income taxation.
Section 3.2. The 2023 Tank and Wells Project. Set forth in Appendix A to this Supplemental
Resolution is a description of the 2023 Tank and Wells Project, which describes the property which has
been or is to be acquired, installed, constructed or improved and the other activities, if any, to be funded
from the 2023 Loans (the 2023 Tank and Wells Project may consist of more than one facility or activity),
and an estimated budget relating to the 2023 Tank and Wells Project. The 2023 Tank and Wells Project
may be changed and the description thereof in Appendix A may be amended from time to time by the City
but only after delivery to the DNRC of the following:
(a) a certificate of the City setting forth the amendment to Appendix A and stating the
reason therefor, including statements as to whether the amendment would cause an increase or
decrease in the cost of the 2023 Tank and Wells Project or an increase or decrease in the amount
of proceeds of the 2023 Loans which will be required to complete the 2023 Tank and Wells Project
and whether the change will materially accelerate or delay the construction schedule for the 2023
Tank and Wells Project;
(b) a written consent to such change in the 2023 Tank and Wells Project by an
Authorized DNRC Officer; and
(c) an Opinion of Bond Counsel stating that the 2023 Tank and Wells Project, as
constituted after such amendment, is, and was at the time the State Bonds were issued, eligible for
financing under the Act and is, and was at the time the Series 2023 Tax -Exempt Bonds were issued,
eligible for financing under the Enabling Act, such amendment will not violate the Act or the
Enabling Act and such amendment will not adversely affect the exclusion of interest on the State
Bonds or the Series 2023 Tax -Exempt Bonds from gross income for purposes of federal income
taxation. Such an Opinion of Bond Counsel shall not be required for amendments which do not
affect the type of facility to be constructed or activity to be financed.
The City acknowledges and agrees that an increase in the principal amount of the 2023 Loans may
be made only upon an application to the DEQ, the DNRC and the Trustee, in such form as the DEQ shall
specify, which is approved by the DEQ and the DNRC, in their sole and absolute discretion, and adoption
by the governing body of the City of a supplemental resolution authorizing the additional loan and delivery
of written certifications by officers of the City to the DEQ, the DNRC and the Trustee to the effect that all
representations and covenants contained in this Supplemental Resolution as it may be so amended or
supplemented are true as of the date of closing of the additional loan and compliance with applicable tests
for the incurrence of such debt. No assurance can be given that any additional loan funds will be available
under the Program at the time of any such application. The City acknowledges and agrees that neither the
DEQ, the DNRC, the Trustee nor any of their agents, employees or representatives shall have any liability
to the City and have made no representations to the City as to the sufficiency of the 2023 Loans to pay costs
of the 2023 Tank and Wells Project or as to the availability of additional funds under the Program to increase
the principal amount of the 2023 Loans.
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Section 3.3. 2023 Tank and Wells Proiect Representations and Covenants. The City hereby
represents to and covenants with the DNRC that:
(a) all construction of the 2023 Tank and Wells Project has complied and will comply
with all federal and state standards, including, without limitation, EPA regulations;
(b) all future construction of the 2023 Tank and Wells Project, if any, will be done
only pursuant to fixed price construction contracts. The City shall obtain a performance and
payment bond from the contractor for each construction contract in the amount of 100% of the
construction price and ensure that such bond is maintained until construction is completed to the
City's, the DNRC's and the DEQ's satisfaction;
(c) all future construction of the 2023 Tank and Wells Project will be done in
accordance with plans and specifications on file with the DNRC and the DEQ, provided that
changes may be made in such plans and specifications with the written consent of an Authorized
DNRC Officer and the DEQ;
(d) all laborers and mechanics employed by contractors and subcontractors on the
2023 Tank and Wells Project have been and will be paid wages at rates not less than those prevailing
on projects of a character similar in the locality as determined by the United States Secretary of
Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code;
(e) the iron and steel products used in the 2023 Tank and Wells Project comply with
the "American Iron and Steel" requirements of Section 436 of the Consolidated Appropriations Act
of 2016 (P.L. 113-76), as those requirements are further interpreted by applicable EPA guidance;
and
(f) to the City's knowledge, the 2023 Tank and Wells Project is a project of the type
permitted to be financed under the State Act, the Enabling Act and the Program and Section 1452
of the Safe Drinking Water Act.
(g) the City has commenced the 2023 Tank and Wells Project and will cause the 2023
Tank and Wells Project to be completed as promptly as practicable with all reasonable dispatch,
except only as completion may be delayed by a cause or event not reasonably within the control of
the City; it is estimated by the City that the 2023 Tank and Wells Project will be substantially
completed by September 30, 2025.
Section 3.4. Completion or Cancellation or Reduction of Costs of the 2023 Tank and Wells
Project.
(a) Upon completion of the Series 2023 Tank and Wells Project, the City shall deliver to the
DNRC a certificate stating that the 2023 Tank and Wells Project is complete and stating the amount, if any,
of the Undisbursed Committed Amount. If Appendix A describes two or more separate projects as making
up the 2023 Tank and Wells Project, a separate completion certificate shall be delivered for each.
(b) If all or any portion of the 2023 Tank and Wells Project is cancelled or cut back or its costs
are reduced or for any other reason the City will not require the full Committed Amounts, the City shall
promptly notify the DNRC in writing of such fact and the amount of the Undisbursed Committed Amount.
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ARTICLE IV
THE 2023 LOANS
Section 4.1. The 2023 Loans: Disbursement of 2023 Loans.
(a) The DNRC has agreed to lend to the City, from time to time as the requirements of this
Section 4.1 are met, an amount up to: (i) $1,000,000 (the "2023A Committed Amount"); (ii) $10,000,000
(the "2023B Committed Amount"); and (iii) $8,854,000 (the "2023C Committed Amount"), for the
purposes of financing, refinancing or reimbursing the City for costs of the 2023 Tank and Wells Project,
funding a deposit to the Reserve Account in the amount of the Reserve Requirement, and paying costs of
issuance of the Series 2023 Bonds; provided the DNRC shall not be required to disburse any proceeds of
the 2023 Loans after June 30, 2026. The Committed Amounts may be reduced as provided in Sections 3.2
and 3.4 of this Supplemental Resolution.
(b) The DNRC intends to disburse the 2023 Loans through the Trustee. In consideration of
the issuance of the Series 2023 Bonds by the City, the DNRC shall make, or cause the Trustee to make, a
disbursement of all or a portion of the 2023 Loans upon receipt of the following documents:
(i) an Opinion of Bond Counsel as to the validity and enforceability of the Series 2023
Bonds and the security therefor and stating in effect that interest on the Series 2023 Tax -Exempt
Bonds is not includable in gross income of the owner thereof for purposes of federal income
taxation, in form and substance satisfactory to the DNRC;
(ii) the Series 2023A Bond, the Series 2023B Bond, and the Series 2023C Bond, fully
executed and authenticated;
(iii) a certified copy of the Original Resolution and this Supplemental Resolution;
(iv) any other security instruments or documents required by the DNRC or DEQ as a
condition to their approval of the 2023 Loans;
(v) if all or part of a 2023 Loan is being made to refinance a project or reimburse the
City for costs of a Project paid prior to the Closing, evidence, satisfactory to the DNRC and the
Bond Counsel referred to in subparagraph (1) above, (A) that the acquisition or construction of the
project was begun no earlier than June 1, 1993 or the debt was incurred no earlier than June 1,
1993, (B) of the City's title to the project, (C) of costs of such project and that such costs have been
paid by the City, and (D) if such costs were paid before adoption of this Supplemental Resolution
that the City has complied with Section 1.150-2 of the Regulations;
(vi) the items required by the Indenture for the portion of the 2023 Loans to be
disbursed at Closing; and
(vii) such other certificates, documents and other information as the DNRC, the DEQ
or the Opinion of Bond Counsel referred to in subparagraph (1) may require (including any
necessary arbitrage rebate instructions).
(c) In order to obtain a disbursement of a portion of the 2023 Loans to pay costs of the 2023
Tank and Wells Project, the City shall submit to the DNRC and the Trustee a signed request for
disbursement on the form prescribed by the DNRC, with all attachments required by such form. The City
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may obtain disbursements only for costs which have been legally incurred and are due and payable. All
2023 Loan disbursements will be made to the City only upon proof that cost was incurred.
(d) Provided that the EPA Capitalization Grant is available to the Program, from and after the
2023B First Advance, the 2023 Loans shall be disbursed by the Trustee, subject to the other terms and
conditions of this Supplemental Resolution, in the following order:
(i) First, the total amount of each advance will be split equally between the 2023A
Loan and the 2023B Loan as set forth on the closing memorandum for the 2023A Loan until the
entire 2023A Loan is advanced; provided that the initial advance shall include the 2023A First
Advance and the 2023B First Advance.
(ii) Second, after the 2023A Loan is advanced in full, all advances will be from the
2023B Loan.
(iii) Third, after the 2023B Loan is advanced in full, all advances will be from the
2023C Loan.
(e) The City shall submit the request for the 2023A First Advance and the 2023B First
Advance in the form required by the DNRC so that it is received in sufficient time for the DNRC to process
the information by the date desired by the City for the making of the 2023A First Advance and the 2023B
First Advance.
(f) When necessary, the City shall submit the request for the 2023C First Advance in the form
required by the DNRC so that it is received in sufficient time for the DNRC to process the information by
the date desired by the City for the making of the 2023C First Advance.
(g) For refinancings, a disbursement schedule complying with the requirements of the Safe
Drinking Water Act shall be established by the DNRC and the City at Closing. The Trustee shall disburse
2023 Loan amounts directly to the holder of the debt being refinanced according to such schedule. If the
City should repay all or a portion of the debt to be refinanced from other sources or should otherwise not
need any portion of the 2023B Loan or 2023C Loan which was to have been used to refinance such debt, it
shall inform the DNRC and the Trustee of such fact pursuant to Section 3.4(b) and a new disbursement
schedule shall be drawn up by the DNRC. The DNRC shall obtain a receipt from the holder of the debt
being refinanced for each disbursement made to pay or prepay a portion of such debt.
(h) If all or a portion of the 2023 Loans is made to reimburse a City for 2023 Tank and Wells
Project costs paid by it prior to Closing, the City shall present at Closing the items required by Section
4.1(b) relating to such costs. The Trustee shall disburse such amounts to the City pursuant to a disbursement
schedule complying with the requirements of the Safe Drinking Water Act established by the DNRC and
the City at the Closing.
(i) Notwithstanding anything herein to the contrary, the Trustee shall not be obligated to
disburse the 2023 Loans any faster or to any greater extent than it has available EPA Capitalization Grants,
Bond proceeds, proceeds of the 2016 BAN and other amounts available therefor in the Revolving Fund.
The DNRC shall not be required to do "overmatching" pursuant to Section 5.04(b) of the Indenture, but
may do so in its discretion. The City acknowledges that if 2023 Tank and Wells Project costs are incurred
faster than the City projected at Closing, there may be delays in making 2023 Loan disbursements for such
costs because of the schedule under which EPA makes EPA Capitalization Grant money available to the
DNRC. The DNRC will use its reasonable best efforts to obtain an acceleration of such schedule if
necessary.
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0) Upon making each 2023A Loan disbursement, 2023B Loan disbursement and 2023C Loan
disbursement, the Trustee shall note such disbursement on Schedule A to the Series 2023A Bond, the Series
2023B Bond, and the Series 2023C Bond, respectively.
(k) The City agrees that it will deposit in the Reserve Account upon receipt thereof, on the date
of the 2023B First Advance or 2023C First Advance and any subsequent disbursement dates, any proceeds
of the 2023B Loan or 2023C Loan, as applicable, borrowed for the purpose of increasing the balance in the
Reserve Account to the Reserve Requirement. The City further acknowledges and agrees that any portion
of the 2023 Loans representing capitalized interest shall be advanced only on Payment Dates and shall be
transferred by the Trustee on the Payment Date directly to the Debt Service Account. The amount of any
such transfer shall be a credit against the interest payments due on the Series 2023 Bonds and interest
thereon shall accrue only from the date of transfer.
(1) Compliance by the City with its representations, covenants and agreements contained in
this Supplemental Resolution and the Collateral Documents shall be a further condition precedent to the
disbursement of the 2023 Loans in whole or in part. The DNRC and the Trustee, in their sole and absolute
discretion, may make one or more disbursements, in whole or in part, notwithstanding such noncompliance,
and without liability to make any subsequent disbursement of the 2023 Loans.
Section 4.2. Commencement of Loan Term. The City's obligations under this Supplemental
Resolution and the Collateral Documents shall commence on the date hereof unless otherwise provided in
this Supplemental Resolution. However, the obligation to make payments under Article V hereof shall
commence upon the first disbursement by the Trustee of the 2023B First Advance and 2023C First Advance
for the 2023B Loan and the 2023C Loan, respectively.
Section 4.3. Termination of Loan Term. The City's obligations under this Supplemental
Resolution and the Collateral Documents in respect of the Series 2023 Bonds shall terminate upon payment
in full of all amounts due under the Series 2023 Bonds and this Supplemental Resolution; provided,
however, that the covenants and obligations provided in Article VI and Section 10.3 of this Supplemental
Resolution shall survive the termination of the Resolution.
Section 4.4. 2023 Loan Closing Submissions. On or prior to the Closing, the City will have
delivered to the DNRC and the Trustee the closing submissions required by Section 7.05 of the Indenture.
ARTICLE V
REPAYMENT OF 2023 LOANS
Section 5.1. Repayment of 2023 Loans. The City shall repay the amounts borrowed by it
pursuant to Section 4.1 hereof in accordance with this Section 5.1.
5.1.1. Interest and Surcharges. Until a Determination Statement is delivered by the
DNRC to the City and so long as the City's obligation to repay the principal of the 2023A Loan is
forgiven as provided in Section 5.1.2 below, amounts disbursed by the DNRC under Section 4.1
hereof that are evidenced by the Series 2023A Bond bear interest at the rate of zero percent (0.00%)
per annum from the date of each advance; provided, however, if the DNRC delivers to the City a
Noncompliance Statement, then all principal of the Series 2023A Bond advanced by the DNRC
shall be payable and amounts disbursed by the DNRC under Section 4.1 hereof that are evidenced
by the Series 2023A Bond shall bear interest at the rate of two percent (2.00%) per annum and in
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addition the City shall pay the Administrative Expense Surcharge and the Loan Loss Reserve
Surcharge from the date of each advance under the Series 2023A Bond, each at the rate of twenty-
five hundredths of one percent (0.25%) per annum. The 2023B Loan and the 2023C Loan shall
each bear interest at the rate of two percent (2.00%) per annum and the City shall pay the
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal
amounts of the 2023B Loan or 2023C Loan, as applicable, at the rate of twenty-five hundredths of
one percent (0.25%) per annum. For purposes of this Supplemental Resolution and the Program,
with respect to the 2023A Loan, the 2023B Loan, and the 2023C Loan, the term "interest on the
2023 Loans" or "interest on the 2023A Loan" or "interest on the 2023B Loan" or "interest on the
2023C Loan", when not used in conjunction with a reference to any surcharges, shall include the
Administrative Expense Surcharge and the Loan Loss Reserve Surcharge, if applicable. The City
shall pay all Loan Repayments and surcharges in lawful money of the United States of America to
the DNRC. Interest, Administrative Expense Surcharge, and Loan Loss Reserve Surcharge shall
be calculated on the basis of a year of 360 days comprising 12 months of 30 days each.
5.1.2. Repayment of 2023A Loan; Principal Forgiveness.
(a) The City is obligated to repay the principal of and interest and Administrative
Expense Surcharge and Loan Loss Reserve Surcharge on the 2023A Loan, unless the DNRC
forgives the City's obligation to repay the principal of the 2023A Loan as provided in Section
5.1.2(b) below. Subject to the provisions of Section 5.1.2(b) hereof, the Loan Repayments and the
Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 2023A Loan shall be
due on each Payment Date as follows:
(i) Interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 2023A Loan shall be payable on each
Payment Date following the date of delivery of the DNRC of a Noncompliance Statement
and concluding on January 1, 2054; and
(ii) The principal of the 2023A Loan shall be payable on each Payment Date
beginning on the Payment Date that is the first to occur following deliver by the DNRC of
Noncompliance Statement and concluding on January 1, 2054, and the amount of each
principal payment shall be calculated on the basis of a substantially level debt service at
the rate of 2.00% per annum; provided that principal of the 2023A Loan is payable only in
amounts that are multiples of $1,000.
(b) Notwithstanding Section 5.1.2(a) above, so long as the City is proceeding
diligently to completion of the 2023 Tank and Wells Project and the City has executed and delivered
the Compliance Certificate and Request to the DNRC in the form and substance satisfactory to the
DNRC and the DEQ in their sole and absolute discretion within thirty (30) days after the date that
the Compliance Certificate and Request provided to the City by the DNRC, the DNRC will,
following review and approval of the Compliance Certificate and Request, deliver to the City a
Forgiveness Statement and the City will thereafter have no obligation to repay amounts advanced
under the Series 2023A Bond or interest or surcharges thereon and the Series 2023A Bond will be
marked "CANCELLED" and returned by the DNRC to the City. However, in the event the City
fails to deliver timely the Compliance Certificate and Request, or the City cannot submit the
Compliance Certificate and Request because it cannot make the certifications required therein, or
the Compliance Certificate and Request is delivered in a form that deviates materially from the
attached hereto as Appendix D as determined in the sole and absolute discretion of the DNRC and
the DEQ, or the DNRC or the DEQ determines at any time that the 2023 Tank and Wells Project
or any portion thereof or of the work relating thereto fails to comply with Program Requirements,
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then the DNRC will deliver to the City a Noncompliance Statement. Upon delivery of a
Noncompliance Statement by the DNRC to the City, all principal advanced or to be advanced under
the Series 2023A Bond, together with interest, Administrative Expense Surcharge, and Loan Loss
Reserve Surcharge thereon from the date of each advance, shall be payable as provided in Section
5.1.2(a) hereof.
(c) In addition, in the event the DNRC delivers a Noncompliance Statement (i) the
Series 2023A Bond will continue in effect as a Subordinate Obligation, and (ii) the City will
forthwith comply with the rate covenant set forth in the Original Resolution, and, if necessary,
increase the rates and charges of the System to satisfy such rate covenant as soon as practicable and
in any event no later than three (3) months after the date of delivery to the City by the DNRC of a
Noncompliance Statement.
5.1.3. Repayment of 2023B Loan. The Loan Repayments and surcharges on the 2023B
Loan required by this Section 5.1 shall be due on each Payment Date, as follows:
(i) interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 2023B Loan shall be payable on each
January 1 and July 1, beginning on January 1, 2024, and concluding on July 1, 2053; and
(ii) the principal of the 2023B Loan shall be repayable on each Payment Date,
beginning on January 1, 2024 and concluding July 1, 2053, and the amount of each
principal payment shall be calculated on the basis of a substantially level debt service at a
rate of 2.50% per annum; provided that principal of the 2023B Loan is payable only in
amounts that are multiples of $1,000.
5.1.4. Repayment of 2023C Loan. The Loan Repayments and surcharges on the 2023C
Loan required by this Section 5.1 shall be due on each Payment Date, as follows:
(i) interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 2023C Loan shall be payable on each
January 1 and July 1, beginning on July 1, 2024, and concluding on January 1, 2054; and
(ii) the principal of the 2023C Loan shall be repayable on each Payment Date,
beginning on July 1, 2024 and concluding January 1, 2054, and the amount of each
principal payment shall be calculated on the basis of a substantially level debt service at a
rate of 2.50% per annum; provided that principal of the 2023C Loan is payable only in
amounts that are multiples of $1,000.
5.1.5. Details Regarding 2023 Loan Repayments. Upon each disbursement of the 2023
Loans to the City pursuant to Section 4.1 hereof, the Trustee shall enter or cause to be entered the
amount advanced on Schedule A to the Series 2023A Bond, the Series 2023B Bond, and the Series
2023C Bond, as applicable, under "Advances" and the total amount advanced under Section 4.1
hereof, including such disbursement, under "Total Amount Advanced." Loan Repayments and the
Administrative Expense Surcharge and the Loan Loss Reserve Surcharge on the 2023B Loan and
2023C Loan and, if applicable, on the Series 2023A Loan, accrue on each such advance from the
date of disbursement and shall be due and payable on the dates and in the amounts shown in
Schedule B to the Series 2023A Bond, the Series 2023B Bond and the Series 2023C Bond, as such
Schedule B shall be modified from time to time as provided in Sections 5.1.2, 5.1.3, 5.1.4, and 5.1.5
hereof and below. The portion of each such Loan Repayment consisting of principal, of interest,
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of Administrative Expense Surcharge and of Loan Loss Reserve Surcharge shall be set forth in
Schedule B to the Series 2023A Bond, the Series 2023B Bond, and the Series 2023C Bond.
(i) If DNRC shall have delivered a Noncompliance Statement, then Schedule
B to the Series 2023A Bond shall continue to reflect interest and surcharges on amounts
advanced under the Series 2023A Bond at the rate of 2.00% per annum. If the DNRC
delivers a Forgiveness Statement, Schedule B to the Series 2023A Bond will be disregarded
and of no effect.
(ii) Past -due Loan Repayments and the Administrative Expense Surcharge
and the Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%)
per annum, until paid.
(iii) Any payment of principal and interest as to the Series 2023B Bond and
Series 2023C Bond and, if applicable, the Series 2023A Bond, and the Administrative
Expense Surcharge and the Loan Loss Reserve Surcharge as to the Series 2023B Bond and
Series 2023C Bond and, if applicable, the Series 2023A Bond, under this Section 5.1 shall
be credited against the same payment obligation under the Series 2023B Bond and Series
2023C Bond and, as applicable, the Series 2023A Bond.
Section 5.2. Additional Payments. The City shall also pay, within 30 days after receipt of a bill
therefor, from any legally available funds therefor, including proceeds of the 2023 Loans all reasonable
expenses of the DNRC and the Trustee in connection with the 2023 Loans, the Collateral Documents and
the Series 2023 Bonds, including, but not limited to:
(a) the cost of reproducing this Supplemental Resolution, the Collateral Documents
and the Series 2023 Bonds;
(b) the fees and disbursements of Bond Counsel and other Counsel utilized by the
DNRC and the Trustee in connection with the 2023 Loans, this Supplemental Resolution, the
Collateral Documents and the Series 2023 Bonds and the enforcement thereof, and
(c) all taxes and other governmental charges in connection with the execution and
delivery of the Collateral Documents or the Series 2023 Bonds, whether or not the Series 2023
Bonds are then outstanding, including all recording and filing fees relating to the Collateral
Documents and the pledge of the State's right, title and interest in and to the Series 2023 Bonds,
the Collateral Documents and this Supplemental Resolution (and with the exceptions noted therein)
and all expenses, including attorneys' fees, relating to any amendments, waivers, consents or
collection or enforcement proceedings pursuant to the provisions hereof or thereof.
Section 5.3. Prepayments. The City may not prepay all or any part of the outstanding principal
amount of the Series 2023B Bond and the Series 2023C Bond and, if applicable, the Series 2023A Bond,
unless (i) a Determination Statement has been delivered, (ii) it obtains the prior written consent of the
DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss Reserve
Surcharge is then delinquent. Any prepayment permitted by the DNRC must be accompanied by payment
of accrued interest, Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of
prepayment on the amount of principal prepaid. If the Series 2023 Bonds are prepaid in part pursuant to
this Section 5.3, such prepayments shall be applied to principal payments in inverse order of maturity.
Section 5.4. Obligations of City Unconditional. The obligations of the City to make the
payments required by this Supplemental Resolution and the Series 2023 Bonds and to perform its other
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agreements contained in this Supplemental Resolution, the Series 2023 Bonds and Collateral Documents
shall be absolute and unconditional, except as otherwise provided herein or in such documents. The City
(a) shall not suspend or discontinue any payments provided for in this Supplemental Resolution and the
Series 2023 Bonds, (b) shall perform all its other agreements in this Supplemental Resolution, the Series
2023 Bonds and the Collateral Documents, and (c) shall not terminate this Supplemental Resolution, the
Series 2023 Bonds or the Collateral Documents for any cause, including any acts or circumstances that may
constitute failure of consideration, destruction of or damage to the 2023 Tank and Wells Project or the
System, commercial frustration of purpose, any dispute with the DNRC or the EPA, any change in the laws
of the United States or of the State or any political subdivision thereof or any failure of the DNRC to
perform any of its agreements, whether express or implied, or any duty, liability or obligation arising from
or connected with this Supplemental Resolution.
Section 5.5. Limited Liability. All payments of principal of and interest on the 2023 Loans and
other payment obligations of the City hereunder and under the Series 2023 Bonds shall be special, limited
obligations of the City payable with respect to the Series 2023 Tax -Exempt Bonds solely out of the Net
Revenues or, with respect to the Series 2023A Bond, solely out of the Surplus Net Revenues, and shall not,
except at the option of the City and as permitted by law, be payable out of any other revenues of the City.
The obligations of the City under this Supplemental Resolution and the Series 2023 Bonds shall never
constitute an indebtedness of the City within the meaning of any State constitutional provision or statutory
or charter limitation and shall never constitute or give rise to a pecuniary liability of the City or a charge
against its general credit or taxing power. The taxing powers of the City may not be used to pay principal
of or interest on the Series 2023 Bonds, no funds or property of the City other than the Net Revenues may
be required to be used to pay principal of or interest on the Series 2023 Tax -Exempt Bonds, and no funds
or property of the City other than the Surplus Net Revenues may be required to be used to pay principal of
or interest, if any, on the Series 2023A Bond.
ARTICLE VI
INDEMNIFICATION OF DNRC AND DEQ
The City shall, to the extent permitted by law, indemnify and save harmless the DNRC and the
DEQ and their officers, employees and agents (each an "Indemnified Party" or, collectively, the
"Indemnified Parties") against and from any and all claims, damages, demands, expenses, liabilities and
losses of every kind asserted by or on behalf of any Person arising out of the acts or omissions of the City
or its employees, officers, agents, contractors, subcontractors, or consultants in connection with or with
regard or in any way relating to the condition, use, possession, conduct, management, planning, design,
acquisition, construction, installation or financing of the 2023 Tank and Wells Project. The City shall, to
the extent permitted by law, also indemnify and save harmless the Indemnified Parties against and from all
costs, reasonable attorneys' fees, expenses and liabilities incurred in any action or proceeding brought by
reason of any such claim or demand. If any proceeding is brought against an Indemnified Party by reason
of such claim or demand, the City shall, upon notice from an Indemnified Party, defend such proceeding
on behalf of the Indemnified Party.
ARTICLE VII
ASSIGNMENT
Section 7.1. Assignment by City. The City may not assign its rights and obligations under this
Supplemental Resolution or the Series 2023 Bonds, except as provided in Section 2.6 hereof.
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Section 7.2. Assignment by DNRC. The DNRC will pledge its rights under and interest in this
Supplemental Resolution, the Series 2023 Bonds and the Collateral Documents (except to the extent
otherwise provided in the Indenture) as security for the payment of the State Bonds and may further assign
such interests to the extent permitted by the Indenture, without the consent of the City.
Section 7.3. State Refunding onds.. In the event the State Bonds are refunded by bonds which
are not State Bonds, all references in this Supplemental Resolution to State Bonds shall be deemed to refer
to such refunding bonds (together, the "Refunding Bonds") or, in the case of a crossover refunding, to the
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of Additional
State Bonds, all references in the Resolution to the State Bonds shall be deemed to refer to such Additional
State Bonds or, in the case of a crossover refunding, both the State Bonds and such Additional State Bonds.
ARTICLE VIII
THE SERIES 2023 BONDS
Section 8.1. Net Revenues Available. 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, including the Series 2023 Tax -Exempt Bonds, the Net Revenues
(and in respect of the Series 2023A Bond, if necessary, the Surplus 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 2023 Tax -Exempt Bonds are expected to be more than sufficient to pay the principal and interest
when due on the Series 2023 Tax -Exempt Bonds, and to create and maintain reasonable reserves therefor
and to provide an adequate allowance for replacement and depreciation, as prescribed herein. For purposes
of the foregoing statement, principal of and interest on the 2023A Loan are disregarded. The City
acknowledges and agrees that if the DNRC delivers a Noncompliance Statement to the City that the
obligation of the City to repay the principal of the 2023A Loan is not forgiven as provided in Section 5.1.2
as determined in the sole and complete discretion of the DNRC and DEQ, then principal and interest and
surcharges will become due and owing on the 2023A Loan evidenced by the Series 2023A Bond as provided
in Section 5.1.2 and the City shall thereupon, and no later than three months after deliver of such
Noncompliance Statement, to the extent required by Section 5.12 of the Original Resolution, adjust its
schedule of fees, rates and charges applicable to the System to cause Net Revenues and Surplus Net
Revenues to be produced in an amount at least equal to that required by the Original Resolution.
Section 8.2. Issuance and Sale of the Series 2023 Bonds. The Council has investigated the facts
necessary and hereby finds, determines and declares it to be necessary and desirable for the City to issue
the Series 2023 Bonds to evidence the 2023 Loans. The Series 2023 Bonds are issued to the DNRC without
public sale pursuant to Montana Code Annotated, Section 7-7-4433.
Section 8.3. Terms. The Series 2023A Bond, the Series 2023B Bond, and the Series 2023C
Bond shall be in the maximum principal amount equal to the original 2023A Committed Amount, the 2023B
Committed Amount, and the 2023C Committed Amount, respectively, shall each be issued as a single, fully
registered bond numbered R-1, shall be dated as of the date of delivery to the DNRC, and shall bear interest
at the rate charged by the DNRC on the 2023A Loan, the 2023B Loan, and the 2023C Loan, respectively.
The principal of and interest on the Series 2023 Tax -Exempt Bonds and, if applicable, the principal of and
interest on the Series 2023A Bond, and any Administrative Expense Surcharge and Loan Loss Reserve
Surcharge shall be payable on the same dates and in the same amounts as Loan Repayments are payable.
Advances of principal of the Series 2023A Bond, the Series 2023B Bond, or the Series 2023C Bond,
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respectively, shall be deemed made when advances of the 2023A Loan, the 2023B Loan, or the 2023C
Loan, respectively, are made under Section 4.1 hereof, and such advances shall be payable in accordance
with Schedule B to the Series 2023B Bond and the Series 2023C Bond and, if applicable, the Series 2023A
Bond, as it may be revised by the DNRC from time to time in accordance with Section 5.1 hereof. The
Series 2023A Bond is a Subordinate Obligation payable only from the Surplus Net Revenues. The City
may prepay the Series 2023 Bonds, in whole or in part, only upon the terms and conditions under which it
can prepay the 2023 Loans under Section 5.3 hereof.
Section 8.4. Negotiability. Transfer and Registration. The Series 2023 Bonds shall be fully
registered as to both principal and interest, and shall be initially registered in the name of and payable to
the DNRC, shall be dated the date of delivery. While so registered, principal of and interest on the Series
2023 Bonds shall be payable to the DNRC at the Office of the Department of Natural Resources and
Conservation, 1625 Eleventh Avenue, Helena, Montana 59620 or such other place as may be designated
by the DNRC in writing and delivered to the City. The Series 2023 Bonds shall be negotiable, subject to
the provisions for registration and transfer contained in this Section 8.4. No transfer of the Series 2023
Bonds shall be valid unless and until (1) the holder, or his duly authorized attorney or legal representative,
has executed the form of assignment appearing on the Series 2023 Bonds, and (2) the Finance Director of
the City or their successor, as bond registrar (the "Registrar"), has duly noted the transfer on the Series 2023
Bonds and recorded the transfer on the registration books of the Registrar. The Registrar may, prior to
noting and recording the transfer, require appropriate proof of the transferor's authority and the genuineness
of the transferor's signature. The City shall be entitled to deem and treat the Person in whose name the
Series 2023 Bonds are registered as the absolute owner of the Series 2023 Bonds for all purposes,
notwithstanding any notice to the contrary, and all payments to the registered holder shall be valid and
effectual to satisfy and discharge the City's liability upon such Series 2023 Bonds to the extent of the sum
or sums so paid.
Section 8.5. Execution and Delivery. The Series 2023 Bonds shall be executed on behalf of the
City by the manual signatures of the Mayor, City Manager, and the Finance Director, or their designee.
Any or all of such signatures may be affixed at or prior to the date of delivery of the Series 2023 Bonds. In
the event that any of the officers who shall have signed the Series 2023 Bonds shall cease to be officers of
the City before the Series 2023 Bonds are issued or delivered, their signatures shall remain binding upon
the City. Conversely, the Series 2023 Bonds may be signed by an authorized official who did not hold such
office on the date of adoption of this Supplemental Resolution. The Series 2023 Bonds shall be delivered
to the DNRC, or its attorney or legal representative.
Section 8.6. Form. The Series 2023A Bond shall be prepared in substantially the form attached
hereto as Appendix B-1. The Series 2023B Bond shall be prepared in substantially the form attached as
Appendix B-2. The Series 2023C Bond shall be prepared in substantially the form attached as Appendix
B-3.
ARTICLE IX
SECURITY FOR THE SERIES 2023 BONDS
The Series 2023B Bond and Series 2023C Bond are issued as an Additional Bond under the
Original Resolution and shall, with the Amended Series 2007B Bond, the Series 2017A Bond, the Series
2020A Bonds, the Series 2020B Bonds, and any other Additional Bonds issued under the provisions of the
Original Resolution be equally and ratably secured by the provisions of the Resolution and payable out of
the Net Revenues appropriated to the Debt Service Account of the Fund, without preference or priority, all
as provided in the Resolution, and secured by the Reserve Account, as further provided in the Original
27
Resolution and in the following sentence. On the date of Closing, the City shall deposit in the Reserve
Account an amount equal to the initial Reserve Requirement assuming the entire 2023B Committed
Amount is advanced on the date of Closing. If less than the entire 2023B Committed Amount is advanced,
then on the date of the final disbursement of proceeds of the Series 2023B Bond, the City shall be entitled,
in its discretion, to transfer any amount in excess of the Reserve Requirement to the Debt Service Account
or the Repair and Replacement Account, so long as the amount remaining in the Reserve Account equals
the Reserve Requirement. If less than the entire 2023C Committed Amount is advanced, then on the date
of the final disbursement of proceeds of the Series 2023C Bond, the City shall be entitled, in its discretion,
to transfer any amount in excess of the Reserve Requirement to the Debt Service Account or the Repair and
Replacement Account, so long as the amount remaining in the Reserve Account equals the Reserve
Requirement. The Series 2023A Bond is a Subordinate Obligation issued under the Original Resolution
and payable from the Surplus Net Revenues that are available after required credits to the Operating
Account, the Debt Service Account, and the Reserve Account. No payment of principal or interest shall be
made on any Subordinate Obligation, including the Series 2023A Bond, if the City is then in default in the
payment of principal of or interest on any Bond or if there is a deficiency in the Operating Account or the
Debt Service Account or the balance in the Reserve Account is less than the Reserve Requirement. In the
event the principal of and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge
become payable under the Series 2023A Bond, the City shall cause rates and charges to be increased to
produce Net Revenues at least equal to the amount required under the Original Resolution within three (3)
months following delivery of a Noncompliance Statement. The City shall keep, perform and observe each
and every one of its covenants and undertakings set forth in the Original Resolution for the benefit of the
registered holders from time to time of the Series 2023 Bonds.
ARTICLE X
TAX MATTERS
Section 10.1. Use of 2023 Tank and Wells Project and System. The 2023 Tank and Wells Project
and the System will be owned and operated by the City and available for use by members of the general
public on a substantially equal basis. The City shall not enter into any lease, use or other agreement with
any non -governmental person relating to the use of the 2023 Tank and Wells Project or the System or
security for the payment of the Series 2023 Tax -Exempt Bonds which might cause the Series 2023 Tax -
Exempt Bonds to be considered a "private activity bond" or "private loan bond" within the meaning of
Section 141 of the Code.
Section 10.2. General Covenant. The City covenants and agrees with the owners from time to
time of the Series 2023 Tax -Exempt Bonds that it will not take or permit to be taken by any of its officers,
employees or agents any action which would cause the interest on the Series 2023 Tax -Exempt Bonds to
become includable in gross income for federal income tax purposes under the Code and the Regulations,
and covenants to take any and all actions within its powers to ensure that the interest on the Series 2023
Tax -Exempt Bonds will not become includable in gross income for federal income tax purposes under the
Code and the Regulations.
Section 10.3. Arbitrage Certification. The Mayor, City Manager, and the City Clerk, being the
officers of the City charged with the responsibility for issuing the Series 2023 Tax -Exempt Bonds pursuant
to this Supplemental Resolution, are authorized and directed to execute and deliver to the DNRC a
certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b) of the
Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue
and delivery of the Series 2023 Tax -Exempt Bonds, it is reasonably expected that the proceeds of the Series
28
2023 Tax -Exempt Bonds will be used in a manner that would not cause the Series 2023 Tax -Exempt Bonds
to be an "arbitrage bond" within the meaning of Section 148 of the Code and the Regulations.
Section 10.4. Arbitrage Rebate. The City acknowledges that the Series 2023 Tax -Exempt Bonds
are subject to the rebate requirements of Section 148(f) of the Code. The City covenants and agrees to
retain such records, make such determinations, file such reports and documents and pay such amounts at
such times as are required under said Section 148(f) and applicable Treasury Regulations to preserve the
exclusion of interest on the Series 2023 Tax -Exempt Bonds from gross income for federal income tax
purposes, unless the Series 2023 Tax -Exempt Bonds qualify for the exception from the rebate requirement
under Section 148(f)(4)(B) of the Code and no "gross proceeds" of the Series 2023 Tax -Exempt Bonds
(other than amounts constituting a "bona fide debt service fund") arise during or after the expenditure of
the original proceeds thereof. In furtherance of the foregoing, the City Clerk is hereby authorized and
directed to execute a rebate or tax certificate with respect to the Series 2023 Tax -Exempt Bonds,
substantially in the form to be prepared by Bond Counsel, and the City hereby covenants and agrees to
observe and perform the covenants and agreements contained therein, unless amended or terminated in
accordance with the provisions thereof.
Section 10.5 Information Reporting. The City shall file with the Secretary of the Treasury, not
later than November 15, 2023, a statement concerning the Series 2023 Tax -Exempt Bonds containing the
information required by Section 149(e) of the Code.
ARTICLE XI
CONTINUING DISCLOSURE
The City understands and acknowledges that the DNRC is acquiring the Series 2023 Bonds under
the Program pursuant to which the State issues from time to time State Bonds to provide funds therefor.
The City covenants and agrees that, upon written request of the DNRC from time to time, the City will
promptly provide to the DNRC all information that the DNRC reasonably determines to be necessary or
appropriate to offer and sell State Bonds or to provide continuing disclosure in respect of State Bonds,
whether under Rule 15c2-12 (17 C.F.R. § 240.15c2-12) promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, or otherwise. Such information shall
include, among other things and if so requested, financial statements of the City prepared in accordance
with governmental accounting standards promulgated by the Governmental Accounting Standards Board
or as otherwise provided under Montana law, as in effect from time to time (such financial statements to
relate to a fiscal year or any period therein for which they are customarily prepared by the City, and, if for
a fiscal year and so requested by the DNRC, subject to an audit report and opinion of an accountant or
government auditor, as permitted or required by the laws of the State). The City will also provide, with any
information so furnished to the DNRC, a certificate of the Mayor, the City Manager and the Finance
Director of the City to the effect that, to the best of their knowledge, such information does not include any
untrue statement of a material fact or omit to state any material fact required to be stated therein to make
the statements made, in light of the circumstances under which they are made, not misleading.
29
ARTICLE XII
MISCELLANEOUS
Section 12.1. Notices. All notices or other communications hereunder shall be sufficiently sent
or given and shall be deemed sent or given when delivered or mailed by certified mail, postage prepaid, to
the parties at the following addresses:
DNRC: Department of Natural Resources and Conservation
1539 Eleventh Avenue
P. O. Box 201601
Helena, Montana 59620-1601
Attn: Conservation and Resource Development Division
Trustee: U.S. Bank Trust Company, National Association
c/o Corporate Trust Services
1420 Fifth Avenue, 7th Floor
Seattle, Washington 98101
City: City of Kalispell
201 15` Avenue East
Kalispell, Montana 59901
Attn: Finance Director
Any of the above parties may, by notice in writing given to the others, designate any further or different
addresses to which subsequent notices or other communications shall be sent.
Section 12.2. Binding Ems. This Supplemental Resolution shall inure to the benefit of and
shall be binding upon the DNRC, the City and their respective permitted successors and assigns.
Section 12.3. Severability. If any provision of this Supplemental Resolution shall be determined
to be unenforceable at any time, it shall not affect any other provision of this Supplemental Resolution or
the enforceability of that provision at any other time.
Section 12.4. Amendments. This Supplemental Resolution may not be effectively amended
without the written consent of the DNRC.
Section 12.5. Applicable Law. This Supplemental Resolution shall be governed by and
construed in accordance with the laws of the State.
Section 12.6. Captions; References to Sections. The captions in this Supplemental Resolution
are for convenience only and do not define or limit the scope or intent of any provisions or Sections of this
Supplemental Resolution. References to Articles and Sections are to the Articles and Sections of this
Supplemental Resolution, unless the context otherwise requires.
Section 12.7. No Liability of Individual Officers, Directors, Trustees or Council Members. No
recourse under or upon any obligation, covenant or agreement contained in this Supplemental Resolution
shall be had against any director, officer or employee, as such, past, present or future, of the DNRC, the
DEQ or the Trustee, either directly or through the DNRC, the DEQ or the Trustee, or against any officer,
or member of the governing body or employee of the City, past, present or future, as an individual so long
as such individual was acting in good faith. Any and all personal liability of every nature, whether at
30
common law or in equity, or by statute or by constitution or otherwise, of any such officer or member of
the governing body or employee of the DNRC, the Trustee or the City is hereby expressly waived and
released by the City and by the DNRC as a condition of and in consideration for the adoption of this
Supplemental Resolution and the making of the 2023 Loans.
Section 12.8. Payments Due on Holidays. If the date for making any payment or the last date
for performance of any act or the exercise of any right, as provided in this Supplemental Resolution or the
Series 2023 Bonds, shall not be a Business Day, such payments may be made or act performed or right
exercised on the next succeeding Business Day with the same force and effect as if done on the nominal
date provided in this Supplemental Resolution or the Series 2023 Bonds.
Section 12.9. Right of Others to Perform City's Covenants. In the event the City shall fail to
make any payment or perform any act required to be performed hereunder, then and in each such case the
DNRC or the provider of any Collateral Document may (but shall not be obligated to) remedy such default
for the account of the City and make advances for that purpose. No such performance or advance shall
operate to release the City from any such default and any sums so advanced by the DNRC or the provider
of any Collateral Document shall be paid immediately to the party making such advance and shall bear
interest at the rate of ten percent (10%) per annum from the date of the advance until repaid. The DNRC
and the provider of any Collateral Document shall have the right to enter the 2023 Tank and Wells Project
or the facility or facilities of which the 2023 Tank and Wells Project is a part or any other facility which is
a part of the System in order to effectuate the purposes of this Section.
Section 12.10. Authentication of Transcript. The officers of the City are hereby authorized and
directed to furnish to the DNRC and to Bond Counsel certified copies of all proceedings relating to the
issuance of the Series 2023 Bonds and such other certificates and affidavits as may be required to show the
right, power and authority of the City to issue the Series 2023 Bonds, and all statements contained in and
shown by such instruments, including any heretofore furnished, shall constitute representations of the City
as to the truth of the statements of fact purported to be shown thereby.
Section 12.11. Repeals and Effective Date.
(a) Repeal. All provisions of other resolutions and other actions and proceedings of the City
and this Council that are in any way inconsistent with the terms and provisions of this Supplemental
Resolution are repealed, amended and rescinded to the full extent necessary to give full force and effect to
the provisions of this Supplemental Resolution.
(b) Effective Date. This Supplemental Resolution shall take effect immediately.
(The remainder of this page is intentionally left blank.)
31
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 19TH DAY OF JUNE, 2023.
ATTEST:
D
Ai e Brunckhorst, CMC
City Clerk
l of
V 1892
32
Mark Johnson
Mayor
APPENDIX A
DESCRIPTION OF THE 2023 TANK AND WELLS PROJECT
The 2023 Tank and Wells Project consists of constructing a one million gallon water storage tank,
two water well facilities, and one control valve facility including water main connections to existing water
system and other improvements thereto, in the City of Kalispell's Upper Pressure Zone.
Estimated 2023 Tank and Wells Project Budget
UNIFORM APPLICATION PROJECT BUDGET
Completed by: RPA /City For. Kalispell Upper Zone Well & Tank 6/13/2023
ADMINISTRATIVE and FINANCIAL COSTS:
SOURCE:
SRF
SOURCE:
Local
SOURCE:
SRF Forgiveness
SOURCE:
TOTAL:
Personnel Costs
$
Office Costs
$
Professional Services
$ 32.480.00
$ 32,480.00
Legal Costs
$
Audit Fees
$
Travel and Training
$
Loan Fees
$
Debt Service Reserve
$ 448,450.00
$ 448.450.00
Interim Interest
$
Bond Counsel and Related Costs
$ 20,000.00
$ 20,000.00
TOTAL ADMINISTRATIVE/FINANCIAL COSTS
$ 468.450.00
$ 32,480.00
$
$
$ 500,930.00
ACTIVITY COSTS:
Land Acquisition
$ 27.200.00
$ 27,200.00
Preliminary Engineering
$ 120,170.00
$ 120,170.00
Surveying
$ 12.600.00
$ 12,600.00
Geotechnical
ad$
$ 35,290.00
$ 35,290.00
Utility Fees
$ 160,453.00
$ 160,453.00
Engineering - Design
$ 912,540.00
$ 912,540.00
Engineering - Const. Engineering Services
700,000.00
$ 700,000.00
Post Construction Services
$ 40.600.00
$ 40,600.00
Construction
$ 16,630,332.00
$
$ 1,000,000.00
$ 17,630,332.00
Contingency
$ 1,755,218.00
$ 1,755,218.00
TOTAL ACTIVITY COSTS
$ 18,385,550.00
$ 2,008,853.00
$ 1,000,000.00
S
$ 21,394,403.00
TOTAL PROJECT COSTS
S 18,854,000.00
$ 2,041,333.00
$ 1,000,000.00
$
$21,895,333.00
33
APPENDIX B-1
[Form of the Series 2023A Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
CITY OF KALISPELL
SUBORDINATE LIEN WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
TAXABLE SERIES 2023A
No. R-1 $1,000,000
Dated: , 2023
FOR VALUE RECEIVED, the City of Kalispell, Montana (the "City"), a duly organized and
existing municipal corporation in Flathead County, Montana, acknowledges itself to be specially indebted
and hereby promises to pay to the Department of Natural Resources and Conservation of the State of
Montana (the "DNRC"), or its registered assigns, solely out of available Surplus Net Revenues in its Water
System Fund (the "Fund"), the principal sum equal to the sum of the amounts entered on Schedule A
attached hereto under "Total Amount Advanced," with interest on each such amount from the date such
amount is advanced hereunder at the rate of two percent (2.00%) per annum on the unpaid balance until
paid, together with an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the
outstanding principal amount of this Series 2023A Bond from the date of each advance of principal, each
at the rate of twenty-five hundredths of one percent (0.25%) per annum, all subject to the effect of the
immediately following paragraph. Principal, interest, Administrative Expense Surcharge and Loan Loss
Reserve Surcharge shall be payable in semiannual installments payable on each January 1 and July 1 (each
a "Loan Repayment Date") commencing with the Payment Date that is the first to occur following delivery
by the DNRC to the City of a statement that the City's obligation to repay the principal amount of the
2023A Loan is not forgiven and ending on January 1, 2054, all as described in the Supplemental Resolution
(as hereinafter defined), subject to earlier redemption. Each installment shall be in the amount set forth
opposite its due date in Schedule B attached hereto under "Total Loan Payment." The portion of each such
payment consisting of principal, of interest, of Administrative Expense Surcharge, and of Loan Loss
Reserve Surcharge shall be as set forth in Schedule B hereto. Upon each disbursement of 2023A Loan, the
DNRC shall enter (or cause to be entered) the principal amount advanced on Schedule A under "Advances"
and the total amount advanced under the Supplemental Resolution, including such advance, under "Total
Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause Schedule
B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Supplemental Resolution,
and the final Schedule B will reflect repayments under Section 5.1.5 of the Supplemental Resolution.
Schedule B shall be calculated and recalculated on a level debt service basis assuming an interest rate of
2.50% per annum. Past -due payments of principal and interest and Administrative Expense Surcharge and
Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid.
Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be calculated on
the basis of a 360-day year comprising 12 months of 30 days each. All payments under this Series 2023A
Bond shall be made to the registered holder of this Series 2023A Bond, at its address as it appears on the
Bond register, in lawful money of the United States of America.
NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SERIES 2023A BOND, IN
THE EVENT THAT THE CITY TIMELY DELIVERS A COMPLIANCE CERTIFICATE AND
B-1-1
REQUEST (AS DEFINED IN THE SUPPLEMENTAL RESOLUTION) IN FORM AND SUBSTANCE
SATISFACTORY TO THE DNRC AND THE DNRC IN RESPONSE THERETO SUPPLIES TO THE
CITY A FORGIVENESS STATEMENT, THEN THEREUPON INTEREST SHALL BE DEEMED TO
ACCRUE ON THE PRINCIPAL ON THIS BOND FROM THE DATE OF EACH ADVANCE AT THE
RATE OF ZERO PERCENT (0.00%) PER ANNUM AND THE CITY'S OBLIGATION TO REPAY
PRINCIPAL ADVANCED HEREUNDER SHALL BE FORGIVEN, AND THE CITY SHALL HAVE
NO OBLIGATION TO REPAY THE DNRC OR ITS REGISTERED ASSIGNS ANY AMOUNTS
ADVANCED HEREUNDER OR INTEREST OR ANY SURCHARGE THEREON. THIS SERIES
2023A BOND SHALL THEREUPON BE MARKED "CANCELLED" AND RETURNED BY THE
HOLDER TO THE CITY, AND THIS SERIES 2023A BOND SHALL NO LONGER CONSTITUTE AN
OBLIGATION OF THE CITY OR OF THE SYSTEM (AS HEREINAFTER DEFINED). IN ADDITION,
UNTIL THE DELIVERY OF A DETERMINATION STATEMENT BY THE DNRC TO THE CITY,
THE OBLIGATION FO THE CITY TO REPAY THE OUTSTANDING PRINCIPAL AMOUNT
HEREOF SHALL BE DEFERRED UNTIL THE PAYMENT DATE FIRST OCCURRING AFTER
DELIVERY OF A NONCOMPLIANCE STATEMENT AND INTEREST SHALL BE DEEMED TO
ACCRUE ON THE PRINCIPAL OF THIS BOND FROM THE DATE OF EACH ADVANCE UNTIL
DELIVERY OF SUCH NONCOMPLIANCE STATEMENT AT THE RATE OF ZERO PERCENT
(0.00%) PER ANNUM.
This Series 2023A Bond is one of an issue of Water System Revenue Bonds of the City authorized
to be issued in one or more series from time to time, and constitutes a series in the maximum authorized
principal amount of $1,000,000 (the "Series 2023A Bond"). The Series 2023A Bond is issued to finance a
portion of costs of the rehabilitation of two water storage tanks in the Water System of the City (the
"System") in the City of Kalispell Lower Pressure Zone and to pay costs of issuance of the Series 2023A
Bond. The Series 2023A Bond is issued pursuant to and in full conformity with the Constitution and laws
of the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part
44, as amended, and ordinances and resolutions duly adopted by the governing body of the City, including
Resolution No. 4273 of the City adopted on June 17, 1996 (the "Original Resolution"), as amended and
supplemented by a Supplemental Resolution adopted on June 19, 2023 (the "Supplemental Resolution,"
and together with the Original Resolution, as so amended and supplemented, the "Resolution"). Terms
used with initial capital letters but not defined herein have the meanings given to them in the Resolution.
The Series 2023A Bond is issuable only as a single, fully registered bond. This Series 2023A Bond is
issued as a Subordinate Obligation payable out of available Surplus Net Revenues in the Fund.
Simultaneously herewith, the City is issuing its (i) $10,000,000 Water System Revenue Bond (DNRC
Drinking Water State Revolving Loan Program), Series 2023B (the "Series 2023B Bond"), and
(ii) $8,854,000 Water System Revenue Bond (DNRC Drinking Water State Revolving Loan Program),
Series 2023C (the "Series 2023C Bond," and together with the Series 2023A Bond and the Series 2023B
Bond, the "Series 2023 Bonds"), which is payable from the Debt Service Account in the Fund on a parity
with the City's outstanding Amended Series 2007B Bond, Series 2017A Bond, the Series 2020A Bonds,
and Series 2020B Bonds (as defined in the Resolution) (together with the Series 2023B Bond and the Series
2023C Bond, the "Outstanding Bonds"). Following the 2023B First Advance, the total amount of each
advance will be split equally between the Series 2023A Bond and the Series 2023B Bond, until the entire
amount of the Series 2023A Bond is advanced.
Reference is made to the Resolution for a more complete statement of the terms and conditions
upon which the Series 2023A Bond has been issued, the conditions upon which additional Bonds may be
issued under the Resolution, the conditions upon which the Resolution may be amended, the rights, duties
and obligations of the City, and the rights of the owners of the Series 2023A Bond.
The City may prepay the principal of this Series 2023A Bond only if (i) a Determination Statement
has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and (iii) no Loan
B-1-2
Repayment or Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any
prepayment permitted by the DNRC must be accompanied by payment of accrued interest and
Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the
amount of principal prepaid. If this Series 2023A Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity.
The Series 2023A Bond, including interest and any premium, are payable solely from the Surplus
Net Revenues available for the payment hereof and do not constitute a debt of the City within the meaning
of any constitutional or statutory limitation or provision.
The City may deem and treat the person in whose name this Series 2023A Bond is registered as the
absolute owner hereof, whether this Series 2023A Bond is overdue or not, for the purpose of receiving
payment and for all other purposes, and the City shall not be affected by any notice to the contrary. The
Series 2023A Bond may be transferred as hereinafter provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly
authorized and will forthwith construct and complete the improvements to the System hereinabove
described, that it will prescribe and collect reasonable rates and charges for all services and facilities
afforded by the System, including all additions thereto and replacements and improvements thereof, and
has created a special Fund into which the gross revenues of the System will be paid, subject to the prior lien
thereon of the Operating Account, the Debt Service Account and the Reserve Account, Surplus Net
Revenues; that the rates and charges of the System will from time to time be made and kept sufficient, to
provide gross income and revenues adequate to pay promptly the reasonable and current expenses of
operating and maintaining the System, to produce in each fiscal year Net Revenues in excess of such current
expenses, equal to at least 110% of the maximum amount of principal and interest payable from the Debt
Service Account in any subsequent fiscal year, and to produce in each fiscal year adequate Surplus Net
Revenues to pay the principal of and interest on this Series 2023A Bond as and when due; that additional
Parity Bonds and refunding Bonds may be issued and made payable from the Debt Service Account on a
parity with the Outstanding Bonds and other parity Bonds upon certain conditions set forth in the
Resolution, but no obligation will be otherwise incurred and made payable from the Net Revenues of the
System, unless the lien thereof shall be expressly made subordinate to the lien of the Outstanding Bonds
and additional Parity Bonds on such Net Revenues and such obligations are payable only from Surplus Net
Revenues (as is the case with this Series 2023A Bond); that all provisions for the security of the holder of
this Series 2023A Bond set forth in the Resolution 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 2023A 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 Series
2023A Bond and the premium, if any, and interest hereon are payable solely out of available Surplus Net
Revenues in the Fund and do not constitute a debt of the City within the meaning of any constitutional or
statutory limitation or provision and the issuance of this Series 2023A Bond does not cause either the
general or the special indebtedness of the City to exceed any constitutional or statutory limitation.
B-1-3
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
has caused this Series 2023A Bond to be executed on its behalf by the facsimile or manual signatures of
the Mayor, City Manager and Finance Director and has caused this Series 2023A Bond to be dated as of
the date first written above.
CITY OF KALISPELL, MONTANA
Mayor
Cit snag
Finance Director
ATTEST:
City C erk `��N�
-� �OFtPOCi
. �S
of 892�
•.ONTN
B-1-4
REGISTRATION AND TRANSFER
The Series 2023A Bond shall be fully registered as to both principal and interest. No transfer of
the Series 2023A Bond shall be valid unless and until (1) the registered holder of the Series 2023A Bond,
or his duly authorized attorney or legal representative, executes the form of assignment appearing on the
Series 2023A Bond, and (2) the Finance Director as bond registrar (the "Registrar"), has duly noted the
transfer on the Series 2023A Bond and recorded the transfer on the Registrar's registration books. The City
shall be entitled to deem and treat the person in whose name the Series 2023A Bond is registered as absolute
owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Series 2023A Bond shall be made only to the order of the registered holder thereof, and all such payments
shall be valid and effectual to satisfy and discharge the City's liability upon the Series 2023A Bond to the
extent of the sum or sums so paid.
REGISTER
The ownership of the outstanding principal balance of the Series 2023A Bond and the interest
accruing thereon is registered on the books of City of Kalispell, Montana in the name of the registered
holder appearing on the first page hereof or as last noted below:
Date of Name and Address
Registration of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh Avenue
, 2023 Helena, MT 59620
Signature of
Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Finance Director of the City of Kalispell, Montana, acting as Bond Registrar, has transferred,
on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued
interest on the Series 2023A Bond to the new registered holder noted next to such date, except for amounts
of principal and interest theretofore paid.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
B-1-5
FORM OF ASSIGNMENT
For value received, the Series 2023A Bond is hereby transferred and assigned by the undersigned
holder, without recourse,
to on this day
of ,
By:
(Authorized Signature)
For:
(Holder)
B-1-6
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount
Date Advances Advanced Notation Made
B-1-7
SCHEDULE B
Date
Principal
Interest
Administrative
Expense
Surcharge
Loan Loss
Reserve
Surcharge
Total Loan Payment
B-1-8
APPENDIX B-2
[Form of the Series 2023B Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
CITY OF KALISPELL
WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
SERIES 2023B
No. R-I $10,000,000
Dated: , 2023
FOR VALUE RECEIVED, the City of Kalispell, Montana (the "City"), a duly organized and
existing municipal corporation in Flathead County, Montana, acknowledges itself to be specially indebted
and hereby promises to pay to the Department of Natural Resources and Conservation of the State of
Montana (the "DNRC"), or its registered assigns, solely from the Debt Service Account of its Water System
Fund, the principal sum equal to the sum of the amounts entered on Schedule A attached hereto under "Total
Amount Advanced," with interest on each such amount from the date such amount is advanced hereunder
at the rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City shall
pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the outstanding principal
amount of this Series 2023B Bond, each at the rate of twenty-five hundredths of one percent (0.25%) per
annum. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be payable
in semiannual installments payable on each January 1 and July 1 (each a "Loan Repayment Date")
commencing on January 1, 2024 and concluding on July 1, 2053. Principal shall be payable on the dates
set forth in Schedule B hereto. Each installment shall be in the amount set forth opposite its due date in
Schedule B attached hereto under "Total Amount of Payment." The portion of each such payment
consisting of principal, the portion consisting of interest, the portion consisting of Administrative Expense
Surcharge, and the portion consisting of Loan Loss Reserve Surcharge shall be as set forth in Schedule B
hereto. Upon each disbursement of 2023B Loan amounts to the City pursuant to the Resolution (as
hereinafter defined), the DNRC shall enter (or cause to be entered) the amount advanced on Schedule A
under "Advances" and the total amount advanced under the Resolution, including such disbursement, under
"Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause
Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Resolution, and
the final Schedule B will reflect repayments under Section 5.1.3 of the Resolution. Schedule B shall be
calculated and recalculated on a level debt service basis assuming an interest rate of 2.50% per annum.
Past- due payments of principal and interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest and
Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be calculated on the basis of a
360-day year comprising 12 months of 30 days each. All payments under this Series 2023B Bond shall be
made to the registered holder of this Series 2023B Bond, at its address as it appears on the Bond register,
in lawful money of the United States of America.
This Series 2023B Bond is one of an issue of Water System Revenue Bonds of the City authorized
to be issued in one or more series from time to time, and constitutes a series in the maximum authorized
principal amount of $10,000,000 (the "Series 2023B Bond"). The Series 2023B Bond is issued to finance
a portion of costs of the rehabilitation of two water storage tanks in the Water System of the City (the
B-2-1
"System") in the City of Kalispell Lower Pressure Zone and to pay costs of issuance of the Series 2023B
Bond. The Series 2023B Bond is issued pursuant to and in full conformity with the Constitution and laws
of the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part
44, as amended, and ordinances and resolutions duly adopted by the governing body of the City, including
Resolution No. 4273 of the City adopted on June 17, 1996 (the "Original Resolution"), as amended and
supplemented by a Supplemental Resolution adopted on June 19, 2023 (the "Supplemental Resolution,"
and together with the Original Resolution, as so amended and supplemented, the "Resolution"). Terms
used with initial capital letters but not defined herein have the meanings given to them in the Resolution.
The Series 2023B Bond is issuable only as a single, fully registered bond. Simultaneously herewith, the
City is issuing its (i) $1,000,000 Water System Revenue Bond (DNRC Drinking Water State Revolving
Loan Program), Subordinate Lien Taxable Series 2023A (the "Series 2023A Bond"), which is a
Subordination Obligation (as defined in the Resolution) and is payable solely out of Surplus Net Revenues
in the Fund, and (ii) $8,854,000 Water System Revenue Bond (DNRC Drinking Water State Revolving
Loan Program), Series 2023C (the "Series 2023C Bond," and together with the Series 2023A Bond and the
Series 2023B Bond, the "Series 2023 Bonds"), which is payable from the Debt Service Account in the Fund
on a parity with the City's outstanding Amended Series 2007B Bond, Series 2017A Bond, the Series 2020A
Bonds, and Series 2020B Bonds (as defined in the Resolution) (together with the Series 2023A Bond and
the Series 2023C Bond, the "Outstanding Bonds"). Following the 2023B First Advance, the total amount
of each advance will be split equally between the Series 2023A Bond and the Series 2023B Bond, until the
entire amount of the Series 2023A Bond is advanced.
Reference is made to the Resolution for a more complete statement of the terms and conditions
upon which the Series 2023B Bond has 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 Resolution and made payable from such Net Revenues on a parity with the Amended
Series 2007B Bond, the Series 2017A Bond, the Series 2020A Bonds, the Series 2020B Bonds, this Series
2023B Bond, and Series 2023C Bond, and any other parity Bond (collectively, the "Bonds") or otherwise,
the conditions upon which the Resolution may be amended, the rights, duties and obligations of the City,
and the rights of the owners of the Series 2023B Bond.
The City may prepay the principal of the Series 2023B Bond only if (i) a Determination Statement
has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and (iii) no Loan
Repayment or Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any
prepayment permitted by the DNRC must be accompanied by payment of accrued interest and
Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the
amount of principal prepaid. If the Series 2023B Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity.
The Series 2023B Bond, including interest and any premium, are payable solely from the Net
Revenues pledged for the payment hereof and do not constitute a debt of the City within the meaning of
any constitutional or statutory limitation or provision.
The City may deem and treat the person in whose name this Series 2023B Bond is registered as the
absolute owner hereof, whether this Series 2023B Bond is overdue or not, for the purpose of receiving
payment and for all other purposes, and the City shall not be affected by any notice to the contrary. The
Series 2023B Bond may be transferred as hereinafter provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly
authorized and will forthwith construct and complete the improvements to the System hereinabove
described, that it will prescribe and collect reasonable rates and charges for all services and facilities
afforded by the System, including all additions thereto and replacements and improvements thereof, and
has created a special Water System Fund into which the Revenues (as defined in the Resolution) of the
System will be paid, and a separate and special Debt Service Account in that Water System Fund, into
which will be paid each month, from and as a first and prior lien on the Net Revenues then on hand, an
amount equal to not less than the sum of one -sixth of principal and the interest to become due within the
next six months with respect to all Bonds payable semi-annually from the Debt Service Account; that the
City has created a Reserve Account in the Water System Fund into which shall be paid additional Net
Revenues, after required credits to the Debt Service Account, sufficient to establish and maintain a reserve
therein equal to, as of the date of calculation, the Reserve Requirement; that the Debt Service Account will
be used only to pay the principal of, premium, if any, and interest on the Amended Series 2007B Bond, the
Series 2017A Bond, the Series 2020A Bonds, the Series 2020B Bonds, this Series 2023B Bond, the Series
2023C Bond, and any other additional Bonds issued pursuant to the Resolution on a parity therewith; that
the rates and charges for the System will from time to time be made and kept sufficient, 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 at least 110% of the maximum amount of principal and interest payable from the Debt Service
Account in any subsequent fiscal year; that additional Bonds and refunding Bonds may be issued and made
payable from the Debt Service Account on a parity with the Amended Series 2007B Bond, the Series 2017A
Bond, the Series 2020A Bonds, the Series 2020B Bonds, this Series 2023B Bond, the Series 2023C Bond,
and other parity Bonds upon certain conditions set forth in the Resolution, but no obligation will be
otherwise incurred and made payable from the Net Revenues of the System, unless the lien thereof shall be
expressly made subordinate to the lien of the Amended Series 2007B Bond, the Series 2017A Bond, the
Series 2020A Bonds, the Series 2020B Bonds, this Series 2023B Bond, the Series 2023C Bond, and
additional parity Bonds on such Net Revenues; that all provisions for the security of the holder of this Series
2023B Bond set forth in the Resolution 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 2023B 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 Series 2023B Bond
and the premium, if any, and interest hereon are payable solely from the Net Revenues of the System
pledged and appropriated to the Debt Service 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 2023B Bond
does not cause either the general or the special indebtedness of the City to exceed any constitutional or
statutory limitation.
B-2-3
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
has caused this Series 2023B Bond to be executed on its behalf by the facsimile or manual signatures of the
Mayor, City Manager and Finance Director and has caused this Series 2023B Bond to be dated as of the
date first written above.
CITY OF KALISPELL, MONTANA
Mayor
I 2:�
Ma ger
Finance Director
ATTEST:
I.. � 4 -, � f� � C-k�
City C rk
B-2-4
REGISTRATION AND TRANSFER
The Series 2023B Bond shall be fully registered as to both principal and interest. No transfer of
the Series 2023B Bond shall be valid unless and until (1) the registered holder of the Series 2023B Bond,
or his duly authorized attorney or legal representative, executes the form of assignment appearing on the
Series 2023B Bond, and (2) the Finance Director as bond registrar (the "Registrar"), has duly noted the
transfer on the Series 2023B Bond and recorded the transfer on the Registrar's registration books. The City
shall be entitled to deem and treat the person in whose name the Series 2023B Bond is registered as absolute
owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Series 2023B Bond shall be made only to the order of the registered holder thereof, and all such payments
shall be valid and effectual to satisfy and discharge the City's liability upon the Series 2023B Bond to the
extent of the sum or sums so paid.
REGISTER
The ownership of the outstanding principal balance of the Series 2023B Bond and the interest
accruing thereon is registered on the books of City of Kalispell, Montana in the name of the registered
holder appearing on the first page hereof or as last noted below:
Date of Name and Address
Registration of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh Avenue
, 2023 Helena, MT 59620
Signature of
Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Finance Director of the City of Kalispell, Montana, acting as Bond Registrar, has transferred,
on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued
interest on the Series 2023B Bond to the new registered holder noted next to such date, except for amounts
of principal and interest theretofore paid.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
C m'
FORM OF ASSIGNMENT
For value received, the Series 2023B Bond is hereby transferred and assigned by the undersigned
holder, without recourse,
to
of
on this day
By:
(Authorized Signature)
For:
(Holder)
I: :7
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount
Date Advances Advanced Notation Made
B-2-7
SCHEDULE B
GENERAL OBLIGATION BONDS
DRINKING WATER
(REVOLVING FUND PROGRAM)
B-2-8
APPENDIX B-3
[Form of the Series 2023C Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
CITY OF KALISPELL
WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
SERIES 2023C
No. R-1 $8,854,000
Dated: , 2023
FOR VALUE RECEIVED, the City of Kalispell, Montana (the "City"), a duly organized and
existing municipal corporation in Flathead County, Montana, acknowledges itself to be specially indebted
and hereby promises to pay to the Department of Natural Resources and Conservation of the State of
Montana (the "DNRC"), or its registered assigns, solely from the Debt Service Account of its Water System
Fund, the principal sum equal to the sum of the amounts entered on Schedule A attached hereto under "Total
Amount Advanced," with interest on each such amount from the date such amount is advanced hereunder
at the rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City shall
pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the outstanding principal
amount of this Series 2023C Bond, each at the rate of twenty-five hundredths of one percent (0.25%) per
annum. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be payable
in semiannual installments payable on each January 1 and July 1 (each a "Loan Repayment Date")
commencing on July 1, 2024 and concluding on January 1, 2054. Principal shall be payable on the dates
set forth in Schedule B hereto. Each installment shall be in the amount set forth opposite its due date in
Schedule B attached hereto under "Total Amount of Payment." The portion of each such payment
consisting of principal, the portion consisting of interest, the portion consisting of Administrative Expense
Surcharge, and the portion consisting of Loan Loss Reserve Surcharge shall be as set forth in Schedule B
hereto. Upon each disbursement of 2023C Loan amounts to the City pursuant to the Resolution (as
hereinafter defined), the DNRC shall enter (or cause to be entered) the amount advanced on Schedule A
under "Advances" and the total amount advanced under the Resolution, including such disbursement, under
"Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause
Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Resolution, and
the final Schedule B will reflect repayments under Section 5.1.4 of the Resolution. Schedule B shall be
calculated and recalculated on a level debt service basis assuming an interest rate of 2.50% per annum.
Past- due payments of principal and interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest and
Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be calculated on the basis of a
360-day year comprising 12 months of 30 days each. All payments under this Series 2023C Bond shall be
made to the registered holder of this Series 2023C Bond, at its address as it appears on the Bond register,
in lawful money of the United States of America.
This Series 2023C Bond is one of an issue of Water System Revenue Bonds of the City authorized
to be issued in one or more series from time to time, and constitutes a series in the maximum authorized
principal amount of $8,854,000 (the "Series 2023C Bond"). The Series 2023C Bond is issued to finance a
portion of costs of the rehabilitation of two water storage tanks in the Water System of the City (the
B-3-1
"System") in the City of Kalispell Lower Pressure Zone and to pay costs of issuance of the Series 2023C
Bond. The Series 2023C Bond is issued pursuant to and in full conformity with the Constitution and laws
of the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part
44, as amended, and ordinances and resolutions duly adopted by the governing body of the City, including
Resolution No. 4273 of the City adopted on June 17, 1996 (the "Original Resolution"), as amended and
supplemented by a Supplemental Resolution adopted on June 19, 2023 (the "Supplemental Resolution,"
and together with the Original Resolution, as so amended and supplemented, the "Resolution"). Terms
used with initial capital letters but not defined herein have the meanings given to them in the Resolution.
The Series 2023C Bond is issuable only as a single, fully registered bond. Simultaneously herewith, the
City is issuing its (i) $1,000,000 Water System Revenue Bond (DNRC Drinking Water State Revolving
Loan Program), Subordinate Lien Taxable Series 2023A (the "Series 2023A Bond"), which is a
Subordination Obligation (as defined in the Resolution) and is payable solely out of Surplus Net Revenues
in the Fund, and (ii) $10,000,000 Water System Revenue Bond (DNRC Drinking Water State Revolving
Loan Program), Series 2023B (the "Series 2023B Bond," and together with the Series 2023A Bond and the
Series 2023C Bond, the "Series 2023 Bonds"), which is payable from the Debt Service Account in the Fund
on a parity with the City's outstanding Amended Series 2007B Bond, Series 2017A Bond, the Series 2020A
Bonds, and Series 2020B Bonds (as defined in the Resolution) (together with the Series 2023A Bond and
the Series 2023B Bond, the "Outstanding Bonds"). The 2023C First Advance will not be made until the
entire amount of the Series 2023A Bond and Series 2023B Bond have been advanced.
Reference is made to the Resolution for a more complete statement of the terms and conditions
upon which the Series 2023C Bond has 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 Resolution and made payable from such Net Revenues on a parity with the Amended
Series 2007B Bond, the Series 2017A Bond, the Series 2020A Bonds, the Series 2020B Bonds, the Series
2023B Bond, and this Series 2023C Bond, and any other parity Bond (collectively, the "Bonds") or
otherwise, the conditions upon which the Resolution may be amended, the rights, duties and obligations of
the City, and the rights of the owners of the Series 2023C Bond.
The City may prepay the principal of the Series 2023C Bond only if (i) a Determination Statement
has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and (iii) no Loan
Repayment or Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any
prepayment permitted by the DNRC must be accompanied by payment of accrued interest and
Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the
amount of principal prepaid. If the Series 2023C Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity.
The Series 2023C Bond, including interest and any premium, are payable solely from the Net
Revenues pledged for the payment hereof and do not constitute a debt of the City within the meaning of
any constitutional or statutory limitation or provision.
The City may deem and treat the person in whose name this Series 2023C Bond is registered as the
absolute owner hereof, whether this Series 2023C Bond is overdue or not, for the purpose of receiving
payment and for all other purposes, and the City shall not be affected by any notice to the contrary. The
Series 2023C Bond may be transferred as hereinafter provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly
authorized and will forthwith construct and complete the improvements to the System hereinabove
described, that it will prescribe and collect reasonable rates and charges for all services and facilities
afforded by the System, including all additions thereto and replacements and improvements thereof, and
has created a special Water System Fund into which the Revenues (as defined in the Resolution) of the
I:]M
System will be paid, and a separate and special Debt Service Account in that Water System Fund, into
which will be paid each month, from and as a first and prior lien on the Net Revenues then on hand, an
amount equal to not less than the sum of one -sixth of principal and the interest to become due within the
next six months with respect to all Bonds payable semi-annually from the Debt Service Account; that the
City has created a Reserve Account in the Water System Fund into which shall be paid additional Net
Revenues, after required credits to the Debt Service Account, sufficient to establish and maintain a reserve
therein equal to, as of the date of calculation, the Reserve Requirement; that the Debt Service Account will
be used only to pay the principal of, premium, if any, and interest on the Amended Series 2007B Bond, the
Series 2017A Bond, the Series 2020A Bonds, the Series 2020B Bonds, the Series 2023B Bond, this Series
2023C Bond, and any other additional Bonds issued pursuant to the Resolution on a parity therewith; that
the rates and charges for the System will from time to time be made and kept sufficient, 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 at least 110% of the maximum amount of principal and interest payable from the Debt Service
Account in any subsequent fiscal year; that additional Bonds and refunding Bonds may be issued and made
payable from the Debt Service Account on a parity with the Amended Series 2007B Bond, the Series 2017A
Bond, the Series 2020A Bonds, the Series 2020B Bonds, the Series 2023B Bond, this Series 2023C Bond,
and other parity Bonds upon certain conditions set forth in the Resolution, but no obligation will be
otherwise incurred and made payable from the Net Revenues of the System, unless the lien thereof shall be
expressly made subordinate to the lien of the Amended Series 2007B Bond, the Series 2017A Bond, the
Series 2020A Bonds, the Series 2020B Bonds, the Series 2023B Bond, this Series 2023C Bond, and
additional parity Bonds on such Net Revenues; that all provisions for the security of the holder of this Series
2023C Bond set forth in the Resolution 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 2023C 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 Series 2023C Bond
and the premium, if any, and interest hereon are payable solely from the Net Revenues of the System
pledged and appropriated to the Debt Service 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 2023C Bond
does not cause either the general or the special indebtedness of the City to exceed any constitutional or
statutory limitation.
B-3-3
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
has caused this Series 2023C Bond to be executed on its behalf by the facsimile or manual signatures of the
Mayor, City Manager and Finance Director and has caused this Series 2023C Bond to be dated as of the
date first written above.
CITY OF KALISPELL, MONTANA
Mayor
Ci ana r
Finance Director
ATTEST:
City erk .OQp.TE
=C
.0ci b �Q;
'''rrrrii���`�``,
REGISTRATION AND TRANSFER
The Series 2023C Bond shall be fully registered as to both principal and interest. No transfer of
the Series 2023C Bond shall be valid unless and until (1) the registered holder of the Series 2023C Bond,
or his duly authorized attorney or legal representative, executes the form of assignment appearing on the
Series 2023C Bond, and (2) the Finance Director as bond registrar (the "Registrar"), has duly noted the
transfer on the Series 2023C Bond and recorded the transfer on the Registrar's registration books. The City
shall be entitled to deem and treat the person in whose name the Series 2023C Bond is registered as absolute
owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Series 2023C Bond shall be made only to the order of the registered holder thereof, and all such payments
shall be valid and effectual to satisfy and discharge the City's liability upon the Series 2023C Bond to the
extent of the sum or sums so paid.
REGISTER
The ownership of the outstanding principal balance of the Series 2023C Bond and the interest
accruing thereon is registered on the books of City of Kalispell, Montana in the name of the registered
holder appearing on the first page hereof or as last noted below:
Date of Name and Address
Registration of Registered Holder
Department of Natural
Resources and Conservation
1625 Eleventh Avenue
,20 Helena, MT 59620
Signature of
Finance Director
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Finance Director of the City of Kalispell, Montana, acting as Bond Registrar, has transferred,
on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued
interest on the Series 2023C Bond to the new registered holder noted next to such date, except for amounts
of principal and interest theretofore paid.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
FORM OF ASSIGNMENT
For value received, the Series 2023C Bond is hereby transferred and assigned by the undersigned
holder, without recourse,
to
of ,
on this day
By:
(Authorized Signature)
For:
mm
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Date Advances
Total Amount
Advanced
l:1c1Fl
Notation Made By
SCHEDULE B
GENERAL OBLIGATION BONDS
DRINKING WATER
(REVOLVING FUND PROGRAM)
B-3-8
none
APPENDIX C
ADDITIONAL AGREEMENTS, REPRESENTATIONS AND COVENANTS
C-1
APPENDIX D
City of Kalispell, Montana
Water System Revenue Bonds
(DNRC Drinking Water State Revolving Loan Program),
$1,000,000 Subordinate Lien Taxable Series 2023A
$10,000,000 Series 2023B
$8,854,000 Series 2023C
COMPLIANCE CERTIFICATE AND REQUEST
We, Mayor, City Manager and Finance Director, hereby certify that we are on the date hereof the
duly qualified and acting Mayor, City Manager and Finance Director, respectively, of the City of Kalispell,
Montana (the "City"), and that:
1. Pursuant to Resolution No. 4273 of the City adopted on June 17, 1996 (the "Original
Resolution"), as amended and supplemented by a Supplemental Resolution adopted on June 19, 2023 (the
"Supplemental Resolution," and together with the Original Resolution, the "Resolution"), the City issued
its (i) Subordinate Lien Water System Revenue Bond (DNRC Drinking Water State Revolving Loan
Program), Taxable Series 2023A, dated, as originally issued, as of July 11, 2023, in the maximum aggregate
principal amount of $1,000,000 (the "Series 2023A Bond"), (ii) Water System Revenue Bond (DNRC
Drinking Water State Revolving Loan Program), Series 2023B, dated, as originally issued, as of July 11,
2023, in the maximum aggregate principal amount of $10,000,000 (the "Series 2023B Bond"), and (iii)
Water System Revenue Bond (DNRC Drinking Water State Revolving Loan Program), Series 2023C,
dated, as originally issued, as of July 11, 2023, in the maximum aggregate principal amount of $8,854,000
(the "Series 2023C Bond," and together with the Series 2023A Bond and the Series 2023B Bond, the "Series
2023 Bonds"). The City has reviewed the Supplemental Resolution, including, without limitation, Articles
II and III thereof, and the definitions relating thereto. The City acknowledges and agrees that the Series
2023A Bond evidences a loan made to the City from the DNRC from the EPA Capitalization Grant, and
that this Certificate is being relied upon by the DNRC for ensuring compliance with requirements applicable
to the City, the DNRC, and the 2023 Tank and Wells Project (as hereinafter defined). Capitalized terms
used herein without definition shall have the meanings given them in the Resolution.
2. The Series 2023A Bond is issued to finance costs of rehabilitation of two water storage
tanks in the System in the City's Lower Pressure Zone, generally described as the 2023 Tank and Wells
Project (the "2023 Tank and Wells Project") in the Supplemental Resolution and to pay costs of issuing the
Series 2023A Bond. Construction of the 2023 Tank and Wells Project has complied with all federal and
state standards, including, without limitation, EPA regulations and standards. The 2023 Tank and Wells
Project has been completed.
3. Costs of the 2023 Tank and Wells Project in the amount of $ have been paid as
of the date of delivery of this Certificate. The City hereby waives its right to any remaining 2023B
Committed Amount and 2023C Committed Amount not advanced or to be advanced upon delivery hereof.
The City specifically confirms and agrees that any remaining amounts of the 2023 Loans to be lent to the
City, if any, shall be evidenced by the Series 2023B Bond or Series 2023C Bond.
4. As of the date hereof, the City has spent the following amounts in connection with the 2023
Tank and Wells Project and costs related thereto:
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Professional Services
Debt Service Reserve
Bond Counsel & Related costs
Construction Engr. Services
Construction
TOTAL PROJECT COSTS
Of such amounts, $ were paid from advances of proceeds of the Series 2023A Bond.
5. The Trustee has delivered to the City a copy of Schedule B to be attached to the Series
2023A Bond, which reflects the amortization of all advances made or to be made on the date hereof of
proceeds of the Series 2023A Bond. The City hereby acknowledges and agrees that Schedule B has been
calculated in accordance with the provisions of the Resolution and the Indenture, and that the Series 2023A
Bond, with said Schedule B attached thereto, has been duly issued pursuant to the Resolution and is a valid
and binding obligation of the City in accordance with its terms and the terms of the Resolution; provided,
however, if the DNRC delivers a Forgiveness Statement, the City's obligation to repay the principal of the
Series 2023A Bond and interest and surcharges thereon is thereupon forgiven, and fi the DNRC delivers a
Noncompliance Certificate, amounts advanced under the 2023A Loan evidenced by the Series 2023A Bond
at the rate of two percent (2.00%) per annum and the City shall pay currently with interest and the
Administrative Expense Surcharge and the Loan Loss Reserve Surcharge, all as described in Sections 5.1.2
of the Supplemental Resolution authorizing the Series 2023A Bond.
6. The representations of the City contained in Articles II and III of the Resolution are true
and complete as of the date hereof as if made on this date, except to the extent that the City has specifically
advised the DEQ and the DNRC otherwise in writing.
7. No default in any covenant or agreement on the part of the City contained in the Resolution
has occurred and is continuing.
8. The City is delivering this Certificate to the DNRC, in part, to ensure compliance with EPA
regulations and standards. The City certifies that all laborers and mechanics employed by contractors and
subcontractors on the 2023 Tank and Wells Project have been and will be paid wages at rates not less than
those prevailing on projects of a character similar in the locality as determined by the United States
Secretary of Labor in accordance with Subchapter IV of Chapter 31 of Title 40, United States Code, and
that the iron and steel products used in the 2023 Tank and Wells Project comply with the "American Iron
and Steel" requirements of Section 436 of the Consolidated Appropriations Act of 2016 (P.L. 113-76), as
those requirements are further interpreted by applicable EPA guidance.
9. The City acknowledges and agrees that this Certificate completed by the City in form
satisfactory to the DNRC must be executed and delivered to the DNRC by the date that is 30 days after
receipt of the form of this Certificate from the DNRC. By submitting this Certificate, the City requests that
the DNRC forgive the obligation of the City to repay the principal of the Series 2023A Bond, together with
interest and surcharges thereon. The City acknowledges and agrees that (i) the forgiveness of principal of
and interest and surcharges on the Series 2023A Bond by the DNRC is contingent on the timely delivery
of this Certificate by the City in satisfactory form as determined in the DNRC's sole and complete
discretion, (ii) the DNRC has no obligation to grant such forgiveness, and (iii) if the DNRC delivers to the
City a Noncompliance Certification (a) the obligation of the City to repay the principal of the Series 2023A
Bond plus interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge thereon shall
continue in full force and effect until the principal of the Series 2023A Bond advanced and interest,
Administrative Expense Surcharge and Loan Loss Reserve Surcharge thereon are paid in full, as set forth
in Schedule B delivered pursuant to paragraph 5 above, and as provided in the Series 2023A Bond and the
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Supplemental Resolution, and (b) the City shall, as necessary, within the 3-month period specified in the
Ordinance, adjust its rates and charges to produce Net Revenues and Surplus Net Revenues required by the
rate covenant in the Ordinance.
WITNESS our hands on behalf of the City as of this day of
20
DMFIRM #406131284 v8/077787 00/00390694
CITY OF KALISPELL, MONTANA
By
Its City Manager
By
Its Finance Director
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