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03. Resolution 5547 - Resolution of Intent to Authorize the Issuance of West Side Tax Increment Urban Renewal District Revenue NoteCharles A. Harball Office of City Attorney City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 TO: FROM: SUBJECT: MEETING ATE: Mayor Tammi Fisher and Kalispell City Council Charles Harball, Interim City Manager Tel 406.758.7709 Fax 406.758.7771 charball@kalispell.com Resolution No. 5547 — A Preliminary Resolution to Authorize the Issuance of a West Side Tax Increment Urban Renewal District Revenue Note. February 6, 2012 — Regular Council Meeting BACKGROUND: On January 9, 2012 the City Council adopted Resolution No. 5544 and called for a public hearing with respect to approving certain 2012 Projects as West Side Urban Renewal Projects. On January 23, 2012, the Council held a public hearing with respect to the approval of the Projects. After the public hearing the City Council had a first reading of Ordinance No. 1711 and on February 6, 2012 the City Council will have the second reading of Ordinance No. 1711. In order to finance the cost of the Projects, the Urban Renewal Act authorizes the City to issue a revenue bond or note payable solely from tax increment derived from the District and such revenue bond or note will be payable solely from the tax increment and will not be a charge against the full, faith and credit and taxing power of the City, but will be a special, limited obligation. Pursuant to Section 7-15-4322 of the Urban Renewal Act, the City may sell any tax increment bonds or notes which are payable from tax increment of the District in a public or private sale. This resolution authorizes staff to solicit proposals from local qualified financial institutions for the purchase of the notes. RECOMMENDATION: City Council give consideration to and pass Resolution No. 5547. FISCAL IMPACTS: Action on this legislation, which is preliminary, does not in itself have a fiscal impact on the City's fiscal budget. It does, however, set the stage for the next action which will be to authorize the sale of a note to finance the projects which will have the effect of extending the life of the West Side Tax Increment District. Respectfully submitted, Charles Harball, Interim City"'Manager M i;12-.a-1 2 -ffi- Nd1Mae IA , , i i / . Mi WHEREAS, the City of Kalispell, Montana (the "City"), pursuant to Ordinance No. 1259, (the "Original Ordinance"), adopted by the City Council of the City (the "Council") created the West Side Urban Renewal District as an urban renewal district (the "District") on March 17, 1997, and approved the West Side Urban Renewal Plan (the "Plan") for the District containing a tax increment financing provision all as set forth in the Original Ordinance; and WHEREAS, the District was created in conformance with and is being operated by the City pursuant to the powers granted to the City under the provisions of Montana Code Annotated Title 7, Chapter 14, Part 24, as amended (the "Urban Renewal Act"), and the Plan has been in continuous existence since adoption; and WHEREAS, the Council, pursuant to Ordinance No. 1347 (the "2000 Ordinance"), adopted on February 7, 2000, amended the Original Ordinance to provide the terms for the modification and amendment of the Plan including the designation and approval of urban renewal projects to be undertaken in the District, provided that the City Council has held a public hearing prior to the consideration and approval of such urban renewal projects; and WHEREAS, City planning staff has identified the following capital improvement projects in the District that are eligible urban renewal projects: (a) improvements to the Meridian and Appleway intersection and such portions of the arterials leading to the intersection as necessary to increase the functionality and safety for vehicular and pedestrian traffic; (b) capital improvements to the water main for the west end of West Colorado and from West Colorado east from 5`h Avenue WN to U.S. 93 then south to West Utah Street for the purposes of improving flows for fire protection in that neighborhood (collectively, the "2012 Projects"); and WHEREAS, pursuant to Resolution No. 5544 of the City Council adopted on January 9, 2012, the City Council called for a public hearing with respect to approving the 2012 Projects as urban renewal projects; and WHEREAS, on January 23, 2012, the City Council of the City held a public hearing with respect to the approval of the 2012 Projects as urban renewal projects; and WHEREAS, after the public hearing on January 23, 2012 with respect to the 2012 Projects, the City Council had a first reading of Ordinance No. 1711 and on the date hereof the City Council had the second reading of Ordinance No. 1711; and WHEREAS, the Council, pursuant to Ordinance No. 1704, (the "2011 Ordinance"), adopted on November 21, 2011, amended the boundaries of the District and approved amendments to incorporate the new areas of the expanded boundaries of the District into the provisions of the Plan (the "Amended Plan"); and WHEREAS, the City staff and bond counsel for the City have submitted the required documentation for the expansion of the District to the Department of Revenue as required by the terms of the Urban Renewal Act and the Administrative Rules of Montana; and WHEREAS, the 2012 Projects are within the original boundaries of the District and the City does not need the boundary adjustment of the District to be approved by the Department of Revenue in order to move forward with the 2012 Projects and the financing thereof; and WHEREAS, in order to finance the cost of the 2012 Projects, the Urban Renewal Act authorized the City to issue a revenue bond or note payable solely from tax increment derived from the District and such revenue bond or note will be payable solely from the tax increment and will not be a charge against the full, faith and credit and taxing power of the City, but will be a special, limited obligation payable solely from the tax increments from the District; and WHEREAS, pursuant to Section 7-15-4322 of the Urban Renewal Act, the City may sell any tax increment bonds or notes the debt service of which is payable from tax increment of the District in a public or private sale; and WHEREAS, pursuant to Section 7-15-4301 of the Urban Renewal Act, the City may issue any tax increment revenue bonds or notes pursuant to resolution or ordinance. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Kalispell, Montana as follows: Section 1. Authorization and Sale,• Recitals. 1.01. Statutory Authority. The City is authorized by the Urban Renewal Act to create urban renewal areas, prepare and adopt an urban renewal plan therefore and amendments thereto, undertake urban renewal projects therein, provide for the segregation and collection of tax increment with respect to property taxes collected in such areas, issue its revenue bonds or notes to pay the costs of such projects and pledge to the repayment of the bonds the tax increment and other revenues derived from projects undertaken within urban renewal area. The City may issue revenue bonds or notes payable solely from the tax increments and sell such revenue bond or notes in a public or private sale in order to finance an approved urban renewal project approved by the City. 1.02. Preliminary Authorization and Delegation to a Selection Committee to Solicit Financing Proposals. The City Council hereby preliminarily approves the issuance and sale of the City's West Side Urban Renewal District Tax Increment Revenue Note, Series 2012 (the "Note") for the purpose of: (i) financing the 2012 Projects, (ii) paying the costs of issuance of the Note; and (iii) funding a debt service reserve fund if required for the successful marketability of the Note. The Note is estimated to be issued by the City in an original aggregate principal amount of $500,000. The City Council hereby delegates to the Interim City Manager and City Finance Officer (collectively, the "Selection Committee") the authority to solicit proposals for the purchase of the Note from local qualified financial institutions and negotiate the terms of the Note with the best proposer. Provided however, that: (i) the purchase price of the Note shall not be less than 97.5% nor exceed 105% of the par amount of the Note (plus accrued interest, if any to the date of issuance), (ii) the initial interest rate on the Note shall not exceed 6.00% percent; (iii) the final maturity date of the note is not later than January 1, 2037; and (iv) the Note shall not be issued later than March 16, 2012. The Note shall be subject to optional redemption by the City as negotiated with the selected proposer. The Selection Committee is hereby authorized to negotiate the terms of the Note subject to final approval by this City Council prior to its issuance. The final bond resolution will be considered by the City Council at a later date. The City will not prepare an official statement for the marketing of the Note and the selected proposer for the Note will execute an investment letter that acknowledges that such proposer is a sophisticated purchaser and understands the risks of an investment in the Note. Section 2. General Terms of the Note. Pursuant to the Act and Montana law, the City Council hereby authorizes the issuance and sale of the Note. The Note will be denominated "West Side Urban Renewal District Tax Increment Revenue Note, Series 2012". The Note shall be dated, as originally issued, and shall bear interest payable semiannually on January 1 and July 1 of each year, commencing July 1, 2012, at an initial rate negotiated by the Selection Committee, subject to adjustment on such dates and at such interest rate calculations as set forth therein, and as approved by this City Council in the final bond resolution. The Note is expected to pay principal on each January 1, commencing January 1, 2013 with approximately level debt service payments. The Note will be issued as a single bond. The Note will be a term bond with mandatory sinking fund redemption payments at a price of par plus accrued interest to the specified redemption dates. The Note will be registered in the name of the selected proposer as a fully registered bond and shall be executed by the manual or facsimile signatures of the Interim City Manager, the Mayor and the City Clerk. Section 3. Designation of Bond Counsel. The law firm of Kennedy & Graven, Chartered, P.C., is authorized to act as Bond Counsel and to assist City staff in the preparation and review of necessary documents relating to the 2012 Projects and the issuance of the Note. The City staff is hereby authorized to assist Bond Counsel in the preparation of such documents. PASSED AND APPROVED by the City Council and signed by the Mayor this 6th day of February, 2012. Tammi Fisher Mayor ATTEST: Theresa White City Clerk