Resolution 5550 - Authorizing Issuance of Revenue Note – West Side Tax Increment Urban Renewal DistrictRESOLUTION NO. 5550
RESOLUTION RELATING TO THE TAX INCREMENT URBAN RENEWAL REVENUE
NOTE (WEST SIDE URBAN RENEWAL TAX INCREMENT DISTRICT), SERIES 2012;
AUTHORIZING AND DIRECTING THE ISSUANCE, AND SALE AND PRESCRIBING THE
FORM AND TERMS THEREOF AND THE SECURITY THEREFOR.
BE IT RESOLVED by the City Council (the "Council") of the City of Kalispell, Montana (the
"City"), as follows:
Section 1. Definitions, Authorization and Findings
1.01. Definitions. The terms defined in this Section 1.01 shall for all purposes of this Resolution
have the meanings herein specified, unless the context clearly otherwise requires:
A. "Resolution" means this Resolution No. 5550 as originally adopted on March 5, 2012 by
the Council or as it may from time to time be amended or supplemented pursuant to the applicable
provisions hereof.
B. All references in this Resolution to designated sections and other subdivisions are to the
designated sections and other subdivisions of this instrument as originally adopted.
C. The words "herein," "hereof' and "hereunder" and other words of similar import without
reference to any particular section or subdivision refer to this Resolution as a whole and not to any
particular section or other subdivision unless the context clearly indicates otherwise.
D. The terms defined in this Section include the plural as well as the singular.
E. All accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles applicable to governmental entities.
F. All computations provided herein shall be made in accordance with generally accepted
accounting principles applicable to governmental entities consistently applied.
G. "Or" is not intended to be exclusive, but is intended to contemplate or encompass one,
more or all of the terms or alternatives conjoined.
H. For purposes of amendments to this Resolution, direction of remedies and waivers of
default, Outstanding Notes shall be treated as "Bonds" Outstanding under this Resolution and Owners of
such Notes shall have the rights given Owners of Bonds in such circumstances.
Accountant shall mean a Person engaged in the practice of accounting as a certified public
accountant, whether or not employed by the City.
Act shall mean Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended.
Additional Bonds shall mean any Bonds issued pursuant to Section 4.02 or 4.03 hereof.
Bond Account shall mean the account so designated in the Tax Increment Debt Service Fund.
Bond Counsel shall mean the law firm of Kennedy & Graven, Chartered, P.C., or any law firm of
nationally recognized bond counsel experienced in matters relating to tax-exempt financing, selected by
the City.
Bond Register shall mean the register maintained for the purpose of registering the ownership,
transfer and exchange of the Bonds of any series.
Bond Registrar or Registrar shall mean, with respect to the 2012 Note, the City Treasurer, or any
successor Paying Agent appointed pursuant to Section 3.03, and, with respect to any series of Additional
Bonds, the Person or Persons designated by or pursuant to this Resolution or a 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 and designated by or pursuant to this Resolution to receive
and disburse the principal of, premium, if any, and interest on such Bonds.
Bondowner shall mean the Owner of a Bond.
Bonds shall mean, collectively, the 2012 Note and any Additional Bonds.
Business Day shall mean, with respect to the Bonds of any series, any day other than a Saturday,
Sunday or other day on which the Paying Agent and Bond Registrar for such series of Bonds is not open
for business.
City shall mean the City of Kalispell, Montana, or its successors.
City Resolution shall mean a resolution, ordinance or other appropriate enactment by the Council
certified by the City Clerk to have been duly adopted and to be in full force and effect.
Code shall mean the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder.
Construction Account shall mean the account so designated in the Tax Increment Capital Project
Fund.
Council shall mean the City Council of the City or any successor governing body thereof.
Debt Service Account shall mean the subaccount so designated in the Bond Account.
District shall mean the West Side Urban Renewal District created and established as an urban
renewal area pursuant to the Act and Ordinance No. 1259, as amended by Ordinance Nos. 1347, 1704 and
1705, as such area may be enlarged or reduced in accordance with the Act and this Resolution.
Financial Consultant shall mean an Independent Person selected by the City, qualified to study
urban renewal areas and projects and tax increment financing plans, and in the judgment of the Council,
having a favorable repute for skill and experience in such work.
Fiscal Year shall mean the period commencing on the first day of July of any year and ending on
the last day of June of the next calendar year, or any other twelve-month period authorized by law and
specified by the Council as the City's fiscal year.
Government Obligations shall mean (a) direct general obligations of, or obligations the prompt
payment of the principal of and the interest on which is fully and unconditionally guaranteed by, the
United States of America, (b) obligations the payment of the principal of, premium, if any, and interest on
which is fully guaranteed as a full faith and credit obligation of the United States of America, and
(c) certificates or other evidence of ownership in principal to be paid or interest to accrue on a pool of
obligations of the type described in the foregoing clause (a) or (b), which obligations are held by a
custodian, any obligations described in the foregoing clause (a) or (b) may be issued or held in book -entry
form on the books of the Department of Treasury of the United States of America.
Independent shall mean, when used with respect to any specified Person, such a Person who (i) is
in fact independent; (ii) does not have any direct financial interest or any material indirect financial
interest in the City, other than the payment to be received under a contract for services to be performed by
such Person; and (iii) is not connected with the City as an officer, employee, promoter, trustee, partner,
director, underwriter or person performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished, such Person shall be appointed by the City
and such opinion or certificate shall state that the signer has read this definition and that the signer is
Independent within the meaning hereof.
Interest Payment Date shall mean each January 1 and July 1, commencing July 1, 2012 for the
2012 Note, and the dates set forth in any Supplemental Resolution for a series of Additional Bonds.
Maturity shall mean, when used with respect to any Bond, the date on which the principal of such
Bond becomes due and payable as therein or herein provided, whether at its Stated Maturity or by
declaration of acceleration, redemption or otherwise.
Opinion of Counsel shall mean a written opinion of counsel, who may (except as otherwise
expressly provided in this Resolution) be counsel for the City.
Ordinance shall mean No. 1259, adopted by the Council on March 17, 1997, as amended by
Ordinance Nos. 1347, 1704, and 1705, adopted by the Council on February 7, 2000, November 21, 2011,
and February 6, 2012, respectively, as such may be further amended or supplemented in accordance with
the Act, the Ordinance and this Resolution.
Original Purchaser shall mean the Person who purchases a Bond from the City when first issued.
The Original Purchaser of the 2012 Note is Rocky Mountain Bank of Kalispell, Montana.
Outstanding shall mean, with reference to Bonds as of the date of determination, all Bonds
theretofore issued and delivered under this Resolution except:
(i) Bonds theretofore cancelled by the City or delivered to the City cancelled or for
cancellation;
(ii) Bonds and portions of Bonds for whose payment or redemption money or
Government Obligations (as provided in Section 8) shall have been theretofore deposited in trust
for the Owners of such Bonds; provided, however, that if such Bonds are to be redeemed, notice
of such redemption shall have been duly given pursuant to this Resolution or irrevocable
instructions to call such Bonds for redemption at a stated Redemption Date shall have been given
by the City; and
(iii) Bonds in exchange for or in lieu of which other Bonds shall have been issued and
delivered pursuant to this Resolution;
provided, however, that in determining whether the Owners of the requisite principal amount of
Outstanding Bonds have given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Bonds owned by the City shall be disregarded and deemed not to be Outstanding.
Owner shall mean, with respect to any Bond, the Person in whose name such Bond is registered
in the Bond Register.
Paying Agent shall mean the Person designated by or pursuant to this Resolution to receive and
disburse the principal of, premium, if any, and interest on the Bonds of a series on behalf of the City. The
initial Paying Agent for the 2012 Note is the City Treasurer.
Person shall mean any individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Plan shall mean the City West Side Urban Renewal Plan, adopted by the Council on
March 17, 1997 by Ordinance No. 1259, as amended by Ordinance Nos. 1347 and 1704, and including all
further amendments thereof adopted in accordance with the Act and this Resolution.
Principal and Interest Requirements shall mean, with respect to any Bonds and for any Fiscal
Year or other specified period, the amount required to pay the principal of and interest on such Bonds
during such Fiscal Year or other period, determined on the assumption that each Serial Bond is to be paid
on its Stated Maturity and each Term Bond is to be paid on the Sinking Fund Payment Dates according to
the mandatory redemption requirements established for such Term Bond by the applicable section of this
Resolution or any Supplemental Resolution.
Principal Payment Date shall mean the each January 1 and July 1 as set forth in this Resolution or
any amendment hereto for a series of Additional Bonds. The Principal Payment Dates of the 2012 Note is
each January 1 and July 1, commencing January 1, 2013.
Project shall mean the 2012 Projects and any urban renewal project undertaken in or with respect
to the Urban Renewal Area under the Act, the costs of which are to be paid, in whole or in part, from the
proceeds of Bonds.
Qualified Investments shall mean the investments described as such in Section 5.06.
Redemption Date when used with respect to any Bond to be redeemed shall mean the date on
which it is to be redeemed.
Redemption Price when used with respect to any Bond to be redeemed shall mean the price at
which it is to be redeemed.
Serial Bonds shall mean Bonds which are not Term Bonds.
Sinking Fund Payment Date shall mean a date set forth in any applicable provision of this
Resolution or a Supplemental Resolution for the making of a mandatory principal payment for the
redemption of a Term Bond. The Principal Payment Dates for the 2012 Note are Sinking Fund Payment
Dates. The payment dates for the 2012 Note set forth in Section 3.03(b) are Sinking Fund Payment
Dates.
State Entitlements shall mean the system of local government entitlements and block grants
established pursuant to HB 124 enacted by the 2001 Legislature effective, for the most part, July 1, 2001
and codified at Montana Code Annotated, Sections 15-1-120 through 15-1-122, as amended.
Stated Maturity when used with respect to any Bond or any installment of interest thereon shall
mean the date specified in such Bond as the fixed date on which principal of such Bond or such
installment of interest is due and payable.
Subordinate Obligations shall mean any bonds, notes or obligations of the City issued on a
subordinate basis to the Bonds as to the Tax Increment pursuant to Section 4.04.
Supplemental Resolution shall mean any resolution supplemental to this Resolution adopted
pursuant to Section 7.
Tax Increment shall mean the amount received by the City pursuant to the Act and the Plan from
the extension of levies of Taxes (expressed in mills), against the incremental taxable value, as defined in
the Act, of all taxable property within the Urban Renewal Area, and shall include any payments in lieu of
Taxes attributable to the incremental taxable value, State Entitlements, and all payments received by the
City designated as replacement revenues for lost Tax Increment.
Tax Increment Capital Project Fund shall mean the fund established pursuant to Section 5.01.
Tax Increment Debt Service Fund shall mean the fund established pursuant to Section 5.01.
Tax Increment Development Fund shall mean the fund established pursuant to Section 5.01.
Taxes shall mean all taxes levied on an ad valorem basis by a Taxing Body against taxable real
and personal property located within the Urban Renewal Area (exclusive of the six -mill levy for
university purposes levied by the State) and shall include all payments in lieu of taxes received by the
City with respect to property within the District.
Taxing Body shall mean the City; Flathead County, Montana; Kalispell School District No. 5; the
State of Montana; and any other political subdivision or governmental unit which may hereafter levy
Taxes against property within the District.
Term Bond shall mean any Bond for the payment of the principal of which mandatory payments
are required by the Resolution or Supplemental Resolution to be made at times and in amounts sufficient
to redeem all or a portion of such Bond prior to its Stated Maturity. The 2012 Note is a Term Bond.
2012 Note shall mean the City's Tax Increment Urban Renewal Revenue Note (West Side Urban
Renewal Tax Increment District), Series 2012, issued in the original aggregate principal amount of
$500,000.
2012 Projects shall mean the capital improvement projects described in Section 1.04 that are
authorized urban renewal projects in the Urban Renewal Area under the terms of the Act.
Urban Renewal Area shall mean the West Side Urban Renewal Area, created and established
pursuant to the Act and the Ordinance, as such area may be enlarged or reduced in accordance with the
Act and the Ordinance.
1.02. Authorization. Under the provisions of Montana Code Annotated, Title 7, Chapter 15,
Parts 42 and 43, as amended (the "Act"), the City is authorized to create urban renewal areas, prepare and
adopt an urban renewal plan therefor 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 bonds to pay the costs of such projects and to refund bonds previously issued under the
Act and pledge to the repayment of the bonds the tax increment and other revenues derived from projects
undertaken within the urban renewal area. Prior to the date hereof, the City does not have any
Outstanding revenues bonds or notes payable from Tax Increment.
1.03. Prior City Actions. Pursuant to the Act, the City has created the West Side Urban Renewal
District as an Urban Renewal Area (the "Urban Renewal Area") and has approved the West Side Urban
Renewal Plan as an Urban Renewal Plan, as amended (the "Urban Renewal Plan"), in accordance with
the provisions of the Act and the Ordinances. The Urban Renewal Plan provides for the segregation and
collection of Tax Increment with respect to the Urban Renewal Area.
The Urban Renewal Area and the Urban Renewal Plan providing for the segregation and
collection of the Tax Increment have been duly and validly created and adopted in strict accordance with
applicable provisions of the Act and are in full force and effect.
1.04. The 2012 Projects. Pursuant to the Act and the procedures contained in the Plan and the
Ordinances, the City Council has held a public hearing prior to the consideration and approval of such
urban renewal projects. On January 9, 2012, the City Council adopted Resolution No. 5544, calling for a
public hearing with respect to the following as urban renewal projects in the District (including the Urban
Renewal Area) 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 5th 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"). A public hearing with respect to an amendment to the Plan to
incorporate the 2012 Projects was held on January 23, 2012 and after the public hearing the City Council
had a first reading of Ordinance No. 1705. On February 6, 2012 the City Council had the second reading
of Ordinance No. 1705. Pursuant to Ordinance No. 1705, adopted February 6, 2012, the City has
designated and approved the 2012 Projects.
1.05. Financing. Pursuant to Resolution No. 5547, adopted on February 6, 2012, the Council set
forth its intention to issue the 2012 Note and solicit proposals for the purchase thereof by qualified local
financial institutions and designating to the Acting City Manager and the City Finance Director to review
and select the most advantageous financing proposals for the purchase of the 2012 Note. Subsequently,
the proposal of Rocky Mountain Bank of Kalispell, Montana (the "Original Purchaser") was determined
by City staff to be most advantageous to the City and selected as the purchaser and such determination is
hereby ratified.
1.06. Estimated Costs of the 2012 Projects and the 2012 Note. The total cost of the
2012 Projects, not including costs incidental to the issuance and sale of the 2012 Note hereinafter
authorized, is estimated to be equal to or greater than the par amount of the 2012 Note. In the event that
the cost of the 2012 Projects exceeds the par amount of the 2012 Note, the City shall pay such costs from
the Tax Increment generated from the District. The City shall pay the costs of issuance for the 2012 Note
from Tax Increment currently on hand.
1.07. Authorization and Sale of 2012 Note; No Official Statement. This Council hereby
determines that it is in the best interests of the City that the City issue its West Side Urban Renewal
District Tax Increment Revenue Note, Series 2012 (the "Note"), as authorized by Section 7-15-4301(1)(b)
of the Act and this Resolution, in order to provide funds to be used to pay the costs of the 2012 Projects.
The Original Purchaser agreed to purchase the 2012 Note at the aggregate purchase price of $500,000.
The 2012 Note has been purchased by the Original Purchaser without the benefit of an official
statement or other offering document. The Original Purchaser is a sophisticated financial institution that
can bear the risk of an investment in the 2012 Note.
1.08. Determination of Tax Increment. It is estimated that the Tax Increment to be received in
each of the Fiscal Years the 2012 Note will be outstanding will be at least $400,000. Based on collections
received as of June 30, 2011, the City projects the actual annual Tax Increment collections to be received
in the Fiscal Year ended June 30, 2012 will be $480,000. The maximum principal and interest on the
2012 Note is initially approximately $32,500 per annum and is not anticipated to exceed $40,000 per
annum in the future.
1.09. Findings and Determinations. It is hereby found, determined and declared by this Council
as follows:
(a) the conditions precedent to the issuance of the 2012 Note under the Act, the
Ordinance and this Resolution have or shall be met prior to the issuance of the 2012 Note;
(b) the estimated Tax Increment to be received by the City, as set forth in
Section 1.10, and pledged to the payment of the 2012 Note will be sufficient to pay the principal
thereof and interest thereon when due; and
(c) it is in the best interests of the City to issue and sell the 2012 Note to provided
funds to pay costs of the 2012 Projects as provided in this Resolution.
Section 2. The Bonds.
2.01. General Title. The general title of the Bonds of all series shall be "West Side Urban
Renewal District Tax Increment Revenue Bonds/Note, Series 20_." with appropriate additions for
refunding Bonds and to distinguish Bonds of each series from Bonds of other series.
2.02. General Limitations; Issuable in Series. The aggregate principal amount of Bonds that may
be authenticated and delivered and Outstanding under this Resolution is not limited, except as provided in
Section 4 and except as may be limited by law.
The Bonds may be issued in series as from time to time authorized by the Council.
The Bonds are special, limited obligations of the City and the principal of, premium, if any, and
interest on the Bonds (except to the extent payable out of proceeds of the Bonds) are payable solely from
the Tax Increment and from other revenues derived by the City from Projects or other sources which may
be pledged to the payment of any series of Bonds. The Bonds shall not pledge the general credit or taxing
powers of the City, and the State of Montana (the "State") shall not in any event be liable for the payment
of the principal of, premium, if any, or interest on the Bonds or for the performance of any pledge of any
kind whatsoever that may be undertaken by the City. Neither the Bonds nor any of the agreements or
obligations of the City contained herein or therein shall be construed to constitute an indebtedness of the
State, the City or Flathead County (the "County") within the meaning of any constitutional or statutory
provisions whatsoever.
With respect to the Bonds of any particular series, the City may incorporate in or add to the
general title of such Bonds any words, letters or figures designed to distinguish that series.
If any Stated Maturity, Redemption Date or Sinking Fund Payment Date shall be on a day which
is not a Business Day, then payment of principal, premium, if any, or interest due on such day may be
made on the next succeeding Business Day, with the same force and effect as if made on such Stated
Maturity, Redemption Date or Sinking Fund Payment Date (whether or not such next succeeding
Business Day occurs in a succeeding month).
2.03. Terms of Particular Series. Each series of Bonds (except the 2012 Note, which is created
by Section 3) shall be created by a Supplemental Resolution. The Bonds of each series (other than the
2012 Note, as to which specific provision is made in Section 3) shall bear such date or dates, shall be
payable at such place or places, shall have such Stated Maturities and Redemption Dates, shall bear
interest at such rate or rates, from such date or dates, payable in such installments and on such dates and
at such place or places, and may be redeemable at such price or prices and upon such terms (in addition to
the prices and terms herein specified for redemption of all Bonds) as shall be provided in the
Supplemental Resolution creating that series. The City may, at the time of the creation of any series of
Bonds or at any time thereafter, make, and the Bonds of that series may contain, provision for:
A. a sinking, amortization, improvement or other analogous fund;
B. limiting the aggregate principal amount of the Bonds of that series or of all
Additional Bonds thereafter issued;
C. exchanging Bonds of that series, at the option of the Owners thereof, for other
Bonds of the same series of the same aggregate principal amount of a different authorized kind
and/or authorized denomination or denominations; or
D. the issuance of Bonds not registered as to principal or interest and the exchange
of such Bonds for fully registered Bonds;
all upon such terms as the City may determine. All Bonds of the same series shall be substantially
identical except as to denomination and the differences specified herein or in a Supplemental Resolution
between interest rates, Stated Maturities and redemption provisions.
2.04. Form and Denominations. The form of the Bonds (other than the 2012 Note, as to which
specific provision is made in Section 3) shall be established by the Supplemental Resolution creating such
series. The Bonds of each series shall be distinguished from the Bonds of other series in such manner as
the Council may determine.
The Bonds of any series shall be issuable as fully registered Bonds unless the Supplemental
Resolution provides otherwise.
The Bonds of each series shall be issuable in such denominations as shall be provided in the
provisions of the Supplemental Resolution creating such series (other than the 2012 Note, as to which
specific provision is made in Section 3). In the absence of any such provision with respect to the Bonds
of any particular series, Bonds shall be in the denomination of $500 or any integral multiple thereof, of a
single Stated Maturity.
2.05. Execution, Authentication and Delivery. Each Bond shall be executed on behalf of the City
by the manual or facsimile signature of the Mayor, City Manager, and attested by the signature of the City
Clerk (or other officers of the City authorized by Resolution). The seal of the City need not be affixed to
or imprinted on any Bond. Any Bond bearing the manual or facsimile signature of an individual who was
at any time an appropriate officer of the City shall be valid and sufficient for all purposes, regardless
whether such individual held such office as of the date of sale, issue or delivery of such Bond or
certificate. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit
under this Resolution unless and until a certificate of authentication on such Bond has been duly executed
by the manual signature of an authorized representative of the Bond Registrar. Certificates of
authentication on each Bond need not be signed by the same representative. The executed certificate of
authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered
under this Resolution and in accordance with the provisions hereof.
2.06. Temporary Bonds. Pending the preparation of definitive Bonds, the City, if authorized by
law, may execute and deliver, temporary Bonds which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive
Bonds in lieu of which they are issued, in registered form, and with such appropriate insertions,
omissions, substitutions and other variations as the officers of the City executing such Bonds may
determine, as evidenced by their signing of such Bonds.
If temporary Bonds are issued, the City will cause definitive Bonds to be prepared without
unreasonable delay. After the preparation of definitive Bonds, the temporary Bonds shall be
exchangeable for definitive Bonds upon surrender of the temporary Bonds, without charge to the Owner.
Upon surrender for cancellation of any one or more temporary Bonds the City shall execute and deliver in
exchange therefor a like principal amount of definitive Bonds of authorized denominations. Until so
exchanged the temporary Bonds shall in all respects be entitled to the security and benefits under this
Resolution, and interest thereon, when and as payable, shall be paid to the bearers of the temporary Bonds
upon presentation thereof for notation of such payment thereon, unless such temporary Bonds shall be
fully registered Bonds.
Section 3. The 2012 Note.
3.01. Denomination, Maturities, Payment and Date of 2012 Note. The 2012 Note to be issued
hereunder, in the original aggregate principal amount of $500,000, shall be issued as a Term Bond and
denominated "Tax Increment Urban Renewal Revenue Note (West Side Urban Renewal Tax Increment
District), Series 2012," shall be issued as a single fully registered bond. The 2012 Note shall mature on
January 1, 2037 and shall be subject to mandatory sinking fund redemption as set forth in Section 3.03
below: Interest on the 2012 Note shall be calculated on the basis of a year of 360 days composed of
twelve 30-day months. The 2012 Note shall be interest at a variable rate equal to the Prime Rate as
published in the Wall Street Journal on each Interest Payment Date plus .75% (75 basis points). The
Interest Rate on the 2012 Note shall adjust on each Interest Payment Date. The initial interest rate on the
2012 Note from the date of issuance until the first Interest Payment Date of July 1, 2012 shall be 4.00%.
The 2012 Note shall be issuable only in fully registered form, and the ownership of the 2012 Note
shall be transferred only upon the bond register of the City hereinafter described. Principal of and interest
on the 2012 Note is payable in lawful money of the United States of America. Principal and premium, if
any, shall be payable by check or draft drawn on the Registrar hereinafter described upon presentation
and surrender of the 2012 Note at maturity or upon redemption at the principal office of the Registrar.
Interest on the 2012 Note shall be payable on January 1 and July 1 in each year, commencing July 1, 2012
(each an "Interest Payment Date"), by check or draft of the Registrar mailed to the Original Purchaser.
The 2012 Note shall bear an original issue date as of March 13, 2012 or such later date as
determined by the Acting City Manager, but in no event later than March 16, 2012. Upon delivery of the
2012 Note to the Original Purchaser pursuant to Section 3.05 or upon the delivery of 2012 Note upon a
transfer or exchange pursuant to Section 3.02, the Registrar shall date each such 2012 Note so delivered
as of the date of its authentication.
3.02. System of Registration. The City shall appoint, and shall maintain, a bond registrar,
transfer agent and paying agent for the 2012 Note (the "Bond Registrar" or the "Registrar"). The initial
Registrar for the 2012 Note shall be the City Treasurer. This Section 3.03 shall establish a system of
registration for the 2012 Note as defined in the Model Public Obligations Registration Act of Montana,
and shall govern in the event provisions of the Resolution relating to registration, transfer or exchange of
2012 Note is inconsistent herewith, except as otherwise provided herein. The effect of registration and
the rights and duties of the City and the Bond Registrar with respect thereto shall be as follows:
(a) Re i e . The Registrar shall keep at its principal office a bond register in which
the Registrar shall provide for the registration of ownership of 2012 Note and the registration of
transfers and exchanges thereof.
(b) Transfer. Upon surrender for transfer of any 2012 Note duly endorsed by the
registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory
to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized
by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new 2012 Note of the same series and a like
aggregate principal amount, interest rate and maturity as requested by the transferor. The
Registrar may, however, close the books for registration of the transfer of any 2012 Note or
portion thereof selected or called for redemption.
(c) Exchange. Whenever any 2012 Note is surrendered by the registered owner for
exchange, the Registrar shall authenticate and deliver one or more new 2012 Note and a like
aggregate principal amount, interest rate and maturity, as requested by the registered owner or the
owner's attorney in writing.
(d) Cancellation. All 2012 Note surrendered upon any transfer or exchange shall be
promptly canceled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When any 2012 Note is presented to the
Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the
endorsement on such 2012 Note or separate instrument of transfer is legally authorized. The
Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its
judgment, deems improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person in
whose name any 2012 Note is at any time registered in the bond register as_the absolute owner of
such 2012 Note, whether such 2012 Note shall be overdue or not, for the purpose of receiving
payment of, or on account of, the principal of, premium, if any, and interest on such 2012 Note
and for all other purposes, and all such payments so made to any such registered owner or upon
the owner's order shall be valid and effectual to satisfy and discharge the liability of the City
upon such 2012 Note to the extent of the sum or sums so paid.
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(g) Taxes, Fees and Charges. For every transfer or exchange of 2012 Note (except
upon a partial redemption of a 2012 Note pursuant to Section 4.05), the Registrar may impose a
charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other
governmental charge required to be paid with respect to such transfer or exchange.
(h) Mutilated, Lost, Stolen or Destroyed 2012 Note. In case any 2012 Note shall
become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new 2012 Note of
the same series and a like amount, number, maturity date and tenor in exchange and substitution
for and upon cancellation of any such mutilated 2012 Note or in lieu of and in substitution for any
such 2012 Note lost, stolen or destroyed, upon the payment of the reasonable expenses and
charges of the Registrar in connection therewith; and, in the case of a 2012 Note lost, stolen or
destroyed, upon filing with the Registrar of evidence satisfactory to it that such 2012 Note was
lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an
appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the
City and the Registrar shall be named as obligees. All 2012 Note so surrendered to the Registrar
shall be canceled by it and evidence of such cancellation shall be given to the City. If the
mutilated, lost, stolen or destroyed 2012 Note has already matured or such 2012 Note has been
called for redemption in accordance with its terms, it shall not be necessary to issue a new
2012 Note prior to payment.
3.03. Redemption.
(a) Optional Redemption of 2012 Note. From the date of issuance of the 2012 Note until
July 1, 2014, the 2012 Note shall be subject to redemption, at the option of the City, in whole or in part
(in integral multiples of $500) on any date, at a redemption price equal to the principal amount thereof to
be redeemed with interest accrued to the date of redemption, plus a premium equal to one percent (1.00%)
of the principal amount of the 2012 Note redeemed on such redemption date. From and after July 1,
2014, the 2012 Note shall be subject to redemption, at the option of the City and in whole or in part (in
integral multiples of $500) on any date, at a redemption price equal to the principal amount thereof to be
redeemed with interest accrued to the date of redemption, without premium.
(b) Mandatory Sinking Fund Redemption. The 2012 Note is subject to mandatory sinking
fund redemption (in integral multiples of $500) on each Principal Payment Date in the following principal
amounts:
Payment Date
January 1, 2013
July 1, 2013
January 1, 2014
July 1, 2014
January 1, 2015
July 1, 2015
January 1, 2016
July 1, 2016
January 1, 2017
July 1, 2017
January 1, 2018
July 1, 2018
January 1, 2019
July 1, 2019
January 1, 2020
Principal Amount
$6,000
6,000
6,500
6,500
6,500
6,500
7,000
7,000
7,000
7,500
7,500
7,500
8,000
8,000
8,000
Payment Date
January 1, 2025
July 1, 2025
January 1, 2026
July 1, 2026
January 1, 2027
July 1, 2027
January 1, 2028
July 1, 2028
January 1, 2029
July 1, 2029
January 1, 2030
July 1, 2030
January 1, 2031
July 1, 2031
January 1, 2032
Principal Amount
$10,000
10,000
10,000
10,500
10,500
11,000
11,000
11,500
11,500
11,500
12,000
12,000
12,500
12,500
13,000
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July 1, 2020
8,000
July 1, 2032
13,000
January 1, 2021
8,500
January 1, 2033
13,500
July 1, 2021
8,500
July 1, 2033
14,000
January 1, 2022
8,500
January 1, 2034
14,000
July 1, 2022
9,000
July 1, 2034
14,500
January 1, 2023
9,000
January 1, 2035
14,500
July 1, 2023
9,500
January 1, 2035
15,000
January 1, 2024
9,500
July 1, 2036
15,500
July 1, 2024
9,500
January 1, 2037*
16,000
* Maturity
(c) Notice of Redemption. The Registrar shall mail or cause to be mailed, by first class mail,
at least thirty (30) days prior to the designated redemption date, a notice of redemption to the Original
Purchaser for the 2012 Note. Any notice of redemption may be sent to the Original Purchaser
conditioned on the City depositing funds with the Paying Agent on or prior to the date selected for
redemption by the City. The notice of redemption shall specify the redemption date, redemption price,
and the place at which the 2012 Note is to be surrendered for payment. Notice of the call of any
2012 Note for redemption having been mailed as herein provided, and funds sufficient for the payment
thereof with accrued interest having been deposited with the Paying Agent on or before the redemption
date, interest on such 2012 Note shall cease to accrue on said date, and the Owner shall have no further
rights with respect thereto or under the Resolution except to receive the redemption price so deposited.
3.04. Execution and Delivery. The 2012 Note shall be forthwith prepared for execution under
the direction of the Finance Director, at the expense of the City, and shall be executed on behalf of the
City by the signatures of the Mayor, Acting City Manager and attested by the City Clerk; provided that
said signatures may be printed, engraved or lithographed facsimiles thereof. The seal of the City need not
be affixed to or imprinted on any 2012 Note. In case any officer whose signature or a facsimile of whose
signature shall appear on the 2012 Note shall cease to be such officer before the delivery of any
2012 Note, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same
as if such officer had remained in office until delivery. Notwithstanding such execution, no 2012 Note
shall be valid or obligatory for any purpose or be entitled to any security or benefit under the Bond
Resolution unless and until a certificate of authentication on such 2012 Note has been duly executed by
the manual signature of an authorized representative of the Registrar. Certificates of authentication on
each 2012 Note need not be signed by the same representative. The executed certificate of authentication
on each 2012 Note shall be conclusive evidence that it has been authenticated and delivered under the
Bond Resolution and in accordance with the provisions hereof When the 2012 Note have been fully
executed and authenticated, they shall be delivered by the Registrar to the Purchaser upon payment of the
purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser
shall not be obligated to see to the application of the purchase price.
3.05. Form of 2012 Note. The 2012 Note shall be in substantially the form set forth in Exhibit A
hereto (which is hereby incorporated herein and made a part hereof), with such appropriate variations,
omissions and insertions as are permitted or required by this Resolution
3.06. Transcript Certification. The officers of the City are directed to furnish to the Original
Purchaser and to Bond Counsel certified copies of all proceedings and information in their official records
relevant to the authorization and issuance of the 2012 Note, and such certificates and affidavits as to other
matters appearing in their official records or otherwise known to them as may be reasonably required to
evidence the validity and security of the 2012 Note, and all such certified copies, certificates and
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affidavits, including any heretofore furnished, shall constitute representations and recitals of the City as to
the correctness of all facts stated therein and the completion of all proceedings stated therein to have been
taken.
3.07. Application of Proceeds of 2012 Note. The City shall deposit the proceeds of the sale of
the 2012 Note in the Construction Account in the Tax Increment Fund to be used to pay costs of the 2012
Projects.
Section 4. Additional Bonds.
4.01. General Provisions. In addition to the 2012 Note, whose issuance and delivery is provided
for in Section 3, Additional Bonds may at any time and from time to time be issued, sold and delivered by
the City but only upon compliance with the conditions of, Sections 4.02 and 4.03, whichever may be
applicable, and upon filing with the Finance Director the following:
A A Supplemental Resolution authorizing the issuance and creating the designated
series of Additional Bonds and the sale thereof to the Original Purchaser or Purchasers named
therein for the purchase price set forth therein;
B. A certificate executed by the Mayor, City Manager and Finance Director stating
that upon the issuance of the Additional Bonds, no default hereunder has occurred and is
continuing which would not be cured upon the issuance of the Additional Bonds and application
of the proceeds thereof.
C. An Opinion of Bond Counsel (who may rely on factual representations of the
City and which opinion may be qualified by customary qualifications and exceptions) stating that:
(1) all conditions precedent provided for in this Resolution relating to the
issuance and delivery of such Additional Bonds have been complied with, including any
conditions precedent specified in this Section;
(2) the series of Additional Bonds when issued and delivered by the City
will be valid and binding special, limited obligations of the City in accordance with their
terms and entitled to the benefits of and secured by this Resolution; and
(3) the issuance of such Additional Bonds will not affect the tax-exempt
nature for federal income tax purposes of the Bonds then Outstanding, if such
Outstanding Bonds bear interest that is intended to be free from federal income tax
purposes.
No Additional Bonds shall be issued unless, immediately after the issuance thereof and the
application of the proceeds thereof the balance on hand in the Reserve Account will be at least equal to
the Reserve Requirement after giving effect to the issuance of such Additional Bonds.
Any Additional Bonds shall be dated, shall bear interest at a rate or rates not exceeding the
maximum rate, if any, permitted by law, shall have Stated Maturities, and may be subject to redemption at
such times and prices and on such terms and conditions, all as may be provided by the Supplemental
Resolution authorizing their issuance. All Additional Bonds issued pursuant to Sections 4.02 and 4.03
shall be payable and secured ratably and equally and on a parity with the 2012 Note and any Additional
Bonds theretofore issued, entitled to the same benefits and security of this Resolution.
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4.02. Additional Bonds to Pay the Cost of Projects. Additional Bonds may be issued under this
Section 4.02, at one time or from time to time, subject to the conditions provided in Section 4.01 and this
Section 4.02, for the purpose of providing funds, in an aggregate amount sufficient with any other funds
available and committed therefor to pay the cost of one or more Projects.
Before any Additional Bonds shall be issued under this Section 4.02, the City shall adopt a
Supplemental Resolution authorizing the issuance of such series of Additional Bonds, fixing the amount
and the details thereof, describing in brief and general terms the Projects to be acquired, constructed,
altered or improved and estimating the costs thereof.
In addition, prior to the execution and delivery of any series of Additional Bonds under this
Section 4.02, there shall be filed with the Finance Director:
(a) A certificate executed by the Mayor, City Manager and Finance Director stating:
(i) the estimated cost of the Projects being financed thereby, including an allowance for
contingencies and all fees, expenses and financing costs, (ii) the amount, if any, which will be
required to be deposited to the credit of the Reserve Account in connection with the issuance of
the Additional Bonds, (iii) the amount, if any, which will be required to be credited to the Bond
Account to pay interest on the Additional Bonds prior to collection of sufficient Tax Increment
available therefor, (iv) the amount of Tax Increment received by the City in the last completed
Fiscal Year, (v) the amount of the maximum Principal and Interest Requirements on the
Outstanding Bonds and the Additional Bonds proposed to be issued for any future Fiscal Year
during the term of the Outstanding Bonds, and (vi) that the principal amount of such Additional
Bonds is sufficient to provide for the payment of all estimated costs of Projects to be financed
thereby and credits to the Reserve Account and Bond Account as set forth above; and
that:
(b) a certificate executed by the Mayor, City Manager and Finance Director stating
(i) the Tax Increment received by the City in the last completed Fiscal Year
was equal to at least 130% of the maximum Principal and Interest Requirements for any
future calendar year (during the term of the Outstanding Bonds) with respect to
Outstanding Bonds and the Additional Bonds proposed to be issued; or
(ii) the Tax Increment received by the City in the last completed Fiscal Year,
adjusted as provided in this Section 4.02(b)(11), was, and the Tax Increment estimated to
be received in the next succeeding two Fiscal Years, adjusted as provided in Section
4.02(c), is estimated to be, equal to at least 130% of the maximum Principal and Interest
Requirements for any future calendar year (during the term of the Outstanding Bonds)
with respect to the Outstanding Bonds and the Additional Bonds proposed to be issued.
For this purpose, the Tax Increment received by the City in the last completed Fiscal
Year may be adjusted by adding any increase in Tax Increment which would have
resulted from applying the aggregate tax rates of the Taxing Bodies effective for the last
completed Fiscal Year to the value, as determined by certification of the Montana
Department of Revenue, of any projects which have been completed in the Urban
Renewal Area before the date of issuance of the Additional Bonds and the taxable values
of which as so completed are not included in the "actual taxable value" of the Urban
Renewal Area (within the meaning of the Act).
The Council shall approve and confirm the findings and estimates set forth in the above -described
certificates in the Supplemental Resolution authorizing the issuance of the Additional Bonds.
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(c) For purposes of the foregoing paragraph (b), in estimating the Tax Increment to
be received in any future Fiscal Year, the Mayor, City Manager and Finance Director shall
assume that: (1) 90% of the Taxes levied in the Urban Renewal Area will be collected in any
Fiscal Year, (2) no Taxes delinquent in a prior Fiscal Year will be collected in any subsequent
Fiscal Year, and (3) there will be no increase in the Tax Increment to be received in any future
Fiscal Year resulting from projected inflation in property values or projected increases in Taxes.
4.03. Additional Bonds for Refunding Purposes. Additional Bonds may be issued at any time or
from time to time, subject to the conditions hereinafter stated in this Section 4.03, for the purpose of
providing funds, with any other funds available and committed therefor, for paying at, or redeeming prior
to, their Stated Maturities any Outstanding Bonds, including the payment of any redemption premium
thereon and interest which will accrue on such Bonds to any Redemption Date or the Stated Maturities
thereof, and any expenses in connection with such financing. Such Additional Bonds shall be designated
substantially as the Bonds to be refunded, with the addition of the term "Refunding".
Prior to authentication and delivery of any Additional Bonds under this Section 4.03 there shall
be filed with the Finance Director such documents as shall be required to show that provisions have been
duly made in accordance with the provisions of this Resolution for the redemption of all of the
Outstanding Bonds to be refunded.
The City shall not deliver any Additional Bonds under this Section 4.03 unless there shall be filed
with the Finance Director:
(i) either a certificate executed by the Mayor, City Manager and Finance Director, a
report to the effect that the proceeds (excluding accrued interest but including any premium) of
the Additional Bonds plus any moneys to be withdrawn from the Bond Account for such purpose,
together with any other funds deposited for such purpose, will be not less than an amount
sufficient to pay the principal of and redemption premium, if any, on the Outstanding Bonds to be
refunded and the interest which will become due and payable on and prior to the Redemption
Date or Stated Maturities of the Bonds to be refunded, or a report of an Independent Accountant
to the effect that from such proceeds there shall be deposited in trust, Government Obligations
which do not permit the redemption thereof at the option of the issuer, the principal of and the
interest on which when due and payable (or redeemable at the option of the holder thereof) will
provide, together with any other moneys which shall have been deposited in trust irrevocably for
such purpose, but without reinvestment, sufficient moneys to pay such principal, redemption
premium and interest;
(ii) an opinion of Bond Counsel to the effect that the issuance of such Additional
Bonds will not prejudice the exclusion from gross income for purposes of federal income taxation
of the interest accruing on any of the Outstanding Bonds, if such Outstanding Bonds bear interest
that is intended to be free from federal income tax purposes; and
(iii) if Additional Bonds are issued to refund Subordinate Obligations issued pursuant
to Section 4.04, the conditions for the issuance of Additional Bonds pursuant to Section 4.02 be
satisfied.
4.04. Subordinate Obligations. Except as provided in Sections 4.01 to 4.03, no bonds, notes or
other evidence of indebtedness of the City will be issued under or secured by the provisions of this
Resolution, and no bonds, notes or other evidence of indebtedness will be made payable from the Bond
Account, unless the pledge and appropriation of such Tax Increment for the payment and security of such
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bonds, notes or other evidence of indebtedness is expressly subordinated to the pledge and appropriation
made for the benefit and security of the 2012 Note and all Additional Bonds issued and to be issued under
and secured by this Resolution in accordance with Sections 4.01 to 4.03. In the event of the issuance of
any such Subordinate Obligations, the principal, interest and redemption premiums thereon will be made
payable from one or more additional accounts created within the Tax Increment Funds for that purpose,
and the balance of funds at any time on hand in any such accounts shall be available and shall be
transferred whenever needed to meet the current requirements of the Bond Account and Reserve Account
set forth in Sections 5.03 and 5.04.
4.05. Bond Anticipation Notes. When and if the City has established that all of the conditions
precedent to the issuance of a series of Additional Bonds have been satisfied (assuming a specified
principal amount, maturity schedule and interest rate to be borne by such Additional Bonds), the City
may, after authorizing the issuance of such series of Additional Bonds but in lieu of issuing such series of
Additional Bonds, issue a series of special, limited Notes, denominated as "Bond Anticipation Notes,"
which shall have a Stated Maturity not more than three years from their date of original issue and which
shall be secured by a lien on the Tax Increment subordinate to all Outstanding Bonds except that at their
Stated Maturity they shall be paid as to principal and interest to the extent required from the proceeds of
the series of Additional Bonds in anticipation of which they were issued or, if for any reason the City has
been unable to sell and issue that series of Additional Bonds, then, at the option of the holders of such
Notes, Bonds of such series of Additional Bonds shall be issued to the Holders of the 2012 Note, in
exchange therefor, on a par -for par basis, without the necessity for meeting the other requirements of this
Section 4 in respect of such Additional Bonds.
Section 5. The Tax Increment Funds.
5.01. Bond Proceeds and Tax Increment Pledged and Appropriated. The City hereby establishes
on its books and records three funds designated as the Tax Increment Capital Project Fund, the Tax
Increment Debt Service Fund and the Tax Increment Development Fund (collectively, the "Tax Increment
Funds") related to any Bonds. The Tax Increment Funds shall be maintained as separate and special
bookkeeping accounts on the official books and records of the City until all Bonds have been fully paid,
or the City's obligation with reference to all Bonds has been discharged as provided in this Resolution.
All proceeds of Bonds and all other funds hereafter received or appropriated for purposes of the Projects
are appropriated to the Tax Increment Funds. All Tax Increment is irrevocably pledged and appropriated
and shall be credited as received to the General Tax Increment Development Fund. The Bonds shall be
secured by a first pledge of and lien on all of the Tax Increment and of all other moneys from time to time
in the Tax Increment Funds in the manner and to the extent provided in this Section 5. The City shall not
issue any obligation or security superior to or on a parity with the 2012 Note, payable or secured, in
whole or in part, from or by the Tax Increment other than Additional Bonds issued pursuant to Section 4,
until the 2012 Note has been paid or discharged as provided herein. The Tax Increment Funds shall be
subdivided into separate accounts as designated and described in Sections 5.03 to 5.06. In the event that
there are not sufficient amounts in the Tax Increment Debt Service Fund for the payment of the Bonds on
any Interest Payment Date or Principal Payment Date, then the City shall transfer such funds from the
following funds (in the following order): (i) the General Tax Increment Development Fund, and then the
(ii) the Tax Increment Capital Project Fund.
5.02. Tax Increment Receipts. All Tax Increment received by the City shall be credited to the
General Tax Increment Development Fund and disbursed in the order as set forth below:
(a) one each Interest Payment Date the amount required to pay the interest due on
the 2012 Note the next Interest Payment Date and on each Principal Payment Date the amount
required to pay the required mandatory sinking fund redemption amount on the next Principal
16
Payment Date (for the July 1, 2012 Interest Payment Date, the City shall transfer the payment
amount on the date of issuance on or before April 1, 2012);
(b) five (5) days prior to each Interest Payment Date or Principal Payment Date
required to pay the principal of and interest due on the 2012 Note on such Interest Payment Date
or Principal Payment Date if the amount in the Debt Service Account is not sufficient for such
payment;
(c) to be transferred to the Tax Increment Capital Project Fund and any Construction
Account therein to pay costs authorized to be paid therefrom;
(d) to make arbitrage rebate payments owing in respect of Bonds under
Section 148(f) of the Code;
(e) to pay costs incurred in connection with Projects (whether or not such Projects
are funded with proceeds of Bonds) within the Urban Renewal Area as authorized by the Act and
approved by the Council;
(f) to pay to the City any administrative charges for the administration of the
District;
(g) to purchase Bonds on the open market;
(h) to pay, redeem or otherwise secure the payment of any Subordinate Obligations;
and
(i) to the to pay to Taxing Bodies a portion of the annual Tax Increment received by
the City pursuant to an agreement authorized by the Act; provided that the City may remit to
Taxing Bodies pursuant to such an agreement only from Tax Increment received in the fiscal year
and on hand in the Tax Increment Development Fund, only if, on the date of remittance, the
funding requirements of the Debt Service Account have been satisfied, and only to the extent that
the balance on deposit in the Tax Increment Development Fund, after such remittance, is not less
than 50% of the principal of and interest payable on Outstanding Bonds in the Fiscal Year such
Tax Increment is received; and provided, further, that if the Constitution or laws of the State of
Montana are amended to abolish or substantially reduce or eliminate real property taxation, and
so long as replacement revenues are not available to pay principal of and interest on the Bonds in
accordance with the provisions of Section 6.13, money in the Tax Increment Development Fund
is to be used, so long as any Bonds are Outstanding, solely for the payment of principal of,
interest or premium, if any, on Outstanding Bonds, whether at their Stated Maturities, on a
Redemption Date or otherwise, or to purchase Outstanding Bonds on the open market. Provided,
however that no transfer to a Taxing Body shall be made if it causes the City to violate the
provisions of Section 6.13 below.
5.03. Tax Increment Development Fund. There shall be credited to the General Tax Increment
Development Fund any and all Tax Increment received from the District, subject to the creation of any
other accounts and the appropriation of Tax Increment to the funds and accounts established herein as
described in Section 5.02 above. Any investment income and other moneys in any of the accounts within
the Tax Increment Funds in excess of the requirements of said accounts and which the City determines in
its discretion to transfer to the Tax Increment Development Fund.
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5.04. Construction Account. Within the Tax Increment Capital Project Fund, for each Project
there shall be a separate Construction Account, to be used only to pay allowed costs as incurred, which
under accepted accounting principles are costs of the particular Project, including but not limited to
payments due for work and materials performed and delivered under construction contracts, architectural,
engineering, inspection, supervision, fiscal and legal expenses, the cost of lands and easements, and other
interests in land, interest accruing on Bonds during the period of construction of a Project financed
thereby and for a period of time thereafter authorized by the Act and deemed necessary by the Council, if
and to the extent that the Debt Service Account is not sufficient for payment of such interest,
reimbursement of any advances made from other City funds, and all other expenses incurred in
connection with the acquisition, construction and financing of the Project. To the Construction Account
shall be credited as received all proceeds of Bonds issued to finance such Project, except amounts
otherwise appropriated in herein or in a Supplemental Resolution or received from Additional Bonds
issued to refund Outstanding Bonds pursuant to Section 4 and all other funds appropriated by the City for
the Project, and all income received from the investment of the Construction Account. Upon completion
of any Project and payment of the cost thereof, the City may transfer any money then remaining in the
Construction Account for that Project, if permitted by the Act and if such transfer will not adversely affect
the tax exemption of interest on the series of Bonds that financed the Project, to the Tax Increment
Development Fund. Money in the Construction Account shall be transferred as needed to the Debt
Service Account to pay interest on Bonds payable therefrom to the extent moneys therein are insufficient.
5.05. Debt Service Account.
(a) General. The Debt Service Account is hereby established as a special account within the
Tax Increment Debt Service Fund. Money in the Debt Service Account shall be used only for (i) payment
of the principal of and interest on the 2012 Note as such payments become due or (ii) to redeem Bonds.
(b) Deposits to Debt Service Account. There shall be deposied to the Debt Service Account the
following amounts: (i) the amount specified in clause (a) of Section 3.09; (ii) any amount specified in
any Supplemental Resolution to be credited to the Debt Service Account; and (iii) from the Tax Increment
as received by the City, the amount specified in Section 5.02. Interest income on money in the Debt
Service Fund shall be retained therein and used as any other funds therein. Any installment of a special
assessment paid prior to its due date with interest accrued thereon to the next succeeding Payment Date
shall be credited with respect to principal and interest payments in the same manner as other special
assessments are credited to District Fund. All money in the Debt Service Fund shall be used first to pay
interest due, and any remaining money shall be used to pay Bonds then due and, if money is available, to
redeem Bonds; provided that any money transferred to the Debt Service Account from the Construction
Fund shall be applied to redeem Bonds to the extent possible on the next Interest Payment Date for which
notice of redemption may properly be given.
If on any Interest Payment Date or Principal Payment Date the balance in the Debt Service
Account is not sufficient to pay the total amount of interest due on such Interest Payment Date or
Principal Payment Date, as applicable, the City shall transfer any money then on hand in the Tax
Increment Development Fund, the Construction Account, or the Tax Increment Capital Project Fund
Account, in the order listed and in an amount equal to such deficiency, to the Debt Service Account.
All income derived from the investment of amounts in the Debt Service Account shall be credited
as received to the Debt Service Account.
5.06. Investments. The Finance Director shall cause all moneys from time to time in the Tax
Increment Funds to be deposited as received with one or more depository banks duly qualified in
accordance with the provisions of Montana Code Annotated, Section 7-6-201, as amended, and shall
18
cause the balances in such accounts, except any part thereof covered by federal deposit insurance, to be
secured by the pledge of bonds or securities of the kinds required by law, and no money shall at any time
be withdrawn from such deposit accounts except for the purposes of the Tax Increment Funds as defined
and authorized by this Resolution. The funds to the credit of the several accounts within the Tax
Increment Funds may be commingled in one or more deposit accounts. The balance on hand in any of the
accounts of the Tax Increment Funds may at any time be invested and reinvested in Qualified Investments
as provided below, maturing and bearing interest payable at the times and in the amounts estimated to be
required to provide cash when needed for the purposes of the respective accounts; provided that the
Reserve Account and Tax Increment Development Fund shall be invested in Qualified Investments
maturing not later than five years from the date of investment. Income from the investment of the
moneys in the various accounts shall be credited thereto. Subject to the provisions of law now or
hereafter controlling investment of such funds, money on hand in any of the accounts of the Tax
Increment Funds may be invested in any of the following Qualified Investments, but no others:
(a) direct obligations of or obligations guaranteed by the United States of America;
(b) bank time deposits or certificates of deposit secured by obligations and securities
described in clause (a) above; and
(c) the Montana short-term investment pool (STIP) administered by the Board of
Investments of the State of Montana or any similar pool hereafter created for the investment of
public funds.
Section 6. Other Covenants of City.
6.01. Punctual Payment. The City will punctually pay or cause to be paid the principal and
interest to become due in respect to all the Bonds, in strict conformity with the terms of the Bonds and of
this Resolution, and it will faithfully observe and perform all of the conditions, covenants and
requirements of this Resolution and all Supplemental Resolutions and of the Bonds. Nothing herein
contained shall prevent the City from making advances of its own moneys however derived to any of the
uses or purposes referred to herein, nor shall be deemed or constitute a pledge or appropriation of funds or
assets of the City other than those expressly pledged or appropriated hereby.
6.02. Accumulation of Claims of Interest. In order to prevent any accumulation of claims for
interest after maturity, the City will not, directly or indirectly, extend or consent to the extension of the
time for the payment of any claim for interest on any of the Bonds and will not, directly or indirectly, be a
parry to or approve any such arrangements by purchasing or funding said claims for interest or in any
other manner. In case any such claim for interest shall be extended or funded, whether or not with the
consent of the City, such interest so extended or funded shall not be entitled, in case of default hereunder,
to the benefits of this Resolution, except subject to the prior payment in full of the principal of all of the
Bonds then outstanding and of all claims for interest which shall not have been so extended or funded.
6.03. Against Encumbrances. The City will not encumber, pledge or place any charge or lien
upon any of the Tax Increment superior to or on a parity with the pledge and lien herein created for the
benefit of the Bonds.
6.04. Management and Operation of Properties. The City will manage and operate or cause to be
managed and operated all Projects owned by the City in a sound and businesslike manner, and will keep
such Projects insured at all times in conformity with sound business practice.
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6.05. Books and Accounts; Financial Statements. The City will keep, or cause to be kept, proper
books of record and accounts, separate from all other records and accounts of the City, in which complete
and correct entries shall be made of all transactions relating to the Projects, Tax Increment and the Tax
Increment Funds. Such books of record and accounts shall be at all time during business hours subject to
the inspection of the Owners of not less than ten percent (10%) of the principal amount of the Bonds then
Outstanding, or their representatives authorized in writing.
The City will prepare and file with the Finance Director annually, within one hundred eighty
(180) days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete
financial statements with respect to the preceding Fiscal Year showing (1) the actual taxable value, the
base taxable value and the incremental taxable value (each as defined in the Act) of the Urban Renewal
Area; (2) the mill rates of all Taxing Bodies; (3) the Tax Increment, including a breakdown of Tax
Increment attributable to current and delinquent property tax collections; (4) all disbursements from the
Tax Increment Funds; (5) the financial conditions of the Projects; and (6) the balances in the Tax
Increment Funds and accounts therein as of the end of each such Fiscal Year, which statements shall be
accompanied by a certificate or opinion in writing of an Independent Accountant.
6.06. Completion of Projects. The City will commence, and will continue to completion, with all
practicable dispatch all Projects undertaken in the Urban Renewal Area in conformity with the Urban
Renewal Plan and the Act.
6.07. Further Assurances. The City will adopt, make, execute and deliver any and all such
further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the
intention or to facilitate the performance of this Resolution, and for the better assuring and confirming
unto the Owners of the Bonds of the rights and benefits provided in this Resolution.
6.08. Amendment of Plan or Ordinance. Except to authorize additional Projects, the City will
not amend or modify the Plan or the Ordinance or reduce the size of the Urban Renewal Area if an effect
thereof will be to materially and adversely affect the security of the Outstanding Bonds; provided,
however, the City may reduce the size of the Urban Renewal Area if a report as provided in Section 6.08
is received from the Financial Consultant regarding the reduction in size of the Urban Renewal Area.
6.09. Adjustment of Tax Incremental Base. The City shall not adjust the tax incremental base of
the Urban Renewal Area pursuant to Section 7-15-4287 of the Act so long as any Bonds are Outstanding,
if the effect would be to reduce the base.
6.10. Federal Tax Exemption. The City will not use the proceeds of any Bonds or use or permit
the use of any Project financed from the proceeds of the Bonds or revenues derived therefrom in such a
way as to cause the exemption from federal income taxation of interest on any Bonds to become
adversely affected.
6.11. Pledge of Replacement Revenues. In the event the Constitution or laws of the State of
Montana are amended to abolish or substantially reduce or eliminate real or personal property taxation
and State law then or thereafter provides to the City an alternate or supplemental source or sources of
revenue specifically to replace or supplement reduced or eliminated Tax Increment, then the City pledges,
and covenants to appropriate annually, subject to the limitations of then applicable law, to the Bond Fund
from such alternate or supplemental revenues an amount that will, with money on hand in the Bond Fund
or available and to be transferred to the Bond Fund during such Fiscal Year, be sufficient to pay the
principal of, premium, if any, and interest on the Outstanding Bonds payable in that Fiscal Year.
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6.12. Bondowner Rights. No Owner of any Bond issued and secured under the provisions of this
Resolution shall have the right to institute any proceeding, judicial or otherwise, for the enforcement of
the covenants herein contained, without the written concurrence of the Owners of not less than 25% in
aggregate principal amount of all Bonds which are at the time Outstanding; but the Owners of this amount
of such Bonds may, either at law or in equity, by suit, action or other proceedings, protect and enforce the
rights of all Owners of such Bonds and compel the performance of any and all of the covenants required
herein to be performed by the City and its officers and employees. The Owner of a majority in principal
amount of such Outstanding Bonds shall have the right to direct the time, method and place of conducting
any proceedings for any remedy available to the Owners or the exercise of any power conferred on them,
and the right to waive a default in the performance of any such covenant, and its consequences, except a
default in the payment of the principal of or interest on any Bond when due. However, nothing herein
shall impair the absolute and unconditional right of the Owner of each Bond to receive payment of the
principal of and interest on such Bond as such principal and interest respectively become due, and to
institute suit for the enforcement of any such payment. In the Event of Default in any such payment, any
court having jurisdiction of the action may appoint a receiver to administer the Tax Increment Funds and
to collect and segregate and apply the Tax Increment and other revenues pledged thereto as provided by
this Resolution and the Act.
6.13. Negative Pledge. On each June 30, commencing June 30, 2012, the City shall have an
amount in the Tax Increment Funds that it equal to the Outstanding principal amount of the 2012 Note.
The City shall only be required to test the amount in the Tax Increment Funds on each June 30 and there
is no requirement on any date other than June 30 that the City maintain an amount equal to the
Outstanding principal amount of the 2012 Note in the Tax Increment Funds. For purposes of this test, the
City shall be able to combine the amounts on deposit in all the Tax Increment Funds, less amounts in the
Debt Service Account to be paid on Bonds on the next day (July 1) and any amounts in the Tax Increment
Capital Project Fund that are required to pay for Project costs that have already been incurred by the City.
Section 7. Supplemental Resolutions.
7.01. General. The City reserves the right to adopt Supplemental Resolutions to this Resolution
from time to time and at any time, for the purpose of curing any ambiguity or of curing, correcting or
supplementing any defective provision contained herein, or of making such provisions with regard to
matters or questions arising hereunder as the City may deem necessary or desirable and not inconsistent
with this Resolution, and which shall not adversely affect the interests of the Owners of Bonds issued
hereunder, or for the purpose of adding to the covenants and agreements herein contained, or to the Tax
Increment herein pledged, other covenants and agreements thereafter to be observed and additional
revenues or income thereafter appropriated to the Tax Increment Funds, or for the purpose of surrendering
any right or power herein reserved to or conferred upon the City, or for the purpose of authorizing the
creation and issuance of a series of Additional Bonds, as provided in and subject to the conditions and
requirements of Section 4. Any such Supplemental Resolution may be adopted by resolution, without the
consent of the Owner of any of the Bonds issued hereunder.
7.02. Consent of Bondowners. With the consent of the Owners of Outstanding Bonds as
provided in Section 7.03, the City may from time to time and at any time adopt a Supplemental
Resolution for the purpose of amending this Resolution by adding any provisions hereto or changing in
any manner or eliminating any of the provisions hereof or of any Supplemental Resolution, except that no
Supplemental Resolution shall be adopted at any time without the consent of the Owners of all
Outstanding Bonds affected thereby, if it would extend the time of payment of interest thereon, would
reduce the amount of the principal thereof or redemption premium thereon, would give to any Bond or
Bonds any privilege over any other Bond or Bonds (except for the privilege accorded Bonds over
Subordinate Bonds), would reduce the sources of Tax Increment or other revenues or income
21
appropriated to the Tax Increment Funds, or would reduce the percentage in principal amount of such
Bonds required to authorize or consent to any such Supplemental Resolution.
7.03. Notice. Notice of a Supplemental Resolution to be adopted pursuant to Section 7.02 shall
be mailed by first-class mail, postage prepaid, to the Owners of all Outstanding Bonds at their addresses
appearing in the Bond Register and shall become effective only upon the filing of written consents with
the Finance Director, signed by the Owners of not less than two-thirds (2/3) in principal amount of the
Bonds issued hereunder which are then Outstanding. Any written consent to the Supplemental Resolution
may be embodied in and evidenced by one or any number of concurrent written instruments of
substantially similar tenor signed by Owners in person or by agent duly appointed in writing, and shall
become effective when delivered to the Finance Director. Any consent by the Owner of any Bond shall
bind that Owner and every future Owner of the same Bond with respect to any Supplemental Resolution
adopted by the City pursuant to such consent; provided than any Owner may revoke his consent with
reference to any Bond by written notice received by the Finance Director before the Supplemental
Resolution has become effective. In the event that unrevoked consents of the Owners of the required
amount of Bonds have not been received by the Finance Director within one year after the publication of
notice of the Supplemental Resolution, the Supplemental Resolution and all consents theretofore received
shall be of no further force and effect.
7.04. Manner of Consent. Proof of the execution of any consent, or of a writing appointing any
agent to execute the same shall be sufficient for any purpose of this Resolution and shall be conclusive in
favor of the City if made in the manner provided in this Section 7.04. The fact and date of the execution
by any Person of any such consent or appointment may be proved by the affidavit of a witness of such
execution or by the certification of any notary public or other officer authorized by law to take
acknowledgment of deeds, certifying that the Person signing it acknowledged to him the execution
thereof The fact and date of execution of any such consent may also be proved in any other manner
which the City may deem sufficient; but the City may nevertheless, in its discretion, require further proof
in cases where it deems further proof desirable. The ownership of any registered Bonds shall be proved
by the Bond Register.
Section 8. Qualified Tax -Exempt Obligation.
In order to qualify the 2012 Note as a "qualified tax-exempt obligation" within the meaning of
Section 265(b)(3) of the Code, the City makes the following factual statements and representations:
(a) the 2012 Note is not a "private activity bond" as defined in Section 141 of the Code;
(b) the City designates the 2012 Note as a "qualified tax-exempt obligation" for
purposes of Section 265(b)(3) of the Code;
(c) not more than $10,000,000 of obligations issued by the City during calendar year
2012 have been designated for purposes of Section 265(b)(3) of the Code.
(d) not more than $10,000,000 of obligations issued by the City during calendar year
2012 have been designated for purposes of Section 265(b)(3) of the Code.
Section 9. Defeasance.
9.01. General. When the liability of the City on all Bonds issued under and secured by this
Resolution and all interest thereon has been discharged as provided in this section, all pledges, covenants
and other rights granted by this Resolution to the Owners of such Bonds shall cease.
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9.02. Maturity. The City may discharge its liability with reference to all Bonds and interest
thereon which are due on any date by depositing with the Paying Agent for such Bonds on or before the
date a sum sufficient for the payment thereof in full; or if any Bond or interest shall not be paid when due,
the City may nevertheless discharge its liability with reference thereto by depositing with the Paying
Agent a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit.
9.03. Redemption. The City may also discharge its liability with reference to any Bonds which
are called for redemption on any date in accordance with their terms, by depositing with the Paying Agent
on or before that date an amount equal to the principal, interest and redemption premium, if any, which
are then due thereon; provided that notice of such redemption has been duly given as provided in this
Resolution or a Supplemental Resolution.
9.04. Escrow. The City may also at any time discharge its liability with reference to any Bond
subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing
irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or securities
which are Government Obligations which are authorized by law to be so deposited, bearing interest
payable at such times and at such rates and maturing on such dates as shall be required to provide funds
sufficient to pay all principal and interest to become due on all such Bonds on or before the Stated
Maturities thereof or, if such Bonds are subject to redemption and the City has given the redemption
notice required therefor or given irrevocable instructions to give such notice and the funds provided will
also be sufficient to pay any applicable redemption premium, to an earlier Redemption Date.
Section 10. Tax Covenants.
10.01. Security for the 2012 Note. The City shall not enter into any lease, use or other agreement
with any non -governmental Person relating to the security for the payment of the 2012 Note which might
cause the 2012 Note to be considered "private activity bonds" or "private loan bonds" within the meaning
of Section 141 of the Code. No "impermissible agreement" as defined in Treasury Regulations,
Section 1.141-4(e)(4)(11), has been or will be entered into by the City in respect of the Tax Increment or
otherwise to secure the 2012 Note.
10.02. General Covenant. The City covenants and agrees with the owners from time to time of
the 2012 Note 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 2012 Note to become includable in gross income for federal
income tax purposes under the Code and applicable Treasury Regulations promulgated thereunder (the
"Regulations"), and covenants to take any and all actions within its powers to ensure that the interest on
the 2012 Note will not become includable in gross income for federal income tax purposes under the
Code and the Regulations.
10.03. Arbitrage Certification. The Mayor, City Manager and the Finance Director, being the
officers of the City charged with the responsibility for issuing the 2012 Note pursuant to this resolution,
are authorized and directed to execute and deliver to the Original Purchaser 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
2012 Note, it is reasonably expected that the proceeds of the 2012 Note will be used in a manner that
would not cause the 2012 Note to be "arbitrage bonds" within the meaning of Section 148 of the Code
and the Regulations.
10.04. Arbitrage Rebate. The City acknowledges that the 2012 Note is subject to the rebate
requirements of Section 148(f) of the Code. The City covenants and agrees to retain such records, make
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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
2012 Note from gross income for federal income tax purposes, unless the 2012 Note qualify for the
spending exceptions from the rebate requirement under Section 148(f)(4)(B) of the Code and the Treasury
Regulations and no "gross proceeds" of the 2012 Note (other than amounts constituting a "bona fide debt
service fund") arise during or after the expenditure of the sale proceeds thereof. In furtherance of the
foregoing, the Finance Director is hereby authorized and directed to execute a tax certificate, 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.
10.05. Information Reporting. The City shall file with the Secretary of the Treasury, not later
than April 15, 2012, a statement concerning the 2012 Note containing the information required by Section
149(e) of the Code.
Section 11. Continuing Disclosure.
11.01. Rule 15c2-12 Exempt. The 2012 Note is exempt from the provisions of Rule 15c2-12
promulgated by the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure (as in effect and interpreted from
time to time, the "Rule"). The original principal amount of the 2012 Note is less than $1,000,000 and the
2012 Note is not publicly offered.
11.02. Information To Be Disclosed. The City will provide to the Original Purchaser, either
directly or indirectly through an agent designated by the City, on or before 270 days after the end of each
fiscal year of the City, commencing with the fiscal year ending June 30, 2012, the following financial
information and operating data in respect of the City.
The City shall file with the Original Purchaser the audited financial statements for such fiscal
year, accompanied by the audit report and opinion of the accountant or government auditor relating
thereto, as permitted or required by the laws of the State of Montana, containing balance sheets as of the
end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the
fiscal year then ended, showing in comparative form such figures for the preceding fiscal year of the City,
prepared in accordance with generally accepted accounting principles promulgated by the Financial
Accounting Standards Board as modified in accordance with the governmental accounting standards
promulgated by the Governmental Accounting Standards Board or as otherwise provided under Montana
law, as in effect from time to time, or, if and to the extent such financial statements have not been
prepared in accordance with such generally accepted accounting principles for reasons beyond the
reasonable control of the City, noting the discrepancies therefrom and the effect thereof, and certified as
to accuracy and completeness in all material respects by the Finance Director; and
Notwithstanding the foregoing paragraph, if the audited financial statements are not available by
the date specified, the City shall provide on or before such date unaudited financial statements in the
format required for the audited financial statements as part of the Disclosure Information and, within 10
days after the receipt thereof, the City shall provide the audited financial statements.
Section 12. Repeal. All provisions of ordinances, resolutions and other actions and proceedings
of the City which are in any way inconsistent with the terms and provisions of this Resolution are
repealed, amended and rescinded to the full extent necessary to give full force and effect to the provisions
of this Resolution.
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Section 13. Effective Date. This Resolution shall be in full force and effect from and after its
final passage and approval according to law.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL, ON THE 5TH DAY OF MARCH, 2012.
ATTEST:
1
Theresa White
City Clerk
25
N• '
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL, MONTANA
TAX INCREMENT URBAN RENEWAL REVENUE NOTE
(WEST SIDE URBAN RENEWAL TAX INCREMENT DISTRICT)
SERIES 2012
Interest
Rate
Stated Maturity
Variable January 1, 2037
REGISTERED OWNER: ROCKY MOUNTAIN BANK
Date of
Original Issue
March 13, 2012
PRINCIPAL AMOUNT: FIVE HUNDRED THOUSAND DOLLARS AND NO/100
$500,000
FOR VALUE RECEIVED, THE CITY OF KALISPELL (the "City"), a duly organized and
validly existing municipal corporation located in Flathead County, Montana, acknowledges itself to be
specially indebted and hereby promises to pay to the registered owner specified above or registered
assigns, solely from the Tax Increment Debt Service Fund, the principal amount specified above on the
maturity date specified above, or, if this 2012 Note is redeemable as stated below, on an earlier date on
which it shall have been duly called for redemption, with interest thereon from the date of original issue
hereof, or such later date to which interest hereon has been paid or duly provided for, until the principal
amount is paid or until this 2012 Note, if redeemable, has been duly called for redemption, at the annual
interest rate specified above. Interest hereon is payable semiannually on January 1 and July 1 in each
year, commencing July 1, 2012, by check or draft drawn on the City Treasurer, as Bond Registrar,
Transfer Agent and Paying Agent, or its successor designated under the Resolution described herein (the
"Bond Registrar"). The principal of this 2012 Note is payable upon presentation and surrender hereof at
maturity or earlier redemption at the principal office of the Bond Registrar. Such principal and interest
are payable in lawful money of the United States of America.
This 2012 Note is one of a duly authorized issue of Bonds of the City designated as "Tax
Increment Urban Renewal Revenue and Refunding Bonds" (collectively, the "Bonds"), issued and to be
issued in one or more series under, and all equally and ratably secured by Resolution No. 5550, adopted
by the City Council March 5, 2012 (as amended or supplemented in accordance with the provisions
thereof, the Resolution), to which Resolution, copies of which are on file with the City, reference is
hereby made for a description of the nature and extent of the security, the respective rights thereunder of
the Owners of the 2012 Note and the City and the terms upon which the 2012 Note is to be issued and
delivered. As provided in the Resolution, the 2012 Note is issuable in series which may vary as in the
Resolution provided or permitted. This 2012 Note is a single term bond issued in the aggregate principal
amount of $500,000 (the "2012 Note"), all of like date of original issue and tenor except as to serial
number, denomination, date, interest rate, maturity date and redemption privilege. The 2012 Note is
issued by the City for the purpose of financing a portion of the cost of a portion of an urban renewal
26
project within the Kalispell Urban Renewal Area (the "Urban Renewal Area") of the City, thereby
assisting activities in the public interest and for the public welfare of the City.
Interest on the 2012 Note shall be calculated on the basis of a year of 360 days composed of
twelve 30-day months. The 2012 Note shall be interest at a variable rate equal to the Prime Rate as
published in the Wall Street Journal on each Interest Payment Date plus .75% (75 basis points). The
Interest Rate on the 2012 Note shall adjust on each Interest Payment Date. The interest rate of this 2012
Note from its date of issuance until the first Interest Payment Date of July 1, 2012 shall be 4.00%.
The 2012 Note is issued pursuant to and in full compliance with the Constitution and laws of the
State of Montana and the home rule charter of the City, particularly Montana Code Annotated, Title 7,
Chapter 15, Parts 42 and 43, as amended (the "Act"), and pursuant to the Resolution. The 2012 Note is
payable solely and equally and ratably from Tax Increment (as defined in the Resolution) received by the
City from the West Side Urban Renewal Tax Increment District. Tax Increment results from the
extension of ad valorem taxes levied by certain Taxing Bodies against the incremental taxable value of
properties within the Urban Renewal Area pursuant to the Act and includes payments in lieu of taxes and
any replacement revenues received from the City for the benefit of the District as reimbursements for lost
tax increment attributable to changes in rates of taxation on classes of property or any payments received
by the City designated as replacement revenues for lost tax revenues in the District. There is not any
reserve fund or account securing the repayment of the 2012 Note.
The 2012 Note is not a general or moral obligation of the City and the City's general credit
and taxing powers are not pledged to the payment of the 2012 Note or the interest thereon. The
2012 Note shall not constitute an indebtedness of the City within the meaning of any constitutional,
statutory or charter limitations. This 2012 Note is payable solely from Tax Increment generated in
the District.
The 2012 Note is subject to optional redemption on or after July 1, 2014 and any date thereafter,
at a redemption price equal to the principal amount thereof to be redeemed with interest accrued to the
date of redemption.
Notice of redemption will be mailed at least 30 days before the redemption date to the Bond
Registrar and to the registered owner of each 2012 Note to be redeemed; provided that any defect in or
failure to give such mailed notice shall not affect the validity of proceedings for the redemption of any
2012 Note not affected thereby. All 2012 Note or portions thereof so called for redemption will cease to
bear interest on the specified redemption date, provided funds for their redemption have been duly
deposited and, except for the purpose of payment, shall no longer be secured by the Resolution and shall
not be deemed Outstanding under the Resolution.
If provision is made for the payment of principal of and interest on this 2012 Note in accordance
with the Resolution, this 2012 Note shall no longer be deemed Outstanding under the Resolution, shall
cease to be entitled to the benefits of the Resolution, and shall thereafter be payable solely from the funds
provided for payment.
The Resolution permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the City and the Holder of the 2012 Note at any time with
the consent of the Holders of two-thirds in aggregate principal amount of the 2012 Note at the time
Outstanding (as defined in the Resolution) which are affected by such modifications. The Resolution also
contains provisions permitting Holder of the 2012 Note of all series at the time Outstanding, on behalf of
all the Holders of all Parity Bonds or all Bonds, to waive compliance by the City with certain provisions
of the Resolution and certain past defaults under the Resolution and their consequences. Any such
27
consent or waiver by the Holder of this 2012 Note shall be conclusive and binding upon such Holder and
on all future Holders of this 2012 Note and of any Bond issued in lieu hereof, whether or not notation of
such consent or waiver is made upon this 2012 Note.
The Holder of this 2012 Note shall have no right to enforce the provisions of the Resolution, or to
institute action to enforce the covenants therein or take any action with respect to a default under the
Resolution or to institute, appear in or defend any suit or other procedure with respect thereto except as
provided in the Resolution.
This 2012 Note is a negotiable investment security as provided in the Montana Uniform
Commercial Code. As provided in the Resolution and subject to certain limitations set forth therein, this
2012 Note is transferable upon the books of the City at the principal office of the Bond Registrar, by the
registered owner hereof in person or by his attorney duly authorized in writing, upon surrender hereof
together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the
registered owner or his attorney; and may also be surrendered in exchange for 2012 Note of other
authorized denominations. Upon such transfer or exchange, the City will cause a new 2012 Note or
Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal
amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any
tax, fee or governmental charge required to be paid with respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this 2012 Note is
registered as the absolute owner hereof, whether this 2012 Note is overdue or not, for the purpose of
receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be affected
by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all acts,
conditions and things required by the Constitution and laws of the State of Montana and the home rule
charter and ordinances and resolutions of the City to be done, to exist, to happen and to be performed in
order to make this 2012 Note a valid and binding special, limited obligation of the City in accordance
with its terms have been done, do exist, have happened and have been performed as so required; that this
2012 Note has been issued by the City in connection with urban renewal projects (as defined in the Act);
that the City, in and by the Resolution has validly made and entered into covenants and agreements with
and for the benefit of the holders from time to time of all Bonds issued thereunder including covenants
that it will pledge, appropriate and credit the Tax Increment derived from the Urban Renewal Area (the
District) to the Tax Increment Debt Service Fund of the City; that additional bonds and refunding bonds
may be issued and made payable from the Tax Increment Debt Service Fund on a parity with the
2012 Note upon certain conditions set forth in the Resolution, but no obligation will be otherwise incurred
and made payable from the Tax Increment unless the lien thereof shall be expressly made subordinate to
the lien on the Tax Increment of the 2012 Note; that all provisions for the security of the Holders of the
2012 Note as set forth in the Resolution will be punctually and faithfully performed as therein stipulated;
that the issuance of the 2012 Note does not cause the indebtedness of the City to exceed any
constitutional, statutory or charter limitation; and that the opinion attached hereto is a true copy of the
legal opinion given by Bond Counsel with reference to the 2012 Note, dated the date of original issuance
and delivery of the 2012 Note.
This 2012 Note shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Resolution until the Certificate of Authentication hereon shall have been
executed by the Bond Registrar by the manual signature of one of its authorized representatives.
28
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
has caused this 2012 Note to be executed by the facsimile signatures of the Mayor, the Acting City
Manager and the City Clerk.
Dated: March 13, 2012
CITY OF KALISPELL, MONTANA
(Facsimile Signature)
Mayor
(Facsimile Signature)
Acting City Manager
(Facsimile Signature)
City Clerk
CERTIFICATE OF AUTHENTICATION
This is one of the Tax Increment Urban Renewal Revenue and Refunding Bonds, Series 2009,
delivered pursuant to the Resolution mentioned within.
CITY OF KALISPELL, MONTANA
as Bond Registrar, Transfer Agent
and Paying Agent
City Treasurer
The following abbreviations, when used in the inscription on the face of this 2012 Note, shall be
construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants in
common
TEN ENT -- as tenants by
the entireties
JT TEN -- as joint tenants with
right of survivorship
and not as tenants in
common
UNIF GIFT MIN ACT Custodian
under Uniform Gifts or
Transfers to Minors
Act
(State)
(Lust) (minor)
Additional abbreviations may also be used.
29
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within 2012 Note and all rights thereunder, and
does hereby irrevocably constitute and appoint attorney to transfer the
said 2012 Note on the books kept for registration of the within 2012A Note, with full power of
substitution in the premises.
Dated
Notice: The assignor's signature to this assignment must correspond with the name as it
appears upon the face of the within 2012 Note in every particular, without
alteration or any change whatever.
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities
Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP"), the
New York Stock Exchange, Inc. Medallion Signatures Program ("MSP") or other such "signature
guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STEMP,
SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended.
The Bond Registrar will not effect transfer of this 2012A Note unless the information concerning
the assignee requested below is provided.
Name and Address:
(Include information for all joint owners if this
2012 Note is held by joint account.)
Please insert social security or other identifying
number of assignee
398131v7 (BWJ)
KA225-14
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