4. Resolution 5566 - Refinancing General Obligation BondsFROM: Amy Robertson, Finance Director
Charles Harball, Interim City Manager
SUBJECT: G. O. Bond Refinancing
MEETING DATE: June 18, 2012
BACKGROUND: Due to drops in interest rates, the City found it advantageous to
refund the 2002 G. O. Bond for the Pool and the 2005 G. O. Bond
for the North Fire Station. The sale was completed June 121h with
closing scheduled for June 28th. The term of the bonds remains the
same. Please find attached the Summary Information sheet.
RECOMMENDATION: Adopt the Bond Resolution
FISCAL IMPACT: Total Debt savings of $565,413.91 over the course of the
remaining 10 years. The reduction in debt service averages
$56,541 per year. This will allow a reduction in mills levied for
the remaining term of the bonds.
w� 9
Amy H. Robertson
Finance Director
Report compiled: June 13, 2012
Charles Harba
Interim City Manager
I'VIVelfinancing of of Kalispell's
Outstanding General Obligation Bonds
ftesults in Significantfor i; , '
On Wednesday, June 13, the City of Kalispell successfully completed the refinancing
of its outstanding General Obligation Bonds that were issued in 2002 and 2005 to
take advantage of low historic interest rates.
The total overall debt service savings was $ 565 413.91 . This reduction in
debt service averages approximately $�56,541.39 in each of the remaining ten
years until the Bonds are paid.
The true interest cost rate of the new refunding Bonds is 1.59 %, which is a
significant reduction in rates from the two outstanding bonds which averaged 4.46%.
Yields to investors ranged from _.038 % in the first maturity in 2013 to
2.10 % in the final maturity in 2022. The Bonds were offered locally to
individual and institutional investors through D.A. Davidson & Co.
The 2002 and 2005 General Obligation Bonds that are being refinanced were
originally issued to construct the new swimming pool and skate park and the North
Fire Sub -Station.
As a part of the financing process, the City of Kalispell received an "A+" credit rating
with a stable outlook from Standard & Poor's rating service. The Standard & Poor's
report specifically indicates the favorable rating is due to the City's:
® Access to an area economy that serves as a regional trade center with access to
multiple resort areas;
® Continued property tax base growth with assessed value growth averaging 3.5%
annually since fiscal 2008;
® Improved finances, coupled with a separate health levy that supports the city's
health insurance costs; and
® Low debt burden.
City taxpayers will experience lower debt service levies commencing with fiscal year
2012/13, which begins with taxes due on November 30, 2012.
June 13, 2012
Bond Summary Information
BE IT RESOLVED By the City Council (the "City Council") of the City of Kalispell, Montana
(the "City"), as follows:
WHEREAS, the City previously issued its previously issued its (i) General Obligation Bonds,
Series 2002 (the "Series 2002 Bonds"), in the original aggregate principal amount of $3,675,000 and
(ii) General Obligation Bonds, Series 2005 (the "Series 2005 Bonds" and together with the Series 2002
Bonds, the "Prior Bonds"), in the original aggregate principal amount of $3,000,000; and
WHEREAS, the Series 2002 Bonds were issued pursuant to the approval of the electors of the
City given at the regular election held on November 6, 2001, and pursuant to a resolution adopted by the
City Council on March 4, 2002; and
WHEREAS, the Series 2005 Bonds were issued pursuant to the approval of the electors of the
City given at the regular election held on November 4, 2004, and pursuant to a resolution adopted by the
City Council on April 4, 2005; and
WHEREAS, the proceeds of the Series 2002 Bonds were used by the City to (i) finance the costs
of constructing a recreational facility including a swimming pool, bathhouse, concessions, skate park and
related site development and improvements, and (ii) pay costs of issuance of the Series 2002 Bonds; and
WHEREAS, the proceeds of the Series 2005 Bonds were used by the City to (i) finance the
design, construction and equipping of the North Fire Sub -Station, and (ii) pay costs of issuance of the
2005 Bonds; and
WHEREAS, the July 1, 2013 through July 1, 2022 maturities of the Series 2002 Bonds are
callable on or after July 1, 2012 for redemption without a premium and the July 1, 2013 through July 1,
2020 maturities of the Series 2005 Bonds are callable for redemption without a premium on January 1,
2013; and
WHEREAS, at its meeting on May 7, 2012, the City Council delegated to an award committee
consisting of the Mayor, City Attorney/Interim City Manager, and the City Finance Director (the "Award
Committee") the authority to determine the maturity dates, principal amounts of the stated maturities of
the Bonds, mandatory redemption provisions with respect to the Bonds, and such other terms of the
Bonds within certain parameters; and
WHEREAS, on June 13, 2012, the Award Committee agreed to the terms of the Bonds with D.A.
Davidson & Co. (the "Purchaser") and executed a bond purchase agreement with the Purchaser consistent
with the parameters previously set forth by this City Council.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Kalispell, Montana,
as follows:
Section 1. Sale of Series 2012 General Obligation Bonds.
1.01. Authority. All acts, conditions and things required by the Constitution and laws of the
State of Montana, including Montana Code Annotated, Title 7, Chapter 7, Parts 42 and 43, as amended
(the "Act"), in order to make the Bonds valid and binding general obligations in accordance with their
terms and in accordance with the terms of this resolution have been done, do exist, have happened and
have been performed in regular and due form, time and manner as so required. The indebtedness to be
evidenced by the Bonds, together with all other general obligation indebtedness of the City, will not
exceed the limitations set forth in Section 7-7-4201 of the Act. The City has full power and authority to
issue the Bonds and refund the Prior Bonds. The Bonds shall be general obligations of the City to which
the City has pledged its full faith and credit and unlimited taxing power.
1.02. General Terms of the Bonds. The Bonds shall be dated as of their date of issuance, shall
be issued in denominations of $5,000 or any integral multiple thereof, and each series shall be numbered
from R-1 upwards in order of issuance. The Bonds shall be issued in the form and in accordance with the
terms set forth in this Resolution. The Mayor and the Interim City Manager are authorized to deliver the
Bonds, without cost to the Purchaser, within thirty (30) days from the date the Award Committee agreed
to the final terms of the Bonds. On the date of settlement for the Bonds, payment for the Bonds shall be
made in federal or equivalent funds that shall be received at the offices of the City or its designee not later
than 11:00 A.M., Mountain Standard Time. The maturity dates and the principal amounts of the stated
maturities of the Bonds, optional and mandatory redemption provisions with respect to the Bonds, and
such other terms of the Bonds shall be as set forth in a Certificate of Award Committee (the "Award
Certificate"). The Completed Award Certificate is attached to this resolution as Exhibit B.
1.03. Refunding Findings. It is hereby found and determined that the issuance of the Bonds
will result in a reduction of debt service cost to the City on the Prior Bonds, such that the present value of
such debt service or interest cost savings (the "Reduction') is 12.89 percent. The Reduction, after
inclusion of all authorized expenses of the refunding in the computation of the effective interest rate on
the Bonds is adequate to authorize the issuance of the Bonds as provided by Title 7, Chapter 7, Section
4304 of the Act.
1.04. Approval of the Bonds. The City Council hereby confirms and ratifies the maturity dates,
principal amounts of the stated maturities of the Bonds, mandatory redemption provisions with respect to
the Bonds as set by the Award Committee. The terms of the Award Certificate are hereby deemed to be
incorporated by reference into this Resolution.
Section 2. Registration and Payment.
2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest
thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft
issued by the Registrar described herein.
2.02. Dates; Interest Payment Dates. Unless otherwise provided in the Award Certificate, each
Bond shall be dated as of the last interest payment date preceding the date of authentication to which
interest on the Bonds has been paid or made available for payment, unless: (i) the date of authentication is
an interest payment date to which interest has been paid or made available for payment, in which case the
Bonds will be dated as of the date of authentication; or (ii) the date of authentication is prior to the first
interest payment date, in which case the Bonds will be dated as of the date of original issue. The Bonds
shall bear interest at the rates per annum as indicated on the Award Certificate and shall be payable on
each June 1 and July 1, commencing on January 1, 2013, computed on the basis of a 360-day year of
twelve thirty -day months. The interest on the Bonds is payable to the registered owners of record thereof
as of the close of business on the fifteenth (15th) day of the immediately preceding month, whether or not
such day is a business day.
2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating agent and
paying agent (the "Registrar" and the "Paying Agent") for the Bonds. The effect of registration and the
rights and duties of the City and the Registrar with respect thereto are as follows:
(a) Register. The Registrar shall keep at its principal corporate trust office a bond
register in which the Registrar provides for the registration of ownership of the Bonds and the
registration of transfers and exchanges of the Bonds entitled to be registered, transferred or
exchanged.
(b) Transfer of Bonds. Upon surrender for transfer of a Bond 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 Bonds of a like aggregate principal amount
and maturity, as requested by the transferor. The Registrar may, however, close the books for
registration of any transfer after the fifteenth day of the month preceding each interest payment
date and until that interest payment date.
(c) Exchange of Bonds. When Bonds are surrendered by the registered owner for
exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate
principal amount and maturity as requested by the registered owner or the owner's attorney in
writing.
(d) Cancellation. Bonds surrendered upon transfer or exchange shall be promptly
cancelled by the Registrar and thereafter disposed of as directed by the City.
(e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar
for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the
endorsement on the Bond or separate instrument of transfer is valid and genuine and that the
requested 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 a Bond is registered in the bond register as the absolute owner of the Bond, whether
the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the
principal of and interest on the Bond and for all other purposes, and payments so made to a
registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge
the liability upon the Bond to the extent of the sum or sums so paid.
(g) Taxes, Fees and Charges. The Registrar may impose a charge upon the owner
thereof for a transfer or exchange of Bonds sufficient to reimburse the Registrar for any tax, fee
or other governmental charge required to be paid with respect to the transfer or exchange.
(h) Mutilated, Lost, Stolen or Destroyed Bond. If a Bond becomes mutilated or is
destroyed, stolen or lost, the Registrar shall deliver a new Bond of like amount, number, maturity
date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in
lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the
reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a
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Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the
Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the
Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it and
as provided by law, in which both the City and the Registrar must be named as obligees. Bonds
so surrendered to the Registrar shall be cancelled by the Registrar and evidence of such
cancellation shall be given to the City. If the mutilated, destroyed, stolen or lost Bond has already
matured or been called for redemption in accordance with its terms, it is not necessary to issue a
new Bond prior to payment.
2.04 Redemption. Bonds with stated maturities in the years 2013 through 2019 shall not be
subject to redemption prior to their stated maturities. The Bonds with stated maturities on or after July 1,
2020 will be subject to redemption on July 1, 2019, and any day thereafter, at the option of the City, in
whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest
accrued to the redemption date, without premium.
The City shall exercise its option to prepay the Bonds (and thereby cause a redemption of Bonds)
by giving written notice to the Registrar, not less than forty-five (45) days prior to the date selected for
redemption. Notice of redemption shall be mailed by the Registrar by first-class mail, postage prepaid, at
least thirty (30) days and no more than sixty (60) days before the redemption date to each Holder of the
Bonds to be redeemed in whole or in part at such Holder's last address appearing on the Register, but no
defect in or failure to give such notice of redemption shall affect the redemption of the validity of the
proceedings for the redemption of the Bonds. Failure to give notice by publication or by mail to any
registered owner, or any defect therein, shall not affect the validity of the proceedings for the redemption
of Bonds. Bonds so called for redemption shall cease to bear interest after the specified redemption date,
provided that the funds for the redemption are on deposit with the place of payment at that time.
2.05. Appointment of Initial Registrar. The City appoints U.S. Bank National Association,
Seattle, Washington, as the initial Registrar. The Mayor and the Interim City Manager are authorized to
execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of
the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized
by law to conduct such business, the resulting corporation is authorized to act as successor Registrar. The
City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The
City reserves the right to remove the Registrar upon thirty (30) days notice and upon the appointment of a
successor Registrar, in which event the predecessor Registrar shall deliver all cash and Bonds in its
possession to the successor Registrar and shall deliver the bond register to the successor Registrar. On or
before each principal or interest due date with respect to the Bonds, without further order of this City
Council, the Finance Director shall transmit to the Registrar money sufficient for the payment of all
principal and interest then due.
2.06. Execution, Authentication and Delivery. Each Bond shall be executed on behalf of the
City by the manual or facsimile signature of the Mayor, Interim City Manager, and 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. In the event that the Mayor, Interim
C!
City Manager, Finance Director or City Clerk is unable to sign any documentation required to issue the
Bonds, then the other duly appointed or elected officers of the City may sign such necessary certificates,
and instruments.
2.07. Temporary Bonds. The City may elect to deliver, in lieu of printed definitive Bonds, one
or more typewritten temporary Bonds in substantially the form set forth in Exhibit A with such changes as
may be necessary to reflect more than one maturity in a single temporary bond. Upon the execution and
delivery of definitive Bonds, the temporary Bonds shall be exchanged therefor and cancelled.
Section 3. Form of the Bonds.
3.01. Printing of Bonds. All of the provisions of the Bonds, when executed as authorized
herein, shall be deemed to be a part of this Resolution as fully and to the same extent as if incorporated
herein and shall be in full force and effect from the date of execution and delivery thereof. The Bonds
shall be substantially in the form attached to this Resolution as Exhibit A, which form is approved, with
such necessary and appropriate variations, omissions and insertions including changes to the terms of the
Bonds as provided in the Award Certificate described in Section 1.02 hereof). The execution of the
Bonds with the manual or facsimile signatures of the Mayor, Interim City Manager and City Clerk, or
their designee, and the delivery of the Bonds by the City shall be conclusive evidence of such
determination.
3.02. Approving Legal Opinion. The Interim City Manager is authorized and directed to obtain
a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, P.C., Minneapolis,
Minnesota, bond counsel to the City, which shall be complete except as to dating thereof and cause the
opinion to accompany each Bond.
Section 4. Payment; Security; Pledges and Covenants.
4.01. Bond Funds.
(a) Bonds Debt Service Fund. The Bonds shall be payable from the General Obligation
Bonds, Series 2012 Debt Service Fund (the "Bonds Debt Service Fund"), herein created, and the proceeds
of the ad valorem taxes hereinafter levied are pledged to the Bonds Debt Service Fund pursuant to this
Section. City funds sufficient to pay the debt service payment due on the Series 2005 Bonds on July 1,
2012 are hereby appropriated to the Bonds Debt Service Fund. Two subaccounts shall be created within
the Bonds Debt Service Fund as follows:
(1) Escrow Account. The Escrow Account will be maintained as an Escrow Account
(the "Escrow Account") with U.S Bank National Association in Seattle, Washington, which is a
suitable financial institution within the State, and said financial institution is hereby designated
escrow agent (the "Escrow Agent") for the Escrow Account. The City will deposit from proceeds of
the Bonds and the debt service accounts for the Prior Bonds the amount of $4,216,224.19. In
addition, the City may, in its discretion, deposit amounts in the Escrow Account to pay costs of
issuance for the Bonds or pay such costs outside of the Escrow Account. Amounts on deposit in the
Escrow Account will be used to fund the escrow for the redemption and prepayment of the Prior
Bonds. Any remaining Bond proceeds not required to fund the Escrow Account shall be deposited in
the Debt Service Account. The Escrow Account shall retain all investment earnings thereon. The
Escrow Account will be invested in securities maturing or callable at the option of the holder on such
dates and bearing interest at such rates as will be required to provide sufficient funds, together with
any cash or other funds retained in the Escrow Account to pay (i) on August 3, 2012 (the "Series
2002 Bonds Redemption Date") the principal amount of the 2013-2022 maturities of the Series 2002
Bonds plus accrued interest from July 1, 2012 through the Series 2002 Bonds Redemption Date and
(ii) on January 1, 2013 (the "Series 2005 Redemption Date") the principal amount of the 2013-2020
maturities of the Series 2005 Bonds plus accrued interest from July 1, 2012 through the Series 2005
Redemption Date. The Escrow Account will be irrevocably appropriated to the payment of the
principal of and interest on the Refunded Bonds until the proceeds of the Bonds therein are applied to
prepayment of the Refunded Bonds. The money in the Escrow Account will be used solely for the
purposes herein set forth and for no other purpose, except that any surplus in the Escrow Account
may be remitted to the City, all in accordance with the Escrow Agreement (hereafter defined) by and
between the City and the Escrow Agent. In the event that the Escrow Agent notifies the City that
there is any deficiency in the Escrow Account, then the City shall promptly deposit funds necessary
to cure such deficiency. Any money remitted to the City upon termination of the Escrow Agreement
will be deposited in the Debt Service Account.
(2) Debt Service Account. The Finance Director will timely deposit in the Debt
Service Account amounts appropriated under this Resolution and the taxes (the "Taxes") levied
or to be levied for hereunder for the Bonds, which Taxes are pledged to the Debt Service
Account. The Finance Director will also deposit any balance remitted to the City upon the
termination of the Escrow Account. If any payment of principal or interest on the Bonds
becomes due when there is not sufficient money in the Debt Service Account to pay the same, the
Finance Director will pay such principal or interest from the general fund of the City, and the
general fund will be reimbursed for those advances out of the proceeds of the Taxes levied by this
Resolution, when collected.
4.02. Information Reporting. The City shall, with assistance from bond counsel, file with the
Secretary of the Treasury, not later than August 15, 2012 a statement concerning the Bonds containing the
information required by Section 149(e) of the Code.
4.03. Pledge of Tax Levy. The full faith, credit and taxing powers of the City shall be and are
hereby irrevocably pledged to the payment of the Bonds and interest due thereon, and the City shall cause
taxes to be levied annually on all taxable property in the City sufficient to pay the interest on the Bonds when
it falls due and to pay and discharge the principal at maturity of each and all of the Bonds as they respectively
come due.
4.04. Cancellation of Prior Levy after Redemption Dates. It is hereby determined that upon the
deposit of proceeds of the Bonds in the Escrow Account that an irrevocable appropriation to the debt service
fund for the 2013-2022 maturities of the Series 2002 Bonds and 2013-2020 maturities of the Series 2005
Bonds will have been made and the Finance Director is hereby authorized and directed to cancel any and all
tax levies for taxes payable in fiscal year 2013 and thereafter made by the resolution authorizing and
approving the sale of the Prior Bonds.
4.05. Escrow Agreement. On or prior to the delivery of the Bonds, the Mayor, Interim City
Manager and Finance Director are hereby authorized and directed to execute on behalf of the City an escrow
agreement (the "Escrow Agreement") with the Escrow Agent in substantially the form now on file with the
Interim City Manager. All essential terms and conditions of the Escrow Agreement including payment by the
City of reasonable charges for the services of the Escrow Agent, are hereby approved and adopted and made
a part of this resolution, and the City covenants that it will promptly enforce all provisions thereof in the event
of default thereunder by the Escrow Agent.
4.06. Notice of Redemption. The Prior Bonds are callable is described in Section 4.01(a)(1) of
this resolution and will be redeemed and prepaid on the Series 2002 Redemption Date and the Series 2005
Redemption Date, respectively, in accordance with their terms and in accordance with the terms and
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conditions set forth in the forms of Notice of Call for Redemption attached to the Escrow Agreement. The
Registrar for the Prior Bonds is authorized and directed to send a copy of each Notice of Redemption to each
registered holder of the Prior Bonds.
Section 5. Authentication of Transcript.
5.01. Furnishing of Documents. The officers of the City are authorized and directed to prepare
and furnish to the Purchaser and to Kennedy & Graven, Chartered, P.C., as bond counsel to the City,
certified copies of proceedings and records of the City relating to the Bonds and to the financial condition
and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show
the facts within their knowledge or as shown by the books and records in their custody and under their
control, relating to the validity and marketability of the Bonds, and such instruments, including any
heretofore furnished, will be deemed representations of the City as to the facts stated therein.
5.02. Official Statement. The Mayor, Interim City Manager and Finance Director are
authorized and directed to examine and certify that they have examined the Preliminary Official
Statement and the final Official Statement to be prepared and circulated in connection with the issuance
and sale of the Bonds and will examine the final Official Statement (collectively, the "Official
Statement") and to certify that to the best of their knowledge and belief the Official Statement is a
complete and accurate representation of the facts and representations made therein as of the date of the
Official Statement.
Section 6. Tax Covenants.
6.01. Tax -Exempt Bonds. The City covenants and agrees with the holders from time to time of
the Bonds that it will not take or permit to be taken by any of its officers, employees, or agents any action
which would cause the interest on the Bonds to become includable in gross income for federal income tax
purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its
officers, employees or agents to take, all affirmative action within its power that may be necessary to
ensure that such interest will not become includable in gross income for federal income tax purposes
under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and
made applicable to the Bonds.
6.02. Compliance with Code. The City will comply with requirements necessary under the
Code to establish and maintain the exclusion from gross income of the interest on the Bonds under
Section 103 of the Code, including, without limitation, requirements relating to temporary periods for
investments and limitations on gross proceeds invested at a yield greater than the yield on the Bonds.
6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the
Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be
deemed to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the
Code.
6.04. Procedural Requirements. The City will use its best efforts to comply with any federal
procedural requirements which may apply in order to effectuate the designations made by this section.
6.05. Qualified Tax -Exempt Obligations. To the extent to qualify a portion of the Bonds as
"qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City makes the
following factual statements and representations:
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(a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code;
(b) the City designates the Bonds as "qualified tax-exempt obligations" for purposes of
Section 265(b)(3) of the Code;
(c) the reasonably anticipated amount of tax-exempt obligations (other than private
activity bonds that are not qualified 501(c)(3) bonds which will be issued by the City (and all
subordinate entities of the City) during calendar year 2012 will not exceed $10,000,000; and
(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 7. Book -Entry ystem; Limited Obligation of City.
7.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten or
printed fully registered Bond for each of the maturities set forth in the Award Certificate. Upon initial
issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in
the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its
successors and assigns ("DTC"). Except as provided in this Section, all of the outstanding Bonds will be
registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC.
7.02. Participants. With respect to Bonds registered in the registration books kept by the
Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent
will have no responsibility or obligation to any broker dealers, banks and other financial institutions from
time to time for which DTC holds Bonds as securities depository (the "Participants") or to any other
person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any
responsibility or obligation with respect to (i) the accuracy of the records of Cede & Co., DTC or any
Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any
other person (other than a registered owner of Bonds, as shown by the registration books kept by the
Registrar), of any notice with respect to the Bonds, including any notice of redemption, or (iii) the
payment to any Participant or any other person, other than a registered owner of Bonds, of any amount
with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the
Paying Agent may treat and consider the person in whose name each Bond is registered in the registration
books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of
principal, premium, if any, and interest with respect to such Bond, for the purpose of registering transfers
with respect to such Bond, and for all other purposes. The Paying Agent shall pay all principal of,
premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as
shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to
fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any,
or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner
of a Bond, as shown in the registration books kept by the Registrar, will receive a certificated Bond
evidencing the obligation of this Resolution. Upon delivery by DTC to the Interim City Manager of a
written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co.,
the words "Cede & Co." shall refer to such new nominee of DTC; and upon receipt of such a notice, the
Interim City Manager shall promptly deliver a copy of the same to the Registrar and Paying Agent.
7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket
Issuer Letter of Representations (the "Representation Letter") which shall govern payment of principal of,
premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or
Registrar subsequently appointed by the City with respect to the Bonds shall agree to take all action
necessary for all representations of the City in the Representation Letter with respect to the Registrar and
Paying Agent, respectively, to be complied with at all times.
7.04. Transfers Outside Book -Entry System. In the event the City, by resolution of the City
Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds
that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the
Participants, of the availability through DTC of Bond certificates. In such event the City will issue,
transfer and exchange Bond certificates as requested by DTC and any other registered owners in
accordance with the provisions of this Resolution. DTC may determine to discontinue providing its
services with respect to the Bonds at any time by giving notice to the City and discharging its
responsibilities with respect thereto under applicable law. In such event, if no successor securities
depository is appointed, the City shall issue and the Registrar shall authenticate Bond certificates in
accordance with this Resolution and the provisions hereof shall apply to the transfer, exchange and
method of payment thereof.
7.05. Payments to DTC. Notwithstanding any other provision of this Resolution to the
contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with
respect to principal of, premium, if any, and interest on the Bond and all notices with respect to the Bond
shall be made and given, respectively, in the manner provided in DTC's Operational Arrangements, as set
forth in the Representation Letter.
Section 8. Continuing Disclosure. The City covenants and agrees that it shall comply with and
carry out all of the provisions of the Continuing Disclosure Certificate, as defined below.
Notwithstanding any other provision of this Resolution, failure of the City to comply with the Continuing
Disclosure Certificate is not to be considered an event of default with respect to the Bonds, however, any
Bondholder may take such actions as may be necessary and appropriate, including seeking mandamus or
specific performance by court order, to cause the City to comply with its obligations under the Continuing
Disclosure Certificate. "Continuing Disclosure Certificate" means that certain Continuing Disclosure
Certificate executed by the Mayor, Interim City Manager, and Finance Director and dated the date of
issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in
accordance with the terms thereof.
Section 9. Defeasance. When all Bonds and all interest thereon have been discharged as provided in
this Section, all pledges, covenants and other rights granted by this Resolution to the holders of the Bonds
will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the
principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds
which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the
payment, including interest earned thereon, in full of the Bonds. If any Bond should not be paid when due, it
may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in
full with interest accrued to the date of such deposit.
0
MA
Interest Rate
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
GENERAL REFUNDING BONI,
SERIES 2012
Maturity Date
Date of Original
Issue CUSIP
July 1, 20_ June 28, 2012
Registered Owner: CEDE & CO.
Principal Amount:
DOLLARS
The City of Kalispell, Flathead County, State of Montana (the "City") acknowledges itself to be
indebted and for value received promises to pay to the Registered Owner specified above, or registered
assigns, the Principal Amount specified above, on the Maturity Date specified above, with interest
thereon from the date hereof at the annual rate specified above, payable June 1 and July 1 in each year,
commencing January 1, 2013, to the person in whose name this Bond is registered at the close of business
on the fifteenth (15th) day (whether or not a business day) of the immediately preceding month. The
interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful
money of the United States of America by check or draft by U.S. Bank National Association, Seattle,
Washington, as Registrar, Paying Agent, Transfer Agent, and Authenticating Agent, or its designated
successor under the Resolutions described herein. For the prompt and full payment of such principal and
interest as the same respectively become due, the full faith and credit and taxing powers of the City have
been and are hereby irrevocably pledged.
The City may elect on July 1, 2019, and on any date thereafter, to prepay the Bonds (hereinafter
defined) due on or after July 1, 2020 at a price of par plus accrued interest to the date of redemption.
This Bond is one of an issue of bonds designated by the City as General Obligation Bonds, Series
2012 (the "Bonds") in the original aggregate principal amount of $4,145,000, all of like original issue
date and tenor, except as to number, maturity date, redemption privilege, and interest rate, issued pursuant
to resolutions adopted by the City Council of the City on May 7, 2012 and June 18, 2012
(the "Resolutions"), for the purpose of providing money to aid in refinancing the July 1, 2013 through
July 1, 2022 maturities of the City's General Obligation Bonds, Series 2002 Bonds (the "Series 2002
Bonds") and the July 1, 2013 through July 1, 2020 maturities of the City's General Obligation Bonds,
Series 2005 (the "Series 2005 Bonds" and together with the Series 2002 Bonds, the "Prior Bonds")
pursuant to Montana Code Annotated, Title 7, Chapter 7, Parts 42 — 43, as amended (the "Act"), and the
A-1
principal hereof and interest hereon are payable from ad valorem taxes, as set forth in the Resolutions to
which reference is made for a full statement of rights and powers thereby conferred. The full faith and
credit of the City are irrevocably pledged for payment of this Bond and the City has obligated itself to
levy additional ad valorem taxes on all taxable property in the City within the limitations provided by law
in the event of any deficiency, which additional taxes may be levied without limitation as to rate or
amount. The Bonds are issued only as fully registered bonds in denominations of $5,000 or any integral
multiple thereof of single maturities. The interest on this Bond shall be calculated on the basis of a year
of 360 days and twelve 30-day months.
As provided in the Resolutions and subject to certain limitations set forth therein, this Bond is
transferable upon the books of the City at the principal office of the Registrar, by the registered owner
hereof in person or by the owner's attorney duly authorized in writing, upon surrender hereof together
with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner
or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized
denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in
the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at
the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental
charge required to be paid with respect to such transfer or exchange.
The City and the Registrar may deem and treat the person in whose name this Bond is registered
as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment
and for all other purposes, and neither the City nor the Registrar will be affected by any notice to the
contrary.
This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under
the Resolutions until the Certificate of Authentication hereon has been executed by the Registrar by
manual signature of one of its authorized representatives.
This Bond has been designated by the City as a "qualified tax-exempt" obligation pursuant to the
provisions of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Montana to be done, to exist,
to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid
and binding general obligation of the City in accordance with its terms, have been done, do exist, have
happened and have been performed as so required, and that the issuance of this Bond does not cause the
indebtedness of the City to exceed any constitutional or statutory limitation of indebtedness.
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IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
has caused this Bond to be executed by the facsimile signatures of the Mayor, the Interim City Manager
and the City Clerk.
Dated: June 28, 2012.
By:
Its:
Mayor
By:
Its: Interim City Manager
By:
Its: City Clerk
(The remainder of this page is intentionally left blank.)
A-3
This is one of the Bonds delivered pursuant to the Resolutions mentioned within.
LIZ
• . I
Authorized Representative
The following abbreviations, when used in the inscription on the face of this Bond, will 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 entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants in common
UNIF GIFT MIN ACT
Custodian
(Cust) (Minor)
under Uniform Gifts or Transfers to Minors
Act, State of
Additional abbreviations may also be used though not in the above list.
(The remainder of this page is intentionally left blank.)
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond and all rights thereunder, and does
hereby irrevocably constitute and appoint attorney to transfer the said
Bond on the books kept for registration of the within Bond, 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 Bond 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, STAMP,
SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended.
The Registrar will not affect transfer of this Bond unless the information concerning the assignee
requested below is provided.
Name and Address:
(Include information for all joint owners if this Series 2012
Bond is held by joint account.)
Please insert social security or other identifying number of assignee
(The remainder of this page is intentionally left blank.)
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The ownership of the principal of and interest on the within Bond has been registered on the
books of the Registrar in the name of the person last noted below.
Signature of Officer of the
Date of Registration Registered Owner Registrar
Cede & Co.
June 28, 2012 Federal ID #13-2555119
(The remainder of this page is intentionally left blank.)
WE
"AWMAM
DATED JUNE 13,2012
City of Kalispell, Montana
General Obligation Refunding Bonds
Series 2012
June 13, 2012
CERTIFICATE O11 AWARD CO TEE
The undersigned are the (i) Mayor of the City of Kalispell (the "City"), (ii) Interim City Manager,
and (iii) Finance Director of the City (collectively, the "Award Committee"). The undersigned members
of the Award Committee hereby certify in connection with the issuance and sale of the City of Kalispell
General Obligation Refunding Bonds, Series 2012 (the `Bonds"), to be issued in the original aggregate
principal amount of $4,145,000, as follows:
1. Authorization. Each of the undersigned are duly appointed and authorized by a
resolution adopted by the City Council of the City on May 7, 2012 (the "Parameters Resolution"), to act
as members of the Award Committee with respect to the Bonds. Such authority has not been revoked,
withdrawn, or otherwise modified.
2. Duties. Pursuant to Section 1.02 of the Parameters Resolution, the Award Committee has
been delegated the authority to negotiate the terms of the sale of the Bonds, with ratification of the final
terms by the City Council. The Bonds are to be awarded by the Award Committee, on behalf of the City;
provided that: (i) the purchase price of the Bonds shall not be less than 99.1% nor exceed 105% of the par
amount of the Bonds (plus accrued interest, if any to the date of issuance), (ii) the average coupon rate on
the Bonds shall not exceed 2.75% percent; (which would mean a reduction in average interest cost of at
least an estimated 1.75% with the refunding) provided that the original aggregate principal amount of
Bonds does not exceed $4200,000 and the Bonds do not have a final maturity later than July 1, 2022, and
(iii) the combined interest rate on the Bonds is more than one-half of one percent (0.5%) less than the
combined interest rate on the Prior Bonds as required by the Act and the net present value savings of debt
service on the Prior Bonds is greater than or equal to 5%.
3. Pricing and Terms. In accordance with applicable terms of the Bond Resolution, the
Award Committee has awarded the sale of the Bonds to D.A. Davidson & Co. (the "Purchaser") and has
agreed with the Purchaser to the following terms of the Bonds:
(a) the original aggregate principal amount of the Bonds is $4,145,000, which is less
than $4,200,000;
(b) the original purchase price of the Bonds is $4,160,459.20 or 100.3729% (the
principal amount of the Bonds $4,145,000, plus original issue premium in the amount of
$52,763.20 less Purchaser's discount of $37,305,00); which is not less than 99.10% nor greater
than 105% of the par amount of the Bonds;
(c) the true interest cost on the Bonds is 1,7235% per annum, which is less than
2.75% per annum and more than one half of one percent (0,5%) less than the interest rate on the
combined Prior Bonds;
(d) the net present value savings of debt service on the Prior Bonds is 12,89%, which
is greater than 5%;
(e) the final maturity of the Bonds is not later than July 1, 2022;
C
(f) the Bonds shall mature on July I of the Years and in the amounts, and shall bear
interest at the rates per annum set forth on the below:
Year Ending
Principal
(July 1)
Amount
Interest Rate
Price
Yield
2013
$445,000
1.00%
100.623%
0.380%
2014
445,000
1.00
100.957
0.520
2015
450,000
1.00
100.921
0.690
2016
455,900
1.50
102.476
0.870
2017
465,000
1.50
102.189
1.050
2018
470,000
1.50
101,268
1.280
2019
475,000
1.75
101.456
1.530
2020
485,000
2.00
101.774
1.730*
2021
225,000
2.00
100.325
1.950*
2022
230,000
2.00
99.101
2.100
*Priced to the optional redemption date ofhily 1, 2019.
4. Counterparts. This Certificate of the Award Committee may be signed in one or more
-
counterparts, each of which shall be an original and all of which shall constitute one instrument.
5. Bond Purchase Agreement. As authorized by the Bond Resolution, the undersigned
Mayor, Interim City Manager and Finance Director have executed and delivered a bond purchase
agreement with the Purchaser that incorporates the terms of this Award Committee Certificate.
(The remainder of this page is intentionally left blank.)
M.
WITNESS our hands officially as the Mayor, Interim City Manager and Finance Director,
respectively, to this AWARD COMMITTEE CERTIFICATE as of the date and year first listed above.
KA225-13 (BWJ)
403077v.2
By
Its; Mayor
By
Its: Interim
By
Its: Finance Di�ecto-r
(Issuer Signature Page to Award Committee Certificate for the Bonds)
NO