4. Resolution 5123 - SID 344 Bondsk_,ity of Kali'spell
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Post Office Box 1.9 T Kalls pell, Montana 59903 --1 7 - Telephone (406)758-71700 Fax406)7 5 8-775 8
REPORT TO
FROM:
SUBJECT:
MEETING DATE:
Mayor Kennedy and City Council
Amy Robertson, Finance Director
James ir- . Patrick, City Manager
SID 344 Bond — issue $4,520,000
June 19, 2006
BACKGROUND: City of Kalispell approved the construction of infrastructure
improvements to be paid for by the developers of the Old School
Station development. SID bonds were authorized and the bond
sale was approved at the special meeting June 13, 2006. Council
awarded the bid to D. A. Davidson. This Resolution sets the terns
and conditions of the bond issue. It includes bond reserve
requirements, audit requirements; ents; it provides information regarding
the construction account, debt service account, arbitrage exemption
and the form of the bonds themselves. This is the final resolution
related to this bond issue.
For more information on the SID 344 Bond you may refer to the
Official Statement. Copies are available in the Finance Office.
RECOMMENDATION: Adopt Resolution 5122, the final SID 344 bond resolution
FISCAL EFFECTS: $4,520,000 proceeds of bonds will be used for construction o
infrastructure. Costs for issuance and legal counsel will be paid
from the bond finds also. Bond closing is scheduled for June 2 " ,
2006.
ALTERNATIVES: As suggested by Council.
Amy H. Robertson
Finance Director City Manager
Report compiled: June 14, 26
RESOLUTION NO. 5123
RESOLUTION RELATING NG TO SPECS IMPROVEMENT IST ICT No. 344 BONDS,
SERIES 2 ; FIXING THE FORM AND DETAILS AND PROVIDING ,FOR THE EXECUTION
AND DELIVERY THEREOF AND SECURITY THEREFOR
BE IT RESOLVED by the City Council (the "City Council") of the City of Kalispell, Montana
(the "City", as follows:
Section 1.. Recitals. It is hereby found, determined and declared as follows:
1.01. Establishment of Special ImDrovement District No. 344.
(a) Intent Resolution, By Resolution No. 5063, adopted October 3, 2005 (the "Intent.
Resolution"'), this City Council declared its intention to create Special Improvement District
No. 344 (the "District".) for the purpose of making public improvements for the special benefit of
the District. The Intent Resolution designated the number- of the District, described the
boundaries thereof, stated the general character of the public improvements (the "Improvements"
to be made in the District and specially benefiting property located therein, and an estimate of the
costs thereof, in accordance with the provisions of Montana Code Annotated, Title 7, Chapter 12,
Parts 41 and 42, as amended (the "Act". Pursuant to the Intent Resolution, this City Council also
declared its intention to cause the cost and expense of making the Improvements to be assessed
against the properties included within the boundaries thereof in accordance with one or more
methods of assessment authorized in Sections -12- 1 1 to 7-12-4165 of the Act. Capitalized
terms used herein without definition shall have the meanings given them in the Intent Resolution.
In the Intent Resolution, this City Council further found that it is in the public interest,
and in the best interest of the City and the District, to i secure payment of principal of and
interest on. the Bonds by the Revolving Fund s defined herein) of the City, on the basis of the
factors required to be considered under Section 7-12-4225 of the Act, and ii establish a reserve
account (the "Reserve Account") securing the Bonds in the District Fund as defined herein).
Those prior findings are hereby ratified and confirmed. This City Council, in the Intent
Resolution, also declared its intention to reimburse the City for costs paid before issuance of the
Bonds, as required by Section 1.1.50-2 of the Income Tax Regulations promulgated under the
Internal .revenue Code of 1986, as amended (the "Code"").
(b) .Notices. The City gave notice of the passage of the Intent Resolution as required by
Montana law , including Section -1 - 10 (2) of the .Act and Montana Code Annotated, Section
-1- 121., by publication can October 18, 2005, October 25, 2005 and November- 1, 2005, in the
Daily biter Lake, a qualified newspaper of general circulation in the City and Flathead County.
.notice of the passage of the Intent Resolution was also wiled to all persons, firms or
corporations or the agents thereof owning real property within the District listed in their mares
upon the last completed assessment roll for state, county and school district taxes, at their last
known addresses. The notice of passage of the Intent Resolution, in accordance with the
Provisions thereof, stated the following: j the general character of the Improvements; ii the
estimated cost of the Improvements; iii the method or methods of assessment of such costs
against properties in the District; (1v) the time when and the place where the City Council would
hear and pass upon all protests made against the making of the Improvements or the creation of
the District v referred t.o the I to t :resolution as being o file in the office of the pity filer for
a description of the boundaries of the District; and (vi) included a statement that, subject to the
limitations of Section 7-12-4222 of the Act, the general fund of the City may be used to provide
loans to the .Devolving Fund or a general tax levy may be unposed on all taxable property in the
City to meet the financial requirements of the Revolving Fund.
(c) Formation of the District. At a regularly scheduled meeting on November 7, 2005,
this City Council met to hear, consider and pass upon all protests made against the making of the
Improvements and the creation of the District. After the public hearing and deliberation, this City
Council, pursuant to Resolution No. 5074, determined and declared that insufficient protests
against the creation of the District or the proposed work had been filed in the time and manner
provided by law by the owners of the property to be assessed for the Improvements in the
District. t. By Resolution No. 5074, in accordance with the Intent Resolution, this City Council
created the District and ordered the proposed Improvements. This City Council, in Resolution
No. 50,, also confirmed the find.inors it previously made in the Intent Resolution with respect to
the pledge of the Devolving Fund and the establishment of the Reserve Account. The boundaries
of the District have not been amended or altered since the passage of Resolution No. .5074.
1.02. Establishment of Tax Increment Districts Within the . istn*ct. Pursuant to pursuant to
Montana Code Annotated, Title 7., Chapter 15, part 42, as amended (the "'TIF Act""), the City has the
power to establish tax increment districts for various purposes, including, but not limited to the payment
of costs of the Improvements and pledging tax increment to the payment of special assessment bonds,
such as the hods as defined herein).
(a) The Industrial TIF District, By Resolution No. So o, adopted October 17, 200
(the "Industrial TIF Intent Resolution"), this City Council declared its intention to establish an
industrial tax increment district (the "Industrial istriet") at old School Station within the
District) and call for a public hearing on the establishment of the Industrial District. The
Industrial TIF Intent Resolution designated the name of the Industrial .district, described the
respective boundaries thereof, and stated the reasons for establishment of the Industrial District.
By the Industrial TIF Intent Resolution, this City Council also declared its intention to establish
the Industrial TIF District for the purpose of providing a financial mechanism to provide the
necessary infrastructure support to encourage the growth of secondary, value -adding industries in
the City. Pursuant to the Industrial TIF Intent Resolution, this City Council also preliminarily
made the findings required by Section -1-21 of the TIC' Act for the formation of an
industrial tax increment district such as the Industrial District.
(b) The Technology TIF District. By Resolution No. 5071, adopted October 17, 200
(the 6-Technology TIF Intent Resolution"'), this City Council declared its intention to establish a
technology tax increment district (the "Technology District'') at old School Station (within the
District) and call for a public hearing on the establishment of the Technology District, The
Technology TIF Intent Resolution designated the name of the Technology District, described the
boundaries thereof, and stated the Treasons for establishment of the Technology District. By the
Technolor TIC` Intent Resolution, this City Council also declared its intention to establish the
.Technology District for the purpose of assisting in financing necessary industrial infrastructure to
encourage the location and retention of technology development projects in the City. Pursuant t
the Technology TIF Intent Resolution, this City Council also preliminarily made the findings
required by Section 7- - 2 2 of the TIF Act for the formation of a technology tax increment
district such as the Industrial District,
(c) Public Hearings on the Creation of the Industrial District and the Technology
District. This pity council,, at its November 7, 2005 meeting, held public hearings with respect to
the creation of the Industrial District and the Technology District. Notices of the public hearings
with respect to both the Industrial District and the Technology District were published in the
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Daily Inter Lake, a qualified newspaper of general circulation in the county in which. the City is
located, on October 25, 2005 and November 1, 2005, as required by Montana law and the TIF
Act. The notices of public hearings for the Industrial District and the Technology District stated,
respectively, that the proposed ordinance for the creation of each tax increment district could be
obtained by contacting the City Clerk.
(d) Formation of Tax Inctement Districts. At a regularly scheduled meeting on
November 7, 2005, this City Council met and held public hearings with respect the formation of
both the Industrial District and the Technology District. After the public hearing and deliberation
with respect to the Industrial District, this City Council., pursuant to Ordinance No. 1.557,
established the Industrial District and set January 1., 2005 as the base taxable year for the
Industrial District. After the public hearing and deliberation with respect to the Technology
District, this City Council, pursuant to Ordinance No. 1, established the Technology District
and set January 1, 2005 as the base taxable year for the Technology District. In ordinance No.
15571, this City Council confirmed the preliminary findings established in the Industrial TIF Intent
Resolution with respect to the requirements of Section -1 - 29 ( of the TIC' Act. Pursuant to
Ordinance No. 1558, this City Council confirmed the preliminary findings established in the
Technology TIF Intent Resolution with respect to the requirements of Section -1_ - 2 2 of the
TIF ,Act. The boundaries of the Industrial 'CIF District and the Technology TIF .District,
respectively, have not been amended or altered since the passage of Ordinance Nos. 1557 and
1.
(e) Pledge.of Tax Increments to the Bonds Generally. The Technology District and the
.Industrial DjsLrict are both located Within the boundaries of the District. Pursuant to Section
1.-20 of the TIF Act, the City may pledge tax increment derived from an industrial tax
increment district (such as the Industrial District) or a technology tax increment district (such as
the Technology District) to the payment of special assessment bonds (such as the Bonds) issued
to pay industrial district and technology district costs described in Sections 7- -2 and 7-15-
4289 of the TIF Act. Pursuant to Section 7-15-4288 of the TIF Act, eligible costs to be paid by
the City with tax increments include public improvements (such as the Improvements)
authorized to be made pursuant to the SID Act. Certain tax increment revenues derived from the
Technology District and the Industrial District will be available, to the extent Provided herein,
for the payment of and pledged to the cost of the Improvements or paying on the Bonds as more
fully described herein in Section 3.03).
..3. Construction Contracts and Related Costs. Plans, specifications, maps, profiles and
surveys for construction of the Improvements were prepared by the engineers acting for the City, and
were thereupon examined and approved by this City Council. An advertisement for bids for construction
of the Improvements was published in the Daily Inter .fake, the official newspaper of the City, in
accordance with the provisions of Section -12 - f of the Act, after which the bids tberetof re received
were opened and examined. .after reviewing the bids in discussion with the engineers .for the City, it was
determined that the lowest regular proposal for the furnishing of work and materials required for
constructing the Impfovements in accordance with the approved plans and specifications was the
following:
Work Bidder Contract Price
Public Water Supply Improvements O'Keefe .Drilling, Butte, Montana 59 , 8-80
Infrastructure Improvements (streets, Schellinger Construction, Kalispell, Montana 2,175327180
curb, gutter and sidewalk, storm drain,
water, sewer and dry utilities)
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Contracts for the construction of the Improvements was therefore awarded to said bidders, subject to the
right of owners of property liable to be assessed for the costs thereof to elect to take the work and enter
into written contracts therefor in the manner provided by Section 7-1 - of the Act, which election the
property owners failed to make. Thereafter, the City and the successful bidders entered into written
contracts for construction of the Improvements upon the bidders having executed and filed bonds
satisfactory to this City Council and in the form and manner provided by Montana Code Annotated,
Title 1.8, Chapter 2, part 2, as amended.
In addition to the above contracts for construction, the construction and equipping of a water
treatment building forming a part of the Improvements will require work and materials of an independent
contractor, the total direct costs of which are estimated to be $500,000.
1.0. Costs. It is currently estimated that the total costs and expenses of the improvements are
$41,520,000 and that the costs and expenses to be assessed against properties benefited by the
Improvements, including costs of preparation of plans, specifications, naps, profiles, engineering
superintendence and inspection, preparation of assessment rolls, expenses of making the special
assessments, the cost of work and materials under the construction contract and all other costs and
expenses, including the deposits of proceeds in the Revolving Fund and in the Reserve Account in the
District Fund, are ,5 o,000. Such amount will he levied and assessed upon the assessable real property
► ithin the District on the basis described in the :intent Resolution, and the City will not contribute funds to
the construction of the Improvements, other than from proceeds of the Bonds.
This City Council has jurisdiction and is required by law to levy and assess $ , 20,000, together
with interest thereon, to collect such special assessments and credit the sane to the special improvement
district fund created for the District (the District Fund created pursuant to Section 3.01 hereof), which
fund is to be maintained on the official books and records of the City separate from all other City funds,
for the payment of principal and interest when due on the bonds herein authorized.
1.0. Sale and Issuance of Bonds. Advertisements for bids for the purchase of the Bonds were
published In accordance with the provisions of Sections - .2- o , 7-7-4252 of the Act and Montana
Code ,Annotated, Section 17- -106, as amended. After a public sale conducted .in accordance with
applicable statutory provisions and pursuant to Resolution No. 5120, adopted by the City Council on
June 131, 2006, this City Council authorized the City to enter into a purchase contract or bid form with
D.A. Davidson & Co., of Great Falls, Montana .he "purchaser"), as the lowest responsible bidder
(representing the lowest true interest cost (TIC)) pursuant to which the purchaser agreed to purchase .from
the City the Bonds at a purchase price of , 2 ,600.00, plus accrued interest, at the rates of interest and
prices set .forth in Section 2.01 hereof. The hid of the Purchaser represents a true interest cast of
4. 6155 8% and a total net dollar interest cost of $2,284,352.83.
1.06 Recitals, All acts, conditions and things required by the Constitution and laws of the State
of Montana, including the Act, as amended, in order to make the Bonds valid and binding special
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 forma time and manner as so
required.
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Section 2. Description of the Bonds.
.0.. crest ,dates. .for the purpose of
paying the costs, and expenses incurred in construction of the Improvements, and in anticipation of the
collection of special assessments to be levied therefor, and in accordance with the proposal described in
Section I..05, the City shall forthwith issue and sell the Fonds to the Purchaser. The Bonds are payable
solely from amounts deposited in Special Improvement District No. 344 Fund (the "District Fund") and
the accounts and subaccounts established therein. The .Fonds shall be denominated "Special
Improvement er ent District No. 344 Bonds, Series 2 ". The Bonds shall be dated, as originally issued, and
he registered as of June 15, 2006, shall each be in the denomination of $5,000 or any integral multiple
thereof of single maturities, shall mature on July 1 in the years and principal amounts set forth below, and
Bonds maturing in such years and principal amounts shall hear interest from the date of original
registration until paid or duly called for ,redemption at the rates per anm set forth opposite such years
and amounts., respectively:
Maturity
Principal
Interest
Bond
Year
Amount
Rate
Yield
price
200
$2 5,000
3. '00%
3. 00
51 00
2008
225,000
3.800
3.800
5 , 000
2009
225,000
3.850
3.850
2 5, 000
010
225,000
3.950
3.950
25 �000
011
5 7000
4.000
4.000
225,000
2012
2 5 � 000
4.000
.1225,000
013
225,3000
4.200
4.200
225M00
2014
225,000
4.300
4.300
225,000
2015
225nOOO
4.400
4.400
225,00
2016
225,000
4.500
4.500
225.,000
2018
225 M00
4.700
4.700
22500
2019
225,000
4.00
4.00
225M00
00
225M00
4.900
4.900
2251000
2021
225,000
5.000
5.000
225,3000
2023
230,000
5.100
5.100
2307000
2024
230,000
5.100
5.100
23000
2025
230nOOO
5.100
5.100
23000
2026
2301,000
5.100
5.100
2301000
Principal of and interest on the Bonds are payable in lawful money of the United Mates of America.
Upon the original delivery of the Bonds or upon transfer or exchange of Bonds, the Registrar as
bereinal`t r defined) shall date each :fond so delivered ered as of the date of its authentication.
.02. Payment Dates. Interest on the Bonds shall be payable on. each January 1 and .Tiny 1,
commencing Jan ary 1, 2007 (each a "Payment Date"'), to the owners of record thereof as, such appear o
the bond registrar at the dose of business on the fifteenth 1. T" day of the immediately preceding month,
wbetber or not such day is a. business day. Upon the original delivery of the Bonds to the Purchaser and
upon each subsequent transfer or exchange of a Bond pursuant to Section 2.04, the .registrar shall date
each Bond as of the date of its authentication.
R,
.o . Method of Payment. The Bonds shall be issued only in fully registered form. The interest
on and, upon surrender thereof at the operations center of the Registrar as bereinafter defined), the
principal of each Bond, shall be payable by check or draft drawn on the Registrar.
2.0c xst The City hereby appoints U.S. Bank National Association, of Seattle,
Washington, to act as bond registrar, transfer agent and paying agent (the `Registrar}'). The City reserves
the right to appoint a successor bond registrar, transfer agent or paying agent, as authorized by the Model
Public Obligations Registration Act of Montana (the "Bond Registration Acf'). The City agrees to pay the
reasonable and customary charges of the Registrar for services performed with respect to the Bonds. This
Section 2.04 shall establish a system of registration for the Bonds as defined by the .bond Registration
Act. The effect of registration and the rights and duties of the City and the Registrar with respect thereto
shall be as follows:
a .bond Reeister. The Registrar shall keep at its operations center a Bond register In
which the Registrar shall provide for the registration of ownership of Bonds and the registration
of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged.
N Transfer. Upon surrender for transfer of any Bond drily 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 drily 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 the transfer of any .fond to be selected or called for redemption. No transfer or
exchange of a Bond shall affect its order of registration for purposes of redemption pursuant to
Section 2.05 hereof.
(c) Exchange of fonds. Whenever any Bond is 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 o neCs
attorney duly authorized in writing.
(d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be
promptly canceled by the Registrar and thereafter disposed of as directed by the City.
(e) Imor Unauthorized Transfer. Wben any Bond is presented to the
Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the
endorsement on such 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 wbich it, .i.n its judgment, deems improper or unauthorized.
(f) persons Deemed Owners. The City and the Registrar may treat the person in
whose name any Bond is at any time registered in the bond register as the absolute over of such
Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on
account of, the principal of and interest on such Bond 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 upon such Bond to the extent of the sum or suns so
paid.
(g) � e n.......�har For every transfer of Bonds or exchange of Bonds
(except -for an exchange upon the partial redemption of any .fond pursuant to Section 2.0
hereof), 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
6
transfer or exchange.
(h) Mutilated Lost Stolen or DestEQy2gd Bonds. In case any Bond shall become
mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bored of like amount,
nurnber, maturity date and tenor in exchange and substitution for and upon cancellation of any
such mutilated fond or in lieu of and in substitution for any such fond 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 Bond destroyed, stolen or lost, upon filing with the Registrar of evidence
satisfactory to it that such 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, in which both the City and the Registrar shall be named as obligees. All Bonds
so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be
given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or such
Bond has been called for redemption in accordance with its terms, it shall not be necessary to
issue a new Bond prior to payment.
2.05. Rdrnptl .
a Mandator ....Redemption. If on any Payment Date there will be a balance in the
District Fund after payment of the principal and interest due on all Bonds drawn against it, either
from the prepayment of special assessments levied in the District or from the transfer of surplus
money from the Construction Fund to the Debt Service Fund as provided in Section 3.02 or
otherwise, the City Finance Director shall call for redemption on the Payment Date outstanding
Bonds, or portions hereof, in an amount which, together with the interest thereon to the Payment
Date, will equal the amount of such funds on deposit in the District Fund on that date. The
redemption price shall equal the amount of the principal amount of the Bonds to be redeemed
plus interest accrued to the date of redemption. 'fax Increments as defined herein) shall not be
applied to redemption of the Bonds pursuant to this Section 2.0a.
(b) the fonds vetb stated maturities on or after July f, 2014
are subject to redemption, in whole or in part, on July 1, 2013, and any date thereafter, at the
option of the City,, in whole or in part, from sources of funds(Including Tax Increments) available
therefor other than those described in Subsection a of this Section 2.05, at a redemption price
equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date,
without premium. However, the fonds shall not be called for redemption i from amounts on
deposit in the Reserve Account or .ii before July 1, 2013, from the proceeds of refunding special
improvement district bonds or warrants.
(c) Selection of .Bonds for Redemption; Partial Redeem tion. if less than all of the
Bonds are to be redeemed, Bonds shall be redeemed in order of the stated maturities thereof. If
.less than all Bonds of a stated maturity r are to be redeemed, the .bonds of such maturity shall be
selected for redemption in $5,000 principal amounts selected by the Registrar by lot or other
manner it deems fair. Upon partial redemption of a Bond, a new fond or Bonds will be delivered
to the registered owner without charge, representing the remaining principal amount thereof
outstanding.
d Notice and Effect of Redemption. tion. The date of redemption and the principal
amount of the Bonds shall be fixed by the City Finance Director, who shall give notice thereof to
the Registrar in sufficient time for the Registrar to give notice, by first class mail, postage
prepaid, or by other means required by the securities depository, to the owner or owners of such
.fonds at their addresses appearing in the bond register, of the numbers of the Bonds or portions
thereof to be redeemed and the date on which payment will be made, which date shall be not less
than thirty 3 days after the date of mailing notice. on the date so fixed interest on the Bonds
or portions -thereof so redeemed shall cease.
2.06. Form. The Bonds shall be drawn in substantially the form set forth in Exhibit A hereto,
and by this reference made a part hereof, with such modifications as are permitted by the Act.
2.07. Execution Registration and Delivery, The Bonds shall be prepared under the direction of
the City Clerk and shall be executed on behalf of the City by the signatures of the Mayor and City Clerk,
provided that the signatures and the corporate seal may be printed, engraved or lithographed facsimiles of
the originals. The seal of the City need not be impressed or imprinted on any Bond. In case any officer
whose signature or a facsimile of whose signature shall appear on the .fonds shall cease to be such officer
before the delivery of any Bond, 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 Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under
this resolution unless a certificate of authentication and registration on such Bond has been duly executed
by the manual signature of an authorized representative of the Registrar. Certificates of authentication
and registration on different Bonds need not he signed by the same representative. The executed
certificate of authentication and registration on each Bond shall be conclusive evidence that it has been
authenticated and delivered sunder this resolution. The Bonds shall be registered .in order of their serial
numbers by the Registrar, as attested by the Certificate of Authentication, as of June 15, 2006. When the
Bonds have been so executed, authenticated and registered, they shall be delivered by the Registrar to the
:purchaser upon payment of the pu.rcbase price in accordance with the contract of sale heretofore made
and executed.
2.08. Application of Bond proceeds. The purchaser shall not be obligated to see to the
application of the purchase price of the Bonds, The City Finance Director r her designee) shall credit
the proceeds of the Bonds (taking into account the purchaser's discount o 90,00.00) as follows:
a $22 ,000.00 to the Revolving Fund, as required by Section. -1 - 169 of the
Act;
(b) $2 6,000.00 to Reserve Account in the District Fund, as authorized by Section -
2-19 of the Act;
(c) $representing accrued interest to the Debt Service .fund in the District
Fund;
d 0,0. o the General Fund of the City for the City, 's administration fee with
respect to the District; and
(e) $,9,00.00 to the Construction Fund in. the District Fund for the cost of the
Improvements and the payment of costs of issuance for the Bonds.
2.09. Securities Depository for the Bonds.
(a) Definitions. For purposes of this Section 2.08, the following tens shall have the
following meanings.-
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"Beneficial owner' shall mean, whenever used with respect to a Bond, the person in
whose name such Bond is recorded as the beneficial owner of such Bond by a Participant
on the records of such Participant, or such person's subro ee.
"Cede & Co,""shall man Cede & Co., the nominee of DTC, and any successor nominee
of .ETC with respect to the Bonds,
"DTC" shall mean The Depository Trust Company of New York, New York.
" ar lcipant" shall mean any broker -dealer; bank or other financial institution for which
DTC holds the Bonds as securities depository.
"Representation letter" shall mean the Blanket Issuer Letter of representations from the
City to DTC, which is hereby incorporated by reference and made a part hereof.
(b) .hook -Entry l ..�...� System. The Bonds shall be initially issued epa rately
authenticated fully registered Bonds, and one Bond shall be issued in the principal amount of
each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be
registered in the Bond register in the name of Cede & Co., as nominee of DTC. The registrar
and the City may treat DTC(or its nominee) as the sole and elusive owner of the Bonds
registered .in its name for the purposes of payment of the principal of or interest on the Bonds,
selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or
required to be given to registered owners of Bonds under this Resolution, registering the transfer
of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be
affected by any notice to the contrary. Neither the Registrar nor the City shall have any
responsibility or obligation to any Participant, any Person claiming a beneficial ownership
interest in the .fonds under or through DTC or any Participant, or any other Person which is not
shown on the Bond register as being a registered owner of any Bonds, with respect to the
accuracy of any records maintained by DTC or any Participant, with respect to the payment by
DTC or any Participant of any amount with respect to the principal of or interest on the Bonds,
with respect to any notice which is permitted or required to be given to owners of Bonds under
this Resolution, with respect to the selection by DTC or any Participant of any person to receive
payment in the event of a partial redemption of the Bonds, or with respect to any consent given or
other action taken by DTC as registered owner of the Bonds. So long as any .fond is registercd in
the name of Cede & Co,, as nominee of DTC, the registrar shall pay all principal of and interest
on such Bond, and shall give all notices wAb respect to such .fond, only to Cede & Co. in
accordance with. the Representation Letter, and all such payments shall be valid and effective to
fully satisfy and discharge the City's obligations with respect to the principal of and interest on
the Bonds to the extent of the sum or sums so paid. No Verson other than. DTC shall receive an
authenticated Bond for each separate stated maturity evidencing the obligation of the City to
male -payments of principal and interest. Upon delivery by DTC to the Registrar of written
notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co.,
the Bonds will be transferable to such new nominee in accordance with paragraph e hereof.
(c) Discontinuing Book -Entry stern.. In the event the City determines that it is in the
best .interest of the Beneficial owners that they be able to obtain. Bonds in the form of Bond
certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the
Participants of the availability through DTC of Bonds in the form of certificates, In such event,
the Bonds will be transferable in accordance with paragraph e hereof. DTC may determine to
discontinue Providing its services with respect to the Bonds at any time by giving notice to the
City and the Registrar and discharging its responsibilities with respect thereto under applicable
law. In such event the Bonds will be transferable in accordance with paragraph e hereof.
(d) BLetter of Representations. The Representation Letter sets forth certain
matters with respect to; among other things, notices, consents and approvals by registered owners
of the .Fonds and Beneficial owners and payments on the Bonds. The Registrar shall have the
same rights with respect to its actions thereunder as it has with respect to its actions under this
resolution.
(e) of Bonds. In the event that any transfer or eebange of Bonds is permitted
under paragraph b or c hereof, such transfer or exchange shall be accomplished upon receipt
by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of
transfer to the permitted transferee in accordance with the provisions of this resolution. In the
event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor
as nominee for ITC as owner of all the Bonds, or another securities depository as owner of all
the Bonds, the provisions of this Resolution shall also apply to all ratters relating thereto,
including, without limitation, the printing of such .fonds in the .form of Bond certificates and the
method of payment of principal of and interest on such Bonds in the form of Bond certificates.
Section 3. DistrictFund- Accounts treatedTherein; Special ssesnents; and lication of
3.01. District Fund. Therc is hereby created and established a. fiend designated as the :-Special
Improvement District No, 344 Fund," th.e "District Fund" which shall be maintained by the City Finance
Director on the books and records of the City separate and apart from all other funds of the City. within
the District Fund there shall be created and maintained three separate accounts, designated as the
"ConstructionFund," "Debt ServiceFund" and "Reserve Account,' respectively.
.02. Construction Fund. There shall be credited to the Construction Fund certain proceeds of
the sale of the Bonds as provided in Section 2.08. ,Any earrings on investment of money in the
Construction Fund shall be retained therein. All costs and expenses of constructing the Improvements to
be paid from proceeds of the Bonds shall be paid from time to time as incurred and allowed from the
Construction Fund in accordance with the provisions of applicable law, and money in the Construction
Fund shall be used .for no other purpose; provided that upon completion of the Improvements and after all
claims and expenses with respect to the Improvements have been fully paid and satisfied, any amount of
money remaining in the Construction Fund shall be transferred to the Debt Service Fund and used to
redeem Bonds as provided in Sections 2.05 and . b .
3.0. .debt Service Fund. a Debt Service Fund Genera. Money in the Debt Service Fund
shall be used only for i payment of the principal of and interest on the Bonds as such payments become
due or ii to redeem Bonds,
(b) to Debt Service Fund. Prom the proceeds of the .Bonds, there shall be deposited in
the Debt Service Fund the amounts set forth in Section 2.08 hereof. Interest income on money in the
Debt Service Fred 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 text 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 in accordance with Section 2.0a ; provided that any money transferred to the Debt
Service Fred from the Construction. Fund pursuant to Section 3.02 shall be applied to redeem Bonds to
10
the extent possible on the next Payment Date for which notice of redemption may properly be given
pursuant to Section .o a . Provided, however, that Tax Increments are not available to redeems. Bonds
pursuant to Section 2.05(a). Redemption of .Fonds shall be as provided in Section 2.05, and interest shall
be paid as accrued thereon to the date of redemption, in accordance with the provisions of Section 7-12-
4206 of the Act.
(c) A
lication of Tax Increments as Security for the Bonds. 1 Tax Increments (the " Tax
Increments-) derived from the Industrial District and the Technology District shall be pledged, to the
extent provided herein, by the City as security for the Bonds. Tax Increments derived from the Industrial
District or the Technology District shall only be utilized by the City to act as security for Bonds allocable
to the cost of Improvements within the applicable tax increment district.
(1i)In the event that a property owner is delinquent in the payment of special assessments
and the City has not received payment of any special assessments allocable to such parcel by the date that
is fifteen l days prior to any January I or July I., commencing January 1, 2007 (each a "Payment
Date"'), the City Finance Director is hereby authorized to transfer, after transfers from the Debt Service
Reserve Account, but prior to transfers from the Revolving Fund, any Tax Increments (but only to the
extent of sn.eh delinquent special assessment payment, to the extent that such funds are on hand in the
operating account for each tax increment district and are not pledged by the City to other purposes)
derived from the tax increment district in which the property is located, and then on deposit with the City,
to the Debt Service Fund for the pro-rata portion of the payment allocable the delinquent property that is
due and owing on the :bonds on the next Payment Bate. A transfer of Tax Increments described in the
immediately preceding sentence shall not extinguish the lien of any special assessments due with respect
to a parcel of property and such transfer does not decrease the amount of special assessments due with
respect to any parcel of property.
(iii)In the event that a property owner pays delinquent special assessments, after the
application of Tax Increments pursuant to Section . .ii above, to the payment of regularly
scheduled debt service on the Bonds, the City Finance Director is hereby authorized to transfer an amount
equal to such prior payments of Tax Increments for such parcel to the applicable operating account for the
tax increment fund .in which such parcel is located. Any payment of delinquent special assessments, after
the application of Tax Increment pursuant to Section .03 c ii above, to a payment of debt service on
the Bonds shall not be applied to the mandatory redemption of the Bonds pursuant to Section 2.05(a). .In
the event that delinquent special assessments are paid after either- the Industrial District or the Tecbnology
District is terminated and the Bonds are not outstanding, the City shall transfer such funds to the
.evolving Fund.
3.04. Deserve Account. .money in Reserve Account shall be applied on any Payment Date to
payment of principal of and interest on the Bonds at the stated maturity thereof if funds on hand in the
Debt Service Fund, prior to the application of Tax Increments pursuant to Section . c . Funds in
Reserve Account must be used for such purpose before a loan is made by the Revolving Fund therefor. If
money is on hand in .deserve Account and all :Bonds have been paid on discharged as provided in
Section 7, such money shall be transferred to the Revolving Fund, as required by Section - 2- 1 .
3.05. Loans from Revolving Fund. The City Council shall annually or more often if necessary
.issue an order authorizing a loan or advance from. the Revolving Fund to the District Fund in an amount
sufficient to replenish any deficiency then existing in the Debt Service Fund and shall issue an order
authorizing a loan or advance from the Revolving Fund to the District Fund in an amount sufficient to
make good ray deficiency then existing in the Debt Service Fund in such order to the extent that money i
available in the Revolving Fund. Provided, however, that at the time any such loan or advance is to be
made, Reserve Account shall have been or shall remain depleted on the next Payment .date. A. deficiency
11
shall be deemed to exist in the Debt Service Fund if the money on deposit therein, together with any
funds on deposit in Reserve Account, on any June 15 or December 1 (excluding amounts in the Debt
Service Fund representing prepaid special assessments) is less than the amount necessary to pay Bonds
due (other than upon redemption), and interest on all .fonds payable, on the next succeeding Payment
Date.
Pursuant to Ordinance No. 71) the City has undertaken and agreed to provide funds for the
Revolving Fund by levying such tax or making such loan from the General Fund as authorized by
Section 7-12-222 of the Act. In the event that the balance on hand in the Revolving Fund fifteen
(1.5) days prior to any date when interest is due on special improvement district bonds or warrants of the
City is not sufficient to make good all deficiencies then existing in the special improvement district funds
for which the City has covenanted to make loans from the Revolving Fund, the balance on hand in the
Revolving Fund shall be allocated to the funds of the special improvement districts in which such
deficiencies then exist in proportion to the amounts of the deficiencies on the respective dates of receipt
of such money, until all interest accrued on such special improvement district bonds or warrants of the
City has been paid.- on any date when all accrued interest on special improvement district bonds and
warrants of the City payable from funds .for which the City has covenanted to male loans from the
Revolving Fund has been paid, any balance remaining in the Revolving .fund shall be lent or advanced to
the special improvement district funds for payment and redemption of bonds to the extent the special
improvement district funds arc deficient for such purpose, and, if money in the Revolving Fund is
insufficient therefor, pro rata, in an amount proportionate to the amount of such deficiency.
The City hereby determines, covenants and agrees to levy the property tax described in the
immediately preceding paragraph to provide funds for the Revolving Fund so long as any Bonds are
outstanding to the extent required under the provisions of this Resolution and the Act, even though such
property tax levy may, under applicable law {including Sf 1.84, adopted by the Montana Legislature in
19) or provisions of the home rule charter of the City, require that property tax levies of the City for
other purposes be reduced correspondingly. In addition, the City ber-eby covenants to comply with the
requirements of the Code and the Regulations in order that the Debt Service Reserve Account and the
Revolving Fund comply and continue; to qualify as "reasonably required" debt service reserve fund(s) for
the Bonds.
Section 4. Covenants. The City covenants and agrees with the owners from time to time of each
of the Bonds that until all the Bonds and interest thereon are fully .paid.
.01. Comhance with Resolution. The City will hold the District Fund and the Revolving Fund
as trust funds, separate and apart from all of its other funds, and the City, its officers -and agents, w.111
comply with all covenants and agreements contained in this resolution. The provisions hereinabove made
with respect to the District Fund and the Revolving Fund are in accordance with the undertaking and
agreement of the City made in connection with the public offering of the Bonds and the sale of the Bonds
as sct forth in Section 1.0.
.02. Construction of Imperovements. The City will do all acts and things necessary to enforce
the provisions of the construction contracts and bonds referred to in Section 1.031 and to ensure the
completion of the Improvements for the benefit of the District in accordance with the plans and
specifications and within the time therein provided, and will pay all costs thereof promptly as incurred
and allowed, out of the District Fund and within the amount of the proceeds of the Bonds appropriated
thereto.
4.03. Levy of Assessments. The City will do all acts and things necessary for the final and valid
levy of special assessments ents upon all assessable real property within the boundaries of the District trict in
12
accordance with the Constitution and laws of the State of Montana and the Constitution of the United
States, in an aggregate principal amount not less than S,20,00. The special assessments shall be levied
on the basis set forth in the Intent Resolution; and shall be payable in equal, semiannual installments over
a period of twenty 2 years, with interest on the whole amount remaining unpaid at an annual rate equal
to the sum f: i the average annual interest rate borne by the Bonds,
plus ii one-half of one perccnt
(0.50%)per annum, interest being payable with principal installments. The special assessments to be
levied will be payable on the 30th day of November in each of the years 2006 through 2025, and on the
1st day of May in the years 2007 through 2026, inclusive, if not theretofore paid, and shall become
delinquent on such date unless paid in ball. The first partial payment of each assessment shall include
interest on the entire assessment from the date of original registration of the Bonds to Janury i., 2007 and
each subsequent partial payment shall include interest for six months on that payment and the then
remaining balance of the special assessment. The special assessments shall constitute a lien upon and
against the property against which they are made and levied, which lien may be extinguished only by
payment of the assessment with all penalties, cost and interest as provided in Section -1.2- 1 1 of the
Act. No tax deed issued with respect to any lot or parcel of land shall operate as payment of any
installment of the assessment thereon which is payable after the execution of such deed, and any tax deed
so issued shall convey title subject only to the lien of said future installments, as provided in Montana
Code Annotated, Section 1 -18-21 .
.o . Reassessment. -if at any time and for whatever reason any special assessment or tag herein
agreed to be levied is held invalid, the City and this City Council, its officers and employees, will take all
steps necessary to correct the same and to reassess and re -levy the sane, including the ordering of work,
with the same .force and effect as if made at the time provided by law, ordinance or resolution relating
thereto, and will reassess and re -levy the sane with the sane force and effect as an original levy thereof,
as authorized in Section. -1 - 1 b of the Act. Any special assessment, or reassessment or re -levy shall,
so far as is practicable, be levied and collected as it would have been if the first levy had been enforced
including the levy and collection of any interest accrued on the first levy.
If proceeds of the Bonds, including investment income thereon, are applied to the redemption of
such Bonds, as provided in Sections -12- 20 and -1 - 20 of the Act, or if refunding bonds are issued
and the principal amount of the outstanding; :bonds of the :district is decreased or increased, the City will
reduce or increase, respectively, the special assessments levied in the District and then outstanding pro
rasa by the principal amount of such prepayment or the amount above or below the outstanding principal
amount of bonds re resented by the refunding bonds. The City and this City Council, its officers and
employees will reassess and re -levy such special assessments, with the same effect as an original leer, in
sacfb reduced or increased amounts in accordance with the provisions of Sections 7-12-41.76 tbrou h 7-
12 - 17 of the Act.
4.05. Tax Increments, The Tax Increments are pledged as security for the Bonds as set forth in
Section 3.0.3 The City will collect and account for the Tax Increments as rewired by the T1F Act.
The City acknowledges that certain Tax Increments are pledged to the payment of the Bonds and the City
covenants to maintain the existence of the Industrial District and the Technology District as required by
the T IF Act and Montana law.
.o . Absence�of.. i i ate. There is now no litigation pending or, to the best knowledge of the
City, threatening or questioning: the validity or regularity of the creation of the District, ;t, the Industrial
District, or the Technology District; the contracts for construction of the Improvements or the undertaking
and agreement of the City to levy special assessments therefor and to make good any deficiency in the
collection thereof through the levy of taxes for and the making; of advances from the Devolving Fund; the
pledge of the Tax Increments as security for the Bonds; the right and power of the City to issue the
Bonds; or in any manner questioning the existence of any condition precedent to the exercise of the City's
13
powers in these matters. If any such litigation should be initiated or threatened, the City will forthwith
notify in writing the Purchaser, and will furnish the Purchaser a copy of all documents, including
pleadings, in connection with such litigation.
4.07. 'waiver of Penalty -Ind Interest. The City covenants not to waive the payment of penalty or
interest on delinquent special assessments levied on property in the District for costs of the
Improvements, unless the City determines, by resolution of the City Council, that such waiveT is in the
best interest of the owners of the outstanding .fonds.
Section 5. Tax Matters.
.01. Use of Imorovements. The Improvements will be owned and operated by the City and
available for use by members of the general public on a substantially equal basis. The City shall not enter
into any lease, use or other agreement with any non -governmental person relating to the use of the
Improvements or security for the payment of the Bonds which night cause the Bonds to be considered
V.pri a.te activity bonds" or "private loan bonds" within the meaning of Section 141 of the Code.
5.02. General Covenant. The City covenants and agrees with the owners 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 Code and applicable Treasury Regulations applicable to the Bonds and promulgated
under the Code, including, without limitation., Treasury Regulations (the "Regulations"), and covenants to
tale any and all actions within its powers to ensure that the interest on the Bonds will not become
includable in gross income for federal income tax purposes under the Code and the Regulations.
5.03. Arbitrate Certification. The Mayor, the City Manager and the City Finance Director, ;tor, being
the officers of the City charged with the responsibility for issuing the Bonds pursuant to this resolution,
are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the
provisions of Section 148 of the Code and the Regulations, stating that on the basis of.facts. estimates and
circumstances in existence on the elate of issue and deliver of the Bonds, it is reasonably expected that
the proceeds of the Bonds will be used in a manner that would not cause the Bonds to be 'a.rbitra.e
bonds"' within the meaning of Section 148 of the Code and the Regulations.
5.04. Qualified Tax E ern t Obligations, In order to qualify the Bonds as "qualified tax-exempt
obligations" within the meaning of Section 2 of the Code, the City makes the following factual
statements and representations:
(a) the Bonds are not `�prjvate activity bonds"' as defined in Section 141 of the Codex
(b) the City designates the Bonds as "qualified tax-exempt obligations" for purposes
of Section 2 b 3 of the Code;
(c) the reasonably anticipated mount of tax --exempt obligations (other than private
activity bonds that are not qualified 01 c 3 bonds) which will be issued by the City (and all
subordinate entities of the City) during calendar year 2006 will not exceed 1.0,000,000; and
(d) not more than S10,000,000 of obligations issued by the City during calendar year
2005 have been designated for purposes of Section 2b of the Code.
Section 6. Authentication of Transcript. The officers of the City are hereby authorized and
directed to furnish to the Purchaser and to bond counsel certified copies of all proceedings relating to the
issuance of the Bonds and such other certificates and affidavits as maybe required to show the right,
power and authority of the City to issue the .fonds, and all statements contained in and shown by such
instruments, including any heretofore furnished, shall constitute representations of the City as to the truth
of the statements purported to be shown thereby,
Section ". Discharge.
7.01. General. When the liability of the City on all Bonds issued under and secured by this
resolution has been discharged as provided in this Section 7, all pledges, covenants and other rights
granted by this resolution to the owners of such obligations shall cease.
.02. Payment. The City .may discharge its liability with reference to any .bond or installment of
interest thereon which is due on any date by on or before that date depositing with the Registrar funds
sufficient., or,, if a City officer is the Registrar, mailing to the registered owner of such Bond a check or
draft in a sum sufficient and providing proceeds available, for the payment thereof in -full, or if any Bond
or installment of interest thereon shall not be paid when due, the City may nevertheless discharge its
liability with reference thereto by depositing with the Registrar funds sufficient, or, if a City officer is the
Registrar, by mailing to the registered owner thereof a check or draft in a sun sufficient and providing
proceeds available, for the payment thereof in full with interest accrued to the date of such deposit or
mafling.
7.03. Prepayment. The City may discharge its liability with respect to any Bond, or installment
of interest thereon which is due on any date, by depositing with the Registrar on or before that date a sung
sufficient and providing proceeds available for the payment thereof in full; or if any fond or installment
of interest thereon shall not be paid when due, the City may, or, .if a City officer is the Registrar, nailing
to the registered owner of such .bond a check or a draft in a sum sufficient and providing proceeds
available, for the payment of the principal, interest and redemption premium, if any, which are then due-,
provided that a proper notice of such redemption has been duly given as provided herein or irrevocably
provided for.
7.04. Escrow. The City may also at any time discharge its liability in its entirety with reference
to the Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by
depositing irrevocably in escrow, with a bank qualified by .haw as an escrow agent for this purpose, cash
or securities which are authorized by law to be so deposited, bearing interest payable at such tin.es and at
such rates and maturing on such dates as shall be required, without reinvestment, to provide funds
sufficient to pay all principal and interest to become due on all Bonds on or before maturity or, if any
Bond has been duly called for redemption or notice of such redemption has been irrevocably provided for,
on or before the designated redemption date.
7.05. Irrevocable De . If an officer of the City is the Registrar, any deposit made under
this Section 7 with the Registrar shall be irrevocable and held for the benefit of the owners of the fonds
in respect of which such deposits have been made.
Section S. Continuing .lisclosn.re.
.off.. City Compliance with Provisions of Continuing Disclosure UndertThe City hereby
covenants and agrees that it will comply with and carry out all of the provisions of the Continuing
Disclosure ure Undertaking. Notwithstanding any other provision of this resolution, failure of the City t
comply with the Continuing Disclosure Undertaking 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
15
appropriate, including seeking mandate or specific performance by court order, to cause the City to
comply with its obligations under this section.
8.02. Execution of Continuina Disclosure Undeftakin. '"Continuing Disclosure Undeftaking
means that certain Continuing Disclosure Undertaking executed by the Mayor, City Finance Director and
City Clerk and dated the date of issuance and delivery of the Bonds, as originally executed and as .it may
e amended from time to t1me in accordance with the terms thereof.
Section 9. Repeals and Effective Date.
9.01. ReDeal. All provisions of other resolutions and other actions and proceedings of the City and
this City Council that 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.
.02. Effective Date. This resolution shall take effect immediately upon its passage and adoption
y this City Council.
PASSED y the City Council of the City of Kalispell, Montana, this tday of June, 2006.
Mayor
Attest:
City Clerk
No.
Rate
n
.EXHIBIT A
[Face of the Bond]
UNITED STATES of AMERICA
STATE E of M oNTAN A.
COUNTY of FLATHEAD
CITY OF KALISPEL
SPECIAL IMPROVEMENT DISTRICT ICT No. 344 BON
SERIES 2006
Maturity
July 1, 2
REGISTERED OWNER: CEDE& Co.
PRINCIPAL AMOUNT:
Date of anal
June 151, 2006
CIS S I
8N
DOLLARS
FOR VALUE RECEIVED, the City of Kalispell, Flathead County, Montana (the "ci .ylll'� will
pay to the registered owner ide. t-I ied above, or registered assigns, on the maturity date specified above
the principal amount specified above, solely from the revenues hereinafter specified, as authorized by
Resolution No. 5111, adopted on April 3, 2006 (the "Authorizing Resolution , and Resolution No. �ly
adopted on June 1, 2006 (the "Bond Resolution", all subject to the provisions hereinafter described
relating to the redemption of this .fond before maturity. This Bond bears interest at the rate per annum
specified above from the date of registration of this Bond, as expressed herein, of from such later date to
which interest hereon has been paid or duly provided for, until the maturity elate specified above or an
earlier date on which this Bond shall have been duly called for redemption by the City Finance Director.
Interest on this Bond is payable semiannually, commencIng January T, 2007, on the first day of January
and the first day of .Tiny in each year, to the owner of record of this Bond appearing as such in the bond
register as of the close of business on the 15th day (whether or not such is a. business day) of the
immediately preceding month. Interest on and, upon presentation and surrender hereof at the operations
center of U.S. Bank National Association in Seattle, Washington, as bond registrar and paying agent
(the "Registrar"), the principal of this .fond are payable by cheek or draft of the Registrar, or its
successor. The principal of and interest on this Bond are payable in lawful money of the United States of
,America.
Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name
of Cede & Co., as nominee of The Depository Trust Company "D `C"' , or in the name of any other
nominee of DTC or other securities depository, the Registrar shall pay all principal of and interest on this
Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee i
accordance with the operational arrangements of .D C or other securitles depository as agreed to by the
City.
}
A-T
This Bond is one of an issue in the aggregate principal amount of $4, 20,00 (the ""Bonds"'), all of
like date of original issue and tenor, except as to serial number, denomination, date, interest rate and
maturity date. The Bonds are issued pursuant to and in full conformity with the Constitution and laws of
the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 12,
Parts 41 and 42, as amended (the ``Act'`), to finance the costs of certain local improvements (the
"Improvements") for the special benefit of property located in Special Improvement ent District No. 344 of
the City (the "District"). The Bonds are issuable only as fully registered bonds of single maturities in
denominations o 1,000 or any integral multiple thereof.
This Bond is payable from the collection of a special tax or special assessments levied upon all
assessable real property within the boundaries of the District, in an aggrecrate principal amount of not less
than 4,2,00, except as such amount may be reduced or increased in accordance with provisions o
Montana law. Such special assessments constitute a lien against the assessable real estate within the
District and are to be deposited into the Special Improvement District No. 344 Fund of the City (the
"District Fund").
The City, has also established an industrial tax increment district (the "Industrial District") and a.
technology tax increment district (the "Teehnology District") within the boundaries of the District. The
City has pledged certain tax increment revenues derived from the Industrial District and the Technology
District to the payment of the Bonds, as more fully described in the Bond Resolution.
The City has established in the District Fund, and funded with certain proceeds of the Bonds, a
Reserve Account (the "Reserve Account"'), from which money is to be applied to pay principal of and
interest on the Bonds in the event collections of special assessments are insufficient therefor, The City
does not have any obligation to replenish the Reserve Account if funds are withdrawn therefrom. The
Bonds are special, limited obligations of the City payable solely from the revenues pledged under the
Resolution and the Bonds are not general obligations of the City.
The City has also validly established a Special Improvement District Revolving Fund
(the "Revolving Fund") to secure the payment of certain of its special improvement district bonds,
including the Bonds. The City has also agreed, to the extent permitted by the Act, to issue orders
annually authorizing loans or advances from the Revolving Fund to District 'urnd, in amounts sufficient
to make good any deficiency in the District Fund to pay principal of or interest on the Bonds after
depletion of the Reserve Account, to the extent that funds are available in the Revolving Fund, and to
provide funds for the Revolving Fund by annually making a tax levy or loan from its general Fund in are
amount sufficient for that purpose, subject to the limitation that no such tax levy or loan may in any year
cause the balance in the Revolving Fund to exceed five percent of the principal amount of the City's then
outstanding special improvement district bonds secured thereby and the d.ur tional limitations specified in
the Act. While any property tax levy to be made by the City to provide funds for the Revolving Fund is
subject to levy limits under current lain, the City has agreed in the Resolution to levy property taxes to
,provide funds for the Revolving Fund to the extent described in this paragraph and, if necessary, to reduce
other property tax levies correspondingly to meet applicable levy limits.
The Bonds are subject to mandatory redemption in order of stated maturities and within a stated
maturity in $5,000 principal amounts selected by lot or other manner deemed fair by the Registrar on any
Payment Date if, after paying all principal and interest then due on the Bonds, there are funds to the credit
of the District Fund, from the prepayment of special assessments levied in the District or from surplus
proceeds of the Bonds not required to pay costs of the Improvements, for the redemption thereof, and in
the manner provided for the redemption of the same. The Bonds maturing on or after July 1, 2014 are
subject to redemption, at the option of the City, from other sources of funds available therefor on July -1,
2 1. or any date thereafter; provided, however, that the City hereby agrees not to redeem. the Bonds from.
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(1) amounts on deposit in the Reserve Account in the District ;t Fund or ii the proceeds of refunding
special improvement district bonds prior to July 1, 2013. The redemption price is equal to the principal
amount of the Bonds or portions thereof to be redeemed plus interest accrued thereon to the date of
redemption, The date of redemption of Bonds and principal amount of Bonds to be redeemed shall be
fixed by the City Finance Director, who shall give notice thereof to the Registrar in sufficient time for the
Registrar to give notice, by first class nail, postage prepaid, or by other means required by the securities
depository, to the owner or owners of such Bonds at their addresses shown on the Bond register, of the
Bonds or portions thereof to be redeemed and the date on which payment will be made, which date shall
not be less than thirty days after the date of mailing of notice, on which date so fixed interest shall
cease. on the date so fixed interest on the Bonds or portions thereof so redeemed shall cease to accrue.
Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner
without charge, representing the remaining principal amount outstanding.
The Bonds have been designated by the City as a "gualifid tax-exempt obligation" pursuant to
Section 265 of the Internal Revenue Code of 1986, as amended.
As provided in the Bond Resolution and subject to certain limitations set forth therein, this Band
1s transferable upon the books of the City at the operations cuter of the 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 Registrar, duly executed by the registered owner or hi.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 :fonds 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 sane 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 nay 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 reeeivin.g payment
and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the
contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all things
required to be done precedent to the issuance of this Bond have been. properly done, happened and been
performed in the manner prescribed by the laws of the Mate of Montana and the resolutions and
ordinances of the City of Kalispell, Montana, relating to the issuance thereof; and that the opinion
attached hereto is a true copy of the legal opinion given by Bond Counsel with reference to the .fonds,
dated the date of original issuance and delivery of the fonds.
This Bond shall not be valid or be ;ore obligatory for any purpose or be entitled to any security
or benefit under the Bond Resolution until the Certificate of Authentication and Registration herein shall
have been executed by the .Registrar by the manual signature of one of its authorized ed representatives.
(The remainder of this page is intentionally left blank.)
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N WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
as caused this Bond to be executed by the facsimile signatures of the Mayor and the City Clerk, and by a
facsimile simile f the official seal of the City*.
(SEAL)
CITY OF KALISPELL, M NTANA
By acsimilesignature)..
Mayor
By(facsimile signature)
City Clerk
CERTIFICATE AUTHENTICATION
N
This is one of the Bonds delivered pursuant to the Bond Resolution mentioned within.
US, BAND NATIONAL ASSOCIATION,
as Bond Registrar, Transfer Agent, and Paying Agent
.y:
Authorized Signer
"WE
The following abbreviations, .e used in the inscription on the face of this Bond, shall be
construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants
in common
TEN ENT -- as tenants
by the entireties
JT TEN - as joint tenants
with right of
survivorship and not
as tenants in common
U M h .................Custodian ............ 4 r► i t i i t i Y W i i i#
(Cost)(Minor)
fader Uniform Transfers
to Mild!rs Act .........................
(State)
Additional abbreviations as also be used.
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ASSIGNMENT
FOR VALUE .DECEIVED the undersigned hereby sells, assigns and transfers -unto
and hereby irrevocably constitutes
and appoints
attorney to transfer the within Bond on the boos kept for registration thereof, with full power o
substitution in the premises.
Dated:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
SIGNATURE GUARANTEED
NOTICE: The signature to this assignment mast
correspond with the name as it appears on the face
of the Bond in every particulat, without alteration,
enlargement or any change whatsoever.
Signature(s) must be guaranteed by are "eligible
guarantor institution meeting the requirements o
the Bond Registrar, which requirements include
membership or participation in STAMP or such
other ""signature guaranty program"' as may be
determined by the Bond Registrar in addition to
or in substitution for STAMP, all in accordance
with the Securities Exchange .Act of 1934, a
amended.
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