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9. Resolution 4298 - Outlaw Inn Bond Refunding RequestAGENDA ITEM 9 - RESOLUTION 4298-Outlaw Inn Bond Refunding Request BACKGROUND/CONSIDERATION: In 1982 the City issued an Industrial Development Revenue bond of $2;900,000 to finance the Outlaw Inn project. In 1986 the City issued $2,680,000 Refunding Mortgage Revenue Bond to refund the original note. The borrowers are now requesting another round of refunding bonds be completed. This round would refund the current principal and can be redeemed on January 1, 1997. The closing date for this refunding will be December 1, 1996. Before these bond transactions can be completed, the City will need to pass a final bond resolution (at the November 4 meeting). Because previous actions met the Internal Revenue code requirements for refunding, it is not necessary to hold an additional public hearing. Although the final resolution for this transaction will be completed at the November 4 meeting, it is necessary for the City to pass by motion or, more desirably, by Resolution of Intent to issue the new bonds, subject to the final approval in the Bond Resolution (November 4). This resolution will clearly set forth the fact that the City is not obligated or has any type of pecuniary liability for this transaction. RECOMMENDATION: Bond Counsel, Mae Nan Ellingson of Dorsey and Whitney, has compiled the enclosed resolution for this procedure. With this procedural review by the bond counsel and since this is not an obligation of the City, I recommend this procedure for refunding of the Outlaw Inn's bonds be approved. The City's expenses will be reimbursed at the rate of $2.50/$1,000 of bonds as per the ordinance requirements. ACTION REQUIRED: RESOLUTION 4298 should be approved to show our intent to complete the refunding process. On November 4 we will need to adopt the final closing resolution. U15 iu 11 1 V -1 1) 0 LA -kMVV'AQV AV v I-MILANW-MINk"WAR, 127 EAST Fiku-4T �,TRFFT NEW yokic D.C. SU(TE 310 DCNVkU LONDON IMISSOULA, P40NTANA. 59802 SEArTLE SRL'55FL5 TELFri-IONE: (406) 721-6025 FARGO HONO W. NU F.ti-x; (406) 543-0863 BiLLWCS 101y XOCHESTE]k Mae Han Ellingson COSTA MESA ORHAT FALLS To; Clarence Krepps Glen NTeier FROM: Mae Nan Ellingson DATE: October 17,1996 RE: Kalispell - Outlaw Inn Series 1996 Refunding Bonds Please find enclosed a draft of 61ie resolution relating to the refunding of the above referenced bonds. If it meets with your approval, please let me know and we will put execution copies in the mail today. RESOLUTION RELATING TO A PROJECT ON BEHALF OF OUTLAW INN JOINT VENTURE AND THE ISSUANCE OF REVENUE BONDS TO REFUND CERTAIN OUTSTANDING INDUSTRIAL DEVELOPMENT REFUNDING MORTGAGE OF THE CITY OF KALISPELL UNDER MONTANA CODE ANNOTATED, TITLE 90, CHAPTERS, PART 1, AS AMENDED; GRANTING PRELIMINARY APPROVAL THERETO AND CALLING A PUBLIC HEARING THEREON BE IT RESOLVED by the City Council (the "Council") of Kalispell, Montana (the "City"), as follows: Section 1. -Rgd_tals. 1.01. Pursuant to Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), the City is authorized to enter into agreements upon terms the governing body considers advantageous and not in conflict with the provisions of the Act to issue its revenue bonds and sell such bonds at public or private sale in such manner and at such times as may be determined by this body to be most advantageous; and to loan the proceeds of its revenue bonds for the purpose of defraying the cost of acquiring or improving real and personal properties suitable for use for, among other things, commercial, manufacturing, agricultural or industrial enterprises, or to refund bonds or notes issued under the Act. Such revenue bonds rnay be secured by a pledge of the revenues to be derived by the City from a loan agreement with the borrower, by a mortgage on the project and by such other security devices as may be deemed advantageous. Under the provisions of the Act, any bonds so issued by the City shall be special, limited obligations of the City and the bonds shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers- 1.02. Pursuant to the Act, the City has issued its Industrial Development Refunding Mortgage (Outlaw h-Ln), Series 1996, dated as of December 15, 1986, in the original aggregate principal amount of $2,680,000, of which $2,680,000 in aggregate principal amount are now outstanding (the "Series 1986 Bonds"), to redeem the outstanding principal balance of the City's Industrial Development Revenue Mortgage Note originally issued to finance on behalf of the Outlaw Inn joint Venture, a Montana joint venture (the "Borrower"), the costs of constructing and equipping additions to the Borrower's motel -convention facility (as hereinafter defined, the "Refinanced Facilities"). The Refinanced Facilities comprise the motel - convention facility known as the Outlaw Inn, including the land, building, improvements and equipment to the extent financed from the proceeds of the Series 1986 Bonds. 1,03. The Borrower has proposed that the City, pursuant to the Act, issue its revenue bonds in the approximate aggregate principal amount of $2,680,000, in one or more series at one time or from tirne to time (the "Bonds"), the proceeds of vvhich will be loaned by the City to the Borrower in the approximate amount of $2,680,000 to be used, with certain available funds of the Borrower, to ref=d in advance of their maturities the Outstanding Bonds. The borrower will pay costs of issuance of the Bonds. The Refinanced Facilities will be owned by the Borrower and are located at 1701 Highway 93 South in the City. Section 2, Preliminary Findings. Based on representations made by the Borrower to the City to date, the Council hereby makes preliminary findings, determinations and declarations, subject to final findings, determinations and declarations. (a) The City is authorized to issue revenue bonds to defray the costs of making a loan to the Borrower, the proceeds of which will be used to refund, with other available funds of the Borrower, the Outstanding Bonds and paying the costs and expenses incident to the issuance and sale of the Bonds, including any security for the Bonds, and to enter into a Loan Agreement with the Borrower requiring loan repayments from the Borrower in amounts sufficient to repay the loan when due and requiring the Borrower to pay all costs of maintaining and insuring the Refinanced Facilities, including taxes thereon. (b) The loan repayments to be made by the Borrower under the Loan Agreement., shall be established at a level and payable in installments at times sufficient to pay all principal of, premium, if any, and interest on the Bonds when due. (c) In preliminarily authorizing the refunding of the Outstanding Bonds and the issuance of the Bonds, the City's purpose is and the effect thereof will be to promote the public welfare of the City and its residents by retaining the location of a revenue -prod, icing ente-rprise within the City thereby promoting and stimulating economic activity within the City, improving employment opportunities for present and future residents, increasing and providing a better balance for the tax base of the City and underlying taxing jurisdictions and otherwise furthering the purposes and policies of the Act. (d) The refunding of the Outstanding Bonds and the issuance of the Bonds to finance ail or a portion of the costs thereof are in the public interest. Section 3. Prgliminjr-y Annnno-val. This Council hereby gives preliminary approval to the refunding of the Outstanding Bonds and the issuance of the Bonds in the approximate aggregate principal amount of $2,680,1000 to finance all or a port -ion of the costs thereof, subject to final dezermination by the Council that the refunding of the Outstanding Bonds and the issuance of the Bonds are in the best interest of the City. Section 4. Costs. The Borrower will pay, or upon demand reimburse the City for payment of any and all costs incurred by &,e City 'I in connection with the refunding of the Outstanding Bonds and the issuance of the Bonds, including the City's issuance fee, whether or not the Bonds are issued. Section a. -CommitrnMt Conditional. The adop-tion of this resolution does not constitute a guarantee or a firm commitment that the City will issue the Bonds as requested by the Borrower. If, based on information made available to or obtained by the City during its review of the Refinanced Facilities, it appears that the Refinanced Facilities or the issuance of 'Bonds to finance the costs thereof is not in the public interest or inconsistent with the purposes of the Act, the City reserves the right not to give final approval to the issuance of the Bonds. The City also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds should the Council,at any time prior to the issuance thereof, determine that it is in the best interests of the City not to issue the Bonds or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for the transaction. PASSED AND APPROVED by the City Council of Kalispell, Montana, this day of .1996, Attest: City Clerk (SEAL) -3- Douglas Rauthe, Mayor