Resolution 5872 - West Side Urban Renewal BondsCERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
I, the undersigned, being the duly qualified and acting recording officer of the City of
Kalispell, Montana (the "City"), hereby certify that the attached resolution is a true copy of
Resolution No. 5872, entitled: "RESOLUTION RELATING TO $4,960,000 TAX
INCREMENT URBAN RENEWAL REVENUE BONDS (WEST SIDE URBAN RENEWAL
DISTRICT), SERIES 2018; AUTHORIZING THE SALE AND PRESCRIBING THE FORM
AND TERMS THEREOF AND THE SECURITY THEREFOR" (the "Resolution"), on file in
the original records of the City in my legal custody; that the Resolution was duly adopted by the
City Council of the City at a regular meeting on May 21, 2018, and that the meeting was duly
held by the City Council and was attended throughout by a quorum, pursuant to call and notice
of such meeting given as required by law; and that the Resolution has not as of the date hereof
been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said meeting, the
following Council Members voted in favor thereof: Gor&(nw.m . W4Ayym art,
KeNesne.r �t�ittri�ia C.cxr(sokl d-- GC.6 ' S0 •yotedagainst
the same: ; abstained from voting
thereon: — ; or were absent: + sc.v -tAj .
WITNESS my hand officially this 21 st day of May, 2018.
(SEAL)
TABLE OF CONTENTS
[Not a part of this Resolution; for convenience of reference only.]
SECTION 1. DEFINITIONS, AUTHORIZATIONS AND FINDINGS.
1.01. Definitions..........................................................
1.02. Rules of Construction ........................................
1.03. Recitals...............................................................
1.04. Prior City Actions ..............................................
1.05. The Series 2012 Note and the Refunding ..........
1.06. Authorization and Sale of Series 2018 Bonds ...
1.07. Application of Series 2018 Bond Proceeds .......
1.08. Estimate of Tax Increment .................................
1.09. Findings and Determinations .............................
SECTION 2. THE BONDS .....................................
Page
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2.01. General Title.............................................................................................................. 8
2.02. General Limitations; Issuable in Series..................................................................... 9
2.03. Terms of a Particular Series....................................................................................... 9
2.04. Form and Denominations........................................................................................... 9
2.05. Execution and Delivery.............................................................................................. 9
SECTION 3. THE SERIES 2018 BONDS....................................................................................10
3.01. Term of Series 2018 Bonds...................................................................................... 10
3.02. Registered Form, Interest Payment Dates................................................................ 11
3.03. Date.......................................................................................................................... 11
3.04. Registration.............................................................................................................. 11
3.05. Appointment of Initial Registrar.............................................................................. 12
3.06. Optional Redemption............................................................................................... 12
3.07. Mandatory Sinking Fund Redemption..................................................................... 13
3.08. Execution and Delivery............................................................................................ 14
3.09. Securities Depository for the Series 2018 Bonds .................................................... 14
3.10. Form of Series 2018 Bonds...................................................................................... 16
3.11. Certification of Proceedings.................................................................................... 16
SECTION 4. APPLICATION OF PROCEEDS OF SERIES 2018 BONDS;
REFUNDING OF REFUNDED NOTE............................................................................16
4.01. Application of Proceeds of Series 2018 Bonds ........................................................ 16
4.02. Redemption.............................................................................................................. 17
SECTION 5. ADDITIONAL BONDS..........................................................................................17
5.01. General Provisions................................................................................................... 17
5.02. Additional Bonds To Pay the Cost of Projects........................................................ 17
5.03. Additional Bonds for Refunding Purposes.............................................................. 19
5.04. Subordinate Obligations........................................................................................... 20
SECTION 6. THE TAX INCREMENT ACCOUNTS..................................................................20
6.01. Bond Proceeds and Tax Increment Pledged and Appropriated ............................... 20
6.02. Tax Increment Receipts........................................................................................... 20
6.03. Construction Account.............................................................................................. 21
6.04. Bond Account.......................................................................................................... 21
6.05. Reserve Account...................................................................................................... 22
6.06. Tax Increment Development Account..................................................................... 23
6.07. Investments.............................................................................................................. 24
SECTION 7. CONTINUING DISCLOSURE...............................................................................24
SECTION 8. TAX COVENANTS AND CERTIFICATIONS.....................................................28
8.01. Use of the Projects................................................................................................... 28
8.02. General Covenant..................................................................................................... 28
8.03. Arbitrage Certification............................................................................................. 29
8.04. Arbitrage Rebate...................................................................................................... 29
8.05. Information Reporting............................................................................................. 30
8.06. "Qualified Tax -Exempt Obligations."..................................................................... 30
SECTION 9. OTHER COVENANTS OF CITY..........
.....................................3 0
9.01. Punctual Payment....................................................................
9.02. Accumulation of Claims of Interest ........................................
9.03. Against Encumbrances............................................................
9.04. Books and Accounts; Financial Statements ............................
9.05. Further Assurances..................................................................
9.06. Amendment of Ordinance.......................................................
9.07. Increase in Base Taxable Value ..............................................
9.08. Pledge of Replacement Revenues ...........................................
9.09. Owners' Rights.......................................................................
....................... 30
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SECTION 10. SUPPLEMENTAL RESOLUTIONS....................................................................32
10.01. General................................................................................................................... 32
10.02. Consent of Owners................................................................................................. 32
10.03. Notice..................................................................................................................... 32
10.04. Manner of Consent................................................................................................. 33
SECTION 11. DEFEASANCE OR DISCHARGE.......................................................................33
11.01. General................................................................................................................... 33
M
11.02. Maturity.................................................................................................................. 33
11.03. Redemption............................................................................................................ 33
11.04. Escrow.................................................................................................................... 33
SECTION 12. REPEALS AND EFFECTIVE DATE...................................................................33
12.01. Repeal.................................................................................................................... 33
12.02. Effective Date........................................................................................................ 34
EXHIBIT A -Form of Series 2018 Bonds................................................................................... A-1
EXHIBIT B-Form of Escrow Agreement....................................................................................B-1
in
RESOLUTION NO. 5872
RESOLUTION RELATING TO $4,960,000 TAX INCREMENT
URBAN RENEWAL REVENUE BONDS (WEST KALISPELL
CORE AREA URBAN RENEWAL DISTRICT), SERIES 2018;
AUTHORIZING THE SALE AND PRESCRIBING THE FORM
AND TERMS THEREOF AND THE SECURITY THEREFOR
BE IT RESOLVED by the City Council (the "Council") of the City of Kalispell,
Montana (the "City"), as follows:
Section 1. Definitions, Authorizations and Findings.
1.01. Definitions. The terms defined in this Section 1.01 shall for all purposes of this
Resolution have the meanings herein specified, unless the context clearly otherwise requires:
Accountant shall mean a Person engaged in the practice of accounting as a certified
public accountant, whether or not employed by the City.
Act shall mean Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as
amended or supplemented.
Additional Bonds shall mean any Bonds issued pursuant to Sections 5.01 through 5.03.
Bond Account shall mean the account so designated in the Tax Increment Debt Service
Account.
Bond Counsel shall mean any firm of nationally recognized bond counsel experienced in
matters relating to tax-exempt financing, selected by the City.
Bond Refzister shall mean the register maintained for the purpose of registering the
ownership, transfer and exchange of the Bonds of any series.
Bonds shall mean the Series 2018 Bonds and any Additional Bonds.
Business Day shall mean, with respect to the Bonds of any series, any day other than a
Saturday, Sunday or other day on which the Registrar for such series of Bonds is not open for
business.
City shall mean the City of Kalispell, Montana, or its successors.
Code shall mean the Internal Revenue Code of 1986, as amended.
Construction Account shall mean the account so designated in the Tax Increment Capital
Project Account.
Council shall mean the City Council of the City or any successor governing body thereof.
Defeasance Obligations shall mean obligations for payment of the principal of and
interest on which the United States has pledged its full faith and credit and which are not subject
to redemption or prepayment other than at the option of the holder thereof.
District shall mean the City's West Side Urban Renewal District created and established
pursuant to the Act and the Ordinance, as such district may be enlarged or reduced in accordance
with the Act and this Resolution.
Escrow Account shall have the meaning given such term in Section 4.01.
Fiscal Year shall mean the period commencing on the first day of July of any year and
ending on the last day of June of the next calendar year, or any other twelve-month period
authorized by law and specified by this Council as the City's Fiscal Year.
Independent shall mean, when used with respect to any specified Person, such a Person
who (i) is in fact independent; (ii) does not have any direct financial interest or any material
indirect financial interest in the City, other than the payment to be received under a contract for
services to be performed by such Person; and (iii) is not connected with the City as an officer,
employee, promoter, trustee, partner, director, underwriter or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion or certificate
shall be furnished, such Person shall be appointed by the City and such opinion or certificate
shall state that the signer has read this definition and that the signer is Independent within the
meaning hereof.
Interest Account shall mean the subaccount so designated in the Bond Account.
Interest Payment Date shall mean the Stated Maturity of an installment of interest on any
of the Bonds.
Ordinance shall mean Ordinance No. 1259, adopted by the Council on March 17, 1997,
as amended and supplemented by Ordinance Nos. 1347, 1704, 1717 and 1804, adopted by the
Council on February 7, 2000, November 21, 2011, November 19, 2012, and March 19, 2018,
respectively, as the same may be further amended or supplemented from time to time in
accordance with the Act.
Original Purchaser shall mean, with respect to any series of Bonds, the Person who
purchases such series of Bonds from the City when first issued. The Original Purchaser of the
Series 2018 Bonds is D.A. Davidson & Co., of Great Falls, Montana.
Outstanding shall mean, with reference to Bonds, as of the date of determination, all
Bonds theretofore issued and delivered under this Resolution except:
(i) Bonds theretofore cancelled by the City or delivered to the City cancelled or
for cancellation;
(ii) Bonds and portions of Bonds for whose payment or redemption money or
Defeasance Obligations (as provided in Section 11.04) shall have been theretofore
deposited in trust for the Owners of such Bonds; provided, however, that if such Bonds
are to be redeemed, notice of such redemption shall have been duly given pursuant to this
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Resolution or irrevocable instructions to call such Bonds for redemption at a stated
Redemption Date shall have been given by the City; and
(iii) Bonds in exchange for or in lieu of which other Bonds shall have been issued
and delivered pursuant to this Resolution;
provided, however, that in determining whether the Owners of the requisite principal amount of
Outstanding Bonds have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Bonds owned by the City shall be disregarded and deemed not to be
Outstanding.
Owner shall mean, with respect to any Bond, the Person in whose name such Bond is
registered in the Bond Register.
Person shall mean any individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Plan shall mean the City's West Side Urban Renewal Plan adopted by the Council on
March 17, 1997, as heretofore and hereafter amended or supplemented from time to time, all in
accordance with the Act, the Ordinance and this Resolution.
Principal and Interest Requirements shall mean, with respect to any Bonds and for any
Fiscal Year or other specified period, the amount required to pay the principal of and interest on
such Bonds during such Fiscal Year or other period, determined on the assumption that each
Serial Bond is to be paid on its Stated Maturity and each Term Bond is to be paid on the Sinking
Fund Payment Dates according to the mandatory redemption requirements established for such
Term Bond by the applicable section of this Resolution or any Supplemental Resolution.
Principal Payment Date shall mean the Stated Maturity of principal of any Serial Bond
and the Sinking Fund Payment Date for any Term Bond.
Project shall mean the 2018 Project and any other urban renewal project undertaken
under the Act in or for the benefit of the District, the costs of which are to be paid, in whole or in
part, from the proceeds of Bonds.
Redemption Date when used with respect to any Bond to be redeemed shall mean the
date on which it is to be redeemed.
Redemption Price when used with respect to any Bond to be redeemed shall mean the
price at which it is to be redeemed.
Refunded Note shall mean the Series 2012 Note being refunded by the Series 2018
Bonds.
Re istrar shall mean the Person, if any, appointed by the City to act as bond registrar,
transfer agent and paying agent for a series of Bonds. With respect to the Series 2018 Bonds, the
Registrar shall be appointed as set forth in Section 3.05.
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Regulations shall mean the Treasury Regulations promulgated under the Code.
Reserve Account shall mean the account so designated in the Tax Increment Debt Service
Account.
Reserve Requirement shall mean an amount equal, as of the date of calculation, to the
least of (i) ten percent (10%) of the original principal amount of the Bonds; (ii) the maximum
Principal and Interest Requirements on the Bonds in the current or any future Fiscal Year; or (iii)
125% of the average Principal and Interest Requirements on the Bonds payable in any Fiscal
Year.
Resolution shall mean this Resolution No. 5872 as originally adopted or as it may from
time to time be amended or supplemented pursuant to the applicable provisions hereof.
Serial Bonds shall mean Bonds which are not Term Bonds.
Series 2018 Bonds shall mean the City's Tax Increment Urban Renewal Revenue Bonds
(West Side Urban Renewal District), Series 2018, issued in the original aggregate principal
amount of $4,960,000.
Series 2012 Note shall mean the City's Tax Increment Urban Renewal Revenue Note
(West Side Urban Renewal Tax Increment District), Series 2012.
Sinking Fund Account shall mean the subaccount so designated in the Bond Account.
Sinking Fund Payment Date shall mean a date set forth in any applicable provision of this
Resolution or a Supplemental Resolution for the making of a mandatory principal payment for
the redemption of a Term Bond.
State shall mean the State of Montana.
State Entitlements shall mean the system of local government entitlements and block
grants established pursuant to HB 124 enacted by the 2001 Legislature and codified at 15-1-120
through 15-1-123, M.C.A., as may be amended from time to time.
Stated Maturity when used with respect to any Bond or any installment of interest thereon
shall mean the date specified in such Bond as the fixed date on which principal of such Bond or
such installment of interest is due and payable.
Subordinate Obligations shall mean any bonds, notes or obligations of the City issued on
a subordinate basis to the Bonds as to the Tax Increment pursuant to Section 5.04.
Supplemental Resolution shall mean any resolution supplemental to this Resolution
adopted pursuant to Section 10.
Tax Increment shall mean the amount received by the City pursuant to the Act from the
extension of levies of Taxes (expressed in mills) against the incremental taxable value (as
defined in the Act) of all Taxable Property, and shall include all payments in lieu of Taxes
attributable to the incremental taxable value, State Entitlements received by the City with respect
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to the District, and all payments received by the City designated as replacement revenues for lost
Tax Increment, as provided in Section 9.08.
Tax Increment Capital Project Account shall mean the account so designated in the Tax
Increment Accounts.
Tax Increment Debt Service Account shall mean the account so designated in the Tax
Increment Accounts.
Tax Increment Development Account shall mean the account so designated in the Tax
Increment Accounts.
Tax Increment Accounts shall mean the accounts established pursuant to Section 6.
Taxable Property means all real and personal property located in the District and subject
to Taxes, including land, improvements and equipment.
Taxes means all taxes levied on an ad valorem basis by any Taxing Body against the
Taxable Property (exclusive of the six mill levy for university purposes levied by the State), and
shall include all payments in lieu of taxes received by the City with respect to Taxable Property.
Taxing Body shall mean the City; Flathead County, Montana; School District No. 5
(Kalispell), Flathead County, Montana; High School District No. 5 (Kalispell), Flathead County,
Montana; the Flathead County Community College District; the State of Montana; special
districts, if applicable, and any other political subdivision or governmental unit which may
hereafter levy Taxes against property within the District.
Term Bond shall mean any Bond for the payment of the principal of which mandatory
payments are required by this Resolution or Supplemental Resolution to be made at times and in
amounts sufficient to redeem all or a portion of such Bond prior to its Stated Maturity.
2012 Project shall mean the urban renewal project financed with proceeds of the Series
2012 Note, consisting of (i) improvements to the Meridian and Appleway intersection and such
portions of the arterials leading to the intersection as necessary to increase the functionality and
safety for vehicular and pedestrian traffic, and (ii) capital improvements to the water mail for the
west end of West Colorado Street and from West Colorado Street east from 5t" Avenue North to
U.S. 93, then south to West Utah Street, for the purposes of improving flows for fire protection
in that neighborhood.
2018 Project shall have the meaning set forth in Section 1.04.
2012 Resolution shall mean Resolution No. 5550, adopted by the Council on March 6,
2012, pursuant to which the City issued the Series 2012 Note.
1.02. Rules of Construction. Unless the context otherwise requires or except as
otherwise expressly provided:
(a) All references in this Resolution to designated sections and other
subdivisions are to the designated sections and other subdivisions of this Resolution as
originally adopted.
(b) The words "herein," "hereof"and and "hereunder" and other words of similar
import without reference to any particular section or subdivision refer to this Resolution
as a whole and not to any particular section or other subdivision unless the context clearly
indicates otherwise.
(c) The terms defined in this Resolution include the plural as well as the
singular.
(d) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles applicable
to governmental entities.
(e) All computations provided herein shall be made in accordance with
generally accepted accounting principles applicable to governmental entities consistently
applied.
(f) "Or" is not intended to be exclusive, but is intended to contemplate or
encompass one or more or all of the terms or alternatives conjoined.
1.03. Recitals. Under the Act, the City is authorized to create urban renewal areas,
prepare and adopt an urban renewal plan therefor and amendments thereto, undertake urban
renewal projects therein, provide for the segregation and collection of tax increment with respect
to property taxes collected in such areas, issue its bonds to pay the costs of such projects and to
refund bonds previously issued under the Act and pledge to the repayment of the bonds the tax
increment and other revenues derived from projects undertaken within the urban renewal area.
1.04. Prior City Actions. Pursuant to the Act and the Ordinance, the Council created the
District and approved the Plan containing a tax increment financing provision, all as set forth in
the Ordinance. As set forth in the Plan and pursuant to the Ordinance, this Council determined
to undertake, as an urban renewal project for the District, (1) the relocation of rail -dependent
occupants from the City's "Core Area," identified as the area affected by the railroad tracks
traversing central Kalispell from east to west and which includes approximately 364 acres along
the rail corridor within City limits, which is within the boundaries of the District, to a new rail
terminus and rail -served industrial site (the "Rail Park"), which requires the design, engineering,
construction and installation of certain public improvements to the Rail Park to allow for such
relocation; (2) removal of the railroad tracks from the Core Area and the design, engineering,
construction and installation of a linear public park in the Core Area on the land previously
occupied by the railroad tracks; and (3) related improvements (collectively, the "2018 Project"),
and the Council declared its intention to use Tax Increment to finance a portion of the costs of
the 2018 Project.
1.05. The Series 2012 Note and the Refunding. Pursuant to the Act, the Ordinance and
the 2012 Resolution, the City issued the Series 2012 Note to finance the 2012 Project. The
Series 2012 Note bears interest at a variable rate. In the 2012 Resolution, the City reserved the
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right to redeem the 2012 Note in whole or in part on July 1, 2014 and any date thereafter. For
the purposes of coordinating bond covenants and providing level, predictable debt service
payable from Tax Increment, the City has determined it is in the best interests of the City to
refund the Series 2012 Note currently outstanding in the principal amount of $425,124.47 (the
"Refunded Note").
1.06. Authorization and Sale of Series 2018 Bonds. Pursuant to Resolution No. 5853
adopted February 5, 2018 (the "Parameters Resolution"), this Council determined that it is in the
best interests of the City to issue its Series 2018 Bonds, as authorized by Section 7-15-4301 of
the Act and this Resolution, to (i) pay a portion of the eligible costs of the 2018 Project; (ii) pay,
redeem and refund the Refunded Note; (iii) fund a deposit to a debt service reserve account for
the Series 2018 Bonds, and (iv) pay costs of issuance of the Series 2018 Bonds and costs of
refunding the Refunded Note. Pursuant to the Parameters Resolution, this Council authorized
the negotiated sale of the Series 2018 Bonds to the Original Purchaser and authorized the City
Manager and City Finance Director, subject to the satisfaction of certain parameters, to enter into
the Bond Purchase Agreement, dated May 15, 2018 with the Original Purchaser (the "Bond
Purchase Agreement"), pursuant to which the Original Purchaser agreed to purchase the Series
2018 Bonds at the aggregate purchase price of $4,973,291.20 (representing the par amount of the
Series 2018 Bonds, less underwriter's compensation of $59,520.00 and plus net original issue
premium of $72,811.20), subject to the terms and conditions of the Bond Purchase Agreement
and this Resolution. The terms of the sale and purchase of the Series 2018 Bonds, as set forth in
the Bond Purchase Agreement and this Resolution, are consistent with the terms and limitations
of Resolution No. 5853. The sale of the Series 2018 Bonds to the Original Purchaser is hereby
ratified and confirmed. To the extent the provisions of this Resolution and of the Bond Purchase
Agreement conflict, the provisions of this Resolution will prevail.
1.07. Application of Series 2018 Bond Proceeds. Proceeds of the Series 2018 Bonds and
amount sin the 2012 Note debt service account will be applied as follows:
Sources of Funds:
Principal Amount of the 2018 Bonds
Available Funds in 2012 Note Debt Service Account
Net Original Issue Premium
Total Sources of Funds
Application of Funds. -
Deposit to the Construction Account
to Pay 2018 Project Costs
Deposit to the Escrow Account to Refund the 2012 Note
Deposit to the Reserve Account
Payment of Underwriter's Discount
Total
$4,960,000.00
11,678.00
72, 811.20
$5,044,489.20
$4,009,594.43
436,337.13
480,011.36
59,520.00
Deposit to Construction Account to Pay Costs of Issuance 59,026.28
Total Application of Funds $5,044,489.20
1.08. Estimate of Tax Increment. The City estimates that Tax Increment from the
District will be at least $479,222 per year (based on $479,222 in Tax Increment expected to be
received by the City in Fiscal Year 2018). The maximum Principal and Interest Requirements on
the Series 2018 Bonds in Fiscal Years 2019 through 2036 is $368,375, and the final debt service
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payment on the Series 2018 Bonds on January 1, 2037 is $550,800. The Reserve Account will
be funded at closing from proceeds of the Series 2018 Bonds in the amount of $480,011.36, and,
assuming the funds in the Reserve Account are not previously drawn, those funds will be applied
to the January 1, 2037 payment (leaving a net amount to be paid from Tax Increment of
$70,788.64). Based on estimated Tax Increment to be received in each Fiscal Year in the
amount of at least $479,222, and treating available funds in the Reserve Account in the amount
of $480,011.36 as other revenues pledged to the repayment of the Series 2018 Bonds, this
Council hereby estimates that, in accordance with Section 7-15-4324 of the Act, there will be
sufficient Tax Increment and other revenues to pay the Series 2018 Bonds in each year such
bonds are Outstanding. Based on the amount of estimated Tax Increment to be received by the
City in Fiscal Year 2018, which is at least 130% of maximum Principal and Interest
Requirements on the Series 2018 Bonds in any Fiscal Year, excluding the January 1, 2037
payment on the Series 2018 Bonds, the City expects that it will not be required to draw on the
Reserve Account until January 1, 2037. Upon the issuance and delivery of the Series 2018
Bonds, there will be no other bonds or other obligations of the City payable from Tax Increment
other than the Series 2018 Bonds.
1.09. Findings and Determinations. It is hereby found, determined and declared by this
Council as follows:
(a) the conditions precedent to the issuance of the Series 2018 Bonds under the
Act, the Ordinance and this Resolution have or will be met prior to the issuance of the
Series 2018 Bonds;
(b) the estimated Tax Increment to be received by the City, together with
amounts in the Reserve Account expected to be applied to the January 1, 2037 payment
on the Series 2018 Bonds and pledged to the payment of the Series 2018 Bonds, as set
forth in Section 1.08, will be sufficient to pay the principal of and interest on the Series
2018 Bonds when due;
(c) it is in the best interests of the City to sell and issue the Series 2018 Bonds
to pay a portion of the costs of the 2018 Project, refund the Refunded Note, fund a
deposit to the Reserve Account, and pay costs of issuance of the Series 2018 Bonds and
costs of the refunding, as provided in this Resolution; and
(d) all acts, conditions and things required by the Constitution and laws of the
State, including the Act, in order to pledge the Tax Increment to the payment of the
Series 2018 Bonds, to make the Series 2018 Bonds valid and binding special, limited
obligations of the City in accordance with their terms and 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.
Section 2. The Bonds.
2.01. General Title. The general title of the Bonds of all series shall be "Tax Increment
Urban Renewal Revenue Bonds (West Side Urban Renewal District)" with appropriate additions
for refunding bonds or Subordinate Obligations and to distinguish Bonds of each series from
Bonds of other series.
2.02. General Limitations,• Issuable in Series. The aggregate principal amount of Bonds
that may be authenticated and delivered and Outstanding under this Resolution is not limited,
except as provided in Section 5 and except as may be limited by law.
The Bonds may be issued in series as from time to time authorized by the City.
The Bonds are special, limited obligations of the City. The Bonds are not general
obligations of the City and neither the general credit nor the taxing power of the City, Flathead
County or the State is pledged to the payment of the Bonds or the interest thereon. Principal of,
premium, if any, and interest on the Bonds (except to the extent expressly payable out of
proceeds of the Bonds) are payable solely from the Tax Increment or other sources which may be
pledged to the payment of any series of Bonds. Flathead County and the State shall in no event
be liable for the payment of the principal of, premium, if any, or interest on the Bonds or the
performance of any pledge of any kind whatsoever that may be undertaken by the City with
respect thereto. Neither this Resolution, the Bonds, nor any of the agreements or obligations of
the City contained herein or therein shall be construed to constitute an indebtedness of the City,
Flathead County or the State within the meaning of any constitutional or statutory provisions
whatsoever.
If any Stated Maturity, Redemption Date or Sinking Fund Payment Date shall be on a day
which is not a Business Day, then payment of principal of, premium, if any, or interest due on
such day may be made on the next succeeding Business Day, with the same force and effect as if
made on such Stated Maturity, Redemption Date or Sinking Fund Payment Date (whether or not
such next succeeding Business Day occurs in a succeeding month), and no interest shall accrue
for the intervening period.
2.03. Terms of a Particular Series. Each series of Bonds (other than the Series 2018
Bonds, as to which specific provision is made in Section 3) shall be created by a Supplemental
Resolution and pursuant to Section 5. The City may, at the time of the creation of any series of
Bonds or at any time thereafter make, and the Bonds of that series may also contain, provision
for a sinking, amortization, improvement or other analogous fund. All Bonds of the same series
shall be substantially identical except as to denomination and the differences specified herein or
in a Supplemental Resolution between interest rates, Stated Maturities and redemption
provisions.
2.04. Form and Denominations. The form of the Bonds (other than the Series 2018
Bonds, as to which specific provision is made in Section 3) shall be established by the
Supplemental Resolution creating such series.
The Bonds of any series shall be issuable as fully registered Bonds, in such
denominations as shall be provided in the Supplemental Resolution creating such series (other
than the Series 2018 Bonds, as to which specific provision is made in Section 3). In the absence
of any such provision with respect to the Bonds of any particular series, Bonds shall be in
denominations of $5,000 or any integral multiple thereof, of single Stated Maturities.
2.05. Execution and Delivery. Each Bond shall be executed on behalf of the City by the
officials of the City specified in a Supplemental Resolution (other than the Series 2018 Bonds, as
to which specific provision is made in Section 3). The signature of any official may be
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facsimile, if permitted by applicable law. Bonds bearing the manual or facsimile signatures of
individuals who were at any time the proper officials of the City shall bind the City,
notwithstanding that such individuals or any of them have ceased to hold such offices prior to the
delivery of such Bonds or did not hold such offices at the date of such Bonds.
At any time and from time to time, the City may deliver Bonds executed by the proper
officers of the City to the Registrar for authentication, and the Registrar shall authenticate and
deliver such Bonds as specified in a Supplemental Resolution (other than the Series 2018 Bonds,
as to which specific provision is made in Section 3).
Section 3. The Series 2018 Bonds.
3.01. Term of Series 2018 Bonds. The Series 2018 Bonds shall be designated "Tax
Increment Urban Renewal Revenue Bonds (West Side Urban Renewal District), Series 2018."
The Series 2018 Bonds shall be in denominations of $5,000 or any integral multiple thereof of
single maturities. The Series 2018 Bonds shall mature, subject to redemption as hereinafter
provided, on July 1 in the years and amounts listed below, except that the final Stated Maturity is
January 1, 2037, and the Series 2018 Bonds maturing in such years and amounts shall bear
interest from date of original issue until paid or duly called for redemption (including mandatory
sinking fund redemption as to the bifurcated term bonds maturing in 2033 and the term bonds
maturing in 2037) at the rates shown opposite such years and amounts, as follows:
Interest
Year'
Amount
Rate
2019
$ 170,000
3.000%
2020
190,000
3.000
2021
195,000
3.000
2022
205,000
3.000
2023
210,000
3.000
2024
215,000
3.000
2025
220,000
3.000
2026
230,000
3.125
2027
235,000
3.250
2028
245,000
3.250
2029
250,000
3.375
2030
260,000
3.500
20332*
500,000
5.000
20332*
340,000
3.750
2037*
1,495,000
4.000
'July 1 in the years 2019 through and including 2033, and January 1, 2037.
2Bifurcated maturities.
*Term Bonds subject to mandatory sinking fund redemption as set forth in Section 3.07
below.
Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day
months.
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3.02. Reizistered Form, Interest Payment Dates. The Series 2018 Bonds shall be issuable
only in fully registered form, and the ownership of the Series 2018 Bonds shall be transferred
only upon the Bond Register. The interest on the Series 2018 Bonds shall be payable on
January 1 and July 1 in each year, commencing January 1, 2019 and ending January 1, 2037.
Interest on the Series 2018 Bonds shall be payable to the Owners thereof as of the close of
business on the 15th day of the month immediately preceding each Interest Payment Date,
whether or not such day is a Business Day. Interest on, and upon presentation and surrender
thereof, the principal of each Series 2018 Bond shall be payable by check or draft issued by the
Registrar described herein.
3.03. Date. Each Series 2018 Bond shall be dated, as originally issued, as of May 29,
2018, and upon authentication of any Series 2018 Bond the Registrar shall indicate thereon the
date of such authentication.
3.04. Reizistration. The City shall appoint, and shall maintain, a bond registrar, transfer
agent and paying agent (the "Registrar"). This Section 3.04 shall establish a system of
registration for the Series 2018 Bonds. The effect of registration and the rights and duties of the
City and the Registrar with respect thereto shall be as follows:
(a) Bond Register. The Registrar shall keep at its principal office a Bond
Register in which the Registrar shall provide for the registration of ownership of Series
2018 Bonds and the registration of transfers and exchanges of Series 2018 Bonds entitled
to be registered, transferred or exchanged.
(b) Transfer of Series 2018 Bonds. Upon surrender to the Registrar for
transfer of any Series 2018 Bond duly endorsed by the Owner thereof or accompanied by
a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the
Owner thereof or by an attorney duly authorized by the Owner in writing, the Registrar
shall authenticate and deliver, in the name of the designated transferee or transferees, one
or more new Series 2018 Bonds of the same series and a like aggregate principal amount,
interest rate and maturity, as requested by the transferor. The Registrar may, however,
close the books for registration of transfer of any Series 2018 Bond or portion thereof
selected or called for redemption.
(c) Exchange of Series 2018 Bonds. Whenever any Series 2018 Bond is
surrendered by the Owner for exchange, the Registrar shall authenticate and deliver one
or more new Series 2018 Bonds of the same series and a like aggregate principal amount,
interest rate and maturity, as requested by the Owner or the Owner's attorney in writing.
(d) Cancellation. All Series 2018 Bonds surrendered upon any 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 any Series 2018 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 Series 2018 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 any Series 2018 Bond is at any time registered in the Bond Register as the
absolute owner of such Series 2018 Bond, whether such Series 2018 Bond shall be
overdue or not, for the purpose of receiving payment of, or on account of, the principal
of, premium, if any, and interest on such Series 2018 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 of the City upon such Series
2018 Bond to the extent of the sum or sums so paid.
(g) Taxes, Fees and Charges. For every transfer or exchange of Series 2018
Bonds (except for an exchange upon a partial redemption of a Series 2018 Bond), the
Registrar may impose a charge upon the Owner thereof sufficient to reimburse the
Registrar for any tax, fee or other governmental charge required to be paid with respect to
such transfer or exchange.
(h) Mutilated, Lost, Stolen or Destroyed Series 2018 Bonds. In case any
Series 2018 Bond shall become mutilated or be lost, stolen or destroyed, the Registrar
shall deliver a new Series 2018 Bond of the same series and a like aggregate principal
amount, interest rate and maturity in exchange and substitution for and upon cancellation
of any such mutilated Series 2018 Bond or in lieu of and in substitution for any such
Series 2018 Bond lost, stolen or destroyed, upon the payment of the reasonable expenses
and charges of the Registrar in connection therewith; and, in the case of a Series 2018
Bond lost, stolen or destroyed, upon filing with the Registrar of evidence satisfactory to it
that such Series 2018 Bond was lost, stolen or destroyed, and of the ownership thereof,
and upon furnishing to the Registrar of an appropriate bond or indemnity in form,
substance and amount satisfactory to it, in which both the City and the Registrar shall be
named as obligees. All Series 2018 Bonds so surrendered to the Registrar shall be
cancelled by it and evidence of such cancellation shall be given to the City. If the
mutilated, lost, stolen or destroyed Series 2018 Bond has already matured or such Series
2018 Bond has been called for redemption in accordance with its terms, it shall not be
necessary to issue a new Series 2018 Bond prior to payment.
3.05. Appointment of Initial Re istrar. The City hereby appoints U.S. Bank National
Association, of Salt Lake City, Utah, to act as the Registrar. The City reserves the right to
appoint a successor Registrar, but the City agrees to pay the reasonable and customary charges of
the Registrar for the services performed. Upon merger or consolidation of a bank or trust
company that is acting as the Registrar, if the resulting corporation is a bank or trust company
authorized by law to conduct such business, such corporation shall be authorized to act as
successor Registrar. The City reserves the right to remove any Registrar upon 30 days' notice
and upon the appointment of a successor Registrar, in which event the predecessor Registrar
shall deliver all cash and Series 2018 Bonds in its possession as Registrar to the successor
Registrar and shall deliver the Bond Register to the successor Registrar.
3.06. Optional Redemption. The Series 2018 Bonds with Stated Maturities on or after
July 1, 2029 are subject to redemption on July 1, 2028 and any date thereafter, at the option of
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the City, in whole or in part, and if in part from such Stated Maturities and in such principal
amounts as the City may designate in writing to the Registrar (or, if no designation is made, in
inverse order of maturities and within a maturity in $5,000 principal amounts selected by the
Registrar by lot or other manner it deems fair), at a Redemption Price equal to the principal
amount thereof and interest accrued to the Redemption Date, without premium.
The Redemption Date and the principal amount of the Series 2018 Bonds to be redeemed
shall be fixed by the City Finance Director who shall give notice thereof to the Registrar at least
45 days prior to the Redemption Date or such lesser period as the Registrar accepts. The
Registrar, at least 30 days prior to the designated Redemption Date, shall cause notice of
redemption to be mailed, by first class mail, or by other means required by the securities
depository, to the Owners of each Series 2018 Bond to be redeemed at their addresses as they
appear on the Bond Register, but no defect in or failure to give such notice shall affect the
validity of proceedings for the redemption of any Series 2018 Bond not affected by such defect
or failure. The notice of redemption shall specify the Redemption Date, Redemption Price, the
numbers, interest rates and CUSIP numbers of the Series 2018 Bonds to be redeemed and the
place at which the Series 2018 Bonds are to be surrendered for payment, which is the principal
office of the Registrar. Official notice of redemption having been given as aforesaid, the Series
2018 Bonds or portions thereof so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified and from and after such date (unless the
City shall default in the payment of the Redemption Price) such Series 2018 Bonds or portions
thereof shall cease to bear interest.
3.07. Mandatory Sinking Fund Redemption. The Series 2018 Bonds having Stated
Maturities in 2033 and 2037 are subject to mandatory sinking fund redemption on July 1 in the
respective years and the respective principal amounts set forth below in $5,000 principal
amounts selected by the Registrar, by lot or other manner it deems fair, at a Redemption Price
equal to the principal amount thereof to be redeemed plus interest accrued to the Redemption
Date:
2033 Term Bonds]
2033 Term Bonds
Sinking Fund
Sinking Fund
Payment or
Payment or
Maturity
Maturity
July 1
Amount
July 1
Amount
2031 *
$245,000
2031 *
$ 25,000
2032*
-
2032*
280,000
2033**
255,000
2033**
35,000
'Bifurcated Maturities.
*Sinking Fund Payment Date
**Stated Maturity.
2037 Term Bonds
Sinking Fund
Payment or
Maturity
Amount
July 1, 2034* $305,000
July 1, 2035* 320,000
July 1, 2036* 330,000
January 1, 2037** 540,000
If the bifurcated Term Bonds having a Stated Maturity in 2033 are not previously
purchased by the City in the open market or prepaid, $255,000 and $35,000, respectively, in
principal amount of such Term Bonds would remain to mature in 2033. If the Term Bonds
having a Stated Maturity in 2037 are not previously purchased by the City in the open market or
13
prepaid, $540,000, in principal amount of such Term Bonds would remain to mature in 2037.
The principal amount of such Term Bonds required to be redeemed on the above Sinking Fund
Payment Dates shall be reduced by the principal amount of such Term Bonds theretofore
redeemed at the option of the City and as to which the City has not previously applied amounts
to reduce the principal amount of such Term Bonds on a Sinking Fund Payment Date.
3.08. Execution and Delivery. The Series 2018 Bonds shall be forthwith prepared for
execution under the direction of the City Clerk and shall be executed on behalf of the City by the
signatures of the Mayor, the City Manager and the City Clerk, provided that said signatures may
be printed, engraved or lithographed facsimiles thereof. The seal of the City need not be
imprinted on or affixed to any Series 2018 Bond. In case any officer whose signature or a
facsimile of whose signature shall appear on the Series 2018 Bonds shall cease to be such officer
before the delivery thereof, 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. When the
Series 2018 Bonds have been so executed by said City officers, they shall be registered by the
City Clerk in accordance with Montana Code Annotated, Section 7-15-4322, as amended.
Notwithstanding such execution, no Series 2018 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 Series 2018 Bond has been duly executed by the manual
signature of an authorized representative of the Registrar. Certificates of authentication on
different Series 2018 Bonds need not be signed by the same representative. The executed
certificate of authentication on each Series 2018 Bond shall be conclusive evidence that it has
been authenticated and delivered under this Resolution. When the Series 2018 Bonds have been
fully executed and authenticated, they shall be delivered by the Registrar to the Original
Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore
made and executed, and the Original Purchaser shall not be obligated to see to the application of
the purchase price.
3.09. Securities Depository for the Series 2018 Bonds.
(a) For purposes of this Section 3.09, the following terms shall have the following
meanings:
"Beneficial Owner" shall mean, whenever used with respect to a Series 2018
Bond of which DTC (as hereinafter defined) or its nominee is the Owner, the Person (or
subrogee of the Person) recorded as the beneficial owner of such Series 2018 Bond on the
records of the Participant (as hereinafter defined) in whose name DTC holds such Series
2018 Bond.
"Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor
nominee of DTC with respect to the Series 2018 Bonds.
"DTC" shall mean The Depository Trust Company of New York, New York.
"Participant" shall mean any broker -dealer, bank or other financial institution for
which DTC holds Series 2018 Bonds as securities depository.
M,
"Representation Letter" shall mean the Blanket Issuer Letter of Representations
pursuant to which the City agrees to comply with DTC's Operational Arrangements.
(b) The Series 2018 Bonds shall be initially issued as separately authenticated fully
registered Series 2018 Bonds, and one Series 2018 Bond shall be issued in the principal amount
of each Stated Maturity of the Series 2018 Bonds. Upon initial issuance, the ownership of all
Series 2018 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
exclusive Owner of the Series 2018 Bonds registered in its name for the purposes of payment of
the principal of or interest on the Series 2018 Bonds, selecting the Series 2018 Bonds or portions
thereof to be redeemed, if any, giving any notice permitted or required to be given to Owners of
Series 2018 Bonds under this Resolution, registering the transfer of Series 2018 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 Series
2018 Bonds under or through DTC or any Participant, or any other Person which is not shown on
the Bond Register as being an Owner, 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 Series 2018 Bonds, with respect to any notice
which is permitted or required to be given to Owners 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 Series 2018 Bonds, or with respect to any consent given or other action taken
by DTC as Owner of the Series 2018 Bonds. So long as any Series 2018 Bond is registered in
the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest
on such Series 2018 Bond, and shall give all notices with respect to such Series 2018 Bond, 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 Series 2018 Bonds to the extent of the sum or sums so paid. Unless the
services of DTC as securities depository with respect to the Series 2018 Bonds are terminated as
provided in subsection (c) hereof, no Person other than DTC shall receive an authenticated Series
2018 Bond for each separate stated maturity evidencing the obligation of the City to make
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
Series 2018 Bonds will be transferable to such new nominee in accordance with subsection (e)
hereof.
(c) In the event the City determines to discontinue the book -entry -only system for the
Series 2018 Bonds, the City may notify DTC and the Registrar, whereupon DTC shall notify the
Participants of the availability through DTC of Series 2018 Bonds in the form of certificates. In
such event, the Series 2018 Bonds will be transferable in accordance with subsection (e) hereof.
DTC may determine to discontinue providing its services with respect to the Series 2018 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 Series 2018 Bonds will be transferable in
accordance with subsection (e) hereof.
(d) The Representation Letter sets forth certain matters with respect to, among other
things, notices, consents and approvals by Owners and Beneficial Owners and payments on the
15
Series 2018 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) In the event that any transfer or exchange of Series 2018 Bonds is permitted under
subsection (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the
Registrar of the Series 2018 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 Series 2018 Bonds in the form of certificates are issued to Owners other than Cede & Co.,
its successor as nominee for DTC as Owner of all the Series 2018 Bonds, or another securities
depository as Owner of all the Series 2018 Bonds, the provisions of this Resolution shall also
apply to all matters relating thereto, including, without limitation, the preparation of such Series
2018 Bonds in the form of Series 2018 Bond certificates and the method of payment of principal
of and interest on such Series 2018 Bonds in the form of Series 2018 Bond certificates.
3.10. Form of Series 2018 Bonds. The Series 2018 Bonds shall be prepared in
substantially the form set forth in Exhibit A hereto and by this reference is made a part hereof.
3.11. Certification of Proceedings. The officers of the City are hereby authorized and
directed to prepare and furnish to the Original Purchaser and to Dorsey & Whitney LLP, Bond
Counsel, certified copies of all proceedings and records of the City, and such other affidavits,
certificates and information as may be required to show the facts relating to the legality and
marketability of the Series 2018 Bonds as the same appear from the books and records under
their custody and control or as otherwise known to them, and all such certified copies,
certificates and affidavits, including any heretofore furnished, shall be deemed representations of
the City as to the facts recited therein.
Section 4. Application of Proceeds of Series 2018 Bonds; Refundiniz of Refunded Note.
4.01. Application of Proceeds of Series 2018 Bonds. Simultaneously with the delivery
of the Series 2018 Bonds, the City Finance Director shall cause to be deposited in an account
(the "Escrow Account") established with U.S. Bank National Association, of Salt Lake City,
Utah (the "Escrow Agent") the following amounts: $424,659.13 of the proceeds of the Series
2018 Bonds and $11,678.00 from money now on hand and available in the debt service account
for the Series 2012 Note for the redemption and prepayment of the Refunded Note on June 29,
2018, as set forth in the Escrow Agreement. The City Manager and the City Finance Director
are hereby authorized to enter into an Escrow Agreement with the Escrow Agent, in the form
which has been presented to this Council and attached hereto as Exhibit B, with such additions
thereto or deletions therefrom as are necessary or appropriate. Pursuant to Section 9.04 of the
2012 Resolution, upon the establishment and funding of the escrow account pursuant to this
Section 4.01, the Refunded Note shall no longer be considered outstanding. In addition,
simultaneously with the delivery of the Series 2018 Bonds, the City Finance Director shall cause
proceeds of the Series 2018 Bonds to be deposited as follows: (i) $480,011.36 to the Reserve
Account to cause the balance therein to equal the Reserve Requirement after giving effect to the
issuance of the Series 2018 Bonds; and (ii) $4,068,620.71 to the Construction Account to be used
to pay costs of the 2018 Project, costs of issuance of the Series 2018 Bonds and costs of the
refunding of the Refunded Note.
16
2018.
4.02. Redemption. The Refunded Note is hereby called for redemption on June 29,
Section 5. Additional Bonds.
5.01. General Provisions. In addition to the Series 2018 Bonds, whose issuance and
delivery is provided for in Section 3, Additional Bonds may at any time and from time to time be
issued, sold and delivered by the City but only upon compliance with the conditions of
Sections 5.02 and 5.03, whichever may be applicable, and upon filing with the City Clerk the
following:
(i) A Supplemental Resolution authorizing the issuance of such series of
Additional Bonds and the sale thereof to the Original Purchaser or Purchasers named
therein for the purchase price set forth therein.
(ii) A certificate executed by the Mayor and the City Finance Director stating
that upon the issuance of such series of Additional Bonds, no default hereunder has
occurred and is continuing which would not be cured upon the issuance of such series of
Additional Bonds and application of the proceeds thereof.
(iii) An opinion of Bond Counsel (who may rely on factual representations of
the City and which opinion may be qualified by customary qualifications and
exceptions), addressed to the City, stating that:
(A) all conditions precedent provided for in this Resolution relating to
the issuance and delivery of such series of Additional Bonds have been complied
with, including any conditions precedent specified in this Section 5.01; and
(B) the series of Additional Bonds when issued and delivered by the
City will be valid and binding special, limited obligations of the City in
accordance with their terms and entitled to the benefits of and secured by this
Resolution.
No Additional Bonds shall be issued unless, immediately after the issuance thereof and
the application of the proceeds thereof the balance on hand in the Reserve Account will be at
least equal to the Reserve Requirement after giving effect to the issuance of such Additional
Bonds.
Any Additional Bonds shall be dated, shall bear interest at a rate or rates not exceeding
the maximum rate, if any, permitted by law, shall have Stated Maturities, and may be subject to
redemption at such times and prices and on such terms and conditions, all as may be provided by
the Supplemental Resolution authorizing their issuance. All Additional Bonds issued pursuant to
Sections 5.02 and 5.03 shall be payable and secured ratably and equally and on a parity with the
Series 2018 Bonds and any Additional Bonds theretofore issued, entitled to the same benefits
and security of this Resolution.
5.02. Additional Bonds To Pay the Cost of Projects. Additional Bonds may be issued
under this Section 5.02, at one time or from time to time, subject to the conditions provided in
17
Section 5.01 and this Section 5.02, for the purpose of providing funds, with any other funds
available and committed therefor, for paying the cost of one or more Projects and any expenses
in connection with such financing.
Before any Additional Bonds shall be issued under this Section 5.02, the City shall adopt
a Supplemental Resolution authorizing the issuance of such series of Additional Bonds and
fixing the amount and the details thereof, and describing in brief and general terms the Projects
to be acquired, constructed, altered or improved and estimating the costs thereof.
In addition, prior to the execution and delivery of any series of Additional Bonds under
this Section 5.02, there shall be filed with the City Clerk:
(i) A certificate executed by the Mayor and the City Finance Director stating:
(A) the estimated cost of the Projects being financed thereby, including an allowance for
contingencies and all fees, expenses and financing costs, (B) the amount, if any, which
will be required to be deposited in the Reserve Account in connection with the issuance
of the Additional Bonds, (C) the amount, if any, which will be required to be credited to
the Bond Account to pay interest on the Additional Bonds prior to collection of sufficient
Tax Increment available therefor, (D) the amount of Tax Increment received by the City
in the last completed Fiscal Year, (E) the amount of the maximum Principal and Interest
Requirements on the Outstanding Bonds and the Additional Bonds proposed to be issued
for any future Fiscal Year during the term of the Outstanding Bonds, and (F) that the
principal amount of such Additional Bonds is sufficient to provide for the payment of all
estimated costs of Projects to be financed thereby and credits to the Reserve Account and
the Bond Account as set forth above; and
(ii) a certificate executed by the Mayor and the City Finance Director stating
that:
(A) the Tax Increment received by the City in the last completed Fiscal
Year was equal to at least 130% of the maximum Principal and Interest
Requirements for any future calendar year (during the term of the Outstanding
Bonds) with respect to Outstanding Bonds and the Additional Bonds proposed to
be issued; or
(B) the Tax Increment received by the City in the last completed Fiscal
Year, adjusted as provided in Section 5.02(ii)(C), was equal to at least 130% of
the maximum Principal and Interest Requirements for any future calendar year
(during the term of the Outstanding Bonds) with respect to the Outstanding Bonds
and the Additional Bonds proposed to be issued.
(C) For the purpose of calculating the adjustment referenced in Section
5.02(ii)(B), the Tax Increment received by the City in the last completed Fiscal
Year may be adjusted by adding 90% of any increase in Tax Increment which
would have resulted from applying the aggregate tax rates of the Taxing Bodies
effective for the last completed Fiscal Year to then -current taxable value of the
District as of the date of calculation, as estimated by the City Finance Director,
based on information from the Department of Revenue, including any projects
18
completed or underway in the District, the taxable values of which are not yet
included in the actual taxable value (as defined in the Act) of the District.
This Council shall approve and confirm the findings and estimates set forth in the above -
described certificates in the Supplemental Resolution authorizing the issuance of the Additional
Bonds.
5.03. Additional Bonds for Refunding Purposes. Additional Bonds may be issued under
this Section 5.03, at one time or from time to time, subject to the conditions provided in
Section 5.01 and this Section 5.03, for the purpose of providing funds, with any other funds
available and committed therefor, for paying at, or redeeming prior to, their Stated Maturities
any Outstanding Bonds, including the payment of any redemption premium thereon and interest
which will accrue on such Bonds to any Redemption Date or the Stated Maturities thereof, and
any expenses in connection with such financing. Such Additional Bonds shall be designated
substantially as the Bonds to be refunded, with the addition of the term "refunding."
Before any Additional Bonds shall be issued under this Section 5.03, the City shall adopt
a Supplemental Resolution authorizing the issuance of such series of Additional Bonds and
fixing the amount and the details thereof, and authorizing the redemption of the Outstanding
Bonds to be refunded.
In addition, prior to the execution and delivery of any series of Additional Bonds under
this Section 5.03, there shall be filed with the City Clerk:
(i) such documents as shall be required to show that provisions have been
duly made in accordance with this Resolution for the redemption of all of the Outstanding
Bonds to be refunded; and
(ii) (a) in the case of a gross defeasance at the time of issuance and delivery of
the Additional Bonds that are refunding bonds, whether or not proceeds are deposited in
escrow, a report of an Independent Accountant or a certificate from an underwriter or
from the sole holder of the Bonds to be refunded (if applicable) to the effect that the
proceeds (excluding accrued interest but including any premium) of the Additional Bonds
plus any moneys to be withdrawn from the Bond Account for such purpose, together with
any other funds deposited for such purpose, will be not less than an amount sufficient to
pay the Redemption Price on the Outstanding Bonds to be refunded, or (b) in the case of
a net defeasance, a report of an Independent Account to the effect that from such
proceeds there shall be deposited in trust, Defeasance Obligations which do not permit
the redemption thereof at the option of the issuer, the principal of and the interest on
which when due and payable (or redeemable at the option of the holder thereof) will
provide, together with any other moneys which shall have been deposited in trust
irrevocably for such purpose, but without reinvestment, sufficient moneys to pay such
principal, redemption premium and interest.
If Additional Bonds are issued to refund Subordinate Obligations issued pursuant to
Section 5.04, the conditions for the issuance of Additional Bonds pursuant to Section 5.02 must
be satisfied in lieu of this Section 5.03.
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5.04. Subordinate Obligations. Except as provided in Sections 5.01, 5.02 and 5.03, no
bonds, notes or other evidence of indebtedness of the City will be issued under or secured by the
provisions of this Resolution, and no bonds, notes or other evidence of indebtedness will be
made payable from the Bond Account, unless the pledge and appropriation of Tax Increment for
the payment and security of such bonds, notes or other evidence of indebtedness is expressly
subordinated to the pledge and appropriation made for the benefit and security of the Series 2018
Bonds and all Additional Bonds issued and to be issued under and secured by this Resolution in
accordance with Sections 5.01, 5.02 and 5.03. In the event of the issuance of any such
Subordinate Obligations, the principal, premium, if any, and interest thereon will be made
payable from one or more additional accounts created within the Tax Increment Development
Account for that purpose, and the balance of funds at any time on hand in any such account(s)
shall be subject to the prior lien of the Bond Account and the Reserve Account, and shall be
transferred whenever needed to meet the current requirements of the Bond Account and Reserve
Account set forth in Sections 6.04 and 6.05.
Section 6. The Tax Increment Accounts.
6.01. Bond Proceeds and Tax Increment Pledged and Appropriated. The City hereby
establishes on its books and records three accounts designated as the Tax Increment Capital
Project Account, the Tax Increment Debt Service Account and the Tax Increment Development
Account (collectively, the "Tax Increment Accounts"). The Tax Increment Accounts shall be
maintained as separate and special bookkeeping accounts on the official books and records of the
City until all Bonds have been fully paid, or the City's obligation with reference to all Bonds has
been discharged as provided in this Resolution.
All proceeds of Bonds and all other funds hereafter received or appropriated for purposes
of the Projects are appropriated to the Tax Increment Accounts (except amounts otherwise
appropriated in a Supplemental Resolution or received from Additional Bonds issued to refund
Outstanding Bonds pursuant to Section 5.03). All Tax Increment is irrevocably pledged and
appropriated and shall be credited as received to the Tax Increment Debt Service Account.
Outstanding Bonds shall be secured by a first pledge of and lien on all of the Tax Increment and
all other moneys from time to time in the Tax Increment Accounts in the manner and to the
extent provided in this Section 6. The City shall not issue any obligation or security superior to
or on a parity with the Series 2018 Bonds, payable or secured, in whole or in part, from or by the
Tax Increment other than Additional Bonds issued pursuant to Sections 5.01, 5.02 or 5.03, until
all of the Bonds have been paid or discharged as provided herein. The Tax Increment Accounts
shall be subdivided into separate accounts as designated and described in Sections 6.03 to 6.06.
6.02. Tax Increment Receipts. All Tax Increment received by the City and credited to
the Tax Increment Debt Service Account, as required in Section 6.01, shall be credited as
received as follows: (a) first, to the Interest Account, until the balance on hand in the Interest
Account is at least equal to all interest on Bonds due and payable from the Interest Account
within the next six full calendar months; (b) second, after any credit to the Interest Account
required by the preceding clause, to the Sinking Fund Account, until the balance on hand in the
Sinking Fund Account is at least equal to all principal of and premium, if any, on Bonds due and
payable from the Sinking Fund Account (including amounts due and payable on a Sinking Fund
Payment Date) within the next twelve full calendar months; (c) third, after any credit to the
Interest Account or the Sinking Fund Account required by the preceding clauses, to the Reserve
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Account until the balance on hand in the Reserve Account is equal to the Reserve Requirement;
and (d) fourth, after any credit to the Interest Account, the Sinking Fund Account or the Reserve
Account required by the preceding clauses, to the Tax Increment Development Account.
6.03. Construction Account. For each Project there shall be a separate Construction
Account within the Tax Increment Capital Project Account, to be used only to pay allowed costs
as incurred, which under accepted accounting principles are costs of the particular Project,
including but not limited to payments due for work and materials performed and delivered under
construction contracts, architectural, engineering, inspection, supervision, fiscal and legal
expenses, the cost of lands and easements, interest accruing on Bonds during the period of
construction of a Project financed thereby and for a period of time thereafter authorized by the
Act and deemed necessary by this Council, if and to the extent that the Interest Account is not
sufficient for payment of such interest, reimbursement of any loans or advances made from other
City funds, and all other expenses incurred in connection with the acquisition, construction and
financing of the Project, including costs of issuance of Bonds or Subordinate Obligations. To the
Construction Account shall be credited as received all proceeds of Bonds issued to finance such
Project, except amounts otherwise appropriated in Section 4.01 or in a Supplemental Resolution
or received from Additional Bonds issued to refund Outstanding Bonds pursuant to Section 5.03
and all other funds appropriated by the City for the Project, and all income received from the
investment of the Construction Account. Upon completion of any Project and payment of the
costs thereof, the City may transfer any money then remaining in the Construction Account for
that Project to the Interest Account and, if money is then remaining in the Construction Account,
to the Sinking Fund Account.
6.04. Bond Account. The Bond Account is hereby established as a special account
within the Tax Increment Debt Service Account. There are hereby established within the Bond
Account two separate subaccounts, designated as the Interest Account and the Sinking Fund
Account.
(a) Interest Account. There shall be credited to the Interest Account the
following amounts: (i) any amount specified in any Supplemental Resolution to be
credited to the Interest Account; and (ii) from the Tax Increment as received by the City,
the amount specified in clause (a) of Section 6.02.
On or before each Interest Payment Date, the City shall withdraw from the
Interest Account an amount sufficient to pay the interest coming due on the Bonds on
such Interest Payment Date, and shall use such amount to pay, or make provision with the
Registrar for the payment of, interest on the Bonds on such Interest Payment Date.
If on any Interest Payment Date the balance in the Interest Account is not
sufficient to pay the total amount of interest due on such Interest Payment Date, the City
shall transfer any money then on hand in the Tax Increment Development Account, the
Reserve Account or the Sinking Fund Account, in the order listed and in an amount equal
to such deficiency, to the Interest Account.
All income derived from the investment of amounts in the Interest Account shall
be credited as received to the Interest Account.
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(b) Sinking Fund Account. There shall be credited to the Sinking Fund
Account the following amounts: (i) any amount specified in a Supplemental Resolution
to be credited to the Sinking Fund Account; and (ii) from the Tax Increment as received
by the City, the amount specified in clause (b) of Section 6.02.
Amounts on hand in the Sinking Fund Account shall be used on any Interest
Payment Date to make up a deficiency in the Interest Account, if and to the extent
required by the third paragraph of subsection (a) hereof.
On or before each Principal Payment Date, the City shall withdraw from the
Sinking Fund Account an amount sufficient to pay the principal due on the Bonds on
such Principal Payment Date, and shall use such amount to pay, or make provision with
the Registrar for the payment of, principal of the Bonds on such Principal Payment Date
If on any Principal Payment Date the balance in the Sinking Fund Account is not
sufficient to pay the total amount of principal due on such Principal Payment Date, the
City shall transfer any money then on hand in the Tax Increment Development Account
or the Reserve Account, in the order listed and in an amount equal to such deficiency, to
the Sinking Fund Account.
All income derived from the investment of amounts in the Sinking Fund Account
shall be credited as received to the Sinking Fund Account.
6.05. Reserve Account. The Reserve Account is hereby established as a special account
within the Tax Increment Debt Service Account. There shall be credited to the Reserve Account
the following amounts: (i) $480,001.36 from proceeds of the Series 2018 Bonds, as provided in
Section 4.01; (ii) any amount specified in any Supplemental Resolution to be credited to the
Reserve Account; (iii) from the Tax Increment as received by the City, the amount specified in
clause (c) of Section 6.02; and (iv) any other amounts appropriated from time to time to the
Reserve Account.
If on any Interest Payment Date or on any Principal Payment Date there shall exist, after
the transfers thereto of any money then on hand in the Tax Increment Development Account a
deficiency in the Interest Account or Sinking Fund Account, the City shall transfer from the
Reserve Account to such account an amount equal to such deficiency.
All income derived from the investment of amounts in the Reserve Account shall be
credited as received to the Reserve Account until such time as the balance in the Reserve
Account is equal to the Reserve Requirement, and thereafter all such investment income as
received shall be transferred to the Sinking Fund Account.
Money in the Reserve Account shall be used only to pay when due principal of, premium,
if any, and interest on Outstanding Bonds when the balance on hand in the Bond Account is
insufficient therefor; provided that on any date when the balance then on hand in the Bond
Account allocable to a series of Bonds, plus the balance then on hand in the Reserve Account
allocable to the series of Bonds, is sufficient with other money available to pay or discharge all
Outstanding Bonds of that series and the interest accrued thereon in full, and the balance
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thereafter on hand in the Reserve Account will be at least equal to the Reserve Requirement for
all Outstanding Bonds not to be discharged, it may be used for that purpose.
If at any time the balance in the Reserve Account exceeds the Reserve Requirement, the
City shall transfer such excess to the Interest Account or Sinking Fund Account. If no credit to
the Interest Account or Sinking Fund Account is required and the balance in each such account is
at required levels, the City may credit excess amounts to the Tax Increment Development
Account.
6.06. Tax Increment Development Account. There shall be credited to the Tax
Increment Development Account any and all Tax Increment remaining after the required credits
to the Bond Account and Reserve Account and any investment income and other moneys in any
of the accounts within the Tax Increment Accounts in excess of the requirements of said
accounts and which the City determines in its discretion to transfer to the Tax Increment
Development Account. Money from time to time on hand in the Tax Increment Development
Account shall be transferred to the Bond Account and Reserve Account as provided by
Sections 6.04 and 6.05 and may be used for any of the following purposes and not otherwise:
(a) to be transferred to the Construction Account to pay costs authorized to be
paid therefrom;
(b) to pay costs incurred in connection with projects within the District as
authorized by the Act and approved by the Council;
(c) to pay administrative costs of the City and the District and costs incurred
in connection with urban renewal projects (as defined in the Act) within the District as
authorized by the Act (including any loans or advances therefor made from other City
funds);
(d) to pay, redeem, discharge or otherwise secure Subordinate Obligations in
accordance with the provisions of this Resolution or any Supplemental Resolution;
(e) to purchase Bonds on the open market;
(f) to redeem or discharge Bonds prior to their Stated Maturities in
accordance with this Resolution or any Supplemental Resolution;
(g) to make payments of arbitrage rebate to the United States of America
pursuant to Section 148(f) of the Code in respect of any series of Bonds; and
(h) to pay other Taxing Bodies a portion of the annual Tax Increment received
by the City, pursuant to an agreement with respect thereto as authorized by the Act;
provided, however, no such agreement shall require or permit the City to remit to any
other Taxing Bodies any portion of the annual Tax Increment received in a Fiscal Year
and on deposit in the Tax Increment Development Account unless (1) the Bond Account
is funded as described above, (2) the balance in the Reserve Account as of the date of the
remittance is not less than the Reserve Requirement; and (3) there is no default under the
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provisions of this Resolution as evidenced by a certificate of the City Finance Director
filed with the City Clerk as of the date of remittance.
6.07. Investments. The City Finance Director shall cause all moneys from time to time
in the Tax Increment Accounts to be deposited as received with one or more depository banks
duly qualified in accordance with the provisions of Montana Code Annotated, Section 7-6-201,
as amended, and shall cause the balances in such accounts, except any part thereof covered by
federal deposit insurance, to be secured by the pledge of bonds or securities of the kinds required
by law, and no money shall at any time be withdrawn from such deposit accounts except for the
purposes of the Tax Increment Accounts as defined and authorized by this Resolution. The
funds to the credit of the several accounts within the Tax Increment Accounts may be
commingled in one or more deposit accounts. The balance on hand in any of the accounts of the
Tax Increment Accounts may at any time be invested and reinvested in Qualified Investments as
provided below, maturing and bearing interest payable at the times and in the amounts estimated
to be required to provide cash when needed for the purposes of the respective accounts; provided
that the Reserve Account and Tax Increment Development Account shall be invested in
Qualified Investments maturing not later than five years from the date of investment. Income
from the investment of the moneys in the various accounts shall be credited thereto. Subject to
the provisions of law now or hereafter controlling investment of such funds, money on hand in
any of the accounts of the Tax Increment Accounts may be invested in any of the following
Qualified Investments, but no others:
(a) direct obligations of or obligations guaranteed by the United States of
America;
(b) bank time deposits or certificates of deposit secured by obligations and
securities described in clause (a) above; and
(c) the short-term investment pool administered by the Board of Investments
of the State or any successor investment pool created pursuant to Montana law.
Section 7. Continuing Disclosure.
(a) Purpose and Beneficiaries. To provide for the public availability of certain
information relating to the Series 2018 Bonds and the security therefor and to permit the Original
Purchasers and other participating underwriters in the primary offering of the Series 2018 Bonds
to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Rule"), the City
hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter
defined) from time to time of the Series 2018 Bonds, to provide annual reports of specified
information and notice of the occurrence of certain events to the Municipal Securities
Rulemaking Board ("MSRB") through its Electronic Municipal Market Access system website
("EMMA"), as hereinafter described (the "Disclosure Covenants"). The City is the only
"obligated person" in respect of the Series 2018 Bonds within the meaning of the Rule for
purposes of identifying the entities in respect of which continuing disclosure must be made.
If the City fails to comply with the Disclosure Covenants, any Person aggrieved thereby,
including the Owners of the Series 2018 Bonds, may take whatever action at law or in equity
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may appear necessary or appropriate to enforce performance and observance of the Disclosure
Covenants, including an action for a writ of mandamus or specific performance. Direct, indirect,
consequential and punitive damages shall not be recoverable for any default hereunder.
Notwithstanding anything to the contrary contained in the Disclosure Covenants, in no event
shall a default under this Section 7 constitute a default under the Series 2018 Bonds or under any
other provision of this Resolution.
As used in this Section 7, "Owner" means, in respect of a Series 2018 Bond, the
registered owner or owners thereof appearing in the Bond Register or any Beneficial Owner (as
hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such
beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used in
this Section 7, `Beneficial Owner" means, in respect of a Series 2018 Bond, any Person that
(i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of
ownership of, such Series 2018 Bond (including Persons holding Series 2018 Bonds through
nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Series 2018
Bond for federal income tax purposes.
(b) Information To Be Disclosed. The City will provide, in the manner set forth in
paragraph (c) hereof, either directly or indirectly through an agent designated by the City, the
following information at the following times:
(i) on or before 270 days after the end of each fiscal year of the City,
commencing with the fiscal year ending June 30, 2018, the following financial
information and operating data in respect of the City (the "Disclosure Information'):
(A) the audited financial statements of the City for such fiscal year,
prepared in accordance with generally accepted accounting principles or as
otherwise provided under Montana law, as in effect from time to time. If and to
the extent such financial statements have not been prepared in accordance with
such generally accepted accounting principles for reasons beyond the reasonable
control of the City, the discrepancies will be noted; and
(B) To the extent not included in the financial statements referred to in
paragraph (b)(i)(A) above, the information for such fiscal year compiled by the
City and publicly available under applicable data privacy or other law, which
information may be unaudited, to include:
(1) the principal amount of Bonds outstanding;
(2) information of the District for the then -most recent
completed fiscal year similar to what is presented in the table in the
section titled "THE DISTRICT —Trends in Value and Tax
Increment" in the Official Statement, including:
(i) Base Value;
(ii) Incremental Value;
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(iii) Total Taxable Value;
(iv) Tax Increment Revenue;
(v) Entitlement Share Revenue; and
(vi) Total Tax Increment Revenue; and
(3) debt service coverage based on the then most recent
completed fiscal year annual debt service.
Notwithstanding anything in this Section 7 to the contrary, if the audited financial
statements are not available by the date specified, the City shall provide on or before such date
unaudited financial statements in the format required for the audited financial statements as part
of the Disclosure Information and, within ten (10) days after the receipt thereof, the City shall
provide the audited financial statements.
Any or all of the Disclosure Information may be incorporated by reference, if it is
updated as required hereby, by reference from other documents, including official statements,
which have been submitted to the MSRB in the manner set forth in paragraph (c) hereof. The
City shall clearly identify in the Disclosure Information in each document so incorporated by
reference.
If any part of the Disclosure Information is changed because it is no longer compiled or
publicly available or can no longer be generated because the operations of the City have
materially changed or been discontinued, such Disclosure Information need no longer be
provided if the City includes in the Disclosure Information a statement to such effect; provided,
however, if such discontinued operations have been replaced by other City operations in respect
of which data is not included in the Disclosure Information and the City determines that certain
specified data regarding such replacement operations would be material (as hereinafter defined)
and such data is customarily compiled and publicly available, then, from and after such
determination, the Disclosure Information shall include such additional specified data regarding
the replacement operations.
If the Disclosure Information is changed or the Disclosure Covenants are amended as
permitted by paragraph (d) of this Section, then the City shall include in the next Disclosure
Information to be delivered pursuant to this Section 7, to the extent necessary, an explanation of
the reasons for the amendment and the effect of any change in the type of financial information
or operating data provided.
(ii) In a timely manner not in excess of ten (10) business days, the City will
provide notice of the occurrence of any of the following events:
(A) principal and interest payment delinquencies;
(B) non-payment related defaults, if material;
(C) unscheduled draws on debt service reserves reflecting financial
difficulties;
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(D) unscheduled draws on credit enhancements reflecting financial
difficulties;
(E) substitution of credit or liquidity providers, or their failure to perform;
(F) adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB), or other material notices or determinations with
respect to the tax status of the Series 2018 Bonds or other material events
affecting the tax status of the Series 2018 Bonds;
(G) modifications to rights of holders of the Series 2018 Bonds, if material;
(H) bond calls, if material, and tender offers;
(I) defeasances;
(J) release, substitution or sale of property securing repayment of the Series
2018 Bonds, if material;
(K) rating changes;
(L) bankruptcy, insolvency, receivership, or similar event of the obligated
person;
(M) the consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of the assets of the City, other
than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material; and
(N) appointment of a successor or additional trustee or the change of name of
a trustee, if material.
An event is "material" if it is an event as to which a substantial likelihood exists that a
reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a
Series 2018 Bond or, if not disclosed, would materially alter the total mix of information
otherwise available to an investor from the Official Statement or information generally available
to the public. Notwithstanding the foregoing sentence, an event is also "material" if it is an event
that would be deemed material for purposes of the purchase, holding or sale of a Series 2018
Bond within the meaning of applicable federal securities laws, as interpreted at the time of
discovery of the occurrence of the event.
(iii) In a timely manner, the City will provide notice of the occurrence of any of
the following events or conditions:
(A) the failure of the City to provide the Disclosure Information
described under paragraph (b)(i) hereof at the time specified thereunder;
(B) the amendment or supplementing of the Disclosure Covenants
pursuant to paragraph (d) hereof, together with a copy of such amendment or
supplement and any explanation provided by the City; and
(C) any change in the fiscal year of the City.
(c) Manner of Disclosure. The City agrees to make available the information
described in paragraph (b) hereof to the MSRB through EMMA or in a manner as may be
27
otherwise prescribed by the MSRB consistent with the Rule. All documents provided to the
MSRB shall be accompanied by identifying information as prescribed by the MSRB.
(d) Term; Amendments; Interpretation.
(i) The Disclosure Covenants shall remain in effect so long as any Series
2018 Bonds are Outstanding.
(ii) Notwithstanding paragraph (d)(i) hereof, the Disclosure Covenants (and
the form and requirements of the Disclosure Information) may be amended or
supplemented by the City from time to time, without notice to, or the consent of, the
Owners of any Series 2018 Bonds, by a resolution of this Council filed in the office of the
recording officer of the City accompanied by an opinion of Bond Counsel, who may rely
on certificates of the City and others and the opinion may be subject to customary
qualifications, to the effect that (i) such amendment or supplement (a) is made in
connection with a change in circumstances that arises from a change in law or regulation
or a change in the identity, nature or status of the City or the type of operations conducted
by the City, or (b) is required by or better complies with the provisions of paragraph
(b)(5) of the Rule, assuming that such provisions apply to the Series 2018 Bonds. If the
Disclosure Covenants (and the form and requirements of the Disclosure Information) are
so amended, the City agrees to provide, contemporaneously with the effectiveness of
such amendment, an explanation of the reasons for the amendment and the effect, if any,
of the change in the type of financial information or operating data being provided
hereunder.
(iii) The Disclosure Covenants are entered into to comply with the continuing
disclosure provisions of the Rule and should be construed so the undertaking would
satisfy the requirements of paragraph (b)(5) of the Rule.
Section 8. Tax Covenants and Certifications.
8.01. Use of the Projects. The 2012 Project is and the 2018 Project will be owned and
operated by the City. No user of the 2012 Project or the 2018 Project is granted any concession,
license or special arrangement with respect to the same. The City shall not enter into any lease,
use or other agreement or arrangement with any non -governmental Person relating to the use of
the 2012 Project, the 2018 Project, or security for the payment of the Series 2018 Bonds which
might cause the Series 2018 Bonds to be considered "private activity bonds" or "private loan
bonds" within the meaning of Section 141 the Code. No "impermissible agreement" as defined
in Section 1.141-4(e)(4)(ii) of the Regulations, has been or will be entered into by the
Commission in respect of the Tax Increment or otherwise to secure the Series 2018 Bonds.
8.02. General Covenant. The City covenants and agrees with the Owners from time to
time of the Series 2018 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 Series 2018 Bonds to
become includable in gross income for federal income tax purposes under the Code and
applicable Regulations, and covenants to take any and all actions within its powers to ensure that
the interest on the Series 2018 Bonds will not become includable in gross income for federal
income tax purposes under the Code and the Regulations.
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8.03. Arbitrage Certification. The Mayor, the City Manager and the City Clerk being the
officers of the City charged with the responsibility for issuing the Series 2018 Bonds pursuant to
this Resolution, are authorized and directed to execute and deliver to the Original Purchaser a
certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b)
of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on
the date of issue and delivery of the Series 2018 Bonds, it is reasonably expected that the
proceeds of the Series 2018 Bonds will not be used in a manner that would cause the Series 2018
Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and the
Regulations.
8.04. Arbitrage Rebate. For federal tax purposes, the City will employ multipurpose
allocations to treat separately the construction or improvement portion of the Series 2018 Bonds
(the "New Money Portion") and the refunding portion of the Series 2018 Bonds (the "Refunding
Portion").
(a) Exception to Arbitrage Rebate for New Money Portion.
(i) The City hereby represents that the New Money Portion of the
Series 2018 Bonds qualifies for the exception for small governmental units to the
arbitrage rebate provisions contained in Section 148(f) of the Code. Specifically,
the City represents:
(A) Substantially all (not less than 95%) of the proceeds of the
New Money Portion (except for amounts to be applied to the payment of
costs of issuance) will be used for local governmental activities of the
City.
(B) The aggregate face amount of all "tax-exempt bonds"
(including warrants, contracts, leases and other indebtedness, but
excluding private activity bonds and the Refunding Portion) issued by or
on behalf of the City and all subordinate entities thereof during 2018 is
reasonably expected not to exceed $5,000,000.
(ii) If notwithstanding the provisions of paragraph (a) of this Section
8.04(a), the arbitrage rebate provisions of Section 148(f) of the Code apply to the
New Money Portion, the City hereby covenants and agrees to make the
determinations, retain records and rebate to the United States the amounts at the
times and in the manner required by said Section 148(f).
(b) Arbitrage Rebate for Refunding Portion. The City acknowledges that the
Refunding Portion of the Series 2018 Bonds is subject to the rebate requirements of
Section 148(f) of the Code. The City covenants and agrees to retain such records, make
such determinations, file such reports and documents and pay such amounts at such times
as are required under said Section 148(f) and applicable Regulations to preserve the
exclusion of interest on the Refunding Portion from gross income for federal income tax
purposes, unless or to the extent that the Refunding Portion qualifies for the exception
from the rebate requirement under Section 148(f)(4)(B) of the Code and no "gross
proceeds" of the Refunding Portion (other than amounts constituting a "bona fide debt
29
service fund") arise during or after the expenditure of the original proceeds thereof. In
furtherance of the foregoing, the Mayor, the Manager and the City Clerk are hereby
authorized and directed to execute a Rebate Certificate, substantially in the form to be
prepared by Bond Counsel, and the City hereby covenants and agrees to observe and
perform the covenants and agreements contained therein, unless amended or terminated
in accordance with the provisions thereof.
8.05. Information Rel2gAiqg. The City shall file with the Secretary of the Treasury, not
later than August 15, 2018, a statement concerning the Series 2018 Bonds containing the
information required by Section 149(e) of the Code.
8.06. "Qualified Tax -Exempt Obligations." Pursuant to Section 265(b)(3)(B)(ii) of the
Code, the City hereby designates the Series 2018 Bonds as "qualified tax-exempt obligations"
for purposes of Section 265(b)(3) of the Code. The City has not designated any obligations in
2018 other than the Series 2018 Bonds under Section 265(b)(3). The City hereby represents that
it does not anticipate that obligations bearing interest not includable in gross income for purposes
of federal income taxation under Section 103 of the Code (including refunding obligations as
provided in Section 265(b)(3) of the Code and including "qualified 501(c)(3) bonds" but
excluding other "private activity bonds," as defined in Sections 141(a) and 145(a) of the Code)
will be issued by or on behalf of the City and all "subordinate entities" of the City in 2018 in an
amount greater than $10,000,000.
Section 9. Other Covenants of City.
9.01. Punctual Payment. The City will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest on the Bonds in accordance with the terms of this
Resolution and any applicable Supplemental Resolution and of the Bonds, and it will faithfully
observe and perform all of the conditions, covenants and requirements of this Resolution and all
Supplemental Resolutions and of the Bonds. Nothing herein contained shall prevent the City
from making advances of its own moneys however derived to any of the uses or purposes
referred to herein, nor shall anything herein be deemed or constitute a pledge or appropriation of
funds or assets of the City other than those expressly pledged or appropriated hereby. The City
further covenants that it will promptly deposit or cause to be deposited all Tax Increment it
receives into the Tax Increment Debt Service Account, as set forth in Section 6.02.
9.02. Accumulation of Claims of Interest. In order to prevent any accumulation of
claims for interest after maturity, the City will not, directly or indirectly, extend or consent to the
extension of the time for the payment of any claim for interest on any of the Bonds and will not,
directly or indirectly, be a party to or approve any such arrangements by purchasing or funding
said claims for interest or in any other manner. In case any such claim for interest shall be
extended or funded, whether or not with the consent of the City, such interest so extended or
funded shall not be entitled, in case of default hereunder, to the benefits of this Resolution,
except subject to the prior payment in full of the principal of all of the Bonds then outstanding
and of all claims for interest which shall not have been so extended or funded.
9.03. Against Encumbrances. The City will not encumber, pledge or place any charge or
lien upon any of the Tax Increment superior to or on a parity with the pledge and lien herein
created for the benefit of the Bonds.
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9.04. Books and Accounts; Financial Statements. The City will keep, or cause to be
kept, proper books of record and accounts, separate from all other records and accounts of the
City, in which complete and correct entries shall be made of all transactions relating to the Tax
Increment and the Tax Increment Accounts. Such books of record and accounts shall be at all
times during business hours subject to the inspection of the Owners of not less than ten percent
(10%) of the principal amount of Outstanding Bonds, or their representatives authorized in
writing.
9.05. Further Assurances. The City will adopt, make, execute and deliver any and all
such further resolutions, instruments and assurances as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance of this Resolution, and for the better
assuring and confirming unto the Owners of the rights and benefits provided in this Resolution.
9.06. Amendment of Ordinance. Except to authorize additional Projects, the City will
not amend or modify the Ordinance or reduce the size of the District if an effect thereof will be
to materially and adversely affect the security of the Outstanding Bonds.
9.07. Increase in Base Taxable Value. The City shall not increase the "base taxable
value" of the District pursuant to Section 7-15-4287 of the Act so long as any Bonds are
Outstanding.
9.08. Pledge of Replacement Revenues. In the event the Constitution or laws of the
State are amended to abolish or substantially reduce or eliminate real or personal property
taxation and State law then or thereafter provides to the City an alternate or supplemental source
or sources of revenue specifically to replace or supplement reduced or eliminated Tax Increment,
then the City pledges, and covenants to appropriate annually, subject to the limitations of then
applicable law, to the Bond Account from such alternate or supplemental revenues an amount
that will, with money on hand in the Bond Account or available to be transferred to the Bond
Account during such Fiscal Year, be sufficient to pay the principal of, premium, if any, and
interest on the Outstanding Bonds payable in that Fiscal Year.
9.09. Owners' Rights. No Owner of any Bond issued and secured under the provisions
of this Resolution shall have the right to institute any proceeding, judicial or otherwise, for the
enforcement of the covenants herein contained, without the written concurrence of the Owners of
not less than 25% in aggregate principal amount of all Outstanding Bonds; but the Owners of
such aggregate principal amount of Outstanding Bonds may, either at law or in equity, by suit,
action or other proceedings, protect and enforce the rights of all Owners of Bonds and compel
the performance of any and all of the covenants required herein to be performed by the City and
its officers and employees. The Owner of a majority in aggregate principal amount of all
Outstanding Bonds shall have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the Owners or the exercise of any power conferred on
them, and the right to waive a default in the performance of any such covenant, and its
consequences, except a default in the payment of the principal of or interest on any Bond when
due. Nothing herein shall impair the absolute and unconditional right of the Owner of each Bond
to receive payment of the principal of and interest on any Bond as such principal and interest
respectively become due, and to institute suit for the enforcement of any such payment. In the
event of default in any such payment, any court having jurisdiction of the action may appoint a
receiver to administer the Tax Increment Accounts and to collect and segregate and apply the
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Tax Increment and other revenues pledged thereto as provided by this Resolution or any
Supplemental Resolution and the Act.
Section 10. Supplemental Resolutions.
10.01. General. Notwithstanding Section 10.02, the City reserves the right to adopt
Supplemental Resolutions to this Resolution from time to time and at any time, for the purpose
of curing any ambiguity or of curing, correcting or supplementing any defective provision
contained herein, or of making such provisions with regard to matters or questions arising
hereunder as the City may deem necessary or desirable and not inconsistent with this Resolution,
and which shall not adversely affect the interests of the Owners of Bonds issued hereunder, or
for the purpose of adding to the covenants and agreements herein contained, or to the Tax
Increment herein pledged, other covenants and agreements thereafter to be observed and
additional revenues or income thereafter appropriated to the Tax Increment Accounts, or for the
purpose of surrendering any right or power herein reserved to or conferred upon the City, or for
the purpose of authorizing the creation and issuance of a series of Additional Bonds, as provided
in and subject to the conditions and requirements of Section 5. Any such Supplemental
Resolution may be adopted without the consent of the Owner of any of the Bonds issued
hereunder.
10.02. Consent of Owners. With the consent of the Owners of a majority in principal
amount of Outstanding Bonds affected thereby as provided in Section 10.04, the City may from
time to time and at any time adopt a Supplemental Resolution for the purpose of amending this
Resolution by adding any provisions hereto or changing in any manner or eliminating any of the
provisions hereof or of any Supplemental Resolution, except that no Supplemental Resolution
shall be adopted at any time without the consent of the Owners of all Outstanding Bonds affected
thereby, if it would extend the time of payment of interest thereon, would reduce the amount of
the principal thereof or redemption premium thereon, would give to any Bond or Bonds any
privilege over any other Bond or Bonds (except for the privilege accorded Bonds over
Subordinate Obligations), would reduce the sources of Tax Increment or other revenues or
income appropriated to the Tax Increment Accounts, or would reduce the percentage in principal
amount of such Bonds required to authorize or consent to any such Supplemental Resolution.
10.03. Notice. Notice of a Supplemental Resolution to be adopted pursuant to Section
10.02 shall be mailed by first-class mail, postage prepaid, to the Owners of all Outstanding
Bonds at their addresses appearing in the Bond Register and shall become effective only upon
the filing of written consents with the City Clerk, signed by the Owners of the requisite
aggregate principal amount of Outstanding Bonds affected thereby. Any written consent to the
Supplemental Resolution may be embodied in and evidenced by one or any number of
concurrent written instruments of substantially similar tenor signed by Owners thereof in person
or by agent duly appointed in writing, and shall become effective when delivered to the City
Clerk. Any consent by the Owner of any Bond shall bind that Owner and every future Owner of
the same Bond with respect to any Supplemental Resolution adopted by the City pursuant to
such consent; provided than any Owner may revoke his consent with reference to any Bond by
written notice received by the City Clerk before the Supplemental Resolution has become
effective. In the event that unrevoked consents of the Owners of the requisite aggregate principal
amount of Bonds have not been received by the City Clerk within one year after the publication
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of notice of the Supplemental Resolution, the Supplemental Resolution and all consents
theretofore received shall be of no further force and effect.
10.04. Manner of Consent. Proof of the execution of any consent, or of a writing
appointing any agent to execute the same, shall be sufficient for any purpose of this Resolution
and shall be conclusive in favor of the City if made in the manner provided in this Section 10.04.
The fact and date of the execution by any Person of any such consent may be proved by the
affidavit of a witness of such execution or by the certification of any notary public or other
officer authorized by law to take acknowledgment of deeds, certifying that the Person signing it
acknowledged to him the execution thereof. The fact and date of execution of any such consent
may also be proved in any other manner which the City may deem sufficient; but the City may
nevertheless, in its discretion, require further proof in cases where it deems further proof
desirable. The ownership of any Bonds shall be proved by the Bond Register.
Section 11. Defeasance or Discharge.
11.01. General. When the liability of the City on all Bonds issued under and secured by
this Resolution and all interest thereon has been discharged as provided in this Section 11, all
pledges, covenants and other rights granted by this Resolution to the Owners of such Bonds shall
cease.
11.02. Maturity. The City may discharge its liability with reference to all Bonds and
interest thereon which are due on any date by depositing with the Registrar on or before the date
a sum sufficient for the payment thereof in full; or if any Bond or interest thereon shall not be
paid when due, the City may nevertheless discharge its liability with reference thereto by
depositing with the Registrar a sum sufficient for the payment thereof in full with interest
accrued to the date of such deposit.
11.03. Redemption. The City may also discharge its liability with reference to any
Bonds which are called for redemption on any date in accordance with their terms, by depositing
with the Registrar on or before that date an amount equal to the principal, premium, if any, and
interest which are then due thereon; provided that notice of such redemption has been duly given
or irrevocably provided for as provided in this Resolution.
11.04. Escrow. The City may also at any time discharge its liability in its entirety with
reference to any Bond subject to the provisions of law now or hereafter authorizing and
regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an
escrow agent for this purpose, cash or Defeasance Obligations which are authorized by law to be
so deposited, bearing interest payable at such times and at such rates and maturing on such dates
as shall be required, without reinvestment, to provide funds sufficient to pay all principal,
premium, if any, and interest to become due on such Bond at its Stated Maturity or, if such Bond
is prepayable and notice of redemption thereof has been given or irrevocably provided for as
provided in this Resolution, to such earlier Redemption Date.
Section 12. Repeals and Effective Date.
12.01. Repeal. All provisions of other resolutions and other actions and proceedings of
the City and this Council that are in any way inconsistent with the terms and provisions of this
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Resolution are repealed, amended and rescinded to the full extent necessary to give full force and
effect to the provisions of this Resolution.
12.02. Effective Date. This Resolution shall take effect immediately upon its passage
and adoption by this Council.
PASSED AND ADOPTED by the City Council of the City of Kalispell, Montana, this
21 st day of May, 2018.
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Mayor
Attest: A—M^ 10-) �6
CTClerk
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