Tab 29 Opinion of Bond CounselMINNEAPOLIS
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City of Kalispell
Kalispell, Montana
D.A. Davidson & Co.
Great Falls, Montana
DORSEY & WHITNEY LLP
MILLENium BUILDING
125 BANK STB_EET, SUITE 600
MISSOULA, MONTANA 59802
TELEPHONE: (406) 721-6025
FAX: (406) 543-0863
Re: $1,581,500 Special Improvement District No. 343 Bonds
City of Kalispell, Flathead County, Montana
Ladies and Gentlemen:
BILLINGS
GREAT FALLS
MISSOULA
BP,LJSSELS
FARGO
HONG KONG
ROCHESTER
SALT LAKE CITY
VANCOUVEI�_
We have acted as Bond Counsel to the City of Kalispell, Flathead County, Montana (the
"City"), in connection with the authorization, issuance and sale by the City of the obligations
described above, dated, as originally issued, as of June 1, 2001 (the "Bonds"). In that capacity,
we have examined certified copies of certain proceedings taken, and certain certificates and
affidavits furnished, by the City in the authorization, sale and issuance of the Bonds, including a
resolution adopted by the City Council of the City on June 4, 2001, establishing the form and
terms of the Bonds (the "Bond Resolution"). As to questions of fact material to our opinion, we
have assumed the authenticity of and relied upon the proceedings, affidavits and certificates
furnished to us without undertaking to verify the same by independent investigation. From our
examination of such proceedings, certificates and affidavits and on the basis of existing law, it is
our opinion that:
1. The City has validly created Special Improvement District No. 343 (the "District"),
provided for the construction of various improvements of special benefit to the District and has
covenanted to levy special assessments for the costs of the improvements, in an amount
estimated at $1,581,500, against benefitted properties within the District. The special
assessments are to be payable in installments, with interest on the balance of the special
assessments remaining unpaid, and collections of such special assessments are to be deposited in
the Special Improvement District No. 343 Fund of the City (the "District Fund"). The principal
of and interest on the Bonds are payable solely from the District Fund.
DORSEY & WHITNEY LLP
City of Kalispell
D.A. Davidson & Co.
Page 2
2. The City has also validly established a Special Improvement District Revolving
Fund (the "Revolving Fund") to secure the payment of certain of its special improvement district
bonds and warrants, including the Bonds. The City has agreed, to the extent permitted by
Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended and as applicable to
the Bonds (the "Act"), to issue orders annually authorizing loans or advances from the Revolving
Fund to the District Fund, in amounts sufficient to make good any deficiency in the District Fund
to pay principal of or interest on the Bonds, to the extent that funds are available in the Revolving
Fund, and to provide funds for the Revolving Fund by annually making a tax levy or loan from
its general fund in an amount sufficient for that purpose, subject to the limitation that no such tax
levy or loan may in any year cause the balance in the Revolving Fund to exceed five percent of
the principal amount of the City's then outstanding special improvement district bonds and
warrants secured thereby and subject to the durational limitations specified in the Act.
Any property tax levy to be made by the City to provide funds for the Revolving
Fund is subject to levy limits under current law. The City has agreed in the Bond Resolution to
levy property taxes to provide funds for the Revolving Fund to the extent described in the
immediately preceding paragraph andl if necessary, to reduce other property tax levies
correspondingly to meet applicable levy limits.
The Bonds are not general obligations of the City and, except to the extent described in
this paragraph (2), the taxing power of the City is not pledged to the payment of the principal
thereof or the interest thereon.
3. The Bonds and the Bond Resolution are valid and binding special, limited
obligations of the City enforceable in accordance with their terms and the provisions of the
Constitution and laws of the State of Montana now in force, including the Act.
4. Interest on the Bonds: (a) is not includable in gross income for federal income tax
purposes; (b) is not an item of tax reference includable in alternative minimum taxable income
I P
for purposes of the federal alternative minimum tax applicable to all taxpayers; and (c) is
includable in adjusted current earnings of corporations in determining alternative minimum
taxable income for purposes of the federal alternative minimum tax.
5. The City has designated the Bonds as "qualified tax-exempt obligations" within the
meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"),,
and financial institutions described in Section 265(b)(5) of the Code may treat the Bonds for
purposes of Sections 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August
71 1986.
DORSEY & WHITNEY LLP
City of Kalispell
D.A. Davidson & Co.
Page 3
6. Interest on the Bonds is not includable in gross income for State of Montana
individual income tax purposes, but is includable in the computation of income for purposes of
the Montana corporate income tax and the Montana corporate license tax.
The opinions expressed in paragraphs 1, 2 and 3 above are subject, as to enforceability,
to the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization,
moratorium or creditors' rights and principles of equity, whether considered at law or in equity.
The opinions expressed in paragraphs 4 and 5 above are subject to the condition of the
City's compliance with all requirements of the Code that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon may be, and continue to be, excluded from
gross income for federal income tax purposes, and the Bonds be and continue to be qualified tax-
exempt obligations. The City has covenanted to comply with these continuing requirements. Its
failure to do so could result in the inclusion of interest on the Bonds in federal gross income,
retroactive to the date of issuance of the Bonds. Except as stated in this opinion, we express no
opinion regarding federal, state or other tax consequences to the owners of the Bonds.
We have not been engaged, and have not undertaken, to review the accuracy,
completeness or sufficiency of the Official Statement or any other offering materials relating to
the Bonds and, accordingly, we express no opinion with respect thereto.
Dated: June 12, 2001.
Very truly yours,
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