Resolution 4329 - Refund 1986 Sewer Revenue Bonds1582
RESOLUTION NO. 4329
RESOLUTION RELATING TO $925,000 SEWERAGE SYSTEM REVENUE
REFUNDING BONDS, SERIES 1997; AUTHORIZING THE ISSUANCE AND
FIXING THE TERMS AND CONDITIONS THEREOF
BE IT RESOLVED by the City Council of the City of Kalispell, Montana (the "City"), as
follows:
Section 1. Authorization and Recitals.
1.01. Authorization. The City pursuant to authority conferred by Montana Code
Annotated, Title 7, Chapter 7, Parts 44 and 45, as amended (the "Act"), and other laws of the State
of Montana, has established and presently owns and operates a municipal sewerage system (the
"System"). Under the provisions of the Act, the City is authorized to issue and sell its revenue
bonds payable during a term not exceeding forty years from their date of issue, to provide funds
for the reconstruction, improvement, betterment and extension of the System and to refund its
revenue bonds issued for such purpose; provided that the bonds and the interest thereon are to be
payable solely out of the net income and revenues to be derived from rates, fees and charges for the
services, facilities and commodities furnished by the undertaking, and are not to create any
obligation for the payment of which taxes may be levied except to pay for services provided by the
System to the City.
1.02. Outstandine Bonds. In accordance with the authorization described in Section 1 and
pursuant to Ordinance Nos. 859 and 1011 and Resolution Nos. 2861, 3649, 3980 and 4022, the
City issued and sold the following bonds which are currently outstanding: Sewerage System
Revenue Bonds, Series 1991, dated as originally issued as of April 15, 1991 (the "Series 1991
Bonds") and its Sewerage System Revenue Bonds, Series 1991A, dated as of November 15, 1991
(the "Series 1991A Bonds"), currently outstanding in the aggregate principal amounts of
$2,450,000 and $3,346,000, respectively (collectively, exclusive of the Series 1997 Bonds, the
"Outstanding Bonds"), for the purpose of financing part of the costs of construction of
improvements to the System. No other bonds or indebtedness are outstanding that are payable
from revenues of the System other than the Sewerage System Revenue Bonds, Series 1986, dated
as originally issued as of June 1, 1986 (the "Series 1986 Bonds"). The Series 1986 Bonds are
outstanding in the aggregate principal amount of $955,000.
1.03. Sources of Funding: Refunding The Series 1986 Bonds. It is necessary and
desirable as hereinafter determined to refund the Series 1986 Bonds from the proceeds of revenue
bonds hereinafter authorized in the approximate principal amount of $925,000. The debt service
savings to result from the refunding of the Series 1986 Bonds is presently estimated to
approximate $58,338.07, calculated on a present -value basis, and using a discount rate of
5.0368% over the term of the bonds herein authorized. As required by Montana Code Annotated,
Section 7-7-4502(t), the average annual interest rate on the bonds herein authorized is more than
three -eighths of one percent (0.375%) less than the average annual interest rate on the Series 1986
Bonds.
1.04. Parity Bonds. In Section 4.03 of Ordinance No. 859, the City reserved the right to
issue additional bonds payable from and secured by the net revenues of the System on a parity with
the Outstanding Bonds on certain terms and conditions. It is determined that the City is authorized
to issue a series of bonds (the "Series 1997 Bonds") in the aggregate principal amount of $925,000
to refund the Series 1996 Bonds, which bonds would be payable from and secured by the net
revenues of the System on a parity with the Outstanding Bonds.
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1.05. Defined Terms. Capitalized terms, used but not defined herein, shall have the
meanings ascribed to them in Ordinance No. 854, as amended.
1.06. Net Revenues Available. The City is authorized to charge just and equitable rates,
charges and rentals for all services directly or indirectly furnished by the System, and to pledge and
appropriate to the Outstanding Bonds and the Series 1997 Bonds the net revenues to be derived
from the operation of the System, including improvements, betterments or extensions thereof
hereafter constructed or acquired. The Net Revenues to be produced by such rates, charges and
rentals during the term of the Series 1997 Bonds and the useful life of the improvements financed
or refinanced thereby will be more than sufficient to pay the principal and interest when due on the
Outstanding Bonds and the Series 1997 Bonds, and to create and maintain reasonable reserves
therefor and to provide an allowance for replacement and depreciation, as herein prescribed-
1.07. Sale of Sewerage System Revenue RefundingBonds. onds. Pursuant to the authority
recited in Sections 1.01 and 1.04 and for the purpose of refunding the Series 1986 Bonds, this
Council authorized the issuance of the Series 1997 Bonds upon certain terms and conditions in
Resolution No. 4326, adopted April 7, 1997. That resolution provided that the final maturity of the
refunding bonds. could not extend beyond June 15, 2006 and that the term of the refunding bonds
can not exceed 9 years and 1 month. The City has determined that it is in its best interest if the
payment dates on the refunding bonds be January 1 and July 1 of each year rather than December
15 and June 15, and to the extent that the provisions of Resolution No. 4326 are inconsistent with
the terms and conditions set forth herein for the Series 1997 Bonds, the provisions of such
resolution are hereby superseded. The City hereby ratifies and confirms the issuance and sale of
revenue bonds to be designated as Sewerage System Revenue Refunding Bonds, Series 1997, in
the aggregate principal amount of $925,000 in accordance with the provisions of Ordinance Nos.
859, this Resolution, and a Bond Purchase Agreement dated as of April 22, 1997, between the
City and D.A. Davidson & Co., of Great Falls, Montana, to D.A. Davidson & Co., of Great Falls,
Montana (the "Purchaser").
Section 2. The Series 1997 Bonds.
2.01. Denominations, Maturities, Interest. The Sewerage System Revenue Refunding
Bonds, Series 1997, to be issued hereunder, in the aggregate principal amount of $925,000, shall
be issued in fully registered form only, in denominations of $5,000 or any integral multiple thereof
of single maturities, shall mature on July 1 in the following respective years and amounts and shall
bear interest from May 15, 1997 to their respective maturities or prior dates upon which they have
been duly called for redemption at the rates per annum set forth opposite such years and amounts,
as follows:
Interest
Year Amount Rate
1998
$ 65,000
4.20%
1999
80,000
4.50
2000
95,000
4.70
2001
100,000
4.80
2002
105,000
4.90
2003
95,000
5.00
2004
100,000
5.10
2005
135,000
5.20
2006
150,000
5.25
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2.02. Payment. The Series 1997 Bonds shall be issuable only in fully registered form,
and the ownership of the Series 1997 Bonds shall be transferred only upon the bond register of the
City hereinafter described. Interest on the Series 1997 Bonds shall be payable on January 1 and
July 1 in each year, commencing January 1, 1998, to the owners of record of the Series 1997
Bonds as such appear on the bond register as of the close of business on the fifteenth day of the
immediately preceding month, whether or not such day is a business day. The interest on, and,
upon presentation and surrender thereof, the principal of, each Series 1997 Bond, the amount
payable with respect thereto, shall be payable in lawful money of the United States of America by
check or draft issued by the Registrar described herein.
2.03. Datingof f Bonds. Each Series 1997 Bond shall be dated, as originally issued, as of
May 15, 1997. Upon the original delivery of the Series 1997 Bonds pursuant to Section 2.08 or
upon the delivery of a Series 1997 Bond upon an exchange or transfer pursuant to Section 2.05,
the Registrar shall date each Series 1997 Bond so delivered as of the date of its authentication.
2.04. System of Registratign. The City shall appoint, and shall maintain, a bond registrar,
transfer agent and paying agent for the Bonds (the "Registrar"). This Section 2.05 shall establish a
system of registration for the Series 1997 Bonds as defined in the Model Public Obligations
Registration Act of Montana. 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 1997 Bonds
and the registration of transfers and exchanges of Series 1997 Bonds entitled to be
registered, transferred or exchanged.
(b) Transfer of Series 1297 Bonds. Upon surrender for transfer of any Series
1997 Bond duly endorsed by the registered owner thereof or accompanied by a written
instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered
owner thereof or by an attorney duly authorized by the registered owner in writing, the
Registrar shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Series 1997 Bonds of a like aggregate principal amount and
maturity, as requested by the transferor. The Registrar may, however, close the books for
registration of the transfer of a Series 1997 Bond or portion thereof selected for
redemption.
(c) Exchange of Series 1997 Bonds. Whenever any Series 1997 Bonds are
surrendered by the registered owner for exchange, the Registrar shall authenticate and
deliver one or more new Series 1997 Bonds of a like aggregate principal amount and
maturity as requested by the registered owner or the owner's attorney in writing.
(d) Cancellation. All Series 1997 Bonds surrendered upon any transfer or
exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed
by the City.
(e) Imp=r or Unauthorized Transfer. When any Series 1997 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 1997 Bond or separate instrument of transfer is legally
authorized. The Registrar shall incur no liability for its refusal, in good faith, to make
transfers which it, in its judgment, deems improper or unauthorized.
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(f) Persons Deemed Owners. The City and the Registrar may treat the person in
whose name any Series 1997 Bond is at any time registered in the Bond Register as the
absolute owner of such Series 1997 Bond, whether such Series 1997 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 1997 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 1997
Bond to the extent of the sum or sums to paid.
(g) Taxes, Fees and Charges. For every transfer or exchange of a Series 1997
Bond (except for an exchange upon a partial redemption of any Series 1997 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 Lot Stolen or Destroyed Series 1997 Bonds. In case any Series
1997 Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall
deliver a new Series 1997 Bond of like amount, number, maturity date and tenor in
exchange and substitution for and upon cancellation of any such mutilated Series 1997
Bond or in lieu of and in substitution for any such Series 1997 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 1997 Bond lost, stolen or destroyed,
upon receipt by the Registrar of evidence satisfactory to it that such Series 1997 Bond was
lost, stolen or destroyed, and of the ownership thereof, and upon receipt by the Registrar
of an appropriate bond of indemnity in form, substance and amount satisfactory to it, in
which both the City and the Registrar shall be named as obligees. All Series 1997 Bonds
so surrendered to the Registrar shall be canceled by it and evidence of such cancellation
shall be given to the City. If the mutilated, lost, stolen or destroyed Series 1997 Bond has
already matured or such Series 1997 Bond has been called for redemption in accordance
with its terms, it shall not be necessary to issue a new Series 1997 Bond before payment.
2.05. Initial Registrar. The City hereby appoints Norwest Bank Montana, N.A., of
Billings, Montana, as the initial Registrar. The Mayor, City Manager and Finance Director are
hereby authorized to execute and deliver, on behalf of the City, a contract with Norwest Bank
Montana, N.A., of Billings, Montana, as Registrar. Upon merger or consolidation of the
Registrar with another corporation, if the resulting corporation is a bank or trust company
authorized by law to conduct such business, such corporation shall be authorized to act as
successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar
for the services performed The City reserves the right to remove 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 1997 Bonds in its possession to the successor Registrar and shall
deliver the Bond Register to the successor Registrar. On or before each principal or interest due
date, without further order of this Council, the Finance Director shall transmit to the Registrar,
solely from moneys in the Revenue Bond Account of the Sewerage System Fund available
therefor, moneys sufficient for the payment of all principal, premium, if any, and interest then due
on the Series 1997 Bonds.
2.06. Redemption. Series 1997 Bonds having stated maturity dates in 2003 and later
years are subject to redemption at the option of the City, in inverse order of maturities and in
$5,000 principal amounts selected by lot or other manner deemed fair by the Registrar within a
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maturity, on July 1, 2002, or any business date thereafter, at the redemption prices set forth below
(expressed as a percentage of the principal amount thereof to be redeemed) plus interest accrued to
the date of redemption:
Redemption Date Redemption Price
July 1, 2002 through June 30, 2003 101%
July 1, 2003 and thereafter 100%
Notice of redemption of any Series 1997 Bond shall be mailed by the Finance Director, at least 30
days before the redemption date, by first-class mail to the Registrar and the owner thereof at his
address appearing in the Bond Register; provided that any failure to give or any defect in such
notice shall not affect the validity of proceedings for the redemption of any Series 1997 Bond not
affected thereby. The notice of redemption shall specify the redemption date, redemption price, the
numbers, interest rates and CUSIP numbers of the Series 1997 Bonds to be redeemed and the
place at which the Series 1997 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
1997 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 1997 Bonds or portions thereof shall
cease to bear interest.
In addition to the notice prescribed by the preceding paragraph, the Finance Director shall
also give, or cause to be given, notice of the redemption of any Series 1997 Bond or Bonds or
portions thereof at least 35 days before the redemption date by certified mail or telecopy to the
Purchaser and all registered securities depositories then in the business of holding substantial
amounts of obligations of the character of the Series 1997 Bonds (such depositories now being
The Depository Trust Company, of Garden City, New York; Midwest Securities Trust Company,
of Chicago, Dlinois; and Philadelphia Depository Trust Company, of Philadelphia, Pennsylvania)
and one or more national information services that disseminate information regarding municipal
bond redemptions; provided that any defect in or any failure to give any notice of redemption
prescribed by this paragraph shall not affect the validity of the proceedings for the redemption of
any Series 1997 Bond or portion thereof.
Series 1997 Bonds in a denomination larger than $5,000 may be redeemed in part in any
integral multiple of $5,000. The owner of any Series 1997 Bond redeemed in part shall receive,
upon surrender of such Series 1997 Bond to the Registrar, one or more new Series 1997 Bonds in
authorized denominations equal in principal amount to the unredeemed portion of the Series 1997
Bond so surrendered. All selections of Series 1997 Bonds for redemption by lot or other manner
deemed fair by the Registrar shall be made in $5,000 principal amounts.
2.07. Execution and Delivery_. The Series 1997 Bonds shall be executed in the name of the
City by the signatures of the Mayor, City Manager and Finance Director, and the official seal of the
City shall be affixed thereto; provided that all signatures and the seal may be printed facsimiles of
the originals thereof. On the reverse side of each Series 1997 Bond shall be printed a copy of the
legal opinion to be rendered by bond counsel, certified by the facsimile signatures of the Mayor,
City Manager and Finance Director. In case any officer whose signature or a facsimile of whose
signature appears on the Series 1997 Bonds shall cease to be such officer before the delivery of
any Series 1997 Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such officer had remained in office until delivery. Notwithstanding such
execution, no Series 1997 Bond shall be valid or obligatory for any purpose or be entitled to any
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security or benefit under Ordinance No. 859 or this Resolution unless and until a certificate of
authentication on such Series 1997 Bond has been duly executed by the manual signature of an
authorized representative of the Registrar. Certificates of authentication on different Series 1997
Bonds need not be signed by the same representative. The executed certificate of authentication on
a Series 1997 Bond shall be conclusive evidence that it has been authenticated and delivered under
Ordinance No. 859 and this Resolution. When the Series 1997 Bonds have been fully executed
and authenticated, they shall be delivered by the Registrar to the Purchaser upon payment of the
purchase price in accordance with the contract of sale heretofore made and executed, and the
Purchaser shall not be obligated to see to the application of the purchase price.
Section 3. Forms.
3.01. Form of Series 1997 Bonds. The Series 1997 Bonds shall be prepared in
substantially the following form, with such appropriate variations, omissions and insertions as are
permitted or required by Ordinance No. 859 or this Resolution:
[Face of the Series 1997 Bonds]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
SEWERAGE SYSTEM REVENUE REFUNDING BOND
SERIES 1997
No.
Interest
Rate Maturity
REGISTERED OWNER:
PRINCIPAL AMOUNT:
Date of
Original Issue
May 15, 1997
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
FOR VALUE RECEIVED, THE CITY OF KALISPELL (the "City"), a duly organized
municipal corporation located in Flathead County, Montana, acknowledges itself to be specially
indebted and hereby promises to pay to the registered owner identified above or registered assigns,
solely from the Revenue Bond Account of its Sewerage System Fund, the principal amount
specified above on the maturity date specified above, or, if this Bond is prepayable as stated
below, on an earlier date on which it shall have been duly called for redemption, upon presentation
and surrender hereof at the principal office of the Bond Registrar hereinafter named, with interest
thereon, from May 15, 1997, or from such later date to which interest has been paid or duly
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provided for, until the principal amount hereof is paid or until this Bond, if prepayable, has been
duly called for redemption, at the annual interest rate specified above. Interest is payable
semiannually on January 1 and July 1 in each year, commencing January 1, 1998, to the registered
owner of this Bond as such appears of record in the bond register as of the close of business on the
fifteenth day (whether or not a business day) of the immediately preceding month. Interest is
payable by check or draft mailed by Norwest Bank Montana, N.A., of Billings, Montana, as Bond
Registrar, Transfer Agent and Paying Agent, or its successor designated under the Ordinance
described herein (the "Bond Registrar").
Notwithstanding any other provisions of this Bond, so long as this Bond is registered in
the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any
other nominee of The Depository Trust Company or other securities depository, the Registrar shall
pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond,
only to Cede & Co. or other nominee in accordance with the operational arrangements of The
Depository Trust Company or other securities depository as agreed to by the City.
This Bond is one of a series in the aggregate principal amount of $925,000 (the "Series
1997 Bonds"), all of like date of original issue and tenor except as to serial number, interest rate,
date, maturity date, denomination and redemption privilege, and all issued for the purposes of
financing improvements to the City's municipal sewerage system (the "System") and of refunding
certain valid outstanding sewerage system revenue bonds of the City, under authority of and in
conformity with the Constitution and laws of the State of Montana and the ordinances and
resolutions of the City, including Montana Code Annotated, as amended, Title 7, Chapter 7, Parts
44 and 45, as amended, and Ordinance No. 859, as amended, and Resolution No. _ duly
enacted by the City Council (collectively, the "Ordinance"). The Series 1997 Bonds are issuable
only as fully registered bonds of a single maturity, in denominations of $5,000 or any integral
multiple thereof. The Series 1997 Bonds are issued on a parity and are equally and ratably secured
by the Net Revenues of the System with outstanding sewerage system revenue bonds of the City,
Series 1991 and Series 1991 A, dated as of April 15, 1991 and November 1, 1991, respectively
(the "Outstanding Bonds").
Reference is made to the Ordinance for a more complete statement of the terms and
conditions upon which the Series 1997 Bonds have been issued, the net revenues of the System
pledged and appropriated for the payment and security thereof, the conditions upon which
additional bonds may be issued under the Ordinance and made payable from such net revenues on
a parity with the Outstanding Bonds and the Series 1997 Bonds or otherwise, the conditions upon
which the Ordinance may be amended, the rights, duties and obligations of the City, and the rights
of the owners of the Series 1997 Bonds.
The Series 1997 Bonds maturing in the years 1998 through 2002 are not subject to
redemption before maturity, but Series 1997 Bonds having stated maturity dates in the years 2003
and later years are each subject to redemption at the option of the City, in whole or in part, in
inverse order of maturities and in $5,000 principal amounts selected by lot within a maturity, on
July 1, 2002, and any interest payment date thereafter, at the redemption prices set forth below
(expressed as a percentage of the principal amount thereof to be redeemed) plus interest accrued to
the date of redemption:
Rgdgmpfion Date Redemption Price
July 1, 2002 through June 30, 2003 101%
July 1, 2003 and thereafter 100%
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Notice of the call for redemption of any Series 1997 Bond will be mailed, at least thirty days before
said redemption date, by first-class mail to the registered owner thereof at the address appearing in
the registration books maintained by the Registrar; provided that any failure to give or any defect in
such notice shall not affect the validity of proceedings for the redemption of any Bond not affected
thereby. Official notice of redemption having been given as aforesaid, the Series 1997 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 1997 Bonds or portions thereof shall cease to bear
interest. Upon partial redemption of any Series 1997 Bond, a new Series 1997 Bond or Bonds
will be delivered to the owner without charge, representing the remaining principal amount
outstanding.
This Bond is a negotiable investment security as provided in the Montana Uniform
Commercial Code. As provided in the Ordinance and subject to certain limitations set forth therein,
this Bond is transferable upon the books of the City at the principal office of the Bond Registrar,
by the registered owner hereof in person or by his attorney duly authorized in writing, upon
surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar,
duly executed by the registered owner or his attorney; and may also be surrendered in exchange for
Series 1997 Bonds of other authorized denominations. Upon such transfer or exchange, the City
will cause a new Series 1997 Bond or Bonds to be issued in the name of the transferee or
registered owner, of the same aggregate principal amount, bearing interest at the same rate and
maturing on the same date, subject to reimbursement for any tax, fee or governmental charge
required to be paid with respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of
receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be
affected by any notice to the contrary.
IT IS CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly
authorized and will forthwith construct and complete the improvements to the System hereinabove
described, has fixed and established and will collect reasonable rates and charges for the services
and facilities afforded by the System and has created a special Sewerage System Fund into which
the gross revenues of the System, including all additions thereto and replacements and
improvements thereof, will be paid, and a separate and special Revenue Bond Account in that
fund, into which will be paid each month, from and as a first and prior lien on the Net Revenues of
the System then on hand, an amount equal to not less than the sum of one -sixth of the interest due
within the next six months and one -twelfth of the principal due within the next twelve months with
respect to all Bonds secured by the Ordinance and payable from that Account, and in which shall
be established and maintained a reserve balance equal to the maximum amount of principal and
interest to become due on the Series 1997 Bonds and all other Bonds in any subsequent fiscal year;
that the Revenue Bond Account will be used only to pay the principal of, premium, if any, and
interest on the Series 1997 Bonds, the Outstanding Bonds and any other additional Bonds issued
pursuant to and secured by the Ordinance on a parity therewith, and such rates and charges will
from time to time be made and kept sufficient, subject to regulations of the Montana Public Service
Commission, to provide gross income and revenues adequate to pay promptly the reasonable and
current expenses of operating and maintaining the System and to produce in each fiscal year Net
Revenues in excess of such current expenses, equal to 125% of the maximum amount of principal
and interest payable from the Revenue Bond Account in any subsequent fiscal year; that additional
Bonds and refunding Bonds may be issued and made payable from the Revenue Bond Account on
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a parity with the Series 1997 Bonds and Outstanding Bonds, upon certain conditions set forth in
the Ordinance, but no obligation will be otherwise incurred and made payable from the Net
Revenues of the System, whether or not such obligation shall also constitute a general obligation
and indebtedness of the City, unless the lien thereof shall be expressly made subordinate to the lien
of the Series 1997 Bonds, the Outstanding Bonds and additional parity Bonds on such Net
Revenues; that all provisions for the security of the holder of this Bond set forth in the Ordinance
will be punctually and faithfully performed as therein stipulated; that all acts, conditions and things
required by the Constitution and laws of the State of Montana and the ordinances and resolutions
of the City to be done, to exist, to happen and to be performed in order to make this Series 1997
Bond a valid and binding special obligation of the City according to its terms have been done, do
exist, have happened and have been performed as so required; and that this Bond and the interest
hereon are payable solely from the Net Revenues of the System pledged and appropriated to the
Revenue Bond Account and do not constitute a debt of the City within the meaning of any
constitutional or statutory limitation or provision and the issuance of the Series 1997 Bonds does
not cause either the general or the special indebtedness of the City to exceed any constitutional or
statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Ordinance until the Certificate of Authentication hereon shall have
been executed by the Bond Registrar by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City
Council, has caused this Bond and the certificate hereof to be executed by the facsimile signatures
of the Mayor, City Manager and Finance Director and has caused a facsimile of the official seal of
the City to be imprinted hereon. -
(Facsimile Signature) (Facsimile Signature) (Facsimile Signature)
Mayor City Manager Finance Director
(Facsimile Seal)
Date:
CERTIFICATE OF AUTHENTICATION
This is one of the Sewerage System Revenue Refunding Bonds, Series 1997 delivered
pursuant to the Ordinance mentioned within.
NORWEST BANK MONTANA, N.A.,
as Bond Registrar, Transfer Agent
and Paying Agent
By
Authorized Representative
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The following abbreviations, when used in the inscription on the face of this Bond,
shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants
in common
TEN ENT -- as tenants
by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as
tenants in common
UTMA........... Custodian ..............
(Gust) (Minor)
under Uniform Transfers to
Minors Act ...................................
(State)
Additional abbreviations may also be used.
ASSIGNMENT
FOR VALUED RECEIVED the undersigned hereby sells, assigns and transfers unto _
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney to transfer the within Bond on the books
kept for registration thereof, with full power of substitution in the premises.
Date:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE:
SIGNATURE GUARANTEE
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Bond Registrar,
which requirements include membership
or participation in STAMP or such other
"signature guaranty program" as may be
determined by the Bond Registrar in
addition to or in substitution for STAMP,
all in accordance with the Securities
Exchange Act of 1934, as amended.
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NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond in every
particular, without alteration, enlargement
or any change whatsoever.
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3.02. Certificate as to Legal Opinion. The following certificate shall be printed on the reverse
of each Series 1997 Bond; following a complete copy of the text of the legal opinion given at the time
of delivery of the Series 1997 Bonds:
We certify that the above is a true copy of the legal opinion on the issue of Bonds of the
City of Kalispell, Montana, which includes the within Bond, dated as of the date of delivery of
and payment for the Bonds.
(Facsimile Signature) (Facsimile Signature) (Facsimile Signature)
Mayor City Manager Finance Director
Section 4. Securities Depositofy.
(a) For purposes of this Section 4, the following terms shall have the following meanings:
`Beneficial Ownet" shall mean, whenever used with respect to a Series 1997 Bond, the
Person in whose name such Series 1997 Bond is recorded as the beneficial owner of such
Series 1997 Bond by a Participant on the records of such Participant, or such Person's
subrogee.
"CEDE & Co." shall mean CEDE & CO., the nominee of DTC, and any successor
nominee of DTC with respect to the Series 1997 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 1997 Bonds as securities depository.
"Representation Letter" shall mean the Blanket Issuer Letter of Representations
executed by the City to DTC pursuant to which the City agrees to comply with DTC's
Operational Arrangements.
(b) The Series 1997 Bonds shall be initially issued as separately authenticated fully registered
bonds, and one Series 1997 Bond shall be issued in the principal amount of each Stated Maturity of the
Series 1997 Bonds. Upon initial issuance, the ownership of such Series 1997 Bonds shall be
registered in the Bond Register in the name of Cede & Co., as nominee of DTC. The Bond Registrar,
Paying Agent and the City may treat DTC (or its nominee) as the sole and exclusive owner of the
Series 1997 Bonds registered in its name for the purposes of payment of the principal of or interest on
the Series 1997 Bonds, selecting the Series 1997 Bonds or portions thereof to be redeemed, if any,
giving arty notioe permitted or required to be given to registered owners of Series 1997 Bonds under
this resolution, registering the transfer of Series 1997 Bonds, and for all other purposes whatsoever;
and neither the Bond Registrar, Paying Agent nor the City shall be affected by any notice to the
contrary. Neither the Bond Registrar, Paying Agent nor the City shall have any responsibility or
obligation to any Participant, any person claiming a beneficial ownership interest in the Series 1997
Bonds under or through DTC or any Participant, or any other person which is not shown on the Bond
Register as being a registered owner of any Series 1997 Bonds, with respect to the accuracy of any
records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant
of any amount with respect to the principal of or interest on the Series 1997 Bonds, with respect to any
notice which is permitted or required to be given to owners of Series 1997 Bonds under this
resolution, with respect to the selection by DTC or any Participant of any person to receive payment in
the event of a partial redemption of the Series 1997 Bonds, or with respect to any consent given or
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other action taken by DTC as registered owner of the Series 1997 Bonds. So long as any Series 1997
Bond is registered in the name of Cede & Co., as nominee of DTC, the Paying Agent shall pay all
principal of and interest on such Series 1997 Bond, and shall give all notices with respect to such
Series 1997 Bond, only to Cede & Co. in accordance with DTC's Operational Arrangements, 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 1997 Bonds to the extent of the sum or sums so
paid. No Person other than DTC shall receive an authenticated Series 1997 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 Bond Registrar of written notice to the effect that DTC has determined to
substitute a new nominee in place of Cede & Co., the Series 1997 Bonds will be transferable to such
new nominee in accordance with paragraph (d) hereof.
(c) In the event the City determines that it is in the best interest of the Beneficial Owners that
they be able to obtain Series 1997 Bonds in the form of bond certificates, the City may notify DTC and
the Bond Registrar and Paying Agent, whereupon DTC shall notify the Participants of the availability
through DTC of Series 1997 Bonds in the form of certificates. In such event, the Series 1997 Bonds
will be transferable in accordance with paragraph (d) hereof. DTC may determine to discontinue
providing its services with respect to the Series 1997 Bonds at any time by giving notice to the City,
the Paying Agent and the Bond Registrar and discharging its responsibilities with respect thereto under
applicable law. In such event the Series 1997 Bonds will be transferable in accordance with paragraph
(d) hereof.
(d) in the event that any transfer or exchange of Series 1997 Bonds is permitted under
paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Bond
Registrar of the Series 1997 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 1997 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 1997 Bonds, or another securities depository
as owner of all the Series 1997 Bonds, the provisions of this resolution shall also apply to all matters
relating thereto, including, without limitation, the printing of such Series 1997 Bonds in the form of
bond certificates and the method of payment of principal of and interest on such Series 1997 Bonds in
the form of bond certificates.
Section 5. Appropriation of Bond Proceeds and Refunding Series 1986 Bonds .
5.01. Appropriation of Bond Proceeds. The proceeds of the Series 1997 Bonds are
appropriated to the Sewerage System Fund created by Ordinance No. 859 and are to be deposited or
applied as follows:
(a) Any accrued interest on the Series 1997 Bonds shall be credited to the Revenue
Bond Account;
(b) $900,683.75 of the proceeds of the Series 1997 Bonds along with $78,460.00 of
moneys on hand in the Revenue Bond Account attributable to the Series 1986 Bonds and
$9,507.50 on hand in the Revenue Bond Account attributable to the Series 1986 Debt Service
Reserve shall be deposited with the Registrar and Paying Agent for the Series 1986 Bonds and
used to pay the principal of and interest on the Series 1986 Bonds on June 15, 1997. (The
balance on hand in the Revenue Bond Account constituting the Debt Service Reserve after the
transfer of the $9,507.50 will be $686,437.50, which is equal to the amount required by
Section 3.04 of Ordinance No. 859, assuming the issuance of the Series 1997 Bonds and that
the Series 1986 Bonds are no longer outstanding); and
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(c) The balance of the proceeds of the Series 1997 Bonds shall be credited to the
Construction Account to pay costs of issuance of the Series 1997 Bonds and of the refunding
of the Series 1986 Bonds.
5.02. Redemption Series 1296 Bonds. The Series 1986 Bonds are hereby called for
redemption on June 15, 1997. The Clerk of Council and Finance Director are hereby directed to
immediately notify the Registrar and Paying Agent of the Series 1986 Bonds of the redemption thereof
and to cause the Registrar and Paying Agent to give notice of redemption by first class mail in
substantially the form attached as Exhibit A hereto, to the registered owners of the outstanding Series
1986 Bonds, not less than thirty (30) days before the date of redemption.
In addition to the notice prescribed by the preceding paragraph, the Finance Director shall also
give, or cause to be given, notice of the redemption of any Series 1986 Bond or Bonds or portions
thereof at least 35 days before the redemption date by certified mail or telecopy to the purchaser thereof
and all registered securities depositories then in the business of holding substantial amounts of
obligations of the character of the Series 1986 Bonds (such depositories now being The Depository
Trust Company, of Garden City, New York; Midwest Securities Trust Company, of Chicago, Illinois;
and Philadelphia Depository Trust Company, of Philadelphia, Pennsylvania) and one or more national
information services that disseminate information regarding municipal bond redemptions; provided that
any defect in or any failure to give any notice of redemption prescribed by this paragraph shall not
affect the validity of the proceedings for the redemption of any Series 1996 Bond or portion thereof.
Section 6. Security for the Series_ 1997 Bonds. The Series 1997 Bonds are issued under
Section 4.03 of Ordinance No. 859 and shall, with the Outstanding Bonds and any other additional
bonds issued under the provisions of said Section 4.03 or Section 4.02 of Ordinance No. 859, be
equally and ratably secured by the provisions of Ordinance No. 859 and this Resolution and payable
out of the net revenues appropriated to the Revenue Bond Account of the Sewerage System Fund,
without preference or priority, all as provided in Ordinance No. 859, and secured by the reserve
established in the Revenue Bond Account. Upon the issuance of the Series 1997 Bonds, the Finance
Director shall deposit, from other available funds in the Sewerage System Fund, the amount required
to cause the balance in said reserve to equal the maximum amount of principal of and interest payable
on the Outstanding Bonds and the Series 1997 Bonds in any future fiscal year. The City shall keep,
perform and observe each and every one of its covenants and undertakings set forth in Ordinance No.
859 and shall cause the Improvements to be undertaken and completed expeditiously.
Section 7. Tax Matters.
7.01. The facilities of the System refinanced or financed in whole or in part with proceeds of
the Series 1997 Bonds (the "Project") are and will be owned and operated by the City and used by the
City to provide sewerage services to members of the general public. No user of the System is granted
any concession, license or special arrangement with respect to the System. The City shall not enter
into any lease, use or other agreement with any nongovernmental person relating to the use of the
Project or security for the payment of the Series 1997 Bonds which might cause the Series 1997 Bonds
to be considered "private activity bonds" or "private loan bonds" within the meaning of Section 141 of
the Internal Revenue Code of 1986, as amended (the "Code").
7.02. The City covenants and agrees with the owners from time to time of the Series 1997
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 1997 Bonds to become includable in gross income for
federal income tax purposes under the Code and applicable Treasury Regulations (the "Regulations"),
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and covenants to take any and all actions within its powers to ensure that the interest on the Series 1997
Bonds will not become includable in gross income for federal income tax purposes under the Code and
the Regulations.
7.03. The Mayor, City Manager and Finance Director, being the officers of the City charged
with the responsibility for issuing the Series 1997 Bonds pursuant to this resolution, are authorized
and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of
Section 148 of the Code, and Sections 1.103-13, 1.103-14 and 1.103-15 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 1997 Bonds, it is reasonably expected that the proceeds of the Series 1997 Bonds will be
used in a manner that would not cause the Series 1997 Bonds to be "arbitrage bonds" within the
meaning of Section 148 of the Code and the Regulations.
7.04. The City acknowledges that the Series 1997 Bonds are 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 Treasury Regulations to preserve the exclusion of interest on
the Series 1997 Bonds from gross income for federal income tax purposes, unless the Bonds qualify
for the exception from the rebate requirement under Section 148(f)(4)(B) of the Code and no "gross
proceeds" of the Series 1997 Bonds (other than amounts constituting a "bona fide debt service fund")
arise during or after the expenditure of the original proceeds thereof. In furtherance of the foregoing,
the Finance Director is hereby authorized and directed to execute a Rebate Certificate containing such
covenants and agreements, 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.
7.05. The City shall file with the Secretary of the Treasury, not later than August 15, 1997, a
statement concerning the Series 1997 Bonds containing the information required by Section 149(e) of
the Code.
7.06. Pursuant to Section 265(b)(3)(B)(ii) of the Code, the City hereby designates the Series
1997 Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code. 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 rebinding
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 b,-
issued by or on behalf of the City and all "subordinate entities" of the City in 1997 in an amount greater
than $10,000,000.
Section 8. Authentication of Transgd t. The officers of the City are hereby authorized and
directed to famish to the Purchaser and to bond counsel certified copies of all proceedings relating to
the issuance of the Series 1997 Bonds and such other certificates and affidavits as may be required to
show the right, power and authority of the City to issue the Series 1997 Bonds, and all statements
contained in and shown by such instruments, including any heretofore furnished, shall constitute
representations of the City as to the truth of the statements purported to be shown thereby.
Section 9. Offering Circular. The Offering Circular relating to the Series 1997 Bonds is
hereby approved and the detenrnination of the City Manager that the Offering Circular is deemed final
for purposes of SEC Rule 15c2-12 is ratified and confirmed. The officers of the City are hereby
authorized and directed to execute such certificates as may be appropriate concerning the accuracy,
completeness and sufficiency of the Offering Circular and to deliver to the Purchaser within seven
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business days after the date of adoption of this resolution copies of the Offering Circular in a
reasonable quantity as requested by the Purchaser.
Section 10. Effective Date. This resolution shall be in full force and effect from and after its
passage.
1997.
Passed and adopted by the City Council of the City of Kalispell, Montana, this 5th day of May,
Clerk of i
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EXHIBIT A
NOTICE OF REDEMPTION
Sewerage System Revenue Bonds, Series 1986
Dated, as originally issued, as of June 1, 1986
City of Kalispell, Flathead County, Montana
NOTICE IS HEREBY GIVEN that the City of Kalispell, Flathead County, Montana, has
called for redemption all bonds of the issue of its Sewerage System Revenue Bonds, Series 1986,
dated, as originally issued, as of June 1, 1986, which mature on June 15 in the years and bear interest
and CUSIP numbers as set forth below:
Year
Interest Rate
CUSIP No.
1998
6.90%
483423 BX6
1999
7.00
483423 BY4
2000
7.00
483423 BZ 1
2001
7.05
483423 CA5
2002
7.10
483423 CB3
2003
7.10
483423 CC1
2004
7.10
483423 CD9
2005
7.10
483423 CE7
2006 7.10
Such bonds have been called for redemption on June 15,
483423 CF4
1997, at the redemption price of
100% of the principal amount thereof plus interest accrued to June
15, 1997.
1
Holders of such bonds maturing in said years should surrender their bonds for payment on
June 15, 1997 to First Trust Company of Montana National Association, of Billings, Montana (as
successor to First Trust Company of Montana), at its operations center in St. Paul, Minnesota, for
payment on January 1, 1998. Holders of such bonds maturing in said years should surrender their
bonds for payment at First Trust National Association, 180 East Fifth Street, 4th Floor - Bond Drop
Window, St. Paul, Minnesota, or if by mail to First Trust National Association, P. O. Box 64111, St.
Paul, Minnesota 55164-0111. For more information, please call Bondholder Relations (612) 973-
6700.
In compliance with the Interest and Dividend Compliance Act of 1983, as amended by the
Energy Policy Act of 1992, a portion of the principal amount of the bonds to be redeemed will be
withheld unless the Paying Agent is furnished with a completed IRS W-9 Form. A W-9 Form may be
obtained from the Paying Agent or other bank or financial institution.
On June 15, 1997, the redemption price of such bonds will become due and payable and
interest on such bonds shall cease to accrue, and the holders thereof shall have no further rights with
respect thereto except to receive the redemption price so deposited.
Dated: , 1997.
BY ORDER OF THE CITY COUNCIL
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Clerk of Council