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Resolution 4536 - Approval of $2,500,000 West Side District Tax Increment Urban Renewal Revenue Bond for Stream2054 RESOLUTION NO. 4536 RESOLUTION RELATING TO $2,500,000 WEST SIDE DISTRICT TAXABLE TAX INCREMENT URBAN RENEWAL REVENUE BOND, SERIES 2000; AUTHORIZING AND DIRECTING THE ISSUANCE 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: A. "Resolution" means this Resolution No. 4536 as originally adopted or as it may from time to time be amended or supplemented pursuant to the provisions hereof. B. 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. C. The words "herein," "hereof ' 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. D. The terms defined in this Section include plural as well as the singular. E. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles applicable to governmental entities. F. All computations provided herein shall be made in accordance with generally accepted accounting principles applicable to governmental entities consistently applied. 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 the Urban Renewal Law, Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended or supplemented. Additional Bonds shall mean any Additional Bonds issued pursuant to Section 6. Additional Parity Bonds shall mean any Additional Bonds issued pursuant to Sections 6.02 or 6.03. Additional Parity Tax Increment shall have the meaning assigned such term in Section 7.03. Additional Subordinate Bonds shall mean any Additional Bonds issued pursuant to Section 6.04. Authority shall mean the Flathead County Economic Development Authority or any successor to its functions under the Interlocal Agreement. Board of Investments shall mean the Board of Investments of the State of Montana, or any successor to its functions, as the Original Purchaser of the Series 2000 Bond. Bond Account shall mean the account so designated in the Tax Increment Debt Service Fund. Bond Counsel shall mean any firm of nationally recognized bond counsel experienced in matters relating to tax-exempt financing, selected by the City. Bond Registrar shall mean the registrar maintained for the purpose of registering the ownership, transfer and exchange of the Bonds of any series. Bondowner shall mean the Owner of a Bond. Bonds shall mean all Bonds issued pursuant to this Resolution, including the Series 2000 Bond and any Additional Bonds. Business Da 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. 2055 91y shall mean the City of Kalispell, Montana, or its successor. Ci Resolution shall mean a resolution, ordinance or other appropriate enactment by the Council to have been duly adopted and to be in full force and effect. Code shall mean the International Revenue Code of 1986, as amended from time to time. Company shall mean Stream International Services Corp., a Delaware corporation, or its permitted successors and assigns. Construction Account shall mean the account so designated in the Tax Increment Capital Project Fund. Council shall mean the City Council of the City or any successor governing body of the City. CouM shall mean Flathead County, Montana, or its successor. County Resolution shall mean a resolution, ordinance or other appropriate enactment by the Board certified by the Clerk and Recorder to have been duly adopted and to be in full force and effect. Deficiency Tax Pa ents shall mean the payments to be made by the Company to the City pursuant to Section 5.7 of the Location, Development and Use Agreement. District shall mean the West Side Urban Renewal District created and established as an urban renewal area pursuant to the Act and Ordinance No. 1259, as such area may be enlarged or reduced in accordance with the Act and this Resolution. Financial Consultant shall mean an Independent Person selected by the City, qualified to study urban renewal areas and projects and tax increment financing plans, and in the judgment of the Council, having a favorable repute for skill and experience in such work. 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 the Council as the City's fiscal year. General Reserve Re uirement shall mean, as of the date of calculation, an amount equal to the maximum amount of Principal and Interest Requirements on all Outstanding Additional Parity Bonds in the then current or any future Fiscal Year. Government Obligations shall mean direct obligations of, or obligations the principal of and interest on which are fully and unconditionally guaranteed as to payment by, the United States of America. 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 the signer is Independent within the meaning hereof. Interest Subaccount shall mean the subaccount so designated in the Bond Account. Interest Pa ent Date shall mean the Stated Maturity of an installment of interest on any of the Bonds. Interlocal Agreement shall mean the Interlocal Agreement dated as of February 8, 2000, between the City, County and Authority, relating to the acquisition, ownership, management and financing of the Property. 2056 Loan Repayment shall mean 5.9l11.5 of each payment received by the City from the Company as, or treated as, interest on the loan in the amount of $1,000,000 made by the City to the Company pursuant to the Location, Development and Use Agreement, Loan Rea ent Subaccount shall mean the subaccount so designated and created in the Revenue Account in the Tax Increment Debt Service Fund. Location, Development and Use Agreement shall mean Location, Development and Use Agreement dated as of February S, 2000, between the City and the Company relating to the 2000 Project. Maturily shall mean, when used with respect to any Bond, the date on which the principal of such Bond becomes due and payable as therein or herein provided, whether at its Stated Maturity or by declaration of acceleration, redemption or otherwise. Opinion of Counsel shall mean a written opinion of counsel, who may (except as otherwise expressly provided in this Resolution) be counsel for the City. Orijzinal Purchaser shall mean, with respect to any series of Bonds, the Person or Persons who purchase such series of Bonds from the City when first issued. The Original Purchaser of the Series 2000 Bond is the Board of Investments. Owner shall mean, with respect to any Bond, the Person in whose name such Bond is registered in the Bond Registrar. 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 Government Obligations (as provided in Section 9) 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 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. Parfty Bonds shall mean the Series 2000 Bond and any Additional Parity Bonds. Person shall mean any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Plan shall mean the West Side Urban Renewal Plan adopted by the Council on March 17, 1997, including all amendments thereof entered into in accordance with the Act and this Resolution. Pledized Revenues shall mean the Tax Increment, the User Fee, the Loan Repayments and the Port Authority Pledged Levy and the Port Authority Deficiency Levy. Port Authority shall mean the Flathead County Economic Development Authority, created by the County as a local port authority pursuant to the Port Authority Act. Port Authorily Subaccount shall mean the subaccount so designated and created in the Revenue Account in the Tax Increment Debt Service Fund. Port Authority Act shall mean Montana Code Annotated, Title 7, Chapter 14, Part 11, and Sections 67-10-401 and 67-10-402, as amended. Port Authority Levy shall mean the property tax levy that the County has covenanted and 2057 agreed to levy on all taxable property in the County for port purposes for the benefit of the Port Authority in the amount of two mills or, to the extent required for purposes of payment of the Series 2000 Bond under this Resolution, such higher amount as may then be permitted under applicable law but not greater than the levy required, if collected in full, to generate $156,000 in collections, pursuant to Montana Code Annotated, Sections 7-14-1131, 7-14-1132, 67-10-401 and 67-10-402, or any amendatory or successory statute. Port Authority Deficiency Levy shall mean, for any Fiscal Year, the lesser of (i) the difference, if any, between the collections of the Port Authority Levy in such Fiscal Year and the Port Authority Pledged Levy, and (ii) $31,000. Port Authorijy Pledged LeV shall mean, for any Fiscal Year, the lesser of (i) collections of the Port Authority Levy in such Fiscal Year (including delinquent collections), or (ii) $125,000. 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 Pa ent Date shall mean the Stated Maturity of principal of any Serial Bond and the Sinking Fund Payment Date for any Term Bond. Projects shall mean the 2000 Project and any other urban renewal project undertaken under the Act, the costs of which are to be paid, in whole or in part, from the proceeds of the Bonds. Prol2egy shall mean the real property and improvements acquired by the City from the proceeds of the Series 2000 Bond as part of the 2000 Project. Qualified Investments shall mean the investments described as such in Section 7.07. 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. Re ig s shall mean the Person appointed by the City to maintain the Bond Register for a series of Bonds and designated by or pursuant to this Resolution to receive and disburse the principal of, premium, if any, and interest on such Bonds. Fund. Reserve Account shall mean the account so designated in the Tax Increment Debt Service Serial Bonds shall mean Bonds which are not Term Bonds. Series 2000 Bond shall mean the City's West Side District Taxable Tax Increment Urban Renewal Revenue Bond, Series 2000, issued in the original aggregate principal amount of $2,500,000 pursuant to this Resolution. Sinking Fund Subaccount shall mean the subaccount so designated in the Bond Account. Sinking Fund Pa ent 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. Stated Maturity when used with respect to any Bond or any installment of interest thereon shall mean the date specified in such Bond a the fixed date on which principal of such Bond or such installment of interest is due and payable. Su lemental Resolution shall mean any resolution supplemental to this Resolution adopted pursuant to Section 9. Tax increment shall mean the sum of (i) the amount received by the City pursuant to the Act and the Plan from the extension of levies of Taxes against the incremental taxable value, as defined in the Act, of all taxable property within the District and shall include any payments in lieu of Taxes attributable to the incremental taxable value, (ii) all payments received by the City designated as replacement revenues for lost Tax Increment, as provided in Section 8.12; and (iii) all Deficiency Tav Aoxrm a"to 2058 Tax Increment Capital P>oj ect Fund shall mean the fund established pursuant to Section 7.01. Tax Increment Debt Service Fund shall mean the fund established pursuant to Section 7.01. Tax Increment Development Fund shall mean the fund established pursuant to Section 7.01. Tax Increment Funds shall mean the Tax Increment Capital Project Fund, the Tax Increment Debt Service Fund and the Tax Increment Development Fund. Taxes shall mean all taxes levied on an ad valorem basis by a Taxing Body against taxable real and personal property located within the District (exclusive of the six -mill levy levied by the State of Montana for the state university system) and shall include all payments in lieu of taxes received by the City with respect, to property within the District. Taxing Body shall mean the City, the County, Flathead County School District No. 5, the State of Montana and any other political subdivision or governmental unit which may hereafter levy Taxes against taxable rental or personal property within the District. Term Bond shall mean any Bond for the payment of the principal of which mandatory payments are required by the 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. 2000 Project shall mean the Project described in Section 1.07. 2000 Reserve Requirement shall mean, as of the date of calculation and if the Series 2000 Bond is Outstanding, an amount equal to the maximum amount of Principal and Interest Requirements on the Series 2000 Bond in the then current or any future Fiscal Year. 2000 Tax Increment shall have the meaning assigned such term in Section 7.03. User Fee shall mean the fee imposed by the City with respect to the Property pursuant to Montana Code Annotated, Section 17-6-316, as amended, as specified in the Location, Development and Use Agreement. User Fee Subaccount shall mean the subaccount so designated and created in the Revenue Account in the Tax Increment Debt Service Fund. 1.02. Authorization. Under the provisions of 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. 1.03. Prior City Actions. The Council pursuant to Ordinance No. 1259 (the "Ordinance"), adopted on March 17, 1997, created the West Side Urban Renewal District (the "District") as an urban renewal area under the Act and approved the West Side Urban Renewal Plan for the District containing a tax increment financing provision all as set forth in the Ordinance. The District and the Plan providing for the segregation and collection of the Tax Increment have been duly and validly created and adopted in strict accordance with applicable provisions of the Act and are in full force and effect. 1.04. Creation of Port Authority: Approval of 2000 Project by Port Authority: Interlocal Agreement: Authority- Covenants. By Resolution No. 1346, duly adopted on July 22, 1999, the Board of County Commissioners of the County created the Port Authority as a local port authority pursuant to the Port Authority Act. The Board of County Commissioners of the County has appointed the Commissioners of the Port Authority and has pursuant to Resolution No. 1346 delegated certain powers, duties and responsibilities to the Port Authority. The Board of Commissioners of the Port Authority has approved the 2000 Project as an authorized corporate activity of the Port Authority under the Port Authority Act for which collections of the Port Authority Pledged Levy and the Port Authority Deficiency Levy may be applied. The Board of Commissioners of the Port Authority has determined that the 2000 Project may be j ointly undertaken by the Port Authority with the City and the County pursuant to the Interlocal Agreement, which has been approved by the Board of Commissioners of the Port Authority, and acknowledged and agreed therein that the Series 2000 Bond is being issued on its behalf and that the Port Authority Pledged Levy and, to the extent required, the Port Authority Deficiency Levy shall be pledged to the repayment of the Series 2000 Bond as herein provided. Pursuant to the Interlocal Agreement, the Port Authority has agreed that in each year that the Series 2000 Bond is Outstanding it will request the County to levy the Port Authority Levy and, if and to the extent required, the Port Authority Deficiency Levy and remit it to the City for application as provided in this Resolution. 1 1 1 2059 1.05. Interlocal A eement• Coua1y Covenants. The County, pursuant to the Interlocal Agreement, which has been approved by the Board of County Commissioners, has covenanted and agreed to levy the Port Authority Levy during each Fiscal Year that the Series 2000 Bond is Outstanding. The County has covenanted and agreed to make the Port Authority Levy, acknowledging that the levy of the Port Authority may, under applicable law (including SB 195, adopted by the Montana Legislature in 1997), require that property tax levies of the County for other purposes be reduced. 1.06.Outstanding Bonds. There are no obligations or other indebtedness of the City now outstanding that is payable in whole or in part from, or is secured by the pledge of, the Tax Increment or other Pledged Revenues. 1.07. The 2000 ProjectXi1y AV12roval of Interlocal A eement. Pursuant to the Act and the procedures contained in the Plan, the City has designated and approved the acquisition of the Property as an urban renewal project (the 2600 Project) and has given notice and conducted a public hearing with respect thereto and has approved the Interlocal Agreement. 1.08. Estimated Costs of 2000 Project. The cost of the acquisition of the Property to be paid from the proceeds of the Series 2000 Bond is $2,500,000. 1.09. Findings and Determinations. It is hereby found, determined and declared by this Council as follows: A. The 2000 Project comprises an urban renewal project under the Act located within the District; B. The District has been duly determined to be blighted and appropriate for the 2000 Project; C. The undertaking of the 2000 Project will encourage farther development and redevelopment within the District and will be consistent with and promote the objectives and policies of the Plan; D. (i) No displacement of businesses, homes or persons will occur as a result of the 2000 Project; (ii) the Plan conforms to the comprehensive plan of the City; (iii) the Plan and the 2000 Prc j ect will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the rehabilitation or redevelopment of the District by private enterprise; and (iv) a sound and adequate financial program exists for the financing of the 2000 Project; E. The Tax Increment and other Pledged Revenues are reasonably estimated to be sufficient to pay the principal of and interest on the Series 2000 Bond when due; and F. It is in the best interests of the City and its residents to undertake the 2000 Project and to issue and sell the Series 2000 Bond as provided in this Resolution. 1.10. Determination of Adequacy of Pledged Revenues. The Series 2000 Bond is payable from the Tax Increment and the Pledged Revenues. Taking into consideration the actual Tax Increment collected for the Fiscal Year ended June 30, 1999, of $235,000, assuming a 90% future collection rate, and revenues to be received from the State as replacement revenues for lost Tax Increment for the Fiscal Year ended June 30, 2000, estimated to be $39,000, and based on the imposition of the Port Authority Levy for fiscal year 2000 and thereafter in the amount of $125,000, and a Loan Repayment estimated to be $38,000 annually, it is estimated that the Pledged Revenues (exclusive of the User Fee) to be received during the Fiscal Year ending June 30, 2000 and each Fiscal Year thereafter, during the time the Series 2000 Bond is expected to be outstanding, will be not less than $437,000. Based on additional development in the District in calendar year 1999, and the tax increment anticipated to be received as a result of the 2000 Project, with a certain development agreement between the City and American Capital Group, LLC, the City anticipates that the Pledged Revenues (exclusive of the Users Fee) to be received during the Fiscal Year ending June 30, 2001, and each Fiscal Year thereafter, during the time the Series 2000 Bond is expected to be outstanding will not be less than $615,000. The maximum annual debt service payable on the Series 2000 Bond in any Fiscal Year during its term, assuming an initial interest rate of 8.71% per annum is $398,896 and, assuming the anticipated adjusted interest rate of 6.21% per annum, which is anticipated to become effective no later than January 1, 2001, is $336,234. It is hereby found, 206 termined and declared that the estimated Pledged Revenues to be receivedby the City and pledged the payment of the Series 2000 Bond will be sufficient to pay the principal thereof and interest thereon when due. Section 2. The Bond. 2.01. General Title. The general title of the Bonds of all series shall be "Tax Increment Urban Renewal Bonds," with appropriate additions for Subordinate Bonds and to distinguish Bonds of each series from Bonds of each other series. 2.02. General Limitations: Issuable in Series. The aggregate principal amount ofBonds that may be authenticated and delivered and Outstanding under this Resolution is not limited, except as provided in Section 6 and except as may be limited by law. The Bonds may be issued in series as from time to time authorized by the Council. The Bonds are special, limited obligations of the City. Principal of, premium, if any, and interest on the Bonds (except to the extent payable out of proceeds of the Bonds) are payable solely from the Tax Increment and from other revenues, if any, derived by the City from Projects or other sources which may be pledged by this Resolution or a Supplemental Resolution to the payment of any series of Bonds. The Bonds shall not pledge the general credit or taxing powers of the City, and the State of Montana shall not in any event be liable for the payment of the principal of, premium, if any, or interest on the Bonds or for the performance of any pledge of any kind whatsoever that may be undertaken by the City. Neither 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 State of Montana, the City of Kalispell or Flathead County within the meaning of any constitutional or statutory provisions whatsoever. With respect to the Bonds of any particular series, the City may incorporate in or add to the general title of such Bonds any words, letters or figures designed to distinguish that series. 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 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). 2.03. Terms of Particular Series. Each series of bonds (except the Series 2000 Bond, which is created by Section 3) shall be created by a Supplemental Resolution. The Bonds of each series (other than the Series 2000 Bond, as to which specific provision is made in Section 3) shall bear such date or dates, shall be payable at such place or places, shall have such Stated Maturities and Redemption Dates, shall bear interest at such rate or rates, from such date or dates, payable in such installments and on such dates and at such place or places, may have attached thereto such coupons for interest, and may be redeemable at such price or prices and upon such terms (in addition to the prices and terms herein specified for redemption of all Bonds) as shall be provided in the Supplemental Resolution creating that series. 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 contain, provision for: A. a sinking, amortization, improvement or other analogous fund; B. limiting the aggregate principal amount of the Bonds of that series or of all Additional Bonds thereafter issued; or C. exchanging Bonds of that series, at the option of the Owners thereof, for other Bonds of the same series of the same aggregate principal amount of a different authorized kind and/or authorized denomination or denominations; D. the issuance of Bonds not registered as to principal or interest or Bonds registrable as to principal only with appurtenant and detachable coupons, and the exchange of such Bonds for fully registered Bonds; all upon such terms as the City may determine. All Bonds of the same series shall be substantially identical except as to denomination and the differences specified herein or in the Supplemental Resolution between interest rates, Stated Maturities and redemption provisions. 2.04. Form and Denominations. The form of the Bonds (other than the Series 2000 Bond, as to which specific provisions are made in Section 4) shall be established by the Supplemental Resolution creating such series. The Bonds of each series shall be distinguished from the Bonds of other series in such manner as the Council may determine. I 1 1 2061 The Bonds of any series shall be issuable as fully registered Bonds unless the Supplemental Resolution provides otherwise. The Bonds of each series shall be issuable in such denominations as shall be provided in the provisions of the Supplemental Resolution creating such series (other than the Series 2000 Bond, as to which specific provisions are made in Section 3). In the absence of any such provision with respect to the Bonds of any particular series, Bonds shall be in the denomination of $5,000 or any integral multiple thereof, of a single maturity. 2.05. Execution. Authentication and Deliy . Each Bond shall be executed on behalf of the City by the officials of the City specified in a City Resolution. The signature of any official may be facsimile, if permitted by applicable law. The seal of the City need not be affixed to or imprinted on any Bond. 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. 2.06. Temnorary Bonds. Pending the preparation of definitive Bonds, the City, if authorized by law, may execute and deliver, temporary Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are issued, in registered form, and with such appropriate insertions, omissions, substitutions and other variations as the officers of the City executing such Bonds may determine, as evidenced by their signing of such Bonds. If temporary Bonds are issued, the City will cause definitive Bonds to be prepared out unreasonable delay. After the preparation of definitive Bonds, the temporary Bonds shall be exchangeable for definitive Bonds upon surrender of the temporary Bonds, without charge to the Owner. Upon surrender for calculation of any one or more temporary Bonds (accompanied by any um -natured coupons appertaining thereto) the City shall execute and deliver in exchange therefor a like principal amount of definitive Bonds of authorized denominations. Until so exchanged the temporary Bonds shall in all respects be entitled to the security and benefits under this Resolution, and interest thereon, when and as payable, shall be paid to the bearers of the temporary Bonds upon presentation thereof for notation of such payment thereon, unless such temporary Bonds shall be fully registered Bonds or shall bear coupons for such interest. Section 3. The Series 2000 Bond. 3.01. General Terms. The City shall forthwith issue the Series 2000 Bond in the principal amount of $2,500,000. The Series 2000 Bond shall denominated "West Side District Taxable Tax Increment Urban Renewal Revenue Bond, Series 2000," shall be one in number, shall be dated as of the date of its delivery to and payment therefor by the Board of Investments, and shall bear interest at the rate of eight and seventy-one hundredths percent (8.71 %) per annum unless and until such rate is adjusted as provided in the next sentence. Effective on the first day of the month next occurring after receipt and approval on a quarterly basis of any Job Credit Certification by the Board of Investments, the interest rate on the Series 2000 Bond will be reduced to a rate commensurate with the number of jobs then certified and approved under the Job Credit Certification in increments of .05% per job, as provided in 17-6-318, M.C.A., but in no event shall the rate be less than 6.21% per annum. Upon an interest rate adjustment, the outstanding principal amount of the Series 2000 Bond shall be reamortized by the holder thereof over the remainder of the term of the Series 2000 Bond ending on the final Stated Maturity and a new Schedule A will be attached thereto by the holder and provided to the City. Such principal and interest shall be paid in consecutive equal semiannual installments on January 1 and July 1 of each year, commencing January 1, 2001, and continuing through July 1, 2010 (the final Stated Maturity of the Series 2000 Bond), subject to the rights and duties of prepayment set forth below. All payments on the Series 2000 Bond shall be applied first to interest due on the Series 2000 Bond and then to reduce the principal amount thereof. If any installment of principal or interest is not paid when due, each and every such delinquent installment shall bear interest, to the extent permitted by law, at the annual rate of interest then bome by the Series 2000 Bond from the due date of such installment until payment thereof. The final semiannual installment may be in such lesser or greater amount as is necessary to pay the balance of principal and interest then remaining due. Such installment payments shall be made to the registered holder of the Series 2000 Bond, at its address as it appears on the Bond Register, in lawful money of the United States of America. The entire proceeds of the Series 2000 Bond shall be advanced by the Board of Investments and disbursed at closing, and the Board of Investments shall enter that amount on Schedule A attached to the Series 2000 Bond under "Advances" and under "Total Amount Advanced." 2062 3.02. Reizistration. The Series 2000 Bond shall be fully registered as to both principal and interest and shall initially be registered in the name of and payable to the Original Purchaser thereof. The Registrar shall establish and maintain a Bond Register for the purpose of recording the names and addresses of the registered owners of the Series 2000 Bond and the date of registration of any transfer. 3.03. Optional Prepayment. The Series 2000 Bond shall be subject to prepayment at the option of the City in whole or in part, on any date, in the principal amount thereof plus accrued interest, without premium. Not less than 15 days before the date specified for prepayment thereof, the City Finance Officer shall mail notice of the prepayment, specifying the date and amount of the prepayment, to the registered owner thereof at the address as it appears on the registration books of the Bond Registrar. 3.04. System of Registration, The City shall appoint, and shall maintain, a Registrar for the Series 2000 Bond. This Section 3.05 shall establish a system of registration for the Series 2000 Bond as defined in the Model Public Obligations Registration Act of Montana, and shall govern in the event provisions of the Bond Resolution relating to registration, transfer or exchange of Bonds are inconsistent herewith. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its principal office a bond register in which the Registrar shall provide for the registration of ownership of Series 2000 Bond and the registration of transfers and exchanges thereof. (b) Transfer. Upon surrender for transfer of any Series 2000 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, a new Series 2000 Bond of a like aggregate principal amount, interest rate and maturity as requested by the transferor. (c) Exchange. Whenever any Series 2000 Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one new Series 2000 Bond of a like aggregate principal amount, interest rate and maturity, as requested by the registered owner or the owner's attorney in writing, (d) Cancellation. The Series 2000 Bond 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 2000 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 2000 Bond or separate instrument of 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 the Series 2000 Bond is at any time registered in the bond register as the absolute owner of the Series Z000 Bond, whether the Series 2000 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 the Series 2000 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 2000 Bond to the extent of the sum or sums so paid. (g) Taxes Fees and Charges. For every transfer or exchange of Series 2000 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 Destro ed Series 2000 Bond. In case the Series 2000 Bond shall become mutilated or be, lost, stolen or destroyed, the Registrar shall deliver a new Series 2000 Bond of a like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Series 2000 Bond or in lieu of and in substitution for any such Series 2000 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 2000 Bond lost, stolen or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Series 2000 Bond was lost, stolen or 1 1 _ _ zos� destroyed, and of the ownership thereof, and upon furnisg 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. The Series 2000 Bond 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 2000 Bond has already matured or such Series 2000 Bond has been called for redemption in accordance with its terms, it shall not be necessary to issue a new Series 2000 Bond prior to payment. 3.05. Initial Registrar. The City hereby appoints the City Finance Officer as the initial Registrar for the Series 2000 Bond. The City reserves the right to appoint a successor Registrar, and 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 securities in its possession as Registrar 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 City Finance Officer shall transmit to the Registrar, solely from money in the Bond Account of the Tax Increment Fund available therefor, as the case may be, money sufficient for the payment of all principal, premium, if any, and interest then due on the Series 2000 Bond. 3.06. Execution and Delivery. The Series 2000 Bond shall be forthwith prepared for execution under the direction of the City Finance Officer, at the expense of the City, and shall be executed on behalf of the City by the signatures of the Mayor, City Manager and City Finance Officer; provided that said signatures may be printed, engraved or lithographed facsimiles thereof. The seal of the City need not be affixed to or imprinted on the Series 2000 Bond. In case any officer whose signature or a facsimile of whose signature shall appear on the Series 2000 Bond shall cease to be such officer before the delivery of any Series 2000 Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, no Series 2000 Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under the Bond Resolution unless and until a certificate of authentication on such Series 2000 Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on each Series 2000 Bond need not be signed by the same representative. The executed certificate of authentication on each Series 2000 Bond shall be condlusive evidence that it has been authenticated and delivered under the Bond Resolution and in accordance with the provisions hereof. When the Series 2000 Bond has been fully executed and authenticated, it shall be delivered by the Registrar to the Board of Investments upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Board of Investments shall not be obligated to see to the application of the purchase price. 3.07. Transcript Certification. The officers of the City are directed to furnish to the Purchaser and to bond counsel certified copies of all proceedings and information in their official records relevant to the authorization and issuance of the Series 2000 Bond, and such certificates and affidavits as to other matters appearing in their official records or otherwise known to them as may be reasonably required to evidence the validity and security of the Series 2000 Bond, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations and recitals of the City as to the correctness of all facts stated therein and the completion of all proceedings stated therein to have been taken. Section 4. Application of Proceeds of Series 2000 Bond. The City shall deposit the proceeds of the sale of the Series 2000 Bond in the Construction Account in the Capital Projects Tax Increment Fund to be used to pay costs of the 2000 Project and costs of issuance of the Series 2000 Bond. Section 5. Form of the Series 2000 Bond. The Series 2000 Bond to be issued pursuant to this Resolution shall be prepared in substantially the following form, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution: 2064 UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF FLATHEAD CITY OF KALISPELL WEST SIDE DISTRICT TAXABLE TAX INCREMENT URBAN RENEWAL REVENUE BOND SERIES 2000 No. R-1 $2,500,000 FOR VALUE RECEIVED, THE CITY OF KALISPELL (the "City"), a duly organized and validly existing municipal corporation of the State of Montana, acknowledges itself to be specially indebted and hereby promises to pay, solely from the Bond Account of its Tax Increment Debt Service Fund, to the Board of Investments of the State of Montana (the "Board of Investments"), or registered assigns, the principal sum of Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00), in installments as set forth below, and to pay interest thereon, solely from the Bond Account, at a rate of and eight and seventy-one hundredths percent (8.71 %) per annum unless and until such interest rate is adjusted as provided in the next sentence. Effective on the first day of the month next occurring after receipt and approval on a quarterly basis of any Job Credit Certification by the Board of Investments, the interest rate on this Bond will be reduced to a rate commensurate with the number of jobs then certified and approved under the Job Credit Certification in increments of .05% per job, as further provided in 17-6-318, M.C.A., but in no event shall the interest rate on this Bond be less than 6.21 %per annum. Upon an interest rate adjustment, the outstanding principal amount of this Bond shall be reamortized over the remainder of the term of this Bond ending on July 1, 2010 (the "Final Maturity Date") and a new schedule A shall be attached thereto and provided to the City. Principal hereof and interest hereon are payable in consecutive equal semiannual installments on January 1 and July 1 of each year, commencing on January 1, 2001, and continuing through the Final Maturity Date, subject to the rights and duties of prepayment set forth below. Upon presentation and surrender hereof at the office of the City Finance Officer in Kalispell, Montana, the interest hereon and the principal hereof are payable in lawful money of the United States of America to the registered owner of this Bond as it appears in the Bond Register of the City. This Bond is one in number and comprises all of a duly authorized series of Bonds of the City (the "Series 2000 Bond") issued, and to be issued from time to time in one or more series (collectively, the "Bonds") pursuant to a resolution duly adopted by the City Council of the City on February 7, 2000 (the "Resolution"), to which Resolution, copies of which are on file with the City, reference is hereby made for a description of the nature and extent of the security for the Series 2000 Bond, the conditions under which additional Bonds may be issued on a parity as to payment with the Series 2000 Bond or otherwise, the conditions under which the Resolution may be amended and the rights of the Holders of the Series 2000 Bond. The Series 2000 Bond is issued by the City for the purpose of financing the acquisition of an office facility in the Gateway West Complex to be leased to Stream International Service Corp., a business enterprise that has agreed to provide new jobs in the City for at least 500 full time employees for a period of not less than 10 years (the "2000 Project"). This Bond is issued pursuant to and in full compliance with the Constitution and laws of the State of Montana, particularly Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended or supplemented (the "Act"), and pursuant to the Resolution. This Bond is payable from the Tax Increment received by the City and resulting from the extension of certain ad valorem taxes levied by certain Taxing Bodies against the incremental taxable value of properties within the District pursuant to the Act (as defined in the Resolution, the "Tax Increment") of the Kalispell West Side Urban Renewal District, an urban renewal area within the City (the "District"), and other revenues and income pledged and appropriated and from time to time credited to the Series 2000 Bond Subaccount in the Tax Increment Debt Service Fund, the Port Authority Levy, certain Loan Repayments from the Company and the User Fee of the Company (as further defined and provided in the Resolution, the "Pledged Revenues"). The City has reserved the right to issue additional Bonds payable from the Tax Increment on a parity with the pledge of the Tax Increment for the Series 2000 Bond, but has agreed that the Pledged Revenues not constituting Tax Increment are pledged solely to the payment of the Series 2000 Bond. This Bond is not a general obligation of the City and the City's general credit and taxing powers are not pledged to the payment of the Bond or the interest thereon. This Bond shall not constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter limitations. 2065 The interest on this Bond is includable in gross income purposes oor ur ederal taxation. f Pf Income The City may prepay the principal of this Bond many date, in whole or part, any unpaid principal of this Bond at a price equal to the principal amount to be redeemed plus interest accrued to the date of redemption, without premium. Notice of any such prepayment will be mailed by the District not less than 15 days prior to the date specified for payment, to the registered holder of this Bond at his address as it appears on the Bond Register maintained by the City Finance Officer. If provision is made for the payment of principal of and interest on this Bond in accordance with the Resolution, this Bond shall no longer be deemed Outstanding under the Resolution, shall cease to be entitled to the benefits of the Resolution, and shall thereafter be payable solely from the funds provided for payment. The Resolution permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the City and the Owners of the Bonds at any time without the consent of any Bondowner or with the consent of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding (as defined in the Resolution) which are affected by such modifications. The Resolution also contains provisions permitting Owners of a majority in aggregate principal amount of the Bonds of all series at the time Outstanding, on behalf of all the Owners of all Bonds, to waive compliance by the City with certain provisions of the Resolution and certain past defaults under the Resolution and their consequences. Any such consent or waiver by the Owner of this Bond shall be conclusive and binding upon such Owner and on all future Owners of this Bond and of any Bond issued in lieu hereof, whether or not notation of such consent or waiver is made upon this Bond. The Owner of this Bond shall have no right to enforce the provisions of the Resolution, or ti institute action to enforce the covenants therein or take any action with respect to a default under the Resolution or to institute, appear in or defend any suit or other procedure with respect thereto except as provided in the Resolution. This Bond is a negotiable investment security as provided in the Montana Uniform Commercial Code. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the office of the City Finance Officer, 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 City Finance Officer, duly executed by the registered owner or his attorney. Upon such transfer, the City will cause a new Bond 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. The City 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 the City shall not be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all acts, conditions and things required by the Constitution and laws of the State of Montana and the home rule charter and ordinances and resolutions of the City to be done, to exist, to happen and to be performed in order to make this Bond a valid and binding special, limited obligation of the City in accordance with its terms have been done, do exist, have happened and have been performed as so required; that this Bond has been issued by the City in connection with an urban renewal project (as defined in the Act); that the City, in and by the Resolution has validly made and entered into covenants and agreements with and for the benefit of the holders from time to time of all Bonds issued thereunder including covenants that it will pledge, appropriate and credit the Tax Increment derived from the District to the Tax Increment Debt Service Fund of the City; that additional Bonds may be issued and made payable from the Tax Increment on a parity with the Series 2000 Bond upon certain conditions set forth in the Resolution, but no obligation will be otherwise incurred and made payable from the Tax Increment unless the lien thereof shall be expressly made subordinate to the lien of the Series 2000 Bond on the Tax Increment; that all provisions for the security of the Owners of the Bonds as set forth in the Resolution will be punctually and faithfully performed as therein stipulated; and that the issuance of the Series 2000 Bond does not cause the indebtedness of the City to exceed any constitutional, statutory or charter Iimitation. 2066 IN WITNESS WHEREOF, the City of Kalispell, Flathead County, State of Montana, by its City Council, has caused this Bond to be executed on its behalf by the facsimile signatures of the Mayor, the City Manager and the City Finance Officer. Dated: CITY OF KALISPELL, MONTANA (Facsimile Signature) Mayor (Facsimile Signature) City Manager (Facsimile Signature) City Finance Officer REGISTER The ownership of the unpaid Principal Balance of this Bond and the interest accruing thereon is registered on the books of the City of Kalispell, Montana in the name of the registered holder appearing on the first page hereof or as last noted below; Date of Name and Address Signature of Registration of Registered Holder Clerk Financial Officer 2000 State of Montana Board of Investments 2401 Colonial Drive Helena, MT 59620-0126 PROVISIONS FOR THE REGISTRATION OF TRANSFER AND EXCHANGE The ownership ofthis Bond and the interest payable hereon may be transferred to a bona fide purchaser only by delivery with an assignment duly executed by the registered owner or his attorney or legal representative, and the City may treat the registered owner as the person exclusively entitled to receive payments of principal of, premium, if any, and interest on this Bond and to exercise all the rights and powers of an owner until this Bond is presented to the City Finance Officer, as Bond Registrar, accompanied by said assignment and by assurance of the nature provided by law that the same is genuine and effective, and until such transfer is registered on the books of the City and noted hereon by the Bond Registrar. NO WRITING HEREON EXCEPT BY CITY FINANCE OFFICER AS BOND REGISTRAR The City Finance Officer has transferred on the books of the City of Kalispell, Flathead County, Montana, on the date last noted below, to the registered assign noted opposite said date, ownership of the principal amount of and interest on this Bond, except the amounts of principal and interest theretofore paid: Date of Transfer Registered Assign Signature of Finance Officer Section 6. Additional Bonds. 206.7 6.01. General Provisions. In addition to the Series 2000 Bond, 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 6.02, 6.03, or 6.04, whichever may be applicable, and upon filing with the Clerk of the Council the following: A. A Supplemental Resolution authorizing the issuance and creating the designated series of Additional Bonds and the sale thereof to the purchaser or purchasers named therein for the purchase price set forth therein; B. A certificate executed by the City Manager and City Finance Officer stating that upon the issuance of the Additional Bonds, no default hereunder has occurred and is continuing which would not be cured upon the issuance of the Additional Bonds and application of the proceeds thereof. C. An Opinion of Bond Counsel stating that: (1) all conditions precedent provided for in this Resolution relating to the issuance and delivery of such Additional Bonds have been complied with, including any conditions precedent specified in this Section 6; (2) 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; (3) the issuance of such Additional Bonds will not affect the tax-exempt status, if any, for federal income tax purposes of any Bonds then outstanding; and No Additional Parity Bonds shall be issued unless, immediately after the issuance 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 Parity 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 6.02 and 6.03 shall be payable and secured ratably and equally and on a parity with the Series 2000 Bond and any Additional Parity Bonds theretofore issued, entitled to the same benefits and security of this Resolution. 6.02. Additional Parity Bonds To Pay the Cost of Projects. Additional Parity Bonds may be issued under this Section 6.02, at one time or from time to time, subject to the conditions provided in Section 6.01 and this Section 6.02, for the purpose of providing funds, in an aggregate amount sufficient with any other funds available and committed therefor to pay the cost of one or more Projects. Before any Additional Parity Bonds shall be issued under this Section 6.02, the City shall adopt a Supplemental Resolution authorizing the issuance of such series ofAdditional Parity Bonds, fixing the amount and the details thereof, 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 Parity Bonds under this Section 6.02, there shall be filed with the Clerk of the Council: (a) A certificate executed by the City Manager and City Finance Officer stating: (i) the estimated cost of the Projects being financed thereby, including an allowance for contingencies and all fees, expenses and financing costs, (ii) the amount, if any, which will be required to be deposited to the credit of the Reserve Account in connection with the issuance of the Additional Parity Bonds, (iii) the amount, if any, which will be required to be credited to the Bond Account to pay interest on the Additional Parity Bonds prior to collection of Tax Increment pledged thereto, (iv) the amount of Tax Increment received by the City in the last completed Fiscal Year, (v) the amount of the maximum Principal and Interest Requirements on the Outstanding Parity Bonds and the Additional Parity Bonds proposed to be issued for any future Fiscal Year during the term of the Outstanding Parity Bonds, and (vi) that the principal amount of such Additional Parity Bonds is sufficient to provide for the payment of all estimated costs of Projects and credits to the Reserve Account and Bond Account as set forth above; and that: (b) a certificate executed by the City Manager and City Finance Officer stating (i) the Tax Increment and Port Authority Pledged Levy received by the City in the last completed Fiscal Year was equal to at least 150% of the maximum Principal and Interest Requirements for any future Fiscal Year (during the term of the Outstanding Parity Bonds) with respect to Outstanding Parity Bonds and the Additional Parity Bonds proposed to be issued; and (ii) the Port Authority Pledged Levy and Tax Increment received by the City in the last completed Fiscal Year, adjusted as provided in this Section 6.02(b)(ii), was, and the Tax Increment estimated to be received in the next succeeding three Fiscal Years, adjusted as provided in Section 6.02(c), is estimated to be, equal to at least 150% of the maximum Principal and Interest Requirements for any future Fiscal Year (during the term of the Outstanding Parity Bonds) with respect to the Outstanding Parity Bonds and the Additional Parity Bonds proposed to be issued, adjusted as provided in Section 6.02(d). For this purpose, the Tax Increment received by the City in the last completed Fiscal Year may be adjusted by adding any increase in Tax Increment which would have resulted from applying the tax rate effective for the last completed Fiscal Year to the value, as determined by certification of the County Assessor, of any projects which have been completed in the District before the date of issuance of the Additional Parity Bonds and the taxable values of which as so completed are not included in the "actual taxable value" of the District (within the meaning of the Act). The 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. (c) For purposes of the foregoing paragraph (b), in estimating the Tax Increment to be received in any future Fiscal Year, the City Manager and City Finance Officer shall assume that: (1) 90% of the Taxes levied in the District will be collected in any Fiscal Year, (2) no Taxes delinquent in a prior Fiscal Year will be collected in any subsequent Fiscal Year and (3) there will be no increase in the Tax Increment to be received in any future Fiscal Year resulting from (A) projected inflation in property values or projected increases in Taxes; (B) the completion of improvements to real property which are under construction at the time of the issuance of the Additional Bonds unless the improvements are substantially completed at the time of the issuance of the Additional Bonds and the City Manager and City Finance Officer reasonably believe that the improvements will be completed within the period for which the estimate is to be made; (C) the completion of an improvement to real estate for which construction has not commenced or is not substantially completed at the time of the issuance of the Additional Bonds unless (i) the City has entered into an agreement with the Person undertaking the improvement wherein the Person agrees to complete the improvement in accordance with a described plan and within the period for which the estimate is to be made and to pay and satisfactorily secure to the City, in the event the improvement is not completed in accordance with the described plan, the difference between the estimated Tax Increment to be derived from such improvement and the actual Tax Increment derived therefrom (adjusted upwards to reflect reductions in the mill rates from those assumed in the estimate), and (ii) the City Manager and City Finance Officer reasonably believe the improvement will be completed within the period for which the estimate is to be made; or (D) improvements to be completed later than the end of the second full Fiscal Year following the issuance of the Additional Bands. In estimating the Tax Increment to be derived from future development, the City shall assume the taxable value of the development upon completion to be 66-2/3% of the estimated taxable valuation. 6.03. Additional Parity Bonds for Refund -in& Purposes. Additional Parity Bonds may be issued at any time or from time to time, subject to the conditions hereinafter stated in this Section 6.03, 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 Parity Bonds shall be designated substantially as the Bonds to be refunded, with the addition of the term "Refunding." Prior to authentication and delivery of any Additional Parity Bonds under this Section 6.03 there shall be filed with the Clerk of the Council such documents as shall be required to show that provisions have been duly made in accordance with the provisions of this Resolution for the redemption of all of the Outstanding Bonds to be refunded. 2069 The City shall not deliver any Additional Parity Bonds under this Section 6.03 unless there shall be filed with the Clerk of the Council: (i) a report of an Independent Accountant to the effect that (a) the proceeds (excluding accrued interest but including any premium) of the Additional Parity 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 principal of and redemption premium, if any, on the Outstanding Bonds to be refunded and the interest which will become due and payable on and prior to the Redemption Date or Stated Maturities of the Bonds to be refunded, or (b) from such proceeds there shall be deposited in trust, Government 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; (ii) an opinion of Bond Counsel to the effect that the issuance of such Additional Bonds will not prejudice the exclusion from gross income for purposes of federal income taxation of the interest accruing on any of the Outstanding Bonds; and (iii) if Additional Parity Bonds are issued to refund Outstanding Bonds issued pursuant to Section 6.04, the conditions for the issuance ofAdditional Parity Bonds pursuant to Section 6.02 are satisfied. 6.04. Subordinate Bonds. Except as provided in Sections 6.01 to 6.03, no Additional Bonds will be issued under or secured by the provisions of this Resolution, and no Additional Bonds will be made payable from the Tax Increment pledged thereto, unless the pledge and appropriation of such Tax Increment for the payment and security of such Additional Bonds is expressly subordinated to the pledge and appropriation made for the benefit and security of the Series 2000 Bond and all Additional Parity Bonds issued and to be issued under and secured by this Resolution in accordance with Sections 6.01 to 6.03. Thirty days prior to the issuance of any Subordinate Bonds, the City shall provide the holder of the Series 2000 Bond of its intent to issue the Subordinate Bonds and the estimated principal amount thereof. In the event of the issuance of any such Additional Bonds, the principal, interest and redemption premiums thereon will be made payable from one or more additional accounts created within the Tax Increment Funds for that purpose, and the balance of funds at any time on hand in any such accounts shall be available and shall be transferred whenever needed to meet the current requirements of the Bond Account and Reserve Account set forth in Sections 7.04 and 7.05. Section 7. The Tax Increment Funds. 7.01. Bond Proceeds and Tax Increment Pledged and Appronnated. Three funds to be designated as the "Tax Increment Capital Project Fund," the "Tax Increment Debt Service Fund" and the "Tax Increment Development Fund" (the Tax Increment Funds) are established and shall be maintained as separate and special bookkeeping accounts on the official books 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. Within the Tax Increment Debt Service Fund there shall be designated and maintained a Revenue Account and a Bond Account. All proceeds of Bonds and all other funds hereafter received or appropriated for purposes of the Projects are appropriated to the Tax Increment Funds as provided in this Section 7. All Tax Increment and other Pledged Revenues are irrevocably pledged and appropriated and shall be credited as received to the Tax Increment Debt Service Fund. The Parity Bonds shall be secured by a first pledge of and lien on all of the Tax Increment and of all other moneys from time to time in the Tax Increment Funds in the manner and to the extent provided in this Section 7, except as to Pledged Revenues not constituting Tax Increment, which shall secure only the Series 2000 Bond. The City shall not issue any obligation or security superior to or on a parity with the Series 2000 Bond, payable or secured, in whole or in part, from or by the Tax Increment other than Additional Parity Bonds issued pursuant to Section 6, until the Series 2000 Bond has been paid or discharged as provided herein. The Tax Increment Funds shall be subdivided into separate accounts as designated and described in Sections 7.02 to 7.07. 7.02. Construction Account. For each Project, including the 2000 Project, there shall be established a separate Construction Account within the Tax increment Capital Project Fund, to be used only to pay as incurred and allowed costs 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 the Council, if and to the extent that the related v 7 Qbaccount in the Interest Subaccount is not sufficient for payment of such interest, reimbursement of any advances made from other City fiinds, and all other expenses incurred in connection with the acquisition, construction and financing ofthe Proj ect. To the Construction Account shall be credited as received all proceeds of Bonds issued to finance such Project, except amounts otherwise appropriated in a Supplemental Resolution or received from Additional Bonds issued to refund Outstanding Bonds pursuant to Section 6 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 cost thereof, the City may transfer any money then remaining in the Construction Account for that Project to the Development Fund or as provided in a Supplemental Resolution. Money in the Construction Account shall be transferred as needed to the related subaccount in the Interest Subaccount to pay interest on Bonds payable therefrom to the extent moneys therein are insufficient. 7.03. Revenue Account. All Tax Increment received by the City and all other Pledged Revenues shall be deposited as received in the Revenue Account of the Tax Increment Debt Service Fund as provided in this Section 7.03. Within the Revenue Account there shall be created and maintained four separate subaccounts as follows: the Tax Increment Subaccount, the User Fee Subaccount, Loan Repayment Subaccount and the Port Authority Levy Subaccount. The City shall deposit the Pledged Revenues as received to the respective subaccounts in the Revenue Account: Type of Pledged Revenues Tax Increment User Fee Loan Repayments Port Authority Pledged Levy Port Authority Deficiency Levy Subaccount Tax Increment Subaccount User Fee Subaccount Loan Repayment Subaccount Port Authority Levy Subaccount Port Authority Levy Subaccount Interest income or investment gain on funds held in any subaccount in the Revenue Account shall be credited to the subaccount in which such funds are held. All money on hand in the Revenue Account is available for use and pledged to payment of the Series 2000 Bond and Additional Bonds issued pursuant hereto. So long as the Series 2000 Bond is Outstanding, amounts deposited in the Tax Increment Subaccount shall be allocated for bookkeeping purposes, as follows: (i) ifno Additional Parity Bond is Outstanding, all such amounts shall be deemed allocated to the Series 2000 Bond (amounts so allocated are referred to herein as "2000 Tax Increment") and (ii) if Additional Parity Bonds are Outstanding, such amounts shall be apportioned between the Series 2000 Bond (the 2000 Tax Increment) and such Additional Parity Bonds (the "Additional Parity Tax Increment") in proportion to the Principal and Interest Requirements on the Series 2000 Bond and the Outstanding Additional Parity Bonds, respectively, in the 12-month period ending on the next succeeding July 1. 7.04. Bond Account: Allocation of Pledged Revenues. (a) The Bond Account is hereby established as a special account within the Tax Increment Debt Service Fund. There are hereby established within the Bond Account two separate subaccounts, designated as the Interest Subaccount and the Sinking Fund Subaccount. Furthermore, there are hereby established within each of the Interest Subaccount and the Sinking Fund Subaccount two separate subaccounts, designated as the 2000 Subaccount and the General Subaccount. (b) Allocation of Pledged Revenues. Five days prior to each Payment Date, the City shall transfer moneys on hand in the respective subaccounts in the Revenue Account as follows: (1) To the Interest Subaccount: (i) first, from the Loan Repayment Subaccount to the 2000 Subaccount in the Interest Subaccount, until the balance on hand in the 2000 Subaccount is at least equal to all interest on the Series 2000 Bond due and payable within the next six full calendar months (the "2000 Interest Requirement"); 00 second, from the User Fee Subaccount to the 2000 Subaccount in the Interest Subaccount, to the extent the balance in the 2000 Subaccount, after the transfer in clause (i), is less than the 2000 Interest Requirement; (iii) third, from 2000 Tax Increment in the Tax Increment Subaccount to the 2000 Subaccount in the Interest Subaccount, 63% of the amount, if any, by which the balance in the 2000 Subaccount, after the transfers in clauses (i) and (ii), is less than the 2000 Interest Requirement; and i 1 2071 (iv) fourth, from Port Authority Levy Subaccount to the 2000 Subaccount in the Interest Subaccount, 37% of the amount, if any, by which the balance in the 2000 Subaccount, after the transfers in. clauses (i) and (ii), is less than the 2000 Interest Requirement. (2) To the Sinking Fund Subaccount: W first, from the Loan Repayment Subaccount to the 2000 Subaccount in the Sinking Fund Subaccount, until the balance on hand in the 2000 Subaccount is at least equal to all principal of the Series 2000 Bond due and payable within the next twelve full calendar months (the "2000 Principal Requirement"); (ii) second, from the User Fee Subaccount to the 2000 Subaccount in the Sinking Fund Subaccount, to the extent the balance in the 2000 Subaccount, after the transfer in clauses (i), is less than the 2000 Principal Requirement; (iii) third, from 2000 Tax Increment in the Tax increment Subaccount to the 2000 Subaccount in the Sinking Fund Subaccount, 63% of the amount, if any, by which the balance in the 2000 Subaccount, after the transfers in clauses (i) and (ii), is less than the 2000 Principal Requirement; and (iv) fourth, from the Port Authority Levy Subaccount to the 2000 Subaccount in the Sinking Fund Subaccount, 37% of the amount, if any, by which the balance in the 2000 Subaccount, after the transfers in clauses (i) and (ii), is less than the 2000 Principal Requirement. (3) To the Reserve Account, after any transfers to the Interest Subaccount or the Sinking Fund Subaccount required by the preceding clauses (1) and (2), as follows: (i) To the 2000 Subaccount in the Reserve Account to the extent the balance therein is less than the 2000 Reserve Requirement, from the following accounts in the following order: first, from any remaining balance in the Loan Repayment Subaccount; second, from any remaining balance in the User Fee Subaccount; third, from 2000 Tax Increment in the Tax Increment Subaccount, 63% of the amount, if any, by which the balance in the 2000 Subaccount in the Reserve Account, after the transfers in clauses (i) and (ii), is less than the 2000 Reserve Requirement; and fourth, from the Port Authority Levy Subaccount, 37% of the amount, if any, by which the balance in the 2000 Subaccount in the Reserve Account, after the transfers in clauses (i) and (ii), is less than the 2000 Reserve Requirement; and (ii) To the General Subaccount in the Reserve Account to the extent the balance therein is less than the General Reserve Requirement, Additional Parity Tax Increment in the Tax Increment Subaccount. (4) To the Tax Increment Development Fund, after any transfers to the Interest Subaccount, Sinking Fund Subaccount or the Reserve Account required by the preceding clauses, the balance of the funds in the Revenue Account, subject to the appropriation thereof to other accounts as provided in Section 6.04; provided, however, that any moneys remaining in the Port Authority Levy Subaccount after the transfers required in clauses (1), (2) and (3) shall be remitted to the Port Authority. Notwithstanding the foregoing provisions of this subsection (b), during any Fiscal Year for which the County levied the Port Authority Deficiency Levy, moneys on hand in the Port Authority Levy Subaccount representing the Port Authority Deficiency Levy shall be transferred to the 2000 Subaccount in the Bond Account and used only to pay the principal of and interest on the Series 2000 Bond to the extent that funds on hand in the 2000 Subaccount in the Bond Account are insufficient therefor on any Interest or Principal Payment Date. On July 2 of the Fiscal Year next following the Fiscal Year in which the Port Authority Deficiency Levy is collected, the City shall to the extent not needed for the purposes set forth in the preceding sentence, transfer any collections of the Port Authority Deficiency Levy then remaining in the Port Authority Levy Subaccount to the County which may remit it to the Port Authority for other authorized purposes under the Port Authority Act. (c) Interest Subaccount. There shall be credited to the Interest Subaccount the following amounts: (i) any amount specified in any Supplemental Resolution to be credited to the Interest Subaccount; (ii) from the Revenue Account, the amounts specified in Section 7.04(b); and (iii) investment income from all funds and accounts in the Tax Increment Funds, except for the Revenue Account, the Construction Account and, to the extent provided in Section 7.05, for the Reserve Account, which income shall be apportioned between the 2000 Subaccount and the General Subaccount in the same proportion that the amount of 2000 Tax Increment then bears to the Additional Parity Tax Increment. 2072 On or before each Interest Payment Date, the City shall withdraw from the 2000 Subaccount in the Interest Subaccount an amount sufficient to pay the interest coming due on the Series 2000 Bond on such Interest Payment Date, and shall use such amount to pay, or make provision with the Paying Agent for the payment of, interest on the Series 2000 Bond on such Interest Payment Date. If on any Interest Payment Date the balance in the 2000 Subaccount in the Interest Subaccount is not sufficient to pay the total amount of interest due on the Series 2000 Bond on such Interest Payment Date, the City shall transfer any money then on hand in the Development Fund, the Construction Account, in the 2000 Subaccount in the Reserve Account or the 2000 Subaccount in the Sinking Fund Subaccount, in the order listed and in an amount equal to such deficiency, to the 2000 Subaccount in the Interest Subaccount. On or before each Interest Payment Date, the City shall withdraw from the General Subaccount in the Interest Subaccount an amount sufficient to pay the interest coming due on any Additional Parity Bonds on such Interest Payment Date, and shall use such amount to pay, or make provision with the Paying Agent for the payment of, interest on the Additional Parity Bonds on such Interest Payment Date. If on any Interest Payment Date the balance in the General Subaccount in the Interest Subaccount is not sufficient to pay the total amount of interest due on the Additional Parity Bonds on such Interest Payment Date, the City shall transfer any money then on hand in the Development Fund, the Construction Account, in the General Subaccount in the Reserve Account or the General Subaccount in the Sinking Fund Subaccount, in the order listed and in an amount equal to such deficiency, to the General Subaccount in the Interest Subaccount. (d) Sinkinez Fund Subaccount. (1) There shall be credited to the Sinking Fund Subaccount the following amounts: (i) any amount specified in a Supplemental Resolution to be credited to the Sinking Fund Subaccount; and (ii) from the Revenue Account, the amounts specified in Section 7.04(b). (2) Amounts on hand in the 2000 Subaccount in the Sinking Fund Subaccount shall be used on any Interest Payment Date to make up a deficiency in the 2000 Subaccount in the Interest Subaccount, after the transfers to the Interest Subaccount required by Section 7.04(b). On or before each Principal Payment Date for the Series 2000 Bond, the City shall withdraw from the 2000 Subaccount in the Sinking Fund Subaccount an amount sufficient to pay the principal due on the Series 2000 Bond on such Principal Payment Date, and shall use such amount to pay, or make provision with the Paying Agent for the payment of, principal of the Series 2000 Bond on such Principal Payment Date, whether a Stated Maturity or a Sinking Fund Payment Date. If on any Principal Payment Date for the Series 2000 Bond the balance in the 2000 Subaccount in the Sinking Fund Subaccount is not sufficient to pay the total amount of principal of the Series 2000 Bond due on such Principal Payment Date, the City shall transfer any money then on hand in the Development Fund, the Construction Account or the 2000 Subaccount in the Reserve Account, in the order listed and in an amount equal to such deficiency, to the 2000 Subaccount in the Sinking Fund Subaccount. (3) Amounts on hand in the General Subaccount in the Sinking Fund Subaccount shall be used on any Interest Payment Date to make up a deficiency in the General Subaccount in the Interest Subaccount, after the transfers to the Interest Subaccount required by Section 7.04(b). On or before each Principal Payment Date for the Additional Parity Bonds, the City shall withdraw from the General Subaccount in the Sinking Fund Subaccount an amount sufficient to pay the principal due on the Additional Parity Bonds on such Principal Payment Date, and shall use such amount to pay, or make provision with the Paying Agent or Agents for the payment of, principal of the Additional Parity Bonds on such Principal Payment Date, whether a Stated Maturity or a Sinking Fund Payment Date. If on any Principal Payment Date for the Additional Parity Bonds the balance in the General Subaccount in the Sinking Fund Subaccount is not sufficient to pay the total amount of principal of the Additional Parity Bonds due on such Principal Payment Date, the City shall transfer any money then on hand in the Development Fund, the Construction Account or the General Subaccount in the Reserve Account, in the order listed and in an amount equal to such deficiency, to the General Subaccount in the Sinking Fund Subaccount. 7.O5. Reserve Account. (1) The Reserve Account is hereby established as a special account within the Tax Increment Debt Service Fund. There are hereby established within the Reserve Account two separate subaccounts, designated as the 2000 Subaccount and the General Subaccount. There shall be credited to the Reserve Account the following amounts: (i) from the Revenue Account, the amounts specified in Section 7.04(b), if any; and (ii) any amount specified in any Supplemental Resolution to be credited to the Reserve Account. 2073 (2) If on any Interest Payment Date or on an Principal Y p Payment Date there shall exist, after the other transfers required by Sections 7.04(b) and (c), a deficiency in the 2000 Subaccount in the Interest Subaccount or the Sinking Fund Subaccount, the City shall transfer from the 2000 Subaccount in the Reserve Account to such subaccount an amount equal to such deficiency. All income derived from the investment of amounts in the 2000 Subaccount in the Reserve Account shall be credited as received to the 2000 Subaccount in the Reserve Account until such time as the balance in the 2000 Subaccount in the Reserve Account is equal to the 2000 Reserve Requirement, and thereafter all such investment income as received shall be transferred to the 2000 Subaccount in the Interest Subaccount. If at any time (including, but not limited to, any Principal Payment Date and any Redemption Date), the balance in the 2000 Subaccount in the Reserve Account exceeds the 2000 Reserve Requirement, the City shall transfer such excess to the 2000 Subaccount in the Bond Account to establish the required balance therein. (3) If on any Interest Payment Date or on any Principal Payment Date there shall exist, after the other transfers required by Sections 7.04(b) and (c), a deficiency in the General Subaccount in the Interest Subaccount or the Sinking Fund Subaccount, the City shall transfer from the General Subaccount in the Reserve Account to such subaccount an amount equal to such deficiency. All income derived from the investment of amounts in the General Subaccount in the Reserve Account shall be credited as received to the General Subaccount in the Reserve Account until such time as the balance in the General Subaccount in the Reserve Account is equal to the General Reserve Requirement, and thereafter all such investment income as received shall be transferred to the General Subaccount in the Interest Subaccount. If at any time (including, but not limited to, any Principal Payment Date and any Redemption Date), the balance in the General Subaccount in the Reserve Account exceeds the General Reserve Requirement, the City shall transfer such excess to the General Subaccount in the Bond Account to establish the required balance therein. 7..06. Development Fund. There shall be credited to the Development Fund any and all Tax Increment remaining after the required credits to the Bond Account and Reserve Account and other moneys in any of the accounts within the Tax Increment Funds in excess of the requirements of said accounts and which the City determines in its discretion to transfer to the Development Fund. Money from time to time on hand in the Development Fund shall be transferred to the Bond Account and Reserve Account as provided by Sections 7.04 and 7.05 and in addition 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; (c) to redeem or discharge Bonds prior to their Stated Maturities in accordance with the provisions of this Resolution or any Supplemental Resolution; (d) to purchase Bonds on the open market; and (e) to pay to Taxing Bodies a portion of the annual Tax Increment received by the City pursuant to an agreement authorized by the Act; provided that the City may remit to Taxing Bodies pursuant to such an agreement only the Tax Increment received in the Fiscal Year and on hand in the Development Fund, only if, on the date of remittance, the balance in the 2000 Subaccount in the Reserve Account is not less than the 2000 Reserve Requirement, the balance in the General Subaccount in the Reserve Account is not less than the General Reserve Account and the funding requirements of the Bond Account have been satisfied, and only to the extent that the balance on deposit in the Development Fund, after such remittance, is not less than 50% of the principal of and interest payable on Outstanding Parity Bonds in the Fiscal Year such Tax Increment is received; and provided, further, that if the Constitution or laws of the State of Montana are amended to abolish or substantially reduce or eliminate real property taxation, and so long as alternate or supplemental revenues are not available to pay principal of and interest on the Bonds in accordance with the provisions of Section 8.12, money in the Development Fund is to be used, so long as any Bonds are outstanding, solely for the payment of principal of, interest or premium, if any, on Outstanding Bonds, whether at their Stated Maturities, on a Redemption Date or otherwise, or to purchase Bonds on the open market. 2074 7.07. Investments. The City Finance Officer shall cause all moneys from time to time in the Tax Increment Funds 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, 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 Funds as defined and authorized by this Resolution. The funds to the credit of the several accounts within the Tax Increment Funds may be commingled in one or more deposit accounts. The balance on hand in any of the accounts of the Tax Increment Funds may at any time be invested and reinvested in Qualified Investments, 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 Development Fund shall be invested in Qualified Investments maturing not later than five years from the date of investment. Section 8. Other Covenants of City. 8.01. Punctual Pa ment. The City will punctually pay or cause to be paid the principal and interest to become due in respect to all the Bonds, in strict conformity with the terms of the Bonds and of this Resolution, and it will faithfully observe and perform all ofthe 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 be deemed or constitute a pledge or appropriation of funds or assets of the City other than those expressly pledged or appropriated hereby. 8.02. Accumulation of CIaims 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. 8.03. 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 Parity Bonds, except as herein specifically provided. The City will not; encumber, pledge or place any charge or lien upon any ofthe Pledged Revenues not constituting Tax Increment superior to or on a parity with the pledge and lien herein created for the benefit of the Series 2000 Bond, except as herein specifically provided. 8.04. Management and O eration ofPro erties. The City will manage and operate or cause to be managed and operated all Projects owned by the City in a sound and business -like manner, and will keep such Projects insured at all times in conformity with sound business practice. 8.05. 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 Projects, Tax Increment and the Tax Increment Funds. Such books of record and accounts shall be at all time during business hours subject to the inspection of the Holders of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives authorized in writing. The City will prepare and file with the Clerk of the Council annually, within one hundred eighty (180) days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete financial statements with respect to the preceding Fiscal Year showing (1) the actual taxable value, the base taxable value and the incremental taxable value (each as defined in the Act) of the District; (2) the mill rates of all Taxing Bodies; (3) the Tax Increment, including a breakdown of Tax Increment attributable to current and delinquent property tax collections and to Delinquency Tax Payments; (4) all disbursements from the Tax Increment Funds; (5) the financial conditions of the Projects; and (6) the balances in the Tax Increment Funds and accounts therein as of the end of each such Fiscal Year, which statements shall be accompanied by a certificate or opinion in writing of an Independent Accountant. The City will furnish a copy of such statements to any Bondholder upon request. 75 8.06. CoMletion of Projects. The City will commence, and will continue to completion,_ Q with all practicable dispatch, the 2000 Project and all other Projects undertaken in the District, and the 2000 Project will be accomplished and completed in a sound and economical manner and in conformity with the Plan and the Act. ` 8.07. Taxation of Leased Property. Other than a Project owned and operated as a public improvement or facility, whenever the City leases real property in the District to any Person other than a governmental entity, the property shall to the extent authorized by law be assessed and taxed in the same manner as privately -owned property and the lease shall provide (1) that the lessee shall pay Taxes upon the taxable value for the entire property and not merely upon the assessed value of his or its leasehold interest, and (2) that if for any reason the Taxes paid by the lessee on such property in any year during the term of the lease shall be less than the Taxes which would have been payable upon the assessed value of the entire property if the property were assessed and taxed in the same manner as privately -owned property, the lessee shall pay such difference to the City within thirty days after the Taxes for such year become payable to the Taxing Bodies and in any event prior to the delinquency date of such Taxes established by law. All such payments to the City shall be treated as Tax Increment and shall be deposited by the City in the Tax Increment Funds. 8.08. Dis osition of Pro e . The City will not authorize the disposition of any land or real property in the District to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property planned for such ownership or use by the Urban Renewal Plan in effect on the date of this Resolution) if such disposition shall consist of more than two percent (2%) of the land area in the District, except as provided in this Section 8.08. The City shall appoint a reputable Independent Financial Consultant and direct said consultant to report on the effect of said disposition. If the Report of the Independent Financial Consultant concludes that Tax Increment (including any amounts resulting from payments in lieu of taxes agreed to be paid with respect to the property) will not be reduced by the proposed disposition in each of the three complete Fiscal Years following such disposition (based on tax levies not greater than those for the current Fiscal Year) below 150% of the maximum Principal and Interest Requirements on all Outstanding Bonds in any future Fiscal Year and that the security of the Bonds or the rights of the Bondholders will not be materially impaired by said proposed disposition, the City may make the proposed disposition. 8.09. 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 Holders of the Bonds of the rights and benefits provided in this Resolution. 8.10. Amendment of Plan. Except to authorize additional Projects, the City will not amend or modify the Plan or reduce the size of the District if an effect thereof will be to materially and adversely affect the security of the Bonds; provided, however, the City may reduce the size of the District if a report as provided in Section 8.08 is received from the Independent Financial Consultant regarding the reduction in size of the District. 8.1 L Federal Tax Exem tion. The City will not use the proceeds of any Bonds or use or permit the use of any Project financed from the proceeds ofthe Bonds or revenues derived therefrom in such a way as to cause the exemption from federal income taxation of interest on any Bonds to become adversely affected. 8.12. Pledge of R lacement Revenues. The City covenants and agrees that in the event the Constitution or laws of the State of Montana are amended to reduce or eliminate real or personal property taxation and Montana law then or thereafter provides to the City an alternate or supplemental source or sources of revenue, whether such revenue may be realized by the levying or imposing of a tax, fee or charge by the City or some other entity, to replace or supplement reduced or eliminated Tax Increment, then the City will appropriate annually, subject to the limitations of then applicable law, to the Bond Account in the Tax increment Fund, for the equal and ratable benefit of all Outstanding Parity Bonds, as further provided in Section 7.04, from such alternate or supplemental revenues an amount that will, with money on deposit in the Bond Account or available and 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 Parity Bonds payable in that fiscal year. If the City observes such covenants and appropriates funds to the Bond Account in such amounts, the violation of other covenants in this Resolution (including without limitation the obligation to maintain the 2000 Reserve Account in an amount equal to the 2000 Reserve Requirement and to maintain the General Reserve Account in an amount equal to the General Reserve Requirement, but excluding the covenant to apply money in the Bond Account to the payment of principal of, premium, if any, and interest on the Bonds) is not to be deemed a default by the City of its obligations under this Resolution. r 8.13. Adjustment of Base Taxable Value. The City shall not adjust the tax incremental base of the District pursuant to Section 7-15-4287 of the Act so long as any Bonds are Outstanding, if the effect thereof would be to materially and adversely affect the amount of Tax Increment. 8.14. Bondholder Rights. No Holder of any Parity 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 Holders of not less than 25% in aggregate principal amount of all Parity Bonds which are at the time Outstanding; but the Holders of this amount of such Parity Bonds may, either at law or in equity, by suit, action or other proceedings, protect and enforce the rights of all Holders of such Parity 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 Holder of a majority in principal amount of such Outstanding Parity Bonds shall have the right to direct the time, method and place of conducting any proceedings for any remedy available to the Holders 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. However, nothing herein shall impair the absolute and unconditional right of the Holder of each Bond to receive payment of the principal of and interest on such 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 Funds and to collect and segregate and apply the Tax Increment and other Pledged Revenues pledged thereto as provided by this Resolution and the Act. Section 9. Supplemental Resolutions. 9.01. General. 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 Holders of Bonds issued hereunder, or for the purpose of adding to the covenants and agreements herein contained, or to the Pledged Revenues herein pledged, other covenants and agreements thereafter to be observed and additional revenues or income thereafter appropriated to the Tax Increment Funds, 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 by resolution, without the consent of the Holder of any of the Bonds issued hereunder. 9.02. Consent ofBondholders. With the consent ofthe Holders of Outstanding Parity Bonds as provided in Section 9.03, 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 Holders 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 Parity Bonds over Subordinate Bonds), would reduce the sources of Tax Increment or other Pledged Revenues appropriated to the Tax Increment Funds, or would reduce the percentage in principal amount of such Bonds required to authorize or consent to any such Supplemental Resolution. 9.03. Notice. Notice of a Supplemental Resolution to be adopted pursuant to Section 9.02 shall be mailed by first-class mail, postage prepaid, to the Holders of all Outstanding Parity Bonds at their addresses appearing in the Bond Register and shall become effective only upon the filing of written consents with the Clerk of the Council, signed by the Holders of not less than two-thirds in principal amount of the Parity Bonds issued hereunder which are then Outstanding. 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 Holders in person or by agent duly appointed in writing, and shall become effective when delivered to the Clerk of the Council. Any consent by the Holder of any Bond shall bind that Holder and every future Holder of the same Bond with respect to any Supplemental Resolution adopted by the City pursuant to such consent; provided that any Holder may revoke his consent with reference to any Bond by written notice received by the Clerk of the Council before the Supplemental Resolution has become effective. In the event that unrevoked consents of the Holders ofthe required amount of Bonds have not been received by the Clerk_ of the Council within one year after the publication of notice of the Supplemental Resolution, the Supplemental Resolution and all consents theretofore received shall be of no further force and effect. 2077-- 9.04. Manner of Consent. Proof of the execution of any consent, or of a writing appointing any agent to execute the same, or of the ownership by any Person of Bonds payable to nearer; 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 9.04. The fact and date of the execution by any Person of any such consent or appointment 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 registered Bonds shall be proved by the Bond Register. Section 10. Defeasance, 10.01. 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 10, all pledges, covenants and other rights granted by this Resolution to the Holders of such Bonds shall cease. 10.02. 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 Paying Agent for such Bonds on or before the date a sum sufficient for the payment thereof in full; or if any Bond or interest shall not be paid when due, the City may nevertheless discharge its liability with reference thereto by depositing with the Paying Agent a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. 10.03. 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 Paying Agent on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due thereon; provided that notice of such redemption has been duly given as provided in this Resolution or a Supplemental Resolution. 10.04. Escrow. The City may also at any time discharge its liability 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 securities which are general obligations of the United States or securities of United States agencies 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 to provide funds sufficient to pay all principal and interest to become due on all such Bonds on or before the Stated Maturities thereof or, if such Bonds are subject to redemption and the City has given the redemption notice required therefor or given irrevocable instructions to give such notice and the funds provided will also be sufficient to pay any applicable redemption premium, to an earlier Redemption Date. Section 11. Effective Date. This Resolution shall be in full force and effect from and after its final passage and approval according to law. PASSED AND APPROVED by the City Council of the City of Kalispell, Montana, this 7th day of February, 2000. Wm.- .BdharS�i Wm. E. Boharski, Mayor Attest: Theresa White City Clerk