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Resolution 5323 - Authorizing Issuance and Sale - Western Montana Mental Healthcare Facilities Revenue NoteRESOLUTION NO.5323 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF A HEALTHCARE FACILITIES REVENUE NOTE (WESTERN MONTANA MENTAL HEALTH CENTER PROJECT) SERIES 2008, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $1,600,000; AUTHORIZING THE EXECUTION OF CERTAIN DOCUMENTS AND DIRECTING DELIVERY THEREOF; AND PROVIDING FOR THE SECURITY, RIGHTS, AND REMEDIES OF THE HOLDERS OF SAID HEALTHCARE FACILITIES REVENUE NOTE, The City of Kalispell, Montana (the "City") is a City and political subdivision of the State of Montana (the "State"). Pursuant to the Constitution and laws of the State, particularly Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), the Act authorizes the City to issue revenue bonds that are special, limited obligations of the City for the purpose of defraying the cost of acquiring or improving any land, building, other improvement, and real or personal property considered necessary in connection with an improvement that is suitable for: commercial, manufacturing, agricultural, or industrial enterprises; recreation or tourist facilities; local, state, and federal governmental facilities; multifamily housing; hospitals; long-term care facilities; community -based facilities for individuals who are persons with developmental disabilities as defined in Montana Code Annotated Title 53, Chapter 20, Part 102, as amended; medical facilities; higher education facilities; electric energy generation facilities; family service provider facilities; the production of energy using an alternative renewable energy source as defined in Montana Code Annotated, Title 15, Chapter 6, Part 225, as amended; and any combination of these projects. The City has received a proposal from the western Montana Mental Health Center, a Montana nonprofit corporation (the "Borrower"), that the City issue its Healthcare Facilities Revenue Note (western Montana Mental .Health Center Project), Series 2008, in a principal amount not to exceed $1,600,000 (the "Note"), and loan the proceeds of the Note to the Borrower to: (i) refinance indebtedness incurred by the Borrower in order to finance the cost of the construction and equipping of (a) a 10,231 square foot medical office building located at 418 Windward way, Kalispell, Montana, (b) a 11,508 square foot medical office building located at 410 windward way, Kalispell, Montana, and (c) a 1,671 square foot crisis residential building located at 412 windward Way, Kalispell, Montana (collectively, the "Project"); (ii) finance certain capital improvements to the Project; and (iii) pay the costs of issuance of the Note. The debt service on the Note is payable solely from revenues and resources of the Borrower. The portion of the proceeds of the Note applied to the payment of costs of issuance of the Note may not exceed two percent of the principal amount of the Note. Pursuant to the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), the City Council (the "City Council") conducted a public hearing on the Project and the issuance of the Note on November 3, 2008. Notice of the public hearing (the "Public Notice"), was published as required by Section 147(f) of the Code and the Act. The Public Notice provided a general, functional description of the Project, as well as the maximum aggregate face amount of the Note and the location of the Project. The Public Notice was published in the .Daily Inter Lake, a newspaper circulating generally in the City, for three consecutive weeks before the November 3, 2008 meeting of the City Council. At the public hearing a reasonable opportunity was provided for interested individuals to express their views, both orally and in writing, on the Project and the proposed issuance of such revenue obligations. At the public hearing, no public spoke with respect to or expressed an opinion in opposition of the issuance of the Note by the City. It is proposed, pursuant to a Loan Agreement, dated on or after December 1., 2008 (the "Loan Agreement"), between the City and the Borrower, that the City lend the proceeds derived from the sale of the Note to the Borrower to finance the Project. The loan repayments to be made by the Borrower under the Loan Agreement are fixed so as to produce revenues sufficient to pay the principal of, premium, if any, and interest on the Note when due. It is further proposed that the City assign its rights to the loan repayments and certain other rights under the Loan Agreement to First Interstate Bank, a Montana commercial banking corporation, or its designee (the "Lender"), as security for payment of the Note under an Assignment of Loan Agreement, dated on or after December 1, 2008 (the "Assignment of Loan Agreement"), between the City, the Lender, and the Borrower. As further security for the repayment of the principal and interest of the Note, the Borrower will also execute a Combination Mortgage, Security Agreement and Fixture Financing Statement, dated on or after December 1, 2008, or such other mortgage document (the "Mortgage"), for the benefit of the Lender. BE IT RESOLVED by the City Council of the City as follows: 1. For the purpose of financing the Project, there is hereby authorized the issuance of the Note. The Note shall bear interest at such rates, shall be in such denomination, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, shall be in such form, and shall have such other details and provisions as are prescribed by the form of the Note attached hereto as Exhibit A. The Note shall be a special, limited obligation of the City payable solely from revenues of the Project, in the manner provided in this resolution and the Loan Agreement. The Note does not constitute an indebtedness, liability, general or moral obligation, or a pledge of the faith and credit or any taxing power of the City, the State, or any political subdivision thereof. The City hereby authorizes and directs the Mayor of the City (the "Mayor") and the Interim City Manager (the "City Manager") of the City (collectively, the "City officials") to execute and deliver the Note to the Lender in accordance with its terms and the terms of this resolution. 2. The proceeds derived from the sale of the Note shall be loaned by the City to the Borrower pursuant to the Loan Agreement. The loan repayments to be made by the Borrower under the Loan Agreement are to be fixed so as to produce revenues sufficient to pay the principal of, premium, if any, and interest on the Note when due. The loan made pursuant to the Loan Agreement (the "Loan"), and the City's rights to the Loan repayments and certain other rights under the Loan Agreement shall be assigned to the Lender as security for payment of the Note pursuant to the Assignment of Loan Agreement. The Note, the Loan Agreement, and the Assignment of Loan Agreement shall be substantially in the forms on file with the City, and are hereby approved, with such necessary and appropriate variations, omissions and insertions as do not materially change the substance thereof, or as the City Officials, in their discretion, shall determine, and the execution and delivery thereof by the City Officials shall be conclusive evidence of such determination. The Note, the Loan Agreement, and the Assignment of Loan Agreement are directed to be executed in the name and on behalf of the City by the City officials. In all events, it is understood, however, that the Note shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City except the City's interest in the loan or revenue agreement with respect to the Note and the Project, and the Note, when, as, and if issued, shall recite in substance that the Note, including interest thereon, are payable solely from the revenues received from the Project, the property pledged to the payment thereof and other sources of security for the Note, and shall not constitute a pecuniary liability of, or a general or moral obligation of the City, within the 2 meaning of any constitutional or statutory limitation. The full faith, credit and taxing power of the City are not pledged to the payment of the Note. 3. The offer of the Lender to purchase the Note is hereby accepted. The City officials are authorized and directed to prepare and execute the Note and deliver the Note to the Lender. The City Manager is hereby authorized to approve the initial interest rate on the Note, approve changes to the maturity schedules, optional and mandatory redemption terms, mandatory sinking fund payment schedules, and other terms and provisions of the Note; provided that the maturity date for the Note shall not be later than 20 years. The debt service on the Note is payable solely from revenues and resources of the Borrower. 4. The City officials and other officers of the City are authorized and directed to prepare and furnish to the Lender and to Bond Counsel certified copies of all proceedings and records of the City relating to the Note, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Note as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. S. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the officials authorized herein to execute said documents, which approval shall be conclusively evidenced by the execution thereof. The City officials and other officers of the City are hereby authorized to execute and deliver, on behalf of the City, all other certificates, instruments, and other written documents that may be requested by Bond Counsel, the Lender, or other persons or entities in conjunction with the issuance of the Note and the expenditure of the proceeds of the Note. Without imposing any limitations on the scope of the preceding sentence, such officers are specifically authorized to execute and deliver a certificate relating to federal tax matters including matters relating to arbitrage and arbitrage rebate, a receipt for the proceeds derived from the sale of the Note, a general certificate of the City, and an Information Return for Tax -Exempt Private Activity Note Issues, Form 8038 (Rev. September, 2007). 6. All covenants, stipulations, obligations, representations, and agreements of the City contained in this resolution or contained in the Loan Agreement or other documents referred to above shall be deemed to be the covenants, stipulations, obligations, representatives, and agreements of the City to the full extent authorized or permitted by law, and all such covenants, stipulations, obligations, representations, and agreements shall be binding upon the City. Except as otherwise provided in this resolution, all rights, powers, and privileges conferred, and duties and liabilities imposed, upon the City by the provisions of this resolution or of the respective Loan Agreement or other documents referred to above shall be exercised or performed by the City, or by such officers, board, body, or agency as may be required or authorized by law to exercise such powers and to perform such duties. No covenant, stipulation, obligation, representation, or agreement herein contained or contained in the Loan Agreement or other documents referred to above shall be deemed to be a covenant, stipulation, obligation, representation, or agreement of any elected official, officer, agent, or employee of the City in that person's individual capacity, and neither the members of the City Council nor any officer or employee executing the Note shall be liable personally on the Note or be subject to any personal liability or accountability by reason of the issuance thereof. 7. Except as herein otherwise expressly provided, nothing in this resolution or in the Loan Agreement, expressed or implied, is intended or shall be construed to confer upon any person, firm, or corporation other than the City and the registered and beneficial owners of the Note, any right, remedy, or 3 claim, legal or equitable, under and by reason of this resolution or any provision hereof or of the Loan Agreement or any provision thereof; this resolution, the Loan Agreement and all of their provisions being intended to be, and being for the sole and exclusive benefit of the City and the registered and beneficial owners of the Note issued under the provisions of this resolution and the Loan Agreement, and the Borrower to the extent expressly provided in the Loan Agreement. S. In case any one or more of the provisions of this resolution, or of the documents mentioned herein, or of the Note issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this resolution, or of the aforementioned documents, or of the Note, but this resolution, the aforementioned documents, and the Note shall be construed and endorsed as if such illegal or invalid provisions had not been contained therein. 9. All acts, conditions, and things required by the laws of the State of Montana, relating to the adoption of this resolution, to the issuance of the Note, and to the execution of the Loan Agreement and the other documents referred to above to happen, exist, and be performed precedent to and in the enactment of this resolution, and precedent to the issuance of the Note, and precedent to the execution of the Loan Agreement and the other documents referred to above have happened, exist, and have been performed as so required by law. 10. The City officials, members of the City Council, officers of the City, and attorneys and other agents or employees of the City are hereby authorized to do all acts and things required by them by or in connection with this resolution and the Loan Agreement and the other documents referred to above for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in the Note, the Loan Agreement, and the other documents referred to above, and this resolution. 11. If for any reason the Mayor is unable to execute and deliver those documents referred to in this resolution, any other member of the City Council, or any officer of the City duly delegated to act on behalf of the Mayor, may execute and deliver such documents with the same force and effect as if such documents were executed by the Mayor. If for any reason the City Manager is unable to execute and deliver the documents referred to in this resolution, such documents may be executed and delivered by the City Clerk, any member of the City Council, or any officer of the City duly delegated to act on behalf of the City Manager, with the same force and effect as if such documents were executed and delivered by the City Manager. 12. The Note is hereby designated by the City as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1956, as amended (the "Code"). In order to qualify the Note as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Note is a "private activity bond" as defined in Section 141 of the Code, but the City has been advised that the Note is also a "qualified 501(c)(3) bond" as defined in Section 145 of the Code; (b) the City designates the Note as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Code; (c) the City reasonably anticipates that the principal amount of tax-exempt obligations (other than "private activity bonds" that are not "qualified 501(c)(3) bonds") to be issued by the City (and all subordinate entities of the City) during calendar year 2008 will not exceed $ l 0,000,000; and 4 (d) the City has not designated more than $10,000,000 of tax-exempt obligations (including the Note) during calendar year 2008 as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code. 13. All commitments of the City expressed herein to issue the Note are subject to the condition that by December 31, 2008, the City, the Borrower and the Lender will have agreed to mutually acceptable terms and conditions of the Loan agreement, the Note and of the other instruments and proceedings relating to the Note and its issuance and sale. If the events set forth herein do not take place within the time set forth above, or any extension thereof, and the Note is not sold within such time, this Resolution will expire and be of no further effect. 14. This resolution shall be in full force and effect from and after its passage. (The remainder of this page is intentionally left blank.) 5 PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL THIS I7TH DAY OF NOVEMBER, 2008. ATTEST: - - - -2, , " L�IL Theresa White City Clerk Pamela B. Kennedy Mayor t -1 0 EXHIBIT A R-1 $ Interest Rate UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF FLATHEAD City of Kalispell, Montana Healthcare Facilities Revenue Note (Western Montana Mental Health Center Project) Series 2008 Maturity Date Date of Original Issue 19 2018 December , 2008 FOR VALUE RECEIVED, the CITY OF KALISPELL, MONTANA (the "Issuer"), is a City and political subdivision of the State of Montana (the "State"), hereby promises to pay to FIRST INTERSTATE BAND, a Montana commercial banking corporation, or its designee (the "Lender"), or registered assigns (the Lender and any subsequent registered owner of this Note being also hereinafter referred to as the "Holder"), at the principal office of the Lender in Missoula, Montana, as shown in the Note Register maintained by the City Clerk of the Issuer or at such other place as the Holder may designate in writing, solely, from the source and in the manner hereinafter provided, the principal amount of THOUSAND AND 001100 DOLLARS ($ }, with interest on the unpaid principal amount at the rate set forth, in paragraph 1(a) hereof in any coin or currency which at the time or times of payment is legal tender for the payment of public or private debts in the United States of America, in accordance with the terms hereinafter set forth: 1. This Note shall bear interest and be payable as follows: (a) Interest shall accrue on the unpaid principal balance of this Note from and after the date of this Note to and including the date of payment of this Note in full at the interest rate set forth above, and shall be payable on the dates (each a "Payment Date") and in the amounts set forth in Exhibit A attached to this Note (which is hereby incorporated herein and made a part of this Note). The principal of this Note shall be payable in installments. Principal shall be payable on the dates and in the amounts shown on Exhibit A attached to this Note (which is hereby incorporated herein and made a part of this Note) on each Payment Date; and (b) In the event the Borrower shall fail to make when due any principal or interest payments required under this Note, the principal or interest payment so in default shall continue as an obligation of the Borrower until the interest payment or principal and interest payment in default shall have been fully paid, and the Borrower agrees to pay interest thereon (including to the extent permitted by law, interest on overdue installments of interest) at the rate of interest per annum borne by this Note. If any principal or interest payment required under this Note is not made when due, and such payment has not been made on the tenth (10th) day following the date on which such payment is due, then, in addition, to all other sums due hereunder, the Holder, in A-1 its sole discretion, shall be entitled to receive a late charge equal to percent %) of the amount of the principal or interest payment so in default. (c) Capitalized terms used in this Note, but not defined herein shall have the meanings given to them in the Loan Agreement. 2. All payments of principal and interest shall be applied first to interest due on the outstanding principal amount hereof and thereafter in reduction of the principal amount hereof. All interest hereon shall be computed on the basis of a year of three hundred sixty (360) days consisting of twelve 30--day months. If any Payment Date is not a Business Day, such payment shall be payable on the next succeeding Business Day. 3. This Note is subject to prepayment in whole but not in part, at the option of the Borrower, on any Payment Date at least eighteen (18) months after issuance of the Note, upon at least thirty (30) days prior written notice to the Lender (or such shorter period of notice as may be acceptable to the Holder) at a prepayment price for each such Payment Date as shown on Exhibit A (the "After Payment Termination Value"). To effect any such prepayment, the Issuer shall pay or cause to be paid to the Lender an amount equal to the After Payment Termination Value, in addition to paying the principal maturing on this Note on such Payment Date and accrued interest on this Note to the date of such prepayment. 4. This Note constitutes an issue in the maximum authorized face amount of $ This Note is issued by the Issuer pursuant to the authority granted by Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the "Act"), for the purpose of providing funds for a project, as defined in the Act, consisting of : (i) refinance indebtedness incurred by the Borrower in order to finance the cost of the construction and equipping of (a) a 10,231. square foot medical office building located at 418 Windward Way, Kalispell, Montana, (b) a 11,508 square foot medical office building located at 410 Windward Way, Kalispell, Montana, and (c) a 1,671 square foot crisis residential building located at 412 Windward Way, Kalispell, Montana (collectively, the "Project"); (ii) financing certain capital improvements to the Project; and (iii) paying necessary expenses incidental thereto, such funds to be loaned by the Issuer to the Borrower pursuant to the Loan Agreement, thereby assisting activities in the public interest and for the public welfare of the State of Montana. Pursuant to the Loan Agreement, the Borrower has agreed to repay the loan of the proceeds of this Note with Loan Payments. This Note is further secured by the Assignment of Loan Agreement and the Mortgage. 5. This Note shall be registered and shall be transferable upon the books of the Issuer at the office of the City Clerk, by the Lender hereof in person or by its attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the City Clerk, duly executed by the Lender or its duly authorized attorney. Upon such transfer the City Clerk will note the date of registration and the name and address of the new holder upon the books of the Issuer and in the registration blank appearing below. Alternatively, the Issuer will, at the request and expense of the holder, issue a new note in the principal amount equal to the unpaid principal balance of this Note, and of like tenor except as to number, and registered in the name of the holder or such transferee as maybe designated by the holder. The Issuer may deem and treat the person in whose name this Note is last registered upon the books of the Issuer, as the absolute owner hereof, whether or not this Note is overdue, for the purpose of receiving payment of or on account of the principal balance, prepayment price, late charges or interest and for all other purposes, and all such payments so made to the Holder or upon its order shall be valid and effectual to satisfy and discharge the liability upon this Note to the extent of the sum or sums so paid, and the Issuer shall not be affected by any notice to the contrary. A--2 6. Time is of the essence under this Note. If default occurs under this Note, or an Event of Default occurs under the Loan Agreement or the Mortgage, or if any other event occurs which entitles the Holder to accelerate payment under the Loan Agreement or the Mortgage, then the Holder may at its right and option (subject, however, to such notice as may be required under the Loan Agreement or the Mortgage) declare immediately due and payable the principal balance of this Note and interest accrued thereon to the date of declaration of such default, together with any reasonable attorneys' fees incurred by the Holder in collecting or enforcing payment thereof, whether suit be brought or not, and all other sums due under this Note. 7. This Note is not a general or moral obligation of the Issuer, but rather a special, limited obligation of the Issuer and shall not be payable from nor charged upon any funds of the Issuer other than the revenues under the Loan Agreement pledged to the payment thereof, nor shall the Issuer be subject to any pecuniary liability thereon. No Holder of this Note shall ever have the right to compel any exercise of the taxing power of the Issuer to pay this Note or the interest or any late charges thereon, nor to enforce payment thereof against any property of the Issuer except revenues under the Loan Agreement pledged to the payment thereof. This Note shall not constitute a charge, lien, or encumbrance, legal or equitable, against the general credit of the Issuer or upon any property of the Issuer, except the revenues under the Loan Agreement pledged to the payment thereof. This Note, including interest, premium, if any, and late charges, if any, hereon is payable solely from the revenues under the Loan Agreement pledged to the payment thereof. This Note shall not constitute a debt of the Issuer within the meaning of any constitutional or statutory limitation. The State of Montana or any other political subdivision shall in no event be liable for the payment of the principal of, premium, if any, interest or late charges on the Note or for the performance of any agreement of any kind whatsoever that may be undertaken by the Issuer. Neither the Note nor any of the agreements or obligations of the Issuer contained herein or in the Loan Agreement shall be construed to constitute an indebtedness of the Issuer within the meaning of any constitutional or statutory provisions whatsoever, nor to constitute or give rise to a pecuniary liability or be a charge against the general credit or taxing power of the Issuer. No failure of the Issuer or any parry to comply with any term, condition, covenant or agreement in the Note or the Loan Agreement shall subject the Issuer to liability for any claim for damages, costs or other financial or pecuniary charge, and no execution on any claim, demand, cause of action or judgment shall be levied upon or collect from the general credit, general funds or taxing powers of the Issuer. 8. The Lender or any subsequent holder of this Note shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the holder and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. 9. It is intended that this Note is made with reference to and shall be construed as a Montana contract and governed by the laws thereof, without giving effect to the conflicts -of -law principles thereof. to. This Note may not be amended, modified or changed nor shall any waiver of any provision hereof be effective, except only by an instrument in writing and signed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought. No modification of the terms and conditions of this Note shall be effective without the written consent of the Issuer. it. If any term of this Note, or the application thereof to any person or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Note, or the application of such term to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term of this Note shall be valid and enforceable to the fullest extent permitted by law. A-3 1 2. The Issuer has designated this Note as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1956, as amended. TT IS HEREBY CERTIFIED AND RENTED that all conditions, acts and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due time, form and manner as required by law. (The remainder of this page is intentionally left blank.) ME IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed by its duly authorized officers as of December , 2008. CITY of KALISPELL, MONTANA By: Its: Mayor By: Its: City Manager A-5 PROVISIONS AS TO REGISTRATION The ownership of the unpaid principal balance of this Note and the interest accruing thereon is registered on the books of the City of Kalispell, Montana, in the name of the registered holder last noted below. Signature of Name and Address of City Clerk, Date of Registration Registered Holder as Registrar First Interstate Bank (Mailing Address): Po Box 4667 Missoula, MT 59806-9945 December , 2008 (Physical Address): 125 East Front Street Missoula, MT 59802 FR600-2 (BWJ) 341499v.4 EXHIBIT A _7