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Home My WebLink About05-22-17 City Commission Packet Materials - A4. Resolution 4801, NEURD Bonding 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Resolution 4801 Authorizing the Issuance and Sale of $1,446,000 Principal Amount of Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District), to Finance the Infrastructure Improvements; and Prescribing the Forms, Terms and Security thereof MEETING DATE: May 22, 2017 AGENDA ITEM TYPE: Action RECOMMENDATION: Approve Resolution 4801 Authorizing the Issuance and Sale of $1,446,000 Principal Amount of Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District), to Finance the Infrastructure Improvements; and Prescribing the Forms, Terms and Security thereof. RECOMMENDED MOTION AND VOTE: I move to approve Resolution 4801 authorizing the issuance and sale of $1,446,000 principal amount of tax increment urban renewal revenue bond, Series 2017 (Northeast Urban Renewal District), to finance the infrastructure improvements; and prescribing the forms, terms and security thereof. BACKGROUND: The City’s adopted economic development strategy, updated in 2016, identifies investment in infrastructure as one of three primary pillars of City economic development activities, along with education and workforce development and supporting local businesses. The historical mixed-uses in the area of northeast Bozeman includes an eclectic and vibrant mix of commercial and residential activities. The Northeast Urban Renewal District (the “District”) is located in the heart of the Northeast Neighborhood. As more residents and visitors discover the 444 2 uniqueness of the larger Northeast Neighborhood additional impacts are felt on the District’s basic infrastructure. These impacts will likely increase. The proposed bond will fund important improvements to the road beds and surfaces of East Peach and East Tamarack Streets, improve pedestrian connectivity with sidewalks and advance storm water treatment with curbs, gutters and treatment systems. The Northeast Urban Renewal District Board (the “Board”) began the bonding process discussions with the City Commission in earnest in June, 2016. The Board recommended bonding for the reconstruction of certain streets in the District in the FY 17 District budget and workplan. The Board developed a plan to complete as many of the five prioritized projects as possible with available bond funding. Resolution 4734 lists the bond eligible projects: 1) Reconstruction of East Tamarack Street; 2) Reconstruction of East Peach Street; 3) Reconstruction of North Ida Avenue; 4) Reconstruction of Front Street; and 5) Reconstruction of East Aspen Street and construction of a pedestrian bridge. Please reference the following documents for additional background information: 1) November 21, 2016 City Commission Packet Material - Resolution 4732 a. November 21, 2016 City Commission meeting minutes 2) December 19, 2016 City Commission Packet Material - Resolution 4734 a. December 19, 2016 City Commission meeting minutes 3) April 3, 2017 City Commission Packet Material - Resolution 4794 a. April 3, 2017 City Commission meeting minutes (DRAFT) When originally scheduled, it was planned that the first two streets on the priority list, East Tamarack and East Peach Streets, would be reconstructed during the 2017 construction season. After additional consultation with the Public Works Department, it was determined that the East Tamarack Street reconstruction should be advanced to FY2019 in order to align with the 2019 CIP Front Street Interceptor project. A portion of the Front Street Interceptor infrastructure planned for replacement in FY19 is under a significant portion of East Tamarack Street. The Board decided to complete the design of East Tamarack Street but delay street reconstruction to the summer of calendar year 2018 (FY19). Only East Peach Street is scheduled for a 2017 reconstruction. Attached to this memo are three exhibits 445 3 detailing the transaction: 1) Resolution 4801; 2) Executed Bond Purchase Agreement with Big Sky Western Bank; and 3) a map of the District. (Exhibits 1 – 3) TERMS: 446 4 FINDINGS: If adopted by the Commission, Resolution 4801 contains the following findings: 1) No persons will be displaced from their housing by the Infrastructure Improvements; 2) The Urban Renewal Plan and the Infrastructure Improvements conform to the City’s growth policy; 3) The Infrastructure Improvements are authorized as an urban renewal project pursuant to the Act and the Urban Renewal Plan; 4) The Urban Renewal Plan and the Infrastructure Improvements will afford maximum opportunity, consistent with the needs of the City as a whole, for the rehabilitation or redevelopment in the District by private enterprise; 5) A sound and adequate financial program exists for the financing of the infrastructure improvements and costs of issuance of the Series 2017 Bond, using Tax Increment, taking into account the Tax Increment expected to be received by the City and available to pay debt service on the Series 2017 Bond; and 6) The infrastructure improvements and issuance and sale by the City of its Series 2017 Bond to finance costs of the infrastructure improvements, including costs of issuance of the Series 2017 Bond, are in the best interests of the City. FISCAL EFFECTS: Upon issuance of the bonds, the City will receive a total of $1,446,000 in two separate draws over two years. The first draw in the amount of $863,000 is scheduled for July, 2017, and the second draw amount $583,000 is scheduled for July, 2018, aligned with the timing of the Front Street Interceptor projects. The total aggregated costs of all five projects exceeds expected bond proceeds. Due to the limited amount of funds available from the bond, East Peach and East Tamarack Streets may be the only two projects funded with the bond proceeds. The bond will be re-paid according to the terms of the bond agreement and summarized in the amortization schedule duplicated on page 3 of this memo. Each bi-annual payment is in the amount of $46,000. Without issuing bonds, the district 447 5 sunsets in 2020. By issuing bonds, the life of the district is extended until the bond term expires, or 2042. The total East Peach Street reconstruction project cost is $856,246.92: 1) $663,189.98 will be paid for the street reconstruction from the Northeast Urban Renewal District bond, 2) $56,519.56 will be paid from the water fund, 3) $120,157.15 will be paid from the sewer fund and 4) $16,380.23 will be paid from the stormwater fund. EXHIBITS: 1) Resolution 4801; 2) Executed Bond Purchase Agreement; and 3) Northeast Urban Renewal District Map. UNRESOLVED ISSUES: None. ALTERNATIVES: As determined by the Bozeman City Commission. Report Compiled on May 15, 2017 448 CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Bozeman, Montana (the “City”), hereby certify that the attached resolution is a true copy of Resolution No. 4801 entitled: “RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF $1,446,000 PRINCIPAL AMOUNT OF TAX INCREMENT URBAN RENEWAL REVENUE BOND, SERIES 2017 (NORTHEAST URBAN RENEWAL DISTRICT) TO FINANCE THE INFRASTRUCTURE IMPROVEMENTS; AND PRESCRIBING THE FORM AND TERMS THEREOF AND THE SECURITY THEREFOR” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Commission of the City on May 22, 2017, and that the meeting was duly held by the City Commission and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Commission members voted in favor thereof: ____________________________________ ________________________________________________________________; voted against the same: ________________________________; abstained from voting thereon: ___________ ________________________________; or were absent: _______________________________. WITNESS my hand and seal officially this _______ day of May, 2017. (SEAL) ________________________________ City Clerk 449 i TABLE OF CONTENTS Page SECTION 1. DEFINITIONS, AUTHORIZATIONS AND FINDINGS ........................................1 1.01. Definitions.........................................................................................................................1 1.02. Rules of Construction .......................................................................................................5 1.03. Recitals ..............................................................................................................................6 1.04. Prior City Actions .............................................................................................................6 1.05. Estimated Costs of the Infrastructure Improvements........................................................7 1.06. Estimate of Tax Increment ................................................................................................7 1.07. Findings.............................................................................................................................7 1.08. Authorization and Sale of Series 2017 Bond ....................................................................7 1.09. Determinations ..................................................................................................................8 SECTION 2. THE BONDS .............................................................................................................8 2.01. General Title .....................................................................................................................8 2.02. General Limitations; Issuable in Series ............................................................................8 2.03. Terms of a Particular Series ..............................................................................................9 2.04. Form and Denominations ..................................................................................................9 2.05. Execution and Delivery.....................................................................................................9 SECTION 3. THE SERIES 2017 BOND ........................................................................................9 3.01. Title, Principal Amount, Interest Rate and Stated Maturities ...........................................9 3.02. System of Registration ....................................................................................................10 3.03. Redemption .....................................................................................................................12 3.04. Execution and Delivery of Series 2017 Bond .................................................................13 3.05. Form of Series 2017 Bond ..............................................................................................13 3.06. Transcript Certification ...................................................................................................13 SECTION 4. ADDITIONAL OBLIGATIONS .............................................................................13 4.01. General Provisions ..........................................................................................................13 4.02. Obligations to Pay Costs of Projects ...............................................................................14 4.03. Obligations for Refunding Purposes ...............................................................................16 4.04. Subordinate Obligations ..................................................................................................16 SECTION 5. THE TAX INCREMENT ACCOUNTS ..................................................................17 5.01. Bond Proceeds and Tax Increment Pledged and Appropriated ......................................17 5.02. Tax Increment Receipts ..................................................................................................17 5.03. Construction Account .....................................................................................................17 5.04. Bond Account .................................................................................................................18 5.05. Reserve Account .............................................................................................................19 5.06. Tax Increment Development Account ............................................................................20 450 ii 5.07. Investments .....................................................................................................................20 SECTION 6. TAX COVENANTS AND CERTIFICATIONS .....................................................21 6.01. Security for the Series 2017 Bond ..................................................................................21 6.02. General Covenant............................................................................................................21 6.03. Arbitrage Certification ....................................................................................................21 6.04. Arbitrage Rebate Exemption...........................................................................................22 6.05. “Qualified Tax-Exempt Obligations” .............................................................................22 6.06. Information Reporting ....................................................................................................23 SECTION 7. OTHER COVENANTS OF CITY ...........................................................................23 7.01. Punctual Payment............................................................................................................23 7.02. Accumulation of Claims of Interest ................................................................................23 7.03. Against Encumbrances....................................................................................................23 7.04. Books and Accounts; Financial Statements ....................................................................23 7.05. Further Assurances..........................................................................................................23 7.06. Amendment of Ordinance ...............................................................................................23 7.07. Adjustment of Base Taxable Value ................................................................................24 7.08. Pledge of Replacement Revenues ...................................................................................24 7.09. Owners’ Rights ...............................................................................................................24 SECTION 8. SUPPLEMENTAL RESOLUTIONS ......................................................................24 8.01. General ............................................................................................................................24 8.02. Consent of Owners ..........................................................................................................25 8.03. Notice ..............................................................................................................................25 8.04. Manner of Consent ..........................................................................................................25 SECTION 9. DEFEASANCE OR DISCHARGE .........................................................................26 9.01. General ............................................................................................................................26 9.02. Maturity...........................................................................................................................26 9.03. Redemption .....................................................................................................................26 9.04. Escrow.............................................................................................................................26 SECTION 10. REPEALS AND EFFECTIVE DATE ...................................................................26 10.01. Repeal ...........................................................................................................................26 10.02. Effective Date ...............................................................................................................26 Exhibit A—Form of Series 2017 Bond ...................................................................................... A-1 451 COMMISSION RESOLUTION NO. 4801 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF $1,446,000 PRINCIPAL AMOUNT OF TAX INCREMENT URBAN RENEWAL REVENUE BOND, SERIES 2017 (NORTHEAST URBAN RENEWAL DISTRICT) TO FINANCE THE INFRASTRUCTURE IMPROVEMENTS; AND PRESCRIBING THE FORM AND TERMS THEREOF AND THE SECURITY THEREFOR BE IT RESOLVED by the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), as follows: Section 1. Definitions, Authorizations and Findings. 1.01. Definitions. The terms defined in this Section 1.01 shall for all purposes of this Resolution have the meanings herein specified, unless the context clearly otherwise requires: Accountant means a Person engaged in the practice of accounting as a certified public accountant, whether or not employed by the City. Act means Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended or supplemented. Additional Bonds means any Bonds issued pursuant to Sections 4.01 through 4.03. Bond Account means the account so designated in the Tax Increment Debt Service Account. Bond Counsel means any firm of nationally recognized bond counsel experienced in matters relating to tax-exempt financing, selected by the City. Bond Register means the register maintained for the purpose of registering the ownership, transfer and exchange of the Bonds of any series. Bonds means the Series 2017 Bond and any Additional Bonds. Business Day means, 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. 452 2 City means the City of Bozeman, Montana, or its successors. Code means the Internal Revenue Code of 1986, as amended. Construction Account means the account so designated in the Tax Increment Capital Project Account. Commission means the City Commission of the City or any successor governing body thereof. Defeasance Obligations means obligations for payment of the principal of and interest on which the United States has pledged its full faith and credit and which are not subject to redemption or prepayment other than at the option of the holder thereof. District means the City’s Northeast Urban Renewal District created and established pursuant to the Act and the Ordinance, as such district may be enlarged or reduced in accordance with the Act and this Resolution. East Peach Street Project means reconstruction of portions of East Peach Street located in the District to City standards, to include curb, gutter, sidewalk, storm water, and paving improvements. East Tamarack Street Project means reconstruction of portions of East Tamarack Street located in the District to City standards, to include curb, gutter, sidewalk, storm water, and paving improvements. Fiscal Year means the period commencing on the first day of July of any year and ending on the last day of June of the next calendar year, or any other twelve-month period authorized by law and specified by this Commission as the City’s Fiscal Year. Independent means, when used with respect to any specified Person, such a Person who (i) is in fact independent; (ii) does not have any direct financial interest or any material indirect financial interest in the City, other than the payment to be received under a contract for services to be performed by such Person; and (iii) is not connected with the City as an officer, employee, promoter, trustee, partner, director, underwriter or person performing similar functions. Whenever it is herein provided that any Independent Person’s opinion or certificate shall be furnished, such Person shall be appointed by the City and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. Infrastructure Improvements shall have the meaning set forth in Section 1.04. Interest Account means the subaccount so designated in the Bond Account. Interest Payment Date means the Stated Maturity of an installment of interest on any of the Bonds. 453 3 Ordinance means Ordinance No. 1655, adopted by this Commission on November 28, 2005, as such may be amended or supplemented. Original Purchaser means, with respect to any series of Bonds, the Person who purchases such series of Bonds from the City when first issued. The Original Purchaser of the Series 2017 Bond is Big Sky Western Bank. Other Priority Street Projects means reconstruction of portions of North Ida Avenue, Front Street, and/or East Aspen Street located in the District to City standards, to include curb, gutter, sidewalk, storm water, and paving improvements, and/or construction of a pedestrian bridge to cross Bozeman Creek. Outstanding means, with reference to Bonds, as of the date of determination, all Bonds theretofore issued and delivered under this Resolution except: (i) Bonds theretofore cancelled by the City or delivered to the City cancelled or for cancellation; (ii) Bonds and portions of Bonds for whose payment or redemption money or Defeasance Obligations (as provided in Section 9.04) shall have been theretofore deposited in trust for the Owners of such Bonds; provided, however, that if such Bonds are to be redeemed, notice of such redemption shall have been duly given pursuant to this Resolution or irrevocable instructions to call such Bonds for redemption at a stated Redemption Date shall have been given by the City; and (iii) Bonds in exchange for or in lieu of which other Bonds shall have been issued and delivered pursuant to this Resolution; provided, however, that in determining whether the Owners of the requisite principal amount of Outstanding Bonds have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the City shall be disregarded and deemed not to be Outstanding. Owner means, with respect to any Bond, the Person in whose name such Bond is registered in the Bond Register. Person means any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Principal Account means the subaccount so designated in the Bond Account. Principal and Interest Requirements means, 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. Principal Payment Date means the Stated Maturity of any installment of principal on any Bond. 454 4 Project means the Infrastructure Improvements and any other urban renewal project undertaken under the Act in or for the benefit of the District, the costs of which are to be paid, in whole or in part, from the proceeds of Bonds. For purposes of this Resolution, Project will include any one or more of the East Peach Street Project, the East Tamarack Street Project, and the Other Priority Street Projects. Redemption Date when used with respect to any Bond to be redeemed means the date on which it is to be prepaid or redeemed in whole or in part. Redemption Price when used with respect to any Bond to be redeemed means the price at which it is to be redeemed. Registrar means the Person, if any, appointed by the City to act as bond registrar, transfer agent and paying agent for a series of Bonds. With respect to the Series 2017 Bond, the Registrar shall be as provided in Section 3.03. Regulations means the Treasury Regulations promulgated under the Code. Reserve Account means the account so designated in the Tax Increment Debt Service Account. Reserve Requirement means, as of the date of calculation, an amount equal to the maximum Principal and Interest Requirements on Outstanding Bonds for the then current or any future calendar year that are secured by the Reserve Account pursuant to this Resolution or a Supplemental Resolution. Resolution means this Resolution No. 4801 as originally adopted or as it may from time to time be amended or supplemented pursuant to the applicable provisions hereof. Series 2017 Bond means the City’s $1,446,000 maximum principal amount of Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District). State means the State of Montana. Stated Maturity when used with respect to any Bond or any installment of principal or interest thereon means the date specified in such Bond as the fixed date on which principal of such Bond or such installment of interest is due and payable. With respect to the Series 2017 Bond, a Stated Maturity means a semiannual principal and interest installment payment date, commencing January 1, 2018, and absent prepayment and redemption, concluding July 1, 2042. Subordinate Obligations means any bonds, notes or obligations of the City issued on a subordinate basis to the Bonds as to the Tax Increment pursuant to Section 4.04. Supplemental Resolution means any resolution supplemental to this Resolution adopted pursuant to Section 8. Tax Increment means the amount received by the City pursuant to the Act from the extension of levies of Taxes (expressed in mills) against the incremental taxable value (as 455 5 defined in the Act) of all Taxable Property, and shall include all payments in lieu of Taxes attributable to the incremental taxable value and all payments received by the City designated as replacement revenues for lost Tax Increment, as provided in Section 7.08. Tax Increment Capital Project Account means the account so designated in the Tax Increment Accounts (as defined in Section 5 below). Tax Increment Debt Service Account means the account so designated in the Tax Increment Accounts. Tax Increment Development Account means the account so designated in the Tax Increment Accounts. Tax Increment Accounts means the accounts established pursuant to Section 5. Taxable Property means all real and personal property located in the District and subject to Taxes, including land, improvements and equipment. Taxes means all taxes levied on an ad valorem basis by any Taxing Body against the Taxable Property (exclusive of the six mill levy for university purposes levied by the State), and shall include all payments in lieu of taxes received by the City with respect to Taxable Property. Taxing Body means the City; Gallatin County, Montana; the elementary school district, the high school district; the State; and any other political subdivision or governmental unit or taxing jurisdiction that levies or may levy Taxes against property within the District. Urban Renewal Plan means the Northeast Urban Renewal District Plan adopted by the Commission on November 28, 2005, as such has been and may be amended or supplemented. 1.02. Rules of Construction. Unless the context otherwise requires or except as otherwise expressly provided: (a) All references in this Resolution to designated sections and other subdivisions are to the designated sections and other subdivisions of this Resolution as originally adopted. (b) The words “herein,” “hereof” and “hereunder” and other words of similar import without reference to any particular section or subdivision refer to this Resolution as a whole and not to any particular section or other subdivision unless the context clearly indicates otherwise. (c) The terms defined in this Resolution include the plural as well as the singular. (d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles applicable to governmental entities. 456 6 (e) All computations provided herein shall be made in accordance with generally accepted accounting principles applicable to governmental entities consistently applied. (f) “Or” is not intended to be exclusive, but is intended to contemplate or encompass one or more or all of the terms or alternatives conjoined. 1.03. Recitals. Under the Act, the City is authorized to create urban renewal areas, prepare and adopt an urban renewal plan therefor and amendments thereto, undertake urban renewal projects therein, provide for the segregation and collection of tax increment with respect to property taxes collected in such areas, issue its bonds to pay the costs of such projects and to refund bonds previously issued under the Act and pledge to the repayment of the bonds the tax increment and other revenues derived from projects undertaken within the urban renewal area. 1.04. Prior City Actions. Pursuant to the Act, the City has determined that blighted property is located within the District, and that the rehabilitation, redevelopment or a combination thereof is necessary for the public health, safety, morals or welfare of the residents of the City, and the Commission has created the District and adopted the Urban Renewal Plan which provides for the segregation and collection of Tax Increment with respect to the District. The District and the Urban Renewal Plan have been duly and validly created and adopted in strict accordance with applicable provisions of the Act and are in full force and effect. As stated in the Urban Renewal Plan, the blighting influences in the District include, but are not limited to, inadequate public infrastructure, such as unsurfaced streets, inadequate storm water drainage, outdated water and sewer utilities, and inadequate street lighting. The Urban Renewal Plan authorizes the installation and construction of public improvements, including improving streets and alleys, improving fire prevention, repairing water and sewer mains, improving sidewalks and a trail network, improving storm water systems, and related public improvements. The Urban Renewal Plan further authorizes the issuances of tax increment bonds to pay all or a portion of the costs of such public improvements. In addition, following a duly noticed and conducted public hearing, the Commission, pursuant to Resolution No. 4734, adopted on December 19, 2016, approved the East Peach Street Project, the East Tamarack Street Project, and the Other Priority Street Projects as urban renewal projects and confirmed that such Projects are contemplated by and within the scope of the Urban Renewal Plan and are eligible for tax increment financing under such plan and the Act. Pursuant to and as authorized under the Urban Renewal Plan, the City proposes to undertake the design, engineering, construction and installation of the East Peach Street Project and the East Tamarack Street Project and, as appropriate, may substitute for, or add to, the East Tamarack Street Project one or more of the Other Priority Street Projects (collectively, the “Infrastructure Improvements”). In the event it is inappropriate to proceed with the East Tamarack Street Project, construction of which is expected to commence in the spring or summer of 2018, or it is not in the best interest of the City to pay a portion of the costs of the East Tamarack Street Project from the proceeds of the Series 2017 Bond, or it is in the best interest of the City to apply a portion of the proceeds of the Series 2017 Bond to a portion of the costs of the East Tamarack Street Project and to costs of one or more of the Other Priority Street 457 7 Projects, the Infrastructure Improvements may include one or more of the Other Priority Street Projects, as determined by the City Manager, the Assistant City Manager, the Public Works Director, and/or the Director of Economic Development. 1.05. Estimated Costs of the Infrastructure Improvements. Proceeds of the Series 2017 Bond shall be used to pay for a portion of the costs of the design, engineering, construction and installation of the Infrastructure Improvements. Costs of the Infrastructure Improvements and associated financing costs in excess of the proceeds of the Series 2017 Bond shall be paid out of Tax Increment on hand and/or other available funds of the City. 1.06. Estimate of Tax Increment. Based on Tax Increment received by the City of $121,342 in fiscal year 2015 and $148,335 in fiscal year 2016, and Tax Increment projected to be received by the City of $132,785 in fiscal year 2017, the City estimates that the Tax Increment will be at least $132,785 per fiscal year. The maximum fiscal year principal and interest payable on the Series 2017 Bond shall not exceed $92,000. There are no other obligations of the City payable from Tax Increment. Accordingly, the estimated Tax Increment to be received each year by the City will be sufficient to pay the maximum annual principal and interest payable on the Series 2017 Bond. 1.07. Findings. It is hereby found, determined and declared by this Commission as follows: (a) no persons will be displaced from their housing by the Infrastructure Improvements; (b) the Urban Renewal Plan and the Infrastructure Improvements conform to the City’s growth policy; (c) the Infrastructure Improvements are authorized as an urban renewal project pursuant to the Act and the Urban Renewal Plan; (c) the Urban Renewal Plan and the Infrastructure Improvements will afford maximum opportunity, consistent with the needs of the City as a whole, for the rehabilitation or redevelopment in the District by private enterprise; (d) a sound and adequate financial program exists for the financing of the Infrastructure Improvements and costs of issuance of the Series 2017 Bond, using Tax Increment, taking into account the Tax Increment expected to be received by the City and available to pay debt service on the Series 2017 Bond; and (e) the Infrastructure Improvements and issuance and sale by the City of its Series 2017 Bond to finance costs of the Infrastructure Improvements, including costs of issuance of the Series 2017 Bond, are in the best interests of the City. 1.08. Authorization and Sale of Series 2017 Bond. This Commission hereby determines that it would be in the best interests of the City to sell its Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District) (the “Series 2017 Bond”), in a negotiated sale to the Original Purchaser, as authorized by Section 7-15- 458 8 4301(1)(a) of the Act. Proceeds of the Series 2017 Bond shall be used to pay costs of the Infrastructure Improvements and to pay costs of issuance of the Series 2017 Bond, as set forth in Section 1.05. The Original Purchaser has agreed to purchase the Series 2017 Bond and disburse amounts thereunder, in two advances, the first in connection with the East Peach Street Project on the date of delivery of the Series 2017 Bond and the second one year thereafter on or about July 20, 2018 in connection with the East Tamarack Street Project (or, if applicable, one or more of the Other Priority Street Projects). The City’s Assistant City Manager and Director of Economic Development, are hereby authorized and directed to approve the aggregate principal amount of the Series 2017 Bond in an amount not to exceed $1,446,000. Upon such approval, the Mayor, Assistant City Manager and City Clerk are hereby authorized and directed to cause the City to issue and deliver on behalf of the City, the Series 2017 Bond in such aggregate principal amount. 1.09. Determinations. All acts, conditions and things required by the Constitution and laws of the State, including the Act, in order to pledge the Tax Increment to the payment of the Series 2017 Bond, to make the Series 2017 Bond valid and binding special, limited obligations of the City in accordance with their terms and in accordance with the terms of this Resolution have been done, do exist, have happened and have been performed in regular and due form, time and manner as so required. Section 2. The Bonds. 2.01. General Title. The general title of the Bonds of all series shall be “Tax Increment Urban Renewal Revenue (Northeast Urban Renewal District),” with appropriate additions for refunding Bonds and to distinguish Bonds of each series from Bonds of other series. 2.02. General Limitations; Issuable in Series. Bonds may be issued in series as from time to time authorized by the City. The aggregate principal amount of Bonds that may be authenticated and delivered and Outstanding under this Resolution is not limited, except as provided in Section 4 and except as may be limited by law. Bonds are special, limited obligations of the City. Bonds are not general obligations of the City and neither the general credit nor the taxing power of the City, Gallatin County, school districts, the State, or any taxing jurisdiction is pledged to the payment of Bonds or the interest thereon. Principal of, premium, if any, and interest on Bonds (except to the extent expressly payable out of proceeds of Bonds) are payable solely from the Tax Increment or other sources which may be pledged to the payment of any series of Bonds. Gallatin County, school districts, the State, and taxing jurisdictions other than the City shall in no event be liable for the payment of the principal of, premium, if any, or interest on Bonds or the performance of any pledge of any kind whatsoever that may be undertaken by the City with respect thereto. Neither this Resolution, any Bonds nor any of the agreements or obligations of the City contained herein or therein shall be construed to constitute an indebtedness of the City, Gallatin County, school districts, the State, or any taxing jurisdiction within the meaning of any constitutional or statutory provisions whatsoever. If any Stated Maturity or Redemption Date shall be on a day which is not a Business Day, then payment of principal of, premium, if any, or interest due on such day may be made on the 459 9 next succeeding Business Day, with the same force and effect as if made on such Stated Maturity or Redemption Date (whether or not such next succeeding Business Day occurs in a succeeding month), and no interest shall accrue for the intervening period. 2.03. Terms of a Particular Series. Each series of Bonds (except the Series 2017 Bond, as to which specific provision is made in Section 3) shall be created by a Supplemental Resolution and pursuant to Section 4. The City may, at the time of the creation of any series of Bonds or at any time thereafter make, and the Bonds of that series may also contain, provision for a sinking, amortization, improvement or other analogous fund. All Bonds of the same series shall be substantially identical except as to denomination and the differences specified herein or in a Supplemental Resolution between interest rates, Stated Maturities and redemption provisions. 2.04. Form and Denominations. The form of Bonds (except the Series 2017 Bond, as to which specific provision is made in Section 3) shall be established by the Supplemental Resolution creating such series. Bonds of any series shall be issuable as fully registered Bonds, in such denominations as shall be provided in the Supplemental Resolution creating such series (except the Series 2017 Bond, as to which specific provision is made in Section 3). 2.05. Execution and Delivery. Each Bond shall be executed on behalf of the City by the officials of the City specified in a Supplemental Resolution (except the Series 2017 Bond, as to which specific provision is made in Section 3). The signature of any official may be facsimile, if permitted by applicable law. Bonds bearing the manual or facsimile signatures of individuals who were at any time the proper officials of the City shall bind the City, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the delivery of such Bonds or did not hold such offices at the date of such Bonds. At any time and from time to time, the City may deliver Bonds executed by the proper officers of the City to the Registrar for authentication, and the Registrar shall authenticate and deliver such Bonds as specified in a Supplemental Resolution (other than the Series 2017 Bond, as to which specific provision is made in Section 3). Section 3. The Series 2017 Bond. 3.01. Title, Principal Amount, Interest Rate and Stated Maturities. The Series 2017 Bond to be issued hereunder shall be denominated “Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District)” and shall be issued in the principal amount of $1,446,000, with the principal amount thereof advanced in two advances, as described more particularly in the form of the Series 2017 Bond. The Series 2017 Bond shall mature, subject to redemption as hereinafter provided, on July 1, 2042. The Series 2017 Bond shall bear interest on the Outstanding principal amount from the date of original issue, or from such later date to which interest has been paid or duly provided for, until paid or discharged at the rate of 4.10% per annum. The principal of and interest on the Series 2017 Bond shall be payable in the amounts and on the respective dates reflected in the Debt Service Schedule attached as Schedule I to the Series 2017 Bond. 460 10 Principal of and interest on the Series 2017 Bond shall be payable by check or draft of the Registrar mailed to the Owner as such appears in the Bond Register as of the close of business on the 15th day (whether or not a Business Day) of the month immediately preceding each payment date; provided that the final payment of principal (whether at maturity or earlier redemption in full) shall be made by the Registrar only upon presentation and surrender of the Series 2017 Bond at the office of the Registrar, which at the date of this Resolution is the office of the City Treasurer, located at 121 N Rouse, Bozeman, Montana, or such other location designated in writing by the Registrar. A successor Registrar may be appointed under the provisions of Section 3.03 below. The Bond Registrar shall note in the Bond Register each principal payment on the Series 2017 Bond. The Series 2017 Bond shall be issuable only in fully registered form and the ownership of the Series 2017 Bond shall be transferred (in whole and not in part) only upon the Bond Register. The Series 2017 Bond shall be dated its date of issuance. Upon delivery of the Series 2017 Bond to the Original Purchaser thereof or upon the delivery of Series 2017 Bond upon a transfer or exchange, the Registrar shall date the Series 2017 Bond so delivered as of the date of its authentication. 3.02. System of Registration. The City hereby appoints the City Treasurer to act as bond registrar, transfer agent and paying agent for the Series 2017 Bond (the “Registrar”). The City reserves the right to appoint a bank, trust company or fiscal company as successor bond registrar, transfer agent or paying agent, as authorized by the Model Public Obligations Registration Act of Montana (the “Registration Act”), but the City agrees to pay the reasonable and customary charges of the Registrar for the services performed. This Section 3.03 shall establish a system of registration for the Series 2017 Bond as defined in the Model Public Obligations Registration Act of Montana, Montana Code Annotated, Title 17, Chapter 5, Part 11, as amended. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Bond Register. The Registrar shall keep a register (the “Bond Register”) in which the Registrar shall provide for the registration of ownership of the Series 2017 Bond and the registration of transfers or surrenders of the Series 2017 Bond entitled to be registered, transferred or surrendered. The term “Holder” or “Bondholder” or “Owner” as used herein means the person (whether a natural person, corporation, association, partnership, trust, governmental unit, or other legal entity) in whose name, as of the date of reference, the Series 2017 Bond is registered in the Bond Register. (b) Transfer. Upon surrender to the Registrar for transfer of the Series 2017 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 2017 Bond in the then outstanding principal amount, bearing interest at the same rate and payable on the same dates. The Registrar may, however, decline to register the transfer of any Bond which has theretofore been selected or called for redemption, in whole or in part. 461 11 (c) Reserved. (d) Cancellation. The Series 2017 Bond surrendered upon any transfer shall be promptly canceled by the Registrar and thereafter delivered to the City Treasurer. (e) Improper or Unauthorized Transfer. The Registrar may refuse to transfer any Series 2017 Bond presented to the Registrar for transfer until the Registrar is satisfied that the endorsement on the Series 2017 Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name the Series 2017 Bond is at any time registered in the Bond Register as the absolute owner of the Series 2017 Bond, whether the Series 2017 Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and (subject to Section 2.2) interest on the Series 2017 Bond and for all other purposes, and all such payments so made to any such Holder shall be valid and effectual to satisfy and discharge the liability upon the Series 2017 Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or surrender of the Series 2017 Bond, the Registrar may impose upon the owner thereof a charge sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or surrender. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case the Series 2017 Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Series 2017 Bond in substitution for and upon cancellation of such mutilated Series 2017 Bond or in lieu of and in substitution for the Series 2017 Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of Series 2017 Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that such Series 2017 Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar 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 2017 Bond so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the City. If the mutilated, destroyed, stolen or lost Series 2017 Bond has already matured or the Series 2017 Bond has been called for redemption in full in accordance with their terms, it shall not be necessary to issue a new Series 2017 Bond prior to payment. (i) Notice of Redemption. The Registrar shall give notice of redemption of the Series 2017 Bond as provided in Section 3.03 of this Resolution. (j) Valid Obligations. The Series 2017 Bond issued upon any transfer or substitution of the Series 2017 Bond shall be a valid obligation of the City evidencing the 462 12 same debt, and, with regard to matters from and after the date of transfer or substitution, entitled to the same benefits under this Resolution as the Series 2017 Bond surrendered upon such transfer or substitution. (k) Intent to Hold. While the above provisions of this Section 3.03 allow for transfer and substitution of the Series 2017 Bond, the Original Purchaser is purchasing the Series 2017 Bond with the intent to hold the Series 2017 Bond through its maturity date. 3.03. Redemption. (a) Optional Redemption of Series 2017 Bond. The Series 2017 Bond shall be subject to redemption at the option of the City, at any time and from time to time, in whole or in part, at a price equal to the principal amount thereof to be redeemed plus interest accrued to the Redemption Date, without premium or penalty (such price in respect of the Series 2017 Bond, the “Redemption Price”). If the Series 2017 Bond is prepaid in part, the Original Purchaser or then-Owner of the Series 2017 Bond will reamortize the principal remaining upon redemption and prepayment as a result of and in accordance with the prepayment notice of the City at the interest rate over the then- remaining term, as described in (b) below. (b) Notice of Redemption. The Redemption Date and the principal amount of the Series 2017 Bond to be redeemed shall be fixed by the City who shall give notice thereof to the Registrar at least 45 days prior to the Redemption Date or such lesser period as the Registrar accepts, provided that no such additional notice to the Registrar is required if the Registrar continues to be the City Treasurer. The Registrar, at least 30 days prior to the designated Redemption Date, shall cause notice of redemption to be mailed, by first class mail to the Owner of each Series 2017 Bond to be redeemed at its address as it appears on the Bond Register, but no defect in or failure to give such mailed notice shall affect the validity of proceedings for the redemption of the Series 2017 Bond not affected by such defect or failure. The notice of redemption shall specify the Redemption Date, Redemption Price, and the place at which the Series 2017 Bond, if redeemed and prepaid in full, is to be surrendered for payment, and, if redeemed and prepaid in part, the total principal amount of the Series 2017 Bond to be redeemed and prepaid in part and the principal amounts on each Stated Maturity that comprise the total partial prepayment and redemption amount. Official notice of redemption having been given as aforesaid, the Series 2017 Bond or portion thereof so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the City shall default in the payment of the Redemption Price) such Series 2017 Bond or portion thereof shall cease to be payable and bear interest. (c) Reamortization if Partial Redemption and Prepayment. If the Series 2017 Bond is prepaid in part, the then-Owner of the Series 2017 Bond will reamortize the principal remaining upon redemption and prepayment as a result of and in accordance with the prepayment notice of the City at the interest rate over the then-remaining term. So long as the Series 2017 Bond is held by one registered Owner, upon partial 463 13 redemption and prepayment there shall be no need to exchange a new bond for the unredeemed portion of the existing bond; provided that the amortization schedule attached as Schedule I to the form of the Series 2017 Bond shall be replaced by an amortization schedule reflecting the reamortization of the principal then outstanding in the manner described above. 3.04. Execution and Delivery of Series 2017 Bond. The Series 2017 Bond shall be forthwith prepared for execution under the direction of the City Clerk and shall be executed on behalf of the City by the signatures of the Mayor, the Assistant City Manager and the City Clerk, provided that said signatures may be printed, engraved or lithographed facsimiles thereof. The seal of the City need not be imprinted on or affixed to the Series 2017 Bond. In case any officer whose signature or a facsimile of whose signature shall appear on the Series 2017 Bond shall cease to be such officer before the delivery thereof, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, the Series 2017 Bond shall not be valid or obligatory for any purpose or be entitled to any security or benefit under this Resolution unless and until a certificate of authentication on such Series 2017 Bond has been duly executed by the manual signature of an authorized representative of the Registrar. The executed certificate of authentication on the Series 2017 Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Series 2017 Bond has been fully executed and authenticated, it shall be delivered by the Registrar to the Original Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Original Purchaser shall not be obligated to see to the application of the purchase price. 3.05. Form of Series 2017 Bond. The Series 2017 Bond shall be in substantially the form set forth in Exhibit A hereto (which is hereby incorporated herein and made a part hereof), with such appropriate variations, omissions and insertions as are permitted or required by the Resolution. 3.06. Transcript Certification. The officers of the City are directed to furnish to the Original Purchaser of the Series 2017 Bond and to Bond Counsel certified copies of all proceedings and information in their official records relevant to the authorization, sale and issuance of the Series 2017 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 2017 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. Additional Obligations. 4.01. General Provisions. In addition to the Series 2017 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 4.02 or 4.03, and upon filing with the City Clerk the following: 464 14 (a) A Supplemental Resolution authorizing the issuance of such series of Additional Bonds and the sale thereof to the Original Purchaser(s) named therein for the purchase price set forth therein. (b) A certificate executed by the Mayor and the Assistant City Manager stating that upon the issuance of such series of Additional Bonds, no default hereunder has occurred and is continuing which would not be cured upon the issuance of such series of Additional Bonds and application of the proceeds thereof. (c) An opinion of Bond Counsel (who may rely on factual representations of the City and which opinion may be qualified by customary qualifications and exceptions) stating that: (i) all conditions precedent provided for in this Resolution relating to the issuance and delivery of such series of Additional Bonds have been complied with, including any conditions precedent specified in this Section 4.01; and (ii) 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. 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 4.02 and 4.03 shall be payable and secured ratably and equally and on a parity with the Series 2017 Bond and any Additional Bonds thereafter issued, and are entitled to the same benefits and security of this Resolution. 4.02. Obligations to Pay Costs of Projects. Additional Bonds may be issued under this Section 4.02, at one time or from time to time, subject to the conditions provided in Section 4.01 and this Section 4.02, for the purpose of providing funds, with any other funds available and committed therefor, for paying the cost of one or more Projects and any expenses in connection with such financing. Before any Additional Bonds shall be issued under this Section 4.02, the City shall adopt a Supplemental Resolution authorizing the issuance of such series of Additional Bonds and fixing the amount and the details thereof, and describing in brief and general terms the Projects to be acquired, constructed, altered or improved and estimating the costs thereof. In addition, prior to the execution and delivery of any series of Additional Bonds under this Section 4.02, there shall be filed with the City Clerk: (i) A certificate executed by the Mayor and the Assistant City Manager stating: (A) the estimated cost of the Projects being financed thereby, including an allowance for contingencies and all fees, expenses and financing costs, (B) the amount, if any, which will be required to be deposited in the Reserve Account in connection with 465 15 the issuance of Additional Bonds then proposed to be issued, (C) the amount, if any, which will be required to be credited to the Bond Account to pay interest on Additional Bonds then proposed to be issued as of the date of issuance, (D) the amount of Tax Increment received by the City in the last completed Fiscal Year, (E) the amount of the maximum Principal and Interest Requirements on the Outstanding Bonds and the Additional Bonds then proposed to be issued for any future Fiscal Year during the term of all Bonds and (F) that the principal amount of Additional Bonds then proposed to be issued is sufficient with other available funds of the City, if any, to provide for the payment of all estimated costs of Projects to be financed thereby, the amount, if any and if paid from proceeds of Additional Bonds, which will be required to be deposited in the Reserve Account in connection with the issuance of the Additional Bonds then proposed to be issued, and credits to the Bond Account as set forth above, if any; and (ii) a certificate executed by the Mayor and the Assistant City Manager stating that: (A) the Tax Increment received by the City in the last completed Fiscal Year was equal to at least 110% of the maximum Principal and Interest Requirements for any future calendar year (during the term of all Bonds) with respect to Outstanding Bonds and the Additional Bonds then proposed to be issued; and (B) the Tax Increment received by the City in the last completed Fiscal Year was, and the Tax Increment estimated to be received in the next succeeding three Fiscal Year is estimated to be, equal to at least 110% of the maximum Principal and Interest Requirements for any future calendar year (during the term of all Bonds) with respect to Outstanding Bonds and the Additional Bonds then proposed to be issued. For purposes of Section 4.02(ii)(A), 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 aggregate tax rates of the Taxing Bodies 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 Bonds then proposed to be issued and the taxable values of which as so completed are not included in the actual taxable value (as defined in the Act) of the District. For purposes of Section 4.02(ii)(B), the Tax Increment to be received in any future Fiscal Year shall assume that: (1) 90% of the Taxes levied in the District will be collected in any future 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 projected inflation in property values or projected increases in Taxes. In addition, the Commission shall approve and confirm the findings and estimates set forth in the above-described certificates in the Supplemental Resolution authorizing the issuance of such Additional Bonds. 466 16 4.03. Obligations for Refunding Purposes. Additional Bonds may be issued under this Section 4.03, at one time or from time to time, subject to the conditions provided in Section 4.01 and this Section 4.03, 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 thereon to any Redemption Date or the Stated Maturities thereof, and any expenses in connection with such financing. Additional Bonds issued under this Section 4.03 shall be designated with the addition of the term “refunding”. Before any Additional Bonds shall be issued under this Section 4.03, the City shall adopt a Supplemental Resolution authorizing the issuance of such series of Additional Bonds and fixing the amount and the details thereof, and authorizing the redemption of the Outstanding Bonds to be refunded. In addition, prior to the execution and delivery of any series of Additional Bonds under this Section 4.03, there shall be filed with the City Clerk: (i) such documents as shall be required to show that provisions have been duly made in accordance with this Resolution for the redemption of all of the Outstanding Bonds to be refunded; and (ii) a report of an Independent Accountant to the effect that (a) the proceeds (excluding accrued interest but including any premium) of the Additional Bonds then proposed to be issued plus any moneys to be withdrawn from the Bond Account for such purpose, together with any other funds deposited for such purpose, will be not less than an amount sufficient to pay the Redemption Price on the Outstanding Bonds to be refunded, except that if the Owner of Outstanding Bonds to be refunded certifies that the proceeds of the Additional Bonds applied to the refunding plus other available funds to be applied to the refunding are sufficient on the date of delivery of the Additional Bonds to pay the Redemption Price on the Outstanding Bonds to be refunded on the Redemption Date, such certificate of an Independent Account shall not be necessary, or (b) from such proceeds there shall be deposited in trust, Defeasance Obligations which do not permit the redemption thereof at the option of the issuer, the principal of and the interest on which when due and payable (or redeemable at the option of the holder thereof) will provide, together with any other moneys which shall have been deposited in trust irrevocably for such purpose, but without reinvestment, sufficient moneys to pay such principal, redemption premium and interest. If Additional Bonds are issued to refund Subordinate Obligations, the conditions for the issuance of Additional Bonds pursuant to Section 4.02 shall be satisfied in lieu of this Section 4.03. 4.04. Subordinate Obligations. Except as provided in Sections 4.01, 4.02 and 4.03, no bonds, notes or other evidence of indebtedness of the City will be issued under or secured by the provisions of this Resolution, and no bonds, notes or other evidence of indebtedness will be made payable from the Bond Account, unless the pledge and appropriation of Tax Increment for the payment and security of such bonds, notes or other evidence of indebtedness is expressly 467 17 subordinated to the pledge and appropriation made for the benefit and security of the Bonds (including the Series 2017 Bond). In the event of the issuance of any such Subordinate Obligations, the principal, redemption premium and interest thereon will be made payable from one or more additional accounts created within the Tax Increment Accounts 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 the Reserve Account set forth in Sections 5.04 and 5.05, respectively. Section 5. The Tax Increment Accounts. 5.01. Bond Proceeds and Tax Increment Pledged and Appropriated. The City hereby establishes on its books and records three accounts designated as the Tax Increment Capital Project Account, the Tax Increment Debt Service Account and the Tax Increment Development Account (collectively, the “Tax Increment Accounts”), as described in this Section 5. The Tax Increment Accounts shall be maintained as separate and special bookkeeping accounts on the official books and records of the City until all Bonds have been fully paid, or the City’s obligation with reference to all Bonds has been discharged as provided in this Resolution. All proceeds of Bonds and all other funds hereafter received or appropriated for purposes of Projects are appropriated to the Tax Increment Accounts except amounts otherwise designated in a Supplemental Resolution or received from Additional Bonds issued to refund Outstanding Bonds pursuant to Section 4.03. All Tax Increment is irrevocably pledged and appropriated and shall be credited as received to the Tax Increment Debt Service Account. Bonds shall be secured by and payable from, equally and ratably with all other Bonds, Tax Increment and all other moneys from time to time in the Tax Increment Accounts, on a first lien basis, in the manner and to the extent provided in Section 5. The City shall not issue any obligation or security superior to the Bonds, payable or secured, in whole or in part, from or by the Tax Increment until all of the Bonds have been paid or discharged as provided herein. 5.02. Tax Increment Receipts. All Tax Increment received by the City and credited to the Tax Increment Debt Service Account, as required in Section 5.01, shall be credited as received as follows: (a) first, to the Interest Account, until the balance on hand is at least equal to all interest on Bonds due and payable therefrom within the next twelve full calendar months; (b) second, to the Principal Account, until the balance on hand is at least equal to all principal of and premium, if any, on Bonds due and payable therefrom within the next twelve full calendar months; (c) third, to the Reserve Account until the balance on hand in the Reserve Account is equal to the Reserve Requirement; and (d) fourth, after all credits required by the preceding clauses, to the Tax Increment Development Account. 5.03. Construction Account. For each Project there shall be a separate Construction Account within the Tax Increment Capital Project Account, to be used only to pay allowed costs as incurred, which under accepted accounting principles are costs of the particular Project, including but not limited to payments due for work and materials performed and delivered under construction contracts, architectural, engineering, inspection, supervision, fiscal and legal expenses, the cost of lands and easements, interest accruing on Bonds during the period of construction of a Project financed thereby and for a period of time thereafter authorized by the Act and deemed necessary by this Commission, if and to the extent that amounts in the Interest 468 18 Account are not sufficient for payment of such interest, reimbursement of any loans or advances made from other City funds, and all other expenses incurred in connection with the acquisition, construction and financing of the Project. To the Construction Account shall be credited as received all proceeds of Bonds issued to finance such Project, except amounts otherwise designated in a Supplemental Resolution or received from Bonds issued to refund Outstanding Bonds or pursuant to Section 4.03 and all other funds appropriated by the City for the Project, and all income received from the investment of the Construction Account. Upon completion of any Project and payment of the cost thereof, the City shall transfer any money then remaining in the Construction Account for that Project to the Bond Account and used to pay or redeem Bonds or portions thereof as provided in Section 3.03. 5.04. Bond Account. The Bond Account is hereby established as a special account within the Tax Increment Debt Service Account. There are hereby established within the Bond Account two separate subaccounts, designated as the Interest Account and the Principal Account. (a) Interest Account. There shall be credited to the Interest Account the following amounts: (i) any amount specified in any Supplemental Resolution to be credited to the Interest Account; and (ii) from the Tax Increment as received by the City, the amount specified in clause (a) of Section 5.02. On or before each Interest Payment Date for Outstanding Bonds, the City shall withdraw from the Interest Account an amount sufficient to pay the interest due on the Bonds on such Interest Payment Date, and shall use such amount to pay, or make provision with the Registrar for the payment of, interest on the Bonds on such Interest Payment Date. If on any Interest Payment Date the balance in the Interest Account is not sufficient to pay the total amount of interest due on Bonds on such Interest Payment Date, the City shall transfer any money then on hand in the Tax Increment Development Account, the Subordinate Bond Account, the Reserve Account (for deficiencies with respect to Additional Bonds secured thereby), or the Principal Account to such account, in the order listed and in an amount equal to such deficiency. All income derived from the investment of amounts in the Interest Account shall be credited as received to the Interest Account. (b) Principal Account. There shall be credited to the Principal Account the following amounts: (i) any amount specified in a Supplemental Resolution to be credited to the Principal Account; and (ii) from the Tax Increment as received by the City, the amount specified in clause (b) of Section 5.02. Amounts on hand in the Principal Account shall be used on any Interest Payment Date to make up a deficiency in the Interest Account, if and to the extent required by this Section 5.04. On or before each Principal Payment Date for Outstanding Bonds, the City shall withdraw from the Principal Account an amount sufficient to pay the principal due on the Bonds on such Principal Payment Date, and shall use such amount to pay, or make 469 19 provision with the Registrar for the payment of, principal of the Bonds on such Principal Payment Date. If on any Principal Payment Date the balance in the Principal Account is not sufficient to pay the total amount of principal due on the Bonds on such Principal Payment Date, the City shall transfer any money then on hand in the Tax Increment Development Account or the Reserve Account (for deficiencies with respect to Additional Bonds secured thereby) to such account in an amount equal to such deficiency. All income derived from the investment of amounts in the Principal Account shall be credited as received to the Principal Account. 5.05. Reserve Account. The Reserve Account is hereby established as a special account within the Tax Increment Debt Service Account. The City shall deposit in the Reserve Account on the date of delivery of the Series 2017 Bond from its funds legally available therefor an amount equal to the Reserve Requirement for the Series 2017 Bond. There shall also be credited to the Reserve Account the following amounts: (i) any amount specified in any Supplemental Resolution to be credited to the Reserve Account; (ii) from the Tax Increment as received by the City, the amount specified in clause (c) of Section 5.02; and (iii) any other amounts appropriated from time to time to the Reserve Account. If on any Interest Payment Date or on any Principal Payment Date there shall exist, after the transfers thereto of any money then on hand in the Tax Increment Development Account and the Bond Account a deficiency in the Interest Account or Principal Account, the City shall transfer from the Reserve Account (for deficiencies with respect to Bonds secured thereby) to such account an amount equal to such deficiency. All income derived from the investment of amounts in the Reserve Account shall be credited as received to the Reserve Account until such time as the balance in the Reserve Account is equal to the Reserve Requirement, and thereafter all such investment income as received shall be transferred to the Principal Account. Money in the Reserve Account shall be used only to pay when due principal of, premium, if any, and interest on Bonds secured thereby when the balance on hand in the Bond Account is insufficient therefor; provided that on any date when the balance then on hand in the Bond Account allocable to a series of Bonds, plus the balance then on hand in the Reserve Account allocable to such series of Bonds, is sufficient with other money available to pay or discharge all Outstanding Bonds of such series and the interest accrued thereon in full, and the balance thereafter on hand in the Reserve Account will be at least equal to the Reserve Requirement for all Outstanding Bonds not to be discharged, it may be used for that purpose. If at any time the balance in the Reserve Account exceeds the Reserve Requirement, the City shall transfer such excess to the Principal Account, except that to the extent the Reserve Account is funded from funds that are other than proceeds of tax-exempt bonds, the City may transfer such excess to the Tax Increment Development Account. 470 20 5.06. Tax Increment Development Account. There shall be credited to the Tax Increment Development Account any and all Tax Increment remaining after the required credits to the Bond Account, the Reserve Account, and any investment income and other moneys in any of the accounts within the Tax Increment Accounts in excess of the requirements of said accounts and which the City determines in its discretion to transfer to the Tax Increment Development Account. Money from time to time on hand in the Tax Increment Development Account shall be transferred to the Bond Account as provided by Sections 5.04 and may be used for any of the following purposes and not otherwise: (a) to be transferred to the Construction Account to pay costs authorized to be paid therefrom; (b) to pay costs incurred in connection with projects within the District as authorized by the Act and approved by the Commission; (c) to pay administrative costs of the City and the District and costs incurred in connection with urban renewal projects (as defined in the Act) within the District as authorized by the Act (including any loans or advances therefor made from other City funds); (d) to pay, redeem, discharge or otherwise secure Subordinate Obligations in accordance with the provisions of this Resolution or any Supplemental Resolution; (e) to purchase Bonds on the open market; (f) to redeem or discharge Bonds prior to their Stated Maturities in accordance with this Resolution or any Supplemental Resolution; (g) to make payments of arbitrage rebate to the United States of America pursuant to Section 148(f) of the Code in respect of any series of Bonds; and (h) to pay other Taxing Bodies a portion of the annual Tax Increment received by the City, pursuant to an agreement with respect thereto as authorized by the Act; provided, however, no such agreement shall require or permit the City to remit to any other Taxing Bodies any portion of the annual Tax Increment received in a Fiscal Year and on deposit in the Tax Increment Development Account unless (1) the balance in the Reserve Account as of the date of the remittance is not less than the Reserve Requirement; and (2) there is no default under the provisions of this Resolution as evidenced by a certificate of the City Treasurer filed with the City Clerk as of the date of remittance. 5.07. Investments. The Assistant City Manager shall cause all moneys from time to time in the Tax Increment Accounts to be deposited as received with one or more depository banks duly qualified in accordance with the provisions of Montana Code Annotated, Section 7-6-201, as amended, and shall cause the balances in such accounts, except any part thereof covered by federal deposit insurance, to be secured by the pledge of bonds or securities of the kinds required by law, and no money shall at any time be withdrawn from such deposit accounts except for the purposes of the Tax Increment Accounts as defined and 471 21 authorized by this Resolution. The funds to the credit of the several accounts within the Tax Increment Accounts may be commingled in one or more deposit accounts. The balance on hand in any of the accounts of the Tax Increment Accounts may at any time be invested and reinvested in Qualified Investments as provided below, maturing and bearing interest payable at the times and in the amounts estimated to be required to provide cash when needed for the purposes of the respective accounts. Income from the investment of the moneys in the various accounts shall be credited thereto. Subject to the provisions of law now or hereafter controlling investment of such funds, money on hand in any of the accounts of the Tax Increment Accounts may be invested in any of the following Qualified Investments, but no others: (a) direct obligations of or obligations guaranteed by the United States of America; (b) bank time deposits or certificates of deposit secured by obligations and securities described in clause (a) above; and (c) the short-term investment pool administered by the Board of Investments of the State or any successor investment pool created pursuant to Montana law. Section 6. Tax Covenants and Certifications. 6.01. Security for the Series 2017 Bond. The City shall not enter into any lease, use or other agreement or arrangement with any non-governmental Person relating to the use of the Infrastructure Improvements or security for the payment of the Series 2017 Bond which might cause the Series 2017 Bond to be considered a “private activity bond” or “private loan bond” within the meaning of Section 141 of the Code. No “impermissible agreement” as defined in Regulations, Section 1.141-4(e)(4)(ii), has been or will be entered into by the City in respect of the Tax Increment or otherwise to secure the Series 2017 Bond. 6.02. General Covenant. The City covenants and agrees with the Owner from time to time of the Series 2017 Bond that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Series 2017 Bond to become includable in gross income for federal income tax purposes under the Code and applicable Regulations, and covenants to take any and all actions within its powers to ensure that the interest on the Series 2017 Bond will not become includable in gross income for federal income tax purposes under the Code and the Regulations. 6.03. Arbitrage Certification. The Mayor, the Assistant City Manager and the City Clerk, being the officers of the City charged with the responsibility for issuing the Series 2017 Bond pursuant to this Resolution, are authorized and directed to execute and deliver to the Original Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b) of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery of the Series 2017 Bond, it is reasonably expected that the proceeds of the Series 2017 Bond will not be used in a manner that would cause the Series 2017 Bond to be an “arbitrage bonds” within the meaning of Section 148 of the Code and the Regulations. 472 22 6.04. Arbitrage Rebate Exemption. (a) The City hereby represents that the Series 2017 Bond qualifies for the exception for small governmental units to the arbitrage rebate provisions contained in Section 148(f)(4)(D) of the Code. Specifically, the City represents: (1) Not less than 95% of the proceeds of the Series 2017 Bond will be used for local governmental activities of the City. (2) The aggregate face amount of all “tax-exempt bonds” (including warrants, contracts, leases and other indebtedness, but excluding private activity bonds and current refunding bonds issued in an amount not greater than the outstanding bonds to be refunded) issued by or on behalf of the City and all subordinate entities thereof during 2017 is not reasonably expected to exceed the $5,000,000. As of the date of issuance of the Series 2017 Bond, the City reasonably expects to issue in 2017 no tax-exempt bonds other than the Series 2017 Bond. In 2012 through 2016, the City issued no tax-exempt bonds, except its $1,815,000 Stormwater System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2015, $5,100,000 General Obligation Bonds, Series 2014, $9,900,000 General Obligation Bonds, Series 2013, $22,172,081 First Amended and Restated Sewer System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program), Series 2010C Bond, Series 2010D Bond, Series 2010F Bond, Series 2010G Bond, and Series 2010H Bond, $18,891,000 First Amended and Restated Water System Revenue Bonds (DNRC Drinking Water State Revolving Loan Program), Consisting of Series 2011A Bond and Series 2011B Bond, and $3,080,000 General Obligation Refunding Bonds, Series 2012. (b) If notwithstanding the provisions of paragraph (a) of this Section 6.04, the arbitrage rebate provisions of Section 148(f) of the Code apply to the Series 2017 Bond, the City hereby covenants and agrees to make the determinations, retain records and rebate to the United States the amounts at the times and in the manner required by said Section 148(f). 6.05. “Qualified Tax-Exempt Obligations”. Pursuant to Section 265(b)(3) of the Code, the City hereby designates the Series 2017 Bond as a “qualified tax-exempt obligation” for purposes of Section 265(b)(3) of the Code. The City has not designated any obligations in 2017 other than the Series 2017 Bond under Section 265(b)(3). The City hereby represents that it does not anticipate that obligations bearing interest not includable in gross income for purposes of federal income taxation under Section 103 of the Code (including refunding obligations as provided in Section 265(b)(3) of the Code and including “qualified 501(c)(3) bonds” but excluding other “private activity bonds,” as defined in Sections 141(a) and 145(a) of the Code) will be issued by or on behalf of the City and all “subordinate entities” of the City in 2017 in an amount greater than $10,000,000. 473 23 6.06. Information Reporting. The City shall file with the Secretary of the Treasury, not later than August 15, 2017 a statement concerning the Series 2017 Bond containing the information required by Section 149(e) of the Code. Section 7. Other Covenants of City. 7.01. Punctual Payment. Subject to Section 2.02, the City will duly and punctually pay or cause to be paid the principal of, premium, if any, and interest on the Bonds in accordance with the terms of this Resolution and any applicable Supplemental Resolution and of the Bonds, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all Supplemental Resolutions and of the Bonds. Nothing herein contained shall prevent the City from making advances of its own moneys however derived to any of the uses or purposes referred to herein, nor shall be deemed or constitute a pledge or appropriation of funds or assets of the City other than those expressly pledged or appropriated hereby. The City further covenants that it will promptly deposit or cause to be deposited all Tax Increment it receives into the Tax Increment Debt Service Account, as set forth in Section 5.02. 7.02. Accumulation of Claims of Interest. In order to prevent any accumulation of claims for interest after maturity, the City will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and will not, directly or indirectly, be a party to or approve any such arrangements by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Resolution, except subject to the prior payment in full of the principal of all of the Bonds then outstanding and of all claims for interest which shall not have been so extended or funded. 7.03. Against Encumbrances. The City will not issue any obligation or security superior to Bonds, payable or secured, in whole or in part, from or by the Tax Increment until all of the Bonds have been paid or discharged as provided herein. 7.04. Books and Accounts; Financial Statements. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the Tax Increment and the Tax Increment Debt Service Account and the Tax Increment Development Account. 7.05. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Resolution. 7.06. Amendment of Ordinance. Except to authorize additional Projects, the City will not amend or modify the Ordinance or reduce the size of the District if an effect thereof will be to materially and adversely affect the security of the Outstanding Bonds. 474 24 7.07. Adjustment of Base Taxable Value. Without the prior written consent of Owners of all Bonds Outstanding, the City shall not adjust the base taxable value (as defined in the Act) of the District pursuant to Section 7-15-4287 of the Act so long as any Bonds are Outstanding. 7.08. Pledge of Replacement Revenues. In the event the Constitution or laws of the State are amended to abolish or substantially reduce or eliminate real or personal property taxation and State law then or thereafter provides to the City an alternate or supplemental source or sources of revenue specifically to replace or supplement reduced or eliminated Tax Increment, then the City pledges, and covenants to appropriate annually, subject to the limitations of then applicable law, to the Bond Account from such alternate or supplemental revenues an amount that will, with money on hand in the Bond Account or available 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 Bonds payable in that Fiscal Year. 7.09. Owners’ Rights. No Owner of any Bond issued and secured under the provisions of this Resolution shall have the right to institute any proceeding, judicial or otherwise, for the enforcement of the covenants herein contained, without the written concurrence of the Owners of not less than 25% in aggregate principal amount of all Outstanding Bonds; but the Owners of such aggregate principal amount of Outstanding Bonds may, either at law or in equity, by suit, action or other proceedings, protect and enforce the rights of all Owners of Bonds and compel the performance of any and all of the covenants required herein to be performed by the City and its officers and employees. The Owner of a majority in aggregate principal amount of all Outstanding Bonds shall have the right to direct the time, method and place of conducting any proceedings for any remedy available to the Owners or the exercise of any power conferred on them, and the right to waive a default in the performance of any such covenant, and its consequences, except a default in the payment of the principal of or interest on any Bond when due. Nothing herein shall impair the absolute and unconditional right of the Owner of each Bond to receive payment of the principal of and interest on any Bond as such principal and interest respectively become due, and to institute suit for the enforcement of any such payment. In the event of default in any such payment, any court having jurisdiction of the action may appoint a receiver to administer the Tax Increment Accounts and to collect and segregate and apply the Tax Increment and other revenues pledged thereto as provided by this Resolution or any Supplemental Resolution and the Act. Section 8. Supplemental Resolutions. 8.01. General. Notwithstanding Section 8.02, the City reserves the right to adopt Supplemental Resolutions to this Resolution from time to time and at any time, for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained herein, or of making such provisions with regard to matters or questions arising hereunder as the City may deem necessary or desirable and not inconsistent with this Resolution, and which shall not adversely affect the interests of the Owners of Bonds issued hereunder, or for the purpose of adding to the covenants and agreements herein contained, or to the Tax Increment herein pledged, other covenants and agreements thereafter to be observed and additional revenues or income thereafter appropriated to the Tax Increment Accounts, or for the purpose of surrendering any right or power herein reserved to or conferred upon the City, or for the purpose of authorizing the creation and issuance of a series of Bonds, as provided in and 475 25 subject to the conditions and requirements of Section 4. Any such Supplemental Resolution may be adopted without the consent of the Owner of any of the Bonds issued hereunder. 8.02. Consent of Owners. With the consent of the Owners of a majority in principal amount of Outstanding Bonds affected thereby as provided in Section 8.04, the City may from time to time and at any time adopt a Supplemental Resolution for the purpose of amending this Resolution by adding any provisions hereto or changing in any manner or eliminating any of the provisions hereof or of any Supplemental Resolution, except that no Supplemental Resolution shall be adopted at any time without the consent of the Owners of all Outstanding Bonds affected thereby, if it would extend the time of payment of interest thereon, would reduce the amount of the principal thereof or premium thereon, would give to any Bond or Bonds any privilege over any other Bond or Bonds (except for the privilege accorded Bonds over Subordinate Obligations), would reduce the sources of Tax Increment or other revenues or income appropriated to the Tax Increment Accounts, or would reduce the percentage in principal amount of such Bonds required to authorize or consent to any such Supplemental Resolution. 8.03. Notice. Notice of a Supplemental Resolution to be adopted pursuant to Section 8.02 shall be mailed by first-class mail, postage prepaid, to the Owners of all Outstanding Bonds at their addresses appearing in the Bond Register and shall become effective only upon the filing of written consents with the City Clerk, signed by the Owners of the requisite principal amount of Outstanding Bonds affected thereby. Any written consent to the Supplemental Resolution may be embodied in and evidenced by one or any number of concurrent written instruments of substantially similar tenor signed by Owners thereof in person or by agent duly appointed in writing, and shall become effective when delivered to the City Clerk. Any consent by the Owner of any Bond shall bind that Owner and every future Owner of the same Bond with respect to any Supplemental Resolution adopted by the City pursuant to such consent; provided than any Owner may revoke his consent with reference to any Bond by written notice received by the City Clerk before the Supplemental Resolution has become effective. In the event that unrevoked consents of the Owners of the requisite principal amount of Bonds have not been received by the City Clerk 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. 8.04. Manner of Consent. Proof of the execution of any consent, or of a writing appointing any agent to execute the same, shall be sufficient for any purpose of this Resolution and shall be conclusive in favor of the City if made in the manner provided in this Section 8.04. The fact and date of the execution by any Person of any such consent may be proved by the affidavit of a witness of such execution or by the certification of any notary public or other officer authorized by law to take acknowledgment of deeds, certifying that the Person signing it acknowledged to him the execution thereof. The fact and date of execution of any such consent may also be proved in any other manner which the City may deem sufficient; but the City may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. The ownership of any Bonds shall be proved by the Bond Register. 476 26 Section 9. Defeasance or Discharge. 9.01. 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 9, all pledges, covenants and other rights granted by this Resolution to the Owners of such Bonds shall cease. 9.02. Maturity. The City may discharge its liability with reference to all Bonds and interest thereon which are due on any date by depositing with the Registrar on or before the date a sum sufficient for the payment thereof in full; or if any Bond or interest thereon shall not be paid when due, the City may nevertheless discharge its liability with reference thereto by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. 9.03. Redemption. The City may also discharge its liability with reference to any Bonds which are called for redemption on any date in accordance with their terms, by depositing with the Registrar on or before that date an amount equal to the principal, redemption premium, if any, and interest which are then due thereon; provided that notice of such redemption has been given or irrevocably provided for as provided in this Resolution. 9.04. Escrow. The City may also at any time discharge its liability in its entirety with reference to any Bond subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or Defeasance Obligations which are authorized by law to be so deposited, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without reinvestment, to provide funds sufficient to pay all principal, redemption premiums, if any, and interest to become due on such Bond at its Stated Maturity or, if such Bond is prepayable and notice of redemption thereof has been given or irrevocably provided for as provided in this Resolution, to such earlier Redemption Date. Section 10. Repeals and Effective Date. 10.01. Repeal. All provisions of other resolutions and other actions and proceedings of the City and this Commission that are in any way inconsistent with the terms and provisions of this Resolution are repealed, amended and rescinded to the full extent necessary to give full force and effect to the provisions of this Resolution. 10.02. Effective Date. This Resolution shall take effect immediately upon its passage and adoption by this Commission. 477 27 PASSED AND APPROVED by the City Commission of the City of Bozeman, Montana, this 22nd day of May, 2017. ____________________________________ CARSON TAYLOR Mayor ATTEST: ROBIN CROUGH, MPA City Clerk APPROVED AS TO FORM: GREG SULLIVAN City Attorney 478 A-1 EXHIBIT A UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF GALLATIN CITY OF BOZEMAN TAX INCREMENT URBAN RENEWAL REVENUE BOND, SERIES 2017 (NORTHEAST URBAN RENEWAL DISTRICT) No. R-______ Interest Rate Final Maturity Date Date of Original Issue 4.10% July 1, 2042 July 20, 2017 REGISTERED HOLDER: Big Sky Western Bank P.O. Box 667 Bozeman, MT 598771-0667 Tax Identification No. [________] PRINCIPAL AMOUNT: ONE MILLION FOUR HUNDRED FORTY-SIX THOUSAND DOLLARS AND NO/100 FOR VALUE RECEIVED, THE CITY OF BOZEMAN, MONTANA (the “City”), a duly organized municipal corporation, acknowledges itself to be specially indebted and hereby promises to pay in installments over time to the registered holder specified above or registered assigns, solely from the Tax Increment received by the City from Taxable Property in the District which has been pledged and appropriated for the payment hereof as stated below, the principal amount specified above, which will be advanced to the City in two advances, with one advance in the amount of $863,000 made on the date hereof, and a second advance in the amount of $583,000 to be made on July 20, 2018, together with interest on the principal amount advanced from and after the date of each advance at the rate of 4.10% per annum. The principal of and interest on this Series 2017 Bond shall be payable in the amounts and on the respective dates reflected in the Debt Service Schedule attached as Schedule I to this Series 2017 Bond. This Series 2017 Bond bears interest on the Outstanding principal amount from the date of original issue specified above, or from such later date to which interest has been paid or duly provided for, until paid or discharged at the rate per annum specified above. [Interest on this Series 2017 Bond shall be calculated on the basis of a year of 360 days composed of twelve 30-day months.] Principal of and interest on this Series 2017 Bond shall be payable by check or draft of the Registrar mailed to the registered owner hereof as such appears in the Bond Register as of the close of business on the 15th day (whether or not a Business Day) of the month immediately preceding each payment date; provided that the final installment of principal (whether at maturity or earlier redemption) shall be drawn on the Registrar only upon presentation and surrender of this Series 2017 Bond at the principal 479 A-2 corporate trust office of the Registrar. Principal and interest on this Series 2017 Bond are payable in lawful money of the United States of America. This Series 2017 Bond is a duly authorized issue of the City designated as “Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District)” (the “Series 2017 Bond”) issued and to be issued under Resolution No. 4801, adopted by the City Commission on May 22, 2017 (as amended or supplemented in accordance with the provisions thereof, 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, the respective rights thereunder of the registered owner of this Series 2017 Bond and the City and the terms upon which this Series 2017 Bond is issued and delivered. Capitalized terms used herein but not otherwise defined shall have the respective meanings given such terms in the Resolution. This Series 2017 Bond is issued by the City for the purpose of financing a portion of the cost of urban renewal projects within the City of Bozeman Northeast Urban Renewal District (the “District”), thereby assisting activities in the public interest and for the public welfare of the City. This Series 2017 Bond is payable and secured ratably and equally and on a parity with any additional parity Bonds hereafter issued pursuant to the Resolution. This Series 2017 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 (the “Act”), and pursuant to the Resolution. This Series 2017 Bond is payable solely from Tax Increment received by the City and resulting from the extension of ad valorem taxes levied by certain Taxing Bodies against the incremental taxable value of Taxable Property within the District pursuant to the Act, except that under certain conditions as described in the Resolution, this Series 2017 Bond may be payable from replacement revenues, if any, provided in the event of the abolition or substantial elimination of property taxation in Montana. This Series 2017 Bond is also payable from amounts available in the Reserve Account, as described more particularly in Section 5.05 of the Resolution. This Series 2017 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 this Series 2017 Bond or the interest hereon. This Series 2017 Bond shall not constitute an indebtedness of the City within the meaning of any constitutional or statutory limitations. This Series 2017 Bond shall be subject to redemption at the option of the City, at any time and from time to time, in whole or in part, at a price equal to the principal amount thereof to be redeemed plus interest accrued to the Redemption Date, without premium. The Redemption Date and the principal amount of this Series 2017 Bond to be redeemed shall be fixed by the City who shall give notice thereof to the Registrar at least 45 days prior to the Redemption Date or such lesser period as the Registrar accepts; provided that no such additional notice to the Registrar is required if the Registrar continues to be the City Treasurer. The Registrar, at least 30 days prior to the designated Redemption Date, shall cause notice of redemption to be mailed, by first class mail to the Owner of each Series 2017 Bond to be redeemed at its address as it appears on the Bond Register, but no defect in or failure to give such mailed notice shall affect the validity of proceedings for the redemption of the Series 2017 Bond not affected by such defect or failure. The notice of redemption shall specify the Redemption Date, Redemption Price, and the place at which the Series 2017 Bond, if redeemed and prepaid in full, is to be surrendered for payment, and, if 480 A-3 redeemed and prepaid in part, the total principal amount of the Series 2017 Bond to be redeemed and prepaid in part and the principal amounts on each Stated Maturity that comprise the total partial prepayment and redemption amount. Official notice of redemption having been given as aforesaid, the Series 2017 Bond or portion thereof so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the City shall default in the payment of the Redemption Price) such Series 2017 Bond or portion thereof shall cease to be payable and bear interest. If the Series 2017 Bond is prepaid in part, the then-registered owner of the Series 2017 Bond will reamortize the principal remaining upon redemption and prepayment as a result of and in accordance with the prepayment notice of the City at the interest rate over the then-remaining term. So long as the Series 2017 Bond is held by one registered owner, upon partial redemption and prepayment there shall be no need to exchange a new bond for the unredeemed portion of the existing bond; provided that the amortization schedule attached hereto as Schedule I shall be replaced by an amortization schedule reflecting the reamortization of the principal then outstanding in the manner described above. The registered owner of this Series 2017 Bond shall have no right to enforce the provisions of the Resolution, or to 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 Series 2017 Bond is a negotiable instrument as provided in the Montana Uniform Commercial Code. As provided in the Resolution and subject to certain limitations set forth therein, this Series 2017 Bond is transferable upon the books of the City at the principal corporate trust office of the Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in exchange for another Series 2017 Bond of a like aggregate principal amount, interest rate and maturity. Upon such transfer or exchange, the City will cause a new Series 2017 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 or exchange. The City and the Registrar may deem and treat the Person in whose name this Series 2017 Bond is registered as the absolute owner hereof, whether this Series 2017 Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. This Series 2017 Bond has been designated by the City as a “qualified tax-exempt obligation” pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Montana and ordinances and resolutions of the City to be done, to exist, to happen and to be performed in order to make this Series 2017 Bond a valid and binding special, limited obligation of the City in accordance with its terms have been done, do 481 A-4 exist, have happened and have been performed as so required; that this Series 2017 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 registered owners from time to time of all Bonds issued thereunder, including covenants that it will pledge, appropriate and credit the Tax Increment to the Tax Increment Debt Service Account of the City; that Additional Bonds may be issued and made payable from the Tax Increment Debt Service Account on a parity with this Series 2017 Bond upon certain conditions set forth in the Resolution, but no obligation will be otherwise incurred and made payable from Tax Increment, unless the lien thereof shall be expressly made subordinate to the lien of this Series 2017 Bond on the Tax Increment; that all provisions for the security of the registered owners of the Bonds as set forth in the Resolution will be punctually and faithfully performed as therein stipulated; and that the issuance of this Series 2017 Bond does not cause the obligations of the City to exceed any constitutional or statutory limitation of indebtedness. This Series 2017 Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by the manual signature of an authorized representative. 482 A-5 IN WITNESS WHEREOF, the City of Bozeman, Montana, by its City Commission, has caused this Series 2017 Bond to be executed by the facsimile signatures of the Mayor, Assistant City Manager, and the City Clerk. CITY OF BOZEMAN, MONTANA (Facsimile Signature) Mayor (SEAL) (Facsimile Signature) Assistant City Manager (Facsimile Signature) City Clerk Dated:__________________ CERTIFICATE OF AUTHENTICATION This Bond is the Tax Increment Urban Renewal Revenue Bond, Series 2017 (Northeast Urban Renewal District) delivered pursuant to the Resolution mentioned within. CITY TREASURER, as Bond Registrar, Transfer Agent and Paying Agent By Authorized Representative 483 A-6 The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants UTMA............Custodian..................... in common (Cust) (Minor) TEN ENT -- as tenants by the entireties under Uniform Gifts to JT TEN -- as joint tenants Minor Act............................................ with right of (State) survivorship and not as tenants in common ___________________________ Additional abbreviations may also be used. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto _____ ___________________________ the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints _____________________ attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: ___________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. SIGNATURE GUARANTEED _________ Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in STAMP or such other “signature guaranty program” as may be determined by the Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 484 A-7 SCHEDULE I 485 486 487 488 489 490 491