HomeMy WebLinkAboutSID 684 Closing Documents, 2006
$1,376,869
Special Improvement District No. 684 Bonds
City of Bozeman, Montana
REBA TE CERTIFICATE
The City of Bozeman, Montana (the "City"), acting through its undersigned duly
authorized officer, hereby certifies and agrees as follows with respect to the $1,376,869 Special
Improvement District No. 684 Bonds, dated, as originally issued, as of April 15, 2006 (the
"Bonds"), and issued by the City pursuant to Resolution No. 3906, adopted by the City
Commission of the City on April 17,2006 (the "Resolution").
Section 1. Undertakings.
1.01. The City, pursuant to Section 5.03 of the Resolution, has covenanted to comply
with the requirements of Section 148(f) of the Internal Revenue Code of 1986, as amended (the
"Code") relating to the Bonds. The City covenants that it will consult with Bond Counsel (as
hereinafter defIned) and undertake to determine what is required with respect to the rebate
provisions contained in Section 148(f) ofthe Code from time to time and will comply with any
requirements that may be applicable to the Bonds. The methodology described in this CertifIcate
will be followed, except to the extent inconsistent with any requirements of future regulations or
written advice received from Bond Counsel.
1.02. Detailed records with respect to each and every Nonpurpose Investment
attributable to Gross Proceeds of the Bonds shall be maintained by the City, including: (i)
purchase date, (ii) purchase price, (iii) brokerage or other transaction costs of purchase, (iv)
infonnation establishing fair market value on the date such investment became a Nonpurpose
Investment, (v) any accrued interest paid, (vi) face amount, (vii) coupon or statcd interest rate,
(viii) periodicity of interest payments, (ix) disposition price, and (xii) brokeragc or other
transaction costs of disposition. Such detailed recordkeeping is required for the calculation of
the Rebatable Arbitrage which, in part, will require a detemlination of the difference between the
actual aggregate earnings of all the Nonpurpose investments and the amount of such earning
assuming a rate of return equal to the Yield of the Bonds.
,
Section 2. Definitions. Unless the context hereof otherwise requires, capitalized terms
shall have the respective meanings given them in the Resolution. In addition, the following
capitalized terms have the following respective meanings in this Certificate:
Bond Counsel shall mean nationally recognized bond counsel selected by the
City.
Bond Year shall mean each one-year period (or shorter from the
Closing Date) that ends at the close of business on each July I, or, if earlier,
the date the last Bond is paid.
Closing Date shall mean ApIil 26, 2006, the date of deli very of the
Bonds.
Code shall mean the Internal Revenue Code of 1986, as amended,
from time to time, and the appIicahle Treasury Rcgulations (including
proposed or temporary regulations) promulgated thercunder.
Computation Date shall mean an installment computation date (the last
day ofthe fifth and each succeeding fifth Bond Year) and the final
computation date (the date the last Bond is discharged). if the Bonds are paid
at their stated maturities, the installment computation dates are expected to he
June 30,2011, Junc 30,2016, June 30,2021, and the final computation date is
expected to be June 30, 2025.
Gross Proceeds shall mean, with respect to the Bonds, all proceeds of
the Bonds (including original proceeds and transferred proceeds) and any
funds (other than proceeds) that are part of a reserve or replacement fund for
the Bonds, including amounts on deposit in the Construction Account in the
District Fund and the Reserve Amount in the Revolving Fund, but excluding
amounts on deposit in the Principal Account and Interest Accounts in the
District Fund to the extent they constitute a "bona fide debt service fund" as
described in the Officers' Certificate of even date herewith.
Investment Property shall mean any security, obligation (other than a
Non~AMT Ohligation), annuity contract or investment-type property.
Non-AMT Obligation means any obligation the interest on which is
not includahle in gross income under Section 103 ofthe Code and which is
not a "specified private activity bond" (within the meaning of Section
57(a)(5)(C) of the Code).
Nonpurpose Investment shall mean any Investment Property that is not
a purpose investment in which Gross Proceeds of the Bonds are invested,
including investments allocated to the Bonds in the Construction Account in
the District Fund and the Reserve Amount in the Revolving Fund.
Rebatable Arbitral1.c shall mean, as of any Computation Date, the
excess of the future value of all nonpurpose receipts with respect to the Bonds
over the future value of all nonpurpose payments with respect to the Bonds.
Regulations shall mean the Treasury Regulations applicable to the
Bonds and promulgated under the Code or the Internal Revenue Code of
1954, as amended, including, without limitation, Treasury Regulations,
Sections 1.103-13, 1.103.14, 1.103-15, 1.148-0 through 1.148-11, 1.148-12T,
1.148-13T, 1.149-[ and 1.150-0 through 1.150-1.
Reserve Amount shall mean the amount on deposit in the City's
Special Improvement District Revolving Fund that is allocable to the Bonds
from time to time, as provided in the OffIcers' Certificate of the City, of even
date herewith.
2
Yield, with reference to any obligation, shall mean that discount rate
which, when computing the present value of all unconditionally payable
payments of principal and interest paid and to be paid on such ohligation,
produces an amount equal to the present value of the issue price ofthe
obligation.
Section 3. Rebatable Arbitrage Calculation and Payment.
3.01. The Bonds are a "construction issue" within the meaning of Section
148(f)( 4 )(C)(iv) of the Code and Section 1.148-6( e) of the Regulations in that the Bonds are not
"private activity bonds" (within the meaning of Section 141 (a) of the Code) and at least 7YYo of
the A vailahle Construction Proceeds are expected to be used for "construction expenditures" (as
defIned in Section 1.148-6(f) of the Regulations) with respect to real property (as defined in
Section 1.148-6(t) of the Regulations) owned or to be owned by the City. None of the property
to he acquired as part of the Improvements will be built by the City or its employees.
The City hereby elects to use its reasonahle expectations in detennining the qualifIcation
of the Bonds as a construction issue pursuant to Section 1.148-6( e )(2) of the Reb'Ulations. Thus,
if the expenditure tests set forth in Section 148(t)(4)(C)(ii) of the Code and Section 1.148-6(e) of
the Regulations, arc met (i.e., the following percentages of Available Construction Proceeds are
spent within the f()llowing periods beginning on the date of issuance: 1 (YYo within six months
(September 26, 2006), 45%) within one year (April 26, 2007), 7YYo within 18 months (September
26, 2007) and 1 00% within two years (April 26, 2008) (subject to a reasonahle contractual
retainage amount not exceeding fIve percent of the Available Construction Proceeds to be spent
within three years from the date hereof), then the Available Construction Proceeds shall not be
treated as Gross Proceeds for purposcs of this Certificate.
3.02. To monitor compliance with Section 3.01, the City will file a report in the offIce of
the Director of Administrative Services in the fonn attached as Exhihit A within 30 days after the
end of each six-month period set forth above (and any subsequent six-month period) until 100%
of the Available Construction Proceeds are in fact expended for costs of the Improvements.
3.03. For purposes of complying with Section 148( t) of the Code, the City will prepare
or have prepared a calculation of the RebatabIe Arhitrage consistent with the rules described in
this Section 3. The City will prcpare (and tIle in the otllce ofthe Director of Administrative
Services) a completed copy ofthe caleulation ofthc Rebatable Arbitrage within 30 days after
each Computation Date.
3.04. The City shall pay to the United States Department of Treasury from surplus
money in the Revolving Fund, the District Fund or other availahle funds (A) not later than 60
days after each Computation Date, an amount equal to at least 90tX) of the Rebatable Arbitragc
calculated as of such Computation Date; and (B) not later than 60 days after the final
Computation Date, an amount equal to 1 ()(YYo ofthe Rcbatablc Arbitrage.
3.05. Each payment required to bc made pursuant hereto shall be tlled with the Internal
Revenue Service Center, Ogden, Utah 84201 (or at such other place as the Internal Revenue
Service shall designate), on or before the date such paymcnt is clue, and shall he accompanied by
3
.
.
a completed and exccuted internal Revenue Scrvice Form 8038-'1'. The District shall retain
records of the calculations required by this Section 3 until six years after the final Computation
Date.
3.06. Notwithstanding anything in this certificate to the contrary, any amount earned
during a Bond Year on any bona fide debt service fund for the Bonds and amounts earned on
such amounts, if allocated to such bona fide debt service fund, shall not be taken into account in
calculating the Rebatable Arbitrage. For purposes of this paragraph 3.06 hcreof~ the term "gross
earnings" means the aggregatc amount earned on the Nonpurpose Investments in which the
Gross Proceeds deposited to the bona fide debt service fund are invested, including amounts
earned on such amounts if allocated to the bona fide debt service fund. It is expected that the
amounts on deposit in the District Fund allocable to the Bonds will constitute a bona fide debt
service fund for the Bonds.
Section 4. Filing Requirements. The City shall file or cause to be fIled such reports or
other documents with the Intemal Revenue Service as required by the Code in accordance with
an opinion of Bond Counsel.
Section 5. Survival of Defeasance. Notwithstanding anything in this CertifIcate or any
other provisions of the Resolution to the contrary, the obligation to remit the Rebatable Arbitrage
to the United States Department of the Treasury and to comply with all other requirements
contained in this Certitleate shall survive the defeasance of the Bonds.
Section 6. Amendmcnts. The City may amend or supplement the provisions of this
Certificate by fIling an executed copy of such amendment or supplement in the office of the
Director of Administrative Services accompanied by an opinion of Bond Counsel to the effect
that such amendment or supplement is required by, or better complies with, the provisions of
Section 148 and applicable Regulations.
Dated: April 26, 2006.
CITY OF BOZEMAN, MONT ANA
By
Acting City Manager
By /l//~
Acting City Clerk
4
t
,
EXHIBIT A
CONSTRUCTION EXPENDITURE REPORT
This report is submitted pursuant to Section 3.02 of the Rebate CertitIcate, dated April
26, 2006. As of ,200_,0) the aggregate "A vailahle Construction Proceeds" available
for expenditure were $ (2) The amount expended fix costs of the Improvements as
of (3) $ (4) which is (Yo of said aggregate
, , was, , "Available Construction Proceeds." Consequently, the requirements of Section 3.01 of the
Rebate Certificate [have been] [have not been] met.(5)
Dated: ,200_.
CiTY OF BOZEMAN, MONT ANA,
By
Its
(1) Insert most recent date from Section 3.01, or semiannual date thereaHer until all A vailablc
Construction Proceeds are expended.
(2) Total of (i) $ (issue price of Bonds less the sum of costs of issuance to be paid from
proceeds thereof), plus (ii) aggregate investment earnings on amounts in Construction Account in the District Fund
up to the date inserted in first blank and future investment income thereon that the City reasonably expects as ofthe
date inserted in the first blank.
(3) Same date as first blank.
(4) Includes all disbursements for costs of the Improvements (excluding bond issuance costs) from
proceeds of the Bonds or investment income thereon from the Construction Account.
(5) If percentage requirement of Section 3.01 is not met, all Available Construction Proceeds are subject to
arbitrage rebate.
CERTrFICA TE SHOWING DUE EXECUTION
OF CONSTRUCTION CONTRACT
I, Devin M. Harbour, the duly qualifIed and acting City Clerk of Bozeman, Montana, do
hereby certify that the fi:)llowing construction contract tor the construction of certain
improvements in Special Improvement District No. 684 has been duly executed by the City
Manager and the Acting City Clerk on behalf of the City.
Portion of Contract
Price Related to
Work Related to Improvements Bidder Improvements
Road improvements, installation of Johnson- Wilson $4,310,068.69
signalization modifications and Constructors, Inc.,
improvements, storm drain, water, and Helena, Montana
sewer improvements, and street lighting
The contract was placed on fIle in my officc after being signed by the contractor, and the
contractor has submitted executed payment and perfonnance bonds in the fonn and manner
providcd for in Title 18, Chapter 1, Part 2, and Title 18, Chapter 2, Part 2, Montana Code
Annotated.
WITNESS my hand this 26th day of April, 2006.
CITY OF BOZEMAN, MONTANA
adJ--
By.,,,"" ----
Acting City Clerk
(SEAL)
$1,376,869
Special Improvement District No. 684 Bonds
City of Bozeman, Montana
FINANCE DIRECTOR'S
CERTIFICATE AND RECEIPT
I, the undersigned, being the duly qualifIed and acting Finance Director of the
City of Bozeman, Montana (the "City"), hereby certify and acknowledge that on the date of this
instrument I received from D.A. Davidson & Co., as purchaser thereof, the purchase price 1()r the
$1,376,869 Special Improvement District No. 684 Bonds of the City of Bozeman, Montana,
dated initially as of April 15, 2006, said purchase price computed as tollows:
Par Value $1,376,869.00
Less: Underwriter's Discount 22,029.90
Plus: Accrued Interest from April 15, 2006 1.786.02
Total Purchase Price $1,356,625.12
Less Good Faith Check 27,537.00
Net Purchase Price $1,329,088.12
WITNESS my hand otlicially as such Finance Director this 26th day of April,
2006.
CITY OF BOZEMAN, MONTANA
$1,376,869
Special Improvement District No. 684 Bonds
City of Bozeman, Montana
CERTIFICA TE OF BOND REGISTRAR
I, the undcrsigncd, being a duly qualificd and acting Finance Director ofthe City of Bozeman,
Montana (the "Finance Director"), who is designated as Bond Registrar under thc resolution adopted by
the City Commission of the City of Bozeman, Montana (the "City"), on April 17, 2006, authorizing the
issuanec of thc Bonds dcscribcd abovc, do hereby certify that the Bond Registrar has reeei ved ninetecn
(19) fully executed but unauthenticated Bonds of said issue.
I further certify that on the date hercofthe Bond Registrar has authenticated and deli vercd to The
Depository Trust Company, in New York, New York, on behalf ofD.A. Davidson & Co., in Great Falls,
Montana (the "Purchaser"), $1,376,869 in aggregate principai amount of said Bonds maturing on July 1
in the years and amounts set forth below and bearing interest at the rates set forth below oppositc such
years and amounts and CUSIP numbers:
Year Amount Interest Rate ~JLSIP NQ,
2007 $71,869 3.700% 103704 IIT2
2008 75,000 3.800 103704 HU9
2009 75,000 3.850 103704 HV7
2010 75,000 3.900 103704 HW5
2011 75,000 4.000 10370411X3
2012 75,000 4.050 103704 HYl
2013 75,000 4.100 103704 IlZ8
2014 75,000 4.200 103704 JAl
2015 75,000 4.250 103704 JB9
2016 75,000 4.300 103704 JC7
2017 70,000 4.350 103704 JD5
2018 70,000 4.400 103704 JE3
2019 70,000 4.450 103704 JFO
2020 70,000 4.500 103704 JG8
2021 70,000 4.550 103704./H6
2022 70,000 4.600 103704 .T.T2
2023 70,000 4.600 103704 JK9
2024 70,000 4.600 103704./L7
2025 70,000 4.600 103704.TM5
I further certify that each and all of the Bonds so authenticatcd and delivered were registered, on
the faec thcrcof and also in thc bond rcgister maintained by the Bond Registrar, in thc name of the owner
thereot~ as designated by the Purchaser.
WITNESS my hand of the Bond Rcgistrar this 26th day of April, 2006.
FINANCE DIRECTOR
OF THE CITY OF BOZEMAN,
as Bond Regi' r~
By 0
STATE OF MONT ANA ) CERTIFICA TE AS TO ORGAN IZATION
) ss OF CITY OF BOZEMAN, MONTANA
COUNTY OF GALLATIN )
The undersigned, being the duly qualifIed and acting City Clerk of the City of Bozeman,
in the County and State af()resaid, and as such having custody of and access to the books and
records of the City relating to the matters hereinafter stated, hereby certifies that, as appears by
sllch books and records and as known to me, the following statements are true and conect.
1. Said City has been a duly organized city f()r more than 123 years and is now
governed by the general laws ofthe State relating to cities ofthe First class, operating under the
Commission-Manager form of government. Its population, according to the 2004 United States
census, was 32,414.
2. The territory included within its boundaries lies wholly in the County of Gallatin,
and comprises approximately 10,375 acres. Said City is divided into 0 wards. The City is
governed hy a Mayor, City Manager and four Commissioners. The f()lIowing nalned persons
hold the offices set opposite their names and tor the temlS stated helow:
Name Office Jerm Began I erm E!ld~
Jeff Krauss Mayor 01-01-2006 12-31-2007
Chris Kukulski City Manager 08-18-2004 --
Anna Rosenberry Finance Director 02-17-2005 --
Devin Harbour Acting City Clerk -- --
Laurae Clark Treasurer 05-01-1996
Paul Luwe City Attorney 11-01-1991 --
Steve Kirchhoff Commissioner 01-01-2000 12-31-2007
Sean Becker Commissioner 01-01-2006 12-31-2009
Kaaren Jacobson Commissioner 01-01-2006 12-31-2009
Jeff Rupp Commissioner 01-01-2006 12-31-2009
.
3. Under the by-laws and ordinances of said City, regular meetings of the City
Commission are held on the first four Mondays of each month at 6:00 p.m., with the second
meeting of the month constituting a work session, and notice of special meetings is required to
be given in writing to all members in advance.
4. The following are all of the newspapers puhlished in the City and the days of their
publication:
Name Days of Publication
Bozeman Dai~y Chronicle Sunday through Saturday
5. There is no litigation threatened or pending questioning the organization or
boundaries of said City or the right of any of the above-named persons to their respective ot11ces
or questioning the right and power of the City and its oftlcers to issue bonds for any purpose or
to levy, collect and apply taxes or other revenues for the payment of any bonds of the City.
6. The seal affIxed below is the official corporate seal of said City.
WiTNESS my hand and the seal of said City this 26th day of April, 2006.
{l/l1 iL
Acting City Clerk
(SEAL)
2
STATE OF MONTANA )
) ss. AFFIDAViT AS TO SiGNATURES
COUNTY OF GALLA TIN ) OF OFFICERS
Affiants, being first duly sworn, upon oath depose and say that affiant JEFFREY
K. KRAUSS is the duly qualified and acting Mayor, that affiant RON BREY is the duly
qualified and acting City Manager, and that affIant DEVIN M. HARBOUR is the duly qualified
and acting City Clerk of the City of Bozeman, Montana (the "City"); that in such capacities,
respectively, we have been authorized to execute $1,376,869 in aggregate principal amount of
Special Improvement District No. 684 Bonds of the City, dated, as Oliginally issued, as of April
15, 2006; that the signatures subscribed to this affidavit are the proper signatures of such affIants
as such Mayor, Acting City Manager, and Acting City Clerk, respectively; that all facsimile
signatures affixed to the Bonds arc true and correct engraved, printed or stamped hlcsimiles of
affiants' proper signatures; and that a duplicate original of this affIdavit has been tIled with the
undersigned Acting City Clerk in accordance with the provisions of Montana Code Annotated,
Section 2-16-114(2).
{1/lJU
Acting City Clerk
Subscribed and sworn to before nle thisl:5 day of April, 2006.
t"
\\\\\111 II "il!1111
,.,./:-\,\ \\ 'c S r It:;~
,'" ',../' ,.... ~~
.. . ~
l'(i'~1~R,'~i',~~
:: Q , ea , (j) :::
::: c( , -'- , * :::
%()', sfJ\L :~~
~*, .<>~
~ ~', .'~"'I:",,~
~ ~. .".
~ . .' r"',,' ....
"////II,Jt OF \J,,'-)
I l/,j it ~_; ; I ~ '; : " 'I
$1,376,869
Special Improvement District No. 684 Bonds
City of Bozeman, Montana
OFFICERS' CERTIFICATE
We, Jeffrey K. Krauss, Ron Brey and Devin M. Harbour, hereby certify that we are on
the date hereof the duly qualified and acting Mayor, acting City Manager, and acting City Clerk,
respectively, ofthe City of Bozeman, Montana (the "City"), and that:
I. True and correct facsimiles of the signatures of the Mayor, the City Manager, and the
City Clerk have been amxed to $1,376,869 Special Improvement District No. 684 Bonds of the
City, dated, as of April 15, 2006 (the "Bonds"). The Bonds mature on the dates, bear interest at
the rates and are substantially in the form prescribed by a resolution duly adopted by the City
Commission on April 17,2006, entitled "Resolution Relating to $1,376,869 Special
improvement District No. 684 Bonds; Fixing the Fonn and Details and Providing for the
Execution and Delivery Thereof and Security Therefor" (the "Resolution"). The Resolution is in
full force and effect in the fonn it was adopted. We have authenticated and delivcred the Bonds
to The Depository Trust Company, in New York, Ncw York, on behalfofD.A. Davidson & Co.,
of Great Falls, Montana (the "Purchaser").
2. The Bonds have been in all respects duly executed f(Jr delivery pursuant to authority
conferrcd upon such officers; that no obligations other than those described above have been
issued pursuant to such authority; that none of the proceedings or records which has been
certitIed to the Purchaser or to the attorneys approving the legality of the issuance of the Bonds
has been in any manner repealed, amended or changed except as shown by additional
proceedings or records furnished each of them; and that there has been no material adverse
change in the tInancial condition of the City or the circumstances affecting the Bonds, except as
shown by the materials so furnished.
3. No litigation or other judicial or administrative proceeding is now pending, or, to the
best of our knowledge, threatened, (i) restraining or enjoining the sale, issuance or delivery of the
Bonds, (ii) questioning the organization of the City or the right of any officers of the City to their
respective offices, (iii) questioning the right and power of omcers of the City to deliver the
Bonds, (iv) questioning the validity of the creation or extension of Special Improvement District
No. 684 (the "District") or the work to be undertaken therein or for the special henefit thereof or
any contract relating thereto, (v) challenging the validity ofthe levy of any special assessments
to pay the plineipal of or interest on the Bonds, or (vi) questioning the levy of any taxes or the
making of any loans to fund the City's Special Improvement District Revolving Fund (the
"Revolving Fund") or the pledge thereof to the Bonds. No suffIcient petition requesting a
referendum has been tlled with respect to the Resolution or any of the resolutions of the City
Council authorizing the issuance and sale of the Bonds or any proceedings preliminary thereto,
including the resolution creating the District.
4. We have reviewed the Official Statement, dated March 27, 2006, relating to the Bonds
(the "0111cial Statemcnt"). The Official Statement did not, as of the date thereof~ and docs not,
as of the date hereot~ contain any misstatement of a material fact or omit to state any material
fact necessary to make the statements contained thcrein not misleading in light ofthe
circumstances under which they are made; provided that we make no comment rcgarding
infi:.mnation provided hy the Purchaser for inclusion in the Otlicial Statement relating to the
Purchaser and the reoffering prices ofthe Bonds.
5. Pursuant to Section] 48 of the Internal Revenue Codc of 1986, as amcnded (the
"Code"), and the Treasury Regulations applicable thereunder (the "Regulations"), we, as the
officers of the City responsible for issuing the Bonds, hereby certify the present expectations of
the City on the date hereof with respect to the Bonds are as follows:
(a) The Bonds are being issued to finance a portion of the cost of constructing
certain local improvements (the "Improvements") in or for the benetlt of the District to be
owned and operated by the City and to pay administrative costs ofthe City and costs
associated with the sale and issuance of the Bonds (the "incidental Costs"). The
Improvements are intended for use by members of the general public.
(b) Based upon the most recent estimate of cost by the City Engineer, the costs of
the Improvements and the Incidental Costs are currently estimated, as f()llows:
Right-of-way Acquisition $ 325,000.00
Road Improvements 2,745,428.00
Storm Drainage 912,525.00
Sanitary Sewer 381,060.00
Water 141,366.00
N 19th/Durston Intersection 129,690.00
Contingency 215,503.00
Engineering & Inspection 610,500.00
Legal! Administration 25,000.00
Total $5,486,On.OO
[remainder of page left intentionally hlank]
2
The City has or will contribute the tollowing amounts to the costs ofthe Improvemcnts:
Street Impact Fee ($3,590,240.00)
Sewer Impact Fees ( 343,770.00)
Water Impact Fees ( 146,010.00)
Total ($4,080,020.00)
The costs of the Improvements and related cxpenses to be financed by the Bonds
arc as follows:
Cost of Improvements $1,219,111. 72
SID Fecs (bond counsel, advertising, etc.) 25,577.86
3% Administrative Fee 41,306.07
1.6% Bond Discount 22,029.90
5% Revolving Fund Fee 68,843.45
Total $1,376,869.00
Costs of the Improvements in excess of the costs to be assessed against the District have
or will be paid by the City from Street impact Fees, Sewer Impact Fees, and Water
Impact Fees, and prepaird assessments in the amount of $4,080,000.
(c) The City has heretofore entered into contracts for the Improvements, in the
f(lrm of architectural or engineering services, site development or construction, in the
sum of at least $68,843.45, which sum is not less than fIve percent of the net sale
proceeds of the Bonds.
(d) Work on the Improvements has commenced and will proceed with due
diligence to completion, and the Improvements arc expccted to be substantially complete
by November 30,2007.
(e) The City will receive $1,356,625.12 from the Purchaser. This amount
represents payment of $1,354,839.10 for the principal of the Bonds (reflecting the
underwriter's discount of$22,029.90), plus $1,7R6.02, representing accrued interest on
the Bonds from April 15, 2006, to the date hereof.
(t) Orthe amount the City will receive from the Purchaser, $1,219,111.72 will be
used to pay the costs of the Improvements set forth in (b) under construction,
engineering, and contingency; $25,577.86 will be used to pay costs of issuance of the
Bonds (reprcscnting costs of financial advisors, legal services, bond registration,
advertising and printing and similar terms); $41 ,306.()7 representing the City's
Administrative Fee will he deposited into the City's General Fund; $68,843.45 will be
deposited in the Revolving Fund; and $1,786.02 will he deposited in the Interest Account
in the District Fund created by the Resolution and used to pay interest on the Bonds on
January 1,2007.
3
(g) The amount to be received by the City from the Purchaser, less the costs of
issuance of the Bonds, including the City's Administrative Fee, and the amounts
deposited in the Revolving Fund, plus investment earnings thereon (which are expected
to be applied to costs ofthe Improvements or interest on the Bonds during construction of
the Improvements), docs not cxcced the amount to be spent by the City with respect to
thc Improvements.
(h) The City expects to spend on costs of the Improvcments or costs of issuance
of the Bonds hy ] anuary 31, 2008, all of the sale proceeds of the Bonds, except the
amounts deposited in the Revolving Fund.
(i) The Bonds are not "hedge bonds" within the meaning of Section 149(g) of the
Code. The City expects to spend not less than 85 percent of the sale proceeds of the
Bonds within three years after the date hereof and less than 50 percent of the proceeds of
the Bonds are invested in nonpurpose investments having a substantially guaranteed yield
for four years or more.
(j) Procceds of thc Bonds and investment income thereon to be used to fInance
the costs of the improvements and pay costs of issuance of the Bonds will be invested for
a temporary period pursuant to Section 1.148-2(e)(2) of the Regulations ending on the
earlier of: (i) three years from the date hereof (April 26, 2009), or (ii) the date that the
Improvements would be completed in the exercise of due diligence and all costs thereof
promptly paid. It: at the conclusion of such temporary period, proceeds of the Bonds and
investment incomc thereon havc not been allocated to the governmental purposes of the
Bonds, such amounts will not be invested at a yield greater than the yield of the Bonds
(4.379054%), if and to the extent such restriction is necessary to prevent the Bonds from
being arbitrage bonds within the meaning of Section 148 of the Code and Regulations
unless the City detennines to take advantage of Section 1.148-5(c) of the Regulations
relating to yield reduction payments.
(k) The Improvements have not been and are not expected to be sold or otherwise
disposed of by the City during the tenn of the Bonds. The City expects that the
Improvements will remain owned and operated by the City substantially in the manner in
which they are now owned and operated f()f the indefinite future, at least during the term
of the Bonds.
The City reasonably expects that during the term of the Bonds no private business
use will be made of the Improvements and that no private payments or security will be
made or furnished that would cause the Bonds to be "private activity bonds" within the
meaning of Section 141 ofthe Code and applicable Regulations. No proceeds of the
Bonds are being or will be loaned to any nongovernmental person and the special
assessments levied in respect of the Improvements meet the exception for tax assessment
loans contained in Section 1.141-5( cl) of the Regulations. The City reasonably expects
that the Bonds will not be private activity bonds within the meaning of Section 141 of the
Code.
4
.
(1) No other obligations of the City (a) arc being issued at substantially the same
time as the Bonds, (b) are being sold pursuant to the same plan of financing as the Bonds,
and (c) are reasonably expected to be paid from substantially the same source of funds
(determined without regard to guarantecs from unrelated parties) as will be used to pay
the Bonds, within the meaning of Section 1.150-1 (c) of the Rcgulations.
(m) The yield of the Bonds, computed in accordance with Section 148 of the
Code and applicable Regulations, is 4.379054% per annum.
(n) The principal of and interest on the Bonds are payable from the Special
Improvement District No. 684 Fund (the "District Fund") of the City. The City expects
to use only the District Fund to pay the principal of and interest on the Bonds. The
special assessments appropriated to the District Fund arc expected to produce amounts
suffIcient to pay all principal of and interest on the Bonds when due.
Whenever there will be money in the Principal and Interest Accounts in the
District Fund on any interest payment date, after paying interest on all Bonds then due,
either from the prepayment of special assessments levied on the benefitted property or
from the transfer of surplus money from the Construction Account to the Principal
Account, the Finance Director is required by law to call for redemption outstanding
Bonds or principal installments thereof which, together with the interest thereon to the
date of redemption, will equal the amount on hand in the Principal and Interest Accounts
on that date. The Principal and Interest Accounts will be used primarily to achieve a
proper matching of revenues and debt service within each bond year and will be fully
depleted at least once a year on July 1 in each bond year (the 12-month period ending on
July 1), except for a reasonable carryover amount which is not expected to exceed the
greater of (i) the earnings on money in the Principal and Interest Accounts for the
preceding bond year or (ii) one-twelfth ofthc annual debt servicc on the Bonds in the
preceding bond year. Consequently, the amounts on deposit in the Principal and Interest
Accounts constitute a "bona fide debt service fund" for the Bonds within the meaning of
Section 1.148-1(b) of the Regulations. Consequently, such amounts may be invested at
an unrestrictcd yield for a temporary period of 13 months.
(0) On the first day of each month commencing May 1, 2006, the Finance
Director will detern1ine the amount on hand in the Principal and Interest Accounts in the
District Fund. If any aUlOunt has been on deposit therein for a period longer than 13
months, such amount will not be invested at a yield greater than the yicld of the Bonds
(4.379054%), except as provided in paragraph 5(t) hereof~ ifand to the extent such
restriction is necessary to prevent the Bonds from heing arhitrage honds within the
meaning of Section 148 of the Code and the Regulations.
(p) The City has established the Revolving Fund pursuant to Montana Code
Annotated, Sections 7-12-4221 to 7-12-4229, as amended, to secure certain special
improvement district bonds and warrants of the City, including the Bonds. The City shall
deposit in the Rcvolving Fund proceeds ofthe Bonds in the amount of$68,843.45, and
from proceeds of the prepayments on the improvements the amount of$10,556.55. The
amount on deposit therein, atler giving effect to the deposit from the proceeds of the
5
.
.
Bonds and the prepayments, is $507,269. This amount secures special improvement
district bonds and warrants of the City, including the Bonds, issued in the original
aggregate principal amount of $6,884,869.
Unless the Regulations otherwise require, the City will allocate amounts on hand
in the Revolving Fund, as a commingled reserve fund as provided in Section 1.148-
6( e)( 6 )(i) of the Regulations, to outstanding issues of special improvement district honds
or warrants secured thereby in proportion to their respective original principal amounts.
The City shall reallocate funds on deposit in the Revolving Fund to outstanding issues of
honds or warrants secured thereby upon the issuance or rctirement of a series of bonds or
warrants secured thereby and, ifnot done otherwise, at least every three years.
(q) The Rcvolving Fund is required for the marketability of the Bonds and
constitutes a "reasonably required reserve" for the Bonds within the meaning of Section
148( d) of the Code and Section 1. 148-2(f) of the Regulations to the extent that the
amount on deposit in the Revolving Fund allocahle to the Bonds (the "Reserve Amount")
does not excecd the Reserve Limitation (as hereinafter defined). For purposes of this
paragraph (r), the "Reserve Limitation" is equal, as of the date of calculation, to the least
of: (i) ten percent (10%) of the proceeds of the Bonds ($137,686.90); (ii) the maximum
amount of principal and interest payable on the Bonds in the current or any future
calendar year of the City (initially, $142,660.45), or (iii) 1250/.) of the average debt
service on the Bonds payable in any calendar year of the City during the teml of the
Bonds (initially, $118,276.37).
Any portion of the Reserve Amount that is in excess of the Reserve Limitation
shall not he invested at a yield in excess of the yield of the Bonds (4.379054%), except as
permitted by paragraph Set) hereof. As of the date hereof, the Reserve Amount is
$101,446.08. All ofthe Reserve Amount, determined as ofthe date hereof, may be
invested at an unrestricted Yield pursuant to this paragraph 5(r).
(r) Except as described in this Section 5, the City has not created or established,
and does not expect to create or establish, any sinking or similar fund which is reasonahly
expected to be used to pay debt service on the Bonds or which is pledged as collateral to
secure the Bonds. No amounts in any other funds or accounts of the City are reserved tor
or pledged to the payment of debt service on the Bonds or will he used to replace funds
that will be used to pay debt service on the Bonds.
(s) An aggregate amount not to exceed the "minor portion" amount for the Bonds
($68,843.45) may be invested pursuant to Section 148(e) of the Code without restriction
as to yield. To the extent (i) the proeceds of the Bonds and investment income thereon in
the Construction Account in the District Fund are invested beyond the date described in
paragraph 5(j) hereof, (ii) an amount has heen on hand in the Principal and Interest
Accounts for a period longer than 13 months and (iii) the Reserve Amount exceeds the
Reserve Limitation described in paragraph 5(r) hereof~ such amounts in the aggregate
may be invested up to the minor portion amount at a yield greater than the yield of the
Bonds.
6
.
.
(t) The Bonds will not he outstanding longer than necessary, within the meaning
of Section 1.148-1(c)(4) of the Regulations. The weighted average maturity of the Bonds
(10.038 years) does not exceed 120 percent of the average reasonably expected economic
life ofthe Improvements. Such average reasonably expected economic life is not less
than 15 years.
(u) The sale proceeds of the Bonds do not exceed the amount necessary to
achieve the governmental purposes of the Bonds. No portion of the Bonds is issued
solely for the purpose of investing such portion at a materially higher yield as less than a
major portion. None of the proceeds ofthe Bonds will be used directly or indirectly to
replace funds which were used directly or indirectly to acquire obligations with a yield
that is materially higher than the Yield of the Bonds.
(v) We have investigated the facts, estimates and circumstances surrounding the
issuance of the Bonds, which are descrihed summarily in this Certificate. To the best of
our knowledge and belief~ such facts, estimates and circumstances are correct and
complete and the City's expectations as to future events, which are based thereon, are in
all respects reasonable and made in good faith. To the extent that the expectations of the
City are based upon estimates and representations made by others, including the
Purchaser, we have examined such estimates and representations and consider them to be
reasonable and correct. Any statements in this CertitIeate involving future events,
whether or not expressly so stated, are intended as expectations of the City and not as
rcpresentations of fact. On the basis of such facts, estimates and circumstances, it is
expected that the proceeds of the Bonds will be used in a manner that would not cause the
Bonds to be considered "arbitrage bonds" within the meaning of Section 148 of the Code,
and there are no present facts, estimates or circumstances which would change the
foregoing conclusion.
6. The provisions of this Section 6 are intended to establish and provide for compliance
by the City with Treasury Regulations, Section 1.150-2 (the "Reimbursement Regulations")
applicable to the "reimbursement proceeds" of the Bonds, being those proceeds which will be
used hy the City to reimburse itself tor any expenditure with respect to the Improvements which
the City paid or will have paid prior to the issuance of the Bonds (a "Reimbursement
Expenditure").
The City hereby certifies and covenants as follows:
(a) Except as hereinafter provided, on or before the date of payment of any
Reimbursement Expenditure, the City made or will have made a written declaration of
the City's offIcial intent (the "Declaration") which complies with the provisions of
Section 1.150-2(d) and (e) of the Reimhursement Regulations. The Declaration need not
cover, however, Reimbursement Expenditures: (i) to be paid or reimbursed from sources
other than the Bonds, (ii) constituting "preliminary expenditures" (within the meaning of
Section 1.150-2(t)(2) ofthe Regulations) f()r the Improvements, including engineering or
architectural expenses and similar preparatory expenses, which in the aggregate do not
exceed 20% ofthe "issue price" of the Bonds, (iii) in a "de minim us" amount (as defined
7
.
,
in Section 1.150-2(f)(1) of the Regulations), i.e., $68,843.45; or (iv) Reimbursement
Expenditures paid not more than 60 days before the date of the Declaration.
(b) As of the date of the Declaration, no funds trom sources other than the Bonds
were, or were reasonably expected to be, reserved, allocated on a long-term basis, or
otherwise set aside by thc City to provide financing for the Reimbursement Expenditure
to he reimhursed from proceeds of the Bonds.
(c) Each Reimbursement Expenditure to be reimbursed from proceeds of the
Bonds, other than costs of issuing the Bonds, is a capital expenditure (i.e., a cost that is
properly chargeable to capital account (or would he with a proper election) under general
federal income tax principles).
(d) The "reimbursement allocation" described in the Reimbursement Regulations
for each Reimbursement Expenditure to be reimbursed from proceeds of the Bonds shall
be made forthwith following (but not prior to) the issuance of the Bonds and in all events
within the period ending on the date which is 18 months after the later of: (i) the date of
payment of the Rcimbursement Expenditure or (ii) the Improvements are 1lrst placed in
service or abandoned, but in no event more than three years after the Reimbursement
Expenditure is paid.
(c) Each such rc1mbursement allocation will be evidenced by an entry on the
omcial books or records of the City maintained for and in connection with the Bonds and
will specifIcally identify the actual prior Reimbursement Expenditure to be reimbursed
from proceeds of the Bonds.
(f) The City is unaware of any facts or circumstances which would cause it to
question the reasonahleness or accuracy ofthis Section 6 or of the Declaration, or its
compliance with any of the covenants herein contained.
7. The seal impressed below is the true and official seal of the City.
Dated: April 26, 2006.
CITY OF BOZEMAN, MONTANA
L~-
(SEAL)
Acting Cit
fl fJ7 ;/J-
Acting City Clerk
8
Form 8038-G Information Return for Tax-Exempt Governmental Obligations
... Under Internal Revenue Code section 149(e) OMB No. 1545-0720
(Rev. November 2000) ... See separate Instructions.
Caution: If the issue price is under $100,000, use Form B03B-GC.
If Amended Return, check here a>- 0
1 Issuer's name 2 Issuer's employer identification number
CITY OF BOZEMAN MONTANA 81 : 6001238
3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number
P.O. Box 1230 3 2006-1
5 City, town, or post office. state, and ZIP code 6 Date of issue
BOZEMAN, MT 59771-1230 MARCH 31, 2005
7 Name of issue 8 CUSIP number
SPECIAL IMPROVEMENT DISTRICT NO. 684 BONDS 103704 JM5
9 Name and title of officer or legal representative whom the IRS may call for more information 10 lelephone number of officer or legal representative
DEVIN HARBOUR, ACTING CITY CLERK ( 406 ) 582-2300
T e of Issue (check a licable box(es) and enter the issue rice) See instructions and attach schedule
Education 11
Health and hospital 12
Transportation 13
Public safety. 14
Environment (including sewage bonds) 15
Housing 16
Utilities 17
18 1,376,869
a>-O
(b) Issue price (c) Stated redemption (d) Weighted (e) Yield
price at maturity average maturity
1,376,869 10.038 4.379054 %
underwriters' discount
22 Proceeds used for accrued interest 1,786.02
23 Issue price of entire issue (enter amount from line 21, column (b)) 1,356,625.12
24 Proceeds used for bond issuance costs (including underwriters' discount) 24 25,577.86
25 Proceeds used for credit enhancement. 25 0
26 Proceeds allocated to reasonably required reserve or replacement fund 26 68,843.45
27 Proceeds used to currently refund prior issues 27 0
28 Proceeds used to advance refund prior issues 28 0
29 Total (add lines 24 through 28) . 94,421.31
30 Nonrefundin roceeds of the issue (subtract line 29 from line 23 and enter amount here) . 1,262,203.81
Descri tion of Refunded Bonds (Com lete this art ani for refundin bonds.
31 Enter the remaining weighted average maturity of the bonds to be currently refunded a>- -- years
32 Enter the remaining weighted average maturity of the bonds to be advance refunded a>- years
33 Enter the last date on which the refunded bonds will be called a>-
34 Enter the date(s) the refunded bonds were issued a>-
Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) 35 0
36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a 0
b Enter the final maturity date of the guaranteed investment contract a>- ~
37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a 0
b If this issue is a loan made from the proceeds of another tax-exempt issue, check box a>- 0 and enter the name of the
issuer a>- and the date of the issue a>-
38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(lIl) (small issuer exception), check box a>-O
39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box a>-O
40 If the issuer has identified a hed e, check box a>-O
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and (0 the best of my knowledge
and belief, they are true, correct, and complete.
Sign G
Here ~ ~ Jeffrey K. Krauss, Mayor
S' , re f' Type or print narne and title
For Paperwork eduction Act Notice, see page 2 of the Instructions. Cat No 63773S rorm 8038-G (Rev. 11-2000)
*