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Home My WebLink About05-13-19 City Commission Packet Materials - C9. Res 5050, Loan Terms and Agreement with BOI of MT for Bronken and Story Mill Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Kristin Donald, Finance Director SUBJECT: Commission Resolution No. 5050 - Authorize City Manager to Sign the Promissory Note, Loan Agreement, and Draw Certificate with the Board of Investments of the State of Montana – INTERCAP LOAN, for financing for Parks projects GF206 and GF266. MEETING DATE: May 13, 2019 AGENDA ITEM: Consent RECOMMENDATION: Approve City Manager’s Signature on the Promissory Note, Loan Agreement, and Draw Certificate with the Board of Investments of the State of Montana, for financing the Park’s Projects GF206 and GF266. BACKGROUND: The Montana Board of Investments - Intercap Program has approved the City’s request for a loan of up to $563,746. We have completed the projects and will be drawing $314,558.74, which is under the originally budgeted amounts for the project and the funding. This funding source and these projects were built into the approved budget and the approved Capital Improvement Plan for GF 206 and GF266 as described below: GF206- Bronken Park Pathway aligned with the new sidewalk that is constructed along Durston, spanning the entire length of Bronken Park. 66 GF266- Storymill Community Center project improvements to the following systems: HVAC, Electrical, and Fire Protection due to the renovation and change in use of the existing Story Mill Community Center interior space. These projects came in under budget and so our request is lower than the 400,000 financing planned. ALTERNATIVES: As suggested by the Commission. FISCAL EFFECTS: Once the Promissory Note, Loan Agreement, and Draw Certificate No. 1 are signed, the City will receive the amounts necessary to pay for up to $563,746 for the projects. We do not anticipate any further draws and only finance the $314,558.74. Interest will accrue from the date of our loan draws, and semi-annual payments will be due to the Board. . Attachment: Resolution No. 5050 Certification of the Minutes Loan documents Report compiled on May 3, 2019 67 RESOLUTION NO. 5050 A RESOLUTION AUTHORIZING PARTICIPATION IN THE BOARD OF INVESTMENTS OF THE STATE OF MONTANA ANNUAL ADJUSTABLE RATE TENDER OPTION MUNICIPAL FINANCE CONSOLIDATION ACT BONDS (INTERCAP REVOLVING PROGRAM), APPROVING THE FORM AND TERMS OF THE LOAN AGREEMENT AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO. WHEREAS, the State of Montana Board of Investments (the Board) has established an INTERCAP revolving program (the Program) pursuant to which it proposes to issue tax-exempt bonds for the purpose of financing capital programs for Montana local government units; and WHEREAS, the City Commission did, on the 25th day of June 2018, after due and proper legal notice, conduct a public hearing on adopted the municipal budget including this funding and projects. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, to wit: Section 1 – Determination and Definitions Section 1.01. Definitions. The following terms will have the meanings indicated below for all purposes of this Resolution unless the context clearly requires otherwise. Capitalized terms used in this Resolution and not defined herein shall have the meanings set forth in the Loan Agreement. 68 Resolution 5050, Promissory Note and Loan Agreement Page 2 of 6 Adjusted Interest Rate means the rate of interest on the Bonds determined in accordance with the provisions of Section 3. 03 of the Indenture. Authorized Representative shall mean the officers of the Borrower designated and duly empowered by the Governing Body and set forth in the application. Board shall mean the Board of Investments of the State of Montana, a public body corporate organized and existing under the laws of the State and its successors and assigns. Board Act shall mean Section 2-15-1808, Title 17, Chapter 5, Pait 16, MCA, as amended. Bonds shall mean the Bonds issued by the Board pursuant to the Indenture to finance the Program. Borrower shall mean the Borrower above named. Indenture shall mean that ce1tain Indenture of Trust dated March 1, 1991 by and between the Board and the Trustee pursuant to which the Bonds are to be issued and all supplemental indentures thereto. Loan means the loan of money by the Board to the Borrower under the terms of the Loan Agreement pursuant to the Act and the Borrower Act and evidenced by the Note. Loan Agreement means the Loan Agreement between the Borrower and the Board, including any amendment thereof or supplement thereto entered into in accordance with the provisions thereof and hereof. Loan Agreement Resolution means this Resolution or such other form of resolution that the Board may approve and all amendments and supplements thereto. Loan Date means the date of closing a Loan. Loan Rate means the rate of interest on the Loan which is initially 3 .3 7% per annum through February 15, 2020 and thereafter a rate equal to the Adjusted Interest Rate on the Bonds and up to 1.50% per annum as necessary to pay Program Expenses. Note means the promissory note to be executed by the Borrower pursuant to the Loan Agreement, in accordance with the provisions hereof and thereof, in substantially the form set forth in the Promissory Note, or in such form that may be approved by the Board. Program shall mean the INTER CAP Program of the Board pursuant to which the Board will issue and sell Bonds and use the proceeds to make loans to participating Eligible Government Units. 69 Resolution 5050, Promissory Note and Loan Agreement Page 3 of 6 Project shall mean those items of equipment, personal or real property improvements to be acquired, installed, financed or refinanced under the Program as set forth in the Description of the Project/Summary of Draws. Trustee shall mean U.S. Bank National Association (formerly known as First Trust Company of Montana National Association) and its successors. Section 1.02. Authority. The Borrower is auth�rized to undertake the Project and is further authorized by the Borrower Act to enter into the Loan Agreement for the purpose of obtaining a loan to finance or refinance the acquisition and installation costs of the Project. Section 1.03. Execution of Agreement and Delivery of Note. Pursuant to the Indenture and the Board Act, the Board has issued and sold the Bonds and deposited a part of proceeds thereof in the Loan Fund held by the Trustee. The Board has, pursuant to the Term Sheet, agreed to make a Loan to the Borrower in the principal amount of $563,746.00 and upon the further terms and conditions set forth herein, and as set forth in the Term Sheet and the Loan Agreement. Section 2 – The Loan Agreement Section 2.01. Terms. (a) The Loan Agreement shall be dated as of the Loan Date, in the principal amount of $563,746.00 and shall constitute a valid and legally binding obligation of the Borrower. The obligation to repay the Loan shall be evidenced by a Promissory Note. The Loan shall bear interest at the initial rate of 3 .37% per annum through February 15, 2020 and thereafter at the Adjusted Interest Rate, plus up to 1.50% per annum as necessary to pay the cost of administering the Program ( the Program Expenses). All payments may be made by check or wire transfer to the Trustee at its principal corporate trust office. (b) The Loan Repayment Dates shall be February 15 and August 15 of each year. ( c)The principal amount of the Loan may be prepaid in whole or in part provided that the Borrower has given written notice of its intention to prepay the Loan in whole or in part to the Board no later than 30 days prior to the designated prepayment date. ( d) The Prepayment Amount shall be equal to the principal amount of the Loan outstanding, plus accrued interest thereon to the date of prepayment. (e) Within fifteen days following an Adjustment Date, the Trustee shall calculate 70 Resolution 5050, Promissory Note and Loan Agreement Page 4 of 6 the respective amounts of principal and interest payable by each Borrower on and with respect to its Loan Agreement and Note for the subsequent August 15 and February 15 payments, and prepare and mail by first class mail a statement therefor to the Borrower. Section 2.02. Use and Disbursement of the Proceeds. The proceeds of the Loan will be expended solely for the purposes set forth in the Description of the Project/Summary of Draws. The proceeds from the sale of the Note to the Board shall remain in the Borrower's Account pending disbursement at the request of the Borrower to pay the budgeted expenditures in anticipation of which the Note was issued. Requests for disbursement of the Loan shall be made to the Board. Prior to the closing of the Loan and the first disbursement, the Borrower shall have delivered to the Trustee a certified copy of this Resolution, the executed Loan Agreement and Note in a form satisfact01y to the Borrower's Counsel and the Board's Bond Counsel and such other ce1iificates, documents and opinions as set forth in the Loan Agreement or as the Board or Trustee may require. The Borrower will pay the loan proceeds to a third party within five business days after the date they are advanced ( except for proceeds to reimburse the Borrower for previously paid expenditures, which are deemed allocated on the date advanced). Section 2.03. Payment and Security for the Note. In consideration of the making of the Loan to the Borrower by the Board, the provisions of this Resolution shall be a part of the Agreement of the Borrower with the Board. The provisions, covenants and Agreements herein set forth to be performed by or on behalf of the Borrower shall be for the benefit of the Board. The Loan Agreement and Note shall constitute a valid and legally binding obligation of the Borrower and the principal of and interest on the Loan shall be payable from the general fund of the Borrower, and any other money and funds of the Borrower otherwise legally available therefor. The Borrower shall enforce its rights to receive and collect all such taxes and revenues to insure the prompt payment of the Borrower obligations hereunder. Section 2.04. Representation Regarding the Property Tax Limitation Act. The Borrower recognizes and acknowledges that the amount of taxes it may levy is limited by the state pursuant to Section 15-10-402, et. seq. (the Prope1iy Tax Limitation Act). The Borrower is familiar with the Propriety Tax Limitation Act and acknowledges that the obligation to repay the Loan under the Agreement and Note are not exceptions to the provisions of the Property Tax Limitation Act. The Borrower represents and covenants that the payment of principal of and interest on the Loan can and will be made from revenues available to the Borrower in the years 71 Resolution 5050, Promissory Note and Loan Agreement Page 5 of 6 as they become due, notwithstanding the provisions of the Property Tax Limitation Act. Section 2.05. Levy and Appropriate Funds to Repay Loan. The Borrower agrees that in order to meet its obligation to repay the Loan and all other payments hereunder that it will budget, levy taxes for and appropriate in each fiscal year during the term of the Loan an amount sufficient to pay the principal of and interest hereon within the limitations of the Property Tax Limitation Act, as may be amended, and will reduce other expenditures if necessary to make the payments hereunder when due. Section 3- Certifications, Execution and Delivery Section 3.01. Authentication of Transcript. The Authorized Representatives are authorized and directed to prepare and furnish to the Board and to attorneys approving the validity of the Bonds, certified copies of this Resolution and all other resolutions and actions of the Borrower and of said officers relating to the Loan Agreement, the Note, and certificates as to all other proceedings and records of the Borrower which are reasonably required to evidence the validity and marketability of the Note. All such certified copies and certificates shall be deemed the representations and recitals of the Borrower as to the correctness of the statements contained therein. Section 3.02. Legal Opinion. The attorney to the Borrower is hereby authorized and directed to deliver to the Board at the time of Closing of the Loan his or her opinion regarding the Loan, the Loan Agreement, the Note and this Resolution in substantially the form of the opinion set forth in the Attorney's Opinion. Section 3.03. Execution. The Loan Agreement, Note, and any other document required to close the Loan shall be executed in the name of the Borrower and shall be executed on behalf of the Borrower by the signatures of the Authorized Representatives of the Borrower. Section 4 That should it be found by any court of competent jurisdiction that any section, clause, portion, sentence, word, or phrase of this resolution is deemed to be contrary to any existing law or regulations, that in this instance, it is the intent of the City Commission of the City of Bozeman, 72 Resolution 5050, Promissory Note and Loan Agreement Page 6 of 6 Montana, that all other portions, sections, words, clauses, phrases, or paragraphs of this document shall remain in full force and effect PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 13th day of May, 2019. ___________________________________ CYNTHIA L. 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