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HomeMy WebLinkAbout09-16-19 City Commission Packet Materials - C12. Res 4999, Interfund Loan and City Warrants with SID 750 for North Tracy Ave Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Kristin Donald, Finance Director SUBJECT: Commission Resolution No. 4999 Authorizing an Interfund Loan and the Issuance of City Warrants in Connection with Special Improvement District No. 750 for Local Improvements to North Tracy Avenue MEETING DATE: September 16, 2019 AGENDA ITEM: Action RECOMMENDATION: Adopt Resolution No. 4999 authorizing an interfund loan from the General Fund and the issuance of City warrants in connection with financing improvements within Special Improvement District No. 750. BACKGROUND: The City Commission created Special Improvement District No. 750 on March 4, 2019 for the purpose of undertaking certain local improvements to North Tracy Avenue and financing the costs thereof. Construction of the improvements is anticipated to be completed in mid-October (see attached project status memo from City Engineering). The District’s share of the cost of construction of the improvements will be paid for by assessments levied against benefitted properties. Costs of the improvements will be financed by an interfund loan from the General Fund to the North Tracy SID by purchasing warrants issued by the District. The assessments collected from the District property owners will be used to make the warrant payments. An interfund loan has a number of benefits, including a lower interest rate for the 262 District property owners, and avoidance of the costs and time-consuming work of underwriting a bond sale. The SID 750 Fund within the General Fund will be paid back for its investment in the warrants as property owners make their payments over time, with interest. ALTERNATIVES: As suggested by the City Commission. FISCAL EFFECTS: Resolution No. 4983, the Resolution of Intent to Create SID 750 estimated the total cost of the Improvements to be $447,000, with the District’s share of the cost of the Improvements to be 50% of the total, or $223,500 plus $1000.00 in incidental costs. The actual total cost of the Improvements is $388,689.00, making the District’s share of the cost of Improvements $195,344.50 inclusive of incidental costs. In accordance with Resolution 4983, special assessments for the District’s share will be payable over a term not exceeding twenty (20) years, in equal semi-annual installments. Property owners have the right to prepay assessments; the assessment payments will pay the annual warrant payments. Attachments: Resolution No. 4999 September 6, 2019 Memorandum from City Engineering regarding project status Report compiled on September 6, 2019 263 Page 1 of 13 RESOLUTION NO. 4999 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RELATING TO SPECIAL IMPROVEMENT DISTRICT NO. 750; AUTHORIZING INTERFUND LOAN AND CITY WARRANTS IN CONNECTION WITH FINANCING COSTS OF CERTAIN LOCAL IMPROVEMENTS TO NORTH TRACY AVENUE BETWEEN VILLARD STREET AND PEACH STREET. WHEREAS, on the 4th day of February, 2019, the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”) adopted Commission Resolution No. 4983 (the “Resolution of Intention”), stating its intent to create Special Improvement District No. 750 (the “District”) to finance the costs of various improvements within the District as described therein (the “Improvements”); and WHEREAS, as set forth in the Resolution of Intention, the Commission committed other Street Maintenance District funds to the costs of the project; and WHEREAS, on February 10, 2019 and February 17, 2019, the City Clerk published a Notice of Passage of the Resolution of Intention to Create SID No. 750 in accordance with Sect. 7-12-4106, MCA, and mailed said notice to each person, firm, or corporation or the agent of the person, firm or corporation having real property within the proposed District; and WHEREAS, the Bozeman City Commission conducted a public hearing on protests submitted to the creation of the District on March 4, 2019 and passed on all such protests, and, having found the written protests not sufficient to bar the Commission from proceeding with creation of the District, did create the District by adopting Resolution 4984 (the “Resolution of Creation”); and WHEREAS, the Bozeman City Commission on March 4, 2019 adopted Resolution 5000, 264 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction Page 2 of 13 authorizing the transfer of excess monies of the Special Improvement District Revolving Fund (the “Revolving Fund”) to the General Fund to purchase warrants (the “Warrants”) to make funds available to finance the District’s share of the costs of the Improvements including the Incidental Costs (“District’s Share of Improvements”), such Warrants to be held by the General Fund and drawn against the SID 750 North Tracy Avenue Special Assessment Fund (the “Special Assessment Fund”); and WHEREAS, the Resolution of Intention and Resolution of Creation contemplate that special assessments levied against benefited properties in the District will repay the City’s General Fund for the District’s Share of the Improvements plus Incidental Costs in connection with the Improvements. WHEREAS, the City Finance Director has notified the City Clerk, pursuant to Section 7- 6-4603, that the designated amounts have been invested; and WHEREAS, the City Commission desires to authorize, ratify, and confirm the sale of warrants for the purpose of purchasing said Improvements from the General Fund. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, as follows: Section 1 Construction Funds, Accounts, and Amounts. In anticipation of the receipt of special assessments levied against the benefitted properties in the District, the General Fund of the City will transfer to the SID 750 Construction Account (the “Construction Account”) of the City a total of $224,500 to pay the District’s Share of Improvements (the “Interfund Loan”). Section 2 Special Assessments and SID Account. In accordance with the Resolution of Intention, the City determined to charge interest on the principal amount of the special assessments at the rate of 2.5% per annum for a period of twenty years in accordance with §7-12-4189, MCA. The City created the Special Assessment Fund for deposit of special assessments levied by the City and paid 265 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction Page 3 of 13 by the owners of benefitted properties in the District. Levies of special assessments, using the lot frontage method of assessment, are levied against the benefitted properties in the District such that the special assessments come due on November 30 and May 31 of each fiscal year, with the initial installment of special assessments becoming due November 30, 2019, and the final installment coming due on May 31, 2039. Section 3 Repayment of General Fund. The Commission confirms the obligation of the District to repay from amounts on hand in such account from receipts of special assessments amounts loaned by the General Fund to pay costs of the Improvements, together with interest thereon. The Commission authorizes the issuance by the City of serial warrants evidencing the right of the General Fund to repayments for amounts lent to finance costs of the Improvements and to be repaid by special assessment receipts deposited in the Special Improvement District Fund. The serial warrants also evidence an investment of the City of monies in the General Fund, with such investment being made from amounts the City has under its control in the General Fund and for which there is not immediate demand. Such warrants are 20 in number, and are due and owing annually on June 30th, commencing June 30, 2020 and concluding June 30, 2039. The obligation of the Special Assessment Fund to repay the General Fund is further evidenced by a Memorandum of Interfund Loan in substantially the form attached hereto as Exhibit A, which includes an exhibit thereto setting forth the form of City warrants. Section 4 Compliance with Montana Law. Section 7-12-4201, MCA, provides that all costs and expenses incurred in any special improvement district in the acquisition or construction of any improvement specified in Title 7, chpt. 12, part 41, MCA, shall be paid from special improvement district bonds or warrants. The warrants substantially in the form attached hereto as Schedule 2 to Exhibit A are drawn against the advances made by the General Fund to the Construction Account and the corresponding advances made from such construction account to pay costs and expenses of the Improvements. In accordance with Section 7-12-4203 through 7-12-4206, MCA, the Commission finds that the terms of the Interfund Loan described above, given due consideration to the range of financing options available to the City, the fixed interest rate of 2.0% 266 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction Page 4 of 13 on such loan for a term of twenty years results in the lowest possible level of special assessments against benefited properties in the District and therefore the most affordable financing alternative for the owners of such properties as the City could not reasonably obtain financing for costs of the Improvements from third-party sources at a lower fixed interest rate for a term of twenty years. In particular, the City finds the fixed interest rate on the warrants of 2.0% per annum satisfies the “highest and best bidder” standard set forth in Section 7-12-4204, MCA. This Commission determines that it has funds under its control in the General Fund for which there is no immediate demand and that in the judgment of the Commission it would be advantageous to invest such amount in warrants of the City. Accordingly, the Commission determines to invest $224,500 of funds in the General Fund in the purchase of warrants issued by the SID to be held by the General Fund of the City, with the acquisition of such warrants being evidenced by transfers of funds from the General Fund to the Construction Account to pay costs of the Improvements in anticipation of the receipt of special assessments in the Special Improvement District Fund to repay such warrants together with interest thereon. Special assessments levied by the City under Title 7, Chapter 2, Part 41, MCA to repay the warrants create a priority lien against each benefited property in the District in favor of the city for the repayment of the warrants that may be enforced and foreclosed in the manner provided by law to repay the warrants. Section 5 Details Regarding Warrants. The total aggregate principal amount of the warrants acquired by the General Fund of the City is $195,344.50, to consist of twenty (20) separate warrants payable annually on June 30th, with interest commencing on the date of making the Interfund Loan by transferring $224,500 of funds in the General Fund to the Construction Account, such date also being the date of registration of the warrants per 7-12-4203(1)(a)) with the first warrant due on June 30, 2020 and the last warrant due on June 30, 2039. Each warrant bears interest on the amount outstanding at the rate of 2.0% from the date of issue thereof until its payment date as set forth on the face of each warrant, resulting in a total interest payment of $55,271.28 over the twenty-year term. The warrants shall be registered in the offices of City Clerk and the City Treasurer and the determination of the City Treasurer to purchase the warrants from amounts in the General Fund, with such purchase being evidenced by the transfer of funds from the General Fund to the Construction Account and subsequent transfers from the Construction Account to pay costs and 267 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction Page 5 of 13 expense of the Improvements, is hereby authorized. The warrants shall bear the signatures of the Mayor and City Clerk. The City Treasurer has notified the City Clerk to draw the warrants in substantially the form attached hereto as Schedule 2 to Exhibit A. Section 6 Effect of Resolution. The Commission hereby confirms the General Fund, which shall hold the warrants, is entitled to repayment, with interest, of the amounts made available for the Improvements, and that the Warrants constitute an investment by the City of available amounts in the General Fund. PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 16th day of September, 2019. __________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: ______________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: __________________________________ GREG SULLIVAN City Attorne 268 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-1 EXHIBIT A MEMORANDUM OF INTERFUND LOAN The City of Bozeman, Montana (the “City”) hereby acknowledges and confirms the terms of an interfund loan (the “Loan”) by the General Fund of the City to pay the costs of certain Improvements (described below) and the obligation of the SID 750 North Tracy Avenue Special Improvement District Fund (the “Special Improvement District Fund”) to repay the Loan from the special assessments levied against certain benefitted properties in connection with improvements to North Tracy Avenue between Villard Street and Peach Street (the “Improvements”) to be undertaken pursuant to the creation of Special Improvement District (“SID”) No. 750 (the “District”). Background: A. The City, by Resolution No. 4983, adopted by the City Commission (the “Commission”) on February 4, 2019 (the “Resolution of Intention”) sought to create the District for the purpose of financing costs of the Improvements in anticipation of the receipt of special assessments levied against benefited properties in the District to repay the Loan to be made by the General Fund to finance the District’s share of the estimated costs of the Improvements of $224,500 as stated in Resolution No. 4983. B. The City duly mailed and caused to be published a notice of passage of the Resolution of Intention and afforded owners of the benefited properties the opportunity to protest the creation of the District in accordance with Montana law. The owners of two parcels within the District boundaries, representing 5.75% of the total costs of the Improvements, protested the creation of SID 750. C. Following a public hearing and finding that insufficient protests by owners of benefited properties were timely made, the Commission, on March 4, 2019, adopted Resolution No. 4984 creating SID 750. D. The City intends to levy special assessments to give rise to funds to repay the Loan and desires to acknowledge and set forth certain details with regard to the Loan, including the issuance by the City of certain warrants held by the General Fund to evidence the obligation of the Special Assessment Fund to repay the Loan. 269 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-2 NOW, THEREFORE, the City hereby declares as follows: 1. Terms of Interfund Loan. The City hereby authorizes the making of the Loan effective as of November 1, 2019 (the “Transfer Date”) of $195,344.50from the General Fund to the SID 750 Construction Account of the City (the “Construction Account”) from available amounts in the General Fund, the terms of the Loan, and the obligation of the Special Improvement District Fund to repay the Loan from available amounts deposited in the Special Improvement District Fund from collections of special assessments levied against benefited properties in the District. In accordance with Resolutions 4983 and 4984, the total principal amount of the Loan is $195,344.50, the interest rate on the principal outstanding under the Loan is 2.0% per annum, the term of the Loan is approximately twenty years commencing on the Transfer Date and concluding June 30, 2039, and the Loan is payable in twenty (20) annual installments of principal and interest, with each installment in an equal amount (except that the initial installment may be in a different amount), as evidenced by the amortization schedule attached hereto as Schedule 1. 2. Obligation to Make Repayments. The City will levy special assessments against the benefited property in the District in accordance with Resolutions 4983 and 4984. Special assessments when received by the City must be deposited in the Special Assessment Fund on or before June 30th, to make installment payments on the Loan to the General Fund, commencing June 30, 2020 and concluding June 30, 2039. 3. Right to Receive Payments. To evidence the Loan and a City investment of available funds, the General Fund will hold serial warrants, with each warrant corresponding to each of the annual payments. Such warrants, which are to be issued in accordance with Section 7-12-4204, MCA, (the City having found that the fixed interest rate of 2.0% per annum for 20 years makes the City the “highest and best bidder”) are registered in the offices of the City Treasurer and the City Clerk, drawn in accordance with the instructions of the City Treasurer, and outstanding until canceled upon receipt of the applicable installment payment from the Special Assessment Fund. The warrants are in substantially the form of the attached Schedule 2. Special assessments levied by the City under Title 7, Chapter 12, Part 41, MCA, to repay the warrants create a priority lien against each benefited property in the District in favor of the City for the repayment of the warrants that may be enforced and foreclosed in the manner provided by law to repay the warrants. 4. Details of Payments. Payments from the Special Improvement District Fund to the General Fund in satisfaction of each warrant are to be made solely from the collection of special assessments levied against benefited properties in the District. Each warrant may be prepaid if 270 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-3 the City so elects from available amounts in the Special Improvement District Fund, or, to maintain a level repayment schedule, the City may elect to hold amounts in the Special Improvement District Fund to make payments as scheduled by each warrant. The amounts repaid to the General Fund in satisfaction of the Loan may be used by the City in any manner allowed by law. 5. Limited Obligation. The Loan and the warrants that evidence the Loan are made pursuant to or in compliance with Resolution 4983, Resolution 4984, Section 7-6-4603, MCA, Section 7-12-4201, MCA, and Sections 7-12-4203 through 7-12-4206, MCA. The Loan is a limited obligation payable only from payments of special assessments deposited in the Special Improvement District Fund and the Loan and interest thereon shall not be a general obligation of the City and the City shall have no obligation to pay principal of or interest on the Loan which may remain unpaid after an installment payment date except from available amounts in the Special Improvement District Fund. If amounts are not available in the Special Improvement District Fund to pay a warrant as of its maturity date, amounts will first be applied to pay interest and then principal, as further described in the form of the warrant. 6. Interpretation. This Memorandum of Interfund Loan memorializes the City’s intention with regard to financing the costs of the Improvements and shall be read liberally to comport with and to ratify and confirm all prior resolutions, acts, and undertakings of the City, and all applicable laws of the State of Montana in connection therewith. 271 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-4 IN WITNESS WHEREOF, this Memorandum of Interfund Loan is made by the City to confirm and authorize all matters within its scope as and when such matters arose, including the Loan effective as of the date of the Transfer Date, and to govern matters within its scope that may in the future arise. Dated this __ day of _________, 2019. __________________________________ ANDREA SURRATT City Manager ATTEST: _____________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: __________________________________ GREG SULLIVAN City Attorney 272 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-1 SCHEDULE 1 Amortization Schedule: 273 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-1 SCHEDULE 2 Warrant No.1: Due June 30, 2020 Dollars: $12,530.79 SPECIAL IMPROVEMENT DISTRICT NO. 750 Issued by the City of Bozeman, Montana in Connection with SID 750 and Held by the General Fund The City Treasurer of the City of Bozeman, Montana (the “City”), agrees to pay to the General Fund the sum of $195,344.50, as authorized by Resolution Nos. 4983 and 4984 adopted on February 4, 2019 and March 4, 2019, respectively, in repayment of the total amount advanced by the General Fund to the SID 750 Construction Account for paying the costs of certain improvements to North Tracy Avenue as described in Resolution No. 4983, with interest thereon at the rate of 2.0% per annum, as authorized in said resolutions, and all laws, resolutions and ordinances relating thereto, but only from amounts then available in the SID 750 North Tracy Avenue Special Improvement District Fund (the “Special Improvement District Fund”). This warrant does not constitute a pledge of the general credit of the City nor does it create a general liability against the City. This warrant is drawn in accordance with that certain Memorandum of Interfund Loan, dated September 16, 2019, 2019, by the City, in connection with the Loan described therein effective as of November 1, 2019, is issued by the City pursuant to Section 7-6-4603, MCA., and represents one of forty (40) sequentially numbered warrants, payable every six (6) months on the 1st day of January and the 1st day of July of each year, commencing on January 1, 2020 and ending July 1, 2039. This warrant represents the total amount of principal and accrued interest, as reflected on the applicable Payment Date shown on the attached Exhibit A, from the date of the registration of this warrant as expressed herein, until the[June 30, 2039. This warrant shall mature and be redeemable on the 1st day of January 2020. This warrant is payable upon presentment to the City Treasurer, on its redemption date, only from amounts available in the Special Improvement District Fund, which is funded by the collection of special assessments levied against the benefited property within the District, as described in the resolutions referred to above. This warrant is redeemable at the option of the City at any time there are funds to the credit of said Special Improvement District Fund for the redemption thereof, and in the manner provided for the redemption of the same, and, if sufficient funds are then available in the Special Improvement District Fund, may be prepaid in the discretion of the City. If this warrant is timely paid in full, it will be marked canceled by the City Treasurer and then filed with the City Clerk. In the event that there are insufficient funds in the Special Improvement District Fund to pay and redeem this warrant upon its maturity and presentation, interest shall first be paid. This warrant shall continue to accrue interest on a pro-rata basis with other warrants then outstanding at the rate of 2.0 % from the date of matured presentation until the actual date of redemption. If funds are not available in the Special Improvement District Fund to pay and redeem this warrant, the City shall have no obligation to pay and redeem this warrant; provided that the City shall have all rights to enforce the repayment of special assessments and the lien created thereby against benefited properties in the District to repay this warrant. It is hereby certified and recited, that all things required to be done precedent to the issuance of this warrant have been properly done, happened and been performed in the manner prescribed by the laws of the State 274 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-2 of Montana and the resolutions and ordinances of the City related to the issuance hereof. NOTICE: The City exercises its preference right to purchase this warrant. Registration Date of this Warrant: November 1, 2019. __________________________________ Cynthia L. Andrus Mayor Registered at the offices of the City Treasurer and City Clerk of the City of Bozeman, Montana effective as of this November 1, 2019. City Treasurer City Clerk 275 Resolution 4999, Authorizing Warrants for SID 750, North Tracy Reconstruction A-1 EXHIBIT A Amortization Schedule: 276 To: Kristin Donald, Finance Director From: Kellen Gamradt, Engineer II Date: September 12, 2019 Re: North Tracy Reconstruction - Project Status BACKGROUND The following is a description of the current status of the improvements to North Tracy and the estimated date for substantial completion of the project. PROJECT STATUS The improvements under construction generally consist of removing the existing street pavement and curbing, installing a 28-foot-wide street section on North Tracy Avenue with gravel base course material, asphaltic cement surfacing, City standard curbs and gutters, pedestrian ramps, traffic control signage and pavement striping, storm drains, and all related improvements incidental to construction. The Improvements shall also include the engineering design, construction, inspection and engineering certification of asphalt cement paving, gravel base courses and subgrade preparation, storm drainage, and all necessary permits and appurtenances to complete the road installation. This project was awarded to Omdahl Excavation, Inc. on March 25th, 2019. The city executed a contract agreement with Omdahl on May 1st, 2019 and the contractor was given notice to proceed on July 29th, 2019. The allowable contract time is 100 calendar days and the date for substantial completion is November 6th, 2019. As of September 5th, the contractor has successfully completed $435,000 of work out of the total contract amount of $794,427.00 (54% completion on a cost basis). Completed work includes: installation of the temporary water system, removal and disposal of existing curb, gutter, asphalt, pedestrian ramps and drive approaches, excavation to subgrade, complete installation of the new 8-inch ductile iron water main and partial installation of the 8-inch PVC sewer main. 38 contract days have elapsed from the 100 calendar day contract time (38% completion). Based on the work progress to date and discussions with the contractor, I have revised the date of substantial completion to October 19th, 2019. 277