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HomeMy WebLinkAbout09-16-19 City Commission Packet Materials - C13. Res 5044, Sale of Warrants with SID 745 for West Oak and North Ferguson Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Kristin Donald, Finance Director SUBJECT: Commission Resolution No. 5044, authorizing, ratifying and confirming the sale of warrants in connection with Special Improvement District No. 745 for Local Improvements to West Oak Street and North Ferguson Avenue. MEETING DATE: September 16, 2019 AGENDA ITEM: Consent RECOMMENDATION: Adopt Resolution No. 5044 authorizing, ratifying and confirming the sale of warrants in connection with the purchase of previously ordered improvements to West Oak Street and Ferguson Avenue within Special Improvement District No. 745. BACKGROUND: The City Commission created Special Improvement District (SID) No. 745 on April 22, 2019 for the purpose of purchasing certain previously ordered improvements in and about North Ferguson Avenue between West Oak Street and Baxter Lane and West Oak Street between Davis Lane and North Ferguson Avenue and financing the costs thereof. To fund the costs of the District’s share of the construction costs of the improvements, the Arterial & Collector District invested, at the City’s direction, a total of $902,424.65. In accordance with the Resolutions of Intention and Creation of the District, special assessments are to be levied against benefitted property in the District and such assessments used to repay warrants issued to 278 purchase the ordered improvements. Resolution 4894 levying the assessments is on the City Commission action agenda this same meeting. If Resolution 4894 is adopted, the special assessments will be levied against property in the District semi-annually for three years in an amount to equal the principal of $903,424.65 (which includes the District’s share of the improvements and $1000.00 in incidental costs) plus simple interest at an annual rate as allowed by Sect. 7-12-4189, MCA. Property owners within a special improvement district have the right to prepay assessments. This Resolution 5044 will ratify and confirm the issuance by the City of serial warrants evidencing the District’s obligation to purchase the improvements from the Arterial and Collector District. The warrants will be three (3) in number, and will be due and owing annually on each June 30, commencing on June 30, 2020 and concluding June 30, 2022. The obligation of the District to pay the Arterial & Collector District is also evidenced by an Interfund Purchase Memorandum, attached to Resolution 5044 as Exhibit A. ALTERNATIVES: As suggested by the City Commission. FISCAL EFFECTS: Resolution No. 4892, the Resolution of Intent to Create SID 745 estimated the total cost of the improvements to be $2,152,611.04, with the District’s share of the cost of the improvements being $902,424.65. The City committed $902,424.65 from the Street Impact Fee Fund and Flanders Mill Subdivision committed $347,731.74 for its share of the improvements to North Ferguson Avenue. Attachment: Resolution No. 5044 Report compiled on September 6, 2019 279 Page 1 of 13 RESOLUTION NO. 5044 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RELATING TO SPECIAL IMPROVEMENT DISTRICT NO. 745; RATIFYING AND CONFIRMING THE SALE OF WARRANTS IN CONNECTION WITH THE PURCHASE OF CERTAIN LOCAL IMPROVEMENTS IN AND ABOUT NORTH FERGUSON AVENUE BETWEEN WEST OAK STREET AND BAXTER LANE AND WEST OAK STREET BETWEEN DAVIS LANE AND NORTH FERGUSON AVENUE, AND FINANCING THE COSTS THEREOF AND INCIDENTAL THERETO. WHEREAS, on the 21st day of May, 2018, City Commission (the “Commission”) for the City of Bozeman, Montana (the “City”) adopted Resolution No. 4892 (the “Resolution of Intention”), stating its intent to create Special Improvement District No. 745 (the “District”) for the purpose of purchasing certain local improvements within the District and financing the costs and incidental costs thereof (the “Improvements”); and WHEREAS, in the Resolution of Intention, the Commission committed other revenue sources to cover the costs of the ordered Improvements that are not to be covered by special assessments against benefitted property within the District; and WHEREAS, on May 27, 2018 and June 3, 2018, the City Clerk published a Notice of Passage of the Resolution of Intention to Create SID No. 745 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 Commission conducted a public hearing on protests submitted to the creation of the District on June 18, 2018, continued to August 6, 2018 where at that time the Commission accepted public comment regarding protests and creation of the District and then 280 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 Page 2 of 13 adjourned the meeting; and WHEREAS, on April 22, 2019 the Commission resumed the public hearing on the creation of SID 745 and passed on all protests, and, having found the written protests not sufficient to bar the Commission from proceeding with creation of the District, created the District by adopting Resolution 4893 (the “Resolution of Creation”); and WHEREAS, the Resolution of Intention and Resolution of Creation contemplate that special assessments levied against benefited properties in the District will be used to purchase improvements previously ordered to be constructed using Arterial & Collector District (“A&C District”) funds made available through the sale of city warrants; and 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 A&C District. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, as follows: Section 1 Construction Account, and Funding Amounts. In consideration for city warrants, issued and drawn against the District’s Construction Account (the “Construction Account”), the A&C District invested, at the City’s direction, a total of $902,424.65 to pay the District’s share of constructing the Improvements. Pursuant to the aforementioned Resolutions of Intention and Creation of the District, special assessments are to be levied against benefitted property in the District and such assessments shall be used to repay warrants issued to purchase the ordered Improvements. Section 2 Special Assessments Fund. In accordance with the Resolution of Intention, the City determined to charge interest on the principal amount of the special assessments of $902,424.65 281 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 Page 3 of 13 and a charge of $1,000.00 for incidental costs as authorized by law at the rate of 1.5% per annum for a period of three years in accordance with §7-12-4189, MCA. The total amount of the assessments to be levied against property in the District is $903,454.65. The City created the SID No. 745 Special Assessment Fund (“Special Assessment Fund”) for deposit of special assessments levied by the City and paid by the owners of benefitted properties in the District. Levies of special assessments 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, 2022. Section 3 Payment to the A&C District. The Commission ratifies and confirms the obligation of the District to pay the A&C District from receipts of special assessments all amounts invested by the A&C District to purchase warrants to pay the Districts share for constructing the Improvements, together with interest as provided. The Commission ratifies and confirms the issuance by the City of serial warrants evidencing the District’s obligation to purchase said improvements from the A&C District. Such warrants are three (3) in number, and are due and owing annually on each June 30, commencing June 30, 2020 and concluding June 30, 2022. The obligation of the Special Assessment Fund to pay the A&C District is also evidenced by an Interfund Purchase Memorandum 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, ch. 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 Special Assessment Fund and satisfy the requirement of Montana law. In accordance with Section 7-12-4203 through 7-12-4206, MCA, the Commission finds: 1. The terms for purchasing the ordered Improvements are just based upon due consideration 282 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 Page 4 of 13 to the range of financing options available to the City; 2. The fixed interest rate of 1.5% for a term of three 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 benefitted properties in the District; 3. 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 three years; and 4. A private sale of the warrants for the full principal amount and a fixed interest rate of 1.5% per annum satisfies the “highest and best bidder” standard set forth in Section 7-12-4204, MCA. The Commission ratifies and confirms its determination that the A&C District held funds for which there was no immediate demand and that in the judgment of the Commission it was advantageous to invest such amount in City warrants. Accordingly, the Commission determines, and ratifies and confirms its determination, to invest $902,424.65 of funds held by the A&C District by purchasing warrants to be held by the A&C District, with the sale of such warrants being made in consideration of A&C District funds being invested to acquire the ordered Improvements. Section 5 Details Regarding Warrants. The total aggregate principal amount of the warrants purchased by the A&C District is $903,424.65, to consist of three separate warrants payable annually on each June 30th, with interest commencing on November 1, 2019 and the first warrant due on June 30, 2020 and the last warrant due on June 30, 2022. Each warrant bears interest on the amount outstanding at the rate of 1.5 % 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 $27,237.24 over the three-year term. The warrants shall be registered in the offices of City Clerk and the City Treasurer. The determination of the City to sell warrants for funds invested by the A&C District, with said investment being evidenced by the transfer of funds from the A&C District to the Construction Account for the cost of acquiring the ordered Improvements, is hereby ratified and confirmed. 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 283 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 Page 5 of 13 A. Section 6 Effect of Resolution. The Commission hereby ratifies and confirms its actions and undertakings in connection with the creation of the District and sale of warrants to finance the cost of purchasing the Improvements identified therein. This Resolution shall be read to comport with the previous actions and undertakings of the Commission relating to the District and to memorialize that the warrants described above, from the date the A&C District invested funds needed to acquire the ordered Improvements, are in accord with the Commission’s intention that the A&C District be entitled to payment in accordance with the terms of said warrants. 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. PASSED, ADOPT ED, 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 Attorney 284 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-1 EXHIBIT A INTERFUND PURCHASE MEMORANDUM The City of Bozeman, Montana (the “City”) hereby acknowledges, ratifies, and authorizes the purchase of certain Improvements (described below) from the Arterial & Collector District (the “A&C District”) on behalf of the Special Improvement District 745 Fund (the “Special Improvement District Fund”). The City’s obligation, on behalf of the Special Improvement District Fund, to purchase the Improvements is secured by warrants drawn against the Special Improvement District Fund to pay for a portion of costs for improvements to North Ferguson Avenue between West Oak Street and Baxter Lane and to West Oak Street between Davis Lane and North Ferguson Avenue (the “Improvements”) as determined by the City Commission to benefit property within Special Improvement District (“SID”) No. 745 (the “District”). Background: A. The City, by Resolution No. 4771, adopted by the City Commission (the “Commission”) on March 20, 2017 (the “Resolution of Intention”) gave notice of the City’s intent to create a Special Improvement District (SID 740) for the purpose of financing a portion of the Improvements by special assessments levied against benefited properties in the District to repay the investment made by the A&C District. The District’s share of the estimated costs of the Improvements as stated in Resolution No. 4771 was $1,063,138.50. 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. Gallatin County, owner of 100% of the property within the District boundaries, protested the creation of SID 740. C. Following a public hearing and finding that insufficient protests by owners of benefited properties were timely made, the Commission, on April 17, 2017, adopted Resolution No. 4772 creating SID 740. The City Commission overruled Gallatin County’s protest because the previous owner of the property within the District waived the right to protest creation of a special improvement district in consideration of receiving approval for annexation of the property to the City on October 19, 2001 and such waiver was a covenant running with the land and binding on successors in interest including Gallatin County. D. The City ordered the Improvements to be constructed in accordance with Resolution Nos. 4771 285 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-2 and 4772. The Improvements were completed. The actual cost of the District’s share of the Improvements was $902,424.65. E. In August 2017, Gallatin County filed a lawsuit in District Court seeking, among other things, a judicial declaration that SID 740 was void ab initio and enjoining the City from levying special assessments based on alleged defects in creation of SID 740. The County’s lawsuit was subsequently dismissed. F. On May 21, 2018, the Commission adopted Resolution 4907, a resolution of intent to dissolve SID 740, and Resolution No. 4892, a resolution of intent to create a new SID No. 745 for the purpose of purchasing the existing Improvements. G. The City duly mailed and caused to be published a notice of passage of Resolutions 4907 and 4892, and afforded owners of the benefited properties the opportunity to protest the dissolution of SID 740 and the creation of SID 745 in accordance with Montana law. H. Following a public hearing and finding that no protests to the dissolution of SID 740 by owners of benefited properties were timely made, the Commission, on June 18, 2018, adopted Resolution No. 4908 dissolving SID 740. I. Following a public hearing and overruling protests to the creation of SID 745 by owners of benefited properties, the Commission, on April 22, 2019, adopted Resolution No. 4893 creating SID 745. J. In furtherance of the City’s resolved intent to purchase the Improvements paid for by money invested from the A&C District fund, the City will issue and sell warrants, which will be paid with special assessments levied against benefitted property in the District. NOW, THEREFORE, the City hereby declares as follows: 1. Terms of Interfund Investment. The City hereby ratifies and confirms the investment by the A&C District of $902,424.65 to construct the Improvements and the transfer of funds from the A&C District to the SID Construction Account (the “Construction Account”). The City also hereby ratifies and confirms the issuance of warrants drawn against the SID 745 Special Assessment Fund (the “Special Assessment Fund”) in consideration for investment of A&C District funds. In accordance with the Resolution No. 4892 and Resolution No. 4893, said warrants are sold for the purpose of memorializing the obligation of SID 745 to pay the A&C District for the A&C District’s investment in the total principal amount of $902,424.65, which amount plus interest and shall be paid in accordance with the warrant terms. 286 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-3 2. Obligation to Make Payments. To obtain funds to pay SID 745’s obligations to the A&C District, the City will levy special assessments in the aggregate amount of $903,424.65 against the benefited property in the District in accordance with Resolution No. 4892 and Resolution No. 4893. Special assessments received by the City, will be deposited in the Special Assessment Fund on or before each January 1 and July 1, to make installment payments on the warrants to the A&C District commencing June 30, 2020 and concluding June 30, 2022. 3. Right to Receive Payments. The warrants sold to and held by the A&C District will evidence the investment of A&C District funds to acquire the Improvements. Such warrants, which are to be issued in accordance with Section 7-12-4204, MCA, are registered in the offices of the City Treasurer and the City Clerk and drawn in accordance with the instructions of the City Treasurer. Such warrants are outstanding until canceled upon receipt of the applicable installment payments from the Special Assessment Fund. The warrants are to be in substantially the form of the attached Schedule 2. Special assessments levied by the City under Title 7, Chapter 12, Part 41, MCA, create a priority lien against each benefited property in the District in favor of the City for the payment of the warrants that may be enforced and foreclosed in the manner provided by law. 4. Details of Payments. Payments from the Special Assessment Fund to the A&C District 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 the City so elects from available amounts in the Special Assessment Fund, or, to maintain a level payment schedule, the City may elect to hold amounts in the Special Assessment Fund to make payments as scheduled by each warrant. The amounts paid to the A&C District in accordance with the warrants may be used by the City in any manner allowed by law. 5. Limited Obligation. The warrants that evidence the investment of A&C District funds are made pursuant to or in compliance with Resolution No. 4892, Resolution No. 4893, Section 7- 6-4603, MCA, Section 7-12-4201, MCA, and Sections 7-12-4203 through 7-12-4206, MCA. The resulting obligation is payable only from payments of special assessments deposited in the Special Assessment Fund and applicable interest. Said obligation shall not be a general obligation of the City and the City shall have no obligation to pay principal of or interest on the warrants, which may remain unpaid after an installment payment date except from available amounts in the Special Assessment Fund. If amounts are not available in the Special Assessment 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. 287 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-4 6. Interpretation. This Interfund Purchase Memorandum 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. IN WITNESS WHEREOF, this Interfund Purchase Memorandum is made by the City to confirm, ratify, and reaffirm all matters within its scope as and when such matters arose, including the investment of A&C District funds and to govern matters within its scope that may in the future arise. Dated this _____ day of September, 2019. __________________________________ ANDREA SURRATT City Manager ATTEST: ______________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: __________________________________ GREG SULLIVAN City Attorney 288 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-1 SCHEDULE 1 289 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-1 SCHEDULE 2 Warrant No.1: Due June 30, 2020 Dollars: $310,220.63 SPECIAL IMPROVEMENT DISTRICT NO. 745 Issued by the City of Bozeman, Montana in Connection with SID 745 and Held by the Arterial & Collector District The City Treasurer of the City of Bozeman, Montana (the “City”), agrees to pay to the Arterial & Collector District (“A&C District”) the sum of $902,424.65, as authorized by Resolution Nos. 4892 and 4893, adopted on May 21, 2018 and April 22, 2019, respectively, and Resolution 5044 in partial payment of the total amount advanced by the A&C District to the SID Construction Account for acquiring ordered improvements to West Oak Street and North Ferguson Avenue as described in Resolution No. 4892, with interest thereon at the rate of 1.5% per annum, as authorized in said resolutions, and all laws, resolutions and ordinances relating thereto. This warrant is drawn against the SID 745 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 Interfund Purchase Memorandum dated September 16, 2019, by the City, in connection with the obligations described therein effective as of November 1, 2019, is issued by the City pursuant to Section 7-6-4603, MCA, and represents one of three sequentially numbered warrants, payable every twelve (12) months on the 30th day of June of each year, commencing on June 30, 2020 and ending June 30, 2022. 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 [insert date warrant is due]. This warrant shall mature and be redeemable on the [insert date warrant is due]. 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 1.5% 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 290 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-2 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 of Montana and the resolutions and ordinances of the City related to the issuance thereof. 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 November 1, 2019. City Treasurer City Clerk 291 Resolution 5044, Confirmation of Interfund Agreement to Purchase Improvements by the Creation of SID 745 A-1 EXHIBIT A Amortization Schedule 292