HomeMy WebLinkAboutResolution 5184 Terms and Conditions for Bonds for Front Street Sanitary Sewer Interceptor
RESOLUTION 5184
RESOLUTION RELATING TO $2,807,000 SEWER SYSTEM REVENUE BOND (DNRC
WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), SERIES
2020D; AUTHORIZING THE ISSUANCE AND FIXING THE TERMS AND
CONDITIONS THEREOF
RECITALS:
WHEREAS, pursuant to the Water Pollution Control State Revolving Fund Act, Montana
Code Annotated, Title 75, Chapter 5, Part 11, as amended (the “Act”), the State of Montana (the
“State”) has established a revolving loan program (the “Program”) to be administered by the
Department of Natural Resources and Conservation of the State of Montana, an agency of the State
(the “DNRC”), and by the Department of Environmental Quality of the State of Montana, an
agency of the State (the “DEQ”), and has provided that a water pollution control state revolving
fund (the “Revolving Fund”) be created within the state treasury and all federal, state and other
funds for use in the Program be deposited into the Revolving Fund, including, but not limited to,
all federal grants for capitalization of a state water pollution control revolving fund under the
Federal Water Pollution Control Act (the “Clean Water Act”), all repayments of assistance
awarded from the Revolving Fund, interest on investments made on money in the Revolving Fund
and payments of principal of and interest on loans made from the Revolving Fund; and
WHEREAS, the Act provides that funds from the Program shall be disbursed and
administered for the purposes set forth in the Clean Water Act and according to rules adopted by
the DEQ and the DNRC; and
WHEREAS, the current EPA Capitalization Grant (as hereinafter defined) requires that
loans under the Program funded in whole or in part by such grant in the aggregate and not on a
loan-by-loan basis be structured in such a way that a percentage of the total proceeds of such grant
be subject to loan forgiveness; and
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WHEREAS, the City of Bozeman, Montana (the “Borrower”) has applied to the DNRC
for the 2020D Loan (as hereinafter defined) from the Revolving Fund to enable the Borrower to
finance, refinance or reimburse itself for a portion of the costs of the 2020 Front Street Project (as
hereinafter defined) which will carry out the purposes of the Clean Water Act, to fund deposits to
the Reserve Account to the Reserve Requirement, and to pay costs of issuance of the Series 2020D
Bond (as hereinafter defined); and
WHEREAS, the DNRC offered to make a loan in the total principal amount of $2,807,000
available to the Borrower; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and regulations
to adopt this Supplemental Resolution and to issue the Series 2020D Bond (as hereinafter defined)
to evidence the 2020D Loan (as hereinafter defined) for the purposes set forth herein; and
WHEREAS, the DNRC expects to fund the 2020D Loan (as hereinafter defined) in part,
directly or indirectly, from proceeds of the EPA Capitalization Grant; in part, directly or indirectly,
with proceeds of the State’s General Obligation Bonds (Water Pollution Control State Revolving
Fund Program); and in part, directly or indirectly, with Recycled Money.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF BOZEMAN, MONTANA, AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1 Definitions. In this Supplemental Resolution, unless a different meaning
clearly appears from the context, the following terms shall have the following meanings:
“Accountant” or “Accountants” means an independent certified public accountant or a firm
of independent certified public accountants satisfactory to the DNRC.
“Acquisition and Construction Account” means the account created in the Sewer System
Fund established pursuant to Sections 11.1 and 11.2 of the Original Resolution.
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“Act” or “State Act” means Montana Code Annotated, Title 75, Chapter 5, Part 11, as
amended from time to time.
“Administrative Expense Surcharge” means a surcharge equal to twenty-five hundredths
of one percent (0.25%) per annum on the outstanding principal amount of the 2020D Loan from
the date of each advance thereof, payable by the Borrower on a Payment Date.
“Authorized DNRC Officer” means the Director of the DNRC or his or her designee.
“Bond Counsel” means any Counsel nationally recognized as experienced in matters
relating to the issuance by states or political subdivisions of tax-exempt obligations selected by the
Borrower and acceptable to the DNRC.
“Bonds” means the Series 2010B Bond, the Series 2010C Bond, the Series 2010D Bond,
Series 2010F Bond, Series 2010G Bond, Series 2010H Bond, the Series 2020B Bond, and the
Series 2020D Bond; when issued, the Series C Bond; and any additional Bonds to be issued on a
parity therewith pursuant to Article X of the Original Resolution, excluding Section 10.4 thereof.
“Borrower” means the City.
“Business Day” means any day which is not a Saturday or Sunday, a legal holiday in the
State or a day on which banks in the State are authorized or required by law to close.
“City” means the City of Bozeman, Montana and its permitted successors or assigns
hereunder.
“Clean Water Act” means the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-
1387, as amended, and all regulations, rules and interpretations issued by the EPA thereunder.
“Closing” means the date of delivery of the Series 2020D Bond to the DNRC.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral Documents” means any security agreement, guaranty or other document or
agreement delivered to the DNRC securing the obligations of the Borrower under this
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Supplemental Resolution and the Series 2020D Bond. If no Collateral Documents secure such
obligations, any reference to Collateral Documents in this Supplemental Resolution shall be
without effect.
“Commission” means the City Commission of the City of Bozeman, Montana.
“Committed Amount” means the aggregate amount of the 2020D Loan committed to be
lent by the DNRC to the Borrower pursuant to Section 4.1 of this Supplemental Resolution, as
such amount may be reduced pursuant to Sections 3.2 and 3.4 of this Supplemental Resolution.
“Consultant” means a nationally recognized consultant or firm of consultants, or an
independent engineer or firm of independent engineers, or an Accountant, which in any case is
qualified and has skill and experience in the preparation of financial feasibility studies or
projections for facilities similar to the System or the 2020 Front Street Project, selected by the
Borrower and satisfactory to the DNRC.
“Counsel” means an attorney duly admitted to practice law before the highest court of any
state and satisfactory to the DNRC.
“Debt” means, without duplication, in respect of the System, (1) indebtedness of the
Borrower for borrowed money or for the deferred purchase price of property or services; (2) the
obligation of the Borrower as lessee under leases which should be recorded as capital leases under
generally accepted accounting principles; and (3) obligations of the Borrower under direct or
indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (1) or (2) above.
“DEQ” means the Department of Environmental Quality of the State of Montana, an
agency of the State, or any successor to its powers, duties and obligations under the Act or the
EPA Agreements.
“DNRC” means the Department of Natural Resources and Conservation of the State of
Montana, an agency of the State, and any successor to its powers, duties and obligations under the
State Act.
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“Enabling Act” means Montana Code Annotated, Title 7, Chapter 7, Parts 44 and 45, as
heretofore and hereafter amended or supplemented.
“EPA” means the Environmental Protection Agency, an agency of the United States of
America, and any successor to its functions under the Clean Water Act.
“EPA Agreements” means all capitalization grant agreements and other written agreements
between the DEQ, the DNRC and the EPA concerning the Program.
“EPA Capitalization Grant” means a grant of funds to the State by the EPA under Title VI
of the Clean Water Act and any grant made available by the EPA for deposit in the Revolving
Fund pursuant to Section 205(m) of the Clean Water Act.
“Estimated Completion Date” means December 31, 2020, the date by which it is estimated
by the Borrower that the 2020 Front Street Project will be substantially completed.
“Fund” means the Sewer System Fund established pursuant to Section 11.1 of the Original
Resolution.
“Governmental Unit” means governmental unit as such term is used in Section 145(a) of
the Code.
“Indenture” means the Indenture of Trust, dated as of June 1, 1991, between the Board of
Examiners of the State and the Trustee, as such may be supplemented or amended from time to
time in accordance with the provisions thereof, pursuant to which, among other things, the State
Bonds are to be or have been issued.
“Loan Loss Reserve Surcharge” means a surcharge equal to twenty-five hundredths of one
percent (0.25%) per annum on the outstanding principal amount of the 2020D Loan from the date
of each advance thereof, payable by the Borrower on a Payment Date.
“Loan Repayments” means periodic installments of principal and interest by Borrower in
repayment of the Series 2020D Bond, at the rates and times specified in Article V.
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“Net Revenues” means the entire amount of the gross revenues of the System (as described
in Section 11.1 of the Original Resolution) remaining upon each such monthly apportionment,
after crediting to the Operating Account the amount required by the Resolution, including sums
required to maintain the Operating Reserve in the minimum amount required by Section 11.3 of
the Original Resolution.
“Operating Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.3 of the Original Resolution.
“Opinion of Bond Counsel” means a written opinion of Bond Counsel.
“Original Resolution” means Resolution No. 4220 of the Borrower adopted on November
16, 2009.
“Payment Date” means each January 1 and July 1 during the term of the 2020D Loan on
which a payment of interest or principal and interest is due, as determined under this Supplemental
Resolution.
“Person” means any Private Person or Public Entity.
“Private Person” means an individual, corporation, partnership, association, joint venture,
joint stock company or unincorporated organization, except a Public Entity.
“Program” means the Water Pollution Control State Revolving Fund Program established
by the State Act.
“Project” means an improvement, betterment, reconstruction or extension of the System,
including the 2020 Front Street Project.
“Public Entity” means a State agency, city, town, county, irrigation district, drainage
district, county water and sewer district, a soil conservation district, political or administrative
subdivision of State government or other public body established by State law or an Indian tribe
that has a federally recognized governing body carrying out substantial governmental duties and
powers over any area.
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“Recycled Money” means payments and prepayments of principal of loans made under the
Program, and any other amounts transferred to the Principal Subaccount in the Revenue
Subaccount in the State Allocation Account (as such terms are defined in the Indenture).
“Registrar” means, with respect to the Series 2020D Bond, the City Finance Director or
any successor appointed pursuant to this Supplemental Resolution, and, with respect to any other
series of Bonds, the Person or Persons designated by or pursuant to this Supplemental Resolution
or a Supplemental Resolution to receive and disburse the principal of, premium, if any, and interest
on the Bonds on behalf of the Borrower and to hold and maintain the Bond Register.
“Regulations” means the Treasury Department, Income Tax Regulations, as amended or
any successor regulation thereto, promulgated under the Code or otherwise applicable to the Series
2020D Bond.
“Replacement and Depreciation Account” means the account created in the Sewer System
Fund established pursuant to Sections 11.1 and 11.6 of the Original Resolution.
“Reserve Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.5 of the Original Resolution.
“Reserve Requirement” means, as of the date of calculation, an amount equal to one-half
the sum of the highest amount of principal and interest payable on all outstanding Bonds in any
one future fiscal year (giving effect to mandatory sinking fund redemption, if any).
“Resolution” means the Original Resolution, , as amended and supplemented by Resolution
Nos. 4234, 4245, 4254, 4299, 4462, and , adopted on January 19, 2010, February 16, 2010,
May 3, 2010, November 1, 2010, August 5, 2013, and June 15, 2020, respectively; as further
amended and supplemented by this Supplemental Resolution; and as it may be further amended
and supplemented.
“Revenue Bond Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.4 of the Original Resolution.
“Revolving Fund” shall have the meaning set forth in the recitals hereof.
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“Series 2010B Bond” means the Borrower’s Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2010B, issued to the DNRC pursuant to
the Resolution, as then in effect.
“Series 2010C Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010C,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010D Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010F Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010F,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010G Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010G,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2010H Bond” means the Borrower’s First Amended and Restated Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010H,
issued to the DNRC pursuant to the Resolution, as then in effect.
“Series 2020A Bond” means the $300,000 Subordinate Lien Sewer System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2020A, issued
to the DNRC pursuant to the Resolution, as then in effect.
“Series 2020B Bond” means the $7,786,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2020B, issued to the DNRC pursuant to
the Resolution, as then in effect.
“Series C Bond” means the $7,063,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 20 C, to be issued to the DNRC to
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evidence the 20 C Loan. The series designation for the Series C Bond shall be completed with
the calendar year in which the Series C Bond is issued, expected to be late in calendar year 2020
or early in calendar year 2021, may or may not contain a “C,” and the final designation will be set
forth on the face page of the form of the Series C Bond.
“Series 2020D Bond” means the $2,807,000 Sewer System Revenue Bond (DNRC Water
Pollution Control State Revolving Loan Program), Series 2020D, issued to the DNRC to evidence
the 2020D Loan.
“Sewer System Fund” means the fund created by Section 11.1 of the Original Resolution.
“State” means the State of Montana.
“State Bonds” means the State’s General Obligation Bonds (Water Pollution Control State
Revolving Fund Program), issued or to be issued pursuant to the Indenture.
“Subordinate Obligations” means the Series 2020A Bond, and any other subordinate
obligations issued under Section 10.4 of the Original Resolution
“Supplemental Resolution” means this Resolution No. of the Borrower adopted on
June 15, 2020.
“Surplus Account” means the account created in the Sewer System Fund established
pursuant to Sections 11.1 and 11.7 of the Original Resolution.
“Surplus Net Revenues” means that portion of the Net Revenues in excess of the current
requirements of the Operating Account, the Revenue Bond Account and the Reserve Account.
“System” means the existing sewer system of the Borrower and all extensions,
improvements and betterments thereof hereafter constructed and acquired, including, without
limitation, the 2020 Front Street Project.
“Trustee” means U.S. Bank National Association, in Seattle, Washington, or any successor
trustee under the Indenture.
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“2020 Front Street Project” means the designing, engineering, and construction of the
facilities, improvements and activities financed, refinanced or the cost of which is being financed
by or reimbursed to the Borrower with proceeds of the 2020D Loan, described in Appendix A
hereto.
“2020D Committed Amount” means the amount of the 2020D Loan committed to be lent
by the DNRC to the Borrower pursuant to Section 4.1 of this Supplemental Resolution, as such
amount may be reduced pursuant to Section 3.2 and Section 3.4 of this Supplemental Resolution.
“2020D Loan” means the loan made to the Borrower by the DNRC pursuant to the Program
in the maximum amount of the 2020D Committed Amount to provide funds to pay a portion of
the costs of the 2020 Front Street Project payable under the Program, to fund deposits to the
Reserve Account, and to pay a portion of the costs of issuance of the Series 2020D Bond.
“Undisbursed Committed Amount” means any undisbursed Committed Amount which is
not required to pay costs of the 2020 Front Street Project as provided in Section 3.4 of this
Supplemental Resolution.
Section 1.2 Other Rules of Construction. For all purposes of this Supplemental
Resolution, except where the context clearly indicates otherwise:
(a) All accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted government accounting standards.
(b) Terms in the singular include the plural and vice versa.
(c) All references to time shall refer to Helena, Montana time, unless otherwise provided
herein.
(d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and construed to include correlative
words of the feminine and neuter genders.
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(f) “Or” is not exclusive, but is intended to permit or encompass one, more or all of the
alternatives conjoined.
Section 1.3 Appendices. Attached to this Supplemental Resolution and hereby made a
part hereof are the following Appendices:
Appendix A: a description of the 2020 Front Street Project and estimated budget for the
2020 Front Street Project;
Appendix B: the form of the Series 2020D Bond; and
Appendix C: additional agreements and representations of the Borrower.
ARTICLE II
AUTHORIZATION, FINDINGS, REPRESENTATIONS AND COVENANTS
Section 2.1 Authorization and Findings.
(a) Authorization. Under the provisions of the Enabling Act, the Borrower is authorized
to issue and sell its revenue bonds payable during a term not exceeding forty years from their date
of issue, to provide funds for the reconstruction, improvement, betterment and extension of the
System or to refund its revenue bonds issued for such purpose; provided that the bonds and the
interest thereon are to be payable solely out of the net income and revenues to be derived from
rates, fees and charges for the services, facilities and commodities furnished by the undertaking,
and are not to create any obligation for the payment of which taxes may be levied except to pay
for services provided by the undertaking to the Borrower.
(b) The System. The Borrower, pursuant to the Enabling Act and other laws of the State,
has established and presently owns and operates the System.
(c) The 2020 Front Street Project. After investigation of the facts and as authorized by the
Enabling Act, this Commission has determined it to be necessary and desirable and in the best
interests of the Borrower to acquire and construct the 2020 Front Street Project.
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(d) Outstanding Bonds. Pursuant to the Enabling Act and the Resolution, the Borrower
has issued, and has outstanding its Series 2010B Bond, Series 2010C Bond, Series 2010D Bond,
Series 2010F Bond, Series 2010G Bond, Series 2010H Bond, and Series 2020B Bond. The
Borrower also has authority to issue, but has not issued, its Series C Bond. The Series 2010B
Bond, the Series 2010C Bond, the Series 2010D Bond, the Series 2010F Bond, the Series 2010G
Bond, the Series 2010H Bond, and the Series 2020B Bond are parity bonds, and the Series C Bond,
when issued, will be a parity bond, payable from Net Revenues of the System. The Borrower also
has issued and has outstanding the Series 2020A Bond, which is a Subordinate Obligation. No
other bonds or indebtedness are outstanding that are payable from or secured by revenues of the
System.
(e) Additional Bonds. The Borrower reserved the right under Section 10.3 of the
Original Resolution, as amended, to issue additional Bonds payable from the Revenue Bond
Account of the Fund on a parity as to both principal and interest with the outstanding Bonds, if
the Net Revenues of the System for the last complete fiscal year preceding the date of issuance
of such additional Bonds have equaled at least 110% of the maximum amount of principal and
interest payable from the Revenue Bond Account in any subsequent fiscal year during the term
of the outstanding Bonds, on all Bonds then outstanding and on the additional Bonds proposed to
be issued. For the purpose of the foregoing computation, the Net Revenues for the fiscal year
preceding the issuance of the additional Bonds shall be those shown by the financial reports
caused to be prepared by the Borrower pursuant to the Original Resolution, except that if the
rates and charges for services provided by the System or finally authorized to go into effect
within 60 days after the issuance of the additional Bonds have been changed since the beginning
of such preceding fiscal year, then the rates and charges in effect at the time of issuance of the
additional Bonds shall be applied to the quantities of service actually rendered and made
available during such preceding fiscal year to ascertain the gross revenues, from which there
shall be deducted to determine the Net Revenues, the actual operation and maintenance cost plus
any additional annual costs of operation and maintenance the Consultant estimates will be
incurred because of the improvement or extension of the System to be constructed from the
proceeds of the additional Bonds proposed to be issued. In no event shall any additional Bonds
be issued and made payable from the Revenue Bond Account if the Borrower is then in default
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in any payment of principal of or interest on any outstanding Bonds payable therefrom, or if
there then exists any deficiency in the balances required by the Original Resolution to be
maintained in any of the accounts of the Fund, which will not be cured or restored upon the
issuance of the additional Bonds. It is hereby determined that the Borrower is authorized to issue
$2,807,000 in aggregate principal amount of additional Bonds pursuant to Section 10.3 of the
Original Resolution, as amended, payable from and secured by the Net Revenues on a parity
with the outstanding Series 2010B Bond, Series 2010C Bond, Series 2010D Bond, Series 2010F
Bond, Series 2010G Bond, Series 2010H Bond, and Series 2020B Bond, and the Mayor, City
Manager and City Finance Director are authorized and directed to sign a certificate confirming
such determination.
Section 2.2 Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(1) is duly organized and validly existing as a municipal corporation and political
subdivision of the State;
(2) has all requisite power and authority and all necessary licenses and permits
required as of the date hereof to own and operate the System and to carry on its current
activities with respect to the System, to adopt this Supplemental Resolution and to enter
into the Collateral Documents and to issue the Series 2020D Bond and to carry out and
consummate all transactions contemplated by this Supplemental Resolution, the Series
2020D Bond and the Collateral Documents;
(3) is a Governmental Unit and a Public Entity; and
(4) has taken all proper action to authorize the execution, delivery and
performance of its obligations under this Supplemental Resolution, the Series 2020D
Bond and the Collateral Documents and the incurrence of the Debt evidenced by the
Series 2020D Bond in the maximum amount of the Committed Amount.
(b) Litigation. There is no litigation or proceeding pending, or to the knowledge of the
Borrower threatened, against or affecting the Borrower in any court or before or by any
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governmental authority or arbitration board or tribunal that, if adversely determined, would
materially and adversely affect the existence, corporate or otherwise, of the Borrower, or the ability
of the Borrower to make all payments and otherwise perform its obligations under this
Supplemental Resolution, the Series 2020D Bond and the Collateral Documents, or the financial
condition of the Borrower, or the transactions contemplated by this Supplemental Resolution, the
Series 2020D Bond and the Collateral Documents or the validity and enforceability of this
Supplemental Resolution, the Series 2020D Bond and the Collateral Documents. No referendum
petition has been filed with respect to any resolution or other action of the Borrower relating to the
2020 Front Street Project, the Series 2020D Bond or any Collateral Documents and the period for
filing any such petition will have expired before issuance of the Series 2020D Bond.
(c) Borrowing Legal and Authorized. The adoption of this Supplemental Resolution, the
execution and delivery of the Series 2020D Bond and the Collateral Documents and the
consummation of the transactions provided for in this Supplemental Resolution, the Series 2020D
Bond and the Collateral Documents and compliance by the Borrower with the provisions of this
Supplemental Resolution, the Series 2020D Bond and the Collateral Documents:
(1) are within the powers of the Borrower and have been duly authorized by all
necessary action on the part of the Borrower; and
(2) do not and will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Borrower pursuant to any
ordinance, resolution, indenture, loan agreement or other agreement or instrument (other
than this Supplemental Resolution and any Collateral Documents) to which the Borrower
is a party or by which the Borrower or its property may be bound, nor will such action
result in any violation of the provisions of any charter or similar document, if applicable,
any laws, ordinances, governmental rules or regulations or court or other governmental
orders to which the Borrower, its properties or operations are subject.
(d) No Defaults. No event has occurred and no condition exists that, upon execution and
delivery of the Series 2020D Bond and the Collateral Documents, would constitute a default under
this Supplemental Resolution or the Collateral Documents. The Borrower is not in violation of
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any term of any agreement, bond resolution, trust indenture, charter or other instrument to which
it is a party or by which it or its property may be bound which violation would materially and
adversely affect the transactions contemplated hereby or the compliance by the Borrower with the
terms hereof or of the Series 2020D Bond and the Collateral Documents.
(e) Governmental Consent. The Borrower has obtained or made all permits, findings and
approvals required to the date of adoption of this Supplemental Resolution by any governmental
body or officer for the making and performance by the Borrower of its obligations under this
Supplemental Resolution, the Series 2020D Bond and the Collateral Documents (including any
necessary sewer rate increase) or for the 2020 Front Street Project, the financing or refinancing
thereof or the reimbursement of the Borrower for costs thereof. No consent, approval or
authorization of, or filing, registration or qualification with, any governmental authority (other
than those, if any, already obtained) is required on the part of the Borrower as a condition to
adopting this Supplemental Resolution, issuing the Series 2020D Bond or entering into the
Collateral Documents and the performance of the Borrower’s obligations hereunder and
thereunder.
(f) Binding Obligation. This Supplemental Resolution, the Series 2020D Bond and any
Collateral Documents to which the Borrower is a party are the valid and binding special, limited
obligations and agreements of the Borrower, enforceable against the Borrower in accordance with
their terms, except to the extent that the enforceability thereof may be limited by laws relating to
bankruptcy, moratorium, reorganization, insolvency or similar laws affecting creditors’ rights and
general principles of equity.
(g) The 2020 Front Street Project. The 2020 Front Street Project consists and will consist
of the facilities, improvements and activities described in Appendix A, as such Appendix A may
be amended from time to time in accordance with Article III of this Supplemental Resolution.
(h) Full Disclosure. There is no fact that the Borrower has not specifically disclosed in
writing to the DNRC that materially and adversely affects or (so far as the Borrower can now
foresee), except for pending or proposed legislation or regulations that are a matter of general
public information, that will materially and adversely affect the properties, operations and finances
of the System, the Borrower’s status as a Public Entity and Governmental Unit, its ability to own
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and operate the System in the manner currently operated or the Borrower’s ability to perform its
obligations under this Supplemental Resolution, the Series 2020D Bond and the Collateral
Documents and to pledge any revenues or other property pledged to the payment of the Series
2020D Bond.
(i) Compliance With Law. The Borrower:
(1) is in compliance with all laws, ordinances, governmental rules and regulations
and court or other governmental orders, judgments and decrees to which it is subject and
which are material to the properties, operations and finances of the System or its status
as a Public Entity and Governmental Unit; and
(2) has obtained all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of the System and the operation thereof and
agrees to obtain all such licenses, permits, franchises or other governmental
authorizations as may be required in the future for the System and the operation thereof,
which failure to obtain might materially and adversely affect the ability of the Borrower
to conduct the operation of the System as presently conducted or the condition (financial
or otherwise) of the System or the Borrower’s ability to perform its obligations under this
Supplemental Resolution, the Series 2020D Bond and the Collateral Documents.
Section 2.3 Covenants.
(a) Insurance. In addition to the requirements of Section 2.2 of the Original Resolution,
the Borrower at all times shall keep and maintain with respect to the System property and casualty
insurance and liability insurance with financially sound and reputable insurers, or self-insurance
as authorized by State law, against such risks and in such amounts, and with such deductible
provisions, as are customary in the State in the case of entities of the same size and type as the
Borrower and similarly situated and shall carry and maintain, or cause to be carried and
maintained, and pay or cause to be paid timely the premiums for all such insurance. All such
insurance policies shall name the DNRC as an additional insured to the extent permitted under the
policy or program of insurance of the Borrower. Each policy must provide that it cannot be
cancelled by the insurer without giving the Borrower and the DNRC 30 days’ prior written notice.
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The Borrower shall give the DNRC prompt notice of each insurance policy it obtains or maintains
to comply with this Section 2.3(a) and of each renewal, replacement, change in coverage or
deductible under or amount of or cancellation of each such insurance policy and the amount and
coverage and deductibles and carrier of each new or replacement policy. Such notice shall
specifically note any adverse change as being an adverse change. The Borrower shall deliver to
the DNRC at Closing a certificate providing the information required by this Section 2.3(a).
(b) Right of Inspection and Notice of Change of Location. The DNRC, the DEQ and the
EPA and their designated agents shall have the right at all reasonable times during normal business
hours and upon reasonable notice to enter into and upon the property of the Borrower for the
purpose of inspecting the System or any or all books and records of the Borrower relating to the
System.
(c) Further Assurance. The Borrower shall execute and deliver to the DNRC all such
documents and instruments and do all such other acts and things as may be necessary or required
by the DNRC to enable the DNRC to exercise and enforce its rights under this Supplemental
Resolution, the Series 2020D Bond and the Collateral Documents and to realize thereon, and
record and file and re-record and refile all such documents and instruments, at such time or times,
in such manner and at such place or places, all as may be necessary or required by the DNRC to
validate, preserve and protect the position of the DNRC under this Supplemental Resolution, the
Series 2020D Bond and the Collateral Documents.
(d) Maintenance of Security, if Any; Recordation of Interest.
(1) The Borrower shall, at its expense, take all necessary action to maintain and
preserve the lien and security interest of this Supplemental Resolution and the Collateral
Documents so long as any amount is owing under this Supplemental Resolution or the
Series 2020D Bond;
(2) The Borrower shall forthwith, after the execution and delivery of the Series
2020D Bond and thereafter from time to time, cause this Supplemental Resolution and
any Collateral Documents granting a security interest in revenues or real or personal
property and any financing statements or other notices or documents relating thereto to
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be filed, registered and recorded in such manner and in such places as may be required
by law in order to perfect and protect fully the lien and security interest hereof and thereof
and the security interest in them granted by this Supplemental Resolution and, from time
to time, shall perform or cause to be performed any other act required by law, including
executing or causing to be executed any and all required continuation statements and
shall execute or cause to be executed any further instruments that may be requested by
the DNRC for such perfection and protection; and
(3) Except to the extent it is exempt therefrom, the Borrower shall pay or cause
to be paid all filing, registration and recording fees incident to such filing, registration
and recording, and all expenses incident to the preparation, execution and
acknowledgment of the documents described in subparagraph (2), and all federal or state
fees and other similar fees, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of the Series 2020D Bond and the Collateral
Documents and the documents described in subparagraph (2).
(e) Additional Agreements. The Borrower covenants to comply with all representations,
covenants, conditions and agreements, if any, set forth in Appendix C hereto.
(f) Financial Information. This Section 2.3(f) supplements, and is not intended to limit,
the requirements in Section 2.2(f) of the Original Resolution, as amended. The Borrower agrees
that for each fiscal year it shall furnish to the DNRC and the DEQ, promptly when available:
(1) the preliminary budget for the System, with items for the 2020 Front Street
Project shown separately; and
(2) when adopted, the final budget for the System, with items for the 2020 Front
Street Project shown separately.
(g) Project Accounts. The Borrower shall maintain 2020 Front Street Project accounts in
accordance with generally accepted government accounting standards, and as separate accounts,
as required by Section 602(b)(9) of the Clean Water Act.
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(h) Records. After reasonable notice from the EPA or the DNRC, the Borrower shall make
available to the EPA or the DNRC such records as the EPA or the DNRC reasonably requires to
review and determine compliance with the Clean Water Act, as provided in Section 606(e) of the
Clean Water Act.
(i) Compliance with Clean Water Act. The Borrower has complied and shall comply
with all conditions and requirements of the Clean Water Act pertaining to the 2020D Loan and the
2020 Front Street Project.
(j) Program Covenant. The Borrower agrees that neither it nor any “related person”
to the Borrower (within the meaning of Section 147(a)(2) of the Code) shall, whether pursuant to
a formal or informal arrangement, acquire bonds issued by the State under the Indenture in an
amount related to the amount of the Series 2020D Bond.
Section 2.4 Covenants Relating to the Tax-Exempt Status of the State Bonds.
(a) The Borrower covenants and agrees that it will not use or permit to be used any of the
proceeds of the Series 2020D Bond or any other funds of the Borrower in respect of the 2020 Front
Street Project or the Series 2020D Bond, directly or indirectly, in a manner that would cause, or
take any other action that would cause, any State Bond to be an “arbitrage bond” within the
meaning of Section 148 of the Code or would otherwise cause the interest on the State Bonds to
be included in gross income for purposes of federal income taxation.
(b) The Borrower agrees that it will not enter into, or allow any “related person” (as defined
in Section 147(a)(2) of the Code) to enter into, any arrangement, formal or informal, for the
purchase of the State Bonds or any other obligations of the DNRC in an amount related to the
amount of the 2020D Loan or the portion of the 2020D Loan derived directly or indirectly from
proceeds of the State Bonds or that would otherwise cause any State Bond to be an “arbitrage
bond” within the meaning of Section 148 of the Code.
(c) The Borrower shall not use or permit the use of the 2020 Front Street Project directly
or indirectly in any trade or business carried on by any Person who is not a Governmental Unit.
For the purpose of this subparagraph, use as a member of the general public (within the meaning
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of the Regulations) shall not be taken into account and any activity carried on by a Person other
than a natural person shall be treated as a trade or business.
(d) Any portion of the 2020 Front Street Project being refinanced or the cost of which is
being reimbursed was acquired by and is now and shall, during the term of the 2020D Loan, be
owned by the Borrower and not by any other Person. Any portion of the 2020 Front Street Project
being financed shall be acquired by and shall, during the term of the 2020D Loan, be owned by
the Borrower and not by any other Person. Notwithstanding the previous two sentences, the
Borrower may transfer the 2020 Front Street Project or a portion thereof to another Governmental
Unit which is also a Public Entity if such transfer is otherwise permitted under the Resolution and
if such organization agrees with the DNRC to comply with Section 2.3(h), Section 2.3(i) and
Section 2.4 of this Supplemental Resolution and if the DNRC receives an Opinion of Bond
Counsel that such transfer will not violate the Act or the Clean Water Act or adversely affect the
exclusion of interest on the State Bonds from gross income or purposes of federal income taxation.
In addition, except as otherwise provided in the Resolution or in any Collateral Documents, the
Borrower may sell or otherwise dispose of any portion of the 2020 Front Street Project which has
become obsolete or outmoded or is being replaced or for other reasons is not needed by the
Borrower or beneficial to the general public or necessary to carry out the purposes of the Clean
Water Act.
(e) At the Closing of the 2020D Loan, the DNRC will, if necessary to obtain the Opinion
of Bond Counsel described in Section 7.05(a) of the Indenture, deliver to the Borrower instructions
concerning compliance by the Borrower with the arbitrage rebate requirements of Section 148 of
the Code (the “Arbitrage Rebate Instructions”). The Borrower shall comply with the Arbitrage
Rebate Instructions, if any, delivered to it by the DNRC at Closing, as such Instructions may be
amended or replaced by the DNRC from time to time. The Arbitrage Rebate Instructions may be
amended or replaced by new Arbitrage Rebate Instructions delivered by the DNRC and
accompanied by an Opinion of Bond Counsel to the effect that the use of said amended or new
Arbitrage Rebate Instructions will not adversely affect the excludability of interest on the State
Bonds or any Additional State Bonds (except State Bonds the interest on which the State did not
intend to be excluded from gross income for federal income tax purposes) from gross income of
the recipients thereof for federal income tax purposes.
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(f) The Borrower agrees that during the term of the 2020D Loan it will not contract with
or permit any Private Person to manage the 2020 Front Street Project or any portion thereof except
according to a written management contract and upon delivery to the DNRC of an Opinion of
Bond Counsel to the effect that the execution and delivery of such management contract will not
violate the State Act or the Clean Water Act or adversely affect the exclusion of interest on State
Bonds from gross income or purposes of federal income taxation.
(g) The Borrower may not lease the 2020 Front Street Project or any portion thereof to any
Person other than a Nonexempt Person which agrees in writing with the Borrower and the State
not to cause any default to occur under the Resolution; provided the Borrower may lease all or any
portion of the 2020 Front Street Project to a Nonexempt Person pursuant to a lease which in the
Opinion of Bond Counsel delivered to the DNRC will not cause the interest on the State Bonds to
be included in gross income for purposes of federal income taxation.
(h) The Borrower shall not change the use or nature of the 2020 Front Street Project if (i)
such change will violate the Clean Water Act, or (ii) so long as the State Bonds are outstanding
unless, in the Opinion of Bond Counsel delivered to the DNRC, such change will not result in the
inclusion in gross income of interest on the State Bonds for federal income tax purposes.
(i) In the event the State Bonds are refunded by bonds which are not State Bonds, all
references in this Supplemental Resolution to State Bonds shall be deemed to refer to such
refunding bonds (together, the “Refunding Bonds”) or, in the case of a crossover refunding, to the
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of
Additional State Bonds, all references in the Resolution to the State Bonds shall be deemed to refer
to such Additional State Bonds or, in the case of a crossover refunding, both the State Bonds and
such Additional State Bonds.
Section 2.5 Maintenance of System; Liens. The Borrower shall maintain the System,
including the 2020 Front Street Project, in good condition and make all necessary renewals,
replacements, additions, betterments and improvements thereto. The Borrower shall not grant or
permit to exist any lien on the 2020 Front Street Project or any other property making up part of
the System, other than liens securing Debt where a parity or senior lien secures the Series 2020D
Bond; provided that this Section 2.5 shall not be deemed to be violated if a mechanic’s or
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contractor’s lien is filed against any such property so long as the Borrower uses its best efforts to
obtain the discharge of such lien and promptly reports to the DNRC the filing of such lien and the
steps it plans to take and does take to discharge of such lien.
Section 2.6 Maintenance of Existence; Merger, Consolidation, Etc.; Disposition of
Assets. The Borrower shall maintain its corporate existence, except that it may consolidate with
or merge into another Governmental Unit or permit one or more Governmental Units to
consolidate with or merge into it or may transfer all or substantially all of its assets to another
Governmental Unit and then dissolve if the surviving, resulting or transferee entity (if other than
the Borrower) (i) is a Public Entity and (ii) assumes in writing all of the obligations of the Borrower
under the Resolution, the Series 2020D Bond and the Collateral Documents, and (a) such action
does not result in any default in the performance or observance of any of the terms, covenants or
agreements of the Borrower under the Resolution, the Series 2020D Bond and the Collateral
Documents, (b) such action does not violate the State Act or the Clean Water Act and does not
adversely affect the exclusion of interest on the Series 2020D Bond or the State Bonds from gross
income for federal income tax purposes and (c) the Borrower delivers to the DNRC on the date of
such action an Opinion of Bond Counsel that such action complies with this Section 2.6.
Other than pursuant to the preceding paragraph, the Borrower shall not transfer the System
or any portion thereof to any other Person, except for property which is obsolete, outmoded, worn
out, is being replaced or otherwise is not needed for the operation of the System, unless the
provisions of (a) and (b) of the preceding paragraph are satisfied and the Borrower delivers to the
DNRC an Opinion of Bond Counsel to that effect and, in addition, the DNRC consents to such
transfer.
ARTICLE III
USE OF PROCEEDS; THE 2020 FRONT STREET PROJECT
Section 3.1 Use of Proceeds. The Borrower shall apply the proceeds of the 2020D Loan
from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the 2020D Loan solely to the financing,
refinancing or reimbursement of costs of the 2020 Front Street Project, to fund deposits to the
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Reserve Account, and to pay costs of issuance of the Series 2020D Bond as set forth in Appendix
A hereto and this Section 3.1. The 2020D Loan will be disbursed in accordance with ARTICLE
IV hereof and Article VII of the Indenture. If the 2020 Front Street Project has not been completed
prior to Closing, the Borrower shall, as quickly as reasonably possible, complete the 2020 Front
Street Project and expend proceeds of the 2020D Loan to pay costs of completing the 2020 Front
Street Project.
(b) No portion of the proceeds of the 2020D Loan shall be used to reimburse the Borrower
for costs paid prior to the date of adoption of this Supplemental Resolution of a Project the
construction or acquisition of which occurred or began earlier than March 7, 1985. In addition, if
any proceeds of the 2020D Loan are to be used to reimburse the Borrower for Project costs paid
prior to the date of adoption of this Supplemental Resolution, the Borrower shall have complied
with Section 1.150-2 of the Regulations in respect of such costs.
(c) Any Debt to be refinanced with proceeds of the 2020D Loan was incurred after March
7, 1985, or with respect to a Project the construction or acquisition of which began after March 7,
1985. No proceeds of the 2020D Loan shall be used for the purpose of refinancing an obligation
the interest on which is exempt from federal income tax or excludable from gross income for
purposes of federal income taxation unless the DNRC has received an Opinion of Bond Counsel,
satisfactory to it, to the effect that such refinancing will not adversely affect the exclusion of
interest on the State Bonds from gross income for purposes of federal income taxation.
Section 3.2 The 2020 Front Street Project. Set forth in Appendix A to this Supplemental
Resolution is a description of the 2020 Front Street Project, which describes the property which
has been or is to be acquired, installed, constructed or improved and the other activities, if any to
be funded from the 2020D Loan (the 2020 Front Street Project may consist of more than one
facility or activity), and an estimated budget relating to the 2020 Front Street Project. The 2020
Front Street Project may be changed and the description thereof in Appendix A may be amended
from time to time by the Borrower but only after delivery to the DNRC of the following:
(a) A certificate of the Borrower setting forth the amendment to Appendix A and stating
the reason therefor, including statements as to whether the amendment would cause an increase or
decrease in the cost of the 2020 Front Street Project or an increase or decrease in the amount of
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proceeds of the 2020D Loan which will be required to complete the 2020 Front Street Project and
whether the change will materially accelerate or delay the construction schedule for the 2020 Front
Street Project;
(b) A written consent to such change in the 2020 Front Street Project by an Authorized
DNRC Officer; and
(c) An Opinion of Bond Counsel stating that the 2020 Front Street Project, as constituted
after such amendment, is, and was at the time the State Bonds were issued, eligible for financing
under the Act and is, and was at the time the Series 2020D Bond were issued, eligible for financing
under the Enabling Act, such amendment will not violate the Act or the Enabling Act and such
amendment will not adversely affect the exclusion of interest on the State Bonds or the Series
2020D Bond from gross income for purposes of federal income taxation. Such an Opinion of
Bond Counsel shall not be required for amendments which do not affect the type of facility to be
constructed or activity to be financed.
The Borrower acknowledges and agrees that an increase in the principal amount of the
2020D Loan may be made only upon an application to the DEQ, the DNRC and the Trustee, in
such form as the DEQ shall specify, which is approved by the DEQ and the DNRC, in their sole
and absolute discretion, and adoption by the governing body of the Borrower of a Supplemental
Resolution authorizing the additional loan and delivery of written certifications by officers of the
Borrower to the DEQ, the DNRC and the Trustee to the effect that all representations and
covenants contained in this Supplemental Resolution as it may be so amended or supplemented
are true as of the date of closing of the additional loan and compliance with applicable tests for the
incurrence of such debt. No assurance can be given that any additional loan funds will be available
under the Program at the time of any such application. The Borrower acknowledges and agrees
that neither the DEQ, the DNRC, the Trustee nor any of their agents, employees or representatives
shall have any liability to the Borrower and have made no representations to the Borrower as to
the sufficiency of the 2020D Loan to pay costs of the 2020 Front Street Project or as to the
availability of additional funds under the Program to increase the principal amount of the 2020D
Loan.
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Section 3.3 2020 Front Street Project Representations and Covenants. The Borrower
hereby represents to and covenants with the DNRC that:
(a) all construction of the 2020 Front Street Project has complied and will comply with all
federal and state standards, including, without limitation, EPA regulations;
(b) all future construction of the 2020 Front Street Project will be done only pursuant to
fixed price construction contracts. The Borrower shall obtain a performance and payment bond
from the contractor for each construction contract in the amount of 100% of the construction price
and ensure that such bond is maintained until construction is completed to the Borrower’s, the
DNRC’s and the DEQ’s satisfaction;
(c) all future construction of the 2020 Front Street Project will be done in accordance with
plans and specifications on file with the DNRC and the DEQ, provided that changes may be made
in such plans and specifications with the written consent of an Authorized DNRC Officer and the
DEQ;
(d) all laborers and mechanics employed by contractors and subcontractors on the 2020
Front Street Project have been and will be paid wages at rates not less than those prevailing on
projects of a character similar in the locality as determined by the United States Secretary of Labor
in accordance with subchapter IV of chapter 31 of title 40, United States Code;
(e) the iron and steel products used in the 2020 Front Street Project comply with the
“American Iron and Steel” requirements of Section 436 of the Consolidated Appropriations Act
of 2014 (P.L. 113-76), as those requirements are further interpreted by applicable EPA guidance;
(f) the 2020 Front Street Project are a project of the type permitted to be financed under
the Enabling Act, the Act and the Program and Title VI of the Clean Water Act; and
(g) the Borrower will undertake the 2020 Front Street Project promptly after the Closing
and will cause the 2020 Front Street Project to be completed as promptly as practicable with all
reasonable dispatch, except only as completion may be delayed by a cause or event not reasonably
within the control of the Borrower; it is estimated by the Borrower that the 2020 Front Street
Project will be substantially completed by the Estimated Completion Date.
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Section 3.4 Completion or Cancellation or Reduction of Costs of the 2020 Front Street
Project.
(a) Upon completion of the 2020 Front Street Project, the Borrower shall deliver to the
DNRC a certificate stating that the 2020 Front Street Project is complete and stating the amount,
if any, of the Undisbursed Committed Amount. If Appendix A describes two or more separate
projects as making up the 2020 Front Street Project, a separate completion certificate shall be
delivered for each.
(b) If all or any portion of the 2020 Front Street Project is cancelled or cut back or its costs
are reduced or for any other reason the Borrower will not require the full Committed Amounts, the
Borrower shall promptly notify the DNRC in writing of such fact and the amount of the
Undisbursed Committed Amount.
ARTICLE IV
THE 2020D LOAN
Section 4.1 The 2020D Loan; Disbursement of 2020D Loan.
(a) The DNRC has agreed to lend to the Borrower, from time to time as the requirements
of this Section 4.1 are met, an amount up to $2,807,000 (the “2020D Committed Amount”) for the
purposes of financing, refinancing or reimbursing the Borrower for a portion of the costs of the
2020 Front Street Project, funding deposits to the Reserve Account, and paying costs of issuance
of the Series 2020D Bond; provided the DNRC shall not be required to disburse any proceeds of
the 2020D Loan to the Borrower after the Estimated Completion Date. The Committed Amount
may be reduced as provided in Section 3.2 and Section 3.4 of this Supplemental Resolution.
(b) The DNRC intends to disburse the 2020D Loan through the Trustee. In consideration
of the issuance of the Series 2020D Bond by the Borrower, the DNRC shall make, or cause the
Trustee to make, a disbursement of all or a portion of the 2020D Loan upon receipt of the following
documents:
(1) an opinion of Bond Counsel as to the validity and enforceability of the Series
2020D Bond and the security therefor and stating in effect that interest on the Series
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2020D Bond is not includable in gross income of the owner thereof for purposes of
federal income taxation, in form and substance satisfactory to the DNRC;
(2) the Series 2020D Bond, fully executed and authenticated;
(3) a certified copy of the Original Resolution and this Supplemental Resolution;
(4) any other security instruments or documents required by the DNRC or DEQ
as a condition to their approval of the 2020D Loan;
(5) if all or part of a Loan is being made to refinance a Project or reimburse the
Borrower for the costs of a Project paid prior to the Closing, evidence, satisfactory to
the DNRC and the Bond Counsel referred to in subparagraph (1) above, (A) that the
acquisition or construction of the Project was begun no earlier than March 7, 1985 or
the debt was incurred no earlier than March 7, 1985, (B) of the Borrower’s title to the
Project, , (C) of costs of such Project and that such costs have been paid by the
Borrower and (D) if such costs were paid before adoption of this Supplemental
Resolution that the Borrower has complied with Section 1.150-2 of the Regulations;
(6) the items required by the Indenture for the portion of the 2020D Loan to be
disbursed at Closing; and
(7) such other certificates, documents and other information as the DNRC, the
DEQ or the Opinion of Bond Counsel referred to in subparagraph (1) may require
(including any necessary arbitrage rebate instructions).
(c) In order to obtain a disbursement of a portion of the 2020D Loan to pay costs of the
2020 Front Street Project, the Borrower shall submit to the DNRC and the Trustee a signed request
for disbursement on the form prescribed by the DNRC, with all attachments required by such form.
The Borrower may obtain disbursements only for costs which have been legally incurred and are
due and payable. All Loan disbursements will be made to the Borrower only upon proof that cost
was incurred.
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(d) The Borrower shall not be entitled to, and the DNRC shall have no obligation to make,
any subsequent advance of any amounts under the 2020D Loan until such time as the Borrower
shall have funded the Reserve Account in an amount then required to satisfy the Reserve
Requirement.
(e) The Borrower shall submit the request for the advance of any amounts under the 2020D
Loan in the form required by the DNRC so that it is received in sufficient time for the DNRC to
process the information by the date desired by the Borrower for the making of the advance.
(f) If all or a portion of the 2020D Loan is made to reimburse a Borrower for Project costs
paid by it prior to Closing, the Borrower shall present at Closing the items required by Section
4.1(b) relating to such costs. The Trustee shall disburse such amounts to the Borrower pursuant
to a disbursement schedule complying with the requirements of the Clean Water Act established
by the DNRC and the Borrower at the Closing.
(g) Notwithstanding anything herein to the contrary, the Trustee shall not be obligated to
disburse the 2020D Loan any faster or to any greater extent than it has available EPA Capitalization
Grants, Bond proceeds and other amounts available therefor in the Revolving Fund. The DNRC
shall not be required to do “overmatching” pursuant to Section 5.04(b) of the Indenture, but may
do so in its discretion. The Borrower acknowledges that if Project costs are incurred faster than
the Borrower projected at Closing, there may be delays in making disbursements of the 2020D
Loan for such costs because of the schedule under which EPA makes EPA Capitalization Grant
money available to the DNRC. The DNRC will use its reasonable best efforts to obtain an
acceleration of such schedule if necessary.
(h) Upon making each 2020D Loan Disbursement, the Trustee shall note such
disbursement on Schedule A to the Series 2020D Bond.
(i) The Borrower agrees that it will deposit in the Reserve Account upon receipt thereof
of any proceeds of the 2020D Loan borrowed for the purpose of increasing the balance in the
Reserve Account to the Reserve Requirement. The Borrower further acknowledges and agrees
that any portions of the 2020D Loan representing capitalized interest shall be advanced only on
Payment Dates and shall be transferred by the Trustee on the Payment Date directly to the Revenue
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Bond Account. The amount of any such transfer shall be a credit against the interest payments
due on the Series 2020D Bond and interest thereon shall accrue only from the date of transfer.
(j) Compliance by the Borrower with its representations, covenants and agreements
contained in the Resolution, including this Supplemental Resolution and the Collateral Documents
shall be a further condition precedent to the disbursement of the 2020D Loan in whole or in part.
The DNRC and the Trustee, in their sole and absolute discretion, may make one or more
disbursements, in whole or in part, notwithstanding such noncompliance, and without liability to
make any subsequent disbursement of the 2020D Loan.
Section 4.2 Commencement of Loan Term. The Borrower’s obligations under this
Supplemental Resolution and the Collateral Documents shall commence on the date hereof unless
otherwise provided in this Supplemental Resolution. However, the obligation to make payments
under Article V hereof shall commence only upon the first disbursement by the Trustee of the
proceeds of the 2020D Loan.
Section 4.3 Termination of Loan Term. The Borrower’s obligations under this
Supplemental Resolution and the Collateral Documents in respect of the Series 2020D Bond shall
terminate upon payment in full of all amounts due under the Series 2020D Bond and this
Supplemental Resolution; provided, however, that the covenants and obligations provided in
Article VI of this Supplemental Resolution shall survive the termination of the Resolution.
Section 4.4 Loan Closing Submissions. On or prior to the Closing, the Borrower will
have delivered to the DNRC and the Trustee the closing submissions required by Section 7.05 of
the Indenture.
ARTICLE V
REPAYMENT OF 2020D LOAN
Section 5.1 Repayment of 2020D Loan. The Borrower shall repay the amounts lent to
it pursuant to Section 4.1 hereof in accordance with this Section 5.1. The 2020D Loan shall bear
interest at the rate of two percent (2.00%) per annum and the Borrower shall pay the Administrative
Expense Surcharge and the Loan Loss Reserve Surcharge on the outstanding principal amount of
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the 2020D Loan, each at the rate of twenty-five hundredths of one percent (0.25%) per annum.
For purposes of this Supplemental Resolution and the Program, with respect to the 2020D Loan,
the term “interest on the 2020D Loan,” when not used in conjunction with a reference to any
surcharges, shall include the Administrative Expense Surcharge and the Loan Loss Reserve
Surcharge. The Borrower shall pay all Loan Repayments, the Administrative Expense Surcharge,
and the Loan Loss Reserve Surcharge in lawful money of the United States of America to the
DNRC. Interest, Administrative Expense Surcharge, and Loan Loss Reserve Surcharge shall be
calculated on the basis of a year of 360 days comprising 12 months of 30 days each.
The Loan Repayments, the Administrative Expense Surcharge, and the Loan Loss Reserve
Surcharge on the 2020D Loan required by this Section 5.1 shall be due on each Payment Date, as
follows:
(1) interest and Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 2020D Loan shall be
payable on each January 1 and July 1, beginning on January 1, 2021 and
concluding on July 1, 2040; and
(2) the principal of the 2020D Loan shall be payable on each Payment Date,
beginning on January 1, 2021 and concluding on July 1, 2040, and the
amount of each principal payment shall be calculated on the basis of a
substantially level debt service at a rate of 2.50% per annum; provided that
principal of the 2020D Loan is payable only in amounts that are multiples
of $1,000.
The payments of principal, interest, Administrative Expense Surcharge and Loan Loss
Reserve Surcharge on the 2020D Loan shall be due on the dates and in the amounts shown in
Schedule B to the Series 2020D Bond, as such Schedule B shall be modified from time to time as
provided below. The portion of each payment consisting of principal, of interest, of Administrative
Expense Surcharge and of Loan Loss Reserve Surcharge shall be set forth in Schedule B to the
Series 2020D Bond. Upon each disbursement of amounts of the 2020D Loan to the Borrower
pursuant to Section 4.1 hereof, the Trustee shall enter or cause to be entered the amount advanced
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on Schedule A to the Series 2020D Bond, under “Advances” and the total amount advanced under
Section 4.1, including such disbursement, under “Total Amount Advanced.”
If the advance was made to pay costs of the 2020D Project pursuant to Section 4.1(c),
interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on such advance
shall accrue from the date the advance is made and shall be payable on each Payment Date
thereafter. Once the completion certificate for the 2020D Project has been delivered to the DNRC,
the Trustee shall revise Schedule B to the Series 2020D Bond in accordance with this Section 5.1
and the Trustee shall send a copy of such Schedule B to the Borrower within one month after
delivery of the completion certificate.
Past-due Loan Repayments and the Administrative Expense Surcharge and the Loan Loss
Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid.
Any payment of principal, interest, Administrative Expense Surcharge and Loan Loss
Reserve Surcharge under this Section 5.1 shall be credited against the same payment obligation
under the Series 2020D Bond.
Section 5.2 Additional Payments. The Borrower shall also pay, within 30 days after
receipt of a bill therefor, from any legally available funds therefor, including proceeds of the
2020D Loan, all reasonable expenses of the DNRC and the Trustee in connection with the 2020D
Loan, the Collateral Documents and the Series 2020D Bond, including, but not limited to:
(a) the cost of reproducing this Supplemental Resolution, the Collateral
Documents and the Series 2020D Bond;
(b) the fees and disbursements of Bond Counsel and other Counsel utilized by
the DNRC and the Trustee in connection with the 2020D Loan, this Supplemental Resolution, the
Collateral Documents and the Series 2020D Bond and the enforcement thereof; and
(c) all taxes and other governmental charges in connection with the execution
and delivery of the Collateral Documents or the Series 2020D Bond, whether or not the Series
2020D Bond are then outstanding, including all recording and filing fees relating to the Collateral
Documents and the pledge of the State’s right, title and interest in and to the Series 2020D Bond,
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the Collateral Documents and this Supplemental Resolution (and with the exceptions noted
therein) and all expenses, including attorneys’ fees, relating to any amendments, waivers, consents
or collection or enforcement proceedings pursuant to the provisions hereof or thereof.
Section 5.3 Prepayments. The Borrower may not prepay all or any part of the
outstanding principal amount of the Series 2020D Bond, unless (i) it obtains the prior written
consent of the DNRC thereto, and (ii) no Loan Repayment or Administrative Expense Surcharge
or Loan Loss Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest, Administrative Expense Surcharge, and
Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the
Series 2020D Bond are prepaid in part pursuant to this Section 5.3, such prepayments shall be
applied to principal payments in inverse order of maturity.
Section 5.4 Obligations of Borrower Unconditional. The obligations of the Borrower
to make the payments required by this Supplemental Resolution and the Series 2020D Bond and
to perform its other agreements contained in this Supplemental Resolution, the Series 2020D Bond
and Collateral Documents shall be absolute and unconditional, except as otherwise provided herein
or in such documents. The Borrower (a) shall not suspend or discontinue any payments provided
for in this Supplemental Resolution and the Series 2020D Bond, (b) shall perform all its other
agreements in this Supplemental Resolution, the Series 2020D Bond and the Collateral Documents
and (c) shall not terminate this Supplemental Resolution, the Series 2020D Bond or the Collateral
Documents for any cause, including any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the 2020 Front Street Project or the System, commercial
frustration of purpose, any dispute with the DNRC or the EPA, any change in the laws of the
United States or of the State or any political subdivision thereof or any failure of the DNRC to
perform any of its agreements, whether express or implied, or any duty, liability or obligation
arising from or connected with this Supplemental Resolution.
Section 5.5 Limited Liability. All payments of principal of and interest on the 2020D
Loan and other payment obligations of the Borrower hereunder and under the Series 2020D Bond
shall be special, limited obligations of the Borrower payable solely out of the Net Revenues, and
shall not, except at the option of the Borrower and as permitted by law, be payable out of any other
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revenues of the Borrower. The obligations of the Borrower under this Supplemental Resolution
and the Series 2020D Bond shall never constitute an indebtedness of the Borrower within the
meaning of any State constitutional provision or statutory or charter limitation and shall never
constitute or give rise to a pecuniary liability of the Borrower or a charge against its general credit
or taxing power. The taxing powers of the Borrower may not be used to pay principal of or interest
on the Series 2020D Bond, no funds or property of the Borrower other than the Net Revenues may
be required to be used to pay principal of or interest on the Series 2020D Bond.
ARTICLE VI
INDEMNIFICATION OF DNRC AND DEQ
The Borrower shall, to the extent permitted by law, indemnify and save harmless the
DNRC and the DEQ and their officers, employees and agents (each an "Indemnified Party" or,
collectively, the “Indemnified Parties") against and from any and all claims, damages, demands,
expenses, liabilities and losses of every kind asserted by or on behalf of any Person arising out of
the acts or omissions of the Borrower or its employees, officers, agents, contractors,
subcontractors, or consultants in connection with or with regard or in any way relating to the
condition, use, possession, conduct, management, planning, design, acquisition, construction,
installation or financing of the 2020 Front Street Project. The Borrower shall, to the extent
permitted by law, also indemnify and save harmless the Indemnified Parties against and from all
costs, reasonable attorneys’ fees, expenses and liabilities incurred in any action or proceeding
brought by reason of any such claim or demand. If any proceeding is brought against an
Indemnified Party by reason of such claim or demand, the Borrower shall, upon notice from an
Indemnified Party, defend such proceeding on behalf of the Indemnified Party.
ARTICLE VII
ASSIGNMENT
Section 7.1 Assignment by Borrower. The Borrower may not assign its rights and
obligations under this Supplemental Resolution or the Series 2020D Bond.
Section 7.2 Assignment by DNRC. The DNRC will pledge its rights under and interest
in this Supplemental Resolution, the Series 2020D Bond and the Collateral Documents (except to
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the extent otherwise provided in the Indenture) as security for the payment of the State Bonds and
may further assign such interests to the extent permitted by the Indenture, without the consent of
the Borrower.
ARTICLE VIII
THE SERIES 2020D BOND
Section 8.1 Net Revenues Available. The Borrower is authorized to charge just and
equitable rates, charges and rentals for all services directly or indirectly furnished by the System,
and to pledge and appropriate to the Series 2010B Bond, the Series 2010C Bond, the Series 2010D
Bond, the Series 2010F Bond, the Series 2010G Bond, the Series 2010H Bond, the Series 2020B
Bond, the Series C Bond, and the Series 2020D Bond the Net Revenues (and in respect of the
Series 2020A Bond, if necessary, the Surplus Net Revenues) to be derived from the operation of
the System, including improvements, betterments or extensions thereof hereafter constructed or
acquired. The Net Revenues to be produced by such rates, charges and rentals during the term of
the Series 2010B Bond, Series 2010C Bond, Series 2010D Bond, Series 2020B Bond, and Series
2020D Bond are expected to be more than sufficient to pay the principal and interest when due on
such Bonds, and to create and maintain reasonable reserves therefor and to provide an adequate
allowance for replacement and depreciation, as prescribed herein.
Section 8.2 Issuance and Sale of the Series 2020D Bond. The Commission has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series 2020D Bond to evidence the 2020D Loan. The
Series 2020D Bond is issued to the DNRC without public sale pursuant to Montana Code
Annotated, Section 7-7-4433.
Section 8.3 Terms. The Series 2020D Bond shall be issued in the maximum principal
amount equal to the original 2020D Committed Amount, shall be issued as a single, fully registered
bond numbered R-1, shall be dated as of the date of delivery to the DNRC, and shall bear interest
at the rate charged by the DNRC on the 2020D Loan. The principal of and interest on the Series
2020D Bond and any Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall
be payable on the same dates and in the same amounts as Loan Repayments are payable. Advances
of principal of the Series 2020D Bond shall be deemed made when advances of the 2020D Loan
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are made under Section 4.1, and such advances shall be payable in accordance with Schedule B to
the Series 2020D Bond, as it may be revised by the DNRC from time to time in accordance with
Section 5.1. The Borrower may prepay the Series 2020D Bond, in whole or in part, only upon the
terms and conditions under which it can prepay the 2020D Loan under Section 5.3.
Section 8.4 Negotiability, Transfer and Registration. The Series 2020D Bond shall be
fully registered as to both principal and interest, and shall be initially registered in the name of and
payable to the DNRC, shall be dated the date of delivery. While so registered, principal of and
interest on the Series 2020D Bond shall be payable to the DNRC at the Office of the Department
of Natural Resources and Conservation, 1539 Eleventh Avenue, Helena, Montana 59620 or such
other place as may be designated by the DNRC in writing and delivered to the Borrower. The
Series 2020D Bond shall be negotiable, subject to the provisions for registration and transfer
contained in this Section 8.4. No transfer of the Series 2020D Bond shall be valid unless and until
(1) the holder, or its duly authorized attorney or legal representative, has executed the form of
assignment appearing on the Series 2020D Bond, and (2) the City Finance Director of the
Borrower, as bond registrar (the “Registrar”), has duly noted the transfer on the Series 2020D
Bond and recorded the transfer on the registration books of the Registrar. The Registrar may, prior
to noting and recording the transfer, require appropriate proof of the transferor’s authority and the
genuineness of the transferor’s signature. The Borrower shall be entitled to deem and treat the
Person in whose name the Series 2020D Bond is registered as the absolute owner of the Series
2020D Bond for all purposes, notwithstanding any notice to the contrary, and all payments to the
registered holder shall be valid and effectual to satisfy and discharge the Borrower’s liability upon
such Bond to the extent of the sum or sums so paid.
Section 8.5 Execution and Delivery. The Series 2020D Bond shall be executed on
behalf of the Borrower by the manual signatures of the Mayor, the City Manager, and the City
Clerk. Any or all of such signatures may be affixed at or prior to the date of delivery of the Series
2020D Bond. In the event that any of the officers who shall have signed the Series 2020D Bond
shall cease to be officers of the Borrower before the Series 2020D Bond are issued or delivered,
their signatures shall remain binding upon the Borrower. Conversely, the Series 2020D Bond may
be signed by an authorized official who did not hold such office on the date of adoption of this
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Supplemental Resolution. The Series 2020D Bond shall be delivered to the DNRC, or its attorney
or legal representative.
Section 8.6 Form. The Series 2020D Bond shall be prepared in substantially the form
attached as Appendix B.
ARTICLE IX
SECURITY FOR THE SERIES 2020D BOND
The Series 2020D is issued as an additional Bond under Section 10.3 of the Original
Resolution, as amended hereby, and shall, with the Series 2010B Bond, the Series 2010C Bond,
the Series 2010D Bond, the Series 2010F Bond, the Series 2010G Bond, the Series 2010H Bond,
the Series 2020B Bond, and any other additional Bonds issued under the provisions of Article X
of the Original Resolution (including the Series C Bond), excluding Section 10.4 thereof, be
equally and ratably secured by the provisions of the Resolution and payable out of the Net
Revenues appropriated to the Revenue Bond Account of the Sewer System Fund, without
preference or priority, all as provided in the Resolution, and secured by the Reserve Account, as
further provided in Section 11.5 of the Original Resolution and in the following sentence. Upon
each advance of principal of the Series 2020D Bond, the City Finance Director of the Borrower
shall transfer from proceeds of the Series 2020D Bond such amount or amounts to the Reserve
Account to cause the balance therein to equal the Reserve Requirement, treating such principal
amount as outstanding. Upon each advance of the Series 2020D Bond, the deposit to the Reserve
Account shall be sufficient to cause the balance in the Reserve Account to equal the Reserve
Requirement in respect of the Series 2010B Bond, the Series 2010C Bond, the Series 2010D Bond,
the Series 2010F Bond, the Series 2010G Bond, the Series 2010H Bond, the principal of the Series
2020B Bond so advanced, and the principal of the Series 2020D Bond so advanced. No payment
of principal or interest shall be made on any Subordinate Obligation if the Borrower is then in
default in the payment of principal of or interest on any Bond or if there is a deficiency in the
Operating Account or the Revenue Bond Account or the balance in the Reserve Account is less
than the Reserve Requirement. The Borrower shall keep, perform and observe each and every one
of its covenants and undertakings set forth in the Resolution for the benefit of the registered holders
from time to time of the Series 2020D Bond.
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ARTICLE X
TAX MATTERS
Section 10.1 Use of Project and System. The 2020 Front Street Project and the System
will be owned and operated by the Borrower and available for use by members of the general
public on a substantially equal basis. The Borrower shall not enter into any lease, use or other
agreement with any non-governmental person relating to the use of the 2020 Front Street Project
or the System or security for the payment of the Series 2020D Bond which might cause the Series
2020D Bond, or any one of them, to be considered a “private activity bond” or “private loan bond”
within the meaning of Section 141 of the Code.
Section 10.2 General Covenant. The Borrower covenants and agrees with the owners
from time to time of the Series 2020D Bond that it will not take or permit to be taken by any of its
officers, employees or agents any action which would cause the interest on the Series 2020D Bond
to become includable in gross income for federal income tax purposes under the Code and the
Regulations, and covenants to take any and all actions within its powers to ensure that the interest
on the Series 2020D Bond will not become includable in gross income for federal income tax
purposes under the Code and the Regulations.
Section 10.3 Arbitrage Certification. The Mayor, the City Manager, and the City Finance
Director are authorized and directed to execute and deliver to the DNRC a certificate in accordance
with the provisions of Section 148 of the Code, and Section 1.148-2(b) of the Regulations, stating
that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery
of the Series 2020D Bond, it is reasonably expected that the proceeds of the Series 2020D Bond
will be used in a manner that would not cause the Series 2020D Bond to be an “arbitrage bond”
within the meaning of Section 148 of the Code and the Regulations.
Section 10.4 Arbitrage Rebate. The Borrower acknowledges that the Series 2020D Bond
is subject to the rebate requirements of Section 148(f) of the Code. The Borrower covenants and
agrees to retain such records, make such determinations, file such reports and documents and pay
such amounts at such times as are required under said Section 148(f) and applicable Treasury
Regulations to preserve the exclusion of interest on the Series 2020D Bond from gross income for
federal income tax purposes, unless the Series 2020D Bond qualifies for the exception from the
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rebate requirement under Section 148(f)(4)(B) of the Code and no “gross proceeds” of the Series
2020D Bond (other than amounts constituting a “bona fide debt service fund”) arise during or after
the expenditure of the original proceeds thereof. In furtherance of the foregoing, the Mayor, the
City Manager, and the City Finance Director are hereby authorized and directed to execute a
Rebate Certificate, substantially in the form to be prepared by Bond Counsel, and the Borrower
hereby covenants and agrees to observe and perform the covenants and agreements contained
therein, unless amended or terminated in accordance with the provisions thereof.
Section 10.5 Information Reporting. The Borrower shall file with the Secretary of the
Treasury, not later than November 15, 2020, a statement concerning the Series 2020D Bond
containing the information required by Section 149(e) of the Code.
ARTICLE XI CONTINUING DISCLOSURE
The Borrower understands and acknowledges that the DNRC is acquiring the Series 2020D
Bond under the Program pursuant to which the State issues from time to time State Bonds to
provide funds therefor. The Borrower covenants and agrees that, upon written request of the
DNRC from time to time, the Borrower will promptly provide to the DNRC all information that
the DNRC reasonably determines to be necessary or appropriate to offer and sell State Bonds or
to provide continuing disclosure in respect of State Bonds, whether under Rule 15c2-12 (17 C.F.R.
§ 240.15c2-12) promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, or otherwise. Such information shall include, among other
things and if so requested, financial statements of the Borrower prepared in accordance with
generally accepted accounting principles promulgated by the Financial Accounting Standards
Board as modified in accordance with the governmental accounting standards promulgated by the
Governmental Accounting Standards Board or as otherwise provided under Montana law, as in
effect from time to time (such financial statements to relate to a fiscal year or any period therein
for which they are customarily prepared by the Borrower, and, if for a fiscal year and so requested
by the DNRC, subject to an audit report and opinion of an accountant or government auditor, as
permitted or required by the laws of the State). The Borrower will also provide, with any
information so furnished to the DNRC, a certificate of the City Manager and the City Finance
Director of the Borrower to the effect that, to the best of their knowledge, such information does
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not include any untrue statement of a material fact or omit to state any material fact required to be
stated therein to make the statements made, in light of the circumstances under which they are
made, not misleading.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. All notices or other communications hereunder shall be
sufficiently sent or given and shall be deemed sent or given when delivered or mailed by certified
mail, postage prepaid, to the parties at the following addresses:
DNRC: Department of Natural Resources and Conservation 1539 Eleventh Avenue
P. O. Box 201601
Helena, Montana 59620-1601 Attn: Conservation and Resource Development Division
Trustee: U.S. Bank National Association
c/o Corporate Trust Services
1420 Fifth Avenue, 7th Floor Seattle, Washington 98101
Borrower: City of Bozeman P.O. Box 1230
Bozeman, Montana 59771-1230
Attn: City Finance Director
Any of the above parties may, by notice in writing given to the others, designate any further
or different addresses to which subsequent notices or other communications shall be sent.
Section 12.2 Binding Effect. This Supplemental Resolution shall inure to the benefit of
and shall be binding upon the DNRC, the Borrower and their respective permitted successors and
assigns.
Section 12.3 Severability. If any provision of this Supplemental Resolution shall be
determined to be unenforceable at any time, it shall not affect any other provision of the Resolution
or the enforceability of that provision at any other time.
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Section 12.4 Amendments. This Supplemental Resolution may not be effectively
amended without the written consent of the DNRC.
Section 12.5 Applicable Law. This Supplemental Resolution shall be governed by and
construed in accordance with the laws of the State.
Section 12.6 Captions; References to Sections. The captions in this Supplemental
Resolution are for convenience only and do not define or limit the scope or intent of any provisions
or Sections of this Supplemental Resolution. References to Articles and Sections are to the Articles
and Sections of this Supplemental Resolution, unless the context otherwise requires.
Section 12.7 No Liability of Individual Officers, Directors, Trustees, or Commissioners.
No recourse under or upon any obligation, covenant or agreement contained in this Supplemental
Resolution shall be had against any director, officer or employee, as such, past, present or future,
of the DNRC, the DEQ or the Trustee, either directly or through the DNRC, the DEQ or the
Trustee, or against any officer, or member of the governing body or employee of the Borrower,
past, present or future, as an individual so long as such individual was acting in good faith. Any
and all personal liability of every nature, whether at common law or in equity, or by statute or by
constitution or otherwise, of any such officer or member of the governing body or employee of the
DNRC, the Trustee or the Borrower is hereby expressly waived and released by the Borrower and
by the DNRC as a condition of and in consideration for the adoption of this Supplemental
Resolution and the making of the Loan.
Section 12.8 Payments Due on Holidays. If the date for making any payment or the last
date for performance of any act or the exercise of any right, as provided in this Supplemental
Resolution or the Series 2020D Bond, shall not be a Business Day, such payments may be made
or act performed or right exercised on the next succeeding Business Day with the same force and
effect as if done on the nominal date provided in this Supplemental Resolution or the Series 2020D
Bond.
Section 12.9 Right of Others to Perform Borrower’s Covenants. In the event the
Borrower shall fail to make any payment or perform any act required to be performed hereunder,
then and in each such case the DNRC or the provider of any Collateral Document may (but shall
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41
not be obligated to) remedy such default for the account of the Borrower and make advances for
that purpose. No such performance or advance shall operate to release the Borrower from any
such default and any sums so advanced by the DNRC or the provider of any Collateral Document
shall be paid immediately to the party making such advance and shall bear interest at the rate of
ten percent (10.00%) per annum from the date of the advance until repaid. The DNRC and the
provider of any Collateral Document shall have the right to enter the 2020 Front Street Project or
the facility or facilities of which the 2020 Front Street Project is a part or any other facility which
is a part of the System in order to effectuate the purposes of this Section.
Section 12.10 Authentication of Transcript. The officers of the Borrower are hereby
authorized and directed to furnish to the DNRC and to Bond Counsel certified copies of all
proceedings relating to the issuance of the Series 2020D Bond and such other certificates and
affidavits as may be required to show the right, power and authority of the Borrower to issue the
Series 2020D Bond, and all statements contained in and shown by such instruments, including any
heretofore furnished, shall constitute representations of the Borrower as to the truth of the
statements of fact purported to be shown thereby.
Section 12.11 Repeals and Effective Date.
(a) Repeal. All provisions of other resolutions and other actions and proceedings of
the Borrower and this Council that are in any way inconsistent with the terms and provisions of
this Supplemental Resolution are repealed, amended and rescinded to the full extent necessary to
give full force and effect to the provisions of this Supplemental Resolution.
(b) Effective Date. This Supplemental Resolution shall take effect immediately.
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PASSED, ADOPTED, AND APPROVED by the City Commission of the City of
Bozeman, Montana, at a regular session thereof held on the 15th day of June, 2020.
CHRIS MEHL Mayor
ATTEST:
MICHAEL MAAS City Clerk
APPROVED AS TO FORM:
GREG SULLIVAN City Attorney
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APPENDIX A
DESCRIPTION OF THE 2020 FRONT STREET PROJECT
The 2020 Front Street Project generally consists of installation of sewer pipe in conjunction with
wastewater interceptor development to increase the capacity of the trunk sewer and allow for infill and
new development along East Main Street and Haggerty Lane and at Bozeman Deaconess Hospital and lands to the south, and related improvements.
ESTIMATED 2020 FRONT STREET PROJECT BUDGET
Source: 2020D Loan Source: Local City Total:
Debt Service Reserve $ 89,257 - $ 89,257
Bond Counsel & Related costs 20,000 - 20,000
Engineering-Basic Services 100,000 - 100,000
Engineering-Resident Project 100,000 - 100,000
Construction 2,188,576 $940,000 3,128,576
Contingency 309,167 - 309,167
TOTAL PROJECT COSTS $2,807,000 $940,000 $3,747,000
A-1
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B-1
APPENDIX B
[Form of the Series 2020D Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
SEWER SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM)
SERIES 2020D
R-1 $2,087,000
FOR VALUE RECEIVED, CITY OF BOZEMAN, MONTANA (the “Borrower”), a duly organized municipal corporation and political subdivision of the State of Montana, acknowledges itself to be specially indebted and, for value received, hereby promises to pay to the
Department of Natural Resources and Conservation of the State of Montana (the “DNRC”), or its
registered assigns, solely from the Revenue Bond Account of its Sewer System Fund, the principal sum equal to the sum of the amounts entered on Schedule A attached hereto under “Total Amount Advanced,” with interest on each such amount from the date such amount is advanced hereunder at the rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the
Borrower shall pay, solely from the Revenue Bond Account, an Administrative Expense Surcharge
and a Loan Loss Reserve Surcharge on the outstanding principal amount of this Bond each at the rate of twenty-five hundredths of one percent (0.25%) per annum. Principal, interest, Administrative Expense Surcharge, and Loan Loss Reserve Surcharge shall be payable in semiannual installments payable on each January 1 and July 1 (each a “Loan Repayment Date”)
commencing January 1, 2021 and concluding on July 1, 2040. Principal shall be payable on the
dates set forth in Schedule B hereto. Each installment shall be in the amount set forth opposite its due date in Schedule B attached hereto under “Total Loan Payment.” The portion of each such payment consisting of principal, of interest, of Administrative Expense Surcharge, and of Loan Loss Reserve Surcharge shall be as set forth in Schedule B hereto. Upon each disbursement of
2020D Loan amounts to the Borrower pursuant to the Resolution described below, the DNRC shall enter (or cause to be entered) the amount advanced on Schedule A under “Advances” and the total amount advanced under the Resolution (as hereinafter defined), including such disbursement, under “Total Amount Advanced.” The DNRC shall prepare Schedule B and any revised Schedule B, or cause Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of
the Resolution. Schedule B shall be calculated and recalculated on a level debt service basis assuming an interest rate of 2.50% per annum. Past-due payments of principal and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest and Administrative Expense Surcharge
and Loan Loss Reserve Surcharge shall be calculated on the basis of a 360-day year comprising
12 months of 30 days each. All payments under this Bond shall be made to the registered holder
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B-2
of this Bond, at its address as it appears on the Bond register, in lawful money of the United States of America.
This Bond is one of an issue of Sewer System Revenue Bonds of the Borrower
authorized to be issued in one or more series from time to time, and constitutes a series in the
maximum authorized principal amount of $2,807,000 (the “Series 2020D Bond”). The Series 2020D Bond is issued to finance a portion of the costs of the construction of certain improvements to the sewer system of the Borrower (the “System”), to fund deposits to the Reserve Account, and to pay costs of issuance of the Series 2020D Bond. The Series 2020D Bond is issued pursuant to
and in full conformity with the Constitution and laws of the State of Montana thereunto enabling,
including Montana Code Annotated, Title 7, Chapter 7, Part 44, as amended, and ordinances and resolutions duly adopted by the governing body of the Borrower, including Resolution No. 4220 of the Borrower adopted on November 16, 2009 (the “Original Resolution”), as amended and supplemented by Resolution Nos. 4234, 4245, 4254, 4299, 4462, , and , adopted on
January 19, 2010, February 16, 2010, May 3, 2010, November 1, 2010, August 5, 2013, June 15, 2020, and June 15, 2020, respectively (the Original Resolution, as so amended and supplemented, the “Resolution”). Terms used with initial capital letters but not defined herein have the meanings given to them in the Resolution. The Series 2020D Bond is issuable only as a single, fully
registered bond. The Series 2020D Bond is issued on a parity with the Borrower’s Sewer System
Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010B, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010C, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010D,
its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control
State Revolving Loan Program), Series 2010F, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010G, its First Amended and Restated Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2010H, and its Sewer System Revenue Bond (DNRC
Water Pollution Control State Revolving Loan Program), Series 2020B (collectively the
“Outstanding Bonds”).
Reference is made to the Resolution for a more complete statement of the terms and conditions upon which the Series 2020D Bond has been issued, the Net Revenues of the System pledged and appropriated for the payment and security thereof, the conditions upon which
additional Bonds may be issued under the Resolution and made payable from such Net Revenues
on a parity with the Outstanding Bonds (collectively with the Series 2020D Bond, the “Bonds”) or otherwise, the conditions upon which the Resolution may be amended, the rights, duties and obligations of the Borrower, and the rights of the owners of the Series 2020D Bond.
The Borrower may prepay the principal of the Series 2020D Bond only if (i) it
obtains the prior written consent of the DNRC thereto, and (ii) no Loan Repayment or
Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC must be accompanied by payment of accrued interest, and Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the Series 2020D Bond is prepaid in part, such prepayments
shall be applied to principal payments in inverse order of maturity.
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The Series 2020D Bond, including interest and premium, if any, is payable solely from the Net Revenues pledged for the payment thereof and does not constitute a debt of the Borrower within the meaning of any constitutional or statutory limitation or provision.
The Borrower may deem and treat the person in whose name this Series 2020D
Bond is registered as the absolute owner hereof, whether this Series 2020D Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and the Borrower shall not be affected by any notice to the contrary. The Series 2020D Bond may be transferred as hereinafter provided.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that
the Borrower will prescribe and collect reasonable rates and charges for all services and facilities afforded by the System, including all additions thereto and replacements and improvements thereof, and has created a special Sewer System Fund into which the gross revenues of the System will be paid, and a separate and special Revenue Bond Account in that Sewer System Fund, into
which will be paid each month, from and as a first and prior lien on the Net Revenues then on hand, an amount equal to not less than the sum of one-sixth of the interest to become due within the next six months and one-twelfth of the principal to become due within the next twelve months with respect to all Bonds payable semiannually from the Revenue Bond Account; that the
Borrower has created a Reserve Account in the Sewer System Fund into which shall be paid
additional Net Revenues, after required credits to the Revenue Bond Account, sufficient to establish and maintain a reserve therein equal to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account will be used only to pay the principal of, premium, if any, and interest on the Outstanding Bonds, the Series 2020D Bond, and any additional Bonds
issued pursuant to the Resolution on a parity therewith; that the rates and charges for the System
will from time to time be made and kept sufficient, to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the System and to produce in each fiscal year Net Revenues equal to at least 110% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year; that
additional Bonds may be issued and made payable from the Revenue Bond Account on a parity
with the Outstanding Bonds, the Series 2020D Bond, and other Bonds, upon certain conditions set forth in the Resolution, but no obligation will be otherwise incurred and made payable from the Net Revenues of the System, unless the lien thereof shall be expressly made subordinate to the lien of the Outstanding Bonds, the Series 2020D Bond, and additional Bonds on such Net Revenues
and such obligations are payable only from Surplus Net Revenues; that all provisions for the
security of the holder of this Series 2020D Bond set forth in the Resolution will be punctually and faithfully performed as therein stipulated; that all acts, conditions and things required by the Constitution and laws of the State of Montana and the ordinances and resolutions of the Borrower to be done, to exist, to happen and to be performed in order to make this Series 2020D Bond a
valid and binding special obligation of the Borrower according to its terms have been done, do
exist, have happened and have been performed as so required; and that this Series 2020D Bond and the interest hereon are payable solely from the Net Revenues of the System pledged and appropriated to the Revenue Bond Account and do not constitute a debt of the Borrower within the meaning of any constitutional or statutory limitation or provision and the issuance of the Series
2020D Bond does not cause either the general or the special indebtedness of the Borrower to
exceed any constitutional or statutory limitation.
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IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing body, has caused this Bond to be executed by the signatures of the Mayor, the City Manager, and the City Clerk, and has caused the official seal of the Borrower to be affixed hereto, and has caused
this Bond to be dated as of the day of , 2020.
Mayor (Seal)
City Manager
City Clerk
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REGISTRATION AND TRANSFER
This Bond shall be fully registered as to both principal and interest. No transfer of this Bond shall be valid unless and until (1) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the form of assignment appearing on this Bond, and (2)
the City Finance Director as bond registrar (the “Registrar”), has duly noted the transfer on the Bond and recorded the transfer on the Registrar’s registration books. The Borrower shall be entitled to deem and treat the person in whose name this Bond is registered as absolute owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Bond shall be made only to the order of the registered holder thereof, and all such payments shall
be valid and effectual to satisfy and discharge the Borrower’s liability upon the Bond to the extent of the sum or sums so paid.
REGISTER
The ownership of the outstanding principal balance of this Bond and the interest accruing
thereon is registered on the books of the City of Bozeman, Montana in the name of the registered holder appearing on the first page hereof or as last noted below:
Date of Name and Address Signature of Registration of Registered Holder City Finance Director
, 2020 Department of Natural
Resources and Conservation 1539 Eleventh Avenue Helena, MT 59620
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Finance Director of the City, acting as Bond Registrar, has transferred, on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued interest on this Bond to the new registered holder noted next to such date, except for amounts of principal and interest theretofore paid.
Date of Transfer
Name of New Registered Holder Signature of Bond Registrar
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FORM OF ASSIGNMENT
For value received, this Bond is hereby transferred and assigned by the undersigned holder, without recourse,
to on this day
of , .
By: (Authorized Signature)
For:
(Holder)
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SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount
Date Advances Advanced Notation Made By
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SCHEDULE B
Loan Loss Administrative Reserve Total Loan Date Principal Interest Expense Surcharge Surcharge Payment
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APPENDIX C
ADDITIONAL AGREEMENTS, REPRESENTATIONS AND COVENANTS NONE
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CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
I, the undersigned, being the duly qualified and acting recording officer of the City of
Bozeman, Montana (the “City”), hereby certify that the attached resolution is a true copy of
Resolution No. , entitled: “RESOLUTION RELATING TO $2,807,000 SEWER
SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE
REVOLVING LOAN PROGRAM), SERIES 2020D; AUTHORIZING THE ISSUANCE
AND FIXING THE TERMS AND CONDITIONS THEREOF” (the “Resolution”), on file in
the original records of the City in my legal custody; that the Resolution was duly adopted by the
City Commission of the City at its regular meeting on June 15, 2020, and that the meeting was
duly held by the City Commission and was attended throughout by a quorum, pursuant to call
and notice of such meeting given as required by law; and that the Resolution has not as of the
date hereof been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said meeting, the
following Commissioners voted in favor thereof:
; voted against the same:
; abstained from voting thereon: ; or were
absent: .
WITNESS my hand officially this day of June, 2020.
MICHAEL MAAS City Clerk
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