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HomeMy WebLinkAboutResolution 3780 Authorize bond sale for SIDs 675, 676, 677, 678 --.--..----.-.- COMMISSION RESOLUTION NO. 3780 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RELATING TO $3,001,000 POOLED SPECIAL IMPROVEMENT DISTRICT BONDS, SERIES 2005 (SPECIAL IMPROVEMENT DISTRICT NOS. 675, 676,677, AND 678); AUTHORIZING THE ISSUANCE AND CALLING FOR THE PUBLIC SALE THEREOF. BE IT RESOLVED by the City Commission (the "Commission") of the City of Bozeman, Montana (the "City"), as follows: Section 1. Recitals. (a) This Commission has duly and validly created and established in the City under Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended (the "Act"), special improvement districts, designated as Special Improvement District Nos. 675 ("District No. 675"), 676 ("District No. 676"), 677 ("District No. 677"), and 678 ("District No. 678") (collectively, the "Districts"), for the purpose of financing costs of certain public improvements of special benefit to the properties within the Districts (the "Improvements") and paying costs incidental thereto, including costs associated with the sale and the security of special improvement district bonds of the City drawn on the Districts (the "Bonds"), the creation and administration of the Districts, and the funding of a deposit to the City's Special Improvement District Revolving Fund (the "Revolving Fund"). The total estimated costs of the Improvements, including such incidental costs, to be financed by the Districts is $3,001,000. The costs of the Improvements are to be paid from the proceeds of the Bonds, which are to be payable primarily from special assessments to be levied against property in the Districts, which property will be specially benefited by the Improvements in an amount not less than $3,001,000. (b) It is necessary that Bonds be issued and sold in an aggregate principal amount of $3,001,000 to finance the costs of the Improvements within each of the Districts, including incidental costs, described in Subsection (a). The costs of the Improvements are currently estimated, as follows: District No. 675 Construction $1,252,244 Engineering 292,413 Developer Contribution - 400,000 Subtotal $1,144,657 City Administration Cost 40,830 Revolving Fund Deposit 68,050 Costs of Issuance 11,845 Bond Discount 27,220 Reserve Account 68,050 Miscellaneous 348 Total $1,361,000 _._._ _.."'..__.._____..________.___..___.____..__n._..____....___.__.._.__.... _ _...._....__ .._ ..__n..._.___ .-...-.----.......--- District No. 676 Construction $1,755,171 Engineering 467,826 Developer Contribution -1.055.654 Subtotal $ 1,067,343 City Administration Cost 38,280 Revolving Fund Deposit 63,800 Costs of Issuance 17,046 Bond Discount 25,520 Reserve Account 63,800 Miscellaneous 211 Total $ 1,276,000 District No. 677 Construction $ 157,793 Engineering 36,847 Developer Contribution - 100.000 Subtotal $ 94,640 City Administration Cost 3,420 Revolving Fund Deposit 5,700 Costs of Issuance 1 ,492 Bond Discount 2,280 Reserve Account 5,700 Miscellaneous 768 Total $ 114,000 District No. 678 Construction $ 170,932 Engineering 39,914 Developer Contribution 0 Subtotal $ 210,846 City Administration Cost 7,500 Revolving Fund Deposit 12,500 Costs of Issuance 1,617 Bond Discount 5,000 Reserve Account 12,500 Miscellaneous 37 Total $ 250,000 (c) The City is authorized pursuant to Montana Code Annotated, Section 7-12-4193, to issue and sell special improvement district bonds of more than one district in a single offering on a pooled basis upon a determination that such pooling is in the best interests of the Districts and the City. (d) The City is further authorized by Montana Code Annotated, Section 7-12-4204(1) to sell the Bonds at a price less than the principal amount thereof, but including interest thereon to the date of delivery, if this Commission determines that such sale is in the best interests of the Districts and the City. - 2 - Section 2. Determinations of Public Interest in Allowing Bond Discount and Permittina Poolina of Bonds. Pursuant to the authority described in Section 1, this Commission hereby determines that the issuance and sale of the Bonds in a pooled single offering for the following Special Improvement Districts in the respective principal amounts set forth below: District No. Principal Amount 675 $1,361,000 676 $1,276,000 677 $ 114,000 678 $ 250,000 is in the best interest of each of the Districts and the City and will facilitate the sale of the Bonds because the size of the issue will attract more interest in the marketplace and thus help to lower interest rates on the Bonds and because a single issue will reduce the costs of issuance. This Commission further determines to fix the minimum price for the Bonds at $2,952,984.00 (98.40% of par), plus interest accrued thereon to the date of delivery. Such minimum bid will enable bidders to bid more efficiently for the Bonds by permitting them to submit their bids based on actual market conditions without adjusting the interest rates thereon to provide compensation for their purchase of the Bonds. This procedure will facilitate the sale of the Bonds at the lowest interest rates, which is in the best interests of each of the Districts and the City. Section 3. Findinas and Determination To Pledge the Revolvina Fund. In the Resolutions of Intention To Create Special Improvement District Nos. 675, 676, 677, and 678, adopted on April 19, 2004, this Commission found it to be in the public interest, and in the best interest of the City and the Districts, to secure payment of principal of and interest on the Bonds by the Revolving Fund and a Reserve for each District and authorized the City to enter into the undertakings and agreements authorized in the Act in respect of the Bonds, based on the factors required to be considered under Section 7 -12-4225( 4) of the Act. Those findings and determinations were ratified and confirmed in the resolutions creating Special Improvement District Nos. 675, 676, 677, and 678, adopted by this Commission on October 11,2004, and are hereby ratified and confirmed. It is hereby covenanted and recited that the City has the power under the Act to pledge the Revolving Fund to payment of the principal of and interest on the Bonds. Section 4. Terms of the Bonds. This Commission hereby authorizes the issuance and sale of Pooled Special Improvement District Bonds, Series 2005 (Special Improvement District Nos. 675, 676, 677, and 678) of the City in the aggregate principal amount of $3,001 ,000 (the "Bonds") for the purpose of financing the Improvements. The Bonds shall be dated, as originally issued, as of April 15, 2005, and shall bear interest payable semiannually on January 1 and July 1 of each year, commencing January 1, 2006, at a rate or rates designated by the successful bidder at public sale and approved by this Commission. The Bonds shall be issued as serial bonds and shall mature, subject to prior redemption, on July 1 in each of the following years and amounts: - 3 - Year Amount Year Amount 2006 156,000 2016 160,000 2007 155,000 2017 160,000 2008 160,000 2018 160,000 2009 160,000 2019 155,000 2010 160,000 2020 155,000 2011 160,000 2021 155,000 2012 160,000 2022 155,000 2013 160,000 2023 155,000 2014 160,000 2024 155,000 2015 160,000 The Bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities, except that one bond maturing in 2006 shall be in the principal amount of $6,000. Bonds are callable on any date from unused proceeds of the Bonds remaining after completion of the Project or from prepaid assessments. The Bonds may not be prepaid from the proceeds of refunding bonds prior to January 1, 2012. The Bonds maturing January 1, 2013 and thereafter shall be subject to optional redemption by the City on January 1 , 2012 and any date thereafter. Notice of redemption must be mailed by first-class mail to the registered owner of each Bond to be redeemed at least 30 days before the redemption date. The Bonds shall be issuable only as fully registered bonds and shall be executed by the manual or facsimile signatures of the Mayor, the City Manager, and the Clerk of the Commission. The Bonds shall be secured by the Revolving Fund. Section 5. Public Sale. The Bonds shall be sold at a public competitive sale which is hereby called and shall be held at a regular meeting of this Commission on April 4, 2005, at 7:00 p.m., M.T. The City will receive sealed bids for the Bonds or bids for the purchase of the Bonds by electronic transmission through ParityTM, in either case on or before April 4, 2005, at 11 :00 a.m., Mountain Time. The Clerk of the Commission is authorized and directed to cause notice of the sale to be published, as required by Montana Code Annotated, Sections 7-12-4204, 7-7-4252 and 17-5-106, in the Bozeman Daily Chronicle once each week for two successive weeks preceding the week which contains the date of sale. The notice of sale shall be pUblished and mailed in substantially the form set forth as Exhibit A to this resolution and this Commission hereby adopts the terms and conditions set forth in such notice of sale as the terms and conditions of the sale of the Bonds. Section 6. Continuina Disclosure. In order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"), the City will covenant and agree, for the benefit of the registered holders and beneficial owners from time to time of the outstanding Bonds, in the resolution prescribing the terms of the Bonds, to provide annual reports of specified information and notice of the occurrence of certain events, if material. The City is the only "obligated person" in respect of the Bonds within the meaning -4- -.. ...--....., .----..----- -----,,- of the Rule for the purposes of disclosing information on an ongoing basis. A description of the undertaking is set forth in the Official Statement. Failure of the City to enter into an undertaking substantially similar to that described in the Official Statement would relieve the successful bidder of its obligation to purchase the Bonds. Section 7. Official Statement. The Director of Finance of the City and other officers of the City in cooperation with D.A. Davidson & Co., of Great Falls, Montana, financial consultant to the City, are hereby authorized and directed to prepare on behalf of the City an official statement to be distributed to potential purchasers of the Bonds. Such official statement shall contain the terms and conditions of sale set forth in the notice of sale referred to in Section 5 and such other information as shall be advisable and necessary to describe accurately the City and the security for, and terms and conditions of, the Bonds. PASSED AND ADOPTED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 7th day of March 2005. ~o::YOr ATTEST: ~/~ ROBIN L. SULLIVAN Clerk of the Commission APPROVED AS TO FORM: ~ ~ f( /, .. ~~ t:. TIMOTHY A. otR. , Acting City Attorney - 5 - .. ...--.----..- EXHIBIT A NOTICE OF BOND SALE $3,001,000 Pooled Special Improvement District Bonds, Series 2005 (Special Improvement District Nos. 675, 676, 677, and 678) CITY OF BOZEMAN, MONTANA NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana (the "City"), will sell to the highest and best bidder for cash, as evidenced by sealed bids or bids transmitted through ParityTM, the above- described Bonds drawn against the funds of the following special improvement districts in the respective principal amounts set forth below: District No. Princieal Amount 675 $1,361,000 676 $1,276,000 677 $ 114,000 678 $ 250,000 Sealed bids for the purchase of the Bonds will be received at the office of the Clerk of the Commission at 411 E. Main Street, Bozeman, Montana, or bids for the purchase of the Bonds will be received by the City by electronic transmission through ParityTM, in either case, until 12:00 a.m., M.T., on Monday, April 4, 2005, at which time the bids will be opened and tabulated. The City Commission of the City will meet at its regular meeting at 7:00 p.m. on the same day in the Commission Room at City Hall, Bozeman, Montana, to consider the bids and to award the sale of the Bonds to the responsive bidder whose bid reflects the lowest true interest cost (TIC). PUrDose and Securitv The Bonds will be issued for the purpose of financing the cost of construction of certain local improvements (the "Improvements") within or for the benefit of Special Improvement District Nos. 675, 676, 677, and 678 (collectively, the "Districts"), in accordance with the provisions of Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended. The Bonds will be special, limited obligations of the City and do not constitute general obligations of the City. The Bonds are payable primarily from the collection of a special assessment which is a lien against the assessable real property within the respective Districts benefited by the Improvements to be undertaken therein or therefor. The special assessments are payable in semiannual installments over a term not exceeding 19 years, each in substantially equal semiannual installments of principal and interest over a period of 19 years, at an annual rate equal to the sum of (i) the average rate of interest borne by the then outstanding Bonds, plus (ii) one-half of one percent (0.50%) per annum. The Bonds are further secured by the Special Improvement District Revolving Fund of the City (the "Revolving Fund") and the City will agree to make a loan from the Revolving Fund to the Sinking Fund established for the Districts to make good any deficiency then existing in the principal and interest subaccounts therein after exhaustion of amounts available in the District Reserve established for each District, and to provide funds for the Revolving Fund by levying a tax or making a loan from the City's general fund to the extent authorized by law. Date and Tvee The Bonds will be dated, as originally issued, as of April 15, 2005, and will be issued as negotiable investment securities in registered form as to both principal and interest. Maturities and Redemetion The Bonds shall mature, subject to redemption, on July 1 in the following years and amounts: A-1 Year Amount Year Amount 2006 156,000 2016 160,000 2007 155,000 2017 160,000 2008 160,000 2018 160,000 2009 160,000 2019 155,000 2010 160,000 2020 155,000 2011 160,000 2021 155,000 2012 160,000 2022 155,000 2013 160,000 2023 155,000 2014 160,000 2024 155,000 2015 160,000 The bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities, except that bond maturing in 2006 shall be in the principal amount of $6,000. Book Entrv The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued jn fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("OTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity, through book entries made on the books and records of OTC and its participants. Principal and interest are payable by the registrar to OTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of OTC will be the responsibility of OTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with OTC. Redemption Mandatorv Redemption. If on any interest payment date there will be a balance in the Sinking Fund after payment of the principal and interest due on all Bonds drawn against it, either from the prepayment of special assessments levied in the Districts or from the transfer of surplus money from the Construction Subaccount to the Principal Subaccount, then outstanding Bonds, or portions thereof, in an amount which, together with the interest thereon to the interest payment date, will equal the amount of such funds on deposit in the Sinking Fund on that date are subject to mandatory redemption on that interest payment date. The redemption price shall equal the amount of the principal amount of the Bonds to be redeemed plus interest accrued to the date of redemption. Optional Redemption. The Bonds are subject to redemption, in whole or in part, at the option of the City from sources of funds available therefor other than those described under "Mandatory Redemption" and other than from any amounts on deposit in a Reserve Account (e.g., from proceeds of refunding bonds) on the terms of this paragraph. The Bonds with stated maturities on or after January 1, 2013 will be subject to redemption on January 1, 2012, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. Selection of Bonds for Redemption. If less than all of the Bonds are to be redeemed, Bonds shall be redeemed in order of the stated maturities thereof. If less than all Bonds of a stated maturity are to be redeemed, the Bonds of such maturity shall be selected for redemption in $5,000 principal amounts selected by the Registrar by lot or other manner it deems fair. Interest Pavment Dates. Rates Interest will be payable each January 1 and July 1, commencing January 1, 2006, to the registered owners of the Bonds as such appear in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. All Bonds of the same stated maturity must bear interest from date of original issue until paid at a single, uniform rate. Each A-2 ---. ..--...-... rate must be expressed in an integral multiple of 1/8 or 1/20 of 1%. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Individual interest rates may be no higher than 6.50%, with the difference between the highest and lowest rate being no greater than 4.50%. No supplemental coupons will be allowed. Bond Reaistrar, Transfer Aaent and Pavina Aaent The City will designate and contract with a suitable bank or trust company to act as bond registrar, transfer agent and paying agent (the "Registrar"). The bond register will be kept, transfers of ownership will be effected and principal of and interest on the Bonds will be paid by the Registrar. The City will pay the charges of the Registrar for such services. The City reserves the right to remove the Registrar and to appoint a successor. Delivery Within 30 days after the sale, the City will deliver to the Registrar the printed Bonds ready for completion and authentication. The original purchaser of the Bonds must notify the Registrar, at least five business days before issuance of the Bonds, of the persons in whose names the Bonds will be initially registered and the authorized denominations of the Bonds to be originally issued. If notification is not received by that date, the Bonds will be registered in the name of the original purchaser and, if serial bonds, will be issued in denominations corresponding to the principal maturities of the Bonds. On the day of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and a certificate verifying that no litigation in any manner questioning the validity of the Bonds is then pending or, to the knowledge of officers of the City, threatened. Payment for the Bonds must be received by the City in immediately available funds at its designated depositary on the day of closing. As a condition of delivery, the purchaser must certify to the City in writing the initial reoffering prices of the Bonds. Qualified Tax-Exempt Obliaations The Bonds will be designated by the City as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the Code), and financial institutions described in Section 265(b)(5) of the Code may treat the Bonds for purposes of Sections 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August 7,1986. Leaal Opinion An opinion as to the validity of the Bonds and the exclusion from gross income for federal income tax purposes and Montana individual income tax purposes of the interest thereon will be furnished by Dorsey & Whitney LLP, of Missoula, Montana, and Minneapolis, Minnesota, as Bond Counsel. The legal opinion will be provided at closing. The legal opinion will state that the Bonds are valid and binding special obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability thereof may be limited by the exercise of judicial discretion or by state or federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights; however, Dorsey & Whitney LLP will not express an opinion as to the enforceability of the agreement of the City to make loans or advances from the Revolving Fund to the Sinking Fund as may be required to pay principal and interest on the Bonds. Tvpe of Bid and Good Faith Deposit Sealed bids or bids transmitted electronically through the ParityTM system (as hereinafter provided) for not less than $2,952,984.00 (98.40%of par) and accrued interest on the principal sum of $3,001,000 must be mailed or delivered or submitted electronically, as the case may be, to the undersigned and must be received at the office of the Director of Administrative Services prior to the time stated above. Bidders must bid for all or none of the Bonds. Each bid must be unconditional. To the extent any instructions or directions set forth in ParityTM conflict with these Terms and Conditions of Sale, the terms of these Terms and Conditions of Sale shall control. For further information about ParityTM, potential bidders may contact the Financial Advisor, D.A. Davidson & Co. at (406) 582- A-3 3457 (Bridget Ekstrom), or ParityTM at (212) 404-8102 (Client Services). In the event of a malfunction in the electronic bidding process, bidders may submit their bids by sealed bid including facsimile transmission to the Clerk of the Commission, Robin Sullivan, at facsimile number (406) 582-2323 (phone (406) 582-2300). Except for a bid by or on behalf of the Board of Investments of the State of Montana, a good faith deposit (the "Deposit") in the form of money, cashier's check, certified check, bank money order, or bank draft drawn and issued by a federally chartered or state chartered bank insured by the federal deposit insurance corporation or a financial surety bond in the sum of $60,020.00 (2.00% of the principal amount of the Bonds, $3,001,000) payable to the order of the City is required for a bid to be considered. If money, cashier's check, certified check, bank money order, or bank draft is used, it must accompany the bid and be delivered to the Director of Administrative Services. If a financial surety bond is used, it must be from an insurance company licensed and qualified to issue such a bond in the State of Montana and such bond must be submitted to the Director of Administrative Services prior to the opening of the bids. The financial surety bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Bonds are awarded to a bidder utilizing a financial surety bond, then that purchaser is required to submit its Deposit to the City in the form of a cashier's check (or wire transfer such amount as instructed by the City) not later than 1 :00 p.m., M.T., on the next business day following the award. If such Deposit is not received by that time, the financial surety bond may be drawn by the City to satisfy the Deposit requirement. No interest on the Deposit will accrue to the purchaser. The Deposit will be applied to the purchase price of the Bonds. In the event the purchaser fails to honor its accepted bid, the Deposit will be retained by the City as liquidated damages. The Deposit of the unsuccessful bidders will be returned immediately on award of the Bonds to the purchaser or after rejection of all bids. Instructions for wiring a Deposit may be obtained from the City's Financial Advisor, D.A. Davidson & Co., 529 East Main Street, P.O. Box 8000, Bozeman, Montana 59715, (406) 582-3457. Award The bid authorizing the lowest true interest cost (total interest on all Bonds from April 15, 2005, to their maturities, less any premium or plus any discount) will be deemed the most favorable. In the event that two or more bids state the lowest true interest cost, the sale of the Bonds will be awarded by lot. No oral bid will be considered. The City reserves the rights to reject any and all bids, to waive informalities in any bid and to adjourn the sale. Official Statement The City will prepare an Official Statement relating to the Bonds which the City will deem, for purposes of SEC Rule 15c2-12, to be final as of its date. The City will deliver, at closing, a certificate executed by the Mayor, the City Manager, and the Clerk of the Commission to the effect that, to the best of their knowledge, as of the date of closing, the information contained in the Official Statement, including any supplement thereto, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading; provided that no comment will be made with respect to any information provided by the successful bidder for inclusion in any supplement to the Official Statement. By submitting a bid for the Bonds, the successful bidder agrees: (1) to disseminate to all members of the underwriting syndicate copies of the Official Statement, including any supplements prepared by the City, (2) to file promptly a copy of the Official Statement, including any supplement prepared by the City, with a nationally recognized municipal securities repository, and (3) to take any and all other actions necessary to comply with applicable rules of the Securities and Exchange Commission and the Municipal Securities Rulemaking Board governing the offering, sale and delivery of the Bonds to ultimate purchasers. Within seven business days after the sale the City will furnish to the successful bidder without charge up to 100 copies of the final Official Statement relating to the Bonds. The successful bidder must notify the Clerk of the Commission in writing within five business days after the award of sale of the Bonds if it requires additional copies of the Official Statement. The cost of additional copies shall be paid by the successful bidder. A-4 Continuinq Disclosure In order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b )(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"), the City will covenant and agree, for the benefit of the registered holders and beneficial owners from time to time of the outstanding Bonds, in the resolution prescribing the terms of the Bonds, to provide annual reports of specified information and notice of the occurrence of certain events, if material. The City, the Sinking Fund and Revolving Fund of the City are the only "obligated persons" in respect of the Bonds within the meaning of the Rule for the purposes of disclosing information on an ongoing basis. A description of the undertaking is set forth in the Official Statement. Failure of the City to enter into an undertaking substantially similar to that described in the Official Statement would relieve the successful bidder of its obligation to purchase the Bonds. CUSIP Numbers The City will assume no fee or obligation for the assignment or printing of CUSIP numbers on the Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be assigned and printed at the expense of the purchaser, if the original purchaser waives any delay in delivery occasioned thereby. Information for bidders and bidding forms may be obtained from the City's Financial Advisor, D.A. Davidson & Co., 529 East Main Street, P.O. Box 8000, Bozeman, Montana 59715, (406) 582-3457. Dated: March 7,2005. BY ORDER OF THE CITY COMMISSION ~ekJ~ Clerk of the Commission City of Bozeman, Montana Legal Ad Publish: Sunday, March 20, 2005 Sunday, March 27,2005 A-5 EXHIBIT A NOTICE OF BOND SALE $3,001,000 Pooled Special Improvement District Bonds, Series 2005 (Special Improvement District Nos. 675, 676, 677, and 678) CITY OF BOZEMAN, MONTANA NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana (the "City"), will sell to the highest and best bidder for cash, as evidenced by sealed bids or bids transmitted through ParityTM, the above- described Bonds drawn against the funds of the following special improvement districts in the respective principal amounts set forth below: District No. Principal Amount 675 $1,361,000 676 $1,276,000 677 $ 114,000 678 $ 250,000 Sealed bids for the purchase of the Bonds will be received at the office of the Clerk of the Commission at 411 E. Main Street, Bozeman, Montana, or bids for the purchase of the Bonds will be received by the City by electronic transmission through ParityTM, in either case, until 12:00 p.m., M.T., on Monday, April 18, 2005, at which time the bids will be opened and tabulated. The City Commission of the City will meet at its regular meeting at 7:00 p.m. on the same day in the Commission Room at City Hall, Bozeman, Montana, to consider the bids and to award the sale of the Bonds to the responsive bidder whose bid reflects the lowest true interest cost (TIC). Purpose and Securitv The Bonds will be issued for the purpose of financing the cost of construction of certain local improvements (the "Improvements") within or for the benefit of Special Improvement District Nos. 675, 676, 677, and 678 (collectively, the "Districts"), in accordance with the provisions of Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended. The Bonds will be special, limited obligations of the City and do not constitute general obligations of the City. The Bonds are payable primarily from the collection of a special assessment which is a lien against the assessable real property within the respective Districts benefited by the Improvements to be undertaken therein or therefor. The special assessments are payable in semiannual installments over a term not exceeding 19 years, each in substantially equal semiannual installments of principal and interest over a period of 19 years, at an annual rate equal to the sum of (i) the average rate of interest borne by the then outstanding Bonds, plus (ii) one-half of one percent (0.50%) per annum. The Bonds are further secured by the Special Improvement District Revolving Fund of the City (the "Revolving Fund") and the City will agree to make a loan from the Revolving Fund to the Sinking Fund established for the Districts to make good any deficiency then existing in the principal and interest subaccounts therein after exhaustion of amounts available in the District Reserve established for each District, and to provide funds for the Revolving Fund by levying a tax or making a loan from the City's general fund to the extent authorized by law. Date and Tvpe The Bonds will be dated, as originally issued, as of May 1,2005, and will be issued as negotiable investment securities in registered form as to both principal and interest. Maturities and Redemption The Bonds shall mature, subject to redemption, on July 1 in the following years and amounts: A-1 ...__m_......_._m __ -.---.---.---.-- Year Amount Year Amount 2006 156,000 2016 160,000 2007 155,000 2017 160,000 2008 160,000 2018 160,000 2009 160,000 2019 155,000 2010 160,000 2020 155,000 2011 160,000 2021 155,000 2012 160,000 2022 155,000 2013 160,000 2023 155,000 2014 160,000 2024 155,000 2015 160,000 The bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities, except that bond maturing in 2006 shall be in the principal amount of $6,000. Book Entry The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity, through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. Redemption Mandatory Redemption. If on any interest payment date there will be a balance in the Sinking Fund after payment of the principal and interest due on all Bonds drawn against it, either from the prepayment of special assessments levied in the Districts or from the transfer of surplus money from the Construction Subaccount to the Principal Subaccount, then outstanding Bonds, or portions thereof, in an amount which, together with the interest thereon to the interest payment date, will equal the amount of such funds on deposit in the Sinking Fund on that date are subject to mandatory redemption on that interest payment date. The redemption price shall equal the amount of the principal amount of the Bonds to be redeemed plus interest accrued to the date of redemption. Optional Redemption. The Bonds are subject to redemption, in whole or in part, at the option of the City from sources of funds available therefor other than those described under "Mandatory Redemption" and other than from any amounts on deposit in a Reserve Account (e.g., from proceeds of refunding bonds) on the terms of this paragraph. The Bonds with stated maturities on or after January 1, 2013 will be subject to redemption on January 1, 2012, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. Selection of Bonds for Redemption. If less than all of the Bonds are to be redeemed, Bonds shall be redeemed in order of the stated maturities thereof. If less than all Bonds of a stated maturity are to be redeemed, the Bonds of such maturity shall be selected for redemption in $5,000 principal amounts selected by the Registrar by lot or other manner it deems fair. Interest Payment Dates. Rates Interest will be payable each January 1 and July 1, commencing January 1, 2006, to the registered owners of the Bonds as such appear in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. All Bonds of the same stated maturity must bear interest from date of original issue until paid at a single, uniform rate. Each A-2 ----------- rate must be expressed in an integral multiple of 1/8 or 1/20 of 1%. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Individual interest rates may be no higher than 6.50%, with the difference between the highest and lowest rate being no greater than 4.50%. No supplemental coupons will be allowed. Bond Reaistrar. Transfer Aaent and Paying Agent The City will designate and contract with a suitable bank or trust company to act as bond registrar, transfer agent and paying agent (the "Registrar"). The bond register will be kept, transfers of ownership will be effected and principal of and interest on the Bonds will be paid by the Registrar. The City will pay the charges of the Registrar for such services. The City reserves the right to remove the Registrar and to appoint a successor. Deliverv Within 30 days after the sale, the City will deliver to the Registrar the printed Bonds ready for completion and authentication. The original purchaser of the Bonds must notify the Registrar. at least five business days before issuance of the Bonds, of the persons in whose names the Bonds will be initially registered and the authorized denominations of the Bonds to be originally issued. If notification is not received by that date, the Bonds will be registered in the name of the original purchaser and. if serial bonds, will be issued in denominations corresponding to the principal maturities of the Bonds. On the day of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and a certificate verifying that no litigation in any manner questioning the validity of the Bonds is then pending or, to the knowledge of officers of the City, threatened. Payment for the Bonds must be received by the City in immediately available funds at its designated depositary on the day of closing. As a condition of delivery, the purchaser must certify to the City in writing the initial reoffering prices of the Bonds. Qualified Tax-Exempt ObliQations The Bonds will be designated by the City as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the Code), and financial institutions described in Section 265(b)(5) of the Code may treat the Bonds for purposes of Sections 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August 7,1986. LeQal Opinion An opinion as to the validity of the Bonds and the exclusion from gross income for federal income tax purposes and Montana individual income tax purposes of the interest thereon will be furnished by Dorsey & Whitney LLP, of Missoula, Montana, and Minneapolis, Minnesota. as Bond Counsel. The legal opinion will be provided at closing. The legal opinion will state that the Bonds are valid and binding special obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability thereof may be limited by the exercise of judicial discretion or by state or federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights; however, Dorsey & Whitney LLP will not express an opinion as to the enforceability of the agreement of the City to make loans or advances from the Revolving Fund to the Sinking Fund as may be required to pay principal and interest on the Bonds. Tvpe of Bid and Good Faith Deposit Sealed bids or bids transmitted electronically through the ParityTM system (as hereinafter provided) for not less than $2,952,984.00 (98.40%of par) and accrued interest on the principal sum of $3,001,000 must be mailed or delivered or submitted electronically, as the case may be, to the undersigned and must be received at the office of the Director of Administrative Services prior to the time stated above. Bidders must bid for all or none of the Bonds. Each bid must be unconditional. To the extent any instructions or directions set forth in ParitlM conflict with these Terms and Conditions of Sale, the terms of these Terms and Conditions of Sale shall control. For further information about ParityTM, potential bidders may contact the Financial Advisor, D.A. Davidson & Co. at (406) 582- A-3 3457 (Bridget Ekstrom), or ParityTM at (212) 404-8102 (Client Services). In the event of a malfunction in the electronic bidding process, bidders may submit their bids by sealed bid including facsimile transmission to the Clerk of the Commission, Robin Sullivan, at facsimile number (406) 582-2323 (phone (406) 582-2300). Except for a bid by or on behalf of the Board of Investments of the State of Montana, a good faith deposit (the "Deposit") in the form of money, cashier's check, certified check, bank money order, or bank draft drawn and issued by a federally chartered or state chartered bank insured by the federal deposit insurance corporation or a financial surety bond in the sum of $60,020.00 (2.00% of the principal amount of the Bonds, $3,001,000) payable to the order of the City is required for a bid to be considered. If money, cashier's check, certified check, bank money order, or bank draft is used, it must accompany the bid and be delivered to the Director of Administrative Services. If a financial surety bond is used, it must be from an insurance company licensed and qualified to issue such a bond in the State of Montana and such bond must be submitted to the Director of Administrative Services prior to the opening of the bids. The financial surety bond must identify each bidder whose Deposit is guaranteed by such financial surety bond. If the Bonds are awarded to a bidder utilizing a financial surety bond, then that purchaser is required to submit its Deposit to the City in the form of a cashier's check (or wire transfer such amount as instructed by the City) not later than 1 :00 p.m., M.T., on the next business day following the award. If such Deposit is not received by that time, the financial surety bond may be drawn by the City to satisfy the Deposit requirement. No interest on the Deposit will accrue to the purchaser. The Deposit will be applied to the purchase price of the Bonds. In the event the purchaser fails to honor its accepted bid, the Deposit will be retained by the City as liquidated damages. The Deposit of the unsuccessful bidders will be returned immediately on award of the Bonds to the purchaser or after rejection of all bids. Instructions for wiring a Deposit may be obtained from the City's Financial Advisor, D.A. Davidson & Co., 529 East Main Street, P.O. Box 8000, Bozeman, Montana 59715, (406) 582-3457. Award The bid authorizing the lowest true interest cost (total interest on all Bonds from May 1, 2005, to their maturities, less any premium or plus any discount) will be deemed the most favorable. In the event that two or more bids state the lowest true interest cost, the sale of the Bonds will be awarded by lot. No oral bid will be considered. The City reserves the rights to reject any and all bids, to waive informalities in any bid and to adjourn the sale. Official Statement The City will prepare an Official Statement relating to the Bonds which the City will deem, for purposes of SEC Rule 15c2-12, to be final as of its date. The City will deliver, at closing, a certificate executed by the Mayor, the City Manager, and the Clerk of the Commission to the effect that, to the best of their knowledge, as of the date of closing, the information contained in the Official Statement, including any supplement thereto, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading; provided that no comment will be made with respect to any information provided by the successful bidder for inclusion in any supplement to the Official Statement. By submitting a bid for the Bonds, the successful bidder agrees: (1) to disseminate to all members of the underwriting syndicate copies of the Official Statement, including any supplements prepared by the City, (2) to file promptly a copy of the Official Statement, including any supplement prepared by the City, with a nationally recognized municipal securities repository, and (3) to take any and all other actions necessary to comply with applicable rules of the Securities and Exchange Commission and the Municipal Securities Rulemaking Board governing the offering, sale and delivery of the Bonds to ultimate purchasers. Within seven business days after the sale the City will furnish to the successful bidder without charge up to 100 copies of the final Official Statement relating to the Bonds. The successful bidder must notify the Clerk of the Commission in writing within five business days after the award of sale of the Bonds if it requires additional copies of the Official Statement. The cost of additional copies shall be paid by the successful bidder. A-4 .._. ....._.___ _" ..._. _m._.. .._..._. ______n. Continuing Disclosure In order to permit bidders for the Bonds and other participating underwriters in the primary offering of the Bonds to comply with paragraph (b )(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"), the City will covenant and agree, for the benefit of the registered holders and beneficial owners from time to time of the outstanding Bonds, in the resolution prescribing the terms of the Bonds, to provide annual reports of specified information and notice of the occurrence of certain events, if material. The City, the Sinking Fund and Revolving Fund of the City are the only "obligated persons" in respect of the Bonds within the meaning of the Rule for the purposes of disclosing information on an ongoing basis. A description of the undertaking is set forth in the Official Statement. Failure of the City to enter into an undertaking substantially similar to that described in the Official Statement would relieve the successful bidder of its obligation to purchase the Bonds. CUSIP Numbers The City will assume no fee or obligation for the assignment or printing of CUSIP numbers on the Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be assigned and printed at the expense of the purchaser, if the original purchaser waives any delay in delivery occasioned thereby. Information for bidders and bidding forms may be obtained from the City's Financial Advisor, D.A. Davidson & Co., 529 East Main Street, P.O. Box 8000, Bozeman, Montana 59715, (406) 582-3457. Dated: March 21,2005. BY ORDER OF THE CITY COMMISSION (/d:J ~ Clerk of the Commission City of Bozeman, Montana Legal Ad Publish: Sunda~ApriI3,2005 Sunda~April 10,2005 A-5