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HomeMy WebLinkAboutResolution 3773, Authorize sale of bonds for SID 683 --......--.----....... COMMISSION RESOLUTION NO. 3773 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RELATING TO $1,372,000 SPECIAL IMPROVEMENT DISTRICT NO. 683 BONDS; AUTHORIZING THE ISSUANCE AND CALLING FOR THE PUBLIC SALE THEREOF AND AUTHORIZING THE PLEDGE OF THE REVOLVING FUND TO THE SECURITY THEREOF. BE IT RESOLVED by the City 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"), a special improvement district, designated as Special Improvement District No. 683 (the "District"), for the purpose of financing a portion of costs of certain public improvements of special benefit to the properties within the District (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 District (the "Bonds"), the creation and administration of the District 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 District are $4,022,830. A portion of 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 District, which property will be specially benefited by the Improvements in an amount not less than $1,372,000. (b) The City is 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 District and the City. (c) It is necessary that the Bonds be issued and sold in an aggregate principal amount of $1 ,372,000 to finance the costs of the Improvements, including incidental costs, described in Subsection (a). The costs of the Improvements are currently estimated, as follows: Right-of-way Acquisition $ 200,000 Road Improvements 2,156,080 Storm Drainage 429,660 Sanitary Sewer 230,150 Water 167,750 Contingency 245,190 Engineering & Inspection 548,600 Legal/Administration 45.400 Total $4,022,830 The City has or will contribute the following amounts to the costs of the Improvements: Street Impact Fee $2,319,300 1995 General Obligation Bond Issue 200,000 Sewer Impact Fees 157,000 Water Impact Fees 127.100 Total $2,803,400 The costs of the Improvements and related expenses to be financed by the Bonds are as follows: Total Cost of Improvements $1,219,430 SID Fees (bond counsel, advertising, etc.) 20,858 3% Administrative Fee 41,160 1.6% Bond Discount 21,952 5% Revolving Fund Fee 68.600 Total $1,372,000 Section 2. Determination of Public Interest in Allowinq Bond Discount. Pursuant to the authority described in Section 1, this Commission hereby determines to fix the minimum price for the Bonds at $1,350,048 (98.40% of the principal amount), 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 the District and the City. Section 3. Findinas and Determination to PledQe the Revolvina Fund. In the Resolution of Intention To Create the District, adopted on November 22,2004, this Commission found it to be in the public interest, and in the best interest of the City and the District, to secure payment of principal of and interest on the Bonds by the Revolving Fund 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 resolution adopted by this Commission on January 18, 2005, creating the District, 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 the Bonds, to be denominated "Special Improvement District No. 683 Bonds," of the City in the aggregate principal amount of $1,372,000 (the "Bonds") for the purpose of financing the Improvements. The Bonds shall be dated, as originally issued, as of March 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 on July 1 in each of the following years and amounts: Year Amount Year Amount 2006 $32,000 2016 $75,000 2007 50,000 2017 75,000 2008 55,000 2018 80,000 2009 55,000 2019 85,000 2010 60,000 2020 90,000 2011 60,000 2021 90,000 2012 65,000 2022 95,000 2013 65,000 2023 100,000 2014 70,000 2024 100,000 2015 70,000 - 2 - Bidders will have the option of combining the Bonds maturing on and after 2006 through and including 2011 and on or after 2012 through and including 2024 into one or more term bonds. If any Bonds are issued as term bonds, such term bonds will be subject to annual mandatory sinking fund redemption in the principal amount set forth in the foregoing schedule on each July 1 , concluding no later than 2024, at a redemption price equal to the principal amount of such Bonds or portions thereof to be redeemed with interest accrued thereon and payable on January 1 and July 1 to the redemption date, in installments and in the same amounts and same dates as the Bonds would have matured if they were not included in a term bond. The Bonds shall be issuable only as fully registered bonds and shall be executed by the manual or facsimile signatures of the Mayor, 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 on March 7, 2005. The City will receive bids for the Bonds in accordance with the notice of sale hereinafter prescribed. The Clerk ofthe Commission is hereby 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 (which is hereby incorporated herein and made a part hereof) 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. Official Statement. The Director of Finance of the City and other officers of the City in cooperation with D.A. Davidson & Co., financial consultants 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 adopted in Section 4 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. The Director of Finance is authorized on behalf of the City to deem the official statement near "final" as of its date, in accordance with Rule 15c2-12(b )(1) under the Securities Exchange Act of 1934. Section 7. Construction Bids. Since construction bids will be opened on February 15,2005, the Commission hereby authorizes the Director of Finance to reduce the principal amount of the Bonds to be issued and to revise the notice of sale prior to publication to take into consideration lower than anticipated construction bids, if applicable. Section 8. 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 is the only "obligated person" 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. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. - 3 - PASSED AND ADOPTED by the City Commission 0 the City of Bozeman, Montana, this 7th day of February 2005. ATTEST: ~./~ R L. SULLIVAN Clerk of the Commission APPROVED AS TO FORM: ~~ I ~---- oo/~~ TIMOTHY A. COOPER' Acting City Attorney - 4 - -..---.------------- .-.....-.,.....- . --..-..----.--------- -.---."........ EXHIBIT A NOTICE OF BOND SALE $1,372,000 SPECIAL IMPROVEMENT DISTRICT NO. 683 BONDS 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 the bids, the above-described Bonds drawn against the fund of Special Improvement District No. 683 in the principal amount of $1,372,000. Bids for the purchase of the Bonds will be received until 11 :00 A.M., M.T., on Monday, March 7, 2005, at the office of the Clerk of the Commission in the City Hall, at 411 E. Main Street, Bozeman, Montana, at which time the bids will be opened and tabulated. Bids may be submitted as written sealed bids or by electronic transmission through ParityrM. The City Commission of the City will meet at 7:00 P.M. on the same day in the Commission Room in the City Hall, at which time the Commission will consider the bids received and, if a responsive and acceptable bid is received, 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 No. 683 (the "District"), in accordance with the provisions of Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended (the "Act"). 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 tax or assessment which is a lien against the assessable real property within the District benefited by the Improvements to be undertaken therein or therefor. The special assessments are payable in equal, semiannual installments over a 19-year term, with unpaid installments of the special assessments bearing interest at a rate equal, from time to time, 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"). The City will agree to make a loan from the Revolving Fund to the district fund established for the District to make good any deficiency then existing in the principal and interest accounts therein 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 and for the period authorized by the Act. Date and TVDe The Bonds will be dated, as originally issued, as of March 15, 2005, and will be issued as negotiable investment securities in registered form as to both principal and interest. Maturities and Form The Bonds shall be issued as serial bonds and shall mature, subject to redemption, on July 1 in the following years and amounts: ------------..- ..-- - --..--..-- ----.- Year Amount Year Amount 2006 $32,000 2016 $75,000 2007 50,000 2017 75,000 2008 55,000 2018 80,000 2009 55,000 2019 85,000 2010 60,000 2020 90,000 2011 60,000 2021 90,000 2012 65,000 2022 95,000 2013 65,000 2023 100,000 2014 70,000 2024 100,000 2015 70,000 Bidders will have the option of combining the Bonds maturing on and after 2006 through and including 2011 and on or after 2012 through and including 2024 into one or more term bonds. If any Bonds are issued as term bonds, such term bonds will be subject to annual mandatory sinking fund redemption in the principal amount set forth in the foregoing schedule on each July 1, concluding no later than 2024, at a redemption price equal to the principal amount of such Bonds or portions thereof to be redeemed with interest accrued thereon and payable on January 1 and July 1 to the redemption date, in installments and in the same amounts and same dates as the Bonds would have matured if they were not included in a term bond. 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 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 Mandatorv Redemption. If on any interest payment date there will be a balance in the District 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 District or from the transfer of surplus money from the Construction Account to the Principal Account, 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 District 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" on any interest payment date; provided, however, the Bonds shall not be called for redemption before January 1, 2012, from the proceeds of refunding special improvement district bonds or warrants. The redemption price shall equal the principal amount of the Bonds to be redeemed plus interest accrued to the date of redemption. 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. A-2 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 rate must be expressed in an integral multiple of 1/8 or 1/20 of 1 %. No supplemental or "B" coupons or additional interest certificates are permitted. 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%. Bond ReQistrar. Transfer Aaent and PayinQ AQent The Director of Finance of the City will 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 appoint a suitable bank or trust company as a successor Registrar. Deliverv Within 45 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 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 stating 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 depository on the day of closing. The successful bidder shall submit to the Clerk of the Commission not earlier than 48 hours after the award of sale and not later than the day of closing a certificate, in form satisfactory to Bond Counsel, as to the initial reoffering price of each stated maturity of the Bonds and stating that at least ten percent of the principal amount of such Bonds of each stated maturity has been sold at such respective prices. Qualified Tax-ExemDt 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. Legal ODinion An opinion as to the validity of the Bonds and the exclusion of the interest thereon from gross income for federal income tax purposes and Montana individual income tax purposes will be furnished by Dorsey & Whitney LLP, of Missoula, Montana, and Minneapolis, Minnesota, as Bond Counsel. The legal opinion will be delivered at closing. The legal opinion will state that the Bonds are valid and binding special, limited 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. TVDe of Bid and Good Faith DeDosit Bids for not less than $1 ,350,048 and accrued interest on the principal sum of $1,372,000 may A-3 be submitted as written sealed bids or by electronic transmission through ParityTM, must be mailed or delivered to the undersigned, and must be received at the office of the Clerk of the Commission prior to the time stated above. Bidders must bid for all or none of the Bonds. Each bid must be unconditional. 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 $27,440 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 Clerk of the Commission. 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 Clerk of the Commission 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 or its financial advisor) 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 the Deposit may be obtained from the City's Financial Advisor, D.A. Davidson & Co., P.O. Box 8000, Bozeman, Montana 59715, (406) 582-3457. Award The bid authorizing the lowest true interest cost (TIC), will be deemed the most favorable. The TIC is the effective cost of the Series 2005 Bonds based on bond proceeds received at closing calculated from the dated date of the Series 2005 Bonds. In the event that two or more bids state the same 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. 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. 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 ofthe Securities and Exchange Commission and the Municipal Securities Rulemaking Board governing the offering, sale and delivery of the Bonds to ultimate purchasers. A-4 Within seven business days after the sale the City will furnish to the successful bidder without charge 100 copies of the final Official Statement relating to the Bonds. The successful bidder must notify the Clerk of Commission in writing within 7 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. 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 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. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. Information for bidders and bidding forms may be obtained from the undersigned or from D. A. Davidson & Co., P. O. Box 8000, Bozeman, Montana 59715, telephone (406) 582-3457, financial consultants to the City. Dated: February 7,2005. BY ORDER OF THE CITY COMMISSION Robin L. Sullivan Clerk of the Commission City of Bozeman, Montana Legal Ad Publish: Monday, February 21, 2005 Monday, February 28, 2005 A-5 _...._on"., ...._._....____..__..._.__ EXHIBIT A REVISED NOTICE OF BOND SALE $1,372,000 SPECIAL IMPROVEMENT DISTRICT NO. 683 BONDS 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 the bids, the above-described Bonds drawn against the fund of Special Improvement District No. 683 in the principal amount of $1 ,372,000. Bids for the purchase of the Bonds will be received until 11 :00 A.M., M.T., on Monday, March 7,2005, at the office of the Clerk of the Commission in the City Hall, at 411 E. Main Street, Bozeman. Montana, at which time the bids will be opened and tabulated. Bids may be submitted as written sealed bids or by electronic transmission through ParityTM. The City Commission of the City will meet at 7:00 P.M. on the same day in the Commission Room in the City Hall, at which time the Commission will consider the bids received and, if a responsive and acceptable bid is received, award the sale of the Bonds to the responsive bidder whose bid reflects the lowest true interest cost (TIC). Purpose and Security 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 No. 683 (the "District"), in accordance with the provisions of Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended (the "Act"). 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 tax or assessment which is a lien against the assessable real property within the District benefited by the Improvements to be undertaken therein or therefor. The special assessments are payable in equal, semiannual installments over a 19-year term, with unpaid installments of the special assessments bearing interest at a rate equal, from time to time, 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"). The City will agree to make a loan from the Revolving Fund to the district fund established for the District to make good any deficiency then existing in the principal and interest accounts therein 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 and for the period authorized by the Act. Date and Tvpe The Bonds will be dated, as originally issued, as of March 15, 2005, and will be issued as negotiable investment securities in registered form as to both principal and interest. Maturities and Form The Bonds shall be issued as serial bonds and shall mature, subject to redemption, on July 1 in the following years and amounts: Year Amount Year Amount 2006 $62,000 2016 $75,000 2007 70,000 2017 75,000 2008 75,000 2018 70,000 2009 75,000 2019 70,000 2010 75,000 2020 70,000 2011 75,000 2021 70,000 2012 75,000 2022 70,000 A-1 2013 75,000 2023 70,000 2014 75,000 2024 70,000 2015 75,000 Bidders will have the option of combining the Bonds maturing on and after 2006 through and including 2011 and on or after 2012 through and including 2024 into one or more term bonds. If any Bonds are issued as term bonds, such term bonds will be subject to annual mandatory sinking fund redemption in the principal amount set forth in the foregoing schedule on each July 1, concluding no later than 2024, at a redemption price equal to the principal amount of such Bonds or portions thereof to be redeemed with interest accrued thereon and payable on January 1 and July 1 to the redemption date, in installments and in the same amounts and same dates as the Bonds would have matured if they were not included in a term bond. 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 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 Mandatorv Redemption. If on any interest payment date there will be a balance in the District 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 District or from the transfer of surplus money from the Construction Account to the Principal Account, 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 District 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" on any interest payment date; provided, however, the Bonds shall not be called for redemption before January 1, 2012, from the proceeds of refunding special improvement district bonds or warrants. The redemption price shall equal the principal amount of the Bonds to be redeemed plus interest accrued to the date of redemption. 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 A-2 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 rate must be expressed in an integral multiple of 1/8 or 1/20 of 1 %. No supplemental or "B" coupons or additional interest certificates are permitted. 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%. Bond Registrar. Transfer Agent and Paying Agent The Director of Finance of the City will 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 appoint a suitable bank or trust company as a successor Registrar. Deliverv Within 45 days after the sale, the City will deliver to the Registrar the printed Bonds ready for completion and authentication. The original purchaser ofthe 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 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 stating 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 depository on the day of closing. The successful bidder shall submit to the Clerk of the Commission not earlier than 48 hours after the award of sale and not later than the day of closing a certificate, in form satisfactory to Bond Counsel, as to the initial reoffering price of each stated maturity of the Bonds and stating that at least ten percent of the principal amount of such Bonds of each stated maturity has been sold at such respective prices. Qualified Tax-ExemDt Obligations 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 ODin ion An opinion as to the validity of the Bonds and the exclusion of the interest thereon from gross income for federal income tax purposes and Montana individual income tax purposes will be furnished by Dorsey & Whitney LLP, of Missoula, Montana, and Minneapolis, Minnesota, as Bond Counsel. The legal opinion will be delivered at closing. The legal opinion will state that the Bonds are valid and binding special, limited obligations ofthe 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. A-3 . .---..--..".. Tvpe of Bid and Good Faith Deposit Bids for not less than $1,350,048 and accrued interest on the principal sum of $1,372,000 may be submitted as written sealed bids or by electronic transmission through ParityTM, must be mailed or delivered to the undersigned, and must be received at the office of the Clerk of the Commission prior to the time stated above. Bidders must bid for all or none of the Bonds. Each bid must be unconditional. 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 $27,440 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 Clerk of the Commission. 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 Clerk of the Commission 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 or its financial advisor) 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 the Deposit may be obtained from the City's Financial Advisor, D.A. Davidson & Co., P.O. Box 8000, Bozeman, Montana 59715, (406) 582-3457. Award The bid authorizing the lowest true interest cost (TIC), will be deemed the most favorable. The TIC is the effective cost of the Series 2005 Bonds based on bond proceeds received at closing calculated from the dated date of the Series 2005 Bonds. In the event that two or more bids state the same 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. CUSIP Numbers The City will assume no fee or obligation for the assignment or printing of CUSI P 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. 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 A-4 ..--.."..-..--.-- 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 100 copies of the final Official Statement relating to the Bonds. The successful bidder must notify the Clerk of Commission in writing within 7 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. 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 is the only "obligated person" 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. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. Information for bidders and bidding forms may be obtained from the undersigned or from D. A. Davidson & Co., P. O. Box 8000, Bozeman, Montana 59715, telephone (406) 582-3457, financial consultants to the City. Dated: February 7,2005. BY ORDER OF THE CITY COMMISSION Robin L. Sullivan Clerk of the Commission City of Bozeman, Montana Legal Ad Publish: Monday, February 21 , 2005 Monday, February 28, 2005 A-5