HomeMy WebLinkAboutResolution 3755 Bond resolution for SID 674, Bridger Center
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BOND RESOLUTION
Relating to
$494,000 CITY OF BOZEMAN SPECIAL IMPROVEMENT DISTRICT NO. 674 BONDS (DNRC
SRF AND WRF LOAN PROGRAMS),
CONSISTING OF
SERIES 2004A BOND IN THE PRINCIPAL AMOUNT OF $400,000
AND SERIES 2004B BOND IN THE PRINCIPAL AMOUNT OF $94,000
CITY OF BOZEMAN, GALLATIN COUNTY, MONTANA
Adopted: December 20, 2004
TABLE OF CONTENTS
ARTICLE I ............. ................................................ ..................................................................... 3
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES ........................................3
Section 1.1. Definitions... .............................. ..................................................................... 3
Section 1.2. Other Rules of Construction........................................................................... 6
Section 1.3. Appendices................................ ..................................................................... 7
ARTICLE II .................. .......................................... ..................................................................... 7
REPRESENTATIONS AND COVENANTS ............................................................................. 7
Section 2.1. Representations................... .......................................................................... 7
Section 2.2. Covenants............................ .......................................................................... 9
ARTICLE III ........................... .............. .............. ....................................................................... 11
USE OF PROCEEDS; THE PROJECT .................................................................................11
Section 3.1. Use of Proceeds...... .................. ...................................... .............................11
Section 3.2. The Project.. ............ .................. ................................................................... 11
Section 3.3. Project Representations and Covenants................................................ ....... 12
Section 3.4. Completion or Cancellation or Reduction of Costs of the Project..................12
ARTICLE IV.............................................................................................................................. 13
THE LOAN................................................................................................. ...........................13
Section 4.1. The Loan; Disbursement of Loan.................................................................. 13
Section 4.2. Commencement of Loan Term...... .................................... ................. ..........14
Section 4.3. Termination of Loan Term ............ ..................................... ............ ............... 14
Section 4.4. Loan Closing Submissions .................................................................... .......14
ARTICLE V..................................................... ................ .... ................ ......................................14
REPAYMENT OF LOAN............................. ................................. .... .....................................15
Section 5.1. Repayment of Loan...................................................................................... 15
Section 5.2. Additional Payments ..................................................................................... 16
Section 5.3. Prepayments.. ....... .................... ................................................................... 16
Section 5.4. Obligations of Borrower UnconditionaL......................................................... 17
Section 5.5. Limited Liability of Revenue Bond Obligation................................................ 17
ARTICLE Vi............................................................... .................................... ...........................17
OTHER AGREEMENTS OF BORROWER ............ ................ ..................... ................ ..........17
Section 6.1. Maintenance of System; Liens...................................................................... 17
Section 6.2. Maintenance of Existence; Merger, Consolidation, Etc.; Disposition of
Assets.......................................................................................................... 17
Section 6.3. Covenants Relating to the Tax-Exempt Status of the State Bonds.............. 18
Section 6.4. Competing Service............................................................... ........................20
Section 6.6. Remedies.................... .................... ..................................... ......... ....... ........20
ARTICLE Vii.... ......................................... ..................... ............. ...... ........................... ...... ....... 22
INDEMNIFICATION OF DNRC, DEQ AND TRUSTEE.......................................................... 22
Section 7.1. Indemnification..................... .................... ................. ...................................22
ARTICLE VIII..................... ............... ........................................................................................ 22
ASSiGNMENT...................................................... ................................................................ 22
Section 8.1. Assignment by Borrower.................. .................................. ................. ..........23
Section 8.2. Assignment by DNRC....... ........................................................ .............. ......23
Section 8.3. State Refunding Bonds................................... ....... ........................... ............ 23
ARTICLE IX........................... ......... .................. .................... ..... ........... ....................................23
THE Series 2001 A BOND........... ..................... ..................................................................... 23
Section 9.1. Authorization............. ................................................................................... 23
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....o_.n.__
.__.._ _on.....
Section 9.2. Outstanding District SID ........................................................................ Bonds
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Section 9.3. Net Revenues Available................................................................................ 23
Section 9.4. Issuance and Sale of the Series 2001 A Bond.............. ................................. 23
Section 9.5. Terms............................... ............................................................................ 23
Section 9.6. Negotiability, Transfer and Registration ........................................................24
Section 9.7. Execution and Delivery................................................................................. 24
Section 9.8. Form............................................................................................................. 24
ARTICLE X.......... ............. ................ ........................................... .............................................24
PRIORITIES AND ADDITIONAL W ASTEW A TER DEBT...................................................... 24
Section 10.1. Priority of Bond Payments ..........................................................................24
ARTICLE XI.. ... ................. .... ........... ..... ......................................................................... ...........25
W ASTEW A TER SYSTEM FUND............................................................................ ......... ..... 25
Section 11.1. Bond Proceeds and Revenues Pledged and Appropriated ..........................25
Section 11.2. Acquisition and Construction Account.......................................................... 25
Section 11.8. Deposit and Investment of Funds ...............................................................25
ARTICLE Xii.................................. ....................................................................... ............... ..... 25
TAX MA TIERS................................ ..................................................................................... 26
Section 12.1. Use of Project....... ......................................................................... ............. 26
Section 12.2. General Covenant...................................................................................... 26
Section 12.3. Arbitrage Certification.... ............................................................................. 26
Section 12.4. Arbitrage Rebate Exem ption....................................................................... 26
Section 12.5. Information Reporting................................................................................. 27
Section 12.6. Qualified Tax-Exempt Obligations" .............................................................27
Section 12.6. "Continuing Disclosure" .............................................................................. 27
ARTICLE XIII............................................................................................................................ 27
MiSCELLANEOUS............................................................................................................... 27
Section 13.1. Notices........................... ......... ......................... ..........................................27
Section 13.2. Binding Effect................. ...... ............................ ..........................................28
Section 13.3. Severability..................... ....... ........... ..........................................................28
Section 13.4. Amendments ............................ ................. ............ ......... ................... .........28
Section 13.5. Applicable Law............................ ...................................................... .........28
Section 13.6. Captions; References to Sections............................................................... 28
Section 13.7. No Liability of Individual Officers, Directors or Trustees..............................28
Section 13.8. Payments Due on Holidays............................................. ...... .............. ....... 29
Section 13.9. Right of Others to Perform Borrower's Covenants ......................................29
Section 13.10. Authentication of Transcript ......................................................................29
Section 13.11. Repeal and Effective Date......................................................................... 29
APPENDIX A--Description of the Project
APPENDIX B--Form of Series 2004 Bond
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COMMISSION RESOLUTION NO. 3755
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, RELATING TO THE FINANCING OF WATER, WASTEWATER, STORM
DRAIN AND STREET IMPROVEMENTS TO CITY
SPECIAL IMPROVEMENT
DISTRICT NO. 674; CREATING A SPECIAL FUND FOR THE ADMINISTRATION OF
MONEY DERIVED THEREFROM FIXING THE FORM AND DETAILS OF AND
DEFINING THE TERMS AND THE MANNER OF PAYMENT OF THE CITY'S $494,000
SPECIAL IMPROVEMENT DISTRICT NO. 674 BONDS (DNRC SRF AND WRF LOAN
PROGRAM), CONSISTING OF SERIES 2004A BOND IN THE PRINCIPAL AMOUNT
OF $400,000 AND SERIES 2004B BOND IN THE PRINCIPAL AMOUNT OF $94,000.
WHEREAS, pursuant to the Montana Water Pollution Control State Revolving Fund Act,
Montana Code Annotated, Title 75, Chapter 5, Part 11, as amended (the "SRF Act"), the State
of Montana (the "State") has established a water pollution control revolving loan program (the
"SRF 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" SRF Revolving Fund") be
created within the state treasury and all federal, state and other funds for use in the Program be
deposited into the SRF 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 (also known as the Clean Water Act) (the "Clean Water Act"), all repayments of
assistance awarded from the SRF Revolving Fund, interest on investments made on money in
the SRF Revolving Fund and payments of principal of and interest on loans made from the SRF
Revolving Fund; and
WHEREAS, the SRF Act provides that funds from the SRF Program shall be disbursed
and administered for the purposes set forth in the Clean Water Act and according to rules
adopted by the Board of Health and Environmental Sciences and the Board of Natural
Resources and Conservation; and
WHEREAS, City of Bozeman, Gallatin County, Montana (the" Borrower") has applied to
the DNRC for loans (the "Loans") from the SRF and WRF Revolving Fund to enable the
Borrower to finance, refinance or reimburse itself for the costs of the Project (as hereinafter
defined) which will carry out the purposes of the Safe Drinking Water Act and the Clean Water
Act; and
WHEREAS, the Borrower has applied to DNRC to borrow funds for the Project (as
hereinafter defined) and DNRC has committed to fund loans for the Project; and
WHEREAS, the Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Resolution and to issue the Series 2004A and B Bonds (as hereinafter
defined) to evidence the Loans for the purposes set forth herein; and
WHEREAS, the DNRC will fund the Loans in part, directly or indirectly, with proceeds of
Recycled Money (as hereafter defined) from repayments of the DNRC Water Pollution Control
State Revolving Fund Bonds or the DNRC Drinking Water State Revolving Fund Bonds
collectively (the "State Bonds") and in part, directly or indirectly, with funds provided by the
United States Environmental Protection Agency; and
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WHEREAS, on April 5, 2004 the City passed its Resolution No. 3669, which was a
resolution of intention to re-create City of Bozeman Special Improvement District No. 674. The
Resolution of Intention designated the number of the District No. 674 (the "District"), described
the boundaries thereof, and stated the general character of improvements to be made as the
construction of new water lines, extension of an existing sewer line and replacement of an
existing sewage lift station, construction of street improvements and storm drainage collection
and treatment facilities generally within the Bridger Center Subdivision (the "Improvements")
and an approximate estimate of the costs thereof, in accordance with the provisions of Montana
Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended (the "Enabling Act"). By the
Resolution of Intention this Commission also declared its intention to cause the cost and
expense of making the improvements benefitting the District to be assessed against the
properties included within the boundaries of the District in accordance with the methods of
assessment authorized in Section 7-12-4162, Montana Code Annotated; and
WHEREAS, notice of the passage of the Resolution of Intention was given by
publication in the Bozeman Daily Chronicle, a daily newspaper published within the City. A copy
of the Notice of the passage of the Resolution of Intention was also mailed on the first day the
notice was published to all persons, firms or corporations or the agents thereof having real
property within the District, listed in their names upon the last completed assessment roll for
state, City and school district taxes, at their last known addresses. The notice for the District
described the general character of the Improvements proposed to be made therein or therefor,
stated the estimated costs of such Improvements and the method of assessment of such costs
against properties in the District, designated the time when and the place where the
Commission would hear and pass upon all protests made against the making of the
Improvements or the creation of the District, and referred to the Resolution of Intention as being
on file in the office of the Clerk of the Commission for a description of the boundaries of the
District, all in accordance with the provisions of the Resolution of Intention; and
WHEREAS, at the time and place specified in the notice hereinabove described, this
Commission met to hear, consider and pass upon all protests made against the making of the
Improvements and the creation of the District, and, after consideration thereof, it was
determined and declared that insufficient protests against the creation of the District or the
proposed work had been filed in the time and manner provided by law by the owners of the
property to be assessed for the Improvements in the District, and this Commission did therefore
by Resolution No. 3686, adopted on May 10, 2004, (the "Resolution to Re-Create") create the
District according to the boundaries described therein and ordered the proposed Improvements
in the District and authorized the reimbursement of expenditures made by the City for the
Improvements from proceeds of the Series 2004 A and B Bonds; and
WHEREAS, plans and specifications for construction of the Improvements were
prepared by the City's consulting engineers and were thereupon examined and approved by this
Commission. An advertisement for bids for construction of the Improvements was published in
the official newspaper of the City in accordance with the provisions of Montana Code Annotated,
Section 7-12-4141, after which the bids theretofore received were opened and examined. After
referring the bids to the City's consulting engineer it was determined that the lowest responsible
bids for constructing the Improvements in accordance with
the approved plans and
specifications was the bid of Walker Excavation. A contract for the construction of the
Improvements was therefore awarded to said bidder, subject to the bidder having executed and
filed bonds satisfactory to this Commission and in the form and manner provided by Montana
Code Annotated, Title 18, Chapter 2, Part 2; and
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WHEREAS, on May 14, 2004, the City received a commitment from DNRC to provide a
loan to the City for the Improvements of up to $500,000 and secured by the provisions of the
Enabling Act and the City's SID Revolving Fund, created by Ordinance No. 612 (the "SID
Revolving Fund"). As indicated in Sections 9 of Resolution No. 3669, the City has taken into
consideration the factors required by Section 7-12-4225, MCA, and has determined it is in the
best interest of the City and the District to pledge the use of the Revolving Fund in support of
the District.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY
OF BOZEMAN AS FOLLOWS:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES
Section 1.1. Definitions. In this Resolution, unless a different meaning clearly appears
from the context:
"Accountant" or "Accountants" means an independent certified public accountant or a firm of
independent certified public accountants satisfactory to the DNRC.
"Acquisition and Reimbursement Account" means the account within the District Fund
established pursuant to Section 11.2 hereof.
"Administrative Expense Surcharge" means a surcharge on the Loan charged by the DNRC to
the Borrower equal to .75% per annum on the outstanding principal amount of the Loan,
payable by the Borrower on the same dates that payments of interest on the Loan are due.
"Authorized DNRC Officer" means the Director or Deputy Director of the DNRC, and, when
used with reference to an act or document, also means any other individual authorized by
resolution of the Board of Natural Resources and Conservation to perform such act or sign such
document. If authorized by a resolution of the Board of Natural Resources and Conservation,
an Authorized DNRC Officer may delegate all or a portion of his authority as an Authorized
DNRC Officer to another individual and such individual shall be deemed an Authorized DNRC
Officer for purposes of exercising such authority.
"Bond Counsel" means any Counsel acceptable to the DNRC which is nationally recognized as
bond counsel. Counsel is nationally recognized as bond counsel if it has rendered a legal
opinion as to the validity and enforceability of state or municipal bonds and as to the exclusion
of interest thereon from gross income for federal income tax purposes (short-term issues
excluded) during the two-year period preceding the date of determination.
"Bond or Bonds" the Series 2004A Bond and the Series 2004B Bond.
"Borrower" means the City of Bozeman, Montana.
"Business Day" means any day which is not a Saturday or Sunday and is not a day on which
banks in Montana are authorized or required by law to close.
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"Clean Water Act" means the Federal Water Pollution Control Act, 33 U.S.C. 991251-1387, as
amended, and all regulations, rules and interpretations issued by the EPA thereunder.
"Closing" means the date of delivery of a Bond to the DNRC.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committed Amount" means the amount of the Loans committed to be lent by the DNRC to the
Borrower pursuant to Section 4.1, as such amount may be reduced pursuant to Sections 3.2(b)
and 3.4.
"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 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.
"DEO" 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.
"District" means City of Bozeman Special Improvement District No. 674.
"District Fund" means the Special Improvement District No. 674 Fund described in Section 11.1
hereof and authorized by Section 7-12-4203, MCA.
"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 Act.
"Enabling Act" means Montana Code Annotated, Title 7, Chapter 12, Part 41 and 42, as
amended, which authorizes the Borrower to establish the District, to undertake the Project and
to issue the Series 2004 Bonds to finance the costs of the Project.
"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 or the Safe Drinking Water Act.
"EPA Agreements" means all capitalization grant agreements and other written agreements
between the DEQ 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 or a grant of funds to the State by the EPA
under Section 1452 of the Safe Drinking Water Act.
"Governmental Unit" means governmental unit as such term is used in Section 145(a) of the
Code.
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"Interest Account" means the account in the District Fund established under Section 11.1 hereof
and described in Section 11.3 hereof.
"Loans" means the Loans made to the Borrower by the DNRC pursuant to the SRF and WRF
Programs in the maximum amount of the Committed Amount to provide funds to pay all or a
portion of the costs of the Project.
"Loan Loss Reserve Surcharge" means a fee equal to 1.00% per annum on the outstanding
principal amount of a Loan, payable on the same dates that payments of interest on the Loan
are due.
"Opinion of Counsel" means a written opinion of Counsel.
"Person" means any Private Person or Public Entity.
"Principal Account" means the account in the District Fund established under Section 11.1
hereof and further described in Section 11.3 hereof.
"Private Person" means an individual, corporation, partnership, association, joint venture, joint
stock company or unincorporated organization, except a Public Entity.
"Project" means the construction of new water lines, extension of an existing sewer line and
replacement of an existing sewage lift station, construction of street improvements and storm
drainage collection and treatment facilities generally within the Bridger Center Subdivision.
"Public Entity" means a municipality, City, county, school district, political or administrative
subdivision of State government, irrigation district, drainage district or other public body
established by State law.
"Recycled Money" means payments and prepayment of principal of any loans made by DNRC
under the Program, and any other amounts transferred to the principal subaccount in the
revenue subaccount described in the State Allocation Account.
"Regulations" means the Treasury Regulations, whether final, temporary or proposed,
promulgated under the Code or otherwise applicable to the Series 2004 Bond.
"Safe Drinking Water Act" means Title XIV of the Public Health Service Act, commonly known
as the Safe Drinking Water Act. 42 U.S.C. ~~ 300f et seq., as amended, and all regulations,
rules and interpretations issued by the EPA thereunder.
"Series 2004 Bonds" means the Series 2004A Bond and the Series 2004B Bond.
"Series 2004A Bond" means the $400,000 City of Bozeman SID No. 674 Bond (DNRC SRF
Loan Program) Series 2004A, issued by the Borrower to DNRC to evidence a Loan.
"Series 2004B Bond" means the $94,000 City of Bozeman SID No. 674 Bond (DNRC WRF
Loan Program) Series 2004B, issued by the Borrower to DNRC to evidence a Loan.
"SID Revolving Fund" means the fund created by Ordinance No. 612 pursuant to Sections 7-12-
4221, MCA and which had a fund balance on July 1,2004 of $1,790,714.
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"SRF Act" means Montana Code Annotated, Title 75, Part 5, Chapter 11, as amended from time
to time.
"SRF Indenture" means the Indenture of Trust, dated as of June 1, 1991, between the Board of
Examiners of the State and the Trustee, as supplemented and amended through May 2004 by
the Second, Third, Fourth, Fifth, Sixth, Seventh, and Eighth Supplemental Indentures of Trust
and as further 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.
"SRF Program" means the Water Pollution Control State Revolving Loan Program established
by the Act.
"Special Assessment Account" means the account within the District Fund described in Section
11.3 hereof.
"State" means the State of Montana.
"State Bonds" means the State's General Obligation Bonds (Water Pollution Control State
Revolving Fund Program) and the (Drinking Water State Revolving Loan Program), issued
pursuant to the SRF Indenture and the WRF Indenture, respectively.
"State Allocation Accounts" means the accounts so defined for the State Bonds in the SRF
Indenture and the WRF Indenture.
"2004A First Advance" means the First Advance of funds of the 2004A Loan by the DNRC to the
Borrower.
"2004 B First Advance" means the First Advance of funds of the 2004B Loan by the DNRC to
the Borrower.
"Trustee" means U.S. Bank Trust National Association in Seattle, Washington, or any successor
trustee under the Indenture.
"WRF Act" means Montana Code Annotated, Title 75, Part 6, Chapter 2, as amended from time
to time.
"WRF Indenture" means the Indenture of Trust, dated as of May 1, 1998, between the Board of
Examiners of the State and the Trustee, as supplemented and amended through September 1,
2004 by the First, Second, Third, Fourth, Fifth, Sixth, and Seventh Supplemental Indentures of
Trust and as further 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.
"WRF Program" means the Drinking Water State Revolving Fund Program established by the
WRF Act.
Section 1.2. Other Rules of Construction. For all purposes of this Resolution, except
where the context clearly indicates otherwise:
(a) All accounting terms not otherwise defined herein have the meaning assigned to
them in accordance with generally accepted government accounting standards.
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(b) Terms in the singular include the plural and vice versa.
(c) All references to time shall refer to Mountain Standard or Daylight Savings Time, as
appropriate, 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.
(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 Resolution and hereby made a part hereof
are the following Appendices:
Appendix A: The Estimated Project Costs; and
Appendix B: the form of the Series 2004 Bonds;
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1. Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(i) is duly organized and validly existing as a political subdivision of the State;
(ii) has all requisite power and authority to create the District, pledge the SID
Revolving Fund and levy the special assessments against the property in the District, to adopt
this Resolution and to issue the Series 2004 Bonds and to carry out and consummate all
transactions contemplated by this Resolution;
(iii) is a Governmental Unit and a Public Entity; and
(iv) has taken all proper action to create the District, to complete construction of
the Project, to pledge the SID Revolving fund, authorize the execution, delivery and
performance of its obligations under this Resolution and issue the Series 2004 Bonds.
(b) Pending 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
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
Resolution, the Series 2004 Bonds, or the financial condition of the Borrower, or the
transactions contemplated by this Resolution, the Series 2004 Bonds or the validity and
enforceability of this Resolution and the Series 2004 Bonds. No referendum petition has been
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filed with respect to any resolution or other action of the Borrower relating to the Project, the
Series 2004 Bond and the period for filing any such petition will have expired before issuance of
the Series 2004 Bond.
(c) Borrowing Legal and Authorized. The adoption of this Resolution, the execution and
delivery of the Series 2004 Bonds and the consummation of the transactions provided for in this
Resolution, the Series 2004 Bonds and compliance by the Borrower with the provisions of this
Resolution, the Series 2004 Bonds:
(i) are within the powers of the Borrower and have been duly authorized by all
necessary action on the part of the Borrower; and
(ii) 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 resolution, indenture, loan agreement or other agreement or instrument (other than
this Resolution) 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 the charter
of the Borrower or 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 2004 Bonds, would constitute a default under this Resolution. The
Borrower is not in violation of 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 2004 Bonds.
(e) Governmental Consent. The Borrower has obtained or made all permits, findings
and approvals required to the date of adoption of this Resolution by any governmental body or
officer for the making and performance by the Borrower of its obligations under this Resolution,
the Bond or for the Project, the financing or refinancing thereof or the reimbursement of the
Borrower for the 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 Resolution, issuing the
Series 2004 Bonds and the performance of the Borrower's obligations hereunder and
thereunder.
(f) Binding Obligation. This Resolution and the Series 2004 Bonds are the valid and
binding 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 principals of equity.
(g) The Project. The Project consists of the improvements described herein.
(h) Full Disclosure. There is no fact that the Borrower has not specifically disclosed in
writing to the DNRC (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
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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 and operate the System in the manner
it is currently operated or the Borrower's ability to perform its obligations under this Resolution,
the Series 2004 Bonds and to pledge any revenues or other property pledged to the payment of
the 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 governmental authorizations necessary to create the District,
complete the Project and to levy special assessments prior to October 1, 2005 and
agrees to pass the resolutions required by Section 7-12-4176, MCA to levy the special
assessments and to provide the notices and hearings required by Sections 7-12-4177
and 4178, MCA and to collect the required assessments as required by Sections 7-12-
4182 or 4183, MCA
Section 2.2. Covenants.
a) Insurance. The Borrower at all times shall keep and maintain, with respect to its
assets, 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 payor cause to be paid timely the
premiums for all such insurance. All such insurance policies shall name the DNRC as an
additional insured as its interests appear. Each policy must provide that it cannot be canceled
by the insurer without giving the Borrower and the DNRC 30 days' prior written notice. The
Borrower shall give the DNRC prompt notice of each insurance policy it obtains or maintains to
comply with this Section 2.2(a) and of each renewal, replacement, change in coverage or
deductible under or amount of or cancellation of such insurance policy and the amount and
coverage and deductibles and carriers 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 2.2(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 Project or any or all books and records of the Borrower relating
to the Project.
(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
Resolution and the Bond 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
9
position of the DNRC under this Resolution and the Series 2004 Bonds.
(d) Maintenance of Security, If Any; Recordation of Interest.
(i) The Borrower shall, at its expense, take all necessary action to maintain and
preserve the lien and security interest of this Resolution so long as any amount is owing
under this Resolution or the Series 2004 Bonds;
(ii) The Borrower shall forthwith, after the execution and delivery of the Series
2004 Bonds and thereafter from time to time, cause this Resolution and any financing
statements or other notices or documents relating thereto to 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 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
(iii) Except to the extent it is exempt there from, the Borrower shall payor 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 (ii), 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 2004 Bonds and the documents described
in subparagraph (ii).
(e) Levy of Special Assessments. The Borrower covenants to levy and collect the
special assessments in the District and to make loans from the SID Revolving Fund if the
District Fund lack sufficient moneys to pay the Bonds timely.
(f) Financial Information. The Borrower agrees that for each fiscal year it shall furnish to
the DNRC and the DEQ, if requested, financial information on the SID Revolving Fund and the
District Fund applicable to the payment of the Bonds:
The Borrower shall also have prepared and supplied to the DNRC and the DEQ, within
180 days of the close of every other fiscal year, a report prepared in accordance with generally
accepted governmental accounting principles and practice with respect to the financial
statements and records relating to the SID Revolving Fund and the District Fund. The report
shall include an analysis of the Borrower's compliance with the provisions of this Resolution.
The report may be the report prepared by the Borrower under Title 2, Chapter 7, Part 5 of
Montana Code Annotated.
(g) Project Accounts. The Borrower shall maintain 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.
(h) Records. After reasonable notice from the EPA, the Borrower shall make available
to the EPA such records as the EPA reasonably requires to review and determine compliance
with Title VI of the Clean Water Act, as provided in Section 606(e) of the Clean Water Act and
as provided in Section 75-6-224(1 )(d), MCA.
10
(i) Compliance with Clean Water Act. The Borrower has complied and shall comply with
all conditions and requirements of the Clean Water Act and the Safe Drinking Water Act
pertaining to the Loan and the 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 2004 Bonds.
ARTICLE III
USE OF PROCEEDS; THE PROJECT
Section 3.1. Use of Proceeds. The Borrower shall apply the proceeds of the Loans from
the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the Loans solely to the financing or
reimbursement of the costs of the Project as set forth in Appendix A hereto and this Section 3.1.
The Loans will be disbursed in accordance with Article IV hereof and Article VII of the SRF and
WRF Indentures. If the Project has not been completed prior to Closing, the Borrower shall, as
quickly as reasonably possible, complete the Project and expend proceeds of the Series 2004
Bonds to pay the costs of completing the Project.
(b) If any proceeds of the Loans are to be used to reimburse the Borrower for Project
costs paid prior to the date of adoption of this Resolution and in a prior fiscal year of the
Borrower, the Borrower represents that at the time it incurred such costs it intended to finance
them with tax-exempt debt or a loan under a state revolving fund program such as the Program
and has complied with Section 1.150-1 and 2 of the Regulations.
(c) No proceeds of the Loans 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 Proiect. Set forth in Appendix A to this Resolution is a description of
the estimated Project costs, to be funded from the Loans. The 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 whether the amendment would cause an increase or
decrease in the cost of the Project, an increase or decrease in the amount of Loan proceeds
which will be required to complete the Project and whether the change will materially accelerate
or delay the construction schedule for the Project;
(b) A written consent to such change in the Project by an Authorized DNRC Officer;
11
.. --.---."..
(c) An Opinion or Opinions of Bond Counsel stating that the 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 a Series 2004 Bonds was 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
2004 Bonds 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
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 resolution
amendatory of or supplementary to this 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 resolution as it may be so
amended or supplemented are true as of the date of closing of the additional loan. No
assurance can be given that any additional loan funds will be available under the Program at the
time of any such application or thereafter. 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 Loan to pay Project Costs or as to the availability of additional funds under the
Program to increase the principal amount of the Loan.
Section 3.3. Proiect Representations and Covenants. The Borrower hereby represents
to and covenants with the DNRC that:
(a) all construction of the Project has complied and will comply with all federal and state
standards, including, without limitation, EPA regulations and standards;
(b) the construction of the Project was done 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 ensured that
such bond is maintained until construction is completed to the Borrower's, the DNRC's and the
DEQ's satisfaction;
(c) the construction was done in accordance with plans and specifications on file with
the DNRC and the DEQ, provided that changes were made in such plans and specifications
with the written consent of an Authorized DNRC Officer and the DEQ;
(d) the Project is a project of the type permitted to be financed under the Enabling
Act, the WRF and SRF Acts and the WRF and SRF Programs and Title VI of the Clean Water
Act and Section 1452 of the Safe Drinking Water Act; and
(e) the Project is estimated to be complete by December 31, 2004.
Section 3.4. Completion or Cancellation or Reduction of Costs of the Proiect.
(a) Upon completion of the Project, the Borrower shall deliver to the DNRC a certificate
stating that the Project is complete, stating the amount, if any, of the Reserved Amounts, and
12
releasing the remaining amount, if any, of the Committed Amount. If any Reserved Amount is
not later needed, the Borrower shall so inform the DNRC and release such amount. If Appendix
A describes two or more separate projects as making up the Project, a separate completion
certificate shall be delivered for each.
(b) If all or any portion of the Project is canceled or cut back or its costs are reduced or
for any other reason the Borrower will not require the full Committed Amount, the Borrower shall
promptly notify the DNRC in writing of such fact and release the portion of the Committed
Amount which will not be needed.
ARTICLE IV
THE LOAN
Section 4.1. The Loan: Disbursement of Loan. The DNRC has agreed to lend to the
Borrower $494,000 in aggregate principal amount. One Loan in the principal amount of
$400,000 (the "2004 A Loan") is evidenced by the Series 2004A Bond. The remaining Loan in
the principal amount of $94,000 (the "2004 B Loan") is evidenced by the Series 2004B Bond.
The Loans are for the purposes of financing (or reimbursing the Borrower for) the costs of the
Project. It is anticipated that the DNRC will provide the City the complete amount of both loans
at closing on December 23, 2004. The Loans shall be disbursed as provided in this Section 4.1.
The DNRC intends to disburse the Loans through the Trustee.
(a) In consideration of the issuance of the Series 2004 Bonds by the Borrower, the
DNRC shall make, or cause the Trustee to make, a disbursement of the Loan upon receipt of
the following documents:
(1) an Opinion of Bond Counsel as to the validity and enforceability of the Series
2004 Bonds and the security therefor and stating in effect that interest on the Series
2004 Bonds is not includable in gross income for purposes of federal income taxation, in
form and substance satisfactory to the DNRC;
(2) the Series 2004 Bonds, fully executed and authenticated;
(3) a certified copy of this Resolution;
4) any other security instruments or documents required by the DNRC or DEQ as
a condition to their approval of the 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 (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
the costs of such Project and that such costs have been paid by the Borrower and (D) if
such costs were paid previously by the Borrower, that the Borrower intended at the time
it incurred such costs to finance them with tax-exempt debt or a loan under a state
revolving fund program such as the Program and complied with Section 1.150-1 and 2 of
the Regulations;
13
(6) the items required by the SRF and WRF Indentures for the portion of the
Loan to be disbursed at Closing; and
(7) such other certificates, documents and other information as the DNRC, the
DEQ or the Bond Counsel giving the opinion referred to in subparagraph (1) may require
(including any necessary arbitrage rebate instructions).
(b) In order to obtain a disbursement of a portion of the 2004A Loan or 2004B Loan to
pay costs of the 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 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.
(c) On the date of Closing, the Borrower will deposit 5% of the principal amount of each
Loan into the SID Revolving Fund.
(d) If all or a portion of a 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 and the Safe
Drinking Water Act established by the DNRC and the Borrower at the Closing.
(e) Notwithstanding anything else provided herein, the Trustee shall not be obligated to
disburse the 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 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 Loan disbursements for such
costs because of the schedule under which EPA makes EPA Capitalization Grant money
available to the DNRC. The DNRC will use its best efforts to obtain an acceleration of such
schedule if necessary.
(f) Upon making each Loan disbursement, the Trustee shall note such disbursement on
Schedule A to the respective Series 2004 Bond.
Section 4.2. Commencement of Loan Term. The Borrower's obligations under this
Resolution shall commence on the date hereof unless otherwise provided in this Resolution.
However, the obligation to make payments under Article V hereof shall commence only upon
the first disbursement by the Trustee of Loan proceeds for the respective Loan.
Section 4.3. Termination of Loan Term. The Borrower's obligations under this
Resolution shall terminate upon payment in full of all amounts due under the Series 2004 Bonds
and this Resolution; provided, however, that the covenants and obligations provided in Article
VII, shall survive the termination of this Resolution.
Section 4.4. Loan Closinq 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
14
-. ..-. .....".". ... .------..-"..".,....---
-----.-..---.
REPAYMENT OF LOAN
Section 5.1. Repavment of Loans. The Borrower shall repay the amounts lent to it
pursuant to Section 4.1 hereof, plus interest on the unpaid amounts lent on the Series A and B
Loans at the rate of 3.75% per annum on the unpaid balance. Each Loan repayment will be
made in semiannual Loan Repayments. Included as part of the interest rate are an
Administrative Expense Surcharge on the outstanding principal amount of the Loan at the rate
of 0.75% per annum and a Loan Loss Reserve Surcharge equal to 1.00% per annum on the
outstanding principal amount of the Loan. The Borrower shall pay all Loan Repayments and
Administrative Expense Surcharges and Loan Loss Reserve Surcharge in lawful money of the
United States of America to the DNRC. Interest and Administrative Expense Surcharges 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 required by this Section 5.1, and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge, shall be due on each January 1 and July 1
(the "Payment Dates"), as follows:
(a) 2004A Loan. With respect to the 2004A Loan:
(1 ) interest, Loan Less Reserve Surcharge and Administrative Expense
Surcharge on the outstanding principal balance of the 2004A Loan shall
be payable on each January 1 and July 1, beginning on January 1, 2006
and concluding on July 1, 2024; and
(2) the principal of the 2004A Loan shall be repayable on each Payment
Date, beginning on January 1, 2006 and concluding on July 1, 2024, and
the amount of each principal payment shall be calculated on the basis of
substantially level debt service at an interest rate of 3.75% per annum;
provided that principal of the 2004A Loan is payable only in amounts that
are multiples of $1,000 as shown on Schedule B attached to the Series
2004 A Bond.
(b) 2004B Loan. With respect to the 2004B Loan:
(1 ) interest, Administrative Expense Surcharge and Loan Loss Reserve
Surcharge on the outstanding principal balance of the 2004B Loan shall
be payable on each January 1 and July 1, beginning January 1, 2006 and
concluding on July 1, 2024; and
(2) the principal of the 2004B Loan shall be repayable on each Payment
Date, beginning on the January 1, 2006 and concluding on July 1, 2024,
and the amount of each principal payment shall be calculated on the
basis of a substantially level debt service at a rate of 3.75% per annum
and principal payments in multiples of $500 as shown on Schedule
attached to the Series 2004 B Bond.
The payments of principal of and interest and Administrative Expense Surcharge and
Loan Loss Reserve Surcharge on the Loan shall be due on the dates and in the amounts shown
15
in Schedule B and Schedule C to each Series 2004 Bond. The portion of each such Loan
Repayment consisting of principal and the portion consisting of interest and the amount of each
Administrative Expense Surcharge and the amount of each Loan Loss Reserve Surcharge shall
be set forth in Schedule B to each Series 2004 Bond. Upon each disbursement of Loan
amounts to the Borrower pursuant to Section 4.1 hereof, the Trustee shall enter or cause to be
entered the amount advanced on Schedule A to each Series 2004 Bond under "Advances" and
the total amount advanced under Section 4.1, including such disbursement, under "Total
Amount Advanced."
Past-due payments of principal and interest and Administrative Expense Surcharges and
Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum,
until paid.
Any payment of principal, interest or Administrative Expense Surcharge and Loan Loss
Reserve Surcharge, if applicable, under this Section 5.1 shall also be credited against the same
payment obligation under the Series 2004 Bonds.
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
Loans, if the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee in
connection with the Loans and the Series 2004 Bonds, including, but not limited to:
(1) the cost of reproducing this Resolution and the Series 2004 Bonds;
(2) the fees and disbursements of Bond Counsel and other Counsel utilized by
the DNRC and the Trustee in connection with the Loans, this Resolution and the Series
2004 Bonds and the enforcement thereof; and
(3) all taxes and other governmental charges in connection with the execution
and delivery of the Series 2004 Bonds, whether or not the Series 2004 Bonds are then
outstanding, including all recording and filing fees and the pledge of the State's right, title
and interest in and to the Series 2004 Bond and this Resolution under the Bond
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. PreDavments. The Borrower may, but only from the prepayment of Special
Assessments levied pursuant to Section 6.7 and upon 30 days' prior written notice to the DNRC
and the Trustee, prepay the Series 2004 Bonds or principal installments thereof without penalty
on any Payment Date; provided that such prepayment 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. In such event, the finance officer of
the District shall call for redemption on the payment date the Series 2004 Bonds or principal
installments thereof, in the order of their registration in an amount which, together with interest
Administrative Expense Surcharge and Loan Loss Reserve Surcharge accrued thereon to the
payment date, will equal the amount of the balance in the District Fund, provided that both
Series A and B bonds are prepaid pro-rata. Except as provided in the foregoing sentences of
this Section 5.3 or as otherwise required by law, the Borrower may not prepay all or any part of
the outstanding principal amount of a Series 2004 Bond unless (i) it obtains the prior written
consent of the DNRC thereto, and (ii) no Loan Repayment or Administrative Expense Surcharge
16
or Loan Loss Reserve Surcharge, if applicable, 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, if applicable, to the date of prepayment
on the amount of principal prepaid. If a Series 2004 Bond is 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. Obliaations of Borrower Unconditional. The obligations of the Borrower to
make the payments required by this Resolution and the Series 2004 Bonds and to perform its
other agreements contained in this Resolution and the Series 2004 Bonds 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 Resolution and the Series
2004 Bonds, (b) shall perform all its other agreements in this Resolution and the Series 2004
Bonds and (c) shall not terminate this Resolution and the Series 2004 Bonds for any cause,
including any acts or circumstances that may constitute failure of consideration, destruction of or
damage to the 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 of either 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
Resolution.
Section 5.5. Limited Liabilitv of Bond Obliaation. All payments of principal of and
interest on the Loans and other payment obligations of the Borrower hereunder and under the
Series 2004 Bonds shall be special, limited obligations of the Borrower payable solely out of the
District Fund and loans, if any requested, from the SID Revolving Fund. The obligations of the
Borrower under this Resolution and the Series 2004 Bonds shall never constitute an
indebtedness of the Borrower within the meaning of any state constitutional provision or
statutory 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 2004 Bonds, and no funds or property of
the Borrower other than the District Fund or the SID Revolving Fund may be used to pay
principal of or interest on the Series 2004 Bonds.
ARTICLE VI
OTHER AGREEMENTS OF BORROWER
Section 6.1. Maintenance of System; Liens. The Borrower shall maintain the 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 Project;
provided that this Section 6.1 shall not be deemed to be violated if a mechanic's or 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 6.2. Maintenance of Existence; Meraer. 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
17
the Borrower) (i) is a Public Entity and (ii) assumes in writing all of the obligations of the
Borrower under this Resolution and the Series 2004 Bonds, 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 this Resolution and the outstanding Bonds, (b) such action does not
violate the Safe Drinking Water Act or the Clean Water Act and does not adversely affect the
exclusion of interest on the Series 2004 Bonds 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 6.2.
Other than pursuant to the preceding paragraph, the Borrower shall not transfer the
Project 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
Project, 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.
Section 6.3. Covenants Relatina 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 2004 Bonds or any other funds of the Borrower, 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. In addition, 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 Loans or the portion of the Loans 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.
(b) The Borrower shall not use or permit the use of the 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 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.
(c) Any portion of the Project being refinanced or the cost of which is being reimbursed
was acquired by and is now and shall, during the term of the Loans, be owned by the Borrower
and not by any other Person. Any portion of the Project being financed shall be acquired by and
shall, during the term of the Loans, be owned by the Borrower and not by any other Person.
Notwithstanding the previous two sentences, the Borrower may transfer the Project or a portion
thereof to another Governmental Unit which is also a Public Entity if such transfer is otherwise
permitted hereunder and if such organization agrees with the DNRC to comply with Sections
2.2(h), 2.2(i) and 6.3 hereof and if the DNRC receive an Opinion of Bond Counsel that such
transfer will not violate the Safe Drinking Water Act or the Clean Water Act or adversely affect
the exclusion of interest on the Bonds from gross income or purposes of federal income
taxation. In addition, except as otherwise provided herein, the Borrower may sell or otherwise
dispose of any portion of the 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 and the Safe Drinking Water Act.
18
...-.-".-.----..---- ___... ____..._ ._u_._ _....__.....__ .._n. _. _. ....
(d) At the Closing of the Loans 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 or 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 Additional State Bonds the interest on which the
State did not intend to be excluded from gross income from federal income tax purposes) from
gross income of the recipients thereof for federal income tax purposes.
(e) The Borrower agrees that during the Loan Term it will not contract with or permit any
Private Person to manage the Project or any portion thereof except according to a written
management contract which complies with the following provisions:
(1) If any contract between the Borrower and the Private Person with respect to
the Project provides for compensation based on a percentage of fees charged for
services rendered by the Private Person, the contract may not exceed a term of five
years (including any renewal options). At least 50% of the compensation to the Private
Person must be based upon a periodic fixed fee. In addition, the Borrower must be able
to cancel the contract without penalty or cause at the end of any three-year period of the
contract term. The compensation must be reasonable, and it may not be based on a
percentage of the net profits of the Project or the System or any portion thereof or any
other division or activity of the Borrower.
(2) If any contract between the Borrower and the Private Person with respect to
the Project provides for compensation based on a periodic flat fee, the compensation
must be reasonable and the contract may not exceed a term of five years (including any
renewal options). In addition, the Borrower must be able to cancel the contract without
penalty or cause at the end of any three-year period of the contract term. If the contract
provides for automatic increases in the periodic flat fee, the increases may not exceed
the percentage increases determined by particular external standards for computing
such increases that are mutually agreed upon in the contract. The percentage increases
reflected in the Consumer Price Index compiled by the Bureau of Labor Statistics, U.S.
Department of Labor, or the actual percentage increases for services that result from the
application of external criteria (for example, increases in rates paid by insurance
companies) are illustrations of two external standards that may be used.
(3) If a Private Person and the Borrower enter into a contract described in
subparagraph (1) or (2) above and the governing body of the borrower contains five or
more members, no more than one member of the governing body of the Borrower may
be the Private Person or a related person (as described in Section 144(a)(3) of the
Code) (a "Related Person"), an employee of the Private Person or a related Person, or a
member of the governing body of the Private Person or a Related Person. However,
such Private Person or a Related Person, employee of the Private Person or a Related
Person or a member of the governing body of the Private Person or a Related Person,
may not serve as the chief executive of the Borrower. If a Private Person and the
19
Borrower enter into a contract described in (1) or (2) above and the governing body
contains less than five members, no member of the governing body may be the Private
Person or Related Person, an employee of the Private Person or a Related Person or a
member of the governing body of the Private Person or a Related Person.
(4) The Borrower may depart from any of its agreements contained in
subparagraphs (1) through (3) if it delivers to the DNRC, at the Borrower's expense, an
Opinion of Bond Counsel that to do so would not adversely affect the exclusion of
interest on the State Bonds from gross income for purposes of federal income taxation.
(f) The Borrower may not lease the 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 this Resolution, provided the Borrower may lease all or any portion
of the 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.
(g) The Borrower shall not change the use or nature of the Project if (i) such change will
violate the Clean Water Act or the Safe Drinking 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.
Section 6.4. Competinq Service. The Borrower will not establish or authorize the
establishment of any other system for the public supply of service or services in competition with
any or all of the services supplied by the facilities of the System.
Section 6.5 District Fund Held in Trust. The Borrower will hold the District Fund as a
trust fund, separate and apart from all of its other funds, and the Borrower, its officers and
agents, will comply with all covenants and agreement contained in this resolution relative to the
District Fund.
Section 6.6. Remedies. The DNRC, so long as it owns the Series 2004 Bonds, or the
owners of not less than 25% in principal amount of the outstanding Bonds issued and secured
under the provisions of this Resolution shall have the right, either at law or in equity, through
suit, action or other proceedings, to protect and enforce the rights of all owners of such Bonds
and to compel the performance of any and all of the covenants required herein to be performed
by the Borrower, and its officers and employees, including but not limited to the fixing and
maintaining of rates, fees and charges and the collection and proper segregation of gross
revenues and the application and use thereof. The owners of a majority in principal amount of
such outstanding Bonds shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Bondowners or the exercise of any power
conferred on them and the right to waive a default in the performance of any such covenant,
and its consequences, except a default in the payment of the principal of, premium, or interest
on any bond when due. However, nothing herein shall impair the absolute and unconditional
right of the owner of each such bond to receive payment of the principal of, premium, if any, and
interest on such Bond as such principal and interest respectively become payable, and to
institute suit for any such payment. Any court having jurisdiction of the action may appoint a
receiver to administer the System on behalf of the Borrower with power to charge and collect
rates, fees and charges sufficient to provide for the payment of any Bonds or obligations
20
outstanding against the System, and to apply the gross revenues in conformity with this
Resolution and the laws of the State.
Section 6.7 Lew of Special Assessments. The Borrower will do all acts and things
necessary for the final and valid levy of the special assessments upon all property within the
boundaries of the District in accordance with the Constitution and laws of the State of Montana
and the Constitution of the United States in an aggregate principal amount not less than that of
the Series 2004 Bonds. Such special assessments shall be levied on the basis or bases
prescribed in Resolution No. 3669, adopted April 5, 2004, and, as authorized by Montana Code
Annotated, Section 7-12-4162, shall be payable in equal semiannual installments of principal
and interest. The unpaid installments of the assessments shall bear interest at the annual rate
of interest borne by the then outstanding Bonds plus 'Y2 of one percent as required by Section 7-
12-4189, MCA The assessments will be payable in installments on the 30th day of November in
each of years 2005 through 2023 and on the 31st day of May in the years 2006 through 2024,
inclusive, if not theretofore paid, and shall become delinquent on such date unless paid in full.
The payment due on any installment date shall be the amount necessary to amortize, over the
19-year term in equal semiannual payments, the principal amount of the assessment, together
with interest to accrue thereon over said term at the interest rate thereon; provided that the
amount of each such installment shall be adjusted each fiscal year to an amount equal to the
amount necessary to amortize fully the then outstanding principal amount of the assessment
(excluding any delinquent amounts), plus interest accrued at the interest rate on the
assessments then in effect in the number of installments then remaining until May 31, 2024.
The special assessments shall constitute a lien upon and against the property against which
they are made and levied, which lien may be extinguished only by payment of the special
assessment with all penalties, costs and interest as provided in Montana Code Annotated,
Section 7-12-4191. No tax deed issued with respect to any lot or parcel of land shall operate as
payment of any installment of the Special Assessment thereon which is payable after the
execution of such deed, and any tax deed so issued shall convey title subject only to the lien of
said future installments, as provided in Montana Code Annotated, Section 15-18-214.
Section 6.8 Reassessment. . If at any time and for whatever reason any special
assessment herein agreed to be levied is held invalid, the Borrower and its governing body, its
officers and employees, will take all steps necessary to correct the same and to reassess and
re-Ievy the same, including the ordering of work, with the same force and effect as if made at
the time provided by law, ordinance or resolution relating thereto, and will reassess and re-Ievy
the same with the same force and effect as an original levy thereof, as authorized in Montana
Code Annotated, Section 7-12-4186. Any special assessment, or reassessment or re-Ievy shall,
so far as is practicable, be levied and collected as it would have been if the first levy had been
enforced including the levy and collection of any interest accrued on the first levy.
Section 6.9 Waiver of Penalty and Interest. The Borrower covenants not waive the
payment of penalty or interest on delinquent assessments levied on property in the Borrower
pursuant to Section 6.7 for costs of the Project, unless the Borrower determines, by resolution of
its governing body, that such waiver is in the best interest of the holders of the Series 2004
Bond.
Section 6.10. Loans from Revolvinq Fund. The Borrower's Commission shall annually
or more often if necessary issue an order authorizing a loan or advance from the Revolving
Fund to the District Fund in an amount sufficient to make good any deficiency then existing in
the Special Assessment Account to the extent that money is available in the SID Revolving
21
Fund. A deficiency shall be deemed to exist in Special Assessment Account if the money on
deposit therein on any June 15th or December 15th (excluding amounts in the representing
prepaid special assessments) is less than the amount necessary to pay Bonds due (other than
upon redemption), and interest on all Bonds payable, on the next succeeding interest payment
date.
The Borrower hereby agrees to provide funds for the SID Revolving Fund by levying a
tax or making a loan from the General Fund as authorized by Section 7-12-4223, Montana Code
Annotated. The Borrower further agrees that in the event that the balance on hand in the SID
Revolving Fund fifteen days prior to any date when interest is due on special improvement
district bonds or warrants of the Borrower is not sufficient to make good all deficiencies then
existing in the special improvement district funds for which the Borrower has covenanted to
make loans from the SID Revolving Fund, the balance on hand in the SID Revolving Fund shall
be allocated to the funds of the special improvement districts in which such deficiencies then
exist in proportion to the amounts of the deficiencies on the respective dates of receipt of such
money, until all interest accrued on such Special improvement district bonds or warrants of the
Borrower has been paid. The Borrower further agrees that on any date when all accrued interest
on special improvement district bonds and warrants of the Borrower payable from funds for
which the Borrower has covenanted to make loans from the Revolving Fund has been paid, any
balance remaining in the SID Revolving Fund shall be lent or advanced to the special
improvement district funds for payment and redemption of bonds to the extent the special
improvement district funds are deficient for such purpose, and, if money in the SID Revolving
Fund is insufficient therefore, pro rata, in an amount proportionate to the amount of such
deficiency.
ARTICLE VII
INDEMNIFICATION OF DNRC, DEQ AND TRUSTEE
Section 7.1. Indemnification. The Borrower shall indemnify and save harmless
the DNRC, the DEQ, the Trustee 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, resulting from or in any way connected with the condition,
use, possession, conduct, management, planning, design, acquisition, construction, installation
or financing of the Project. The Borrower shall also defend, indemnify and save harmless the
Indemnified Parties against and from all costs, reasonable counsel 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 any such claim or demand, the
Borrower shall, upon notice from the Indemnified Party, defend such proceeding on behalf of the
Indemnified Party. Notwithstanding the foregoing, the Borrower shall not be obligated to
indemnify an Indemnified Party or any of its officers, employees or agents or hold any of them
harmless against or from or in respect of any claim, damage, demand, expense, liability or loss
arising from the intentional or willful misconduct or gross negligence of the Indemnified Parties.
ARTICLE VIII
ASSIGNMENT
22
.--.-.-...-..-..-- __".____".."_...._.n
Section 8.1. Assianment by Borrower. The Borrower may not assign its rights and
obligations under this Resolution or the Series 2004 Bonds, except as provided in Section 6.2.
Section 8.2. Assianment by DNRC. The DNRC will pledge its rights under and interest
in this Resolution and the Series 2004 Bonds (except to the extent otherwise provided in the
Indenture) as security for the payment of the State Bonds.
Section 8.3. State Refundina Bonds. In the event the State Bonds and Additional State
Bonds are refunded by bonds which are not Additional State Bonds, all references in this
Resolution to State Bonds and Additional State Bonds shall be deemed to refer to the refunding
bonds and any bonds of the State on a parity with such refunding bonds (together, the
"Refunding Bonds") or, in the case of a crossover refunding, to the State Bonds and Additional
State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue
of Additional State Bonds, all references in this 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.
ARTICLE IX
THE SERIES 2004 BONDS
Section 9.1. Authorization. Under the provisions of the Enabling Act, the Borrower is
authorized to issue and sell its special improvement district bonds payable during a term not
exceeding twenty years from their date of issue, to provide funds for the Improvements or to
refund its special improvement district bonds issued for such purpose; provided that the bonds
and the interest thereon are to be payable solely out of the District Fund.
Section 9.2. Outstandina District SID Bonds. As of the date hereof, there are no
outstanding SID Bonds for the District.
Section 9.3. Special Assessment Amount. In order to provide sufficient funds for
payment of the Series 2004 Bond, the Borrower, pursuant to Section 7-12-4162, M.C.A., and
this Resolution sets the total principal amount of water improvement assessment for the 11 lots
benefited at $94,000, plus interest at the rate of 3.75% per annum, (which correlates to the
principal amount of the Series B Bond and sets the total principal amount of Sewer
Improvements at $145,500 for the six lots benefited by Sewer Improvements and sets the total
principal amount of Street and Storm Drain Improvements at $254,500 for the 13 lots benefited
by the Street and Storm Drain Improvements (which jointly correlate to the principal amount of
the Series A Bond).
Section 9.4. Issuance and Sale of the Series 2004 Bonds. 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 2004 Bonds to evidence the Loans. The
Series 2004 Bonds are issued to the DNRC without public sale pursuant to Montana Code
Annotated, Section 7-7-4433(2)(a).
Section 9.5. Terms. The Series 2004 Bonds shall be in the maximum principal amount
of the Loans, shall be issued as single, fully registered bonds numbered R-1, shall be dated as
23
--.-...-.....-.---."--.".,,.----- _.
.. .______n ___...
of the date of delivery to the DNRC, and shall bear interest at the rate charged by the DNRC on
the respective Loan. The principal of and interest on the Series 2004 Bonds shall be payable
on the same dates and in the same amounts as principal and interest of the Loan Repayments
are payable. Advances of principal of the Series 2004 Bonds shall be deemed made when
advances of the Loan are made under Section 4.1, and such advances shall be payable in
accordance with Schedule B to each Series 2004 Bond.
The Borrower may prepay the Series 2004 Bonds, in whole or in part, only upon the
terms and conditions under which it can prepay the Loans under Section 5.3.
Section 9.6. Neqotiabilitv. Transfer and Reqistration. The Series 2004 Bonds shall be
fully registered as to both principal and interest, and shall be initially registered in the name of
and payable to the DNRC. While so registered, principal of and interest on the Series 2004
Bonds shall be payable to the DNRC at the Office of the Department of Natural Resources and
Conservation, 1625 11th Ave., Helena, Montana 59620-2301 or such other place as may be
designated by the DNRC in writing and delivered to the Borrower. The Series 2004 Bonds shall
be negotiable, subject to the provisions for registration and transfer contained in this section.
No transfer of the Series 2004 Bonds shall be valid unless and until (1) the holder, or his duly
authorized attorney or legal representative, has executed the form of assignment appearing on
the Bond, and (2) the Clerk of the Commission of the Borrower (the "Registrar"), as Bond
Registrar, has duly noted the transfer on the Series 2004 Bonds 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 a Series 2004 Bond is registered as the absolute owner of such Series 2004 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 9.7. Execution and Deliverv. The Series 2004 Bonds shall be executed on
behalf of the Borrower by the manual signatures of the Mayor and the Clerk of the Commission.
Any or all of such signatures may be affixed at or prior to the date of delivery of the Series 2004
Bonds. The Bonds shall be sealed with the corporate seal of the Borrower. In the event that
any of the officers who shall have signed the Series 2004 Bonds shall cease to be officers of the
Borrower before the Bonds are issued or delivered, their signatures shall remain binding upon
the Borrower. Conversely, the Series 2004 Bonds may be signed by an authorized official who
does not hold such office on the date of adoption of this Resolution. The Series 2004 Bonds
shall be delivered to the DNRC, or its attorney or legal representative.
Section 9.8. Form. The Series 2004 Bonds shall be prepared in substantially the form
attached as Appendix B.
ARTICLE X
NO ADDITIONAL DESTRICT BONDS
Section 10.1. No Additional District Bonds. The Borrower will not allow the issuance of
any other special assessment bonds for the District for the Project.
24
-..-..---,.,."..---.--
ARTICLE XI
DISTRICT FUND
Section 11.1. Bond Proceeds and Soecial Assessments Pledqed and Aoorooriated.
There is hereby created the District Fund. The Fund shall be maintained as a separate and
special bookkeeping account on the official books of the Borrower until the Series 2004 Bonds
and interest due thereon has been fully paid, or the Borrower's obligations with reference to
such Bonds has been discharged as provided in this Resolution. All proceeds of the Series
2004 Bonds and all special assessments of the District collected for the payment of the Series
2004 Bonds are irrevocably pledged to the payment of the Series 2004 Bonds.
Section 11.2. Acquisition and Reimbursement Account. There is hereby created a
separate Series 2004 Acquisition and Reimbursement Account established under this
Resolution and shall be used to pay as incurred and allowed costs which under accepted
accounting practice are capital costs and expenses of the Project as generally described on
Exhibit A hereto. To the Acquisition and Reimbursement Account shall be credited as received
proceeds of Series 2004 Bonds issued hereunder. This Account shall be utilized to make
appropriate reimbursements to the Borrower and to pay Project Costs.
Section 11.3 Series 2004 Soecial Assessment Account. There is hereby created a
Special Assessment Account within the District Fund. Money in the Series 2004 Special
Assessment Account shall be used only for payment of the principal of and interest on the
Series 2004 Bonds as such payments become due or to redeem the Series 2004 Bonds.
Upon collection of the installment of principal and interest due on November 30 and May
31 of each fiscal year on the Special Assessments to be levied with respect to the Project, the
finance officer of the Borrower shall credit to the Interest Account so much of said Special
Assessments as is collected as interest payment and the balance thereof to the Principal
Account. Any installment of any Special Assessment paid prior to its due date with interest
accrued thereon to the next succeeding interest payment date shall be credited with respect to
principal and interest payments in the same manner as other assessments are credited to the
Series 2004 Special Assessment Account. All money such Account shall be used first to pay
interest due, and any remaining money shall be used to pay principal of the Series 2004 Bonds
then due and, if money is available, to redeem the Series 2004 Bond or principal installments
thereof in accordance with Section 5.3; provided that any money transferred to such Account
from the Acquisition and Construction Account pursuant to Section 6.3 shall be applied to
redeem the Series 2004 Bonds or principal installments thereof to the extent possible on the
next interest payment date for which notice of redemption may properly be given pursuant to
Section 5.3. Redemption of the Series 2004 Bonds shall be in order of the principal installments
it represents as provided in Section 5.3, and interest shall be paid as accrued thereon to the
date of redemption.
Section 11.4. Deoosit and Investment of Funds. The Finance Officer of the Borrower
shall cause all money in the District Fund to be deposited and invested as described in Title 7,
Chapter 6, Part 2, MCA.
ARTICLE XII
25
TAX MA TIERS
Section 12.1. Use of Proiect. The Project 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 nongovernmental
person relating to the use of the Project or security for the payment of the Series 2004 Bonds
which might cause the Series 2004 Bonds to be considered a "private activity bond" or "private
loan bond" within the meaning of Section 141 of the Code.
Section 12.2. General Covenant. The Borrower covenants and agrees with the owners
from time to time of the Series 2004 Bonds 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 2004
Bonds 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 2004 Bonds will not become includable in gross income for federal
income tax purposes under the Code and the Regulations.
Section 12.3. Arbitraae Certification. The Mayor and the Clerk of the Commission,
being the officers of the Borrower charged with the responsibility for issuing the Series 2004
Bonds Pursuant to this Resolution, 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 Sections
1.148-1 through 1.148-11 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 2004 Bonds, it is
reasonably expected that the proceeds of the Series 2004 Bonds will be used in a manner that
would not cause the Series 2004 Bonds to be an "arbitrage bond" within the meaning of Section
148 of the Code and the Regulations.
Section 12.4. Arbitraae Rebate Exemption.
(a) The Borrower hereby represents that the Series 2004 Bond qualifies for the
exception for small governmental units to the arbitrage rebate provisions contained in Section
148(f) of the Code. Specifically, the Borrower represents:
(1) Substantially all (not less than 95%) of the proceeds of the Series 2004 Bond
(except for amounts to be applied to the payment of costs of issuance will be used for
local governmental activities of the Borrower.
(2) The aggregate face amount of all "tax-exempt bonds" (including warrants,
contracts, leases and other indebtedness, but excluding private activity bonds) issued by
or on behalf of the Borrower and all subordinate entities thereof during 2004 is
reasonably expected not to exceed $5,000,000. To date in 2004, the Borrower has
issued no such tax-exempt bonds.
(b) If notwithstanding the provisions of paragraph (a) of this Section 12.4, the arbitrage
rebate provisions of Section 148(f) of the Code apply to the Series 2004 Bond, the Borrower
hereby covenants and agrees to make the determinations, retain records and rebate to the
United States the amounts at the times and in the manner required by said Section 148(f).
26
-. ....--- ..-...---.-.-.-----.-... -..------..-.-.......-... -....-----.---
Section 12.5. Information Reportinq. The Borrower shall file with the Secretary of the
Treasury, not later than November 15, 2004, a statement concerning the Series 2004 Bonds
containing the information required by Section 149(e) of the Code.
Section 12.6. "Qualified Tax-Exempt Obliqations". Pursuant to Section 265(b)(3)(B)(ii) of
the Code, the Borrower hereby designates the Series 2004 Bonds as a "qualified tax-exempt
obligation" for purposes of Section 265(b)(3) of the Code. The Borrower has not designated
any obligations in 2004 other than the Series 2004 Bonds under Section 265(b)(3). The
Borrower hereby represents that it does not anticipate that obligations bearing interest not
includable in gross income for purposes of federal income taxation under Section 103 of the
Code (including refunding obligations as provided in Section 265(b)(3) of the Code and
including "qualified 501(c)(3) bonds" but excluding other "private activity bonds," as defined in
Section 141(a) and 145(a) of the Code) will be issued by or on behalf of the Borrower and all
"subordinate entities" of the Borrower in 2004 in an amount greater than $10,000,000.
Section 12.7. "Continuinq Disclosure". The Borrower understands and acknowledges
that the DNRC is acquiring the Series 2004 Bonds 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 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (17 C.F.R. ~ 240.15c2-12) 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 Mayor and the Clerk to the effect that, to the best of their knowledge, such
information does no include any untrue statement of a material fact or omit to state any material
fact required to be state therein to make the statement made, in light of the circumstance under
which they are made, not misleading.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. 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
P.O. Box 202301
Helena, Montana 59620
27
Attention: Anna Miller
Trustee: U.S. Bank NA
2 Union Square
601 Union Street, Suite 2120
Seattle, WA 98101
Attn: Corporate Trust Department
Borrower: City of Bozeman
411 East Main
P.O. Box 1230
Bozeman, MT 59771-1230
Attention: Finance Officer
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 13.2. Bindina Effect. This Resolution shall inure to the benefit of and shall be
binding upon the DNRC, the Borrower and their respective successors and assigns.
Section 13.3. Severabilitv. If any provision of this Resolution shall be determined to be
unenforceable at any time, it shall not affect any other provision of this Resolution or the
enforceability of that provision at any other time.
Section 13.4. Amendments. This Resolution may not be effectively amended without
the written consent of the DNRC.
Section 13.5. Applicable Law. This Resolution shall be governed by and construed in
accordance with the laws of the State.
Section 13.6. Captions: References to Sections. The captions in this Resolution are for
convenience only and do not define or limit the scope or intent of any provisions or Sections of
this Resolution. References to Articles and Sections are to the Articles and Sections of this
Resolution, unless the context otherwise requires.
Section 13.7. No Liabilitv of Individual Officers, Directors or Trustees. No recourse
under or upon any obligation, covenant or agreement contained in this Resolution shall be had
against any director, officer or employee, as such, past, present or future, of the DNRC or the
Trustee, either directly or through the DNRC 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 Resolution and the making of the Loan.
28
Section 13.8. Payments Due on Holidavs. 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 Resolution
or the Bond, shall not be 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 Resolution or the Bonds.
Section 13.9. Riqht of Others to Perform Borrower's Covenants. I n the eyent 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 may (but shall 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 shall be paid immediately to the party making such advance
and shall bear interest at the rate of 10 percent from the date of the advance until repaid. The
DNRC shall have the right to enter the Project or the facility or facilities of which the 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 13.10. Authentication of TranscriDt. 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 2004 Bonds and such other certificates and
affidavits as may be required to show the right, power and authority of the Borrower to issue the
Series 2004 Bonds, 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 purported to be shown thereby.
Section 13.11. ReDeal and Effective Date.
(a) Repeal. Other than as stated in (a) above, all provisions of other resolutions and
other actions and proceedings of the Borrower and this Commission that are in any way
inconsistent with the terms and provisions of this Resolution are repealed, amended and
rescinded to the full extent necessary to give full force and effect to the provisions of this
Resolution.
(b) Effective Date. This Resolution shall take effect immediately.
PASSED AND ADOPTED by the City Commission of Bozeman, Montana, on this 20th
day of December, 2004.
Attest:
BY:at:J~
Its: Clerk of the Commission
29
Approved as to form:
By: ~ ~o~
Its: Acting City Attorney ........
30
_____n._ . --...--
APPENDIX A
Sid Cost Breakdown
The construction of new water lines, extension of an existing sewer line and replacement
of an existing sewage lift station, construction of street improvements and storm drainage
collection and treatment facilities generally within the Bridger Center Subdivision.
Estimates of Project Costs
Street & Storm
Walker Excavation & DOR $200,689
Engineering & Inspection 31 ,400
SID fees (adv., bond counsel, etc.) 2,144
City Administration (3%) 7,637
Revolving Fund (5%) 12,730
TOTAL $254,600
Series 2004A Bond Amount: 254,600 DNRC Breakdown
SEWER SRF FUNDING
Walker Excavation & DOR 116,731 Construction
317,419.01
Engineering & Inspection 15,072 Engineering 46,472.00
SID fees (adv., bond counsel, etc.) 1962 SID & Legal Fees 4,100.99
City Administration (3%) 4365 City Admin & Revolving Fund 32,008.00
Revolving Fund (5%) 7270 $400,000.00
TOTAL $145,400
Series 2004 A Bond Amount 145,400
WATER WRF FUNDING
Walker Excavation & DOR 67,668 Construction
67,667.54
Engineering & Inspection 16,328 Engineering 16,328.00
SID fees (adv., bond counsel, etc.) 2,487 SID & Legal Fees 2,492.46
City Administration (3%) 2,817 City Admin & Revolving Fund 7,512.00
Revolving Fund (5%) 4,700 $94,000.00
TOTAL $94,000 TOTAL FUNDING AMOUNT $494,000
Series 2004B Bond Amount $94,000
Total Series 2004 Bonds Amount $494,000
APPENDIX B-1
[Form of the Series 2004A Bond]
UNITED STATES OF AMERICA
STATE OF MONT ANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
SPECIAL IMPROVEMENT DISTRICT 674
(DNRC SRF LOAN PROJECT), Series 2004A
No. R-l $400,000
FOR VALUE RECEIVED, the City of Bozeman, Gallatin County, 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 its Special Improvement District No. 674
Fund, the principal sum equal to the sum of the amounts entered on Schedule A and Schedule B
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 an Administrative Expense Surcharge and
a Loan Loss Reserve Surcharge on the outstanding principal amount of this Bond at the rate of
three-quarters of one percent (0.75%) and one percent (1.00%), respectively, per annum. Interest
and Administrative Expense Surcharge and Loan Loss Reserve Surcharge at the collective rate of
three and three-quarter percent (3.75%) per annum shall be payable in semiannual installments
payable on each January 1, and July 1 (each a "Loan Repayment Date") commencing January 1,
2006. 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 hereto under "Total Loan
Payment." The portion of each such payment consisting of principal, the portion consisting of
interest and the portion consisting of Administrative Expense Surcharge shall be as set forth in
Schedule B hereto. Upon each disbursement of 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 the "Total Amount Advanced." The
DNRC shall prepare Schedule B and revised Schedule B, or cause Schedule B and revised
Schedules 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 3.75% per
annum. Past-due payments of principal and interest and Administrative Expense 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 of this Bond, at its address as it appears on the Bond register, in lawful
money of the United States of America.
This Bond constitutes one of a series of Special Improvement District 674 Bonds of the
Borrower in the maximum authorized principal amount of $494,00 issued to finance the costs of
the construction of certain Improvements to the property in Special Improvement District #674
(the "District"), to make a deposit to the Borrower's Special Improvement District Revolving
Fund (the "SID Revolving Fund") for the Series 2004 A Bond and to pay costs of issuance of the
Series 2004A Bond. This Series 2004A 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 12, Parts 41 and 42, as amended, and ordinances and resolutions duly
adopted by the governing body of the Borrower. This Series 2004A Bond is issuable only as a
single, fully registered bond.
Reference is made to Resolution No. 3755, duly adopted by the governing body of the
Borrower on December 20,2004 wherein the Borrower authorized the issuance of this Bond (the
"Resolution"). The Resolution should be reviewed for a more complete statement of the terms
and conditions upon which this Series 2004A Bond has been issued, the District Fund and SID
Revolving Fund pledged and appropriated for the payment and security thereof on a parity
between the Series 2004A Bond and the Series 2004B Bond (collectively the "Series 2004
Bonds"), the conditions upon which the Resolution may be amended, the rights, duties and
obligations of the Borrower, and the rights ofthe owners of this Series 2004A Bond.
The principal installments of the Bond are subject to mandatory redemption in order of
registration on any interest payment date if, after paying all principal and interest then due on the
Bond, there are funds to the credit of the Series 2004 Special Assessment Account of the District
from the prepayment of assessments levied in the Borrower for the redemption thereof, upon 30
days' prior written notice to the Holder and the Trustee.
The Borrower may prepay the principal of this Series 2004A Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) no Loan Repayment or Administrative
Expense Surcharge is then delinquent. Any prepayment permitted by the DNRC must be
accompanied by payment of accrued interest and Administrative Expense Surcharge to the date
of prepayment on the amount of principal prepaid. If this Series 2004A Bond is prepaid in part,
such prepayments shall be applied to principal payments in inverse order of maturity.
This Bond is payable from the collection of a special assessment levied upon certain
property within the boundaries of the Borrower, in an aggregate principal amount of the Series
2004A Bond, except as such amount may be reduced or increased in accordance with provisions
of the Resolution and Montana law. Such assessments constitute a lien against such property
within the District, and this Bond is not a general obligation of the Borrower.
If default be made in the payment of any installment due under this Bond or by the
occurrence of anyone or more of the Events of Default specified in Article IX of the SRF and
WRF Indenture (as defined in the Resolution) and if such Event of Default is not remedied as
therein provided, the DNRC then, or at any time thereafter, may give notice to the Borrower that
all unpaid amounts of this Bond then outstanding together with all other unpaid amounts
81- 3
outstanding under the Resolution are due and payable immediately and thereupon without further
notice or demand all such amounts shall become and be immediately due and payable. Failure to
exercise this option shall not constitute a waiver of the right to exercise the same at any time in
the event of any continuing or subsequent default. In the event of default in the payment of this
Bond and if the same is collected by an attorney at law, the Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees.
The Borrower may deem and treat the person in whose name this Series 2004A Bond is
registered as the absolute owner hereof, whether this Series 2004A 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.
This Series 2004A Bond has been designated by the Borrower as a "qualified tax-exempt
obligation" pursuant to Section 265 ofthe Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the
Borrower has duly authorized and will forthwith undertake the Improvements, has fixed and
established and will collect the Special Assessments, and has created a special District Fund into
which Special Assessments will be paid. The Borrower has agreed in the Resolution and in
accordance with the provisions of Title 7, Chapter 12, Parts 41 and 42, Montana Code
Annotated, to make loans from the SID Revolving Fundto the District Fund and to levy taxes for
deficiencies in the Revolving Fund. The Series 2004 Bonds are not, however, general
obligations of the Borrower. The Borrower, through its Commission also covenants that all
provisions for the security of this Series 2004 Bonds 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
2004A 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
2004A Bond and interest hereon are payable solely from the District Fund 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 2004 Bonds does not cause either the general or the special
indebtedness of the Borrower to exceed any constitutional or statutory limitation.
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 and the Clerk of the
Commission, 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 December, 2004.
SAMPLE
Mayor
SAMPLE
City Clerk
(SEAL)
Bl- 4
__________u__ _________ ----- ------ ..----.--..-....----.--.-
REGISTRA TION 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 fonn of assignment appearing on this Bond, and (2)
the Director of Finance 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.
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City of Bozeman, Montana, acting as Bond Registrar, has
transferred on the books of the Borrower, 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.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
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)
Bl- 5
-----------
.. ----- ---------
_. __._._"..._..____ - _u_._ ._,,_. __..__.
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount Notation
Date Advances Advanced Made By
~
~
~
~
~
~
~
~
Bl- 6
..--....-.-
__._.._._._.no
SCHEDULE B
PnlbniDary Sdledule
Sf A TE OF MONT A.NA.
GENERAL OBLIGATION BONDS
WASTEWATER
(REVOLVrNG FUND PROGRAM) SER 04
BORROWER; Bozeman
PROJ8CT NAME: FINAL LOAN FA YMB~
7/ 1f2024
LOAN COMMJTMENT: $400.000 #OF LOAN PAYMENTS: 38
WAN AMOUNT: 400.000 PROJECT
NUMBER: -
INTEltEST RA1E: 3_7S% DATE
OF FUNDING: 12/2312004
PAYMENT LOAN LOSS ADM EXPENSE INTEREST
PRJNCIPAL OIS LOAN TOTAl-AMOUNT
DUB RESER VB SURCHARGE PAYMENT
PAYMENT BALANCe: OF PAYMENT
1 11112006 4.088.89 3.066.67 8,177.78
0.00 400.000.00 515.333.33 IS.H3.33
2 7/112006 2,000.00 1,~OO.oo 4,000.00 7,000.00
393,000.00 $14,~OO.00
3 11112007 1.965.00 1,473.75 3,930.00
3,000.00 38~.OOO.OO $15.368.75 29,868.75
4 7/1121X11 1.925.00 1.443.75 3,850.00 8.000.00
377.000.00 $15,218.75
5 1/112008 1.885.00 1.413.75 3.770.00 8,000.00
369,000.00 $15.068.75 30.287.50
6 1/11200& 1,845_00 1.383.75 3.690.00 &,000.00
361,000.00 $14.918.75
'7 1/112009 1.805.00 1,353.75 3,610.00 8.000.00
353.000.00 $14.768.75 29.687.50
8 7/112009 1.765.00 J .323.75 3.530.00 8.000.00
345.000.00 $14.618.75
9 1/112010 1.725_00 1.293.75 3,450.00 9,000.00
336.000.00 $15.468.75 30,087.50
10 1/112010 1,680.00 1,260.00 3.:160.00 9,000.00
327,000.00 $15.300_00
\I JIl/10 11 1.635.00 1,226.25 3,270.00 9,000.00
318,000.00 $J:i,UI.25 30,431.25
12 7/112011 1,590.00 1.192.50 3,180.00 9,000.00
309.000.00 $14.96250
13 1/112012 1,545.00 1.\58.75 3,090.00 9.000.00
300.000,00 $14.793.75 29,756.2'!
14 71112012 1.500.00 1.125.00 3,000.00 9,000.00
291,000.00 $14.&25.00
15 11112013 1,45S.oo 1,09l.25 2.910.00 10.000.00
281.000.00 $t5,456.25 30.081.25
16 7/112013 1.405.00 1,053.75 2,810.00 10,000.00
271,000.00 $15,268.75
17 1/1/2014 1,)55.00 1,016.25 2.710.00 10.000.00
261.000.00 $15,081.25 3O,3SQ.OO
18 711120[4 1,305.00 978.75 2.610.00 10.000.00
251,000.00 $14.893,75
19 1/1/2015 1,255.00 941.25 2,510.00 10.000.00
241,000.00 $14.706.25 29.600.00
20 7/1/2015 1,205.00 903.75 2,410.00 10,000.00
231,000.00 $14,518.75
21 111/2()16 1,155.00 ~.1S 2,310.00 11,000.00
220.000.00 $15,331.25 29.850.00
22 7/112016 1;100.00 82.5.00 2.200.00 !
1,000.00 209.000.00 $15,125.00
23 1/112017 1,045.00 783.75 2.090.00 11;000.00
198,000.00 $14,918..75 30,04_3.75
24 7/1/2011 990.00 741.50 1.980..00 11,ooo.OO
181.000.00 $14,712.50
25 1/1f20IS 935.00 701.25 I,VO.OO 12,000,00
175.000.00 $15.50~,25 30,218.75
26 7/112018 875.00 656.25 1,750.00 12.000.00
163,000.00 $15,281,25
27 1/112019 815.00 611.25 1.630.00 12,000.00
151-,000.00 $15,056.25 30.337.50
28 7f112Q19 155.00 566.25 1.510.00 12,000.00
139,000.00 $14,831.25
29 11112020 695.00 521.25 1.390.00 13.000.00
126,000.00 $15.60~.25 3Q,437.5O
30 71112000 630.00 472.50 1,260.00 13,000.00
113,000.00 $15.362.50
31 1/112021 565.00 423.75 1.130.00 13.000.00
100.000.00 $15,118.75 30.431.25
32 7flf2021 500.00 375.00 1,000.00 13,000,00
V,OOO.OO $14.875.00
33 1/112022 435.00 326.25 870.00 14,000.00
73,000.00 $15.631.25 30,506.25
34 711f2fJ2l 365.00 270.75 730.00 14,000.00
59,000.00 $15.368.75
3S 111.12023 295.00 22J.25 590.00 14.000_00
45,000.00 $15.106_25 30,475.00
36 7/112003 225.00 168.75 450.00 14.000.00
31,000.00 S14,843.75
37 11112024 155.00 116.25 3]0.00 15.000.00
16,000.00 $15.581.25 30,425.00
38 71112024 80.00 60.00 160..00 16,{1OO.00
0.00 $16.300.00 $16,300.00
46,548.89 34.91).67 93.097.78
400,000.00 574,558.33 574,558.33
-
-
APPENDIX B-2
[Form of the Series 2004B Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLA TIN
CITY OF BOZEMAN
SPECIAL IMPROVEMENT DISTRICT 674
(DNRC WRF LOAN PROJECT), Series 2004B
No. R-1 $94,000
FOR VALUE RECEIVED, the City of Bozeman, Gallatin County, 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 trom the its Special Improvement District No. 674
Fund, the principal sum equal to the sum of the amounts entered on Schedule A and Schedule B
hereto under "Total Amount Advanced," with interest on each such amount trom 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 an Administrative Expense Surcharge and
a Loan Loss Reserve Surcharge on the outstanding principal amount of this Bond at the rate of
three-quarters of one percent (0.75%) and one percent (1.00%), respectively, per annum. Interest
and Administrative Expense Surcharge and Loan Loss Reserve Surcharge at the collective rate of
three and three-quarter percent (3.75%) per annum shall be payable in semiannual installments
payable on each January 1, and July 1 (each a "Loan Repayment Date") commencing January 1,
2006. 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 hereto under "Total Loan
Payment." The portion of each such payment consisting of principal, the portion consisting of
interest and the portion consisting of Administrative Expense Surcharge shall be as set forth in
Schedule B hereto. Upon each disbursement of 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 the "Total Amount Advanced." The
DNRC shall prepare Schedule B and revised Schedule B, or cause Schedule B and revised
Schedules 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 3.75% per
annum. Past-due payments of principal and interest and Administrative Expense 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
82- 1
the registered holder of this Bond, at its address as it appears on the Bond register, in lawful
money of the United States of America.
This Bond constitutes one of a series of Special Improvement District 674 Bonds of the
Borrower in the maximum authorized principal amount of $494,00 issued to finance the costs of
the construction of certain Improvements to the property in Special Improvement District #674
(the "District"), to make a deposit to the Borrower's Special Improvement District Revolving
Fund (the "SID Revolving Fund") for the Series 2004B Bond and to pay costs of issuance of the
Series 2004B Bond. This Series 2004B Bond is issued pursuant to and in full conformity with
the Constitution and laws of the State of Montana thereunto enabling, induding Montana Code
Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended, and ordinances and resolutions duly
adopted by the governing body of the Borrower. This Series 2004B Bond is issuable only as a
single, fully registered bond.
Reference is made to Resolution No. 3755, duly adopted by the governing body of the
Borrower on December 20,2004 wherein the Borrower authorized the issuance of this Bond (the
"Resolution"). The Resolution should be reviewed for a more complete statement of the terms
and conditions upon which this Series 2004B Bond has been issued, the District Fund and SID
Revolving Fund pledged and appropriated for the payment and security thereof on a parity
between the Series 2004B Bond and the Series 2004B Bond (collectively the "Series 2004
Bonds"), the conditions upon which the Resolution may be amended, the rights, duties and
obligations of the Borrower, and the rights of the owners of this Series 2004B Bond.
The principal installments of the Bond are subject to mandatory redemption in order of
registration on any interest payment date if, after paying all principal and interest then due on the
Bond, there are funds to the credit of the Series 2004 Special Assessment Account of the District
from the prepayment of assessments levied in the Borrower for the redemption thereof, upon 30
days' prior written notice to the Holder and the Trustee.
The Borrower may prepay the principal of this Series 2004B Bond only if (i) it obtains
the prior written consent of the DNRC thereto, and (ii) no Loan Repayment or Administrative
Expense Surcharge is then delinquent. Any prepayment permitted by the DNRC must be
accompanied by payment of accrued interest and Administrative Expense Surcharge to the date
of prepayment on the amount of principal prepaid. If this Series 2004B Bond is prepaid in part,
such prepayments shall be applied to principal payments in inverse order of maturity.
This Bond is payable from the collection of a special assessment levied upon certain
property within the boundaries of the Borrower, in an aggregate principal amount of the Series
2004B Bond, except as such amount may be reduced or increased in accordance with provisions
of the Resolution and Montana law. Such assessments constitute a lien against such property
within the District, and this Bond is not a general obligation of the Borrower.
If default be made in the payment of any installment due under this Bond or by the
occurrence of anyone or more of the Events of Default specified in Article IX of the SRF and
WRF Indenture (as defined in the Resolution) and if such Event of Default is not remedied as
B2- 2
......... n.... _._
_._......._._n...._....
therein provided, the DNRC then, or at any time thereafter, may give notice to the Borrower that
all unpaid amounts of this Bond then outstanding together with all other unpaid amounts
outstanding under the Resolution are due and payable immediately and thereupon without further
notice or demand all such amounts shall become and be immediately due and payable. Failure to
exercise this option shall not constitute a waiver of the right to exercise the same at any time in
the event of any continuing or subsequent default. In the event of default in the payment of this
Bond and if the same is collected by an attorney at law, the Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees.
The Borrower may deem and treat the person in whose name this Series 2004B Bond is
registered as the absolute owner hereof, whether this Series 2004B 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.
This Series 2004B Bond has been designated by the Borrower as a "qualified tax-exempt
obligation" pursuant to Section 265 ofthe Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the
Borrower has duly authorized and will forthwith undertake the Improvements, has fixed and
established and will collect the Special Assessments, and has created a special District Fund into
which Special Assessments will be paid. The Borrower has agreed in the Resolution and in
accordance with the provisions of Title 7, Chapter 12, Parts 41 and 42, Montana Code
Annotated, to make loans rrom the SID Revolving Fund to the District Fund and to levy taxes for
deficiencies in the Revolving Fund. The Series 2004 Bonds are not, however, general
obligations of the Borrower. The Borrower, through its Commission also covenants that all
provisions for the security of this Series 2004 Bonds 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
2004B 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
2004B Bond and interest hereon are payable solely rrom the District Fund 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 2004 Bonds does not cause either the general or the special
indebtedness of the Borrower to exceed any constitutional or statutory limitation.
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 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 ofthe day of December, 2004.
SAMPLE
Mayor
SAMPLE
City Clerk
(SEAL)
B2-3
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 fonn of assignment appearing on this Bond, and (2)
the Director of Finance 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.
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The Director of Finance of the City of Bozeman, Montana, acting as Bond Registrar, has
transferred on the books of the Borrower, 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.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
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)
B2-4
. .__..u__.._...__
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount Notation
Date Advances Advanced Made By
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-
-
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82- 5
SCHEDULE B
Pmimlnary SdleduIe
STATE OF MONTANA
GENERAL OBLIGATION BONDS
DRINKING WATER
(REVOLVING FUND PROGRAM) SER 04
~ BORROWER: Bozeman
PROJECT NAME: fINAL LOAN FA YMENT: 7/1nm4
LOAN COMMlTMENT: $94.000 #OFLOAN PAYMENTS: 38
LOAN AMOUNT: 94,000 PROJECT NUMBER:
INTEREST RATE: 3.75% DATE OF FUNDING:
12/2312004
-
PAYMENT LOAN LOSS ADM EXPENSE INTEREST PRINCIPAL
015 LOAN TOTALAMDUNT
DUE RESERVE SURCHARGE PAYMENT PAYMENT BALANCE
OF PAYMENT
I 1/111006 960.89 720.67 1,921-78 0,00 94,000.00
$3.603.33 3.603.33
2 71112006 470.00 >52.50 940.00 1,500.00
92,500.00 $>,262.50
> 1/1/2007 462.50 346.88 925.00 2,000.00
90.500.00 $3,734.38 6.9%.88
4 7/112007 452.50 339.38 905.00 2,000.00
88,500.00 $3,696.88
5 111/2008 442.50 331.88 885.00 1.500.00
87.000.00 $3,159.38 6,856.25
6 7/1/2008 435.00 326.25 870.00 2,000.00
85,000.00 $3,631.25
7 111/2009 425.00 318.75 850.00 2,000.00
83,000.00 $3,593.75 7,225.00
8 7/112009 415.00 311.25 830.00 2,000.00
81.000.00 $3,556.25
9 1/112010 405.00 303.75 810.00 2,000.00
79,000.00 $3,518.75 7 ,075.00
10 7/112010 395.00 296.25 790.00 2,000.00
77 .000.00 $3,481.25
11 1/112011 385.00 288.75 770.00 2,000.00
75,000.00 $3,443.75 6,925.00
12 7/112011 375.00 281.25 750.00 2,500.00
72,500.00 $3,906.25
13 1/1/2012 362.50 27\.88 725.00 2.000.00
70,500.00 $3,359.38 7.265.63
14 7/112012 352.50 264.38 705.00 2,000.00
68,500.00 $3.321.88
15 1/112OIJ 342.50 256.88 685.00 2,500,00
66,000.00 $3,784.38 7,106.25
16 7/112013 330.00 247.50 660.00 2,500.00
63.500.00 $3,737.50
17 1/1/2014 317.50 238.\3 635.00 2,000.00
61.500.00 $3,190.63 6,928.13
18' 7/112014 307,50 230.63 615.00 2,000.00
59.soo.oo $3,153.13
19 11112015 297.50 223.13 595.00 3,000.00
56,500.00 $4,115.63 7,268.75
20 7/112015 282.SO 211.88 565.00 2,000.00
54,500.00 $3,059.38
21 1/112016 272.SO 204.38 545.00 3,000.00
51.500.00 $4.02\.88 7,081.25
22 7/112016 257.50 193.13 515.00 3,000.00
48,500.00 53,965.63
23 1/112017 242.50 181.88 485.00 2,000.00
46,500.00 $2,909.38 6,875.00
24 7/112017 232.50 174.38 465.00 2,500.00
44,000.00 $3,371.88
25 1/112018 220.00 165.00 440.00 3.000.00
41,000.00 $3,825.00 7 ,\96.88
26 7/]12018 205.00 153.75 410.00 3,000.00
38,000.00 $3,768.75
27 1/112019 190.00 142.50 380.00 2,500.00
35,500.00 $3,212.50 6,981.25
28 71tn0l9 177.50 133.13 355.00 3,000.00
32,500.00 $3,665.63
29 1/112020 162.50 121.88 325.00 3.000.00
29,500.00 $3.609.38 7,275.00
30 7111'1iY20 147.50 lIO.63 295.00 3,000.00
26500.00 $3,553.13
31 1/112021 132.50 99.38 265.00 3,000.00
23,500.00 $3,496.88 7,050.00
32 7/112021 117.SO 88.13 235.00 3.000.00
20,500.00 $3,440.63
33 1/112022 102.SO 76.88 205.00 3,000.00
17,500.00 $3.384.38 6,825.00
34 7/112022 87.50 65.63 175.00 3,000.00
14,500.00 $3,328.13
35 1/112023 72.50 54.38 145.00 3,500.00
11,000.00 $3,771.88 7,100.00
36 7/112023 55.00 41.25 \J 0.00 3.500.00
7,500.00 $3,706.25
37 11112024 37.50 28.13 75.00 3.000.00
4,500.00 $3,140.63 6,846.88
38 7/112024 22.50 16.88 45.00 4,500.00
0.00 $4584.38 $4,584.38
\0.950.89 8.213.17 21,901.78 94,000.00
135,065.83 135,065.83
B2- 6