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HomeMy WebLinkAboutResolution 2923 Setting the bond form for SID 657 - Lexington ': '''' Member Frost introduced the following resolution and moved for its adoption. RESOLUTION NO. 2921 RESOLUTION RELATING TO $130,000 SPECIAL IMPROVEMENT DISTRICT NO. 657 BONDS; FIXING THE FORM AND DETAILS AND PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND SECURITY THEREFOR BE IT RESOLVED by the City Commission of the City of Bozeman, Montana (the "City"), as follows: Section 1. Recitals. It is hereby found, determined and declared as follows: 1.01. Resolution of Intention. By Resolution No. 2905, adopted February 22, 1993 (the "Resolution of Intention"), this Commission declared its intention to create Special Improvement District No. 657 (the "District"), for the purpose of making special improvements for the special benefit of the District. The Resolution of Intention designated the number of the District, described the boundaries thereof and stated the general character of the improvements to be made (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 "Act"). By the Resolution of Intention this Commission also declared its intention to cause the cost and expense of making the improvements specially benefiting the District to be assessed against the properties included within the boundaries thereof in accordance with one or more methods of assessment authorized in Montana Code Annotated, Sections 7-12-4161 to 7-12-4165 and as set forth in the Resolution of Intention. 1.02. Notices. Notice of the passage of the Resolution of Intention was given by two publications in the Bozeman Daily Chronicle, a weekly newspaper published within the City. Notice of the passage of the Resolution of Intention was also mailed the same day the notice was first 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, county and school district taxes, at their last known addresses. The notice described the general character of the Improvements, stated the estimated cost of the Improvements and the method or methods of assessment of such costs against properties in the District, specified the time when and the place where the Commission would hear and pass -2- ~ .., upon all protests made against the making of the Improvements or the creation or extension 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. 1.03. Creation of District. 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 or extension 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. 2907, adopted March 22, 1993, create the District and order the proposed Improvements in accordance with the Resolution of Intention. 1.04. Construction Contracts. Plans, specifications, maps, profiles- and surveys for construction of the Improvements were prepared by the engineers acting for the City, 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 engineers for the City it was determined that the lowest regular proposals for the furnishing of all work and materials required for constructing the Improvements in accordance with the approved plans and specifications were the following: Work Bidder Contract Price Street paving and drainage Figgins Sand & $90,311.50 improvements Gravel A contract for the construction of the Improvements was therefore awarded to said bidder, subject to the right of owners of property liable to be assessed for the costs thereof to elect to take the work and enter into a written contract therefor in the manner provided by Montana Code Annotated, Section 7-12-4147, which election the property owners failed to make, whereupon the City and the successful bidder entered into a written contract for construction of the Improvements upon the bidder having executed and filed a bond satisfactory to this Commission and in the form and manner provided by Montana Code Annotated, Title 18, Chapter 2, Part 2, as amended. 1.05. Costs. It is currently estimated that the costs and expenses connected with and incidental to the formation of the District to the City, including -2- .." -....-.-...--.-..-.---.--..--- --.".---.----.--- __" '.__n ..-.------ ---------.--..-... _.____n..___.". " . costs of preparation of plans, specifications, maps, profiles, engineering superintendence and inspection, preparation of assessment rolls, expenses of making the assessments, the cost of work and materials under the construction contract and all other costs and expenses, including the deposit of proceeds in the Special Improvement District Revolving Fund of the City, are $130,000. Such amount will be levied and assessed upon the assessable real property within the District on the bases described in the Resolution of Intention. This Commission has jurisdiction and is required by law to levy and assess such amount, to collect such special assessments and credit the same to the special improvement district fund created for the District, which fund is to be maintained on the official books and records of the City separate from all other City funds, for the payment of principal and interest when due on the bonds herein authorized. 1.06. Sale and Issuance of Bonds. For the purpose of fieancing the costs and expenses of making the Improvements, which are to be assessed against the property within the District as provided in the Resolution of Intention, this - Commission by Resolution No. 2913, adopted May 17, 1993/ called for the public sale of bonds in the total aggregate amount of $180,000. Advertisements for bids for the purchase of the Bonds were published in accordance with the provisions of Montana Code Annotated, Sections 7-12-4204, 7-7-4252 and 17-5-106. On June 1, 1993, this Commission awarded the sale of the Bonds to Donald W. Weaver, of Bozeman, Montana (the "Purchaser"), as the lowest responsible bidder. Due to subsequent receipt of favorable construction bids, the aggregate principal amount of Bonds was reduced to $130,000 (the "Bonds") and the Purchaser agreed to purchase from the City the Bonds at a purchase price of $130,000 plus interest accrued thereon from the date of original issue of the Bonds, at a net effective interest rate of 6.90% per annum and upon the further terms set forth in this resolution. 1.07. Recitals. All acts, conditions and things required by the Constitution and laws of the State of Montana, including Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42/ as amended, in order to make the Bonds valid and binding special obligations in accordance with their terms and in accordance with the terms of this resolution have been done, do exist, have happened and have been performed in regular and due form, time and manner as so required. Section 2. The Bonds. 2.01. Principal Amount, Maturities, Denominations, Date, Interest Rates. For the purpose of paying the costs and expenses incurred in construction of the Improvements, and in anticipation of the collection of special assessments to be levied therefor, and in accordance with the proposal described in Section 1.06/ the City shall forthwith issue and deliver to the Purchaser the Bonds payable solely from the Special Improvement District No. 657 Fund (the "District Fund") and denominated "Special Improvement District No. 657 Bonds." The Bonds shall be -3- ------- .' '" dated, as originally issued, and be registered as of July I, 1993, shall each be in the denomination of $1,000 or any integral multiple thereof of single maturities, shall mature on July 1 in the years and principal amounts set forth below, and Bonds maturing in such years and principal amounts shall bear interest from the date of original registration until paid or duly called for redemption at the rates per annum set forth opposite such years and amounts, respectively: Principal Principal Year Amount Rate Year Amount Rate 1994 $ 1,000 3.50% 2004 $10,000 6.75% 1995 1,000 4.00 2005 10,000 7.00 1996 1,000 4.25 2006 10,000 7.00 1997 1,000 4.50 2007 10,000 7.00 1998 1,000 4.75 2008 10,000 7.25 1999 1,000 5.00 2009 10,000 7.25 2000 1,000 5.50 2010 10,000 7.25 2001 3,000 6.00 2011 10,000 7.50 2002 10,000 6.50 2012 10,000 7.50 2003 10,000 6.75 2013 10,000 7.50 Each of the Bonds shall represent one or more principal installments of the issue of the same maturity. Principal installments of the issue are numbered from 1 through 130, each in the amount of $1,000. 2.02. Interest Payment Dates. Interest on the Bonds shall be payable on each January 1 and July I, commencing January I, 1994, to the owners of record thereof as such appear on the bond registrar at the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. Upon the original delivery of the Bonds to the Purchaser and upon each subsequent transfer or exchange of a Bond pursuant to Section 2.04, the Registrar shall date each Bond as of the date of its authentication. 2.03. Method of Payment. The Bonds shall be issued only in fully registered form. The interest on and, upon surrender thereof at the principal office of the Registrar (as hereinafter defined), the principal of each Bond, shall be payable by check or draft drawn on the Registrar. 2.04. Registration. The Director of Finance of the City of Bozeman will act as registrar, transfer agent and paying agent (the "Registrar"). The City reserves the right to appoint a successor bond registrar, transfer agent or paying agent, as authorized by the Model Public Obligations Registration Act of Montana, Montana Code Annotated, Title 17, Chapter 5, Part II, as amended (the "Registration Act"), but the City agrees to pay the reasonable and customary charges of the Registrar for -4- .--..- " " ' the services performed. This Section 2.04 shall establish a system of registration for the Bonds as defined in the Registration Act. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Bond Register. The Registrar shall keep at its principal office a bond register in which the Registrar shall provide for the registration of ownership of the Bonds and the registration of transfers and exchanges of the Bonds entitled to be registered, transferred or exchanged. (b) Transfer. Upon surrender to the Registrar for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer of any Bond or principal installment thereof selected or called for redemption. No transfer or exchange of a Bond shall affect its order of registration for purposes of redemption pursuant to Section 2.05. (c) Exchange. Whenever any Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount, interest rate and maturity and representing the same principal installments, as requested by the registered owner or the owner's attorney duly authorized in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unau thorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or -5- ',. . not, for the purpose of receiving payment of, or on account oC the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the City upon such Bond to the extent of the sum or sums so paid. (g) Taxes. Fees and Charges. For every transfer of Bonds or exchange of Bonds (except an exchange upon a partial redemption of a Bondt the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated. Lost. Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that such Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or such Bond has been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond prior to payment. 2.05. Redemption. If on any interest payment date there will be a balance in the District Fund after payment of the principal and interest due on all Bonds drawn against it, either from the prepayment of special assessments levied in the Districts or from the transfer of surplus money from the Construction Account to the Principal Account as provided in Section 3.02 or otherwise, the Director of Finance shall call for redemption on the interest payment date outstanding Bonds, or principal installments thereof, in the order of their registration in an amount which, together with the interest thereon to the interest paYment date, will equal the amount of the District Fund on that date. For purposes of redemption, the order of registration of the Bonds shall correspond to the order of the numbers of the principal installments represented by the Bonds. Bonds representing more than one principal installment may be redeemed in part, in one or more whole principal installments and, upon such partial redemption, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal installments outstanding. The Bonds are subject to redemption at the -6- -- .. option of the City from other sources of funds available therefor on any interest payment date. The redemption price shall equal the amount of the principal installment or installments of the Bonds to be redeemed plus interest accrued thereon to the date of redemption. The date of redemption shall be fixed by the Director of Finance, who shall give notice, by first class mail, postage prepaid to the owner or owners of such Bonds at their addresses appearing in the bond register, of the numbers of the principal installments and Bonds to be redeemed and the date on which payment will be made, which date shall be not less than ten days after the date of mailing notice. The Director of Finance shall at the same time mail notice of the redemption to the Purchaser. On the date so fixed interest on the Bonds or principal installments thereof so redeemed shall cease. Notwithstanding anything to the contrary contained herein, the Bonds shall not be called for redemption from the proceeds of refunding special improvement district bonds or warrants before July 1, 2000. In addition to the notice prescribed by the preceding paragraph, the Director of Finance shall also give, or cause to be given, notice of the redemption of any Bond or Bonds or principal installments thereof at least 10 days before the redemption date by deposit of notice, properly addressed in the " United States mail with postage paid at the first class rate or telecopy to the Purchaser and all registered securities depositories then in the business of holding substantial amounts of obligations of the character of the Bonds (such depositories now being The Depository Trust Company, of Garden City, New York; Midwest Securities Trust Company, of Chicago, Illinois; and Philadelphia Depository Trust Company, of Philadelphia, Pennsylvania) and one or more national information services that disseminate information regarding municipal bond redemptions; provided that any defect in or any failure to give any notice of redemption prescribed by this paragraph shall not affect the validity of the proceedings for the redemption of any Bond or portion thereof. 2.06. Form. The Bonds shall be drawn in substantially the form set forth in Exhibit A hereto, and by this reference made a part hereof, with such modifications as are permitted by the Act. 2.07. Execution, Registration and Delivery. The Bonds shall be prepared under the direction of the Clerk of the Commission and shall be executed on behalf of the City by the signatures of the City Manager and the Clerk of the Commission and sealed with the official seal of the City; provided that the signatures and the corporate seal may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for -7- ._n _ ____ " any purpose or entitled to any security or benefit under this resolution unless a certificate of authentication and registration on such Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication and registration on different Bonds need not be signed by the same representative. The executed certificate of authentication and registration on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. The Bonds shall be registered in order of their serial numbers by the Registrar, as attested by the Certificate of Authentication and Registration, as of July 1, 1993. When the Bonds have been so executed, authenticated and registered, they shall be delivered by the Registrar to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed. The Purchaser shall not be obligated to see to the application of the purchase price, but from the proceeds of the Bonds the Director of Finance shall credit forthwith $6,500 to the Special Improvement District Revolving Fund of the City, as authorized by Montana Code Annotated, Section 7-12-4169(2), any accrued interest to the Interest Account in the District Fund, and the balance of such - proceeds to the Construction Account in the District Fund. Section 3. District Fund: Assessments. 3.01. District Fund. There is hereby created and established the District Fund designated as the "Special Improvement District No. 657 Fund," which shall be maintained by the Director of Finance on the books and records of the City separate and apart from all other funds of the City. Within the District Fund there shall be maintained three separate accounts, designated as the "Construction Account," "Principal Account" and "Interest Account," respectively. 3.02. Construction Account. There shall be credited to the Construction Account certain proceeds of the sale of the Bonds as provided in Section 2.07. Any earnings on investment of money in the Construction Account shall be retained therein. All costs and expenses of constructing the Improvements to be paid from proceeds of the Bonds shall be paid from time to time as incurred and allowed from the Construction Account in accordance with the provisions of applicable law, and money in the Construction Account shall be used for no other purpose; provided that upon completion of the Improvements and after all claims and expenses with respect to the Improvements have been fully paid and satisfied, any money remaining in the Construction Account shall be transferred to the Principal Account and used to redeem Bonds as provided in Section 3.03. 3.03. Principal Account and Interest Account. Money in the Principal Account and the Interest Account shall be used only for payment of the principal of and interest on the Bonds as such payments become due or to redeem Bonds. From the proceeds of the Bonds, there shall be deposited in the Interest Account any interest on the Bonds accrued to the date of their delivery. -8- ...__.. m__. ...._ .._..._....._.__...____ ___ ------.--.-----. -- .-- " '" 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 Improvements, the Director of Finance 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 District Fund. All money in the Interest Account and the Principal Account shall be used first to pay interest due, and any remaining money shall be used to pay Bonds then due and, if money is available, to redeem Bonds or principal installments thereof in accordance with Section 2.05; provided that any money transferred to a Principal Account from the Construction Account pursuant to Section 3.02 shall be applied to redeem 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 2.05. Redemption of Bonds shall be in order of the principal installments they represent as provided in Section 2.05, and interest shall be paid as accrued thereon to the date of redemption, in accordance with the provisions of Montana Code Annotated, Section 7-12-4206. 3.04. Loans from Revolving Fund. The Commission shall annually or more often if necessary issue an order authorizing a loan or advance from the Special Improvement District Revolving Fund of the City (the "Revolving Fund") to the District Fund in an amount sufficient to make good any deficiency then existing in the Interest Account and shall 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 Principal Account in such order and in each case to the extent that money is available in the Revolving Fund. A deficiency shall be deemed to exist in the Principal Account or the Interest Account if the money on deposit therein on any December 15 or June 15 (excluding amounts in the Principal Account 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, Pursuant to Ordinance No. 612, the City has undertaken and agreed to provide funds for the Revolving Fund by levying such tax or making such loan from the General Fund as authorized by Montana Code Annotated, Section 7-12-4222. In the event that the balance on hand in the Revolving Fund fifteen days prior to any date when interest is due on special improvement district bonds or warrants of the City is not sufficient to make good all deficiencies then existing in the special improvement district funds for which the City has covenanted to make loans from the Revolving Fund, the balance on hand in the Revolving Fund shall be allocated to the funds of the special improvement districts in which such -9- - " 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 City has been paid. On any date when all accrued interest on special improvement district bonds and warrants of the City payable from funds for which the City has covenanted to make loans from the Revolving Fund has been paid, any balance remaining in the 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 Revolving Fund is insufficient therefor, pro rata, in an amount proportionate to the amount of such deficiency. Section 4. Covenants. The City covenants and agrees with the owners from time to time of each of the Bonds that until all the Bonds and interest thereon are fully paid: 4.01. Compliance with Resolution. The City will hold the District Fund and the Revolving Fund as trust funds, separate and apart from all of its other funds, and the City, its officers and agents, will comply with all covenants and agreements contained in this resolution. The provisions hereinabove made with respect to the District Fund and the Revolving Fund are in accordance with the undertaking and agreement of the City made in connection with the public offering of the Bonds and the sale of the Bonds as set forth in Section 1.06. 4.02. Construction of Improvements. The City will do all acts and things necessary to enforce the provisions of the construction contracts and bonds referred to in Section 1.04 and to ensure the completion of the Improvements for the benefit of the District in accordance with the plans and specifications and within the time therein provided, and will pay all costs thereof promptly as incurred and allowed, out of the District Fund and within the amount of the proceeds of the Bonds appropriated thereto. 4.03. Levy of Assessments. The City will do all acts and things necessary for the final and valid levy of special assessments upon all assessable real 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 $130,000. Such special assessments shall be levied on the basis or bases prescribed in the Resolution of Intention, and shall be payable in semiannual installments over a period of 20 years, each installment being due in an amount equal to one-fortieth of the principal amount of each assessment, with interest on the whole amount remaining unpaid at the average annual interest rate borne by the Bonds, plus one-half of one percent per annum, interest being payable with principal installments. The assessments to be levied will be payable on the 30th day -10- . . of November in each of the years 1993 through 2012, and on the 31st day of May in the years 1994 through 2013, inclusive, if not theretofore paid, and shall become delinquent on such date unless paid in full. The first partial payment of each assessment shall include interest on the entire assessment from the date of original registration of the Bonds to January 1, 1994, and each subsequent partial payment shall include interest for six months on that payment and the then remaining balance of the special assessment. The 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 assessment with all penalties, cost 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 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. 4.04. Reassessment. If at any time and for whatever reason any special assessment or tax herein agreed to be levied is held invalid, the City and this Commission, 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-levy 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. If proceeds of the Bonds, including investment income thereon, are applied to the redemption of such Bonds, as provided in Montana Code Annotated, Sections 7-12-4205 and 7-12-4206, or if refunding bonds are issued and the principal amount of the outstanding Bonds of the District is decreased or increased, the City will reduce or increase, respectively, the assessments levied in the District and then outstanding pro rata by the principal amount of such prepayment or the increment above or below the outstanding principal amount of bonds represented by the refunding bonds. The City and this Commission, its officers and employees will reassess and re-Ievy such assessments, with the same effect as an original levy, in such reduced or increased amounts irt accordance with the provisions of Montana Code Annotated, Sections 7-12-4176 through 7-12-4178. 4.05. Absence of Litigation. There is now no litigation pending or, to the best knowledge of the City, threatened questioning the validity or regularity of the creation of the District, the contracts for construction of the Improvements or the undertaking and agreement of the City to levy special assessments therefor and to make good any deficiency in the collection thereof through the levy of taxes for and the making of advances from the Revolving Fund, or the right and power of -11- -.......---."..----..". , the City to issue the Bonds or in any manner questioning the existence of any condition precedent to the exercise of the City's powers in these matters except as has been disclosed to the Purchaser in a letter from the City dated as of I 1993. If any such litigation should be initiated or threatened, the City will forthwith notify in writing the Purchaser, and will furnish the Purchaser a copy of all documents, including pleadings, in connection with such litigation. 4.06. Waiver of Penalty and Interest. The City covenants not to waive the payment of penalty or interest on delinquent assessments levied on property in the District for costs of the Improvements, unless the City determines, by resolution of the City Commission, that such waiver is in the best interest of the owners of the outstanding Bonds. Section 5. Tax Matters. 5.01. Use of Improvements. The Improvements will be owned and operated by the City and available for use by members of the general public on a substantially equal basis. The City shall not enter into any lease, use or other agreement with any non-governmental person relating to the use of the Improvements or security for the payment of the Bonds which might cause the Bonds to be considered "private activity bonds" or "private loan bonds" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended (the "Code"). 5.02. General Covenant. The City covenants and agrees with the owners from time to time of the 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 Bonds to become includable in gross income for federal income tax purposes under the Code and applicable Treasury Regulations (the "Regulations"), and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income for federal income tax purposes under the Code and the Regulations. 5.03. Arbitrage Certification. The City Manager and the Clerk of the Commission, being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Sections 1.103-13, 1.103-14 and 1.103-15 of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds, it is reasonably expected that the proceeds of the Bonds will be used in a manner that would not cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and the Regulations. 5.04. Arbitrage Rebate Exemption. -12- . I (a) The City hereby represents that the Bonds qualify for the exception for small governmental units to the arbitrage rebate provisions contained in Section 148(f) of the Code. Specifically, the City represents: (1) Substantially all (not less than 95%) of the proceeds of the Bonds (except for amounts to be applied to the payment of costs of issuance and amounts to be deposited in the Interest Account pursuant to Section 3.03) will be used for local governmental activities of the City. (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 City and all subordinate entities thereof during 1993 is reasonably expected not to exceed $5,000,000. To date in 1993, the City has issued no such tax-exempt bonds, and in the calendar years 1988 through 1992 the average principal amount of such tax-exempt bORds issued by the City in a single calendar year was $780,820. (b) If notwithstanding the provisions of paragraph (a) of this Section 5.04, the arbitrage rebate provisions of Section 148(f) of the Code apply to the Bonds, the City 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(0. 5.05. Information Reporting. The City shall file with the Secretary of the Treasury, not later than November IS, 1993, a statement concerning the Bonds containing the information required by Section 149(e) of the Code. 5.06. "Qualified Tax-Exempt Obligations." Pursuant to Section 265(b)(3)(B)(ii) of the Code, the City hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code. The City has not designated any obligations in 1993 other than the Bonds under Section 265(b)(3). The City 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 Sections 141(a) and 145(a) of the Code) will be issued by or on behalf of the City and all "subordinate entities" of the City in 1993 in an amount greater than $10,000,000. Section 6. Authentication of Transcript. The officers of the City are hereby authorized and directed to furnish to the Purchaser and to bond counsel certified copies of all proceedings relating to the issuance of the Bonds and such other certificates and affidavits as may be required to show the right, power and -13- -------------------------- .-...---.- . --~ '. . ' authority of the City to issue the Bonds, and all statements contained in and shown by such instruments, including any heretofore furnished, shall constitute representations of the City as to the truth of the statements purported to be shown thereby, Section 7. Discharge. 7.01. General. When the liability of the City on all Bonds issued under and secured by this resolution has been discharged as provided in this Section 7, all pledges, covenants and other rights granted by this resolution to the owners of such obligations shall cease. 7.02. Payment. The City may discharge its liability with reference to any Bond or installment of interest thereon which is due on any date by on or before that date depositing with the Registrar funds sufficient, or, if a City officer is the Registrar, mailing to the registered owner of such Bond a check or draft in a sum sufficient and providing proceeds available, for the payment thereof in full; or if any Bond or installment of interest thereon shall not be paid when due, the City may nevertheless discharge its liability with reference thereto by depositing with the Registrar funds sufficient, or, if a City officer is the Registrar, by mailing to the registered owner thereof a check or draft in a sum sufficient and providing proceeds available, for the payment thereof in full with interest accrued to the date of such deposit or mailing. 7.03. Prepayment. The City may also discharge its obligations with respect to any Bonds called for redemption on any date when they are prepayable according to their terms, by on or before that date depositing with the Registrar funds sufficient, or, if a City officer is the Registrar, mailing to the registered owner of such Bond a check or a draft in a sum sufficient and providing proceeds available, for the payment of the principal, interest and redemption premium, if any, which are then due; provided that notice of such redemption has been duly given as provided herein or irrevocably provided for. 7.04, Escrow, The City may also at any time discharge its liability in its entirety with reference to the Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or securities which are authorized by law to be so deposited, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without reinvestment, to provide funds sufficient to pay all principal and interest to become due on all Bonds on or before maturity or, if any Bond has been duly called for redemption or notice of such redemption has been irrevocably provided for, on or before the designated redemption date. -14- --.----- ----.--.-....- - Section 8. Repeals and Effective Date. 8.01. Repeal. All provisions of other resolutions and other actions and proceedings of the City 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. 8.02. Effective Date. This resolution shall take effect immediately upon its passage and adoption by this Commission. PASSED by the City Commission of the City of Bozeman, Montana, this 6th day of July, 1993. Attest rz1f: ili~~ ~~~ Ma - . (SEAL) " II, v , -15- -....-. . -- " The motion for the adoption of the foregoing resolution was duly seconded by Commissionmember Vincent , and upon vote being taken thereon, the following Commissionmembers voted in favor thereof: Frost, Vincent. Knapp and Swanson , and the following voted against the same: none , and the following abstained from voting thereon: none , whereupon the resolution was declared duly passed and adopted and was signed by the Mayor, which signature was attested by the Clerk of the Commission. ..--- . '. \ EXHIBIT A [Face of the Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF GALLATIN CITY OF BOZEMAN $130,000 SPECIAL IMPROVEMENT DISTRICT NO. 657 BONDS Interest at the rate per annum specified below Payable January 1, 1994 and semiannually thereafter on the 1st day of January and the 1st day of July in each year, No. $ Representing Principal Installment Nos. Date of Original Rate Ma turity Issue CUSIP July 1, 1993 REGISTERED OWNER: SEE REVERSE FOR CERTAIN DEFINITIONS PRINCIPAL AMOUNT: DOLLARS The Director of Finance of the City of Bozeman, Gallatin County, Montana, will pay to the registered owner identified above, or registered assigns, on the maturity date specified above the principal amount specified above, solely from the revenues hereinafter specified, as authorized by Resolution No. ----J adopted July 6, 1993 (the "Resolution"), all subject to the provisions hereinafter described relating to the redemption of this Bond before maturity, This Bond bears interest at the rate per annum specified above from the date of registration of this Bond, as expressed herein, or from such later date to which interest hereon has been paid or duly provided for, until the maturity date specified above or an earlier date on . , .' which this Bond shall have been duly called for redemption by the Director of Finance. Interest on this Bond is payable semiannually, commencing January I, 1994, on the first day of January and the first day of July in each year, to the owner of record of this Bond appearing as such in the bond register as of the close of business on the 15th day (whether or not such is a business day) of the immediately preceding month. Interest on and, upon presentation and surrender hereof at the principal office of the bond registrar and paying agent hereinafter named, the principal of this Bond are payable by check or draft of the Director of Finance, as bond registrar and paying agent, or its successor designated under the Resolution (the "Registrar"). The principal of and interest on this Bond are payable in lawful money of the United States of America. Additional provisions of this Bond are contained on the reverse hereof and such provisions shall for all purposes have the same effect as though fully set forth herein. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication and Registration herein shall have been executed by the Registrar by the manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Bozeman, Gallatin County, Montana, by its City Commission, has caused this Bond and the certificate on the reverse hereof to be executed by the facsimile signatures of the City Manager and the Clerk of the Commission, and by a printed facsimile of the official seal of the City. CITY OF BOZEMAN, MONTANA (Facsimile Signature) CITY MANAGER (Facsimile Signature) CLERK OF THE COMMISSION (Facsimile Seal) A-2 ------.---- . . .. I Dated: CERTIFICATE OF AUTHENTIC A TION AND REGISTRATION This is one of the Bonds delivered pursuant to the Resolution mentioned herein. DIRECTOR OF FINANCE as Bond Registrar, Transfer Agent and Paying Agent By Authorized Representative [Reverse of the Bonds] This Bond is one of an issue in the aggregate principal amount of $130,000 (the "Bonds"), all of like date of original issue and tenor, except as to serial number, denomination, date, interest rate and maturity date. The Bonds are 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, to finance the costs of certain local improvements (the "Improvements") for the special benefit of property located in Special Improvement District No. 657 of the City (the "District"). The Bonds are issuable only as fully registered bonds of single maturities in denominations of $1,000 or any integral multiple thereof. This Bond represents one or more principal installments of an issue of Bonds of the City numbered as set forth above. The principal installments for the issue are in the aggregate amount of $130,000, and are numbered from 1 though 130, each in the amount of $1,000. This Bond is payable from the collection of a special tax or assessment levied upon all assessable real property within the boundaries of the District, in an aggregate principal amount of not less than $130,000, except as such amount may be reduced or increased in accordance with provisions of Montana law. Such assessments constitute a lien against the assessable real estate within the District, and the Bonds are not general obligations of the City. The principal installments of the Bonds 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 Bonds, there are funds to the credit of the Special Improvement District No. 657 Fund of the City, from the prepayment of A-3 ..~............. . . ., . ' assessments levied in the District or from surplus proceeds of the Bonds not required to pay costs of the Improvements, for the redemption thereof, and in the manner provided for the redemption of the same. The Bonds are subject to redemption at the option of the City from other sources of funds available therefor on any interest payment date; provided, however, that the City hereby agrees that the Bonds are not to be called for redemption from the proceeds of refunding special improvement district bonds or warrants before July 1,2000. The redemption price is equal to the amount of the principal installment or installments of the Bonds to be redeemed plus interest accrued thereon to the date of redemption. The date of redemption shall be fixed by the Director of Finance, who shall give notice by first class mail, postage prepaid, to the owner or owners of such Bonds at their addresses shown on the bond register, of the numbers of the principal installments and Bonds to be redeemed and the date on which payment will be made, which date shall not be less than ten days after the date of mailing of notice, on which date so fixed interest shall cease. On the date so fixed interest on the Bonds or principal installments thereof so redeemed shall cease to accrue. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal installments outstanding. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, representing the same principal installments, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all things required to be done precedent to the issuance of this Bond have been properly done, happened and been performed in the manner prescribed by the laws of the State of Montana and the resolutions and ordinances of the City of Bozeman, Montana, relating to the issuance thereof. A-4 ..--.. ---------- - .-.-..--........----.-. -....-....----- .--..------ ~r...,.. . . ., , The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants UTMA. . . . .Custodian. . . . . . in common (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Transfers JT TEN -- as joint tenants to Minors with right of survivorship and Act................... . not as tenants in (State) common Additional abbreviations may also be used. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this OF ASSIGNEE: assignment must correspond with the name as it appears upon the / / face of the within Bond in every particular, without alteration, enlargement or any change whatsoever. A-5 . . - . '" ~ ' SIGNATURE GUARANTEED Certificate as to Legal Opinion The following certificate shall be printed on the reverse of each Bond, following a full, true and correct copy of the text of the legal opinion given at the time of delivery of the Bonds: We certify that the foregoing is a full, true and correct copy of the opinion of Bond Counsel on the issue of Bonds of the City of Bozeman, Montana, which includes the within Bond, dated as of the date of delivery of and payment for the Bonds. (Facsimile Signature) (Facsimile Signature) (Facsimile Signature) MAYOR DIRECTOR OF FINANCE CLERK OF THE COMMISSION A-6 ,