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24- General Obligation Bonds, Series 2024A
$2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana Transcript Index Date of Closing: May 16, 2024 PARTICIPANTS: Issuer: City of Bozeman Terry Cunningham, Mayor Chuck Winn, Interim City Manager Melissa Hodnett, Finance Director Michael Maas, City Clerk Purchaser: Fidelity Capital Markets, Boston, Massachusetts Bond Registrar: U.S. Bank Trust Company, National Association Securities Depository: The Depository Trust Company Municipal Advisor: Baker Tilly Municipal Advisors, LLC Bond Counsel: Dorsey & Whitney LLP 1. Certificate as to Transcript of Proceedings Authorizing General Obligation Bonds of the City of Bozeman, Montana 2. Resolution No. 5316, A Resolution of the City Commission Submitting to the Qualified Electors of the City of Bozeman, Montana, the Question of Issuing General Obligation Bonds for the Purpose of Paying the Costs of Designing, Constructing, Equipping and Furnishing a New Fire Station 2; and the Question of Issuing General Obligation Bonds for the Purpose of Paying the Costs of Designing, Constructing, Equipping and Furnishing Improvements to the Bozeman Swim Center; the Bogert Pool; and the Lindley Center; and Costs Associated with the Sale and Issuance of Each Series of Bonds 3. Resolution No. 5590, Resolution Relating to up to $2,280,000 in Principal Amount of General Obligation Bonds and up to $3,930,000 in Principal Amount of Limited Tax General Obligation Bonds; Authorizing the Issuance and Calling for the Public Sale Thereof 4. Preliminary Official Statement 5. Affidavit of Publication of Notice of Bond Sale 2 6. Bid Tabulation Sheet 7. Official Statement 8. Resolution No. 5591, Resolution Relating to $2,280,000 General Obligation Bonds, Series 2024A; Determining the Form and Details, Authorizing the Execution and Delivery and Levying Taxes for the Payment Thereof 9. Statement of Indebtedness, City of Bozeman, Montana 10. Certificate as to Organization 11. Affidavit as to Signatures of Officers 12. Signature and No-Litigation Certificate 13. Tax Certificate 14. Request and Authorization 15. Finance Director’s Certificate and Receipt 16. Certificate of Bond Registrar 17. Issue Price Certificate 18. Receipt of Purchaser 19. Certificate of Municipal Advisor 20. Continuing Disclosure Undertaking 21. IRS Form 8038-G 22. Specimen Bond 23. Bond Counsel Opinion 24. Moody’s Rating Letter 25. The Depository Trust Company’s Blanket Issuer Letter of Representations 26. Closing Instructions and Final Debt Service Schedule STATE OF MONTANA COUNTY OF GALLA TIN ) : ss. ) CERTIFICATE AS TO TRANSCRIPT OF PROCEEDINGS AUTHORIZING GENERAL OBLIGATION BONDS OF CITY OF BOZEMAN, MONTANA I, the undersigned, being the duly qualified and acting City Clerk of the City of Bozeman, Montana, (the "City") hereby certify that each of the statements contained in this certificate is true and correct as shown by the official records of the City in my custody, and as otherwise known to me; that each and all of the documents hereto attached are duplicates or full, true and correct copies of the originals of such documents which are on file and of record in my office; that the documents constitute a full, true and correct transcript of all proceedings of the City Commission and other officers and employees of the City, and of the City's official record of the performance of all acts and the existence of all conditions and things required by law to be taken, to exist, to happen and to be performed prior to the date of this certificate, precedent to the issuance of the following-described bonds of the City: $2,280,000 General Obligation Bonds, dated as of May 16, 2024 and that the attached documents are more fully described as follows: 1. F@ffll @f p@titi@fl rn€lt}@Btiflg Hw @aHiRg @f aft @l@@ti@fl @fl th@ B@Rds, f)f'@B@flt@d t€l th@ G@V@ffliflg B@dy ifl -------@€)Uflt@f'f)arts. (M.C.A., S@@ti@fl 7 7 ~ 2. F@ffll @f affidavit atta@h@d t@ @a@h @@uflt@f'f)art by th@ @irnulat@¥ th@rn@f. 3. C@rtif½@at@ @f th@ City Clmic, dat@d , 2Q_, statiRg th@ etualif½@ati@fls @fth@ p@titi@fl@¥s. (M,.C.A., S@@ti@fl 7 7 4225) 4. Minutes of a meeting of the City Commission held July 13, 2021, including the resolution adopted thereat, calling an election on the Bonds. (M.C.A., Section 7-7- 4226) 5. Affidavit of publication of notice of close of registration for the election. (M.C.A., Section 13-2-301(a)). 6. Notice of the election, dated July 13, 2021. (M.C.A., Section 7-7-4227) 7. Affidavit of Publication of Notice of Election (October 3, 10, and 17, 2021). (M.C.A., Sections 7-7-4227, 13-1-108) 8. Printed ballot furnished to the qualified electors for voting on ( each of) the proposition(s) submitted at the election held November 2, 2021. 9. Canvass of Votes Cast setting forth the official returns of the votes cast on the proposition submitted; dated November 10, 2021. '/ 10. Minutes of a meeting of the City Commission held March 19, 2024, including the resolution adopted thereat, authorizing the issuance of the Bonds and public sale thereof, subject to certain parameters. (M.C.A., Section 7-7-4254 and Section 17-5-107.) 11. Affidavit of Publication of Notice of Sale of Bonds (April 6 and 13, 2024) (M.C.A., Section 7-7-4252.) 12. Bid Tabulation Sheet. 13. Minutes of a meeting of the City Commission held April 16, 2024, confirming the award of the sale of the Bonds. 14. Minutes of a meeting of the City Commission held April 23, 2024, including the resolution adopted thereat, prescribing the form and details and authorizing execution of the Bonds. I further certify that there is no litigation threatened pending or known to me to be threatened, questioning the organization or boundaries of the City, or the right of any officer or member of the City Commission to his or her office, or in any manner questioning the right and power of the City and its officers to issue the Bonds of the City and to authorize the City to levy and apply taxes for the payment thereof. WITNESS my hand officially as such City Clerk and the seal of the City this 16th day of May, 2024. (SEAL) City Clerk 2 RESOLUTION 5316 A RESOLUTION OF THE CITY COMMISSION SUBMITTING TO THE QUALIFIED ELECTORS OF THE CITY OF BOZEMAN, MONTANA, THE QUESTION OF ISSUING GENERAL OBLIGATION BONDS FOR THE PURPOSE OF PAYING THE COSTS OF DESIGNING, CONSTRUCTING, EQUIPPING AND FURNISHING A NEW FIRE STATION 2; AND THE QUESTION OF ISSUING GENERAL OBLIGATION BONDS FOR THE PURPOSE OF PAYING THE COSTS OF DESIGNING, CONSTRUCTING, EQUIPPING AND FURNISHING IMPROVEMENTS TO THE BOZEMAN SWIM CENTER; THE BOGERT POOL; AND THE LINDLEY CENTER; AND COSTS ASSOCIATED WITH THE SALE AND ISSUANCE OF EACH SERIES OF BONDS BE IT RESOLVED by the City Commission (the “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. Authorization. The City is authorized pursuant to Section 7-7-4221, Montana Code Annotated, upon approval of the electorate of the City, to issue general obligation bonds pledging the general credit of the City for any purpose authorized by law, provided that such indebtedness will not cause the total indebtedness of the City to exceed 2.5% of the total assessed value of taxable property of the City, determined as provided in Section 15-8-111, Montana Code Annotated, ascertained by the last assessment for state and county taxes. The Commission is authorized pursuant to Section 7-7-4223, Montana Code Annotated, to call a bond election by adopting a resolution to that effect. 1.02. Proposed Fire Station Project. The Commission determines there should be submitted to the electors of the City qualified to vote at bond elections the question of whether the Commission shall be authorized to sell and issue general obligation bonds of the City in the total principal amount of up to $6,730,000.00 for the purpose of paying the costs of designing, DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 2 constructing, equipping and furnishing a new Fire Station 2 to better position resources to serve growth in the southwestern areas of the City and costs associated with the sale and issuance of the bonds, which bonds shall bear interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, and subject to redemption as required by law. 1.03. Proposed Recreation Facilities Improvement Projects. The Commission determines there should be submitted to the electors of the City qualified to vote at bond elections the question of whether the Commission shall be authorized to sell and issue general obligation bonds of the City in the total principal amount of up to $2,280,000.00 for the purpose of paying the costs of designing, constructing, equipping and furnishing improvements to the Bozeman Swim Center; the Bogert Pool; and the Lindley Center and costs associated with the sale and issuance of the bonds, which bonds shall bear interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, and subject to redemption as required by law. 1.04. Debt Limitation. The Commission has determined that the issuance of general obligation bonds up to the total principal amount of Nine Million Ten Thousand and No/100 Dollars ($9,010,000.00) together with the outstanding principal amounts of all other general obligation indebtedness of the City will not cause the City to exceed its general obligation indebtedness limitation, which is currently calculated to be $221,682,901 (i.e., 2.50% x $8,867,316,046). 1.05. Elections. The Commission has determined there should be submitted to the electors of the City qualified to vote at bond elections two bond election questions, one regarding whether the Commission shall be authorized to sell and issue general obligation bonds of the City to obtain funds to pay the costs of Fire Station 2 and the other regarding whether the Commission shall be authorized to sell and issue general obligation bonds of the City to obtain funds to pay the costs of improving the Bozeman Swim Center, the Bogert Pool, and the Lindley Center. 1.06. Bonds. It is the judgment of the Commission that the total principal amount of up to Six Million Seven Hundred Thirty Thousand and No/100 Dollars ($6,730,000.00) in general obligation bonds will be necessary to carry out the purpose set forth Section 1.02 above and that DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 3 the total principal amount of up to Two Million Two Hundred Eighty Thousand and No/100 Dollars ($2,280,000.00) in general obligation bonds will be necessary to carry out the purpose set forth Section 1.03 above. It is also the judgment and determination of the Commission that such general obligation bonds may be issued in multiple series, each series payable during a term not to exceed twenty (20) years and subject to redemption as provided by law. Section 2 Calling of the Election. The City Commission hereby calls and directs that a special City election be held in conjunction with the general election on November 2, 2021, for the purpose of voting on the following questions: Question 1: Proposed Fire Station Project Shall the City Commission of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed Six Million Seven Hundred Thirty Thousand and No/100 Dollars ($6,730,000.00) bearing interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, for the purpose of paying the costs of designing, constructing, equipping and furnishing a new Fire Station 2 on a site located on the Montana State University campus to be leased by MSU to the City or other suitable location in the City; and costs associated with the sale and issuance of the bonds? Question 2: Proposed Recreation Facilities Improvement Projects Shall the City Commission of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed Two Million Two Hundred Eighty Thousand and No/100 Dollars ($2,280,000.00) bearing interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, for the purpose of paying the costs of designing, constructing, equipping and furnishing improvements to: the Bozeman DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 4 Swim Center to include replacing perimeter drain tiles (gutter system), deck tiles, and ceiling tiles, repairing the plaster shell, and replacing the HVAC system; the Bogert Pool to include replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall/fence; and the Lindley Center to include upgrading restrooms to meet current Americans with Disabilities Act requirements, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot and related site improvements; and costs associated with the sale and issuance of the bonds? Section 3 Conduct of Elections. All qualified electors of the City shall be entitled to vote at the bond elections. The City Clerk is hereby authorized and directed to give notice of the call and details of the elections to the Gallatin County Election Administrator as soon as practicable and in any event on or the before the date required by the Gallatin County Election Administrator. The Gallatin County Election Administrator is requested to give notice of the close of registration and thereafter prepare printed lists of the qualified electors in the City entitled to vote in the elections in the City and to conduct the elections in the form and manner prescribed by law. Section 4 Notice of Elections. The City Clerk or the Gallatin County Election Administrator, as appropriate, is hereby authorized and requested to cause notice of the call and holding of the elections to be given by publishing notice at least three times no earlier than 40 days and no later than 10 days before each election in the Bozeman Daily Chronicle, a newspaper of general circulation in Gallatin County. The notice of elections as published shall read substantially as shown on Exhibit A hereto (which is incorporated by reference and made a part hereof), with such additions or deletions as are determined necessary or desirable. Section 5 Forms of Ballots. The ballots shall be printed in substantially the following forms, with such additions or deletions as are determined necessary or desirable: DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 5 OFFICIAL BALLOT CITY OF BOZEMAN, MONTANA GENERAL OBLIGATION BOND ELECTION FIRE STATION 2 PROJECT NOVEMBER 2, 2021 INSTRUCTIONS TO VOTERS: Completely fill in the oval using a blue or black ink pen before the words “FIRE STATION 2 BONDS —YES” if you wish to vote for the bond issue; if you are opposed to the bond issue, completely fill in the oval using a blue or black ink pen before the words “FIRE STATION 2 BONDS —NO.” Shall the City Commission of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed Six Million Seven Hundred Thirty Thousand and No/100 Dollars ($6,730,000.00) bearing interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, for the purpose of paying the costs of designing, constructing, equipping and furnishing a new Fire Station 2 on a site located on the Montana State University campus to be leased by MSU to the City or other suitable location in the City; and costs associated with the sale and issuance of the bonds? FIRE STATION 2 BONDS – YES FIRE STATION 2 BONDS – NO DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E OFFICIAL BALLOT CITY OF BOZEMAN, MONTANA GENERAL OBLIGATION BOND ELECTION RECREATION FACILITIES IMPROVEMENT PROJECTS NOVEMBER 2, 2021 INSTRUCTIONS TO VOTERS: Completely fill in the oval using a blue or black ink pen before the words “RECREATION FACILITIES IMPROVEMENT BONDS —YES” if you wish to vote for the bond issue; if you are opposed to the bond issue, completely fill in the oval using a blue or black ink pen before the words “RECREATION FACILITIES IMPROVEMENT BONDS — NO.” Shall the City Commission of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed Two Million Two Hundred Eighty Thousand and No/100 Dollars ($2,280,000.00) bearing interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, for the purpose of paying the costs of designing, constructing, equipping and furnishing improvements to: the Bozeman Swim Center to include replacing perimeter drain tiles (gutter system), deck tiles, and ceiling tiles, repairing the plaster shell, and replacing the HVAC system; the Bogert Pool to include replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall/fence; and the Lindley Center to include upgrading restrooms to meet current Americans with Disabilities Act requirements, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot and related site improvements; and costs associated with the sale and issuance of the bonds? RECREATION FACILITIES IMPROVEMENT BONDS – YES RECREATION FACILITIES IMPROVEMENT BONDS – NO DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 2 Section 6 Notice to County Election Administrator. A copy of this Resolution will be provided to the Gallatin County Election Administrator as soon as possible after its adoption and approval in order to inform the Election Administrator of the details of the special election and the pertinent requests and authorizations as to the conduct of the special election. Section 7 Reimbursement Expenditures. (a) For purposes of this Section 7, “project” means the Fire Station 2 Project set forth in the first ballot above and/or the Recreation Facilities Improvement Projects set forth in the second ballot above. The United States Department of Treasury has promulgated final regulations governing the use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City for project expenditures paid by the City prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the “Regulations”) require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds within 18 months (or three years, if the reimbursement bond issue qualifies for the “small issuer” exception from the arbitrage rebate requirement) after the later of (i) the date the expenditure is paid or (ii) the date the project is placed in service or abandoned, but (unless the issue qualifies for the “small issuer” exception from the arbitrage rebate requirement) in no event more than three years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. (b) Other than (i) expenditures to be paid or reimbursed from sources other than the bonds, (ii) expenditures permitted to be reimbursed under the transitional provision contained in Section 1.150-2(j)(2) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a “de minimus” amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for a project within the scope of this resolution have been paid by the City before the date 60 days before the date of adoption of this resolution. DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 3 (c) The City reasonably expects to reimburse the expenditures made for costs of such a project out of the proceeds of bonds in an estimated maximum aggregate principal amount of up to $9,010,000 ($6,730,000 with respect to the Fire Station Project and $2,280,000 with respect to the Recreation Facilities Improvement Projects) after the date of payment of all or a portion of the costs of such a project. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the bonds or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations. (d) As of the date hereof, there are no City funds reserved, allocated on a long-term basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to such a project, other than pursuant to the issuance of the bonds. The statement of intent contained in this resolution, therefore, is determined to be consistent with the City’s budgetary and financial circumstances as they exist or are reasonably foreseeable on the date hereof. (e) The City’s City Finance Director shall be responsible for making the “reimbursement allocations” described in the Regulations, being generally the transfer of the appropriate amount of proceeds of the bonds to reimburse the source of temporary financing used by the City to make prior payment of the costs of the project. Each allocation shall be evidenced by an entry on the official books and records of the City maintained for the bonds or the project and shall specifically identify the actual original expenditure being reimbursed. DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E 4 PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, this 13th day of July, 2021. ____________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: ___________________________________ MIKE MAAS City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and appointed City Clerk of the City of Bozeman, Montana (the “City”), hereby certify that the attached resolution is a true copy of Resolution No. ____ entitled: “A RESOLUTION OF THE CITY COMMISSION SUBMITTING TO THE QUALIFIED ELECTORS OF THE CITY OF BOZEMAN, MONTANA, THE QUESTION OF ISSUING GENERAL OBLIGATION BONDS FOR THE PURPOSE OF PAYING THE COSTS OF DESIGNING, CONSTRUCTING, EQUIPPING AND FURNISHING A NEW FIRE STATION 2; AND THE QUESTION OF ISSUING GENERAL OBLIGATION BONDS FOR THE PURPOSE OF PAYING THE COSTS OF DESIGNING, CONSTRUCTING, EQUIPPING AND FURNISHING IMPROVEMENTS TO THE BOZEMAN SWIM CENTER; THE BOGERT POOL; AND THE LINDLEY CENTER; AND COSTS ASSOCIATED WITH THE SALE AND ISSUANCE OF EACH SERIES OF BONDS” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Commission at a regular meeting on July 13, 2021, and that the meeting was duly held by the City Commission and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Commission Members voted in favor thereof: ; those Commissioners who voted against the same: . WITNESS my hand and seal officially this __ day of July, 2021. (SEAL) MIKE MAAS City Clerk 5316 Mayor Andrus, Deputy Mayor Cunningham, Cr. Pomeroy, Cr. Madgic 13 DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E A-1 EXHIBIT A NOTICE OF GENERAL OBLIGATION BOND ELECTION CITY OF BOZEMAN, MONTANA NOVEMBER 2, 2021 NOTICE IS HEREBY GIVEN by the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), that pursuant to a certain resolution duly adopted at a regular meeting of the Commission on July 13, 2021, a special city election of the registered voters of the City will be held in conjunction with the general election on November 2, 2021, for the purpose of voting on the following questions: Proposed Fire Station Project Shall the City Commission of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed Six Million Seven Hundred Thirty Thousand and No/100 Dollars ($6,730,000.00) bearing interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, for the purpose of paying the costs of designing, constructing, equipping and furnishing a new Fire Station 2 on a site located on the Montana State University campus to be leased by MSU to the City or other suitable location in the City; and costs associated with the sale and issuance of the bonds? Proposed Recreation Facilities Improvement Projects Shall the City Commission of the City of Bozeman, Montana (the “City”) be authorized to sell and issue general obligation bonds of the City in one or more series in an aggregate principal amount not to exceed Two Million Two Hundred Eighty Thousand and No/100 Dollars ($2,280,000.00) bearing interest at rates to be determined at the time of sale, payable semiannually over a term not to exceed twenty years for each series of bonds, for the purpose of paying the costs of designing, constructing, equipping and furnishing improvements to: the Bozeman Swim Center to include replacing perimeter drain tiles (gutter system), deck tiles, and ceiling tiles, repairing the plaster shell, and replacing the HVAC system; the Bogert Pool to include replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall/fence; and the Lindley Center to include upgrading restrooms to meet current Americans with Disabilities Act requirements, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot and related site improvements; and costs associated with the sale and issuance of the bonds? The election will be conducted solely by mail ballot. Ballots will be mailed to all eligible registered voters in the City on October 13, 2021, and must be returned by each voter, to the DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E A-2 Gallatin County Election Administrator, 311 W. Main Street, Room 210, Bozeman, Montana 59715, or ballots may be delivered in person to the Gallatin County Election Office, 311 W. Main Room 210, in Bozeman, during regular business hours (8:00 a.m. to 5:00 p.m.) weekdays (exclusive of holidays) October 14, 2021 through November 1, 2021. On Election Day, November 2, 2021, the only places for deposit of voted ballots will be the office of the Gallatin County Election Administrator and such other ballot drop-off locations as are identified in the election instructions provided by the Gallatin County Election Administrator, which will be open from 7:00 a.m. to 8:00 p.m. All ballots will be tallied in the office of the Gallatin County Election Administrator on November 2, 2021 as required by law. A qualified voter who will be absent from the City during the time the election is being conducted may: (a) vote in person in the office of the Gallatin County Election Administrator as soon as the ballots are available and until 8:00 p.m. on Election Day; or (b) make a written request prior to noon on November 1, 2021, signed by theapplicant and addressed to the office of the Gallatin County Election Administrator requesting the ballot be mailed to an address other than that which appears on the registration records. An elector may obtain a replacement ballot if his or her ballot is destroyed, spoiled, lost, or not received by the elector, by filling out and mailing, emailing, or faxing back a completed replacement ballot request form or by personally appearing at the office of the Gallatin County Election Administrator at 311 W. Main Room 210, in Bozeman. Ballots may be returned in person at the places of deposit listed in the election instructions of the Gallatin County Election Administrator, or returned by mail. If returning by mail, please use the then-prevailing first-class-postage price or one Forever Stamp. Postmark date does not apply; ballots returned by mail must be received by the 8:00 p.m. Election Day deadline to be counted. Electors who miss the close of registration deadline may register late and vote in the election if the County Election Administrator receives and verifies the electors’ voter registration information prior to noon on November 1, 2021. DATED this ____ day of ______________, 2021. /s/Eric Semerad Gallatin County Election Administrator Publish: October 3, 2021, October 10, 2021, and October 17, 2021 DocuSign Envelope ID: F2209AAE-392A-4DCE-A534-C5B5AA093B2E Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 1 RESOLUTION NO. 5590 RESOLUTION RELATING TO UP TO $2,280,000 IN PRINCIPAL AMOUNT OF GENERAL OBLIGATION BONDS AND UP TO $3,930,000 IN PRINCIPAL AMOUNT OF LIMITED TAX GENERAL OBLIGATION BONDS; AUTHORIZING THE ISSUANCE AND CALLING FOR THE PUBLIC SALE THEREOF BE IT RESOLVED by the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”) as follows: Section 1 Recitals. Pursuant to Section 7-7-4221, Montana Code Annotated (“MCA”), the City is authorized, upon approval of the electorate of the City, to issue general obligation bonds secured by the full faith and credit and taxing power of the City for any purpose authorized by law, provided that such indebtedness will not cause the total indebtedness of the City to exceed 2.5% of the total assessed value of the taxable property of the City, determined as provided in Section 15-8-111, MCA, ascertained by the last assessment for state and county taxes. In addition, pursuant to Section 7-7- 4104, MCA, the City is authorized to issue general obligations not secured by a pledge of the City’s taxing power without submitting the question of incurring the indebtedness to the electors upon the satisfaction of certain conditions, including that (1) the principal amount of the obligation may not exceed 10% of the general fund budget of the municipality in each of the two immediately preceding fiscal years; (2) at the time the obligation is incurred, the debt service in the current or any future fiscal year on the obligation and any other outstanding obligation issued pursuant to Section 7-7-4104, MCA, does not exceed 2% of the revenues deposited in the general fund of the DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 2 municipality in each of the two immediately preceding fiscal years; and (3) the term of the obligation does not exceed 20 years. The electors of the City at an election duly called, noticed and held on November 2, 2021, authorized this Commission to sell and issue general obligation bonds of the City in the aggregate principal amount not to exceed $2,280,000 for the purpose of paying the costs of designing, constructing, equipping and furnishing improvements to: the Bozeman Swim Center to include replacing perimeter drain tiles (gutter system), deck tiles, and ceiling tiles, repairing the plaster shell, and replacing the HVAC system; the Bogert Pool to include replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall/fence; and the Lindley Center to include upgrading restrooms to meet current Americans with Disabilities Act requirements, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot and related site improvements (the “Initial Improvements”); and costs associated with the sale and issuance of the bonds. In its engineering in advance of making the Initial Improvements, the City has determined that the Bozeman Swim Center, Bogert Pool and Lindley Center each require improvements and renovations in addition to the Initial Improvements (collectively, the “Additional Improvements”). The City has determined at this time to sell and issue general obligation bonds of the City (the “Series 2024A Bonds”) to finance or reimburse the City for costs of the Initial Improvements and to pay costs of issuing the Series 2024A Bonds, and to sell and issue limited tax general obligation bonds of the City (the “Series 2024B Bonds”) to finance or reimburse the City for costs of the Additional Improvements and to pay costs of issuing the Series 2024B Bonds. The Series 2024A Bonds and Series 2024B Bonds are referred to collectively herein as the “Series 2024 Bonds.” The total assessed value of the taxable property of the City, ascertained by the last assessment for state and county taxes, was equal to $17,730,663,050 (2.5% equals $443,266,576.25). The issuance of the Series 2024A Bonds in the principal amount of $2,280,000 will not cause the total indebtedness of the City to exceed the limitation set forth in Section 7-7- 4201, MCA. DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 3 The City’s general fund budgets for the fiscal years ended June 30, 2022 and 2023 were $39,306,358 (10% equals $3,930,636) and $46,726,481 (10% equals $4,672,648), respectively. Revenues deposited in the general fund of the City for the fiscal years ended June 30, 2022 and 2023 were $32,954,190 (2% equals $659,084) and $43,234,377 (2% equals $864,688), respectively. Section 2 Public Sale. The Series 2024 Bonds shall be offered and sold at a public competitive sale pursuant to certain Terms and Conditions of Sale (the “Terms and Conditions”) to be determined and finalized with respect to each series of Series 2024 Bonds by the City Manager and City Finance Director, in consultation with Baker Tilly Municipal Advisors LLC, as municipal advisor to the City (“Baker Tilly”). For each series of Series 2024 Bonds, the City Manager and City Finance Director shall determine the date and time that bids will be opened and tabulated. The City Manager and City Finance Director will prepare or cause to be prepared a notice of the sale of each series of Series 2024 Bonds, expected to be substantially in the forms attached as Exhibit A and Exhibit B, and the City Clerk is authorized and directed to cause notice of the sale of each series of Series 2024 Bonds to be published in the Bozeman Chronicle or otherwise in accordance with state law. Following tabulation of bids, the City Manager and City Finance Director will award the sale of each series of Series 2024 Bonds to the responsive bidder with the lowest true interest cost; subject to approval and confirmation by the Commission. With respect to either series of Series 2024 Bonds, the City Manager and City Finance Director shall have the right to reject any and all bids in their sole discretion and to waive any informality and irregularity in any and all bids. In the event that all bids are rejected, the City Manager and City Finance Director are authorized to initiate a new public, competitive sale of either series of Series 2024 Bonds and to prepare such additional Terms and Conditions, offering materials and notices, in accordance with this resolution. The forms of the Series 2024 Bonds and the final terms and conditions of each series thereof will be set forth in a subsequent resolution or resolutions to be adopted by this Commission following the award of the sale of such Series 2024 Bonds. DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 4 Section 3 Authorization to Award Sale; Parameters. Following tabulation of the bids as described in Section 2, the City Manager and City Finance Director are hereby authorized to award the sale of each series of the Series 2024 Bonds, in their discretion, subject to ratification and confirmation by the Commission, on the terms and at a purchase price subject, with respect to each series of Series 2024 Bonds, to the following limitations and conditions: (a) the aggregate principal amount of the Series 2024A Bonds shall not exceed $2,280,000 (exclusive of original issue premium or discount); (b) the aggregate principal amount of the Series 2024B Bonds shall not exceed $3,930,000, which is 10% of the general fund budget of the municipality in the lower of the two preceding fiscal years; (c) the debt service payable in the current or any future fiscal year on the Series 2024B Bonds and all other outstanding limited tax general obligations of the City shall not exceed $659,084, which is 2% of the revenues deposited in the general fund of the municipality in the lower of the two preceding fiscal years; (d) the purchase price of each series of Series 2024 Bonds shall not be less than 97% of the principal amount thereof; (e) the true interest cost of the Series 2024A Bonds shall not exceed 5.00% and the true interest cost of the Series 2024B Bonds shall not exceed 5.00%; (f) the term of the Series 2024A Bonds shall not exceed twenty (20) years; and (g) the Series 2024B Bonds shall finally mature not later than twenty (20) years after the date of issuance. The Series 2024 Bonds will be dated, as originally issued, as of their date of delivery. The Series 2024 Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 5 equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. Section 4 Expected Denominations The Series 2024A Bonds are expected to mature, subject to redemption as hereinafter provided, on July 1 in each of the following years and amounts (unless combined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) Year Principal Amount(1) 2025 $ 75,000 2035 $110,000 2026 85,000 2036 115,000 2027 90,000 2037 120,000 2028 90,000 2038 125,000 2029 95,000 2039 130,000 2030 95,000 2040 135,000 2031 100,000 2041 140,000 2032 105,000 2042 145,000 2033 105,000 2043 150,000 2034 110,000 2044 160,000 (1) Preliminary; subject to change. The Series 2024B Bonds are expected to mature, subject to redemption as hereinafter provided, on July 1 in each of the following years and amounts (unless combined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) Year Principal Amount(1) 2025 $115,000 2035 $180,000 2026 140,000 2036 185,000 2027 140,000 2037 190,000 2028 145,000 2038 200,000 2029 150,000 2039 210,000 2030 155,000 2040 340,000 2031 160,000 2041 355,000 2032 165,000 2042 370,000 2033 170,000 2043 385,000 2034 175,000 (1) Preliminary; subject to change. DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 6 The City reserves the right, after bids are opened and prior to award, to increase or decrease the amount of any maturity or maturities in multiples of $5,000 in order to produce sufficient net proceeds and to meet the City’s structuring goals. Section 5 Preliminary Official Statement. The City Manager, City Finance Director and other officers of the City, in consultation with Baker Tilly, are hereby authorized and directed to prepare, on behalf of the City, one or more Preliminary Official Statements to be distributed to potential bidders. The Preliminary Official Statement(s) shall contain the Terms and Conditions and such other information as shall be advisable and necessary to describe accurately the City, the terms and conditions of each series of Series 2024 Bonds and the security therefor. The City Manager and City Finance Director are authorized on behalf of the City to deem each Preliminary Official Statement near “final” as of its date, in accordance with Rule 15c2-12(b)(1) under the Securities Exchange Act of 1934. Section 6 Continuing Disclosure. In order to permit bidders for each series of Series 2024 Bonds and other participating underwriters in the primary offering of such series of Series 2024 Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Rule”), the City will covenant and agree for the benefit of the registered holders and beneficial owners from time to time of such outstanding series of Series 2024 Bonds, to provide annual reports of specified information and notice of the occurrence of certain events. The City is the only “obligated person” in respect of the Series 2024 Bonds within the meaning of the Rule for the purposes of disclosing information on an ongoing basis. A description of the undertaking will be set forth in the Preliminary Official Statement(s). Failure of the City to enter into an undertaking substantially similar to that described in the applicable Preliminary Official Statement would relieve the successful bidder of its obligation to purchase the applicable series of Series 2024 Bonds. DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 7 Section 7 Effective Date. This Resolution shall become effective upon passage. PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 19th day of March, 2024. ___________________________________ TERRY CUNNINGHAM Mayor ATTEST: ___________________________________ MICHAEL MAAS City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting City Clerk of the City of Bozeman, Montana (the “City”), hereby certify that attached hereto is a true copy of Resolution No. 5590 entitled: “RESOLUTION RELATING TO UP TO $2,280,000 IN PRINCIPAL AMOUNT OF GENERAL OBLIGATION BONDS AND UP TO $3,930,000 IN PRINCIPAL AMOUNT OF LIMITED TAX GENERAL OBLIGATION BONDS; AUTHORIZING THE ISSUANCE AND CALLING FOR THE PUBLIC SALE THEREOF” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Commission at a meeting on March 19, 2024, and that the meeting was duly held by the City Commission and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Commissioners voted in favor thereof: ; voted against the same: ; abstained from voting thereon: ; or were absent: . WITNESS my hand officially this 19th day of March, 2024. Michael Maas City Clerk DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Madgic, Christopher Coburn, Douglas Fischer Terence Cunningham, Joey Morrison, Jennifer Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds EXHIBIT A Form of Notice of Sale of Series 2024A Bonds NOTICE OF SALE OF $2,280,000 GENERAL OBLIGATION BONDS, SERIES 2024A CITY OF BOZEMAN, MONTANA Notice is hereby given that the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), will receive bids for the purchase of General Obligation Bonds, Series 2024A, in the aggregate principal amount of $2,280,000 (the “Series 2024A Bonds”). The proceeds of the Series 2024A Bonds will be used by the City to (i) finance or reimburse the City for a portion of the costs of improvements to the Bozeman Swim Center, Bogert Pool and Lindley Center; and (ii) pay the costs associated with the sale of the Series 2024A Bonds. The Series 2024A Bonds, including interest thereon, are general obligations of the City payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. The Series 2024A Bonds shall be dated, as originally issued, as of their date of delivery, expected to be May 16, 2024, and shall bear interest payable semiannually on January 1 and July 1 of each year, commencing January 1, 2025, to the registered owners of the Series 2024A Bonds as such appear in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month, at a rate or rates designated by the successful bidder at public sale and approved by the Commission. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Bids shall be for not less than $2,280,000.00, plus accrued interest, if any, on the total principal amount of the Series 2024A Bonds. The Series 2024A Bonds shall mature, subject to redemption as hereinafter provided, on July 1 in each of the following years and amounts (unless combined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) Year Principal Amount(1) 2025 $ 75,000 2035 $110,000 2026 85,000 2036 115,000 2027 90,000 2037 120,000 2028 90,000 2038 125,000 2029 95,000 2039 130,000 2030 95,000 2040 135,000 2031 100,000 2041 140,000 2032 105,000 2042 145,000 2033 105,000 2043 150,000 2034 110,000 2044 160,000 (1) Preliminary; subject to change. DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds The City reserves the right, after bids are opened and prior to award, to increase or decrease the amount of any maturity or maturities in multiples of $5,000 in order to produce sufficient net proceeds and to meet the City’s structuring goals. The Series 2024A Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. If less than all of the Series 2024A Bonds are to be redeemed, the Series 2024A Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City). The Series 2024A Bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities. The Series 2024A Bonds will be issued as fully registered bonds only. The Series 2024A Bonds will be issued in book-entry only form. The City reserves the right to reject any and all bids and to sell the Series 2024 Bonds at a private or other sale. Bids will be received by Baker Tilly Municipal Advisors, LLC, the City’s municipal advisor or by electronic transmission through PARITY® pursuant to the instructions set forth herein until 10:00 a.m., M.T., on Tuesday, April 16, 2024, at which time bids will be opened and tabulated. The tabulation of bids will be presented to a designated Pricing Committee subsequent to the opening of bids, at which time the Pricing Committee will consider the bids received and, if a responsive and acceptable bid is received, award sale of the Series 2024A Bonds to the bidder with the lowest true interest cost, subject to approval and confirmation by the Commission. To have its bid considered for award, the successful bidder is required to submit a good faith deposit via wire transfer to the City in the amount of $45,600.00 no later than 1:00 p.m. M.T. on Tuesday, April 16, 2024. Prospective bidders should consult the Terms and Conditions of Sale and the Preliminary Official Statement for a detailed description of the Series 2024A Bonds, the security therefor, and the form of legal opinion proposed to be rendered by Dorsey & Whitney LLP, of Missoula, Montana, as bond counsel. For an electronic copy of the Preliminary Official Statement or for any additional information prior to sale, prospective purchasers are referred to the Municipal Advisor to the City, Baker Tilly Municipal Advisors, LLC, by telephone (651) 223 3000, or by email: bids@bakertilly.com. Dated: May 19, 2024. BY ORDER OF THE CITY COMMISSION Publish: April 7, 2024 April 14, 2024 DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds EXHIBIT B Form of Notice of Sale of Series 2024B Bonds NOTICE OF SALE OF $3,930,000 LIMITED TAX GENERAL OBLIGATION BONDS, SERIES 2024B CITY OF BOZEMAN, MONTANA Notice is hereby given that the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), will receive bids for the purchase of Limited Tax General Obligation Bonds, Series 2024B, in the aggregate principal amount of $3,930,000 (the “Series 2024B Bonds”), subject to adjustment as described below. The proceeds of the Series 2024B Bonds will be used by the City to (i) finance or reimburse the City for a portion of the costs of improvements to the Bozeman Swim Center, Bogert Pool and Lindley Center; and (ii) pay the costs associated with the sale of the Series 2024B Bonds. The Series 2024B Bonds, including interest thereon, are general obligations of the City payable from legally available funds of the City. The general credit of the City is irrevocably pledged for the prompt payment of the principal and interest on the Series 2024B Bonds as they become due, however, the Series 2024B Bonds are not secured by a pledge of the City’s taxing power and the City cannot be obligated to levy taxes for the payment of principal of and interest on the Series 2024B Bonds. The Series 2024B Bonds shall be dated, as originally issued, as of their date of delivery, expected to be May 16, 2024, and shall bear interest payable semiannually on January 1 and July 1 of each year, commencing January 1, 2025, to the registered owners of the Series 2024B Bonds as such appear in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month, at a rate or rates designated by the successful bidder at public sale and approved by the Commission. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Bids shall be for not less than $3,930,000.00, plus accrued interest, if any, on the total principal amount of the Series 2024B Bonds. The Series 2024B Bonds shall mature, subject to redemption as hereinafter provided, on July 1 in each of the following years and amounts (unless combined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) Year Principal Amount(1) 2025 $115,000 2035 $180,000 2026 140,000 2036 185,000 2027 140,000 2037 190,000 2028 145,000 2038 200,000 2029 150,000 2039 210,000 2030 155,000 2040 340,000 2031 160,000 2041 355,000 2032 165,000 2042 370,000 DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Resolution No. 5590, Authorizing the Issuance and Public Sale of General Obligation and Limited Tax General Obligation Bonds 2033 170,000 2043 385,000 2034 175,000 (1) Preliminary; subject to change. The City reserves the right, after bids are opened and prior to award, to increase or decrease the amount of any maturity or maturities in multiples of $5,000 in order to produce sufficient net proceeds and to meet the City’s structuring goals. The Series 2024B Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. If less than all of the Series 2024B Bonds are to be redeemed, the Series 2024B Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City). The Series 2024B Bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities. The Series 2024B Bonds will be issued as fully registered bonds only. The Series 2024B Bonds will be issued in book-entry only form. Bids will be received by Baker Tilly Municipal Advisors, LLC, the City’s municipal advisor or by electronic transmission through PARITY® pursuant to the instructions set forth herein until 10:30 a.m., M.T., on Tuesday, April 16, 2024, at which time bids will be opened and tabulated. The tabulation of bids will be presented to a designated Pricing Committee subsequent to the opening of bids, at which time the Pricing Committee will consider the bids received and, if a responsive and acceptable bid is received, award sale of the Series 2024B Bonds to the bidder with the lowest true interest cost, subject to approval and confirmation by the Commission. To have its bid considered for award, the successful bidder is required to submit a good faith deposit via wire transfer to the City in the amount of $78,600.00 no later than 1:00 p.m. M.T. on Tuesday, April 16, 2024. Prospective bidders should consult the Terms and Conditions of Sale and the Preliminary Official Statement for a detailed description of the Series 2024B Bonds, the security therefor, and the form of legal opinion proposed to be rendered by Dorsey & Whitney LLP, of Missoula, Montana, as bond counsel. For an electronic copy of the Preliminary Official Statement or for any additional information prior to sale, prospective purchasers are referred to the Municipal Advisor to the City, Baker Tilly Municipal Advisors, LLC, by telephone (651) 223 3000, or by email: bids@bakertilly.com. Dated: May 19, 2024. BY ORDER OF THE CITY COMMISSION Publish: April 7, 2024 April 14, 2024 DocuSign Envelope ID: 03B17866-FBF3-4DB0-BC59-77DD0BB13EA1 Certificate Of Completion Envelope Id: 03B17866FBF34DB0BC5977DD0BB13EA1 Status: Completed Subject: Complete with DocuSign: Resolution_5590_Authorizing_the_Issuance_and_Public_Safe_of_General_Obl... Source Envelope: Document Pages: 12 Signatures: 4 Envelope Originator: Certificate Pages: 5 Initials: 0 Alex Newby AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) Stamps: 2 anewby@bozeman.net IP Address: 69.145.83.100 Record Tracking Status: Original 3/19/2024 1:34:41 PM Holder: Alex Newby anewby@bozeman.net Location: DocuSign Security Appliance Status: Connected Pool: StateLocal Storage Appliance Status: Connected Pool: City Manager Location: DocuSign Signer Events Signature Timestamp Greg Sullivan gsullivan@bozeman.net Bozeman City Attorney City of Bozeman, Montana Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Using IP Address: 69.145.83.100 Sent: 3/19/2024 8:00:06 PM Viewed: 3/21/2024 1:10:45 PM Signed: 3/21/2024 1:10:53 PM Electronic Record and Signature Disclosure: Accepted: 3/21/2024 1:10:45 PM ID: 29a50087-dc89-4540-b92a-5a7c2c0e5d2e Terry Cunningham tcunningham@bozeman.net Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Using IP Address: 174.215.20.63 Signed using mobile Sent: 3/21/2024 1:10:54 PM Viewed: 3/21/2024 1:11:26 PM Signed: 3/21/2024 1:11:36 PM Electronic Record and Signature Disclosure: Accepted: 11/3/2022 7:48:36 AM ID: 3079a697-195d-4eed-be8a-2bfe643492d2 Mike Maas mmaas@bozeman.net City Clerk City of Bozeman Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Using IP Address: 69.145.83.100 Sent: 3/21/2024 1:11:37 PM Viewed: 3/22/2024 7:18:21 AM Signed: 3/22/2024 7:19:00 AM Electronic Record and Signature Disclosure: Accepted: 8/23/2022 2:22:44 PM ID: b1bb90fd-5db8-4a5f-9451-9536f39ef003 In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Melissa Hodnett mhodnett@bozeman.net Finance Director City of Bozeman Security Level: Email, Account Authentication (None) Sent: 3/22/2024 7:19:02 AM Viewed: 3/22/2024 7:22:27 AM Electronic Record and Signature Disclosure: Accepted: 7/20/2023 11:50:41 AM ID: 565e8c08-4859-45e9-bb3e-564acd7056a8 Witness Events Signature Timestamp Notary Events Signature Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 3/19/2024 8:00:06 PM Certified Delivered Security Checked 3/22/2024 7:18:21 AM Signing Complete Security Checked 3/22/2024 7:19:00 AM Completed Security Checked 3/22/2024 7:19:02 AM Payment Events Status Timestamps Electronic Record and Signature Disclosure ELECTRONIC RECORD AND SIGNATURE DISCLOSURE From time to time, City Manager (we, us or Company) may be required by law to provide to you certain written notices or disclosures. 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By selecting the check-box next to ‘I agree to use electronic records and signatures’, you confirm that: You can access and read this Electronic Record and Signature Disclosure; and You can print on paper this Electronic Record and Signature Disclosure, or save or send this Electronic Record and Disclosure to a location where you can print it, for future reference and access; and Until or unless you notify City Manager as described above, you consent to receive exclusively through electronic means all notices, disclosures, authorizations, acknowledgements, and other documents that are required to be provided or made available to you by City Manager during the course of your relationship with City Manager. Further information may be obtained from Baker Tilly Municipal Advisors, LLC 30 East Seventh Street, Suite 3025, Saint Paul, MN 55101 (651) 223-3000 or bids@bakertilly.com. *Preliminary, subject to change. PRELIMINARY OFFICIAL STATEMENT DATED APRIL 4, 2024 NEW ISSUES MOODY’S UNDERLYING RATING: Aa1 BOOK ENTRY ONLY NOT BANK QUALIFIED In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”), (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code, and (iii) is excluded from Montana taxable income for State of Montana individual income tax purposes. Interest on the Bonds may, however, be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is included in gross income for purposes of the Montana corporate income tax and the Montana alternative corporate income tax. The Bonds are not “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. (See “TAX CONSIDERATIONS” herein.) CITY OF BOZEMAN, MONTANA $2,280,000* General Obligation Bonds, Series 2024A (the “Series 2024A Bonds”) $3,930,000* Limited Tax General Obligation Bonds, Series 2024B (the “Series 2024B Bonds”) Dated Date Date of Delivery (anticipated to be May 16, 2024) Sale Date and Time: Series 2024A Bonds Tuesday, April 16, 2024 until 10:00 A.M., Mountain Time (11:00 A.M. Central Time) Sale Date and Time: Series 2024B Bonds Tuesday, April 16, 2024 until 10:30 A.M., Mountain Time (11:30 A.M. Central Time) Security Series 2024A Bonds. The Series 2024A Bonds are general obligations of the City of Bozeman, Montana (the “City”), payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. Series 2024B Bonds. The Series 2024B Bonds are general obligations of the City, payable from any legally available funds of the City. The general credit of the City is irrevocably pledged for the prompt payment of the principal and interest on the Series 2024B Bonds as they become due; however, the Series 2024B Bonds are not secured by a pledge of the City’s taxing power and the City cannot be obligated to levy taxes for the payment of principal of and interest on the Series 2024B Bonds. See “Authority and Security” herein. Authorization Series 2024A Bonds. The Series 2024A Bonds are being issued pursuant to Montana Code Annotated, Title 7, Chapter 7, Part 42; a duly held election granting authorization to sell and issue general obligation bonds of the City; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. Series 2024B Bonds. The Series 2024B Bonds are being issued pursuant to Section 7-7-4104, Montana Code Annotated; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. See “Authority and Security” herein. Purpose The proceeds of the Series 2024A Bonds and the Series 2024B Bonds (collectively, the “Bonds”) will be used to (i) pay the costs of certain improvements to the Bozeman Swim Center, Bogert Pool, and Lindley Center; and (ii) pay the costs associated with the sale of each series of Bonds. See “Purpose of the Bonds and Use of Funds ” herein. Principal and Interest Payments Principal for each series of Bonds will be paid annually on July 1, beginning July 1, 2025. Interest for each series of Bonds will be payable semiannually on January 1 and July 1, beginning January 1, 2025. The information contained in this Preliminary Official Statement is deemed by the City to be final as of the date hereof; however, the pricing and underwriting information is subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Redemption Provisions The Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. Bids for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption, scheduled to conform to the respective maturity schedule set forth on the following page. Book Entry The Bonds will be issued only as fully registered obligations, and when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”). See “Appendix B - Book Entry”. Denominations The Bonds are being issued in the denomination of $5,000 or integral multiples thereof. Paying Agent/Registrar U.S. Bank Trust Company, National Association, located in Salt Lake City, Utah (“Registrar” and “Paying Agent”). Bidding Information Interested bidders should review the Terms and Conditions of Sale for additional instructions. See Appendix F herein. MATURITY SCHEDULE (Base CUSIP(1) _________) The Series 2024A Bonds Maturity July 1 Principal(2) Interest Rate Yield Price CUSIP(1) 2025 $ 75,000 2026 $ 85,000 2027 $ 90,000 2028 $ 90,000 2029 $ 95,000 2030 $ 95,000 2031 $100,000 2032 $105,000 2033 $105,000 2034 $110,000 2035 $110,000 2036 $115,000 2037 $120,000 2038 $125,000 2039 $130,000 2040 $135,000 2041 $140,000 2042 $145,000 2043 $150,000 2044 $160,000 (1) CUSIP® is a registered trademark of the American Bankers Association (“ABA”). CUSIP data (including CUSIP identifiers and related descriptive data) contained herein is provided by CUSIP Global Services (“CGS”), which is operated on behalf of the ABA by FactSet Research Systems Inc. CUSIP data is the valuable intellectual property of the ABA and the inclusion of CUSIP data herein is not intended to create a database and does not serve in any way as a substitute for any CUSIP Service provided by CGS. CUSIP data herein is provided for convenience of reference only. Neither the City, the Municipal Advisor, the Series 2024A Bonds Underwriter, nor their agents take any responsibility for the accuracy of such data now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of each series of Bonds. (2) Preliminary subject to change. The City reserves the right to adjust individual maturity amounts of each series of Bonds to achieve its financial objectives. MATURITY SCHEDULE (Base CUSIP(1) _________) The Series 2024B Bonds Maturity July 1 Principal(2) Interest Rate Yield Price CUSIP(1) 2025 $115,000 2026 $140,000 2027 $140,000 2028 $145,000 2029 $150,000 2030 $155,000 2031 $160,000 2032 $165,000 2033 $170,000 2034 $175,000 2035 $180,000 2036 $185,000 2037 $190,000 2038 $200,000 2039 $210,000 2040 $340,000 2041 $355,000 2042 $370,000 2043 $385,000 (1) CUSIP® is a registered trademark of the American Bankers Association (“ABA”). CUSIP data (including CUSIP identifiers and related descriptive data) contained herein is provided by CUSIP Global Services (“CGS”), which is operated on behalf of the ABA by FactSet Research Systems Inc. CUSIP data is the valuable intellectual property of the ABA and the inclusion of CUSIP data herein is not intended to create a database and does not serve in any way as a substitute for any CUSIP Service provided by CGS. CUSIP data herein is provided for convenience of reference only. Neither the City, the Municipal Advisor, the Series 2024B Bonds Underwriter, nor their agents take any responsibility for the accuracy of such data now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of each series of Bonds. (2) Preliminary subject to change. The City reserves the right to adjust individual maturity amounts of each series of Bonds to achieve its financial objectives. The Bonds are being offered for delivery when, as and if issued and received by the Series 2024A Bonds Underwriter and the Series 2024B Bonds Underwriter (hereinafter defined) and subject to the approval of legality by Dorsey & Whitney LLP, Bond Counsel. The Bonds are expected to be available for delivery through the facilities of DTC, in New York, New York on or about May 16, 2024. In connection with this offering the underwriter may over-allot or effect transactions which stabilize or maintain the market price of the Bonds offered hereby at a level above that which might otherwise prevail in the open market, and such stabilizing, if commenced, may be discontinued at any time. No dealer, broker, salesperson, or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds, other than as contained in the Preliminary Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities described herein by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. Certain information contained in the Preliminary Official Statement or the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness or accuracy. The information and expressions of opinion in the Preliminary Official Statement and the Final Official Statement are subject to change, and neither the delivery of the Preliminary Official Statement nor the Final Official Statement nor any sale made under either such document shall create any implication that there has been no change in the affairs of the City since the respective date thereof. However, upon delivery of the securities, the City will provide a certificate stating there have been no material changes in the information contained in the Final Official Statement since its delivery. References herein to laws, rules, regulations, resolutions, agreements, reports, and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for the purposes of, and as that term is defined in, Securities and Exchange Commission Rule 15c2-12. The Bonds are considered securities and have not been approved or disapproved by the Securities and Exchange Commission or any state or federal regulatory authority nor has any state or federal regulatory authority confirmed the accuracy or determined the adequacy of this Official Statement. Any representation to the contrary is a criminal offense. Investors must rely on their own examination of this Official Statement, the security pledged to repay the Bonds, the issuer and the merits and risks of the investment opportunity. FORWARD-LOOKING STATEMENTS This Official Statement, including its appendices, contains statements which should be considered “forward- looking statements,” meaning they refer to possible future events or conditions. Such statements are generally identifiable by the words such as “plan,” “expect,” “estimate,” “budget,” “may,” or similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause a deviation from the actual results, performance or achievements expressed or implied by such forward-looking statements. The City does not expect or intend to update or revise any forward-looking statements contained herein if or when its expectations, or events, conditions, or circumstances on which such statements are based occur. CONTACT INFORMATION Additional information regarding the City may be obtained by contacting Ms. Melissa Hodnett, Finance Director, City of Bozeman, 121 N. Rose Avenue, Bozeman, Montana 59715, phone (406) 582-2318, email: mhodnett@bozeman.net. CITY OF BOZEMAN, MONTANA 121 NO. ROUSE AVENUE BOZEMAN, MONTANA 59715 CITY COMMISSION Terry Cunningham Mayor Joey Morrison Deputy Mayor Jennifer Madgic Commissioner Christopher Coburn Commissioner Douglas Fischer Commissioner ACTING CITY MANAGER Chuck Winn FINANCE DIRECTOR Melissa Hodnett MUNICIPAL ADVISOR Baker Tilly Municipal Advisors, LLC Saint Paul, Minnesota BOND COUNSEL Dorsey & Whitney LLP Missoula, Montana REGISTRAR AND PAYING AGENT U.S. Bank Trust Company, National Association Salt Lake City, Utah SERIES 2024A BONDS UNDERWRITER _____________ _____________ SERIES 2024B BONDS UNDERWRITER _____________ _____________ TABLE OF CONTENTS Page PURPOSE OF THE BONDS AND USE OF FUNDS .................................................................................................... 1 PURPOSE OF THE BONDS.................................................................................................................................................. 1 SOURCES AND USES OF FUNDS ......................................................................................................................................... 1 INVESTMENT OF FUNDS ................................................................................................................................................... 2 DESCRIPTION OF THE BONDS ............................................................................................................................. 2 INTEREST CALCULATION ................................................................................................................................................... 2 REGISTRATION AND EXCHANGE FEATURES ........................................................................................................................... 2 BOOK ENTRY ................................................................................................................................................................. 2 PROVISIONS FOR PAYMENT .............................................................................................................................................. 2 NOTICE OF REDEMPTION ................................................................................................................................................. 2 OPTIONAL REDEMPTION .................................................................................................................................................. 3 [MANDATORY REDEMPTION ............................................................................................................................................. 3 AUTHORITY AND SECURITY ................................................................................................................................ 4 THE SERIES 2024A BONDS .............................................................................................................................................. 4 THE SERIES 2024B BONDS .............................................................................................................................................. 4 THE MONTANA PROPERTY TAX SYSTEM ............................................................................................................. 5 RATINGS ........................................................................................................................................................... 10 RISK FACTORS AND INVESTOR CONSIDERATIONS .............................................................................................. 10 MAINTENANCE OF RATINGS ........................................................................................................................................... 10 SECONDARY MARKET .................................................................................................................................................... 11 FUTURE CHANGES IN LAW; TAX EXEMPTION ...................................................................................................................... 11 LIMITATIONS ON REMEDIES AVAILABLE TO OWNERS OF THE BONDS ....................................................................................... 11 POTENTIAL IMPACTS RESULTING FROM EPIDEMICS OR PANDEMICS ........................................................................................ 12 CLIMATE CHANGE ........................................................................................................................................................ 12 CYBERSECURITY ............................................................................................................................................................ 12 PURCHASER/UNDERWRITING ........................................................................................................................... 12 THE SERIES 2024A BONDS ............................................................................................................................................ 12 THE SERIES 2024B BONDS ............................................................................................................................................ 13 CONTINUING DISCLOSURE ................................................................................................................................ 13 FUTURE FINANCING .......................................................................................................................................... 13 LITIGATION ....................................................................................................................................................... 14 LEGAL MATTERS ................................................................................................................................................ 14 TAX CONSIDERATIONS ...................................................................................................................................... 14 TAX-EXEMPT INTEREST .................................................................................................................................................. 14 ORIGINAL ISSUE DISCOUNT ............................................................................................................................................ 15 MARKET DISCOUNT ...................................................................................................................................................... 15 BOND PREMIUM .......................................................................................................................................................... 16 RELATED TAX CONSIDERATIONS ...................................................................................................................................... 16 SALE OR OTHER DISPOSITION ......................................................................................................................................... 16 INFORMATION REPORTING AND BACKUP WITHHOLDING ...................................................................................................... 16 NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS ............................................................................................................. 17 MUNICIPAL ADVISOR ........................................................................................................................................ 17 MUNICIPAL ADVISOR REGISTRATION ................................................................................................................................ 17 OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS .................................................................................................. 17 MISCELLANEOUS ............................................................................................................................................... 17 CERTIFICATION.................................................................................................................................................. 18 Appendices A. General Information of the City B. Book Entry C. Forms of Bond Counsel Opinion D. Forms of Continuing Disclosure Undertaking E. 2023 Annual Comprehensive Financial Report F. Bidding Information: Terms and Conditions of Sale and Bid Forms * Preliminary; subject to change. - 1 - OFFICIAL STATEMENT City of Bozeman, Montana $2,280,000* General Obligation Bonds, Series 2024A $3,930,000* Limited Tax General Obligation Bonds, Series 2024B PURPOSE OF THE BONDS AND USE OF FUNDS PURPOSE OF THE BONDS The proceeds of the Bonds will be used to (i) pay the costs of certain improvements to the Bogert Swim Center, Bogert Pool, and Lindley Center (collectively, the “Project”); and (ii) pay the costs associated with the sale of each series of Bonds. The Project consists of the designing, constructing, equipping and furnishing improvements to (i) the Bozeman Swim Center including replacing perimeter drain tiles, deck tiles, and ceiling tiles, repairing the plaster shall, and replacing the HVAC system; (ii) the Bogert Pool, including replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall and fence; and (iii) the Lindley Center, including upgrading restrooms to meet current requirements under the Americans with Disabilities Act, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot, and related site improvements. SOURCES AND USES OF FUNDS The composition of the Series 2024A Bonds is as follows: Sources of Funds: Principal Amount $_______ [Net] Reoffering [Premium][Discount] _______ Total Sources of Funds $_______ Uses of Funds: Deposit to Project Fund $_______ Costs of Issuance(1) _______ Underwriter’s Compensation _______ Total Uses of Funds $_______ (1) Includes fees for bond counsel, municipal advisor, registrar/paying agent, rating, and other miscellaneous expenses. The composition of the Series 2024B Bonds is as follows: Sources of Funds: Principal Amount $_______ [Net] Reoffering [Premium][Discount] _______ Total Sources of Funds $_______ Uses of Funds: Deposit to Project Fund $_______ Costs of Issuance(1) _______ Underwriter’s Compensation _______ Total Uses of Funds $_______ (1) Includes fees for bond counsel, municipal advisor, registrar/paying agent, rating, and other miscellaneous expenses. - 2 - INVESTMENT OF FUNDS The proceeds of the Bonds are to be invested in accordance with the laws of the State relating to the depositing, holding, securing, or investing of public funds. The City shall direct the investment of Bond proceeds. DESCRIPTION OF THE BONDS INTEREST CALCULATION Interest on the Bonds is payable on January 1 and July 1 of each year, commencing January 1, 2025. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month immediately preceding such interest payment date (the “Record Date”). Interest will be computed on the basis of a 360-day year of twelve 30-day months. REGISTRATION AND EXCHANGE FEATURES Each registered Bond shall be transferable or exchangeable only at the designated corporate trust office of the “Registrar” and “Paying Agent,” U.S. Bank Trust Company, National Association, Salt Lake City, Utah, at the written request of the registered owner thereof or its attorney duly authorized in writing upon surrender thereof, together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or its duly authorized attorney. BOOK ENTRY When issued, the Bonds will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Bonds will be made in book entry only form. See “Appendix B - Book Entry”. PROVISIONS FOR PAYMENT The principal on the Bonds shall be payable at the designated corporate trust office of the Registrar and Paying Agent, or by wire transfer to DTC or any successor depository. All payments of interest on the Bonds shall be paid to the registered owners as the names appear as of the Record Date and at the addresses as they appear on the registration books kept by the Registrar or at such other address as is provided to the Registrar or by wire transfer to DTC or any successor depository. If payment of principal or interest is made to DTC or any successor depository, payment shall be made by wire transfer in same-day funds. Payments on the Bonds shall be made in lawful money of the United States of America which, on the date of such payment, shall be legal tender. So long as DTC or its nominee is the registered owner of the Bonds, principal and interest on the Bonds will be paid directly to DTC by the Paying Agent. The final disbursement of such payments to the Beneficial Owners of the Bonds will be the responsibility of the DTC Participants and Indirect Participants. See “Appendix B - Book Entry.” NOTICE OF REDEMPTION Notice of redemption for the Bonds will be given not less than 30 days before the date of redemption by first-class mail, or other means required by the securities depository, to the registered owners of the Bonds to be redeemed at their addresses as they appear on the bond register maintained by the Registrar. Provided that such notice of redemption has been given and funds sufficient for payment of principal and accrued interest on the Bonds to be redeemed have been deposited with the Registrar on or before the redemption dates, interest on Bonds called for redemption will cease to accrue on the date fixed for redemption. Failure to give such written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds not affected by such defect or failure. - 3 - Any notice of optional redemption of Bonds may state that redemption is conditioned upon the receipt by the Registrar on or prior to the date fixed for such redemption of money sufficient to pay the redemption price of the Bonds to be redeemed or upon the satisfaction of any other condition stated in the notice, and that if such money is not so received or such condition not so satisfied, such notice shall be of no force and effect, and the City shall not be required to redeem such Bonds. In the event that a notice of redemption contains such a condition and such money is not so received or such condition is not so satisfied, the redemption will not be made and the Registrar will, within a reasonable time thereafter, give notice in the manner in which the notice of redemption was given, that such money was not so received or such condition not so satisfied and that such redemption was not made. OPTIONAL REDEMPTION The Series 2024A Bonds and the Series 2024B Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. If less than all of the Series 2024A Bonds or the Series 2024B Bonds are to be redeemed, the Series 2024A Bonds and/or Series 2024B Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City). [MANDATORY REDEMPTION Series 2024A Bonds The Series 2024A Bonds maturing on July 1, 20 __, July 1, 20__, and July 1, 20__ (the “2024A Term Bonds”) are subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on the mandatory dates and in the principal amounts as follows: 20__ Term Bond 20__ Term Bond Year Amount Year Amount 20__ $_____ 20__ $_____ 20__ $_____ 20__ $_____ 20__(1) $_____ 20__(1) $_____ 20__ Term Bond Year Amount 20__ $_____ 20__ $_____ 20__(1) $_____ (1) Final Maturity. The principal amount of such 2024A Term Bonds required to be redeemed on the above mandatory dates shall be reduced by the principal amount of such 2024A Term Bonds previously redeemed at the option of the City. - 4 - Series 2024B Bonds The Series 2024B Bonds maturing on July 1, 20 __, July 1, 20__, and July 1, 20__ (the “2024B Term Bonds”) are subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on the mandatory dates and in the principal amounts as follows: 20__ Term Bond 20__ Term Bond Year Amount Year Amount 20__ $_____ 20__ $_____ 20__ $_____ 20__ $_____ 20__(1) $_____ 20__(1) $_____ 20__ Term Bond Year Amount 20__ $_____ 20__ $_____ 20__(1) $_____ (1) Final Maturity. The principal amount of such 2024B Term Bonds required to be redeemed on the above mandatory dates shall be reduced by the principal amount of such 2024B Term Bonds previously redeemed at the option of the City.] AUTHORITY AND SECURITY THE SERIES 2024A BONDS Authority The Series 2024A Bonds are being issued pursuant to Montana Code Annotated, Title 7, Chapter 7, Part 42; a duly held election granting authorization to sell and issue general obligation bonds of the City; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. The election on the question of issuing the Series 2024A Bonds was held on November 2, 2021, in which sufficient voter approval was received to authorize the issuance up to $2,280,000 in principal amount of general obligation bonds for the purposes described herein (see “Purpose of the Bonds and Use of Funds” herein). Security and Sources of Payment The Series 2024A Bonds are general obligations of the City payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. The full faith and credit and taxing power of the City will be pledged to the payment of the Series 2024A Bonds. Each year’s first-half collections of taxes (due November 30 of each year) will be used to pay the interest payment due on January 1. Second-half collections of taxes (due May 31 of each year) plus surplus first-half collections will be used to pay the principal and interest payment due on July 1 of the same calendar year. THE SERIES 2024B BONDS Authority The Series 2024B Bonds are being issued pursuant to Section 7-7-4104, Montana Code Annotated; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. Pursuant to Section 7-7-4104, Montana Code Annotated, the City is authorized to issue a general obligation of the City not secured by its taxing power - 5 - without submitting the question of incurring the indebtedness to the electors, upon the satisfaction of certain conditions: (1) the principal amount of the obligation may not exceed 10% of the general fund budget of the City in each of the two immediately preceding fiscal years; (2) at the time the obligation is incurred, the debt service in the current or any future fiscal year on the obligations and any other outstanding obligations issued pursuant to Section 7-7-4104 do not exceed 2% of the revenues deposited in the general fund of the City in each of the two immediately preceding years; and (3) the term of the obligation does not exceed 20 years. The Series 2024B Bonds meet such requirements provided for in the above-referenced statute, as shown below: Budget Budget 2022 2023 Budgeted Expenditure $39,306,358 $46,726,481 10% of Expenditures $3,930,636 $4,672,648 Maximum Allowable Par $3,930,636 Par Amount of the Series 2024B Bonds $3,930,000 Actual Actual 2022 2023 Total General Fund Revenue $32,954,190 $43,234,377 2% of Revenues $659,084 $864,688 Maximum Legal Annual Debt Service $659,084 Estimated New Aggregate Debt Service $404,649 Security and Sources of Payment The Series 2024B Bonds are general obligations of the City, payable from any legally available funds of the City. The general credit of the City is irrevocably pledged for the prompt payment of the principal and interest on the Series 2024B Bonds as they become due; however, the Series 2024B Bonds are not secured by a pledge of the City’s taxing power and the City cannot be obligated to levy taxes for the payment of principal of and interest on the Series 2024B Bonds. The principal of and interest on the Series 2024B Bonds are payable from any funds of the City legally available for the payment, including amounts in its General Fund. The City will covenant in the bond resolution to appropriate each fiscal year during the term of the Series 2024B Bonds an amount sufficient for the payment of the principal of and interest on the Series 2024B Bonds due in such fiscal year from the General Fund and any other legally available funds of the City. Any ad valorem taxes the City may levy to pay principal of and interest on the Series 2024B Bonds are subject to applicable limits now or hereafter imposed by law on the amount of taxes that may be levied by the City. THE MONTANA PROPERTY TAX SYSTEM General. As a general rule, all real and personal property in the State is subject to taxation by both the State and its counties, municipalities and other political subdivisions to finance various general and special governmental functions and capital improvements. This rule is subject to exceptions in the case of specified classes of exempt property, including public property, property of churches, schools, hospitals, cemeteries and charities, household goods, certain agricultural products, automobiles, smaller trucks, business inventory, money and credits. The State imposes a beneficial use tax upon property otherwise exempt from property tax used by private parties or for industrial trade or business purposes. Property is classified according to its use and character, and the different classes of property are taxed at different percentages of their assessed valuation. Both cities and counties can grant property tax benefits to new and expanding businesses within their jurisdictions, but only with respect to the taxes they levy and only for a period of up to five years. Property Tax Task Force. The appraisal done by the Montana Department of Revenue (“Department of Revenue” or “DOR”) effective January 1, 2023 resulted in historic property valuation growth, whereby the total statewide assessed value grew by 39.4%, the statewide taxable value grew by 29.6% and the median residential property assessed value grew by approximately 46%. The growth in assessed value of residential property as compared to other classes of property resulted in a shift of the property tax burden - 6 - from other classes of property (notably commercial and industrial property) to residential property, causing concern about the affordability of property taxes for homeowners. In January 2024, Governor Gianforte launched a property tax task force to provide recommendations to reform the State’s property tax system and reduce the burden on property taxpayers. The property tax task force will provide a written report and recommendations for legislation by August 15, 2024 to be considered by the 2025 legislature. Classification. Currently, there are 16 classifications of property for tax purposes. For many of the property tax classifications, the taxable value for property is determined by applying a statutorily established percentage tax rate to the assessed value of the property (or other amount) as follows: Property Class Description Tax Rate One Net Mine Proceeds 100% of annual net proceeds less expenses Two Gross Proceeds of Metal Mines 3.00% of annual gross proceeds Three Agricultural Land 2.16% of productive capacity Four Residential 1.35% to 1.89%1 of assessed value Commercial 1.89%1 of assessed value Five Pollution Control, Electric/Telephone Coops, etc. 3.00% of assessed value Seven Non-Centrally Assessed Utilities 8.00% of assessed value Eight Business Equipment 1.50% and/or 3.00% of assessed value2 Nine Pipelines, Non-Electric Generating Property of Electric Utilities 12.00% of assessed value Ten Forest Land 0.29% of forest productivity value in tax year 2023 0.27% of forest productivity value in tax year 2024, and 0.37% of forest productivity value after tax year 2024 Twelve Airlines and Railroads Varies Thirteen Electrical Generation and Telecommunications 6.00% of assessed value Fourteen Renewable Energy Production and Transmission 3.00% of assessed value Fifteen Carbon Dioxide and Liquid Pipeline 3.00% of assessed value Sixteen High-Voltage Converter Station 2.25% of assessed value Seventeen Qualified Data Center Land/Improvements/Furniture/Fixtures, etc. 0.90% of assessed value Eighteen Green Hydrogen Facilities, Pipelines and Storage Systems 1.50% to 3.00% of assessed value __________________ 1 See “–Class Four Property Tax Rates” herein. 2 See “–Class Eight Property Tax Rates” herein. Appraisal, Assessment, and Revaluation. Other than agricultural land, forest land, railroad transportation properties and mines, taxable property is to be assessed at 100 percent of market value, which is determined by the Montana Department of Revenue (the “Department of Revenue” or “DOR”). The Department of Revenue determines the assessed value of most real property by appraisal using one or more of the three accepted appraisal approaches: (a) the cost approach, based on the cost of the property, using the national cost service manuals and the Montana Appraisal Manual; (b) the sales comparison approach, based on comparable arm’s-length sales; and (c) the income approach, based on a calculation of the net property income (reflected by market rents minus property management and other expenses). The Montana Constitution requires that property tax values be equalized across the State, and the efforts to determine assessed values of taxable property on a consistent basis across the State are intended to ensure that similarly situated taxpayers are treated the same. The assessed and taxable values of most classes of property are assessed on a county-by-county basis and are attributed to the local taxing jurisdictions in which the property is located. Prior to January 1, 2015, Class Three, Four, and Ten properties were reappraised every six years and all other property was reappraised annually. - 7 - Senate Bill 157, enacted by the 2015 Legislature, changed the reappraisal process for Class Three and Four property to a two-year cycle, changed certain tax rates, and eliminated certain exemptions utilized under prior law. Pursuant to Senate Bill 54 (“SB 54”) adopted by the 2023 Legislature, commencing January 1, 2024, centrally assessed property shall now be reappraised every two years, rather than annually. Pursuant to Senate Bill 3 (“SB 3”) adopted by the 2023 Legislature, (i) commencing January 1, 2025, the Class Ten property will be reappraised every two years rather than the six-year reappraisal cycle; (ii) the tax rate applied to Class Ten property for fiscal year 2023/24 changed from 0.37% to 0.29% and then will change to 0.27% in fiscal year 2024/25; and (iii) the methodology for assessing productivity of forest land (stumpage price standard) will be based on a 10-year Olympic average. Class Ten property remains on its current six-year reappraisal cycle through fiscal year 2024/25, with the most recent reappraisal cycle commenced January 1, 2021 and any increases in assessed value phased-in at a rate of 16.66% per year. The DOR is required to appraise all other classes of property annually. The Department of Revenue’s most recent reappraisal of Class Three and Four property was completed as of January 1, 2023, which values were applicable for fiscal years 2023/24 and 2024/25. Centrally Assessed Property. The DOR is required to “centrally assess” certain types of property owned by corporations or other entities operated as a single, integrated continuous property located in more than one county. Property to be centrally assessed includes, without limitation, telegraph, telephone, microwave, electric power or transmission lines, natural gas or oil pipelines; property of scheduled airlines; railroad transportation properties operating in more than one county or more than one state; net proceeds of mines; and gross proceeds of coal mines. Pursuant to SB 54, as of January 1, 2024, centrally assessed property will be reappraised every two years, rather than annually, and the property values, other than railroad property values, are apportioned by the DOR among the counties in which such property is located, either on a mileage basis or on the basis of the original installed cost of the property located in the respective counties. If neither of these methods is appropriate, the DOR may adopt such other method or basis of apportionment as it determines to be proper. Centrally assessed property constitutes a significant amount of taxable values of most counties. The DOR and the owner of property to be centrally assessed may agree to have the property assessed by a qualified independent appraiser, agree to share the costs of the appraisal and agree to accept the result. Otherwise, the DOR will assess those properties as described below. State law does not describe the factors to be taken into consideration by the DOR in determining the assessed value of public utilities, but rather states the appraisal is to be made using factors determined proper by the DOR. Pursuant to its rules, the DOR uses the unit method of valuation to appraise centrally assessed property when appropriate. The unit method may include a cost indicator method, a capitalized income indicator and a market indicator. If in the DOR’s judgment these indicators fail to reflect a company’s value or there is insufficient information to use those methods, it may adopt a different method or methods to reflect the company’s assessed value. Further, the DOR may derive a market, or stock and debt indicator of value based on outstanding securities and liabilities, or construct a market indicator using sales comparison data or any other analysis or data bases for similar property. The income indicator may be determined by using capitalization of historical income, capitalization of projected income, discounted cash flow analysis or other method. The DOR has broad discretion in determining the appropriate methodologies to use to determine values of public utilities and other centrally assessed properties, and to allocate assessed values of such properties among the counties in which such properties are located. As provided by law, a railroad system’s property value is calculated by starting with the railroad system’s property value for the previous year and adjusting up or down by an amount calculated to reflect the changes in the system’s income, gross profit margin and depreciated property costs. Railroad property values are apportioned among the states and the counties in which the property is located, based on the average of the ratios of the track miles, revenue ton miles, gross investment, operating revenue and railroad car and locomotive miles in each state or county to the railroad system as a whole. Under prior law, on or before June 1 of each year, the DOR was required to notify owners of centrally assessed property of the appraisal and report and to report values to affected counties on or before July 1 of each year. Pursuant to SB 54 passed by the 2023 Legislature, commencing January 1, 2024, the DOR will notify owners of centrally assessed property of the appraisal on or before June 1 of each appraisal year, and will report values to affected counties on or before July 1 of each appraisal year. Property owners may appeal their assessed valuation to the State Board of Tax Appeals. - 8 - Class Four Property Tax Rates. The tax rates in the following table apply to Class Four property. The taxable value is calculated by applying the tax rate to the assessed value of property, which is then multiplied by the number of mills levied by each taxing jurisdiction to calculate the taxes payable by each property owner. Residential Property Commercial & Industrial Property Residential Tax Rate Portion of Assessed Value in Excess of $1.5 million Commercial Tax Rate Golf Courses 1.35% 1.89%1 1.89%2 0.945%3 __________________ 1 The tax rate for the portion of the assessed value of a single-family residence in excess of $1.5 million is equal to the residential tax rate multiplied by 1.4. 2 The tax rate for commercial property is the residential tax rate multiplied by 1.4. 3 The tax rate for commercial property that is a golf course and meets certain criteria is one-half the commercial tax rate. Class Eight Property Tax Rates. Under current law, the first $300,000 in assessed value of Class Eight business equipment property owned by a person or entity is exempt from taxation. Class Eight property is taxed at 1.5% for the first $6 million of assessed value subject to taxation in excess of the $100,000 exempt amount, and at a rate of 3% for assessed value subject to taxation in excess of $6 million. Pursuant to House Bill 212 (“HB 212”) passed by the 2023 Legislature, the exempt amount of Class Eight business equipment property has been increased to $1,000,000, effective for tax years beginning after December 1, 2023. HB 212 also provides for local jurisdictions to be reimbursed from the state general fund for lost revenue, with cities and counties reimbursed through Entitlement Share distributions. In addition, personal property intended for rent or lease in the ordinary course of business is generally exempt from property tax if the cost of such property is less than $15,000 and the lease period does not exceed one month. Pursuant to Senate Bill 530 enacted by the 2023 Legislature, manufacturing machinery, fixtures, and equipment installed after December 31, 2022 is entitled to a property tax abatement, with taxes phased in over a 10-year period. Certification of Values, Levy and Collection of Taxes and Tax Liens. The Department of Revenue is required by law to furnish certified assessed and taxable values to each taxing jurisdiction prior to the first Monday in August and the assessed and taxable values of centrally assessed property on or before July 1, to enable local governments to prepare fiscal year budgets. The fiscal year of the City and other taxing jurisdictions commences July 1 of each year and ends June 30 of the following year. The amount of real property taxes and taxes on centrally assessed and personal property and equipment to be levied and collected in each fiscal year by the City is determined in July and August as a part of the budget process. Taxes are levied against the taxable value of property in the City based on the certified assessed value as of the preceding January 1. Tax bills are assembled by the county treasurer based on the combined mill levies of the city, county, school district and special taxing jurisdictions in which the subject property is located, in addition to State mill levies. Taxes are payable in two installments. Bills are normally sent to property owners on October 30, and installments become due on November 30 and May 31. For example, taxes for the fiscal year ending June 30, 2024 are payable in substantially equal installments due on November 30, 2023 and May 31, 2024, and are based on the mill levies established in August 2023 and on the assessed and taxable value of the property as of January 1, 2023. Class Eight or “business equipment” taxes are billed and collected on a different schedule. The owners of personal property report the property they own as of January 1 of each year. The property is assessed by the local representatives of the DOR in May of each year. The tax bills are distributed in July and are due within 30 days of receipt. All property taxes are collected by the counties and remitted to the various taxing jurisdictions. Under State law, if property taxes are not paid in full when due, the delinquent installment bears a penalty and interest at a delinquent rate and, if not paid, the property is sold at tax sale. Current law provides that each delinquent installment bears interest at a rate of 5/6 of 1% per month (10% per annum) and incurs a penalty of 2% of the delinquent amount. Property subject to a property tax lien may be redeemed by the owner, the occupant, a mortgagee, a contract vendor or any other interested party within 36 months after the date of the tax sale or within 60 days after notice of application for a tax deed, whichever is later; provided, - 9 - however, that if the property is subdivided as a residential or commercial lot upon which special improvement district assessments or rural special improvement district assessments are delinquent and upon which no habitable dwelling or commercial structure is situated, redemption must be made within 24 months after the date of the tax sale or within 60 days after notice of application for a tax deed, whichever is later. Enforcement of a property tax lien may be a lengthy process. Limitation on Amount of Tax Levy. Montana local governments rely on local property taxes as the principal source for funding their general operations under rules prescribed by the State Legislature. Since 1987, there have been statutory provisions limiting the amount property taxes local governments are authorized to levy. Current law codified in Title 15, Chapter 10, Part 4, Montana Code Annotated, as amended from time to time, limits the total amount of taxes which can be levied to the number of mills required to generate the amount of property tax actually assessed in the prior year, based on the current year’s taxable value less newly taxable value, plus one-half the average rate of inflation for the prior three years, subject to certain exceptions. A local government that does not impose the maximum allowable levy in any given year may carry forward the authority to impose mills in a subsequent tax year equal to the difference between the amount actually levied and the authorized amount. Tax collections may be increased due to growth in a local government’s property tax base from (a) annexation of real property and improvements, (b) construction, expansion, or remodeling, (c) transfer of property, (d) reclassification of real property, and (e) revaluation caused by expansion, addition, replacement or remodeling. A local government taxing jurisdiction may also impose, without limitation: (a) additional levies authorized by the voters of the jurisdiction, including amounts necessary to pay voted general obligation debt like the Series 2024A Bonds; (b) taxes levied to pay premiums of certain insurance policies procured by the local government and contributions to certain state employment benefit plans; (c) certain mining proceeds taxes; (d) mills levied to account for a decrease in reimbursements from the State; (e) levies to pay for legal judgments against the jurisdiction; (f) levies to repay taxes paid under protest; or (g) an emergency levy in the case of a natural disaster or an unforeseen event affecting a school or community college district budget. Entitlement Share. In 2001, the State Legislature enacted a program of revenue sharing with local governments, under which various revenue sources that were previously directed to local governments, including gaming taxes, vehicle taxes and fees, district court fees and a number of different reimbursements, were redirected to the State’s general fund. In exchange, local governments receive a payment made by the State known as the “Entitlement Share.” In addition, when the State Legislature reduced the applicable tax rate for business equipment in 2011 and increased the amount of business equipment that is exempt from taxation in 2013, 2021 and 2023, the State Legislature provided for property tax reimbursements to local governments, which reimbursements are included in the Entitlement Share pool and are paid through the Entitlement Share distribution. The Entitlement Share is calculated based on a statutory formula that is meant to reflect the health of the State’s economy. Each local government’s base component is equal to that local government’s Entitlement Share in the prior year. The sum of all local governments’ base components is the Entitlement Share pool, which must be increased annually by a growth rate that is the lesser of: (1) a factor determined by a calculation based on gaming revenue, alcohol taxes, certain district court fees and State income tax revenue over the three preceding fiscal years, or (2) 1.03 for counties, 1.0325 for consolidated local governments, and 1.035 for cities and towns. Pursuant to House Bill 565 (“HB 565”), enacted by the 2017 Legislature, the growth rate for the Entitlement Share pool was reduced to 1.005 in fiscal year 2018 and 1.0187 for fiscal year 2019, but returned to the original growth rates described above in fiscal year 2020 and thereafter. The portion of the Entitlement Share pool attributable to the Class Eight property tax reimbursements described above was previously subject to the Entitlement Share growth rate. However, pursuant to HB 565 and commencing in fiscal year 2018, the growth rate for that portion of the Entitlement Share pool attributable to Class Eight property tax reimbursements is reduced to one-half of the average rate of inflation for the prior three years. Annual “growth” of the Entitlement Share is distributed to local governments based 50% on population and 50% on each local government’s percentage share of the prior fiscal year Entitlement Share pool. - 10 - HB 565 allows Entitlement Share payments to be withheld if a local government fails to file certain statutory annual reports or fails to remit collections made on behalf of the State and owed to another taxing jurisdiction or the State. Other than tax increment districts existing as of June 30, 2000 and which have not yet terminated, tax increment districts are entitled to allocations of that portion of the Entitlement Share pool attributable to Class Eight property tax reimbursements, but are not entitled to allocations of other portions of the Entitlement Share. Budget Process. The City is subject to the Local Government Budget Act (codified at Title 7, Chapter 6, Part 40, Montana Code Annotated), which stipulates that money may not be disbursed by the City except pursuant to an appropriation. A legally adopted budget is required for all City funds. The City Manager is responsible for preparation of the preliminary annual budget. The City Commission modifies and/or approves this budget. The City Commission must meet prior to the budget adoption for the purpose of holding a public hearing on the final budget. This hearing can be continued until the budget is finally approved and adopted by the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values from the Department of Revenue. By the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values, the City Commission must fix the tax levy for each fund. The Series 2024B Bonds may not be payable from or be a charge upon any funds of the City other than moneys lawfully appropriated from time to time by the City in the annual budget of the City. No holder of a Series 2024B Bond shall have the right to compel any exercise of the taxing power of the City to pay the Series 2024B Bonds or to enforce payment thereof against any property of the City other than moneys lawfully appropriated from time to time by the City in the annual budget of the City. The City has not granted a lien on any revenues or funds in its General Fund or otherwise provided for the segregation of such revenues or funds as security for the payment of the Series 2024B Bonds, and any ad valorem taxes the City may in its discretion levy to pay principal of and interest on the Series 2024B Bonds are subject to applicable limits now or hereafter imposed by law on the amount of taxes that may be levied by the City. RATINGS Moody’s Investors Service (“Moody’s”), 7 World Trade Center, 250 Greenwich Street, 23rd Floor, New York, New York has assigned a rating of “Aa1” to each series of Bonds. Such rating reflects only the view of Moody’s and any explanation of the significance of such rating may only be obtained from Moody’s. The rating is not a recommendation to buy, sell or hold the Bonds, and there is no assurance that the rating will be retained for any given period of time or that the rating will not be revised downward or withdrawn entirely by Moody’s. Any revision downward or withdrawal of the rating may have an adverse effect upon the market price of the Bonds. The City has not applied to any other rating service for a rating on the Bonds. RISK FACTORS AND INVESTOR CONSIDERATIONS Prospective purchasers of the Bonds should consider carefully, along with other matters referred to herein, the following risks of investment. The ability of the City to meet the debt service requirements of the Bonds is subject to various risks and uncertainties which are discussed throughout this Official Statement. Certain investment considerations are set forth below. This discussion of risk factors is not, and is not intended to be, exhaustive. MAINTENANCE OF RATINGS The Bonds have been rated as to their creditworthiness by Moody’s. While the City does not anticipate any material changes in the future, no assurance can be given that the Bonds will maintain their original rating. If the rating on the Bonds is revised downward or is withdrawn, the Bonds may lack liquidity in the secondary market in comparison with other similar municipal obligations. See “Ratings” herein. - 11 - SECONDARY MARKET While the purchaser(s) of the Bonds may expect, insofar as possible, to maintain a secondary market in the Bonds, no assurance can be given concerning the future existence of such a secondary market or its maintenance by the purchasers or others, and prospective purchasers of the Bonds should therefore be prepared, if necessary, to hold their Bonds to maturity or prior redemption, if any. FUTURE CHANGES IN LAW; TAX EXEMPTION Future legislative proposals, if enacted into law, clarification of the Code (defined herein) or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation, as to which Bond Counsel expresses no opinion. Legislation relating to property taxes and other matters affecting municipal bonds is considered by the Montana legislature in each legislative session. See “THE MONTANA PROPERTY TAX SYSTEM – Property Tax Task Force” herein. It is possible that legislation enacted after the date of the Bonds will have an adverse effect on payment or timing of payment or other matters impacting the Bonds. There can be no assurance that there will not be any change in, interpretation of, or addition to the applicable laws and provisions which would have a material effect, directly or indirectly, on the security for or tax treatment of the Bonds or on the affairs of the City. In addition, the tax-exempt status of interest on the Bonds, as described under “TAX CONSIDERATIONS” herein, is based on continuing compliance with the City with certain covenants contained in the Bond Resolution and the related tax certificate, and the reporting of certain information to the United States Treasury. These covenants relate generally to restrictions on the use of the improvements financed with proceeds of the Bonds, requirements regarding the timely and proper use of proceeds of the Bonds, arbitrage limitations and rebate of excess investment earnings (if any) to the federal government. Failure by the City to comply with any of these covenants could cause interest on the Bonds to become included in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance. The Bond Resolution does not provide for payment of additional interest on the Bonds, redemption of the Bonds, or acceleration of the payment of debt service on the Bonds in the event that interest thereon becomes subject to federal or state income taxation. LIMITATIONS ON REMEDIES AVAILABLE TO OWNERS OF THE BONDS No Acceleration. There is no provision for acceleration of maturity of the principal of the Bonds in the event of a default in the payment of principal of or interest on the Bonds. Consequently, the owners of the Bonds may have to enforce available remedies. No Trustee. There is no bond trustee or similar person or entity to monitor or enforce the provisions of the Bond Resolution on behalf of the owners of the Bonds, and therefore the owners should be prepared to enforce such provisions themselves if the need to do so ever arises. No Trustee. There is no bond trustee or similar person or entity to monitor or enforce the provisions of the Resolution on behalf of the owners of the Bonds, and therefore the owners should be prepared to enforce such provisions themselves if the need to do so ever arises. - 12 - POTENTIAL IMPACTS RESULTING FROM EPIDEMICS OR PANDEMICS The City’s finances may be materially adversely affected by unforeseen impacts of future epidemics and pandemics. The City cannot predict future impacts of epidemics or pandemics, any similar outbreaks, or their impact on travel, on assemblies or gatherings, on the State, national or global economy, or on securities markets, or whether any such disruptions may have a material adverse impact on the financial condition or operations of the City, including but not limited to the payment of debt service on the Bonds or on any of its outstanding debt obligations. CLIMATE CHANGE The City is affected by the impacts of climate change, and those impacts are projected to intensify over coming decades. Changes may include reduced low elevation snowpack, earlier spring snowmelt, more frequent and intense droughts and wildfires, greater variability in temperatures and weather conditions, and related impacts to agriculture, recreation and human health. The City’s economy is significantly benefited by tourism and outdoor recreation opportunities, and the changes to snowpack and increased wildfires, among other climate impacts, could materially adversely affect the regional economy as well as assessed and taxable values in the City. The City has adopted a climate plan that outlines six focus areas and identifies ways to reduce the City’s greenhouse gas emissions and create a more sustainable community. However, whether future changes in climate and related impacts can be limited or managed is largely outside the City’s control. CYBERSECURITY The City relies on computer networks, data storage, collection, and transmission to conduct the operations of the City and has implemented security measures to protect data and limit financial exposure, including securing cyber security insurance to assist with the reduction of potential risk of financial and operational damage resulting from network attacks. Even with these security measures, the City, its information technology, data stored by the City and its infrastructure may be vulnerable in the event of a deliberate system attack, including malware, ransomware, computer virus, employee error or general disruption. If breached or compromised, the networks could be disrupted and information could be accessed, disclosed, lost, or stolen. The City acknowledges that its systems could be affected by a cybersecurity attack and that a loss, disruption, or unauthorized access to data held by the City could have a material impact on the City. Further, as cybersecurity threats evolve, the City will continue to evaluate and implement security measures and work to mitigate any vulnerabilities in its system. The City has cybersecurity coverage through the Montana Municipal Interlocal Authority. PURCHASER/UNDERWRITING THE SERIES 2024A BONDS The Series 2024A Bonds are being purchased by __________ (the “Series 2024A Bonds Underwriter”) [and its syndicate] at a purchase price of $_______, which is the par amount of the Series 2024A Bonds of $__________, less the Underwriter’s discount of $__________, plus the [net] original issue premium/discount of $__________. The Series 2024A Bonds Underwriter intends to offer the Series 2024A Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Series 2024A Bonds Underwriter may allow concessions to certain dealers (including dealers in a selling group of the Series 2024A Bonds Underwriter and other dealers depositing the Series 2024A Bonds into investment trusts), who may reallow concessions to other dealers. After the initial public offering, the public offering price may be varied from time to time by the Series 2024A Bonds. - 13 - THE SERIES 2024B BONDS The Series 2024B Bonds are being purchased by __________ (the “Series 2024B Bonds Underwriter”) [and its syndicate] at a purchase price of $_______, which is the par amount of the Series 2024B Bonds of $__________, less the Underwriter’s discount of $__________, plus the [net] original issue premium/discount of $__________. The Series 2024B Bonds Underwriter intends to offer the Series 2024B Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Series 2024B Bonds Underwriter may allow concessions to certain dealers (including dealers in a selling group of the Series 2024B Bonds Underwriter and other dealers depositing the Series 2024B Bonds into investment trusts), who may reallow concessions to other dealers. After the initial public offering, the public offering price may be varied from time to time by the Series 2024B Bonds. CONTINUING DISCLOSURE In order to permit the Underwriter in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City will enter into a continuing disclosure undertaking pursuant to which it will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events. The form of the continuing disclosure undertaking is set forth in Appendix D to this Official Statement. During the last five years, the City believes that it has materially complied with the prior continuing disclosure undertakings subject to the Rule, except as noted below: The City did not timely file with the MSRB’s EMMA system (i) its 2020 Annual Comprehensive Financial Report (audited financial statements and operating data); (ii) certain annual operating data for the fiscal year ended 2021 in connection with its Tax Increment Urban Renewal Revenue Bonds (Bozeman Midtown Urban Renewal District), Series 2020; (iii) notice of incurrence of a financial obligation; and (iv) notice that the information noted in (i) through (iii) above was not timely filed. The information described above has since been filed with the MSRB’s EMMA system together with notices of the late filings. Additionally, the City timely filed its 2019 Annual Comprehensive Financial Report (audited financial statements and operating data); however, this information was not linked to the City’s Tax Increment Urban Renewal Revenue Bonds (Downtown Bozeman Improvement District), Series 2007 (the “Series 2007 Bonds”). The City did not take corrective action to remedy this upon discovery as the Series 2007 Bonds had been redeemed in full and were no longer outstanding. Breach of the continuing disclosure undertakings will not constitute a default or an event of default under the Bonds or the Bond Resolution. A broker or dealer is to consider a known breach of the continuing disclosure undertakings, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the continuing disclosure undertakings may adversely affect the transferability and liquidity of the Bonds and their market price. FUTURE FINANCING As of the date of this Official Statement, the City anticipates entering into an approximately $4,250,000 Master Lease Purchase Agreement in calendar year 2024 (the “2024 Lease”). The 2024 Lease is being entered into to finance various equipment for the City including, but not limited to, equipment for Fire Station No. 2, the City’s Solid Waste System, the Bozeman Swim Center, Bogert Pool, and Lindley Center. Installment payments for the 2024 Lease will be paid from legally available funds of the City, subject to annual non-appropriation of the City. The City periodically evaluates market conditions and outstanding financial obligations for refunding and refinancing opportunities and may issue refunding obligations if debt service savings can be achieved. - 14 - LITIGATION There is no litigation pending or, to the knowledge of the City, threatened restraining or enjoying the issuance, sale, execution or delivery of the Bonds, questioning the power and authority of the City to issue the Bonds, challenging the validly of or security for the Bonds, or materially affecting the financial condition of the City. LEGAL MATTERS The Bonds are subject to approval as to certain matters by Dorsey & Whitney LLP, of Missoula, Montana, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Legal opinions substantially in the forms set forth in Appendix C herein will be delivered at closing. TAX CONSIDERATIONS The following is a summary of certain U.S. federal and Montana income tax considerations relating to the purchase, ownership, and disposition of the Bonds. This summary is based on the U.S. Internal Revenue Code of 1986 (the “Code”) and the Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), all as of the date hereof and all of which are subject to change, possibly with retroactive effect. Any such change could adversely affect the matters discussed below, including the tax exemption of interest on the Bonds. The City has not sought and will not seek any rulings from the IRS regarding the matters discussed below, and there can be no assurance the IRS or a court will not take a contrary position regarding these matters. Prospective purchasers of Bonds should consult their own tax advisors with respect to applicable federal, state, and local tax rules, and any pending or proposed legislation or regulatory or administrative actions, relating to the Bonds based on their own particular circumstances. This summary is for general information only and is not intended to constitute a complete analysis of all tax considerations relating to the purchase, ownership, and disposition of Bonds. It does not address the application of the alternative minimum tax or the additional tax on net investment income, nor does it address the U.S. federal estate and gift tax or any state, local, or non-U.S. tax consequences, except with respect to Montana income tax to the extent expressly specified herein. This summary is limited to consequences to U.S. holders that purchase the Bonds for cash at original issue and hold the Bonds as “capital assets” (generally, property held for investment). This discussion does not address all aspects of U.S. federal income or state taxation that may be relevant to particular holders of Bonds in light of their specific circumstances or the tax considerations applicable to holders that may be subject to special income tax rules, such as: holders subject to special tax accounting rules under Section 451(b) of the Code; insurance companies; brokers, dealers, or traders in stocks, securities, or currencies or notional principal contracts; foreign corporations subject to the branch profits tax; holders receiving payments in respect of the Bonds through foreign entities; and S corporations, partnerships, or other pass-through entities or investors therein. For purposes of this discussion, the “issue price” of a maturity of Bonds is the first price at which a substantial amount of Bonds of that maturity is sold for cash to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers. TAX-EXEMPT INTEREST In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Code, (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code, and (iii) is excluded from Montana taxable income for State of Montana individual income tax purposes. Interest on the Bonds may, however, be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable - 15 - corporations (as defined in Section 59(k) of the Code), and is included in gross income for purposes of the Montana corporate income tax and the Montana alternative corporate income tax. The Code establishes certain requirements that must be met after the issuance of the Bonds in order that interest on the Bonds be excluded from federal gross income. These requirements include, but are not limited to, provisions regarding the use of Bond proceeds and the facilities financed or refinanced with such proceeds and restrictions on the investment of Bond proceeds and other amounts. The City has made certain representations and has covenanted to comply with certain restrictions, conditions, and requirements designed to ensure interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or noncompliance with these covenants may cause interest on the Bonds to be included in gross income for federal income tax purposes and Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to their date of issue. Bond Counsel has not independently verified the accuracy of these representations and will not verify the continuing compliance with these covenants. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is included in gross income for federal income tax purposes and Montana taxable income for Montana individual income tax purposes. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is included in federal gross income. ORIGINAL ISSUE DISCOUNT Bonds may be issued at a discount from their principal amount (any such Bonds being “Discount Bonds”). The excess of the principal amount payable on Bonds of a given maturity over their issue price constitutes “original issue discount” (“OID”). OID that accrues to a holder of a Discount Bond is excluded from federal gross income of individuals, estates and trusts to the same extent that stated interest on such Discount Bond would be so excluded. The amount of OID that accrues on a Discount Bond is added to the holder’s federal tax basis. OID on a Discount Bond generally accrues pursuant to a constant-yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of OID that accrues for any particular semiannual accrual period generally is equal to the excess of (1) the product of (a) one-half of the yield on such Discount Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Discount Bonds, over (2) the amount of stated interest actually payable. For this purpose, the adjusted issue price is determined by adding to the issue price for such Discount Bonds the OID that is treated as having accrued during all prior accrual periods. If a Discount Bond is sold or otherwise disposed of between compounding dates, then the original issue discount that would have accrued for that accrual period for federal income tax purposes is allocated ratably to the days in that accrual period. If a Discount Bond is purchased for a cost that exceeds the sum of the issue price plus accrued interest and accrued OID, the amount of OID that is deemed to accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess over the remaining term of the Discount Bond. If the excess is greater than the amount of remaining OID, the basis reduction rules for amortizable bond premium may result in taxable gain upon sale or other disposition of the Bonds, even if the Bonds are sold, redeemed, or retired for an amount equal to or less than their cost. It is possible under certain state and local income tax laws that original issue discount on a Discount Bond may be taxable in the year of accrual and may be deemed to accrue differently than under federal law. MARKET DISCOUNT If a Bond is purchased for a cost that is less than the Bond’s issue price (plus accrued original issue discount, if any), the purchaser will be treated as having purchased the Bond with market discount (unless a statutory de minimis rule applies). Market discount is treated as ordinary income and generally is recognized on the maturity or earlier disposition of the Bond (to the extent that the gain realized does not exceed the accrued market discount on the Bond). - 16 - BOND PREMIUM A holder that acquires a Bond for an amount in excess of its principal amount generally must, from time to time, reduce the holder’s federal tax basis for the Bond. Premium generally is amortized for federal income tax purposes on the basis of a bondholder’s constant yield to maturity or to certain call dates with semiannual compounding. Accordingly, holders who acquire Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if such Bonds are sold for an amount equal to or less than their original cost. Amortized premium is not deductible for federal income tax purposes. RELATED TAX CONSIDERATIONS Section 86 of the Code requires recipients of certain social security and railroad retirement benefits to take interest on the Bonds into account in determining the taxability of such benefits. Section 265(a) of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds. In the case of a financial institution, generally no deduction is allowed under section 265(b) the Code for that portion of the holder’s interest expense that is allocable to interest on tax-exempt obligations, such as the Bonds, unless the obligations are “qualified tax-exempt obligations.” Indebtedness may be allocated to the Bonds for this purpose even though not directly traceable to the purchase of the Bonds. The Bonds are not “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code. Income (including interest) or loss on the Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations. The ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may affect a holder’s federal, state, or local tax liability in some additional circumstances. The nature and extent of these other tax consequences depends upon the particular tax status of the holder and the holder’s other items of income or deduction. SALE OR OTHER DISPOSITION A holder will generally recognize gain or loss on the sale, exchange, redemption, retirement, or other disposition of a Bond equal to the difference between (i) the amount realized less amounts attributable to any accrued but unpaid stated interest and (ii) the holder’s adjusted tax basis in the Bond. The amount realized includes the cash and the fair market value of any property received by the holder in exchange for the Bond. A holder’s adjusted tax basis in a Bond generally will be equal to the amount that the holder paid for the Bond, increased by any accrued original issue discount with respect to the Bond and reduced by the amount of any amortized bond premium on the Bond. Except to the extent attributable to market discount (which will be taxable as ordinary income to the extent not previously included in income), any gain or loss will be capital gain or loss and will be long-term capital gain or loss if the holder held the Bond for more than one year. Long-term capital gains recognized by certain non-corporate persons, including individuals, generally are taxable at a reduced rate. The deductibility of capital losses is subject to significant limitations. INFORMATION REPORTING AND BACKUP WITHHOLDING Payments of interest on the Bonds (including any allocable bond premium or accrued original issue discount) and proceeds from the sale or other disposition of the Bonds are expected to be reported to the IRS as required under applicable Treasury Regulations. Backup withholding will apply to these payments if the holder fails to provide an accurate taxpayer identification number and certification that it is not subject to backup withholding (generally on an IRS Form W-9) or otherwise fails to comply with the applicable backup withholding requirements. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. Certain holders are exempt from information reporting. Potential holders should consult their own tax advisors regarding qualification for an exemption and the procedures for obtaining such an exemption. - 17 - NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The City will not designate the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. MUNICIPAL ADVISOR The City has retained Baker Tilly Municipal Advisors, LLC as municipal advisor in connection with certain aspects of the issuance of the Bonds (the “Municipal Advisor” or “BTMA”). BTMA is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP (“BTUS”), an accounting firm and has been retained by the City to provide certain financial advisory services including, among other things, preparation of the deemed “nearly final” Preliminary Official Statement and the Final Official Statement (the “Official Statements”). The information contained in the Official Statements has been compiled from records and other materials provided by City officials and other sources deemed to be reliable. The Municipal Advisor has not verified and will not independently verify the completeness and accuracy of the information contained in the Official Statements. The Municipal Advisor’s duties, responsibilities and fees arise solely as Municipal Advisor to the City and they have no secondary obligations or other responsibility. MUNICIPAL ADVISOR REGISTRATION BTMA is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. As such, BTMA is providing certain specific municipal advisory services to the City, but is neither a placement agent to the City nor a broker/dealer and cannot participate in the underwriting of the Bonds. The offer and sale of the Bonds shall be made by the City, in the sole discretion of the City, and under its control and supervision. The City has agreed that BTMA does not undertake to sell or attempt to sell the Bonds, and will take no part in the sale thereof. OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS BTUS is an advisory, tax and assurance firm headquartered in Chicago, Illinois. BTUS and its affiliated entities, have operations in North America, South America, Europe, Asia and Australia. BTUS is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms. Baker Tilly Wealth Management, LLC (“BTWM”), a U.S. Securities and Exchange Commission (“SEC”) registered investment adviser under the Federal Investment Advisers Act of 1940. Baker Tilly Capital, LLC (“BTC”), a wholly owned subsidiary of BTUS, is a limited purpose broker/dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”). Baker Tilly Financial, LLC (“BTF”), is a wholly owned subsidiary of BTUS, registered with the SEC as an investment advisor. BTUS, BTWM and subsidiaries of BTUS may provide advisory services to the clients of BTMA. BTMA has no other activities or arrangements that are material to its advisory business or its clients with a related person who is a broker-dealer, investment company, other investment adviser or financial planner, bank, law firm or other financial entity. MISCELLANEOUS The information contained in this Official Statement has been compiled from the City officials and other sources deemed to be reliable, and while not guaranteed as to completeness or accuracy, it is believed to be correct as of this date. However, the Official Statement speaks only as of its date, and the information contained herein is subject to change. The references, excerpts, and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is directed to all such documents for full and complete statements of all matters of fact relating to the Bonds, the security for the payment of the Bonds and the rights and obligations of the owners thereof. - 18 - Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds. CERTIFICATION The City has authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The City certifies to the best of its knowledge and belief that this Official Statement, as of its date and as it relates to the City and its economic and financial condition, (i) is complete and accurate; (ii) does not contain any untrue statement of a material fact; and (iii) does not omit any material facts or information which would make the statements contained herein misleading. (The Balance of This Page Has Been Intentionally Left Blank) APPENDIX A A-1 GENERAL INFORMATION OF THE CITY CITY PROPERTY VALUES Trend of Values Fiscal Year Taxable Market Value Full Taxable Value Incremental Value for All Tax Increment Districts Net Taxable Value(1) Taxable Value for Open Space Purposes(2) 2023/24 $17,730,663,050 $269,988,379 $21,822,620 $247,165,759 N/A 2022/23 11,021,338,679 171,848,662 12,066,606 159,782,056 $172,444,905 2021/22 10,724,564,866 166,838,141 11,485,638 155,352,503 164,979,565 2020/21 8,875,762,356 137,983,427 8,446,310 129,537,117 137,765,762 2019/20 8,596,253,775 133,582,036 8,158,839 125,423,197 133,391,037 2018/19 6,981,943,409 109,713,782 5,392,365 104,321,417 191,152,592 (1) Excludes Tax Increment Districts Incremental Values. (2) The Taxable Value for Open Space Purposes will be used for levies related to the City’s outstanding open space bonds. Sources: The City and the City’s Annual Comprehensive Financial Report. 2022/23 Net Taxable Value by Property Class: $159,782,056 Residential Property $ 89,925,341 56.3% Commercial and Industrial Property 58,735,884 36.7 Other Property 11,120,831 7.0 2022/23 Net Taxable Value $159,782,056 100.0% Source: City’s Annual Comprehensive Financial Report. Most recent information available. Ten of the Largest Taxpayers in the City Taxpayer Type of Property 2022/23 Taxable Value Percent of 2022/23 Net Taxable Value ($159,782,056)(1) Northwestern Energy Utility $ 8,620,846 5.4% Plato MT I Propco LLC Apartments 1,080,146 0.7 Charter Communications Telecommunications 745,534 0.5 GKT Bozeman Gateway LLC Real Estate 623,384 0.4 Verizon Telecommunications 605,249 0.4 Billings Clinic Healthcare 593,261 0.4 Cannery District Partners LLC Real Estate 571,306 0.4 Bozeman Apartment Group LLC Apartments 560,417 0.4 Springs VII At Bozeman LLC Retirement/Assisted Living 546,620 0.3 GKT Gallatin Shopping Center VM LLC Shopping Center 507,025 0.3 Total $14,453,788 9.0% (1) Excludes incremental valuations for tax increment financing districts within the City. Source: City’s Annual Comprehensive Financial Report. Most recent information available. A-2 CITY INDEBTEDNESS Legal Debt Limit and Debt Margin(1) Legal Debt Limit (2.5% of 2023/24 Taxable Market Value of $17,730,633,050) $443,266,576 Less: Outstanding Debt Subject to Limit (48,045,000) Legal Debt Incurrence Capacity as of May 16, 2024 $395,221,576 (1) The amount of outstanding debt subject to the legal debt limit may be decreased by amounts in debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. Unlimited Tax General Obligation Debt(1) Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 12-23-2013 $ 9,900,000 Open Space (2013) 07-01-2034 $ 6,270,000 12-09-2014 5,100,000 Open Space (2014) 07-01-2035 3,470,000 09-18-2019 34,405,000 Public Safety Project (2019) 07-01-2039 29,500,000 06-30-2022 6,730,000 Fire Station 2 (2022) 07-01-2042 6,525,000 04-16-2024 2,280,000 Bozeman Swim Center, Bogert Pool, and Lindley Center (2024A) 07-01-2044 2,280,000 Total $48,045,000 (1) These issues are subject to the legal debt limit. Limited Tax General Obligation Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 07-01-2018 $1,700,000 Sports Park (2018) 06-30-2039 $1,469,633 04-16-2024 3,930,000 Bozeman Swim Center, Bogert Pool, and Lindley Center, (2024B) 07-01-2043 3,930,000 Total $5,399,633 Special Improvement District Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 12-23-2004 $ 94,000 Special Improvement District No. 674 (2004) 07-01-2024 $ 4,500 12-23-2004 400,000 Special Improvement District No. 674 (2004) 07-01-2024 16,000 08-14-2020 4,001,000 Special Improvement District No. 747 (2020) 07-01-2040 3,251,333 Total $3,271,833 A-3 Tax Increment Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 07-20-2017 $1,446,000 North East Urban Renewal District (2017) 07-01-2042 $1,167,138 07-09-2020 6,500,000 Midtown Urban Renewal District (2020) 07-01-2044 5,960,000 03-05-2020 3,689,000 Downtown Improvement District Refunding (2020) 07-01-2032 2,657,000 Total $9,784,138 Water Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 09-30-2011 $9,491,000 Water Treatment Plant (2011A) 01-01-2032 $ 4,748,000 06-12-2013 9,552,000 Water Treatment Plant (2011B) 01-01-2033 5,016,000 05-17-2017 7,573,000 Tank Project (2017) 07-01-2037 5,512,000 Total $15,276,000 Wastewater Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 02-10-2010 $ 359,300 Wastewater System Revenue (2010B) 01-01-2030 $ 121,000 02-10-2010 885,081 Wastewater System Revenue (2010C) 01-01-2031 410,000 02-25-2010 9,500,000 Upgrade and Expansion (2010D) 01-01-2030 3,502,000 06-10-2010 729,000 Digester Project (2010F) 07-01-2030 323,000 04-27-2011 3,903,000 Digester Project (2010G) 01-01-2031 1,276,000 08-21-2013 8,692,000 Wastewater Treatment Plant (2010H) 01-01-2031 4,027,000 07-22-2020 7,786,000 Wastewater System Revenue (2020B) 07-01-2040 6,687,000 07-22-2020 6,693,321 Davis Lane/Norton E Ranch (2020C) 01-01-2041 5,866,000 08-12-2020 2,807,000 Wastewater System Revenue (2020D) 07-01-2040 2,410,000 Total $24,622,000 The City received an additional loan from the State of Montana, through its State Revolving Fund Program, to fund additional wastewater projects (the “2020A Loan”). The 2020A Loan was issued in the amount of $300,000 and has a final maturity in 2040. However, the full amount of the 2020A Loan is eligible for loan forgiveness upon completion of the project in accordance with program requirements. Stormwater Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 06-29-2015 $1,815,000 Stormwater System Revenue (DNRC) (2015) 07-01-2035 $1,153,000 A-4 Estimated Calendar Year Debt Service Payments Unlimited Tax G.O. Debt(1) Limited Tax G.O. Debt(2) Year Principal Principal & Interest Principal Principal & Interest 2024 (at 5-16) $ 2,300,000 $ 3,129,325 $ 71,492 $ 125,795 2025 2,465,000 4,128,260 189,196 401,245 2026 2,560,000 4,120,357 216,996 404,621 2027 2,665,000 4,123,889 219,902 400,211 2028 2,765,000 4,117,038 227,915 401,142 2029 2,885,000 4,124,823 236,049 401,749 2030 2,995,000 4,117,725 244,297 402,338 2031 3,125,000 4,126,125 252,668 402,858 2032 3,255,000 4,129,195 261,162 403,251 2033 3,380,000 4,121,963 269,797 403,320 2034 3,515,000 4,119,560 278,564 403,287 2035 2,945,000 3,410,005 287,473 402,775 2036 2,655,000 3,039,900 296,527 401,694 2037 2,725,000 3,039,293 305,740 399,995 2038 2,800,000 3,041,485 320,109 402,775 2039 2,875,000 3,041,397 271,746 404,902 2040 585,000 671,112 340,000 400,575 2041 610,000 672,712 355,000 401,635 2042 630,000 668,242 370,000 401,903 2043 150,000 162,897 385,000 401,363 2044 160,000 166,672 Total $48,045,000(3) $62,271,975 $5,399,633(4) $7,767,434 (1) Includes estimated debt service on the Series 2024A Bonds. (2) Includes estimated debt service on the Series 2024B Bonds. (3) 59.1% of this debt will be retired within ten years. (4) 40.5% of this debt will be retired within ten years. A-5 Estimated Calendar Year Debt Service Payments (continued) Special Improvement District Debt Tax Increment Revenue Debt Year Principal Principal & Interest Principal Principal & Interest 2024 (at 5-16) $ 104,265 $ 156,265 $ 479,387 $ 646,353 2025 171,541 270,761 516,097 836,467 2026 177,031 270,761 529,924 833,908 2027 182,696 270,761 543,826 830,901 2028 188,543 270,761 562,807 832,522 2029 194,577 270,761 584,870 836,573 2030 200,804 270,761 597,018 829,980 2031 207,230 270,761 618,256 832,065 2032 213,861 270,761 639,586 833,530 2033 220,705 270,761 326,013 499,376 2034 227,768 270,761 338,540 498,776 2035 235,058 270,761 356,172 502,776 2036 242,580 270,761 368,912 501,176 2037 250,343 270,761 381,767 499,176 2038 258,354 270,761 399,739 501,776 2039 196,477 200,616 412,835 498,776 2040 431,059 500,376 2041 449,417 501,376 2042 462,913 500,426 2043 385,000 408,550 2044 400,000 412,000 Total $3,271,833(1) $4,147,535 $9,784,138(2) $13,136,859 (1) 56.9% of this debt will be retired within ten years. (2) 55.2% of this debt will be retired within ten years. A-6 Estimated Calendar Year Debt Service Payments (continued) Water Revenue Debt Wastewater Revenue Debt Year Principal Principal & Interest Principal Principal & Interest 2024 (at 5-16) $ 683,000 $ 898,360 $ 1,034,000 $ 1,365,166 2025 1,395,000 1,796,138 2,111,000 2,729,515 2026 1,435,000 1,795,773 2,171,000 2,729,700 2027 1,477,000 1,796,225 2,234,000 2,731,203 2028 1,520,000 1,796,448 2,298,000 2,731,865 2029 1,563,000 1,795,443 2,365,000 2,733,705 2030 1,609,000 1,796,180 2,100,000 2,401,644 2031 1,655,000 1,795,573 1,310,000 1,557,895 2032 1,366,000 1,458,635 883,000 1,102,488 2033 743,000 801,520 904,000 1,101,275 2034 441,000 484,013 927,000 1,101,538 2035 451,000 482,925 951,000 1,102,213 2036 463,000 483,575 974,000 1,101,300 2037 475,000 483,925 998,000 1,100,800 2038 1,024,000 1,101,688 2039 1,049,000 1,100,938 2040 1,079,000 1,104,550 2041 210,000 212,625 Total $15,276,000(1) $17,664,733 $24,622,000(2) $29,110,108 Stormwater Revenue Debt Year Principal Principal & Interest 2024 (at 5-16) $ 44,000 $ 55,530 2025 89,000 110,740 2026 90,000 109,950 2027 94,000 112,130 2028 96,000 112,240 2029 97,000 111,320 2030 100,000 112,370 2031 103,000 113,350 2032 106,000 114,270 2033 109,000 115,140 2034 112,000 115,940 2035 113,000 114,700 Total $1,153,000(3) $1,297,680 (1) 88.0% of this debt will be retired within ten years. (2) 70.7% of this debt will be retired within ten years. (3) 80.5% of this debt will be retired within ten years. A-7 Other Debt Obligations The City has various outstanding leases and loans, as described in “Note 7 – Long-Term Debt” and “Note 8 – Leases” of its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. Please see Appendix E herein. Overlapping Debt Taxing Unit(1) Est. G.O. Debt As of 05-16-24(2) Debt Applicable to Tax Capacity in City Percent Amount Gallatin County $47,080,000 36.98% $17,410,184 Bozeman High School District No. 7 69,120,000 61.81 42,723,072 Total $60,133,256 (1) Only those units with outstanding general obligation debt are shown here. (2) Excludes revenue-supported debt. Debt Ratios(1) G.O. Direct Debt G.O. Direct & Overlapping Debt To 2023/24 Taxable Market Value ($17,730,663,050) 0.30% 0.64% To 2023/24 Net Taxable Value ($247,165,759) 21.62% 45.95% Per Capita (56,123 – 2023 U.S. Census Estimate) $952 $2,024 (1) Excludes special improvement district debt, tax increment revenue debt, water revenue debt, wastewater revenue debt, stormwater revenue debt, and other debt obligations. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Levies Fiscal Year Ending June 30 2019/20 2020/21 2021/22 2022/23 2023/24 University Millage 6.00 6.00 6.00 6.00 6.00 Statewide School Equalization 40.00 40.00 40.00 40.00 32.90 Countywide School Levy 96.45 96.74 91.29 89.58 70.70 Gallatin County Operating & Bond 91.17 97.59 88.24 91.25 72.99 Open Space Bonds 3.90 4.04 4.04 2.30 1.32 Gallatin College 1.50 1.50 1.50 1.50 1.50 Countywide Planning 2.22 1.48 2.18 2.23 1.59 Gallatin Conservation District 0.77 0.91 0.70 0.72 0.48 City of Bozeman 187.70 165.62 152.12 204.50 150.72 Bozeman High School District 92.77 97.61 84.86 86.05 62.51 Bozeman Elementary School District 125.90 121.74 101.99 102.09 77.21 Total 648.38 633.23 572.92 626.22 477.92 Source: Gallatin County, Montana, Annual Property Tax Information 2012 - Current Year | Gallatin County, MT (gallatinmt.gov). A-8 Authorized Levy Authority, Budgeted Levy, and Unused Levy Authority New Parks & Trails District. On May 5, 2020, City voters approved the creation of a Parks & Trails District, which became effective in fiscal year 2020/21. With the creation of the Parks & Trails District, certain parks, recreation and aquatics expenditures were no longer accounted for in the General Fund and the City began to levy a special assessment to pay for the personnel, operating, and capital expenditures (other than capital expenditures related to facilities). The Parks & Trails District had been in development for years with consultants and in the most recent Capital Improvement Plan and internal staffing plan. The Parks & Trails District was created in an effort to solve three major issues of deferred maintenance, equity, and operations and maintenance of all City-owned parks. As a result of the creation of the Parks & Trails District, the City shifted funding from property taxes to a charge for services, which also resulted in the decrease in the number of mills required to be levied. The Parks & Trails District Fund accounts for the special assessment and rental revenues collected, and the operating and capital expenditures required to manage and maintain City-wide parks and trails. As of June 30, 2023, the Parks & Trails District Fund recorded total revenue of $15,190,123, of which $14,607,391 was Charges for Services revenue. City Levy Authority. The following table shows the total property tax levies by the City, mills levied by the City, and the unused statutory mill levy authority for the upcoming and past five fiscal years. Mills Levied by the City Mills Not Levied by the City Fiscal Year Property Taxes Levied Permissive and Voted Statutory Maximum Utilized Total Mills Unused Statutory Maximum Mills 2023/24 $37,243,780 57.70 93.02 150.72 12.11 2022/23 32,675,430 70.56 133.94 204.50 11.30 2021/22 23,942,928 46.89 107.23 154.12 21.66 2020/21 21,453,937 53.26 112.36 165.62 31.79 2019/20 23,541,934 55.08 132.62 187.70 9.75 2018/19 20,056,920 45.46 145.78 191.24 15.89 Property Tax Levies and Collections Fiscal Year Total Tax Levy Amount Collected in Tax Levy Year Current Property Tax Collections as a Percent of Total Tax Levy Total Property Tax Collections as of June 30, 2023(1) Total Tax Collections as a Percent of Total Tax Levy 2023/24(2) $37,243,780 $23,125,287 62.09% $23,125,287 62.09% 2022/23 32,675,430 32,618,261 99.83 32,793,744 100.36 2021/22 23,942,928 23,777,644 99.31 23,815,584 99.47 2020/21 21,453,937 21,017,696 97.97 21,080,437 98.26 2019/20 23,541,934 23,381,671 99.32 23,589,506 100.20 2018/19 20,056,920 19,940,784 99.42 19,950,675 99.47 (1) Includes amounts, penalties, and interest collected in subsequent years. (2) Through January 1, 2024. Source: The City. A-9 FUNDS ON HAND As of February 29, 2024 General Fund $ 19,552,131 Special Revenue Funds 64,347,393 Debt Service Funds 3,467,611 Capital Project Funds 5,075,472 Enterprise Funds 62,156,848 Internal Service Funds 1,845,067 Custodial Funds 514,151 Permanent Funds 1,940,783 Total Cash and Investments $158,899,456 INVESTMENTS The City’s investments may include cash and cash items; demand, time, saving and fiscal agent deposits; investments in the State Short-Term Investment Pool (“STIP”); direct obligations of the United States Government; and repurchase agreements. As of January 31, 2024, the City’s investments had a market value of $159.2 million, of which $57 million was held in STIP and $102.2 million outside of STIP. GENERAL INFORMATION CONCERNING THE CITY The City is located in Gallatin County (the “County”) in southwestern Montana, and is the County seat. The City encompasses an area of approximately 20.9 square miles (13,382 acres). The City is currently the State’s fourth largest municipality by population behind the cities of Billings, Missoula, and Great Falls. The City is situated along Interstate 90, approximately 143 miles west of the City of Billings and 160 miles southeast of the City of Missoula. A variety of transportation systems serve the City and the surrounding areas of the County. Interstate 90 is a primary east/west route through the County connecting the northern tier of the United States, which runs adjacent to the City. Air service is available through Bozeman Yellowstone International Airport, located outside the city limits of the City of Belgrade (“Belgrade”). Rail service is provided by the Montana Rail Link rail line. Population The City’s population trend is shown below. Population Percent Change 2023 U.S. Census Estimate 56,123 5.3% 2020 U.S. Census 53,293 43.0 2010 U.S. Census 37,280 35.5 2000 U.S. Census 27,509 21.4 1990 U.S. Census 22,660 4.7 1980 U.S. Census 21,645 -- Sources: The United States Census Bureau, http://www.census.gov/. A-10 Major Employers Private Employers by Class Employer Class Size Bozeman Deaconess Hospital 9 Oracle America 7 Kenyon Noble Lumber & Hardware 7 Town Pump Convenience Stores 7 Wal Mart 7 Albertson’s 6 Bridger Bowl 6 Community Food Co-Op 6 Costco 6 First Student 6 Glacier Bancorp 6 McDonalds 6 Murdoch’s Ranch & Home Supply 6 Ressler Motors 6 Rosauers Food and Drug 6 Target 6 Town & Country Foods 6 UPS 6 Williams Plumbing & Heating 6 Zoot Enterprises 6 Public Employers by Class Employer Class Size Montana State University 9 Belgrade School District 8 Bozeman School District 8 Gallatin County 8 City of Bozeman 7 Class 6: 100 to 249 employees Class 7: 250 to 499 employees Class 8: 500 to 999 employees Class 9: 1,000+ employees Source: The City’s 2023 Annual Comprehensive Financial Report. Labor Force Data Annual Average December 2023 2019 2020 2021 2022 Labor Force: City of Bozeman 31,683 32,269 33,514 35,192 37,004 Gallatin County 70,264 71,221 74,131 77,887 81,948 State of Montana 543,741 545,334 550,555 567,787 578,459 Unemployment Rate (%): City of Bozeman 2.2% 5.2% 2.4% 1.8% 2.5% Gallatin County 2.3 5.0 2.4 1.9 2.6 State of Montana 3.5 5.8 3.4 2.6 3.8 Source: Montana Department of Labor and Industry, lmi.mt.gov/Home/DS-Results-LAUS. 2023 data are preliminary. A-11 Retail Sales and Effective Buying Income (EBI) The total Retail Sales, EBI, and Median Household EBI for the City for Data Year 2022 (Report Year 2023) were $1,601,050,094; $1,945,297,500; and $65,301, respectively. The total Retail Sales, EBI, and Median Household EBI for Gallatin County for Data Year 2022 (Report Year 2023) were $3,404,337,751; $4,521,407,000; and $72,571, respectively. The 2022/23 Median Household EBI for the State of Montana was $58,000. The 2022/23 Median Household EBI for the United States was $64,600. Source: Claritas, LLC. Most recent information available. Building Permits Issued by the City Commercial Permits Residential Permits Total Value (All Permits) (in millions) Fiscal Year Number Value (in millions) Number Value (in millions) 2023 1,014 $271.00 2,354 $444.00 $715.00 2022 548 201.00 1,947 479.00 680.00 2021 707 237.00 2,674 233.00 470.00 2020 702 302.00 2,094 176.00 478.00 2019 768 249.00 2,307 311.00 560.00 2018 883 216.00 3,222 340.00 556.00 2017 1,731 65.00 3,905 130.00 195.00 2016 1,628 164.47 3,937 200.00 364.47 2015 1,560 98.02 2,836 191.97 289.99 2014 1,165 44.50 2,911 130.68 175.18 Source: City’s Annual Comprehensive Financial Reports. Economic Base The economy of the City, Gallatin County (the “County”), and the Gallatin Valley (Greater Bozeman) are closely related. About half of the jobs in the County are located within the City, and a large majority of the jobs are in the Gallatin Valley, which is comprised of the City, Gallatin Gateway, Four Corners, Belgrade, and Manhattan. The City is growing rapidly, with a 3.8% annual population growth (2015-2019) and a 2.5% annual job growth (over 6,900 jobs 2015-2019). The economy of the area is concentrated heavily in tourism and retail-type jobs, but also contains industry clusters including construction, health care, professional and technical services, manufacturing, and recreation and entertainment. In 2023, the City was announced as the No. 1 Strongest Economy for fastest growing micropolitan cities by POLICOM for the sixth consecutive year. Economic strength is defined as “the long-term tendency for an area to consistently grow in both size and quality.” The many amenities in and around the City support the continued growth of the retail economy especially. Museum of the Rockies. The Museum of the Rockies (the “Museum”), with is a university, community and state-supported regional museum dedicated to the interpretation of the physical and cultural heritage of the Northern Rocky Mountains, is located in the City. The Museum was founded in 1957 and today is the largest natural history museum in the region with 94,000 square feet. Focusing on paleontology, astronomy, and regional natural/cultural history, the Museum houses a living history farm, earth and dinosaur halls, a fossil bank, and the Taylor Planetarium. The Museum attracts over 200,000 visitors every year. Yellowstone National Park. In 1872, Yellowstone National Park (the “Park”) was the first national park to be established in the world. The Park has five entrances, with the western gage to the Park located approximately 90 miles south of the City and the north entrance is near the Town of Gardiner, which is located approximately 100 miles southeast of the City. The Park encompasses an area of approximately 2.2 million acres across three states. The Park also contains one of the world’s largest calderas, is the site A-12 of an active volcano, has approximately 20,000 hydrothermal features, 300 active geysers, and 290 waterfalls. The Park offers 10 visitor centers, 9 hotels/lodges, 12 campgrounds, 52 picnic areas, one marina, and over 1,100 miles of trails and hosts over 4 million visitors annually. Bozeman Yellowstone International Airport (“BZN Airport”). BZN Airport currently services eight major airlines and two smaller lines. With more than 300 aircraft arriving and departing daily, BZN Airport is the busiest airport in the State for the nineth consecutive year, serving over $2.3 million passengers in 2023. Regionally, BZN Airport was the 7th busiest airport in the Northwest Region which includes Colorado, Utah, Montana, Idaho, Oregon, and Washington. Big Sky Resort. The unincorporated community of Big Sky is located in the County; however, Big Sky Resort (the “Resort”) and much of the surrounding area is located in Madison County. The Resort is the largest in the country with more than 30 lifts, 4,350 vertical feet drop and a total of 5,850 acres of ski terrain. Other amenities at the Resort include tennis courts, an 18-hole golf course designed by Arnold Palmer, a convention center with 43,000 square feet of meeting space, hotel and indoor mall – all of which contribute to year-round use. The reserve (located within Moonlight Basin) is an 8,027 yard, par 72 Jack Nicklaus Signature Golf Course. The Resort is in the process of a $150 million investment plan, spanning over ten years. In 2023, a new tram was constructed with two cabins, each with up to 75-passenger capacity, and travels 2,142 vertical feet. Additionally, workforce housing was constructed in 2023 to support team members at the Resort. Future projects include a gondola to improve tram access and additional workforce housing to support expansions. Bridger Bowl. Located approximately 16 miles northeast of the City is Bridger Bowl, a well-developed, private, non-profit ski area with 2,600 vertical feet, 2,000 acres of skiing terrain, five double chair lifts, one triple chair lift, and one quad chair lift. Technology-Based Businesses. A fast-growing segment of the area’s economy is technology-based business, for which university resources and an educated labor force are significant assets. As home to over 85 high-tech companies, the Gallatin Valley is rapidly becoming the high-tech capital of the Northern Rockies. The various focuses of high-tech companies in the City and the surrounding areas range from computer software development to laser technology to pharmaceutical research, some of which include Oracle, Snowflake, Next Frontier Capital, Foundant Technologies, Workiva, and Schedulicity. Past and present graduates of MSU provide the expanding high-tech community with a strong labor pool. The City has received $45.9 million in federal awards to support innovation and technology-based small businesses between 2015 and 2021, the second highest per employee among peer groups, indicating funding for continued innovation and growth of the technology sector. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive federal research funds designed to stimulate research and development and technological innovation for small businesses. SBIR and STTR programs and funding are an indicator of innovation amount small businesses in communities. Between 2015 and 2021, the City received the second most funding of its peer communities. MSU TechLink Center. The MSU TechLink Center (“TechLink”) was established in 1996 and is funded by the Department of Defense, NASA, and other federal agencies to link companies in Montana and the surrounding region with federal laboratories for joint research and technology transfer. An overriding purpose is to contribute to the success of both technology-based companies and key resource-based industries in the State and region. TechLink provides specialized assistance in the industry areas of advanced materials, aerospace, agricultural technologies, biomedicine and biotechnology, electronics, environmental technologies, information technologies and software, and photonics and sensors. Manufacturing Facilities. Blackhawk Products (“Blackhawk”) is a subsidiary of Alliant Techsystems Inc. (“ATK”), a defense contractor that has an 80,000 square-foot facility located approximately 20 miles west of the City near the Town of Manhattan. ATK has more than 60 facilities located in 22 states, Puerto Rico and internationally, and is headquartered in Arlington, Virginia. Blackhawks’ headquarters are located in Norfolk, Virginia, and it also has manufacturing facilities in Meridian, Idaho and Southport, North Carolina. Blackhawk manufactures accessories for military, law enforcement, corporate security applications and outdoor use and includes items such as specialized apparel, armor, eye wear, backpacks, and gun holsters. A-13 Simms Fishing Products (“Simms”) is a fishing product, apparel and accessories manufacturing company and is the sole fishing wader manufacturer in the United States. Simms’ corporate headquarters, warehouses, and production facility are located in the Four Corners Area, approximately 8 miles west of the City. Education School District No. 2 and High School District No. 2 of Yellowstone County provide elementary, secondary and vocational-technical instruction for students in the City and much of the surrounding area. Several parochial schools are also located in the City. Post-Secondary Education Montana State University-Bozeman (“MSU”) is a land grant college and represents the largest single component of the local economy. MSU offers bachelor degree programs in approximately 60 fields, master’s degrees i approximately 45 fields, and doctorates in approximately 20 fields. Additionally, Gallatin College-MSU is a two-year college located in the City that offers approximately 10 workforce programs where students can earn an associate degree or a one-year professional certification, depending on the program of study. Gallatin College is a division of MSU, and may of the courses offered are transferrable to four-year institutions and specifically complement programs at MSU. GOVERNMENTAL ORGANIZATION AND SERVICES Organization The City is a municipal corporation, organized under the laws of Montana in 1883. A Commissioner/Manager form of government governs the City with a five-member Commission comprised of a Mayor and four Commissioners. The City’s legislative and policy-making body is the City Commission, who are elected every two years and serve overlapping four-year terms. At a regular City election, the voters of the City shall elect a Mayor at-large for a term of four years. The individual so elected shall serve as Deputy Mayor and a Commissioner for the first two years of their term, and Mayor for the balance of their term of office. The following individuals comprise the current City Commission: Expiration of Term Terry Cunningham Mayor January 2026 Joey Morrison Deputy Mayor January 2026 Jennifer Madgic Commissioner January 2028 Christopher Coburn(1) Commissioner January 2026 Douglas Fischer Commissioner December 2025 (1) At the March 26, 2024 City Commission meeting, Commissioner Coburn announced his resignation from the Commission effective May 7, 2024. As required by State law, the City Commission will be required to appoint his replacement within 30 days of the effective date of his resignation. Key Administrative Staff City Manager Chuck Winn City Finance Director Melissa Hodnett City Controller Aaron Funk City Treasurer Laurae Clark City Attorney Greg Sullivan City Services The City provides a number of basic services to its residents, which include police and fire protection; the City Municipal Court; municipal water, sewer and sanitation systems; public works; transportation; planning; building inspection; zoning enforcement; public library; and parks and recreation. A-14 Labor Contracts The status of labor contracts in the City is as follows: Expiration Date Bargaining Unit No. of Employees of Current Contract Bozeman Firefighters Association 47 June 30, 2025 Bozeman Police Protective Association 60 June 30, 2024 Teamsters Local #2 125 June 30, 2026 Montana Federation of Public Employees 110 June 30, 2025 Subtotal 342 Non-unionized employees 145 Total employees 487 Employee Pensions All full-time City employees are eligible for one of three State-wide cost-sharing, multiple-employer retirement plans: Public Employees’ Retirement System (PERS), Firefighters’ Unified Retirement System (FURS), and Municipal Police Officers’ Retirement System (MPORS). All three plans are administered by the State’s Public Employee’s Retirement Division and offer retirement, disability, and death benefits to plan members. Contribution rates for the plans are determined by State law and the City has made the statutorily required contributions. In addition, City employees can also participate in a deferred compensation plan. A detailed description of these plans, along with the City’s required contributions to each plan, are represented in the City’s Annual Comprehensive Financial Reports. The City’s Annual Comprehensive Financial Report for fiscal year ended June 30, 2023 is included as Appendix E of this Official Statement. Other Postemployment Benefits The City has obligations to its employees for post-employment benefits other than pensions, accounted for pursuant to the Government Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75). The City’s OPEB liabilities and associated contributions are represented in the City’s Annual Comprehensive Financial Reports. The City’s Annual Comprehensive Financial Report for fiscal year ended June 30, 2023 is included as Appendix E of this Official Statement. Budgeting Process The City is required to adopt an annual budget under the State’s “Local Government Budget Act,” Title 7, Chapter 6, Part 40, Montana Code Annotated. Under the City Charter, the City Administrator is responsible for presenting the annual budget for the City Commission’s consideration and adoption. State law requires the budget to be adopted on the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values from the State Department of Revenue, prior to fixing the annual tax levies by the City Commission. A-15 General Fund Budget Summary 2023 Budget 2023 Actual 2024 Budget Revenues: Taxes $24,370,654 $25,578,352 $39,877,800 Licenses and Permits 364,300 381,922 420,400 Intergovernmental Revenue 10,073,490 9,434,058 10,316,100 Charges for Services 6,146,228 6,307,168 7,384,000 Fines and Forfeitures 1,074,000 1,009,841 893,300 Interest 80,000 (49,257) 250,000 Miscellaneous 294,626 351,367 219,900 Total Revenues $42,403,298 $43,013,451 $59,361,500 Expenditures: General Government $14,393,635 $11,578,604 $16,107,400 Public Safety 19,974,420 20,849,308 23,101,400 Public Welfare 8,218,466 6,587,267 8,407,500 Other 2,203,427 1,683,415 3,102,800 Capital Outlay 1,936,533 3,107,362 4,125,700 Debt Service 43,692 200,205 61,400 Total Expenditures $46,770,173 $44,006,161 $54,906,200 Excess (Deficiency) of Revenues Over (Under) Expenditures $ (4,366,875) $ (992,710) $ 4,455,300 Other Financing Sources (Uses): Issuance of Lease $ 0 $ 637,867 $ 0 Sale of Assets 2,768,705 2,774,759 12,600 Transfers In 8,644,904 10,854,877 5,176,600 Transfers Out (3,538,682) (6,798,407) (859,000) Total Other Financing Sources (Uses) $ 7,874,927 $ 7,469,096 $ 4,330,200 Net Change in Fund Balance $ 3,508,052 $ 6,476,386 $ 8,785,500 Beginning Fund Balance – July 1 $ 5,444,605 $ 5,444,605 $11,027,500 Ending Fund Balance - June 30 $ 8,952,657 $11,920,991 $19,813,000 Fund Balance as a % of Expenditures 19% 27% 36% Sources: The City. Major General Fund Revenue Sources Revenue 2019 2020 2021 2022 2023 Taxes $16,660,409 $17,701,622 $15,775,452 $18,023,178 $25,578,352 Intergovernmental 7,912,214 9,718,389 11,864,827 8,816,807 9,434,058 Charges for Services 3,182,506 3,119,771 3,650,043 4,523,191 6,307,168 Fines and Forfeitures 1,099,673 1,083,059 1,084,870 993,493 1,009,841 Licenses and Permits 383,320 369,334 367,895 420,415 381,922 Miscellaneous 189,769 430,965 431,551 139,623 351,367 Sources: City’s Annual Comprehensive Financial Reports. APPENDIX B B-1 BOOK ENTRY The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. B-2 Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or its agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or its agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to City or its agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. APPENDIX C C-1 FORMS OF BOND COUNSEL OPINIONS [draft form of bond counsel opinion] [to be dated the date of issuance of the Series 2024A Bonds] City of Bozeman, Montana Bozeman, Montana [Purchaser] Re: $[__________] General Obligation Bonds, Series 2024A City of Bozeman, Montana Ladies and Gentlemen: We have acted as Bond Counsel to City of Bozeman, Montana (the “City”) in connection with the authorization, sale and issuance by the City of its General Obligation Bonds, Series 2024A, dated, as originally issued, as of the date hereof (the “Series 2024A Bonds”). In that capacity, we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Series 2024A Bonds, including a resolution adopted by the City Commission of the City on __________, 2024, and the form of the Series 2024A Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits, and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits, and certificates and on the basis of existing law, it is our opinion that: 1. The Series 2024A Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms. 2. The full faith and credit of the City are pledged to the payment of the principal of and interest on the Series 2024A Bonds, and ad valorem taxes are required by law to be levied annually during the term of the Series 2024A Bonds on all taxable property within the City, without limitation as to rate or amount, in amounts sufficient to pay the principal of and interest on the Series 2024A Bonds as due. 3. Interest on the Series 2024A Bonds: (a) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”); and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code. 4. Interest on the Series 2024A Bonds is excluded from Montana taxable income for State of Montana individual income tax purposes. The opinions expressed in paragraphs 1 and 2 above are subject, as to enforceability, to the effect of any applicable state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors’ rights and principles of equity, whether considered at law or in equity. C-2 The opinions expressed in paragraphs 3 and 4 above are subject to the condition of the City’s compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2024A Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes and from Montana taxable income for State of Montana individual income tax purposes. The City has covenanted to comply with these continuing requirements. Its failure to do so could result in the inclusion of interest on the Series 2024A Bonds in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance of the Series 2024A Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to the holders of the Series 2024A Bonds. We note, however, that interest on the Series 2024A Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is includable in the computation of income for purposes of the Montana alternative corporate income tax and the Montana corporate income tax. We do not express any opinion as to any laws other than the laws of the State of Montana and federal laws of the United States of America as in effect on the date hereof. We assume no obligation to revise, supplement, or update this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the laws of the State of Montana or of the United States of America that may occur after the date hereof, including, but not limited to, laws which may have retroactive effect. We have not been engaged, and have not undertaken, to review the accuracy, completeness or sufficiency of the Official Statement or any other offering materials relating to the Series 2024A Bonds and, accordingly, we express no opinion with respect thereto. Dated: ___________, 2024. Very truly yours, C-3 [draft form of bond counsel opinion] [to be dated the date of issuance of the Series 2024B Bonds] City of Bozeman, Montana Bozeman, Montana [Purchaser] Re: $[__________] Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana Ladies and Gentlemen: We have acted as Bond Counsel to City of Bozeman, Montana (the “City”) in connection with the authorization, sale and issuance by the City of its Limited Tax General Obligation Bonds, Series 2024B, dated, as originally issued, as of the date hereof (the “Series 2024B Bonds”). In that capacity, we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Series 2024B Bonds, including a resolution adopted by the City Commission of the City on __________, 2024 (the “Resolution”), and the form of the Series 2024B Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits, and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits, and certificates and on the basis of existing law, it is our opinion that: 1. The Series 2024B Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms; however, the Series 2024B Bonds are not secured by the taxing power of the City. 2. The principal of and interest on the Series 2024B Bonds are payable from any funds of the City legally available for the payment thereof, including funds in the City’s general fund. The City has covenanted in the Resolution to appropriate each fiscal year during the term of the Series 2024B Bonds an amount sufficient for the payment of the principal of and interest on the Series 2024B Bonds due in such fiscal year. The City has not granted a lien on any revenues in its general fund or otherwise provided for the segregation of such revenues as security for the payment of the Series 2024B Bonds. Any ad valorem taxes the City may in its discretion levy that are applied to the payment of principal of and interest on the Series 2024B Bonds are subject to applicable limits now or hereafter imposed by law on the amount of taxes that may be levied by the City. 3. Interest on the Series 2024B Bonds: (a) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”); and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code. 4. Interest on the Series 2024B Bonds is excluded from Montana taxable income for State of Montana individual income tax purposes. C-4 The opinions expressed in paragraphs 1 and 2 above are subject, as to enforceability, to the effect of any applicable state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors’ rights and principles of equity, whether considered at law or in equity. The opinions expressed in paragraphs 3 and 4 above are subject to the condition of the City’s compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2024B Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes and from Montana taxable income for State of Montana individual income tax purposes. The City has covenanted to comply with these continuing requirements. Its failure to do so could result in the inclusion of interest on the Series 2024B Bonds in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance of the Series 2024B Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to the holders of the Series 2024B Bonds. We note, however, that interest on the Series 2024B Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is includable in the computation of income for purposes of the Montana alternative corporate income tax and the Montana corporate income tax. We do not express any opinion as to any laws other than the laws of the State of Montana and federal laws of the United States of America as in effect on the date hereof. We assume no obligation to revise, supplement, or update this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the laws of the State of Montana or of the United States of America that may occur after the date hereof, including, but not limited to, laws which may have retroactive effect. We have not been engaged, and have not undertaken, to review the accuracy, completeness or sufficiency of the Official Statement or any other offering materials relating to the Series 2024B Bonds and, accordingly, we express no opinion with respect thereto. Dated: ___________, 2024. Very truly yours, APPENDIX D D-1 FORMS OF CONTINUING DISCLOSURE UNDERTAKINGS $[_______] General Obligation Bonds, Series 2024A City of Bozeman, Montana CONTINUING DISCLOSURE UNDERTAKING This CONTINUING DISCLOSURE UNDERTAKING is made by the City of Bozeman, Montana (the “City’) in connection with the issuance and delivery by the City of its $[________] General Obligation Bonds, Series 2024A (the “Bonds”), as of this ___ day of __________, 2024. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system website (“EMMA”), as hereinafter described. The City is the only “obligated person” in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with this Continuing Disclosure Undertaking, any person aggrieved thereby, including the Owners of any outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of this Continuing Disclosure Undertaking, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Continuing Disclosure Undertaking constitute a default under the Bonds or under any other provision of the Resolution. As used herein, “Owner” means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, “Beneficial Owner” means, in respect of a Bond, any person or entity that (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. D-2 (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2024, the following financial information and operating data in respect of the City (the “Disclosure Information”): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Montana, containing a balance sheet as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, 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 or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof; and (B) to the extent not included in the financial statements referred to in paragraph (A) above, information for such fiscal year of the type set forth below: (1) principal amount of general obligation debt outstanding; (2) assessed valuation of the City; (3) taxable valuation of the City; and (4) tax collection figures in a format similar to the table under the heading “Property Tax Levies and Collections” on page A-8 of Appendix A to the Official Statement. Notwithstanding anything herein, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within ten days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated, if it is updated as required hereby, by reference from other documents, including official statements, which have been submitted to the MSRB in the manner set forth in subsection (c) hereof. The City shall clearly identify the Disclosure Information in each document so incorporated by reference. D-3 If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be material (as hereinafter defined), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this Continuing Disclosure Undertaking is amended, then the City shall include in the next Disclosure Information to be delivered pursuant to this Continuing Disclosure Undertaking, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (G) modifications to rights of holders of the Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; (J) release, substitution or sale of property securing repayment of the Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the City; D-4 (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (O) incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (P) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties. An event is “material” if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed in this Bond Resolution or information generally available to the public. Notwithstanding the foregoing sentence, an event is also “material” if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For purposes of paragraphs (O) and (P) above, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of either (i) or (ii). A “financial obligation” does not include municipal securities for which a final official statement has been provided to the MSRB consistent with the Rule. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information described above under paragraph (b)(1) above at the time specified thereunder; (B) the amendment or supplementing of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the City; and (C) any change in the fiscal year of the City. D-5 (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) hereof to the MSRB via EMMA or in a manner as may be otherwise proscribed by the MSRB consistent with the Rule. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (d) Term; Amendments; Interpretation. (1) This Continuing Disclosure Undertaking shall remain in effect so long as any Bonds are outstanding. (2) This Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (b)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Commission filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that the Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information), as so amended or supplemented, will comply with the provisions of paragraph (b)(5) of the Rule, assuming that such provisions apply to the Bonds. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) this Continuing Disclosure Undertaking is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so the undertaking would satisfy the requirements of paragraph (b)(5) of the Rule. Dated: __________, 2024 CITY OF BOZEMAN, MONTANA By ____________________________________ Mayor By ____________________________________ City Manager D-6 $[_______] Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana CONTINUING DISCLOSURE UNDERTAKING This CONTINUING DISCLOSURE UNDERTAKING is made by the City of Bozeman, Montana (the “City’) in connection with the issuance and delivery by the City of its $[________] Limited Tax General Obligation Bonds, Series 2024B (the “Bonds”), as of this ___ day of __________, 2024. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system website (“EMMA”), as hereinafter described. The City is the only “obligated person” in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with this Continuing Disclosure Undertaking, any person aggrieved thereby, including the Owners of any outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of this Continuing Disclosure Undertaking, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Continuing Disclosure Undertaking constitute a default under the Bonds or under any other provision of the Resolution. As used herein, “Owner” means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, “Beneficial Owner” means, in respect of a Bond, any person or entity that (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. D-7 (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2024, the following financial information and operating data in respect of the City (the “Disclosure Information”): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Montana, containing a balance sheet as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, 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 or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof; and (B) to the extent not included in the financial statements referred to in paragraph (A) above, information for such fiscal year of the type set forth below: (1) principal amount of limited tax general obligation debt outstanding; (2) assessed valuation of the City; (3) taxable valuation of the City; (4) mill levy information in a format similar to the table under the heading “City Levy Authority” on page A-8 of Appendix A to the Official Statement; and (5) tax collection figures in a format similar to the table under the heading “Property Tax Levies and Collections” on page A-8 of Appendix A to the Official Statement. Notwithstanding anything herein, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within ten days after the receipt thereof, the City shall provide the audited financial statements. D-8 Any or all of the Disclosure Information may be incorporated, if it is updated as required hereby, by reference from other documents, including official statements, which have been submitted to the MSRB in the manner set forth in subsection (c) hereof. The City shall clearly identify the Disclosure Information in each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be material (as hereinafter defined), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this Continuing Disclosure Undertaking is amended, then the City shall include in the next Disclosure Information to be delivered pursuant to this Continuing Disclosure Undertaking, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (G) modifications to rights of holders of the Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; D-9 (J) release, substitution or sale of property securing repayment of the Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the City; (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (O) incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (P) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties. An event is “material” if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed in this Bond Resolution or information generally available to the public. Notwithstanding the foregoing sentence, an event is also “material” if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For purposes of paragraphs (O) and (P) above, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of either (i) or (ii). A “financial obligation” does not include municipal securities for which a final official statement has been provided to the MSRB consistent with the Rule. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information described above under paragraph (b)(1) above at the time specified thereunder; D-10 (B) the amendment or supplementing of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the City; and (C) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) hereof to the MSRB via EMMA or in a manner as may be otherwise proscribed by the MSRB consistent with the Rule. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (d) Term; Amendments; Interpretation. (1) This Continuing Disclosure Undertaking shall remain in effect so long as any Bonds are outstanding. (2) This Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (b)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Commission filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that the Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information), as so amended or supplemented, will comply with the provisions of paragraph (b)(5) of the Rule, assuming that such provisions apply to the Bonds. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) this Continuing Disclosure Undertaking is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so the undertaking would satisfy the requirements of paragraph (b)(5) of the Rule. Dated: __________, 2024 CITY OF BOZEMAN, MONTANA By ____________________________________ Mayor By ____________________________________ City Manager APPENDIX E E-1 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT The following pages include the City’s Annual Comprehensive Financial Report (“ACFR”) for fiscal year ended June 30, 2023. Annual Comprehensive Financial Report Year Ended June 30, 2023 City of Bozeman, Montana Prepared by the Finance Department City of Bozeman, Montana Table of Contents June 30, 2023 Introductory Section Letter of Transmittal ..........................................................................................................................................I Listing of City Officials .................................................................................................................................... VII Organizational Chart ..................................................................................................................................... VIII Certificate of Achievement for Excellence in Financial Reporting ..................................................................... IX Financial Section Independent Auditor’s Report .......................................................................................................................... 1 Management’s Discussion and Analysis ............................................................................................................ 5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position ....................................................................................................................... 18 Statement of Activities ............................................................................................................................ 20 Fund Financial Statements Balance Sheet - Governmental Funds ...................................................................................................... 21 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position .................... 23 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ................... 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................................................................. 25 Proprietary Funds Statement of Net Position ....................................................................................................................... 26 Statement of Revenues, Expenses and Changes in Net Position ............................................................... 29 Statement of Cash Flows ......................................................................................................................... 31 Fiduciary Funds Statement of Fiduciary Net Position ........................................................................................................ 33 Statement of Changes in Fiduciary Net Position....................................................................................... 34 Notes to Financial Statements ........................................................................................................................ 35 Required Supplementary Information Schedule of Changes in Total OPEB Liability and Related Ratios .................................................................... 102 Notes to Schedule of Changes in Total OPEB Liability and Related Ratios ...................................................... 103 Schedules of Employer’s Share of Net Pension Liability and Schedules of Employer’s Contributions Montana Public Employees Retirement System Pension Plan .................................................................... 104 Montana Firefighters’ Unified Retirement System Pension Plan ................................................................ 105 Montana Municipal Police Officers’ Retirement System Pension Plan ....................................................... 106 Notes to the Schedules of Employer’s Share of Net Pension Liability and Schedules of Employer’s Contributions ............................................................................................................................................ 107 Schedules of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis General Fund ............................................................................................................................................ 112 Major Special Revenue Funds ................................................................................................................... 113 Notes to the Schedules of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis ........................................................................................................................................ 114 City of Bozeman, Montana Table of Contents June 30, 2023 Other Supplementary Information Combining and Individual Fund Statements and Schedules Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Major Debt Service Fund and Major Capital Projects Fund ................................................................................................... 115 Nonmajor Governmental Funds Description of Nonmajor Funds ............................................................................................................. 116 Combining Balance Sheet ...................................................................................................................... 119 Combining Statements of Revenues, Expenditures, and Changes in Fund Balances ............................... 126 Combining Statements of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual133 Nonmajor Enterprise Funds Description of Nonmajor Funds ............................................................................................................. 143 Combining Balance Sheet ...................................................................................................................... 144 Combining Statement of Revenues, Expenses and Changes in Net Position ........................................... 146 Combining Statement of Cash Flows ..................................................................................................... 147 Internal Service Funds Description of Internal Service Funds .................................................................................................... 149 Combining Balance Sheet ...................................................................................................................... 150 Combining Statement of Revenues, Expenses and Changes in Net Position ........................................... 152 Combining Statement of Cash Flows ..................................................................................................... 153 Custodial Funds Description of Funds ............................................................................................................................. 155 Combining Statement of Fiduciary Net Position ..................................................................................... 156 Combining Statement of Changes in Fiduciary Net Position ................................................................... 157 Statistical Section Introduction to Statistical Section ................................................................................................................. 158 Financial Trends Components of Net Position ..................................................................................................................... 160 Changes in Net Position ............................................................................................................................ 161 Fund Balances of Governmental Funds ..................................................................................................... 164 Changes in Fund Balances of Governmental Funds .................................................................................... 165 Revenue Capacity Assessed Value of Taxable Property .......................................................................................................... 166 City Taxable Market and Taxable Values ................................................................................................... 167 Tax Increment District Taxable Valuation Detail ........................................................................................ 168 Downtown Bozeman Improvement District & Comparison to City Taxable Value ...................................... 171 Property Tax Levies for Tax Increment/Urban Renewal Districts ................................................................ 172 Direct and Overlapping Property Tax Rates ............................................................................................... 173 Principal Property Taxpayers ..................................................................................................................... 174 Principal Property Taxpayers in Downtown Bozeman Improvement District .............................................. 175 Properties in the Bozeman Midtown Urban Renewal District .................................................................... 176 Principal Property Taxpayers in Downtown Bozeman Midtown Urban Renewal District ............................ 177 City of Bozeman, Montana Table of Contents June 30, 2023 Property Tax Levies and Collections .......................................................................................................... 178 Water Sold by Type of Customer ............................................................................................................... 179 Water and Sewer Rates ............................................................................................................................. 180 Debt Capacity Ratios of Outstanding Debt by Type .......................................................................................................... 181 Ratios of General Bonded Debt Outstanding ............................................................................................. 182 Computation of Direct and Overlapping Debt............................................................................................ 183 Legal Debt Margin Information ................................................................................................................. 184 Pledged Revenue Coverage – Governmental Activities .............................................................................. 185 Pledged Revenue Coverage – Business-Type Activities .............................................................................. 186 Debt Service Requirements and Coverage for Tax Increment Districts ....................................................... 187 Summary of Outstanding SIDs ................................................................................................................... 188 Revolving Fund Balance and Bond Secured Thereby .................................................................................. 189 Special Improvement District Assessment Billing and Collections .............................................................. 190 Demographic and Economic Information Demographic and Economic Statistics ....................................................................................................... 191 Principal Employers................................................................................................................................... 192 Operating Information Full-Time Equivalent City Government Employees by Function/Program ................................................... 193 Operating Indicators by Function/Program ............................................................................................... 194 Capital Assets Statistics by Function/Program ........................................................................................... 195 Single Audit Section Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................................................................................................................................. 196 Independent Auditor’s Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ..................................................................................................................................... 198 Schedule of Expenditures of Federal Awards................................................................................................. 201 Notes to Schedule of Expenditures of Federal Awards .................................................................................. 202 Schedule of Findings and Questioned Costs .................................................................................................. 203 Introductory Section Year Ended June 30, 2023 City of Bozeman, Montana I December 21, 2023 To the Honorable Mayor, City Commission, and the Citizens of the City of Bozeman, Montana: The Annual Comprehensive Financial Report of the CITY OF BOZEMAN, MONTANA for the fiscal year ended JUNE 30, 2023 is hereby submitted. The financial statement and supporting schedules have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and meet the requirements of the standards as prescribed by the Secretary of State Audits Division. We believe the enclosed data, as presented, is accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Eide Bailly LLP, Certified Public Accountants, have issued an unmodified or “clean” opinion on the City’s financial statements for the fiscal year ended June 30, 2023. The independent auditors report is located at the front of the Financial Section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. In addition to the financial audit, the City undertakes a single audit in conformance with the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Audits. The results of this single audit, including a schedule of expenditures of federal awards, and the independent auditor’s reports on the City’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards, are available in the City’s issued single audit report. II CITY OF BOZEMAN PROFILE The City of Bozeman sits in the center of Gallatin County, flanked by the Bridger Mountains and Custer Gallatin National Forest, just south of the Missouri River Headwaters. This diverse Rocky Mountain landscape creates easy access to year-round outdoor activities for Bozeman residents including hiking, mountain biking, climbing, camping, fishing, and downhill and cross-country skiing. The City encompasses an area of approximately 20 square miles with its next-closest municipality being the City of Belgrade, approximately seven miles from the City’s outermost boundary. Bozeman is the county seat of Gallatin County and is the home to Montana State University (MSU) – Bozeman, and the Fighting Bobcats. Bozeman is located 143 miles west of Billings and 200 miles east of Missoula. The City was incorporated in April of 1883 with a city council form of government, and later in January 1922 transitioned to its current city manager/city commission form of government. The population of Bozeman in the 2020 census is 53,293 – which is a total increase of 43% from April 2010 – which continues Bozeman’s standing as the fourth largest city in the state. The latest population estimate issued by the United States Census Bureau as of July 1, 2022 is 56,123. The government provides a full range of services. These services include police and fire protection; sanitation services; water, wastewater & storm water utilities; the construction and maintenance of streets and infrastructure; recreational activities; cultural events; planning and zoning; and general administrative services. The City, as a primary government, is supported or works closely with certain entities to provide these services to the citizens of the City of Bozeman. ECONOMIC OUTLOOK Bozeman has gained recognition as one of the most desirable places to live in the country, offering a wealth of recreational activities, including fishing, hiking, skiing, hunting, and an array of impressive outdoor experiences. Positioned as one of Montana's most populous cities, Downtown Bozeman serves as the vibrant urban hub of the area, featuring a lively nightlife scene, street festivals, farmers markets, and cultural establishments that cater to both residents and visitors. As the home to MSU Bozeman, this town with a collegiate atmosphere serves as a gateway for newcomers to discover the diverse offerings of Montana, serving as a pivotal economic force for both incoming residents and businesses in the region. In 2023, Bozeman was announced as the #1 Strongest Economy for fastest-growing micropolitan cities by POLICOM for the sixth consecutive year. Economic strength is defined as “the long-term tendency for an area to consistently grow in both size and quality.” Bozeman has a 2022 population estimated to be 56,123 residents. Between 2015-2019 the growth rate was 3.8% according to a Bozeman Economic Assessment conducted by Bridge Economic Development published in March 2023. Bozeman’s economy is most heavily concentrated in tourism and retail jobs that typically have lower wages than trade sector jobs. However, both Bozeman and Gallatin County are experiencing strong growth in knowledge- based industries (professional and technical services) and in manufacturing. Increased enrollment at MSU - Bozeman for in-demand tech and engineering degrees, along with substantial growth in company presence, is contributing significantly to population growth. III The City's median home values fall within the midrange when compared to peers. Over the last decade, median household income in Bozeman has surged, experiencing an uptick of nearly $15,000. In fiscal year 2023, the City received 200 new single-family home applications and 112 multi-family residential building applications, up from 116 and 62 respectively in 2022. Despite this growth, the construction of new homes in the region has not matched the increasing demand. This continued growth increases the need for City services and infrastructure. BUDGET DEVELOPMENT PROCESS The City of Bozeman budget serves several purposes. For the citizens of the City of Bozeman, it presents a picture of the city government operations and intentions for the year. For the City Commission, it serves as a policy tool and as an expression of goals and objectives. For City Management, it is used as an operating guide and a control mechanism. The City Manager’s Recommended Budget is created and submitted to the City Commission annually. Public work sessions are then held by the Commissioners at which time the City Manager, Finance Director, and department staff explain the budget recommendations and underlying justification for the requests. During (or following) the work sessions, the Commissioners may adjust the proposed budget. Following any adjustments to the City Manager's budget recommendation, a tentative appropriation ordinance is prepared, and a public hearing is held. The Commission may make additional adjustments following the public hearing, after which time, the Commission passes the appropriation ordinance in final form. The legal level of budgetary control is established at the service area level. FINANCIAL POLICIES The overall goal of the City's financial policies is to establish and maintain effective management of the city's financial resources. Formal policy statements and major objectives provide the foundation for achieving this goal. The City avoids budgetary practices that balance current expenditures at the expense of meeting future years' expenses and seeks to maintain a diversified and stable revenue base that is estimated in a realistic and conservative manner. For one-time revenues, highest priority is given to the funding of capital assets or other non-recurring expenditures. On-going expenditures are limited to levels which can be supported by current revenues. Construction projects and capital purchases of $25,000 or more are included in the Capital Improvement Plan (CIP), with all capital purchases of $5,000 or more reported as capital outlays in the financial statements. Minor capital outlays of less than $5,000 are included in the regular operating budget. Long-term debt is limited to capital improvements which cannot be financed from current revenues and repays borrowed funds within a period that does not exceed the expected useful life of the project. The City does not use long-term debt for financing current operations and adheres to a policy of full public disclosure with regard to the issuance of debt. IV The City updates its long-term financial projections on an on-going basis and identifies both current and long-term funding needs and challenges to ensure financial stability of the City into the future. The City maintains and updates long-term financial plans on at least an annual basis for the following funds and programs: General Fund (including Police and Fire), Water, Water Reclamation, Stormwater, Solid Waste, Parks & Trails District, Forestry District, and all Streets departments. A minimum level of General Fund reserve equal to 2 months of annual revenues, or 16.67%, is maintained in compliance with Bozeman Municipal Code. This reserve is committed to be used for: cash flow purposes, accrued employee payroll benefits which are not shown as a liability, unanticipated equipment acquisition and replacement, and to enable the city to meet unexpected expenditure demands or revenue shortfalls. The City manages and accounts for its financial activity in accordance with Generally Accepted Accounting Principles (GAAP), as set forth by the Governmental Accounting Standards Board (GASB). The Ccity maintains its accounting records for general governmental operations on a modified accrual basis, with revenues recorded when available and measurable, and expenditures recorded when services or goods are received and liabilities incurred. Accounting records for proprietary fund types and similar trust funds are maintained on an accrual basis, with all revenues recorded when earned and expenses recorded at the time liabilities are incurred, without regard to receipt or payment of cash. MAJOR INITIATIVES Strategic Plan With the adoption of the Strategic plan, the fiscal year 2023 budget incorporated efforts to implement each of the vision statements. The Commission set thirteen priorities along with strides towards the strategic plan. The highlights of the impact on the 2023 financials and 2024 budget include: An Engaged Community. The City continues to strive to foster a culture of civic engagement through the implementation and application of the City’s adopted communication plan. Emphasis has been and continues to be placed on successful collaboration through City-County Regional Planning. An Innovative Economy. The City Commission adopted the Economic Vitality Strategy in June 2023. In coordination with that plan, the City continues to support retention and growth of both traded and local business sectors. Additionally, many capital infrastructure investments helped leverage funds to encourage both residential and commercial economic development. A Safe, Welcoming Community. The City continues to work towards welcoming diversity through policies and public awareness by way of investment in the development of the City’s first Equity and Inclusion Plan, slated for presentation to City Commission in FY24. The Bozeman Public Safety Center opened in FY23, consolidating municipal court, police, and fire administration in one location. A Well‐Planned City. The City Commission adopted the Parks, Recreation and Active Transportation (PRAT) Plan on September 12, 2023. The plan provides and will inform actions towards facilitating and promoting recreational opportunities. In FY23, 8 mills were allocated to Community Housing in order to continue the implementation of its action plan to address the needs of community housing in Bozeman. The FY24 Budget includes appropriations for the acquisition of Light Detection and Ranging (LiDAR) data for land management, planning, and engineering projects which will aid in our efforts toward GIS Land Use & Infrastructure Development Tracking. V A Creative, Learning Culture. The Percent for Art program has been incorporated into our Capital Improvement Plan and some projects are already underway. This program provides a guaranteed funding mechanism for the acquisition of artwork for new public facilities and civic spaces. Extensive improvements were made to the Bozeman Public Library in FY23 to create innovative spaces in order to provide new services, programming, and places for social gatherings. A Sustainable Environment. The FY24 Budget looks at Climate Action Plan Implementation and continues to increase the Sustainability Division’s budget from $870K in FY23 to approximately $1.1M in FY24. A High‐Performance Organization. We have completed the Advisory Board Consolidation. Throughout the organization, departments are working on collaborating and functioning as a high-performing and innovative team. Staff continues to look at rates and fees to ensure we are using equitable and sustainable sources of funding for appropriate City services with an emphasis on delivering them in a lean and efficient manner. Additionally, the FY24 budget includes funding for a Facility Condition Inventory and Facility Needs Assessment to inform future facility needs. OTHER INFORMATION Independent Audit The State of Montana requires a biannual audit of the books of accounts, financial records, and transactions of all administrative departments of the City by independent certified accountants selected by the City Commission. It is the belief of the City Commission and Executive staff that an annual audit assures a higher level of financial management and fiscal responsibility. This policy, along with the legal requirements, has been complied with and the auditors' opinion of Eide Bailly LLP, has been included in this report. Awards The Government Finance Officers' Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bozeman for its annual comprehensive financial report for the fiscal year ended June 30, 2022. The Certificate of Achievement is a prestigious national award that is an important recognition of conformance with the highest standards for preparation of state and local government financial reports. This was the 39th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized annual comprehensive financial report that conforms to program standards and satisfies generally accepted accounting principles and applicable legal requirements. The City believes our current annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirement and we are submitting it to the GFOA to determine its eligibility for another certificate. The City has also received the Distinguished Budget Presentation Award from the GFOA for 31 years. The award represents the City’s commitment to meeting the highest principles of governmental budgeting. The budget is rated in four major categories: as a policy document, an operations guide, a financial plan, and a communications device. Budget documents must be rated “proficient” in all four categories to receive the award. VI Acknowledgements The preparation of the Annual Comprehensive Financial Report on a timely basis was made possible by the dedicated service of the entire staff of the Finance Department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report, with special thanks to Aaron Funk for his dedication and expertise in financial reporting. We would also like to express appreciation to the City Commission for their interest and support in planning and overseeing the operations of the City in a responsible and professional manner. Jeff Mihelich City Manager Melissa Hodnett Director of Finance VII City of Bozeman, Montana Listing of City Officials June 30, 2023 Name Position Elected Officials Legislative Cynthia Andrus MayorTerence Cunningham Deputy MayorChristopher Coburn Commissioner Jennifer Madgic CommissionerI-Ho Pomeroy Commissioner JudicialKarl Seel Muncipal JudgeJ. Colleen Herrington Muncipal Judge Officers Executive Jeff Mihelich City Manager Chuck Winn Assistant City ManagerKira Peters Assitant City ManagerMichael Maas City Clerk Department of Law Gregory Sullivan City Attorney Department of Finance Melissa Hodnett, MBA Finance DirectorAaron Funk, CPA Controller Laurae Clark Treasurer Department of Economic Development Britt Fontenot Director of Economic Development Department of Information Technology Scott McMahan Information Technology Director Department of Human Resources Cassandra Tozer Human Resources Director Department of Public Safety James Veltkamp Chief of PoliceJosh Waldo Fire Chief Department of Public ServiceNicholas Ross Director of Public Service John Alston City EngineerJon Henderson Director of Strategic Services Department of Public WelfareMitch Overton Director of Parks and RecreationSusan Gregory Director of Bozeman Public Library Department of Planning and Community Development Anna Bentley Director of Planning and Community Development VIII City of Bozeman, Montana Organizational Chart June 30, 2023 IX Financial Section Year Ended June 30, 2023 City of Bozeman, Montana 1 Independent Auditor’s Report To the Honorable Mayor and City Council City of Bozeman Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Bozeman (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, based on our audit and the report of the other auditor, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Bozeman, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the Bozeman Public Library Foundation, which represent 100% of the net position and revenues of the discretely presented component unit as of June 30, 2023. Those statements were audited by other auditors whose report(s) has been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component unit, is based solely on the report(s) of the other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. What inspires you, inspires us. | eidebailly.com 401 N. 31st St., Ste. 1120 | P.O. Box 7112 | Billings, MT 59103-7112 | TF 800.824.9797 | T 406.896.2400 | F 406.252.8600 | EOE 2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City‘s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: •Exercise professional judgment and maintain professional skepticism throughout the audit. •Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. •Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City‘s internal control. Accordingly, no such opinion is expressed. •Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. •Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. 3 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of changes in total OPEB liability and related ratios, schedules of employer’s share of net pension liability, schedules of employer’s contributions, and schedules of revenue, expenditures, and changes in fund balance – budget to actual – budgetary basis for the general fund and major special revenue funds be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining fund financial statements, the individual budgetary comparison schedules, and schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining fund financial statements, the individual budgetary comparison schedules, and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory section and statistical section, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Billings, Montana December 21, 2023 5 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Management of the City of Bozeman (the City) offers readers of the basic financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2023. Readers are encouraged to consider the information presented here in conjunction with additional information that is furnished in the letter of transmittal. The focus of the information herein is on the primary government. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended as an introduction to the City’s basic financial statements. The basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. In addition to the basic financial statements, also provided are required and other supplementary information. Government-Wide Financial Statements The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities reports how the City’s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation and sick leave). The governmental activities reflect the City’s basic services, including police, fire, public works, parks, and general administration. Property taxes, charges for services, state shared revenues, court fines, and recreation fees finance most of these activities. The business-type activities reflect private sector-type operations, such as water, wastewater, storm water, solid waste, and parking, where fees for services typically cover all or most of the cost of operations, including depreciation. The government-wide financial statements include not only the City itself (referred to as the primary government), but also other legally separate entities for which the City is financially accountable. Financial information for most of these component units are reported separately from the financial information presented for the primary government itself. A few component units, although legally separate, function essentially as an agency of the City and, therefore, are included as an integral part of the City. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into categories: governmental funds, proprietary funds, and fiduciary funds that use different accounting approaches. 6 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Governmental funds are used for the City’s basic services and are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. Because this information does not encompass the long-term focus of the government-wide statements, additional information is provided that reconciles the governmental fund financial statements to the government-wide statements explaining the relationship (or differences) between them. The City maintains individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund and major special revenue funds. Data from the other governmental funds are combined into a single aggregated presentation. Individual fund data for these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for the General Fund. A budgetary comparison schedule has been provided to demonstrate compliance with these budgets for the General Fund in accordance with U.S. GAAP. The City maintains two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for water, wastewater, stormwater, solid waste and parking services. When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City’s enterprise funds (a component of the proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. We use internal service funds to report activities that provide supplies and services for the City’s other programs and activities, such as the Vehicle Maintenance Fund and Health Insurance Fund. Internal service fund activity is reported as governmental activity in the government- wide statements since this activity, the financing of goods and services for other funds of the government, is more governmental than business-type in nature. The City uses fiduciary funds to account for assets held on behalf of outside parties, including other governments. When these assets are held under the terms of a formal trust agreement, a private-purpose trust fund is used. The City is the trustee, or fiduciary, for other funds, including the Municipal Court Fund, the Montana Arts Council Fund (Montana Ballet, Bozeman Symphony Orchestra, and Big Sky Association for the Arts), and the CMC Bozeman Asbestos Site Remediation Fund. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The guidelines for the administration of these funds are contained in applicable financial agreements and/or City ordinances. These documents contain the rules governing the receipt, expenditure, and management of the City’s fiduciary funds. As the statements reflect, the financial activity during the year for these funds is nominal. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. 7 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Government-wide Financial Analysis Net Position Net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred inflows by $636.2 million at the close of the most recent fiscal year. Net position increased by $48.6 million this year as compared to a $43.3 million increase last year. Net position of the City includes $78.6 million (12.4%) of restricted net position. These are resources subject to external restrictions as to how they may be used by the City. The majority of the net position, 84.0%, is invested in capital assets (land, buildings, infrastructure, etc.) less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to community members; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. The following table presents condensed financial information on the City’s net position for the fiscal years ending June 30, 2023 and 2022. Governmental Activities Business-Type Activities Total 2023 2022 2023 2022 2023 2022 AssetsCurrent and other assets 108,097,028$ 103,200,397$ 61,772,593$ 57,951,745$ 169,869,621$ 161,152,142$ Capital assets 298,922,399 275,835,087 338,222,054 329,667,072 637,144,453 605,502,159 Total assets 407,019,427 379,035,484 399,994,647 387,618,817 807,014,074 766,654,301 Deferred Outflows of Resources 8,250,714 7,792,013 1,302,625 1,245,353 9,553,339 9,037,366 LiabilitiesOther liabilities 19,669,995 26,155,271 2,827,483 2,527,916 22,497,478 28,683,187 Long-term liabilities 101,721,336 95,447,522 52,757,557 53,831,562 154,478,893 149,279,084 Total liabilities 121,391,331 121,602,793 55,585,040 56,359,478 176,976,371 177,962,271 Deferred Inflows of Resources 2,500,575 8,369,794 933,712 1,794,124 3,434,287 10,163,918 Net positionNet investment in capital assets 236,885,005 217,241,690 297,691,119 286,461,913 534,576,124 503,703,603 Restricted 46,965,688 55,321,501 31,659,041 29,337,941 78,624,729 84,659,442 Unrestricted 7,527,542 (15,708,281) 15,428,360 14,910,714 22,955,902 (797,567) Total net position 291,378,235$ 256,854,910$ 344,778,520$ 330,710,568$ 636,156,755$ 587,565,478$ 8 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 The following table presents condensed financial information on the City’s changes in net position for the fiscal years ending June 30, 2023 and 2022. Governmental Activities Business-Type Activities Total 2023 2022 2023 2022 2023 2022 Revenues Program revenuesCharges for services 36,321,320$ 35,800,641$ 35,954,215$ 36,283,040$ 72,275,535$ 72,083,681$ Operating grants and contributions 12,843,761 7,707,580 1,435,529 1,511,436 14,279,290 9,219,016 Capital grants and contributions 14,514,120 12,153,695 11,084,423 13,064,462 25,598,543 25,218,157 General revenuesTaxes 39,860,197 29,432,001 - - 39,860,197 29,432,001 Unrestricted intergovernmental 5,370,015 5,099,529 - - 5,370,015 5,099,529 Unrestricted investment earnings (losses)1,118,619 (1,685,354) 833,995 (1,291,575) 1,952,614 (2,976,929) Miscellaneous 1,225,899 520,517 226,026 219,769 1,451,925 740,286 Gain (loss) on disposal of capital assets 2,726,201 (15,735) (13,856) 1,031 2,712,345 (14,704) Total revenues 113,980,132 89,012,874 49,520,332 49,788,163 163,500,464 138,801,037 ExpensesGeneral government 17,726,413 12,352,494 - - 17,726,413 12,352,494 Public safety 28,002,592 22,442,450 - - 28,002,592 22,442,450 Public service 14,646,742 12,176,141 - - 14,646,742 12,176,141 Public welfare 15,343,285 16,211,729 - - 15,343,285 16,211,729 Interest and fiscal charges 2,070,117 2,051,119 - - 2,070,117 2,051,119 Water - 13,882,728 11,604,238 13,882,728 11,604,238 Waste water - - 11,979,470 10,849,991 11,979,470 10,849,991 Solid waste - - 7,980,984 5,220,011 7,980,984 5,220,011 Parking - - 1,565,405 1,360,611 1,565,405 1,360,611 Stormwater - - 1,711,451 1,243,760 1,711,451 1,243,760 Total expenses 77,789,149 65,233,933 37,120,038 30,278,611 114,909,187 95,512,544 Excess before transfers 36,190,983 23,778,941 12,400,294 19,509,552 48,591,277 43,288,493 Transfers (1,667,658) (1,396,976) 1,667,658 1,396,976 - - Change in net position 34,523,325 22,381,965 14,067,952 20,906,528 48,591,277 43,288,493 Beginning net position 256,854,910 234,472,945 330,710,568 309,804,040 587,565,478 544,276,985 Ending net position 291,378,235$ 256,854,910$ 344,778,520$ 330,710,568$ 636,156,755$ 587,565,478$ Governmental Activities The net position of the City’s governmental activities increased by $34.5 million or 13.4% from $256.9 million last year to $291.4 million this year due to revenues exceeding expenses. Governmental activities revenues for the year increased $25.0 million or 28.0%, from $89.0 million in fiscal year 2022 (FY22) to $114.0 million in fiscal year 2023 (FY23), while total expenses increased by $12.6 million or 19.2%, from $65.2 million in FY22 to $77.8 million in FY23. 9 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Property tax revenues increased by $10.4 million or 35.4% from $29.4 million to $39.9 million. Mill values for the City of Bozeman increased by 54.7% based on the latest assessments from the Department of Revenue. In addition, the number of total property tax mills levied increased to 204.5 from 154.12 in the prior year. Charges for services, which primarily includes street assessments, fire and street impact fees, and the park and trails assessments, increased by $0.5 million or 1.5% from $35.8 million in FY22 to $36.3 million in FY23. Street impact fees decreased by $3.2 million or 38.2% from $8.4 million in FY22 to $5.2 million in FY23 primarily due to a decline in new, large developments. This decrease was offset mainly by increases in General Fund charges for services, Parks & Trails, the Building Inspection Fund, and the Street Maintenance Assessment District Fund. General Fund charges for services increased by $1.7 million due to an increase in services paid for by other City departments, including expenditures for the City Manager’s Office, Legal, Human Resources, Information Technology, and Finance. Parks & Trails District assessments increased by approximately 16.7% from $5.0 million in FY22 to $5.8 million in FY23, due to a 15% increase in special assessments to pay for deferred maintenance and due to growth in the district. The Building Inspection Fund increased by $0.7 million or 30% from $2.4 million to $3.1 million primarily due to growth in total applications submitted for plan review. The Street Maintenance District assessment revenue increased by approximately $0.5 million due to a 6% increase in special assessments and growth in the district. Restricted operating grants and contributions increased by $5.1 million or 66.6% from $7.7 million in FY22 to $12.8 million in FY23 primarily due to the recognition of American Rescue Plan Act grants revenues toward revenue recovery for operations in the General Fund and Planning Fund. 10 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Program expenses increased by $12.6 million or 19.2%, from $65.2 million in FY22 to $77.8 million in FY23. A combination of increased costs of contracted services and increases in personnel costs resulted in this increase. Contracted and agreed upon citywide salary increases were implemented in fiscal year 2023 to address increased inflation in the community. These salary increases also supported the City in reducing the large amount of vacancy savings that was baked into prior fiscal year actuals and resulted in an increase in expenses. General government expenses increased by $5.4 million or 43.5% from $12.4 million to $17.7 million. $2.2 million of the increase is attributed to the salary and benefits increases as described above. $1.8 million of the increase includes city-wide payments for insurance, and general fund grants to non-profits which were reclassified from miscellaneous expenses in fiscal year 2023. Remaining increases are attributed to the personnel services increases described above. Public safety expenses increased by $5.6 million or 24.8% from $22.4 million in FY22 to $28.0 million in FY23. Public service expenses increased by $2.5 million or 20.3% from $12.2 million in FY22 to $14.6 million in FY23. Both increases are attributed to the contracted services and personnel services increases described above. Public welfare expenses decreased by $0.9 million or 5.4% from $16.2 million in FY22 to $15.3 million in FY23 due to significant urban renewal contributions that were expensed in fiscal year 2022 and a decline in grant expenses for Community Housing. Interest and fiscal charges saw a trivial increase of approximately $19,000 or 0.9% from $2.05 million in FY22 to $2.07 million in FY23. The following graph illustrates how program revenues offset program expenses for the governmental activities. 11 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Business-Type Activities The net position of the City’s business-type activities increased by $14.1 million, or 4.3%, from $330.7 million last year to $344.8 million this year. Overall, the revenues provided by charges for services continued to exceed total expenses, the details of which are discussed further below. Business-type net position cannot be used to make up for deficits reported by governmental activities in the event any such deficits were reported. The City generally can only use the net position of business-type activities to finance the continuing operations of the water, wastewater, solid waste, storm water, and parking funds. Business-type activities total revenues decreased by $0.3 million or 0.5% from $49.8 million in FY22 to $49.5 million in FY23, while expenses increased by $6.8 million or 22.6%, from $30.3 million in FY22 to $37.1 million in FY23. Capital grants and contributions decreased by $2.0 million or 15.2% from $13.1 million in FY22 to $11.1 million in FY23. Restricted capital grants & contributions consist primarily of privately constructed water, wastewater, and storm water infrastructure that was contributed to the city by developers. Infrastructure contributions will vary year to year depending on the amount of development as well as what stage in the process the development is in. In the current year the city saw a decrease compared to prior year. Charges for services revenue decreased by 0.9% or $0.3 million in total. Impact fees and cash in lieu of building infrastructure, which are contributions to the City by developers, declined by approximately $1.6 million. This decrease was offset by an increase in user rates and fees of $1.4 million made up of water, wastewater, solid waste, stormwater, and parking revenues. These decreases were offset by an increase of $2.1 million in unrestricted investment earnings. 12 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Operating Expenses – Water expenses increased by $2.3 million or 19.6%, wastewater expenses increased by $1.1 million or 10.4%, solid waste expenses increased by $2.8 million or 52.9% parking expenses increased by $0.2 million or 15.1%, and stormwater expenses increased by $0.5 million or 37.6%. Consistent with governmental activities, a combination of increased costs of contracted services and increases in personnel costs resulted in this increase. Contracted and agreed upon citywide salary increases were implemented in fiscal year 2023 to address increased inflation in the community. These salary increases also supported the City in reducing the large amount of vacancy savings that was baked into prior fiscal year actuals and resulted in an increase in expenses. The significant increase in solid waste expenses was primarily due to an additional $1.4 million of estimated expenses for post-closure costs of the landfill to meet regulatory requirements. The following graph illustrates how program revenues offset program expenses for the business-type activities. Financial Analysis of the Government’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financial related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on current year revenues, expenditures, and balances of spendable resources. Such information is useful in assessing the City’s near-term financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. 13 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 As of June 30, 2023, the City’s governmental funds reported combined ending fund balances of $80.9 million, an increase of $11.8 million or 17.1% in comparison to the prior year. The General Fund is the main operating fund of the City. The City’s total general fund balance increased by $6.5 million or 75.3%, from $8.6 million in FY22 to $15.1 million in FY23. This increase is primarily due to transfers in from other funds. American Rescue Plan Act Funding was transferred in the amount of $3.2 million for revenue recovery purposes. In addition, $2.0 million was moved to the General Fund from the Special Improvement District (SID) expense fund. It was determined that this balance originally came from the General Fund, and the City has the ability to loan directly from the General Fund to support an SID. Total General Fund expenditures increased by approximately $8.6 million, from $35.4 million in FY22 to $44.0 million in FY23. Approximately $2.5 million of the increase is in capital outlay, which included work on the Swim Center, Westside Recreation Center, and Library. Capital outlay also includes approximately $0.6 million in subscription-based IT services that were capitalized to implement GASB Statement 96. In addition, contracted and agreed upon salary increases across the City were implemented in fiscal year 2023 to address increased inflation in the community. These salary increases also supported the City in reducing the large amount of vacancy savings that was baked into prior fiscal year actuals. Significant variances (variances over 10%) between the original budgets compared to the final budgets were as follows: • A budget amendment increased intergovernmental revenues by $1.1 million to include the state’s contribution to employee pensions for employees other than public safety in both revenues and expenditures. • Charges for services were increased to increase expected revenues received from other departments to support central services. The original budget amount was based on prior year actuals, and the amendment trued up central services expenditures and therefore revenues to cover the FY24 budget. • Transfers in was amended by $2.1 million to close out funds that accounted for Special Improvement Districts (SIDs) that were completed. $2.0 million was added to the budget to transfer from the SID Revolving Fund, which can only contain 10% of outstanding bonds/warrants. • The original budget accounted for non-cash state pension expenditures in other, however the actual expenditures hit the appropriate service area. The budget was amended to move $2.9 million from other to public safety. Other minor increases to public safety include an increase for body worn cameras which were originally budgeted in capital outlay, and a carry forward of capital projects originally budgeted in fiscal year 2022. • The capital outlay budget was amended to carry forward capital projects originally budgeted in fiscal year 2023. 14 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Significant expenditures variances (variances over 10%) between the final budget compared to actual results were as follows: • Both general government and public welfare actuals came in 20% under budget due to significant vacancy savings. While vacancy rates have improved, there were a number of new positions in the FY23 budget to support these service areas that are still in the queue for posting. • The budget for other expenditures included a contingency amount of 1% of the total General Fund budget. This amount was not spent in the fiscal year resulting in a budget variance of 24%. • Capital outlay expenditures exceed budget due primarily to expenditures for the Swim Center that were budgeted in the Capital Projects Fund. In addition, $571k of the variance is related to recognizing subscription-based technology assets which are not included in the budget. • Actuals exceeded budget in debt principal and interest due to subscription-based technology arrangement non-cash adjustments that are not considered a disbursement, expenditure, or obligation per the Montana Local Government Budget Act. The Street Maintenance District Fund accounts for city-wide special assessments to pay for street maintenance expenditures. Fund balance decreased by $0.1 million or 6.0%, from $2.0 million in FY22 to $1.8 million in FY23. The fund balance should continue to decline in this fund. Special assessments can only be used to pay for street maintenance, and any remaining fund balance will be used to pay for delayed capital projects and to mitigate future assessment increases. Revenues increased from $7.8 million in FY22 to $8.7 million in FY23 due to a 6% increase in the billed assessment to support the approved budget and capital improvement plan, and an increase in miscellaneous refunds & reimbursement revenues. Major budget amendments in the Street Maintenance District include a carry forward from the prior year of planned capital outlay of $1.7 million. Budget to actual variances are due to some items which are in the Capital Improvement Plan and are budgeted in capital outlay but are actually expended in operations in the public works service area. In addition, some projects in capital outlay will be delayed until fiscal year 2024 and will be carried forward. The American Rescue Plan Act (ARPA) Fund accounts for the ARPA federal grant program. The City received the final installment of the ARPA funding in fiscal year 2022. Per the grantor expenditure guidelines, the funding was used primarily for revenue recovery in various General Fund and Planning Fund departments and utility related infrastructure projects. Fund balance at the end of the 2023 fiscal year is $54,789. The SID Debt Service Fund accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. SIDs or Special Improvement Districts are authorized under Montana Code Annotated (MCA) in order to undertake certain local improvements to benefit specific property owners located within City limits, and to assess the cost of those improvements to benefitted property owners. Fund balance decreased by $2.9 million or 65.5% from $4.4 million in FY22 to $1.5 million in FY23. The decrease was primarily due to a transfer of excess funds originally loaned from the General Fund to finance special improvement districts. The Construction Capital Projects Fund accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. Fund balance increased by $1.1 million or 12.2%, from $9.3 million to $10.5 million. The increase is primarily due to transfers in from the General Fund to support expenditures to build the Bozeman Public Safety Center (BPSC) and for the Swim Center over and above the amount funded by the general obligation bonds. 15 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Capital Asset and Debt Administration Capital Assets At the end of FY23 the City had $637.1 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, and water and sewer lines. This amount represents a net increase (including additions and deductions) of roughly $31.6 million or 5.2%, from $605.5 million in FY22 to $637.1 million in FY23. Major additions and capital projects during the year include: $3.5 million for the construction of the library expansion project; $2.6 million for the construction of the Sourdough Transmission Main Phase 2; $1.0 million for swim center repairs and improvements, $1.3 million for construction of Fire Station 2, and $1.9 million for the reconstruction of Bridger/Story Road. The following table presents a summary of capital assets, net of accumulated depreciation/amortization as of June 30, 2023 and 2022. Amounts are shown in thousands. Governmental Activities Business-Type Activities Total20232022202320222023 2022 Capital assets (net of accumulateddepreciation/amortization whereapplicable)Land 38,073$ 37,398$ 2,219$ 2,219$ 40,291$ 39,617$ Artwork 15 - - - 15 - Right of way/Intangibles - - 2,762 2,762 2,762 2,762 Construction in progress 19,467 46,800 6,576 24,053 26,042 70,853 Buildings 55,371 15,181 84,178 84,182 139,550 99,363 Improvements other than buildings - - 163 421 163 421 Machinery and equipment 9,028 7,273 3,206 3,335 12,234 10,608 Infrastructure 173,970 167,407 238,650 212,133 412,620 379,541 Vehicles 1,676 1,378 468 563 2,145 1,941 Right-of-use lease assets 306 397 - - 306 397 Subscription-based IT assets 1,016 - - - 1,016 - Total capital assets 298,922$ 275,835$ 338,222$ 329,667$ 637,144$ 605,502$ Additional information on the City of Bozeman’s capital assets can be found in Note 6 of this report. 16 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Long Term Liabilities At fiscal year-end, the City had $154.5 million of bonds, notes, leases, and SBITAs payable outstanding compared to $149.3 million last year – an increase of $5.2 million or 3.5%. Of this amount, $45.8 million comprises general obligation debt backed by the full faith and credit of the city. Additional information on the City’s long-term debt for can be found in Note 7 in the notes to the basic financial statements. The following table presents a summary of long term debts as of June 30, 2023 and 2022. Amounts are shown in thousands. Governmental Activities Business-Type Activities Total20232022202320222023 2022 General obligation bonds 45,765$ 47,990$ -$ -$ 45,765$ 47,990$ Tax increment financing bonds 9,803 10,289 - - 9,803 10,289 Special assessment bonds 3,372 3,764 - - 3,372 3,764 Water revenue bonds - - 15,949 17,267 15,949 17,267 Wastewater revenue bonds - - 25,939 27,932 25,939 27,932 Storm water revenue bonds - - 1,196 1,280 1,196 1,280 Notes payable 2,046 2,323 - - 2,046 2,323 Unamortized premiums 4,230 4,485 - - 4,230 4,485 Financed purchases payable 873 210 - - 873 210 Leases payable 344 420 - - 344 420 Subscription-based IT agreements 853 - - - 853 - Landfill closure/postclosure - - 2,359 1,175 2,359 1,175 Pollution remediation - - 537 783 537 783 Compensated absences 3,939 3,226 680 555 4,619 3,781 Total OPEB liability 3,688 4,197 763 871 4,451 5,068 Net pension liability 26,808 18,544 5,335 3,969 32,143 22,513 Total long-term liabilities 101,721$ 95,448$ 52,758$ 53,832$ 154,479$ 149,280$ The City’s general obligation bonds have been assigned ratings of “Aa3” (TOP, Series 2013 and Series 2014), and “Aa1” (BPSC, Series 2019 and FS2, Series 2022) by Moody’s Investor Services (Moody’s). The City’s tax increment financing bonds have been assigned ratings of “BBB” (Downtown, Series 2020), and “AA” (Midtown, Series 2020) by Standard & Poor’s Rating Services (S&P). Pursuant to State law and except for special provisions concerning general obligation indebtedness incurred for purposes of providing sewer and water service, aggregate outstanding and unpaid general obligation indebtedness for cities cannot exceed 2.5% of the total assessed value of taxable property as ascertained by the last assessment for State and county taxes. The 2022/23 total assessed valuation for the City was $11,021,338,679. The total amount of debt the City may incur according to State law is $275,533,467. As of June 30, 2023, the City had general obligation debt outstanding in the amount of $45,765,000. The City has $209,974,023 of general obligation debt capacity remaining. 17 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Economic Factors and Next Year’s Budgets and Rates Bozeman has a 2022 population estimated to be 56,123 residents by the US Census Bureau which is almost 50% of the total population of Gallatin County. Between 2015-2019 the growth rate was 3.8% according to a Bozeman Economic Assessment conducted by Bridge Economic Development published in March 2023. As noted in the Transmittal Letter, Bozeman continues to be one of the fastest growing cities in the country, with a population increase of 2.9% per year over 11 years. This level of growth continues to put a huge demand on City services and City resources. Budgets in recent years have tried to reduce the impact of increasing cost of services and growth on homeowners in Bozeman. However, those policies resulted in significant deferred maintenance and a lack of funding to address it. As a result, the 2024 adopted budget includes significant revenue increases including 12% rate increases for water and sewer, 8% rate increases for stormwater, street maintenance district, and street arterial & collector district, 7% for parks & trails district, and 4% for tree maintenance/forestry. Property taxes are estimated to increase approximately 14% due primarily to an increase in the mill value as new assessed properties come on the tax roll. In addition, debt has been issued for the voter approved Fire Station 2 General Obligation Bonds and mills to pay the debt service have been added to the mill levy. The economic outlook and budget projections for next year are conservative. Increases in personnel costs will range from 5.0-6.5% based on bargaining unit contracts. The cost of infrastructure, contracted services, and right of way has increased significantly over the past few years resulting in significant inflation to the Capital plan. The City developed its next budget with the goal of toward maintaining current services in spite of significant growth pressures, supporting City Commission priorities, and supporting the City’s basic infrastructure. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions concerning the information provided in this report or requests for additional financial information should be addressed to: Finance Department P.O. Box 1230 Bozeman, MT 59771 This report is available online at https://www.bozeman.net/departments/finance The Notes to Financial Statements are an integral part of this statement 18 City of Bozeman, Montana Statement of Net Position June 30, 2023 Discretely Presented Primary Government Component UnitGovernmentalBusiness-Type Bozeman Public Activities Activities Total Library Foundation AssetsCash and cash equivalents 69,395,002$ 26,671,788$ 96,066,790$ 278,855$ Receivables (net of allowance for uncollectibles):Interest 237,319 154,203 391,522 17,000 Taxes 3,641,340 - 3,641,340 - Accounts 1,811,890 2,697,544 4,509,434 44,250 Special assessments 3,929,858 2,303 3,932,161 - Intergovernmental 840,421 196,137 1,036,558 - Leases - 333,289 333,289 - Notes receivable 815,477 - 815,477 - Prepaid items 563,120 - 563,120 86,271 Other assets 8,657 - 8,657 271,139 Restricted assetsCash and cash equivalents 26,853,944 31,717,329 58,571,273 - Investments - - - 5,571,466 Capital assets, net of accumulated depreciation/amortization, where applicableLand 38,072,640 2,218,553 40,291,193 - Artwork 15,000 - 15,000 10,046 Intangible - water rights - 2,762,142 2,762,142 - Construction in progress 19,466,651 6,575,780 26,042,431 - Buildings 55,371,446 84,178,187 139,549,633 - Improvements other than buildings - 162,646 162,646 - Machinery and equipment 9,028,316 3,205,949 12,234,265 - Infrastructure 173,969,574 238,650,448 412,620,022 - Vehicles 1,676,339 468,349 2,144,688 - Right-of-use lease assets 306,101 - 306,101 - Subscription-based IT assets 1,016,332 - 1,016,332 - Total assets 407,019,427 399,994,647 807,014,074 6,279,027 Deferred Outflows of ResourcesOther postemployment benefits 832,263 190,293 1,022,556 - Pension plans 7,418,451 1,112,332 8,530,783 - Total deferred outflows of resources 8,250,714 1,302,625 9,553,339 - The Notes to Financial Statements are an integral part of this statement 19 City of Bozeman, Montana Statement of Net Position June 30, 2023 Governmental Business-Type Bozeman PublicActivitiesActivitiesTotalLibrary Foundation LiabilitiesAccounts payable 14,481,072 2,467,624 16,948,696 10,168 Escheat property payable 169,120 - 169,120 - Retainage and other payables 555,447 163,379 718,826 - Accrued payroll 1,650 811 2,461 8,832 Accrued interest payable 22,531 - 22,531 - Unearned revenue 4,440,175 195,669 4,635,844 - DebtDue within one year, other than OPEBand pensions 6,746,376 4,099,354 10,845,730 - Due in more than one year, other than OPEBand pensions 64,478,403 42,560,770 107,039,173 - Total OPEB liability 3,688,009 762,549 4,450,558 - Net pension liability 26,808,548 5,334,884 32,143,432 - Total liabilities 121,391,331 55,585,040 176,976,371 19,000 Deferred Inflows of ResourcesOther postemployment benefits 1,063,147 216,794 1,279,941 - Pension plans 1,437,428 390,563 1,827,991 - Lease related - 326,355 326,355 - Total deferred outflows of resources 2,500,575 933,712 3,434,287 - Net PositionNet investment in capital assets 236,885,005 297,691,119 534,576,124 - Restricted forGeneral government 3,325,140 - 3,325,140 - Public safety 20,521,522 - 20,521,522 - Public service 5,097,597 - 5,097,597 - Public welfareExpendable 15,250,286 - 15,250,286 5,147,558 Nonexpendable 2,073,934 - 2,073,934 1,112,469 Debt service 697,209 3,263,510 3,960,719 - Capital improvements - 28,395,531 28,395,531 - Unrestricted 7,527,542 15,428,360 22,955,902 - Total net position 291,378,235$ 344,778,520$ 636,156,755$ 6,260,027$ Primary Government The Notes to Financial Statements are an integral part of this statement 20 City of Bozeman, Montana Statement of Activities Year Ended June 30, 2023 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Component UnitCharges for Grants and Grants and Governmental Business-Type Bozeman PublicFunctions/Programs Expenses Services Contributions Contributions Activities Activities Total Library Foundation Primary government Governmental activitiesGeneral government 17,726,413$ 7,128,575$ 10,184,404$ -$ (413,434)$ -$ (413,434)$ -$ Public safety 28,002,592 4,942,022 683,787 48,852 (22,327,931) - (22,327,931) - Public service 14,646,742 22,563,519 947,712 10,527,814 19,392,303 - 19,392,303 - Public welfare 15,343,285 1,687,204 1,027,858 3,937,454 (8,690,769) - (8,690,769) - Interest 2,070,117 - - - (2,070,117) - (2,070,117) - Total governmental activities 77,789,149 36,321,320 12,843,761 14,514,120 (14,109,948) - (14,109,948) - Business-type activities Water 13,882,728 14,886,895 1,343,403 4,965,344 - 7,312,914 7,312,914 - Waste water 11,979,470 12,343,552 44,223 4,625,847 - 5,034,152 5,034,152 - Solid waste 7,980,984 5,872,630 28,998 - - (2,079,356) (2,079,356) - Parking 1,565,405 968,042 7,029 - - (590,334) (590,334) - Stormwater 1,711,451 1,883,096 11,876 1,493,232 - 1,676,753 1,676,753 - Total business-type activities 37,120,038 35,954,215 1,435,529 11,084,423 - 11,354,129 11,354,129 - Total primary government 114,909,187$ 72,275,535$ 14,279,290$ 25,598,543$ (14,109,948) 11,354,129 (2,755,819) - Component Unit Bozeman Public Library FoundationGeneral government 2,446,482$ -$ 1,434,591$ -$ - - - (1,011,891) General revenuesProperty taxes 39,860,197 - 39,860,197 - Unrestricted intergovernmental 5,370,015 - 5,370,015 - Unrestricted investment earnings (losses)1,118,619 833,995 1,952,614 (557,166) Miscellaneous 1,225,899 226,026 1,451,925 26,393 Gain on disposal of assets 2,726,201 (13,856) 2,712,345 - Transfers (1,667,658) 1,667,658 - - Total general revenue and transfers 48,633,273 2,713,823 51,347,096 (530,773) Change in net position 34,523,325 14,067,952 48,591,277 (1,542,664) Net position - beginning 256,854,910 330,710,568 587,565,478 7,802,691 Net position - ending 291,378,235$ 344,778,520$ 636,156,755$ 6,260,027$ Primary Government Governmental Fund Financial Statements Major Governmental Funds General Fund – This fund accounts for the financial operations of the City, which are not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal expenditures in the General Fund are made for police and fire protection, public welfare, and general government. Street Maintenance District Special Revenue Fund – This special revenue fund accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. American Rescue Plan Act (ARPA) Special Revenue Fund – This fund accounts for the ARPA federal grant program. Grant funds must be used for the stated purpose of the grant and must meet grantor expenditure guidelines. Special Improvement District (SID) Debt Service – Accounts for the accumulation of resources and payment of special assessment bond principal and interest for general improvement, sidewalk, and curb construction projects. Construction Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments and general obligation debt other than those financed by proprietary funds. The Notes to Financial Statements are an integral part of this statement 21 City of Bozeman, Montana Balance Sheet - Governmental Funds June 30, 2023 Street Other Total Maintenance American SID Capital Governmental Governmental General District Rescue Plan Debt Service Projects Funds Funds Assets Cash 14,749,410$ 2,547,256$ 4,332,804$ 2,228,752$ 10,069,434$ 32,324,824$ 66,252,480$ Receivables (net of allowance for uncollectibles)Property taxes 2,431,051 - - - - 1,210,289 3,641,340 Accrued interest 38,856 6,570 11,386 5,088 25,259 140,578 227,737 Accounts 1,584,346 5,068 - - - 204,897 1,794,311 Special assessments - 131,914 - 3,677,271 - 120,673 3,929,858 Intergovernmental 45,633 400,050 - - - 394,738 840,421 Due from other funds 1,444,199 - - - - - 1,444,199 Advances to other funds - - - - - 641,763 641,763 Prepaid items 37,167 - - - - - 37,167 Notes receivable - - - - - 815,477 815,477 Restricted cash and investments 1,938,143 - - - 1,439,763 23,476,038 26,853,944 Total assets 22,268,805$ 3,090,858$ 4,344,190$ 5,911,111$ 11,534,456$ 59,329,277$ 106,478,697$ The Notes to Financial Statements are an integral part of this statement 22 City of Bozeman, Montana Balance Sheet - Governmental Funds June 30, 2023 Street Other Total Maintenance American SID Capital Governmental Governmental General District Rescue Plan Debt Service Projects Funds Funds Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities Accounts payable 5,563,506$ 1,104,195$ -$ 84,340$ 790,819$ 6,492,594$ 14,035,454$ Escheat property payable 143,414 678 - - - 25,028 169,120 Accrued payroll - - - - - 1,650 1,650 Interest payable 9,206 - - - - 11,173 20,379 Retainage payable 37,601 63,029 - - 275,914 178,903 555,447 Advances from other funds - - - 641,763 - - 641,763 Due to other funds - - - - - 543,293 543,293 Unearned revenue 43,500 77,224 4,289,401 - - 30,050 4,440,175 Total liabilities 5,797,227 1,245,126 4,289,401 726,103 1,066,733 7,282,691 20,407,281 Deferred Inflows of Resources Unavailable revenue - property taxes 156,197 - - - - 102,938 259,135 Unavailable revenue - special assessments - - - 3,666,668 - - 3,666,668 Unavailable revenue - court fines 1,237,376 - - - - - 1,237,376 Total deferred inflows of resources 1,393,573 - - 3,666,668 - 102,938 5,163,179 Fund Balance Nonspendable 37,167 - - - - 1,804,399 1,841,566 Restricted - 1,845,732 54,789 1,518,340 10,467,723 46,910,898 60,797,482 Committed 6,087,489 - - - - 603,360 6,690,849 Assigned - - - - - 2,927,964 2,927,964 Unassigned 8,953,349 - - - - (302,973) 8,650,376 Total fund balance 15,078,005 1,845,732 54,789 1,518,340 10,467,723 51,943,648 80,908,237 Total liabilities, deferred inflowsof resources, and fund balances 22,268,805$ 3,090,858$ 4,344,190$ 5,911,111$ 11,534,456$ 59,329,277$ 106,478,697$ The Notes to Financial Statements are an integral part of this statement 23 City of Bozeman, Montana Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2023 Total Fund Balances - Governmental Funds 80,908,237$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.298,922,399 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position.2,411,960 Other assets are not available to pay for current-period expenditures and, therefore, are either not recognized as a receivable or are unearned in the funds.5,163,179 Impact fee credits do not affect current financial resources and, therefore, are not reported in the governmental funds.(56,343) Deferred outflows and inflows of resources related to pensions and other postemployment benefits are applicable to future periods and, therefore, are not reported in the funds.5,750,139 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.(101,721,336) Net Position of Governmental Activities 291,378,235$ The Notes to Financial Statements are an integral part of this statement 24 City of Bozeman, Montana Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2023 Street Other TotalMaintenanceAmericanSIDCapital Governmental GovernmentalGeneralDistrictRescue Plan Debt Service Projects Funds Funds RevenuesTaxes 25,578,352$ -$ -$ -$ -$ 14,078,675$ 39,657,027$ Special assessments - 17,716 - 569,231 - 706,403 1,293,350 Licenses and permits 381,922 37,033 - - - 3,123,233 3,542,188 Intergovernmental 9,434,058 35,762 6,751,994 - - 1,868,173 18,089,987 Charges for services 6,307,168 8,220,620 - - - 15,608,720 30,136,508 Fines and forfeitures 1,009,841 - - - - 59,429 1,069,270 Interest on investments 171,669 41,037 196,050 57,674 243,848 1,036,820 1,747,098 Change in fair market value of investments (220,926) (19,675) 56,661 11,625 (106,668) (375,922) (654,905) Interest on loans receivable - - - - - 30,346 30,346 Miscellaneous 351,367 433,264 - - - 1,246,521 2,031,152 Total revenues 43,013,451 8,765,757 7,004,705 638,530 137,180 37,382,398 96,942,021 ExpendituresCurrentGeneral government 11,578,604 - - - - 3,422,533 15,001,137 Public safety 20,849,308 - - - 680,334 4,004,809 25,534,451 Public works - 7,080,982 - - 1,943 1,371,736 8,454,661 Public welfare 6,587,267 - - - 5,213 6,703,745 13,296,225 Other 1,683,415 - - - - 152,877 1,836,292 Capital outlay 3,107,362 2,155,485 - - 4,059,642 8,595,970 17,918,459 Debt servicePrincipal 186,259 307,904 - 391,928 - 3,041,427 3,927,518 Interest and fiscal charges 13,946 14,613 - 128,795 - 2,146,781 2,304,135 Total expenditures 44,006,161 9,558,984 - 520,723 4,747,132 29,439,878 88,272,878 Excess (Deficiency) of Revenuesover (under) Expenditures (992,710) (793,227) 7,004,705 117,807 (4,609,952) 7,942,520 8,669,143 Other Financing Sources (Uses)Transfers in 10,854,877 - - - 6,520,862 6,112,215 23,487,954 Transfers out (6,798,407) (206,363) (6,751,994) (3,002,709) (771,342) (7,624,797) (25,155,612) Issuance of long-term debt 637,867 862,620 - - - 511,185 2,011,672 Sale of capital assets 2,774,759 18,712 - - - 6,600 2,800,071 Total other financing sources (uses)7,469,096 674,969 (6,751,994) (3,002,709) 5,749,520 (994,797) 3,144,085 Net Change in Fund Balance 6,476,386 (118,258) 252,711 (2,884,902) 1,139,568 6,947,723 11,813,228 Fund Balance (Deficit), Beginning of Year 8,601,619 1,963,990 (197,922) 4,403,242 9,328,155 44,995,925 69,095,009 Fund Balance, End of Year 15,078,005$ 1,845,732$ 54,789$ 1,518,340$ 10,467,723$ 51,943,648$ 80,908,237$ The Notes to Financial Statements are an integral part of this statement 25 City of Bozeman, Montana Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2023 Net Change in Fund Balances - Total Governmental Funds 11,813,228$ Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities the cost of capital assets is allocated over their estimated useful lives as depreciation/amortization expense. When capital assets are dipsosed, the net effect is to reduce net position.23,145,747 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.(370,455) Internal service funds are used by management to charge the costs of certain activities toindividual funds. The net revenue (expense) of the internal service funds is reported in the governmental activities.(371,368) In the statement of activities compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for theseitems are measured by the amount of financial resources used.(596,725) In the statement of activities OPEB is measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used.(292,785) In the statement of activities the cost of pension benefits earned net of employee contributions is reported as pension expense. In the governmental funds, however, the contributions are reported as expense.(975,045) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums whendebt is first issued, whereas these amounts are deferred and amortized in thestatement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.2,170,728 Change in Net Position of Governmental Activities 34,523,325$ Proprietary Fund Financial Statements Proprietary funds are used to account for activities that receive significant support from fees and charges. The City has two types of proprietary funds: enterprise funds and internal service funds. Major Enterprise Funds Water Fund – This fund accounts for the City's water utility operations and to collect and administer water impact fees. Waste Water Fund – This fund accounts for the City's sewer utility operations and to collect and administer waste water impact fees. Solid Waste Fund – This fund accounts for the City’s garbage collection service and recycling operations. Internal Service Funds Internal Service Funds are used to account for goods and services provided by one department to other departments of the City on a cost-reimbursement basis. The City’s internal service funds are aggregated and presented in one column in the proprietary fund financial statements. The Notes to Financial Statements are an integral part of this statement 26 City of Bozeman, Montana Statement of Net Position Proprietary Funds June 30, 2023 Governmental Business-type Activities ActivitiesInternal Water Wastewater Solid Waste Nonmajor Funds Total Service Funds Assets Current Assets Cash and cash equivalents 18,274,858$ 4,937,213$ 305,666$ 3,154,051$ 26,671,788$ 3,142,522$ Receivables (net of allowance for uncollectibles):Interest 105,925 36,851 1,017 10,410 154,203 9,582 Accounts 935,658 983,691 592,963 185,232 2,697,544 17,579 Special assessments 1,802 142 293 66 2,303 - Intergovernmental 468 195,669 - - 196,137 - Leases 333,289 - - - 333,289 - Prepaid items - - - - - 525,953 Other current assets - - - - - 8,657 Total current assets 19,652,000 6,153,566 899,939 3,349,759 30,055,264 3,704,293 Noncurrent AssetsRestricted assetsInvestments 21,717,124 9,045,284 240,391 714,530 31,717,329 - Capital assets - Land 573,847 1,112,597 228,673 303,436 2,218,553 - Construction in progress 5,219,886 596,564 153,151 606,179 6,575,780 - Intangible water rights 2,762,142 - - - 2,762,142 - Buildings 40,717,384 63,113,469 769,975 11,962,292 116,563,120 1,546,120 Improvements other than buildings 13,646,910 14,745,401 2,155,300 - 30,547,611 - Machinery and equipment 2,069,741 3,765,557 7,031,970 1,244,358 14,111,626 746,036 Vehicles 665,045 723,533 548,499 384,670 2,321,747 213,395 Infrastructure 220,180,667 167,467,565 118,081 8,478,146 396,244,459 29,314 Right-of-use lease assets - - - - - 423,122 Less accumulated depreciation/amortization (122,668,171) (94,516,457) (8,595,222) (7,343,134) (233,122,984) (1,418,723) Total capital assets, net of accumulateddepreciation/amortization 163,167,451 157,008,229 2,410,427 15,635,947 338,222,054 1,539,264 Total noncurrent assets 184,884,575 166,053,513 2,650,818 16,350,477 369,939,383 1,539,264 Total assets 204,536,575 172,207,079 3,550,757 19,700,236 399,994,647 5,243,557 The Notes to Financial Statements are an integral part of this statement 27 City of Bozeman, Montana Statement of Net Position Proprietary Funds June 30, 2023 Governmental Business-type Activities Activities Internal Water Wastewater Solid Waste Nonmajor Funds Total Service Funds Deferred Outflows of ResourcesOther postemployment benefits 59,211 54,160 49,782 27,140 190,293 64,469 Pension plans 394,274 313,758 244,745 159,555 1,112,332 495,994 Total deferred outflows of resources 453,485 367,918 294,527 186,695 1,302,625 560,463 Liabilities Current Liabilities Accounts payable 581,017 861,389 891,642 132,037 2,466,085 389,275 Retainage payable 123,883 34,201 5,295 - 163,379 - Due to other funds - - - - - 900,906 Accrued payroll 2,132 - 218 - 2,350 - Accrued interest payable - - - - - 2,152 Current portion of long-term debt 1,592,614 2,207,799 140,034 158,907 4,099,354 - Unearned revenue - 195,669 - - 195,669 - Total current liabilities 2,299,646 3,299,058 1,037,189 290,944 6,926,837 1,292,333 Noncurrent LiabilitiesLandfill closure costs - - 2,359,259 - 2,359,259 - Solvent site remediation liabliity - 536,669 - - 536,669 - Long-term debt, net of current portion Bonds payable 14,593,000 23,888,000 - 1,109,000 39,590,000 - Leases payable - - - - - 381,167 Compensated absences 4,367 32,009 34,297 4,169 74,842 377,754 Total OPEB liability 223,958 245,638 198,508 94,445 762,549 262,234 Net pension liability 1,890,988 1,504,821 1,173,828 765,247 5,334,884 2,410,999 Total noncurrent liabilities 16,712,313 26,207,137 3,765,892 1,972,861 48,658,203 3,432,154 Total liabilities 19,011,959 29,506,195 4,803,081 2,263,805 55,585,040 4,724,487 The Notes to Financial Statements are an integral part of this statement 28 City of Bozeman, Montana Statement of Net Position Proprietary Funds June 30, 2023 GovernmentalBusiness-type Activities ActivitiesInternal Water Wastewater Solid Waste Nonmajor Funds Total Service Funds Deferred Inflows of Resources Other postemployment benefits 68,507 67,918 53,869 26,500 216,794 82,100 Pension plans 138,438 110,167 85,935 56,023 390,563 78,013 Lease related 326,355 - - - 326,355 - Total deferred inflows resources 533,300 178,085 139,804 82,523 933,712 160,113 Net Position Net investment in capital assets 147,756,553 133,243,140 2,265,098 14,426,328 297,691,119 1,158,097 Restricted for: Drought reserve 780,747 - - - 780,747 - Impact capital projects 19,451,114 6,680,373 - - 26,131,487 - Infrastructure capital projects 586,664 - - - 586,664 - Parking capital projects - - 240,391 656,242 896,633 - Debt service 898,599 2,364,911 - - 3,263,510 - Unrestricted 15,971,124 602,293 (3,603,090) 2,458,033 15,428,360 (238,677) Total net position 185,444,801$ 142,890,717$ (1,097,601)$ 17,540,603$ 344,778,520$ 919,420$ The Notes to Financial Statements are an integral part of this statement 29 City of Bozeman, Montana Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended June 30, 2023 GovernmentalBusiness-type Activities ActivitiesInternalWater Wastewater Solid Waste Nonmajor Funds Total Service Funds Operating RevenuesCharges for services 12,314,794$ 10,787,474$ 5,872,630$ 2,851,138$ 31,826,036$ 13,756,060$ Operating ExpensesSalaries and benefits 3,257,504 2,520,272 1,932,368 1,371,002 9,081,146 4,967,049 Materials and supplies 1,262,658 511,150 529,600 50,433 2,353,841 1,211,511 Repairs and maintenance 162,772 240,171 578,840 104,295 1,086,078 36,610 Utilities 311,948 864,303 879,873 48,614 2,104,738 40,838 Administrative charges 3,595,486 2,432,739 1,033,892 571,075 7,633,192 838,823 Other services 1,560,407 1,053,316 1,092,815 493,647 4,200,185 6,945,342 Depreciation/amortization 3,253,430 3,624,466 529,985 606,315 8,014,196 235,383 Change in estimated closure and post-closurecare costs - - 1,403,611 - 1,403,611 - Total operating expenses 13,404,205 11,246,417 7,980,984 3,245,381 35,876,987 14,275,556 Operating Loss (1,089,411) (458,943) (2,108,354) (394,243) (4,050,951) (519,496) The Notes to Financial Statements are an integral part of this statement 30 City of Bozeman, Montana Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended June 30, 2023 Governmental Business-type Activities ActivitiesInternalWater Wastewater Solid Waste Nonmajor Funds Total Service FundsNonoperating Revenues (Expenses)Gain (loss) on disposal of assets 157 - - (14,013) (13,856) 739 Interest income 847,904 305,935 8,498 84,920 1,247,257 64,885 Net (decrease) increase in fair market value of (303,157) (98,121) 2,054 (14,038) (413,262) (38,460) investmentsInterest expense and bond fees (478,523) (733,053) - (31,475) (1,243,051) (20,864) Intergovernmental revenues 1,343,403 44,223 28,998 18,905 1,435,529 70,789 Impact fees 2,572,101 1,556,078 - - 4,128,179 - Lease income 47,470 - - - 47,470 - Miscellaneous revenue 124,255 9,267 33,379 11,655 178,556 71,039 Total nonoperating revenues (expenses)4,153,610 1,084,329 72,929 55,954 5,366,822 148,128 Income (Loss) before Contributions and Transfers 3,064,199 625,386 (2,035,425) (338,289) 1,315,871 (371,368) - Transfers in 1,351,387 246,769 295,000 190,784 2,083,940 - Transfers out (278,855) (96,454) - (40,973) (416,282) - Capital contributions 4,965,344 4,625,847 - 1,493,232 11,084,423 - Change in Net Position 9,102,075 5,401,548 (1,740,425) 1,304,754 14,067,952 (371,368) Total Net Position, Beginning of Year 176,342,726 137,489,169 642,824 16,235,849 330,710,568 1,290,788 Total Net Position (Deficit), End of Year 185,444,801$ 142,890,717$ (1,097,601)$ 17,540,603$ 344,778,520$ 919,420$ The Notes to Financial Statements are an integral part of this statement 31 City of Bozeman, Montana Statement of Cash Flows Proprietary Funds Year Ended June 30, 2023 GovernmentalBusiness-type Activities ActivitiesWater Wastewater Solid Waste Nonmajor Funds Total Funds Operating Activities Receipts from customers and users 12,058,639$ 10,791,055$ 5,771,707$ 2,934,611$ 31,556,012$ 13,758,791$ Payments to suppliers (3,499,723) (2,756,427) (2,817,712) (1,034,770) (10,108,632) (8,149,535) Payments to and on behalf of employees (3,118,368) (2,551,549) (1,975,795) (1,294,080) (8,939,792) (4,689,268) Payments to internal service funds and administration (3,595,486) (2,432,739) (1,033,892) (571,075) (7,633,192) (838,823) Net Cash from (Used for) Operating Activities 1,845,062 3,050,340 (55,692) 34,686 4,874,396 81,165 Noncapital Financing Activities Transfers to other funds (278,855) (96,454) - (40,973) (416,282) - Transfers from other funds 1,351,387 246,769 295,000 190,784 2,083,940 - Intergovernmental operating grants 2,186,176 115,620 28,998 18,905 2,349,699 70,789 Impact fees 2,572,101 1,556,078 - - 4,128,179 - Miscellaneous income 124,255 9,267 33,379 11,655 178,556 71,039 Lease payments received 40,536 - - - 40,536 109,099 Net Cash from Noncapital Financing Activities 5,995,600 1,831,280 357,377 180,371 8,364,628 250,927 Capital and Related Financing ActivitiesProceeds from sale of assets 184 - - - 184 - Acquisition of capital assets (3,470,701) (1,255,884) (279,311) (492,899) (5,498,795) (106,181) Debt servicePrincipal (1,318,000) (1,993,321) - (84,000) (3,395,321) (95,743) Interest (478,523) (733,053) - (31,475) (1,243,051) (18,712) Net Cash Used for Capitaland Related Financing Activities (5,267,040) (3,982,258) (279,311) (608,374) (10,136,983) (220,636) Investing ActivityInterest and dividends from investments 482,970 186,618 10,157 65,450 745,195 20,396 Change in Cash and Cash Equivalents 3,056,592 1,085,980 32,531 (327,867) 3,847,236 131,852 Cash and Cash Equivalents, Beginning of Year 36,935,390 12,896,517 513,526 4,196,448 54,541,881 3,010,670 Cash and Cash Equivalents, End of Year 39,991,982$ 13,982,497$ 546,057$ 3,868,581$ 58,389,117$ 3,142,522$ The Notes to Financial Statements are an integral part of this statement 32 City of Bozeman, Montana Statement of Cash Flows Proprietary Funds Year Ended June 30, 2023 GovernmentalBusiness-type Activities Activities Internal ServiceWater Wastewater Solid Waste Nonmajor Funds Total Funds Reconciliation of Operating Loss toNet Cash from (Used for) Operating Activities Operating loss (1,089,411)$ (458,943)$ (2,108,354)$ (394,243)$ (4,050,951)$ (519,496)$ Adjustments to reconcile operating loss to net cash from (used for) operating activitiesDepreciation/amortization 3,253,430 3,624,466 529,985 606,315 8,014,196 235,383 Landfill closure/postclosure costs - - 1,403,611 1,403,611 - Changes in assets and liabilitiesAccounts receivable (254,375) (191,946) (100,977) 83,392 (463,906) 2,731 Special assessments receivable (1,780) (142) 54 81 (1,787) - Prepaid expenses - - - - - (59,417) Other assets - - - - - (8,657) Pension related deferred outflows (57,293) (18,581) (8,318) (30,648) (114,840) (95,730) OPEB related deferred outflows 20,599 16,036 13,754 7,179 57,568 26,190 Vouchers payable (231,390) 244,089 477,506 (337,781) 152,424 152,840 Retainage payable 29,452 (85,318) 5,295 - (50,571) - Payroll payable 253 1,793 - - 2,046 - Compensated absences 56,155 27,944 31,579 9,903 125,581 116,735 Unearned revenue - 195,669 - - 195,669 - Landfill closure accruals - - (219,385) - (219,385) - Solvent site remediation liablitiy - (246,258) - - (246,258) - Net pension liability 550,207 330,369 233,129 252,351 1,366,056 869,198 Total OPEB liability (38,752) (30,163) (25,871) (13,504) (108,290) (49,263) Pension related deferred inflows (434,895) (392,042) (316,319) (163,297) (1,306,553) (643,846) OPEB related deferred inflows 42,862 33,367 28,619 14,938 119,786 54,497 Net cash from (used for)operating activities 1,845,062$ 3,050,340$ (55,692)$ 34,686$ 4,874,396$ 81,165$ Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of capital assets throughcapital contributions and donations 4,965,344$ 4,625,847$ -$ 1,493,232$ 11,084,423$ -$ Acquisition of capital assets through debt -$ -$ -$ -$ -$ 70,767$ Fiduciary Fund Financial Statements Custodial Funds Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. Custodial funds are used to report fiduciary activities that are not required to be reported in pension (or other employee benefit) trust funds, investment trust funds, or private-purpose trust funds. The following custodial funds are included in the Fiduciary Fund financial statements: Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies. Municipal Court – Accounts for monies held for appearance bonds and restitution to criminal arrests and reimbursement for damage caused. The custodial funds are aggregated and presented in one column in the fiduciary fund financial statements. The Notes to Financial Statements are an integral part of this statement 33 City of Bozeman, Montana Statement of Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2023 Custodial Funds AssetsCash and cash equivalents 625,446$ Receivables (net of allowance for uncollectibles): Accounts 2,692 Total assets 628,138 Liabilities Deposits payable 580,359 Net Position Restricted forOther organization or individuals 47,779$ The Notes to Financial Statements are an integral part of this statement 34 City of Bozeman, Montana Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2023 Custodial Funds Additions Miscellaneous 572$ DeductionsTotal deductions - Change in Net Position 572 Net Position, Beginning 47,207 Net Position, Ending 47,779$ 35 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 1 - Summary of Significant Accounting Policies The City of Bozeman of Gallatin County, Montana (the City) was incorporated as a municipal corporation in 1883. The present City Code of Ordinances was adopted October 3, 2011. Under the charter, the City is governed by a mayor and four commission members who comprise the City Commission. The day-to-day affairs of the City are conducted under the supervision of the City Manager, who is appointed by and serves at the pleasure of a majority of the City Commission. The accompanying financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB), the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accompanying financial statements present the financial position of the City and the various funds and fund types, the results of operations of the City and the various funds and fund types, and the cash flows of the proprietary funds. The financial statements are presented as of June 30, 2023, and for the year then ended. The more significant accounting policies of the City are described below. The following is a summary of the City’s significant accounting policies: Reporting Entity The City has considered all potential component units for which it is financially accountable and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability in Statement 14, The Financial Reporting Entity, and Statement 61, The Financial Reporting Entity: Omnibus – an Amendment of GASB Statements No. 14 and No. 34. These criteria include appointing a voting majority of an organization's governing body and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the City. Determining whether certain organizations are component units, organizations that are legally separate, tax- exempt entities are required to be reported as a discretely presented component unit if the following criteria is met. • The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the City. • The City is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization. • The economic resources received or held by the separate organization that the City is entitled to or otherwise has the ability to access are significant. Discretely Presented Component Unit – The Bozeman Public Library Foundation (the Foundation) is a nonprofit agency organized to support the Bozeman Public Library through raising, receiving, administering, and disbursing funds, grants, bequests, and gifts for the sole benefit of the library. The resources were deemed to be significant and therefore, the Foundation is included as a discretely presented component unit under GASB Statement 39. 36 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The Foundation was incorporated with the State of Montana on August 29, 1983, and subsequently amended on December 15, 1989. The governing board consists of an elected president and elected members of the board of directors. Separately issued internal financial statements of the Foundation may be obtained by contacting the Foundation’s offices at 626 East Main Street, Bozeman, MT. 59715. The fiscal year end of the Foundation is December 31. Basis of Accounting/Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Certain amounts presented in the prior year data in these notes have been reclassified to be consistent with the current year’s presentation. Government-Wide Financial Statements The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) present information of all the non-fiduciary activities of the primary government and its component units. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Certain eliminations have been made as prescribed by GASB 34 in regards to inter-fund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated, except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The City applies all applicable GASB pronouncements including all National Council on Governmental Accounting Statements and Interpretations currently in effect. 37 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met those qualifications. All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures, and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in current net position. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources which have been treated as susceptible to accrual by the City are property taxes, intergovernmental revenues, and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. The City has elected to apply the early recognition option of recognizing debt services expenditures provided by GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. Under this option, an expenditure and a liability are recorded in debt service funds in the current year for amounts due early in the following year, for which resources have been provided during the current year. The City reports the following major governmental funds: General Fund – This fund accounts for the financial operations of the City, which are not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal expenditures in the General Fund are made for police and fire protection, public welfare, and general government. Street Maintenance District Special Revenue Fund – This special revenue fund accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. American Rescue Plan Act (ARPA) Special Revenue Fund – This fund accounts for the ARPA federal grant program. Grant funds must be used for the stated purpose of the grant and must meet grantor expenditure guidelines. Special Improvement District (SID) Debt Service – Accounts for the accumulation of resources and payment of special assessment bond principal and interest for general improvement, sidewalk, and curb construction projects. Construction Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments and general obligation debt other than those financed by proprietary funds. 38 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position, and a Statement of Cash Flows for each major proprietary fund. A column representing internal service funds is also presented with the Proprietary Fund Financial Statements. Internal service balances and activities, however, have been combined with the governmental activities in the Government-Wide Financial Statements. Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. The City reports the following major proprietary funds: Water Fund – This fund accounts for the City's water utility operations and to collect and administer water impact fees. Waste Water Fund – This fund accounts for the City's sewer utility operations and to collect and administer waste water impact fees. Solid Waste Fund – This fund accounts for the City’s garbage collection service and recycling operations. Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City’s Fiduciary Funds represent custodial funds. Custodial funds are custodial in nature (assets equal liabilities) and use the economic resources measurement focus. These funds are accounted for using the accrual basis of accounting. The following custodial funds are included in the Fiduciary Fund financial statements: Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies. Municipal Court Fund – Accounts for monies held for appearance bonds and restitution related to criminal arrests and reimbursement for damage caused. 39 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Internal Service Funds Internal Service Funds are used to account for goods and services provided by one department to other departments of the City on a cost-reimbursement basis. These direct costs and certain indirect costs are included as part of the program expense reported for the individual functions and activities of these other departments. The following Internal Service Funds are included in the Proprietary Fund Financial Statements: Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in the operation of City services. Medical Health Insurance – Accounts for insurance premium revenues received from the various City departments and retirees, and the related costs of health, vision, and dental insurance premiums incurred by City employees and retirees. Public Works Administration – Accounts for the professional level management, engineering, and GIS technical support provided to other Public Works divisions, including water, wastewater, solid waste, stormwater, in addition to support provided to other City departments. Cash and Cash Equivalents Cash and investments are under the management of the City's Treasurer and consist primarily of demand deposits and investments in U.S. Government Bonds. Interest income earned as a result of pooling of City deposits is distributed to the appropriate funds utilizing a formula based on the average balance of cash and investments of each fund. Montana State statutes authorize the City to invest in interest-bearing savings accounts, certificates of deposits, and time deposits insured up to $250,000 by the Federal Deposit Insurance Corporation or fully collateralized, U.S. government and U.S. agency obligations and repurchase agreements where there is a master repurchase agreement and collateral held by a third party. Restricted Cash and Investments Restricted cash and investments are those whose use is restricted to specific purposes by state statute, bond indenture, or otherwise. The City’s restricted cash and investments are primarily restricted for construction and maintenance of City infrastructure, debt service and urban renewal. Investments Fair Value The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets (these investments are valued using prices quoted in active markets); Level 2 inputs are significant other observable inputs (these investments are valued using matrix pricing); Level 3 inputs are significant unobservable inputs (these investments are valued using consensus pricing). 40 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Property Taxes Real property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien Date: December 1st for the 1st installment and June 1st for the 2nd installment Levy Date: November 1st Due Dates: November 30th for the 1st installment and May 31 for the 2nd installment Personal property taxes are assessed on January 1 of each year and billed in May, with payment due within thirty days. Gallatin County collects all property taxes on behalf of the City and remits collections, including penalties and interest, on a monthly basis. The County assesses a delinquency penalty of 2%. If taxes become delinquent, the County tax collector may sell the property to collect taxes due plus 0.83% per month interest. In the fund financial statements, the City accrues as receivable all property taxes received during the first sixty (60) days of the new fiscal year from Gallatin County, in accordance with the modified accrual basis. In the government-wide financial statements, all taxes billed, but not yet collected are accrued in accordance with the full accrual basis of accounting, as described in Note 1. Special Assessments Special assessments receivable represents the uncollected amounts levied against benefited property for the cost of local improvements. Assessments are payable over a period of 18 to 20 years and bear interest of 2.5% to 5.75% per annum. Recognition of the revenues from these assessments has been deferred until both measurable and available in governmental funds. In the Government-Wide Financial Statements, however, these amounts are reported as revenues in the period they are levied. Once received, the monies will be used to meet the annual debt service requirements on related bonds and notes payable. Interfund Receivables and Payables All outstanding balances between funds are reported as “due to/from other funds” (current portion) or “advances to/from other funds” (non-current portion). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Lease Receivables Lease receivables are recorded by the City as the present value of future lease payments expected to be received from the lessee during the lease term, reduced by any provision for estimated uncollectible amounts. Lease receivables are subsequently reduced over the life of the lease as cash is received in the applicable reporting period. The present value of future lease payments to be received are discounted based on the interest rate the City charges the lessee. 41 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods (consumption method) and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital assets at $5,000. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value. Depreciable capital assets are reported on the Statement of Net Position, net of applicable accumulated depreciation. Capital assets which are not depreciable such as land, works of art, and construction in progress, are reported separately. Depreciation expense is reported in the Statement of Activities and is calculated using the straight-line method based on the assets estimated useful life. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Buildings 20-80 yearsOther structures and improvements 10-100 years Infrastructure/flood control 25-100 yearsMachinery and equipment 5-30 years Vehicles 5-10 years The City defines infrastructure as the basic physical assets that allow the City to function. These assets include the street system, comprised of roads, sidewalks, curbs, and street lights; the water purification and distribution system; the sewer collection and treatment system; park and recreation lands and related improvements; stormwater conveyance system; and buildings and site amenities, including parking and landscaped areas. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Right-of-use lease assets are recognized at the lease commencement date and represent the City’s right to use an underlying asset for the lease term. Right-of-use lease assets are measured at the initial value of the lease liability plus any payments made to the lessor before commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term, plus any initial direct costs necessary to place the lease asset into service. Right-of-use lease assets are amortized over the shorter of the lease term or useful life of the underlying asset using the straight-line method. The amortization period varies from 1 to 4 years. Right to use subscription IT assets are recognized at the subscription commencement date and represent the City’s right to use the underlying IT asset for the subscription term. Right to use subscription IT assets are measured at the initial value of the subscription liability plus any payments made to the vendor at the commencement of the subscription term, less any subscription incentives received from the vendor at or before the commencement of the subscription term, plus any capitalizable initial implementation costs necessary to place the subscription asset into service. Right to use subscription IT assets are amortized over the shorter of the subscription term or useful life of the underlying asset using the straight-line method. The amortization period varies from 2 to 5 years. 42 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Long-Term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long- term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds on a straight-line basis over the term of the related issue. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Lease liabilities represent the City’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments expected to be made during the lease term. The present value of lease payments is discounted based on a borrowing rate determined by the City. Subscription liabilities represent the City’s obligation to make subscription payments arising from the subscription contract. Subscription liabilities are recognized at the subscription commencement date based on the present value of future subscription payments expected to be made during the subscription term. The present value of subscription payments is discounted based on a borrowing rate determined by the City. Compensated Absences Earned but unpaid vacation and sick pay is included as a liability in the proprietary fund types and Government- Wide Financial Statements. The portion relating to the governmental fund types not expected to be paid with expendable, and available resources is not reported in the governmental fund statements unless the liability has matured (i.e., unused reimbursable leave still outstanding following an employee's resignation or retirement). On-Behalf Payments for Fringe Benefits On-behalf payments for fringe benefits are direct payments made by one entity to a third-party recipient for the employees of another legally separate entity. On-behalf payments include pension plan contributions. The State's pension contribution is recorded as intergovernmental revenue with an offsetting public safety or general government expenditure in the Pension Special Revenue Fund (see Note 11). Postemployment Benefits Other Than Pensions (OPEB) Under the provisions of the various employee and union contracts, the District provides certain postemployment benefits other than pensions to eligible retirees. These OPEB obligations are funded on a pay-as-you-go basis. The total OPEB liability, deferred outflows/inflows of resources, and OPEB expense were actuarially determined in accordance with GASB Statement No. 75. Additional information can be found in Note 10. 43 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Pensions Montana Public Employees’ Retirement Association (MPERA) prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). Additional information can be found in Note 11. Deferred Outflows and Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City has three items that qualify for reporting in this category. They are the contributions made to pension plans after the measurement date and prior to the fiscal year-end, changes in the net pension liability not included in pension expense, and changes in the total other post employments benefits liability not included in OPEB expense, reported in the district-wide statement of net position. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has four types of items that qualify for reporting in this category. The City reports unavailable revenues from property taxes, special assessments, and court fines on the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The second item is deferred inflows related to leases where the City is the lessor and is reported in the governmental funds balance sheet and statement of net position. The deferred inflows of resources related to leases are recognized as an inflow of resources (revenue) on the straight-line basis over the term of the lease. The other items are changes in the net pension liability not included in pension expense and changes in the total other post-employment benefits liability not included in OPEB expense reported in the district-wide statement of net position. 44 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Net Position Net position represents the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources in the City’s financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation/amortization, and unspent bond proceeds for capital purposes reduced by the outstanding balances of any long-term debt or lease attributable to the acquisition, construction, or improvement of those assets, retainage payable, and accounts payable related to capital asset construction. Net position is reported as restricted when there are limitations imposed on its use either through enabling legislation or through external restrictions imposed by creditors, grantors, or laws and regulations of other governments. Unrestricted net position is the net amount of assets and liabilities that are not included in the determination of net investment in capital assets or the restricted component of net position. When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first. As a nonprofit organization operating under the Financial Accounting Standards Board (FASB), the Foundation reports net position with restricted or unrestricted funds, in accordance with donor requests. Fund Balance In accordance with GASB Statement 54, the City reports fund balance for governmental funds in two general classifications, nonspendable and spendable. Nonspendable Fund Balance – represents the portion of fund balance that is not in spendable form, such as inventories, and, in the general fund, long-term notes and loans receivable. Spendable fund balance is further categorized as restricted, committed, assigned, and unassigned. Restricted Fund Balance – balances that can be spent only for the specific purposes stipulated by external parties or through enabling legislation. External parties include grantors, debt covenants, votes, and laws and regulations of other governments. Committed Fund Balance – amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority, the City Commission. The City Commission needs to formally adopt a Resolution in order to establish, modify, or rescind a fund balance commitment. Assigned Fund Balance – amounts intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. The City’s policy to authorize the assignment of fund balance is as follows: Assigned Fund Balance can be expressed and authorized directly by the City Commission or by an official to whom the Commission delegates the authority. The City Commission delegates this authority to the City Manager. Included in the assigned fund balance for the general fund are assignments for the portion of the current general fund balance that is projected to be used to fund expenditures and other cash outflows in excess of the expected revenues and other cash inflows projected for the next fiscal year. 45 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Unassigned Fund Balance – the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. When both restricted and unrestricted resources are available, spending will occur in the following order, for the identified fund types: General Fund: Restricted, Committed, Assigned, Unassigned Special Revenue Funds: Restricted, Committed, Assigned Debt Service Funds: Assigned, Committed, Restricted Capital Projects Funds: Restricted, Committed, Assigned Minimum General Fund – Fund Balance The City does not maintain a stabilization fund. However, the City’s Charter requires an established minimum level of “General Fund Unreserved Fund Balance,” in accordance with the Government Finance Officers’ Association (GFOA) Best Practices, of 2 months or 16.67%, of operating revenues. Implementation of GASB Statement No. 96 As of July 1, 2022, the City adopted GASB Statement No. 96, Subscription‐Based Information Technology Arrangements (SBITAs). The implementation of this standard establishes that a SBITA results in a right to use subscription IT asset -an intangible asset - and a corresponding liability. The standard provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA. The Statement requires recognition of certain SBITA assets and liabilities for SBITAs that previously were recognized as outflows of resources based on the payment provisions of the contract. There was no change to beginning balances of the right to use subscription asset and subscription liability as a result of implementing this standard. As a result of these adjustments there was no effect on beginning net position. The additional disclosures required by this standard are included in Notes 6 and 9. 46 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 2 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government – wide statement of net position. One element of that reconciliation explains that “long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.” The details of this difference are as follows: Bonds payable 58,940,056$ Notes payable 2,045,505 Unamortized premium 4,230,082 Financed purchases payable 872,674 Leases payable 343,801 SBITAs 853,425 Compensated absences 3,939,236 Total OPEB liability 3,688,009 Net pension liability 26,808,548 Net adjustment to reduce fund balance - total governmentalfunds to arrive at net position - governmental activities 101,721,336$ Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities the cost of capital assets is allocated over their estimated useful lives and reported as depreciation/amortization expense.” 47 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The details of this difference are as follows: Capital outlay reported in fund financial statements 17,918,459$ Plus: donated/contributed assets 14,514,120 Plus: assets purchased by internal service funds 176,948 Plus: prior year construction in progress added as asset in current year 40,982,806 Capital asset increases per Note 6 73,592,333$ Less: assets transferred out to enterprise funds (21,909) Less: assets disposed (931,647) Less: prior year construction in progress added as asset in current year (40,982,806) Capital asset decreases per Note 6 (41,936,362) Depreciation/amortization expense (9,447,606) Accumulated depreciation/amortization increases per Note 6 (9,447,606) Less: accumulated depreciation on assets transferred out to enterprise funds 21,909 Less: accumulated depreciation/amortization on assets disposed 857,038 Accumulated depreciation/amortization decreases per Note 6 878,947 Capital assets purchased by internal service funds (176,948) Depreciation/amortization expense included in net expense of internal service funds 235,383 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities 23,145,747$ Another element of that reconciliation states that “The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.” The details of this difference are as follows: Principal payments on bonded debt 3,102,731$ Principal payments on notes payable 277,077 Amortization of premium on bonded debt 254,882 Issuance of financed purchases payable (929,222) Principal payments on financed purchases payable 266,172 Principal payments on leases payable 77,489 Issuance of SBITAs (1,153,217) Principal payments on SBITA 299,792 Issuance of debt recorded in internal service funds 70,767 Principal payments recorded in internal service funds (95,743) Net adjustment to net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities 2,170,728$ 48 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 3 - Stewardship, Compliance, and Accountability Budgets Each year, the City Manager must submit to the City Commission a proposed operating budget for all budget units within the City for the fiscal year commencing July 1. This operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted to obtain citizen comments on the proposed budget. The budget is then legally adopted through passage of the appropriation resolution by the City Commission. The City adopts a final budget each June and amends the budget in August if the initial taxable value estimates were significantly different from the final Certified Values received from the State. Budgets are legally required for all governmental fund types. These budgets are prepared on the same basis and using the same accounting practices as are used to account and prepare financial reports for the funds. Budgets presented in this report for comparison to actual amounts are presented in accordance with GAAP. Annual appropriated budgets are adopted for all funds and all appropriations lapse at year-end. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established at the service area level. The City Commission may amend the budget during the course of the fiscal year. Montana state statute provides a number of different ways to amend the budget. The first involves a reallocation of existing appropriations among the line items within a specific fund. The second defines a series of scenarios where the governing body has authority to amend the budget without a hearing for donations, land sales, and fee-based budgets. All other increases in appropriation authority that are not specifically permitted by statute must be approved through a public hearing process. Any accruing revenue of the municipality not appropriated and any balance at any time remaining after the purpose of an appropriation has been satisfied or abandoned, may from time to time be appropriated to other uses that do not conflict with any uses for which specifically the revenue was accrued. A public hearing is required for an overall increase in appropriation authority, except in the case of an emergency. In its annual appropriation resolution, the City Commission delegated budget amendment authority to the City Manager for the expenditure of funds from any or all of the following: debt service funds, enterprise funds, internal service funds, trust funds, federal and state grants accepted and approved by the governing body, special assessments, and donations. In all other funds, the City Manager may, without approval from the City Commission, make budget amendments as long as the total appropriation for the department is not exceeded. Spending control is established by the total amount of expenditures budgeted for each service area, but management may exercise control at budgetary line items. 49 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Deficit Fund Balance/Net Position The following funds had a deficit fund balance/net position at December 31, 2023: Governmental FundsNonmajor Funds General Obligation Bonds 290,217$ Proprietary FundsEnterprise Funds Solid Waste 1,097,601 Internal Service FundsVehicle Maintenance Shop 723,685 The deficit fund balance in General Obligation Bonds fund is due to a timing difference between the debt payment related to Fire Station 2 bonds and tax collections. The city elects to pay debt payments due on July 1st on or just before June 30th each fiscal year. The taxes related to the July 1st payment will be collected in fiscal year 2024. The deficit fund balance in the Solid Waste fund resulted from rates for solid waste services not increasing with the costs of operations. The city had not increased residential solid waste rates in over three years. Based on a thorough rate setting analysis the city implemented new solid waste rates in fiscal year 2024 that incorporates funding for the fund balance deficit. The deficit fund balance in Vehicle Maintenance Shop fund is due to an increase in the materials and supplies and salaries and benefits expenses. The City will re-evaluate the internal allocations to keep pace with increasing costs as well as recover the fund balance deficit that has accumulated over the last two fiscal years. Note 4 - Cash and Investments At June 30, 2023, the carrying amount of the City's deposits in local banks and investments was $5,403,616. Interest bearing account balances are covered by the Federal Depository Insurance Corporation (FDIC) up to $250,000 per bank, per depositor. In addition, all noninterest bearing transaction account balances are fully insured by FDIC coverage. Interest bearing account balances not insured by FDIC coverage is $5,158,704. This remaining balance is covered by collateral held by the pledging bank's agent in the City's name. 50 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The City’s cash and investments are reported as follows: Cash and cash equivalents Statement of net position 96,066,790$ Statement of fiduciary net position 625,446 Restricted cash and cash equivalentsStatement of net position 58,571,273 155,263,509$ Deposits 1,853,665$ Investments 153,409,844 155,263,509$ Custodial Credit Risk – Custodial credit risk for deposits is the risk that in the event of a financial institution failure, the City’s deposits may not be returned or the City will not be able to recover the collateral securities in the possession of the outside party. The City minimizes custodial credit risk by restrictions set forth in City policy and state law. The City’s policy requires deposits to be 104 percent secured by collateral valued at market value. The City Treasurer maintains a listing of financial institutions, which are approved for investment purposes. Types of securities that may be pledged as collateral are detailed in Section 17-6-103 of the Montana Code Annotated (MCA). City policy requires that specific safeguards against risk of loss be evidenced when the City does not physically hold the securities. Interest Rate Risk – Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City’s investment policy limits investing funds primarily in short- and intermediate-term liquid securities of high credit quality to ensure adequate liquidity and minimize the impact of changes in interest rates. Portfolios are structured so that securities mature concurrent with cash needs to meet anticipated demands. Credit Risk – Credit risk is defined as the risk that an issuer or other counterpart to an investment that will not fulfill its obligation. The above credit risk rating indicates the probability that the issuer may default in making timely principal and interest payments. The credit ratings presented in the following table are provided by Standard and Poor’s Corporation (S&P). The City’s investment policy is to hold investments to maturity with the contractual understanding that these investments are low risk, locked in to a guaranteed rate of return, and are, therefore, not impacted significantly by changes in short term interest rates. 51 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 On June 30, 2023, the following interest rate and credit risks and valuation inputs were associated with the City’s deposits and investments. Maturities (in Years)Investment Type Credit Rating Fair Value Not Applicable < 1 1 - 5 Primary GovernmentU.S. Government bonds S&P AA+88,859,930$ -$ 15,639,940$ 73,219,990$ Corporate Bonds S&P AA+994,870 - - 994,870 Certificates of Deposit N/A 1,200,000 1,200,000 - - MMIA Account N/A 2,355,044 2,355,044 - - State of Montana Short Term Investment Pool N/A 60,000,000 60,000,000 - 153,409,844$ 63,555,044$ 15,639,940$ 74,214,860$ The City voluntarily participates in the STIP (Short Term Investment Pool) administered by the Montana Board of Investments (MBOI). A local government’s STIP ownership is represented by shares, the prices of which are fixed at $1.00 per share, and participants may buy or sell shares with one business days’ notice. STIP administrative expenses are charged daily against the STIP income, which is distributed on the first calendar day of each month. Shareholders have the option to automatically reinvest their distribution income in additional shares. STIP is not registered with the Securities and Exchange Commission. STIP is not FDIC insured or otherwise insured or guaranteed by the federal government, the State of Montana, the Montana Board of Investments (MBOI) or any other entity against investment losses and there is no guaranteed rate of return on funds invested in STIP shares. The MBOI maintains a reserve fund to offset possible losses and limit fluctuations in STIP’s valuation. The STIP investment portfolio consists of securities with maximum maturity of 2 years. Information on investments held in the STIP can be found in the Annual Report on the MBOI website at https://investmentmt.com/Annual-Reports. Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City’s investment policy diversifies the portfolios by limiting investments to avoid overconcentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities and the State of Montana Investment Pool). No more than 40% of the total portfolio may be with any one financial institution, excluding the State of Montana Investment Pool. The City’s investment policy also has limits on the following allowable deposits and investments: repurchase agreements shall not exceed 25 percent of the City’s portfolio or $3,000,000, certificates of deposit issued by commercial banks shall not exceed 25% of the City’s portfolio, and certificates of deposit issued by savings and loan associations shall not exceed 5% of the City’s portfolio. No more than 30% of the total portfolio may be invested in certificates of deposit with any one financial institution, and each financial institution must be a member of the FDIC. None of the established limits were exceeded as of June 30, 2023. Fair Value – The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are described as follows: Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the City has the ability to access. 52 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Level 2 – Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets: Quoted prices for identical or similar assets or liabilities in active markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Inputs to the valuation methodology that are unobservable and significant to the fair value measurement. The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table presents the assets measure at fair value on a recurring basis, except those measured at net asset value (NAV) and cost as identified below, at June 30, 2023: Total Level 1 Level 2 Level 3Primary Government US Government Bonds 88,859,930$ -$ 88,859,930$ -$ Corporate Bonds 994,870 - 994,870 - 89,854,800$ -$ 89,854,800$ -$ U.S. Government and Agency securities, money market mutual funds, and certificates of deposit classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for these securities. Corporate bonds, municipal bonds, corporate commercial paper, bond and equity mutual funds classified in Level 2 of the fair value hierarchy are valued using techniques such as quoted prices for similar investments in active and inactive markets as well as inputs other than quoted prices that are observable for these assets. Investments with the STIP totaling $60,000,000 are measured at net asset value (NAV) and are not subject to GASB 72 leveling. Investments in certificates of deposit and MMIA accounts are measured at cost and are not subject to GASB 72 leveling. The Foundation reports its cash and investments at December 31, 2022, as follows. Investments are considered to be Level 1. Cash and InvestmentsCash and cash equivalents 278,855$ Restricted investments 5,571,466 Total Cash and Investments 5,850,321$ 53 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 5 - Notes Receivable Loans receivable as of June 30, 2023, were as follows: Loan Program Interest Rate Maturity Date Amount Economic Development Loan Fund 3.0-8.0% 2024-2028 797,979$ Community Housing Fund 0%2026 17,498 815,477$ Note 6 - Capital Assets Governmental activities capital asset activity for the year ended June 30, 2023, was as follows: Beginning EndingBalance Increases Decreases Balance Governmental ActivitiesCapital assets, not being depreciated/amortizedLand 37,398,008$ 674,632$ -$ 38,072,640$ Artwork - 15,000 - 15,000 Construction in progress 46,799,648 13,649,809 40,982,806 19,466,651 Total capital assets, not beingdepreciated/amortized 84,197,656 14,339,441 40,982,806 57,554,291 Capital assets, being depreciated/amortizedBuildings 35,527,210 41,635,817 299,963 76,863,064 Machinery and equipment 20,410,289 3,503,550 547,733 23,366,106 Infrastructure 265,265,236 12,349,705 - 277,614,941 Vehicles 4,890,181 609,818 105,860 5,394,139 Right-of-use lease building 423,122 - - 423,122 Right-of-use lease vehicles 19,833 - - 19,833 Subscription-based IT assets - 1,154,002 - 1,154,002 Total capital assets, being depreciated/amortized 326,535,871 59,252,892 953,556 384,835,207 Less accumulated depreciation/amortization forBuildings 20,345,822 1,411,373 265,577 21,491,618 Machinery and equipment 13,136,904 1,707,871 506,985 14,337,790 Infrastructure 97,857,844 5,787,523 - 103,645,367 Vehicles 3,512,252 311,933 106,385 3,717,800 Right-of-use lease assets 45,618 91,236 - 136,854 Subscription-based IT assets - 137,670 - 137,670 Total accumulated depreciation/amortizatio 134,898,440 9,447,606 878,947 143,467,099 Total capital assets, being depreciated/amortized, net 191,637,431 49,805,286 74,609 241,368,108 Governmental Activities Capital Assets, Net 275,835,087$ 64,144,727$ 41,057,415$ 298,922,399$ 54 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Depreciation/amortization expense was charged to functions/programs of the government as follows: Governmental activitiesGeneral government 435,502$ Public safety 1,618,276 Public works 5,737,326 Public health and welfare 1,656,502 Total depreciation/amortization expense -governmental activities 9,447,606$ Business-type activities capital asset activity for the year ended June 30, 2023, was as follows: Beginning EndingBalance Increases Decreases Balance Business-Type ActivitiesCapital assets, not being depreciatedLand 2,218,553$ -$ -$ 2,218,553$ Intangible water rights 2,762,142 - - 2,762,142 Construction in progress 24,053,162 3,970,767 21,448,149 6,575,780 Total capital assets, not being depreciated 29,033,857 3,970,767 21,448,149 11,556,475 Capital assets, being depreciatedBuildings 113,909,343 2,659,559 5,783 116,563,119 Improvements other than buildings 30,547,611 - - 30,547,611 Machinery and equipment 13,399,592 719,256 7,223 14,111,625 Infrastructure 365,552,192 30,692,267 - 396,244,459 Vehicles 2,325,217 - 3,470 2,321,747 Total capital assets, being depreciated 525,733,955 34,071,082 16,476 559,788,561 Less accumulated depreciation forBuildings 29,727,515 2,661,318 3,906 32,384,927 Improvements other than buildings 30,126,930 257,634 - 30,384,564 Machinery and equipment 10,065,031 847,870 7,223 10,905,678 Infrastructure 153,418,794 4,175,621 - 157,594,415 Vehicles 1,762,470 93,663 2,735 1,853,398 Total accumulated depreciation 225,100,740 8,036,106 13,864 233,122,982 Total capital assets, being depreciated, net 300,633,215 26,034,976 2,612 326,665,579 Business-Type Activities Capital Assets, Net 329,667,072$ 30,005,743$ 21,450,761$ 338,222,054$ Depreciation increases include $21,910 of accumulated depreciation on assets transferred from governmental activities. 55 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Depreciation expense was charged to functions/programs of the government as follows: Business-type activitiesWater 3,253,430$ Waste Water 3,624,466 Solid Waste 529,985 Parking 400,734 Storm Water 205,581 Total depreciation expense - business-type activities 8,014,196$ Note 7 - Long-Term Debt The following is a summary of changes in long-term debt of the City for the year ended December 31, 2023: Beginning Ending Due WithinBalanceAdditions Reductions Balance One Year Governmental ActivitiesBonds payableGeneral obligation bonds 47,990,000$ -$ 2,225,000$ 45,765,000$ 2,300,000$ Tax increment financingbonds 10,288,570 - 485,803 9,802,767 501,468 Special assessment bonds 3,764,217 - 391,928 3,372,289 204,722 Total bonds payable 62,042,787 - 3,102,731 58,940,056 3,006,190 Notes payableNotes payable 1,886,950 - 167,627 1,719,323 285,104 Intercap notes payable 435,632 - 109,450 326,182 44,371 Total notes payable 2,322,582 - 277,077 2,045,505 329,475 Unamortized premium 4,484,964 - 254,882 4,230,082 254,882 Financed purchases payable 209,624 929,222 266,172 872,674 157,210 Leases payable 421,290 - 77,489 343,801 85,131 Subscription IT agreements - 1,153,217 299,792 853,425 254,988 Compensated absences 3,225,776 3,371,915 2,658,455 3,939,236 2,658,500 72,707,023$ 5,454,354$ 6,936,598$ 71,224,779$ 6,746,376$ Business-Type ActivitiesBonds payableWater revenue bonds 17,267,000$ -$ 1,318,000$ 15,949,000$ 1,356,000$ Waste water revenue bonds 27,932,321 1,993,321 25,939,000 2,051,000 Stormwater revenue bonds 1,280,000 - 84,000 1,196,000 87,000 Total bonds payable 46,479,321 - 3,395,321 43,084,000 3,494,000 Landfill closure/postclosure 1,175,032 1,184,227 - 2,359,259 - Pollution remediation obligation 782,927 - 246,258 536,669 - Compensated absences 554,615 743,869 618,288 680,196 605,354 48,991,895$ 1,928,096$ 4,259,867$ 46,660,124$ 4,099,354$ 56 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Bonds Payable At June 30, 2023, the City had the following bond issuances outstanding: PrincipalFinal Maturity Interest Rate Original Issue Outstanding Governmental Activities:General obligation bondsTOP Bonds, Series 2013 2034 2.00 - 4.00%9,900,000$ 6,270,000$ TOP Bonds, Series 2014 2035 2.00 - 4.00%5,100,000 3,470,000 BPSC Bonds, Series 2019 2039 2.00 - 4.00%34,405,000 29,500,000 Refunding Bonds, Series 2022 2042 4.00 - 5.00%25,640,000 6,525,000 Total general obligation bonds 75,045,000$ 45,765,000$ Tax increment financing bondsRefunding Bonds, Series 2020 2032 2.44%3,689,000$ 2,657,000$ Series 2017 2042 4.10%1,446,000 1,185,767 Series 2020 2044 2.00 - 4.00%6,325,000 5,960,000 Total sales tax revenue bonds 11,460,000$ 9,802,767$ Special assessment bondsSpecial Improvement District No. 747, Series 2020 2040 3.175%4,001,000$ 3,333,789$ Note payable to Department of Natural Resources and Conservation, #WRF-05067 2024 3.750%94,000 18,000 Note payable to Department of Natural Resources and Conservation, #SRF-05132 2024 3.750%400,000 20,500 Total taxable appropriation bonds 4,495,000$ 3,372,289$ Total governmental activities 91,000,000$ 58,940,056$ Business-Type ActivitiesWater revenue bonds Series 2011A 2032 3.00%9,491,000$ 5,009,000$ Series 2011B 2033 3.00%9,552,000 5,257,000 Series 2017 2037 2.50%7,573,000 5,683,000 Total water revenue bonds 26,616,000$ 15,949,000$ Waste water revenue bondsSeries 2010B 2030 1.75%359,300$ 131,000$ Series 2010D 2030 3.00%8,308,000 3,767,000 Series 2010F 2030 3.00%729,000 345,000 Series 2010C 2031 3.00%885,081 436,000 Series 2010G 2031 3.00%3,605,565 1,354,000 Series 2010H 2031 3.00%8,692,000 4,284,000 Sereis 2020D 2040 2.50%2,807,000 2,469,000 Series 2020B 2040 2.50%7,786,000 6,850,000 Series 2020C 2041 2.50%6,693,321 6,003,000 Series 2020A 2040 0.00%300,000 300,000 Total water revenue bonds 40,165,267$ 25,939,000$ Stormwater revenue bondsSeries 2015 2035 2.50%1,815,000$ 1,196,000$ Total business-type activities 135,377,534$ 43,084,000$ 57 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 There are a number of limitations and restrictions contained in the various bond indentures. The City is in compliance with all significant limitations and restrictions. General Obligation Bonds – The City issues general obligation bonds to provide funds for the acquisition and construction of major capital assets. General obligation bonds are direct obligations of the City and are backed by the full faith and credit of the City. General obligation bonds are recorded in the governmental activities in the government-wide statement. Principal and interest on these bonds are payable from the debt service funds. Tax Increment Financing (TIF) Bonds – Tax Increment Financing (TIF) Bonds are not general obligations, but are special limited obligations of the City. TIF bonds are recorded in the governmental activities in the government- wide statement. The bonds are payable solely, and equally and ratably from the tax increment revenues received by the City from its Downtown Bozeman Improvement District, Northeast Improvement District, and Midtown Improvement District. If the incremental revenues are insufficient to pay the principal and interest due on the TIF bonds when due, such payment shortfall shall not constitute a default under the TIF agreement. If and when the incremental revenues are sufficient, the City shall pay the amount of any shortfall to the paying agent and registrar without any penalty interest or premium thereon. Due to the uncertainty of the future tax increment receipts, future payments on the TIF bonds may vary from the summary of debt service requirements. Principal and interest on these bonds are payable from the TIF debt service fund. Special Assessment Bonds – Special assessment bonds are payable from the collection of special assessments levied against benefited property owners within each special improvement district. To the extent that such special assessment collections are not sufficient to make the required debt service payments, the City is obligated to levy and collect a general property tax on all taxable property in the City to provide additional funding for the debt service payments. The cash balance in the SID Revolving Fund must equal at least 5% of the principal amount of bonds outstanding. If the cash balance is less than 5%, a levy is required to bring the cash balance to the required minimum. Principal and interest on these bonds are payable from the SID debt service fund. Revenue Bonds -The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. The revenue bond ordinances specify that the City shall establish various restricted asset accounts and distribute the net revenues for the water fund to the restricted asset accounts and set user rates at levels which will generate minimum net revenues, as defined. The revenue bond ordinances specify that City management and/or the City Commission shall take corrective actions to bring the City into compliance with the revenue bond ordinances, if necessary, and that bondholders shall have the right to institute proceedings, judicial or otherwise, to enforce the covenants of the revenue bond ordinances. The City is in compliance with applicable covenants as of June 30, 2023. 58 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The annual requirements to amortize the bonded debt outstanding for the governmental activities as of June 30, 2023, are as follows: Years Ending General Obligation Bonds Tax Increment Financing Bonds June 30, Principal Interest Principal Interest 2,300,000$ 1,658,650$ 501,468$ 334,613$ 2,390,000 1,573,675 517,401 320,441 2,475,000 1,483,125 531,215 304,068 2,575,000 1,384,250 545,171 287,104 2,675,000 1,280,000 564,152 269,745 2029-2033 15,140,000 4,659,850 2,773,715 1,066,961 2034-2038 14,060,000 1,770,494 1,854,832 655,719 2039-2043 4,150,000 245,150 2,114,813 264,466 2044-2047 - - 400,000 12,000 45,765,000$ 14,055,194$ 9,802,767$ 3,515,117$ Years Ending Special Assessment Bonds Total Governmental Activities June 30, Principal Interest Principal Interest 204,722$ 105,129$ 3,006,190$ 2,098,392$ 171,541 99,219 3,078,942 1,993,335 177,031 93,730 3,183,246 1,880,923 182,696 88,064 3,302,867 1,759,418 188,543 82,218 3,427,695 1,631,963 2029-2033 1,037,177 316,624 18,950,892 6,043,435 2034-2038 1,214,103 139,700 17,128,935 2,565,913 2039-2043 196,476 4,139 6,461,289 513,755 2044-2047 - - 400,000 12,000 3,372,289$ 928,823$ 58,940,056$ 18,499,134$ 2024 202520262027 2028 2024 202520262027 2028 59 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The annual requirements to amortize the bonded debt outstanding for the business-type activities as of June 30, 2023, are as follows: Years Ending Water Revenue Bonds Waste Water Revenue BondsJune 30, Principal Interest Principal Interest 1,356,000$ 312,250$ 2,051,000$ 531,968$ 1,395,000 284,930 2,111,000 489,298 1,435,000 256,840 2,171,000 445,388 1,477,000 227,930 2,234,000 400,265 1,520,000 198,170 2,298,000 353,798 2029-2033 6,936,000 523,840 7,562,000 1,146,061 2034-2038 1,830,000 83,550 4,874,000 558,598 2039-2043 - - 2,638,000 71,838 15,949,000$ 1,887,510$ 25,939,000$ 3,997,214$ Years Ending Stormwater Revenue Bonds Total Business-Type Activities June 30, Principal Interest Principal Interest 87,000$ 23,490$ 3,494,000$ 867,708$ 89,000 21,740 3,595,000 795,968 90,000 19,950 3,696,000 722,178 94,000 18,130 3,805,000 646,325 96,000 16,240 3,914,000 568,208 2029-2033 515,000 51,450 15,013,000 1,721,351 2034-2038 225,000 5,640 6,929,000 647,788 2039-2043 - - 2,638,000 71,838 1,196,000$ 156,640$ 43,084,000$ 6,041,364$ 20242025 202620272028 20242025 202620272028 Industrial Revenue and Private Activity Bonds The City issues tax exempt industrial revenue and private activity bonds to finance construction of facilities within the City, which it sells on installment contracts to the facilities' users. The bonds and the interest payable thereon are not obligations of the City and do not constitute or give rise to a pecuniary liability or contingent liability of the City or a charge against the general credit or taxing power of the City. The bonds are issued under and collateralized by the indentures and are payable solely from the payments to be made pursuant to the loan agreements between the City and the facilities users. The bonds are not a lien on any of the City’s properties or revenues, other than the facilities for which they were issued. To provide financial assistance for the acquisition and improvements of the building occupied by a private elementary school, the City has issued a Private Activity Revenue Bond. This bond is secured by the property financed and is payable solely from payments received on the underlying mortgage loan. Upon repayment of the bond, ownership of the acquired facility transfers to the private-sector entity served by the bond issuance. Neither the City nor any political subdivision thereof is obligated in any manner for repayment of the bond. Accordingly, the bond is not reported as a liability in the accompanying financial statements. As of June 30, 2023, the Revenue Bond outstanding had an aggregate principal amount payable of $114,671. 60 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Notes Payable At June 30, 2023, the City had the following notes payable outstanding: PrincipalFinal Maturity Interest Rate Original Issue Outstanding Governmental Activities: Notes payableSports Park Loan 2039 3.74%1,700,000 1,504,323 Pete's Hill Loan 2024 3.75%315,000 215,000 Total notes payable 2,015,000$ 1,719,323$ Intercap notes payableUpgrade Street Lighting 2030 1.55 - 5.75%199,231$ 110,035$ Sports Park-Bronken Park Improvements 2029 1.00 - 5.75%314,559 216,147 Total intercap notes payable 513,790$ 326,182$ Total governmental activities 4,030,000$ 2,045,505$ Future payments on notes payable are as follows: Governmental Activities Years Ending June 30, Principal Interest 329,475$ 78,510$ 118,478 52,893 122,399 50,216 126,433 47,363 130,755 44,463 2029-2033 547,381 173,485 2034-2038 548,135 80,840 2039-2043 122,349 3,446 2,045,405$ 531,216$ 20242025202620272028 Financed Purchases Payable Financed purchases payable consists of direct borrowing financing agreements for the purchase of various pieces of machinery and equipment. Financed purchases payable of the governmental activities are paid by the General Fund and Street Maintenance Fund. 61 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Future payments on financed purchases payable are as follows: Governmental ActivitiesYears Ending June 30, Principal Interest 157,210$ 56,811$ 123,070 49,926 113,913 41,340 121,664 33,489 356,817 26,745 872,674$ 208,311$ 2024 2025 202620272028 Leases Payable Leases payable consists of long-term leases as described in Note 8. Leases payable of the governmental activities are liquidated by the General Fund and the Public Works Administration Fund. Subscription IT Agreements Subscription IT agreements consists of long-term software contracts as described in Note 9. Subscriptions payable of the governmental activities are liquidated by the General Fund, City Planning Fund, and Public Works Administration Fund. Landfill Closure/Postclosure Landfill Closure/Postclosure liability consists of expected future obligations relating to the municipal landfill. See Note 20 for additional information. Pollution Remediation Liability Pollution remediation liability consists of expected future obligations relating to remediation of the Bozeman Solvent Site. See Note 21 for additional information. Compensated Absences The entire portion of accumulated unpaid vacation is considered short term for the reason that historically, unpaid vacation is utilized within one year either through vacation payouts when employees terminate their service with the City or with the use of annual leave throughout the year. Within the governmental activities, the General Fund has typically been used in prior years to liquidate the liability for compensated absences. Compensated absences for the business-type activities are liquidated from the fund in which they are earned. 62 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 8 - Leases Lessor Activities The City has accrued a receivable for a land lease. The remaining receivable for this lease was $333,289 for the year ended June 30, 2023. Deferred inflows related to these leases were $326,355 as of June 30, 2023. Interest revenue recognized on these leases was $17,801 for the year ended June 30, 2023. Principal receipts of $22,735 were recognized during the fiscal year. The interest rate used to value the lease was 5%. Final receipt is expected in fiscal year 2033. Lessee Activities The City has entered into various lease agreements for a vehicle and office space. The City is required to make principal and interest payments through February 2028. The lease agreements have interest rates between 6.61% and 8.09%. For lease agreements with no specified interest rate, the lease liability was valued using a discount rate of 5% based on the City’s incremental borrowing rate at the inception of the leases. The future principal and interest lease payments as of June 30, 2023, are as follows: Years Ending Governmental ActivitiesJune 30,Principal Interest 85,131$ 15,274$ 87,877 10,922 94,477 6,413 76,316 1,599 343,801$ 34,208$ 2024 2025 2026 2027 Note 9 - Subscription-Based Information Technology Arrangements (SBITAs) The City has entered into SBITA contracts for various operating software. The City is required to make principal and interest payments through January 2029. The SBITA contracts have interest rates of 5% which was determined based on the City’s incremental borrowing rate at the inception of the subscriptions. 63 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The future principal and interest payments as of June 30, 2023, are as follows: Years Ending Governmental Activities June 30,Principal Interest 254,988$ 35,936$ 268,981 22,501 140,943 14,121 91,905 7,714 96,608 2,913 853,425$ 83,185$ 2024 2025 20262027 2028 Note 10 - Other Post-Employments Benefit Plan The City provides other post-employment benefits (OPEB) allowing its retired employees to continue their medical, dental, and vision care coverage through the City's group health plan until death (Retiree Health Plan). The single-employer defined benefit post-employment health care plan allows retirees to participate, as a group, at a rate that does not cover all of the related costs. This results in the reporting of an implied rate subsidy in the financial statements and footnotes. The City's contract with Allegiance Benefits details the plan eligibility. MMIA is the administrator of the plan, which covers both active and retired members. In accordance with MCA 2-18-704, the City’s retirees may continue coverage for themselves and their covered eligible dependents, if they are eligible for public employees' retirement by virtue of their employment with the City of Bozeman. The City's current labor contracts do not include any obligations for payments to retirees. The City also allows terminated employees to continue their health care coverage for 18 months past the date of termination as required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). OPEB is recorded on an accrual basis for all enterprise and internal service funds. OPEB is recorded on a modified accrual basis for the governmental funds. Plan contributions are recognized in the period in which the contributions are made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement 75. Funding Policy The plan is unfunded by the City and plan members receiving benefits contribute 100 percent of their cost of the benefits on a pay-as-you-go basis. The City plan’s administratively established retiree medical, dental, and vision premiums vary between $41 and $2,313 per month depending on the medical plan selected, family coverage, and Medicare eligibility. The plan provides different coinsurance amounts depending on whether members use preferred, non-preferred, or other hospitals. Depending on the plan, for a single individual, after an annual deductible of $500 to $2,800 for non-Medicare-eligible retirees, the plan reimburses 60% to 80% of allowed charges after deductible and up to the out-of-pocket maximum, and then 100%. Depending on the plan, for a family, after an annual deductible of $1,000 to $5,600 for non-Medicare-eligible retirees, the plan reimburses 60% to 80% of allowed charges after deductible and up to the out-of-pocket maximum, and then 100%. 64 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Employees Covered by Benefit Terms At July 1, 2022, the census valuation date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefit payments 23 Inactive employees entitled to but not yet receiving benefit payments - Active employees 412 435 Contributions Benefit contributions are paid by the City as they come due. Total OPEB Liability (TOL) The City’s total OPEB liability of $4,450,558 for the June 30, 2023, reporting date was measured as of June 30, 2022, and was determined by an actuarial valuation as of July 1, 2022. Changes in the TOL for the year ended June 30, 2023, are as follows: Balance at July 1, 2022 5,067,116$ Changes from the Prior Year: Service cost 386,864 Interest cost 116,219 Assumption changes (862,570) Differences between expected and actual experience (110,114) Benefit payments (146,957) Net Change (616,558) Balance at June 30, 2023 4,450,558$ 65 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 There is sensitivity of the TOL to changes in the discount rate. The TOL of the City as well as what the City’s TOL would be if it were calculated using a discount rate that is one percentage point lower (2.69%) or one percentage point higher (4.69%) follows: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate Discount rate 2.69%3.69%4.69% Total OPEB Liability 5,031,129$ 4,450,558$ 3,948,856$ There is also sensitivity of the TOL to changes in the healthcare cost rates. The TOL of the City as well as what the City’s TOL would be if it were recalculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current healthcare cost trend rate follows: 1% Decrease in 1% Increase in Trend Rates Trend Rates Trend Rates Trend rate 6.50%, grading to 7.50%, grading to 8.50%, grading to 3.50% over 20 years 4.50% over 20 years 5.50% over 20 years Total OPEB Liability 3,872,715$ 4,450,558$ 5,144,076$ For the year ended June 30, 2023, the City recognized OPEB expense of $540,230. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between actual and expected experience -$ 239,534$ Assumption changes 1,022,556 1,040,407 1,022,556$ 1,279,941$ 66 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEBs will be recognized in OPEB expense as follows: OPEBYears Ended June 30, Expense Amount 2024 37,147$ 2025 37,149 2026 76,687 2027 (146,063) 2028 (217,466) Thereafter (44,839) The June 30, 2023, year-end OPEB cost is reported in the City’s funds as follows: Functions/Programs Governmental Activities General government 92,687$ Public safety 157,567 Public works 67,634 Public health and welfare 127,463 Total governmental activities 445,351 Business-type Activitie Water 33,950 Wastewater 26,429 Solid waste 22,668 Parking 4,417 Stormwater 7,415 Total business-type activities 94,879 Total 540,230$ 67 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Actuarial Methods and Assumptions The City’s actuarial valuation is completed on a biennial frequency, provided no significant events have occurred warranting new measurement. The City completed the valuation for fiscal year 2023. As of July 1, 2022, the most recent valuation date, the City’s total OPEB liability was determined using the following actuarial assumptions: The following key assumptions were chosen by the City: • Discount Rate: 3.69% for determining fiscal 2023 liability and expense. • Inflation Rate: 2.5% long-term. • Expected Real Rate of Return on Assets: N/A • Health Care Claim and Contribution Trend Rates: 7.50% initial in fiscal 2023 and 4.50% ultimate in fiscal 2043. • Average Salary Increase: Not applicable. • Retirement Rates: Based on actuarial valuation for statewide retirement systems as of June 30, 2022 • Retiree Participation Rate: 35% of future eligible retirees are assumed to participate in the Plan upon retirement. 80% of retirees are assumed to elect the same medical plan upon retirement that they have while being employed and 20% are assumed to elect the HDHP plan. • Lapse Rate: 15% per year • Marriage Assumption: 60% of all future eligible retired employees are assumed to be married at retirement and elect spousal coverage. Husbands are assumed to be three years older than their wives. The discount rate was based on a yield or index rate for a 20-year, tax-exempt, general obligation municipal bond with an average rating of AA/Aa or higher. Rates were taken from the Bond Buyer 20-Bond GO index as of the measurement date. Mortality rates were based on the Pub-2010 Public Retirement Plan Public Safety mortality table projected generationally with Scale MP-2021 for MPORS and FURS (Police and Fire, respectively) and Pub-2010 Public Retirement Plans General mortality table projected generationally with Scale MP-2021 for PERS (all other employees). The medical trend rate table was reset in fiscal 2023. This report constitutes the only analysis and presentation of the City’s post-employment benefit plan. There is no separate, audited GAAP-basis post-employment benefit plan report. 68 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 11 - Defined Benefit Pension Plans All City of Bozeman full-time employees participate in one of three statewide, cost-sharing, multiple-employer, retirement benefit plans administered by the Public Employees Retirement Division (PERD). Contributions to the three plans are as required by State statute. Fiscal years 2023 and 2022 total payroll and covered payroll for all retirement plans were $31,950,316 and $25,726,854, respectively. Financial information for all three plans is reported in the Public Employees' Retirement Board's published Annual Comprehensive Financial Report for the fiscal year-end. It is available from the PERD at 100 North Park Avenue, Suite 220, P.O. Box 200131, Helena, MT 59620-0131. The authority to establish, amend, and provide cost of living adjustments to all three plans is assigned to the State legislature. The authority to establish and amend contribution rates to all three plans is also assigned to the State legislature. For the year ended December 31, 2023 the City reported its proportionate share of net pension liabilities, deferred outflows of resources, deferred inflows of resources, and pension expense for each of the plans as follows: Deferred DeferredOutflows of Net Pension Inflows of Resources Liability Resources Pension Expense PERS 4,488,592$ 21,527,855$ 1,576,037$ 2,570,071$ FURS 2,115,919 3,494,798 77,968 687,199 MPORS 1,926,272 7,120,779 173,986 1,261,458 Total all plans 8,530,783$ 32,143,432$ 1,827,991$ 4,518,728$ Public Employees’ Retirement System (PERS) In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non- employer contributing entity are required to recognize and report certain amounts associated with participation in the Public Employees’ Retirement System Defined Benefit Retirement Plan (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single-employer, or agent plans. These disclosures provide information for employers who are using a June 30, 2022, measurement date for the 2023 reporting. 69 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Summary of Significant Accounting Policies The Montana Public Employee Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (TPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan Plan Description The PERS-Defined Benefit Retirement Plan (DBRP), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing plan established July 1, 1945, and governed by Title 19, chapters 2 & 3, Montana Code Annotated (MCA). This plan provides retirement benefits to covered employees of the State, and local governments, and certain employees of the Montana University System, and school districts. Benefits are established by state law and can only be amended by the Legislature. All new members are initially members of the PERS-DBRP and have a 12-month window during which they may choose to remain in the PERSDBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be participants of both the defined benefit and defined contribution retirement plans. All new members from the universities also have a third option to join the university system’s Montana University System Retirement Program (MUS-RP). Benefits Provided The PERS-DBRP provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. Retirement benefits are as follows: Service retirement: • Hired prior to July 1, 2011: ο Age 60, 5 years of membership service ο Age 65, regardless of membership service ο Any age, 30 years of membership service • Hired on or after July 1, 2011: ο Age 65, 5 years of membership service ο Age 70, regardless of membership service 70 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Early Retirement: • Hired prior to July 1, 2011: ο Age 50, 5 years of membership service ο Any age, 25 years of membership service • Hired on or after July 1, 2011: ο Age 55, 5 years of membership service Second Retirement (requires returning to PERS-covered employer or PERS service): • Retired before January 1, 2016, and accumulate less than 2 years additional service credit or retired on or after January 1, 2016, and accumulate less than 5 years additional service credit: ο A refund of member’s contributions plus return interest (currently 2.02% effective July 1, 2018). ο No service credit for second employment. ο Start the same benefit amount the month following termination; and ο Guaranteed Annual Benefit Adjustment (GABA) starts again in the January immediately following the second retirement. • Retired before January 1, 2016, and accumulate at least 2 years of additional service credit: ο A recalculated retirement benefit based on provisions in effect after the initial retirement; and ο GABA starts on the recalculated benefit in the January after receiving the new benefit for 12 months. • Retired on or after January 1, 2016, and accumulate 5 or more years of service credit: ο The same retirement as prior to the return to service. ο A second retirement benefit as prior to the second period of service based on laws in effect upon the rehire date; and ο GABA starts on both benefits in the January after receiving the original and the new benefit for 12 months. Member’s highest average compensation (HAC) • Hired prior to July 1, 2011, highest average compensation during any consecutive 36 months. • Hired on or after July 1, 2011 – highest average compensation during any consecutive 60 months. Compensation Cap • Hired on or after July 1, 2013 – 110% annual cap on compensation considered as a part of a member’s highest average compensation. Monthly benefit formula • Members hired prior to July 1, 2011 ο Less than 25 years of membership service: 1.785% of HAC per year of service credit; ο 25 years of membership service or more: 2% of HAC per year of service credit. • Members hired on or after July 1, 2011 ο Less than 10 years of membership service: 1.5% of HAC per year of service credit; ο 10 years or more, but less than 30 years of membership service: 1.785% of HAC per year of service credit; ο 30 years or more of membership service: 2% of HAC per year of service credit. 71 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Guaranteed Annual Benefit Adjustment (GABA) – After the member has completed 12 full months of retirement, the member’s benefit increases by the applicable percentage (provided below) each January, inclusive of all other adjustments to the member’s benefit. • 3.0% for members hired prior to July 1, 2007 • 1.5% for members hired between July 1, 2007, and June 30, 2013 • Members hired on or after July 1, 2013: ο 1.5% for each year PERS is funded at or above 90%; ο 1.5% reduced by 0.1% for each 2.0% PERS is funded below 90%; and ο 0% whenever the amortization period for PERS is 40 years or more. Contributions The State Legislature has the authority to establish and amend contribution rates. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: The state of Montana, as the non-employer contributing entity, paid to the Plan, additional contributions that qualify as special funding. Those employers who received special funding are all participating employers. Not Special Funding: Per Montana law, state agencies and universities paid their own additional contributions. The employer paid contributions are not accounted for as special funding for state agencies and universities but are reported as employer contributions. Member and employer contribution rates are shown in the table below. State & University Fiscal Year Hired <07/01/2011 Hired >07/01/2011 Employer Employer State Employer State 2023 7.900%7.900%9.070%8.970%0.100%8.700%0.370% 2022 7.900%7.900%8.970%8.870%0.100%8.600%0.370% 2021 7.900%7.900%8.870%8.770%0.100%8.500%0.370% 2020 7.900%7.900%8.770%8.670%0.100%8.400%0.370%2019 7.900%7.900%8.670%8.570%0.100%8.300%0.370%2018 7.900%7.900%8.570%8.470%0.100%8.200%0.370%2017 7.900%7.900%8.470%8.370%0.100%8.100%0.370%2016 7.900%7.900%8.370%8.270%0.100%8.000%0.370%2015 7.900%7.900%8.270%8.170%0.100%7.900%0.370%2014 7.900%7.900%8.170%8.070%0.100%7.800%0.370%2012-2013 6.900%7.900%7.170%7.070%0.100%6.800%0.370%2010-2011 6.900%N/A 7.170%7.070%0.100%6.800%0.370%2008-2009 6.900%N/A 7.035%6.935%0.100%6.800%0.235%2000-2007 6.900%N/A 6.900%6.800%0.100%6.800%0.100% Member Local Government Local Government Member contributions to the system of 7.9% are temporary and will be decreased to 6.9% on January 1 following actuary valuation results that show the amortization period has dropped below 25 years and would remain below 25 years following the reduction of both the additional employer and additional member contribution rates. 72 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Employer contributions to the system: • Effective July 1, 2014, following the 2013 Legislative session, PERS-employer contributions increase an additional 0.1% a year and will continue over 10 years through 2024. The additional employer contributions including the 0.27% added in 2007 and 2009, will terminate on January 1 following actuary valuation results that show the amortization period has dropped below 25 years and would remain below the 25 years following the reduction of both the additional employer and additional member contributions rates. • Effective July 1, 2013, employers are required to make contributions on working retirees’ compensation. Member contributions for working retirees are not required. • The portion of employer contributions allocated to the Plan Choice Rate (PCR) are included in the employers reporting. The PCR was paid off effective March 2016 and the contributions previously directed to the PCR are now directed to member accounts. Non-Employer Contributions: Special Funding • The state contributed 0.1% of members’ compensation on behalf of local government entities. • The state contributed 0.37% of members’ compensation on behalf of school district entities. • The state contributed a Statutory Appropriation from the General Fund of $34,633,570. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2022, is on an actuarial valuation performed by the Plan’s actuary as of June 30, 2022. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2023 and 2022 reporting dates, are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $21,527,855 and the employer’s proportionate share was 0.905336 percent. Change in June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Percent of Reporting Date Reporting Date Reporting Date Reporting Date Collective NPL City Proportionate Share 21,527,855$ 15,249,847$ 0.905336% 0.841036% 0.064300% State of Montana Proportionate Share associated with the City 6,454,277$ 4,507,680$ 0.271429% 0.248601% 0.022828% Total 27,982,132$ 19,757,527$ 1.176765% 1.089637% 0.087128% Net Pension Liability as of Percent of Collective NPL as of 73 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Changes in actuarial assumptions and methods: The following changes in assumptions or other inputs were made that affected the measurement of the TPL. • The discount rate was increased from 7.06% to 7.30%. • The investment rate of return was increased from 7.06% to 7.30%. • Updated all mortality tables to the PUB2010 tables for general employees. • Updated the rates of withdrawal, retirement, and disability. • Lowered the payroll growth assumption from 3.50% to 3.25%. • The inflation rate was increased from 2.40% to 2.75%. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense: At June 30, 2023, the reporting date, the employer recognized a Pension Expense of $2,570,071 for its proportionate share of the Plan’s pension expense. The employer also recognized grant revenue of $668,990 for the support provided by the State of Montana for its proportionate share of the pension expense associated with the employer. At June 30, 2023, the reporting date, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Expected vs actual experience 274,436$ -$ Project investment earnings vs. actual investment earnings 632,695 - Changes in assumptions 802,259 1,576,037 Changes in proportion and differences between employer contributions and proportionate share of contributions 890,101 - City contributions subsequent to the measurement date 1,889,101 - 4,488,592$ 1,576,037$ The $1,889,101 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. 74 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: For the Reporting Recognition of Deferred Outflows and Deferred Inflows in Year Ended June 30, Future Years as an Increase (Decrease) to Pension Expense 2024 638,429$ 2025 (373,095) 2026 (682,393) 2027 1,440,513 Actuarial Assumptions: The total pension liability measured as of June 30, 2022, for the June 30, 2023, reporting date, was determined on the results of an actuarial valuation date of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment return (net of pension plan 7.30%investment expense, including inflation) General wage growth*3.50%*includes inflation at 2.75% Merit increases 0% to 4.80% Postretirement Benefit Increases Guaranteed Annual Benefit Adjustment (GABA) each January After the member has completed 12 full months of retirement,the member's benefit increases by the applicable percentage (below) each January, inclusive of all other adjustments to the member's benefit. Members hired prior to July 1, 2007 3.00% Members hired between July 1, 2007, and June 30, 2013 1.50% Members hired on or after July 1, 2013 For each year PERS is funded at or above 90%1.50% For each year PERS is funded below 90%1.50%, reduced by 0.1% for each 2.0% PERS is funded below 90% Whenver the amortization period for PERS is 40 years or more 0.00% For active members, mortality rates were based on PUB-2010 General Amount Weighted Employer Mortality projected to 2021 for males and females, projected generationally using MP-2021. For disabled retirees, the mortality rates were based on PUB-2010 General Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for both males and females. For contingent survivors, mortality rates were based on PUB-2010 General Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males and females, projected generationally using MP-2021. For healthy retirees, morality rates were based on PUB-2010 General Amount Weighted Healthy Retiree Mortality table projected to 2021, with ages set forward one year and adjusted 104% for males and 103% for females, projected generationally using MP-2021. 75 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The actuarial assumptions and methods utilized in the June 30, 2022 valuation, were developed in the five-year experience study for the period ending 2021. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non- employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 0.10% of the salaries paid by local governments and 0.37% paid by school districts. In addition, the state contributed a statutory appropriation from the general fund. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2126. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2022, is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class as of the most recent experience study, are summarized in the following table. Long-Term Expected Real Target Asset Rate of Return Asset Class Allocation Arithmetic Basis Cash 3.0%-0.33%Domestic Equity 30.0%5.90% International Equity 17.0%7.14% Private Investments 15.0%9.13% Real Assets 5.0%4.03% Real Estate 9.0%5.41% Core Fixed Income 15.0%1.14% Non-Core Fixed Income 6.0%3.02% Total 100.0% 76 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the TPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. 1% Decrease Current Discount 1% Increase (6.30%)Rate (7.30%)(8.30%) City's proportionate share of the net pension liability 31,033,407$ 21,527,855$ 13,552,811$ PERS Disclosure for the defined contribution plan The City contributed to the state of Montana Public Employee Retirement System Defined Contribution Retirement Plan (PERS-DCRP) for employees that have elected the DCRP. The PERS-DCRP is administered by the PERB and is reported as a multiple employer plan established July 1, 2002, and governed by Title 19, chapters 2 & 3, MCA. All new PERS members are initially members of the PERS-DBRP and have a 12-month window during which they may choose to remain in the PERS-DBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be participants of both the defined benefit and defined contribution retirement plans. Member and employer contribution rates are specified by state law and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. The state Legislature has the authority to establish and amend contribution rates. Benefits are dependent upon eligibility and individual account balances. Participants are vested immediately in their own contributions and attributable income. Participants are vested after 5 years of membership service for the employer’s contributions to individual accounts and the attributable income. Non-vested contributions are forfeited upon termination of employment per 19-3-2117(5), MCA. Such forfeitures are used to cover the administrative expenses of the PERS-DCRP. At the plan level for the measurement period ended June 30, 2022, the PERS-DCRP employer did not recognize any net pension liability or pension expense for the defined contribution plan. Plan level non-vested forfeitures for the 344 employers that have participants in the PERS-DCRP totaled $1,681,603. Pension Plan Fiduciary Net Position The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. These reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annualreports1/annualreports. 77 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Firefighters’ Unified Retirement System (FURS) In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non-employer contributing entity are required to recognize and report certain amounts associated with participation in the Firefighters’ Unified Retirement System (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single- employer, or agent pension plans. These disclosures provide information for employers who are using a June 30, 2022, measurement date for the 2023 reporting. Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (TPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan Plan Description: The Firefighters’ Unified Retirement System (FURS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing defined benefit plan established in 1981, and governed by Title 19, chapters 2 & 13, Montana Code Annotated (MCA). This plan provides retirement benefits to firefighters employed by first- and second-class cities, other cities and rural fire district departments that adopt the plan, and to firefighters hired by the Montana Air National Guard on or after October 1, 2001. Benefits are established by state law and can only be amended by the Legislature. Benefits provided: The FURS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. 78 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Service retirement and monthly benefit formula: • Hired on or after July 1, 1981, or member has elected to be covered by GABA: ο 20 years of membership service, regardless of age ο 2.5% of HAC times years of service credit • Hired prior to July 1, 1981, and not elected to be covered by GABA, the greater of above or: ο If membership service is less than 20 years: 2% of the highest monthly compensation (HMC) for each year of service credit; ο If membership service is greater than or equal to 20 years: 50% of HMC plus 2% of HMC for each year of service credit in excess of 20 • Early retirement: Age 50 with 5 years of membership service - Normal retirement benefit calculated using HAC and service credit Second Retirement (applies to retirement system members re-employed in a FURS position on or after July 1, 2017): • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο is not awarded service credit for the period of reemployment; ο is refunded the accumulated contributions associated with the period of reemployment; ο starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο is awarded service credit for the period of reemployment; ο starting the first month following termination of service, receives: the same retirement benefit previously paid to the member; and a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members’ rehire date, and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: on the initial retirement benefit in January immediately following second retirement, and on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Member’s compensation period used in benefit calculation: • Hired prior to July 1, 1981, and not electing GABA: highest monthly compensation (HMC); • Hired after June 30, 1981, and those electing GABA: highest average compensation (HAC) during any consecutive 36 months (or shorter period of total service). • Part-time firefighter: 15% of regular compensation of a newly confirmed full-time firefighter. Compensation Cap • Hired on or after July 1, 2013 – 110% annual cap on compensation considered as a part of a member’s highest average compensation. 79 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Guaranteed Annual Benefit Adjustment (GABA) • Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months – the member’s benefit increases by 3.0% each January. Minimum Benefit Adjustment (non‐GABA) • A member with 10 or more years of membership service who has not elected to be covered under GABA – the minimum benefit provided may not be less than 50% of the monthly compensation paid to a newly confirmed active firefighter of the employer that last employed the member as a firefighter in the current fiscal year. Contributions: The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: MCA 19-13-604 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. Member Fiscal Year Non-GABA GABA Employer State 1998-2023 9.500%1.700%14.360% 32.610% 1997 7.800%N/A 14.360% 32.610% Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2022, is on an actuarial valuation performed by the Plan’s actuary as of June 30, 2022. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2023 and 2022 reporting dates are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. Due to the existence of the special funding situation, the state is required to report a proportionate share of a local government’s collective NPL that is associated with the non-state employer. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $3,494,798 and the employer’s proportionate share was 2.2000 percent. 80 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Change inJune 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Percent of Reporting Date Reporting Date Reporting Date Reporting Date Collective TPL City Proportionate Share 3,494,798$ 1,935,764$ 2.2000% 2.2620% -0.0620% State of Montana Proportionate Share associated with the City 7,906,822$ 4,393,566$ 4.9775% 5.1341% -0.1566% Total 11,401,620$ 6,329,330$ 7.1775% 7.3961% -0.2186% Net Pension Liability as of Percent of Collective NPL as of Changes in actuarial assumptions and methods: The following changes in assumptions or other inputs were made that affected the measurement of the TPL. • The discount rate was increased from 7.06% to 7.30%. • The investment rate of return was increased from 7.06% to 7.30%. • The payroll growth rate was reduced from 3.50% to 3.25%. • All mortality tables were updated to the PUB2010 tables for public safety employees. • Updated the rates of withdrawal, retirement, disability and merit increase scales. • The inflation rate was increased from 2.40% to 2.75%. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense: At June 30, 2023, the reporting date, the employer recognized its proportionate share of the Plan’s pension expense of $687,199. The employer also recognized grant revenue of $1,617,904 for the support provided by the State of Montana for its proportionate share of the pension expense that is associated with the employer. Recognition of Deferred Inflows and Outflows: At June 30, 2023, the reporting date, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Expected vs actual experience 304,800$ 6,829$ Project investment earnings vs. actual investment earnings 219,493 - Changes in assumptions 908,214 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 71,139 City contributions subsequent to the measurement date 683,412 - 2,115,919$ 77,968$ 81 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The $683,412 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: For the Reporting Recognition of Deferred Outflows and Deferred Inflows in Year Ended June 30, Future Years as an Increase (Decrease) to Pension Expense 2024 310,314$ 2025 210,951 2026 138,702 2027 554,162 2028 140,410 Actuarial Assumptions: The total pension liability measured as of June 30, 2022, for the June 30, 2023, reporting date, was determined on the results of an actuarial valuation date of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment return (net of pension plan 7.3% investment expense, including inflation) General wage growth*3.5% *includes inflation at 2.75% Merit increases 1.00% to 6.40% Postretirement Benefit Increases Guaranteed Annual Benefit Adjustment (GABA) each January Members hired on or after July 1, 1997, or those electing GABA (requires 12 full months of retirement before GABA 3% will be made) Minimum Benefit Adjustment (non-GABA)Members with 10 or more yars of membership service The minimum benefit provided shouldand member did not elect GABA not be less than 50% of the current base compensation of a newly confirmed active firefighter of the employer that last employed the member as a fire fighter. 82 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 For active members, mortality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality projected to 2021 for males and females, projected generationally using MP-2021. For healthy retirees, morality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality table projected to 2021, with ages set forward one year for males, adjusted 105% for males and 100% for females, projected generationally using MP-2021. For contingent survivors, mortality rates were based on PUB-2010 Safety Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males, projected generationally using MP-2021. For disabled retirees, the mortality rates were based on PUB-2010 Safety Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for males. The actuarial assumptions and methods utilized in the June 30, 2022, valuation, were developed in the five-year experience study for the period ending 2021. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non- employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 32.61% of the salaries paid by employers. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2133. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2022, is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. 83 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The target asset allocation and best estimates of arithmetic real rate of return for each major asset class as of the most recent experience study, are summarized in the following table. Long-TermExpected Real Target Asset Rate of Return Asset Class Allocation Arithmetic Basis Cash 3.0%-0.33% Domestic Equity 30.0%5.90% International Equity 17.0%7.14% Private Investments 15.0%9.13% Real Assets 5.0%4.03% Real Estate 9.0%5.41% Core Fixed Income 15.0%1.14% Non-Core Fixed Income 6.0%3.02% Total 100.0% Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. 1% Decrease Current Discount 1% Increase (6.30%)Rate (7.30%)(8.30%) City's proportionate share of the net pension liability 6,057,049$ 3,494,798$ 1,448,854$ Pension plan fiduciary net position: The stand-alone financial statements (76d) of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. The reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annualreports1/annualreports. Municipal Police Officers’ Retirement System (MPORS) In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non- employer contributing entity are required to recognize and report certain amounts associated with participation in the Municipal Police Officers’ Retirement System (the Plan). This includes the proportionate share of the collective TotalPension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single- employer, or agent plans. This report provides information for employers who are using a June 30, 2022, measurement date for the 2023 reporting. 84 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB).General Information about the Pension Plan General Information about the Pension Plan Plan Description: The Municipal Police Officers’ Retirement System (MPORS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing defined benefit plan established in 1974 and governed by Title 19, chapters 2 & 9, Montana Code Annotated (MCA). This plan provides retirement benefits to all municipal police officers employed by first- and second-class cities and other cities that adopt the plan. Benefits are established by state law and can only be amended by the Legislature. Deferred Retirement Option Plan (DROP): Beginning July 2002, eligible members of MPORS can participate in the DROP by filing a one-time irrevocable election with the Board. The DROP is governed by Title 19, Chapter 9, Part 12, MCA. A member must have completed at least twenty years of membership service to be eligible. They may elect to participate in the DROP for a minimum of one month and a maximum of 60 months and may only participate in the DROP once. A participant remains a member of the MPORS but will not receive membership service or service credit in the system for the duration of the member’s DROP period. During participation in the DROP, all mandatory contributions continue to the retirement system. A monthly benefit is calculated based on salary and years of service to date as of the beginning of the DROP period. The monthly benefit is paid into the member’s DROP account until the end of the DROP period. At the end of the DROP period, the participant may receive the balance of the DROP account in a lump-sum payment or in a direct rollover to another eligible plan, as allowed by the IRS. If the participant continues employment after the DROP period ends, they will again accrue membership service and service credit. The DROP account cannot be distributed until employment is formally terminated. Benefits provided: MPORS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and compensation. Member rights are vested after five years of service. Service retirement and monthly benefit formula: • 20 years of membership service, regardless of age. • Age 50 with 5 years of membership service (Early Retirement). • 2.5% of FAC times years of service credit. 85 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Second retirement: Re-calculated using specific criteria for members who return to covered MPORS employment prior to July 1, 2017: • Less than 20 years of membership service, upon re-employment, repay benefits and subsequent retirement is based on total MPORS service. • More than 20 years of membership service, upon re-employment, receives initial benefit and a new retirement benefit based on additional service credit and FAC after re-employment. Applies to retirement system members re-employed in a MPORS position on or after July 1, 2017: • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο is not awarded service credit for the period of reemployment; ο is refunded the accumulated contributions associated with the period of reemployment; ο starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο is awarded service credit for the period of reemployment; ο starting the first month following termination of service, receives: the same retirement benefit previously paid to the member, and a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members rehire date; and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: on the initial retirement benefit in January immediately following second retirement, and on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Member’s final average compensation (FAC) • Hired prior to July 1, 1977 - average monthly compensation of final year of service; • Hired on or after July 1, 1977 - final average compensation (FAC) for last consecutive 36 months. Compensation Cap • Hired on or after July 1, 2013: 110% annual cap on compensation considered as a part of a member’s FAC. Guaranteed Annual Benefit Adjustment (GABA) • Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months, a GABA will be made each year in January equal to 3%. Minimum benefit adjustment (non‐GABA) • The minimum benefit provided may not be less than 50% of the compensation paid to a newly confirmed police officer of the employer that last employed the member as a police officer in the current fiscal year. 86 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Contributions: The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: MCA 19-9-702 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. MemberHired before Hired after Hired after Hired after Fiscal Year 7/1/1975 6/30/1975 6/30/1979 6/30/1997 GABA Employer State 2000-2023 5.800%7.000%8.500%9.000%14.410% 29.370% 1998-1999 7.800%9.000%10.500% 11.000% 14.410% 29.370%1997 7.800%9.000%10.500%N/A 14.360% 29.370% Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2022, is on an actuarial valuation performed by the Plan’s actuary as of June 30, 2022. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2023 and 2022 reporting dates are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. Due to the existence of the special funding situation, the state is required to report a proportionate share of a local government’s collective TPL that is associated with the non-state employer. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $7,120,779 and the employer’s proportionate share was 3.0145 percent. Change in June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Percent of Reporting Date Reporting Date Reporting Date Reporting Date Collective TPL City Proportionate Share 7,120,779$ 5,327,439$ 3.0145% 2.9306% 0.0839% State of Montana ProportionateShare associated with the City 14,472,724$ 10,828,332$ 6.1270% 5.9566% 0.1704% Total 21,593,503$ 16,155,771$ 9.1415% 8.8872% 0.2543% Net Pension Liability as of Percent of Collective NPL as of Changes in actuarial assumptions and methods: The following changes in assumptions or other inputs were made that affected the measurement of the TPL. • The discount rate was increased from 7.06% to 7.30%. • The investment rate of return was increased from 7.06% to 7.30%. • All mortality assumptions were updated to the PUB2010 tables for public safety employees. • Rates of withdrawal, retirement, disability retirement, and merit increases were updated. 87 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 • Payroll growth assumption was lowered from 3.50% to 3.25%. • The inflation rate was increased from 2.40% to 2.75%. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense: At June 30, 2023, the reporting date, the employer recognized its proportionate share of the Plan’s pension expense of $1,261,458. The employer also recognized grant revenue of $2,481,326 for the support provided by the State of Montana for its proportionate share of the pension expense associated with the employer. Recognition of Deferred Inflows and Outflows: At June 30, 2023, the reporting date, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Expected vs actual experience 31,670$ 37,308$ Project investment earnings vs. actual investment earnings 259,365 - Changes in assumptions 628,407 136,678 Changes in proportion and differences between employer contributions and proportionate share of contributions 123,359 - City contributions subsequent to the measurement date 883,471 - 1,926,272$ 173,986$ The $883,471 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: For the Reporting Recognition of Deferred Outflows and Deferred Inflows in Year Ended June 30, Future Years as an Increase (Decrease) to Pension Expense 2024 467,549$ 2025 158,069 2026 (142,191) 2027 385,388 88 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Actuarial Assumptions: The total pension liability measured as of June 30, 2022, for the June 30, 2023, reporting date, was determined on the results of an actuarial valuation date of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment return (net of pension plan 7.3% investment expense, including inflation) General wage growth*3.5% *includes inflation at 2.75% Merit increases 1.00% to 6.40% Postretirement Benefit Increases Guaranteed Annual Benefit Adjustment (GABA) each January Members hired on or after July 1, 1997, or those electing GABA (requires 12 full months of retirement before GABA 3% will be made) Minimum Benefit Adjustment (non-GABA) Benefit for a retired member or member's survivor and The minimum benefit provided shouldmember did not elect GABA not be less than 50% of the monthlycompensation paid to a newly confirmed police officer of the employerthat last employed the member as a police officer. For active members, mortality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality projected to 2021 for males and females, projected generationally using MP-2021. For healthy retirees, morality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality table projected to 2021, with ages set forward one year for males, adjusted 105% for males and 100% for females, projected generationally using MP-2021. . For disabled retirees, the mortality rates were based on PUB-2010 Safety Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for males. For contingent survivors, mortality rates were based on PUB-2010 Safety Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males, projected generationally using MP-2021 89 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The actuarial assumptions and methods utilized in the June 30, 2022, valuation, were developed in the five-year experience study for the period ending 2021. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non- employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 29.37% of the salaries paid by employers. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2134. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2022 is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class as of the most recent experience study, are summarized in the following table. Long-Term Expected Real Target Asset Rate of ReturnAsset Class Allocation Arithmetic Basis Cash 3.0%-0.33% Domestic Equity 30.0%5.90% International Equity 17.0%7.14% Private Investments 15.0%9.13% Real Assets 5.0%4.03% Real Estate 9.0%5.41%Core Fixed Income 15.0%1.14% Non-Core Fixed Income 6.0%3.02% Total 100.0% 90 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. 1% Decrease Current Discount 1% Increase (6.30%)Rate (7.30%)(8.30%) City's proportionate share of the net pension liability 10,730,017$ 7,120,779$ 4,254,327$ Pension plan fiduciary net position: The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. These reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annualreports1/annualreports. Note 12 - Interfund Activity Interfund receivables/payables are used when a fund has a cash deficit, as well as for other short-term amounts owed between funds. Nonmajor Governmental InternalFundsService Funds TotalDue to:General Fund 543,293$ 900,906$ 1,444,199$ Due from: Interfund advances are used to account for long-term advances between funds. A summary of the City’s interfund advances is as follows: Advances to Advances fromother City funds other City Funds SID Debt Service -$ 641,763$ Nonmajor Governmental Funds 641,763 - 641,763$ 641,763$ 91 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Interfund Transfers Transfers are used to (1) move revenues from the fund that statute or budgets requires to collect them to the fund that statute or budgets require to expend them, (2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (3) to transfer non-restricted interest income from the permanent fund to the general fund. The following interfund transfers occurred during the year ended June 30, 2023 Transfer InCapitalNonmajorGeneralProjectsGovernmental Water Fund Fund Funds FundTransfer outGeneral Fund -$ 4,963,542$ 1,349,081$ -$ Street Maintenance Fund - - 206,363 - American Rescue Plan 3,308,013 - 1,901,300 1,295,912 SID Debt Service 2,078,222 - 924,487 - Capital projects - - 771,342 - Nonmajor Governmental Funds 5,468,642 1,141,038 959,642 55,475 Water Fund - 278,855 - - Wastewater Fund - 96,454 - - Nonmajor Enterprise Funds - 40,973 - - Total 10,854,877$ 6,520,862$ 6,112,215$ 1,351,387$ Transfer in NonmajorWastewaterSolid Waste EnterpriseFundFundFunds Total Transfer outGeneral Fund -$ 295,000$ 190,784$ 6,798,407$ Street Maintenance Fund - - - 206,363 American Rescue Plan 246,769 - - 6,751,994 SID Debt Service - - - 3,002,709 Capital projects - - - 771,342 Nonmajor Governmental Funds - - - 7,624,797 Water Fund - - - 278,855 Wastewater Fund - - - 96,454 Nonmajor Enterprise Funds - - - 40,973 Total 246,769$ 295,000$ 190,784$ 25,571,894$ General Fund transfers in from the American Rescue Plan Act fund covered general government services expenses as allowable under the revenue recovery federal grant terms. General Fund transfers in from nonmajor governmental funds were for health insurance expenses. Excess money in the SID Debt Service Fund was transferred in the General Fund as allowed under Montana Code. 92 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Capital Project Fund transfers in from the General Fund, nonmajor governmental funds, Water Fund, and Wastewater Fund were primarily to cover overages in project costs. Nonmajor governmental funds transfers in from the General Fund covered payroll costs that exceed available grant funding and to finance a portion of community housing projects. Nonmajor governmental funds transfers in from the American Rescue Plan Act fund covered general government services expenses as allowable under the revenue recovery federal grant terms. Nonmajor governmental funds transfers in from SID Debt Service Fund were entered to close out paid special assessment districts. Nonmajor governmental funds transfers in from Capital Projects funds returned available cash upon project completion. Nonmajor governmental funds transfers in from other nonmajor governmental funds included funding for tax increment financing district debt payments and health insurance expenses. Water Fund and Wastewater Fund transfers in from the American Rescue Plan Act fund covered capital expenses for several infrastructure projects in accordance with federal grant terms. Solid Waste Fund and Nonmajor Enterprise Funds transfers in from the General Fund covers landfill monitoring costs and the landfill debt payments. 93 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 13 - Net Position/Fund Balances Net Investment in Capital Assets The amounts comprising the City’s net investment in capital assets on the government-wide statement of net position are as follows: Governmental Business-Type Activities Activities Capital Assets, Net of Accumulated Depreciation/Amortization 298,922,399$ 338,222,054$ Capital Related Debt (67,285,543) (43,689,354) Capital Debt Proceeds Not Yet Expended 6,041,524 - Capital Debt Reserve Balances - 3,321,798 Retainage Payable (241,479) (163,379) Accounts Payable Related to Capital Asset Acquisition (551,896) - Net Investment in Capital Assets 236,885,005$ 297,691,119$ The amounts comprising the City’s net investment in capital assets in the enterprise funds statement of net position are as follows: NonmajorWater Fund Waste Water Fund Solid Waste Fund Enterprise Funds Capital Assets, Net of Accumulated Depreciation/Amortization 163,167,451$ 157,008,229$ 2,410,427$ 15,635,947$ Capital Related Debt (16,185,614) (26,095,799) (140,034) (1,267,907) Capital Debt Reserve Balances 898,599 2,364,911 - 58,288 Retainage Payable (123,883) (34,201) (5,295) - Net Investment in Capital Assets 147,756,553$ 133,243,140$ 2,265,098$ 14,426,328$ 94 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Fund Balances The City classified fund balances within the governmental funds are as follows at June 30, 2023: Street OtherMaintenanceAmericanSIDGovernmentalGeneral Fund District Rescue Plan Debt Service Capital Projects Funds Total Fund BalancesNonspendableCemetary perpetual care -$ -$ -$ -$ -$ 1,804,399$ 1,804,399$ Prepaid items 37,167 - - - - - 37,167 Total nonspendable 37,167 - - - - 1,804,399 1,841,566 RestrictedGeneral governmentPlanning - - - - - 1,368,543 1,368,543 Health Insurance - - - - - 1,341,543 1,341,543 Other 54,789 560,265 615,054 Public safetyBuilding inspection - - - - - 1,021,673 1,021,673 Fire impact - - - - - 4,842,733 4,842,733 Victim witness - - - - - 345,883 345,883 Other 14,311,233 14,311,233 Public serviceGas tax - - - - - 241,522 241,522 Lighting districts - - - - - 504,862 504,862 Other - 1,845,732 4,351,213 6,196,945 Public welfareTax increment districts 4,553,485 4,553,485 Economic developmentloans - - - - - 987,246 987,246 Tree maintenance district - - - - - 617,190 617,190 Other - - - - - 11,166,299 11,166,299 Capital projects - - - - 10,467,723 - 10,467,723 Debt serviceSID Sinking - - - 1,518,340 - - 1,518,340 SID Revolving Fund - - - - - 697,208 697,208 Total restricted - 1,845,732 54,789 1,518,340 10,467,723 46,910,898 60,797,482 CommittedPublic welfare - - - - - 603,360 603,360 Capital projects 6,087,489 - - - - - 6,087,489 Total committed 6,087,489 - - - - 603,360 6,690,849 AssignedPublic welfare - - - - - 2,927,964 2,927,964 Unassigned 8,953,349 - - - - (302,973) 8,650,376 Total Fund Balances 15,078,005$ 1,845,732$ 54,789$ 1,518,340$ 10,467,723$ 51,943,648$ 80,908,237$ Note 14 - Deferred Compensation Plan The City offers its employees a defined contribution, deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. The City does not contribute to the plan, and it does not report any balances related to the deferred compensation plan, as these amounts represent neither assets nor liabilities to the City, and the plan is administered by an independent third party, ICMA Retirement Corporation. 95 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 15 - Impact Fees On January 22, 1996, the City Commission adopted fire, water, waste water and street impact fees in Ordinance number 1414. The impact fees were first effective on March 23, 1996. Impact fees were set at a percentage of the cost of the impact, to be phased out over 5 years. Beginning on March 30, 2013, all impact fees are charged at 100% of the impact. An applicant may obtain an Impact Fee Credit by dedication of non-site-related land or construction of non-site- related improvements. Credits must be made before the beginning of improvement construction, must comply with the City’s Capital Improvements Program, and must be approved by the City Commission. Credits may be used only for like-type impact fees. The full provisions for impact fee credits are contained in Chapter 3.24 of the Bozeman Municipal Code. For proprietary type funds, the City records a liability for the impact fee credit and capitalizes the underlying asset. For governmental-type funds, the credits are only disclosed in the footnotes. For government-wide financial reporting, the outstanding credits are reported as unearned revenue. The Water Impact Fee Fund, Street Impact Fee Fund, and Wastewater Impact Fee Fund have recorded impact fee credits amounting to $0, $33,232, and $114,576, respectively, for the fiscal year ending June 30, 2023. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2023: Expenses,Beginning Expenditures, EndingBalancesImpact Fees Other Income and Transfers Balances Fire 4,287,167$ 522,006$ 63,839$ (30,279)$ 4,842,733$ Water 15,281,920 2,572,101 2,791,567 (2,666,156) 17,979,432 Waste Water 9,793,026 1,556,078 120,908 - 11,470,012 Streets 13,218,872 5,205,583 222,127 (4,735,417) 13,911,165 Totals 42,580,985$ 9,855,768$ 3,198,441$ (7,431,852)$ 48,203,342$ Note 16 - Joint Venture Agreements Joint ventures are legal entities or other organizations that result in a contractual arrangement and that are owned, operated, or governed by two or more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. As of June 30, 2023, the City has entered into joint venture contractual arrangements, as follows: 911 Communication Center The City and Gallatin County, Montana (the County) have entered into an inter-local agreement for the purposes of establishment of the operation and financing of a 911 communication services division (the Division) for dispatch and records services, to define the relationship of the Administrative Board with the City and County, and to establish the line of authority for personnel furnishing the communication services to the City and County and others who may contract for the services. 96 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 City-County Drug Forfeitures The City and County have entered into an inter-local agreement for the purposes of establishment of a joint drug forfeiture account funded from drug related forfeitures, seizures, and prosecutions of City and County law enforcement cases and to establish an equitable means of distributing those funds to continue drug interdiction activities. The goal of the agreement is to make the City and County Drug Enforcement operations less reliant on the general and public safety fund monies of the City and County. The original term of the agreement was for a period of one year, beginning September 20, 2004 and automatically renews for a period of one year until terminated by either party with written notice of intent to terminate. Financial information regarding the joint drug forfeiture account can be obtained by contacting the City of Bozeman Department of Finance, 411 East Main Street, Bozeman, MT 59715. The County and City have entered into various other joint venture contractual arrangements, memorandums of understanding and inter-local agreements to support the following programs and/or operations: Victim Witness, Hazardous Materials, Solid Waste (Disposal and Convenient Site), Fire Warden/Chief, Evidence Technician, Library Services, Board of Health, and rental of the Law and Justice Center. The financial interests are not material. Montana Municipal Interlocal Authority The City and Montana Municipal Interlocal Authority (MMIA) have entered into a 20-year agreement in December 2012 to share up to $1 million in profits from the sale of city-owned property known as the Mandeville Farm. The agreement came about as part of a settlement on legal claims from the City of Bozeman vs. MMIA litigation. A “profit” shall occur only when the City has recovered its total investment in the property, which includes the original purchase price together with all “costs of development” as defined in the settlement agreement. Note 17 - Risk Management The City faces a considerable number of risks of loss, including a) damage to and loss of property and contents, b) employee torts, c) professional liability (i.e., errors and omissions), d) environmental damage, e) workers' compensation (i.e., employee injuries), and f) medical insurance cost of employees. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss except for small deductible amounts, are purchased for property and content damage and professional liabilities. The City participates in two state-wide public risk pools operated by the Montana Municipal Interlocal Authority (MMIA), for workers' compensation and for tort liability. Employee medical insurance is provided through a cost-sharing multiple- employer defined benefit plan administered by MMIA. The plan offers health, dental and vision benefits and flexible spending and health savings accounts. Given the lack of coverage available, the City has no coverage for potential losses from environmental damages. Commercial Policies Coverage limits and the deductibles on the commercial policies have stayed relatively constant for the last several years. The premiums for the policies are allocated between the City's Enterprise Funds and the General Fund. Premiums are subsidized through a special purpose property tax levy, based on total appropriations. Settled claims resulting from these risks did not exceed commercial insurance coverage during the three years ended June 30, 2023, 2022, and 2021. 97 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Public Entity Risk Pools In 1986, the City joined together with other Montana cities to form the Montana Municipal Interlocal Authority, which established a workers' compensation plan and a tort liability plan. Both public entity risk pools currently operate as common risk management and insurance programs for the member governments. The liability limits for damages in tort action are $750,000 per claim and $1.5 million per occurrence, and $12.5 million per occurrence for any claim that is not subject to the limitations on governmental liability, as described in Montana Code Annotated Section 2-9-108 (the Statute) or any successor statute, either as matter of law, by operation of the Statute, or by a judicial determination that the Statute is inapplicable or is otherwise invalid, with $11,250 deductible per occurrence. State tort law limits the City's liability to $1.5 million. The City pays premiums for its employee injury insurance coverage, which is allocated to the employer funds based on total salaries and wages. The agreements for formation of the pools provide that they will be self-sustaining through member premiums. The tort liability plan and workers' compensation program issued debt of $4.41 million and $6.155 million, respectively, to immediately finance the necessary insurance reserves. All members signed a contingent note for a pro rata share of this liability in case operating revenues were insufficient to cover the debt service; the debt was retired in 2011. The City also owns a policy with MMIA for loss or damage to property. This is an all-risk policy, essentially all property owned by the City being insured for 100% of replacement cost, subject to a $5,000 deductible per occurrence. MMIA reinsures their property insurance with a national municipal pool, Public Entities’ Property Insurance. Note 18 - Litigation The City generally follows the practice of recording liabilities resulting from claims and legal actions only when they become fixed or determinable in amount. In the opinion of City Counsel and management, such claims against the City not covered by insurance, would not materially affect the financial condition of the City at June 30, 2023. Note 19 - Contingencies Various claims and lawsuits involving the City can be pending at any given time. These claims are either covered by insurance or are the types which are normal in City operations and do not present any material risk of financial disruption. City management believes that the total amount of liability, if any, which may arise from such claims and lawsuits beyond that which is covered by insurance would not have a material effect on the City's financial condition or its ability to carry out its activities. 98 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 20 - Municipal Landfill Closure and Post-Closure Care Costs The City has a municipal solid waste landfill. State and Federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after final closure. The City stopped accepting waste effective June 30, 2008. The final capping of the cells is still pending. The City has accrued a liability for $2,359,259, which is its estimate of future landfill closure and post-closure care costs as of June 30, 2023 This amount is based on a Corrective Measures Assessment completed in September 2014 by a third-party engineering firm, from which a remediation plan has been adopted by the City and has been approved by the Montana Department of Environmental Quality. The cost of post closure care is an estimate and is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. The Solid Waste Fund accounts for the City’s solid waste collection, recycling, and disposal utility operation – including assets, liabilities, and post-closure costs associated with the closed Story Mill landfill. Segment information for the landfill is as follows: Condensed Statement of Net Position Restricted cash and cash equivalents 240,391$ Capital assets, net of depreciation 752,832 Total assets 993,223 Current liabilities 314,898 Closure and post-closure care cost 2,359,259 Total liabilities 2,674,157 Restricted for debt service (1,680,934)$ 99 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Condensed Statement of Revenues, Expenses and Changes in Net Position Operating revenues and expenses: Operating revenues -$ Operating expenses Depreciation 6,142 Change in post closure cost estimate 1,403,611 Other operating 269,991 Total operating expenses 1,679,744 Operating profit (1,679,744) Non-operating revenues (expenses): Interest income 7,850 Transfers 295,000 Total non-operating revenues 302,850 Change in net position (1,376,894) Net position, beginning of year (304,040) Net position, end of year (1,680,934)$ Note 21 - Pollution Remediation Obligations Jewel v. City of Bozeman / State of Montana v. City of Bozeman This action was filed in the United States District Court for the District of Montana. The multi-count complaint reduced itself to a cost recovery action under the Federal Superfund (CERCLA) and State Superfund (CECRA). On July 8, 1999, the City, Jewel Food Stores, Inc. and the other parties reached a final settlement agreement in this action. The settlement, in part, required Jewel Food Stores, Inc. to pay the City of Bozeman $1,200,000, the City and Jewel to extend alternative water supply to businesses and residents in the North 19th Avenue area of the City; and Jewel and the City to share specified remediation costs on an equal basis (50% each) up to a cumulative amount of $4,000,000, and for eligible costs in excess of that amount, to be shared 70% by Jewel and 30% by the City. The City is reimbursed by insurers for 23% of the City’s expenditures for these purposes. 100 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The Montana Department of Environmental Quality (MDEQ) issued the Record of Decision (ROD) for the Bozeman Solvent Site (BSS) in August 2011. The Administrative Order of Consent (AOC) was finalized in January 2012. The ROD and AOC specifically delineate the remediation to be completed for the BSS. The AOC serves as the legal mechanism for the implementation of the selected remedies identified in the ROD. Though remediation is currently underway and may be completed relatively quickly, monitoring of the site will continue for a period of up to 30 years. Tasman Geosciences, Inc. serves as the contractor for the potentially liable parties (the City of Bozeman and CVS Pharmacy, Inc.). Based on the selected remedies identified in the ROD, Tasman has completed a long-term cost projection for the project in February 2016. The long-term cost projection was reviewed in September 2017, and, at that time, it was determined it was still an accurate projection. This cost projection includes all remediation and monitoring cost, as well as the MDEQ cost recovery associated with the BSS. The long-term cost projection for the City is $2,089,997 in remediation costs. Reduced by its insurer’s reimbursement, the amount is $536,669. This liability is recorded in the Wastewater Fund, is an estimate, and is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. CMC Asbestos Bozeman CECRA Facility In 2001, the City purchased property located within the CMC Asbestos Bozeman Facility (the “Facility”), a former asbestos ore storage and processing, recycling/salvage yard. In 2002, contractors for the City, under the Montana Voluntary Cleanup and Redevelopment Act (VCRA), submitted a Voluntary Cleanup Plan (VCP), which was approved by the Department of Environmental Quality (DEQ). Remediation work on City-owned property was completed in October 2003. On December 21, 2006, the City agreed to complete remedial actions at the remainder of the Facility, which included adjacent, private properties. The City submitted an Addendum to its original VCP, and cleanup work under the approved Addendum was completed in June 2009. On October 20, 2010, the City received notice from the DEQ stating that no further action is required at the facility and that the DEQ proposes removing the Facility from the CECRA priority list. Pursuant to an August 2007 Stipulated Agreement between the City and all other involved parties, additional cleanup after issuance of the DEQ’s closure letter may be required by DEQ based upon property use changes, modification of structures, or other factors. The City has an ongoing claim against the State orphan share for the orphan share funds’ proportional share of these post-closure clean-up costs. In addition, all other parties are still liable for their proportional share of the clean-up. The result is that should additional work be required at the Facility, the City will only be liable for 1% of the total post-closure clean-up costs. Note 22 - Commitments The City entered into a contract to repair and remodel the Bozeman Swim Center. The contract commitment for the project is $1,969,236. For the year ended June 30, 2023, the City had incurred $551,971 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into various contracts for road and streetscape projects. The contract commitments for the projects are $19,150,165. For the year ended June 30, 2023, the City had incurred $10,215,705 towards the projects, which are reported as construction in progress in the Statement of Net Position. 101 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The City entered into a contract to construct the Library Renovation project. The contract commitment for the project is $3,797,555. For the year ended June 30, 2023, the City had incurred $2,819,364 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract to construct the Fire Station #2 project. The contract commitment for the project is $11,574,604. For the year ended June 30, 2023, the City had incurred $1,042,896.01 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for construction services for the Sourdough Water Transmission Main, Phase 2 project. The contract commitment for the project is $4,105,303. For the year ended June 30, 2023, the City had incurred $4,047,285 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for drilling services for the groundwater investigation project. The contract commitment for the project is $550,850. For the year ended June 30, 2023, the City had incurred $145,464 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for construction services for the Solid Waste addition project. The contract commitment for the project is $773,800. For the year ended June 30, 2023, the City had incurred $105,900 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for construction services for the Downtown Sewer Main project. The contract commitment for the project is $617,900. For the year ended June 30, 2023, the City had incurred $587,006 towards the project, which is reported as construction in progress in the Statement of Net Position. Required Supplementary Information June 30, 2023 City of Bozeman, Montana 102 City of Bozeman, Montana Schedule of Changes in Total OPEB Liability and Related Ratios June 30, 2023 Schedule of Changes in Total OPEB Liability and Related Ratios Last 10 Fiscal Years* 2023 2022 2021 2020 2019 2018 Service cost 386,864$ 348,856$ 218,391$ 224,433$ 180,183$ 256,948$ Interest cost 116,219 101,891 105,950 105,809 88,126 81,562 Assumption changes (862,570) 428,413 1,270,632 86,882 225,374 (653,711) Differences between expected and actual experience (110,114) - (8,615) - (502,125) 431,737 Benefit payments (146,957) (147,232) (119,793) (116,330) (118,184) (431,737) Net change in total OPEB liability (616,558) 731,928 1,466,565 300,794 (126,626) (315,201) Total OPEB liability, beginning of year 5,067,116 4,335,188 2,868,623 2,567,829 2,694,455 3,009,656 Total OPEB liability, end of year 4,450,558$ 5,067,116$ 4,335,188$ 2,868,623$ 2,567,829$ 2,694,455$ Covered payroll 29,433,945$ 27,432,420$ 29,119,539$ 24,490,157$ 23,503,572$ 45,345,305$ City's total OPEB liability as a percentage ofcovered payroll 15.12%18.47%14.89%11.71%10.93%5.94% *GASB Statement No. 75 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. 103 City of Bozeman, Montana Notes to Schedule of Changes in Total OPEB Liability and Related Ratios June 30, 2023 Notes to the Schedule of Changes in Total OPEB Liability and Related Ratios Assets are not accumulated in a trust that meets the criteria in GASB Statement No. 75, paragraph 4 to pay related benefits. Assumption Changes Changes of assumptions reflect the effects of changes in the discount rate used each period. The following are the discount rates used for each period presented: 6/30/2023 3.69% 6/30/2022 2.16% 6/30/2021 2.21% 6/30/2020 3.50% 6/30/2019 3.87% 6/30/2018 3.13% 104 City of Bozeman, Montana Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 Schedule of Employer’s Share of Net Pension Liability Last 10 Fiscal Years* Employer's Employer's State's Total ProportionateEmployer's Proportionate Proportionate Proportionate Share of the Total Plan FiduciaryProportionShare (Amount) Share (Amount) Share (Amount)Pension Liability Net Position as(Percentage)of the Net of the Net of the Net Employer's as a Percentage a Percentage ofMeasurementof the Net Pension Liability Pension Liability Pension Liability Covered-of its Covered-the Total PensionDatePension Liability (a)(b)(a+b)Payroll (c) Payroll (a/c)Liability 6/30/2022 0.905336% 21,527,855$ 6,454,277$ 27,982,132$ 15,910,277$ 135.31%73.66%6/30/2021 0.841036% 15,249,847$ 4,507,680$ 19,757,527$ 14,855,905$ 102.65%79.91%6/30/2020 0.852225% 22,483,506$ 7,096,303$ 29,579,809$ 14,298,930$ 157.24%68.90%6/30/2019 0.861979% 18,018,037$ 5,867,557$ 23,885,594$ 14,222,530$ 126.69%73.85%6/30/2018 0.833641% 17,399,265$ 5,822,595$ 23,221,860$ 13,764,340$ 126.41%73.47%6/30/2017 1.041883% 20,291,988$ 266,967$ 20,558,955$ 12,924,792$ 157.00%73.75%6/30/2016 1.021762% 17,404,143$ 212,659$ 17,616,802$ 12,238,920$ 142.20%74.71%6/30/2015 0.958835% 13,403,285$ 164,637$ 13,567,922$ 11,189,797$ 119.78%78.40%6/30/2014 0.915049% 11,401,613$ 139,231$ 11,540,844$ 10,479,122$ 108.80%79.90% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. Schedule of Employer’s Contributions Last 10 Fiscal Years* Contributions inRelation to the Contributions asStatutorilyPlan Choice Rate Statutorily Contribution a Percentage of Reporting Required Required Required Deficiency Covered- Covered- Date Contribution (a) Contribution (b) Contribution (c)(Excess) (a+b-c)Payroll (d) Payroll (c/d) 6/30/2023 1,889,101$ -$ 1,889,101$ -$ 21,068,370$ 8.97%6/30/2022 1,414,999$ -$ 1,414,999$ -$ 15,910,277$ 8.89%6/30/2021 1,316,517$ -$ 1,316,517$ -$ 14,855,905$ 8.86%6/30/2020 1,252,776$ -$ 1,252,776$ -$ 14,298,930$ 8.76%6/30/2019 1,223,234$ -$ 1,223,234$ -$ 14,222,530$ 8.60%6/30/2018 1,161,210$ -$ 1,161,210$ -$ 13,764,340$ 8.44%6/30/2017 1,081,810$ -$ 1,081,810$ -$ 12,924,792$ 8.37%6/30/2016 1,022,996$ 28,892$ 1,051,888$ -$ 12,238,920$ 8.59%6/30/2015 922,084$ 52,151$ 974,235$ -$ 11,189,797$ 8.71% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. 105 City of Bozeman, Montana Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Firefighters’ Unified Retirement System Pension Plan June 30, 2023 Schedule of Employer’s Share of Net Pension Liability Last 10 Fiscal Years* Employer's Employer's State's Total ProportionateEmployer's Proportionate Proportionate Proportionate Share of the Net Plan FiduciaryProportionShare (Amount) Share (Amount) Share (Amount)Pension Liability Net Position as(Percentage)of the Net of the Net of the Net Employer's as a Percentage a Percentage ofMeasurementof the Net Pension Liability Pension Liability Pension Liability Covered-of its Covered-the Total PensionDatePension Liability (a)(b)(a+b)Payroll (c) Payroll (a/c)Liability 6/30/2022 2.2000%3,494,798$ 7,906,822$ 11,401,620$ 4,263,039$ 81.98%78.76%6/30/2021 2.2620%1,935,764$ 4,393,566$ 6,329,330$ 4,162,698$ 46.50%87.72%6/30/2020 2.3217%3,632,985$ 8,189,975$ 11,822,960$ 4,052,989$ 89.64%75.34%6/30/2019 2.1955%2,518,508$ 6,091,025$ 8,609,533$ 3,807,151$ 66.15%80.08%6/30/2018 2.3663%2,725,281$ 6,231,502$ 8,956,783$ 3,726,746$ 73.13%79.03%6/30/2017 2.3492%2,655,380$ 6,030,078$ 8,685,458$ 3,511,860$ 75.61%77.77%6/30/2016 2.3705%2,707,390$ 6,134,093$ 8,841,483$ 3,338,041$ 81.11%75.48%6/30/2015 2.4336%2,489,054$ 5,543,784$ 8,032,838$ 3,270,451$ 76.11%76.90%6/30/2014 2.4192%2,361,551$ 5,327,544$ 7,689,095$ 3,142,481$ 75.15%76.71% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. Schedule of Employer’s Contributions Last 10 Fiscal Years* Contributions inRelation to the Contributions asStatutorily Statutorily Contribution a Percentage ofReporting Required Required Deficiency Covered- Covered- Date Contribution (a) Contribution (b)(Excess) (a-b)Payroll (c) Payroll (b/c) 6/30/2023 683,412$ 683,412$ -$ 4,759,139$ 14.36% 6/30/2022 616,605$ 616,605$ -$ 4,263,039$ 14.46%6/30/2021 595,510$ 595,510$ -$ 4,162,698$ 14.31%6/30/2020 596,564$ 596,564$ -$ 4,052,989$ 14.72%6/30/2019 524,670$ 524,670$ -$ 3,807,151$ 13.78%6/30/2018 548,518$ 548,518$ -$ 3,726,746$ 14.72%6/30/2017 504,303$ 504,303$ -$ 3,511,860$ 14.36%6/30/2016 477,250$ 477,250$ -$ 3,338,041$ 14.30%6/30/2015 478,776$ 478,776$ -$ 3,270,451$ 14.64% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. 106 City of Bozeman, Montana Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Municipal Police Officers’ Retirement System Pension Plan June 30, 2023 Schedule of Employer’s Share of Net Pension Liability Last 10 Fiscal Years* Employer's Employer's State's Total ProportionateEmployer's Proportionate Proportionate Proportionate Share of the Net Plan FiduciaryProportionShare (Amount) Share (Amount) Share (Amount)Pension Liability Net Position as(Percentage)of the Net of the Net of the Net Employer's as a Percentage a Percentage ofMeasurementof the Net Pension Liability Pension Liability Pension Liability Covered-of its Covered-the Total PensionDatePension Liability (a)(b)(a+b)Payroll (c) Payroll (a/c)Liability 6/30/2022 3.0145%7,120,779$ 14,472,724$ 21,593,503$ 5,623,538$ 126.62%69.67%6/30/2021 2.9306%5,327,439$ 10,828,332$ 16,155,771$ 5,303,838$ 100.44%75.76%6/30/2020 2.9892%7,311,248$ 14,746,046$ 22,057,294$ 5,120,608$ 142.78%64.84%6/30/2019 2.8699%5,712,381$ 11,632,402$ 17,344,783$ 4,729,931$ 120.77%68.84%6/30/2018 2.9325%5,022,189$ 10,266,345$ 15,288,534$ 4,628,804$ 108.50%70.95%6/30/2017 3.0402%5,408,979$ 11,024,418$ 16,433,397$ 4,555,121$ 118.75%68.34%6/30/2016 3.0842%5,552,007$ 11,020,975$ 16,572,982$ 4,353,897$ 127.52%65.62%6/30/2015 2.9746%4,920,638$ 9,969,680$ 14,890,318$ 4,116,930$ 119.52%66.90%6/30/2014 3.0209%4,746,933$ 9,589,371$ 14,336,304$ 3,142,481$ 151.06%67.01% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. Schedule of Employer’s Contributions Last 10 Fiscal Years* Contributions inRelation to the Contributions asStatutorily Statutorily Contribution a Percentage ofReporting Required Required Deficiency Covered- Covered- Date Contribution (a) Contribution (b)(Excess) (a-b)Payroll (c) Payroll (b/c) 6/30/2023 883,471$ 883,471$ -$ 6,130,962$ 14.41% 6/30/2022 810,351$ 810,351$ -$ 5,623,538$ 14.41%6/30/2021 763,261$ 763,261$ -$ 5,303,838$ 14.39%6/30/2020 732,880$ 732,880$ -$ 5,120,608$ 14.31%6/30/2019 684,296$ 684,296$ -$ 4,729,931$ 14.47%6/30/2018 692,318$ 692,318$ -$ 4,628,804$ 14.96%6/30/2017 655,143$ 655,143$ -$ 4,555,121$ 14.38%6/30/2016 637,789$ 637,789$ -$ 4,353,897$ 14.65%6/30/2015 596,791$ 596,791$ -$ 4,116,930$ 14.50% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. 107 City of Bozeman, Montana Notes to the Schedules of Employer’s Share of Net Pension Liability and Schedules of Employer’s Contributions June 30, 2023 Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Change of Benefit Terms The following changes to the PERS, FURS, and MPORS plan provisions were made as identified: 2017 Legislative Changes – PERS: Working Retiree Limitations Effective July 1, 2017, if a PERS retiree returns as an independent contractor to what would otherwise be PERS- covered employment, general contractor overhead costs are excluded from PERS working retiree limitations. Refunds 1) Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. 2) Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. 3) Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest Credited To Member Accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77%. Lump‐Sum Payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. Disabled PERS Defined Contribution (DC) Members PERS members hired after July 1, 2011 have a normal retirement age of 65. PERS DC members hired after July 1, 2011 who became disabled were previously only eligible for a disability benefit until age 65. Effective July 1, 2017, these individuals will be eligible for a disability benefit until they reach 70, thus ensuring the same 5-year time period available to PERS DC disabled members hired prior to July 1, 2011 who have a normal retirement age of 60 and are eligible for a disability benefit until age 65. 108 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 2017 Legislative Changes – FURS: Working Retiree Limitations Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. • Members who return for less than 480 hours in a calendar year: ο May not become an active member in the system; and ο Are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. • Members who return for 480 or more hours in a calendar year: ο Must become an active member of the system; ο Will stop receiving a retirement benefit from the system; and ο Will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. • Employee, employer and state contributions, if any, apply as follows: ο Employer contributions and state contributions (if any) must be paid on all working retirees; ο Employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο Is not awarded service credit for the period of reemployment; ο Is refunded the accumulated contributions associated with the period of reemployment; ο Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο Is awarded service credit for the period of reemployment; ο Starting the first month following termination of service, receives: The same retirement benefit previously paid to the member, and A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and 109 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: On the initial retirement benefit in January immediately following second retirement, and On the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest Credited to Member Accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77% Lump‐Sum Payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. 2017 Legislative Changes – MPORS: Working Retiree Limitations Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. • Members who return for less than 480 hours in a calendar year: ο May not become an active member in the system; and ο Are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. • Members who return for 480 or more hours in a calendar year: ο Must become an active member of the system; ο Will stop receiving a retirement benefit from the system; and ο Will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. 110 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 • Employee, employer and state contributions, if any, apply as follows: ο Employer contributions and state contributions (if any) must be paid on all working retirees; ο Employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο Is not awarded service credit for the period of reemployment; ο Is refunded the accumulated contributions associated with the period of reemployment; ο Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο Is awarded service credit for the period of reemployment; ο Starting the first month following termination of service, receives: The same retirement benefit previously paid to the member, and A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: On the initial retirement benefit in January immediately following second retirement, and On the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. 111 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 Interest Credited to Member Accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77% Lump‐sum payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. Method and Assumptions used in Calculations of Actuarially Determined Contributions The following actuarial assumptions and methods were used to determine contribution rates reported for fiscal year ending June 30, 2022, which were based on the results of the June 30, 2021 actuarial valuation: PERS FURS MPORS General Wage Growth*3.50%3.50%3.50%Investment Rate of Return*7.65%7.65%7.65%*Includes inflation at 2.75%2.75%2.75% Merit increase 0% to 8.47%0% to 6.30%0% to 6.60% Asset valuation method Four-year smoothed market Four-year smoothed market Four-year smoothed marketActuarial cost method Entry age Normal Entry Age Normal Entry Age NormalAmortization method Level percentage of payroll, open Level percentage of pay, open Level percentage of pay, openMortality (Healthy members)For Males & Females: RP 2000 For Males & Females: RP 2000 For Males & Females: RP 2000 Combined Employee and Annuitant Combined Employee and Annuitant Combined Employee and Annuitant Mortality Table projected to 2020 Mortality Table projected to 2020 Mortality Table projected to 2020 using Scale BB, males set back using Scale BB, males set back using Scale BB, males set back1 year 1 year 1 yearMortality (Disabled members)For Males & Females: RP 2000 For Males & Females: RP 2000 For Males & Females: RP 2000 Combined Mortality Table, with no Combined Mortality Table Combined Mortality TableprojectionsAdmin Expense as a % of Payroll 0.29%0.13%0.17% Administrative expenses are recognized by an additional amount added to the normal cost contribution rate for the System. This amount varies from year to year based on the prior year’s actual administrative expenses. The actuarial assumptions and methods utilized in the June 30, 2021 valuation, were developed in the six-year experience study for the period ending 2016. 112 City of Bozeman, Montana Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis General Fund June 30, 2023 Actual Variance WithOriginal Budget Final Budget Amounts Final Budget Budgetary Fund Balance, July 1 5,444,605$ 5,444,605$ 5,444,605$ -$ Resources (inflows):Taxes 24,370,654 24,370,654 25,578,352 1,207,698 Licenses and permits 364,300 364,300 381,922 17,622 Intergovernmental 8,962,890 10,073,490 9,434,058 (639,432) Charges for services 4,225,559 6,146,228 6,307,168 160,940 Fines and forfeitures 1,074,000 1,074,000 1,009,841 (64,159) Interest on investments 80,000 80,000 171,669 91,669 Change in fair market value of investments - - (220,926) (220,926) Miscellaneous 294,626 294,626 351,367 56,741 Transfers in 4,514,716 8,644,904 10,854,877 2,209,973 Issuance of long-term debt - - 637,867 637,867 Sale of capital assets 5,000 2,768,705 2,774,759 6,054 Amounts available for appropriation 49,336,350 59,261,512 62,725,559 3,464,047 Charges to Appropriations (outflows):CurrentGeneral government 13,333,611 14,393,635 11,578,604 2,815,031 Public safety 16,803,308 19,974,420 20,849,308 (874,888) Public welfare 7,656,222 8,218,466 6,587,267 1,631,199 Other 5,118,620 2,203,427 1,683,415 520,012 Capital outlay 1,026,000 1,936,533 3,107,362 (1,170,829) Debt service - Principal 39,932 39,932 186,259 (146,327) Interest and fiscal charges 3,760 3,760 13,946 (10,186) Transfers to other funds 874,977 3,538,682 6,798,407 (3,259,725) Total charges to appropriations 44,856,430 50,308,855 50,804,568 (495,713) Budgetary fund balance, June 30 4,479,920$ 8,952,657$ 11,920,991$ 2,968,334$ 113 City of Bozeman, Montana Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis Major Special Revenue Funds June 30, 2023 Street Maintenance District Special Revenue Fund American Rescue Plan Special Revenue Fund Actual Variance With Actual Variance With Original Budget Final Budget Amounts Final Budget Original Budget Final Budget Amounts Final Budget Budgetary Fund Balance, July 1 1,963,990$ 1,963,990$ 1,963,990 -$ (197,922)$ (197,922)$ (197,922) -$ Resources (inflows): Special assessments 15,000 21,100 17,716 (3,384) - - - - Licenses and permits 18,000 18,000 37,033 19,033 - - - - Intergovernmental - - 35,762 35,762 6,734,581 6,734,581 6,751,994 17,413 Charges for services 6,768,463 6,768,463 8,220,620 1,452,157 - - - - Interest on investments 10,000 11,000 41,037 30,037 - - 196,050 196,050 Change in fair market value of investments - - (19,675) (19,675) - - 56,661 56,661 Miscellaneous 25,000 25,000 433,264 408,264 - - - - Transfers in 1,825,520 1,825,520 - (1,825,520) - - - - Issuance of long-term debt - - 862,620 862,620 - - - - Sale of capital assets - - 18,712 18,712 - - - - Amounts available for appropriation 10,625,973 10,633,073 11,611,079 978,006 6,536,659 6,536,659 6,806,783 270,124 Charges to Appropriations (outflows): Current Public works 6,097,170 6,268,058 7,080,982 (812,924) - - - - Capital outlay 2,470,990 4,159,894 2,155,485 2,004,409 - - - - Debt service Principal 88,973 174,840 307,904 (133,064) - - - - Interest and fiscal charges - - 14,613 (14,613) - - - - Transfers to other funds 738,101 738,101 206,363 531,738 11,267,081 11,267,081 6,751,994 4,515,087 Total charges to appropriations 9,395,234 11,340,893 9,765,347 1,575,546 11,267,081 11,267,081 6,751,994 4,515,087 Budgetary fund balance, June 30 1,230,739$ (707,820)$ 1,845,732$ 2,553,552$ (4,730,422)$ (4,730,422)$ 54,789$ 4,785,211$ 114 City of Bozeman, Montana Notes to the Schedules of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis June 30, 2023 Street Maintenance American RescueGeneral Fund District Plan Act Sources/ inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule 62,725,559$ 11,611,079$ 6,806,783$ Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current-year revenue for financial reporting purposes.(5,444,605) (1,963,990) 197,922 Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes.(10,854,877) - - The proceeds from the issuance of long-term debt or a lease are a budgetary resource but are a other financing source forfinancial reporting purposes.(637,867) (862,620) - The proceeds from the sale of assets are budgetary resourcesbut are regarded as a special item, rather than revenue, for financial reporting purposes.(2,774,759) (18,712) - Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds 43,013,451$ 8,765,757$ 7,004,705$ Uses/ outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule 50,804,568$ 9,765,347$ 6,751,994$ Differences - budget to GAAP: Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes.(6,798,407) (206,363) (6,751,994) Total expenditures as reported on the statement of revenues,expenditures, and changes in fund balances - governmental funds 44,006,161$ 9,558,984$ -$ Other Supplementary Information June 30, 2023 City of Bozeman, Montana 115 City of Bozeman, Montana Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Major Debt Service Fund and Major Capital Projects Fund June 30, 2023 SID Debt Service Capital Projects Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 473,008$ 158,684$ (314,324)$ -$ 2,240,188$ 2,240,188$ Special assessments - - - - 220,642 220,642 Licenses and permits - - - - 500 500 Intergovernmental - 591,564 591,564 - 59,965 59,965 Charges for services - 39,685 39,685 - - - Interest on investments 28,345 42,389 14,044 84,000 124,889 40,889 Change in fair market value of investments - (9,121) (9,121) - (77,357) (77,357) Miscellaneous - 145,227 145,227 4,144,000 - (4,144,000) Total revenues 501,353 968,428 467,075 4,228,000 2,568,827 (1,659,173) ExpendituresCurrent Public safety - 345,568 (345,568) - - - Public welfare - 62,808 (62,808) - 686,511 (686,511) Other - 152,877 (152,877) - - - Capital outlay - 392,939 (392,939) 14,088,505 12,590 14,075,915 Debt servicePrincipal 317,693 67,627 250,066 - - - Interest and fiscal charges - 58,168 (58,168) - - - Total expenditures 317,693 1,079,987 (762,294) 14,088,505 699,101 13,389,404 Excess (Deficiency) of Revenuesover (under) Expenditures 183,660 (111,559) (295,219) (9,860,505) 1,869,726 11,730,231 Other Financing Sources (Uses)Transfers in - 369,895 369,895 4,401,806 - (4,401,806) Transfers out (3,211,524) (298,872) 2,912,652 - (330,150) (330,150) Total other financing sources (uses)(3,211,524) 71,023 3,282,547 4,401,806 (330,150) (4,731,956) Net Change in Fund Balance (3,027,864)$ (40,536) 2,987,328$ (5,458,699)$ 1,539,576 6,998,275$ Fund Balance, Beginning of Year 2,351,957 3,775,619 Fund Balance, End of Year 2,311,421$ 5,315,195$ 116 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Departmental Special Revenues – Accounts for monies received and expended for projects relating to various City departments. TIF Downtown Improvement District – In November 1995, the City adopted an Urban Renewal Plan for the downtown area. This fund accounts for the revenue and expenditures associated with this tax increment financing district and associated business improvement district. City Planning Board – Accounts for monies received from various sources including property taxes, fees, and County revenues. Expenditures are for short-term and long-term planning of City and adjacent County zones. Section 76-1-102 MCA provides that the purpose of City planning is to encourage local governments to improve the present health, safety, convenience, and welfare of the citizens. Health-Medical Insurance – Accounts for property tax revenues received and transferred to the general fund for premiums and deductibles on group insurance coverage for City employees. Gas Tax Apportionment – Accounts for revenues from State gasoline taxes apportioned from the State of Montana Department of Highways. Tree Maintenance – Accounts for special assessment revenues levied, received, and expended for tree maintenance provided to specific property owners. Fire Impact Fees Special Revenues – Accounts for the collection and expenditures associated with the fire impact fees. Street Impact Fee – Accounts for the collection and expenditures associated with the street impact fees. Building Inspection Fund – Accounts for all activity related to enforcing the building regulation adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Pole Yard TIF – In November 2020, the City created a tax increment financing district to eliminate conditions that contribute to blight substantially impairing sound growth of the City through investments in public infrastructure and efficient delivery of public services. The fund accounts for the revenue and expenditures associated with the district. Economic Development Revolving Loan Fund – Accounts for revenues received and expended relative to loans made in accordance with the Community Development Block Grant Program, for economic development purposes. Community Housing – Accounts for money set aside by the City Commission and related expenditure for the establishment of safe, decent, and affordable housing for low and moderate-income citizens. Street Arterial & Collector District – Accounts for special assessment revenues levied, received, and expended for necessary transportation infrastructure. 117 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Governmental Funds June 30, 2023 TIF N 7th Corridor – In August of 2005, the City created a Renewal Plan for the North 7th Avenue business district. This fund accounts for the revenue and expenditures associated with the district. TIF N.E. Urban Renewal – In August of 2005, the City created an Urban Renewal Plan for the Northeast Urban section of Bozeman. This fund accounts for the revenue and expenditures associated with the district. TIF Mandeville/Wheat Dr. – In December 2006, the City created a tax increment financing district to encourage the attraction and retention of value-adding farming industries. This fund accounts for the revenue and expenditures associated with the district. Victim/Witness Advocate – Accounts for monies collected through the Court system to assist with Victim and Witness Advocate Program. Fire Department Equipment– Accounts for Public Safety mill levy tax revenues for fire department capital and equipment. TIF South Bozeman Technology – In December 2012, the City created a tax increment financing district to improve existing infrastructure deficiencies on property adjacent to Montana State University and the Innovation Campus. This fund accounts for the revenue and expenditures associated with the district. Parks and Trails District Fund – In May 2020, the Citizens of Bozeman approved the creation of a Parks and Trails District. This fund accounts for the special assessment and rental revenues collected, and the operating and capital expenditures required to manage and maintain citywide parks and trails. Street Lighting – Accounts for special assessment revenues levied, received, and expended for street and public highway lighting provided to specific property owners. Park Land – Accounts for monies donated for the purpose of acquiring and developing City Parks. Municipal Court Restitution – Accounts for checks that were canceled on the restitution checking account, per MCA 46-18-250. Debt Service Funds Special Improvement District (SID) Revolving – Accounts for property tax revenues received and expended for the payment of special improvement district bond principal and interest. General Obligation Bonds Debt Service Fund – Accounts for the debt service payments associated with the Library and Transportation general obligation bonds. Tax Increment Financing Bonds Debt Service Fund – Accounts for the debt service payments associated with the Tax Increment Urban Renewal Revenue Bonds issued as partial funding for the construction of a Downtown Intermodal Parking Facility. 118 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Governmental Funds June 30, 2023 Permanent Funds Perpetual Cemetery Care – Accounts for 15% maintenance fee received from the sale of City cemetery plots, which is to be used for perpetual care. The interest income from the trust is transferred to the general fund for use in maintaining the City’s cemetery. 119 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds DowntownImprovement Health-Medical Gas TaxDepartmentalDistrictCity Planning Insurance Apportionment Assets Cash and investments 2,367,398$ 7,906,849$ 1,469,418$ 1,109,091$ 567,950$ Receivables (Net of allowance for uncollectibles) Property taxes 11,822 245,158 23,789 252,568 - Accrued interest 4,901 20,756 3,748 2,912 1,492 Accounts 1,385 - - - - Special assessments - 1,474 - - - Intergovernmental 394,738 - - - - Advances to other funds - - - - - Notes receivable - - - - - Restricted cash and investments 25,000 - - - - Total assets 2,805,244$ 8,174,237$ 1,496,955$ 1,364,571$ 569,442$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable 492,745$ 2,859,042$ 123,332$ -$ 319,745$ Escheat property payable - - - - - Accrued employee benefits - - 764 - - Interest payable - - 2,152 - - Apperance bonds and other liabilities - - - - 8,175 Due to other funds - - - - - Unearned revenue - - - - - Total liabilities 492,745 2,859,042 126,248 - 327,920 Deferred Inflows of ResourcesUnavailable revenue - property taxes 1,078 - 2,164 23,028 - Fund BalanceNonspendable - - - - - Restricted 560,160 5,315,195 1,368,543 1,341,543 241,522 Committed 287,279 - - - - Assigned 1,463,982 - - - - Unassigned - - - - - Total fund balance 2,311,421 5,315,195 1,368,543 1,341,543 241,522 Total liabilities, deferred inflowsof resources, and fund balances 2,805,244$ 8,174,237$ 1,496,955$ 1,364,571$ 569,442$ 120 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Tree Bulding Pole YardMaintenanceFire Impact Fee Street Impact Fee Inspection TIF District Assets Cash and investments 696,715$ -$ -$ 1,223,518$ 317,319$ Receivables (Net of allowance for uncollectibles) Property taxes - - - - 17,568 Accrued interest 1,891 12,689 40,185 2,993 - Accounts - - - - - Special assessments 13,212 - - - - Intergovernmental - - - - - Advances to other funds - - - - - Notes receivable - - - - - Restricted cash and investments - 4,830,808 15,281,573 - - Total assets 711,818$ 4,843,497$ 15,321,758$ 1,226,511$ 334,887$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable 85,528$ 764$ 1,295,002$ 194,931$ -$ Escheat property payable - - - - - Accrued employee benefits - - - 886 - Interest payable - - - 9,021 - Apperance bonds and other liabilities - - 115,591 - - Due to other funds - - - - - Unearned revenue 9,100 - - - - Total liabilities 94,628 764 1,410,593 204,838 - Deferred Inflows of ResourcesUnavailable revenue - property taxes - - - - - Fund BalanceNonspendable - - - - - Restricted 617,190 4,842,733 13,911,165 1,021,673 334,887 Committed - - - - - Assigned - - - - - Unassigned - - - - - Total fund balance 617,190 4,842,733 13,911,165 1,021,673 334,887 Total liabilities, deferred inflowsof resources, and fund balances 711,818$ 4,843,497$ 15,321,758$ 1,226,511$ 334,887$ 121 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Econonomic Street Arterial North NortheastDevelopmentCommunityand Collector 7th Corridor Urban RenewalRevolving Loans Housing District TIF District TIF District Assets Cash and investments -$ 2,294,532$ 3,851,110$ 2,292,211$ 949,800$ Receivables (Net of allowance for uncollectibles) Property taxes - 95,033 - 188,140 47,339 Accrued interest - 5,673 9,998 7,365 2,495 Accounts 189,267 - - - - Special assessments - - 22,101 - - Intergovernmental - - - - - Advances to other funds - - - - - Notes receivable 797,979 17,498 - - - Restricted cash and investments - - 898,377 512,091 92,000 Total assets 987,246$ 2,412,736$ 4,781,586$ 2,999,807$ 1,091,634$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ 63,993$ 376,047$ 18,456$ 36,153$ Escheat property payable - - - - - Accrued employee benefits - - - - - Interest payable - - - - - Apperance bonds and other liabilities - - 54,326 - 811 Due to other funds - - - - - Unearned revenue - - - - - Total liabilities - 63,993 430,373 18,456 36,964 Deferred Inflows of ResourcesUnavailable revenue - property taxes - 8,521 - 38,424 - Fund Balance (Deficit)Nonspendable - - - - - Restricted 987,246 572,915 4,351,213 2,942,927 1,054,670 Committed - 316,081 - - - Assigned - 1,463,982 - - - Unassigned - (12,756) - - - Total fund balance (deficit)987,246 2,340,222 4,351,213 2,942,927 1,054,670 Total liabilities, deferred inflowsof resources, and fund balances 987,246$ 2,412,736$ 4,781,586$ 2,999,807$ 1,091,634$ 122 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Mandeville/Wheat Drive Victim/Witness Fire Department South Bozeman Parks and TrailsTIF District Advocate Equipment TIF District District Assets Cash and investments 163,597$ 392,687$ 397,213$ 58,806$ 3,726,744$ Receivables (Net of allowance for uncollectibles) Property taxes 2,667 - 47,766 - - Accrued interest 430 1,031 1,044 - 10,359 Accounts - 4,694 - - 15 Special assessments - - - - 76,942 Intergovernmental - - - - - Advances to other funds - - - - - Notes receivable - - - - - Restricted cash and investments - - - - - Total assets 166,694$ 398,412$ 446,023$ 58,806$ 3,814,060$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ 52,529$ 41,600$ 4,499$ 498,720$ Escheat property payable - - - - - Accrued employee benefits - - - - - Interest payable - - - - - Apperance bonds and other liabilities - - - - - Due to other funds - - - - - Unearned revenue - - - - - Total liabilities - 52,529 41,600 4,499 498,720 Deferred Inflows of ResourcesUnavailable revenue - property taxes - - 4,355 - - Fund Balance (Deficit)Nonspendable - - - - - Restricted 166,694 345,883 400,068 54,307 3,315,340 Committed - - - - - Assigned - - - - - Unassigned - - - - - Total fund balance (deficit)166,694 345,883 400,068 54,307 3,315,340 Total liabilities, deferred inflowsof resources, and fund balances 166,694$ 398,412$ 446,023$ 58,806$ 3,814,060$ 123 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Total NonmajorStreetMunicipal Court SpecialLightingPark Land Restitution Revenue Funds Assets Cash and investments 527,426$ 1,957,707$ -$ 32,270,091$ Receivables (Net of allowance for uncollectibles) Property taxes - - - 931,850 Accrued interest - 5,142 - 135,104 Accounts - - - 195,361 Special assessments 6,944 - - 120,673 Intergovernmental - - - 394,738 Advances to other funds - - - - Notes receivable - - - 815,477 Restricted cash and investments - - 25,133 21,664,982 Total assets 534,370$ 1,962,849$ 25,133$ 56,528,276$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable 29,508$ -$ -$ 6,492,594$ Escheat property payable - - 25,028 25,028 Accrued employee benefits - - - 1,650 Interest payable - - - 11,173 Apperance bonds and other liabilities - - - 178,903 Due to other funds - - - - Unearned revenue - - - 9,100 Total liabilities 29,508 - 25,028 6,718,448 Deferred Inflows of ResourcesUnavailable revenue - property taxes - - - 77,570 Fund BalanceNonspendable - - - - Restricted 504,862 1,962,849 105 46,213,690 Committed - - - 603,360 Assigned - - - 2,927,964 Unassigned - - - (12,756) Total fund balance 504,862 1,962,849 105 49,732,258 Total liabilities, deferred inflowsof resources, and fund balances 534,370$ 1,962,849$ 25,133$ 56,528,276$ 124 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Debt Service Funds Total NonmajorSIDGeneral Obligation Debt ServiceRevolvingBondsTIF Bonds Funds Assets Cash and investments 54,728$ 5$ -$ 54,733$ Receivables (Net of allowance for uncollectibles) Property taxes - 278,439 - 278,439 Accrued interest 717 - - 717 Accounts - - - - Special assessments - - - - Intergovernmental - - - - Advances to other funds 641,763 - - 641,763 Notes receivable - - - - Restricted cash and investments - - - - Total assets 697,208$ 278,444$ -$ 975,652$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ -$ -$ -$ Escheat property payable - - - - Accrued employee benefits - - - - Interest payable - - - - Apperance bonds and other liabilities - - - - Due to other funds - 543,293 - 543,293 Unearned revenue - - - - Total liabilities - 543,293 - 543,293 Deferred Inflows of ResourcesUnavailable revenue - property taxes - 25,368 - 25,368 Fund Balance (Deficit)Nonspendable - - - - Restricted 697,208 - - 697,208 Committed - - - - Assigned - - - - Unassigned - (290,217) - (290,217) Total fund balance (deficit)697,208 (290,217) - 406,991 Total liabilities, deferred inflowsof resources, and fund balances 697,208$ 278,444$ -$ 975,652$ 125 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Permanent Fund Total Total NonmajorCemetaryGovernmentalPerpetual Care Funds Assets Cash and investments -$ 32,324,824$ Receivables (Net of allowance for uncollectibles) Property taxes - 1,210,289 Accrued interest 4,757 140,578 Accounts 9,536 204,897 Special assessments - 120,673 Intergovernmental - 394,738 Advances to other funds - 641,763 Notes receivable - 815,477 Restricted cash and investments 1,811,056 23,476,038 Total assets 1,825,349$ 59,329,277$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ 6,492,594$ Escheat property payable - 25,028 Accrued employee benefits - 1,650 Interest payable - 11,173 Apperance bonds and other liabilities - 178,903 Due to other funds - 543,293 Unearned revenue 20,950 30,050 Total liabilities 20,950 7,282,691 Deferred Inflows of ResourcesUnavailable revenue - property taxes - 102,938 Fund Balance (Deficit)Nonspendable 1,804,399 1,804,399 Restricted - 46,910,898 Committed - 603,360 Assigned - 2,927,964 Unassigned - (302,973) Total fund balance (deficit)1,804,399 51,943,648 Total liabilities, deferred inflowsof resources, and fund balances 1,825,349$ 59,329,277$ 126 City of Bozeman, Montana Combining Statements of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds DowntownImprovement Health-Medical Gas TaxDepartmentalDistrictCity Planning Insurance Apportionment RevenuesTaxes 158,684$ 2,240,188$ 319,372$ 3,390,016$ -$ Special assessments - 220,642 - - - Licenses and permits - 500 65,250 - - Intergovernmental 591,564 59,965 181,220 - 788,161 Charges for services 39,685 - 1,275,250 - - Fines and forfeits - - - - - Interest on on investments 42,389 124,889 9,872 11,552 9,193 Change in fair market value of investments (9,121) (77,357) (49,251) (13,036) 15,291 Interest on loans receivable - - - - - Miscellaneous 145,227 - 59,771 - - Total revenues 968,428 2,568,827 1,861,484 3,388,532 812,645 ExpendituresCurrent General government - - 3,299,875 - - Public safety 345,568 - - - - Public works - - - - 545,185 Public welfare 62,808 686,511 - - - Other 152,877 - - - - Capital outlay 392,939 12,590 90,570 - 1,088,063 Debt servicePrincipal 67,627 - 32,421 - - Interest and fiscal charges 58,168 - 2,915 - - Total expenditures 1,079,987 699,101 3,425,781 - 1,633,248 Excess (Deficiency) of Revenues Over (Under) Expenditures (111,559) 1,869,726 (1,564,297) 3,388,532 (820,603) Other Financing Sources (Uses) Transfers in 369,895 - 2,100,028 - - Transfers out (298,872) (330,150) - (3,072,283) - Issuance of long-term debt - - 89,785 - - Sale of capital assets - - - - - Total other financing sources (uses)71,023 (330,150) 2,189,813 (3,072,283) - Net Change in Fund Balances (40,536) 1,539,576 625,516 316,249 (820,603) Fund Balance, Beginning of Year 2,351,957 3,775,619 743,027 1,025,294 1,062,125 Fund Balances, End of Year 2,311,421$ 5,315,195$ 1,368,543$ 1,341,543$ 241,522$ 127 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Tree Building Pole YardMaintenanceFire Impact Fee Street Impact Fee Inspection TIF District RevenuesTaxes -$ -$ -$ -$ 187,994$ Special assessments 2,090 - - - - Licenses and permits - - - 3,057,483 - Intergovernmental 8,422 - - 159,792 5,897 Charges for services 889,983 522,006 5,205,583 32,400 - Fines and forfeits - - - - - Interest on on investments 14,228 101,857 311,234 25,806 - Change in fair market value of investments (4,532) (38,018) (91,627) 6,516 - Interest on loans receivable - - - - - Miscellaneous 26,014 - 2,520 2 - Total revenues 936,205 585,845 5,427,710 3,281,999 193,891 ExpendituresCurrent General government - - - - - Public safety - 30,279 - 3,530,445 - Public works - - 313,614 - - Public welfare 900,976 - - - - Other - - - - - Capital outlay 84,986 - 4,621,353 421,400 - Debt servicePrincipal - - - 130,576 - Interest and fiscal charges - - - 9,021 - Total expenditures 985,962 30,279 4,934,967 4,091,442 - Excess (Deficiency) of Revenues Over (Under) Expenditures (49,757) 555,566 492,743 (809,443) 193,891 Other Financing Sources (Uses) Transfers in - - 199,550 - - Transfers out - - - - - Issuance of long-term debt - - - 421,400 - Sale of capital assets 6,600 - - - - Total other financing sources (uses)6,600 - 199,550 421,400 - Net Change in Fund Balances (43,157) 555,566 692,293 (388,043) 193,891 Fund Balance, Beginning of Year 660,347 4,287,167 13,218,872 1,409,716 140,996 Fund Balances, End of Year 617,190$ 4,842,733$ 13,911,165$ 1,021,673$ 334,887$ 128 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Econonomic Street Arterial North NortheastDevelopmentCommunityand Collector 7th Corridor Urban RenewalRevolving Loans Housing District TIF District TIF District RevenuesTaxes -$ 1,277,713$ -$ 1,666,460$ 405,388$ Special assessments - - 3,936 - - Licenses and permits - - - - - Intergovernmental - 1,542 - 47,767 1,802 Charges for services - - 1,662,399 - - Fines and forfeits - - - - - Interest on on investments 802 22,939 85,529 52,288 18,692 Change in fair market value of investments - (53,553) (15,026) (32,165) (11,208) Interest on loans receivable 19,941 - - - - Miscellaneous - 134,153 - - - Total revenues 20,743 1,382,794 1,736,838 1,734,350 414,674 ExpendituresCurrent General government - - - - - Public safety - - - - - Public works - - 42,405 - - Public welfare 58,523 279,908 - 162,661 57,375 Other - - - - - Capital outlay - - 1,140,492 131,766 63,587 Debt servicePrincipal - - - - 41,803 Interest and fiscal charges - - - - 50,197 Total expenditures 58,523 279,908 1,182,897 294,427 212,962 Excess (Deficiency) of Revenues Over (Under) Expenditures (37,780) 1,102,886 553,941 1,439,923 201,712 Other Financing Sources (Uses) Transfers in - 1,000,000 - - - Transfers out - - (55,475) (409,950) - Issuance of long-term debt - - - - - Sale of capital assets - - - - - Total other financing sources (uses)- 1,000,000 (55,475) (409,950) - Net Change in Fund Balances (37,780) 2,102,886 498,466 1,029,973 201,712 Fund Balance, Beginning of Year 1,025,026 237,336 3,852,747 1,912,954 852,958 Fund Balances, End of Year 987,246$ 2,340,222$ 4,351,213$ 2,942,927$ 1,054,670$ 129 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Mandeville/Wheat Drive Victim/Witness Fire Department South Bozeman Parks and TrailsTIF District Advocate Equipment TIF District District RevenuesTaxes 21,643$ -$ 640,306$ 34,690$ -$ Special assessments - - - - 13,346 Licenses and permits - - - - - Intergovernmental - - - - 22,041 Charges for services - - - - 5,888,241 Fines and forfeits - 59,429 - - - Interest on on investments 3,381 8,831 18,926 681 62,884 Change in fair market value of investments (1,604) (906) 16,301 - (49,132) Interest on loans receivable - - - - - Miscellaneous - - - - 55,542 Total revenues 23,420 67,354 675,533 35,371 5,992,922 ExpendituresCurrent General government - 122,658 - - - Public safety - - 98,517 - - Public works - - - - - Public welfare - - - 4,803 4,470,034 Other - - - - - Capital outlay - - 78,182 - 467,028 Debt servicePrincipal - - - - - Interest and fiscal charges - - - - - Total expenditures - 122,658 176,699 4,803 4,937,062 Excess (Deficiency) of Revenues Over (Under) Expenditures 23,420 (55,304) 498,834 30,568 1,055,860 Other Financing Sources (Uses) Transfers in - - - - 375,977 Transfers out - - (1,141,038) - - Issuance of long-term debt - - - - - Sale of capital assets - - - - - Total other financing sources (uses)- - (1,141,038) - 375,977 Net Change in Fund Balances 23,420 (55,304) (642,204) 30,568 1,431,837 Fund Balance, Beginning of Year 143,274 401,187 1,042,272 23,739 1,883,503 Fund Balances, End of Year 166,694$ 345,883$ 400,068$ 54,307$ 3,315,340$ 130 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Total NonmajorStreetMunicipal Court SpecialLightingPark Land Restitution Revenue Funds Revenues Taxes -$ -$ -$ 10,342,454$ Special assessments 466,389 - - 706,403 Licenses and permits - - - 3,123,233 Intergovernmental - - - 1,868,173 Charges for services - - - 15,515,547 Fines and forfeits - - - 59,429 Interest on on investments 10,614 40,848 - 977,435 Change in fair market value of investments - (30,028) - (438,456) Interest on loans receivable - - - 19,941 Miscellaneous - 823,292 - 1,246,521 Total revenues 477,003 834,112 - 33,420,680 ExpendituresCurrent General government - - - 3,422,533 Public safety - - - 4,004,809 Public works 470,532 - - 1,371,736 Public welfare - 20,146 - 6,703,745 Other - - - 152,877 Capital outlay - 3,014 - 8,595,970 Debt servicePrincipal - 100,000 - 372,427 Interest and fiscal charges - - - 120,301 Total expenditures 470,532 123,160 - 24,744,398 Excess (Deficiency) of Revenues Over (Under) Expenditures 6,471 710,952 - 8,676,282 Other Financing Sources (Uses) Transfers in - - - 4,045,450 Transfers out - - - (5,307,768) Issuance of long-term debt - - - 511,185 Sale of capital assets - - - 6,600 Total other financing sources (uses)- - - (744,533) Net Change in Fund Balances 6,471 710,952 - 7,931,749 Fund Balance, Beginning of Year 498,391 1,251,897 105 41,800,509 Fund Balances, End of Year 504,862$ 1,962,849$ 105$ 49,732,258$ 131 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Debt Service Funds Total NonmajorSIDGeneral Obligation Debt ServiceRevolvingBondsTIF Bonds Funds Revenues Taxes -$ 3,736,221$ -$ 3,736,221$ Special assessments - - - - Licenses and permits - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeits - - - - Interest on on investments 11,491 9,183 - 20,674 Change in fair market value of investments 74,123 - - 74,123 Interest on loans receivable 10,405 - - 10,405 Miscellaneous - - - - Total revenues 96,019 3,745,404 - 3,841,423 ExpendituresCurrent General government - - - - Public safety - - - - Public works - - - - Public welfare - - - - Other - - - - Capital outlay - - - - Debt servicePrincipal - 2,225,000 444,000 2,669,000 Interest and fiscal charges - 1,730,380 296,100 2,026,480 Total expenditures - 3,955,380 740,100 4,695,480 Excess (Deficiency) of Revenues Over (Under) Expenditures 96,019 (209,976) (740,100) (854,057) Other Financing Sources (Uses) Transfers in 1,326,665 - 740,100 2,066,765 Transfers out (2,188,757) (128,272) - (2,317,029) Issuance of long-term debt - - - - Sale of capital assets - - - - Total other financing sources (uses)(862,092) (128,272) 740,100 (250,264) Net Change in Fund Balances (766,073) (338,248) - (1,104,321) Fund Balance, Beginning of Year 1,463,281 48,031 - 1,511,312 Fund Balances, End of Year 697,208$ (290,217)$ -$ 406,991$ 132 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Permanent Fund Total Total NonmajorCemetaryGovernmentalPerpetual Care Funds RevenuesTaxes -$ 14,078,675$ Special assessments - 706,403 Licenses and permits - 3,123,233 Intergovernmental - 1,868,173 Charges for services 93,173 15,608,720 Fines and forfeits - 59,429 Interest on on investments 38,711 1,036,820 Change in fair market value of investments (11,589) (375,922) Interest on loans receivable - 30,346 Miscellaneous - 1,246,521 Total revenues 120,295 37,382,398 ExpendituresCurrent General government - 3,422,533 Public safety - 4,004,809 Public works - 1,371,736 Public welfare - 6,703,745 Other - 152,877 Capital outlay - 8,595,970 Debt servicePrincipal - 3,041,427 Interest and fiscal charges - 2,146,781 Total expenditures - 29,439,878 Excess (Deficiency) of Revenues Over (Under) Expenditures 120,295 7,942,520 Other Financing Sources (Uses) Transfers in - 6,112,215 Transfers out - (7,624,797) Issuance of long-term debt - 511,185 Sale of capital assets - 6,600 Total other financing sources (uses)- (994,797) Net Change in Fund Balances 120,295 6,947,723 Fund Balance, Beginning of Year 1,684,104 44,995,925 Fund Balances, End of Year 1,804,399$ 51,943,648$ 133 City of Bozeman, Montana Combining Statements of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsDepartmentalDowntown Improvement District City Planning Final Actual Variance with Final Actual Variance with Final Actual Variance with Budget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 152,627$ 158,684$ 6,057$ 8,033,278$ 2,240,188$ (5,793,090)$ 305,254$ 319,372$ 14,118$ Special assessments - - - 185,100 220,642 35,542 - - - Licenses and permits - - - 2,000 500 (1,500) - 65,250 65,250 Intergovernmental 425,000 591,564 166,564 57,059 59,965 2,906 118,081 181,220 63,139 Charges for services 10,000 39,685 29,685 - - - 1,642,515 1,275,250 (367,265) Fines and forfeitures - - - - - - - - - Interest on investments 21,175 42,389 21,214 20,000 124,889 104,889 10,000 9,872 (128) Change in fair market value of investments - (9,121) (9,121) - (77,357) (77,357) - (49,251) (49,251) Interest on loans receivable - - - - - - - - - Miscellaneous 94,000 145,227 51,227 - - - 50,000 59,771 9,771 Total revenues 702,802 968,428 265,626 8,297,437 2,568,827 (5,728,610) 2,125,850 1,861,484 (264,366) ExpendituresCurrentGeneral government - - - - - - 4,410,310 3,299,875 1,110,435 Public safety 285,961 345,568 (59,607) - - - - - - Public works - - - - - - - - - Public welfare 426,600 62,808 363,792 5,165,785 686,511 4,479,274 - - - Other 152,877 152,877 - - - - - - - Capital outlay - 392,939 (392,939) - 12,590 (12,590) 40,000 90,570 (50,570) Debt servicePrincipal 125,795 67,627 58,168 - - - - 32,421 (32,421) Interest and fiscal charges - 58,168 (58,168) - - - - 2,915 (2,915) Total expenditures 991,233 1,079,987 (88,754) 5,165,785 699,101 4,466,684 4,450,310 3,425,781 1,024,529 Excess (Deficiency) of Revenuesover (under) Expenditures (288,431) (111,559) 176,872 3,131,652 1,869,726 (1,261,926) (2,324,460) (1,564,297) 760,163 Other Financing Sources (Uses)Transfers in 20,688 369,895 349,207 - - - 245,365 2,100,028 1,854,663 Transfers out (68,497) (298,872) (230,375) (330,150) (330,150) - - - - Issuance of long-term debt - - - - - - - 89,785 89,785 Sale of capital assets - - - - - - - - - Total other financing sources (uses)(47,809) 71,023 118,832 (330,150) (330,150) - 245,365 2,189,813 1,944,448 Net Change in Fund Balance (336,240)$ (40,536) 295,704$ 2,801,502$ 1,539,576 (1,261,926)$ (2,079,095)$ 625,516 2,704,611$ Fund Balance, Beginning of Year 2,351,957 3,775,619 743,027 Fund Balance, End of Year 2,311,421$ 5,315,195$ 1,368,543$ 134 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsHealth-Medical Insurance Gas Tax Apportionment Tree Maintenance Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 3,300,689$ 3,390,016$ 89,327$ -$ -$ -$ -$ -$ -$ Special assessments - - - - - - 2,000 2,090 90 Licenses and permits - - - - - - - - - Intergovernmental - - - 1,734,520 788,161 (946,359) - 8,422 8,422 Charges for services - - - - - - 872,292 889,983 17,691 Fines and forfeitures - - - - - - - - - Interest on investments - 11,552 11,552 10,000 9,193 (807) 4,000 14,228 10,228 Change in fair market value of investments - (13,036) (13,036) - 15,291 15,291 - (4,532) (4,532) Interest on loans receivable - - - - - - - - - Miscellaneous - - - - - 6,000 26,014 20,014 Total revenues 3,300,689 3,388,532 87,843 1,744,520 812,645 (931,875) 884,292 936,205 51,913 ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - 1,358,350 545,185 813,165 - - - Public welfare - - - - - - 996,471 900,976 95,495 Other - - - - - - - - - Capital outlay - - - 80,000 1,088,063 (1,008,063) 235,000 84,986 150,014 Debt servicePrincipal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures - - - 1,438,350 1,633,248 (194,898) 1,231,471 985,962 245,509 Excess (Deficiency) of Revenuesover (under) Expenditures 3,300,689 3,388,532 87,843 306,170 (820,603) (1,126,773) (347,179) (49,757) 297,422 Other Financing Sources (Uses)Transfers in - - - - - - - - - Transfers out (3,300,689) (3,072,283) 228,406 (975,291) - 975,291 - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - 6,600 6,600 Total other financing sources (uses)(3,300,689) (3,072,283) 228,406 (975,291) - 975,291 - 6,600 6,600 Net Change in Fund Balance -$ 316,249 316,249$ (669,121)$ (820,603) (151,482)$ (347,179)$ (43,157) 304,022$ Fund Balance, Beginning of Year 1,025,294 1,062,125 660,347 Fund Balance, End of Year 1,341,543$ 241,522$ 617,190$ 135 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsFire Impact Fee Street Impact Fee Building Inspection Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ -$ -$ -$ -$ -$ -$ Special assessments - - - - - - - - - Licenses and permits - - - - - - 2,129,880 3,057,483 927,603 Intergovernmental - - - - - - - 159,792 159,792 Charges for services 511,181 522,006 10,825 5,727,830 5,205,583 (522,247) 100 32,400 32,300 Fines and forfeitures - - - - - - - - - Interest on investments 8,800 101,857 93,057 60,000 311,234 251,234 12,000 25,806 13,806 Change in fair market value of investments - (38,018) (38,018) - (91,627) (91,627) - 6,516 6,516 Interest on loans receivable - - - - - - - - - Miscellaneous - - - 1,000 2,520 1,520 - 2 2 Total revenues 519,981 585,845 65,864 5,788,830 5,427,710 (361,120) 2,141,980 3,281,999 1,140,019 ExpendituresCurrentGeneral government - - - - - - - - - Public safety 25,560 30,279 (4,719) - - - 4,279,526 3,530,445 749,081 Public works - - - 343,392 313,614 29,778 - - - Public welfare - - - - - - - - - Other - - - - - - - - - Capital outlay 1,500,000 - 1,500,000 14,582,746 4,621,353 9,961,393 40,000 421,400 (381,400) Debt servicePrincipal - - - - - - - 130,576 (130,576) Interest and fiscal charges - - - - - - - 9,021 (9,021) Total expenditures 1,525,560 30,279 1,495,281 14,926,138 4,934,967 9,991,171 4,319,526 4,091,442 228,084 Excess (Deficiency) of Revenuesover (under) Expenditures (1,005,579) 555,566 1,561,145 (9,137,308) 492,743 9,630,051 (2,177,546) (809,443) 1,368,103 Other Financing SourcesTransfers in - - - - 199,550 199,550 - - - Transfers out - - - - - - - - - Issuance of long-term debt - - - - - - - 421,400 421,400 Sale of capital assets - - - - - - - - - Total other financing sources - - - - 199,550 199,550 - 421,400 421,400 Net Change in Fund Balance (1,005,579)$ 555,566 1,561,145$ (9,137,308)$ 692,293 9,829,601$ (2,177,546)$ (388,043) 1,789,503$ Fund Balance, Beginning of Year 4,287,167 13,218,872 1,409,716 Fund Balance, End of Year 4,842,733$ 13,911,165$ 1,021,673$ 136 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsPole Yard TIF District Economic Development Revolving Loans Community Housing Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 260,180$ 187,994$ (72,186)$ -$ -$ -$ 1,221,016$ 1,277,713$ 56,697$ Special assessments - - - - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - 5,897 5,897 - - - - 1,542 1,542 Charges for services - - - - - - - - - Fines and forfeitures - - - - - - - - - Interest on investments - - - - 802 802 5,000 22,939 17,939 Change in fair market value of investments - - - - - - - (53,553) (53,553) Interest on loans receivable - - - 25,000 19,941 (5,059) 900 - (900) Miscellaneous - - - - - - - 134,153 134,153 Total revenues 260,180 193,891 (66,289) 25,000 20,743 (4,257) 1,226,916 1,382,794 155,878 ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - - - - - - - Public welfare 80,000 - 80,000 31,000 58,523 (27,523) 1,228,728 279,908 948,820 Other - - - - - - - - - Capital outlay - - - - - - Debt service - - - Principal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures 80,000 - 80,000 31,000 58,523 (27,523) 1,228,728 279,908 948,820 Excess (Deficiency) of Revenuesover (under) Expenditures 180,180 193,891 13,711 (6,000) (37,780) (31,780) (1,812) 1,102,886 1,104,698 Other Financing UsesTransfers in - - - - - - - 1,000,000 1,000,000 Transfers out - - - - - - - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing uses - - - - - - - 1,000,000 1,000,000 Net Change in Fund Balance 180,180$ 193,891 13,711$ (6,000)$ (37,780) (31,780)$ (1,812)$ 2,102,886 2,104,698$ Fund Balance, Beginning of Year 140,996 1,025,026 237,336 Fund Balance, End of Year 334,887$ 987,246$ 2,340,222$ 137 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsStreet Arterial and Collector District North 7th Corridor TIF District Northeast Urban Renewal TIF District Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ 2,635,734$ 1,666,460$ (969,274)$ 647,632$ 405,388$ (242,244)$ Special assessments 3,500 3,936 436 - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - - - 37,927 47,767 9,840 1,354 1,802 448 Charges for services 1,654,440 1,662,399 7,959 - - - - - - Fines and forfeitures - - - - - - - - - Interest on investments 6,472 85,529 79,057 10,000 52,288 42,288 3,000 18,692 15,692 Change in fair market value of investments - (15,026) (15,026) - (32,165) (32,165) - (11,208) (11,208) Interest on loans receivable - - - - - - - - - Miscellaneous 3,359 - (3,359) - - - - - - Total revenues 1,667,771 1,736,838 69,067 2,683,661 1,734,350 (949,311) 651,986 414,674 (237,312) ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works 253,000 42,405 210,595 - - - - - - Public welfare - - - 4,239,813 162,661 4,077,152 1,045,624 57,375 988,249 Other - - - - - - - - - Capital outlay 5,485,000 1,140,492 4,344,508 - 131,766 (131,766) - 63,587 (63,587) Debt servicePrincipal - - - - - - 92,000 41,803 50,197 Interest and fiscal charges - - - - - - - 50,197 (50,197) Total expenditures 5,738,000 1,182,897 4,555,103 4,239,813 294,427 3,945,386 1,137,624 212,962 924,662 Excess (Deficiency) of Revenuesover (under) Expenditures (4,070,229) 553,941 4,624,170 (1,556,152) 1,439,923 2,996,075 (485,638) 201,712 687,350 Other Financing Sources (Uses)Transfers in 975,291 - (975,291) - - - - - - Transfers out (1,000,000) (55,475) 944,525 (409,950) (409,950) - - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing sources (uses)(24,709) (55,475) (30,766) (409,950) (409,950) - - - - Net Change in Fund Balance (4,094,938)$ 498,466 4,593,404$ (1,966,102)$ 1,029,973 2,996,075$ (485,638)$ 201,712 687,350$ Fund Balance, Beginning of Year 3,852,747 1,912,954 852,958 Fund Balance, End of Year 4,351,213$ 2,942,927$ 1,054,670$ 138 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsMandeville/Wheat Drive TIF District Victim/Witness Advocate Fire Department Equipment Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 54,701$ 21,643$ (33,058)$ -$ -$ -$ 610,508$ 640,306$ 29,798$ Special assessments - - - - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - - - - - - - - - Charges for services - - - - - - - - - Fines and forfeitures - - - 70,000 59,429 (10,571) - - - Interest on investments - 3,381 3,381 3,500 8,831 5,331 5,000 18,926 13,926 Change in fair market value of investments - (1,604) (1,604) - (906) (906) - 16,301 16,301 Interest on loans receivable - - - - - - - - - Miscellaneous - - - - - - - - - Total revenues 54,701 23,420 (31,281) 73,500 67,354 (6,146) 615,508 675,533 60,025 ExpendituresCurrentGeneral government - - - 140,000 122,658 17,342 - - - Public safety - - - - - - - 98,517 (98,517) Public works - - - - - - - - - Public welfare 100,000 - 100,000 - - - - - - Other - - - - - - - - - Capital outlay - - - - - - 641,750 78,182 563,568 Debt servicePrincipal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures 100,000 - 100,000 140,000 122,658 17,342 641,750 176,699 465,051 Excess (Deficiency) of Revenuesover (under) Expenditures (45,299) 23,420 68,719 (66,500) (55,304) 11,196 (26,242) 498,834 525,076 Other Financing UsesTransfers in - - - - - - - - - Transfers out - - - - - - (1,000,000) (1,141,038) (141,038) Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing uses - - - - - - (1,000,000) (1,141,038) (141,038) Net Change in Fund Balance (45,299)$ 23,420 68,719$ (66,500)$ (55,304) 11,196$ (1,026,242)$ (642,204) 384,038$ Fund Balance, Beginning of Year 143,274 401,187 1,042,272 Fund Balance, End of Year 166,694$ 345,883$ 400,068$ 139 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsSouth Bozeman TIF District Parks and Trails District Street Lighting Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 57,408$ 34,690$ (22,718)$ -$ -$ -$ -$ -$ -$ Special assessments - - - - 13,346 13,346 492,989 466,389 (26,600) Licenses and permits - - - - - - - - - Intergovernmental - - - - 22,041 22,041 - - - Charges for services - - - 5,449,453 5,888,241 438,788 - - - Fines and forfeitures - - - - - - - - - Interest on investments - 681 681 2,550 62,884 60,334 5,863 10,614 4,751 Change in fair market value of investments - - - - (49,132) (49,132) - - - Interest on loans receivable - - - - - - - - - Miscellaneous - - - - 55,542 55,542 - - - Total revenues 57,408 35,371 (22,037) 5,452,003 5,992,922 540,919 498,852 477,003 (21,849) ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - - - - 546,096 470,532 75,564 Public welfare 10,000 4,803 5,197 5,170,304 4,470,034 700,270 - - - Other - - - - - - - - - Capital outlay - - - 873,000 467,028 405,972 - - - Debt servicePrincipal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures 10,000 4,803 5,197 6,043,304 4,937,062 1,106,242 546,096 470,532 75,564 Excess (Deficiency) of Revenuesover (under) Expenditures 47,408 30,568 (16,840) (591,301) 1,055,860 1,647,161 (47,244) 6,471 53,715 Other Financing SourcesTransfers in - - - - 375,977 375,977 - - - Transfers out - - - - - - (25,520) - 25,520 Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing sources - - - - 375,977 375,977 (25,520) - 25,520 Net Change in Fund Balance 47,408$ 30,568 (16,840)$ (591,301)$ 1,431,837 2,023,138$ (72,764)$ 6,471 79,235$ Fund Balance, Beginning of Year 23,739 1,883,503 498,391 Fund Balance, End of Year 54,307$ 3,315,340$ 504,862$ 140 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsPark Land Municipal Court Restitution Total Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ -$ -$ -$ 17,279,027$ 10,342,454$ (6,936,573)$ Special assessments - - - - - - 683,589 706,403 22,814 Licenses and permits - - - - - - 2,131,880 3,123,233 991,353 Intergovernmental - - - - - - 2,373,941 1,868,173 (505,768) Charges for services - - - - - - 15,867,811 15,515,547 (352,264) Fines and forfeitures - - - - - - 70,000 59,429 (10,571) Interest on investments 5,000 40,848 35,848 - - - 192,360 977,435 785,075 Change in fair market value of investments - (30,028) (30,028) - - - - (438,456) (438,456) Interest on loans receivable - - - - - - 25,900 19,941 (5,959) Miscellaneous 50,000 823,292 773,292 - - - 204,359 1,246,521 1,042,162 Total revenues 55,000 834,112 779,112 - - - 38,828,867 33,420,680 (5,408,187) ExpendituresCurrentGeneral government - - - - - - 4,550,310 3,422,533 1,127,777 Public safety - - - - - - 4,591,047 4,004,809 586,238 Public works - - - - - - 2,500,838 1,371,736 1,129,102 Public welfare 5,000 20,146 (15,146) - - - 18,499,325 6,703,745 11,795,580 Other - - - - - - 152,877 152,877 - Capital outlay 192,635 3,014 189,621 - - - 23,670,131 8,595,970 15,074,161 Debt service Principal 100,000 100,000 - - - - 317,795 372,427 (54,632) Interest and fiscal charges - - - - - - - 120,301 (120,301) - Total expenditures - 123,160 (123,160) - - - 54,282,323 24,744,398 29,537,925 Excess (Deficiency) of Revenuesover (under) Expenditures 55,000 710,952 655,952 - - - (15,453,456) 8,676,282 24,129,738 Other Financing UsesTransfers in - - - - - - 1,241,344 4,045,450 2,804,106 Transfers out - - - - - - (7,110,097) (5,307,768) 1,802,329 Issuance of long-term debt - - - - - - - 511,185 511,185 Sale of capital assets - - - - - - - 6,600 6,600 - Total other financing uses - - - - - - (5,868,753) (744,533) 5,124,220 Net Change in Fund Balance 55,000$ 710,952 655,952$ -$ - -$ (21,322,209)$ 7,931,749 29,253,958$ Fund Balance, Beginning of Year 1,251,897 105 41,800,509 Fund Balance, End of Year 1,962,849$ 105$ 49,732,258$ 141 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Debt Service FundsSID Revolving General Obligation Bonds TIF Bonds Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ 3,599,755$ 3,736,221$ 136,466$ -$ -$ -$ Special assessments - - - - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - - - - - - - - - Charges for services - - - - - - - - - Fines and forfeitures - - - - - - - - - Interest on investments 5,000 11,491 6,491 - 9,183 9,183 - - - Change in fair market value of investments - 74,123 74,123 - - - - - - Interest on loans receivable 5,000 10,405 5,405 - - - - - - Miscellaneous - - - - - - - - - Total revenues 10,000 96,019 86,019 3,599,755 3,745,404 145,649 - - - ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - - - - - - - Public welfare - - - - - - - - - Other - - - - - - - - - Capital outlay - - - - - - - - - Debt service Principal - - - 2,375,255 2,225,000 150,255 444,000 444,000 - Interest and fiscal charges - - - 1,580,125 1,730,380 (150,255) 296,100 296,100 - Total expenditures - - - 3,955,380 3,955,380 - 740,100 740,100 - Excess (Deficiency) of Revenuesover (under) Expenditures 10,000 96,019 86,019 (355,625) (209,976) 145,649 (740,100) (740,100) - Other Financing Sources (Uses)Transfers in - 1,326,665 1,326,665 - - - 740,100 740,100 - Transfers out (1,924,207) (2,188,757) (264,550) (128,272) (128,272) - - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing sources (uses)(1,924,207) (862,092) 1,062,115 (128,272) (128,272) - 740,100 740,100 - Net Change in Fund Balance (1,914,207)$ (766,073) 1,148,134$ (483,897)$ (338,248) 145,649$ -$ - -$ Fund Balance, Beginning of Year 1,463,281 48,031 - Fund Balance (Deficit), End of Year 697,208$ (290,217)$ -$ 142 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Debt Service Funds Permanent FundTotalCemetary Perpetual Care Total Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 3,599,755$ 3,736,221$ 136,466$ -$ -$ -$ 20,878,782$ 14,078,675$ (6,800,107)$ Special assessments - - - - - - 683,589 706,403 22,814 Licenses and permits - - - - - - 2,131,880 3,123,233 991,353 Intergovernmental - - - - - - 2,373,941 1,868,173 (505,768) Charges for services - - - 40,000 93,173 53,173 15,907,811 15,608,720 (299,091) Fines and forfeitures - - - - - - 70,000 59,429 (10,571) Interest on investments 5,000 20,674 15,674 20,000 38,711 18,711 217,360 1,036,820 819,460 Change in fair market value of investments - 74,123 74,123 - (11,589) (11,589) - (375,922) (375,922) Interest on loans receivable 5,000 10,405 5,405 - - - 30,900 30,346 (554) Miscellaneous - - - - - - 204,359 1,246,521 1,042,162 Total revenues 3,609,755 3,841,423 231,668 60,000 120,295 60,295 42,498,622 37,382,398 (5,116,224) ExpendituresCurrentGeneral government - - - - - - 4,550,310 3,422,533 1,127,777 Public safety - - - - - - 4,591,047 4,004,809 586,238 Public works - - - - - - 2,500,838 1,371,736 1,129,102 Public welfare - - - - - - 18,499,325 6,703,745 11,795,580 Other - - - - - - 152,877 152,877 - Capital outlay - - - - - - 23,670,131 8,595,970 15,074,161 Debt service - - Principal 2,819,255 2,669,000 150,255 - - - 3,137,050 3,041,427 95,623 Interest and fiscal charges 1,876,225 2,026,480 (150,255) - - - 1,876,225 2,146,781 (270,556) Total expenditures 4,695,480 4,695,480 - - - - - 29,439,878 (29,439,878) Excess (Deficiency) of Revenuesover (under) Expenditures (1,085,725) (854,057) 231,668 60,000 120,295 60,295 42,498,622 7,942,520 (34,556,102) Other Financing Sources (Uses)Transfers in 740,100 2,066,765 1,326,665 - - - 1,981,444 6,112,215 4,130,771 Transfers out (2,052,479) (2,317,029) (264,550) - - - (9,162,576) (7,624,797) 1,537,779 Issuance of long-term debt - - - - - - - 511,185 511,185 Sale of capital assets - - - - - - - 6,600 6,600 Total other financing sources (uses)(1,312,379) (250,264) 1,062,115 - - - (7,181,132) (994,797) 6,186,335 Net Change in Fund Balance (2,398,104)$ (1,104,321) 1,293,783$ 60,000$ 120,295 60,295$ 35,317,490$ 6,947,723 (28,369,767)$ Fund Balance, Beginning of Year 1,511,312 1,684,104 44,995,925 Fund Balance, End of Year 406,991$ 1,804,399$ 51,943,648$ 143 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Enterprise Funds June 30, 2023 The enterprise funds account for the operations that are financed and operated in a manner similar to private business enterprises where the intent of the City is that the costs (expenses, including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges, or where the City has decided that periodic determination of the revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or for other purposes. The City operates the following nonmajor enterprise funds: Parking Fund – Accounts for the City’s parking enforcement and facilities operations. Stormwater Fund – Accounts for the City’s stormwater management and mitigation operations. 144 City of Bozeman, Montana Combining Balance Sheet Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Assets Current Assets Cash and cash equivalents 1,286,323$ 1,867,728$ 3,154,051$ Receivables (net of allowance for uncollectibles):Interest 5,220 5,190 10,410 Accounts 1,602 183,630 185,232 Special assessments - 66 66 Total current assets 1,293,145 2,056,614 3,349,759 Noncurrent AssetsRestricted assets Investments 656,242 58,288 714,530 Capital assetsLand 303,436 - 303,436 Construction in progress 33,000 573,179 606,179 Buildings 11,938,077 24,215 11,962,292 Machinery and equipment 487,170 757,188 1,244,358 Vehicles 187,533 197,137 384,670 Infrastructure 47,058 8,431,088 8,478,146 Less accumulated depreciation (5,983,217) (1,359,917) (7,343,134) Total capital assets, net of accumulated depreciation 7,013,057 8,622,890 15,635,947 Total noncurrent assets 7,669,299 8,681,178 16,350,477 Total assets 8,962,444 10,737,792 19,700,236 Deferred Outflows of Resources OPEB 12,353 14,787 27,140 Pensions 59,326 100,229 159,555 Total deferred outflows of resources 71,679 115,016 186,695 145 City of Bozeman, Montana Combining Balance Sheet Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Liabilities Current Liabilities Accounts payable 80,501 51,536 132,037 Current portion of long-term debt 16,436 142,471 158,907 Total current liabilities 96,937 194,007 290,944 Noncurrent LiabilitiesLong-term debt, net of deferred refundings Bonds payable - 1,109,000 1,109,000 Compensated absences - 4,169 4,169 Total OPEB liability 58,266 36,179 94,445 Net pension liability 284,536 480,711 765,247 Total noncurrent liabilities 342,802 1,630,059 1,972,861 Total liabilities 439,739 1,824,066 2,263,805 Deferred Inflows of Resources OPEB plans 14,512 11,988 26,500 Pension plans 20,831 35,192 56,023 Total deferred inflows resources 35,343 47,180 82,523 Net PositionNet investment in capital assets 6,996,621 7,429,707 14,426,328 Restricted for:Parking capital projects 656,242 - 656,242 Unrestricted 906,178 1,551,855 2,458,033 Total net position 8,559,041$ 8,981,562$ 17,540,603$ 146 City of Bozeman, Montana Combining Statement of Revenues, Expenses and Changes in Net Position Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Operating Revenues Charges for services 968,042$ 1,883,096$ 2,851,138$ Operating ExpensesSalaries and benefits 510,504 860,498 1,371,002 Materials and supplies 27,760 22,673 50,433 Repairs and maintenance 86,907 17,388 104,295 Utilities 43,935 4,679 48,614 Administrative charges 127,499 443,576 571,075 Other expenses 368,066 125,581 493,647 Depreciation/amortization 400,734 205,581 606,315 Total operating expenses 1,565,405 1,679,976 3,245,381 Operating Income (Loss)(597,363) 203,120 (394,243) Nonoperating Revenues (Expenses)Loss on disposal of assets (14,013) - (14,013) Interest income 43,718 41,202 84,920 Net decrease in fair market value of investments (7,757) (6,281) (14,038) Interest expense and bond fees - (31,475) (31,475) Intergovernmental revenues 7,029 11,876 18,905 Miscellaneous revenue 11,655 - 11,655 Total nonoperatingrevenues (expenses)40,632 15,322 55,954 Income (Loss) before Contributions and Transfers (556,731) 218,442 (338,289) Transfers in - 190,784 190,784 Transfers out - (40,973) (40,973) Capital contributions from other governments - 1,493,232 1,493,232 Change in Net Position (556,731) 1,861,485 1,304,754 Total Net Position, Beginning of Year 9,115,772 7,120,077 16,235,849 Total Net Position, End of Year 8,559,041$ 8,981,562$ 17,540,603$ 147 City of Bozeman, Montana Combining Statement of Cash Flows Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Operating ActivitiesReceipts from customers and users 1,080,116$ 1,854,495$ 2,934,611$ Payments to suppliers (523,155) (511,615) (1,034,770) Payments to and on behalf of employees (495,140) (798,940) (1,294,080) Payments to internal service funds and administrat (127,499) (443,576) (571,075) Net cash from (used for) Operating Activities (65,678) 100,364 34,686 Noncapital Financing Activities Transfers to other funds - (40,973) (40,973) Transfers from other funds - 190,784 190,784 Intergovernmental operating grants 7,029 11,876 18,905 Miscellaneous income 11,655 - 11,655 Net Cash from Noncapital Financing Activities 18,684 161,687 180,371 Capital and Related Financing Activities Acquisition of capital assets (119,230) (373,669) (492,899) Debt service Principal - (84,000) (84,000) Interest - (31,475) (31,475) Net Cash Used for Capitaland Related Financing Activities (119,230) (489,144) (608,374) Investing ActivitiesInterest and dividends from investments 33,214 32,236 65,450 Change in Cash and Cash Equivalents (133,010) (194,857) (327,867) Cash and Cash Equivalents, Beginning of Year 2,075,575 2,120,873 4,196,448 Cash and Cash Equivalents, End of Year 1,942,565$ 1,926,016$ 3,868,581$ 148 City of Bozeman, Montana Combining Statement of Cash Flows Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Reconciliation of Operating Income (Loss) toNet cash from (used for) Operating ActivitiesOperating income (loss)(597,363)$ 203,120$ (394,243)$ Adjustments to reconcile operating income (loss) to net cash from (used for)operating activitiesDepreciation/amortization 400,734 205,581 606,315 Changes in assets and liabilities Accounts receivable 112,074 (28,682) 83,392 Special assessments receivable - 81 81 Pension related deferred outflows (9,401) (21,247) (30,648) OPEB related deferred outflows 2,680 4,499 7,179 Vouchers payable 3,513 (341,294) (337,781) Compensated absences (235) 10,138 9,903 Net pension liability 85,895 166,456 252,351 Total OPEB liability (5,042) (8,462) (13,504) Pension related deferred inflows (64,110) (99,187) (163,297) OPEB related deferred inflows 5,577 9,361 14,938 Net cash from (used for)Operating Activities (65,678)$ 100,364$ 34,686$ Supplemental Schedule of NoncashInvesting and Financing ActivitiesAcquisition of capital assets throughcapital contributions and donations -$ 1,493,232$ 1,493,232$ 149 City of Bozeman, Montana Description of Internal Service Funds Internal Service Funds June 30, 2023 Internal Service Funds are used to account for the goods or services provided by one department to other departments of the City on a cost-reimbursement basis. The City operates the following internal service funds: Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in operation of City services. Medical Health Insurance – Accounts for insurance premiums received from the various City departments and retirees, and the related costs of health and dental premiums paid to the City’s insurance provider. Public Works Administration – Accounts for the professional level management, engineering, and GIS technical support provided to other Public Works divisions, including water, wastewater, solid waste, stormwater, in addition to support provided to other City departments. 150 City of Bozeman, Montana Combining Balance Sheet Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Assets Current Assets Cash and cash equivalents -$ -$ 3,142,522$ 3,142,522$ Receivables (net of allowance for uncollectibles):Interest - - 9,582 9,582 Accounts 1,912 15,667 - 17,579 Prepaid items - 525,953 - 525,953 Other assets - - 8,657 8,657 Total current assets 1,912 541,620 3,160,761 3,704,293 Noncurrent AssetsCapital assetsBuildings 1,424,215 - 121,905 1,546,120 Machinery and equipment 217,315 - 528,721 746,036 Vehicles 88,980 - 124,415 213,395 Infrastructure - - 29,314 29,314 Right-of-use lease assets - - 423,122 423,122 Less accumulated depreciation/amortization (873,198) - (545,525) (1,418,723) Total capital assets, net of accumulateddepreciation/amortization 857,312 - 681,952 1,539,264 Total noncurrent assets 857,312 - 681,952 1,539,264 Total assets 859,224 541,620 3,842,713 5,243,557 Deferred Outflows of ResourcesOther postemployment benefits 18,013 - 46,456 64,469 Pension plans 107,432 - 388,562 495,994 Total deferred outflows of resources 125,445 - 435,018 560,463 151 City of Bozeman, Montana Combining Balance Sheet Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Liabilities Current LiabilitiesAccounts payable 173,915 425 214,935 389,275 Due to other funds 880,942 19,964 - 900,906 Accrued interest payable - - 2,152 2,152 Total current liabilities 1,054,857 20,389 217,087 1,292,333 Noncurrent LiabilitiesLong-term debt, net of current portionLeases payable - - 381,167 381,167 Compensated absences 38,482 - 339,272 377,754 Total OPEB liability 64,711 - 197,523 262,234 Net pension liability 486,803 - 1,924,196 2,410,999 Total noncurrent liabilities 589,996 - 2,842,158 3,432,154 Total liabilities 1,644,853 20,389 3,059,245 4,724,487 Deferred Inflows of ResourcesOther postemployment benefits 16,998 - 65,102 82,100 Pension plans 46,503 - 31,510 78,013 Total deferred inflows resources 63,501 - 96,612 160,113 Net PositionNet investment in capital assets 857,312 - 300,785 1,158,097 Unrestricted (1,580,997) 521,231 821,089 (238,677) Total net position (723,685)$ 521,231$ 1,121,874$ 919,420$ 152 City of Bozeman, Montana Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Operating RevenuesCharges for services 2,130,913$ 5,957,109$ 5,668,038$ 13,756,060$ Operating ExpensesSalaries and benefits 832,176 - 4,134,873 4,967,049 Materials and supplies 1,174,519 - 36,992 1,211,511 Repairs and maintenance 23,120 - 13,490 36,610 Utilities 32,276 - 8,562 40,838 Administrative charges 211,794 - 627,029 838,823 Other services 49,058 5,920,760 975,524 6,945,342 Depreciation/amortization 65,015 - 170,368 235,383 Total operating expenses 2,387,958 5,920,760 5,966,838 14,275,556 Operating Income (Loss)(257,045) 36,349 (298,800) (519,496) Nonoperating Revenues (Expenses)Gain (loss) on disposal of assets 12,134 - (11,395) 739 Interest income (13,185) 234 77,836 64,885 Net decrease in fair market value of investments - - (38,460) (38,460) Interest expense and bond fees - - (20,864) (20,864) Intergovernmental revenues 12,031 - 58,758 70,789 Miscellaneous revenue 380 17,659 53,000 71,039 Total nonoperatingrevenues (expenses)11,360 17,893 118,875 148,128 Change in Net Position (245,685) 54,242 (179,925) (371,368) Total Net Position, Beginning of Year (478,000) 466,989 1,301,799 1,290,788 Total Net Position, End of Year (723,685)$ 521,231$ 1,121,874$ 919,420$ 153 City of Bozeman, Montana Combining Statement of Cash Flows Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Operating ActivitiesReceipts from customers and users 2,129,920$ 5,960,833$ 5,668,038$ 13,758,791$ Payments to suppliers (1,186,744) (5,980,125) (982,666) (8,149,535) Payments to and on behalf of employees (787,050) - (3,902,218) (4,689,268) Payments to internal service funds and administrat (211,794) - (627,029) (838,823) Net Cash (Used for) from Operating Activities (55,668) (19,292) 156,125 81,165 Noncapital Financing Activities Intergovernmental operating grants 12,031 - 58,758 70,789 Miscellaneous income 380 17,659 53,000 71,039 Payments received on interfund borrowing 107,700 1,399 - 109,099 Net Cash from Noncapital Financing Activities 120,111 19,058 111,758 250,927 Capital and Related Financing ActivitiesAcquisition of capital assets (51,258) - (54,923) (106,181) Debt servicePrincipal - - (95,743) (95,743) Interest - - (18,712) (18,712) Net Cash Used for Capital and Related Financing Activities (51,258) - (169,378) (220,636) Investing ActivitiesInterest and dividends from investments (13,185) 234 33,347 20,396 Change in Cash and Cash Equivalents - - 131,852 131,852 Cash and Cash Equivalents, Beginning of Year - - 3,010,670 3,010,670 Cash and Cash Equivalents, End of Year -$ -$ 3,142,522$ 3,142,522$ 154 City of Bozeman, Montana Combining Statement of Cash Flows Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Reconciliation of Operating Income (Loss) toNet Cash (Used for) from Operating ActivitiesOperating income (loss)(257,045)$ 36,349$ (298,800)$ (519,496)$ Adjustments to reconcile operating income (loss) to net cash (used for) from operating activities Depreciation/amortization 65,015 - 170,368 235,383 Changes in assets and liabilities Accounts receivable (993) 3,724 - 2,731 Prepaid expenses - (59,417) - (59,417) Other assets - - (8,657) (8,657) Pension related deferred outflows (16,270) - (79,460) (95,730) OPEB related deferred outflows 4,820 - 21,370 26,190 Vouchers payable 92,229 52 60,559 152,840 Compensated absences 17,313 - 99,422 116,735 Net pension liability 147,724 - 721,474 869,198 Total OPEB liability (9,066) - (40,197) (49,263) Pension related deferred inflows (109,425) - (534,421) (643,846) OPEB related deferred inflows 10,030 - 44,467 54,497 Net cash (used for) fromoperating activities (55,668)$ (19,292)$ 156,125$ 81,165$ Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of capital assets through debt -$ -$ 70,767$ 70,767$ 155 City of Bozeman, Montana Description of Funds Custodial Funds June 30, 2023 Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. Custodial funds are used to report fiduciary activities that are not required to be reported in pension (or other employee benefit) trust funds, investment trust funds, or private-purpose trust funds. The City has the following custodial funds: Municipal Court Trust Fund – Accounts for monies held for appearance bonds and restitution to criminal arrests and reimbursement for damage caused. Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies. 156 City of Bozeman, Montana Combining Statement of Fiduciary Net Position Custodial Funds June 30, 2023 Tourism Business Municipal ImprovementCourtDistrict Total AssetsCash and investments 575,276$ 50,170$ 625,446$ Receivables (net of allowance for uncollectibles): Accounts 2,692 - 2,692 Total assets 577,968 50,170 628,138 LiabilitiesDeposits payable 580,359 - 580,359 Net PositionRestricted forOther organization or individuals (2,391)$ 50,170$ 47,779$ 157 City of Bozeman, Montana Combining Statement of Changes in Fiduciary Net Position Custodial Funds June 30, 2023 Tourism Business Municipal ImprovementCourtDistrict Total Additions Miscellaneous 572$ -$ 572$ Deductions Total deductions - - - Change in Net Position 572 - 572 Net Position, Beginning (2,963) 50,170 47,207 Net Position, Ending (2,391)$ 50,170$ 47,779$ Statistical Section Year Ended June 30, 2023 City of Bozeman, Montana 158 City of Bozeman, Montana Introduction to Statistical Section For the Year Ended June 30, 2023 This part of the City of Bozeman's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends – These schedules contain trend information to help the reader understand and assess how the government’s financial position has changed over time. Components of Net Position ......................................................................................................................... 160 Changes in Net Position ................................................................................................................................ 161 Fund Balances of Governmental Funds ......................................................................................................... 164 Changes in Fund Balances of Governmental Funds ....................................................................................... 165 Revenue Capacity – These schedules contain information to assist the reader in understanding and assessing the factors affecting the government’s ability to generate its own-source revenues. Assessed Value of Taxable Property .............................................................................................................. 166 City Taxable Market and Taxable Values ....................................................................................................... 167 Tax Increment District Taxable Valuation Detail ............................................................................................ 168 Downtown Bozeman Improvement District & Comparison to City Taxable Value .......................................... 171 Property Tax Levies for Tax Increment/Urban Renewal Districts ................................................................... 172 Direct and Overlapping Property Tax Rates ................................................................................................... 173 Principal Property Taxpayers ........................................................................................................................ 174 Principal Property Taxpayers in Downtown Bozeman Improvement District ................................................. 175 Properties in the Bozeman Midtown Urban Renewal District ........................................................................ 176 Principal Property Taxpayers in Downtown Bozeman Midtown Urban Renewal District ................................ 177 Property Tax Levies and Collections .............................................................................................................. 178 Water Sold by Type of Customer................................................................................................................... 179 Water and Sewer Rates ................................................................................................................................ 180 Debt Capacity – These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Ratios of Outstanding Debt by Type .............................................................................................................. 181 Ratios of General Bonded Debt Outstanding ................................................................................................. 182 Computation of Direct and Overlapping Debt ............................................................................................... 183 Legal Debt Margin Information ..................................................................................................................... 184 Pledged Revenue Coverage – Governmental Activities .................................................................................. 185 Pledged Revenue Coverage – Business-Type Activities .................................................................................. 186 Debt Service Requirements and Coverage for Tax Increment Districts........................................................... 187 Summary of Outstanding SIDs ....................................................................................................................... 188 Revolving Fund Balance and Bond Secured Thereby...................................................................................... 189 Special Improvement District Assessment Billing and Collections .................................................................. 190 159 City of Bozeman, Montana Introduction to Statistical Section For the Year Ended June 30, 2023 Demographic and Economic Information – These schedules offer demographic and economic information to (1) assist the reader in understanding the socioeconomic environment within which a government operates and (2) provide information that facilitates comparisons of financial statement information over time and among governments. Demographic and Economic Statistics ........................................................................................................... 191 Principal Employers ...................................................................................................................................... 192 Operating Information – These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Full-Time Equivalent City Government Employees by Function/Program ...................................................... 193 Operating Indicators by Function/Program ................................................................................................... 194 Capital Assets Statistics by Function/Program ............................................................................................... 195 Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. 160 City of Bozeman, Montana Components of Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Governmental ActivitiesNet investment in capital assets 89,267,076$ 93,409,850$ 104,342,191$ 115,696,956$ 137,058,945$ 155,191,911$ 118,577,368$ 196,931,242$ 217,241,690$ 236,885,005$ Restricted 35,621,803 41,755,126 42,829,320 41,583,992 36,522,195 21,202,050 69,208,376 68,458,112 55,321,501 46,965,688 Unrestricted 12,127,224 (5,137,642) (3,923,466) (4,839,467) (5,514,909) 4,799,426 27,280,681 (31,383,436) (15,708,281) 7,527,542 Total Governmental Activities Net Position 137,016,103 130,027,334 143,248,045 152,441,481 168,066,231 181,193,387 215,066,425 234,005,918 256,854,910 291,378,235 Business-Type ActivitiesNet investment in capital assets 205,501,357 211,419,777 221,385,655 229,372,281 239,254,236 245,190,586 260,124,896 271,812,360 286,461,913 297,691,119 Restricted 3,372,927 4,977,984 4,990,635 8,866,951 13,070,517 12,671,931 12,307,565 14,839,596 29,337,941 31,659,041 Unrestricted 8,723,353 6,619,399 10,582,408 9,154,014 12,923,470 21,053,523 25,801,918 23,152,084 14,910,714 15,428,360 Total Business-Type Activities Net Position 217,597,637 223,017,160 236,958,698 247,393,246 265,248,223 278,916,040 298,234,379 309,804,040 330,710,568 344,778,520 Primary GovernmentNet investment in capital assets 294,768,433 304,829,627 325,727,846 345,069,237 376,313,181 400,382,497 378,702,264 468,743,602 503,703,603 534,576,124 Restricted 38,994,730 46,733,110 47,819,955 50,450,943 49,592,712 33,873,981 81,515,941 83,297,708 84,659,442 78,624,729 Unrestricted 20,850,577 1,481,757 6,658,942 4,314,547 7,408,561 25,852,949 53,082,599 (8,231,352) (797,567) 22,955,902 Total Primary Government Net Position 354,613,740$ 353,044,494$ 380,206,743$ 399,834,727$ 433,314,454$ 460,109,427$ 513,300,804$ 543,809,958$ 587,565,478$ 636,156,755$ Fiscal Year 161 City of Bozeman, Montana Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Expenses Governmental ActivitiesGeneral government 6,989,830$ 7,417,644$ 8,058,925$ 9,415,702$ 9,896,366$ 10,310,075$ 9,854,245$ 11,517,404$ 12,352,494$ 17,726,413$ Public safety 15,297,088 17,023,578 18,391,357 17,689,004 18,637,422 19,699,377 20,664,687 22,698,030 22,442,450 28,002,592 Public works 6,031,768 6,458,930 6,861,939 7,857,917 8,615,272 9,850,802 9,781,345 11,018,661 12,176,141 14,646,742 Public health and welfare 7,417,158 7,579,653 7,994,697 9,210,264 9,476,010 9,658,817 10,354,632 13,429,890 16,211,729 15,343,285 Interest and fiscal charges 179,280 824,266 893,470 771,714 781,255 786,236 1,763,155 2,105,985 2,051,119 2,070,117 Total governmental activities expenses 35,915,124 39,304,071 42,200,388 44,944,601 47,406,325 50,305,307 52,418,064 60,769,970 65,233,933 77,789,149 Business-Type ActivitiesWater 6,869,870 7,995,910 9,273,395 9,740,629 9,832,508 9,984,114 9,807,970 10,687,976 11,604,238 13,882,728 Waste water 8,955,592 6,940,983 8,163,312 8,590,477 8,548,138 9,291,509 9,209,689 10,209,279 10,849,992 11,979,470 Solid waste 6,958,209 3,308,441 4,570,884 4,262,650 4,535,865 4,739,710 4,665,613 4,991,829 5,220,011 7,980,984 Parking 805,274 789,186 830,869 897,278 1,133,777 1,119,466 1,304,465 1,183,693 1,360,611 1,565,405 Stormwater 161,180 309,585 469,743 930,444 878,173 924,282 1,051,497 985,732 1,243,760 1,711,451 Total business-type activities expenses 23,750,125 19,344,105 23,308,203 24,421,478 24,928,461 26,059,081 26,039,234 28,058,509 30,278,612 37,120,038 Total Primary Government Expenses 59,665,249$ 58,648,176$ 65,508,591$ 69,366,079$ 72,334,786$ 76,364,388$ 78,457,298$ 88,828,479$ 95,512,545$ 114,909,187$ Fiscal Year 162 City of Bozeman, Montana Changes in Net Position (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Program Revenues Governmental ActivitiesCharges for servicesGeneral government 2,453,015$ 1,947,445$ 2,530,474$ 2,683,016$ 3,139,427$ 3,777,184$ 3,546,689$ 4,380,033$ 5,472,678$ 7,128,575$ Public safety 3,290,573 3,211,911 3,347,859 3,175,257 2,234,994 4,158,560 4,020,453 4,260,366 4,317,541 4,942,022 Public works 7,623,178 8,784,447 9,310,147 10,342,921 15,531,304 12,189,258 16,522,229 18,836,107 19,176,512 22,563,519 Public health and welfare 613,322 1,097,845 1,213,526 1,414,394 1,593,025 1,724,864 1,567,557 5,294,909 6,833,910 1,687,204 Operating grants and contributions 457,354 2,254,052 2,494,244 2,715,986 3,021,400 5,419,871 7,622,415 12,156,812 7,707,580 12,843,761 Capital grants and contributions 4,762,416 2,960,051 5,018,559 2,667,352 7,651,008 6,593,221 15,429,642 4,518,830 12,153,695 14,514,120 Total governmental activities program revenues 19,199,858 20,255,751 23,914,809 22,998,926 33,171,158 33,862,958 48,708,985 49,447,057 55,661,916 63,679,201 Business-Type ActivitiesCharges for servicesWater 9,842,699 9,969,058 11,935,016 11,166,944 12,915,454 11,438,495 11,913,879 13,970,784 15,431,185 14,886,895 Waste water 8,852,738 9,008,247 9,283,600 9,668,524 10,686,506 10,445,185 10,671,361 11,691,165 12,684,974 12,343,552 Solid waste 2,725,465 2,953,414 2,617,243 3,613,721 3,926,123 4,228,099 4,631,523 4,969,868 5,431,005 5,872,630 Parking 602,838 576,357 597,238 878,458 958,378 958,504 1,028,036 1,005,788 1,062,010 968,042 Stormwater 262,781 304,906 943,621 1,293,941 1,324,461 1,349,678 1,429,449 1,519,994 1,673,866 1,883,096 Operating grants and contributions 9,596 123,439 134,946 169,509 134,523 83,264 104,868 243,536 1,511,436 1,435,529 Capital grants and contributions 5,898,923 6,385,418 11,287,654 7,774,707 9,944,719 8,324,760 13,312,504 5,427,166 13,064,462 11,084,423 Total business-type activitiesprogram revenues 28,195,040 29,320,839 36,799,318 34,565,804 39,890,164 36,827,985 43,091,620 38,828,301 50,858,938 48,474,167 Total Primary Government Program Revenues 47,394,898$ 49,576,590$ 60,714,127$ 57,564,730$ 73,061,322$ 70,690,943$ 91,800,605$ 88,275,358$ 106,520,854$ 112,153,368$ Net Revenue (Expense) Governmental Activities (16,715,266)$ (19,048,320)$ (18,285,579)$ (21,945,675)$ (14,235,167)$ (16,442,349)$ (3,709,079)$ (11,322,913)$ (9,572,017)$ (14,109,948)$ Business-Type Activities 4,444,915 9,976,734 13,491,115 10,144,326 14,961,703 10,768,904 17,052,386 10,769,792 20,580,326 11,354,129 Total Primary Government Net Revenue (Expense)(12,270,351)$ (9,071,586)$ (4,794,464)$ (11,801,349)$ 726,536$ (5,673,445)$ 13,343,307$ (553,121)$ 11,008,309$ (2,755,819)$ 163 City of Bozeman, Montana Changes in Net Position (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General Revenues and Other Changes in Net Position Governmental ActivitiesProperty taxes 17,561,022$ 20,203,718$ 21,234,288$ 21,708,812$ 22,532,724$ 23,823,994$ 28,308,301$ 27,115,391$ 29,432,001$ 39,860,197$ Unrestricted intergovernmental 7,436,419 7,699,711 7,992,180 8,372,625 6,171,297 4,658,177 4,859,238 4,956,187 5,099,529 5,370,015 Unrestricted investment earnings (losses)355,790 403,152 519,637 554,870 64,058 1,490,286 1,604,365 428,653 (1,685,354) 1,118,619 Miscellaneous 293,884 374,966 418,215 1,317,137 2,320,536 1,009,437 1,128,061 (1,722,976) 520,517 1,225,899 Gain (loss) on disposal of capital asset 236,688 - 123,934 (71,335) 28,861 167,291 16,862 20,072 (15,735) 2,726,201 Transfers (10,000) (410,016) 1,218,036 (742,999) (758,084) (475,000) (546,353) (534,921) (1,396,976) (1,667,658) Total governmental activities 25,873,803 28,271,531 31,506,290 31,139,110 30,359,392 30,674,185 35,370,474 30,262,406 31,953,982 48,633,273 Business-Type ActivitiesUnrestricted investment earnings - - - 304,231 3,389 1,010,849 846,331 38,987 (1,291,575) 833,995 Miscellaneous 390,700 - - 1,256,284 2,529,824 362,631 518,162 233,508 219,770 226,026 (Loss) gain on disposal of capital asset - - - (2,013,292) 10,005 (172,428) 4,012 17,918 1,031 (13,856) Transfers 10,000 380,347 (1,218,036) 742,999 758,084 475,000 546,353 534,921 1,396,976 1,667,658 Total business-type activities 400,700 380,347 (1,218,036) 290,222 3,301,302 1,676,052 1,914,858 825,334 326,202 2,713,823 Total Primary Government 26,274,503$ 28,651,878$ 30,288,254$ 31,429,332$ 33,660,694$ 32,350,237$ 37,285,332$ 31,087,740$ 32,280,184$ 51,347,096$ Change in Net Position Governmental Activities 9,158,537$ 9,223,211$ 13,220,711$ 9,193,435$ 16,124,225$ 14,231,836$ 31,661,395$ 18,939,493$ 22,381,965$ 34,523,325$ Business-Type Activities 4,845,615 10,357,081 12,273,079 10,434,548 18,263,005 12,444,956 18,967,244 11,595,126 20,906,528 14,067,952 Total Primary Government Change in Net Position 14,004,152$ 19,580,292$ 25,493,790$ 19,627,983$ 34,387,230$ 26,676,792$ 50,628,639$ 30,534,619$ 43,288,493$ 48,591,277$ Fiscal Year 164 City of Bozeman, Montana Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General FundNonspendable -$ -$ -$ -$ -$ -$ -$ -$ -$ 37,167$ Committed - - - - - - - - - 6,087,489 Assigned 6,420,760 6,061,965 5,541,841 6,402,882 7,739,020 7,739,582 8,110,313 9,313,580 8,708,695 - Unassigned 193,534 - 979,258 87,274 (274,252) - 1,030,550 (130,315) (107,076) 8,953,349 Total General Fund 6,614,294$ 6,061,965$ 6,521,099$ 6,490,156$ 7,464,768$ 7,739,582$ 9,140,863$ 9,183,265$ 8,601,619$ 15,078,005$ All Other Governmental FundsNonspendable 1,269,557$ 2,061,790$ 1,426,575$ 1,533,338$ 1,623,816$ 1,735,591$ 1,796,174$ 1,884,479$ 1,919,979$ 1,804,399$ Restricted 19,927,526 12,546,935 39,856,356 38,938,127 34,403,744 23,129,241 65,273,723 61,818,904 55,582,529 60,797,482 Committed 3,075,505 3,088,936 3,528,263 3,901,694 3,856,238 4,279,091 4,328,163 3,621,644 3,168,927 603,360 Assigned 229,602 - 7,425,398 7,259,749 1,868,485 1,293,436 578,852 96,473 134,135 2,927,964 Unassigned (184,101) (97,173) 914,535 107,103 (42,648) 8,731,534 (125,584) 662,773 (312,180) (302,973) Total All Other Governmental Funds 24,318,089$ 17,600,488$ 53,151,127$ 51,740,011$ 41,709,635$ 39,168,893$ 71,851,328$ 68,084,273$ 60,493,390$ 65,830,232$ Fiscal Year 165 City of Bozeman, Montana Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 RevenuesTaxes 17,385,371$ 20,404,236$ 21,303,074$ 21,682,667$ 22,553,972$ 23,788,018$ 28,321,349$ 26,973,106$ 29,607,197$ 39,657,027$ Special assessments 2,011,944 1,578,855 1,265,954 1,163,275 1,137,103 1,116,925 1,390,355 1,676,909 1,616,318 1,293,350 Licenses and permits 1,784,282 1,827,842 2,112,090 2,092,673 2,541,727 2,392,081 2,524,368 2,902,616 2,850,060 3,542,188 Intergovernmental 8,208,770 8,562,937 8,920,424 8,956,044 9,419,104 10,488,662 12,600,824 15,297,152 12,638,682 18,089,987 Charges for services 9,656,123 10,629,791 12,283,683 13,743,830 17,885,529 16,987,622 20,142,910 24,847,833 30,095,236 30,136,508 Fines and forfeitures 1,411,162 1,305,166 1,253,705 1,256,525 1,240,154 1,234,324 1,199,601 1,168,880 1,053,196 1,069,270 Investment income (losses)329,086 370,305 479,699 520,690 34,709 1,439,743 1,343,201 155,647 (1,885,520) 1,092,193 Loan repayments 63,980 94,989 38,552 31,837 25,827 31,695 44,930 38,276 53,539 30,346 Miscellaneous 287,089 363,274 415,646 1,307,668 2,313,097 995,553 1,790,144 1,766,620 2,712,894 2,031,152 Total revenues 41,137,807 45,137,395 48,072,827 50,755,209 57,151,222 58,474,623 69,357,682 74,827,039 78,741,602 96,942,021 ExpendituresGeneral government 6,138,575 6,594,474 7,318,539 7,643,886 8,268,285 8,782,078 9,280,183 10,449,026 11,891,184 15,001,137 Public safety 14,637,886 15,086,695 16,485,549 16,812,131 17,602,966 18,005,944 19,598,592 19,778,375 22,104,511 25,534,451 Public works 3,498,770 3,786,283 3,840,405 4,422,771 4,955,559 5,774,783 5,376,499 5,868,383 6,977,080 8,454,661 Public health & welfare 6,678,347 7,366,955 7,245,425 7,654,059 7,975,354 8,339,885 9,046,331 11,690,142 14,598,944 13,296,225 Other 1,046,712 1,113,340 418,431 506,169 655,532 728,642 665,517 3,500,760 2,204,370 1,836,292 Capital outlay 8,053,456 9,905,333 9,337,470 12,468,020 18,420,501 19,106,110 24,265,809 32,608,736 30,801,575 17,918,459 Debt servicePrincipal 1,482,142 1,121,593 1,345,250 1,422,555 1,500,687 1,635,369 6,639,947 3,188,603 2,969,165 3,927,518 Interest and fiscal charges 380,950 824,266 893,470 771,714 718,597 786,238 1,763,155 2,105,985 2,051,119 2,304,135 Total expenditures 41,916,838 45,798,939 46,884,539 51,701,305 60,097,481 63,159,049 76,636,033 89,190,010 93,597,948 88,272,878 Excess (Deficiency) ofRevenues over (under)Expenditures (779,031) (661,544) 1,188,288 (946,096) (2,946,259) (4,684,426) (7,278,351) (14,362,971) (14,856,346) 8,669,143 Other Financing Sources (Uses)Transfers in 3,103,787 4,816,671 6,483,413 3,950,059 4,394,277 4,202,825 8,867,568 5,976,400 10,802,182 23,487,954 Transfers out (3,113,787) (5,197,018) (5,496,492) (4,693,058) (5,152,361) (4,677,825) (9,413,920) (6,511,321) (12,199,158) (25,155,612) Bonds issued 10,012,647 5,619,361 47,406 234,702 1,103,586 2,859,598 41,878,844 10,501,000 7,045,000 - Premium (discount) on bonds - - - - - - - 649,009 515,591 - Leases and other debt issued - - - - - - - - 19,833 2,011,672 Sale of capital assets 243,092 64,855 227,984 43,277 35,144 33,898 29,567 23,744 34,836 2,800,071 Total other financingsources (uses)10,245,739 5,303,869 1,262,311 (465,020) 380,646 2,418,496 41,362,059 10,638,832 6,218,284 3,144,085 Net Change inFund Balances 9,466,708$ 4,642,325$ 2,450,599$ (1,411,116)$ (2,565,613)$ (2,265,930)$ 34,083,708$ (3,724,139)$ (8,638,062)$ 11,813,228$ 166 City of Bozeman, Montana Assessed Value of Taxable Property Last Ten Fiscal Years AssessedTaxable ValueFiscal Year Commercial as a PercentageEndedResidentialand Industrial Total Taxable Total Direct Total Market of Total MarketJune 30,Property Property Other Property Assessed Value*Tax Rate Value**Value 2023 89,925,341$ 58,735,884$ 11,120,831$ 159,782,056$ 204.50 11,021,338,679$ 1.450% 2022 87,432,389 57,107,580 10,812,534 155,352,503 154.12 10,724,564,866 1.449% 2021 72,903,489 47,617,844 9,015,783 129,537,116 169.48 8,875,762,356 1.459% 2020 70,588,175 46,105,567 8,729,455 125,423,197 188.45 8,596,253,775 1.459% 2019 58,712,093 38,348,553 7,260,771 104,321,417 191.24 6,981,943,409 1.494% 2018 56,952,419 37,199,199 7,043,156 101,194,774 187.33 6,745,351,312 1.500% 2017 52,777,954 30,966,657 6,013,815 89,758,426 205.30 5,870,738,906 1.529% 2016 50,899,738 29,864,642 5,799,800 86,564,180 210.16 5,698,588,679 1.519% 2015 50,978,520 31,641,840 5,273,640 87,894,000 188.76 3,598,269,877 2.443% 47,956,720 32,542,060 5,138,220 85,637,000 173.08 3,386,295,608 2.529%2014 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property in Gallatin County is reassessed by the State Department of Revenue every two years. * Includes tax-exempt property ** Sales price of property is not public record in the State of Montana, so the Total Market Value was used instead 167 City of Bozeman, Montana City Taxable Market and Taxable Values Last Ten Fiscal Years Net Taxable Value (Excludes Incremental Tax Increment Fiscal Year Value for All Districts Taxable ValueEndedTaxableFullTax Increment Incremental for Open SpaceJune 30,Market Value Taxable Value Districts Values) Purposes 2023 11,021,338,679$ 171,848,662$ 12,066,606$ 159,782,056$ 172,444,905$ 2022 10,724,564,866 166,838,141 11,485,638 155,352,503 164,979,565 2021 8,875,762,356 137,983,427 8,446,311 129,537,116 137,765,762 2020 8,596,253,775 133,582,036 8,158,839 125,423,197 133,391,037 2019 6,981,943,409 109,713,782 5,392,365 104,321,417 191,152,592 2018 6,745,351,312 106,224,806 5,030,032 101,194,774 105,727,520 2017 5,870,738,906 94,102,761 4,344,335 89,758,426 93,212,816 2016 5,698,588,679 90,787,797 4,223,617 86,564,180 91,973,923 2015 3,598,269,877 92,081,322 4,187,322 87,894,000 90,735,030 3,386,295,608 89,650,917 4,013,917 85,637,000 85,615,328 2014 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. 168 City of Bozeman, Montana Tax Increment District Taxable Valuation Detail Last Ten Fiscal Years Fiscal YearEnded Incremental Incremental IncrementalJune 30,Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable 2023 1,328,695$ 8,245,319$ 9,574,014$ 423,054$ 660,471$ 1,083,525$ 3,507,723$ 2,751,885$ 6,259,608$ 2022 1,328,695 7,893,562 9,222,257 423,054 636,368 1,059,422 3,507,723 2,589,893 6,097,616 2021 1,328,695 6,247,663 7,576,358 423,054 477,252 900,306 3,507,723 1,707,571 5,215,294 2020 1,328,695 5,987,410 7,316,105 423,054 457,274 880,328 3,507,723 1,714,155 5,221,878 2019 1,328,695 4,159,996 5,488,691 423,054 229,047 652,101 3,507,723 982,574 4,490,297 2018 1,328,695 3,769,917 5,098,612 423,054 223,765 646,819 3,507,723 948,746 4,456,469 2017 1,328,695 3,068,902 4,397,597 423,054 193,281 616,335 3,473,127 1,003,546 4,476,673 2016 1,328,695 2,898,551 4,227,246 423,054 214,470 637,524 2,886,997 1,055,385 3,942,382 2015 1,328,695 2,718,220 4,046,915 423,054 190,579 613,633 2,886,997 1,225,604 4,112,601 1,328,695 2,586,963 3,915,658 423,054 172,608 595,662 2,886,997 1,193,297 4,080,294 2014 Bozeman Downtown Northeast Renewal District Bozeman Midtown* Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. *Previously North 7th Corridor 169 City of Bozeman, Montana Tax Increment District Taxable Valuation Detail (continued) Last Ten Fiscal Years Fiscal YearEnded Incremental Incremental IncrementalJune 30,Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable 2023 244,332$ 37,133$ 281,465$ 417$ 56,410$ 56,827$ 1,137,056$ 315,388$ 1,452,444$ 2022 244,332 53,750 298,082 417 56,410 56,827 1,137,056 255,655 1,392,711 2021 244,332 13,824 258,156 417 - 417 - - - 2020 244,332 - 244,332 417 - 417 - - - - 2019 244,332 20,749 265,081 417 - 417 - - - 2018 - - - 417 - 417 - - - 2017 - - - 417 - 417 - - - - 2016 - - - 417 - 417 - - - 2015 - - - 417 3 420 - - - - - - 417 - 417 - - - 2014 Pole Yard Urban Renewal***Bozeman TechnologyNorth Park Urban Renewal** Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. **New District created in fiscal year 2019 ***New District created in fiscal year 2022 170 City of Bozeman, Montana Tax Increment District Taxable Valuation Detail (continued) Last Ten Fiscal Years Fiscal Year TotalEndedIncrementalJune 30,Base Taxable Taxable Total Taxable 2023 6,641,277$ 12,066,606$ 18,707,883$ 2022 6,641,277 11,485,638 18,126,915 2021 5,504,221 8,446,310 13,950,531 2020 5,504,221 8,158,839 13,663,060 2019 5,504,221 5,392,366 10,896,587 2018 5,259,889 4,942,428 10,202,317 2017 5,225,293 4,265,729 9,491,022 2016 4,639,163 4,168,406 8,807,569 2015 4,639,163 4,134,406 8,773,569 4,639,163 3,952,868 8,592,031 2014 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. 171 City of Bozeman, Montana Downtown Bozeman Improvement District & Comparison to City Taxable Value Last Ten Fiscal Years City Taxable The District'sValue Incremental Taxable (Excluding ALL Taxable ValueFiscal Year Market Value of Taxable Value Tax Increment as a PercentageEndedProperty in the of Property Incremental District of the City's June 30,District in the District Taxable Value Valuations)Taxable Value 2023 607,434,219$ 9,574,014$ 8,245,319$ 159,782,056$ 5.16% 2022 580,867,055 9,222,257 7,893,562 155,352,503 5.08% 2021 465,530,358 7,576,358 6,247,663 129,537,116 4.82% 2020 447,565,041 7,316,105 5,987,410 125,423,197 4.77% 2019 319,728,707 5,488,691 4,159,996 104,321,417 3.99% 2018 297,005,720 5,098,612 3,769,917 101,194,774 3.73% 2017 265,793,431 4,397,597 3,068,902 89,758,426 3.42% 2016 259,138,001 4,227,246 2,898,551 86,564,180 3.35% 2015 190,128,511 4,046,915 2,718,220 87,894,000 3.09% 153,063,721 3,915,658 2,586,963 85,637,000 3.02%2014 Downtown Bozeman Improvement District Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. 172 City of Bozeman, Montana Property Tax Levies for Tax Increment/Urban Renewal Districts Last Ten Fiscal Years Fiscal Year Taxing Entity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Statewide School Equalization 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 Gallatin County Operating and Bond 88.38 89.55 99.77 100.41 91.23 98.87 91.17 99.09 93.48 95.05 Open Space Bond 4.90 4.95 5.03 5.85 5.13 4.69 3.90 4.04 3.74 2.30 County-Wide School 101.28 99.94 106.85 105.39 99.67 102.44 96.45 96.74 91.29 89.58 Bozeman High School Distrct 73.16 72.97 76.76 77.25 73.10 108.95 92.77 97.61 84.86 86.05 Bozeman Elemenatary School District 145.25 143.70 151.15 154.81 146.92 142.63 125.90 121.74 101.99 102.09 City of Bozeman 173.08 188.76 210.16 205.30 187.33 191.24 187.70 163.62 152.12 204.50 Total revenues 626.05 639.87 689.72 689.01 643.38 688.82 637.89 622.84 567.48 619.57 Exempt from Tax Increment University Millage 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Gallatin Conservation District 0.97 0.95 1.05 1.01 0.89 0.91 0.77 - - - County-Wide Planning 2.39 2.35 2.39 2.39 2.48 2.50 2.22 1.48 2.18 2.23 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every six years and beginning in 2017 every two years. 173 City of Bozeman, Montana Direct and Overlapping Property Tax Rates Last Ten Fiscal Years Fiscal Year GeneralEndedObligation Total Direct Bozeman School Gallatin State ofJune 30,Basic Rate Debt Service Tax Rate District County Montana 2023 181.15 23.35 204.50 254.11 179.89 93.48 2022 131.89 22.23 154.12 219.35 195.83 46.00 2021 140.73 28.75 169.48 218.67 191.52 46.00 2020 162.82 25.63 188.45 251.58 206.00 46.00 2019 178.22 13.02 191.24 220.02 223.33 46.00 2018 173.92 13.41 187.33 232.06 241.69 46.00 2017 190.17 15.13 205.30 227.91 241.69 46.00 2016 194.51 15.65 210.16 216.67 215.78 46.00 2015 177.52 11.24 188.76 218.41 221.00 46.00 164.83 8.25 173.08 203.26 215.10 46.00 2014 Source: Based on information provided by Gallatin County and Department of Revenue 174 City of Bozeman, Montana Principal Property Taxpayers Current Year and Nine Years Ago Percentage of Percentage ofTotal City Total CityTaxableTaxableTaxableTaxableAssessedAssessedAssessedAssessedTaxpayerValuationRankValuation Valuation Rank Valuation Northwestern Energy - T & D 8,620,846$ 1 5.40%3,668,602$ 1 4.28% Plato MT I Propco LLC 1,080,146 2 0.68%- N/A N/A Charter Communications Inc 745,534 3 0.47%- N/A N/A GKT Bozeman Gateway LLC 623,384 4 0.39%- N/A N/A Verizon Inc 605,249 5 0.38%555,252 4 0.65% Billings Clinic 593,261 6 0.37%- N/A N/A Cannery District Partners LLC 571,306 7 0.36%- N/A N/A Bozeman Apartment Group LLC 560,417 8 0.35%- N/A N/A Springs VII at Bozeman LLC 546,620 9 0.34%- N/A N/A GKT Gallatin Shopping Center VM LLC 507,025 10 0.32%- N/A N/A Qwest Corporation - N/A N/A 1,040,298 2 1.21% Bresnan Communications - N/A N/A 813,246 3 0.95% Harry Daum - Gallatin Mall - N/A N/A 500,755 5 0.58% Stone Ridge Partners LLC - N/A N/A 468,297 6 0.55% J & D Family LLLP - N/A N/A 350,638 7 0.41% Bridger Peaks Holding LLC - N/A N/A 350,440 8 0.41% First Security Bank - N/A N/A 349,000 9 0.41% Wal-Mart Stores Inc - N/A N/A 338,929 10 0.40% Total attributable to top taxpayers 14,453,788 9.05%8,435,457 9.85% Total of all other properties 145,328,268 90.95%77,201,543 90.15% 159,782,056$ 100.00%85,637,000$ 100.00% 2023 2014 Source: Gallatin County Treasurer 175 City of Bozeman, Montana Principal Property Taxpayers in Downtown Bozeman Improvement District Current Year and Prior Year Percentage of Percentage ofTotal City Total CityTaxableTaxableTaxableTaxableAssessedAssessedAssessedAssessedTaxpayerBusinessValuationRankValuation Valuation Rank Valuation ETHA Hotel LLC Property Investor/Developer 479,342$ 1 5.01%479,342$ 1 5.20% Straight Away Bozeman Investo Commercial 401,588 2 4.19%- N/A N/A G25 Holdings LLC Property Investor/Developer 332,967 3 3.48%332,967 2 3.61% First Security Bank Bank 283,859 4 2.96%282,549 3 3.06% 106 East Babcock LLC Multi-Tenant Commercial/Residential Building 216,271 5 2.26%192,174 4 2.08% 5 West LLC Multi-Tenant Commercial/Residential Building 185,489 6 1.94%185,489 5 2.01% Osborne Building LLC Multi-Tenant Commercial/Residential Building 166,700 7 1.74%149,770 8 1.62% 104 East Main LLC Multi-Tenant Commercial/Residential Building 161,377 8 1.69%161,377 6 1.75% Downtowner Group LLC Business Support Services 150,146 9 1.57%150,146 7 1.63% Moose Point LP Commercial Property Developer 142,399 10 1.49%142,399 9 1.54% F&H, LLC Property Investor/Developer - N/A N/A 136,985 10 1.49% Total attributable to top taxpayers 2,520,138 26.32%2,213,198 24.00% Total of all other properties 7,053,876 73.68%7,009,059 76.00% 9,574,014$ 100.00%9,222,257$ 100.00% 2023 2022 Source: Gallatin County Treasurer 176 City of Bozeman, Montana Properties in the Bozeman Midtown Urban Renewal District Current Year and Prior Year Percentage of Percentage ofTotal City Total City Taxable Taxable Taxable TaxableAssessed Assessed Assessed Assessed Property Type/Property Tax Classification Valuation Valuation Valuation Valuation 3 agricultural land 16,239$ 803$ 16,897$ 903$ 4 residential 48,687,693 652,961 41,516,680 556,166 4 commercial 290,738,314 5,494,952 286,476,924 5,414,414 5 pollution control, electric and telephone cooperative 4,215 126 - - 8 business equipment 2,602,716 39,042 3,463,777 51,957 9 pipelines and non-electric generatingproperty of electric utility 411,219 49,346 387,383 46,487 13 eletrical generation and telecommunication 372,962 22,378 461,501 27,689 342,833,358$ 6,259,608$ 332,323,162$ 6,097,616$ 2022/2023 2021/2022 Source: Montana Department of Revenue 177 City of Bozeman, Montana Principal Property Taxpayers in Downtown Bozeman Midtown Urban Renewal District Current Year and Prior Year Percentage of Percentage ofTotal City Total CityTaxableTaxableTaxableTaxableAssessedAssessedAssessedAssessedTaxpayerValuationRankValuation Valuation Rank Valuation TCIP Partnership 264,335$ 1 4.22%264,335$ 2 4.34% Walmart Stores Inc.247,136 2 3.95%247,136 3 4.05% Rocky Mountain Retail LLC 220,308 3 3.52%- N/A N/A Grantree Hotels LP 219,618 4 3.51%219,618 4 3.60% Buffalo Ventures LLC 213,835 5 3.42%213,835 5 3.51% Westlake, George 187,745 6 3.00%300,665 1 4.93% Bozeman Hospitality LLC 167,963 7 2.68%169,344 6 2.78% Aspen Land Co LLC 163,602 8 2.61%- N/A N/A Oak Street Partnership 146,997 9 2.35%146,997 8 2.41% RSVP Motel LLC 136,794 10 2.19%- N/A N/A Murdoch Family LP - 7 N/A 164,113 7 2.69% Gallatin Hospitality LLC - 9 N/A 117,399 9 1.93% Universal Athletic Services Inc.- 10 N/A 112,693 10 1.85% Total attributable to top taxpayers 1,968,333 31.44%1,956,135 16.58% Total of all other properties 4,291,275 68.56%4,141,481 67.92% 6,259,608$ 100.00%6,097,616$ 84.50% 2022/2023 2021/2022 178 City of Bozeman, Montana Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Taxes Levied Collections inEndedfor the Percentage Subsequent PercentageJune 30,Fiscal Year Amount of Levy Years Amount of Levy 2023 32,675,419$ 32,618,261$ 99.83%-$ 32,618,261$ 99.83% 2022 23,793,072 23,777,644 99.94%37,940 23,815,584 100.09% 2021 21,454,058 21,017,696 97.97%62,741 21,080,437 98.26% 2020 23,589,506 23,381,671 99.12%207,835 23,589,506 100.00% 2019 19,950,675 19,940,784 99.95%9,891 19,950,675 100.00% 2018 18,956,357 18,791,653 99.13%59,070 18,850,723 99.44% 2017 18,338,501 18,069,230 98.53%100,003 18,169,233 99.08% 2016 18,191,892 18,009,556 99.00%74,809 18,084,365 99.41% 2015 16,590,871 16,559,270 99.81%31,601 16,590,871 100.00% 2014 14,821,724 14,482,502 97.71%227,481 14,709,983 99.25% Collected Within theFiscal Year of the Levy Total Collections to Date Source: Gallatin County City Manager's Final Adopted Budget 179 City of Bozeman, Montana Water Sold by Type of Customer (in hundreds of cubic feet [HCF]) Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Residential 1,433,833 1,385,140 1,493,192 1,601,439 1,623,881 1,556,249 1,546,308 1,788,984 1,612,932 1,583,076 Government 52,448 53,165 51,923 56,956 75,001 54,270 103,536 73,416 82,308 110,364 MSU 213,698 210,107 208,618 225,394 217,967 238,968 178,368 171,840 199,080 202,164 Commercial 607,444 599,193 610,741 620,761 618,398 627,116 506,868 590,076 578,688 600,456 Total 2,307,423 2,247,605 2,364,474 2,504,550 2,535,247 2,476,603 2,335,080 2,624,316 2,473,008 2,496,060 Total direct rate per 1,000 HCF 3,053.40$ 3,105.14$ 3,175.41$ 3,256.72$ 3,337.92$ 3,508.94$ 3,575.07$ 3,697.72$ 4,001.23$ 4,054.42$ Source: City of Bozeman Finance Department 180 City of Bozeman, Montana Water and Sewer Rates Last Ten Fiscal Years Water*Sewer*Fiscal YearEnded Monthly Rate per Monthly Rate per June 30,Base Rate 1,000 Gallons Base Rate 1,000 Gallons 2023 16.17$ 25.33$ 19.58$ 32.45$ 2022 16.17$ 25.33$ 19.58$ 32.45$ 2021 16.17$ 25.33$ 19.58$ 32.45$ 2020 16.17$ 25.33$ 19.58$ 32.45$ 2019 16.17$ 25.33$ 19.58$ 32.45$ 2018 15.70$ 24.60$ 19.01$ 31.50$ 2017 15.39$ 24.11$ 18.63$ 30.87$ 2016 15.02$ 23.53$ 18.09$ 29.98$ 2015 14.65$ 22.95$ 17.56$ 29.10$ 2014 14.65$ 22.95$ 17.56$ 29.10$ * For Residential Customers, using 5/8 inch meter size. Sources: City of Bozeman, Montana Commission Resolution 4327 City of Bozeman, Montana Commission Resolution 4328 City of Bozeman, Montana Commission Resolution 4454 City of Bozeman, Montana Commission Resolution 4626 & 4627 City of Bozeman, Montana Commission Resolution 4819 & 4820 City of Bozeman, Montana Commission Resolution 4927 & 4928 City of Bozeman, Montana Commission Resolution 5065 & 5066 City of Bozeman, Montana Commission Resolution 5273 & 5274 181 City of Bozeman, Montana Ratios of Outstanding Debt by Type Last Ten Fiscal Years General Tax Increment Special Water Wastewater Stormwater Total PercentageObligationFinancingAssessmentNotesLeasesUnamortizedRevenue Revenue Revenue Leases Primary of Personal PerYearBonds Bonds Bonds Payable Payable Premium Year Bonds Bonds Bond Payable Government Income (1)Capita (2) 2023 45,765,000$ 9,802,767$ 3,372,289$ 2,045,505$ 343,801$ 4,230,082$ 2023 15,949,000$ 25,939,000$ 1,196,000$ -$ 108,641,421$ 5.56%1,936$ 2022 47,990,000 10,288,570 3,764,217 2,322,582 630,917 4,484,963 2022 17,267,000 27,932,231 1,280,000 - 115,960,480 6.82%2,126 2021 43,240,000 10,763,655 3,948,216 2,246,694 310,270 4,198,474 2021 18,547,000 24,582,587 1,362,000 434,598 109,633,494 7.87%2,057 2020 45,445,000 4,733,238 139,500 2,481,079 404,043 3,778,566 2020 19,791,000 14,057,000 1,442,000 363,749 92,635,175 7.24%1,859 2019 12,940,000 5,338,811 171,500 2,637,009 651,453 208,593 2019 21,001,000 15,229,000 1,520,000 290,538 59,987,904 5.73%1,236 2018 13,835,000 5,018,931 406,000 763,588 463,535 222,051 2018 19,107,497 16,368,000 1,292,430 214,887 57,691,919 5.80%1,238 2017 14,710,000 4,425,000 501,000 902,500 270,492 235,509 2017 15,760,000 17,856,000 1,367,430 183,591 56,211,522 6.12%1,242 2016 15,570,000 4,630,000 662,500 884,844 249,501 248,967 2016 16,567,000 18,930,565 1,440,430 71,077 59,254,884 6.97%1,365 2015 16,320,000 4,825,000 890,500 963,274 295,912 262,425 2015 17,365,000 19,972,565 229,750 10,585 61,135,011 7.20%1,467 2014 11,685,000 5,015,000 1,185,500 1,086,396 94,176 - 2014 18,140,000 21,025,565 - - 58,231,637 6.83%1,498 Governmental Activities Business-type Activities Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department 182 City of Bozeman, Montana Ratios of General Bonded Debt Outstanding Last 10 Fiscal Years General Tax Increment Percentage ofObligationFinancing Market Value Per Year Bonds District Bonds Total of Property Capita 2023 45,765,000$ 9,802,767$ 55,567,767$ 34.78%990.11$ 2022 47,990,000 10,288,570 58,278,570 37.51%1,068.45$ 2021 43,240,000 10,763,655 54,003,655 41.69%1,013.33$ 2020 45,445,000 4,733,238 50,178,238 40.01%1,006.97$ 2019 12,940,000 5,338,811 18,278,811 17.52%376.63$ 2018 13,835,000 4,926,931 18,761,931 18.54%402.65$ 2017 14,710,000 4,425,000 19,135,000 21.32%422.87$ 2016 15,570,000 4,630,000 20,200,000 23.34%465.38$ 2015 16,320,000 4,825,000 21,145,000 24.06%507.56$ 2014 11,685,000 5,015,000 16,700,000 19.50%429.75$ Source: City Manager's Final Adopted Budget Debt Outstanding is reduced by cash held for bond reserves for the purposes of this table 183 City of Bozeman, Montana Computation of Direct and Overlapping Debt Last Ten Fiscal Years Estimated Estimated ShareDebtPercentageof OverlappingTaxing Entity Outstanding Applicable (1)Debt City of Bozeman 67,285,543$ 100.00% 67,285,543$ Gallatin County 49,080,000 36.98% 18,151,439 Bozeman School District #7 164,724,114 61.81% 101,812,563 Subtotal overlapping debt 213,804,114 119,964,002 Total Direct and Overlapping Debt 281,089,657$ 187,249,545$ Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Bozeman. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each entity's total taxable assessed value. Sources: City of Bozeman Finance Department Gallatin County Assessor's Office Bozeman School District #7 184 City of Bozeman, Montana Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Debt limit*84,657,000$ 84,500,000$ 142,464,717$ 147,500,000$ 168,633,783$ 174,548,585$ 214,906,344$ 221,894,059$ 268,114,122$ 275,533,467$ Total net debt applicable to limit 19,066,072 23,557,111 22,245,812 21,044,501 20,709,105 21,947,366 56,981,426 64,707,309 69,481,249 65,559,444 Legal debt margin 65,590,928$ 60,942,889$ 120,218,905$ 126,455,499$ 147,924,678$ 152,601,219$ 157,924,918$ 157,186,750$ 198,632,873$ 209,974,023$ Total net debt applicable to the limitas a percentage of debt limit 22.52%27.88%15.61%14.27%12.28%12.57%26.51%29.16%25.91%23.79% *2.5% of total market value of taxable property of $8.6 Billion per MCA 2019 7-7-4201 Source: City Manager's Final Adopted Budget 185 City of Bozeman, Montana Pledged Revenue Coverage – Governmental Activities Last Ten Fiscal Years Special Assessment Year Collections Principal Interest Total Coverage 2023 569,231$ 391,928$ 128,795$ 520,723$ 1.09 2022 901,483 183,999 135,136 319,135 2.82 2021 975,387 192,284 135,114 327,398 2.98 2020 775,230 32,000 26,434 58,434 13.27 2019 518,351 234,500 18,740 253,240 2.05 2018 506,819 95,000 23,221 118,221 4.29 2017 558,988 161,500 30,335 191,835 2.91 2016 705,143 228,000 39,343 267,343 2.64 2015 586,116 295,000 50,070 345,070 1.70 2014 1,054,483 474,000 73,760 547,760 1.93 Special Assessment Bonds Debt Service 186 City of Bozeman, Montana Pledged Revenue Coverage – Business-Type Activities Last Ten Fiscal Years Water Less:Net AvailableYearRevenue Expenditures Revenue Principal Interest Total Coverage 2023 12,314,794$ 10,150,775$ 2,164,019$ 1,318,000$ 478,523$ 1,796,523$ 1.20 2022 11,613,448 7,868,703 3,744,745 1,280,000 515,842 1,795,842 2.09 2021 11,027,542 6,878,458 4,149,084 1,244,000 552,156 1,796,156 2.31 2020 9,852,377 6,848,489 3,003,888 1,210,000 587,350 1,797,350 1.67 2019 9,396,171 6,525,730 2,870,441 1,176,000 578,954 1,754,954 1.64 2018 10,157,888 6,494,121 3,663,767 1,141,000 530,881 490,890 7.46 2017 9,281,821 6,589,396 2,692,425 822,000 490,890 1,312,890 2.05 2016 8,414,870 6,176,752 2,238,118 798,000 515,010 1,313,010 1.70 2015 7,748,913 4,973,926 2,774,987 775,000 538,425 1,313,425 2.11 2014 7,871,386 4,405,464 3,465,922 751,000 429,438 1,180,438 2.94 Water Revenue Bonds Debt Service Water Less:Net AvailableYearRevenue Expenditures Revenue Principal Interest Total Coverage 2023 10,787,474$ 7,621,951$ 3,165,523$ 1,993,321$ 733,053 2,726,374$ 1.16 2022 10,389,216 6,607,192 3,782,024 1,951,000 729,704 2,680,704 1.41 2021 9,926,730 6,329,624 3,597,106 1,760,000 581,214 2,341,214 1.54 2020 9,441,675 6,592,798 2,848,877 1,172,000 446,064 1,618,064 1.76 2019 9,336,007 6,348,468 2,987,539 1,139,000 479,859 1,618,859 1.85 2018 8,876,017 5,158,989 3,717,028 1,104,000 513,009 1,617,009 2.30 2017 8,566,893 5,496,164 3,070,729 1,074,565 545,267 1,619,832 1.90 2016 7,927,692 5,139,029 2,788,663 1,042,000 552,269 1,594,269 1.75 2015 7,631,117 3,914,454 3,716,663 1,053,000 632,268 1,685,268 2.21 2014 7,204,486 5,895,751 1,308,735 1,084,854 660,771 1,745,625 0.75 Waste Water Revenue BondsDebt Service 187 City of Bozeman, Montana Debt Service Requirements and Coverage for Tax Increment Districts Last Ten Fiscal Years Downtown Improvement District Northeast Urban Renewal District*Midtown Improvement District** Revenues Annual Revenues Annual Revenues Annual Available for Debt Service Available for Debt Service Available for Debt Service Year Debt Service Payment Coverage Debt Service Payment Coverage Debt Service Payment Coverage 2023 2,347,685$ 330,150$ 7.11 414,674$ 92,000$ 4.51 1,734,350$ 409,950$ 4.23 2022 1,483,518 332,372 4.46 397,037 92,000 4.32 1,701,529 408,550 4.16 2021 1,847,752 332,448 5.56 470,096 92,000 5.11 1,118,930 401,893 2.78 2020 1,803,534 447,987 4.03 289,196 92,000 3.14 - - N/A 2019 2,150,531 423,573 5.08 164,252 95,000 1.73 - - N/A 2018 2,430,377 422,288 5.76 149,580 92,000 1.63 - - N/A 2017 2,160,187 425,488 5.08 - - N/A - - N/A 2016 2,066,749 423,288 4.88 - - N/A - - N/A 2015 1,853,725 425,888 4.35 - - N/A - - N/A 2014 1,644,960 423,088 3.89 - - N/A - - N/A *$863,000 Bond issuance for the Northeast Urban Renew al District on 7/20/2017 **$6,500,000 Bond issuance for the Northeast Urban Renewal District on 7/9/2020 188 City of Bozeman, Montana Summary of Outstanding SIDs Last Ten Fiscal Years Bonds Assessments DelinquentOriginal Amount Maturity Date Outstanding Cash Balance Outstanding Assessments SID 674 494,000$ 7/1/2024 38,500$ 1,185$ 24,306$ -$ SID 747 4,001,000 7/1/2040 3,333,789 4,441 2,781,020 5,420 Total 4,495,000$ 3,372,289$ 5,626$ 2,805,326$ 5,420$ Bond Issue 189 City of Bozeman, Montana Revolving Fund Balance and Bond Secured Thereby Last Ten Fiscal Years Revolving Fund Principal Fiscal Year Ended June 30, Cash Balance Amount of Debt 2023 54,728$ 680,263 2022 766,881 766,510 2021 2,555,927 1,152,898 2020 2,173,692 1,537,286 2019 3,020,315 643,983 2018 2,903,817 916,503 2017 2,874,013 1,040,533 2016 2,924,604 1,120,708 2015 2,948,129 1,295,224 2014 2,474,971 1,317,226 190 City of Bozeman, Montana Special Improvement District Assessment Billing and Collections Last Ten Fiscal Years Assessment Total Annual Fiscal Year Ended June 30, Billing Collections 2023 567,476$ 569,230 2022 578,154 599,831 2021 594,719 649,643 2020 642,408 703,796 2019 476,212 518,351 2018 505,481 506,819 2017 528,622 558,988 2016 543,351 705,143 2015 538,697 586,116 2014 676,613 1,054,484 191 City of Bozeman, Montana Demographic and Economic Statistics Last Ten Fiscal Years Percentage Residents (ageChange in Per Capita 25 and over)Pre K-12Estimated Estimated Personal Personal with Bachelor's School Unemployment Year Population Population Income Income Median Age Degree or Higher Enrollment Rate 2023 56,123 2.89% 1,952,338,137$ 39,939$ 28.0 63.8%7,357 1.9% 2022 54,545 2.35% 1,700,066,144 36,526 29.0 63.1%7,308 2.1% 2021 53,293 6.95% 1,393,673,190 32,865 28.0 58.7%6,893 3.2% 2020 49,831 2.68% 1,279,025,432 30,268 28.0 56.8%7,152 4.5% 2019 48,532 4.15% 1,047,804,618 29,097 28.0 56.9%7,015 3.8% 2018 46,596 2.97% 993,940,022 28,748 27.9 55.6%6,908 2.8% 2017 45,250 4.25% 918,565,430 26,506 27.7 56.5%6,770 2.8% 2016 43,405 4.19% 849,682,100 26,350 27.5 54.4%6,533 2.8% 2015 41,660 7.21% 849,198,410 26,335 27.3 53.6%6,294 2.9% 2014 38,860 0.30% 852,165,042 26,427 26.8 53.3%6,216 3.5% Sources: Bozeman Public Schools U.S. Bureau of Labor Statistics U.S. Census Bureau 192 City of Bozeman, Montana Principal Employers Current Year and Nine Years Ago Employer EmployerPrivate Employers by Class Class Size Private Employers by Class Class Size Bozeman Deaconess Hospital 9 Bozeman Deaconess Hospital 9Oracle America 7 Oracle America 7 Kenyon Noble Lumber & Hardware 7 Wal Mart 7 Town Pump Convenience Stores 7 Albertson's 6Wal Mart 7 Bridger Bowl 6Albertson's 6 Community Food Co-Op 6 Bridger Bowl 6 Costco 6Community Food Co-Op 6 Federal Premium Ammunition 6Costco6First Security Bank 6First Student 6 First Student 6 Glacier Bancorp 6 GranTree Inn 6McDonalds6Kenyon Noble Lumber & Hardware 6Murdoch's Ranch & Home Supply 6 Korman Marketing Group 6Ressler Motors 6 Martel Construction 6 Rosauers Food & Drug 6 McDonalds 6Target6Murdoch's Ranch & Home Supply 6Town & Country Foods 6 Ressler Motor 6 UPS 6 Town & Country Foods 6Williams Plumbing & Heating 6 Town Pump Convenience Stores 6Zoot Enterprises 6 Zoot Enterprises 6 Employer EmployerPublic Employers by Class Class Size Public Employers by Class Class Size Montana State University 9 Montana State University 9 Belgrade School District 8 School District #7 9Bozeman School District 8 Belgrade School District 8Gallatin County 8 City of Bozeman 7 City of Bozeman 7 Department of Agriculture 7Gallatin County 7 2023 2014 Source: Montana Department of Labor & Industry Class 6 - 100 to 249 Employees Class 7 - 250 to 499 Employees Class 8 - 500 to 999 Employees Class 9 - 1,000+ Employees 193 City of Bozeman, Montana Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General GovernmentCity Commission 2.10 2.10 2.10 2.10 0.10 2.10 2.10 2.10 2.10 2.10 City Manager 5.00 5.00 6.00 6.00 9.00 9.00 9.00 9.00 9.00 9.00 Municipal Court 8.50 9.00 8.50 8.50 9.50 9.50 9.60 9.98 11.23 11.23 City Attorney 7.00 9.00 10.20 10.20 10.70 10.70 11.70 12.70 12.70 13.70 Administrative Services *19.00 21.00 21.50 23.50 - - - - - - Human Resources *- - - - 4.00 5.00 5.00 5.00 5.00 6.00 Finance *- - - - 12.50 13.50 13.50 15.00 14.00 14.00 Information Technology *- - - - 6.00 7.00 7.00 7.00 8.00 8.50 Community Development 8.00 12.60 11.60 13.00 13.00 14.25 15.25 15.25 18.25 19.50 Facilities Management 3.50 3.50 3.50 3.50 4.50 5.00 5.00 6.00 7.00 8.00 Total general government 53.10 62.20 63.40 66.80 69.30 76.05 78.15 82.03 87.28 92.03 Public safety Police Department 72.75 72.25 71.70 72.70 72.70 74.55 75.55 76.95 80.95 81.95 Fire Department 45.75 45.00 46.00 46.00 46.00 47.00 50.00 50.00 50.00 57.00 Building Inspection 12.55 14.00 18.50 18.50 19.50 19.75 19.75 19.75 19.75 20.75 Parking 5.50 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Total public safety 136.55 137.25 142.20 143.20 144.20 147.30 151.30 152.70 156.70 165.70 Public servicesPublic Services Admin/Engineering 12.00 6.58 10.25 11.50 11.50 16.25 18.25 22.25 26.25 29.25 Streets 18.62 16.20 18.85 19.85 21.85 21.35 22.30 22.30 22.30 24.70 Storm Water 1.00 4.00 6.25 6.50 7.50 7.50 8.50 9.50 9.50 10.25 Water Conservation 2.25 3.00 3.00 3.00 3.00 Water Treatment Plant 11.27 12.75 10.50 10.50 10.00 10.00 10.00 10.00 10.00 10.00 Water Operations 15.62 17.33 14.45 14.45 14.50 14.50 15.70 15.65 16.65 17.65 Wastewater Operations 11.25 13.09 13.30 14.05 12.00 12.50 13.55 14.55 14.55 14.55 Wastewater Plant 17.47 15.50 14.75 14.75 15.00 15.00 16.00 16.00 16.00 16.00 Solid Waste Collection/Recycling 15.74 15.90 15.15 16.15 17.15 17.15 18.75 19.75 19.75 20.75 Vehicle Maintenance 5.00 5.00 6.50 6.50 7.50 7.50 8.50 8.50 9.50 10.50 Total public services 107.97 106.35 110.00 114.25 117.00 124.00 134.55 141.50 147.50 156.65 Public WelfareCemetery (numerous short terms)3.33 4.90 5.04 5.04 4.75 4.25 4.25 4.55 4.55 4.55 Parks (numerous short terms)11.77 15.40 14.51 14.51 14.90 18.00 18.00 19.75 19.75 29.65 Forestry 4.60 5.95 5.65 6.65 5.20 6.00 6.00 6.65 6.65 6.65 Library 23.11 23.41 26.02 28.02 28.02 28.02 28.02 26.53 26.53 27.53 Recreation (numerous short terms)16.83 16.83 23.55 24.26 23.41 24.80 24.80 21.90 21.90 23.10 Economic Development 4.00 3.50 3.50 3.50 2.00 2.00 3.00 3.00 3.00 3.00 Sustainability 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 3.00 3.00 Total public services 65.14 71.49 79.77 83.48 79.78 84.57 85.57 83.88 85.38 97.48 Total 362.76 377.29 395.37 407.73 410.28 431.92 449.57 460.11 476.86 511.86 Source: City Manager's Final Adopted Budget * Administrative Services consists of Finance, Information Technology and Human Resources. Beginning in fiscal year 2018, these programs are reported separately. 194 City of Bozeman, Montana Operating Indicators by Function/Program Last Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 FinanceSID Statements 16,424 16,506 16,893 17,200 17,463 18,185 18,552 18,895 19,655 20,001 Utility Bills 155,000 162,000 166,000 169,000 172,000 168,280 176,263 180,720 205,092 208,259Accounts Payable Checks Processed 10,453 11,098 11,000 11,800 12,350 11,762 11,800 12,488 10,543 9,846 PoliceNumber of Officers 63 61 60 61 60 60 60 60 60 61Calls for Service 48,542 46,290 47,400 48,200 47,136 50,548 48,099 48,560 69,857 49,182Arrests2,165 2,195 2,078 2,427 2,314 2,618 2,017 2,118 1,936 2,402Misdemeanor Citations Issued - includes traffic 6,045 6,169 6,390 5,886 4,940 5,430 4,800 4,058 4,012 5,460 Traffic Stops 8,210 7,757 7,482 7,900 7,675 9,600 8,410 8,736 8,062 5,991Traffic Crashes 1,469 1,601 1,792 1,850 1,958 1,840 1,813 1,351 1,452 1,707 Fire*Fires, Hazardous Conditions, Rupture/Explosions 340 296 349 445 564 522 340 304 319 367 Emergency Medical Services/ Rescue 2,051 2,032 2,424 3,062 3,320 3,073 3,154 3,005 2,716 2,714Service Calls 212 202 244 334 438 406 239 170 311 282 Building InspectionCommercial Permits:Number 1,165 1,560 1,628 1,731 883 768 702 707 548 1,014 Value (Millions)44.50$ 98.02$ 164.47$ 65.00$ 216.00$ 249.00$ 302.00$ 237.00$ 201.00$ 271.00$ Residential Permits: Number 2,911 2,836 3,937 3,905 3,222 2,307 2,094 2,674 1,947 2,354Value (Millions)130.68$ 191.97$ 200.00$ 130.00$ 340.00$ 311.00$ 176.00$ 233.00$ 479.00$ 444.00$ WaterNew Service Main Taps 57 70 60 72 65 101 96 100 60 25 Meter Replacement/ Repair 479 1,006 978 1,500 994 1,042 528 1,273 1,285 645Water Main Breaks/ Repairs 7 5 7 6 7 5 11 14 9 5WastewaterMain Line Flushing (in Miles)30.0 90.0 50.0 30.9 50.0 37.5 48.0 33.3 73.7 55.1New Infrastructure TV (in Miles)2.00 8.00 2.60 9.90 7.00 2.80 3.30 7.40 6.77 3.70 New Service Taps 37 44 20 30 30 56 25 34 19 19Solid Waste Collection & Recycling Residential Accounts 7,869 8,369 8,878 9,695 10,384 10,884 11,321 11,841 12,317 12,379Commercial Customers 258 265 461 449 515 573 566 520 612 649 Recycling Customers 1,601 2,100 2,663 3,386 3,854 4,434 4,867 5,526 6,025 6,231Annual Tonnage Collected: Collections Program 10,960 11,457 11,691 12,490 17,657 18,880 19,815 19,955 21,369 23,530Vehicle MaintenanceWork Orders Processed 1,717 1,549 1,453 1,509 2,592 2,392 2,057 3,718 1,802 1,845Gallons of Oil Disposed 8,740 8,969 7,395 6,475 5,007 5,522 4,900 5,787 2,925 4,676 ParksPark Reservations 400 400 400 400 425 493 423 912 1,433 938 Sources: City Manager's Final Adopted Budget, City of Bozeman Finance Department *Statistics are based on calendar year 195 City of Bozeman, Montana Capital Assets Statistics by Function/Program Last Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 PoliceStations 1 1 1 1 1 1 1 1 1 1 Patrol Units (Cars)*20 22 21 21 22 21 21 24 20 22 Patrol Units (Motorcycles)4 2 3 3 3 3 3 3 3 3 FireStations 3 3 3 3 3 3 3 3 3 3Fire Trucks 7 7 7 7 7 7 7 7 7 9StreetsStreet & Alley Mileage 259 262 266 267 271 275 280 282 286 297Lane Miles Painted 35 49 50 50 52 48 53 51 51 53Number of Signs Installed/Repaired 798 600 600 600 708 394 1,107 1,270 273 467WaterWater Mains (Miles)267.28 268.57 274.89 276.92 283.95 286.68 297.10 299.52 304.53 307.58Fire Hydrants 2,406 2,419 2,511 2,573 2,618 2,668 2,758 2,782 2,835 3,008WastewaterSanitary Sewers (Miles)211.51 212.53 219.14 224.28 234.64 236.04 239.00 242.43 254.14 251.07Number of Manholes 4,185 4,219 4,360 4,492 4,614 4,677 4,828 5,023 5,051 5,457Solid WasteNumber of Collection Vehicles 8 8 8 8 8 8 6 6 8 9Number of Roll-off Trucks 4 4 4 4 5 5 5 5 5 5Number of Recycling Trucks 2 2 2 2 2 2 2 2 2 2Number of Compost Collection Trucks 2 2 2 2 1 1 1 1 1 1ParksFormal Turf Acres 125 126 140 140 172 192 192 192 196 475Natural Parkland Acres 220 220 220 220 323 343 388 413 413 436Miles of Trails 61 63 63 63 63 65 65 65 71 79 *Patrol cars determined by Vehicle & Equipment Master List-Fire Extinguishers tab-Total of "Utility" & "Interceptor" vehicles 206 Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department City of Bozeman GIS Department City of Bozeman Police Department Federal Awards Reports in Accordance with the Uniform Guidance June 30, 2023 City of Bozeman, Montana 196 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The City Commission City of Bozeman, Montana We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Bozeman, Montana (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 21, 2023. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified certain deficiencies in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item 2023-001 that we consider to be a significant deficiency. What inspires you, inspires us. | eidebailly.com 401 N. 31st St., Ste. 1120 | P.O. Box 7112 | Billings, MT 59103-7112 | TF 800.824.9797 | T 406.896.2400 | F 406.252.8600 | EOE 197 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City’s Response to Finding Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the finding identified in our audit and described in the accompanying Schedule of Findings and Questioned Costs. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Billings, Montana December 21, 2023 198 Independent Auditor’s Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance The City Commission City of Bozeman, Montana Report on Compliance for the Major Federal Program Opinion on the Major Federal Program We have audited City of Bozeman, Montana’s (the City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal program for the year ended June 30, 2023. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2023. Basis for Opinion on the Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for the major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City‘s federal programs. What inspires you, inspires us. | eidebailly.com 401 N. 31st St., Ste. 1120 | P.O. Box 7112 | Billings, MT 59103-7112 | TF 800.824.9797 | T 406.896.2400 | F 406.252.8600 | EOE 199 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: •Exercise professional judgment and maintain professional skepticism throughout the audit. •Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. •Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 200 Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Billings, Montana December 21, 2023 201 City of Bozeman, Montana Schedule of Expenditures of Federal Awards Year Ended June 30, 2023 Federal Financial Pass-throughAssistanceEntity IdentifyingListingNumber Expenditures Department of AgriculturePassed through Montana Department of Natural Resourcesand Conservation:Cooperative Forestry Assistance 10.664 FHE-21-101 3,718$ Department of InteriorPassed through Montana Historcial Society:Historic Preservation Fund Grants-in-Aid 15.904 P21AF10470 12,400 Department of JusticeDirect Program:Edward Byrne Memorial Justice Assistance Grant Program 16.738 6,288 Passed through Gallatin County:2990-000-42-420 Edward Byrne Memorial Justice Assistance Grant Program 16.738 142-000-400-790 73,204 Total CFDA 16.738 79,492 Direct Program:Bulletproof Vest Partnership Program 16.607 3,294 Total Department of Justice 82,786 Department of Transportation Passed through Montana Department of Transportation: State and Community Highway Safety 20.600 00-03-09-02 521 National Priority Safety Programs 20.616 00-03-09-02 1,064 Total Department of Transportation 1,585 Department of Treasury Direct Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 6,751,994 Passed through Montana Department of Natural Resources and Conservation: COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 Various 1,494,522 Total Department of Treasury 8,246,516 Department of Homeland SecurityPassed through Montana Disaster and Emergency Services: Homeland Security Grant Program 97.067 22HSBZMNV 392,939 Total Federal Financial Assistance 8,739,944$ Federal Grantor/Pass-ThroughGrantor/Program or Cluster Title 202 City of Bozeman, Montana Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2023 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards (the schedule) includes the federal award activity of the City of Bozeman, Montana (the City) under programs of the federal government for the year ended June 30, 2023. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or fund balance, or cash flows of the City. Note 2 - Significant Accounting Policies Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal assistance has been provided to a subrecipient. Note 3 - Indirect Cost Rate The City has not elected to use the 10% de minimus cost rate. 203 City of Bozeman, Montana Schedule of Findings and Questioned Costs Year Ended June 30, 2023 Section I – Summary of Auditor’s Results FINANCIAL STATEMENTS Type of auditor's report issued:Unmodified Internal control over financial reporting:Material weaknesses identified NoSignificant deficiencies identified not considered to be material weaknesses Yes Noncompliance material to financial statements noted?No FEDERAL AWARDS Internal control over major program: Material weaknesses identified NoSignificant deficiencies identified notconsidered to be material weaknesses None reported Type of auditor's report issued on compliance for major programs:Unmodified Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 2 CFR 200.516:No Identification of major programs: Name of Federal Program Federal Financial Assistance Listing COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 Dollar threshold used to distinguish between Type A and Type B programs: $ 750,000 Auditee qualified as low-risk auditee?Yes 204 City of Bozeman, Montana Schedule of Findings and Questioned Costs Year Ended June 30, 2023 Section II – Financial Statement Findings 2023-001: Street Impact Fees – Assessment Significant Deficiency Criteria: Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. Ensuring street impact fees are assessed and recorded appropriately is a key component of effective internal control over financial reporting. Condition: We tested 40 separate street impact fee calculations that were assessed during fiscal year 2023. Through testing these transactions, we noted inconsistencies with assessment practices and rate schedules being applied to various transactions tested, and as a result, we found several discrepancies between our recalculation of fees and the amount that was charged for 16 of the 40 items tested. Total street impact fees charged totaled ~5.2M during the fiscal year, and the errors noted within our sample projected to an overall discrepancy of ~162k. This difference represents an estimated amount that revenue was overstated during the fiscal year as a result of the testing performed. Various differences are the result of information that could not be provided to support various inputs into the calculations as they were not maintained in a manner that would allow us to accurately recalculate the fees charged. Cause: The City of Bozeman (City) did not have adequate internal controls to ensure impact fees were assessed and recorded consistently and that adequate documentation was maintained to support the amounts that were charged. Effect: Inconsistent documentation, inability to quickly replicate fee calculations, and possibility that some customers may have been overcharged or undercharged for street impact fees. Testing resulted in an immaterial misstatement in street impact fee revenues. Recommendation: We recommend the City enhance internal controls to ensure street impact fees are consistently assessed and appropriately recorded and that documentation is maintained to support the inputs into the calculations performed. Views of Responsible Officials: Management agrees with this finding. 205 City of Bozeman, Montana Schedule of Findings and Questioned Costs Year Ended June 30, 2023 Section III – Federal Award Findings and Questioned Costs No current year findings reported. APPENDIX F * Preliminary; subject to change. F-1 BIDDING INFORMATINON: TERMS AND CONDITIONS OF SALE AND BID FORMS TERMS AND CONDITIONS OF SALE $2,280,000* General Obligation Bonds, Series 2024A City of Bozeman, Montana The City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), will receive bids for the purchase of General Obligation Bonds, Series 2024A, in the aggregate principal amount of $2,280,000* (the “Series 2024A Bonds”), subject to adjustment as described below. Bids will be received by Baker Tilly Municipal Advisors, LLC, the City’s municipal advisor (“Baker Tilly MA”) or by electronic transmission through PARITY® pursuant to the instructions set forth herein until 10:00 a.m., M.T., on Tuesday, April 16, 2024 (the “Sale Time”), at which time bids will be opened and tabulated. The tabulation of bids will be presented to a designated Pricing Committee subsequent to the opening of bids, at which time the Pricing Committee will consider the bids received and, if a responsive and acceptable bid is received, award sale of the Series 2024A Bonds to the bidder with the lowest true interest cost, subject to approval and confirmation by the Commission. SUBMISSION OF BIDS All bidders are advised that each bid shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2024A Bonds regardless of the manner in which the bid is submitted. Baker Tilly MA will assume no liability for the inability of a bidder or its bid to reach Baker Tilly MA prior to the Sale Time, and neither the City nor Baker Tilly MA shall be responsible for any failure, misdirection or error in the means of transmission selected by any bidder. All bidders are advised that each bid shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2024A Bonds regardless of the manner in which the bid is submitted. Sealed Bidding. Completed, signed bids may be submitted to Baker Tilly MA by email to bids@bakertilly.com, and must be received prior to the Sale Time. OR Electronic Bidding. Bids may also be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all bids submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic bid in a timely manner and in compliance with the requirements of the Terms of Bid. Neither the City, its agents, nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents, nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Series 2024A Bonds, and PARITY® is not an agent of the City. If any provisions of this Terms of Bid conflict with information provided by PARITY®, this Terms of Bid shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 THE SERIES 2024A BONDS The Series 2024A Bonds shall be dated, as originally issued, as of their date of delivery, expected to be May 16, 2024, and shall bear interest payable semiannually on January 1 and July 1 of each year, commencing January 1, 2025, to the registered owners of the Series 2024A Bonds as such appear in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month, at a rate or rates designated by the successful bidder at public sale and approved by the Commission. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. F-2 The Series 2024A Bonds shall mature, subject to redemption as hereinafter provided, on July 1 in each of the following years and amounts (unless combined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) Year Principal Amount(1) 2025 $ 75,000 2035 $110,000 2026 85,000 2036 115,000 2027 90,000 2037 120,000 2028 90,000 2038 125,000 2029 95,000 2039 130,000 2030 95,000 2040 135,000 2031 100,000 2041 140,000 2032 105,000 2042 145,000 2033 105,000 2043 150,000 2034 110,000 2044 160,000 (1) Preliminary; subject to change. The City reserves the right, after bids are opened and prior to award, to increase or decrease the amount of any maturity or maturities in multiples of $5,000 in order to produce sufficient net proceeds and to meet the City’s structuring goals. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2024A Bonds as that of the successful bid. Gross spread for this purpose is the differential between the price paid to the City for the Series 2024A Bonds and the prices at which the bid indicates the Series 2024A Bonds are initially offered to the investing public. The Series 2024A Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. If less than all of the Series 2024A Bonds are to be redeemed, the Series 2024A Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City). The Series 2024A Bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities. The Series 2024A Bonds will be issued as fully registered bonds only. The Series 2024A Bonds will be issued in book-entry only form. BOOK ENTRY The Series 2024A Bonds will be issued by means of a book entry system with no physical distribution of Series 2024A Bonds made to the public. The Series 2024A Bonds will be issued in fully registered form and one Series 2024A Bond representing the aggregate principal amount of the Series 2024A Bonds maturing in each year will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Series 2024A Bonds. Individual purchases of the Series 2024A Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2024A Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The lowest bidder (the “Purchaser”), as a condition of delivery of the Series 2024A Bonds, will be required to deposit the Series 2024A Bonds with DTC. F-3 PURPOSE AND SECURITY The proceeds of the Series 2024A Bonds will be used by the City to (i) finance or reimburse the City for a portion of the costs of improvements to the Bozeman Swim Center, Bogert Pool, and Lindley Center; and (ii) pay the costs associated with the sale of the Series 2024A Bonds. The Series 2024A Bonds, including interest thereon, are general obligations of the City payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. CONTINUING DISCLOSURE In order to permit bidders for the Series 2024A Bonds and other participating underwriters in the primary offering of the Series 2024A Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Rule”), the City will covenant and agree for the benefit of the registered holders and beneficial owners from time to time of the outstanding Series 2024A Bonds to provide annual reports of specified information and notice of the occurrence of certain events. The City is the only “obligated person” in respect of the Series 2024A Bonds within the meaning of the Rule for the purposes of disclosing information on an ongoing basis. A description of the undertaking will be set forth in the Official Statement. Failure of the City to enter into an undertaking substantially similar to that described in the Official Statement would relieve the successful bidder of its obligation to purchase the Series 2024A Bonds. BIDDING PARAMETERS Bids shall be for not less than $2,280,000.00 (Par), plus accrued interest, if any, on the total principal amount of the Series 2024A Bonds. No bid can be withdrawn or amended after the time set for receiving bids on the Sale Date. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity as stated on the bid must be 98.0% or greater. Series 2024A Bonds of the same maturity shall bear a single rate from the date of the Series 2024A Bonds to the date of maturity. No conditional bids will be accepted. Bidders will have the option of combining the Series 2024A Bonds into one or more term bonds. If any Series 2024A Bonds are issued as term bonds, such term bonds will be subject to annual mandatory sinking fund redemption in the principal amount set forth in the foregoing schedule on each July 1, concluding no later than July 1, 2044, at a redemption price equal to the principal amount of such Series 2024A Bonds or portions thereof to be redeemed with interest accrued thereon and payable on January 1 and July 1 to the redemption date, in installments and in the same amounts and on the same dates as the Series 2024A Bonds would have matured if they were not included in a term bond. GOOD FAITH DEPOSIT To have its bid considered for award, the successful bidder is required to submit a good faith deposit via wire transfer to the City in the amount of $45,600.00 (the “Deposit”) no later than 1:00 p.m. M.T. on Tuesday, April 16, 2024. The successful bidder shall be solely responsible for the timely delivery of its Deposit, and neither the City nor Baker Tilly MA have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the bid of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. A Deposit will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Baker Tilly MA following the receipt and tabulation of bids. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the successful bidder will be retained by the City and no interest will accrue to the successful bidder. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the successful bidder fails to comply with the accepted bid, the Deposit will be retained by the City. F-4 AWARD The Series 2024A Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost basis calculated on the bid prior to any adjustment made by the City. The City’s computation of the interest rate of each bid, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any bid or of matters relating to the receipt of bids and award of the Series 2024A Bonds, (ii) reject all bids without cause, and (iii) reject any bid that the City determines to have failed to comply with the terms herein. BOND REGISTRAR, TRANSFER AGENT AND PAYING AGENT U.S. Bank Trust Company, National Association, Salt Lake City, Utah, will act as bond registrar, transfer agent and paying agent (the “Registrar”) in connection with the Series 2024A Bonds. The bond register will be kept, transfers of ownership will be effected and principal of and interest on the Series 2024A Bonds will be paid by the Registrar. The City will pay the charges of the Registrar for such services. The City reserves the right to remove the Registrar and to appoint a successor. NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The Series 2024A Bonds will not be designated by the City as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and financial institutions described in Section 265(b)(5) of the Code may treat the Series 2024A Bonds for purposes of Sections 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August 7, 1986. LEGAL OPINION An opinion as to the validity of the Series 2024A Bonds and the exclusion from gross income for federal and Montana income tax purposes of the interest on the Series 2024A Bonds will be furnished by Dorsey & Whitney LLP, of Missoula, Montana, as Bond Counsel. The legal opinion will be delivered at the time of closing. The legal opinion will state that the Series 2024A Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability thereof may be limited by the exercise of judicial discretion or by state or federal laws relating to bankruptcy, reorganization, moratorium or creditors’ rights. DELIVERY On or about May 16, 2024, the City will deliver to the Registrar the printed Series 2024A Bonds for completion, authentication and delivery to The Depository Trust Company (“DTC”), which will act as securities depository for the Series 2024A Bonds. The Series 2024A Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. The successful bidder will not receive physical certificates representing its interest in the Series 2024A Bonds. Payment for the Series 2024A Bonds must be received by the City in immediately available funds at its designated depositary on the day of closing. ESTABLISHMENT OF ISSUE PRICE In order to establish the issue price of the Series 2024A Bonds for federal income tax purposes, the City requires bidders to agree to the following, and by submitting a bid, each bidder agrees to the following. If a bid is submitted by a potential underwriter, the bidder confirms that (i) the underwriters have offered or reasonably expect to offer the Series 2024A Bonds to the public on or before the date of the award at the offering price (the “initial offering price”) for each maturity as set forth in the bid and (ii) the bidder, if it is the winning bidder, shall require any agreement among underwriters, selling group agreement, third-party distribution agreement or other agreement relating to the initial sale of the Series 2024A Bonds to the public to which it is a party to include provisions requiring compliance by all parties to such agreements with the provisions contained herein. For purposes hereof, Series 2024A Bonds with a separate CUSIP number constitute a separate “maturity,” and “the public” does not include underwriters of the Series 2024A Bonds (including members of a selling group or retail distribution group) or persons related to underwriters of the Series 2024A Bonds. F-5 If, however, a bid is submitted for the bidder’s own account in a capacity other than as an underwriter of the Series 2024A Bonds, and the bidder has no current intention to sell, reoffer, or otherwise dispose of the Series 2024A Bonds, the bidder shall notify the City to that effect at the time it submits its bid and shall provide a certificate to that effect in place of the certificate otherwise required below. If the winning bidder intends to act as an underwriter, the City shall advise the winning bidder at or prior to the time of award whether (i) the competitive sale rule or (ii) the “hold-the-offering price” rule applies. If the City advises the winning bidder that the requirements for a competitive sale have been satisfied and that the competitive sale rule applies, the winning bidder will be required to deliver to the City at or prior to closing a certification, substantially in the form attached hereto as Exhibit A, as to the reasonably expected initial offering price as of the award date. If the City advises the winning bidder that the requirements for a competitive sale have not been satisfied, the hold-the-offering price rule will apply. The winning bidder shall (1) upon the request of the City confirm that the underwriters did not offer or sell any maturity of the Series 2024A Bonds to any person at a price higher than the initial offering price of that maturity during the period starting on the award date and ending on the earlier of (a) the close of the fifth business day after the sale date or (b) the date on which the underwriters have sold at least 10% of that maturity to the public at or below the initial offering price; and (2) at or prior to closing, deliver to the City a certification substantially in the form attached hereto as Exhibit B, together with a copy of the pricing wire. Any action to be taken or documentation to be received by the City pursuant hereto may be taken or received on behalf of the City by Baker Tilly MA. Bidders should prepare their bids on the assumption that the Series 2024A Bonds will be subject to the “hold-the-offering-price” rule. Any bid submitted pursuant to the Terms of Bid shall be considered a firm offer for the purchase of the Series 2024A Bonds, and bids submitted will not be subject to cancellation or withdrawal. BOND INSURANCE AT PURCHASER’S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2024A Bonds. If the Series 2024A Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s bid. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest true interest cost to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2024A Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2024A Bonds. COSTS; CUSIP NUMBERS The City will pay the fees and charges of its municipal advisor, bond counsel, and Registrar, along with costs of printing the Official Statement, and other miscellaneous costs associated with the sale and issuance of the Series 2024A Bonds. If the Series 2024A Bonds qualify for the assignment of CUSIP numbers such numbers will be printed on the Series 2024A Bonds; however, neither the failure to print such numbers on any Series 2024A Bond nor any error with respect thereto will constitute cause for failure or refusal by the Purchaser to accept delivery of the Series 2024A Bonds. Baker Tilly MA will apply for CUSIP numbers pursuant to Rule G-34 implemented by the Municipal Securities Rulemaking Board. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. F-6 RATING The City has applied for a rating from Moody’s Investors Service on the Series 2024A Bonds. If the City obtains such rating, rating agency fees for obtaining the rating will be the responsibility of the City. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2024A Bonds, and said Preliminary Official Statement has been deemed final by the City as of the date thereof within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For an electronic copy of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Baker Tilly Municipal Advisors, LLC, by telephone (651) 223-3000, or by email bids@bakertilly.com. A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying the maturity dates, principal amounts, and interest rates of the Series 2024A Bonds, together with any other information required by law. By awarding the Series 2024A Bonds to the Purchaser, the City agrees that, no more than seven business days after the date of such award, it shall provide to the Purchaser an electronic copy of the Final Official Statement. The City designates the Purchaser as its agent for purposes of distributing the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt of the Final Official Statement by each such syndicate member. City of Bozeman, Montana F-7 EXHIBIT A ISSUE PRICE CERTIFICATE – COMPETITIVE SALES WITH AT LEAST THREE BIDS FROM ESTABLISHED UNDERWRITERS $[PRINCIPAL AMOUNT] General Obligation Bonds, Series 2024A City of Bozeman, Montana ISSUE PRICE CERTIFICATE The undersigned, on behalf of [NAME OF UNDERWRITER] (“[SHORT NAME OF UNDERWRITER]”), hereby certifies as set forth below with respect to the sale of the obligations named above (the “Bonds”). 1. Reasonably Expected Initial Offering Price. (a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public by [SHORT NAME OF UNDERWRITER] are the prices listed in Schedule A (the “Expected Offering Prices”). The Expected Offering Prices are the prices for the Maturities of the Bonds used by [SHORT NAME OF UNDERWRITER] in formulating its bid to purchase the Bonds. Attached as Schedule B is a true and correct copy of the bid provided by [SHORT NAME OF UNDERWRITER] to purchase the Bonds. (b) [SHORT NAME OF UNDERWRITER] was not given the opportunity to review other bids prior to submitting its bid. (c) The bid submitted by [SHORT NAME OF UNDERWRITER] constituted a firm offer to purchase the Bonds. 2. Defined Terms. For purposes of this Issue Price Certificate: (a) Issuer means the City of Bozeman, Montana. (b) Maturity means Bonds with the same credit and payment terms. Any Bonds with different maturity dates, or with the same maturity date but different stated interest rates, are treated as separate Maturities. (c) Member of the Distribution Group means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). (d) Public means any person (i.e., an individual, trust, estate, partnership, association, company, or corporation) other than a Member of the Distribution Group or a related party to a Member of the Distribution Group. A person is a “related party” to a Member of the Distribution Group if the Member of the Distribution Group and that person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). (e) Sale Date means the first day on which there is a binding contract in writing for the sale of the respective Maturity. The Sale Date of each Maturity was [DATE]. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents [SHORT NAME OF UNDERWRITER]’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Dorsey & Whitney, LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. [UNDERWRITER] By:______________________________________ Name:___________________________________ Dated: [ISSUE DATE] F-8 SCHEDULE A EXPECTED OFFERING PRICES (Attached) F-9 SCHEDULE B COPY OF UNDERWRITER’S BID (Attached) * Preliminary; subject to change. F-10 EXHIBIT B ISSUE PRICE CERTIFICATE – COMPETITIVE SALES WITH FEWER THAN THREE BIDS FROM ESTABLISHED UNDERWRITERS $[PRINCIPAL AMOUNT] General Obligation Bonds, Series 2024A City of Bozeman, Montana ISSUE PRICE CERTIFICATE The undersigned, on behalf of [NAME OF UNDERWRITER/REPRESENTATIVE] ( [“[SHORT NAME OF UNDERWRITER]”)][the “Representative”)][, on behalf of itself and [NAMES OF OTHER UNDERWRITERS] (together, the “Underwriting Group”),] hereby certifies as set forth below with respect to the sale of the obligations named above (the “Bonds”). 1. Initial Offering Price of the Bonds. [SHORT NAME OF UNDERWRITER][The Underwriting Group] offered the Bonds to the Public for purchase at the specified initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire for the Bonds is attached to this certificate as Schedule B. 2. First Price at which Sold to the Public. On the Sale Date, at least 10% of each Maturity [listed in Schedule C] was first sold to the Public at the respective Initial Offering Price [or price specified [therein][in Schedule C], if different]. 3. Hold the Offering Price Rule. [SHORT NAME OF UNDERWRITER][Each member of the Underwriting Group] has agreed in writing that, (i) for each Maturity less than 10% of which was first sold to the Public at a single price as of the Sale Date, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “Hold-the-Offering-Price Rule”), and (ii) any agreement among underwriters, selling group agreement, or third-party distribution agreement contains the agreement of each underwriter, dealer, or broker-dealer who is a party to such agreement to comply with the Hold-the-Offering-Price Rule. Based on the [Representative][SHORT NAME OF UNDERWRITER]’s own knowledge and, in the case of sales by other Members of the Distribution Group, representations obtained from the other Members of the Distribution Group, no Member of the Distribution Group has offered or sold any such Maturity at a price that is higher than the respective Initial Offering Price during the respective Holding Period. 4. Defined Terms. For purposes of this Issue Price Certificate: (a) Holding Period means the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date ([DATE]), or (ii) the date on which Members of the Distribution Group have sold at least 10% of such Maturity to the Public at one or more prices, none of which is higher than the Initial Offering Price for such Maturity. (b) Issuer means the City of Bozeman, Montana. (c) Maturity means Bonds with the same credit and payment terms. Any Bonds with different maturity dates, or with the same maturity date but different stated interest rates, are treated as separate Maturities. (d) Member of the Distribution Group means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). (e) Public means any person (i.e., an individual, trust, estate, partnership, association, company, or corporation) other than a Member of the Distribution Group or a related party to a Member of the Distribution Group. A person is a “related party” to a Member of the Distribution Group if the Member of the Distribution Group and that person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the F-11 corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). (f) Sale Date means the first day on which there is a binding contract in writing for the sale of the respective Maturity. The Sale Date of each Maturity was [DATE]. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents [NAME OF UNDEWRITING FIRM][the Representative’s] interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Dorsey & Whitney, LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. [UNDERWRITER][REPRESENTATIVE] By:______________________________________ Name:___________________________________ Dated: [ISSUE DATE] F-12 SCHEDULE A INITIAL OFFERING PRICES OF THE BONDS (Attached) F-13 SCHEDULE B PRICING WIRE (Attached) F-14 SCHEDULE C SALES OF AT LEAST 10% OF MATURITY TO THE PUBLIC ON THE SALE DATE AT THE INITIAL OFFERING PRICE (Attached) F-15 TERMS AND CONDITIONS OF SALE $3,930,000* Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana The City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), will receive bids for the purchase of Limited Tax General Obligation Bonds, Series 2024B, in the aggregate principal amount of $3,930,000* (the “Series 2024B Bonds”), subject to adjustment as described below. Bids will be received by Baker Tilly Municipal Advisors, LLC, the City’s municipal advisor (“Baker Tilly MA”) or by electronic transmission through PARITY® pursuant to the instructions set forth herein until 10:30 a.m., M.T., on Tuesday, April 16, 2024 (the “Sale Time”), at which time bids will be opened and tabulated. The tabulation of bids will be presented to a designated Pricing Committee subsequent to the opening of bids, at which time the Pricing Committee will consider the bids received and, if a responsive and acceptable bid is received, award sale of the Series 2024B Bonds to the bidder with the lowest true interest cost, subject to approval and confirmation by the Commission. SUBMISSION OF BIDS All bidders are advised that each bid shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2024B Bonds regardless of the manner in which the bid is submitted. Baker Tilly MA will assume no liability for the inability of a bidder or its bid to reach Baker Tilly MA prior to the Sale Time, and neither the City nor Baker Tilly MA shall be responsible for any failure, misdirection or error in the means of transmission selected by any bidder. All bidders are advised that each bid shall be deemed to constitute a contract between the bidder and the City to purchase the Series 2024B Bonds regardless of the manner in which the bid is submitted. Sealed Bidding. Completed, signed bids may be submitted to Baker Tilly MA by email to bids@bakertilly.com, and must be received prior to the Sale Time. OR Electronic Bidding. Bids may also be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all bids submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic bid in a timely manner and in compliance with the requirements of the Terms of Bid. Neither the City, its agents, nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents, nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Series 2024B Bonds, and PARITY® is not an agent of the City. If any provisions of this Terms of Bid conflict with information provided by PARITY®, this Terms of Bid shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 THE SERIES 2024B BONDS The Series 2024B Bonds shall be dated, as originally issued, as of their date of delivery, expected to be May 16, 2024, and shall bear interest payable semiannually on January 1 and July 1 of each year, commencing January 1, 2025, to the registered owners of the Series 2024B Bonds as such appear in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month, at a rate or rates designated by the successful bidder at public sale and approved by the Commission. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. F-16 The Series 2024B Bonds shall mature, subject to redemption as hereinafter provided, on July 1 in each of the following years and amounts (unless combined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) Year Principal Amount(1) 2025 $115,000 2035 $180,000 2026 140,000 2036 185,000 2027 140,000 2037 190,000 2028 145,000 2038 200,000 2029 150,000 2039 210,000 2030 155,000 2040 340,000 2031 160,000 2041 355,000 2032 165,000 2042 370,000 2033 170,000 2043 385,000 2034 175,000 (1) Preliminary; subject to change. The City reserves the right, after bids are opened and prior to award, to increase or decrease the amount of any maturity or maturities in multiples of $5,000 in order to produce sufficient net proceeds and to meet the City’s structuring goals. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2024B Bonds as that of the successful bid. Gross spread for this purpose is the differential between the price paid to the City for the Series 2024B Bonds and the prices at which the bid indicates the Series 2024B Bonds are initially offered to the investing public. The Series 2024B Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. If less than all of the Series 2024B Bonds are to be redeemed, the Series 2024B Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City). The Series 2024B Bonds shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities. The Series 2024B Bonds will be issued as fully registered bonds only. The Series 2024B Bonds will be issued in book-entry only form. BOOK ENTRY The Series 2024B Bonds will be issued by means of a book entry system with no physical distribution of Series 2024B Bonds made to the public. The Series 2024B Bonds will be issued in fully registered form and one Series 2024B Bond representing the aggregate principal amount of the Series 2024B Bonds maturing in each year will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Series 2024B Bonds. Individual purchases of the Series 2024B Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2024B Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The lowest bidder (the “Purchaser”), as a condition of delivery of the Series 2024B Bonds, will be required to deposit the Series 2024B Bonds with DTC. F-17 PURPOSE AND SECURITY The proceeds of the Series 2024B Bonds will be used by the City to (i) finance or reimburse the City for a portion of the costs of improvements to the Bozeman Swim Center, Bogert Pool, and Lindley Center; and (ii) pay the costs associated with the sale of the Series 2024B Bonds. The Series 2024B Bonds, including interest thereon, are general obligations of the City payable from any legally available funds of the City. The general credit of the City is irrevocably pledged for the prompt payment of the principal and interest on the Series 2024B Bonds as they become due; however, the Series 2024B Bonds are not secured by a pledge of the City’s taxing power and the City cannot be obligated to levy taxes for the payment of principal of and interest on the Series 2024B Bonds. CONTINUING DISCLOSURE In order to permit bidders for the Series 2024B Bonds and other participating underwriters in the primary offering of the Series 2024B Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Rule”), the City will covenant and agree for the benefit of the registered holders and beneficial owners from time to time of the outstanding Series 2024B Bonds to provide annual reports of specified information and notice of the occurrence of certain events. The City is the only “obligated person” in respect of the Series 2024B Bonds within the meaning of the Rule for the purposes of disclosing information on an ongoing basis. A description of the undertaking will be set forth in the Official Statement. Failure of the City to enter into an undertaking substantially similar to that described in the Official Statement would relieve the successful bidder of its obligation to purchase the Series 2024B Bonds. BIDDING PARAMETERS Bids shall be for not less than $3,930,000.00 (Par), plus accrued interest, if any, on the total principal amount of the Series 2024B Bonds. No bid can be withdrawn or amended after the time set for receiving bids on the Sale Date. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity as stated on the bid must be 98.0% or greater. Series 2024B Bonds of the same maturity shall bear a single rate from the date of the Series 2024B Bonds to the date of maturity. No conditional bids will be accepted. Bidders will have the option of combining the Series 2024B Bonds into one or more term bonds. If any Series 2024B Bonds are issued as term bonds, such term bonds will be subject to annual mandatory sinking fund redemption in the principal amount set forth in the foregoing schedule on each July 1, concluding no later than July 1, 2043, at a redemption price equal to the principal amount of such Series 2024B Bonds or portions thereof to be redeemed with interest accrued thereon and payable on January 1 and July 1 to the redemption date, in installments and in the same amounts and on the same dates as the Series 2024B Bonds would have matured if they were not included in a term bond. GOOD FAITH DEPOSIT To have its bid considered for award, the successful bidder is required to submit a good faith deposit via wire transfer to the City in the amount of $78,600.00 (the “Deposit”) no later than 1:00 p.m. M.T. on Tuesday, April 16, 2024. The successful bidder shall be solely responsible for the timely delivery of its Deposit, and neither the City nor Baker Tilly MA have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the bid of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. A Deposit will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Baker Tilly MA following the receipt and tabulation of bids. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the successful bidder will be retained by the City and no interest will accrue to the successful bidder. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the successful bidder fails to comply with the accepted bid, the Deposit will be retained by the City. F-18 AWARD The Series 2024B Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost basis calculated on the bid prior to any adjustment made by the City. The City’s computation of the interest rate of each bid, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any bid or of matters relating to the receipt of bids and award of the Series 2024B Bonds, (ii) reject all bids without cause, and (iii) reject any bid that the City determines to have failed to comply with the terms herein. BOND REGISTRAR, TRANSFER AGENT AND PAYING AGENT U.S. Bank Trust Company, National Association, Salt Lake City, Utah, will act as bond registrar, transfer agent and paying agent (the “Registrar”) in connection with the Series 2024B Bonds. The bond register will be kept, transfers of ownership will be effected and principal of and interest on the Series 2024B Bonds will be paid by the Registrar. The City will pay the charges of the Registrar for such services. The City reserves the right to remove the Registrar and to appoint a successor. NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The Series 2024B Bonds will not be designated by the City as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and financial institutions described in Section 265(b)(5) of the Code may treat the Series 2024B Bonds for purposes of Sections 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August 7, 1986. LEGAL OPINION An opinion as to the validity of the Series 2024B Bonds and the exclusion from gross income for federal and Montana income tax purposes of the interest on the Series 2024B Bonds will be furnished by Dorsey & Whitney LLP, of Missoula, Montana, as Bond Counsel. The legal opinion will be delivered at the time of closing. The legal opinion will state that the Series 2024B Bonds are valid and binding general obligations of the City enforceable in accordance with their terms, except to the extent to which enforceability thereof may be limited by the exercise of judicial discretion or by state or federal laws relating to bankruptcy, reorganization, moratorium or creditors’ rights. DELIVERY On or about May 16, 2024, the City will deliver to the Registrar the printed Series 2024B Bonds for completion, authentication and delivery to The Depository Trust Company (“DTC”), which will act as securities depository for the Series 2024B Bonds. The Series 2024B Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. The successful bidder will not receive physical certificates representing its interest in the Series 2024B Bonds. Payment for the Series 2024B Bonds must be received by the City in immediately available funds at its designated depositary on the day of closing. ESTABLISHMENT OF ISSUE PRICE In order to establish the issue price of the Series 2024B Bonds for federal income tax purposes, the City requires bidders to agree to the following, and by submitting a bid, each bidder agrees to the following. If a bid is submitted by a potential underwriter, the bidder confirms that (i) the underwriters have offered or reasonably expect to offer the Series 2024B Bonds to the public on or before the date of the award at the offering price (the “initial offering price”) for each maturity as set forth in the bid and (ii) the bidder, if it is the winning bidder, shall require any agreement among underwriters, selling group agreement, third-party distribution agreement or other agreement relating to the initial sale of the Series 2024B Bonds to the public to which it is a party to include provisions requiring compliance by all parties to such agreements with the provisions contained herein. For purposes hereof, Series 2024B Bonds with a separate CUSIP number constitute a separate “maturity,” and “the public” does not include underwriters of the Series 2024B Bonds (including members of a selling group or retail distribution group) or persons related to underwriters of the Series 2024B Bonds. F-19 If, however, a bid is submitted for the bidder’s own account in a capacity other than as an underwriter of the Series 2024B Bonds, and the bidder has no current intention to sell, reoffer, or otherwise dispose of the Series 2024B Bonds, the bidder shall notify the City to that effect at the time it submits its bid and shall provide a certificate to that effect in place of the certificate otherwise required below. If the winning bidder intends to act as an underwriter, the City shall advise the winning bidder at or prior to the time of award whether (i) the competitive sale rule or (ii) the “hold-the-offering price” rule applies. If the City advises the winning bidder that the requirements for a competitive sale have been satisfied and that the competitive sale rule applies, the winning bidder will be required to deliver to the City at or prior to closing a certification, substantially in the form attached hereto as Exhibit A, as to the reasonably expected initial offering price as of the award date. If the City advises the winning bidder that the requirements for a competitive sale have not been satisfied, the hold-the-offering price rule will apply. The winning bidder shall (1) upon the request of the City confirm that the underwriters did not offer or sell any maturity of the Series 2024B Bonds to any person at a price higher than the initial offering price of that maturity during the period starting on the award date and ending on the earlier of (a) the close of the fifth business day after the sale date or (b) the date on which the underwriters have sold at least 10% of that maturity to the public at or below the initial offering price; and (2) at or prior to closing, deliver to the City a certification substantially in the form attached hereto as Exhibit B, together with a copy of the pricing wire. Any action to be taken or documentation to be received by the City pursuant hereto may be taken or received on behalf of the City by Baker Tilly MA. Bidders should prepare their bids on the assumption that the Series 2024B Bonds will be subject to the “hold-the-offering-price” rule. Any bid submitted pursuant to the Terms of Bid shall be considered a firm offer for the purchase of the Series 2024B Bonds, and bids submitted will not be subject to cancellation or withdrawal. BOND INSURANCE AT PURCHASER’S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2024B Bonds. If the Series 2024B Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s bid. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest true interest cost to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2024B Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2024B Bonds. COSTS; CUSIP NUMBERS The City will pay the fees and charges of its municipal advisor, bond counsel, and Registrar, along with costs of printing the Official Statement, and other miscellaneous costs associated with the sale and issuance of the Series 2024B Bonds. If the Series 2024B Bonds qualify for the assignment of CUSIP numbers such numbers will be printed on the Series 2024B Bonds; however, neither the failure to print such numbers on any Series 2024B Bond nor any error with respect thereto will constitute cause for failure or refusal by the Purchaser to accept delivery of the Series 2024B Bonds. Baker Tilly MA will apply for CUSIP numbers pursuant to Rule G-34 implemented by the Municipal Securities Rulemaking Board. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. F-20 RATING The City has applied for a rating from Moody’s Investors Service on the Series 2024B Bonds. If the City obtains such rating, rating agency fees for obtaining the rating will be the responsibility of the City. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2024B Bonds, and said Preliminary Official Statement has been deemed final by the City as of the date thereof within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For an electronic copy of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Baker Tilly Municipal Advisors, LLC, by telephone (651) 223-3000, or by email bids@bakertilly.com. A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying the maturity dates, principal amounts, and interest rates of the Series 2024B Bonds, together with any other information required by law. By awarding the Series 2024B Bonds to the Purchaser, the City agrees that, no more than seven business days after the date of such award, it shall provide to the Purchaser an electronic copy of the Final Official Statement. The City designates the Purchaser as its agent for purposes of distributing the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt of the Final Official Statement by each such syndicate member. City of Bozeman, Montana F-21 EXHIBIT A ISSUE PRICE CERTIFICATE – COMPETITIVE SALES WITH AT LEAST THREE BIDS FROM ESTABLISHED UNDERWRITERS $[PRINCIPAL AMOUNT] Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana ISSUE PRICE CERTIFICATE The undersigned, on behalf of [NAME OF UNDERWRITER] (“[SHORT NAME OF UNDERWRITER]”), hereby certifies as set forth below with respect to the sale of the obligations named above (the “Bonds”). 1. Reasonably Expected Initial Offering Price. (a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public by [SHORT NAME OF UNDERWRITER] are the prices listed in Schedule A (the “Expected Offering Prices”). The Expected Offering Prices are the prices for the Maturities of the Bonds used by [SHORT NAME OF UNDERWRITER] in formulating its bid to purchase the Bonds. Attached as Schedule B is a true and correct copy of the bid provided by [SHORT NAME OF UNDERWRITER] to purchase the Bonds. (b) [SHORT NAME OF UNDERWRITER] was not given the opportunity to review other bids prior to submitting its bid. (c) The bid submitted by [SHORT NAME OF UNDERWRITER] constituted a firm offer to purchase the Bonds. 2. Defined Terms. For purposes of this Issue Price Certificate: (a) Issuer means the City of Bozeman, Montana. (b) Maturity means Bonds with the same credit and payment terms. Any Bonds with different maturity dates, or with the same maturity date but different stated interest rates, are treated as separate Maturities. (c) Member of the Distribution Group means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). (d) Public means any person (i.e., an individual, trust, estate, partnership, association, company, or corporation) other than a Member of the Distribution Group or a related party to a Member of the Distribution Group. A person is a “related party” to a Member of the Distribution Group if the Member of the Distribution Group and that person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). (e) Sale Date means the first day on which there is a binding contract in writing for the sale of the respective Maturity. The Sale Date of each Maturity was [DATE]. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents [SHORT NAME OF UNDERWRITER]’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Dorsey & Whitney, LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. [UNDERWRITER] By:______________________________________ Name:___________________________________ Dated: [ISSUE DATE] F-22 SCHEDULE A EXPECTED OFFERING PRICES (Attached) F-23 SCHEDULE B COPY OF UNDERWRITER’S BID (Attached) F-24 EXHIBIT B ISSUE PRICE CERTIFICATE – COMPETITIVE SALES WITH FEWER THAN THREE BIDS FROM ESTABLISHED UNDERWRITERS $[PRINCIPAL AMOUNT] Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana ISSUE PRICE CERTIFICATE The undersigned, on behalf of [NAME OF UNDERWRITER/REPRESENTATIVE] ( [“[SHORT NAME OF UNDERWRITER]”)][the “Representative”)][, on behalf of itself and [NAMES OF OTHER UNDERWRITERS] (together, the “Underwriting Group”),] hereby certifies as set forth below with respect to the sale of the obligations named above (the “Bonds”). 1. Initial Offering Price of the Bonds. [SHORT NAME OF UNDERWRITER][The Underwriting Group] offered the Bonds to the Public for purchase at the specified initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire for the Bonds is attached to this certificate as Schedule B. 2. First Price at which Sold to the Public. On the Sale Date, at least 10% of each Maturity [listed in Schedule C] was first sold to the Public at the respective Initial Offering Price [or price specified [therein][in Schedule C], if different]. 3. Hold the Offering Price Rule. [SHORT NAME OF UNDERWRITER][Each member of the Underwriting Group] has agreed in writing that, (i) for each Maturity less than 10% of which was first sold to the Public at a single price as of the Sale Date, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “Hold-the-Offering-Price Rule”), and (ii) any agreement among underwriters, selling group agreement, or third-party distribution agreement contains the agreement of each underwriter, dealer, or broker-dealer who is a party to such agreement to comply with the Hold-the-Offering-Price Rule. Based on the [Representative][SHORT NAME OF UNDERWRITER]’s own knowledge and, in the case of sales by other Members of the Distribution Group, representations obtained from the other Members of the Distribution Group, no Member of the Distribution Group has offered or sold any such Maturity at a price that is higher than the respective Initial Offering Price during the respective Holding Period. 4. Defined Terms. For purposes of this Issue Price Certificate: (a) Holding Period means the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date ([DATE]), or (ii) the date on which Members of the Distribution Group have sold at least 10% of such Maturity to the Public at one or more prices, none of which is higher than the Initial Offering Price for such Maturity. (b) Issuer means the City of Bozeman, Montana. (c) Maturity means Bonds with the same credit and payment terms. Any Bonds with different maturity dates, or with the same maturity date but different stated interest rates, are treated as separate Maturities. (d) Member of the Distribution Group means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). (e) Public means any person (i.e., an individual, trust, estate, partnership, association, company, or corporation) other than a Member of the Distribution Group or a related party to a Member of the Distribution Group. A person is a “related party” to a Member of the Distribution Group if the Member of the Distribution Group and that person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). (f) Sale Date means the first day on which there is a binding contract in writing for the sale of the respective Maturity. The Sale Date of each Maturity was [DATE]. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents [NAME OF UNDEWRITING FIRM][the Representative’s] interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Dorsey & Whitney, LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. F-25 [UNDERWRITER][REPRESENTATIVE] By:______________________________________ Name:___________________________________ Dated: [ISSUE DATE] F-26 SCHEDULE A INITIAL OFFERING PRICES OF THE BONDS (Attached) F-27 SCHEDULE B PRICING WIRE (Attached) F-28 SCHEDULE C SALES OF AT LEAST 10% OF MATURITY TO THE PUBLIC ON THE SALE DATE AT THE INITIAL OFFERING PRICE (Attached) BID SALE DATE: April 16, 2024 F-29 CITY OF BOZEMAN, MONTANA $2,280,000* General Obligation Bonds, Series 2024A For the Series 2024A Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $2,280,000.00 (Par)) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2025 % % % 2035 % % % 2026 % % % 2036 % % % 2027 % % % 2037 % % % 2028 % % % 2038 % % % 2029 % % % 2039 % % % 2030 % % % 2040 % % % 2031 % % % 2041 % % % 2032 % % % 2042 % % % 2033 % % % 2043 % % % 2034 % % % 2044 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of April 16, 2024 we accept all of the terms and conditions of the Terms and Conditions of Sale published in the Preliminary Official Statement dated April 4, 2024 including the City’s right to modify the principal amount of the Series 2024A Bonds. (See “Terms and Conditions of Sale” herein.) In the event of failure to deliver these Series 2024A Bonds in accordance with said Terms and Conditions of Sale, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. By submitting this proposal, we confirm that we have an established industry reputation for underwriting municipal bonds such as the Series 2024A Bonds. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder will not will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ....................................................................................................................................................................................................... The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Email: bids@bakertilly.com BID SALE DATE: April 16, 2024 F-30 CITY OF BOZEMAN, MONTANA $3,930,000* Limited Tax General Obligation Bonds, Series 2024B For the Series 2024B Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $3,930,000.00 (Par)) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2025 % % % 2035 % % % 2026 % % % 2036 % % % 2027 % % % 2037 % % % 2028 % % % 2038 % % % 2029 % % % 2039 % % % 2030 % % % 2040 % % % 2031 % % % 2041 % % % 2032 % % % 2042 % % % 2033 % % % 2043 % % % 2034 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of April 16, 2024 we accept all of the terms and conditions of the Terms and Conditions of Sale published in the Preliminary Official Statement dated April 4, 2024 including the City’s right to modify the principal amount of the Series 2024B Bonds. (See “Terms and Conditions of Sale” herein.) In the event of failure to deliver these Series 2024B Bonds in accordance with said Terms and Conditions of Sale, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. By submitting this proposal, we confirm that we have an established industry reputation for underwriting municipal bonds such as the Series 2024B Bonds. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder will not will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ....................................................................................................................................................................................................... The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Email: bids@bakertilly.com AFFIDAVIT OF PUBLICATION STATE OF MONTANA, COUNTY OF CUSTER I, Margo Kelsey, Legal Specialist being first duly sworn, depose and say that I am the principal clerk of the publisher of the Bozeman Daily Chronicle a newspaper in general cir- culation, Bozeman, Gallatin County, Montana; that I know from my personal knowledge that the Legal# NOTICE OF SALE OF $2,280,000 GENERAL a printed copy of which is hereto annexed, was published in the entire issue of said newspaper for: 2 Insertion(s) in the following issues: 04/06/24, 04/13/24 Total Cost: $180.00 Subscribed and sworn by _,,_,..,,,,,,.........,_'""'"'--___._,.........,......,_........,""9--_,._.,,,,,,_ before me on: On 15th day ~ Notary Public for theStateoafui'i'tana Residing at; Miles City, Montana. AD#499799 DANIEL HANCE NOTARY PUBLIC for the State of Montana Res;ding at Miles City. Montana My Comm;ssion Expires August 24. 2027 NOTICE OF SALE OF $2,280,000 GENERAL OBLIGATION BONDS, SERIES 2024A CITY OF BOZEMAN, MONTANA Notice is hereby given that the City Commission (the "Com- mission'') of the City of Boz- eman, Montana (the "City''), will receive bids for the pur- chase of General Obligation Bonds, Series 2024A, in the aggregate principal amount of $2,280,000 (the "Series 2024A Bonds"). The proceeds of the Series 2024A Bonds will be used by the City to (i) finance or reimburse the City for a portion of the costs of im- provements to the Bozeman Swim Center, Bogert Pool and Lindley Center; and (ii) pay the costs associated with the sale of the Series 2024A Bonds. The Series 2024A Bonds, in-cluding interest thereon, are general obligations of the City payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. The Series 2024A Bonds shall be dated, as original- ly issued, as of their date of delivery, expected to be May 16, 2024, and shall bear inter- est payable semiannually on January 1 and July 1 of each year, commencing January 1, 2025, to the registered owners of the Series 2024A Bonds as such appear in the bond reg- ister as of the close of busi- ness on the 15th day (whether or not a business day) of the immediately preceding month, at a rate or rates designated by the successful bidder at public sale and approved by the Commission. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Bids shall be for not less than $2,280,000.00, plus accrued interest, if any, on the total principal amount of the Series 2024A Bonds. The Series 2024A Bonds shall mature, subject to redemption as here- inafter provided, on July 1 in each of the following years and amounts (unless com- bined into one or more term bonds), subject to adjustment as described below: Year Principal Amount(1) 2025 $75,000 2026 85,000 2027 90,000 2028 90,000 2029 95,000 2030 95,000 2031 100,000 2032 105,000 2033 105,000 2034 110,000 Year Principal Amount(1) 2035 $110,000 2036 115,000 2037 120,000 2038 125,000 2039 130,000 2040 135,000 2041 140,000 2042 145,000 2043 150,000 2044 160,000 (1) Preliminary; subject to change. The City reserves the right, after bids are opened and prior to award, to increase or decrease the amount of any maturity or maturities in multiples of $5,000 in or- der to produce sufficient net proceeds and to meet the City's structuring goals. The Series 2024A Bonds with stated maturities on or after July 1 , 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the re- demption date, without pre- mium. If less than all of the Series 2024A Bonds are to be redeemed, the Series 2024A Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in in- verse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or oth- er manner as directed by the City). The Series 2024A Bonds shall be in the denomination of $5,000 each or any inte- gral multiple thereof of single maturities. The Series 2024A Bonds will be issued as fully registered bonds only. The Series 2024A Bonds will be issued in book-entry only form. The City reserves the right to reject any and all bids and to sell the Series 2024 Bonds at a private or other sale. ~it:ls v.till be received by Bak~r '" Tilly Municipal Advisors, L.LC, the City's municipal a~vI~or or by electronic transmIssIon through PARITY® pursuant to the instructions set forth herein until 10:00 a.m., M.T., on Tuesday, April 16, 2024, at which time bids will be opened and tabulated. The tabulation of bids will be presented to a designated Pricing Committee subsequent to the opening of bids, at which time the Pric• ing Committee will consider the bids received and, if a responsive and acceptable bid is received, award sale of the Series 2024A Bonds to the bidder with the lowest true interest cost, subject to approval and confirmation by the Commission. To have its bid considered for award, the successful bidder is required to submit a good faith deposit via wire transfer to the City in the amount of $45,600.00 no later than 1 :00 p.m. M.T. on Tuesday, April 16, 2024. Prospective bidders should consult the Terms and Con- ditions of Sale and the Pre- liminary Official Statement for a detailed description of the Series 2024A Bonds, the se- curity therefor, and the form of legal opinion proposed to be rendered by Dorsey & Whitney LLP, of Missoula, Montana, as bond counsel. For an elec- tronic copy of the Preliminary Official Statement or for any additional information prior to sale, prospective purchasers are referred to the Municipal Advisor to the City, Baker Til- ly Municipal Advisors, LLC, by telephone (651) 223 3000, or by email: bids@bakertilly.com. Dated: May 19, 2024. BY ORDER OF THE CITY COMMISSION MNAXLP * Subsequent to bid opening, the total issue size was not changed; however, certain individual maturity amounts have changed. As a result, the price, net interest cost, and true interest cost have changed to $2,407,666.85, $1,040,981.59, and 3.6506%, respectively. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2024 Baker Tilly Municipal Advisors, LLC $2,280,000* City of Bozeman, Montana General Obligation Bonds, Series 2024A Moody’s Rating: Aa1 Sale Date: April 16, 2024 BBI: 3.76% Average Maturity: 11.772 Years Bidder TIC Fidelity Capital Markets 3.6372% D.A. Davidson & Co. 3.6736% Robert W. Baird & Co., Inc. 3.7052% Stifel, Nicolaus & Co. Inc. 3.7386% Huntington Securities, Inc. 3.8066% TD Securities (USA) LLC 3.8337% BNYMellon Capital Markets 3.9052% Hilltop Securities 3.9320% Interest Reoffering Reoffering Winning Bidder Information Maturity Rate Yield Price FIDELITY CAPITAL MARKETS 7/01/2025 5.000% 3.450% 101.692% Morgan Stanley 7/01/2026 5.000% 3.270% 103.519% Raymond James & Associates, Inc. 7/01/2027 5.000% 3.050% 105.766% Advisors Asset Management 7/01/2028 5.000% 2.930% 107.984% Ramirez & Co., Inc. 7/01/2029 5.000% 2.880% 110.030% SumRidge Partners 7/01/2030 5.000% 2.850% 112.001% FHN Financial Capital Markets 7/01/2031 5.000% 2.820% 113.979% American Veterans Group, 7/01/2032 5.000% 2.840% 115.570% PBC SDVOB 7/01/2033 5.000% 2.850% 117.165% SAMCO Capital Markets 7/01/2034 5.000% 2.850% 117.165% Cabrera Capital Markets, LLC 7/01/2035 5.000% 2.930% 116.466% 7/01/2036 5.000% 3.000% 115.858% 7/01/2037 3.375% 3.500% 98.690% 7/01/2038 3.500% 3.630% 98.570% 7/01/2039 4.000% 3.580% 103.241% 7/01/2040 4.000% 3.690% 102.379% 7/01/2041 4.000% 3.810% 101.449% 7/01/2044 4.000% 4.000% 100.000% Purchase Price: $2,410,888.45* Net Interest Cost: $1,006,458.43* TIC: 3.6372%* Ct bakertilly MUNICIPAL ADVISORS FINAL OFFICIAL STATEMENT DATED APRIL 16, 2024 NEW ISSUES MOODY’S UNDERLYING RATING: Aa1 BOOK ENTRY ONLY NOT BANK QUALIFIED In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”), (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code, and (iii) is excluded from Montana taxable income for State of Montana individual income tax purposes. Interest on the Bonds may, however, be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is included in gross income for purposes of the Montana corporate income tax and the Montana alternative corporate income tax. The Bonds are not “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. (See “TAX CONSIDERATIONS” herein.) CITY OF BOZEMAN, MONTANA $2,280,000 General Obligation Bonds, Series 2024A (the “Series 2024A Bonds”) $3,930,000 Limited Tax General Obligation Bonds, Series 2024B (the “Series 2024B Bonds”) Dated Date Date of Delivery (May 16, 2024) Security Series 2024A Bonds. The Series 2024A Bonds are general obligations of the City of Bozeman, Montana (the “City”), payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. Series 2024B Bonds. The Series 2024B Bonds are general obligations of the City, payable from any legally available funds of the City. The general credit of the City is irrevocably pledged for the prompt payment of the principal and interest on the Series 2024B Bonds as they become due; however, the Series 2024B Bonds are not secured by a pledge of the City’s taxing power and the City cannot be obligated to levy taxes for the payment of principal of and interest on the Series 2024B Bonds. See “Authority and Security” herein. Authorization Series 2024A Bonds. The Series 2024A Bonds are being issued pursuant to Montana Code Annotated, Title 7, Chapter 7, Part 42; a duly held election granting authorization to sell and issue general obligation bonds of the City; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. Series 2024B Bonds. The Series 2024B Bonds are being issued pursuant to Section 7-7-4104, Montana Code Annotated; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. See “Authority and Security” herein. Purpose The proceeds of the Series 2024A Bonds and the Series 2024B Bonds (collectively, the “Bonds”) will be used to (i) pay the costs of certain improvements to the Bozeman Swim Center, Bogert Pool, and Lindley Center; and (ii) pay the costs associated with the sale of each series of Bonds. See “Purpose of the Bonds and Use of Funds ” herein. Principal and Interest Payments Principal for each series of Bonds will be paid annually on July 1, beginning July 1, 2025. Interest for each series of Bonds will be payable semiannually on January 1 and July 1, beginning January 1, 2025. Redemption Provisions The Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. The Bonds contain maturity schedules providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption, scheduled to conform to the respective maturity schedules set forth herein. Book Entry The Bonds will be issued only as fully registered obligations, and when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”). See “Appendix B - Book Entry”. Denominations The Bonds are being issued in the denomination of $5,000 or integral multiples thereof. Paying Agent/Registrar U.S. Bank Trust Company, National Association, located in Salt Lake City, Utah (“Registrar” and “Paying Agent”). Underwriters Please see the “PURCHASER/UNDERWRITING” section herein for discussion regarding the Underwriters of the Bonds. MATURITY SCHEDULE (Base CUSIP(1) 103637) The Series 2024A Bonds Maturity July 1 Principal Interest Rate Yield Price CUSIP(1) 2025 $ 60,000 5.000% 3.450% 101.692% KB9 2026 $ 75,000 5.000% 3.270% 103.519% KC7 2027 $ 80,000 5.000% 3.050% 105.766% KD5 2028 $ 80,000 5.000% 2.930% 107.984% KE3 2029 $ 85,000 5.000% 2.880% 110.030% KF0 2030 $ 90,000 5.000% 2.850% 112.001% KG8 2031 $ 95,000 5.000% 2.820% 113.979% KH6 2032 $100,000 5.000% 2.840% 115.570% KJ2 2033 $105,000 5.000% 2.850% 117.165% KK9 2034 $110,000 5.000% 2.850% 117.165%(3) KL7 2035 $115,000 5.000% 2.930% 116.466%(3) KM5 2036 $120,000 5.000% 3.000% 115.858%(3) KN3 2037 $130,000 3.375% 3.500% 98.690% KP8 2038 $130,000 3.500% 3.630% 98.570% KQ6 2039 $135,000 4.000% 3.580% 103.241%(3) KR4 2040 $140,000 4.000% 3.690% 102.379%(3) KS2 2041 $150,000 4.000% 3.810% 101.449%(3) KT0 2044(2) $480,000 4.000% 4.000% 100.000% KW3 (1) CUSIP® is a registered trademark of the American Bankers Association (“ABA”). CUSIP data (including CUSIP identifiers and related descriptive data) contained herein is provided by CUSIP Global Services (“CGS”), which is operated on behalf of the ABA by FactSet Research Systems Inc. CUSIP data is the valuable intellectual property of the ABA and the inclusion of CUSIP data herein is not intended to create a database and does not serve in any way as a substitute for any CUSIP Service provided by CGS. CUSIP data herein is provided for convenience of reference only. Neither the City, the Municipal Advisor, the Series 2024A Bonds Underwriter, nor their agents take any responsibility for the accuracy of such data now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of each series of Bonds. (2) Term Bonds (see “DESCRIPTION OF THE BONDS – Redemption Provisions – Mandatory Redemption” herein). (3) Priced to the first optional redemption date of July 1, 2033. MATURITY SCHEDULE (Base CUSIP(1) 103637) The Series 2024B Bonds Maturity July 1 Principal Interest Rate Yield Price CUSIP(1) 2025 $ 95,000 5.000% 3.320% 101.836% KX1 2026 $120,000 5.000% 3.180% 103.707% KY9 2027 $125,000 5.000% 2.980% 105.981% KZ6 2028 $135,000 5.000% 2.880% 108.186% LA0 2029 $140,000 5.000% 2.840% 110.231% LB8 2030 $145,000 5.000% 2.830% 112.121% LC6 2031 $155,000 5.000% 2.820% 113.979% LD4 2032 $165,000 5.000% 2.850% 115.492% LE2 2033 $170,000 5.000% 2.850% 117.165% LF9 2036(2) $560,000 4.000% 3.110% 107.020%(3) LJ1 2037 $200,000 4.000% 3.250% 105.878%(3) LK8 2038 $210,000 4.000% 3.350% 105.071%(3) LL6 2039 $220,000 4.000% 3.450% 104.271%(3) LM4 2041(2) $715,000 4.000% 3.800% 101.526%(3) LP7 2043(2) $775,000 4.000% 3.950% 100.376%(3) LR3 (1) CUSIP® is a registered trademark of the American Bankers Association (“ABA”). CUSIP data (including CUSIP identifiers and related descriptive data) contained herein is provided by CUSIP Global Services (“CGS”), which is operated on behalf of the ABA by FactSet Research Systems Inc. CUSIP data is the valuable intellectual property of the ABA and the inclusion of CUSIP data herein is not intended to create a database and does not serve in any way as a substitute for any CUSIP Service provided by CGS. CUSIP data herein is provided for convenience of reference only. Neither the City, the Municipal Advisor, the Series 2024B Bonds Underwriter, nor their agents take any responsibility for the accuracy of such data now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of each series of Bonds. (2) Term Bonds (see “DESCRIPTION OF THE BONDS – Redemption Provisions – Mandatory Redemption” herein). (3) Priced to the first optional redemption date of July 1, 2033. The Official Statement dated April 16, 2024 is a Final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. The Bonds are being offered for delivery when, as and if issued and received by the Series 2024A Bonds Underwriter and the Series 2024B Bonds Underwriter (hereinafter defined) and subject to the approval of legality by Dorsey & Whitney LLP, Bond Counsel. The Bonds are expected to be available for delivery through the facilities of DTC, in New York, New York on or about May 16, 2024. The City designates the senior managing underwriter of the syndicate to which the Series 2024A Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each participating underwriter. By delivering an offer with respect to the purchase of the Series 2024A Bonds, the senior managing underwriter has agreed that (i) it accepts such designation and (ii) it shall enter into a contractual relationship with all participating underwriters of the Series 2024A Bonds for purposes of assuring the receipt by each such participating underwriter of the Final Official Statement. No dealer, broker, salesperson, or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds, other than as contained in the Preliminary Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities described herein by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. Certain information contained in the Preliminary Official Statement or the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness or accuracy. The information and expressions of opinion in the Preliminary Official Statement and the Final Official Statement are subject to change, and neither the delivery of the Preliminary Official Statement nor the Final Official Statement nor any sale made under either such document shall create any implication that there has been no change in the affairs of the City since the respective date thereof. However, upon delivery of the securities, the City will provide a certificate stating there have been no material changes in the information contained in the Final Official Statement since its delivery. References herein to laws, rules, regulations, resolutions, agreements, reports, and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for the purposes of, and as that term is defined in, Securities and Exchange Commission Rule 15c2-12. The Bonds are considered securities and have not been approved or disapproved by the Securities and Exchange Commission or any state or federal regulatory authority nor has any state or federal regulatory authority confirmed the accuracy or determined the adequacy of this Official Statement. Any representation to the contrary is a criminal offense. Investors must rely on their own examination of this Official Statement, the security pledged to repay the Bonds, the issuer and the merits and risks of the investment opportunity. FORWARD-LOOKING STATEMENTS This Official Statement, including its appendices, contains statements which should be considered “forward-looking statements,” meaning they refer to possible future events or conditions. Such statements are generally identifiable by the words such as “plan,” “expect,” “estimate,” “budget,” “may,” or similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause a deviation from the actual results, performance or achievements expressed or implied by such forward-looking statements. The City does not expect or intend to update or revise any forward-looking statements contained herein if or when its expectations, or events, conditions, or circumstances on which such statements are based occur. CONTACT INFORMATION Additional information regarding the City may be obtained by contacting Ms. Melissa Hodnett, Finance Director, City of Bozeman, 121 N. Rose Avenue, Bozeman, Montana 59715, phone (406) 582-2318, email: mhodnett@bozeman.net. CITY OF BOZEMAN, MONTANA 121 NO. ROUSE AVENUE BOZEMAN, MONTANA 59715 CITY COMMISSION Terry Cunningham Mayor Joey Morrison Deputy Mayor Jennifer Madgic Commissioner Christopher Coburn Commissioner Douglas Fischer Commissioner ACTING CITY MANAGER Chuck Winn FINANCE DIRECTOR Melissa Hodnett MUNICIPAL ADVISOR Baker Tilly Municipal Advisors, LLC Saint Paul, Minnesota BOND COUNSEL Dorsey & Whitney LLP Missoula, Montana REGISTRAR AND PAYING AGENT U.S. Bank Trust Company, National Association Salt Lake City, Utah SERIES 2024A BONDS UNDERWRITER Fidelity Capital Markets Boston, Massachusetts SERIES 2024B BONDS UNDERWRITER D.A. Davidson & Co. Denver, Colorado TABLE OF CONTENTS Page PURPOSE OF THE BONDS AND USE OF FUNDS .................................................................................................... 1 PURPOSE OF THE BONDS.................................................................................................................................................. 1 SOURCES AND USES OF FUNDS ......................................................................................................................................... 1 INVESTMENT OF FUNDS ................................................................................................................................................... 2 DESCRIPTION OF THE BONDS ............................................................................................................................. 2 INTEREST CALCULATION ................................................................................................................................................... 2 REGISTRATION AND EXCHANGE FEATURES ........................................................................................................................... 2 BOOK ENTRY ................................................................................................................................................................. 2 PROVISIONS FOR PAYMENT .............................................................................................................................................. 2 NOTICE OF REDEMPTION ................................................................................................................................................. 2 OPTIONAL REDEMPTION .................................................................................................................................................. 3 MANDATORY REDEMPTION .............................................................................................................................................. 3 AUTHORITY AND SECURITY ................................................................................................................................ 4 THE SERIES 2024A BONDS .............................................................................................................................................. 4 THE SERIES 2024B BONDS .............................................................................................................................................. 4 THE MONTANA PROPERTY TAX SYSTEM ............................................................................................................. 5 RATINGS ........................................................................................................................................................... 10 RISK FACTORS AND INVESTOR CONSIDERATIONS .............................................................................................. 10 MAINTENANCE OF RATINGS ........................................................................................................................................... 10 SECONDARY MARKET .................................................................................................................................................... 11 FUTURE CHANGES IN LAW; TAX EXEMPTION ...................................................................................................................... 11 LIMITATIONS ON REMEDIES AVAILABLE TO OWNERS OF THE BONDS ....................................................................................... 11 POTENTIAL IMPACTS RESULTING FROM EPIDEMICS OR PANDEMICS ........................................................................................ 12 CLIMATE CHANGE ........................................................................................................................................................ 12 CYBERSECURITY ............................................................................................................................................................ 12 PURCHASER/UNDERWRITING ........................................................................................................................... 12 THE SERIES 2024A BONDS ............................................................................................................................................ 12 THE SERIES 2024B BONDS ............................................................................................................................................ 13 CONTINUING DISCLOSURE ................................................................................................................................ 13 FUTURE FINANCING .......................................................................................................................................... 13 LITIGATION ....................................................................................................................................................... 14 LEGAL MATTERS ................................................................................................................................................ 14 TAX CONSIDERATIONS ...................................................................................................................................... 14 TAX-EXEMPT INTEREST .................................................................................................................................................. 14 ORIGINAL ISSUE DISCOUNT ............................................................................................................................................ 15 MARKET DISCOUNT ...................................................................................................................................................... 15 BOND PREMIUM .......................................................................................................................................................... 16 RELATED TAX CONSIDERATIONS ...................................................................................................................................... 16 SALE OR OTHER DISPOSITION ......................................................................................................................................... 16 INFORMATION REPORTING AND BACKUP WITHHOLDING ...................................................................................................... 16 NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS ............................................................................................................. 17 MUNICIPAL ADVISOR ........................................................................................................................................ 17 MUNICIPAL ADVISOR REGISTRATION ................................................................................................................................ 17 OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS .................................................................................................. 17 MISCELLANEOUS ............................................................................................................................................... 17 CERTIFICATION.................................................................................................................................................. 18 Appendices A. General Information of the City B. Book Entry C. Forms of Bond Counsel Opinion D. Forms of Continuing Disclosure Undertaking E. 2023 Annual Comprehensive Financial Report - 1 - OFFICIAL STATEMENT City of Bozeman, Montana $2,280,000 General Obligation Bonds, Series 2024A $3,930,000 Limited Tax General Obligation Bonds, Series 2024B PURPOSE OF THE BONDS AND USE OF FUNDS PURPOSE OF THE BONDS The proceeds of the Bonds will be used to (i) pay the costs of certain improvements to the Bogert Swim Center, Bogert Pool, and Lindley Center (collectively, the “Project”); and (ii) pay the costs associated with the sale of each series of Bonds. The Project consists of the designing, constructing, equipping and furnishing improvements to (i) the Bozeman Swim Center including replacing perimeter drain tiles, deck tiles, and ceiling tiles, repairing the plaster shall, and replacing the HVAC system; (ii) the Bogert Pool, including replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall and fence; and (iii) the Lindley Center, including upgrading restrooms to meet current requirements under the Americans with Disabilities Act, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot, and related site improvements. SOURCES AND USES OF FUNDS The composition of the Series 2024A Bonds is as follows: Sources of Funds: Principal Amount $2,280,000.00 Net Reoffering Premium 144,018.60 Total Sources of Funds $2,424,018.60 Uses of Funds: Deposit to Project Account $2,368,344.85 Costs of Issuance(1) 39,322.00 Underwriter’s Compensation 16,351.75 Total Uses of Funds $2,424,018.60 (1) Includes fees for bond counsel, municipal advisor, registrar/paying agent, rating, and other miscellaneous expenses. The composition of the Series 2024B Bonds is as follows: Sources of Funds: Principal Amount $3,930,000.00 Reoffering Premium 217,966.75 Total Sources of Funds $4,147,966.75 Uses of Funds: Deposit to Project Account $4,077,080.75 Costs of Issuance(1) 52,328.00 Underwriter’s Compensation 18,558.00 Total Uses of Funds $4,147,966.75 (1) Includes fees for bond counsel, municipal advisor, registrar/paying agent, rating, and other miscellaneous expenses. - 2 - INVESTMENT OF FUNDS The proceeds of the Bonds are to be invested in accordance with the laws of the State relating to the depositing, holding, securing, or investing of public funds. The City shall direct the investment of Bond proceeds. DESCRIPTION OF THE BONDS INTEREST CALCULATION Interest on the Bonds is payable on January 1 and July 1 of each year, commencing January 1, 2025. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month immediately preceding such interest payment date (the “Record Date”). Interest will be computed on the basis of a 360-day year of twelve 30-day months. REGISTRATION AND EXCHANGE FEATURES Each registered Bond shall be transferable or exchangeable only at the designated corporate trust office of the “Registrar” and “Paying Agent,” U.S. Bank Trust Company, National Association, Salt Lake City, Utah, at the written request of the registered owner thereof or its attorney duly authorized in writing upon surrender thereof, together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or its duly authorized attorney. BOOK ENTRY When issued, the Bonds will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Bonds will be made in book entry only form. See “Appendix B - Book Entry”. PROVISIONS FOR PAYMENT The principal on the Bonds shall be payable at the designated corporate trust office of the Registrar and Paying Agent, or by wire transfer to DTC or any successor depository. All payments of interest on the Bonds shall be paid to the registered owners as the names appear as of the Record Date and at the addresses as they appear on the registration books kept by the Registrar or at such other address as is provided to the Registrar or by wire transfer to DTC or any successor depository. If payment of principal or interest is made to DTC or any successor depository, payment shall be made by wire transfer in same-day funds. Payments on the Bonds shall be made in lawful money of the United States of America which, on the date of such payment, shall be legal tender. So long as DTC or its nominee is the registered owner of the Bonds, principal and interest on the Bonds will be paid directly to DTC by the Paying Agent. The final disbursement of such payments to the Beneficial Owners of the Bonds will be the responsibility of the DTC Participants and Indirect Participants. See “Appendix B - Book Entry.” NOTICE OF REDEMPTION Notice of redemption for the Bonds will be given not less than 30 days before the date of redemption by first-class mail, or other means required by the securities depository, to the registered owners of the Bonds to be redeemed at their addresses as they appear on the bond register maintained by the Registrar. Provided that such notice of redemption has been given and funds sufficient for payment of principal and accrued interest on the Bonds to be redeemed have been deposited with the Registrar on or before the redemption dates, interest on Bonds called for redemption will cease to accrue on the date fixed for redemption. Failure to give such written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds not affected by such defect or failure. Any notice of optional redemption of Bonds may state that redemption is conditioned upon the receipt by the Registrar on or prior to the date fixed for such redemption of money sufficient to pay the redemption price of the Bonds to be redeemed or upon the satisfaction of any other condition stated in the notice, and that if such money is not so received or such condition not so satisfied, such notice shall be of no force and - 3 - effect, and the City shall not be required to redeem such Bonds. In the event that a notice of redemption contains such a condition and such money is not so received or such condition is not so satisfied, the redemption will not be made and the Registrar will, within a reasonable time thereafter, give notice in the manner in which the notice of redemption was given, that such money was not so received or such condition not so satisfied and that such redemption was not made. OPTIONAL REDEMPTION The Series 2024A Bonds and the Series 2024B Bonds with stated maturities on or after July 1, 2034 will be subject to redemption on July 1, 2033, and any date thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. If less than all of the Series 2024A Bonds or the Series 2024B Bonds are to be redeemed, the Series 2024A Bonds and/or Series 2024B Bonds to be redeemed shall be from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City). MANDATORY REDEMPTION Series 2024A Bonds The Series 2024A Bonds maturing on July 1, 2044 (the “2024A Term Bond”) is subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on the mandatory dates and in the principal amounts as follows: 2044 Term Bond Year Amount 2042 $155,000 2043 $160,000 2044(1) $165,000 (1) Final Maturity. The principal amount of such 2024A Term Bond required to be redeemed on the above mandatory dates shall be reduced by the principal amount of such 2024A Term Bond previously redeemed at the option of the City. Series 2024B Bonds The Series 2024B Bonds maturing on July 1, 2036, July 1, 2041, and July 1, 2043 (the “2024B Term Bonds”) are subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on the mandatory dates and in the principal amounts as follows: 2036 Term Bond 2041 Term Bond Year Amount Year Amount 2034 $180,000 2040 $350,000 2035 $185,000 2041(1) $365,000 2036(1) $195,000 2043 Term Bond Year Amount 2042 $380,000 2043(1) $395,000 (1) Final Maturity. The principal amount of such 2024B Term Bonds required to be redeemed on the above mandatory dates shall be reduced by the principal amount of such 2024B Term Bonds previously redeemed at the option of the City. - 4 - AUTHORITY AND SECURITY THE SERIES 2024A BONDS Authority The Series 2024A Bonds are being issued pursuant to Montana Code Annotated, Title 7, Chapter 7, Part 42; a duly held election granting authorization to sell and issue general obligation bonds of the City; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. The election on the question of issuing the Series 2024A Bonds was held on November 2, 2021, in which sufficient voter approval was received to authorize the issuance up to $2,280,000 in principal amount of general obligation bonds for the purposes described herein (see “Purpose of the Bonds and Use of Funds” herein). Security and Sources of Payment The Series 2024A Bonds are general obligations of the City payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. The full faith and credit and taxing power of the City will be pledged to the payment of the Series 2024A Bonds. Each year’s first-half collections of taxes (due November 30 of each year) will be used to pay the interest payment due on January 1. Second-half collections of taxes (due May 31 of each year) plus surplus first-half collections will be used to pay the principal and interest payment due on July 1 of the same calendar year. THE SERIES 2024B BONDS Authority The Series 2024B Bonds are being issued pursuant to Section 7-7-4104, Montana Code Annotated; a resolution adopted by the City Commission on March 19, 2024; and a resolution to be adopted by the City Commission of the City on or about April 23, 2024. Pursuant to Section 7-7-4104, Montana Code Annotated, the City is authorized to issue a general obligation of the City not secured by its taxing power without submitting the question of incurring the indebtedness to the electors, upon the satisfaction of certain conditions: (1) the principal amount of the obligation may not exceed 10% of the general fund budget of the City in each of the two immediately preceding fiscal years; (2) at the time the obligation is incurred, the debt service in the current or any future fiscal year on the obligations and any other outstanding obligations issued pursuant to Section 7-7-4104 do not exceed 2% of the revenues deposited in the general fund of the City in each of the two immediately preceding years; and (3) the term of the obligation does not exceed 20 years. The Series 2024B Bonds meet such requirements provided for in the above-referenced statute, as shown below: Budget Budget 2022 2023 Budgeted Expenditure $39,306,358 $46,726,481 10% of Expenditures $3,930,636 $4,672,648 Maximum Allowable Par $3,930,636 Par Amount of the Series 2024B Bonds $3,930,000 Actual Actual 2022 2023 Total General Fund Revenue $32,954,190 $43,234,377 2% of Revenues $659,084 $864,688 Maximum Legal Annual Debt Service $659,084 Estimated New Aggregate Debt Service $404,649 - 5 - Security and Sources of Payment The Series 2024B Bonds are general obligations of the City, payable from any legally available funds of the City. The general credit of the City is irrevocably pledged for the prompt payment of the principal and interest on the Series 2024B Bonds as they become due; however, the Series 2024B Bonds are not secured by a pledge of the City’s taxing power and the City cannot be obligated to levy taxes for the payment of principal of and interest on the Series 2024B Bonds. The principal of and interest on the Series 2024B Bonds are payable from any funds of the City legally available for the payment, including amounts in its General Fund. The City will covenant in the bond resolution to appropriate each fiscal year during the term of the Series 2024B Bonds an amount sufficient for the payment of the principal of and interest on the Series 2024B Bonds due in such fiscal year from the General Fund and any other legally available funds of the City. Any ad valorem taxes the City may levy to pay principal of and interest on the Series 2024B Bonds are subject to applicable limits now or hereafter imposed by law on the amount of taxes that may be levied by the City. THE MONTANA PROPERTY TAX SYSTEM General. As a general rule, all real and personal property in the State is subject to taxation by both the State and its counties, municipalities and other political subdivisions to finance various general and special governmental functions and capital improvements. This rule is subject to exceptions in the case of specified classes of exempt property, including public property, property of churches, schools, hospitals, cemeteries and charities, household goods, certain agricultural products, automobiles, smaller trucks, business inventory, money and credits. The State imposes a beneficial use tax upon property otherwise exempt from property tax used by private parties or for industrial trade or business purposes. Property is classified according to its use and character, and the different classes of property are taxed at different percentages of their assessed valuation. Both cities and counties can grant property tax benefits to new and expanding businesses within their jurisdictions, but only with respect to the taxes they levy and only for a period of up to five years. Property Tax Task Force. The appraisal done by the Montana Department of Revenue (“Department of Revenue” or “DOR”) effective January 1, 2023 resulted in historic property valuation growth, whereby the total statewide assessed value grew by 39.4%, the statewide taxable value grew by 29.6% and the median residential property assessed value grew by approximately 46%. The growth in assessed value of residential property as compared to other classes of property resulted in a shift of the property tax burden from other classes of property (notably commercial and industrial property) to residential property, causing concern about the affordability of property taxes for homeowners. In January 2024, Governor Gianforte launched a property tax task force to provide recommendations to reform the State’s property tax system and reduce the burden on property taxpayers. The property tax task force will provide a written report and recommendations for legislation by August 15, 2024 to be considered by the 2025 legislature. - 6 - Classification. Currently, there are 16 classifications of property for tax purposes. For many of the property tax classifications, the taxable value for property is determined by applying a statutorily established percentage tax rate to the assessed value of the property (or other amount) as follows: Property Class Description Tax Rate One Net Mine Proceeds 100% of annual net proceeds less expenses Two Gross Proceeds of Metal Mines 3.00% of annual gross proceeds Three Agricultural Land 2.16% of productive capacity Four Residential 1.35% to 1.89%1 of assessed value Commercial 1.89%1 of assessed value Five Pollution Control, Electric/Telephone Coops, etc. 3.00% of assessed value Seven Non-Centrally Assessed Utilities 8.00% of assessed value Eight Business Equipment 1.50% and/or 3.00% of assessed value2 Nine Pipelines, Non-Electric Generating Property of Electric Utilities 12.00% of assessed value Ten Forest Land 0.29% of forest productivity value in tax year 2023 0.27% of forest productivity value in tax year 2024, and 0.37% of forest productivity value after tax year 2024 Twelve Airlines and Railroads Varies Thirteen Electrical Generation and Telecommunications 6.00% of assessed value Fourteen Renewable Energy Production and Transmission 3.00% of assessed value Fifteen Carbon Dioxide and Liquid Pipeline 3.00% of assessed value Sixteen High-Voltage Converter Station 2.25% of assessed value Seventeen Qualified Data Center Land/Improvements/Furniture/Fixtures, etc. 0.90% of assessed value Eighteen Green Hydrogen Facilities, Pipelines and Storage Systems 1.50% to 3.00% of assessed value __________________ 1 See “–Class Four Property Tax Rates” herein. 2 See “–Class Eight Property Tax Rates” herein. Appraisal, Assessment, and Revaluation. Other than agricultural land, forest land, railroad transportation properties and mines, taxable property is to be assessed at 100 percent of market value, which is determined by the Montana Department of Revenue (the “Department of Revenue” or “DOR”). The Department of Revenue determines the assessed value of most real property by appraisal using one or more of the three accepted appraisal approaches: (a) the cost approach, based on the cost of the property, using the national cost service manuals and the Montana Appraisal Manual; (b) the sales comparison approach, based on comparable arm’s-length sales; and (c) the income approach, based on a calculation of the net property income (reflected by market rents minus property management and other expenses). The Montana Constitution requires that property tax values be equalized across the State, and the efforts to determine assessed values of taxable property on a consistent basis across the State are intended to ensure that similarly situated taxpayers are treated the same. The assessed and taxable values of most classes of property are assessed on a county-by-county basis and are attributed to the local taxing jurisdictions in which the property is located. Prior to January 1, 2015, Class Three, Four, and Ten properties were reappraised every six years and all other property was reappraised annually. Senate Bill 157, enacted by the 2015 Legislature, changed the reappraisal process for Class Three and Four property to a two-year cycle, changed certain tax rates, and eliminated certain exemptions utilized under prior law. Pursuant to Senate Bill 54 (“SB 54”) adopted by the 2023 Legislature, commencing January 1, 2024, centrally assessed property shall now be reappraised every two years, rather than annually. Pursuant to Senate Bill 3 (“SB 3”) adopted by the 2023 Legislature, (i) commencing January 1, 2025, the Class Ten property will be reappraised every two years rather than the six-year reappraisal cycle; (ii) the tax rate applied to Class Ten property for fiscal year 2023/24 changed from 0.37% to 0.29% and then will change to 0.27% in fiscal year 2024/25; and (iii) the methodology for assessing productivity of forest land (stumpage price - 7 - standard) will be based on a 10-year Olympic average. Class Ten property remains on its current six-year reappraisal cycle through fiscal year 2024/25, with the most recent reappraisal cycle commenced January 1, 2021 and any increases in assessed value phased-in at a rate of 16.66% per year. The DOR is required to appraise all other classes of property annually. The Department of Revenue’s most recent reappraisal of Class Three and Four property was completed as of January 1, 2023, which values were applicable for fiscal years 2023/24 and 2024/25. Centrally Assessed Property. The DOR is required to “centrally assess” certain types of property owned by corporations or other entities operated as a single, integrated continuous property located in more than one county. Property to be centrally assessed includes, without limitation, telegraph, telephone, microwave, electric power or transmission lines, natural gas or oil pipelines; property of scheduled airlines; railroad transportation properties operating in more than one county or more than one state; net proceeds of mines; and gross proceeds of coal mines. Pursuant to SB 54, as of January 1, 2024, centrally assessed property will be reappraised every two years, rather than annually, and the property values, other than railroad property values, are apportioned by the DOR among the counties in which such property is located, either on a mileage basis or on the basis of the original installed cost of the property located in the respective counties. If neither of these methods is appropriate, the DOR may adopt such other method or basis of apportionment as it determines to be proper. Centrally assessed property constitutes a significant amount of taxable values of most counties. The DOR and the owner of property to be centrally assessed may agree to have the property assessed by a qualified independent appraiser, agree to share the costs of the appraisal and agree to accept the result. Otherwise, the DOR will assess those properties as described below. State law does not describe the factors to be taken into consideration by the DOR in determining the assessed value of public utilities, but rather states the appraisal is to be made using factors determined proper by the DOR. Pursuant to its rules, the DOR uses the unit method of valuation to appraise centrally assessed property when appropriate. The unit method may include a cost indicator method, a capitalized income indicator and a market indicator. If in the DOR’s judgment these indicators fail to reflect a company’s value or there is insufficient information to use those methods, it may adopt a different method or methods to reflect the company’s assessed value. Further, the DOR may derive a market, or stock and debt indicator of value based on outstanding securities and liabilities, or construct a market indicator using sales comparison data or any other analysis or data bases for similar property. The income indicator may be determined by using capitalization of historical income, capitalization of projected income, discounted cash flow analysis or other method. The DOR has broad discretion in determining the appropriate methodologies to use to determine values of public utilities and other centrally assessed properties, and to allocate assessed values of such properties among the counties in which such properties are located. As provided by law, a railroad system’s property value is calculated by starting with the railroad system’s property value for the previous year and adjusting up or down by an amount calculated to reflect the changes in the system’s income, gross profit margin and depreciated property costs. Railroad property values are apportioned among the states and the counties in which the property is located, based on the average of the ratios of the track miles, revenue ton miles, gross investment, operating revenue and railroad car and locomotive miles in each state or county to the railroad system as a whole. Under prior law, on or before June 1 of each year, the DOR was required to notify owners of centrally assessed property of the appraisal and report and to report values to affected counties on or before July 1 of each year. Pursuant to SB 54 passed by the 2023 Legislature, commencing January 1, 2024, the DOR will notify owners of centrally assessed property of the appraisal on or before June 1 of each appraisal year, and will report values to affected counties on or before July 1 of each appraisal year. Property owners may appeal their assessed valuation to the State Board of Tax Appeals. - 8 - Class Four Property Tax Rates. The tax rates in the following table apply to Class Four property. The taxable value is calculated by applying the tax rate to the assessed value of property, which is then multiplied by the number of mills levied by each taxing jurisdiction to calculate the taxes payable by each property owner. Residential Property Commercial & Industrial Property Residential Tax Rate Portion of Assessed Value in Excess of $1.5 million Commercial Tax Rate Golf Courses 1.35% 1.89%1 1.89%2 0.945%3 __________________ 1 The tax rate for the portion of the assessed value of a single-family residence in excess of $1.5 million is equal to the residential tax rate multiplied by 1.4. 2 The tax rate for commercial property is the residential tax rate multiplied by 1.4. 3 The tax rate for commercial property that is a golf course and meets certain criteria is one-half the commercial tax rate. Class Eight Property Tax Rates. Under current law, the first $300,000 in assessed value of Class Eight business equipment property owned by a person or entity is exempt from taxation. Class Eight property is taxed at 1.5% for the first $6 million of assessed value subject to taxation in excess of the $100,000 exempt amount, and at a rate of 3% for assessed value subject to taxation in excess of $6 million. Pursuant to House Bill 212 (“HB 212”) passed by the 2023 Legislature, the exempt amount of Class Eight business equipment property has been increased to $1,000,000, effective for tax years beginning after December 1, 2023. HB 212 also provides for local jurisdictions to be reimbursed from the state general fund for lost revenue, with cities and counties reimbursed through Entitlement Share distributions. In addition, personal property intended for rent or lease in the ordinary course of business is generally exempt from property tax if the cost of such property is less than $15,000 and the lease period does not exceed one month. Pursuant to Senate Bill 530 enacted by the 2023 Legislature, manufacturing machinery, fixtures, and equipment installed after December 31, 2022 is entitled to a property tax abatement, with taxes phased in over a 10-year period. Certification of Values, Levy and Collection of Taxes and Tax Liens. The Department of Revenue is required by law to furnish certified assessed and taxable values to each taxing jurisdiction prior to the first Monday in August and the assessed and taxable values of centrally assessed property on or before July 1, to enable local governments to prepare fiscal year budgets. The fiscal year of the City and other taxing jurisdictions commences July 1 of each year and ends June 30 of the following year. The amount of real property taxes and taxes on centrally assessed and personal property and equipment to be levied and collected in each fiscal year by the City is determined in July and August as a part of the budget process. Taxes are levied against the taxable value of property in the City based on the certified assessed value as of the preceding January 1. Tax bills are assembled by the county treasurer based on the combined mill levies of the city, county, school district and special taxing jurisdictions in which the subject property is located, in addition to State mill levies. Taxes are payable in two installments. Bills are normally sent to property owners on October 30, and installments become due on November 30 and May 31. For example, taxes for the fiscal year ending June 30, 2024 are payable in substantially equal installments due on November 30, 2023 and May 31, 2024, and are based on the mill levies established in August 2023 and on the assessed and taxable value of the property as of January 1, 2023. Class Eight or “business equipment” taxes are billed and collected on a different schedule. The owners of personal property report the property they own as of January 1 of each year. The property is assessed by the local representatives of the DOR in May of each year. The tax bills are distributed in July and are due within 30 days of receipt. All property taxes are collected by the counties and remitted to the various taxing jurisdictions. Under State law, if property taxes are not paid in full when due, the delinquent installment bears a penalty and interest at a delinquent rate and, if not paid, the property is sold at tax sale. Current law provides that each delinquent installment bears interest at a rate of 5/6 of 1% per month (10% per annum) and incurs a penalty of 2% of the delinquent amount. Property subject to a property tax lien may be redeemed by the owner, the occupant, a mortgagee, a contract vendor or any other interested party within 36 months after the date of the tax sale or within 60 days after notice of application for a tax deed, whichever is later; provided, - 9 - however, that if the property is subdivided as a residential or commercial lot upon which special improvement district assessments or rural special improvement district assessments are delinquent and upon which no habitable dwelling or commercial structure is situated, redemption must be made within 24 months after the date of the tax sale or within 60 days after notice of application for a tax deed, whichever is later. Enforcement of a property tax lien may be a lengthy process. Limitation on Amount of Tax Levy. Montana local governments rely on local property taxes as the principal source for funding their general operations under rules prescribed by the State Legislature. Since 1987, there have been statutory provisions limiting the amount property taxes local governments are authorized to levy. Current law codified in Title 15, Chapter 10, Part 4, Montana Code Annotated, as amended from time to time, limits the total amount of taxes which can be levied to the number of mills required to generate the amount of property tax actually assessed in the prior year, based on the current year’s taxable value less newly taxable value, plus one-half the average rate of inflation for the prior three years, subject to certain exceptions. A local government that does not impose the maximum allowable levy in any given year may carry forward the authority to impose mills in a subsequent tax year equal to the difference between the amount actually levied and the authorized amount. Tax collections may be increased due to growth in a local government’s property tax base from (a) annexation of real property and improvements, (b) construction, expansion, or remodeling, (c) transfer of property, (d) reclassification of real property, and (e) revaluation caused by expansion, addition, replacement or remodeling. A local government taxing jurisdiction may also impose, without limitation: (a) additional levies authorized by the voters of the jurisdiction, including amounts necessary to pay voted general obligation debt like the Series 2024A Bonds; (b) taxes levied to pay premiums of certain insurance policies procured by the local government and contributions to certain state employment benefit plans; (c) certain mining proceeds taxes; (d) mills levied to account for a decrease in reimbursements from the State; (e) levies to pay for legal judgments against the jurisdiction; (f) levies to repay taxes paid under protest; or (g) an emergency levy in the case of a natural disaster or an unforeseen event affecting a school or community college district budget. Entitlement Share. In 2001, the State Legislature enacted a program of revenue sharing with local governments, under which various revenue sources that were previously directed to local governments, including gaming taxes, vehicle taxes and fees, district court fees and a number of different reimbursements, were redirected to the State’s general fund. In exchange, local governments receive a payment made by the State known as the “Entitlement Share.” In addition, when the State Legislature reduced the applicable tax rate for business equipment in 2011 and increased the amount of business equipment that is exempt from taxation in 2013, 2021 and 2023, the State Legislature provided for property tax reimbursements to local governments, which reimbursements are included in the Entitlement Share pool and are paid through the Entitlement Share distribution. The Entitlement Share is calculated based on a statutory formula that is meant to reflect the health of the State’s economy. Each local government’s base component is equal to that local government’s Entitlement Share in the prior year. The sum of all local governments’ base components is the Entitlement Share pool, which must be increased annually by a growth rate that is the lesser of: (1) a factor determined by a calculation based on gaming revenue, alcohol taxes, certain district court fees and State income tax revenue over the three preceding fiscal years, or (2) 1.03 for counties, 1.0325 for consolidated local governments, and 1.035 for cities and towns. Pursuant to House Bill 565 (“HB 565”), enacted by the 2017 Legislature, the growth rate for the Entitlement Share pool was reduced to 1.005 in fiscal year 2018 and 1.0187 for fiscal year 2019, but returned to the original growth rates described above in fiscal year 2020 and thereafter. The portion of the Entitlement Share pool attributable to the Class Eight property tax reimbursements described above was previously subject to the Entitlement Share growth rate. However, pursuant to HB 565 and commencing in fiscal year 2018, the growth rate for that portion of the Entitlement Share pool attributable to Class Eight property tax reimbursements is reduced to one-half of the average rate of inflation for the prior three years. Annual “growth” of the Entitlement Share is distributed to local governments based 50% on population and 50% on each local government’s percentage share of the prior fiscal year Entitlement Share pool. - 10 - HB 565 allows Entitlement Share payments to be withheld if a local government fails to file certain statutory annual reports or fails to remit collections made on behalf of the State and owed to another taxing jurisdiction or the State. Other than tax increment districts existing as of June 30, 2000 and which have not yet terminated, tax increment districts are entitled to allocations of that portion of the Entitlement Share pool attributable to Class Eight property tax reimbursements, but are not entitled to allocations of other portions of the Entitlement Share. Budget Process. The City is subject to the Local Government Budget Act (codified at Title 7, Chapter 6, Part 40, Montana Code Annotated), which stipulates that money may not be disbursed by the City except pursuant to an appropriation. A legally adopted budget is required for all City funds. The City Manager is responsible for preparation of the preliminary annual budget. The City Commission modifies and/or approves this budget. The City Commission must meet prior to the budget adoption for the purpose of holding a public hearing on the final budget. This hearing can be continued until the budget is finally approved and adopted by the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values from the Department of Revenue. By the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values, the City Commission must fix the tax levy for each fund. The Series 2024B Bonds may not be payable from or be a charge upon any funds of the City other than moneys lawfully appropriated from time to time by the City in the annual budget of the City. No holder of a Series 2024B Bond shall have the right to compel any exercise of the taxing power of the City to pay the Series 2024B Bonds or to enforce payment thereof against any property of the City other than moneys lawfully appropriated from time to time by the City in the annual budget of the City. The City has not granted a lien on any revenues or funds in its General Fund or otherwise provided for the segregation of such revenues or funds as security for the payment of the Series 2024B Bonds, and any ad valorem taxes the City may in its discretion levy to pay principal of and interest on the Series 2024B Bonds are subject to applicable limits now or hereafter imposed by law on the amount of taxes that may be levied by the City. RATINGS Moody’s Investors Service (“Moody’s”), 7 World Trade Center, 250 Greenwich Street, 23rd Floor, New York, New York has assigned a rating of “Aa1” to each series of Bonds. Such rating reflects only the view of Moody’s and any explanation of the significance of such rating may only be obtained from Moody’s. The rating is not a recommendation to buy, sell or hold the Bonds, and there is no assurance that the rating will be retained for any given period of time or that the rating will not be revised downward or withdrawn entirely by Moody’s. Any revision downward or withdrawal of the rating may have an adverse effect upon the market price of the Bonds. The City has not applied to any other rating service for a rating on the Bonds. RISK FACTORS AND INVESTOR CONSIDERATIONS Prospective purchasers of the Bonds should consider carefully, along with other matters referred to herein, the following risks of investment. The ability of the City to meet the debt service requirements of the Bonds is subject to various risks and uncertainties which are discussed throughout this Official Statement. Certain investment considerations are set forth below. This discussion of risk factors is not, and is not intended to be, exhaustive. MAINTENANCE OF RATINGS The Bonds have been rated as to their creditworthiness by Moody’s. While the City does not anticipate any material changes in the future, no assurance can be given that the Bonds will maintain their original rating. If the rating on the Bonds is revised downward or is withdrawn, the Bonds may lack liquidity in the secondary market in comparison with other similar municipal obligations. See “Ratings” herein. - 11 - SECONDARY MARKET While the purchasers of the Bonds may expect, insofar as possible, to maintain a secondary market in the Bonds, no assurance can be given concerning the future existence of such a secondary market or its maintenance by the purchasers or others, and prospective purchasers of the Bonds should therefore be prepared, if necessary, to hold their Bonds to maturity or prior redemption, if any. FUTURE CHANGES IN LAW; TAX EXEMPTION Future legislative proposals, if enacted into law, clarification of the Code (defined herein) or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation, as to which Bond Counsel expresses no opinion. Legislation relating to property taxes and other matters affecting municipal bonds is considered by the Montana legislature in each legislative session. See “THE MONTANA PROPERTY TAX SYSTEM – Property Tax Task Force” herein. It is possible that legislation enacted after the date of the Bonds will have an adverse effect on payment or timing of payment or other matters impacting the Bonds. There can be no assurance that there will not be any change in, interpretation of, or addition to the applicable laws and provisions which would have a material effect, directly or indirectly, on the security for or tax treatment of the Bonds or on the affairs of the City. In addition, the tax-exempt status of interest on the Bonds, as described under “TAX CONSIDERATIONS” herein, is based on continuing compliance with the City with certain covenants contained in the Bond Resolution and the related tax certificate, and the reporting of certain information to the United States Treasury. These covenants relate generally to restrictions on the use of the improvements financed with proceeds of the Bonds, requirements regarding the timely and proper use of proceeds of the Bonds, arbitrage limitations and rebate of excess investment earnings (if any) to the federal government. Failure by the City to comply with any of these covenants could cause interest on the Bonds to become included in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance. The Bond Resolution does not provide for payment of additional interest on the Bonds, redemption of the Bonds, or acceleration of the payment of debt service on the Bonds in the event that interest thereon becomes subject to federal or state income taxation. LIMITATIONS ON REMEDIES AVAILABLE TO OWNERS OF THE BONDS No Acceleration. There is no provision for acceleration of maturity of the principal of the Bonds in the event of a default in the payment of principal of or interest on the Bonds. Consequently, the owners of the Bonds may have to enforce available remedies. No Trustee. There is no bond trustee or similar person or entity to monitor or enforce the provisions of the Bond Resolution on behalf of the owners of the Bonds, and therefore the owners should be prepared to enforce such provisions themselves if the need to do so ever arises. No Trustee. There is no bond trustee or similar person or entity to monitor or enforce the provisions of the Resolution on behalf of the owners of the Bonds, and therefore the owners should be prepared to enforce such provisions themselves if the need to do so ever arises. - 12 - POTENTIAL IMPACTS RESULTING FROM EPIDEMICS OR PANDEMICS The City’s finances may be materially adversely affected by unforeseen impacts of future epidemics and pandemics. The City cannot predict future impacts of epidemics or pandemics, any similar outbreaks, or their impact on travel, on assemblies or gatherings, on the State, national or global economy, or on securities markets, or whether any such disruptions may have a material adverse impact on the financial condition or operations of the City, including but not limited to the payment of debt service on the Bonds or on any of its outstanding debt obligations. CLIMATE CHANGE The City is affected by the impacts of climate change, and those impacts are projected to intensify over coming decades. Changes may include reduced low elevation snowpack, earlier spring snowmelt, more frequent and intense droughts and wildfires, greater variability in temperatures and weather conditions, and related impacts to agriculture, recreation and human health. The City’s economy is significantly benefited by tourism and outdoor recreation opportunities, and the changes to snowpack and increased wildfires, among other climate impacts, could materially adversely affect the regional economy as well as assessed and taxable values in the City. The City has adopted a climate plan that outlines six focus areas and identifies ways to reduce the City’s greenhouse gas emissions and create a more sustainable community. However, whether future changes in climate and related impacts can be limited or managed is largely outside the City’s control. CYBERSECURITY The City relies on computer networks, data storage, collection, and transmission to conduct the operations of the City and has implemented security measures to protect data and limit financial exposure, including securing cyber security insurance to assist with the reduction of potential risk of financial and operational damage resulting from network attacks. Even with these security measures, the City, its information technology, data stored by the City and its infrastructure may be vulnerable in the event of a deliberate system attack, including malware, ransomware, computer virus, employee error or general disruption. If breached or compromised, the networks could be disrupted and information could be accessed, disclosed, lost, or stolen. The City acknowledges that its systems could be affected by a cybersecurity attack and that a loss, disruption, or unauthorized access to data held by the City could have a material impact on the City. Further, as cybersecurity threats evolve, the City will continue to evaluate and implement security measures and work to mitigate any vulnerabilities in its system. The City has cybersecurity coverage through the Montana Municipal Interlocal Authority. PURCHASER/UNDERWRITING THE SERIES 2024A BONDS The Series 2024A Bonds are being purchased by Fidelity Capital Markets, Boston, Massachusetts (the “Series 2024A Bonds Underwriter”) and its syndicate at a purchase price of $2,407,666.85, which is the par amount of the Series 2024A Bonds of $2,280,000.00, less the Underwriter’s discount of $16,351.75, plus the net original issue premium of $144,018.60. The Series 2024A Bonds Underwriter intends to offer the Series 2024A Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Series 2024A Bonds Underwriter may allow concessions to certain dealers (including dealers in a selling group of the Series 2024A Bonds Underwriter and other dealers depositing the Series 2024A Bonds into investment trusts), who may reallow concessions to other dealers. After the initial public offering, the public offering price may be varied from time to time by the Series 2024A Bonds. - 13 - THE SERIES 2024B BONDS The Series 2024B Bonds are being purchased by D.A. Davidson & Co., Denver, Colorado (the “Series 2024B Bonds Underwriter”) at a purchase price of $4,129,408.75, which is the par amount of the Series 2024B Bonds of $3,930,000.00, less the Underwriter’s discount of $18,558.00, plus the original issue premium of $217,966.75. The Series 2024B Bonds Underwriter intends to offer the Series 2024B Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Series 2024B Bonds Underwriter may allow concessions to certain dealers (including dealers in a selling group of the Series 2024B Bonds Underwriter and other dealers depositing the Series 2024B Bonds into investment trusts), who may reallow concessions to other dealers. After the initial public offering, the public offering price may be varied from time to time by the Series 2024B Bonds. CONTINUING DISCLOSURE In order to permit the Underwriter in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City will enter into a continuing disclosure undertaking pursuant to which it will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events. The form of the continuing disclosure undertaking is set forth in Appendix D to this Official Statement. During the last five years, the City believes that it has materially complied with the prior continuing disclosure undertakings subject to the Rule, except as noted below: The City did not timely file with the MSRB’s EMMA system (i) its 2020 Annual Comprehensive Financial Report (audited financial statements and operating data); (ii) certain annual operating data for the fiscal year ended 2021 in connection with its Tax Increment Urban Renewal Revenue Bonds (Bozeman Midtown Urban Renewal District), Series 2020; (iii) notice of incurrence of a financial obligation; and (iv) notice that the information noted in (i) through (iii) above was not timely filed. The information described above has since been filed with the MSRB’s EMMA system together with notices of the late filings. Additionally, the City timely filed its 2019 Annual Comprehensive Financial Report (audited financial statements and operating data); however, this information was not linked to the City’s Tax Increment Urban Renewal Revenue Bonds (Downtown Bozeman Improvement District), Series 2007 (the “Series 2007 Bonds”). The City did not take corrective action to remedy this upon discovery as the Series 2007 Bonds had been redeemed in full and were no longer outstanding. Breach of the continuing disclosure undertakings will not constitute a default or an event of default under the Bonds or the Bond Resolution. A broker or dealer is to consider a known breach of the continuing disclosure undertakings, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the continuing disclosure undertakings may adversely affect the transferability and liquidity of the Bonds and their market price. FUTURE FINANCING As of the date of this Official Statement, the City anticipates entering into an approximately $4,250,000 Master Lease Purchase Agreement in calendar year 2024 (the “2024 Lease”). The 2024 Lease is being entered into to finance various equipment for the City including, but not limited to, equipment for Fire Station No. 2, the City’s Solid Waste System, the Bozeman Swim Center, Bogert Pool, and Lindley Center. Installment payments for the 2024 Lease will be paid from legally available funds of the City, subject to annual non-appropriation of the City. The City periodically evaluates market conditions and outstanding financial obligations for refunding and refinancing opportunities and may issue refunding obligations if debt service savings can be achieved. - 14 - LITIGATION There is no litigation pending or, to the knowledge of the City, threatened restraining or enjoying the issuance, sale, execution or delivery of the Bonds, questioning the power and authority of the City to issue the Bonds, challenging the validly of or security for the Bonds, or materially affecting the financial condition of the City. LEGAL MATTERS The Bonds are subject to approval as to certain matters by Dorsey & Whitney LLP, of Missoula, Montana, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Legal opinions substantially in the forms set forth in Appendix C herein will be delivered at closing. TAX CONSIDERATIONS The following is a summary of certain U.S. federal and Montana income tax considerations relating to the purchase, ownership, and disposition of the Bonds. This summary is based on the U.S. Internal Revenue Code of 1986 (the “Code”) and the Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), all as of the date hereof and all of which are subject to change, possibly with retroactive effect. Any such change could adversely affect the matters discussed below, including the tax exemption of interest on the Bonds. The City has not sought and will not seek any rulings from the IRS regarding the matters discussed below, and there can be no assurance the IRS or a court will not take a contrary position regarding these matters. Prospective purchasers of Bonds should consult their own tax advisors with respect to applicable federal, state, and local tax rules, and any pending or proposed legislation or regulatory or administrative actions, relating to the Bonds based on their own particular circumstances. This summary is for general information only and is not intended to constitute a complete analysis of all tax considerations relating to the purchase, ownership, and disposition of Bonds. It does not address the application of the alternative minimum tax or the additional tax on net investment income, nor does it address the U.S. federal estate and gift tax or any state, local, or non-U.S. tax consequences, except with respect to Montana income tax to the extent expressly specified herein. This summary is limited to consequences to U.S. holders that purchase the Bonds for cash at original issue and hold the Bonds as “capital assets” (generally, property held for investment). This discussion does not address all aspects of U.S. federal income or state taxation that may be relevant to particular holders of Bonds in light of their specific circumstances or the tax considerations applicable to holders that may be subject to special income tax rules, such as: holders subject to special tax accounting rules under Section 451(b) of the Code; insurance companies; brokers, dealers, or traders in stocks, securities, or currencies or notional principal contracts; foreign corporations subject to the branch profits tax; holders receiving payments in respect of the Bonds through foreign entities; and S corporations, partnerships, or other pass-through entities or investors therein. For purposes of this discussion, the “issue price” of a maturity of Bonds is the first price at which a substantial amount of Bonds of that maturity is sold for cash to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers. TAX-EXEMPT INTEREST In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Code, (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code, and (iii) is excluded from Montana taxable income for State of Montana individual income tax purposes. Interest on the Bonds may, however, be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable - 15 - corporations (as defined in Section 59(k) of the Code), and is included in gross income for purposes of the Montana corporate income tax and the Montana alternative corporate income tax. The Code establishes certain requirements that must be met after the issuance of the Bonds in order that interest on the Bonds be excluded from federal gross income. These requirements include, but are not limited to, provisions regarding the use of Bond proceeds and the facilities financed or refinanced with such proceeds and restrictions on the investment of Bond proceeds and other amounts. The City has made certain representations and has covenanted to comply with certain restrictions, conditions, and requirements designed to ensure interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or noncompliance with these covenants may cause interest on the Bonds to be included in gross income for federal income tax purposes and Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to their date of issue. Bond Counsel has not independently verified the accuracy of these representations and will not verify the continuing compliance with these covenants. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is included in gross income for federal income tax purposes and Montana taxable income for Montana individual income tax purposes. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is included in federal gross income. ORIGINAL ISSUE DISCOUNT Bonds may be issued at a discount from their principal amount (any such Bonds being “Discount Bonds”). The excess of the principal amount payable on Bonds of a given maturity over their issue price constitutes “original issue discount” (“OID”). OID that accrues to a holder of a Discount Bond is excluded from federal gross income of individuals, estates and trusts to the same extent that stated interest on such Discount Bond would be so excluded. The amount of OID that accrues on a Discount Bond is added to the holder’s federal tax basis. OID on a Discount Bond generally accrues pursuant to a constant-yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of OID that accrues for any particular semiannual accrual period generally is equal to the excess of (1) the product of (a) one-half of the yield on such Discount Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Discount Bonds, over (2) the amount of stated interest actually payable. For this purpose, the adjusted issue price is determined by adding to the issue price for such Discount Bonds the OID that is treated as having accrued during all prior accrual periods. If a Discount Bond is sold or otherwise disposed of between compounding dates, then the original issue discount that would have accrued for that accrual period for federal income tax purposes is allocated ratably to the days in that accrual period. If a Discount Bond is purchased for a cost that exceeds the sum of the issue price plus accrued interest and accrued OID, the amount of OID that is deemed to accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess over the remaining term of the Discount Bond. If the excess is greater than the amount of remaining OID, the basis reduction rules for amortizable bond premium may result in taxable gain upon sale or other disposition of the Bonds, even if the Bonds are sold, redeemed, or retired for an amount equal to or less than their cost. It is possible under certain state and local income tax laws that original issue discount on a Discount Bond may be taxable in the year of accrual and may be deemed to accrue differently than under federal law. MARKET DISCOUNT If a Bond is purchased for a cost that is less than the Bond’s issue price (plus accrued original issue discount, if any), the purchaser will be treated as having purchased the Bond with market discount (unless a statutory de minimis rule applies). Market discount is treated as ordinary income and generally is recognized on the maturity or earlier disposition of the Bond (to the extent that the gain realized does not exceed the accrued market discount on the Bond). - 16 - BOND PREMIUM A holder that acquires a Bond for an amount in excess of its principal amount generally must, from time to time, reduce the holder’s federal tax basis for the Bond. Premium generally is amortized for federal income tax purposes on the basis of a bondholder’s constant yield to maturity or to certain call dates with semiannual compounding. Accordingly, holders who acquire Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if such Bonds are sold for an amount equal to or less than their original cost. Amortized premium is not deductible for federal income tax purposes. RELATED TAX CONSIDERATIONS Section 86 of the Code requires recipients of certain social security and railroad retirement benefits to take interest on the Bonds into account in determining the taxability of such benefits. Section 265(a) of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds. In the case of a financial institution, generally no deduction is allowed under section 265(b) the Code for that portion of the holder’s interest expense that is allocable to interest on tax-exempt obligations, such as the Bonds, unless the obligations are “qualified tax-exempt obligations.” Indebtedness may be allocated to the Bonds for this purpose even though not directly traceable to the purchase of the Bonds. The Bonds are not “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code. Income (including interest) or loss on the Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations. The ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may affect a holder’s federal, state, or local tax liability in some additional circumstances. The nature and extent of these other tax consequences depends upon the particular tax status of the holder and the holder’s other items of income or deduction. SALE OR OTHER DISPOSITION A holder will generally recognize gain or loss on the sale, exchange, redemption, retirement, or other disposition of a Bond equal to the difference between (i) the amount realized less amounts attributable to any accrued but unpaid stated interest and (ii) the holder’s adjusted tax basis in the Bond. The amount realized includes the cash and the fair market value of any property received by the holder in exchange for the Bond. A holder’s adjusted tax basis in a Bond generally will be equal to the amount that the holder paid for the Bond, increased by any accrued original issue discount with respect to the Bond and reduced by the amount of any amortized bond premium on the Bond. Except to the extent attributable to market discount (which will be taxable as ordinary income to the extent not previously included in income), any gain or loss will be capital gain or loss and will be long-term capital gain or loss if the holder held the Bond for more than one year. Long-term capital gains recognized by certain non-corporate persons, including individuals, generally are taxable at a reduced rate. The deductibility of capital losses is subject to significant limitations. INFORMATION REPORTING AND BACKUP WITHHOLDING Payments of interest on the Bonds (including any allocable bond premium or accrued original issue discount) and proceeds from the sale or other disposition of the Bonds are expected to be reported to the IRS as required under applicable Treasury Regulations. Backup withholding will apply to these payments if the holder fails to provide an accurate taxpayer identification number and certification that it is not subject to backup withholding (generally on an IRS Form W-9) or otherwise fails to comply with the applicable backup withholding requirements. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. Certain holders are exempt from information reporting. Potential holders should consult their own tax advisors regarding qualification for an exemption and the procedures for obtaining such an exemption. - 17 - NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The City will not designate the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. MUNICIPAL ADVISOR The City has retained Baker Tilly Municipal Advisors, LLC as municipal advisor in connection with certain aspects of the issuance of the Bonds (the “Municipal Advisor” or “BTMA”). BTMA is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP (“BTUS”), an accounting firm and has been retained by the City to provide certain financial advisory services including, among other things, preparation of the deemed “nearly final” Preliminary Official Statement and the Final Official Statement (the “Official Statements”). The information contained in the Official Statements has been compiled from records and other materials provided by City officials and other sources deemed to be reliable. The Municipal Advisor has not verified and will not independently verify the completeness and accuracy of the information contained in the Official Statements. The Municipal Advisor’s duties, responsibilities and fees arise solely as Municipal Advisor to the City and they have no secondary obligations or other responsibility. MUNICIPAL ADVISOR REGISTRATION BTMA is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. As such, BTMA is providing certain specific municipal advisory services to the City, but is neither a placement agent to the City nor a broker/dealer and cannot participate in the underwriting of the Bonds. The offer and sale of the Bonds shall be made by the City, in the sole discretion of the City, and under its control and supervision. The City has agreed that BTMA does not undertake to sell or attempt to sell the Bonds, and will take no part in the sale thereof. OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS BTUS is an advisory, tax and assurance firm headquartered in Chicago, Illinois. BTUS and its affiliated entities, have operations in North America, South America, Europe, Asia and Australia. BTUS is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms. Baker Tilly Wealth Management, LLC (“BTWM”), a U.S. Securities and Exchange Commission (“SEC”) registered investment adviser under the Federal Investment Advisers Act of 1940. Baker Tilly Capital, LLC (“BTC”), a wholly owned subsidiary of BTUS, is a limited purpose broker/dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”). Baker Tilly Financial, LLC (“BTF”), is a wholly owned subsidiary of BTUS, registered with the SEC as an investment advisor. BTUS, BTWM and subsidiaries of BTUS may provide advisory services to the clients of BTMA. BTMA has no other activities or arrangements that are material to its advisory business or its clients with a related person who is a broker-dealer, investment company, other investment adviser or financial planner, bank, law firm or other financial entity. MISCELLANEOUS The information contained in this Official Statement has been compiled from the City officials and other sources deemed to be reliable, and while not guaranteed as to completeness or accuracy, it is believed to be correct as of this date. However, the Official Statement speaks only as of its date, and the information contained herein is subject to change. The references, excerpts, and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is directed to all such documents for full and complete statements of all matters of fact relating to the Bonds, the security for the payment of the Bonds and the rights and obligations of the owners thereof. - 18 - Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds. CERTIFICATION The City has authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The City certifies to the best of its knowledge and belief that this Official Statement, as of its date and as it relates to the City and its economic and financial condition, (i) is complete and accurate; (ii) does not contain any untrue statement of a material fact; and (iii) does not omit any material facts or information which would make the statements contained herein misleading. (The Balance of This Page Has Been Intentionally Left Blank) APPENDIX A A-1 GENERAL INFORMATION OF THE CITY CITY PROPERTY VALUES Trend of Values Fiscal Year Taxable Market Value Full Taxable Value Incremental Value for All Tax Increment Districts Net Taxable Value(1) Taxable Value for Open Space Purposes(2) 2023/24 $17,730,663,050 $269,988,379 $21,822,620 $247,165,759 N/A 2022/23 11,021,338,679 171,848,662 12,066,606 159,782,056 $172,444,905 2021/22 10,724,564,866 166,838,141 11,485,638 155,352,503 164,979,565 2020/21 8,875,762,356 137,983,427 8,446,310 129,537,117 137,765,762 2019/20 8,596,253,775 133,582,036 8,158,839 125,423,197 133,391,037 2018/19 6,981,943,409 109,713,782 5,392,365 104,321,417 191,152,592 (1) Excludes Tax Increment Districts Incremental Values. (2) The Taxable Value for Open Space Purposes will be used for levies related to the City’s outstanding open space bonds. Sources: The City and the City’s Annual Comprehensive Financial Report. 2022/23 Net Taxable Value by Property Class: $159,782,056 Residential Property $ 89,925,341 56.3% Commercial and Industrial Property 58,735,884 36.7 Other Property 11,120,831 7.0 2022/23 Net Taxable Value $159,782,056 100.0% Source: City’s Annual Comprehensive Financial Report. Most recent information available. Ten of the Largest Taxpayers in the City Taxpayer Type of Property 2022/23 Taxable Value Percent of 2022/23 Net Taxable Value ($159,782,056)(1) Northwestern Energy Utility $ 8,620,846 5.4% Plato MT I Propco LLC Apartments 1,080,146 0.7 Charter Communications Telecommunications 745,534 0.5 GKT Bozeman Gateway LLC Real Estate 623,384 0.4 Verizon Telecommunications 605,249 0.4 Billings Clinic Healthcare 593,261 0.4 Cannery District Partners LLC Real Estate 571,306 0.4 Bozeman Apartment Group LLC Apartments 560,417 0.4 Springs VII At Bozeman LLC Retirement/Assisted Living 546,620 0.3 GKT Gallatin Shopping Center VM LLC Shopping Center 507,025 0.3 Total $14,453,788 9.0% (1) Excludes incremental valuations for tax increment financing districts within the City. Source: City’s Annual Comprehensive Financial Report. Most recent information available. A-2 CITY INDEBTEDNESS Legal Debt Limit and Debt Margin(1) Legal Debt Limit (2.5% of 2023/24 Taxable Market Value of $17,730,633,050) $443,266,576 Less: Outstanding Debt Subject to Limit (48,045,000) Legal Debt Incurrence Capacity as of May 16, 2024 $395,221,576 (1) The amount of outstanding debt subject to the legal debt limit may be decreased by amounts in debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. Unlimited Tax General Obligation Debt(1) Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 12-23-2013 $ 9,900,000 Open Space (2013) 07-01-2034 $ 6,270,000 12-09-2014 5,100,000 Open Space (2014) 07-01-2035 3,470,000 09-18-2019 34,405,000 Public Safety Project (2019) 07-01-2039 29,500,000 06-30-2022 6,730,000 Fire Station 2 (2022) 07-01-2042 6,525,000 04-16-2024 2,280,000 Bozeman Swim Center, Bogert Pool, and Lindley Center (2024A) 07-01-2044 2,280,000 Total $48,045,000 (1) These issues are subject to the legal debt limit. Limited Tax General Obligation Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 07-01-2018 $1,700,000 Sports Park (2018) 06-30-2039 $1,469,633 04-16-2024 3,930,000 Bozeman Swim Center, Bogert Pool, and Lindley Center, (2024B) 07-01-2043 3,930,000 Total $5,399,633 Special Improvement District Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 12-23-2004 $ 94,000 Special Improvement District No. 674 (2004) 07-01-2024 $ 4,500 12-23-2004 400,000 Special Improvement District No. 674 (2004) 07-01-2024 16,000 08-14-2020 4,001,000 Special Improvement District No. 747 (2020) 07-01-2040 3,251,333 Total $3,271,833 A-3 Tax Increment Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 07-20-2017 $1,446,000 North East Urban Renewal District (2017) 07-01-2042 $1,167,138 07-09-2020 6,500,000 Midtown Urban Renewal District (2020) 07-01-2044 5,960,000 03-05-2020 3,689,000 Downtown Improvement District Refunding (2020) 07-01-2032 2,657,000 Total $9,784,138 Water Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 09-30-2011 $9,491,000 Water Treatment Plant (2011A) 01-01-2032 $ 4,748,000 06-12-2013 9,552,000 Water Treatment Plant (2011B) 01-01-2033 5,016,000 05-17-2017 7,573,000 Tank Project (2017) 07-01-2037 5,512,000 Total $15,276,000 Wastewater Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 02-10-2010 $ 359,300 Wastewater System Revenue (2010B) 01-01-2030 $ 121,000 02-10-2010 885,081 Wastewater System Revenue (2010C) 01-01-2031 410,000 02-25-2010 9,500,000 Upgrade and Expansion (2010D) 01-01-2030 3,502,000 06-10-2010 729,000 Digester Project (2010F) 07-01-2030 323,000 04-27-2011 3,903,000 Digester Project (2010G) 01-01-2031 1,276,000 08-21-2013 8,692,000 Wastewater Treatment Plant (2010H) 01-01-2031 4,027,000 07-22-2020 7,786,000 Wastewater System Revenue (2020B) 07-01-2040 6,687,000 07-22-2020 6,693,321 Davis Lane/Norton E Ranch (2020C) 01-01-2041 5,866,000 08-12-2020 2,807,000 Wastewater System Revenue (2020D) 07-01-2040 2,410,000 Total $24,622,000 The City received an additional loan from the State of Montana, through its State Revolving Fund Program, to fund additional wastewater projects (the “2020A Loan”). The 2020A Loan was issued in the amount of $300,000 and has a final maturity in 2040. However, the full amount of the 2020A Loan is eligible for loan forgiveness upon completion of the project in accordance with program requirements. Stormwater Revenue Debt Date of Issue Original Amount Purpose Final Maturity Est. Principal Outstanding As of 05-16-24 06-29-2015 $1,815,000 Stormwater System Revenue (DNRC) (2015) 07-01-2035 $1,153,000 A-4 Estimated Calendar Year Debt Service Payments Unlimited Tax G.O. Debt(1) Limited Tax G.O. Debt(2) Year Principal Principal & Interest Principal Principal & Interest 2024 (at 5-16) $ 2,300,000 $ 3,129,325 $ 71,492 $ 125,943 2025 2,450,000 4,137,173 169,196 411,708 2026 2,550,000 4,131,013 196,996 410,745 2027 2,655,000 4,133,388 204,902 409,745 2028 2,755,000 4,125,138 217,915 413,612 2029 2,875,000 4,131,488 226,049 411,746 2030 2,990,000 4,127,838 234,297 409,745 2031 3,120,000 4,134,388 247,668 412,495 2032 3,250,000 4,135,538 261,162 414,826 2033 3,380,000 4,131,288 269,797 411,495 2034 3,515,000 4,126,638 283,564 412,995 2035 2,950,000 3,419,938 292,473 410,795 2036 2,660,000 3,047,713 306,527 413,434 2037 2,735,000 3,050,131 315,740 410,595 2038 2,805,000 3,047,375 330,109 412,595 2039 2,880,000 3,047,550 281,746 404,902 2040 590,000 677,000 350,000 409,600 2041 620,000 683,400 365,000 410,600 2042 640,000 678,600 380,000 411,000 2043 160,000 176,000 395,000 410,800 2044 165,000 171,600 Total $48,045,000(3) $62,439,522 $5,399,633(4) $7,939,376 (1) Includes debt service on the Series 2024A Bonds. (2) Includes debt service on the Series 2024B Bonds. (3) 59.0% of this debt will be retired within ten years. (4) 38.9% of this debt will be retired within ten years. A-5 Estimated Calendar Year Debt Service Payments (continued) Special Improvement District Debt Tax Increment Revenue Debt Year Principal Principal & Interest Principal Principal & Interest 2024 (at 5-16) $ 104,265 $ 156,265 $ 479,387 $ 646,353 2025 171,541 270,761 516,097 836,467 2026 177,031 270,761 529,924 833,908 2027 182,696 270,761 543,826 830,901 2028 188,543 270,761 562,807 832,522 2029 194,577 270,761 584,870 836,573 2030 200,804 270,761 597,018 829,980 2031 207,230 270,761 618,256 832,065 2032 213,861 270,761 639,586 833,530 2033 220,705 270,761 326,013 499,376 2034 227,768 270,761 338,540 498,776 2035 235,058 270,761 356,172 502,776 2036 242,580 270,761 368,912 501,176 2037 250,343 270,761 381,767 499,176 2038 258,354 270,761 399,739 501,776 2039 196,477 200,616 412,835 498,776 2040 431,059 500,376 2041 449,417 501,376 2042 462,913 500,426 2043 385,000 408,550 2044 400,000 412,000 Total $3,271,833(1) $4,147,535 $9,784,138(2) $13,136,859 (1) 56.9% of this debt will be retired within ten years. (2) 55.2% of this debt will be retired within ten years. A-6 Estimated Calendar Year Debt Service Payments (continued) Water Revenue Debt Wastewater Revenue Debt Year Principal Principal & Interest Principal Principal & Interest 2024 (at 5-16) $ 683,000 $ 898,360 $ 1,034,000 $ 1,365,166 2025 1,395,000 1,796,138 2,111,000 2,729,515 2026 1,435,000 1,795,773 2,171,000 2,729,700 2027 1,477,000 1,796,225 2,234,000 2,731,203 2028 1,520,000 1,796,448 2,298,000 2,731,865 2029 1,563,000 1,795,443 2,365,000 2,733,705 2030 1,609,000 1,796,180 2,100,000 2,401,644 2031 1,655,000 1,795,573 1,310,000 1,557,895 2032 1,366,000 1,458,635 883,000 1,102,488 2033 743,000 801,520 904,000 1,101,275 2034 441,000 484,013 927,000 1,101,538 2035 451,000 482,925 951,000 1,102,213 2036 463,000 483,575 974,000 1,101,300 2037 475,000 483,925 998,000 1,100,800 2038 1,024,000 1,101,688 2039 1,049,000 1,100,938 2040 1,079,000 1,104,550 2041 210,000 212,625 Total $15,276,000(1) $17,664,733 $24,622,000(2) $29,110,108 Stormwater Revenue Debt Year Principal Principal & Interest 2024 (at 5-16) $ 44,000 $ 55,530 2025 89,000 110,740 2026 90,000 109,950 2027 94,000 112,130 2028 96,000 112,240 2029 97,000 111,320 2030 100,000 112,370 2031 103,000 113,350 2032 106,000 114,270 2033 109,000 115,140 2034 112,000 115,940 2035 113,000 114,700 Total $1,153,000(3) $1,297,680 (1) 88.0% of this debt will be retired within ten years. (2) 70.7% of this debt will be retired within ten years. (3) 80.5% of this debt will be retired within ten years. A-7 Other Debt Obligations The City has various outstanding leases and loans, as described in “Note 7 – Long-Term Debt” and “Note 8 – Leases” of its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. Please see Appendix E herein. Overlapping Debt Taxing Unit(1) Est. G.O. Debt As of 05-16-24(2) Debt Applicable to Tax Capacity in City Percent Amount Gallatin County $47,080,000 36.98% $17,410,184 Bozeman High School District No. 7 69,120,000 61.81 42,723,072 Total $60,133,256 (1) Only those units with outstanding general obligation debt are shown here. (2) Excludes revenue-supported debt. Debt Ratios(1) G.O. Direct Debt G.O. Direct & Overlapping Debt To 2023/24 Taxable Market Value ($17,730,663,050) 0.30% 0.64% To 2023/24 Net Taxable Value ($247,165,759) 21.62% 45.95% Per Capita (56,123 – 2023 U.S. Census Estimate) $952 $2,024 (1) Excludes special improvement district debt, tax increment revenue debt, water revenue debt, wastewater revenue debt, stormwater revenue debt, and other debt obligations. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Levies Fiscal Year Ending June 30 2019/20 2020/21 2021/22 2022/23 2023/24 University Millage 6.00 6.00 6.00 6.00 6.00 Statewide School Equalization 40.00 40.00 40.00 40.00 32.90 Countywide School Levy 96.45 96.74 91.29 89.58 70.70 Gallatin County Operating & Bond 91.17 97.59 88.24 91.25 72.99 Open Space Bonds 3.90 4.04 4.04 2.30 1.32 Gallatin College 1.50 1.50 1.50 1.50 1.50 Countywide Planning 2.22 1.48 2.18 2.23 1.59 Gallatin Conservation District 0.77 0.91 0.70 0.72 0.48 City of Bozeman 187.70 165.62 152.12 204.50 150.72 Bozeman High School District 92.77 97.61 84.86 86.05 62.51 Bozeman Elementary School District 125.90 121.74 101.99 102.09 77.21 Total 648.38 633.23 572.92 626.22 477.92 Source: Gallatin County, Montana, Annual Property Tax Information 2012 - Current Year | Gallatin County, MT (gallatinmt.gov). A-8 Authorized Levy Authority, Budgeted Levy, and Unused Levy Authority New Parks & Trails District. On May 5, 2020, City voters approved the creation of a Parks & Trails District, which became effective in fiscal year 2020/21. With the creation of the Parks & Trails District, certain parks, recreation and aquatics expenditures were no longer accounted for in the General Fund and the City began to levy a special assessment to pay for the personnel, operating, and capital expenditures (other than capital expenditures related to facilities). The Parks & Trails District had been in development for years with consultants and in the most recent Capital Improvement Plan and internal staffing plan. The Parks & Trails District was created in an effort to solve three major issues of deferred maintenance, equity, and operations and maintenance of all City-owned parks. As a result of the creation of the Parks & Trails District, the City shifted funding from property taxes to a charge for services, which also resulted in the decrease in the number of mills required to be levied. The Parks & Trails District Fund accounts for the special assessment and rental revenues collected, and the operating and capital expenditures required to manage and maintain City-wide parks and trails. As of June 30, 2023, the Parks & Trails District Fund recorded total revenue of $15,190,123, of which $14,607,391 was Charges for Services revenue. City Levy Authority. The following table shows the total property tax levies by the City, mills levied by the City, and the unused statutory mill levy authority for the upcoming and past five fiscal years. Mills Levied by the City Mills Not Levied by the City Fiscal Year Property Taxes Levied Permissive and Voted Statutory Maximum Utilized Total Mills Unused Statutory Maximum Mills 2023/24 $37,243,780 57.70 93.02 150.72 12.11 2022/23 32,675,430 70.56 133.94 204.50 11.30 2021/22 23,942,928 46.89 107.23 154.12 21.66 2020/21 21,453,937 53.26 112.36 165.62 31.79 2019/20 23,541,934 55.08 132.62 187.70 9.75 2018/19 20,056,920 45.46 145.78 191.24 15.89 Property Tax Levies and Collections Fiscal Year Total Tax Levy Amount Collected in Tax Levy Year Current Property Tax Collections as a Percent of Total Tax Levy Total Property Tax Collections as of June 30, 2023(1) Total Tax Collections as a Percent of Total Tax Levy 2023/24(2) $37,243,780 $23,125,287 62.09% $23,125,287 62.09% 2022/23 32,675,430 32,618,261 99.83 32,793,744 100.36 2021/22 23,942,928 23,777,644 99.31 23,815,584 99.47 2020/21 21,453,937 21,017,696 97.97 21,080,437 98.26 2019/20 23,541,934 23,381,671 99.32 23,589,506 100.20 2018/19 20,056,920 19,940,784 99.42 19,950,675 99.47 (1) Includes amounts, penalties, and interest collected in subsequent years. (2) Through January 1, 2024. Source: The City. A-9 FUNDS ON HAND As of February 29, 2024 General Fund $ 19,552,131 Special Revenue Funds 64,347,393 Debt Service Funds 3,467,611 Capital Project Funds 5,075,472 Enterprise Funds 62,156,848 Internal Service Funds 1,845,067 Custodial Funds 514,151 Permanent Funds 1,940,783 Total Cash and Investments $158,899,456 INVESTMENTS The City’s investments may include cash and cash items; demand, time, saving and fiscal agent deposits; investments in the State Short-Term Investment Pool (“STIP”); direct obligations of the United States Government; and repurchase agreements. As of January 31, 2024, the City’s investments had a market value of $159.2 million, of which $57 million was held in STIP and $102.2 million outside of STIP. GENERAL INFORMATION CONCERNING THE CITY The City is located in Gallatin County (the “County”) in southwestern Montana, and is the County seat. The City encompasses an area of approximately 20.9 square miles (13,382 acres). The City is currently the State’s fourth largest municipality by population behind the cities of Billings, Missoula, and Great Falls. The City is situated along Interstate 90, approximately 143 miles west of the City of Billings and 160 miles southeast of the City of Missoula. A variety of transportation systems serve the City and the surrounding areas of the County. Interstate 90 is a primary east/west route through the County connecting the northern tier of the United States, which runs adjacent to the City. Air service is available through Bozeman Yellowstone International Airport, located outside the city limits of the City of Belgrade (“Belgrade”). Rail service is provided by the Montana Rail Link rail line. Population The City’s population trend is shown below. Population Percent Change 2023 U.S. Census Estimate 56,123 5.3% 2020 U.S. Census 53,293 43.0 2010 U.S. Census 37,280 35.5 2000 U.S. Census 27,509 21.4 1990 U.S. Census 22,660 4.7 1980 U.S. Census 21,645 -- Sources: The United States Census Bureau, http://www.census.gov/. A-10 Major Employers Private Employers by Class Employer Class Size Bozeman Deaconess Hospital 9 Oracle America 7 Kenyon Noble Lumber & Hardware 7 Town Pump Convenience Stores 7 Wal Mart 7 Albertson’s 6 Bridger Bowl 6 Community Food Co-Op 6 Costco 6 First Student 6 Glacier Bancorp 6 McDonalds 6 Murdoch’s Ranch & Home Supply 6 Ressler Motors 6 Rosauers Food and Drug 6 Target 6 Town & Country Foods 6 UPS 6 Williams Plumbing & Heating 6 Zoot Enterprises 6 Public Employers by Class Employer Class Size Montana State University 9 Belgrade School District 8 Bozeman School District 8 Gallatin County 8 City of Bozeman 7 Class 6: 100 to 249 employees Class 7: 250 to 499 employees Class 8: 500 to 999 employees Class 9: 1,000+ employees Source: The City’s 2023 Annual Comprehensive Financial Report. Labor Force Data Annual Average December 2023 2019 2020 2021 2022 Labor Force: City of Bozeman 31,683 32,269 33,514 35,192 37,004 Gallatin County 70,264 71,221 74,131 77,887 81,948 State of Montana 543,741 545,334 550,555 567,787 578,459 Unemployment Rate (%): City of Bozeman 2.2% 5.2% 2.4% 1.8% 2.5% Gallatin County 2.3 5.0 2.4 1.9 2.6 State of Montana 3.5 5.8 3.4 2.6 3.8 Source: Montana Department of Labor and Industry, lmi.mt.gov/Home/DS-Results-LAUS. 2023 data are preliminary. A-11 Retail Sales and Effective Buying Income (EBI) The total Retail Sales, EBI, and Median Household EBI for the City for Data Year 2022 (Report Year 2023) were $1,601,050,094; $1,945,297,500; and $65,301, respectively. The total Retail Sales, EBI, and Median Household EBI for Gallatin County for Data Year 2022 (Report Year 2023) were $3,404,337,751; $4,521,407,000; and $72,571, respectively. The 2022/23 Median Household EBI for the State of Montana was $58,000. The 2022/23 Median Household EBI for the United States was $64,600. Source: Claritas, LLC. Most recent information available. Building Permits Issued by the City Commercial Permits Residential Permits Total Value (All Permits) (in millions) Fiscal Year Number Value (in millions) Number Value (in millions) 2023 1,014 $271.00 2,354 $444.00 $715.00 2022 548 201.00 1,947 479.00 680.00 2021 707 237.00 2,674 233.00 470.00 2020 702 302.00 2,094 176.00 478.00 2019 768 249.00 2,307 311.00 560.00 2018 883 216.00 3,222 340.00 556.00 2017 1,731 65.00 3,905 130.00 195.00 2016 1,628 164.47 3,937 200.00 364.47 2015 1,560 98.02 2,836 191.97 289.99 2014 1,165 44.50 2,911 130.68 175.18 Source: City’s Annual Comprehensive Financial Reports. Economic Base The economy of the City, Gallatin County (the “County”), and the Gallatin Valley (Greater Bozeman) are closely related. About half of the jobs in the County are located within the City, and a large majority of the jobs are in the Gallatin Valley, which is comprised of the City, Gallatin Gateway, Four Corners, Belgrade, and Manhattan. The City is growing rapidly, with a 3.8% annual population growth (2015-2019) and a 2.5% annual job growth (over 6,900 jobs 2015-2019). The economy of the area is concentrated heavily in tourism and retail-type jobs, but also contains industry clusters including construction, health care, professional and technical services, manufacturing, and recreation and entertainment. In 2023, the City was announced as the No. 1 Strongest Economy for fastest growing micropolitan cities by POLICOM for the sixth consecutive year. Economic strength is defined as “the long-term tendency for an area to consistently grow in both size and quality.” The many amenities in and around the City support the continued growth of the retail economy especially. Museum of the Rockies. The Museum of the Rockies (the “Museum”), with is a university, community and state-supported regional museum dedicated to the interpretation of the physical and cultural heritage of the Northern Rocky Mountains, is located in the City. The Museum was founded in 1957 and today is the largest natural history museum in the region with 94,000 square feet. Focusing on paleontology, astronomy, and regional natural/cultural history, the Museum houses a living history farm, earth and dinosaur halls, a fossil bank, and the Taylor Planetarium. The Museum attracts over 200,000 visitors every year. Yellowstone National Park. In 1872, Yellowstone National Park (the “Park”) was the first national park to be established in the world. The Park has five entrances, with the western gage to the Park located approximately 90 miles south of the City and the north entrance is near the Town of Gardiner, which is located approximately 100 miles southeast of the City. The Park encompasses an area of approximately 2.2 million acres across three states. The Park also contains one of the world’s largest calderas, is the site A-12 of an active volcano, has approximately 20,000 hydrothermal features, 300 active geysers, and 290 waterfalls. The Park offers 10 visitor centers, 9 hotels/lodges, 12 campgrounds, 52 picnic areas, one marina, and over 1,100 miles of trails and hosts over 4 million visitors annually. Bozeman Yellowstone International Airport (“BZN Airport”). BZN Airport currently services eight major airlines and two smaller lines. With more than 300 aircraft arriving and departing daily, BZN Airport is the busiest airport in the State for the nineth consecutive year, serving over $2.3 million passengers in 2023. Regionally, BZN Airport was the 7th busiest airport in the Northwest Region which includes Colorado, Utah, Montana, Idaho, Oregon, and Washington. Big Sky Resort. The unincorporated community of Big Sky is located in the County; however, Big Sky Resort (the “Resort”) and much of the surrounding area is located in Madison County. The Resort is the largest in the country with more than 30 lifts, 4,350 vertical feet drop and a total of 5,850 acres of ski terrain. Other amenities at the Resort include tennis courts, an 18-hole golf course designed by Arnold Palmer, a convention center with 43,000 square feet of meeting space, hotel and indoor mall – all of which contribute to year-round use. The reserve (located within Moonlight Basin) is an 8,027 yard, par 72 Jack Nicklaus Signature Golf Course. The Resort is in the process of a $150 million investment plan, spanning over ten years. In 2023, a new tram was constructed with two cabins, each with up to 75-passenger capacity, and travels 2,142 vertical feet. Additionally, workforce housing was constructed in 2023 to support team members at the Resort. Future projects include a gondola to improve tram access and additional workforce housing to support expansions. Bridger Bowl. Located approximately 16 miles northeast of the City is Bridger Bowl, a well-developed, private, non-profit ski area with 2,600 vertical feet, 2,000 acres of skiing terrain, five double chair lifts, one triple chair lift, and one quad chair lift. Technology-Based Businesses. A fast-growing segment of the area’s economy is technology-based business, for which university resources and an educated labor force are significant assets. As home to over 85 high-tech companies, the Gallatin Valley is rapidly becoming the high-tech capital of the Northern Rockies. The various focuses of high-tech companies in the City and the surrounding areas range from computer software development to laser technology to pharmaceutical research, some of which include Oracle, Snowflake, Next Frontier Capital, Foundant Technologies, Workiva, and Schedulicity. Past and present graduates of MSU provide the expanding high-tech community with a strong labor pool. The City has received $45.9 million in federal awards to support innovation and technology-based small businesses between 2015 and 2021, the second highest per employee among peer groups, indicating funding for continued innovation and growth of the technology sector. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive federal research funds designed to stimulate research and development and technological innovation for small businesses. SBIR and STTR programs and funding are an indicator of innovation amount small businesses in communities. Between 2015 and 2021, the City received the second most funding of its peer communities. MSU TechLink Center. The MSU TechLink Center (“TechLink”) was established in 1996 and is funded by the Department of Defense, NASA, and other federal agencies to link companies in Montana and the surrounding region with federal laboratories for joint research and technology transfer. An overriding purpose is to contribute to the success of both technology-based companies and key resource-based industries in the State and region. TechLink provides specialized assistance in the industry areas of advanced materials, aerospace, agricultural technologies, biomedicine and biotechnology, electronics, environmental technologies, information technologies and software, and photonics and sensors. Manufacturing Facilities. Blackhawk Products (“Blackhawk”) is a subsidiary of Alliant Techsystems Inc. (“ATK”), a defense contractor that has an 80,000 square-foot facility located approximately 20 miles west of the City near the Town of Manhattan. ATK has more than 60 facilities located in 22 states, Puerto Rico and internationally, and is headquartered in Arlington, Virginia. Blackhawks’ headquarters are located in Norfolk, Virginia, and it also has manufacturing facilities in Meridian, Idaho and Southport, North Carolina. Blackhawk manufactures accessories for military, law enforcement, corporate security applications and outdoor use and includes items such as specialized apparel, armor, eye wear, backpacks, and gun holsters. A-13 Simms Fishing Products (“Simms”) is a fishing product, apparel and accessories manufacturing company and is the sole fishing wader manufacturer in the United States. Simms’ corporate headquarters, warehouses, and production facility are located in the Four Corners Area, approximately 8 miles west of the City. Education School District No. 2 and High School District No. 2 of Yellowstone County provide elementary, secondary and vocational-technical instruction for students in the City and much of the surrounding area. Several parochial schools are also located in the City. Post-Secondary Education Montana State University-Bozeman (“MSU”) is a land grant college and represents the largest single component of the local economy. MSU offers bachelor degree programs in approximately 60 fields, master’s degrees i approximately 45 fields, and doctorates in approximately 20 fields. Additionally, Gallatin College-MSU is a two-year college located in the City that offers approximately 10 workforce programs where students can earn an associate degree or a one-year professional certification, depending on the program of study. Gallatin College is a division of MSU, and may of the courses offered are transferrable to four-year institutions and specifically complement programs at MSU. GOVERNMENTAL ORGANIZATION AND SERVICES Organization The City is a municipal corporation, organized under the laws of Montana in 1883. A Commissioner/Manager form of government governs the City with a five-member Commission comprised of a Mayor and four Commissioners. The City’s legislative and policy-making body is the City Commission, who are elected every two years and serve overlapping four-year terms. At a regular City election, the voters of the City shall elect a Mayor at-large for a term of four years. The individual so elected shall serve as Deputy Mayor and a Commissioner for the first two years of their term, and Mayor for the balance of their term of office. The following individuals comprise the current City Commission: Expiration of Term Terry Cunningham Mayor January 2026 Joey Morrison Deputy Mayor January 2026 Jennifer Madgic Commissioner January 2028 Christopher Coburn(1) Commissioner January 2026 Douglas Fischer Commissioner December 2025 (1) At the March 26, 2024 City Commission meeting, Commissioner Coburn announced his resignation from the Commission effective May 7, 2024. As required by State law, the City Commission will be required to appoint his replacement within 30 days of the effective date of his resignation. Key Administrative Staff City Manager Chuck Winn City Finance Director Melissa Hodnett City Controller Aaron Funk City Treasurer Laurae Clark City Attorney Greg Sullivan City Services The City provides a number of basic services to its residents, which include police and fire protection; the City Municipal Court; municipal water, sewer and sanitation systems; public works; transportation; planning; building inspection; zoning enforcement; public library; and parks and recreation. A-14 Labor Contracts The status of labor contracts in the City is as follows: Expiration Date Bargaining Unit No. of Employees of Current Contract Bozeman Firefighters Association 47 June 30, 2025 Bozeman Police Protective Association 60 June 30, 2024 Teamsters Local #2 125 June 30, 2026 Montana Federation of Public Employees 110 June 30, 2025 Subtotal 342 Non-unionized employees 145 Total employees 487 Employee Pensions All full-time City employees are eligible for one of three State-wide cost-sharing, multiple-employer retirement plans: Public Employees’ Retirement System (PERS), Firefighters’ Unified Retirement System (FURS), and Municipal Police Officers’ Retirement System (MPORS). All three plans are administered by the State’s Public Employee’s Retirement Division and offer retirement, disability, and death benefits to plan members. Contribution rates for the plans are determined by State law and the City has made the statutorily required contributions. In addition, City employees can also participate in a deferred compensation plan. A detailed description of these plans, along with the City’s required contributions to each plan, are represented in the City’s Annual Comprehensive Financial Reports. The City’s Annual Comprehensive Financial Report for fiscal year ended June 30, 2023 is included as Appendix E of this Official Statement. Other Postemployment Benefits The City has obligations to its employees for post-employment benefits other than pensions, accounted for pursuant to the Government Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75). The City’s OPEB liabilities and associated contributions are represented in the City’s Annual Comprehensive Financial Reports. The City’s Annual Comprehensive Financial Report for fiscal year ended June 30, 2023 is included as Appendix E of this Official Statement. Budgeting Process The City is required to adopt an annual budget under the State’s “Local Government Budget Act,” Title 7, Chapter 6, Part 40, Montana Code Annotated. Under the City Charter, the City Administrator is responsible for presenting the annual budget for the City Commission’s consideration and adoption. State law requires the budget to be adopted on the later of the first Thursday after the first Tuesday in September or within 30 calendar days of receiving certified taxable values from the State Department of Revenue, prior to fixing the annual tax levies by the City Commission. A-15 General Fund Budget Summary 2023 Budget 2023 Actual 2024 Budget Revenues: Taxes $24,370,654 $25,578,352 $39,877,800 Licenses and Permits 364,300 381,922 420,400 Intergovernmental Revenue 10,073,490 9,434,058 10,316,100 Charges for Services 6,146,228 6,307,168 7,384,000 Fines and Forfeitures 1,074,000 1,009,841 893,300 Interest 80,000 (49,257) 250,000 Miscellaneous 294,626 351,367 219,900 Total Revenues $42,403,298 $43,013,451 $59,361,500 Expenditures: General Government $14,393,635 $11,578,604 $16,107,400 Public Safety 19,974,420 20,849,308 23,101,400 Public Welfare 8,218,466 6,587,267 8,407,500 Other 2,203,427 1,683,415 3,102,800 Capital Outlay 1,936,533 3,107,362 4,125,700 Debt Service 43,692 200,205 61,400 Total Expenditures $46,770,173 $44,006,161 $54,906,200 Excess (Deficiency) of Revenues Over (Under) Expenditures $ (4,366,875) $ (992,710) $ 4,455,300 Other Financing Sources (Uses): Issuance of Lease $ 0 $ 637,867 $ 0 Sale of Assets 2,768,705 2,774,759 12,600 Transfers In 8,644,904 10,854,877 5,176,600 Transfers Out (3,538,682) (6,798,407) (859,000) Total Other Financing Sources (Uses) $ 7,874,927 $ 7,469,096 $ 4,330,200 Net Change in Fund Balance $ 3,508,052 $ 6,476,386 $ 8,785,500 Beginning Fund Balance – July 1 $ 5,444,605 $ 5,444,605 $11,027,500 Ending Fund Balance - June 30 $ 8,952,657 $11,920,991 $19,813,000 Fund Balance as a % of Expenditures 19% 27% 36% Sources: The City. Major General Fund Revenue Sources Revenue 2019 2020 2021 2022 2023 Taxes $16,660,409 $17,701,622 $15,775,452 $18,023,178 $25,578,352 Intergovernmental 7,912,214 9,718,389 11,864,827 8,816,807 9,434,058 Charges for Services 3,182,506 3,119,771 3,650,043 4,523,191 6,307,168 Fines and Forfeitures 1,099,673 1,083,059 1,084,870 993,493 1,009,841 Licenses and Permits 383,320 369,334 367,895 420,415 381,922 Miscellaneous 189,769 430,965 431,551 139,623 351,367 Sources: City’s Annual Comprehensive Financial Reports. APPENDIX B B-1 BOOK ENTRY The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. B-2 Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or its agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or its agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to City or its agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. APPENDIX C C-1 FORMS OF BOND COUNSEL OPINIONS [draft form of bond counsel opinion] [to be dated the date of issuance of the Series 2024A Bonds] City of Bozeman, Montana Bozeman, Montana Fidelity Capital Markets Boston, Massachusetts Re: $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana Ladies and Gentlemen: We have acted as Bond Counsel to City of Bozeman, Montana (the “City”) in connection with the authorization, sale and issuance by the City of its General Obligation Bonds, Series 2024A, dated, as originally issued, as of the date hereof (the “Series 2024A Bonds”). In that capacity, we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Series 2024A Bonds, including a resolution adopted by the City Commission of the City on April 23, 2024, and the form of the Series 2024A Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits, and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits, and certificates and on the basis of existing law, it is our opinion that: 1. The Series 2024A Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms. 2. The full faith and credit of the City are pledged to the payment of the principal of and interest on the Series 2024A Bonds, and ad valorem taxes are required by law to be levied annually during the term of the Series 2024A Bonds on all taxable property within the City, without limitation as to rate or amount, in amounts sufficient to pay the principal of and interest on the Series 2024A Bonds as due. 3. Interest on the Series 2024A Bonds: (a) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”); and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code. 4. Interest on the Series 2024A Bonds is excluded from Montana taxable income for State of Montana individual income tax purposes. C-2 The opinions expressed in paragraphs 1 and 2 above are subject, as to enforceability, to the effect of any applicable state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors’ rights and principles of equity, whether considered at law or in equity. The opinions expressed in paragraphs 3 and 4 above are subject to the condition of the City’s compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2024A Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes and from Montana taxable income for State of Montana individual income tax purposes. The City has covenanted to comply with these continuing requirements. Its failure to do so could result in the inclusion of interest on the Series 2024A Bonds in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance of the Series 2024A Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to the holders of the Series 2024A Bonds. We note, however, that interest on the Series 2024A Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is includable in the computation of income for purposes of the Montana alternative corporate income tax and the Montana corporate income tax. We do not express any opinion as to any laws other than the laws of the State of Montana and federal laws of the United States of America as in effect on the date hereof. We assume no obligation to revise, supplement, or update this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the laws of the State of Montana or of the United States of America that may occur after the date hereof, including, but not limited to, laws which may have retroactive effect. We have not been engaged, and have not undertaken, to review the accuracy, completeness or sufficiency of the Official Statement or any other offering materials relating to the Series 2024A Bonds and, accordingly, we express no opinion with respect thereto. Dated: ______________, 2024. Very truly yours, C-3 [draft form of bond counsel opinion] [to be dated the date of issuance of the Series 2024B Bonds] City of Bozeman, Montana Bozeman, Montana D.A. Davidson & Co. Great Falls, Montana Re: $3,930,000 Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana Ladies and Gentlemen: We have acted as Bond Counsel to City of Bozeman, Montana (the “City”) in connection with the authorization, sale and issuance by the City of its Limited Tax General Obligation Bonds, Series 2024B, dated, as originally issued, as of the date hereof (the “Series 2024B Bonds”). In that capacity, we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Series 2024B Bonds, including a resolution adopted by the City Commission of the City on April 23, 2024 (the “Resolution”), and the form of the Series 2024B Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits, and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits, and certificates and on the basis of existing law, it is our opinion that: 1. The Series 2024B Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms; however, the Series 2024B Bonds are not secured by the taxing power of the City. 2. The principal of and interest on the Series 2024B Bonds are payable from any funds of the City legally available for the payment thereof, including funds in the City’s general fund. The City has covenanted in the Resolution to appropriate each fiscal year during the term of the Series 2024B Bonds an amount sufficient for the payment of the principal of and interest on the Series 2024B Bonds due in such fiscal year. The City has not granted a lien on any revenues in its general fund or otherwise provided for the segregation of such revenues as security for the payment of the Series 2024B Bonds. Any ad valorem taxes the City may in its discretion levy that are applied to the payment of principal of and interest on the Series 2024B Bonds are subject to applicable limits now or hereafter imposed by law on the amount of taxes that may be levied by the City. 3. Interest on the Series 2024B Bonds: (a) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”); and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code. 4. Interest on the Series 2024B Bonds is excluded from Montana taxable income for State of Montana individual income tax purposes. C-4 The opinions expressed in paragraphs 1 and 2 above are subject, as to enforceability, to the effect of any applicable state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors’ rights and principles of equity, whether considered at law or in equity. The opinions expressed in paragraphs 3 and 4 above are subject to the condition of the City’s compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2024B Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes and from Montana taxable income for State of Montana individual income tax purposes. The City has covenanted to comply with these continuing requirements. Its failure to do so could result in the inclusion of interest on the Series 2024B Bonds in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance of the Series 2024B Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to the holders of the Series 2024B Bonds. We note, however, that interest on the Series 2024B Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is includable in the computation of income for purposes of the Montana alternative corporate income tax and the Montana corporate income tax. We do not express any opinion as to any laws other than the laws of the State of Montana and federal laws of the United States of America as in effect on the date hereof. We assume no obligation to revise, supplement, or update this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the laws of the State of Montana or of the United States of America that may occur after the date hereof, including, but not limited to, laws which may have retroactive effect. We have not been engaged, and have not undertaken, to review the accuracy, completeness or sufficiency of the Official Statement or any other offering materials relating to the Series 2024B Bonds and, accordingly, we express no opinion with respect thereto. Dated: _____________, 2024. Very truly yours, APPENDIX D D-1 FORMS OF CONTINUING DISCLOSURE UNDERTAKINGS $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana CONTINUING DISCLOSURE UNDERTAKING This CONTINUING DISCLOSURE UNDERTAKING is made by the City of Bozeman, Montana (the “City’) in connection with the issuance and delivery by the City of its $2,280,000 General Obligation Bonds, Series 2024A (the “Bonds”), as of this 16th day of May, 2024. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system website (“EMMA”), as hereinafter described. The City is the only “obligated person” in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with this Continuing Disclosure Undertaking, any person aggrieved thereby, including the Owners of any outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of this Continuing Disclosure Undertaking, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Continuing Disclosure Undertaking constitute a default under the Bonds or under any other provision of the Resolution. As used herein, “Owner” means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, “Beneficial Owner” means, in respect of a Bond, any person or entity that (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. D-2 (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2024, the following financial information and operating data in respect of the City (the “Disclosure Information”): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Montana, containing a balance sheet as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, 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 or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof; and (B) to the extent not included in the financial statements referred to in paragraph (A) above, information for such fiscal year of the type set forth below: (1) principal amount of general obligation debt outstanding; (2) assessed valuation of the City; (3) taxable valuation of the City; and (4) tax collection figures in a format similar to the table under the heading “Property Tax Levies and Collections” on page A-8 of Appendix A to the Official Statement. Notwithstanding anything herein, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within ten days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated, if it is updated as required hereby, by reference from other documents, including official statements, which have been submitted to the MSRB in the manner set forth in subsection (c) hereof. The City shall clearly identify the Disclosure Information in each document so incorporated by reference. D-3 If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be material (as hereinafter defined), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this Continuing Disclosure Undertaking is amended, then the City shall include in the next Disclosure Information to be delivered pursuant to this Continuing Disclosure Undertaking, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (G) modifications to rights of holders of the Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; (J) release, substitution or sale of property securing repayment of the Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the City; D-4 (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (O) incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (P) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties. An event is “material” if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed in this Bond Resolution or information generally available to the public. Notwithstanding the foregoing sentence, an event is also “material” if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For purposes of paragraphs (O) and (P) above, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of either (i) or (ii). A “financial obligation” does not include municipal securities for which a final official statement has been provided to the MSRB consistent with the Rule. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information described above under paragraph (b)(1) above at the time specified thereunder; (B) the amendment or supplementing of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the City; and (C) any change in the fiscal year of the City. D-5 (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) hereof to the MSRB via EMMA or in a manner as may be otherwise proscribed by the MSRB consistent with the Rule. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (d) Term; Amendments; Interpretation. (1) This Continuing Disclosure Undertaking shall remain in effect so long as any Bonds are outstanding. (2) This Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (b)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Commission filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that the Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information), as so amended or supplemented, will comply with the provisions of paragraph (b)(5) of the Rule, assuming that such provisions apply to the Bonds. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) this Continuing Disclosure Undertaking is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so the undertaking would satisfy the requirements of paragraph (b)(5) of the Rule. Dated: May 16, 2024 CITY OF BOZEMAN, MONTANA By ____________________________________ Mayor By ____________________________________ City Manager D-6 $3,930,000 Limited Tax General Obligation Bonds, Series 2024B City of Bozeman, Montana CONTINUING DISCLOSURE UNDERTAKING This CONTINUING DISCLOSURE UNDERTAKING is made by the City of Bozeman, Montana (the “City’) in connection with the issuance and delivery by the City of its $3,930,000 Limited Tax General Obligation Bonds, Series 2024B (the “Bonds”), as of this 16th day of May, 2024. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system website (“EMMA”), as hereinafter described. The City is the only “obligated person” in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with this Continuing Disclosure Undertaking, any person aggrieved thereby, including the Owners of any outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of this Continuing Disclosure Undertaking, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Continuing Disclosure Undertaking constitute a default under the Bonds or under any other provision of the Resolution. As used herein, “Owner” means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, “Beneficial Owner” means, in respect of a Bond, any person or entity that (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. D-7 (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2024, the following financial information and operating data in respect of the City (the “Disclosure Information”): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Montana, containing a balance sheet as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, 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 or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof; and (B) to the extent not included in the financial statements referred to in paragraph (A) above, information for such fiscal year of the type set forth below: (1) principal amount of limited tax general obligation debt outstanding; (2) assessed valuation of the City; (3) taxable valuation of the City; (4) mill levy information in a format similar to the table under the heading “City Levy Authority” on page A-8 of Appendix A to the Official Statement; and (5) tax collection figures in a format similar to the table under the heading “Property Tax Levies and Collections” on page A-8 of Appendix A to the Official Statement. Notwithstanding anything herein, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within ten days after the receipt thereof, the City shall provide the audited financial statements. D-8 Any or all of the Disclosure Information may be incorporated, if it is updated as required hereby, by reference from other documents, including official statements, which have been submitted to the MSRB in the manner set forth in subsection (c) hereof. The City shall clearly identify the Disclosure Information in each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be material (as hereinafter defined), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this Continuing Disclosure Undertaking is amended, then the City shall include in the next Disclosure Information to be delivered pursuant to this Continuing Disclosure Undertaking, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (G) modifications to rights of holders of the Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; D-9 (J) release, substitution or sale of property securing repayment of the Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the City; (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (O) incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (P) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties. An event is “material” if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed in this Bond Resolution or information generally available to the public. Notwithstanding the foregoing sentence, an event is also “material” if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For purposes of paragraphs (O) and (P) above, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of either (i) or (ii). A “financial obligation” does not include municipal securities for which a final official statement has been provided to the MSRB consistent with the Rule. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information described above under paragraph (b)(1) above at the time specified thereunder; D-10 (B) the amendment or supplementing of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the City; and (C) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) hereof to the MSRB via EMMA or in a manner as may be otherwise proscribed by the MSRB consistent with the Rule. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (d) Term; Amendments; Interpretation. (1) This Continuing Disclosure Undertaking shall remain in effect so long as any Bonds are outstanding. (2) This Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (b)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Commission filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that the Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information), as so amended or supplemented, will comply with the provisions of paragraph (b)(5) of the Rule, assuming that such provisions apply to the Bonds. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) this Continuing Disclosure Undertaking is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so the undertaking would satisfy the requirements of paragraph (b)(5) of the Rule. Dated: May 16, 2024 CITY OF BOZEMAN, MONTANA By ____________________________________ Mayor By ____________________________________ City Manager APPENDIX E E-1 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT The following pages include the City’s Annual Comprehensive Financial Report (“ACFR”) for fiscal year ended June 30, 2023. Annual Comprehensive Financial Report Year Ended June 30, 2023 City of Bozeman, Montana Prepared by the Finance Department City of Bozeman, Montana Table of Contents June 30, 2023 Introductory Section Letter of Transmittal ..........................................................................................................................................I Listing of City Officials .................................................................................................................................... VII Organizational Chart ..................................................................................................................................... VIII Certificate of Achievement for Excellence in Financial Reporting ..................................................................... IX Financial Section Independent Auditor’s Report .......................................................................................................................... 1 Management’s Discussion and Analysis ............................................................................................................ 5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position ....................................................................................................................... 18 Statement of Activities ............................................................................................................................ 20 Fund Financial Statements Balance Sheet - Governmental Funds ...................................................................................................... 21 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position .................... 23 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ................... 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................................................................. 25 Proprietary Funds Statement of Net Position ....................................................................................................................... 26 Statement of Revenues, Expenses and Changes in Net Position ............................................................... 29 Statement of Cash Flows ......................................................................................................................... 31 Fiduciary Funds Statement of Fiduciary Net Position ........................................................................................................ 33 Statement of Changes in Fiduciary Net Position....................................................................................... 34 Notes to Financial Statements ........................................................................................................................ 35 Required Supplementary Information Schedule of Changes in Total OPEB Liability and Related Ratios .................................................................... 102 Notes to Schedule of Changes in Total OPEB Liability and Related Ratios ...................................................... 103 Schedules of Employer’s Share of Net Pension Liability and Schedules of Employer’s Contributions Montana Public Employees Retirement System Pension Plan .................................................................... 104 Montana Firefighters’ Unified Retirement System Pension Plan ................................................................ 105 Montana Municipal Police Officers’ Retirement System Pension Plan ....................................................... 106 Notes to the Schedules of Employer’s Share of Net Pension Liability and Schedules of Employer’s Contributions ............................................................................................................................................ 107 Schedules of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis General Fund ............................................................................................................................................ 112 Major Special Revenue Funds ................................................................................................................... 113 Notes to the Schedules of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis ........................................................................................................................................ 114 City of Bozeman, Montana Table of Contents June 30, 2023 Other Supplementary Information Combining and Individual Fund Statements and Schedules Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Major Debt Service Fund and Major Capital Projects Fund ................................................................................................... 115 Nonmajor Governmental Funds Description of Nonmajor Funds ............................................................................................................. 116 Combining Balance Sheet ...................................................................................................................... 119 Combining Statements of Revenues, Expenditures, and Changes in Fund Balances ............................... 126 Combining Statements of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual133 Nonmajor Enterprise Funds Description of Nonmajor Funds ............................................................................................................. 143 Combining Balance Sheet ...................................................................................................................... 144 Combining Statement of Revenues, Expenses and Changes in Net Position ........................................... 146 Combining Statement of Cash Flows ..................................................................................................... 147 Internal Service Funds Description of Internal Service Funds .................................................................................................... 149 Combining Balance Sheet ...................................................................................................................... 150 Combining Statement of Revenues, Expenses and Changes in Net Position ........................................... 152 Combining Statement of Cash Flows ..................................................................................................... 153 Custodial Funds Description of Funds ............................................................................................................................. 155 Combining Statement of Fiduciary Net Position ..................................................................................... 156 Combining Statement of Changes in Fiduciary Net Position ................................................................... 157 Statistical Section Introduction to Statistical Section ................................................................................................................. 158 Financial Trends Components of Net Position ..................................................................................................................... 160 Changes in Net Position ............................................................................................................................ 161 Fund Balances of Governmental Funds ..................................................................................................... 164 Changes in Fund Balances of Governmental Funds .................................................................................... 165 Revenue Capacity Assessed Value of Taxable Property .......................................................................................................... 166 City Taxable Market and Taxable Values ................................................................................................... 167 Tax Increment District Taxable Valuation Detail ........................................................................................ 168 Downtown Bozeman Improvement District & Comparison to City Taxable Value ...................................... 171 Property Tax Levies for Tax Increment/Urban Renewal Districts ................................................................ 172 Direct and Overlapping Property Tax Rates ............................................................................................... 173 Principal Property Taxpayers ..................................................................................................................... 174 Principal Property Taxpayers in Downtown Bozeman Improvement District .............................................. 175 Properties in the Bozeman Midtown Urban Renewal District .................................................................... 176 Principal Property Taxpayers in Downtown Bozeman Midtown Urban Renewal District ............................ 177 City of Bozeman, Montana Table of Contents June 30, 2023 Property Tax Levies and Collections .......................................................................................................... 178 Water Sold by Type of Customer ............................................................................................................... 179 Water and Sewer Rates ............................................................................................................................. 180 Debt Capacity Ratios of Outstanding Debt by Type .......................................................................................................... 181 Ratios of General Bonded Debt Outstanding ............................................................................................. 182 Computation of Direct and Overlapping Debt............................................................................................ 183 Legal Debt Margin Information ................................................................................................................. 184 Pledged Revenue Coverage – Governmental Activities .............................................................................. 185 Pledged Revenue Coverage – Business-Type Activities .............................................................................. 186 Debt Service Requirements and Coverage for Tax Increment Districts ....................................................... 187 Summary of Outstanding SIDs ................................................................................................................... 188 Revolving Fund Balance and Bond Secured Thereby .................................................................................. 189 Special Improvement District Assessment Billing and Collections .............................................................. 190 Demographic and Economic Information Demographic and Economic Statistics ....................................................................................................... 191 Principal Employers................................................................................................................................... 192 Operating Information Full-Time Equivalent City Government Employees by Function/Program ................................................... 193 Operating Indicators by Function/Program ............................................................................................... 194 Capital Assets Statistics by Function/Program ........................................................................................... 195 Single Audit Section Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................................................................................................................................. 196 Independent Auditor’s Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ..................................................................................................................................... 198 Schedule of Expenditures of Federal Awards................................................................................................. 201 Notes to Schedule of Expenditures of Federal Awards .................................................................................. 202 Schedule of Findings and Questioned Costs .................................................................................................. 203 Introductory Section Year Ended June 30, 2023 City of Bozeman, Montana I December 21, 2023 To the Honorable Mayor, City Commission, and the Citizens of the City of Bozeman, Montana: The Annual Comprehensive Financial Report of the CITY OF BOZEMAN, MONTANA for the fiscal year ended JUNE 30, 2023 is hereby submitted. The financial statement and supporting schedules have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and meet the requirements of the standards as prescribed by the Secretary of State Audits Division. We believe the enclosed data, as presented, is accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Eide Bailly LLP, Certified Public Accountants, have issued an unmodified or “clean” opinion on the City’s financial statements for the fiscal year ended June 30, 2023. The independent auditors report is located at the front of the Financial Section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. In addition to the financial audit, the City undertakes a single audit in conformance with the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Audits. The results of this single audit, including a schedule of expenditures of federal awards, and the independent auditor’s reports on the City’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards, are available in the City’s issued single audit report. II CITY OF BOZEMAN PROFILE The City of Bozeman sits in the center of Gallatin County, flanked by the Bridger Mountains and Custer Gallatin National Forest, just south of the Missouri River Headwaters. This diverse Rocky Mountain landscape creates easy access to year-round outdoor activities for Bozeman residents including hiking, mountain biking, climbing, camping, fishing, and downhill and cross-country skiing. The City encompasses an area of approximately 20 square miles with its next-closest municipality being the City of Belgrade, approximately seven miles from the City’s outermost boundary. Bozeman is the county seat of Gallatin County and is the home to Montana State University (MSU) – Bozeman, and the Fighting Bobcats. Bozeman is located 143 miles west of Billings and 200 miles east of Missoula. The City was incorporated in April of 1883 with a city council form of government, and later in January 1922 transitioned to its current city manager/city commission form of government. The population of Bozeman in the 2020 census is 53,293 – which is a total increase of 43% from April 2010 – which continues Bozeman’s standing as the fourth largest city in the state. The latest population estimate issued by the United States Census Bureau as of July 1, 2022 is 56,123. The government provides a full range of services. These services include police and fire protection; sanitation services; water, wastewater & storm water utilities; the construction and maintenance of streets and infrastructure; recreational activities; cultural events; planning and zoning; and general administrative services. The City, as a primary government, is supported or works closely with certain entities to provide these services to the citizens of the City of Bozeman. ECONOMIC OUTLOOK Bozeman has gained recognition as one of the most desirable places to live in the country, offering a wealth of recreational activities, including fishing, hiking, skiing, hunting, and an array of impressive outdoor experiences. Positioned as one of Montana's most populous cities, Downtown Bozeman serves as the vibrant urban hub of the area, featuring a lively nightlife scene, street festivals, farmers markets, and cultural establishments that cater to both residents and visitors. As the home to MSU Bozeman, this town with a collegiate atmosphere serves as a gateway for newcomers to discover the diverse offerings of Montana, serving as a pivotal economic force for both incoming residents and businesses in the region. In 2023, Bozeman was announced as the #1 Strongest Economy for fastest-growing micropolitan cities by POLICOM for the sixth consecutive year. Economic strength is defined as “the long-term tendency for an area to consistently grow in both size and quality.” Bozeman has a 2022 population estimated to be 56,123 residents. Between 2015-2019 the growth rate was 3.8% according to a Bozeman Economic Assessment conducted by Bridge Economic Development published in March 2023. Bozeman’s economy is most heavily concentrated in tourism and retail jobs that typically have lower wages than trade sector jobs. However, both Bozeman and Gallatin County are experiencing strong growth in knowledge- based industries (professional and technical services) and in manufacturing. Increased enrollment at MSU - Bozeman for in-demand tech and engineering degrees, along with substantial growth in company presence, is contributing significantly to population growth. III The City's median home values fall within the midrange when compared to peers. Over the last decade, median household income in Bozeman has surged, experiencing an uptick of nearly $15,000. In fiscal year 2023, the City received 200 new single-family home applications and 112 multi-family residential building applications, up from 116 and 62 respectively in 2022. Despite this growth, the construction of new homes in the region has not matched the increasing demand. This continued growth increases the need for City services and infrastructure. BUDGET DEVELOPMENT PROCESS The City of Bozeman budget serves several purposes. For the citizens of the City of Bozeman, it presents a picture of the city government operations and intentions for the year. For the City Commission, it serves as a policy tool and as an expression of goals and objectives. For City Management, it is used as an operating guide and a control mechanism. The City Manager’s Recommended Budget is created and submitted to the City Commission annually. Public work sessions are then held by the Commissioners at which time the City Manager, Finance Director, and department staff explain the budget recommendations and underlying justification for the requests. During (or following) the work sessions, the Commissioners may adjust the proposed budget. Following any adjustments to the City Manager's budget recommendation, a tentative appropriation ordinance is prepared, and a public hearing is held. The Commission may make additional adjustments following the public hearing, after which time, the Commission passes the appropriation ordinance in final form. The legal level of budgetary control is established at the service area level. FINANCIAL POLICIES The overall goal of the City's financial policies is to establish and maintain effective management of the city's financial resources. Formal policy statements and major objectives provide the foundation for achieving this goal. The City avoids budgetary practices that balance current expenditures at the expense of meeting future years' expenses and seeks to maintain a diversified and stable revenue base that is estimated in a realistic and conservative manner. For one-time revenues, highest priority is given to the funding of capital assets or other non-recurring expenditures. On-going expenditures are limited to levels which can be supported by current revenues. Construction projects and capital purchases of $25,000 or more are included in the Capital Improvement Plan (CIP), with all capital purchases of $5,000 or more reported as capital outlays in the financial statements. Minor capital outlays of less than $5,000 are included in the regular operating budget. Long-term debt is limited to capital improvements which cannot be financed from current revenues and repays borrowed funds within a period that does not exceed the expected useful life of the project. The City does not use long-term debt for financing current operations and adheres to a policy of full public disclosure with regard to the issuance of debt. IV The City updates its long-term financial projections on an on-going basis and identifies both current and long-term funding needs and challenges to ensure financial stability of the City into the future. The City maintains and updates long-term financial plans on at least an annual basis for the following funds and programs: General Fund (including Police and Fire), Water, Water Reclamation, Stormwater, Solid Waste, Parks & Trails District, Forestry District, and all Streets departments. A minimum level of General Fund reserve equal to 2 months of annual revenues, or 16.67%, is maintained in compliance with Bozeman Municipal Code. This reserve is committed to be used for: cash flow purposes, accrued employee payroll benefits which are not shown as a liability, unanticipated equipment acquisition and replacement, and to enable the city to meet unexpected expenditure demands or revenue shortfalls. The City manages and accounts for its financial activity in accordance with Generally Accepted Accounting Principles (GAAP), as set forth by the Governmental Accounting Standards Board (GASB). The Ccity maintains its accounting records for general governmental operations on a modified accrual basis, with revenues recorded when available and measurable, and expenditures recorded when services or goods are received and liabilities incurred. Accounting records for proprietary fund types and similar trust funds are maintained on an accrual basis, with all revenues recorded when earned and expenses recorded at the time liabilities are incurred, without regard to receipt or payment of cash. MAJOR INITIATIVES Strategic Plan With the adoption of the Strategic plan, the fiscal year 2023 budget incorporated efforts to implement each of the vision statements. The Commission set thirteen priorities along with strides towards the strategic plan. The highlights of the impact on the 2023 financials and 2024 budget include: An Engaged Community. The City continues to strive to foster a culture of civic engagement through the implementation and application of the City’s adopted communication plan. Emphasis has been and continues to be placed on successful collaboration through City-County Regional Planning. An Innovative Economy. The City Commission adopted the Economic Vitality Strategy in June 2023. In coordination with that plan, the City continues to support retention and growth of both traded and local business sectors. Additionally, many capital infrastructure investments helped leverage funds to encourage both residential and commercial economic development. A Safe, Welcoming Community. The City continues to work towards welcoming diversity through policies and public awareness by way of investment in the development of the City’s first Equity and Inclusion Plan, slated for presentation to City Commission in FY24. The Bozeman Public Safety Center opened in FY23, consolidating municipal court, police, and fire administration in one location. A Well‐Planned City. The City Commission adopted the Parks, Recreation and Active Transportation (PRAT) Plan on September 12, 2023. The plan provides and will inform actions towards facilitating and promoting recreational opportunities. In FY23, 8 mills were allocated to Community Housing in order to continue the implementation of its action plan to address the needs of community housing in Bozeman. The FY24 Budget includes appropriations for the acquisition of Light Detection and Ranging (LiDAR) data for land management, planning, and engineering projects which will aid in our efforts toward GIS Land Use & Infrastructure Development Tracking. V A Creative, Learning Culture. The Percent for Art program has been incorporated into our Capital Improvement Plan and some projects are already underway. This program provides a guaranteed funding mechanism for the acquisition of artwork for new public facilities and civic spaces. Extensive improvements were made to the Bozeman Public Library in FY23 to create innovative spaces in order to provide new services, programming, and places for social gatherings. A Sustainable Environment. The FY24 Budget looks at Climate Action Plan Implementation and continues to increase the Sustainability Division’s budget from $870K in FY23 to approximately $1.1M in FY24. A High‐Performance Organization. We have completed the Advisory Board Consolidation. Throughout the organization, departments are working on collaborating and functioning as a high-performing and innovative team. Staff continues to look at rates and fees to ensure we are using equitable and sustainable sources of funding for appropriate City services with an emphasis on delivering them in a lean and efficient manner. Additionally, the FY24 budget includes funding for a Facility Condition Inventory and Facility Needs Assessment to inform future facility needs. OTHER INFORMATION Independent Audit The State of Montana requires a biannual audit of the books of accounts, financial records, and transactions of all administrative departments of the City by independent certified accountants selected by the City Commission. It is the belief of the City Commission and Executive staff that an annual audit assures a higher level of financial management and fiscal responsibility. This policy, along with the legal requirements, has been complied with and the auditors' opinion of Eide Bailly LLP, has been included in this report. Awards The Government Finance Officers' Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bozeman for its annual comprehensive financial report for the fiscal year ended June 30, 2022. The Certificate of Achievement is a prestigious national award that is an important recognition of conformance with the highest standards for preparation of state and local government financial reports. This was the 39th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized annual comprehensive financial report that conforms to program standards and satisfies generally accepted accounting principles and applicable legal requirements. The City believes our current annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirement and we are submitting it to the GFOA to determine its eligibility for another certificate. The City has also received the Distinguished Budget Presentation Award from the GFOA for 31 years. The award represents the City’s commitment to meeting the highest principles of governmental budgeting. The budget is rated in four major categories: as a policy document, an operations guide, a financial plan, and a communications device. Budget documents must be rated “proficient” in all four categories to receive the award. VI Acknowledgements The preparation of the Annual Comprehensive Financial Report on a timely basis was made possible by the dedicated service of the entire staff of the Finance Department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report, with special thanks to Aaron Funk for his dedication and expertise in financial reporting. We would also like to express appreciation to the City Commission for their interest and support in planning and overseeing the operations of the City in a responsible and professional manner. Jeff Mihelich City Manager Melissa Hodnett Director of Finance VII City of Bozeman, Montana Listing of City Officials June 30, 2023 Name Position Elected Officials Legislative Cynthia Andrus MayorTerence Cunningham Deputy MayorChristopher Coburn Commissioner Jennifer Madgic CommissionerI-Ho Pomeroy Commissioner JudicialKarl Seel Muncipal JudgeJ. Colleen Herrington Muncipal Judge Officers Executive Jeff Mihelich City Manager Chuck Winn Assistant City ManagerKira Peters Assitant City ManagerMichael Maas City Clerk Department of Law Gregory Sullivan City Attorney Department of Finance Melissa Hodnett, MBA Finance DirectorAaron Funk, CPA Controller Laurae Clark Treasurer Department of Economic Development Britt Fontenot Director of Economic Development Department of Information Technology Scott McMahan Information Technology Director Department of Human Resources Cassandra Tozer Human Resources Director Department of Public Safety James Veltkamp Chief of PoliceJosh Waldo Fire Chief Department of Public ServiceNicholas Ross Director of Public Service John Alston City EngineerJon Henderson Director of Strategic Services Department of Public WelfareMitch Overton Director of Parks and RecreationSusan Gregory Director of Bozeman Public Library Department of Planning and Community Development Anna Bentley Director of Planning and Community Development VIII City of Bozeman, Montana Organizational Chart June 30, 2023 IX Financial Section Year Ended June 30, 2023 City of Bozeman, Montana 1 Independent Auditor’s Report To the Honorable Mayor and City Council City of Bozeman Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Bozeman (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, based on our audit and the report of the other auditor, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Bozeman, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the Bozeman Public Library Foundation, which represent 100% of the net position and revenues of the discretely presented component unit as of June 30, 2023. Those statements were audited by other auditors whose report(s) has been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component unit, is based solely on the report(s) of the other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. What inspires you, inspires us. | eidebailly.com 401 N. 31st St., Ste. 1120 | P.O. Box 7112 | Billings, MT 59103-7112 | TF 800.824.9797 | T 406.896.2400 | F 406.252.8600 | EOE 2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City‘s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: •Exercise professional judgment and maintain professional skepticism throughout the audit. •Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. •Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City‘s internal control. Accordingly, no such opinion is expressed. •Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. •Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. 3 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of changes in total OPEB liability and related ratios, schedules of employer’s share of net pension liability, schedules of employer’s contributions, and schedules of revenue, expenditures, and changes in fund balance – budget to actual – budgetary basis for the general fund and major special revenue funds be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining fund financial statements, the individual budgetary comparison schedules, and schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining fund financial statements, the individual budgetary comparison schedules, and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory section and statistical section, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 4 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Billings, Montana December 21, 2023 5 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Management of the City of Bozeman (the City) offers readers of the basic financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2023. Readers are encouraged to consider the information presented here in conjunction with additional information that is furnished in the letter of transmittal. The focus of the information herein is on the primary government. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended as an introduction to the City’s basic financial statements. The basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. In addition to the basic financial statements, also provided are required and other supplementary information. Government-Wide Financial Statements The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities reports how the City’s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation and sick leave). The governmental activities reflect the City’s basic services, including police, fire, public works, parks, and general administration. Property taxes, charges for services, state shared revenues, court fines, and recreation fees finance most of these activities. The business-type activities reflect private sector-type operations, such as water, wastewater, storm water, solid waste, and parking, where fees for services typically cover all or most of the cost of operations, including depreciation. The government-wide financial statements include not only the City itself (referred to as the primary government), but also other legally separate entities for which the City is financially accountable. Financial information for most of these component units are reported separately from the financial information presented for the primary government itself. A few component units, although legally separate, function essentially as an agency of the City and, therefore, are included as an integral part of the City. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into categories: governmental funds, proprietary funds, and fiduciary funds that use different accounting approaches. 6 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Governmental funds are used for the City’s basic services and are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. Because this information does not encompass the long-term focus of the government-wide statements, additional information is provided that reconciles the governmental fund financial statements to the government-wide statements explaining the relationship (or differences) between them. The City maintains individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund and major special revenue funds. Data from the other governmental funds are combined into a single aggregated presentation. Individual fund data for these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for the General Fund. A budgetary comparison schedule has been provided to demonstrate compliance with these budgets for the General Fund in accordance with U.S. GAAP. The City maintains two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for water, wastewater, stormwater, solid waste and parking services. When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City’s enterprise funds (a component of the proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. We use internal service funds to report activities that provide supplies and services for the City’s other programs and activities, such as the Vehicle Maintenance Fund and Health Insurance Fund. Internal service fund activity is reported as governmental activity in the government- wide statements since this activity, the financing of goods and services for other funds of the government, is more governmental than business-type in nature. The City uses fiduciary funds to account for assets held on behalf of outside parties, including other governments. When these assets are held under the terms of a formal trust agreement, a private-purpose trust fund is used. The City is the trustee, or fiduciary, for other funds, including the Municipal Court Fund, the Montana Arts Council Fund (Montana Ballet, Bozeman Symphony Orchestra, and Big Sky Association for the Arts), and the CMC Bozeman Asbestos Site Remediation Fund. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The guidelines for the administration of these funds are contained in applicable financial agreements and/or City ordinances. These documents contain the rules governing the receipt, expenditure, and management of the City’s fiduciary funds. As the statements reflect, the financial activity during the year for these funds is nominal. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. 7 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Government-wide Financial Analysis Net Position Net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred inflows by $636.2 million at the close of the most recent fiscal year. Net position increased by $48.6 million this year as compared to a $43.3 million increase last year. Net position of the City includes $78.6 million (12.4%) of restricted net position. These are resources subject to external restrictions as to how they may be used by the City. The majority of the net position, 84.0%, is invested in capital assets (land, buildings, infrastructure, etc.) less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to community members; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. The following table presents condensed financial information on the City’s net position for the fiscal years ending June 30, 2023 and 2022. Governmental Activities Business-Type Activities Total 2023 2022 2023 2022 2023 2022 AssetsCurrent and other assets 108,097,028$ 103,200,397$ 61,772,593$ 57,951,745$ 169,869,621$ 161,152,142$ Capital assets 298,922,399 275,835,087 338,222,054 329,667,072 637,144,453 605,502,159 Total assets 407,019,427 379,035,484 399,994,647 387,618,817 807,014,074 766,654,301 Deferred Outflows of Resources 8,250,714 7,792,013 1,302,625 1,245,353 9,553,339 9,037,366 LiabilitiesOther liabilities 19,669,995 26,155,271 2,827,483 2,527,916 22,497,478 28,683,187 Long-term liabilities 101,721,336 95,447,522 52,757,557 53,831,562 154,478,893 149,279,084 Total liabilities 121,391,331 121,602,793 55,585,040 56,359,478 176,976,371 177,962,271 Deferred Inflows of Resources 2,500,575 8,369,794 933,712 1,794,124 3,434,287 10,163,918 Net positionNet investment in capital assets 236,885,005 217,241,690 297,691,119 286,461,913 534,576,124 503,703,603 Restricted 46,965,688 55,321,501 31,659,041 29,337,941 78,624,729 84,659,442 Unrestricted 7,527,542 (15,708,281) 15,428,360 14,910,714 22,955,902 (797,567) Total net position 291,378,235$ 256,854,910$ 344,778,520$ 330,710,568$ 636,156,755$ 587,565,478$ 8 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 The following table presents condensed financial information on the City’s changes in net position for the fiscal years ending June 30, 2023 and 2022. Governmental Activities Business-Type Activities Total 2023 2022 2023 2022 2023 2022 Revenues Program revenuesCharges for services 36,321,320$ 35,800,641$ 35,954,215$ 36,283,040$ 72,275,535$ 72,083,681$ Operating grants and contributions 12,843,761 7,707,580 1,435,529 1,511,436 14,279,290 9,219,016 Capital grants and contributions 14,514,120 12,153,695 11,084,423 13,064,462 25,598,543 25,218,157 General revenuesTaxes 39,860,197 29,432,001 - - 39,860,197 29,432,001 Unrestricted intergovernmental 5,370,015 5,099,529 - - 5,370,015 5,099,529 Unrestricted investment earnings (losses)1,118,619 (1,685,354) 833,995 (1,291,575) 1,952,614 (2,976,929) Miscellaneous 1,225,899 520,517 226,026 219,769 1,451,925 740,286 Gain (loss) on disposal of capital assets 2,726,201 (15,735) (13,856) 1,031 2,712,345 (14,704) Total revenues 113,980,132 89,012,874 49,520,332 49,788,163 163,500,464 138,801,037 ExpensesGeneral government 17,726,413 12,352,494 - - 17,726,413 12,352,494 Public safety 28,002,592 22,442,450 - - 28,002,592 22,442,450 Public service 14,646,742 12,176,141 - - 14,646,742 12,176,141 Public welfare 15,343,285 16,211,729 - - 15,343,285 16,211,729 Interest and fiscal charges 2,070,117 2,051,119 - - 2,070,117 2,051,119 Water - 13,882,728 11,604,238 13,882,728 11,604,238 Waste water - - 11,979,470 10,849,991 11,979,470 10,849,991 Solid waste - - 7,980,984 5,220,011 7,980,984 5,220,011 Parking - - 1,565,405 1,360,611 1,565,405 1,360,611 Stormwater - - 1,711,451 1,243,760 1,711,451 1,243,760 Total expenses 77,789,149 65,233,933 37,120,038 30,278,611 114,909,187 95,512,544 Excess before transfers 36,190,983 23,778,941 12,400,294 19,509,552 48,591,277 43,288,493 Transfers (1,667,658) (1,396,976) 1,667,658 1,396,976 - - Change in net position 34,523,325 22,381,965 14,067,952 20,906,528 48,591,277 43,288,493 Beginning net position 256,854,910 234,472,945 330,710,568 309,804,040 587,565,478 544,276,985 Ending net position 291,378,235$ 256,854,910$ 344,778,520$ 330,710,568$ 636,156,755$ 587,565,478$ Governmental Activities The net position of the City’s governmental activities increased by $34.5 million or 13.4% from $256.9 million last year to $291.4 million this year due to revenues exceeding expenses. Governmental activities revenues for the year increased $25.0 million or 28.0%, from $89.0 million in fiscal year 2022 (FY22) to $114.0 million in fiscal year 2023 (FY23), while total expenses increased by $12.6 million or 19.2%, from $65.2 million in FY22 to $77.8 million in FY23. 9 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Property tax revenues increased by $10.4 million or 35.4% from $29.4 million to $39.9 million. Mill values for the City of Bozeman increased by 54.7% based on the latest assessments from the Department of Revenue. In addition, the number of total property tax mills levied increased to 204.5 from 154.12 in the prior year. Charges for services, which primarily includes street assessments, fire and street impact fees, and the park and trails assessments, increased by $0.5 million or 1.5% from $35.8 million in FY22 to $36.3 million in FY23. Street impact fees decreased by $3.2 million or 38.2% from $8.4 million in FY22 to $5.2 million in FY23 primarily due to a decline in new, large developments. This decrease was offset mainly by increases in General Fund charges for services, Parks & Trails, the Building Inspection Fund, and the Street Maintenance Assessment District Fund. General Fund charges for services increased by $1.7 million due to an increase in services paid for by other City departments, including expenditures for the City Manager’s Office, Legal, Human Resources, Information Technology, and Finance. Parks & Trails District assessments increased by approximately 16.7% from $5.0 million in FY22 to $5.8 million in FY23, due to a 15% increase in special assessments to pay for deferred maintenance and due to growth in the district. The Building Inspection Fund increased by $0.7 million or 30% from $2.4 million to $3.1 million primarily due to growth in total applications submitted for plan review. The Street Maintenance District assessment revenue increased by approximately $0.5 million due to a 6% increase in special assessments and growth in the district. Restricted operating grants and contributions increased by $5.1 million or 66.6% from $7.7 million in FY22 to $12.8 million in FY23 primarily due to the recognition of American Rescue Plan Act grants revenues toward revenue recovery for operations in the General Fund and Planning Fund. 10 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Program expenses increased by $12.6 million or 19.2%, from $65.2 million in FY22 to $77.8 million in FY23. A combination of increased costs of contracted services and increases in personnel costs resulted in this increase. Contracted and agreed upon citywide salary increases were implemented in fiscal year 2023 to address increased inflation in the community. These salary increases also supported the City in reducing the large amount of vacancy savings that was baked into prior fiscal year actuals and resulted in an increase in expenses. General government expenses increased by $5.4 million or 43.5% from $12.4 million to $17.7 million. $2.2 million of the increase is attributed to the salary and benefits increases as described above. $1.8 million of the increase includes city-wide payments for insurance, and general fund grants to non-profits which were reclassified from miscellaneous expenses in fiscal year 2023. Remaining increases are attributed to the personnel services increases described above. Public safety expenses increased by $5.6 million or 24.8% from $22.4 million in FY22 to $28.0 million in FY23. Public service expenses increased by $2.5 million or 20.3% from $12.2 million in FY22 to $14.6 million in FY23. Both increases are attributed to the contracted services and personnel services increases described above. Public welfare expenses decreased by $0.9 million or 5.4% from $16.2 million in FY22 to $15.3 million in FY23 due to significant urban renewal contributions that were expensed in fiscal year 2022 and a decline in grant expenses for Community Housing. Interest and fiscal charges saw a trivial increase of approximately $19,000 or 0.9% from $2.05 million in FY22 to $2.07 million in FY23. The following graph illustrates how program revenues offset program expenses for the governmental activities. 11 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Business-Type Activities The net position of the City’s business-type activities increased by $14.1 million, or 4.3%, from $330.7 million last year to $344.8 million this year. Overall, the revenues provided by charges for services continued to exceed total expenses, the details of which are discussed further below. Business-type net position cannot be used to make up for deficits reported by governmental activities in the event any such deficits were reported. The City generally can only use the net position of business-type activities to finance the continuing operations of the water, wastewater, solid waste, storm water, and parking funds. Business-type activities total revenues decreased by $0.3 million or 0.5% from $49.8 million in FY22 to $49.5 million in FY23, while expenses increased by $6.8 million or 22.6%, from $30.3 million in FY22 to $37.1 million in FY23. Capital grants and contributions decreased by $2.0 million or 15.2% from $13.1 million in FY22 to $11.1 million in FY23. Restricted capital grants & contributions consist primarily of privately constructed water, wastewater, and storm water infrastructure that was contributed to the city by developers. Infrastructure contributions will vary year to year depending on the amount of development as well as what stage in the process the development is in. In the current year the city saw a decrease compared to prior year. Charges for services revenue decreased by 0.9% or $0.3 million in total. Impact fees and cash in lieu of building infrastructure, which are contributions to the City by developers, declined by approximately $1.6 million. This decrease was offset by an increase in user rates and fees of $1.4 million made up of water, wastewater, solid waste, stormwater, and parking revenues. These decreases were offset by an increase of $2.1 million in unrestricted investment earnings. 12 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Operating Expenses – Water expenses increased by $2.3 million or 19.6%, wastewater expenses increased by $1.1 million or 10.4%, solid waste expenses increased by $2.8 million or 52.9% parking expenses increased by $0.2 million or 15.1%, and stormwater expenses increased by $0.5 million or 37.6%. Consistent with governmental activities, a combination of increased costs of contracted services and increases in personnel costs resulted in this increase. Contracted and agreed upon citywide salary increases were implemented in fiscal year 2023 to address increased inflation in the community. These salary increases also supported the City in reducing the large amount of vacancy savings that was baked into prior fiscal year actuals and resulted in an increase in expenses. The significant increase in solid waste expenses was primarily due to an additional $1.4 million of estimated expenses for post-closure costs of the landfill to meet regulatory requirements. The following graph illustrates how program revenues offset program expenses for the business-type activities. Financial Analysis of the Government’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financial related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on current year revenues, expenditures, and balances of spendable resources. Such information is useful in assessing the City’s near-term financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. 13 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 As of June 30, 2023, the City’s governmental funds reported combined ending fund balances of $80.9 million, an increase of $11.8 million or 17.1% in comparison to the prior year. The General Fund is the main operating fund of the City. The City’s total general fund balance increased by $6.5 million or 75.3%, from $8.6 million in FY22 to $15.1 million in FY23. This increase is primarily due to transfers in from other funds. American Rescue Plan Act Funding was transferred in the amount of $3.2 million for revenue recovery purposes. In addition, $2.0 million was moved to the General Fund from the Special Improvement District (SID) expense fund. It was determined that this balance originally came from the General Fund, and the City has the ability to loan directly from the General Fund to support an SID. Total General Fund expenditures increased by approximately $8.6 million, from $35.4 million in FY22 to $44.0 million in FY23. Approximately $2.5 million of the increase is in capital outlay, which included work on the Swim Center, Westside Recreation Center, and Library. Capital outlay also includes approximately $0.6 million in subscription-based IT services that were capitalized to implement GASB Statement 96. In addition, contracted and agreed upon salary increases across the City were implemented in fiscal year 2023 to address increased inflation in the community. These salary increases also supported the City in reducing the large amount of vacancy savings that was baked into prior fiscal year actuals. Significant variances (variances over 10%) between the original budgets compared to the final budgets were as follows: • A budget amendment increased intergovernmental revenues by $1.1 million to include the state’s contribution to employee pensions for employees other than public safety in both revenues and expenditures. • Charges for services were increased to increase expected revenues received from other departments to support central services. The original budget amount was based on prior year actuals, and the amendment trued up central services expenditures and therefore revenues to cover the FY24 budget. • Transfers in was amended by $2.1 million to close out funds that accounted for Special Improvement Districts (SIDs) that were completed. $2.0 million was added to the budget to transfer from the SID Revolving Fund, which can only contain 10% of outstanding bonds/warrants. • The original budget accounted for non-cash state pension expenditures in other, however the actual expenditures hit the appropriate service area. The budget was amended to move $2.9 million from other to public safety. Other minor increases to public safety include an increase for body worn cameras which were originally budgeted in capital outlay, and a carry forward of capital projects originally budgeted in fiscal year 2022. • The capital outlay budget was amended to carry forward capital projects originally budgeted in fiscal year 2023. 14 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Significant expenditures variances (variances over 10%) between the final budget compared to actual results were as follows: • Both general government and public welfare actuals came in 20% under budget due to significant vacancy savings. While vacancy rates have improved, there were a number of new positions in the FY23 budget to support these service areas that are still in the queue for posting. • The budget for other expenditures included a contingency amount of 1% of the total General Fund budget. This amount was not spent in the fiscal year resulting in a budget variance of 24%. • Capital outlay expenditures exceed budget due primarily to expenditures for the Swim Center that were budgeted in the Capital Projects Fund. In addition, $571k of the variance is related to recognizing subscription-based technology assets which are not included in the budget. • Actuals exceeded budget in debt principal and interest due to subscription-based technology arrangement non-cash adjustments that are not considered a disbursement, expenditure, or obligation per the Montana Local Government Budget Act. The Street Maintenance District Fund accounts for city-wide special assessments to pay for street maintenance expenditures. Fund balance decreased by $0.1 million or 6.0%, from $2.0 million in FY22 to $1.8 million in FY23. The fund balance should continue to decline in this fund. Special assessments can only be used to pay for street maintenance, and any remaining fund balance will be used to pay for delayed capital projects and to mitigate future assessment increases. Revenues increased from $7.8 million in FY22 to $8.7 million in FY23 due to a 6% increase in the billed assessment to support the approved budget and capital improvement plan, and an increase in miscellaneous refunds & reimbursement revenues. Major budget amendments in the Street Maintenance District include a carry forward from the prior year of planned capital outlay of $1.7 million. Budget to actual variances are due to some items which are in the Capital Improvement Plan and are budgeted in capital outlay but are actually expended in operations in the public works service area. In addition, some projects in capital outlay will be delayed until fiscal year 2024 and will be carried forward. The American Rescue Plan Act (ARPA) Fund accounts for the ARPA federal grant program. The City received the final installment of the ARPA funding in fiscal year 2022. Per the grantor expenditure guidelines, the funding was used primarily for revenue recovery in various General Fund and Planning Fund departments and utility related infrastructure projects. Fund balance at the end of the 2023 fiscal year is $54,789. The SID Debt Service Fund accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. SIDs or Special Improvement Districts are authorized under Montana Code Annotated (MCA) in order to undertake certain local improvements to benefit specific property owners located within City limits, and to assess the cost of those improvements to benefitted property owners. Fund balance decreased by $2.9 million or 65.5% from $4.4 million in FY22 to $1.5 million in FY23. The decrease was primarily due to a transfer of excess funds originally loaned from the General Fund to finance special improvement districts. The Construction Capital Projects Fund accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. Fund balance increased by $1.1 million or 12.2%, from $9.3 million to $10.5 million. The increase is primarily due to transfers in from the General Fund to support expenditures to build the Bozeman Public Safety Center (BPSC) and for the Swim Center over and above the amount funded by the general obligation bonds. 15 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Capital Asset and Debt Administration Capital Assets At the end of FY23 the City had $637.1 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, and water and sewer lines. This amount represents a net increase (including additions and deductions) of roughly $31.6 million or 5.2%, from $605.5 million in FY22 to $637.1 million in FY23. Major additions and capital projects during the year include: $3.5 million for the construction of the library expansion project; $2.6 million for the construction of the Sourdough Transmission Main Phase 2; $1.0 million for swim center repairs and improvements, $1.3 million for construction of Fire Station 2, and $1.9 million for the reconstruction of Bridger/Story Road. The following table presents a summary of capital assets, net of accumulated depreciation/amortization as of June 30, 2023 and 2022. Amounts are shown in thousands. Governmental Activities Business-Type Activities Total20232022202320222023 2022 Capital assets (net of accumulateddepreciation/amortization whereapplicable)Land 38,073$ 37,398$ 2,219$ 2,219$ 40,291$ 39,617$ Artwork 15 - - - 15 - Right of way/Intangibles - - 2,762 2,762 2,762 2,762 Construction in progress 19,467 46,800 6,576 24,053 26,042 70,853 Buildings 55,371 15,181 84,178 84,182 139,550 99,363 Improvements other than buildings - - 163 421 163 421 Machinery and equipment 9,028 7,273 3,206 3,335 12,234 10,608 Infrastructure 173,970 167,407 238,650 212,133 412,620 379,541 Vehicles 1,676 1,378 468 563 2,145 1,941 Right-of-use lease assets 306 397 - - 306 397 Subscription-based IT assets 1,016 - - - 1,016 - Total capital assets 298,922$ 275,835$ 338,222$ 329,667$ 637,144$ 605,502$ Additional information on the City of Bozeman’s capital assets can be found in Note 6 of this report. 16 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Long Term Liabilities At fiscal year-end, the City had $154.5 million of bonds, notes, leases, and SBITAs payable outstanding compared to $149.3 million last year – an increase of $5.2 million or 3.5%. Of this amount, $45.8 million comprises general obligation debt backed by the full faith and credit of the city. Additional information on the City’s long-term debt for can be found in Note 7 in the notes to the basic financial statements. The following table presents a summary of long term debts as of June 30, 2023 and 2022. Amounts are shown in thousands. Governmental Activities Business-Type Activities Total20232022202320222023 2022 General obligation bonds 45,765$ 47,990$ -$ -$ 45,765$ 47,990$ Tax increment financing bonds 9,803 10,289 - - 9,803 10,289 Special assessment bonds 3,372 3,764 - - 3,372 3,764 Water revenue bonds - - 15,949 17,267 15,949 17,267 Wastewater revenue bonds - - 25,939 27,932 25,939 27,932 Storm water revenue bonds - - 1,196 1,280 1,196 1,280 Notes payable 2,046 2,323 - - 2,046 2,323 Unamortized premiums 4,230 4,485 - - 4,230 4,485 Financed purchases payable 873 210 - - 873 210 Leases payable 344 420 - - 344 420 Subscription-based IT agreements 853 - - - 853 - Landfill closure/postclosure - - 2,359 1,175 2,359 1,175 Pollution remediation - - 537 783 537 783 Compensated absences 3,939 3,226 680 555 4,619 3,781 Total OPEB liability 3,688 4,197 763 871 4,451 5,068 Net pension liability 26,808 18,544 5,335 3,969 32,143 22,513 Total long-term liabilities 101,721$ 95,448$ 52,758$ 53,832$ 154,479$ 149,280$ The City’s general obligation bonds have been assigned ratings of “Aa3” (TOP, Series 2013 and Series 2014), and “Aa1” (BPSC, Series 2019 and FS2, Series 2022) by Moody’s Investor Services (Moody’s). The City’s tax increment financing bonds have been assigned ratings of “BBB” (Downtown, Series 2020), and “AA” (Midtown, Series 2020) by Standard & Poor’s Rating Services (S&P). Pursuant to State law and except for special provisions concerning general obligation indebtedness incurred for purposes of providing sewer and water service, aggregate outstanding and unpaid general obligation indebtedness for cities cannot exceed 2.5% of the total assessed value of taxable property as ascertained by the last assessment for State and county taxes. The 2022/23 total assessed valuation for the City was $11,021,338,679. The total amount of debt the City may incur according to State law is $275,533,467. As of June 30, 2023, the City had general obligation debt outstanding in the amount of $45,765,000. The City has $209,974,023 of general obligation debt capacity remaining. 17 City of Bozeman, Montana Management’s Discussion and Analysis June 30, 2023 Economic Factors and Next Year’s Budgets and Rates Bozeman has a 2022 population estimated to be 56,123 residents by the US Census Bureau which is almost 50% of the total population of Gallatin County. Between 2015-2019 the growth rate was 3.8% according to a Bozeman Economic Assessment conducted by Bridge Economic Development published in March 2023. As noted in the Transmittal Letter, Bozeman continues to be one of the fastest growing cities in the country, with a population increase of 2.9% per year over 11 years. This level of growth continues to put a huge demand on City services and City resources. Budgets in recent years have tried to reduce the impact of increasing cost of services and growth on homeowners in Bozeman. However, those policies resulted in significant deferred maintenance and a lack of funding to address it. As a result, the 2024 adopted budget includes significant revenue increases including 12% rate increases for water and sewer, 8% rate increases for stormwater, street maintenance district, and street arterial & collector district, 7% for parks & trails district, and 4% for tree maintenance/forestry. Property taxes are estimated to increase approximately 14% due primarily to an increase in the mill value as new assessed properties come on the tax roll. In addition, debt has been issued for the voter approved Fire Station 2 General Obligation Bonds and mills to pay the debt service have been added to the mill levy. The economic outlook and budget projections for next year are conservative. Increases in personnel costs will range from 5.0-6.5% based on bargaining unit contracts. The cost of infrastructure, contracted services, and right of way has increased significantly over the past few years resulting in significant inflation to the Capital plan. The City developed its next budget with the goal of toward maintaining current services in spite of significant growth pressures, supporting City Commission priorities, and supporting the City’s basic infrastructure. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions concerning the information provided in this report or requests for additional financial information should be addressed to: Finance Department P.O. Box 1230 Bozeman, MT 59771 This report is available online at https://www.bozeman.net/departments/finance The Notes to Financial Statements are an integral part of this statement 18 City of Bozeman, Montana Statement of Net Position June 30, 2023 Discretely Presented Primary Government Component UnitGovernmentalBusiness-Type Bozeman Public Activities Activities Total Library Foundation AssetsCash and cash equivalents 69,395,002$ 26,671,788$ 96,066,790$ 278,855$ Receivables (net of allowance for uncollectibles):Interest 237,319 154,203 391,522 17,000 Taxes 3,641,340 - 3,641,340 - Accounts 1,811,890 2,697,544 4,509,434 44,250 Special assessments 3,929,858 2,303 3,932,161 - Intergovernmental 840,421 196,137 1,036,558 - Leases - 333,289 333,289 - Notes receivable 815,477 - 815,477 - Prepaid items 563,120 - 563,120 86,271 Other assets 8,657 - 8,657 271,139 Restricted assetsCash and cash equivalents 26,853,944 31,717,329 58,571,273 - Investments - - - 5,571,466 Capital assets, net of accumulated depreciation/amortization, where applicableLand 38,072,640 2,218,553 40,291,193 - Artwork 15,000 - 15,000 10,046 Intangible - water rights - 2,762,142 2,762,142 - Construction in progress 19,466,651 6,575,780 26,042,431 - Buildings 55,371,446 84,178,187 139,549,633 - Improvements other than buildings - 162,646 162,646 - Machinery and equipment 9,028,316 3,205,949 12,234,265 - Infrastructure 173,969,574 238,650,448 412,620,022 - Vehicles 1,676,339 468,349 2,144,688 - Right-of-use lease assets 306,101 - 306,101 - Subscription-based IT assets 1,016,332 - 1,016,332 - Total assets 407,019,427 399,994,647 807,014,074 6,279,027 Deferred Outflows of ResourcesOther postemployment benefits 832,263 190,293 1,022,556 - Pension plans 7,418,451 1,112,332 8,530,783 - Total deferred outflows of resources 8,250,714 1,302,625 9,553,339 - The Notes to Financial Statements are an integral part of this statement 19 City of Bozeman, Montana Statement of Net Position June 30, 2023 Governmental Business-Type Bozeman PublicActivitiesActivitiesTotalLibrary Foundation LiabilitiesAccounts payable 14,481,072 2,467,624 16,948,696 10,168 Escheat property payable 169,120 - 169,120 - Retainage and other payables 555,447 163,379 718,826 - Accrued payroll 1,650 811 2,461 8,832 Accrued interest payable 22,531 - 22,531 - Unearned revenue 4,440,175 195,669 4,635,844 - DebtDue within one year, other than OPEBand pensions 6,746,376 4,099,354 10,845,730 - Due in more than one year, other than OPEBand pensions 64,478,403 42,560,770 107,039,173 - Total OPEB liability 3,688,009 762,549 4,450,558 - Net pension liability 26,808,548 5,334,884 32,143,432 - Total liabilities 121,391,331 55,585,040 176,976,371 19,000 Deferred Inflows of ResourcesOther postemployment benefits 1,063,147 216,794 1,279,941 - Pension plans 1,437,428 390,563 1,827,991 - Lease related - 326,355 326,355 - Total deferred outflows of resources 2,500,575 933,712 3,434,287 - Net PositionNet investment in capital assets 236,885,005 297,691,119 534,576,124 - Restricted forGeneral government 3,325,140 - 3,325,140 - Public safety 20,521,522 - 20,521,522 - Public service 5,097,597 - 5,097,597 - Public welfareExpendable 15,250,286 - 15,250,286 5,147,558 Nonexpendable 2,073,934 - 2,073,934 1,112,469 Debt service 697,209 3,263,510 3,960,719 - Capital improvements - 28,395,531 28,395,531 - Unrestricted 7,527,542 15,428,360 22,955,902 - Total net position 291,378,235$ 344,778,520$ 636,156,755$ 6,260,027$ Primary Government The Notes to Financial Statements are an integral part of this statement 20 City of Bozeman, Montana Statement of Activities Year Ended June 30, 2023 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Component UnitCharges for Grants and Grants and Governmental Business-Type Bozeman PublicFunctions/Programs Expenses Services Contributions Contributions Activities Activities Total Library Foundation Primary government Governmental activitiesGeneral government 17,726,413$ 7,128,575$ 10,184,404$ -$ (413,434)$ -$ (413,434)$ -$ Public safety 28,002,592 4,942,022 683,787 48,852 (22,327,931) - (22,327,931) - Public service 14,646,742 22,563,519 947,712 10,527,814 19,392,303 - 19,392,303 - Public welfare 15,343,285 1,687,204 1,027,858 3,937,454 (8,690,769) - (8,690,769) - Interest 2,070,117 - - - (2,070,117) - (2,070,117) - Total governmental activities 77,789,149 36,321,320 12,843,761 14,514,120 (14,109,948) - (14,109,948) - Business-type activities Water 13,882,728 14,886,895 1,343,403 4,965,344 - 7,312,914 7,312,914 - Waste water 11,979,470 12,343,552 44,223 4,625,847 - 5,034,152 5,034,152 - Solid waste 7,980,984 5,872,630 28,998 - - (2,079,356) (2,079,356) - Parking 1,565,405 968,042 7,029 - - (590,334) (590,334) - Stormwater 1,711,451 1,883,096 11,876 1,493,232 - 1,676,753 1,676,753 - Total business-type activities 37,120,038 35,954,215 1,435,529 11,084,423 - 11,354,129 11,354,129 - Total primary government 114,909,187$ 72,275,535$ 14,279,290$ 25,598,543$ (14,109,948) 11,354,129 (2,755,819) - Component Unit Bozeman Public Library FoundationGeneral government 2,446,482$ -$ 1,434,591$ -$ - - - (1,011,891) General revenuesProperty taxes 39,860,197 - 39,860,197 - Unrestricted intergovernmental 5,370,015 - 5,370,015 - Unrestricted investment earnings (losses)1,118,619 833,995 1,952,614 (557,166) Miscellaneous 1,225,899 226,026 1,451,925 26,393 Gain on disposal of assets 2,726,201 (13,856) 2,712,345 - Transfers (1,667,658) 1,667,658 - - Total general revenue and transfers 48,633,273 2,713,823 51,347,096 (530,773) Change in net position 34,523,325 14,067,952 48,591,277 (1,542,664) Net position - beginning 256,854,910 330,710,568 587,565,478 7,802,691 Net position - ending 291,378,235$ 344,778,520$ 636,156,755$ 6,260,027$ Primary Government Governmental Fund Financial Statements Major Governmental Funds General Fund – This fund accounts for the financial operations of the City, which are not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal expenditures in the General Fund are made for police and fire protection, public welfare, and general government. Street Maintenance District Special Revenue Fund – This special revenue fund accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. American Rescue Plan Act (ARPA) Special Revenue Fund – This fund accounts for the ARPA federal grant program. Grant funds must be used for the stated purpose of the grant and must meet grantor expenditure guidelines. Special Improvement District (SID) Debt Service – Accounts for the accumulation of resources and payment of special assessment bond principal and interest for general improvement, sidewalk, and curb construction projects. Construction Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments and general obligation debt other than those financed by proprietary funds. The Notes to Financial Statements are an integral part of this statement 21 City of Bozeman, Montana Balance Sheet - Governmental Funds June 30, 2023 Street Other Total Maintenance American SID Capital Governmental Governmental General District Rescue Plan Debt Service Projects Funds Funds Assets Cash 14,749,410$ 2,547,256$ 4,332,804$ 2,228,752$ 10,069,434$ 32,324,824$ 66,252,480$ Receivables (net of allowance for uncollectibles)Property taxes 2,431,051 - - - - 1,210,289 3,641,340 Accrued interest 38,856 6,570 11,386 5,088 25,259 140,578 227,737 Accounts 1,584,346 5,068 - - - 204,897 1,794,311 Special assessments - 131,914 - 3,677,271 - 120,673 3,929,858 Intergovernmental 45,633 400,050 - - - 394,738 840,421 Due from other funds 1,444,199 - - - - - 1,444,199 Advances to other funds - - - - - 641,763 641,763 Prepaid items 37,167 - - - - - 37,167 Notes receivable - - - - - 815,477 815,477 Restricted cash and investments 1,938,143 - - - 1,439,763 23,476,038 26,853,944 Total assets 22,268,805$ 3,090,858$ 4,344,190$ 5,911,111$ 11,534,456$ 59,329,277$ 106,478,697$ The Notes to Financial Statements are an integral part of this statement 22 City of Bozeman, Montana Balance Sheet - Governmental Funds June 30, 2023 Street Other Total Maintenance American SID Capital Governmental Governmental General District Rescue Plan Debt Service Projects Funds Funds Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities Accounts payable 5,563,506$ 1,104,195$ -$ 84,340$ 790,819$ 6,492,594$ 14,035,454$ Escheat property payable 143,414 678 - - - 25,028 169,120 Accrued payroll - - - - - 1,650 1,650 Interest payable 9,206 - - - - 11,173 20,379 Retainage payable 37,601 63,029 - - 275,914 178,903 555,447 Advances from other funds - - - 641,763 - - 641,763 Due to other funds - - - - - 543,293 543,293 Unearned revenue 43,500 77,224 4,289,401 - - 30,050 4,440,175 Total liabilities 5,797,227 1,245,126 4,289,401 726,103 1,066,733 7,282,691 20,407,281 Deferred Inflows of Resources Unavailable revenue - property taxes 156,197 - - - - 102,938 259,135 Unavailable revenue - special assessments - - - 3,666,668 - - 3,666,668 Unavailable revenue - court fines 1,237,376 - - - - - 1,237,376 Total deferred inflows of resources 1,393,573 - - 3,666,668 - 102,938 5,163,179 Fund Balance Nonspendable 37,167 - - - - 1,804,399 1,841,566 Restricted - 1,845,732 54,789 1,518,340 10,467,723 46,910,898 60,797,482 Committed 6,087,489 - - - - 603,360 6,690,849 Assigned - - - - - 2,927,964 2,927,964 Unassigned 8,953,349 - - - - (302,973) 8,650,376 Total fund balance 15,078,005 1,845,732 54,789 1,518,340 10,467,723 51,943,648 80,908,237 Total liabilities, deferred inflowsof resources, and fund balances 22,268,805$ 3,090,858$ 4,344,190$ 5,911,111$ 11,534,456$ 59,329,277$ 106,478,697$ The Notes to Financial Statements are an integral part of this statement 23 City of Bozeman, Montana Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2023 Total Fund Balances - Governmental Funds 80,908,237$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.298,922,399 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position.2,411,960 Other assets are not available to pay for current-period expenditures and, therefore, are either not recognized as a receivable or are unearned in the funds.5,163,179 Impact fee credits do not affect current financial resources and, therefore, are not reported in the governmental funds.(56,343) Deferred outflows and inflows of resources related to pensions and other postemployment benefits are applicable to future periods and, therefore, are not reported in the funds.5,750,139 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.(101,721,336) Net Position of Governmental Activities 291,378,235$ The Notes to Financial Statements are an integral part of this statement 24 City of Bozeman, Montana Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2023 Street Other TotalMaintenanceAmericanSIDCapital Governmental GovernmentalGeneralDistrictRescue Plan Debt Service Projects Funds Funds RevenuesTaxes 25,578,352$ -$ -$ -$ -$ 14,078,675$ 39,657,027$ Special assessments - 17,716 - 569,231 - 706,403 1,293,350 Licenses and permits 381,922 37,033 - - - 3,123,233 3,542,188 Intergovernmental 9,434,058 35,762 6,751,994 - - 1,868,173 18,089,987 Charges for services 6,307,168 8,220,620 - - - 15,608,720 30,136,508 Fines and forfeitures 1,009,841 - - - - 59,429 1,069,270 Interest on investments 171,669 41,037 196,050 57,674 243,848 1,036,820 1,747,098 Change in fair market value of investments (220,926) (19,675) 56,661 11,625 (106,668) (375,922) (654,905) Interest on loans receivable - - - - - 30,346 30,346 Miscellaneous 351,367 433,264 - - - 1,246,521 2,031,152 Total revenues 43,013,451 8,765,757 7,004,705 638,530 137,180 37,382,398 96,942,021 ExpendituresCurrentGeneral government 11,578,604 - - - - 3,422,533 15,001,137 Public safety 20,849,308 - - - 680,334 4,004,809 25,534,451 Public works - 7,080,982 - - 1,943 1,371,736 8,454,661 Public welfare 6,587,267 - - - 5,213 6,703,745 13,296,225 Other 1,683,415 - - - - 152,877 1,836,292 Capital outlay 3,107,362 2,155,485 - - 4,059,642 8,595,970 17,918,459 Debt servicePrincipal 186,259 307,904 - 391,928 - 3,041,427 3,927,518 Interest and fiscal charges 13,946 14,613 - 128,795 - 2,146,781 2,304,135 Total expenditures 44,006,161 9,558,984 - 520,723 4,747,132 29,439,878 88,272,878 Excess (Deficiency) of Revenuesover (under) Expenditures (992,710) (793,227) 7,004,705 117,807 (4,609,952) 7,942,520 8,669,143 Other Financing Sources (Uses)Transfers in 10,854,877 - - - 6,520,862 6,112,215 23,487,954 Transfers out (6,798,407) (206,363) (6,751,994) (3,002,709) (771,342) (7,624,797) (25,155,612) Issuance of long-term debt 637,867 862,620 - - - 511,185 2,011,672 Sale of capital assets 2,774,759 18,712 - - - 6,600 2,800,071 Total other financing sources (uses)7,469,096 674,969 (6,751,994) (3,002,709) 5,749,520 (994,797) 3,144,085 Net Change in Fund Balance 6,476,386 (118,258) 252,711 (2,884,902) 1,139,568 6,947,723 11,813,228 Fund Balance (Deficit), Beginning of Year 8,601,619 1,963,990 (197,922) 4,403,242 9,328,155 44,995,925 69,095,009 Fund Balance, End of Year 15,078,005$ 1,845,732$ 54,789$ 1,518,340$ 10,467,723$ 51,943,648$ 80,908,237$ The Notes to Financial Statements are an integral part of this statement 25 City of Bozeman, Montana Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2023 Net Change in Fund Balances - Total Governmental Funds 11,813,228$ Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities the cost of capital assets is allocated over their estimated useful lives as depreciation/amortization expense. When capital assets are dipsosed, the net effect is to reduce net position.23,145,747 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.(370,455) Internal service funds are used by management to charge the costs of certain activities toindividual funds. The net revenue (expense) of the internal service funds is reported in the governmental activities.(371,368) In the statement of activities compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for theseitems are measured by the amount of financial resources used.(596,725) In the statement of activities OPEB is measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used.(292,785) In the statement of activities the cost of pension benefits earned net of employee contributions is reported as pension expense. In the governmental funds, however, the contributions are reported as expense.(975,045) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums whendebt is first issued, whereas these amounts are deferred and amortized in thestatement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.2,170,728 Change in Net Position of Governmental Activities 34,523,325$ Proprietary Fund Financial Statements Proprietary funds are used to account for activities that receive significant support from fees and charges. The City has two types of proprietary funds: enterprise funds and internal service funds. Major Enterprise Funds Water Fund – This fund accounts for the City's water utility operations and to collect and administer water impact fees. Waste Water Fund – This fund accounts for the City's sewer utility operations and to collect and administer waste water impact fees. Solid Waste Fund – This fund accounts for the City’s garbage collection service and recycling operations. Internal Service Funds Internal Service Funds are used to account for goods and services provided by one department to other departments of the City on a cost-reimbursement basis. The City’s internal service funds are aggregated and presented in one column in the proprietary fund financial statements. The Notes to Financial Statements are an integral part of this statement 26 City of Bozeman, Montana Statement of Net Position Proprietary Funds June 30, 2023 Governmental Business-type Activities ActivitiesInternal Water Wastewater Solid Waste Nonmajor Funds Total Service Funds Assets Current Assets Cash and cash equivalents 18,274,858$ 4,937,213$ 305,666$ 3,154,051$ 26,671,788$ 3,142,522$ Receivables (net of allowance for uncollectibles):Interest 105,925 36,851 1,017 10,410 154,203 9,582 Accounts 935,658 983,691 592,963 185,232 2,697,544 17,579 Special assessments 1,802 142 293 66 2,303 - Intergovernmental 468 195,669 - - 196,137 - Leases 333,289 - - - 333,289 - Prepaid items - - - - - 525,953 Other current assets - - - - - 8,657 Total current assets 19,652,000 6,153,566 899,939 3,349,759 30,055,264 3,704,293 Noncurrent AssetsRestricted assetsInvestments 21,717,124 9,045,284 240,391 714,530 31,717,329 - Capital assets - Land 573,847 1,112,597 228,673 303,436 2,218,553 - Construction in progress 5,219,886 596,564 153,151 606,179 6,575,780 - Intangible water rights 2,762,142 - - - 2,762,142 - Buildings 40,717,384 63,113,469 769,975 11,962,292 116,563,120 1,546,120 Improvements other than buildings 13,646,910 14,745,401 2,155,300 - 30,547,611 - Machinery and equipment 2,069,741 3,765,557 7,031,970 1,244,358 14,111,626 746,036 Vehicles 665,045 723,533 548,499 384,670 2,321,747 213,395 Infrastructure 220,180,667 167,467,565 118,081 8,478,146 396,244,459 29,314 Right-of-use lease assets - - - - - 423,122 Less accumulated depreciation/amortization (122,668,171) (94,516,457) (8,595,222) (7,343,134) (233,122,984) (1,418,723) Total capital assets, net of accumulateddepreciation/amortization 163,167,451 157,008,229 2,410,427 15,635,947 338,222,054 1,539,264 Total noncurrent assets 184,884,575 166,053,513 2,650,818 16,350,477 369,939,383 1,539,264 Total assets 204,536,575 172,207,079 3,550,757 19,700,236 399,994,647 5,243,557 The Notes to Financial Statements are an integral part of this statement 27 City of Bozeman, Montana Statement of Net Position Proprietary Funds June 30, 2023 Governmental Business-type Activities Activities Internal Water Wastewater Solid Waste Nonmajor Funds Total Service Funds Deferred Outflows of ResourcesOther postemployment benefits 59,211 54,160 49,782 27,140 190,293 64,469 Pension plans 394,274 313,758 244,745 159,555 1,112,332 495,994 Total deferred outflows of resources 453,485 367,918 294,527 186,695 1,302,625 560,463 Liabilities Current Liabilities Accounts payable 581,017 861,389 891,642 132,037 2,466,085 389,275 Retainage payable 123,883 34,201 5,295 - 163,379 - Due to other funds - - - - - 900,906 Accrued payroll 2,132 - 218 - 2,350 - Accrued interest payable - - - - - 2,152 Current portion of long-term debt 1,592,614 2,207,799 140,034 158,907 4,099,354 - Unearned revenue - 195,669 - - 195,669 - Total current liabilities 2,299,646 3,299,058 1,037,189 290,944 6,926,837 1,292,333 Noncurrent LiabilitiesLandfill closure costs - - 2,359,259 - 2,359,259 - Solvent site remediation liabliity - 536,669 - - 536,669 - Long-term debt, net of current portion Bonds payable 14,593,000 23,888,000 - 1,109,000 39,590,000 - Leases payable - - - - - 381,167 Compensated absences 4,367 32,009 34,297 4,169 74,842 377,754 Total OPEB liability 223,958 245,638 198,508 94,445 762,549 262,234 Net pension liability 1,890,988 1,504,821 1,173,828 765,247 5,334,884 2,410,999 Total noncurrent liabilities 16,712,313 26,207,137 3,765,892 1,972,861 48,658,203 3,432,154 Total liabilities 19,011,959 29,506,195 4,803,081 2,263,805 55,585,040 4,724,487 The Notes to Financial Statements are an integral part of this statement 28 City of Bozeman, Montana Statement of Net Position Proprietary Funds June 30, 2023 GovernmentalBusiness-type Activities ActivitiesInternal Water Wastewater Solid Waste Nonmajor Funds Total Service Funds Deferred Inflows of Resources Other postemployment benefits 68,507 67,918 53,869 26,500 216,794 82,100 Pension plans 138,438 110,167 85,935 56,023 390,563 78,013 Lease related 326,355 - - - 326,355 - Total deferred inflows resources 533,300 178,085 139,804 82,523 933,712 160,113 Net Position Net investment in capital assets 147,756,553 133,243,140 2,265,098 14,426,328 297,691,119 1,158,097 Restricted for: Drought reserve 780,747 - - - 780,747 - Impact capital projects 19,451,114 6,680,373 - - 26,131,487 - Infrastructure capital projects 586,664 - - - 586,664 - Parking capital projects - - 240,391 656,242 896,633 - Debt service 898,599 2,364,911 - - 3,263,510 - Unrestricted 15,971,124 602,293 (3,603,090) 2,458,033 15,428,360 (238,677) Total net position 185,444,801$ 142,890,717$ (1,097,601)$ 17,540,603$ 344,778,520$ 919,420$ The Notes to Financial Statements are an integral part of this statement 29 City of Bozeman, Montana Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended June 30, 2023 GovernmentalBusiness-type Activities ActivitiesInternalWater Wastewater Solid Waste Nonmajor Funds Total Service Funds Operating RevenuesCharges for services 12,314,794$ 10,787,474$ 5,872,630$ 2,851,138$ 31,826,036$ 13,756,060$ Operating ExpensesSalaries and benefits 3,257,504 2,520,272 1,932,368 1,371,002 9,081,146 4,967,049 Materials and supplies 1,262,658 511,150 529,600 50,433 2,353,841 1,211,511 Repairs and maintenance 162,772 240,171 578,840 104,295 1,086,078 36,610 Utilities 311,948 864,303 879,873 48,614 2,104,738 40,838 Administrative charges 3,595,486 2,432,739 1,033,892 571,075 7,633,192 838,823 Other services 1,560,407 1,053,316 1,092,815 493,647 4,200,185 6,945,342 Depreciation/amortization 3,253,430 3,624,466 529,985 606,315 8,014,196 235,383 Change in estimated closure and post-closurecare costs - - 1,403,611 - 1,403,611 - Total operating expenses 13,404,205 11,246,417 7,980,984 3,245,381 35,876,987 14,275,556 Operating Loss (1,089,411) (458,943) (2,108,354) (394,243) (4,050,951) (519,496) The Notes to Financial Statements are an integral part of this statement 30 City of Bozeman, Montana Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Year Ended June 30, 2023 Governmental Business-type Activities ActivitiesInternalWater Wastewater Solid Waste Nonmajor Funds Total Service FundsNonoperating Revenues (Expenses)Gain (loss) on disposal of assets 157 - - (14,013) (13,856) 739 Interest income 847,904 305,935 8,498 84,920 1,247,257 64,885 Net (decrease) increase in fair market value of (303,157) (98,121) 2,054 (14,038) (413,262) (38,460) investmentsInterest expense and bond fees (478,523) (733,053) - (31,475) (1,243,051) (20,864) Intergovernmental revenues 1,343,403 44,223 28,998 18,905 1,435,529 70,789 Impact fees 2,572,101 1,556,078 - - 4,128,179 - Lease income 47,470 - - - 47,470 - Miscellaneous revenue 124,255 9,267 33,379 11,655 178,556 71,039 Total nonoperating revenues (expenses)4,153,610 1,084,329 72,929 55,954 5,366,822 148,128 Income (Loss) before Contributions and Transfers 3,064,199 625,386 (2,035,425) (338,289) 1,315,871 (371,368) - Transfers in 1,351,387 246,769 295,000 190,784 2,083,940 - Transfers out (278,855) (96,454) - (40,973) (416,282) - Capital contributions 4,965,344 4,625,847 - 1,493,232 11,084,423 - Change in Net Position 9,102,075 5,401,548 (1,740,425) 1,304,754 14,067,952 (371,368) Total Net Position, Beginning of Year 176,342,726 137,489,169 642,824 16,235,849 330,710,568 1,290,788 Total Net Position (Deficit), End of Year 185,444,801$ 142,890,717$ (1,097,601)$ 17,540,603$ 344,778,520$ 919,420$ The Notes to Financial Statements are an integral part of this statement 31 City of Bozeman, Montana Statement of Cash Flows Proprietary Funds Year Ended June 30, 2023 GovernmentalBusiness-type Activities ActivitiesWater Wastewater Solid Waste Nonmajor Funds Total Funds Operating Activities Receipts from customers and users 12,058,639$ 10,791,055$ 5,771,707$ 2,934,611$ 31,556,012$ 13,758,791$ Payments to suppliers (3,499,723) (2,756,427) (2,817,712) (1,034,770) (10,108,632) (8,149,535) Payments to and on behalf of employees (3,118,368) (2,551,549) (1,975,795) (1,294,080) (8,939,792) (4,689,268) Payments to internal service funds and administration (3,595,486) (2,432,739) (1,033,892) (571,075) (7,633,192) (838,823) Net Cash from (Used for) Operating Activities 1,845,062 3,050,340 (55,692) 34,686 4,874,396 81,165 Noncapital Financing Activities Transfers to other funds (278,855) (96,454) - (40,973) (416,282) - Transfers from other funds 1,351,387 246,769 295,000 190,784 2,083,940 - Intergovernmental operating grants 2,186,176 115,620 28,998 18,905 2,349,699 70,789 Impact fees 2,572,101 1,556,078 - - 4,128,179 - Miscellaneous income 124,255 9,267 33,379 11,655 178,556 71,039 Lease payments received 40,536 - - - 40,536 109,099 Net Cash from Noncapital Financing Activities 5,995,600 1,831,280 357,377 180,371 8,364,628 250,927 Capital and Related Financing ActivitiesProceeds from sale of assets 184 - - - 184 - Acquisition of capital assets (3,470,701) (1,255,884) (279,311) (492,899) (5,498,795) (106,181) Debt servicePrincipal (1,318,000) (1,993,321) - (84,000) (3,395,321) (95,743) Interest (478,523) (733,053) - (31,475) (1,243,051) (18,712) Net Cash Used for Capitaland Related Financing Activities (5,267,040) (3,982,258) (279,311) (608,374) (10,136,983) (220,636) Investing ActivityInterest and dividends from investments 482,970 186,618 10,157 65,450 745,195 20,396 Change in Cash and Cash Equivalents 3,056,592 1,085,980 32,531 (327,867) 3,847,236 131,852 Cash and Cash Equivalents, Beginning of Year 36,935,390 12,896,517 513,526 4,196,448 54,541,881 3,010,670 Cash and Cash Equivalents, End of Year 39,991,982$ 13,982,497$ 546,057$ 3,868,581$ 58,389,117$ 3,142,522$ The Notes to Financial Statements are an integral part of this statement 32 City of Bozeman, Montana Statement of Cash Flows Proprietary Funds Year Ended June 30, 2023 GovernmentalBusiness-type Activities Activities Internal ServiceWater Wastewater Solid Waste Nonmajor Funds Total Funds Reconciliation of Operating Loss toNet Cash from (Used for) Operating Activities Operating loss (1,089,411)$ (458,943)$ (2,108,354)$ (394,243)$ (4,050,951)$ (519,496)$ Adjustments to reconcile operating loss to net cash from (used for) operating activitiesDepreciation/amortization 3,253,430 3,624,466 529,985 606,315 8,014,196 235,383 Landfill closure/postclosure costs - - 1,403,611 1,403,611 - Changes in assets and liabilitiesAccounts receivable (254,375) (191,946) (100,977) 83,392 (463,906) 2,731 Special assessments receivable (1,780) (142) 54 81 (1,787) - Prepaid expenses - - - - - (59,417) Other assets - - - - - (8,657) Pension related deferred outflows (57,293) (18,581) (8,318) (30,648) (114,840) (95,730) OPEB related deferred outflows 20,599 16,036 13,754 7,179 57,568 26,190 Vouchers payable (231,390) 244,089 477,506 (337,781) 152,424 152,840 Retainage payable 29,452 (85,318) 5,295 - (50,571) - Payroll payable 253 1,793 - - 2,046 - Compensated absences 56,155 27,944 31,579 9,903 125,581 116,735 Unearned revenue - 195,669 - - 195,669 - Landfill closure accruals - - (219,385) - (219,385) - Solvent site remediation liablitiy - (246,258) - - (246,258) - Net pension liability 550,207 330,369 233,129 252,351 1,366,056 869,198 Total OPEB liability (38,752) (30,163) (25,871) (13,504) (108,290) (49,263) Pension related deferred inflows (434,895) (392,042) (316,319) (163,297) (1,306,553) (643,846) OPEB related deferred inflows 42,862 33,367 28,619 14,938 119,786 54,497 Net cash from (used for)operating activities 1,845,062$ 3,050,340$ (55,692)$ 34,686$ 4,874,396$ 81,165$ Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of capital assets throughcapital contributions and donations 4,965,344$ 4,625,847$ -$ 1,493,232$ 11,084,423$ -$ Acquisition of capital assets through debt -$ -$ -$ -$ -$ 70,767$ Fiduciary Fund Financial Statements Custodial Funds Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. Custodial funds are used to report fiduciary activities that are not required to be reported in pension (or other employee benefit) trust funds, investment trust funds, or private-purpose trust funds. The following custodial funds are included in the Fiduciary Fund financial statements: Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies. Municipal Court – Accounts for monies held for appearance bonds and restitution to criminal arrests and reimbursement for damage caused. The custodial funds are aggregated and presented in one column in the fiduciary fund financial statements. The Notes to Financial Statements are an integral part of this statement 33 City of Bozeman, Montana Statement of Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2023 Custodial Funds AssetsCash and cash equivalents 625,446$ Receivables (net of allowance for uncollectibles): Accounts 2,692 Total assets 628,138 Liabilities Deposits payable 580,359 Net Position Restricted forOther organization or individuals 47,779$ The Notes to Financial Statements are an integral part of this statement 34 City of Bozeman, Montana Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2023 Custodial Funds Additions Miscellaneous 572$ DeductionsTotal deductions - Change in Net Position 572 Net Position, Beginning 47,207 Net Position, Ending 47,779$ 35 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 1 - Summary of Significant Accounting Policies The City of Bozeman of Gallatin County, Montana (the City) was incorporated as a municipal corporation in 1883. The present City Code of Ordinances was adopted October 3, 2011. Under the charter, the City is governed by a mayor and four commission members who comprise the City Commission. The day-to-day affairs of the City are conducted under the supervision of the City Manager, who is appointed by and serves at the pleasure of a majority of the City Commission. The accompanying financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB), the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accompanying financial statements present the financial position of the City and the various funds and fund types, the results of operations of the City and the various funds and fund types, and the cash flows of the proprietary funds. The financial statements are presented as of June 30, 2023, and for the year then ended. The more significant accounting policies of the City are described below. The following is a summary of the City’s significant accounting policies: Reporting Entity The City has considered all potential component units for which it is financially accountable and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability in Statement 14, The Financial Reporting Entity, and Statement 61, The Financial Reporting Entity: Omnibus – an Amendment of GASB Statements No. 14 and No. 34. These criteria include appointing a voting majority of an organization's governing body and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the City. Determining whether certain organizations are component units, organizations that are legally separate, tax- exempt entities are required to be reported as a discretely presented component unit if the following criteria is met. • The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the City. • The City is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization. • The economic resources received or held by the separate organization that the City is entitled to or otherwise has the ability to access are significant. Discretely Presented Component Unit – The Bozeman Public Library Foundation (the Foundation) is a nonprofit agency organized to support the Bozeman Public Library through raising, receiving, administering, and disbursing funds, grants, bequests, and gifts for the sole benefit of the library. The resources were deemed to be significant and therefore, the Foundation is included as a discretely presented component unit under GASB Statement 39. 36 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The Foundation was incorporated with the State of Montana on August 29, 1983, and subsequently amended on December 15, 1989. The governing board consists of an elected president and elected members of the board of directors. Separately issued internal financial statements of the Foundation may be obtained by contacting the Foundation’s offices at 626 East Main Street, Bozeman, MT. 59715. The fiscal year end of the Foundation is December 31. Basis of Accounting/Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Certain amounts presented in the prior year data in these notes have been reclassified to be consistent with the current year’s presentation. Government-Wide Financial Statements The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) present information of all the non-fiduciary activities of the primary government and its component units. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Certain eliminations have been made as prescribed by GASB 34 in regards to inter-fund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated, except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The City applies all applicable GASB pronouncements including all National Council on Governmental Accounting Statements and Interpretations currently in effect. 37 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met those qualifications. All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures, and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in current net position. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources which have been treated as susceptible to accrual by the City are property taxes, intergovernmental revenues, and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. The City has elected to apply the early recognition option of recognizing debt services expenditures provided by GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. Under this option, an expenditure and a liability are recorded in debt service funds in the current year for amounts due early in the following year, for which resources have been provided during the current year. The City reports the following major governmental funds: General Fund – This fund accounts for the financial operations of the City, which are not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal expenditures in the General Fund are made for police and fire protection, public welfare, and general government. Street Maintenance District Special Revenue Fund – This special revenue fund accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. American Rescue Plan Act (ARPA) Special Revenue Fund – This fund accounts for the ARPA federal grant program. Grant funds must be used for the stated purpose of the grant and must meet grantor expenditure guidelines. Special Improvement District (SID) Debt Service – Accounts for the accumulation of resources and payment of special assessment bond principal and interest for general improvement, sidewalk, and curb construction projects. Construction Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments and general obligation debt other than those financed by proprietary funds. 38 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position, and a Statement of Cash Flows for each major proprietary fund. A column representing internal service funds is also presented with the Proprietary Fund Financial Statements. Internal service balances and activities, however, have been combined with the governmental activities in the Government-Wide Financial Statements. Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. The City reports the following major proprietary funds: Water Fund – This fund accounts for the City's water utility operations and to collect and administer water impact fees. Waste Water Fund – This fund accounts for the City's sewer utility operations and to collect and administer waste water impact fees. Solid Waste Fund – This fund accounts for the City’s garbage collection service and recycling operations. Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City’s Fiduciary Funds represent custodial funds. Custodial funds are custodial in nature (assets equal liabilities) and use the economic resources measurement focus. These funds are accounted for using the accrual basis of accounting. The following custodial funds are included in the Fiduciary Fund financial statements: Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies. Municipal Court Fund – Accounts for monies held for appearance bonds and restitution related to criminal arrests and reimbursement for damage caused. 39 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Internal Service Funds Internal Service Funds are used to account for goods and services provided by one department to other departments of the City on a cost-reimbursement basis. These direct costs and certain indirect costs are included as part of the program expense reported for the individual functions and activities of these other departments. The following Internal Service Funds are included in the Proprietary Fund Financial Statements: Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in the operation of City services. Medical Health Insurance – Accounts for insurance premium revenues received from the various City departments and retirees, and the related costs of health, vision, and dental insurance premiums incurred by City employees and retirees. Public Works Administration – Accounts for the professional level management, engineering, and GIS technical support provided to other Public Works divisions, including water, wastewater, solid waste, stormwater, in addition to support provided to other City departments. Cash and Cash Equivalents Cash and investments are under the management of the City's Treasurer and consist primarily of demand deposits and investments in U.S. Government Bonds. Interest income earned as a result of pooling of City deposits is distributed to the appropriate funds utilizing a formula based on the average balance of cash and investments of each fund. Montana State statutes authorize the City to invest in interest-bearing savings accounts, certificates of deposits, and time deposits insured up to $250,000 by the Federal Deposit Insurance Corporation or fully collateralized, U.S. government and U.S. agency obligations and repurchase agreements where there is a master repurchase agreement and collateral held by a third party. Restricted Cash and Investments Restricted cash and investments are those whose use is restricted to specific purposes by state statute, bond indenture, or otherwise. The City’s restricted cash and investments are primarily restricted for construction and maintenance of City infrastructure, debt service and urban renewal. Investments Fair Value The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets (these investments are valued using prices quoted in active markets); Level 2 inputs are significant other observable inputs (these investments are valued using matrix pricing); Level 3 inputs are significant unobservable inputs (these investments are valued using consensus pricing). 40 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Property Taxes Real property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien Date: December 1st for the 1st installment and June 1st for the 2nd installment Levy Date: November 1st Due Dates: November 30th for the 1st installment and May 31 for the 2nd installment Personal property taxes are assessed on January 1 of each year and billed in May, with payment due within thirty days. Gallatin County collects all property taxes on behalf of the City and remits collections, including penalties and interest, on a monthly basis. The County assesses a delinquency penalty of 2%. If taxes become delinquent, the County tax collector may sell the property to collect taxes due plus 0.83% per month interest. In the fund financial statements, the City accrues as receivable all property taxes received during the first sixty (60) days of the new fiscal year from Gallatin County, in accordance with the modified accrual basis. In the government-wide financial statements, all taxes billed, but not yet collected are accrued in accordance with the full accrual basis of accounting, as described in Note 1. Special Assessments Special assessments receivable represents the uncollected amounts levied against benefited property for the cost of local improvements. Assessments are payable over a period of 18 to 20 years and bear interest of 2.5% to 5.75% per annum. Recognition of the revenues from these assessments has been deferred until both measurable and available in governmental funds. In the Government-Wide Financial Statements, however, these amounts are reported as revenues in the period they are levied. Once received, the monies will be used to meet the annual debt service requirements on related bonds and notes payable. Interfund Receivables and Payables All outstanding balances between funds are reported as “due to/from other funds” (current portion) or “advances to/from other funds” (non-current portion). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Lease Receivables Lease receivables are recorded by the City as the present value of future lease payments expected to be received from the lessee during the lease term, reduced by any provision for estimated uncollectible amounts. Lease receivables are subsequently reduced over the life of the lease as cash is received in the applicable reporting period. The present value of future lease payments to be received are discounted based on the interest rate the City charges the lessee. 41 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods (consumption method) and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital assets at $5,000. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value. Depreciable capital assets are reported on the Statement of Net Position, net of applicable accumulated depreciation. Capital assets which are not depreciable such as land, works of art, and construction in progress, are reported separately. Depreciation expense is reported in the Statement of Activities and is calculated using the straight-line method based on the assets estimated useful life. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Buildings 20-80 yearsOther structures and improvements 10-100 years Infrastructure/flood control 25-100 yearsMachinery and equipment 5-30 years Vehicles 5-10 years The City defines infrastructure as the basic physical assets that allow the City to function. These assets include the street system, comprised of roads, sidewalks, curbs, and street lights; the water purification and distribution system; the sewer collection and treatment system; park and recreation lands and related improvements; stormwater conveyance system; and buildings and site amenities, including parking and landscaped areas. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Right-of-use lease assets are recognized at the lease commencement date and represent the City’s right to use an underlying asset for the lease term. Right-of-use lease assets are measured at the initial value of the lease liability plus any payments made to the lessor before commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term, plus any initial direct costs necessary to place the lease asset into service. Right-of-use lease assets are amortized over the shorter of the lease term or useful life of the underlying asset using the straight-line method. The amortization period varies from 1 to 4 years. Right to use subscription IT assets are recognized at the subscription commencement date and represent the City’s right to use the underlying IT asset for the subscription term. Right to use subscription IT assets are measured at the initial value of the subscription liability plus any payments made to the vendor at the commencement of the subscription term, less any subscription incentives received from the vendor at or before the commencement of the subscription term, plus any capitalizable initial implementation costs necessary to place the subscription asset into service. Right to use subscription IT assets are amortized over the shorter of the subscription term or useful life of the underlying asset using the straight-line method. The amortization period varies from 2 to 5 years. 42 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Long-Term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long- term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds on a straight-line basis over the term of the related issue. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Lease liabilities represent the City’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments expected to be made during the lease term. The present value of lease payments is discounted based on a borrowing rate determined by the City. Subscription liabilities represent the City’s obligation to make subscription payments arising from the subscription contract. Subscription liabilities are recognized at the subscription commencement date based on the present value of future subscription payments expected to be made during the subscription term. The present value of subscription payments is discounted based on a borrowing rate determined by the City. Compensated Absences Earned but unpaid vacation and sick pay is included as a liability in the proprietary fund types and Government- Wide Financial Statements. The portion relating to the governmental fund types not expected to be paid with expendable, and available resources is not reported in the governmental fund statements unless the liability has matured (i.e., unused reimbursable leave still outstanding following an employee's resignation or retirement). On-Behalf Payments for Fringe Benefits On-behalf payments for fringe benefits are direct payments made by one entity to a third-party recipient for the employees of another legally separate entity. On-behalf payments include pension plan contributions. The State's pension contribution is recorded as intergovernmental revenue with an offsetting public safety or general government expenditure in the Pension Special Revenue Fund (see Note 11). Postemployment Benefits Other Than Pensions (OPEB) Under the provisions of the various employee and union contracts, the District provides certain postemployment benefits other than pensions to eligible retirees. These OPEB obligations are funded on a pay-as-you-go basis. The total OPEB liability, deferred outflows/inflows of resources, and OPEB expense were actuarially determined in accordance with GASB Statement No. 75. Additional information can be found in Note 10. 43 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Pensions Montana Public Employees’ Retirement Association (MPERA) prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). Additional information can be found in Note 11. Deferred Outflows and Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City has three items that qualify for reporting in this category. They are the contributions made to pension plans after the measurement date and prior to the fiscal year-end, changes in the net pension liability not included in pension expense, and changes in the total other post employments benefits liability not included in OPEB expense, reported in the district-wide statement of net position. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has four types of items that qualify for reporting in this category. The City reports unavailable revenues from property taxes, special assessments, and court fines on the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The second item is deferred inflows related to leases where the City is the lessor and is reported in the governmental funds balance sheet and statement of net position. The deferred inflows of resources related to leases are recognized as an inflow of resources (revenue) on the straight-line basis over the term of the lease. The other items are changes in the net pension liability not included in pension expense and changes in the total other post-employment benefits liability not included in OPEB expense reported in the district-wide statement of net position. 44 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Net Position Net position represents the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources in the City’s financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation/amortization, and unspent bond proceeds for capital purposes reduced by the outstanding balances of any long-term debt or lease attributable to the acquisition, construction, or improvement of those assets, retainage payable, and accounts payable related to capital asset construction. Net position is reported as restricted when there are limitations imposed on its use either through enabling legislation or through external restrictions imposed by creditors, grantors, or laws and regulations of other governments. Unrestricted net position is the net amount of assets and liabilities that are not included in the determination of net investment in capital assets or the restricted component of net position. When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first. As a nonprofit organization operating under the Financial Accounting Standards Board (FASB), the Foundation reports net position with restricted or unrestricted funds, in accordance with donor requests. Fund Balance In accordance with GASB Statement 54, the City reports fund balance for governmental funds in two general classifications, nonspendable and spendable. Nonspendable Fund Balance – represents the portion of fund balance that is not in spendable form, such as inventories, and, in the general fund, long-term notes and loans receivable. Spendable fund balance is further categorized as restricted, committed, assigned, and unassigned. Restricted Fund Balance – balances that can be spent only for the specific purposes stipulated by external parties or through enabling legislation. External parties include grantors, debt covenants, votes, and laws and regulations of other governments. Committed Fund Balance – amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority, the City Commission. The City Commission needs to formally adopt a Resolution in order to establish, modify, or rescind a fund balance commitment. Assigned Fund Balance – amounts intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. The City’s policy to authorize the assignment of fund balance is as follows: Assigned Fund Balance can be expressed and authorized directly by the City Commission or by an official to whom the Commission delegates the authority. The City Commission delegates this authority to the City Manager. Included in the assigned fund balance for the general fund are assignments for the portion of the current general fund balance that is projected to be used to fund expenditures and other cash outflows in excess of the expected revenues and other cash inflows projected for the next fiscal year. 45 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Unassigned Fund Balance – the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. When both restricted and unrestricted resources are available, spending will occur in the following order, for the identified fund types: General Fund: Restricted, Committed, Assigned, Unassigned Special Revenue Funds: Restricted, Committed, Assigned Debt Service Funds: Assigned, Committed, Restricted Capital Projects Funds: Restricted, Committed, Assigned Minimum General Fund – Fund Balance The City does not maintain a stabilization fund. However, the City’s Charter requires an established minimum level of “General Fund Unreserved Fund Balance,” in accordance with the Government Finance Officers’ Association (GFOA) Best Practices, of 2 months or 16.67%, of operating revenues. Implementation of GASB Statement No. 96 As of July 1, 2022, the City adopted GASB Statement No. 96, Subscription‐Based Information Technology Arrangements (SBITAs). The implementation of this standard establishes that a SBITA results in a right to use subscription IT asset -an intangible asset - and a corresponding liability. The standard provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA. The Statement requires recognition of certain SBITA assets and liabilities for SBITAs that previously were recognized as outflows of resources based on the payment provisions of the contract. There was no change to beginning balances of the right to use subscription asset and subscription liability as a result of implementing this standard. As a result of these adjustments there was no effect on beginning net position. The additional disclosures required by this standard are included in Notes 6 and 9. 46 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 2 - Reconciliation of Government-Wide and Fund Financial Statements Explanation of Certain Differences between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government – wide statement of net position. One element of that reconciliation explains that “long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.” The details of this difference are as follows: Bonds payable 58,940,056$ Notes payable 2,045,505 Unamortized premium 4,230,082 Financed purchases payable 872,674 Leases payable 343,801 SBITAs 853,425 Compensated absences 3,939,236 Total OPEB liability 3,688,009 Net pension liability 26,808,548 Net adjustment to reduce fund balance - total governmentalfunds to arrive at net position - governmental activities 101,721,336$ Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities the cost of capital assets is allocated over their estimated useful lives and reported as depreciation/amortization expense.” 47 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The details of this difference are as follows: Capital outlay reported in fund financial statements 17,918,459$ Plus: donated/contributed assets 14,514,120 Plus: assets purchased by internal service funds 176,948 Plus: prior year construction in progress added as asset in current year 40,982,806 Capital asset increases per Note 6 73,592,333$ Less: assets transferred out to enterprise funds (21,909) Less: assets disposed (931,647) Less: prior year construction in progress added as asset in current year (40,982,806) Capital asset decreases per Note 6 (41,936,362) Depreciation/amortization expense (9,447,606) Accumulated depreciation/amortization increases per Note 6 (9,447,606) Less: accumulated depreciation on assets transferred out to enterprise funds 21,909 Less: accumulated depreciation/amortization on assets disposed 857,038 Accumulated depreciation/amortization decreases per Note 6 878,947 Capital assets purchased by internal service funds (176,948) Depreciation/amortization expense included in net expense of internal service funds 235,383 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities 23,145,747$ Another element of that reconciliation states that “The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.” The details of this difference are as follows: Principal payments on bonded debt 3,102,731$ Principal payments on notes payable 277,077 Amortization of premium on bonded debt 254,882 Issuance of financed purchases payable (929,222) Principal payments on financed purchases payable 266,172 Principal payments on leases payable 77,489 Issuance of SBITAs (1,153,217) Principal payments on SBITA 299,792 Issuance of debt recorded in internal service funds 70,767 Principal payments recorded in internal service funds (95,743) Net adjustment to net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities 2,170,728$ 48 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 3 - Stewardship, Compliance, and Accountability Budgets Each year, the City Manager must submit to the City Commission a proposed operating budget for all budget units within the City for the fiscal year commencing July 1. This operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted to obtain citizen comments on the proposed budget. The budget is then legally adopted through passage of the appropriation resolution by the City Commission. The City adopts a final budget each June and amends the budget in August if the initial taxable value estimates were significantly different from the final Certified Values received from the State. Budgets are legally required for all governmental fund types. These budgets are prepared on the same basis and using the same accounting practices as are used to account and prepare financial reports for the funds. Budgets presented in this report for comparison to actual amounts are presented in accordance with GAAP. Annual appropriated budgets are adopted for all funds and all appropriations lapse at year-end. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established at the service area level. The City Commission may amend the budget during the course of the fiscal year. Montana state statute provides a number of different ways to amend the budget. The first involves a reallocation of existing appropriations among the line items within a specific fund. The second defines a series of scenarios where the governing body has authority to amend the budget without a hearing for donations, land sales, and fee-based budgets. All other increases in appropriation authority that are not specifically permitted by statute must be approved through a public hearing process. Any accruing revenue of the municipality not appropriated and any balance at any time remaining after the purpose of an appropriation has been satisfied or abandoned, may from time to time be appropriated to other uses that do not conflict with any uses for which specifically the revenue was accrued. A public hearing is required for an overall increase in appropriation authority, except in the case of an emergency. In its annual appropriation resolution, the City Commission delegated budget amendment authority to the City Manager for the expenditure of funds from any or all of the following: debt service funds, enterprise funds, internal service funds, trust funds, federal and state grants accepted and approved by the governing body, special assessments, and donations. In all other funds, the City Manager may, without approval from the City Commission, make budget amendments as long as the total appropriation for the department is not exceeded. Spending control is established by the total amount of expenditures budgeted for each service area, but management may exercise control at budgetary line items. 49 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Deficit Fund Balance/Net Position The following funds had a deficit fund balance/net position at December 31, 2023: Governmental FundsNonmajor Funds General Obligation Bonds 290,217$ Proprietary FundsEnterprise Funds Solid Waste 1,097,601 Internal Service FundsVehicle Maintenance Shop 723,685 The deficit fund balance in General Obligation Bonds fund is due to a timing difference between the debt payment related to Fire Station 2 bonds and tax collections. The city elects to pay debt payments due on July 1st on or just before June 30th each fiscal year. The taxes related to the July 1st payment will be collected in fiscal year 2024. The deficit fund balance in the Solid Waste fund resulted from rates for solid waste services not increasing with the costs of operations. The city had not increased residential solid waste rates in over three years. Based on a thorough rate setting analysis the city implemented new solid waste rates in fiscal year 2024 that incorporates funding for the fund balance deficit. The deficit fund balance in Vehicle Maintenance Shop fund is due to an increase in the materials and supplies and salaries and benefits expenses. The City will re-evaluate the internal allocations to keep pace with increasing costs as well as recover the fund balance deficit that has accumulated over the last two fiscal years. Note 4 - Cash and Investments At June 30, 2023, the carrying amount of the City's deposits in local banks and investments was $5,403,616. Interest bearing account balances are covered by the Federal Depository Insurance Corporation (FDIC) up to $250,000 per bank, per depositor. In addition, all noninterest bearing transaction account balances are fully insured by FDIC coverage. Interest bearing account balances not insured by FDIC coverage is $5,158,704. This remaining balance is covered by collateral held by the pledging bank's agent in the City's name. 50 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The City’s cash and investments are reported as follows: Cash and cash equivalents Statement of net position 96,066,790$ Statement of fiduciary net position 625,446 Restricted cash and cash equivalentsStatement of net position 58,571,273 155,263,509$ Deposits 1,853,665$ Investments 153,409,844 155,263,509$ Custodial Credit Risk – Custodial credit risk for deposits is the risk that in the event of a financial institution failure, the City’s deposits may not be returned or the City will not be able to recover the collateral securities in the possession of the outside party. The City minimizes custodial credit risk by restrictions set forth in City policy and state law. The City’s policy requires deposits to be 104 percent secured by collateral valued at market value. The City Treasurer maintains a listing of financial institutions, which are approved for investment purposes. Types of securities that may be pledged as collateral are detailed in Section 17-6-103 of the Montana Code Annotated (MCA). City policy requires that specific safeguards against risk of loss be evidenced when the City does not physically hold the securities. Interest Rate Risk – Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City’s investment policy limits investing funds primarily in short- and intermediate-term liquid securities of high credit quality to ensure adequate liquidity and minimize the impact of changes in interest rates. Portfolios are structured so that securities mature concurrent with cash needs to meet anticipated demands. Credit Risk – Credit risk is defined as the risk that an issuer or other counterpart to an investment that will not fulfill its obligation. The above credit risk rating indicates the probability that the issuer may default in making timely principal and interest payments. The credit ratings presented in the following table are provided by Standard and Poor’s Corporation (S&P). The City’s investment policy is to hold investments to maturity with the contractual understanding that these investments are low risk, locked in to a guaranteed rate of return, and are, therefore, not impacted significantly by changes in short term interest rates. 51 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 On June 30, 2023, the following interest rate and credit risks and valuation inputs were associated with the City’s deposits and investments. Maturities (in Years)Investment Type Credit Rating Fair Value Not Applicable < 1 1 - 5 Primary GovernmentU.S. Government bonds S&P AA+88,859,930$ -$ 15,639,940$ 73,219,990$ Corporate Bonds S&P AA+994,870 - - 994,870 Certificates of Deposit N/A 1,200,000 1,200,000 - - MMIA Account N/A 2,355,044 2,355,044 - - State of Montana Short Term Investment Pool N/A 60,000,000 60,000,000 - 153,409,844$ 63,555,044$ 15,639,940$ 74,214,860$ The City voluntarily participates in the STIP (Short Term Investment Pool) administered by the Montana Board of Investments (MBOI). A local government’s STIP ownership is represented by shares, the prices of which are fixed at $1.00 per share, and participants may buy or sell shares with one business days’ notice. STIP administrative expenses are charged daily against the STIP income, which is distributed on the first calendar day of each month. Shareholders have the option to automatically reinvest their distribution income in additional shares. STIP is not registered with the Securities and Exchange Commission. STIP is not FDIC insured or otherwise insured or guaranteed by the federal government, the State of Montana, the Montana Board of Investments (MBOI) or any other entity against investment losses and there is no guaranteed rate of return on funds invested in STIP shares. The MBOI maintains a reserve fund to offset possible losses and limit fluctuations in STIP’s valuation. The STIP investment portfolio consists of securities with maximum maturity of 2 years. Information on investments held in the STIP can be found in the Annual Report on the MBOI website at https://investmentmt.com/Annual-Reports. Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City’s investment policy diversifies the portfolios by limiting investments to avoid overconcentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities and the State of Montana Investment Pool). No more than 40% of the total portfolio may be with any one financial institution, excluding the State of Montana Investment Pool. The City’s investment policy also has limits on the following allowable deposits and investments: repurchase agreements shall not exceed 25 percent of the City’s portfolio or $3,000,000, certificates of deposit issued by commercial banks shall not exceed 25% of the City’s portfolio, and certificates of deposit issued by savings and loan associations shall not exceed 5% of the City’s portfolio. No more than 30% of the total portfolio may be invested in certificates of deposit with any one financial institution, and each financial institution must be a member of the FDIC. None of the established limits were exceeded as of June 30, 2023. Fair Value – The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are described as follows: Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the City has the ability to access. 52 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Level 2 – Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets: Quoted prices for identical or similar assets or liabilities in active markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Inputs to the valuation methodology that are unobservable and significant to the fair value measurement. The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table presents the assets measure at fair value on a recurring basis, except those measured at net asset value (NAV) and cost as identified below, at June 30, 2023: Total Level 1 Level 2 Level 3Primary Government US Government Bonds 88,859,930$ -$ 88,859,930$ -$ Corporate Bonds 994,870 - 994,870 - 89,854,800$ -$ 89,854,800$ -$ U.S. Government and Agency securities, money market mutual funds, and certificates of deposit classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for these securities. Corporate bonds, municipal bonds, corporate commercial paper, bond and equity mutual funds classified in Level 2 of the fair value hierarchy are valued using techniques such as quoted prices for similar investments in active and inactive markets as well as inputs other than quoted prices that are observable for these assets. Investments with the STIP totaling $60,000,000 are measured at net asset value (NAV) and are not subject to GASB 72 leveling. Investments in certificates of deposit and MMIA accounts are measured at cost and are not subject to GASB 72 leveling. The Foundation reports its cash and investments at December 31, 2022, as follows. Investments are considered to be Level 1. Cash and InvestmentsCash and cash equivalents 278,855$ Restricted investments 5,571,466 Total Cash and Investments 5,850,321$ 53 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 5 - Notes Receivable Loans receivable as of June 30, 2023, were as follows: Loan Program Interest Rate Maturity Date Amount Economic Development Loan Fund 3.0-8.0% 2024-2028 797,979$ Community Housing Fund 0%2026 17,498 815,477$ Note 6 - Capital Assets Governmental activities capital asset activity for the year ended June 30, 2023, was as follows: Beginning EndingBalance Increases Decreases Balance Governmental ActivitiesCapital assets, not being depreciated/amortizedLand 37,398,008$ 674,632$ -$ 38,072,640$ Artwork - 15,000 - 15,000 Construction in progress 46,799,648 13,649,809 40,982,806 19,466,651 Total capital assets, not beingdepreciated/amortized 84,197,656 14,339,441 40,982,806 57,554,291 Capital assets, being depreciated/amortizedBuildings 35,527,210 41,635,817 299,963 76,863,064 Machinery and equipment 20,410,289 3,503,550 547,733 23,366,106 Infrastructure 265,265,236 12,349,705 - 277,614,941 Vehicles 4,890,181 609,818 105,860 5,394,139 Right-of-use lease building 423,122 - - 423,122 Right-of-use lease vehicles 19,833 - - 19,833 Subscription-based IT assets - 1,154,002 - 1,154,002 Total capital assets, being depreciated/amortized 326,535,871 59,252,892 953,556 384,835,207 Less accumulated depreciation/amortization forBuildings 20,345,822 1,411,373 265,577 21,491,618 Machinery and equipment 13,136,904 1,707,871 506,985 14,337,790 Infrastructure 97,857,844 5,787,523 - 103,645,367 Vehicles 3,512,252 311,933 106,385 3,717,800 Right-of-use lease assets 45,618 91,236 - 136,854 Subscription-based IT assets - 137,670 - 137,670 Total accumulated depreciation/amortizatio 134,898,440 9,447,606 878,947 143,467,099 Total capital assets, being depreciated/amortized, net 191,637,431 49,805,286 74,609 241,368,108 Governmental Activities Capital Assets, Net 275,835,087$ 64,144,727$ 41,057,415$ 298,922,399$ 54 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Depreciation/amortization expense was charged to functions/programs of the government as follows: Governmental activitiesGeneral government 435,502$ Public safety 1,618,276 Public works 5,737,326 Public health and welfare 1,656,502 Total depreciation/amortization expense -governmental activities 9,447,606$ Business-type activities capital asset activity for the year ended June 30, 2023, was as follows: Beginning EndingBalance Increases Decreases Balance Business-Type ActivitiesCapital assets, not being depreciatedLand 2,218,553$ -$ -$ 2,218,553$ Intangible water rights 2,762,142 - - 2,762,142 Construction in progress 24,053,162 3,970,767 21,448,149 6,575,780 Total capital assets, not being depreciated 29,033,857 3,970,767 21,448,149 11,556,475 Capital assets, being depreciatedBuildings 113,909,343 2,659,559 5,783 116,563,119 Improvements other than buildings 30,547,611 - - 30,547,611 Machinery and equipment 13,399,592 719,256 7,223 14,111,625 Infrastructure 365,552,192 30,692,267 - 396,244,459 Vehicles 2,325,217 - 3,470 2,321,747 Total capital assets, being depreciated 525,733,955 34,071,082 16,476 559,788,561 Less accumulated depreciation forBuildings 29,727,515 2,661,318 3,906 32,384,927 Improvements other than buildings 30,126,930 257,634 - 30,384,564 Machinery and equipment 10,065,031 847,870 7,223 10,905,678 Infrastructure 153,418,794 4,175,621 - 157,594,415 Vehicles 1,762,470 93,663 2,735 1,853,398 Total accumulated depreciation 225,100,740 8,036,106 13,864 233,122,982 Total capital assets, being depreciated, net 300,633,215 26,034,976 2,612 326,665,579 Business-Type Activities Capital Assets, Net 329,667,072$ 30,005,743$ 21,450,761$ 338,222,054$ Depreciation increases include $21,910 of accumulated depreciation on assets transferred from governmental activities. 55 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Depreciation expense was charged to functions/programs of the government as follows: Business-type activitiesWater 3,253,430$ Waste Water 3,624,466 Solid Waste 529,985 Parking 400,734 Storm Water 205,581 Total depreciation expense - business-type activities 8,014,196$ Note 7 - Long-Term Debt The following is a summary of changes in long-term debt of the City for the year ended December 31, 2023: Beginning Ending Due WithinBalanceAdditions Reductions Balance One Year Governmental ActivitiesBonds payableGeneral obligation bonds 47,990,000$ -$ 2,225,000$ 45,765,000$ 2,300,000$ Tax increment financingbonds 10,288,570 - 485,803 9,802,767 501,468 Special assessment bonds 3,764,217 - 391,928 3,372,289 204,722 Total bonds payable 62,042,787 - 3,102,731 58,940,056 3,006,190 Notes payableNotes payable 1,886,950 - 167,627 1,719,323 285,104 Intercap notes payable 435,632 - 109,450 326,182 44,371 Total notes payable 2,322,582 - 277,077 2,045,505 329,475 Unamortized premium 4,484,964 - 254,882 4,230,082 254,882 Financed purchases payable 209,624 929,222 266,172 872,674 157,210 Leases payable 421,290 - 77,489 343,801 85,131 Subscription IT agreements - 1,153,217 299,792 853,425 254,988 Compensated absences 3,225,776 3,371,915 2,658,455 3,939,236 2,658,500 72,707,023$ 5,454,354$ 6,936,598$ 71,224,779$ 6,746,376$ Business-Type ActivitiesBonds payableWater revenue bonds 17,267,000$ -$ 1,318,000$ 15,949,000$ 1,356,000$ Waste water revenue bonds 27,932,321 1,993,321 25,939,000 2,051,000 Stormwater revenue bonds 1,280,000 - 84,000 1,196,000 87,000 Total bonds payable 46,479,321 - 3,395,321 43,084,000 3,494,000 Landfill closure/postclosure 1,175,032 1,184,227 - 2,359,259 - Pollution remediation obligation 782,927 - 246,258 536,669 - Compensated absences 554,615 743,869 618,288 680,196 605,354 48,991,895$ 1,928,096$ 4,259,867$ 46,660,124$ 4,099,354$ 56 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Bonds Payable At June 30, 2023, the City had the following bond issuances outstanding: PrincipalFinal Maturity Interest Rate Original Issue Outstanding Governmental Activities:General obligation bondsTOP Bonds, Series 2013 2034 2.00 - 4.00%9,900,000$ 6,270,000$ TOP Bonds, Series 2014 2035 2.00 - 4.00%5,100,000 3,470,000 BPSC Bonds, Series 2019 2039 2.00 - 4.00%34,405,000 29,500,000 Refunding Bonds, Series 2022 2042 4.00 - 5.00%25,640,000 6,525,000 Total general obligation bonds 75,045,000$ 45,765,000$ Tax increment financing bondsRefunding Bonds, Series 2020 2032 2.44%3,689,000$ 2,657,000$ Series 2017 2042 4.10%1,446,000 1,185,767 Series 2020 2044 2.00 - 4.00%6,325,000 5,960,000 Total sales tax revenue bonds 11,460,000$ 9,802,767$ Special assessment bondsSpecial Improvement District No. 747, Series 2020 2040 3.175%4,001,000$ 3,333,789$ Note payable to Department of Natural Resources and Conservation, #WRF-05067 2024 3.750%94,000 18,000 Note payable to Department of Natural Resources and Conservation, #SRF-05132 2024 3.750%400,000 20,500 Total taxable appropriation bonds 4,495,000$ 3,372,289$ Total governmental activities 91,000,000$ 58,940,056$ Business-Type ActivitiesWater revenue bonds Series 2011A 2032 3.00%9,491,000$ 5,009,000$ Series 2011B 2033 3.00%9,552,000 5,257,000 Series 2017 2037 2.50%7,573,000 5,683,000 Total water revenue bonds 26,616,000$ 15,949,000$ Waste water revenue bondsSeries 2010B 2030 1.75%359,300$ 131,000$ Series 2010D 2030 3.00%8,308,000 3,767,000 Series 2010F 2030 3.00%729,000 345,000 Series 2010C 2031 3.00%885,081 436,000 Series 2010G 2031 3.00%3,605,565 1,354,000 Series 2010H 2031 3.00%8,692,000 4,284,000 Sereis 2020D 2040 2.50%2,807,000 2,469,000 Series 2020B 2040 2.50%7,786,000 6,850,000 Series 2020C 2041 2.50%6,693,321 6,003,000 Series 2020A 2040 0.00%300,000 300,000 Total water revenue bonds 40,165,267$ 25,939,000$ Stormwater revenue bondsSeries 2015 2035 2.50%1,815,000$ 1,196,000$ Total business-type activities 135,377,534$ 43,084,000$ 57 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 There are a number of limitations and restrictions contained in the various bond indentures. The City is in compliance with all significant limitations and restrictions. General Obligation Bonds – The City issues general obligation bonds to provide funds for the acquisition and construction of major capital assets. General obligation bonds are direct obligations of the City and are backed by the full faith and credit of the City. General obligation bonds are recorded in the governmental activities in the government-wide statement. Principal and interest on these bonds are payable from the debt service funds. Tax Increment Financing (TIF) Bonds – Tax Increment Financing (TIF) Bonds are not general obligations, but are special limited obligations of the City. TIF bonds are recorded in the governmental activities in the government- wide statement. The bonds are payable solely, and equally and ratably from the tax increment revenues received by the City from its Downtown Bozeman Improvement District, Northeast Improvement District, and Midtown Improvement District. If the incremental revenues are insufficient to pay the principal and interest due on the TIF bonds when due, such payment shortfall shall not constitute a default under the TIF agreement. If and when the incremental revenues are sufficient, the City shall pay the amount of any shortfall to the paying agent and registrar without any penalty interest or premium thereon. Due to the uncertainty of the future tax increment receipts, future payments on the TIF bonds may vary from the summary of debt service requirements. Principal and interest on these bonds are payable from the TIF debt service fund. Special Assessment Bonds – Special assessment bonds are payable from the collection of special assessments levied against benefited property owners within each special improvement district. To the extent that such special assessment collections are not sufficient to make the required debt service payments, the City is obligated to levy and collect a general property tax on all taxable property in the City to provide additional funding for the debt service payments. The cash balance in the SID Revolving Fund must equal at least 5% of the principal amount of bonds outstanding. If the cash balance is less than 5%, a levy is required to bring the cash balance to the required minimum. Principal and interest on these bonds are payable from the SID debt service fund. Revenue Bonds -The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. The revenue bond ordinances specify that the City shall establish various restricted asset accounts and distribute the net revenues for the water fund to the restricted asset accounts and set user rates at levels which will generate minimum net revenues, as defined. The revenue bond ordinances specify that City management and/or the City Commission shall take corrective actions to bring the City into compliance with the revenue bond ordinances, if necessary, and that bondholders shall have the right to institute proceedings, judicial or otherwise, to enforce the covenants of the revenue bond ordinances. The City is in compliance with applicable covenants as of June 30, 2023. 58 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The annual requirements to amortize the bonded debt outstanding for the governmental activities as of June 30, 2023, are as follows: Years Ending General Obligation Bonds Tax Increment Financing Bonds June 30, Principal Interest Principal Interest 2,300,000$ 1,658,650$ 501,468$ 334,613$ 2,390,000 1,573,675 517,401 320,441 2,475,000 1,483,125 531,215 304,068 2,575,000 1,384,250 545,171 287,104 2,675,000 1,280,000 564,152 269,745 2029-2033 15,140,000 4,659,850 2,773,715 1,066,961 2034-2038 14,060,000 1,770,494 1,854,832 655,719 2039-2043 4,150,000 245,150 2,114,813 264,466 2044-2047 - - 400,000 12,000 45,765,000$ 14,055,194$ 9,802,767$ 3,515,117$ Years Ending Special Assessment Bonds Total Governmental Activities June 30, Principal Interest Principal Interest 204,722$ 105,129$ 3,006,190$ 2,098,392$ 171,541 99,219 3,078,942 1,993,335 177,031 93,730 3,183,246 1,880,923 182,696 88,064 3,302,867 1,759,418 188,543 82,218 3,427,695 1,631,963 2029-2033 1,037,177 316,624 18,950,892 6,043,435 2034-2038 1,214,103 139,700 17,128,935 2,565,913 2039-2043 196,476 4,139 6,461,289 513,755 2044-2047 - - 400,000 12,000 3,372,289$ 928,823$ 58,940,056$ 18,499,134$ 2024 202520262027 2028 2024 202520262027 2028 59 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The annual requirements to amortize the bonded debt outstanding for the business-type activities as of June 30, 2023, are as follows: Years Ending Water Revenue Bonds Waste Water Revenue BondsJune 30, Principal Interest Principal Interest 1,356,000$ 312,250$ 2,051,000$ 531,968$ 1,395,000 284,930 2,111,000 489,298 1,435,000 256,840 2,171,000 445,388 1,477,000 227,930 2,234,000 400,265 1,520,000 198,170 2,298,000 353,798 2029-2033 6,936,000 523,840 7,562,000 1,146,061 2034-2038 1,830,000 83,550 4,874,000 558,598 2039-2043 - - 2,638,000 71,838 15,949,000$ 1,887,510$ 25,939,000$ 3,997,214$ Years Ending Stormwater Revenue Bonds Total Business-Type Activities June 30, Principal Interest Principal Interest 87,000$ 23,490$ 3,494,000$ 867,708$ 89,000 21,740 3,595,000 795,968 90,000 19,950 3,696,000 722,178 94,000 18,130 3,805,000 646,325 96,000 16,240 3,914,000 568,208 2029-2033 515,000 51,450 15,013,000 1,721,351 2034-2038 225,000 5,640 6,929,000 647,788 2039-2043 - - 2,638,000 71,838 1,196,000$ 156,640$ 43,084,000$ 6,041,364$ 20242025 202620272028 20242025 202620272028 Industrial Revenue and Private Activity Bonds The City issues tax exempt industrial revenue and private activity bonds to finance construction of facilities within the City, which it sells on installment contracts to the facilities' users. The bonds and the interest payable thereon are not obligations of the City and do not constitute or give rise to a pecuniary liability or contingent liability of the City or a charge against the general credit or taxing power of the City. The bonds are issued under and collateralized by the indentures and are payable solely from the payments to be made pursuant to the loan agreements between the City and the facilities users. The bonds are not a lien on any of the City’s properties or revenues, other than the facilities for which they were issued. To provide financial assistance for the acquisition and improvements of the building occupied by a private elementary school, the City has issued a Private Activity Revenue Bond. This bond is secured by the property financed and is payable solely from payments received on the underlying mortgage loan. Upon repayment of the bond, ownership of the acquired facility transfers to the private-sector entity served by the bond issuance. Neither the City nor any political subdivision thereof is obligated in any manner for repayment of the bond. Accordingly, the bond is not reported as a liability in the accompanying financial statements. As of June 30, 2023, the Revenue Bond outstanding had an aggregate principal amount payable of $114,671. 60 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Notes Payable At June 30, 2023, the City had the following notes payable outstanding: PrincipalFinal Maturity Interest Rate Original Issue Outstanding Governmental Activities: Notes payableSports Park Loan 2039 3.74%1,700,000 1,504,323 Pete's Hill Loan 2024 3.75%315,000 215,000 Total notes payable 2,015,000$ 1,719,323$ Intercap notes payableUpgrade Street Lighting 2030 1.55 - 5.75%199,231$ 110,035$ Sports Park-Bronken Park Improvements 2029 1.00 - 5.75%314,559 216,147 Total intercap notes payable 513,790$ 326,182$ Total governmental activities 4,030,000$ 2,045,505$ Future payments on notes payable are as follows: Governmental Activities Years Ending June 30, Principal Interest 329,475$ 78,510$ 118,478 52,893 122,399 50,216 126,433 47,363 130,755 44,463 2029-2033 547,381 173,485 2034-2038 548,135 80,840 2039-2043 122,349 3,446 2,045,405$ 531,216$ 20242025202620272028 Financed Purchases Payable Financed purchases payable consists of direct borrowing financing agreements for the purchase of various pieces of machinery and equipment. Financed purchases payable of the governmental activities are paid by the General Fund and Street Maintenance Fund. 61 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Future payments on financed purchases payable are as follows: Governmental ActivitiesYears Ending June 30, Principal Interest 157,210$ 56,811$ 123,070 49,926 113,913 41,340 121,664 33,489 356,817 26,745 872,674$ 208,311$ 2024 2025 202620272028 Leases Payable Leases payable consists of long-term leases as described in Note 8. Leases payable of the governmental activities are liquidated by the General Fund and the Public Works Administration Fund. Subscription IT Agreements Subscription IT agreements consists of long-term software contracts as described in Note 9. Subscriptions payable of the governmental activities are liquidated by the General Fund, City Planning Fund, and Public Works Administration Fund. Landfill Closure/Postclosure Landfill Closure/Postclosure liability consists of expected future obligations relating to the municipal landfill. See Note 20 for additional information. Pollution Remediation Liability Pollution remediation liability consists of expected future obligations relating to remediation of the Bozeman Solvent Site. See Note 21 for additional information. Compensated Absences The entire portion of accumulated unpaid vacation is considered short term for the reason that historically, unpaid vacation is utilized within one year either through vacation payouts when employees terminate their service with the City or with the use of annual leave throughout the year. Within the governmental activities, the General Fund has typically been used in prior years to liquidate the liability for compensated absences. Compensated absences for the business-type activities are liquidated from the fund in which they are earned. 62 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 8 - Leases Lessor Activities The City has accrued a receivable for a land lease. The remaining receivable for this lease was $333,289 for the year ended June 30, 2023. Deferred inflows related to these leases were $326,355 as of June 30, 2023. Interest revenue recognized on these leases was $17,801 for the year ended June 30, 2023. Principal receipts of $22,735 were recognized during the fiscal year. The interest rate used to value the lease was 5%. Final receipt is expected in fiscal year 2033. Lessee Activities The City has entered into various lease agreements for a vehicle and office space. The City is required to make principal and interest payments through February 2028. The lease agreements have interest rates between 6.61% and 8.09%. For lease agreements with no specified interest rate, the lease liability was valued using a discount rate of 5% based on the City’s incremental borrowing rate at the inception of the leases. The future principal and interest lease payments as of June 30, 2023, are as follows: Years Ending Governmental ActivitiesJune 30,Principal Interest 85,131$ 15,274$ 87,877 10,922 94,477 6,413 76,316 1,599 343,801$ 34,208$ 2024 2025 2026 2027 Note 9 - Subscription-Based Information Technology Arrangements (SBITAs) The City has entered into SBITA contracts for various operating software. The City is required to make principal and interest payments through January 2029. The SBITA contracts have interest rates of 5% which was determined based on the City’s incremental borrowing rate at the inception of the subscriptions. 63 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The future principal and interest payments as of June 30, 2023, are as follows: Years Ending Governmental Activities June 30,Principal Interest 254,988$ 35,936$ 268,981 22,501 140,943 14,121 91,905 7,714 96,608 2,913 853,425$ 83,185$ 2024 2025 20262027 2028 Note 10 - Other Post-Employments Benefit Plan The City provides other post-employment benefits (OPEB) allowing its retired employees to continue their medical, dental, and vision care coverage through the City's group health plan until death (Retiree Health Plan). The single-employer defined benefit post-employment health care plan allows retirees to participate, as a group, at a rate that does not cover all of the related costs. This results in the reporting of an implied rate subsidy in the financial statements and footnotes. The City's contract with Allegiance Benefits details the plan eligibility. MMIA is the administrator of the plan, which covers both active and retired members. In accordance with MCA 2-18-704, the City’s retirees may continue coverage for themselves and their covered eligible dependents, if they are eligible for public employees' retirement by virtue of their employment with the City of Bozeman. The City's current labor contracts do not include any obligations for payments to retirees. The City also allows terminated employees to continue their health care coverage for 18 months past the date of termination as required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). OPEB is recorded on an accrual basis for all enterprise and internal service funds. OPEB is recorded on a modified accrual basis for the governmental funds. Plan contributions are recognized in the period in which the contributions are made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement 75. Funding Policy The plan is unfunded by the City and plan members receiving benefits contribute 100 percent of their cost of the benefits on a pay-as-you-go basis. The City plan’s administratively established retiree medical, dental, and vision premiums vary between $41 and $2,313 per month depending on the medical plan selected, family coverage, and Medicare eligibility. The plan provides different coinsurance amounts depending on whether members use preferred, non-preferred, or other hospitals. Depending on the plan, for a single individual, after an annual deductible of $500 to $2,800 for non-Medicare-eligible retirees, the plan reimburses 60% to 80% of allowed charges after deductible and up to the out-of-pocket maximum, and then 100%. Depending on the plan, for a family, after an annual deductible of $1,000 to $5,600 for non-Medicare-eligible retirees, the plan reimburses 60% to 80% of allowed charges after deductible and up to the out-of-pocket maximum, and then 100%. 64 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Employees Covered by Benefit Terms At July 1, 2022, the census valuation date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefit payments 23 Inactive employees entitled to but not yet receiving benefit payments - Active employees 412 435 Contributions Benefit contributions are paid by the City as they come due. Total OPEB Liability (TOL) The City’s total OPEB liability of $4,450,558 for the June 30, 2023, reporting date was measured as of June 30, 2022, and was determined by an actuarial valuation as of July 1, 2022. Changes in the TOL for the year ended June 30, 2023, are as follows: Balance at July 1, 2022 5,067,116$ Changes from the Prior Year: Service cost 386,864 Interest cost 116,219 Assumption changes (862,570) Differences between expected and actual experience (110,114) Benefit payments (146,957) Net Change (616,558) Balance at June 30, 2023 4,450,558$ 65 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 There is sensitivity of the TOL to changes in the discount rate. The TOL of the City as well as what the City’s TOL would be if it were calculated using a discount rate that is one percentage point lower (2.69%) or one percentage point higher (4.69%) follows: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate Discount rate 2.69%3.69%4.69% Total OPEB Liability 5,031,129$ 4,450,558$ 3,948,856$ There is also sensitivity of the TOL to changes in the healthcare cost rates. The TOL of the City as well as what the City’s TOL would be if it were recalculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current healthcare cost trend rate follows: 1% Decrease in 1% Increase in Trend Rates Trend Rates Trend Rates Trend rate 6.50%, grading to 7.50%, grading to 8.50%, grading to 3.50% over 20 years 4.50% over 20 years 5.50% over 20 years Total OPEB Liability 3,872,715$ 4,450,558$ 5,144,076$ For the year ended June 30, 2023, the City recognized OPEB expense of $540,230. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between actual and expected experience -$ 239,534$ Assumption changes 1,022,556 1,040,407 1,022,556$ 1,279,941$ 66 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEBs will be recognized in OPEB expense as follows: OPEBYears Ended June 30, Expense Amount 2024 37,147$ 2025 37,149 2026 76,687 2027 (146,063) 2028 (217,466) Thereafter (44,839) The June 30, 2023, year-end OPEB cost is reported in the City’s funds as follows: Functions/Programs Governmental Activities General government 92,687$ Public safety 157,567 Public works 67,634 Public health and welfare 127,463 Total governmental activities 445,351 Business-type Activitie Water 33,950 Wastewater 26,429 Solid waste 22,668 Parking 4,417 Stormwater 7,415 Total business-type activities 94,879 Total 540,230$ 67 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Actuarial Methods and Assumptions The City’s actuarial valuation is completed on a biennial frequency, provided no significant events have occurred warranting new measurement. The City completed the valuation for fiscal year 2023. As of July 1, 2022, the most recent valuation date, the City’s total OPEB liability was determined using the following actuarial assumptions: The following key assumptions were chosen by the City: • Discount Rate: 3.69% for determining fiscal 2023 liability and expense. • Inflation Rate: 2.5% long-term. • Expected Real Rate of Return on Assets: N/A • Health Care Claim and Contribution Trend Rates: 7.50% initial in fiscal 2023 and 4.50% ultimate in fiscal 2043. • Average Salary Increase: Not applicable. • Retirement Rates: Based on actuarial valuation for statewide retirement systems as of June 30, 2022 • Retiree Participation Rate: 35% of future eligible retirees are assumed to participate in the Plan upon retirement. 80% of retirees are assumed to elect the same medical plan upon retirement that they have while being employed and 20% are assumed to elect the HDHP plan. • Lapse Rate: 15% per year • Marriage Assumption: 60% of all future eligible retired employees are assumed to be married at retirement and elect spousal coverage. Husbands are assumed to be three years older than their wives. The discount rate was based on a yield or index rate for a 20-year, tax-exempt, general obligation municipal bond with an average rating of AA/Aa or higher. Rates were taken from the Bond Buyer 20-Bond GO index as of the measurement date. Mortality rates were based on the Pub-2010 Public Retirement Plan Public Safety mortality table projected generationally with Scale MP-2021 for MPORS and FURS (Police and Fire, respectively) and Pub-2010 Public Retirement Plans General mortality table projected generationally with Scale MP-2021 for PERS (all other employees). The medical trend rate table was reset in fiscal 2023. This report constitutes the only analysis and presentation of the City’s post-employment benefit plan. There is no separate, audited GAAP-basis post-employment benefit plan report. 68 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 11 - Defined Benefit Pension Plans All City of Bozeman full-time employees participate in one of three statewide, cost-sharing, multiple-employer, retirement benefit plans administered by the Public Employees Retirement Division (PERD). Contributions to the three plans are as required by State statute. Fiscal years 2023 and 2022 total payroll and covered payroll for all retirement plans were $31,950,316 and $25,726,854, respectively. Financial information for all three plans is reported in the Public Employees' Retirement Board's published Annual Comprehensive Financial Report for the fiscal year-end. It is available from the PERD at 100 North Park Avenue, Suite 220, P.O. Box 200131, Helena, MT 59620-0131. The authority to establish, amend, and provide cost of living adjustments to all three plans is assigned to the State legislature. The authority to establish and amend contribution rates to all three plans is also assigned to the State legislature. For the year ended December 31, 2023 the City reported its proportionate share of net pension liabilities, deferred outflows of resources, deferred inflows of resources, and pension expense for each of the plans as follows: Deferred DeferredOutflows of Net Pension Inflows of Resources Liability Resources Pension Expense PERS 4,488,592$ 21,527,855$ 1,576,037$ 2,570,071$ FURS 2,115,919 3,494,798 77,968 687,199 MPORS 1,926,272 7,120,779 173,986 1,261,458 Total all plans 8,530,783$ 32,143,432$ 1,827,991$ 4,518,728$ Public Employees’ Retirement System (PERS) In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non- employer contributing entity are required to recognize and report certain amounts associated with participation in the Public Employees’ Retirement System Defined Benefit Retirement Plan (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single-employer, or agent plans. These disclosures provide information for employers who are using a June 30, 2022, measurement date for the 2023 reporting. 69 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Summary of Significant Accounting Policies The Montana Public Employee Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (TPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan Plan Description The PERS-Defined Benefit Retirement Plan (DBRP), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing plan established July 1, 1945, and governed by Title 19, chapters 2 & 3, Montana Code Annotated (MCA). This plan provides retirement benefits to covered employees of the State, and local governments, and certain employees of the Montana University System, and school districts. Benefits are established by state law and can only be amended by the Legislature. All new members are initially members of the PERS-DBRP and have a 12-month window during which they may choose to remain in the PERSDBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be participants of both the defined benefit and defined contribution retirement plans. All new members from the universities also have a third option to join the university system’s Montana University System Retirement Program (MUS-RP). Benefits Provided The PERS-DBRP provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. Retirement benefits are as follows: Service retirement: • Hired prior to July 1, 2011: ο Age 60, 5 years of membership service ο Age 65, regardless of membership service ο Any age, 30 years of membership service • Hired on or after July 1, 2011: ο Age 65, 5 years of membership service ο Age 70, regardless of membership service 70 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Early Retirement: • Hired prior to July 1, 2011: ο Age 50, 5 years of membership service ο Any age, 25 years of membership service • Hired on or after July 1, 2011: ο Age 55, 5 years of membership service Second Retirement (requires returning to PERS-covered employer or PERS service): • Retired before January 1, 2016, and accumulate less than 2 years additional service credit or retired on or after January 1, 2016, and accumulate less than 5 years additional service credit: ο A refund of member’s contributions plus return interest (currently 2.02% effective July 1, 2018). ο No service credit for second employment. ο Start the same benefit amount the month following termination; and ο Guaranteed Annual Benefit Adjustment (GABA) starts again in the January immediately following the second retirement. • Retired before January 1, 2016, and accumulate at least 2 years of additional service credit: ο A recalculated retirement benefit based on provisions in effect after the initial retirement; and ο GABA starts on the recalculated benefit in the January after receiving the new benefit for 12 months. • Retired on or after January 1, 2016, and accumulate 5 or more years of service credit: ο The same retirement as prior to the return to service. ο A second retirement benefit as prior to the second period of service based on laws in effect upon the rehire date; and ο GABA starts on both benefits in the January after receiving the original and the new benefit for 12 months. Member’s highest average compensation (HAC) • Hired prior to July 1, 2011, highest average compensation during any consecutive 36 months. • Hired on or after July 1, 2011 – highest average compensation during any consecutive 60 months. Compensation Cap • Hired on or after July 1, 2013 – 110% annual cap on compensation considered as a part of a member’s highest average compensation. Monthly benefit formula • Members hired prior to July 1, 2011 ο Less than 25 years of membership service: 1.785% of HAC per year of service credit; ο 25 years of membership service or more: 2% of HAC per year of service credit. • Members hired on or after July 1, 2011 ο Less than 10 years of membership service: 1.5% of HAC per year of service credit; ο 10 years or more, but less than 30 years of membership service: 1.785% of HAC per year of service credit; ο 30 years or more of membership service: 2% of HAC per year of service credit. 71 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Guaranteed Annual Benefit Adjustment (GABA) – After the member has completed 12 full months of retirement, the member’s benefit increases by the applicable percentage (provided below) each January, inclusive of all other adjustments to the member’s benefit. • 3.0% for members hired prior to July 1, 2007 • 1.5% for members hired between July 1, 2007, and June 30, 2013 • Members hired on or after July 1, 2013: ο 1.5% for each year PERS is funded at or above 90%; ο 1.5% reduced by 0.1% for each 2.0% PERS is funded below 90%; and ο 0% whenever the amortization period for PERS is 40 years or more. Contributions The State Legislature has the authority to establish and amend contribution rates. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: The state of Montana, as the non-employer contributing entity, paid to the Plan, additional contributions that qualify as special funding. Those employers who received special funding are all participating employers. Not Special Funding: Per Montana law, state agencies and universities paid their own additional contributions. The employer paid contributions are not accounted for as special funding for state agencies and universities but are reported as employer contributions. Member and employer contribution rates are shown in the table below. State & University Fiscal Year Hired <07/01/2011 Hired >07/01/2011 Employer Employer State Employer State 2023 7.900%7.900%9.070%8.970%0.100%8.700%0.370% 2022 7.900%7.900%8.970%8.870%0.100%8.600%0.370% 2021 7.900%7.900%8.870%8.770%0.100%8.500%0.370% 2020 7.900%7.900%8.770%8.670%0.100%8.400%0.370%2019 7.900%7.900%8.670%8.570%0.100%8.300%0.370%2018 7.900%7.900%8.570%8.470%0.100%8.200%0.370%2017 7.900%7.900%8.470%8.370%0.100%8.100%0.370%2016 7.900%7.900%8.370%8.270%0.100%8.000%0.370%2015 7.900%7.900%8.270%8.170%0.100%7.900%0.370%2014 7.900%7.900%8.170%8.070%0.100%7.800%0.370%2012-2013 6.900%7.900%7.170%7.070%0.100%6.800%0.370%2010-2011 6.900%N/A 7.170%7.070%0.100%6.800%0.370%2008-2009 6.900%N/A 7.035%6.935%0.100%6.800%0.235%2000-2007 6.900%N/A 6.900%6.800%0.100%6.800%0.100% Member Local Government Local Government Member contributions to the system of 7.9% are temporary and will be decreased to 6.9% on January 1 following actuary valuation results that show the amortization period has dropped below 25 years and would remain below 25 years following the reduction of both the additional employer and additional member contribution rates. 72 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Employer contributions to the system: • Effective July 1, 2014, following the 2013 Legislative session, PERS-employer contributions increase an additional 0.1% a year and will continue over 10 years through 2024. The additional employer contributions including the 0.27% added in 2007 and 2009, will terminate on January 1 following actuary valuation results that show the amortization period has dropped below 25 years and would remain below the 25 years following the reduction of both the additional employer and additional member contributions rates. • Effective July 1, 2013, employers are required to make contributions on working retirees’ compensation. Member contributions for working retirees are not required. • The portion of employer contributions allocated to the Plan Choice Rate (PCR) are included in the employers reporting. The PCR was paid off effective March 2016 and the contributions previously directed to the PCR are now directed to member accounts. Non-Employer Contributions: Special Funding • The state contributed 0.1% of members’ compensation on behalf of local government entities. • The state contributed 0.37% of members’ compensation on behalf of school district entities. • The state contributed a Statutory Appropriation from the General Fund of $34,633,570. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2022, is on an actuarial valuation performed by the Plan’s actuary as of June 30, 2022. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2023 and 2022 reporting dates, are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $21,527,855 and the employer’s proportionate share was 0.905336 percent. Change in June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Percent of Reporting Date Reporting Date Reporting Date Reporting Date Collective NPL City Proportionate Share 21,527,855$ 15,249,847$ 0.905336% 0.841036% 0.064300% State of Montana Proportionate Share associated with the City 6,454,277$ 4,507,680$ 0.271429% 0.248601% 0.022828% Total 27,982,132$ 19,757,527$ 1.176765% 1.089637% 0.087128% Net Pension Liability as of Percent of Collective NPL as of 73 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Changes in actuarial assumptions and methods: The following changes in assumptions or other inputs were made that affected the measurement of the TPL. • The discount rate was increased from 7.06% to 7.30%. • The investment rate of return was increased from 7.06% to 7.30%. • Updated all mortality tables to the PUB2010 tables for general employees. • Updated the rates of withdrawal, retirement, and disability. • Lowered the payroll growth assumption from 3.50% to 3.25%. • The inflation rate was increased from 2.40% to 2.75%. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense: At June 30, 2023, the reporting date, the employer recognized a Pension Expense of $2,570,071 for its proportionate share of the Plan’s pension expense. The employer also recognized grant revenue of $668,990 for the support provided by the State of Montana for its proportionate share of the pension expense associated with the employer. At June 30, 2023, the reporting date, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Expected vs actual experience 274,436$ -$ Project investment earnings vs. actual investment earnings 632,695 - Changes in assumptions 802,259 1,576,037 Changes in proportion and differences between employer contributions and proportionate share of contributions 890,101 - City contributions subsequent to the measurement date 1,889,101 - 4,488,592$ 1,576,037$ The $1,889,101 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. 74 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: For the Reporting Recognition of Deferred Outflows and Deferred Inflows in Year Ended June 30, Future Years as an Increase (Decrease) to Pension Expense 2024 638,429$ 2025 (373,095) 2026 (682,393) 2027 1,440,513 Actuarial Assumptions: The total pension liability measured as of June 30, 2022, for the June 30, 2023, reporting date, was determined on the results of an actuarial valuation date of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment return (net of pension plan 7.30%investment expense, including inflation) General wage growth*3.50%*includes inflation at 2.75% Merit increases 0% to 4.80% Postretirement Benefit Increases Guaranteed Annual Benefit Adjustment (GABA) each January After the member has completed 12 full months of retirement,the member's benefit increases by the applicable percentage (below) each January, inclusive of all other adjustments to the member's benefit. Members hired prior to July 1, 2007 3.00% Members hired between July 1, 2007, and June 30, 2013 1.50% Members hired on or after July 1, 2013 For each year PERS is funded at or above 90%1.50% For each year PERS is funded below 90%1.50%, reduced by 0.1% for each 2.0% PERS is funded below 90% Whenver the amortization period for PERS is 40 years or more 0.00% For active members, mortality rates were based on PUB-2010 General Amount Weighted Employer Mortality projected to 2021 for males and females, projected generationally using MP-2021. For disabled retirees, the mortality rates were based on PUB-2010 General Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for both males and females. For contingent survivors, mortality rates were based on PUB-2010 General Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males and females, projected generationally using MP-2021. For healthy retirees, morality rates were based on PUB-2010 General Amount Weighted Healthy Retiree Mortality table projected to 2021, with ages set forward one year and adjusted 104% for males and 103% for females, projected generationally using MP-2021. 75 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The actuarial assumptions and methods utilized in the June 30, 2022 valuation, were developed in the five-year experience study for the period ending 2021. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non- employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 0.10% of the salaries paid by local governments and 0.37% paid by school districts. In addition, the state contributed a statutory appropriation from the general fund. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2126. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2022, is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class as of the most recent experience study, are summarized in the following table. Long-Term Expected Real Target Asset Rate of Return Asset Class Allocation Arithmetic Basis Cash 3.0%-0.33%Domestic Equity 30.0%5.90% International Equity 17.0%7.14% Private Investments 15.0%9.13% Real Assets 5.0%4.03% Real Estate 9.0%5.41% Core Fixed Income 15.0%1.14% Non-Core Fixed Income 6.0%3.02% Total 100.0% 76 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the TPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. 1% Decrease Current Discount 1% Increase (6.30%)Rate (7.30%)(8.30%) City's proportionate share of the net pension liability 31,033,407$ 21,527,855$ 13,552,811$ PERS Disclosure for the defined contribution plan The City contributed to the state of Montana Public Employee Retirement System Defined Contribution Retirement Plan (PERS-DCRP) for employees that have elected the DCRP. The PERS-DCRP is administered by the PERB and is reported as a multiple employer plan established July 1, 2002, and governed by Title 19, chapters 2 & 3, MCA. All new PERS members are initially members of the PERS-DBRP and have a 12-month window during which they may choose to remain in the PERS-DBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be participants of both the defined benefit and defined contribution retirement plans. Member and employer contribution rates are specified by state law and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. The state Legislature has the authority to establish and amend contribution rates. Benefits are dependent upon eligibility and individual account balances. Participants are vested immediately in their own contributions and attributable income. Participants are vested after 5 years of membership service for the employer’s contributions to individual accounts and the attributable income. Non-vested contributions are forfeited upon termination of employment per 19-3-2117(5), MCA. Such forfeitures are used to cover the administrative expenses of the PERS-DCRP. At the plan level for the measurement period ended June 30, 2022, the PERS-DCRP employer did not recognize any net pension liability or pension expense for the defined contribution plan. Plan level non-vested forfeitures for the 344 employers that have participants in the PERS-DCRP totaled $1,681,603. Pension Plan Fiduciary Net Position The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. These reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annualreports1/annualreports. 77 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Firefighters’ Unified Retirement System (FURS) In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non-employer contributing entity are required to recognize and report certain amounts associated with participation in the Firefighters’ Unified Retirement System (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single- employer, or agent pension plans. These disclosures provide information for employers who are using a June 30, 2022, measurement date for the 2023 reporting. Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (TPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan Plan Description: The Firefighters’ Unified Retirement System (FURS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing defined benefit plan established in 1981, and governed by Title 19, chapters 2 & 13, Montana Code Annotated (MCA). This plan provides retirement benefits to firefighters employed by first- and second-class cities, other cities and rural fire district departments that adopt the plan, and to firefighters hired by the Montana Air National Guard on or after October 1, 2001. Benefits are established by state law and can only be amended by the Legislature. Benefits provided: The FURS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. 78 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Service retirement and monthly benefit formula: • Hired on or after July 1, 1981, or member has elected to be covered by GABA: ο 20 years of membership service, regardless of age ο 2.5% of HAC times years of service credit • Hired prior to July 1, 1981, and not elected to be covered by GABA, the greater of above or: ο If membership service is less than 20 years: 2% of the highest monthly compensation (HMC) for each year of service credit; ο If membership service is greater than or equal to 20 years: 50% of HMC plus 2% of HMC for each year of service credit in excess of 20 • Early retirement: Age 50 with 5 years of membership service - Normal retirement benefit calculated using HAC and service credit Second Retirement (applies to retirement system members re-employed in a FURS position on or after July 1, 2017): • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο is not awarded service credit for the period of reemployment; ο is refunded the accumulated contributions associated with the period of reemployment; ο starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο is awarded service credit for the period of reemployment; ο starting the first month following termination of service, receives: the same retirement benefit previously paid to the member; and a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members’ rehire date, and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: on the initial retirement benefit in January immediately following second retirement, and on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Member’s compensation period used in benefit calculation: • Hired prior to July 1, 1981, and not electing GABA: highest monthly compensation (HMC); • Hired after June 30, 1981, and those electing GABA: highest average compensation (HAC) during any consecutive 36 months (or shorter period of total service). • Part-time firefighter: 15% of regular compensation of a newly confirmed full-time firefighter. Compensation Cap • Hired on or after July 1, 2013 – 110% annual cap on compensation considered as a part of a member’s highest average compensation. 79 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Guaranteed Annual Benefit Adjustment (GABA) • Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months – the member’s benefit increases by 3.0% each January. Minimum Benefit Adjustment (non‐GABA) • A member with 10 or more years of membership service who has not elected to be covered under GABA – the minimum benefit provided may not be less than 50% of the monthly compensation paid to a newly confirmed active firefighter of the employer that last employed the member as a firefighter in the current fiscal year. Contributions: The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: MCA 19-13-604 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. Member Fiscal Year Non-GABA GABA Employer State 1998-2023 9.500%1.700%14.360% 32.610% 1997 7.800%N/A 14.360% 32.610% Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2022, is on an actuarial valuation performed by the Plan’s actuary as of June 30, 2022. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2023 and 2022 reporting dates are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. Due to the existence of the special funding situation, the state is required to report a proportionate share of a local government’s collective NPL that is associated with the non-state employer. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $3,494,798 and the employer’s proportionate share was 2.2000 percent. 80 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Change inJune 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Percent of Reporting Date Reporting Date Reporting Date Reporting Date Collective TPL City Proportionate Share 3,494,798$ 1,935,764$ 2.2000% 2.2620% -0.0620% State of Montana Proportionate Share associated with the City 7,906,822$ 4,393,566$ 4.9775% 5.1341% -0.1566% Total 11,401,620$ 6,329,330$ 7.1775% 7.3961% -0.2186% Net Pension Liability as of Percent of Collective NPL as of Changes in actuarial assumptions and methods: The following changes in assumptions or other inputs were made that affected the measurement of the TPL. • The discount rate was increased from 7.06% to 7.30%. • The investment rate of return was increased from 7.06% to 7.30%. • The payroll growth rate was reduced from 3.50% to 3.25%. • All mortality tables were updated to the PUB2010 tables for public safety employees. • Updated the rates of withdrawal, retirement, disability and merit increase scales. • The inflation rate was increased from 2.40% to 2.75%. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense: At June 30, 2023, the reporting date, the employer recognized its proportionate share of the Plan’s pension expense of $687,199. The employer also recognized grant revenue of $1,617,904 for the support provided by the State of Montana for its proportionate share of the pension expense that is associated with the employer. Recognition of Deferred Inflows and Outflows: At June 30, 2023, the reporting date, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Expected vs actual experience 304,800$ 6,829$ Project investment earnings vs. actual investment earnings 219,493 - Changes in assumptions 908,214 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 71,139 City contributions subsequent to the measurement date 683,412 - 2,115,919$ 77,968$ 81 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The $683,412 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: For the Reporting Recognition of Deferred Outflows and Deferred Inflows in Year Ended June 30, Future Years as an Increase (Decrease) to Pension Expense 2024 310,314$ 2025 210,951 2026 138,702 2027 554,162 2028 140,410 Actuarial Assumptions: The total pension liability measured as of June 30, 2022, for the June 30, 2023, reporting date, was determined on the results of an actuarial valuation date of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment return (net of pension plan 7.3% investment expense, including inflation) General wage growth*3.5% *includes inflation at 2.75% Merit increases 1.00% to 6.40% Postretirement Benefit Increases Guaranteed Annual Benefit Adjustment (GABA) each January Members hired on or after July 1, 1997, or those electing GABA (requires 12 full months of retirement before GABA 3% will be made) Minimum Benefit Adjustment (non-GABA)Members with 10 or more yars of membership service The minimum benefit provided shouldand member did not elect GABA not be less than 50% of the current base compensation of a newly confirmed active firefighter of the employer that last employed the member as a fire fighter. 82 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 For active members, mortality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality projected to 2021 for males and females, projected generationally using MP-2021. For healthy retirees, morality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality table projected to 2021, with ages set forward one year for males, adjusted 105% for males and 100% for females, projected generationally using MP-2021. For contingent survivors, mortality rates were based on PUB-2010 Safety Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males, projected generationally using MP-2021. For disabled retirees, the mortality rates were based on PUB-2010 Safety Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for males. The actuarial assumptions and methods utilized in the June 30, 2022, valuation, were developed in the five-year experience study for the period ending 2021. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non- employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 32.61% of the salaries paid by employers. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2133. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2022, is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. 83 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The target asset allocation and best estimates of arithmetic real rate of return for each major asset class as of the most recent experience study, are summarized in the following table. Long-TermExpected Real Target Asset Rate of Return Asset Class Allocation Arithmetic Basis Cash 3.0%-0.33% Domestic Equity 30.0%5.90% International Equity 17.0%7.14% Private Investments 15.0%9.13% Real Assets 5.0%4.03% Real Estate 9.0%5.41% Core Fixed Income 15.0%1.14% Non-Core Fixed Income 6.0%3.02% Total 100.0% Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. 1% Decrease Current Discount 1% Increase (6.30%)Rate (7.30%)(8.30%) City's proportionate share of the net pension liability 6,057,049$ 3,494,798$ 1,448,854$ Pension plan fiduciary net position: The stand-alone financial statements (76d) of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. The reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annualreports1/annualreports. Municipal Police Officers’ Retirement System (MPORS) In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non- employer contributing entity are required to recognize and report certain amounts associated with participation in the Municipal Police Officers’ Retirement System (the Plan). This includes the proportionate share of the collective TotalPension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single- employer, or agent plans. This report provides information for employers who are using a June 30, 2022, measurement date for the 2023 reporting. 84 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB).General Information about the Pension Plan General Information about the Pension Plan Plan Description: The Municipal Police Officers’ Retirement System (MPORS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing defined benefit plan established in 1974 and governed by Title 19, chapters 2 & 9, Montana Code Annotated (MCA). This plan provides retirement benefits to all municipal police officers employed by first- and second-class cities and other cities that adopt the plan. Benefits are established by state law and can only be amended by the Legislature. Deferred Retirement Option Plan (DROP): Beginning July 2002, eligible members of MPORS can participate in the DROP by filing a one-time irrevocable election with the Board. The DROP is governed by Title 19, Chapter 9, Part 12, MCA. A member must have completed at least twenty years of membership service to be eligible. They may elect to participate in the DROP for a minimum of one month and a maximum of 60 months and may only participate in the DROP once. A participant remains a member of the MPORS but will not receive membership service or service credit in the system for the duration of the member’s DROP period. During participation in the DROP, all mandatory contributions continue to the retirement system. A monthly benefit is calculated based on salary and years of service to date as of the beginning of the DROP period. The monthly benefit is paid into the member’s DROP account until the end of the DROP period. At the end of the DROP period, the participant may receive the balance of the DROP account in a lump-sum payment or in a direct rollover to another eligible plan, as allowed by the IRS. If the participant continues employment after the DROP period ends, they will again accrue membership service and service credit. The DROP account cannot be distributed until employment is formally terminated. Benefits provided: MPORS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and compensation. Member rights are vested after five years of service. Service retirement and monthly benefit formula: • 20 years of membership service, regardless of age. • Age 50 with 5 years of membership service (Early Retirement). • 2.5% of FAC times years of service credit. 85 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Second retirement: Re-calculated using specific criteria for members who return to covered MPORS employment prior to July 1, 2017: • Less than 20 years of membership service, upon re-employment, repay benefits and subsequent retirement is based on total MPORS service. • More than 20 years of membership service, upon re-employment, receives initial benefit and a new retirement benefit based on additional service credit and FAC after re-employment. Applies to retirement system members re-employed in a MPORS position on or after July 1, 2017: • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο is not awarded service credit for the period of reemployment; ο is refunded the accumulated contributions associated with the period of reemployment; ο starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο is awarded service credit for the period of reemployment; ο starting the first month following termination of service, receives: the same retirement benefit previously paid to the member, and a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members rehire date; and ο does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: on the initial retirement benefit in January immediately following second retirement, and on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Member’s final average compensation (FAC) • Hired prior to July 1, 1977 - average monthly compensation of final year of service; • Hired on or after July 1, 1977 - final average compensation (FAC) for last consecutive 36 months. Compensation Cap • Hired on or after July 1, 2013: 110% annual cap on compensation considered as a part of a member’s FAC. Guaranteed Annual Benefit Adjustment (GABA) • Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months, a GABA will be made each year in January equal to 3%. Minimum benefit adjustment (non‐GABA) • The minimum benefit provided may not be less than 50% of the compensation paid to a newly confirmed police officer of the employer that last employed the member as a police officer in the current fiscal year. 86 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Contributions: The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: MCA 19-9-702 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. MemberHired before Hired after Hired after Hired after Fiscal Year 7/1/1975 6/30/1975 6/30/1979 6/30/1997 GABA Employer State 2000-2023 5.800%7.000%8.500%9.000%14.410% 29.370% 1998-1999 7.800%9.000%10.500% 11.000% 14.410% 29.370%1997 7.800%9.000%10.500%N/A 14.360% 29.370% Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2022, is on an actuarial valuation performed by the Plan’s actuary as of June 30, 2022. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2023 and 2022 reporting dates are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. Due to the existence of the special funding situation, the state is required to report a proportionate share of a local government’s collective TPL that is associated with the non-state employer. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $7,120,779 and the employer’s proportionate share was 3.0145 percent. Change in June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Percent of Reporting Date Reporting Date Reporting Date Reporting Date Collective TPL City Proportionate Share 7,120,779$ 5,327,439$ 3.0145% 2.9306% 0.0839% State of Montana ProportionateShare associated with the City 14,472,724$ 10,828,332$ 6.1270% 5.9566% 0.1704% Total 21,593,503$ 16,155,771$ 9.1415% 8.8872% 0.2543% Net Pension Liability as of Percent of Collective NPL as of Changes in actuarial assumptions and methods: The following changes in assumptions or other inputs were made that affected the measurement of the TPL. • The discount rate was increased from 7.06% to 7.30%. • The investment rate of return was increased from 7.06% to 7.30%. • All mortality assumptions were updated to the PUB2010 tables for public safety employees. • Rates of withdrawal, retirement, disability retirement, and merit increases were updated. 87 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 • Payroll growth assumption was lowered from 3.50% to 3.25%. • The inflation rate was increased from 2.40% to 2.75%. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense: At June 30, 2023, the reporting date, the employer recognized its proportionate share of the Plan’s pension expense of $1,261,458. The employer also recognized grant revenue of $2,481,326 for the support provided by the State of Montana for its proportionate share of the pension expense associated with the employer. Recognition of Deferred Inflows and Outflows: At June 30, 2023, the reporting date, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Expected vs actual experience 31,670$ 37,308$ Project investment earnings vs. actual investment earnings 259,365 - Changes in assumptions 628,407 136,678 Changes in proportion and differences between employer contributions and proportionate share of contributions 123,359 - City contributions subsequent to the measurement date 883,471 - 1,926,272$ 173,986$ The $883,471 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: For the Reporting Recognition of Deferred Outflows and Deferred Inflows in Year Ended June 30, Future Years as an Increase (Decrease) to Pension Expense 2024 467,549$ 2025 158,069 2026 (142,191) 2027 385,388 88 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Actuarial Assumptions: The total pension liability measured as of June 30, 2022, for the June 30, 2023, reporting date, was determined on the results of an actuarial valuation date of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment return (net of pension plan 7.3% investment expense, including inflation) General wage growth*3.5% *includes inflation at 2.75% Merit increases 1.00% to 6.40% Postretirement Benefit Increases Guaranteed Annual Benefit Adjustment (GABA) each January Members hired on or after July 1, 1997, or those electing GABA (requires 12 full months of retirement before GABA 3% will be made) Minimum Benefit Adjustment (non-GABA) Benefit for a retired member or member's survivor and The minimum benefit provided shouldmember did not elect GABA not be less than 50% of the monthlycompensation paid to a newly confirmed police officer of the employerthat last employed the member as a police officer. For active members, mortality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality projected to 2021 for males and females, projected generationally using MP-2021. For healthy retirees, morality rates were based on PUB-2010 Safety Amount Weighted Healthy Retiree Mortality table projected to 2021, with ages set forward one year for males, adjusted 105% for males and 100% for females, projected generationally using MP-2021. . For disabled retirees, the mortality rates were based on PUB-2010 Safety Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for males. For contingent survivors, mortality rates were based on PUB-2010 Safety Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males, projected generationally using MP-2021 89 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The actuarial assumptions and methods utilized in the June 30, 2022, valuation, were developed in the five-year experience study for the period ending 2021. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non- employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 29.37% of the salaries paid by employers. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2134. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2022 is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class as of the most recent experience study, are summarized in the following table. Long-Term Expected Real Target Asset Rate of ReturnAsset Class Allocation Arithmetic Basis Cash 3.0%-0.33% Domestic Equity 30.0%5.90% International Equity 17.0%7.14% Private Investments 15.0%9.13% Real Assets 5.0%4.03% Real Estate 9.0%5.41%Core Fixed Income 15.0%1.14% Non-Core Fixed Income 6.0%3.02% Total 100.0% 90 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. 1% Decrease Current Discount 1% Increase (6.30%)Rate (7.30%)(8.30%) City's proportionate share of the net pension liability 10,730,017$ 7,120,779$ 4,254,327$ Pension plan fiduciary net position: The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. These reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annualreports1/annualreports. Note 12 - Interfund Activity Interfund receivables/payables are used when a fund has a cash deficit, as well as for other short-term amounts owed between funds. Nonmajor Governmental InternalFundsService Funds TotalDue to:General Fund 543,293$ 900,906$ 1,444,199$ Due from: Interfund advances are used to account for long-term advances between funds. A summary of the City’s interfund advances is as follows: Advances to Advances fromother City funds other City Funds SID Debt Service -$ 641,763$ Nonmajor Governmental Funds 641,763 - 641,763$ 641,763$ 91 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Interfund Transfers Transfers are used to (1) move revenues from the fund that statute or budgets requires to collect them to the fund that statute or budgets require to expend them, (2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (3) to transfer non-restricted interest income from the permanent fund to the general fund. The following interfund transfers occurred during the year ended June 30, 2023 Transfer InCapitalNonmajorGeneralProjectsGovernmental Water Fund Fund Funds FundTransfer outGeneral Fund -$ 4,963,542$ 1,349,081$ -$ Street Maintenance Fund - - 206,363 - American Rescue Plan 3,308,013 - 1,901,300 1,295,912 SID Debt Service 2,078,222 - 924,487 - Capital projects - - 771,342 - Nonmajor Governmental Funds 5,468,642 1,141,038 959,642 55,475 Water Fund - 278,855 - - Wastewater Fund - 96,454 - - Nonmajor Enterprise Funds - 40,973 - - Total 10,854,877$ 6,520,862$ 6,112,215$ 1,351,387$ Transfer in NonmajorWastewaterSolid Waste EnterpriseFundFundFunds Total Transfer outGeneral Fund -$ 295,000$ 190,784$ 6,798,407$ Street Maintenance Fund - - - 206,363 American Rescue Plan 246,769 - - 6,751,994 SID Debt Service - - - 3,002,709 Capital projects - - - 771,342 Nonmajor Governmental Funds - - - 7,624,797 Water Fund - - - 278,855 Wastewater Fund - - - 96,454 Nonmajor Enterprise Funds - - - 40,973 Total 246,769$ 295,000$ 190,784$ 25,571,894$ General Fund transfers in from the American Rescue Plan Act fund covered general government services expenses as allowable under the revenue recovery federal grant terms. General Fund transfers in from nonmajor governmental funds were for health insurance expenses. Excess money in the SID Debt Service Fund was transferred in the General Fund as allowed under Montana Code. 92 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Capital Project Fund transfers in from the General Fund, nonmajor governmental funds, Water Fund, and Wastewater Fund were primarily to cover overages in project costs. Nonmajor governmental funds transfers in from the General Fund covered payroll costs that exceed available grant funding and to finance a portion of community housing projects. Nonmajor governmental funds transfers in from the American Rescue Plan Act fund covered general government services expenses as allowable under the revenue recovery federal grant terms. Nonmajor governmental funds transfers in from SID Debt Service Fund were entered to close out paid special assessment districts. Nonmajor governmental funds transfers in from Capital Projects funds returned available cash upon project completion. Nonmajor governmental funds transfers in from other nonmajor governmental funds included funding for tax increment financing district debt payments and health insurance expenses. Water Fund and Wastewater Fund transfers in from the American Rescue Plan Act fund covered capital expenses for several infrastructure projects in accordance with federal grant terms. Solid Waste Fund and Nonmajor Enterprise Funds transfers in from the General Fund covers landfill monitoring costs and the landfill debt payments. 93 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 13 - Net Position/Fund Balances Net Investment in Capital Assets The amounts comprising the City’s net investment in capital assets on the government-wide statement of net position are as follows: Governmental Business-Type Activities Activities Capital Assets, Net of Accumulated Depreciation/Amortization 298,922,399$ 338,222,054$ Capital Related Debt (67,285,543) (43,689,354) Capital Debt Proceeds Not Yet Expended 6,041,524 - Capital Debt Reserve Balances - 3,321,798 Retainage Payable (241,479) (163,379) Accounts Payable Related to Capital Asset Acquisition (551,896) - Net Investment in Capital Assets 236,885,005$ 297,691,119$ The amounts comprising the City’s net investment in capital assets in the enterprise funds statement of net position are as follows: NonmajorWater Fund Waste Water Fund Solid Waste Fund Enterprise Funds Capital Assets, Net of Accumulated Depreciation/Amortization 163,167,451$ 157,008,229$ 2,410,427$ 15,635,947$ Capital Related Debt (16,185,614) (26,095,799) (140,034) (1,267,907) Capital Debt Reserve Balances 898,599 2,364,911 - 58,288 Retainage Payable (123,883) (34,201) (5,295) - Net Investment in Capital Assets 147,756,553$ 133,243,140$ 2,265,098$ 14,426,328$ 94 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Fund Balances The City classified fund balances within the governmental funds are as follows at June 30, 2023: Street OtherMaintenanceAmericanSIDGovernmentalGeneral Fund District Rescue Plan Debt Service Capital Projects Funds Total Fund BalancesNonspendableCemetary perpetual care -$ -$ -$ -$ -$ 1,804,399$ 1,804,399$ Prepaid items 37,167 - - - - - 37,167 Total nonspendable 37,167 - - - - 1,804,399 1,841,566 RestrictedGeneral governmentPlanning - - - - - 1,368,543 1,368,543 Health Insurance - - - - - 1,341,543 1,341,543 Other 54,789 560,265 615,054 Public safetyBuilding inspection - - - - - 1,021,673 1,021,673 Fire impact - - - - - 4,842,733 4,842,733 Victim witness - - - - - 345,883 345,883 Other 14,311,233 14,311,233 Public serviceGas tax - - - - - 241,522 241,522 Lighting districts - - - - - 504,862 504,862 Other - 1,845,732 4,351,213 6,196,945 Public welfareTax increment districts 4,553,485 4,553,485 Economic developmentloans - - - - - 987,246 987,246 Tree maintenance district - - - - - 617,190 617,190 Other - - - - - 11,166,299 11,166,299 Capital projects - - - - 10,467,723 - 10,467,723 Debt serviceSID Sinking - - - 1,518,340 - - 1,518,340 SID Revolving Fund - - - - - 697,208 697,208 Total restricted - 1,845,732 54,789 1,518,340 10,467,723 46,910,898 60,797,482 CommittedPublic welfare - - - - - 603,360 603,360 Capital projects 6,087,489 - - - - - 6,087,489 Total committed 6,087,489 - - - - 603,360 6,690,849 AssignedPublic welfare - - - - - 2,927,964 2,927,964 Unassigned 8,953,349 - - - - (302,973) 8,650,376 Total Fund Balances 15,078,005$ 1,845,732$ 54,789$ 1,518,340$ 10,467,723$ 51,943,648$ 80,908,237$ Note 14 - Deferred Compensation Plan The City offers its employees a defined contribution, deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. The City does not contribute to the plan, and it does not report any balances related to the deferred compensation plan, as these amounts represent neither assets nor liabilities to the City, and the plan is administered by an independent third party, ICMA Retirement Corporation. 95 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 15 - Impact Fees On January 22, 1996, the City Commission adopted fire, water, waste water and street impact fees in Ordinance number 1414. The impact fees were first effective on March 23, 1996. Impact fees were set at a percentage of the cost of the impact, to be phased out over 5 years. Beginning on March 30, 2013, all impact fees are charged at 100% of the impact. An applicant may obtain an Impact Fee Credit by dedication of non-site-related land or construction of non-site- related improvements. Credits must be made before the beginning of improvement construction, must comply with the City’s Capital Improvements Program, and must be approved by the City Commission. Credits may be used only for like-type impact fees. The full provisions for impact fee credits are contained in Chapter 3.24 of the Bozeman Municipal Code. For proprietary type funds, the City records a liability for the impact fee credit and capitalizes the underlying asset. For governmental-type funds, the credits are only disclosed in the footnotes. For government-wide financial reporting, the outstanding credits are reported as unearned revenue. The Water Impact Fee Fund, Street Impact Fee Fund, and Wastewater Impact Fee Fund have recorded impact fee credits amounting to $0, $33,232, and $114,576, respectively, for the fiscal year ending June 30, 2023. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2023: Expenses,Beginning Expenditures, EndingBalancesImpact Fees Other Income and Transfers Balances Fire 4,287,167$ 522,006$ 63,839$ (30,279)$ 4,842,733$ Water 15,281,920 2,572,101 2,791,567 (2,666,156) 17,979,432 Waste Water 9,793,026 1,556,078 120,908 - 11,470,012 Streets 13,218,872 5,205,583 222,127 (4,735,417) 13,911,165 Totals 42,580,985$ 9,855,768$ 3,198,441$ (7,431,852)$ 48,203,342$ Note 16 - Joint Venture Agreements Joint ventures are legal entities or other organizations that result in a contractual arrangement and that are owned, operated, or governed by two or more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. As of June 30, 2023, the City has entered into joint venture contractual arrangements, as follows: 911 Communication Center The City and Gallatin County, Montana (the County) have entered into an inter-local agreement for the purposes of establishment of the operation and financing of a 911 communication services division (the Division) for dispatch and records services, to define the relationship of the Administrative Board with the City and County, and to establish the line of authority for personnel furnishing the communication services to the City and County and others who may contract for the services. 96 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 City-County Drug Forfeitures The City and County have entered into an inter-local agreement for the purposes of establishment of a joint drug forfeiture account funded from drug related forfeitures, seizures, and prosecutions of City and County law enforcement cases and to establish an equitable means of distributing those funds to continue drug interdiction activities. The goal of the agreement is to make the City and County Drug Enforcement operations less reliant on the general and public safety fund monies of the City and County. The original term of the agreement was for a period of one year, beginning September 20, 2004 and automatically renews for a period of one year until terminated by either party with written notice of intent to terminate. Financial information regarding the joint drug forfeiture account can be obtained by contacting the City of Bozeman Department of Finance, 411 East Main Street, Bozeman, MT 59715. The County and City have entered into various other joint venture contractual arrangements, memorandums of understanding and inter-local agreements to support the following programs and/or operations: Victim Witness, Hazardous Materials, Solid Waste (Disposal and Convenient Site), Fire Warden/Chief, Evidence Technician, Library Services, Board of Health, and rental of the Law and Justice Center. The financial interests are not material. Montana Municipal Interlocal Authority The City and Montana Municipal Interlocal Authority (MMIA) have entered into a 20-year agreement in December 2012 to share up to $1 million in profits from the sale of city-owned property known as the Mandeville Farm. The agreement came about as part of a settlement on legal claims from the City of Bozeman vs. MMIA litigation. A “profit” shall occur only when the City has recovered its total investment in the property, which includes the original purchase price together with all “costs of development” as defined in the settlement agreement. Note 17 - Risk Management The City faces a considerable number of risks of loss, including a) damage to and loss of property and contents, b) employee torts, c) professional liability (i.e., errors and omissions), d) environmental damage, e) workers' compensation (i.e., employee injuries), and f) medical insurance cost of employees. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss except for small deductible amounts, are purchased for property and content damage and professional liabilities. The City participates in two state-wide public risk pools operated by the Montana Municipal Interlocal Authority (MMIA), for workers' compensation and for tort liability. Employee medical insurance is provided through a cost-sharing multiple- employer defined benefit plan administered by MMIA. The plan offers health, dental and vision benefits and flexible spending and health savings accounts. Given the lack of coverage available, the City has no coverage for potential losses from environmental damages. Commercial Policies Coverage limits and the deductibles on the commercial policies have stayed relatively constant for the last several years. The premiums for the policies are allocated between the City's Enterprise Funds and the General Fund. Premiums are subsidized through a special purpose property tax levy, based on total appropriations. Settled claims resulting from these risks did not exceed commercial insurance coverage during the three years ended June 30, 2023, 2022, and 2021. 97 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Public Entity Risk Pools In 1986, the City joined together with other Montana cities to form the Montana Municipal Interlocal Authority, which established a workers' compensation plan and a tort liability plan. Both public entity risk pools currently operate as common risk management and insurance programs for the member governments. The liability limits for damages in tort action are $750,000 per claim and $1.5 million per occurrence, and $12.5 million per occurrence for any claim that is not subject to the limitations on governmental liability, as described in Montana Code Annotated Section 2-9-108 (the Statute) or any successor statute, either as matter of law, by operation of the Statute, or by a judicial determination that the Statute is inapplicable or is otherwise invalid, with $11,250 deductible per occurrence. State tort law limits the City's liability to $1.5 million. The City pays premiums for its employee injury insurance coverage, which is allocated to the employer funds based on total salaries and wages. The agreements for formation of the pools provide that they will be self-sustaining through member premiums. The tort liability plan and workers' compensation program issued debt of $4.41 million and $6.155 million, respectively, to immediately finance the necessary insurance reserves. All members signed a contingent note for a pro rata share of this liability in case operating revenues were insufficient to cover the debt service; the debt was retired in 2011. The City also owns a policy with MMIA for loss or damage to property. This is an all-risk policy, essentially all property owned by the City being insured for 100% of replacement cost, subject to a $5,000 deductible per occurrence. MMIA reinsures their property insurance with a national municipal pool, Public Entities’ Property Insurance. Note 18 - Litigation The City generally follows the practice of recording liabilities resulting from claims and legal actions only when they become fixed or determinable in amount. In the opinion of City Counsel and management, such claims against the City not covered by insurance, would not materially affect the financial condition of the City at June 30, 2023. Note 19 - Contingencies Various claims and lawsuits involving the City can be pending at any given time. These claims are either covered by insurance or are the types which are normal in City operations and do not present any material risk of financial disruption. City management believes that the total amount of liability, if any, which may arise from such claims and lawsuits beyond that which is covered by insurance would not have a material effect on the City's financial condition or its ability to carry out its activities. 98 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Note 20 - Municipal Landfill Closure and Post-Closure Care Costs The City has a municipal solid waste landfill. State and Federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after final closure. The City stopped accepting waste effective June 30, 2008. The final capping of the cells is still pending. The City has accrued a liability for $2,359,259, which is its estimate of future landfill closure and post-closure care costs as of June 30, 2023 This amount is based on a Corrective Measures Assessment completed in September 2014 by a third-party engineering firm, from which a remediation plan has been adopted by the City and has been approved by the Montana Department of Environmental Quality. The cost of post closure care is an estimate and is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. The Solid Waste Fund accounts for the City’s solid waste collection, recycling, and disposal utility operation – including assets, liabilities, and post-closure costs associated with the closed Story Mill landfill. Segment information for the landfill is as follows: Condensed Statement of Net Position Restricted cash and cash equivalents 240,391$ Capital assets, net of depreciation 752,832 Total assets 993,223 Current liabilities 314,898 Closure and post-closure care cost 2,359,259 Total liabilities 2,674,157 Restricted for debt service (1,680,934)$ 99 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 Condensed Statement of Revenues, Expenses and Changes in Net Position Operating revenues and expenses: Operating revenues -$ Operating expenses Depreciation 6,142 Change in post closure cost estimate 1,403,611 Other operating 269,991 Total operating expenses 1,679,744 Operating profit (1,679,744) Non-operating revenues (expenses): Interest income 7,850 Transfers 295,000 Total non-operating revenues 302,850 Change in net position (1,376,894) Net position, beginning of year (304,040) Net position, end of year (1,680,934)$ Note 21 - Pollution Remediation Obligations Jewel v. City of Bozeman / State of Montana v. City of Bozeman This action was filed in the United States District Court for the District of Montana. The multi-count complaint reduced itself to a cost recovery action under the Federal Superfund (CERCLA) and State Superfund (CECRA). On July 8, 1999, the City, Jewel Food Stores, Inc. and the other parties reached a final settlement agreement in this action. The settlement, in part, required Jewel Food Stores, Inc. to pay the City of Bozeman $1,200,000, the City and Jewel to extend alternative water supply to businesses and residents in the North 19th Avenue area of the City; and Jewel and the City to share specified remediation costs on an equal basis (50% each) up to a cumulative amount of $4,000,000, and for eligible costs in excess of that amount, to be shared 70% by Jewel and 30% by the City. The City is reimbursed by insurers for 23% of the City’s expenditures for these purposes. 100 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The Montana Department of Environmental Quality (MDEQ) issued the Record of Decision (ROD) for the Bozeman Solvent Site (BSS) in August 2011. The Administrative Order of Consent (AOC) was finalized in January 2012. The ROD and AOC specifically delineate the remediation to be completed for the BSS. The AOC serves as the legal mechanism for the implementation of the selected remedies identified in the ROD. Though remediation is currently underway and may be completed relatively quickly, monitoring of the site will continue for a period of up to 30 years. Tasman Geosciences, Inc. serves as the contractor for the potentially liable parties (the City of Bozeman and CVS Pharmacy, Inc.). Based on the selected remedies identified in the ROD, Tasman has completed a long-term cost projection for the project in February 2016. The long-term cost projection was reviewed in September 2017, and, at that time, it was determined it was still an accurate projection. This cost projection includes all remediation and monitoring cost, as well as the MDEQ cost recovery associated with the BSS. The long-term cost projection for the City is $2,089,997 in remediation costs. Reduced by its insurer’s reimbursement, the amount is $536,669. This liability is recorded in the Wastewater Fund, is an estimate, and is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. CMC Asbestos Bozeman CECRA Facility In 2001, the City purchased property located within the CMC Asbestos Bozeman Facility (the “Facility”), a former asbestos ore storage and processing, recycling/salvage yard. In 2002, contractors for the City, under the Montana Voluntary Cleanup and Redevelopment Act (VCRA), submitted a Voluntary Cleanup Plan (VCP), which was approved by the Department of Environmental Quality (DEQ). Remediation work on City-owned property was completed in October 2003. On December 21, 2006, the City agreed to complete remedial actions at the remainder of the Facility, which included adjacent, private properties. The City submitted an Addendum to its original VCP, and cleanup work under the approved Addendum was completed in June 2009. On October 20, 2010, the City received notice from the DEQ stating that no further action is required at the facility and that the DEQ proposes removing the Facility from the CECRA priority list. Pursuant to an August 2007 Stipulated Agreement between the City and all other involved parties, additional cleanup after issuance of the DEQ’s closure letter may be required by DEQ based upon property use changes, modification of structures, or other factors. The City has an ongoing claim against the State orphan share for the orphan share funds’ proportional share of these post-closure clean-up costs. In addition, all other parties are still liable for their proportional share of the clean-up. The result is that should additional work be required at the Facility, the City will only be liable for 1% of the total post-closure clean-up costs. Note 22 - Commitments The City entered into a contract to repair and remodel the Bozeman Swim Center. The contract commitment for the project is $1,969,236. For the year ended June 30, 2023, the City had incurred $551,971 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into various contracts for road and streetscape projects. The contract commitments for the projects are $19,150,165. For the year ended June 30, 2023, the City had incurred $10,215,705 towards the projects, which are reported as construction in progress in the Statement of Net Position. 101 City of Bozeman, Montana Notes to Financial Statements June 30, 2023 The City entered into a contract to construct the Library Renovation project. The contract commitment for the project is $3,797,555. For the year ended June 30, 2023, the City had incurred $2,819,364 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract to construct the Fire Station #2 project. The contract commitment for the project is $11,574,604. For the year ended June 30, 2023, the City had incurred $1,042,896.01 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for construction services for the Sourdough Water Transmission Main, Phase 2 project. The contract commitment for the project is $4,105,303. For the year ended June 30, 2023, the City had incurred $4,047,285 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for drilling services for the groundwater investigation project. The contract commitment for the project is $550,850. For the year ended June 30, 2023, the City had incurred $145,464 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for construction services for the Solid Waste addition project. The contract commitment for the project is $773,800. For the year ended June 30, 2023, the City had incurred $105,900 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for construction services for the Downtown Sewer Main project. The contract commitment for the project is $617,900. For the year ended June 30, 2023, the City had incurred $587,006 towards the project, which is reported as construction in progress in the Statement of Net Position. Required Supplementary Information June 30, 2023 City of Bozeman, Montana 102 City of Bozeman, Montana Schedule of Changes in Total OPEB Liability and Related Ratios June 30, 2023 Schedule of Changes in Total OPEB Liability and Related Ratios Last 10 Fiscal Years* 2023 2022 2021 2020 2019 2018 Service cost 386,864$ 348,856$ 218,391$ 224,433$ 180,183$ 256,948$ Interest cost 116,219 101,891 105,950 105,809 88,126 81,562 Assumption changes (862,570) 428,413 1,270,632 86,882 225,374 (653,711) Differences between expected and actual experience (110,114) - (8,615) - (502,125) 431,737 Benefit payments (146,957) (147,232) (119,793) (116,330) (118,184) (431,737) Net change in total OPEB liability (616,558) 731,928 1,466,565 300,794 (126,626) (315,201) Total OPEB liability, beginning of year 5,067,116 4,335,188 2,868,623 2,567,829 2,694,455 3,009,656 Total OPEB liability, end of year 4,450,558$ 5,067,116$ 4,335,188$ 2,868,623$ 2,567,829$ 2,694,455$ Covered payroll 29,433,945$ 27,432,420$ 29,119,539$ 24,490,157$ 23,503,572$ 45,345,305$ City's total OPEB liability as a percentage ofcovered payroll 15.12%18.47%14.89%11.71%10.93%5.94% *GASB Statement No. 75 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. 103 City of Bozeman, Montana Notes to Schedule of Changes in Total OPEB Liability and Related Ratios June 30, 2023 Notes to the Schedule of Changes in Total OPEB Liability and Related Ratios Assets are not accumulated in a trust that meets the criteria in GASB Statement No. 75, paragraph 4 to pay related benefits. Assumption Changes Changes of assumptions reflect the effects of changes in the discount rate used each period. The following are the discount rates used for each period presented: 6/30/2023 3.69% 6/30/2022 2.16% 6/30/2021 2.21% 6/30/2020 3.50% 6/30/2019 3.87% 6/30/2018 3.13% 104 City of Bozeman, Montana Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 Schedule of Employer’s Share of Net Pension Liability Last 10 Fiscal Years* Employer's Employer's State's Total ProportionateEmployer's Proportionate Proportionate Proportionate Share of the Total Plan FiduciaryProportionShare (Amount) Share (Amount) Share (Amount)Pension Liability Net Position as(Percentage)of the Net of the Net of the Net Employer's as a Percentage a Percentage ofMeasurementof the Net Pension Liability Pension Liability Pension Liability Covered-of its Covered-the Total PensionDatePension Liability (a)(b)(a+b)Payroll (c) Payroll (a/c)Liability 6/30/2022 0.905336% 21,527,855$ 6,454,277$ 27,982,132$ 15,910,277$ 135.31%73.66%6/30/2021 0.841036% 15,249,847$ 4,507,680$ 19,757,527$ 14,855,905$ 102.65%79.91%6/30/2020 0.852225% 22,483,506$ 7,096,303$ 29,579,809$ 14,298,930$ 157.24%68.90%6/30/2019 0.861979% 18,018,037$ 5,867,557$ 23,885,594$ 14,222,530$ 126.69%73.85%6/30/2018 0.833641% 17,399,265$ 5,822,595$ 23,221,860$ 13,764,340$ 126.41%73.47%6/30/2017 1.041883% 20,291,988$ 266,967$ 20,558,955$ 12,924,792$ 157.00%73.75%6/30/2016 1.021762% 17,404,143$ 212,659$ 17,616,802$ 12,238,920$ 142.20%74.71%6/30/2015 0.958835% 13,403,285$ 164,637$ 13,567,922$ 11,189,797$ 119.78%78.40%6/30/2014 0.915049% 11,401,613$ 139,231$ 11,540,844$ 10,479,122$ 108.80%79.90% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. Schedule of Employer’s Contributions Last 10 Fiscal Years* Contributions inRelation to the Contributions asStatutorilyPlan Choice Rate Statutorily Contribution a Percentage of Reporting Required Required Required Deficiency Covered- Covered- Date Contribution (a) Contribution (b) Contribution (c)(Excess) (a+b-c)Payroll (d) Payroll (c/d) 6/30/2023 1,889,101$ -$ 1,889,101$ -$ 21,068,370$ 8.97%6/30/2022 1,414,999$ -$ 1,414,999$ -$ 15,910,277$ 8.89%6/30/2021 1,316,517$ -$ 1,316,517$ -$ 14,855,905$ 8.86%6/30/2020 1,252,776$ -$ 1,252,776$ -$ 14,298,930$ 8.76%6/30/2019 1,223,234$ -$ 1,223,234$ -$ 14,222,530$ 8.60%6/30/2018 1,161,210$ -$ 1,161,210$ -$ 13,764,340$ 8.44%6/30/2017 1,081,810$ -$ 1,081,810$ -$ 12,924,792$ 8.37%6/30/2016 1,022,996$ 28,892$ 1,051,888$ -$ 12,238,920$ 8.59%6/30/2015 922,084$ 52,151$ 974,235$ -$ 11,189,797$ 8.71% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. 105 City of Bozeman, Montana Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Firefighters’ Unified Retirement System Pension Plan June 30, 2023 Schedule of Employer’s Share of Net Pension Liability Last 10 Fiscal Years* Employer's Employer's State's Total ProportionateEmployer's Proportionate Proportionate Proportionate Share of the Net Plan FiduciaryProportionShare (Amount) Share (Amount) Share (Amount)Pension Liability Net Position as(Percentage)of the Net of the Net of the Net Employer's as a Percentage a Percentage ofMeasurementof the Net Pension Liability Pension Liability Pension Liability Covered-of its Covered-the Total PensionDatePension Liability (a)(b)(a+b)Payroll (c) Payroll (a/c)Liability 6/30/2022 2.2000%3,494,798$ 7,906,822$ 11,401,620$ 4,263,039$ 81.98%78.76%6/30/2021 2.2620%1,935,764$ 4,393,566$ 6,329,330$ 4,162,698$ 46.50%87.72%6/30/2020 2.3217%3,632,985$ 8,189,975$ 11,822,960$ 4,052,989$ 89.64%75.34%6/30/2019 2.1955%2,518,508$ 6,091,025$ 8,609,533$ 3,807,151$ 66.15%80.08%6/30/2018 2.3663%2,725,281$ 6,231,502$ 8,956,783$ 3,726,746$ 73.13%79.03%6/30/2017 2.3492%2,655,380$ 6,030,078$ 8,685,458$ 3,511,860$ 75.61%77.77%6/30/2016 2.3705%2,707,390$ 6,134,093$ 8,841,483$ 3,338,041$ 81.11%75.48%6/30/2015 2.4336%2,489,054$ 5,543,784$ 8,032,838$ 3,270,451$ 76.11%76.90%6/30/2014 2.4192%2,361,551$ 5,327,544$ 7,689,095$ 3,142,481$ 75.15%76.71% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. Schedule of Employer’s Contributions Last 10 Fiscal Years* Contributions inRelation to the Contributions asStatutorily Statutorily Contribution a Percentage ofReporting Required Required Deficiency Covered- Covered- Date Contribution (a) Contribution (b)(Excess) (a-b)Payroll (c) Payroll (b/c) 6/30/2023 683,412$ 683,412$ -$ 4,759,139$ 14.36% 6/30/2022 616,605$ 616,605$ -$ 4,263,039$ 14.46%6/30/2021 595,510$ 595,510$ -$ 4,162,698$ 14.31%6/30/2020 596,564$ 596,564$ -$ 4,052,989$ 14.72%6/30/2019 524,670$ 524,670$ -$ 3,807,151$ 13.78%6/30/2018 548,518$ 548,518$ -$ 3,726,746$ 14.72%6/30/2017 504,303$ 504,303$ -$ 3,511,860$ 14.36%6/30/2016 477,250$ 477,250$ -$ 3,338,041$ 14.30%6/30/2015 478,776$ 478,776$ -$ 3,270,451$ 14.64% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. 106 City of Bozeman, Montana Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Municipal Police Officers’ Retirement System Pension Plan June 30, 2023 Schedule of Employer’s Share of Net Pension Liability Last 10 Fiscal Years* Employer's Employer's State's Total ProportionateEmployer's Proportionate Proportionate Proportionate Share of the Net Plan FiduciaryProportionShare (Amount) Share (Amount) Share (Amount)Pension Liability Net Position as(Percentage)of the Net of the Net of the Net Employer's as a Percentage a Percentage ofMeasurementof the Net Pension Liability Pension Liability Pension Liability Covered-of its Covered-the Total PensionDatePension Liability (a)(b)(a+b)Payroll (c) Payroll (a/c)Liability 6/30/2022 3.0145%7,120,779$ 14,472,724$ 21,593,503$ 5,623,538$ 126.62%69.67%6/30/2021 2.9306%5,327,439$ 10,828,332$ 16,155,771$ 5,303,838$ 100.44%75.76%6/30/2020 2.9892%7,311,248$ 14,746,046$ 22,057,294$ 5,120,608$ 142.78%64.84%6/30/2019 2.8699%5,712,381$ 11,632,402$ 17,344,783$ 4,729,931$ 120.77%68.84%6/30/2018 2.9325%5,022,189$ 10,266,345$ 15,288,534$ 4,628,804$ 108.50%70.95%6/30/2017 3.0402%5,408,979$ 11,024,418$ 16,433,397$ 4,555,121$ 118.75%68.34%6/30/2016 3.0842%5,552,007$ 11,020,975$ 16,572,982$ 4,353,897$ 127.52%65.62%6/30/2015 2.9746%4,920,638$ 9,969,680$ 14,890,318$ 4,116,930$ 119.52%66.90%6/30/2014 3.0209%4,746,933$ 9,589,371$ 14,336,304$ 3,142,481$ 151.06%67.01% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. Schedule of Employer’s Contributions Last 10 Fiscal Years* Contributions inRelation to the Contributions asStatutorily Statutorily Contribution a Percentage ofReporting Required Required Deficiency Covered- Covered- Date Contribution (a) Contribution (b)(Excess) (a-b)Payroll (c) Payroll (b/c) 6/30/2023 883,471$ 883,471$ -$ 6,130,962$ 14.41% 6/30/2022 810,351$ 810,351$ -$ 5,623,538$ 14.41%6/30/2021 763,261$ 763,261$ -$ 5,303,838$ 14.39%6/30/2020 732,880$ 732,880$ -$ 5,120,608$ 14.31%6/30/2019 684,296$ 684,296$ -$ 4,729,931$ 14.47%6/30/2018 692,318$ 692,318$ -$ 4,628,804$ 14.96%6/30/2017 655,143$ 655,143$ -$ 4,555,121$ 14.38%6/30/2016 637,789$ 637,789$ -$ 4,353,897$ 14.65%6/30/2015 596,791$ 596,791$ -$ 4,116,930$ 14.50% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10- year trend in compiled, the City will present information for those years for which information is available. 107 City of Bozeman, Montana Notes to the Schedules of Employer’s Share of Net Pension Liability and Schedules of Employer’s Contributions June 30, 2023 Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Change of Benefit Terms The following changes to the PERS, FURS, and MPORS plan provisions were made as identified: 2017 Legislative Changes – PERS: Working Retiree Limitations Effective July 1, 2017, if a PERS retiree returns as an independent contractor to what would otherwise be PERS- covered employment, general contractor overhead costs are excluded from PERS working retiree limitations. Refunds 1) Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. 2) Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. 3) Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest Credited To Member Accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77%. Lump‐Sum Payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. Disabled PERS Defined Contribution (DC) Members PERS members hired after July 1, 2011 have a normal retirement age of 65. PERS DC members hired after July 1, 2011 who became disabled were previously only eligible for a disability benefit until age 65. Effective July 1, 2017, these individuals will be eligible for a disability benefit until they reach 70, thus ensuring the same 5-year time period available to PERS DC disabled members hired prior to July 1, 2011 who have a normal retirement age of 60 and are eligible for a disability benefit until age 65. 108 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 2017 Legislative Changes – FURS: Working Retiree Limitations Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. • Members who return for less than 480 hours in a calendar year: ο May not become an active member in the system; and ο Are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. • Members who return for 480 or more hours in a calendar year: ο Must become an active member of the system; ο Will stop receiving a retirement benefit from the system; and ο Will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. • Employee, employer and state contributions, if any, apply as follows: ο Employer contributions and state contributions (if any) must be paid on all working retirees; ο Employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο Is not awarded service credit for the period of reemployment; ο Is refunded the accumulated contributions associated with the period of reemployment; ο Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο Is awarded service credit for the period of reemployment; ο Starting the first month following termination of service, receives: The same retirement benefit previously paid to the member, and A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and 109 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: On the initial retirement benefit in January immediately following second retirement, and On the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest Credited to Member Accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77% Lump‐Sum Payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. 2017 Legislative Changes – MPORS: Working Retiree Limitations Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. • Members who return for less than 480 hours in a calendar year: ο May not become an active member in the system; and ο Are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. • Members who return for 480 or more hours in a calendar year: ο Must become an active member of the system; ο Will stop receiving a retirement benefit from the system; and ο Will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. 110 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 • Employee, employer and state contributions, if any, apply as follows: ο Employer contributions and state contributions (if any) must be paid on all working retirees; ο Employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: ο Is not awarded service credit for the period of reemployment; ο Is refunded the accumulated contributions associated with the period of reemployment; ο Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. • If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: ο Is awarded service credit for the period of reemployment; ο Starting the first month following termination of service, receives: The same retirement benefit previously paid to the member, and A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and ο Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: On the initial retirement benefit in January immediately following second retirement, and On the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. 111 City of Bozeman, Montana Notes to the Schedule of Employer’s Share of Net Pension Liability and Schedule of Employer’s Contributions Montana Public Employees Retirement System Pension Plan June 30, 2023 Interest Credited to Member Accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77% Lump‐sum payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. Method and Assumptions used in Calculations of Actuarially Determined Contributions The following actuarial assumptions and methods were used to determine contribution rates reported for fiscal year ending June 30, 2022, which were based on the results of the June 30, 2021 actuarial valuation: PERS FURS MPORS General Wage Growth*3.50%3.50%3.50%Investment Rate of Return*7.65%7.65%7.65%*Includes inflation at 2.75%2.75%2.75% Merit increase 0% to 8.47%0% to 6.30%0% to 6.60% Asset valuation method Four-year smoothed market Four-year smoothed market Four-year smoothed marketActuarial cost method Entry age Normal Entry Age Normal Entry Age NormalAmortization method Level percentage of payroll, open Level percentage of pay, open Level percentage of pay, openMortality (Healthy members)For Males & Females: RP 2000 For Males & Females: RP 2000 For Males & Females: RP 2000 Combined Employee and Annuitant Combined Employee and Annuitant Combined Employee and Annuitant Mortality Table projected to 2020 Mortality Table projected to 2020 Mortality Table projected to 2020 using Scale BB, males set back using Scale BB, males set back using Scale BB, males set back1 year 1 year 1 yearMortality (Disabled members)For Males & Females: RP 2000 For Males & Females: RP 2000 For Males & Females: RP 2000 Combined Mortality Table, with no Combined Mortality Table Combined Mortality TableprojectionsAdmin Expense as a % of Payroll 0.29%0.13%0.17% Administrative expenses are recognized by an additional amount added to the normal cost contribution rate for the System. This amount varies from year to year based on the prior year’s actual administrative expenses. The actuarial assumptions and methods utilized in the June 30, 2021 valuation, were developed in the six-year experience study for the period ending 2016. 112 City of Bozeman, Montana Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis General Fund June 30, 2023 Actual Variance WithOriginal Budget Final Budget Amounts Final Budget Budgetary Fund Balance, July 1 5,444,605$ 5,444,605$ 5,444,605$ -$ Resources (inflows):Taxes 24,370,654 24,370,654 25,578,352 1,207,698 Licenses and permits 364,300 364,300 381,922 17,622 Intergovernmental 8,962,890 10,073,490 9,434,058 (639,432) Charges for services 4,225,559 6,146,228 6,307,168 160,940 Fines and forfeitures 1,074,000 1,074,000 1,009,841 (64,159) Interest on investments 80,000 80,000 171,669 91,669 Change in fair market value of investments - - (220,926) (220,926) Miscellaneous 294,626 294,626 351,367 56,741 Transfers in 4,514,716 8,644,904 10,854,877 2,209,973 Issuance of long-term debt - - 637,867 637,867 Sale of capital assets 5,000 2,768,705 2,774,759 6,054 Amounts available for appropriation 49,336,350 59,261,512 62,725,559 3,464,047 Charges to Appropriations (outflows):CurrentGeneral government 13,333,611 14,393,635 11,578,604 2,815,031 Public safety 16,803,308 19,974,420 20,849,308 (874,888) Public welfare 7,656,222 8,218,466 6,587,267 1,631,199 Other 5,118,620 2,203,427 1,683,415 520,012 Capital outlay 1,026,000 1,936,533 3,107,362 (1,170,829) Debt service - Principal 39,932 39,932 186,259 (146,327) Interest and fiscal charges 3,760 3,760 13,946 (10,186) Transfers to other funds 874,977 3,538,682 6,798,407 (3,259,725) Total charges to appropriations 44,856,430 50,308,855 50,804,568 (495,713) Budgetary fund balance, June 30 4,479,920$ 8,952,657$ 11,920,991$ 2,968,334$ 113 City of Bozeman, Montana Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis Major Special Revenue Funds June 30, 2023 Street Maintenance District Special Revenue Fund American Rescue Plan Special Revenue Fund Actual Variance With Actual Variance With Original Budget Final Budget Amounts Final Budget Original Budget Final Budget Amounts Final Budget Budgetary Fund Balance, July 1 1,963,990$ 1,963,990$ 1,963,990 -$ (197,922)$ (197,922)$ (197,922) -$ Resources (inflows): Special assessments 15,000 21,100 17,716 (3,384) - - - - Licenses and permits 18,000 18,000 37,033 19,033 - - - - Intergovernmental - - 35,762 35,762 6,734,581 6,734,581 6,751,994 17,413 Charges for services 6,768,463 6,768,463 8,220,620 1,452,157 - - - - Interest on investments 10,000 11,000 41,037 30,037 - - 196,050 196,050 Change in fair market value of investments - - (19,675) (19,675) - - 56,661 56,661 Miscellaneous 25,000 25,000 433,264 408,264 - - - - Transfers in 1,825,520 1,825,520 - (1,825,520) - - - - Issuance of long-term debt - - 862,620 862,620 - - - - Sale of capital assets - - 18,712 18,712 - - - - Amounts available for appropriation 10,625,973 10,633,073 11,611,079 978,006 6,536,659 6,536,659 6,806,783 270,124 Charges to Appropriations (outflows): Current Public works 6,097,170 6,268,058 7,080,982 (812,924) - - - - Capital outlay 2,470,990 4,159,894 2,155,485 2,004,409 - - - - Debt service Principal 88,973 174,840 307,904 (133,064) - - - - Interest and fiscal charges - - 14,613 (14,613) - - - - Transfers to other funds 738,101 738,101 206,363 531,738 11,267,081 11,267,081 6,751,994 4,515,087 Total charges to appropriations 9,395,234 11,340,893 9,765,347 1,575,546 11,267,081 11,267,081 6,751,994 4,515,087 Budgetary fund balance, June 30 1,230,739$ (707,820)$ 1,845,732$ 2,553,552$ (4,730,422)$ (4,730,422)$ 54,789$ 4,785,211$ 114 City of Bozeman, Montana Notes to the Schedules of Revenue, Expenditures, and Changes in Fund Balances – Budget to Actual – Budgetary Basis June 30, 2023 Street Maintenance American RescueGeneral Fund District Plan Act Sources/ inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule 62,725,559$ 11,611,079$ 6,806,783$ Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current-year revenue for financial reporting purposes.(5,444,605) (1,963,990) 197,922 Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes.(10,854,877) - - The proceeds from the issuance of long-term debt or a lease are a budgetary resource but are a other financing source forfinancial reporting purposes.(637,867) (862,620) - The proceeds from the sale of assets are budgetary resourcesbut are regarded as a special item, rather than revenue, for financial reporting purposes.(2,774,759) (18,712) - Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds 43,013,451$ 8,765,757$ 7,004,705$ Uses/ outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule 50,804,568$ 9,765,347$ 6,751,994$ Differences - budget to GAAP: Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes.(6,798,407) (206,363) (6,751,994) Total expenditures as reported on the statement of revenues,expenditures, and changes in fund balances - governmental funds 44,006,161$ 9,558,984$ -$ Other Supplementary Information June 30, 2023 City of Bozeman, Montana 115 City of Bozeman, Montana Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Major Debt Service Fund and Major Capital Projects Fund June 30, 2023 SID Debt Service Capital Projects Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 473,008$ 158,684$ (314,324)$ -$ 2,240,188$ 2,240,188$ Special assessments - - - - 220,642 220,642 Licenses and permits - - - - 500 500 Intergovernmental - 591,564 591,564 - 59,965 59,965 Charges for services - 39,685 39,685 - - - Interest on investments 28,345 42,389 14,044 84,000 124,889 40,889 Change in fair market value of investments - (9,121) (9,121) - (77,357) (77,357) Miscellaneous - 145,227 145,227 4,144,000 - (4,144,000) Total revenues 501,353 968,428 467,075 4,228,000 2,568,827 (1,659,173) ExpendituresCurrent Public safety - 345,568 (345,568) - - - Public welfare - 62,808 (62,808) - 686,511 (686,511) Other - 152,877 (152,877) - - - Capital outlay - 392,939 (392,939) 14,088,505 12,590 14,075,915 Debt servicePrincipal 317,693 67,627 250,066 - - - Interest and fiscal charges - 58,168 (58,168) - - - Total expenditures 317,693 1,079,987 (762,294) 14,088,505 699,101 13,389,404 Excess (Deficiency) of Revenuesover (under) Expenditures 183,660 (111,559) (295,219) (9,860,505) 1,869,726 11,730,231 Other Financing Sources (Uses)Transfers in - 369,895 369,895 4,401,806 - (4,401,806) Transfers out (3,211,524) (298,872) 2,912,652 - (330,150) (330,150) Total other financing sources (uses)(3,211,524) 71,023 3,282,547 4,401,806 (330,150) (4,731,956) Net Change in Fund Balance (3,027,864)$ (40,536) 2,987,328$ (5,458,699)$ 1,539,576 6,998,275$ Fund Balance, Beginning of Year 2,351,957 3,775,619 Fund Balance, End of Year 2,311,421$ 5,315,195$ 116 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Departmental Special Revenues – Accounts for monies received and expended for projects relating to various City departments. TIF Downtown Improvement District – In November 1995, the City adopted an Urban Renewal Plan for the downtown area. This fund accounts for the revenue and expenditures associated with this tax increment financing district and associated business improvement district. City Planning Board – Accounts for monies received from various sources including property taxes, fees, and County revenues. Expenditures are for short-term and long-term planning of City and adjacent County zones. Section 76-1-102 MCA provides that the purpose of City planning is to encourage local governments to improve the present health, safety, convenience, and welfare of the citizens. Health-Medical Insurance – Accounts for property tax revenues received and transferred to the general fund for premiums and deductibles on group insurance coverage for City employees. Gas Tax Apportionment – Accounts for revenues from State gasoline taxes apportioned from the State of Montana Department of Highways. Tree Maintenance – Accounts for special assessment revenues levied, received, and expended for tree maintenance provided to specific property owners. Fire Impact Fees Special Revenues – Accounts for the collection and expenditures associated with the fire impact fees. Street Impact Fee – Accounts for the collection and expenditures associated with the street impact fees. Building Inspection Fund – Accounts for all activity related to enforcing the building regulation adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Pole Yard TIF – In November 2020, the City created a tax increment financing district to eliminate conditions that contribute to blight substantially impairing sound growth of the City through investments in public infrastructure and efficient delivery of public services. The fund accounts for the revenue and expenditures associated with the district. Economic Development Revolving Loan Fund – Accounts for revenues received and expended relative to loans made in accordance with the Community Development Block Grant Program, for economic development purposes. Community Housing – Accounts for money set aside by the City Commission and related expenditure for the establishment of safe, decent, and affordable housing for low and moderate-income citizens. Street Arterial & Collector District – Accounts for special assessment revenues levied, received, and expended for necessary transportation infrastructure. 117 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Governmental Funds June 30, 2023 TIF N 7th Corridor – In August of 2005, the City created a Renewal Plan for the North 7th Avenue business district. This fund accounts for the revenue and expenditures associated with the district. TIF N.E. Urban Renewal – In August of 2005, the City created an Urban Renewal Plan for the Northeast Urban section of Bozeman. This fund accounts for the revenue and expenditures associated with the district. TIF Mandeville/Wheat Dr. – In December 2006, the City created a tax increment financing district to encourage the attraction and retention of value-adding farming industries. This fund accounts for the revenue and expenditures associated with the district. Victim/Witness Advocate – Accounts for monies collected through the Court system to assist with Victim and Witness Advocate Program. Fire Department Equipment– Accounts for Public Safety mill levy tax revenues for fire department capital and equipment. TIF South Bozeman Technology – In December 2012, the City created a tax increment financing district to improve existing infrastructure deficiencies on property adjacent to Montana State University and the Innovation Campus. This fund accounts for the revenue and expenditures associated with the district. Parks and Trails District Fund – In May 2020, the Citizens of Bozeman approved the creation of a Parks and Trails District. This fund accounts for the special assessment and rental revenues collected, and the operating and capital expenditures required to manage and maintain citywide parks and trails. Street Lighting – Accounts for special assessment revenues levied, received, and expended for street and public highway lighting provided to specific property owners. Park Land – Accounts for monies donated for the purpose of acquiring and developing City Parks. Municipal Court Restitution – Accounts for checks that were canceled on the restitution checking account, per MCA 46-18-250. Debt Service Funds Special Improvement District (SID) Revolving – Accounts for property tax revenues received and expended for the payment of special improvement district bond principal and interest. General Obligation Bonds Debt Service Fund – Accounts for the debt service payments associated with the Library and Transportation general obligation bonds. Tax Increment Financing Bonds Debt Service Fund – Accounts for the debt service payments associated with the Tax Increment Urban Renewal Revenue Bonds issued as partial funding for the construction of a Downtown Intermodal Parking Facility. 118 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Governmental Funds June 30, 2023 Permanent Funds Perpetual Cemetery Care – Accounts for 15% maintenance fee received from the sale of City cemetery plots, which is to be used for perpetual care. The interest income from the trust is transferred to the general fund for use in maintaining the City’s cemetery. 119 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds DowntownImprovement Health-Medical Gas TaxDepartmentalDistrictCity Planning Insurance Apportionment Assets Cash and investments 2,367,398$ 7,906,849$ 1,469,418$ 1,109,091$ 567,950$ Receivables (Net of allowance for uncollectibles) Property taxes 11,822 245,158 23,789 252,568 - Accrued interest 4,901 20,756 3,748 2,912 1,492 Accounts 1,385 - - - - Special assessments - 1,474 - - - Intergovernmental 394,738 - - - - Advances to other funds - - - - - Notes receivable - - - - - Restricted cash and investments 25,000 - - - - Total assets 2,805,244$ 8,174,237$ 1,496,955$ 1,364,571$ 569,442$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable 492,745$ 2,859,042$ 123,332$ -$ 319,745$ Escheat property payable - - - - - Accrued employee benefits - - 764 - - Interest payable - - 2,152 - - Apperance bonds and other liabilities - - - - 8,175 Due to other funds - - - - - Unearned revenue - - - - - Total liabilities 492,745 2,859,042 126,248 - 327,920 Deferred Inflows of ResourcesUnavailable revenue - property taxes 1,078 - 2,164 23,028 - Fund BalanceNonspendable - - - - - Restricted 560,160 5,315,195 1,368,543 1,341,543 241,522 Committed 287,279 - - - - Assigned 1,463,982 - - - - Unassigned - - - - - Total fund balance 2,311,421 5,315,195 1,368,543 1,341,543 241,522 Total liabilities, deferred inflowsof resources, and fund balances 2,805,244$ 8,174,237$ 1,496,955$ 1,364,571$ 569,442$ 120 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Tree Bulding Pole YardMaintenanceFire Impact Fee Street Impact Fee Inspection TIF District Assets Cash and investments 696,715$ -$ -$ 1,223,518$ 317,319$ Receivables (Net of allowance for uncollectibles) Property taxes - - - - 17,568 Accrued interest 1,891 12,689 40,185 2,993 - Accounts - - - - - Special assessments 13,212 - - - - Intergovernmental - - - - - Advances to other funds - - - - - Notes receivable - - - - - Restricted cash and investments - 4,830,808 15,281,573 - - Total assets 711,818$ 4,843,497$ 15,321,758$ 1,226,511$ 334,887$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable 85,528$ 764$ 1,295,002$ 194,931$ -$ Escheat property payable - - - - - Accrued employee benefits - - - 886 - Interest payable - - - 9,021 - Apperance bonds and other liabilities - - 115,591 - - Due to other funds - - - - - Unearned revenue 9,100 - - - - Total liabilities 94,628 764 1,410,593 204,838 - Deferred Inflows of ResourcesUnavailable revenue - property taxes - - - - - Fund BalanceNonspendable - - - - - Restricted 617,190 4,842,733 13,911,165 1,021,673 334,887 Committed - - - - - Assigned - - - - - Unassigned - - - - - Total fund balance 617,190 4,842,733 13,911,165 1,021,673 334,887 Total liabilities, deferred inflowsof resources, and fund balances 711,818$ 4,843,497$ 15,321,758$ 1,226,511$ 334,887$ 121 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Econonomic Street Arterial North NortheastDevelopmentCommunityand Collector 7th Corridor Urban RenewalRevolving Loans Housing District TIF District TIF District Assets Cash and investments -$ 2,294,532$ 3,851,110$ 2,292,211$ 949,800$ Receivables (Net of allowance for uncollectibles) Property taxes - 95,033 - 188,140 47,339 Accrued interest - 5,673 9,998 7,365 2,495 Accounts 189,267 - - - - Special assessments - - 22,101 - - Intergovernmental - - - - - Advances to other funds - - - - - Notes receivable 797,979 17,498 - - - Restricted cash and investments - - 898,377 512,091 92,000 Total assets 987,246$ 2,412,736$ 4,781,586$ 2,999,807$ 1,091,634$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ 63,993$ 376,047$ 18,456$ 36,153$ Escheat property payable - - - - - Accrued employee benefits - - - - - Interest payable - - - - - Apperance bonds and other liabilities - - 54,326 - 811 Due to other funds - - - - - Unearned revenue - - - - - Total liabilities - 63,993 430,373 18,456 36,964 Deferred Inflows of ResourcesUnavailable revenue - property taxes - 8,521 - 38,424 - Fund Balance (Deficit)Nonspendable - - - - - Restricted 987,246 572,915 4,351,213 2,942,927 1,054,670 Committed - 316,081 - - - Assigned - 1,463,982 - - - Unassigned - (12,756) - - - Total fund balance (deficit)987,246 2,340,222 4,351,213 2,942,927 1,054,670 Total liabilities, deferred inflowsof resources, and fund balances 987,246$ 2,412,736$ 4,781,586$ 2,999,807$ 1,091,634$ 122 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Mandeville/Wheat Drive Victim/Witness Fire Department South Bozeman Parks and TrailsTIF District Advocate Equipment TIF District District Assets Cash and investments 163,597$ 392,687$ 397,213$ 58,806$ 3,726,744$ Receivables (Net of allowance for uncollectibles) Property taxes 2,667 - 47,766 - - Accrued interest 430 1,031 1,044 - 10,359 Accounts - 4,694 - - 15 Special assessments - - - - 76,942 Intergovernmental - - - - - Advances to other funds - - - - - Notes receivable - - - - - Restricted cash and investments - - - - - Total assets 166,694$ 398,412$ 446,023$ 58,806$ 3,814,060$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ 52,529$ 41,600$ 4,499$ 498,720$ Escheat property payable - - - - - Accrued employee benefits - - - - - Interest payable - - - - - Apperance bonds and other liabilities - - - - - Due to other funds - - - - - Unearned revenue - - - - - Total liabilities - 52,529 41,600 4,499 498,720 Deferred Inflows of ResourcesUnavailable revenue - property taxes - - 4,355 - - Fund Balance (Deficit)Nonspendable - - - - - Restricted 166,694 345,883 400,068 54,307 3,315,340 Committed - - - - - Assigned - - - - - Unassigned - - - - - Total fund balance (deficit)166,694 345,883 400,068 54,307 3,315,340 Total liabilities, deferred inflowsof resources, and fund balances 166,694$ 398,412$ 446,023$ 58,806$ 3,814,060$ 123 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Special Revenue Funds Total NonmajorStreetMunicipal Court SpecialLightingPark Land Restitution Revenue Funds Assets Cash and investments 527,426$ 1,957,707$ -$ 32,270,091$ Receivables (Net of allowance for uncollectibles) Property taxes - - - 931,850 Accrued interest - 5,142 - 135,104 Accounts - - - 195,361 Special assessments 6,944 - - 120,673 Intergovernmental - - - 394,738 Advances to other funds - - - - Notes receivable - - - 815,477 Restricted cash and investments - - 25,133 21,664,982 Total assets 534,370$ 1,962,849$ 25,133$ 56,528,276$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable 29,508$ -$ -$ 6,492,594$ Escheat property payable - - 25,028 25,028 Accrued employee benefits - - - 1,650 Interest payable - - - 11,173 Apperance bonds and other liabilities - - - 178,903 Due to other funds - - - - Unearned revenue - - - 9,100 Total liabilities 29,508 - 25,028 6,718,448 Deferred Inflows of ResourcesUnavailable revenue - property taxes - - - 77,570 Fund BalanceNonspendable - - - - Restricted 504,862 1,962,849 105 46,213,690 Committed - - - 603,360 Assigned - - - 2,927,964 Unassigned - - - (12,756) Total fund balance 504,862 1,962,849 105 49,732,258 Total liabilities, deferred inflowsof resources, and fund balances 534,370$ 1,962,849$ 25,133$ 56,528,276$ 124 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Debt Service Funds Total NonmajorSIDGeneral Obligation Debt ServiceRevolvingBondsTIF Bonds Funds Assets Cash and investments 54,728$ 5$ -$ 54,733$ Receivables (Net of allowance for uncollectibles) Property taxes - 278,439 - 278,439 Accrued interest 717 - - 717 Accounts - - - - Special assessments - - - - Intergovernmental - - - - Advances to other funds 641,763 - - 641,763 Notes receivable - - - - Restricted cash and investments - - - - Total assets 697,208$ 278,444$ -$ 975,652$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ -$ -$ -$ Escheat property payable - - - - Accrued employee benefits - - - - Interest payable - - - - Apperance bonds and other liabilities - - - - Due to other funds - 543,293 - 543,293 Unearned revenue - - - - Total liabilities - 543,293 - 543,293 Deferred Inflows of ResourcesUnavailable revenue - property taxes - 25,368 - 25,368 Fund Balance (Deficit)Nonspendable - - - - Restricted 697,208 - - 697,208 Committed - - - - Assigned - - - - Unassigned - (290,217) - (290,217) Total fund balance (deficit)697,208 (290,217) - 406,991 Total liabilities, deferred inflowsof resources, and fund balances 697,208$ 278,444$ -$ 975,652$ 125 City of Bozeman, Montana Combining Balance Sheet Nonmajor Governmental Funds June 30, 2023 Permanent Fund Total Total NonmajorCemetaryGovernmentalPerpetual Care Funds Assets Cash and investments -$ 32,324,824$ Receivables (Net of allowance for uncollectibles) Property taxes - 1,210,289 Accrued interest 4,757 140,578 Accounts 9,536 204,897 Special assessments - 120,673 Intergovernmental - 394,738 Advances to other funds - 641,763 Notes receivable - 815,477 Restricted cash and investments 1,811,056 23,476,038 Total assets 1,825,349$ 59,329,277$ Liabilities, Deferred Inflows of Resources, and Fund Balance LiabilitiesAccounts payable -$ 6,492,594$ Escheat property payable - 25,028 Accrued employee benefits - 1,650 Interest payable - 11,173 Apperance bonds and other liabilities - 178,903 Due to other funds - 543,293 Unearned revenue 20,950 30,050 Total liabilities 20,950 7,282,691 Deferred Inflows of ResourcesUnavailable revenue - property taxes - 102,938 Fund Balance (Deficit)Nonspendable 1,804,399 1,804,399 Restricted - 46,910,898 Committed - 603,360 Assigned - 2,927,964 Unassigned - (302,973) Total fund balance (deficit)1,804,399 51,943,648 Total liabilities, deferred inflowsof resources, and fund balances 1,825,349$ 59,329,277$ 126 City of Bozeman, Montana Combining Statements of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds DowntownImprovement Health-Medical Gas TaxDepartmentalDistrictCity Planning Insurance Apportionment RevenuesTaxes 158,684$ 2,240,188$ 319,372$ 3,390,016$ -$ Special assessments - 220,642 - - - Licenses and permits - 500 65,250 - - Intergovernmental 591,564 59,965 181,220 - 788,161 Charges for services 39,685 - 1,275,250 - - Fines and forfeits - - - - - Interest on on investments 42,389 124,889 9,872 11,552 9,193 Change in fair market value of investments (9,121) (77,357) (49,251) (13,036) 15,291 Interest on loans receivable - - - - - Miscellaneous 145,227 - 59,771 - - Total revenues 968,428 2,568,827 1,861,484 3,388,532 812,645 ExpendituresCurrent General government - - 3,299,875 - - Public safety 345,568 - - - - Public works - - - - 545,185 Public welfare 62,808 686,511 - - - Other 152,877 - - - - Capital outlay 392,939 12,590 90,570 - 1,088,063 Debt servicePrincipal 67,627 - 32,421 - - Interest and fiscal charges 58,168 - 2,915 - - Total expenditures 1,079,987 699,101 3,425,781 - 1,633,248 Excess (Deficiency) of Revenues Over (Under) Expenditures (111,559) 1,869,726 (1,564,297) 3,388,532 (820,603) Other Financing Sources (Uses) Transfers in 369,895 - 2,100,028 - - Transfers out (298,872) (330,150) - (3,072,283) - Issuance of long-term debt - - 89,785 - - Sale of capital assets - - - - - Total other financing sources (uses)71,023 (330,150) 2,189,813 (3,072,283) - Net Change in Fund Balances (40,536) 1,539,576 625,516 316,249 (820,603) Fund Balance, Beginning of Year 2,351,957 3,775,619 743,027 1,025,294 1,062,125 Fund Balances, End of Year 2,311,421$ 5,315,195$ 1,368,543$ 1,341,543$ 241,522$ 127 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Tree Building Pole YardMaintenanceFire Impact Fee Street Impact Fee Inspection TIF District RevenuesTaxes -$ -$ -$ -$ 187,994$ Special assessments 2,090 - - - - Licenses and permits - - - 3,057,483 - Intergovernmental 8,422 - - 159,792 5,897 Charges for services 889,983 522,006 5,205,583 32,400 - Fines and forfeits - - - - - Interest on on investments 14,228 101,857 311,234 25,806 - Change in fair market value of investments (4,532) (38,018) (91,627) 6,516 - Interest on loans receivable - - - - - Miscellaneous 26,014 - 2,520 2 - Total revenues 936,205 585,845 5,427,710 3,281,999 193,891 ExpendituresCurrent General government - - - - - Public safety - 30,279 - 3,530,445 - Public works - - 313,614 - - Public welfare 900,976 - - - - Other - - - - - Capital outlay 84,986 - 4,621,353 421,400 - Debt servicePrincipal - - - 130,576 - Interest and fiscal charges - - - 9,021 - Total expenditures 985,962 30,279 4,934,967 4,091,442 - Excess (Deficiency) of Revenues Over (Under) Expenditures (49,757) 555,566 492,743 (809,443) 193,891 Other Financing Sources (Uses) Transfers in - - 199,550 - - Transfers out - - - - - Issuance of long-term debt - - - 421,400 - Sale of capital assets 6,600 - - - - Total other financing sources (uses)6,600 - 199,550 421,400 - Net Change in Fund Balances (43,157) 555,566 692,293 (388,043) 193,891 Fund Balance, Beginning of Year 660,347 4,287,167 13,218,872 1,409,716 140,996 Fund Balances, End of Year 617,190$ 4,842,733$ 13,911,165$ 1,021,673$ 334,887$ 128 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Econonomic Street Arterial North NortheastDevelopmentCommunityand Collector 7th Corridor Urban RenewalRevolving Loans Housing District TIF District TIF District RevenuesTaxes -$ 1,277,713$ -$ 1,666,460$ 405,388$ Special assessments - - 3,936 - - Licenses and permits - - - - - Intergovernmental - 1,542 - 47,767 1,802 Charges for services - - 1,662,399 - - Fines and forfeits - - - - - Interest on on investments 802 22,939 85,529 52,288 18,692 Change in fair market value of investments - (53,553) (15,026) (32,165) (11,208) Interest on loans receivable 19,941 - - - - Miscellaneous - 134,153 - - - Total revenues 20,743 1,382,794 1,736,838 1,734,350 414,674 ExpendituresCurrent General government - - - - - Public safety - - - - - Public works - - 42,405 - - Public welfare 58,523 279,908 - 162,661 57,375 Other - - - - - Capital outlay - - 1,140,492 131,766 63,587 Debt servicePrincipal - - - - 41,803 Interest and fiscal charges - - - - 50,197 Total expenditures 58,523 279,908 1,182,897 294,427 212,962 Excess (Deficiency) of Revenues Over (Under) Expenditures (37,780) 1,102,886 553,941 1,439,923 201,712 Other Financing Sources (Uses) Transfers in - 1,000,000 - - - Transfers out - - (55,475) (409,950) - Issuance of long-term debt - - - - - Sale of capital assets - - - - - Total other financing sources (uses)- 1,000,000 (55,475) (409,950) - Net Change in Fund Balances (37,780) 2,102,886 498,466 1,029,973 201,712 Fund Balance, Beginning of Year 1,025,026 237,336 3,852,747 1,912,954 852,958 Fund Balances, End of Year 987,246$ 2,340,222$ 4,351,213$ 2,942,927$ 1,054,670$ 129 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Mandeville/Wheat Drive Victim/Witness Fire Department South Bozeman Parks and TrailsTIF District Advocate Equipment TIF District District RevenuesTaxes 21,643$ -$ 640,306$ 34,690$ -$ Special assessments - - - - 13,346 Licenses and permits - - - - - Intergovernmental - - - - 22,041 Charges for services - - - - 5,888,241 Fines and forfeits - 59,429 - - - Interest on on investments 3,381 8,831 18,926 681 62,884 Change in fair market value of investments (1,604) (906) 16,301 - (49,132) Interest on loans receivable - - - - - Miscellaneous - - - - 55,542 Total revenues 23,420 67,354 675,533 35,371 5,992,922 ExpendituresCurrent General government - 122,658 - - - Public safety - - 98,517 - - Public works - - - - - Public welfare - - - 4,803 4,470,034 Other - - - - - Capital outlay - - 78,182 - 467,028 Debt servicePrincipal - - - - - Interest and fiscal charges - - - - - Total expenditures - 122,658 176,699 4,803 4,937,062 Excess (Deficiency) of Revenues Over (Under) Expenditures 23,420 (55,304) 498,834 30,568 1,055,860 Other Financing Sources (Uses) Transfers in - - - - 375,977 Transfers out - - (1,141,038) - - Issuance of long-term debt - - - - - Sale of capital assets - - - - - Total other financing sources (uses)- - (1,141,038) - 375,977 Net Change in Fund Balances 23,420 (55,304) (642,204) 30,568 1,431,837 Fund Balance, Beginning of Year 143,274 401,187 1,042,272 23,739 1,883,503 Fund Balances, End of Year 166,694$ 345,883$ 400,068$ 54,307$ 3,315,340$ 130 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue Funds Total NonmajorStreetMunicipal Court SpecialLightingPark Land Restitution Revenue Funds Revenues Taxes -$ -$ -$ 10,342,454$ Special assessments 466,389 - - 706,403 Licenses and permits - - - 3,123,233 Intergovernmental - - - 1,868,173 Charges for services - - - 15,515,547 Fines and forfeits - - - 59,429 Interest on on investments 10,614 40,848 - 977,435 Change in fair market value of investments - (30,028) - (438,456) Interest on loans receivable - - - 19,941 Miscellaneous - 823,292 - 1,246,521 Total revenues 477,003 834,112 - 33,420,680 ExpendituresCurrent General government - - - 3,422,533 Public safety - - - 4,004,809 Public works 470,532 - - 1,371,736 Public welfare - 20,146 - 6,703,745 Other - - - 152,877 Capital outlay - 3,014 - 8,595,970 Debt servicePrincipal - 100,000 - 372,427 Interest and fiscal charges - - - 120,301 Total expenditures 470,532 123,160 - 24,744,398 Excess (Deficiency) of Revenues Over (Under) Expenditures 6,471 710,952 - 8,676,282 Other Financing Sources (Uses) Transfers in - - - 4,045,450 Transfers out - - - (5,307,768) Issuance of long-term debt - - - 511,185 Sale of capital assets - - - 6,600 Total other financing sources (uses)- - - (744,533) Net Change in Fund Balances 6,471 710,952 - 7,931,749 Fund Balance, Beginning of Year 498,391 1,251,897 105 41,800,509 Fund Balances, End of Year 504,862$ 1,962,849$ 105$ 49,732,258$ 131 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Debt Service Funds Total NonmajorSIDGeneral Obligation Debt ServiceRevolvingBondsTIF Bonds Funds Revenues Taxes -$ 3,736,221$ -$ 3,736,221$ Special assessments - - - - Licenses and permits - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeits - - - - Interest on on investments 11,491 9,183 - 20,674 Change in fair market value of investments 74,123 - - 74,123 Interest on loans receivable 10,405 - - 10,405 Miscellaneous - - - - Total revenues 96,019 3,745,404 - 3,841,423 ExpendituresCurrent General government - - - - Public safety - - - - Public works - - - - Public welfare - - - - Other - - - - Capital outlay - - - - Debt servicePrincipal - 2,225,000 444,000 2,669,000 Interest and fiscal charges - 1,730,380 296,100 2,026,480 Total expenditures - 3,955,380 740,100 4,695,480 Excess (Deficiency) of Revenues Over (Under) Expenditures 96,019 (209,976) (740,100) (854,057) Other Financing Sources (Uses) Transfers in 1,326,665 - 740,100 2,066,765 Transfers out (2,188,757) (128,272) - (2,317,029) Issuance of long-term debt - - - - Sale of capital assets - - - - Total other financing sources (uses)(862,092) (128,272) 740,100 (250,264) Net Change in Fund Balances (766,073) (338,248) - (1,104,321) Fund Balance, Beginning of Year 1,463,281 48,031 - 1,511,312 Fund Balances, End of Year 697,208$ (290,217)$ -$ 406,991$ 132 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2023 Permanent Fund Total Total NonmajorCemetaryGovernmentalPerpetual Care Funds RevenuesTaxes -$ 14,078,675$ Special assessments - 706,403 Licenses and permits - 3,123,233 Intergovernmental - 1,868,173 Charges for services 93,173 15,608,720 Fines and forfeits - 59,429 Interest on on investments 38,711 1,036,820 Change in fair market value of investments (11,589) (375,922) Interest on loans receivable - 30,346 Miscellaneous - 1,246,521 Total revenues 120,295 37,382,398 ExpendituresCurrent General government - 3,422,533 Public safety - 4,004,809 Public works - 1,371,736 Public welfare - 6,703,745 Other - 152,877 Capital outlay - 8,595,970 Debt servicePrincipal - 3,041,427 Interest and fiscal charges - 2,146,781 Total expenditures - 29,439,878 Excess (Deficiency) of Revenues Over (Under) Expenditures 120,295 7,942,520 Other Financing Sources (Uses) Transfers in - 6,112,215 Transfers out - (7,624,797) Issuance of long-term debt - 511,185 Sale of capital assets - 6,600 Total other financing sources (uses)- (994,797) Net Change in Fund Balances 120,295 6,947,723 Fund Balance, Beginning of Year 1,684,104 44,995,925 Fund Balances, End of Year 1,804,399$ 51,943,648$ 133 City of Bozeman, Montana Combining Statements of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsDepartmentalDowntown Improvement District City Planning Final Actual Variance with Final Actual Variance with Final Actual Variance with Budget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 152,627$ 158,684$ 6,057$ 8,033,278$ 2,240,188$ (5,793,090)$ 305,254$ 319,372$ 14,118$ Special assessments - - - 185,100 220,642 35,542 - - - Licenses and permits - - - 2,000 500 (1,500) - 65,250 65,250 Intergovernmental 425,000 591,564 166,564 57,059 59,965 2,906 118,081 181,220 63,139 Charges for services 10,000 39,685 29,685 - - - 1,642,515 1,275,250 (367,265) Fines and forfeitures - - - - - - - - - Interest on investments 21,175 42,389 21,214 20,000 124,889 104,889 10,000 9,872 (128) Change in fair market value of investments - (9,121) (9,121) - (77,357) (77,357) - (49,251) (49,251) Interest on loans receivable - - - - - - - - - Miscellaneous 94,000 145,227 51,227 - - - 50,000 59,771 9,771 Total revenues 702,802 968,428 265,626 8,297,437 2,568,827 (5,728,610) 2,125,850 1,861,484 (264,366) ExpendituresCurrentGeneral government - - - - - - 4,410,310 3,299,875 1,110,435 Public safety 285,961 345,568 (59,607) - - - - - - Public works - - - - - - - - - Public welfare 426,600 62,808 363,792 5,165,785 686,511 4,479,274 - - - Other 152,877 152,877 - - - - - - - Capital outlay - 392,939 (392,939) - 12,590 (12,590) 40,000 90,570 (50,570) Debt servicePrincipal 125,795 67,627 58,168 - - - - 32,421 (32,421) Interest and fiscal charges - 58,168 (58,168) - - - - 2,915 (2,915) Total expenditures 991,233 1,079,987 (88,754) 5,165,785 699,101 4,466,684 4,450,310 3,425,781 1,024,529 Excess (Deficiency) of Revenuesover (under) Expenditures (288,431) (111,559) 176,872 3,131,652 1,869,726 (1,261,926) (2,324,460) (1,564,297) 760,163 Other Financing Sources (Uses)Transfers in 20,688 369,895 349,207 - - - 245,365 2,100,028 1,854,663 Transfers out (68,497) (298,872) (230,375) (330,150) (330,150) - - - - Issuance of long-term debt - - - - - - - 89,785 89,785 Sale of capital assets - - - - - - - - - Total other financing sources (uses)(47,809) 71,023 118,832 (330,150) (330,150) - 245,365 2,189,813 1,944,448 Net Change in Fund Balance (336,240)$ (40,536) 295,704$ 2,801,502$ 1,539,576 (1,261,926)$ (2,079,095)$ 625,516 2,704,611$ Fund Balance, Beginning of Year 2,351,957 3,775,619 743,027 Fund Balance, End of Year 2,311,421$ 5,315,195$ 1,368,543$ 134 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsHealth-Medical Insurance Gas Tax Apportionment Tree Maintenance Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 3,300,689$ 3,390,016$ 89,327$ -$ -$ -$ -$ -$ -$ Special assessments - - - - - - 2,000 2,090 90 Licenses and permits - - - - - - - - - Intergovernmental - - - 1,734,520 788,161 (946,359) - 8,422 8,422 Charges for services - - - - - - 872,292 889,983 17,691 Fines and forfeitures - - - - - - - - - Interest on investments - 11,552 11,552 10,000 9,193 (807) 4,000 14,228 10,228 Change in fair market value of investments - (13,036) (13,036) - 15,291 15,291 - (4,532) (4,532) Interest on loans receivable - - - - - - - - - Miscellaneous - - - - - 6,000 26,014 20,014 Total revenues 3,300,689 3,388,532 87,843 1,744,520 812,645 (931,875) 884,292 936,205 51,913 ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - 1,358,350 545,185 813,165 - - - Public welfare - - - - - - 996,471 900,976 95,495 Other - - - - - - - - - Capital outlay - - - 80,000 1,088,063 (1,008,063) 235,000 84,986 150,014 Debt servicePrincipal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures - - - 1,438,350 1,633,248 (194,898) 1,231,471 985,962 245,509 Excess (Deficiency) of Revenuesover (under) Expenditures 3,300,689 3,388,532 87,843 306,170 (820,603) (1,126,773) (347,179) (49,757) 297,422 Other Financing Sources (Uses)Transfers in - - - - - - - - - Transfers out (3,300,689) (3,072,283) 228,406 (975,291) - 975,291 - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - 6,600 6,600 Total other financing sources (uses)(3,300,689) (3,072,283) 228,406 (975,291) - 975,291 - 6,600 6,600 Net Change in Fund Balance -$ 316,249 316,249$ (669,121)$ (820,603) (151,482)$ (347,179)$ (43,157) 304,022$ Fund Balance, Beginning of Year 1,025,294 1,062,125 660,347 Fund Balance, End of Year 1,341,543$ 241,522$ 617,190$ 135 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsFire Impact Fee Street Impact Fee Building Inspection Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ -$ -$ -$ -$ -$ -$ Special assessments - - - - - - - - - Licenses and permits - - - - - - 2,129,880 3,057,483 927,603 Intergovernmental - - - - - - - 159,792 159,792 Charges for services 511,181 522,006 10,825 5,727,830 5,205,583 (522,247) 100 32,400 32,300 Fines and forfeitures - - - - - - - - - Interest on investments 8,800 101,857 93,057 60,000 311,234 251,234 12,000 25,806 13,806 Change in fair market value of investments - (38,018) (38,018) - (91,627) (91,627) - 6,516 6,516 Interest on loans receivable - - - - - - - - - Miscellaneous - - - 1,000 2,520 1,520 - 2 2 Total revenues 519,981 585,845 65,864 5,788,830 5,427,710 (361,120) 2,141,980 3,281,999 1,140,019 ExpendituresCurrentGeneral government - - - - - - - - - Public safety 25,560 30,279 (4,719) - - - 4,279,526 3,530,445 749,081 Public works - - - 343,392 313,614 29,778 - - - Public welfare - - - - - - - - - Other - - - - - - - - - Capital outlay 1,500,000 - 1,500,000 14,582,746 4,621,353 9,961,393 40,000 421,400 (381,400) Debt servicePrincipal - - - - - - - 130,576 (130,576) Interest and fiscal charges - - - - - - - 9,021 (9,021) Total expenditures 1,525,560 30,279 1,495,281 14,926,138 4,934,967 9,991,171 4,319,526 4,091,442 228,084 Excess (Deficiency) of Revenuesover (under) Expenditures (1,005,579) 555,566 1,561,145 (9,137,308) 492,743 9,630,051 (2,177,546) (809,443) 1,368,103 Other Financing SourcesTransfers in - - - - 199,550 199,550 - - - Transfers out - - - - - - - - - Issuance of long-term debt - - - - - - - 421,400 421,400 Sale of capital assets - - - - - - - - - Total other financing sources - - - - 199,550 199,550 - 421,400 421,400 Net Change in Fund Balance (1,005,579)$ 555,566 1,561,145$ (9,137,308)$ 692,293 9,829,601$ (2,177,546)$ (388,043) 1,789,503$ Fund Balance, Beginning of Year 4,287,167 13,218,872 1,409,716 Fund Balance, End of Year 4,842,733$ 13,911,165$ 1,021,673$ 136 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsPole Yard TIF District Economic Development Revolving Loans Community Housing Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 260,180$ 187,994$ (72,186)$ -$ -$ -$ 1,221,016$ 1,277,713$ 56,697$ Special assessments - - - - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - 5,897 5,897 - - - - 1,542 1,542 Charges for services - - - - - - - - - Fines and forfeitures - - - - - - - - - Interest on investments - - - - 802 802 5,000 22,939 17,939 Change in fair market value of investments - - - - - - - (53,553) (53,553) Interest on loans receivable - - - 25,000 19,941 (5,059) 900 - (900) Miscellaneous - - - - - - - 134,153 134,153 Total revenues 260,180 193,891 (66,289) 25,000 20,743 (4,257) 1,226,916 1,382,794 155,878 ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - - - - - - - Public welfare 80,000 - 80,000 31,000 58,523 (27,523) 1,228,728 279,908 948,820 Other - - - - - - - - - Capital outlay - - - - - - Debt service - - - Principal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures 80,000 - 80,000 31,000 58,523 (27,523) 1,228,728 279,908 948,820 Excess (Deficiency) of Revenuesover (under) Expenditures 180,180 193,891 13,711 (6,000) (37,780) (31,780) (1,812) 1,102,886 1,104,698 Other Financing UsesTransfers in - - - - - - - 1,000,000 1,000,000 Transfers out - - - - - - - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing uses - - - - - - - 1,000,000 1,000,000 Net Change in Fund Balance 180,180$ 193,891 13,711$ (6,000)$ (37,780) (31,780)$ (1,812)$ 2,102,886 2,104,698$ Fund Balance, Beginning of Year 140,996 1,025,026 237,336 Fund Balance, End of Year 334,887$ 987,246$ 2,340,222$ 137 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsStreet Arterial and Collector District North 7th Corridor TIF District Northeast Urban Renewal TIF District Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ 2,635,734$ 1,666,460$ (969,274)$ 647,632$ 405,388$ (242,244)$ Special assessments 3,500 3,936 436 - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - - - 37,927 47,767 9,840 1,354 1,802 448 Charges for services 1,654,440 1,662,399 7,959 - - - - - - Fines and forfeitures - - - - - - - - - Interest on investments 6,472 85,529 79,057 10,000 52,288 42,288 3,000 18,692 15,692 Change in fair market value of investments - (15,026) (15,026) - (32,165) (32,165) - (11,208) (11,208) Interest on loans receivable - - - - - - - - - Miscellaneous 3,359 - (3,359) - - - - - - Total revenues 1,667,771 1,736,838 69,067 2,683,661 1,734,350 (949,311) 651,986 414,674 (237,312) ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works 253,000 42,405 210,595 - - - - - - Public welfare - - - 4,239,813 162,661 4,077,152 1,045,624 57,375 988,249 Other - - - - - - - - - Capital outlay 5,485,000 1,140,492 4,344,508 - 131,766 (131,766) - 63,587 (63,587) Debt servicePrincipal - - - - - - 92,000 41,803 50,197 Interest and fiscal charges - - - - - - - 50,197 (50,197) Total expenditures 5,738,000 1,182,897 4,555,103 4,239,813 294,427 3,945,386 1,137,624 212,962 924,662 Excess (Deficiency) of Revenuesover (under) Expenditures (4,070,229) 553,941 4,624,170 (1,556,152) 1,439,923 2,996,075 (485,638) 201,712 687,350 Other Financing Sources (Uses)Transfers in 975,291 - (975,291) - - - - - - Transfers out (1,000,000) (55,475) 944,525 (409,950) (409,950) - - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing sources (uses)(24,709) (55,475) (30,766) (409,950) (409,950) - - - - Net Change in Fund Balance (4,094,938)$ 498,466 4,593,404$ (1,966,102)$ 1,029,973 2,996,075$ (485,638)$ 201,712 687,350$ Fund Balance, Beginning of Year 3,852,747 1,912,954 852,958 Fund Balance, End of Year 4,351,213$ 2,942,927$ 1,054,670$ 138 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsMandeville/Wheat Drive TIF District Victim/Witness Advocate Fire Department Equipment Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 54,701$ 21,643$ (33,058)$ -$ -$ -$ 610,508$ 640,306$ 29,798$ Special assessments - - - - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - - - - - - - - - Charges for services - - - - - - - - - Fines and forfeitures - - - 70,000 59,429 (10,571) - - - Interest on investments - 3,381 3,381 3,500 8,831 5,331 5,000 18,926 13,926 Change in fair market value of investments - (1,604) (1,604) - (906) (906) - 16,301 16,301 Interest on loans receivable - - - - - - - - - Miscellaneous - - - - - - - - - Total revenues 54,701 23,420 (31,281) 73,500 67,354 (6,146) 615,508 675,533 60,025 ExpendituresCurrentGeneral government - - - 140,000 122,658 17,342 - - - Public safety - - - - - - - 98,517 (98,517) Public works - - - - - - - - - Public welfare 100,000 - 100,000 - - - - - - Other - - - - - - - - - Capital outlay - - - - - - 641,750 78,182 563,568 Debt servicePrincipal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures 100,000 - 100,000 140,000 122,658 17,342 641,750 176,699 465,051 Excess (Deficiency) of Revenuesover (under) Expenditures (45,299) 23,420 68,719 (66,500) (55,304) 11,196 (26,242) 498,834 525,076 Other Financing UsesTransfers in - - - - - - - - - Transfers out - - - - - - (1,000,000) (1,141,038) (141,038) Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing uses - - - - - - (1,000,000) (1,141,038) (141,038) Net Change in Fund Balance (45,299)$ 23,420 68,719$ (66,500)$ (55,304) 11,196$ (1,026,242)$ (642,204) 384,038$ Fund Balance, Beginning of Year 143,274 401,187 1,042,272 Fund Balance, End of Year 166,694$ 345,883$ 400,068$ 139 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsSouth Bozeman TIF District Parks and Trails District Street Lighting Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 57,408$ 34,690$ (22,718)$ -$ -$ -$ -$ -$ -$ Special assessments - - - - 13,346 13,346 492,989 466,389 (26,600) Licenses and permits - - - - - - - - - Intergovernmental - - - - 22,041 22,041 - - - Charges for services - - - 5,449,453 5,888,241 438,788 - - - Fines and forfeitures - - - - - - - - - Interest on investments - 681 681 2,550 62,884 60,334 5,863 10,614 4,751 Change in fair market value of investments - - - - (49,132) (49,132) - - - Interest on loans receivable - - - - - - - - - Miscellaneous - - - - 55,542 55,542 - - - Total revenues 57,408 35,371 (22,037) 5,452,003 5,992,922 540,919 498,852 477,003 (21,849) ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - - - - 546,096 470,532 75,564 Public welfare 10,000 4,803 5,197 5,170,304 4,470,034 700,270 - - - Other - - - - - - - - - Capital outlay - - - 873,000 467,028 405,972 - - - Debt servicePrincipal - - - - - - - - - Interest and fiscal charges - - - - - - - - - Total expenditures 10,000 4,803 5,197 6,043,304 4,937,062 1,106,242 546,096 470,532 75,564 Excess (Deficiency) of Revenuesover (under) Expenditures 47,408 30,568 (16,840) (591,301) 1,055,860 1,647,161 (47,244) 6,471 53,715 Other Financing SourcesTransfers in - - - - 375,977 375,977 - - - Transfers out - - - - - - (25,520) - 25,520 Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing sources - - - - 375,977 375,977 (25,520) - 25,520 Net Change in Fund Balance 47,408$ 30,568 (16,840)$ (591,301)$ 1,431,837 2,023,138$ (72,764)$ 6,471 79,235$ Fund Balance, Beginning of Year 23,739 1,883,503 498,391 Fund Balance, End of Year 54,307$ 3,315,340$ 504,862$ 140 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Special Revenue FundsPark Land Municipal Court Restitution Total Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ -$ -$ -$ 17,279,027$ 10,342,454$ (6,936,573)$ Special assessments - - - - - - 683,589 706,403 22,814 Licenses and permits - - - - - - 2,131,880 3,123,233 991,353 Intergovernmental - - - - - - 2,373,941 1,868,173 (505,768) Charges for services - - - - - - 15,867,811 15,515,547 (352,264) Fines and forfeitures - - - - - - 70,000 59,429 (10,571) Interest on investments 5,000 40,848 35,848 - - - 192,360 977,435 785,075 Change in fair market value of investments - (30,028) (30,028) - - - - (438,456) (438,456) Interest on loans receivable - - - - - - 25,900 19,941 (5,959) Miscellaneous 50,000 823,292 773,292 - - - 204,359 1,246,521 1,042,162 Total revenues 55,000 834,112 779,112 - - - 38,828,867 33,420,680 (5,408,187) ExpendituresCurrentGeneral government - - - - - - 4,550,310 3,422,533 1,127,777 Public safety - - - - - - 4,591,047 4,004,809 586,238 Public works - - - - - - 2,500,838 1,371,736 1,129,102 Public welfare 5,000 20,146 (15,146) - - - 18,499,325 6,703,745 11,795,580 Other - - - - - - 152,877 152,877 - Capital outlay 192,635 3,014 189,621 - - - 23,670,131 8,595,970 15,074,161 Debt service Principal 100,000 100,000 - - - - 317,795 372,427 (54,632) Interest and fiscal charges - - - - - - - 120,301 (120,301) - Total expenditures - 123,160 (123,160) - - - 54,282,323 24,744,398 29,537,925 Excess (Deficiency) of Revenuesover (under) Expenditures 55,000 710,952 655,952 - - - (15,453,456) 8,676,282 24,129,738 Other Financing UsesTransfers in - - - - - - 1,241,344 4,045,450 2,804,106 Transfers out - - - - - - (7,110,097) (5,307,768) 1,802,329 Issuance of long-term debt - - - - - - - 511,185 511,185 Sale of capital assets - - - - - - - 6,600 6,600 - Total other financing uses - - - - - - (5,868,753) (744,533) 5,124,220 Net Change in Fund Balance 55,000$ 710,952 655,952$ -$ - -$ (21,322,209)$ 7,931,749 29,253,958$ Fund Balance, Beginning of Year 1,251,897 105 41,800,509 Fund Balance, End of Year 1,962,849$ 105$ 49,732,258$ 141 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Debt Service FundsSID Revolving General Obligation Bonds TIF Bonds Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes -$ -$ -$ 3,599,755$ 3,736,221$ 136,466$ -$ -$ -$ Special assessments - - - - - - - - - Licenses and permits - - - - - - - - - Intergovernmental - - - - - - - - - Charges for services - - - - - - - - - Fines and forfeitures - - - - - - - - - Interest on investments 5,000 11,491 6,491 - 9,183 9,183 - - - Change in fair market value of investments - 74,123 74,123 - - - - - - Interest on loans receivable 5,000 10,405 5,405 - - - - - - Miscellaneous - - - - - - - - - Total revenues 10,000 96,019 86,019 3,599,755 3,745,404 145,649 - - - ExpendituresCurrentGeneral government - - - - - - - - - Public safety - - - - - - - - - Public works - - - - - - - - - Public welfare - - - - - - - - - Other - - - - - - - - - Capital outlay - - - - - - - - - Debt service Principal - - - 2,375,255 2,225,000 150,255 444,000 444,000 - Interest and fiscal charges - - - 1,580,125 1,730,380 (150,255) 296,100 296,100 - Total expenditures - - - 3,955,380 3,955,380 - 740,100 740,100 - Excess (Deficiency) of Revenuesover (under) Expenditures 10,000 96,019 86,019 (355,625) (209,976) 145,649 (740,100) (740,100) - Other Financing Sources (Uses)Transfers in - 1,326,665 1,326,665 - - - 740,100 740,100 - Transfers out (1,924,207) (2,188,757) (264,550) (128,272) (128,272) - - - - Issuance of long-term debt - - - - - - - - - Sale of capital assets - - - - - - - - - Total other financing sources (uses)(1,924,207) (862,092) 1,062,115 (128,272) (128,272) - 740,100 740,100 - Net Change in Fund Balance (1,914,207)$ (766,073) 1,148,134$ (483,897)$ (338,248) 145,649$ -$ - -$ Fund Balance, Beginning of Year 1,463,281 48,031 - Fund Balance (Deficit), End of Year 697,208$ (290,217)$ -$ 142 City of Bozeman, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances– Budget and Actual Nonmajor Governmental Funds Year Ended June 30, 2023 Debt Service Funds Permanent FundTotalCemetary Perpetual Care Total Final Actual Variance with Final Actual Variance with Final Actual Variance withBudget Amounts Final Budget Budget Amounts Final Budget Budget Amounts Final Budget RevenuesTaxes 3,599,755$ 3,736,221$ 136,466$ -$ -$ -$ 20,878,782$ 14,078,675$ (6,800,107)$ Special assessments - - - - - - 683,589 706,403 22,814 Licenses and permits - - - - - - 2,131,880 3,123,233 991,353 Intergovernmental - - - - - - 2,373,941 1,868,173 (505,768) Charges for services - - - 40,000 93,173 53,173 15,907,811 15,608,720 (299,091) Fines and forfeitures - - - - - - 70,000 59,429 (10,571) Interest on investments 5,000 20,674 15,674 20,000 38,711 18,711 217,360 1,036,820 819,460 Change in fair market value of investments - 74,123 74,123 - (11,589) (11,589) - (375,922) (375,922) Interest on loans receivable 5,000 10,405 5,405 - - - 30,900 30,346 (554) Miscellaneous - - - - - - 204,359 1,246,521 1,042,162 Total revenues 3,609,755 3,841,423 231,668 60,000 120,295 60,295 42,498,622 37,382,398 (5,116,224) ExpendituresCurrentGeneral government - - - - - - 4,550,310 3,422,533 1,127,777 Public safety - - - - - - 4,591,047 4,004,809 586,238 Public works - - - - - - 2,500,838 1,371,736 1,129,102 Public welfare - - - - - - 18,499,325 6,703,745 11,795,580 Other - - - - - - 152,877 152,877 - Capital outlay - - - - - - 23,670,131 8,595,970 15,074,161 Debt service - - Principal 2,819,255 2,669,000 150,255 - - - 3,137,050 3,041,427 95,623 Interest and fiscal charges 1,876,225 2,026,480 (150,255) - - - 1,876,225 2,146,781 (270,556) Total expenditures 4,695,480 4,695,480 - - - - - 29,439,878 (29,439,878) Excess (Deficiency) of Revenuesover (under) Expenditures (1,085,725) (854,057) 231,668 60,000 120,295 60,295 42,498,622 7,942,520 (34,556,102) Other Financing Sources (Uses)Transfers in 740,100 2,066,765 1,326,665 - - - 1,981,444 6,112,215 4,130,771 Transfers out (2,052,479) (2,317,029) (264,550) - - - (9,162,576) (7,624,797) 1,537,779 Issuance of long-term debt - - - - - - - 511,185 511,185 Sale of capital assets - - - - - - - 6,600 6,600 Total other financing sources (uses)(1,312,379) (250,264) 1,062,115 - - - (7,181,132) (994,797) 6,186,335 Net Change in Fund Balance (2,398,104)$ (1,104,321) 1,293,783$ 60,000$ 120,295 60,295$ 35,317,490$ 6,947,723 (28,369,767)$ Fund Balance, Beginning of Year 1,511,312 1,684,104 44,995,925 Fund Balance, End of Year 406,991$ 1,804,399$ 51,943,648$ 143 City of Bozeman, Montana Description of Nonmajor Funds Nonmajor Enterprise Funds June 30, 2023 The enterprise funds account for the operations that are financed and operated in a manner similar to private business enterprises where the intent of the City is that the costs (expenses, including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges, or where the City has decided that periodic determination of the revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or for other purposes. The City operates the following nonmajor enterprise funds: Parking Fund – Accounts for the City’s parking enforcement and facilities operations. Stormwater Fund – Accounts for the City’s stormwater management and mitigation operations. 144 City of Bozeman, Montana Combining Balance Sheet Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Assets Current Assets Cash and cash equivalents 1,286,323$ 1,867,728$ 3,154,051$ Receivables (net of allowance for uncollectibles):Interest 5,220 5,190 10,410 Accounts 1,602 183,630 185,232 Special assessments - 66 66 Total current assets 1,293,145 2,056,614 3,349,759 Noncurrent AssetsRestricted assets Investments 656,242 58,288 714,530 Capital assetsLand 303,436 - 303,436 Construction in progress 33,000 573,179 606,179 Buildings 11,938,077 24,215 11,962,292 Machinery and equipment 487,170 757,188 1,244,358 Vehicles 187,533 197,137 384,670 Infrastructure 47,058 8,431,088 8,478,146 Less accumulated depreciation (5,983,217) (1,359,917) (7,343,134) Total capital assets, net of accumulated depreciation 7,013,057 8,622,890 15,635,947 Total noncurrent assets 7,669,299 8,681,178 16,350,477 Total assets 8,962,444 10,737,792 19,700,236 Deferred Outflows of Resources OPEB 12,353 14,787 27,140 Pensions 59,326 100,229 159,555 Total deferred outflows of resources 71,679 115,016 186,695 145 City of Bozeman, Montana Combining Balance Sheet Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Liabilities Current Liabilities Accounts payable 80,501 51,536 132,037 Current portion of long-term debt 16,436 142,471 158,907 Total current liabilities 96,937 194,007 290,944 Noncurrent LiabilitiesLong-term debt, net of deferred refundings Bonds payable - 1,109,000 1,109,000 Compensated absences - 4,169 4,169 Total OPEB liability 58,266 36,179 94,445 Net pension liability 284,536 480,711 765,247 Total noncurrent liabilities 342,802 1,630,059 1,972,861 Total liabilities 439,739 1,824,066 2,263,805 Deferred Inflows of Resources OPEB plans 14,512 11,988 26,500 Pension plans 20,831 35,192 56,023 Total deferred inflows resources 35,343 47,180 82,523 Net PositionNet investment in capital assets 6,996,621 7,429,707 14,426,328 Restricted for:Parking capital projects 656,242 - 656,242 Unrestricted 906,178 1,551,855 2,458,033 Total net position 8,559,041$ 8,981,562$ 17,540,603$ 146 City of Bozeman, Montana Combining Statement of Revenues, Expenses and Changes in Net Position Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Operating Revenues Charges for services 968,042$ 1,883,096$ 2,851,138$ Operating ExpensesSalaries and benefits 510,504 860,498 1,371,002 Materials and supplies 27,760 22,673 50,433 Repairs and maintenance 86,907 17,388 104,295 Utilities 43,935 4,679 48,614 Administrative charges 127,499 443,576 571,075 Other expenses 368,066 125,581 493,647 Depreciation/amortization 400,734 205,581 606,315 Total operating expenses 1,565,405 1,679,976 3,245,381 Operating Income (Loss)(597,363) 203,120 (394,243) Nonoperating Revenues (Expenses)Loss on disposal of assets (14,013) - (14,013) Interest income 43,718 41,202 84,920 Net decrease in fair market value of investments (7,757) (6,281) (14,038) Interest expense and bond fees - (31,475) (31,475) Intergovernmental revenues 7,029 11,876 18,905 Miscellaneous revenue 11,655 - 11,655 Total nonoperatingrevenues (expenses)40,632 15,322 55,954 Income (Loss) before Contributions and Transfers (556,731) 218,442 (338,289) Transfers in - 190,784 190,784 Transfers out - (40,973) (40,973) Capital contributions from other governments - 1,493,232 1,493,232 Change in Net Position (556,731) 1,861,485 1,304,754 Total Net Position, Beginning of Year 9,115,772 7,120,077 16,235,849 Total Net Position, End of Year 8,559,041$ 8,981,562$ 17,540,603$ 147 City of Bozeman, Montana Combining Statement of Cash Flows Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Operating ActivitiesReceipts from customers and users 1,080,116$ 1,854,495$ 2,934,611$ Payments to suppliers (523,155) (511,615) (1,034,770) Payments to and on behalf of employees (495,140) (798,940) (1,294,080) Payments to internal service funds and administrat (127,499) (443,576) (571,075) Net cash from (used for) Operating Activities (65,678) 100,364 34,686 Noncapital Financing Activities Transfers to other funds - (40,973) (40,973) Transfers from other funds - 190,784 190,784 Intergovernmental operating grants 7,029 11,876 18,905 Miscellaneous income 11,655 - 11,655 Net Cash from Noncapital Financing Activities 18,684 161,687 180,371 Capital and Related Financing Activities Acquisition of capital assets (119,230) (373,669) (492,899) Debt service Principal - (84,000) (84,000) Interest - (31,475) (31,475) Net Cash Used for Capitaland Related Financing Activities (119,230) (489,144) (608,374) Investing ActivitiesInterest and dividends from investments 33,214 32,236 65,450 Change in Cash and Cash Equivalents (133,010) (194,857) (327,867) Cash and Cash Equivalents, Beginning of Year 2,075,575 2,120,873 4,196,448 Cash and Cash Equivalents, End of Year 1,942,565$ 1,926,016$ 3,868,581$ 148 City of Bozeman, Montana Combining Statement of Cash Flows Nonmajor Enterprise Funds June 30, 2023 Parking Storm Water Total Reconciliation of Operating Income (Loss) toNet cash from (used for) Operating ActivitiesOperating income (loss)(597,363)$ 203,120$ (394,243)$ Adjustments to reconcile operating income (loss) to net cash from (used for)operating activitiesDepreciation/amortization 400,734 205,581 606,315 Changes in assets and liabilities Accounts receivable 112,074 (28,682) 83,392 Special assessments receivable - 81 81 Pension related deferred outflows (9,401) (21,247) (30,648) OPEB related deferred outflows 2,680 4,499 7,179 Vouchers payable 3,513 (341,294) (337,781) Compensated absences (235) 10,138 9,903 Net pension liability 85,895 166,456 252,351 Total OPEB liability (5,042) (8,462) (13,504) Pension related deferred inflows (64,110) (99,187) (163,297) OPEB related deferred inflows 5,577 9,361 14,938 Net cash from (used for)Operating Activities (65,678)$ 100,364$ 34,686$ Supplemental Schedule of NoncashInvesting and Financing ActivitiesAcquisition of capital assets throughcapital contributions and donations -$ 1,493,232$ 1,493,232$ 149 City of Bozeman, Montana Description of Internal Service Funds Internal Service Funds June 30, 2023 Internal Service Funds are used to account for the goods or services provided by one department to other departments of the City on a cost-reimbursement basis. The City operates the following internal service funds: Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in operation of City services. Medical Health Insurance – Accounts for insurance premiums received from the various City departments and retirees, and the related costs of health and dental premiums paid to the City’s insurance provider. Public Works Administration – Accounts for the professional level management, engineering, and GIS technical support provided to other Public Works divisions, including water, wastewater, solid waste, stormwater, in addition to support provided to other City departments. 150 City of Bozeman, Montana Combining Balance Sheet Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Assets Current Assets Cash and cash equivalents -$ -$ 3,142,522$ 3,142,522$ Receivables (net of allowance for uncollectibles):Interest - - 9,582 9,582 Accounts 1,912 15,667 - 17,579 Prepaid items - 525,953 - 525,953 Other assets - - 8,657 8,657 Total current assets 1,912 541,620 3,160,761 3,704,293 Noncurrent AssetsCapital assetsBuildings 1,424,215 - 121,905 1,546,120 Machinery and equipment 217,315 - 528,721 746,036 Vehicles 88,980 - 124,415 213,395 Infrastructure - - 29,314 29,314 Right-of-use lease assets - - 423,122 423,122 Less accumulated depreciation/amortization (873,198) - (545,525) (1,418,723) Total capital assets, net of accumulateddepreciation/amortization 857,312 - 681,952 1,539,264 Total noncurrent assets 857,312 - 681,952 1,539,264 Total assets 859,224 541,620 3,842,713 5,243,557 Deferred Outflows of ResourcesOther postemployment benefits 18,013 - 46,456 64,469 Pension plans 107,432 - 388,562 495,994 Total deferred outflows of resources 125,445 - 435,018 560,463 151 City of Bozeman, Montana Combining Balance Sheet Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Liabilities Current LiabilitiesAccounts payable 173,915 425 214,935 389,275 Due to other funds 880,942 19,964 - 900,906 Accrued interest payable - - 2,152 2,152 Total current liabilities 1,054,857 20,389 217,087 1,292,333 Noncurrent LiabilitiesLong-term debt, net of current portionLeases payable - - 381,167 381,167 Compensated absences 38,482 - 339,272 377,754 Total OPEB liability 64,711 - 197,523 262,234 Net pension liability 486,803 - 1,924,196 2,410,999 Total noncurrent liabilities 589,996 - 2,842,158 3,432,154 Total liabilities 1,644,853 20,389 3,059,245 4,724,487 Deferred Inflows of ResourcesOther postemployment benefits 16,998 - 65,102 82,100 Pension plans 46,503 - 31,510 78,013 Total deferred inflows resources 63,501 - 96,612 160,113 Net PositionNet investment in capital assets 857,312 - 300,785 1,158,097 Unrestricted (1,580,997) 521,231 821,089 (238,677) Total net position (723,685)$ 521,231$ 1,121,874$ 919,420$ 152 City of Bozeman, Montana Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Operating RevenuesCharges for services 2,130,913$ 5,957,109$ 5,668,038$ 13,756,060$ Operating ExpensesSalaries and benefits 832,176 - 4,134,873 4,967,049 Materials and supplies 1,174,519 - 36,992 1,211,511 Repairs and maintenance 23,120 - 13,490 36,610 Utilities 32,276 - 8,562 40,838 Administrative charges 211,794 - 627,029 838,823 Other services 49,058 5,920,760 975,524 6,945,342 Depreciation/amortization 65,015 - 170,368 235,383 Total operating expenses 2,387,958 5,920,760 5,966,838 14,275,556 Operating Income (Loss)(257,045) 36,349 (298,800) (519,496) Nonoperating Revenues (Expenses)Gain (loss) on disposal of assets 12,134 - (11,395) 739 Interest income (13,185) 234 77,836 64,885 Net decrease in fair market value of investments - - (38,460) (38,460) Interest expense and bond fees - - (20,864) (20,864) Intergovernmental revenues 12,031 - 58,758 70,789 Miscellaneous revenue 380 17,659 53,000 71,039 Total nonoperatingrevenues (expenses)11,360 17,893 118,875 148,128 Change in Net Position (245,685) 54,242 (179,925) (371,368) Total Net Position, Beginning of Year (478,000) 466,989 1,301,799 1,290,788 Total Net Position, End of Year (723,685)$ 521,231$ 1,121,874$ 919,420$ 153 City of Bozeman, Montana Combining Statement of Cash Flows Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Operating ActivitiesReceipts from customers and users 2,129,920$ 5,960,833$ 5,668,038$ 13,758,791$ Payments to suppliers (1,186,744) (5,980,125) (982,666) (8,149,535) Payments to and on behalf of employees (787,050) - (3,902,218) (4,689,268) Payments to internal service funds and administrat (211,794) - (627,029) (838,823) Net Cash (Used for) from Operating Activities (55,668) (19,292) 156,125 81,165 Noncapital Financing Activities Intergovernmental operating grants 12,031 - 58,758 70,789 Miscellaneous income 380 17,659 53,000 71,039 Payments received on interfund borrowing 107,700 1,399 - 109,099 Net Cash from Noncapital Financing Activities 120,111 19,058 111,758 250,927 Capital and Related Financing ActivitiesAcquisition of capital assets (51,258) - (54,923) (106,181) Debt servicePrincipal - - (95,743) (95,743) Interest - - (18,712) (18,712) Net Cash Used for Capital and Related Financing Activities (51,258) - (169,378) (220,636) Investing ActivitiesInterest and dividends from investments (13,185) 234 33,347 20,396 Change in Cash and Cash Equivalents - - 131,852 131,852 Cash and Cash Equivalents, Beginning of Year - - 3,010,670 3,010,670 Cash and Cash Equivalents, End of Year -$ -$ 3,142,522$ 3,142,522$ 154 City of Bozeman, Montana Combining Statement of Cash Flows Internal Service Funds June 30, 2023 Vehicle MedicalMaintenanceHealth Public WorksShopInsuranceAdministration Total Reconciliation of Operating Income (Loss) toNet Cash (Used for) from Operating ActivitiesOperating income (loss)(257,045)$ 36,349$ (298,800)$ (519,496)$ Adjustments to reconcile operating income (loss) to net cash (used for) from operating activities Depreciation/amortization 65,015 - 170,368 235,383 Changes in assets and liabilities Accounts receivable (993) 3,724 - 2,731 Prepaid expenses - (59,417) - (59,417) Other assets - - (8,657) (8,657) Pension related deferred outflows (16,270) - (79,460) (95,730) OPEB related deferred outflows 4,820 - 21,370 26,190 Vouchers payable 92,229 52 60,559 152,840 Compensated absences 17,313 - 99,422 116,735 Net pension liability 147,724 - 721,474 869,198 Total OPEB liability (9,066) - (40,197) (49,263) Pension related deferred inflows (109,425) - (534,421) (643,846) OPEB related deferred inflows 10,030 - 44,467 54,497 Net cash (used for) fromoperating activities (55,668)$ (19,292)$ 156,125$ 81,165$ Supplemental Schedule of Noncash Investing and Financing Activities Acquisition of capital assets through debt -$ -$ 70,767$ 70,767$ 155 City of Bozeman, Montana Description of Funds Custodial Funds June 30, 2023 Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. Custodial funds are used to report fiduciary activities that are not required to be reported in pension (or other employee benefit) trust funds, investment trust funds, or private-purpose trust funds. The City has the following custodial funds: Municipal Court Trust Fund – Accounts for monies held for appearance bonds and restitution to criminal arrests and reimbursement for damage caused. Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies. 156 City of Bozeman, Montana Combining Statement of Fiduciary Net Position Custodial Funds June 30, 2023 Tourism Business Municipal ImprovementCourtDistrict Total AssetsCash and investments 575,276$ 50,170$ 625,446$ Receivables (net of allowance for uncollectibles): Accounts 2,692 - 2,692 Total assets 577,968 50,170 628,138 LiabilitiesDeposits payable 580,359 - 580,359 Net PositionRestricted forOther organization or individuals (2,391)$ 50,170$ 47,779$ 157 City of Bozeman, Montana Combining Statement of Changes in Fiduciary Net Position Custodial Funds June 30, 2023 Tourism Business Municipal ImprovementCourtDistrict Total Additions Miscellaneous 572$ -$ 572$ Deductions Total deductions - - - Change in Net Position 572 - 572 Net Position, Beginning (2,963) 50,170 47,207 Net Position, Ending (2,391)$ 50,170$ 47,779$ Statistical Section Year Ended June 30, 2023 City of Bozeman, Montana 158 City of Bozeman, Montana Introduction to Statistical Section For the Year Ended June 30, 2023 This part of the City of Bozeman's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends – These schedules contain trend information to help the reader understand and assess how the government’s financial position has changed over time. Components of Net Position ......................................................................................................................... 160 Changes in Net Position ................................................................................................................................ 161 Fund Balances of Governmental Funds ......................................................................................................... 164 Changes in Fund Balances of Governmental Funds ....................................................................................... 165 Revenue Capacity – These schedules contain information to assist the reader in understanding and assessing the factors affecting the government’s ability to generate its own-source revenues. Assessed Value of Taxable Property .............................................................................................................. 166 City Taxable Market and Taxable Values ....................................................................................................... 167 Tax Increment District Taxable Valuation Detail ............................................................................................ 168 Downtown Bozeman Improvement District & Comparison to City Taxable Value .......................................... 171 Property Tax Levies for Tax Increment/Urban Renewal Districts ................................................................... 172 Direct and Overlapping Property Tax Rates ................................................................................................... 173 Principal Property Taxpayers ........................................................................................................................ 174 Principal Property Taxpayers in Downtown Bozeman Improvement District ................................................. 175 Properties in the Bozeman Midtown Urban Renewal District ........................................................................ 176 Principal Property Taxpayers in Downtown Bozeman Midtown Urban Renewal District ................................ 177 Property Tax Levies and Collections .............................................................................................................. 178 Water Sold by Type of Customer................................................................................................................... 179 Water and Sewer Rates ................................................................................................................................ 180 Debt Capacity – These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Ratios of Outstanding Debt by Type .............................................................................................................. 181 Ratios of General Bonded Debt Outstanding ................................................................................................. 182 Computation of Direct and Overlapping Debt ............................................................................................... 183 Legal Debt Margin Information ..................................................................................................................... 184 Pledged Revenue Coverage – Governmental Activities .................................................................................. 185 Pledged Revenue Coverage – Business-Type Activities .................................................................................. 186 Debt Service Requirements and Coverage for Tax Increment Districts........................................................... 187 Summary of Outstanding SIDs ....................................................................................................................... 188 Revolving Fund Balance and Bond Secured Thereby...................................................................................... 189 Special Improvement District Assessment Billing and Collections .................................................................. 190 159 City of Bozeman, Montana Introduction to Statistical Section For the Year Ended June 30, 2023 Demographic and Economic Information – These schedules offer demographic and economic information to (1) assist the reader in understanding the socioeconomic environment within which a government operates and (2) provide information that facilitates comparisons of financial statement information over time and among governments. Demographic and Economic Statistics ........................................................................................................... 191 Principal Employers ...................................................................................................................................... 192 Operating Information – These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Full-Time Equivalent City Government Employees by Function/Program ...................................................... 193 Operating Indicators by Function/Program ................................................................................................... 194 Capital Assets Statistics by Function/Program ............................................................................................... 195 Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. 160 City of Bozeman, Montana Components of Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Governmental ActivitiesNet investment in capital assets 89,267,076$ 93,409,850$ 104,342,191$ 115,696,956$ 137,058,945$ 155,191,911$ 118,577,368$ 196,931,242$ 217,241,690$ 236,885,005$ Restricted 35,621,803 41,755,126 42,829,320 41,583,992 36,522,195 21,202,050 69,208,376 68,458,112 55,321,501 46,965,688 Unrestricted 12,127,224 (5,137,642) (3,923,466) (4,839,467) (5,514,909) 4,799,426 27,280,681 (31,383,436) (15,708,281) 7,527,542 Total Governmental Activities Net Position 137,016,103 130,027,334 143,248,045 152,441,481 168,066,231 181,193,387 215,066,425 234,005,918 256,854,910 291,378,235 Business-Type ActivitiesNet investment in capital assets 205,501,357 211,419,777 221,385,655 229,372,281 239,254,236 245,190,586 260,124,896 271,812,360 286,461,913 297,691,119 Restricted 3,372,927 4,977,984 4,990,635 8,866,951 13,070,517 12,671,931 12,307,565 14,839,596 29,337,941 31,659,041 Unrestricted 8,723,353 6,619,399 10,582,408 9,154,014 12,923,470 21,053,523 25,801,918 23,152,084 14,910,714 15,428,360 Total Business-Type Activities Net Position 217,597,637 223,017,160 236,958,698 247,393,246 265,248,223 278,916,040 298,234,379 309,804,040 330,710,568 344,778,520 Primary GovernmentNet investment in capital assets 294,768,433 304,829,627 325,727,846 345,069,237 376,313,181 400,382,497 378,702,264 468,743,602 503,703,603 534,576,124 Restricted 38,994,730 46,733,110 47,819,955 50,450,943 49,592,712 33,873,981 81,515,941 83,297,708 84,659,442 78,624,729 Unrestricted 20,850,577 1,481,757 6,658,942 4,314,547 7,408,561 25,852,949 53,082,599 (8,231,352) (797,567) 22,955,902 Total Primary Government Net Position 354,613,740$ 353,044,494$ 380,206,743$ 399,834,727$ 433,314,454$ 460,109,427$ 513,300,804$ 543,809,958$ 587,565,478$ 636,156,755$ Fiscal Year 161 City of Bozeman, Montana Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Expenses Governmental ActivitiesGeneral government 6,989,830$ 7,417,644$ 8,058,925$ 9,415,702$ 9,896,366$ 10,310,075$ 9,854,245$ 11,517,404$ 12,352,494$ 17,726,413$ Public safety 15,297,088 17,023,578 18,391,357 17,689,004 18,637,422 19,699,377 20,664,687 22,698,030 22,442,450 28,002,592 Public works 6,031,768 6,458,930 6,861,939 7,857,917 8,615,272 9,850,802 9,781,345 11,018,661 12,176,141 14,646,742 Public health and welfare 7,417,158 7,579,653 7,994,697 9,210,264 9,476,010 9,658,817 10,354,632 13,429,890 16,211,729 15,343,285 Interest and fiscal charges 179,280 824,266 893,470 771,714 781,255 786,236 1,763,155 2,105,985 2,051,119 2,070,117 Total governmental activities expenses 35,915,124 39,304,071 42,200,388 44,944,601 47,406,325 50,305,307 52,418,064 60,769,970 65,233,933 77,789,149 Business-Type ActivitiesWater 6,869,870 7,995,910 9,273,395 9,740,629 9,832,508 9,984,114 9,807,970 10,687,976 11,604,238 13,882,728 Waste water 8,955,592 6,940,983 8,163,312 8,590,477 8,548,138 9,291,509 9,209,689 10,209,279 10,849,992 11,979,470 Solid waste 6,958,209 3,308,441 4,570,884 4,262,650 4,535,865 4,739,710 4,665,613 4,991,829 5,220,011 7,980,984 Parking 805,274 789,186 830,869 897,278 1,133,777 1,119,466 1,304,465 1,183,693 1,360,611 1,565,405 Stormwater 161,180 309,585 469,743 930,444 878,173 924,282 1,051,497 985,732 1,243,760 1,711,451 Total business-type activities expenses 23,750,125 19,344,105 23,308,203 24,421,478 24,928,461 26,059,081 26,039,234 28,058,509 30,278,612 37,120,038 Total Primary Government Expenses 59,665,249$ 58,648,176$ 65,508,591$ 69,366,079$ 72,334,786$ 76,364,388$ 78,457,298$ 88,828,479$ 95,512,545$ 114,909,187$ Fiscal Year 162 City of Bozeman, Montana Changes in Net Position (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Program Revenues Governmental ActivitiesCharges for servicesGeneral government 2,453,015$ 1,947,445$ 2,530,474$ 2,683,016$ 3,139,427$ 3,777,184$ 3,546,689$ 4,380,033$ 5,472,678$ 7,128,575$ Public safety 3,290,573 3,211,911 3,347,859 3,175,257 2,234,994 4,158,560 4,020,453 4,260,366 4,317,541 4,942,022 Public works 7,623,178 8,784,447 9,310,147 10,342,921 15,531,304 12,189,258 16,522,229 18,836,107 19,176,512 22,563,519 Public health and welfare 613,322 1,097,845 1,213,526 1,414,394 1,593,025 1,724,864 1,567,557 5,294,909 6,833,910 1,687,204 Operating grants and contributions 457,354 2,254,052 2,494,244 2,715,986 3,021,400 5,419,871 7,622,415 12,156,812 7,707,580 12,843,761 Capital grants and contributions 4,762,416 2,960,051 5,018,559 2,667,352 7,651,008 6,593,221 15,429,642 4,518,830 12,153,695 14,514,120 Total governmental activities program revenues 19,199,858 20,255,751 23,914,809 22,998,926 33,171,158 33,862,958 48,708,985 49,447,057 55,661,916 63,679,201 Business-Type ActivitiesCharges for servicesWater 9,842,699 9,969,058 11,935,016 11,166,944 12,915,454 11,438,495 11,913,879 13,970,784 15,431,185 14,886,895 Waste water 8,852,738 9,008,247 9,283,600 9,668,524 10,686,506 10,445,185 10,671,361 11,691,165 12,684,974 12,343,552 Solid waste 2,725,465 2,953,414 2,617,243 3,613,721 3,926,123 4,228,099 4,631,523 4,969,868 5,431,005 5,872,630 Parking 602,838 576,357 597,238 878,458 958,378 958,504 1,028,036 1,005,788 1,062,010 968,042 Stormwater 262,781 304,906 943,621 1,293,941 1,324,461 1,349,678 1,429,449 1,519,994 1,673,866 1,883,096 Operating grants and contributions 9,596 123,439 134,946 169,509 134,523 83,264 104,868 243,536 1,511,436 1,435,529 Capital grants and contributions 5,898,923 6,385,418 11,287,654 7,774,707 9,944,719 8,324,760 13,312,504 5,427,166 13,064,462 11,084,423 Total business-type activitiesprogram revenues 28,195,040 29,320,839 36,799,318 34,565,804 39,890,164 36,827,985 43,091,620 38,828,301 50,858,938 48,474,167 Total Primary Government Program Revenues 47,394,898$ 49,576,590$ 60,714,127$ 57,564,730$ 73,061,322$ 70,690,943$ 91,800,605$ 88,275,358$ 106,520,854$ 112,153,368$ Net Revenue (Expense) Governmental Activities (16,715,266)$ (19,048,320)$ (18,285,579)$ (21,945,675)$ (14,235,167)$ (16,442,349)$ (3,709,079)$ (11,322,913)$ (9,572,017)$ (14,109,948)$ Business-Type Activities 4,444,915 9,976,734 13,491,115 10,144,326 14,961,703 10,768,904 17,052,386 10,769,792 20,580,326 11,354,129 Total Primary Government Net Revenue (Expense)(12,270,351)$ (9,071,586)$ (4,794,464)$ (11,801,349)$ 726,536$ (5,673,445)$ 13,343,307$ (553,121)$ 11,008,309$ (2,755,819)$ 163 City of Bozeman, Montana Changes in Net Position (continued) Last Ten Fiscal Years (Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General Revenues and Other Changes in Net Position Governmental ActivitiesProperty taxes 17,561,022$ 20,203,718$ 21,234,288$ 21,708,812$ 22,532,724$ 23,823,994$ 28,308,301$ 27,115,391$ 29,432,001$ 39,860,197$ Unrestricted intergovernmental 7,436,419 7,699,711 7,992,180 8,372,625 6,171,297 4,658,177 4,859,238 4,956,187 5,099,529 5,370,015 Unrestricted investment earnings (losses)355,790 403,152 519,637 554,870 64,058 1,490,286 1,604,365 428,653 (1,685,354) 1,118,619 Miscellaneous 293,884 374,966 418,215 1,317,137 2,320,536 1,009,437 1,128,061 (1,722,976) 520,517 1,225,899 Gain (loss) on disposal of capital asset 236,688 - 123,934 (71,335) 28,861 167,291 16,862 20,072 (15,735) 2,726,201 Transfers (10,000) (410,016) 1,218,036 (742,999) (758,084) (475,000) (546,353) (534,921) (1,396,976) (1,667,658) Total governmental activities 25,873,803 28,271,531 31,506,290 31,139,110 30,359,392 30,674,185 35,370,474 30,262,406 31,953,982 48,633,273 Business-Type ActivitiesUnrestricted investment earnings - - - 304,231 3,389 1,010,849 846,331 38,987 (1,291,575) 833,995 Miscellaneous 390,700 - - 1,256,284 2,529,824 362,631 518,162 233,508 219,770 226,026 (Loss) gain on disposal of capital asset - - - (2,013,292) 10,005 (172,428) 4,012 17,918 1,031 (13,856) Transfers 10,000 380,347 (1,218,036) 742,999 758,084 475,000 546,353 534,921 1,396,976 1,667,658 Total business-type activities 400,700 380,347 (1,218,036) 290,222 3,301,302 1,676,052 1,914,858 825,334 326,202 2,713,823 Total Primary Government 26,274,503$ 28,651,878$ 30,288,254$ 31,429,332$ 33,660,694$ 32,350,237$ 37,285,332$ 31,087,740$ 32,280,184$ 51,347,096$ Change in Net Position Governmental Activities 9,158,537$ 9,223,211$ 13,220,711$ 9,193,435$ 16,124,225$ 14,231,836$ 31,661,395$ 18,939,493$ 22,381,965$ 34,523,325$ Business-Type Activities 4,845,615 10,357,081 12,273,079 10,434,548 18,263,005 12,444,956 18,967,244 11,595,126 20,906,528 14,067,952 Total Primary Government Change in Net Position 14,004,152$ 19,580,292$ 25,493,790$ 19,627,983$ 34,387,230$ 26,676,792$ 50,628,639$ 30,534,619$ 43,288,493$ 48,591,277$ Fiscal Year 164 City of Bozeman, Montana Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General FundNonspendable -$ -$ -$ -$ -$ -$ -$ -$ -$ 37,167$ Committed - - - - - - - - - 6,087,489 Assigned 6,420,760 6,061,965 5,541,841 6,402,882 7,739,020 7,739,582 8,110,313 9,313,580 8,708,695 - Unassigned 193,534 - 979,258 87,274 (274,252) - 1,030,550 (130,315) (107,076) 8,953,349 Total General Fund 6,614,294$ 6,061,965$ 6,521,099$ 6,490,156$ 7,464,768$ 7,739,582$ 9,140,863$ 9,183,265$ 8,601,619$ 15,078,005$ All Other Governmental FundsNonspendable 1,269,557$ 2,061,790$ 1,426,575$ 1,533,338$ 1,623,816$ 1,735,591$ 1,796,174$ 1,884,479$ 1,919,979$ 1,804,399$ Restricted 19,927,526 12,546,935 39,856,356 38,938,127 34,403,744 23,129,241 65,273,723 61,818,904 55,582,529 60,797,482 Committed 3,075,505 3,088,936 3,528,263 3,901,694 3,856,238 4,279,091 4,328,163 3,621,644 3,168,927 603,360 Assigned 229,602 - 7,425,398 7,259,749 1,868,485 1,293,436 578,852 96,473 134,135 2,927,964 Unassigned (184,101) (97,173) 914,535 107,103 (42,648) 8,731,534 (125,584) 662,773 (312,180) (302,973) Total All Other Governmental Funds 24,318,089$ 17,600,488$ 53,151,127$ 51,740,011$ 41,709,635$ 39,168,893$ 71,851,328$ 68,084,273$ 60,493,390$ 65,830,232$ Fiscal Year 165 City of Bozeman, Montana Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 RevenuesTaxes 17,385,371$ 20,404,236$ 21,303,074$ 21,682,667$ 22,553,972$ 23,788,018$ 28,321,349$ 26,973,106$ 29,607,197$ 39,657,027$ Special assessments 2,011,944 1,578,855 1,265,954 1,163,275 1,137,103 1,116,925 1,390,355 1,676,909 1,616,318 1,293,350 Licenses and permits 1,784,282 1,827,842 2,112,090 2,092,673 2,541,727 2,392,081 2,524,368 2,902,616 2,850,060 3,542,188 Intergovernmental 8,208,770 8,562,937 8,920,424 8,956,044 9,419,104 10,488,662 12,600,824 15,297,152 12,638,682 18,089,987 Charges for services 9,656,123 10,629,791 12,283,683 13,743,830 17,885,529 16,987,622 20,142,910 24,847,833 30,095,236 30,136,508 Fines and forfeitures 1,411,162 1,305,166 1,253,705 1,256,525 1,240,154 1,234,324 1,199,601 1,168,880 1,053,196 1,069,270 Investment income (losses)329,086 370,305 479,699 520,690 34,709 1,439,743 1,343,201 155,647 (1,885,520) 1,092,193 Loan repayments 63,980 94,989 38,552 31,837 25,827 31,695 44,930 38,276 53,539 30,346 Miscellaneous 287,089 363,274 415,646 1,307,668 2,313,097 995,553 1,790,144 1,766,620 2,712,894 2,031,152 Total revenues 41,137,807 45,137,395 48,072,827 50,755,209 57,151,222 58,474,623 69,357,682 74,827,039 78,741,602 96,942,021 ExpendituresGeneral government 6,138,575 6,594,474 7,318,539 7,643,886 8,268,285 8,782,078 9,280,183 10,449,026 11,891,184 15,001,137 Public safety 14,637,886 15,086,695 16,485,549 16,812,131 17,602,966 18,005,944 19,598,592 19,778,375 22,104,511 25,534,451 Public works 3,498,770 3,786,283 3,840,405 4,422,771 4,955,559 5,774,783 5,376,499 5,868,383 6,977,080 8,454,661 Public health & welfare 6,678,347 7,366,955 7,245,425 7,654,059 7,975,354 8,339,885 9,046,331 11,690,142 14,598,944 13,296,225 Other 1,046,712 1,113,340 418,431 506,169 655,532 728,642 665,517 3,500,760 2,204,370 1,836,292 Capital outlay 8,053,456 9,905,333 9,337,470 12,468,020 18,420,501 19,106,110 24,265,809 32,608,736 30,801,575 17,918,459 Debt servicePrincipal 1,482,142 1,121,593 1,345,250 1,422,555 1,500,687 1,635,369 6,639,947 3,188,603 2,969,165 3,927,518 Interest and fiscal charges 380,950 824,266 893,470 771,714 718,597 786,238 1,763,155 2,105,985 2,051,119 2,304,135 Total expenditures 41,916,838 45,798,939 46,884,539 51,701,305 60,097,481 63,159,049 76,636,033 89,190,010 93,597,948 88,272,878 Excess (Deficiency) ofRevenues over (under)Expenditures (779,031) (661,544) 1,188,288 (946,096) (2,946,259) (4,684,426) (7,278,351) (14,362,971) (14,856,346) 8,669,143 Other Financing Sources (Uses)Transfers in 3,103,787 4,816,671 6,483,413 3,950,059 4,394,277 4,202,825 8,867,568 5,976,400 10,802,182 23,487,954 Transfers out (3,113,787) (5,197,018) (5,496,492) (4,693,058) (5,152,361) (4,677,825) (9,413,920) (6,511,321) (12,199,158) (25,155,612) Bonds issued 10,012,647 5,619,361 47,406 234,702 1,103,586 2,859,598 41,878,844 10,501,000 7,045,000 - Premium (discount) on bonds - - - - - - - 649,009 515,591 - Leases and other debt issued - - - - - - - - 19,833 2,011,672 Sale of capital assets 243,092 64,855 227,984 43,277 35,144 33,898 29,567 23,744 34,836 2,800,071 Total other financingsources (uses)10,245,739 5,303,869 1,262,311 (465,020) 380,646 2,418,496 41,362,059 10,638,832 6,218,284 3,144,085 Net Change inFund Balances 9,466,708$ 4,642,325$ 2,450,599$ (1,411,116)$ (2,565,613)$ (2,265,930)$ 34,083,708$ (3,724,139)$ (8,638,062)$ 11,813,228$ 166 City of Bozeman, Montana Assessed Value of Taxable Property Last Ten Fiscal Years AssessedTaxable ValueFiscal Year Commercial as a PercentageEndedResidentialand Industrial Total Taxable Total Direct Total Market of Total MarketJune 30,Property Property Other Property Assessed Value*Tax Rate Value**Value 2023 89,925,341$ 58,735,884$ 11,120,831$ 159,782,056$ 204.50 11,021,338,679$ 1.450% 2022 87,432,389 57,107,580 10,812,534 155,352,503 154.12 10,724,564,866 1.449% 2021 72,903,489 47,617,844 9,015,783 129,537,116 169.48 8,875,762,356 1.459% 2020 70,588,175 46,105,567 8,729,455 125,423,197 188.45 8,596,253,775 1.459% 2019 58,712,093 38,348,553 7,260,771 104,321,417 191.24 6,981,943,409 1.494% 2018 56,952,419 37,199,199 7,043,156 101,194,774 187.33 6,745,351,312 1.500% 2017 52,777,954 30,966,657 6,013,815 89,758,426 205.30 5,870,738,906 1.529% 2016 50,899,738 29,864,642 5,799,800 86,564,180 210.16 5,698,588,679 1.519% 2015 50,978,520 31,641,840 5,273,640 87,894,000 188.76 3,598,269,877 2.443% 47,956,720 32,542,060 5,138,220 85,637,000 173.08 3,386,295,608 2.529%2014 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property in Gallatin County is reassessed by the State Department of Revenue every two years. * Includes tax-exempt property ** Sales price of property is not public record in the State of Montana, so the Total Market Value was used instead 167 City of Bozeman, Montana City Taxable Market and Taxable Values Last Ten Fiscal Years Net Taxable Value (Excludes Incremental Tax Increment Fiscal Year Value for All Districts Taxable ValueEndedTaxableFullTax Increment Incremental for Open SpaceJune 30,Market Value Taxable Value Districts Values) Purposes 2023 11,021,338,679$ 171,848,662$ 12,066,606$ 159,782,056$ 172,444,905$ 2022 10,724,564,866 166,838,141 11,485,638 155,352,503 164,979,565 2021 8,875,762,356 137,983,427 8,446,311 129,537,116 137,765,762 2020 8,596,253,775 133,582,036 8,158,839 125,423,197 133,391,037 2019 6,981,943,409 109,713,782 5,392,365 104,321,417 191,152,592 2018 6,745,351,312 106,224,806 5,030,032 101,194,774 105,727,520 2017 5,870,738,906 94,102,761 4,344,335 89,758,426 93,212,816 2016 5,698,588,679 90,787,797 4,223,617 86,564,180 91,973,923 2015 3,598,269,877 92,081,322 4,187,322 87,894,000 90,735,030 3,386,295,608 89,650,917 4,013,917 85,637,000 85,615,328 2014 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. 168 City of Bozeman, Montana Tax Increment District Taxable Valuation Detail Last Ten Fiscal Years Fiscal YearEnded Incremental Incremental IncrementalJune 30,Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable 2023 1,328,695$ 8,245,319$ 9,574,014$ 423,054$ 660,471$ 1,083,525$ 3,507,723$ 2,751,885$ 6,259,608$ 2022 1,328,695 7,893,562 9,222,257 423,054 636,368 1,059,422 3,507,723 2,589,893 6,097,616 2021 1,328,695 6,247,663 7,576,358 423,054 477,252 900,306 3,507,723 1,707,571 5,215,294 2020 1,328,695 5,987,410 7,316,105 423,054 457,274 880,328 3,507,723 1,714,155 5,221,878 2019 1,328,695 4,159,996 5,488,691 423,054 229,047 652,101 3,507,723 982,574 4,490,297 2018 1,328,695 3,769,917 5,098,612 423,054 223,765 646,819 3,507,723 948,746 4,456,469 2017 1,328,695 3,068,902 4,397,597 423,054 193,281 616,335 3,473,127 1,003,546 4,476,673 2016 1,328,695 2,898,551 4,227,246 423,054 214,470 637,524 2,886,997 1,055,385 3,942,382 2015 1,328,695 2,718,220 4,046,915 423,054 190,579 613,633 2,886,997 1,225,604 4,112,601 1,328,695 2,586,963 3,915,658 423,054 172,608 595,662 2,886,997 1,193,297 4,080,294 2014 Bozeman Downtown Northeast Renewal District Bozeman Midtown* Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. *Previously North 7th Corridor 169 City of Bozeman, Montana Tax Increment District Taxable Valuation Detail (continued) Last Ten Fiscal Years Fiscal YearEnded Incremental Incremental IncrementalJune 30,Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable Base Taxable Taxable Total Taxable 2023 244,332$ 37,133$ 281,465$ 417$ 56,410$ 56,827$ 1,137,056$ 315,388$ 1,452,444$ 2022 244,332 53,750 298,082 417 56,410 56,827 1,137,056 255,655 1,392,711 2021 244,332 13,824 258,156 417 - 417 - - - 2020 244,332 - 244,332 417 - 417 - - - - 2019 244,332 20,749 265,081 417 - 417 - - - 2018 - - - 417 - 417 - - - 2017 - - - 417 - 417 - - - - 2016 - - - 417 - 417 - - - 2015 - - - 417 3 420 - - - - - - 417 - 417 - - - 2014 Pole Yard Urban Renewal***Bozeman TechnologyNorth Park Urban Renewal** Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. **New District created in fiscal year 2019 ***New District created in fiscal year 2022 170 City of Bozeman, Montana Tax Increment District Taxable Valuation Detail (continued) Last Ten Fiscal Years Fiscal Year TotalEndedIncrementalJune 30,Base Taxable Taxable Total Taxable 2023 6,641,277$ 12,066,606$ 18,707,883$ 2022 6,641,277 11,485,638 18,126,915 2021 5,504,221 8,446,310 13,950,531 2020 5,504,221 8,158,839 13,663,060 2019 5,504,221 5,392,366 10,896,587 2018 5,259,889 4,942,428 10,202,317 2017 5,225,293 4,265,729 9,491,022 2016 4,639,163 4,168,406 8,807,569 2015 4,639,163 4,134,406 8,773,569 4,639,163 3,952,868 8,592,031 2014 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. 171 City of Bozeman, Montana Downtown Bozeman Improvement District & Comparison to City Taxable Value Last Ten Fiscal Years City Taxable The District'sValue Incremental Taxable (Excluding ALL Taxable ValueFiscal Year Market Value of Taxable Value Tax Increment as a PercentageEndedProperty in the of Property Incremental District of the City's June 30,District in the District Taxable Value Valuations)Taxable Value 2023 607,434,219$ 9,574,014$ 8,245,319$ 159,782,056$ 5.16% 2022 580,867,055 9,222,257 7,893,562 155,352,503 5.08% 2021 465,530,358 7,576,358 6,247,663 129,537,116 4.82% 2020 447,565,041 7,316,105 5,987,410 125,423,197 4.77% 2019 319,728,707 5,488,691 4,159,996 104,321,417 3.99% 2018 297,005,720 5,098,612 3,769,917 101,194,774 3.73% 2017 265,793,431 4,397,597 3,068,902 89,758,426 3.42% 2016 259,138,001 4,227,246 2,898,551 86,564,180 3.35% 2015 190,128,511 4,046,915 2,718,220 87,894,000 3.09% 153,063,721 3,915,658 2,586,963 85,637,000 3.02%2014 Downtown Bozeman Improvement District Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every two years. 172 City of Bozeman, Montana Property Tax Levies for Tax Increment/Urban Renewal Districts Last Ten Fiscal Years Fiscal Year Taxing Entity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Statewide School Equalization 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 Gallatin County Operating and Bond 88.38 89.55 99.77 100.41 91.23 98.87 91.17 99.09 93.48 95.05 Open Space Bond 4.90 4.95 5.03 5.85 5.13 4.69 3.90 4.04 3.74 2.30 County-Wide School 101.28 99.94 106.85 105.39 99.67 102.44 96.45 96.74 91.29 89.58 Bozeman High School Distrct 73.16 72.97 76.76 77.25 73.10 108.95 92.77 97.61 84.86 86.05 Bozeman Elemenatary School District 145.25 143.70 151.15 154.81 146.92 142.63 125.90 121.74 101.99 102.09 City of Bozeman 173.08 188.76 210.16 205.30 187.33 191.24 187.70 163.62 152.12 204.50 Total revenues 626.05 639.87 689.72 689.01 643.38 688.82 637.89 622.84 567.48 619.57 Exempt from Tax Increment University Millage 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Gallatin Conservation District 0.97 0.95 1.05 1.01 0.89 0.91 0.77 - - - County-Wide Planning 2.39 2.35 2.39 2.39 2.48 2.50 2.22 1.48 2.18 2.23 Source: Based on information provided by Gallatin County and Montana Department of Revenue Note: Property is assessed by the State Department of Revenue every six years and beginning in 2017 every two years. 173 City of Bozeman, Montana Direct and Overlapping Property Tax Rates Last Ten Fiscal Years Fiscal Year GeneralEndedObligation Total Direct Bozeman School Gallatin State ofJune 30,Basic Rate Debt Service Tax Rate District County Montana 2023 181.15 23.35 204.50 254.11 179.89 93.48 2022 131.89 22.23 154.12 219.35 195.83 46.00 2021 140.73 28.75 169.48 218.67 191.52 46.00 2020 162.82 25.63 188.45 251.58 206.00 46.00 2019 178.22 13.02 191.24 220.02 223.33 46.00 2018 173.92 13.41 187.33 232.06 241.69 46.00 2017 190.17 15.13 205.30 227.91 241.69 46.00 2016 194.51 15.65 210.16 216.67 215.78 46.00 2015 177.52 11.24 188.76 218.41 221.00 46.00 164.83 8.25 173.08 203.26 215.10 46.00 2014 Source: Based on information provided by Gallatin County and Department of Revenue 174 City of Bozeman, Montana Principal Property Taxpayers Current Year and Nine Years Ago Percentage of Percentage ofTotal City Total CityTaxableTaxableTaxableTaxableAssessedAssessedAssessedAssessedTaxpayerValuationRankValuation Valuation Rank Valuation Northwestern Energy - T & D 8,620,846$ 1 5.40%3,668,602$ 1 4.28% Plato MT I Propco LLC 1,080,146 2 0.68%- N/A N/A Charter Communications Inc 745,534 3 0.47%- N/A N/A GKT Bozeman Gateway LLC 623,384 4 0.39%- N/A N/A Verizon Inc 605,249 5 0.38%555,252 4 0.65% Billings Clinic 593,261 6 0.37%- N/A N/A Cannery District Partners LLC 571,306 7 0.36%- N/A N/A Bozeman Apartment Group LLC 560,417 8 0.35%- N/A N/A Springs VII at Bozeman LLC 546,620 9 0.34%- N/A N/A GKT Gallatin Shopping Center VM LLC 507,025 10 0.32%- N/A N/A Qwest Corporation - N/A N/A 1,040,298 2 1.21% Bresnan Communications - N/A N/A 813,246 3 0.95% Harry Daum - Gallatin Mall - N/A N/A 500,755 5 0.58% Stone Ridge Partners LLC - N/A N/A 468,297 6 0.55% J & D Family LLLP - N/A N/A 350,638 7 0.41% Bridger Peaks Holding LLC - N/A N/A 350,440 8 0.41% First Security Bank - N/A N/A 349,000 9 0.41% Wal-Mart Stores Inc - N/A N/A 338,929 10 0.40% Total attributable to top taxpayers 14,453,788 9.05%8,435,457 9.85% Total of all other properties 145,328,268 90.95%77,201,543 90.15% 159,782,056$ 100.00%85,637,000$ 100.00% 2023 2014 Source: Gallatin County Treasurer 175 City of Bozeman, Montana Principal Property Taxpayers in Downtown Bozeman Improvement District Current Year and Prior Year Percentage of Percentage ofTotal City Total CityTaxableTaxableTaxableTaxableAssessedAssessedAssessedAssessedTaxpayerBusinessValuationRankValuation Valuation Rank Valuation ETHA Hotel LLC Property Investor/Developer 479,342$ 1 5.01%479,342$ 1 5.20% Straight Away Bozeman Investo Commercial 401,588 2 4.19%- N/A N/A G25 Holdings LLC Property Investor/Developer 332,967 3 3.48%332,967 2 3.61% First Security Bank Bank 283,859 4 2.96%282,549 3 3.06% 106 East Babcock LLC Multi-Tenant Commercial/Residential Building 216,271 5 2.26%192,174 4 2.08% 5 West LLC Multi-Tenant Commercial/Residential Building 185,489 6 1.94%185,489 5 2.01% Osborne Building LLC Multi-Tenant Commercial/Residential Building 166,700 7 1.74%149,770 8 1.62% 104 East Main LLC Multi-Tenant Commercial/Residential Building 161,377 8 1.69%161,377 6 1.75% Downtowner Group LLC Business Support Services 150,146 9 1.57%150,146 7 1.63% Moose Point LP Commercial Property Developer 142,399 10 1.49%142,399 9 1.54% F&H, LLC Property Investor/Developer - N/A N/A 136,985 10 1.49% Total attributable to top taxpayers 2,520,138 26.32%2,213,198 24.00% Total of all other properties 7,053,876 73.68%7,009,059 76.00% 9,574,014$ 100.00%9,222,257$ 100.00% 2023 2022 Source: Gallatin County Treasurer 176 City of Bozeman, Montana Properties in the Bozeman Midtown Urban Renewal District Current Year and Prior Year Percentage of Percentage ofTotal City Total City Taxable Taxable Taxable TaxableAssessed Assessed Assessed Assessed Property Type/Property Tax Classification Valuation Valuation Valuation Valuation 3 agricultural land 16,239$ 803$ 16,897$ 903$ 4 residential 48,687,693 652,961 41,516,680 556,166 4 commercial 290,738,314 5,494,952 286,476,924 5,414,414 5 pollution control, electric and telephone cooperative 4,215 126 - - 8 business equipment 2,602,716 39,042 3,463,777 51,957 9 pipelines and non-electric generatingproperty of electric utility 411,219 49,346 387,383 46,487 13 eletrical generation and telecommunication 372,962 22,378 461,501 27,689 342,833,358$ 6,259,608$ 332,323,162$ 6,097,616$ 2022/2023 2021/2022 Source: Montana Department of Revenue 177 City of Bozeman, Montana Principal Property Taxpayers in Downtown Bozeman Midtown Urban Renewal District Current Year and Prior Year Percentage of Percentage ofTotal City Total CityTaxableTaxableTaxableTaxableAssessedAssessedAssessedAssessedTaxpayerValuationRankValuation Valuation Rank Valuation TCIP Partnership 264,335$ 1 4.22%264,335$ 2 4.34% Walmart Stores Inc.247,136 2 3.95%247,136 3 4.05% Rocky Mountain Retail LLC 220,308 3 3.52%- N/A N/A Grantree Hotels LP 219,618 4 3.51%219,618 4 3.60% Buffalo Ventures LLC 213,835 5 3.42%213,835 5 3.51% Westlake, George 187,745 6 3.00%300,665 1 4.93% Bozeman Hospitality LLC 167,963 7 2.68%169,344 6 2.78% Aspen Land Co LLC 163,602 8 2.61%- N/A N/A Oak Street Partnership 146,997 9 2.35%146,997 8 2.41% RSVP Motel LLC 136,794 10 2.19%- N/A N/A Murdoch Family LP - 7 N/A 164,113 7 2.69% Gallatin Hospitality LLC - 9 N/A 117,399 9 1.93% Universal Athletic Services Inc.- 10 N/A 112,693 10 1.85% Total attributable to top taxpayers 1,968,333 31.44%1,956,135 16.58% Total of all other properties 4,291,275 68.56%4,141,481 67.92% 6,259,608$ 100.00%6,097,616$ 84.50% 2022/2023 2021/2022 178 City of Bozeman, Montana Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Taxes Levied Collections inEndedfor the Percentage Subsequent PercentageJune 30,Fiscal Year Amount of Levy Years Amount of Levy 2023 32,675,419$ 32,618,261$ 99.83%-$ 32,618,261$ 99.83% 2022 23,793,072 23,777,644 99.94%37,940 23,815,584 100.09% 2021 21,454,058 21,017,696 97.97%62,741 21,080,437 98.26% 2020 23,589,506 23,381,671 99.12%207,835 23,589,506 100.00% 2019 19,950,675 19,940,784 99.95%9,891 19,950,675 100.00% 2018 18,956,357 18,791,653 99.13%59,070 18,850,723 99.44% 2017 18,338,501 18,069,230 98.53%100,003 18,169,233 99.08% 2016 18,191,892 18,009,556 99.00%74,809 18,084,365 99.41% 2015 16,590,871 16,559,270 99.81%31,601 16,590,871 100.00% 2014 14,821,724 14,482,502 97.71%227,481 14,709,983 99.25% Collected Within theFiscal Year of the Levy Total Collections to Date Source: Gallatin County City Manager's Final Adopted Budget 179 City of Bozeman, Montana Water Sold by Type of Customer (in hundreds of cubic feet [HCF]) Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Residential 1,433,833 1,385,140 1,493,192 1,601,439 1,623,881 1,556,249 1,546,308 1,788,984 1,612,932 1,583,076 Government 52,448 53,165 51,923 56,956 75,001 54,270 103,536 73,416 82,308 110,364 MSU 213,698 210,107 208,618 225,394 217,967 238,968 178,368 171,840 199,080 202,164 Commercial 607,444 599,193 610,741 620,761 618,398 627,116 506,868 590,076 578,688 600,456 Total 2,307,423 2,247,605 2,364,474 2,504,550 2,535,247 2,476,603 2,335,080 2,624,316 2,473,008 2,496,060 Total direct rate per 1,000 HCF 3,053.40$ 3,105.14$ 3,175.41$ 3,256.72$ 3,337.92$ 3,508.94$ 3,575.07$ 3,697.72$ 4,001.23$ 4,054.42$ Source: City of Bozeman Finance Department 180 City of Bozeman, Montana Water and Sewer Rates Last Ten Fiscal Years Water*Sewer*Fiscal YearEnded Monthly Rate per Monthly Rate per June 30,Base Rate 1,000 Gallons Base Rate 1,000 Gallons 2023 16.17$ 25.33$ 19.58$ 32.45$ 2022 16.17$ 25.33$ 19.58$ 32.45$ 2021 16.17$ 25.33$ 19.58$ 32.45$ 2020 16.17$ 25.33$ 19.58$ 32.45$ 2019 16.17$ 25.33$ 19.58$ 32.45$ 2018 15.70$ 24.60$ 19.01$ 31.50$ 2017 15.39$ 24.11$ 18.63$ 30.87$ 2016 15.02$ 23.53$ 18.09$ 29.98$ 2015 14.65$ 22.95$ 17.56$ 29.10$ 2014 14.65$ 22.95$ 17.56$ 29.10$ * For Residential Customers, using 5/8 inch meter size. Sources: City of Bozeman, Montana Commission Resolution 4327 City of Bozeman, Montana Commission Resolution 4328 City of Bozeman, Montana Commission Resolution 4454 City of Bozeman, Montana Commission Resolution 4626 & 4627 City of Bozeman, Montana Commission Resolution 4819 & 4820 City of Bozeman, Montana Commission Resolution 4927 & 4928 City of Bozeman, Montana Commission Resolution 5065 & 5066 City of Bozeman, Montana Commission Resolution 5273 & 5274 181 City of Bozeman, Montana Ratios of Outstanding Debt by Type Last Ten Fiscal Years General Tax Increment Special Water Wastewater Stormwater Total PercentageObligationFinancingAssessmentNotesLeasesUnamortizedRevenue Revenue Revenue Leases Primary of Personal PerYearBonds Bonds Bonds Payable Payable Premium Year Bonds Bonds Bond Payable Government Income (1)Capita (2) 2023 45,765,000$ 9,802,767$ 3,372,289$ 2,045,505$ 343,801$ 4,230,082$ 2023 15,949,000$ 25,939,000$ 1,196,000$ -$ 108,641,421$ 5.56%1,936$ 2022 47,990,000 10,288,570 3,764,217 2,322,582 630,917 4,484,963 2022 17,267,000 27,932,231 1,280,000 - 115,960,480 6.82%2,126 2021 43,240,000 10,763,655 3,948,216 2,246,694 310,270 4,198,474 2021 18,547,000 24,582,587 1,362,000 434,598 109,633,494 7.87%2,057 2020 45,445,000 4,733,238 139,500 2,481,079 404,043 3,778,566 2020 19,791,000 14,057,000 1,442,000 363,749 92,635,175 7.24%1,859 2019 12,940,000 5,338,811 171,500 2,637,009 651,453 208,593 2019 21,001,000 15,229,000 1,520,000 290,538 59,987,904 5.73%1,236 2018 13,835,000 5,018,931 406,000 763,588 463,535 222,051 2018 19,107,497 16,368,000 1,292,430 214,887 57,691,919 5.80%1,238 2017 14,710,000 4,425,000 501,000 902,500 270,492 235,509 2017 15,760,000 17,856,000 1,367,430 183,591 56,211,522 6.12%1,242 2016 15,570,000 4,630,000 662,500 884,844 249,501 248,967 2016 16,567,000 18,930,565 1,440,430 71,077 59,254,884 6.97%1,365 2015 16,320,000 4,825,000 890,500 963,274 295,912 262,425 2015 17,365,000 19,972,565 229,750 10,585 61,135,011 7.20%1,467 2014 11,685,000 5,015,000 1,185,500 1,086,396 94,176 - 2014 18,140,000 21,025,565 - - 58,231,637 6.83%1,498 Governmental Activities Business-type Activities Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department 182 City of Bozeman, Montana Ratios of General Bonded Debt Outstanding Last 10 Fiscal Years General Tax Increment Percentage ofObligationFinancing Market Value Per Year Bonds District Bonds Total of Property Capita 2023 45,765,000$ 9,802,767$ 55,567,767$ 34.78%990.11$ 2022 47,990,000 10,288,570 58,278,570 37.51%1,068.45$ 2021 43,240,000 10,763,655 54,003,655 41.69%1,013.33$ 2020 45,445,000 4,733,238 50,178,238 40.01%1,006.97$ 2019 12,940,000 5,338,811 18,278,811 17.52%376.63$ 2018 13,835,000 4,926,931 18,761,931 18.54%402.65$ 2017 14,710,000 4,425,000 19,135,000 21.32%422.87$ 2016 15,570,000 4,630,000 20,200,000 23.34%465.38$ 2015 16,320,000 4,825,000 21,145,000 24.06%507.56$ 2014 11,685,000 5,015,000 16,700,000 19.50%429.75$ Source: City Manager's Final Adopted Budget Debt Outstanding is reduced by cash held for bond reserves for the purposes of this table 183 City of Bozeman, Montana Computation of Direct and Overlapping Debt Last Ten Fiscal Years Estimated Estimated ShareDebtPercentageof OverlappingTaxing Entity Outstanding Applicable (1)Debt City of Bozeman 67,285,543$ 100.00% 67,285,543$ Gallatin County 49,080,000 36.98% 18,151,439 Bozeman School District #7 164,724,114 61.81% 101,812,563 Subtotal overlapping debt 213,804,114 119,964,002 Total Direct and Overlapping Debt 281,089,657$ 187,249,545$ Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Bozeman. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each entity's total taxable assessed value. Sources: City of Bozeman Finance Department Gallatin County Assessor's Office Bozeman School District #7 184 City of Bozeman, Montana Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Debt limit*84,657,000$ 84,500,000$ 142,464,717$ 147,500,000$ 168,633,783$ 174,548,585$ 214,906,344$ 221,894,059$ 268,114,122$ 275,533,467$ Total net debt applicable to limit 19,066,072 23,557,111 22,245,812 21,044,501 20,709,105 21,947,366 56,981,426 64,707,309 69,481,249 65,559,444 Legal debt margin 65,590,928$ 60,942,889$ 120,218,905$ 126,455,499$ 147,924,678$ 152,601,219$ 157,924,918$ 157,186,750$ 198,632,873$ 209,974,023$ Total net debt applicable to the limitas a percentage of debt limit 22.52%27.88%15.61%14.27%12.28%12.57%26.51%29.16%25.91%23.79% *2.5% of total market value of taxable property of $8.6 Billion per MCA 2019 7-7-4201 Source: City Manager's Final Adopted Budget 185 City of Bozeman, Montana Pledged Revenue Coverage – Governmental Activities Last Ten Fiscal Years Special Assessment Year Collections Principal Interest Total Coverage 2023 569,231$ 391,928$ 128,795$ 520,723$ 1.09 2022 901,483 183,999 135,136 319,135 2.82 2021 975,387 192,284 135,114 327,398 2.98 2020 775,230 32,000 26,434 58,434 13.27 2019 518,351 234,500 18,740 253,240 2.05 2018 506,819 95,000 23,221 118,221 4.29 2017 558,988 161,500 30,335 191,835 2.91 2016 705,143 228,000 39,343 267,343 2.64 2015 586,116 295,000 50,070 345,070 1.70 2014 1,054,483 474,000 73,760 547,760 1.93 Special Assessment Bonds Debt Service 186 City of Bozeman, Montana Pledged Revenue Coverage – Business-Type Activities Last Ten Fiscal Years Water Less:Net AvailableYearRevenue Expenditures Revenue Principal Interest Total Coverage 2023 12,314,794$ 10,150,775$ 2,164,019$ 1,318,000$ 478,523$ 1,796,523$ 1.20 2022 11,613,448 7,868,703 3,744,745 1,280,000 515,842 1,795,842 2.09 2021 11,027,542 6,878,458 4,149,084 1,244,000 552,156 1,796,156 2.31 2020 9,852,377 6,848,489 3,003,888 1,210,000 587,350 1,797,350 1.67 2019 9,396,171 6,525,730 2,870,441 1,176,000 578,954 1,754,954 1.64 2018 10,157,888 6,494,121 3,663,767 1,141,000 530,881 490,890 7.46 2017 9,281,821 6,589,396 2,692,425 822,000 490,890 1,312,890 2.05 2016 8,414,870 6,176,752 2,238,118 798,000 515,010 1,313,010 1.70 2015 7,748,913 4,973,926 2,774,987 775,000 538,425 1,313,425 2.11 2014 7,871,386 4,405,464 3,465,922 751,000 429,438 1,180,438 2.94 Water Revenue Bonds Debt Service Water Less:Net AvailableYearRevenue Expenditures Revenue Principal Interest Total Coverage 2023 10,787,474$ 7,621,951$ 3,165,523$ 1,993,321$ 733,053 2,726,374$ 1.16 2022 10,389,216 6,607,192 3,782,024 1,951,000 729,704 2,680,704 1.41 2021 9,926,730 6,329,624 3,597,106 1,760,000 581,214 2,341,214 1.54 2020 9,441,675 6,592,798 2,848,877 1,172,000 446,064 1,618,064 1.76 2019 9,336,007 6,348,468 2,987,539 1,139,000 479,859 1,618,859 1.85 2018 8,876,017 5,158,989 3,717,028 1,104,000 513,009 1,617,009 2.30 2017 8,566,893 5,496,164 3,070,729 1,074,565 545,267 1,619,832 1.90 2016 7,927,692 5,139,029 2,788,663 1,042,000 552,269 1,594,269 1.75 2015 7,631,117 3,914,454 3,716,663 1,053,000 632,268 1,685,268 2.21 2014 7,204,486 5,895,751 1,308,735 1,084,854 660,771 1,745,625 0.75 Waste Water Revenue BondsDebt Service 187 City of Bozeman, Montana Debt Service Requirements and Coverage for Tax Increment Districts Last Ten Fiscal Years Downtown Improvement District Northeast Urban Renewal District*Midtown Improvement District** Revenues Annual Revenues Annual Revenues Annual Available for Debt Service Available for Debt Service Available for Debt Service Year Debt Service Payment Coverage Debt Service Payment Coverage Debt Service Payment Coverage 2023 2,347,685$ 330,150$ 7.11 414,674$ 92,000$ 4.51 1,734,350$ 409,950$ 4.23 2022 1,483,518 332,372 4.46 397,037 92,000 4.32 1,701,529 408,550 4.16 2021 1,847,752 332,448 5.56 470,096 92,000 5.11 1,118,930 401,893 2.78 2020 1,803,534 447,987 4.03 289,196 92,000 3.14 - - N/A 2019 2,150,531 423,573 5.08 164,252 95,000 1.73 - - N/A 2018 2,430,377 422,288 5.76 149,580 92,000 1.63 - - N/A 2017 2,160,187 425,488 5.08 - - N/A - - N/A 2016 2,066,749 423,288 4.88 - - N/A - - N/A 2015 1,853,725 425,888 4.35 - - N/A - - N/A 2014 1,644,960 423,088 3.89 - - N/A - - N/A *$863,000 Bond issuance for the Northeast Urban Renew al District on 7/20/2017 **$6,500,000 Bond issuance for the Northeast Urban Renewal District on 7/9/2020 188 City of Bozeman, Montana Summary of Outstanding SIDs Last Ten Fiscal Years Bonds Assessments DelinquentOriginal Amount Maturity Date Outstanding Cash Balance Outstanding Assessments SID 674 494,000$ 7/1/2024 38,500$ 1,185$ 24,306$ -$ SID 747 4,001,000 7/1/2040 3,333,789 4,441 2,781,020 5,420 Total 4,495,000$ 3,372,289$ 5,626$ 2,805,326$ 5,420$ Bond Issue 189 City of Bozeman, Montana Revolving Fund Balance and Bond Secured Thereby Last Ten Fiscal Years Revolving Fund Principal Fiscal Year Ended June 30, Cash Balance Amount of Debt 2023 54,728$ 680,263 2022 766,881 766,510 2021 2,555,927 1,152,898 2020 2,173,692 1,537,286 2019 3,020,315 643,983 2018 2,903,817 916,503 2017 2,874,013 1,040,533 2016 2,924,604 1,120,708 2015 2,948,129 1,295,224 2014 2,474,971 1,317,226 190 City of Bozeman, Montana Special Improvement District Assessment Billing and Collections Last Ten Fiscal Years Assessment Total Annual Fiscal Year Ended June 30, Billing Collections 2023 567,476$ 569,230 2022 578,154 599,831 2021 594,719 649,643 2020 642,408 703,796 2019 476,212 518,351 2018 505,481 506,819 2017 528,622 558,988 2016 543,351 705,143 2015 538,697 586,116 2014 676,613 1,054,484 191 City of Bozeman, Montana Demographic and Economic Statistics Last Ten Fiscal Years Percentage Residents (ageChange in Per Capita 25 and over)Pre K-12Estimated Estimated Personal Personal with Bachelor's School Unemployment Year Population Population Income Income Median Age Degree or Higher Enrollment Rate 2023 56,123 2.89% 1,952,338,137$ 39,939$ 28.0 63.8%7,357 1.9% 2022 54,545 2.35% 1,700,066,144 36,526 29.0 63.1%7,308 2.1% 2021 53,293 6.95% 1,393,673,190 32,865 28.0 58.7%6,893 3.2% 2020 49,831 2.68% 1,279,025,432 30,268 28.0 56.8%7,152 4.5% 2019 48,532 4.15% 1,047,804,618 29,097 28.0 56.9%7,015 3.8% 2018 46,596 2.97% 993,940,022 28,748 27.9 55.6%6,908 2.8% 2017 45,250 4.25% 918,565,430 26,506 27.7 56.5%6,770 2.8% 2016 43,405 4.19% 849,682,100 26,350 27.5 54.4%6,533 2.8% 2015 41,660 7.21% 849,198,410 26,335 27.3 53.6%6,294 2.9% 2014 38,860 0.30% 852,165,042 26,427 26.8 53.3%6,216 3.5% Sources: Bozeman Public Schools U.S. Bureau of Labor Statistics U.S. Census Bureau 192 City of Bozeman, Montana Principal Employers Current Year and Nine Years Ago Employer EmployerPrivate Employers by Class Class Size Private Employers by Class Class Size Bozeman Deaconess Hospital 9 Bozeman Deaconess Hospital 9Oracle America 7 Oracle America 7 Kenyon Noble Lumber & Hardware 7 Wal Mart 7 Town Pump Convenience Stores 7 Albertson's 6Wal Mart 7 Bridger Bowl 6Albertson's 6 Community Food Co-Op 6 Bridger Bowl 6 Costco 6Community Food Co-Op 6 Federal Premium Ammunition 6Costco6First Security Bank 6First Student 6 First Student 6 Glacier Bancorp 6 GranTree Inn 6McDonalds6Kenyon Noble Lumber & Hardware 6Murdoch's Ranch & Home Supply 6 Korman Marketing Group 6Ressler Motors 6 Martel Construction 6 Rosauers Food & Drug 6 McDonalds 6Target6Murdoch's Ranch & Home Supply 6Town & Country Foods 6 Ressler Motor 6 UPS 6 Town & Country Foods 6Williams Plumbing & Heating 6 Town Pump Convenience Stores 6Zoot Enterprises 6 Zoot Enterprises 6 Employer EmployerPublic Employers by Class Class Size Public Employers by Class Class Size Montana State University 9 Montana State University 9 Belgrade School District 8 School District #7 9Bozeman School District 8 Belgrade School District 8Gallatin County 8 City of Bozeman 7 City of Bozeman 7 Department of Agriculture 7Gallatin County 7 2023 2014 Source: Montana Department of Labor & Industry Class 6 - 100 to 249 Employees Class 7 - 250 to 499 Employees Class 8 - 500 to 999 Employees Class 9 - 1,000+ Employees 193 City of Bozeman, Montana Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General GovernmentCity Commission 2.10 2.10 2.10 2.10 0.10 2.10 2.10 2.10 2.10 2.10 City Manager 5.00 5.00 6.00 6.00 9.00 9.00 9.00 9.00 9.00 9.00 Municipal Court 8.50 9.00 8.50 8.50 9.50 9.50 9.60 9.98 11.23 11.23 City Attorney 7.00 9.00 10.20 10.20 10.70 10.70 11.70 12.70 12.70 13.70 Administrative Services *19.00 21.00 21.50 23.50 - - - - - - Human Resources *- - - - 4.00 5.00 5.00 5.00 5.00 6.00 Finance *- - - - 12.50 13.50 13.50 15.00 14.00 14.00 Information Technology *- - - - 6.00 7.00 7.00 7.00 8.00 8.50 Community Development 8.00 12.60 11.60 13.00 13.00 14.25 15.25 15.25 18.25 19.50 Facilities Management 3.50 3.50 3.50 3.50 4.50 5.00 5.00 6.00 7.00 8.00 Total general government 53.10 62.20 63.40 66.80 69.30 76.05 78.15 82.03 87.28 92.03 Public safety Police Department 72.75 72.25 71.70 72.70 72.70 74.55 75.55 76.95 80.95 81.95 Fire Department 45.75 45.00 46.00 46.00 46.00 47.00 50.00 50.00 50.00 57.00 Building Inspection 12.55 14.00 18.50 18.50 19.50 19.75 19.75 19.75 19.75 20.75 Parking 5.50 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Total public safety 136.55 137.25 142.20 143.20 144.20 147.30 151.30 152.70 156.70 165.70 Public servicesPublic Services Admin/Engineering 12.00 6.58 10.25 11.50 11.50 16.25 18.25 22.25 26.25 29.25 Streets 18.62 16.20 18.85 19.85 21.85 21.35 22.30 22.30 22.30 24.70 Storm Water 1.00 4.00 6.25 6.50 7.50 7.50 8.50 9.50 9.50 10.25 Water Conservation 2.25 3.00 3.00 3.00 3.00 Water Treatment Plant 11.27 12.75 10.50 10.50 10.00 10.00 10.00 10.00 10.00 10.00 Water Operations 15.62 17.33 14.45 14.45 14.50 14.50 15.70 15.65 16.65 17.65 Wastewater Operations 11.25 13.09 13.30 14.05 12.00 12.50 13.55 14.55 14.55 14.55 Wastewater Plant 17.47 15.50 14.75 14.75 15.00 15.00 16.00 16.00 16.00 16.00 Solid Waste Collection/Recycling 15.74 15.90 15.15 16.15 17.15 17.15 18.75 19.75 19.75 20.75 Vehicle Maintenance 5.00 5.00 6.50 6.50 7.50 7.50 8.50 8.50 9.50 10.50 Total public services 107.97 106.35 110.00 114.25 117.00 124.00 134.55 141.50 147.50 156.65 Public WelfareCemetery (numerous short terms)3.33 4.90 5.04 5.04 4.75 4.25 4.25 4.55 4.55 4.55 Parks (numerous short terms)11.77 15.40 14.51 14.51 14.90 18.00 18.00 19.75 19.75 29.65 Forestry 4.60 5.95 5.65 6.65 5.20 6.00 6.00 6.65 6.65 6.65 Library 23.11 23.41 26.02 28.02 28.02 28.02 28.02 26.53 26.53 27.53 Recreation (numerous short terms)16.83 16.83 23.55 24.26 23.41 24.80 24.80 21.90 21.90 23.10 Economic Development 4.00 3.50 3.50 3.50 2.00 2.00 3.00 3.00 3.00 3.00 Sustainability 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 3.00 3.00 Total public services 65.14 71.49 79.77 83.48 79.78 84.57 85.57 83.88 85.38 97.48 Total 362.76 377.29 395.37 407.73 410.28 431.92 449.57 460.11 476.86 511.86 Source: City Manager's Final Adopted Budget * Administrative Services consists of Finance, Information Technology and Human Resources. Beginning in fiscal year 2018, these programs are reported separately. 194 City of Bozeman, Montana Operating Indicators by Function/Program Last Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 FinanceSID Statements 16,424 16,506 16,893 17,200 17,463 18,185 18,552 18,895 19,655 20,001 Utility Bills 155,000 162,000 166,000 169,000 172,000 168,280 176,263 180,720 205,092 208,259Accounts Payable Checks Processed 10,453 11,098 11,000 11,800 12,350 11,762 11,800 12,488 10,543 9,846 PoliceNumber of Officers 63 61 60 61 60 60 60 60 60 61Calls for Service 48,542 46,290 47,400 48,200 47,136 50,548 48,099 48,560 69,857 49,182Arrests2,165 2,195 2,078 2,427 2,314 2,618 2,017 2,118 1,936 2,402Misdemeanor Citations Issued - includes traffic 6,045 6,169 6,390 5,886 4,940 5,430 4,800 4,058 4,012 5,460 Traffic Stops 8,210 7,757 7,482 7,900 7,675 9,600 8,410 8,736 8,062 5,991Traffic Crashes 1,469 1,601 1,792 1,850 1,958 1,840 1,813 1,351 1,452 1,707 Fire*Fires, Hazardous Conditions, Rupture/Explosions 340 296 349 445 564 522 340 304 319 367 Emergency Medical Services/ Rescue 2,051 2,032 2,424 3,062 3,320 3,073 3,154 3,005 2,716 2,714Service Calls 212 202 244 334 438 406 239 170 311 282 Building InspectionCommercial Permits:Number 1,165 1,560 1,628 1,731 883 768 702 707 548 1,014 Value (Millions)44.50$ 98.02$ 164.47$ 65.00$ 216.00$ 249.00$ 302.00$ 237.00$ 201.00$ 271.00$ Residential Permits: Number 2,911 2,836 3,937 3,905 3,222 2,307 2,094 2,674 1,947 2,354Value (Millions)130.68$ 191.97$ 200.00$ 130.00$ 340.00$ 311.00$ 176.00$ 233.00$ 479.00$ 444.00$ WaterNew Service Main Taps 57 70 60 72 65 101 96 100 60 25 Meter Replacement/ Repair 479 1,006 978 1,500 994 1,042 528 1,273 1,285 645Water Main Breaks/ Repairs 7 5 7 6 7 5 11 14 9 5WastewaterMain Line Flushing (in Miles)30.0 90.0 50.0 30.9 50.0 37.5 48.0 33.3 73.7 55.1New Infrastructure TV (in Miles)2.00 8.00 2.60 9.90 7.00 2.80 3.30 7.40 6.77 3.70 New Service Taps 37 44 20 30 30 56 25 34 19 19Solid Waste Collection & Recycling Residential Accounts 7,869 8,369 8,878 9,695 10,384 10,884 11,321 11,841 12,317 12,379Commercial Customers 258 265 461 449 515 573 566 520 612 649 Recycling Customers 1,601 2,100 2,663 3,386 3,854 4,434 4,867 5,526 6,025 6,231Annual Tonnage Collected: Collections Program 10,960 11,457 11,691 12,490 17,657 18,880 19,815 19,955 21,369 23,530Vehicle MaintenanceWork Orders Processed 1,717 1,549 1,453 1,509 2,592 2,392 2,057 3,718 1,802 1,845Gallons of Oil Disposed 8,740 8,969 7,395 6,475 5,007 5,522 4,900 5,787 2,925 4,676 ParksPark Reservations 400 400 400 400 425 493 423 912 1,433 938 Sources: City Manager's Final Adopted Budget, City of Bozeman Finance Department *Statistics are based on calendar year 195 City of Bozeman, Montana Capital Assets Statistics by Function/Program Last Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 PoliceStations 1 1 1 1 1 1 1 1 1 1 Patrol Units (Cars)*20 22 21 21 22 21 21 24 20 22 Patrol Units (Motorcycles)4 2 3 3 3 3 3 3 3 3 FireStations 3 3 3 3 3 3 3 3 3 3Fire Trucks 7 7 7 7 7 7 7 7 7 9StreetsStreet & Alley Mileage 259 262 266 267 271 275 280 282 286 297Lane Miles Painted 35 49 50 50 52 48 53 51 51 53Number of Signs Installed/Repaired 798 600 600 600 708 394 1,107 1,270 273 467WaterWater Mains (Miles)267.28 268.57 274.89 276.92 283.95 286.68 297.10 299.52 304.53 307.58Fire Hydrants 2,406 2,419 2,511 2,573 2,618 2,668 2,758 2,782 2,835 3,008WastewaterSanitary Sewers (Miles)211.51 212.53 219.14 224.28 234.64 236.04 239.00 242.43 254.14 251.07Number of Manholes 4,185 4,219 4,360 4,492 4,614 4,677 4,828 5,023 5,051 5,457Solid WasteNumber of Collection Vehicles 8 8 8 8 8 8 6 6 8 9Number of Roll-off Trucks 4 4 4 4 5 5 5 5 5 5Number of Recycling Trucks 2 2 2 2 2 2 2 2 2 2Number of Compost Collection Trucks 2 2 2 2 1 1 1 1 1 1ParksFormal Turf Acres 125 126 140 140 172 192 192 192 196 475Natural Parkland Acres 220 220 220 220 323 343 388 413 413 436Miles of Trails 61 63 63 63 63 65 65 65 71 79 *Patrol cars determined by Vehicle & Equipment Master List-Fire Extinguishers tab-Total of "Utility" & "Interceptor" vehicles 206 Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department City of Bozeman GIS Department City of Bozeman Police Department Federal Awards Reports in Accordance with the Uniform Guidance June 30, 2023 City of Bozeman, Montana 196 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The City Commission City of Bozeman, Montana We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Bozeman, Montana (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 21, 2023. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified certain deficiencies in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item 2023-001 that we consider to be a significant deficiency. What inspires you, inspires us. | eidebailly.com 401 N. 31st St., Ste. 1120 | P.O. Box 7112 | Billings, MT 59103-7112 | TF 800.824.9797 | T 406.896.2400 | F 406.252.8600 | EOE 197 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City’s Response to Finding Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the finding identified in our audit and described in the accompanying Schedule of Findings and Questioned Costs. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Billings, Montana December 21, 2023 198 Independent Auditor’s Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance The City Commission City of Bozeman, Montana Report on Compliance for the Major Federal Program Opinion on the Major Federal Program We have audited City of Bozeman, Montana’s (the City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal program for the year ended June 30, 2023. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2023. Basis for Opinion on the Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for the major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City‘s federal programs. What inspires you, inspires us. | eidebailly.com 401 N. 31st St., Ste. 1120 | P.O. Box 7112 | Billings, MT 59103-7112 | TF 800.824.9797 | T 406.896.2400 | F 406.252.8600 | EOE 199 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: •Exercise professional judgment and maintain professional skepticism throughout the audit. •Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. •Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 200 Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Billings, Montana December 21, 2023 201 City of Bozeman, Montana Schedule of Expenditures of Federal Awards Year Ended June 30, 2023 Federal Financial Pass-throughAssistanceEntity IdentifyingListingNumber Expenditures Department of AgriculturePassed through Montana Department of Natural Resourcesand Conservation:Cooperative Forestry Assistance 10.664 FHE-21-101 3,718$ Department of InteriorPassed through Montana Historcial Society:Historic Preservation Fund Grants-in-Aid 15.904 P21AF10470 12,400 Department of JusticeDirect Program:Edward Byrne Memorial Justice Assistance Grant Program 16.738 6,288 Passed through Gallatin County:2990-000-42-420 Edward Byrne Memorial Justice Assistance Grant Program 16.738 142-000-400-790 73,204 Total CFDA 16.738 79,492 Direct Program:Bulletproof Vest Partnership Program 16.607 3,294 Total Department of Justice 82,786 Department of Transportation Passed through Montana Department of Transportation: State and Community Highway Safety 20.600 00-03-09-02 521 National Priority Safety Programs 20.616 00-03-09-02 1,064 Total Department of Transportation 1,585 Department of Treasury Direct Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 6,751,994 Passed through Montana Department of Natural Resources and Conservation: COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 Various 1,494,522 Total Department of Treasury 8,246,516 Department of Homeland SecurityPassed through Montana Disaster and Emergency Services: Homeland Security Grant Program 97.067 22HSBZMNV 392,939 Total Federal Financial Assistance 8,739,944$ Federal Grantor/Pass-ThroughGrantor/Program or Cluster Title 202 City of Bozeman, Montana Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2023 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards (the schedule) includes the federal award activity of the City of Bozeman, Montana (the City) under programs of the federal government for the year ended June 30, 2023. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or fund balance, or cash flows of the City. Note 2 - Significant Accounting Policies Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal assistance has been provided to a subrecipient. Note 3 - Indirect Cost Rate The City has not elected to use the 10% de minimus cost rate. 203 City of Bozeman, Montana Schedule of Findings and Questioned Costs Year Ended June 30, 2023 Section I – Summary of Auditor’s Results FINANCIAL STATEMENTS Type of auditor's report issued:Unmodified Internal control over financial reporting:Material weaknesses identified NoSignificant deficiencies identified not considered to be material weaknesses Yes Noncompliance material to financial statements noted?No FEDERAL AWARDS Internal control over major program: Material weaknesses identified NoSignificant deficiencies identified notconsidered to be material weaknesses None reported Type of auditor's report issued on compliance for major programs:Unmodified Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 2 CFR 200.516:No Identification of major programs: Name of Federal Program Federal Financial Assistance Listing COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 Dollar threshold used to distinguish between Type A and Type B programs: $ 750,000 Auditee qualified as low-risk auditee?Yes 204 City of Bozeman, Montana Schedule of Findings and Questioned Costs Year Ended June 30, 2023 Section II – Financial Statement Findings 2023-001: Street Impact Fees – Assessment Significant Deficiency Criteria: Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. Ensuring street impact fees are assessed and recorded appropriately is a key component of effective internal control over financial reporting. Condition: We tested 40 separate street impact fee calculations that were assessed during fiscal year 2023. Through testing these transactions, we noted inconsistencies with assessment practices and rate schedules being applied to various transactions tested, and as a result, we found several discrepancies between our recalculation of fees and the amount that was charged for 16 of the 40 items tested. Total street impact fees charged totaled ~5.2M during the fiscal year, and the errors noted within our sample projected to an overall discrepancy of ~162k. This difference represents an estimated amount that revenue was overstated during the fiscal year as a result of the testing performed. Various differences are the result of information that could not be provided to support various inputs into the calculations as they were not maintained in a manner that would allow us to accurately recalculate the fees charged. Cause: The City of Bozeman (City) did not have adequate internal controls to ensure impact fees were assessed and recorded consistently and that adequate documentation was maintained to support the amounts that were charged. Effect: Inconsistent documentation, inability to quickly replicate fee calculations, and possibility that some customers may have been overcharged or undercharged for street impact fees. Testing resulted in an immaterial misstatement in street impact fee revenues. Recommendation: We recommend the City enhance internal controls to ensure street impact fees are consistently assessed and appropriately recorded and that documentation is maintained to support the inputs into the calculations performed. Views of Responsible Officials: Management agrees with this finding. 205 City of Bozeman, Montana Schedule of Findings and Questioned Costs Year Ended June 30, 2023 Section III – Federal Award Findings and Questioned Costs No current year findings reported. Resolution 5591, Authorizing the Execution and Delivery of $2,280,000 General Obligation Bonds, Series 2024A RESOLUTION 5591 RESOLUTION RELATING TO $2,280,000 GENERAL OBLIGATION BONDS, SERIES 2024A; DETERMINING THE FORM AND DETAILS, AUTHORIZING THE EXECUTION AND DELIVERY AND LEVYING TAXES FOR THE PAYMENT THEREOF BE IT RESOLVED by the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), as follows: Section 1 Authorization and Sale; Recitals. 1.01. Authorization. At an election duly called and held November 2, 2021, the electors of the City authorized this Commission to sell and issue general obligation bonds of the City in the aggregate principal amount not to exceed $2,280,000 for the purpose of paying the costs of designing, constructing, equipping and furnishing improvements to: the Bozeman Swim Center to include replacing perimeter drain tiles (gutter system), deck tiles, and ceiling tiles, repairing the plaster shell, and replacing the HVAC system; the Bogert Pool to include replacing the concrete coping around the pool and the concrete gutter system, re-plastering the shell, repairing the concrete deck, and replacing the perimeter wall/fence; and the Lindley Center to include upgrading restrooms to meet current Americans with Disabilities Act requirements, replacing windows and log siding, upgrading the kitchen, insulating the east roof, installing floor and roof supports, improving the parking lot and related site improvements (the “2024A Project”); and costs associated with the sale and issuance of the bonds. In addition, the City has determined to sell and issue simultaneously herewith a series of limited tax general obligation bonds (the “Series 2024B Bonds”) of the City to finance or reimburse the City for costs of improvements and renovations to the Bozeman Swim Center, DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 2 Bogert Pool and Lindley Center and to pay costs associated with the sale and issuance of the Series 2024B Bonds. 1.02. Sale. Pursuant to Resolution No. 5590, adopted by the Commission on March 19, 2024, the City authorized and provided for the sale and issuance of general obligation bonds of the City, to be denominated “General Obligation Bonds, Series 2024A” (the “Series 2024A Bonds”), at a public competitive sale. Pursuant to such authorization, on April 16, 2024, the City awarded the sale of the Series 2024A Bonds to Fidelity Capital Markets, Boston, Massachusetts (the “Original Purchaser”), based on its bid to purchase the Series 2024A Bonds in the aggregate principal amount of $2,280,000.00 at a purchase price of $2,407,666.85 (reflecting an underwriter’s discount of $16,351.75 and original issue premium of $144,018.60), the Series 2024A Bonds to bear interest at the rates and mature on the dates and in the amounts and contain the further terms and conditions set forth in this resolution. The sale of the Series 2024A Bonds to the Original Purchaser is hereby ratified and confirmed. 1.03. Recitals. All acts, conditions and things required by the Constitution and laws of the State of Montana, including Montana Code Annotated, Title 7, Chapter 7, Part 42, as amended, in order to make the Series 2024A Bonds valid and binding general obligations of the City 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. The City has full power and authority to issue the Series 2024A Bonds. The indebtedness to be evidenced by the Series 2024A Bonds, together with all other outstanding general obligation indebtedness of the City, will not exceed 2.50% of the total assessed valuation of taxable property of the City, determined as provided in Section 15-8-111, M.C.A., as ascertained by the last assessment for state and county taxes. Section 2 Bond Terms, Execution and Delivery. 2.01. Terms of Bonds. The Series 2024A Bonds shall be issued in the principal amount of $2,280,000 and shall be in the denomination of $5,000 each or any integral multiple thereof of single maturities. The Series 2024A Bonds shall mature on July 1 in the years and amounts listed DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 3 below, and Series 2024A Bonds maturing in such years and amounts shall bear interest from date of original issue until paid or duly called for redemption (including mandatory sinking fund redemption as to the term bonds maturing in 2044), at the rate per annum shown opposite such years and amounts, as follows: Year Amount Rate Year Amount Rate 2025 $ 60,000 5.000% 2034 $110,000 5.000% 2026 75,000 5.000 2035 115,000 5.000 2027 80,000 5.000 2036 120,000 5.000 2028 80,000 5.000 2037 130,000 3.375 2029 85,000 5.000 2038 130,000 3.500 2030 90,000 5.000 2039 135,000 4.000 2031 95,000 5.000 2040 140,000 4.000 2032 100,000 5.000 2041 150,000 4.000 2033 105,000 5.000 2044* 480,000 4.000 *Term bonds subject to mandatory sinking fund redemption as set forth in Section 2.07 below. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. 2.02. Registered Form, Interest Payment Dates. The Series 2024A Bonds shall be issuable only in fully registered form, and the ownership of the Series 2024A Bonds shall be transferred only upon the bond register of the City hereinafter described. The interest on the Series 2024A Bonds shall be payable on January 1 and July 1 in each year, commencing January 1, 2025. Interest on the Series 2024A Bonds shall be payable to the owners of record thereof as such appear on the bond register as of the close of business on the 15th day of the month immediately preceding each interest payment date, whether or not such day is a business day. Interest on, and upon presentation and surrender thereof, the principal of each Series 2024A Bond shall be payable by check or draft issued by or drawn on the Registrar described herein or, as appropriate, by wire transfer. 2.03. Dated Date. Each Series 2024A Bond shall be originally dated as of May 16, 2024, and upon authentication of any Series 2024A Bond the Registrar (as hereinafter defined) shall indicate thereon the date of such authentication. 2.04. Registration. The City shall appoint, and shall maintain, a bond registrar, transfer agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 4 (a) Register. The Registrar shall keep at its principal office a bond register in which the Registrar shall provide for the registration of ownership of Series 2024A Bonds and the registration of transfers and exchanges of Series 2024A Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender to the Registrar for transfer of any Series 2024A 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 Series 2024A Bonds of the same series of a like aggregate principal amount and maturity, as the case may be, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer of any Series 2024A Bond or portion thereof selected or called for redemption. (c) Exchange of Bonds. Whenever any Series 2024A Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Series 2024A Bonds of the same series of a like aggregate principal amount, interest rate and maturity, as requested by the registered owner or the owner’s attorney in writing. (d) Cancellation. All Series 2024A 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 Series 2024A 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 Series 2024A 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 unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Series 2024A Bond is at any time registered in the bond register as the DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 5 absolute owner of such Series 2024A Bond, whether such Series 2024A Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Series 2024A 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 Series 2024A Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or exchange of Series 2024A Bonds (except for an exchange upon the partial redemption of a Series 2024A Bond), 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 Series 2024A Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new Series 2024A Bond of the same series of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Series 2024A Bond or in lieu of and in substitution for any such Bond lost, stolen or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Series 2024A Bond lost, stolen or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Series 2024A Bond was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of 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 Series 2024A Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Series 2024A Bond has already matured or such Series 2024A Bond has been called for redemption in accordance with its terms, it shall not be necessary to issue a new Series 2024A Bond prior to payment. 2.05. Appointment of Initial Registrar. The City hereby appoints U.S. Bank Trust Company, National Association, in Salt Lake City, Utah, to act as registrar, transfer agent and paying agent (the “Registrar”). The City reserves the right to appoint a successor bond registrar, DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 6 transfer agent or paying agent, as authorized by the Model Public Obligations Registration Act of Montana, Montana Code Annotated, Title 17, Chapter 5, Part 11, as amended (the “Registration Act”), but the City agrees to pay the reasonable and customary charges of the Registrar for the services performed. 2.06. Optional Redemption. (a) Series 2024A Bonds with stated maturities in the years 2025 through 2033 are not subject to optional redemption prior to their stated maturities. Series 2024A Bonds with stated maturities on or after July 1, 2034 are subject to redemption on July 1, 2033 and any date thereafter, at the option of the City, in whole or in part, and if in part from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City), at a redemption price equal to the principal amount thereof and interest accrued to the redemption date, without premium. (b) The date of redemption and the principal amount of the Series 2024A Bonds to be redeemed shall be fixed by the City Manager who shall give notice thereof to the Registrar at least 45 days prior to the redemption date. At least thirty days prior to the designated redemption date, the Registrar shall cause notice of redemption to be mailed, by first class mail, or by other means required by the securities depository, to the registered owners of each Series 2024A Bond to be redeemed at their addresses as they appear on the bond register described in Section 2.04, but no defect in or failure to give such notice shall affect the validity of proceedings for the redemption of any Series 2024A Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price, the numbers, interest rates, CUSIP numbers, and the maturity date of the Series 2024A Bonds or portions thereof to be redeemed and the place at which the Series 2024A Bonds are to be surrendered for payment. Official notice of redemption having been given as aforesaid, the Series 2024A Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Series 2024A Bonds or portions thereof shall cease to bear interest. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 7 2.07. Mandatory Sinking Fund Redemption. The Series 2024A Bonds having a stated maturity in 2044 are subject to mandatory sinking fund redemption on July 1 in the years and the principal amounts set forth below in $5,000 principal amounts selected by the Registrar, by lot or other manner as directed by the City, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date: 2044 Term Bond Sinking Fund Payment Date (July 1) Principal Amount on Sinking Fund Payment Date 2042 $ 155,000 2043 160,000 2044* 165,000 ___________ *Stated Maturity. If the term bonds with a stated maturity in 2044 are not previously purchased by the City in the open market or prepaid, $165,000 in principal amount of such term bonds would remain to mature in 2044. The principal amounts required to be redeemed on the above sinking fund payment dates shall be reduced by the amount by which such principal amounts are previously redeemed at the option of the Commission. 2.08. Execution and Delivery. The Series 2024A Bonds shall be forthwith prepared for execution under the direction of the City Clerk and shall be executed on behalf of the City by the signatures of the Mayor, the City Manager and the City Clerk, provided that said signatures may be printed, engraved or lithographed facsimiles thereof. The seal of the City need not be imprinted on or affixed to any Series 2024A Bond. In case any officer whose signature or a facsimile of whose signature shall appear on the Series 2024A Bonds shall cease to be such officer before the delivery thereof, 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. When the Series 2024A Bonds have been so executed by said City officers, they shall be registered by the City Clerk in accordance with Montana Code Annotated, Section 7-7-4257, as amended. Notwithstanding such execution, no Series 2024A Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Resolution unless and until a certificate of authentication on such Series 2024A Bond has been duly executed by the manual signature of an authorized representative DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 8 of the Registrar. Certificates of authentication on different Series 2024A Bonds need not be signed by the same representative. The executed certificate of authentication on each Series 2024A Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Series 2024A Bonds have been fully executed and authenticated, they shall be delivered by the Registrar to the Original Purchaser or as otherwise directed upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Original Purchaser shall not be obligated to see to the application of the purchase price. 2.09. Securities Depository for the Bonds. (a) For purposes of this Section 2.09, the following terms shall have the following meanings: “Beneficial Owner” means, whenever used with respect to a Series 2024A Bond, the person in whose name such Series 2024A Bond is recorded as the beneficial owner of such Series 2024A Bond by a Participant on the records of such Participant, or such person’s subrogee. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Series 2024A Bonds. “DTC” means The Depository Trust Company of New York, New York. “Participant” means any broker-dealer, bank or other financial institution for which DTC holds Series 2024A Bonds as securities depository. “Representation Letter” means the Blanket Issuer Letter of Representations pursuant to which the City agrees to comply with DTC’s Operational Arrangements. (b) The Series 2024A Bonds shall be initially issued as separately authenticated fully registered bonds, and one Series 2024A Bond shall be issued in the principal amount of each stated maturity of the Series 2024A Bonds. Upon initial issuance, the ownership of such Series 2024A Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City may treat DTC (or its nominee) as DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 9 the sole and exclusive owner of the Series 2024A Bonds registered in its name for the purposes of payment of the principal of or interest on the Series 2024A Bonds, selecting the Series 2024A Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Series 2024A Bonds under this Resolution, registering the transfer of Series 2024A Bonds, and for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any Person claiming a beneficial ownership interest in the Series 2024A Bonds under or through DTC or any Participant, or any other Person which is not shown on the bond register as being a registered owner of any Series 2024A Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Series 2024A Bonds, with respect to any notice which is permitted or required to be given to owners of Series 2024A Bonds under this Resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Series 2024A Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Series 2024A Bonds. So long as any Series 2024A Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Series 2024A Bond, and shall give all notices with respect to such Series 2024A Bond, only to Cede & Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the City’s obligations with respect to the principal of and interest on the Series 2024A Bonds to the extent of the sum or sums so paid. No Person other than DTC shall receive an authenticated Series 2024A Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Series 2024A Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof. (c) In the event the City determines to discontinue the book-entry-only system for the Series 2024A Bonds, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Series 2024A Bonds of such DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 10 series in the form of certificates. In such event, the Series 2024A Bonds of such series will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Series 2024A Bonds of one or both series at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Series 2024A Bonds of such series will be transferable in accordance with paragraph (e) hereof. (d) The Representation Letter sets forth certain matters with respect to, among other things, notices, consents and approvals by registered owners of the Series 2024A Bonds and Beneficial Owners and payments on the Series 2024A Bonds. The Registrar shall have the same rights with respect to its actions thereunder as it has with respect to its actions under this Resolution. (e) In the event that any transfer or exchange of Series 2024A Bonds of a series is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Series 2024A Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this Resolution. In the event Series 2024A Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Series 2024A Bonds, or another securities depository as owner of all the Series 2024A Bonds, the provisions of this Resolution shall also apply to all matters relating thereto, including, without limitation, the preparation of such Series 2024A Bonds in the form of bond certificates and the method of payment of principal of and interest on such Series 2024A Bonds in the form of bond certificates. 2.10 Form of Bonds. The Series 2024A Bonds shall be prepared in substantially the form set forth in Exhibit A hereto, and by this reference made a part hereof. Section 3 Security Provisions. 3.01. Project Account; Use of Proceeds. There is hereby created a special account to be designated as the “2024A Project Account” (the “Project Account”), to be held and administered DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 11 by the City Manager separate and apart from all other funds and accounts of the City. The City appropriates to the Project Account the proceeds of the sale of the Series 2024A Bonds in the amount of (a) $2,407,666.85 (representing the principal amount of the Series 2024A Bonds, plus original issue premium on the Series 2024A Bonds, less underwriter’s discount), and (b) all income derived from the investment of amounts on hand in the Project Account. The Project Account shall be used solely to defray expenses of the 2024A Project to be paid with proceeds of the Series 2024A Bonds, including costs of issuance of the Series 2024A Bonds. Upon payment of all costs and expenses of the 2024A Project to be paid with proceeds of the Series 2024A Bonds and investment earnings thereon, any amounts remaining in the Project Account shall be credited and paid to the Debt Service Account. 3.02. Debt Service Account. There is hereby created a special account to be designated as the “2024A Debt Service Account” (the “Debt Service Account”), to be held and administered by the City Manager separate and apart from all other funds and accounts of the City, to be used solely to pay principal of and interest on the Series 2024A Bonds. The City irrevocably appropriates to the Debt Service Account: (a) all funds, if any, to be transferred thereto from the Project Account in accordance with the provisions of Section 3.01, (b) all taxes levied in accordance with this Resolution, (c) all income derived from the investment of amounts on hand in the Debt Service Account, and (d) such other money as shall be received and appropriated to the Debt Service Account from time to time. 3.03. Tax Levies. The full faith and credit and taxing powers of the City shall be and are hereby irrevocably pledged to the payment of the Series 2024A Bonds and interest due thereon, and the City shall cause taxes to be levied annually on all taxable property in the City, without limitation as to rate or amount, sufficient to pay the interest on the Series 2024A Bonds when it falls due and to pay and discharge the principal at maturity of each and all of the Series 2024A Bonds as they respectively become due. Section 4 Tax Covenants and Certifications. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 12 4.01. Use of the Project. The 2024A Project 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 2024A Project or security for the payment of the Series 2024A Bonds which might cause the Series 2024A 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”). 4.02. General Covenant. The City covenants and agrees with the owners from time to time of the Series 2024A 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 2024A 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 Series 2024A Bonds will not become includable in gross income for federal income tax purposes under the Code and the Regulations. 4.03. Arbitrage Certification. The Mayor, the City Manager and the City Clerk, being among the officers of the City charged with the responsibility for issuing the Series 2024A Bonds pursuant to this Resolution, are authorized and directed to execute and deliver to the Original Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b) of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on the date of issue and delivery of the Series 2024A Bonds, it is reasonably expected that the proceeds of the Series 2024A Bonds will be used in a manner that would not cause the Series 2024A Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and the Regulations. 4.04. Arbitrage Rebate. The City acknowledges that the Series 2024A Bonds are subject to the rebate requirements of Section 148(f) of the Code. The City covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section 148(f) and applicable Regulations to preserve the exclusion of interest on the Series 2024A Bonds from gross income for federal income tax purposes, unless the Series 2024A Bonds qualify for the exception from the rebate requirement under Section 148(f)(4)(B) of the Code and no “gross proceeds” of the Series 2024A Bonds (other DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 13 than amounts constituting a “bona fide debt service fund”) arise during or after the expenditure of the original proceeds thereof. In furtherance of the foregoing, the Mayor, the City Manager and the City Clerk are, or any one or more of them is, hereby authorized and directed to execute a Rebate Certificate, substantially in the form to be prepared by Bond Counsel, and the City hereby covenants and agrees to observe and perform the covenants and agreements contained therein, unless amended or terminated in accordance with the provisions thereof. 4.05. Information Reporting. The City shall file with the Secretary of the Treasury, not later than August 15, 2024, a statement concerning the Series 2024A Bonds containing the information required by Section 149(e) of the Code. Section 5 Defeasance or Discharge. 5.01. General. When the liability of the City on all Series 2024A Bonds issued under and secured by this Resolution and all interest thereon has been discharged as provided in this section, all pledges, covenants and other rights granted by this Resolution to the Holders of such Series 2024A Bonds shall cease. 5.02. Maturity. The City may discharge its liability with reference to all Series 2024A Bonds and interest thereon which are due on any date by depositing with the Registrar for such Series 2024A Bonds on or before the date a sum sufficient for the payment thereof in full; or if any Series 2024A Bond or interest thereon shall not be paid when due, the City may nevertheless discharge its liability with reference thereto by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. 5.03. Redemption. The City may also discharge its liability with reference to any prepayable Series 2024A Bonds which are called for redemption on any date in accordance with their terms, by depositing with the Registrar on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due thereon, provided that notice of such redemption has been duly given as provided in this Resolution. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 14 5.04. Escrow. The City may also at any time discharge its liability in its entirety with reference to any Series 2024A 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 general obligations of the United States or securities of United States agencies which are authorized by law to be so deposited or funds holding only such securities, 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, interest and redemption premiums, if any, to become due on such Series 2024A Bonds at their Stated Maturities or, if such Series 2024A Bonds are prepayable and notice of redemption thereof has been given or irrevocably provided for, to such earlier redemption date. Section 6 Continuing Disclosure. The Commission hereby approves the Continuing Disclosure Undertaking of the City substantially in the form of the attached Exhibit B and authorizes the Mayor and the City Manager, or in the absence of either of them or in the event of their inability to sign, their designees, to execute and deliver on behalf of the City contemporaneously with the date of issuance and delivery of the Series 2024A Bonds the Continuing Disclosure Undertaking, with such changes as may be necessary or appropriate. The signatures of any two authorized officials of the City are adequate to cause the Continuing Disclosure Undertaking to be binding and enforceable on the City. Section 7 Certification of Proceedings. The officers of the City are hereby authorized and directed to prepare and furnish to the Original Purchaser and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records of the City, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Series 2024A Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 15 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. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 16 PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 23rd day of April, 2024. ___________________________________ TERRY CUNNINGHAM Mayor ATTEST: ___________________________________ MIKE MAAS City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 A-1 EXHIBIT A UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF GALLATIN CITY OF BOZEMAN GENERAL OBLIGATION BOND SERIES 2024A No. $ .00 Rate Maturity Date of Original Issue CUSIP % July 1, May 16, 2024 103637 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS FOR VALUE RECEIVED, CITY OF BOZEMAN, MONTANA (the “City”), acknowledges itself to be indebted and hereby promises to pay to the registered owner named above, or registered assigns, the principal amount specified above on the maturity date specified above or, if this Bond is prepayable as stated herein, on any date prior thereto on which this Bond shall have been duly called for redemption, and to pay interest on said principal amount to the registered owner hereof from the Date of Original Issue set forth above or from such later date to which interest has been paid or duly provided for until this Bond is paid or, if this Bond is prepayable, until it has been duly called for redemption, at the rate specified above. Principal of this Bond is payable upon presentation and surrender hereof to U.S. Bank Trust Company, National Association, of Salt Lake City, Utah, as Bond Registrar, Transfer Agent and Paying Agent, or its successor designated under the Resolution described herein (the “Registrar”), at its operations center in St. Paul, Minnesota. The interest on this Bond shall be payable on January 1 and July 1 in each year, commencing January 1, 2025, and shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Interest on the Bonds shall be payable to the owners of record thereof as such appear on the bond register as of the close of business on the 15th day of the month immediately preceding each interest payment date, whether or not such day is a Business Day. Interest on, and upon presentation and surrender thereof, the principal of each Bond shall be payable by check or draft issued by the Registrar described herein. “Business Day” means any day other than a Saturday, Sunday or legal holiday of the State of Montana. The principal of and interest on this Bond are payable in lawful money of the United States of America. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 A-2 Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. This Bond is one of an issue in the total principal amount of $2,280,000 (the “Series 2024A Bonds”), all of like date of original issue and tenor except as to serial number, denomination, maturity date, interest rate and redemption privilege, all authorized by the favorable vote of more than the requisite majority of the qualified electors of the City voting on the question of the issuance thereof at a duly held election, all pursuant to resolutions duly adopted by the City Commission, including Resolution No. ____ adopted on April 23, 2024 (the “Resolution”), and in full conformity with the Constitution and laws of the State of Montana thereunto enabling. The Bonds are issuable only as fully registered bonds of single maturities, in denominations of $5,000 or any integral multiple thereof. Bonds with stated maturities in the years 2025 through 2033 are not subject to redemption prior to their stated maturities. Bonds with stated maturities on or after July 1, 2034 are subject to redemption on July 1, 2033 and any date thereafter, at the option of the City, in whole or in part, and if in part from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City), at a redemption price equal to the principal amount thereof and interest accrued to the redemption date, without premium. The date of redemption and the principal amount of the Bonds shall be fixed by the City Manager, who shall give notice thereof to the Registrar at least forty-five days prior to the date of redemption. At least thirty days prior to the designated redemption date, the Registrar shall cause notice of redemption to be mailed, by first class mail, or by other means required by the securities depository, to the registered owners of each Bond to be redeemed at their addresses as they appear on the bond register. No defect in or failure to give such notice shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price, the numbers, interest rates, CUSIP numbers, and the maturity date of the Bonds or portions thereof to be redeemed and the place at which the Bonds are to be surrendered for payment. Official notice of redemption having been given as aforesaid, the Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions thereof shall cease to bear interest. The Bonds having a stated maturity in 2044 are subject to mandatory sinking fund redemption on July 1 in the years and the principal amounts set forth below in $5,000 principal amounts selected by the Registrar, by lot or other manner as directed by the City, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date: DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 A-3 2044 Term Bond Sinking Fund Payment Date (July 1) Principal Amount on Sinking Fund Payment Date 2042 $ 155,000 2043 160,000 2044* 165,000 ___________ *Stated Maturity. If the term bonds with a stated maturity in 2044 are not previously purchased by the City in the open market or prepaid, $165,000 in principal amount of such term bonds would remain to mature in 2044. the principal amounts required to be redeemed on the above sinking fund payment dates shall be reduced by the amount by which such principal amounts are previously redeemed at the option of the Commission. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City in 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 any 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, 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 acts, conditions and things required by the Constitution and laws of the State of Montana to be done, to exist, to happen and to be performed precedent to and in the issuance of this Bond, in order to make it a valid and binding general obligation of the City according to its terms, have been done, do exist, have happened and have been performed in regular and due form, time and manner as so required; that the City Commission will annually levy an ad valorem tax on all of the taxable property in the City in an amount sufficient to pay the interest hereon when it falls due and also to pay and discharge the principal of this Bond at maturity; that this Bond, together with all other general obligation indebtedness of the City outstanding on the date of original issue hereof, does not exceed any constitutional or statutory limitation of indebtedness. 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 hereon shall have been executed by the Registrar by the manual signature of one of its authorized representatives. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 A-4 IN WITNESS WHEREOF, City of Bozeman, Montana, by its City Commission, has caused this Bond to be executed by the facsimile signatures of the Mayor, the City Manager and the City Clerk and by a printed facsimile of the official seal of the City. CITY OF BOZEMAN, MONTANA (Facsimile Signature) MAYOR (Facsimile Signature) (Facsimile Seal) CITY MANAGER (Facsimile Signature) CITY CLERK Dated: CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned herein. U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Registrar, Transfer Agent, and Paying Agent By Authorized Signature DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 A-5 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 Gifts to JT TEN -- as joint tenants Minor Act............................................ with right of (State) survivorship and not as tenants in 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 assignment OF ASSIGNEE: 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. SIGNATURE GUARANTEED Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Bond Registrar, which requirements include membership or participation in STAMP or such other “signature guaranty program” as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 B-1 EXHIBIT B FORM OF CONTINUING DISCLOSURE UNDERTAKING This CONTINUING DISCLOSURE UNDERTAKING is made by the City of Bozeman, Montana (the “City’) in connection with the issuance and delivery by the City of its $2,280,000 General Obligation Bonds, Series 2024A (the “Bonds”), as of this 16th day of May, 2024. Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), the City hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system website (“EMMA”), as hereinafter described. The City is the only “obligated person” in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with this Continuing Disclosure Undertaking, any person aggrieved thereby, including the Owners of any outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of this Continuing Disclosure Undertaking, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Continuing Disclosure Undertaking constitute a default under the Bonds or under any other provision of the Resolution. As used herein, “Owner” means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, “Beneficial Owner” means, in respect of a Bond, any person or entity that (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: (1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2024, the following financial information and operating data in respect of the City (the “Disclosure Information”): DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 B-2 (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Montana, containing a balance sheet as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, 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 or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof; and (B) to the extent not included in the financial statements referred to in paragraph (A) above, information for such fiscal year of the type set forth below: (1) principal amount of general obligation debt outstanding; (2) assessed valuation of the City; (3) taxable valuation of the City; and (4) tax collection figures in a format similar to the table under the heading “Property Tax Levies and Collections” on page A-8 of Appendix A to the Official Statement. Notwithstanding anything herein, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within ten days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated, if it is updated as required hereby, by reference from other documents, including official statements, which have been submitted to the MSRB in the manner set forth in subsection (c) hereof. The City shall clearly identify the Disclosure Information in each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be material (as hereinafter defined), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 B-3 If the Disclosure Information is changed or this Continuing Disclosure Undertaking is amended, then the City shall include in the next Disclosure Information to be delivered pursuant to this Continuing Disclosure Undertaking, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess of ten business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (G) modifications to rights of holders of the Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; (J) release, substitution or sale of property securing repayment of the Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the City; (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 B-4 (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (O) incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (P) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties. An event is “material” if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed in this Bond Resolution or information generally available to the public. Notwithstanding the foregoing sentence, an event is also “material” if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For purposes of paragraphs (O) and (P) above, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of either (i) or (ii). A “financial obligation” does not include municipal securities for which a final official statement has been provided to the MSRB consistent with the Rule. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information described above under paragraph (b)(1) above at the time specified thereunder; (B) the amendment or supplementing of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the City; and (C) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) hereof to the MSRB via EMMA or in a manner as may be otherwise proscribed by the MSRB consistent with the Rule. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (d) Term; Amendments; Interpretation. DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 B-5 (1) This Continuing Disclosure Undertaking shall remain in effect so long as any Bonds are outstanding. (2) This Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (b)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Commission filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that the Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information), as so amended or supplemented, will comply with the provisions of paragraph (b)(5) of the Rule, assuming that such provisions apply to the Bonds. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) this Continuing Disclosure Undertaking is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so the undertaking would satisfy the requirements of paragraph (b)(5) of the Rule. Dated: May 16, 2024 CITY OF BOZEMAN, MONTANA By ____________________________________ Mayor By ____________________________________ City Manager DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 Resolution 5591, Authorizing the Execution and Delivery of $2,280,000 General Obligation Bonds, Series 2024A CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Bozeman, Montana (the “City”), hereby certify that the attached resolution is a true copy of Resolution 5591, entitled: “RESOLUTION RELATING TO $2,280,000 GENERAL OBLIGATION BONDS, SERIES 2024A; DETERMINING THE FORM AND DETAILS, AUTHORIZING THE EXECUTION AND DELIVERY AND LEVYING TAXES FOR THE PAYMENT THEREOF” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Commission of the City at a meeting on April 23, 2024, and that the meeting was duly held by the City Commission and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Commissioners voted in favor thereof: ; voted against the same: ; abstained from voting thereon: ; or were absent: . WITNESS my hand officially this 23rd day of April, 2024. Mike Maas City Clerk DocuSign Envelope ID: 46744917-4711-4B2A-864F-AF3D02A3F454 STATEMENT OF INDEBTEDNESS ST A TEMENT OF INDEBTEDNESS OF THE CITY OF BOZEMAN, GALLATIN COUNTY, MONTANA, AS OF APRIL 30, 2024. I, the undersigned, being the Finance Director of the City of Bozeman, Gallatin County, Montana, do hereby certify that the following is a true and correct statement showing the financial condition of the above-named city, as the same existed on the 30th day of April, 2024. VALUATION AND DEBT LIMIT Total assessed value of taxable property in City subject to taxation, as ascertained from last assessment for state and county taxes General limit of indebtedness 2.50% of total of assessed value of taxable property $17,730,663,050 $443,266,576 WARRANT INDEBTEDNESS Name of Fund NONE Totals Unpaid Warrants Registered or Note $0.00 Net Cash on Hand in Fund $0.00 Indebtedness Against Fund GENERAL OBLIGATION BONDED INDEBTEDNESS Interest Original Principal Date of Date of Interest Last Amount of Amount Name oflssue Issue Maturity Rate Paid On Issue Outstanding GO Bonds, Series 2013 12/23/2013 07/01/2034 2.25% to 01/01/2024 $9,990,000.00 $6,270,000.00 4.00% GO Bonds, Series 2014 12/09/2014 07/01/2035 2.00% to 01/01/2024 $5,100,000.00 $3,470,000.00 4.00% GO Bonds, Series 2019 09/18/2019 07/01/2039 2.00% to 01/01/2024 $34,405,000.00 $29,500,000.00 4.00% GO Bonds, Series 2022 06/30/2022 07/01/2042 4.00% to 01/01/2024 $6,730,000.00 $6,525,000.00 5.00% Totals: $56,225,000.00 $45,765,000.00 LIMITED TAX GENERAL OBLIGATION BONDED INDEBTEDNESS 1 Interest Original Principal Date of Date of Interest Last Amount of Amount Name of Issue Issue Maturity Rate Paid On Issue Outstanding L TGO (Sports Park), Series 2018 07/01/2018 06/30/2039 3.74% 01/01/2024 $1,700,000.00 $1,469,633.00 LTGO, Series 2024B 05/16/2024 07/01/2043 4.00% to n/a $3,930,000.00 $3,930,000.00 5.00% Totals: $5,630,000.00 $5,399,633.00 OTHER OUTSTANDING INDEBTEDNESS (List each outstanding city debt separately with amount) Note (Pete's Hill Loan) (matures 2024) Montana Board of Investments INTER CAP Loans -Street lighting upgrades (matures 2030) -Sports Park -Bronken Park (matures 2029) Total 1 Does not constitute indebtedness for the purpose of statutory debt limitations. $215,000.00 $110,035.00 $216,147.00 $541,182.00 RECAPITULATION (1) Applicable Debt Limit ..................................................................... $443,266,576 (2) Net Warrant Indebtedness ..................... $0.00 (3) Net Bonded Indebtedness ...................... $45,765,000 ( 4) Net Other Indebtedness ......................... $541,182 (5) Total General Indebtedness (Add 2, 3 and 4) .................................................... $46,306,182 ( 6) Present Bonding Capacity (Subtract 5 from 1)......................................................................... $396,960,394 (7) Offered Bond Issues .. .... .. .......... .............. .................. .................... $2,280,000 (8) Remaining General Bond Capacity After Sale.............................. $394,680,394 IN WITNESS WHEREOF, I have hereunto subscribed my name at the City of Bozeman, Montana, this 16th day of May, 2024. CITY OF BOZEMAN, MONTANA Finance Director STA TE OF MONTANA COUNTY OF GALLA TIN ) ) ss ) CERTIFICATE AS TO ORGANIZATION OF CITY OF BOZEMAN, MONTANA The undersigned, being the duly qualified and acting City Clerk of the City of Bozeman, in Gallatin County, Montana, and as such having custody of and access to the books and records of the City relating to the matters hereinafter stated, hereby certifies that, as appears by such books and records and as known to me, the following statements are true and correct. 1. The City has been a duly organized city for more than 141 years (April 1883) and is now governed by the general laws of the State relating to cities of the first class, operating under the Commission-Manager form of government. Its population, according to the 2020 United States census, was 53,293, and its estimated current population is 56,123. 2. The territory included within its boundaries lies wholly in the County of Gallatin, and comprises approximately 10,375 acres. The City is divided into O wards. The City is governed by a Mayor, City Manager and four Commissioners. The following named persons hold the offices set opposite their names and for the terms stated below: Name Office Term Ends Terry Cunningham Mayor January 2026 Joey Morrison Deputy Mayor January 2026 Douglas Fischer Commissioner December 2025 Jennifer Madgic Commissioner January 2028 Vacant* Commissioner Name Office Chuck Winn Interim City Manager Greg Sullivan City Attorney Melissa Hodnett Finance Director Laurae Clark City Treasurer Michael Maas City Clerk Aaron Funk Controller *Commissioner Christopher Coburn resigned as of May 7, 2024. The City Commission will appoint his replacement within 30 days of the effective date as required by State law. 3. Under the by-laws and ordinances of the City, regular meetings of the City Commission are held at 6:00 p.m. every Tuesday in the City Commission Room at City Hall located at 121 N. Rouse A venue in Bozeman, with the exceptions of Tuesdays following holidays and the fifth Tuesday of the month, and notice of special meetings is required to be given in writing to all members in advance. 4. The following are newspapers of general circulation published in the City and the days of their publication: Name Bozeman Daily Chronicle Days of Publication Tuesday through Saturday 5. There is no litigation threatened or pending questioning the organization or boundaries of the City or the right of any of the above-named persons to their respective offices or questioning the right and power of the City and its officers to issue bonds for any purpose or to levy, collect and apply taxes or other revenues for the payment of any bonds of the City. 6. The seal affixed below is the official corporate seal of the City. WITNESS my hand and the seal of the City this 16th day of May, 2024. (SEAL) 2 STATE OF MONTANA COUNTY OF GALLATIN ) ) ss. ) AFFIDAVIT AS TO SIGNATURES OF OFFICERS Affiants, being first duly sworn, upon oath depose and say that affiant TERRY CUNNINGHAM is the duly qualified and acting Mayor, that affiant CHUCK WINN is the duly qualified and acting Interim City Manager, and that affiant MICHAEL MAAS is the duly qualified and acting City Clerk of the City of Bozeman, Montana (the "City"); that the Mayor, Interim City Manager, and City Clerk have been authorized to execute $2,280,000 in aggregate principal amount of General Obligation Bonds, Series 2024A of the City, dated, as originally issued, as of May 16, 2024; that the signatures subscribed to this affidavit are the proper signatures of such affiants as such Mayor, Interim City Manager, and City Clerk, respectively; that all facsimile signatures affixed to the Bonds are true and correct engraved, printed or stamped facsimiles of the applicable affiants' proper signatures; and that a duplicate original of this affidavit has been filed with the undersigned City Clerk in accordance with the provisions of Montana Code Annotated, Section 2-16-114(2). Mayor Interim City Manager City Clerk Subscribed and sworn to before me this l1_ day of Mstff , 2024,. bJ 'Tu:)~-.~' ().~ ~\'l-t-t {'J\at{S . (Notarial Seal) .,,,,.,,,,, MICHELLE CHAPEL /~"<:-':-':-~,C?-'i~',,, Notary Public ./ cJ'·> · · :.o ', f Montana :t:1: oiARt,1 •.1 -:. for the State o :: • ,~ -·-( ·. :. Residing at: ~,.· .. SEAL . .-;} Bozeman, Montana • .. ~~ ..... jt,' My Commission Expires: ,,.:,c:,oFt-110 ,,' April 21, 2025 1'11111H''· :, Prin Not Res· ntana My Expires: ____ _ $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana SIGNATURE AND NO-LITIGATION CERTIFICATE We, Terry Cunningham, Chuck Winn and Mike Maas, hereby certify that we are on the date hereof the duly qualified and acting Mayor, Interim City Manager and City Clerk, respectively, of the City of Bozeman, Montana (the "City"), and, on behalf of the City, certify that: I. True and correct facsimiles of the signatures of the Mayor, Interim City Manager and City Clerk have been affixed to $2,280,000 General Obligation Bonds, Series 2024A, of the City, dated, as originally issued, as of May 16, 2024 (the "Series 2024A Bonds"). The Series 2024A Bonds mature on the dates, bear interest at the rates and are substantially in the form prescribed by Resolution No. 5591 duly adopted by the City Commission of the City on April 23, 2024, entitled "Resolution Relating to $2,280,000 General Obligation Bonds, Series 2024A; Determining the Form and Details, Authorizing the Execution and Delivery and Levying Taxes for the Payment Thereof' (the "Resolution"). The Resolution is in full force and effect in the form in which it was adopted. We have delivered the Series 2024A Bonds to U.S. Bank Trust Company, National Association, of Salt Lake City, Utah, as Registrar, for authentication and delivery to The Depository Trust Company, in New York, New York, on behalf of Fidelity Capital Markets, as purchaser thereof (the "Purchaser"). The Series 2024A Bonds are in fully registered form pursuant to a system of registration established by the Resolution. 2. The Series 2024A Bonds have been in all respects duly executed for delivery pursuant to authority conferred upon the Mayor, Interim City Manager and City Clerk as such officers; no obligations other than those described above have been issued pursuant to such authority; none of the proceedings or records which has been certified to the Purchaser or to the attorneys approving the legality of the issuance of the Series 2024A Bonds has been in any manner repealed, amended or changed except as shown by additional proceedings or records furnished each of them; and there has been no material adverse change in the financial condition of the City or the circumstances affecting the Series 2024A Bonds, except as shown by the materials so furnished. 3. No litigation is now pending, or, to the best of our knowledge, threatened (i) restraining or enjoining the issuance or delivery of the Series 2024A Bonds, (ii) questioning the organization of the City or the right of any officers of the City to their respective offices, (iii) questioning the right and power of officers of the City to deliver the Series 2024A Bonds, (iv) challenging the validity of the election authorizing the issuance of the Series 2024A Bonds, or (v) questioning the levy of any ad valorem taxes to pay the principal of or interest on the Series 2024A Bonds. 4. We have reviewed the Official Statement, dated April 16, 2024, relating to the Series 2024A Bonds, and, to the best of our knowledge, the Official Statement did not, as of the date thereof, and does not, as of the date hereof, contain any misstatement of a material fact or omit to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances under which they are made; provided that we make no comment regarding information provided by the Purchaser for inclusion in the Official Statement relating to the Purchaser and the reoffering prices of the Series 2024A Bonds or by the rating agency or by The Depository Trust Company. WITNESS our hands as of this 16th day of May, 2024. (SEAL) Interim City Manager And_M~.J.e=--~~S ___ _ City Clerk 2 $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana TAX CERTIFICATE We, the undersigned, certify that we are the duly qualified and acting Mayor, Interim City Manager and City Clerk, respectively, of the City of Bozeman, Montana, that we are responsible for issuing the City's $2,280,000 General Obligation Bonds, Series 2024A (the "Series 2024A Bonds"), and that we are duly authorized to execute this Tax Certificate. ARTICLE I DESCRIPTION OF FINANCING 1.1 Pumose of Series 2024A Bonds. The Series 2024A Bonds are being issued to finance the 2024A Project. Proceeds of the Series 2024A Bonds also will be used to pay costs of issuing the Series 2024A Bonds, all pursuant to the Bond Resolution. 1.2 Single Issue. The Series 2024A Bonds are generally considered a single "issue" for all purposes of Section 103 and Sections 141 through 150 of the Code. The City has not entered into and will not enter into a binding written contract at substantially the same time at substantially the same time as the Bid Award for the sale or exchange of any tax-exempt obligation pursuant to the same plan of financing as the Series 2024A Bonds that is reasonably expected to be payable from substantially the same source of funds as the Series 2024A Bonds. 1.3. Sources and Uses. The sources and uses of funds are shown on Exhibit A hereto. 1.4 Issuance of the Series 2024A Bonds. The Series 2024A Bonds have been sold by the City to the Purchaser pursuant to the Bid Award and the Bond Resolution. The Series 2024A Bonds are being issued in registered form within the meaning of Section 149( a) of the Code. In accordance with the Bid Award and the Bond Resolution, the Series 2024A Bonds are being issued on the Closing Date by delivery of the Series 2024A Bonds to the Purchaser for a net purchase price calculated as follows: Par Amount Original Issue Premium Sale Proceeds Less Underwriter's Discount Net purchase price $2,280,000.00 144,018.60 $2,424,018.60 $(16,351. 75) $2,407,666.85 1.5 Application of Sale Proceeds. On the Closing Date, all of the Sale Proceeds (less amounts retained by the Purchaser as compensation) will be deposited into the Project Account, with $2,368,344.85 applied to pay costs of the 2024A Project and $39,322.00 applied to pay costs of issuance of the Series 2024A Bonds. 1.6 Issue Price. The "issue price" of the Series 2024A Bonds is $2,424,018.60, which is the aggregate of the issue prices determined separately for each maturity of the Series 2024A Bonds (treating Series 2024A Bonds with the same maturity date but different credit or payment terms as separate maturities). The issue price of the Series 2024A Bonds has been determined using the reasonably expected initial offering price of each maturity of the Series 2024A Bonds to the public as of the sale date, pursuant to the special rule for competitive sales provided by Section 1.148-1 (f)(2)(iii) of the Regulations and as evidenced by the Certificate of Municipal Advisor and the Issue Price Certificate, each dated as of the date hereof. 1.7 Yield. The Municipal Advisor has calculated the Bond Yield to be 3.5200520%. In calculating the Bond Yield, the following applies: ( a) The issue consisting of the Series 2024A Bonds is a "fixed yield issue" as defined in Section 1.148-1 (b) of the Regulations, and the Bond Yield has been calculated, as provided in Section l .148-4(b) of the Regulations, as the discount rate that, when used in computing the present value as of the issue date of all unconditionally payable payments of principal, interest, and fees for qualified guarantees on the issue and amounts reasonably expected to be paid as fees for qualified guarantees on the issue, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of bonds of the issue as of the issue date. (b) Certain maturities of the Series 2024A Bonds are subject to mandatory sinking fund redemption. Accordingly, the Bond Yield is computed by treating such Series 2024A Bonds as redeemed in accordance with the redemption schedule. (c) None of the Series 2024A Bonds are subject to optional redemption within five years of the Closing Date. Any Bond with an issue price that exceeds the face amount of the Bond by more than one-fourth of one percent times the face amount times the number of complete years to the first optional redemption date for the Bond is treated as redeemed at its stated redemption price at the optional redemption date that would produce the lowest yield on the Bond. ( d) The City has not entered into a "qualified guarantee" for the Series 2024A Bonds within the meaning of Section 1.148-4(f) of the Regulations. Payments relating to guarantees that are not qualified guarantees are not taken into account in determining Bond Yield. ( e) The City has not entered into a "qualified hedge" relating to the Series 2024A Bonds within the meaning of Section l .148-4(h) of the Regulations. Payments relating to swaps that are not qualified hedges are not taken into account in determining Bond Yield. ARTICLE II DESCRIPTION OF FUNDS 2.1 Cost of Issuance. On the Closing Date, $39,322.00 of the Proceeds of the Series 2024A Bonds will be deposited in the Project Account and will be used to pay issuance costs of the Series 2024A Bonds. If any such Proceeds remain on deposit in the Project Account as of the date which is six months from the date hereof, or upon an earlier determination that such funds will not be used for issuance costs, the City shall transfer such amounts to the Debt Service Account. 2 2.2 Project Account. On the Closing Date, $2,368,344.85 of the Net Sale Proceeds of the Series 2024A Bonds will be deposited in the Project Account and will be used to pay costs of the 2024A Project. The Net Sale Proceeds deposited into the Project Account, plus investment earnings thereon, do not exceed the reasonably expected costs of the 2024A Project, and it is reasonably expected that all such amounts in the Project Account will be allocated to expenditures for the 2024A Project. Substantial binding obligations to third parties for the acquisition and construction of the 2024A Project obligating the expenditure of at least 5% of the Net Sale Proceeds allocable to the Series 2024A Bonds have been entered into or made, or it is reasonably expected that such obligations will be entered into or made within six months from the date hereof. The City understands that an obligation subject to contingencies within the control of the City (or any Related Party to the City) is not considered a binding obligation for this purpose. The acquisition, construction, renovation, and equipping of the 2024A Project and the allocation of the Net Sale Proceeds to expenditures with respect thereto will proceed with due diligence to completion. It is reasonably expected that at least 85% of the Net Sale Proceeds deposited into the Project Account will be allocated to costs of the 2024A Project within three years of the date hereof. Any balance remaining in the Project Account upon completion of the 2024A Project, or upon an earlier determination that all such funds will not be used for the 2024A Project, will be transferred to the Debt Service Account and applied in a manner determined, in consultation with bond counsel, to comply with the federal income tax rules governing the application of excess proceeds. 2.3 Reserve Fund. No provision has been made for a reserve or replacement fund in connection with the Series 2024A Bonds. 2.4 Debt Service Account. The principal of, premium, if any, and interest on the Series 2024A Bonds are payable from the Debt Service Account. The Debt Service Account will be used primarily to achieve a proper matching of revenues and debt service within each Bond Year and will be fully depleted at least once a year on each July 1, except for a reasonable carryover amount expected not to exceed the greater of (a) the earnings on the Debt Service Account in the immediately preceding Bond Year or (b) one-twelfth of the annual debt service on the Series 2024A Bonds in the immediately preceding Bond Year. The Debt Service Account will constitute a "bona fide debt service fund" as defined in section 1.148-1 (b) of the Regulations. 2.5 No Other Funds. The City has not created or established, nor does the City expect to create or establish, any fund or account, other than as described in this Tax Certificate, reasonably expected to be used or available to pay the principal of or interest on the Series 2024A Bonds, including any funds held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the bondholders (i.e., a "negative pledge"). ARTICLE III NO REFUNDING 3.1 No Refunding. No Proceeds of the Series 2024A Bonds will be used to pay principal, interest, or redemption price on another issue, and no Proceeds of the Series 2024A Bonds will be allocated to reimburse an original expenditure paid by another obligation. Accordingly, the Series 2024A Bonds are not a "refunding issue" and there will be no Transferred Proceeds. 3 4.1 Reimbursement. ARTICLE IV USE OF PROCEEDS (a) No Proceeds are expected to be used to reimburse any expenditure paid prior to the Closing Date. (b) No Proceeds of the Series 2024A Bonds will be used to reimburse any expenditure paid more than 60 days prior to the date of adoption by the City of an official intent meeting the requirements of Section 1.150-2( e) of the Regulations with respect to such expenditure. Any allocation of Proceeds to the reimbursement of an original expenditure will be made not later than 18 months after the later of (i) the date the original expenditure was paid or (ii) the date the portion of the 2024A Project to which the payment relates was placed in service or abandoned, and in no event more than three years after the date of payment of the original expenditure. For this purpose, an allocation made within 30 days of the Closing Date may be treated as made on the Closing Date. The requirements of this Section 4.1 do not, however, apply to a reimbursement of (i) certain de minimis expenditures with respect to the 2024A Project meeting the requirements of Section 1.150- 2(£)( 1) of the Regulations, and (ii) "preliminary expenditures" for the 2024A Project within the meaning of Section 1.150-2(£)(2) of the Regulations, including engineering or architectural expenses and similar preparatory expenses, which in the aggregate do not exceed 20% of the aggregate issue price of the Series 2024A Bonds. (c) For a period of one year following any allocation of Proceeds to reimburse an expenditure, the City shall not use funds corresponding to the Proceeds for which a reimbursement allocation was made in a manner that results in the creation of Replacement Proceeds of the Series 2024A Bonds or another issue of tax-exempt bonds (other than amounts deposited into a bona fide debt service fund). 4.2 Capital Expenditures. All Net Proceeds of the Series 2024A Bonds have been or will be used, directly or indirectly, to finance or refinance Capital Expenditures or, to the extent permitted by Section 1.148-6(d)(3)(ii) of the Regulations, de minimis expenditures for certain specified purposes (including costs of issuing the Series 2024A Bonds and interest on the Series 2024A Bonds until three years from the Closing Date). The City acknowledges that if Proceeds of the Series 2024A Bonds are allocated to expenditures other than as permitted by this Section, a like amount of then-available funds of the City will be treated as unspent Proceeds of the Series 2024A Bonds and the City may be in violation of one or more tax covenants set forth in the Bond Resolution. 4.3 Use for Exempt Purpose. (a) All of the Net Proceeds of the Series 2024A Bonds will be applied to capital costs of the 2024A Project or costs of issuance of the Series 2024A Bonds. During the measurement period beginning with the issuance of the Series 2024A Bonds: i) not more than 10% of the Proceeds ( or $15 million, if less) will be used, directly or indirectly in any activity that constitutes a trade or business of a Non-Exempt Person, and (ii) not more than 5% of the Proceeds will be used, directly or indirectly, in whole or in part, for any use that 4 is not related to any governmental use of the Proceeds or for any disproportionate related business use of the Proceeds. In determining whether all or any portion of the Proceeds are used, directly or indirectly, by a Non-Exempt Person, the City acknowledges that use of Proceeds may result from (i) ownership of all or a portion of the 2024A Project by a Non-Exempt Person, (ii) actual or beneficial use of the 2024A Project pursuant to a lease, management or service contract, or (iii) any other arrangement that conveys a special legal entitlement for the beneficial use of the Proceeds or the property financed thereby or that provides a special economic benefit with respect to the financed property. (b) The facilities to be financed by the Series 2024A Bonds will be owned and maintained by the City so long as any of the Series 2024A Bonds are outstanding and will be used for the general governmental purposes of the City, subject to the retirement and salvage of portions thereof because of damage or destruction, normal wear and tear, or obsolescence. (c) No portion of the Proceeds will be used, directly or indirectly, to make or finance loans to any other person. No Proceeds will be used to make a prepayment for goods or services more than 90 days prior to the reasonably expected date of delivery to the City of all of the goods or services for which the prepayment was made. ( d) No portion of the Proceeds will be used, directly or indirectly, to make grants to any person. (e) the City. No Gross Proceeds will be allocated to payments to any Related Party to ARTICLE V INVESTMENT OF PROCEEDS AND ARBITRAGE REBA TE 5.1 Arbitrage. This Tax Certificate is given, in part, to establish the reasonable expectations of the City regarding the amount and use of the gross proceeds of the Series 2024A Bonds. The City does not reasonably expect that the Series 2024A Bonds will be "arbitrage bonds" within the meaning of Section 148 of the Code. No portion of the Series 2024A Bonds is issued for the purpose of investing the Proceeds thereof at a yield higher than the Bond Yield. The Sale Proceeds of the Series 2024A Bonds, including income from the investment thereof, do not exceed the amount necessary for the governmental purposes of the Series 2024A Bonds. The City reasonably expects that the term of the Series 2024A Bonds is no longer than is reasonably necessary for the governmental purposes of the Series 2024A Bonds. 5.2 Replacement Proceeds. Neither the City nor any Related Party to the City has or will have any amounts that have a sufficiently direct nexus to the Series 2024A Bonds or to a governmental purpose of the Series 2024A Bonds to conclude that the amounts would have been used for that governmental purpose if the Series 2024A Bonds were not used or to be used for that governmental purpose (acknowledging that the mere availability or preliminary earmarking of such amounts for a governmental purpose does not itself establish such a sufficient nexus). Without limiting the generality of the foregoing, the Sale Proceeds of the Series 2024A Bonds will not be used to replace proceeds of an earlier issue of tax-exempt obligations that were not expended 5 on the facilities for which such earlier issue was issued, or for substantially the same facilities as was intended for any such replaced and unexpended proceeds of any such earlier issue, nor will the Proceeds of the Series 2024A Bonds be used to replace any other funds that are or were reasonably expected to be used directly or indirectly to pay principal or interest on the Series 2024A Bonds. The City reasonably expects to pay debt service on the Series 2024A Bonds from then-current revenues. 5.3 Maturity Limitation. As determined under Section 147(b) of the Code, the average reasonably expected economic life of the facilities financed with the Net Proceeds of the Series 2024A Bonds is not less than 25 years. The weighted average maturity of the Series 2024A Bonds, within the meaning of Section 147(b) of the Code, is 11.953 years. Accordingly, the weighted average maturity of the Series 2024A Bonds does not exceed 120% of the average reasonably expected economic life of the facilities financed by Series 2024A Bonds. 5.4 Investment of Gross Proceeds. (a) Subject to Section 5.5, Gross Proceeds shall be invested at all times to the greatest extent practicable until such Gross Proceeds are allocated to expenditures. No amounts may be held as cash or be invested in zero-yield investments other than obligations of the United States purchased directly from the United States. In the event amounts cannot be otherwise invested at a return that exceeds the cost of such investment due to the denomination, price or availability of investments, the amounts shall be invested in an interest-bearing deposit account of a bank with a yield not less than that paid to the general public or held uninvested the minimum amount of time necessary. (b) All investments made with Gross Proceeds shall be bought and sold at fair market value, which for this purpose is the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's-length transaction. The City does not expect to invest Gross Proceeds in certificates of deposit, guaranteed investment contracts, or any investment that is not of a type traded on an established securities market, all within the meaning of Section 1.148-5( d)( 6) of the Regulations, and agrees to obtain the advice of a financial advisor or bond counsel to the extent necessary before making any such investments. The City will not invest Gross Proceeds in any Nonpurpose Investment in an amount greater than the fair market value of the Nonpurpose Investment as of the purchase date within the meaning of Section 1.148-6( c) of the Regulations. (c) As provided in Section 6.2, not more than 50% of the Proceeds of the Series 2024A Bonds are or will be invested in Nonpurpose Investments having a substantially guaranteed Yield for four years or more. 5.5 Yield Restriction. Except as provided in this Section, prior to allocation to expenditures, all Gross Proceeds shall be invested at a Yield not in excess of the Bond Yield until they cease to be Gross Proceeds. (a) The following may be invested without Yield restriction during the indicated temporary period: (i) amounts on deposit in the Project Account to pay costs of issuance for a period of 13 months from the Closing Date; 6 (ii) amounts on deposit in the Project Account to pay costs of the 2024A Project prior to the earlier of three years after the Closing Date or the completion (or abandonment) of the 2024A Project; (iii) amounts on deposit in the Debt Service Account for a period of 13 months; (iv) all Investment Proceeds for a period of one year from the date received; (v) all Replacement Proceeds for a period of 30 days from the date that the amounts are first treated as Replacement Proceeds; and (vi) all other Gross Proceeds for a period of 30 days from the date received. (b) Gross Proceeds may be invested without Yield restriction to the extent the City makes permissible yield-reduction payments with respect to such investment in the manner provided in section 1.148-5( c) of the Regulations. (c) At any time Gross Proceeds of the Series 2024A Bonds do not qualify for investment at a yield in excess of the Bond Yield pursuant to an applicable temporary period, such Gross Proceeds (if not held in a refunding escrow) may be invested without yield restriction as part of the "minor portion" as set forth in Section 148( e) of the Code. The Series 2024A Bonds are treated as a single issue for purposes of determining the minor portion, and, therefore the "minor portion" amount is the lesser of $100,000 or 5% of the Sale Proceeds. 5.6 Rebate. Section 148(f) of the Code and the corresponding Regulations require the periodic payment to the United States of the Rebate Amount, which, as of any date, is the excess of the future value, as of that date, of all Receipts on Nonpurpose Investments over the future value, as of that date, of all Payments on Nonpurpose Investments. Future value is computed in accordance with Section 1.148-3( c) of the Regulations. To the extent necessary to satisfy the rebate requirement, the City shall take the following actions consistent with the Code and applicable Regulations: (a) For each investment of Gross Proceeds in Nonpurpose Investments, the City will record the purchase date of such investment, its purchase price ( or fair market value in the case of a deemed acquisition or deemed disposition as specified in Section l .148- 5( d)(3) of the Regulations), accrued interest due on its purchase date, its face amount, its coupon rate, the frequency of its interest payment, its disposition price, the accrued interest due on its disposition date and its disposition date. (b) As of each Computation Date, the City will compute or cause to be computed the Bond Yield. (c) As of each Computation Date, the City will detennine or cause to be determined the Receipts and the Payments, and will determine the future value thereof as of the Computation Date. 7 ( d) Notwithstanding anything in this Section to the contrary, Receipts and Payments with respect to Nonpurpose Investments allocated to Gross Proceeds of the Series 2024A Bonds on deposit during a Bond Year in the Debt Service Account, which is a bona fide debt service fund as defined in Section 1.148-1 (b) of the Regulations, shall not be taken into account in calculating the Rebate Amount unless, in a particular Bond Year, investment income thereon is more than $100,000. ( e) As of each Computation Date, the City will calculate or cause to be calculated the Rebate Amount. (f) The City shall pay to the United States Department of the Treasury (i) not later than 60 days after each Installment Computation Date, an amount equal to at least 90% of the Rebate Amount calculated as of the date of such Installment Computation Date; and (ii) not later than 60 days after the Final Computation Date, an amount equal to 100% of the Rebate Amount calculated as of the Final Computation Date. (g) Each payment required to be made pursuant to this Section shall be filed with the Internal Revenue Service Center, Ogden, Utah 84201-0027, or such other address then specified, on or before the date such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or such other form as the Commissioner may prescribe. The City expects to satisfy the "18-month exception" of Section 1.148-7(d) of the Regulations, which provides that the Series 2024A Bonds are treated as satisfying the rebate requirement if ( x) the Gross Proceeds ( as that term is modified by Section 1.148-7 ( d)(3) of the Regulations) are allocated to expenditures for the governmental purposes of the Series 2024A Bonds in accordance with the spending schedule specified by the Regulations, (y) the rebate requirement is met for amounts not required to be spent within the specified spending schedule (excluding earnings on a bona fide debt service fund), and (z) the Series 2024A Bonds are not a multipurpose issue any portion of which is treated as meeting the rebate requirement under the "2- year exception" of Section 1.148 7( e) of the Regulations. 5.7 Universal Cap. Pursuant to the provisions of Section l .148-6(b) of the Regulations, for purposes of determining, inter alia, compliance with the yield restriction and arbitrage rebate provisions of Section 148 of the Code, amounts that otherwise would be Gross Proceeds of the Series 2024A Bonds shall be allocated (and remain allocated) to the Series 2024A Bonds only to the extent that the value of the Nonpurpose Investments allocated to the Series 2024A Bonds does not exceed the value of the outstanding Series 2024A Bonds (i.e., the universal cap). Value shall be determined in accordance with the provisions of Sections 1.148-4( e) and 1.148-5( d), respectively, of the Regulations. For purposes of complying with the universal cap provisions of Section l .148-6(b) of the Regulations, the City will compute the amount of the universal cap and the value of the Nonpurpose Investments on the dates required pursuant to Section l .148- 6(b )(2)(iii) of the Regulations, except that the universal cap need not be applied on any otherwise required date if its application on that date would not result in a reduction or reallocation of Gross Proceeds of the Series 2024A Bonds. Because the City reasonably expects as of the date hereof that the universal cap will not reduce the amount of Gross Proceeds allocable to the Series 2024A Bonds during the term of the issue, the City need not apply the universal cap on any date the Series 2024A Bonds actually meet the provisions of Section 1.148-6(b )(2)(i) of the Regulations. 8 ARTICLE VI GENERAL 6.1 No Federal Guarantee. No portion of the payment of principal or interest with respect to the Series 2024A Bonds is or will be guaranteed, directly or indirectly (in whole or in part), by the United States (or any agency or instrumentality thereof). Less than 5% of the Gross Proceeds of the Series 2024A Bonds have been or will be used to make loans the payment of principal or interest with respect to which is or will be guaranteed (in whole or in part) by the United States ( or any agency or instrumentality thereof) or invested ( directly or indirectly) in federally insured deposits or accounts. The Series 2024A Bonds will not be considered "federally guaranteed" in violation of this Section by reason of any investment of the Proceeds of the Series 2024A Bonds (a) during an initial temporary period until such proceeds are needed for the governmental purpose for which the Series 2024A Bonds are being issued, (b) as part of a bona fide debt service fund, ( c) as part of a reserve which meets the requirements of section 148( d) of the Code, (d) in bonds issued by the United States Treasury or (e) in any other investments permitted by the Regulations (including investments held in a refunding escrow). 6.2 Not Hedge Bonds. The City reasonably expects that at least 85% of the Net Sale Proceeds of the Series 2024A Bonds will be used for the governmental purposes of the Series 2024A Bonds within three years of the Closing Date and that not more than 50% of the proceeds of the Series 2024A Bonds are or will be invested in Nonpurpose Investments having a substantially guaranteed Yield for four years or more. As indicated in Section 1.1 hereof, the Series 2024A Bonds are being issued for a significant governmental purpose and not for the purpose of hedging against future increases in interest rates. ARTICLE VII POST-ISSUANCE COMPLIANCE 7.1 Filing Requirements. The City has reviewed the Internal Revenue Service Form 8038-G for the Series 2024A Bonds as prepared for signature by the City, and the information therein is correct and complete. The City shall file or cause to be filed with the Internal Revenue Service such reports and other documents as may be required from time to time by the Code and the Regulations, in accordance with an opinion of bond counsel. 7.2 Written Procedures. The City acknowledges that the Internal Revenue Service encourages issuers of tax-exempt obligations to adopt written post-issuance compliance procedures in addition to its documents concerning tax-exempt obligations. The City has adopted written post-issuance compliance procedures to monitor the requirements of Section 148 of the Code and to ensure that any nonqualified obligations are remediated in accordance with the requirements of the Code and the Regulations. 7 .3 Record Retention. The City agrees to keep and retain or cause to be kept and retained sufficient records to support the continued exclusion of the interest on the Series 2024A Bonds from federal income taxation, to demonstrate compliance with the covenants in this Tax Certificate, and to show that all tax-exempt obligation related tax returns related to the Series 2024A Bonds submitted or required to be submitted to the Internal Revenue Service are correct and timely filed. Such records shall include, but are not limited to, basic records relating to the Series 2024A Bonds (including this Tax Certificate, the Bond Resolution, and the Official 9 Statement); documentation evidencing the expenditure of Gross Proceeds; documentation evidencing the use of the 2024A Project by public and private entities (including copies of leases, management contracts, and research agreements); documentation evidencing all sources of payment or security for the Series 2024A Bonds; and documentation pertaining to any investment of Gross Proceeds (including any rebate calculations). The City shall retain such records until three years after all of the Series 2024A Bonds ( or any obligations issued to directly or indirectly refund all or any portion of the Series 2024A Bonds) have been discharged. 7.4 Change in Expectations. The City understands and acknowledges that changes in the facts or expectations set forth in this Tax Certificate may have adverse effects on the exclusion of interest on the Series 2024A Bonds from gross income, and, accordingly, that bond counsel should be consulted regarding any such changes. ARTICLE VIII DEFINITIONS For purposes of this Tax Certificate, the following terms have the following meanings unless the context or use clearly indicates another or different meaning is intended. Terms used but not defined in this Tax Certificate shall have the meanings given to them in the Bond Resolution or the Code. Bid Award means the bid award agreement dated April 16, 2024 between the City and the Purchaser. Bond Resolution means Resolution No. 5591 adopted by the City Commission on April 23, 2024, authorizing the execution and delivery of the Series 2024A Bonds. Bond Year means (i) the period from the Closing Date to and including July 1, 2024, and (ii) each subsequent period of one year ending on July 1, 2044. Bond Yield means the yield of the Series 2024A Bonds calculated as set forth in Section 1.7 hereof. Capital Expenditures means costs of a type that are properly chargeable to a capital account under general federal income tax principles in effect at the time the cost is paid, or would be so chargeable with a proper election or with the placed-in-service date considered to be the date on which, based on all facts and circumstances, (a) the facility has reached a degree of completion that would permit its operation at substantially its design level and (b) the facility is, in fact, in operation at such level. City means City of Bozeman, Montana. Closing Date means May 16, 2024. Code means the U.S. Internal Revenue Code of 1986. Computation Date means an Installment Computation Date and the Final Computation Date. Debt Service Account means the account so designated pursuant to the Bond Resolution. 10 Final Computation Date means July 1, 2044 or such earlier date when all the Series 2024A Bonds have been discharged. Governmental Person means a state or local governmental unit as defined in Section 1.103- 1 of the Regulations or any instrumentality thereof. Governmental Person does not include the United States or any agency or instrumentality thereof. Gross Proceeds means Proceeds and any Replacement Proceeds of the Series 2024A Bonds. Installment Computation Date means July 1, 2028 and the last day of every fifth Bond Year thereafter, but not including the Final Computation Date. Investment Proceeds means any amounts actually or constructively received from investing Proceeds of the Series 2024A Bonds. Investment Property means any security, obligation, annuity contract, investment-type property, or residential real property described in Section 148(b )(2)(E) of the Code, but not including any tax-exempt bond ( other than a "specified private activity bond" as defined in Section 57(a)(5)(C)) of the Code. Net Proceeds means the Proceeds of the Series 2024A Bonds, less any amount of Proceeds deposited in a reasonably required reserve or replacement fund. Net Sale Proceeds means the Sale Proceeds of the Series 2024A Bonds less the amount thereof allocated to the "minor portion" available under section 148(e) of the Code and any amount of Sale Proceeds deposited in a reasonably required reserve or replacement fund. Non-Exempt Person means any person that is not a Governmental Person. Nonpwpose Investment means any Investment Property (other than a Purpose Investment) in which Gross Proceeds are invested. Payments means all payments as defined in section 1.148-3( d)(l) of the Regulations. Proceeds means Sale Proceeds, Investment Proceeds, and any Transferred Proceeds of the Series 2024A Bonds. Project Account means the account so designated pursuant to the Bond Resolution. Purchaser means Fidelity Capital Markets, Boston, Massachusetts. Purpose Investment means any Investment Property acquired to carry out the governmental purpose of the Series 2024A Bonds. Rebate Amount means 100% of the amount owed to the United States under Section 148(£)(2) of the Code, as computed in accordance with section 1.148-3 of the Regulations. Receipts means all receipts as defined in section l .148-3(d)(2) of the Regulations. 11 Regulations means the Treasury Regulations, including, to the extent applicable to the Series 2024A Bonds, the regulations promulgated under Sections 103 and 141 through 150 of the Code. Related Party means a member of the same group of entities directly or indirectly controlled by the same entity or group of entities (including the controlling entity or entities). For this purpose, an entity or group of entities generally controls another entity or group of entities if it possesses, directly or indirectly, discretionary and non-ministerial rights or powers either to (a) approve and remove without cause a controlling portion of the governing body of the controlled entity or (b) require the use of funds or assets of the controlled entity for any purpose. An entity is not a controlled entity, however, if it possesses substantial taxing, eminent domain, and police powers. Replacement Proceeds means the amounts defined in Section 1.148-1 ( c) of the Regulations, including any fund to the extent reasonably expected to be used directly or indirectly to pay principal or interest on the Series 2024A Bonds or any fund directly or indirectly pledged to pay principal or interest on the Series 2024A Bonds. For this purpose, an amount is treated as pledged to pay principal or interest on the Series 2024A Bonds if it is held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of bondholders or a guarantor of the Series 2024A Bonds, unless (a) a substantial beneficiary of the Series 2024A Bonds may grant rights in the amount superior to the rights of the bondholders or the guarantor or (b) the amount does not exceed reasonable needs for which it is maintained, the required level is tested no more frequently than every six months, and the amount may be spent without any substantial restriction other than a requirement to replenish the amount by the next testing date. Sale Proceeds means any amounts actually or constructively received from the sale of the Series 2024A Bonds, including amounts retained by an underwriter as compensation and accrued interest ( other than pre-issuance accrued interest, if any). Series 2024A Bonds means the City's General Obligation Bonds, Series 2024A. Transferred Proceeds means transferred proceeds of the Series 2024A Bonds as defined in section 1.148-9 of the Regulations (or the applicable corresponding provision of prior law). 2024A Project means the 2024A Project described in the Bond Resolution. Yield means, with respect to any Investment Property, that discount rate which, when used in computing the present value of all unconditionally payable receipts from such Investment Property produces an amount equal to the present value of all unconditionally payable payments for the obligation. [Signature page follows.] 12 Dated as of this 16th day of May, 2024. CITY OF BOZEMAN, MONTANA By_/2_b _________ ~-=----------=--~- Mayor Interim City Manager And _Jv1~, b"----'"-ft1AA~5,.,,__ __ _ City Clerk Signature Page to Tax Certificate EXHIBIT A Final $2,280,000 City of Bozeman, Montana General Obligation Bonds, Series 2024A Sources & Uses Dated 05/16/2024 I Delivered 05/16/2024 Sources Of Funds $2,280,000.00 ~ --144,018.60 -" Total Sources Uses Of Funds Deposit to Project Account $2,368,344.85 Costs of Issuance ·· · · · · · ·· · ··-· ~-·-· -·--·---·~--_ ·· · · 39,322.00 Total Underwriter's Discol!nt (0.717%) · · ·· ~----.. ---·-····----16,351.75 Total Uses $2,424,018.60 A-1 $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana REQUEST AND AUTHORIZATION U.S. Bank Trust Company, National Association 170 S Main, Suite 200 Salt Lake City, UT 84101 Ladies and Gentlemen: You are hereby requested and authorized forthwith to execute the Certificate of Authentication printed on the $2,280,000 General Obligation Bonds, Series 2024A, dated as of May 16, 2024 (the "Bonds"), of the City of Bozeman, Montana (the "City"), and to deliver the Bonds to The Depository Trust Company, in New York, New York, on behalf of Fidelity Capital Markets, as purchaser thereof, all in accordance with the resolution adopted by the City Commission on April 23, 2024 (the "Resolution") relating to said Bonds. We transmit to you herewith the Bonds described above, which have been duly executed on behalf of the City, and a copy of the Resolution. We request that you acknowledge receipt of the Bonds and the Resolution by signing the receipt attached hereto and made a part of this document and by returning a copy hereof so signed to the City. Dated: May 16, 2024. CITY OF BOZEMAN, MONTANA By ______________ _ Mayor AnJLLtL Interim City Manager And____,Af"-'-=-'1'b "'--'~~S __ _ City Clerk Received the Bonds and the Resolution this 16th day of May, 2024. 2 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana FINANCE DIRECTOR'S CERTIFICATE AND RECEIPT I, the undersigned, being the duly qualified and acting Finance Director of the City of Bozeman, Montana, hereby certify and acknowledge that on the date of this instrument I received from Fidelity Capital Markets, as purchaser thereof, the purchase price of the General Obligation Bonds, Series 2024A, of City of Bozeman, Montana, dated as originally issued as of May 16, 2024, said purchase price being computed as follows: Principal Amount Plus Reoffering Premium Less Underwriter's Discount Net Purchase Price: $2,280,000.00 144,018.60 (16,351.75) $2,407,666.85 and that I thereupon caused said Bonds to be delivered to The Depository Trust Company, of New York, New York, on behalf of said Purchaser. WITNESS my hand officially as such Finance Director this 16th day of May, 2024. Finance Director $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana CERTIFICATE OF BOND REGISTRAR I, the undersigned, being the duly qualified acting Vice President of U.S. Bank Trust Company, National Association, of Salt Lake City, Utah, who is designated as Bond Registrar under the resolution adopted by the City Commission of the City of Bozeman, Montana (the "City"), on April 23, 2024, authorizing the issuance of the City's General Obligation Bonds, Series 2024A (the "Bonds"), do hereby certify that the Bond Registrar has received eighteen ( 18) fully executed but unauthenticated Bonds. I further certify that on the date hereof the Bond Registrar has authenticated and delivered to The Depository Trust Company, in New York, New York, on behalf of Fidelity Capital Markets, as purchaser thereof (the "Purchaser''), $2,280,000 in aggregate principal amount of the Bonds, dated as originally issued as of May 16, 2024, maturing on July I in the years and in the amounts and bearing interest at the rates and CUSIPS as set forth below: Interest Year Amount Rate CUSIP No. 2025 $ 60,000 5.000% 103637 KB9 2026 75,000 5.000 103637 KC7 2027 80,000 5.000 103637 KOS 2028 80,000 5.000 103637 KE3 2029 85,000 5.000 103637 KF0 2030 90,000 5.000 103637 KG8 2031 95,000 5.000 103637 KH6 2032 100,000 5.000 103637 KJ2 2033 I 05,000 5.000 103637 KK9 2034 110,000 5.000 103637 KL7 2035 115,000 5.000 103637 KM5 2036 120,000 5.000 103637 KN3 2037 130,000 3.375 103637 KP8 2038 130,000 3.500 103637 KQ6 2039 135,000 4.000 103637 KR4 2040 140,000 4.000 103637 KS2 2041 150,000 4.000 103637 KT0 2044* 480,000 4.000 I 03637 KW3 *Term bonds. I further certify that each and all of the Bonds so authenticated and delivered were registered, on the face thereof and also in the bond register maintained by the Bond Registrar, in the name of the owner thereof, as designated by the Purchaser. WITNESS my hand as Bond Registrar this 16th day of May, 2024. 2 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Bond Registrar $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana ISSUE PRICE CERTIFICATE The undersigned, on behalf of Fidelity Capital Markets, Boston, Massachusetts ("Fidelity"), hereby certifies as set forth below with respect to the sale of the obligations named above (the "Bonds"). I. Reasonably Expected Initial Offering Price. (a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public by Fidelity are the prices listed in Schedule A (the "Expected Offering Prices"). The Expected Offering Prices are the prices for the Maturities of the Bonds used by Fidelity in formulating its bid to purchase the Bonds. Attached as Schedule B is a true and correct copy of the bid provided by Fidelity to purchase the Bonds. (b) Fidelity was not given the opportunity to review other bids prior to submitting its bid. ( c) The bid submitted by Fidelity constituted a firm offer to purchase the Bonds. 2. Defined Terms. For purposes of this Issue Price Certificate: (a) Issuer means the City of Bozeman, Montana. (b) Maturity means Bonds with the same credit and payment terms. Any Bonds with different maturity dates, or with the same maturity date but different stated interest rates, are treated as separate Maturities. ( c) Member of the Distribution Group means (i) any person that agrees pursuant to a written contract with the Issuer ( or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). (d) Public means any person (i.e., an individual, trust, estate, partnership, association, company, or corporation) other than a Member of the Distribution Group or a related paiiy to a Member of the Distribution Group. A person is a "related party" to a Member of the Distribution Group if the Member of the Distribution Group and that person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). ( e) Sale Date means the first day on which there is a binding contract in writing for the sale of the respective Maturity. The Sale Date of each Maturity was April 16, 2024. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Fidelity Capital Markets' interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Dorsey & Whitney, LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. FIDELITY CAPITAL MARKETS By:~tJ.t;c? Its f:1Hl•t'ipt! :B-:soc\ Uod,a.uok:u Dated: May 16, 2024 2 SCHEDULE A REASONABLY EXPECTED INITIAL OFFERING PRICES $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana Maturity Principal {July 12 Amount Price 2025 $ 60,000 101.692% 2026 75,000 103.519 2027 80,000 105.766 2028 80,000 107.984 2029 85,000 110.030 2030 90,000 112.001 2031 95,000 113.979 2032 100,000 115.570 2033 105,000 117.165 2034 110,000 117.1651 2035 115,000 116.4661 2036 120,000 115.8581 2037 130,000 98.690 2038 130,000 98.570 2039 135,000 103.241 1 2040 140,000 102.3791 2041 150,000 101.4491 TERM BONDS. 2044 $480,000 100.000% 1 Priced to the call date of July I, 2033. 3 SCHEDULEB Fidelity Capital Markets -Boston, MA's Bid City of Bozeman, Montana . $2,280,000 General Obligation Bonds, Series 2024A For the aggregate principal amount or $2,280,000.00, we will pay you ~8.46 $2,407,666.85, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest atthe following rate(s): '.Maturlty,Date Amount$ Coupon% J Yield% ooHarPrtce. · ·laorid lns4rarice : 07/01/2025 +5M60M 5.0000 3.4500 101.692 • 07/01/2026 65M75M 5.0000 ! 3.2700 103.519 [ 07/01/2027 -OGM80M 5.0000 3.0500 105.766 ; 07/01/2028 90M80M 5.0000 2.9300 107.984 ( 07/01/2029 95M85.M 5.0000 2:8800 '.110;0SO : 0110112030 l . 9§M 90M 5.0000 2.8500 112.001 --! 07/01/2031 400M95M 5.0000 2.8200 113.979 --i 07/01/2032 .:t-05M 100M 5.0000 2.8400 115.570 l 0110112033 :t-OOM 105M 5.0000 2.8500 117.165 1 Q7/01f,2{)34 . 44GM:ftO~f s.oopl:f 2t8~bp: i1]J65' .. .. i 07/01/2035 44-0M 115M 5.0000 2.9300 116.466 , 01m11203s l .,.,,,_,._..,,.,.,_,,__..,.___,., :t-¼M 120M 5.0000 3.0000 1 115.858 , 0110112oa1 I 4-2-0M 130M 3.3750 3.5000 I 98.690 ,. ; 07/01/2038 ~M130M 3.5000 3.6300 98.570 ! 07/01/2039' ~:135M }<,,...,..-,,..,_.,,;. -4.oopo 3;58P0 1os;2,1.1 ! 07/01/2040 435M140M 4.0000 3.6900 102.379 i 07/01/2041 440M 150M 4,0000 3.8100 101.449 ,-l 07/01/2042 i l . i 07 /01/2{!44 455M.480lvl I 4.0000 · 4.QOOO I 100,QOO .: r ....... ......_..,...,~..,._-,...,.,... ---- Total Interest Cost: ~Alli $1,168,648.44 Premium: ~Gi~ $127,666.85 Net Interest Cost: $t-,G~ $1,040,981.59 TIC: ~-3.6506870% Total Insurance Premium: $GhGG $0.00 Time Last Bid Received On: 04/16/2024 9:58:54 MDST This proposal is made subject to ail of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Fidelity Capital Markets, Boston, MA Contact: Katharine Estes Title: Vice-President Te!ephone:774-392-0159 .... £ax:....... .1317-692-5949 Issuer Name: City of Bozeman, MT Accepted By: __,_/ ________ _ Company Name: Fidelity Capital Markets AcceptedBy: ~~--Ji_,,,.~ Dale: April 16, 2024 Date: April16,2024 $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana RECEIPT OF PURCHASER Fidelity Capital Markets, Boston, Massachusetts, as purchaser of the $2,280,000 General Obligation Bonds, Series 2024A (the "Series 2024A Bonds"), issued by the City of Bozeman, Montana (the "City"), hereby acknowledges receipt this date from the City through The Depository Trust Company, New York, New York, of $2,280,000 in aggregate principal amount of Series 2024A Bonds, fully executed and authenticated, dated, as originally issued, as of May 16, 2024, maturing on July 1 in the years and in the amounts and bearing interest at the rates and CUSIPS as set forth below: Interest Year Amount Rate CUSIPNo. 2025 $60,000 5.000% 103637 KB9 2026 75,000 5.000 103637 KC7 2027 80,000 5.000 103637 KD5 2028 80,000 5.000 103637 KE3 2029 85,000 5.000 103637 KF0 2030 90,000 5.000 103637 KG8 2031 95,000 5.000 103637 KH6 2032 100,000 5.000 103637 KJ2 2033 105,000 5.000 103637 KK9 2034 110,000 5.000 103637 KL7 2035 115,000 5.000 103637 KM5 2036 120,000 5.000 103637 KN3 2037 130,000 3.375 103637 KP8 2038 130,000 3.500 103637 KQ6 2039 135,000 4.000 103637 KR4 2040 140,000 4.000 103637 KS2 2041 150,000 4.000 103637 KT0 2044* 480,000 4.000 103637 KW3 *Term bonds. Dated: May 16, 2024. FIDELITY CAPITAL MARKETS By~il:t:~ Its HY:a ~ cJ (2L.d P.>1\0 J °"cf.u:[.ui,,h:/ $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana CONTINUING DISCLOSURE UNDERTAKING This CONTINUING DISCLOSURE UNDERTAKING is made by the City of Bozeman, Montana (the "City') in connection with the issuance and delivery by the City of its $2,280,000 General Obligation Bonds, Series 2024A (the "Bonds"), as of this 16th day of May, 2024. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit participating underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2- 12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule"), the City hereby makes the following covenants and agrees, for the benefit of the Owners (as hereinafter defined) from time to time of the outstanding Bonds, to provide annual reports of specified information and notice of the occurrence of certain events to the Municipal Securities Rulemaking Board ("MSRB") through its Electronic Municipal Market Access system website ("EMMA"), as hereinafter described. The City is the only "obligated person" in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails to comply with this Continuing Disclosure Undertaking, any person aggrieved thereby, including the Owners of any outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of this Continuing Disclosure Undertaking, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a default under this Continuing Disclosure Undertaking constitute a default under the Bonds or under any other provision of the Resolution. As used herein, "Owner" means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, "Beneficial Owner" means, in respect of a Bond, any person or entity that (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: ( 1) on or before 270 days after the end of each fiscal year of the City, commencing with the fiscal year ending June 30, 2024, the following financial information and operating data in respect of the City (the "Disclosure Information"): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Montana, containing a balance sheet as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, 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 or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, noting the discrepancies therefrom and the effect thereof; and (B) to the extent not included in the financial statements referred to in paragraph (A) above, information for such fiscal year of the type set forth below: (1) principal amount of general obligation debt outstanding; (2) assessed valuation of the City; (3) taxable valuation of the City; and (4) tax collection figures in a format similar to the table under the heading "Property Tax Levies and Collections" on page A-8 of Appendix A to the Official Statement. Notwithstanding anything herein, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within ten days after the receipt thereof, the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated, if it is updated as required hereby, by reference from other documents, including official statements, which have been submitted to the MSRB in the manner set forth in subsection (c) hereof. The City shall clearly identify the Disclosure Information in each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure 2 Information and the City determines that certain specified data regarding such replacement operations would be material ( as hereinafter defined), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this Continuing Disclosure Undertaking is amended, then the City shall include in the next Disclosure Information to be delivered pursuant to this Continuing Disclosure Undertaking, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner not in excess often business days, notice of the occurrence of any of the following events: (A) principal and interest payment delinquencies; (B) non-payment related defaults, if material; (C) unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform; (F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (G) modifications to rights of holders of the Bonds, if material; (H) bond calls, if material, and tender offers; (I) defeasances; (J) release, substitution or sale of property securing repayment of the Bonds, if material; (K) rating changes; (L) bankruptcy, insolvency, receivership, or similar event of the City; (M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, 3 other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (0) incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (P) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties. An event is "material" if it is an event as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed in this Bond Resolution or information generally available to the public. Notwithstanding the foregoing sentence, an event is also "material" if it is an event that would be deemed material for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. For purposes of paragraphs (0) and (P) above, the term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of either (i) or (ii). A "financial obligation" does not include municipal securities for which a final official statement has been provided to the MSRB consistent with the Rule. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information described above under paragraph (b)(l) above at the time specified thereunder; (B) the amendment or supplementing of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the City; and (C) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) hereof to the MSRB via EMMA or in a manner as may be otherwise proscribed 4 by the MSRB consistent with the Rule. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. ( d) Term; Amendments; Interpretation. (1) This Continuing Disclosure Undertaking shall remain in effect so long as any Bonds are outstanding. (2) This Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (b)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Commission filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that the Continuing Disclosure Undertaking (and the form and requirements of the Disclosure Information), as so amended or supplemented, will comply with the provisions of paragraph (b)(5) of the Rule, assuming that such provisions apply to the Bonds. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) this Continuing Disclosure Undertaking is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so the undertaking would satisfy the requirements of paragraph (b)(5) of the Rule. Dated: May 16, 2024. Mayor Interim City Manager 5 125 Bank Street | Suite 600 | Missoula, MT | 59802-4407 | T 406.721.6025 | F 406.543.0863 | dorsey.com TRICIA C. ELPEL, Paralegal elpel.tricia@dorsey.com June 26, 2024 CERTIFIED MAIL RETURN RECEIPT REQUESTED Department of the Treasury Internal Revenue Service Center Ogden, UT 84201 Re: $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana Dear Sir/Madam: Enclosed is an IRS Form 8038-G, Information Return for Tax-Exempt Governmental Bonds, to be filed pursuant to Section 149(e) of the Internal Revenue Code with respect to the issuance of the Issuer’s bonds. Please file the enclosed Form 8038-G. Thank you. Very truly yours, Tricia C. Elpel, Paralegal Enclosure CJ}) DORSEY™ always ahead Form8O38•G Information Return for Tax-Exempt Governmental Bonds ► Under Internal Revenue Code section 149(e) (Rev. October 2021) ► See separate instructions. 0MB No. 1545-0047 Department of the Treasury Caution: If the issue price is under $100,000, use Form 8038-GC. Internal Revenue Service ► Go to www.irs.gov/F8038G for instructions and the latest information. . . Reporting Authority Check box if Amended Return ► D 1 Issuer's name 2 Issuer's employer identification number (EIN) Citv of Bozeman, Montana 81-6001238 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a 4 Number and street (or P.O. box if mail is not delivered to street address) I Room/suite 5 Report number (For IRS Use Only) P.O. Box 1230 I 3 I I 6 City, town, or post office, state, and ZIP code 7 Date of issue Bozeman, MT 59771-1230 05/16/2024 8 Name of issue 9 CUSIP number General Obliaation Bonds, Series 2024A 103637 KW3 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information 10b Telephone number of officer or other employee shown on 1 0a Chuck Winn, Interim Citv Manaaer (406) 582-2300 ■:r.1uil ■ Type of Issue (Enter the issue price.) See the instructions and attach schedule. 11 Education. 12 Health and hospital 13 Transportation 14 Public safety . 15 Environment (including sewage bonds) 16 Housing 17 Utilities 18 Other. Describe ► Swim center and pool upgrades, recreational center improvements 19a If bonds are TANs or RANs, check only box 19a ► □ b If bonds are BANs, check only box 19b ► □ 20 If bonds are in the form of a lease or installment sale, check box ► □ •~1 •• 'I Description of Bonds. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption (d) Weighted price at maturity average maturity 21 07/01/2044 $ 2,424,018.60 $ 2,280,000.00 11.953 years l~•ll.l Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 23 Issue price of entire issue (enter amount from line 21, column (b)) 24 Proceeds used for bond issuance costs (including underwriters' discount) 24 25 Proceeds used for credit enhancement 25 26 Proceeds allocated to reasonably required reserve or replacement fund 26 27 Proceeds used to refund prior tax-exempt bonds. Complete Part V . 27 28 Proceeds used to refund prior taxable bonds. Complete Part V 28 29 Total (add lines 24 through 28) . 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) .. . ··-Description of Refunded Bonds. Complete this part only for refunding bonds . 31 Enter the remaining weighted average maturity of the tax-exempt bonds to be refunded . 32 Enter the remaining weighted average maturity of the taxable bonds to be refunded . 33 Enter the last date on which the refunded tax-exempt bonds will be called (MM/DD/YYYY) 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/YYYY) For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S 55,673.75 ► ► ► 0 0 0 0 11 12 13 14 15 16 17 18 2,424,018.60 i (e) Yield 3.5200520 % 22 0 23 2,424,018.60 29 55,673.75 30 2 368 344.85 years years Form 8038-G (Rev. 10-2021) Form 8038-G (Rev. 10-2021) Page2 1::,:, .... ~. Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC). See instructions 36a b Enter the final maturity date of the GIC ► (MM/DD/YYYY) C Enter the name of the GIC provider ► 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . 37 38a b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► D and enter the following information: Enter the date of the master pool bond ► (MM/DD/YYYY) _______________ _ c Enter the EIN of the issuer of the master pool bond ► _________________ _ d Enter the name of the issuer of the master pool bond ► _________________ _ 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . 41a b If the issuer has identified a hedge, check here ► D and enter the following information: Name of hedge provider ► ________________ _ c Type of hedge ► __________________ _ d Term of hedge ►-------------------- ► ► □ □ 42 If the issuer has superintegrated the hedge, check box ► D 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . ► 0 44 If the issuer has established written procedures to monitor the requirements of section 148, check box . ► 0 45a If some portion of the proceeds was used to reimburse expenditures, check here ► D and enter the amount of reimbursement . . . ► --------------b Enter the date the official intent was adopted ► (MM/DD/YYYY) Signature and Consent Paid Preparer Use Only Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to proces is eturn to the person that I have authorized above. PrinVfype preparer's name Dan Semmens Firm's name ► Dorse & Whitne 05/16/2024 Date Firm's address ► 125 Bank Street Suite 600 Missoula MT 59802 ► Chuck Winn, Interim City Manager Type or print name and title Date Check O if PTIN 0 7 / CJ f / ZtJ2., self-employed p01 069444 Firm's EIN ► 41-0223337 Phone no. 406-721-6025 Form 8038-G (Rev. 10-2021) D er ,-=i f17 D ·.; , ~ ;ertified ~r qb i Extra Services & Fees (check box, add tee as appr3E[iate) r4 !)(Return Receipt (hardcop.y) $ :2., \o ~ □ LJ Return Receipt (electronic) $ ____ _ □ D Certified Mail Restricted Dellvery $ ____ _ D O Adult Signature Required $ ____ _ D Adult Signature Restricted Delivery $ :ii Postage -u-1 U- U7 $ •\o\ rn Total Postage and Fees $ Y. 1c,Ct Postmar1< .:_ Here City, State, ZIP+4° r) J\ u T ---------•✓ s&v/\ ~LfZ-0 \ USPS TRACKING# 11111111 1111 II I First-Class Mail Postage & Fees Paid USPS Permit No. G-10 9590 9402 6033 0069 7416 52 United States Postal Service 0 Sender: Please print your name, address, and ZIP+4® in this box• i 2-11<3'D, ooD Gio ~J 5RJf 1-(s Z,02-~ A DORSEY & WHITNEY LLP Yt-OUr-r\M'-' ilill Complete items 1, 2, and 3. ilill Print your name and address on the reverse so that we can return the card to you. !Iii Attach this card to the back of the mailpiece, or on the front if space permits. Millennium Building 125 Bank Street, Suite 600 Missoula, MT 59802-4407 A. Signature X B. Received by (Printed Name) D Agent □ Addresse C. Date of Deliver 1. Article Addressed to: D. i!J \'\Eiliviv ~re~differEJn~frdiB;it!l\1;1'~? I tE/3~tel:.1lelL'itery..ad~tess..belbjt: l D Yes □ No "< ; I i n 1 • • " ~ : : 1 Department of the Treasury Internal Revenue Service Center Ogden, UT 84201 j: I ,_ '<j ;r_J ,. I !J ; l I 1/ -~ _JI ' !By= . ----·-----·--. 3. Service Type ii I illl lllllHIII I IIIII I I I II II II 11111111 ~ ~;~t!~~~=1~~ ReStricted Delivery □ Certified Mail Restricted Delivery ___ 9_5_9_0_9_4_0_2_6_0_3~3~0_0_6_9~7_4~1~6~5=2~---< □ Collect on Delivery 2. Article Number (Transfer from service label) □ Collect on Delivery Restricted Delivery ri 1--· ·--.J \'lai! 7016 3560 0001 0840 319 0 \.1ail Restricted Delivery JO) PS Form 38 ii, July 2015 PSN 7530-02-000-9053 □ Priority Mail Express® □ Registered MailTM □ Re~istered Mail Restrict Delivery □ Return Receipt for Merchandise □ Signature Confirmation' □ Signature Confin11ation Restricted Delivery Domestic Return Receip UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF GALLATIN CITY OF BOZEMAN GENERAL OBLIGATION BOND SERIES 2024A No. $ .00 Rate Maturity Date of Original Issue CUSIP % July 1, May 16, 2024 103637 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS FOR VALUE RECEIVED, CITY OF BOZEMAN, MONTANA (the “City”), acknowledges itself to be indebted and hereby promises to pay to the registered owner named above, or registered assigns, the principal amount specified above on the maturity date specified above or, if this Bond is prepayable as stated herein, on any date prior thereto on which this Bond shall have been duly called for redemption, and to pay interest on said principal amount to the registered owner hereof from the Date of Original Issue set forth above or from such later date to which interest has been paid or duly provided for until this Bond is paid or, if this Bond is prepayable, until it has been duly called for redemption, at the rate specified above. Principal of this Bond is payable upon presentation and surrender hereof to U.S. Bank Trust Company, National Association, of Salt Lake City, Utah, as Bond Registrar, Transfer Agent and Paying Agent, or its successor designated under the Resolution described herein (the “Registrar”), at its operations center in St. Paul, Minnesota. The interest on this Bond shall be payable on January 1 and July 1 in each year, commencing January 1, 2025, and shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Interest on the Bonds shall be payable to the owners of record thereof as such appear on the bond register as of the close of business on the 15th day of the month immediately preceding each interest payment date, whether or not such day is a Business Day. Interest on, and upon presentation and surrender thereof, the principal of each Bond shall be payable by check or draft issued by the Registrar described herein. “Business Day” means any day other than a Saturday, Sunday or legal holiday of the State of Montana. The principal of and interest on this Bond are payable in lawful money of the United States of America. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay 2 all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. This Bond is one of an issue in the total principal amount of $2,280,000 (the “Series 2024A Bonds”), all of like date of original issue and tenor except as to serial number, denomination, maturity date, interest rate and redemption privilege, all authorized by the favorable vote of more than the requisite majority of the qualified electors of the City voting on the question of the issuance thereof at a duly held election, all pursuant to resolutions duly adopted by the City Commission, including Resolution No. 5591 adopted on April 23, 2024 (the “Resolution”), and in full conformity with the Constitution and laws of the State of Montana thereunto enabling. The Bonds are issuable only as fully registered bonds of single maturities, in denominations of $5,000 or any integral multiple thereof. Bonds with stated maturities in the years 2025 through 2033 are not subject to redemption prior to their stated maturities. Bonds with stated maturities on or after July 1, 2034 are subject to redemption on July 1, 2033 and any date thereafter, at the option of the City, in whole or in part, and if in part from such stated maturities and in such principal amounts as the City may designate in writing to the Registrar (or, if no designation is made, in inverse order of maturities and within a maturity in $5,000 principal amounts selected by the Registrar by lot or other manner as directed by the City), at a redemption price equal to the principal amount thereof and interest accrued to the redemption date, without premium. The date of redemption and the principal amount of the Bonds shall be fixed by the City Manager, who shall give notice thereof to the Registrar at least forty-five days prior to the date of redemption. At least thirty days prior to the designated redemption date, the Registrar shall cause notice of redemption to be mailed, by first class mail, or by other means required by the securities depository, to the registered owners of each Bond to be redeemed at their addresses as they appear on the bond register. No defect in or failure to give such notice shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price, the numbers, interest rates, CUSIP numbers, and the maturity date of the Bonds or portions thereof to be redeemed and the place at which the Bonds are to be surrendered for payment. Official notice of redemption having been given as aforesaid, the Bonds or portions thereof so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions thereof shall cease to bear interest. The Bonds having a stated maturity in 2044 are subject to mandatory sinking fund redemption on July 1 in the years and the principal amounts set forth below in $5,000 principal amounts selected by the Registrar, by lot or other manner as directed by the City, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date: 3 2044 Term Bond Sinking Fund Payment Date (July 1) Principal Amount on Sinking Fund Payment Date 2042 $ 155,000 2043 160,000 2044* 165,000 ___________ *Stated Maturity. If the term bonds with a stated maturity in 2044 are not previously purchased by the City in the open market or prepaid, $165,000 in principal amount of such term bonds would remain to mature in 2044. the principal amounts required to be redeemed on the above sinking fund payment dates shall be reduced by the amount by which such principal amounts are previously redeemed at the option of the Commission. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City in 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 any 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, 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 acts, conditions and things required by the Constitution and laws of the State of Montana to be done, to exist, to happen and to be performed precedent to and in the issuance of this Bond, in order to make it a valid and binding general obligation of the City according to its terms, have been done, do exist, have happened and have been performed in regular and due form, time and manner as so required; that the City Commission will annually levy an ad valorem tax on all of the taxable property in the City in an amount sufficient to pay the interest hereon when it falls due and also to pay and discharge the principal of this Bond at maturity; that this Bond, together with all other general obligation indebtedness of the City outstanding on the date of original issue hereof, does not exceed any constitutional or statutory limitation of indebtedness. 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 hereon shall have been executed by the Registrar by the manual signature of one of its authorized representatives. 4 IN WITNESS WHEREOF, City of Bozeman, Montana, by its City Commission, has caused this Bond to be executed by the facsimile signatures of the Mayor, the City Manager and the City Clerk and by a printed facsimile of the official seal of the City. CITY OF BOZEMAN, MONTANA (Facsimile Signature) MAYOR (Facsimile Signature) (Facsimile Seal) CITY MANAGER (Facsimile Signature) CITY CLERK Dated: CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned herein. U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Registrar, Transfer Agent, and Paying Agent By Authorized Signature 5 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 Gifts to JT TEN -- as joint tenants Minor Act............................................ with right of (State) survivorship and not as tenants in 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 assignment OF ASSIGNEE: 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. SIGNATURE GUARANTEED Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Bond Registrar, which requirements include membership or participation in STAMP or such other “signature guaranty program” as may be determined by the Bond Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. DORSEY"' City of Bozeman, Montana Bozeman, Montana Fidelity Capital Markets Boston, Massachusetts Re: $2,280,000 General Obligation Bonds, Series 2024A City of Bozeman, Montana Ladies and Gentlemen: We have acted as Bond Counsel to City of Bozeman, Montana (the ·'City") in connection with the authorization, sale and issuance by the City of its General Obligation Bonds, Series 2024A, dated, as originally issued, as of the date hereof (the "'Series 2024A Bonds"). In that capacity, we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the City in the authorization, sale and issuance of the Series 2024A Bonds, including a resolution adopted by the City Commission of the City on April 23, 2024, and the fonn of the Series 2024A Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits, and ce1iificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits, and certificates and on the basis of existing law, it is our opinion that: 1. The Series 2024A Bonds are valid and binding general obligations of the City, enforceable in accordance with their terms. 2. The full faith and credit of the City are pledged to the payment of the principal of and interest on the Series 2024A Bonds, and ad valorem taxes are required by law to be levied annually during the tenn of the Series 2024A Bonds on all taxable property within the City, without limitation as to rate or amount, in amounts sufficient to pay the principal of and interest on the Series 2024A Bonds as due. 3. Interest on the Series 2024A Bonds: (a) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code"); and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on noncorporate taxpayers by Section 55 of the Code. 4. Interest on the Series 2024A Bonds is excluded from Montana taxable income for State of Montana individual income tax purposes. The opinions expressed in paragraphs 1 and 2 above are subject, as to enforceability, to the effect of any applicable state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors' rights and principles of equity, whether considered at law or in equity. Dorsey & Whitney LLP I 125 Bank Street I Suite 600 I Missoula, MT I 59802-4407 I T 406.721.6025 I City of Bozeman, Montana Fidelity Capital Markets Page 2 The opinions expressed in paragraphs 3 and 4 above are subject to the condition of the City's compliance with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2024A Bonds in order that interest thereon may be, and continue to be, excluded from gross income for federal income tax purposes and from Montana taxable income for State of Montana individual income tax purposes. The City has covenanted to comply with these continuing requirements. Its failure to do so could result in the inclusion of interest on the Series 2024A Bonds in gross income for federal income tax purposes and in Montana taxable income for State of Montana individual income tax purposes, which may be retroactive to the date of issuance of the Series 2024A Bonds. Except as stated in this opinion, we express no opinion regarding federal, state or other tax consequences to the holders of the Series 2024A Bonds. We note, however, that interest on the Series 2024A Bonds may be taken into account in determining adjusted financial statement income for purposes of the federal alternative minimum tax imposed on applicable corporations (as defined in Section 59(k) of the Code), and is includable in the computation of income for purposes of the Montana alternative corporate income tax and the Montana corporate income tax. We do not express any opinion as to any laws other than the laws of the State of Montana and federal laws of the United States of America as in effect on the date hereof. We assume no obligation to revise, supplement, or update this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the laws of the State of Montana or of the United States of America that may occur after the date hereof, including, but not limited to, laws which may have retroactive effect. We have not been engaged, and have not undertaken, to review the accuracy, completeness or sufficiency of the Official Statement or any other offering materials relating to the Series 2024A Bonds and, accordingly, we express no opinion with respect thereto. Dated: May 16, 2024. Very trniy yours, ~~ i0'vv;1n1 vvr Rating Action: Moody's assigns Aa1 to Bozeman, MT's GOULT Series 2024A and GOLT 2024B Bonds 03 Apr 2024 New York, April 03, 2024 -- Moody's Ratings has assigned a Aa1 rating to the City of Bozeman's General Obligation Bonds, Series 2024A in the estimated par amount of $2.28 million and an Aa1 rating to its Limited Tax General Obligation Bonds, Series 2024B in the estimated par amount of $3.93 million. Concurrently, Moody's affirmed the city's Aa1 issuer rating and the Aa1 rating on its outstanding general obligation unlimited tax (GOULT) bonds. RATINGS RATIONALE The Aa1 issuer rating reflects the city's large and robustly growing tax base, rapid population growth, and significant benefits from the presence of Montana State University (MSU). The city's location provides access to a variety of year round recreational activities making tourism and retail services important drivers of the city's economic growth. Given the presence of the University, the economy is slowly diversifying to include technology, health sciences and manufacturing services. Ongoing development and housing turnover, driven by rapid population growth, will continue to support increases in the tax base. The city's tax base reached $17.7 billion as of fiscal 2024 reflecting a robust full value per capita level of $331,414. Resident income is more modest (at 109.8% of the US MHI) partly reflecting the sizable student population in the area. The city's finances are sound and will remain stable over the next few years supported by prudent and conservative budget management. Leverage is modest and will remain manageable despite some debt plans in the next few years, and fixed costs are low. The absence of a rating distinction between the city's general obligation unlimited tax (GOULT) bonds and the issuer rating reflects the city's pledge to levy ad valorem taxes, without limit as to rate or amount, sufficient to make timely payment of debt service. The city's general obligation limited bonds (GOLT) are at the same level as the issuer rating reflecting a non-contingent promise to pay, with the city's general credit MOODY'S RATINGS irrevocably pledged for the payment of the principal and interest on the bonds from any legally available funds of the city. The bonds are not secured by any specific pledge of the city's ad valorem taxing power. RATING OUTLOOK Moody's does not assign outlooks to local governments with this amount of debt outstanding. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS - Further diversification of the economy and employment opportunities - Improvement in resident income levels in line with higher rated peers or at levels close to 120% of US Median Household Income (MHI) - Increase in fund balance levels in line with higher rated peers; to levels materially above 35% of revenue FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS - Weakening or slowdown in the local economy - Reduced financial flexibility reflected in material and sustained declines in fund balance to levels closer to 25% of revenue - Significant increase in long term liabilities and/or fixed costs to levels closer to or above 350% of revenue LEGAL SECURITY The GOULT Bonds are general obligations of the City of Bozeman, payable from the proceeds of an ad valorem tax that the City will covenant to levy annually on all taxable property within the City, without limitation as to rate or amount. The GOLT bonds are a general non-contingent promise to pay of the city, payable from any legally available funds of the City. The general credit of the City is irrevocably pledged for the payment of the principal and interest on the bonds when due. The Series 2024B Bonds are not secured by any specific pledge of the City's ad valorem taxing power. USE OF PROCEEDS The proceeds of the Series 2024A Bonds and the Series 2024B Bonds will be used to make improvements to the Bozeman Swim Center, Bogert Pool, and Lindley Center and to pay the costs of issuing the Bonds. PROFILE The City of Bozeman is situated on the eastern slope of the Rocky Mountains in southwestern Montana (Aa1 stable) and serves as the county seat of Gallatin County. It is located roughly 90 miles from Yellowstone National Park and is home to Montana State University (Aa3 stable). The city is the fourth largest city by population in the state of Montana with an estimated population of about 53,500 as of 2022 (per the American Community Survey). METHODOLOGY The principal methodology used in these ratings was US Cities and Counties Methodology published in November 2022 and available at https://ratings.moodys.com/rmc-documents/386953 . Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology. REGULATORY DISCLOSURES For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions . 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The Depository Trust Company A subsidiary of the Depository Trust & Clearing Corporation BLANKET ISSUER LETTER OF REPRESENTATIONS (To be completed by Issuer and Co-lssuer(s), if applicable) City of Bozeman, Montana (Name oflssuer and Co-Issuer(s}, if applicable) September 5, 2019 (Date) The Depository Trust Company 18301 Bermuda Green Drive Tampa, FL 33647 Attention: Underwriting Department Ladies and Gentlemen: This letter sets fo1th our understanding with respect to all issues (the "Securities") that Issuer shall request to be made eligible for deposit by The Depository Trust Company ("DTC"). Issuer is: tNote: fssyer shall represent one and cross out the other,) [tneet·~ en:1ht~ in~ [formed under the Jaws of] _____ th_e_S_t_a_t_e_o_f _M_o_n_ta_n_a ____ _ To induce OTC to accept the Securities as eligible for deposit at D TC, and to act in accordance with DTC's Rules with respect to the.Securities, Issuer represents to DTC that issuer will comply with the requirements stated in DTC's Operational Arrangements, as they may be amended from time to time. Note: Schedule A contains statements that DTC believes accurately describe DTC, the method of effecting book-entry transfers of securities distributed through DTC, and certain related matters. DTCC Address) Very truly yours, By: Andrea Surratt, City Manager (Print Name) 121 North Rouse Avenue (Street Address) Bozeman, MT USA 59715 (City) (State) (Country) (Zip Code) 406-582-2306 (Phone Number) asu rratt@bozeman.net (E-mail BLOR 06-2013 SCHEDULEA (To Blanket Issuer Letter of Representations) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC--bracketcd material may be applicable only to certain issues) l. The Depository Trust Company ("DTC"), New York, NY, will act as securities deposit01y for the securities (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security ce1iificate will be issued for [each issue ofJ the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional ce1iificate will be issued with respect to any remaining principal amom1t of such issue.) 2. DTC, the world's largest securities deposito1y, is a limited-purpose trust company organized under the New York Banking Law, a "ban king organization" within the meaning oft he New York Banking Law, a member oft he Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "cl earing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's pa1ticipants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade set1lement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. DirectPatiicipants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and ce1tain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, h·ust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Patticipants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Pa1ticipants, which will receive a credit for the Securities on DTC 's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-enhy system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Patticipants with DTC are registered in the name ofDTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative ofDTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Pa1ticipants will remain responsible for keeping account of their holdings on behalf of their customers. BLOR 06-2013 SCHEDULEA (To Blanket Issuer Letter of Representations) 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Pa11icipants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by a1Tangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities m ay wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.] (6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. 's consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DT C's records. Payments by Pa11icipants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative ofDTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Pa1ticipants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Ten der/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Pa1ticipant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Paiticipants on DTC's records and followed by a book-entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book-entry-only transfers tlu-ough DTC (or a successor securities depository). lo that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes lo be reliable, but Issuer takes no responsibility for the accuracy thereof. BLOR 06-2013 TO: Fidelity Capital Markets (the “Purchaser”) Katherine Estes Phone: (774) 392-0159 Email: Katherine.estes@fmr.com City of Bozeman, Montana (“City”) Dorsey & Whitney LLP(“Bond Counsel”) U.S. Bank Trust Company, National Association (“Registrar/Paying Agent”) FROM: Baker Tilly Municipal Advisors, LLC (“Municipal Advisor”) Alyssa L. Glaser, Managing Director Phone: (651) 223-3035 Email: alyssa.glaser@bakertilly.com CLOSING DATE: Thursday, May 16, 2024 SUBJECT: Closing Instructions for: City of Bozeman, Montana $2,280,000 General Obligation Bonds, Series 2024A (the “Series 2024A Bonds”) I. Pricing Information Par Amount of the Series 2024A Bonds $2,280,000.00 Plus: Net Reoffering Premium 144,018.60 Less: Purchaser’s Discount (16,351.75) Net Purchase Price $2,407,666.85 Plus: Accrued Interest 0 Total Purchase Price $2,407,666.85 Less: Good Faith Deposit (45,600.00) Total Purchaser Transfer Due $2,362,066.85 See “Transmittal of Proceeds by the Purchaser” below for additional wire information. ($ bakertilly MUNICIPAL ADVISORS II. Transmittal of Proceeds by the Purchaser By 10:00 A.M. on the day of closing, the Purchaser will wire transfer $2,362,066.85 for the Series 2024A Bonds in immediately available funds to the City. Please use the following wire instructions: Amount: $2,362,066.85 Bank: U.S. Bank SWIFT Code: USBKUS44IMT ABA #: 092900383 Acct. #: 150095736248 Acct Name: City of Bozeman Operating Account Ref: GO Bonds 2024A NOTE: Due to cybersecurity concerns and instances of fraudulent activity regarding emails containing wire instructions related to debt obligations, it is encouraged that the wire instructions provided above are verbally confirmed with each party providing account information. Any modifications of wiring instructions after this memorandum should not be made without verbal confirmation to protect against fraudulent activity. III. Release of Series 2024A Bonds When all parties are satisfied that all moneys have been received and that all documentation is in order, the Purchaser and the Registrar/Paying Agent will instruct the Depository Trust Company to release the Series 2024A Bonds to the credit of the Purchaser via the DTC Closing Desk. IV. City Receipt and Disbursement of Funds The total Series 2024A Bond proceeds received by the City should be allocated as follows: Sources of Funds: Bond Proceeds Received from Purchaser $2,362,066.85 Good Faith Proceeds Previously Received from Purchaser 45,600.00 Total Sources of Funds $2,407,666.85 Uses of Funds Deposit to Project Account $2,368,344.85 Costs of Issuance 39,322.00 Total Uses of Funds $2,407,666.85 $39,322.00 of funds received will be used to pay the following costs of issuance: Municipal Advisor (Baker Tilly MA LLC) $10,097.00 Bond Counsel (Dorsey & Whitney LLP) 20,000.00 Rating (Moody’s) 7,710.00 Registrar/Paying Agent (U.S. Bank N.A.) 850.00 MuniPlatform 165.00 Miscellaneous 500.00 Total $39,322.00 Final $2,280,000 City of Bozeman, Montana General Obligation Bonds, Series 2024A Pricing Summary Maturity Type of Bond Coupon Yield Maturity Value Price YTM Call Date Call Price Dollar Price 07/01/2025 Serial Coupon 5.000%3.450%60,000.00 101.692% ---61,015.20 07/01/2026 Serial Coupon 5.000%3.270%75,000.00 103.519% ---77,639.2507/01/2027 Serial Coupon 5.000%3.050%80,000.00 105.766% ---84,612.80 07/01/2028 Serial Coupon 5.000%2.930%80,000.00 107.984% ---86,387.2007/01/2029 Serial Coupon 5.000%2.880%85,000.00 110.030% ---93,525.50 07/01/2030 Serial Coupon 5.000%2.850%90,000.00 112.001% ---100,800.9007/01/2031 Serial Coupon 5.000%2.820%95,000.00 113.979% ---108,280.05 07/01/2032 Serial Coupon 5.000%2.840%100,000.00 115.570% ---115,570.00 07/01/2033 Serial Coupon 5.000%2.850%105,000.00 117.165% ---123,023.25 07/01/2034 Serial Coupon 5.000%2.850%110,000.00 117.165%c 3.019%07/01/2033 100.000%128,881.50 07/01/2035 Serial Coupon 5.000%2.930%115,000.00 116.466%c 3.226%07/01/2033 100.000%133,935.90 07/01/2036 Serial Coupon 5.000%3.000%120,000.00 115.858%c 3.393%07/01/2033 100.000%139,029.60 07/01/2037 Serial Coupon 3.375%3.500%130,000.00 98.690% ---128,297.00 07/01/2038 Serial Coupon 3.500%3.630%130,000.00 98.570% ---128,141.00 07/01/2039 Serial Coupon 4.000%3.580%135,000.00 103.241%c 3.718%07/01/2033 100.000%139,375.35 07/01/2040 Serial Coupon 4.000%3.690%140,000.00 102.379%c 3.801%07/01/2033 100.000%143,330.60 07/01/2041 Serial Coupon 4.000%3.810%150,000.00 101.449%c 3.883%07/01/2033 100.000%152,173.50 07/01/2044 Term 1 Coupon 4.000%4.000%480,000.00 100.000% ---480,000.00 Total ---$2,280,000.00 -----$2,424,018.60 Bid Information Par Amount of Bonds $2,280,000.00Reoffering Premium or (Discount)144,018.60 Gross Production $2,424,018.60 Total Underwriter's Discount (0.717%)$(16,351.75)Bid (105.599%)2,407,666.85 Total Purchase Price $2,407,666.85 Bond Year Dollars $27,690.00 Average Life 12.145 YearsAverage Coupon 4.2204711% Net Interest Cost (NIC)3.7594135% True Interest Cost (TIC)3.6506870% Final $2,280,000 City of Bozeman, Montana General Obligation Bonds, Series 2024A Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/16/2024 ----- 01/01/2025 --63,054.69 63,054.69 - 07/01/2025 60,000.00 5.000%50,443.75 110,443.75 173,498.44 01/01/2026 --48,943.75 48,943.75 -07/01/2026 75,000.00 5.000%48,943.75 123,943.75 172,887.5001/01/2027 --47,068.75 47,068.75 - 07/01/2027 80,000.00 5.000%47,068.75 127,068.75 174,137.50 01/01/2028 --45,068.75 45,068.75 - 07/01/2028 80,000.00 5.000%45,068.75 125,068.75 170,137.50 01/01/2029 --43,068.75 43,068.75 -07/01/2029 85,000.00 5.000%43,068.75 128,068.75 171,137.5001/01/2030 --40,943.75 40,943.75 - 07/01/2030 90,000.00 5.000%40,943.75 130,943.75 171,887.50 01/01/2031 --38,693.75 38,693.75 - 07/01/2031 95,000.00 5.000%38,693.75 133,693.75 172,387.50 01/01/2032 --36,318.75 36,318.75 -07/01/2032 100,000.00 5.000%36,318.75 136,318.75 172,637.5001/01/2033 --33,818.75 33,818.75 - 07/01/2033 105,000.00 5.000%33,818.75 138,818.75 172,637.50 01/01/2034 --31,193.75 31,193.75 - 07/01/2034 110,000.00 5.000%31,193.75 141,193.75 172,387.50 01/01/2035 --28,443.75 28,443.75 - 07/01/2035 115,000.00 5.000%28,443.75 143,443.75 171,887.5001/01/2036 --25,568.75 25,568.75 - 07/01/2036 120,000.00 5.000%25,568.75 145,568.75 171,137.50 01/01/2037 --22,568.75 22,568.75 - 07/01/2037 130,000.00 3.375%22,568.75 152,568.75 175,137.50 01/01/2038 --20,375.00 20,375.00 - 07/01/2038 130,000.00 3.500%20,375.00 150,375.00 170,750.0001/01/2039 --18,100.00 18,100.00 -07/01/2039 135,000.00 4.000%18,100.00 153,100.00 171,200.00 01/01/2040 --15,400.00 15,400.00 - 07/01/2040 140,000.00 4.000%15,400.00 155,400.00 170,800.00 01/01/2041 --12,600.00 12,600.00 - 07/01/2041 150,000.00 4.000%12,600.00 162,600.00 175,200.0001/01/2042 --9,600.00 9,600.00 -07/01/2042 155,000.00 4.000%9,600.00 164,600.00 174,200.00 01/01/2043 --6,500.00 6,500.00 - 07/01/2043 160,000.00 4.000%6,500.00 166,500.00 173,000.00 01/01/2044 --3,300.00 3,300.00 - 07/01/2044 165,000.00 4.000%3,300.00 168,300.00 171,600.00 Total $2,280,000.00 -$1,168,648.44 $3,448,648.44 - Yield Statistics Bond Year Dollars $27,690.00 Average Life 12.145 YearsAverage Coupon 4.2204711% Net Interest Cost (NIC)3.7594135% True Interest Cost (TIC)3.6506870% Bond Yield for Arbitrage Purposes 3.5200520% All Inclusive Cost (AIC)3.8310937% IRS Form 8038 Net Interest Cost 3.5363750% Weighted Average Maturity 11.953 Years