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HomeMy WebLinkAboutResolution 4175 Intercap Revolving Programi RESOLUTION NO. 4175 RESOLUTION AUTHORIZING PARTICII'ATION ]N THE BOARD OF INVESTMENTS OF THE STATE OF MONTANA ANNUAL ADJUSTABLE RATE TENDER OPTION MUNICIPAL FINANCE CONSOLIDATION ACT BONDS (INTERCAP REVOLVING PROGRAM}, APPROVING THE FORM AND TERMS OF THE LOAN AGREEMENT AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO BE IT RESOLVED BY THE trOMMISS10J~1 (the Governing Body) OF THE CITY OF BOZEMAN (the Borrower) AS FOLLOWS: ARTICLE I DETERMINATIONS AND DEFINITIONS Section 1.01. Definitions. The following terms will have the meanings indicated below for all purposes of this Resolution unless the context clearly requires otherwise. Capitalized terms used in this Resolution and not defined herein shall have the meanings set forth in the Loan Agreement. Adjusted Interest Rate means the rate of interest on the Bonds determined in accordance with the provisions of Section 3.03 of the Indenture. Authorized Representative shall mean the officers of the Borrower designated and duly empowered by the Governing Body and set forth in the application. Board shall mean the Board of Investments of the State of Montana, a public body corporate organized and existing under the laws of the State and its successors and assigns. Board Act shall mean Section 2-15-1808, Title 17, Chapter 5, Part 16, MCA, as amended. Bonds shall mean the Bonds issued by the Board pursuant to the Indenture to finance the Program. Borrower shall mean the Bon-ower above named. Indenture shall mean that certain Indenture of Trust dated March 1, 1991 by and between the Board and the Trustee pursuant to which the Bonds are to be issued and all supplemental indentures thereto. Loan means the loan of money by the Board to the Borrower under the terms of the Loan Agreement pursuant to the Act and the Borrower Act and evidenced by the Note. Loan A~-eement means the Loan Agreement between the Borrower and the Board, including any amendment thereof or supplement thereto entered into in accordance with the provisions thereof and hereof. Loan Agreement Resolution means this Resolution or such other farm ofresolution that the Board may approve and all amendments and supplements thereto. Loan Date means the date of closing a Loan. Loan Rate means the rate of interest on the Loan which is initially 3.25% per annum through February 15, 2010 and thereafter a rate equal to the Adjusted Interest Rate on the Bonds and up to 1.5% per annum as necessary to pay Program Expenses. Note means the promissory note to be executed by the Borrower pursuant to the Loan Agreement, in accordance with the provisions hereof and thereof, in substantially the form set forth in the Promissory Note, or in such form that maybe approved by the Board. RESOLUTION - 2 102 Program shall mean the INTERCAP Program of the Board pursuant to which the Board will issue and sell Bonds and use the proceeds to make loans to participating Eligible Government Units. Project shall mean those items of equipment, personal or real property improvements to be acquired, installed, financed or refinanced under the Program as set forth in the Description of the Project/Summary of Draws. Trustee shall mean U.S. Bank Trust National Association MT (formerly known as First Trust Company of Montana National Association) and its successors. Section 1.02. Authori .The Borrower is authorized to undertake the Project and is further authorized by the Borrower Act to enter into the Loan Agreement for the purpose of obtaining a loan to finance or refinance the acquisition and installation costs of the Project. Section 1.03. Execution of A~reernent and Delivery of Note. Pursuant to the Indenture and the Board Act, the Board has issued and sold the Bonds and deposited a part of proceeds thereof in the Loan Fund held by the Trustee. The Board has, pursuant to the Term Sheet, agreed to make a Loan to the Borrower in the principal amount of $890,000.00 and upon the further terms and conditions set forth herein, and as set forth in the Tenn Sheet and the Loan Agreement. ARTICLE II THE LOAN AGREEMENT Section 2.01. Terms. (a} The Loan Agreement shall be dated as of the Loan Date, in the principal amount of $890,000.00 and shall constitute a valid and legally binding obligation of the Borrower. The obligation to repay the Loan shall be evidenced by a Promissory Note. The Loan shall bear interest at the initial rate of 3.25% per annum through February 15, 2010 and thereafter at the Adjusted Interest Rate, plus up to 1.5% per annum as necessary to pay the cost of administering the Program (the Program Expenses). All payments may be made by check or wire transfer to the Trustee at its principal corporate trust office. (b) The Loan Repayment Dates shall be February 15 and August 15 of each year. (c) The principal amount of the Loan may be prepaid in whole or in part provided that the Borrower has given written notice of its intention to prepay the Loan in whole or in part to the Board no later than 30 days prior to the designated prepayment date. (d) The Prepayment Amount shall be equal to the principal amount of the Loan outstanding, plus accrued interest thereon to the date of prepayment. (e) Within fifteen days following an Adjustment Date, the Trustee shall calculate the respective amounts of principal and interest payable by each Borrower on and with respect to its Loan Agreement and Note for the subsequent August 15 and February 15 payments, and prepare and mail by first class mail a statement therefor to the Borrower. Section 2.02. Use and Disbursement of the Proceeds. The proceeds of the Loan will be expended solely for the purposes set forth in the Description of the Proj ect/Summary of Draws. The proceeds from the sale of the Note to the Board shall remain in the Borrower's Account pending disbursement at the request of the Borrower to pay the budgeted expenditures in anticipation of which the Note was issued. Requests for disbursement of the Loan shall be made to the Board. Prior to the closing of the Loan and the first disbursement, the Borrower shall have delivered to the Trustee a certified copy of this Resolution, the executed Loan Agreement and Note in a form satisfactory to the Borrower's Counsel and the Board's Bond Counsel and such other certificates, documents and opinions as set forth in the Loan Agreement or as the Board or Trustee may require. The Borrower will pay the loan.proceeds to a third party within five business days after the date they are advanced (except for proceeds to reimburse the Borrower for previously paid expenditures, which are deemed allocated on the date advanced). RESOLUTION - 3 103 Section 2.03. Payment and Security for the Note. In consideration of the making of the Loan to the Borrower by the Board, the provisions of this Resolution shall be a part of the Agreement of the Borrower with the Board. The provisions, covenants and Agreements herein set forth to be performed by or on behalf of the Borrower shall be for the benefit of the Board. The Loan Agreement and Note shall constitute a valid and legally binding obligation of the Borrower and the principal of and interest on the Loan shall be payable from the general fiend of the Borrower, and any other money and funds of the Borrower otherwise legally available therefor. The Borrower shall enforce its rights to receive and collect all such taxes and revenues to insure the prompt payment of the Borrower obligations hereunder. Section 2.04. Representation Regardin>r the ProuertyTax Limitation Act. The Bonowerrecognizes and acknowledges that the amount of taxes it may levy is limited by the state pursuant to Section 15-I 0-402, et. seq. (the Property Tax Limitation Act). The Borrower is familiar with the Property Tax Limitation Act and acknowledges that the obligation to repay the Loan under the Agreement and Note are not exceptions to the provisions of the Property Tax Limitation Act. The Bonower represents and covenants that the payment of principal of and interest on the Loan can and will be made from revenues available to the Borrower in the years as they become due, notwithstanding the provisions of the Property Tax Limitation Act. Section 2.05. Levy and Aupropriate Funds to Repay Loan. The Borrower agrees that in order to meet its obligation to repay the Loan and all other payments hereunder that it will budget, levy taxes for and appropriate in each fiscal year during the term of the Loan an amount sufficient to pay the principal of and interest hereon within the limitations of the Property Tax Limitation Act, as may be amended, and will reduce other expenditures if necessary to make the payments hereunder when due. ARTICLE III CERTIFICATIONS, EXECUTION AND DELIVERY Section 3.01. Authentication of Transcriut. The Authorized Representatives are authorized and directed to prepare and furnish to the Board and to attorneys approving the validity of the Bonds, certified copies of this Resolution and all other resolutions and actions of the Borrower and of said officers relating to the Loan Agreement, the Note, and certificates as to all other proceedings and records of the Borrower which are reasonably required to evidence the validity and marketability of the Note. All such certified copies and certificates shall be deemed the representations and recitals of the Borrower as to the correctness of the statements contained therein. Section 3.02. Legal Opinion. The attorney to the Borrower is hereby authorized and directed to deliver to the Board at the time of Closing of the Loan his or her opinion regarding the Loan, the Loan Agreement, the Note and this Resolution in substantially the form of the opinion set forth in the Attorney's Opinion. Section 3.03. Execution. The Loan Agreement, Note, and any other document required to close the Loan shall be executed in the name of the Borrower and shall be executed on behalf of the Borrower by the signatures of the Authorized Representatives of the Borrower. T PASSED AND APPROVED by the ~'~ C.ommisSiorL this i S~day of `J r~'Yte~ , 2009. ,~ ~-` By Kaaren Jacobso Its Mayor Attest: By tac 1 en Its City C k RESOLUTION - 4 104 r Commission Memorandum REPORT TO: Honorable Mayor and Commission Members FROM: Anna Rosenberry, Finance Director Chris Kukulski, City Manager SUBJECT: Resolution No. 4175 -Resolution Authorizing Participation in the Board of Investments of the State of Montana Annual Adjustable Rate Tender Option Municipal Finance Consolidation Act Bonds (INTERCAP REVOLVING PROGRAM), Approving the Form and Terms of the Loan Agreement and Authorizing the Execution and Delivery of Documents Related Thereto. MEETING DATE: June 15, 2009 RECOMMENDATION: Adopt Resolution No. 4175 authorizing the loan necessary to complete the construction of Fire Station #3. BACKGROUND: The Montana Board of Investments - Intercap Program has approved the City's request for a loan of up to $890,000, for the completion of Fire Station #3. This resolution is required by the Board in order to secure the loan. On July 21, 2008, the City awarded the bid to construct Fire Station #3 to Martel Construction. At that time, we anticipated having over $2.6 Million cash available for the project from Fire ~o~ Impact Fees. With total project costs of $3.5 Million, we anticipated needing to borrow approximately $890,000 to complete consU-uction. This borrowing and its effect on the City's debt limit has been described in detail in the FY09 Budget Document, the FY10-14 Capital Improvement Plan, and. in the Commission Memo awarding the construction bid. USE OF INTERCAP: Because current state statutes do not provide specific authority for cities to borrow against streams of impact fee revenues, we need to borrow the funds under the city's general borrowing authority (general obligation) MCA 7-7-4104. Under this authority, the City could borrow up to $1,953,341 without a vote of the public. This loan of $890,000 falls within the loan requirements of the statute, as presented in Exhibit A. This loan is ultimately secured by the City's General Fund; we intend to use Fire Impact Fees collected during each year to make the debt service payments, but if those should fall short the General Fund would be required to make the payment. There is no penalty for early payment, and it continues to be our intention to pay off this loan as quickly as possible. FISCAL EFFECTS: Under current Intercap rates, a loan of $890,000 will require annual debt payments of $105,670 (10 year term, 3.25%). However, this rate is variable and changes each February. Since 1987, Intercap has had rates as high as 7.5% (would require an annual payment of $130,000) and as low as 2.7%, with an average interest rate of 3.99% (would require an annual payment of $108,800.) The program's rate history is attached to this memo. From FY00 to FY09-to-date (10 Years), Fire Impact Fee Collections have averaged $267,000 per year; if collections continued at the average, we could retire the debt within approximately 4 years. However, we don't anticipate that level of collections in the near future. In the current fiscal year, Fire Impact Fee collections are $167,000 with just a few weeks of the year remaining. This amount would still be enough to cover the required debt service payment. 108 f Fire Impact Fee Revenue >aoa,ooo ~~ac~,ooo s t oa.oa~ ~. ~ Firc tmpaet fie R~v,~nue -~-~strmated ~cbt Payment Going forward, Fire Impact Fee revenue could decline by an additiona136% and the city would still have Fire Impact Fee cash available to make the Intercap loan payment without assistance from the General Fund. If Impact Fee collections decline by more than 36% from their FY09 levels, the City's General Fund will be relied on to assist in making up any deficiency. DEBT SERVICE RESERVE: In order to mitigate any use of General Fund dollars, we propose to utilize any remaining construction project contingency money to fund a debt service reserve within the Fire Impact Fee Fund. This amount will be known once construction is complete. This would be utilized to decrease any possible dependence on the General Fund to make the debt payments in FY10. Depending on how much is available from impact fee collections in future years, we may be able to add to the reserve until a full year's payment has been accumulated; making any future General Fund contribution that might be necessary in the future, easier to plan for. Report compiled on: June 8, 2009 Attachments: Resolution No. 4175 Intercap Rate History Sheet Exhibit A -Loan Limitations under 7-7-4104 109 FY04 Fw01 F~'02 F1't?3 FYD~ F1'05 FYOf FY'0: FY08 F'~'09- TO Ddtt (GENERAL FUND LOAN) RESOLUTION AUTHORIZING PARTICIPATION IN THE INTERCAP PROGRAM CERTIFICATE OF MINUTES RELATING TO RESOLUTION NO. '1175 Issuer: City of Bozeman Kind, date, time and place of meeting: A meeting held on at o'clock _.m. in Montana. Members present: Members absent: RESOLUTION NO. 4175 RESOLUTION AUTHORIZING PARTICIPATION IN THE BOARD OF INVESTMENTS OF THE STATE OF MONTANA ANNUAL ADJUSTABLE RATE TENDER OPTION MUNICIPAL FINANCE CONSOLIDATION ACT BONDS (INTERCAP REVOLVING PROGRAM), APPROVING THE FORM AND TERMS OF THE LOAN AGREEMENT AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO I, the undersigned, being the fully qualified and acting recording officer of the public body issuing the obligations referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of the public body in my legal custody, from which they have been transcribed; that the documents are a correct and complete transcript of the minutes of a meeting of the governing body at the meeting, insofar as they relate to the obligations; and that the meeting was duly held by the governing body at the time and place and was attended tluoughout by the members indicated above, pursuant to call and notice of such meeting given as required by law. WITNESS my hand offtcially as such recording officer this day of , 2009. By. Its RESOLU"PION - I 101 RESOLUTION NO. ~ 175 RESOLUTION AUTHORIZING PARTICIPATION IN THE BOARD OF INVESTMENTS OF THE STATE OF MONTANA ANNUAL ADJUSTABLE RATE TENDER OPTION MUNICIPAL FINANCE CONSOLIDATION ACT BONDS (INTERCAP REVOLVING PROGRAM), APPROVING THE FORM AND TERMS OF THE LOAN AGREEMENT AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO BE IT RESOLVED BY THE COMMISSIDt~I (the Governing Body) OF THE CITY OF BOZEMAN (the Borrower) AS FOLLOWS: ARTICLE I DETERMINATIONS AND DEFINITIONS Section 1.01. Definitions. The following terms will have the meanings indicated below for all purposes of this Resolution unless the context clearly requires otherwise. Capitalized terms used in this Resolution and not defined herein shall have the meanings set forth in the Loan Agreement. Adjusted Interest Rate means the rate of interest on the Bonds determined in accordance with the provisions of Section 3.03 of the Indenture. Authorized Reuresentative shall mean the officers of the Borrower designated and duly empowered by the Governing Body and set forth in the application. Board shall mean the Board of Investments of the State of Montana, a public body corporate organized and existing under the laws of the State and its successors and assigns. Board Act shall mean Section 2-15-1808, Title 17, Chapter 5, Part 16, MCA, as amended. Bonds shall mean the Bonds issued by the Board pursuant to the Indenture to finance the Program. BoiTOwer shall mean the Borrower above named. Indenture shall mean that certain Indenture of Trust dated March 1, 1991 by and between the Board and the Trustee pursuant to which the Bonds are to be issued and all supplemental indentures thereto. Loan means the loan of money by the Board to the Borrower under the terms of the Loan Agreement pursuant to the Act and the Borrower Act and evidenced by the Note. Loan Agreement means the Loan Agreement between the Borrower and the Board, including any amendment thereof or supplement thereto entered into in accordance with the provisions thereof and hereof. Loan Agreement Resolution means this Resolution or such other form of resolution that the Board may approve and all amendments and supplements thereto. Loan Date means the date of closing a Loan. Loan Rate means the rate of interest on the Loan which is initially 3.25% per annum through February 15, 2010 and thereafter a rate equal to the Adjusted Interest Rate on the Bonds and up to 1.5% per annum as necessary to pay Program Expenses. Note means the promissory note to be executed by the Borrower pursuant to the Loan Agreement, in accordance with the provisions hereof and thereof, in substantially the form set forth in the Promissory Note, or in such form that may be approved by the Board. RESOLUTION - 2 102 Pro •am shall mean the INTERCAP Program of the Board pursuant to which the Board will issue and sell Bonds and use the proceeds to make loans to participating Eligible Government Units. Project shall mean those items of equipment, personal or real property improvements to be acquired, installed, financed or refinanced under the Program as set forth in the Description of the Project/Summary of Draws. Trustee shall mean U.S. Bank Trust National Association MT (forn~erly known as First Trust Company of Montana National Association) and its successors. Section 1.02. Authori .The Borrower is authorized to undertake the Project and is further authorized by the Borrower Act to enter into the Loan Agreement for the purpose of obtaining a loan to finance or refinance the acquisition and installation costs of the Project. Section 1.03. Execution of Agreement and Delivery of Note. Pursuant to the Indenture and the Board Act, the Board has issued and sold the Bonds and deposited a part of proceeds thereof in the Loan Fund held by the Trustee. The Board has, pursuant to the Tenn Sheet, agreed to make a Loan to the Borrower in the principal amount of $890,000.00 and upon the further terms and conditions set forth herein, and as set forth in the Tenn Sheet and the Loan Agreement. ARTICLE II THE LOAN AGREEMENT Section 2.01. Terms. (a) The Loan Agreement shall be dated as of the Loan Date, in the principal amount of $890,000.00 and shall constitute a valid and legally binding obligation of the Borrower. The obligation to repay the Loan shall be evidenced by a Promissory Note. The Loan shall bear interest at the initial rate of 3.25% per annum through February 1 S, 2010 and thereafter at the Adjusted Interest Rate, plus up to 1.5% per annum as necessary to pay the cost of administering the Program (the Program Expenses). All payments may be made by check or wire transfer to the Trustee at its principal corporate trust office. (b) The Loan Repayment Dates shall be February 15 and August 15 of each year. (c) The principal amount of the Loan may be prepaid in whole or in part provided that the Borrower has given written notice of its intention to prepay the Loan in whole or in part to the Board no later than 30 days prior to the designated prepayment date. (d) The Prepayment Amount shall be equal to the principal amount of the Loan outstanding, plus accrued interest thereon to the date of prepayment. (e) Within fi8een days following an Adjustment Date, the Tnrstee shall calculate the respective amounts of principal and interest payable by each Borrower on and with respect to its Loan Agreement and Note for the subsequent August 15 and February 15 payments, and prepare and mail by first class mail a statement therefor to the Borrower. Section 2.02. Use and Disbursement of the Proceeds. The proceeds of the Loan will be expended solely for the proposes set forth in the Description of the Project/Summary of Draws. The proceeds from the sale of the Note to the Board shall remain in the Borrower's Account pending disbursement at the request of the Borrower to pay the budgeted expenditures in anticipation of which the Note was issued, Requests for disbursement of the Loan shall be made to the Board. Prior to the closing of the Loan and the first disbursement, the Bon•ower shall have delivered to the Trustee a certified copy of this Resolution, the executed Loan Agreement and Note in a form satisfactory to the Borrower's Cotmsel and the Board's Bond Counsel and such other certificates, documents and opinions as set forth in the Loan Agreement or as the Board or Trustee may require. The Borrower will pay the loan proceeds to a third party within five business days after the date they are advanced (except for proceeds to reimburse the Borrower for previously paid expenditures, which are deemed allocated on the date advanced). RESOLUTION - 3 103 Section 2.03. Payment and Security for the Note. In consideration of the making of the Loan to the Borrower by the Board, the provisions of this Resolution shall be a part of the Agreement of the Bonower with the Board. The provisions, covenants and Agreements herein set forth to be performed by or on behalf ofthe Borrower shall be for the benefit of the Board. The Loan Agreement and Note shall constitute a valid and legally binding obligation of the Borrower and the principal of and interest on the Loan shall be payable from the general fiord of the Borrower, and any other money and funds of the Borrower otherwise legally available therefor. The Borrower shall enforce its riglrts to receive and collect all such taxes and revenues to insure the prompt payment of the Borrower obligations hereunder. Section 2.04. Representation Regarding the Property Tax Limitation Act. The Borrower recognizes and acknowledges that the amount of taxes it may levy is limited by the state pursuant to Section 15-10-402, et. seq. (the Property Tax Limitation Act). The Borrower is familiar with the Property Tax Limitation Act and acknowledges that the obligation to repay the Loan under the Agreement and Note are not exceptions to the provisions of the Property Tax Limitation Act. The Borrower represents and covenants that the payment of principal of and interest on the Loan can and will be made from revenues available to the Borrower in the years as they become due, notwithstanding the provisions of the Property Tax Limitation Act. Section 2.05. Levy and A,gpropriate Funds to Repa~Loan. The Borrower agrees that in order to meet its obligation to repay the Loan and all other payments hereunder that it will budget, levy taxes for and appropriate in each fiscal year during the term of the Loan an amount sufficient to pay the principal of and interest hereon within the limitations of the Property Tax Limitation Act, as maybe amended, and will reduce other expenditures if necessary to make the payments hereunder when due. ARTICLE III CERTIFICATIONS, EXECUTION AND DELIVERY Section 3.01. Authentication of Transcript. The Authorized Representativesaie authorized and directed to prepare and furnish to the Board and to attorneys approving the validity of the Bonds, certified copies of this Resolution and all other resolutions and actions of the Borrower and of said officers relating to the Loan Agreement, the Note, and certificates as to all other proceedings and records of the Borrower which are reasonably required to evidence the validity and. marketability of the Note. All such certified copies and certificates shall be deemed the representations and recitals of the Borrower as to the correctness of the statements contained therein. Section 3.02. Legal Opinion. The attorney to the Borrower is hereby authorized and directed to deliver to the Board at the time of Closing of the Loan his or her opinion regarding the Loan, the Loan Agreement, the Note and this Resolution in substantially the form of the opinion set forth in the Attorney's Opinion. Section 3.03. Execution. The Loan Agreement, Note, and any other document required to close the Loan shall be executed in the name of the Borrower and shall be executed on behalf of the Borrower by the signatures of the Authorized Representatives of the Borrower. PASSED AND APPROVED by the this day of , 2009. By Kaaren Jacobson Its Mayor Attest: By Stacy Ulmen Its City Clerk RESOLUTION - 4 104 • ~ • . • • INTERCAP LOAN RATE'S HISTORY Year Loan Rate 1987 5.625% 1988 6.625 1989 7.950% 1990 7.500% 1991 6.350% 1992 4.950% 1993" 4.350 1994 4.500.% 1995 6.400 % o 1996 4.850% 1997 4.750% 1998 4.850% 1999 4..300% 2000 5.600% 2001 4.750% 2002 3.150% 2003 2.850% 2004 2.700% 2005 3.800% 2006 4.750% 2007 4.850% 2008 4.250% 2009 _^ ~_ Overall Avera e 4.911 Average past 10 years 3.995% *variable rate changes every February 16. 105 Exhibit A -Fire Station #3 Intercap Loan Loan Limitation Calculations Under Sect 7-7-4104 7-7-4104 (3Ja: Amount Borrowed Does not exceed 10% of the General Fund Budget for FY08 or FY07 Amount Borrowed 10% FY08 Budget 10°~ FY07 Budget $ 890,000.00 $ 1,953,341.10 $ 2,004,447.90 7-7-4104 (3Jb: Debt service payments do not exceed 2% of General fund Revenue for FY08 or FY07 Debt Service Payment 2% FY08 Revenues 2% FY07 Revenues $ 105,670.00 $ 384,458.66 $ 385,779.56 A. Rosenberry 106 6/10/2009