HomeMy WebLinkAboutResolution 4607 Stormwater System Revenue Bond Series 2015 BOND RESOLUTION
Relating to
$1,815,000
STORMWATER SYSTEM REVENUE BOND
(DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM),
SERIES 2015
CITY OF BOZEMAN
Adopted: June 15,2015
so
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 No. , entitled: "RESOLUTION RELATING TO $1,815,000
STORMWATER SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL
STATE REVOLVING LOAN PROGRAM), SERIES 2015; AUTHORIZING THE ISSUANCE
AND FIXING THE TERMS AND CONDITIONS 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 its regular meeting on June 15, 2015, 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hereof been amended or repealed.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:
'"� , a ; voted against the same:
abstained from voting thereon: ; or were
absent: ' ' , �-Y i
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WITNESS my hand officially this day of June, 2015.
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TABLE OF CONTENTS
Page
RECITALS ......................................................................................................................................I
ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES....................2
SectionL I. Definitions.......................................................................................................2
Section 1.2. Other Rules of Construction ........................................................................... 7
Section1.3. Appendices...................................................................................................... 8
ARTICLE II REPRESENTATIONS AND COVENANTS........................................................... 8
Section 2.L Authorization and Findings............................................................................. 8
Section2.2. Representations............................................................................................... 9
Section2.3. Covenants...................................................................................................... 11
ARTICLE III USE OF PROCEEDS; THE 2015 PROJECT........................................................ 14
Section 3.1. Use of Proceeds............................................................................................. 14
Section 3.2. The 2015 Project........................................................................................... 15
Section 3.3. 2015 Project Representations and Covenants............................................... 16
Section 3.4. Completion or Cancellation or Reduction of Costs of the 2015 Project....... 17
ARTICLEIV THE 2015 LOAN................................................................................................... 17
Section 4.1. The 2015 Loan; Disbursement of Loan........................................................ 17
Section 4.2. Commencement of Loan Term.....................................................................20
Section 4.3. Termination of Loan Term............................................................................ 20
Section 4.4. Loan Closing Submissions............................................................................20
ARTICLE V REPAYMENT OF LOAN...................................................................................... 20
Section 5.1. Repayment of Loan.......................................................................................20
Section 5.2. Additional Payments..................................................................................... 21
Section5.3. Prepayments.......................................................:..........................................22
Section 5.4. Obligations of Borrower Unconditional.......................................................22
Section 5.5. Limited Liability...........................................................................................22
ARTICLE VI OTHER AGREEMENTS OF BORROWER........................................................23
Section 6.1. Maintenance of System; Liens......................................................................23
Section 6.2. Maintenance of Existence;Merger, Consolidation, Etc.; Disposition of
Assets................................................................................................................................23
Section 6.3. Covenants Relating to the Tax-Exempt Status of the State Bonds............... 23
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Section 6.4. Competing Service........................................................................................26
Section6.5.Billing ...........................................................................................................26
Section6.6.Remedies.......................................................................................................26
Section 6.7.Rate Covenant...............................................................................................26
ARTICLE VII INDEMNIFICATION OF DNRC AND DEQ.....................................................27
ARTICLE VIII ASSIGNMENT...................................................................................................28
Section 8.1.Assignment by Borrower..............................................................................28
Section 8.2.Assignment by DNRC ..................................................................................28
Section 8.3. State Refunding Bonds .................................................................................28
ARTICLE IX THE SERIES 2015 BOND....................................................................................28
Section 9.1.Authorization................................................................................................28
Section 9.2. Outstanding Bonds........................................................................................28
Section 9.3. Sources of Funding....................................................................................... 28
Section 9.4.Net Revenues Available................................................................................28
Section 9.5. Issuance and Sale of the Series 2015 Bond..................................................29
Section9.6. Terms............................................................................................................ 29
Section 9.7.Negotiability, Transfer and Registration....................................................... 29
Section 9.8. Execution and Delivery................................................................................. 30
Section9.9.Form.............................................................................................................. 30
ARTICLE X PRIORITIES AND ADDITIONAL STORMWATER DEBT............................... 30
Section 10.1. Priority of Bond Payments.......................................................................... 30
Section 10.2. Refunding Revenue Bonds ......................................................................... 30
Section 10.3. Other Parity Bonds...................................................................................... 31
Section 10.4. Subordinate Obligations.............................................................................. 31
ARTICLE XI STORMWATER SYSTEM FUND....................................................................... 32
Section 11.1.Bond Proceeds and Revenues Pledged and Appropriated.......................... 32
Section 11.2. Acquisition and Construction Account....................................................... 32
Section 11.3. Operating Account...................................................................................... 33
Section 11.4.Revenue Bond Account.............................................................................. 33
Section 11.5. Reserve Account......................................................................................... 33
Section 11.6. Replacement and Depreciation Account..................................................... 34
Section 11.7. Surplus Account.......................................................................................... 34
Section 11.8. Deposit and Investment of Funds ............................................................... 35
ARTICLEXII TAX MATTERS .................................................................................................. 36
Section 12.1.Use of 2015 Project and System................................................................. 36
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Section 12.2. General Covenant........................................................................................ 36
Section 12.3. Arbitrage Certification................................................................................ 36
Section 12.4. Arbitrage Rebate......................................................................................... 36
Section 12.5. Information Reporting................................................................................ 37
Section 12.6. "Qualified Tax-Exempt Obligations"......................................................... 37
ARTICLE XIII CONTINUING DISCLOSURE.......................................................................... 37
ARTICLE XIV DEFEASANCE................................................................................................... 38
Section14.1. General........................................................................................................ 38
Section14.2. Maturity....................................................................................................... 38
Section14.3. Prepayment................................................................................................. 38
Section14.4. Escrow......................................................................................................... 38
ARTICLE XV SUPPLEMENTAL RESOLUTIONS .................................................................. 39
Section15.1. General........................................................................................................ 39
Section 15.2. Consent of Holders ..................................................................................... 39
Section15.3.Notice.......................................................................................................... 39
Section 15.4. Manner of Consent...................................................................................... 40
ARTICLE XVI MISCELLANEOUS ...........................................................................................40
Section16.1.Notices ........................................................................................................ 40
Section 16.2. Binding Effect.............................................................................................41
Section16.3. Severability.................................................................................................41
Section 16.4. Amendments...............................................................................................41
Section 16.5. Applicable Law...........................................................................................41
Section 16.6. Captions;References to Sections................................................................41
Section 16.7.No Liability of Individual Officers, Commissioners..................................41
Section 16.8. Payments Due on Holidays.........................................................................41
Section 16.9. Right of Others to Perform Borrower's Covenants ....................................41
Section 16.10. Authentication of Transcript..................................................................... 42
Section 16.11. Effective Date ...........................................................................................42
APPENDIX A—Description of the Project................................................................................A-1
APPENDIX B—Form of Series 2015 Bond................................................................................B-1
APPENDIX C—Additional Representations and Covenants......................................................C-1
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RESOLUTION NO.
RESOLUTION RELATING TO $1,815,000 STORMWATER
SYSTEM REVENUE BOND (DNRC WATER POLLUTION
CONTROL STATE REVOLVING LOAN PROGRAM), SERIES
2015; AUTHORIZING THE ISSUANCE AND FIXING THE
TERMS AND CONDITIONS THEREOF
WHEREAS,pursuant to the Montana Water Pollution Control State Revolving Fund Act,
Montana Code Annotated, Title 75, Chapter 5,Part 11, as amended (the"Act"),the State of
Montana(the "State")has established a revolving loan program (the "Program")to be
administered by the Department of Natural Resources and Conservation of the State of Montana,
an agency of the State (the"DNRC"), and by the Department of Environmental Quality of the
State of Montana, an agency of the State (the "DEQ"), and has provided that a revolving water
pollution control revolving fund (the "Revolving Fund") be created within the state treasury and
all federal, state and other funds for use in the Program be deposited into the Revolving Fund,
including, but not limited to, all federal grants for capitalization of a state water pollution control
revolving fund under the Federal Water Pollution Control Act(also known as the Clean Water
Act) (the"Clean Water Act"), all repayments of assistance awarded from the Revolving Fund,
interest on investments made on money in the Revolving Fund and payments of principal of and
interest on loans made from the Revolving Fund; and
WHEREAS,the Act provides that funds from the Program shall be disbursed and
administered for the purposes set forth in the Clean Water Act and according to rules adopted by
the DEQ and the DNRC; and
WHEREAS,the City of Bozeman,Montana(the "Borrower"),has applied to the DNRC
for the 2015 Loan (as hereinafter defined) from the Revolving Fund to enable the Borrower to
finance, refinance or reimburse itself for the costs of the 2015 Project(as hereinafter defined)
which will carry out the purposes of the Clean Water Act; and
WHEREAS,the Borrower is authorized under applicable laws, ordinances and
regulations to adopt this Resolution and to issue the Series 2015 Bond (as hereinafter defined)to
evidence the 2015 Loan (as hereinafter defined)for the purposes set forth herein; and
WHEREAS,the DNRC will fund the 2015 Loan (as hereinafter defined)with Recycled
Money (as hereinafter defined.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF BOZEMAN, MONTANA,AS FOLLOWS:
ARTICLE I
DEFINITIONS,RULES OF CONSTRUCTION AND APPENDICES
Section 1.1. Definitions. In this Resolution,unless a different meaning clearly
appears from the context:
"Accountant" or"Accountants" means an independent certified public accountant
or a firm of independent certified public accountants satisfactory to the DNRC.
"Acquisition and Construction Account"means the account within the Fund
established pursuant to Sections 11.1 and 11.2.
"Act"means Montana Code Annotated, Title 75, Part 5, Chapter 11, as amended
from time to time.
"Administrative Expense Surcharge"means a surcharge on the 2015 Loan
charged by the DNRC to the Borrower equal to twenty-five hundredths of one percent(0.25%)
per annum on the outstanding principal amount of the 2015 Loan,payable by the Borrower on
the same dates that payments of interest on the 2015 Loan are due.
"Authorized DNRC Officer" means the Director or Deputy Director of the
DNRC, and,when used with reference to an act or document, also means any other individual
authorized by resolution of the Department of Natural Resources and Conservation to perform
such act or sign such document. If authorized by the Department of Natural Resources and
Conservation, an Authorized DNRC Officer may delegate all or a portion of his authority as an
Authorized DNRC Officer to another individual, and such individual shall be deemed an
Authorized DNRC Officer for purposes of exercising such authority.
"Bond Counsel"means any Counsel acceptable to the DNRC which is nationally
recognized as bond counsel. Counsel is nationally recognized as bond counsel if it has rendered
a legal opinion as to the validity and enforceability of state or municipal bonds and as to the
exclusion of interest thereon from gross income for federal income tax purposes (short-term
issues excluded) during the two-year period preceding the date of determination.
"Bonds"means the Series 2015 Bond and any additional Bonds to be issued on a
parity therewith pursuant to Article X, excluding Subordinate Obligations issued pursuant to
Section 10.4.
"Borrower"means the City and any permitted successor or assign, as described
below.
"Business Day"means any day which is not a Saturday or Sunday and is not a
day on which banks in Montana are authorized or required by law to close.
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"City"means the City of Bozeman,Montana.
"City Stormwater Ordinances"means Chapter 40, Article 4,Division 1 of the
Code of Ordinances of the City, as amended or supplemented from time to time.
"Clean Water Act"means the Federal Water Pollution Control Act, 33 U.S.C. §§
1251-1387, as amended, and all regulations, rules and interpretations issued by the EPA
thereunder.
"Closing"means the date of delivery of the Series 2015 Bond to the DNRC.
"Code"means the Internal Revenue Code of 1986, as amended.
"Collateral Documents"means any security agreement, guaranty or other
document or agreement delivered to the DNRC securing the obligations of the Borrower under
this Resolution and the Series 2015 Bond. If no Collateral Documents secure such obligations,
any reference to Collateral Documents in this Resolution shall be without effect.
"Commission"means the City Commission of the City of Bozeman,Montana.
"Committed Amount"means the amount of the 2015 Loan committed to be lent
by the DNRC to the Borrower pursuant to Section 4.1, as such amount may be reduced pursuant
to Sections 3.2 and 3.4.
"Consultant"means a nationally recognized consultant or firm of consultants, or
an independent engineer or firm of independent engineers, or an Accountant,which in any case
is qualified and has skill and experience in the preparation of financial feasibility studies or
projections for facilities similar to the System or the Project, selected by the Borrower and
satisfactory to the DNRC.
"Corrective Measures Assessment"means the Revised Corrective Measures
Assessment Bozeman Landfill Gallatin County,Montana,prepared by Tetra Tech Inc., of
Helena,Montana, dated September 4, 2015, as amended or revised from time to time.
"Counsel"means an attorney duly admitted to practice law before the highest
court of any state and satisfactory to the DNRC.
"Debt"means, without duplication, (1) indebtedness of the Borrower for
borrowed money or for the deferred purchase price of property or services; (2)the obligation of
the Borrower as lessee under leases which should be recorded as capital leases under generally
accepted accounting principles; and (3) obligations of the Borrower under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise)to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clause (1) or(2) above.
"DEQ"means the Department of Environmental Quality of the State of Montana,
an agency of the State, or any successor to its powers, duties and obligations under the Act or the
EPA Agreements.
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"DNRC"means the Department of Natural Resources and Conservation of the
State of Montana, an agency of the State, and any successor to its powers, duties and obligations
under the Act.
"Enabling Act"means Montana Code Annotated, Title 7, Chapter 7,Parts 44 and
45, as amended, which authorizes the Borrower to own and operate the System,to undertake the
2015 Project and to issue the Series 2015 Bond to finance all or a portion of the costs of the 2015
Project.
"EPA"means the Environmental Protection Agency, an agency of the United
States of America, and any successor to its functions under the Clean Water Act.
"EPA Agreements"means all capitalization grant agreements and other written
agreements between the DEQ and the EPA concerning the Program.
"EPA Capitalization Grant"means a grant of funds to the State by the EPA under
Title VI of the Clean Water Act and any grant made available by the EPA for deposit in the
Revolving Fund pursuant to Section 205(m) of the Clean Water Act.
"Fund"means the Stormwater System Fund established pursuant to Section 11.1.
"Governmental Unit"means governmental unit as such term is used in Section
145(a) of the Code.
"Indenture"means the Indenture of Trust, dated as of June 1, 1991, between the
Board of Examiners of the State and the Trustee, as such may be supplemented or amended from
time to time in accordance with the provisions thereof,pursuant to which, among other things,
the State Bonds are to be or have been issued.
"Loan" or"2015 Loan"means the loan made to the Borrower by the DNRC
pursuant to the Program in the maximum amount of the Committed Amount to provide funds to
pay all or a portion of the costs of the 2015 Project payable under the Program,to fund the
Reserve Account to the Reserve Requirement, and to pay costs of issuing the Series 2015 Bond.
"Loan Loss Reserve Surcharge" means a surcharge on the 2015 Loan charged by
the DNRC to the Borrower equal to twenty-five hundredths of one percent(0.25%)per annum
on the outstanding principal amount of the 2015 Loan,payable on the same dates that payments
of interest on the 2015 Loan are due.
"Loan Repayments"means periodic installments of principal and interest by
Borrower in repayment of the 2015 Loan, at the rate and times specified in Article V.
"Loan Term"means that period of time commencing and ending as set in
Sections 4.2 and 4.3.
"Net Revenues"means the sum of(a)the entire amount of the Revenues of the
System for a specific period less the Operating Expenses for the same period,plus (b)the
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Pledged Stormwater Mitigation Property Tax Revenues deposited in the Revenue Bond Account
in such specified period.
"Operating Account"means the account within the Fund established pursuant to
Sections 11.1 and 11.3.
"Operating Expenses"means those expenses of the System defined as such in
Section 11.3.
"Operating Reserve"means the reserve to be maintained in the Operating
Account as required by Section 11.3.
"Opinion of Counsel"means a written opinion of Counsel.
"Outstanding Bonds" shall have the meaning assigned in Section 9.2.
"Person"means any Private Person or Public Entity.
"Pledged Stormwater Mitigation Property Tax Revenues"means, from the
Stormwater Mitigation Property Tax Revenues, an amount equal to the amount necessary to
cause the Net Revenues in each fiscal year during the term of the Bonds to equal not less than the
total amount of Net Revenues required under the rate covenant set forth in Section 6.7 of this
Resolution.
"Private Person"means an individual, corporation,partnership, association,joint
venture,joint stock company or unincorporated organization, except a Public Entity.
"Program"means the Water Pollution Control State Revolving Loan Program
established by the Act.
"Project"means the costs of designing, engineering, acquiring, constructing,
installing, improving, or enlarging the System, or any part thereof, financed,refinanced or the
cost of which is being reimbursed to the Borrower in part with proceeds of the Bonds or other
funds of the Borrower, including the 2015 Project.
"Property Tax Revenues"means amounts received by the Borrower derived from
ad valorem property tax revenues, but excluding therefrom amounts not available to be
segregated for Stormwater Mitigation.
"Public Entity"means a State agency, city,town, municipality, irrigation district,
county water and sewer district, a soil conservation district or other public body established by
State law or an Indian tribe that has a federally recognized governing body carrying out
substantial governmental duties and powers over any area.
"Recycled Money"means payments and prepayments of principal of any loans
made under the Program, and any other amounts transferred to the Principal Subaccount in the
Revenue Subaccount in the State Allocation Account.
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"Regulations"means the Treasury Department, Income Tax Regulations, as
amended or any successor regulation thereto,promulgated under the Code or otherwise
applicable to the Series 2015 Bond.
"Replacement and Depreciation Account"means the account within the Fund
established pursuant to Sections 11.1 and 11.6.
"Reserve Account"means the account within the Fund established pursuant to
Sections 11.1 and 11.5.
"Reserve Requirement" means, as of the date of calculation, an amount equal to
one-half of the sum of the highest cumulative amount of principal of and interest payable on all
outstanding Bonds in any one future fiscal year (giving effect to mandatory sinking fund
redemption, if any).
"Reserved Amounts" means any undisbursed Committed Amount which will or
may be required to pay any remaining costs of the 2015 Project upon completion thereof as
provided in Section 3.4(a).
"Resolution"means this Resolution as it may from time to time be amended or
supplemented in accordance with its terms.
"Revenue Bond Account"means the account within the Fund established
pursuant to Sections 11.1 and 11.4.
"Revenues"means all revenues and receipts from rates, fees, charges and rentals
imposed for the availability, benefit and use of the System, and from penalties and interest
thereon, and from any sales of property which is a part of the System and all income received
from the investment of such revenues and receipts, as described more particularly in Section
11.1.
"Series 2015 Bond"means the $1,815,000 Stormwater System Revenue Bond
(DNRC Water Pollution Control State Revolving Loan Program), Series 2015, issued by the
Borrower to the DNRC to evidence the 2015 Loan.
"Stormwater Revenues"means revenues (gross or net) received by the Borrower
from or in connection with the operation of the System.
"State" means the State of Montana.
"State Bonds"means the State's General Obligation Bonds (Water Pollution
Control State Revolving Fund Program), issued pursuant to the Indenture.
"Stormwater Mitigation"means projects or procedures of or for the benefit of the
City,that are designed, implemented, constructed, installed, maintained, or operated to enhance
or protect water quality or the environment or achieve one or more of the other purposes noted in
the City Stormwater Ordinances, including,without limitation, such projects or procedures as
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they regard landfills of the Borrower, whether or not in operation, and all costs and expenses
thereof and funds necessary to enable the financing of such costs and expenses.
"Stormwater Mitigation Property Tax Revenues"means, from the Property Tax
Revenues, an amount specifically authorized by the Commission to be levied against the taxable
property in the City for Stormwater Mitigation in each fiscal year during the term of the Bonds.
"Subordinate Obligations"means bonds or other obligations issued pursuant to
Section 10.4 hereof.
"Supplemental Resolution"means any other resolution supplemental to the
Resolution.
"Surplus Account"means the account within the Fund established pursuant to
Sections 11.1 and 11.7.
"Surplus Net Revenues"means that portion of the Net Revenues in excess of the
current requirements of the Operating Account,the Revenue Bond Account and the Reserve
Account.
"System"means the existing stormwater system of the Borrower and all
extensions, improvements and betterments thereof hereafter constructed and acquired, including,
without limitation,the 2015 Project.
"2015 Loan" shall have the same meaning as the Loan.
"2015 Project"means the facilities, improvements and activities identified in the
Corrective Measures Assessment(as approved by the Montana DEQ Solid Waste Division)
financed, refinanced or the cost of which is being reimbursed to the Borrower with proceeds of
the 2015 Loan, described in Appendix A hereto.
"Trustee"means U.S. Bank National Association, in Seattle, Washington, or any
successor trustee under the Indenture.
"Undisbursed Committed Amount"means any undisbursed Committed Amount
which is not required to pay costs of the 2015 Project upon completion thereof as provided
herein.
Section 1.2. Other Rules of Construction. For all purposes of this Resolution,
except where the context clearly indicates otherwise:
(a) All accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted government accounting standards.
(b) Terms in the singular include the plural and vice versa.
(c) All references to time shall refer to Helena,Montana time, unless otherwise
provided herein.
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(d) All references to mail shall refer to first-class mail postage prepaid.
(e) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders.
(f) "Or" is not exclusive,but is intended to permit or encompass one,more or all
of the alternatives conjoined.
Section 1.3. Appendices. Attached to this Resolution and hereby made a part
hereof are the following Appendices:
Appendix A: a description of the 2015 Project;
Appendix B: the form of the Series 2015 Bond; and
Appendix C: additional agreements and representations of the Borrower.
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1. Authorization and Findings.
(a)Authorization. Under the provisions of the Enabling Act, the Borrower is
authorized to issue and sell its revenue bonds payable during a term not exceeding forty years
from their date of issue,to provide funds for the reconstruction, improvement, betterment and
extension of the System or to refund its revenue bonds issued for such purpose; provided that the
bonds and the interest thereon are to be payable solely out of the net income and revenues to be
derived from rates, fees and charges for the services, facilities and commodities furnished by the
undertaking, and provided that property taxes specifically authorized to be levied for the general
purpose of the undertaking constitute revenue of the undertaking and may not result in the
undertaking being considered not self-supporting.
(b) The System. The Borrower,pursuant to the Enabling Act and other laws of
the State, has established and presently owns and operates the System. The System is the
"undertaking" referenced in the Enabling Act. The City Stormwater Ordinances govern the
System, which is established and designed to, among other things, protect and enhance the water
quality in various creeks, rivers, and bodies of water, including the East Gallatin River,
consistent with the Clean Water Act and United States Phase II Stormwater Regulations;
minimize pollutants in stormwater discharges; and provide for monitoring and surveillance to
control Stormwater runoff. The 2015 Project,which constitutes Stormwater Mitigation and will
form a part of the System, will further the objectives of the City Stormwater Ordinance.
(c) Stormwater Miti ag tion. The Borrower, by resolution of the Commission
adopted on September 8, 2014,has specifically authorized the Stormwater Mitigation Property
Tax Revenues to be levied for the general purpose served by the System,to include corrective
measures at the Bozeman Story Mill Landfill, and the segregation of such revenues in the general
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fund of the City and the appropriation thereof to the System and the pledge of the Pledged
Stormwater Mitigation Property Tax Revenues as required by this Resolution.
(d)The 2015 Proiect. After investigation of the facts and as authorized by the
Enabling Act,this Commission has determined it to be necessary and desirable and in the best
interests of the Borrower to design, acquire, and install the 2015 Project,to issue the Series 2015
Bond to finance the costs thereof and pay for costs associated with the 2015 Project, and to
pledge the Net Revenues to the repayment of the Series 2015 Bond.
Section 2.2. Representations. The Borrower represents as follows:
(a) Organization and Authority. The Borrower:
(i) is duly organized and validly existing as a municipal corporation of
the State;
(ii) has all requisite power and authority and has acquired or will acquire
all necessary licenses and permits required as of the date hereof to own and operate the
System and to carry on its current activities with respect to the System,to adopt this
Resolution and to enter into the Collateral Documents and to issue the Series 2015 Bond
and to carry out and consummate all transactions contemplated by this Resolution,the
Bond and the Collateral Documents;
(iii) is a Governmental Unit and a Public Entity;
(iv)has determined it has sufficient Net Revenues to satisfy the rate
covenant set forth in Section 6.7 below; and
(v) has taken all proper action to authorize the execution, delivery and
performance of its obligations under this Resolution,the Series 2015 Bond and the
Collateral Documents and the incurrence of the Debt evidenced by the Series 2015 Bond
in the maximum amount of the Committed Amount.
(b) Pending Litigation. There is no litigation or proceeding pending, or to the
knowledge of the Borrower threatened, against or affecting the Borrower in any court or before
or by any governmental authority or arbitration board or tribunal that, if adversely determined,
would materially and adversely affect the existence, corporate or otherwise, of the Borrower, or
the ability of the Borrower to make all payments and otherwise perform its obligations under this
Resolution,the Series 2015 Bond and the Collateral Documents, or the financial condition of the
Borrower, or the transactions contemplated by this Resolution,the Bond and the Collateral
Documents or the validity and enforceability of this Resolution,the Series 2015 Bond and the
Collateral Documents. No referendum petition has been filed with respect to any resolution or
other action of the Borrower relating to the 2015 Project,the Series 2015 Bond or any Collateral
Documents. Notwithstanding any provision to the contrary herein,the City hereby discloses to
the DNRC, as purchaser of the Series 2015 Bond, and any prospective or subsequent holder of
the Series 2015 Bond that litigation has been filed in the Eighteenth Judicial District regarding
the Story Mill landfill (See, e.g., Cause No. DV-14-958B (Christina Bauer et al. v. City of
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Bozeman et al.); Cause No. DV-15-24B (Mikel Daenen et. al. v. City of Bozeman et al.); Cause
No. DV-14-994B (Lesley Fischer, et al. v. City of Bozeman et al.); see also Cause No. BDV-
2014-958 (Montana Municipal Interlocal Authority v. City of Bozeman, et al., filed in the First
Judicial District of Montana regarding insurance coverage)) and further litigation regarding the
Story Mill Landfill may be filed. As of the date of this Resolution,the City is not able to predict
the effect of the above litigation or subsequent litigation on the City but the City currently
expects to produce sufficient Net Revenues to repay the Series 2015 Bond.
(c) Borrowing Legal and Authorized. The adoption of this Resolution,the
execution and delivery of the Series 2015 Bond and the Collateral Documents and the
consummation of the transactions provided for in this Resolution,the Series 2015 Bond and the
Collateral Documents and compliance by the Borrower with the provisions of this Resolution,
the Series 2015 Bond and the Collateral Documents:
(i) are within the powers of the Borrower and have been duly authorized
by all necessary action on the part of the Borrower; and
(ii) do not and will not result in any breach of any of the terms, conditions
or provisions of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Borrower pursuant to
any ordinance,resolution, indenture, loan agreement or other agreement or instrument
(other than this Resolution and any Collateral Documents)to which the Borrower is a
party or by which the Borrower or its property may be bound, nor will such action result
in any violation of the provisions of any laws, ordinances, governmental rules or
regulations or court or other governmental orders to which the Borrower, its properties or
operations are subject.
(d) No Defaults. No event has occurred and no condition exists that, upon
execution and delivery of the Bond and the Collateral Documents,would constitute a default
under this Resolution or the Collateral Documents. The Borrower is not in violation of any term
of any agreement, bond resolution, trust indenture, charter or other instrument to which it is a
party or by which it or its property may be bound which violation would materially and
adversely affect the transactions contemplated hereby or the compliance by the Borrower with
the terms hereof or of the Series 2015 Bond and the Collateral Documents.
(e) Governmental Consent. The Borrower has obtained or will make application
for all permits, findings and approvals required to the date of adoption of this Resolution by any
governmental body or officer for the malting and performance by the Borrower of its obligations
under this Resolution,the Series 2015 Bond and the Collateral Documents (including any
necessary stormwater rate increase) or for the 2015 Project,the financing or refinancing thereof
or the reimbursement of the Borrower for the costs thereof. No consent, approval or
authorization of, or filing,registration or qualification with, any governmental authority(other
than those, if any, already obtained) is required on the part of the Borrower as a condition to
adopting this Resolution, issuing the Bond or entering into the Collateral Documents and the
performance of the Borrower's obligations hereunder and thereunder. If a utility board or
commission manages or controls the System, such board or commission has agreed with the
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DNRC to abide by the terms of this Resolution and the Collateral Documents, including
approving any necessary stormwater rate increases.
(f) Binding Obligation. This Resolution,the Series 2015 Bond and any
Collateral Documents to which the Borrower is a party are the valid and binding obligations and
agreements of the Borrower, enforceable against the Borrower in accordance with their terms
except to the extent that the enforceability thereof may be limited by laws relating to bankruptcy,
moratorium, reorganization, insolvency or similar laws affecting creditors' rights and general
principles of equity.
(g) The 2015 Project. The 2015 Project consists and will consist of the facilities,
improvements and activities described in Appendix A, as such Appendix A may be amended
from time to time in accordance with the provisions of Article III of this Resolution.
(h) Full Disclosure. There is no fact in existence as of the date of this Resolution
that the Borrower has not specifically disclosed in writing to the DNRC that materially and
adversely affects or(so far as the Borrower can now foresee), except for pending or proposed
legislation or regulations that are a matter of general public information,that will materially and
adversely affect the properties, operations and finances of the System,the Borrower's status as a
Public Entity and Governmental Unit, its ability to own and operate the System in the manner it
is currently operated or the Borrower's ability to perform its obligations under this Resolution,
the Series 2015 Bond and the Collateral Documents and to pledge any revenues or other property
pledged to the payment of the Series 2015 Bond.
(i) Compliance With Law. The Borrower:
(1) is in compliance with all laws, ordinances, governmental rules and
regulations and court or other governmental orders,judgments and decrees to which it is
subject and which are material to the properties, operations and finances of the System or
its status as a Public Entity and Governmental Unit; and
(2) has obtained or will obtain all licenses,permits, franchises or other
governmental authorizations necessary to the ownership of the System and the operation
thereof and agrees to obtain all such licenses,permits, franchises or other governmental
authorizations as may be required in the future for the System and the operation thereof,
which failure to obtain might materially and adversely affect the ability of the Borrower
to conduct the operation of the System as presently conducted or the condition(financial
or otherwise) of the System or the Borrower's ability to perform its obligations under this
Resolution,the Series 2015 Bond and the Collateral Documents.
Section 2.3. Covenants.
(a) Insurance. The Borrower at all times shall keep and maintain with respect to
the System property and casualty insurance and liability insurance with financially sound and
reputable insurers, or self-insurance as authorized by State law, against such risks and in such
amounts, and with such deductible provisions, as are customary in the State in the case of entities
of the same size and type as the Borrower and similarly situated and shall carry and maintain, or
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cause to be carried and maintained, and pay or cause to be paid timely the premiums for all such
insurance. Nothing herein shall be construed to prohibit or preclude the Borrower from self-
insuring or participating in a self-insurance program in compliance with the provisions of
Montana law. All such insurance policies shall name the DNRC as an additional insured to
extent permitted or available under the policy or program of insurance. Each policy must
provide that it cannot be cancelled by the insurer without giving the Borrower and the DNRC 30
days' prior written notice. The Borrower shall give the DNRC prompt notice of each insurance
policy it obtains or maintains to comply with this Section 2.3(a) and of each renewal,
replacement, change in coverage or deductible under or amount of or cancellation of each such
insurance policy and the amount and coverage and deductibles and carrier of each new or
replacement policy. Such notice shall specifically note any adverse change as being an adverse
change. The Borrower shall deliver to the DNRC at Closing a certificate providing the
information required by this Section 2.3(a).
(b) Right of Inspection and Notice of Change of Location. The DNRC,the DEQ
and the EPA and their designated agents shall have the right at all reasonable times during
normal business hours and upon reasonable notice to enter into and upon the property of the
Borrower for the purpose of inspecting the System or any or all books and records of the
Borrower relating to the System.
(c) Further Assurance. The Borrower shall execute and deliver to the DNRC all
such documents and instruments and do all such other acts and things as may be necessary or
required by the DNRC to enable the DNRC to exercise and enforce its rights under this
Resolution,the Series 2015 Bond and the Collateral Documents and to realize thereon, and
record and file and re-record and refile all such documents and instruments, at such time or
times, in such manner and at such place or places, all as may be necessary or required by the
DNRC to validate,preserve and protect the position of the DNRC under this Resolution,the
Series 2015 Bond and the Collateral Documents.
(d) Maintenance of Security, if Recordation of Interest.
(i) The Borrower shall, at its expense,take all necessary action to
maintain and preserve the lien and security interest of this Resolution and the Collateral
Documents so long as any amount is owing under this Resolution or the Series 2015
Bond;
(ii) The Borrower shall forthwith, after the execution and delivery of the
Series 2015 Bond and thereafter from time to time, cause this Resolution and any
Collateral Documents granting a security interest in revenues or real or personal property
and any financing statements or other notices or documents relating thereto to be filed,
registered and recorded in such manner and in such places as may be required by law in
order to perfect and protect fully the lien and security interest hereof and thereof and the
security interest in them granted by this Resolution and, from time to time, shall perform
or cause to be performed any other act required by law, including executing or causing to
be executed any and all required continuation statements and shall execute or cause to be
executed any further instruments that may be requested by the DNRC for such perfection
and protection; and
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(iii) Except to the extent it is exempt therefrom,the Borrower shall pay or
cause to be paid all filing, registration and recording fees incident to such filing,
registration and recording, and all expenses incident to the preparation, execution and
acknowledgment of the documents described in subparagraph(ii), and all federal or state
fees and other similar fees, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of the Series 2015 Bond and the Collateral
Documents and the documents described in subparagraph (ii).
(e) Additional Agreements. The Borrower covenants to comply with all
representations, covenants, conditions and agreements, if any, set forth in Appendix C hereto.
(f) Financial Information. The Borrower agrees that for each fiscal year it shall
furnish to the DNRC and the DEQ,promptly when available:
(1) the preliminary budget for the System,with items for the 2015 Project
shown separately; and
(2) when adopted,the final budget for the System,with items for the 2015
Project shown separately.
The Borrower will cause proper and adequate books of record and account to be
kept showing complete and correct entries of all receipts, disbursements and other transactions
relating to the System,the monthly gross revenues derived from its operation, and the
segregation and application of the gross revenues in accordance with this Resolution, in such
reasonable detail as may be determined by the Borrower in accordance with generally accepted
governmental accounting practice and principles. It will cause such books to be maintained on
the basis of the same fiscal year as that utilized by the Borrower. The Borrower shall, within 270
days after the close of each fiscal year, cause to be prepared and supply to the DNRC a financial
report with respect to the System for such fiscal year. The report shall be prepared at the
direction of the financial officer of the Borrower in accordance with applicable generally
accepted governmental accounting principles and, in addition to whatever matters may be
thought proper by the financial officer to be included therein, shall include the following:
(A) A statement in detail of the income and expenditures of the System for the
fiscal year, identifying capital expenditures and separating them from operating
expenditures;
(B) A balance sheet as of the end of the fiscal year;
(C) The amount on hand in each account of the Fund at the end of the fiscal year;
(D) A list of the insurance policies and fidelity bonds in force at the end of the
fiscal year, setting out as to each the amount thereof, the risks covered thereby,the name
of the insurer or surety and the expiration date of the policy or bond; and
(E) A determination that the report shows full compliance by the Borrower with
the provisions of this Resolution during the fiscal year covered thereby, including proper
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segregation of the capital expenditures from operating expenses, maintenance of the
required balance in the Revenue Bond Account(as hereinafter defined), and receipt of
Net Revenues (including Pledged Stormwater Mitigation Property Tax Revenues) during
each fiscal year at least equal to 110% of the maximum amount of principal and interest
payable on outstanding Bonds in any subsequent fiscal year, or, if the report should
reveal that the revenues have been insufficient for compliance with this Resolution, or
that the methods used in accounting for such revenues were contrary to any provision of
this Resolution,the report shall include a full explanation thereof,together with
recommendations for such change in rates or accounting practices or in the operation of
the System as may be required.
The Borrower shall also have prepared and supplied to the DNRC and the DEQ,
within 270 days of the close of every other fiscal year, an audit report prepared by an
independent certified public accountant or an agency of the state in accordance with generally
accepted governmental accounting principles and practice with respect to the financial
statements and records of the System. The audit report shall include an analysis of the
Borrower's compliance with the provisions of this Resolution.
(g) Project Accounts. The Borrower shall maintain project accounts in
accordance with generally accepted government accounting standards, and as separate accounts,
as required by Section 602(b)(9) of the Clean Water Act.
(h) Records. After reasonable notice from the EPA,the Borrower shall make
available to the EPA such records as the EPA reasonably requires to review and determine
compliance with Title VI of the Clean Water Act, as provided in Section 606(e) of the Clean
Water Act.
(i) Compliance with Clean Water Act. The Borrower has complied and shall
comply with all conditions and requirements of the Clean Water Act pertaining to the 2015 Loan
and the 2015 Project.
0) Program Covenant. The Borrower agrees that neither it nor any"related
person"to the Borrower(within the meaning of Section 147(a)(2) of the Code) shall,whether
pursuant to a formal or informal arrangement, acquire bonds issued by the State under the
Indenture in an amount related to the amount of the Series 2015 Bond.
ARTICLE III
USE OF PROCEEDS; THE 2015 PROJECT
Section 3.1. Use of Proceeds. The Borrower shall apply the proceeds of the 2015
Loan from the DNRC solely as follows:
(a) The Borrower shall apply the proceeds of the 2015 Loan solely to the
financing,refinancing or reimbursement of the costs of the 2015 Project as set forth in
Appendix A hereto and this Section 3.1. The 2015 Loan will be disbursed in accordance
with Article IV hereof and Article VII of the Indenture. If the 2015 Project has not been
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completed prior to Closing,the Borrower shall, as quickly as reasonably possible,
complete the 2015 Project and expend proceeds of the Series 2015 Bond to pay the costs
of completing the 2015 Project.
(b) No portion of the proceeds of the 2015 Loan shall be used to
reimburse the Borrower for costs paid prior to the date of adoption of this Resolution of a
Project the construction or acquisition of which occurred or began earlier than March 7,
1985. In addition, if any proceeds of the 2015 Loan are to be used to reimburse the
Borrower for 2015 Project costs paid prior to the date of adoption of this Resolution and
in a prior fiscal year of the Borrower,the Borrower represents that at the time it incurred
such costs it intended to finance them with tax-exempt debt or a loan under a state
revolving fund program such as the Program.
(c) Any Debt to be refinanced with proceeds of the 2015 Loan was
incurred after March 7, 1985, or a Project the construction or acquisition of which began
after March 7, 1985. No proceeds of the 2015 Loan shall be used for the purpose of
refinancing an obligation the interest on which is exempt from federal income tax or
excludable from gross income for purposes of federal income taxation unless the DNRC
has received an Opinion of Bond Counsel, satisfactory to it,to the effect that such
refinancing will not adversely affect the exclusion of interest on the State Bonds from
gross income for purposes of federal income taxation.
Section 3.2. The 2015 Project. Set forth in Appendix A to this Resolution is a
description of the 2015 Project,which describes the property which has been or is to be acquired,
installed, constructed or improved and the other activities, if any to be funded from the 2015
Loan (the 2015 Project may consist of more than one facility or activity). The 2015 Project may
be changed and the description thereof in Appendix A may be amended from time to time by the
Borrower but only after delivery to the DNRC of the following:
(a) A certificate of the Borrower setting forth the amendment to Appendix
A and stating the reason therefor, including statements whether the amendment would
cause an increase or decrease in the cost of the 2015 Project, an increase or decrease in
the amount of Loan proceeds which will be required to complete the 2015 Project and
whether the change will materially accelerate or delay the construction schedule for the
2015 Project;
(b) A written consent to such change in the 2015 Project by an Authorized
DNRC Officer; and
(c) An Opinion or Opinions of Bond Counsel stating that the 2015
Project, as constituted after such amendment, is, and was at the time the State Bonds were
issued, eligible for financing under the Act and is, and was at the time the Series 2015
Bond was issued, eligible for financing under the Enabling Act, such amendment will not
violate the Act or the Enabling Act and such amendment will not adversely affect the
exclusion of interest on the State Bonds or the Series 2015 Bond from gross income for
purposes of federal income taxation. Such an Opinion of Bond Counsel shall not be
15
required for amendments which do not affect the type of facility to be constructed or
activity to be financed.
The Borrower acknowledges and agrees that an increase in the principal amount
of the 2015 Loan may be made only upon an application to the DEQ,the DNRC and the Trustee,
in such form as the DEQ shall specify, which is approved by the DEQ and the DNRC, in their
sole and absolute discretion, and adoption by the governing body of the Borrower of a resolution
amendatory of or supplementary to this resolution authorizing the additional loan and delivery of
written certifications by officers of the Borrower to the DEQ,the DNRC and the Trustee to the
effect that all representations and covenants contained in this resolution as it may be so amended
or supplemented are true as of the date of closing of the additional loan. No assurance can be
given that any additional loan funds will be available under the Program at the time of any such
application or thereafter. The Borrower acknowledges and agrees that neither the DEQ,the
DNRC, the Trustee nor any of their agents, employees or representatives shall have any liability
to the Borrower and have made no representations to the Borrower as to the sufficiency of the
2015 Loan to pay Project Costs or as to the availability of additional funds under the Program to
increase the principal amount of the 2015 Loan.
Section 3.3. 2015 Project Representations and Covenants. The Borrower hereby
represents to and covenants with the DNRC that:
(a) all construction of the 2015 Project has complied and will comply
with all federal and state standards, including, without limitation,EPA regulations and
standards;
(b) all future construction of the 2015 Project will be done only pursuant
to fixed price construction contracts. The Borrower shall obtain a performance and
payment bond from the contractor for each construction contract in the amount of 100%
of the construction price and ensure that such bond is maintained until construction is
completed to the Borrower's,the DNRC's and the DEQ's satisfaction;
(c) all future construction will be done in accordance with plans and
specifications on file with the DNRC and the DEQ,provided that changes may be made
in such plans and specifications with the written consent of an Authorized DNRC Officer
and the DEQ;
(d) the iron and steel products used in the 2015 Project comply with the
"Buy American"requirements of Section 436 of H.R. 3547, "Consolidated
Appropriations Act, 2015," as those requirements are further interpreted by applicable
EPA guidance;
(e) all laborers and mechanics employed by contractors and subcontractors
on the 2015 Project have been and will be paid wages at rates not less than those
prevailing on projects of a character similar in the locality as determined by the United
States Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40,
United States Code;
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(f)the 2015 Project is a project of the type permitted to be financed under
the Enabling Act, the Act and the Program and Title VI of the Clean Water Act; and
(g) the Borrower will undertake the 2015 Project promptly after the
Closing Date and will cause the 2015 Project to be completed as promptly as practicable
with all reasonable dispatch, except only as completion may be delayed by a cause or
event not reasonably within the control of the Borrower; it is estimated by the Borrower
that the 2015 Project will be substantially completed by December 31, 2016 (the
"Estimated Completion Date").
Section 3.4. Completion or Cancellation or Reduction of Costs of the 2015
Project.
(a) Upon completion of the 2015 Project,the Borrower shall deliver to the
DNRC a certificate stating that the 2015 Project is complete, stating the amount, if any,
of the Reserved Amounts, and releasing the remaining amount, if any, of the Committed
Amount. If any Reserved Amount is not later needed,the Borrower shall so inform the
DNRC and release such amount. If Appendix A describes two or more separate projects
as making up the 2015 Project, a separate completion certificate shall be delivered for
each.
(b) If all or any portion of the 2015 Project is cancelled or cut back or its
costs are reduced or for any other reason the Borrower will not require the full
Committed Amount,the Borrower shall promptly notify the DNRC in writing of such
fact and release the portion of the Committed Amount which will not be needed.
ARTICLE IV
THE 2015 LOAN
Section 4.1. The 2015 Loan; Disbursement of Loan. The DNRC has agreed to
lend to the Borrower, from time to time as the requirements of this Section 4.1 are met, an
amount up to $1,815,000 (the"Committed Amount") for the purposes of financing,refinancing
or reimbursing the Borrower for all or a portion of the costs of the 2015 Project and paying costs
of issuance of the Series 2015 Bond;provided the DNRC shall not be required to loan any
proceeds of the State Bonds to the Borrower after 360 days following the Estimated Completion
Date. The Committed Amount may be reduced as provided in Sections 3.2 and 3.4. The 2015
Loan shall be disbursed as provided in this Section 4.1. The DNRC intends to disburse the 2015
Loan through the Trustee.
(a) In consideration of the issuance of the Series 2015 Bond by the
Borrower,the DNRC shall make, or cause the Trustee to make, a disbursement of all or a
portion of the 2015 Loan upon receipt of the following documents:
(1) an Opinion of Bond Counsel as to the validity and
enforceability of the Series 2015 Bond and the security therefor and stating in
effect that interest on the Series 2015 Bond is not includable in gross income of
17
the owner thereof for purposes of federal income taxation, in form and substance
satisfactory to the DNRC;
(2) the Series 2015 Bond, fully executed and authenticated;
(3) a certified copy of this Resolution;
(4) any other security instruments or documents required by the
DNRC or DEQ as a condition to their approval of the 2015 Loan;
(5) if all or part of a Loan is being made to refinance a Project or
reimburse the Borrower for the costs of a Project paid prior to the Closing,
evidence, satisfactory to the DNRC and the Bond Counsel referred to in (1)
above, (A)that the acquisition or construction of the Project was begun no earlier
than March 7, 1985 or the debt was incurred no earlier than March 7, 1985, (B) of
the Borrower's title to the Project, (C) of the costs of such Project and that such
costs have been paid by the Borrower and(D) if such costs were paid in a
previous fiscal year of the Borrower,that the Borrower intended at the time it
incurred such costs to finance them with tax-exempt debt or a loan under a state
revolving fund program such as the Program;
(6) the items required by the Indenture for the portion of the 2015
Loan to be disbursed at Closing;
(7) such other certificates, documents and other information as the
DNRC,the DEQ or the Bond Counsel giving the opinion referred to in
subparagraph (1)may require (including any necessary arbitrage rebate
instructions).
(b) (1) The Borrower agrees that it is not entitled to a disbursement of
any amounts of the 2015 Loan until the DEQ has completed its environmental assessment
process in connection with the 2015 Project,meaning that the 30-day comment period on
such environmental assessment has passed. DEQ and DNRC recognize such period has
passed as of June 2, 2015 and no comments were received; accordingly,the Borrower is
entitled to disbursements of the 2015 Loan to pay or reimburse the Borrower for costs
and expenses incurred or paid to date by the Borrower in connection with the 2015
Project, including,without limitation,preliminary engineering and costs of issuance of
the Series 2015 Bond.
(2) The Borrower agrees that it is not entitled to any disbursement
of the 2015 Loan to pay construction or installation costs of the 2015 Project or
costs of acquiring materials or equipment for the 2015 Project until (i)bids for
such construction, installation, and acquisition have been received by the
Borrower and the Borrower and the DNRC determine to each of their reasonable
satisfaction that the 2015 Loan,together with any amounts the Borrower has on
hand and available to pay costs of the 2015 Project, are sufficient to pay the costs
of the 2015 Project to completion thereof, (ii)the site title opinion delivered to the
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DEQ by the City on June 2, 2015 is approved by the DEQ and the DNRC, and
(iii) all other conditions to a loan disbursement under this Resolution are satisfied.
If it is determined the proceeds of the 2015 Loan and amounts the City has on
hand and available to pay 2015 Project costs will not be sufficient to pay costs to
reach completion of the 2015 Project,then the Borrower will amend this
resolution to increase the amount of the 2015 Loan,but only upon a showing that
the Net Revenues are sufficient to satisfy the rate covenant set forth in Section 6.7
in respect of the increased amount of the 2015 Loan.
(3)Provided that the conditions described in Section 4.1(b)(1) and
(2) are satisfied, in order to obtain a disbursement of a portion of the 2015 Loan to
pay costs of the 2015 Project,the Borrower shall submit to the DNRC and the
Trustee a signed request for disbursement on the form prescribed by the DNRC,
with all attachments required by such form. The Borrower may obtain
disbursements only for costs which have been legally incurred and are due and
payable. All 2015 Loan disbursements will be made to the Borrower only upon
proof that cost was incurred.
(c) For refinancings, a disbursement schedule complying with the
requirements of the Clean Water Act shall be established by the DNRC and the Borrower
at Closing. The Trustee shall disburse Loan amounts directly to the holder of the debt
being refinanced according to such schedule. If the Borrower should repay all or a
portion of the debt to be refinanced from other sources or should otherwise not need any
portion of the 2015 Loan which was to have been used to refinance such debt, it shall
inform the DNRC and the Trustee of such fact pursuant to Section 3.4(b) and a new
disbursement schedule shall be drawn up by the DNRC. The DNRC shall obtain a
receipt from the holder of the debt being refinanced for each disbursement made to pay or
prepay a portion of such debt.
(d) If all or a portion of the 2015 Loan is made to reimburse a Borrower
for 2015 Project costs paid by it prior to Closing,the Borrower shall present at Closing
the items required by Section 4.1(b)(3)relating to such costs. The Trustee shall disburse
such amounts to the Borrower pursuant to a disbursement schedule complying with the
requirements of the Clean Water Act established by the DNRC and the Borrower at the
Closing.
(e) Notwithstanding anything else provided herein,the Trustee shall not
be obligated to disburse the 2015 Loan any faster or to any greater extent than it has
available EPA Capitalization Grants,Bond proceeds and other amounts available therefor
in the Revolving Fund. The DNRC shall not be required to do "overmatching"pursuant
to Section 5.04(b) of the Indenture,but may do so in its discretion. The Borrower
acknowledges that if 2015 Project costs are incurred faster than the Borrower projected at
Closing,there may be delays in making Loan disbursements for such costs because of the
schedule under which EPA makes EPA Capitalization Grant money available to the
DNRC. The DNRC will use its commercially reasonable efforts to obtain an acceleration
of such schedule if necessary.
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(f) Upon making each Loan disbursement,the Trustee shall note such
disbursement on Schedule A to the Series 2015 Bond.
(g) The Borrower agrees that it will deposit in the Reserve Account upon
receipt thereof, either on the Closing Date of the 2015 Loan or upon any disbursement
date, any proceeds of the 2015 Loan borrowed for the purpose of increasing the balance
in the Reserve Account to the Reserve Requirement. The Borrower further
acknowledges and agrees that any portion of the 2015 Loan representing capitalized
interest shall be advanced only on Payment Dates and shall be transferred by the Trustee
on the Payment Date directly to the Debt Service Account. The amount of any such
transfer shall be a credit against the interest payments due on the Series 2015 Bond and
interest thereon shall accrue only from the date of transfer.
Section 4.2. Commencement of Loan Term. The Borrower's obligations under
this Resolution and the Collateral Documents shall commence on the date hereof unless
otherwise provided in this Resolution. However,the obligation to make payments under Article
V hereof shall commence only upon the first disbursement by the Trustee of Loan proceeds.
Section 4.3. Termination of Loan Term. The Borrower's obligations under this
Resolution and the Collateral Documents shall terminate upon payment in full of all amounts due
under the Series 2015 Bond and this Resolution;provided,however,that the covenants and
obligations provided in Article VII and Section 12.4 shall survive the termination of this
Resolution.
Section 4.4. Loan Closing Submissions. On or prior to the Closing,the Borrower
will have delivered to the DNRC and the Trustee the closing submissions required by Section
7.05 of the Indenture.
ARTICLE V
REPAYMENT OF LOAN
Section 5.1. Repayment of Loan. The Borrower shall repay the amounts lent to it
pursuant to Section 4.1 hereof,plus interest on the unpaid amounts lent at the rate of two and
zero hundredths percent(2.00%)per annum, in semiannual Loan Repayments. In addition,the
Borrower shall pay an Administrative Expense Surcharge on the outstanding principal amount of
the 2015 Loan at the rate of twenty-five hundredths of one percent(0.25%)per annum and a
Loan Loss Reserve Surcharge equal to twenty-five hundredths of one percent(0.25%)per annum
on the outstanding principal amount of the 2015 Loan. For purposes of this Resolution and the
Program,the term"interest on the 2015 Loan" shall include the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge. The Borrower shall pay all Loan Repayments
and the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge in lawful
money of the United States of America to the DNRC. Interest and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge shall be calculated on the basis of a year of 360
days comprising 12 months of 30 days each.
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The Loan Repayments required by this Section 5.1 and the Administrative
Expense Surcharge and the Loan Loss Reserve Surcharge shall be due on each January 1 and
July 1 (the "Payment Dates"), as follows:
(1) interest and the Administrative Expense Surcharge and the Loan Loss
Reserve Surcharge on the outstanding principal balance of the 2015 Loan shall be
payable on each January 1 and July 1,beginning on January 1, 2016,through and
including July 1, 2035; and
(2)the principal of the 2015 Loan shall be repayable on each Payment
Date,beginning on January 1, 2016 and concluding on July 1, 2035, and the amount of
each principal payment shall be calculated on the basis of a substantially level debt
service at a rate of 2.50%per annum.
The payments of principal of and interest and the Administrative Expense
Surcharge and the Loan Loss Reserve Surcharge on the 2015 Loan shall be due on the dates
specified above and on the dates and in the amounts shown in Schedule B to the Series 2015
Bond, as such Schedule B shall be modified from time to time as provided below. The portion of
each such Loan Repayment consisting of principal and the portion consisting of interest and the
amount of each Administrative Expense Surcharge and the amount of each Loan Loss Reserve
Surcharge shall be set forth in Schedule B to the Series 2015 Bond. Upon each disbursement of
Loan amounts to the Borrower pursuant to Section 4.1 hereof,the Trustee shall enter or cause to
be entered the amount advanced on Schedule A to the Series 2015 Bond under"Advances" and
the total amount advanced under Section 4.1, including such disbursement,under"Total Amount
Advanced."
If the advance was made to pay costs of the 2015 Project pursuant to Section
4.1(b), interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on such
advance shall accrue from the date the advance is made and shall be payable on each Payment
Date thereafter. Once the completion certificate for a Project has been delivered to the DNRC,
the Trustee shall revise Schedule B to the Series 2015 Bond in accordance with this Section 5.1,
and the Trustee shall send a copy of such Schedule B to the Borrower within one month after
delivery of the completion certificate.
Past-due payments of principal and interest and the Administrative Expense
Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent
(10.00%)per annum, until paid.
Any payment of principal, interest or the Administrative Expense Surcharge and
Loan Loss Reserve Surcharge under this Section 5.1 shall also be credited against the same
payment obligation under the Series 2015 Bond.
Section 5.2. Additional Patents. The Borrower shall also pay,within 30 days
after receipt of a bill therefor, from any legally available funds therefor, including proceeds of
the 2015 Loan, if the Borrower so chooses, all reasonable expenses of the DNRC and the Trustee
in connection with the 2015 Loan,the Collateral Documents and the Series 2015 Bond,
including,but not limited to:
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(1) the cost of reproducing this Resolution,the Collateral Documents and the
Series 2015 Bond;
(2) the fees and disbursements of Bond Counsel and other Counsel utilized by the
DNRC and the Trustee in connection with the 2015 Loan, this Resolution,the Collateral
Documents and the Series 2015 Bond and the enforcement thereof; and
(3) all taxes and other governmental charges in connection with the execution
and delivery of the Collateral Documents or the Series 2015 Bond,whether or not the
Series 2015 Bond is then outstanding, including all recording and filing fees relating to
the Collateral Documents and the pledge of the State's right,title and interest in and to
the Series 2015 Bond,the Collateral Documents and this Resolution and all expenses,
including attorneys' fees, relating to any amendments,waivers, consents or collection or
enforcement proceedings pursuant to the provisions hereof or thereof.
Section 5.3. Prepayments. The Borrower may not prepay all or any part of the
outstanding principal amount of the Series 2015 Bond unless (i) it obtains the prior written
consent of the DNRC thereto, and (ii)no Loan Repayment or Administrative Expense Surcharge
or Loan Loss Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC
must be accompanied by payment of accrued interest and Administrative Expense Surcharge and
Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If
the Series 2015 Bond is prepaid in part pursuant to this Section 5.3, such prepayments shall be
applied to principal payments in inverse order of maturity.
Section 5.4. Obligations of Borrower Unconditional. The obligations of the
Borrower to make the payments required by this Resolution and the Series 2015 Bond and to
perform its other agreements contained in this Resolution,the Series 2015 Bond and Collateral
Documents shall be absolute and unconditional, except as otherwise provided herein or in such
documents. The Borrower(a) shall not suspend or discontinue any payments provided for in this
Resolution and the Series 2015 Bond, (b) shall perform all its other agreements in this
Resolution,the Series 2015 Bond and the Collateral Documents and(c) shall not terminate this
Resolution,the Series 2015 Bond or the Collateral Documents for any cause, including any acts
or circumstances that may constitute failure of consideration, destruction of or damage to the
2015 Project or the System, commercial frustration of purpose, any dispute with the DNRC or
the EPA, any change in the laws of the United States or of the State or any political subdivision
of either or any failure of the DNRC to perform any of its agreements,whether express or
implied, or any duty, liability or obligation arising from or connected with this Resolution.
Provided, however, if the loan contemplated herein is not made and no funds are disbursed to the
Borrower,this Resolution may be terminated.
Section 5.5. Limited Liability. All payments of principal of and interest on the
2015 Loan and other payment obligations of the Borrower hereunder and under the Series 2015
Bond shall be special, limited obligations of the Borrower payable solely out of the Net
Revenues or out of the Revenue Bond Account and shall not be payable out of any other funds or
revenues of the Borrower. The obligations of the Borrower under this Resolution and the Series
2015 Bond shall never constitute an indebtedness of the Borrower within the meaning of any
state constitutional provision or statutory limitation and shall never constitute or give rise to a
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pecuniary liability of the Borrower or a charge against its general credit or taxing power. The
taxing powers of the Borrower are not pledged to pay principal of or interest on the Series 2015
Bond, and no funds or property of the Borrower other than the Net Revenues are pledged to pay
principal of or interest on the Series 2015 Bond.
ARTICLE VI
OTHER AGREEMENTS OF BORROWER
Section 6.1. Maintenance of System;Liens. The Borrower shall maintain the
System, including the 2015 Project for so long as it is required, in good condition and make all
necessary renewals, replacements, additions, betterments and improvements thereto. The
Borrower shall not grant or permit to exist any lien on the 2015 Project or any other property
making up part of the System, other than liens securing Debt where a parity lien secures the
Series 2015 Bond;provided that this Section 6.1 shall not be deemed to be violated if a
mechanic's or contractor's lien is filed against any such property so long as the Borrower uses its
best efforts to obtain the discharge of such lien and promptly reports to the DNRC the filing of
such lien and the steps it plans to take and does take to discharge such lien.
Section 6.2. Maintenance of Existence,Merger, Consolidation,Etc.; Disposition
of Assets. The Borrower shall maintain its corporate existence, except that it may consolidate
with or merge into another Governmental Unit or permit one or more Governmental Units to
consolidate with or merge into it or may transfer all or substantially all of its assets to another
Governmental Unit and then dissolve if the surviving,resulting or transferee entity (if other than
the Borrower) (i) is a Public Entity and(ii) assumes in writing all of the obligations of the
Borrower under this Resolution,the Series 2015 Bond and the Collateral Documents, and(a)
such action does not result in any default in the performance or observance of any of the terms,
covenants or agreements of the Borrower under this Resolution,the Bond and the Collateral
Documents, (b) such action does not violate the Act or the Clean Water Act and does not
adversely affect the exclusion of interest on the Series 2015 Bond or the State Bonds from gross
income for federal income tax purposes and (c)the Borrower delivers to the DNRC on the date
of such action an Opinion of Bond Counsel that such action complies with this Section 6.2.
Other than pursuant to the preceding paragraph,the Borrower shall not transfer
the System or any portion thereof to any other Person, except for property which is obsolete,
outmoded, worn out, is being replaced or otherwise is not needed for the operation of the
System, unless the provisions of(a) and (b) of the preceding paragraph are satisfied and the
Borrower delivers to the DNRC an Opinion of Bond Counsel to that effect and, in addition,the
DNRC consents to such transfer.
Section 6.3. Covenants Relating to the Tax-Exempt Status of the State Bonds.
(a) The Borrower covenants and agrees that it will not use or permit to be used
any of the proceeds of the Series 2015 Bond or any other funds of the Borrower, directly or
indirectly, in a manner that would cause, or take any other action that would cause, any State
Bond to be an "arbitrage bond"within the meaning of Section 148 of the Code or would
otherwise cause the interest on the State Bonds to be included in gross income for purposes of
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federal income taxation. In addition,the Borrower agrees that it will not enter into, or allow any
"related person" (as defined in Section 147(a)(2) of the Code)to enter into, any arrangement,
formal or informal, for the purchase of the State Bonds or any other obligations of the DNRC in
an amount related to the amount of the 2015 Loan or the portion of the 2015 Loan derived
directly or indirectly from proceeds of the State Bonds or that would otherwise cause any State
Bond to be an "arbitrage bond"within the meaning of Section 148 of the Code.
(b) The Borrower shall not use or permit the use of the 2015 Project directly or
indirectly in any trade or business carried on by any Person who is not a Governmental Unit. For
the purpose of this subparagraph, use as a member of the general public shall not be taken into
account and any activity carried on by a Person other than a natural person shall be treated as a
trade or business.
(c) Any portion of the 2015 Project being refinanced or the cost of which is being
reimbursed was acquired by and is now and shall, during the term of the 2015 Loan, be owned
by the Borrower and not by any other Person. Any portion of the 2015 Project being financed
shall be acquired by and shall, during the term of the 2015 Loan, be owned by the Borrower and
not by any other Person. Notwithstanding the previous two sentences, the Borrower may transfer
the 2015 Project or a portion thereof to another Governmental Unit which is also a Public Entity
if such transfer is otherwise permitted hereunder and if such organization agrees with the DNRC
to comply with Sections 2.3(h), 2.3(i) and 6.3 hereof and if the DNRC receives an Opinion of
Bond Counsel that such transfer will not violate the Act or the Clean Water Act or adversely.
affect the exclusion of interest on the Bonds from gross income for purposes of federal income
taxation. In addition, except as otherwise provided herein or in any Collateral Documents,the
Borrower may sell or otherwise dispose of any portion of the 2015 Project which has become
obsolete or outmoded or is being replaced or for other reasons is not needed by the Borrower or
beneficial to the general public or necessary to carry out the purposes of the Clean Water Act.
(d) At the Closing of the 2015 Loan the DNRC will, if necessary to obtain the
Opinion of Bond Counsel described in Section 7.05(a) of the Indenture, deliver to the Borrower
instructions concerning compliance by the Borrower with the arbitrage rebate requirements of
Section 148 of the Code (the"Arbitrage Rebate Instructions"). The Borrower shall comply with
the Arbitrage Rebate Instructions, if any, delivered to it by the DNRC at Closing, as such
Instructions may be amended or replaced by the DNRC from time to time. The Arbitrage Rebate
Instructions may be amended or replaced by new Arbitrage Rebate Instructions delivered by the
DNRC and accompanied by an Opinion of Bond Counsel to the effect that the use of said
amended or new Arbitrage Rebate Instructions will not adversely affect the excludability of
interest on the State Bonds or any Additional State Bonds (except Additional State Bonds the
interest on which the State did not intend to be excluded from gross income for federal income
tax purposes) from gross income of the recipients thereof for federal income tax purposes.
(e) The Borrower agrees that during the Loan Term it will not contract with or
permit any Private Person to manage the 2015 Project or any portion thereof except according to
a written management contract which complies with the following provisions:
(1) If any contract between the Borrower and the Private Person with
respect to the 2015 Project provides for compensation based on a percentage of fees
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charged for services rendered by the Private Person,the contract may not exceed a term
of five years (including'any renewal options). At least 50% of the compensation to the
Private Person must be based upon a periodic fixed fee. In addition,the Borrower must
be able to cancel the contract without penalty or cause at the end of any three-year period
of the contract term. The compensation must be reasonable, and it may not be based on a
percentage of the net profits of the 2015 Project or the System or any portion thereof or
any other division or activity of the Borrower.
(2) If any contract between the Borrower and the Private Person with
respect to the 2015 Project provides for compensation based on a periodic flat fee,the
compensation must be reasonable and the contract may not exceed a term of five years
(including any renewal options). In addition,the Borrower must be able to cancel the
contract without penalty or cause at the end of any three-year period of the contract term.
If the contract provides for automatic increases in the periodic flat fee,the increases may
not exceed the percentage increases determined by particular external standards for
computing such increases that are mutually agreed upon in the contract. The percentage
increases reflected in the Consumer Price Index compiled by the Bureau of Labor
Statistics,U.S. Department of Labor, or the actual percentage increases for services that
result from the application of external criteria (for example, increases in rates paid by
insurance companies) are illustrations of two external standards that may be used.
(3) If a Private Person and the Borrower enter into a contract described in
subparagraph (1) or(2) above and the governing body of the Borrower contains five or
more members,no more than one member of the governing body of the Borrower may be
the Private Person or a related person(as described in Section 144(a)(3) of the Code) (a
"Related Person"), an employee of the Private Person or a Related Person, or a member
of the governing body of the Private Person or a Related Person. However, such Private
Person or a Related Person, employee of the Private Person or a Related Person or a
member of the governing body of the Private Person or a Related Person may not serve as
the chief executive of the Borrower. If a Private Person and the Borrower enter into a
contract described in(1) or (2) above and the governing body contains less than five
members, no member of the governing body may be the Private Person or a Related
Person, an employee of the Private Person or a Related Person or a member of the
governing body of the Private Person or a Related Person.
(4) The Borrower may depart from any of its agreements contained in
subparagraphs (1)through (3) if it delivers to the DNRC, at the Borrower's expense, an
Opinion of Bond Counsel that to do so would not adversely affect the exclusion of
interest on the State Bonds from gross income for purposes of federal income taxation.
(f) The Borrower may not lease the 2015 Project or any portion thereof to any
Person other than a Nonexempt Person which agrees in writing with the Borrower and the State
not to cause any Default to occur under this Resolution,provided the Borrower may lease all or
any portion of the 2015 Project to a Nonexempt Person pursuant to a lease which in the Opinion
of Bond Counsel delivered to the DNRC will not cause the interest on the State Bonds to be
included in gross income for purposes of federal income taxation.
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(g) The Borrower shall not change the use or nature of the 2015 Project if(i) such
change will violate the Clean Water Act, or(ii) so long as the State Bonds are outstanding
unless, in the Opinion of Bond Counsel delivered to the DNRC, such change will not result in
the inclusion in gross income of interest on the State Bonds for federal income tax purposes.
Section 6.4. Competing Service. The Borrower will not establish or authorize the
establishment of any other system for the public supply of service or services in competition with
any or all of the services supplied by the facilities of the System.
Section 6.5. Billing. The charges for stormwater services shall be billed at least
monthly, and if the bill is not paid within 60 days of the date of billing, or if the customer fails to
comply with all rules and regulations established for the System within 60 days after notice of
violation thereof(which notice shall be given promptly upon discovery of any such violation),
the water service to the premises involved shall be discontinued and shall not be resumed until
payment of all past-due bills for stormwater service and compliance with all such rules and
regulations. The Borrower shall take appropriate legal action to collect the unpaid charges,
including,to the extent now or hereafter authorized by law, malting the charge a lien against the
real property served by the stormwater connection for which the charge remains unpaid and
causing charges with respect to such properties to be collected in the same manner as taxes
levied against property within the Borrower.
Section 6.6. Remedies. The DNRC, so long as it owns the Series 2015 Bond, or
the owners of not less than 25% in principal amount of the outstanding Bonds issued and secured
under the provisions of this Resolution shall have the right, either at law or in equity,through
suit, action or other proceedings,to protect and enforce the rights of all owners of such Bonds
and to compel the performance of any and all of the covenants required herein to be performed
by the Borrower, and its officers and employees, including but not limited to the fixing and
maintaining of rates, fees and charges and the collection and proper segregation of gross
revenues and Pledged Stormwater Mitigation Property Tax Revenues and the application and use
thereof. The owners of a majority in principal amount of such outstanding Bonds shall have the
right to direct the time, method and place of conducting any proceeding for any remedy available
to the Bondowners or the exercise of any power conferred on them and the right to waive a
default in the performance of any such covenant, and its consequences, except a default in the
payment of the principal of,premium, or interest on any Bond when due. However, nothing
herein shall impair the absolute and unconditional right of the owner of each such Bond to
receive payment of the principal of,premium, if any, and interest on such Bond as such principal
and interest respectively become payable, and to institute suit for any such payment. Any court
having jurisdiction of the action may appoint a receiver to administer the System on behalf of the
Borrower with power to charge and collect rates, fees and charges sufficient to provide for the
payment of any Bonds or obligations outstanding against the System, and to apply the gross
revenues and Pledged Stormwater Mitigation Property Tax Revenues in conformity with this
Resolution and the laws of the State.
Section 6.7. Rate Covenant. While any Bonds are outstanding and unpaid, the
rates, charges and rentals for all services and facilities furnished and made available by the
System to the Borrower and its inhabitants, and to all customers within or without the boundaries
of the Borrower, shall be reasonable and just,taping into consideration the cost and value of the
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System and the cost of maintaining and operating it, and the amounts necessary for the payment
of all Bonds and the interest accruing thereon, and the proper and necessary allowances for the
depreciation of the System, and no free service shall be provided to any person or corporation. It
is covenanted and agreed that the rates, charges and rentals to be charged to all recipients of
stormwater services shall be maintained and shall be revised whenever and as often as may be
necessary, according to schedules such that the sum of(a)the Revenues less the Operating
Expenses plus (b)the Pledged Stormwater Mitigation Property Tax Revenues for each fiscal year
will be at least sufficient to pay the current expenses of operation and maintenance as herein
defined,to maintain the Operating Reserve herein established,to maintain the amounts in the
Reserve Account at the Reserve Requirement,to produce Net Revenues (including Pledged
Stormwater Mitigation Property Tax Revenues) during each fiscal year commencing with the
fiscal year ending June 30, 2015, not less than 110% of the maximum annual principal and
interest payable on any outstanding Bonds in the current or any future fiscal year, and to produce
sufficient Surplus Net Revenues to pay Subordinate Obligations as and when due.
Nothing in this Resolution compels the City to produce a certain dollar amount of
only Revenues less Operating Expenses, on the one hand, or only Pledged Stormwater
Mitigation Property Tax Revenues, on the other hand, but the provisions hereof instead compel
the City to produce Net Revenues in an aggregate amount required by this Resolution.
If at the close of any fiscal year the Net Revenues and Surplus Net Revenues
actually received during such year have been less than required hereby,the Borrower will
forthwith prepare a schedule of altered rates, charges and rentals and Pledged Stormwater
Mitigation Property Tax Revenues which are just and equitable and sufficient to produce Net
Revenues and Surplus Net Revenues in such amounts, and will do all things necessary to the end
that such schedule will be placed in operation at the earliest possible date.
ARTICLE VII
INDEMNIFICATION OF DNRC AND DEQ
The Borrower shall,to the extent permitted by law, indemnify and save harmless
the DNRC and the DEQ and their officers, employees and agents (each an "Indemnified Party"
or, collectively,the "Indemnified Parties") against and from any and all claims, damages,
demands, expenses, liabilities and losses of every kind asserted by or on behalf of any Person
arising out of the acts or omissions of the Borrower or its employees, officers, agents,
contractors, subcontractors, or consultants in connection with or with regard or in any way
relating to the condition, use, possession, conduct, management, planning, design, acquisition,
construction, installation or financing of the 2015 Project but the Indemnified Parties understand
this provision does not require the Borrower to indemnify the Indemnified Parties for the
Indemnified Parties' permitting and regulatory oversight duties associated with the 2015 Project
nor for any action of the Indemnified Parties prior to the date of this Resolution. The Borrower
shall,to the extent permitted by law, also indemnify and save harmless the Indemnified Parties
against and from all costs, reasonable attorneys' fees, expenses and liabilities incurred in any
action or proceeding brought by reason of any such claim or demand. If any proceeding is
brought against an Indemnified Party by reason of such claim or demand,the Borrower shall,
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upon notice from an Indemnified Party, defend such proceeding on behalf of the Indemnified
Party.
ARTICLE VIII
ASSIGNMENT
Section 8.1. Assignment by Borrower. The Borrower may not assign its rights
and obligations under this Resolution or the Series 2015 Bond, except as provided in Section 6.3.
Section 8.2. Assignment by DNRC. The DNRC will pledge its rights under and
interest in this Resolution, the Series 2015 Bond and the Collateral Documents (except to the
extent otherwise provided in the Indenture) as security for the payment of the State Bonds.
Section 8.3. State RefundingBonds.onds. In the event the State Bonds are refunded,
all references in this Resolution to State Bonds shall be deemed to refer to the refunding bonds
and any bonds of the State on a parity with such refunding bonds (together, the "Refunding
Bonds") or, in the case of a crossover refunding,to the State Bonds and the Refunding Bonds. In
the event the State Bonds are refunded by an issue of bonds other than State Bonds, all
references in this Resolution to the State Bonds shall be deemed to refer to such other bonds or,
in the case of a crossover refunding, both the State Bonds and such other bonds.
ARTICLE IX
THE SERIES 2015 BOND
Section 9.1. Authorization. Under the provisions of the Enabling Act,the
Borrower is authorized to issue and sell its revenue bonds payable during a term not exceeding
forty years from their date of issue,to provide funds for the reconstruction, improvement,
betterment and extension of the System or to refund its revenue bonds issued for such purpose;
provided that the bonds and the interest thereon are to be payable solely out of the net income
and revenues to be derived from rates, fees and charges for the services, facilities and
commodities furnished by the undertaking, and are not to create any obligation for the payment
of which taxes may be levied except to pay for services provided by the undertaking to the
Borrower.
Section 9.2. OutstandingBonds.onds. No bonds or indebtedness are outstanding that
are payable from Stormwater Revenues of the System or from the Pledged Stormwater
Mitigation Property Tax Revenues.
Section 9.3. Sources of Funding. The 2015 Project is set forth on Appendix A. It
is proposed that the costs of the 2015 Project will be paid from the proceeds of the Bonds.
Section 9.4. Net Revenues Available. The Borrower is authorized to charge just
and equitable rates, charges and rentals for all services directly or indirectly furnished by the
System, and to pledge and appropriate to the Series 2015 Bond the Net Revenues to be derived
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from the operation of the System and to segregate and deposit in the Revenue Bond Account the
Pledged Stoimwater Mitigation Property Tax Revenues, including improvements,betterments or
extensions thereof hereafter constructed or acquired. The Net Revenues to be produced by such
rates, charges and rentals plus the Pledged Stoimwater Mitigation Property Tax Revenues during
the term of the Series 2015 Bond will be more than sufficient to pay the principal and interest
when due on the Series 2015 Bond, and to create and maintain reasonable reserves therefor and
to provide an adequate allowance for replacement and depreciation, as prescribed herein.
Section 9.5. Issuance and Sale of the Series 2015 Bond. The Board has
investigated the facts necessary and hereby finds, determines and declares it to be necessary and
desirable for the Borrower to issue the Series 2015 Bond to evidence the 2015 Loan. The Series
2015 Bond is issued to the DNRC without public sale pursuant to Montana Code Annotated,
Section 7-7-4433.
Section 9.6. Terms. The Series 2015 Bond shall be in the maximum principal
amount equal to the original Committed Amount of the 2015 Loan, shall be issued as a single,
fully registered bond numbered R-1, shall be dated as of the date of delivery to the DNRC, and
shall bear interest at the rate charged by the DNRC on the 2015 Loan. The principal of and
interest on the Series 2015 Bond shall be payable on the same dates and in the same amounts on
which principal and interest of the Loan Repayments are payable. Advances of principal of the
Series 2015 Bond shall be deemed made when advances of the 2015 Loan are made under
Section 4.1, and such advances shall be payable in accordance with Schedule B to the Series
2015 Bond, as it may be revised by the DNRC from time to time in accordance with Section 5.1.
The Borrower may prepay the Series 2015 Bond, in whole or in part, only upon
the terms and conditions under which it can prepay the 2015 Loan under Section 5.3.
Section 9.7. Negotiability, Transfer and Registration. The Series 2015 Bond
shall be fully registered as to both principal and interest, and shall be initially registered in the
name of and payable to the DNRC. While so registered,principal of and interest on the Series
2015 Bond shall be payable to the DNRC at the Office of the Department of Natural Resources
and Conservation, 1625 Eleventh Avenue, Helena, Montana 59620 or such other place as may be
designated by the DNRC in writing and delivered to the Borrower. The Series 2015 Bond shall
be negotiable, subject to the provisions for registration and transfer contained in this section. No
transfer of the Series 2015 Bond shall be valid unless and until (1)the holder, or his duly
authorized attorney or legal representative,has executed the form of assignment appearing on the
Bond, and (2)the City Administrative Services Director of the Borrower(the "Registrar"), as
Bond Registrar, has duly noted the transfer on the Series 2015 Bond and recorded the transfer on
the registration books of the Registrar. The Registrar may,prior to noting and recording the
transfer, require appropriate proof of the transferor's authority and the genuineness of the
transferor's signature. The Borrower shall be entitled to deem and treat the person in whose
name the Series 2015 Bond is registered as the absolute owner of the Series 2015 Bond for all
purposes,notwithstanding any notice to the contrary, and all payments to the registered holder
shall be valid and effectual to satisfy and discharge the Borrower's liability upon such Bond to
the extent of the sum or sums so paid.
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Section 9.8. Execution and Delivery. The Series 2015 Bond shall be executed on
behalf of the Borrower by the manual signatures of the Mayor, the City Administrative Sei vices
Director, and the Cleric of the Commission. Any or all of such signatures may be affixed at or
prior to the date of delivery of the Series 2015 Bond. The Bond shall be sealed with the
corporate seal of the Borrower. In the event that any of the officers who shall have signed the
Series 2015 Bond shall cease to be officers of the Borrower before the Bond is issued or
delivered,their signatures shall remain binding upon the Borrower. Conversely,the Series 2015
Bond may be signed by an authorized official who did not hold such office on the date of
adoption of this Resolution. The Series 2015 Bond shall be delivered to the DNRC, or its
attorney or legal representative.
Section 9.9. Form. The Series 2015 Bond shall be prepared in substantially the
form attached as Appendix B.
ARTICLE X
PRIORITIES AND ADDITIONAL STORMWATER DEBT
Section 10.1. Priority of Bond Payments. Each and all of the Bonds shall be
equally and ratably secured without preference or priority of any one Bond over any other by
reason of serial number, date of issue, or otherwise;provided that if at any time the Net
Revenues on hand in the Fund are insufficientto pay principal and interest then due on all such
Bonds, any and all Net Revenues then on hand shall be first used to pay the interest accrued on
all outstanding Bonds, and the balance shall be applied toward payment of the maturing principal
of such Bonds to be paid first, and pro rata in payment of Bonds maturing on the same date.
Section 10.2. Refunding Revenue Bonds. The Borrower reserves the right and
privilege of refunding any or all of the Bonds subject to the following terms and conditions:
(a) Any matured Bonds may be refunded if moneys available for the payment
thereof at maturity, within the limitation prescribed in Section 10.01, should at any time
be insufficient to make such payment in full.
(b) Any Bonds may be refunded prior to maturity as and when they become
prepayable according to their terms.
(c) Provision may be made for the payment and refunding of any unmatured
Bonds by the deposit with a duly qualified depository bank, as escrow agent, of cash
sufficient, or of securities of the kinds authorized by law,the payments of interest on and
principal of which are sufficient,to pay the principal amount of and premium, if any, on
such Bonds with interest to maturity or to any prior date or dates on which they are
prepayable, and have been called for redemption or provision has been irrevocably made
for their redemption, on such date or dates.
(d) Any refunding revenue Bonds issued for the above purposes may be made
payable from the net revenues on a parity as to interest with all then outstanding Bonds;
provided that(1) if not all of the Bonds of a series are refunded,the maturity of each
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refunding revenue Bond shall be subsequent to the last maturity of any then outstanding
Bonds of such series which are not refunded or to be refunded out of moneys on deposit
with such escrow agent, and(2) no Bondowner shall be required to accept a refunding
revenue Bond in exchange for any Bond owned by him.
Section 10.3. Other Parity Bonds. The Borrower reserves the right to issue
additional Bonds payable from the Revenue Bond Account of the Fund, on a parity as to both
principal and interest with the Series 2015 Bond, if the Net Revenues of the System (including
Pledged Stormwater Mitigation Property Tax Revenues) for the last complete fiscal year
preceding the date of issuance of such additional Bonds have equaled at least 110% of the
maximum amount of principal and interest payable from said Revenue Bond Account in any
subsequent fiscal year during the term of the outstanding Bonds, on all Bonds then outstanding
and on the additional Bonds proposed to be issued. For the purpose of the foregoing
computation,the Net Revenues for the fiscal year preceding the issuance of additional Bonds
shall be those shown by the financial reports caused to be prepared by the Borrower pursuant to
Section 2.3(f), except that if the rates and charges for services provided by the System have been
changed since the beginning of such preceding fiscal year,then the rates and charges in effect at
the time of issuance of the additional Bonds or finally authorized to go into effect within 60 days
thereafter shall be applied to the quantities of service actually rendered and made available
during such preceding fiscal year to ascertain the gross revenues, from which there shall be
deducted to determine the Net Revenues,the actual operation and maintenance cost plus any
additional annual costs of operation and maintenance which the Consultant estimates will be
incurred because of the improvement or extension of the System to be constructed from the
proceeds of the additional Bonds proposed to be issued. In no event shall any additional Bonds
be issued and made payable from the Revenue Bond Account if the Borrower is then in default
in any payment of principal of or interest on any outstanding Bonds payable therefrom or if there
then exists any deficiency in the balances required by this Resolution to be maintained in any of
the accounts of the Fund, which will not be cured or restored upon the issuance of the additional
Bonds. In connection with the issuance of a series of additional Bonds,the Borrower shall cause
amounts in the Reserve Account to be increased, from the proceeds of the additional Bonds or
from available Net Revenues,to an amount equal to the Reserve Requirement during the term of
the outstanding Bonds or so much thereof as will not cause the Borrower to violate the
provisions of Section 12.2 hereof.
Section 10.4. Subordinate Obligations. Nothing in this Resolution shall preclude
the Borrower from issuing additional bonds or notes that are expressly made a charge on only the
Surplus Net Revenues of the System subordinate to the pledge of Net Revenues to the Revenue
Bond Account and the Reserve Account(such additional bonds,the "Subordinate Obligations");
provided,however,no obligations may be issued pursuant to this Section 10.4 if a deficiency
exists in the Revenue Bond Account or the Reserve Account which is not to be restored by the
issuance of the Subordinate Obligations. Any Surplus Net Revenues segregated to pay such
Subordinate Obligations in the Fund are subject to the prior appropriation thereof to the
Operating Account,the Revenue Bond Account or the Reserve Account if necessary to meet the
requirements thereof.
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ARTICLE XI
STORMWATER SYSTEM FUND
Section 11.1. Bond Proceeds and Revenues Pledged and Appropriated. A special
Stormwater System Fund is hereby created and shall be maintained as a separate and special
bookkeeping account on the official books of the Borrower until all Bonds and interest and
redemption premiums due thereon have been fully paid, or the Borrower's obligations with
reference to such Bonds have been discharged as provided in this Resolution. All proceeds of
Bonds issued hereunder and all other funds presently on hand derived from the operation of the
System are irrevocably pledged and appropriated to the Fund. In addition,there is hereby
irrevocably pledged and appropriated to the Fund all Revenues, to include amounts received by
the City from any sales of property acquired for the System and all income received from the
investment of the Revenues, including investment of the Reserve Account established in the
Revenue Bond Account and the Operating Reserve established in the Operating Account, but
excluding any special assessments or taxes levied for construction of any part of the System and
the proceeds of any grant or loan from the State or the United States, and any investment income
thereon,to the extent such exclusion is a condition to such grant or loan. The Fund shall be
subdivided into separate accounts as designated and described in Sections 11.2 through 11.7,to
segregate income and expenses received,paid and accrued for the respective purposes described
in those sections. The Revenues received in the Fund shall be apportioned monthly,
commencing as of the first day of the month following the date of delivery of the Series 2015
Bond. Finally,there is hereby pledged to the Revenue Bond Account the Pledged Stormwater
Mitigation Property Tax Revenues.
Section 11.2. Acquisition and Construction Account. The Acquisition and
Construction Account shall be used only to pay as incurred and allowed costs which under
accepted accounting practice are capital costs of a Project and of such future reconstructions,
improvements, betterments or extensions of the System as may be authorized in accordance with
law, including but not limited to payments due for work and materials performed and delivered
under construction contracts, architectural, engineering, inspection, supervision, fiscal and legal
expenses,the cost of lands and easements,reimbursement of any advances made from other
Borrower funds, and all other expenses incurred in connection with the acquisition, construction
and financing of any such undertaking. To the Acquisition and Construction Account shall be
credited as received all proceeds of Bonds issued hereunder(except proceeds of refunding bonds
appropriated to the payment of outstanding Bonds and amounts required to be credited to the
Revenue Bond Account), all other funds appropriated by the Borrower for the System and any
other funds appropriated by the Borrower to the Acquisition and Construction Account for
improvements to the System, and all income received from the investment of the Acquisition and
Construction Account. Upon completion of a capital improvement or program of capital
improvements for the System,the balance remaining in the Acquisition and Construction
Account shall be credited to the Revenue Bond Account and Reserve Account to the extent
required to establish the required balance therein and,to the extent not so required,to the
Replacement and Depreciation Account.
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Section 11.3. Operating Account. On each monthly apportionment there shall
first be set aside and credited to the Operating Account, as a first charge on the gross revenues,
such amount as may be required over and above the balance then held in the account to pay the
reasonable and necessary operating expenses of the System which are then due and payable, or
are to be paid prior to the next monthly apportionment. The term"operating expenses" shall
mean the current expenses,paid or accrued, of operation, maintenance and current repair of the
System and its facilities, as calculated in accordance with sound accounting practices, and shall
include, without limitation, administrative expenses of the Borrower relating solely to the
System,premiums for insurance on the properties thereof, labor and the cost of materials and
supplies used for current operation and for maintenance, and charges for the accumulation of
appropriate reserves for current expenses which are not recurrent monthly but may reasonably be
expected to be incurred in accordance with sound accounting practices. Such expenses shall not
include any allowance for interest expense or depreciation,renewals or replacements of capital
assets of the System and shall not include any portion of the salaries or wages paid to any officer
or employee of the Borrower, except such portion as shall represent reasonable compensation for
the performance of duties necessary to the operation of the System. There shall also be credited
to this account forthwith upon the delivery of the Series 2015 Bond and from available funds
other than the proceeds therefrom a sum equal to the estimated average monthly operating
expenses of the System to establish an Operating Reserve,which sum shall be maintained by
additional transfers upon each monthly apportionment whenever necessary, or may be
augmented by transfers of additional amounts from the Surplus Account described below if
determined by the governing body of the Borrower to be necessary to meet contingencies arising
in the operation and maintenance of the System. Money in the Operating Account shall be used
solely for the payment of current operating expenses of the System.
Section 11.4. Revenue Bond Account. Upon each monthly apportionment there
shall be set aside and credited to the Revenue Bond Account out of the Net Revenues (including
Pledged Stormwater Mitigation Property Tax Revenues) an amount equal to not less than the
sum of one-sixth of the interest due within the next six months plus one-twelfth of the principal
to become due within the next twelve months with respect to outstanding Bonds payable from
the Revenue Bond Account;provided that the Borrower shall be entitled to reduce a monthly
credit by the amount of any surplus previously credited and then on deposit in the Revenue Bond
Account. The Borrower appropriates to the Revenue Bond Account Pledged Stormwater
Mitigation Property Tax Revenues in an amount necessary to pay timely, with available amounts
of Revenues over Operating Expenses,the Bonds. Money from time to time held in the Revenue
Bond Account shall be disbursed only to meet payments of principal of,premium, if any, and
interest on the Bonds payable therefrom as such payments become due. If any payment of
principal or interest becomes due when moneys in the Revenue Bond Account are temporarily
insufficient therefor, such payment shall be advanced out of any Net Revenues theretofore
segregated and then on hand in the Reserve Account,the Replacement and Depreciation Account
or the Surplus Account and in that order.
Section 11.5. Reserve Account. The Borrower agrees to establish and maintain a
Reserve Account in the Fund. On the Closing Date and on each date of disbursement of
proceeds of the Series 2015 Bond thereafter until the final disbursement of such proceeds,the
Borrower shall deposit in the Reserve Account,from proceeds of the Series 2015 Bond or,to the
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extent necessary, from other available funds of the Borrower, an amount equal to the product of
(i)the initial Reserve Requirement based on the Committed Amount of the 2015 Loan,times (ii)
a fraction the numerator of which is the amount of proceeds of the Series 2015 Bond to be
disbursed on said date and the denominator of which is the Committed Amount of the 2015
Loan. On the date of the final disbursement of proceeds of the Series 2015 Bond, if the amount
in the Reserve Account is less than the Reserve Requirement,the Borrower shall deposit in the
Reserve Account from other available funds of the Borrower an amount necessary to cause the
balance in the Reserve Account to equal the Reserve Requirement, calculated as of that date and
based on the actual outstanding principal amount of the Series 2015 Bond. Thereafter, upon
each monthly apportionment, from the Net Revenues remaining after the apportionment to the
Revenue Bond Account,the Borrower shall credit to the Reserve Account such additional Net
Revenues as may be required to establish and thereafter maintain the balance in an amount equal,
as of the date of calculation,to the Reserve Requirement. Money in the Reserve Account shall
be used only to pay maturing principal,premium and interest when money within the Revenue
Bond Account is insufficient therefor;provided that on any date when all outstanding Bonds of a
series are due or prepayable by their terms, if the amount then on hand in the Reserve Account
allocable to such Bonds and available for such appropriation is sufficient with money available
for the purpose to pay all such Bonds and the interest accrued thereon in full, it may be used for
that purpose; and provided, further, that so long as the amount on hand in the Reserve Account is
not less than the Reserve Requirement,the Borrower may credit earnings on investment of the
Reserve Account to the Replacement and Depreciation Account.
Section 11.6. Replacement and Depreciation Account. There shall next be set
aside and credited, upon each monthly apportionment,to the Replacement and Depreciation
Account Surplus Net Revenues of the System, as the governing body of the Borrower shall
determine to be required for the accumulation of a reasonable allowance for depreciation of the
System and for replacement or renewal of worn out, obsolete or damaged properties and
equipment thereof. Money in this account shall be used only for the purposes above stated or, if
so directed by the governing body of the Borrower,to redeem Bonds which are prepayable
according to their terms, to pay principal or interest when due thereon as required in Section
11.4, to fund any deficiency in the Reserve Account, or to pay the cost of improvements to the
System; provided that, Surplus Net Revenues in the Replacement and Depreciation Account may
be used to pay Subordinate Obligations as they come due, subject to the prior lien on Surplus Net
Revenues to pay any deficiency of the Revenue Bond Account and the Reserve Account,
provided further that in the event construction and installation of additional improvements or
additions to the System are financed other than from proceeds of Bonds payable from the
Revenue Bond Account, Surplus Net Revenues from time to time received may be segregated
and paid into one or more separate and additional accounts for the repayment of such
indebtedness and interest thereon, in advance of payments required to be made into the
Replacement and Depreciation Account, subject to the prior lien on Surplus Net Revenues to pay
any deficiency of the Revenue Bond Account or the Reserve Account and to pay a Subordinate
Obligation, should it become payable.
Section 11.7. Surplus Account. Any amount of the Surplus Net Revenues from
time to time remaining after the above required applications thereof shall be credited to the
Surplus Account(or such other account in the Fund as the Borrower may establish for
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bool&eeping purposes to account for Surplus Net Revenues in accordance with the purposes of
this Resolution), and the money from time to time in that account,when not required to restore a
current deficiency in the Revenue Bond Account,the Reserve Account, or the Replacement and
Depreciation Account as provided in Sections 11.4, 11.5, and 11.6,respectively, may be used for
any of the following purposes and not otherwise:
(a) To redeem Bonds payable from the Net Revenues when and as such Bonds
become prepayable according to their terms; or
(b) To purchase Bonds on the open market, whether or not the Bonds or other
such Bonds may then be prepayable according to their terms; or
(c) To be held as a reserve for redemption of Bonds payable from the Net
Revenues which are not then but will later be prepayable according to their terms; or
(d) To pay for repairs of or for the construction and installation of improvements
or additions to the System; or
(e) To restore the Operating Reserve or increase the same when determined to be
necessary by the governing body of the Borrower; or
(f) To pay Subordinate Obligations permitted under Section 10.4 above.
No Surplus Net Revenues shall at any time be transferred from the Surplus Account or any other
account of the Fund to any other fund of the Borrower,nor shall Surplus Net Revenues at any
time be loaned to other municipal funds or invested in warrants, special improvement bonds or
other obligations payable from other funds, except as provided in Section 11.8 and except that if
the source of the Surplus Net Revenues is Pledged Stormwater Mitigation Property Tax
Revenues,moneys derived from such revenues that are Surplus Net Revenues may be transferred
to the General Fund of the Borrower and applied as the Borrower sees fit.
Section 11.8. Deposit and Investment of Funds. The finance officer of the
Borrower shall cause all money appropriated to the Fund to be deposited as received with one or
more depository banks duly qualified in accordance with the provisions of Montana Code
Annotated, Section 7-6-201, in a deposit account or accounts. The balance in such accounts,
except such portion thereof as shall be guaranteed by federal deposit insurance, shall at all times
be secured to its full amount by bonds or securities of the types set forth in said Section 7-6-201.
Any of such moneys not necessary for immediate use may be deposited with such depository
banks in savings or time deposits. No money shall at any time be withdrawn from such deposit
accounts except for the purposes of the Fund as defined and authorized in this Resolution; except
as provided in Section 11.7 above and except that money from time to time on hand in the Fund
may at any time, in the discretion of the governing body of the Borrower, be invested in
securities which are direct, general obligations of, or obligations the prompt payment of the
principal of and the interest on which is fully and unconditionally guaranteed by,the United
States of America,bank repurchase agreements with respect to such obligations, certificates of
deposits of national banks having a combined capital and surplus of at least$1,000,000 or in the
Montana short-term investment program administered by the Board of Investments,which
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investments mature and bear interest at the times and in the amounts estimated to be required to
provide cash when needed for the purposes of the respective accounts; provided that funds on
hand in the Reserve Account,the Replacement and Depreciation Account and the Surplus
Account may be invested in said securities maturing not later.than five years from the date of the
investment; and provided, further,that money on hand in the Surplus Account of the Fund may,
in the discretion of the governing body of the Borrower, be invested in any securities which are
direct, general obligations of the Borrower. Income received from the deposit or investment of
moneys in said accounts shall be credited to the account from whose moneys the deposit was
made or the investment was purchased, and handled and accounted for in the same manner as
other moneys in that account.
ARTICLE XII
TAX MATTERS
Section 12.1. Use of 2015 Project and System. The 2015 Project and the System
will be owned and operated by the Borrower and available for use by members of the general
public on a substantially equal basis. The Borrower shall not enter into any lease, use or other
agreement with any non-governmental person relating to the use of the 2015 Project or the
System or security for the payment of the Series 2015 Bond which might cause the Series 2015
Bond to be considered a"private activity bond" or"private loan bond"within the meaning of
Section 141 of the Code.
Section 12.2. General Covenant. The Borrower covenants and agrees with the
owners from time to time of the Series 2015 Bond 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
2015 Bond to become includable in gross income for federal income tax purposes under the
Code and the Regulations, and covenants to take any and all actions within its powers to ensure
that the interest on the Series 2015 Bond will not become includable in gross income for federal
income tax purposes under the Code and the Regulations.
Section 12.3. Arbitrage Certification. The Mayor,the City Administrative
Services Director, and the Clerk of the Commission, being the officers of the Borrower charged
with the responsibility for issuing the Series 2015 Bond pursuant to this Resolution, are
authorized and directed to execute and deliver to the DNRC a certificate in accordance with the
provisions of Section 148 of the Code, and 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 2015 Bond, it is reasonably expected that the proceeds of the Series 2015 Bond will be
used in a manner that would not cause the Series 2015 Bond to be an"arbitrage bond"within the
meaning of Section 148 of the Code and the Regulations.
Section 12.4. Arbitrage Rebate. The Borrower acknowledges that the Series
2015 Bond is subject to the rebate requirements of Section 148(f) of the Code. The Borrower
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 Treasury Regulations to preserve the exclusion of interest on the Series 2015 Bond
from gross income for federal income tax purposes,unless the Series 2015 Bond qualifies for the
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exception from the rebate requirement under Section 148(f)(4)(B) of the Code and no "gross
proceeds" of the Series 2015 Bond (other 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 Administrative Services Director, and the Cleric of the
Commission are hereby authorized and directed to execute a Rebate Certificate, substantially in
the form to be prepared by Bond Counsel, and the Borrower hereby covenants and agrees to
observe and perform the covenants and agreements contained therein, unless amended or
terminated in accordance with the provisions thereof.
Section 12.5. Information Reporting. The Borrower shall file with the Secretary
of the Treasury,not later than August 15, 2015, a statement concerning the Series 2015 Bond
containing the information required by Section 149(e) of the Code.
Section 12.6. "Qualified Tax-Exempt Obligations". Pursuant to Section
265(b)(3)(B)(i)(111) of the Code,the Borrower hereby designates the Series 2015 Bond as a
"qualified tax-exempt obligation"for purposes of Section 265(b)(3) of the Code. The Borrower
has not designated any obligations in 2015 other than the Series 2015 Bond under Section
265(b)(3). The Borrower hereby represents that it does not anticipate that obligations bearing
interest not includable in gross income for purposes of federal income taxation under Section 103
of the Code (including refunding obligations as provided in Section 265(b)(3) of the Code and
including"qualified 501(c)(3)bonds"but excluding other"private activity bonds," as defined in
Sections 141(a) and 145(a) of the Code)will be issued by or on behalf of the Borrower and all
"subordinate entities" of the Borrower in 2015 in an amount greater than $10,000,000.
ARTICLE XIII
CONTINUING DISCLOSURE
The Borrower understands and acknowledges that the DNRC is acquiring the Series 2015
Bond under the Program pursuant to which the State issues from time to time State Bonds to
provide funds therefor. The Borrower covenants and agrees that, upon written request of the
DNRC from time to time,the Borrower will promptly provide to the DNRC all information that
the DNRC reasonably determines to be necessary or appropriate to offer and sell State Bonds or
to provide continuing disclosure in respect of State Bonds,whether under Rule 15c2-12
promulgated by the Securities and Exchange Commission under the Securities Exchange Act of
1934 (17 C.F.R. § 240.15c2-12) or otherwise. Such information shall include, among other
things and if so requested, financial statements of the Borrower prepared in accordance with
generally accepted accounting principles promulgated by the Financial Accounting Standards
Board as modified in accordance with the governmental accounting standards promulgated by
the Governmental Accounting Standards Board or as otherwise provided under Montana law, as
in effect from time to time (such financial statements to relate to a fiscal year or any period
therein for which they are customarily prepared by the Borrower, and, if for a fiscal year and so
requested by the DNRC, subject to an audit report and opinion of an accountant or government
auditor, as permitted or required by the laws of the State). The Borrower will also provide,with
any information so furnished to the DNRC, a certificate of the Mayor and the City
Administrative Services Director to the effect that,to the best of their knowledge, such
information does not include any untrue statement of a material fact or omit to state any material
37
fact required to be stated therein to make the statements made, in light of the circumstances
under which they are made,not misleading.
ARTICLE XIV
DEFEASANCE
Section 14.1. General. When the liability of the Borrower on all Bonds issued
under and secured by this Resolution and all interest thereon has been discharged as provided in
this Article XIV, all pledges, covenants and other rights granted by this Resolution to the
Holders of such Bonds shall cease, other than to the payment of such Bonds from money
segregated for such purpose. The Borrower may also discharge its liability with respect to one or
more Bonds in accordance with this Article XIV.
Section 14.2. Maturity. The Borrower may discharge its liability with reference
to any Bonds and interest thereon which are due on any date by depositing with the Registrar for
such Bonds on or before the date a sum sufficient for the payment thereof in full; or if any Bond
or interest thereon shall not be paid when due,the Borrower 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.
Section 14.3. Prepay. The Borrower may also discharge its obligations with
respect to any prepayable Bonds called for redemption on any date when they are prepayable
according to their terms, by depositing with the Registrar therefor on or before the Redemption
Date a sum sufficient for the payment thereof in full;provided that notice of the redemption
thereof has been duly given as provided in this Resolution or any Supplemental Resolution
relating thereto.
Section 14.4. Escrow. The Borrower may at any time discharge its liability with
reference to any Bonds, subject to the provisions of law now or hereafter authorizing and
regulating such action and the following paragraphs of this Section, by depositing irrevocably in
escrow, with a bank qualified by law as an escrow agent for this purpose, cash or Government
Obligations authorized by law to be so deposited, bearing interest payable at such times and at
such rates and maturing on such dates as shall be required, without reinvestment,to provide
funds sufficient to pay all principal, interest and redemption premiums, if any, to become due on
such Bonds at their stated maturities or, if such Bonds are prepayable and notice of redemption
thereof has been duly given or irrevocably provided for,to such earlier redemption date.
No defeasance shall be made pursuant to this Section 14.4 unless there has first
been presented to the escrow agent a written opinion of nationally recognized bond counsel to
the effect that such defeasance shall not cause the interest on any outstanding Bonds to be
included in the gross income of the holders thereof for federal income tax purposes.
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ARTICLE XV
SUPPLEMENTAL RESOLUTIONS
Section 15.1. General. The Borrower reserves the right to adopt Supplemental
Resolutions from time to time and at any time, for the purpose of curing any ambiguity or of
curing, correcting or supplementing any defective provision contained herein, or of making such
provisions with regard to matters or questions arising hereunder as the Borrower may deem
necessary or desirable and not inconsistent with this Resolution, and which shall not adversely
affect the interests of the Holders of Outstanding Bonds, or for the purpose of adding to the
covenants and agreements herein contained, or to the Revenues herein pledged, other covenants
and agreements thereafter to be observed and additional revenues or income thereafter
appropriated to the Fund, or for the purpose of surrendering any right or power herein reserved to
or conferred upon the Borrower, or for the purpose of authorizing the creation and issuance of a
series of additional Bonds or subordinate lien obligations, as provided in and subject to the
conditions and requirements of this Article XV. Any such Supplemental Resolution may be
adopted without notice to or the consent of the Holder of any of the Bonds issued hereunder,
except that the consent of the DNRC shall be obtained in accordance with Section 16.4 below if
it is a Holder of an outstanding Bond.
Section 15.2. Consent of Holders. With the consent of the Holders of Bonds
issued hereunder as provided in Section 15.4,the Borrower may from time to time and at any
time adopt a Supplemental Resolution for the purpose of amending this Resolution by adding
any provisions hereto or changing in any manner or eliminating any of the provisions hereof or
of any Supplemental Resolution, except that no Supplemental Resolution shall be adopted at any
time without the consent of the Holders of all Bonds issued hereunder which are then
Outstanding and affected thereby, if it would extend the time of payment of interest thereon or
principal thereof,would reduce the interest rate thereon or the amount of the principal or the
redemption price thereof,would give to any Bond or Bonds any privileges over any other Bond
or Bonds,would reduce the sources of revenues or income appropriated to the Fund, or would
reduce the percentage in principal amount of such Bonds required to authorize or consent to any
such Supplemental Resolution.
Section 15.3. Notice. Notice of the Supplemental Resolution to be adopted
pursuant to Section 15.2 shall be mailed by first-class mail to the Holders of all Outstanding
Bonds at their addresses appearing in the Bond Register, and shall become effective only upon
the filing of written consents with the City Administrative Services Director, signed by the
Holders of not less than a majority in principal amount of the Bonds then Outstanding and
affected thereby. Any written consent to the Supplemental Resolution may be embodied in and
evidenced by one or any number of concurrent written instruments of substantially similar tenor
signed by Holders in person or by agent duly appointed in writing, and shall become effective
when delivered to the City Administrative Services Director. Any consent by the Holder of any
Bond shall bind him and every future Holder of the same Bond with respect to any Supplemental
Resolution adopted by the Borrower pursuant to such consent;provided that any Holder may
revoke his consent with reference to any Bond by written notice received by the City
Administrative Services Director before the Supplemental Resolution has become effective. In
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the event that unrevoked consents of the Holders of the required amount of Bonds have not been
received by the City Administrative Services Director within one year after the mailing of notice
of the Supplemental Resolution,the Supplemental Resolution and all consents theretofore
received shall be of no further force and effect.
Section 15.4. Manner of Consent. Proof of the execution of any consent, or of a
writing appointing any agent to execute the same, or of the ownership by any Person of Bonds
shall be sufficient for any purpose of this Resolution and shall be conclusive in favor of the
Borrower if made in the manner provided in this Section 15.4. The fact and date of the execution
by any Person of any such consent or appointment may be proved by the affidavit of a witness of
such execution or by the certification of any notary public or other officer authorized by law to
take acknowledgment of deeds, certifying that the Person signing it acknowledged to him the
execution thereof. The fact and date of execution of any such consent may also be proved in any
other manner which the Borrower may deem sufficient; but the Borrower may nevertheless, in its
discretion, require further proof in cases where it deems further proof desirable. The ownership
of Bonds shall be proved by the Bond Register.
ARTICLE XVI
MISCELLANEOUS
Section 16.1. Notices. All notices or other communications hereunder shall be
sufficiently sent or given and shall be deemed sent or given when delivered or mailed by
certified mail,postage prepaid, to the parties at the following addresses:
DNRC: Department of Natural Resources
and Conservation
1625 Eleventh Avenue
Helena,Montana 59620
Attention: Conservation and
Resource Development Division
Trustee: U.S. Bank National Association
c/o Corporate Trust Services
Two Union Square
601 Union Street, Suite 2120
Seattle, Washington 98101
Attn: Corporate Trust Department
Borrower: City of Bozeman
P.O. Box 1230
Bozeman,Montana 59771-1230
Attn: City Administrative Services Director
Any of the above parties may, by notice in writing given to the others, designate any further or
different addresses to which subsequent notices or other communications shall be sent.
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Section 16.2. BindingEffect.ffect. This Resolution shall inure to the benefit of and
shall be binding upon the DNRC, the Borrower and their respective permitted successors and
assigns.
Section 16.3. Severability. If any provision of this Resolution shall be
determined to be unenforceable at any time, it shall not affect any other provision of this
Resolution or the enforceability of that provision at any other time.
Section 16.4. Amendments. This Resolution may not be effectively amended
without the written consent of the DNRC.
Section 16.5. Applicable Law. This Resolution shall be governed by and
construed in accordance with the laws of the State.
Section 16.6. Captions; References to Sections. The captions in this Resolution
are for convenience only and do not define or limit the scope or intent of any provisions or
Sections of this Resolution. References to Articles and Sections are to the Articles and Sections
of this Resolution,unless the context otherwise requires.
Section 16.7. No Liability of Individual Officers, Commissioners. No recourse
under or upon any obligation, covenant or agreement contained in this Resolution shall be had
against any director, officer or employee, as such,past,present or future; of the DNRC or the
Trustee, either directly or through the DNRC or the Trustee, or against any officer, or member of
the governing body or employee of the Borrower,past,present or future, as an individual so long
as such individual was acting in good faith. Any and all personal liability of every nature,
whether at common law or in equity, or by statute or by constitution or otherwise, of any such
officer or member of the governing body or employee of the DNRC,the Trustee or the Borrower
is hereby expressly waived and released by the Borrower and by the DNRC as a condition of and
in consideration for the adoption of this Resolution and the malting of the 2015 Loan.
Section 16.8. Payments Due on Holidays. If the date for making any payment or
the last date for performance of any act or the exercise of any right, as provided in this
Resolution or the Series 2015 Bond, shall not be a Business Day, such payments may be made or
act performed or right exercised on the next succeeding Business Day with the same force and
effect as if done on the nominal date provided in this Resolution or the Series 2015 Bond.
Section 16.9. Right of Others to Perform Borrower's Covenants. In the event the
Borrower shall fail to make any payment or perform any act required to be performed hereunder,
then and in each such case the DNRC or the provider of any Collateral Document may(but shall
not be obligated to) remedy such default for the account of the Borrower and matte advances for
that purpose. No such performance or advance shall operate to release the Borrower from any
such default and any sums so advanced by the DNRC or the provider of any Collateral
Document shall be paid immediately to the party making such advance and shall bear interest at
the rate of ten percent from the date of the advance until repaid. The DNRC and the provider of
any Collateral Document shall have the right to enter the 2015 Project or the facility or facilities
of which the 2015 Project is a part or any other facility which is a part of the System in order to
effectuate the purposes of this Section.
41
Section 16.10. Authentication of Transcript. The officers of the Borrower are
hereby authorized and directed to furnish to the DNRC and to Bond Counsel certified copies of
all proceedings relating to the issuance of the Series 2015 Bond and such other certificates and
affidavits as may be required to show the right,power and authority of the Borrower to issue the
Series 2015 Bond, and all statements contained in and shown by such instruments, including any
heretofore furnished, shall constitute representations of the Borrower as to the truth of the
statements purported to be shown thereby.
Section 16.11. Effective Date. This Resolution shall take effect immediately.
[Balance of page intentionally left blank]
42
Adopted by the City Commission of the City of Bozeman, Montana, on this 15th
day of June, 2015.
( V�yayor
Attest: m,
Clerk o€th Commission
13
.d*,' '1®off®
PjIv coat
olll
43
APPENDIX C
ADDITIONAL REPRESENTATIONS AND COVENANTS
[None]
C-1
SCHEDULE B
Administrative Loan Loss
Expense Reserve Total Loan
Date Principal Interest Surcharge Surcharge Payment
B-8
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount
Date Advances Advanced Notation Made By
B-7
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Administrative Services Director of the City of Bozeman, Montana, acting as
Bond Registrar, has transferred, on the books of the Borrower, on the date last noted below,
ownership of the principal amount of and the accrued interest on this Bond to the new registered
holder noted next to such date, except for amounts of principal and interest theretofore paid.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
FORM OF ASSIGNMENT
For value received,this Bond is hereby transferred and assigned by the undersigned
holder,without recourse, to
on this day of ,
By:
(Authorized Signature)
For:
(Holder)
B-6
REGISTRATION AND TRANSFER
This Bond shall be fully registered as to both principal and interest. No transfer of this
Bond shall be valid unless and until (1) the registered holder of the Bond, or his duly authorized
attorney or legal representative, executes the form of assignment appearing on this Bond, and (2)
the City Administrative Services Director as bond registrar (the "Registrar"), has duly noted the
transfer on the Bond and recorded the transfer on the Registrar's registration books. The
Borrower shall be entitled to deem and treat the person in whose name this Bond is registered as
absolute owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on
account of the Bond shall be made only to the order of the registered holder thereof, and all such
payments shall be valid and effectual to satisfy and discharge the Borrower's liability upon the
Bond to the extent of the sum or sums so paid.
REGISTER
The ownership of the unpaid Principal Balance of this Bond and the interest accr
thereon is registered on the books of the City of Bozeman, Montana in the name of the regist
il
holder appearing on the first page hereof or as last noted below:
Signature of
Date of Name and Address City Administrative
Registration of Registered Holder Services Director
Department of Natural
Resources and Conservation
1625 Eleventh Avenue rfi'
, 2015 Helena,MT 59620t
THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND
REGISTRAR UPON REGISTRATION OF EACH TRANSFER
The City Administrative Services Director of the City, acting as Bond Registrar, has
transferred, on the books of the City, on the date last noted below, ownership of the principal
amount of and the accrued interest on this Bond to the new registered holder noted next to such
date, except for amounts of principal and interest theretofore paid.
Name of New Signature of
Date of Transfer Registered Holder Bond Registrar
B-5
IN WITNESS WHEREOF, the City of Bozeman, Montana, by its governing
body, has caused this Bond to be executed by the signatures of the Mayor, the City
Administrative Services Director, and the Clerk of the Commission, and has caused the official
seal of the Borrower to be affixed hereto, and has caused this Bond to be dated as of the
day of _ , 2015.
`S 0 Mayor
® . � a $
(SEA )
t
A �^
City)k ministrative rvices Di ector
'' 0.� Cl k 6 OrAmissjC4.
o— 1 3 o
IN
B-4