HomeMy WebLinkAboutOrdinance 63- 839, Refunding water revenue bonds
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. . :f;tIA nt.. t.v. ORDINANCE NO. 839
.'. fj, AN ORDINANCE AUTHORIZING THE REDEMPTION AND REFUNDING
OF OUTSTANDING WATER SYSTEM REVENUE OONDS OF THE CITY
OF BOZEMAN, CREATING SPECIAL FUNDS AND ACCOUNTS FOR THE
PAYMENT OF THE OUTSTANDING BONDS AND REFUNDING BONDS
'. AND THE AIIIINISTRATION OF WATER REVENUES, ESTABLISHING
COVFBANTS OF THE CITY FOR THE SECtmITY OF THE BONDS,
PRESCRIBING RATES AND CHARGES FOR THE USE AND AVAILABILITY
OF MUNICIPAL WATER SERVICE, AND RESCINDING ORDINANCE NO.
800 I
BE IT ORDAINED BY THE COMMISSION OF THE CITY OF BOZEMAN, MONTANA, AS FOLLOWS:
Section 1. Outstanding Bonds.
1.01 In accordance with Ordinance No. 800, adopted August 2, 1957, the City has issued
its Water System Revenue Bonds, Series A, dated July 1, 1957, which are now outstanding in the
aggregate principal amount of $1,105,000, maturing serially on July 1 in the years and amounts
stated below and bearing interest at the annual rates stated oppoeite their respective maturity
years:
I!!!: Amount Interest Rate Year Amount Interest Rate
1963 $20,000 5.00% 1976 $45,000 4. 50%
1964 20,000 5.00% 1977 45,000 4.50%
1965 20,000 4.75% 1978 50,000 4.50%
1966 25,000 4.75% 1979 55,000 4.50%
1967 iZ?;OOO 4.75% 1980 50,000 4. 50%
1968 25,000 4.75% 1981 60,000 4.50%
1969 30,000 4.75% 1982 60,000 4.50%
1970 30,000 4.75% 1983 55,000 4.50%
1971 30,000 4.75% 1984 70,000 4.50%
1972 35,000 4.75% 1985 75,000 4.50%
1973 35,000 4.75% 1986 80,000 4.50%
1974 40 000 4.75% 1987 85,000 4.50%
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1975 40,000 4.75%
The bonds maturing in the years 1968 through 1987 are subject to redemption at the option of the I
City at par plus accrued interest on July 1, 1967. No other bonds or obligations of any kind are
now outstanding, which are payable from or constitute a lien :in any manner upon the revenues of
the municipal water system, other than obligations incurred for current operation and maintenance
of that system. The bonds of Series A and the interest thereon are payable at the office of the
Harris Trust and Savings Bank, in Chicago, Illinois.
1.02 The redemption and refunding of the bonds of Series A is authorized by Title 11, Chap-
ter 24 of the Revised Codes of Montana 1947 and amendatory laws including Chapter 50, Laws of 1963,
and will effect a saving in interest cost to the City. For the purpose of such refunding the City
has advertised and contracted to sell its Water SystEm Revenue Bonds, Seriee B in the principal
amount of $1,010,000, subject to the terms and conditions stated in Section 2. The proceeds of
tlese bonds, including any premium and accrued interest, plus the sum of $lSO,OOO now on hand and
available for thie purpose in the Revenue Bond Account and Surplus Account of the municipal Water
Fund, or so much of this sum as may be required, plus the income to be realized from the invest-
ment of the foregoing amounts as provided below, are irrevocably appropiated for the payment and
redemption of the Series A bonds due July 1, 1963 through 1967 at their respective maturities I
and of the remaining Series A bonds on July 1, 1967, and for the payment of interest to become
due on the bonds on or before that date. The City Director of Finance is directed, simultaneously
with the delivery of the bonds herein authorized, in securities. which are direct general obli8a-
tions of the United States, maturing or callable at the option of the holder on such dates and
bearing interest at such rates that the principal and interest payments thereof, plus any portion
of said sum. retained in cash, will provide funds sufficient to pay and redeem each and all of the
Series A bonds and interest thereon in full at the times hereinabove mentioned, which securitj.es
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and retained cash he shall forthwith deposit in a special escrow account with the Harris Trust
and Savings Bank, Chicago, Illinois. The escroW' account and all income therefrom shall be irre-
vocably appropriated for said purpose. Upon the delivery of the bonds herein authorized, the
Director of Finance shall give notice of the call of each and all of the prepayable bonds of Series
A for redemption on July 1, 1967, and the Mayor and the Clerk of the City Conmission shall execute
on EscroW' Agreement with the Harris Trust and Savings Bank as excrow agent, establishing such account
and providing for the payment and redemption of all Series A bonds, substantially in accordance
I with the form of such agreement which has been approved by the Commission this date and is now
on file with its Clerk. Nothing herein shall impair or otherwise affect the obligation of the
City to maintain the Revenue Bond Acount in its Water Fund and to perform and enforce all of the
covenants contained in Ordinance No. 800 for the security of holders of the Series A bonds, but
the principal thereof and interest thereon shall be primarily payable from said special escrow
account until such bonds are fully paid and redeElD.ed. The expenses incurred by th e City for the
purpose of this refunding shall be paid from the Surplus Account in the Water Fund.
Section 2. Terms of Refunding Revenue Bonds. The refunding revenue bonds authorized and
contracted to be sold as recited in Section 1 shall be designated as Water System R~funding'Revenue
Bonds, Series B, shall be in the aggregate principal~. amount of $1,010,000 and in the denomination
of $5,000 each, numbered serially from 1 to 202, inclusive , shall be dated as of May 1, 1963,
and shall mature serially on July 1 in the years and amounts stated below, bearing interest at
the annual rates stated opposite their respective maturity years:
Year Amount Interest Rats Year Amount Interest Rate
1964 $40,000 2.50% 1974 $50,000 2.60'$
1965 40,000 2.50% 1975 50,000 2.75%
1966 45,000 2. 50% 1976 50,000 2.75%
1967 45,000 2.50% 1977 50,000 2.90%
1968 45,000 2. 50% 1978 50,000 2.90%
1969 45,000 2.50% 1979 50,000 2.90%
1970 50,000 2.50% 1980 50,000 3.00%
1971 50,000 2.50% 1981 50,000 3.00%
1972 50,000 2.60% 1982 50,000 3 1/8%
1973 50,000 2.60% 1983 50,000 3 1/8%
1984 50,000 3 1/8%
plus 1,70% per annum from July 1, 1963 to January 1, 1964, to be represented by a separate coupon.
The interest on the bonds shall be payable January 1, 1964, and semiannually thereafter on July 1
and January 1 in each year. The bonds maturing in the years 1964 through 1973 shall not be subj .:~ct
I to redemption before maturity, but those maturing in the years 1974 through 1984 shall be subject
to redemption and prepayment at the option of th~ City in whole or in part, in inverse order of
their aerial numbers, on July 1, 1973, and any interest payment date thereafter, at par plus
accrued interest provided that not less than thirty days before the redemption date specified.
notice of the call of each bond to be prepaid shall be mailed by the Director of Finance by
registered mail to the holder thereof, if known to him, and to Kalman & Company, Inc., Minneapolis,
Minnesota, and to the Harris Trust and Savings Bank, Chicago, Illinois, and shall also be published
in an issue of a newspaper at Bozeman, Montana, and in an issue of a daily financial newspaper
at New York City, New York. The Director of Finance and his successors in office shall maintain
a record of the names and addresses of the holders of prepayable bonds, so far as this information
is conununicated to him by the bondholders. The bonds and interest thereon shall be payable at
the office of the Haitris Trust and Savings Bank, in Chicago, Illinois, in any coin or currency
of the United States of America which on the respective dates of payment is legal tender for
public and private debts, and the reasonable and customary charges of the paying agent shall
be paid and accounted for as an operating cost of the municipal water system. In the event of
the resignation of the paying agent or its consolidation or merger, a successor paying agent
shall be selected in the same manner as provided in the Escrow Agreement referred to in Section
1.02, for the selection of a successor escrow agent in like circumstances.
Section 3. Form of Bonds and CoupOns. The Water System Refunding Revenue Bonds, Series B
and the interest coupons appurtenant thereto shall be in substantially the following form:
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEmN
WATER SYSTl!)I REFUNDING REVENUE BOND
SERIES B
No. $5,000
I KNOW ALL Ml!N BY THESE PRESmTS that the City of Bozeman, a duly organized municipal corporation
of Gallatin,.County, Montana, hereby promises to pay to bearer or, if this bond is registered as to
principal as provided below, to the registered holder hereof, upon presentation and surrender of this
bond, out of the Series B Revenue Bond Account of its Water Fund, the sum of FIVE THOUSAND DOLLARS
on the 1st day of July, 19 , or, if this bond is prepayable, as stated below, on a prior date on
which it shall have been duly called for redemption, and to pay interest thereon from the date hereof
until the principal sum is paid or, if this bond is prepayable, until it has been duly called for
redemption, at the rate of per cent ( %) per annum, payable January 1, 1964,
and semiannually thereafter on -the 1st day of July and the 1st day of January in each year, interest
to maturity being represented by and. pqab1e in accordance with and upon presentation and surrender
of the interest coupons appurtenant hereto. :;Both principal and interest are payable at the office
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of the Harris TrUst and Savings Bank, in Chicago, Illinois, or at the office of any successor paying
agent appointed pursuant to the ordinance referred to below, in any coin or currency of the United
States of America which on the respective dates of p@.-,ment is legal tender for public and private debts.
This bond is one of a series in the total principal amount of $1,010,000, all of like date and
tenor except as to serial number, interest rate, maturity and redemption privilege, issued for the
purpose of providing moneys sufficient, with funds on hand, to pay, redeem and refund each and all 01\l~
the City's outstanding Water System Revenue Bonds, Series A, pursuant to and in full conformity with I
the provisions of the Constitution and laws of the State of Montana and the ordinances of the City
of Bozanan thereunto enabling, including Title II, Chapter 24 of the Revised Codes of Montana 1947,
as amended, and Ordinance No. 839 of the City, duly enacted on April 15, 1963.
Bonds of this series maturing in the years 1964 to 1973, inclusive, are payable at their res-
pective stated maturity dates without option of prior payment, but those maturing in the years
1974 to 1984, inclusive, are subject to redemption and prepayment at the option of the City in
whole or in part, in ;1ilverse order of their serial numbers, at par plus accrued interest, on July I,
1973, and on any interest payment date thereafter. Not less than thirty days in advance of the date
fixed for redemption of any of said bonds, the City will mail notice of the call thereof to the holder,
if known, and to the bank at which principal and interest are then payable, and will cause such
notice to be published in a newspaper at Bozeman, Montana, and a financial newspaper at New York City,
New York. Holders of prepayable bonds may have their names and addresses and the serial numbers of
their bonds recorded by the Director of Finance of the City of Bozeman for the purpose of receiving
such mailed notice, with or without registering such bonds as provided below.
This bond is transferable by delivery except while registered as to principal in the name of
a holder on books kept at the office of the Harris Trust and Savings Bank, in Chicago, Illinois
(or at the office of any successor paying agent appointed pursuant to said ordinance), such
registration being noted hereon by the paying agent. While so re@istered, no transfer hereof shall
be valid unless made on said registry by the registered holder in person or by his attorney duly
authorized in writing and similarly noted hereon, but this bond may be discharged from registration
by being in like manner transferred. and registered to bearer, and thereupon transferability by
delivery shall be restored.; but the bond may again and from time to time be registered in the name
of a holder and transferred to bearer as before. Such registration shall not affect the negotiability
of the coupons appurtenant hereto, which shall always cont1.nue payable to bearer and transferable by
delivery.
THE CITY OF BOZEMAN CERTIFIES, RECITES, COVENANTS AND AGREES that until this bond is paid and
discharged. as provided in said ordinance it will maintain on its official bOoks and records, separate
from all other municipalf'unds, a Water Fund into which will be paid as received the gross revenues
of its municipal water system, including all properties and equipment used or useful for the supply I
and distribution of water and all future additions thereto and replacements and improvements thereof,
and a Series B Revenue Bond Account therein, into which will be paid so much of the net water
system revenues, in excess of normal, reasonable and current operating expenses, as may be required
to pay all principal and interest on bonds of this series when due and to maintain at all times a
reserve of $80,000; that it has established and will maintain and revise when necessary, subject
to regulation by the Public Service' Commission of the State of Montana, reasonable rates and charges
for all services and facilities made available by the municipal water system, sufficient to produce
net revenues in each fiscal year equal to at least 150% of the principal and interest due on all
bonds of this series during such year; that such bonds constitute and will remain a first and prior
lien and charge on the entire net revenues of the system, subject only to the lien of the Water
System Revenue Bonds, Series A, all of which are due and payable before or have been duly called for
redemption on July 1, 1967; that the City has deposited in escrow, with the bank designated as paying
agent for the Series A bonds, cash funds and general obligations of the United States maturing and
bearing interest payable on such dates and in such amounts as will be sufficient to pay all principal
and interest due on the Series A bonds on and before such redemption date, and has irrevocably
appropriated for this purpose the funds and securities so deposited; that except as expressly
authorized in said ordinance, no other obligation will be incurred and made payable from such net
revenues, whether or not it shall also constitute a general obligation and indebtedness of the City,
unless the lien thereof shall be expressly made subordinate to the lien of the bonds of Series B on
such net revenues; that all provisions for the security of the holder of this bond set forth in
said ordinance will be punctually and faithfully performed as stipulated therein; that all acts,
conditions and things required by the Constitution and laws of the State of Montana to be done, to
exist, to happen and to be performed in order to make this bond a valid and binding special obligation
of the City ot Bozeman according to its terms have been done, do exist, have happened and have been
performed as so required; and that the issusnae of this bond did ,not cause the special or general
indebtedness of the City to exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF the City of Bozeman, Gallatin County, Montana, by its City Commission, has
caused this bond to be eXecuted. in its behalf by the signatures of its Mayor and its Director of
Finance and countersigned by the Clerk of the Commission, one of such officers having signed. manually,
and the other by true and correct facsimiles of their signatures reproduced hereon, and has caused I
this bond to be sealed. with its 'corporate seal, and the appurtenant interest coupons to be executed
and authenticated by the true and correct facsimile eignatures of said officers, and has caused this
bond to be dated as of May 1, 1963.
Countersigned: Mayor
Clerk of the City Commission Director of Finance
(SEAL)
(Form of Coupon)
No. $
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On the 1st day of January (July), 19 , the City of Bozeman, Gallatin County, Montana, will
pay to bearer at the office of the Harris Trust and Savings Bank, in Chicago, Illinois, out of
the special fund and account named in the bond described below, the slim shown hereon in lawful
money of the United States of America for interest then due on its Water System Refunding Revenue
Bond, Series B, dated May 1, 1963, No.
(Facsimile signature) (Facsimile signature) (Facsimile signature)
Clerk of the City Commission Director of Finance Mayor
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(Coupons due after the earliest redemption date of the bond to
which they appertain shall also contain the phrase: "Unless
the bond described below is called for earlier redemption".)
(Provision for Registration)
The within bond has been registered, as to ownership of principal only, on the bond registry
of the City of Bozeman, Montana, kept at the office of the paying agent, the Harris Trust and
Savings Bank, in Chicago, Illinois (or any successor paying agent duly appointed).
NO WRITING HEREON EXCEPT BY AN AUTHORIZED OFFICER OF THE PAYING AGENT
Date of Rep:istration Re.ltistered Owner Authorized Officer's Sip:nature
'Section 4. Execution. DeliverY and Investment of Proceeds. The bonds of Series B shall be
prepared for execution under the direction of the Director of Finance and shall be executed on
behalf on the City by the signatures of the Mayor and Director of Finance ani countersigned by
the Clerk of the City Commission. Each bond shall be signed by one of these of ricers manually,
and the facsimile signatures of the other officers may be engraved, printed or lithographed
thereon. The interest coupons appurtenant to each bond shall be executed and authenticated by
I facsimile signatures of the same officers, similarly reproduoed. The Director of Finance shall
then cause the bonds to be delivered to John Nuveen Be Company , of Chicago Illinois,
as purchaser, upon payment of the par value plus accrued intereSt to the date of delivery, plus
the premium. specified in the contract of sale. The purchaser shall not be obligated to see to
the application of the purchase price, but the Director of Finance shall simultaneously invest
the proceeds of the bonds and the additional funds appropriated in Section 1.02 in United States
government obligations and deposit such securities and any portion of such funds retained in cash
with the escrow agent, in accordance with the provisions of Section 1.02. At or before the time
of such delivery the Director of Finance shall aleo give notice of the call of the Series A DOndS,
and the Mayor"'and the Clerk of the City Conmrl.ssion shall execute the Escrow Agreement.
Section 5. Water Fund
5.01 Pledp:e of Revenues. Until the bonds of Series B are fully paid and discharged as provided
in Section 9, all of the gross revenues to be derived from the operation of the municipal water
system, including all properties and equipment used or useful for the supply of and distribution
of water and all future additions thereto and replacements and improvements thereof, are irrevocably
pledged and appropriated. to its Water Fund, which will be segregated and maintained at all times as
a separate and special fund in the CitY's~official books and records, and will be accounted for,
applied, expended, deposited and secured as provided in this section. Gross revenues are defined
to include all income and receipts derived from rates, charges and rentals imposed for connections
with and for the use and availability of the water system, and all proceeds of sales of properties
and equipment thereof, and all penalties and interest on such rates, charges and rentals, but
shall not include special assess.ljl.ents, or deposits made bJl customers to secure payment of meter
rentals or other charges. All gross revenues reeei ved. shall be deposited daily with one or more
depository banks duly quS.lified. in accordance with ReM 16-2618, in a water account, and if deposits
coatain other than water f\U1ds, such other funds shall be segregated in not more than 30 days and
withdrawn from the water acco\U1t. The water account shall be separate and apart from all other
bank accounts of the City, and the balances therein, except that portton guaranteed by Federal
Deposit Insurance, shall at all times be secured to their full amount by the pledge of securities
of the types described in ReM 16-2618. The Water Fund shall be subdivided on the official books
I and records of the City into the separate accounts named and described below, and the gross revenues
received in each calendar month shall be apportioned to the respective accounts not later than the
15th day of the following month and thereafter accounted for and expended as provided in this section.
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5.02 OperatinJ<: Account. To this account shall be credited each month, as a first lien and
charge on the gross revenues, such amount as may be required, with the balance then held in that
account, to pay the reasonable and necessary operating expenses of the system which are then due
and paJlB.ble or are to be paid within one month. The Operating Account shall be ulled.i solely to
pay current operating expenses of the water system, which are defined to mean the expenses of
operation, maintenance and current repair of the sJlstem and all parts therof, as calculated in ac-
cordance With accepted accounting practice, and shall include, but without limitation, administrative
expenses of the City relating solely to the water system, premiums for insurance on the properties
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and equipment thereof, labor and the cost of materials and supplies used for current operation and
maintenance, and charges for the accumulation in accordance with accepted accounting practice of
appropriate reserves for expenses which may reasonably be expected to recur periodically though
not monthly. Operating expenses do not include any allowance for depreciation or for renewals or
replacements or capital assets of the water system, or any part of the salary or compensation of
any City officer or employee except to the extent that his working time is actually devoted to the
operation and maintenance of the system. Net revenues now on hand in the amount of $10,000 are
appropriated to this account and shall be maintained as an Operating Reserve, over and above the
monthly apportionments to the Operating Account which are otherwise required. The Operating Re- I
serve may be increased if reasonably determined by the City Manager and Director of Finance to
be nece8sary to meet contingencies arising in the operation and maintenance of the system. However,
no additional funds shall be transferred to maintain or increase the Operating Reserve except from
revenues in excess of the current requirements of the Series B Revenue Bond Account as provided below.
5.03 Series B Revenue Bond Account. The net revenues of the water system are defined. to
include the entire amount of the gross revenueB remaining upon each monthly apportionment after
crediting to the Operating Account the amount required in Section 5.02, exclusive of any sum
required to maintain or increase the Operating Reserve. From the net revenues the Bum of ~9,OOO
shall continue to be credited each month to the Revenue Bond Account created by Ordinance No. 800
until all Series A bonds issued thereunder have been fully paid and redeemed. The funds and
securities to be deposited under the Escrow Agreement exoeed the amount required to be held~ as
a reserve in the Revenue Bond,o:,Aooount, and the escrow agent is required by that Ag:reement to rsnit
to the paying agent for the Series A bonds, out of such funds and the payments of principal and
interest received. on such secftritieB, amounts suffioient at the times required to meet eaoh
principal and interest payment due on the Series A bonds on and before the date. :when they are
called for redemption. Accordingly, upon the completion of all such transfers required to be
made at or before the end of each fiscal year on June 30, all net revenues then on hand in the
Revenue Bond Acoount are available and so muoh thereof as may be necessary shall be transferred
by the Director of Finance to a separate Series B Revenue Bond Account, to pap principal and
interest when due on the Water System Refunding Revenue Bonds, Series B, and to ihaintain at all
times a reserve of not less than $80,000 seouring suoh payments. Net revenues in this amount
are noW on hand and available and are hereby appropriated and shall be deposited in the Series B
Revenue Bond Account for the creation of this reserve. From and after July 1, 1967, all sums
required to be transferred. from the special escrow account to the paying agent for the Series A
bonds having been trans,f.erred in accord~ce'withtheE8crowAgreement:, tne,;Revenue Bond Aocount
shall be discontinued, and there shall then be transferred out of the net revenues each month
to the Series B Revenue Bond Account a sum equal to one-sixth of the interest plus one-twelfth
of the principal next due on the Water System Refunding Revenue:':Bonds, Series B, plus suoh
amount, if any, as may be required to maintain the reserve in that account at the amount stated
above. The oredits'of net revenueB herein required to be made to the Series B Revenue Bond Account ,. I
are cumulative and if any such sum cannot be credited in full on the date herein provided, the
defioiency shall be restored to the Series B Revenue Bond Account out of the next net revenues
thereafter becoming available. The net revenues received each month and not otherwiBe appropriated
herein, plus the balance remaining in the Series B Revenue Account at the end fiscal year in exces8
of prinoipal and interest due on July 1 immediately following and the then amount of the required
reserve, are referred to herein as "eurplus net revenues" and shall be available for transfer to
other aocountsas provided below; except that if the balance in the SerieB B Revenue Bond Account
should at any time be insufficient to pay principal or interest due, the deficiency shall be paid out
of any surplus net revenues then on hand in the Water Fund. The right is also reserved by the City
to oreate one or more additional revenue bond acoounts for the segregation of 8urplUI net revenues
pledged to the payment of future issues of revenue bonds expressly made subordinate to the lien of
the bonds of Series B on the net revenues, and to provide for the transfer of surplus net revenues
to such accounts in advanoe of credits hereinafter directed to be made to other accounts of the Water
Fund.
5.04 Replacement and Depreciation Aocount. To this account shall be credited upon each monthly
apportionment so much of the surplus net revenues as the City Manager and Director of Finance shall
determine to be required for the accumulation gf a reasonable allowance for depreciation of the water
system and for replacement or renewal of worn-out, obsolete or damaged propertieB and equipment there-
of, aggregating a sum not less that 5% of the gross revenues received during each fiseal year. This
account shall be used only for the foregoing purposeB, or to pay principal or interest due on revenue
bonds when other net revenueB are not .Elufficient, or, if so directed by the COmmission, to redeem and
prepay or to purchase revenue bonds in the manner and subject to the conditions stated in Section 5.05
or to pay the COBt of improvements to the system.
5.05 Surplus Aooount. All surplus net revenues remaining eaoh month after the credits required.
above shall be credited to the Surplus Account, and the balance in this aocount from time to time,
when not required to restore a current deficienoyin any other account in the Water Fund, may be used.
(a) to redeem and prepay bonds payable from the revenues of the water system when and as they become
prepayable according to their terms; (b) to purchase any such bond on the open market at a dollar
price lesB than the dollar amount of principal and interest payable on'and before the earlieBt date I
on which the bond 1s prepayable acoording to itB terms, or the dollar amount of prinoipal and interest
payable to maturity if the bond is not prepayable, provided that all bonds purchased shall be canceled
forthwith; (0) to be held as a reserve for redemption of bonds payable from the revenues of the water
system which are not then but will later pe prepayable aocording to their terms; (0) to pay for repairs
of public water mains or conneotions thereof to the curb lines of private property abutting thereon,
or for water meters, or for the construction and installation of water mains whioh are not, or the
portion of the cost thereof which is not, legally assessable against such property, or for improvements
or additions to the water supply and treatment and storage facilities; or (e) to restore the Operat-
ing Reserve or increase the same when determined by the City Manager and Director of Finance to be
necesBary. No water fund moneys shall at any time be transferred from the Surplus Account or any other
aocount of the Water Fund to any other fund of the City, nor shall any suoh moneys at any time be loaned
to any other municipal funds or invested in warrants, special improvement bonds or other obligations
payable from other municipal funds.
5.06 Investments. Moneys from time to time on hand in the reserve in the Series B Revenue Bond
Account or in the Replacement and Depreciation Aocount or in the Surplus Account may, in the disoretion
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of the City Commission, be invested in seourities which are general obligations of the United
States, maturing not more than five yeare from the date of such investment. The inoome from
any investment shall be oredited to the fund and aooount from whioh it was pUrchased, and
acoounted for in the same manner as other moneys in that fund or account. The foregoing limi-
tations on the maturities of such investments shall not be applicable to securities punchased
and deposited in 8.8CPOW for the purpoee of refunding as provided in Section 7.
Section 6. Order of Payment. Each and all of the bonds of Series B shall be equally and
I ratably secured by and payable out of the net revenues appropriated to the Series B Revenue Bond
Account, without preference or priority of anyone bond over any other; except that if any time
the balance in that aocount should be insufficient to pay all principal and interest due on such
bonds and cannot be made sufficient by' transfers of surplus net revenues, it shall be used first
to pay pro rata the interest then due on all suoh bonds, and any remainder shall be applied to
the payment of matured. Donds in order of their serial numbers, lowest numbers first.
Section 7. Additional Revenue Bonds.
7.01 The City reserves the right and privilege of ref\U1ding any matured bonds of Series B
for the payment of which revenues are not aaailable within the limitations prescribed in Section
6, by the issuance and sale of ref\U1ding revenue bonds.
7.02 The City also reserves the right and privilege of ref\U1ding any bonds of Series B by
the issuance of refunding revenue bonds in an amount sufficient, with any moneys appropl'iated for
that purpose from accounts of the Water Fund other than the Operating Account, and any income
from investments of such moneys and of the proceeds of the refunding revenue bonds, to pay all
principal and interest due on such bonds to the date or dates upon which they mature or will be-
come prepayable according to their terms or by consent of the holders, provided that such bond
proceeds and other funds and investments are irrevocably deposited in escrow for that purpose
at or before the time of issuance of the refunding revenue bonds, in the manner provided. by
law.
7.03 Refunding revenue bonds issued pursuant to Sections 7.01 and 7.02 may be made pay-
able from the net revenues on a parity as to interest with all then outstanding bond's of Series
B, provided that the maturity of each such refunding revenue bond is subsequent to the last mat-
urity of the then outstanding bonds of Series B which are not so refunded. Except ae provided
in these sections, no obligation will be incurred by the City and made payable from the net rev-
enues of the water system, whether or not such obligation shall also constitute a general obliga-
tion and indebtedness of the City, unless the lien thereof upon the net revenues is expressly
made subordinate to that granted for the security of the bonds of Series B. No holder of any
bond shall be required to accept a refunding revenue bond in exchange therefor.
I Section 8. Covenants.
8.01 The City of Bozeman covenants and agrees with the purchaser and the holders from
time to time all bonds of Series B that it will punctually and faithfully do and cause to be done
by all of its officers and employees all things required by the provisions of this ordinance which
in any manner tend to assure or improve the security or marketability of the bonds and specific-
ally, but without limitation of the foregoing, makes the additional covenants and agreements stated
in this section.
8.02 It will maintain, preserve, keep and operate the properties and equipment of the water
system and all additions thereto and improvements and extensions thereof in good repair, working
order and operating condition in conformity with standards customarily followed for water systems
of li~e size and character, and will operate and administer the system and its funas and revenues
in an efficient manner and at reasonabLe cost.
8.03 It will not sell, lease, mortgage, pledge or otherwise dispose of or encumber all or
substantially all of the properties and equipment of the eyetem and will continue to operate it
as a public utility until the bonds are paid and dispharged in accordance with Section 9, and will
not extablish or authorize the establishment of any other system for supp~ying water service in
competition therewith in the City of Bozeman.
8.04 It will not sell or otherwise dispose of any portion of the properties and equipment
of the system except at its fair market value and upon a determination of the City Man~ger that
it is no longer required for use in the operation of the system, unless the properties or equip-
ment so disposed of are simultaneoue1y replaced by others of equal utility. The proceeds of any
such sale or disposition shall be used. either to purchaee other properties or to pay revenue
bonds.
8.05 It has established and will maintain and revise when necessary, subject to regulation
by the Public Service Conrnisslon of the State of Montana, reasonable rates and charges for all
I services and facilities made available by the water system, sufficient to produce net revenues
in each fiscal year equal to at least 150% of the principal and interest due on all bonds of Ser-
ies B during such year, and will 60 all things necessary to enforce and collect such rates and
charges. The establishment of this ratio is deemed necessary in order to market the bonds upon
advantageous terms, to provide adequately for replacements, renewals and capital improvements
which may be required to maintain adequate service for the present population and the increase
thereof reasonably to be expected, and to permit savings of inter.,t by prepayment of bonds from
any revenues which may in future be available after providing for these requirements. If on
June ,30 in any fiscal year the net revenues of that year have not been sufficient for compliance
with this covenant, whether because of increaeed costs of current operation ani maintenance or
for any other reason, the City Will forthwith prepare a schedule of increased rates, charges and
rentals, sufficient to produce net revenues in the $mOunt required, and will submit the eame to
the Public Service Commission with an adequate rate Itudy and supporting data so that such schedule
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may be placed in effect at the earliest possible date. The minimum net revenues for compli-
ance with this covenant are as follows:
Fiscal Year Net Revenues Fiscal Year Net Revenues Fiscal Year Net Revenues
Endin~ June 30 Required Endinll.: June 30 ReQuired EndiJut June 30 Required
1965 $100,781.25 1972 $103,968.75 1979 $89,793.75
1966 99,281.25 1973 102,056.26 1980 87,618.75
1967 105,187.50 1974 100,106.25 1981 85,406.25
1968 103,500.00 1975 98,156.25 1982 83,156.25 I
1969 101,812.50 1976 96,150.00 1983 80,859.38
1970 100,125.00 1977 94,087.50 1984 78,515.63
1971 105,843.75 1978 91,968.75 1985 76,171.88
8.06 It will at all times keep the properties and equipment of the water system. insured
by reputable inaureen, in amounts and against all risks for which like private utility proper-
ties in Montana are customarily insured by prudent owners thereof, and will at all times keep
persons handling any funds of the water system adequately bonded for the faithfulperformaac:le
of their duties and their obligation to account for and pay over such funds to the City; and
in the event of loss, damage or default covered by any such insurance or bond, the City will
use the proceeds thereof to restore the sante or to pay bonds of Series B. It will at all times
keep proper and adequate books of account showing all receipts and disbursments of moneys
derived from the operation of the water system, in accordance with the laws of the State of
Montana and the regulations of the Public Service Commission, which books shall show the segrega-
tion and application of the revenues of the system in accordance with this ordinance, and shall
be available for inspection and copying during any reasonable business hours by the holder of
$5,000 or more in principal amount of the bonds of Series B or his agents or attorneys. Not
later than the 15th day of each month the City will cause to be prepared and forwarded to Kalman
& Company, Inc., Minneapolis, Minnesota, a report showing the cash receipts of and'expenditures
from each of the accounts of the Water Fund during the preceding month, and the cash balance
on hand in the amount of unpaid warrants outstanding against each of such accounts ae of the
1st day of such preceding month.
8.07 It will cause the books and records of the Water Fund to be audited for each fiscal
year by a certified public accountant mutually agreeable to the City and to Kalman & Company, Inc.
The aOOit shall be completed each year within 60 days after the close of the fiscal year and the
City will then on request, without cost, furnieh a copy of the report of the audit to any holder
of $5,000 or more principal amount of the bonds of Series B. In addition to whatever other matters
may be thought proper by the certified public accountant, each audit shall include the following:
(a) a statement in detail of the income and expenditures of the 'Water system for the fiscal year,>:'
separating and identifying capital expenditures from operating expenditures; (b) a balance sheet I
as of the end of the fiscal year; (c) the accountant's comments regarding any failure of the City
to carry out the requirements at this ordinance, and his reconmendation for any change in the
administration of the system necessary to comply hereri:th; (d) a list of the mnsurance policies
in force at the end of the fiscal year, setting out as to each policy the amount of the policy,
the risks covered by it, the name of the insureer, and the expiration date of the policy; and
(e) the number of metered water customers and the number of unmetered water customers at the end
of the fiscal year.
8.08 The insurance and fidelity bond premiums and the cost of the bookkeeping and audits
herein required, and of the billing and collection of water rates, charges and rentals, shAll be
payable from the Op~rating Account.
8.09 The holders of 2CJf, or more in aggregate principal amount of the bonds of Series B which
are at any time outstanding mp.y, either at law or in equity, by suit, action, mandamus, application
for appointment of a receiver or other proceeding, protect and enforce the rights of all owners
of such bonds, and may enforce and compel the performance of all covenants and duties of the City
and its officials as herein stat ed, including the fixing and maintaining of sufficient rates, charges
and rentals for the services afforded by the system, the collection and proper segregation of the
revenues, and the proper application thereof.
8.10 If default should be made in the prompt payment of the principal amount of any bond
of Series B when due and payable, or if default should be made in the payment of any interest on
such bonds for 30 days after the same beeomes due and payable, or if the City should default in
the performance of any covenant contained in this ordinance and such default continues for a
period of 60 days, in any of such events the City Commiseion shall immediately conduct an official
and thorough investigation of the circumstances causing such default and shall replace any personnel
determined to be responsible therefor and ehall adopt such new and/or improved operating policies
as are deemed necessary to bring the operation of the water department into full compliance with
all of the requirements and provisions of this ordinance, and shall also petition the Public Serice
Commission for such revision of rates, charges and rentals as may be necessary for that purpose.
The right of any holder or holders of the bonds of Series B to require such action or actions i5
not exclusive of any other right granted them \U1der this ordinance, and in any event of default I
herein mentioned such holder or holders shall have the right to proceed in law or in equity to
require the performance of all covenants herein cont4ined, in any action which to them shall seem
appropriate, subject to the right of the holders of bonds in the amount stated in Section 8.09
to represent all bondholders in any action or proceeding instituted by them.
Section 9. Defeasance.
9.01 When all of the Water System Refunding Revenue Bonds, Series B and all coupons apper-
taining thereto have been paid and discharged as provided in this section, all pledges, covenants
and other rights grAil'ed by this ordinance shall cease.
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9.02 The City may pay and discharge all bonds and coupons due on any date by depositing with
the paying agent or any successor paying agent on or before that date a sum sufficient for the
payment thereof in full; and if any bond or coupon should not be paid when due, the same may
nevertheless be paid and discharged by depositing with the paying agent, or any successor paying
agent, a sum sufficient for the payment thereof in full with interest accrued from the due date
to the date of such deposit.
9.03 The City may pay and discharge all prepayable bonds called for redemption on any date
I when they are prepayable according to their terms, by depositing with the paying agent or any successor
paying agent on or before that date a sum sufficient for the payment thereof in full, provided.
that notice of the redemption thereof has been duly given as provided in Section 2.
9.04 The City may pay and discharge alltpnds of Series B at any time by irrevocably deposit-
ing in escrow with the paying agent or any successor paying agent, for the purpose of paying all
principal and interest due on such bonds prior to a date upon which all of the same will be
prepayable according to their terms, and paying all remaining bonds of the series on that date,
a sum of cash and securities which are general obligations of the United States, in such aggregate
face amo\Ult, bearing interest at such rates and maturing or callable at the holder's option on
such dates as shall be required to provide f\Ulda sufficient for this purpose; provided that notice
of the redemption of all prepayable bonds of the series on or before such date has been duly given
as required by Section 2.
9.05 Any moneys or securities which at any time shall be deposited by or on behalf of
the City with the paying agent or any successor paying agent for the purpose of paying and dis-
charging any bonds or coupons shall be held by such paying agent in trust for the respective holders
of such bonds or coupons and are hereby irrevocably appropriated to such payment and discharge.
9.06 Notwithstanding any other provision of this ordinance, any moneys held by the paying
agent or a successor paying agent for the payment and discharge of any Series B bond or coupon,
which remain \Ulclaimed after the date when the bond or coupon has become due and payable, whether
at its maturity date or at a previous date at which it has been duly called for redemption, or
which remain unclaimed after the date of deposit of moneys for the payment and discharge of a
bond or coupon not paid when due or called for redemption, for a period of five years after such
due date, redemption date or deposit date, shall be free from such trust and shall. promptly there-
after be transferred to the City by such paying agent, and the paying agent shall be released and
discharged with respect thereto, and the holders of bonds and coupons payable from any such moneys
shall look only to the City for the payment thereof.
Section 10. Re~tions for Water Service. The em.ployee'._ of the City's Water Department,
under the direction and control of the City Manager, shall issue statements and collect bills for
I the rates, charges and rentals for water service and for any other moneys currently receivable
on aCCO\Ult of the water system. All moneys collected shall be remitted to the Director of Fin-
ance daily, and receipt taken therefor, and shall be accounted for by the Director of Finance.
The rules and regulations for the operation of the Water Department and the use of water service
shall be as provided in the ordinances of the City now and hereafter adopted; except that all
bills for water service shall become due and payable on the 1st day of each month, and if apy
bill is not paid on or before the 15th day of that month it-wrn tn-en become delinquent and if
nQt~_'p~i~_ J.n full by the 15th of the following month, water service to the premises involved
shall be discontinued until payment of all past due bills for water service or other water system
accoWlts has been made and full compliance with all such rlolles and regulations has been met.
Information printed on the monthly water bill serves as a notice of delinquency and of the fore-
going rules and regulations. The City Man~ger shall be bonded for the prompt and full perfonnance
of all duties imposed upon him and officers and employees of the City under his supervision, with
reference to the collection of bills and the enforcement of compliance with regulatiop,s, and fail-
ure on the part of any such officer or employee to perform such duties shall constitute malfeas-
ance tor which he shall be personally liable.
Section 11. Water Rates and Char~es. Until otherwise prescribed by ordinance, the rates,
charges and rentals for all services and benefits provided by the muncipal water system shall be
those filed by the City with the Public Service Commission of the State of Montana pursuant to
that Commission'S Order No. 2647, Docket No. 4493, dated April 1, 1957, as amended at the meeting
of the Commission December 16, 1957, (Minute Entry No. 6S5). Water meters shall be installed and
maintained in all public buildings owned by the City of Bozeman and all other public oorporations
and political subdivisions, and water service to each such public building shall be billed to the
corporations conerned. at the same rates as those applicable to private patrons of the water system.
The City of Bozeman shall also pay the S\UU of $1.00 per month in respect of each water hydrant
now or hereafter maintained by it, such sUm. being fOWld and determined. to represent the reason-
able cost and value of water service to be furnished and made available to the City for purposes
of sanitation and maintenance of streets, parks and public places and for fire protection. All
amounts to become due in respect of service furnished and abailable to the City shall be included
in the annual budget and shall be paid as the l3ervice accrues out of the appropriate f\Ulds of the
I City. Amounts so received from the City and from all other public corporations shall be handled
and accounted. for in the same manner a.e other revenues of said water system.
Section 12. Repeal1!3. All provisions of ordinances, resolutions and other actions and pro-
ceedings of the City and of the City Commission Which are in any way inoonsistent with the terms
and provisions of this ordiance are hereby repealed, amended and rescinded to the full extent nec-
essary.to give full force and effect to the provisions of this ordinance. Ordinance No. SOO, adopted
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August 2, 1957, is rescinded and shall cease to be in force and effect on that date on which each
and all of the Water System Revenue Bonds, Series A, shall have been fully paid and redeemed, with
all interest accrued thereon.
Section 18. Effective Date. This ordinance shall be in full force and effect 30 days from
and after its final passage.
Passed by the City Commission of the City of Bozeman, Montana, this 15th day of April, 1963. I
Approved: sl Fred M. Staudaher
Mayor
Attest: sl C. K. Wilson
Clerk of the City qommission
( SEAL)
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