HomeMy WebLinkAboutOrdinance 72- 917, Refinances sewerage system.
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ORDINANCE NO. 917
AN ORDINANCE RELATING TO THE BOZEMAN MUNICIPAL SEWERAGE SYSTEM; PROVIDING FOR
THE ISSUANCE OF $1,325,000 SEWERAGE SYSTEM REFUNDING REVENUE BONDS, THE RE-
FUNDING AND REDEMPTION OF ALL OUTSTANDING REVENUE BONDS, AND COVENANTS SECUR-
ING THE PAYMENT OF THESE AND FUTURE ISSUES; PLEDGING REVENUES OF THE SYSTEM
TO SPECIAL FUNDS AND ACCOUNTS FOR ITS OPERATION, MAINTENANCE, DEBT SERVICE,
REPA IR AND REPLACEMENT; AND RESCINDING ORDINANCE NO. 887.
BE IT ORDAINED BY THE COMMISSION OF THE CITY OF BOZEMAN:
Section 1. Authorization of Refunding.
1.01 Pursuant to Ordinance No. 887, dated October 1, 1969, and as authorized at the special
election held September 10, 1968, the City issued revenue bonds to finance the reconstruction, im-
provement, betterment and extension of the municipal sewerage system, which are now outstanding in
the amount of $1,325,000, bear interest at 6% per annum, and mature on July 1 in the amount of
$50,000 in each of the years 1972 through 1978, $75,000 in 1979, and $900,000 in 1980, subject to
the right reserved to redeem and prepay on July 1, 1976, all bonds maturing thereafter, at 102% of
their principal amount plus interest accrued to the redemption date.
1.02 Pursuant to Section 11-2218, Revised Codes of Montana, 1947, as amended, but subject to
the terms and conditions provided in this ordinance, the City shall issue $1,325,000 Sewerage System
Refunding Revenue Bonds for the purpose of refunding, paying and redeeming all of the outstanding bonds
described above. It is estimated that by this means the effective interest cost of financing the
undertaking authorized by the voters can be very substantially reduced, the maturities of the out-
standing bonds can be extended, and the annual principal and interest payments can be adjusted to a
level such that additional repairs, replacements and improvements can be financed from current reven-
uses, thus reducing the amount of future borrowing needed. However, no Refunding Revenue Bonds shall
be issued hereunder unless:
(a) the average annual interest rate thereon is lower than that required by Section 11-2218
as a condition for the refunding; and
(b) the maturities and interest payments on securities purchased from bond proceeds and
other funds and deposited in escrow in accordance with this ordinance are such as to provide funds
sufficient for the payment and redemption of the outstanding bonds, with interest accrued and redem-
ption premiums due thereon, on July 1, 1976, and at their prior maturities; and
(c) the yield to the City on the securities so purchased does not exceed the yield to the
purchaser on the refunding Revenue Bonds by such a margin as to make the latter bonds arbitrage
bonds within the meaning of Section 103(d) of the United States Internal Revenue Code, as defined
in the regulations of the Internal Revenue Service, proposed or adopted and most recently published
prior to the delivery of the Refunding Revenue Bonds.
Section 2. Form:
2.01 The Sewerage System Refunding Revenue Bonds to be issued pursuant to this ordinance shall
be printed in substantially the following form, with appropriate insertions of serial numbers and
interest rates:
SEWERAGE SYSTEM REFUNDING REVENUE BOND
No.
$5,000
KNOW ALL MEN BY THESE PRESENTS that the City of Bozeman, a duly organized municipal corporation
of Gallatin County, Montana, for value received promises to pay to bearer, solely out of the Revenue
Bond Account of its Sewerage System Fund, the sum of FIVE THOUSAND DOLLARS on the 1st day of (Jan-
uary) July, 19 ,or if this bond is prepayable as stated below, on a date prior thereto on which
it shall have been duly called for redemption, and to pay interest thereon out of that account 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 on
January 1, 1973, and semiannually thereafter on July 1 and January 1 of each year, interest to
maturity being represented by and payable in accordance with and upon presentation and surrender
of the interest coupons appurtenant hereto. Both principal and interest are payable at
, in , 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.
This bond is one of an issue in the total principal amount of $1,325,000, all of like date and
tenor except as to serial number, interest rate, maturity date and redemption privilege, issued for
the purpose of refunding, paying and redeeming a like principal amount of valid outstanding revenue
bonds issued pursuant to authorization by the requisite majority of the qualified electors of the
City at a special election duly called and held to provide money to finance the improvement 'of the
municipal sewerage system, and pursuant to and in full conformity with the provisions of the Con-
stitution and laws of the State of Montana and the ordinances of the City thereunto enabling, in-
cluding Sections 11-2217 to 11-2221, inclusive, Revised Codes of Montana 1947, as amended, and
Ordinance No. 917 of the City, duly enacted on March 30, 1972.
Bonds of this issue maturing on and before July 1, 1980, are not subject to redemption before
maturity, but those maturing after that date are each subject to redemption and prepayment at the
option of the City on July 1, 1980, and on any interest payment date thereafter, in inverse order
of their serial numbers and at a price equal to the principal amount plus accrued interest. Not
less than thirty days in advance of the date fixed for prepayment and redemption of any bond, the
City will cause notice of the call thereof to be published in a Bozeman, Montana, newspaper and
in a New York City Daily financial newspaper, and to be mailed to the holder, if known, and to the
bank at which principal and interest are then payable, but published notice shall be effective
without mailing. Holders of prepayable bonds may register their names and addresses and the serial
ORDINANCE NO. 917
229
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numbers of their bonds with the Director of Finance for the purpose of receiving such mailed notice.
IT IS CERTIFIED, RECITED, COVENANTED AND AGREED that the City has fixed and established and will
collect reasonable rates and charges for the services and facilities afforded by the municipal sewer-
age system, and has created a special Sewerage System Fund into which the gross revenues of the system,
including all additions thereto and replacements and improvements thereof, will be paid, and a sep-
arate and special Revenue Bond Account in that fund, into which account there shall be credited each
month, out of the net revenues of the system then on hand, an amount equal to atleast one~twelfth of
the amount of principal and interest payable therefrom in the next succeeding twelve months, and into
which account there shall also be credited monthly out of the remaining net revenues, such additional
amounts as may be necessary to accumulate therein before June 30, 1977, a reserve, which reserve I
shall thereafter be maintained by the transfer of additional net revenues whenever necessary, in a
sum equal to the maximum amount of principal and interest to fall due within any subsequent calendar
year other than the year 1980 on all such bonds; that such rates and charges will from time to time
be made and kept sufficient to provide gross income and revenues adequate for prompt payment of the .
reasonable and current expenses of operation and maintenance of the sewerage system and to produce
in each fiscal year net revenues, in excess of such current expenses, equal to 130% of the maximum
amount of principal and interest payable from the Revenue Bond Account in any subsequent calendar year
other than the year 1980; that the payments required to be made to the Revenue Bond Account consti-
tute a first and prior lien and charge on the entire net income and revenues to be derived from the
operation of such system and of all future 'additions thereto and betterments thereof; that except as
expressly authorized in Ordinance No. 917, no other obligation will be incurred and made payable from
the Revenue Bond Accout, and no other obligation will be made payable from the net revenues of the
municipal sewerage system, whether or not such obligation 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 this issue on such net revenues; that all provisions for the security of the
holder of this bond set forth in Ordinance No. 917 will be punctually and faithfully performed as
therein stipulated; that all acts, conditions and things required by the Constitution and laws of
the State of Montana and the ordinances of the City to be done, to exist, to happen and to be per-
formed in order to make this bond a valid and binding special obligation of the City according to
its terms have been done, do exist, have happened and have been performed as so required; and that
the issuance of this bond does not cause the indebtedness, whether general or special, of the City
to exceed any constitutional or statutory limitation of indebtedness.
IN WITNESS WHEREOF THE CITY OF BOZEMAN, Gallatin County, Montana, by its City Commission, has
caused this bond and the coupons appurtenant hereto and the certificate appearing on the reverse side
hereof to be executed in its behalf by the signatures of the Mayor and the Director of Finance and
countersigned by the Clerk of the Commission, and sealed with the corporate seal of the City, all
such signatures being printed facsimiles of the actual signatures of said officers except for the
signature of one officer manually subscribed on the face of this bond, and has caused this bond to
be dated as of April 12, 1972.
Countersigned:
William E. Grabow, Mayor
Erna V. Harding, Clerk of the Commission
William J. Verwolf, Director of Finance
(SEAL)
2.02 Interest coupons shall be printed and attached to each bond, numbered serially and re~
presenting the amount of each interest payment due thereon to maturity, in substantially the follow-
ing form:
No.
$
On the first day of January (July), unless the bond described below is subject to and is called
for earlier redemption, the City of Bozeman, Gallatin County, Montana, will pay to bearer at
in , from the Revenue Bond Account in its Sewerage System Fund, the amount shown hereon in
lawful money of the United States of America for interest then due on its Sewerage System Refunding
Revenue Bond, dated April 12, 1972, No.
Clerk of the Commission
Director of Finance
Mayor
2.03 The following certificate shall be printed on the reverse side of each bond, following a
full copy of the text of the legal opinion given at the time of delivery:
bond We certify that the above is a full, true and correct copy of the legal op1n1on rendered
by/counsel on the issue of bonds of the City of Bozeman which includes the within bond, dated as
of the date of delivery of and payment for the bonds.
Clerk of the Commission
Director of Finance
Mayor
Section 3. Terms, Execution and Delivery.
3.01 The Sewerage System Refunding Revenue Bonds to be issued pursuant to this ordinance, in
the aggregate principal amount of $1,325,000, shall be dated as of April 12, 1972, shall be issued
in the denomination of $5,000 each, numbered serially from 1 to 265, inclusive, shall bear interest
payable January 1, 1973, and semiannually thereafter on each July 1 and January 1, and shall mature
in order of serial numbers on each January 1 and July 1 from January 1, 1973, to a date not later
than July 1, 1985. The principal amount of bonds to mature on each date and the rate of interest to
be borne by such bonds shall be established in accordance with the contract of sale thereof when
approved by vote of the Commission. The Mayor and Clerk of the Commission are authorized to negotiate
the exact terms of sale with Dain, Kalman, & Quai.l, Inc., of Minneapolis, Minnesota, and E. F. Hutton
& Company, Inc., of Denver, Colorado, in accordance with their proposal heretofore approved by the
Commission, to obtain a rating of the bonds by a nationally recognized rating agency and, depending
upon the rating received, to present a purchase proposal establishing maturities and coupon"rates
conforming to one of the alternate schedules described in the proposal heretofore approved; provided
that the bonds shall not be sold except upon the conditions stated in Section 1.02 above, or at a
price less than par plus accrued interest to the date of delivery.
ORDINANCE NO. 917
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3.02 The principal of and interest on the bonds shall be payable at a suitable bank to be
designated in the contract of sale, and the reasonable and customary charges of the paying agent
shall be paid from the Operating Account in the Sewerage System Fund. Upon merger or consolid-
ation of the paying agent, if the resulting corporation is a bank or trust company authorized by
law to conduct such business, such corporation shall be authorized to act as successor paying
agent. Upon the resignation of the paying agent, which shall be communicated in writing to the
City not less than ninety days before it shall become effective, the City reserves the power to
appoint a successor paying agent. No resignation and no appointment of a successor paying agent
shall become effective until the date specified in a notice of the resignation and appointment
which the City shall cause to be published in a financial newspaper of national circulation pub-
lished in New York City, New York, not less than thirty days before said effective date.
3.03 None of the bonds maturing on or before July 1, 1980, shall be subject to redemption
before maturity. The bonds maturing after that date shall be subject to redemption and prepayment
at the option of the City in whole or in part in inverse order of their serial numbers on July I,
1980, and on any interest payment date thereafter, at a price equal to the principal amount plus
interest accrued to the redemption date, upon notice published at least thirty days before the
redemption date in a newspaper published in Bozeman, Montana, and in a financial newspaper of
national circulation published in New York City, New York, stating the amount, the serial numbers
and the maturities of the bonds called for redemption. Notice shall also be mailed to the bank
at which principal and interest are then payable, and to the holder of each bond who, at the time
it is called for redemption, had registered his name and address with the Director of Finance for
this purpose. Failure to give any such mailed notice shall not invalidate any call for redemption.
Notice of the call of any bond for redemption having been published as herein provided, and funds
sufficient for its payment with accrued interest and premium having been deposited with the paying
agent on or before the redemption date, interest on such bond shall cease on said date and its
appurtenant interest coupons maturing subsequently shall become void, and the holder shall have no
further rights with respect thereto or under this ordinance except to receive the redemption price
so deposited.
3.04 The bonds and interest coupons and the certificate on the reverse side of each bond shall
be executed in behalf of the City by the signatures of the Mayor, Director of Finance and Clerk of
the Commission, and its corporate seal shall be affixed to each bond. The signature of one officer
shall be manually subscribed on the face of each bond, but the other signatures may be printed, en-
graved or lithographed facsimiles. The Director of Finance shall deliver the bonds, when executed,
or cause them to be delivered, to the purchasers upon receipt of the purchase price provided in the
contract of sale, and the purchasers shall not be obligated to see to the application of the purchase
price, which shall, however, be accounted for as provided in Section 3.06.
3.05 The officers of the City are directed to furnish to the purchasers of the bonds certified
copies of all proceedings and information in their official records relevant to the authorization
and issuance of the bonds, and such certificates and affidavits as to other matters appearing in
their official records or otherwise known to them as may be reasonably required to evidence the vali-
dity and security of the bonds, and all such certified copies, certificates and affidavits, including
any heretofore furnished, shall constitute representations and recitals of the City of Bozeman as to
the correctness of all facts stated therein and the completion of all proceedings stated therein to
have been taken.
3.06 The proceeds of the bonds, when received, together with such additional Sum now on hand
in the Revenue Bond Account of the Sewerage System Fund as may be needed for the purpose, are irre-
vocably pledged and appropriated for the payment and redemption of the outstanding bonds described in
Section 1.02 above on July 1, 1976, and at their respective prior maturity dates, together with in-
terest accrued to the date of payment and redemption premiums then due. The Director of Finance is
directed, simultaneously, with the delivery of the bonds, to invest the proceeds and so much of said
additional sum as may be required in securities of the kinds enumerated in Section 11-2218, Revised
Codes of Montana 1947, as amended, maturing or callable at the option of the holder on such dates
an bearing interest at such rates and payable at such times that the principal and interest payments
thereon, plus any portion of said sum retained in cash, will provide funds sufficient to pay and re-
deem each and all of the outstanding bonds, interest and redemption premium at the times hereinabove
mentioned. Such securities and retained cash shall be deposited forthwith in a special escrow account
with the First National Bank of Minneapolis, Minneapolis, Minnesota, and the Mayor and Clerk of the
Commission shall execute an escrow agreement with that bank, establishing the account and providing
for the payment and redemption of the outstanding bonds in accordance with law. The Director of Fin-
ance shall also give notice of the call of each and all of the prepayab1e outstanding bonds for re-
demption on July I, 1976, and the escrow agreement shall provide for an additional notice of such
call to be published by the escrow agent not more than six months prior to that date.
Section 4. Sewerage System Fund and Accounts:
4.01 The City irrevocably covenants with the holders of each and all of the bonds herein autho-
rized that until the bonds are fully paid and discharged as provided in Section 7, all of the gross
revenues derived from the operation of its sewerage system will be accounted for, applied and dis-
posed of in the manner provided in this section, and will be deposited and secured as provided in
Section 4.06 hereof. Such gross revenues are hereby defined to include all income and receipts de-
rived from rates, charges and rentals imposed for the availability of and connections with and use
for the use of such system, including all additions thereto and betterments and replacements there-
of originally or subsequently constructed or acquired, or for the benefits provided by the facilities
of the system, or from sales of property acquired in connection therewith, and all penalties and
interest on such rates, charges and rentals, but shall not include any special assessment levied for
the construction of sewer mains or other improvements. All gross revenues shall be paid daily, as
received by the City, into the municipal Sewerage System Fund, which fund shall at all times be
segregated and maintained by the Director of Finance on the books of the City as a separate and spec-
fund. This fund shall be subdivided into the separate accounts described below, and the gross revenues
received in the fund shall be apportioned once in each calendar month, which apportionment is here-
inafter referred to as the "periodic apportionment". The gross revenues received in the fund shall
be credited to the respective accounts and accounted for therein and expended therefrom as follows:
ORDINANCE NO. 917
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4.02 On each periodic apportionmentfuere 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 periodic apportionment. The term
"operating expenses" shall mean the current expenses, paid or accrued, of operation, maintenance and
current repair of the sewerage system and its facilities, as calculated in accordance with sound
accounting practice, and shall include, without limitation, administrative expenses of the City re-
lating soley to the sewerage 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 depreciation or 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 City, except such portion as shall represent reasonable compensation for the performance of duties
necessary to the operation of the sewerage system. There shall also be credited to this account all
additional SumS collected since the last periodic apportionment, until there has been accumulated
therein an Operating Reserve in the amount of $5,000, which sum shall be maintained by additional
transfers upon each periodic apportionment whenever necessary, or may be augmented by transfers of
additional amounts from the Surplus Account described below if determined by the City Commissionto be
necessary to meet contingencies arising in the operation and maintenance of the system. Moneys in
the Operating Account shall be used solely for the payment of current operating expenses of the sew-
erage system as herein defined.
4.03 The net revenues of the municipal sewerage system, as referred to in this ordinance, are
hereby defined to include the entire amount of such gross revenues remaining upon each such periodic
apportionment, after crediting to the Operating Account the amount required in Section 4.02 hereof,
including sums required to create and maintain the Operating Reserve at the minimum amount therein
stated. Upon each periodic apportionment there shall be set aside and credited to the Revenue Bond
Account out of the net revenues an amount equal to not less than one-twelfth of the total sum of the
pri.ncipal and interest to become due within the then next succeeding twelve months on all bonds of
the issue herein authorized and on all bonds refunding the same. Immediately upon delivery of the
bonds herein authorized there shall be credited to the Revenue Bond Account as and for a part of the
reserve balance which ishereby required to be accumulated therein the sum of $41,000 from amounts
on hand in funds of the City and available for this purpose. Upon each periodic apportionment there-
after there shall also be credited to the Revenue Bond Account such additional sum as may be necessary
in the judgment of the Commission to establish in that account by June 30, 1977, a reserve, which
shall thereafter be maintained by the transfer of additional net revenues whenever necessary, in an
amount at all times equal at least to the maximum amount of principal and interest to fall due on all
such bonds within any subsequent calendar year other than the year 1980. Moneys from time to time
held in the Revenue Bond Account shall be disbursed only to meet payments of principal and interest
on such bonds as such payments become due, and the reserve therein shall be used only to pay maturing
principal and interest when other moneys within the account are insufficient therefor; provided, that
if in any periodic apportionment there is apportioned to such reserve an amount in excess of the
amount required to be apportioned, that excess may be credited against the amount required in a sub-
sequent apportionment or may be transferred by resolution of the Commission to any other account in
the Sewerage System Fund, and if the maximum amount of principal and interest to fall due on all out-
standing bonds within any subsequent calendar year is less than the amount accumulated and on hand in
such reserve, such excess may likewise be transferred by resolution of the Commission to any other
account in the Sewerage System Fund; provided further, that on any date when all outstanding bonds are
due or prepayable by their terms, if the amount then on hand in the Revenue Bond Accout, including
the reserve, is sufficient to pay all such bonds and the interest accrued thereon in full, it may be
used for that purpose. If any payment of principal or interest becomes due when moneys in the Rev-
enue Bond Account are temporarily insufficient therefor, such payment shall be advanced out of any
net revenues theretofore segregated and then on hand in the Replacement and Depreciation account or
the Surplus Account.
4.04 There shall next be set aside and credited, upon each periodic apportionment, to the Re-
placement and Depreciation Account such portion of the net revenues of the system, in excess of the
current requirements of the Revenue Bond Account (which portion of the net revenues is referred to
herein as "surplus net revenues"), as the Commission shall determine to be required for the accumul-
ation of a reasonable allowance for depreciation of the system and for replacement or renewal of worn
out or obsolete properties comprised therein. Moneys in this account shall be used only for the pur-
poses above stated or. if so directed by the Commission, to redeem revenue bonds which are prepayab1e
according to their terms, or to pay principal or interest then due thereon as required in Section 4.03
hereof; provided, that in the event that the City shall hereafter issue bonds over and above the amount
heretofore authorized, for the purpose of financing the construction and installation of additional
improvements or additions to the sewerage system, surplus net revenues from time to time received may
be segregated and paid into one or more separate and additional accounts for the payment of such bonds
and interest thereon, in advance of payments required to be made in to the Replacement and Depreciation
Account.
4.05 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, and the moneys from time to time in
that account, when not required to restore a current deficiency in the Revenue Bond Account as pro-
vided in Section 4.03 hereof, may be used for any of the following purposes and not otherwise:
(a) To redeem and prepay bonds payable from the net revenues when and as such bonds become
prepayable according to their terms; or
(b) To purchase such bonds on the open market (whether or not such bonds may then be prepay-
able according to their terms), which bonds shall be canceled forthwith upon being so purchases; or
(c) To be held as a reserve for redemption and prepayment of bonds payable from the net
revenues which are not then but will be prepayab1e according to their terms; or
(d) To pay for repairs of or for the construction and installation of improvements or
additions to the sewerage system; or
(e) To restore the Operating Reserve or increase the same when determined to be necessary
by the City Commission.
ORDINANCE NO. 917
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No moneys shall at any time be transferred from the Surplus Account or any other account of the
Sewerage System Fund to any other fund of the City, nor shall such moneys at any time be loaned to
other municipal funds or invested in warrants, special improvement bonds or other obligations payable
from other funds, except the City's Sewerage System Improvement Fund.
4.06 The Director of Finance shall cause all moneys pertaining to the Sewerage System Fund and
the Sewerage System Improvement Fund to be deposited as received with one or more depository banks
duly qualified in accordance with the provisions of Section 16-2618 of the Revised Codes of Montana
1947, as amended, in a deposit account or accounts which shall be maintained separate and apart from
all other bank accounts of the City, so long as any of the bonds issued hereunder and the interest
thereon shall remain unpaid; and 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 Section 16-2618. No moneys shall at any time be withdrawn
from such deposit accounts except for the purposes of the Sewerage System Fund and the Sewerage System
Improvement Fund as defined and authorized in this ordinance, except that moneys from time to time
on hand in either of these funds, in excess of amounts required to be paid from such fund, may in the
discretion of the City Commission, be invested in securities which are general obligations of the
United States of America, maturing not later than the date on which it is anticipated such moneys
wn1 be needed in such fund. The income received from any such investments shall be credited to the
fund and account from whose moneys the investment was purchased, and handled and accounted for in
the same manner as other moneys in that fund or account.
Section 5. Priori~ies and Additional Bonds.
5.01 Each and all of the bonds described in Section 3, together with any additional bonds
issued under the provisions of Sections 5.02 and 5.03 below, shall be equally and ratably secured
by the provisions of this ordinance and payable out of the net revenues appropriated to the Revenue
Bond Account of the Sewerage System Fund, ~hthout preference or priority; except that if at any time
the balance in the Revenue Bond Account is7sufficient, and cannot be made sufficient as provided in
Section 4, to pay all principal and interest then due on all such bonds, such balance shall be used
first to pay the interest due and to become due on all such bonds on their next succeeding interest
payment dates, respectively, and the remainder shall be applied to the payment of the principal amount
of such bonds in order of their maturities, and in order of the dates of issue of bonds maturing on
the same date, and in order of the serial numbers of bonds dated and maturing on the same date.
5.02 Refunding revenue bonds may be issued hereunder for the purpose of refunding any matured
bonds issued hereunder, if and when and to the extent that net revenues are not available to pay such
bonds within the limitations prescribed in Section 5.01, provided that the maturity of each such
refunding revenue bond is subsequent to the last maturity of the then outstanding bonds issued here-
under which are not so refunded, and that no holder of any bond issued hereunder shall be required to
accept a refunding revenue bond in exchange therefor.
5.03 Additional revenue bonds may be issued hereunder for the purpose of financing the recon-
struction, improvement, betterment and extension of the municipal sewerage system, or for the purpose
of redeeming at or before maturity and refunding outstanding bonds issued hereunder, provided that:
(a) the net revenues of the sewerage system for the fiscal year most recently ended
before the issuance of the additional bonds have been not less than 130% of the maximum amount
of principal and interest to become due in any subsequent calendar year (except 1980) of the
term of all then outstanding bonds payable from the Revenue Bond Account, on all of such bonds and
and the additional bonds then issued, except bonds refunded by such additional issue;
(b) for the purpose of this Section 5.03, the net revenues of the system shall be
determined by applying the rates and charges in effect on the date of delivery of the additional
bonds to the quantities of sewerage service furnished and made available in the fiscal year
preceding the issuance thereof, to determine the gross revenues attributable to such fiscal
year, and by deducting from the gross revenues the amount of costs of operation and mainte-
nance of the system actually paid during such year, to determine the net revenues; and
(c) in the event that conditions (a) and (b) are fulfilled, the additional bonds
so issued may be made payable from the Revenue Bond Account and secured by each and all of
the covenants and agreements and other provisions contained in this ordinance, on a parity
with the refunding revenue bonds herein authorized and any additional revenue bonds theretofore
issued pursuant to this Section 5.03, as fully as though all of such additional revenue bonds
had been described in this ordinance and had formed a part of the initial issue hereundet.
5.04 Except as expressly authorized in this Section 5, no obligation shall be incurred by the
City and made payable from revenues of the municipal sewerage system, whether or not such obligation
also constitutes a general obligation and indebtedness of the City, unless the pledge of such revenues
for the payment of such obligations is expressly made subordinate to the prior pledge thereof for
the payment and security of all bonds payable from the Revenue Bond Account.
Section 6. Covenants.
6.01 The City covenants and agrees with the purchasers and the holders from time to time of
all bonds issued under and secured by the provisions of this ordinance that the recitals contained
in Section 1 hereof are correct; and that until all such bonds are fully paid or the City's liability
with reference thereto is fully discharged as provided in this ordinance, it will continue to own
and operate the municipal sewerage system as a public utility and convenience, free from all liens
thereon or on the income therefrom other than the liens herein granted or provided for, and will
maintain, expend and account for its sewerage system fund and the several accounts therein as provided
in Section 4, and will issue no additional bonds or other obligations constituting a lien or charge
on the system or on revenues received from any of its properties except upon the conditions and in
the manner prescribed in Section 5, and will perform and cause all officers and employees of the City
to perform and enforce each and all of the additional covenants and agreements set forth in this
section 6.
ORDINANCE NO. 917
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6.02 The City will prescribe and collect rates, fees and charges for all services and facil-
ities furnished and made available by the municipal sewerage system to the City and to its inhabit-
ants. and to all customers within or without the boundaries of the City, which shall be reasonable
and just. taking into consideration the cost and value of the system and the cost of maintaining
and operating it, and the amount necessary for the payment of all bonds and interest thereon, and the
proper and necessary allowances for depreciation of the system, and no free service shall be provided
to any person or corporation. Until modified in accordance with the law, the rates, fees and charges
shall be those prescribed by Ordinance No. 884, adopted July 23, 1969.
6.03 The City will maintain such rates, fees and charges and will revise them whenever and as
often as necessary, according to a schedule such that the gross revenues will be at least sufficient
to pay the current expenses of operation and maintenance of the system as defined in this ordinance,
and to maintain the operating reserve established herein, and to produce net revenues fulfilling
the following conditions:
(a) that the net revenues received in each fiscal year shall be not less than 130%
of the maximum amount of principal and interest payable from the Revenue Bond Account during
any subsequent calendar year other than 1980, this margin being determined to be needed to pay
and to provide reserves for payment of replacement, renewal and improvement costs, to provide
adequate service for the present population and the increase thereof reasonably tobe expected,
and to provide for marketing of revenue bonds for improvements, when necessary, upon terms
most advantageous to the City;
(b) if at the close of any fiscal year the net revenues actually received have been
less than required above, the City will forthwith prepare and place in operation a schedule of
altered rates, fees and charges which are just and equitable and sufficient to produce net
revenues in such amout; and
(c) the minimum annual amount of net revenues required for compliance with this
Section 6.03, based upon the principal and interest requirements of the Refunding Revenue
Bonds herein authorized, shall be $175.550.00.
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6.04 The City will cause all buildings. machinery and equipment constituting a part of the
sewerage system to be kept insured to the extent insurable in an insurance company or companies quali-
fied under the laws of Montana, against direct physical damage or loss from fire and extended cover-
age perils in an amount not less than that for which like properties are customarily insured by prudent
owners thereof, and will at all times keep persons handling funds of the system adequately bonded
for the faithful performance of their duties and for accounting for and paying over such monies to the
City, and in the event of loss or damage covered by any such insurance or bond, will apply the proceeds
thereof to restore the loss or damage or to pay and redeem bonds payable from the Revenue Bond Account.
6.05 The City will cause the sewerage system to be maintained in good and efficient condition
and continuously operated at standards approved by proper federal and state authorities.
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6.06 The City will cause proper and adequate books of account to be kept showing complete and
correct entries of all receipts, disbursements and other transactions relating to the sewerage system.
the revenues derived from its operation, and the segregation and application of the revenues in
accordance with this ordinance, in such reasonable detail as may be determined by the City in accord-
ance with generally accepted accounting practices and principles. Such books shall be open to inspect-
ion and copying during all reasonable business hours by any holder of bonds issued hereunder or his
agent or attorney.
6.07 The City will cause its books to be maintained on the basis of a fiscal year commencing
July 1 and ending June 30, and to be audited annually within 60 days after the close of each fiscal
year by an independent certified public accountant, mutually satisfactory to the City and to the
underwriters of each issue of revenue bonds hereunder, and will mail a copy of the report of each
such audit to each underwriter and to the bank designated as agent for the payment of each issue of
bonds hereunder. and will make the report available for inspec tion by the holder of any of such bonds.
In addition to whatever matters the accountant may consider proper to include, each report of audit
shall include the following:
(a) a statement in detail of the income and expenditures of the sewerage 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) a determination that the audit shows full compliance by the City with the provisions
of this ordinance during the year covered thereby, including proper segregation of capital expendi-
tures from operating expenses, maintenance of the required balance in the Revenue Bond Account, and
receipt of net revenues for each fiscal year at least equal to 130% of the maximum amount of prin-
cipal and interest payable in any subsequent calendar year (other than 1980) from the Revenue Bond
Account; or. if the audit should reveal that the revenues have been insufficient for compliance
with this ordinance, or that the methods used in accounting for such revenues where contrary to any
provision of this ordinance, the report of audit shall include a full explanation thereof, together
with the accountant's recommendation for such change in rates or accounting practices or in the I
operation of this system as may be required;
(d) a list of the insurance policies and fidelity bonds in force at the end of the fiscal
year, stating as to each the amount, the risks covered, the name of the insurer or surety and the
expiration date; and
(e) a statement of the number of premises connected to the sewerage system at the end
of the year.
6.08 The City will cause to be prepared and forwarded to any underwriter of bonds issued
hereunder. upon request. not later than the 15th day of each month, a report showing the cash receipts
of and expenditures from each of the several accounts of the sewerage system fund during the preceding
month, and the cash balance on hand and the amount of unpaid warrants outstanding against each of such
accounts as of the last day of such preceding month. The insurance and fidelity bond premiums and
the cost of the bookkeeping and audits herein provided for and of the billing and collection of sewer-
ORDINANCE NO. 917
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age rates, fees and charges shall be payable from the operating account.
6.09 The Director of Finance shall be charged with the responsibility of the proper billings, collect-
ion and application of all charges due for service rendered and made available by the system, and for
the discontinuance of service in case of non-payment of charges or non~compliance with the regulations.
The Director of Finance shall be bonded at all times in an amount not less than $5,000.0~ to assure the
faithful performance of such duties. Any failure on the part of the Director of Finance to comply
and to enforce compliance on the part of all officers and employees concerned with the provisions of
this ordinance, and with the City's other regulations respecting the sewerage system, shall constitute
malfeasance for which the Director of Finance and the surety on his bond shall be liable. In the
event of default on the part of the City in the payment of principal of or interest on any bond promptly
as each such payment falls due, or in the performance of any covenants herein contained, and if such
default shall continue for a period of 60 days, the Commission will appoint a special superintendent
for the system, with the power and responsibility to operate the system for the City and to recommend
to the Commission such revisions of the rates and charges in operating policies as may be necessary
to comply with this ordinance, and to assure that the net revenues will be sufficient to pay all the
bonds, principal and interest, and he shall in all things so operate the system as to comply fully with
all of the requirements and provisions of this ordinance. The right of the holders of the bonds to
require employment of such a superintendent shall not be exclusive, and in the event of any such default,
such holders shall have the right to proceed at law or in equity to require the performance of the
covenants herein contained, in any form of action which shall to them seem appropriate.
6.10 Employees collecting bills or handling other funds of the sewerage system shall deposit
the same in the bank daily, except that funds in an amount less that $500.00 may be held in the City
safe until $500.00 is accumulated, at which time the entire balance shall be deposited, and duplicate
deposit receipts shall be filed with the Director of Finance and the Clerk of the Commission.
6.11 The rules and regulations for operation of the sewer department and the use of sewer service
from the system shall be as provided in the City's existing ordinances, and in any ordinances sub~
sequently adopted and amendatory thereof or supplemental thereto; provided that all bills for sewer
service shall be made a part of the statement, if any, for water service to the same premises, and no
payment of water or sewerage charges so billed shall be accepted without payment of both of said items.
6.12 Charges will be billed at least once in each calendar month, and if the bill is not paid
within 45 days after the due date, or if the customer fails to comply with all rules and regulations
established for the sewerage 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 in-
volved shall be discontinued and shall not be resumed until payment of all past-due bills for sewer
service and compliance with all such rules and regulations.
6.13 No holder of any bond issued and secured under the provisions of this ordinance shall have
the right to institute any proceeding, judicial or otherwise, for the enforcement of the covenants
herein contained, without the written concurrence of the holders of not less than 20% in aggregate
principal amount of all such bonds which are at the time outstanding; but the holders of this amount
of such bonds may, either at law or in equity, by suit, action, mandamus, or other proceedings, pro-
tect and enforce the rights of all holders of such bonds and compel the performance of any and all
of the covenants required herein to be performed by the City and its officers and employees, including
but not limited to the fixing and maintaining of rates, fees and charges and the collection and proper
segre~ation of revenues and the application and use thereof. The holders of a majority in principal
amount of such outstanding bonds shall have the right to direct the time, method and place of con~
ducting any proceeding for any remedy avai1ab Ie to the bond holders or the exercise of any power con~
ferred 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 or interest on any bond when due.
However, nothing herein shall impair the absolute and unconditional right of the holder of each such
bond to receive payment of the principal of and interest on such bond as such principal and interest
respectively become du~ and to institute suit for the enforcement of any such payment. In the event
of default in any such payment, any court having jurisdiction of the action may appoint a receiver
to administer the system on behalf of the City with power to charge and collect rates. fees and charges
sufficient to provide for the payment of the operating and maintenance expenses and for the payment
of all revenue bonds. and to apply the revenues in conformity with this ordinance and the laws of the
state of Montana.
Section 7. Amendments.
7.01 The City reserves the right to amend this ordinance from time to time at any time. for the
purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision con-
tained herein. or of making such provisions with regard to matters or questions arising hereunder as
the City Commission may deem necessary or desirable and not inconsistent with this ordinance, and
which shall not adversely affect the interests of the holders of bonds issued hereunder, 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 thereafter approp-
riated to the Sewerage System Fund, or for the purpose of surrendering any right or power herein re-
served to or conferred upon the City. Any such amendment may be adopted by ordinance. without the
consent of the holder of any of the bonds issued hereunder.
7.02 With the consent of holders of bonds issued hereunder as provided in Section 7.03, the
City may from time to time and at any time amend this ordinance by adding any provisions hereto or
changing in any manner or eliminating any of the provisions hereof, or of any amending ordinance,
except that no amendment shall be adopted at any time without the consent of the holders of all bonds
issued hereunder which are then outstanding. if it would extend the maturities of any such bonds.
would reduce the rate or extend the time of payment of interest thereon, would reduce the amount of
the principal thereof. would give to any bond or bonds any privileges over any other bond or bonds,
would reduce the sources of revenues appropriated to the Sewerage System Fund, or would reduce the
percentage in principal amount of such bonds required to aithorize or consent to any such amenrlement.
7.03 Any amendment adopted pursuant to Section 7.02 shall be made by ordinance, published in a
financial newspaper of national circulation published in New York City. New York. and shall become
ORDINANCE NO. 917
236
effective only upon the filing of written consents with the Clerk. signed by the holders of not less
than two-thirds in principal amount of the bonds issued hereunder which are then outstanding. Any
written consent to an amendment may be embodied in and evidenced by one or any number of concurrent
written instruments of substantially similar tenor signed by bondholders in person or by agent duly
appointed in writing, and shall become effective when de1iv~a to the Clerk. Any consent by the holder
of any bond shall bind him and every future holder of the same bond with respect to any amendment
adopted by the City pursuant to such consent, provided that any holder may revoke his consent with
reference to any bond by written notice received by the Clerk before the amendment has become effective.
I the event that unrevoked consents of the holders of the required amount of bonds have not been
r~ceived by the Clerk within one year after the publication of any amendment, the amendment and all
consents theretofore received shall be of no further force and effect.
7.04 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 payable to bearer, shall be sufficient for any
purpose of this ordinance and shall be conclusive in favor of the City if made in the manner provided
in this Section 7.04. The fact and date of the execution by any person of any s~ch consent or appoint-
ment may be proved by the affidavit of a witness of such execution or by the certificate of any notary
public or other officer authorized by law to take acknowledgments of deeds, certifying that the person
signing it acknowledged to him the execution thereof. The amount of bonds payable to bearer, held by
any person by or for whom a consent is given, and the distinguishing numbers of such bonds, and the
date of his holding the same, may be proved by a certificate executed by any trust company, bank or
other depository, wherever situated, if such certificate is deemed satisfactory by the Clerk, showing
that at the date therein mentioned such person had on deposit with such depository, or exhibited to
it, the bonds therein described; or such facts may be proved by the certificate or affidavit of the
person executing such consent, if such certificate or affidavit is deemed satisfactory by the Clerk.
The City may conclusively assume that such ownership continues until written notice to the contrary
is received by the Clerk. The fact and date of execution of any such consent and the amount and
distinguishing numbers of bonds held by the person executing the same may also be proved in any other
manner which the City Commission may deem sufficient; but the Commission may nevertheless, in its
discretion. require further proof in cases where it deems further proof desirable.
Section 8. Defeasance:
8.01 When the liability of the City on any bonds issued under and secured by this ordinance
and all coupons appertaining thereto has been discharged as provided in this section. all pledges,
covenants and other rights granted by this ordinance to the holders of such bonds shall cease.
8.02 The City may discharge its liability with reference to all bonds and coupons which are
due on any date by depositing with the paying agent or agents for such bonds on or before that date
a sum sufficient for the payment thereof in full; or if any bond or coupon shall not be paid when
due, the City may nevertheless discharge its liability with reference thereto by depositing with the
paying agent or agents a sum sufficient for the payment thereof in full with interest accrued to the
date of such deposit.
8.03 The City may also discharge its liability with reference to any prepayable bonds which are
called for redemption on any date in accordance with their terms, by depositing with the paying agent
or agents on or before that date an amount equal to the principal, interest and redemption premium,
if any, which ar e then due thereon, provided that notice of such redemption has been duly given as
provided in the ordinance authorizing such bonds.
8.04 The City may also at any time discharge its liability in its entirety with reference to
the issue of bonds described in Section 3, or with reference to any other issue of bonds secured by
the provisions of this ordinance, subject to the provisions of the law now or hereafter authorizing
and regulating such action, by calling all prepayable bonds of such issue for redemption on the next
date when they may be prepaid in accordance with their terms, by giving the notice required for such
recemption, and by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent
for this purpose, cash or securities which are general obligations of the United States or securities
of the United States Agencies which are authorized by law to be so deposited, bearing interest pay~
able at such times and at such rates and maturing on such dates as shall be required to provide funds
sufficient to pay all principal, interest and redemption premium to become due on all bonds of the
issue on or before the redemption date.
Section 9. Repeals and Effective Date.
9.01 All provisions of ordinances, resolutions and other actions and proceedings of the City
of Bozeman and of the City Commission which are in anyway inconsistent with the terms and provisions
of this ordinance are repealed. amended and rescinded to the full extent necessary to give full force
and effect to the provisions of this ordinance.
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9.02 Ordinance No. 887, adopted October 1, 1969, entitled "An Ordinance Directing The Under-
taking of An Improvement Of The Sewerage System Of The City of Bozeman, Creating Special Funds And
Account For the Administration Of Monies Derived From The Operation Of Said System, Authorizing And
Directing The Issuance Of Revenue Bonds To Pay The Costs Of Said Undertaking, And Defining The Terms
And Manner Of Payment Of The Bonds And The Security Thereof." is rescinded, effective on the date I
on which the outstanding revenue bonds issued thereunder shall have been discharged in accordance
with the provisions of Section 11.03 of said ordinance, by the deposit of cash and securities suffi~
cient for the payment and redemption thereof in escrow under the provisions of Section 3.06 of this
ord inance.
9.03 This ordinance shall be in full force and effect 30 days from and after its final passage
and approval according to law.
Passed by the City Commission and approved by the Mayor of the City of Bozeman, Montana, this
30th day of March. 1972.
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Approved:
WILLIAM E. GRABOW, Mayor
ATTEST:
I E~~~~-
Clerk of the City Commission
State of Montana )
County of Gallatin .
City of Bozeman )
I, Erna V. Harding, Clerk of the Commission, of the City of Bozeman, Montana,
do hereby certify, that the foregoing Ordinance No. 917 was published by Title
and Number in the Bozeman Daily Chronicle, a newspaper of general circulation
printed and published in said City in the issue of the 30th day of March, 1972,
and due proof of such publication is on file in my office.
IT WITNESS WHEREOF, I hereunto set my hand and affix the corporate seal of my
office this 20th day of June, 1972.
f;> //~~
~/~,(/. -- a .?
ERNA V. HARDING, .
Clerk of theCity Commission
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ORDINANCE NO. 917