HomeMy WebLinkAboutOrdinance 73- 939, Sewerage system refunding revenue bonds.
ORDINANCE NO. 939
AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE OF $1,210,000 SEWERAGE
SYSTEM REFUNDING REVENUE BONDS UNDER THE PROVISIONS OF ORDINANCE NO. 918,
TO REFUND, PAY AND REDEEM BONDS NOW OUTSTANDING THEREUNDER.
BE IT ORDAINED BY THE CCHUSSION OF THE CITY OF BOZEMAN:
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Section 1. Authorization.
l.OI Pursuant to Ordinance No. 918, dated APril 19, 1972, entitled "An Ordinance Relating
to the Bozeman Municipal Sewerage System; Providing for the Issuance and Sale of $1,325,000 Sewerage
System Refunding Revenue Bonds, the Refunding and Redemption of all Outstanding Revenue Bonds, and
Covenants Securing the Payment of These and Future Issues; Pledging Revenues of the System to
Special Funds and Accounts for its Operation, Maintenance, Debt Service, Repair and Replacement;
and Rescinding Ordinances Nos. 887 and 917", the City issued the bonds therein authorized under
date of May 23, 1973, and has paid or set aside funds for payment of all principal and interest
due thereon to and including January 1. 1974; after which date the principal amount remaining
outstanding will be $1,210,000.
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1.02 The outstanding bonds were issued for the purpose of refunding and reducing the
interest cost and extending the maturities of revenue bonds theretofore issued to finance the
reconstruction, improvement, bette~ent and extension of the Municipal Sewerage System. It
is believed that the savings in interest cost resulting from the refunding, which have been
recalculated and analyzed by the officers of the city and the State Auditor, are less than
the amount of such savings which was estimated by the financial advisor employed by the city
in connection with the issuance of the bonds. The city has advised the purchasers of the
outstanding bonds of this discrepancy and said purchasers have stated to the council that
they were not aware of it and do not admit any financial liability in connection with the
miscalculation or any representation as to the savings which were effected. The purchasers
have nevertheless agreed to the purchase of a new series of Sewerage System Refunding Revenue
Bonds, to be dated January I, 1974, in the a80unt of $1,210,000, at the principal amount
thereof plus a premium of $l5,000, plus accrued interest from January I, 1974, to the date
of delivery, and subject to the further teras and conditions set forth in this ordinance.
It is considered that by the issuance of such bonds and the investment of the proceeds thereof
in escrow for the retirement of the outstanding bonds on and prior to July 1, 1980, when the
remainder of the outstanding bonds are subject to redemption, the savings in interest cost
will be approximately $50,000, an amount which the city considers sufficient to achieve the
total amount of savings previously expected.
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1.03 The terms of this agreement are embodied in a proposal letter dated November 28,
1973, received from E. F. Hutton & Company, Inc., Denver, Colorado, and Dain, Kalman & Quail,
Inc., Minneapolis, Minnesota. Under these terms it is determioed that, in accordance with
the provisions of Section 11-2218, R.C.M., the average annual interest rate with respect to
the bonds herein authorized will be lower<'by not less than 3/8 of I'%. (. 375'%.) per annum than
the average annual interest rate with respect to the outstanding bonds to be refunded, both
such rates being computed on the basis of the dollar amount of interest payable to the
stated maturities of the bonds, without regard to possible prior redemption of either issue
and ~tthout regard to the premium to be paid by the purchasers. It is further determined
that the bonds herein authorized may and shall be issued under the provisions of Section 5
of Ordinance No. 918, and shall be equally and ratably secured by the provisions of that
ordinance and payable out of the net revenues appropriated to the Revenue Bond Account of
the Sewerage System Fund without preference or priority io relation to other bonds so
issued, except as expressly provided in said ordinance; inasmuch as the net revenues of
the Municipal Sewerage Systea for the fiscal year ended June 30, 1973, computed as provided
in Section 5, were not less than 130~ of the maximum amount of principal and interest to
become due with respect to such bonds in any future calendar year (except for the amount to
become due in 1980, and the amount due in 1974 for the payment of which the premium and
accrued interest on the proposed bonds are available), and no other bonds are now out-
standing and payable from the Revenue Bond Account except those to be refunded upon the
issuance of such bonds. It is further determined that the liability of the city with
reference to said outstanding bonds will be discharged in accordance with the provisions
of Section 8.04 of Ordinance 918, upon the deposit of the proceeds of the bonds issued
hereunder in escrow for the redemption of said outstanding bonds on or prior to July 1,
1980, and the investment of such proceeds in securities sufficient for the purpose under
the provisions of said Section 8.04 and of Section 11-2218 R.C.M. It is further certified
and reasonably expected that, on the basis of facts and circumstances existing on the date
of issue and delivery of the bonds herein authorized, the proceeds thereof will not be used
in such manner that, if reasonably expected on such date, the bonds would be "arbitrage
bonds" within the meaning of Section 103 (d) of tne United States Internal Revenue Code
or of the regulations of the Internal Revenue Service thereunder, inasmuch as the major
portion of such proceeds will be invested in securities. the yield on Which, computed
on an actuarial basis, will not exceed the yield similarly computed on the bonds herein
authorized. Accordingly such bonds are authorized and directed to be issued and sold in
accordance with the terms of said proposal; subject, however, to verification by the Director
of Finance of tbe existence of the facts and circumstances upon which the determinations
made in this paragraph are based, as of the date of issue and delivery of the bonds, and the
Director shall file in the official records of the city a certificate as to such facts and
circumstances, before the bonds be delivered to the purchasers.
ORDINANCE NO. 939
313
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Section 2. ~.
2.01 The Sewerage System Refunding Revenue Bonds to be issued pursuant to this ordinance
shall be printed in substantially the following form:
UNITED STATES OF AMERICA
STATE OF MONT ANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
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 (January) (July), 1975, 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 prepayab1e, until it has been duly called for redemption, at the rate of four and one-
half per cent (4 1/2~) per annum, payable on July 1, 1974, and semiannually thereafter on
January 1 and July 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 Security Bank and Trust Company
, in Bozeman, Montana , 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 $1,210,000, all of
like date and tenor except as to serial number, maturity date and redemption privilege, issued
for the purpose of refunding, paying and redeeming a like principal amount of valid outstanding
revenue bonds heretofore issued for the refunding of bonds financing improvements to the Municipal
Sewerage System, pursuant to and in full conformity with the provisions of the Constitution and
laws of the State of Montana and the ordinances of the City thereunto enabling, including Sections
11-2217 to ll-2221, inclusive, Revised Codes of Montana 1947, as aaended, and Ordinances No. 918,
enacted April 19, 1972, and No. 939, enacted December 5, 1973, of the City of Bozeman.
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 pre-
payment 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
tbeir names and addresses and the serial nuabers 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 sewerage 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 separate 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 at least 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 and maintain a
reserve in the manner and amount required by Section 4.03 of Ordinance No. 918; that such rates
and charges will from time to tiae 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 l30~ 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 constitute 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 bette~ents thereof; that except as expressly authorized in Ordinance No. 918, no other
obligation will be incurred and made payable from the Revenue Bond Account, 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 tbe lien
thereof shall be expressly made subordioate to the lien of the bonds of this issue on such net
revenues; that all provisions for the security of tbe bolder of this bond set forth in Ordinance
No. 918 will be puoctua1ly 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 performed 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 bave 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.
ORDINANCE NO. 939
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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 tbe
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 and the seal thereof being printed facsiailes.exceptfor the
signature of one officer manually subscribed on the face of this bond, and has caused this bond
to be dated as of January 1, 1974.
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Countersigned:
Mayor
Clerk of the Commission
Director of Finance
(Seal)
2.02 Interest coupons shall be printed and attached to each bond, numbered serially and
representing the amount of each interest payment due thereon to maturity, in substantially the
following form:
No.
$112.50
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 Security Bank and Trust Company in Bozeman, Montana , 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 January 1,
1974, 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:
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We certify that the above is a full, true and correct copy of the legal opinion rendered
by bond counsel on the issue of bonds of the City of Bozeaan which includes the within bond, dated
as of the date of delivery and payment for the bonds.
Director of Finance
Mayor
Clerk of the Commission
Section 3. Terms, Execution and Delivery.
3.0l The Sewerage System Revenue Bonds issued hereunder, in the aggregate principal amount
of $1,2l0,000, shall be dated January 1, 1974, issued in tbe denoaination of $5,000 each, numbered
serially from 1 to 242, inclusive, shall bear interest at the rate of four and one-half per cent
(4 1/2~) per annum, payable seaiannually on January 1 and July 1 in each year, commencing July 1,
1974, and shall mature serially on January 1 and July 1 in the respective years and amounts as
follows:
Maturity Maturity
Date Amount Date Amount
July 1, 1974 $ 55,000 January l, 1980 $ 50,000
January 1. 1975 40,000 July 1, 1980 215,000
July l, 1975 40,000 January l. 1981 55,000
January 1. 1976 40,000 July 1, 1981 55,000
July 1, 1976 40,000 January 1, 1982 60,000
January l, 1977 45,000 July 1, 1982 55,000
July l, 1977 45,000 January 1, 1983 65,000
January 1, 1978 45,000 July 1, 1983 60,000
July 1, 1978 45,000 January 1, 1984 65.000
January 1, 1979 45.000 July l, 1984 45,000
July 1, 1979 45,000
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3.02 The principal of and interest on the bonds shall be payable at Security Bank and Trust
Company , in Bozeaaan, Montana, which is designated as paying
agent, 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 consolidation 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 published in New York City, New York, not less
than thirty days before said effective date.
ORDINANCE NO. 939
315
316
3.03 None of the bonds maturing on or before July l, 1980, shall be subject to redemption
before maturity. The bonds maturing after that date shall be subject to redemption and prepay-
ment at the option of the City in whole or in part in inverse order of their serial nw.bers on
July 1, 1980, and on any interest, payment date thereafter, at a price equal to the principal
-.ount 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, has registered his name and address with the
Director 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 redemtpion price so deposited.
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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 and
the seal may be printed, engraved or lithographed facsimiles. After the Director of Finance has
verified and certified the facts and circumstances referred to in Section 1.03, he shall deliver
the bonds, or cause them to be delivered, to the purchasers upon receipt of the purchase price
provided in the contract of sale, and the purchase price shall 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 validity 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, except for the premium and accrued interest, which shall
be deposited in the Revenue Bond Account, are irrevocably pledged and appropriated for the pay-
ment and redemption of the outstanding bonds described in Section 1.01 above on July 1, 1980,
and at their respective prior maturity dates, together with interest accrued to the date of I
payment. The Director of Finance is directed, simultaneously with the delivery of the bonds
and in accordance with the proposal described in Section 1.03, to invest the proceeds 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 and 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 redeem each and all of the
outstanding bonds and interest at the time hereinabove mentioned. Such securities and retained
cash shall be deposited forthwith in a special escrow account with the First National Bank of
Minneapolis, in 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 Finance shall also
give notice of the call of each and all of the prepayable outstanding bonds for redemption on
July 1, 1980, and the escrow aareement 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. Security Covenants.
Under authority of Section 5.03(c) of Ordinance No. 918, the bonds herein authorized
shall be payable from the Revenue Bond Account and secured by each and all of the covenants and
agreements and other provisions contained in said Ordinance No. 918, on a parity with all addi-
tional revenue bonds, if any, issued pursuant to said Section 5.03, as fully as though such bonds
had been described in Ordinance No. 918 and had foraed a part of the initial issue thereunder,
save and accept that:
(a) The terms of the bonds and the conditions for the issuance thereof are set
forth in Section 1 through 3 of this ordinance; and
(b) The minimum reserve balance required in Section 4.03 of Ordinance No. 918 has
been established and increased as therein provided to the amount required as of June 30, 1973,
and need not be further increased except at the future times and in the amounts required in
Section 4.03.
Section 5. Effective Date.
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This ordinance shall be in full force and effect thirty days from and after its final
passage aDd approval accordiag to law.
UKDINANCE NO. 939
.' t."..t" j>;
passed by the City C~ssion and approved by the Mayor of the City of Bozeman,
Montana, this 5th day of Dece~er, 1973.
Attest:
cF>' c% .r:
.- "f'1C .' L'. A: d';~;
Clerk of (the C issioQ
Mayor
Approved: .
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STATE OF MONTANA )
COUNTY OF GALLATIN 8S
CITY OF BOZEMAN )
1, Erna V. Harding, Clerk of the City Commission of the City of Bozeman, do hereby
certify. that the foregoing Ordinance No. 939 was published by title and number in
the Bozeman Daily Chroaicle, a newspaper of general circulation, printed and published
in said City of Bozeman in the issue of the 7th day of December, 1973, and due proof
of such publication is on file in my office.
IN WITNESS WHEREOF,.I hereunto set my hand and affix the corporate seal of my office
this 31st day of December, 1973.
E~/~~~~'~
Clerk of the City Comaission
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ORDINANCE NO. 939
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