HomeMy WebLinkAbout20- Tax Increment Urban Renewal Revenue Refunding Bond (Downtown Bozeman Improvement District), Series 2020$3,689,000
Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District), Series 2020
City of Bozeman, Montana
Transcript Index
Date of Closing: March 5, 2020
Participants:
Issuer: City of Bozeman, Montana
Chris Mehl, Mayor
Dennis Taylor, Interim City Manager
Kristin Donald, City Finance Director
Mike Maas, City Clerk
Placement Agent: Stifel, Nicolaus & Company, Incorporated
Registrar: City Finance Director
Purchaser: Truist Bank
Escrow Agent: U.S. Bank National Association
Bond Counsel: Dorsey & Whitney LLP
Purchaser’s Counsel: Ballard Spahr LLP
City Commission Documents and Proceedings
1. Resolution No. 3046, a Resolution of the City Commission of the City of Bozeman,
Montana, Declaring that Blighted Areas Exist within the Municipality and the
Rehabilitation, Redevelopment, or a Combination Thereof or Such Area or Areas is
Necessary in the Interest
2. Plat of Proposed 1995 Urban Renewal District
3. Certified copy of minutes of the November 6, 1995 meeting at which public hearing was
conducted
4. Resolution No. 3491, a Resolution of the City Commission of the City of Bozeman,
Montana, Adopting the Downtown Bozeman Improvement District Plan as a Planning
Document for the City of Bozeman
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5. Ordinance No. 1409, an Ordinance of the City Commission of the City of Bozeman,
Montana, adopting an Urban Renewal Plan for the Portions of the Downtown Bozeman
Area
6. Resolution No. 3718, a Resolution of the City Commission of the City of Bozeman,
Montana, Declaring the Intention to Extend the Life of the Tax Increment Financing
District Established under Urban Renewal Plan Dated November 1995 and to Include a
Parking Garage as a Specified Project in the Plan, and Setting a Public Hearing Date
7. Affidavit of Publication of Notice Regarding Resolution No. 3718
8. Certified copy of minutes of the September 20, 2004 meeting at which public hearing
was conducted
9. Ordinance No. 1628, an Ordinance of the City Commission of the City of Bozeman,
Montana, Extending the Life of the Tax Increment Financing District Established under
Urban Renewal Plan Dated November 1995
10. Resolution No. 3894, a Resolution of the City Commission of the City of Bozeman,
Montana Calling a Public Hearing to Approve the Downtown Parking Garage Facility as
an Urban Renewal Project and to Finance the Project through the Issuance of Tax
Increment Urban Renewal Bonds and Grant Anticipation Revenue Notes
11. Affidavit of Publication of Notice of Public Hearing on Bozeman Urban Renewal Plan to
Approve a Certain Project as an Urban Renewal Project
12. Certified copy of minutes of the March 27, 2006 meeting at which public hearing was
conducted
13. Resolution No. 3901, a Resolution of the City Commission of Bozeman, Montana,
Approving the Downtown Parking Garage Facility as an Urban Renewal Project and the
Issuance of Tax Increment Urban Renewal Bonds and Grant Anticipation Revenue Notes
14. Resolution No. 5142, Resolution Relating to $3,689,000 Tax Increment Urban Renewal
Revenue Refunding Bond (Downtown Bozeman Improvement District), Series 2020;
Authorizing and Directing the Sale and Issuance and Prescribing the Form and Terms
Thereof and the Security Therefor
Closing Documents
15. Escrow Agreement
16. Receipt of Escrow Agent
17. Arbitrage and Rebate Certificate and Agreement
Exhibit A – Certificate of Placement Agent
18. Certificate as to Organization
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19. Affidavit as to Signatures of Officers
20. Signature and No-Litigation Certificate
21. Certificate and Receipt of City Finance Director
22. Placement Agent Agreement
23. Investor Letter
24. Wire Transfer Agreement
25. Internal Revenue Service Form 8038-G
26. Specimen Bond
27. Bond Counsel Opinion
28. Reliance Letter
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EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
TAX INCREMENT URBAN RENEWAL REVENUE REFUNDING BOND
(DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT),
SERIES 2020
No. R-1 $3,689,000.00
Interest
Rate
Stated
Maturity
Date of
Original Issue
2.44% July 1, 2032 March 5, 2020
REGISTERED OWNER: TRUIST BANK
PRINCIPAL AMOUNT: THREE MILLION SIX HUNDRED EIGHTY NINE
THOUSAND DOLLARS AND NO/100
FOR VALUE RECEIVED, THE CITY OF BOZEMAN (the “City”), a duly organized and
validly existing municipal corporation located in Gallatin County, Montana, acknowledges itself
to be specially indebted and hereby promises to pay to the registered owner specified above or
registered assigns, solely from Tax Increment in the Debt Service Account, on each Payment Date
specified on the attached Schedule I, the dollar amount corresponding to that Payment Date as set
forth on such Schedule I, all subject to the provisions referred to herein with respect to the
prepayment and redemption of the principal of this Bond before Payment Dates. This Bond bears
interest from the date of original issue specified above, or from such later date to which interest
has been paid or duly provided for, until paid or discharged at the rate per annum specified above,
subject to a Determination of Taxability. Interest on this Bond shall be calculated on the basis of
a year of 360 days composed of twelve 30-day months. Principal of and interest on this Bond shall
be payable by ACH or wire transfer to the Owner hereof as such appears in the Bond Register as
of the close of business on the 15th day (whether or not a Business Day) of the month immediately
preceding each Payment Date, and the Owner of this Bond shall not be required to present this
Bond in order to receive any payment. Interest on this Bond shall be calculated on the basis of a
360-day year composed of twelve 30-day months. The City Finance Director shall initially serve
as the Bond Registrar for this Bond.
In the event that the City shall fail to observe any covenant, agreement or representation in
Section 8 of the Resolution (as defined below), which failure results in a Determination of
Taxability, the interest rate on this Bond shall increase to an interest rate per annum equal to the
quotient of the tax-exempt rate of interest on the Series 2020 Bond (2.44%) divided by 67.5% (the
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“Taxable Rate”). In addition, the City shall pay to the Owner an amount equal to the difference
between the interest paid at the tax-exempt rate and the interest which would have been paid at the
Taxable Rate from and after the Date of Taxability, plus any penalties, interest, assessments and
additions to tax payable by the Owner as a result of such change in taxable status. Thereafter,
interest on this Bond shall accrue at the Taxable Rate and shall be payable to the Owner on the
Payment Dates specified in Schedule I.
This Bond is a duly authorized issue of the City designated as “Tax Increment Urban
Renewal Revenue Refunding Bond (Downtown Bozeman Improvement District), Series 2020,”
issued under and secured by Resolution No. [____], adopted by the City Commission on February
24, 2020 (as amended or supplemented in accordance with the provisions thereof, the
“Resolution”), to which Resolution, copies of which are on file with the City, reference is hereby
made for a description of the nature and extent of the security, the rights thereunder of the Owner
and the City and the terms upon which this Bond is issued and delivered. Capitalized terms used
herein but not otherwise defined shall have the respective meanings given such terms in the
Resolution. This Bond evidences a loan from the Lender to the City in the principal amount of
$3,689,000 for the purpose of refunding, together with other amounts available therefor, the City’s
outstanding Tax Increment Urban Renewal Revenue Bonds, Series 2007 (Downtown Bozeman
Improvement District), and to pay costs of issuing the Series 2020 Bond and of the refunding.
This Bond is issued pursuant to and in full compliance with the Constitution and laws of
the State of Montana and the home rule charter of the City, particularly Montana Code Annotated,
Title 7, Chapter 15, Parts 42 and 43, as amended (the “Act”), and pursuant to the Resolution. This
Bond is payable solely from Tax Increment received by the City. Tax Increment results from the
levying of Taxes by the Taxing Bodies against the incremental taxable value, as defined in the Act,
of all Taxable Property, and shall include any payments in lieu of Taxes attributable to the
incremental taxable value, State Entitlements, and all payments received by the City designated as
replacement revenues for lost Tax Increment. By the Resolution, the City has pledged the Tax
Increment (including State Entitlements) received by the City to the Debt Service Account.
This Bond is not a general obligation of the City and the City’s general credit and
taxing powers are not pledged to the payment of this Bond or the interest thereon. This Bond
shall not constitute an indebtedness of the City within the meaning of any constitutional,
statutory or charter limitations.
This Bond is subject to prepayment and redemption, in whole and not in part, at the option
of the City, on July 1, 2026 and on any Interest Payment Date thereafter at a price of the principal
amount being prepaid and redeemed plus interest thereon through the date of prepayment or
redemption, without premium or penalty. The City shall give 15 days’ prior written notice of any
such redemption to the Owner at its address set forth in the Bond Register.
If provision is made for the payment of principal of and interest on this Bond in full in
accordance with the Resolution, this Bond shall no longer be deemed outstanding under the
Resolution, shall cease to be entitled to the benefits of the Resolution, and shall thereafter be
payable solely from the funds provided for payment.
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Except as provided in the Resolution, the Owner of this Bond shall have no right to enforce
the provisions of the Resolution, or to institute action to enforce the covenants therein or take any
action with respect to a default under the Resolution or to institute, appear in or defend any suit or
other procedure with respect thereto.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond
is transferable upon the books of the City at the principal office of the Bond Registrar, by the
registered owner hereof in person or by its attorney duly authorized in writing, upon surrender
hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly
executed by the registered owner or its attorney; and may also be surrendered in exchange for a
Bond of like aggregate principal amount, interest rate and maturity. Upon such transfer or
exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or
registered owner, of the same aggregate principal amount, bearing interest at the same rate and
maturing on the same date, subject to reimbursement for any tax, fee or governmental charge
required to be paid with respect to such transfer or exchange.
On or before 270 days after the end of each Fiscal Year of the City, commencing with the
Fiscal Year ending June 30, 2019, the City shall provide to the owner of the Series 2020 Bond the
audited financial statements of the City for such Fiscal Year, accompanied by the audit report and
opinion of the accountant or government auditor relating thereto. If the audited financial
statements are not available by the date that is 270 days after the end of the Fiscal Year, the City
shall provide to the Owner of the Series 2020 Bond the unaudited financial statements by such
date and shall provide the audited financial statements within 10 Business Days after receipt
thereof. The audited financial statements provided by the City shall include sufficient financial
information with respect to the District and the Tax Increment derived therefrom to enable the
Owner to ascertain the debt service coverage ratio for the Series 2020 Bond for such Fiscal Year.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of
receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be
affected by any notice to the contrary.
This Bond has been deemed designated by the City as a “qualified tax-exempt obligation”
pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required by the Constitution and laws of the State of Montana and the
home rule charter and ordinances and resolutions 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, limited obligation of the
City in accordance with its terms have been done, do exist, have happened and have been
performed as so required; that this Bond has been issued by the City in connection with urban
renewal projects (as defined in the Act); that the City, in and by the Resolution has validly made
and entered into covenants and agreements with and for the benefit of the Owner from time to time
of this Bond, including covenants that it will pledge, appropriate and credit the Tax Increment
derived from the District to the Debt Service Account of the City; that all provisions for the security
of the Owner of this Bond as set forth in the Resolution will be punctually and faithfully performed
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as therein stipulated; and that the issuance of this Bond does not cause the indebtedness of the City
to exceed any constitutional, statutory or charter limitation.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Resolution until the Certificate of Authentication hereon shall have
been executed by the Bond Registrar by the manual signature of an authorized representative.
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IN WITNESS WHEREOF, the City of Bozeman, Gallatin County, Montana, by its City
Commission, has caused this Bond to be executed by the facsimile signatures of the Mayor, the
City Manager and the City Finance Director and attested to by the City Clerk.
CITY OF BOZEMAN, MONTANA
______________________________
Mayor
_______________________________
City Manager
_______________________________
City Clerk
Dated:
CERTIFICATE OF AUTHENTICATION
This is the Series 2020 Bond delivered pursuant to the Resolution mentioned within.
CITY OF BOZEMAN, MONTANA
as Bond Registrar, Transfer Agent
and Paying Agent
By
City Finance Director
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The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants UTMA..........Custodian..............
in common (Cust) (Minor)
TEN ENT -- as tenants
by the entireties
under Uniform Transfers to
JT TEN -- as joint tenants with Minors Act................................
right of survivorship and (State)
not as tenants in common
Additional abbreviations may also be used.
ASSIGNMENT
FOR VALUED RECEIVED the undersigned hereby sells, assigns and transfers unto
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney to transfer the within Bond on the
books kept for registration thereof, with full power of substitution in the premises.
Date:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF NOTICE: The signature to this assignment
ASSIGNEE: must correspond with the name as it appears
upon the face of the within bond in every
particular, without alteration,
enlargement or any change whatsoever.
/ /
SIGNATURE GUARANTEE
Signature(s) must be guaranteed by an
“eligible guarantor institution” meeting
the requirements of the Bond Registrar,
which requirements include membership
or participation in STAMP or such other
“signature guaranty program” as may be
determined by the Registrar in addition
to or in substitution for STAMP, all in
accordance with the Securities Exchange
Act of 1934, as amended.
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SCHEDULE I
Bond Payment Schedule
EXHIBIT B
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this “Agreement”) is made and executed between the
City of Bozeman, Montana (the “City”), and U.S. Bank National Association, in Salt Lake City,
Utah (the “Agent”). The parties hereto recite and, in consideration of the mutual covenants and
payments referred to and contained herein, covenant and agree as follows:
1. The City, in accordance with Resolution No. [___] adopted by the City
Commission of the City on February 24, 2020, sold its Tax Increment Urban Renewal Revenue
Refunding Bond (Downtown Bozeman Improvement District), Series 2020, dated, as originally
issued, as of the date hereof, in the aggregate principal amount of $3,689,000 (the “Series 2020
Bond”) for the purpose of providing funds to refund, pay and redeem the City’s Tax Increment
Urban Renewal Revenue Bonds, Series 2007 (Downtown Bozeman Improvement District),
dated, as originally issued, as of December 27, 2007 (the “Series 2007 Bonds”), with stated
maturities in 2020 and thereafter, and outstanding in the aggregate principal amount of
$3,995,000 (the “Refunded Bonds”), and paying costs of issuance of the Series 2020 Bond and
the refunding of the Refunded Bonds. The City has directed that the proceeds of the Series 2020
Bond be applied as follows: (i) $3,621,489.18 to be deposited in the Escrow Account, and (ii)
$67,510.82 to be deposited in the Development Account held by the City and used to pay the
costs of issuance of the Series 2020 Bond and the refunding of the Refunded Bonds. The City
has appropriated $426,382.50 of the funds in the debt service reserve account for the Series 2007
Bonds for deposit to the Escrow Account.
2. The Agent acknowledges receipt of the cash in the aggregate amount of
$4,047,871.68 (representing $3,621,489.18 of proceeds of the Series 2020 Bond and
$426,382.50 of funds in the debt service reserve account for the Series 2007 Bonds) and agrees
that it will hold such cash in a special segregated escrow account in the name of the City (the
“Escrow Account”), and that it will remit from the Escrow Account to the paying agent of the
Series 2007 Bonds the funds required for the payment of principal of and interest on the
Refunded Bonds as shown on the attached Exhibit A (which is hereby incorporated herein and
made a part hereof).
The Agent will:
(i) not less than 30 days prior to April 9, 2020, provide notice of the redemption of
the Refunded Bonds in the form of Exhibit B hereto (which is incorporated herein and made a
part hereof), by first class mail, to the bond registrar for the Series 2007 Bonds and to registered
owners of such Refunded Bonds at their addresses as they appear on the Bond Register, as
required by Section 3.05(c) of the resolution of the City Commission of the City adopted
December 17, 2007, authorizing the issuance of the Series 2007 Bonds; and
(ii) not less than 35 days prior to April 9, 2020, provide notice of the redemption of
the Refunded Bonds in the form of Exhibit B hereto, by certified mail, telecopy or express
delivery service, or by such other means required by the recipient, to D.A. Davidson & Co., 8
Third Street North, Great Falls, Montana 59401, Attention: Aaron Rudio, as the Original
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Purchaser of the Series 2007 Bonds; to The Depository Trust Company, of New York, New
York; and to the Municipal Securities Rulemaking Board.
After provision for payment of all Refunded Bonds with interest accrued thereon, the
Agent will remit any remaining funds in the Escrow Account to the City, which will hold said
cash in the Debt Service Account for the Series 2020 Bond for application toward the payment of
the interest to become due on the Series 2020 Bond on July 1, 2020.
3. The City represents, based on a certification from Stifel, Nicolaus & Company,
Incorporated, placement agent to the City, that the amount to be deposited by the City pursuant
to this Agreement into the Escrow Account (i.e., $4,047,871.68), is sufficient to pay the
redemption price of the Refunded Bonds on April 9, 2020, as described in Exhibit A hereto,
including all interest accrued thereon.
4. The City acknowledges that regulations of the Comptroller of the Currency grant
the City the right to receive brokerage confirmations of the security transactions as they occur.
The City specifically waives such notification to the extent permitted by law and will receive
periodic cash transaction statements from the Escrow Agent which will detail all investment
transactions.
5. In order to ensure continuing compliance with Section 148 of the Internal
Revenue Code of 1986, as amended, and applicable Treasury Regulations, the Agent agrees that
it will not reinvest any cash held in the Escrow Account. Said prohibition on reinvestment shall
continue unless and until an opinion is received from nationally recognized bond counsel that
reinvestments in general obligations of the United States or obligations the principal of and
interest on which are guaranteed as to payment by the United States, as specified in said opinion,
may be made in a manner consistent with said Section 148 and then existing Treasury
Regulations.
6. The Agent also acknowledges receipt of a sum described in a letter agreement
between the City and the Agent, as and for full compensation for all services to be performed by
it as Agent under this Agreement, and the Agent expressly waives any lien upon or claim against
the moneys and investments in the Escrow Account.
7. If at any time it shall appear to the Agent that the money in the Escrow Account
will not be sufficient to make any payment due to the owners of any of the Refunded Bonds, the
Agent shall immediately notify the City. Upon receipt of such notice, the City shall forthwith
transmit to the Agent for deposit in the Escrow Account from moneys on hand and legally
available therefor, such additional moneys as may be required to make any such payment.
8. On or before April 15, 2020, the Agent shall submit to the City a report covering
all money it shall have received and all payments it shall have made or caused to be made
hereunder. Such report shall also list the amount of money existing in the Escrow Account, if
any, on such date.
9. It is recognized that title to the moneys held in the Escrow Account from time to
time shall remain vested in the City but subject always to the prior charge and lien thereon of this
Agreement and the use thereof required to be made by the provisions of this Agreement. The
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Agent shall hold all such money in the Escrow Account as a special trust fund and account
separate and wholly segregated from all other funds of the Agent on deposit therein and shall
never commingle such money with other money. It is understood and agreed that the
responsibility of the Agent under this Agreement is limited to the safekeeping and segregation of
the funds deposited with it in the Escrow Account and the collection of and accounting for any
interest payable with respect thereto. Except as provided in Section 5 hereof, no withdrawals,
transfers or investment or reinvestment shall be made of cash balances in the Escrow Account.
Cash balances shall be held by the Agent as cash balances as shown on the books and records of
the Escrow Agent and shall not be reinvested or invested by the Agent except as provided in
Section 5 hereof.
10. This Agreement is made by the City for the benefit of the owners of the Refunded
Bonds and is not revocable by the City, and the funds deposited in the Escrow Account have
been irrevocably appropriated for the payment and redemption of the Refunded Bonds and
interest thereon, in accordance with this Agreement.
11. This Agreement shall be binding upon and shall inure to the benefit of the City
and the Agent and their respective successors and assigns. In addition, this Agreement shall
constitute a third-party beneficiary contract for the benefit of the owners of the Refunded Bonds.
Said third-party beneficiaries shall be entitled to enforce performance and observance by the City
and the Agent of the respective agreements and covenants herein contained as fully and
completely as if said third-party beneficiaries were parties hereto. Any bank or trust company
into which the Agent may be merged or with which it may be consolidated or any bank or trust
company resulting from any merger or consolidation to which it shall be a party or any bank or
trust company to which it may sell or transfer all or substantially all of its corporate trust
business shall, if the City approves, be the successor agent hereunder without the execution of
any additional document or the performance of any further act.
12. This Agreement may not be amended except to sever any clause herein deemed to
be illegal or cure any ambiguity or correct or supplement any provision herein which may be
inconsistent with any other provision; provided that the Agent shall determine that any such
amendment shall not adversely affect the owners of the Refunded Bonds.
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IN WITNESS WHEREOF the parties hereto have caused this Escrow Agreement to be
duly executed by their duly authorized officers, as of the 5th day of March, 2020.
CITY OF BOZEMAN, MONTANA
__________________________________
Mayor
__________________________________
City Manager
__________________________________
City Finance Director
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U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent
__________________________________
By
Its Vice President
(Signature page to Escrow Agreement, dated March 5, 2020,
with the City of Bozeman, Montana)
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EXHIBIT A
DEBT SERVICE SCHEDULE FOR
REFUNDED BONDS
Date Principal Interest Total
04/09/2020 $3,995,000 $52,871.68 $4,047,871.68
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EXHIBIT B
NOTICE OF REDEMPTION
Tax Increment Urban Renewal Revenue Bonds, Series 2007
(Downtown Bozeman Improvement District)
City of Bozeman, Montana
NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana (the “City”), has
called for redemption all of its Tax Increment Urban Renewal Revenue Bonds, Series 2007
(Downtown Bozeman Improvement District), dated, as originally issued, as of December 27,
2007, maturing on July 1 in the years and amounts and bearing interest and CUSIP numbers as
set forth below:
Maturity
(July 1)
Principal
Amount
Interest
Rate
CUSIP
Number
2020 $ 230,000 4.40% 103707 AN5
2021 240,000 4.50% 103707 AP0
2022 250,000 4.60% 103707 AQ8
2023 260,000 4.70% 103707 AR6
2024 275,000 4.80% 103707 AS4
2028* 1,235,000 4.95% 103707 AW5
2032* 1,505,000 5.00% 103707 BA2
*Term Bonds
Such bonds have been called for redemption on April 9, 2020, and interest thereon will
cease to accrue from and after said date. The redemption price is equal to the principal amount
of the bonds plus interest accrued to the redemption date, without premium.
Holders of such bonds maturing in said years should surrender their bonds for payment to
U.S. Bank National Association, as paying agent, for payment on April 9, 2020 at its operations
center at 60 Livingston Avenue - Bond Drop Window, St. Paul, Minnesota 55107 or if by mail to
P.O. Box 64111, St. Paul, Minnesota 55164-0111.
Important Notice:
We are required by law to withhold an applicable portion of the principal amount of your
holdings redeemed unless we are provided with your social security number or federal employer
identification number, properly certified. Accordingly, you are instructed to submit at the time
of surrender of your bonds a W-9 Form which may be obtained at a bank or other financial
institution.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup
withholding tax will be withheld at the applicable backup withholding rate in effect at the time
the payment is made if the tax identification number is not properly certified.
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The paying agent shall not be held responsible for the selection or use of the CUSIP
number, nor is any representation made as to its correctness indicated in the Redemption Notice.
It is included solely for the convenience of the holders.
Interest on the bonds shall cease to accrue on April 9, 2020 and the holders thereof shall
have no further rights with respect thereto except to receive the redemption price so deposited.
Dated: March 5, 2020.
U.S. BANK NATIONAL ASSOCIATION
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this “Agreement”) is made and executed between the
City of Bozeman, Montana (the “City”), and U.S. Bank National Association, in Salt Lake City,
Utah (the “Agent”). The parties hereto recite and, in consideration of the mutual covenants and
payments referred to and contained herein, covenant and agree as follows:
1. The City, in accordance with Resolution No. 5142 adopted by the City
Commission of the City on February 24, 2020, sold its Tax Increment Urban Renewal Revenue
Refunding Bond (Downtown Bozeman Improvement District), Series 2020, dated, as originally
issued, as of the date hereof, in the aggregate principal amount of $3,689,000 (the “Series 2020
Bond”) for the purpose of providing funds to refund, pay and redeem the City’s Tax Increment
Urban Renewal Revenue Bonds, Series 2007 (Downtown Bozeman Improvement District),
dated, as originally issued, as of December 27, 2007 (the “Series 2007 Bonds”), with stated
maturities in 2020 and thereafter, and outstanding in the aggregate principal amount of
$3,995,000 (the “Refunded Bonds”), and paying costs of issuance of the Series 2020 Bond and
the refunding of the Refunded Bonds. The City has directed that the proceeds of the Series 2020
Bond be applied as follows: (i) $3,621,489.18 to be deposited in the Escrow Account, and (ii)
$67,510.82 to be deposited in the Development Account held by the City and used to pay the
costs of issuance of the Series 2020 Bond and the refunding of the Refunded Bonds. The City
has appropriated $426,382.50 of the funds in the debt service reserve account for the Series 2007
Bonds for deposit to the Escrow Account.
2. The Agent acknowledges receipt of the cash in the aggregate amount of
$4,047,871.68 (representing $3,621,489.18 of proceeds of the Series 2020 Bond and
$426,382.50 of funds in the debt service reserve account for the Series 2007 Bonds) and agrees
that it will hold such cash in a special segregated escrow account in the name of the City (the
“Escrow Account”), and that it will remit from the Escrow Account to the paying agent of the
Series 2007 Bonds the funds required for the payment of principal of and interest on the
Refunded Bonds as shown on the attached Exhibit A (which is hereby incorporated herein and
made a part hereof).
The Agent will:
(i) not less than 30 days prior to April 9, 2020, provide notice of the redemption of
the Refunded Bonds in the form of Exhibit B hereto (which is incorporated herein and made a
part hereof), by first class mail, to the bond registrar for the Series 2007 Bonds and to registered
owners of such Refunded Bonds at their addresses as they appear on the Bond Register, as
required by Section 3.05(c) of the resolution of the City Commission of the City adopted
December 17, 2007, authorizing the issuance of the Series 2007 Bonds; and
(ii) not less than 35 days prior to April 9, 2020, provide notice of the redemption of
the Refunded Bonds in the form of Exhibit B hereto, by certified mail, telecopy or express
delivery service, or by such other means required by the recipient, to D.A. Davidson & Co., 8
Third Street North, Great Falls, Montana 59401, Attention: Aaron Rudio, as the Original
Purchaser of the Series 2007 Bonds; to The Depository Trust Company, of New York, New
York; and to the Municipal Securities Rulemaking Board.
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After provision for payment of all Refunded Bonds with interest accrued thereon, the
Agent will remit any remaining funds in the Escrow Account to the City, which will hold said
cash in the Debt Service Account for the Series 2020 Bond for application toward the payment of
the interest to become due on the Series 2020 Bond on July 1, 2020.
3. The City represents, based on a certification from Stifel, Nicolaus & Company,
Incorporated, placement agent to the City, that the amount to be deposited by the City pursuant
to this Agreement into the Escrow Account (i.e., $4,047,871.68), is sufficient to pay the
redemption price of the Refunded Bonds on April 9, 2020, as described in Exhibit A hereto,
including all interest accrued thereon.
4. The City acknowledges that regulations of the Comptroller of the Currency grant
the City the right to receive brokerage confirmations of the security transactions as they occur.
The City specifically waives such notification to the extent permitted by law and will receive
periodic cash transaction statements from the Escrow Agent which will detail all investment
transactions.
5. In order to ensure continuing compliance with Section 148 of the Internal
Revenue Code of 1986, as amended, and applicable Treasury Regulations, the Agent agrees that
it will not reinvest any cash held in the Escrow Account. Said prohibition on reinvestment shall
continue unless and until an opinion is received from nationally recognized bond counsel that
reinvestments in general obligations of the United States or obligations the principal of and
interest on which are guaranteed as to payment by the United States, as specified in said opinion,
may be made in a manner consistent with said Section 148 and then existing Treasury
Regulations.
6. The Agent also acknowledges receipt of a sum described in a letter agreement
between the City and the Agent, as and for full compensation for all services to be performed by
it as Agent under this Agreement, and the Agent expressly waives any lien upon or claim against
the moneys and investments in the Escrow Account.
7. If at any time it shall appear to the Agent that the money in the Escrow Account
will not be sufficient to make any payment due to the owners of any of the Refunded Bonds, the
Agent shall immediately notify the City. Upon receipt of such notice, the City shall forthwith
transmit to the Agent for deposit in the Escrow Account from moneys on hand and legally
available therefor, such additional moneys as may be required to make any such payment.
8. On or before April 15, 2020, the Agent shall submit to the City a report covering
all money it shall have received and all payments it shall have made or caused to be made
hereunder. Such report shall also list the amount of money existing in the Escrow Account, if
any, on such date.
9. It is recognized that title to the moneys held in the Escrow Account from time to
time shall remain vested in the City but subject always to the prior charge and lien thereon of this
Agreement and the use thereof required to be made by the provisions of this Agreement. The
Agent shall hold all such money in the Escrow Account as a special trust fund and account
separate and wholly segregated from all other funds of the Agent on deposit therein and shall
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never commingle such money with other money. It is understood and agreed that the
responsibility of the Agent under this Agreement is limited to the safekeeping and segregation of
the funds deposited with it in the Escrow Account and the collection of and accounting for any
interest payable with respect thereto. Except as provided in Section 5 hereof, no withdrawals,
transfers or investment or reinvestment shall be made of cash balances in the Escrow Account.
Cash balances shall be held by the Agent as cash balances as shown on the books and records of
the Escrow Agent and shall not be reinvested or invested by the Agent except as provided in
Section 5 hereof.
10. This Agreement is made by the City for the benefit of the owners of the Refunded
Bonds and is not revocable by the City, and the funds deposited in the Escrow Account have
been irrevocably appropriated for the payment and redemption of the Refunded Bonds and
interest thereon, in accordance with this Agreement.
11. This Agreement shall be binding upon and shall inure to the benefit of the City
and the Agent and their respective successors and assigns. In addition, this Agreement shall
constitute a third-party beneficiary contract for the benefit of the owners of the Refunded Bonds.
Said third-party beneficiaries shall be entitled to enforce performance and observance by the City
and the Agent of the respective agreements and covenants herein contained as fully and
completely as if said third-party beneficiaries were parties hereto. Any bank or trust company
into which the Agent may be merged or with which it may be consolidated or any bank or trust
company resulting from any merger or consolidation to which it shall be a party or any bank or
trust company to which it may sell or transfer all or substantially all of its corporate trust
business shall, if the City approves, be the successor agent hereunder without the execution of
any additional document or the performance of any further act.
12. This Agreement may not be amended except to sever any clause herein deemed to
be illegal or cure any ambiguity or correct or supplement any provision herein which may be
inconsistent with any other provision; provided that the Agent shall determine that any such
amendment shall not adversely affect the owners of the Refunded Bonds.
A-1
EXHIBIT A
DEBT SERVICE SCHEDULE FOR
REFUNDED BONDS
Date Principal Interest Total
04/09/2020 $3,995,000 $52,871.68 $4,047,871.68
B-1
EXHIBIT B
NOTICE OF REDEMPTION
Tax Increment Urban Renewal Revenue Bonds, Series 2007
(Downtown Bozeman Improvement District)
City of Bozeman, Montana
NOTICE IS HEREBY GIVEN that the City of Bozeman, Montana (the “City”), has
called for redemption all of its Tax Increment Urban Renewal Revenue Bonds, Series 2007
(Downtown Bozeman Improvement District), dated, as originally issued, as of December 27,
2007, maturing on July 1 in the years and amounts and bearing interest and CUSIP numbers as
set forth below:
Maturity
(July 1)
Principal
Amount
Interest
Rate
CUSIP
Number
2020 $ 230,000 4.40% 103707 AN5
2021 240,000 4.50% 103707 AP0
2022 250,000 4.60% 103707 AQ8
2023 260,000 4.70% 103707 AR6
2024 275,000 4.80% 103707 AS4
2028* 1,235,000 4.95% 103707 AW5
2032* 1,505,000 5.00% 103707 BA2
*Term Bonds
Such bonds have been called for redemption on April 9, 2020, and interest thereon will
cease to accrue from and after said date. The redemption price is equal to the principal amount
of the bonds plus interest accrued to the redemption date, without premium.
Holders of such bonds maturing in said years should surrender their bonds for payment to
U.S. Bank National Association, as paying agent, for payment on April 9, 2020 at its operations
center at 60 Livingston Avenue - Bond Drop Window, St. Paul, Minnesota 55107 or if by mail to
P.O. Box 64111, St. Paul, Minnesota 55164-0111.
Important Notice:
We are required by law to withhold an applicable portion of the principal amount of your
holdings redeemed unless we are provided with your social security number or federal employer
identification number, properly certified. Accordingly, you are instructed to submit at the time
of surrender of your bonds a W-9 Form which may be obtained at a bank or other financial
institution.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, federal backup
withholding tax will be withheld at the applicable backup withholding rate in effect at the time
the payment is made if the tax identification number is not properly certified.
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The paying agent shall not be held responsible for the selection or use of the CUSIP
number, nor is any representation made as to its correctness indicated in the Redemption Notice.
It is included solely for the convenience of the holders.
Interest on the bonds shall cease to accrue on April 9, 2020 and the holders thereof shall
have no further rights with respect thereto except to receive the redemption price so deposited.
Dated: March 5, 2020.
U.S. BANK NATIONAL ASSOCIATION
$3,689,000
Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District), Series 2020
City of Bozeman, Montana
ARBITRAGE AND REBATE CERTIFICATE AND AGREEMENT
The undersigned officers of the City of Bozeman, Montana (the “City”) hereby certify
that they are duly authorized to execute and deliver this Arbitrage and Rebate Certificate and
Agreement (this “Certificate”) on behalf of the City. This Certificate is given to establish a basis
for the expectations of the City regarding the expenditure and investment of the Gross Proceeds
(as defined below) of the $3,689,000 Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District), Series 2020 (the “Series 2020 Bond”), pursuant to
Section 148 of the Code (as defined below) and Section 1.148-2(b) of the Regulations. To the
best knowledge of the undersigned, the expectations set forth herein are reasonable and it is not
reasonably expected that the Series 2020 Bond will be an “arbitrage bond” within the meaning of
Section 148 of the Code and applicable Regulations. The City understands that Dorsey &
Whitney LLP is relying on this Certificate in providing its tax opinion with respect to the Series
2020 Bond at its issuance on the Closing Date, that failure to comply with this Certificate could
result in a violation of the covenants in the Resolution relating to maintaining the tax-exempt
status of interest on the Series 2020 Bond, and that the City should consult with Bond Counsel in
advance regarding deviations from the facts and expectations set forth herein. This Certificate
does not, however, constitute a covenant with holders of the Series 2020 Bond. We further
certify on behalf of the City as follows:
Section 1. Definitions. For all purposes of this Certificate, the following terms have the
meanings stated below. Capitalized terms used herein but not otherwise defined shall have the
meanings given such terms in the Code or the Resolution, unless the context otherwise clearly
requires.
Bank means Truist Bank, a North Carolina banking corporation.
Bond Counsel means nationally recognized municipal bond counsel selected by the City.
Bond Year means (a) the period from the Closing Date to and including July 1, 2020, and
(b) each subsequent period of one year ending on July 1.
Bond Yield means the yield of the Series 2020 Bond calculated as set forth in Section 4
hereof.
Certificate means this Arbitrage and Rebate Certificate and Agreement.
Closing Date means March 5, 2020, the date of issuance and delivery of the Series 2020
Bond.
Code means the Internal Revenue Code of 1986, as amended from time to time.
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Computation Date means an Installment Computation Date and the Final Computation
Date.
Debt Service Account means the Debt Service Account created pursuant to the
Resolution, which shall be used to pay debt service on the Series 2020 Bond.
Escrow Account means the escrow account created pursuant to the Escrow Agreement.
Escrow Agreement means the Escrow Agreement, dated as of March 5, 2020, by and
between the City and U.S. Bank National Association, as escrow agent.
Final Computation Date means July 1, 2032 or such earlier date when all of the Series
2020 Bond has been discharged.
Governmental Person means a state or local governmental unit as defined in Section
1.103-1 of the Regulations or any instrumentality thereof. Governmental Person does not
include the United States or any agency or instrumentality thereof.
Gross Proceeds means the Proceeds and Replacement Proceeds of the Series 2020 Bond.
Installment Computation Date means July 1, 2024 and the last day of every fifth Bond
Year thereafter to, but not including, the Final Computation Date.
Investment Proceeds means any amounts actually or constructively received from
investing Proceeds of the Series 2020 Bond.
Investment Property means any security, obligation, annuity contract, investment
property, or residential real property described in Section 148(b)(2)(e) of the Code, but not
including any tax-exempt bond (other than a “specified private activity bond” as defined in
Section 57(a)(5)(C) of the Code).
Net Proceeds means the Proceeds of the Series 2020 Bond, less any amount of Proceeds
deposited in a reasonably required reserve or replacement fund.
Net Sale Proceeds means the Sale Proceeds less the amount thereof allocated to the
“minor portion” available under Section 148(e) of the Code or any amount thereof deposited in a
reasonably required reserve or replacement fund.
Non-Exempt Person means any person that is not a Governmental Person.
Nonpurpose Investment means any Investment Property (other than a Purpose
Investment) in which Gross Proceeds of the Series 2020 Bond are invested.
Project means the approximately 159,000 square foot parking garage constructed in part
with proceeds of the Series 2007 Bonds, which includes 435 parking spaces and is owned and
operated by the City.
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Payments means all payments as defined in Section 1.148-3(d)(1) of the Regulations.
Placement Agent means Stifel, Nicolaus & Company, Incorporated.
Proceeds means the Sale Proceeds, Investment Proceeds and any Transferred Proceeds of
the Series 2020 Bond.
Purpose Investment means any Investment Property acquired to carry out the
governmental purposes of the Series 2020 Bond.
Rebate Amount means 100% of the amount owed to the United States under Section
148(f)(2) of the Code, as computed in accordance with Section 1.148-3 of the Regulations.
Receipts means all receipts as defined in Section 1.148-3(d)(2) of the Regulations.
Refunded Bonds means the outstanding Series 2007 Bonds.
Regulations means the Treasury Regulations applicable to the Series 2020 Bond and
promulgated under the Code, including, without limitation, to the extent they apply, the Income
Tax Regulations under Sections 103 and 141 through 150 of the Code.
Related Party means a member of the same group of entities directly or indirectly
controlled by the same entity or group of entities (including the controlling entity or entities).
For this purpose, an entity or group of entities generally controls another entity or group of
entities if it possesses, directly or indirectly, discretionary and non-ministerial rights or powers
either to (a) approve and remove without cause a controlling portion of the governing body of the
controlled entity or (b) require the use of funds or assets of the controlled entity for any purpose.
An entity is not a controlled entity, however, if it possesses substantial taxing, eminent domain,
and police powers.
Replacement Proceeds means the amounts defined in Section 1.148-1(c) of the
Regulations, including without limitation any fund to the extent reasonably expected to be used
directly or indirectly to pay principal or interest in the Series 2020 Bond or any fund directly or
indirectly pledged to pay principal or interest in the Series 2020 Bond. For this purpose, an
amount is treated as pledged to pay principal or interest on the Series 2020 Bond if it is held
under an agreement to maintain the amount at a particular level for the direct or indirect benefit
of bondholders or a guarantor of the Series 2020 Bond, unless (a) a substantial beneficiary of the
Series 2020 Bond may grant rights in the amount superior to the rights of the bondholders or the
guarantor or (b) the amount does not exceed reasonable needs for which it is maintained, the
required level is tested no more frequently than every six months, and the amount may be spent
without any substantial restriction other than a requirement to replenish the amount by the next
testing date.
Resolution means the resolution adopted by the City Commission of the City on February
24, 2020, authorizing the issuance and setting forth the terms of the Series 2020 Bond.
4
Series 2007 Bonds means the City’s Tax Increment Urban Renewal Revenue Bonds
(Downtown Bozeman Improvement District), Series 2007, issued in the aggregate principal
amount of $6,270,000.
Transferred Proceeds means unspent proceeds of a refunded issue that are allocated to a
refunding issue when the proceeds of the refunding issue are used to pay the principal of the
refunded issue within the meaning of Section 1.148-9 of the Regulations.
Yield, with respect to any Investment Property, means that discount rate which, when
used in computing the present value of all unconditionally payable receipts from such Investment
Property produces an amount equal to the present value of all unconditionally payable payments
for the obligation.
Section 2. The Purpose of the Series 2020 Bond; Single Issue; Purpose of the Refunded
Bonds.
2.1. The Series 2020 Bond is being issued to provide funds to defease and currently
refund the Refunded Bonds and to pay costs of issuance of the Series 2020 Bond.
Pursuant to the provisions of Section 1.150-1(c) of the Regulations, the Series 2020 Bond
is considered to be a single “issue” for all purposes of Section 103 and Sections 141 through 150
of the Code. The Series 2020 Bond has not been sold at substantially the same time and pursuant
to the same plan of financing as any other issue of tax-exempt bonds that is payable from
substantially the same source of funds.
2.2. The Series 2007 Bonds were issued to finance the cost of designing and constructing
a parking/retail structure as an urban renewal project undertaken by the City in the District, to
fund a deposit to a debt service reserve account and to pay costs of issuing the Series 2007
Bonds. The structure consists of two condominium units: the Project and a retail space
condominium. The total cost of the Project and the retail space condominium was $12,162,068.
The cost of the retail space condominium, $1,255,927, was paid by the purchaser thereof. The
cost of designing and constructing the Project and related financing costs were $10,906,141, of
which $6,280,896, or approximately 57.6%, were paid from bond proceeds and $4,625,245, or
approximately 42.4%, were paid from other sources.
Section 3. Sources and Disbursements of Funds.
3.1. The City will receive $3,689,000 of proceeds from the sale of the Series 2020 Bond
to the Bank. To the best of our knowledge and based on the certificate of the Placement Agent
attached as Exhibit A hereto, the price paid by the Bank for the Series 2020 Bond is reasonable
under customary standards applicable in the municipal bond market.
3.2. The proceeds of the Series 2020 Bond will be applied as follows: (i) $3,621,489.18
will be deposited, together with the funds described in Section 3.3 hereof, in the Escrow Account
(the “Escrow Account”) established to pay, refund, and redeem the Refunded Bonds pursuant to
an Escrow Agreement, of even date herewith (the “Escrow Agreement”), between the City and
U.S. Bank National Association, in Salt Lake City, Utah (the “Escrow Agent”); and (ii)
5
$67,510.82 will be applied to the payment of costs of issuance of the Series 2020 Bond and costs
of the refunding of the Refunded Bonds.
3.3. As of the date hereof, $426,382.50 is on deposit in the debt service reserve account
for the Series 2007 Bonds, all of which will be deposited in the Escrow Account and applied,
together with the proceeds of the Series 2020 Bond described in clause (i) of Section 3.2 hereof,
to pay, refund, and redeem the Refunded Bonds. There are no funds on hand in the debt service
account for the Series 2007 Bonds available to be contributed to the refunding and there are no
other funds or accounts of the City that secure the repayment of the Series 2007 Bonds. Interest
on the Series 2007 Bonds was last paid on January 1, 2020.
Section 4. Issue Price; Bond Yield.
4.1. The “issue price” of the Series 2020 Bond is $3,689,000, which is the price paid by
the single buyer of the Series 2020 Bond in a private placement, pursuant to the general rule
provided by Section 1.148-1(f)(2)(i) of the Regulations.
4.2. As shown on the Certificate of Placement Agent attached as Exhibit A, the
Placement Agent has calculated the Bond Yield to be 2.440284%. The issue consisting of the
Series 2020 Bond is a “fixed yield issue” as defined in Section 1.148-1(b) of the Regulations and
the Bond Yield has been calculated, as provided in Section 1.148-4(b) of the Regulations, as that
discount rate that, when used in computing the present value as of the issue date of all
unconditionally payable payments of principal, interest, and fees for qualified guarantees on the
Series 2020 Bond, produces an amount which is equal to present value, using the same discount
rate, of the aggregate issue price of the Series 2020 Bond as of the issue date thereof.
4.3. The City has not entered into a “qualified hedge” relating to the Series 2020 Bond
within the meaning of Section 1.148-4(h) of the Regulations. Payments relating to swaps that
are not qualified hedges shall not be taken into account in determining the Bond Yield.
4.4. The City has not entered into a “qualified guarantee” for the Series 2020 Bond
within the meaning of Section 1.148-4(f) of the Regulations. Payments relating to guarantees
that are not qualified guarantees are not taken into account in determining the Bond Yield.
Section 5. Tax Increment Accounts.
5.1. Development Account. Gross Proceeds on deposit in the Development Account will
be used to pay costs of issuing the Series 2020 Bond as provided in the Resolution. It is
expected that all Gross Proceeds deposited into the Development Account, and any investment
earnings thereon, will be disbursed by May 5, 2020 (and, if not so disbursed, any remaining
funds shall be transferred to the Debt Service Account). It is not reasonably expected that
amounts on deposit in the Development Account will be used to pay debt service on the Series
2020 Bond.
5.2. Debt Service Account. Pursuant to the Resolution, the principal of and interest on
the Series 2020 Bond are payable from the Debt Service Account. Tax Increment pledged to the
Debt Service Account is expected to be received in amounts sufficient to pay all principal of and
6
interest on the Series 2020 Bond when due. It is expected that all amounts credited to the Debt
Service Account will be used to pay principal of and interest on the Series 2020 Bond within 13
months after deposit. The Debt Service Account will be used primarily to achieve a proper
matching of revenues and debt service within each Bond Year and will be fully depleted at least
once a year on July 1, except for a reasonable carryover amount which is not expected to exceed
the greater of (i) the earnings on money in the Debt Service Account allocable to the Series 2020
Bond for the immediately preceding Bond Year or (ii) one-twelfth of the annual debt service on
the Series 2020 Bond in the immediately preceding Bond Year. Consequently, the amounts on
deposit in the Debt Service Account allocable to the Series 2020 Bond are expected to constitute
a “bona fide debt service fund” for the Series 2020 Bond within the meaning of Section 1.148-
1(b) of the Regulations.
5.3. Other Accounts. The City has not created or established, nor does it expect to create
or establish, any fund or account, other than as described in this Certificate, reasonably expected
to be used or available to pay the principal of or interest on the Series 2020 Bond, including any
funds held under an agreement to maintain the amount at a particular level for the direct or
indirect benefit of holders of the Series 2020 Bond (i.e., a “negative pledge”).
Section 6. Refunding.
Proceeds of the Series 2020 Bond to be applied to the payment and redemption of the
Refunded Bonds will be so applied on April 9, 2020, a date not more than 90 days from the date
hereof. All of the proceeds of the Refunded Bonds other than the amounts in the debt service
reserve fund for the Refunded Bonds, which will be applied to the redemption of the Refunded
Bonds, have been expended for the purposes for which the Series 2007 Bonds were issued.
Accordingly, there will be no Transferred Proceeds of the Refunded Bonds.
Section 7. Use of Proceeds.
7.1. Reimbursement. No Proceeds are expected to be used to reimburse any expenditure
paid prior to the Closing Date.
7.2. No Working Capital. Except as otherwise permitted by Section 1.148-6(d)(3)(ii) of
the Regulations with respect to de minimis expenditures for certain specified purposes (including
without limitation costs of issuance of the Series 2020 Bond and interest on the Series 2020
Bond until three years from the Closing Date), all of the Gross Proceeds of the Series 2020 Bond
will be expended, directly or indirectly, to finance or refinance costs of a type that are properly
chargeable to a capital account (or would be so chargeable with a proper election) under general
federal income tax principles in effect at the time the cost is paid. The City acknowledges that if
Gross Proceeds of the Series 2020 Bond are spent for non-capital purposes other than as
permitted by this Section 7.2, a like amount of then available funds of the City will be treated as
unspent Gross Proceeds of the Series 2020 Bond and the City may be in violation of one or more
of the tax covenants set forth in the Resolution.
7.3. Application of Bond Proceeds to Governmental Purpose of Series 2020 Bond.
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(a) The City has no intention to sell or otherwise dispose of the property or
improvements refinanced with the proceeds of the Series 2020 Bond before the final
maturity of the Series 2020 Bond. The City expects that such property will continue to
be owned and operated by the City substantially in the manner in which it is now owned
and operated for an indefinite period concluding not earlier than the final stated maturity
date of the Series 2020 Bond. All of the Net Proceeds of the Series 2007 Bonds were
applied to capital costs of the Project or costs of issuance of the Series 2007 Bonds.
During the combined measurement period beginning with the later of the issuance of the
Series 2007 Bonds or the date the Project was placed in service: (i) not more than 10% of
the Proceeds will be used, directly or indirectly, in any activity that constitutes a trade or
business of a Non-Exempt Person, and (ii) not more than 5% of the Proceeds will be
used, directly or indirectly, in whole or in part, for any use that is not related to any
governmental use of the Proceeds or for any disproportionate related business use of the
Proceeds. In determining whether all or any portion of the Proceeds are used, directly or
indirectly, by a Non-Exempt Person, the City acknowledges that use of Proceeds may
result from (i) ownership of all or a portion of the Project by a Non-Exempt Person, (ii)
actual or beneficial use of the Project pursuant to a lease, management or service
contract, or (iii) any other arrangement that conveys a special legal entitlement for the
beneficial use of the Proceeds or the property financed thereby or that provides a special
economic benefit with respect to the financed property. In particular, the City
acknowledges that (i) any agreement with a Non-Exempt Person regarding parking in the
Project may result in private business use by a Non-Exempt Person if such use is not use
as a member of the general public (ii) use by a Non-Exempt Person is treated as general
public use only if the Project is intended to be available and in fact is reasonably
available for use on the same basis by natural persons, and (iii) an arrangement is not
treated as general public use if the term of the use under the arrangement, including all
renewal options, is greater than 200 days. As permitted by Section 1.141-15(l)(3), the
City will apply the allocation provisions of Section 1.141-6 of the Regulations to the
Bonds.
(b) Not more than ten percent (10%) of the debt service on the Series 2020
Bond will be, directly or indirectly, (i) secured by any interest in property used or to be
used for a private business use or (ii) payments in respect of property used or to be used
for a private business use. Not more than five percent (5%) of the Sale Proceeds of the
Series 2020 Bond will be used for any unrelated private business use. No “impermissible
agreement” within the meaning of Section 1.141-4(e)(4) of the Regulations has been or
will be entered into by the City with any Person in respect of taxable property in the
District.
(c) No portion of the Proceeds will be used, directly or indirectly, to make or
finance loans to any other person.
(d) No portion of the Proceeds will be used, directly or indirectly, to make
grants to any person.
8
(e) No Gross Proceeds will be allocated to payments to any Related Party to
the City.
Section 8. Investment of Proceeds and Arbitrage Rebate
8.1. Arbitrage. No portion of the Series 2020 Bond is issued for the purpose of investing
the proceeds thereof at a Yield higher than the Bond Yield. The Sale Proceeds of the Series
2020 Bond, including income from the investment thereof, do not exceed the amount necessary
for the governmental purposes of the Series 2020 Bond. In connection with the issuance of the
Series 2020 Bond, except as specifically provided in Sections 148(c) and (d) of the Code, the
City has not engaged and will not engage in any transaction or series of transactions (i) enabling
the City to exploit the difference between tax-exempt and taxable interest rates to gain a material
financial advantage, and (ii) increasing the burdens on the market for tax-exempt obligations in
any manner including, without limitation, by selling bonds that would not otherwise be sold, or
by selling more bonds, or issuing them sooner, or allowing them to remain outstanding longer,
than would otherwise be necessary.
8.2. Replacement Proceeds. The Sale Proceeds of the Series 2020 Bond will not be used
to replace proceeds of an earlier issue of tax-exempt obligations that were not expended on the
project for which such earlier issue was issued, or for substantially the same project as was
intended for any such replaced and unexpended proceeds of any such earlier issue, nor will the
Proceeds of the Series 2020 Bond be used to replace any other funds that are or were reasonably
expected to be used directly or indirectly to pay principal or interest on the Series 2020 Bond.
The City reasonably expects to pay debt service on the Series 2020 Bond from then-current Tax
Increment revenues.
8.3. Maturity Limitation. The Series 2020 Bond is not expected to be outstanding longer
than necessary for the governmental purposes of the issue, within the meaning of Section 1.148-
1(c)(4) of the Regulations. The weighted average maturity of the Series 2020 Bond (6.616
years) does not exceed (i) 120% of the remaining average reasonably expected economic life of
the projects refinanced by the Series 2020 Bond, or (ii) the weighted average maturity of the
Refunded Bonds to be refunded by the Series 2020 Bond (6.983 years).
8.4. Investment of Gross Proceeds.
(a) Subject to Section 8.5, Gross Proceeds shall be invested at all times to the greatest
extent practicable until such Gross Proceeds are allocated to expenditures. No amounts may be
held as cash or be invested in zero-Yield investments other than obligations of the United States
purchased directly from the United States. In the event amounts cannot be otherwise invested at
a return that exceeds the cost of such investment due to the denomination, price or availability of
investments, the amounts shall be invested in an interest-bearing deposit account of a bank with a
Yield not less than that paid to the general public or held uninvested the minimum amount of
time necessary.
(b) All investments made with Gross Proceeds shall be bought and sold at fair market
value, which for this purpose is the price at which a willing buyer would purchase the investment
9
from a willing seller in a bona fide, arm’s-length transaction. The City does not expect to invest
Gross Proceeds in certificates of deposit, guaranteed investment contracts, or any investment that
is not of a type traded on an established securities market, all within the meaning of section
1.148-5(d)(6) of the Regulations, and agrees to obtain the advice of a financial advisor or Bond
Counsel to the extent necessary before making any such investments. The City will not invest
Gross Proceeds in any Nonpurpose Investment in an amount greater than the fair market value of
the Nonpurpose Investment as of the purchase date within the meaning of section 1.148-6(c) of
the Regulations.
(c) As provided in Section 10, not more than 50% of the Proceeds of the Series 2020
Bond are or will be invested in Nonpurpose Investments having a substantially guaranteed Yield
for four years or more.
8.5. Yield Restriction. Except as provided in this Section 8.5, prior to allocation to
expenditures, all Gross Proceeds shall be invested at a Yield not in excess of the Bond Yield
until they cease to be Gross Proceeds.
(a) The following may be invested without Yield restriction during the
indicated temporary period:
(i) Proceeds on deposit in the Development Account for a period of
13 months from the Closing Date;
(ii) amounts on deposit in the Debt Service Account for a period of 13
months from the date received;
(iii) amounts in the Escrow Account for a period of 90 days from the
Closing Date;
(iv) any other Investment Proceeds for a period of one year from the
date received;
(v) all other Replacement Proceeds for a period of 30 days from the
date that the amounts are first treated as Replacement Proceeds; and
(vi) all other Gross Proceeds for a period of 30 days from the date
received.
(ii) Gross Proceeds may be invested without Yield restriction to the extent the
City makes permissible yield-reduction payments with respect to such investment in the
manner provided in section 1.148-5(c) of the Regulations.
(iii) At any time Gross Proceeds of the Series 2020 Bond do not qualify for
investment at a Yield in excess of the Bond Yield pursuant to an applicable temporary
period, such Gross Proceeds (if not held in a refunding escrow) may be invested without
yield restriction as part of the “minor portion” as set forth in Section 148(e) of the Code.
The “minor portion” amount is the lesser of $100,000 or 5% of the Sale Proceeds.
10
8.6. Rebate. Section 148(f) of the Code and the corresponding Regulations require the
periodic payment to the United States of the Rebate Amount, which, as of any date, is the excess
of the future value, as of that date, of all Receipts on Nonpurpose Investments over the future
value, as of that date, of all Payments on Nonpurpose Investments. Future value is computed in
accordance with Section 1.148-3(c) of the Regulations.
To the extent necessary to meet this rebate requirement, the City shall take the following
actions consistent with the Code and applicable Regulations:
(i) For each investment of Gross Proceeds in Nonpurpose Investments, the
Trustee, on behalf of the City, will record the purchase date of such investment, its
purchase price (or fair market value in the case of a deemed acquisition or deemed
disposition as specified in Section 1.148-5(d)(3) of the Regulations), accrued interest due
on its purchase date, its face amount, its coupon rate, the frequency of its interest
payment, its disposition price, the accrued interest due on its disposition date and its
disposition date.
(ii) If necessary, as of each Computation Date, the City will compute or cause
to be computed the Bond Yield.
(iii) As of each Computation Date, the City will determine or cause to be
determined the Receipts and the Payments, and will determine the future value thereof as
of the Computation Date.
(iv) Notwithstanding anything in this Section 8.6 to the contrary, Receipts and
Payments with respect to Nonpurpose Investments allocated to Gross Proceeds of the
Series 2020 Bond on deposit during a Bond Year in the Debt Service Account, which is a
bona fide debt service fund as defined in Section 1.148-1(b) of the Regulations, shall not
be taken into account in calculating the Rebate Amount unless, in a particular Bond Year,
investment income thereon is more than $100,000.
(v) As of each Computation Date, the City will calculate or cause to be
calculated the Rebate Amount.
(vi) The City shall pay to the United States Department of the Treasury (a) not
later than 60 days after each Installment Computation Date, an amount equal to at least
90% of the Rebate Amount calculated as of the date of such Installment Computation
Date; and (b) not later than 60 days after the Final Computation Date, an amount equal to
100% of the Rebate Amount calculated as of the Final Computation Date.
(vii) Each payment required to be made pursuant to this Section 8.6 shall be
made, on or before the date such payment is due, to the Internal Revenue Service at such
place as is then designated, and accompanied by Internal Revenue Service Form 8038-T
or such other form as the Commissioner may prescribe. The City shall retain records of
the calculations and payments required by this Section 8.6 until three years after the Final
Computation Date.
11
Section 9. No Federal Guarantee. The Series 2020 Bond will not be “federally
guaranteed” within the meaning of Section 149(b) of the Code. For purposes of this Section 9,
the Series 2020 Bond is “federally guaranteed” if:
(i) the payment of principal or interest with respect to the Series 2020 Bond is
guaranteed, directly or indirectly, (in whole or in part) by the United States (or any
agency or instrumentality thereof), or
(ii) five percent (5%) of more of the Proceeds of the Series 2020 Bond are (A)
used to make loans the payment of principal or interest with respect to which is to be
guaranteed (in whole or in part) by the United States (or any agency of instrumentality
thereof) or (B) invested (directly or indirectly) in federally insured deposits or accounts.
For purposes of this Section 9, the Series 2020 Bond will not be treated as “federally guaranteed”
by reason of any investment of the Proceeds of the Series 2020 Bond (1) during an initial three-
year temporary period until such proceeds are needed for the governmental purpose for which
the Series 2020 Bond is being issued, (2) during the thirteen-month temporary period applicable
to bona fide debt service fund investments, (3) as part of a reserve which meets the requirements
of Section 148(d) of the Code, (4) in bonds issued by the United States Treasury or (5) in any
other investments permitted by the Regulations.
Section 10. Not Hedge Bonds. The City reasonably expects that at least 85% of the Net
Sale Proceeds of the Series 2020 Bond will be used for the governmental purposes of the Series
2020 Bond within three years of the Closing Date and that not more than 50% of the Proceeds of
the Series 2020 Bond will be invested in Nonpurpose Investments having a substantially
guaranteed Yield for four years or more. At the time of issuance of the Series 2007 Bonds, the
City reasonably expected that at least 85% of the Net Sale Proceeds of the Series 2007 Bonds
would be used for the governmental purposes of Series 2007 Bonds within three years of their
issue date and that no more than 50% of the proceeds of the Series 2007 Bonds would be
invested in Nonpurpose Investments having a substantially guaranteed Yield for four years or
more.
Section 11. General.
11.1. The City will retain detailed records and documents relating to the expenditure of
Gross Proceeds of the Series 2020 Bond, the use of the Project, and the investment of Gross
Proceeds until at least three years following the retirement of the Series 2020 Bond (or any
obligations issued to directly or indirectly refund any portion of the Series 2020 Bond) to the
extent required by applicable IRS rules and the Regulations.
11.2. The City understands and acknowledges that changes in the facts or expectations set
forth in this Certificate may have adverse effects on the exclusion of interest on the Series 2020
Bond from gross income, and, accordingly, that Bond Counsel should be consulted regarding any
such changes.
12
Section 12. Filing Requirements. The City will file or cause to be filed with the Internal
Revenue Service such reports (including IRS Form 8038-G) and other documents as may be
required from time to time by the Code and the Regulations.
[Balance of page intentionally left blank]
A-1
EXHIBIT A
$3,689,000
Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District), Series 2020
City of Bozeman, Montana
CERTIFICATE OF PLACEMENT AGENT
The undersigned officer of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby
certifies that:
1. Stifel is acting as Placement Agent to the City of Bozeman, Montana (the “City”), in
connection with the issuance by the City of its $3,689,000 Tax Increment Urban Renewal
Revenue Refunding Bond (Downtown Bozeman Improvement District), Series 2020 (the
“Bond”), dated, as originally issued, as of March 5, 2020. The information contained in this
Certificate is correct, to the best of our knowledge, in reliance upon certain information provided
to us by the City and Truist Bank, as the purchaser of the Bond (the “Bank”).
2. The price paid by the Bank for the Bond is reasonable under customary standards
applicable in the municipal bond market.
3. The yield of the Bond, determined in accordance with Section 148(h) of the Internal
Revenue Code of 1986, as amended (the “Code”), and applicable Treasury Regulations
promulgated thereunder, is 2.440284% per annum.
4. The net present value of the debt service savings achieved through the refunding of
the Refunded Bonds is $649,786.30 and is equal to 16.26% of the aggregate principal amount of
the Refunded Bonds.
5. The weighted average maturity of the Bond, based on the issue price of the Bond from
its date of issue (not on the basis of the principal amount of the Bond or from its dated date), i.e.,
6.616 years, does not exceed the weighted average maturity of the Refunded Bonds to be
refunded by the Bond, calculated as of the date hereof, i.e., 6.983 years.
6. The cash deposited into the Escrow Account for the refunding of the Refunded Bonds
on the date hereof ($4,047,871.68) is sufficient to pay in full on April 9, 2020 all outstanding
principal of ($3,995,000) and accrued interest on ($52,871.68) the Refunded Bonds.
7. The terms used herein have the same meaning given them in Section 148 of the Code,
applicable Treasury Regulations thereunder, in the Instructions for Form 8038-G (Rev.
September 2018), or in the Arbitrage and Rebate Certificate and Agreement of the City of even
date herewith. This Certificate is being furnished to Dorsey & Whitney LLP for the purpose,
among other things, of completing and filing on a timely basis Internal Revenue Service Form
8038-G for the Bonds.
STATE OF MONTANA ) CERTIFICATE AS TO ORGANIZATION
) ss OF CITY OF BOZEMAN, MONTANA
COUNTY OF GALLATIN )
The undersigned, being the duly qualified and acting City Clerk of the City of Bozeman,
in the County and State aforesaid, and as such having custody of and access to the books and
records of the City relating to the matters hereinafter stated, hereby certifies that, as appears by
such books and records and as known to me, the following statements are true and correct.
1. The City has been a duly organized city for nearly 137 years (since April 1883)
and is now governed by the general laws of the State relating to cities of the first class, operating
under the Commission-Manager form of government. Its population, according to the 2010
United States census, was 37,280, and its current population is estimated to be 48,532.
2. The territory included within its boundaries lies wholly in the County of Gallatin,
and comprises approximately 10,375 acres. The City is divided into 0 wards. The City is
governed by a Mayor, City Manager and four Commissioners. The following named persons
hold the offices set opposite their names and for the terms stated below:
Name
Office
Term Ends
Chris Mehl Mayor January 2022
Cynthia Andrus Deputy Mayor January 2024
I-Ho Pomeroy Commissioner January 2022
Terry Cunningham Commissioner January 2022
Michael Wallner Commissioner January 2024
Name
Office
Dennis Taylor Interim City Manager --
Anna Rosenberry Assistant City Manager --
Chuck Winn Assistant City Manager --
Greg Sullivan City Attorney --
Kristin Donald City Finance Director --
Mike Maas City Clerk --
Brian LaMeres Controller
$3,689,000
Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District), Series 2020
City of Bozeman, Montana
SIGNATURE AND NO-LITIGATION CERTIFICATE
We, Chris Mehl, Dennis Taylor, Kristin Donald and Mike Maas, hereby certify that we
are the duly qualified and acting Mayor, Interim City Manager, City Finance Director and City
Clerk, respectively, of the City of Bozeman, Montana (the “City”). We further certify on behalf
of the City that:
1. True and correct signatures of the undersigned Mayor, Interim City Manager and City
Clerk as such officers are affixed to the $3,689,000 Tax Increment Urban Renewal Revenue
Refunding Bond (Downtown Bozeman Improvement District), Series 2020, of the City, dated, as
originally issued, as of March 5, 2020 (the “Series 2020 Bond”). The Series 2020 Bond is issued
under and pursuant to a resolution adopted by the City Commission of the City on February 24,
2020 (the “Resolution”). The Series 2020 Bond matures on the date, bears interest at the rate and
is substantially in the form prescribed by the Resolution. The Resolution is in full force and
effect and has not been further amended or supplemented. The City Finance Director is acting as
Registrar, and will authenticate and cause to be delivered the Series 2020 Bond to Truist Bank, as
purchaser thereof (the “Purchaser”), in accordance with the Purchaser’s instructions. The Series
2020 Bond is in fully registered form pursuant to a system of registration established by the
Resolution.
2. The Series 2020 Bond has been in all respects duly executed for delivery pursuant to
authority conferred upon such officers; no obligations other than the Series 2020 Bond have been
issued pursuant to such authority; none of the proceedings or records which has been certified to
the Purchaser or to the attorneys approving the legality of the issuance of the Series 2020 Bond
has been in any manner repealed, amended or changed except as shown by additional
proceedings or records furnished each of them; and there has been no material adverse change in
the financial condition of the City or the circumstances affecting the Series 2020 Bond, except as
shown by the materials so furnished.
3. No litigation is now pending, or, to the best of our knowledge, threatened: (i)
restraining or enjoining the issuance or delivery of the Series 2020 Bond, (ii) questioning the
organization or boundaries of the City or the right of any officers of the City to their respective
offices, (iii) questioning the right and power of officers of the City to deliver the Series 2020
Bond, (iv) challenging the validity of or security for the Series 2020 Bond, the pledge of Tax
Increment (as defined in the Resolution) to pay the principal thereof, or premium, if any, and the
interest thereon or (v) challenging the validity or legality of the Resolution.
STIFEL, NICOLAUS & COMPANY, INCORPORATED
1401 LAWRENCE ST., SUITE 900 DENVER, COLORADO 80202 (303) 296‐2300 WWW.STIFEL.COM/PUBLICFINANCE | MEMBER SIPC & NYSE
PLACEMENT AGENT AGREEMENT
March 4, 2020
City of Bozeman, Montana
Re: Tax Increment Urban Renewal Revenue Refunding Bond (Downtown
Bozeman Improvement District) Series 2020
The City of Bozeman, Montana (the “Issuer”) proposes to issue, offer, and sell in a
private placement the above-referenced obligation of the Issuer (the “Bond”) issued as a single
bond (which means the minimum denomination is greater than $100,000), with, as currently
contemplated, gross proceeds of approximately $3,689,000 for the purpose of refunding the
Issuer’s prior Downtown Bozeman Improvement District Tax Increment Urban Renewal Revenue
Bond, Series 2007. The Bond is being issued pursuant to a resolution of the governing body of
the Issuer captioned ‘RESOLUTION RELATING TO $3,689,000 TAX INCREMENT URBAN
RENEWAL REVENUE REFUNDING BOND (DOWNTOWN BOZEMAN IMPROVEMENT
DISTRICT), SERIES 2020; AUTHORIZING AND DIRECTING THE SALE AND ISSUANCE
AND PRESCRIBING THE FORM AND TERMS THEREOF AND THE SECURITY
THEREFOR’, adopted on February 24, 2020 (the “Resolution”).
This Placement Agent Agreement (the “Agreement”) confirms the agreement
between the Issuer and Stifel, Nicolaus & Company, Incorporated (the “Placement Agent”) as
follows:
1. Engagement. As evidenced by the Professional Services Agreement dated
January 27, 2020, and Stifel’s G-17 letter accepted on January 22, 2020,
the Issuer has engaged Stifel to serve as Placement Agent as its exclusive
agent to assist the Issuer in placing the Bond on a best efforts basis with
Truist Bank, a North Carolina banking corporation (“Truist” or the
“Purchaser”), who has represented on the date hereof that Truist is a
“qualified institutional buyer” as defined in Rule 144A under the Securities
Act of 1933 (the “Securities Act”) or an “accredited investor,” as defined
in Rule 501(a)(1),(2),(3), or (7) under the Securities Act, as represented by
Truist in an executed Investor Letter in substantially the form attached as
Exhibit A on a private placement basis (the “Placement”). Sale a n d
delivery of the Bond by the Issuer and purchase by the Purchaser will occur
on March 5, 2020 (“Closing Date”).
Page 2
2. Fees and Expenses.
(a) For its services under this Agreement, the Issuer agrees to pay the
Placement Agent:
(1) a placement fee of $25,000 for its services under this
Agreement, payable on the Closing Date
3. Disclosure and Due Diligence.
(a) The Issuer has provided, or caused to be provided, the Placement
Agent with a copy of the City’s most recent Comprehensive Annual
Financial Report and, the Downtown Bozeman Improvement Plan
(May 2019), (the “Information Package”) together with the
Resolution and the Bond (together with all supplements,
modifications, and additions thereto prior to the Closing Date, the
“Placement Materials”). The Issuer acknowledges and agrees that it
is solely responsible for the completeness, truth, and accuracy of the
Placement Materials and that the Placement Agent and the
Purchaser may rely upon, as complete, true, and accurate, the
Placement Materials and all information provided by the Issuer to
the Placement Agent for use in connection with the Placement and
that the Placement Agent does not assume any responsibility
therefor.
(b) The Issuer has made and will make available to the Purchaser and
the Placement Agent such documents and other information which
the Purchaser or the Placement Agent reasonably deems
appropriate, will provide access to its officers, directors, employees,
accountants, counsel and other representatives, and will provide the
Purchaser and the Placement Agent the opportunity to ask questions
and receive answers from knowledgeable individuals, including
Bond Counsel, concerning the Issuer, the Bond, and the security
therefor; it being understood that the Purchaser and the Placement
Agent will rely solely upon such information supplied by the Issuer
and its representatives without assuming any responsibility for
independent investigation or verification thereof.
(c) In the event that the Placement Agent is unable to complete “due
diligence” in order to form a reasonable basis for recommending the
Bond to the Purchaser either (1) because of the Issuer’s failure to
comply with paragraph (a) or (b) of this paragraph or (2) because
the Placement Agent uncovers “red flags” about the Issuer that cause
the Placement Agent to be not satisfied that Placement Agent can in
good faith recommend the Bond to Purchaser, the Placement Agent
Page 3
may terminate this Agreement without further obligation on the part
of the Placement Agent to proceed with the Placement and without
any obligation on the part of the Placement Agent to reimburse to
the Issuer any monies advanced by the Issuer to the Placement
Agent.
4. Representations, Warranties, and Agreements of the Issuer. As of the
date of this Agreement, unless otherwise stated, the Issuer represents,
warrants, and agrees with the Placement Agent that:
(a) The Issuer is duly organized and validly existing under the laws of
the State of Montana (the “State”) and its self-governing Charter with
the power to adopt the Resolution, perform the agreements on its part
contained therein and in the agreements approved thereby and cause
the issuance of the Bond.
(b) The Issuer will not knowingly take any action in the Placement in
violation of the requirements for exemption from registration or
qualification of the Bond under all federal and applicable state
securities laws and regulations.
(c) The Issuer has complied, and in all respects on the Closing Date will
be in compliance, with all of the provisions of applicable law of the
State relating to the issuance of the Bond.
(d) The Issuer, acting either through its Interim City Manager or its City
Commission, as applicable: (1) has duly approved the execution and
delivery of this Agreement; (2) on February 24, 2020 adopted the
Resolution; (3) duly approved the Placement Materials and the
delivery thereof to prospective Purchaser; and (4) duly authorized
and approved the execution and delivery of the Escrow Agreement
(as defined in the Resolution), and Wire Transfer Agreement, as
such documents are amended and supplemented to the Closing Date,
(the “Financing Documents”), and the performance of its
obligations and the consummation by it of all other transactions
contemplated thereby.
(e) On the Closing Date, the Financing Documents will have been duly
authorized, executed, and delivered by the Issuer, and, assuming due
authorization, execution and delivery by the other parties thereto, as
applicable, constitute legal, valid and binding agreements of the
Issuer enforceable in accordance with their respective terms, except
as the enforcement thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or
other laws affecting the enforcement of creditors’ rights generally
Page 4
and by the application of equitable principles if sought and by the
limitations on legal remedies imposed on actions against the Issuer
in the State of Montana.
(f) The Issuer is not, and on the Closing Date will not be, in material
breach of or material default under any applicable law or
administrative regulation of the State or any department, division,
agency or instrumentality thereof, or of the United States, or any
applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Issuer is a party or is otherwise subject, which breach or default
would materially and adversely affect the Issuer or its ability to
perform its duties and obligations under the Financing Documents,
and the execution and delivery of the Financing Documents, the
adoption of the Resolution and the issuance of the Bond and
compliance with the provisions of each will not conflict with or
constitute a breach of or default under any applicable law or
administrative regulation of the State or under any certificate,
agreement or other instrument to which the Issuer is a party or is
otherwise subject, which breach or default would materially and
adversely affect the Issuer or its ability to perform its duties under
the Financing Documents and the Bond.
(g) No action, suit, proceeding or investigation at law or in equity before
or by any court, governmental agency, public board or body is, and
on the Closing Date will not be, pending or, to the knowledge of the
Issuer, threatened: (i) in any way affecting the existence of the Issuer
or the titles of the members of the Bozeman City Commission to
their respective offices, (ii) seeking to prohibit, restrain or enjoin the
issuance, sale or delivery of the Bond or the collection of tax
increment revenues or collection or payment by the Issuer of any
amounts pledged or to be pledged as security to pay the principal of
and interest on Bond, (iii) in any way contesting or affecting the
validity or enforceability of, or the power or authority of the Issuer
to issue, adopt or to enter into (as applicable), the Bond, the
Resolution or the Financing Documents, (iv) contesting in any way
the completeness, truth, or accuracy of the Placement Materials, as
described in Section 3(a), (v) except as disclosed in the Placement
Materials, wherein an unfavorable decision, ruling or finding would
materially adversely affect the financial position or condition of the
Issuer or would result in any material adverse change in the ability
of the Issuer to pledge or apply the security or source of payment of,
or to pay debt service on the Bond, or (vi) contesting the status of
the interest on the Bond as excludable from gross income for federal
income tax purposes or as exempt from any applicable state tax.
Page 5
(h) Regarding information provided by the Issuer to the Placement
Agent:
(1) the Issuer has furnished the Placement Agent and the
Purchaser with the Information Package. The Issuer
represents and warrants that all information made available
to the Placement Agent by the Issuer or contained in the
Information Package, when provided was, and has been at
all times thereafter during the period of the engagement of
the Placement Agent hereunder, be complete, true, and
accurate in all material respects and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not
misleading in light of the circumstances under which such
statements are made;
(2) except as otherwise indicated to the contrary in the Issuer’s
financial statements, all historical financial statements of the
Issuer provided to the Placement Agent and the Purchaser as
part of the City’s Comprehensive Audited Financial Report
have been prepared in accordance with generally accepted
accounting principles and practices then in effect in the
United States and fairly present the financial condition and
operations of the entities covered thereby in all material
respects;
(3) any forecasted financial or market information with respect
to the Issuer or its market contained in its fiscal year 2020
budget provided to the Placement Agent and the Purchaser
by the Issuer has been prepared in good faith with a
reasonable basis for the assumptions and the conclusions
reached therein.
(i) On the Closing Date, the Issuer will deliver or cause to be delivered
to the Placement Agent:
(1) The opinion of Dorsey & Whitney LLP, Bond Counsel to the
Issuer, dated the Closing Date addressed to the Issuer and
Truist and with a reliance letter addressed to the Placement
Agent relating to:
(i) the validity of the Bond; and
(ii) the tax-exempt status of the Bond;
Page 6
(2) a certificate of the Issuer, dated the Closing Date, in the form
attached to this Agreement as Exhibit B, stating:
(i) the representations and warranties of the Issuer
contained in this Agreement are true and correct as if
made on the Closing Date;
(ii) the Issuer has complied with and fully satisfied all of
its agreements with and obligations to the Placement
Agent under this Agreement; and
(3) An Investor Letter, executed by the Purchaser and
addressed to the Issuer and the Placement Agent in the form
attached as Exhibit A; and
(4) Such additional legal opinions, certificates, proceedings,
instruments and other documents as the Placement Agent or
its counsel, if any, and Bond Counsel may reasonably
request to evidence compliance by the Issuer with legal
requirements, the truth and accuracy, as of the Closing
Date, of the representations of the Issuer, and the due
performance or satisfaction by the Issuer at or prior to such
time of all agreements then to be performed and all
conditions then to be satisfied by the Issuer.
5. Termination. This Agreement terminates on the Closing Date following
satisfaction of the obligations of the parties on that date, and may be
terminated by either party upon ten (10) business days’ prior written notice;
provided that the provisions of Paragraph 2 and obligations thereunder shall
not be affected by such termination.
6. Regulatory Disclosure. The Placement Agent represents to the Issuer and
the Issuer acknowledges based on the Placement Agent’s representations,
in connection with the purchase and sale of the Bond, the offering of the
Bond for sale and the discussions and negotiations relating to the terms of
the Bond pursuant to and as set forth in this Agreement, that:
(a) the Placement Agent has acted at arm’s length, is acting solely for
its own account and is not agent of or advisor to (including, without
limitation, a Municipal Advisor (as such term is defined in Section
975(e) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act)), and owes no fiduciary duty to the Issuer or any
other person,
(b) the Placement Agent’s duties and obligations to the Issuer shall be
limited to those contractual duties and obligations set forth in this
Agreement, and
Page 7
(c) the Placement Agent may have interests that differ from those of the
Issuer.
(d) The Issuer represents to the Placement Agent that the Issuer has
consulted its legal and financial advisors to the extent it deemed
appropriate in connection with the offering and sale of the Bond.
The Issuer further acknowledges and agrees that it is responsible for
making its judgment with respect to the offering and sale of the
Bond and the process leading thereto. The Issuer agrees that it will
not claim that the Placement Agent acted as a Municipal Advisor to
the Issuer or rendered advisory services of any nature or respect, or
owes a fiduciary or similar duty to the Issuer, in connection with the
offering or sale of the Bond or the process leading thereto.
7. Survival of Certain Representations and Obligations. The respective
agreements, covenants, representations, warranties and other statements of
the Issuer and its officers set forth in or made pursuant to this Agreement
shall survive delivery of and payment for the Bond and shall remain in full
force and effect, regardless of any investigation, or statements as to the
results thereof, made by or on behalf of the Placement Agent, for a period
of time not in excess of applicable statutes of limitation or repose.
8. Notices. Any notice or other communication to be given to the Issuer under
this Agreement may be given by delivering the same in writing to the City
of Bozeman, Montana, P.O. Box 1230, Bozeman, MT 59771, Attention:
Interim City Manager. Any notice or other communication to be given to
the Placement Agent under this Agreement may be given by delivering the
same in writing to Stifel, Nicolaus & Company, Incorporated, 1401
Lawrence Street, Suite 900, Denver, CO 80202, Attention: Bryan Stelmack,
Director.
9. Reserved.
10. No Assignment. This Agreement has been made by the Issuer and the
Placement Agent, and no person, other than the foregoing, shall acquire or
have any right under or by virtue of this Agreement.
11. Applicable Law. This Agreement shall be interpreted, governed and
enforced in accordance with the laws of the State of Montana.
12. Effectiveness. This Agreement shall become effective upon its execution
by duly authorized officials of all parties hereto and shall be valid and
enforceable from and after the time of such execution.
Page 8
13. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision
hereof.
14. Counterparts. This Agreement may be executed in several counterparts
(including counterparts exchanged by email in PDF format), each of which
shall be an original and all of which shall constitute but one and the same
instrument.
Page A-1
EXHIBIT A
FORM OF INVESTOR LETTER
March 5, 2020
City of Bozeman, Montana
121 North Rouse Avenue
Bozeman, MT 59715
Stifel, Nicolaus & Company, Incorporated
1401 Lawrence Street, Suite 900
Denver, CO 80202
$3,689,000
City of Bozeman, Montana
Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District)
Series 2020
Ladies and Gentlemen:
In connection with the purchase by Truist Bank (the “Bank”) on this date of the bond described
above, dated March 5, 2020 (the “Bond”), I hereby certify on behalf of the Bank as follows:
1. The Bank has performed its own due diligence and financial analysis with regard to the
Bond and the ability of the City of Bozeman, Montana (the “City”) to make the payments on the Bond
from Tax Increment as set forth in a resolution adopted by the City Commission of the City on
February 24, 2020 (the “Resolution”). The Bank acknowledges that no official statement, prospectus,
offering circular, or other comprehensive offering statement has been provided with respect to the Bond.
The Bank acknowledges that it has made its own inquiry and analysis with respect to the City, the District
(as defined in the Resolution), and the other material factors affecting the payments by the City from Tax
Increment pledged pursuant to the Resolution to the payment of the Bond by the governing body of the
City.
2. The Bank has sufficient knowledge and experience in financial and business matters to be
able to evaluate the risks and merits of a loan evidenced by the Bond.
3. The Bank is either (a) an “accredited investor,” as defined in Rule 501(A)(1), (2), (3) or
(7) of Regulation D promulgated under the Securities Act of 1933, as amended (an “Institutional
Accredited Investor”) or (b) a “qualified institutional buyer,” as defined in Rule 144A promulgated under
the Securities Act of 1933, as amended (a “Qualified Institutional Buyer”).
4. We represent that we are currently lending the funds to the City evidenced by the Bond
for our own account in the ordinary course of our banking business. The Bank (a) is a North Carolina
banking corporation and is not a broker, dealer or municipal securities dealer registered under the
Securities Exchange Act of 1934 and (b) has the present intent to hold the Bond to maturity or earlier
redemption. Provided that the foregoing does not prevent the Bank from selling or redistributing or
assigning the Bond or participation interests therein at a later date in compliance with law and the
provisions of the Bond and related legal documents.
5. The Bank is not requiring a CUSIP number for the Bond and does not want a CUSIP
number attached to the Bond.
6. We acknowledge that the Bond is a special, limited revenue obligation of the City
payable from the Tax Increment pursuant to the terms of the Resolution.
7. We understand that the Bond has not been registered with any federal or state securities
agency or commission.
8. The Bank: (i) is not acting as an Underwriter with respect to the Bond, (ii) has not
contracted with any person pursuant to a written agreement to have such person participate in an initial
sale of the Bond to the Public, and (iii) has not agreed with the City pursuant to a written agreement to
sell the Bond to persons other than the Bank. For purposes of this paragraph:
(a) Public means any person (i.e., an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party. Persons generally are
“related parties” for purposes of this certificate if they have more than 50 percent common
ownership or control, directly or indirectly.
(b) Underwriter means (i) any person that agrees pursuant to a written contract with the
City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial
sale of the Bond to the Public, and (ii) any person that agrees pursuant to a written contract
directly or indirectly with a person described in clause (i) of this paragraph to participate in the
initial sale of the Bond to the Public (including member of a selling group or a party to a retail
distribution agreement participating in the initial sale of the Bond to the Public.
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The foregoing representations shall survive the execution and delivery to us of the Bond and the
instruments and documents contemplated thereby.
TRUIST BANK
By:
Name: William DaSilva
Title: Assistant Vice President
DMNORTH #7128928 v6/046978.01/00332530
March 5, 2020
City of Bozeman, Montana
121 North Rouse Avenue
Bozeman, MT 59715
Stifel, Nicolaus & Company, Incorporated
1401 Lawrence Street, Suite 900
Denver, CO 80202
$3,689,000
City of Bozeman, Montana
Tax Increment Urban Renewal Revenue Refunding Bond
(Downtown Bozeman Improvement District)
Series 2020
Ladies and Gentlemen:
In connection with the purchase by Truist Bank (the “Bank”) on this date of the bond described
above, dated March 5, 2020 (the “Bond”), I hereby certify on behalf of the Bank as follows:
1. The Bank has performed its own due diligence and financial analysis with regard to the
Bond and the ability of the City of Bozeman, Montana (the “City”) to make the payments on the Bond
from Tax Increment as set forth in a resolution adopted by the City Commission of the City on
February 24, 2020 (the “Resolution”). The Bank acknowledges that no official statement, prospectus,
offering circular, or other comprehensive offering statement has been provided with respect to the Bond.
The Bank acknowledges that it has made its own inquiry and analysis with respect to the City, the District
(as defined in the Resolution), and the other material factors affecting the payments by the City from Tax
Increment pledged pursuant to the Resolution to the payment of the Bond by the governing body of the
City.
2. The Bank has sufficient knowledge and experience in financial and business matters to be
able to evaluate the risks and merits of a loan evidenced by the Bond.
3. The Bank is either (a) an “accredited investor,” as defined in Rule 501(A)(1), (2), (3) or
(7) of Regulation D promulgated under the Securities Act of 1933, as amended (an “Institutional
Accredited Investor”) or (b) a “qualified institutional buyer,” as defined in Rule 144A promulgated under
the Securities Act of 1933, as amended (a “Qualified Institutional Buyer”).
4. We represent that we are currently lending the funds to the City evidenced by the Bond
for our own account in the ordinary course of our banking business. The Bank (a) is a North Carolina
banking corporation and is not a broker, dealer or municipal securities dealer registered under the
Securities Exchange Act of 1934 and (b) has the present intent to hold the Bond to maturity or earlier
redemption. Provided that the foregoing does not prevent the Bank from selling or redistributing or
assigning the Bond or participation interests therein at a later date in compliance with law and the
provisions of the Bond and related legal documents.
5. The Bank is not requiring a CUSIP number for the Bond and does not want a CUSIP
number attached to the Bond.
6. We acknowledge that the Bond is a special, limited revenue obligation of the City
payable from the Tax Increment pursuant to the terms of the Resolution.
7. We understand that the Bond has not been registered with any federal or state securities
agency or commission.
8. The Bank: (i) is not acting as an Underwriter with respect to the Bond, (ii) has not
contracted with any person pursuant to a written agreement to have such person participate in an initial
sale of the Bond to the Public, and (iii) has not agreed with the City pursuant to a written agreement to
sell the Bond to persons other than the Bank. For purposes of this paragraph:
(a) Public means any person (i.e., an individual, trust, estate, partnership, association,
company, or corporation) other than an Underwriter or a related party. Persons generally are
“related parties” for purposes of this certificate if they have more than 50 percent common
ownership or control, directly or indirectly.
(b) Underwriter means (i) any person that agrees pursuant to a written contract with the
City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial
sale of the Bond to the Public, and (ii) any person that agrees pursuant to a written contract
directly or indirectly with a person described in clause (i) of this paragraph to participate in the
initial sale of the Bond to the Public (including member of a selling group or a party to a retail
distribution agreement participating in the initial sale of the Bond to the Public.
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Wire Transfer Agreement
This Wire Transfer Agreement is dated as of March 5, 2020 (this “Agreement”) and is by and
between CITY OF BOZEMAN, MONTANA (the “Borrower”) and TRUIST BANK (“Truist”).
RECITALS
The Borrower is, simultaneously with the execution and delivery of this Agreement, executing
and delivering Tax Increment Urban Renewal Revenue Refunding Bond (Downtown Bozeman
Improvement District), Series 2020 (the “Contract”), between the Borrower and Truist. The purpose of
the Contract is to provide for Truist’s advance of $3,689,000 to or on behalf of the Borrower to enable the
Borrower to (i) refinance the Borrower’s Tax Increment Urban Renewal Revenue Bonds, Series 2007
(Downtown Bozeman Improvement District), originally issued on December 27, 2007 (the “Refunded
Bonds”), which proceeds were originally used to (a) finance a portion of the costs of a parking garage facility,
and (b) fund a deposit to a reserve account, and (ii) pay related financing costs.
In order to prevent unauthorized or fraudulent wire transfers through cyber fraud and other
means, Truist and the Borrower hereby agree to the following:
Section 1. Wire Transfer Requirements. In the event a wire transfer is made by Truist to
disburse funds as contemplated by the Contract (a “Disbursement”), said wire transfer shall be delivered
as directed in a written “Disbursement Authorization” provided to Truist by a representative of the
Borrower, subject to the terms and conditions set forth herein. For the purposes of this Agreement, a
representative of the Borrower shall include employees and elected and/or appointed officials of the
Borrower, bond counsel, and the Borrower’s legal counsel.
Section 2. Verification Procedures. Prior to making any Disbursement pursuant to a
Disbursement Authorization not delivered to Truist in person by a representative of the Borrower, Truist
shall verify such Disbursement Authorization verbally via telephone communication with a representative
of the Borrower. The Borrower shall ensure that a representative of the Borrower will provide such
verification to Truist. The Borrower shall not disclose, or allow to be disclosed, such Truist verification
procedures to any third party unless there is a legitimate business need to make such disclosure or such
disclosure is required by law, and the Borrower accepts the risk of such third party knowledge of the
security procedures. If the Borrower has reason to believe that a security procedure has been obtained by
or disclosed to an unauthorized person or learns of any unauthorized transfer or of any discrepancy in a
transfer request, then the Borrower shall notify Truist immediately.
Section 3. Payee Identification. The Borrower is solely responsible for accurately identifying the
wire transfer information contained in the Disbursement Authorization delivered to Truist by a
representative of the Borrower, including but not limited to the bank name and its ABA number,
beneficiary’s account name and account number and beneficiary’s physical address, together with other
information requested by Truist (collectively, “Remittance Instructions”). If the Remittance Instructions
describe a beneficiary inconsistently by name and account number, the Borrower acknowledges that
Truist may make payment on the basis of the account number alone, that Truist is not obligated to detect
such errors, and that the Borrower assumes the risk of any loss resulting therefrom.
Section 4. Duty to Reconcile Written Confirmation. Upon request from a representative of the
Borrower, Truist shall use its best efforts to send a representative of the Borrower written confirmation of
the Disbursement in the form of a reference number, beneficiary name and wire amount. A representative
of the Borrower shall promptly review and reconcile the written confirmation of the Disbursement sent by
Truist, and shall report to Truist in writing, promptly, but in no event later than ten (10) business days
2
after the date of such written confirmation, any unauthorized, erroneous, unreceived or improperly
executed payment. Truist and the Borrower agree that ten (10) business days is a reasonable time for the
detection and reporting to Truist of such information. After that time, all items on the written
confirmation will be considered correct and the Borrower will be precluded from recovering from Truist
if such wire transfer identified in the written confirmation was actually made by Truist. For the avoidance
of doubt, any such writings can be provided electronically.
Section 5. Unauthorized Payments. Notwithstanding any other provision herein, if a
Disbursement has been verified by a representative of the Borrower pursuant to Section 2, it shall be
binding on the Borrower if Truist acted in good faith in making such Disbursement.
Section 6. Recordation. Truist may record any telephone conversation between Truist and a
representative of the Borrower in order to reduce the risk of unauthorized or erroneous transfers. Truist
may retain such recordings for as long as Truist may deem necessary.
Section 7. Compliance with Agreement. If Truist complies with the provisions of this
Agreement, the Borrower agrees that Truist shall not be responsible for any communication or
miscommunication by a representative of the Borrower.
Section 8. Applicable Law. All wire transfer orders are governed by Article 4A of the Uniform
Commercial Code, except as any provisions thereof that may be and are modified by the terms hereof. If
any part of the applicable wire transfer order involves the use of the Fedwire, the rights and obligations of
Truist and the Borrower regarding that wire transfer order are governed by Regulation J of the Federal
Reserve Board.
Section 9. Choice of Law. The parties intend that Montana law shall govern this Agreement.
Section 10. Amendments. This Agreement may not be modified or amended unless such
amendment is in writing and signed by Truist and the Borrower.
Section 11. No Third-Party Beneficiaries. There are no parties intended to be or which shall be
deemed to be third-party beneficiaries of this Agreement.
Section 12. Successors and Assigns. All of the covenants and conditions of this Agreement shall
be binding upon and inure to the benefit of the parties to this Agreement and their respective successors
and assigns.
Section 13. Severability. If any court of competent jurisdiction shall hold any provision of this
Agreement invalid or unenforceable, such holding shall not invalidate or render unenforceable any other
provision of this Agreement.
Section 14. Counterparts. This Agreement may be executed in any number of counterparts,
including separate counterparts, each executed counterpart constituting an original but all together only
one agreement.
Section 15. Termination. This Agreement shall cease and terminate upon termination of the
Contract.
Section 16. E-Verify. Truist understands that “E-Verify” is a federal program operated by the
United States Department of Homeland Security and other federal agencies, or any successor or
equivalent program used to verify the work authorization of newly hired employees pursuant to federal
3
law in accordance with Section 64-25(5) of the General Statutes of North Carolina, as amended. Truist
uses E-Verify to verify the work authorization of its employees in accordance with Section 64-26(a) of
the General Statutes of North Carolina, as amended.
Section 17. Electronic Signatures. The parties agree that the electronic signature of a party to
this Agreement shall be as valid as an original signature of such party and shall be effective to bind such
party to this Agreement. For purposes hereof: (i) “electronic signature” means a manually signed original
signature that is then transmitted by electronic means; and (ii) “transmitted by electronic means” means
sent in the form of a facsimile or sent via the internet as a portable document format (“pdf”) or other
replicating image attached to an electronic mail or internet message.
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UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF GALLATIN
CITY OF BOZEMAN
TAX INCREMENT URBAN RENEWAL REVENUE REFUNDING BOND
(DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT),
SERIES 2020
No. R-1 $3,689,000.00
Interest
Rate
Stated
Maturity
Date of
Original Issue
2.44% July 1, 2032 March 5, 2020
REGISTERED OWNER: TRUIST BANK
PRINCIPAL AMOUNT: THREE MILLION SIX HUNDRED EIGHTY NINE
THOUSAND DOLLARS AND NO/100
FOR VALUE RECEIVED, THE CITY OF BOZEMAN (the “City”), a duly organized and
validly existing municipal corporation located in Gallatin County, Montana, acknowledges itself
to be specially indebted and hereby promises to pay to the registered owner specified above or
registered assigns, solely from Tax Increment in the Debt Service Account, on each Payment Date
specified on the attached Schedule I, the dollar amount corresponding to that Payment Date as set
forth on such Schedule I, all subject to the provisions referred to herein with respect to the
prepayment and redemption of the principal of this Bond before Payment Dates. This Bond bears
interest from the date of original issue specified above, or from such later date to which interest
has been paid or duly provided for, until paid or discharged at the rate per annum specified above,
subject to a Determination of Taxability. Interest on this Bond shall be calculated on the basis of
a year of 360 days composed of twelve 30-day months. Principal of and interest on this Bond shall
be payable by ACH or wire transfer to the Owner hereof as such appears in the Bond Register as
of the close of business on the 15th day (whether or not a Business Day) of the month immediately
preceding each Payment Date, and the Owner of this Bond shall not be required to present this
Bond in order to receive any payment. Interest on this Bond shall be calculated on the basis of a
360-day year composed of twelve 30-day months. The City Finance Director shall initially serve
as the Bond Registrar for this Bond.
In the event that the City shall fail to observe any covenant, agreement or representation in
Section 8 of the Resolution (as defined below), which failure results in a Determination of
Taxability, the interest rate on this Bond shall increase to an interest rate per annum equal to the
quotient of the tax-exempt rate of interest on the Series 2020 Bond (2.44%) divided by 67.5% (the
“Taxable Rate”). In addition, the City shall pay to the Owner an amount equal to the difference
between the interest paid at the tax-exempt rate and the interest which would have been paid at the
Taxable Rate from and after the Date of Taxability, plus any penalties, interest, assessments and
2
additions to tax payable by the Owner as a result of such change in taxable status. Thereafter,
interest on this Bond shall accrue at the Taxable Rate and shall be payable to the Owner on the
Payment Dates specified in Schedule I.
This Bond is a duly authorized issue of the City designated as “Tax Increment Urban
Renewal Revenue Refunding Bond (Downtown Bozeman Improvement District), Series 2020,”
issued under and secured by Resolution No. 5142, adopted by the City Commission on February
24, 2020 (as amended or supplemented in accordance with the provisions thereof, the
“Resolution”), to which Resolution, copies of which are on file with the City, reference is hereby
made for a description of the nature and extent of the security, the rights thereunder of the Owner
and the City and the terms upon which this Bond is issued and delivered. Capitalized terms used
herein but not otherwise defined shall have the respective meanings given such terms in the
Resolution. This Bond evidences a loan from the Lender to the City in the principal amount of
$3,689,000 for the purpose of refunding, together with other amounts available therefor, the City’s
outstanding Tax Increment Urban Renewal Revenue Bonds, Series 2007 (Downtown Bozeman
Improvement District), and to pay costs of issuing the Series 2020 Bond and of the refunding.
This Bond is issued pursuant to and in full compliance with the Constitution and laws of
the State of Montana and the home rule charter of the City, particularly Montana Code Annotated,
Title 7, Chapter 15, Parts 42 and 43, as amended (the “Act”), and pursuant to the Resolution. This
Bond is payable solely from Tax Increment received by the City. Tax Increment results from the
levying of Taxes by the Taxing Bodies against the incremental taxable value, as defined in the Act,
of all Taxable Property, and shall include any payments in lieu of Taxes attributable to the
incremental taxable value, State Entitlements, and all payments received by the City designated as
replacement revenues for lost Tax Increment. By the Resolution, the City has pledged the Tax
Increment (including State Entitlements) received by the City to the Debt Service Account.
This Bond is not a general obligation of the City and the City’s general credit and
taxing powers are not pledged to the payment of this Bond or the interest thereon. This Bond
shall not constitute an indebtedness of the City within the meaning of any constitutional,
statutory or charter limitations.
This Bond is subject to prepayment and redemption, in whole and not in part, at the option
of the City, on July 1, 2026 and on any Interest Payment Date thereafter at a price of the principal
amount being prepaid and redeemed plus interest thereon through the date of prepayment or
redemption, without premium or penalty. The City shall give 15 days’ prior written notice of any
such redemption to the Owner at its address set forth in the Bond Register.
If provision is made for the payment of principal of and interest on this Bond in full in
accordance with the Resolution, this Bond shall no longer be deemed outstanding under the
Resolution, shall cease to be entitled to the benefits of the Resolution, and shall thereafter be
payable solely from the funds provided for payment.
Except as provided in the Resolution, the Owner of this Bond shall have no right to enforce
the provisions of the Resolution, or to institute action to enforce the covenants therein or take any
3
action with respect to a default under the Resolution or to institute, appear in or defend any suit or
other procedure with respect thereto.
As provided in the Resolution and subject to certain limitations set forth therein, this Bond
is transferable upon the books of the City at the principal office of the Bond Registrar, by the
registered owner hereof in person or by its attorney duly authorized in writing, upon surrender
hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly
executed by the registered owner or its attorney; and may also be surrendered in exchange for a
Bond of like aggregate principal amount, interest rate and maturity. Upon such transfer or
exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or
registered owner, of the same aggregate principal amount, bearing interest at the same rate and
maturing on the same date, subject to reimbursement for any tax, fee or governmental charge
required to be paid with respect to such transfer or exchange.
On or before 270 days after the end of each Fiscal Year of the City, commencing with the
Fiscal Year ending June 30, 2019, the City shall provide to the owner of the Series 2020 Bond the
audited financial statements of the City for such Fiscal Year, accompanied by the audit report and
opinion of the accountant or government auditor relating thereto. If the audited financial
statements are not available by the date that is 270 days after the end of the Fiscal Year, the City
shall provide to the Owner of the Series 2020 Bond the unaudited financial statements by such
date and shall provide the audited financial statements within 10 Business Days after receipt
thereof. The audited financial statements provided by the City shall include sufficient financial
information with respect to the District and the Tax Increment derived therefrom to enable the
Owner to ascertain the debt service coverage ratio for the Series 2020 Bond for such Fiscal Year.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of
receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall be
affected by any notice to the contrary.
This Bond has been deemed designated by the City as a “qualified tax-exempt obligation”
pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required by the Constitution and laws of the State of Montana and the
home rule charter and ordinances and resolutions 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, limited obligation of the
City in accordance with its terms have been done, do exist, have happened and have been
performed as so required; that this Bond has been issued by the City in connection with urban
renewal projects (as defined in the Act); that the City, in and by the Resolution has validly made
and entered into covenants and agreements with and for the benefit of the Owner from time to time
of this Bond, including covenants that it will pledge, appropriate and credit the Tax Increment
derived from the District to the Debt Service Account of the City; that all provisions for the security
of the Owner of this Bond as set forth in the Resolution will be punctually and faithfully performed
as therein stipulated; and that the issuance of this Bond does not cause the indebtedness of the City
to exceed any constitutional, statutory or charter limitation.
4
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Resolution until the Certificate of Authentication hereon shall have
been executed by the Bond Registrar by the manual signature of an authorized representative.
5
IN WITNESS WHEREOF, the City of Bozeman, Gallatin County, Montana, by its City
Commission, has caused this Bond to be executed by the Mayor, the Interim City Manager and the
City Clerk.
CITY OF BOZEMAN, MONTANA
______________________________
Mayor
_______________________________
Interim City Manager
_______________________________
City Clerk
Dated: March 5, 2020.
CERTIFICATE OF AUTHENTICATION
This is the Series 2020 Bond delivered pursuant to the Resolution mentioned within.
CITY OF BOZEMAN, MONTANA
as Bond Registrar, Transfer Agent
and Paying Agent
By
City Finance Director
6
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants UTMA..........Custodian..............
in common (Cust) (Minor)
TEN ENT -- as tenants
by the entireties
under Uniform Transfers to
JT TEN -- as joint tenants with Minors Act................................
right of survivorship and (State)
not as tenants in common
Additional abbreviations may also be used.
ASSIGNMENT
FOR VALUED RECEIVED the undersigned hereby sells, assigns and transfers unto
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney to transfer the within Bond on the
books kept for registration thereof, with full power of substitution in the premises.
Date:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF NOTICE: The signature to this assignment
ASSIGNEE: must correspond with the name as it appears
upon the face of the within bond in every
particular, without alteration,
enlargement or any change whatsoever.
/ /
SIGNATURE GUARANTEE
Signature(s) must be guaranteed by an
“eligible guarantor institution” meeting
the requirements of the Bond Registrar,
which requirements include membership
or participation in STAMP or such other
“signature guaranty program” as may be
determined by the Registrar in addition
to or in substitution for STAMP, all in
accordance with the Securities Exchange
Act of 1934, as amended.
7
SCHEDULE I
Bond Payment Schedule