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HomeMy WebLinkAboutResolution 5259 Warrant in Connection with SID 762 RESOLUTION 5259 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RELATING TO SPECIAL IMPROVEMENT DISTRICT NO. 762; AUTHORIZING INTERFUND LOAN AND CITY WARRANTS IN CONNECTION WITH FINANCING COSTS OF CERTAIN LOCAL IMPROVEMENTS TO S. 6TH BETWEEN BABCOCK STREET AND CLEVELAND STREET. WHEREAS, on the 2nd day of February, 2021, the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”) adopted Commission Resolution No. 5250 (the “Resolution of Intention”), stating its intent to create Special Improvement District No. 762(the “District”) to finance the costs of various improvements within the District as described therein (the “Improvements”); and WHEREAS, as set forth in the Resolution of Intention, the Commission committed other Street Maintenance District funds to the costs of the project; and WHEREAS, on February 7th and February 14th, 2021, the City Clerk did publish a Notice of Passage of the Resolution of Intent to Create SID No. 762 in accordance with Sect. 7-12-4106, MCA, and mailed said notice to each person, firm, or corporation or the agent of the person, firm or corporation having real property within the proposed District; and WHEREAS, the Bozeman City Commission conducted a public hearing on protests submitted to the creation of the District on March 2, 2021 and did pass on all such protests having found the written protests not sufficient to bar the Commission from proceeding with creation of the District.; and WHEREAS, the Bozeman City Commission on March 2, 2021 adopted Resolution 5259, authorizing the transfer of excess monies of the Special Improvement District Revolving Fund (the “Revolving Fund”) to the Street Reconstruction Fund to purchase warrants (the “Warrants”) to make funds available to finance the District’s share of the costs of the Improvements including the Incidental Costs (“District’s Share of Improvements”), such Warrants to be held by the Street DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 Reconstruction Fund and drawn against the SID 762 S. 6th Special Assessment Fund (the “Special Assessment Fund”); and WHEREAS, the Resolution of Intention and Resolution of Creation contemplate that special assessments levied against benefited properties in the District will repay the City’s Street Reconstruction Fund for the District’s Share of the Improvements plus Incidental Costs in connection with the Improvements. WHEREAS, the City Finance Director has notified the City Clerk, pursuant to Section 7-6-4603, that the designated amounts have been invested; and WHEREAS, the City Commission desires to authorize, ratify, and confirm the sale of warrants for the purpose of purchasing said Improvements from the Street Reconstruction Fund. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, as follows: Section 1 Construction Funds, Accounts, and Amounts. In anticipation of the receipt of special assessments levied against the benefitted properties in the District, the Street Reconstruction Fund of the City will transfer to the SID 762 Construction Account (the “Construction Account”) of the City a total of $781,129.98 to pay the District’s Share of Improvements (the “Interfund Loan”). Section 2 Special Assessments and SID Account. In accordance with the Resolution of Intention, the City determined to charge interest on the principal amount of the special assessments at the rate of 2.0% per annum for a period of twenty years in accordance with §7-12-4189, MCA. The City created the Special Assessment Fund for deposit of special assessments levied by the City and paid by the owners of benefitted properties in the District. Levies of special assessments, using the lot frontage method of assessment, are levied against the benefitted properties in the District such that the special assessments come due on November 30 and May 31 of each fiscal year, with the initial installment of special assessments becoming due November 30, 2021, and the final installment coming due on May 31, 2041. DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 Section 3 Repayment of Street Reconstruction Fund. The Commission confirms the obligation of the District to repay from amounts on hand in such account from receipts of special assessments amounts loaned by the Street Reconstruction Fund to pay costs of the Improvements, together with interest thereon. The Commission authorizes the issuance by the City of serial warrants evidencing the right of the Street Reconstruction Fund to repayments for amounts lent to finance costs of the Improvements and to be repaid by special assessment receipts deposited in the Special Improvement District Fund. The serial warrants also evidence an investment of the City of monies in the Street Reconstruction Fund, with such investment being made from amounts the City has under its control in the Street Reconstruction Fund and for which there is not immediate demand. Such warrants are 20 in number, and are due and owing annually on June 30th, commencing June 30, 2021 and concluding June 30, 2041. The obligation of the Special Assessment Fund to repay the Street Reconstruction Fund is further evidenced by a Memorandum of Interfund Loan in substantially the form attached hereto as Exhibit A, which includes an exhibit thereto setting forth the form of City warrants. Section 4 Compliance with Montana Law. Section 7-12-4201, MCA, provides that all costs and expenses incurred in any special improvement district in the acquisition or construction of any improvement specified in Title 7, chpt. 12, part 41, MCA, shall be paid from special improvement district bonds or warrants. The warrants substantially in the form attached hereto as Schedule 2 to Exhibit A are drawn against the advances made by the Street Reconstruction Fund to the Construction Account and the corresponding advances made from such construction account to pay costs and expenses of the Improvements. In accordance with Section 7-12-4203 through 7-12-4206, MCA, the Commission finds that the terms of the Interfund Loan described above, given due consideration to the range of financing options available to the City, the fixed interest rate of 2.0% on such loan for a term of twenty years results in the lowest possible level of special assessments against benefited properties in the District and therefore the most affordable financing alternative for the owners of such properties as the City could not reasonably obtain financing for costs of the Improvements from third-party sources at a lower fixed interest rate for a term of twenty years. In particular, the City finds the fixed interest rate on the warrants of 2.0% per annum satisfies the “highest and best bidder” standard set forth in Section 7-12-4204, MCA. This Commission determines that it has funds under its control in the Street Reconstruction Fund for which there is no immediate demand and that in the judgment of the Commission it would be advantageous to invest such amount in warrants of the City. Accordingly, the Commission determines to invest $781,129.98 of funds in the Street DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 Reconstruction Fund in the purchase of warrants issued by the SID to be held by the Street Reconstruction Fund of the City, with the acquisition of such warrants being evidenced by transfers of funds from the Street Reconstruction Fund to the Construction Account to pay costs of the Improvements in anticipation of the receipt of special assessments in the Special Improvement District Fund to repay such warrants together with interest thereon. Special assessments levied by the City under Title 7, Chapter 2, Part 41, MCA to repay the warrants create a priority lien against each benefited property in the District in favor of the city for the repayment of the warrants that may be enforced and foreclosed in the manner provided by law to repay the warrants. Section 5 Details Regarding Warrants. The total aggregate principal amount of the warrants acquired by the Street Reconstruction Fund of the City is $781,129.98, to consist of twenty (20) separate warrants payable annually on June 30th, with interest commencing on the date of making the Interfund Loan by transferring $781,129.98 of funds in the Street Reconstruction Fund to the Construction Account, such date also being the date of registration of the warrants per 7-12- 4203(1)(a)) with the first warrant due on June 30, 2021 and the last warrant due on June 30, 2041. Each warrant bears interest on the amount outstanding at the rate of 2.0% from the date of issue thereof until its payment date as set forth on the face of each warrant, resulting in a total interest payment of $174,296.94 over the twenty-year term. The warrants shall be registered in the offices of City Clerk and the City Treasurer and the determination of the City Treasurer to purchase the warrants from amounts in the Street Reconstruction Fund, with such purchase being evidenced by the transfer of funds from the Street Reconstruction Fund to the Construction Account and subsequent transfers from the Construction Account to pay costs and expense of the Improvements, is hereby authorized. The warrants shall bear the signatures of the Mayor and City Clerk. The City Treasurer has notified the City Clerk to draw the warrants in substantially the form attached hereto as Schedule 2 to Exhibit A. Section 6 Effect of Resolution. The Commission hereby confirms the Street Reconstruction Fund, which shall hold the warrants, is entitled to repayment, with interest, of the amounts made available for the Improvements, and that the Warrants constitute an investment by the City of available amounts in the Street Reconstruction Fund. DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 PASSED,ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 2nd day of March, 2021. __________________________________ Cynthia L. Andrus Mayor ATTEST: ________________________________________ Mike Maas City Clerk APPROVED AS TO FORM: __________________________________ GREG SULLIVAN City Attorney DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-1 EXHIBIT A MEMORANDUM OF INTERFUND LOAN The City of Bozeman, Montana (the “City”) hereby acknowledges and confirms the terms of an interfund loan (the “Loan”) by the Street Reconstruction Fund of the City to pay the costs of certain Improvements (described below) and the obligation of the SID 762 S. 6th Special Improvement District Fund (the “Special Improvement District Fund”) to repay the Loan from the special assessments levied against certain benefitted properties in connection with improvements to S. 6th between Wilson and S. 8th Avenue (the “Improvements”) to be undertaken pursuant to the creation of Special Improvement District (“SID”) No. 750 (the “District”). Background: A. The City, by Resolution No. 5249, adopted by the City Commission (the “Commission”) on February 2, 2021 (the “Resolution of Intention”) sought to create the District for the purpose of financing costs of the Improvements in anticipation of the receipt of special assessments levied against benefited properties in the District to repay the Loan to be made by the Street Reconstruction Fund to finance the District’s share of the estimated costs of the Improvements of $781,129.98 as stated in Resolution No. 5249. B. The City duly mailed and caused to be published a notice of passage of the Resolution of Intention and afforded owners of the benefited properties the opportunity to protest the creation of the District in accordance with Montana law. The owners of two parcels within the District boundaries, representing 5.75% of the total costs of the Improvements, protested the creation of SID 762. C. Following a public hearing and finding that insufficient protests by owners of benefited properties were timely made, the Commission, on March 2, 2021, adopted Resolution No. 5250 creating SID 762. D. The City intends to levy special assessments to give rise to funds to repay the Loan and desires to acknowledge and set forth certain details with regard to the Loan, including the DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-2 issuance by the City of certain warrants held by the Street Reconstruction Fund to evidence the obligation of the Special Assessment Fund to repay the Loan. NOW, THEREFORE, the City hereby declares as follows: 1. Terms of Interfund Loan. The City hereby authorizes the making of the Loan effective as of November 1, 2021 (the “Transfer Date”) of $781,129.98 from the Street Reconstruction Fund to the SID 762 Construction Account of the City (the “Construction Account”) from available amounts in the Street Reconstruction Fund, the terms of the Loan, and the obligation of the Special Improvement District Fund to repay the Loan from available amounts deposited in the Special Improvement District Fund from collections of special assessments levied against benefited properties in the District. In accordance with Resolutions 5249 and 5250, the total principal amount of the Loan is $781,129.98, the interest rate on the principal outstanding under the Loan is 2.0% per annum, the term of the Loan is approximately twenty years commencing on the Transfer Date and concluding June 30, 2041, and the Loan is payable in twenty (20) annual installments of principal and interest, with each installment in an equal amount (except that the initial installment may be in a different amount), as evidenced by the amortization schedule attached hereto as Schedule 1. 2. Obligation to Make Repayments. The City will levy special assessments against the benefited property in the District in accordance with Resolutions 5249 and 5250. Special assessments when received by the City must be deposited in the Special Assessment Fund on or before June 30th, to make installment payments on the Loan to the Street Reconstruction Fund, commencing June 30, 2021 and concluding June 30, 2041. 3. Right to Receive Payments. To evidence the Loan and a City investment of available funds, the Street Reconstruction Fund will hold serial warrants, with each warrant corresponding to each of the annual payments. Such warrants, which are to be issued in accordance with Section 7-12-4204, MCA, (the City having found that the fixed interest rate of 2.0% per annum for 20 years makes the City the “highest and best bidder”) are registered in the offices of the City Treasurer and the City Clerk, drawn in accordance with the instructions of the City Treasurer, and outstanding until canceled upon receipt of the applicable installment payment from the Special Assessment Fund. The warrants are in substantially the form of the attached Schedule 2. Special assessments levied by the City under Title 7, Chapter 12, Part 41, MCA, to repay the warrants create a priority lien against each benefited property in the District in favor of the City DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-3 for the repayment of the warrants that may be enforced and foreclosed in the manner provided by law to repay the warrants. 4.Details of Payments. Payments from the Special Improvement District Fund to the Street Reconstruction Fund in satisfaction of each warrant are to be made solely from the collection of special assessments levied against benefited properties in the District. Each warrant may be prepaid if the City so elects from available amounts in the Special Improvement District Fund, or, to maintain a level repayment schedule, the City may elect to hold amounts in the Special Improvement District Fund to make payments as scheduled by each warrant. The amounts repaid to the Street Reconstruction Fund in satisfaction of the Loan may be used by the City in any manner allowed by law. 5.Limited Obligation. The Loan and the warrants that evidence the Loan are made pursuant to or in compliance with Resolution 5249, Resolution 5250, Section 7-6-4603, MCA, Section 7-12-4201, MCA, and Sections 7-12-4203 through 7-12-4206, MCA. The Loan is a limited obligation payable only from payments of special assessments deposited in the Special Improvement District Fund and the Loan and interest thereon shall not be a Street Reconstruction obligation of the City and the City shall have no obligation to pay principal of or interest on the Loan which may remain unpaid after an installment payment date except from available amounts in the Special Improvement District Fund. If amounts are not available in the Special Improvement District Fund to pay a warrant as of its maturity date, amounts will first be applied to pay interest and then principal, as further described in the form of the warrant. 6. Interpretation. This Memorandum of Interfund Loan memorializes the City’s intention with regard to financing the costs of the Improvements and shall be read liberally to comport with and to ratify and confirm all prior resolutions, acts, and undertakings of the City, and all applicable laws of the State of Montana in connection therewith. IN WITNESS WHEREOF, this Memorandum of Interfund Loan is made by the City to confirm and authorize all matters within its scope as and when such matters arose, including the Loan DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-4 effective as of the date of the Transfer Date, and to govern matters within its scope that may in the future arise. Dated this _2nd_ day of March, 2021. __________________________________ Jeff Mihelich City Manager ATTEST: ________________________________________ Mike Maas City Clerk APPROVED AS TO FORM: __________________________________ GREG SULLIVAN City Attorney DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-1 SCHEDULE 1 Amortization Schedule: DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-1 SCHEDULE 2 Warrant No.1: Due June 30, 2021 SPECIAL IMPROVEMENT DISTRICT NO. 762 Issued by the City of Bozeman, Montana in Connection with SID 762 and Held by the Street Reconstruction Fund The City Treasurer of the City of Bozeman, Montana (the “City”), agrees to pay to the Street Reconstruction Fund the sum of $781,129.98, as authorized by Resolution Nos. 5249 and 5250 adopted on February 2, 2021 and March 2, 2021, respectively, in repayment of the total amount advanced by the Street Reconstruction Fund to the SID 762 Construction Account for paying the costs of certain improvements to S. 6th as described in Resolution No. 5249, with interest thereon at the rate of 2.0% per annum, as authorized in said resolutions, and all laws, resolutions and ordinances relating thereto, but only from amounts then available in the SID 762 S. 6th Special Improvement District Fund (the “Special Improvement District Fund”). This warrant does not constitute a pledge of the Street Reconstruction credit of the City nor does it create a Street Reconstruction liability against the City. This warrant is drawn in accordance with that certain Memorandum of Interfund Loan, dated March 2, 2021, by the City, in connection with the Loan described therein effective as of November 1, 2021, is issued by the City pursuant to Section 7-6-4603, MCA., and represents one of forty (20) sequentially numbered warrants, payable the 30th day of June of each year, commencing on June 30, 2022 and ending June 30, 2041. This warrant represents the total amount of principal and accrued interest, as reflected on the applicable Payment Date shown on the attached Exhibit A, This warrant is payable upon presentment to the City Treasurer, on its redemption date, only from amounts available in the Special Improvement District Fund, which is funded by the collection of special assessments levied against the benefited property within the District, as described in the resolutions referred to above. This warrant is redeemable at the option of the City at any time there are funds to the credit of said Special Improvement District Fund for the redemption thereof, and in the manner provided for the redemption of the same, and, if sufficient funds are then available in the Special Improvement District Fund, may be prepaid in the discretion of the City. If this warrant is timely paid in full, it will be marked canceled by the City Treasurer and then filed with the City Clerk. In the event that there are insufficient funds in the Special Improvement District Fund to pay and redeem this warrant upon its maturity and presentation, interest shall first be paid. This warrant shall continue to accrue interest on a pro-rata basis with other warrants then outstanding at the rate of 2.0 % from the date of matured presentation until the actual date of redemption. If funds are not available in the Special Improvement District Fund to pay and redeem this warrant, the City shall have no obligation to pay and redeem this warrant; provided that the City shall have all rights to enforce the repayment of special assessments and the lien created thereby against benefited properties in the District to repay this warrant. It is hereby certified and recited, that all things required to be done precedent to the issuance of this warrant have been properly done, happened and been performed in the manner prescribed by the laws of the State of Montana and the resolutions and ordinances of the City related to the issuance hereof. DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-2 NOTICE: The City exercises its preference right to purchase this warrant. Registration Date of this Warrant: March 2, 2021. __________________________________ Cynthia L. Andrus Mayor Registered at the offices of the City Treasurer and City Clerk of the City of Bozeman, Montana effective as of this March 2, 2021. City Finance Director City Clerk DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1 A-1 EXHIBIT A Amortization Schedule: DocuSign Envelope ID: 4C331F69-ED49-4FCA-A3B3-C8F28C1A3DE1