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DRAFT 10/15/10 CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Missoula, Montana (the “City hereby certify that the attached resolution is a true copy of Resolution No. entitled: “RESOLUTION RELATING TO FRONT STREET PARKING STRUCTURE, SETTING FORTH THE CITY’S INTENTION TO ISSUE FRONT STREET URBAN RENEWAL DISTRICT TAX INCREMENT REVENUE BONDS OF THE CITY IN THE APPROXIMATE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $2,750,000 FOR THE PURPOSE OF FINANCING A PORTION OF THE FRONT STREET PARKING STRUCTURE; CALLING A PUBLIC HEARING THEREON; SETTING FORTH THE CITY’S INTENTION TO NEGOTIATE THE SALE OF THE BONDS AND DESIGNATING THEM AS ECONOMIC RECOVERY ZONE FACILITY BONDS; AUTHORIZING THE MISSOULA PARKING COMMISSION TO ISSUE PARKING COMMISSION REVENUE BONDS IN THE APPROXIMATE AMOUNT OF $6,000,000 AND DESIGNATING THEM AS ECONOMIC RECOVERY ZONE DEVELOPMENT BONDS; AND ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council of the City at a regular meeting on 2010, and that the meeting was duly held by the City Council and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Council members voted in favor thereof: ; voted against the same: ; abstained from voting thereon: ; or were absent: . WITNESS my hand officially this day of October, 2010. City Clerk ---PAGE BREAK--- RESOLUTION NO. 2010-_____ RESOLUTION RELATING TO FRONT STREET PARKING STRUCTURE, SETTING FORTH THE CITY’S INTENTION TO ISSUE FRONT STREET URBAN RENEWAL DISTRICT TAX INCREMENT REVENUE BONDS OF THE CITY IN THE APPROXIMATE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $2,750,000 FOR THE PURPOSE OF FINANCING A PORTION OF THE FRONT STREET PARKING STRUCTURE; CALLING A PUBLIC HEARING THEREON; SETTING FORTH THE CITY’S INTENTION TO NEGOTIATE THE SALE OF THE BONDS AND DESIGNATING THEM AS ECONOMIC RECOVERY ZONE FACILITY BONDS; AUTHORIZING THE MISSOULA PARKING COMMISSION TO ISSUE PARKING COMMISSION REVENUE BONDS IN THE APPROXIMATE AMOUNT OF $6,000,000 AND DESIGNATING THEM AS ECONOMIC RECOVERY ZONE DEVELOPMENT BONDS; AND ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE BE IT RESOLVED by the City Council (the “Council of the City of Missoula Montana (the “City”) as follows: 1.01. Authorization. Under the provisions of Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended (the “Act”), the City is authorized to create urban renewal areas, prepare and adopt an urban renewal plan therefor and amendments thereto, undertake urban renewal projects therein, provide for the segregation and collection of tax increment with respect to property taxes collected in such areas, issue its bonds to pay the costs of such projects and to refund bonds previously issued under the Act and pledge to the repayment of the bonds the tax increment and other revenues derived from projects undertaken within the urban renewal area. 1.02. Prior City Actions. Pursuant to the Act and Ordinance No. 3359, the City has created the City of Missoula Front Street Urban Renewal District as an Urban Renewal Area (the “Urban Renewal Area” or “District”) and has approved the Front Street Urban Renewal Plan, adopted by the Council on October 15, 2007, as amended (the “Urban Renewal Plan”), as an Urban Renewal Plan in accordance with the provisions of the Act. The Urban Renewal Plan provides for the segregation and collection of Tax Increment with respect to the Urban Renewal Area. The Urban Renewal Area and the Urban Renewal Plan providing for the segregation and collection of the Tax Increment have been duly and validly created and adopted in strict accordance with applicable provisions of the Act and are in full force and effect. 1.03. Tax Increment Revenue Bonds. Pursuant to the Act, the City may issue its urban renewal tax increment bonds to finance the costs of eligible urban renewal projects payable over a term not to exceed 25 years and must mature in years and amounts so that the principal and interest due on the bonds in each year may not exceed the estimated tax increment payment in lieu of taxes or other amounts pledged to the repayment thereof. ---PAGE BREAK--- 2 1.04. Parking Structure. The Urban Renewal Plan identified a public parking structure as an Urban Renewal Project to be undertaken in the District. The Missoula Redevelopment Agency, in conjunction with the Missoula Parking Commission, has developed a plan of financing which is projected to finance the costs of acquiring land for and constructing thereon a public parking facility (the “Parking Structure” or the “Project”) which will be owned and operated by the Missoula Parking Commission. The Missoula Redevelopment Agency on behalf of the Missoula Parking Commission is in the process of retaining an architect and a construction manager at risk for the design and construction of the Parking Structure. It is proposed that the Parking Structure will provide 400 parking spaces and approximately 5,000 square feet of commercial space. It is proposed that the Project will be financed from proceeds of the Tax Increment Revenue Bonds to be issued in the estimated aggregate principal amount of $2,750,000, a cash contribution of the Missoula Parking Commission and Missoula Parking Commission Revenue Bonds in the estimated amount of $6,000,000 (the “Parking Revenue Bonds”). 1.05. Projections of Increment. The Missoula Redevelopment Agency, based on the projected incremental taxable value of the District, including the tax increment revenue to be derived from the First Interstate Bank Project, and in consultation with Springsted, Inc., has determined that the City can service an estimated principal amount of $2,750,000 of tax increment revenue bonds of the District over a term of 25 years (the “Tax Increment Revenue Bonds”) to pay a portion of the costs of the Project. 1.06. Tax Increment Revenue Bonds as Recovery Zone Facility Bonds. Under Sections 1400U-1 through 1400U-3 of the Internal Revenue Code of 1986, as amended (the “Code”), gross income for federal income tax purposes does not include interest on any bond designated by an eligible issuer thereof as a “recovery zone facility bond.” Under Internal Revenue Service Notice 2009-50, the State of Montana was allocated authority to issue $135,000,000 of bonds designated as recovery zone facility bonds pursuant to Section 1400U-1(a)(3) of the Code and Montana Code Annotated Section 17-5-116. A portion of that allocation has been made available to cities and counties for certain projects under the Montana Department of Administration’s Recovery Zone Bond Allocation Policy. Pursuant to Resolution No. 2009-123 of Missoula County adopted September 30, 2009, Missoula County, including the City, has been designated a “recovery zone” for purposes of the Code. The City is authorized under the Act to issue bonds pledging the tax increment revenues of the District and to designate them as “recovery zone facility bonds” within the meaning of the Code and Montana Code Annotated Section 7-7-140 and Section 7-15-4301. The City obtained an allocation from the Montana Department of Administration of Recovery Zone Facility Bonds in the amount of $8,000,000, a portion of which will be related to the City’s Tax Increment Revenue Bonds pursuant to Section 1400U-3 of the Code and Montana Code Annotated Section 17-5-116(3). 1.07. Parking Revenue Bonds as Recovery Zone Economic Development Bonds. Pursuant to a resolution adopted by the Board of Commissions of Missoula County, Montana (the “County”) on September 30, 2009, the County, including the City, was designated a recovery zone under Section 1400U-1(b) of the Code. Under Internal Revenue Service Notice 2009-50, the State of Montana was allocated authority to issue $90,000,000 of bonds designated as recovery zone economic development bonds pursuant to Section 1400U-1(a)(3) of the Code ---PAGE BREAK--- 3 and Montana Code Annotated Section 17-5-116. A portion of that allocation has been made available to cities and counties for certain projects under the Montana Department of Administration’s Recovery Zone Bond Allocation Policy. The City has obtained an allocation from the Department of Administration for $7,000,000 of Recovery Zone Economic Development Bonds which will be allocated by the City to the Parking Revenue Bonds. The Missoula Parking Commission is authorized to designate its Parking Revenue Bonds as “Recovery Zone Economic Development Bonds” for purposes of Section 1400U-2 of the Code and are tax credit bonds as described in Section 17-5-117, M.C.A and elect under Section 6431 to receive a direct payment from the United States Treasury in an amount equal to 45% of the interest payable on the Parking Revenue Bonds on each interest payment date. Section 2. Public Hearing. The Tax Increment Revenue Bonds may be used to finance a portion of the Parking Structure that may be used in the trade or business of a non exempt entity, and thus may be “private activity bonds” under Section 141 of the Internal Revenue Code of 1986, as amended (the “Code”). Section 147(f) of the Code requires that, prior to the issuance of private activity bonds, a public hearing duly noticed shall be held by the City on the proposed Project and the issuance of bonds therefor. Pursuant to such authority, a public hearing on the proposed Project and the issuance of the Tax Increment Revenue Bonds to finance the costs thereof is hereby called to be held by the Council on November 22, 2010 at 7:00 p.m., M.T., in the City Council Chambers, 435 Ryman, City Hall, Missoula, Montana. All persons wishing to speak will be given an opportunity to comment or may file written comments with the City Clerk. Section 3. Form of Notice. The notice of the public hearing shall contain the date, time and location of the public hearing and a general description of the Project, its location and estimated costs, the name of the owner and operator of the Project and the maximum principal amount of the Bonds proposed to be issued. Section 4. Publication of Notice. The Council shall cause the notice of the public hearing on the Project to be published in the Missoula Independent on October 28, 2010, November 4, 2010 and on November 11, 2010 in substantially the form attached as Exhibit A hereto. Section 5. Intent to Sell Bonds. If, after the public hearing, the Council determines it is in the best interests of the City to finance the Project, the City will proceed to sell the Tax Increment Revenue Bonds in a private, negotiated sale to either First Interstate Bank or some other financial institution selected by the City Finance Director and the Director of the Missoula Redevelopment Agency. Section 6. Bond Resolution. The Missoula Redevelopment Agency, along with the City Finance Director and the City’s financial advisor, is authorized to negotiate the terms and conditions of the Tax Increment Revenue Bonds and make a recommendation thereof to the Missoula City Council. The final terms and conditions of the Tax Increment Revenue Bonds will be set forth in a resolution to be approved by this City Council. Section 7. Reimbursement Expenditures. ---PAGE BREAK--- 4 7.01. Regulations. The United States Department of Treasury has promulgated final regulations governing the use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City for project expenditures paid by the City prior to the date of issuance of such bonds. Those regulations, Treasury Regulations, Section 1.150-2 (the “Regulations”), require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds within 18 months (or three years, if the reimbursement bond issue qualifies for the “small issuer” exception from the arbitrage rebate requirement) after the later of the date the expenditure is paid or (ii) the date the project is placed in service or abandoned, but (unless the issue qualifies for the “small issuer” exception from the arbitrage rebate requirement) in no event more than three years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. 7.02. Project. The City proposes to finance a portion of the Project from the Tax Increment Revenue Bonds in the estimated amount of $2,750,000. 7.03. Prior Expenditures. Other than expenditures to be paid or reimbursed from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under the transitional provision contained in Section 1.150-2(j)(2) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a “de minimus” amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for the Project have heretofore been paid by the City and no expenditures will be paid by the City until after the date of this Resolution. 7.04. Declaration of Intent. The City reasonably expects to reimburse some or all of the expenditures made for costs of the Project out of the proceeds of the Tax Increment Revenue Bonds in an estimated maximum aggregate principal amount of $2,750,000 after the date of payment of all or a portion of the costs of the Project. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Tax Increment Revenue Bonds or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations. 7.05. Budgetary Matters. As of the date hereof, the City has no funds set aside to pay costs of financing for the Project or to reimburse the City for Project costs, other than pursuant to the issuance of the Tax Increment Revenue Bonds. The Missoula Parking Commission has cash on hand which it will use, along with the proceeds of the Parking Commission Revenue Bonds. The statement of intent contained in this resolution, therefore, is determined to be consistent with the City’s budgetary and financial circumstances as they exist or are reasonably foreseeable on the date hereof. 7.06. Reimbursement Allocations. The City Finance Officer shall be responsible for making the “reimbursement allocations” described in the Regulations, being generally the transfer of the appropriate amount of proceeds of the Bonds to reimburse the source of temporary financing used by the City to make prior payment of the costs of the Project. Each allocation shall be evidenced by an entry on the official books and records of the City maintained for the ---PAGE BREAK--- 5 Tax Increment Revenue Bonds or the Project and shall specifically identify the actual original expenditure being reimbursed. Section 8. Filing. This resolution shall be filed within 30 days of its adoption in the publicly available official books and records of the City. This resolution shall be available for inspection at the office of the City Clerk during normal business hours of the City on every business day until the date of issuance of the Tax Increment Revenue Bonds. PASSED AND APPROVED by the City Council of the City of Missoula, this day of 2010. Mayor ATTEST: City Clerk ---PAGE BREAK--- A-1 EXHIBIT A NOTICE OF PUBLIC HEARING ON ISSUING BONDS FOR THE FRONT STREET PARKING STRUCTURE CITY OF MISSOULA, MONTANA NOTICE IS HEREBY GIVEN that the City Council of the City of Missoula, Montana (the “City”), will meet on Monday, November 22nd at 7:00 p.m., M.T., in the City Council Chambers, 435 Ryman, City Hall, Missoula, Montana, for the purpose of conducting a public hearing on the proposed Front Street Parking Structure to be located at the intersection of Front and Pattee Streets in downtown Missoula and the issuance of tax increment revenue bonds therefor (the “Tax Increment Revenue Bonds”). The Missoula Redevelopment Agency which, in conjunction with the Missoula Parking Commission, has developed a plan of financing which is projected to finance the costs of acquiring land for and constructing thereon a public parking facility (the “Parking Structure” or the “Project”) which will be owned and operated by the Missoula Parking Commission. It is proposed that the Parking Structure will provide 400 parking spaces and approximately 5,000 square feet of commercial space. It is proposed that the Project will be financed from proceeds of the Tax Increment Revenue Bonds of the City, to be issued in the estimated aggregate principal amount of $2,750,000; a cash contribution of the Missoula Parking Commission; and Missoula Parking Commission Revenue Bonds in the estimated amount of $6,000,000 (the “Parking Revenue Bonds”). It is proposed that the Tax Increment Revenue Bonds be issued as Economic Recovery Zone Facility Bonds and the Parking Revenue Bonds be issued as Recovery Zone Economic Development Bonds. All persons interested may appear and be heard at the time and place set forth above, or may file written comments with the City Clerk prior to the date of the hearing set forth above. Further information may be obtained from Ellen Buchanan, Director of the Missoula Redevelopment Agency, or Anne Guest, Director of the Missoula Parking Commission. Dated: 2010. BY ORDER OF THE CITY COUNCIL OF THE CITY OF MISSOULA, MONTANA City Clerk Publication Dates: October 28, 2010, November 4, 2010 and November 11, 2010