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1 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”), certify that the attached resolution is a true copy of a resolution entitled: “RESOLUTION CREATING A POLICY OF THE CITY OF MISSOULA, MONTANA FOR THE TRANSFER OF AVAILABLE FUNDS TO REPLENISH THE CITY’S SPECIAL IMPROVEMENT DISTRICT REVOLVING FUND” (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 June 14, 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notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed.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 City Council members voted in favor thereof: Childers, Haines, Hellegaard, Houseman, Jaffe, Marler, Mitchell, Rye, Strohmaier, Walzer, Wiener, and Wilkins. voted against the same: none; abstained from voting thereon: none; or were absent: none; WITNESS my hand officially this 14th day of June, 2010. Martha L. Rehbein Martha L. Rehbein City Clerk ---PAGE BREAK--- 2 RESOLUTION NUMBER 7538 RESOLUTION CREATING A POLICY OF THE CITY OF MISSOULA, MONTANA FOR THE TRANSFER OF AVAILABLE FUNDS TO REPLENISH THE CITY’S SPECIAL IMPROVEMENT DISTRICT REVOLVING FUND BE IT RESOLVED By the City Council (the “City Council”) of the City of Missoula, Montana (the “City”), as follows: Section 1. Recitals. It is hereby found, determined and declared as follows: 1.01. Special Improvement District Bond Statutory Authorization. Montana Code Annotated, Title 7, Chapter 12, Parts 41 and 42, as amended (collectively, the “SID Act”), authorizes the City to issue special improvement district bonds (the “SID Bonds”) to finance the construction of certain local public improvements. 1.02. Sidewalk, Curb, Gutter and Alley Approach Bond Statutory Authorization. Montana Code Annotated, Title 7, Chapter 14, Part 41, as amended (the “Sidewalk Act”), authorizes the City to issue sidewalk, curb, gutter and alley approach bonds (the “Sidewalk Bonds”) to finance the construction of certain sidewalk, curb, gutter, and alley approach projects. Sidewalk Bonds may generally be issued subject to the terms and security provisions provided in the SID Act. 1.03. Creation of Revolving Fund. Section 7-12-4221 of the SID Act provides that the City may create, establish, and maintain by ordinance a fund to be known and designated as the special improvement district revolving fund in order to secure prompt payment of any SID Bonds or Sidewalk Bonds issued by a municipality in the event special assessments are insufficient for the payment therefor. 1.04. Revolving Fund Ordinance. Pursuant to Ordinance No. 601, adopted by this City Council on June 10, 1930 (the “Ordinance”), the City created and established Special Improvement District Revolving Fund No. 1 of the City (the “Revolving Fund”). Pursuant to the Ordinance, the City’s various SID Bonds and the City’s Sidewalk Bonds are secured by the Revolving Fund. 1.05. Loans from the Revolving Fund. Section 7-12-4223 of the SID Act provides that whenever principal or interest on a SID Bond or a Sidewalk Bond that is secured by the Revolving Fund becomes due and there is insufficient money in the debt service fund to pay such principal or interest, an amount sufficient to make up the deficiency must be loaned by the Revolving Fund to such debt service fund. Once a loan is made, the Revolving Fund has a lien on all unpaid assessments and installments of assessments, whether delinquent or not, to be deposited into such debt service fund. 1.06. Sources of Money for the Revolving Fund. Section 7-12-4222(1) of the SID Act also provides for three sources of money that may be deposited in the Revolving Fund: a loan from the City’s general fund to the Revolving Fund; an amount of at least five percent and not more than ten percent (10%) of the proceeds of SID Bonds or Sidewalk Bonds that are secured by the Revolving Fund; and a tax levy, if the balance in the Revolving Fund does not exceed ten percent (10%) or, with the amount of the tax levy, will not exceed ten percent (10%) of the principal amount of the then-outstanding SID Bonds and Sidewalk Bonds that are secured by the Revolving Fund. 1.07. Revolving Fund Balance. As of April 30, 2010, the Revolving Fund maintains an approximate cash balance of $851,223 and secures approximately $15,384,300 in aggregate principal amount of the City’s outstanding SID Bonds and Sidewalk Bonds. Based on these amounts, the current ---PAGE BREAK--- 3 approximate cash balance of the Revolving Fund is equal to 5.5% of the approximate aggregate principal amount of the City’s outstanding SID Bonds and Sidewalk Bonds. 1.08. Administration of SID and Sidewalk Assessments. In addition to the requirements imposed upon the City by the SID Act and the Sidewalk Act for the creation of special improvement districts, the ordering of sidewalk, curb, gutter and alley approach projects, and the approval of SID Bond and Sidewalk Bond issues, the City has developed administrative procedures that must be complied with prior to the formation of a special improvement district or the approval of a sidewalk, curb, gutter and alley approach project. For example, the City Council has established a policy, to be reviewed annually, requiring additional security for SID Bonds in which more than 50% of the cost of improvements will be assessed against lots which are undeveloped. City staff also has extensive experience administering the ongoing requirements of providing notice of proposed assessments to benefited property owners, distributing assessment invoices, and collecting current and delinquent assessments, such that total assessments paid in any year is substantially equivalent to total assessments billed in any year. 1.09. Assessment Repayment History and Revolving Fund Balance History. In the past five years, the City has collected between approximately 93% and 96% of current assessments due and between approximately $107,000 and $208,000 in delinquent assessments each year. It has also been the City’s longstanding practice, as set forth in each resolution awarding the sale of the City’s SID Bonds and Sidewalk Bonds, to deposit five percent of the proceeds of a SID Bond issue or a Sidewalk Bond issue into the Revolving Fund. The City has always maintained a cash balance in the Revolving Fund of at least five percent of the aggregate principal amount of outstanding SID Bonds and Sidewalk Bonds secured by the Revolving Fund. Finally, the City has never defaulted on a debt service payment of SID Bonds or Sidewalk Bonds. Section 2. Policy Statement. 2.01. Policy to Replenish the Revolving Fund. This City Council hereby determines it to be the policy of the City to transfer available funds from the sources described in the SID Act to the Revolving Fund if at any time the cash balance in the Revolving Fund is equal to an amount that is less than five percent of the total aggregate principal amount of the City’s then-outstanding SID Bonds and Sidewalk Bonds that are secured by the Revolving Fund, all pursuant to the requirements and limitations of the SID Act. 2.02. Review of Ordinance. The City’s staff, bond counsel, financial advisors, and consultants will advise this City Council regarding the implementation of the policy contained in this Resolution for all future SID Bond and Sidewalk Bond issues. Additionally, the City’s staff, bond counsel, and financial advisor will review the Ordinance to determine whether and how to amend the Ordinance to reflect the policy of the City stated in this Resolution. 2.03. Effective Date. This Resolution shall take effect immediately upon its passage and adoption by this City Council. Passed by the City Council of the City of Missoula, Montana, this 14th day of June, 2010. John Engen John Engen Mayor Attest: Martha L. Rehbein Martha L. Rehbein, CMC City Clerk MS190-16 (AJP) 369560v.1