Minutes of a special meeting of the board of commissioners of the Bitter Root Irrigation District held at the District office at 1182 Lazy J Lane in Corvallis, MT on January 27, 2016.
Commissioners present: John Schmiedeke, Bill Posten, Steve Bauman,
Dave Golay and Matt Pendergast.
Also present: Manager John Crowley, Secretary Stacy Coulter, and Harvey Hackett
Chairman Schmiedeke called the meeting to order at 10:05 AM.
Chairman Schmiedeke stated that the purpose of the special meeting is to adopt the following resolution:
RESOLUTION NO. 2016-3 RESOLUTION RELATING TO $1,773,976 BITTER ROOT IRRIGATION DISTRICT BOND, SERIES 2016; CREATING BITTER ROOT IRRIGATION DISTRICT BOND FUND AND PRESCRIBING COVENANTS OF THE IRRIGATION DISTRICT FOR THE SECURITY OF THE HOLDERS OF THE BOND BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Bitter Root Irrigation District, Ravalli County, Montana (the “District”), as follows: Section 1. Recitals. It is hereby found, determined and declared as follows:
1.01. Establishment of District. By order of the District Court of the Montana Fourth
Judicial District issued on July 22, 1920, the District was established, the original boundaries thereof were defined, and commissioners were appointed therefor, all in accordance with the predecessor of Montana Code Annotated, Section 85-7-107.
1.02. Election on the Incurrence of Indebtedness. At an election held in and for the
District on December 8, 2015, the District was authorized to issue bonds in an amount not to
exceed the aggregate amount of $1,773,976 to pay a portion of the costs of designing,
engineering, constructing and installing certain improvements to the District’s irrigation system, including approximately 900 lineal feet of large diameter steel pipe and supporting truss bridge over the Bitterroot River that siphons water from Lake Como to the east side of the Bitterroot Valley; related improvements; and paying costs associated with the sale and issuance of the bonds (the “Improvements”). The total cost of the Improvements is estimated to be $2,448,976, which is currently anticipated to be paid from the bonds, grants in the aggregate amount of $375,000, and funds of the District in the amount of $300,000. The boundaries of the District are on file in the office of the Ravalli County Clerk and Recorder. The bonds shall be payable from assessments levied against irrigable acres in the District.
1.03. Construction of the Improvements. The Improvements to be constructed and installed are part of the District’s irrigation system (the “System”), which serves all of the 16,665 irrigable acres in the District, as described on the attached Exhibit A. Preliminary plans,
specifications, maps, profiles and surveys for construction of the Improvements in the District have been prepared by engineers designated by the District. It is presently estimated, based on the engineer’s estimate, that the Improvements and all incidental costs will cost at least $2,448,976, $1,773,976 of which will be financed from the proceeds of the bond authorized pursuant to this resolution. This estimated cost includes contingencies, administration, engineering, construction administration and construction, a debt service reserve, and costs associated with the sale and issuance of the Bonds. Costs in excess of the Bonds will be paid from grants in the aggregate amount of $375,000 and funds of the District in the amount of $300,000. The cost and expense of the Improvements, loan fees, debt service reserve, and costs of issuance to be financed by the Bond will be levied and assessed upon all the irrigable acres in the District on the basis described in the Board’s Resolution of Board of Commissioners of Bitter Root Irrigation District Determining Irrigable Lands to be Benefitted by Improvements and Apportioning Costs of Improvements Thereto (the “Assessment Resolution”), adopted following a public hearing on January 27, 2016 in accordance with Section 1.04 hereof.
1.04. Determination of Irrigable Area. The Board has examined or caused to be examined each 40-acre tract or fractional lot as designated by the United States public survey or platted lot, if land is subdivided in lots and blocks (or whenever land is owned in less than 40-acre tracts or in less than the platted lot, then each such tract) of land in the District, and has caused topographical surveys and maps to be made in accordance with Montana Code Annotated, Section 85-7-2107 and 85-7-2114. The Board has adopted a resolution determining the number of irrigable acres in each such tract, fractional lot or platted lot and apportioned and distributed the costs of the Improvements over such land within the District according to the irrigable area thereof, so that each such irrigable acre is required to bear the same burden of such costs as each other irrigable acre in the District pursuant to Montana Code Annotated, Section 85-7-2107. Such resolution was adopted after a hearing conducted in accordance with the provisions of Montana Code Annotated, Sections 85-7-2107 and 85-7-2114. The special tax or assessment levied to pay the principal of and interest on the bond herein authorized is a lien upon the entire tract, fractional lot or plotted lot, of which the irrigable area forms a part as of January 1 of the year in which the special tax or assessment is levied. The number of irrigable acres in each such tract, fractional lot or platted lot as so determined may not be diminished but may be increased during the term any bonds herein authorized are outstanding.
1.05. All Things Necessary. The Board has determined the amount of and interest rate of the assessments, has filed a list of irrigable lands with the County Clerk and Recorder and the County Treasurer and has done all things necessary for the issuance of the bond herein authorized.
Section 2. The Loan; Disbursement of Loan.
2.01. Authorization of Loan to District. The DNRC has been authorized by the 2015
Legislature pursuant to House Bill No. 8 to make a loan to the District in the amount of up to
$1,773,976. As set forth in Section 1.02 hereof, the District has obtained authorization from the qualified electors of the District to borrow $1,773,976 of the authorized amount.
2.02. DNRC Commitment to Loan. The DNRC has agreed to lend to the District, from time to time as the requirements of this Section 2.02 are met, an amount up to $1,773,976 (the “Loan”) for the purposes of financing the costs of the Improvements and incidental costs (the
“Committed Amount”). The Committed Amount may be reduced as provided in Section 2.03.
The Loan shall be disbursed as provided in this section.
(a) The District shall evidence its obligation to repay the Loan by the issuance of a bond issued to the DNRC in accordance with Title 85, Chapter 7, Parts 20 and 21, Montana Code Annotated, in the amount of $1,773,976 (the “Bond”).
(b) In consideration of the issuance of the Bond by the District, the DNRC shall make a disbursement of all or a portion of the Loan upon receipt of the following documents and satisfaction of the following conditions:
(1) an Opinion of Bond Counsel as to the validity and enforceability of the Bond and the security therefor; (2) the Bond, fully executed and authenticated;(3) a certified copy of this Resolution;(4) payment or provision for payment of the Origination Fee; and(5) such other certificates, documents and other information as the DNRC, the Department of Environmental Quality of the State of Montana or the Bond Counsel giving the opinion referred to in subparagraph (1) may require.
(c) The initial disbursement of the Loan on Closing shall be in an amount in excess of 5% of the maximum principal amount of the Bond (which shall not exceed $1,773,976) and shall be used to pay costs of the Improvements and fund, as necessary, a deposit to the Reserve and may pay associated costs of issuance.
The exact amount of the initial disbursement shall be shown on Schedule A to the Bond. Upon the initial disbursement, the DNRC will prepare a Schedule B to be attached to the Bond, which schedule will set forth the amounts of principal and interest thereof at the rate of 4.00% per annum to be paid in sixty (60) equal semiannual installments (except for the first semiannual installment) and the respective dates of payment.
(d) On the date of Closing the DNRC will retain, and not physically advance to the District, an amount equal to the sum of the Origination Fee, and the District acknowledges and agrees that such retainage constitutes a disbursement of proceeds of the Loan in an amount equal to the amount retained by the DNRC in satisfaction of the Origination Fee.
(e) The District agrees that it will deposit in the Reserve (as hereinafter defined) upon receipt thereof, on the Closing Date of the Loan, any proceeds of the Loan borrowed for the purpose of increasing the balance in the Reserve to the Reserve Requirement, and if no Loan proceeds fund the Reserve, that it will deposit in the Reserve at closing of the Bond the Reserve Requirement from funds on hand and available therefor.
2.03. Disbursement of Loan. Upon each disbursement of Loan amounts to the District, the DNRC shall enter or cause to be entered the amount advanced on Schedule A to the Bond under “Advances” and the total amount advanced, including such disbursement, under “Total
Amount Advanced.” Once the amount has been advanced, the DNRC shall revise Schedule B to
the Bond by adding the principal amount of the disbursement to the principal amount of the Bond then outstanding and reamortized over the existing terms at the rate of 4.00% per annum. Once the completion certificate for the Improvements has been delivered to the DNRC, the DNRC shall finalize Schedule B to the Bond, and the DNRC shall send a copy of such Schedule B to the Borrower within one month after delivery of the completion certificate. The Committed Amount shall be the lesser of $1,773,976 or the total amount advanced to the District by the DNRC through the date of the completion certification for the Improvements. The DNRC may require that the entire purchase price of the Bond (i.e., $1,773,796) be advanced in a single advance at closing and delivery of the Bond.
2.04. Commencement of Loan Term. The District’s obligations under this Resolution shall commence on the date hereof unless otherwise provided in this Resolution. However, the obligation to make Bond payments under Section 3 hereof shall commence only upon the first disbursement of Loan proceeds.
Section 3. Terms, Registration, Execution and Delivery of Bond.
3.01. Principal Amount, Denomination, Interest Rate and Payment Dates.
The Bond to be issued pursuant to this Resolution shall be designated as Bitter Root Irrigation District Bond, Series 2016, shall be in the principal amount of $1,773,976, shall be issued as a single, fully registered bond, numbered R-1, shall be dated as of the date of delivery to the DNRC, and shall bear interest at the rate of 4.00% per annum. The principal of and interest on the Bond shall be payable in sixty (60) semiannual installments each January 15 and July 15, commencing January 15, 2017, and concluding July 15, 2046. Advances of principal of the Bond shall be deemed made when advances of the Loan are made under Section 2.02 hereof, and such advances shall be payable in accordance with Schedule B to the Bond, as such schedule may be revised from time to time in accordance with Section 2.03 hereof.
(a) Bond Register. The District hereby appoints the Ravalli County Treasurer as Registrar for the Bond. The Registrar shall keep at its principal office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers of Bonds entitled to be registered or transferred.
(b) Transfer of Bond. Upon surrender to the Registrar for transfer of the Bond accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall transfer ownership of the Bond in the bond register to the name of the designated transferee or transferees. Such transfer shall also be noted on the Bond.
The following form of assignment shall be sufficient for said purposes:
For value received ______hereby sells, assigns and transfers unto the within Bond of the Bitter Root Irrigation District, Montana, and does hereby irrevocably constitute and appoint ______attorney to transfer said Bond on the books of said District with full power of substitution in the premises.
Dated: ______
(c) Exchange of Bond. Whenever any portion of the principal installments of the Bond has been prepaid in accordance with Section 3.02 hereof, the Registrar shall authenticate and deliver a new Bond of like interest rate and maturities, representing the outstanding principal amount, as requested by the registered owner or the owner’s attorney in writing.
(d) Improper or Unauthorized Transfer. When the Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized.
The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized.
(e) Persons Deemed Owners. The District and the Registrar may treat the person in whose name the Bond is at any time registered in the bond register as the absolute owner of the Bond, whether the Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner’s order shall be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so