HomeMy Public PortalAboutResolution 06-97 Glf Crse Promissory NoteRESOLUTION NO. 6-97
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MCCALL, IDAHO,
AUTHORIZING THE ISSUANCE AND DELIVERY OF A PROMISSORY NOTE OF THE
CITY, IN THE PRINCIPAL AMOUNT OF $650,000, TO U.S. BANK NATIONAL
ASSOCIATION, AS EVIDENCE OF A LOAN INDEBTEDNESS OF THE CITY
INCURRED FOR PAYING A PORTION OF THE COST OF GOLF COURSE IRRIGATION
SYSTEM IMPROVEMENTS; PROVIDING FOR THE ISSUANCE, FORM, EXECUTION,
REGISTRATION, MATURITY, AND PAYMENT OF THE NOTE; PROVIDING
COVENANTS WITH RESPECT TO THE NOTE; AUTHORIZING THE EXECUTION OF
ADDITIONAL DOCUMENTS; REPEALING RESOLUTION NO. 16-96, ADOPTED ON
AUGUST 22, 1996; AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of McCall, Valley County, Idaho (the
"City"), is a municipal corporation duly organized and operating
under and pursuant to the laws of the State of Idaho; and
WHEREAS, the City presently owns and operates, and has for
many years owned and operated, a municipal golf course for public
recreational purposes (the "Golf Course"); and
WHEREAS, the City Council (the "Council") of the City has
determined that certain improvements to the existing Golf Course
irrigation system (the "Improvements") are necessary for the
continued operation of the Golf Course, and, in order to finance
the cost of the Improvements, the City has made application to West
One Bank, Idaho, now U.S. Bank National Association (the "Bank")
for a loan of up to $650,000, and the Bank has approved such loan
application, to be repaid by the City from Golf Course revenues
over a 15-year term; and
WHEREAS, the Council, by adoption of Resolution No. 9-96 on
May 23, 1996, approved and authorized the execution of a loan
agreement between the City and the Bank, and the Council further
determined and declared, in Resolution No. 9-96, that the
indebtedness to be incurred thereby is an ordinary and necessary
expense of the City within the meaning of Article 8, Section 3,
Idaho Constitution, for which no approval of the electors of the
City is necessary; and
WHEREAS, pursuant to Resolution No. 9-96, the City caused to
be filed, in the District Court of the Fourth Judicial District of
the State of Idaho, in and for the County of Valley (the "District
Court"), a Petition for Judicial Confirmation pursuant to Title 7,
Chapter 13, Idaho Code, seeking a judicial determination and
declaration of the validity of the City's incurring of an
indebtedness and the issuing of its promissory note as evidence
thereof for the purpose of financing the cost of the improvements;
and
Page 1
WHEREAS, on June 27, 1996, the District Court, in Case No. SP-
96-98, entered its Findings of Fact, Conclusions of Law and
Judgment (the "Judicial Confirmation Order") ordering, adjudging,
and decreeing that (1) the City is authorized to enter into the
loan agreement with the Bank without the approval of the electors
of the City voting at a special election called for such purpose;
(2) the indebtedness of the City incurred pursuant to the loan
agreement is an ordinary and necessary expense of the City within
the meaning of Article 8, Section 3, of the Idaho Constitution; (3)
the City is authorized to issue its evidence of indebtedness
pursuant to the loan agreement and to pledge its Golf Course
revenues to the payment thereof; and (4) such evidence of
indebtedness, when issued pursuant to such authority, will be a
valid and binding special obligation of the City in accordance with
its terms; and
WHEREAS, pursuant to the Judicial Confirmation Order, the City
now desires to issue its promissory note in the principal amount of
$650,000 to the Bank in accordance with the loan agreement and the
Judicial Confirmation Order.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF McCALL, of Valley County, Idaho, as follows:
Section 1: For the purpose of providing funds for the
financing of the Golf Course irrigation system improvement project,
and the payment of costs and fees incidental thereto, the Mayor is
hereby authorized to execute, and the City Clerk is hereby
authorized to attest, on behalf of the City, the promissory note
(the "Note") of the City in the manner hereinafter provided.
Section 2: The Note shall be substantially in the form
annexed hereto as Exhibit "A"; shall be dated the date of its
delivery; shall be issued to U.S. Bank as Registered Owner; shall
be in the principal amount of $650,000; and shall bear interest at
the rate of six and ten hundredths percent (6.100) per annum on the
unpaid principal balance from its date of issuance, or the date
from which the last interest payment has been made, computed on the
basis of a 365-day year, until October 15, 2004. The interest rate
shall then be reestablished by the parties to a tax-exempt rate
equivalent to 4.Oo plus the then -current 5-Year Treasury Constant
Maturity, as more fully set forth in Exhibit "B" which is annexed
hereto and by reference made a part of this Resolution. All
proceeds of the Notes shall be drawn by the City on August 15,
1997. Semiannual payments of principal and interest in the
amounts shown on Exhibit "C" which is annexed hereto and by
reference made a part hereof (to be applied first to interest and
then to principal) shall be made by the City on each April 15 and
October 15, commencing on April 15, 1998, and continuing through
October 15, 2004. Semiannual payments due on April 15, 2005,
through October 15, 2010, shall be adjusted to amortize the
remaining principal balance in approximately equal semiannual
Page 2
payments. The entire principal balance of the Note and all
interest accrued from the last payment date shall be due on
October 15, 2010.
Section 3: The Note shall be registered in the name of the
Bank as the Registered Owner, both as to principal and as to
interest, with the City Treasurer, and any transfer must likewise
be registered.
Section 4: The City reserves the right to prepay the
outstanding principal balance of the Note, in full, together with
interest accrued thereon, on any scheduled payment date on or after
October 15, 2004, without penalty.
Section 5: The Note shall be payable in lawful money of the
United States of America to the Registered Owner thereof at the
address of such Registered Owner as shown in the registration books
of the City.
Section 6: The Note shall be executed in the name of the City
by the manual signature of the Mayor and attested by the manual
signature of the City Clerk, and the seal of the City shall be
impressed thereon.
Section 7: The Note shall be payable from the net revenues
(gross revenues less costs of operation and maintenance) of the
Golf Course of the City (the "Net Revenues"). The Net Revenues are
hereby pledged for the payment of the Note on a parity with the
lien of the City's Recreational Revenue Bonds, Series 1989, issued
pursuant to Ordinance No. 554, adopted on July 14, 1989.
Section 8: The City covenants with the Registered Owner of
the Note as follows:
A. In accordance with Section 149(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), the Note shall be issued and
remain in fully registered form in order that interest thereon be
excluded from gross income of the owner or owners for federal
income tax purposes. The City covenants and agrees that it will
take no action to permit the Note to be issued in or converted to
bearer form.
B. The Note is hereby designated a "qualified tax-exempt
obligation" within the meaning and for the purposes of Section
265(b)(3) of the Code, and the City does not reasonably anticipate
that it will designate more than $10,000,000, including the Note,
as qualified tax-exempt obligations during the calendar year 1997.
C. None of the proceeds of the Note will be used directly or
indirectly (i) to make or finance loans to persons or (ii) in any
trade or business carried on by any person (other than use as a
member of the general public). For purposes of the preceding
Page 3
sentence, the term "person" does not include a government unit
other than the United States or any agency or instrumentality
thereof, and the term "trade or business" means any activity
carried on by a person other than a natural person. The City
further covenants and agrees to take no action which would cause
the Note to be a "private activity bond," nor will it omit to take
any action necessary to prevent the Note from becoming a "private
activity bond," within the meaning of Section 141 of the Code.
D. The City has general taxing powers. The Note is not a
"private activity bond" within the meaning of Section 141 of the
Code. 950 or more of the net proceeds of the Note are to be used
for the local government activities of the City. The City has no
subordinate entities. The City has not issued, and does not
reasonably anticipate issuing, tax-exempt obligations in calendar
year 1997 in a face amount which exceeds $5,000,000. Accordingly,
under Section 148(f)(4)(D) of the Code, the City is not required to
pay rebates to the United States under Section 148(f) of the Code.
E. The Mayor, Clerk, and Treasurer, and other appropriate
officials of the City, or any one or more of such officials, as may
be appropriate, are each hereby authorized and directed to execute,
on behalf of the City, such certificate or certificates as shall be
necessary to establish that the Note is not an "arbitrage bond"
within the meaning of Section 148 of the Code and the Treasury
Regulations promulgated thereunder, and to establish that interest
on the Note is not and will not become includable in the gross
income of the owners of the Note under the Code and applicable
regulations. The City covenants and agrees that no use will be
made of the proceeds of the Note, or any funds of the City which
may, pursuant to Section 148 of the Code and applicable
regulations, be deemed to be proceeds of the Note, which would
cause the Note to be an "arbitrage bond."
F. The City will comply with the information reporting
requirements of Section 149(e) of the Code.
G. None of the proceeds of the Note will be used to
reimburse the City for capital expenditures made prior to the date
of delivery of the Note unless the City, not later than 60 days
after the payment of such expenditure, shall have adopted an
official intent resolution as provided by Section 1.150-2 of the
Treasury Regulations.
H. The City has complied, or will, prior to the issuance of
the Note, have complied, with the requirements of Section 17(A) of
Ordinance No. 554, adopted on July 14, 1989, with respect to the
issuance of additional obligations issued on a parity of lien with
the City's Recreational Revenue Bonds, Series 1989.
Section 9: The Mayor, City Clerk, and City Treasurer, or any
one or more such officials, as shall be appropriate, are hereby
Page 4
authorized to execute such further certifications and other
documents as may be necessary or appropriate to carry out the
intent of this Resolution.
Section 10: Resolution No. 16-96, adopted on August 22, 1996,
is hereby repealed.
Section 11: This Resolution shall take effect and be in force
from and after its passage and approval.
DATED this 2nd day of August, 1997.
CITY OF MCCALL
Valley County, Idaho
By
City Clerk
( S E A L )
Page 5
UNITED STATES OF AMERICA
STATE OF IDAHO
CITY OF McCALL
VALLEY COUNTY
PROMISSORY NOTE, SERIES 1997
FOR THE VALUE RECEIVED, City of McCa11, Valley County, Idaho (the "City"),
acknowledges itself to owe and promises to pay in lawful money of the United States of America
to
U.S. BANK
the original Registered Owner hereof or its assignee, the principal sum of
Six Hundred Fifty Thousand and no/100 DOLLARS
($650,000.00), and shall make payments on the then outstanding principal balance, together with
interest on the unpaid balance. Interest on the unpaid balance shall be payable on April 15, 1998
and semiannually on April 15 and October 15 of each year thereafter until the principal balance
is paid in full. Payments of principal shall be made in twenty-six (26) semi-annual installments
on April 15 and October 15 of the years and in the amounts listed below. The City's final
payment will be due on October 15, 2010, and will be for all principal and all accrued interest
not yet paid. The semi-annual payments due April 15, 1998, through and including October 15,
2004, shall bear interest at the rate of six and ten hundredths percent (6.10%) per annum
computed on an actual/365 day year, as shown in Exhibit C. . The interest rate for the
subsequent semi-annual payments due April 15, 2005, through and including October 15, 2010,
will be determined in March 2005 to a tax exempt rate equivalent to the then prevailing 5-year
Treasury Constant Maturity plus 4.00%, as set forth in Exhibit "B", which is annexed hereto
and incorporated by reference herein.
The proceeds of the Note will be drawn in lump sum on August 15, 1997 for financing the costs
of improvements to the City's golf course sprinkler system.
Maturity Schedule
4/15/98 $5,000.00 10/15/02 $10,000.00 4/15/07 $35,000.00
10/15/98 $5,000.00 4/15/03 $10,000.00 10/15/07 $50,000.00
4/15/99 $5,000.00 10/15/03 $10,000.00 4/15/08 $35,000.00
10/15/99 $5,000.00 4/15/04 $10,000.00 10/15/08 $50,000.00
4/15/00 $5,000.00 10/15/04 $10,000.00 4/15/09 $40,000.00
10/15/00 $5,000.00 4/15/05 $30,000.00 10/15/09 $55,000.00
4/15/01 $10,000.00 10/15/05 $45,000.00 4/15/10 $40,000.00
10/15/01 $10,000.00 4/15/06 $30,000.00 10/15/10 $80,000.00
4/15/02 $10,000.00 10/15/06 $45,000.00
EXHIBIT "A"
The City reserves the right to prepay the remaining principal amount of this Note, in full, on any
scheduled payment date on or after October 15, 2004, without penalty or premium.
Both principal of and interest on this Note are payable in lawful money of the United States of
America at U.S. Bank of Idaho, Government Banking, P.O. Box 8247, Boise, Idaho, 83702.
This Note is registered, both as to principal and interest, with the Treasurer of the City of
McCall, Valley County, Idaho, and any transfer hereof must likewise be registered. This Note is
a negotiable instrument, authorized and approved by the McCa11 City Council in a Resolution
duly adopted and approved on the end th day of August , 1997. This Note is a
special obligation of the City, payable from the City's Golf Course revenues, duly budgeted and
appropriated therefor for each fiscal year of the City on a parity with the City of McCall
Recreational Revenue Bonds, Series 1989, issued pursuant to Ordinance No. 554, adopted on
July 14, 1989. The City has covenanted to budget and appropriate annually sufficient funds
from its Golf Course revenues to pay the principal and interest on the Note falling due during
each fiscal year of the City so long as this Note remains outstanding.
IT IS HEREBY CERTIFIED, RECITED, AND DECLARED that all matters, acts, conditions,
and things required by law of the State of Idaho and the Resolution of the City referred to above
exist, have happened, and have been performed, and that the issuance of this Note does not
violate any constitutional, statutory, or other limitations.
IN WITNESS WHEREOF, City of McCall, Valley County, State of Idaho, has caused this Note
to be executed on its behalf and under its official seal by the manual signature of the Mayor and
attested by the manual signature of the City Treasurer, and the Seal of the City affixed hereto, all
as of the 15 th day of August , 1997.
CITY OF McCALL
VALLEY COUNTY, IDAHO
By
Mayor
ATTEST:
City Treasurer
(SEAL)
**********************
This Promissory Note is registered in the name of the registered owner whose name and address
appear last below, and both principal and interest are payable only to said owner.
NOTE: There must be no writing in the space below except by the City Treasurer.
Date of Name of Address of Treasurer
Registration RegT Owner Registered Owner Signature
U.S. Bank (Government Banking) 101 So Capitol Blvd
Boise. Idaho 83702
TREASURER'S CERTIFICATE
I, the undersigned, the Treasurer of City of McCall, Valley County, Idaho, hereby certify that
the within Promissory Note has been duly registered in my office in the Registration Book kept
for that purpose.
Treasurer
City of McCall, Idaho
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
Name of Transferee:
Address:
Tax Identification No.
the within Bond and hereby irrevocably constitutes and appoints
of ,
to transfer said Bond on the books kept for registration thereof
with full power of substitution in the premises.
Dated -
Registered Owner
NOTE: The signature on this
Assignment must correspond with the
name of the registered owner as it
appears upon the face of the within
Bond in every particular, without
alteration or enlargement or any
change whatever.
SIGNATURE GUARANTEED:
Bank, Trust Company or Member
Firm of the New York Stock
Exchange
Authorized Officer
Page 4 - EXHIBIT "A"
Exhibit "B"
Determination of Interest Rate after October 15, 2004
The interest rate will be determined in accordance with the
following formula:
((1 - MCTR) x (TCM + S) ) + (ACF x MAR x D) = R
TCM = Treasury Constant Maturity (5 yr), as published in
the Federal Reserve Bank of New York H.15
publication.
MCTR = Marginal corporate tax rate, including federal,
state and local tax rates.
S = Spread required, as stipulated in the loan
proposal 4.00%.
D = Disallowance percentage, currently 20% for bank
qualified obligations and 100% for non -bank
qualified obligations.
ACF = "Average Cost of Funds," the 90-day Treasury yield
to be used in place of the IRS definition for this
term.
R = The tax exempt interest rate to be used.
EXAMPLE
TCM = 6.30%
MCTR = 40%
S = 4.00%
D = 20%
ACF = 5.1596
((1 - .4)x (6.30 + 4.00)) + (5.15 x .4 x .2) = 6.59%
EXHIBIT "B"
PRINCIPAL AND INTEREST PAYMENTS
CITY OF McCALL ... GOLF COURSE/SPRINKLER LOAN
DATED DATE 8/15/97
DATE COUPON PRINCIPAL INTEREST TOTAL FY TOTAL,
Apr-98 6.10% $0.00 $26,397.12 $26,397.12 $ 26,397.12
Oct-98 6.10% $5,000.00 $19,672.50 $24,672.50
Apr-99 6.10% $5,000.00 $19,520.00 $24,520.00 $ 49,192.50
Oct-99 6.10% $5,000.00 $19,367.50 $24,367.50
Apr-00 6.10% $5,000.00 $19,215.00 $24,215.00 $ 48,582.50
Oct-00 6.10% $10,000.00 $19,062.50 $29,062.50
Apr-01 6.10% $10,000.00 $18,757.50 $28,757.50 $ 57,820.00
Oct-01 6.10% $10,000.00 $18,452.50 $28,452.50
Apr-02 6.10% $10,000.00 $18,147.50 $28,147.50 $ 56,600.00
Oct-02 6.10% $10,000.00 $17,842.50 $27,842.50
Apr-03 6.10% $10,000.00 $17,537.50 $27,537.50 $ 55,380.00
Oct-03 6.10% $10,000.00 $17,232.50 $27,232.50
Apr-04 6.10% $10,000.00 $16,927.50 $26,927.50 $ 54,160.00
Oct-04 6.10% $10,000.00 $16.622.50 $26.622.50
$110,000.00 $264,754.62 $374,754.62
Reset interest rate after October 15, 2004 and prior to April 15, 2005
according to prescribed formula
7/23/97
EXHIBIT C
McCall Golf Course