The City issued Sewer System Revenue Bonds (Series 2005, 2008, 2009B, 2009C, 2010B 2010C, and 2013) which are currently outstanding and held by the Department of Natural Resources and Conservation of the State of Montana.  All of these bonds are secured by cash bond reserves which the City holds and which can be used to pay bond owners if current revenues are ever insufficient to make those payments.  The City agreed to use cash for these reserves and for future sewer bonds but now desires to amend the prior bond resolutions to allow the City to use a Surety Bond to fund bond reserve requirements. The City has reserved the right to amend the prior Resolutions with the written consent of the DNRC, and the DNRC has consented in writing to the amendment and restatement.  The current cash reserve is $1.4 million.  The resolution does not change the reserve amount but gives the City the option to use a Surety bond instead of cash or bond proceeds.

City Council may:

• Approve the resolution which will allow for the reserve requirement of the Sewer System Revenue Bond Series 2017 to be funded fully by a surety bond or;
• Disapprove the resolution which will require fully funding the reserve requirement for future bond issuances with cash.

There is no financial impact related to this resolution.

Staff recommends that the City Council approve the resolution amending and restating prior sewer bond resolutions.