ORDINANCE NO. 566
AN ORDINANCE APPROVING AN INTERIM LOAN FROM DREAM FIRST BANK, NATIONAL ASSOCIATION IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $1,080,000; AUTHORIZING THE FORM AND EXECUTION OF THE INTERIM LOAN AGREEMENT AND PROMISSORY NOTE TO EVIDENCE SUCH LOAN; AUTHORIZING THE CONSTRUCTION OF A PROJECT; AND PRESCRIBING OTHER DETAILS IN CONNECTION THEREWITH.
WHEREAS, the Town of Holly, Prowers County, Colorado (the “Town”), is a political subdivision of the State of Colorado (the “State”), duly organized and existing as a statutory municipality under the laws of the State, acting through its elected Board of Trustees (the “Board”); and
WHEREAS, the members of the Board have been duly elected and qualified; and
WHEREAS, the Town has heretofore determined and undertaken to operate, and maintain its water system (the “System”) as a government-owned business and accounts for the financial operations of the System, along with the Town’s electric system, sewer system and garbage collection activities, in the Town’s Utility Enterprise Fund; and
WHEREAS, the Town has determined that the System is an enterprise within the meaning of Article X, Section 20 of the Colorado Constitution and Title 37, Article 45.1, C.R.S. (the “Enterprise Act”); and
WHEREAS, TABOR requires an election to incur any multiple fiscal year financial obligation without adequate present cash reserves pledged irrevocably and held for payments in all future fiscal years, unless such obligation is incurred for an enterprise; and
WHEREAS, under TABOR, an enterprise is a government owned business authorized to issue its own revenue bonds and receiving under 10% of its annual revenue in grants from all Colorado state and local governments combined; and
WHEREAS, the System is a government-owned business and the Town, acting by and through the Enterprise, is authorized to issue its own revenue bonds (the “Enterprise”); and
WHEREAS, for the fiscal year ended December 31, 2024, the Enterprise received grants from all Colorado state and local governments combined which were less than 10% of the annual revenue of the Enterprise; and
WHEREAS, the Board serves as the governing body of the Enterprise; and
WHEREAS, the Board has determined that the interest of the Town and the public interest and necessity demand and require the acquisition, construction, and completion of improvements to the System, including the replacement of water mains, elimination of dead ends, installation of two bored with associated casing and the construction of other improvements to rehabilitate the Town’s water system and any other costs incidental thereto (collectively, the “Project”); and
WHEREAS, the Board has applied for a loan (the “RUS Loan”) from the United States Department of Agriculture, Rural Utility Service (the “RUS”), in order to finance the Project; and
WHEREAS, the RUS requires that the Town obtain interim financing to complete the construction of the Project, with such interim financing to be repaid from the proceeds of the RUS Loan after the completion of construction; and
WHEREAS, the Board has determined that in order to finance all or a portion of the costs of the Project, it is necessary and advisable and in the best interests of the Town (i) to enter into an interim loan agreement (the “Loan Agreement”) with Dream First Bank, National Association, (“Dream Bank”), pursuant to which Dream Bank shall loan the Town an amount not to exceed $1,080,000 (the “Loan”) for such purposes, and (ii) to issue one or more promissory notes (the “Note”) to Dream Bank to evidence the Town’s repayment obligations under the Loan Agreement; and
WHEREAS, the Board has determined that in order to obtain the Loan it shall covenant that the Note shall be repaid with the proceeds of the RUS Loan, if obtained, at or prior to the maturity of the Note; and
WHEREAS, there have been presented to the Board the forms of the Loan Agreement and the Note (collectively, the “Financing Documents”); and
WHEREAS, the Financing Documents shall constitute revenue obligations of the Enterprise, payable solely from the proceeds of the RUS Loan and the Net Revenues of the System (as defined in the Loan Agreement); and
WHEREAS, the Town has not pledged nor hypothecated the Net Revenues derived or to be derived from the operation of the System, or any part thereof, to the payment of any loan, bonds, notes or for any other purpose, with the result that the Net Revenues may now be pledged lawfully and irrevocably to the payment of the Note; and
WHEREAS, pursuant to Title 31, Article 35, Part 4, C.R.S. (the “Sewer and Water Systems Act”), the Enterprise Act, and TABOR, the Financing Documents may be approved by the Board without an election; and
WHEREAS, the forms of the Financing Documents are on file with the Town Clerk; and
WHEREAS, the Board desires to approve the form of the Financing Documents and other documents referenced therein, authorize the execution of the Loan Agreement, and authorize the execution and delivery of the Note.
NOW, THEREFORE, THE BOARD OF TRUSTEES OF THE TOWN OF HOLLY, COLORADO, ORDAINS:
Section 1. Recitals Incorporated. The foregoing recitals are made a part of this Ordinance.
Section 2. Determinations. The Board hereby finds and determines that the Enterprise constitutes an enterprise under TABOR.
Section 3. Approvals, Authorizations, and Amendments. The forms of the Financing Documents presented at this meeting are incorporated herein by reference and are hereby approved. The Town shall enter into and perform its obligations under the Financing Documents in the forms of such documents presented at this meeting, with such changes as are not inconsistent herewith and as are hereafter approved by the Mayor of the Town (the “Mayor”) or the Town Administrator of the Town (the “Town Administrator”). The Mayor, the Town Administrator and Town Clerk of the Town (the “Town Clerk”) each are hereby individually authorized and directed to execute the Financing Documents and to affix the seal of the Town thereto, and further to execute and authenticate such other documents or certificates as are deemed necessary or desirable in connection therewith. The Financing Documents shall be executed in substantially the forms approved at this meeting.
The execution of any instrument or certificate or other document in connection with the matters referred to herein by any one or more of the Mayor, the Town Administrator, the Town Clerk or by other appropriate officers of the Town, shall be conclusive evidence of the approval by the Town of such instrument.
Section 4. Election to Apply the Supplemental Act. Section 11-57-204 of the Supplemental Public Securities Act, constituting Title 11, Article 57, Part 2, C.R.S. (the “Supplemental Act”) provides that a public entity, including the Town, may elect in an act of issuance to apply all or any of the provisions of the Supplemental Act. The Town hereby elects to apply all of the provisions of the Supplemental Act to the Financing Documents.
Section 5. Delegation.
(a) Pursuant to Section 11-57-205 of the Supplemental Act, the Town hereby delegates to the Mayor or the Town Administrator the independent authority to make any determination delegable pursuant to Section 11-57-205(1) of the Supplemental Act relating to and contained in the Financing Documents, including the following determinations, subject to the restrictions contained in paragraph (b) of this Section 5:
(i) The interest rate on the Loan;
(ii) The principal amount of the Loan;
(iii) The amount of principal of the Loan maturing in any given year and the final maturity of the Loan;
(iv) The dates on which the principal of and interest on the Loan are paid;
(v) The terms on which the Loan is subject to optional prepayment prior to maturity; and
(vi) The existence and amount of reserve funds for the Loan, if any.
(b) The delegation in paragraph (a) of this Section 5 shall be subject to the following parameters and restrictions:
(i) The net effective interest rate on the Loan shall not exceed the maximum interest rate permitted under C.R.S. § 5-12-103
(ii) The principal amount of the Loan shall not exceed $1,080,000; and
(iii) The final maturity of the Loan shall not be later than December 31, 2027.
Section 6. Conclusive Recital. Pursuant to Section 11-57-210 of the Supplemental Act, the Note and the Loan Agreement shall contain recitals that the Note is issued pursuant to certain provisions of the Supplemental Act. Such recital shall be conclusive evidence of the validity and the regularity of the issuance of the Note after its delivery for value. Pursuant to Section 31-35-413, C.R.S., the Note and the Loan Agreement shall contain recitals that the Note is issued pursuant to Title 31, Article 35, Part 4, C.R.S. Such recital shall conclusively impart full compliance with all the provisions of such statute, and the Note issued containing such recital shall be incontestable for any cause whatsoever after its delivery for value.
Section 7. Ratification and Approval of Prior Actions. All actions heretofore taken by the officers of the Town and members of the Board, not inconsistent with the provisions of this Ordinance, relating to the Project, the Financing Documents, or actions to be taken in respect thereof, are hereby ratified, approved, and confirmed.
Section 8. Pledge of Revenues. The Town hereby irrevocably pledges the proceeds of the RUS Loan, and solely to the extent necessary, Net Revenues derived or to be derived from the operation of the System, or any part thereof, to the payment of the Financing Documents. The creation, perfection, enforcement, and priority of the pledge of revenues to secure or pay the Financing Documents provided herein and therein shall be governed by Section 11‑57-208 of the Supplemental Act and this Ordinance. The amounts pledged to the payment of the Financing Documents shall immediately be subject to the lien of such pledge without any physical delivery, filing, or further act. The lien of such pledge shall have the priority described in the Loan Agreement. The lien of such pledge shall be valid, binding, and enforceable as against all persons having claims of any kind in tort, contract, or otherwise against the Town irrespective of whether such persons have notice of such liens.
Section 9. Limitation of Actions. Pursuant to Section 11-57-212 of the Supplemental Act, no legal or equitable action brought with respect to any legislative acts or proceedings in connection with the Financing Documents shall be commenced more than thirty days after the authorization of the issuance of the Note.
No elected or appointed officers or agents of the Town shall be subject to any pecuniary liability in connection with any agreement, covenant, or undertaking by the Town, or by them, contained in any document executed in connection with the authorization, execution, and delivery of the Financing Documents or this Ordinance or with respect to any action taken or omitted to be taken in good faith with reference thereto.
Section 10. Limited Obligation; Special Obligation. The Financing Documents are payable solely from the proceeds of the RUS Loan, and solely to the extent necessary, Net Revenues, and the Financing Documents do not constitute a debt within the meaning of any constitutional or statutory limitation or provision.
Section 11. Disposition and Investment of Loan Proceeds. The proceeds of the Loan shall be drawn from time to time upon the prior approval of RUS as provided in, and subject to the conditions set forth in, the Financing Documents, and shall be applied to pay the costs and expenses of acquiring, constructing and equipping the Project, including costs related thereto and, to the extent permitted under federal tax laws, reimbursement to the Town for capital expenditures heretofore incurred and paid from Town funds in anticipation of the incurrence of long-term financing therefor, and all other costs and expenses incident thereto, including without limitation the costs of obtaining the Loan. Neither Dream Bank nor any subsequent owner(s) of the Note shall be responsible for the application or disposal by the Town or any of its officers of the funds derived from the Loan. In the event that all of the proceeds of the Loan are not required to pay such costs and expenses, any remaining amount shall be used for the purpose of paying the principal amount of the Loan and the interest thereon, as applicable.
Section 12. Town Representative. The Mayor, the Town Administrator and the Town Clerk are hereby designated as the authorized officers for the purpose of performing any act or executing any document relating to the Loan, the Town, or the Financing Documents. A copy of this Ordinance shall be furnished to Dream Bank as evidence of such designation.
Section 13. Estimated Life of Improvements. It is hereby determined that the estimated life of the Project to be financed with the proceeds of the Loan is not less than the final maturity of the Loan.
Section 14. Direction to Take Authorizing Action. The appropriate officers of the Town and members of the Board are hereby authorized and directed to take all other actions necessary or appropriate to effectuate the provisions of this Ordinance, including but not limited to executing such certificates and affidavits as may reasonably be required by Dream Bank.
Section 15. Severability. If any section, paragraph, clause, or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause, or provision shall not affect any of the remaining provisions of this Ordinance, the intent being that the same are severable.
Section 16. Repealer. All orders, resolutions, bylaws, ordinances or regulations of the Town, or parts thereof, inconsistent with this Ordinance are hereby repealed to the extent only of such inconsistency.
Section 17. Ordinance Irrepealable. After the Note is issued, this Ordinance shall constitute an irrevocable contract between the Town and Dream Bank, and shall be and remain irrepealable until the Note and the interest thereon, as applicable, shall have been fully paid, satisfied, and discharged. No provisions of any constitution, statute, charter, ordinance, resolution or other measure enacted after the issuance of the Note shall in any manner be construed as impairing the obligations of the Town to keep and perform the covenants contained in this Ordinance.
Section 18. Recordation. A true copy of this Ordinance, as adopted by the Board, shall be numbered and recorded on the official records of the Town and its adoption and publication shall be authenticated by the signatures of the Mayor and the Town Clerk, and by a certification of publication.
Section 19. Publication and Effective Date. The Board hereby determines that the submission schedule, publication deadline or other circumstances make publication in The Holly Shopper ineffective or otherwise undesirable, and elects to publish this ordinance by posting copies thereof in the four designated public places set forth in Resolution No. 2025-1 of the Town. This Ordinance after its passage and adoption shall be numbered, recorded, published and posted and the adoption, posting, and publication shall be authenticated by the signature of the Mayor and the Town Clerk. In accordance with Section 31‑16‑105, Colorado Revised Statutes, as amended, this Ordinance shall take effect 30 days after its passage and publication.
INTRODUCED AND PASSED ON FIRST READING THIS 3rd DAY OF December, 2025.
INTRODUCED, PASSED ON SECOND AND FINAL READING, AND ORDERED PUBLISHED THIS 15th DAY OF DECEMBER, 2025.
/s/ Vance Brian, Jr., Mayor
ATTEST:
/s/ Cynthia S. Humrich, Clerk/Treasurer