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TO: Mayor Thomas J. Weisner
FROM: Brian W. Caputo, Chief Financial Officer/City Treasurer
DATE: April 17, 2015
SUBJECT:
An Ordinance Authorizing and Providing for the Issuance of $28,035,000.00 Aggregate Principal Amount of Waterworks and Sewerage Revenue Refunding Bonds, Series 2015-B, of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois, for the Purpose of Refunding Certain Outstanding Revenue Bonds of Said City Relating to the Combined Waterworks and Sewerage System of said City, Prescribing all the Details of Said Bonds, Confirming the Sale of Said Bonds, Providing for the Collection, Segregation and Distribution of the Revenues of the Combined Waterworks and Sewerage System of Said City in Relation Thereto, and Related Matters.
PURPOSE:
To obtain the approval of the City Council of a proposed ordinance providing for the issuance of the Series 2015-B Waterworks and Sewerage Revenue Refunding Bonds.
BACKGROUND:
In August of October of 2006, the city issued its Series 2006 Waterworks and Sewerage Revenue Bonds for the purposes specified below:
The true interest cost associated with the issue was 4.57%. The final maturity of the bonds included in the issue is December 1, 2036.
DISCUSSION:
Based upon an evaluation of the outstanding Series 2006 Bonds and currently available borrowing rates, we have determined that it would be advantageous to completely refund the series (except for the bonds maturing on December 1, 2015). Currently, $28.7 million of the series' principal is outstanding.
Attached is a draft ordinance authorizing the issuance of the refunding bonds. The final ordinance will be prepared after the bonds are sold and the exact interest costs are known. However, we believe that we may be able to garner net present value savings of about 9.0% (or $2.5 million).
IMPACT STATEMENT:
Not applicable.
RECOMMENDATIONS:
That the City Council approve the attached, proposed ordinance that would authorize the issuance of the city's Series 2015-B Waterworks and Sewerage Revenue Refunding Bonds.
cc: Alderman O'Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Peters, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance authorizing and providing for the issuance of $28,035,000.00 aggregate principal amount of Waterworks and Sewerage Revenue Refunding Bonds, Series 2015-B, of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois, for the purpose of refunding certain outstanding revenue bonds of said City relating to the combined waterworks and sewerage system of said City, prescribing all the details of said bonds, confirming the sale of said bonds, providing for the collection, segregation and distribution of the revenues of the combined waterworks and sewerage system of said City in relation thereto, and related matters.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois (the "City"), by its City Council (the "Council"), has provided by ordinance for its municipally-owned combined waterworks and sewerage system and for the operation thereof as a single utility (the "System"), in accordance with the provisions of Division 139 of Article 11 of the Illinois Municipal Code, as supplemented and amended (the "System Act"), the Local Government Debt Reform Act of the State of Illinois, as supplemented and amended (the "Reform Act"), both where applicable, and the home rule powers of the City under the provisions of Section 6 of Article VII of the 1970 Constitution of the State of Illinois (the "Home Rule Powers") (the System Act, the Reform Act and the Home Rule Powers, being collectively referred to herein as the "Enabling Law"); and
Whereas, the City has heretofore issued $33,485,000 aggregate principal amount of Waterworks and Sewerage Revenue Bonds, Series 2006, of the City, which are presently outstanding in the aggregate principal amount of $28,710,000 and payable from the net revenues of the System (the "Prior Bonds"); and
Whereas, the Prior Bonds were issued pursuant to the provisions of Ordinance No. o06-103, duly adopted by the Council on October 24, 2006 (the "Prior Ordinance"), which is and will still be in effect after the issuance of the Series 2015 Bonds, and are the only bonds and obligations of the City now outstanding which by their terms are payable from the net revenues of the System, other than a loan made to the City by the Illinois Environmental Protection Agency, pursuant to a Loan Agreement dated June 15, 2003, which is on a parity with the Prior Bonds (the "Loan"), and certain other obligations of the City that have a subordinate lien on the net revenues of the System (the "Subordinate Lien Obligations"); and
Whereas, an examination of the audit showing the revenues of the System for the last completed fiscal year indicates that the net revenues of the System for such fiscal year were sufficient to permit the issuance of additional bonds of the City on a parity with the Prior Bonds and the Loan; and
Whereas, the Council has determined that it is advisable, necessary and in the best interests of the public health, safety and welfare to refund a portion of the Prior Bonds (the "Refunded Bonds"); and
Whereas, the estimated costs of refunding the Refunded Bonds and paying costs of issuance are in excess of $28,035,000.00; and
Whereas, there are insufficient funds on hand and lawfully available to pay the costs of refunding the Refunded Bonds and paying costs of issuance, and such costs are expected to be defrayed by cash on hand or expected to be on hand and lawfully available for refunding the Refunded Bonds and paying costs of issuance, the proceeds of $28,035,000.00 in aggregate principal amount of revenue bonds payable, together with the Prior Bonds and the Loan, from the net revenues of the System and issued at this time pursuant to the Enabling Law; and
Whereas, the City is now authorized to issue such revenue bonds under the applicable provisions of the Enabling Law; and
Whereas, the City is not in default under the Prior Ordinance, all of the requirements contained in the Prior Ordinance pertaining to the issuance of parity bonds have been met and will be met, and the City may issue bonds to share ratably and equally in the net revenues of the System with the Prior Bonds and the Loan;
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows: See attachment.