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TO: Mayor John Laesch
FROM: Christopher Minick, Chief Financial Officer, City Treasurer
DATE: July 10, 2025
SUBJECT:
An Ordinance authorizing the issuance and sale of adjustable rate demand economic development revenue bonds, Aurora University, in one or more series, of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois, in an aggregate principal amount not to exceed $16,000,000, and confirming the sale thereof; authorizing the execution and delivery of a loan agreement, trust indenture, bond purchase agreement and related documents; authorizing the distribution of an official statement; approving the delivery of a letter of credit, a reimbursement agreement a remarketing agreement; and authorizing certain related matters.
PURPOSE:
As a home rule municipality, the City of Aurora may issue Private Activity Bonds for qualified not-for-profit entities. Aurora University and the City have partnered in similar issuances in the past, most recently in 2019 and 2020. The University would like to issue new bonds for major capital improvements on the Aurora campus. A public hearing will be held giving notice for this issuance.
BACKGROUND:
The City of Aurora and Aurora University have worked together to help build a premier campus in Aurora. Part of this relationship has involved the City's assistance through the issuance of conduit financing in the form of Private Activity Bonds. Private Activity Bonds do not involve the City financial statements in any manner other than the recording of the transaction in the notes to the City’s financial statements in the Annual Comprehensive Financial Report. Aurora University pays the City’s out of pocket costs associated with this issuance. The City has confirmed that it has no liability for these bonds, actual or moral, through consultation with our bond counsel Chapman and Cutler, LLP, and through our auditor Sikich, LLC. This confirmation is also clearly stated in the attached documents that will be included in the total bond transcript. Use of Private Activity Bonds lowers the financing costs incurred by the University.
Aurora University approved a resolution at its May 2, 2025 Board of Trustees meeting for the issuance of the above bonds (Attached).
These improvements will involve substantial construction jobs for the community and will allow Aurora University to grow and remain a premier institution for higher education in Aurora and the Midwest.
DISCUSSION:
The attached bond transcript documents outline the requested Private Activity Bonds for Aurora University in an amount not to exceed $16 million to finance new construction at Aurora University.
The bonds will be variable rate and should be issued at par, so there should be minimal discount or premium that would change the amount of the bonds from the actual bond proceeds. The not to exceed amount provides Aurora University with a measure of flexibility in the event of market fluctuations. Again, there is no liability to the City regarding these bonds. Bond proceeds may also be used to cover all or a portion of the costs of issuance.
The bond issue includes the (i) construction of a three-story 45,000 square foot learning commons (the “Learning Commons”) that will house the library, career services, study rooms, a café, a technology hub, the university archives, and a corporate lounge for employers on the Main Campus, (ii) acquisition and installation of certain furniture, fixtures, technology and equipment at the Learning Commons, (iii) repairs and upgrades to certain of the university structures including parking lots/garages and other structural components related to the Learning Commons, (iv) construction, repairs, and/or upgrades to certain university structures including, but not limited to roofs, parking lots/garages, and other structural components on the Aurora campus, and (v) other acquisition, construction, renovation, improvement and/or equipping of educational, athletic, and/or administrative facilities of the university and related infrastructure on the Aurora campus. Representatives from Aurora University will be available to explain the project further
IMPACT STATEMENT:
This ordinance has no impact on the City's financial statements or debt. This investment by Aurora University will improve the university's financial status as well as provide funding for campus improvements keeping the university a premier institution in Aurora and the Midwest
RECOMMENDATIONS:
That the City Council approve the attached Ordinance authorizing the issuance of Private Activity Bonds in a not to exceed amount of $16 million in 2025.
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance authorizing the issuance and sale of Adjustable Rate Demand Economic Development Revenue Bonds, Aurora University, in one or more series, of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois, in an aggregate principal amount not to exceed $16,000,000, and confirming the sale thereof; authorizing the execution and delivery of a Loan Agreement, Trust Indenture, Bond Purchase Agreement and related documents; authorizing the distribution of an Official Statement; approving the delivery of a Letter of Credit, a Reimbursement Agreement and a Remarketing Agreement; and authorizing certain 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 “Issuer”), has a population of more than 25,000, and, in accordance with the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois, the Issuer is a home rule unit of government, and, as such, may exercise any power or perform any function pertaining to its government and affairs; and
WHEREAS, pursuant to the Constitution and the laws of the State of Illinois, and particularly its powers as a home rule unit of government under the Constitution of the State of Illinois, the City Council of the Issuer has adopted Ordinance No. 4519 on March 23, 1976, as supplemented and amended (the “Enabling Ordinance,” such Enabling Ordinance and such provisions of the Constitution hereinafter collectively referred to as the “Act”); and
WHEREAS, pursuant to the Constitution and the laws of the State of Illinois, and particularly the Act, the Issuer is authorized and empowered to issue its revenue bonds and to lend the proceeds thereof for the purpose of financing or refinancing “projects,” within the meaning of the Act; and
WHEREAS, Aurora University, an Illinois not-for-profit corporation (the “University”), has requested the Issuer to issue its revenue bonds, in one or more series and lend the proceeds from the sale thereof to the University; and
WHEREAS, the University desires to apply the proceeds from the sale of such revenue bonds to (1) finance or reimburse itself for the (a) construction of a three-story 45,000 square foot learning commons (the “Learning Commons”) that will house the library, career services, study rooms, a café, a technology hub, the University archives, and a corporate lounge for employers to be located on the University’s main campus, (b) acquisition and installation of certain furniture, fixtures, technology and equipment at the Learning Commons, (c) repairs and upgrades to certain University structures including parking lots/garages and other structural components related to the Learning Commons, (d) construction, repairs, and/or upgrades to certain University structures including, but not limited to roofs, parking lots/garages, and other structural components on the University’s main campus, and (e) other acquisition, construction, renovation, improvement and/or equipping of educational, athletic, and/or administrative facilities of the University and related infrastructure on the University’s main campus, all in the City of Aurora, Illinois (collectively, the “Project”), (ii) pay a portion of the interest on the hereinafter defined Bonds, if deemed necessary or advisable by the Issuer or the University, and (iii) pay certain expenses incurred in connection with the issuance of the Bonds (collectively, the “Financing Purposes”); and
WHEREAS, in furtherance of the purposes set forth in the Act, the Issuer wishes to assist the University to accomplish the Financing Purposes by the sale and issuance of its revenue bonds, in one or more series, and the loan of the proceeds from the sale thereof, and by authorizing such actions as might be required to implement such stated intentions; and
WHEREAS, pursuant to and in accordance with the provisions of the Constitution and the laws of the State of Illinois, and particularly the Act, the Issuer is now prepared to issue and sell its Adjustable Rate Demand Economic Development Revenue Bonds, Aurora University, Series 2025 (the “Bonds”), which Bonds shall be issued in an aggregate principal amount not to exceed $16,000,000; and
WHEREAS, the Bonds will bear interest at variable rates established in accordance with the Indenture (as hereinafter defined), and the proceeds from the sale thereof will be loaned to the University through the purchase of the University’s promissory note (the “Note”) to be issued by the University pursuant to the Loan Agreement (as hereinafter defined) and assigned by the Issuer to the Trustee (as hereinafter defined) pursuant to the Indenture as security for the Bonds; and
WHEREAS, drafts of the following documents have been previously provided to and are on file with the Issuer, and will be executed and delivered by the Issuer (collectively, the “Issuer Documents”):
(a) a Trust Indenture (the “Indenture) between the Issuer and The Bank of New York Mellon Trust Company, National Association, as trustee (the “Trustee”), providing for the issuance thereunder of the Bonds and setting forth the terms and provisions applicable to such Bonds, including securing the Bonds by an assignment thereunder of the Issuer’s right, title and interest in and to the Note and certain of the Issuer’s rights in and to the Loan Agreement;
(b) a Loan Agreement (the “Loan Agreement”) between the Issuer and the University, under which the Issuer will loan the proceeds of the Bonds to the University, all as more fully described in the Loan Agreement, including the form of the Note attached thereto; and
(c) a Bond Purchase Agreement (the “Purchase Agreement”) among the Issuer, the University and Robert W. Baird & Co. Incorporated and any other investment bank or financial institution named therein, as underwriters (collectively, the “Underwriter”), providing for the sale by the Issuer and the purchase by the Underwriter of the Bonds; and
WHEREAS, in connection with the issuance of the Bonds, the following additional documents will be executed and delivered by parties other than the Issuer (collectively, the “Additional Transaction Documents”):
(a) a Remarketing Agreement between the University and Robert W. Baird & Co. Incorporated, as remarketing agent (the “Remarketing Agent”) and the University pursuant to which the Remarketing Agent agrees, among other things, to use its best efforts to remarket any of the Bonds tendered by the owners thereof for purchase as provided in the Indenture;
(b) an Official Statement, relating to the offering of the Bonds; and
(c) a direct pay letter of credit (“Letter of Credit”) issued by BMO Bank N.A.,
as credit provider (the “Credit Provider”), pursuant to the terms of the Reimbursement Agreement (“Reimbursement Agreement”) between the University and the Credit Provider.
WHEREAS, the City Council of the Issuer hereby finds and determines that the issuance of the Bonds for the stated purposes is beneficial for the welfare of the government and affairs of the Issuer, is a proper public purpose and is in the public interest; and
WHEREAS, the City Clerk of the Issuer has caused a notice of public hearing with respect to the plan of finance of the costs of the Financing Purposes through the issuance of the Bonds to be published in The Beacon News, a newspaper of general circulation in the City of Aurora, Illinois, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), on July 15, 2025, and the City Council of the Issuer has conducted said public hearing on July 22, 2025;)
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
Section 1. Recitals. The City Council of the Issuer hereby finds that all of the recitals contained in the preambles to this Ordinance are full, true and correct, and does incorporate them into this Ordinance by this reference.
Section 2. Public Hearing Approval. Pursuant to the Act, the Issuer does hereby authorize and approve the accomplishment of the Financing Purposes through the issuance of the Bonds in accordance with the terms of the Loan Agreement and the Indenture, and does hereby determine that the Financing Purposes are collectively a “project” within the meaning of the Act, and that the Financing Purposes are in furtherance of the public purposes set forth in the Act; and that the Issuer hereby approves the accomplishment of the Financing Purposes through the issuance of the Bonds, as described in the aforesaid notice of public hearing which is hereby incorporated by reference, which approval shall be considered the public approval required by Section 147(f) of the Code.
Section 3. Issuer Documents. The Issuer is hereby authorized to enter into the Issuer Documents in substantially the same forms now before the City Council of the Issuer; that the forms, terms and provisions of the Issuer Documents be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Issuer Documents in the name, for and on behalf of the Issuer, and thereupon to cause the Issuer Documents to be delivered to the University, such Loan Agreement (as executed) to provide for the loan of the proceeds of the Bonds to the University and the use of such proceeds for the Financing Purposes in the manner and with the effect therein provided, such Issuer Documents to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Issuer Documents on behalf of the Issuer shall approve, his or her execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of the Issuer Documents now before the City Council of the Issuer; that from and after the execution and delivery of the Issuer Documents, the officers, employees and agents of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Issuer Documents as executed; provided, however, the Bonds shall be issued to effect the Financing Purposes and in no event shall the aggregate principal amount of Bonds issued in one or more series exceed $16,000,000; and that the Issuer Documents shall constitute, and hereby is made, a part of this Ordinance, and copies of the Issuer Documents shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer.
Section 4. Bond Trustee. The designation of The Bank of New York Mellon Trust Company, National Association, to serve as Trustee, Paying Agent and Registrar with respect to the Bonds is hereby approved.
Section 5. The Bonds. The form of the Bonds now before the City Council of the Issuer, subject to appropriate insertions and revisions in order to comply with the provisions of the Indenture (as executed and delivered) be, and the same hereby are, approved; that the Bonds shall be executed in the name, for and on behalf of the Issuer with the manual signature of its Mayor and attested with the manual signature of its City Clerk and the official seal of the Issuer shall be impressed or imprinted thereon; that the Bonds shall bear interest at initial rates not to exceed 6.00% per annum, subject to adjustment thereafter in accordance with the Indenture, and shall be payable over a term not to exceed 31 years from date of issuance; that the Mayor of the Issuer or the City Clerk of the Issuer shall cause the Bonds, as so executed and attested, to be delivered to the Trustee for authentication; and that when such Bonds shall be executed on behalf of the Issuer in the manner contemplated by the Indenture and this Ordinance, in an aggregate principal amount not to exceed $16,000,000, they shall represent the approved form of Bonds of the Issuer.
Section 6. Distribution of Official Statement. The preparation and distribution of the Official Statement for the Bonds by the Underwriter is hereby approved in substantially the same form now before the City Council of the Issuer or with such changes or revisions therein as the Mayor of the Issuer shall approve by written certificate, his execution of the Indenture to constitute conclusive evidence of such approval of any and all changes and revisions therein from the form of the Official Statement before the City Council of the Issuer.
Section 7. Additional Transaction Documents. The Issuer does hereby approve the execution and delivery of the Additional Transaction Documents. The final forms of the Additional Transaction Documents shall be approved by the Mayor of the Issuer, the Mayor’s execution of the Indenture to constitute conclusive evidence of the Mayor’s approval and the Issuer’s approval of the final forms of the Additional Transaction Documents.
Section 8. Other Documents. The Mayor, the City Clerk (and for purposes of this Ordinance, any person duly appointed to any such office on an acting or interim basis) and any other officer, employee or agent of the Issuer be, and each of them hereby is, authorized and directed to execute, attest, seal and deliver any and all documents and certificates, to do any and all things deemed necessary to effect the issuance and sale of the Bonds and the execution and delivery of the Issuer Documents and such other instruments (including one tax exemption certificate and other agreements and financing statements), and to perform the obligations and duties of the Issuer hereunder and thereunder, all as shall be necessary and desirable to carry out the intent and purposes of this Ordinance, including the preambles to this Ordinance.
Section 9. Authorization and Ratification of Subsequent Acts. All acts of the City Council of the Issuer and the officers and employees of the Issuer that are in conformity with the intent and purposes of this Ordinance, whether heretofore or hereafter taken or done, be, and the same are hereby, in all respects, ratified, confirmed and approved.
Section 10. Severability. The provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases and provisions of this Ordinance.
Section 11. Publication. A full, true and complete copy of this Ordinance shall be printed or published promptly after passage in pamphlet form by authority of the City Council of the Issuer.
Section 12. Conflicts. All ordinances, resolutions, or parts thereof, in conflict herewith are hereby superseded to the extent of such conflict; and that this Ordinance shall be in full force and effect immediately and forthwith upon its passage, approval and publication in pamphlet form as aforesaid.
Section 13. Effective Date. This Ordinance shall be in full force and effect immediately upon its passage, as by law provided.