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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: July 13, 2020
SUBJECT:
An Ordinance amending the documents relating to the Special Facility Revenue Bond, Series 2010 (Marmion Project) (The "Bond") of the City of Aurora, Kane, DuPage, Will, and Kendall Counties, Illinois; Authorizing the execution and Delivery of an Amended Bond, a First Amendment to Loan Agreement and related documents in connection therewith; and related matters.
PURPOSE:
Marmion Academy originally issued private activity debt through the City of Aurora in 2010. This ordinance will amend the terms of this debt. The City of Aurora has no liability in facilitating this transaction and has hired Chapman and Cutler as Bond Counsel (at Marmions' cost) to review and prepare the necessary documents for this amendment.
BACKGROUND:
In August 2010 Marmion Academy, with the assistance of the City of Aurora issued $10.0 million in bonds $4.0 million of which was used to refinance current debt and $6.0 million was issued to finance capital construction at Marmion Academy.
Marmion is requesting the City's approval to amend this original bond issue as attached. Representatives of the Academy will be available to answer questions at the Committee of the Whole meeting.
No liability is created to the City of Aurora as a result of this amending ordinance.
DISCUSSION:
The City of Aurora may act as a conduit financing agency for private activity bonds for area private schools or universities. The Marmion Academy is requesting an amendment to their current financing of $10.0 million in bonds issued in 2010. This amend deals with changes in the rate of the bonds. This change does not change the fact that the City has no liability for this indebtedness and is only acting as a conduit issuer.
A revised Bond Ordinance and Loan Agreement are attached. Per these documents, the outstanding bonded indebtedness is approximately $6.25 million.
IMPACT STATEMENT:
The passage of this ordinance will allow Marmion Academy to efficiently manage their long term finances and maintain a great asset to the City of Aurora with no liability to the City.
RECOMMENDATIONS:
That the City Council adopt this ordinance and authorize the Mayor, City Treasurer and City Clerk to complete the attached documents as needed to execute the refinancing of this debt.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance amending the documents relating to the Special Facility Revenue Bond Series 2010 (Marmion Project) (the “Bond”) of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois; authorizing the execution and delivery of an Amended Bond, a First Amendment to Loan Agreement and related documents in connection therewith; 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 “Issuer”), has a population of more than 25,000, as determined by the last official census, and pursuant to the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois (the “Constitution”), 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 and Ordinance No. 4519 duly adopted by the City Council of the Issuer (the “City Council”) on March 23, 1976, as supplemented and amended (the “Enabling Act”), the Issuer has previously issued its Special Facility Revenue Bond, Series 2010 (Marmion Project) in the principal amount of $10,000,000 (the “Original Bond”), which is currently outstanding in the principal amount of $6,284,052.79, pursuant to an ordinance duly adopted by the City Council on August 10, 2010 (the “Original Bond Ordinance”); and
WHEREAS, in connection with the issuance of the Original Bond, the Issuer executed and delivered, among other documents, a Loan Agreement dated as of August 1, 2010 (the “Loan Agreement”) between the Issuer and Marmion, an Illinois not-for-profit corporation (the “Borrower”) and an Assignment Agreement dated as of August 1, 2010, between the Issuer and Wheaton Bank & Trust, National Association (formerly known as Wheaton Bank & Trust Company, the “Bank”); and
WHEREAS, at the request of the Borrower and the Bank, the Issuer has agreed to amend the Loan Agreement, the Original Bond Ordinance and the Original Bond to change the interest rate borne by the Bond (collectively, the “Amendment”); and
WHEREAS, Section 15 of the Original Bond Ordinance and Section 9.5 of the Loan Agreement allow the Original Bond Ordinance and the Loan Agreement to be amended with the written consent of the Bank; and
WHEREAS, in connection with the Amendment, it is now necessary for the Issuer to authorize the execution and delivery of a First Amendment to Loan Agreement dated as of August 1, 2020, between the Issuer and the Borrower (the “First Amendment”) and an amended Bond (the “Amended Bond”); and
WHEREAS, the Issuer has caused to be prepared and presented to the City Council the First Amendment and the Amended Bond;
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
Section 1. Incorporation of Preambles. The City Council 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
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Section 2. Amendment of Section 3 of the Original Bond Ordinance. As of the effective date of the First Amendment. The first paragraph of Section 3 of the Original Bond Ordinance is hereby deleted in its entirety and replaced with the following:
That for the purpose of financing a portion of the cost of the Project and the refunding of the Prior Bond, there shall be and there is hereby authorized to be issued by the Issuer its Special Facility Revenue Bond, Series 2010 (Marmion Project), which shall be issued in the principal amount of $10,000,000, shall be dated the date of its delivery (except as otherwise provided herein), shall be lettered R and numbered 1, shall be issued in fully registered form in the name of the Owner, or registered assigns, shall mature as to principal in principal installments, payable on the first Business Day of each calendar month and in the principal amounts as set forth in Schedule A attached to and made a part of the Bond (but not later than September 1, 2036), except as hereinafter provided, and shall bear interest on the unpaid principal amount of the Bond from the date of the Bond at the rate equal to 80% of the sum of (i) LIBOR, calculated on the date of delivery of the Bond and the first Business Day of each calendar month thereafter, and (ii) three percent (3%), payable on the first Business Day of each calendar month until paid, computed on the basis of a calendar year consisting of 360 days and calculated on the actual number of days elapsed. In the event that a Determination of Taxability shall occur, the Bond shall bear interest at 100% of LIBOR, calculated on the date that the interest on the Bond becomes includible in gross income for federal income tax purposes, and the first Business Day of each calendar month thereafter, plus three percent (3%) from the date that the interest on the Bond becomes includible in gross income for federal income tax purposes, payable monthly until final maturity. In the event that an event of default has occurred and is continuing hereunder, the Bond shall bear interest at the Prime Rate in effect from time to time, plus two percent (2.0%). The outstanding principal amount of the Bond on any date shall be the principal amount of the Bond less any payments of principal previously made.
Section 3. Amendment of Original Bond Form. The form of Bond contained in Section 4 of the Original Ordinance is hereby deleted in its entirety and replaced with the form of Amended Bond attached hereto as Appendix A.
Section 4. Authorization of Execution and Delivery of First Amendment. The First Amendment, in substantially the form presented at this meeting and on file with the City Clerk and containing substantially the terms and provisions set forth therein, is hereby authorized, approved and confirmed, and the form, terms and provisions of the First Amendment are hereby approved, with such changes and revisions therein as shall be approved by the officers of the Issuer executing and attesting the same, their signatures thereon to constitute conclusive evidence of such approval, and the Mayor and the City Clerk of the Issuer are hereby authorized and directed to execute, attest, seal (if required) and deliver the First Amendment.
Section 5. Authentication and Delivery of the Amended Bond. The Amended Bond shall be executed on behalf of the Issuer by the manual or facsimile signature of its Mayor and by the manual or facsimile signature of its City Clerk and shall have impressed manually or printed by facsimile thereon the official seal of the Issuer. The City Clerk of the Issuer shall deliver the Amended Bond to the Bank in exchange for the Original Bond numbered R-1, which shall be cancelled.
Section 6. Authorization of Ancillary Documents. The Mayor and the City Clerk of the Issuer are hereby authorized and directed to execute, attest, seal and deliver any and all documents and certificates, and do any and all things deemed necessary to effect the execution and delivery of the First Amendment, and to carry out the intent and purposes of this Ordinance, including the preambles hereto. In the absence of the Mayor and/or City Clerk of the Issuer, any other officer or official of the Issuer authorized to do so under Illinois law may execute documents or take such other actions required or contemplated by this Ordinance.
Section 7. Designation of Bond Counsel. Chapman and Cutler LLP, Chicago, Illinois, is hereby authorized to act as bond counsel to the Issuer in connection with the Amendment.
Section 8. Authorization and Ratification of Subsequent Acts. All acts of the officials of the Issuer which are in conformity with the purposes and intent of this Ordinance and in furtherance of the Amendment be, and the same hereby are, in all respects, ratified, approved and confirmed.
Section 9. Ordinance Not Repealable. This Ordinance shall not be repealable until the Amended Bond and the interest thereon shall have been fully paid, cancelled and discharged.
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.
Section 11. Publication. That 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.
Section 12. Effective Date and Repealer. This Ordinance shall become effective immediately upon passage, and all resolutions or ordinances in conflict herewith are repealed to the extent of the conflict