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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: October 1, 2019
SUBJECT:
A Resolution authorizing the use of $3.0 million in Line of Credit Funding for the Hobbs Redevelopment Project.
PURPOSE:
Resolution R19-159, R19-207 and R19-240 (Attached), established Lines of Credit (LOC) with Fifth Third Bank and Old Second Bank for $10.0 million at each institution. These resolutions also established the draw limits on these Lines of Credit at $6.8 million for downtown developments and $9,739,741 for Bilter Road Land Purchases. The attached resolution will authorize the use of $3.0 million in LOC funding for the Hobbs development, approved on September 24, 2019 (Resolution R19-330 is attached).
BACKGROUND:
As a part of funding for several development projects the City is using LOCs with local banking institutions combined with available funds on hand. As noted previously, some of the borrowing through LOCs will be paid back by the given developers when Federal and State tax credits are received and some of the borrowing will be converted into long term taxable debt.
As noted in the Resolution R19-159, R19-207 and R19-240, the City has previously authorized the use of $16,539,741 in LOC funding, of which the following has already been drawn:
Terminal Development $1.2 million
80 S. River Development $283,333
Avalon Heights/Old Copley Phase I $3.0 million
Bilter Road Land Purchase $9.7 million
TOTAL $14.2 million
DISCUSSION:
The approval of the redevelopment of the Hobbs building includes the provision of a $1.5 million grant, and the usage of a $1.5 million bridge loan to be repaid through tax credits associated with the redevelopment project. As is provided for in the enabling resolution for using LOC funding, each new project must be approved by the City Council for the use of these funds. Using the LOC for this project will bring the total authorized usage of LOC funding to $19.5 million of the authorized $20.0 million. Of this amount $4.4 million will be repaid when the tax credits are received for each project (in approximately 2 years from the start of each project), and $9.7 million has been used for land that has an approximate equal value for the debt outstanding.
The total investments associated with these grants and short term loans based on the redevelopment pro formas submitted by each developer is approximately $37 million.
IMPACT STATEMENT:
Approving this resolution will allow for the continued redevelopment of the Downtown which will continue to improve the total Aurora economy.
RECOMMENDATIONS:
That the resolution authorizing the usage of Line of Credit funding in the amount of $3.0 million for the Hobbs redevelopment project be approved.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing the use of $3.0 million in Line of Credit Funding for the Hobbs Redevelopment Project.
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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, Through the approval of Resolutions R19-159 and R19-240 the City Council has authorized the usage of Line of Credit funding for development projects within the City and:
WHEREAS, The Hobbs Redevelopment Project and Agreement includes the funding of a $1.5 million Grant and a $1.5 million bridge loan and:
WHEREAS, there is sufficient funding within the Line of Credit at Fifth Third Bank and Old Second Bank:
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the Mayor and Chief Financial Officer are authorized to utilize the Lines of Credit Established with Fifth Third Bank and Old Second Bank for the funding of the Hobbs Redevelopment project in an amount not to exceed $3.0 million in accordance with the Redevelopment Agreement between the City of Aurora and JH Real Estate Partners LLC and will be made at $1.5 million from both Fifth Third Bank and Old Second Bank.