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TO: Mayor Thomas J. Weisner
FROM: Brian W. Caputo, Chief Financial Officer/City Treasurer
DATE: August 28, 2015
SUBJECT:
An Ordinance Providing for the Issuance of $69,185,000 Aggregate Principal Amount of General Obligation Refunding Bonds, Series 2015-C, of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, Confirming the Sale Thereof, and Providing for the Levy and Collection of a Direct Annual Tax for the Payment of Principal of and Interest on Said Bonds.
PURPOSE:
To obtain the approval of the City Council of a proposed ordinance providing for the issuance of the Series 2015-C General Obligation Refunding Bonds.
BACKGROUND:
In April of 2008, the city issued its Series 2008 GO Bonds in the amount of $85.5 million. The bonds were issued to provide resources for the construction of the new Police Headquarters and the purchase of E911 equipment. The true interest cost associated with the issue was 4.66%. The final maturity of the bonds included in the issue is December 30, 2038.
DISCUSSION:
Based upon an evaluation of the outstanding Series 2008 GO Bonds and currently available borrowing rates, we have determined that it would be advantageous to refund the bonds in the series that mature after December 31, 2015. This amounts to $68,655,000 in principal.
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, our target for savings is a net present value of 10.0% (about $6.9 million).
IMPACT STATEMENT:
Not applicable.
RECOMMENDATIONS:
That the City Council approve the attached, proposed ordinance that would authorize the issuance of the city’s 2015-C GO Refunding Bonds.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance providing for the issuance of $69,185,000 aggregate principal amount of General Obligation Refunding Bonds, Series 2015-C, of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, confirming the sale thereof, and providing for the levy and collection of a direct annual tax for the payment of the principal of and interest on said bonds.
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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, pursuant to the provisions of Section 6 of Article VII of the Constitution of the State of Illinois, the City has the power to incur debt payable from ad valorem property tax receipts or from any other lawful source and maturing within forty (40) years from the time the debt is incurred without prior referendum approval; and
WHEREAS, the City has heretofore issued $85,500,000 aggregate principal amount of its General Obligation Bonds, Series 2008, dated May 15, 2008 (the “Prior Bonds”) currently outstanding in the aggregate principal amount of $68,655,000; and
WHEREAS, the Outstanding Bonds are presently outstanding and unpaid and are binding and subsisting legal obligations of the City; and
WHEREAS, on the 28th day of June, 1973, the City Council of the City (the “City Council”) did adopt Ordinance Number 4340 determining the procedures to be followed in the borrowing of money for public purposes of the City and in evidence of such borrowing for the issuing of full faith and credit bonds of the City without referendum approval, such ordinance being entitled:
An Ordinance of the City of Aurora, Illinois, establishing procedures to be
followed in incurring indebtedness for corporate purposes, issuing
nonreferendum bonds to evidence such indebtedness and authorizing and
directing the levying of a tax, without limit as to rate or amount, for the purpose of
paying principal and interest on such bonds as the same become due.
which ordinance was amended by Ordinance No. 085-5353, duly adopted by the City Council on March 19, 1985 (Ordinance No. 4340 as so amended, which is also known as Section 2-319 of Division 1 of Article V of Chapter 2 of the Code of Ordinances of the City, being referred to hereinafter as the “Enabling Ordinance”); and
WHEREAS, the City Council has heretofore determined, and does hereby determine, that it is necessary and advisable for the public health, safety, welfare, and convenience of residents of the City that the City refund the Outstanding Bonds (the “Refunded Bonds”) in order to reduce interest costs to the City; and
WHEREAS, the estimated cost to the City of refunding the Refunded Bonds is not less than the sum of $63,370,000 and investment earnings thereon; and
WHEREAS, there are insufficient funds of the City on hand and lawfully available to pay such costs of refunding the Refunded Bonds; and
WHEREAS, the City Council does hereby determine that it is advisable and in the best interests of the City to borrow $69,185,000 at this time and, in evidence of such borrowing, issue its full faith and credit bonds in the aggregate principal amount of $69,185,000.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows: See Attachment.