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TO: Mayor Thomas J. Weisner
FROM: Brian W. Caputo, Chief Financial Officer/City Treasurer
DATE: August 6, 2015
SUBJECT:
A Resolution Authorizing the Execution of an Intergovernmental Agreement Between the City of Aurora and West Aurora School District No. 129.
PURPOSE:
To obtain the approval of the City Council of a proposed resolution that would authorize the execution of an intergovernmental agreement with the West Aurora School District 129 pertaining to the transfer of the city’s allocation of volume cap for qualified energy conservation bonds (QECBs) to the school district.
BACKGROUND:
Through the Energy Improvement Extension Act of 2008 and the American Recovery and Reinvestment Act of 2009, the City of Aurora received authority (volume cap) from the federal government to issue up to $1,778,201 in QECBs. The federal government established this authority during the last recession in an effort to stimulate economic activity. These bonds can generally be issued to finance capital expenditures that accomplish the following purposes:
1. Reduce energy consumption in publically owned buildings by at least 20%.
2. Implement green community programs.
3. Develop rural capacity, specifically involving the production of electricity from renewable energy resources.
4. Support energy-related research facilities, research grants and research.
5. Implement mass commuting and related facilities that reduce energy consumption and pollution.
6. Design/run demonstration projects to promote the commercialization of energy-related technologies and processes.
7. Launch public education campaigns to promote energy efficiency.
All (100%) of the proceeds from the issuance of QECBs must be devoted to qualified energy conservation purposes.
From a national standpoint, very few QECBs have been issued because of the restrictive eligibility criteria.
Interest earned by the owner of a QECB is subject to federal income taxation. However, a state or local government issuer of QECBs may receive “direct subsidy payments” (i.e., subsidies to cover the bond interest costs) from the federal government. The direct subsidy payments are the lesser of 100% of the interest payable on the bonds or 70% of the “tax credit rate” established by the U.S. Treasury.
DISCUSSION:
The city has never used its allocation of QECB volume cap because we have not had a project of sufficient scope that fully satisfies any of the qualification criteria. Furthermore, we do not foresee that we will pursue a project in the future that could be financed with QECBs.
With the authority provided by their recently approved capital bond referendum, West Aurora School District 129 will be undertaking projects totaling over $22 million that could be financed with QECBs. The school district has requested that we transfer our QECB allocation to them. Transferring the city’s QECB allocation to School District 129 would permit the deployment of what has otherwise been unusable financing capacity for the benefit of the community.
The intergovernmental agreement that is attached to the proposed resolution would provide for the transfer of the city’s QECB allocation to the West Aurora School District. If the school district does not use the QECB allocation by June 30, 2017, the district will be required to return the allocation to the city.
We have inquired of East Aurora School District 131, Oswego School District 308, and Indian Prairie School District 204 about whether they are planning any projects that could qualify for QECB support. All of the districts indicated that they have no QECB-eligible projects.
IMPACT STATEMENT:
Not Applicable.
RECOMMENDATIONS:
That the City Council approve the attached, proposed resolution that will authorize the execution of an intergovernmental agreement with the West Aurora School District 129 pertaining to the transfer of the city’s allocation of QECB volume cap to the school district.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing The Execution Of An Intergovernmental Agreement Between The City Of Aurora And West Aurora School District No. 129.
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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, which is a home rule municipality, and West Aurora School District No. 129 (“District”), are each granted authority pursuant to the Illinois Constitution, Article VII, Section 10, and the Intergovernmental Cooperation Act, 5 ILCS 220/1 et.seq. to enter into binding agreements regarding the exercise of their respective powers, and
Whereas, as part of the Energy Improvement Extension Act of 2008, which was included in the Emergency Economic Stabilization Act of 2008 (the “Stabilization Act”), Congress enacted Section 54D of the Internal Revenue Code of 1986, as amended (the “Code”), permitting State and local governments to issue qualified energy conservation bonds to qualified entities in order to finance qualified conservation purposes; and
Whereas, the Governor’s Office of Management and Budget has heretofore allocated a portion of its qualified energy conservation bond allocation in the amount of $1,778,201 to the City (being the “City of Aurora QECB Allocation”); and
Whereas, the City Council of the City (the “City Council”) hereby deems it advisable, necessary, and in the best interests of the City to allocate the City of Aurora QECB Allocation to the District, to be used for qualified conservation purposes under Applicable Law forthwith upon the Parties’ approval of this Agreement; and
Whereas, no other public school districts with school buildings within the corporate boundaries of the City, namely purposes East District 131, Oswego School District 308, and Indian Prairie School District 204, have made application for part or all of the City of Aurora QECB Allocation for use for qualified conservation purposes; and
WHEREAS, the City and District have determined that it is in their overall respective best interests to enter into an Intergovernmental Agreement setting forth the terms and conditions related to the City of Aurora QECB Allocation to the District, a copy of said Intergovernmental Agreement is hereto incorporated and attached as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the Mayor is authorized to execute the Intergovernmental Agreement related to the City of Aurora QECB Allocation to the District. Additionally, the Chief Financial Officer/City Treasurer, or his designee, is hereby authorized to act on the City’s behalf, without further Council approval, to effectuate the allocation of the City of Aurora QECB Allocation to the District as well as take other actions, consistent with this Resolution and Intergovernmental Agreement.
PASSED AND APPROVED on ________________________.
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Aldermen Aldermen
AYES ______ NAYS______ ABSENT_______
ATTEST:
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City Clerk Mayor
City of Aurora
Law Department
44 East Downer Place
Aurora, Illinois 60507