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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: November 21, 2018
SUBJECT:
An Ordinance of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, Providing for the Issuance of Tax Increment Revenue Refunding Bonds, Series 2018A in an Aggregate Principal Amount of $4,520,000, and Related Matters - Finance Committee Agenda Item - October 9, 2018.
PURPOSE:
To obtain the approval of the City Council of a proposed ordinance providing for the issuance of the City of Aurora Series 20018A Tax Increment Finance (TIF) Revenue Bonds.
BACKGROUND:
In August 2008, the City issued Revenue Bonds from TIF District 6 in the amount of $6,660,000. The remaining bonds of $4,520,000 are now callable, and the refinancing of these bonds will reduce the remaining debt service costs by approximately $318,000. TIF #6 consists of approximately 530 acres and is located just northeast of the city’s downtown. Attachment 1 shows an estimate of these savings. It is generally bounded by the Fox River on the west; Spring Street on the south; Aurora Avenue, Lincoln Avenue, and Ohio Street (extended along the railroad right-of-way) on the east; and Mettel Road on the north. It also generally extends east to Ohio Street between Pierce Street and north of Delius Street, and east to Aurora Lane and Mitchell Road (south of Indian Trail). The district was established to attract residential, commercial, and other mixed-use projects to redevelop underutilized.
DISCUSSION:
The City reviews the total debt portfolio each year to monitor current interest rates for bonds compared to the interest rates in place when bonds are originally issued. Similar to the refinancing of a “mortgage”, the City can refinance previously issued bonds to accomplish savings or debt restructuring goals within the total economic development and capital infrastructure programs currently in place. The refinancing of the 2008A TIF Revenue bonds does not contemplate any restructuring of the debt through either the extension of the debt for a longer period of time or through a change in the timing of principal payments. This refinancing will focus on debt service savings of approximately $318,000 through 2027.
Attachment 1 is the original Council report from 2008 for the original issuance of these bonds.
We intend to sell the 2018A Tax Increment Revenue Bonds on November 27, 2018. The bonds will have the same maturity schedule as the current 2008A bonds and will be sold through a negotiated sale (the 2008A Bonds were also sold on a negotiated basis).
Attached is a draft bond ordinance. The final bond ordinance will be prepared after the bonds are sold and the exact interest costs are known.
IMPACT STATEMENT:
If the refunding is not done, the City will pay higher debt service costs for the remaining life of the bonds.
RECOMMENDATIONS:
That the City Council approve the attached, proposed ordinance that would authorize the issuance of the city’s 2018A Tax Increment Finance Revenue Bonds.
cc: Robert J. O’Connor, Alderman
Theodoros C. Mesiacos, Alderman
Edward J. Bugg, Alderman
Alex Alexandrou, Chief Management Officer
Wendy McCambridge, City Clerk
Richard Veenstra, Corporation Counsel
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, providing for the issuance of Tax Increment Revenue Refunding Bonds, Series 2018A (River City TIF Number 6) in an aggregate principal amount of $__________, for the purpose of refunding certain bonds heretofore issued by the City and now outstanding, and authorizing the sale of said bonds to the purchasers thereof.
body
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
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows: See Attached Bond Ordinance in Attachment 3