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TO: Mayor John Laesch and the City Council
FROM: Chris Minick, Chief Financial Officer
DATE: May 20, 2025
SUBJECT:
Seeking a Motion to Approve An Ordinance providing for the issuance of not to exceed $95,000,000 General Obligation Bonds of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, for the purpose of financing capital improvements in and for said City, providing for the levy of a direct annual tax sufficient to pay the principal of and interest on said bonds, and authorizing the proposed sale of said bonds to the purchaser thereof.
PURPOSE:
To obtain the approval of the City Council of a proposed ordinance providing for the issuance of the Series 2025 C General Obligation (GO) Bonds.
BACKGROUND:
The City's Capital Improvements Plan and 2025 City Budget call for the financing of various capital projects through the issuance of General Obligation Bonds of the City. The major projects include construction costs for Fire Stations 4, 9, and 13, River Edge Park expansion, Bilter Road Improvements, the parking garage on New York Street, and the final payments on the City's newly opened Public Works Facility.
Bonds were sold in January of 2025 to accomplish the financing for the first two tranches of funding. The series of bonds sold in January were intended to finance the entire purchase of the parking garage at 2 W New York St, which has been completed, and initial funding for the fire station projects (stations 9 and 13 specifically), Farnsworth and Bilter Roadway Improvements, and the River Edge Park Expansion Project. During the budget process for 2025, 3 draws of bonding were anticipated during 2025 and early 2026 to accomplish the financing plan for these improvements. The funding draws were staggered to avoid the accrual of interest expense on funds not immediately needed for construction purposes.
The City is now ready to undertake the next phase or tranche of funding so that construction of the projects already underway and recently approved may proceed without delay. Staff is recommending that the amounts necessary to finish all of the contemplated capital projects be bonded at this time so that the projects may proceed as expeditiously as possible to conclusion. There are time sensitivities to certain of the projects undertaken, and additionally projects are most efficiently completed when the constructions steps and phasing can occur in their logical order and in accordance with appropriate scheduling.
The attached draft ordinance is the first official step in selling bonds to finance these projects. The ordinance is structured as a "parameters ordinance" and sets forth various conditions under which sale of the bonds is approved, providing the terms of the bonds are within certain parameters as defined in the ordinance. We have structured the ordinance to provide some flexibility to take advantage of the most beneficial bond structure given market conditions at the time of bond sale. We will utilize a competitive process of online "bidding" for the sale and placement of the bonds. The winner of the bond sale will be the entity that provides the overall lowest cost of the bonds to the City. This method has been utilized in previous bond sales and has provided very beneficial results.
DISCUSSION:
We intend to sell the 2025 GO Bonds during late June of 2025 to provide resources and financing for the aforementioned projects.
Series 2025 C will not exceed $95 million and will be issued as a tax exempt issue. These bonds are typically issued for general infrastructure projects. Tax exempt financing mechanisms are appropriate for general infrastructure projects and provide the lowest cost of financing for City projects. Staff is anticipating a 20-year life for the bond and the first debt service payment on the bond will be due on December 30, 2025 and will be paid by capitalized interest.
It is intended that the debt service payments for the bond will be financed by increasing the debt service portion of the property tax levy. The debt service payment will cost the owner of a property with a $300,000 market value approximately $9.00 per month.
The amounts noted in this memo are preliminary and are based on bond market conditions as they exist today. The bond market is dynamic and conditions change daily. The amounts quoted may change slightly as the bond sale is finalized over the next month.
IMPACT STATEMENT:
Adoption of the Ordinance will allow for the financing and timely construction of various capital improvements and projects as budgeted and planned by the City.
Should the bonds not be approved, there is the potential for costly and inefficient delays in the various construction projects. It is particularly crucial to avoid delays in the River Edge Park expansion project due to the planned Christkindlmarket event occurring in November of 2025. Undue delays in the progress of construction would increase the ultimate costs of the projects.
RECOMMENDATIONS:
That the City Council approve the attached, proposed ordinance that would authorize the issuance of the city’s 2025 C GO Bonds.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance providing for the issuance of not to exceed $95,000,000 General Obligation Bonds of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, for the purpose of financing capital improvements in and for said City, providing for the levy of a direct annual tax sufficient to pay the principal of and interest on said bonds, and authorizing the proposed sale of said bonds to the purchaser thereof.
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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 it is incurred without prior referendum approval; and
WHEREAS, the City Council of the City (the “City Council”) has considered the needs of the City and does hereby determine that it is necessary, desirable and in the best interests of the City to borrow at this time to finance capital projects in and for the City, including River Edge Park expansion, fire station relocation and construction, and roadway intersection and other infrastructure projects, together with such engineering, electrical, financial, legal and other professional services related thereto as may be advisable and necessary (collectively, the “2025 C Project”); and
WHEREAS, on the 28th day of August, 1973, 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 does hereby further determine that, in order to pay the costs of the 2025 C Project, it is necessary, desirable and in the best interests of the City to borrow not to exceed $95,000,000 at this time and, in evidence of such borrowing, issue full faith and credit bonds of the City in the aggregate principal amount of not to exceed $95,000,000 (the “Bonds)
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 true, correct and complete and does incorporate them into this Ordinance by this reference.
Section 2. The City Council hereby adopts the attached Ordinance,
An Ordinance providing for the issuance of not to exceed $95,000,000 General Obligation Bonds of the City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois, for the purpose of financing capital improvements in and for said City, providing for the levy of a direct annual tax sufficient to pay the principal of and interest on said bonds, and authorizing the proposed sale of said bonds to the purchaser thereof.