TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: June 12, 2020
SUBJECT: title
Renewal of $10. 0 million Line of Credit - Old Second Bank
body
PURPOSE:
To approve the renewal of the $10.0 million Line of Credit (LOC) with Old Second Bank for one year.
The City initially approved LOCs with Old Second Bank and Fifth Third Bank in 2019 for $10.0 million. The renewal of the LOC for Fifth Third is not due until late July, however the LOC for Old Second is due now.
During the final review of the 2019 Audit, working with Sikich LLC staff confirmed that the LOC for Old Second needs to be renewed before the report date of the Audit which will be in late June. This renewal is required to allow for the LOC debt to be placed in the Long-Term Debt Account Groups in the Audit and not in the operating funds of the City (Gaming Tax and multiple TIF Funds.) When this debt is placed in these operating funds, the fund balance appears as a negative balance.
The attached tables show the projected use and payoff of the $20.million in total LOC by the bank issuing the LOC. Certain draws in the future could be changed between banks, as well as projected payoffs of the LOC.
The renewal LOC, Promissory Note and Resolution have no changes in the terms for interest and are again for a one year duration. The revised LOC agreement is attached.
RECOMMENDATION:
Staff recommends the Committee of the Whole approve the review of the LOC renewal at the June 23, 2020 City Council meeting.