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TO: Mayor John Laesch
FROM: Stacey Peterson, Chief Financial Officer
DATE: August 7, 2025
SUBJECT:
Seeking Approval of a Resolution Authorizing the Renewal of the Line of Credit (LOC) in the amount of $10 million with Old Second National Bank for a one-year term expiring on June 30, 2026.
PURPOSE:
To approve the renewal of the $10 million Line of Credit (LOC) with Old Second Bank for one year.
BACKGROUND:
The City initially approved LOCs with Old Second Bank and Fifth Third Bank in 2019 for $10.0 million. The City has used the LOC's to provide short-term financing for the City contributions to various land acquisition and economic development projects when bond financing is not practical.
The Line of Credit taken through Fifth Third Bank was paid off during calendar year 2023. The LOC through Old Second is currently the only LOC that the City has outstanding. The LOC was renewed during July of 2024 and that renewal allowed for a subsequent one-year extension of the LOC until June 30, 2025. The executed 2024 renewal terms are attached.
DISCUSSION:
There have been no draws on the LOC since the last renewal and the outstanding balance on the Old Second LOC is currently $6,688,000. The LOC will continue to be reduced by payments from bond issuances and repayments of development costs from developers from various economic redevelopment costs initially financed by the City. The city intends to pay off the line of credit once the budget process is complete and it has been determined that there is no additional need for future projects.
The rate for the renewed LOC will continue to be based on the 30-day Secured Overnight Financing Rate (SOFR) + 200 basis points (2%). SOFR is a published rate and is a common replacement for LIBOR in loans moving forward in the past few years. SOFR represents the overnight rate that financial institutions charge each other for overnight loans. The rate generated for the renewed LOC (if calculated today) is currently...
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