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TO: Mayor Richard C. Irvin
FROM: Chris Minick, Chief Financial Officer
DATE: May 8, 2024
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, 2025.
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. Staff anticipates that there will be additional need for short term financing of economic development projects in the future and the LOC's provide a practical and cost effective vehicle for those needs. The City makes periodic payments on the LOC's as appropriate when developer payments are received as well as when long term bonds are issued.
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 2023 and that renewal allowed for a subsequent one-year extension of the LOC until June 30, 2025. The executed 2023 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 future bond issuances and repayments of development costs from developers from various economic redevelopment costs initially financed by the City.
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 f...
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