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Home My WebLink About97-109 Resolution No. 97-109 Revised RESOLUTION AUTHORIZING INVITATIONS FOR SEALED BIDS FOR $4 , 860, 000 GENERAL OBLIGATION CORPORATE PURPOSE BONDS, SERIES 1997A AND UP TO 3 . 4 MILLION IN REFUNDING BONDS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Speer Financial, Inc. be and is hereby authorized to solicit sealed bids for $4 , 860, 000 General Obligation Corporate Purpose Bonds, Series 1997A, for the objects and purposes described in Exhibit A, and up to 3 . 4 million in Refunding Bonds (to refund the 1988 and 1990 General Obligation Corporate Purpose Bonds) , a copy of which is attached hereto and made a part hereof by reference. sl Kevin Kelly Kevin Kelly, Mayor Presented: April 23, 1997 Adopted: April 23, 1997 Vote: Yeas 7 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk r City of Elgin Agenda Item No. A (0 April 16 , 1997 TO: Mayor and Members of the City Council FROM: Robert O. Malm, Interim City Manager SUBJECT: Authorization for 1997 Sale of Bonds for Various Sewer/Water Capital Projects and Refunding of Certain Previously Issued Bonds PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to authorize sealed bids for $4 , 860, 000 in General Obligation Corporate Purpose Bonds incorporated within the 1997 Budget and the Five-Year Financial Plan, and up to $3,400, 000 in Refunding Bonds . BACKGROUND On November 6, 1996 the City Council approved the 1997 Budget and 1997-2001 Financial Plan. Subsequently, the Plan was revised on March 14, 1997 to accommodate the Riverside Plant Expansion changes . Included within these two pieces of legislation was the funding of 1997 water and sewer capital improvements through the issuance of $4 , 860, 000 in General Obligation Bonds . Copies of the 1997 Water and Sewer Capital Plans highlighting the scheduled projects are attached. Additionally, because interest rates are still low, the City has been investigating bond refunding opportunities . Speer has recommended that up to $3 .4 million in previously issued debt be refunded. The refunding process essentially takes newly issued debt that is sold at a lower interest rate and eliminates exist- ing debt that was sold at a higher interest rate. The difference in interest savings for this particular transaction would save the City approximately $125,000 (present value) and is net of fees . The 1997 $4, 860, 000 G.O. issue is a self-supporting bond issue (repaid with user fees) rather than a tax supported bond issue. Therefore, the debt ratios developed within the debt policy adopted on October 26 , 1994 will not be affected. The ratios shown below are a result of the previous 1996A bond sale. Authorization for 1997 Bond Sale April 17 , 1997 Page 2 As of Type of Ratio 12/31/96 Median Ceiling Direct Net Debt Per Capita $613 $677 $812 Ratio of Net Direct Debt to Estimated Full Value 1 . 60 1 . 83 2 . 20 Net Direct Debt as a Percentage of Operating Expenditures 15 . 45% N/A 17 . 5% Overlapping Net Debt Per Capita $1 ,292 $1 ,270 $1,524 Ratio of Overall Net Debt to Estimated Full Value 3 . 38 3 . 34 4 . 01 Debt service schedules are in the process of being prepared and will maximize principal retirement in light of available water and sewer revenues generated by the rates approved in the 1997 Budget and Five Year Financial Plan. Attached is a schedule of existing debt highlighting those outstanding debt issues which includes the planned 1997 bond sale. The City has historically issued general obligation bonds rather than revenue bonds for water and sewer projects . User fees collected from water and sewer customers have been utilized to retire the annual principal and interest. The applicable portion of the property tax levy is then abated to ensure no property taxes are levied. General obligation debt, because of the ultimate pledge of property tax dollars, carries a lower interest rate. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED Speer Financial, Moody' s Investors Service, Standard and Poors . FINANCIAL IMPACT Retirement of these bonds has been taken into consideration as part of the Five-Year Financial Plan and will be budgeted accord- ingly. The ratios outlined in the debt policy are within the prescribed limits . The bonds will be utilized to fund the Riverside Plant Expansion, Northwest Corridor Water Main, AMR Meter Conversion, Area III Water Main, Annual Distribution System Upgrades, Otter Creek Lift Station, Tyler Creek Phase 5, Annual Combined Sewer Overflow Program, Combined Sewer Separation, Annual Neighborhood Sewer Repairs and Area III Sewer Line construction. The final amount of the bond sale takes into account the use of savings from previous years ' bond projects, interest earnings and operating surplus . Authorization for 1997 Bond Sale April 17 , 1997 Page 3 LEGAL IMPACT All future actions should continue to be coordinated with bond counsel . RECOMMENDATION It is recommended that the City Council authorize proceeding with the sale of $4 , 860, 000 General Obligation Corporate Purpose Bonds and $3,400, 000 in Refunding Bonds . Respectfully submitted, a es R. Nowicki ina Director Robert 0. Malm Interim City Manager JRN/daw Attachment Exhibit A WATER CAPITAL IMPROVEMENTS Riverside Plant Improvements/Expansion $ 1, 620, 000 Northwest Corridor Water Main 65,000 AMR Meter Conversion 500, 000 Area III Water Mains 500,000 Annual Distribution System Upgrades _ 525, 000 Total Water Capital Improvements $ 3,210,6 0 Less Interest Earnings Series 1996A ( 150,000) Less Operating Surplus ( 440, 000 ) Total Bond Proceeds $ 2 , 620, 000 SEWER CAPITAL IMPROVEMENTS Otter Creek Lift Station $ 175, 000 Tyler Creek Phase 5 1, 130, 000 Annual Combined Sewer Overflow Program 290, 000 Combined Sewer Separation 180, 000 Annual Neighborhood Sewer Repairs 275, 000 Area III Sewer Line Repairs 288, 000 Sewer Televising Truck 97 , 000 Sewer Jetting/Vactor Unit 150, 000 Total Sewer Capital Improvements $ 2 ,585, 000 Less Previous Years ' Project Savings ( 345,000 ) Total Bond Proceeds $ 2,240, 000 10 City of Elgin, Illin-.- Schedule of Existing Debt Principal Bonds Jan.1,1997 Bonds Amount of Interest Retired To Outstanding Principal Outstanding Issue Original Issue Rates 12/31/96 12/31/96 Payments 01/02/97 GENERALPURPOSE Corp. Purpose 1986 $2,150,000 6.80-8.80% 1,400,000 750,000 750,000 0 Corp. Purpose 1989A Dundee TIF $2,500,000 6.70-7.05% 1,795,000 705,000 0 705,000 Corp. Purpose 1990 $2,170,000 6.15- 630% 1,170,000 1,000,000 1,000,000 0 Corp. Purpose 1991 $4,665,000 6.10-7.60% 800,000 3,865,000 1,400,000 2,465.000 1991A Refunding Issue $5,920,000 5.00-6,60% 915,000 5,005,000 350,000 4,655,000 for 1980A Parking for 1984 G.O. Bonds for 1985 S.Grove TIF Bonds Corp. Purpose 1992 $20,620,000 5.75-8.20% 400,000 20,220,000 200,000 20,020,000 Corp Purpose 1993(New$) $4,300,000 4.20-5.38% 0 4,300,000 0 4,300,000 Corp. Purpose 1993(Refund 1989A) $1,365,000 4.20-5.38% 0 1,365,000 15,000 1,350,000 Corp. Purpose 1993(Refund 1986) $840,000 4.20-5,38% 20,000 820,000 15,000 805.000 Corp. Purpose 1994 $6,500,000 5.80-6.30% 0 6,500,000 0 6,500.000 Corp. Purpose 1995 $6,500,000 5.30-6.00% 0 6,500,000 0 6,500,000 Corp. Purpose 1995 A $2,250,000 4.90-5.25% 0 2,250,000 0 2,250,000 Corp. Purpose 1996 $5,117,000 5.00-8.00% 0 5,117,000 0 5,117,000 Corp. Purpose 1996A $5,080,000 5.125-7,125% 0 5,080,000 0 5,080.000 TOTAL $63 477 000 $3 730 000 $59,747 000 SEWER SYSTEM Sewer Purpose 1991 $3,860,000 6.10-7.60% $700.000 $3,160,000 $300,000 $2,860,000 Sewer Purpose 1992 $2,530,000 5,75-8.20% 0 2,370,000 95,000 2,275,000 Sewer Purpose 1995 $5,065,000 5.00-8.00% 0 5,065,000 0 4,920,000 Sewer Purpose 1996 $4,013,000 5,00-8,00% 0 4,013,000 0 4,013,000 Sewer Purpose 1997 $2 240,000 0 2,240,000 0 2,240,0W TOTAL 16,848,000 $395,M $16,308,000 WATER SYSTEM Water Purpose 1988 $2,025,000 6.10-8.10% $200,000 $1,825,000 $100,000 $1,725,000 Water Purpose 1990 $5,550,000 5.30-6.00% 700,000 4,850,000 200,000 4,650.000 Water Purpose 1991 $3,035,000 6,10-7,60% 300,000 2,735,000 100,000 2,635,000 Water Purpose 1992 $5.260,000 5.75-8.20% 160.000 5,100,000 100,000 5,000,000 Water 1993E Refunding $8,280,000 4.20-5.38% 3,420,000 4,860,000 0 4,860,000 Water Purpose 1995 $4,890,000 5.30-6.00% 0 4,890,000 150,000 4,740,000 Water Purpose 1996 $,4,860,000 5.00-8.00% 0 4,860,000 0 4,8W,000 Water Purpose 1996A $16,560,000 5,125-7.125% 0 16,560,000 0 16,560,000 Water Purpose 1997 $2,620,000 0 2,620,000 0 2,620,000 TOTAL $48,300,000 650 000 $47,650,000 Water Capital Projects 1997-2001 (revised 3/12/97) December 1997 1998 1999 2000 2001 1996 Means of Financing: Bond Sale $16,560,000 $2,620,000 S6,090,000 S2,535,000 $3,225,000 $2,093,000 Impact Fees 330,000 Interest Earnings-Dec. 550,000 150,000 275,000 Bond Issue 1996 Operating Surplus 440,000 Project Savings/ 610,000 Investment Earnings Total S18,050,000 $3,210,000 S6,365,000 S2,535,000 $3,225,000 $2,093,000 Capital Projects: Riverside Plant Expansion $18,050,000 $1,620,000 $2,935,000 Riverside Intake 425,000 750,000 Airlite Plant Improvements 855,000 1,380,000 McLean Lagoon Expansion 1,025,000 Northwest Corridor Water Main 65,000 365,000 1,015,000 Coombs 1MG Water Tower 130,000 Lyle Ave.Booster Pump 45,000 Fox Ln.Booster Pump 15,000 70,000 AMR Conversion 500,000 500,000 500,000 550,000 550,000 Dundee Ave.Booster 25,000 60,000 Area III Water Mains 500,000 Annual Distribution System 525,000 455,000 300,000 215,000 500,000 Upgrade Water Main Reimbursement 230,000 250,000 255,000 270,000 58,000 Riverside to Chicago SL Water Main State SL Transmission 35,000 205,000 Reinforcement 32,000 Geneva SL Reinforcement 168,000 RL 20 to Coombs Water Main 50,000 16"Transfer Line-Airlite Total S18,050,000 S3,210,000 S6,365,000 52.535,000 S3,225,000 52,093,000 38 - Approved 1997 Budget and City of Elgin, Illinois 1997-2001 Financial Plan Sewer Capital Program 1997-2001 (Revised October 10, 1996) 1907 1998 19" T-2000 1 2001 Means of Financing: Bond Sale S2,240,000 S2,455,000 S925,000 S4,095,000 S2,285,000 Project Savings/ 345,000 0 0 0 0 Investment Earnings Total S2,585,000 S2,455,000 S925,000 S4,095,000 S2,285,000 Capital Projects: Otter Creek Lift Station S175,000 [er Creak Phase S" 1,134),D00 I,i30,DOtf BRIS-1B(601,Parallel) 300,000 3,410,000 Northeast Interceptor 30'00() Sealing N.Randall Interceptor Sewer 730,000 -Phase 3B Annual Combined Sewer 290,000 305,000 320,000 335,000 350,000 Overflow Program Combined Sewer Separation 180,000 Annual Neighborhood Sewer 275,000 290,000 3051000 320,000 335,000 Repairs Trunk 20B-North/South 11600'000 Area III-Sewer Line 288,0M Repairs Sewer Televising Truck 97,000 Sewer Jetting/Vactor Unit 150,000 Total S2,585,000 S2,455,000 5925,000 54,095,000 52,285,000 +-Changed per 10/10196 meeting with LDL 45 - Approved