By Jason Crane
The Aurora City Council is set to approve an Ordinance authorizing a 100% principal forgiveness loan agreement for the Lead Service Line Replacement Project.
The City previously applied for a 100% principal forgiveness loan from the Illinois Environmental Protection Agency to fund the upcoming “Lead Service Line Replacement” project. The ordinance outlines the requested $2,465,000.00 amount of the forgivable loan. The City of Aurora qualifies for principal forgiveness for lead service line replacement and for FY2026 the maximum forgiveness amount is $2,465,000.00.
The proposed 2025 budget shows the partial loan amount for construction of this service replacement project; the City intends to front fund the construction and seek reimbursement at the same time as payments are made to the contractor. Processing contractor payments significantly quicker in this manner in lieu of waiting for the receipt of loan funds makes the project more attractive to contractors and will most likely result in lower bids.
The State of Illinois passed Public Act 102-0613 in August 2021 titled the Lead Service Line Replacement and Notification Act requiring full replacement of lead water service lines when disturbed. The City of Aurora has an estimated 16,200 lead water services connected to the public water system. The Lead Service Line Replacement Project will include the full replacement of the lead service from the water main to the water meter in the house or the completion of previous partial lead water services to eliminate all sections of lead between the main and meter.
The service replacements per the funding approval must occur in Census Tracts 8542.00, 8529.04, 8532.00, 8536.02, 8530.05 and 8533.00. Passing this ordinance is required by the IEPA to provide the City the forgivable funds necessary to construct this project in 2025 and 2026. The proposed 2025 budget shows the partial value of the forgivable loan in account 510-4058-511-73-02.
By adopting this ordinance, the City will be utilizing available forgivable funds to construct this project. Once completed, the project will reduce the number of lead services lines requiring replacement in the City of Aurora. During construction, there will be various local roadway and lane closures, delays are to be expected. Individual residential water outages will be kept to a minimum while the service is being connected at the water main and inside the house.
•Consent was given at the August 19, Aurora Committee of the Whole meeting to approve 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.
The purpose is to approve the renewal of the $10 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 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.
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 6.39% due to the recent increases in interest rates.
Approval of this resolution will renew this ongoing line of credit through Old Second National Bank, which is necessary for the City’s continued project financing when bond financing is not immediately practical.