The Aurora City Council has passed a $16.5 million bond issue to fund capital projects during the next four years.
Aldermen voted 10-1 to pass the issue, which officials first brought up as part of the 2017 budget discussions.
"This is for the entire community, based on long-term planning," said Alderman Robert O'Connor, at large, chairman of the Finance Committee. "For 2017, this is not going to affect the tax rate."
Aldermen got good news from Speer Financial, the city's bond counsel, that earlier in the day the bidding for Aurora's bond issue went better than expected.
Raphaliata McKenzie, senior vice president, director and owner of Speer Financial, said the city got a total of 51 bids from six different bidders during the 15 minutes the bond auction took place.
In such a bond sale, bidders bid an interest rate during a 15-minute period, and are allowed to improve their bid during that time. The bidders are allowed to see where they rank throughout the auction, although they are not allowed to see the actual bids. The reason there are 51 bids is that includes the number of times individual bidders improved their bids.
Bank of America improved its bid eight times and ended up winning the bidding with a 3.012 percent interest rate.
McKenzie said she expected bids between 3.5 and 4 percent, and joked that she lost a lunch bet with a co-worker who said they would be lower. The bids started at about 3.3 percent, she said, and improved to the winning bid.
"This was a very successful sale," she told the City Council. "We did not expect it to be this active."
She also told aldermen that after the bond issue, Standard and Poors affirmed the city's bond rating where it has been, AA stable. There are only two rankings higher -- AA plus and AAA -- and McKenzie said because of the city's high rating, it does not have to spend money on insurance for the bond issue.
She said the high rating "reflects the city's strong financial management."
The current issue stands at 20 years, with the city paying $1.2 million a year toward the debt service. The city will pay more than $5 million in interest during those 20 years.
McKenzie said the bonds are "callable" after 10 years, which means the city could refinance to a lower interest rate and pay less interest. O'Connor noted that the city saved a total of $12 million in recent years with several such refinancings of past bond issues.
The bond issue would pay for about $10 million in capital projects during 2017, another $2 million worth in 2018, about $2.75 million scheduled in 2019 and $487,700 planned in 2020.
In some cases, the capital projects are connected to work that is also getting federal or state grants, and a local match is needed to leverage the funding.
For example, the city is planning about $1.6 million from the issue this year to put toward a pedestrian bridge over the Fox River near RiverEdge Park, and a total of about $3.5 million during future years.
But that is a small part of an overall $14 million regional transportation project that includes developing more parking at the Aurora Transportation Center, relocating the bus pulse point there, and improving the entrance and exit onto North Broadway through changing two traffic signals. The pedestrian bridge is part of the project because it makes parking on the west side of the river usable for people who are going to the Transportation Center to ride a train.
The city received a federal Congestion Mitigation and Air Quality grant of $8.6 million, plus a $2 million grant from Kane County, to put toward that project.
Another project the city has planned for 2017 is putting $500,000 toward a $900,000 project to develop Mastodon Lake and Island at Phillips Park into an interactive playground and information center.
The city has received a $400,000 Open Space Land Acquisition and Development grant for that project.
Other projects the bond issue would go toward are: Construction of Fire Station 7 in Lincoln Park on the West Side; purchase of a new aerial truck; construction of a new entrance to the Route 59 train station; additions to the city's optical fiber network; the two-way conversion of Galena Boulevard and New York Street downtown, the last step in the one-way street conversions the city has been doing for several years now; a traffic signal at Galena Boulevard and Smith Street, as part of the two-way conversion; and some property acquisitions.
Not everyone was convinced the issue made financial sense for the city. Alderman Judd Lofchie, 10th Ward, said he was concerned that down the road, the bond issue would affect the tax rate, and "residents elected me to keep taxes low."
He said he thought the $5 million in interest was too high.
"I don't think this is a wise more for us," he said.
He was the lone vote against the bond issue.
Lofchie's predecessor, former Alderman Lynne Johnson, spoke to the council and raised serveral concerns she had previously voiced about the bond issue. She said she feared the list of capital projects was filled with too many "wants" and not enough "needs," in particular the pedestrian bridge over the river, and the interpretive center at Mastodon Lake.
But city staff members pointed out that those projects are examples where the city has to match federal or state grants. Quoting Ken Schroth, the city's Public Works director, Alderman Tina Bohman, 1st Ward, said the city is getting about $30 million worth of work from the $16.5 million in the issue.
"It's not as if we're taking $16.5 million and throwing it down a hole," O'Connor said. "We are getting something tangible out of it."
