Finance Committee - Regular Meeting

Okay. I'd like to call

the order. The city of Joliet Finance Committee meeting here Tuesday, May 20 at 05:30. In attendance for the committee meeting is Councilman Larry Hug, myself, Pat Mudran, and Sherry Reardon has a conflict right now. Hope to join us later. First order of business would be to approve the minutes from April 15. So moved. I'll second that. All in favor? Aye. Any opposed?

Same sign. Thank you very much. Citizens to be heard on the agenda. Seeing none, we'll move ahead and go right to our agenda items. First agenda item is award of contract for the insurance services for general liability, workman's comp, property and casualty coverage to Alliant Insurance Agency in the amount of $40,500. Armando, Kathy, either one of you two wanna speak on this?

I will. Yes. Thank you. Good evening. As you did mention, we did have an RFP for the a new broker coming in for that purpose of liability workers' compensation as you mentioned. We did have four people that or four companies that came out, Alliant, Arthur Gallagher, Gaylord Insurance, and Marsh. We did an interview with all four of them. Once that process was done, we did, sit down and converse about who we seem to like better and who had a better presentation and what they could do for the city. At the end of the day, we decided to go with Alliant. I know that we have been with Gallagher for quite a long time.

They just seem to be able to talk and produce a little bit more than Gallagher has in the past, so we decided we should move forward with them. As you mentioned, the amount is 40,500. They are a little higher than Gallagher, but in the long run, I think that they would be much better for the city.

And at this time, you do not do they have recommendations for what insurance carriers we would be using? Are we staying with the same carriers? Or that hadn't been discussed That has not

fully been discussed. Obviously, as you know, we have a very small amount of people who are actually in the municipality when it comes to insurance. They did mention that they have worked very well with the companies that we have. If we are happy with them, we could keep them, but they will shop around to see if there's anything better. The truth of the matter is, as you know, being it's so small as it is, I believe that we might end up with one or two of the same companies we already have at hand. And that renewal is August? It would be August 1. It ends, what is it, the month before that? July. July 30. Sorry. We got it.

I understand. So their bid for the 40,000 is on what additional services they're gonna be able in loss expertise that they're gonna be able to offer to the city and the staff?

Right. So the 40,500 is a flat service fee. They do have other programs that they have for us. They they brought a full team. They introduced us to everybody that they would be able to work with.

At that point, instead of us going out and hiring out other companies to help us with safety, for example, or, for flagging and other, different objects that we need for the city under safety and for insurance purposes. They would be able to provide that because it's already in house. They did bring a gentleman that that's all he does for the city. He would be specialized in flagging and stretching and in any kind of training that we would need for the different jobs that the city does. Obviously, water, roadways, they all do something different. Some of them are interchangeable, but they need this special training for them. They would be able to help us with that.

And I can assume they gave you a list of some of their current clients and you checked with their satisfaction?

Yes. They did. They have quite a few of them. One that did stand out, which is one of the larger ones, was Will County. They had that as one of their main companies. Will County being one of the larger, I mean, counties in the area, they do handle them very well. I can mention a couple other ones that we have. They have the the Village Of Donors Grove, Crest Hill, City Of Chicago, DuPage County, Naperville. Those are just some that they do have. Again, I think Naperville and Will County are probably the ones that are gonna stand out a little bit outside of Chicago.

Obviously, Chicago has its own its own entity. So, I mean, for us, I think that they would be very well. Speaking to other municipalities that I done in the past, for example, Downers Grove, I did speak to them in the past and Naperville. They did have them. They were very happy with them. One of the smaller communities that had them also had Gallagher at one time. They did speak about how they switched over and were very pleased with Lyon.

Can I assume there've been with the county of Will for more than just one year?

Yes. They've there for quite a while. It's been more than five years, my understanding. So they are doing very well with them. They are very well liked. Okay. They've been with, Downers Grove in Naperville for a number of years as

well. Larry?

Yeah. Now you mentioned you're saying that they offer or Gallagher doesn't offer some additional services. I'm sorry? You said they offer additional services not offered by Gallagher? Flying?

Are able to do loss forecast forecasting, for example. They are able to work with our legal teams in special circumstances with advisement on different issues that might come up and that we might face. That was something that we had not dealt with with Gallagher in the past. So that was something that did catch our attention. Obviously, that's something that would be very beneficial for the city at a much cheaper cost because it is already with the company Alliant.

As part of the 40,500?

Yes. And they also have a 99% retention rate. I did forget to mention that. So with everybody that I mentioned earlier, they have been able to keep everybody at 99%. That that's a pretty good number.

It's a very good number.

I see the other ones that were interviewed. Marsh and Clinton had a $50,000 fee, and so they're already high even if they have or higher if they have the same. So what was the 10%?

The fee The the what would the Gaylord, you mean? The 10%? That would be the 10% of the premium fee. So, obviously, at that point, it's not a flat cost. It would be with they would get paid by certain savings that they would have for the city. Obviously, we don't know what those savings could actually be. We don't know what kind of year we're gonna have. That's never something that we know that's gonna happen. So at the 10%, we weren't very happy with that amount because, obviously, we just wanted to have a fixed price, something that the city has had for multiple years now.

And we're talking about the premium for what? The liability and PNC? Or

Yes. For for all of them as far as the

For all the policy. Yeah. All the policy.

As far as yes.

And so what did you figure out what that was just so we knew? Under our current premiums, what it would be?

I did not. I'm not gonna lie to you. I did not. That's something I could get a number for you if you need me to.

And what you're saying is it's not fixed over the years, that next year when the premium goes up, their fee goes up.

Right. Yes. That's normally what happens. Yes.

Right. And how is so you were saying Alliance gonna offer additional services. I'm curious if it I didn't catch if it's for the 40,500. You our honor, you specifically said something to do with safety?

Yes. They have a safety person that it's already in house that they are able to bring out to provide us with different help. Obviously, they also have I can read some of the things that they have. They have a human resources library that they will provide for us at a free cost, safety with safety library, certificate of insurance tracking, incident tracking and trending, customized webinars. The webinars are a very big thing, obviously, because that's something that we use quite a bit. We do use them for our own ability to help the comp the city with issues that might come up. So those are very helpful. That's something that's already built in. They would also help us with part

of the 40,500. There's no additional fee?

No additional fee. That is part of the, of the, cost.

And then the last question I had is switching to Alliant. If any, what effect will it have on our health insurance and claims for health insurance?

There would not be any at that point. Everything, they start the transition. If it gets approved today, we would let them know. They would then start the the process of dealing with Gallagher, myself, and getting the information that they need to make a smooth transition without any hiccups.

Excuse me one second.

Right. But at the same time for the health Alright. It's gonna be a little Which

comes up at a different time.

Right. But the as far as that but I was gonna mention, thank you. Go ahead. That the health, that's gonna be a different broker.

Alright. It won't be a lion?

No. No. No. No. Obviously, that's just for the workers' comp.

So a lion doesn't participate in processing claims for health?

No. No. They do not. No.

I did look to answer your question, last year's premium was a million 8, so 10% would be a 180,000.

Okay. Alright. That's it. Amanda, you mentioned certificate tracking. So as you know, I think we all know that all of this work that's being done with the sewer and water, all these contractors, you get a certificate of insurance. Were we tracking tracking that that through through the the bid bid process, or would this be something that they would then potentially track for us, or what type of certificate tracking

Well, the certificates that I provide on a regular basis are for different training for different locations that we would be participating insurance certificates. Right. That's that's that's something that they would help me greatly with because, obviously, at the moment, that's something that I have to provide for all the departments on a regular basis. Sure.

What kind of certificates would they be tracking then? I I was kinda thinking the same thing as you have.

You like They they they would also be these. Obviously, at that point, I would be able to provide them with the certificates that I've already we've already provided for all for the fire department, the police department, water.

I think

you might always use

the word certification rather than certificate. I'm sorry? Would you rather be using the word certifications that they would be tracking rather than Larry and I think of certificates. Typically, we have to get the certificate of insurance showing you had coverages. Are speaking

of thinking of COI, is a different thing, yes. I think that with them, the certificate of insurance tracking is more for managing the COIs and controlling the liability and risk that would be involved with the action that the city for needs to training purposes, for example. Or if we are trying to bring in a group for a concert or something, we have to be able to provide that information for them. I think that what they're doing is just tracking something a little bit more advanced than what I'm talking about. My apologies to for that.

No. You so you're just trying to confuse me then.

Yeah. Pretty much. You know? I guess I'm late. It is a late day for me.

So, like, certifications, you know, we have certain mandated certifications for the water department and sewer department from the federal EPA. Right?

Correct.

Are they gonna track those certifications?

I don't wanna say yes, but I will ask that. I believe that that is something that they are able to do for us.

What is that part of the 40,000 line? I'm trying to get at it.

No. No. That is part of it. That would still be part of it. They were very forthcoming in saying that most of the stuff that they are able to provide us that I've spoken about is part of the 40,500. We didn't nothing that they showed us went above the 4 or 5 45 40,500 that they offered us, and then we thought was a very good value.

And where are they out of? Do you know?

They are out of multiple locations. They're nationwide, but they do have a main office in Chicago that we are able to deal with. So if we ever needed them to come down right away, we would be able to make a phone call out, and they would be able to show up. Okay.

That's all I have now. K. K. Next is an ordinance approving one or more supplemental intentions and authorization authorizing the insurance of not to exceed 145,000,000 water works, sewage senior line revenue bonds to the city of Joliet, Illinois.

That was a

lot. A lot for me to say.

Yeah, so I've got Anthony Masselli from Spear Financial here. He's gonna give a brief presentation on the financing model or financing plan for the water and sewer improvements. So this bond is related to that to help fund improvements associated with the city being part of Grand Prairie Water Commission and then city improvements. But with that I'll turn it over to Anthony.

Thanks Kevin. Good evening. Nice to see you again. So I'm gonna go over, as Kevin mentioned, the financing plan for capital cost related to the water and sewer system. Please stop and ask questions.

I think you should have packets in front of you there that I'll walk through and I'll also have it on the screen. Starting off just looking at the annual project cost. This is annual project cost related to water and sewer system. CIP or capital improvement as well as the water main replacement project, the wastewater treatment plant renovation, improvements related to Grand Prairie Water Commission development costs, then also improvements to the Joliet internal system to accept water from Chicago through Grand Prairie. What this lays out is year by year looking at those costs as expected through 2032.

As you'll see, '25 through '29 is really the brunt of the capital costs averaging about $200,000,000 a year. What we've noted here, if you look through each categories of costs in the parenthetical we just note, and this will come up later, where the expected funding source from each of these is, so you can see system general capital is expected to be funded just through cash, water treatment plant expansion is expected to be funded through debt. Water main replacement through debt. Joliet Improvements to accept Chicago water debt. And then Grand Prairie water development cost also debt funded.

Overall through '25 through 2032, we're expecting just over $1,200,000,000 between all of these capital costs over that period of time.

Anthony, the Grand Prairie, this is all our cost? We're not getting reimbursed from Yep. The other

The city is paying for the development cost related to the Grand Prairie Water Commission, you're gonna get not directly reimbursed, but you get a and somebody better than I can explain how the credit works, but you'll get a credit in the bill that you're paying to Grand Prairie for the cost that you're upfronting. Similar to if you were to put direct money into the Grand Prairie system.

But this number you have here would be the potential net number or just the gross number?

That is that is the the full amount that you're paying. We're paying,

yeah. Exactly.

So just to jump in, the Grand Prairie setup is whether we held the debt or cash funded, so if we didn't do this and it was built into the Grand Prairie, instead of us paying our own debt and paying Grand Prairie, we would have just paid Grand Prairie roughly probably more because our debt is cheaper. Because we've issued it sooner. Right. So

And how much of and that's probably not for you, Anthony. How much of this is part of the 1,200,000,000.0 original estimate for the alternative water switchover?

Are you talking the Grand Prairie's 1.2? Or are

The water improvements there. I know the sewer improvements are part of, you know, much has to do with the alternative water source switchover that we're doing?

I don't know if I can.

So related to right now, I can't speak to what it was looking at or what we were looking at before, but just with the numbers on the Related to the alternate water source, it's specifically it's the the last three lines here. Yeah. Water main replacement, Joliet improvements to accept Chicago water, and Grand Prairie water development costs. Those last three line items were the essentially the water source project. It was addressing the water main and water loss, and then Joliet Improvements was something we haven't started yet, but is going to be your internal improvements to accept the water, and then finally the development cost.

One more thing, Anthony. The water main replacement, I realize it has to be paid, but we would have had to do this regardless.

When we did the initial evaluation of the alternatives back in 2020, the water main replacement was a component of the Lake Michigan project because reducing the nonrevenue water is a requirement of our Lake Michigan allocation. So that those costs were identified at that time and incorporated into that alternatives evaluation.

Okay. So, I mean, I understand why it would be I mean, it's gotta be someplace, but we would have been doing this. We'd be we would regardless. So, I mean, I don't know if it's fair to be in here. That's all I'm saying.

Yeah. I mean, we would not be doing it to the magnitude that we are doing.

And it's in here because this is this whole sewer and water system. Right? You've got cash funded items, which is just, things break, we fix, that's in there. So this was just to give you a complete picture of the sewer and water system. The city's real only debt is sewer and water and so we wanted to make sure we weren't holding anything back that this is everything related to sewer and water.

And and with that respect, it would be unfair then not to have the replacement in there.

Correct. I

mean, we're we're gonna replace them somehow.

Right. Because the users will pay for all of this.

Right. And to Allison's point, the speed at which you're replacing water mains has accelerated

And the what I was getting at, Allison, I you know, apparently, didn't clearly state the question. For the Grand Prairie water development cost, the Joliet improvements to accept the Chicago water and the water main replacement debt, those are all part of the switchover.

Yeah. So

And so how does this affect? Are we still on budget? Is this is this in addition? Is this part of the estimate?

Yeah. This when we have been doing our when we do our water and sewer rate projections, we've been incorporating all of all of this work. So when we did the rate updates two years ago, we were already tracking all of these costs as part of that overall water and sewer rate study assessment. So we presented the so the overall commission budget is the $1,450,000,000 of which Joliet's responsible about $800,000,000 So I'm not sure if we're answering your question because I'm not sure where the 1,200,000,000.0, what you're

referring I think the short

answer Well, the 1,200,000,000.0 is what they estimate the total will be between now and 2032.

Of all sewer and water improvement.

Oh, it's all water and sewer improvements. Yeah.

Yeah. But is the bigger numbers you see for for Grand Prairie and so forth that eventually go down or go away, those are part of the original estimate to to do the Grand Prairie?

Yes.

So are we still on budget is what I'm asking?

Yes.

Okay. Alright. That's what I need to know. Because you're just here to actually not talk about our budget, talk about how we're going to take care of the debt we want to incur. Correct. Right. Thank you.

So in order to fund all of these programs, we're looking at a number of different funding sources. I just put a quick summary of the funding sources that we're considering and using in different stages of this financing plan. Starting on the left, on the local level, what the city can provide, there's cash, which is just normal. Set user charges, you collect those fees, and then you're able to do ongoing capital improvements with those funds. Those are obviously limited by, you know, availability of those funds and then your future liquidity needs.

You have revenue bonds. You have the ability to issue revenue bonds, which we'll be discussing tonight. Revenue bonds are flexible in terms of issuance. You could issue them rather quickly, three to four month issuance process, go up to a forty year term. You can sculpt the repayment, meaning you can put principal in different years accomplish the overall goals of the financing.

Current rates for a thirty year revenue bond for the city would be about 5% roughly. Then what we haven't assumed in the financing plan right now but very likely will be at some point, is some sort of short term borrowing or line of credit. This could be used as an interim funding or bridge financing before long term funding is taken out. The reason we're not assuming it at the moment is that short term rates are relatively high. We're looking at 4.5% for a one to two year issuance.

Should that start to come down, we'll begin investigating that as a means to save interest cost for the city. From the state level, there's IEPA loans, which the city has been successful in getting over the years. Loans must be awarded by the state, so there's some limitation on how much we're able to get depending on how much the state's availability is. However, that said, the interest rate is very low. Right now, that rate is at 1.87%.

The state resets the rate for new loans each July 1 to start their fiscal year, so we'll know what next year rate is coming up soon here. You can do a twenty or thirty year term with an IEPA loan, and the repayment is level semi annual debt service. There's no ability to sculpt that repayment. When the loan starts, it's level debt service.

So, Anthony, does the one point when we have a loan there, that 1.87 is for the entire term of that loan?

That's correct.

But it'll be reset this July for any new

That's correct.

Thank you.

Yes. On the federal level, there are WIFIA loans, which the city has executed too already. These are through the US EPA. The WIFIA loan program, it's a relatively long process, so it's not something that can happen quickly. They will fund up to 49% of a project.

The term is very favorable in terms of you could extend the repayment 35 beyond substantial completion of the project. And the current rate, it it's set off the US treasury rates. So right now, it's in that 4.8% range. So we're watching that to see how that transpires with US treasury rates. However, unlike the state loans, you do have the ability to sculpt repayment like a bond issue, so you can put principal repayment in certain years to accomplish the goals for your repayment. I also put on here grants on the federal level. No certainty as to if those are coming in and they're not assumed for the future financing.

Under local revenue bonds, you meant to say scoped. I was just trying to figure it out. Got to scope. Scope. Yes. We're missing a t. That's all.

Yes. There should be a t there.

And all you're saying there, what what that refers to in finances is we can talk about which years we wanna load the debt and pay this much or pay that little.

It's exactly right. Especially since we have these other financing mechanisms coming in that may or may not have that ability. You want to make sure that you're putting the debt where you can

Pay it.

Move it. You're moving it to so that overall, you're paying up a steady payment,

essentially. Thank you.

So to that, point, just our strategy on on this financing plan, starting with the IEPA loans is to maximize the use of the IEPA loans. So if the state has availability, we're we're taking as much in IEPA as we can get. It's lowest interest rate. It's the lowest cost of funds for the city. However, there is no ability to sculpt that debt repayment, so we have to be mindful of that as we take on other debt. And then utilize thirty year term loans for for all

new

IEPA loans because that cost is so low with the overall amount of debt the city needs to accomplish this. We're taking on the longest term we can. And the IEPA doesn't change the rate.

There's a cap on what you can qualify for. Right?

There is.

Yeah. And it's

And is that cap yearly, or is it over a five year period?

From my understanding, it's 30,000,000 a year right now. But they've changed that in the past, and they could change again. So but the city has been lucky in getting bypass funds after the fact because it has projects that are ready to go. Sure. Allison can talk to this more eloquently.

Yeah. The the the state has a certain amount of money each year they're able to distribute. And so then the cap is 20% of that available money. So it changes each year. But last year, as Anthony said, it was about $30,000,000 But as their fiscal year for the state starts to get closer to June, they have funds available.

So if another town didn't use their funds, we're able to come in and use those through the bypass program. So this year for our water main project, we initially thought we were only going to have $35,000,000 but we ended up getting, I think, close to $60,000,000 So we're being very strategic in how we advertise and bid our projects so that we can start we we we don't close our loans until, like, this year. Did it in March because that's when we know there might be other funds available. So It

seems to me we wanna do it would be great to do the entire project with those loans, but there's a cap.

Yeah.

But if it's up to you know, let's say it was million for the next five years. It may not be. We can't predict the future. So that means we could have 300,000,000 available if every year is as lucrative as the last year was.

Yeah. And we we we're really good partners with the state. They they know that Joliet has the wherewithal to administer these loans. So they typically are very they want to work with us. And so I think we are well positioned to get as much of the IEP money as available. The state also, we expected that pot of money this year will increase because the state itself is leveraging its debt that's in the program. But at a federal level, there's a portion of the money that has come from the federal level. And the president has announced that his budget would be cutting all federal funding for the SRF program. So that's something that is concerning, obviously, for us.

Okay. Thank you. So next is is WIFIA. These, again, are the federal loans. These represent the longest term principle in the financing plan. As I've mentioned, the city, and I'll talk through this a little bit, the city has executed two loans already at 3%, so that means a very long term principle that we're putting outstandings at a relatively low rate at 3%, which in this market is fantastic. We're also wrapping that around the IEPA loans, which we cannot sculpt, and the revenue bonds. With WIFIA, their interest rate is locked at closing. You do have an ability to re execute the rate as long as you don't draw on

the loan.

Loans one and two, which I'll talk about in more detail in a second, are locked in. That rate is locked in at 3%. Loan three, which we're working on right now for the Joliet improvement to accept Chicago Water. That'll happen this year. That rate will be locked. We are not intending to draw on that loan, and I'll talk about why and what the alternative is, but we're not intending to draw on loan right away. We're going push that off for two years in the hopes that we can re execute that loan and get it at a lower rate if rates drop. And if rates don't drop, if rates go higher, we've locked in our high rate. Should say, we've locked in the rate before it goes higher. We've hedged against an increase in interest rates.

The next is bonds. Again, this is the kind of always available funding source. We can always go to the market and issue bonds when we can't get those IEPA loans or when we've run out of WIFIA funding. This is going to fill those gaps between state revolving fund loans and WIFIA. We're trying to target the middle range of the repayment schedule with the bonds to level everything out. Mentioned short term. We'll potentially be used in the future to delay WIFIA draws if we can get a short term loan under what we're what we're paying on the WIFIA loans. We can then begin to take that line of credit if it's, let's say, at 2% instead of taking a 3% pull on WIFIA. So that's a mechanism for the future if rates cooperate.

And are we collecting our you know, being charged interest? If we if we don't draw on the WIFIA for three years, we we still have month you know, the the interest each.

No. You only get it's a drawdown loan program. You only get

So it's start kicking? Exactly. Got it.

That's the benefit of it. I mean, that's the true that's why we're putting it out as long as possible. We're only drawing when we need it. And if we get short term rates that come in lower, we'll draw on the short term instead of drawing on that WIFIA debt.

So if you have, like, a $200,000,000 WIFIA loan, you you you put it out for a few years, by the time you finally start to draw, you really only need a 100,000,000. Then

Yeah. You don't yeah. Absolutely.

Then you tell them, take the other $100,000,000 back, we're using the $100,000,000

100%.

Okay, thank you.

I'm going to quickly go through the plan of finance for each of the different projects that we identified in the first slide. For general system capital improvements, this is primarily cash funded as I mentioned. There are a few low interest loans, SRF loans from the state that we had gotten, as well as some principal forgiveness loans, 0%, things for mostly lead service line replacements. So that could happen more in the future, but it's not assumed. It's just assumed to have just cash funding going forward.

The wastewater treatment facility improvements are expected to be bond funded. Those won't come until probably somewhere between 2027 and 2029, so we have some time on that. With regards to water main replacement, so we closed WIFIA loan two in April 2022 at a rate of 3% to fund a portion of those costs. The total loan was just under $221,000,000 for WIFIA Loan two. We have drawn $33,200,000 to date.

We expect draw about a little over 147,000,000 from 2025 through 2027 for projects, and then we'll draw about 40,500,000.0 over that same period for debt service reserve funding. So as The city is issuing senior lien revenue bonds, you have to fund what's called a debt service reserve account with those bonds basically. It's an account held in trust for the benefit of bondholder. It's essentially equal to one year's debt service. If for any reason the city were to not be able to pay, the trustee can pull on that to pay the revenue bond.

It's a security feature and it adds to the rating of the issue and something we need in order to sell for the credit purposes of the bonds. Again, the city has been successful in obtaining IEPA loans for funding of water main replacements, some of these projects or some of these draws on WIFIA too haven't occurred and as originally planned and have been delayed to your benefit. So we're able to use lower rate IEPA loans instead of drawing on this WIFIA loan two.

I had a question about the WIFIA two. When you look at the WIFIA loan two, which was originated for 221,000,000 in in 2022 Yes. Is it allowed? Maybe it's not allowed because it seems like it would be smarter. Wouldn't it be smarter to divide that into four loans? So you you draw the first loan. Can you do that

or no? So the The way this works is I mean you could have at

the time.

Can have can

have You it. For this purpose, it'll work the same, I think, is what you're thinking. Because if we drew on 30,000,000 of it, only that 30,000,000 is outstanding. The only benefit of breaking it into different loans would be if we wanted to try to reset the rate on smaller loans.

That's what was

thinking. Yeah, but in this case it's at 3%. So we'd have to see the thirty year treasury come down very dramatically in the next couple of years, we found ourselves in a great position then.

It could happen even though it's unlikely. Certainly could. If it did go because it's one large loan. This one's done.

Yes. That's correct.

That's all I

was saying.

Yeah. Absolutely.

We do expect to issue revenue bonds for water main replacement not until 2027, and that's only if needed. Again, it's hinges on availability of state revolving fund loans and and other funding projects, but revenue bonds are anticipated in '27.

Okay. Thank you.

So for Grand Prairie Water development costs, we closed WIFIA loan one in April '22 at a rate of 3% as well. That loan was 87 about 87 and a half million dollars. We have drawn 49 roughly 49,000,000 to date. The city is actually working on another $5,000,000 draw right now. We expect that the remaining 38 and a half will be drawn for project cost this year.

So so one of the reasons we're talking about revenue bonds now is that we expect WIFIA loan one to be drawn completely in 2025. The next is the Joliet improvements to accept Chicago Water. So we are working right now on WIFIA loan number three. Will fund 49% of that project, which is just under $87,000,000. We expect to close that sometime in July or August of this year.

Current rate is again right around 4.8%. For that project, we expect revenue bonds to provide the remaining 51% of the funding, so there aren't any other funding sources for that. The 2025 revenue bonds, we will discuss, are gonna fund project cost through '26. So this we're doing this strategically so that we're not drawing on this WIFI alone for the reason that we are potentially able to then reset that rate. So we're gonna borrow for cost to get us over this kind of initial hump of projects, get us through this year and next year, and should the market cooperate and long term rates come down between now and then, we will be able to re execute this loan before we draw on it.

So that's the initial plan and something we're going to continue to watch. With the 2025 revenue bonds, these are going to fund three things. It's Grand Prairie Water Commission development cost through '26. It's going to be the Joliet system improvements required to accept Chicago water through '26, and then there's also gonna be a debt service reserve fund deposit. We expect the first interest payment to be January 2026, assuming an issuance in July here.

Principal will be amortized between 2034 and 2055, so roughly thirty year issuance, but starting a little bit later because of wrapping around the existing and expected IEPA loans. Right now the estimated interest rate is 5%. We're hopeful that will come down between now and July when we intend to issue. Expected par size is approximately $133,000,000.

One quick question too. The service reserve fund, that stays there for the duration of the bonds. Right? Yes. When the bonds are paid off, which could be twenty, thirty, or forty years, that money's still there. What happens at the end?

It goes back

to same. Okay.

It actually you you actually you'll use it to pay your last payment.

Got it. Okay. Thank you.

So this chart is the expected project debt service. So this is principal and interest of all of the debt for all of the projects that we've just discussed. The blue lines represent the expected debt service for the entire project from '25 all the way through 2064. The orange line that runs through there is the debt service that we expect after the issuance of the '25 bonds. So just as a kind of frame of reference from where we are now in 2025 with what we're issuing versus what's to come and the additional loans required to accomplish the project.

From a timeline perspective, we are reviewing the plan of finance right now and considering the ordinance and supplemental indenture for the senior lien revenue bonds. The expectation is to take that to city council on June 3 to approve the bond ordinance and supplemental indenture. We would price the bonds and close in July. We're also anticipating bringing the, ordinance and supplemental indenture for WIFIA loan free in July as well. I believe that will go to finance in June.

We would anticipate closing on WIFIA loan three in August. And then between January '26 and December '26, continue to monitor rates to see if we can reexecute with the loan to create a lower interest rate. So that's the immediate timing and then and and everything through '26. It's not anticipated we would need to go to the market again until '27.

And are these loan interest rates for these special specialized loans, with the they're dependent on the Fed's raising and lowering the rates too?

So when the Fed raises and lower rates, it's gonna have a direct impact on short term rates. It would be if you if you're looking at the thirty year treasury, that would be a better indicator of kind of where we would be on the WIFIA loan rate because these are such long term debts. That's what they pin it off of. They actually pin it off of what's called the the state and local government security rate or the slugs rate, which is just a index.

And we want to hope and pray for a great markets. The market itself and the treasury bonds are down.

That's what we want. We want treasury bonds down, especially in the long term.

Thank you. That

is all I had. Anthony, I realize that Spear has been an advisor here at the city for quite some time. Yourself? You've been

here? Yes. So I've been with Spear and working with the city since I started at Spear. I started at Spear in 2013. I've worked in public finance twenty years altogether. Obviously,

this is somewhat of a moving target. You and finance and Joe get together on a whatever basis to review all this or how does that work?

Jeez, how often do we talk, Kevin?

Probably at least weekly, if not more so. Okay. Yeah. We have structured meetings every two weeks. You know, either it's for Graham Perry or Joliet. Right.

And then some interim things.

Mhmm.

Yeah. Right. So as we all know, we have a number of partners in this who I'm assuming are going through something very similar. Do we have any idea how they're doing?

Anthony represents most of them.

We can't lose one or else we need to step up, obviously.

Yeah. It's a little bit of a mixed bag, I think. Sure. With the city's water main replacement program, obviously, that's a lot of work that needs to be accomplished. The others are just in different positions. Know, some have started at different times and instituted, you know, different revenue streams, but everybody seems to be on track and pushing in the correct direction. I could say that.

So as of today, we have no worries about that.

I worries. Have That's nothing that ever comes up that people have concerns about funding the project. I mean, even recently, Shorewood made a $20,000,000 cash contribution to, you know, to kinda prepay their debt. So that was a great development for the overall commission. It was able to allow us to delay some of our debt because we were able to utilize their cash that they contributed.

And I would think that some of the strength of Grand Prairie is borrowed from the strength of Joliet. And, the strength of Grand Prairie, because of Joliet and other considerations, also transfers to the other communities because they're part of the Grand Prairie. That's going to help them.

Yeah. I mean, it's a water commission based on the strength of its its six members, you really

The biggest and strongest being Joliet. Yeah. Okay. Yeah.

Okay. Thank you very much. You're welcome.

That was very good, actually. The only thing I would make clear, if anybody's watching or listening at some point, there's a big number for improving the water system. That was a long delayed process. We're not going to point backwards, but if it had been done, this is going to last for another the improvements another eight or ten or twelve years. Once we get there, you'll see a lot of this drop. And then you'll have just like we're doing with the roads right now. And then you'll see normal every twenty year. Am I correct in

Yeah. That's correct. I mean, definitely, the work we're doing right now is is very accelerated. We hope to then after this, so we'll replace every water main constructed prior to 1970. So then we'll be on track for a more normal fifty to seventy five year replacement plan where you're doing just that percentage of the system annually.

We weren't doing and for some people, you know, my age, Pat, your age, 19. Nineteen nineteen seventies over fifty years ago. So, yeah, we got a lot of

Easy easy there. Easy there,

mister Huck. So I just wanted to point that out so that, you know, they understand that this is this was kinda deferred and delayed improvements that would have been done like Pat said anyways, but we're doing it instead of at a 3% rate where we bumped it to almost 5% to try to meet the deadline with with the the compact. Correct?

Mhmm. Yeah. That's correct. And we'll go back down to, 1% after work.

After we

get caught up. Yeah. And we'll be, like I said, identifying those water mains constructed post 1970 that are prone to failure and replacing those.

Alright. Thank you.

That's all I

have, chairman.

Alright. If the two agenda item before we go to reports, I would think we'd need a motion for these, Larry, before we go to

Well, let me bring up there he is. I will make a motion on agenda items eight eighty five seventy nine and eighty five eighty seven, and it'd be sent to the full council with this committee's recommendation to approve.

I'll second that motion. All in favor? Aye. Aye. Thank you. Okay now Mr. Singh.

Real quick since we have less about ten minutes till counsel. No surprises on the monthly financial report. Revenues are and it's both expenses for all operating funds are in line with budgets or slightly better. The quarterly for the museum, they had just over 4,000 people in the last three months, visitors from nine countries and 12 states. Big work at the prison, state and federal grant work, funded work continues over there. Moving into travel expenses, while it's larger than normal, it does include both past and future travel for trainings, majority of that is for JPD.

Any questions? No. No. No. I'm I'm good. Okay. Position summary.

Very quickly, since we are short on time, local four forty right now has 14 open positions. Other positions we have are seven open right now. Normally, as you know, dispatchers have always been the hardest ones that we have to apply. We do have them down to three positions right now so that we are moving in the right direction for that. I know that's something that you've normally ask about. We are moving forward with that very well right now. Okay. And as always, the other positions are always just a moving positions within the city.

Questions? Or

No. No. Not at all. For that, Larry?

Alright. Moving then for new or old business, not for final action or or recommendation. Nothing. Anything for you? I have I have nothing. This would be a time for the public to comment and anything that was on the agenda or any other city item you'd like to talk about. You have four minutes if anybody does. If not, we'll move on for adjournment so the regular city council meeting can start

Motion to adjourn.

At 06:30. I'll second that. All in favor? Aye. Aye. Thank you.