Finance Committee

Village of Niles Special Finance Committee Meeting Council Chambers October 27, 2017 8:00 a.m. Call To Order Chairman LoVerde called the meeting to order at 8:02 a.m. Roll Call Finance Director Martynowicz called the roll for Committee members: Committee Members Present: Chairman Joe LoVerde, Bob Callero, John Johann, and Paul Nielsen Committee Members Absent: Al Weel Village Staff Present: Finance Director Jeff Martynowicz, Village Manager Steve Vinezeano, Public Services Director Mary Anderson Others Present: Bill Balling Morton Grove/Niles Superintendent, Larry Thomas Stanley Consultants, Kevin McKenna Speer Financial, Anthony Micelli Speer Financial, Terry Liston Morton Grove Village Attorney, Ralph Czerwinski Morton Grove Village Administrator Old Business None Approval of Minutes None Accounts Payable Approval None New Business None Morton Grove/Niles Water Commission Financing Update Steve Vinezeano introduced the MGN team. Steve stated the projected has an estimated cost of $99 million and could save the Village of Niles $126 million over 40 years. Steve introduced Kevin McKenna from Speer Financial. Kevin McKenna explained the financing options between the IEPA loans and Bonds stating it’s important to get the cheapest money available and stay flexible. Kevin proposed a 30 year financing plan between IEPA loans and bonds. Alternate revenue bonds were explained by Kevin and said it would be an optimal use. Kevin explained the next step in financing would be a negotiated bond sale where an RFQ would be utilized to select an underwriter. That process would start in late November. Joe LoVerde asked to see financial figures and Steve Vinezeano responded that a pro forma would be sent to the committee. Bill Balling stated that the assumption of a 2% rate increase from Chicago was assumed in the analysis. Bill explained the proposed Evanston contract and the assumed rate in the contract and what the parameters are within the Evanston water purchasing contract. Joe LoVerde asked how the savings would begin on the first day. Jeff Martynowicz answered that the bond interest rate of 4% along with the decrease in the purchase rate from Evanston would be lower than the annual costs we pay to Chicago for water. Joe LoVerde asked if the credit rating of the Village of Niles would be affected. Kevin McKenna explained the bonds are a liability of the water commission. Joe asked if the water commission could levy a property tax. Kevin explained that the  October 27, 2017 Finance Committee bonds would be General Obligation Alternate Revenue bonds where a property tax would back up the water revenues of the bonds. These bonds are referred to as double barrel bonds. Bob Callero asked the cost of the project and if we use any of Skokie’s infrastructure. Steve responded the cost is $98.3 million and no to using Skokie’s infrastructure. Ralph Czerwinski explained the difference between how Skokie’s water is delivered currently and how water will be delivered from Evanston through Skokie and how it will be delivered to Morton Grove and Niles. Terry Liston explained the state statute that allows the MGN to install pipes in Skokie’s roadways. John Johann asked if 30 years was the maximum borrowing length and if a model has been done with IEPA loans and bonds to specify the best rates. Kevin explained 40 years is the maximum length on a bond issue and that the repayment structure would be level. Also, once the IEPA affirms how much money is available for the project he will put together the analysis. Joe LoVerde asked about the construction timeline and how it was bid. Larry Thomas explained that there are 9 construction contracts for different parts of the construction process. Larry explained the construction timeline and estimated date of completion which is estimated to be in December 2018. John Johann asked what interest rate makes the project not make sense. Steve explained that 5% is the maximum rate to make the project work. Paul Nielson asked if the bonds were zero coupon bonds and why the difference in interest rates between IEPA and bonds. Kevin McKenna explained the bonds were serial bonds and that the bond interest rate is higher due market conditions and term for interest rates on bonds. Paul Nielson asked if it would be advantageous to bring Skokie into the commission for greater purchasing power. Terry Liston stated that Skokie is currently working with Evanston directly that they were approached about the project years ago and that Skokie was comfortable with their current system. Steve Vinezeano explained the history of Niles, Morton Grove and Park Ridge working together to purchase water from a different source. Bob Callero asked what happens if both communities could not meet their obligation to pay for the water. Terry Liston explained that the bonds would be structured to be backed by property taxes if that happens. Bob asked about the condition of the Evanston water plant. Bill Balling explained that the plant is older but has outstanding maintenance. Other Business None Public Comment None Executive Session None Adjournment: Motion to adjourn was made and all concurred at 9:24 a.m. 2  October 27, 2017 Finance Committee 3