Politics & Government

St. Charles Eyes Refinancing of 1st Street TIF

Aldermen gave nod to $27 million bond issue, which heads to a formal City Council vote later this month.

The St. Charles City Council later this month will consider formal approval of a $27 million bond issue to refinance the debt for the 1st Street Tax Increment Financing District and to provide $1.9 million to finance separate projects, including infrastructure improvements.

Aldermen, meeting one week ago as the City Council Government Services Committee, voted to recommend formal approval of the bond issue, which city Finance Director Chris Minick said will save the city about $1.5 million annually in interest payments in the near term, through 2027.

The $27 million bond issue, Minick said, will refinance the city’s outstanding 1st Street TIF debt, which stands at $28.5 million. “We’re taking advantage of lower interest rates, compared to” interest rates that were in place when the TIF was established, just before the start of the Great Recession.

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The bond issue extends through 2039, however, and Minick said the city’s near-term savings would erode beginning in 2028. However, he emphasized, the city believes that economic conditions will improve and spark new development before then, which should ensure that the bonds are retired before the long-term costs mount.

The $1.5 million annual savings, he said, will ease the burden the TIF is beginning to place on city’s general fund. Minick said that until this point, the increment increases in property taxes within the TIF have paid the interest on the TIF debt. But with the redevelopment project stalled, the increment won’t grow quickly enough, which would require continued general fund payments. The refinancing will avoid that, he said.

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The bond issue also will provide the city with $1.9 million in capital for utility unprovements in the 1st Street Redevelpment Project area as well. The city already had budgeted money for that work, which includes electrical improvements, water system upgrades, and improvements to the sewer lift station. City Administrator Brian Townsend, in an email Monday morning, explained the work is not part of the 1st Street project.

The City Council is expected to take up the issue formally in the coming weeks.

Editor's note: Earlier versions of this story incorrectly assoicated the $1.9 million in utility improvements with the TIF. Townsend said Monday that is not the cast: "The $1.9 million is for: enhancing the city’s electric system located at the former Little Woods School site and replacing a failed substation transformer
engineering for the city’s elevated water tower No. 3 and replacing a lift station at the Royal Fox Subdivision."

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