R99-199 AUTHORIZING THE REALLOCATION OF 1999 VOLUME CAP

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LEGAL DEPARTMENT MEMORANDUM No. 99-21 November 9, 1999 TO: Honorable Mayor and City Council Members FROM: Steve Garman, City Manage Beth B. Couter, Finance Direct John W. Couter, Corporation ounsel RE: Highland Park Bond Cap Reallocation As the Council is aware, cities in Illinois are limited in issuing revenue bonds to finance purely private activities (that is, non-public profit-making activities). That limitation is related to the population of the city - Decatur, for example, can issue no more than approximately Four Million Dollars ($4,000,000) in such bonds per calendar year. It is possible, however, for one city to allocate all or part of its "bond cap" to another city so that the second city can assist in financing a factory, housing development, etc. In the past, Decatur has been asked to allocate some of its "cap" to help other cities with their private development activities. Earlier this year, Highland Park allocated a portion of its cap to Decatur for the purpose of helping finance a proposed assisted living facility here. At this time, however, that facility is not yet ready to proceed, but a similar facility in Benton, by the same developer, is ready. That developer is asking Decatur to reallocate a portion of the previously allocated Highland Park "cap" to Benton, so that Benton will be able to issue the bonds needed for the project. Since the "Highland Park cap" is restricted to use for the proposed assisted living facility, Decatur has no current use for it and its reallocation to Benton costs the City nothing. Next year, after January 1, Decatur will have all of its Year 2000 cap plus the remainder of the "Highland Park cap" available to assist this developer (if needed, and if the Council so decides). Staff recommends approval of the Resolution authorizing reallocation of "bond cap" to Benton. JWC:ps cc: Wendy L. Morthland Steven G. Jones