The Aurora City Council is set to vote next week on a $58 million bond issue to provide the city’s contribution to the Hollywood Casino-Aurora resort project.
Aldermen meeting as a Committee of the Whole Tuesday night moved what is known as a parameters ordinance, setting up the rules surrounding how the bond proceeds will be spent and paid back, to next week’s regular council meeting.
The issue will be on unfinished business. If the full council approves the ordinance, the city would look to sell the bonds by the end of February, according to Chris Minick, the city’s chief financial officer.
The bond issue was anticipated as part of the redevelopment agreement the city approved with Penn Entertainment, Hollywood Casino’s parent company, in October 2022.
Penn intends to build a $360 million casino resort along Farnsworth Avenue and Bilter Road, near Interstate 88. Aurora agreed to pay $50 million as an advance to Penn as part of the deal. The money will be paid back by Penn to the city through property tax payments over a period of 20 to 22 years, depending on the length of the bonds, according to Minick.
To facilitate the repayment, the City Council earlier this year approved a tax increment financing district on the casino property. The increment will provide the money to pay back the bonds and interest. If the TIF district does not raise enough money – estimated at $5.2 million a year – to make the payments, Penn Entertainment has agreed to make the payments.
Minick pointed out that right now, none of the money involved exists. The money for the payment to Penn does not exist until the city sells the bonds, and the money in the TIF district to pay those bonds back will be wealth created by the casino project.
“In other words, without this development, the funds do not exist,” Minick said.
The reason the bond issue is for $58 million is so the city will have enough to make the first-year bond payments while the casino project is being built.
Mayor Richard Irvin asked Minick during this week’s meeting if “the taxpayers of Aurora” would be “affected by this whatsoever.”
“They will not,” Minick said.
“The taxpayers will never pay a dime towards this,” Irvin said.
Minick said the city is estimated to have to pay back $94 million over the life of the bond issue, depending on market fluctuations. The city will include an option to call the bonds between eight to 10 years out, paying it off early.
Typically, major bond issues are often reissued during their life when the market could command a lower interest rate.
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