Blue Island Council authorizes public hearings on $11.5 million water infrastructure financing plan

Blue Island — The City Council on Tuesday authorized public hearings and engagement letters for a proposed two-part financing package that would raise up to $11.5 million for water-system work, including recoating water towers, cathodic protection and a facility-hardening plan.

The financing move follows an Illinois Environmental Protection Agency notice that required the city to "recoat, paint and reevaluate" its tanks and related structures, the council heard during a lengthy presentation from Public Works Director Mike Schroeder and the city's accountants and bond advisers.

The council approved three related measures by roll call votes to begin required public hearings and to engage bond counsel and financial advisors. Each measure passed on unanimous recorded votes (6 ayes). Those votes set in motion a timetable the city said it must meet to access favorable bond-market rules this year.

Why it matters: City staff said the work is mandatory under Illinois EPA guidance and time-sensitive because only a limited number of contractors do large tank sand-and-recoat jobs and scheduling can push repairs out. Officials said delaying bids or funding could expose the city to regulatory penalties and higher costs.

Public Works Director Mike Schroeder outlined the immediate scope: the Thornton Tank, the Highland Tank, the Highland ground reservoir and the Vincennes pumping house, plus cathodic protection and structural work identified in a recent inspection. "The Illinois EPA made us aware that it is time again to, recoat paint and reevaluate check structure and let us know," Schroeder said. He described the work as "a 2 to 3 year project" because portions of the system must be taken offline for multi-week repairs.

City accountants and advisers described the financing structure the council is being asked to authorize for public hearings. John Kasperic, a CPA working with the city, told the council "the city has the ability to issue approximately $1,500,000" under the municipal limit for a general obligation (limited) bond tied to the city's equalized assessed valuation. Kasperic and a bank partner said the remainder of the package would be structured as an alternate revenue bond that must be repaid from the water utility's revenues rather than the general levy.

Officials said the full financing package under discussion would total about $11.5 million. Roughly $8.7 million of that is expected to pay for the towers, cathodic protection, main meters and an initial facility-hardening scope; an estimated $1 million line item on staff materials showed the facility-hardening estimate as tentative. Staff also noted a separate, forgivable funding pot for lead service line replacements — roughly $2,000,000 expected this year — would be pursued in parallel but is separate from the towers project.

Council members pressed for timing and cash-flow detail. Schroeder and Kasperic said the physical work and contractor payments will be spread over two to three years but a funding commitment is needed now to secure contractor availability and favorable market terms. Kasperic highlighted a bank-qualified threshold in tax rules that favors issuing under $10 million in a given year; that constraint was part of the reason the team proposed splitting the financing into two issuances and scheduling public hearings now.

Council action and next steps: The council approved two ordinances to set public hearings for the limited-tax (general obligation) bond and an alternate revenue bond and approved a resolution to engage bond counsel and placement advisors. The motions and roll-call outcomes recorded six ayes on each item. With those approvals the city will publish required notices and set hearing dates; a 30-day holding period and other statutory steps were described as part of the timetable staff must meet to close on the first tranche this year.

Service impacts and security: Staff said properly performed tank recoating and coordination with hydraulic modeling should avoid customer service interruptions and preserve water quality. Schroeder and staff also discussed facility hardening and security measures (cameras, fencing, cyber protections) urged by EPA guidance; the hardening line item was described as an estimate to be refined as the project advances.

Costs and borrowing: Kasperic and the bank team explained interest-rate projections shown in the council packet (approximately 4.95% in the materials) and described how the city could invest bond proceeds in collateralized, federally backed accounts until funds are spent, narrowing the net borrowing cost. The council and staff discussed the timing tradeoffs of borrowing less now versus capturing current market conditions and contractor availability.

What the council decided not to do tonight: No final bond sale or construction contract was approved; the council only authorized the public hearings and engagement of counsel and advisers so the city can proceed through statutorily required steps. Detailed ordinances and borrowings would return for vote after the hearings and any additional council direction.

Council members said they want continued updates on timelines, staffing impacts and project phasing as the city moves through hearings and toward eventual construction contracts. Kasperic's team and the public works department were tasked to return with final amortization schedules and refined project estimates ahead of a vote to issue bonds.

Ending — timeline note: Staff indicated some bond-closing steps are on a tight calendar this fall to preserve bank-qualified status and meet contractor availability; a portion of the financing was targeted for closing by early December, with remaining tranches to follow in a later window subject to required public notices and hearings.