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Committee approves $52,950 arbitrage payment and $72,900 temporary generator design bill for pumping station
Summary
Waukegan's finance committee approved payment of up to $52,949.79 to the U.S. Treasury related to bond arbitrage and authorized design work (not to exceed $72,900) for a temporary diesel generator at the Gmore Pumping Station to prevent pressure loss during power failures.
The Finance & Purchasing Committee on June 1 authorized two finance items brought by staff: an IRS arbitrage payment tied to the city’s Series 2020 water and sewer revenue bonds, and a design bill to install a temporary standby diesel generator at the Gmore Pumping Station.
A motion carried to approve payment to the U.S. Treasury in an amount not to exceed $52,949.79 related to bond arbitrage. Finance Director Juan Garcia explained that when the city refinanced bonds in 2020 and received proceeds, there is a limited time frame to spend those funds; due to COVID-era supply delays the city retained proceeds longer than planned and earned interest above the allowed threshold, triggering an IRS penalty.
The committee also voted to approve a design bill proposal up to $72,900 for phase-one installation of a temporary diesel generator at the pump station to avoid an extended loss of pressure in the Waukegan water distribution system if a power failure occurs at that site. The temporary generator is intended to remain until automatic transfer switch (ATS) and permanent equipment can be furnished and installed on the permanent generator.
Both measures passed on committee roll calls; finance staff said these actions are intended to preserve utility service continuity and resolve an IRS compliance liability.
Outcome and next steps: The arbitrage payment will be submitted as authorized; the generator design work will proceed under the approved not-to-exceed amount and be coordinated with the water utility to minimize service interruptions.
