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6.11 Motion to waive the rule requiring two readings of an ordinance and adopt AN ORDINANCE PROVIDING FOR THE ISSUANCE OF NOT TO EXCEED $10,000,000 GENERAL OBLIGATION BONDS, IN ONE OR MORE SERIES FOR THE PURPOSE OF FINANCING THE COSTS OF CERTAIN CAPITAL P
IL Mr�GauC'd'+rt;�iect\V Subject Motion to waive the rule requiring two readings of an ordinance and adopt AN ORDINANCE PROVIDING F• OF NOT•1 EXCEED $10,000,000 OBLIGATION BONDS, IN ONE OR MORE SERIES FOR THE PURPOSE OF FINANCING THE COSTS• CAPITAL* PROVIDING FOR THE LEVY AND COLLECTIONOF A DIRECT ANNUAL TAX SUFFICIENT • PAY THE PRINCIPAL OF AND INTEREST ON SAID BONDS, AND AUTHORIZING PROPOSED SALE • • \ • ■ ■ ► ■ • Meeting December 7, 2021 - REGULAR MEETING OF THE MOUNT PROSPECT VILLAGE BOARD - Fiscal Impact Dollar Amount Budget Source Category CONSENT AGENDA Type Ordinance Information The accompanying parameter ordinance is presented for the Board's consideration. The ordinance will allow the issuance of $10,000,000 General Obligation Bonds to be used for the water and sewer capital projects. While these bonds will be issued as a General Obligation of the Village and supported by a direct annual tax levy, the entire amount of the annual debt service levy will be abated using funds from the water/sewer fund. A few key details for the proposed bond issue is identified below. 1. The Village concluded a comprehensive water rate study in 2017, which identified that the Village was not investing enough in water and sewer infrastructure. The rate of investment prior to the water rate study was at a 600 -year replacement cycle for Village's water and sewer infrastructure, 1 while the estimated life of water and sewer infrastructure typically ranges from 80 to 100 years. 2. As per the recommendations provided in the rate study, an infrastructure plan was implemented, and water/sewer revenue bonds were issued in 2017, 2018, and 2019. The last series of revenue bonds were scheduled to be issued in 2021, but due to COVID-19, the water/sewer infrastructure projects were running slightly behind. To time the issuance of debt with respective project timelines, it was decided to postpone the issuance of bonds until 2022. The series 2022 bonds will be issued and will be invested in various water and sewer projects as identified in the Community Investment Plan in the 2022 Budget. 3. Also, the 2017 rate study was revised, which calls for bond issuance of $10.0 million (originally planned in 2021) in 2022 and $11.0 million in 2025. A copy of the recent rate study is attached herewith. 4. The current Municipal Market Data (MMD) rate is around 1.34%. With the MMD rate as a reference point, the Village can anticipate in the current environment a rate of 2.05% for 20 -year - $10.0 million G.O. bonds. 5. Bond proceeds from the issuance will be utilized to fund below listed projects. CIP Items 2022 Combined Sewer Improvements 800,000 Elevated Tank Design and Construction 2,500,000 Fairview Gardens Footing Tile Disconnection 1,850,000 Sewer Main Rehabilitation 110001000 Water Main Replacement 3,300,000 Lift Station Rehabilitation - Lincoln -We Go 620,000 Total $ 10,070,000 Pending approval, the ordinance will permit Mayor, Village Manager and Finance Director to execute an order for the sale of these bonds. The bonds will be sold via competitive bids. A summary of results will be presented to the Village Board when the sale is finalized. Alternatives 2 1. Adopt the attached parameters ordinance approving the issuance of $10,000,000 of General Obligation bonds. 2. Action at the discretion of the Village Board. Staff Recommendation Approve the attached ordinance for the issuance and sale of the General Obligation Bonds for water/sewer projects in the amount of not to exceed $10,000,000. ATTACHMENTS: Draft - Village Mt Prospect 2022 calendar 10.26.21 (003).pdf Mt Prospect Rate Study - Final Report 11.23.21.pdf PARAMETERS ORDINANCE 2022 Village of Mount Prospect (home rule) (new money only) (4895 -9457 -7924.v2) -c. pdf KI PM'x DRAFT SECURMES Village of Mount Prospect General Obligation Bonds, Series 2022 Schedule of Events As of 10/26/2021 Role Participant Abbreviation Issuer Village of Mount Prospect Village Bond & Disclosure Counsel Ice Miller LLP BC Financial Advisor PMA Securities, LLC PMA Village Board meets on the 1st and 3rd Thursdays of every month November 2021 Su Mo Tu We Th Fr Sa Sa 1 2 3 4 5 6 7 8 9 10 11 12 113 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 24 25 26 Village Board meets on the 1st and 3rd Thursdays of every month December 2021 Su Mo Tu We Th Fr Sa 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 PMA Village Board meets on the 1st and 3rd Thursdays of every month January 2022 Su Mo Tu We Th Fr Sa We Th Fr 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 15 Village Board meets on the 1st and 3rd Thursdays of every month February 2022 Su Mo Tu We Th Fr Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PMA Rating/Due Diligence Call 12/16-12/17/21 All Village Board meets on the 1st and 3rd Thursdays of every month Responsible Task Date Participant(s) Apply for rating 11/22/21 PMA Parameters forwarded to Bond Counsel 11/23/21 PMA Parameters ordinance forwarded to Village for inclusion in Board packets 11/30/21 BC Board Meeting 12/07/21 Village Board adopts parameters ordinance Rating rehearsal call 12/09/21 PMA Distribute first draft of Preliminary Official Statement (POS) 12/10/21 PMA Rating/Due Diligence Call 12/16-12/17/21 All Comments due on first draft of POS 12/21/21 All Distribute second draft of POS and Notification of Sale (NOS) 12/28/21 PMA List sale in Bond Buyer 01/04/22 PMA Receive rating 01/10/22 --- Comments due on second draft of POS & NOS 01/10/22 All Village of Mount Prospect 1 of 2 4 PMN SECURMES Village Board meets on the 1st and 3rd Thursdays of every month Task Deemed final letter signed and returned Closing November 2021 Su Mo Tu We Th Fr Sa Sa 1 2 3 4 5 f 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 24 25 26 Village Board meets on the 1st and 3rd Thursdays of every month Task Deemed final letter signed and returned Closing December 2021 Su Mo Tu We Th Fr Sa 3 4 5 6 7 3 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Village Board meets on the 1st and 3rd Thursdays of every month Task Deemed final letter signed and returned Closing January 2022 Su Mo Tu We Th Fr Sa We Th Fr Sa 1 2 3 4 5 6 7 3 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 20 Village Board meets on the 1st and 3rd Thursdays of every month Task Deemed final letter signed and returned Closing Date 01/11/22 01/11/22 01/11/22 01/11/22 01/18/22 01/27/22 02/08/22 Responsible Participant(s) Village PMA PMA PMA All PMA Village of Mount Prospect 2 of 2 5 February 2022 Su Mo Tu We Th Fr Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Date 01/11/22 01/11/22 01/11/22 01/11/22 01/18/22 01/27/22 02/08/22 Responsible Participant(s) Village PMA PMA PMA All PMA Village of Mount Prospect 2 of 2 5 -3r Water and Sewer Rate Study Village of Mount Prospect, Illinois Water and Sewer Rate Study Project No. 136553 Final Report 11/23/2021 N Water and Sewer Rate Study prepared for Village of Mount Prospect, Illinois Water and Sewer Rate Study Mount Prospect, Illinois Project No. 136553 Final Report 11/23/2021 prepared by Burns & McDonnell Engineering Company, Inc. COPYRIGHT © 2021 BURNS & McDONNELL ENGINEERING COMPANY, INC. 7 Water and Sewer Rate Study Final Report Table of Contents TABLE OF CONTENTS Page No. 1.0 EXECUTIVE SUMMARY...................................................................................1-1 1.1 Project Background.............................................................................................. 1-1 1.2 Industry Trends in Water and Sewer Rates.......................................................... 1-1 1.3 Financial Planning............................................................................................... 1-2 1.4 Proposed Rates..................................................................................................... 1-3 2.0 FINANCIAL PLANNING ANALYSIS................................................................2-1 2.1 Project Approach................................................................................................. 2-1 2.2 Introduction to Financial Planning....................................................................... 2-2 2.3 Water and Sewer Utility Revenues under Existing Rates .................................... 2-2 2.3.1 Historical and Projected Customers...................................................... 2-2 2.3.2 Historical and Projected Volumes........................................................ 2-3 2.3.3 Existing Water and Sewer Rates........................................................... 2-4 2.3.4 User Revenues under Existing Rates .................................................... 2-5 2.4 Water and Sewer Utility Expenditures................................................................ 2-6 2.4.1 O&M Expenses..................................................................................... 2-6 2.4.2 Projected Capital Improvement Expenditures ...................................... 2-7 2.4.3 Existing and Proposed Debt Service Requirements .............................. 2-8 2.4.4 Water Utility Flow of Funds................................................................. 2-8 2.4.5 Sewer Utility Flow of Funds............................................................... 2-11 2.4.6 Consolidated Utility Flow of Funds .................................................... 2-13 3.0 PROPOSED RATES......................................................................................... 3-1 3.1 Introduction.......................................................................................................... 3-1 3.2 Existing Water and Sewer Rates.......................................................................... 3-1 3.3 Proposed Water and Sewer Rates........................................................................ 3-2 3.4 Regional Water and Sewer Typical Bills............................................................. 3-4 3.5 Water and Sewer Service Affordability............................................................... 3-5 3.6 Statement of Limitations...................................................................................... 3-7 Village of Mount Prospect TOC -1 Burns & McDonnell 0 Water and Sewer Rate Study Final Report Table of Contents LIST OF TABLES Page No. Table 1-1: Existing and Proposed Water and Sewer Rates.......................................................... 1-4 Table 1-2: Typical Water and Sewer Bills Under Existing and Proposed Rates ......................... 1-4 Table 2-1: Historical and Projected Water Accounts and Volume .............................................. 2-3 Table 2-2: Historical and Projected Sewer Accounts and Volume .............................................. 2-3 Table 2-3: Existing Water and Sewer Rates................................................................................ 2-4 Table 2-4: Historical and Projected Water User Revenues......................................................... 2-5 Table 2-5: Historical and Projected Sewer User Revenues......................................................... 2-6 Table 2-6: Historical and Projected Operation and Maintenance Expenses ................................ 2-7 Table 2-7: Capital Improvement Program................................................................................... 2-7 Table 2-8: Existing and Proposed Debt Service.......................................................................... 2-8 Table 2-9: Water Utility Financial Plan..................................................................................... 2-10 Table 2-10: Sewer Utility Financial Plan................................................................................... 2-12 Table 2-11: Combined Water and Sewer Utility Financial Plan ............................................... 2-13 Table 3-1: Existing Water and Sewer Rates................................................................................ 3-1 Table 3-2: Existing and Proposed Water and Sewer Rates.......................................................... 3-2 Table 3-3: Typical Water Bills Under Existing and Proposed Rates ........................................... 3-3 Table 3-4: Typical Sewer Bills Under Existing and Proposed Rates .......................................... 3-3 Table 3-5: Typical Combined Water and Sewer Bills Under Existing and Proposed Rates....................................................................................................................... 3-4 Table 3-6: Mount Prospect Affordability Analysis..................................................................... 3-6 LIST OF FIGURES Page No. Figure 1-1: Changes in General Inflation and Water and Sewer Rates ....................................... 1-1 Figure2-1: Study Methodology................................................................................................... 2-1 Figure 3-1: Residential Sewer Bill Comparison at 5,000 Gallons per Month ............................. 3-4 Village of Mount Prospect TOC -2 Burns & McDonnell 0 Water and Sewer Rate Study Final Report List of Abbreviations LIST OF ABBREVIATIONS Abbreviation Term/Phrase/Name AWWA American Water Works Association BLS Bureau of Labor Statistics CIP Capital Improvement Program CPI -U Consumer Price Index for all Urban Consumers DSC Debt Service Coverage FY Fiscal Year Kgal Thousand Gallons of Water MHI Median Household Income MWRDGC Metropolitan Water Reclamation District of Greater Chicago NACWA National Association of Clean Water Agencies O&M Operation & Maintenance Expense the Study Water and Sewer Rate Study the Village Village of Mount Prospect, Illinois WEF Water Environment Federation Village of Mount Prospect i Burns & McDonnell 10 Water and Sewer Rate Study Final Report Executive Summa 1.0 EXECUTIVE SUMMARY 1.1 Project Background Burns & McDonnell was engaged by the Village of Mount Prospect (the Village) in 2016 to conduct a water and sewer rate study that (i) evaluated the financial planning implications of the recommended capital improvements, and (ii) proposed rates to recover costs for the water and sewer utilities. In 2021 the Village requested Burns & McDonnell refresh the rate study (the Study) to reflect current conditions and provide a new 10 -year forecast. This Report summarizes the results of the Study. 1.2 Industry Trends in Water and Sewer Rates Replacement of aging infrastructure is one of several dynamics impacting water and sewer utility rates. Other dynamics may include regulatory requirements, inflation on operating and capital costs, and a general trend in declining consumption most often associated with more efficient fixtures and appliances and greater awareness of water conservation. Each utility is different, and the relative importance of these dynamics will vary by utility. However, there is no doubt that water and sewer rate increases have substantially outpaced general inflation in the United States. The United States Bureau of Labor Statistics (BLS) tracks many facets of inflation. The most commonly referenced measure is the Consumer Price Index for all Urban Consumers (CPI -U) which measures inflation at the consumer level. The BLS also tracks a combined inflation index for consumer water and sewer costs. Figure 1-1 compares changes in the consumer price index to changes in the water and sewer cost index. Figure 1-1: Changes in General Inflation and Water and Sewer Rates Village of Mount Prospect 1-1 Burns & McDonnell 11 Water and Sewer Rate Study Final Report Executive Summa Annually, since 2000 the water and sewer index has been increasing at nearly 5 percent per year, while CPI's annual rate of change is about 2 percent per year. Other industry surveys reach similar conclusions regarding water and/or sewer rates. The National Association of Clean Water (NACWA) annually updates its Cost of Clean Water Index, which specifically surveys sewer utilities across the nation regarding the cost of residential sewer service. From 1985 through 2020, the annual increase according to this survey has been 4.8 percent per year. American Water Works Association (AWWA) also conducts a broad, biennial water and sewer rate survey with results indicating average annual rate increases of 5.1 percent per year for water and 5.6 percent per year for sewer from 1996 to 2018. Every utility is unique, and the dynamics impacting rates can vary widely. However, funding renewal and replacement of underground infrastructure is a consistent and substantial influence on costs for most water and sewer utilities. Since 2017, the Village has raised water and sewer rates 8 percent per year, approving a program of annual 8 percent increases through 2025. Increasing funding of renewal and replacement of water and sewer mains has been a primary driver of these increases and is likely to continue for the foreseeable future. 1.3 Financial Planning Comprehensive financial planning conducted for the water and sewer utilities indicates that revenues under existing rates are not sufficient to meet the projected cash obligations of the utilities over the ten- year study period. The need for revenue adjustments is influenced by the following factors: • Anticipated declines in customer usage, forecasted to be approximately 1 percent per year, offset slightly by growth in customers; • Implementation of the proposed capital plans, including renewal and replacement programs for the aging water distribution system and the sewer collection system, and lead water line replacement; • Inflationary impacts on operation and maintenance expenses and future capital improvements. Several financial planning scenarios were evaluated to fund the operating and capital needs of the utilities. Financial planning assumptions are described in Section 2 of this report. Financial plans were evaluated based on the following guiding principles: 1. Minimize the need for sudden and substantial revenue adjustments. Village of Mount Prospect 1-2 Burns & McDonnell 12 Water and Sewer Rate Study Final Report Executive Summa 2. Maintain projected operating reserves each year in an amount equal to a minimum of 90 days of O&M. 3. Reduce capital funding reliance on new debt issuance over time. 4. Funding the system renewal/replacement program targets. Based on its ability to meet the guiding principles, the recommended financial plan detailed in this report proposes the following revenue increases to be effective January 1 of each year indicated. The Village has already approved increases of 8% annually for 2021 through 2025. Adopted 2021 8% 8% Adopted 2022 8% 8% Adopted 2023 8% 8% Adopted 2024 8% 8% Adopted 2025 8% 8% Proposed 2026 8% 8% Proposed 2027 8% 5% Proposed 2028 8% 5% Proposed 2029 8% 5% Proposed 2030 8% 5% Proposed 2031 8% 5% 1.4 Proposed Rates Proposed rates have been developed for 2026 through 2031. Existing and proposed water and sewer rates are shown in Table 1-1. Village of Mount Prospect 1-3 Burns & McDonnell 13 Water and Sewer Rate Study Final Report Executive Summa Table 1-1: Existing and Proposed Water and Sewer Rates Water- Outside Village Table 1-2: Typical Water and Sewer Bills Under Existing and Proposed Rates Existing I Adopted I Proposed Monthly Line $/Kgal 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 No. Description 11 3/4" $ 12.00 $ 14.00 Base Charge $ 18.00 $ 20.00 $ 21.60 $ 23.40 $ 25.20 $ 27.20 $ 29.40 $/bill $/bill $/bill $/biII $/bill $/bill $/bill $/bill $/bill $/bill $/bill $ 27.20 Water- Inside Village $ 31.80 13 1.5" $ 18.00 $ 22.00 $ 24.00 $ 28.00 $ 30.00 $ 32.40 $ 35.00 $ 37.80 1 5/8" $ 6.00 $ 7.00 $ 8.00 $ 9.00 $ 10.00 $ 10.80 $ 11.70 $ 12.60 $ 13.60 $ 14.70 $ 15.90 2 3/4" $ 6.00 $ 7.00 $ 8.00 $ 9.00 $ 10.00 $ 10.80 $ 11.70 $ 12.60 $ 13.60 $ 14.70 $ 15.90 3 1" $ 6.00 $ 7.00 $ 8.00 $ 9.00 $ 10.00 $ 10.80 $ 11.70 $ 12.60 $ 13.60 $ 14.70 $ 15.90 4 1.5" $ 9.00 $ 11.00 $ 12.00 $ 14.00 $ 15.00 $ 16.20 $ 17.50 $ 18.90 $ 20.40 $ 22.00 $ 23.80 5 2" $ 13.00 $ 15.00 $ 18.00 $ 20.00 $ 22.00 $ 23.80 $ 25.70 $ 27.80 $ 30.00 $ 32.40 $ 35.00 6 3" $ 44.00 $ 51.00 $ 59.00 $ 66.00 $ 73.00 $ 78.80 $ 85.10 $ 91.90 $ 99.30 $ 107.20 $ 115.80 7 4" $ 55.00 $ 65.00 $ 74.00 $ 83.00 $ 92.00 $ 99.40 $ 107.40 $ 116.00 $ 125.30 $ 135.30 $ 146.10 8 6" $ 82.00 $ 96.00 $ 109.00 $ 123.00 $ 137.00 $ 148.00 $ 159.80 $ 172.60 $ 186.40 $ 201.30 $ 217.40 9 8" $ 112.00 $ 131.00 $ 150.00 $ 169.00 $ 187.00 $ 202.00 $ 218.20 $ 235.70 $ 254.60 $ 275.00 $ 297.00 Water- Outside Village Table 1-2: Typical Water and Sewer Bills Under Existing and Proposed Rates Volume Charge Monthly Bill Under $/Kgal 10 5/8" $ 12.00 $ 14.00 $ 16.00 $ 18.00 $ 20.00 $ 21.60 $ 23.40 $ 25.20 $ 27.20 $ 29.40 $ 31.80 11 3/4" $ 12.00 $ 14.00 $ 16.00 $ 18.00 $ 20.00 $ 21.60 $ 23.40 $ 25.20 $ 27.20 $ 29.40 $ 31.80 12 1" $ 12.00 $ 14.00 $ 16.00 $ 18.00 $ 20.00 $ 21.60 $ 23.40 $ 25.20 $ 27.20 $ 29.40 $ 31.80 13 1.5" $ 18.00 $ 22.00 $ 24.00 $ 28.00 $ 30.00 $ 32.40 $ 35.00 $ 37.80 $ 40.80 $ 44.00 $ 47.60 14 2" $ 26.00 $ 30.00 $ 36.00 $ 40.00 $ 44.00 $ 47.60 $ 51.40 $ 55.60 $ 60.00 $ 64.80 $ 70.00 15 3" $ 88.00 $ 102.00 $ 118.00 $ 132.00 $ 146.00 $ 157.60 $ 170.20 $ 183.80 $ 198.60 $ 214.40 $ 231.60 16 4" $ 110.00 $ 130.00 $ 148.00 $ 166.00 $ 184.00 $ 198.80 $ 214.80 $ 232.00 $ 250.60 $ 270.60 $ 292.20 17 6" $ 164.00 $ 192.00 $ 218.00 $ 246.00 $ 274.00 $ 296.00 $ 319.60 $ 345.20 $ 372.80 $ 402.60 $ 434.80 18 8" $ 224.00 $ 262.00 $ 300.00 $ 338.00 $ 374.00 $ 404.00 $ 436.40 $ 471.40 $ 509.20 $ 550.00 $ 594.00 19 Sewer- Inside Village $ 5.00 $ 5.00 $ 5.40 $ 5.80 $ 6.30 $ 6.80 $ 7.10 $ 7.50 $ 7.90 $ 8.30 $ 8.70 20 Sewer - Outside Village $ 10.00 $ 10.00 $ 10.80 $ 11.60 $ 12.60 $ 13.60 $ 14.20 $ 15.00 $ 15.80 $ 16.60 $ 17.40 The impact of proposed water and sewer rates on typical customers is shown in Table 1-2. Table 1-2: Typical Water and Sewer Bills Under Existing and Proposed Rates Volume Charge Monthly Bill Under $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal $/Kgal 21 Water- Inside Village $ 11.85 $ 12.71 $ 13.66 $ 14.69 $ 15.81 $ 17.07 $ 18.44 $ 19.92 $ 21.51 $ 23.23 $ 25.09 22 Water- Outside Village $ 23.70 $ 25.42 $ 27.32 $ 29.38 $ 31.62 $ 34.14 $ 36.88 $ 39.84 $ 43.02 $ 46.46 $ 50.18 23 Sewer- Inside Village $ 2.54 $ 2.79 $ 3.02 $ 3.26 $ 3.52 $ 3.80 $ 3.99 $ 4.19 $ 4.40 $ 4.62 $ 4.85 24 Sewer - Outside Village $ 5.08 $ 5.58 $ 6.04 $ 6.52 $ 7.04 $ 7.60 $ 7.98 $ 8.38 $ 8.80 $ 9.24 $ 9.70 The impact of proposed water and sewer rates on typical customers is shown in Table 1-2. As a part of its budget process, the Village evaluates the sufficiency of revenues and proposed debt issuance in meeting budget year expenses and capital costs and providing desired reserves and debt service coverage. As a matter of practice, Burns & McDonnell encourages the Village to continue this Village of Mount Prospect 1-4 Burns & McDonnell 14 Table 1-2: Typical Water and Sewer Bills Under Existing and Proposed Rates Billable Monthly Bill Under Rates Line Flow Existing Adopted F Proposed No. Customer Type &Meter Size Kgal 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Water and Sewer Utility 1 SM.. 5.0 $ 82.95 $ 89.50 $ 96.80 $ 104.55 $ 112.95 $ 121.95 $ 130.95 $ 140.65 $ 151.05 $ 162.25 $ 174.30 2 3/4" 10.0 $ 154.90 $ 167.00 $ 180.20 $ 194.30 $ 209.60 $ 226.30 $ 243.10 $ 261.20 $ 280.60 $ 301.50 $ 324.00 3 1" 15.0 $ 226.85 $ 244.50 $ 263.60 $ 284.05 $ 306.25 $ 330.65 $ 355.25 $ 381.75 $ 410.15 $ 440.75 $ 473.70 Change in $ over prior year 4 5/8" $ 6.55 $ 7.30 $ 7.75 $ 8.40 $ 9.00 $ 9.00 $ 9.70 $ 10.40 $ 11.20 $ 12.05 5 3/4" $ 12.10 $ 13.20 $ 14.10 $ 15.30 $ 16.70 $ 16.80 $ 18.10 $ 19.40 $ 20.90 $ 22.50 6 V. $ 17.65 $ 19.10 $ 20.45 $ 22.20 $ 24.40 $ 24.60 $ 26.50 $ 28.40 $ 30.60 $ 32.95 Change in % over prior year 7 5/8" 7.9% 8.2% 8.0% 8.0% 8.0% 7.4% 7.4% 7.4% 7.4% 7.4% 8 3/4" 7.8% 7.9% 7.8% 7.9% 8.0% 7.4% 7.4% 7.4% 7.4% 7.5% 9 V. 7.8% 7.8% 7.8% 7.8% 8.0% 7.4% 7.5% 7.4% 7.5% 7.5% As a part of its budget process, the Village evaluates the sufficiency of revenues and proposed debt issuance in meeting budget year expenses and capital costs and providing desired reserves and debt service coverage. As a matter of practice, Burns & McDonnell encourages the Village to continue this Village of Mount Prospect 1-4 Burns & McDonnell 14 Water and Sewer Rate Study Final Report Executive Summa process, and consider a more comprehensive update to its financial plan every five years, or sooner if conditions change. Village of Mount Prospect 1-5 Burns & McDonnell 15 Water and Sewer Rate Study Final Report Financial Planning Analysis 2.0 FINANCIAL PLANNING ANALYSIS 2.1 Project Approach To meet the project objectives identified by the Village, Burns & McDonnell conducted the rate study in a two-step approach. This approach, depicted in Figure 2-1, is grounded in the principles established by the American Water Works Association (AWWA) MI Rate Manual and the Water Environment Federation (WEE) Financing and Charges for Wastewater Systems. Figure 2-1: Study Methodology INI�11011 ; Step 1: Financial Planning provides an indication of the adequacy of the revenue generated by current rates. The results of the financial forecast analysis answer the questions "Are the existing rates adequate?" and "If not, what level of overall revenue increase is needed?" The Financial Planning Analysis is presented in this section of our report. Step 2: Rate Design provides for the required revenue recovery. Once the overall level of revenue required is identified and customer class responsibility for that level of revenue is determined, schedules of rates for each rate class are developed that will generate revenues accordingly. The Rate Design Analysis is detailed in Section 3.0 of this report. Village of Mount Prospect 2-1 Burns & McDonnell iU Water and Sewer Rate Study Final Report Financial Plannin 2.2 Introduction to Financial Planning The primary issue addressed in the Financial Planning Analysis is revenue sufficiency. The results of the Financial Planning Analysis answer the questions: • Are the existing rates sufficient to fund anticipated operating and capital costs? • If not, what level of overall revenue increase is needed? To determine if the existing schedule of rates can generate revenues to meet the Village's operating and capital costs, Burns & McDonnell prepared a ten-year financial projection of revenues and expenditures for the water and sewer utilities. A comparison of projected revenues and expenditures provides insight into the adequacy of overall revenue levels. Our approach to Financial Planning involves the following basic steps: 1. Project revenues under existing rates. 2. Project water and sewer utility expenditures, including operating and capital costs. 3. Develop a ten-year financial plan, including the budget year and a nine-year forecast period. The planning period includes the current fiscal year (FY) 2021 as a budget year and a ten-year forecast period, FY 2022 through FY 2031. The Village's fiscal year ends on December 31, and the projected periods in the financial plan recognize the same fiscal year ending December 31. 2.3 Water and Sewer Utility Revenues under Existing Rates The first step in the Financial Plan Analysis was to project revenues under the existing schedule of rates. To complete this effort required an analysis of water and sewer customers, volumes, and revenues. 2.3.1 Historical and Projected Customers Table 2-1 presents the historical water customers served by the Village from 2018 to 2020 and the projection of customers for the 2021 to 2031 planning period. In recent years, Mount Prospect has experienced minimal change in the number of accounts. Considering this trend in account growth, the projection of accounts assumes a small allowance for annual growth in customer accounts for 2021 through 2031. Table 2-2 presents the historical sewer customers served by the Village from 2018 to 2020 and the projection of customers for the 2021 to 2031 planning period. Similar to the water utility, Mount Prospect has experienced minimal change in the number of sewer accounts in recent years. The projection of sewer Village of Mount Prospect 2-2 Burns & McDonnell 17 Water and Sewer Rate Final Report Financial Planninq Analvsis accounts assumes a small allowance for growth in customer accounts for 2021 through 2031, consistent with the approach to forecasting water accounts. Table 2-1: Historical and Projected Water Accounts and Volume Histo rival I Protected 1WATER N/C-Water NO Chargr 11 11 14 14 14 14 14 14 14 14 14 14 14 14 2 -11- nside Village2 2 10 216 2 2,203 2,189 2,198 11,202 2 234 25 12, ,243 12 261 1252 2, 2 270 279 12288 3 Water -Outside IN— 8 10 10 10 10 2 10 10 10 10 10 10 10 10 10 4 Total Accounts 12,166 12,224 12,213 12,222 12,231 12,240 12,249 12,258 12,26] 12,2]6 12,285 12,294 12,303 12,312 Billetl Volume (3,000 Gopons) 5 WATER N/C-Water NO Charge 4,043 3,842 5,458 5,458 5,458 5,458 5,458 5,458 5,458 5,458 5,458 5,458 5,458 5,458 6 Water Inside 111-1,108,43] 1,080,955 1,118,401 1,108,035 1,097,764 1,08],58] 1,0]),505 1,06),515 1,05],61] 1,047,811 1,038,095 1,028,468 1,018,930 1,009,480 J Water -Outside Village 312 664 873 823 823 8]3 823 823 823 823 873 873 823 823 8 Total Billed Volume 1,112,792 1,085,461 1,124,232 1,114,366 1,104,095 1,093,918 1,083,836 1,023,846 1,063,948 1,054,142 1,44,426 1,034,799 1,025,261 1,015,811 Table 2-2: Historical and Projected Sewer Accounts and Volume Line H, -,n al Projected No, Accounts 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 1 Sewer Inside (w/water) 12,07612,133 12,124 12,133 12,142 12,151 12,160 12,169 12,1]8 12,187 12,196 12,205 12,214 12,223 2 Sewer Inside (w/o water) 39 36 33 33 33 33 33 33 33 33 33 33 33 33 3 Sewer NO Charge 4 Sewer Outside water) 11 1 9 - 12 - 12 - 12 - 12 - 12 - 12 - 12 - 12 - 12 - 12 - 12 - 12 - 5 Sewer Outside �w/o ware r) 6 Total Accounts 13 13 13 13 13 13 13 13 13 13 13 13 13 13 12,140 12,191 12,182 12,191 12,200 12,209 12,218 12,227 12,236 12,245 12,259 12,263 12,272 12,281 Gilled volume (1,000 Gallons) ] Sewer Inside (w/water) 1,108,526 1,071,725 1,108,634 1,098,362 1,088,185 1,078,102 1,068,112 1,058,213 1,048,406 1,038,689 1,029,061 1,019,522 1,010,072 1,000,708 8 5ewer lnside(w/o water) - - - - - - - - - - - - - - O Charge 9 Sewer ",,I'd,: 4,043 3,820 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 10 Sewer Outside(,,/water) 312 - - - - - - - - - - - - - 11 Sewer Outside �w/o water) 12 Total Billed Volume 1,112,881 1,075,545 1,113,975 1,103,703 1,093,526 1,083,443 1,073,453 1,063,554 1,053,747 1,044,030 1,034,402 1,024,863 1,015,413 1,006,049 2.3.2 Historical and Projected Volumes Table 2-1 and Table 2-2 also present the historical and projected volumes. Table 2-1 presents historical water volumes based on water sales for 2018 to 2020, and the projection of volumes for the 2021 to 2031 planning period. Based on recent historical data Inside Village use per account was estimated to decline 1.0 percent annually beginning in 2021. This decrease in average use per account reflects an industry trend associated with the prevalence of more efficient appliances and fixtures, and a greater customer awareness regarding water use and conservation. Forecasting use per account to decline provides a slightly more conservative forecast of water sales and ultimately, revenue under existing rates. Other classes were estimated to remain at 2020 levels of usage per account. The impact of declining use per account is offset slightly by assumed growth in customer accounts, resulting in an annual reduction in billed water volume of about 0.9 percent per year. Table 2-2 presents historical sewer volumes based on billed sewer volume for 2018 to 2020, and the projection of volumes for the 2021 to 2031 planning period. Consistent with the forecasting approach with the water volume projection, Inside Village sewer use per account was estimated to decline 1.0 percent annually beginning in 2021. The other classes were estimated to remain at the 2020 level of sewer use per account. Comparable to the water volume projection, the impact of declining use per account is offset slightly by assumed growth in customer accounts, resulting in an annual reduction in billed sewer volume of about 0.9 percent per year. Village of Mount Prospect 2-3 Burns & McDonnell 18 Water and Sewer Rate Study Final Report Financial Planning Analysis 2.3.3 Existing Water and Sewer Rates The water and sewer rate schedule is shown in Table 2-3. The water rate consists of a base charge per bill that varies by meter size and a volumetric charge per thousand gallons of usage for both Inside and Outside Village customers. The sewer rate also consists of a base charge per bill and a volumetric charge per thousand gallons. Volume Charge $/Kgal 21 Table 2-3: Existing Water and Sewer Rates -Inside Village $ 11.85 Existing Line -Outside Village $ 23.70 2021 No. Description $ 2.54 Base Charge Sewer- Outside Village $ 5.08 $/bill Water - Inside Village 1 5/8" $ 6.00 2 3/4" $ 6.00 3 1" $ 6.00 4 1.5" $ 9.00 5 2" $ 13.00 6 3" $ 44.00 7 4" $ 55.00 8 6" $ 82.00 9 8" $ 112.00 Water - Outside Village 10 5/8" $ 12.00 11 3/4" $ 12.00 12 1" $ 12.00 13 1.5" $ 18.00 14 2" $ 26.00 15 3" $ 88.00 16 4" $ 110.00 17 6" $ 164.00 18 8" $ 224.00 19 Sewer -Inside Village $ 5.00 20 Sewer- Outside Village $ 10.00 Volume Charge $/Kgal 21 Water -Inside Village $ 11.85 22 Water -Outside Village $ 23.70 23 Sewer- Inside Village $ 2.54 24 Sewer- Outside Village $ 5.08 Village of Mount Prospect 2-4 Burns & McDonnell 19 Water and Sewer Rate Study Final Report Financial Plannin As a matter of practice, rates for service provided to Outside Village customers are set at 2.0 times Inside Village rates. Water and sewer rates applicable to Outside Village customers are reflective of this multiplier for both base and volume charges. The Village has implemented annual rate increases in recent years, prompted in part by inflation in operating costs but largely driven by capital investment in renewal and replacement. The 2021 water and sewer volumetric and base rates in Table 2-3 reflect an 8.0 percent increase over 2020 rates. 2.3.4 User Revenues under Existing Rates Table 2-4 and Table 2-5 present historical user charge revenues for 2018 to 2020 and a projection of user charge revenues under 2020 rates for the 2021 to 2031 planning period. The projection of user charge revenues was estimated based on the forecasted accounts and volumes factored by the schedule of 2020 water and sewer rates. The impact related to the adopted 2021 water rate increase is discussed later in this section. As shown in Table 2-4, historical water user charge revenues increased from $11.3 million to $13.1 million from 2018 to 2020, impacted by implemented rate increases and actual water demand. Forecasted user charge revenues are based on projected accounts and water volume presented in Table 2-1 and the 2020 water rates. The impact of water rates adopted for 2021 through 2025 is shown later in Table 2-9. Overall, water user charge revenues under 2020 rates are projected to decline from $13.0 million in 2021 to $11.9 million in 2031. Table 2-4: Historical and Projected Water User Revenues Une Hismriczl -j-',2018 2019 2020 2021 2022 2023 2024 2025 2026 202] 2028 2029 2030 2031 User Ch— Revenues 1 —TERN/C W4term C -gr$ -liufde Vlllage $ 1,3,5$ 1 e$ 1,A,1 5 1 0$ 1 0$ 1 0$ 1 0$ 1 0 5 1 0 5 1 O$ 1 0$ 1 0$ 1 0$ 1 281,30 6100 41,80 23,]0 06,60 90,]0 ]5,80 61,90 4920 1�3J 40 3 Water -Outside Ui hags $ 22,370 $ 14,]50 $ 22,941 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22,900 $ 22$00 4 Totel UC Revenue $ 11,259,995 $ 11,]80,208 $ 13,125,]32 $ 13,004,200 $ 12,883,900 $ 12,764,]00 $ 12,646,600 $ 12,529,500 $ 12,413,600 $ 12,298,]00 $ 12,184,800 $ 12,0]2,100 $ 11,960,300 $ 11,849,600 Ill For.-dslight --growth—, growth for waterinde village customer class. [2) Water Inside Vlllage volume decllning by 1% per year, all other class' forecasted usage held const, nt 20201...1, As shown in Table 2-5 historical sewer user charge revenues increased from $2.8 million to $3.3 million from 2018 to 2020. Forecasted user charge revenues are based on projected accounts and sewer volume presented in Table 2-2 and the 2020 sewer rates. Overall, sewer user revenues under 2020 rates are projected to decline from $3.2 million in 2021 to $2.9 million in 2031. Village of Mount Prospect 2-5 Burns & McDonnell 20 Water and Sewer Rate Study Final Report Financial Planning Analysis Table 2-5: Historical and Projected Sewer User Revenues Line Hirto rlcal Pro'ectetl No• User Charee Revenues 2018 2019 2020 2021 2022 2023 2024 2025 202fi 2027 2028 2029 2030 2031 1 Sew er Inside(./water) 2,786,448 2,922,346 3,243,161 3,213,100 3,183,341 3,153,844 3,124,618 3,095,661 3,066,971 3,038,545 3,010,382 2,982,477 2,954,830 2,927,437 2Sewerl —d, (./o water) 2,005 2,075 2,259 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300 3 Sever1, charge - - - - - - - - - - - - - - 4 Sewer Outside ('/water) 1,306 - - - - - - - - - - - - - 5 Sewer Outside (w/o water) 1,560 11685 1,821 1,800 1,600 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 6 Total UC Revenues $ 2,791,318 $ 2,926,105 $ 3,247,241 $ 3,217,200 $ 3,187,441 $ 3,157,944 $ 3,128,718 $ 3,099,761 $ 3,071,071 $ 3,042,645 $ 3,014,482 $ 2,986,577 $ 2,958,930 $ 2,931,537 (1] Forecasted slight account growth for water Inside vl Mage curtomer class. (2]SewerInside Village volume decll ning by 1%per ,,all oth,rd—''fo,--d usage held constant et 20201evels 2.4 Water and Sewer Utility Expenditures Typically, a municipal water or sewer utility's primary cash expenditures include the following direct operating and capital costs: • Operation and Maintenance (O&M) Expenses • Capital Improvement Program Expenditures • Debt Service Principal and Interest Payments Each of these cash obligations is described further below. 2.4.1 O&M Expenses Table 2-6 presents the recent water and sewer O&M expense history and the projection of water and sewer system O&M expenses through the 2031 planning period. Expenses summarized on Table 2-6 reflect operating costs only; costs related to capital projects are excluded from Table 2-6 and are addressed later in this report. In recent history, water O&M expenses ranged from $10.8 million in 2018 to $11.9 million in 2020. Sewer O&M expenses ranged from $1.7 million in 2018 to $2.2 million in 2020. Anticipated 2021 O&M costs are based on the Village's approved budget. In general, projected O&M expenses are anticipated to increase from budgeted 2021 amounts at approximately 3.4 percent annually. The overall inflationary increase is a function of the following inflation rate assumptions developed in collaboration with Public Works staff. • Lake Michigan Water Supply Costs: 4.0 percent annually • Personal Services, Salaries & Wages: 2.0 percent annually • All other operating expenses: 3.0 percent annually Village of Mount Prospect 2-6 Burns & McDonnell 21 Water and Sewer Rate Final Report Financial Planninq Analvsis Table 2-6: Historical and Projected Operation and Maintenance Expenses Line I 6,500,000 Historical I Budgeted I 6,762,000 6,910,000 65,000 185,000 185,000 Projected 185,000 185,00' 185,000 185,000 Na 2014 2014 2424 2421 2422 2423 2424 2025 2425 24ZZ 242$ 2424 2430 2431 Water O&M 1Banking Fees 21,231 26,083 28,549 30,DOD 30,500 31,212 31,835 32,473 33,122 33,785 34,461 35,150 35,853 35,570 2 Customer Service 128,707 131,421 138592 141,800 144,535 147,529 150,479 153,489 156,559 159,690 162,884 165,141 169,464 172,853 3 Water Administration' 479,940 440,999 924,110 493,018 505,859 519,047 532,591 546,500 560,736 575,457 590,526 605,003 621,900 638,228 4Equipment Maintenance 462,539 539,017 499,154 5D8,572 523,829 539,544 555,730 572,402 589,574 607,262 625,479 644,244 663,571 683,478 5 LA-tenance of Buildings 285,874 257,434 251,955 287,081 293,843 300,771 307,870 315,142 322,594 330,229 338,052 345,068 354,282 362,700 6 Maintenanre of Grounds 144,277 112,171 92,704 129,386 132,727 136,158 139,680 143,297 147,011 150,825 154,741 158,763 162,893 167,134 7 Lake Michigan Water Supply 6,642,177 6,585,555 7,517,582 7,234,300 7,523,672 7,824,619 8,137,604 8,463,108 8,801,632 9,153,697 9,519,845 9,900,639 10,296,665 10,708,531 8 Water Sup ply Maint.&Repair 888,000 715,923 729,416 846,771 868,414 890,631 913,437 936,850 960,885 985,560 1,010,892 1,036,900 1,063,601 1,091,015 9 Water Distribution Ma'mt. & Rep 736,851 996,170 1,079,228 1,187,665 1,217,210 1,247,519 1,278,614 1,310,515 1,343,243 1376,822 1,411,274 1,446,622 1,482,891 1,520,105 10 Water Meter Ma'mtenance&Repair 496,444 236,773 241,624 277,694 285,465 293,458 301,680 310,136 318,834 327,781 336,985 346,451 356,189 366,206 11 Water Valve/Hydrant Maint. & Rep 506,303 404,677 410,232 451,838 463,205 474,869 486,838 499,121 511,726 524,661 537,937 551,561 565,544 579,895 12 Total Water O&M 10,792,342 10,446,224 11,913,146 11,588,125 11,989,460 12,405,357 12,836,359 13,283,033 13,745,967 14,225,770 14,723,076 15,238,542 15,772,852 16,326,715 Sewer D&M i 1 IAOl -z 1x s.se �I s'a 3sx Asx 3sx ssw "I Asx esr, 13 Banking Fees 21,231 26,083 28,549 30,00D 30,600 31,212 31,836 32,473 33,122 33,785 34,461 35,150 35,853 36,570 14 Customer Service 128,707 131,421 138,592 141,800 144,636 147,529 150,479 153,489 156,559 159,690 162,884 166,141 169,464 172,853 15 Sewer Administration" 479,940 440,999 924,110 493,018 505,859 519,047 532,591 546,500 560,786 575,457 590,526 606,003 621,900 638,228 16Equipment Maintenance 462,539 539,017 499,154 508,572 523,829 539,544 555,730 572,402 589,574 607,262 625,479 644,244 663,571 683,478 17 San itai-V Sewer Ma'mt. & Repair 570,844 673,674 598,420 808,010 828,357 849,236 870,662 892,650 915,215 938,373 962,140 986,531 1,011,565 1,037,259 18 Total Sewer O&M 1,663,261 1,811,194 2,188,825 1,981,400 2,033,281 2,086,568 2,141,299 2,197,515 2,255,256 2,314,567 2,375,489 2,438,069 2,502,353 2,568,388 19 Total Water&Sewer O&M Expenses 12,455,604 12,257,417 14,101,970 13,569,524 14,022,741 14,491,924 14,977,658 15,480,548 16,001,223 16,540,336 17,098,565 17,676,612 18,275,205 18,895,103 [1] lake Michigan Water Su pp lV Costs are Inflated at percent peryea.. [2] Personal Services, Scheduled Salaries & Wages are inflated at 2 percent per year. [3] All other costs are inflated at 3 percent per rear. [4] 2020 0&M ox pense'md,des roughly $8401, in NOPEBO and OPER exp,- - NOPE80 catch-up expenses in 2020 2.4.2 Projected Capital Improvement Expenditures Table 2-7 shows the projected capital improvement expenditures (C1P) for the 2021 to 2031 planning period. Projected capital investment totals approximately $104.7 million from 2021 through 2031, as shown on Line 27 of Table 2-7. The majority of this investment is targeted to water and sewer main rehabilitation (Lines 8 and 25, respectively), lead water service line replacement (Line 10), and combined sewer improvements (Line 23). L - No. Water I'll l Imorovemen[ Pro'ec[s 1 Wireless Telemetry System Upgrade-PLCllpgrades 2VFD Replacement 3 Deep Well Rehabilitation-Well#4 4 Deep Well Rehabilitation-Well#16 5 Deep Well Rehab IRtation-Well#17 6 NorthwestWaterCommissonlnterconn- 7 D"P Well Rehabilitation-Well#11 8 Water Main Replacement 9 Boos ter Station Pump Rehalilitation 10 Lead Water Service Line Replacement 11 Water Reservoir Number 4 Rehabilitation 12Deep Well Rehabilitation-Well#5 13 Elevated Tank Painting 14 Water Reservoir Number 16 Painting 15 Water Reservoir Number 17 Painting 16 Elevated Tank 17 Total Water Capital lmp roveme.t Projects Sewer Cao tai Improvement Pro'ec[s 18 Fairview Gardens Footing The Disconnection 19 Lift Station"'a b - Cottonwood 20 Llft Station Re Lab -Lincoln-Wego 21 Lift Station Rehabl litlon-Maple-Berkshire 22 LIR Relief 5tatlon Rehab -Fairview 23 Combined Sewer Improvements 24 Overhead Sewer Program 25 Sewer Main Rehabilitation 26 Total Se-, Capital Improvement Projects 27 Total Water and Sewer Capital Improvement Projects Village of Mount Prospect Table 2-7: Capital Improvement Program Prn;eeted 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Totals - - - 80,000 - - - 100,OOD - - - 180,000 525,000 535,000 - 5,500,000 535,0D0 - 3,300,000 65,000 65,0'0 4,500,000 5,400,000 6,500,000 6,500,000 5,500,000 6,630,000 6,762,000 6,910,000 65,000 185,000 185,000 185,000 185,000 185,00' 185,000 185,000 - - 100,000 700,000 700,0'0 700,'00 7'0,000 700,000 - 685,000 - - - - - - - - - - - - - 550,000 - - - - - 700,00D - - - - - - 500,000 - - - 500 ODD 590,000 12,435,000 4,565,000 6,350,000 7,970,000 7,385,000 7,885,000 8,315,000 7,727,000 8,445,000 130,000 525,000 535,000 535,000 - 5,500,000 535,000 7,040,000 60,042,000 185,000 1,675,000 700,000 4,900,000 685,000 650,000 700,000 500,000 500,000 500,000 2,500,000 8,425,000 80,092,000 2-7 Burns & McDonnell 22 1,850,000 680,000 - - - - - - - - - - 680,000 - 620,000 - - - - - - - - - 620,000 - - 630,000 - - - - - - - - 630,000 - - 875,000 - - - - - - - - 875,000 - 800,DD0 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 8,000,000 - 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,000,000 11000,000 11000,000 11000,000 11000,000 11000,000 11000,000 11000,000 11000,000 11000,000 11000,000 1,000,000 11,000,000 1,680,000 4,370,000 3,405,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 24,655,000 2,270,000 16,805,000 7,970,000 8,250,000 9,870,000 9,285,000 9,785,000 10,215,000 9,627,000 10,345,000 10,325,000 104,747,000 2-7 Burns & McDonnell 22 Water and Sewer Rate Study Final Report Financial Plannin 2.4.3 Existing and Proposed Debt Service Requirements Table 2-8 shows the existing and proposed debt service for the Village water and sewer utilities. Line Ne. Existing Water Debt 1 2017 2 2018A 3 2019A 4 Total Existing Debt Existing Sewer Debt 5 2017 6 2018A 7 2019A 8 Total Existing Debt Proposed Debt 9 Water Debt 10 Sewer Debt 11 Total Proposed Debt Existing and Proposed Debt 12 Total Water Debt 13 Total Sewer Debt 14 Totat Debt Service Table 2-8: Existing and Proposed Debt Service Projected 2421 2422 2423 7074 2425 2424 2427 242& 2423 24.3.4 2431 182,700 187,860 192,660 197,100 201,180 203,220 208,800 213,960 218,640 222,900 224,940 190,800 192,300 196,500 200,280 206,580 209,280 212,880 216,120 222,000 227,400 230,640 354,480 361,560 367,860 376,380 384,060 390,780 399,060 406,620 413,460 422,580 431,100 727,980 741,720 757,020 773,760 791,820 803,280 820,740 836,700 854,100 872,880 886,680 121,800 125,240 128,440 131,400 134,120 135,480 139,200 142,540 145,760 148,600 149,960 127,200 128,200 131,000 133,520 137,720 139,520 141,920 144,080 148,000 151,600 153,760 236.320 241.040 245.240 250.920 256.040 260.520 266.040 271.080 275.640 281.720 287.400 485,320 494,480 504,680 515,840 527,880 535,520 547,160 557,800 569,400 581,920 591,120 291,500 291,500 291,500 1,004,200 1,004,200 1,004,200 1,004,200 1,004,200 1,004,200 356,300 356,300 356,300 356,300 356,300 356,300 356,300 356,300 356,300 647,800 647,800 647,800 1,360,500 1,360,500 1,360,500 1,360,500 1,360,500 1,360,500 727,980 741,720 1,048,520 1,065,260 1,083,320 1,807,480 1,824,940 1,840,900 1,858,300 1,877,080 1,890,880 485,320 494,480 860,980 872,140 884,180 891,820 903,460 914,100 925,700 938,220 947,420 $ 1,213,300 $ 1,236,200 $ 1,909,500 $ 1,937,400 $ 1,967,500 $ 2,699,300 $ 2,728,400 $ 2,755,000 $ 2,784,000 $ 2,815,300 $ 2,838,300 [1] Proposed debt terms assumes 20 year term, 2.5% interest, and 1% bond issuance cost As shown on Lines 1 through 8, the Village has three outstanding debt series which provided funding for improvements on the water and sewer systems. Based on Village staff guidance the existing debt was split with 60 percent attributed to water and 40 percent attributed to sewer. The proposed plan includes two debt issues, the first in 2022 amounting to $10 million and the second in 2025 amounting to $11 million. The 2022 issue is anticipated to fund improvements on both the water and sewer systems, whereas the 2025 issue is targeted to the water system only. Proposed debt service payments are assumed to start in the year following debt issuance, based on an equal annual payment structure with a 20 -year term, an annual interest rate of 2.5 percent with a 1.0 percent issuance expense. 2.4.4 Water Utility Flow of Funds Detailed cash flow tables were developed individually for the water and sewer utility, and then combined to show the consolidated utility cash flow under the proposed plan. Table 2-9 presents the water utility cash flow, Table 2-10 presents the sewer utility cash flow, and Table 2-11 shows the consolidated utility cash flow. Beginning with the water utility, Line 1 of Table 2-9 shows user revenues under 2020 rates, identified previously in Table 2-4. Lines 2 through 12 present the revenue increases including the approved 8 percent increases from 2021 through 2025 and the proposed increases from 2026 through 2031. All revenue increases are assumed to be effective January 1 of each year indicated. As shown on Lines 7 Village of Mount Prospect 2-8 Burns & McDonnell 23 Water and Sewer Rate Study Final Report Financial Plannin through 12, 8 percent rate increases are proposed to continue through 2031. Total user revenues are summarized on Line 14. All other water revenues are summarized on Line 15 and are estimated to remain at 2021 budgeted levels, with the exception of water penalties and interest income. Water penalties are assumed to increase in proportion to the increase in user charge revenues. Interest income is calculated based on annual fund balances. Total water O&M expenses are shown on Line 17, shown previously in Table 2-6. The Village's outstanding and proposed debt is shown on Lines 18 through 20 and are identified previously in Table 2- 8. Total revenue requirements are summarized on Line 21. This amount is deducted from Line 16, total revenue, to determine the annual operating balance. With the proposed revenue adjustments, the operating balance on Line 22 is positive throughout the forecast and increasing to provide the funding needed to mitigate future debt issuance and achieve a pay-as-you-go strategy for capital improvements over time. Lines 23 through 26 project future operating reserves for the water utility. For 2021, a beginning balance of approximately $15.2 million was determined to be available for the water utility, as shown on Line 23. The annual operating balance is added to this amount to reflect cash produced by ongoing operations of the water utility. The utility intends to maintain a minimum operating balance of 90 days (or about 25 percent) of the next fiscal year's O&M, shown as the target on Line 27. Any balances exceeding this minimum are considered available for use on capital projects and are transferred for that purpose on Line 25. The water capital flow of funds is shown in Table 2-9 on Lines 28 through 34. Sources of funds for the capital plan includes the transfer of available cash from operations and the issuance of debt. As noted previously, two debt issues are proposed for the water utility amounting to $4.5 million in proceeds in 2022 and $11.0 million in proceeds in 2025. Issuance expense associated with the proposed debt issues is assumed to be capitalized and reflected in the debt service payment. Water capital improvement projects shown on Line 32 are consistent with those shown previously in Table 2-7. Line 34 of Table 2-9 shows the annual capital balance. As can be seen, the forecast shows funding sources sufficient to cover the capital uses in each year, leaving a positive capital balance on Line 34. Balances accumulate over the study period but eventually decrease as the capital funding strategy shifts to Village of Mount Prospect 2-9 Burns & McDonnell 24 Water and Sewer Rate Study Final Report Financial Planning Analysis a pay-as-you-go capital funding approach. Table 2-9: Water Utility Financial Plan Une of Funds Projected No. 7421 2422 2423 2424 2425 241Cx 2922 2M 2473 2434 2431 Water Utility Operating Flow of Funds - 13,472,400 7,798,700 5,821,700 2,735,300 9,766,800 6,480,700 3,574,200 1,198,000 453,600 124,900 1 Revenue Under Existing Rates 13,004,200 12,883,900 12,764,700 12,646,600 12,529,500 12,413,600 12,298,700 12,184,800 12,072,100 11,960,300 11,849,600 Proposed Revenue Adjustments 4,500,000 291,500 291,500 291,500 1,004,200 1,004,200 1,004,200 1,004,200 1,004,200 1,004,200 Year Month Increase 728,000 741,700 1,048,500 1,065,300 1,083,300 1,807,500 1,824,900 1,840,900 1,858,300 1,877,100 1,890,900 2 2021 2 8.0% 953,600 1,030,700 1,021,200 1,011,700 1,002,400 993,100 983,900 974,800 965,800 956,800 948,000 3 2022 2 8.0% 1,855,900 1,020,400 1,102,900 1,092,700 1,082,600 1,072,500 1,062,600 1,052,800 1,043,000 1,033,400 1,023,800 4 2023 2 8.0% 15,162,800 2,956,300 1,091,800 1,180,100 1,169,200 1,158,300 1,147,600 1,137,000 1,126,500 1,116,000 1,105,700 5 2024 2 8.0% 1,855,900 2,363,900 2,694,200 1,168,300 1,262,700 1,251,000 1,239,400 1,228,000 1,216,600 1,205,300 1,194,200 6 2025 2 813% (14,062,400) (2,261,300) (2,588,000) (3,263,600) 1,250,100 1,351,100 1,338,600 1,326,20D 1,313,900 1,301,700 1,289,700 7 2026 2 8.0% 2,956,300 3,058,900 3,165,10D 3,275,300 3,389,400 1,337,600 1,445,700 1,432,300 1,419,000 1,405,900 1,392,900 8 2027 2 8.0% 1,431,200 1,546,900 1,532,600 1,518,400 1,504,300 9 2028 2 8.0% 1,531,400 1,655,200 1,639,800 1,624,700 10 2029 2 8.0% 1,638,600 1,771,000 1,754,600 11 2030 2 8.0% 1,753,300 1,895,000 12 2031 2 8.0% 1,876,100 13 Total Proposed Additional Revenue 953,600 2,051,100 3,215,900 4,452,800 5,767,000 7,163,600 8,649,000 10,229,400 11,911,200 13,701,600 15,609,000 14 Total Water User Charge Revenue 13,957,800 14,935,000 15,980,600 17,099,400 18,296,500 19,577,200 20,947,700 22,414,200 23,983,300 25,661,900 27,458,600 15 Other Water Fund Revenue 214,200 160,100 167,500 176,100 185,400 193,500 204,200 215,600 227,900 241,000 255,100 16 Grand Total Water Revenue 14,172,000 15,095,100 16,148,100 17,275,500 18,481,900 19,770,700 21,151,900 21,629,800 24,211,200 25,902,900 27,713,700 Revenue Reauirements of Funds 17 Operation and Maintenance Expense 11,588,100 11,989,500 12,405,400 12,836,400 13,283,000 13,746,000 14,225,800 14,723,100 15,238,500 15,772,900 16,326,700 Debt Service - 13,472,400 7,798,700 5,821,700 2,735,300 9,766,800 6,480,700 3,574,200 1,198,000 453,600 124,900 18 Existing G.O. Debt 728,000 741,700 757,000 773,800 791,800 803,300 820,700 836,700 854,100 872,900 886,700 19 Proposed Debt 4,500,000 291,500 291,500 291,500 1,004,200 1,004,200 1,004,200 1,004,200 1,004,200 1,004,200 20 Total Debt Service 728,000 741,700 1,048,500 1,065,300 1,083,300 1,807,500 1,824,900 1,840,900 1,858,300 1,877,100 1,890,900 21 Total Revenue Requirements 12,316,100 12,731,200 13,453,900 13,901,700 14,366,300 15,553,500 16,050,700 16,564,000 17,096,800 17,650,000 18,217,600 22 Annual Operating Balance 1,855,900 2,363,900 2,694,200 3,373,800 4,115,600 4,217,200 5,101,200 6,065,800 7,114,400 8,252,900 9,496,100 23 Beginning Balance Operating Funds 15,162,800 2,956,300 3,058,900 3,165,100 3,275,300 3,389,400 3,507,700 3,630,400 3,757,400 3,889,200 4,025,800 24 Annual Operating Balance 1,855,900 2,363,900 2,694,200 3,373,800 4,115,600 4,217,200 5,101,200 6,065,800 7,114,400 8,252,900 9,496,100 25 Transfers to Capital (14,062,400) (2,261,300) (2,588,000) (3,263,600) (4,001,500) (4,098,900) (4,978,500) (5,938,800) (6,982,600) (8,116,300) (9,354,800) 26 Ending Operating Balance 2,956,300 3,058,900 3,165,10D 3,275,300 3,389,400 3,507,700 3,630,400 3,757,400 3,889,200 4,025,800 4,167,100 27 Target Annual Operating Balance [1] 2,956,300 3,058,900 3,165,100 3,275,300 3,389,400 3,507,700 3,630,400 3,757,400 3,889,200 4,025,800 4,167,100 Water Utility Capital Flow of Funds Sources 28 Beginning Capital Balance - 13,472,400 7,798,700 5,821,700 2,735,300 9,766,800 6,480,700 3,574,200 1,198,000 453,600 124,900 29 Transfer from Operations 14,062,400 2,261,300 2,588,000 3,263,600 4,001,500 4,098,900 4,978,500 5,938,800 6,982,600 8,116,300 9,354,800 30 Debt Issuance 4,500,000 11,000,000 31 Total Capital Sources 14,062,400 20,233,700 10,386,700 9,085,300 17,736,800 13,865,700 11,459,200 9,513,000 8,180,600 8,569,900 9,479,700 Uses 32 CIP 590,000 12,435,000 4,565,000 6,350,000 7,970,000 7,385,000 7,885,000 8,315,000 7,727,000 8,445,000 8,425,000 33 Total Capital Uses 590,000 12,435,000 4,565,000 6,350,000 7,970,000 7,385,000 7,885,000 8,315,000 7,727,000 8,445,000 8,425,000 34 Ending Capital Balance 13,472,400 7,798,700 5,821,700 2,735,300 9,766,800 6,480,700 3,574,200 1,198,000 453,600 124,900 1,054,700 35 Debt Service Coverage 3.55 4.19 3.57 4.17 4.80 3.33 3.80 4.30 4.83 5.40 6.02 [1] Annual Operating Balance target of 90 days O&M Existing utility debt service has been issued in the form of General Obligation bonds, to be paid from utility rate revenues. Future debt issues are assumed to be similarly structured. Although these bonds do not include covenants regarding debt service coverage (DSC), as a matter of prudent planning debt service coverage is evaluated and is shown on Line 35. DSC requirements are commonly associated with revenue bonds and generally require net revenues (defined as total utility revenue less O&M) to exceed annual debt service payments by a minimum factor that may range from 1. l Ox to 1.35x. This minimum DSC level provides assurances to bond holders that the utility has the financial wherewithal to meet its Village of Mount Prospect 2-10 Burns & McDonnell 25 Water and Sewer Rate Study Final Report Financial Planning Analys annual debt payment. Municipal bond rating agencies evaluate many criteria regarding the creditworthiness of utility debt. Debt service coverage is one of the primary indicators that is examined, and rating agencies generally reserve their stronger ratings for debt service coverage ratios that exceed 1.5x to 2.0x. As shown on Line 35, the water utility is anticipated to have DSC exceeding 1.5x to 2.Ox in each year of the forecast. 2.4.5 Sewer Utility Flow of Funds Table 2-10 presents the sewer utility cash flow. Line 1 of Table 2-10 shows user revenues under 2021 rates, identified previously in Table 2-5. Lines 2 through 6 present the revenue increases including the approved 8 percent increases from 2021 through 2025 and the proposed increases from 2026 through 2031. As shown on Line 8, sewer rate increases are anticipated to decline from 8 percent to 5 percent per year beginning in 2027. All revenue increases are assumed to be effective January 1 of each year indicated. Total user revenues are summarized on Line 14. Line 15 summarizes other sewer fund revenue, which is projected to remain at 2021 budget levels, with the exception of sewer penalties and interest income. Sewer penalties which are assumed to increase in proportion to the increase in user charge revenues and interest income are calculated based on annual balances. Line 16 shows the total operating revenue forecasted over the study period. Total sewer O&M expenses are shown on Line 17, shown previously in Table 2-6. The Village's outstanding and proposed debt is shown on Lines 18 through 20 and are identified previously in Table 2- 8. Total revenue requirements are summarized on Line 21. This amount is deducted from Line 16, total revenue, to determine the annual operating balance. With the proposed revenue adjustments, the operating balance on Line 22 is positive throughout the forecast. Lines 23 through 26 project future operating reserves for the sewer utility. For 2021, a beginning balance of approximately $2.5 million was determined to be available for the sewer utility, as shown on Line 23. The annual operating balance is added to this amount to reflect cash produced by ongoing operations of the sewer utility. The utility intends to maintain a minimum operating balance of 90 days (or about 25 percent) of the next fiscal year's O&M, shown as the target on Line 27. Any balances exceeding this minimum are considered available for use on capital projects and are transferred for that purpose on Line 25. Village of Mount Prospect 2-11 Burns & McDonnell Water and Sewer Rate Final Report Financial Planninq Analvsis The sewer capital flow of funds is shown in Table 2-10 on Lines 28 through 34. Sources of funds for the capital plan includes the transfer of available cash from operations and the issuance of debt. As noted previously, one debt issue is proposed for the sewer utility amounting to $5.5 million in proceeds in 2022. Comparable to the water utility, issuance expense associated with the proposed debt issue is assumed to be capitalized and reflected in the debt service payment. Sewer capital improvement projects shown on Line 32 are consistent with those shown in Table 2-7. Line 252,600 250,300 N.. 245,700 243,400 Sewer Utility Operating Flow of Funds 1 Revenue Under Existing Rates Proposed Revenue Adiustments Year Month Increase 262,900 2 2021 2 8.0% 3 2022 2 8.0% 4 2023 2 8.0% 5 2024 2 8.0% 6 2025 2 8.0% 7 2026 2 8.0% 8 2027 2 5.0% 9 2028 2 5.0% 10 2029 2 5.0% 11 2030 2 5.0% 12 2031 2 5.0% 13 Total Proposed Additional Revenue 14 Total Sewer User Charge Revenue 15 Other Sewer Fund Revenue 16 Grand Total Sewer Revenue Revenue Requirements 17 Operation and Maintenance Expense Debt Service 18 Existing G.O. Debt 19 Proposed Debt 20 Total Debt Service 21 Total Revenue Requirements 22 Annual Operating Balance 23 Beginning Balance Operating Funds 24 Annual Operating Balance 25 Transfers to Capital 26 Ending Operating Balance 27 Target Annual Operating Balance [1] Table 2-10: Sewer Utility Financial Plan Projected 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 3,217,200 3,187,400 3,157,900 3,128,700 3,099,800 3,071,100 3,042,600 3,014,500 2,986,600 2,958,900 2,931,500 235,900 255,000 252,600 250,300 248,000 245,700 243,400 241,200 238,900 236,700 234,500 252,400 272,800 270,300 267,800 265,300 262,900 260,500 258,000 255,600 253,300 2,285,000 270,100 291,900 289,200 286,600 283,900 281,300 278,700 276,100 273,500 (2,146,000) (2,268,700) 289,000 312,400 309,500 306,600 303,800 301,000 298,200 295,400 601,200 617,000 633,300 309,300 334,300 331,200 328,100 325,100 322,000 319,100 585,700 601,200 617,000 633,300 330,900 357,600 354,400 351,100 347,800 344,600 31 Total Capital Sources 3,009,200 8,030,900 4,702,200 2,551,400 221,300 239,200 237,000 234,800 232,600 2,669,300 3,154,800 Uses 230,200 248,800 246,500 244,200 32 CIP 1001000 43701000 239,500 237,300 235,100 11900,000 11900,000 1,900,000 11900,000 11900,000 11900,000 33 Total Capital Uses 1,680,000 248,100 245,800 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 34 Ending Capital Balance 257,100 235,900 507,400 795,500 1,101,500 1,426,700 1,772,300 2,006,900 2,238,700 2,478,100 2,703,100 2,935,200 3,453,100 3,694,800 3,953,400 4,230,200 4,526,500 4,843,400 5,049,500 5,253,200 5,464,700 5,662,000 5,866,700 55,800 47,800 49,000 51,200 53,500 56,000 57,700 59,300 60,900 63,600 51,300 3,508,900 3,742,600 4,002,400 4,281,400 4,580,000 4,899,400 5,107,200 5,312,500 5,525,600 5,725,600 5,918,000 1,981,400 2,033,300 2,086,600 2,141,300 2,197,500 2,255,300 2,314,600 2,375,500 2,438,100 2,502,400 2,568,400 485,300 494,500 504,700 515,800 527,900 535,500 547,200 557,800 569,400 581,900 591,100 - - 356,300 355,300 356,300 356,300 356,300 356,300 356,300 356,300 356,300 485,300 494,500 861,000 872,100 884,200 891,500 903,500 914,100 925,700 938,200 947,400 2,466,700 2,527,800 2,947,600 3,013,400 3,081,700 3,147,100 3,218,100 3,289,600 3,363,800 3,440,600 3,515,800 1,042,200 1,214,800 1,054,800 1,268,000 1,498,300 1,752,300 1,889,100 2,022,900 2,161,800 2,285,000 2,402,200 2,468,400 501,400 514,500 528,000 541,800 556,100 570,700 585,700 601,200 617,000 633,300 1,042,200 1,214,800 1,054,800 1,268,000 1,498,300 1,752,300 1,889,100 2,022,900 2,161,800 2,285,000 2,402,200 (3,009,200) (1,201,700) (1,041,300) (1,254,200) (1,484,000) (1,737,700) (1,874,100) (2,007,400) (2,146,000) (2,268,700) (2,385,500) 501,400 514,500 528,000 541,800 556,100 570,700 585,700 601,200 617,000 633,300 650,000 501,400 514,500 528,000 541,800 556,100 570,700 585,700 601,200 617,000 633,300 650,000 Sewer Utility Capital Flow of Funds Sources 28 Beginning Capital Balance - 1,329,200 3,660,900 1,297,200 651,400 235,400 73,100 47,200 154,600 400,600 769,300 29 Transfer from Operations 3,009,200 1,201,700 1,041,300 1,254,200 1,484,000 1,737,700 1,874,100 2,007,400 2,146,000 2,268,700 2,385,500 30 Debt Issuance 5,500,000 31 Total Capital Sources 3,009,200 8,030,900 4,702,200 2,551,400 2,135,400 1,973,100 1,947,200 2,054,600 2,300,600 2,669,300 3,154,800 Uses 32 CIP 1001000 43701000 3,405,000 11900,000 11900,000 11900,000 11900,000 1,900,000 11900,000 11900,000 11900,000 33 Total Capital Uses 1,680,000 4,370,000 3,405,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 1,900,000 34 Ending Capital Balance 1,329,200 3,660,900 1,297,200 651,400 235,400 73,100 47,200 154,600 400,600 769,300 1,254,800 35 Debt Service Coverage 3.15 3.46 2.23 2.45 2.69 2.96 3.09 3.21 3.34 3.44 3.54 [1] Annual Operating Balance target of 90 days O&M Line 34 of Table 2-10 shows the annual capital balance. As can be seen, the forecast shows funding sources sufficient to cover the capital uses in each year, leaving a positive capital balance on Line 34. Similar to the water utility, sewer DSC is projected to remain above 1.5x to 2.Ox during the study period. Village of Mount Prospect 2-12 Burns & McDonnell 27 Water and Sewer Rate Study Final Report Financial Planning Analysis 2.4.6 Consolidated Utility Flow of Funds A combined water and sewer utility detailed cash flow table is presented in Table 2-11. On a consolidated basis, proposed revenue adjustments range from 8.0 percent to about 7.4 percent for 2021 through 2031, as shown on Lines 3 through 13. Ending operating balances meet the 90 -day operating reserve in each year. The CTP is fully funded by the available cash and proposed debt issuance. The plan relies on debt initially but over time allows for the utility to achieve a pay-as-you-go strategy for capital projects over time. Table 2-11: Combined Water and Sewer Utility Financial Plan Line Projected No. 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Water & Sewer Utility Operating Flow of Funds - 14,801,600 11,459,600 7,118,900 3,386,700 10,002,200 6,553,800 3,621,400 1,352,600 854,200 1 Water Revenue Under Existing Rates 13,004,200 12,883,900 12,764,700 12,646,600 12,529,500 12,413,600 12,298,700 12,184,800 12,072,100 11,960,300 11,849,600 2 Sewer Revenue Under Existing Rates 3,217,200 3,157,400 3,157,900 3,12S,700 3,099,800 3,071,100 3,042,600 3,014,500 2,986,600 2,958,900 2,931,500 Proposed Revenue Adjustments 32 Total Capital Sources 17,071,600 28,264,600 15,088,900 11,636,700 19,872,200 15,838,800 13,406,400 11,567,600 10,481,200 11,239,200 Year Month Increase Uses 3 2021 2 8.0% 1,189,500 1,285,700 1,273,800 1,262,000 1,250,400 1,238,800 1,227,300 1,216,000 1,204,700 1,193,500 1,182,500 4 2022 2 8.0% 34 Sewer CIP 1,272,800 1,375,700 1,363,000 1,350,400 1,337,800 1,325,500 1,313,300 1,301,000 1,289,000 1,277,100 5 2023 2 8.0% 35 Total Capital Uses 2,270,000 1,361,900 1,472,000 1,458,400 1,444,900 1,431,500 1,418,300 1,405,200 1,392,100 1,379,200 6 2024 2 8.0% 36 Ending Capital Balance 14,801,600 11,459,600 1,457,300 1,575,100 1,560,500 1,546,000 1,531,800 1,517,600 1,503,500 1,489,600 7 2025 2 8.0% 37 Debt Service Coverage 3.39 3.89 2.96 1,559,400 1,685,400 1,669,800 1,654,300 1,639,000 1,623,700 1,608,800 8 2026 2 8.0% [1] Annual Operating Balance target of 90 days O&M 1,668,500 1,803,300 1,786,700 1,770,100 1,753,700 1,737,500 9 2027 2 7.4% 1,652,500 1,786,100 1,769,600 1,753,200 1,736,900 10 2028 2 7.4% 1,761,600 1,904,000 1,886,300 1,868,900 11 2029 2 7.4% 1,878,100 2,008,300 1,989,700 12 2030 2 7.4% 2,001,400 2,140,800 13 2031 2 7.5% 2,133,200 14 Total Proposed Additional Revenue 1,189,500 2,558,500 4,011,400 5,554,300 7,193,700 8,935,900 10,655,900 12,468,100 14,389,300 16,404,700 18,544,200 15 Total Utility User Charge Revenue 17,410,900 18,629,800 19,934,000 21,329,600 22,823,000 24,420,600 25,997,200 27,667,400 29,448,000 31,323,900 33,325,300 16 Other Water Fund Revenue 270,000 207,900 216,500 227,300 238,900 249,500 261,900 274,900 288,800 304,600 306,400 17 Grand Total Water Revenue 17,680,900 18,837,700 20,150,500 21,556,900 23,061,900 24,670,100 26,259,100 27,942,300 29,736,800 31,628,500 33,631,700 Revenue Requirements 18 Operation and Maintenance Expense 13,569,500 14,022,800 14,492,000 14,977,700 15,480,500 16,001,300 16,540,400 17,098,600 17,676,600 18,275,300 18,895,100 Debt Service 19 Existing G.O. Debt 1,213,300 1,236,200 1,261,700 1,289,600 1,319,700 1,338,800 1,367,900 1,394,500 1,423,500 1,454,800 1,477,800 20 Proposed Debt 647,800 647,800 647,800 1,360,500 1,360,500 1,360,500 1,360,500 1,360,500 1,360,500 21 Tota l Debt Service 1,213,300 1,236,200 1,909,500 1,937,400 1,967,500 2,699,300 2,728,400 2,755,000 2,784,000 2,815,300 2,838,300 22 Total Revenue Requirements 14,782,800 15,259,000 16,401,500 16,915,100 17,448,000 18,700,600 19,268,800 19,853,600 20,460,600 21,090,600 21,733,400 23 Annual Operating Balance 2,898,100 3,578,700 3,749,000 4,641,800 5,613,900 5,969,500 6,990,300 8,088,700 9,276,200 10,537,900 11,898,300 24 Beginning Balance Operating Funds 17,631,200 3,457,700 3,573,400 3,693,100 3,817,100 3,945,500 4,078,400 4,216,100 4,358,600 4,506,200 4,659,100 25 Annual Operating Balance 2,898,100 3,578,700 3,749,000 4,641,800 5,613,900 5,969,500 6,990,300 8,088,700 9,276,200 10,537,900 11,898,300 25 Transfers to Capital (17,071,600) (3,463,000) (3,629,300) (4,517,800) (5,485,500) (5,836,600) (6,852,600) (7,946,200) (9,128,600) (10,385,000) (11,740,300) 27 Ending Operating Balance 3,457,700 3,573,400 3,693,100 3,817,100 3,945,500 4,078,400 4,216,100 4,358,600 4,506,200 4,659,100 4,817,100 28 Target Annual Operating Balance [1] 3,457,700 3,573,400 3,693,100 3,817,100 3,945,500 4,078,400 4,216,100 4,358,600 4,506,200 4,659,100 4,817,100 Utility Capital Flow of Funds Sources 29 Beginning Capita l Balance - 14,801,600 11,459,600 7,118,900 3,386,700 10,002,200 6,553,800 3,621,400 1,352,600 854,200 894,200 30 Transfer from Operations 17,071,600 3,463,000 3,629,300 4,517,800 5,485,500 5,836,600 6,852,600 7,946,200 9,128,600 10,385,000 11,740,300 31 Debt Issuance 10,000,000 11,000,000 32 Total Capital Sources 17,071,600 28,264,600 15,088,900 11,636,700 19,872,200 15,838,800 13,406,400 11,567,600 10,481,200 11,239,200 12,634,500 Uses 33 Water CIP 590,000 12,435,000 4,565,000 6,350,000 7,970,000 7,385,000 7,885,000 8,315,000 7,727,000 8,445,000 8,425,000 34 Sewer CIP 1,680,000 4,370,000 3,405,000 1,900,000 11900,000 11900,000 11900,000 11900,000 11900,000 11900,000 11900,000 35 Total Capital Uses 2,270,000 16,805,000 7,970,000 8,250,000 9,870,000 9,285,000 9,785,000 10,215,000 9,627,000 10,345,000 10,325,000 36 Ending Capital Balance 14,801,600 11,459,600 7,118,900 3,386,700 10,002,200 6,553,800 3,621,400 1,352,600 854,200 894,200 2,309,500 37 Debt Service Coverage 3.39 3.89 2.96 3.40 3.85 3.21 3.56 3.94 4.33 4.74 5.19 [1] Annual Operating Balance target of 90 days O&M Village of Mount Prospect 2-13 Burns & McDonnell Water and Sewer Rate Study Final Report Proposed Rates 3.0 PROPOSED RATES 3.1 Introduction The primary focus of Step 2, Rate Design, is the examination of revenue recovery. Generally speaking, the objective is to design rates for each utility to progress toward the following goals: • Generate adequate revenues to meet the projected operating and capital costs, while maintaining sound financial performance. • Provide revenue stability. 3.2 Existing Water and Sewer Rates The current 2021 water and sewer rate schedule is shown in Table 3-1. The water rate consists of a fixed fee that varies by meter size and a volumetric charge per thousand gallons for both Inside and Outside Village customers. The sewer rate consists of a uniform fixed fee and a volumetric charge per thousand gallons for both Inside and Outside Village customers. Village of Mount Prospect Table 3-1: Existing Water and Sewer Rates Line 2021 No. Description Base Charge $/bill Water - Inside Village 1 5/8" $ 6.00 2 3/4" $ 6.00 3 1" $ 6.00 4 1.5" $ 9.00 5 2" $ 13.00 6 3" $ 44.00 7 4" $ 55.00 8 6" $ 82.00 9 8" $ 112.00 Water - Outside Village 10 5/8" $ 12.00 11 3/4" $ 12.00 12 1" $ 12.00 13 1.5" $ 18.00 14 2" $ 26.00 15 3" $ 88.00 16 4" $ 110.00 17 6" $ 164.00 18 8" $ 224.00 19 Sewer - Inside Village $ 5.00 20 Sewer -Outside Village $ 10.00 Volume Charge $/I(gal 21 Water - Inside Village $ 11.85 22 Water - Outside Village $ 23.70 23 Sewer - Inside Village $ 2.54 24 Sewer -Outside Village $ 5.08 CIE Burns & McDonnell Water and Sewer Rate Study Final Report Proposed Rates As a matter of practice, rates for service provided to Outside Village customers are set at 2.0 times Inside Village rates. Water and sewer rates applicable to Outside Village customers are reflective of this multiplier for both base and volume charges. 3.3 Proposed Water and Sewer Rates Table 3-2 shows existing and proposed water and sewer rates. Rates for 2022 through 2025 are unchanged from recommendations made in the prior rate study, reflecting the 8 percent per year increase previously approved. Water and sewer rates for 2026 through 2031 are anticipated to maintain the existing rate structure and increase in accordance with water and sewer rate increases shown previously in Table 2-9 and Table 2-10, respectively. Table 3-2: Existing and Proposed Water and Sewer Rates Table 3-3 shows the changes in monthly water bills over the study period, assuming all proposed rates are implemented through 2031. As shown on Lines 7 through 9, the impact of proposed rate increases is approximately 8 percent per year, aligning with percentage increases shown previously on Table 2-9. Village of Mount Prospect 3-2 Burns & McDonnell 30 6x''.istdro AcirntraeCi Proposed Lim 2621 2022 2023 2624 2625 2626 20127 2028 2029 2030 2031 No. Description Base Charge $/bill 5/bi11 S/bill $/b�'ll S/Ibdll S/tlbM S/bill S/b ll 5/b,11 5ji'01 5/b(II w'atse• . irnmde Village 1 5/8" $ 6.00 $ 7.00 $ 8.66 $ 9.00 $ 16.66 S 101.80 5 11.70 $ 12.6 $ 13.60 $ 14.700 $ 15.90 2 3/4" $ 6.66 $ 7.60 $ 8.60 $ 9.60 $ 10.00 $ 16.86 $ 11.70 $ 12.60 $ 13.60 $ 14.70 $ 1.5.90 3 1°` $ 6.66 $ 7,CCi� $ 8.60 $ 9.60 $ 10,00 $ 16.80 $ 11.70 $ 12.6�d1 $ 13.6�fl1 $ 14.70 $ 15.90 4 1.5" $ 9.00 $ 11.00 $ 12.06 $ 14.00 $ 15.00 $ 16.20 $ 17.50 $ 18.96 $ 20.40 $ 22.00 $ 23.50 S 2" $ 13.00 $ 15.00 $ 18.00 $ 26.00 $ 22.00 $ 23.80 $ 25.70 $ 27.80 $ 30.06 $ 32.40 $ 35.06 6 3" $ 44.00 $ 51.003 $ 59.00 $ 66.60 $ 73,00 $ 78,30 $ 85.10 $ 91.90 $ 99.30 $167.20 $115.50 7 4" $ 55.66 $ 65.60 $ 74.00 $ 53.00 $ 92.00 $ 99.401 5 167.40 $ 116.0141 $ 225.30 $135.30 $146.101 8 6" $ 82.66 $ 96.60 $ 1002,00 $ 123.00 $ 137,601 $ 148,00 5 159.801 $ 172.61 $ 486.40 $201,30 $21.7.40 9 8" $ 112.00 $ 131.00 $ 150.66 $ 169.60 5 157,00 $ 202,00 $ 218.20 $ 235.76 $ 254M $275.06 $297.0'0 Water - Outside Village 10 5/8' $ 12.00 $ 14.010 $ 16.603 $ 15.66 S 26.641 $ 21.61 $ 23,40 $ 25.20 $ 2720 $ 29.401 $ 31,80 11 3/4" $ 12.00 $ 14.010 $ 16.603 $ IBM S 26.06 $ 21.61 5 23,40 $ 25,20 $ 2720 $ 29.401 $ 31,80 12 1`" $ 12.601 $ 14. 00 $ 16.00 S 18.0]11 $ 201.66 $ 2L60 $ 23.40 $ 25,20 $ 2720 $ 29,407 $ 31,80 13 1,51" $ 15.00 $ 22.06 $ 24.00 $ 28.00 S MOO $ 32.40 5 35.6'6 S 37,80 $ 40.80 5 44,00" $ 47.66 14 2" $ 26.00 $ 34M.00 $ 36.00 $ 40.00 S 44.66 $ 47.67 S 51.40 $ 55,60 $ 60,00 $ 64.43; $ 76,60 15 3" $ 58.00 $ 162.000 $ 115.00 $ 132.00 S 146.66 $ 157.607 $ 176.20 $ 183.50 $ 195.6 $ 214A0 $ 231,60 16 4" $ 116.00 $ 136.0.'00 $ 145.00 $ 166.603 S 154.00 $ 195.50 S 214.56 $ 232.00 $ 250.6 $270.66 $292.20 17 6" $ 164.00 $ 192.00 $ 218.60 S 246.003 S 274.66 S 29&00 S 3719.60 $ 345.20 $ 372,80 $402,60 $434.80 18 8" $ 224.00 S 262.00 $ 3010,00 $ 336.103 S 374.66 S 404M S 436.46 S 471.40 $ 5019.211 $550,00 5594.6 19 Sevwer- insi& Village $ 5.00 $ 5.00¢ $ 5.40 S &.840 $ 6.36 S &80 S 7.16 S 7.50 $ 7.90 $ 5.300 $ 5.70 20 Sevwer- Outside Village $ 16.00 $ 16.00 S 10,90 $ 1166 $ 12.66 S 13.60 S 14.26 S 1&.0D $ 15,80 $ 16,60 $ 17.40 VoiLirrie Charge "s/KgM 5/Kpi SjKpl S(Kpl S/M.5a1 i: g.4 51H'.g,aI 1,1K9'a1 slkgal S/Kpi 21 water . inside Village $ 11.95 $ 12.71 $ 13.66 $ 14.69 S 15.31 $ 17.67 $ 18.44 S 1992. $ 21,.51 $ 23.23 $ 2S a) 2.2 water . Outside Village $ 23.70 $ 25.42 $ 27.32 S 29.38 S 31.62 S 34.14 S 36.33 $ 39.84 $ 43.02 $ 407.46 $ 50.18 23 Sews r - inside Village $ 2.54 $ 2.79 $ 3.02 $ 3,26 $ 3.52 $ 3.8 0 $ 3.99 $ 4.1:h $ 4.40 $ 4.62 $ 4.85 2.4 Sewver- OtAs'ideVilla $ 5.09 $ 5.58 $ 6.04 $ 6.52 $ 7.64 $ 7.60 $ 7.98 $ 8.38 $ 5.6 $ 9.29 $ 9 7 Table 3-3 shows the changes in monthly water bills over the study period, assuming all proposed rates are implemented through 2031. As shown on Lines 7 through 9, the impact of proposed rate increases is approximately 8 percent per year, aligning with percentage increases shown previously on Table 2-9. Village of Mount Prospect 3-2 Burns & McDonnell 30 Water and Sewer Rate Final Report Table 3-3: Typical Water Bills Under Existing and Proposed Rates Proposed Rates Table 3-4 shows the changes in sewer bills over the study period, assuming all rate increases and proposed rates are implemented through 2031. As shown on Lines 7 through 9 the impact of proposed rate increases is approximately 8 percent per year through 2026, and then declines to 5 percent per year through 2031, aligning with percentage increases shown previously on Table 2-10. Table 3-4: Typical Sewer Bills Under Existing and Proposed Rates Billable Billable Monthly Bill Under Rates Monthly Bill Under Rates Line Flow Existing Flow Adopted I F Proposed Proposed No. No. Customer Tvoe & Meter Size Kgal 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Water Utility 1 Residential (5/8" - 1") 5.0 $ 17.70 $ 18.95 $ 20.50 $ 22.10 $ 23.90 $ 25.80 $ 27.05 $ 28.45 $ 29.90 1 Residential (5/8" - 1") 5.0 $ 65.25 $ 70.55 $ 76.30 $ 82.45 $ 89.05 $ 96.15 $ 103.90 $ 112.20 $ 121.15 $ 130.85 $ 141.35 2 Residential (5/8" - 1") 10.0 $ 124.50 $ 134.10 $ 144.60 $ 155.90 $ 168.10 $ 181.50 $ 196.10 $ 211.80 $ 228.70 $ 247.00 $ 266.80 3 Residential (5/8" - 1") 15.0 $ 183.75 $ 197.65 $ 212.90 $ 229.35 $ 247.15 $ 266.85 $ 288.30 $ 311.40 $ 336.25 $ 363.15 $ 392.25 5 Change in $ over prior year $ 2.50 $ 2.70 $ 2.80 $ 3.10 $ 3.30 $ 2.20 $ 2.40 $ 2.50 $ 2.60 $ 2.70 6 Residential (5/8" - 1") 4 Residential (5/8" - 1") $ 4.40 $ 4.70 $ 3.15 $ 3.40 $ 3.55 $ 5.30 $ 5.75 $ 6.15 $ 6.60 $ 7.10 $ 7.75 $ 8.30 $ 8.95 $ 9.70 $ 10.50 5 Residential (5/8" - 1") $ 9.60 $ 10.50 $ 11.30 $ 12.20 $ 13.40 $ 14.60 $ 15.70 $ 16.90 $ 18.30 $ 19.80 6 Residential (5/8"-1") $ 13.90 $ 15.25 $ 16.45 $ 17.80 $ 19.70 $ 21.45 $ 23.10 $ 24.85 $ 26.90 $ 29.10 Change in % over prior year 7 Residential (5/8" - 1") 8.1% 8.2% 8.1% 8.0% 8.0% 8.1% 8.0% 8.0% 8.0% 8.0% 8 Residential (5/8" - 1") 7.7% 7.8% 7.8% 7.8% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 9 Residential (5/8" - 1") 7.6% 7.7% 7.7% 7.8% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% Table 3-4 shows the changes in sewer bills over the study period, assuming all rate increases and proposed rates are implemented through 2031. As shown on Lines 7 through 9 the impact of proposed rate increases is approximately 8 percent per year through 2026, and then declines to 5 percent per year through 2031, aligning with percentage increases shown previously on Table 2-10. Change in % over prior year 7 Residential (5/8" - 1") 7.1% 8.2% 7.8% 8.1% 7.9% 4.8% 5.2% 5.1% 5.0% 4.9% 8 Residential (5/8" - 1") 8.2% 8.2% 7.9% 8.1% 8.0% 4.956 5.1% 5.1% 5.0% 5.0% 9 Residential (5/8" - 1") 8.7% 8.2% 7.9% 8.0% 8.0% 4.90/ 5.1% 5.0% 5.0% 5.0% Table 3-5 shows the combined changes in water and sewer bills over the study period, assuming all rate increases and proposed rates are implemented through 2031. Lines 7 through 9 show the percentage change from year to year which consolidates the impact of proposed water and sewer rate increases. Village of Mount Prospect 3-3 Burns & McDonnell 31 Table 3-4: Typical Sewer Bills Under Existing and Proposed Rates Billable Monthly Bill Under Rates Line Flow Existing Adopted F Proposed No. Customer Tyne &Meter Size ICgal 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Sewer Utility 1 Residential (5/8" - 1") 5.0 $ 17.70 $ 18.95 $ 20.50 $ 22.10 $ 23.90 $ 25.80 $ 27.05 $ 28.45 $ 29.90 $ 31.40 $ 32.95 2 Residential (5/8" - 1") 10.0 $ 30.40 $ 32.90 $ 35.60 $ 38.40 $ 41.50 $ 44.80 $ 47.00 $ 49.40 $ 51.90 $ 54.50 $ 57.20 3 Residential (5/8" - 1") 15.0 $ 43.10 $ 46.85 $ 50.70 $ 54.70 $ 59.10 $ 63.80 $ 66.95 $ 70.35 $ 73.90 $ 77.60 $ 81.45 Change in $ over prior year 4 Residential (5/8" - 1") $ 1.25 $ 1.55 $ 1.60 $ 1.80 $ 1.90 $ 1.25 $ 1.40 $ 1.45 $ 1.50 $ 1.55 5 Residential (5/8" - 1") $ 2.50 $ 2.70 $ 2.80 $ 3.10 $ 3.30 $ 2.20 $ 2.40 $ 2.50 $ 2.60 $ 2.70 6 Residential (5/8" - 1") $ 3.75 $ 3.85 $ 4.00 $ 4.40 $ 4.70 $ 3.15 $ 3.40 $ 3.55 $ 3.70 $ 3.85 Change in % over prior year 7 Residential (5/8" - 1") 7.1% 8.2% 7.8% 8.1% 7.9% 4.8% 5.2% 5.1% 5.0% 4.9% 8 Residential (5/8" - 1") 8.2% 8.2% 7.9% 8.1% 8.0% 4.956 5.1% 5.1% 5.0% 5.0% 9 Residential (5/8" - 1") 8.7% 8.2% 7.9% 8.0% 8.0% 4.90/ 5.1% 5.0% 5.0% 5.0% Table 3-5 shows the combined changes in water and sewer bills over the study period, assuming all rate increases and proposed rates are implemented through 2031. Lines 7 through 9 show the percentage change from year to year which consolidates the impact of proposed water and sewer rate increases. Village of Mount Prospect 3-3 Burns & McDonnell 31 Water and Sewer Rate Final Report Proposed Rates 3.4 Regional Water and Sewer Typical Bills A comparison of rates for fifteen regional utilities (including Mount Prospect) was conducted based on rates in effect as of September 30, 2021. Figure 3-1 shows a combined water and sewer bill for a 5/8 -inch meter using 5,000 gallons a month for these regional providers. As shown in Figure 3-1, the regional typical bill ranges from about $35 per month to about $100 per month, with Mount Prospect currently at about $83 a month. The average across this survey is nearly $60 per month. Figure 3-1: Residential Sewer Bill Comparison at 5,000 Gallons per Month N •11.0i /// gallons • Village of Mount Prospect 3-4 Burns & McDonnell 32 Table 3-5: Typical Combined Water and Sewer Bills Under Existing and Proposed Rates Billable Monthly Bill Under Rates Line Flow Existing Adopted I Proposed No. Customer Typeg, Meter Size Kgal 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Water and Sewer Utility 1 5/8" 5.0 $ 82.95 $ 89.50 $ 96.80 $ 104.55 $ 112.95 $ 121.95 $ 130.95 $ 140.65 $ 151.05 $ 162.25 $ 174.30 2 3/4" 10.0 $ 154.90 $ 167.00 $ 180.20 $ 194.30 $ 209.60 $ 226.30 $ 243.10 $ 261.20 $ 280.60 $ 301.50 $ 324.00 3 V. 15.0 $ 226.85 $ 244.50 $ 263.60 $ 284.05 $ 306.25 $ 330.65 $ 355.25 $ 381.75 $ 410.15 $ 440.75 $ 473.70 Change in $ over prior year 4 5/8" $ 6.55 $ 7.30 $ 7.75 $ 8.40 $ 9.00 $ 9.00 $ 9.70 $ 10.40 $ 11.20 $ 12.05 S 3/4" $ 12.10 $ 13.20 $ 14.10 $ 15.30 $ 16.70 $ 16.80 $ 18.10 $ 19.40 $ 20.90 $ 22.50 6 1" $ 17.65 $ 19.10 $ 20.45 $ 22.20 $ 24.40 $ 24.60 $ 26.50 $ 28.40 $ 30.60 $ 32.95 Change in % over prior year 7 5/8" 7.9% 8.2% 8.0% 8.0% 8.0% 7.4% 7.4% 7.4% 7.4% 7.4% 8 3/4" 7.8% 7.9% 7.8% 7.9% 8.0% 7.4% 7.4% 7.4% 7.4% 7.5% 9 1" 7.8% 7.8% 7.8% 7.8% 8.0% 7.4% 7.5% 7.4% 7.5% 7.5% 3.4 Regional Water and Sewer Typical Bills A comparison of rates for fifteen regional utilities (including Mount Prospect) was conducted based on rates in effect as of September 30, 2021. Figure 3-1 shows a combined water and sewer bill for a 5/8 -inch meter using 5,000 gallons a month for these regional providers. As shown in Figure 3-1, the regional typical bill ranges from about $35 per month to about $100 per month, with Mount Prospect currently at about $83 a month. The average across this survey is nearly $60 per month. Figure 3-1: Residential Sewer Bill Comparison at 5,000 Gallons per Month N •11.0i /// gallons • Village of Mount Prospect 3-4 Burns & McDonnell 32 Water and Sewer Rate Study Final Report Proposed Rates 3.5 Water and Sewer Service Affordability Many communities experience concerns over affordability with providing their water and sewer services to customers. The US EPA provides guidance for interpreting annual water and sewer costs as a percent of median household income (MHI) to evaluate affordability. The methodology developed by the EPA and reflected herein was designed to consider the impact of compliance with the Clean Water Act. Generally speaking, affordability in this context is viewed as "low burden" if the total water and sewer bill per year is less than 2 percent of MHI; "medium burden" if the total annual bill is between 2 percent and 4 percent of MHI; and "high burden" if the total annual bill is greater than 4 percent of MHI. Mount Prospect bills its customers for water treatment and distribution services and sewer collection services. However, sewer treatment set -vice for Mount Prospect customers is provided by the Metropolitan Water Reclamation District of Greater Chicago (MWRDGC), and their associated costs of sewer treatment are recovered through property taxes. The EPA's affordability methodology and perspective on relative "burden" reflects the total cost of sewer service, including both collection and treatment. To understand the total cost for water and sewer service provided to a typical residential customer, the cost of MWRDGC treatment has been estimated. Table 3-6 shows affordability analysis of a residential water and sewer customer, including sewer treatment. Line 1 represents the costs paid by a residential customer using 5 kgal per month for water treatment and distribution and sewer collection service provided by Mount Prospect. Lines 3 through 5 show the estimated cost of sewer treatment provided by MWRDGC applied to a median household value in Mount Prospect and MWRDGC's rate. Line 6 shows the total cost of water and sewer service for a 5 kgal residential customer with a median household value of $330,000 to be about $1,400 per year. As shown on Line 8, the total cost for water and sewer set vice represents about 1.7 percent of the projected 2021 Mount Prospect MHI, indicating the combined annual water and sewer cost to be "low burden" in terms of affordability. Village of Mount Prospect 3-5 Burns & McDonnell 33 Water and Sewer Rate Final Report Proposed Rates [1] Mount Prospect monthly residential cost for water service and sewer collection service [2] 2019 5 -Yr ACS inflated to 2021 using average annual growth rates since 2010 (1.8%) Village of Mount Prospect 3-6 Burns & McDonnell 34 Table 3-6: Mount Prospect Affordability Analysis Line No. Existing Mount Prospect Water & Sewer Costs [11 2021 1 Monthly Bill: 5/8" using 5kgal/month $ 82.95 2 Annualized Bill $ 995.40 Estimated Sewer Treatment Costs (MWRDGC) 3 Equalized Assessed Property Value $ 106,436 4 MWRDGC Levy ($/$100 assessed property value) $ 0.3784 5 Total Annual Cost of Sewer Treatment (Line 3/ 100 * Line 4) $ 402.75 6 Total Water and Sewer Service Cost per Year (Line 2 + Line 5) $ 1,398.15 7 M H I [21 $ 82,629 8 Annual Water and Sewer cost as % of MHI (Line 6/ Line 7) 1.7% [1] Mount Prospect monthly residential cost for water service and sewer collection service [2] 2019 5 -Yr ACS inflated to 2021 using average annual growth rates since 2010 (1.8%) Village of Mount Prospect 3-6 Burns & McDonnell 34 Water and Sewer Rate Study Final Report Proposed Rates 3.6 Statement of Limitations In preparation of the Village of Mount Prospect Rate Study (Study), Burns & McDonnell relied upon information provided by the Village. The information included various analyses, computer-generated information and reports, audited financial reports, and other financial and statistical information, as well as other documents such as operating budgets and current rate schedules. In addition, input to key assumptions regarding expected future levels of revenue, sales, and expenditures was provided by Village staff to Burns & McDonnell. While Burns & McDonnell has no reason to believe that the information provided, and upon which Burns & McDonnell has relied, is inaccurate or incomplete in any material respect, Burns & McDonnell has not independently verified such information and cannot guarantee its accuracy or completeness. Estimates and projections prepared by Burns & McDonnell relating to financial forecasting and costs are based on Burns & McDonnell's experience, qualifications, and judgment as a professional consultant. Since Burns & McDonnell has no control over weather, cost and availability of labor, material and equipment, labor productivity, contractors' procedures and methods, unavoidable delays, economic conditions, government regulations and laws (including interpretation thereof), competitive bidding, and market conditions or other factors affecting such estimates or projections, Burns & McDonnell does not guarantee the accuracy of its estimates or predictions. Village of Mount Prospect 3-7 Burns & McDonnell 35 BURNS `MSDONNELL. CREATE AMAZING. Burns & McDonnell World Headquarters 9400 Ward Parkway Kansas City, MO 64114 O 816-333-9400 F 816-333-3690 www.burnsmcd.com ORDINANCE NUMBER AN ORDINANCE providing for the issuance of not to exceed $10,000,000 General Obligation Bonds, in one or more series, of the Village of Mount Prospect, Cook County, Illinois, for the purpose of financing the costs of certain capital projects in the Village, providing for the levy and collection of a direct annual tax sufficient to pay the principal of and interest on said Bonds, and authorizing the proposed sale of said Bonds to the purchaser thereof. Adopted by the Mayor and Board of Trustees on the 7th day of December, 2021. Error! Unknown document property name. 37 ORDINANCE NO. AN ORDINANCE providing for the issuance of not to exceed $10,000,000 General Obligation Bonds, in one or more series, of the Village of Mount Prospect, Cook County, Illinois, for the purpose of financing the costs of certain capital projects in the Village, providing for the levy and collection of a direct annual tax sufficient to pay the principal of and interest on said Bonds, and authorizing the proposed sale of said Bonds to the purchaser thereof. WHEREAS, by virtue of its population, and pursuant to the provisions of Section 6 of Article VII of the Constitution of the State of Illinois (the "State"), the Village of Mount Prospect, Cook County, Illinois (the "Village"), is a home rule unit and may exercise any power or perform any function pertaining to its government and affairs including, but not limited to, the power to tax and to incur debt; and WHEREAS, pursuant to the provisions of said Section 6, the Village has the power to incur debt payable from ad valorem property tax receipts or from any other lawful source and maturing within 40 years from the time it is incurred without prior referendum approval; and WHEREAS, the Mayor and the Board of Trustees of the Village (collectively, the "Corporate Authorities") have heretofore determined and do hereby determine that it is advisable, necessary and in the best interests of the residents of the Village to issue its general obligation bonds in the aggregate issued amount not to exceed $10,000,000 to pay (i) for costs of certain capital projects in the Village (collectively, the "Project"), (ii) capitalized interest through December 1, 2022 (not to exceed $250,000 total), and (iii) certain costs of issuance of the Bonds (as such term is hereinafter defined), all for the benefit of the inhabitants of the Village; and WHEREAS, the estimated cost of the Project, including engineering, legal, financial, bond discount, printing and publication costs, capitalized interest, and other expenses Error! Unknown document property name. 38 (collectively, the "Project Costs"), is not more than $10,000,000, and there are insufficient funds on hand and lawfully available to pay such costs; and WHEREAS, this Ordinance, adopted pursuant to Section 6 of Article VII of the Constitution of the State and the Municipal Code of the Village, provides authority for the Village acting by the Corporate Authorities to issue the Bonds: NOW THEREFORE, BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS, IN EXERCISE OF ITS HOME RULE POWERS, AS FOLLOWS: Section 1. Incorporation of Preamble. The Corporate Authorities hereby find that all of the recitals contained in the preambles to this Ordinance are full, true and correct and do hereby incorporate such recitals into this Ordinance by this reference. Section 2. Findings; Issuance of Bonds. (a) The Corporate Authorities hereby find and determine that it is necessary and in the best interest of the Village and necessary for the welfare of the government and affairs of the Village, the proper public purposes of the Village and in the public interest to issue, in one or more series, general obligation bonds of the Village in an amount not to exceed $10,000,000 for the purpose of funding the costs of the Project and the costs of the Village in connection with the issuance of such bonds. Section 3. Bond Details. There shall be borrowed on the credit of and for and on behalf of the Village, an aggregate principal amount not to exceed $10,000,000 for the purposes aforesaid and that the Village shall issue, in one or more series, in the name of the Village its "General Obligation Bonds" (the "Bonds") The Bonds shall be issued in the form of a separate single authenticated fully registered bond for the aggregate principal amount of each separate maturity of the Bonds. The Bonds -2- Error! Unknown document property name. 39 shall bear the date of authentication; shall be in denominations of Five Thousand Dollars ($5,000) each or integral multiples thereof, numbered consecutively from 1 upward and dated as set forth in the hereinafter described Bond Notification; and interest on the Bonds shall be payable semiannually on each June 1 and December 1 of each year or such other date as provided in a Bond Notification (as hereinafter defined), commencing not earlier than December 1, 2021 (such interest computed upon the basis of a 360 -day year of twelve 30 -day months). The Bonds shall become due and payable (subject to prior redemption as set forth in the Bond Notification) on December 1 over a period ending not later than December 1, 2043 and in an amount not exceeding $1,475,000 per year, all as further detailed in the Bond Notification executed by the Designated Representatives (as hereinafter defined); provided, however, that no Bond shall bear interest at a rate per annum in excess of five percent (5.00%). The Designated Representatives are hereby given full authority to execute and deliver a Bond Notification for and on behalf of the Village as herein provided. The Bond Notification shall be made a part of the transcript of the proceedings related to the issuance of the Bonds. Interest on the Bonds shall be payable from the interest payment date to which interest has been paid next preceding the authentication date of the Bonds unless the Bonds are authenticated after the fifteenth (15th) day next preceding an interest payment date and on or before such interest payment date in which case they shall bear interest from such interest payment date, or unless the Bonds are authenticated on or before the fifteenth (15th) day next preceding the first interest payment date, in which case they shall bear interest from the original date of the issuance of the Bonds, until the principal shall be fully paid. All payments of interest on the Bonds shall be paid by check, mailed one business day prior to the interest payment date to the registered owners thereof as the names appear as of the fifteenth (15th) day next preceding -3- Error! Unknown document property name. 40 the interest payment date and at the addresses as they appear on the registration books kept by the Registrar (as hereinafter defined) or at such other address as is provided to the Paying Agent (as hereinafter defined) in writing by such registered owner. The principal of the Bonds shall be payable at the principal corporate trust office of the Paying Agent. All payments on the Bonds shall be made in any coin or currency of the United States of America that on the date of such payment shall be legal tender for the payment of public and private debts. If payment of principal or interest is made to a depository, payment shall be made by wire transfer on the payment date in same-day funds. If the payment date occurs on a date when financial institutions are not open for business, the wire transfer shall be made on the next succeeding business day. The Paying Agent shall be instructed to wire transfer payments by 1:00 p.m. (New York City time) so such payments are received at the depository by 2:30 p.m. (New York City time). Section 4. Registrar and Paying Agent. (a) General. The Village Treasurer, the Purchaser (as hereinafter defined) or a bank or trust company with an office located in the State of Illinois, the State of Minnesota or the State of Missouri, as set forth in the Bond Notification (the "Registrar" or "Paying Agent") is hereby appointed to serve as registrar and paying agent for the Bonds. The Registrar is hereby charged with the responsibility of authenticating the Bonds. The Mayor, the Treasurer of the Village (the "Village Treasurer"), and the Village Clerk of the Village (the "Village Clerk") are hereby authorized to enter into such agreements or understandings with the Registrar as will enable the institution to perform the services required of a registrar and paying agent. The Mayor and Village Treasurer are further authorized to pay such fees as the Registrar may charge for the -4- Error! Unknown document property name. 41 services it provides as Registrar and Paying Agent, and such fees may be paid from the fund established to pay the principal of and interest on the Bonds. Each Bond shall be transferable or exchangeable only upon the books of the Village kept for that purpose at the principal corporate trust office of the Registrar by the registered owner in person, or by its attorney duly authorized in writing, upon surrender of such Bond together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered owner, or its attorney duly authorized in writing, and thereupon a new fully registered bond or bonds in an authorized aggregate principal amount and of the same maturity, shall be executed and delivered in the name of the transferee or transferees or the registered owner, as the case may be, in exchange therefor. The Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the fifteenth (15th) day next preceding an interest payment date on such Bond and ending on such interest payment date, or after notice calling such Bond for redemption has been mailed, or during the fifteen (15) day period next preceding mailing of notice of redemption of any Bonds. The costs of such transfer or exchange shall be borne by the Village except for any tax or governmental charge required to be paid with respect to the transfer or exchange, which taxes or governmental charges are payable by the person requesting such transfer or exchange. The Village, the Registrar and the Paying Agent for the Bonds may treat and consider the person in whose name such Bonds are registered as the absolute owner thereof for all purposes, including for the purpose of receiving payment of, or on account of, the principal thereof and interest due thereon. The Registrar and Paying Agent may at any time resign as registrar and paying agent upon giving 30 days' notice in writing to the Village and by first class mail to each registered owner of the Bonds then outstanding, and such resignation will take effect at the end of such -5- Error! Unknown document property name. 42 30 -day period or upon the earlier appointment of a successor registrar and paying agent by the Village. Any such notice to the Village may be served personally or sent by registered mail. The Registrar and Paying Agent may be removed at any time as registrar and paying agent by the Village, in which event the Village may appoint a successor registrar and paying agent for the Bonds. The Village shall notify each registered owner of the Bonds then outstanding by first class mail of the removal of the registrar and paying agent. Notices to the registered owners of the Bonds shall be deemed to be given when mailed by first class mail to the addresses of such registered owners as they appear on the registration books kept by the Registrar. Upon the appointment of any successor registrar and paying agent by the Village, the Mayor, the Village Treasurer or the Village Clerk are authorized and directed to enter into such agreements and understandings with such successor registrar and paying agent as will enable the institution to perform the services required of a registrar and paying agent for the Bonds. The Mayor and Village Treasurer are further authorized to pay such fees as the successor registrar and paying agent may charge for the services it provides as registrar and paying agent and such fees may be paid from the fund established to pay the principal and interest on the Bonds as fiscal agency charges. Any predecessor registrar and paying agent shall deliver all of the Bonds and any cash or investments in its possession with respect thereto, together with the registration books, to the successor registrar and paying agent. (b) Book Entry System. The Village has determined that it is beneficial to the Village to have the Bonds held by a central depository system pursuant to an agreement between the Village and the Depository Trust Company, New York, New York ("Depository Trust Company") and have transfers of the Bonds effected by book -entry on the books of the central M Error! Unknown document property name. 43 depository system ("Book Entry System"). The Bonds shall be initially issued in the form of a separate single authenticated fully registered Bond for the aggregate principal amount of each separate maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the register kept by the Registrar in the name of CEDE & CO., as nominee of the Depository Trust Company. With respect to the Bonds registered in the register kept by the Registrar in the name of CEDE & CO., as nominee of the Depository Trust Company, the Village and the Paying Agent shall have no responsibility or obligation to any other holders or owners (including any beneficial owner (`Beneficial Owner")) of the Bonds with respect to (i) the accuracy of the records of the Depository Trust Company, CEDE & CO., or any Beneficial Owner with respect to ownership questions, (ii) the delivery to any bondholder (including any Beneficial Owner) or any other person, other than the Depository Trust Company, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any bondholder (including any Beneficial Owner) or any other person, other than the Depository Trust Company, of any amount with respect to the principal of, or premium, if any, or interest on the Bonds except as otherwise provided herein. So long as the Bonds are registered in the name of CEDE & CO., as nominee of the Depository Trust Company, no person other than the Depository Trust Company shall receive an authenticated Bond evidencing an obligation of the Village to make payments of the principal of and premium, if any, and interest on the Bonds pursuant to this Ordinance. The Village and the Registrar and Paying Agent may treat as and deem the Depository Trust Company or CEDE & CO. to be the absolute bondholder of each of the Bonds for the purpose of (i) payment of the principal of and premium, if any, and interest on such Bonds; (ii) giving notices of redemption -7- Error! Unknown document property name. 44 and other notices permitted to be given to bondholders with respect to such Bonds; (iii) registering transfers with respect to such Bonds; (iv) obtaining any consent or other action required or permitted to be taken of or by bondholders; (v) voting; and (vi) for all other purposes whatsoever. The Paying Agent shall pay all principal of and premium, if any, and interest on the Bonds only to or upon the order of the Depository Trust Company, and all such payments shall be valid and effective fully to satisfy and discharge the Village's and the Paying Agent's obligations with respect to principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. Upon delivery by the Depository Trust Company to the Village of written notice to the effect that the Depository Trust Company has determined to substitute a new nominee in place of CEDE & CO., and subject to the provisions herein with respect to consents, the words "CEDE & CO." in this Ordinance shall refer to such new nominee of the Depository Trust Company. Notwithstanding any other provision hereof to the contrary, so long as any Bond is registered in the name of CEDE & CO., as nominee of the Depository Trust Company, all payments with respect to the principal of and premium, if any, and interest on such Bonds and all notices with respect to such Bonds shall be made and given, respectively, to the Depository Trust Company as provided in a representation letter from the Village to the Depository Trust Company (the "Blanket Village Letter of Representations") Upon receipt by the Village of written notice from the Depository Trust Company to the effect that the Depository Trust Company is unable or unwilling to discharge its responsibilities and no substitute depository willing to undertake the functions of the Depository Trust Company hereunder can be found which is willing and able to undertake such functions upon reasonable and customary terms, then the Bonds shall no longer be restricted to being registered in the register of the Village kept by the Registrar in the name of CEDE & CO., as nominee of the Error! Unknown document property name. 45 Depository Trust Company, but may be registered in whatever name or names the bondholders transferring or exchanging the Bonds shall designate, in accordance with the provisions of this Ordinance. If the Village determines that it is in the best interest of the bondholders that they be able to obtain certificates for the fully registered Bonds, the Village may notify the Depository Trust Company and the Registrar, whereupon the Depository Trust Company will notify the Beneficial Owners of the availability through the Depository Trust Company of certificates for the Bonds. In such event, the Registrar shall prepare, authenticate, transfer and exchange certificates for the Bonds as requested by the Depository Trust Company and any Beneficial Owners in appropriate amounts, and whenever the Depository Trust Company requests the Village and the Registrar to do so, the Registrar and the Village will cooperate with the Depository Trust Company by taking appropriate action after reasonable notice to (i) make available one or more separate certificates evidencing the fully registered Bonds of any Beneficial Owner's Depository Trust Company account or (ii) arrange for another securities depository to maintain custody of certificates for and evidencing the Bonds. If the Bonds shall no longer be restricted to being registered in the name of the Depository Trust Company, the Registrar shall cause said Bonds to be printed in blank in such number as the Registrar shall determine to be necessary or customary; provided, however, that the Registrar shall not be required to have such Bonds printed until it shall have received from the Village indemnification for all costs and expenses associated with such printing. Section 5. Redemption. (a) Optional Redemption. If so provided in the Bond Notification, the Bonds may be subject to redemption prior to maturity at the option of the Village, from any available funds, in -9- Error! Unknown document property name. El F1.1 whole or in part, in integral multiples of $5,000, in any order of their maturity as determined by the Village (less than all of the Bonds of a single maturity to be selected by the Registrar and within any maturity by lot), on the date (not later than December 1, 2031) of redemption provided in the Bond Notification and on any date thereafter, at the redemption price of par plus accrued interest to the redemption date. (b) Mandatory Redemption. The Bonds may be subject to mandatory redemption as set forth in the Bond Notification. (c) General. For any such redemptions, the Bonds shall be redeemed only in the principal amount of $5,000 and integral multiples thereof. The Village shall, at least thirty (30) days prior to the redemption date (unless a shorter time period shall be satisfactory to the Registrar), notify the Registrar of such redemption date and of the principal amount and maturity or maturities of Bonds to be redeemed. For purposes of any redemption of less than all of the outstanding Bonds of a single maturity, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot not more than sixty (60) days prior to the redemption date by the Registrar, by such method of lottery as the Registrar shall deem fair and appropriate; provided that such lottery shall provide for the selection for redemption of Bonds or portions of Bonds in principal amounts of $5,000 and integral multiples thereof. The Registrar shall promptly notify the Village in writing of the Bonds or portions of Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed. Section 6. Redemption Procedure. For any such redemptions, unless waived by the registered owner of Bonds to be redeemed, official notice of the call for any such redemption shall be given by the Registrar on behalf of the Village by mailing the redemption notice by first - 10- Error! Unknown document property name. 47 class mail at least thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address as it appears on the registration books kept by the Registrar or at such other address as is furnished in writing by such registered owner to the Registrar. All official notices of redemption shall state: (i) the redemption date, (ii) the redemption price, (iii) the identification by CUSIP numbers, if applicable, and maturity dates (and, in the case of partial redemption of Bonds within a maturity, the respective principal amounts) of the Bonds to be redeemed, (iv) a statement that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, (v) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal corporate trust office of the Registrar, and (vi) such other information then required by custom, practice, or industry standard. Prior to any redemption date, the Village shall deposit with the Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on such redemption date. Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed shall have been received by the Registrar prior to the giving of such notice of redemption, such notice may, at the option of the Village, state that said redemption shall be conditioned upon the receipt of such moneys by the Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice shall be of no force and effect, the Village shall not redeem such -11- Error! Unknown document property name. 48 Bonds, and the Registrar shall give notice, in the same manner in which the notice of redemption was given, that such moneys were not so received and that such Bonds will not be redeemed. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the Village shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Neither the failure to mail such redemption notice, nor any defect in any notice so mailed to any particular registered owner of a Bond, shall affect the sufficiency of such notice with respect to other registered owners. Notice having been properly given, failure of a registered owner of a Bond to receive such notice shall not be deemed to invalidate, limit or delay the effect of the notice or redemption action described in the notice. Such notice may be waived in writing by a registered owner of a Bond entitled to receive such notice either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by registered owners shall be filed with the Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds or portions being redeemed shall be paid by the Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for the payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the registered owner a new Bond or Bonds of the same maturity in the amount of the unpaid principal, of like tenor, of authorized denominations, and bearing the same rate of interest. If any Bond or portion of a Bond called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid or duly - 12- Error! Unknown document property name. 49 provided for, bear interest from the redemption date at the rate borne by the Bond or portion of a Bond so called for redemption. All Bonds which have been redeemed shall be canceled and destroyed by the Registrar and shall not be reissued. In addition to the foregoing notice, further notice shall be given by the Registrar on behalf and at the expense of the Village as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (a) the CUSIP numbers of all Bonds being redeemed; (b) the date of issue of the Bonds as originally issued; (c) the rate of interest borne by each Bond being redeemed; (d) the maturity date of each Bond being redeemed; and (e) any other descriptive information needed to identify accurately the Bonds being redeemed. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. Section 7. Execution and Negotiability. Each of the Bonds shall be executed in the name of the Village by the manual or facsimile signature of the Mayor, and the seal of the Village shall be affixed, imprinted, engraved or otherwise reproduced thereon and attested by the manual or facsimile signature of the Village Clerk. In case any officer whose signature or facsimile signature appears on the Bonds shall cease to be such officer before the delivery of the Bonds, the signature of such officer shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. -13- Error! Unknown document property name. 50 The Bonds shall have all of the qualities and incidents of negotiable instruments under the laws of the State of Illinois, subject to the provisions for registration herein. The Bonds shall also be authenticated by the manual signature of the Registrar and no Bond shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed. Section 8. Form of Bonds. The form and tenor of the Bond shall be substantially as follows, all blanks to be filled in properly prior to delivery: - 14- Error! Unknown document property name. 51 REGISTERED REGISTERED NO R- $ UNITED STATES OF AMERICA STATE OF ILLINOIS COUNTY OF COOK VILLAGE OF MOUNT PROSPECT GENERAL OBLIGATION BOND, SERIES 20 Interest Maturity Original Authentication Rate Date Date Date CUSIP % December 1, REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: The Village of Mount Prospect, in Cook County, Illinois (the "Village"), for value received, hereby promises to pay to the Registered Owner named above or registered assigns, the Principal Sum set forth above on the Maturity Date set forth above (unless this bond be subject to and be called for redemption prior to maturity as hereinafter provided), and to pay interest hereon (computed on the basis of a 360 -day year of twelve 30 -day months) at the Interest Rate per annum stated above from the interest payment date to which interest has been paid next preceding the Authentication Date of this bond unless this bond is authenticated after the fifteenth (15th) day next preceding an interest payment date and on or before such interest payment date in which case it shall bear interest from such interest payment date or unless this bond is authenticated on or before the fifteenth (15th) day next preceding the first interest payment date, in which case it shall bear interest from the Original Date, until the principal is paid, which interest is payable semiannually on June 1 and December 1 in each year, beginning on , 20_. This bond is one of an authorized issue of "General Obligation Bonds, Series 20" (the "Bonds") of the Village of like date, tenor and effect, except as to rates of interest and dates of maturity; aggregating Dollars ($ ); numbered consecutively from R-1 up; issued for the purpose of paying the costs of the Project (as defined in the hereinafter defined Ordinance),the Refunding (as defined in the hereinafter defined Ordinance), and the issuance the bonds. This bond is issued pursuant to a Bond Ordinance adopted by the Mayor and the Board of Trustees of said Village (collectively, the "Corporate Authorities") on the 7th day of December, 2021 and a Notification of Sale (the "Bond Notification") executed on the day of , 20_ (collectively, the "Ordinance") by the Mayor of said Village pursuant thereto and in accordance with Section 6 of Article VTI of the Illinois Constitution of 1970 and the Municipal Code of the Village, the proceeds of which are to be applied solely to pay the costs of the Project (as defined in the Ordinance) and the issuance of the Bonds. -15- Error! Unknown document property name. 52 [Optional and mandatory redemption provisions, if applicable.] This bond is transferable or exchangeable only upon the books of the Village kept for that purpose at the principal corporate trust office of the Registrar by the registered owner hereof in person, or by its attorney duly authorized in writing, upon surrender of this bond together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered owner, or its attorney duly authorized in writing, and thereupon a new fully registered bond or bonds in an authorized aggregate principal amount and of the same maturity, shall be executed and delivered in the name of the transferee or transferees or to the registered owner, as the case may be, in exchange therefor. The Registrar shall not be required to transfer or exchange this bond during the period beginning at the close of business on the fifteenth (15th) day next preceding an interest payment date on this bond and ending on such interest payment date. The Village, the Registrar, the Paying Agent (as hereinafter defined) and any other registrar or paying agent for this bond may treat and consider the person in whose name this bond is registered as the absolute owner hereof for all purposes, including for the purpose of receiving payment of, or on account of, the principal hereof and interest due hereon. THE OWNER OF THIS BOND, BY THE ACCEPTANCE HEREOF, HEREBY AGREES TO ALL THE TERMS AND PROVISIONS CONTAINED IN THE ORDINANCE. Bonds maturing in any one year are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof. The principal of this bond is payable at the principal corporate trust office of (the "Registrar" or "Paying Agent"). All payments of interest on this bond shall be paid by check, mailed one (1) business day prior to the interest payment date to the registered owner hereof as of the fifteenth (15th) day next preceding such interest payment date at the address as it appears on the registration books kept by the Registrar or at such other address as is provided to the Paying Agent in writing by the registered owner. If payment of principal or interest is made to a depository, payment shall be made by wire transfer on the payment date in same-day funds. If the payment date occurs on a date when financial institutions are not open for business, the wire transfer shall be made on the next succeeding business day. The Paying Agent shall wire transfer payments so such payments are received at the depository by 2:30 p.m. (New York City time). All payments on the bond shall be made in any coin or currency of the United States of America, which on the dates of such payment, shall be legal tender for the payment of public and private debts. The Bonds shall be initially issued in a Book Entry System (as defined in the Ordinance). The provisions of this bond and of the Ordinance are subject in all respects to the provisions of the Blanket Issuer Letter of Representations (as defined in the Ordinance) between the Village and the Depository Trust Company, or any substitute agreement, affecting such Book Entry System. This bond is a general obligation of the Village payable from ad valorem taxes levied against all taxable property in the Village, without limitation as to rate or amount. The full faith, credit and resources of the Village are pledged to the punctual payment of the principal of and - 16- Error! Unknown document property name. 53 interest on this bond. This bond is negotiable, subject to registration provisions, pursuant to the laws of the State of Illinois. It is hereby certified and recited that all acts, conditions and things required to be done precedent to and in the execution, issuance and delivery of this bond have been done and performed in regular and due form as provided by law; that the indebtedness of the Village, including the issue of the Bond of which this is one, does not exceed any limitation imposed by law; and that provision has been made for the collection of a direct annual tax sufficient to pay the interest hereon as it falls due and also to pay and discharge the principal hereof at maturity. This bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by an authorized representative of the Registrar. -17- Error! Unknown document property name. 54 IN WITNESS WHEREOF, the Village of Mount Prospect, Cook County, Illinois, has caused this bond to be executed by the manual or duly authorized facsimile signature of the Mayor of the Village, the seal of said Village (or a facsimile thereof) to be affixed, imprinted, engraved or otherwise reproduced hereon and attested by the manual or duly authorized facsimile signature of the Village Clerk, all as of the Original Date identified above. (SEAL) Attest: By: Village Clerk VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS Mayor REGISTRAR'S CERTIFICATE OF AUTHENTICATION This bond is one of the Bonds described in the within -mentioned Ordinance. Authorized Representative [End of Form of Bond] Section 9. Authorization for Preparation and Sale of the Bonds, Purchase Contract. The Mayor, the Village Manager, or the Finance Director of the Village (the "Designated Representatives") are hereby authorized to proceed no later than the earlier of (i) six (6) months from the date of the passage of this Ordinance, or (ii) the date of the next board election, without any further authorization or direction from the Board, to sell the Bonds upon the terms as prescribed in this Ordinance. The Bonds hereby authorized shall be executed as in this Ordinance provided as soon after the delivery of the Bond Notification as may be, and Error! Unknown document property name. 55 thereupon be deposited with the Village Treasurer, and, after authentication thereof by the Bond Registrar, be by said Treasurer delivered to each purchaser thereof, as hereinafter described (the "Purchaser"), upon receipt of the purchase price therefor, the same being not less than 97% of the principal amount of the Bonds plus any accrued interest to date of delivery. The Purchaser shall be (a) pursuant to a competitive sale conducted by PMA Securities, Inc., Naperville, Illinois ("PMA"), the best bidder for the Bonds; (b) in a negotiated underwriting, a bank or financial institution listed in the Dealers & Underwriters or Municipal Derivatives sections of the most recent edition of The Bond Buyer's Municipal Marketplace; or (c) in a private placement, (i) a bank or financial institution authorized to do business in the State of Illinois, (ii) a governmental unit as defined in the Local Government Debt Reform Act of the State, as amended, or (iii) an "accredited investor" as defined in Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as amended; provided, however, that the Purchaser as set forth in either (b) or (c) shall be selected only upon receipt by the Village of the written recommendation of PMA that the sale of the Bonds on a negotiated or private placement basis to the Purchaser is in the best interests of the Village because of (i) the pricing of the Bonds by the Purchaser, (ii) then current market conditions or (iii) the timing of the sale of the Bonds; and further provided, that the Purchaser as set forth in (c) may be selected through the utilization of a placement agent selected by the Designated Representatives after consultation with PMA if the use of such placement agent is determined by the Designated Representatives to be in the best interest of the Village. Prior to the sale of the Bonds, the Mayor or the Finance Director of the Village is hereby authorized to approve and execute a commitment for the purchase of a Municipal Bond Insurance Policy (as hereinafter defined), to further secure the Bonds, as long as the present - 19- Error! Unknown document property name. W value of the fee to be paid for the Municipal Bond Insurance Policy (using as a discount rate the expected yield on the Bonds treating the fee paid as interest on the Bonds) is less than the present value of the interest reasonably expected to be saved on the Bonds over the term of the Bonds as a result of the Municipal Bond Insurance Policy. Upon the sale of the Bonds, the Designated Representatives shall prepare a Notification of Sale of the Bonds, which shall include the pertinent details of sale as provided herein (the "Bond Notification"). In the Bond Notification, the Designated Representatives shall find and determine that the Bonds have been sold at such price and bear interest at such rates that either the true interest cost (yield) or the net interest rate received upon the sale of the Bonds does not exceed the maximum rate otherwise authorized by applicable law. The Bond Notification shall be entered into the records of the Village and made available to the Board at the next regular meeting thereof, but such action shall be for information purposes only, and the Board shall have no right or authority at such time to approve or reject such sale as evidenced in the Bond Notification. Upon the sale of the Bonds, as evidenced by the execution and delivery of the Bond Notification by the Designated Representatives, the Mayor, Village Clerk and Village Treasurer and any other officers of the Village, as shall be appropriate, shall be and are hereby authorized and directed to approve or execute, or both, such documents of sale of the Bonds as may be necessary, including, without limitation, the contract for the sale of the Bonds between the Village and the Purchaser (the "Purchase Contract"). Prior to the execution and delivery of the Purchase Contract, the Designated Representatives shall find and determine that no person holding any office of the Village, either by election or appointment, is in any manner financially -20- Error! Unknown document property name. 57 interested directly in his own name or indirectly in the name of any other person, association, trust or corporation, in the Purchase Contract. The use by the Purchaser of any Preliminary Official Statement or Preliminary Term Sheet and any final Official Statement or final Term Sheet relating to the Bonds (the "Disclosure Document") is hereby ratified, approved and authorized; the execution and delivery of the Disclosure Document is hereby authorized; and the officers of the Board are hereby authorized to take any action as may be required on the part of the Village to consummate the transactions contemplated by the Purchase Contract, this Ordinance, said Preliminary Disclosure Document, the Disclosure Document and the Bonds. The Bonds when fully paid for and delivered to the Purchaser, shall be the binding general obligations of the Village. The proper officers of the Village are hereby directed to sell the Bonds to the Purchaser and to do whatever acts and things which may be necessary to carry out the provisions of this Ordinance. Section 10. Bond Insurance. In the event the Purchaser certifies to the Village that it would be economically advantageous for the Village to acquire a municipal bond insurance policy for the Bonds, the Village hereby authorizes and directs the Village Treasurer or the Village Manager to obtain such an insurance policy. The acquisition of a municipal bond insurance policy is hereby deemed economically advantageous if the difference between the present value cost of (a) the total debt service on the Bonds if issued without municipal bond insurance and (b) the total debt service on the Bonds if issued with municipal bond insurance, is greater than the cost of the premium on the municipal bond insurance policy. In the event the payment of principal and interest on the Bonds is insured pursuant to a municipal bond insurance policy issued by a bond insurer (the `Bond Insurer"), and as long as such municipal -21- Error! Unknown document property name. bond insurance policy shall be in full force and effect, the Village and the Registrar agree to comply with such usual and reasonable provisions regarding presentment and payment of the Bonds, subrogation of the rights of the Bondholders to the Bond Insurer upon payment of the Bonds by the Bond Insurer, amendment hereof, or other terms, as approved by the Mayor of the Village on advice of counsel, his or her approval to constitute full and complete acceptance by the Village of such terms and provisions under authority of this Section. Section 11. Continuing Disclosure. The Continuing Disclosure Undertaking (the "Undertaking") in substantially the form which has been presented to and is hereby approved by the Corporate Authorities, and the Mayor and the Village Clerk are hereby authorized and directed to complete, execute and attest the same on behalf of the Village. Notwithstanding any other provisions of this Ordinance, failure of the Village to comply with the Undertaking shall not be considered an event of default under the Bonds or this Ordinance. Section 12. Tax Levy. For the purpose of providing funds to produce sums necessary to pay the interest on the Bonds as it falls due and also pay and discharge the principal thereof at maturity, there shall be levied upon all the taxable property within the Village a direct annual tax (the "Levied Taxes") for each of the years while the Bonds or any of them are outstanding, in amounts sufficient for that purpose, and that there be and there is hereby levied upon all of the taxable property in the Village, in each of the years 2021 to 2040, a maximum direct annual tax in the amount of $1,500,000, such amount to be finalized in the Bond Notification. Principal or interest coming due at any time when there are not sufficient funds on hand from the foregoing tax levy to pay the same shall be paid from current funds on hand of the Village, and the fund from which such payment was made shall be reimbursed out of the taxes hereby levied when the same shall be collected. -22- Error! Unknown document property name. The Village covenants and agrees with the Purchaser and the holders of the Bonds that so long as the Bonds remain outstanding, the Village will take no action or fail to take any action which in any way would adversely affect the ability of the Village to levy and collect the foregoing tax levy, unless the abatement of any particular tax levy amount has been provided for through the deposit of moneys in a segregated account, and the Village and its officers will comply with all present and future applicable laws in order to assure that the Levied Taxes will be levied, extended and collected as provided herein and deposited in the Bond Fund established to pay the principal of and interest on the Bonds. The funds derived from the tax levy be and the same are hereby appropriated and set aside for the sole and only purpose of paying principal of and interest on said Bonds when and as the same become due. The funds from the sale of said Bonds be and they are hereby appropriated and set aside for the purpose hereinbefore set out. Section 13. Filing of Ordinance. Forthwith upon this Ordinance becoming effective, the Village Clerk is hereby directed to file a certified copy of this Ordinance, which certificate shall recite that this Ordinance has been passed by the Corporate Authorities and published, with the County Clerk, and it shall be the duty of said County Clerk in and for the years 2021 to 2040 while the Bonds or any of them are outstanding (as set forth in the Bond Notification), inclusive, to annually ascertain the rate necessary to produce the tax herein and therein levied, and extend the same for collection on the tax books against all of the taxable property within the Village in connection with other taxes levied in said years, in order to raise the respective amounts aforesaid and in said years such annual tax shall be computed, extended and collected in the same manner as now or hereafter provided by law for the computation, extension and collection -23- Error! Unknown document property name. 60 of taxes for general corporate purposes of the Village, and when collected, the taxes hereby levied shall be used only for the purpose of paying the principal of and interest on the Bonds. Section 14. Bond Fund. There is hereby created and established a special fund of the Village known as the "Bond Fund," with the appropriate series designation (the "Bond Fund") to be held by the Village Treasurer, which is a trust fund established for the purpose of carrying out the covenants, terms and conditions imposed upon the Village by this Ordinance. The Bond Fund shall be the fund for the payment of the principal of and interest on the Bonds at maturity or on interest payment dates or redemption. Any capitalized interest included in the proceeds of the sale of the Bonds shall be deposited in the Bond Fund for the payment of interest on the Bonds, and the Levied Taxes shall be deposited into the Bond Fund, as received, and shall be used solely and only for the payment of principal of and interest on the Bonds when due (including any redemption). The Bonds are secured by a pledge of all moneys on deposit in the Bond Fund, and such pledge is irrevocable until the Bonds have been paid in full or until the obligations of the Village are discharged under this Ordinance. The Village directs that the Village Treasurer deposit the following amounts received from the collection of the Levied Taxes into the Bond Fund: (a) an amount equal to one-half of the total principal and interest due on the Bonds in such year (the "Debt Service Requirement") shall be deposited into the Bond Fund from collections of the first installment of property taxes and (b) an amount equal to the other half of the Debt Service Requirement shall be deposited into the Bond Fund from collections of the second installment of property taxes. Section 15. Use of Bond Proceeds. Any accrued interest received on the delivery of the Bonds is hereby appropriated for the purpose of paying first interest due on the Bonds and is hereby ordered deposited into the Bond Fund. -24- Error! Unknown document property name. 61 There is hereby created and established a special fund of the Village known as the "Project Fund," with the appropriate series designation (the "Project Fund"), to be held by the Village Treasurer. Proceeds of the Bonds shall be deposited in the Project Fund, and the Project Fund shall be used for the purpose of paying for the costs of the Project, and costs of issuance of the Bonds. For the purpose of paying first interest due on the Bonds, an amount necessary for that purpose may be loaned from the Project Fund to the Bond Fund. Said amount shall be reimbursed to the Project Fund from the Bond Fund as Levied Taxes are received and available therefor. Additional loans from the Project Fund to the Bond Fund to pay debt service on the Bonds may be made upon further direction by the Corporate Authorities so long as provision is made to reimburse the Project Fund with Levied Taxes. Interest received from deposits in the Project Fund shall, at the discretion of the Corporate Authorities, either be transferred for the payment of the principal of and interest on the Bonds on the interest payment date next after such interest is received or be retained in the Project Fund. In the event that any moneys remain in the Project Fund upon completion of the Project, the Village shall use said remaining moneys for various capital improvements within the Village; otherwise, the Village shall deposit said remaining moneys in the Project Fund into the Bond Fund and cause such moneys to be used to pay the interest on the Bonds on the earliest possible date. Section 16. Defeasance of the Bonds. If, when the Bonds or a portion thereof shall have become due and payable in accordance with their terms or shall have been duly called for redemption or irrevocable instructions to call the Bonds or a portion thereof for redemption shall have been given, and the whole amount of the principal and the interest and the premium, if any, -25- Error! Unknown document property name. G2 so due and payable upon all of the Bonds or a portion thereof then outstanding shall be paid; or (i) sufficient moneys or (ii) direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury), the principal of and the interest on which when due will provide sufficient moneys for such purpose, shall be held in trust for such purpose, and provision shall also be made for paying all fees and expenses for the redemption, then and in that case the Bonds or any designated portion thereof issued hereunder shall no longer be deemed outstanding or entitled to any pledge of the Levied Taxes made herein. Section 17. Investment of Moneys. Moneys in the Bond Fund and Project Fund may be invested by the Village Treasurer in lawful investments for the Village. All income earned or losses sustained on such investments shall be credited to the Fund or Account from which the investments were made. Section 18. Amendments with Consent of Bondholders. Subject to the terms and provisions contained in this section, and not otherwise, the owners of not less than sixty-six and two-thirds percent (662/3%) in aggregate principal amount of the Bonds issued pursuant to this Ordinance and then outstanding shall have the right from time to time, anything contained in this Ordinance to the contrary notwithstanding, to consent to and approve the adoption by the Village of such ordinance or ordinances supplemental hereto or amendatory hereof, as shall be deemed necessary or desirable by the Village for the purpose of modifying, altering, amending, adding to or rescinding in any particular manner any of the terms or provisions contained in this Ordinance, or in any supplemental ordinance; provided, however, that nothing herein contained shall permit or be construed as permitting: -26- Error! Unknown document property name. 63 (a) An extension of the maturity of the principal of or interest on any Bond issued pursuant to this Ordinance; or (b) A reduction in the principal amount of any Bond or the rate of interest thereon; or (c) A preference or priority of any Bond or Bonds issued pursuant to this Ordinance over any other Bond or Bonds issued pursuant to the provisions of this Ordinance; or (d) A reduction in the aggregate principal amount of the Bonds required for consent to such supplemental ordinance. If the owners of not less than sixty-six and two-thirds percent (66/3%) in aggregate principal amount of the Bonds outstanding at the time of adoption of such supplemental ordinance shall have consented to and approved the adoption thereof by written instrument to be maintained on file in the office of the Village Clerk, no owner of any Bond issued pursuant to this Ordinance shall have any right to object to the adoption of such supplemental ordinance or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Village from adopting the same, or from taking any action pursuant to the provisions thereof. Upon the adoption of any supplemental ordinance pursuant to the provisions of this section, this Ordinance shall be, and shall be deemed, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Ordinance of the Village and all owners of Bonds then outstanding, shall thereafter be determined, exercised and enforced in accordance with this Ordinance, subject in all respects to such modifications and amendments. Notwithstanding anything contained in the foregoing provisions of this Ordinance, the rights and obligations of the Village and of the owners of the Bonds authorized by this Ordinance, and the terms and provisions of the Bonds and this Ordinance, or any supplemental or amendatory ordinance, may -27- Error! Unknown document property name. 64 be modified or altered in any respect with the consent of the Village and the consent of the owners of all the Bonds then outstanding. Section 19. General Covenants. The Village covenants and agrees with the registered owners of the Bonds, so long as any such Bonds remain Outstanding, as follows: A. The Village will punctually pay or cause to be paid from the sources provided for in this Ordinance, the principal of and interest to become due on the Bonds in strict conformity with the terms of the Bonds and this Ordinance, and it will faithfully observe and perform all of the conditions, covenants and requirements thereof. B. The Village will pay and discharge, or cause to be paid and discharged, from the Bond Fund, any and all lawful claims which, if unpaid, might become a lien or charge upon the Levied Taxes, or any part thereof, or upon any such funds in the hands of the Bond Registrar, or which might impair the security of the Bonds. Nothing herein contained shall require the Village to make any such payment so long as the Village in good faith contests the validity of said claims. C. The Village will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Village, in which complete and correct entries will be made of all transactions relating to the Levied Taxes and the Bond Fund. Such books of record and accounts will at all times during business hours be subject to the inspection of the holders of not less than ten percent (10%) of the principal amount of the outstanding Bonds or their representatives authorized in writing. D. The Village will preserve and protect the security of the Bonds and the rights of the registered owners of the Bonds and will warrant and defend their rights against all claims and Error! Unknown document property name. 65 demands of all persons. From and after the sale and delivery of any of the Bonds by the Village, to the extent lawful the Bonds shall be incontestable by the Village. E. The Village will adopt, make, execute and deliver any and all such further ordinances, instruments and assurances as may be reasonably necessary or proper to carry out the intention of, or to facilitate the performance of, this Ordinance, and for the better assuring and confirming unto the owners of the Bonds of the rights and benefits of this Ordinance. F. As long as any Bonds are outstanding, the Village will continue to deposit the Levied Taxes into the Bond Fund. The Village and its officers will comply with all present and future applicable laws in order to assure that the Levied Taxes will be levied, extended and collected as provided in this Ordinance and deposited in the Bond Fund. G. Once issued and while outstanding, the Bonds shall be and forever remain until paid or defeased the general obligation of the Village, for the payment of which its full faith and credit are pledged and shall be payable from the levy of the Levied Taxes. Section 20. Tax Covenants. In order to preserve the exclusion of interest on any Bonds, the interest on which is exempt from gross income for federal tax purposes under Section 103 of the Internal Revenue Code of 1986 as existing on the date of issuance of the Bonds (the "Code") and as an inducement to purchasers of the Bonds, the Village represents, covenants and agrees that: (a) The facilities financed with the Bonds are available for use by members of the general public. Use by a member of the general public means use by natural persons not engaged in a trade or business. No person or entity, other than the Village or another state or local governmental unit, will use more than 10% of the proceeds of the Bonds or property financed by Bond proceeds other than as a member of the general public. No person or entity -29- Error! Unknown document property name. other than the Village or another state or local governmental unit own property financed by Bond proceeds or have actual or beneficial use of such property pursuant to a lease, a management or incentive payment contract, an arrangement such as a take -or -pay or output contract or any other type of arrangement that conveys other special legal entitlements and differentiates that person's or entity's use of such property from the use by the general public, unless such uses in the aggregate relate to no more than 10% of the proceeds of the Bonds. (b) No more than ten percent (10%) of the payment of principal of or interest on the Bonds will be (under the terms of the Bonds, this Ordinance or any underlying arrangement), directly or indirectly, (i) secured by any interest in property used or to be used for a private business use or payments in respect of such property or (ii) derived from payments (whether or not to the Village) in respect of such property or borrowed money used or to be used for a private business use. (c) No more than five percent (5%) of the Bond proceeds will be loaned to any entity or person other than a state or local governmental unit. No more than five percent (5%) of the Bond proceeds will be transferred, directly or indirectly, or deemed transferred to a nongovernmental person in any manner that would in substance constitute a loan of the Bond proceeds. (d) The Village reasonably expects, as of the date hereof, that it will comply with the covenants described in paragraph (a), (b) and (c) above during the entire term of the Bonds. (e) No more than five percent (5%) of the proceeds of the Bonds will be attributable to private business use as described in (a) and private security or payments described in (b) attributable to unrelated or disproportionate private business use. For this purpose, the private business use test is applied by taking into account only use that is not related to any -30- Error! Unknown document property name. government use of proceeds of the issue (Unrelated Use) and use that is related but disproportionate to any governmental use of those proceeds (Disproportionate Use). (f) The Village will not take any action nor fail to take any action with respect to the Bonds that would result in the loss of the exclusion from gross income for federal tax purposes nor will the Village act in any other manner which would adversely affect such status, and it will not make any investment or do any other act or thing during the period that the Bonds are outstanding which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code. (g) The Village certifies that to the extent necessary to preserve the tax-exempt status of the Bonds it will rebate any arbitrage profits to the United States of America in accordance with Section 148(f) of the Code and the Regulations promulgated thereunder. It shall be not an event of default under this Ordinance if interest on any Bond is not excludable from gross income for federal income tax purposes pursuant to any provision of the Code which is not currently in effect and in existence on the date of issuance of the Bonds. (h) The Village represents that the Bonds are not private activity bonds as defined in Section 141 of the Code. (i) These covenants are based solely on current law in effect and in existence on the date of delivery of such Bonds. The Village hereby authorizes the officials of the Village responsible for issuing the Bonds, the same being the Mayor, the Village Clerk and the Village Treasurer, to make such further covenants and certifications as may be necessary to assure that the use thereof will not cause the Bonds to be arbitrage bonds and to assure that the interest on the Bonds will be excludable from gross income for federal income tax purposes. In connection therewith, the -31- Error! Unknown document property name. Village further agrees: (a) through its officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (b) to consult with counsel approving the Bonds and to comply with such advice as may be given; (c) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the Bonds as required pursuant to Section 148 of the Code and the regulations promulgated thereunder; (d) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (e) if deemed necessary or advisable by their officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the Village in such compliance. Section 21. Noncompliance with Tax Covenants. Notwithstanding any other provisions of this Ordinance, the covenants and authorizations contained in this Ordinance (the "Tax Sections") which are designed to preserve the exclusion of interest on the Bonds from gross income under federal law (the "Tax Exemption") need not be complied with if the Village receives an opinion of nationally recognized bond counsel that any Tax Section is unnecessary to preserve the Tax Exemption. and Section 22. Bank Qualified Representations. The Village represents: (a) The Bonds are not private activity bonds as defined in Section 141 of the Code; (b) The Village is authorized to designate each series of the Bonds as qualified tax-exempt obligations for purposes of Section 265(b) of the Code pursuant to each respective Bond Order provided that, for each respective series of the Bonds, the reasonably anticipated amount of qualified tax-exempt obligations (including 501(c)(3) obligations and tax-exempt -32- Error! Unknown document property name. leases but excluding other private activity bonds) which will be issued by the Village and all entities subordinate to the Village during each such year does not exceed 510,000,000. Section 23. Registered Form. The Village recognizes that Section 149(a) of the Code requires the Bonds to be issued and to remain in fully registered form in order that interest thereon is exempt from federal income taxation for the Bonds. In this connection, the Village agrees that it will not take any action to permit the Bonds to be issued in, or converted into, bearer or coupon form. Section 24. Severability. If any section, paragraph, or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. Section 25. Publication. The Village Clerk is hereby authorized and directed to publish this Ordinance in pamphlet form and to file copies thereof for public inspection in his/her office. Section 26. Conflicting Ordinances. All ordinances, resolutions and parts of ordinances and resolutions, in conflict herewith are hereby repealed. Section 27. Headings. The headings or titles of the several sections shall be solely for convenience of reference and shall not affect the meaning, construction, or effect of this Ordinance. Section 28. Effective Date. This Ordinance shall be in full force and effect from and after its adoption and publication. -33- Error! Unknown document property name. 70 ADOPTED this 7th day of December, 2021 by a roll call vote as follows: AYES: NAYS: ABSENT: APPROVED this 7th day of December, 2021. Mayor ATTEST: Village Clerk -34- Error! Unknown document property name. 71 Trustee moved and Trustee seconded the motion that said Ordinance as presented by the Village Clerk be adopted. After a full discussion thereof, the Mayor directed that the roll be called for a vote upon the motion to adopt said Ordinance as presented. Upon the roll being called, the following Trustees voted AYE: and the following Trustees voted NAY: Whereupon the Mayor declared the motion carried and said Ordinance adopted, approved and signed the same in open meeting and directed the Village Clerk to record the same in full in the records of the Board of Trustees of the Village of Mount Prospect, Cook County, Illinois, which was done. Other business not pertinent to the adoption of said Ordinance was duly transacted at said meeting. Upon motion duly made, seconded, and carried, the meeting was adjourned. Village Clerk Error! Unknown document property name. 72 STATE OF ILLINOIS ) ) SS COUNTY OF COOK ) CERTIFICATION OF MINUTES AND ORDINANCE I, the undersigned, do hereby certify that I am the duly qualified and acting Village Clerk of the Village of Mount Prospect, Cook County, Illinois (the "Village"), and as such official am the keeper of the official journal of proceedings, books, records, minutes and files of the Mayor and the Board of Trustees (collectively, the "Corporate Authorities"). I further certify that the foregoing is a full, true and complete transcript of that portion of the minutes of the meeting of the Corporate Authorities held on the 7th day of December, 2021, insofar as the same relates to the adoption of Ordinance No. entitled: AN ORDINANCE providing for the issuance of not to exceed $10,000,000 General Obligation Bonds, in one or more series, of the Village of Mount Prospect, Cook County, Illinois, for the purpose of financing the costs of certain capital projects in the Village, providing for the levy and collection of a direct annual tax sufficient to pay the principal of and interest on said Bonds, and authorizing the proposed sale of said Bonds to the purchaser thereof. a true, correct, and complete copy of which said Ordinance as adopted at said meeting appears in the foregoing transcript of the minutes of said regular public meeting. I do further certify that the deliberations of the Corporate Authorities on the adoption of said ordinance were conducted openly; that the vote on the adoption of said ordinance was taken openly; that said meeting was held at a specified time and place convenient to the public; that notice of said meeting was duly given to all newspapers, radio or television stations and other news media requesting such notice; that an agenda for said meeting was posted at the principal office of the Corporate Authorities and at the location where said meeting was to be held on a day which was not a Saturday, Sunday or legal holiday for Illinois municipalities and at least 48 hours in advance of holding said meeting; that said agenda described or made specific reference to said ordinance; that a true, correct and complete copy of said agenda as so posted is attached hereto; and that said meeting was called and held in strict compliance with the provisions of the Open Meetings Act, as amended, and the Illinois Municipal Code, as amended, and that the Corporate Authorities has complied with all of the provisions of said Act and said Code, except as said Act and said Code are validly superseded by the home rule powers of the Village, and with all of the procedural rules of the Corporate Authorities in the adoption of said ordinance. IN WITNESS WHEREOF, I hereunto affix my official signature and seal of said Village, this 7th day of December, 2021. Village Clerk (SEAL) Error! Unknown document property name. 73 STATE OF ILLINOIS ) ) SS COUNTY OF COOK ) FILING CERTIFICATE I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of Cook County, Illinois, and as such official I do further certify that on the day of entitled: 20_, there was filed in my office a duly certified copy of Ordinance No. AN ORDINANCE providing for the issuance of not to exceed $10,000,000 General Obligation Bonds, in one or more series, of the Village of Mount Prospect, Cook County, Illinois, for the purpose of financing the costs of certain capital projects in the Village, providing for the levy and collection of a direct annual tax sufficient to pay the principal of and interest on said Bonds, and authorizing the proposed sale of said Bonds to the purchaser thereof. duly adopted by the Board of Trustees of the Village of Mount Prospect, Cook County, Illinois, on the 7th day of December, 2021, and that the same has been deposited in the official files and records of my office. IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of said County, this day of , 20_. County Clerk of Cook County, Illinois (SEAL) Error! Unknown document property name. 74 STATE OF ILLINOIS ) ) SS COUNTY OF COOK ) CERTIFICATE OF PUBLICATION IN PAMPHLET FORM I, the undersigned, do hereby certify that I am the duly qualified and acting Village Clerk of the Village of Mount Prospect, Cook County, Illinois (the "Village"), and as such official I am the keeper of the official journal of proceedings, books, records, minutes and files of the Village and of the Mayor and Board of Trustees (the "Board") of the Village. I do further certify that on the 7th day of December, 2021, there was published in pamphlet form, by authority of the Board, a true, correct, and complete copy of Ordinance No. of the Village entitled: AN ORDINANCE providing for the issuance of not to exceed $10,000,000 General Obligation Bonds, in one or more series, of the Village of Mount Prospect, Cook County, Illinois, for the purpose of financing the costs of certain capital projects in the Village, providing for the levy and collection of a direct annual tax sufficient to pay the principal of and interest on said Bonds, and authorizing the proposed sale of said Bonds to the purchaser thereof. and providing for the issuance of said bonds, and that the ordinance as so published was on that date readily available for public inspection and distribution, in sufficient number so as to meet the needs of the general public, at my office as Village Clerk located in the Village. IN WITNESS WHEREOF I have affixed hereto my official signature and the seal of the Village this 7th day of December, 2021. Village Clerk (SEAL) Error! Unknown document property name. 75