IML POOLED
MUNICIPAL LOAN PROGRAM

We are pleased to report that nearly 300 municipal officials attended the recent series of regional meetings held to inform those with interest about the League's new Pooled Municipal Loan Program. The purpose of the Program is to provide members of the League with a cost effective alternative to consider along with the traditional avenues available when planning to finance capital projects. The Program is in operation and applications for loans already have been received.

The Program is available to both home rule and non-home rule municipalities that, as in any other borrowing, can show sufficient ability to repay the loan. The interest rate on the loans is variable and payable monthly while the principal can be paid annually with level payments spread over the term of the loan. Loan terms can be up to 20 years in length or, if shorter, the depreciable life of the project financed by the loan.

The following points summarize information about the Program sought by local officials as evidenced by frequently asked questions at the recent meetings:

• The minimum loan application amount is $250,000.
• A loan may be drawn at intervals until July 1, 1989 (e.g. total loan $900,000, drawn over three intervals at $300,000/interval).
• Interest is paid only on funds actually drawn.
• Non-home rule borrowing must be based on existing statutory authority and referendum approval still will be needed in appropriate situations.
• Loans may be repaid with tax dollars, revenues generated from projects financed by the loan or both.
• Local debt service reserve funds to protect bondholders need not be established.
• No municipality can be made responsible for the loan of another that may not be able to repay.
• Loans may be prepaid.
• Municipal compliance with EPA mandates can be financed through the Program.
• No individual underwriting costs are incurred as in a local bond issue. The costs of the Program are shared.
• The Program is based on intergovernmental cooperation authority. Eighty-seven municipalities already have entered into an intergovernmental agreement allowing them to apply for loans.

Page 4 / Illinois Municipal Review / March 1987