Objective

To provide members of the Municipal League with low cost funds for equipment purchases, renovations or construction projects, refinancing of previous capital expenditures, interim financing, refinancing of higher cost debt and other capital needs.

Program Description

The Illinois Municipal League, acting on behalf of its members, has arranged for the issuance of variable rate tax-exempt securities. The proceeds are then loaned to participating municipalities in order to finance or refinance capital projects. The municipal governments benefit from the low interest cost of the securities, the economies associated with spreading the costs of issuance among many participants and the interest earnings from the debt service reserve fund and undisbursed loan funds.

Uses of the Program

Any capital expenditure that a municipality elects to amortize in 20 years or less can be financed through the program. Examples include:

Equipment: Automobiles, Trucks and other Vehicles; Computers; Construction Equipment; Telephone Systems; Furnishings; Utility Related Equipment; Traffic Control Equipment; and Street Lighting.

Construction: Streets, Roads, and Sidewalks; Public Buildings; and Water and Sewer Improvements.

Acquisitions: Existing Water and Sewer Facilities; Electric Utilities; and Real Property.

Program Benefits

• Produces the lowest borrowing rate for participants by taking advantage of significant institutional investor demand for short-term tax-exempt securities.

• Allows access to capital markets not otherwise available to participants on an individual basis.

• Uses low cost variable rate securities.

• Affords participants the advantages of a pooled financing with no shared liability for the obligations of other participants.

• Simplifies the process of raising capital by allowing municipal governments to draw down funds without the cost and time associated with arranging individual financing.

• Generates investment income which can lower the effective loan rate to participants.

• Allows prepayment of loans and permits their conversion to fixed rate. (Continued on next page)

January 1987 / Illinois Municipal Review / Page 5

Terms of the Loans

Amortization: Loans made through the program will amortize over the shorter of 20 years or the depreciable life of the items purchased or projects constructed.

Interest Rate: The interest rate on the loans will float with rates in the short-term tax-exempt market.

Interest and Principal Payments: Interest on the loans will be payable monthly. Principal will be payable according to an amortization schedule providing level debt service.

Security: Participating municipal governments will pledge tax and non-tax sources of revenue as security for program loans.

Individual Liability: Participating municipal governments will be responsible only for their own loans. No participant will be responsible for principal or interest payments on loans of other participants.

Program Procedures

Step 1: The Illinois Municipal League, as administrator, oversees the issuance of securities. Proceeds of the issuance of securities are used to fund the pool.

Step 2: Participants apply to borrow funds through the program by submitting a loan application. The application will include the proposed use of funds, revenues to be pledged for repayment, and financial data on the participant. Participants should expect their initial loans to be funded four to five weeks after submission of the completed application.

At closing, the municipal government executes a loan agreement.

Step 3: Participants in the program will make monthly interest payments on their loans at a rate calculated by the Trustee. This rate is equal to the weighted average monthly interest rate on the securities, plus each participant's share of ongoing program fees and expenses, minus each participant's pro-rata share of interest income from the loan fund and the debt service reserve fund.

Investment Bankers The First Boston Corporation — Chicago and New York

Bond Counsel Winston & Strawn — Chicago, Illinois

Program Credit Provider Bond Investor Guaranty — New York

The Illinois Municipal League will be holding a series of meetings throughout the state to fully inform all interested municipalities of the details of this program.

February 10, 1987 — 2:00 P.M.	Oak Brook — Village Hall
February 10, 1987 — 7:00 P.M.	Ottawa — City Hall
February 11, 1987 — 10:00 A.M.	Peoria — City Hall
February 11, 1987 — 2:00 P.M.	Springfield — State House Inn
February 11, 1987 — 7:00 P.M.	Collinsville — Hilton Hotel

Municipalities will receive a letter from the League with complete and final information on the above meetings. •

Page 6 / Illinois Municipal Review / January 1987