Financial Advisory Board — Naperville, IL
Date: 2024-10-28

400 S. Eagle Street
 City of Naperville Naperville, IL 60540



 Meeting Agenda

 Financial Advisory Board

Monday, October 28, 2024 6:00 PM NEU




A. CALL TO ORDER:

B. ROLL CALL:

C. PUBLIC FORUM:

D. REPORTS:
 24-1225 Welcome new student representatives Adithi Basapuram and Allen Xu

 24-1202 Approve the minutes of the July 29, 2024 regular meeting

 24-1203 Approve the minutes of the September 4, 2024 special meeting

 24-1130 Receive the 2024 3rd quarter investment report

 24-1212 Receive the 2024 year-to-date budget report through September 30, 2024

 24-1224 Review the proposed 2025 Annual Budget and Capital Improvement
 Program

E. NEW BUSINESS:
 24-1226 Approve the tentative 2025 meeting schedule


F. OLD BUSINESS:
 24-1016B Approve the recommendations for electric and water utility rates for 2025
 through 2027

G. ADJOURNMENT:
 Any individual with a disability requesting a reasonable accommodation in order to
 participate in a public meeting should contact the Communications Department at least
 48 hours in advance of the scheduled meeting. The Communications Department can
 be reached in person at 400 S. Eagle Street, Naperville, IL., via telephone at
 630-420-6707 or 630-305-5205 (TDD) or via e-mail at info@naperville.il.us. Every effort
 will be made to allow for meeting participation.



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City of Naperville Page 2 Printed on 10/23/2024

400 S. Eagle Street
 City of Naperville Naperville, IL 60540
 http://www.naperville.il.us/

 Meeting Minutes - Final

 Financial Advisory Board


Monday, October 28, 2024 6:00 PM NEU


A. CALL TO ORDER:

B. ROLL CALL:
 Also present: Raymond Munch, Finance Director; Darrell Blenniss, Water Utility
 Director; Brent Strumpf, Deputy Finance Director; Mike Piotrowski, Marquette
 Associates; Jack Sannes, Marquette Associates; Adithi Basapuram, Student
 Representative; Allen Xu, Student Representative

 Present 7- Thomas Gavin, Mark Gizzo, Edward Harvey, Josh McBroom, Jignesh Patel, Curtis
 Williams, and Jeff Walker

C. PUBLIC FORUM:

 None

D. REPORTS:

 Welcome new student representatives Adithi Basapuram and Allen Xu

 Chairman Harvey welcomed two new student representatives to the Financial Advisory
 Board - Adithi Basapuram and Allen Xu.

 Approve the minutes of the July 29, 2024 regular meeting
 Chairman Harvey called for a motion to approve the minutes. Motion made by Gavin, seconded
 by Patel. Motion approved by unanimous voice vote.


 Approve the minutes of the September 4, 2024 special meeting
 Chairman Harvey called for a motion to approve the minutes. Motion made by Gizzo, seconded
 by Patel. Motion approved by unanimous voice vote.


 Receive the 2024 3rd quarter investment report
 Mike Piotrowski of Marquette Associates provided a high-level overview of the third quarter
 investment report. It was a positive quarter across all market segments. Fixed income had very
 strong returns as bond yields fell. Equities also remain strong while inflation continues to trend
 in the correct direction. The Financial Advisory Board could have more difficult quarters and
 discussions in the future as yields have already risen in the beginning of the fourth quarter.
 The uncertainty from the election is potentially adding to the market volatility.

 Jack Sannes of Marquette Associates presented the third quarter investment report. Mr.
 Sannes highlighted the net investment change of approximately $8.6 million during the quarter

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Financial Advisory Board Meeting Minutes - Final October 28, 2024

 reflected on page three of the report. The portfolio allocations are more conservatively
 positioned with an overweight to cash. The higher cash position helps mitigate volatility in the
 near term. Mr. Sannes noted the year-to-date return of 4.5%, which is ahead of the policy
 benchmark of 4.2%.


 Receive the 2024 year-to-date budget report through September 30, 2024
 Director Munch reviewed the year-to-date budget report through September 30. Munch noted
 that actuals are tracking close to budget. Revenues are beginning to normalize along with
 supply chain disruptions. Electric utilities is one of the few remaining areas that is still
 experiencing significant supply chain constraints. Director Blenniss stated that there is a lack
 of capacity for contractors due to the amount of work available. Blenniss noted that bids have
 already been released for 2025 Capital Improvement Program projects.


 Review the proposed 2025 Annual Budget and Capital Improvement Program
 Director Munch presented an overview of the 2025 Annual Budget and Capital Improvement
 Program. Munch stated that the total budget of $641.88 million is a 3.3% increase from the
 previous year. The City-wide property tax rate is decreasing to 0.6279. The Board inquired
 about the property tax levy. It was noted that the City is only a portion of the property tax bill in
 addition to other local governments.

E. NEW BUSINESS:

 Approve the tentative 2025 meeting schedule

 Chairman Harvey called for a motion to approve the tentative
 schedule. Motion made by Gizzo, seconded by Jignesh. Motion
 approved by unanimous voice vote.

F. OLD BUSINESS:

 Approve the recommendations for electric and water utility rates for 2025 through 2027
 Director Munch discussed the proposed rates. The proposed electric rate
 adjustments remained unchanged. The recommended electric increases are
 6.1% in 2025, 5.6% in 2026, and 5.6% in 2027. Based on feedback from the
 Financial Advisory Board at the September 4 meeting, staff worked with the rate
 study engineers and the City’s financial advisor to model rates leveraging more
 debt over the next three years. The final recommended water increases are 12%
 annually from 2025 to 2027. Wastewater rate increases are recommended at 10%
 annually from 2025 to 2027.
 The Board asked what happens if City Council rejects the proposed increases.
 Director Blenniss stated that staff would review and propose new options. The City
 Council could approve the rate proposals subject to certain changes. Munch also
 stated that staff gave City Council ample time to provide input and discuss the
 proposal.
 The Board inquired about how the debt will be issued. Munch stated that staff
 discussed this with the City’s financial advisor and ran multiple scenarios. The City
 issues debt as needed on a reimbursement basis. Blenniss also stated that the
 City continues to pursue outside funding such as federal grants.
 The Board inquired about if we monitor failure rate costs. Blenniss stated that the
 City does monitor this but there are also service level issues. The more water

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Financial Advisory Board Meeting Minutes - Final October 28, 2024

 main breaks experienced the more it impacts residents and water quality.


 Chairman Harvey called for a motion to approve the recommendations for electric and
 water utility rates for 2025 through 2027. Motion made by Gavin, seconded by Gizzo.
 Motion approved by unanimous voice vote.

G. ADJOURNMENT:
 Chairman Harvey called for a motion to adjourn the meeting at 7:28 p.m. Motion made by
 Gavin, seconded by Gizzo. Motion passed by unanimous voice vote.




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