CHICAGO — The Chicago City Council signed off Wednesday on an $850 million borrowing authorization along with several key development projects sought by Mayor Rahm Emanuel before closing the books on his eight-year tenure.
The city intends to issue about $800 million late this month in its first general obligation bond offering in more than two years. Barclays has the books.
“This bond issuance is to finance the 2018 and 2019 Capital Improvement Program, aldermanic menu, and equipment purchases and does not include settlement and judgment costs,” said finance department spokeswoman Kristen Cabanban. “Proceeds from the bond sale will also be used to retire $155 million in short-term loans used by the city to fund its 2018 capital needs.”
The city phased out borrowing for costly settlements and judgments and scoop-and-toss restructuring after its January 2017 billion dollar issue. The city also provided a detailed list of projects in line for funding. Council members have criticized the absence of such detail in previous deals.
The breakdown includes $168 million for local ward projects sought by the council’s members, $182 million for various infrastructure projects, $79 million for facilities repairs, $72 million for personal property and equipment purchases, $43 million for general facilities construction, and $171 million for a smart lighting program that was originally to have been financed though a public-private partnership.
The deal will also provide $65 million for a new public safety training academy and some smaller projects. The council also signed off on a design-build contract with a private contractor for the $95 million public safety facility. The Emanuel-backed project has vocal public critics and was opposed by some aldermen and the two candidates vying to replace Emanuel in an April 2 runoff, attorney Lori Lightfoot and Cook County Board President Toni Preckwinkle.
Opponents say the city bond money could be better spent elsewhere while Emanuel argues the project is needed to address training issues raised in the U.S. Justice Department’s 2016 probe of Chicago police tactics and will spur economic development in a blighted area.
The council after a lengthy debate also signed off on zoning changes for Sterling Bay’s $6 billion Lincoln Yards development project set for an industrial area between two affluent Chicago North Side neighborhoods.
Opponents argue the project is being rushed through, should be further scaled back, and include more affordable housing, with tax-increment subsidies going elsewhere. Supporters like Alderman Joe Moore countered that the project has been modified in response to critics and will generate significant development and tax dollars to “mitigate some of the challenges to make our pension fund solid.”
The even more contentious vote to establish a TIF district and direct as much as $1.3 billion in diverted property tax revenue to finance infrastructure improvements around the development is expected next month.
Whether the council will vote on Emanuel’s ordinance laying the structural groundwork for an up to $10 billion pension obligation issue remains up in the air with the clock ticking, the city’s chief financial officer, Carole Brown, said Monday. The deal could be pursued by the next council, but Emanuel had wanted to vet the ordinance laying out the bond security before his term ended.
Fitch Ratings rates Chicago BBB-minus with a stable outlook. S&P Global Ratings rates the city BBB-plus and stable. Kroll Bond Rating Agency rates the city A with a stable outlook. Moody’s Investors Service assigns a junk rating of Ba1 and stable outlook, but is no longer asked to rate new deals.