On Monday, the Finance Committee will consider seven bond-related ordinances, including one authorizing the issuance of $1.25 billion in General Obligation bonds, $300 million of which is a so-called scoop and toss restructuring over the next two years, part of Mayor Rahm Emanuel’s promise to phase out the practice by 2019.
Other bonds up for a vote include:
$98 million for municipal improvements within the Franklin Point and River South Areas
$200 million for issuance of bonds funded by sales tax revenue, $70 million of which will finance aldermanic menu money spending
$1 billion in Midway Airport Revenue Bonds
$800 million in three separate water- and wastewater-related bonds
The City’s Chief Financial Officer, Carole Brown, briefed aldermen in person on the issuances earlier this week, but aldermen Aldertrack spoke to don’t necessarily feel up to speed, and some feel rushed.
“I think the issue here is not that they’re borrowing the money. It’s that they haven’t talked about it until the last couple days,” Ald. Ameya Pawar (47) told Aldertrack, noting that the airport and water bonds are not out of the ordinary. Pawar is not a member of the Finance Committee, but he says he hopes the votes will be delayed untilBen Winick, with the Council’s newly created Office of Financial Analysis, can provide context to aldermen.
All seven bond authorization ordinances, some upwards of 500 pages, were introduced before the holiday break at the December 9 full City Council meeting.
Ald. Howard Brookins (21), a Finance Committee member, said he had a one-hour briefing with Brown this week. “It was comprehensive,” he said, “so much so that they handed us literally 50 sheets of paper.” He said from his briefing, the borrowing seemed in line with what the Mayor previewed in budget negotiations, but, “unless you’re a finance major, it’s like, what are we looking at?”
Another alderman put it bluntly, “I don’t know what the hell it is. I don’t know why they’re trying to do all this at one time.”
Ald. Scott Waguespack (32), a vocal critic and the sole “no” vote on the last issuance of general obligation bonds in committee last June, said, “This is a massive bundling of offerings and some are basically a blank check.” At the June 15 Finance Committee meeting, aldermen voted to advance Mayor Emanuel’s plan to issue up to $1.1B in General Obligation bonds, although several committee members said they had a hard time understanding the language of the ordinance or what was at stake if they failed to approve it.
Rather than be connected to specific tax receipts or revenue streams, General Obligation bonds are backed by a government body’s entire revenue stream, and repaid through the general fund for regular government operations. Other bond issuances, like airport bonds, are backed by revenue specifically generated from airport activities, like ticket fees and gate lease fees charged to airlines.
Of the $1.25B general obligation bond authorization up for a vote Monday, $125 million would go towards traditional refunding for present value savings, $300 million would cover two years of scoop-and-toss restructuring for budget relief, and $700 million would cover two years of as-yet unannounced capital projects, according to finance publication Bond Buyer.
A Mayoral briefing presentation from June includes the four-year phase-out schedule for scoop and toss, which would be $225 million in 2015, $150 million in 2016, $100 million in 2017, $50 million in 2018, zeroing out in 2019.
Of the $200 million authorized for sales tax revenue bonds, $70 million will fund the 2016 Aldermanic Menu program which gives each alderman $1 million to spend on local improvement projects in their ward. The bonds will also “refund outstanding Sales Tax Revenue Bonds for interest cost savings,” according to Brown’s presentation.
Winick, who was appointed last year to oversee the City Council’s new independent budget office, told Aldertrack he’s still looking over the details and hasn’t offered concrete answers to aldermen.
Next Tuesday, $500 million in General Obligation bonds authorized in September will go to market. Five aldermen on the Finance Committee voted against the issuance at the time: Ald. Willie Cochran (20), Ald. Pat Dowell (3), Ald. Scott Waguespack (32),Ald. John Arena (45), and Ald. Gregory Mitchell (7).