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File #: 15-2216-0114    Name: Short Term Financing for a line of credit
Type: Action Item Status: Passed
File created: 1/5/2015 In control: Board of Commissioners
On agenda: 2/11/2015 Final action:
Title: ORDINANCE AUTHORIZING THE ISSUANCE OF BOND ANTICIPATION NOTES IN AN AMOUNT NOT TO EXCEED $40,000,000 UNDER A LINE OF CREDIT
Sponsors: Chief Financial Officer, Treasurer
Indexes: Financing
Attachments: 1. Signed Ordinance
Title
 
ORDINANCE AUTHORIZING THE ISSUANCE OF BOND ANTICIPATION NOTES IN AN AMOUNT NOT TO EXCEED $40,000,000 UNDER A LINE OF CREDIT
 
Body
To:      The Honorable Board of Commissioners of the Chicago Park District
 
I. Recommendation
 
It is recommended that the Board of Commissioners (the "Board") of the Chicago Park District (the "District") adopt an ordinance authorizing the District to issue Bond Anticipation Notes (the "BANs") in an amount not to exceed $40,000,000 under a line of credit for the purpose of paying and reimbursing a part of the cost of building, maintaining, and improving parks; and the execution of a line of credit agreement (the "Agreement") and other documents in connection with the issuance. The ordinance also authorizes the repayment of BANs by the issuance of bonds in the near future and the costs associated with entering into the Agreement. The General Superintendent and authorized officers of the District are delegated the authority to do, or cause to be done, all things necessary for the execution and establishment of a line of credit program.  
 
   A.  Background
      
On November 19, 2014, the District issued a Request for Proposal for a Revolving Line of Credit/Direct-Pay Letter of Credit (the "RFP"), which was forwarded to 18 banks and/or financial institutions with a response due date of December 10, 2014.
 
The District received three responses back.  Two of the banks were responsive to the RFP (Barclays and PNC Bank) and the other bank offered an alternative mode of financing (JPMorgan Chase). Some of the reasons for the low number of responses to the RFP from the banks and/or financial institutions are below:
 
a.      The aggregated credit capacity in the Chicago market is saturated due in part to lines of credit issued to the City of Chicago and the Chicago Public Schools;
b.      One of the banks would only entertain requests for $50M or above;
c.      One of the banks would only entertain requests for $40M or below; and
d.      Interest rate concerns.
 
 
 
 
I. Recommendation (continued)
 
   B.  Key Terms and Conditions
 
      PNC Bank National Association
 
Maximum Amount:      $40,000,000
 
Term:      1 year, with a subsequent 180 day loan for the
      current balance
 
Tax-Exempt Rate - Used:      70% LIBOR + 0.90%
Unused:      0.15%
 
Taxable Rate -  Used:      LIBOR + 1.4%
Unused:      0.15%
 
Minimum Draw:      $2,000,000
 
Governing Law:      Illinois
 
II. Transaction Team
 
Special Tax Counsel:      Katten Muchin Rosenman
      525 W. Monroe Street
      Chicago, Illinois  60661
 
Issuer's Counsel:       Hardwick Law Firm
      100 North LaSalle Street
      Suite 501
      Chicago, Illinois 60602
 
II. Transaction Team (continued)
 
 
 
 
Independent Registered
Municipal Advisor for the
District:      Speer Financial, Inc.
      One North LaSalle Street, Suite 4100
      Chicago, Illinois  60602
 
Bank and/or
Financial Institution:      PNC Bank National Association
      PNC Centre, One North Franklin, Suite 2800
      Chicago, Illinois  60606
 
 
PNC Bank National Association's
Counsel(s):      Thompson Colburn LLP
      55 E. Monroe Street, 37th Floor
      Chicago, Illinois  60603
      
III. Budget and Financial Information
 
     A.  Use of Proceeds
Budget Classification:      Capital Funds
Fiscal Year(s):      2013, 2014 and 2015 Capital Improvement Plans
Source of Funds:       Draw-downs from Line of Credit
 
 
 
 
 
 
III. Budget and Financial Information (continued)
 
      B.  Repayment Information
Budget Classification:      General Funds
Fiscal Year(s):      NA
Note Interest Payments:      Capitalized Interest
Source of Funds for
Payment at Maturity:       Issuance of bonds which will result in a Debt Service Expense-Property Tax Levy
IV. Explanation
 
A.       Authorization
 
The District is authorized to issue BANs under and pursuant to Section 20b of the Chicago Park District Act, 70 ILCS 1505 and the Local Government Debt Reform Act, 30 ILCS 350.
 
B.      Utilization of the BANs Under the Line of Credit
 
§      Eliminates the need to go into the market twice in a calendar year to issue long-term debt
§      Interest only until maturity
§      Modest costs of issuance and related time management savings
§      Interest savings with a refinancing risk
§      Meet the timeline needs of District's capital program
 
 
V. General Conditions
1. Conflicts:  No agreement authorized herein shall be legally binding on the Chicago Park District if entered into in violation of the provisions of the Public Officer Prohibited Activities Act, 50 ILCS 105/0.01 et seq.
 
2. Ethics: The Chicago Park District's Ethics Code, Chapter III of the Code of the Chicago Park District, shall be incorporated into and made part of all agreements authorized herein.