March 9, 2016 - Board Meeting
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 as part of the District’s capital programs and the payment of capitalized interest and the costs of issuing the notes.
The ordinance authorizes the District to exercise the option of renewing a line of credit with PNC Bank National Association for one additional year. The ordinance authorizes the execution of a line of credit agreement and other documents in connection with the issuance of BANs as well as the repayment of the BANs by the issuance of general obligation bonds in the near future. 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 Information
On November 19, 2014, the District issued a Request for Proposal for a Revolving Line of Credit/Direct-Pay Letter of Credit (the “RFP”) for terms covering a period of two years, 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:
I. Recommendation (continued)
A. Background Information (continued)
a. The aggregated credit capacity at that time in the Chicago market was 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; and
a. One of the banks could only entertain requests for $10M or below.
The District chose PNC Bank National Association and with approval of the Board of Commissioners on February 11, 2015, the District issued a BANs with an underlying line of credit on March 3, 2015, which was paid off on October 6, 2015, with the issuance of general obligation bonds. The key terms and conditions listed below remain the same.
B. Key Terms and Conditions
PNC Bank National Association
Maximum Amount $40,000,000
Term 1 year
Tax-Exempt Rate - Used 70% LIBOR + 0.90%
Unused 0.15%
Minimum Draw $2,000,000
Governing Law Illinois
II. Transaction Team
Special Tax Counsel: Katten Muchin Rosenman LLP
525 W. Monroe Street
Chicago, Illinois 60661
II. Transaction Team (continued)
Issuer’s Counsel: Hardwick Law Firm LLC
100 North LaSalle Street
Suite 501
Chicago, Illinois 60602
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
Paying Agent: Zions Bank, a dvision of ZB, National Association
111 W. Washington Street, Suite 1860
Chicago, Illinois 60602
III. Budget and Financial Information
A. Use of Proceeds
Budget Classification: Capital Funds
Fiscal Year(s): 2014, 2015 and 2016 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.