CHICAGO — The Illinois Finance Authority yesterday advanced more than $800 million of new-money and refunding debt planned by various organizations, including the Art Institute of Chicago, the Alexian Brothers Health System, and Palos Community Hospital.
It also moved to establish a $48 million borrowing program to aid continuing-care facilities struggling with the state’s late bill payments.
The IFA board gave preliminary approval to the $48 million Affordable Assisted Living Coalition note project as a low-cost way to help assisted-living providers cope with chronically late payments from the state government, which has a backlog of $5 billion of bills as it grapples with a $13 billion deficit.
The state is several months late in paying its Medicaid accounts for all of the 119 supportive-living facilities, or SLFs, that fund affordable care services for frail and disabled Illinois residents who receive Medicaid assistance, according to IFA documents.
The program — developed by William Blair & Co. and the Affordable Assisted Living Coalition — will fund up to 365 days of accounts receivable and provide reimbursement for each month of SLF Medicaid invoices. Under the program, the IFA would issue $48 million of taxable notes dated April 1 that will mature Nov. 1, 2010, and June 1, 2011, to finance the purchase of the Medicaid accounts receivables. The two maturities allow the SLFs to participate for either six or 12 months.
The proceeds will fund on a monthly basis the receivable invoices submitted by each SLF and certified by the state Department of Healthcare and Human Services, allowing each participating facility to receive immediately its month’s funding for their Medicaid receivables over the next six months to one year. Each participating SLF’s Medicaid receivables will be pledged to the Financial Authority to secure the notes.
“Importantly, while often delayed, the state has never failed to make these payments,” according to IFA documents.
Gov. Pat Quinn is unveiling a fiscal 2011 budget today that is expected to propose borrowing to pay down bills.
William Blair would serve as underwriter and Greenberg Traurig LLP is bond counsel on the note issues.
Meanwhile, the Art Institute wants to eliminate its floating-rate risk and will current refund all of its existing variable-rate debt and some medium-term bonds, converting all of it to fixed rate. The $176 million of bonds being refunded were sold in 1992, 1995, 1996, 1998 and 2000. The IFA board gave preliminary approval to the financing.
The museum, as part of its debt portfolio restructuring, also is planning to convert its $58 million of 2009 variable-rate demand bonds to annual put bonds. The debt will be secured solely by a general pledge of the institute and not by a pledge of any real assets, nor a lien or security interest in the institute’s collection, according to IFA documents. The prestigious museum carries current ratings of A1 from Moody’s Investors Service and A-plus from Standard & Poor’s.
The institute is working with Prager Sealy & Co. as financial adviser. The museum is in discussions with various banks and has not yet named an underwriting team. Officials hope to sell the bonds this spring and close by the end of April. Orrick Herrington & Sutcliffe LLP is bond counsel.
The original bonds financed various museum and school-building renovations, gallery renovations, equipment and art object purchases, the acquisition and renovation of a school facility as well as the renovation of the museum’s Ryerson/Burnham Libraries. Its 2009 bonds financed the acquisition, construction, furnishing and equipping of the new Modern Wing and gallery reinstallation renovations.
The downtown Chicago museum’s permanent collection includes 260,000 works of art, including paintings, sculpture, prints, drawings, photographs, decorative arts, and textiles. It claims to hold one of the finest collections of French Impressionism outside of Paris, one of the best collections of 19th Century prints and drawings, and a leading collection of Chinese bronzes and jades.
The museum saw more than 1.5 million visitors last year, up from 1.4 million in 2008, and has a membership of 88,810. It also operates a prestigious art school with 3,000 students.
In other arts issuance, the Poetry Foundation is seeking to enter the tax-exempt market for the first time. It received final approval to sell up to $25 million to cover a portion of the costs of its acquisition and renovation of a new downtown administrative headquarters that will have performance space and also house its archives and collections, which are currently on display at the Newberry Library in Chicago.
The foundation intends to issue fixed-rate bonds this spring, although a floating-rate structure remains an option. It anticipates underlying ratings of A1 from Moody’s and A-plus from Standard & Poor’s. William Blair is the underwriter and Perkins Coie LLP is bond counsel.
The foundation’s mission is to raise poetry to a more visible and influential position in American culture, to discover and recognize the best poetry, and to place it before the largest possible audience.
After receiving a major gift from philanthropist Ruth Lilly, the Poetry Foundation was established in 2003 as a successor to the Modern Poetry Association.
The new home is designed to “help formalize the foundation’s national leadership role and also establish a destination venue for symposia and both performance and civic events,” according to IFA documents.
On the health care front, Alexian Brothers received final approval to issue up to $150 million to refund $70 million of bonds from a 2005 issue and to raise $50 million to finance a modernization of its St. Alexius Medical Center in Hoffman Estates, outside of Chicago.
This spring the system intends to issue fixed-rate bonds secured by an interest in all accounts, a mortgage, and debt service reserve. The shift on the refunding piece allows the system to drop a standby letter of credit.
Alexian Brothers is rated A by Fitch Ratings and A3 by Moody’s. Bank of America Merrill Lynch will be underwriter. Kaufman Hall & Associates is financial adviser. Jones Day is bond counsel.
The system — sponsored by the Congregation of Alexian Brothers, Immaculate Conception Province, and a Roman Catholic religious institute — operates three hospitals in Elk Grove and Hoffman Estates along with life-care centers and nursing homes in Missouri, Tennessee, and Wisconsin. The Alexian Brothers launched their ministry in the United States in 1866 when they opened an eight-bed hospital in Chicago that was destroyed in the Great Chicago Fire of 1871.
The 436-bed Palos Community Hospital, which serves Chicago’s south suburbs, received final approval to sell up to $305 million of bonds to finance construction of a new bed tower and other improvements. The hospital expects to issue just $175 million and privately place another $100 million to fund construction.
Palos opened in 1972 with 265 beds but has since grown due to population demands, “with major building additions and modernizations in 1975, 1978, 1992, 1995, 2006, and 2009,” according to IFA documents.
Goldman, Sachs & Co. and Cabrera Capital Markets are underwriters. Jones Day is bond counsel. The hospital is not currently rated but is expected to seek ratings, and the IFA indicated a rating in the high single-A category is expected.
Gov. Quinn also recently designated the IFA as issuer on $40 million of Midwest disaster-relief bonds.