CHICAGO — The Illinois Finance Authority on Tuesday advanced bond deals for two privately developed state university student housing projects and financings for a handful of borrowers rushing to tap federal stimulus bond programs ahead of their expiration.
"This month's project agenda is driven primarily by the IFA's effort to close deals that provide borrowers with access to the several federal conduit financing tools scheduled to expire at the end of 2010," IFA executive director Christopher Meister wrote in board documents.
Most of the deals approved tap the expiring recovery zone facility bond program that allows for a tax exemption on private-activity bonds to promote business development without the need to use a portion of a state's volume cap. The agency has been working with local governments across the state to consolidate unused allocations awarded by the federal government under various stimulus bond programs.
The board approved Rochelle Energy Center LLC's sale of up to $10 million of RZFBs to expand its gas-to-energy generation operations through the construction and equipping of a new facility that will produce 4.8 megawatts hourly on the 2.17-acre Rochelle Municipal Landfill site. Rochelle Energy is an affiliate of Rockford-based William Charles Ltd.
The bonds are expected to be sold with a 10-year term, paying an interest rate between 4% and 5%. GE Government Finance Inc. will purchase the bonds. The bonds will be secured by a 12-year power purchase agreement, a leasehold mortgage, and a corporate guarantee from William Charles.
The project will eliminate flare-off of waste methane gas at Rochelle Municipal Landfill No. 2 and generate new power that the city of Rochelle and its city-owned electric power utility will purchase, according to IFA documents. Kutak Rock LLP is bond counsel.
Smart Hotels/Olympia Chicago LLC received approval for the sale of up to $23 million sale of RZFBs to finance construction of a six-story, 130-unit select-service hotel near the University of Chicago's Hyde Park campus. William Blair & Co. is purchasing the bonds to place with institutional investors. The 30-year bonds are expected to pay a rate between 4% and 5%. The University of Chicago will provide a guarantee. Ice Miller LLP is bond counsel.
The board approved the sale of up to $30 million of RZFBs for JH Naperville Hotel LLC's acquisition and renovation of an existing seven-story, 426-room hotel in Naperville, far west of Chicago. The hotel will be run as a Marriott Hotel and Conference Center.
The bonds are being privately placed with William Blair with an initial three-year term paying an interest rate between 3.5% and 4.5%. The project is a joint venture of Janko Group LLC and Heitman Capital Management. Shanahan & Shanahan LLP is bond counsel.
The board approved Mayo Properties LLC's sale of up to $4.1 million of RZFBs to finance Morgan Transportation Corp.'s purchase, renovation, and expansion of a 35,500-square-foot warehouse, office, and trucking terminal and to build additional loading docks in suburban Chicago.
First Midwest Bank will purchase the 20-year bonds at an expected fixed rate between 3% and 4.5% for an initial five-year term. The bonds will be secured by a first mortgage on the property, a first lien on the financed equipment, and a collateral assignment of rents and leases. Moran also will provide a corporate guarantee. Ice Miller is bond counsel.
The board also signed off on a $3.5 million issue of RZFBs for Internationale Parkway LLC on behalf of MicroSun Technologies LLC to finance the acquisition, renovation, construction, and equipping of a 98,500-square-foot industrial warehouse located in suburban Chicago. The Northern Trust Co. will buy the bonds that carry a similar structure to the Mayo Properties bonds. Ice Miller is also bond counsel.
The triple-A rated Deerfield's planned sale of $20 million of general obligation bonds tapping the qualified energy conservation bond program also advanced. The suburban Chicago village will finance major improvements to its wastewater reclamation facility. Katten Muchin Rosenman LLP is bond counsel.
"The improvements will enhance the reliability and efficiency of the facility through replacement and renovation of aged equipment and structures, installation of modern instrumentation and control systems, and elimination of dated treatment processes and technologies," IFA documents read.
The authority board gave preliminary approval to two student housing bond issues for $65 million and $135 million. CHF-Normal LLC wants to borrow $65 million to finance the development of a 228-unit, 896-bed residential facility under a ground lease from Illinois State University in Normal.
The project would be developed by American Campus Communities with day-to-day operations managed by the university. RBC Capital Markets is the underwriter. The finance team has not yet settled on a final structure. The borrower would either seek bond insurance or underlying ratings. Officials expect low investment-grade ratings.
CHF-DeKalb LLC would borrow $135 million for construction of a residential facility with more than 1,000 beds on Northern Illinois University's campus in DeKalb. American Campus would develop the project and the university would manage the facility. Chapman and Cutler LLP is bond counsel.
