CHICAGO — The Chicago City Council Wednesday approved up to $1 billion of new-money and refunding debt that will help the city keep its $8 billion O’Hare International Airport expansion project on track as negotiations with the airlines over upcoming projects continue.
Citi is senior manager on the deal slated for sale late this year or in January. Siebert Brandford Shank & Co. is co-senior manager. Another 10 firms are co-managers.
“The bonds will allow the city to continue on with the O’Hare Modernization Program which is improving the airport’s efficiency, reducing delays, and increasing capacity,” Gene Saffold, the city’s chief financial officer, said. The city earlier this year wrapped up financing for the $3.3 billion first phase of the project.
The final size and structure of the deal will depend on a mix of factors, including the transaction’s timing, interest rates, and whether Chicago can strike a final agreement with the airlines on the next phase. The city is considering issuing some taxable Build America Bonds and qualified energy conservation bonds. The ordinance allows the city to issue new-money third-lien general airport revenue bonds and stand-alone or double-barrelled passenger facility charge bonds.
The airport’s major airlines have resisted city pressure to fund the second phase of the O’Hare Modernization Program. They support runway expansion but want a $2.2 billion terminal project delayed. They also oppose the city’s planned prepayment of some existing debt.
City officials acknowledged they could face a lawsuit from the airlines if the city moves forward with the deal but wanted approval in hand in order to issue the debt in time to have proceeds to enter into contracts for the spring construction season.