CHICAGO - When Chicago in 2004 received a $1.8 billion windfall from its groundbreaking 99-year lease to a private consortium of its Skyway toll bridge, the city committed $500 million to establish its first-ever reserve. That move shored up the city's then-shaky credit and led to a round of upgrades.
The reserve was set up as the city teetered on the brink of a downgrade, due in large part to its narrow cash balance - at the time its only fiscal cushion. The balance had fallen dramatically from a high of $180 million in 1998 to a low of $13 million in 2002. In the fall of 2004, the city estimated a narrow $19 million ending balance for the year. It also was grappling with a $220 million deficit in its preliminary budget.