CHICAGO — The Chicago suburb of Bridgeview, Ill. is set to come to market in the next few weeks to refinance $2 million of debt as part a larger restructuring aimed at easing a soccer stadium debt that threatens to consume a growing chunk of of the government's spending.
The upcoming deal will restructure bonds issued in 2004 as revenue bonds that carried a tax increment financing pledge.
The new debt will also feature the city's full, faith and credit pledge in a move the BBB-plus-rated village hopes will help lower borrowing costs, the city's financial advisor said.
Ahead of the deal, Standard & Poor's revised its outlook on the village to negative from stable, warning that the stadium-related debt threatens an already weak fiscal position. S&P maintains a BBB-plus rating on the city's general obligation bonds.
Located 15 miles outside Chicago with a population of 16,000, the village of Bridgeview issued $134 million of bonds in 2005 to finance a 20,000-seat sports stadium and concert venue. The Toyota Park Stadium is the home facility for the Chicago Fire, a member of Major League Soccer.
Since opening in 2006, the facility has failed to generate expected revenue and the city has struggled to cover debt payments.
After the original borrowing and subsequent restructurings, Bridgeview will have a debt burden of more than $245 million, according to S&P, which translates into nearly 34% of total government expenditures.
The city's mayor, Steven Landek, has more than doubled property taxes extended between 2009 and 2013, according to Standard & Poor's.
"The negative outlook reflects our expectation that additional debt restructurings will be necessary, and without them, the village's financial position would significantly weaken," the ratings agency said in its ratings report.
"Multiple restructurings have been necessary to cover debt service and minimize property tax increases in the near term," analyst Blake Yokum said in the report. "Through restructuring, the overall debt burden is expected to increase and debt service has been extended to 2044 and planned additional restructurings will extend debt even further to 2054 in a worst-case scenario."
The village expects to restructure the $2 million of TIF bonds in the next few weeks, according to Dan Denys from Chicago-based Austin Meade Financial Ltd., the city's financial advisor. The finance team is still considering insurance for the bonds, Denys said.
George K. Baum is the underwriter.
The new deal will generate savings by lowering interest rates, Denys said. It will also shortening the life of the debt to 2019 from 2024. The village in June restructured the bulk of the original $6.6 million issuance, Denys said.
The upcoming deal is part of a larger plan the village is crafting to deal with the stadium debt, he said.
"There's a couple things we're looking at but we haven't made a formal commitment," said Denys. "We have a lot of debt, and a lot of things are predicted on periodic debt restructurings."
"The biggest amount of bonds don't have call options," Denys added. "That's part of our challenge."
In its most recent deal, the village in June restructured $27 million of GO bonds, as well as a part of the TIF bonds, issuing fixed rate bonds to refinance what was originally variable-rate debt supported by a bank letter of credit.
Bond documents for that deal said the village would return to the market depending on "external events, including the growth in tax revenue, sales of land owned by the village, and general economic development of the village."
Denys said the village is looking at raising revenue from a variety of sources to help pay down the debt and still hoping the stadium will begin to raise revenue.
"Hopefully soccer will catch on," he said. "And we'll be back to where we should have been."