CHICAGO — The Cook County Forest Preserve District, which boasts 68,000 acres of open space in the Chicago area, is selling bonds to entice more Chicagoans to camp out, among other things.

The $157 million sale, the district’s first in eight years, is set for Wednesday. It will substantially boost the district’s debt portfolio, which will total $197 million after the sale.

The district is contiguous with Cook County and features 110 forest preserves that surround Chicago on three sides. It averages 40 million visitors a year.

The district is a separate governmental unit from the county, but managed by the same board of commissioners, a fact that is key to its credit rating, according to analysts.

Ahead of the deal, the district snagged an upgrade from Standard & Poor’s and praise from the big three rating agencies for its effort to increasingly distinguish itself from the low-double-A rated county, which has a troubled financial and political history.

Standard & Poor’s recently boosted the forest district’s rating to AA from AA-minus. Moody’s Investors Service rates the district Aa2 and Fitch Ratings rates it AA with a stable outlook.

“The rating agencies were impressed we weren’t just relying on the county,” said Mark Thomas, the district’s chief financial officer. “We’re a discrete entity, and that gets lost a lot. We’ve been distinguishing ourselves further from the county.”

For instance, the district has been formalizing its intergovernmental agreements with Cook County.

Moody’s warned that the district’s dependence on the county remains a credit challenge, and said an upgrade could come with the establishment of a separate board of commissioners.

Thomas joined the district from the Chicago Park District last October under new district superintendent Arnold Randall, who was brought in to manage the district under county board President Toni Preckwinkle.

The $157 million deal is divided into three series: $45.8 million of unlimited-tax general obligation bonds, $54.7 million of limited-tax GOs and $56.4 million of unlimited-tax GOs.

The new-money piece of the deal is expected to total $105 million.

The rest of the proceeds will be used to refinance and restructure 2001 bonds for savings.

The district plans to spend the new-money proceeds over the next three years on a variety of capital improvements, land acquisition and funding for the popular suburban Brookfield Zoo and the Chicago Botanic Gardens.

Roughly $20 million of the bond proceeds will be used to upgrade and promote the little-known camp sites across the forest district in an effort to attract more families.

“Camping is a huge initiative and a huge chunk of the deal,” Thomas said. “We’re saying, 'Don’t go to Wisconsin, don’t go to Michigan, come 15 minutes from downtown and you can literally be in wilderness.’ ”

It’s likely to be the district’s only borrowing for the next three years.

Standard & Poor’s said its upgrade reflects the district’s large $550 billion property tax base, positive financial operations and moderate overall debt burden.

Challenges include the district’s low 68% funded level of its pensions, which have an accrued liability of $83.4 million, and its limited ability to raise property taxes.

Property taxes are the district’s main revenue source but are subject to a levy cap that limits the operational levy growth to the lesser of 5% and the rate of inflation, with additional levy allowed for new construction, analyst John Kenward said in the upgrade report.

A new management team that took over in 2003 made major cuts — slicing the workforce nearly in half, to 544 — and privatizing the district’s golf courses.

“As a result of management’s fiscal reforms, the district has made significant progress in improving its financial and operational management and in the process built sizable reforms,” Kenward wrote. “The district reported operating surpluses before transfers in each of the past five fiscal years.”

Like other local Illinois governments, the Forest Preserve District, which has a separate pension fund from the county, is awaiting action in Springfield on the pension issue, Thomas said.

“We’ll react to whatever reforms come out of Springfield,” he said.

The district tapped Cook County’s bond pool for its teams, and selected Loop Capital Markets as the senior manager. Blaylock Robert Van LLC and M.R. Beal & Co. are co-seniors.

Katten Muchin Rosenman LLP and Burke Burns & Pinelli Ltd. are co-bond counsel. Peralta Garcia Solutions is the financial advisor.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.