CHICAGO – The Cook County, Illinois Board of Commissioners advanced borrowing plans and two major development projects.
The board signed off on a planned $330 million refunding that's expected to achieve about $27 million in present value savings.
"The savings will be targeted to moderate our year-over year increases in debt service, when including forecasted new money over the next decade, that will lead to inflationary growth in debt service rather than some of the years where we have sharper increases currently," the finance department said.
The team selected to market the current refunding includes Loop Capital Markets LLC and Barclays Capital Inc. as senior managers. Siebert Brandford Shank & Co. LLC and William Blair & Co. LLC are co-senior managers.
Also at its Wednesday meeting, the board approved a roughly $600 million privately financed redevelopment of its shuttered hospital, that was unveiled recently by board president Toni Preckwinkle. Commissioners also advanced plans for a bond-financed $118 million expansion of its existing John H. Stroger Jr. Hospital.
Cook, the nation's second-most-populous county, includes the city of Chicago.
Its chief financial officer, Ivan Samstein, said the county initially intends to tap a credit lien established in 2014 with PNC Bank to finance initial work and will begin issuing long-term bonds for the outpatient and administration building project in the fall. The county would include some borrowing for the project in a $100 million to $140 million general obligation issue that would also fund other capital work.
Samstein said he would still need to return with final details on the transaction including a finance team later in the year.
The county will only "borrow the amount of cash we will use in that given year" to save on interest costs, Samstein told commissioners.
The new nine-story, 282,000-square foot Central Campus Health Center would serve as an outpatient facility next to Stroger hospital just west of downtown Chicago. It would replace services now offered in three aging buildings the county said are outdated and inefficient.
Construction costs total about $108 million with another $10 million going to cover the cost of consultants, legal fees, contingencies and financial analysis. The county hopes to lower its health system's operating costs and save on costly capital repairs.
The former Cook County Hospital building, on the same block as the Stroger Hospital and shuttered for more than a decade, would see new life under the private development proposal approved by commissioners.
The plan would transform century-old structure into a mixed-use development without any county capital investment or subsidies, officials said.
The project encompasses multiple phases that also include development of adjacent land. It calls for a hotel, residential housing, retail, and new conference and office space, parking, open space, and research facilities.
Under the redevelopment and 99-year land lease agreement the board will consider, the consortium selected to manage the project -- Civic Health Development Group – would pay the county $2 million in annual rent.
The deals will mark the county's first since January 2014. The county's $3.6 billion of GOs carry ratings of A-plus from Fitch Ratings, A2 from Moody's Investors Service, and AA from Standard & Poor's. All assign a negative outlook.
Like Chicago and its sister agencies, the county is strained by its unfunded pension liabilities. Preckwinkle last year modified a funding proposal aimed at stabilizing its system saddled with a $6.5 unfunded tab. The plan dropped benefit cuts after court rulings made clear direct cuts violated the state constitution, but kept the shift to an actuarially required contribution.
The county will make its regular $195 million payment based on the current statutory formula tied to a percentage of employee contributions and make a supplemental payment to meet the ARC.