CHICAGO — The Illinois Finance Authority board this week approved the first tranche of private-activity borrowing planned by CenterPoint Joliet Terminal Railroad LLC to finance ongoing construction at its intermodal freight-transfer facility in Joliet under a $15 billion federal government pilot program.
The U.S. Department of Transportation, which manages the program — established in the 2005 SAFETEA-LU package — has awarded CenterPoint an allocation of up to $1.34 billion of freight-transfer facilities revenue bonding.
The program seeks to promote private investment in highway, bridge, and intermodal freight-transfer facility projects of regional or national importance with tax-exempt private-activity bonds in the form of freight transfer revenue debt and highway infrastructure facilities revenue bonding. No state PAB volume cap is needed. Projects also must receive Title 23 Highway Funds or Title 49 Railroad Grant Funds from the DOT.
CenterPoint, which has four projects in various stages of development, has preliminarily selected the IFA as the conduit for its Joliet issuance. The company would use proceeds of the sale to finance the acquisition of land and construction and equipping of the up to- 20-million- square- feet of rail-to-truck and truck-to-rail CenterPoint Intermodal Center in Joliet. The 4,000-acre site is located about 45 miles southwest of Chicago and just west of the Union Pacific main line.
The company is planning on a private placement with a syndicate of banks led by SunTrust Bank, with SunTrust Robinson Humphrey as underwriter. Perkins Coie LLP is bond counsel. A preliminary structure calls for an initial bond term of five years with interest rates reset every five years until final maturity in 40 years.
CenterPoint plans to issue annual tranches of debt based on demand over the next five to 10 years as its facility is built out. CenterPoint must spend bond proceeds within five years of their issuance under the program.
The sole member of the borrower is CenterPoint Properties Trust, a private Maryland real estate investment trust. CPT is owned by CalEast Global Logistics LLC, an investor in logistics warehouse and related real estate. It is a joint venture owned by the California Public Employees Retirement System and LaSalle Investment Management, a division of Jones Lang LaSalle.
The authority earlier this year gave preliminary approval to the Seneca I-80 Railport Development LLC’s proposed $576 million issue under the same program. The IFA also has given preliminary approval to CenterPoint’s proposed $505 million financing for a Crete Terminal Railroad LLC project and Ridge Property Services LLC in Will County, which wants to build a rail transfer facility in Wilmington and has received a $554 million allocation from the DOT.
The various projects have been pending before the IFA for several years as tight credit markets have made it more difficult to raise the necessary financing.
Intermodal facilities are designed to provide for the efficient and direct transfer of goods between ship, rail or truck, in effect serving as an inland port. Chicago currently serves as the largest inland port-freight transfer center nationally.
“It can take four days for this rail traffic to move through the city of Chicago. Development of intermodal facilities around the outer suburbs of Chicago will help reduce rail bottlenecks and reduce Chicago’s truck traffic,” the IFA said in documents.
Developers broke ground on the Joliet facility last fall at a ceremony attended by Illinois Gov. Pat Quinn. In 2009, Quinn signed the Intermodal Facilities Promotion Act, which is designed to encourage business development along the freight rail systems of Illinois.
Under the act, state income taxes attributed to the jobs created at the facilities would be placed in an Intermodal Facilities Promotion Fund.
The Department of Commerce and Economic Development in turn would distribute the funds to provide grants for infrastructure. CenterPoint Joliet is expected to receive up to $3 million annually between 2010 and 2016.
The board gave final approval to DePaul University’s sale early next year of up to $200 million of new-money and refunding bonds to finance construction projects at its main Lincoln Park campus in Chicago, its downtown Chicago buildings, and O’Hare campus. The school is the largest Catholic university in the nation with an enrollment of 25,072.
Goldman, Sachs & Co. is the senior manager. Barclays Capital, Cabrera Capital Markets LLC, and Samuel A. Ramirez & Co. are co-managers. Chapman and Cutler LLP is bond counsel.
The board gave final approval to East-West University’s plan to sell up to $35 million of bonds to finance the construction and equipping of a new 14-story, multipurpose building in the South Loop in Chicago. Wells Fargo Bank will purchase the bonds directly.
The IFA board gave preliminary approval for the sale of up to $4.1 million of recovery zone facility bonds for Mayo Properties LLC to finance the purchase and renovation of a warehouse-office building and trucking terminal in the Chicago suburb of Elk Grove Village. The bonds will be privately placed with First Midwest Bank.
The board gave final approval to the sale of up to $3 million of recovery zone facility bonds for BPJ Investments LLC for the expansion of Neuco Inc.’s office and warehouse facility in the Chicago suburb of Downers Grove. The bonds are being privately placed with Hinsdale Bank & Trust Co.
In the health care sector, the board gave preliminary approval to Roseland Community Hospital’s issue early next year of up to $35 million to finance working capital and various projects. Raymond James & Associates and Melvin & Co. are underwriters.
Smith Crossing received preliminary approval for its plan to sell up to $50 million of bonds to fund the second phase of an expansion project at the continuing care retirement facility in the southern Chicago suburb of Orland Park. Ziegler Capital Markets is the underwriter. Jones Day is bond counsel.
The Sarah Bush Lincoln Health Center received final approval to sell up to $65 million to refund debt and reimburse itself for capital projects at the 128-bed facility. The center carries an existing A-plus rating from Standard & Poor’s. Bank of America Merrill Lynch is the underwriter and Jones Day is bond counsel.
