In an effort to stem Chicago’s growing debt, the City Council on Wednesday approved a plan to borrow nearly $2.35 billion. The money will be used, among other things, to refinance existing debt and pay penalties.
Although Mayor Rahm Emanuel originally requested $1.25 billion in general obligation bonds, that rate was reduced to $650 million by the city’s finance committee.
The $650 million will be used in part to refinance the city’s GO bonds by selling off new, long-term debt to pay off older bonds. The technique, known as “scoop and toss,” is a somewhat common way for municipalities to extend the deadline for their borrowings. These bonds will be priced and underwritten by Goldman, Sachs & Co in the second half of this year.
This is in addition to the city’s $500 million GO bond restructuring and refunding that was priced on Tuesday. Emanuel plans to phase out all “scoop and toss” trading by 2019.
The most substantial part of the borrowing package is the $1 billion of bonds allocated to Midway Airport to fund improvements and refund existing bonds.
On Wednesday, an additional $200 million in water revenue bonds was also removed from the plan. The package passed in a 40-4 vote.