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* Sun-Times…
The cash-strapped city of Chicago paid $74.7 million in fees last year to banks, law firms and other businesses that helped it borrow money — a record tab that will rise as more fees get tallied and one that comes as the city pays higher costs to dig itself out of its deep financial hole.
Altogether, City Hall borrowed $4.6 billion through the municipal bond market in 2015, with firms that worked on those deals netting $28.3 million in fees, a Chicago Sun-Times examination of city records found. On top of that, City Hall paid $46.4 million in other borrowing-related fees through the first three quarters of the year; fees for the fourth quarter have yet to be disclosed.
Most of the firms that help the city with borrowing and other financial transactions have long done business at City Hall. Some also have been political supporters of Mayor Rahm Emanuel, whose plan to fix the city’s finances relies in part on ending costly and risky financial deals from the past.
But, to do that, the city keeps borrowing. And many of the fees associated with borrowing have gone up, a consequence of the city’s credit rating dropping to “junk” status in May. The downgrade also is resulting in the city paying higher interest rates on long-term borrowing deals — costs that can add up over decades.
It’s a trend Chicago taxpayers might have to get used to: Emanuel is planning another $4.15 billion in bond sales in 2016, starting with a $500 million deal this month, according to documents he’s shared with aldermen.
* The Tribune drills down into the new borrowing proposal…
The most controversial element is $335 million in scoop-and-toss borrowing over the next three years. The proceeds would be used to pay off loans coming due with money coming in from the new loans, a technique that pushes debt onto future generations at higher cost. […]
The city also plans to borrow $700 million to convert $500 million in variable-rate water system debt to fixed-rate debt and pay a $200 million fee to terminate a related “swap contract” that provided a hedge to the original variable rate debt.
That $200 million “swap contract” debacle could’ve paid for a whole lot of stuff. Just sayin…
* Related…
* Emanuel wants $6 million in new tobacco taxes — to pay for CPS student program
* Chicago’s Orange Line goes back and forth: Mayor Rahm Emanuel’s administration last summer sold $1.1 billion worth of bonds, with much of that money being used to rid City Hall of [Mayor Daley’s[ Orange Line deal and others that Emanuel aides say have become a financial drag… It’s not the only Daley deal the city moved to end early using proceeds from the July bond sale. City Hall also used $2.4 million to buy back the city’s 911 computer and radio system from investors. Bond proceeds also were used to pay $35 million in debt from Daley’s acquisition of the Michael Reese hospital site, which he hoped to use to house athletes for the 2016 Olympics; $62 million to settle a dispute with investors in four downtown parking garages the city privatized in 2006; $18.5 million to settle a dispute involving the parking-meter privatization deal of 2009; and $195 million to terminate interest-rate swap agreements on earlier borrowing.
posted by Rich Miller
Monday, Jan 11, 16 @ 10:22 am
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“..with firms that worked on those deals netting $28.3 million in fees..”
The scam continues but it is “The Chicago Way”.
Comment by Empty Suit Monday, Jan 11, 16 @ 11:20 am
Paying off one credit card with another credit card.
That’s gravitas.
Comment by wordslinger Monday, Jan 11, 16 @ 1:26 pm
Wonderin’ if Capt Fax — man of money — could tell us his alternative to the swap?
Never mind how the names of who got the fees. …it is in the OS
Comment by Anonin' Monday, Jan 11, 16 @ 1:58 pm
==- wordslinger - Monday, Jan 11, 16 @ 1:26 pm:==
Chuy just couldn’t handle such (ir)responsible money management!
Comment by Precinct Captain Monday, Jan 11, 16 @ 1:59 pm