Stadium Authority Releases Chicago Taxpayers, Refinances $ 21.4 Million In Soldier Field Debt
The Illinois Sports Facilities Authority has agreed to recoup some of the debt used to renovate Soldier Field to free beleaguered Chicago taxpayers for what would have cost $ 22 million.
The bonds that funded the $ 660 million renovation of Soldier Field are being reimbursed by part of the city’s hotel tax – but this finance package also assumed that hotel tax revenues would grow 5.5% per year.
When it doesn’t, Chicago taxpayers are supposed to make up the difference.
This has only happened once before, in 2011 – for an amount of $ 185,000. Mayor Rahm Emanuel then complained that Chicago taxpayers are “not an ATM”. He dumped three members of the stadium board, including Richard M. Daley’s nephew.
The ATM was set to be turned back on – this time to the tune of $ 22 million – thanks to the devastating impact of the coronavirus pandemic on Chicago hotels.
That’s why a stadium board now headed by governor-appointed Leslie Darling came to the rescue this week – refinancing $ 21.4 million in Soldier Field bonds, despite the authority’s rating of the unwanted bonds. of the stadium.
This pushes back the debt at an initial cost of $ 468,000.
“During the last legislative session, the city worked closely with the board of directors of ISFA as well as the office of the governor to grant ISFA the necessary refinancing authority and take ownership of up to $ 20 million to deal with [2021 fiscal year] deficit resulting from the precipitous drop in hotel tax revenues during the pandemic which is expected to impact the City’s budget by [the 2021 fiscal year] and beyond, ”Chicago CFO Jennie Huang Bennett said in a statement.
“During the pandemic, hotel tax revenues declined 75-90%, creating a once-in-a-century once-in-a-century event that necessitated this adjustment. We appreciate the collaboration of everyone involved to make this a reality. “
Newly appointed ISFA CEO Frank Bilecki said COVID-19 had “devastated the hotel industry around the world and Chicago was not immune” to falling demand.
“Due to these extraordinarily low occupancy rates and the loss of hotel tax revenues, ISFA is unable to reimburse the state advance on hotel tax revenues. As a result, the city is responsible for making up this difference, which this year amounts to around $ 22 million, ”Bilecki wrote in a text message to the Sun-Times.
“ISFA worked with the city to meet its financial needs as it made its way through the pandemic, including this week’s unique ISFA board action of refinancing a part of… 2001 bonds. “
Last fall, the Chicago Sun-Times sounded the alarm about the city’s untimely embezzlement of state tax revenues to pay off $ 430 million of Soldier’s outstanding debt. Field.
At the time, Bennett said she believed it could be avoided, telegraphing the refinancing that took place this week.
“If the state does not have enough to cover the state advance, which is the first line of defense against hotel shortfalls, then debt restructuring would prevent such a shortfall from the city. or the state, ”Bennett said at the time.
Last month, hotel occupancy rates “hovered in the high 20% range,” according to Michael Jacobson, president of the Illinois Hotel Lodging Association.
This was a “big improvement” from the single-digit figures a year ago, but well below the “1970s” occupancy rates that Chicago hotels normally enjoy in hotels. days and weeks leading up to Memorial Day.
The Westin River North reopened last month. The Sheraton Grand will follow suit next week. The Palmer House Hilton, still mired in bankruptcy, plans to reopen later this month, Jacobson said.
He urges Mayor Lori Lightfoot to allocate $ 75 million in new federal aid to help staff at hotels that “went a year penniless in revenue” reopen completely.
Soldier Field bonds are set to expire in 2032, but payouts are skyrocketing over time. During the current fiscal year, ending June 30, the debt service payment amounts to $ 46.5 million. It stands at $ 49.4 million in 2022 and continues to increase gradually until the end of the lump sum payments: $ 66.5 million in 2030, $ 81.7 million in 2031 and $ 86.9 million. dollars in 2032.
These lump sum payments were part of the changes made after the terrorist attacks of September 11, 2001, when the travel industry shut down.
To save the deal, then-mayor Richard M. Daley pressured the Bears to permanently relinquish their right to sell the name rights to Soldier Field and instituted protection for two years for Chicago taxpayers.
In the original version, the state could retain a portion of the city’s share of state income tax whenever the Chicago hotel tax did not increase at an annual rate of 5.5%. – enough to withdraw $ 399 million in stadium bonds.
The new version has been restructured – with deferred interest payments triggering these balloon amounts – to make a two-year local tax bailout unnecessary. This gave the airline, convention and tourism industries the opportunity to recover from the devastating losses they suffered as a result of the terrorist attacks.