CHICAGO -- The Chicago Park Districts is preparing a proposal for a $90 million general obligation bond issue to renovate Soldier Field in an effort to keep the Chicago Bears football team in the city.
Joseph Fratto, the district's deputy superintendent of finance and management services, said the district will propose the bond issue to the Chicago Plan Commission once negotiations with team officials over a new and extended lease for the facility are firmer.
The district had been scheduled to present the proposal to the plan commission on Thursday, but postponed the presentation until Dec. 21 because more time was needed for negotiations, Fratto said.
One stumbling block appears to be how much revenue the district would get from the renovated stadium. While the district initially would raise property taxes to back the bonds, Fratto said, it would eventually rely on revenues from the stadium to cover the debt. At that time, he added, the district would abate the property tax.
Mayor Richard Daley has warned the district not to tap property tax revenues for the project. Daley chairs the board to the Chicago Public Building Commission, which would issue the bonds, Fratto said.
Noelle Gaffney, a spokeswoman for the mayor, said Daley does not want taxpayers to pay for improvements at Soldier Field because the facility is primarily used by the Bears. She added that Daley has asked all taxing bodies in the city to avoid putting an additional burden on taxpayers by increasing their property tax levies.
In addition to Chicago Plan Commission approval, the project and the bond issue would need approval of the park district and the public building commission boards. Fratto said. If approved, the bonds could be issued as soon as February, he added, with most of the project being completed before the next football season.
The renovation plans, which would increase the stadium's seating capacity from 66,000 to about 71,000, call for 4,000 club seats, 42 new sky boxes, a field heating system, a new scoreboard, new washrooms and concession areas, and mechanical and electrical upgrades. Fratto said the increased revenue from the renovated stadium would be sufficient to pay the approximately $9.3 million of annual debt service on the 20-year bonds.
Fratto said that probably half of the $90 million of bonds would be sold on a taxable basis to cover the cost of the club seating and skyboxes.
Howard Hush, a partner at Chapman and Cutler, the district's bond counsel, said the issue would be "a good candidate for some taxable bonds" due to the private use of the luxury seating by the Bears, while at the same time, the team would be making lease payments for the stadium to the district, which would use the money to pay off the bonds. A debt issue would be deemed a private-activity bond if both the private use and security interest tests contained in the Tax Reform Act of 1986 are met.
The district currently receives 20% of existing sky box revenues, 12% of gross ticket revenues, and a $1 per ticket surcharge from Bears games. Fratto said that "everything is on the table" with the new negotiations, including existing revenues and any new revenues generated by the renovation. He added that the new lease with the Bears would have to be extended beyond the current one, which terminates in 1999, to cover the 20-year life of the bonds.
Bears officials are not saying much about the current talks. In a written statement, Mike McCaskey, the team's president, said the team is "negotiating in good faith with the city and is continuing to honor our commitment not to negotiate this deal in public."
"We are ready to make our presentation to the plan commission, and we think we have a stadium that will make our fans happy," he added.
The district has been trying to keep the team in Chicago after the Illinois General Assembly in 1990 failed to approve a domed stadium as part of a $987 million expansion of the McCormick Place convention center in the city. The ability to issue $100 million of tax-exempt bonds for the stadium had been included in the transition rules for the Tax REform Act of 1986. Those rules expired on Dec. 31,1990.
With no prospects for a new stadium in Chicago, Bears officials were courting suburban governments for an open-air, 75,000-seat stadium financed with public and private funds until negotiations with the Chicago Park District began this fall.
The district has $320 million of outstanding GO debt, including about $18 million of bonds issued in 1983 for a previous Soldier Field facelift. The debt is rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's Corp.