Finance Committee Signs Off on Johnson’s $830 Million General Obligation Bond Issue

Committee Approves Bond Issue Amid Concerns Over Borrowing and Bond Rating

Mayor Brandon Johnson’s plan to issue $830 million worth of general obligation bonds to bankroll a year’s worth of capital projects cleared a City Council committee Monday amid questions about borrowing that much money when federal funding is at risk and the impact of the city’s recently reduced-bond rating.

Concerns Raised Over Borrowing and Bond Rating

Finance Committee Vice-Chair Bill Conway (34th) raised concerns about the bond issue, citing the city’s recent bond rating downgrade from BBB+ to BBB by Standard & Poor’s. Conway noted that the downgrade was due to “excessive debt liabilities.. the largest of any major U.S. city.” He also expressed concern about the impact of the bond issue on the city’s bond rating and the potential cost to taxpayers.

Chief Financial Officer Defends Bond Issue

Chief Financial Officer Jill Jaworski defended the bond issue, stating that the liabilities cited by S&P include Chicago’s $37 billion pension crisis. She also noted that the rating agencies expect the city to continue making high-level investments in infrastructure and that this is included in the city’s rating.

Aldermen Express Concerns

Downtown Ald. Brendan Reilly (42nd) expressed concern about the bond issue, stating that the city’s “routine” borrowing practices are contributing to the city’s budget problems. He also noted that the bond issue does not include a plan for how the borrowed money will be spent.

Projects Funded by Bond Issue

The bond issue will fund a variety of projects, including:

• $108 million for the aldermanic menu program
• $68.1 million for bridge replacement
• $157.5 million for street projects
• $73.8 million to renovate police and fire stations and other city buildings
• $64.9 million for fleet replacement
• $102 million for street resurfacing
• $78 million for street light replacement and traffic signal improvement
• $100 million to replace lead service lines
• $19 million for repairs to sidewalks and pedestrian rights-of-way

Conclusion

The Finance Committee’s approval of the bond issue is a significant step forward for Mayor Johnson’s plan to invest in the city’s infrastructure. However, concerns about the impact of the bond issue on the city’s bond rating and the potential cost to taxpayers remain. The city will need to carefully manage its debt and ensure that the borrowed money is spent wisely in order to avoid further financial problems.

FAQs

Q: Why is the city issuing $830 million in general obligation bonds?
A: The city is issuing the bonds to fund a year’s worth of capital projects, including infrastructure improvements, building renovations, and fleet replacement.

Q: What is the impact of the bond issue on the city’s bond rating?
A: The bond issue may have a negative impact on the city’s bond rating, as the city’s debt liabilities are already high and the bond issue will add to that debt.

Q: How will the borrowed money be spent?
A: The borrowed money will be spent on a variety of projects, including infrastructure improvements, building renovations, and fleet replacement. The city will need to carefully manage its debt and ensure that the borrowed money is spent wisely in order to avoid further financial problems.

Q: What is the timeline for the bond issue?
A: The bond issue is expected to be finalized in the coming weeks, with the borrowed money being spent over the next year.