Broker-dealers that want to be in future Chicago underwriting teams need to submit their qualifications, including their team’s diversity, to the city by Sept. 1.
The city will choose from the future pool for senior and co-manager positions for a four-year period but will periodically update the pool.
“This is a new RFQ solicitation and all firms that responded to the June 10, 2016 city underwriter RFQ need to respond to this solicitation to be considered for the pool,” reads the first formal
Firms chosen to be in the pool must provide upfront and then annually update information on the number of Chicago-based employees; minority, women and disabled veteran ownership; and diversity of staff who cover the city account.
The city further seeks disclosure on a firm’s community involvement, any current municipal finance department legal issues and rationale for why they do not negatively impact Chicago taxpayers, extension of credit support to the city, relationships with other city department or sister agencies, and any trading of credit default swaps relating to city or its sister agencies like the school system and park district.
Inclusion in the pool doesn’t guarantee a future underwriting spot and the city will consider late submissions but only for co-managers.
The city and its special purpose borrowing entity, the Sales Tax Securitization Corp., will choose from the pool for new money, refunding and short-term financings or credit lines.
That includes general obligation deals, airport financings, water and sewer enterprise system transactions and any deals that might carry an ESG — environmental, social and governance — designation.
“Which of the city’s existing credits do you think would benefit from issuing ESG bonds?” and “what investors in the current market would you target in a sale of City ESG bonds?” are two questions posed to underwriters.
Motor fuel tax-backed, single and multi-family housing, tax-increment financing and special service area deals are also included as well as any potential new credit considered by the city.
The city will give the most weight to thoughtful and original financing ideas, the firm’s willingness to lend to the city and its sister agencies and history of doing so and the firm’s commitment to the city of Chicago community, according to the RFQ.
The city published the RFQ Friday and will accept questions until Aug. 13 and the final submissions are due Sept. 1 to the city's finance team with pool selection expected the week of Sept. 6.
Also Friday, the administration pushed off a bidding deadline by two months to Oct. 29 for developers to submit their proposals to develop the city’s first casino.
The extension gives potential bidders more time to fully assess the Chicago casino opportunity; conduct additional due diligence; assemble more competitive bid packages; and explore financing opportunities, the city said.
"Extending the deadline for interested bidders will allow the City to collect as many robust, impactful and transformative proposals as possible,” Lightfoot said in a statement. Applicants may submit written questions on the request for proposals process by Oct. 1.
Several major operators planned to take a pass, according to published reports, while the mayor’s office said several firms sought more time, so the hope in extending the deadline is to improve the competition.
In July, Chicago launched a search for a financial advisor to help assess development proposals as it looks to stake out a share of the casino gambling market with the promise of a roughly $200 million annual jackpot.
Chicago launched the casino
Past legislation requires any profits go toward the city’s police and firefighters’ pension funds. The city’s four funds combined have $32.96 billion of net pension liabilities with funds ranging from 19% to 44% funded based on 2020 actuarial reports.
Lightfoot and her predecessors have long eyed establishing the city’s first casino to capture revenue that is now lost to competitors in suburbs and across the Indiana and Wisconsin borders.
The city is seeking proposals for a “partner” interested in going through the selection process to develop the casino-resort with the goal of opening a permanent facility by 2025 with 500 hotel rooms or less, meeting space, restaurants, bars, and entertainment venues. A temporary facility can be built and operated for up to 24 months.
The state awarded Chicago its first casino license in 2019 as part of an expansive gambling package that allowed for six casinos, but its tax structure was considered too onerous to attract an investor, Lightfoot and potential developers warned.
The revised tax structure calls for the state to receive a roughly $800 million one-time fee and another $135 million one-time capital infusion. Once up and running, the city is banking on more than $200 million in annual taxes with the state expected to see nearly $250 million in annual tax collections. The casino financing costs could run around $2 billion.
Moody’s Investors Service last year labeled the state changes as a "
Fitch Ratings rates Chicago BBB-minus, S&P Global Ratings has the city at BBB-plus, and Kroll Bond Rating Agency is at A. All assigned a negative outlook in the wake of the pandemic. S&P lowered its outlook last year citing the pandemic. S&P recently said it was waiting to see if the city could achieve structural balance in 2023 before returning the outlook to stable.
The STSC carries higher ratings than the city’s GOs as do several of the enterprise systems although some rating agencies link the latter off the city’s GO due to close governance ties.
Chicago is a frequent issuer under multiple credits. The city last year sold $1.7 billion of debt in several deals that included a $1.2 billion O’Hare International Airport revenue deal and a $467 million GO refunding. The STSC sold another $1 billion.
The city has several revenue financings in the works for O’Hare and water and sewer for later this year or into 2022 and will borrow for capital and to refund debt. The city also recently said that it expected debt refinancing savings would help cover the backdated costs of a new, tentative police contract.
The City Council signed off last November on $3.9 billion of new money, refunding and restructuring bonding authority as part of the
The fate of repaying the $450 million 2020 credit line is up in the air as the city hopes further federal guidance on eligible uses of American Rescue Plan Act relief will lift the ban on using a portion of the city’s $1.9 billion of aid to repay debt issued to close COVID-19 pandemic-related gaps.
The city
