reprinted from:
Economy won't hurt deal on Soldier Field
S&P won't
cut rating of $399 million bond issue despite slump
By
Fran Spielman
Copyright 2001 Chicago Sun-Times, Inc.
Article date: September 22, 2001
A Wall Street rating agency said Friday it has no
plans to downgrade its "A" rating for a $399 million Soldier Field bond
issue, even though the borrowing is supported by
hotel tax revenues sent plummeting
by last week's hijackings. Standard & Poor's said it is confident that the
economic slowdown in the airline and tourism industries will be temporary,
that empty hotel rooms will be filled and that, even if the slowdown is
prolonged, the bonds have ample financial support.
Unbeknownst to lawmakers who approved the stadium deal, the Soldier Field
bonds are secured by the "first dollars collected from a 60 percent share of
the 5 percent tax levied on hotel rooms statewide," said Standard & Poor's
analyst Jeff Panger. The 2 percent tax increase on Chicago hotel rooms that
financed Comiskey Park--and lawmakers thought would pay for Soldier
Field--is being used to replenish the state advance.
But the Chicago-only tax--and Mayor Daley's pledge of up to $5 million a
year from the city's share of the state income tax--is not providing what
Panger called "bond holder security." That's why single-digit occupancy
rates at Chicago hotels have not placed the "A" bond rating in jeopardy.
"Revenue can decline by 70 percent, and they would still have enough money
to pay the bonds," Panger said. "If there was a prolonged economic slump
that severely eroded revenues and coverage levels, then we would revisit the
rating. But it's only in later years, when debt service increases, that
there is some concern."
If the statewide tax grows at a rate of just 0.4 percent a year, the
Illinois Sports Facilities Authority still would have enough money to make
the payments on Soldier Field, he said.
The Chicago Sun-Times reported this week that the stadium authority plans to
test the market before deciding whether to go forward with the Soldier Field
bond issue, insured by Ambac Assurance Corp. On Friday, Ambac's senior
managing director Howard Pfeffer declined to say whether the insurance
commitment was in jeopardy.
Some in the General Assembly were outraged that state taxpayers could wind
up paying for any shortfalls. "We were not told the whole truth," said Rep.
Jack Franks (D-Woodstock), who voted against the Soldier Field package.
Contributing: Dave McKinney
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