Chicago Board of Education
Chicago Board of Education to Borrow $529M in Dedicated Improvement Tax Bonds to Finance School Developments; Sale Date Pushed to Next Week
Wed 02/22/2023 17:43 PM
Relevant Document:
Preliminary Offering Memorandum
The Board of Education of the City of Chicago, or the CBOE, is issuing $528.995 million in dedicated improvement tax bonds to fund its 2023 public school projects.
The Series 2023 bonds are rated A by Fitch and BBB+ by KBRA with a stable outlook. BofA Securities and Loop Capital Markets are joint senior underwriters on the deal. Pricing, which was originally scheduled for tomorrow, Thursday, Feb. 23, is now pushed to the week of Feb. 27, according to market sources. Closing is expected Mar. 9.
Below is a table describing select tranches of the initial offering. All bonds are federally tax exempt but state taxable. A 10-year par call is expected on the bonds.
Proceeds of the Series 2023 bonds will finance the “2023 Project,” which focuses on improvements for public schools in the city, including improvements to school buildings that will make them compliant with the Americans with Disabilities Act, overcrowding relief and expansion accommodations, renovations of gymnasiums and science labs, and other mechanical and structural renovations for security and fire alarms.
Bond proceeds will also make a deposit to the consolidated debt service reserve fund, fund a deposit to the capitalized interest account to fund interest on the 2023 bonds through April 1, 2024, and pay the costs of issuance.
The Series 2023 bonds are secured by a pledge of the trust estate, including capital improvement taxes to be levied in order to pay for $880.48 million of outstanding parity bonds, according to the investor road show. The levy, extension and collection of ad valorem property taxes are governed by the Illinois Property Tax Code.
The consolidated debt service reserve fund is required to be funded at 14% of the amount of the largest annual debt service requirement on all outstanding consolidated reserve fund bonds, which is composed of both outstanding parity bonds and the Series 2023 bonds.
CBOE’s general operating fund balance increased by $275.9 million to $1.08 billion in fiscal year 2022. It retained access to more than $1.5 billion in Elementary and Secondary School Emergency Relief, or ESSER, funds at the start of fiscal year 2023 and said it expects to receive more than $945 million in fiscal years 2024 and 2025. CBOE’s operating surplus was $276 million in fiscal 2022, up from $236 million in fiscal 2021 and $45 million in fiscal 2020.
The CBOE last issued $866 million in unlimited tax obligation bonds in January 2022 in a deal underwritten by Goldman Sachs, as reported. The timing of the sale coincided with the return to in-person learning in Chicago Public Schools last spring. Final yields across the board widened about 20 bps compared with price talk.
–Hoa P. Nguyen
Preliminary Offering Memorandum
The Board of Education of the City of Chicago, or the CBOE, is issuing $528.995 million in dedicated improvement tax bonds to fund its 2023 public school projects.
The Series 2023 bonds are rated A by Fitch and BBB+ by KBRA with a stable outlook. BofA Securities and Loop Capital Markets are joint senior underwriters on the deal. Pricing, which was originally scheduled for tomorrow, Thursday, Feb. 23, is now pushed to the week of Feb. 27, according to market sources. Closing is expected Mar. 9.
Below is a table describing select tranches of the initial offering. All bonds are federally tax exempt but state taxable. A 10-year par call is expected on the bonds.
Proceeds of the Series 2023 bonds will finance the “2023 Project,” which focuses on improvements for public schools in the city, including improvements to school buildings that will make them compliant with the Americans with Disabilities Act, overcrowding relief and expansion accommodations, renovations of gymnasiums and science labs, and other mechanical and structural renovations for security and fire alarms.
Bond proceeds will also make a deposit to the consolidated debt service reserve fund, fund a deposit to the capitalized interest account to fund interest on the 2023 bonds through April 1, 2024, and pay the costs of issuance.
The Series 2023 bonds are secured by a pledge of the trust estate, including capital improvement taxes to be levied in order to pay for $880.48 million of outstanding parity bonds, according to the investor road show. The levy, extension and collection of ad valorem property taxes are governed by the Illinois Property Tax Code.
The consolidated debt service reserve fund is required to be funded at 14% of the amount of the largest annual debt service requirement on all outstanding consolidated reserve fund bonds, which is composed of both outstanding parity bonds and the Series 2023 bonds.
CBOE’s general operating fund balance increased by $275.9 million to $1.08 billion in fiscal year 2022. It retained access to more than $1.5 billion in Elementary and Secondary School Emergency Relief, or ESSER, funds at the start of fiscal year 2023 and said it expects to receive more than $945 million in fiscal years 2024 and 2025. CBOE’s operating surplus was $276 million in fiscal 2022, up from $236 million in fiscal 2021 and $45 million in fiscal 2020.
The CBOE last issued $866 million in unlimited tax obligation bonds in January 2022 in a deal underwritten by Goldman Sachs, as reported. The timing of the sale coincided with the return to in-person learning in Chicago Public Schools last spring. Final yields across the board widened about 20 bps compared with price talk.
–Hoa P. Nguyen
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