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Record #: Or2016-31   
Type: Order Status: Failed to Pass
Intro date: 1/13/2016 Current Controlling Legislative Body: Committee on Budget and Government Operations
Final action:
Title: Call for Department of Law to explore legal action regarding early termination penalties, loss recovery and repayment on all interest rate swap agreements
Sponsors: Ramirez-Rosa, Carlos, Waguespack, Scott, Taliaferro, Chris, Munoz, Ricardo, Sadlowski Garza, Susan, Foulkes, Toni, Arena, John, Moore, David H., Sawyer, Roderick T.
Topic: CITY DEPARTMENTS/AGENCIES - Law
Attachments: 1. Or2016-31.pdf
Related files: R2019-362
CHICAGO, February 10, 2016



To the President and Members of the City Council:


Your Committee on the Budget and Government Operations, having had under consideration a proposed Order concerning interest rate swap agreements; and having had the same under advisement, begs leave to report and recommend that Your Honorable Body Refer the proposed Order and report transmitted herewith to the City Council Committee on Finance.

This recommendation was concurred in by a viva voce vote ofthe members of the Committee.

Budget
ORDER

WHEREAS, in 2015, Moody's Investors Service downgraded to Bal from Baa2 the rating on the City of Chicago's $8.1 billion of outstanding general obligation debt; $542 million of outstanding sales tax revenue debt; and $268 million of outstanding and authorized motor fuel tax revenue debt.

WHEREAS, previous interest rate swap deals have resulted in over $1.1 billion in payments from the City of Chicago and Chicago Public Schools to financial institutions.

WHEREAS, in December of 2015, several ordinances were submitted to the City Council ofthe City of Chicago that would issue over $3 billion in bonds.

WHEREAS, included in these ordinances, is the early termination of several interest rate swap agreements.

WHEREAS, termination penalties for interest rate swap agreements are the net present value of all future payments on the swaps.

WHEREAS, the City of Chicago and Chicago Public Schools have already paid at least $331 million in interest rate swap termination agreement penalties, and will be on the hook for another $301 million in termination penalties if these additional swaps are terminated.

WHEREAS, the proposed payments will have the City of Chicago pay approximately $402 million in interest rate swap agreement termination penalties.

WHEREAS, Chicago taxpayers will be forced to pay interest on the proposed bonds the City of Chicago would issue to make these payments

WHEREAS, in 2015, the City Council ofthe City of Chicago voted in fa...

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