Feasibility Study for Tax Increment Allocation Refunding Bonds

City of Chicago, IL

SB Friedman was engaged by the City of Chicago Department of Finance to prepare a feasibility study for a tax increment allocation bond refunding issuance in the Pilsen Tax Increment Financing (“TIF”) district. Our feasibility study consisted of detailed annual tax increment projections for the remaining life of the Pilsen TIF district, along with research into recent demographic and market trends within the district and information on the top taxpayers and industries represented in the district. Our projections provided information that allowed the City and underwriters to justify a refunding transaction under current underwriting standards. The additional research into market trends and top taxpayers provided key information illustrating the stability and maturity of the district. 

Because the Pilsen TIF district is a mature district with many stable taxpayers, the increment projections included tax revenue from only existing development, not projects that are currently proposed or under construction. We conducted seven different sensitivity analyses to understand the impacts of various decreases in property value, changes in assessed value among top taxpayers, alterations in state legislation regarding property tax rates, and impacts of increased appeals through the Illinois Property Tax Appeals Board (PTAB) on debt coverage through the remaining life of the TIF district. The sensitivity analyses provided additional data illustrating the stability of increment in the district. 

Results: The Tax Increment Allocation Revenue Refunding Bonds (Pilsen Redevelopment Project), Series 2014 bonds were authorized by City Council in 2013. Following completion of our feasibility study and presentation of findings to the rating agency, the bonds received an “A” rating from Standard & Poor’s. The bonds were issued November 5, 2014.