Saddled with debt payments after sinking $135 million into the construction of a soccer stadium, the Chicago-area suburb of Bridgeview recently had to borrow an additional $27 million to cover required bond payments.
The Chicago Tribune reported the new borrowing comes on top of more than $218 million in debt cited in the village’s 2011 audited statements.
Brian Costin, director of government reform at the Illinois Policy Institute, reviewed several financial reports for the city and stadium, named Toyota Park, and saw serious consequences for the village’s stadium borrowing.
“Unfortunately, it looks as if there are only two possible future routes for Bridgeview’s 16,446 residents: municipal bankruptcy or significantly higher taxes to pay for the mistakes of politicians past and present,” Costin said.
Millions in Losses
The borrowing was required because Toyota Park, the home field of the Chicago Fire Major League Soccer franchise, has yet to turn a profit, forcing the village to dip into general funds or borrow more to repay the debt. Bridgeview’s 2011 audit shows operating and debt expenses of $12.5 million at Toyota Park compared to only $4.1 million in revenue, for a loss of nearly $8.4 million. Debt service comprises nearly all of the loss, with $8,160,000 being due in 2011 for stadium debt, according to the 2010 stadium audit.
This is the second time in recent years that Bridgeview has been forced to borrow money to pay stadium debt. In 2011, Bridgeview issued $22.5 million in general obligation bonds to “ease the transition to higher debt service levies,” according to a February 2012 report from Standard & Poor’s.
As a result of Bridgeview’s substantial debt, the 2011 bonds carried an interest rate of 6.75 percent compared to the rates on the original borrowing in 2005, which ranged from 4.5 percent to 5.2 percent, according to Bridgeview’s documents.
Municipal bond rates have generally declined over this time.
A Bridgeview elected official who spoke on condition of anonymity declined to answer questions about the new borrowing or the stadium but said the financial situation would turn around in the next six to eight months.
“The proof will be in the results” the elected official said, adding the village could “crow a little bit” when the turnaround occurs.
No Business Plan
The stadium was built in 2005 to be the home of the Chicago Fire and to host concerts and other events. It opened in 2006 to great optimism.
A June 2006 article in the Chicago Tribune (“Village set up for economic kick”) cited Mayor Steven Landek’s prediction that growing interest in soccer and a swelling immigrant population in the area would “ensure the stadium’s success” and quoted him saying, “This is a great economic anchor for us… [a]nd it’s going to change our lives.”
Despite borrowing $135 million to build Toyota Park and promising stadium revenue would be sufficient to pay operating and debt expenses, there apparently was no economic impact study or business plan showing stadium revenue could fund the bond repayment.
The future for Bridgeview’s taxpayers remains grim. According to a 2012 report from Standard & Poor’s announcing a downgrade in the village’s bond rating from A to BBB+/negative, Bridgeview has “embarked on a multiyear plan to raise property taxes levied for debt service to as much as $9.1 million in 2016, from $2.1 million in 2010.”
Bridgeview’s property taxes are already among the highest in the Chicago region, and have tripled in less than a decade.
Summarizing Bridgeview’s current situation, the Illinois Policy Institute’s Brian Costin was blunt: “The village leaders attempted to be property speculators and entertainment tycoons. They have failed miserably. This is an example of why government should stick to providing core government services, and not build risky entertainment venues backed by taxpayer dollars.”
No elected official or spokesperson at Bridgeview Village Hall was willing to respond to multiple requests for on-the-record comment.