Skokie Borrows $160 Million For Pensions, $27 Million For Garage

SKOKIE, IL — Village trustees voted to borrow up to $187 million to shore up Skokie's police and fire pension funds and finance a hotel development in its downtown.

The village board Monday voted 6-0, with one abstention, to approve an ordinance allowing the issuance of bonds for both projects.

"First, an amount not to exceed $160 million is required to fund 90 percent of the unfunded portion of the fire and police pension liabilities, as determined by the village's outside actuaries," Corporation Counsel Michael Lorge said Monday ahead of the final vote on the bonds.

"Second, an amount not to exceed $27 million is required to fund TIF-related improvements in conjunction with the previously approved hotel development at 4930 Oakton St.," Lorge said.

In December 2020, the village board agreed to a deal with Evanston developer Mark Meyer's E&M Skokie LLC to build a 142-room hotel at the corner of Oakton Street and Niles Avenue.

"Both the 2022 Series A and Series B will be sold as part of the same debt issuance in early January in order to meet the funding deadlines towards the TIF project and take advantage of the underwriting expertise and market reach," the village attorney added.

Village officials have already agreed to provide $13.5 million — the estimated cost of the hotel's parking garage — in tax increment financing to the developer.

"As contemplated in the development agreement between the Village and the developer, the 2022 Series B bonds are necessary to fulfill the Village's commitment to the project," Finance Director Julian Prendi said last month in a memo to Lorge.

As Patch previously reported, the development agreement provides for $13.5 million in tax increment financing from the village's Oakton-Niles TIF District. But because the district was only formed in 2019, the village needs to borrow the money to finance the parking lot.

As for the larger portion of the bond issuance approved Monday, Prendi said the $160 million in pension obligation bonds includes enough funds to cover 90 percent of the unfunded liability of the village's public safety pension funds, as well as a pension stabilization fund and the cost of issuing the bonds themselves.

"The ordinance also establishes maximum annual coupon (interest rates of 5.5% and an all-in interest cost not to exceed 3.5%," Prendi said. "Staff anticipates the actual rates to be much lower than the maximums established in the ordinance."

Payment of principal and interest for the pension obligation bonds will come from existing revenue streams, including property taxes, while the money set aside for the public-private parking lot project will come from future tax revenue and fees associated with the garage's operation. Staff said the lot is set to include 100 spaces owned by the village and 200 by the planned Homewood Suites by Hilton hotel.

The lone abstention on the project, Trustee James Johnson, said he supported borrowing money to cover the village's unfunded pension liabilities — but not the other $27 million.

"It's the second series that I don't support, particularly the support of the construction of a very large parking garage on what is now green space in downtown Skokie," Johnson said. "But the larger series I wholeheartedly support."

No other trustee remarked on the $187 million borrowing plan ahead of the vote Monday — or when it was first introduced on Dec. 20.

Related: Deal For 8-Story Hotel In Downtown Skokie Approved By Trustees