Posted on: January 26, 2024, 05:39h.
Last updated on: January 26, 2024, 05:39h.
Aurora, Ill. is considering the sale of $58 million in municipal bonds to fund Penn Entertainment’s upcoming Hollywood Casino in the area.
Construction of the regional casino began recently, tied to Illinois lawmakers allowing riverboat casinos, such as Hollywood Aurora, to be moved to dry land. The city is planning to sell the debt in the near future, with low financing costs expected due to its strong credit ratings.
Why Aurora Bond Sale Is Necessary
Pennsylvania-based Penn Entertainment is constructing a $360 million casino hotel near I-88 in Aurora, home to more than 179,000 residents.
The bond sale is necessary due to the city advancing $50 million to Penn to initiate the project, to be repaid via property tax payments. The repayment period is projected to be up to 22 years.
While the debt sale is essential to move the casino project ahead, it’s crucial for Aurora to sell short-dated bonds to minimize interest rate risk.
Total Cost Manageable for Aurora
Chris Minick, Aurora’s chief management officer, mentioned that the city will likely pay $94 million over the life of the $58 debt issuance, depending on market conditions. The city can call the bonds and settle the debt early between eight to 10 years after the initial sale.
Despite the bond costs, Hollywood Aurora is expected to be a significant contributor to Aurora’s income and sales taxes.
Through the first 10 months of 2023, the casino was the fourth-highest grossing in the state, solidifying its position as an important source of revenue for the area and Illinois.