{"id":308278,"date":"2024-01-26T17:39:18","date_gmt":"2024-01-26T23:39:18","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=308278"},"modified":"2024-01-29T11:57:43","modified_gmt":"2024-01-29T17:57:43","slug":"aurora-ill-could-sell-bonds-to-contribute-to-penn-casino","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/aurora-ill-could-sell-bonds-to-contribute-to-penn-casino\/","title":{"rendered":"Aurora, Illinois May Sell $58M in Bonds For Penn Casino Financing"},"content":{"rendered":"

Aurora, Ill., is mulling the sale of $58 million in municipal bonds to come up with its end of the financing needed for Penn Entertainment\u2019s (NASDAQ: PENN) planned Hollywood Casino in the city.<\/p>\n

\"Hollywood
An artist’s rending of the forthcoming $360 million Hollywood Casino Aurora. The city is expected to sell $58 million in bonds to advance the project. (Image: Penn Entertainment)<\/figcaption><\/figure>\n

Construction on the regional casino commenced a couple of months ago and is tied to Illinois lawmakers signing off on riverboat casinos moving ashore<\/a>, of which Hollywood Aurora was one.\u00a0 That policy was approved in 2019. In 2022, Penn announced plans to bring the gaming venue to dry land.<\/p>\n

\n

At a meeting of the Aurora City Council earlier this week, aldermen on the Finance Committee passed a parameters ordinance, which stipulates how proceeds from a bond sale will be spent. Should the full council approve that ordinance at a Feb. 13 meeting, the city could look to sell the debt before the end of next month.<\/p>\n<\/div>\n

Aurora sports an \u201cAA\u201d credit rating — the second-highest — with a \u201cstable\u201d outlook from S&P Global Ratings. Moody\u2019s Investors Service rates some of the city\u2019s revenue and variable rate demand debt \u201cAa3.\u201d Those grades are far higher than what\u2019s found in other Illinois casino towns<\/a>, confirming Aurora\u2019s financing costs for the upcoming bond sale will likely be low.<\/p>\n

Why Aurora Bond Sale Is Necessary<\/h2>\n

Pennsylvania-based Penn Entertainment is building a $360 million casino hotel near I-88 in Aurora, home to more than 179,000 people.<\/p>\n

\n

The bond sale is needed because the city essentially fronted Penn $50 million to start the project, with the gaming company agreeing to repay that sum via property tax payments. The repayment period is expected to be up to 22 years, depending on the maturity date of the bonds sold.<\/p>\n<\/div>\n

While the debt sale is needed to move the casino project along, Aurora must keep the maturity date on the bonds it sells as short as possible. The reason is that longer-dated bonds carry more interest rate risk, and as such, higher yields need to be attached to those issuances to compensate investors for that risk.<\/p>\n

The $58 million issue is needed so Aurora can make the first year of payments while Hollywood Aurora is under construction.<\/p>\n

Total Cost Manageable for Aurora<\/h2>\n

Aurora\u2019s chief management officer, Chris Minick, told the Chicago Tribune<\/em> the city will likely pay $94 million over the life of the $58 debt issuance, depending on market conditions. Aurora can call the bonds eight to 10 years after the sale and settle the debt early.<\/p>\n

Even if it is $94 million that the city ultimately pays to market those bonds, it\u2019s likely a prudent investment. That’s because Hollywood Aurora is expected to be a major contributor to city coffers, and that goes beyond property tax payments.<\/p>\n

Through the first 10 months of 2023, the casino was the fourth-highest grossing in the state, indicating it\u2019s an important driver of income and sales tax to Aurora and Illinois.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Aurora, Ill., is mulling the sale of $58 million in municipal bonds to come up with its end of the financing needed for Penn Entertainment\u2019s (NASDAQ: PENN) planned Hollywood Casino in the city. Construction on the regional casino commenced a couple of months ago and is tied to Illinois lawmakers signing off on riverboat casinos […]<\/p>\n","protected":false},"author":46,"featured_media":300739,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,86430,86438],"tags":[81903,86455,86457],"acf":[],"yoast_head":"\nAurora, Ill. 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