City taps line of credit to run Millennium Park

A $200 million line of credit authorized three years ago to tide the city over when state sales tax payments arrive late has been tapped to finance operations and maintenance at Millennium Park.

The surprise arrangement will continue until 2012, when a bus shelter contract is expected to start generating excess revenue to finance park operations. Park loans won't be paid off until 2018. By that time, Chicago taxpayers will have spent $8.5 million on interest at a rate of 4 percent.

"We're doing that because of the free concerts there. That is the people's park," Mayor Richard Daley said.

Budget director Paul Volpe defended the decision to borrow against future bus shelter revenue as a creative solution to a vexing problem: where to find the $7.4 million a year needed to run Millennium Park now that opposition from business leaders has killed plans for a downtown property tax increase.

The fact that aldermen who approved the line of credit were never told about the park borrowing didn't faze Volpe, who insisted that "the authority exists."

"The plan calls for the use of interim (borrowing) that is backed by revenues from the street furniture, which will more than exceed the need for operating and maintenance costs of the park. In fact, there's almost $88 million in street furniture revenue over the life of the contract not used for this purpose," he said.

Civic Federation president Laurence Msall called Millennium Park a "wonderful amenity" but expressed deep concern about Daley's decision to borrow to pay operating expenses.

"You have to pay interest on money you borrow. That's increasing the cost of (park) operations. ... We are not convinced that borrowing is the solution for how to pay the operating expenses of the park — or any other operations," Msall said.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.