Aurora, Illinois is considering issuing $58 million in municipal bonds to fund its share of the financing for Penn Entertainment’s (NASDAQ: PENN) new Hollywood Casino. The city’s contribution to the project began following Illinois’ 2019 approval for riverboat casinos to relocate onshore. Penn announced its intention to move Hollywood Aurora from its riverboat location in 2022, with construction already underway.
The Aurora City Council’s Finance Committee recently approved a parameters ordinance detailing the bond sale’s expenditure. With an anticipated full council approval on February 13, the city plans to sell these bonds before the end of the month. Aurora’s strong “AA” credit rating from S&P and “Aa3” from Moody’s suggests favorable financing costs for this sale.
Necessity of Aurora’s Bond Sale for Casino Development
Penn Entertainment’s $360 million casino-hotel project near I-88 in Aurora necessitates this bond sale. Aurora initially provided Penn with $50 million to kickstart the project, expecting repayment through property tax over up to 22 years, depending on the bond maturity. The sale aims to manage the first year’s payments during the casino’s construction while minimizing interest rate risks associated with longer-dated bonds.
Affordability and Benefits of the Project for Aurora
Aurora’s Chief Management Officer, Chris Minick, estimates the total cost for the city at about $94 million over the bond’s life, considering market conditions. The city has the option to settle the debt early, approximately 8 to 10 years after the sale. Despite the sizable investment, Hollywood Aurora is expected to be a significant revenue source for Aurora, beyond just property taxes. In 2023, it was the state’s fourth highest-grossing casino, underscoring its value to both the city and state economies.
Strategic Financing for Hollywood Aurora Casino
Aurora’s plan to sell $58 million in bonds is a strategic financial maneuver to support the development of Penn Entertainment’s Hollywood Aurora Casino. This significant investment reflects Aurora’s commitment to enhancing its entertainment and economic landscape. The move aligns with the city’s vision to evolve into a regional gaming and entertainment hub, leveraging the potential of Hollywood Aurora Casino.
This casino, once completed, is poised to attract a large number of visitors, boosting local businesses and generating considerable tax revenues. The project not only promises to revitalize Aurora’s economic growth but also positions the city as a key player in Illinois’ gaming industry. With careful management and the anticipated success of the casino, this initiative could mark a transformative chapter in Aurora’s development.