Reporters put thousands of records into a database and used it to identify short-term expenditures like equipment purchases, legal costs and payments on bank loans used to cover pension costs and other expenses.
In one equipment purchase, city officials in 2003 used proceeds from recently issued bonds to buy $700,000 worth of Palm Pilot software, which powered hand-held organizers that were precursors to smartphones.
The software was obsolete within a few years. But the city wasn’t due to make its first principal payment until 2011. By that time, taxpayers had already paid $250,000 in interest on the purchase, raising the ultimate price to nearly $1 million — not including fees paid to issue the bonds.
Such added costs are the reason most experts say long-term borrowing should be reserved for projects that are intended to last. Depending on how bonds are structured, interest payments can double the cost of items paid for with bond proceeds; paying the brokers, banks and attorneys who execute the deals adds millions more.
But that didn’t stop the city from spending $1.1 billion in bond proceeds on software, books, trash cans and other equipment since 2000.
The city in 2005 bought $21 million worth of spare parts for its fleet of cars, dump trucks, street sweepers and other vehicles. Accounting documents filed at the time said the parts would last three years, but paying off the bonds used to cover them will take at least 12 years and increase the total cost to $30 million.
The cost of library books and other materials bought with bond money in 2011 by the Emanuel administration will have nearly doubled by the time the first principal payment is due in 2032, a decade after city accounting documents say the books will reach the end of their usable life.
“From a policy standpoint it doesn’t make any sense because you want to match the useful life of (what you pay for); otherwise you are having future generations pay off something that they didn’t even get to use,” said former Highland Park Mayor Michael Belsky, who teaches at the University of Chicago’s Harris School of Public Policy and managed the public finance group at the Fitch Ratings agency.