Municipal Building Authorities and Public Building Commissions

Chapman and Cutler LLP provides bond counsel and underwriter’s or disclosure counsel representation on bonds and other obligations issued by municipal building authorities. In Illinois, these issuers are known as public building commissions. Utah uses municipal building authorities created by cities, counties and school districts for these purposes.

One of the important responsibilities for counsel in these transactions is the preparation or review of the lease agreements.

Public building commissions finance the cost of structures and facilities built to house essential governmental services. Some of these buildings are used in the conduct of local government business by a variety of branches, departments and agencies. Municipal building authorities may finance a variety of facilities.

Buildings and facilities financed by the issuance of the authority’s or commission’s bonds are leased to local governmental units. Subsequently, lease payments from the units secure the repayment of the bonds. In Illinois, the local governmental units are authorized to levy a special, unlimited ad valorem property tax to make the lease payments. Therefore, Illinois public building commission revenue bonds have the same credit quality and are treated by municipal bond credit analysts as being the functional equivalent of general obligation bonds issued by the lessee. In Utah, payments of lease obligations are made from various sources, but the payments are subject to annual appropriation.

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