[bluquark]

10x over 75 years is a ~3% risk-free annual return. It looks like ordinary government long-term bonds (like 30-year treasuries) were yielding around 4% in 2008, making this look at first glance like a good deal for Chicago.

However, municipalities with a good credit rating can usually issue bonds that pay out about a third less yield than treasuries, thanks to favorable treatment of municipal bonds in the US tax code. I don't know how healthy Chicago's rating was in 2008 but even if somewhat mediocre, it's likely they could've gotten 3% or less on the bond market.

So at a minimum there was no advantage for the city in signing up for a sweetheart deal with strings attached, instead of covering the shortfall by issuing a bond.

[dmurray]

This deal was secured by something other than Chicago's taxing power, so it should have less effect on Chicago's creditworthiness and ability to issue other bonds.

In any case, if it was 3% it's economically very comparable to issuing a regular bond and not the "fleecing" that's talked about. If the city regrets the deal, it should be able to issue a regular bond and use it to buy out the investors, or issue regular bonds annually and use them to pay the penalties, all at roughly a wash economically.

I'm not sure 3% is correct, though. I'd like to see another source on that. It reads like it has some protection against inflation. If it's 3% + inflation, that's a really enormous return.