The cash-strapped city of Chicago is one step closer to borrowing $1.1 billion in general obligation bonds, in an attempt to shore up the city’s finances. The complex borrowing package, backed by Mayor Rahm Emanuel, passed through the city’s Finance Committee Monday.

Pitched as a way to “clean up” the city’s balance sheet and move away from unsustainable financial practices of the past, the bonds would convert some of the city’s short-term debt into longer-term, fixed-rate debt, pay down city settlements, and refinance old terminated interest rate “swaps,”  among other things.

The city’s new Chief Financial Officer Carole Brown told aldermen Monday that it would be “irresponsible” for the city not to sign off on this borrowing plan.

“This is not kicking the can, this is not shuffling the deck chairs, this is a real step toward doing what I think all of you are committed to doing, and that you want to see us do, which is return to a state of more fiscal stability,” Brown said.   

According to Brown, the borrowing package is both part of the financial plan Emanuel pitched last spring, and a reaction to the recent credit rating downgrade by Moody’s. Brown said the city is “technically in default” and “there would be the potential that we would have to come up with close to $900 million to pay back the banks if we did not execute this transaction.”

The city’s plan for the $1.1 billion includes:

• $170 million for the first two years of interest

• $151 million will be used to convert variable rate general obligation bonds into fixed rate bonds

• $192 million will be spent to end “swaps”

• $35 million will be used for the 2015 loan payment for the old Michael Reese hospital site

Many aldermen were skeptical of the plan. Some voiced concern that there weren’t enough diverse banks or firms involved in the deal. Others, like Ald. John Arena (45) were concerned that the city hasn’t put forth any new revenue ideas.

“We get fines here and fees here, we know it’s not enough. Everybody knows it’s not enough but ignores this issue. And when we have 1.1 billion dollars put in front of us, and say ‘approve this’ without at least a look at a plan for revenue at this point…this is irresponsible,” Arena said.

The lone no vote was cast by progressive Ald. Scott Waguespack. The full City Council is scheduled to vote on the package Wednesday.

Lauren Chooljian is WBEZ’s city politics reporter. Follow her @laurenchooljian