* The always valuable Jim DeRogatis fills us in…
Joining Commissioner Bridget Gainer’s initiative examining Lollapalooza’s exemption from the Cook County amusement tax, Illinois Rep. Sara Feigenholtz is pushing the state legislature to probe whether the three-day concert is paying its share of state sales taxes on everything sold in Grant Park.
Although several sources, including Gainer, have said that the massive music festival uses its partnership with the not-for-profit Parkways Foundation to avoid paying the 6.25-percent sales tax, this reporter has not been able to confirm how it receives an exemption. Feigenholtz said on Friday that she intends to get an answer, and to seriously question whether a waiver is warranted. […]
Illinois law states that to qualify for an exemption from the sales tax, “Your organization must be not-for-profit and organized and operated exclusively for charitable, religious, educational, or governmental purposes.” Lollapalooza, which is co-owned by politically well-connected Texas concert promoters C3 Presents and Hollywood talent agency William Morris Endeavor (run by Mayor Rahm Emmanuel’s brother, Ari) clearly is a for-profit venture.
Last year, the festival gave Parkways more than $2 million for park improvements. But its gross revenues were more than $21 million, and it did not pay the 5-percent city amusement tax, the 1.5-percent county amusement tax, or any fee to rent and close Grant Park for much of the summer.
* Nobody seems to know how this happened or why. Background…
Although Lollapalooza is very much a for-profit event, it partners to apply for all of its licenses with the non-profit Parkways Foundation, a favorite group of former Mayor Daley and his late wife, Maggie. A long-term sweetheart deal negotiated in part by the festival’s attorney and lobbyist, Daley nephew Mark Vanecko, exempts it from paying the 5 percent city amusement tax and the 1.5 percent county amusement tax, as well as the state sales tax levied on every other major event in Chicago—even though the municipal code clearly states that every big concert and sporting event must pay what’s owed unless 100 percent of its profits go to charity. […]
The loss in sales tax could be even more substantial, Gainer said, since local government has no idea what that cut of souvenir, food, and alcohol sales would even be. Parkways applies for the festival’s liquor license, but as this blog has reported, actual sales are handled by a corporation co-owned by Texas promoters C3 Presents and local bar owner Kevin Killerman, a client and friend of Vanecko.
Mayor Rahm Emanuel has said he would ask the City Council to appoint a “third-party, independent” negotiator to broker talks with Lollapalooza and determine whether to eliminate the music festival’s multi-million dollar amusement tax exemption.
The hands-off stance is necessitated by the involvement of Emanuel’s brother, Hollywood super-agent Ari Emanuel. Ari Emanuel is the CEO of William Morris Endeavor, which co-owns Lollapalooza.