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Is Lollapalooza stiffing the state?

Tuesday, Jan 31, 2012

* 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.

Oy.

* 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.

* More

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.

Discuss.

- Posted by Rich Miller        


26 Comments
  1. - Hank - Tuesday, Jan 31, 12 @ 9:13 am:

    * Nobody seems to know how this happened or why.
    Really?
    Daley favorite
    Daley nephew
    Rahm brother
    It’s all legit


  2. - Wendsicia - Tuesday, Jan 31, 12 @ 9:19 am:

    Why is the tune “It’s a Family Affair” by Sly & the Family Stone running through my mind after reading this post?


  3. - amalia - Tuesday, Jan 31, 12 @ 9:23 am:

    Hank is spot on.


  4. - Plutocrat03 - Tuesday, Jan 31, 12 @ 9:25 am:

    Nuttin’ to see here, move along….

    MOVE ALONG NOW!


  5. - MrJM - Tuesday, Jan 31, 12 @ 9:27 am:

    In the 1991 press kit for the original tour, Lollapalooza was given alternate definitions: “”Huge and great.” and “A big red lollipop.” http://goo.gl/hnL4r

    The Grant Park Lollapalooza combines the two: It’s a “giant sucker’s deal”!

    – MrJM


  6. - 3rd Generation Chicago Native - Tuesday, Jan 31, 12 @ 9:30 am:

    Every year I go to Taste of Chicago, they would not let anyone picnic on the grass in Grant Park last summer. To keep the grass and grounds in good condition. I have been to Grant Park after Taste of Chicago many times, and there was barely any damage done because of this event.

    But right after Lollapalooza, Grant Park, and the Petrillo Music shell areas were so tore up. There were bushes uprooted in Grant Park, much of the grass was gone and just patches of dirt everywhere, very little grass left. At the Petrillo music shell area there no grass anywhere. I was there the day a couple of news stations, one of them Spanish speaking was there on the Petrillow Music Shell grounds with the dirt in the background.
    The area was then roped off the remainder of the good weather for repairs. It was a horrific disaster. And no one was able to enjoy Grant Park after this.
    And to find out we did not get all the tax revenue? Pretty upsetting.


  7. - Dooley Dudright - Tuesday, Jan 31, 12 @ 9:57 am:

    EVERYBODY is talkin’ these days about Tammany men growin’ rich on graft, but nobody thinks of drawin’ the distinction between honest graft and dishonest graft. There’s all the difference in the world between the two. Yes, many of our men have grown rich in politics. I have myself. I’ve made a big fortune out of the game, and I’m gettin’ richer every day, but I’ve not gone in for dishonest graft - blackmailin’ gamblers, saloonkeepers, disorderly people, etc. - and neither has any of the men who have made big fortunes in politics.

    There’s an honest graft, and I’m an example of how it works. I might sum up the whole thing by sayin’: “I seen my opportunities and I took ‘em.”

    – New York state senator George Washington Plunkitt (1905)
    http://www.panarchy.org/plunkitt/graft.1905.html
    http://en.wikipedia.org/wiki/George_Washington_Plunkitt


  8. - shore - Tuesday, Jan 31, 12 @ 9:58 am:

    Rahm said he would “review it” a year ago. I trust the city council even less to appoint a “3rd party independent negotiator”.

    http://www.wbez.org/blog/jim-derogatis/2011-08-02/rahm-city-will-review-lollapalooza-tax-exemption-90008


  9. - Dan Shields, Springfield, IL - Tuesday, Jan 31, 12 @ 10:03 am:

    Imagine that a sweetheart tax dodging deal in Chicago. The State and local governments should sue these tax dodgers for the lost revenue. Not like the State of Illinois could use it or anything……..


  10. - Soccertease - Tuesday, Jan 31, 12 @ 10:11 am:

    At the State Fair and other festivals, not-for-profits owe-and pay-sales tax because they are in competition with others. Ask the Revenue folks, they will verify this. I think people confuse sales taxes with income taxes that not-for-profits do not pay.


  11. - Soccertease - Tuesday, Jan 31, 12 @ 10:19 am:

    Forgot to add that not-for-profits can PURCHASE (e.g., equipt and machinery) sales tax free but not SELL sales tax free.


  12. - dupage dan - Tuesday, Jan 31, 12 @ 10:34 am:

    Hey, what’s good for the machine is good for the city.

    Why?

    Because the machine says so, dat’s why.


  13. - Anonymous - Tuesday, Jan 31, 12 @ 10:37 am:

    “Nobody seems to know how this happened or why.”

    Sure we do. And so does Bridget Gainer, who was a Chicago Park District senior staffer at the time. The answer is Laura Foxgrover.

    Also, ask her about the Park Grill contract negotiations, during which she had the owner’s baby. No confict there, I’m sure…

    http://en.wikipedia.org/wiki/Park_Grill


  14. - Bitterman - Tuesday, Jan 31, 12 @ 10:53 am:

    Dooly Dud, brilliant!


  15. - Dirty Red - Tuesday, Jan 31, 12 @ 11:24 am:

    Weren’t there other cities trying to woo Lolla?


  16. - Yellow Dog Democrat - Tuesday, Jan 31, 12 @ 1:12 pm:

    This seems like an appropriate time to point out that Lollapalooza is illegal.

    The Illinois Supreme Court’s three Mongomery Ward decisions, trumpeted by the Chicago Tribune and others during the children’s museum debate, specifically prohibit using Grant Park for events “to which the public is not admitted for free.”

    Back in the day, they used to charge admission to circuses and all kinds of crazy stuff in Grant Park.

    The Supreme Court put a stop to that in perpituity.


  17. - Anonymous - Tuesday, Jan 31, 12 @ 1:30 pm:

    Same as it ever was. Same as it ever was. Same as it ever was. SAME AS IT EVER WAS.


  18. - wordslinger - Tuesday, Jan 31, 12 @ 1:32 pm:

    Remember when some thought Daley was indispensable?


  19. - Yellow Dog Democrat - Tuesday, Jan 31, 12 @ 1:58 pm:

    Wordslinger:

    Good one.


  20. - Anonymous - Tuesday, Jan 31, 12 @ 3:03 pm:

    Into the blue again. After the money’s gone.


  21. - Anon - Tuesday, Jan 31, 12 @ 3:07 pm:

    Lollapalooza may be the biggest, but it ain’t the only one. Tons of exemptions approved, millions of dollars waived. Millions.


  22. - Tom - Tuesday, Jan 31, 12 @ 4:54 pm:

    I wonder if the $2 million received by the park district is money used to restore Grant Park to a usable fashion. Last year, it took them months to get it back into a state people could actually use it. I think someone needs to look into it. No way should a park be closed for half the summer because they want to use if for 3 days.


  23. - Yellow Dog Democrat - Tuesday, Jan 31, 12 @ 6:22 pm:

    @Tom - You’re right. We should bill them for the whole three months.


  24. - Glass half full - Tuesday, Jan 31, 12 @ 7:26 pm:

    Hmmmmm……did Toni Preckwinkle vote for this exemption as a member of the city council?


  25. - South of the Loop - Tuesday, Jan 31, 12 @ 7:32 pm:

    I concur with Tom.

    Also 3rdGen is right it was like a disaster struck. I was embarrased if anyone visited Chicago for the first time, and during prime vacation season and went to Grant Park. All they would have seen is this tore up mess. Or if someone came back to Chicago for a visit they would have thought the city was broke and unable to keep up it’s parks.


  26. - Soccertease - Tuesday, Jan 31, 12 @ 9:23 pm:

    Rich, hope you follow up on this one. Dept of Revenue should be able to collect all sales taxes due from Lallapalooza since they are not tax exempt for sales tax. Rep. Sara Feigenholtz should persist until this is done.


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