A scam subsidy?
Thursday, Sep 11, 2008 - Posted by Rich Miller
* The Sun-Times uncovers a nifty little trick at the Chicago Children’s “Museum.” Visitors pay $19 to $23 to park, the museum takes a headcount as everyone walks in, and…
Then, at the end of the year, the museum uses its total annual attendance to help it get a six-figure “parking rebate” from its government landlord, the Metropolitan Pier and Exposition Authority.
Last year, McPier gave the museum $550,000 — money awarded based on the idea that visitors deserve a break on the high cost of parking, records show.
But the museum didn’t use that money to rebate anybody’s parking. Instead, it gave about half the money back to its landlord to cover its share of maintenance costs for common areas of Navy Pier. The museum pocketed the rest for its operating budget.
“Only about 54 or 55 percent of our visitors arrive by car,” Natalie Kreiger, the museum’s spokeswoman, reasons. “With the parking money going into our operating budget, all of our visitors benefit from that money.” [,,,]
Well, the museum had 445,765 visitors last year. The museum estimates that about 245,000 of them arrived by car. Figure, conservatively, that all 245,000 traveled two to a car — a parent and child. That would mean the museum could have provided $4-per-car rebates to all museum visitors who parked in Navy Pier’s garage — and still have had money left over.
Sweet deal, eh?
* More…
A year-by-year look at the “parking rebate” McPier pays to the Chicago Children’s Museum:
2001-02 $270,267
2002-03 $340,043
2003-04 $408,347
2004-05 $489,331
2005-06 $569,887
2006-07 $550,000*
Total $2,627,875
*First year of a $550,000 cap on the parking rebate.
Source: Metropolitan Pier and Exposition Authority
- Carlos - Thursday, Sep 11, 08 @ 9:58 am:
Another Chicago ripoff, greed can’t wait till the Olympics.
- Hearing Voices - Thursday, Sep 11, 08 @ 10:21 am:
Another reason to move the Children’s Museum to Grant Park. No loss of parking revenue for the city parking garages. What will the museum do to make up the lost special revenue?
- Plutocrat03 - Thursday, Sep 11, 08 @ 10:23 am:
Some people call it the circle of life… I take some one else’s money and give it back to you, you give it back to me……..
Makes one wonder what kind deal has been cut for the new site to make the Mayor so edgy in pushing the move.
- Snidely Whiplash - Thursday, Sep 11, 08 @ 10:31 am:
This one’s really a hoot! Sounds like a scam dreamed up between the two of them to get their respective hands on a quarter million each which might somehow pop up into unallocated funds are spent with far less oversight from above? The fact that about an even half winds up going right back to McPier really raises one’s eyebrows. Why give them half a million then have them pay a quarter million of it BACK to them? It just sounds fishy.
- wordslinger - Thursday, Sep 11, 08 @ 11:15 am:
They validate parking. Is that part of the deal?
- Loyal Alumn-Uof I 65 - Thursday, Sep 11, 08 @ 11:39 am:
Is the parking garage at McPier owned by the same investment group that owns the garage at Millenium Park? If not,how will McPier’s revenue loss be handled? Since a new consulting company has been hired to revitalize Navy Pier offerings and attractions, what can one expect in terms of a Children’s attraction?
- Amy - Thursday, Sep 11, 08 @ 12:11 pm:
the board of the children’s museum should be sentenced to
working in the parking garage.
the favored status to this project is very sad. it’s doing nothing
but making money for connected relatives and pals to high elected officials. and it’s not even considered to be the best
children’s museum in the area!
- Truthful James - Thursday, Sep 11, 08 @ 1:03 pm:
Natalie should have added…”and at no time does my hand leave the end of my arm…”
- Tempest in a Teapot - Thursday, Sep 11, 08 @ 1:12 pm:
On the surface this appears to me to be much ado about nothing, and looks like a decent and rather common business arrangement for all involved; including the museum visitors. I think you have to take a much broader perspective and look at the bigger picture to see the real SUBSIDY SCAM here.
First; from the MPEA side of the equation, what percentage of the people do you think drive to the museum there, but don’t go anywhere else or spend any more money at Navy Pier? Almost none.
With those attendance numbers the museum seems to be a pretty decent draw for Navy Pier, despite the cost of parking, and I suspect that many of the families go there with the idea of spending the day and enjoying all that Navy Pier has to offer.
I am a Disney and International Speedway Corporation (NASCAR) shareholder; so I’m acutely aware of the issue of per capita spending numbers at a family/public entertainment destination venue like Navy Pier, and I am pretty confident that MPEA gets a significantly greater return on investment than the amount rebated for parking to the museum. Especially consideration for the rebate in exchange for the number of visitors it looks like they draw there.
While I am not directly familiar with the lease/rental arrangements at Navy Pier, if they are collecting base rent plus a percentage of sales, like most other similar type venues would, then MPEA is reaping an additional benefit from the per capita spending by museum visitors; whether they park there or not. What percentage of McDonald’s Navy Pier revenues do you think is derived from childrens museum visitors?
Those that don’t park don’t generate any common area expense cost associated with operating the parking garages either, but I suspect neither the museum or any other tenants gets a discount from their CAM costs based on the number of visitors arriving by public transportation, or on foot.
Given the current and forecast economic climate the bigger concern for taxpayers in this situation might be how the MPEA is going to replace the museum as a tenant, with a similar operator that will draw close to a half million visitors each year. MPEA will lose not just direct rent; but the additional per capita spending that museum visitors that helps to fund MPEA operations and pay down debt service.
From the museum’s perspective, they can keep the cost of admission lower by reduced operating expenses, which results in more visitors and more per capita spending for Navy Pier by their visitors. Without the parking rebate being retained to cover operating overhead, the operating overhead, of which CAM is likely a very significant portion, they would have to raise admission prices, which would drive down attendance and adversely impact the per capita spend elsewhere at Navy Pier. By using this rebate revenue for in-direct operating costs, the museum can use more if its direct revenue for direct operating expenses which can fund programs and exhibits that in turn attract more visitors, which is a win/win/win for both the MPEA, the musuem, and the visitors.
From the visitors perspective, the cost of parking is a convenience charge for some or many, because public transportation is available (although very inconvenient) and there is lower cost parking available off-site as well. The museums ability to cover overhead for all visitors, from a rebate earned from roughly half of them, probably allows them to put on a better show for all. I think I read that the museum also provides a reasonable level of discounted and free admissions and programs as well, so part of the costs they are recapturing through the parking rebate probably helps them to underwrite those costs as well.
There are far more egregious concerns with respect to MPEA operations that both taxpayers and venue customers should be concerned with, but I don’t think that this parking rebate issue is one of them.
In terms of a “Scam Subsidy”; for starters one would be the 11.5 percent tax rates charged for restaurant meals inside the taxing district that funds MPEA.
The overall Chicago sales tax rate is 10.25 percent, (THE HIGHEST IN THE COUNTRY )since Cook County’s 1 percent sales tax increase took effect July 1, plus the city imposes a 0.25 percent tax on restaurants inside city limits, and the MPEA imposes a 1 percent tax on restaurant meals within its taxing boundary, so restaurant food and beverage served within the district bondaries are taxed at 11.50%!
The district boundaries are the Stevenson Expy. on the south, Ashland Avenue on the west, Surf on the north and Lake Michigan on the east, and the Restaurant Tax within the district is prohected to generate almost $33 million this year.The rationale behind this scheme was that the businesses within this district would be benefitting most from increased business derived from business conventions and tourism visitors drawn here at least in part by McCormick Place and Navy Pier.
How many Gold Coast, Old Town, and Lincoln Park residents that walk to their local restaurants frequently use McCormick Place or Navy Pier on an annual basis? Not a big number, but yet they have to pay 1% more for breakfast lunch and dinner. The 1% tax also applies to all restaurants, not just those specifically catering to conventioneers, so think about the fast food chains, as well as operations like IHOP or Denny’s in the outlying areas of the district.
How about the fact that the restaurant taxing district boundaries run from the Stevenson Expressway and the lakefront where McCormick Place is located, to Surf St. (3000 North) but the district does not extend itself south of McCormick Place at all?
What if an insurance company or a bank located in the Prairie District or Printers Row offerred protection or depositor and lending services only to customers on this same basis? People would be screaming “DISCRIMINATION” from the roof tops, but when it comes to drawing boundaries as to who to collect tax money from this is OK?
Believe it or not; the aggregate taxes collected by MPEA this year are insufficient meet the current debt service obligations, and the STATE sales tax revenues have to be tapped to the tune of $6.5 million to make up the shortfall. Talk about a “SUBSIDY SCAM”.
The MPEA is also continuing to maneuver in Springfield to extend he current debt and expand the bowrrowing authority so that they can add hotel capacity at McCormick Place, at a time when business travel is being substantially curtailed, and airlines bringing convetnioneers to Chicago are enacting enormous cut-backs due to the reduced number of travelers.
The real SUBSIDY SCAM in this equation is breadth and scope of the operational and debt service funding burden imposed on the taxpayers for these facilities, that not effectively run, and that can’t and won’t control their operating costs within their available revenue sources.
- Anon III - Thursday, Sep 11, 08 @ 3:06 pm:
I am breathless. The “teapot” post is 1157 words. Rich, you should charge this flack for paid political advertizing.
- Rich Miller - Thursday, Sep 11, 08 @ 3:08 pm:
lol.
- Snidely Whiplash - Thursday, Sep 11, 08 @ 6:26 pm:
Yeah, looks like one their lobbyists found the blog.
- Billed by the hour - Thursday, Sep 11, 08 @ 6:45 pm:
I hope Tempest gets to bill the MPEA by the hour or maybe they are paid out of parking revenues?