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*** UPDATED x3 - Bill won’t be called - Bill to be stripped - Lightfoot opposes *** Did this McPier proposal go too far?

Thursday, May 30, 2019

* Good question, but not quite a complete answer

Total McCormick Place attendance in 2017 was 2.5 million, compared with over 3 million in 2001. Use of the convention center as measured by square footage dropped by half.

So why does the center keep getting more money, and racking up new debt?

Part of the reason is that it’s in a highly competitive industry where other cities are making ill-considered investments in centers of their own. There’s a futile arms race at play.

The bigger reasons for expansion are political. Organized labor and private businesses collaborate to push expansion plans year after year. When they succeed, the mayor of Chicago and other officials then get to stand at ribbon-cuttings and take credit for tourism numbers.

Um, name me another place that brings in 2.5 million people mostly from out of state to Illinois every year for extended periods of time. That’s why those “private businesses,” which are actually hotels, restaurants, etc. aren’t totally opposed to new taxation. The restaurant association, I’m told, is so far neutral on this bill

Dining out in certain parts of Chicago would get a little more costly under a measure approved Wednesday in the Illinois Senate to help pay for a construction project at McCormick Place.

By a 44-6 vote, the Senate passed a bill to expand the boundaries of the area in which the Metropolitan Pier and Exposition Authority, the agency that oversees McCormick Place and Navy Pier, levies a 1% restaurant tax. The measure now moves to the House.

The tax currently is collected downtown, but the expanded area, which would include parts of the North, Northwest and South sides, was designed to bring in more money from trendy restaurants in areas such as Wrigleyville, Logan Square and Hyde Park, McPier CEO Lori Healey said during a committee hearing Wednesday. The agency expects to bring in an additional $10 million in annual revenue from the expanded boundaries, she said. […]

Chicago Mayor Lori Lightfoot said Wednesday that she doesn’t know enough about McPier’s proposal to have a position.

No group filed a witness slip in opposition yesterday.

* But the proposed boundaries of what would be a much larger taxing district have some locals up in arms

Ald. Tom Tunney (44th), owner of Ann Sather restaurants, said he adamantly opposes the dramatic expansion of a restaurant tax that was supposed to be temporary.

“This tax was supposed to go away — not expand,” said Tunney, the new chairman of the City Council’s Zoning Committee.

“I’m not supportive of it. We already have the highest sales tax in the country, and we’re expanding it? I just feel that the cost of dining out is very expensive. It’s close to 12 percent. Consumers notice. I also think it hurts us on the competitiveness of the convention and tourism business.” […]

Ald. Brian Hopkins (2nd) joined Tunney in opposing the expansion.

“The whole purpose of the original tax on restaurants for McCormick Place was to capture tourism dollars. We know they’re concentrated in the downtown area,” Hopkins said.

“The further you push that away [from downtown], the more you’re putting that burden on local residents who are going to their neighborhood restaurant. That’s not fair, and I don’t support it.”

That bill flew out of the Senate before any opposition could coalesce. There may not be enough time to stop it in the House. We’ll see. It’s been assigned to the House Executive Committee, where it should blow right through to the floor.

*** UPDATE 1 *** Greg Hinz…

Mayor Lori Lightfoot has come out against a legislative plan to expand McCormick Place by hitting areas as much as 10 miles away from the convention center with a 1 percent tax on restaurants, bars, and take-out food items.

The move may well stall action on the proposal, at least for now, as lawmakers in Springfield race toward a scheduled adjournment of their spring session at midnight tomorrow.

In a statement, the mayor, who insisted at a press conference yesterday that she was just learning details of the plan, based her opposition in part on the fact that the proposed bill has a carve-out for sports stadiums with a capacity of at least 20,000 people—including Wrigley Field, Guaranteed Rate Field and the United Center.

“The mayor is committed to ensuring that Chicago’s convention industry remains vibrant, and supports making investments that will enhance McCormick Place and drive new economic growth for the city of Chicago,” the statement said. “However we are concerned about this proposal in its current form, specifically the exemption favoring large venue owners, whose customer base includes visitors and conventioneers, and the potential unintended consequences for small businesses in Chicago.

*** UPDATE 2 *** A source on the House Executive Committee says the plan is to strip the tax hike from the bill. The General Assembly will punt to the fall veto session.

*** UPDATE 3 *** Same source updates with info that the bill will not be called during tonight’s hearing.

- Posted by Rich Miller        

40 Comments
  1. - Ok - Thursday, May 30, 19 @ 12:17 pm:

    Museum Campus brings in 5 million visitors a year, and it is right next to McCormick Place.

    Wrigley Field brings in north of 3 million visitors a year.

    And most conventions are happening in hotel conference centers downtown, not at McCormick Place.


  2. - The 647 - Thursday, May 30, 19 @ 12:18 pm:

    This proposal seems poorly designed if the plan is to “bring in more money from trendy restaurants in areas such as . . . Logan Square[.]” The tax applies east of Western. Logan Square is west of Western.


  3. - Ok - Thursday, May 30, 19 @ 12:18 pm:

    Ain’t nobody going to a convention at McCormick Place and then going to a hipster bar in Logan Square.

    Just Saying…


  4. - Rich Miller - Thursday, May 30, 19 @ 12:21 pm:

    Ok, as I specifically pointed out, McCormick Place visitors are mostly out of staters. Those examples you gave are not necessarily out of staters.


  5. - Ok - Thursday, May 30, 19 @ 12:22 pm:

    This idea is horrid on its face. Less than 1% of the revenue will come from people who use the building. It will be paid by the residents of Chicago that have no interest in this one building that should be able to largely pay for itself.

    But since they brought the issue up, why don’t we redirect all their hard work on that new tax toward PAY-GO capital for transit.

    Probably 80-90% of the people paying the tax would benefit from it.


  6. - Ok - Thursday, May 30, 19 @ 12:29 pm:

    “Those examples you gave are not necessarily out of staters.”

    True, but only about 45% of museum campus visitors come from the Chicago area. That would make its 2.75 million draw from outside Chicagoland still bigger than McCormick Place.


  7. - wordslinger - Thursday, May 30, 19 @ 12:34 pm:

    –It is the largest convention center in the nation. But despite consultant promises and expansion after expansion, it cannot turn a profit.–

    That’s a ridiculous strawman, even by IPI standards.

    Neither McCormick Place, nor any other convention center, was ever intended to “turn a profit.” They exist to put heads-in-beds, diners in restaurants, shoppers in stores, riders in cars, etc.

    Just the radiologists show, every year, gets more than 50,000 high-roller international attendees for a week right after Thanksgiving, selling out the hotels, dining out all meals and doing Christmas shopping downtown.

    But, oh no — McCormick Place doesn’t “turn a profit” on leasing the space for the show. But the businesses that are taxed to back the bonds do quite well. Check the link below to see why they don’t beef about it.

    http://www.mpea.com/wp-content/uploads/2017/01/EIS-Executive-Summary.pdf


  8. - wordslinger - Thursday, May 30, 19 @ 12:38 pm:

    –True, but only about 45% of museum campus visitors come from the Chicago area.–

    How many of them are spending multiple nights in hotels? Eating out all meals?

    Business travelers spend way more than leisure travelers. And overnight travelers way more than day trippers.


  9. - Steve - Thursday, May 30, 19 @ 12:39 pm:

    Tunney and Hopkins are correct expanding the tax really is asking for too much .


  10. - City Zen - Thursday, May 30, 19 @ 12:46 pm:

    ==Ain’t nobody going to a convention at McCormick Place and then going to a hipster bar in Logan Square.==

    They should be heading to Skylark on 22nd and Halsted.


  11. - lakeside - Thursday, May 30, 19 @ 12:48 pm:

    Well, this should finish off the non-hipster, family run places in Logan Square. Super cool………..


  12. - Ok - Thursday, May 30, 19 @ 12:49 pm:

    Word - your link itself says that the total economic impact of McCormick Place is about $1 billion per year.

    A 1% tax that generates $10 million a year presumes that building a new building to replace an old one would generate new spending of an EXTRA $1 billion a year on food an drink alone, just in communities where it is not already taxing those things.

    Otherwise it is gaining revenue from economic activity that is happening otherwise, and cannibalizes other revenue needs.


  13. - lakeside - Thursday, May 30, 19 @ 12:54 pm:

    Let me pull some of that back. The article I read yesterday didn’t have the boundaries demarcated. As 647 points out, Logan Square starts west of Western. It’s still a huge swath of the city, though. Yipes.


  14. - Ok - Thursday, May 30, 19 @ 12:59 pm:

    And the Lightfoot drops…

    https://www.chicagobusiness.com/greg-hinz-politics/lightfoot-puts-brick-food-drink-tax-fund-mccormick-place-revamp


  15. - wordslinger - Thursday, May 30, 19 @ 1:02 pm:

    –A 1% tax that generates $10 million a year presumes that building a new building to replace an old one would generate new spending of an EXTRA $1 billion a year on food an drink alone, just in communities where it is not already taxing those things.==

    Where’s that coming from?


  16. - Honeybadger - Thursday, May 30, 19 @ 1:08 pm:

    -Business travelers spend way more than leisure travelers.—
    Really? Where were you able to acquire that data? Just curious.


  17. - Honeybadger - Thursday, May 30, 19 @ 1:12 pm:

    Never mind. You are indeed correct.


  18. - lincoln's beard - Thursday, May 30, 19 @ 1:18 pm:

    === A 1% tax that generates $10 million a year ===

    @wordslinger, I think the thought process here is that if the argument is that “the improvements paid for by the tax will result in increased nearby business that will pay for the tax increase”, those improvements would need to create a billion dollars of new spending to pay for the increase. $10m/1% = $1b


  19. - Robert the Bruce - Thursday, May 30, 19 @ 1:40 pm:

    Yes, it goes too far, geographically. McPier tourists aren’t dining too far south of McCormick Place or west of Ashland.


  20. - wordslinger - Thursday, May 30, 19 @ 1:42 pm:

    –Word - your link itself says that the total economic impact of McCormick Place is about $1 billion per year.–

    No, $1.7 billion in 2018. See page 16.


  21. - Moe Berg - Thursday, May 30, 19 @ 1:48 pm:

    There’s no nexus between McCormick Place and those expanded neighborhoods. A total money grab that’s going to be paid for by Chicagoans, not conventioneers.


  22. - Jim - Thursday, May 30, 19 @ 2:02 pm:

    Arms race is the right word . It will be an expensive building to build . Better to downsize , create open land east of LSDRIVE and remodel the existing buildings. The expanded TIF area is just wrong


  23. - Robert the Bruce - Thursday, May 30, 19 @ 2:02 pm:

    Good on Lightfoot. Her statement is quite logical regarding the exemptions and the small businesses and residents far from the convention center that would be affected.


  24. - wordslinger - Thursday, May 30, 19 @ 2:04 pm:

    It’s all academic now that Lightfoot has weighed in. I don’t believe it’s possible to pass a McCormick Place expansion bill that’s opposed by the Chicago mayor.


  25. - CT Resident - Thursday, May 30, 19 @ 2:05 pm:

    While I always considered it a ‘downtown’ tax - it also covers all of Chinatown which while very close to MCP, convention goers were not typical customers of my parents’ restaurant - so at least for us this was 99% a tax paid for by neighbors and locals.


  26. - Facts matter - Thursday, May 30, 19 @ 2:09 pm:

    Not a new issue. See - GEJA’S CAFE et al., Appellants,
    v.
    The METROPOLITAN PIER AND EXPOSITION AUTHORITY, Appellee. Geja’s Cafe v. Metropolitan Pier and Exposition Authority, 153 Ill.2d 239, 180 Ill.Dec. 135 (Ill., 1992)


  27. - SAP - Thursday, May 30, 19 @ 2:33 pm:

    ==[T]he mayor…based her opposition in part on the fact that the proposed bill has a carve-out for sports stadiums with a capacity of at least 20,000 people—including Wrigley Field, Guaranteed Rate Field and the United Center.
    “The mayor is committed to ensuring that Chicago’s convention industry remains vibrant, and supports making investments that will enhance McCormick Place and drive new economic growth for the city of Chicago,” the statement said. “However we are concerned about this proposal in its current form, specifically the exemption favoring large venue owners, whose customer base includes visitors and conventioneers, and the potential unintended consequences for small businesses in Chicago.==

    Is there room to reach agreement here if they remove the carve outs, or am I being overly optimistic?


  28. - Responsa - Thursday, May 30, 19 @ 2:36 pm:

    Lightfoot doing what mayors are supposed to do–think critically and look out for the whole city. You can tell she was pretty much not happy about being kept out of the loop on this. So far she is trending up AFAIAC.


  29. - Three Dimensional Checkers - Thursday, May 30, 19 @ 2:43 pm:

    It’s probably a rare conventioneer that will make the trek from McCormick Place up to Logan Square or down to Hyde Park. It seems like the bill just picks places with money to tax but that don’t have any connection to the conventions.


  30. - bobby brown - Thursday, May 30, 19 @ 2:44 pm:

    way to go lori..looks like shes not making many freinds from the start..and i love it…do whats needed, not what “they” want.


  31. - Bruce( no not him) - Thursday, May 30, 19 @ 3:21 pm:

    As a downstater, I whole heartedly support taxes in Chicago not on me. /s


  32. - My button is broke... - Thursday, May 30, 19 @ 3:35 pm:

    According to Choose Chicago, there are over 52 million people that visit Chicago each year. So McCormick Place is responsible for attracting 5% of the visitors to Chicago…


  33. - ChicagoBars - Thursday, May 30, 19 @ 3:51 pm:

    Since I’ve gone on about this at length on other less forums here’s my personal opinion.

    There very well may be a case for a new even bigger debt ceiling for McCormick Place to renovate the east hall of McCormick Place and create some good Union construction jobs.

    But McCormick Place also already rakes in a great deal of combined hotel, “downtown” dining & drinking tax, and transportation based hospitality taxes annually already:
    FY2019 (to date): $139.7M
    FY2018: $143.8M
    FY2017: $142.7M
    FY2016:$137.1M

    Before quasi-governmental McCormick Place slams thru a greatly expanded ($60M per year) drinking and dining tax that will disproportionately impact neighborhood patronized bars & restaurants (while somehow exempting 3 of the 10 biggest tourism draws in their district) there needs to be a much more public discussion of:

    1) Is there a means for McPier to live within it’s already generous revenue; and
    2) Are there any less onerous ways to raise any extra money needed than taxing a couple hundred almost entirely locally owned small businesses and their neighborhood customers?

    There are higher wage expenses coming and definitely higher property tax bills coming for all these mom and pops in the next two years. Before McCormick Place takes $60,000,000 off the top from the neighborhood consumers there needs to be a public city-driven discussion of this whole plan.

    Introducing the McCormick Place Chicagoan Eating & Drinking Tax grab language Tuesday, passing it in the Senate on Wednesday, and calling it for a house committee on Thursday night of the last week of spring session is not that thoughtful conversation.

    Table the bill until fall, let all the parties discuss why, what, and how much McCormick Place truly needs and where that should fall. There’s time.

    Also one supportive legislator sending out a high dollar campaign fundraiser invite for an event at one of the venues specifically exempt from this tax the same week this bill moves is just a bad look… but that might just be me.


  34. - A guy - Thursday, May 30, 19 @ 4:13 pm:

    ==I don’t believe it’s possible to pass a McCormick Place expansion bill that’s opposed by the Chicago mayor.==

    I’d normally agree, but they’re getting the memo awfully late on this. If she bricks it, we’ll really know how much juice she’s already got.


  35. - James - Thursday, May 30, 19 @ 4:36 pm:

    Agree with the Mayor. No exemptions needed for Ricketts, Wirtz and Reinsdorf.


  36. - Da Big Bad Wolf - Thursday, May 30, 19 @ 4:48 pm:

    Looks like that grand old lady, Lakeside Center, lives to fight another day.


  37. - Charlie Brown - Thursday, May 30, 19 @ 5:05 pm:

    What happened to that hearty brigade of contract lobbyists that Lightfoot supposedly had working for her on the down low?


  38. - Chicago 20 - Thursday, May 30, 19 @ 5:08 pm:

    I think everyone is missing the big picture here.

    According to the FY 2019 MPEA Audited Financial Statement the current 2019 MPEA bond debt repayment for 2019 is $196,695,00.

    This amount is paid with MPEA Authority Tax Collections. The total MPEA tax revenue for 2018 was $151,526,000.

    Right now in 2019 the scheduled MPEA bond payments exceed the 2018 MPEA tax revenue by $42,478,000.

    The MPEA debt repayment schedule stair steps ( much like the pension ramp ) to $347,244,350 in the coming years.

    MPEA Authority Tax Collections must increase by $195,718,350 a year by then or the MPEA will default leaving the State of Illinois, the guarantor, stuck with the balance of the bond payments.

    Asking the State of Illinois for demolition/expansion money is just a diversion to allow the MPEA to refinance and extend out their existing debt, with another debt ramp repayment schedule that will be completely unaffordable in only a few years.

    So my advice is don’t worry about the expansion of the 1% MPEA restaurant tax, worry about where the $195 million is going to come from.

    Back in the day, before the 2010 reforms the MPEA could give away the floor space and make it up on the back end.
    Now after the reform legislation the MPEA gives away the floor space then gives the trade show financial incentives on top of it while the same legislation prohibits the MPEA from making any back end money.

    The trade shows are making over $25 million in a few days time at McCormick Place and the Illinois taxpayers are going to be stuck with billions of debt.


  39. - Just Me 2 - Thursday, May 30, 19 @ 9:26 pm:

    Did anyone else notice how the Mayor’s statement said how concerned “we” are about the legislation? Who is “we”? Has the Mayor been split into different people in the past few days?


  40. - Bobby Beagle - Thursday, May 30, 19 @ 11:00 pm:

    The new boundaries extended into McKinley Park, a working class southwest side neighborhood which never in 1,000,000 years would attract a convention goer for any reason other than to perhaps visit a massage parlor on Archer (sad, but true).

    We have 1 bar and about 3 restaurants spread out across a few struggling commercial strips that have not recovered from de-industrialization. These proposed boundaries were abusive, good on Lightfoot for shutting this down.


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