Agency that runs Navy Pier, McCormick Place in deep debt

The agency that runs McCormick Place and Navy Pier is deeply in debt because of a downturn in convention and tourism business and needs to overhaul its operations to climb its way out of the financial hole, a top official said Tuesday.

John Gates Jr., Mayor Daley's choice to serve as board chairman of the Metropolitan Pier and Exposition Authority, wasted no time in confronting the financial problems plaguing the agency known as McPier.

"We are not collecting sufficient taxes to pay our debt service. The spread is $34 million a year. We're going to focus on getting our financial and operating house in order. We'll be meeting in two weeks to advance that process," Gates said, after chairing a monthly board meeting.

"Convention business is down at least 20 percent across the country. This is not something isolated to Chicago. Orlando and Las Vegas are facing similar, if not worse, problems. But our job is to figure out how we can sustain ourselves financially and bring the business back to Chicago."

Gates refused to discuss the future of McCormick Place East, the under-utilized lakefront hulk of a building that costs $10.6 million a year to maintain and operate and needs $100 million worth of maintenance and repairs.

He would only say, "We're evaluating all of the facilities trying to bring them to their highest and best use."

Last year, McCormick Place was forced to dip into the state sales tax -- to the tune of nearly $19 million -- to cover its debt obligations after tourism taxes fell short.

It was the first time that had ever happened, but it won't be the last. The projected shortfall this year is $34 million.

A bill that would have extended McPier's payment schedule and increased its borrowing capacity has passed the Illinois Senate twice, but never made it through the House.

The bailout would have paved the way for the authority to bankroll a 600-room expansion of the Hyatt Regency McCormick Place hotel with low-cost municipal bonds.

The Chicago Sun-Times reported last month that McCormick Place East needs $100 million in repairs and stands at a crossroads.

Unless the Illinois General Assembly revives McPier's stalled debt re-structuring plan, there won't be enough money to upgrade and maintain the building.

Known as Lakeside Center, the building has long been viewed as a possible site for a Chicago casino because it has a built-in convention audience, an express bus lane linking it to downtown hotels and restaurants and its own theater, Arie Crown.

The site is made even more attractive by the fact that it's already there. You wouldn't have to spend tens of millions of dollars and wait years to build a casino. It could be up and running within months after a license is granted.

Daley appointed Gates to replace attorney Ted Tetzlaff with a mandate to get a handle on the agency's worsening finances.