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TIF, hotel taxes could help pay for planned McCormick Place arena

The McCormick Place west building. File Photo. | Brian Jackson~Sun-Times

The McCormick Place west building. File Photo. | Brian Jackson~Sun-Times

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Updated: June 16, 2013 6:23AM

Mayor Rahm Emanuel’s plan to build a 12,000-seat basketball arena near McCormick Place that would double as a home for mid-sized shows would be built with $125 million in public funds — $55 million in tax-increment financing and $70 million in hotel taxes, sources said Tuesday.

City Hall sources fleshed out the financing details for an arena that would become the new basketball home for DePaul University as local Ald. Pat Dowell (3rd) raised questions about the impact of the stadium and two new hotels on her South Loop residents.

Dowell, who was briefed on the project Tuesday, said she’s all for increasing tourism and convention business and bringing more “economic vitality” to the South Loop.

But, the alderman said her constituents have many questions about how the stadium would “fit into” the South Loop community and impact their daily lives.

“It’s a lot of people in an area that’s very walkable and very pedestrian. It’s basically condominiums and homes,” Dowell said.

“While I think my constituents welcome more activity that would come with hotels and restaurants--they are as pro-development as I am — you have to be concerned about the impact of an event center-arena tied to McCormick Place….I have questions about design, traffic patterns, movement and participant behavior. What happens to the historic homes and buildings in that area? There are a lot of issues.”

The Chicago Sun-Times reported this week that Emanuel has agreed to build a basketball arena for DePaul near McCormick Place that would double as a mecca for mid-sized shows now bypassing Chicago because they’re too big for Navy Pier and too small for the city’s existing convention halls. Two new hotels are also part of the mix.

Dowell said that’s precisely how the stadium was sold to her.

“I don’t know that I would consider this to be an arena for DePaul. It’s an arena plus event center that could be utilized in a number of different ways,” she said.

Tina Feldstein, president of the Prairie District Neighborhood Alliance, said area residents are dead-set against the idea of “shoe-horning” an arena into their neighborhood.

“Our biggest concern is killing the neighborhood with a venue that sits vacant for most of its useful life and, the only time it is used, it’ll be largely an alcohol-focussed sporting venue that will bring unwanted rowdiness, security and parking issues,” Feldstein said.

“There are 18 DePaul home games. Let’s add in other convention events. Add Rush Arena football. You could add and add and add and you’re still gonna end up with a massive facility that will sit vacant for most of its useful life and will not add any value economically. An arena doesn’t represent an economic engine.”

Feldstein insisted that area residents are not anti-development. Far from it.

“We’d love hotels. We want walkable retail. We want vibrancy. We want a walkable streetscape. We’re not afraid of tall buildings. We’re not asking for this to be quiet with no activity. But, we want to see it become a destination [year-round] — not a few times-a-year. An arena with 12,000 seats is a massive wall that’s essentially going to just deaden the neighborhood,” she said.

Jim Goodman, Managing Vice President, conferences and continuing education with the American Dental Association, called the arena “a good use of taxpayers’ money, because it’s an investment.”

“From what I understand, I don’t know all the details, but there’s also a hotel element, there’s some retail. There’s more of a master kind of plan for the whole McCormick area.”

Goodman said hosting a meeting for his members uses 10,000 hotel rooms – something McCormick Place now cannot handle. That means his members are getting bused to and from downtown. It’s a turn off, he said.

Goodman said building an arena would do far more than host a couple dozen sports games. It would attract his association back to Chicago – and likely many others. Goodman said having a 12,000-seat arena would mean he could host general session meetings of his members and cut down on “rigging” costs; costs associated with putting up staging, wiring, carpeting and other necessities.

“That arena would allow me to have a general session in it. Right now, for me to do a general session, there isn’t a ballroom big enough to do that. So I have to build it out on a trade show floor. That costs a fortune,” largely in labor, Goodman said.

On Tuesday, Emanuel ducked out of an unrelated event at the Garfield Park Conservatory before reporters could question him about the McCormick Place projects and the wisdom of using public money to build an arena anchored by a tenant that plays 18 games-a-season and is decades removed from its heyday as a college basketball powerhouse.

The tentative plan is for a “shared burden” of resources: $55 million from the surrounding TIF; $70 million from DePaul, the nation’s largest Catholic university, and $70 million from a McPier Bond fund, which has resources left over from a 2010 restructuring. McCormick Place bonds are backed by local hotel and motel taxes.

The plan for two new hotels and a new arena has fueled speculation about a casino in the area.

Consultants hired to plan for the old Michael Reese Hospital site nearby — acquired by the city for $91 million to house an Olympic Village — recently recommended a casino as one possibility for that site.

State legislation for a Chicago-owned casino has advanced through the Illinois Senate and is pending in the House. Quinn’s office has warmed to gambling expansion but said it won’t be considered until the Illinois Legislature sends him comprehensive pension reform.

As of now, the DePaul proposal is expected to be pushed through on separate tracks, sources say, including state legislation that could be proposed this week that is necessary to clarify bond language with the Metropolitan Pier and Exposition Authority. One source with knowledge of the plans said the existing language allows the bond fund to be tapped for renovations of existing structures so a legislative tweak is necessary to use the money for “future projects.”

A source with knowledge of the proposal said one of the mega hotels is slated for the site directly north of McCormick Place between Indiana Street and Prairie Avenue. The other would be on the north side of Cermak Road, which is owned by Centerpoint, a huge industrial real estate property owner, sources say. The west side of McCormick Place, near Cermak, is the area tentatively being considered for the arena.

Gov. Pat Quinn is ruling out any direct infusion of money from the state budget.

“We’re not discussing any scenarios where there would be direct state support. That’s not something the state can afford right now,” said Brooke Anderson, a Quinn spokeswoman said.

Earlier this year, DePaul turned down a 10-year, rent-free offer to move Blue Demons basketball to the United Center in favor of pursuing Emanuel’s plan to build a new basketball arena near McCormick Place.

Emanuel has made no secret of his determination to bring the DePaul Blue Demons basketball program back to Chicago. He is equally intent on using a new basketball arena and new hotels in the shadows of the convention center to spur the development of night life within walking distance of McCormick Place.

Jim Reilly, CEO of the Metropolitan Pier and Exposition Authority, said the new arena would give McCormick Place the competitive edge it needs to become “the world’s leading convention and trade show destination.”

“Most of our competitors have an events center; it allows them to attract a range of shows and conventions that we cannot currently attract in a cost-effective fashion,” Reilly said in a prepared statement.

“The proposed multi-purpose event center at McCormick Place will immediately improve our ability to attract shows, and it will put into overdrive the entire convention and tourism strategy we are implementing,” Reilly said. “Further, this proposed facility would help revitalize the entire neighborhood, creating jobs and economic opportunity in the process, all of which will benefit the entire city and region.”

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