Analysis: Lucas Museum push offers ammo for Emanuel’s critics

Three years ago, Mayor Rahm Emanuel proposed using $55 million in tax-increment financing funds to help bankroll a 10,000-seat basketball arena for DePaul University that would double as an “event center” for McCormick Place.

The project became a symbol of what critics called the mayor’s misplaced priorities.

The political drumbeat got so loud, Emanuel rearranged the financing so the TIF subsidy would be used to acquire land for the project and surrounding hotels, instead of to build the stadium.

Now, there’s a fresh example of the same tone-deaf, “Let ’em eat cake” approach that prompted critics to brand Rahm Emanuel “Mayor 1 percent”: The last-ditch effort to let movie mogul George Lucas build his museum on Chicago’s lakefront by demolishing and replacing McCormick Place East.

At a time when the marathon state budget stalemate has cut off funding to vital social services, state universities and college scholarships to needy students, Emanuel wants to spend political capital, greatly diminished by his handling of the Laquan McDonald shooting video, to keep the Lucas Museum in Chicago on a lakefront site he hopes Friends of the Parks will agree not to challenge.

Specifically, the mayor wants to persuade Republican Gov. Bruce Rauner, Democratic legislative leaders and a General Assembly paralyzed by partisan politics to raise five tourism taxes and authorize $1.2 billion in new borrowing to expand McCormick Place.

Two of those tax increases would be on Chicago hotel rooms now taxed at a rate of 17.4 percent. That’s compared to 12 percent for Las Vegas and 12.5 percent for Orlando, Chicago’s two biggest rivals for convention business.

One of those hotel tax increases — the 2 percent that financed construction of U.S. Cellular Field — is supposed to expire in 2033, when stadium bonds are paid off.

Instead, the mayor wants to transfer that increase from the stadium authority to McPier and extend the levy until 2066 to be paid by our grandchildren and great grandchildren.

“While Springfield has its challenges, those challenges should not inhibit the ability to grow the cultural, educational, business and economic future of the city of Chicago. One of the largest employers in the city is the convention and hospitality industry,” Emanuel said.

“These are the type of investments that build the city that made it a dominant player. . . . And I think the state of Illinois will see this investment,” he said. “Remember, just building it creates close to 8,000 to 10,000 jobs.”

Emanuel has already raised property taxes by $588 million for police and fire pensions and school construction and imposed Chicago’s first-ever garbage collection fee.

He has offered to raise property taxes by an additional $170 million for teacher pensions, whether or not the state does its share to bail out the nearly bankrupt Chicago Public Schools facing Chicago’s second teachers strike in four years.

The Illinois Supreme Court’s decision to overturn Emanuel’s plan to save the Municipal Employees and Laborers Pension Funds is also likely to require another increase in the monthly tax tacked on to Chicago telephone bills, both land lines and cellphones.

Yet another concern is Rauner’s refusal to sign a bill now on his desk that would give Chicago 15 more years to ramp up to 90 percent funding of the police and fire pension funds.

The city had to borrow $220 million to cover a shortfall caused by Emanuel’s assumption that his old friend Rauner would sign that bill. Rauner won’t sign it unless it’s part of a deal that includes his pro-business, anti-union reforms.

With all of those financial pressures closing in on Chicago, it’s tough to imagine how Emanuel can present his Lucas-McCormick Place financing plan without being laughed off the stage by the Chicago Teachers Union.

When the CTU similarly ridiculed the DePaul arena at a time when Emanuel was closing a record 50 public schools, the mayor offered a topsy-turvy explanation.

He argued that he was not using public money to build a basketball arena for DePaul as much as the nation’s largest Catholic university was “subsidizing” an “event center” that McCormick Place needs to compete, thus freeing millions to renovate Navy Pier.

The same “down-is-up, up-is-down” argument is being made now.

Top mayoral aides are portraying Lakeside Center as the convention equivalent of “This Old House” with a $100 million roof replacement needed within five years and $225 million in repairs required over the next 20 years.

They’re arguing that Lucas’ $743 million “gift” offers a once in a lifetime opportunity to get out from under those obligations.

“Neither Vegas, Orlando nor New York are resting on their laurels. They are investing in their future to compete for the same business we’re competing for. The question is, are we going to have the confidence in Chicago’s future and be willing to invest in the future?” Emanuel said.

“If you’re stagnant, you’ll see other cities like Orlando, like New York City, like Las Vegas, like Los Angeles pass you by. I don’t think Chicago should allow them to beat us,” he said. “We finally secured this great museum when San Francisco coughed up their future. . . . It would be a mistake not to invest in our future, grow our economy, grow our educational and cultural attractions so people continue from around the world and around the U.S. to come to Chicago.”

While his top aides were outlining the five tax increases, Emanuel was insisting that there would be “no taxpayers’ support for this effort.”

The mayor can say that with a straight face only because the tourism taxes he wants to extend would be used to expand McCormick Place. Never mind that the expansion would not be necessary if he wasn’t planning to tear down McCormick Place East to make way for the Lucas Museum.

“What pays it is a hotel tax, which is visitors that come to the city of Chicago. It’s fees that already exist — not new taxes,” he said.

On Tuesday, attorneys for the city and Friends of the Parks had been scheduled to appear in court to discuss the park advocates’ lawsuit. The hearing was postponed again, this time until May 3.

City Hall views that delay as a good sign. It means Friends of the Parks is still considering what City Hall hopes will be an offer the group can’t refuse: to create 12 acres of lakefront parkland.

Even if a protracted court battle can be avoided, Civic Federation President Laurence Msall calls the mayor’s plan a long shot, at best.

“It’s very hard to see how this project and this museum can be effectively embraced by the Illinois General Assembly along with the requisite tax increases and extensions tied to it, without a resolution to the state’s budget crisis and the financial crisis facing the Chicago Public Schools, the city of Chicago and everyone who relies on the state of Illinois,” Msall said.

“This is a new project — one that doesn’t demand immediate attention except for the schedule of those promoting the project,” he said. “What demands immediate attention . . . is the state’s failure to have a budget 10 months into the fiscal year and the potential collapse of our higher education system and community services for the mentally ill, disabled and elderly.”

Msall noted that the McPier Authority is “already financially stressed” by the hotel and arena projects.

“This may turn out to be a beneficial project, but there is an enormous amount of cost-benefit analysis and financial detail that needs to be transparently provided to justify such extraordinary borrowing and use of public tax dollars,” he said.