City’s costly food fight with clout-heavy Park Grill settled

The decade-long food fight between City Hall and Park Grill has come to an end 11 months after a judge ruled Mayor Rahm Emanuel couldn’t break the sweetheart deal Mayor Richard M. Daley gave a clout-heavy group to run Millennium Park’s only restaurant.

Emanuel has agreed to drop the city’s court appeal. And Park Grill’s operators agreed to finally start paying for garbage collection, natural gas and water and also to accelerate their rent payments.

The deal will save Chicago taxpayers $5.7 million over the next 18 years, according to Stephen Patton, City Hall’s top lawyer.

The lawsuit Emanuel filed in late 2011, months after succeeding Daley, has cost taxpayers $6.9 million in legal fees paid to private law firms hired by City Hall and the Chicago Park District to battle the restaurant’s high-powered lawyers.

Patton defended the legal battle, which included a 63-day trial before Cook County Judge Moshe Jacobius, who ruled last September the city had no grounds to break the 30-year deal the restaurant got from the park district under Daley.

“This was always about more than the Park Grill,” Patton said Friday. “It was also about sending a clear and powerful message that, under this administration, below-market deals that benefit a few insiders at the expense of taxpayers would not be tolerated.”

Park Grill attorney Stephen Novack said, “The city and the park district have now agreed to what we have been saying for years and what Judge Jacobius ruled — the concession agreement is and always has been legal, valid and binding.”

Novack pointed out the restaurant previously offered to pay for water, natural gas and garbage collection, but the city refused. While the city expects to save $5.7 million, Novack said, “The city’s exaggerated settlement calculation is based primarily on the exorbitant garbage charge that the park district has been overpaying but which the restaurant can replace at a fraction of the cost.

“In fact, my clients offered the city essentially what it is getting in settlement before the city filed its lawsuit and before the city and park district incurred millions of dollars in attorneys’ fees and costs.”

The lawsuit said taxpayers lost more than $8 million under the deal reached under Daley that provided free water, natural gas and garbage collection and allowed the restaurant to defer monthly lease payments to recoup construction costs.

Under Emanuel, City Hall argued the park district failed to get permission from the City Council and struck the deal while one of the restaurant operators, Matthew O’Malley, was having an affair with Laura Foxgrover, then a top park official. They have since married, and Foxgrover works for O’Malley.

O’Malley and James Horan, the owner of Blue Plate Catering, operate the restaurant, whose original investors included a group of clout-heavy insiders, among them associates of Daley and one of his cousins — whose husband is chairman of the restaurant’s management company.

O’Malley and Horan argued the Daley administration was aware of the negotiations, saying the former mayor personally involved himself in the restaurant’s construction, even suggesting the location of its bar.

Illness kept Daley from testifying during the trial, but in a deposition the former mayor said he couldn’t remember anything about the restaurant — not even attending its grand opening in November 2003, months before City Hall approved its liquor license.

Park Grill’s lease became another City Hall scandal in February 2005 after the Chicago Sun-Times revealed Foxgrover gave birth to O’Malley’s daughter while the park district was negotiating with O’Malley’s group. The restaurant was given a 30-year contract providing free gas, water and garbage collection. Park Grill also wouldn’t pay property taxes.

Daley criticized the deal, blaming City Hall’s top lawyer, Mara Georges, who began trying to renegotiate. City Hall put those negotiations on hold as the restaurant fought Cook County officials trying to make Park Grill pay property taxes, a battle the restaurant won.

During the spring of 2011, O’Malley and Horan sought to sell their management stake to Levy Restaurants for $8 million, a deal the park district refused to approve. The city then sued to break the lease.

Under the settlement, Park Grill will hire a private company to collect its trash, and gas and water meters will be installed. The restaurant will begin making minimum rents payments on Oct 1, about 18 months earlier than its contract required.

Patton said taxpayers will save $3.8 million on the Park Grill’s garbage collection and $1.5 million on natural gas, while earning $367,000 on the accelerated rent.

And the park district is turning over the restaurant’s concession deal to City Hall, which operates Millennium Park.

The settlement vacates the judge’s ruling against the city last fall.