After several false starts, Mayor Rahm Emanuel has scrapped plans to attract a development team capable of adding 100,000 square feet of retail space to Chicago’s downtown riverwalk and generating enough revenue to pay off a federal construction loan and make the attraction “self-sustaining.”
Instead, the city will — for the time being at least — act as its own developer and landlord of an inviting public space that, Emanuel believes is well on its way to rivaling Millennium Park.
“What we’ve learned from the success of the last two seasons is that it might be in the best interest for the city to just continue to manage the concession contracts ourselves, instead of going the developer route,” said Michelle Woods, riverwalk project manager for the city’s Department of Fleet and Facilities Management.
“If we put longer term agreements in place, then the vendors themselves would spend the capital and make the site improvements themselves. They’d be able to recover their investments, and it would be a mutually beneficial arrangement.”
If a developer is chosen at all, it will only be for the “final segment between Lake Street and Franklin because that’s such a critical parcel,” Woods said.
The process of going it alone began Thursday.
City Hall announced plans to grant one-year extensions to a dozen existing concession contracts that together generated $8.5 million in gross revenues, nearly double the $4.5 million take from 15 vendors in 2015.
The extensions will tide the city over until a selection committee awards long-term concession contracts — for either three or 10 years — for the entire riverwalk from Lake Shore Drive to Franklin.
Why long-term contracts?
“A lot of times with these restaurants, they don’t want to just have a one-year agreement because it damages their brand. If they’re not back the next year, it looks like they’re some sort of failure. And obviously we want our vendors to be successful,” Woods said.
After building the riverwalk with a 35-year, $99 million federal loan, Emanuel had hoped to turn the entire operation over to a private developer/landlord.
But the search has been fraught with difficulty, just as it was under former Mayor Richard M. Daley.
Emanuel’s initial “request-for-qualifications” (RFQ) attracted three proposals, but only for “professional services, which was not what we wanted,” Woods said.
That was followed by 343-page RFP that invited competitors to propose a “variety of financial structures” with the goal of making the downtown riverwalk a “self-sustaining amenity and asset.” The only stipulation was that they develop, promote, operate and maintain the entire riverwalk — not individual chunks.
The RFP attracted only one proposal. After protracted negotiations, the city was unable to come to terms with that lone bidder.
Yet another RFP sought to identify a third boat dock operator that would operate year-round from a site east of the Columbus Drive bridge.
That proposal also attracted only one bidder. The city subsequently terminated negotiations when the only bidder revised its revenue estimates downward.
The new RFP will try again to attract a third boat dock operator. But Woods is not optimistic.
“What we definitely don’t want to do is infringe on the existing tour boat contracts that we have. Those are two of our biggest revenue generators towards our debt service obligations for the TIFIA loan. So, we don’t want anything that’s going to compete with the kind of revenues they would make,” she said.
“If we did have an entertainment boat proposal that offers something completely separate from architectural cruises and fireworks cruises — maybe a lunch-time cruise or something creative and different — we might entertain something like that.”
As for the other long-term concession ideas, Woods said, “the sky is the limit” for a riverwalk that, existing vendors say, attracted at least 350,000 patrons between May and November of 2016.
She’s hoping responses generated by the new RFP go beyond the current mix of restaurants, bars, kayak and electric boat rentals to include cultural, educational and recreational offerings.
Think everything from fishing concessions, bocce ball courts and ping-pong tables to shuffle board, miniature golf and batting cages.
“We’re looking for things that make the riverwalk a fun, interesting place to go,” she said.
Emanuel said the downtown riverwalk is “way ahead of schedule” when it comes to patrons and concession revenues.
“The City Winery on the riverwalk on the weekends does more business than the City Winery on Randolph Street . . . The Tiny Hat does more on the riverwalk than their storefront,” the mayor said.
“It is now creating a second waterfront for Chicago . . . It has become — in the spring, summer and fall — a major, major attraction . . . So, we’ve put an RFP out to bring other people to bid on something that is no longer a risk in the sense of, is it a viable business opportunity and job creator? People are now flocking to the riverfront.”
The fits and starts on the riverwalk project are not unique to Emanuel.
Daley’s plan to build a San Antonio-style riverwalk initially called for the city to spend up to $50 million in federal money to build a river-level boardwalk from Michigan to Lake that would have included 35,500 square feet of retail and restaurant space, along with docks for tour boats and water taxis.
When the work was done, the city would have turned over the riverwalk to a private management company.
But when Daley tried to tackle the project in one fell swoop, only one company responded to the RFP. City Hall decided to toss out the lone bid and restarted the competition in smaller bites.
After filling in the “missing links” in the Wacker Drive riverwalk, the city agreed in 2009 to design the rest even though Chicago taxpayers still didn’t have the money to build it.
The Daley administration issued another RFP for firms interested in designing the final phase of the riverwalk, the six-block stretch between State and Lake streets. But Daley left office before the dream could be realized.