Senators broaden restaurant tax to back McCormick Place expansion

Levy on larger part of Chicago would help convention industry add jobs, proponents say

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Lakeside Center at McCormick Place

The above-ground portion of Lakeside Center would be demolished and replaced with greenspace, under a proposal making its way through the Illinois Legislature.

Sun-Times file

Money to support a McCormick Place expansion would be raised by expanding a 1% tax on restaurant meals and drinks under legislation adopted Wednesday in the Illinois Senate.

The proposal, which has strong backing from trade unions, would enlarge the part of Chicago’s central business district in which the tax is collected. The Senate passed the bill 44-6, shortly after its Executive Committee approved the measure 12-1, with one member voting present.

The revenue would allow the Metropolitan Pier and Exposition Authority, which runs McCormick Place, to borrow an additional $600 million, increasing its bonding limit to $3.45 billion. The agency plans to build a new convention hall over King Drive and tear down the above-ground portion of the Lakeside Center, widely viewed as outmoded convention space.

An earlier proposal to fund the expansion with a $1-a-ride tax on Uber and Lyft has been dropped amid opposition from those companies.

Lori Healey, CEO of the authority, told senators the expanded boundaries of the taxing district were drafted with help from the tourism industry and local restaurants. She called it an effort to “modernize our tax collections” by tapping activity within a growing central business district.

“What we tried to do was to increase the boundaries to a modest extent possible to really pick up what I would call the cool new restaurants that all of our conference attendees want to go to,” Healey said.

Lori Healey (rear), CEO of the Metropolitan Pier and Exposition Authority, and state Sen. Mattie Hunter (D-Chicago) testify in favor of an expanded restaurant tax to support McCormick Place.

Lori Healey, CEO of the Metropolitan Pier and Exposition Authority, and state Sen. Mattie Hunter, D-Chicago, (foreground) testify in favor of an expanded restaurant tax to support McCormick Place.

via BlueRoomStream

The proposed boundaries would be from Irving Park Road on the north to 55th Street on the south, and the lakefront on the east. The western border would be Western Avenue from Irving Park Road south to Pershing Road; east to the Dan Ryan Expressway; south to 51st Street; east to Cottage Grove Avenue; and south to 55th Street.

The current boundaries are Diversey Avenue on the north; the Stevenson Expressway on the south; the lakefront on the east; and Ashland Avenue on the west.

The proposal came under immediate criticism from aldermen whose wards are part of the larger district.

Ald. Tom Tunney (44th), owner of Ann Sather restaurants, said he adamantly opposes the dramatic expansion of a restaurant tax that was supposed to be temporary.

“This tax was supposed to go away — not expand,” said Tunney, the new chairman of the City Council’s Zoning Committee.

“I’m not supportive of it. We already have the highest sales tax in the country, and we’re expanding it? I just feel that the cost of dining out is very expensive. It’s close to 12 percent. Consumers notice. I also think it hurts us on the competitiveness of the convention and tourism business.”

The enlarged taxing district would cover the Wrigleyville bars and restaurants, but not Wrigley Field itself. The measure exempts sports stadiums, which face their own taxes, that seat at least 20,000 people.

Ald. Brian Hopkins (2nd) joined Tunney in opposing the expansion.

“The whole purpose of the original tax on restaurants for McCormick Place was to capture tourism dollars. We know they’re concentrated in the downtown area,” Hopkins said.

“The further you push that away [from downtown], the more you’re putting that burden on local residents who are going to their neighborhood restaurant. That’s not fair, and I don’t support it.”

Mayor Lori Lightfoot said she was undecided about the measure. “I don’t know enough particulars now to have an opinion,” she said. “Obviously, it’s important that we continue to do everything that we can so that we remain competitive in our convention business because we’re constantly under threat from Las Vegas, Orlando and places around the world.”

Downtown Ald. Brendan Reilly (42nd) said he’s all for expanding the boundaries of the restaurant taxing district — particularly if it allows for demolition of a Lakeside Center that, he believes, never belonged on the lakefront.

“All of the restaurants that I represent are already paying that tax. So, a very small group of businesses have been shouldering that burden for a very long time,” Reilly said.

Healey said broadening the taxing district would allow the authority to collect $10 million a year on top of the tax’s current revenue of about $51 million a year.

The change still must go through the House before the scheduled end of the current legislative session Friday. Then it needs the governor’s signature to become law.

Don Villar, secretary-treasurer of the Chicago Federation of Labor and a member of the McCormick Place board, said construction of a new convention hall would support 2,000 direct and indirect jobs. With an estimated completion in 2023, the hall then would support 3,300 permanent jobs, he said.

“At the end of the day, it’s a smart investment. Think of the jobs,” he said.

The CFL, an alliance of around 300 unions, is a part owner of the Sun-Times.

State Sen. Mattie Hunter, D-Chicago, sponsored the expansion of the taxing district in an amendment to Senate Bill 485. McCormick Place is just outside her 3rd District.

The bill would change the name of the Metropolitan Pier and Exposition Authority to the Metropolitan Public Exposition Authority. For the agency commonly called McPier, the change would downplay its control over Navy Pier. It still owns Navy Pier but a nonprofit manages its daily business.

The bill leaves unchanged areas around O’Hare and Midway airports where McCormick Place also earns revenue from a 1% percent restaurant tax.

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