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Rahm loses fight to break Daley's Park Grill deal

Park Grill, at Millennium Park. Sun-Times file photo

Mayor Rahm Emanuel has lost his four-year battle to break the lucrative deal the clout-heavy owners of Park Grill got under Mayor Richard M. Daley to operate the only restaurant in Millennium Park.

Cook County Circuit Judge Moshe Jacobius sided with the restaurant Thursday, refusing to rip up the contract it signed with the Chicago Park District to build the eatery in the downtown park Daley built as his crowning achievement.

The Emanuel administration argued Park Grill has made more than $100 million over the past decade under a “sweetheart deal” that was illegal because it wasn’t formally approved by the Chicago City Council.

Jacobius rejected Emanuel’s argument, writing: “To validate the city’s position would mean that the city could be fully aware of an undertaking, participate in it, support it and approve of it, and then summarily disavow it when it no longer suited the city’s purposes after an extremely lengthy time of taking no action and encouraging the undertaking.”

Stephen Novack, attorney for the Park Grill and its operators James Horan and Matthew O’Malley, called the ruling “a complete victory for my client.”

Emanuel, though, said: “Today, the court ruled against Chicago’s taxpayers, who we believe have been taken advantage of in a sweetheart deal that benefited a select few.”

The mayor explaind his reason for suing the Park Grill: “I want a clear message to send to every person that’s procuring or trying to handle a service for the city: The taxpayers of the city of Chicago will not be walked on by you. And, in this case, this is exactly what I thought was done. And the judge did note the city got a bad deal.”

Seven months after taking office, Emanuel sued to break the 30-year deal with the restaurant, which was bankrolled by Daley’s friends and associates including his cousin Theresa Mintle, a CTA official at the time.

Arguing that Park Grill pays the park district far less than it should, Emanuel’s lawyers maintained taxpayers have lost more than $8 million by providing free natural gas and garbage collection while letting the Park Grill defer promised payments to the park district until it recovered its construction costs, including furniture. The restaurant pays no property taxes.

The lawsuit argued the restaurant got a below-market deal because a top park district official, Laura Foxgrover, was having an affair with O’Malley during the negotiations. They have since married in a ceremony performed by Illinois Supreme Court Justice Anne Burke.

Jacobius criticized Foxgrover for “wrongdoing” in helping negotiate the deal while pregnant with O’Malley’s child. She gave birth to his daughter before the deal was finalized.

“It was absolutely wrong for Foxgrover to have had any involvement in the issuance of the concession agreement,” the judge said in his 79-page ruling.

Jacobius said Foxgrover’s “failure to disclose her relationship with O’Malley to anyone other than [her supervisor Colleen] Rock-Mueller raises the specter of impropriety,” noting Rock-Mueller never told anyone at the park district about the relationship.

Foxgrover’s “participation tainted the entire process and raises the specter of the [Park Grill] joint venture having received an unfair advantage in the contract bidding and negotiation processes,” Jacobius wrote.

But Jacobius also wrote: “While the court is extremely troubled by this, it is also true that there was no hard evidence presented that Foxgrover directly subverted the bidding and negotiation processes.”

Jacobius found that, “while it was absolutely improper for her to maintain any involvement in the selection and negotiation processes for the restaurant in Millennium Park, the conduct on her part . . . does not warrant a finding that she caused the terms of the concession agreement to be markedly skewed in favor of the joint venture, nor can it be grounds for vitiating the concession agreement.”

Foxgrover couldn’t be reached for comment.

The controversy over the Park Grill deal began in February 2005, when the Chicago Sun-Times revealed O’Malley got Foxgrover pregnant during the negotiations. Daley’s staff says it spent the next six years trying to rework the deal — talks that went nowhere until O’Malley and Horan reached a deal to sell their management stake to Levy Restaurants for $13.7 million in March 2011, weeks before Emanuel took office.

Park district officials declined to approve the sale, and Emanuel decided to sue the restaurant, run by a five-member management team that includes O’Malley, Horan and architect Michael Toolis, whose wife, Mintle, was Emanuel’s first chief of staff. Mintle had a stake in the restaurant she sold to her husband days after starting work for Emanuel.

Other Park Grill investors included trucking magnate Fred Barbara; Pat Degnan, the brother of longtime Daley political adviser Tim Degnan; and janitorial business kingpin Richard Simon, who lived next door to Daley.

City Hall and the park district spent more than $4.1 million in legal fees fighting the restaurant.

Contributing: Becky Schlikerman

Judge’s ruling: