THE WATCHDOGS: Rauner orders movie studio to return $10M grant for land that’s not for sale
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Gov. Bruce Rauner on Monday ordered a clout-heavy Chicago TV and movie studio to give back a $10 million state grant that his predecessor, Pat Quinn, had awarded to the studio’s owners to buy land that isn’t for sale.
The Rauner administration’s action came one day after the Chicago Sun-Times revealed that owners of six of the seven properties listed in the grant say they have no plans to sell their land to Cinespace Chicago Film Studios or anybody else. There’s no indication the seventh property is for sale, either.
Quinn’s administration, the Sun-Times also found, awarded the $10 million without any appraisals to justify the projected purchase prices listed by the studio’s owners.
Additionally, the former governor’s Department of Commerce and Economic opportunity had nothing to show that Cinespace had pending contracts to buy any of the properties — or even had been in negotiations to buy them, according to documents obtained under the Illinois Freedom of Information Act.
“The administration has very serious concerns about the lack of supporting documentation and the failure of the Quinn administration to abide by normal procedures for issuing grants,” Rauner spokesman Lance Trover said. “Following a review, Gov. Rauner has ordered the $10 million grant to Cinespace be terminated and the funds returned.”
Cinespace applied for the grant on Nov. 13, less than two weeks after Quinn lost the governor’s race to Rauner. The former governor’s administration approved the grant on Dec. 1, and the $10 million grant check went out on Dec. 19, records show.
There’s no evidence that the studio has spent any of the grant money to date. Rauner is giving Cinespace until May 7 to return the all the money, plus interest.
Cinespace President Alex Pissios didn’t return telephone and email messages seeking comment about the grant — one of five grants totaling $27.3 million that his studio got while Quinn was governor.
Quinn said through a spokesman that while he didn’t personally play any role in awarding the most recent grant, his administration supported expansion of Cinespace’s North Lawndale campus because of the jobs it would create.
William Morgan, the Quinn spokesman, also noted that the grant had an expiration date of June 30, at which time Cinespace would have had to repay any of the money it hadn’t spent.
“The grant was administered through DCEO to continue the rapid expansion of the film industry in Illinois, which has created $1.2 billion in economic growth since 2009, including roughly $600 million in wages for Illinois workers,” Morgan said.
Rauner’s decision to terminate the grant came hours after a request from another Republican lawmaker seeking an investigation of the grant.
“I am respectfully asking you to investigate this matter to determine to what extent taxpayers’ money may have been misused,” state Rep. David McSweeney, R-Barrington Hills, wrote in an email to Illinois Auditor General Bill Holland’s office Monday morning. “The state certainly cannot afford to be giving out grants to companies that fail to use the money for the stated purpose of the grant.”
Holland’s office said it couldn’t comment on “ongoing or prospective audits.”
Cinespace has had a meteoric rise since 2009, when the family-owned company began turning the old Ryerson steel mill in North Lawndale into what studio owners say is the largest movie and TV production studio east of Los Angeles. Several movies and TV shows have filmed there, including the NBC hit “Chicago Fire.”
The studio has gotten millions of dollars in loans from Belmont Bank & Trust, a small, privately owned bank founded in 2006 by attorney James J. Banks, a 20-year member of the Illinois Tollway board who was reappointed by Quinn. Karen Banks, the sister of James Banks, works for Cinespace.
The bank’s board also includes former state Sen. James DeLeo, D-Chicago, and businessman Fred B. Barbara, a friend of former Mayor Richard M. Daley who struck it rich hauling garbage for City Hall.