DePaul arena plan advances with a change to keep alderman happy

Chicago aldermen got the ball rolling Tuesday on Mayor Rahm Emanuel’s plan to build a $170 million DePaul basketball arena that would double as an “event center” for McCormick Place, but in a way that appeased the local alderman.

The City Council’s Finance Committee agreed to earmark $55 million in tax-increment-financing (TIF) funds towards a new, 1,200-room, headquarters hotel to be built on the northeast corner of Cermak and Prairie. That’s 13 percent of the $421 million cost.

The design and financing changes were triggered by a court fight over adjacent land.

Instead of waiting for a judge to resolve the dispute, City Hall relocated the headquarters hotel to a site across the street from the stadium that will incorporate the landmark American Book Company Building.

Emanuel also responded to concerns raised by Ald. Pat Dowell (3^rd) by diverting the TIF subsidy from the DePaul basketball arena that would double as an “event center” for McCormick Place to the hotel.

“TIF is being spent for the purpose TIF was created; to generate economic development opportunity in areas where there isn’t any. It’s for economic development purposes in an area that is blighted. This is an appropriate use of taxpayers’ money,” Dowell said Tuesday.

Using TIF dollars to build the 10,000-seat stadium would have been “problematic,” the alderman said.

“It was supporting an arena that was gonna be utilized primarily by DePaul,” Dowell said.

Outgoing McPier CEO Jim Reilly added, “All of the money the city is going to give us from TIF goes into the hotel. None of it goes into” the arena.

Emanuel’s original plan called for $70 million in stadium construction costs to come from the McPier bond fund backed by local hotel taxes and $33 million in land costs to be paid for by the surrounding TIF. Another $21.5 milion in TIF funds would have been used to buy the land now tied up in court.

The new plan calls for the city to devote all $55 million of its TIF money to purchase land for the headquarters hotel and absorb a chunk of development costs.

That would force McPier to spend $33 million to acquire land for the arena and still develop the headquarters hotel.

“As a partner in the [hotel] development, the city will recover its TIF investment if the hotel is sold or refinanced and will share in any upside upon refinancing,” Planning and Development Commissioner Andy Mooney said Tuesday.

The DePaul arena has been controversial since the day Emanuel announced it last spring. To some, it has become a symbol of the mayor’s misplaced priorities.

Emanuel has pitched the project — not as a hand-out to DePaul, but as a subsidy from the nation’s largest Catholic university that will help McCormick Place compete for mid-sized shows and free millions to renovate Navy Pier.

That was a tough sell at a time when Chicago was closing schools, slashing school budgets to the tune of 3,168 layoffs, phasing out the city’s 55 percent subsidy for retiree health care and piling up police overtime to mask a shortage of officers.

At Tuesday’s Finance Committee meeting, Mooney renewed the mayor’s argument.

“DePaul will invest $70 million toward the $170 million cost of the facility and will become one of its principal users. It’s a rare event when we can point to this type of public-private partnership where real private dollars are spent on a public facility and where we can kick-start its use with a long-term, rent-paying user,” he said.

Tina Feldstein, president of the Prairie District Neighborhood Alliance, has argued that shifting the headquarters hotel to the block east of the arena makes “a lot more sense” because it “salvages” Prairie Avenue and creates a “walkable destination, instead of it being partially blocked off for trucks loading” for the arena.

“It gives the development a much better chance of creating a destination. You don’t want another Rosement where they come to the event center and leave. The only way you address that issue is by creating a destination,” she has said.

Still, Feldstein has argued that “major concerns” remain about traffic and parking that will likely require making some streets one-way while putting cul-de-sacs on others.

“The issue is vehicular traffic. How and where are all of these cars going to go? How are they going to bring in and out so many people in such a small footprint? That’s not solved yet,” she has said.