Hidden in a flurry of end-of-session activity in Springfield is a bill that would pour more taxpayer money into a black hole.
Well, a black box, specifically.
Chicago’s McCormick Place convention center has been a political money pit for nearly 60 years. And now state lawmakers are considering whether to keep subsidizing failure with more tax dollars.
The Senate passed a bill May 29 that would significantly expand the boundaries of the area in which the Metropolitan Pier and Exposition Authority, or MPEA, levies a 1% restaurant tax. The MPEA is responsible for Navy Pier and McCormick Square, which includes McCormick Place and the new Wintrust Arena. McCormick’s Lakeside Center convention hall is the black box that butts up against Lake Michigan.
The bill would also expand the MPEA’s bonding authority to allow for more than $600 million to be poured into the partial demolition of Lakeside, and construction of another convention space.
It’s true that Illinoisans who don’t visit, work or live in Chicago won’t pay this new tax. But that doesn’t mean they don’t have skin in the game. MPEA is a hybrid state-local body that just broke $4 billion in debt, which the authority will struggle to pay off. Calls for a bailout will come. And it’s already eating state dollars.
Like many of Illinois’ problems, McCormick is a decades-long tale of overpromising, under-delivering and throwing good money after bad.
Built in 1960, a frigid night in 1967 saw the original McCormick Place turn to ash. The city dispatched 2,000 firefighters to the lakefront, but two-thirds of the structure burned down within 45 minutes. It was the largest fire Chicagoans had seen since the blaze that leveled the city nearly a century earlier.
“[W]e will get to the immediate task of rebuilding McCormick Place,” then-Mayor Richard J. Daley declared the morning after the fire. Build he did. And construction has hardly stopped. The McCormick Place campus now includes 2.6 million square feet of exhibit space, 2,000 hotel rooms across two publicly financed hotels, a 10,000-seat arena, and a 2.5-mile busway accessible only by convention-goers and political figures.
It is the largest convention center in the nation. But despite consultant promises and expansion after expansion, it cannot turn a profit.
Financial reports released last month show MPEA took an operating loss of more than $100 million in fiscal year 2018. Meanwhile, it received $154 million in tax revenue from car rentals throughout Cook County, hotel stays throughout the city, restaurant bills stretching from Chinatown to Lincoln Park, and ground transportation departures from O’Hare and Midway, as well as $32 million in state sales tax revenue.
This money comes overwhelmingly from people who do not use the convention center.
But all of this and a one-time windfall of $18 million from the sale of an MPEA-owned painting wasn’t even enough to cover the authority’s $237 million in debt payments.
Clearly, major expansions in 1986, 1997, 2007 and 2017 have not brought McCormick into the black. But lawmakers must think this time is different.
Pathological optimism in the face of a flagging convention industry is nothing new for the MPEA and state lawmakers.
“[O]ver and over, Chicago and Illinois public officials and a roster of consultants promised that a bigger McCormick Place would yield hundreds of thousands of new convention attendees and billions in new spending and public revenues,” wrote professor Heywood Sanders in “Convention Center Follies,” his 528-page book on the highly political industry.
“Those repeated promises have proved false, the consultant projections unmet.”
Total McCormick Place attendance in 2017 was 2.5 million, compared with over 3 million in 2001. Use of the convention center as measured by square footage dropped by half.
So why does the center keep getting more money, and racking up new debt?
Part of the reason is that it’s in a highly competitive industry where other cities are making ill-considered investments in centers of their own. There’s a futile arms race at play.
The bigger reasons for expansion are political. Organized labor and private businesses collaborate to push expansion plans year after year. When they succeed, the mayor of Chicago and other officials then get to stand at ribbon-cuttings and take credit for tourism numbers.
In order for residents and travelers to escape the authority’s massive debt load, this cycle must end.
Chopping up and selling as many of the MPEA’s assets as possible should be the long-term goal – perhaps in concert with a long-discussed Chicago casino. This should come with the gradual elimination of the nearly $200 million in total tax dollars that flow to MPEA every year.
The old adage is that if you find yourself in a hole, the first step to getting out is to stop digging.
When it comes to McCormick Place, state lawmakers need to throw away the shovels.