DePaul may finally get its new arena, with a city subsidy to boot
Mayor Rahm Emanuel, hoping to elevate Chicago’s game in tourism and conventions, has assembled a package deal that would combine new hotel rooms and a DePaul University-anchored stadium near McCormick Place with beautification of Navy Pier.
The plan’s key element is an estimated $173 million arena within a block bounded by 21st Street, Prairie, Indiana and Cermak. DePaul would bear $70 million of the cost of the roughly 10,000-seat arena, which would be available for other large-scale meetings.
The aim is to keep more convention-goers close to McCormick Place by adding two hotels, including a 1,200-room operation previously announced for the southwest corner of Cermak and Indiana. A 500-room “boutique” hotel would go up kitty-corner from that site.
Emanuel’s aides linked those improvements to work at Navy Pier. While McCormick Place is North American’s largest convention center, Navy Pier is among the state’s top tourist draws. Both sites fall under the Metropolitan Pier and Exposition Authority, commonly called McPier.
It was an exercise of salesmanship designed to build support and deflect criticism that the city is subsidizing a stadium for DePaul, whose NCAA basketball program has fallen on hard times.
“If you can package together a bunch of projects, groups of projects that each on their own are going to be significant — you package them together, you really have the ability to capture people’s imaginations,” said Steve Koch, the deputy mayor and a business executive Emanuel brought in to negotiate mega-deals.
But the grand scheme could falter for several reasons. It isn’t known if the city and DePaul can reliably fill the arena, which would be in a part of town with little nightlife to entice visitors.
Also, most of the land involved in the McCormick Place work still is in private hands. To get it, McPier and the city might have to resort to “quick take” powers under eminent domain, but the acquisition price could be higher than budgeted. The money would come from tax-increment financing.
Another potential glitch is that McPier needs a change in state law to allow it to spend bond proceeds on new buildings. If the Legislature balks, “then we’ll have to take another look” at the projects, said Andrew Mooney, commissioner of the city’s planning agency.
Emanuel’s aides insisted the projects are based on solid financial projections. The public expenditures, they said, come from McPier bonds that already have been issued.
“The money is in the bank,” said Jim Reilly, chief executive officer of McPier. He said he is confident the land acquisition costs won’t go over budget. The estimated purchase price of the land for the arena and the small hotel is $33 million, while the cost of the land for the large hotel would be about $22 million, Reilly said.
He said those sums are based on the agency’s appraisals. “We’ve been buying across the street for less per square foot than our own appraisals,” Reilly said.
A casino, officials insisted, is not in the mix, if only because the Legislature has yet to authorize one for Chicago. Mooney said the issue would be re-examined if the city gets a casino license.
Business interests affected by McCormick Place always argue that gambling shouldn’t be close to the trade shows, whose organizers want people at their booths and not at nearby slot machines.
The DePaul arena, which the university will have the right to name, would be used by the Blue Demons men’s team for about 18 dates a year. It also would be available for free use by the public schools or the city.
But it’s geared mostly to bringing Chicago a greater share of the corporate meeting business. Donald Welsh, president of the Choose Chicago tourism agency, estimated the arena will be booked 20 to 30 weeks of the year.
“To have something like this on the [McCormick] campus is incredibly important as we grow the market segments, particularly the corporate segment,” Welsh said.
Mooney noted that tourism and conventions are among the city’s top three economic generators.
The arena deal, rather than an unjustified public subsidy, has benefits all around, Mooney said. “This is a true example of a public-private partnership,” he said.
City officials issued details of the plans Wednesday in a briefing with Sun-Times reporters.
The McCormick Place improvements will generate $108 million annually in tax revenue, city officials said.
A DePaul official could not be reached for comment Wednesday. Koch said terms with the school let it keep ticket and concession revenue for its games, with revenue from other events going to McPier.
Koch said DePaul judges the arena as “pretty key to their ambitions” to improve their basketball program.
In all cases, parking revenue would go to McPier.
Building the arena would require the relocation of a city landmark built in 1888, the Harriet Rees House at 2110 S. Prairie. Reilly said it would get a better setting a couple blocks away.
Above: Rendering of the DePaul stadium and hotel