CHICAGO — Illinois Gov. Pat Quinn last week signed legislation that replaces the current 13-member board of the fiscally struggling Metropolitan Pier and Exposition Authority with a seven-member interim panel charged with reviewing how to revamp the agency’s management of Chicago’s convention center business.
Quinn will have power over three appointments to the board and Mayor Richard Daley control over the other three and the board chairman post. The agency manages McCormick Place Convention Center and Navy Pier in Chicago. The appointments are expected to be made by next month.
The General Assembly approved the legislation last month, frustrated over MetPier’s loss of trade shows and its request for additional state help in a restructuring of its debt. Lawmakers are expected to rely on the interim board’s review in their debate over whether to approve a debt restructuring for the agency that lost two major convention trade shows last year.
Faced with rising debt-service costs and sagging tourism revenues, the authority is pushing for legislation — backed by Quinn and Daley — that would allow it fiscal relief and long-term financial stability, and would ultimately save the state money, according to chief financial officer Richard Oldshue.
A slump in tourism taxes prompted MetPier to draw $18.8 million in Illinois sales tax revenue for its fiscal 2009 debt payments on $2.1 billion of convention center expansion bonds. An estimated draw of $34 million is again expected this year as collections from taxes on restaurants, car rentals, hotels, and taxi rides from the city’s airports won’t keep up with debt-service demands. The state’s sales tax revenue can be used as a backup pledge — subject to appropriation — on the bonds.
Under the revised multi-layered debt restructuring plan, the MetPier is asking the state to extend a $31.7 million annual debt-service subsidy on a 1984 revenue bond issue to 2032, 17 years past the 2015 maturity of the bonds. About $140 million remains outstanding.
The maturity schedule would be left intact. The subsidy is supported by various dedicated tax revenue, primarily coming from the state sales tax. The bill would also give the agency the ability to extend the maturity on its $2.1 billion of bonds by eight years to 2050 from 2042 and extend the collection of its tourism taxes and the state sales tax backup pledge by another 10 years to 2060.
If no action is taken, officials estimate the subsidies will cost the state $800 million. If enacted as proposed, about $200 million would be shaved off that number through 2015 and $400 million through 2025.
The fiscal pressures spurred Fitch
Ratings to drop the expansion bonds credit one notch to A-plus over the summer. Moody’s Investors Service recently downgraded bonds supported by the state tax subsidy to A3 after it downgraded the state. Standard & Poor’s rates the expansion bonds AAA.
The legislation also includes major labor-rule reforms and changes to contractor practices aimed at enhancing Chicago’s appeal as it competes with major centers in Las Vegas and Orlando.
