CHICAGO — An interim board overseeing Chicago’s convention center authority yesterday recommended Illinois lawmakers overhaul the agency to help bring down convention and trade show costs and ease mounting financial pressures through a debt restructuring plan.
“These changes could enhance Chicago’s ability to win and retain convention and trade show business. But I want to be clear: the interim board is not recommending new tax revenue or operating subsidies for McCormick Place. Its approach is to reallocate projected savings from debt restructuring to cut costs to customers and balance the MPEA budget,” Metropolitan Pier and Exposition Authority interim board chairman John S. Gates Jr. said in a statement.
Gov. Pat Quinn in February signed legislation replacing the authority’s 13-member board with a seven-member one charged by lawmakers with recommending reforms at the government agency, which owns and operates Chicago’s Navy Pier and the McCormick Place Convention Center.
State lawmakers sought the appointment of an interim board as a condition of their consideration of proposed reforms and a debt restructuring plan floated by Quinn and Chicago Mayor Richard Daley. Local and state leaders have been frustrated over MetPier’s loss of trade shows to lower-cost competitors and the General Assembly has looked skeptically on its request for additional state help in a restructuring of its debt. Many of the interim board’s recommendations resemble measures proposed by Quinn and Daley.
The reform recommendations forwarded to a joint Senate-House panel for review focus on five areas: debt, labor relations and exhibitor rights, MetPier’s in-house electrical providers and food services, sales and marketing, and governance. The board opted not to make a recommendation on future governance of the agency.
The board recommended that the authority be allowed to restructure its debt to preserve against a projected draw of $40 million from state sales taxes for debt service. It would also allow $20 million to $25 million from the state to go to the authority’s operating fund.
Authority officials could not immediately say how closely the recommendations mirror MetPier’s own proposed restructuring plan that would have allowed it to extend the maturity on $2.1 billion of bonds by eight years and extend its collection of tourism taxes by another 10 years.
A slump in tourism taxes prompted MetPier to use $18.8 million in Illinois sales tax revenue for its fiscal 2009 debt payments on $2.1 billion of convention center expansion bonds. Another estimated draw of $34 million is 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.
The fiscal pressures spurred Fitch Ratings to drop the rating on the expansion bonds one notch to A-plus over the summer. Moody’s Investors Service also dropped bonds supported by the state tax subsidy to A3 after it downgraded the state. Standard & Poor’s rates the expansion bonds AAA.
The interim board also recommended eliminating MetPier’s in-house electrical service provider, making trade-show workers public employees of the agency, restructuring labor units, allowing the authority to renegotiate show labor contracts and work rules, and adopting “exhibitor rights” measures similar to those used by other convention centers. The proposals also include a ban on strikes.
Reform legislation will have to vie for lawmakers’ attention with a looming $13 billion state budget deficit. There are just a few weeks left before a scheduled May 7 legislative adjournment date. Quinn is pushing for a controversial temporary income tax hike to help bring down the deficit and stave off $1.3 billion in education aid cuts.
The Democratic governor Tuesday met with legislative leaders to outline a revised budget plan that called for an additional $400 million in cuts and extending by four months the time period in the next fiscal year during which the state can pay the previous year’s bills. The revised budget also seeks income tax and cigarette tax increases as well as dipping into tobacco settlement funds and surpluses in non-general-fund accounts.