CHICAGO - The Metropolitan Pier & Exposition Authority signed off a $564 million contract to design and build a new convention center hotel and events center that will house an arena for DePaul University's Blue Demons basketball team.
The MPEA board gave the contract to Prairie District Partners which submitted the lowest qualified bid. The contract calls for the construction of a 1,200 room headquarters hotel and McCormick Place Event Center. Construction is expected to begin on both facilities in the second quarter of 2015. The authority approved it at a meeting Tuesday.
"Both facilities are key elements in maintaining Chicago's leadership in the convention and trade show industry and revitalizing the neighborhood surrounding the McCormick Place campus," a statement from the agency read. The facilities will serve the McCormick Place Convention Center which is operated by MPEA.
The contract calls for nearly $400 million to finance the 40-story hotel that will be operated by Marriott International Inc. and include specialty suites, 90,000 square feet of meeting room space which includes two 25,000 square-foot ballrooms, and a great room-style restaurant and bar.
The new hotel would complement the convention center's existing 800-room hotel, managed by Hyatt Hotels Corp.
The adjacent events center with a 10,000 seat arena will cost $164 million, up from an original price tag of $140 million. The project costs is being split between the authority and DePaul University, including the higher costs. The authority will tap previously issued bond proceeds to cover its share.
The authority said Wednesday it has arranged financing for the construction phase of the hotel and will later pay off the debt with long term expansion project and hotel revenue bonds.
The authority's $2.6 billion of debt carries ratings that range from the single-A category to triple-A, based on support from Illinois. The authority's debt is repaid by its taxes on hotel rooms, restaurant meals, Chicago airport taxicab rides, and car rentals. A state sales tax backup pledge subject to appropriation also supports the debt.
The authority began restructuring its existing debt portfolio in deals in 2010 and 2011. It has also tapped about $300 million of a $450 million new-money authorization that was included in the restructuring legislation approved by state lawmakers in 2010.
