CHICAGO — Chicago convention managers and Mayor Rahm Emanuel advanced plans Thursday for a new arena and makeover of the city’s top tourist attraction — Navy Pier — as part of a $1 billion package of new and previously proposed tourism-and-entertainment projects.
The plan seeks to strike at the tourism and convention businesses on two fronts. First, it aims to establish an entertainment district around McCormick Place Convention Center south of the city’s downtown with the development of a new arena, new restaurants, and two new hotels. Second, it advances plans long in the works to redevelop Navy Pier, which is downtown along the city’s Lake Michigan shoreline.
The entertainment district’s price tag is $841 million and the initial Navy Pier renovations cost $165 million. About $400 million of the overall price tag would come from private investment.
“These projects represent a major economic engine for Chicago, injecting millions of dollars into our local economy and creating thousands of construction and full-time jobs,” Emanuel said at a news conference with officials from the Metropolitan Pier and Exposition Authority, the city-state controlled agency that owns the convention center and the pier.
The announcement coincided with Emanuel’s second anniversary in the job. The city has dubbed the larger package that includes new hotels “Elevate Chicago” and billed it as an infrastructure program to support the city’s tourism and trade show business.
The $140 million arena plan unveiled Thursday relies on a contribution of $70 million from MPEA bond funds to construct the facility that would serve as home to DePaul University’s Blue Demons and host concerts and convention center events. The school would cover the other half and the city would contribute $33 million in tax-increment financing funds to cover land acquisition and infrastructure improvements.
Construction on a site near the convention center could begin as soon as 2014 on the 10,000-seat stadium. Chicago-based DePaul would pay for its share through ticket sales, a naming rights deal, and other sports-related revenues. The team currently plays at a suburban arena.
Emanuel and MPEA officials also said plans are set now for $165 million in renovations to Navy Pier. It’s part of a larger $278 million redevelopment of the top tourist draw that has been in the planning stage for some time.
The projects rely on $115 million in existing bond proceeds and new borrowing and $50 million in funding from The Children’s Museum and private businesses that stand to benefit. The museum located at the pier would undergo a $26 million expansion, new dining space added along with other amenities, fountains, and more park and plaza space.
The convention center entertainment district would house two new hotels. They include a newly announced privately developed 500-room hotel although it’s unclear how soon that project might be undertaken. The authority previously unveiled a proposal to build a $400 million, 1,200-room hotel that it would finance to complement an existing one that serves the convention center.
MPEA chief executive officer Jim Reilly said the arena would help the city better compete with New Orleans, Indianapolis, and Minneapolis. “Most of our competitors have events centers, which allows them to attract a range of shows and conventions that are more difficult for us to attract with competitive pricing. We are fortunate to have a private partner in this venture to share construction and operations costs,” he said.
MPEA said more than $1.2 billion in spending during the construction period is expected to create 7.400 temporary jobs. After its completion, $250 million is expected to be spent in the area supporting 2,500 new jobs.
Hurdles remain for the projects including a legislative change needed to clarify how MPEA bond proceeds are used to finance projects and lawmakers also must extend the life of the TIF district in the convention center area. The arena subsidy also is drawing fire from some like the Chicago Teachers Union, upset by the use of TIF which draws funds from Chicago Public Schools’ coffers.
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.