CHICAGO — The public agency that owns the McCormick Place Convention Center in Chicago joined city and state officials Tuesday to unveil plans for a new, 1,200-room, $400 million hotel to serve the convention center complex.
The new hotel would complement the convention center's existing 800-room hotel, managed by Hyatt Hotels Corp. It is currently undergoing a major renovation and 450-room expansion now underway.
The Metropolitan Pier and Exposition Authority of Illinois made the announcement with Chicago Mayor Rahm Emanuel and Gov. Pat Quinn, both of whom are responsible for appointing members to the authority board.
They billed the hotel as a major economic development project that would create 2,500 construction jobs and 500 permanent jobs and help spur development south of Chicago's downtown.
Officials also touted the competitive boost additional rooms would give McCormick Place as it competes against its chief rivals, Las Vegas and Orlando, for major conventions and trade shows. The new hotel would double the number of rooms adjacent to the convention center and allow the facility to host another 15 mid-market events annually.
"Building a headquarters hotel next to McCormick Place is a major step in taking Chicago's convention and meeting business to the next level," the MPEA's chief executive officer, Jim Reilly, said in a statement. "This is a great demonstration of how McCormick Place will continue to be a powerful economic engine for our region."
The authority did not disclose a detailed financing plan. It will acquire the site and "utilize revenue-based financing during the construction phase" and will later fold the interim financing into its "expansion project debt structure."
The authority would tap additional income generated by the new hotel "to aggressively grow the conventions and meetings business in Chicago." Officials were not immediately available to provide additional details. Construction is expected to begin in 2014 and the project should take two years to complete.
The authority's $2.6 billion of debt carries ratings that range from the single-A category to triple-A based on the level of state support. 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.
The restructuring authorization allows the agency — through a series of deals — to push off final maturities and better match its debt service schedule with tax growth so it doesn't need to tap the state sale tax backup. It also frees up some existing authority tax revenue to help cover operations, and replenish exhausted reserves.
The legislative package also overhauled MetPier's governance and operating structure, including privatizing most convention center operations. The reforms lowered the costs for users of the convention center and eased union work rules, helping stave off the further flight of convention business to more affordable facilities.