City of Chicago plan revealed for public funding of private, DePaul University stadium

by Brian Costin

Maybe you haven’t heard yet, but city of Chicago leaders have unveiled a plan to fund a new stadium for DePaul University – a private school.

You may also not have heard of Chicago’s Metropolitan Pier and Exposition Authority, or McPier, but chances are if you have ever been to Chicago you’ve probably paid taxes related to this government body.

McPier taxes include:

  • 1 percent tax on restaurant sales in downtown Chicago district
  • 2.5 percent tax on hotel and motel rooms in Chicago
  • 6 percent tax on auto rentals in Cook County
  • $4 minimum taxi/livery airport departure tax
  • Up to a $54 per bus/van per vehicle airport departure tax

These taxes help pay for entertainment and restaurant facilities located along Chicago’s lakefront, at McCormick Place and Navy Pier.

That may soon expand to include the new, publicly financed sports stadium for DePaul University – the city’s proposal includes paying for the stadium with a combination of McPier hotel taxes and TIF district tax revenues.

According to a report in the Chicago Sun-Times, a new DePaul basketball arena would be largely funded by taxpayers:

The tentative plan is for a “shared burden” of resources: $55 million from the surrounding TIF; $70 million from DePaul, the nation’s largest Catholic university, and $70 million from a McPier Bond fund, which has resources left over from a 2010 restructuring. McCormick Place bonds are backed by local hotel and motel taxes.

The DePaul Blue Demons’ men’s and women’s basketball teams, which would be relocated from the Allstate Arena in Rosemont, have an average of 36 home games per year. For the other 300-plus days a year, the new Chicago arena would be directly competing with many other large venues across the Chicago area for sporting events, concerts and more.

Chicago has a long-running history with subsidizing entertainment facilities:

  • The United Center, home to the Bulls and the Blackhawks, was privately financed, but the building has a special property tax break that saves the clubs millions in property taxes.
  • The Chicago White Sox’s Cellular Field, which opened in 1991, cost taxpayers $125 million to build and is owned by the ISFA. Enhancements pushed those costs to more than $200 million, plus interest. The White Sox paid no rent until 2008, and rent payments fall way short of paying the bonds off annually. Since the club doesn’t own the facility it pays no property taxes.

It isn’t clear that there’s enough business to go around for everyone. The Chicago area has many stadiums, and most require large public subsidies to stay afloat. Stadiums receiving taxpayer subsidies in the suburbs include the Chicagoland Speedway in Joliet, Toyota Park in Bridgeview and the Sears Centre in Hoffman Estates.

The stadiums in Hoffman Estates and Bridgeview in particular have had serious struggles in attracting enough business to meet financial projections. Additional competition could be harmful to other stadiums and the taxpayers who support them.

Chicago-area taxpayers shouldn’t be viewed as an ATM for professional sports and private universities. Instead of expanding sports and entertainment subsidies, the DePaul stadium deal should be nixed, or at least privately financed by those who stand to profit off it.

autor
Illinois Policy Institute | Administrator