IV. Jurisdiction Surveys

G. Chicago

1. Metropolitan Pier and Exposition Authority

The Metropolitan Fair and Exposition Authority was created within metropolitan Cook County, Illinois, in 1955. See The Official Statement of the Metropolitan Pier and Exposition Authority (OS), 1999, 32. In 1991, it was renamed the Metropolitan Pier and Exposition Authority (the Authority). See id. The Metropolitan Pier and Exposition Authority Act (Act), adopted in 1992, further refined and defined the Authority’s purpose, powers and duties. See Act, 1. The Authority is “a political subdivision, unit of local government with only those powers authorized by law, body politic and municipal corporation.” Act, 13. Its formation allows it to sue and be sued, but the Authority’s real property cannot be impacted by such suits. See id. [A lot of analysis of the Authority’s functions and powers appear to have been decided in Chicago Acorn v. Metropolitan Pier and Exposition Authority, N.D. Ill, 1996, 941 F.Supp 692.]

The Authority must “promote, operate, and maintain fairs, expositions, meetings, and conventions” within the metropolitan area. Act, 16. It must arrange, finance, equip, operate and maintain grounds, buildings and facilities for these events. See id. The Authority operates and maintains McCormick Place, a trade fair and convention center on Lake Shore Drive; Navy Pier, at Lake Shore Drive and Grand Avenue on Lake Michigan; and an 800-room hotel and parking garage connected to McCormick Place. See OS, 1.

McCormick Place is the largest exhibition and meeting center in North America. See OS, 33. In 1991, to preserve McCormick Place’s market share in trades shows and meetings, Illinois created the Expansion Project. See OS, 34. Money was used to acquire land, design and construct a new facility, remodel an old facility, construct a concourse connecting the facilities and hotel, and design and construct offsite infrastructure improvements. See id.

The Authority also develops, promotes and maintains Navy Pier, a historic landmark. See Act, 18 and OS, 33. The city of Chicago formerly owned Navy Pier, but it transferred the pier to the Authority in 1989. The state of Illinois provided a grant of $150 million to help the Authority conduct structural repairs, renovations and redevelopment. See OS, 34. The pier now operates as a cultural and commercial area for shops, restaurants and recreation areas, and in 1998, more than 8 million people visited it. See Act, 15 and OS, 34. Tenant spaces are fully leased, with plans for a Fall 1999 completion of a Shakespearean Theatre. See OS, 35. Any charges collected from running Navy Pier will be used to defray the Authority’s expenses and to pay the principal and interest upon any revenue bonds issued by the Authority.

The Authority also has Capital Improvement Projects for all its properties, which it hopes to continue to fund with its Series 1999 Bonds. See OS, 35. These projects include parking facilities, a dedicated bus lane along a railroad right of way, and hopes for a marina at Navy Pier. See id.

2. Property Acquisition

The Authority can exercise the right of eminent domain through condemnation proceedings for property, with the property only to be used in relation to this Act. See Act, 19. The compensation can be through money; substitute property; interests in other property; or leases, licenses or concessions of Authority property. See id. The Authority must plan for relocating any businesses displaced by condemnation, and must try to relocate them within McCormick Place first and the City of Chicago second. See id. The City of Chicago has the right of first refusal for the sale of any property, other than substitute property, by the Authority. See id.

3. Funding for the Authority

The Act provides the Authority with several methods of saving and making money. For example, all Authority property is exempt from state taxes. See Act, 23. Other funds may be gained through grants, loans and appropriations from any governmental agency and from revenue bonds and notes. See Act, 27. The Authority also receives money from the Fair and Exposition Fund of the Illinois Department of Agriculture, taking over all contracts and commitments made by the Chicago Park Fair Corporation. See Act, 18. It may execute and deliver trust agreements to secure payment of bonds so long as it does not create any liens against Authority real property. See Act, 31. It can issue refunding or advance refunding bonds to refund any then outstanding bonds or notes issued under the provisions of the Act. See Act, 33. The proceeds of the bonds are to be put in a trust that will pay the interest and principal of any outstanding bonds. See Act, 34. The Authority can also use these proceeds to reimburse its construction fund. See id. These bonds remain the duty of the Authority; they cannot become a responsibility of the state or any other political entity. See Act, 36, 37. However, any political entities, including the state, can buy into and invest in the Authority’s bonds. See Act, 38.

Bonds secured by the McCormick Place Expansion Project can be issued for the Authority to use in maintaining, expanding and renovating all its properties. See OS, 2. The aggregate, principal amount (excluding refunding bonds and notes) is limited to $1,307,000,000. See id. All of the Authority’s properties are interconnected in this manner.

For example, the Act enables two sources of funds to pay for the debts of the Authority: Authority Taxes and State Sales Tax Deposits. See OS, 4. Although the Authority does not pay state taxes on its property, it can levy several taxes of its own. It accumulates funds from taxes on food and drink vendors, hotels, car rentals, and taxi and livery services from the municipal airports. The State Sales Tax will only be used to pay the required balance and interest on debt services that were not met by the Authority Taxes. See OS, 5.

4. Authority Taxes

The Authority imposes a Metropolitan Pier and Exposition Authority Retailers’ Occupation Tax on food and beverage vendors within the central business area of Chicago, within the O’Hare and Midway airports, and those on watercraft leaving and returning to the Lake Michigan shore, piers and docks. See Act, 39 and OS, 12. This is a 1 percent tax on the gross receipts of the sale of all food and drink. See Act, 39. Vendors may list the tax as part of the amount required of them by the State Use Tax Act, granting them a 1.75percent reduction/refund of their payment on the latter tax. See id.

Another tax levied by the Authority is the Hotel Operators’ Occupation Tax of 2.5 percent of gross receipts from the leasing, renting and letting of hotel rooms to non-permanent residents of the hotel. See Act, 41. Hotel operators get a discount of 2.1 percent or $25 per calendar year (whichever is greater) from municipal taxes and the tax under the Illinois Sports Facilities Authority Act. See Act, 42.

Car rental companies in the metropolitan area also pay taxes toward the Authority. See Act, 43. They pay 6 percent of their gross receipts, unless they rent cars for taxis. See id. They get refunds from their payments of the Automobile Renting Occupation and Use Tax Act. See id. Companies that rent cars that are used within Cook County but are rented outside Illinois may also be taxed 6 percent of their gross receipts. See OS, 13.

The Authority levies an Airport Departure Tax on all but governmental agencies providing ground transportation from the airport. See Act, 45. The rates are: $2 per cab or any other automobile for hire; $9 per bus or van that can hold up to 12 passengers; $18 per bus holding between 13 and 24 passengers; $27 per bus capable of holding more than 24 people; and $1 per passenger in any vehicle regulated by the Interstate or Illinois Commerce Commissions. See id.

All such tax-collected funds go in a trust fund separate from the State Treasury. See Act, 46. The state treasurer will use the funds first to pay tax refunds. See id. The rest will incrementally be used to pay for the McCormick Place Expansion Project Fund. See id. The balance remains in the trust fund. See id. Every July 20, the treasurer calculates the previous year’s surplus revenues and gives them to the Authority. See id. The Authority can use this money to pay off bonds or notes; repair, replace or improve its properties; and everything in excess of $50,000,000 held by the Authority by the next June 30 must be used to pay the debt or early redemption on bonds. See id. After the debt has been cleared, all remaining funds will stay with the Authority, and the Authority will no longer levy taxes. See id.

5. State Sales Tax Deposits

The Illinois state sales tax, as of 1999, was 6.25 percent. See OS, 15. Five percent of that stays in state government (1.25 percent goes to local governments), and of that 5 percent, a portion goes to the Authority. See id. 1.75 percent is transferred to a separate fund in the State Treasury for the Authority’s payment of debt service on the $314,115,000 principal amount of Dedicated State Tax Revenue Bonds. See OS, 16.

Again, this fund is only used if the funds from the Authority Taxes do not meet the payment requirements of the annual debt service. Once the debts are completely paid, the fund will be dissolved. Since the state just issued Series 1999 bonds, however, the forecasted end of the debt continues to be pushed back.

6. Series 1999 Bonds

These bonds will be used to finance the Expansion Projects at both the McCormick Place and Navy Pier, and to repay the bank loan and refund bonds. (The bank loan was used for additional parking at Navy Pier and the acquisition of a parking garage for McCormick Place.) See OS, 27. The total proceeds from this new series of bonds are $442,214,177. See OS, 27.

7. The Board

The Authority’s 13-member board may have no members of any other state board, any local government or any school district. See Act, 59. Members receive no pay, but get reimbursed for actual expenses pertaining to their duties. See id. The governor appoints (with consent from the state senate) six members, and Chicago’s mayor appoints six members as well as (with consent from the governor) one member who is the chair. See id. Members serve for five years. See id. Meetings must be held at least once a month, and all meetings must be public. See Act, 62-63.

No board member, officer or employee of the Authority may be connected in any way with another trust, corporation, partnership or association that does any work of or for the Authority. See Act, 86. This requirement continues for two years after one leaves the board or trustee positions. See id. Exceptions are listed on page 87. Violations are considered felonies. See Act, 87.

The governor also appoints, with the mayor’s approval, a chief executive officer of the Authority, who is controlled by the board. See Act, 67. The executive officer is responsible for management of all properties and employees of the Authority, and directs enforcement of all Authority rules. See id. The board may also appoint general managers of the separate facilities, such as Navy Pier and McCormick Place. See id.

Most contracts entered into by the Authority are publicly advertised and up for bid. See Act, 76. Contracts for lease or sale of Authority property that are worth more than $5,000 are given to the highest bidder, and construction contracts worth more than $5,000 are given to the lowest bidder. See id. Contracts worth less than $5,000 are also opened to bidding whenever possible. See id.