Worth a Read: January 2012 Archives
"The County Targets Lollapalooza's Tax Exemption" - WBEZ
By: Jim DeRogatis
January 23, 2012
If the city won't reexamine the boondoggle of a tax break that the Daley administration gave Lollapalooza, even in the midst of an epic budget crisis, the county will.
Cook County Commissioner Bridget Gainer says she has heard from many of her North Side constituents complaining about the negative impact on their businesses caused by Lollapalooza, and its tax break adds insult to injury. "No tax is paid or reported," she says. "It's absurd."
As first noted in the Sun-Times Thursday, Gainer has introduced a measure that would shift the responsibility of determining whether a non-profit group or event qualifies for an exemption from the 1.5 percent county amusement tax from the county revenue director to the board of commissioners. It is co-sponsored by four other commissioners--Earlean Collins, Deborah Sims, Joan Patricia Murphy, and Liz Doody Gorman--and Gainer said several Republican commissioners are likely to lend their support. Although Lollapalooza is very much a for-profit event, it partners to apply for all of its licenses with the non-profit Parkways Foundation, a favorite group of former Mayor Daley and his late wife, Maggie. A long-term sweetheart deal negotiated in part by the festival's attorney and lobbyist, Daley nephew Mark Vanecko, exempts it from paying the 5 percent city amusement tax and the 1.5 percent county amusement tax, as well as the state sales tax levied on every other major event in Chicago--even though the municipal code clearly states that every big concert and sporting event must pay what's owed unless 100 percent of its profits go to charity. Key Lollapalooza beneficiaries: Kevin Killerman, Mark Vanecko, C3 Presents main man Charlie Jones, and Ari Emanuel. Last year, Lollapalooza gave Parkways more than $2 million for park improvements, but its gross revenues were more than $21 million. The county got nothing from the event. The break on the city and county amusement tax saved the festival more than a million dollars, on top of the approximately $1 million city officials say any other group would pay to commandeer Grant Park for more than a month at the height of the summer.
The loss in sales tax could be even more substantial, Gainer said, since local government has no idea what that cut of souvenir, food, and alcohol sales would even be. Parkways applies for the festival's liquor license, but as this blog has reported, actual sales are handled by a corporation co-owned by Texas promoters C3 Presents and local bar owner Kevin Killerman, a client and friend of Vanecko. Gainer knows a lot about how both the Park District and Parkways should work: The energetic young progressive worked for the former as the director of Lakefront Parks until 2001, and she sat on the Parkways board until 2005, including the period when Lollapalooza first came to Chicago.
"This wasn't the way this [the Lollapalooza deal] was supposed to go down," Gainer says. Initially, it was considered a break to bring a speculative venture to Chicago. But Lollapalooza now has proven to be very successful and hardly in need of a benefit that no other major entertainment event is granted. "If you don't need that kind of support to survive, it should be given to someone else... some other cultural event," Gainer says. She and her fellow board members approached the state's attorney about how best to rectify the situation, and Anita Alvarez's office recommended bringing the annual review of the Lollapalooza tax abatement under board control.
County commissioners will vote on the proposal on Feb. 1. Meanwhile, Gainer says Illinois Representative Sara Feigenholtz plans to examine the festival's waiver on the state sales tax. Initially modeled on C3's Austin City Limits festival, Lollapalooza has become one of the most successful and profitable concerts of its kind in the world, and its owners since have expanded to stage similar events in Chile, Brazil, and Australia. Cook County Board President Toni Preckwinkle had no comment on Gainer's initiative last week, and this reporter still is waiting for a response to questions about the county tax break posed to Preckwinkle's spokesperson last August. At that time, after questions about Lollapalooza's tax break were raised by the Sun-Times and this blog and harshly criticized in a strongly worded Tribune editorial, Mayor Rahm Emanuel pledged to ask for an independent review of Lollapalooza's break on the city amusement tax before this year's concert. Emanuel has recused himself from any negotiations with the concert because it is co-owned by C3 and William Morris Endeavor, the Hollywood talent agency run by his brother Ari, many of whose employees made substantial donations during the mayoral campaign. Chicago aldermen Joe Moreno and Scott Waguespack have also called for a new look at Lollapalooza's sweetheart deal. But to date, as services are being slashed, fees and fines increased, and city employees laid off in record numbers, the city council has yet to turn its attention to the substantial revenues that have been waived from the music festival.
"Proposal: Shift Tax Exemption Power for Lollapalooza, Other Events, to County" - Chicago Sun Times
By: Lisa Donovan, Cook County Reporter (ldonovan@suntimes.com)
January 19, 2012
The Cook County Board would have the final say before granting tax exemptions for big-ticket events such as Lollapalooza under a plan introduced this week by County Commissioner Bridget Gainer in response to a report in the Chicago Sun-Times last year.
Currently, County Board President Toni Preckwinkle's revenue director decides whether a group such as a non-profit or event qualifies for an amusement-tax exemption. But if the board approves Gainer's measure that authority would shift, at least on bigger deals, to the board. The measure comes months after the Sun-Times reported the city and county have been granting amusement tax exemptions for Lollapalooza for the last seven years. In 2011, that meant promoters saved $1 million in taxes at the event. Here's how it works: Though Austin, Texas-based Lollapalooza promoter C3 Presents puts on and manages the festival, booking the acts, hiring the vendors, overseeing the entire operation and reaping the profits, the Chicago Park District, which owns Grant Park, doesn't contract directly with C3. Nor does C3 obtain the liquor licenses for the festival. Instead, that's arranged through the Parkways Foundation, the park district's not-for-profit fund-raising arm, which serves as a conduit between the promoters and the district -- an arrangement that cost the county $350,000 in amusement tax revenues last year.
Gainer's proposal -- which fellow commissioners Earlean Collins, Deborah Sims, Joan Patricia Murphy, and Liz Doody Gorman agreed to co-sponsor -- calls for a board vote on any amusement tax exemption in which the county would lose $150,000 or more. The measure, introduced Wednesday, also states: The County Board "may deny the exemption application if it finds that the exemption is not in the best economic interest of the county."
"When we are laying off people at the county who work at the hospital and provide vital services then we have to look carefully at who's getting away with not paying taxes," Gainer said.
Preckwinkle did not immediately comment on the measure. But Gainer did say that the revenue director and the state's attorney's office were consulted in crafting the measure. The proposal could come up for a vote as early as Feb. 1. Mayor Rahm Emanuel has said he would ask the City Council to appoint a "third-party, independent" negotiator to broker talks with Lollapalooza and determine whether to eliminate the music festival's multi-million dollar amusement tax exemption. The hands-off stance is necessitated by the involvement of Emanuel's brother, Hollywood super-agent Ari Emanuel. Ari Emanuel is the CEO of William Morris Endeavor, which co-owns Lollapalooza.
Copyright © 2012 -- Sun-Times Media, LLC
"Feds Look Dispose of Vacant Property Ordinance Quickly" - Chicago Tribune
By Mary Ellen Podmolik, Tribune reporter (mepodmolik@tribune.com)
January 18, 2012
The Federal Housing Finance Agency is seeking a summary judgment in its case against Chicago's vacant building ordinance before the city even files a response to the lawsuit.
The FHFA, which oversees Fannie Mae and Freddie Mac, filed suit against Chicago last month, claiming that federal law prohibits the ordinance from being imposed on the regulator. The suit seeks to exempt all Fannie Mae and Freddie Mac-owned mortgages from the ordinance, a number that tops 250,000 within the city. In a court filing the FHFA made last week in support of a ruling in its favor without a trial, it also noted that in addition to those mortgages it owns, it guarantees another 750,000 loans in Chicago.
The city's ordinance, passed in November, requires mortgage lenders and loan servicers to pay to register and maintain vacant properties during the foreclosure process, before the properties have legally changed ownership. Cook County subsequently passed a similar ordinance for unincorporated areas of the county and any municipality that chooses to participate. The government argues that the city's ordinance creates a legal liability for the FHFA, that the registration fees required in the ordinance are, in fact, taxes, and that following the ordinance would interfere with the agency's mandate to conserve assets and reduce taxpayer costs. It also noted that if the FHFA must observe the ordinance, it opens the door to 50 states and 60,000 communities to impose similar requirements.
The two sides are expected to appear in court Thursday. Neither responded to phone calls Wednesday for comment. The city, which did not have to file a response to the suit for another month, agreed to move up the court date but has opposed FHFA's request for summary judgment. " It is premature and inappropriate to rush this very important case to summary judgment at this early juncture," the city said in a court filing Tuesday. A ruling against the city will have implications far more reaching that the city's borders. Other municipalities nationally have taken similar actions to help care for the growing number of vacant, dilapidated homes in neighborhoods.
The FHFA "is living in Washington, far away from the reality of what's happening," said Cook County Commissioner Bridget Gainer, D-Chicago, who sponsored the county ordinance. "You give total impunity to the bad actors in the market."
Copyright © 2012, Chicago Tribune
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