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Soldier Field deal in doubt
Like O'Hare plan, it relies on tourism money

By Fran Spielman
Copyright 2001 Chicago Sun-Times, Inc.
Article date: September 21, 2001
 

Two of Mayor Daley's pet projects--the $606 million renovation of Soldier Field and the $6 billion expansion of O'Hare Airport--could be in jeopardy now that last week's terrorist hijackings have thrown the travel and airline industries into financial turmoil.

The threat to the fast-paced Soldier Field project appears to be most immediate. The Illinois Sports Facilities Authority was about to sell $399 million in bonds retired by the same 2 percent hotel tax that financed Comiskey Park.

The deal assumes the tax will continue to grow at an annual rate of 5 percent. If it doesn't, Chicago will make up the difference by allowing the state to withhold a portion of the city's share of state income tax. But occupancy rates have plunged to single-digit levels. In a bond market shaky for even the most routine deals, the question is whether the Soldier Field bonds can be sold.

"It's hard to figure what could be worse now than a deal backed by the tourism industry," said a source familiar with the stadium deal. "It's built on the premise that there's a surplus in the tax above and beyond what's necessary to pay for McCormick Place and Comiskey Park. If the hotel tax is off by 70, 80, 90 percent, you have to worry about whether there's enough money to pay for what already exists, no less something new."

Jerry Blakemore, executive director of the Sports Facilities Authority, noted that Soldier Field bonds already have an insurance commitment and a triple-A rating.

"We feel we have a good deal to present to the market, but the market is going to tell us in the next couple of days. We'll have the market give us an assessment of the entire proposal and then we'll make a decision early next week as to whether and when to go forward with the sale of the bonds," he said.

Gov. Ryan said Thursday he's concerned a travel industry slump that has one major Chicago hotel reporting a 9 percent occupancy rate could affect the stadium financing deal. "Those are certainly things we have to look at if this thing doesn't turn around and if we keep laying off people."

Walter Knorr, the city's chief financial officer, acknowledged the Soldier Field deal is being "reassessed," but he refused to entertain the thought that the Bears' 20-month construction schedule may have to be postponed.

"My answer has got to be more patriotic than finance," Knorr said. "We're going to get this world back together. Business is going to come back. People are going to travel. People are going to be in the hotels and the occupancy is going to come back."

The O'Hare plan is equally shaky, primarily because airlines who are cutting back flights, laying off thousands and pressuring Congress for a multibillion-dollar bail-out are in no position to even think about financing a massive expansion. The precipitous drop-off in air travel also means the city has less ticket tax revenue to cover the cost of an O'Hare overhaul.

"Until we figure out what's going to happen to air travel, and United and American's ability to survive the aftermath of this, it's going to be down on our list of priorities," the official said. "You have to be somewhat optimistic and say we think we'll survive and that demand, although down right now, will someday come back and we still need to fix O'Hare. Do we need all of the mayor's plans?"

Daley argued this week that the current crisis has "nothing to do with" the need to fix O'Hare. "The best, [most] efficient airports have runways that are parallel. They can't cross."

Contributing: Dave McKinney
 

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