The Metropolitan Pier and Exposition Authority is negotiating with a general contractor for the proposed DePaul arena near McCormick Place, but the two sides are struggling with a price tag that has soared to as much as $250 million, about 75 percent more than the original estimate, according to people close to the bidding process.
McPier next week is expected to award a design-build contract for the arena and an adjacent 1,200-room Marriott hotel to a venture led by Bethesda, Md.-based Clark Construction Group, those sources tell Crain's. The cost of the 51-story hotel is expected to be in line with previous estimates, or a total of roughly $400 million.
But a sticking point is the "dug-in" design of the 10,000-seat arena, which places its playing floor well below ground level. That feature has pushed construction costs above the $140 million that McPier and city officials optimistically projected when they announced the project in May 2013, sources said.Joe Cahill of Crain's weighs in and says "McPier should stop chasing rainbows, dump DePaul arena":
But the agency is in no position to chase after rainbows. Despite winning legislative approval to refinance a towering debt burden, McPier remains a financial outpatient. Assets trail liabilities by $1.1 billion, and McPier posted an operating loss of $91.4 million last year. Even after the refinancing, the hotel tax revenues that are supposed to cover McPier's debt service fell short of the mark by about $60 million last year.
The last thing McPier needs is financial responsibility for a money-losing arena. Instead of denying the inevitability of construction cost overruns, the agency should use them as an excuse to avert another fiscal fiasco.
Yes, McPier already has spent $37.8 million buying and clearing land for the arena. But that doesn't make the arena a good investment. Proceeding with construction would only throw good money after bad.
Taxpayers would be better served if McPier were to sell the land to a private real estate developer or set it aside for some future expansion of McCormick Place.
While he might be on to something, it still feels like this project is moving forward.
Maybe they should listen to the wise and influential 90's R&B group TLC who also suggested that we don't "Chase Waterfalls" (which for whatever reason is what we thought of when we read the title of Mr. Cahill's article - sigh):
Don't go chasing waterfalls
Please stick to the rivers and the lakes that you're used to
I know that you're gonna have it your way or nothing at all
But I think you're moving too fast