It appears a controversial state proposal for a 1-percent sales-tax increase that would affect Chicago neighborhood restaurants and bars is dead, at least until the fall. Springfield lawmakers were considering the hike to pay for renovations at McCormick Place Convention Center, to help the venue compete for events against cities like Orlando, Atlanta, and Las Vegas. The bill, introduced Tuesday, was gaining momentum until Thursday afternoon when Chicago Mayor Lori Lightfoot spoke out against the increase.
The bill sailed through the Springfield senate earlier this week, setting up a house vote for Friday night. But after Lightfoot’s remarks it looks like that won’t happen, according to Capital Fax. Downtown restaurants have been assessed the 1-percent tax since 1995 with the feeling that conventions bring business to restaurants closer to McCormick Place, an area known for sparse dining options. The plan proposes to extend the taxable borders to areas as far as 10 miles from McCormick. That would include neighborhoods where many trendy restaurants reside like Lakeview, Wicker Park, and Logan Square. Metropolitan Pier & Exposition Authority (McPier) runs the convention center. CEO Lori Healey argued that more and more convention goers were eschewing downtown restaurants and visiting restaurants in other neighborhoods. In an interview with Crain’s, Healey called it a “modest” tax.
The Illinois Restaurant Association didn’t take a stance on the tax hike. While association President Sam Toia wants lawmakers to consider the feelings of restaurant owners in Wicker Park, Lakeview, and Logan Square, he also recognizes the importance of maintaining McCormick Place. He feels conventions are an important economic engine for the city. At the same time, the bill was filed only on Tuesday. Many of the city’s bar and restaurant owners weren’t even aware that the hike was on the table. The restaurant association has increased communication between McPier, Choose Chicago, and local restaurant members. Many Chicagoans are also frustrated that Springfield lawmakers were deciding on something that affects city restaurant owners.
“We want to make sure everyone is seated at the table,” Toia said.
The association works closely with the city’s tourism bureau, Choose Chicago. Having a pristine convention center is a priority for Choose Chicago as that’s a big tourism draw. There are many conflicts of interest to note. The National Restaurant Association convention takes place annually at McCormick Place. Another aspect of the bill that angered restaurant owners was that sports stadiums, including the United Center and Wrigley Field, would be exempt from the increase. One industry insider wondered what lobbyist connections the owners of the Chicago Blackhawks (the Wirtz family) and the Chicago Cubs (the Ricketts family) had to get that in writing.
While the bill’s proponents argued that the tax would only make consumers pay more, many restaurant owners didn’t buy that explanation. It’s a competitive market with many restaurants closing due to increased costs, and customers — especially in neighborhoods aways from downtown — complain that menu prices are too pricey for their areas. Examples of this include the Radler (a German restaurant that switched its focus to beer) and Trench (a closed restaurant that tried to reinvent it to go more casual) in Wicker Park.
The new taxable district would include restaurants and bars on Irving Park Road to the north to 55th Street to the south, and toward Lake Michigan on the east. Western Avenue would be the western boundary to Irving Park Road and then south to Pershing Road. Then east to the Dan Ryan Expressway, south to 51st Street, east to Cottage Grove Avenue, and south to 55th Street.
Chicagoan Scott Goldstein invests in restaurants include Daisies in Logan Square and the upcoming rooftop patio on top of Second City in Old Town. He said it would make sense to tax customers in Old Town, but not in other areas of the city.
“The margins are already razor thin, especially for neighborhood restaurants, including ones that are trying to pay their employees fair wages,” he said.
Goldstein added when talking about Daisies: “We are a small restaurant — we are not seating big convention groups. I don’t see people taking a 35-minute cab or Uber ride to Logan Square.”
Many restaurant owners contacted didn’t even know that Springfield lawmakers were considering this action. As Chicago’s population shrinks, Jesse Fakhoury, of Lola’s Coney Island in Humboldt Park, wondered if legislation like this tax hike — regulations that he said unfairly affect small businesses — were reasons people moved to other states.
“No company is probably bringing clients to have dinner at Lola’s while there is a convention going on,” Fakhoury said. “It’s a total unfair assessment and there is no way to monitor it.”
Healey, via a spokesperson, didn’t return requests for comment. Lawmakers may get a chance to vote for the tax in the fall if the bill is refiled.