The Chicagoist will be launching later but in the meantime please enjoy our archives.

Proposed DePaul Arena Is Already A Financial Sinkhole

By Chuck Sudo in News on Nov 19, 2014 5:35PM

Rendering of the exterior of the proposed DePaul University basketball arena.(Pelli Clarke Pelli Architects)

Critics of the proposed arena that would, among other things, serve as the new home for DePaul University’s men’s basketball team said the Emanuel administration was overly optimistic the project would cost $173 million, would break even in its first year of operation and net $1 million in profit by its fifth year. It appears they may be correct.

Crain’s Chicago Business sports business reporter Danny Ecker writes about negotiations between the Metropolitan Pier and Exposition Authority and a contractor over the already escalating costs to build the arena according to the designs created by Pelli Clarke Pelli Architects. Sources tell Ecker McPier is set to award a contract next week to build the arena and an adjacent 1,200-room hotel to a group led by Connecticut-based Clark Construction Group. But the two sides are having problems keeping the costs for the arena’s construction in check.

Currently, the price tag is at $250 million and Clark hasn’t even broken ground on the site. Part of the problem, those sources tell Ecker, is the recessed design of the arena, where the basketball court is expected to be located below street level. Neighborhood groups like the Prairie District Neighborhood Alliance tell Ecker one of the reasons the arena was approved was because the design ensured the arena would not be a “monstrous building that's going to overwhelm the neighborhood.”

Keep in mind Emanuel insisted the arena, which will officially be known as the McCormick Place Event Center, was a linchpin of the tourism and trade show plan to rehab McCormick Place and Navy Pier. With the costs now 75 percent above projections both McPier and DePaul are looking for other financing, and design adjustments are being considered that would lower the construction costs. Below ground construction is expensive especially around McCormick Place where the soil is especially soft and needs to be buttressed. Bob Schock, President of Case Foundation in Roselle, told Ecker.

“This neighborhood has a deposit of glacial clay (such that) you can't dig a hole more than 4 to 5 feet without having to shore it" with elements such as a concrete wall.

DePaul has committed $70 million to build the arena. The Emanuel administration has promised $70 million in funding from the city’s hotel-motel tax and another $55 million in tax increment financing. In addition to the cost overruns, the project is already marred by business and political clout.

Hedge Fund Owned By Emanuel's Top Campaign Donor Stands To Profit Off DePaul Arena Deal