Wednesday, February 01, 2012

Time to talk about the Park Grille again

The Stocks & Jocks show was talking about Park Grille’s unbelievable deal cut with the Park District on Tuesday (31 January 2012) so some of us did some research, originally to refresh our memories but it’s even worse than we recalled. It involves a son of Vrdolyak, Maggie Daley’s After School Matters, Michael Shakman, the Archdiocese of Chicago, 19th Ward, and the CTA, and others you’ll have to read about. Things that you knew, but perhaps forgot some of the details over time.

Chicago Sun-Times, City puts heat on clout-heavy café

Originally run February 11, 2005. Every sentence is an indictment of the process behind the O’Malleys winning the Park Grille deal. It starts off with this:

The Chicago Park District awarded a 20-year lease to run the swanky restaurant at Millennium Park to a businessman who got a top Park District official* pregnant during negotiations, the Chicago Sun-Times has learned.
*Laura Foxgrover

Then there’s this:
*The Park Grill, which opened 16 months ago, hasn't had to pay any property taxes. The Park District has failed to take the required steps to generate a tax bill for the restaurant. Businesses on public land must pay property taxes.
--As noted in a Chicago Reader follow-up, the Park Grille won its battle not to pay property taxes. See further below.

*The Park Grill, as part of its deal with the Park District, gets free water, gas and garbage pickup. The garbage pickup costs taxpayers about $245,000 annually.

*The restaurant's rent is tied to its gross sales.

*O'Malley and Foxgrover grew up in the Southwest Side's powerful 19th Ward and have political connections.

*O'Malley also has been a business partner with the son of power broker and former Ald. Edward R. Vrdolyak.

*Foxgrover is the daughter of former Cook County Circuit Judge Paul Foxgrover. The judge pleaded guilty in 1992 to stealing more than $25,000 in court fines and restitution and was sentenced to six years in prison.

*O'Malley's partner in Park Grill is James Horan, a respected restaurant owner and caterer who runs Blue Plate Catering. Blue Plate runs a cafe at Gallery 37, an after-school program created and fostered by Mayor Daley's wife, Maggie Daley.
--The same After School Matters that companies doing business with the city TIF funds had to kick back some of it to Maggie’s scam.

The Chicago Reader followed up on this in December 2011:
*O'Malley and his partner James Horan "agreed to pay the Park District an annual minimum fee of $275,000," Joravsky wrote. "But in exchange for the Park Grill paying all the build-out costs, the Park District agreed to waive the fee until the 15th anniversary of the contract's start date or until the Park Grill makes $3 million (net) or half its construction costs, whichever's less."

*After the scandal(s) came out, the city sent O'Malley a letter asserting that the land beneath the restaurant was owned by the city. Because of that, the city should have been party to the deal. It wasn't, so as Fran Spielman reported in Friday's Sun-Times story, the letter asserted that the "20-year concession agreement 'does not authorize your occupation of the Park Grill facilities.'"

*This is far from a first for Park Grill with respect to litigation. After news of the deal broke, Mayor Daley demanded that his aides renegotiate the settlement. As Spielman says, “those negotiations went nowhere.” Meanwhile, another perk had emerged. As Joravsky explained in 2005’s "The Poor, Poor Park Grill," the restaurant had been exempted from paying property taxes. Then-Cook County assessor James Houlihan took issue with this, and informed O’Malley and Horan that they’d be billed for 2004. In August 2005 the pair filed a lawsuit against Houlihan, arguing that they had a concession agreement rather than a lease, hence were not subject to property taxes. The case went all the way to the Illinois Supreme Court, which last December ruled in the restaurant’s favor on the grounds that its contract with the Park District was a license rather than a lease.

*There’s an additional irony. O’Malley’s backers included Daley cronies Fred Barbara and Tim Degnan. Defending the Park Grill on Friday was Michael Shakman, whose own lawsuit led to the anti-patronage Shakman decree.

And for a primer on how to make money on real estate in a down market, look to aforementioned Matthew O’Malley. Chicago Real Estate Daily reports in January 2010:

*The archdiocese bought property for the school in 2008 from a venture managed by Matthew O'Malley, whose Mainstay Hospitality LLC runs well-known Chicago Firehouse restaurant, Grace O'Malley's Restaurant & Pub and Wabash Tap, all near the church, according to the Cook County Recorder.

*Mr. O'Malley's venture sold for $2.4 million, after paying $1.35 million for it in 2005, property records.

But wait, there’s more we can learn from Matthew O’Malley. His girlfriend/friend Colleen Flaherty opened Tiny Lounge off the Addison Brown Line stop ca. 2001, but was sold for a significant profit to the CTA for the Addison station expansion project in 2006.
*Note: It relocated to Lincoln Square.

A little additional information on Colleen Flaherty, courtesy of Chicago Tribune:
Flaherty, who grew up on the Southwest Side, the youngest of seven,
*Note: That would be the Chicago Ridge.

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