The following is a detailed breakout of the contents of Senate Bill 28 as it passed the Illinois General Assembly. This legislation is an extensive reform of the Chicago convention industry aimed at solving the problems with a comprehensive and long-term approach.
I Authority Trustee: Jim Reilly Named Trustee
The Trustee, named in the legislation as James Reilly, has the power and duties for 18 months of the MPEA Board and CEO and he runs the day-to-day operations of the Authority. He assumes the role on the effective date of the Act and serves until the new Board appoints a new CEO.
Special duties include:
entering into a private management contract to run McCormick Place;
entering into a marketing agreement with CCTB;
recommending whether to separate Navy Pier from McCormick Place or some other change in governance;
enforcing exhibitor rights;
submitting monthly reports to the Interim board;
making decisions regarding work rules in consultation with an Advisory Council.
II 7-Member Interim Board: 18-Month Term With Power To Veto Any Action Of The Trustee
Mayor appoints 3, Governor appoints 3 with advice and consent of Senate, members select a seventh member to serve as Chair; at least 1 board member must be from labor and 1 must have convention industry experience. They have the power to veto any action of the Trustee by a 5/7 vote, so long as Board takes action within 30 days of receiving monthly report detailing action. The Trustee must notify Interim Board prior to entering into a contract for 24 months or more or one with a value of $100,000 or more and the Board has 10 days to reject it. Terms of current MPEA Interim Board members expire on the effective date of the bill. New members, except Chair, must be appointed within 30 days and they serve an 18 month term. Members of any previous MPEA Boards are not permitted to be appointed.
III 9-Member Board: Assumes Operation Of Authority After 18 Month Period
The post Trustee MPEA Board comes into being at the end of the 18 month period. The Mayor appoints 4 members, the Governor appoints 4 with advice and consent of Senate, and the members of the Board select a seventh to serve as Chair. Again, at least 1 member must be from labor and 1 must have convention industry experience. Members of any previous MPEA Boards are not permitted to be appointed (this does not apply to the interim board members serving during the 18th month Trusteeship). The terms are staggered 4-year terms and the Board is created on the first Monday after the 18th month. The Trustee remains in control until the full Board is constituted and CEO is appointed. The new Board must hire a CEO to run day-to-day operations and the CEO reports to the Board.
IV Role Of The CCTB: Authority Enters Into Marketing Contract
The bill provides that the Authority enters into marketing agreement with CCTB, provided the organization amends it bylaws to reflect a governance structure laid out in the law. This would be a 25-member Board of Directors with members serving 3-year staggered terms with a two-term limit. The Chair would be appointed by the Mayor from among the business and civic leaders of Chicago who are not engaged in the hospitality business. The MPEA Board Chair or designee is an automatic member (and also serves on the Executive Committee). Of the remaining 23 members, no more than 5 members may be from the hotel industry; no more than 2 members may be from the restaurant and attractions industry, no more than 2 members from the trade show industry and no more than 2 members from unions. In addition, the Director of the Illinois Department of Commerce and Economic Opportunity serves as ex-officio, non-voting member of the Board. Furthermore, members cannot have a conflict of interest with MPEA. The Chair selects an Executive Committee of 5-9 members (includes MPEA Chair).
Once CCTB enters into a marketing agreement with MPEA, it receives 75% of the proceeds from increasing the Chicago airport departure fee on taxis, limos and charter buses. This is estimated to be between $4.6 million and $5.4 million annually, more as O’Hare and Midway expand capacity.
V Ethics Provisions
Trustee, Interim Board members, Board members, MPEA employees, and their spouses or immediate family members, must abide by the Governmental Ethics Act (including filing of statements of economic disclosure). They are prohibited from using their position for personal or financial gain, accepting any gifts for personal use (does not include travel covered for work reasons), holding or pursuing employment or office that may conflict with official duties, and having a financial interest, directly or indirectly, with a party to a contract. A revolving door prohibition for trustee, board members and employees is instituted whereby they cannot accept employment or compensation for services from person or business if the trustee, member, employee participated personally or substantially in the award of a contract or in making a licensing decisions. The bill prohibits the Authority from entering into a consulting contract with the current CEO, Interim Board members, or future Board members. Finally, the Authority must develop an annual ethics program.
VI Exhibitor Rights: Establishes “House Rules” For Exhibitors And Labor
Booths - Any exhibitor on Authority premises shall be permitted to do the following:
Exhibitor and exhibitor's employees are permitted in a booth of any size, the use of a ladder and hand tools to (i) set up and dismantle exhibits on Authority premises; (ii) assemble and disassemble materials, machinery, or equipment; or (iii) install signs, props, ballots, other decorative items.
Exhibitor and exhibitor's employees are permitted in a booth of any size to (i) deliver, plug-in, connect, operate electrical equipment, computers, audio-visual devices; (ii) re-position or re-skid items in their booth; (iii) unload and load materials from a privately owned car with the use of a dolly or non-motorized hand cart.
Labor Costs - A contractor or show manager may only charge an exhibitor for labor services as follows:
Monday - Friday: Straight-time for consecutive 8-hour period between 6am-10pm, with straight-time and a half each hour after 8-hour period; double-time for work between midnight and 6am.
Saturday: Straight-time and a half for consecutive 8-hour period, with double straight-time for each hour after 8-hour period; double-time for work between midnight and 6am.
Sunday and State/Federal Holidays: Double straight-time for any hours worked.
“Reasonable markup” is allowed.
May only charge in 30 minute increments.
Electrical Services - Show managers may retain an electrical contractor of their choice, provided the entity is approved by the Authority. If show manager uses the Authority’s electrical contractor (FOCUS One or its successor) the Authority must offer the services at a rate not to exceed the costs of providing the service.
Food – The Authority must offer the services at a rate not to exceed the costs of providing the service and exhibitors may bring in food or beverage for personal consumption.
VII Work Jurisdiction: Establishes Advisory Council
To reduce confusion and increased costs, the Authority has power to establish work jurisdiction and the scope of work of union employees. Authority consults with the newly created Advisory Council and makes the determination. Determination is made after considering, in their totality and not in isolation, the following factors: the training and skills required to perform the task, past practices on Authority premises, safety, and the need for efficiency, and exhibitor satisfaction. Any disputes between labor and the Authority is subject to binding arbitration.
All stewards of unions must be working stewards, with no more than 1 per labor organization per building per show. No more than 2 man-crews. An exhibitor or show manager may “call by name” specific union employees.
VIII Audits
Authority must hire entity approved by the State’s Auditor General to conduct audits, at least 2 per calendar year, to ensure the reforms have resulted in cost reductions for exhibitors and that those costs have been passed on to exhibitors. If findings demonstrate an entity has not passed on the savings, the Authority has the ability to ban entities from doing business on Authority grounds (this should only be used in extreme cases).
IX Authority Finance: Debt Refinancing. Capital Improvements and Operational Support
The bill provides the Authority with $80 million in operating support to replace revenues from electrical, plumbing and food services. This support occurs over a 4-year period and is delivered in increments of $20 million each year - transmitted to the Authority as “surplus revenue”. Current law provides that Authority‘s “surplus revenue” is dedicated to either (a) debt service or (b) capital improvements. This bill provides that “surplus revenues” may be used for operations of the Authority in FY 2011-2015 in an amount not to exceed $20 million annually or $80 million in total. Some of this money is achieved through actual revenue surplusses ($25 million) and the rest is achieved by postponing repayment of the Authority's current delinquent balance for past draws against GRF ($55 million) until July 20, 2015. After July 20, 2015, any Authority “surplus revenues” shall be reduced by 50% to repay the $55 million in past draws from the State’s General Revenue Fund.
This approach will also alllow replenishment of the Authority's depleted Reserve Fund, while avoiding egregious pressure on the Authority by temporarily reseting the Authority's mandatory Reserve Fund account balance, $30 million under current law to $15 million in 2011. Balances will return to $30 million in 2012.
The bill authorizes the Authority to sell naming rights for McCormick Place with 75% of the revenues from any sale(s) being applied to Authority‘s debt service and 25% as revenue to the Authority:
Through refinancing of the current MPEA debt, the Authority will have the ability to improve its infrastructure and secure sustainable revenues by raise $450 million in new money. The Authority's initial project outline prioritizes new capital expenditures for a) hotel expansion, b) Lakeside Center (East Building) improvements, and c) Navy Pier (Festival Hall and Skyline Stage) improvements.
To pay for the refinancing, the bill extends by 18 years the Authority levied taxes to Fiscal Year 2060. Current law sunsets these taxes and deposits in 2042, corresponding with the retirement of the Expansion debt. Extending these collections 18 years beyond the retirement of the current debt allows for collateral against which new bonding may occur. Present MPEA taxes are a 1% on prepared food and beverage in a specified district, 2.5% city hotel tax, 6% Cook County auto rental tax, and a departure fee at O'Hare and Midway.
Download Senate Bill 28:
Download Enrolled Senate Bill 28
House of Representatives Roll Call Vote:
http://www.ilga.gov/legislation/votehistory/96/house/09600SB0028_05062010_029000T.pdf
Senate Roll Call Vote:
http://www.ilga.gov/legislation/votehistory/96/senate/09600SB0028_05072010_002001C.pdf
