While the city of Chicago won concessions, including
increased rent, from the group that runs Millennium Park’s restaurant, records
reveal City Hall and the Chicago Park District racked up a final tab of more
than $7 million in legal fees to wage the years-long legal fight over the
restaurant owners’ so-called “sweetheart deal.”
In early August, the city of Chicago and the owners of the
Park Grill restaurant announced they had reached a deal to end the city’s
lawsuit against the restaurateurs, and rewrite some of the terms of the 30-year
contract the Park Grill owners had received from the Park District and the city
to run the restaurant and related concessions in Millennium Park.
Under the deal, the Park Grill group agreed to begin paying base
rent, altering the previous contract which had called for the restaurant to pay
rent out of its profits. The new deal would also require the restaurant group
to begin paying for its own water and natural gas service and for its own trash
removal, which had previously been covered by the city.
All told, the city of Chicago has estimated the new
agreement would bring in an additional $5.7 million for the city over the life
of the contract, when compared to the terms of the previous operating
The Park Grill group has disputed those estimates, however,
saying the city’s numbers are too high. Attorney Stephen Novack, of Novack
& Macey, who represented the Park Grill, said the city’s estimates are
based in part on garbage removal fees paid by the city, a service Novack said
he believed the Park Grill’s owners could obtain for “a fraction” of the cost
paid by the city.
Records supplied by the city and the Park District in
response to Freedom of Information requests from The Cook County Record reveal
taxpayers also picked up a hefty tab to obtain the settlement.
In October, records supplied by the city and Park District
indicated the two entities had spent a combined $6.6 million of public funds to
law firms to handle the litigation.
New records obtained in August now peg the total tab at more
than $7 million.
Records obtained from the Chicago Department of Law, which handles
litigation and other legal matters for the city, showed the city spent more
than $3.37 million on legal fees paid to law firm Barnes & Thornburg LLP from
the beginning of the legal action until July 2016.
Park District records revealed law firm Reed Smith earned
more than $3.28 million from the litigation, as of June 2016. The records
showed the Park District also paid nearly $357,000 to investment banking firm
Stout Risius Ross to supply an “expert witness” for the case.
The legal action had dated back to 2011, after the city sued
the Park Grill owners to attempt to undo the restaurant’s operating agreement, which
city officials characterized as a “sweetheart deal” birthed of insider
relationships and political connections.
In its lawsuit, the city, as the owner of the Millennium
Park’s land, asserted it had never formally signed off on the “unconscionable”
terms of the deal reached in 2002 between the Park Grill owners and the Park
District. The city claimed the deal’s terms were, in part, the result of a
romantic relationship between one of the leading members of the Park Grill
ownership group and a Chicago Park District employee who worked with Park
District officials responsible for negotiating the concession agreement.
The Park District has maintained that official played no
role in negotiating the deal.
In September 2015, a Cook County judge rejected the city’s
arguments, saying the city’s decision to wait until after news reports
concerning the contract and the allegedly improper relationship became public
undercut its contentions about just how bad the deal was.
“Even if the City did not authorize the Concession Agreement
before it was signed, the City ratified the Concession Agreement and now may
not challenge its validity,” wrote Cook County Circuit Judge Moshe Jacobius.
Both sides appealed in the weeks following the ruling,
extending the legal battle several more months. The appeals court never weighed
in on the matter.