Park Grill, City Hall reach deal to end years-long court fight over 'sweetheart' contract

By Jonathan Bilyk | Aug 5, 2016

The city of Chicago and the owners of the Park Grill restaurant in Millennium Park have reached a settlement to end the years-long legal saga cutting across Chicago’s culture of politics and clout.

Stephen Novack, attorney with the firm of Novack & Macey, which represented the restaurant’s ownership group, said the deal would rewrite some of the terms of the 30-year contract the restaurant group had received from the city and the Chicago Park District to operate the “white tablecloth” establishment and related concessions in Chicago’s premier public park.

Under the terms of the deal, the Park Grill group has agreed to begin picking up the tab for its own water and natural gas service, as well as for trash removal, all of which had been provided free of charge under the original contract terms. Novack said the deal also would allow the Park Grill to select its own trash removal contractor, which he said would allow the restaurant to reduce the amount spent on the service to "a fraction" of what the city had been paying through its vendor.

Additionally, the Park Grill agreed to begin paying “base rent,” Novack said, rather than paying annual fees based on a percentage of the restaurant’s net revenues under the current contract terms. Novack did not immediately specify how much the restaurant’s owners would pay in “base rent.”

Novack said the deal was very similar to what the Park Grill owners had offered to the city years ago, before City Hall first filed its lawsuit in Cook County Circuit Court.

“In fact, my clients offered the City essentially what it is getting in settlement before the City filed its lawsuit and before the City and Park District incurred millions of dollars in attorneys' fees and costs in the litigation,” Novack said in a prepared statement. “This meritless litigation that has cost the taxpayers and my clients so much is finally over."

A spokesman for the city did not return a call requesting comment Friday afternoon.

The matter first landed in court in 2011, following the inauguration of Mayor Rahm Emanuel, when the city sued the restaurant group to undo the contract, which officials characterized as a “sweetheart deal” doled out to friends and allies of former Mayor Richard M. Daley. The city had asserted it held ownership of the park land on which the restaurant sits, yet had never formally consented to the contract reached in 2002 between the Park District and the group, legally known as Millennium Park Joint Venture. That group, led by caterer James Horan and restaurateur Matthew O’Malley, included a number of other people reportedly connected to Daley, including friends and neighbors of the former mayor and officials in his administration, city contractors and members of city boards and commissions.

The city alleged the deal was improperly negotiated to guarantee the Park Grill group “unconscionable” terms, including free water, natural gas and garbage removal and exemption from property taxes, among other items. Because of these terms, the city argued the Park Grill owed it more than $8 million.

The city had particularly pointed to a relationship between O’Malley and a former Chicago Park District official who worked with the people responsible for negotiating the concession agreement. According to published reports, that official, identified as Laura Foxgrover, had come to the Chicago Park District from O’Malley’s former business and had born a child with O’Malley. They later married.

The relationship between O’Malley and Foxgrover was made public in 2005, when the Chicago Sun-Times first reported it.

The Park District has said Foxgrover played no role in negotiating the deal.

Following those published reports, the city sued the Park District and the Park Grill investors.

In September 2015, however, Cook County Judge Moshe Jacobius shot down the lawsuit, saying the city’s decision to wait until after the news reports concerning the contract and the allegedly improper relationship became public undercut its contentions concerning the severity of the impropriety of the restaurant contract.

Jacobius said the city’s actions before and after the deal was signed demonstrated it had empowered the Park District to act as its agent in negotiating the agreement and signaled to the Park Grill group City Hall was on board.

“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,” the judge wrote.

Both sides filed appeals in the matter last fall.

Novack said the settlement deal was being presented to the Illinois First District Appellate Court, perhaps as soon as Friday, to allow the court to sign off on the deal and end the litigation.

Before the appeals were filed, records obtained by the Cook County Record showed the city and Park District had combined to spend more than $6.6 million on lawyers’ fees to wage its court fight – a number that is certain to have increased in the months since.

According to the records supplied at that time,  the city paid its lawyers, from the firm of Barnes & Thornburg, more than $3.3 million from January 2012, when it first hired the firm, to September 2015, shortly before Jacobius handed down his decision in the case.

The Park District  paid its lawyers, from the firm of Reed Smith LLP, more than $3.13 million from December 2011 to April 2015. 

“The City and Park District have now agreed to what we have been saying for years and what Judge Jacobius ruled - namely, that my clients' Concession Agreement is and always has been legal, valid and binding according to its terms,” Novack said.

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Organizations in this Story

Barnes & Thornburg LLP Chicago Park District Chicago Sun-Times City of Chicago Novack and Macey LLP Reed Smith LLP

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