Chicago -- A Cook County Circuit Court judge has dismissed seven counts of an eight-count lawsuit challenging a 1% restaurant tax that would help back $937 million or revenue bonds for the expansion of the McCormick Place convention center in Chicago.
However, Judge Earl Arkiss deferred until next week any action on the lawsuit's centerpiece, an argument that the tax violates constitutional guarantees of equal protection, according to lawyer Brian Williams. The attorney represents restaurant owners and patrons that filed the class action suit.
Mr. Williams said the suit's seven other counts turned on technical points such as the way the Illinois General Assembly approved the tax, which was passed last year. He added that Wednesday's dismissals would be appealed to the Illinois Supreme Court.
John Schmidt, chairman of the Metropolitan Pier and Exposition Authority, which would issue the bonds for the expansion project, said that while the authority considered the dismissed counts "frivolous," the court's action was being reviewed to determine if the appeal of the dismissals represent any impediment to issuing the approximately $760 million of bonds that would be backed by other tax revenues besides the restaurant tax.
Mr. Schmidt said the pricing of those bonds was tentatively scheduled for next month or early August in a deal headed by Smith Barney, Harris Upham & Co. and Donaldson, Lufkin and Jenrette Securities Corp. The pricing of the remainder of the bonds, backed by the restaurant tax, would be determined by the outcome of the constitutionality challenge to the tax, he added.
The lawsuit's constitutional argument is that the pier and exposition authority has not sufficiently established that restaurants within a designated taxing district would benefit from the McCormick Place expansion. The special district encompasses the downtown area and O'Hare International and Midway airports.
Both Mr. Schmidt and Mr. Williams said they expected that ultimately this aspect of the case will reach the Illinois Supreme Court.
