CHICAGO -- A lawsuit naming the Metropolitan Pier and Exposition Authority will not stop it from issuing $397 million of revenue bonds for expansion of the McCormick Place convention center in Chicago, authority officials say.
The suit claims that a departure tax on suburban limousine services from Chicago's two commercial airports unconstitutionally singles out some air passengers.
Revenues from that tax and other special taxes approved last year by the Illinois General Assembly would be used to back the bonds for the McCormick Place expansion.
The class action suit was filed May 22 on behalf of suburban Chicago limousine operators and their patrons.
"We don't think [the plaintiffs'] claim has merit," said John Schmidt, the authority's chairman.
The authority is proceeding with plans to issue the bonds by the end of July, according to James Fricke, director of budget and treasury management for the aurthority.
The 75 cent to $1 per ride departure tax would apply to all city and suburban taxis, livery vehicles, limousines, buses, and vans carrying passengers for hire from O'Hare and Midway airports.
James McGurk, an attorney for the plaintiffs, said the tax is unconstitutional because its imposition would deny the plaintiffs equal protection.
He explained that suburban carriers by law cannot transport passenger to McCormick Place or anywhere else in the city.
The suit charges that the departure tax violates the uniformity clause in the Illinois Constitutions because it would apply only to arriving passengers who use commercial car services, and not to all arriving passengers. Also, the suit charges, people travelling from train and bus stations would not be taxed.
Mr. McGurk further asserted that the tax is invalid because a provision in the federal Airport and Airway Improvement Act of 1982 states that all proceeds from an airport tax must be used for airport-related projects.
Mr. Schmidt is optimistic the authority will win the case. An even if the plaintiffs are successful, he said, the bond issue would not be affected. The departure tax revenue "would be a very tiny part of the overall package," he said.
A second lawsuit plays a larger role in the upcoming bond issue, he added. That suit questions the constitutionality of a 1% restaurant tax also approved by the legislature for the expansion.
Filed in January by restaurant owners, the lawsuit charges that imposition of the tax only within a special taxing district denies the plaintiffs equal protection. The suit reasons that the authority has not "sufficiently established" that restaurants located in the district will benefit from McCormick Place improvements.
A Cook County Circuit Court judge is expected to issue a ruling on the restaurant tax case by mid-June, Mr. Schmidt said.
Attoneys for both sides have said they expect the issue ultimately to be decided by the Illinois Supreme Court.
"We don't expect to lose. We don't think there is a serious legal issue," Mr. Schmidt said.
The legislature has prohibited the authority from using restaurant tax proceeds to back bonds until the tax is adjudicated.
Authority officials have talked about splitting the $937 million bond issue in two due to the litigation.
Currently, restaurant tax revenues make up 21% of the revenues from a legislatively approved tax package that also contains the departure tax, a 2.5% Chicago hotel tax, and a 6% tax on auto rentals.
The authority cannot issue any of the $937 million of bonds until after July 1, the effective date for levying the tax package. Authority officials have estimated that the tax package will raise $53 million in 1993.