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Skyway advertising may be lifeboat for taxpayers
July 30, 2005
BY FRAN SPIELMAN City Hall Reporter
Advertisement
The sale of naming rights to and advertising on the Chicago Skyway and other city assets could hold the key to a reprieve for Chicago taxpayers.
Mayor Daley's preliminary 2006 budget has a comparatively modest $94.1 million hole that must be filled, either by cutting spending, raising revenues or a combination of the two. That's less than half the size of last year's $220 million budget gap.
After socking it to Chicagoans last year with $108.7 million in higher taxes and fees (when sales and hotel tax hikes effective July 1 are factored in for a full year), top mayoral aides are trying desperately to avoid raising taxes again.
However, water rates and city sticker fees that go into self-supporting funds are possible exceptions. "Without a rate increase, this [water] fund is projected to have a deficit in 2006," the preliminary budget states.
When Daley cut the blockbuster $1.83 billion deal that privatized the Chicago Skyway, naming rights and advertising were intentionally "held back" to set the stage for a future transaction that could be duplicated at other city assets.
The roster of possible assets include everything from airports, libraries and water filtration plants to police and fire stations and vehicles, the 911 emergency center, bridges over the Chicago River and even Lake Shore Drive.
"There's a few other assets that may provide for a captive audience to be exposed to advertising" or naming rights, said Budget Director John Harris. "The CTA is exploring it for some of its train lines. New York is looking at opportunities for its tunnels and bridges. We will be putting out a request for information to the experts in that field to give us some more ideas."
Attorney John Schmidt, the former Daley chief of staff who advised the mayor on the Skyway transaction, said naming rights and advertising are old hat for sports stadiums, but virgin territory for major cities.
U.S. Cellular paid $68 million over 20 years -- $3.4 million a year -- for the naming rights to Comiskey Park. United Airlines ponied up $1.8 million a year to put its name on the home of the Bulls and Black Hawks.
"Some people say the reason stadium naming rights are worth so much is because it's a positive association. On the other hand, a lot more people drive over the Skyway than go to games at the United Center," Schmidt said.
Normally, preliminary budgets include $100 million-plus shortfalls, accompanied by dire warnings of tax increases and layoffs.
This year, revenues are on the rise and nearly all union contracts are settled, complete with work-rule changes that should save the city $10 million a year.
Although property taxes are "consumed" by pension obligations, debt payments and library expenses, the city also has a $500 million long-term reserve created with Skyway funds that's generating interest that can be used for day-to-day operations.
The bottom line for Chicago taxpayers is as good as it gets at this early stage.
"This projected shortfall is manageable as long as we use these new labor concessions effectively and enhance revenue opportunities that are not a burden to taxpayers," Harris said.
Doubts more taxes
Earlier this week, after raising the city's bond rating, a senior bond analyst for Standard & Poors predicted that taxpayers who did the heavy lifting last year would get a break in 2006.
"Most employee contracts have been signed. The city's budget has a fair amount of stability for at least two more years," said analyst John Kenward. "With the recovering economy, there may not be a need for additional taxes for a while. That's our belief. They have a strong chance."
Skyway advertising may be lifeboat for taxpayers
July 30, 2005
BY FRAN SPIELMAN City Hall Reporter
Advertisement
The sale of naming rights to and advertising on the Chicago Skyway and other city assets could hold the key to a reprieve for Chicago taxpayers.
Mayor Daley's preliminary 2006 budget has a comparatively modest $94.1 million hole that must be filled, either by cutting spending, raising revenues or a combination of the two. That's less than half the size of last year's $220 million budget gap.
After socking it to Chicagoans last year with $108.7 million in higher taxes and fees (when sales and hotel tax hikes effective July 1 are factored in for a full year), top mayoral aides are trying desperately to avoid raising taxes again.
However, water rates and city sticker fees that go into self-supporting funds are possible exceptions. "Without a rate increase, this [water] fund is projected to have a deficit in 2006," the preliminary budget states.
When Daley cut the blockbuster $1.83 billion deal that privatized the Chicago Skyway, naming rights and advertising were intentionally "held back" to set the stage for a future transaction that could be duplicated at other city assets.
The roster of possible assets include everything from airports, libraries and water filtration plants to police and fire stations and vehicles, the 911 emergency center, bridges over the Chicago River and even Lake Shore Drive.
"There's a few other assets that may provide for a captive audience to be exposed to advertising" or naming rights, said Budget Director John Harris. "The CTA is exploring it for some of its train lines. New York is looking at opportunities for its tunnels and bridges. We will be putting out a request for information to the experts in that field to give us some more ideas."
Attorney John Schmidt, the former Daley chief of staff who advised the mayor on the Skyway transaction, said naming rights and advertising are old hat for sports stadiums, but virgin territory for major cities.
U.S. Cellular paid $68 million over 20 years -- $3.4 million a year -- for the naming rights to Comiskey Park. United Airlines ponied up $1.8 million a year to put its name on the home of the Bulls and Black Hawks.
"Some people say the reason stadium naming rights are worth so much is because it's a positive association. On the other hand, a lot more people drive over the Skyway than go to games at the United Center," Schmidt said.
Normally, preliminary budgets include $100 million-plus shortfalls, accompanied by dire warnings of tax increases and layoffs.
This year, revenues are on the rise and nearly all union contracts are settled, complete with work-rule changes that should save the city $10 million a year.
Although property taxes are "consumed" by pension obligations, debt payments and library expenses, the city also has a $500 million long-term reserve created with Skyway funds that's generating interest that can be used for day-to-day operations.
The bottom line for Chicago taxpayers is as good as it gets at this early stage.
"This projected shortfall is manageable as long as we use these new labor concessions effectively and enhance revenue opportunities that are not a burden to taxpayers," Harris said.
Doubts more taxes
Earlier this week, after raising the city's bond rating, a senior bond analyst for Standard & Poors predicted that taxpayers who did the heavy lifting last year would get a break in 2006.
"Most employee contracts have been signed. The city's budget has a fair amount of stability for at least two more years," said analyst John Kenward. "With the recovering economy, there may not be a need for additional taxes for a while. That's our belief. They have a strong chance."
