City officials Wednesday will consider making a $165,000 gift to the Music Institute of Chicago as a “thank you” for the institute’s decision to move its headquarters to Evanston from Wilmette.
The proposal, up for review by the Economic Development Committee, would cover about 20 percent of the cost of planned renovations to the 10,000-square-foot space the institute has leased in the basement of the former Marshall Fields building at 1702 Sherman Ave.
Update 9:35 a.m. 3/27/13: We’ve just been advised that tonight’s Economic Development meeting has been cancelled because of lack of a quorum as a result of committee members being out of town during spring break week at local schools. The committee is now scheduled to hold its next meeting at 7:30 p.m. on Wednesday, April 24.
The money would come from the city’s Washington National Tax Increment Financing District fund. It’s structured as a no-interest, forgivable loan. Ten percent of the loan’s balance would be forgiven for each year the institute continues to occupy the building, for which it has signed a 10-year lease.
Top: The entrance to 1702 Sherman Ave. Above: A design by MIC’s architect for the renovation of the leased space.
The Music Institute will maintain its Evanston operations in the former First Church of Christ Scientist building at 1490 Chicago Ave. after the move, but it plans to close its facility on Dempster Street on Evanston’s west side as well as its current office in Wilmette.
Memos from city staff and the Music Institute outline a variety of anticipated benefits to the city from the move. In Evanston Now’s analysis, these add up to the following benefits to the city over 10 years:
- $21,466 in estimated sales tax revenue from 16 full-time-equivalent workers relocating to Evanston from Wilmette. This is based on an average $129 per week spent on restaurant meals and goods and services near their workplace by office workers surveyed by the International Council of Shopping Centers and the 2 percent city share of sales tax.
- $26,000 in estimated sales tax revenue from MIC visitors. This is based on the city staff’s assumption of $10 per visit in ancillary purchases, MIC’s estimate of 500 visitors per week, the 2 percent city share of sales tax and an assumption that roughly half of visits previously occurred on Dempster Street in Evanston and half in Wilmette.
- $19,680 in estimated sales tax revenue on ancillary spending by audiences at the planned black-box theater. This is based on the 4,000 midpoint of MIC estimates of annual theater visits, $24.60 estimated average nonprofit arts attendee ancillary spending from an Americans for the Arts survey and the 2 percent city share of sales tax.
- $9,461 in estimated city liquor tax revenue. This is based on 4,000 theater visits, an estimated $13.14 average meals spending per visitor from the Americans for the Arts survey and a city estimate that 30 percent of restaurant sales is subject to the city’s 6 percent liquor tax.
These add up to $76,607.
- MIC plans to lease 25 parking spaces in a city-owned garage at a total cost over 10 years of $150,000. These are spaces that might, or might not, find other paying customers.
- The MIC move converts a long-vacant space downtown to a productive use.
- With the deal, city officials will be able to claim part of the credit for bringing a new theater space to downtown Evanston.
The costs to the city of the arrangement include the $165,000 gift itself, plus the income the city might have earned from that money over time, if it had been put to another use.
It’s difficult to determine the most appropriate rate of return for the funds, but as one reference point, the city is assuming that it will earn 7 percent per year on money invested in its fire and police pension funds. At 7 percent, $165,000 would roughly double over 10 years.
The Economic Development Committee, and ultimately the City Council, will have to determine whether the gift to MIC is a good deal for taxpayers.
Music Institute expands in downtown Evanston (Dec. 5, 2012)
Office-Worker Retail Spending in a Digital Age, International Council of Shopping Centers, 2012 (.pdf)
Arts and Economic Prosperity IV, Americans for the Arts, 2012
Economic Development Committee packet, (March 27, 2013) (.pdf)