Chicago's Obama Center is about to go bankrupt?
I'm shocked. Our GOAT President was such a maven in economics and growing the economy. I figured his pet self aggrandizement project would be similarly brilliant.
Just kidding, I expected nothing less from the Boy Wonder. Biden can't talk and can't think, Trump couldn't talk (without inserting both feet) whereas Barack could talk but couldn't think (that outside of his personal ivy tower bubble).
Sorry to his fans! I gotta be me.
Chicago’s Obama Center Is Under Water
It doesn’t have the money it promised the city it would raise under a May 2019 master agreement for the Jackson Park property.
By Richard Epstein and Michael Rachlis
Aug. 17, 2022 6:37 pm ET
We have been fighting the construction of the Obama Presidential Center in Chicago’s historic Jackson Park for the past four years. The center, which is scheduled to open in February 2025, is being built in a dangerous place. The water table is high enough to require constant drainage—a peril that will be compounded by major storms off Lake Michigan. An award-winning alternative design on private land west of nearby Washington Park would be less costly and safer to build and would provide far better access to the South Side community that is the center’s target audience.
The Obama Foundation just released its annual report and 990 tax forms for 2021. Together they show that the Obama Presidential Center’s financial foundations are as rickety as its physical ones. The Foundation’s 2020 annual report exhibited some financial candor, estimating that $300 million in annual donations for four straight years would be necessary to meet all future construction and operating costs. The 2021 return revealed that the foundation had raised only $159 million, about 8% less than it raised in 2020. Those dollars must pay for all foundation activities, including payroll, fundraising, public relations, and scholarship and grant programs.
The foundation also reported that last year it spent about $115 million on construction costs, without indicating either the total project construction costs or the estimated timeline to completion. It is crystal clear that no sudden reversal of fortune will allow the foundation to meet its 2020 targets (adjusted for inflation) of raising more than $1 billion.
Last year the foundation needed to do some fancy accounting footwork to close on the Jackson Park property. A May 2019 master agreement with the city contained two strict “condition precedents.” Under the first condition, the foundation had to certify that it had “received” more money than the anticipated cost of the building as of March 2021. The foundation barely appeared to meet that target, but then insisted that it wasn’t required to retain those dollars for constructing the building. What, then, was the point of the condition? As its own cost estimates ballooned from $350 million in 2018 to about $700 million in 2021, the foundation ignored its contractual obligation to update its financial projections before closing.
Under the second condition set by the city, the foundation promised to establish an endowment to cover the center’s operating, maintenance and improvements. In 2020 the foundation claimed the first year of operations alone would cost $40 million, and that it needed to raise $470 million for such endowment. In June 2021 the foundation contributed a mere $1 million to the endowment, thereby ignoring the universal accounting convention that bare promises to raise money never constitute an endowment: Cash and firm pledges are always required.
The foundation’s failure to meet these two conditions meant that the 2021 property transfer should never have happened.
The nonprofit Protect Our Parks, which we represent, has challenged these actions in pending litigation. In January U.S. District Judge John Robert Blakey rebuffed our challenge by holding, incorrectly, that Protect Our Parks sued as if it were a party with rights under the master agreement. In fact, our submissions made clear that we sought to block the transfer solely in our capacity as Chicagoans. Procedural obstacles have prevented an immediate appeal of this ruling without the district court’s approval, which was requested and denied.
Working through cumbersome legal channels to untangle these issues will take months or years. Yet construction on the Obama Presidential Center goes forward, evidently without the funding to back it. Does the Obama Foundation have the financial wherewithal to complete its project? Any private developer would have to prove this, especially for a project affecting such a substantial piece of publicly owned park land in the center of a major U.S. city. Construction should be paused until the foundation proves it is complying with the key terms of the master agreement. If we are correct, it should never have broken ground.
Messrs. Epstein and Rachlis represent Protect our Parks and a group of the individual plaintiffs.