To the Editor:

In August, an article titled, "Obama Foundation fundraising up this year, tax docs shows," made it appear that the Foundation was free of financial shortfalls that would stop the Obama Presidential Center from rising out of hundreds of dead trees cut in Jackson Park. But five months later, the financial situation is, if anything, worse.

Section 12(h), the September 2018 master agreement between the Foundation and the City, requires the Foundation to certify it has in hand cash or pledges that "in the aggregate equal or exceed the Projected Total Construction Costs of the Presidential Center in order to take possession of the 19.3 acres of Jackson Park slated to become the home of the OPC. Section 12(j) then requires the Foundation to endow — i.e., put in a restricted escrow-type account — funds necessary to operate, maintain and improve the OPC. The Foundation failed to meet either condition.

First, the Foundation claimed it had raised sufficient funds to start construction. In its initial report of March 2021, it noted that it had raised some $485 million, or $3 million more than the anticipated cost of the OPC. The catch was that the Foundation had already spent or committed a large fraction of those dollars on unrelated items, including heavy administrative expenses and various OPC programs. The Foundation should not be able to count toward its construction costs money already spent elsewhere, or that is restricted to other nonconstruction uses. Worse still, by June, the Foundation's estimated that construction costs had increased to $700 million, double its initial cost estimates from 2018. Moreover, since August 2021, the costs position could only worsen with inflation and supply chain difficulties. Despite the increase in costs and massive shortfall, the transfer took place without requiring the Foundation to update its cost figures.

Second, as to the endowment, despite acknowledging that the first year of operation will cost $40 million and needs $470 million for operations, the Foundation established an endowment with a grand total of $1 million.

The City and the Foundation claim that they have "ample" time to raise funds. But even if the original terms of the grant were improperly disregarded, as of today, the money is not there. First, the total net assets of $560 million on hand in March 2021 were not fully available to fund the $830 million that the Foundation claimed in August 2021 that would be "needed to build, operate Obama Center in the first year," for those assets included about $70 million in preconstruction costs, plus other costs of other programs and routine administrative expenses. At most, there are $200 million in restricted funds to cover the costs of construction, operation, maintenance, and improvements.

The Foundation announced a fundraising campaign to raise $1.6 billion over the next five years to cover the aforementioned shortfalls. Yet, the most the Foundation has ever raised in one year was $233 million in 2017. At that pace, the probability of reaching its fundraising target for each of the coming five years is unlikely. But even if a miracle occurred, the $1.6 billion goal also has to cover the Foundation's ongoing and recurrent obligations (i.e., fundraising costs, salaries for close to 200 employees, ongoing programs of education and outreach, administrative expenses, etc.). Even the recent Jeff Bezos pledge of $100 million in unrestricted funds does not materially alter the financial situation described above, a testament to the gravity of the situation. Construction costs far exceed the amounts earmarked, and the endowment fund for operations has less than three percent of what's needed for the first year of operations.

The City must be prepared to answer what happens if the Foundation's ambitious construction project implodes when the project is half-complete? And who will shoulder the burden? Unfortunately, this tale of financial woe is only one of many dubious steps that the City and Foundation have taken to hurry this project along in ways that will compromise the physical integrity of the lakefront and the City's financial viability.

The solution is simple — halt the current project and thoughtfully review the South Side alternatives that would permit the best project for the City, the community, and the Foundation. Otherwise, the Chicago Bears' plans to leave Soldier Field could be a tell-tale sign of leaving taxpayers and residents here holding the proverbial bag over the problematic development and over the loss of a great public park whose destruction also negatively impacts the health and welfare of the community which it serves.

Richard A. Epstein and Michael Rachlis

The writers are co-counsels for Protect Our Parks

(1) comment

Ross Petersen

I believe the Obama foundation has fallen behind on their fundraising, and they failed to consider the impact their location has had, on attracting that support. Most corporations, foundations are reluctant to support the destruction of a Public Park.

We did not hold meetings to discuss the Obama center, we had an 'unveiling', instead.

Recently, the Obama foundation announced that they would accept contributions, and name parts of the center in anyone's honor - as long as this was accompanied by a sizable contribution. This is a ghastly boondoggle that will deface a beautiful, lakefront Park. And you wonder why no-one is contributing.

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