Chicago is a big city that often seems like a small one, especially when you realize how many of its powerful political and business interests intertwine. The relationship between the city government and the Illinois Restaurant Association, the nonprofit organization that helps run the Taste of Chicago, is yet another example.

Remember way back in May, when Mayor Daley and some of his loyal aldermen muzzled the opposition, pulled out a parliamentary trick or two, and repealed the ban on foie gras faster than it usually takes the City Council to honor the month’s grade school spelling bee champs?

The worthiness of the ban isn’t the point–as Mayor Daley has decreed, we’re done debating that one for now. But no one’s talked much about the fact that it was overturned at the bidding of a nonprofit city contractor that happens to make a lot of donations to a lot of elected officials–and will undoubtedly be weighing in on other issues before the council.

While the mayor mocked the ban for the cameras, the effort to get the council to repeal it was led by 44th Ward alderman Tom Tunney and the Illinois Restaurant Association, an trade and advocacy organization. Tunney, a restaurateur, was formerly the restaurant association’s chairman; Sheila O’Grady, once Mayor Daley’s chief of staff, is currently its president. 

Since 1984, according to the Mayor’s Office of Special Events, the restaurant association has been a “partner” of the city’s in running the Taste of Chicago and other summer festivals. Under the terms of their no-bid contract for “beverage and food management,” the association helps pick which restaurants get to set up booths and then provides “the knowledge, information and training necessary to maximize their ability to participate in the Events for which they are selected.” Translated, that means the association is supposed to make sure vendors are properly handling food, disposing of garbage, and–don’t forget, guys!–making money. “I don’t think the Taste could exist without IRA doing their part,” said Cindy Gatziolis, a spokeswoman for the special events office.

For these services, the city will pay the restaurant association up to $3.6 million this year, according to their contract. Gatziolis said most of the money will go toward festival supplies such as ice and cups. But the association usually keeps a chunk of the money as service fees. Last year it held onto $232,500; in 2006, $1.1 million. (After expenses, the Taste brings the city about $3 million, which it spends on other festivals, according to Gatziolis.)

Gatziolis said the contract isn’t put out for a competitive bid because no one but the Illinois Restaurant Association is qualified to provide these kinds of services. “It is the only one,” she said. “They have that expertise.”

The City Council voted 48 to 0 in December to sign off on 2008 summer festival funding, including the contract with the restaurant association.

The deal with the city accounts for the majority of the association’s annual revenues, according to federal tax documents. In 2006, the most recent year available, the association reported about $5.8 million in revenues, and about $3.8 million of it came from the Taste contract and other summer event fees. The association raised about $565,000 through member dues.

Under federal tax rules, the association is allowed to spend a portion of the membership money on political activities, and it does. In 2006 the organization spent more than $200,000 on lobbying and other “political expenditures,” and its political action committee typically hands out thousands of dollars in campaign contributions each year. Among the recipients since the beginning of 2007 are aldermen Leslie Hairston (5th), Sandi Jackson (7th), George Cardenas (12th), Ed Burke (14th), Lona Lane (18th), Howard Brookins Jr. (21st), Carrie Austin (34th), Rey Colon (35th), Brian Doherty (41st), Brendan Reilly (42nd), Vi Daley (43rd), Tom Tunney (44th), and Bernard Stone (50th). Of that group, only Colon voted against repealing the foie gras ban. 

In the last few years the association has also lobbied hard on other issues before the council. In 2005 its opposition helped weaken the city’s indoor smoking ban, and the next year it helped kill Burke’s proposal to prohibit restaurants from cooking with trans fats. It’s also weighed in on city and state debates about the minimum wage, liquor licensing, and tax policy.

O’Grady was out of town Friday. A spokeswoman for the association said she’d get back in touch with a comment but didn’t. I suspect everyone was out for a long lunch.