As I explained in a previous post, the multi-billion dollar company American Financial Realty Trust (through their subsidiary First States Investors) recently bought the National City Bank building downtown (the old Commercial Bank building). That bank has a pedestrian walkway and underground vaults that encroach on the public way. Therefore, the city is supposed to be collecting ten cents per square foot on that encroachment annually.

Action was deferred last week while the staff answered some questions from the council. Those answers were released today. I’d like to simply look at the whole request and comment as I go:

First States Investors 4500 LLC, as the new owners of the National City Bank Building at 301 SW Adams, seeks the City of Peoria’s permission to continue using the pedestrian walkway and underground storage vaults on the property. Since both the walkway and the storage vaults are encroachments upon the public way, the buyer is seeking assurances that the City of Peoria will allow the continued use of the property. The buyer and seller were concerned that any refusal by the City of Peoria to allow the continued use and enjoyment of the encroachments would prevent the fullest utilization of the property and would require the parties to renegotiate the terms and conditions of the sale.

This part is completely reasonable. They want to be able to continue using the pedestrian walkway and underground vaults. The city can easily provide them assurances regarding this request. It’s the next part that defies logic:

Though § 26-111 of the Municipal Code, provides that a building owner pay .10/square foot as an annual fee for any encroachment upon the public way, the City of Peoria has not collected such a fee for a number of years.

Why not? That question was not answered in this new communication from staff. It’s apparent that nobody authorized the staff to stop collecting these fees. They just stopped, and now they want to use their negligence or deliberate unauthorized action to justify the continuation of that policy:

It would be unreasonable to begin collecting same relative to this transaction given the number of years the encroachments have existed.

No, what’s unreasonable is that staff has failed to do their job and are now shamelessly flaunting it.

The language of the ordinance provides for the building owners to provide proof of adequate public liability and property damage insurance prior to commencing any reconstruction, repair or other maintenance of the encroachments. Additionally, the Directors of Public Works and Inspections must authorize and monitor any repairs or reconstruction of the encroachments such that the City of Peoria is assured that the integrity of the public way is maintained.

Of course they should provide insurance for their own encroachment. The fee isn’t assessed to cover that. As far as the directors of Public Works and Inspections authorizing and monitoring any repairs or reconstruction, I think it’s fair to ask if they’ve been doing that, or if such monitoring also ceased “a number of years” ago.

The encroachment square footage, according to the Assessor’s Office, is 750 s.f. over the alley and 848 s.f. under the alley. If the annual fee were collected on this property, it would amount to $159.80. The land and building value is more than $4,000,000 and the City is receiving tax revenue on same. We believe collection stopped in the 1980’s.

The implication seems to be here that the amount is so small in comparison to the property tax revenue the city gets that it’s not worth collecting. Hogwash. The city collects lots of petty fines from businesses that pay plenty of property taxes to the city. The city by rights should charge them for the fees they haven’t paid since “the 1980’s.” That’s over $4,000 for the past 26 years.

Perhaps the most comical part of this is that according to this request, the company buying the bank building hasn’t even asked to get out of the fee — the only thing they’ve asked for is assurance that they can continue using the walkway and vaults; i.e., that the city won’t make them tear them out ala Peoria Heights vs. Alexis. Why city staff is insisting that the city stop collecting fees is a mystery.

But if that’s really what they want, then Patrick Nichting is right: they should include an amendment to the municipal code that repeals this fee. If a multi-billion dollar company shouldn’t have to pay it, then certainly no one else should.