I couldn’t attend the council meeting last night, but I see in today’s paper that they’ve tacked on some more taxes to our water bills: “The council also voted to assess a 5 percent water utility tax . . . expected to generate $1.5 million annually.”
Technically, the city is taxing the water company, but Illinois American Water is fully expected to pass that cost on directly to consumers. And the selling point of this tax as opposed to a property tax increase is that it can also be collected from non-profit organizations. “City officials have estimated the typical residential customer of 6,000 gallons of water a month will pay $1.70 more a month,” according to the paper. Add that to the $6 per month we’re already paying through our water bills (the so-called “garbage fee”), and now we’re up to $7.70 — a 28% increase in water taxes/fees for the “typical residential customer.” Pretty soon, we’ll be paying more in taxes/fees than for the water portion of the water bill.
A few other interesting things about this tax:
- “[T]he council voted on a host of issues that leaves the city with a $1.4 million surplus heading into next year,” the paper explains, and this five percent tax will generate $1.5 million annually. A quick calculation tells me that only $100,000 was needed to actually balance the budget when all was said and done last night. But the council established a tax that will generate $1.5 million. A bit of overkill, wouldn’t you say? If they had established a 1% tax, it would presumably generate $300,000 — more than enough to cover the deficit left after other actions were taken last night.
- Despite coming up with a new revenue source that puts them in the black by $1.4 million, the council still decided to lay off 16 police officers. Public safety is evidently not real high on the council’s priority list. That’s okay. It’s not like we have a lot of crime in Peoria or anything. I’m sure the officers that are left can learn to work smarter, not harder, or something like that.
- Speaking about the new water utility tax: “This isn’t money we’ll wildly run out and spend,” Van Auken said. “We’re still facing a deficit next year.” Ha ha ha! No, the council wouldn’t wildly run out and spend it. Of course not. They’re the model of fiscal conservatism and strategic planning. You can trust them not to fritter away taxpayer money on non-essential, risky ventures.
Bah.
They said last night that this will be the third tax/fee/whatever added to water bill – thrid one had some name about fire protection – although it’s general revenue source now. Clyde Gulley suggested getting rid of the garbage tax and increasing the water utility tax by whatever amount was necessary – then non-profits would be paying into it.
Gary Scadburg asked how much was going to cover MidTown Plaza debt – 350K plus -and how that debt was requiring city employees to take cuts, etc. when they had nothing to do with the folley of MidTown Plaza. Ardis chimed in that hind sight was 2020. And history keeps repeating itself.
I agree with Sandberg on the Mid-Town issue. I’ll also take it a step further and say that the citizens of Peoria are entitled to an explanation from the developer as to what he plans to do to fill that space.
How much do we have to wildly spend for the DCDF (drunk councilpersons defense fund)?
Jim: How much did taxpayer’s spend…. as the case was dismissed without prejudice?
The developer of Midtown Plaza is getting paid by Cub’s owner (super value) until there lease runs out so the developer could care less if a new use is found.
Midtown Plaza is a falure. It is a poster child for “it’s better than nothing” slogan. And history will keep repeating itself. The City has no leverage so they are suck with the debt. How sweet for the developer.
We contacted the developer about six months ago regarding the Midtown Plaza building. We asked about leasing half of the main building and were told that indeed SuperValue was paying the lease to the developer and at that time there was no interest in subdividing the building for our purposes. So they are not making it easy to utilize that area.
This tax is a classic case of government failing to exhibit the political will necessary to reduce its size and spending proportionately with decreased revenues. The tax does not fund a project that could theoretically foster future growth or even improve the city in some tangible way, but rather merely sustains the existing government bureaucracy by further burdening a citizenry that is already financially crippled.
Every dollar taken from consumers is a dollar that won’t be spent and multiply in the private sector, which is the only real and sustainable way to increase revenue to the government. Therefore, this tax will ultimately result in a decrease in total revenue to the city. Even the most ignorant of our federal politicians have been taught to say “you don’t raise taxes during a recession.”
I had preiously admired this council’s willingness to reduce spending, so this decision is an inexplicable and unmitigated disappointment.
If the developer isn’t going to put the property to good use then the city should use eminent domain to take midtown back.
What is given should be able to be taken away.
Eminent domain was used to take property to enable the development of Midtown, in the interests of the ‘public good’. The developer has failed to meet the interests of the public good and therefore the properties should be taken back.
kohlrabi: Exactly on the history keeps repeating itself!
…. “Gary Scadburg asked how much was going to cover MidTown Plaza debt – 350K plus -and how that debt was requiring city employees to take cuts, etc. when they had nothing to do with the folley of MidTown Plaza. Ardis chimed in that hind sight was 2020.”
Let’s review Gary’s 2020 hindsight! When you review Gary’s voting record — VOILA! Gary predicted the outcome would be different than the ‘juiced’ numbers and projections as presented by those persons/groups selling the latest ‘better than nothing’ project.
Regrettably to the taxpayer’s pocketbook, Gary’s predictions have come true in every case that I can recall during the past sixteen years that I have lived in Peoria! Don’t let the facts get in the way of decisions just because you do not the messenger who has to courage to deliver the message
” The Emperor still has no clothes!”
This is all very touching, but………………….
where does the museum figure into all of this?
NV: Same story as before … a want and not a need.
As I posted at the PJStar … Read about the museum here …..
http://www.peoriacounty.org/countyBoard/files/get/Committee_Agenda_and_Minutes/2009 Board Committees/Facilities/11-November/11-monthly/091117pkt.pdf
Private financing, promoters assured voters would come forth as soon as the referendum was passed …. still has not been achieved …. recent $5M grant from the bankrupt State of Illinois to help close the private funding gap — wonder when and how the state will be providing that money …. another up to $140,000 to be approved at December 2009 County Board Meeting to ‘keep the project’ moving along …. meanwhile no announcement of the signed IMAX agreement as promised. …… and so it goes….. the insanity continues in Peoria County.
Mahkno,
Unfortunately (or really fortunately or government would abuse eminent domain even more than they currently do) eminent domain only allows government to acquire private property for market value of the property. As such, MidTown Plaza is worth quite of bit of money based on the lease payments that are still being paid to the owner/developer. In fact, I believe the developer/owner is more profitable with an empty building than an ocuupied building because of wear and tear and weather related maintenance, As such the use of eminent domain would not be in any way beneficial to pursue for the public as the value to produce revenue for the owner is still there, the only thing that is lost by Cibss xlosure is the major revenue stream of sales taxes that were pledged to cover the $450,000 anual debt service. MidTown never made annual debt service when opened and while empty, $350,000 iss necesary to come from general funds to cover the debt service.
As bad as those numbers are, the $39,500,000 grant to the downtown Marriot developer/owner is TEN TIMES the liability and in my opinion, carries even a higher risk factor for not making projections. The one year anniversary for that committment is in a couple weeks, but the reasons for my no vote last year as I stated were “speech #4” and “definition of insanity” is as true today as it was in December 2008 but hardly “2020 hindsight”.
New Voice, the only tax that could conceivably be justified during these economic times is one designed to foster future growth. This tax certainly fails that test.
Outside a recession, most reasonable people will look open-mindedly at a tax designed to improve the city in some tangible way. Controversial though it may be, the museum falls into this latter category (Bradley professors notwithstanding). This tax certainly fails that test.
I hope that with every check written to pay their water bills that people remember this council as lacking the political cojones to reduce spending instead of raising taxes during a recession. And they were so close. To paraphrase Dennis Green, this council isn’t who I thought they were.
Gary: what can the city do to help stem the red ink with Midtown Plaza? Nothing? If so I think the developer should be tagged for no incentives in the future.
Ditto on Martin Palmer’s comment.
Is Midtown a Joseph development? Isn’t Northpoint Plaza, where the library tried to negotiate space, a Joseph development as well? It seems the library really wanted the vacant space at Northpoint but the PJS reported they could not reach a deal with the developer??? That would have been a better location for the library and revitalized that shopping area.
It is very disappointing that developers in the community seem to have taken so much and given back so little.
I agree that the developer should not be considered for any additional incentives as a consequence of the Mid-Town debacle. The developer needs to step up and turn the situation around. I wish there was a way to hold his feet to the fire to do so.
Martin and Conrad,
While I understand your opinion that the Deveoper shouldn’t get future incentives, that would just open the door to other developers. The enemy is not the Developer, it is a political system that facilitates giving incentives to any developer for projects that are consumer related, ie shopping centers, hotels, restaurants, physicians,ets. ANY and ALL consumer related projects only attempt to micro-manage the economy, at best if sucessful in any warped sense, or at worse, result from political/friendship ties and use tax revenue streams to underwrite the existant risks in the market place. The Developer did as he should, made the better deal. THe people in fault is those persons, administrative as well as elected, that did not protect the public sector’s interests. In the case of MidTown, the City “hired” a consultant whose anaylsis said MidTown would not meet expectations, so 9 members out of 11 chose to believe the Developers” consultant” that said MidTown would draw customers from 50 miles away. Even if that would be true which it wasn’t, the subsidy would then micro manage shopping centers within that 50 miles creating winners and losers.
The answer is not to then make room for the next Developer, but rather to understand the limitations of local goverment and their primary responsibilities and DONT UNDERWRITE or USE TAX DOLLARS to SUBSIZED ANY consumer related development.
It is my contention that the public sector has very limited responsibility to loaning money or granting money to the private sector for any reason and certainly no responsibility when the subsidy is going to tilt the consumer related market in any direction. A better argument can be made for incentives that support “base employment businesses” that enlarge the local consumer base ( similar to the Phiser development out east), but those incentives still need protections built in to safeguard even those opportunities from leaving and moving to the next better deal.
It is much easier for politicians AND CITIZENS to want instant results thru a project instead of recognising that disinvestment occurs over a long period of time and “one swing of the bat” ot the “golden ring” type solutions while sexy and seductive will NOT change that disinvestment cycle, but only a long term holistic stategy of traditional government services, public safety, public works and planning that doesn’t put power houses next to residents homes will have a chance for success and stability.
Local government should focus on providing basic services in the most efficient cost effective manner. In doing that well, our taxes will be as low as possible creating the economic environment where ALL residents and ALL businesses receive value for their taxes, not just a few from the subsidy of Fulton Street Follies.
Exactly. Right on, Gary.
DONT UNDERWRITE or USE TAX DOLLARS to SUBSIZE ANY consumer related development. Absolutely Agree, Gary.
I will say, however, while the increased water tax is bad, bad, bad, it is better than a property tax increase. The council has a point about the so-called “non-profits” paying the water tax. And, most people can reduce their water use. Short of tearing down your house, or an assessment fight (where the deck is stacked against you), I don’t know what you can do to reduce your property tax (oh, and renters who “don’t pay property taxes” – you are even worse off – your landlord passes the property tax along and you can’t even appeal it).
Why can’t the developer of Midtown be sued by the city, or a lien placed on the property for failure to pay the city the money owed?
If it was based on sales tax, and Cub foods was not paying it, then Super Valu should e sued for the money they owe the city. If the developer is not willing to re-lease the property, then the developer ought to be required to pay the city based in his projected income from the property.
My original question “Gary: what can the city do to help stem the red ink with Midtown Plaza? Nothing?”
I guess the answer is NOTHING. “The enemy is not the Developer, it is a political system” I guess we will perpetuate this forever since we as a people re-elect some of the same people that brought us Midtown Follies. Here a TIF there a TIF…
As fo the powerhouse next to homes our 3rd district rep made sure that would happen, and so it goes. CJ’s “Its better than nothing” slogan!
Ben,
The Developer preformed to the extent of the agreement. He constructed x number of square feet of retail space. Developer didn’t pledge tax revenues, City did in order to repay the G.O. bonds that were issued. When the TIF funds arent there, the G.O.Bonds still need to be paid because they are backed up by the “full faith and credit” of the City of Peoria. Agreement didn’t say the G.O. bonds were backed up by lease payments.
Marty,
In my opinion City never could do anything to stop the bleeding. We jut could have NOT provided the public transfusion of blood
The Mariott Hotel is the same ……….. the $39,500,000 is a GRANT, a GIFT, so to speak, NOT a LOAN. The Developer has to build a hotel for at least $100.000.000, of course there is no independant verification of the “value”. It’s a G.O. Bond (General Obligation Bond), NOT a General Revenue Bond.
Mouse,
Its one of those tax exempt property owners that has the political clout to get a power center on edge of their campus across street from single family homes and 3 blocks from MidTown Plaza which drives property values down so they can buy property as discounted prices and take off the tax rolls. While I understand the argument behind utility taxes reaching the non profits, but the shotgun blast still hits all of us also. Vacant land and land developed iwth parking lots dont use much water. There needs to be the capacity to charge large nont for or non profits Payments in Lieu of Taxes (PILOTS) for the services that goivernement provides without hitting everyone else with sckrapnel
Gary, I will put u on the spot. Do you think politicial contributions play a role in public subsidies? Likeability? Why does Joseph contribute to Peoria council canidates and live in E peoria? I am not aware of many non-natives contributing to campaigns.
Can the city legally terminate the Marriot agreement? Could the city legally end giving subsidies for developers for any reason?
Don’t mean to be asking 20 questions these have been things I have wondered for a long time.
Simple dumb me…………I wanted the city to own the water company when we had the chance
What,
Do I have proof that polictical contributions effect votes no, but like friendships and personal or family relationships, they do cloud the judgment from individuals and allow elected persons to drop rational objectivity for a more emotional value system. I don’t have any belief in any “quid pro quo” (sp) but its just this dropping of any appearance of objectivity and reality and the use of feelings to become the basis for the vote and the use os superlatives in describing the outcome that the contributions / frfiendships promote. Conversely often it is NOT the reward of money or contributions that is used, but the threat of loss of money, work / job that I suspect is used to control votes.
Developer deadlines within the Mariott Hotel agreement have not been met, thereby the agreement could be terminated. Corporation Counsel Randy Ray’s opinion the missed deadline do not automatically terminte the agreement, but that an affirmative vote of the majority of the Council is necessary to initiate the termination process legally. With the defeaning silience regarding that agreement and the Build the Block Museum agreement which has also not met deadlines inspite of repeated extensions/modifications to that agreement, I would bet that both will be coming back AFTER BUDGET SEASON to get enriched with respect to public sector responsibilities in lieu of termination.
The City has NO OBLIGATION to give out subsidies, therefore there is no reason that the City could not stop offering them or entering into these agreements. The reasons that they are offered are political or Adminstratively driven to reflect the role that the individual, either elected or Administrative feels is their job. Every election politicians promise economic development. Instead of working to provide basic services in the most efficent, cost effective manner keeping taxes low and taking a long term vieww, its much easier to susidise theres “silver bullet solutions” thru increased taxes, beat their chest and declare success.
Once the agreement is established, it’s almost impossible to terminate. I will use the Riverfront Village Agreement as an example of that. The City pledged over $4,000,000 to build the platform which was to house TWO restaurants and x square feet (think 10,000-12,000 sf) of retail. Two restaurants each producing $4,500,000 gross revenues and subsequent taxes and the retail producing sales tax as well as parking revenue were pledged to pay off this $4,500,000 public sector committment.
Tow restaurants were built. The retail space rented slowly and there was turnover. The 2 restaurants were NOT coming close to their $4,500,000 annual sales. Along comes Hooters, the “Silver Bullet” to save Riverfront Village whose mission was to save the Riverfront if only parking fees were eleiminated/reduced. If the third restaurant was Mothers Teresa’s Fish and Wine Bar, it was NOT what was in the agreement and to every Council person opposed to the third restaurant it became about Hooters not about the terms of the original and amended agreement. In the enda 45th or 5th amendment allowed the third restaurant , not on the platform but farther down the Riverfront and parking fees were reduced limiting our ability to repay the bonds without dipping into other revenue sources from the pledged sources. Today, three restaurants still exist, none meeting the initial finanacing projection of $4,500,000 gross annual sales and the retail component now provides a subsidised home for Peoria Chamber of Commerce and The Peoria Area Economic Development Council, neither of which tenants or subsidaries produce sales tax.
To consumate the revised location for the third restaurant, the City had to enter into a lease for 19 years 11 months and 30 days to get around the need for a super majority vote (ultimately a 6-5 vote, inlieu of 8 votes needed to sell land or enter into leases over 20 years. The City receives $500 per month rent for the Hooters site and expended over $200,000 preparing the site or more money than we will receive over the term of the lease. Why are we in financial deficent with those sorts of deals ?………………….. good intentions……….. friendships…………, personal relationships, ……………………contributions, …………….. clouded judgment.
More incentives is the name of the game and the same — follow the money song
http://www.pjstar.com/business/x29008999/Report-Caterpillar-may-build-new-Ohio-plant
Anyone who thinks you can operate a state or municipality without incentives to businesses is seriously delusional. Whether you like it or not (I don’t believe anyone really does except the beneficiaries), the competition for businesses is fierce and the currency is tax incentives. Karrie, the Caterpillar article you link to is merely testimony as to why Illinois and Peoria have to compete.
Even accepting that premise, Peoria hasn’t always shown itself as capable of discerning between good and bad investments. Unfortunately, I believe Gary accurately identifies some of the reasons for that. Other obvious, non-conspiratorial reasons are that politicians aren’t always good businesspeople and it’s easier to place a bet when it’s not your money.
There are some places that even offer incentives to residents and businesses. I am happy that someone finally posted the fact that incentives are used in many places with success. If no incentives were offered to developers they would merely find similiar demographics in similiar sized cities and do business there.
Incentives in themselves are not a bad thing, but the things they are used for in Peoria are very questionable. Using them for retail, as in the case of Mid-Town, was horrid, since the project enabled Cub to stack the deck and remove many solid solid local grocers.
The City needs to get out of the hotel business.
Politicians spend a great deal of time in the public spotlight, so…………………. you would think that they, of all people would take great pains to keep from doing and saying things that make them look……… foolish?
Anyone read ‘Mayor’ Ardis’s Forum letter in the J Star today?
Quote:
“No one could have predicted the financial crisis that hit our country and the challenges it would impose on our municipalities.”
Everyone feel free to have fun with this one!
Midtown misses deadlines. The council extends the deadlines. The Marriot misses deadlines and the council has yawned. If the mayor indeed feels Midtown was a disaster he should be in favored of ending the Marriot since it is following a similiar path as Mid-Town.
Quote:
“We simply could not continue to subsidize their [PAWS] operations to the tune of over $400,000 per year at the same time we are laying off police officers.”
But…………………. the city could afford to break the bank on a number of ridiculous projects including, but not limited to……………….. the museum!
Damn it people!!!!!! What we need is a new city logo!!!!!
I repeat the same question that many of us have asked over and over again; who will cover the cost of museum operations, etc when those idiots finally realise that no museum ‘pays for itself?’
I predict the lay-off of the entire Peoria Police Department by 2012, which is why I plan on opening the very first Guns, Ammo & Liquor store in Peoria.
I will call it the Guns, Ammo & Liquor store. Smoke ’em if you got ’em.