Category Archives: City of Peoria

City of Peoria, Peoria Civic Center

Is the Civic Center expansion meeting consultant’s predictions?

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In 2005, the Peoria Civic Center broke ground on a $55 million expansion project. The project was completed on March 1, 2007. The project was approved in part because of a study done by Charles H. Johnson Consulting, Inc., in 2002 which predicted a positive economic impact for the expansion. Peoria would be able to attract more conventions, bringing more people to Peoria, which would lead to higher sales tax revenues.

I thought it might be helpful to look at the predictions and compare them to the newly-expanded Civic Center’s actual performance. Let’s look at these three indicators: Event Days, Attendance, and Net Operating Income.

First, to be fair, I should point out that the Johnson report’s predictions are for “a stabilized year of operation after facility improvements are completed.” What constitutes a “stabilized year of operation” is open to some debate. It could be as early as the third year of operation after completion, or as late as the fifth or sixth. We only have numbers up through FY2009, since FY2010 won’t be complete until the end of August. So, while it’s been three years since March 2007 by the calendar, we only have numbers up through August 2009, or roughly two years after completion of the project.

Nevertheless, it’s worth looking at the trends even this early for two reasons: (1) the time leading up to a “stabilized year” is called the “ramp up” time, and one would expect to see the numbers trending upward even if they haven’t yet reached the predicted levels, and (2) the success of the Civic Center is cited as one of the biggest reasons (if not the only one) for approving the Wonderful Development (i.e., downtown Marriott hotel deal).

Event Days

The Johnson study predicted that the number of Event Days would rise from 510 (the total for FY2001) to 632 — a 24% increase — after expansion. Actual Event Days from 2001 to 2009 did trend upward to a peak of 607 in FY2008, but then dipped significantly in FY2009 to 575. Here’s the breakdown by facility (Theater, Arena, Convention Center), with the total shown in green:

When you look at the Event Days by facility, the Arena and Convention Center actually met or slightly exceeded predictions, whereas the Theater fell short in FY2008. However, increasing Event Days does not necessarily translate into higher attendance or more net income, as we shall next.

Attendance

The Johnson study predicted that Attendance would increase from 849,885 (FY2001 total) to 1,071,500 (26% increase) after expansion. Actual Attendance has indisputably trended downwards. Peak attendance was way back in 2002 when it reached 913,335. Since then, it has fallen every year except for 2008 when it bumped up slightly to 832,121.

It’s interesting that, even though Event Days trended upwards, attendance trended downwards. It’s attendance that we’re really after with the Civic Center, since it’s people who eat at restaurants, stay at hotels, and go shopping in Peoria, thus adding to our sales tax base. If attendance is going down, we’re losing money on the expansion. We would expect that to be reflected in the Civic Center’s Net Operating Income, and it is.

Net Operating Income

The Johnson study said the FY2001 Net Operating Income was $212,000. I’m not sure where they got that number. According to the Civic Center’s financial statements, there was a Net Operating Loss in FY2001 of $1,732,500. Even Operating Income Before Depreciation is only $78,333, although it’s at least on the positive side. I could find no reference to a $212,000 profit anywhere in the financial statement. It’s possible the amount was a preliminary figure that was revised subsequent to the report being published.

Nevertheless, Johnson predicted Net Operating Income of $1,519,000 after improvements. The actual picture of the Civic Center’s finances is not so rosy. From FY2001 to FY2009, the Civic Center suffered Net Operating Losses every year, and those losses are trending downward. FY2009 saw an all-time low loss of $4,273,556.

Much of this is a result of depreciation. If we look at Operating Income Before Depreciation, the trend from FY2006 to FY2009 is reversed, but still in the red.

At the current rate of increase, it will take somewhere in the neighborhood of fifteen years for Operating Income Before Depreciation to reach Johnson’s predicted levels.

Conclusion

While Event Days were close to reaching predictions before the downturn in business in FY2009, neither Attendance nor Net Operating Income show any signs of reaching their predicted levels.

Afterword

There’s one other prediction not related to the Johnson report that’s worth noting. That was the prediction in a March 24, 2006, memo from the Civic Center Authority to the Peoria City Council that stated:

The Peoria Civic Center Authority is not now and has not previously requested public funding for a hotel. We have always hoped that a private development would be interested by the Peoria Civic Center expansion and upgrade to come forward with a proposal. We hope that the community will enable such a development.

The Peoria Civic Center Authority is committed and continues to be committed to the success of the expanded facilities. We believe it can be successful without an attached hotel but more and larger regional opportunities will be possible if more and better downtown hotel rooms are available.

Six months after that was written, the Civic Center Authority started pushing for an attached hotel. So now, after $55 million in investment that we were promised would be successful without a publicly-supported, attached hotel, taxpayers are being asked to back another $37 million in public investment for not one, but two headquarters hotels — a Pere Marquette Marriott and a Courtyard by Marriott. To bolster hotel supporters’ predictions that these hotels will be successful and realize 68%+ occupancy rates, another study has been completed, this time by HVS International.

All indications are that the Civic Center expansion is failing and the predictions by Johnson Consulting were, to put it charitably, optimistic. Yet we’re going to follow the same process of relying on rosy predictions from consultants and promises of success from the Civic Center (and Convention and Visitors Bureau) to give $37 million toward a headquarters hotel.

Why should we believe all these predictions of success? What empirical evidence is there that this project will pay off for the taxpayers? There is none.

See also:
Journal Star editorial 5/23/2010
Wonderful Development agreement raises questions

City Council, City of Peoria

What’s the justification for the Wonderful Development?

38 Comments

The ordinance that would authorize the Wonderful Development (downtown Marriott project) to move forward includes this justification:

WHEREAS, the City Council of the City of Peoria finds as follows:

  1. That the buildings on the Project Site have remained underused for a period of at least one year.
  2. That the Project is expected to create or retain job opportunities within the municipality.
  3. That the Project will serve to further the development of adjacent areas.
  4. That without the Agreement, the Project would not be possible.
  5. That the Developer, EM Properties Ltd., meets the high standards of credit worthiness and financial strength as demonstrated by a letter from a financial institution with assets of $10 million or more attesting to the financial strength of the Developer.
  6. That the Project will strengthen the commercial sector of the municipality.
  7. That the Project will enhance the tax base of the municipality.
  8. That the Agreement is made in the best interest of the municipality.

Is this the standard for getting $37 million from taxpayers? I can think of all kinds of businesses that could make such claims — it will create jobs, strengthen the commercial sector, enhance the tax base, meet “the high standards of credit worthiness,” etc., etc. Is that really a justification for taxpayer assistance? Where’s the line at City Hall for those handouts?

I would also like to point out that the buildings on the Project Site have been underused for the past year and a half precisely because of the previous unfulfilled redevelopment agreement with EM Properties, whose “high standards of credit worthiness and financial strength” were not impressive enough to result in actual financing of the original project. Why would the current owner try to get tenants for the vacant buildings when he has an agreement to sell those buildings for imminent demolition?

And I take great issue with the contention the Agreement is in the best interest of the municipality. If the hotels (there are two now!) do not perform up to expectations, the bonds will have to be repaid from the general fund — a fund which is insufficient to provide the basic needs of the City. The City Manager is asking City departments for wage concessions to plug an anticipated $10 million budget deficit for 2011.

Supporters of the project will point out that defeating this project will not help the current budget crisis, and they’re correct. But what Peoria residents need to know is that approving this hotel project will create a future budget crisis. The MidTown Plaza project didn’t create a budget crisis in year one either, but we’re feeling its effects now. The same goes for the Firefly Energy loan guarantee. We won’t have to pay the piper for this hotel fiasco for five years or so, but mark my words, we will be paying the piper for it.

City of Peoria, Kellar Branch, Museum Block, Peoria County, Peoria Mayor, Peoria Park District, Taxes

PJS Editorial pretends City asset giveaways have nothing to do with budget crisis

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A couple of responses to today’s Journal Star editorial. First, there’s this:

Even Mayor Jim Ardis, who never saw a tax increase he didn’t greet with contempt, seems to have come to the realization that City Hall probably can’t cut its way out of this.

That’s not exactly accurate. Mayor Ardis happily voted to increase sales taxes by 1% within the Hospitality Improvement Zone downtown.

And then, there’s this:

As a result [of the need to make more cuts to city services or raise taxes to balance the budget], a fair number of locals are venting, understandably, though some of them paint either-or scenarios that do not exist. Indeed, the choice is not a recreational trail vs. police officers, or a museum vs. firefighters. The vast majority of the funding for those quality-of-life projects comes out of dedicated revenue streams controlled by other local governments – the park district and county, respectively, with the help of grants. Those dollars couldn’t be used to put more badges on the streets even if the council wanted to. Like them or hate them, those projects — one of them initiated by a successful citizen referendum — are not what created this operating deficit.

First of all, this framing of the argument is obviously a “straw man.” I know of no “locals” who have made the assertions they are countering. Clearly “either-or scenarios” as painted here do not exist. But to imply that these projects have absolutely no relation to the City’s fiscal crisis is also false.

Yes, construction of the rail-to-trail project is funded by the Park District, but it’s only made possible by the City of Peoria giving away a $3 million asset to the Park District for one dollar. The City just threw away $3 million (or at least $750,000, the last bona fide offer to purchase the rail line) while at the same time they need to cut $800,000 from this year’s budget. Why didn’t they put the land up for sale to the highest bidder? Putting this land into the hands of a rail carrier and working with them to woo new manufacturing business to Pioneer Industrial Park would have resulted in raising the tax base in Peoria through new business and new jobs.

Then there’s the Sears block, which has lain dormant for over a decade now because the City won’t enforce deadlines on redevelopment agreements. This is prime real estate that could be parceled off and sold, which would provide a couple of things: income from the initial sale, and on-going revenue from sales and property taxes by the businesses who locate there. Instead, the City is sitting on the land indefinitely, until they can finally give it away for nothing to be used by a non-profit organization that will be a perpetual drain on the county taxpayers.

In addition to the lost opportunity to generate revenue with these assets, taxpayers now have to pay for their development and maintenance in perpetuity. That means we have to pay higher taxes to support these drains on the economy. And that exacerbates the City’s budget woes. Since taxes are high because of increases by other local governments (to which the City directly contributed, as shown above), it puts pressure on the City not to add to the tax burden. And that means the City continues to try to balance its budget by cutting — police, fire, public works, etc.

The Journal Star is simply trying to rationalize its support for non-essential pet projects by using straw-man arguments to dismiss valid criticism.

See also Billy Dennis’s post in response to today’s PJS editorial.

City of Peoria, Peoria Area CVB, Peoria Civic Center

Civic Center loses wrestling tournament to Springfield

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The Illinois Kids Wrestling Federation’s annual Jon Davis IKWF Kids Open will be moving to Springfield for 2011 and 2012. The Peoria Civic Center has hosted the event for more than a decade. The contest is held every January and has brought in anywhere from 1,300 to 2,100 wrestlers annually. It was held at Redbird Arena until 1995 when the group left to protest ISU’s decision to drop wrestling as a varsity sport.

In e-mails forwarded to The Peoria Chronicle by a source who wishes to remain anonymous, Sports Sales Manager Chad Mentzer of the Peoria Area Convention and Visitors Bureau wrote, “After talking with Mike Urwin with IKWF, there are two reasons why we lost this piece of business…. #1 Hotels. Average cost [in Springfield] is approximately $20 cheaper per night. #2 Facility rental fees. Projected fees in Springfield are, based upon expenses from 2009, considerably less than the Peoria Civic Center.” The group sought a block of 400 room nights for the one-day event.

Joel Green, Director of Sales and Marketing at the Hotel Pere Marquette responded to Mentzer’s e-mail by saying that his hotel had “lowered our rates considerably for 2011… after holding our rates for 2009 and 2010.” January rates are historically low to begin with in the Peoria hospitality industry. Regarding the venue, Debbie Ritschel, General Manager of the Peoria Civic Center, added, “In this particular case the fact that they [Springfield] will not have to cover ice in their arena may have also been a factor.”

In April, Holiday Inn City Centre General Manager Sami Qureshi stated that the top reason conventions skip Peoria is due to the Civic Center’s rate structure. This recent convention loss and the reasons cited by the IKWF appear to support that contention.

The loss of this event also highlights the competitive nature of hotel room pricing. If the Pere Marquette lowered its room rates below 2009 levels and Springfield was still able to offer rates $20 per night lower, one wonders how a four- or five-star Marriott hotel will be able to offer competitive rates that are high enough to pay off the debt service on a $37 million bond taken out by the City of Peoria.

City of Peoria

Changes to neighborhood zoning considered

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From this week’s Issues Update for the City of Peoria:

NEIGHBORHOOD ZONING TOPICS MEETING. Staff is currently working on text changes that address several topics relevant to the appearance and quality of life in neighborhoods. Those topics include the following issues:

  • Width of driveways and location of parking spaces
  • Number and location for storage of recreational vehicles
  • Front yard fence permit process
  • Regulations for group living facilities (proposed changes to regulations for halfway houses, recovery homes, and residential substance abuse treatment facilities)
  • Transfers of property

Since these topics impact or have the ability to impact all neighborhoods in the City, the Planning Department is inviting all City neighborhood associations to a meeting on Thursday, June 3, 2010, at 6:00 P.M., in the City Council Chambers to hear current regulations, issues, research, and possible options for the group to discuss and provide feedback to staff. Text changes will be finalized after this meeting and sent to the Zoning Commission for public hearing and then to the City Council for final consideration.

City Council, City of Peoria, Peoria Mayor

Mayor’s directive elevates district reps’ power

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It’s no secret that district council representatives are given a lot of deference on “district specific business” already. Most of the council votes in lock step with the district councilman and are happy to defer items for no other reason than the district council person requested it.

Now Peoria Mayor Jim Ardis wants to take it a step further. He sent this e-mail to council members on Thursday, May 6:

In an effort to insure that agenda items are ready for council debate I have asked the Manager to put a sign-off line on council communications for district council-members to approve district specific agenda items before they are placed on the agenda. This will not only insure that the district member is ready for the item to come forward it should also minimize deferrals because they are, in fact, ready for council consideration.

Thanks in advance to District Members for assuring your district specific business is approved by you for placement on the agenda.

That means that an item will not even be put on the agenda unless the district representative approves it. To state it another way, under this system, items can be kept off the agenda by the will of a single city council representative. For instance, if Clyde Gulley didn’t want the Washington Street/Route 24 changes to come before the council, he could decline to sign off on this district-specific item, which would keep it off the agenda in perpetuity — even if all the other council members wanted to move forward on it.

The Mayor’s directive gives a special privilege to district council representatives, allowing them to dictate the will of the council on items impacting their districts. But where does the Mayor get the power to make such a directive? The City’s Municipal Code and Council Rules don’t confer this authority on the Mayor, nor does any ordinance preclude any council member from submitting an item for the agenda.

Section 2-31 of the municipal code states, “All reports, communications, ordinances, resolutions, contract documents or other matters to be submitted to the council shall, not later than 10:00 a.m. on Friday preceding each council meeting, be delivered to the city clerk, whereupon the city clerk shall immediately arrange a list of such matters according to the order of business and furnish each member of the council, the mayor, the city manager and the corporation counsel with a copy of the same prior to the council meeting and as far in advance of the meeting as time for preparation will permit.” Nothing in there requires the proposed agenda item go through the Mayor or the district council representative. It merely has to be delivered to the city clerk.

It would appear that the Mayor cannot make such changes without a majority vote of the council… unless, of course, the council voluntarily consents to the Mayor’s missive, abdicating their responsibility to represent all of Peoria, not just their own fiefdoms.

City Council, City of Peoria, Kellar Branch

Liveblogging the City Council 5/11/2010

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Here we go again! It’s Tuesday night in beautiful downtown Peoria in historic Peoria City Hall, Council Chambers. All the council members and the Mayor are present except for Montelongo, and they will be disposing of the following agenda. Be sure to refresh this post often as I’ll be updating it throughout the evening.

The business portion of the meeting starts at 6:41, after 25 minutes of proclamations.

Continue reading Liveblogging the City Council 5/11/2010 →

City Council, City of Peoria, Kellar Branch, Peoria Park District, Village of Peoria Heights

Taxpayers to be soaked $1,250,969 for non-essential trail — and that’s just the beginning

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I’ve been saying it ever since the sphynxlike Kellar Branch Corridor Corporation first appeared that its clandestine efforts were going to cost the taxpayers lots of money. Now we know just how much: $1,250,969.

That’s the amount of money in taxpayer dollars the Peoria Park District is going to pony up to buy out the leasehold interests of two rail companies on the Kellar Branch rail line: Pioneer Railcorp and Central Illinois Railroad. Doing so will free up the middle portion of the line to be converted into a recreational trail.

But that’s the beginning. After they buy out the leasehold interests, they still have to actually build the trail, which will cost untold millions itself. In 2006, the estimated cost of conversion was just under $6.5 million.

But there are other costs. The City of Peoria actually owns the Kellar Branch. So in order for this plan to go through, the City has to give the Kellar Branch (technically, the easement) to the Park District. The appraised value of the Kellar Branch is $2,872,500. So how much is the City planning to ask for this valuable asset? $1. That’s right, $1. And the City doesn’t even get the salvage rights for the rails.

Perfect timing. Right on the heels of a City Council retreat where we learned the City is facing a $10-11 million budget deficit and is in dire need of a new revenue source, our illustrious City Council will likely approve a request next Tuesday to squander a nearly $3 million asset. Pioneer Railcorp at one time offered the city $750,000 for the line, but the City turned them down. No, they were holding out for the Park District’s winning bid of $1.

Anyone who thought that the Kellar Branch Corridor Corporation was buying out the rail carriers’ leasehold interests out of charity was naive. Included in that $1.25 million is $140,800 for the Corporation’s “expenses.” No list of expenses is given. I suspect it includes a little reward from the Park District for finally acquiring what they’ve coveted for so long.

For those of you keeping score, let’s see what our new grand total is for tax dollars wasted on non-essentials/poor investments:

“Wonderful Development” (Downtown Hotel) $37,000,000
Peoria Riverfront Museum $34,700,000
Firefly Energy Loan Guarantee $6,000,000
Civic Center Expansion $55,000,000
Kellar Branch acquisition $1,250,969
Kellar Branch conversion $6,441,738
Total $140,392,707

It’s like they say, pretty soon you’re talking real money. But we can’t afford to fix sidewalks or resurface streets, or fully staff our police and fire departments. Yes, I know I’m conflating expenses from several municipal organizations (City, County, Park District), but the fact is that all that tax money comes from the same source: our pockets. The Park District raising its property tax levy puts pressure on the City not to raise its levy. It’s all related.

Perhaps we could take those toll booths we’re removing from Riverfront Village and install them at the entrances to the Kellar Branch trail. Given the number of users predicted by the Journal Star, we should be able to solve our entire budget deficit by charging a modest toll.

City Council, City of Peoria

Council faces grim budget realities

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The Peoria City Council had their annual retreat Wednesday night at the Peoria NEXT Innovation Center on West Main street. All the council members, the Mayor, and City department heads attended the retreat.

I was unable to attend the entire retreat, but did get there for roughly half of it. Based on materials distributed at the meeting, revenues are down again, and they’re expecting another ten to eleven million dollar deficit. They also appear to be anticipating a possible decline in population. One of the slides labeled “Key Expense Drivers” stated, “5,000 Loss in Population equals Approximately $500,000/yr of per Capita Income — 1 person = $100/capita.”

The Journal Star reports that revenues are down for a few reasons: (1) “reduction in property tax revenues because of a slump in the city’s equalized assessed valuation” caused by “assessment devaluations of commercial properties throughout the city,” (2) “January’s sales tax figures dropped by 10 percent from their November and December numbers,” indicating a troubling trend, and (3) “state income tax revenues are down from a year ago.” Nothing but bad news from the finance director.

By the end of the meeting, the following “next steps” were established, which are nearly identical to last year’s budget process:

  1. City Manager: Sit down with the professionals and come back with a budget that shows the cuts that can be made.
  2. Look at all forms of revenue growth — everything is on the table.
  3. Department heads to sit with staff and consider additional budget modifications.
  4. Challenge to the staff to consider new, alternative, and creative forms of service delivery to reduce costs/enhance revenues.

Translation: Expect higher taxes and/or fees, the possible invention of new fees, and more cuts in services. The Mayor especially made it clear that he believes the budget hole cannot be filled by cutting alone — new revenue will have to be generated.

City of Peoria, Parking

Ticket booths and gates to be removed from Riverfront Village

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The Issues Update this week included this tidbit of news about the parking lots at Riverfront Village. It looks like they’re going to be taking out the ticket booths and gates that have gone unused for the past four years:

The City owns and operates several parking lots on the Peoria Riverfront. These are the Michel Bridge East and West Surface Lots, Edgewater Lot and Liberty Lot, which are collectively known as the MEL Parking Lots. These lots are controlled by means of three sets of ticket booths and gates, which are accessed from Water Street.

Since 2006, the MEL Lots have been posted 2-hour free parking in an effort to promote short term parking for customer use. (Parking meters and permits are available in these parking lots for long term parkers.) During this time, the ticket booths have been vacant and the gates lifted. Complaints have been received from business owners in the area who feel that the ticket booths sometimes confuse new visitors trying to park in the lots.

These facilities have been left in place in case the City would reinstitute an hourly charge in these lots. If charges were to be reinstituted, staff feels the best way to implement this would be through an unmanned area parking system where patrons pay at kiosks. It seems unlikely that the City would choose to provide manned ticket booths for this area in the future. Since these facilities appear to no longer serve a purpose, they should be removed to create better access to the Lots and to remove any confusion by the motorists.

The Public Works Department, using in-house labor and equipment, plans to remove the ticket booths and gates and to provide clearer signage for these lots. The first priority will be to remove the gates at the foot of Liberty Street to allow two-way access to the Lots during the Water Street construction. The rest of the ticket booths and gates will be removed over the course of the summer, as scheduling allows.