Good evening, ladies and gentlemen. Welcome to room 400 of Peoria City Hall, Council Chambers. It’s time for another Peoria City Council meeting! As usual, I’ll be updating this post throughout the evening, so be sure to refresh your browser to see the changes. Here’s tonight’s agenda (linkable version available here):
Category Archives: City of Peoria
City mulls over cuts to basic services, giving $37M to hotel developer
According to this Journal Star article, the City of Peoria is looking for ways to cut basic services like sidewalk and sewer improvements due to a nearly “flat projection” in sales tax growth. Meanwhile, according to this other Journal Star article, developer Gary Matthews is still pitching his hotel plan which relies on $37 million in TIF and sales tax revenue. That figure is down from the $39.3 million originally proposed (and approved), but the project is smaller now, too. There are 70 fewer rooms and “[i]t will be designed so that another 100 rooms can be added later, if needed,” according to Matthews.
“It has taken me a lot longer to reach this point than I expected. I didn’t see the recession coming, especially one that deep. Even so, I never thought it would be so tough to finance a project that is 50 percent equity,” Matthews said.
He didn’t see the recession coming when he submitted this project for council approval in December 2008? Really? That’s funny, because the recession started in December 2007, according to the National Bureau of Economic Research. Yet despite this striking admission, we’re still supposed to trust his judgment with our $37 million in tax money. And the City has such a great track record of choosing economic winners and losers… well, at least losers. Cub Foods. Firefly Energy. A few more “self-supporting” projects like those, and we’ll be completely bankrupt.
It’s time the City stopped acting like a bank for entrepreneurs who can’t get private financing because their projects are too risky, and started doing what they’re supposed to be doing, which is providing basic services for the residents of the City. It’s past time, actually.
More historic quotes about Firefly
“In terms of company stability, Caterpillar owns 35 percent of Firefly, and Cat is a company that does its homework. This battery technology is unique and promising enough that Firefly had little trouble raising $20 million in private equity. Company officials figure 80 percent of that money is spent locally, so there’s economic spin-off.” –Journal Star Editorial Board, May 22, 2007
The Journal Star said the risk was worth taking, and endorsed the loan guarantee. I just thought this quote was notable because there’s this attitude in Peoria that if Cat invests in something, then it must be a sure thing. Obviously, Cat didn’t get as successful as it is by making a string of poor investments, but the Firefly bankruptcy does show that Cat isn’t perfect, and their investment is no substitute for municipalities doing their own due diligence. Then again, Cat did tip its hand even in 2007. A May 23, 2007, article carried this ominous statement: “Although Caterpillar Inc. owns 35 percent of Firefly, it wasn’t clear Tuesday why it wouldn’t guarantee the loan.”
“The Firefly package was being worked on for a number of weeks between Firefly, the county and the city,” Ardis wrote in an e-mail. “The proposal went through various stages and changed a number of times. It would have been difficult to update people on financial discussions when they were fluid and evolving into what was the final proposal. Once made public, there wasn’t anything hard to understand about the deal.” –Mayor Jim Ardis, quoted in “Word on the Street,” Peoria Journal Star, May 28, 2007
This was Ardis’s defense of “dropping the deal late on the public — [and] his council colleagues — and pushing the vote” with very little deliberation and without any policy discussion. The whole article is interesting. It recounts the story of how former Mayor Dick Carver was in town to talk to the City Council about the Kellar Branch rail-to-trail initiative, and during his stay here, he set up a meeting between Mayor Ardis, Rep. David Leitch, and president of G&D Integrated Joe O’Neill. They met at Le Peep restaurant for breakfast, and, “Over toast, these four men toasted a commitment to finding a solution that would keep Firefly Energy Inc. in Peoria.” Firefly moved into the former Foster & Gallagher building on Galena Road — a building owned by O’Neill’s company — and “O’Neill also hopes his Morton firm will eventually secure contracts with Firefly to build the high-tech core components that would then be shipped to battery plants in Missouri and Ohio,” the paper reported at the time. Leitch was a VP at National City at the time, the bank that provided the loan to Firefly.
“Ultimately, this is new ground for Peoria County.” –Peoria County Administrator Patrick Urich, quoted in Journal Star, June 1, 2007
The news article added, “But he [Urich] told the committees it was a worthwhile investment because the company has promised to keep its headquarters here and may manufacture in Peoria its high-tech components, parts that would then be shipped to battery plants in Missouri and Ohio.”
“I see it as one of the safest loans that we could make. If I had the money, I’d make it myself.” –County Board Chairman Bill Prather, quoted in Journal Star, June 10, 2007
If it were really that safe, why did National City require the City and County to guarantee the loan? If it were really that safe, why didn’t Caterpillar guarantee the loan? Well, now we know.
“I’m happy to be doing what I can to get them these defense dollars. In the end, I want them in Peoria. That’s going to be the icing on the cake for us.” Then-Congressman Ray LaHood, quoted in the Journal Star, June 10, 2007.
LaHood helped Firefly get millions in defense contracts. Icing on the cake? What cake?
“This is the highest and best use of this money that we have.” –Peoria County Board member Allen Mayer, quoted in the Journal Star, June 15, 2007
Note to future board candidates: Mark this quote for your campaign literature.
Before someone else says it, I concede that hindsight is 20/20. But I’m more concerned about another proverb: Those who don’t learn from history are doomed to repeat it. Will our elected officials take this very hard and expensive lesson to heart and stop using taxpayer money for risky private ventures?
Firefly closes, taxpayers left holding the bag
In May-June 2007, the City of Peoria and Peoria County pledged a combined total of $6.6 million as a guarantee for a loan from National City Bank to Firefly Energy, the darling Caterpillar spin-off and “poster child” of PeoriaNext. The source of the funds breaks down to $3.3 million in utility tax revenues from the City, $1 million in Keystone revenue and $2.3 million in Personal Property Replacement Tax Revenue from the County.
Today, WEEK-TV reports that Firefly is closing down its operations and filing for Chapter 7 bankruptcy. That’s not like Chapters 11 or 13 where they reorganize. Chapter 7 means they’re kaput and they will be liquidating their assets, and that means taxpayers are on the hook.
[Firefly’s CEO Ed] Williams said, “After 15 months of unsuccessful attempts to raise $20 million in equity capital, in the midst of this world-wide financial crisis, funds that would have enabled the Company’s transition to full production and commercial sales, the Firefly Energy Board has decided to cease operations and voluntarily file for Chapter 7 bankruptcy.”
So, what happens to the taxpayers? The City and County released the following joint statement:
In May 2007, following the significant investment of the private sector and the state and federal governments, the City and County of Peoria unanimously joined in a community partnership to guarantee a $6 million loan to Firefly Energy, Inc. by PNC National City Bank. Unfortunately, after 3 years of extensive efforts to make a commercially-viable alternative to the traditional lead-acid battery, Firefly has not been successful. Along with our state and federal partners, the City and County did everything we could to help Firefly succeed and bring technology-centered, specialized manufacturing jobs to Peoria. It has long been a goal of both private sector and government in the Peoria area to take ideas spun off from Caterpillar to create jobs and commerce in the Peoria area.
As guarantors, the City and County are determined to exercise their full legal rights to protect their interests. In the worst case, the City and County might lose their $6 million guarantee. In the likely case, the governments will pursue by legal means the pledged collateral, the physical and intellectual assets of Firefly Energy, Inc., to reduce any investment losses that may be realized by the City and County. We believe that the value of these assets is considerable and will reduce any amounts that may need to be paid by the City and County as guarantors. Furthermore, we expect that the lender PNC National City will fulfill its legal obligation under the loan agreement to protect the interests of the guarantors and maximize the value of the collateral. Again, the City and County intend to exercise their full legal rights to protect the interest of the tax payers of the City and County of Peoria.
Not to be nit-picky, but the guarantee was for $6.6 million — $6 million for the loan, and $600,000 to cover accrued interest. Regardless, the bottom line is that it’s going to cost taxpayers. Four million dollars of the loan was to be used for equipment, and the rest for working capital. So it looks like we will be on the hook for a sizable chunk.
I love how they are saying they intend to “protect the interest of the tax payers.” You know what would have really protected us? Not guaranteeing a $6 million loan for a risky start-up business in the first place.
Not quoted anywhere is Rep. David Leitch, the former VP at National City who is credited with orchestrating the public-private partnership. He was quoted in the Journal Star back in 2007 as saying this deal was “the most exciting thing Peoria had done since building the Civic Center.” But my favorite quote was what he said after the City approved its half of the guarantee: “This will be a moment we can all look back on and say, ‘Wow.'”
Well, he was right about that. $6.6 million potentially down the drain. Wow.
Despite promised enforcement, jaywalking tickets tossed
Students were ticketed for walking in the middle of the street near Manual High School again. And once again, Police Chief Steve Settingsgaard is tossing out the tickets. But I was intrigued by this statement at the end of the article in the Journal Star:
Settingsgaard said he is looking for better long-term solutions than issuing tickets. He has asked City Manager Scott Moore to investigate possibilities, particularly along Wiswall, that would provide a safe place for students to walk.
“One possibility might be to create a pedestrian/bicycle lane on one side of the street. This could potentially alleviate the problem without the tremendous expense or installing sidewalks/curbs/gutters.”
Some thoughts:
- How many sidewalks/curbs/gutters could we install for $39.3 million — the amount the council is desperately trying to put in Gary Matthews’ pocket? I guess a skywalk between the Pere and the Civic Center is more important than the safety of our city’s children. We keep spending money hand over fist to lure the ever-elusive tourist while our basic services disintegrate. You’d think the big push for the census would remind City Hall that residents are important, at least in terms it can understand — money. The more population we have actually living in Peoria, the more revenue we get from property taxes and federal/state appropriations. But if we keep treating our residents as second-class citizens and catering to the Almighty Tourist, it should come as no shock that people will choose to live in surrounding communities where they are more valued.
- While the city has a responsibility to provide for the safety of children, these students nevertheless also must bear some personal responsibility. In the absence of sidewalks, they should be walking next to the shoulder, not walking down the middle of the road obstructing traffic. The last time students were ticketed, they got their tickets thrown out only if they attended mandatory school assemblies where police officers and school officials tried to give students a “better understanding of the rules.” Furthermore, Settingsgaard said at the time — and this is a quote from the 2007 press conference announcing the jaywalking tickets would be expunged — “there will be enforcement in the future.” Now we learn there will be no enforcement, no assemblies — no accountability or consequences of any kind. What message does that send?
- I wonder how the police officers feel who gave out the citations. Having their Chief throw nearly all the citations out after he had said there would be enforcement in the future certainly sends a mixed message at best. It also might make me wonder what other laws the Chief would like not to see enforced, and for which people.
Council Roundup 3/9/2010
I started to drive to Peoria City Hall Tuesday night for the council meeting, but before I even got there, they were finished! The agenda was short, and council members Spain and Sandberg were both absent. The consent agenda passed unanimously, and no one removed any items from it. The one regular business item regarding the East Bluff Neighborhood Housing Service was deferred for two weeks, and the Town of Peoria items were dispatched unanimously as well.
Speaking of Gary Sandberg, he’s been up at Mayo Clinic the past week where he underwent aortic valve replacement surgery. I’m happy to report that the surgery was successful, and he’s recovering well. He’s hoping to come home sometime this week. Best wishes for a speedy recovery, Gary!
No regional brand?! Oh, we’ve got trouble, my friends!
Ryan Spain and the Heartland Partnership are cooking up a new idea:
The idea behind the project is to brand the Peoria region with a tag line and, perhaps, another logo.
It would be a comprehensive approach to selling the region to tourism groups and those who could come to Peoria on business, Spain said.
“I would argue we don’t have anything now,” he said. “The timing and the urgency for creating a brand for our region … if we don’t have one, we run the risk of someone doing it for us. It may or may not be what we want to be known for.”
You gotta love marketing people. Urgency? Risk? Peoria County was established in 1825; Tazewell County followed in 1827, and Woodford in 1841. From that time to the present we’ve never had a regional brand. But now, suddenly it’s urgent to brand the region, and we’re at risk if we don’t!
This kind of exaggeration reminds me of someone… a salesman I heard once. Ah yes, I can just hear Mr. Spain explaining this dire situation to the town leaders now:
“Either you’re closing your eyes to a situation you do not wish to acknowledge or you are not aware of the caliber of disaster indicated by the absence of regional branding in your community. Well, ya got trouble, my friend, right here, I say, trouble right here in River City, with a capital T that rhymes with B that stands for Brand!
“Leaders of River City! Heed the warning before it’s too late! Watch for the tell-tale signs of having no regional brand! When you talk to out-of-town clients and say you’re from Peoria, do they ask ‘Where’s that’? Do the bloggers in your community make their own sarcastic logos of the region? Does Rocco Landesman not know that there is a Civic Center in your town?
“If so, ya got trouble, my friends. Yes, ya got lots and lots of trouble — with a capital T that rhymes with B that stands for Brand!”
Perhaps he can institute The Think System, where he gets everyone to just think that “it’s better here” in Peoria and they start to believe it. Oh wait, someone’s already tried that one…..
This land is my land, say City and County
There’s a new conflict in the museum soap opera. Here’s the skinny: the County wants to own portion of the Sears block on which the proposed museum would be built, but they don’t want to pay the City for it, and the City isn’t too keen on that idea.
Let’s start with these lines:
“We’ve made it this far and all of a sudden now they want ownership?” Dillon asked, questioning the city’s motives.
Some affiliated with Peoria County are shaking their heads, noting the city has always indicated it wasn’t going to be “a roadblock” on any museum issue….
At-large City Councilman Ryan Spain acknowledged ongoing discussions but he said he didn’t know of any “strong push” from council members for the ownership or the co-ownership of the land.
“We still stand behind giving the land away,” Spain said. “That was our major contribution for the project.”
First of all, nowhere did anyone say that the City was going to just give the land to the County. The original redevelopment agreement between the City and the museum group agreed to lease the land to the museum for $1 per year for 99 years. So, essentially, they were donating the use of the land, but not ownership of it. Enter the County, thanks to the public facilities tax referendum. It would seem reasonable to assume that the City still planned to lease the land for the same amount, thus not being “a roadblock” in the way of museum progress. But now the the County has decided it wants/needs to own the land… well, that’s a different story. Perhaps the County was assuming facts not in evidence. Or maybe they just misunderstood. And as for Mr. Spain, I’d like him to show me the vote where the City Council said they were going to give away the land for nothing.
Moving on:
In fact, county officials argue it is necessary for them to have ownership of the property as part of a legal basis for the referendum allowing them to seek voter approval on a special sales tax through a new law.
This raises some rather disturbing questions. Is the County now saying that they have a legal requirement to own the land in order to use the sales tax revenue for the project? If so, the County has been keeping its proverbial cart in front of the horse for longer than I realized. The way the statement is worded, it’s not even clear to me that the referendum itself was legal, but I presume it must have been since the ballot wording was so broad (it was, after all, a “public facilities tax,” not a museum tax).
For those who may not remember, the “new law” includes this language (emphasis mine):
For purposes of this Section, “public facilities purposes” means the acquisition, development, construction, reconstruction, rehabilitation, improvement, financing, architectural planning, and installation of capital facilities consisting of buildings, structures, and durable equipment and for the acquisition and improvement of real property and interest in real property required, or expected to be required, in connection with the public facilities, for use by the county for the furnishing of governmental services to its citizens, including but not limited to museums and nursing homes.
If the County is indeed required to own the land in order to expend funds on the project, this raises other questions. For instance, where is the money coming from to pay for Mark Johnson, the county’s museum consultant? And where is the money to pay for the “experienced counsel at the law firm of McDermott Will & Emery“?
I’m still wondering how they were able to apply for federal money to build a parking deck on land they don’t own without first having an agreement with the owner of the land. There’s still no redevelopment agreement, yet the County is moving ahead as if there were.
Maybe the land conflict will be the thing that finally does in the museum. Nah. Like zombies in a bad horror film, this project comes back to life every time you think it might be dead.
Downtown hotel project gets more scrutiny
The Journal Star has a new story up, including interviews with Illinois Finance Authority members and the owner of the Holiday Inn City Centre. Kudos to reporter John Sharp for following up on this.
Liveblogging the City Council 2/23/2010
Good evening, and welcome to Peoria City Hall! Sorry I wasn’t able to liveblog last week’s special meeting. I had a scheduling conflict. I was disappointed that it was carried on neither WCBU nor cable channel 22, but more on that later. For now, it looks like all council members are present and accounted for, and ready to tackle this agenda (remember to refresh your browser often as I’ll be updating this throughout the evening):