Category Archives: Museum Block

Museum Block, Peoria County

PI reports on latest county advocacy meeting

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I couldn’t make it to the latest museum advocacy meeting held at Bradley University Monday night. But PeoriaIllinoisan was there and turned in his own report. He doesn’t know it, but he’s a mighty fine citizen journalist. I found this particularly interesting:

One of the speakers pointed out that several fliers and information was available at the back of the room, which they were, and just to show that he was fair, he said a flier of a dissenting opinion was also there… it was… on another table was a small stack, blocked and shielded from view by a very enthusiastic Museum supporter who made snide remarks about Merle Widmer, Gary Sandberg, and anyone else who dared to question the “facts”.

Classy.

UPDATE: I’ve been told by another source that it was county board member Andrew Rand — not Richerson — who made the comment about the flyers. PI has corrected his report and that correction is reflected in the quote above.

Museum Block, Peoria County

Advocacy by any other name is still advocacy

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The first town hall meeting on the Peoria County public facility sales tax referendum took place Thursday night at Kickapoo Creek Winery. The event was sponsored by County Board members Carol Trumpe and Bob Baietto. Presenters were Jim Richerson for the museum group and Scott Sorrell for the County. Questions had to be written out ahead of time, so attendees weren’t allowed to verbalize the questions themselves. Everything was highly controlled.

The meeting is billed as informational, not advocating for or against passage of the referendum. But if Thursday’s meeting wasn’t advocacy, I sure don’t know what is. Richerson gave his pitch piece for the block and used phrases like “when [not “if”] the referendum passes.” Questions were answered by board members, Sorrell, Richerson, and Mark Johnson from Caterpillar. Obviously, Richerson and Johnson are for the referendum. No one who is against the referendum was allowed a place at the table. The county did not present any risks, cons, or critical information. Everything shared at the meeting was positive toward the referendum. Yet we’re expected to believe we’re hearing an unbiased and fact-based presentation.

In the back of the room was a table full of materials from the the pro-referendum advocacy group Friends of Build the Block, including a flyer that said flat-out, “Vote Yes.” No advance effort was made to contact the anti-referendum advocacy group Citizens for Responsible Spending and offer them a table for their materials.

So, we have an event at which only pro-referendum presenters are invited, only pro-referendum materials are provided, and passage of the referendum is only shown in a favorable light. There’s an old saying: “If it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck.” So if the event looks like advocacy and sounds like advocacy, guess what?

Museum Block, Peoria Civic Center, Peoria County, Taxes

Ritschel not seeing all the benefits of higher taxes

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Here’s an intriguing story from the Journal Star. It’s in regard to a request from City staff to raise sales taxes downtown to help repay general obligation bonds that will be used to build a new Mariott hotel:

Civic Center officials believe an extra 1 percent sales tax on concessions and catering could put the Downtown sports and recreations center at a competitive disadvantage compared to other nearby facilities . . . .

Ritschel said the 1 percent tax would generate approximately $30,000 a year for the Civic Center, which is less money than they anticipate losing to East Peoria and elsewhere because of the extra tax.

Peoria and East Peoria tax similarly when it comes to hotels, food and beverage sales, Ritschel said, so the extra 1 percent would make the Civic Center “more uncompetitive.”

Perhaps someone from the museum group can explain to Ms. Ritschel and the rest of the Civic Center officials the big benefits of higher sales taxes. They spur economic growth; they don’t hurt it. The new Marriott downtown will bring jobs and be like our own little stimulus package. And besides, it’s so cheap — only $1 for every $100 spent. How much does the average person spend on concessions downtown? $25? It’s only going to add an extra quarter to your purchase! Pocket change, dude. They must just be naysayers who don’t want to see progress in Peoria.

Obviously, I’m poking fun at the arguments given for the museum sales tax. But all sarcasm aside, I actually agree with Ritschel on this issue. The same thing that Ritschel fears will happen with a 1% sales tax increase will also happen if voters approve a .25% sales tax increase in Peoria County to pay for the proposed downtown museum. It will make us less competitive and drive more business across the river and elsewhere. Did you catch the phrase she used? She said a tax increase would make the Civic Center “more uncompetitive.” In other words, there’s already a tax disparity, and adding to it is just going to exacerbate the problem.

Did the Bradley professors take the cross-border effect of tax disparity into account when they did their economic analysis of the museum project? I’ve added that to my list of questions to ask when we meet. I expect a call soon to set up a meeting date/time.

Museum Block

County sales tax opposition organized

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Although the Journal Star says, “Group rises to oppose museum,” the group — Citizens for Responsible Spending — actually rises simply to oppose a proposed county sales tax for public facilities. The .25% tax increase would double the county’s tax rate and would be used to fill a funding gap for a museum that hasn’t even raised all its private capital yet.

That’s right. Even if the public referendum passes and successfully closes the gap in the public funding portion of the museum’s financing plan, the museum group will still be $11 million short in private funding, according to their own website. That’s after six or seven years of fundraising, including high-profile efforts by current and former mayors to get more donors.

Has anyone in the museum group ever entertained the notion that maybe — just maybe — the problem isn’t a fundraising problem? That maybe the problem is that their museum plan is too expensive, too inefficient, and unsustainable?

Museum Block

Fact-checking museum claims

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On February 17, Greg Batton and Dan Diorio talked to Bradley professors Dr. Robert Scott and Dr. Joshua Lewer on the Greg & Dan Show on 1470 WMBD (listen to an .mp3 of the interview here). The two professors volunteered their time to conduct an “independent economic analysis” of the proposed downtown museum project. Let’s take a look at what they had to say.

As the interview began, one of the first topics they hit on was projected attendance at the museum. In response to Dan Diorio saying that museum attendance is down across the country, Dr. Scott countered, “Actually, most everything’s down a bit this year because of the recession . . . but there’s more museum attendance in the United States than there is at all athletic events combined.” He followed up by saying, “So, if you think about all of the activity that’s so prevalent on TV athletic events, there are a lot more people going to these kinds of venues.”

Museum attendance figures are relatively easy to come by; the American Association of Museums (AAM) website states that “American museums average approximately 865 million visits per year,” based on a 1999 study. But the tricky part is defining what is meant by “all athletic events combined.” A November 24, 2008, NPR story regarding museums gave this example, which corroborates Dr. Scott’s statistic:

If you add up the attendance for every major-league baseball, basketball, football and hockey game this year, the combined total will come to about 140 million people. That’s a big number, but it’s barely a fraction of the number of people who will visit American museums this year.

Museums are big business, attracting billions of tourist dollars, advancing science, and educating and amusing more than 850 million people annually.

As impressive as that comparison sounds, it’s not a fair comparison. The total attendance for major-league baseball, basketball, football, and hockey games more specifically comes to 139,474,548, according to figures available on Wikipedia. But there are only 122 teams (32 NFL, 30 MLB, 30 NHL, and 30 NBA). If you divide that out, you’ll see that it comes to an average attendance of 1,143,234 people per team. In comparison, according to both the AAM and NPR, there are 17,500 museums nationwide. If you take the 865 million visitors reported by the AAM and divide it by the number of museums, it comes out to an average attendance of just 48,914 people per museum. And we won’t even get into the fact that museums are open year-round, whereas sporting events have a limited number of games per season.

Next, Dr. Scott said, “And here in Peoria alone at Lakeview, they get over a hundred thousand — something like 110,000 — attendees a year.” This is difficult to verify. In a May 2007 presentation included in material the museum gave to Peoria County, the Museum Collaboration Group said Lakeview’s past four-year average attendance was 87,000. On the other hand, Lakeview Museum’s website now says they get 125,000 visitors per year. So, who knows what the real attendance figure is?

Next up, the John Deere Pavilion: Dr. Scott said, “They [John Deere] get over 200,000 attendees a year.” County Board Member and blogger Merle Widmer called the manager of the John Deere Pavilion and asked for their 2008 annual attendance. She said it was 175,000 to 180,000.

In fairness, Dr. Scott did say later in the interview, “Joshua [Lewer] and I did not go into a detailed analysis of the attendance. We talked to the people who had done the detailed analysis.” So his information is only as good as what was given to him by “the people who had done the detailed analysis,” which would be the museum group.

But here’s the problem: if the economic analysis was substantially based on attendance numbers provided by the museum folks, then the deck was stacked from the beginning. The success of the museum is inextricably tied to its attendance forecast. If they don’t get enough visitors, they can’t operate in the black, and the economic impact would be lower as well. By accepting the museum’s high attendance predictions, they’re conceding that the museum will be successful before they even start the economic impact study. It should come as no surprise that a rosy economic forecast resulted from optimistic attendance figures.

Museum Block, Peoria County

Build the Block numbers questioned

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I took down my previous post on the economic impact study by a couple of Bradley professors because I unfairly portrayed them as being uncooperative and unwilling to back up their numbers. They have both contacted me and assured me that they will be happy to meet once they’re both in the country and can coordinate their schedules. My apologies to them for implying they were stonewalling me.

In the meantime, it appears I’m not the only one wondering how they came up with such impressive numbers in favor of the museum. (Last week, they held a press conference where they announced the museum and Cat visitor center would create 1,100 jobs during the two-year construction phase, 90 jobs per year after construction, and $572 million in economic growth over 20 years.) The chairman of the economics department at Knox College is skeptical of those numbers, too.

Richard Stout is the chairman of the economics department at Knox College in Galesburg. Though he hasn’t read the economic impact study, he said he has some questions about how the study drew some of its conclusions. He was skeptical about how the $572 million of economic growth over 20 years figure was calculated. For one thing, included in that figure is the $136 million cost of the project and estimated additional spending that would be created because of it.

“You can’t say the cost of construction is not a cost, that it’s an economic benefit. The cost of construction is a cost,” said Stout, who also questioned how the museum’s operating expenses through the years would also be tallied as an economic benefit to the region.

I also found this interesting. The Bradley professors told me that they weren’t “e-mailing out [their] spreadsheet work on Build the Block at this time.” But according to the Journal Star article, “The summary mentions a copy of the report will be filed with the Peoria County Clerk’s Office and available for sale. It has not yet been filed, according to Scott Sorrell, assistant to the county administrator.”

Once it’s filed with the County Clerk’s office, doesn’t it become a public document? How can it be available “for sale”? Couldn’t a person just FOIA it? Who would get the money from such a “sale”? If I write my own report on Build the Block, will Peoria County sell my report on consignment as well? Perhaps this was just a typo, and the “sale” referred to is simply photocopying charges, as allowed under the Freedom of Information Act.

City of Peoria, Museum Block, Peoria County, Peoria Park District

More than just sales taxes may support museum

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Did you know that your property taxes indirectly support Lakeview Museum? Karrie Alms does. She’s a community activist and frequent commenter here at the Peoria Chronicle. While doing her usual detailed research, she came across a property tax levy fund titled “Fund 123 MUSEUM PEORIA PARK.” That caught her eye, so she asked Park Board President Tim Cassidy about it. He explained:

Presently Lakeview museum owns and operates museum operations. The PPD [Peoria Park District] owns the land and building and allows Lakeview to use it under an agreement that is now several decades old.

Mr. Cassidy also confirmed that Lakeview does not pay rent for its use of the building, and “the amount of [the] museum fund levy going to Lakeview museum facility is $189,234 per the 2009 budget.” Not having to pay rent or upkeep on the building and grounds surely helps Lakeview’s bottom line and also explains why they didn’t include funds for capital improvement in their pro forma for the proposed downtown museum.

So, what happens if/when the museum moves downtown? As I reported in a previous post (“Is Peoria’s History Getting a Back Seat?” July 13, 2007) after talking to museum officials, “When the new museum opens, Lakeview is planning to hang on to its building at Lake and University to be used for storage because there’s not going to be enough storage space at the new museum. In particular, there’s not very much space planned in the new museum for special, climate-controlled storage of fragile pieces.” However, it doesn’t appear that the Park District has agreed to let the museum continue to use the building. Cassidy told Alms:

If Lakeview museum left the site to go downtown [its] continued [use] of present site would be subject to further agreement based on PPD needs for the facility. […] PPD has no final plans for Lakeview facility use if museum leaves. It remains open for discussion, although one use considered is a senior recreation/leisure facility for programming needs.

Cassidy also said that continued use of the Lakeview building “has never been approved by PPD. In fact specific request has not been made for PPD to formally act.”

If the new museum is unable to use the current Lakeview building for storage, they will have to find storage elsewhere. Without a rent-free (i.e., taxpayer-subsidized) facility to use, cost of that storage would impact the museum’s profitability. The Museum Collaboration Group can’t just assume they will be able to continue using that building (rent-free, at that) when their lease expires in 2012. Off-site, specialized storage costs should be figured into their pro forma.

The Park District/Lakeview Museum arrangement also raises another question. In the ground lease the Museum Collaboration Group signed with the City of Peoria for the old Sears block, it has this interesting provision:

11.2 Permitted Assignees. Notwithstanding anything in this Lease to the contrary, Tenant may assign Tenant’s interest in the Lease as follows:

11.2.1 Peoria Park District. Provided the District (“Peoria Park District”) agrees, the Tenant may assign Tenant’s leasehold interest in this Lease to the Peoria Park District, subject to the following: (i) Tenant shall not be relieved of any of its obligations under this Lease and Redevelopment Agreement; (ii) the Peoria Park District shall be obligated to observe the terms and conditions of the Lease applicable to Tenant; provided, however, that the Peoria Park District shall have no personal liability to Landlord, Tenant or any third parties with respect to the Lease, the Redevelopment Agreement or the Real Property, with such liability limited strictly to Tenant’s leasehold interest in the Lease; and (iii) the Landlord shall be entitled to enforce the provisions of the Lease and the Redevelopment Agreement directly against the Tenant, who shall continue to have available to it all the rights and obligations of the Tenant under this Lease and Redevelopment Agreement notwithstanding such assignment.

The “Tenant” would be the Peoria Riverfront Museum, and the “obligations under this lease” would include repair, maintenance, alterations, and additions to the building and grounds. If the museum were to assign its interest in the lease to the Park District, then the Park District could use its funds — i.e., Peoria property taxes — to maintain the building and grounds. Here you can check about student loan interest deduction with guide of an experienced firm like taxfyle. That would certainly be more than taxpayers bargained for if they approve the sales tax referendum on April’s ballot.

No deal has been made to assign the lease to the Park District at this time according to Cassidy. But the legal language is in place and could be acted upon if the sales tax referendum is approved and construction of the facility is allowed to proceed. It’s something to think about when you go to the polls on April 7.

Museum Block, Peoria County

Sales tax referendum for museum will be on April ballot

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From Peoria County’s website:

Peoria County Board Approves Sales Tax Referendum for April Ballot

At a special board meeting earlier this evening [Jan. 27], the Peoria County Board approved the following resolution to place a referendum on the Consolidated General Election ballot this April that asks voters to raise the county’s sales tax rate by 1/4 of 1% to help fund public facilities. If approved by the electorate, the sales tax increase would be applied on retail sales of non-titled goods and would be the equivalent of twenty-five cents (25¢) for every $100 purchased. The referendum includes a sunset clause setting the tax increase to expire twenty (20) years from its effective date of January 1, 2010. Money collected from the increase would be used to help fund construction of the Peoria Riverfront Museum.

Peoria County’s role through the April 7, 2009 consolidated election is not to advocate for or against the passing of this referendum, but rather to educate the public on the sales tax increase and its intent. County Board Members Andrew Rand and James Dillon will host an informational town hall meeting on March 9 at 6:30 p.m. at Bradley University’s Baker Hall Auditorium, Room B51. More information regarding this town hall meeting will be forthcoming.

The resolution is available for download here: www.peoriacounty.org/county/files/get/Jan09PRMrefe.pdf

For more information regarding the referendum, please call County Administration at (309) 672-6056.

I’m especially intrigued by the statement, “Peoria County’s role through the April 7, 2009 consolidated election is not to advocate for or against the passing of this referendum….” Does that mean that they will publish the pros and cons of the sales tax, the way the State published the pros and cons of holding a constitutional convention? Or does it mean that they will give multiple opportunities for the museum to sell the supposed benefits of the tax increase (without any counterargument offered) under the pretense of “providing information”?

Oh wait, I think I have the answer to that question:

Town Hall Meeting re Riverfront Museum Financing

Peoria County Board Members Andrew Rand (District 4) and James Dillon (District 7) will be hosting an informational town hall meeting regarding the Peoria Riverfront Museum and a county-wide temporary sales tax referendum at 6:30 p.m. on Monday, March 9 at Bradley University, Baker Hall Auditorium B51.

Jim Richerson, CEO of Lakeview Museum, will explain the Museum Project, and Erik Bush, CFO, County of Peoria, will explain public and private financing efforts. Scott Sorrel, Assistant to the County Administrator, will present as well. The intent of this town hall meeting is two-fold: to raise awareness of the Museum Project and to educate the public about a county-wide sales tax referendum that will appear on the Consolidated General Election ballot this April. All interested persons are encouraged to attend.

Nope, no advocacy there.

Museum Block, Peoria County

County re-crunches museum numbers

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Earlier this month, Peoria County administrators crunched the pro forma numbers submitted by the Museum Collaboration Group and found that it was a money-losing proposition. The museum folks objected to that analysis, saying it wasn’t accurate. They got together with the County and re-crunched the numbers, and now the County shows the museum will make a tidy profit.

Erik Bush, the County’s Chief Financial Officer explains what changed:

The first analysis actually showed a dire projection. When discussing the revenues with PRM staff, it became clear that in developing their background materials, PRM had established discounts on their revenue projections, from which I assumed as 100% projections. In reality, these numbers were in some cases 70% of their true projections. In tum, I was discounting discounted figures. A line by line narrative of these changes may be found at the end of this memorandum.

I asked PRM to provide me with the 100% revenue estimates and proceeded to run the second iteration.

The results are summarized as follows:

a. Based on the PRM’s assumptions, their projections could be off up to 9% and still operate in the black over a 20-year period.

b. In using their 100% revenue projections it appears revenues annually meet or exceed 100% of expense projections. The margin of actual to budget has historically been 1-2%; therefore, I find a 9% cushion to a structural deficit reasonable.

c. A key item missing from their pro-forma is the cost of future capital investment. A common benchmark for capital investment is 10%. Based on an expected expense base of slightly more than $4 million, it can be reasonably expected the museum is not showing close to $400,000 in potential annual future costs to properly maintain its assets. This figure is a benchmark and can be driven by annual needs.

d. In the 100% scenario, roughly $100k of the endowment will be necessary to cover the cost of capital investment and break even annually. In the 95% scenario, an endowment ofroughly eight million dollars would be needed to generate the necessary interest (assuming 4% annual return, compounded monthly) to cover the annual cost of capital investment, combined with the projected excess of revenues over expenditures.

The changes are all well-argued, but I still have a problem with a couple of key assumptions:

  • Gallery admissions still based on projected 240,000 visitors per year. On their pro forma, the museum changed some parameters: they raised the average ticket price from $5.25 to $7.50, and they assumed 40% of the 240,000 visitors to the museum would buy a gallery admission, up from 33%. Those changes raised their projected revenue for gallery admissions from $420,000 to $718,000. However, if we use a more realistic estimate of 180,000 visitors per year, the revenue would be $540,000 — $178,000 less than the county/museum projection.

  • Planetarium tickets and attendance projected to go up. I’m stumped as to how the museum folks think they’re going to raise the admission price for the planetarium from $1.50 to $4.00 per student, yet end up having more students (19,000 vs. 16,000) visiting the planetarium, especially with schools in as bad of financial shape as they are these days. Nowhere do they explain how they came up with their number of students or how their number compares with historical attendance numbers. In my opinion, they have to assume at the very least that the number of students won’t increase. So take 16,000 students times $4 and you get $64,000, $12,000 less than the county/museum projection.

So, that’s a total difference of $190,000 from the proposed pro-forma, which would bring their projected revenues down to $4,298,000. That would still cover their projected expenses, but would only give them about a 4% cushion instead of 9%. Also, it would mean they’d have to use roughly $270,000 of their endowment for capital investment instead of $100,000. I don’t know how big of an endowment that would require, but to get $303,750 interest earned takes $6,750,000 of investable funds according to the previous pro-forma analysis available at the county’s website. Do they have that much in their endowment?

Here’s the other thing. The money raised by a county sales tax would have to go toward capital purchases, according to the statute:

For the purposes of this Section, “public facilities purposes” includes, but is not limited to, 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 museum doesn’t meet their revenue projections, I think it’s logical to expect them to scrap the capital investment fund, especially since they didn’t have it in their pro forma in the first place. Without infusions of capital, the place will get out of date pretty fast, and then you know what will happen? They’ll be back asking the taxpayers for more county tax money under this statute for “durable equipment” and “improvement[s].” And then the taxpayers will really be over a barrel because the project at that point will be “too big to fail,” if you know what I mean.

I still believe that a more compact, urban design would be significantly less expensive to build while still being an attractive civic building, plus it would free up the rest of the block (outside of Caterpillar’s visitor center, of course) for private development (retail, residential components), which will bring in property and sales tax dollars to the city and county. Plus, it would be what the public said they wanted on that block, and what professional city planners over the past several decades have said is needed on that block. Why is this option not being pursued?

County board member Merle Widmer has written extensively on the topic of the museum. I encourage everyone who’s interested in this topic to take a look at his blog, Peoria Watch.

The county votes tonight (County Board Room 403, 6:00 p.m.) on whether to put a sales tax referendum on the April ballot. No other counties of which I’m aware are planning similar measures to support this “regional” museum.

Museum Block

The Economist: Museums “unsafe bets for urban renewal”

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A special edition of The Economist magazine (“The World in 2009”) includes this article, which was alluded to in a previous comment. The article is titled, “The Museum-building binge.” Here’s something to consider when deciding how much money and land we want to dedicate to a new downtown museum complex:

Museums often enjoy cheeringly high visitor numbers in the first year or two, but then attendance tends to taper off.

“Sustainability is the new buzzword,” explains Javier Pes, editor of Museum Practice, a journal published by the Museums Association. Wealthy private donors have been happy enough to contribute large sums in exchange for a glamorous new wing named after them. But donations tend to ebb after the museum reopens, and directors need to find other ways to pull in tourists after the initial excitement wears off, such as pricey blockbuster shows. Operating costs go up.

In Denver, for example, where Daniel Libeskind designed a new $110m building for the art museum, an initial boom of visitors in 2006 has waned, and budget constraints have forced the museum to cut staff. The remarkable new structure—an explosion of angles and intersecting shapes—is the centrepiece of Denver’s nascent culture district. Yet some visitors complain of feeling disoriented inside. […]

Such investments are clearly unsafe bets for urban renewal.

What is the Museum Collaboration Group’s plan to sustain their optimistic attendance numbers over the next 20 years (i.e., the duration of the bonds used for construction) and beyond?