Category Archives: Peoria County

City of Peoria, Peoria County

Firefly closes, taxpayers left holding the bag

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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.

Museum Block, Peoria County

County to consider museum bylaws tonight

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The Peoria County Board will have a special “Committee of the Whole” (COTW) meeting Thursday night at 5:30 p.m., followed by the regular monthly Board meeting at 6:00 p.m. The only thing on the COTW agenda is the bylaws for the proposed Peoria Riverfront Museum. If approved by the committee, then final action will be taken immediately at the following Board meeting. According to the agenda briefing and supporting documents, all museum partners have approved the bylaws, so now all it needs is the County Board’s approval.

The approval of the By-Laws by the County Board, coupled with the appointment of the 12 at-large members of the Board of Directors, will allow for the Articles of Incorporation for the Peoria Riverfront Museum to be filed with the Secretary of State. The new 501 (c)(3) corporation will then be the entity responsible for executing a Lease Operating Agreement with the County and a Site Redevelopment Agreement with the City, County, and Caterpillar.

In addition to the 12 at-large members of the Board of Directors which are appointed by the County Board, there are also 11 designated members of the Board of Directors made up as follows: five from Lakeview, two from Caterpillar, and one each from the African American Hall of Fame Museum, Peoria Historical Society, Peoria Regional Museum Society, and Illinois High School Association. However, none of these names are being made public before tonight’s meeting, you may wonder how the best law firms do it.

Also of note, get ready for another “Build the Block” direct mail blitz asking for more funds. Lakeview plans to send out two letters. “The first is a letter sent to area business leaders, and the second is the letter that will kick off the ‘Every Member Counts’ campaign,” as explained in the agenda briefing.

Museum Block, Peoria County

National Citizen Survey results reveal museum backlash

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The National Citizen Survey results are in for Peoria County. A few observations:

The Open-ended Question report includes just five references to the museum. The question was, “What do you think will be the single most important issue facing Peoria County in the next five years?” Here are the museum responses, verbatim from the report:

  • “Reinvigorating tie downtown are a finish the Museum & Warehouse District. Attract small businesses & residential to downtown to promote growth!”
  • “Raising taxes for a museum, then not building it.”
  • “I don’t think the coming museum was what we needed. For a city this time, Lake views was quite adequate – He have enough along the never and need to address other more important ways to use our monetary spending. You have a lot to be proud if in that Previous street, sidewalks & the like are being address-long way to go yet”
  • “That stupid museum”
  • “To terminate the museum project. Taxpayers cannot afford more debt for a want. Spend money on public safety services! Repeal the public facility sales tax!”

Yes, I was surprised, too. I thought a large number of people would recognize that the single most important issue facing Peoria in the next five years will be what to do with all the money that’s going to be rolling in as a result of the new museum. Actually, between that and the huge housing boom we’re going to have because of the Kellar Branch trail being completed, Peoria’s only problem is going to be deciding whether to pave the streets with gold or marble.

Incidentally, I have to wonder if a few of these responses were originally handwritten and then run through OCR (optical character recognition) software, or if people just don’t know how to type.

Meanwhile, here’s a random sampling of responses on the overall Results report:

  • 86% of respondents said job growth is too slow in the County, while 36% said retail growth was too slow.
  • Only 26% of respondents said they had attended a local public meeting, although 51% had watched one on TV.
  • 31% of respondents said the value of services for the taxes paid to Peoria County was “excellent” or “good,” down from 36% the previous year.
  • 32% of respondents said the overall direction Peoria County is taking was “excellent” or “good,” down from 41% the previous year.
  • Only 21% of respondents said the job Peoria County does at listening to its citizens was “excellent or “good,” down from 33% the previous year.

Yes, if I had gotten the survey, I would have marked Peoria County’s ability to listen as “poor” myself. Remember the previous year’s survey? It included the question, “To what degree would you support or oppose a voter referendum to increase the sales tax rate by .25 percent (for example, from 8.0% to 8.25% for the City of Peoria) to fund the remaining cost of constructing money?” Results:

Strongly support 11%
Somewhat support 24%
Somewhat oppose 20%
Strongly oppose 45%

That’s right: 65% of County respondents somewhat or strongly opposed a tax referendum. So what did the County do? They put a tax referendum question on the very next ballot. It’s not surprising that residents the following year gave them poor marks for listening, or that fewer respondents feel the County is heading in the right direction now.

City of Peoria, Museum Block, Peoria County

This land is my land, say City and County

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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.

Peoria County, Regional Office of Education, State of Illinois

County looks for new ways to lose taxpayer money

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It looks like the County, which has been trying feverishly to squander $40 million on a poorly-planned museum, took some time away from that project to potentially throw away another million:

Peoria County could temporarily pick up slack for the state of Illinois after preliminary approval to issue a $1 million line of credit to the Peoria Regional Office of Education to meet payroll.

In an unprecedented move, the County Board’s finance committee approved issuing the credit Thursday, though it still must be approved by the full board on March 11.

Genius! Since the taxes we pay to the state aren’t being distributed to the Regional Office of Education (ROE) in a timely manner, the taxes we pay to the County are going to be used to help the ROE meet payroll. Then, the taxes we pay to the state will (they hope) be paid back to the County plus interest of around 3%. Who pays that 3% interest? The taxpayers! Yes, when one government body charges another government body interest, what that really means is our tax money being flushed down the toilet. Since both government bodies cover the same taxpayers, we’re essentially charging ourselves interest.

The article goes on to explain what the money would be used for specifically:

Delayed payments from the state of Illinois have created a cash flow emergency in the regional office’s Two Rivers Professional Development Center, an intermediate educational service provider.

Staffers for the regional office and Two Rivers are implementing a $12 million virtual school contract with state money.

The virtual school offers 130 courses, from core subjects such as math, English and science to foreign languages, health and business online. It serves about 120 schools across the state, with about 3,000 students in public, private and home-school settings from fifth grade through high school enrolled annually.

“If we don’t get the credit, the program shuts down. We can’t meet payroll,” Brookhart said.

The Illinois Virtual School was established in 2001, according to published reports. Their website states, “The Peoria Regional Office of Education (ROE), in partnership with the Area III Consortium*, was awarded the Illinois State Board of Education (ISBE) contract to manage and operate the Illinois Virtual School (IVS) on April 1, 2009…. The Area III Consortium is a partnership of 10 Regional Offices of Education located in west Central Illinois, the Area III Learning Technology Center, Two Rivers Professional Development Center and Western Illinois University.” The ten regional offices cover the following counties: Adams, Pike, Brown, Cass, Morgan, Scott, Fulton, Schuyler, Hancock, McDonough, Henderson, Mercer, Warren, Knox, Logan, Mason, Menard, Peoria, Sangamon, and Tazewell.

Given all that, several questions come to mind:

  • Why is it suddenly Peoria County’s responsibility alone to keep this program running? Where are the other 19 counties involved?
  • Considering Peoria County is itself facing revenue cuts from the state, how is it that they think it’s prudent to cover the state’s shortfall to the ROE?
  • How is it that Peoria County can afford to make a risky $1 million loan to anyone when they spent $4.2 million more than they took in last year?
  • If the state doesn’t come through with the money, how will Peoria County be repaid? Specifically, from what revenue source will they be repaid?
  • How important is this Illinois Virtual School program? Maybe this is a program that needs to be shut down if the state is unable to pay its bills.
City of Peoria, Internet, Peoria County

Peoria to try to woo Google

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From a press release:

Mayor Jim Ardis will hold a news conference on February 23, 2010, at 1:30 p.m. The news conference will be held at the PeoriaNEXT Innovation Center (801 W. Main Street, Peoria). The Mayor will be joined by community leaders to discuss our efforts to submit an application to become a test market for Google.

County Board member Merle Widmer has some additional information on his blog, including an e-mail from Mayor Ardis:

As you may have recently seen, Google announced an effort to bring 1GB Internet service to a test market somewhere in the United States. This would be a phenomenal service that would deliver speed up to 100x faster than the best current system available. The impact on economic development will be enormous.

You might also have seen me talk about the importance of this opportunity to Peoria. The City of Peoria has started an application and has now joined the County of Peoria in working collaboratively.

You can read the rest at Merle’s blog, but you get the idea. Here’s some more information on Google’s effort from their official blog.

Museum Block, Peoria County

County putting cart before the horse, twice

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On the Peoria County Facilities Committee agenda for Tuesday is a resolution to secure federal funding to build a nearly $7 million (completely unnecessary and wasteful) parking deck on the so-called museum block downtown. There are two problems with this plan, as I see it:

  1. The county doesn’t own the land on which they want to build. The City of Peoria still owns the former Sears block. The agreement the County wants to approve is just between the County and the Federal government, although it does include a commitment that the County will acquire “in its name…all right-of-way necessary for this project.” Last I heard, there hadn’t been much dialog with the City about transferring title to the land.
  2. The museum project doesn’t have all its money raised yet. During last year’s run up to the referendum vote, the County stated on numerous occasions that they wouldn’t start construction until all the money for the museum project was raised. The money hasn’t been raised yet, so why would the County consider starting construction yet?

If this resolution is passed by the Facilities Committee, it should be rejected by the full Board. It puts the cart before the horse, twice.

Museum Block, Peoria County

How are those IMAX negotiations coming?

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During the run up to last April’s referendum, I talked to many people who were going to vote in favor of the museum tax. One of the big selling features for many of them was the proposed IMAX theater that would be included as part of the package. The museum group wasn’t shy about touting the IMAX. They included it by name on their marketing materials. When Citizens for Responsible Spending pointed out that the museum group had no contract with IMAX, museum officials defended their use of the IMAX brand name and explained that they couldn’t sign a contract until the referendum passed, but that they had a contract sitting on their desks ready to sign.

It’s now been ten months, and there is still no signed contract with IMAX. More tellingly, museum officials have stopped using the IMAX brand name. In their presentation to the Peoria County Board last Thursday, it was consistently referred to as a “large screen theater” or a “giant screen theater.” When board member Brad Harding asked if it was an IMAX or a large screen theater, Lakeview’s chairman of the board stated that they can’t use the IMAX brand name because they don’t have a contract signed with IMAX yet. He did say they were still negotiating with IMAX, however.

I sincerely hope that the IMAX negotiations are successful. Because if there is no IMAX, it will be one of the biggest bait-and-switch swindles ever propagated on Peoria taxpayers.

Museum Block, Peoria County

Same song, second verse from museum group

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March 6, 2009:

Although a funding gap of about $11 million to build the Peoria Riverfront Museum would remain even if Peoria County voters approve a sales tax increase next month, project officials say they are confident a successful referendum will trigger the final donations.

“We will go out after the referendum is passed, and while it won’t be a piece of cake, we do feel that once we get over the hurdle of the referendum, the other $11 million can be put together,” said Mark Johnson, project manager of the Caterpillar Experience, the Cat visitor’s center that will share the Downtown block with the museum.

April 8, 2009:

The $40 million county contribution to the $77 million museum doesn’t fully fund the project; a $10 million funding gap remains…. Officials are looking at the possibility of federal economic stimulus money to help pay for the parking garage and other public money in a capital budget out of Springfield. Vergon said he thinks the money will be raised one way or another.

“We’ve got a capital campaign to restart,” he said. “It shouldn’t be too difficult to do that because most of the people that had not pledged or committed were concerned whether we’d get all the public money or not, and it looks like that seems to be behind us now.”

May 21, 2009:

Initially short about $10.2 million even with the $40 million raised through the voter-approved Peoria County sales tax increase, the funding gap to build the Peoria Riverfront Museum is narrowing.

“We knew there were people who didn’t want to formally commit to a donation until after the referendum to see which way the vote went,” said Michael Bryant, the CEO of Methodist Medical Center, who also heads the group of area leaders and business people – called the CEO Roundtable – that is raising money for the museum.

“We are seeing that those people are stepping up right now and committing money to this project.” Bryant said the new shortfall is about $7.2 million, meaning the project has received about $3 million in donations since the quarter-percent sales tax referendum was approved by voters 50.7 percent to 49.3 percent 44 days ago. “We’d like to see the gap closed all the way by the end of the summer,’ Bryant said. ‘I’m cautiously optimistic it can be done.”

February 4, 2010:

Governance agreements for the Peoria Riverfront Museum are within sight, paving the way for construction to begin this summer, though the Museum Collaboration Group is saddled with a $7.2 million revenue gap.

So, to sum up, there was a $10.2 to $11 million private funding gap before the referendum in 2009. Not to worry, museum supporters assured us. Once the referendum passes, they were confident they could raise the rest of the money. After the referendum passed, the CEO Roundtable went to work and raised $3 million in a little over a month.

And that’s it. Since May 2009, the funding gap has remained at $7.2 million. A child conceived when the last dollar was raised for the museum could have been born by now.

Not to worry, though. Lakeview Museum Board of Directors Chairman Tom Bardwell told the County Board on Thursday how they plan to close that gap:

We strongly believe that, through research and also conversations in the community and everything that’s happening right now, we believe there’s about $4 million that can be raised in private dollars here in Peoria County or in the local area.

We also believe there’s about a million and a half dollars — in fact, we have a target for about $3 million of line-of-sight that we can see, but let’s be conservative and say a million and a half dollars — from either grants, foundations, other government entities that may make pledges towards this project, which basically takes you five and a half million.

And then there’s also a third avenue of funding we’re pursuing — some of you may have heard some of this — something called New Market Tax Credits. New Market Tax Credits are something we’re pursuing for this project. We believe, conservatively, $4 million should be our target number.

So, our funding strategy is targeted to raise about nine and a half million dollars which is obviously about the $7.2 million gap, but obviously we want to be as conservative as possible in those numbers, so we hope to get there as soon as we can….

Note that their plan to close the private funding gap includes efforts to get $4 million in public funding via the New Markets Tax Credit program. They’re also trying to get public funding from “other government entities.” And despite the fact they’ve not raised any money the past nine months, we’re supposed to believe there’s still $4 million in private funding out there based on their “research” and “conversations.” These are the same people who assured us the funding gap would be closed right after the referendum passed.

Why should we believe any of this? What possible reason is there to have any confidence in the museum group’s fundraising plans? In fact, other than the $3 million raised after the referendum passed, fundraising efforts have been effectively stalled for years, which is why the museum group came to Peoria County for tax funding in the first place.

Instead of this eternal effort to bleed the region for money, the museum should do what it should have done years ago: change its plans. Redesign the building so it’s more efficient to build. Build up instead of out, which will free up more of the block for private commercial development. Dispense with the parking deck, as there is already a glut of available parking downtown, especially along the riverfront. Cutting the deck (pun intended) and/or redesigning the building would also remove the engineering challenge/expense of putting a boomerang-shaped building partially on top of a rectangular deck. If just those things were done, millions of taxpayer dollars would be saved, and the project could be built without any additional fundraising.

The first step in problem solving is to correctly identify the problem. The problem here is not a fundraising problem. It’s a design problem. The project is too large and too expensive. Caterpillar should be using its influence to get the museum group to do their part in reducing expenses instead of bullying the County into building something unaffordable and unsustainable.

Museum Block, Peoria County

County caving to Cat on museum

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Looks like the Peoria County Board is set to capitulate to Caterpillar’s demands. In Caterpillar’s letter of January 20, they gave this ultimatum:

Our message to the Peoria County Board is clear: We must have a deadline or the work for the museum project will continue to languish; the county must modify its governance demands to allow museum activists and professionals to run the PRM; and the Board must help close the funding gap caused by the loss of New Marketing Tax Credits … the county’s contribution needs to be the full $40 million authorized.

In the absence of a positive response from the Peoria County Board by February 12, 2010, Caterpillar doesn’t believe this project can be viable. Failure to move forward in a responsive manner will result in Caterpillar withdrawing its funding commitment for a PRM and termination of our plans to move forward with the Caterpillar Visitor Center.

According to Peoria County Board member Merle Widmer, the County has drawn up an agreement that dutifully complies with Caterpillar’s demands. “The board will be asked to increase the amount voted to give the museum committee to $40 million instead of the $34.7 million the board voted on to help make up the shortage in the endowment,” he reports. “To accept ownership of the building, the County Board will be asked to approve a minimum of three contracts totaling 120 pages . . . and containing such language ‘that a board member can be removed without cause’, an advisory committee (all agreeing to the museum mission) of not more than 60, several layers of boards with the county owning the building forever.”

And if you ever thought the County Board was a professional, deliberative body, looking out for the best interests of taxpayers and thoughtfully considering both sides of an issue, Mr. Widmer adds an account of this conversation, recorded in closed session when at a meeting from which he was absent: “…Mike Phelan, Democrat County Board member [told] the Executive Committee to disregard Merle Widmer and get on with building this museum. He said the public voted on it and the public wants this museum…. He also said board members comments should be limited tommorrow afternoon and Board Chairman, Tom O’Neill said something about ‘putting a sleeping pill in his water.'”

Impolite comments about fellow board members aside, Mr. Phelan forgets that voters were told in town hall meetings that the county would be financing $34.7 million of the cost, and that the museum group would be responsible for raising the rest of the money. Caterpillar is blaming the County for the supposed loss of $5 million in New Market Tax Credits, and are demanding $5.3 million in additional funding from sales tax receipts. No independent proof of this supposed “loss” has been produced, at least publicly. Nevertheless, it appears the County is willing to take the rap for the alleged loss and plug the hole with yet more public funding. All the while, there is still a huge question of whether the other private money that has been supposedly raised will materialize. Most of it is in the form of pledges that have yet to be collected.

A Committee of the Whole meeting will take place today (Thursday) at 3 p.m. at the Peoria County Courthouse.