I went to a recent budget open house for the City of Peoria, and this graph caught my attention:
Our budget deficit is approximately $10 million. Our debt service (the amount we pay on principal and interest per year) is nearly $19 million. That debt service includes money borrowed for the recent Civic Center expansion, the Peoria Public Library renovation/expansion, acquisition/infrastructure work done in TIF districts, and some other infrastructure projects.
The money to pay for this debt comes from various sources. The Hotel, Restaurant, and Amusement (HRA) tax pays for the Civic Center expansion. A portion of our property taxes is specifically designated for the library’s recent capital projects. And debt incurred in TIF districts is covered by the new taxes produced by the TIF (the “tax increment”) — with one notable exception: MidTown Plaza.
MidTown, home of the now-shuttered Cub Foods, has never paid for itself. While there has been some incremental increase, it’s not enough to cover its own debt service. Money from the general fund makes up the difference. Staff is quick to point out that they recommended against that TIF, but the council voted for it anyway.
As if that weren’t enough, the council has committed to taking on more debt: $39.5 million for a Marriott Hotel to be built across the street from the Civic Center, to be paid for with the tax increment within the newly-created Hospitality Improvement Zone (HIZ) TIF plus a 1% sales tax increase within the TIF. The city hasn’t had to sell the bonds yet because the hotel developer has been unable to get supplemental financing through bank loans.
Think about this debt and the taxes that pay for it when the council is haggling over closing its structural budget deficit. They have no problem raising or maintaining taxes for non-necessities and developer welfare — even in the leanest of times, as the hotel deal shows — but feign frugality when it comes to paying for basic city services. They cut police and code enforcement personnel, reduce road maintenance, and institute other cost-saving measures ostensibly to keep taxes “low.” In reality, the city is acting no differently than a person who balances his household budget by cutting his grocery purchases while maintaining (or even increasing) his cigarette consumption.
CJ: You are spot on …. and sadly the budget insanity continues……
The debt is unsustainable. But govt. exists on debt, which is why inflation will accelerrate. The govt. has to inflate the currency to survive. It’s a stealth tax.
If memory serves me correct the Marriot developers had until Mar. 31st to obtain their funding. Is there a lawyer that reads this post? Since the developer missed their deadline could the city terminate the Marriot deal?
If we missed a property tax payment would the city be so forgiving?
Questioner: Ah yes, the city could terminate the contract per my city councilman. I asked him if he would move to do terminate the contract or vote for contract termination if another council person advanced such an idea. His response — why would I do that (to either question)?
Because our city cannot afford it. The developer has not delivered and it would save taxpayers future taxes in the case that the development would not be profitable. But it will make money for our city was the reply. I asked then why is the development backed by GO and not Revenue bonds? No reply as — this development (like the many other developments in Peoria) are not sure things.
Additionally, another District 1 constituent replied that the Holiday Inn was just waiting to get a crack at the money. What could you (councilman) have been thinking when you (councilman) voted yes on the Marriott deal? Did you (councilman) not think that the Holiday Inn would be asking for money once you (councilman and other councilpersons) voted yes to this deal?
Councilman replies well, I wouldn’t vote for the Holiday Inn deal as the city cannot sustain a Marriott and a Crowne Plaza. I replied — well, let’s not hope that the Holiday Inn finds some legal loophole to sue the city to get their share of the pie — after all they are in the same taxing district as the Marriott proposal. Because it so, then the city will be on the hook for the legal expenses and have to pay for the hotel deal too.
I could relate more … just too frustrating for words and boggles the taxpayer mind.
So Midtown bites the dust and it the city done the same thing would it could have terminated the development it stepped and gave the developer chance after chance. Finally Midtown got built and today it sits 75% (THATS MY GUESS) empty.
If the Marriot was a grand-slam it would have obtained the “supplemental financing.” Until the average citizen wakes up such deals will continue to thrive.
“If the Marriot was a grand-slam it would have obtained the “supplemental financing.” Until the average citizen wakes up such deals will continue to thrive.”
I’m curious as to how you reached that conclusion. We just survived a credit crisis wherein fortune 500 companies couldn’t even float commercial paper for daily operations, i.e., creditors had absolutely no appetite for risk. If you are going to speculate, it would be less irresponsible and more logical to surmise that the project is merly on hold like thousands of others across the country.
What good does it do for the average citizen to wake up? You go to a council meeting and you get X amount of minutes to speak your piece, after which they vote to do it anyway. Its a done deal before you even get up. You can write each council person way ahead of time. You can petition and deliver the petitions to the council and they ignore them. You can get up at every single council meeting and state your case with common sense and it still gets voted through. Yuck
It was the developer that agreed to the March deadline not anyone else. In fact the recent credit problems is another good reason why no govt body should enter into such deals.
Very simple: Vote! Simply don’t vote any of them back in. Vote for the other person. In the First (I kick myself all the time) no one ran against him so no choice. In the Second, well, enough loved Barbara and her drunkin awaking of college kids and poking police officers. On and on it goes.
Questioner: Exactly — no govt body should enter into such deals. California just approved a new budget and reportedly dealt with their budget deficity — including $15B in cuts to education, health care et al. Citizens have become accustom to government taking care of their wants and so the shock to the electorate’s system may be profond.
Emtronics: I agree — vote them all out. Please do not kick yourself too hard — you made a decision which was best for your family — family comes first! There is a time and a season for all activities in life and now just was not your season for running for elected office.