The Journal Star included two articles today — I’m sure we’ll be seeing many more in the coming weeks — championing the proposed riverfront museum. One was an editorial (“Boost museum with old-fashioned political campaign“), and the other a Paul Gordon business article (“Museum would be true local project“).
First up, the editorial. Here’s their take on why the museum doesn’t have broader support:
Our read is that most locals are not exactly against the museum so much as not emphatically for it. They’re skeptical that The Block will draw visitors beyond this immediate area, that it won’t require ongoing tax support for operations, that this is “absolutely critical” to the region. Remarkably, some even doubt whether central Illinois’ history merits remembrance and celebration.
That’s all true, but they’re missing the bigger point. This museum is a bait and switch. We were supposed to be getting a Peoria history museum as part of a new-urban-style development. Instead, they’re wanting to move Lakeview Museum to the riverfront, add a token amount of “regional” history to the permanent display area, throw in a bunch of other stuff, and house it in a downsized, inefficient, suburban building — and they want our tax dollars to fund it.
It’s not that people are against a museum — it’s that they’re against this plan for a museum. It’s too much money in too small a space for too little value added. Instead of spending their wad on a big marketing campaign, they would be better off spending that money to rework their plan for the Sears block.
As I have suggested before, I propose that they leave Lakeview where it is and keep it as the art and science museum. We already have it, and there’s no compelling reason to move it to the riverfront on the public’s dime. Then, on the Sears block, they build a new history and achievement museum (with an IMAX theater), but they build it on a small portion of the block in a multi-level, urban-style building. This will reduce the construction costs considerably while simultaneously giving them additional space. The rest of the block would be put out for proposals from developers for mixed-use development, including residential and retail urban development. This would infuse the block with activity around the clock, benefiting not only the museum and IMAX theater, but the riverfront and the rest of downtown. I bet they could do that without even having to go to the public to request a tax increase.
Moving on to Paul Gordon’s column, he focuses on a memorandum of understanding “between Caterpillar Inc., the Museum Collaboration Group and the West-Central Illinois Building Trades Council.”
The memo […] spells out the responsibilities of each of the partners in getting the project built if the funding goal is reached in the next three years.
But it’s the bottom line numbers that will bring people together for the project.
It will keep 250 to 300 construction workers on the job each month for two or more years (an estimated 420,000-plus man hours), keep the projected $77 million in total construction costs – including an estimated $45 million in wages – in central Illinois and serve as a renewed commitment to Peoria by its largest employer.
That sounds great until you remember that your tax dollars are going to be paying the lion’s share ($35 million) of those $45 million in wages. And you’re going to paying those taxes forever — long after those two years of construction jobs are complete. Why? Well, first of all, because taxes, once established, never get rescinded. Witness the HRA taxes for the Civic Center which Peorians were promised would only be temporary. Secondly, the museum has a projected annual operating budget of $4 million. That means they’d have to get 1,000 visitors a week paying $10.95 admission (for reference, Lakeview currently charges $6 admission for adults, $4 for kids, and according to their website, “The Museum has a membership base of 4,000 and attracts 125,000 visitors annually”). So I think it’s safe to say that they’ll have to use tax revenue to cover their operational costs… forever.
But hey, we’ll have two years of local construction jobs, so that’s a good trade-off, right?
“keep the projected $77 million in total construction costs – including an estimated $45 million in wages – in central Illinois and serve as a renewed commitment to Peoria by its largest employer.”
– Is that a “renewed commitment to Peoria by its largest employer,” OR a renewed commitment BY Peoria TO its largest employer? See the difference?
– I love how they ‘spread’ the wealth around. I am sorry! Keeping 250-300 construction workers on the job for two+years is hardly an incentive to birth this freaking monster! Especially since no amount of museum BS is EVER going to benefit me or mine! I am willing to bet MOST Peorians feel the same way. The way these ‘museum people’ manipulate info and figures [$] is criminal.
– As soon as I know MY job is 100% safe, I am going to tell them so! Don’t want to piss-off the wrong people………….
Yes we will be paying for this forever. No museum anywhere, regardless of size, is self-sustaining. All of them have to get aide for operating costs forever. Its just a fact of life. I am not against museums, I am against being fleeced forever to support this one and its convoluted planning.
Just say NO to the Bait n Switch.
City Council elections are coming up this spring.
County Board this fall… maybe we need to nail some candidates down on their position on the museum.
ALL hail the power of ” Big Yellow “! Isn’t it interesting, for lack of a better word, how intense the fundraising campaign has become once rumor surfaced that CAT might abandon Downtown Peoria if the Riverfront museum isn’t built? Suddenly, staunch opponents are aggressively behind it.
Never mind that the U.S. economy is collapsing, Peoria leaders insist that residents, wealthy and poor alike, rescue a dying project. ” BEWARE! There’s more here than meets the eye. “
If one tax dollar is used to fund this, I am leaving this town !!!!!!!!!!!
People don’t seem to commit to this project because it continually changes shape and format, not to mention price and funding.
Most [if not all] of the comments posted on Peo Chronicle show that people are NOT happy with current museum plan. I find it even more interesting that almost, if not all of the blog comments following J Star articles are just as negative.
Business File: Museum would be true local project – Someone spent some time responding to the Business File article. You have to check it out.
Even if the J Star people do not read C.J.’s stuff, they have to read the responses to their articles…don’t they?
Where does the Journal Star, or anyone pushing this project, think they are going to get public support from? IT IS NOT THERE!
Copy and pasted from PJStar.com. Any museum official who reads this blog, feel free to try and give a differing opinion:
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1 day ago
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Not to put a damper on the idea; but I’d like to challenge the real value here. At work I propose a lot of capital projects and I get beat up by our CFO and COO for ideas that don’t break even in less than 2 years with >= 12% ROIC. That’s pretty normal thinking in competitive business today (even inside companies it’s a competitive environment to get capital). Using my company’s approval criteria as a ‘benchmark’, this proposal doesn’t look terribly attractive financially and wouldn’t get approved and funded at my company.
Even if you accept these estimates as facts, the benefits of $7 Mil to $14 Mil annually to the community with a project cost of $136 Mil means that this opportunity breaks even in 10-19 years and over 40 years it would return between 5.3% and 11.5% on the $136 Mil originally invested.
Cost of Project
$136,000,000
Annual Benefits Rate of Return Break Even on Cash Flow (yrs.)
Low Estimate $7,000,000 5.3% 19
High Estimate $14,000,000 11.5% 10
Consider that:
** public projects more frequently run over budget and take longer than planned and
** the projected benefits, which have a wild margin of error of +/- 33%, are clearly SWAGs.
Also think about the long term implications of using public money to create this block. What’s the ‘future value’ of this investment at year 40? In 40 years will the Journal Star headline read ‘Estimate of $150 Mil in tax dollars needed to revitalize the block’? Even if it’s not 100% public funded today, do the tax payers of Peoria get stuck footing the bill when the commercial space is vacant? I’m sure the grandkids would like to crawl all over amazing big yellow pieces of equipment; but the price of admission for them is much bigger than the amount on the board at the ticket booth.
I’m not saying that you shouldn’t donate more to this project (remember you alredy gave YOUR MONEY that the politicians donated on your behalf in public funding); but make sure you have a good reason why.
As an alternative, if I had $136 Mil in public and private money to spend on helping the Peoria economy, I’d provide loans to small and medium enterprises to start new businesses and create jobs. And If I was good at it, most of my loans would be repaid with interest and I’d end up in 40 years with more than the $136 Mil that I started with. But who thinks that way and how could you trust a politician to run a $136 Mil low interest commercial loan portfolio.
Hey, after my rant I feel much better. How about you?
With this financial analysis I’ve done the part I know how to do, I challenge someone with a more current understanding of local politics, to take the next step and answer the question ‘who’s pushing for this?’. I bet that’s a far more interesting question than the proposed ROIC. Following the scientific method I’ll propose a hypothesis: The individual(s) and company(ies) who expect to get the lions share of the $7 Mil -$14 Mil annual ‘benefits to the community’ are the driving force behind this.
Mazr: Excellent! Another question — is the cost really $136M or really closer to $272M when the interest is added? IF at the $272M mark, then the ROIC would be zero or negative?
Mazr,
Are you suggesting there is some chicanery afoot?
The Museum Group is now resorting to economic slight-of-hand; yet another indication that this project is now a complete and total bust.
The idea of building a museum in this city started years ago. A great deal of research went into developing several viable plans. It was a project with a great deal of promise.
Despite all of their supposed know-how and hardball business savvy, the Peoria ‘elite’ could not stand up to LaHood. The minute LaHood started calling the shots this project was doomed.
LaHood pitched his ‘divided we fall’ crap to anyone who would listen. The end result was an impotent Museum Collaboration Group, incapable of connecting with the public from the very beginning.
MAZR did a great job with the figures. He should have been consulting with the museum all along…
I have said this before; the WRONG people were involved with this entire project from the beginning. I am not sure what Lakeview and the ‘crew’ have been pushing the last couple of years, but I will tell you this; IT weren’t NO MUSEUM! This is something the public could sense from the start.
As much as I would like to take credit for this well thought out and intelligent posting, anyone who has read my past drivel would probably call B.S.
I copied that from a comment left on the PJStar website. I should have been more specific where I got the info.
Sorry
Mazr,
Your honesty scares me, but well done. The merits of a truly well planned museum would/should have been more than enough to sell the idea to the public. Even the broad definition of a ‘museum’ has been lost by the current museum group.