Hello everyone, and welcome to the Peoria City Council meeting for May 25, 2010. Hold on to your wallets, as a lot of your tax money is destined to be given to a private developer tonight. It’s also packed in council chambers. Outside there are a bunch of AFSCME employees chanting “chop from the top” very loudly to try to disrupt the meeting [note: the crowd was dispersed by the time the meeting got underway]. All the council members and the mayor are present, and we’re on our way. The clerk is reading the consent agenda now. As usual, I’ll be updating this post throughout the night, so please refresh your browser often to see the latest comments. Here’s the agenda:

PETITIONS, REMONSTRANCES & COMMUNICATIONS CITY OF PEORIA

ITEM NO. 1 CONSIDERATION OF CONSENT AGENDA ITEMS BY OMNIBUS VOTE, for the City of Peoria, with Recommendations as Outlined:

A. Communication from the City Manager and Director of Public Works Requesting Approval of the LOW BID of ILLINOIS CIVIL CONTRACTORS, INC. and to Award a CONTRACT, in the Amount of $300,000.00, from the Base Bid of $168,985.54, for the SIDEWALK PARTICIPATION PROGRAM 2010 CONTRACT.

B. Communication from City Manager, Fire Chief, and Director of Information Systems Requesting Approval of a SOLE SOURCE PURCHASE of a SOFTWARE UPGRADE for FIRE RECORDS MANAGEMENT SYSTEM, in the Amount of $45,900.00, from APPLICATION DATA SYSTEMS, INC.

C. Communication from the City Manager and Assistant Director of Planning and Growth Management with Recommendation from the Administration to ADVERTISE a NOTICE OF FUND AVAILABILITY (NOFA) for PUBLIC FACILITIES IMPROVEMENTS Utilizing Unobligated Community Development Block Grant Funds, in the Amount of $200,000.00.

D. Communication from the City Manager and Corporation Counsel Requesting Authorization for a SETTLEMENT OF CLAIM for PERSONAL INJURY to EMILIO MATA Arising Out of an Accident on October 9, 2007, at the Intersection of Darst and Krause Streets, in the Amount of $13,000.00, and Requesting Authorization for the City Manager to Execute the Necessary Documents.

E. Communication from the City Manager Requesting Approval to RENEW the BUSINESS DEVELOPMENT LOAN for PARSEC ENTERPRISES, INC., for FIVE YEARS, and Requesting Authorization for the City Manager to Execute the Necessary Documents.

F. Communication from the City Manager and Director of Public Works Requesting Approval of the Following:

1. LOCAL AGENCY AGREEMENT, in the Amount of $2,770,000.00 with the ILLINOIS DEPARTMENT of TRANSPORTATION (IDOT) for Federal Participation, in the Amount of $1,939,000.00, for the CONSTRUCTION of the INTERSECTION of NORTHMOOR ROAD and SHERIDAN ROAD (Stage 1);

2. MFT RESOLUTION, in the Amount of $585,350.00, to Pay for the City’s Portion of the CONSTRUCTION and CONSTRUCTION ENGINEERING COSTS. (Refer to 05-609, 08-052 and 09-154)

G. Communication from the City Manager and Police Chief Requesting Approval and Authorization for the City Manager to Execute an INTERGOVERNMENTAL AGREEMENT Between the CITY OF PEORIA and the COUNTY OF PEORIA Under the EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT (JAG) PROGRAM FY 2010 LOCAL SOLICITATION, in the Amount of $124,424.00.

H. Communication from the City Manager and Finance Director/Comptroller Requesting Adoption of an ORDINANCE Amending the CITY OF PEORIA BUDGET for FISCAL YEAR 2010 Relating to the WORKFORCE INVESTMENT ACT (WIA) YOUTH FUNDS Issued Under the ARRA, in the Amount of $131,738.00, to SUPPORT the MAYOR’S YOUTH CORP (MYC) SUMMER EMPLOYMENT PROGRAM.

I. Communication from the City Manager and Director of Public Works Requesting Authorization to Enter into a CONTRACT with AVIS BUDGET GROUP, in the Amount of $14,125.60, to RENT FOUR (4) TEN-PASSENGER VANS for the Mayor’s Youth Corps (MYC) SUMMER EMPLOYMENT PROGRAM.

J. Communication from the City Manager and Assistant Director of Planning and Growth Management with Recommendation from the Zoning Commission and Staff to Adopt an ORDINANCE Amending APPENDIX B Relating to MULTIFACED SIGNS.

K. Communication from the City Manager and Corporation Counsel Requesting Approval of an SITE APPLICATION for a CLASS “B” (Restaurant, Full-Service Bar) with a SUBCLASS 2 (Live Entertainment) LIQUOR LICENSE at 401 S. W. WATER STREET, SUITE 102, with recommendation from the Liquor Commission to Approve.

L. Communication from the City Manager and Corporation Counsel Requesting Approval of an SITE APPLICATION for a CLASS “B” (Restaurant, Full-Service Bar) with a SUBCLASS 2 (Live Entertainment) LIQUOR LICENSE at 1200 W. MAIN STREET, SUITE 33, with Recommendation from the Liquor Commission to Approve.

M. Communication from the City Manager and Corporation Counsel Requesting Approval of an SITE APPLICATION for a CLASS “B” (Restaurant, Full-Service Bar) with a SUBCLASS 1A (2:00 A.M. Closing), SUBCLASS 2 (Live Entertainment), and SUBCLASS 3A (Sidewalk Cafe) LIQUOR LICENSE at 5901 N. PROSPECT, SUITE D, with Recommendation from the Liquor Commission to Approve.

N. Communication from the City Manager and Corporation Counsel Requesting Approval of an SITE APPLICATION for a CLASS “B” (Restaurant, Full-Service Bar) LIQUOR LICENSE at 9901-E NORTH KNOXVILLE AVENUE, with Recommendation from the Liquor Commission to Approve.

O. Communication from the City Manager and Corporation Counsel Requesting Approval of an SITE APPLICATION for a CLASS C-1 (Grocery with Package Liquor) LIQUOR LICENSE at 9129 N. ALLEN ROAD, with Recommendation from the Liquor Commission to Approve.

P. REAPPOINTMENTS by Mayor Jim Ardis to the ANIMAL REVIEW BOARD, with Request to Concur:

Lynn Brender (Voting) – Term Expires 6/30/2012
Roslyn Gott (Voting) – Term Expires 6/30/2012
Susan K. Kirschman (Voting) – Term Expires 6/30/2012
Chris Kelly (Voting) – Term Expires 6/30/2012
Ronald C. Theobald (Voting) – Term Expires 6/30/2012

Q. REAPPOINTMENTS by Mayor Jim Ardis to the CONSTRUCTION COMMISSION, with Request to Concur:

Tom DeJarld (Voting) – Term Expires 6/30/2014
John C. Dillon (Voting) – Term Expires 6/30/2014

R. APPOINTMENT and REAPPOINTMENTS by Mayor Jim Ardis to the FAIR EMPLOYMENT and HOUSING COMMISSION, with Request to Concur:

APPOINTMENT:

Syed E. Ahmad (Voting) – Term Expires 6/30/2012

REAPPOINTMENTS:

Wayne W. Cannon (Voting) – Term Expires 6/30/2013
Paul J. Moreno (Voting) – Term Expires 6/30/2013

S. REAPPOINTMENTS by Mayor Jim Ardis to the FIRE & POLICE COMMISSION, with Request to Concur:

Carl K. Cannon (Voting) – Term Expires 6/30/2013
D. Michael Doyle (Voting) – Term Expires 6/30/2013
Leonard A. Unes (Voting) – Term Expires 6/30/2013

T. REAPPOINTMENT by Mayor Jim Ardis to the GREATER PEORIA MASS TRANSIT DISTRICT BOARD OF TRUSTEES, with Request to Concur:

Maxine Wortham (Voting) – Term Expires 6/30/2014

U. REAPPOINTMENTS by Mayor Jim Ardis to the MUNICIPAL BAND COMMISSION, with Request to Concur:

John Day (Voting) – Term Expires 6/30/2013
Dr. Laura J. Schelly (Voting) – Term Expires 6/30/2013

V. APPOINTMENT and REAPPOINTMENT by Mayor Jim Ardis to the POLICE PENSION FUND BOARD OF TRUSTEES, with Request to Concur:

Ryan M. Alwood (Voting) – Term Expires 5/12/2011
John B. Renick (Voting) – Term Expires 5/11/2012

W. REAPPOINTMENTS by Mayor Jim Ardis to the RIVERFRONT PROGRAM and POLICY ADVISORY COMMITTEE, with Request to Concur:

Bobby Gray (Voting) – Term Expires 6/30/2012
Patrick T. Sullivan (Voting) – Term Expires 6/30/2012

X. REAPPOINTMENTS by Mayor Jim Ardis to the SOLID WASTE DISPOSAL COMMITTEE, with Request to Concur:

Council Member Dan Irving (Voting) – Term Expires 6/30/2011
Council Member Ryan Spain (Voting) – Term Expires 6/30/2011

Y. APPOINTMENTS and REAPPOINTMENTS by Mayor Jim Ardis to the WORKFORCE DEVELOPMENT BOARD, with Request to Concur:

APPOINTMENTS:

Brian Barry (Voting) – Term Expires 10/1/2012
Gayla Scott (Voting) – Term Expires 10/1/2012

REAPPOINTMENTS:

Dr. John S. Erwin – (Voting) – Term Expires 10/1/2012
Lisa Feinholz (Voting) – Term Expires 10/1/2012
Kyle Ham (Voting) – Term Expires 10/1/2012

Z. Communication from the City Manager and Director of Public Works with Request to SET a SPECIAL CITY COUNCIL MEETING on JUNE 15, 2010, to HOLD a POLICY SESSION to Discuss the SANITARY SEWER REHABILITATION PROGRAM and the COMBINED SEWER OVERFLOW LONG TERM CONTROL PLAN, and to Consider any Regular Business that May Arise Per a Listed Agenda.

AA. Communication from the City Manager and Assistant Director of Planning and Growth Management Regarding a REPORT SUMMARIZING PROMOTIONAL ACTIVITIES Undertaken by the CITY OF PEORIA COMPLETE COUNT COMMITTEE to GENERATE an AWARENESS of the 2010 CENSUS, with Request to Receive and File.

BB. Communication from the City Manager and Director of Public Works Regarding a REPORT BACK Responding to QUESTIONS from COUNCIL MEMBER DAN IRVING Regarding the SIDEWALK PARTICIPATION PROGRAM, with Request to Receive and File. (Refer to Item No. 10-211)

CC. Communication from the City Manager and Director of Public Works Regarding a REPORT BACK Responding to QUESTIONS from COUNCIL MEMBER GARY SANDBERG Regarding the BID PROCESS Followed by the City for LOT MOWING, with Request to Receive and File. (Refer to Item No. 10-212)

The following council members requested that items be removed from the consent agenda for separate discussion: Van Auken (abstaining from F), Spain (item C), Jacob (abstaining from K, L, M, N, and O; removing item H), Sandberg (item A). The remaining items were approved unanimously.

• Item A. Questions the process of extrapolating unit pricing for the sidewalk participation program. Feels the bidding process could be manipulated to choose large contractors over smaller and minority-owned ones. Public Works Director Barber disagrees. Van Auken/Spain move to approve. Gulley says he’s “totally against this” but he’ll be supporting it tonight. I love it when Council members say that. He added, “It’s the wrong thing to do, however . . . I will be supporting it.” Thanks for clearing that up, Mr. Gulley! He thinks we need to work harder to meet the goal of minority participation. Motion passes 10-1 (Sandberg).
• Item C. Spain requests a four-week deferral to look at different options. Seconded by Turner. Passes unanimously.
• Item H. Jacob just wanted to talk up the program. Approved unanimously.

ITEM NO. 2 Communication from the City Manager and Director of Public Works Requesting Approval of an AGREEMENT with CATERPILLAR INC. and LAKEVIEW MUSEUM ARTS and SCIENCES for Certain Work Being Performed by the City Through its CONSTRUCTION CONTRACT with STARK EXCAVATING, INC. for IMPROVEMENTS to WATER STREET, in the Approximate Amount of $150,000.00. (Refer to Item No. 10-129)

Gulley/Van Auken move to approve. No discussion. Passes unanimously.

ITEM NO. 3 Communication from the City Manager and Assistant Director of Planning and Growth Management with Recommendation from the Zoning Commission and Staff to Adopt an ORDINANCE Granting a SPECIAL USE in a Class R4 (Single Family Residential) District for an EXISTING LIBRARY and BUILDING ADDITION for Property Known as the LINCOLN CARNEGIE LIBRARY Located at 1312 W. LINCOLN AVENUE, with Conditions.

Gulley/Van Auken move to approve. Van Auken asks for privilege of the floor for Jim Bateman and Margaret Cousin. Bateman represents the Central Illinois Landmarks Foundation. He commends the library for nominating the library for landmark status, hiring an architect who works with historic preservation, and for having a representative from CILF attend the weekly library meetings. Cousin is also involved with CILF and heaps additional praise on the project and the library board. Van Auken is smiling broadly at Cousin. Motion approved unanimously.

ITEM NO. 4 Communication from the City Manager and Corporation Counsel Requesting Approval of a GROUND LEASE Between the City of Peoria and PEORIA PUBLIC LIBRARY for the LINCOLN LIBRARY BRANCH, and Requesting Authorization for the City Manager to Execute the Necessary Documents.

Gulley/Turner move to approve. No discussion. Approved unanimously.

ITEM NO. 5 Communication from the City Manager Requesting Adoption of an ORDINANCE Approving the REDEVELOPMENT AGREEMENT Between the City of Peoria and EM PROPERTIES, LTD., to REHABILITATE the HOTEL PERE MARQUETTE into a FULL SERVICE MARRIOTT; CONSTRUCT a NEW COURTYARD MARRIOTT HOTEL; CONSTRUCT a PARKING GARAGE with RETAIL and RESTAURANT SPACE; CONSTRUCT an ELEVATED CONNECTOR to the CIVIC CENTER, and Requesting Authorization for the City Manager to Execute the Necessary Documents.

Look closely in a couple minutes, and you’ll see your tax money sprout wings and fly away from City Hall.

Ardis asks for everyone to be respectful in their discussion and lays out guidelines. The discussion tonight has nothing to do with relocating an adult use establishment (Big Al’s); that discussion was held months ago and is water under the bridge, as they say. Staff will speak, then the developer, then the public, then the council will deliberate without time limit, and then they’ll vote 10-1 to approve it (my prediction). And so, here we go. Chris Setti, assistant to the City Manager is up first.

Setti gives an overview of the changes between the December 2008 project and the current one. Instead of one hotel, it’s now two hotels — a full-service Pere Marquette, and a new Courtyard Marriott. 401-405 rooms now, down from 470-some. Parking deck is smaller by about 30 spaces. More square footage for retail/restaurant space. City contribution reduced from $39+ million down to $37 million. Lower cost of bonds. Developer investing $10 million more in the renovation of the Pere Marquette than initially planned.

Mr. Matthews’ team, starting with Mark Hoffman, starts their presentation. They start by showing historic photos of Peoria and some famous quotes from Churchill and Shaw. You really have to see the slide show to get the full effect, but they’re showing artists’ renderings of what a full-service Pere will look like after renovations. Lost of dimly-lit “before” pictures followed by beautifully lit “after” renderings. Next are pictures of the Courtyard Marriott, followed by renderings of the pedestrian bridge to the Civic Center. Then a picture of the new project exterior at night all lit up. And finally he names all the investors, who are seated in front of the press table.

Dr. Couri is now speaking. He gave a brief overview of the history of trying to get an attached hotel by the Civic Center. He’s generally talking up the project and how valuable this project will be in attracting more conferences. “Our hotels are rated very low compared to our regional competitors,” he says. Examples: professional meeting planners do not book Peoria because our hotels do not meet the minimum standards of what their clients are looking for — this applies to medical conferences and Rivermen hockey meetings. Bradley University openly dissuaded their visitors not to stay at the Castle Lodge, Pere Marquette, or Holiday Inn, sending people to East Peoria instead.

Michael Everett is now speaking on behalf of the trades. They are (unsurprisingly) in favor of the project. More talking up of the project and comparing it to the Civic Center. A smattering of applause.

Dr. Chou (sp?) is now speaking (he’s one of the investors in the project). He’s talking about the benefits of the Southtown TIF in getting the U of I College of Medicine to locate on Main Street. Also talking about the Cancer Research Center. What does this have to do with the hotel project? They heavily utilize the conference and hotel space in the area. The people who come in to service the hospitals have expense accounts and are accustomed to staying in high-priced hotels. Basically he’s saying that the medical community will embrace this project and help make it successful. (The obvious question is — if there’s all this demand, why can’t this project be 100% privately financed?)

Sue Wozniak (OSF St. Francis) supports the hotel project. She says it will help with recruitment as our hotels give recruits a first impression of the city. Safe, affordable, and convenient accommodations are desired downtown. She also goes on about all the demand there is for this hotel, begging the question of why so many public dollars are needed. Another reference to the City’s “investment in the Civic Center” and how that “investment will be at risk” if we don’t approve the hotel project. It will help grow the economy.

Jim Baumgartner with Caterpillar speaks in support of the hotel project. Says Cat will be having more meetings that will need these accommodations, and also says the new museum will bring in more demand. “It’s really important for our growth to have the high quality hotels you’ve seen earlier in the presentation.” It’s the council’s decision to determine if the project is financially viable.

I don’t know who’s speaking now because he doesn’t hold the mic close enough to his mouth. A hotel brings in visitors, money, prestige, etc., to the community, he says. This plan “literally blew me away,” he says. Mostly he’s just rambling. Sounds like this guy is with the Pere Marquette.

Now Bob Marx of the Peoria [Area] Convention and Visitors Bureau is speaking (he didn’t say “Area” when introducing himself). Just as an aside, he looks younger in real life than he does in his pictures. We need more room nights, more tourism, more tax revenue, etc. In order to do that, we need a competitive hospitality product in a highly-competitive marketplace. “We have to literally put on a suit of armor and joust our way” into selling Peoria hotels, he says. I don’t think any of these people know what the word “literally” literally means. He says this investment is “fiscally responsible.” He also has been a Marriott general manager in the past. He criticizes a recent article by Phil Luciano of the “Peoria Star” — I believe he means the Peoria Journal Star. I don’t think the Peoria Star has been published since the 1940’s, has it? “Marriott will drive incremental business . . . and up the ante in downtown Peoria.”

And now we get to Gary Matthews of EM Properties — the one who will be walking away with $9 million of our tax money when he leaves here tonight. Thanks his staff, his attorney, a litany of other people. It’s like Oscar night here. When will the orchestra start playing him off? Thanks to the sellers for their patience. Ah, the guy with the microphone problem was Ron Samples, one of the general partners of the Pere Marquette; thanks to him, too. And, *sniff*, he thanks his wife. Reads a short statement in support of the project. “They [Caterpillar, medical community] deserve quality lodging” because they’ve put a lot of money into downtown Peoria, he says.

And, as for the developers fee, Matthews brings out David Richardson, a lawyer with a large firm in several states. He says that developers fees range from 8% to 20%. He outlines the time, riskiness of the project, type of project, and payout schedule, and he justifies the fee based on those criteria. The IRS defines a “reasonable” fee as “up to 20%.” Industry standard for a hotel project is 10% to 20%. Based on his experience, 9% is “on the low end for a hotel project.”

And now it’s opened up to the public to address the council.

• Kenny Carrigan. He’s a strong proponent of the project. He was against the Civic Center because it was entirely tax money developing commercial property. But this project has strong support from an individual (I presume he means private developer). He says when new money comes into a community, it’s a multiple of four. He makes several other points about how this will make this community stronger and keep people here.
• Phyllis Cry (sp?). Born and raised in Peoria. She loves the new project; thinks it’s beautiful. She speaks in favor of the project, too. She talks about passing the HRA tax to build the Civic Center and how beautiful it is. The Marriott could make us a winter convention city. Don’t give this big advantage to East Peoria.
• Robert Lawless. He believes the Council should invest in this community because Cat and OSF have invested millions here.
• Conrad Stinnett III. There needed to be better communication of this plan to citizens. Also wonders how the City can afford this project. Doesn’t believe taxpayer dollars should be used for this.
• Merle Widmer. Speaks against the project.
• Pam (didn’t catch last name). Strong proponent of the project and what it can mean to our community. It will help Peoria reach a greater vision.
• Jeff (?). Will another hotel really bring more to the downtown area? Will it really increase nightlife downtown? What about negotiated rates? Will people really be paying the full rate or a smaller negotiated rate? Our crime is going up and we have different issues to worry about.
• Savino Sierra Has worries about the project paying for itself.
• C. J. Summers My apologies to Mr. Plevka at the Journal Star. I just had to speak. I basically said what I’ve said in my recent posts on the hotel project; no big surprises.
• LaVetta Ricca Wonders why we have money for this, but not to help the South Side and improve safety and basic services in the City.
• Mr. White Didn’t get the guy’s name, but he says the council is like the board of directors and the citizens are the stockholders, and they will have to answer to the stockholders.
• David Holman. Owns (owned?) several homes in Peoria. Urges the council to renovate Peoria, and this hotel is just the beginning, and he encourages the council to vote for it.
• Christa Riggs. Is concerned about the process of how we use our money. It’s a lot of money — why wasn’t there an RFP? Why the need for such a large developer fee?
• Nathan Virman (sp?) Part of the building trades; he’s a carpenter. This is an investment in the community and economic development. He’s not from the community — he sees it as a regional investment. He thinks it’s a good investment. This needs public money to go forward. Believes this is a financially viable project “and Gary [Matthews] has the numbers to prove it.”
• No name given. Requests that the Council vote against the hotel. And that’s the last word from the public.

Now we bring it back in to the council for discussion. Van Auken is up first. Asks Finance Director Jim Scroggins to give an overview of the funding. Tax increment financing will provide the funding for this project. Without this project, that increment would not be available to be used for operations. Revenues cannot be used for operations… this year. Van Auken asks how many TIF district the City has. Answer: 10, 11 including Campustown. Of those 11, MidTown Plaza has failed. Currently, we are using general fund revenues to pay for the project. “That’s 11 projects, one potential failure,” Van Auken says.

Sandberg asks if Southtown TIF performed as expected, or if it had to be extended. Answer: it was extended to 35 years. A federal loan was forgiven for the Southtown TIF, and but for that loan being forgiven, we’d still be paying off the upfront money for Southtown, even after 35 years. He asks Scroggins if the EAV of the Pere has increased over the last 10 years. Answer: yes. Sandberg says that increases in EAV could help the general fund if it weren’t for the TIF, because the TIF caps the EAV so the general fund doesn’t get the increment it could have gotten.

Spain asks Setti why the city didn’t offer an RFP for this project. Answer: the City doesn’t have an ownership stake in the subject policy. This was a private transaction between Matthews and Samples, et. al., so he has options on the property, not the City. We did do an RFP for the property at Kumpf and Jefferson because the City owns it. Spain next asks Mr. Baumgarten (Cat) where Cat’s visitors go and stay. Answer: Doesn’t have facts and data on where people go, so his answer will be anecdotal; they stay in hotels in Peoria or East Peoria for a couple of nights, and they go to restaurants, shopping (Northwoods, Grand Prairie). Spain says Cat has in the past supported the Pere Marquette by putting their visitors there, but now it sounds like they are more dispersed. Answer: yes.

Spain continues with questions for Matthews. Asks him to explain why there’s an increased investment in upgrading the Pere Marquette. This is a softball question designed to give Matthews more opportunity to sell the project. Spain asks about the developer’s fee. Will we have to pay more if the cost of the project increases? Answer: no, there’s a guaranteed maximum price that it cannot succeed. Spain asks for a timeline for the project. Answer: Work on Pere Marquette will start immediately after closing. Project completed and ready to open first quarter of 2013.

Sandberg asks if Matthews will need some of the $37 million immediately? Will he be drawing on it immediately in 2010? Answer: yes.

Irving is next with several questions about the redevelopment agreement. Is there anything in agreement that says we will have a Marriott flag on the Pere Marquette? Or can the flag be different under the agreement? Answer: Marriott or comparable high-quality franchise, and before bonds will be issued the City has to approve that franchise. If there is a shortfall in the bonds payment, who is on the hook to pay the shortfall? Answer: the City. If the hotel goes dark and the payments come due, the City has to pay them. Some other questions about the developer’s fee.

Riggenbach asks if the City of Peoria has a track record of paying developer fees for other projects. Randy Ray (City Attorney) says Riverfront Village had some developer fees, but doesn’t remember the percentage, other than it was “something less than the percentage we’re talking about here.” City retained ownership of the parking and public deck for Riverfront Village. If the city retains ownership, “the logic of the developer’s fee is more apparent” than projects where the developer maintains ownership. Asks Scroggins about the difference/advantages of general obligation bonds versus revenue bonds. Answer: interest rate is cheaper on GO bonds than a revenue bond. Revenue bond rates are significantly higher because of the risk.

Now Mayor Ardis has some softball questions for Matthews. How has the construction climate changed since 2008? Will construction costs be lower now than it was then? Answer: Yes, hopefully a savings of 5% to 18%. Ardis asks how the auditing procedure is going to work — how will we know what the savings were? Randy Ray says two ways: draw requests, and another provision in the redevelopment agreement. Point from Ardis: the process is transparent, so we’ll know what the costs were, and we’ll be able to split the savings with the developer, per the agreement. Questions about the historic tax credits and how they will be used. Matthews: We already qualify for the state historic tax credits, and they’re applying for federal historic tax credits. Lots of detailed information on tax credits. If the cost of the project comes down, does the developer’s fee come down by the same percentage? Answer: Yes. If the total project cost is less, the developer’s fee is less. Question: Can the project be expanded in the future (i.e., can you add more rooms and grow the project)? Answer: Yes, and at no cost to the City. Question to City Staff: Do we have a pot of money ($37 million) out there out of which we could pay for firefighters, police officers, etc.? Answer from Scroggins: No. We do not issue bonds for operational purposes. Ardis: This project is being funded by revenue generated by the project.

Sandberg clarifies that the IRS 20% cap on the developers fee is for the restoration portion of a project, not the whole project. So how much of the project is restoration? Answer: About 50%. Sandberg asks further questions of Matthews — if you (Matthews) were unable to meet your guaranteed project/maximum price that was presented in 2008, why should we believe you’ll be able to meet your guaranteed maximum price now? How do we know you’re not going to come back in 18 months and knock off another 75 rooms from the project? Answer: The economy was too shaky in 2008 and he didn’t know all the costs associated. Since that time, the economy has improved and he’s more familiar with what’s needed. Sandberg asks why, if the size of the project was reduced, why the city’s investment wasn’t reduced by the same percentage. Matthews has been getting increasingly agitated throughout Sandberg’s questioning, and finally says if Sandberg isn’t supportive of the project, he should vote “no,” as he probably will anyway. “Then don’t [support the project], Councilman. Vote no!” he said loudly. “A ringing endorsement,” Sandberg replies.

Gulley is up next. (By the way, it’s about 9:34 p.m. now, and the meeting started at 6:30 or so. Long night at council chambers!) I didn’t catch Gulley’s first question. His next question is whether the subcontractors on the project have to meet the City of Peoria’s requirements for contractors doing work for the City. Answer: yes.

Jacob has the next question. He says now the City is taking on some of the obligation of the connector between the Civic Center and the hotel. Randy Ray says the City is not taking on any additional obligation; in fact, the new agreement makes explicit that the project grant includes the connector (construction). As for maintenance, there would need to be a three-way agreement, I guess between the City, Civic Center, and hotel. Question: Are we taking on any liability for injuries? Answer: Not our desire, but will have to be addressed in connector agreement. Question: Is our guaranteed maximum price already set? Answer from Matthews: Yes. $102 million is the guaranteed maximum price. Question: Do we have those hard costs now? Do you have hard bids yet? Answer: No. So the guaranteed maximum price will be determined after the bids come in. Also, “the City has no exposure to change orders.” Question: Can you run through the total private equity going into this project (cash, debt, etc.)? Answer: $47 million in debt financing; $37 million from City; balance is Matthews’ cash equity, new market tax credit, federal tax credit, and investment from a couple corporations he wishes not to disclose. (Hmmm, I wonder who those corporations are?) Total cash equity: “around $13 million” says Matthews. Question: Worst case scenario, if there’s a default, who gets paid first? Answer: Senior debt — the banks — would get paid first, before the bond holders.

Back to Sandberg again. If this is not approved tonight, there’s still a standing agreement from 2008 that is still in force. Scroggins verifies for Sandberg that attachment six says we’re going out for a bond of $40 million with capitalized interest. Another option would be an interest only bond, but that’s not feasible because it would require the city to pay $1.5 million over the next three years or so, which we don’t have. Sandberg to Dr. Couri: When the Civic Center first started saying they needed high-quality hotel rooms connected to the Civic Center, how many rooms did they say they needed? Answer: I don’t know. More questions about occupancy rates — why did the occupancy rate stay essentially the same after rooms were cut? If the occupancy rate was 75% of 475 rooms, why isn’t the projected occupancy rate 88% of 401 rooms? Why is it 74% of 401 rooms? Matthews can’t answer Sandberg’s questions.

Montelongo is next. He has some questions about the developer’s fee, then a question for Setti about issuing RFPs. He clarifies with Ray that the City has put out RFPs that involve private property, like MidTown Plaza.

Spain asks Setti how the developer will be able to pay off its obligation to the City now that he has fewer rooms in the project? Answer: the project generates less overall municipal revenue now than it did in 2008. However, it’s a request for less money ($37 million vs. $39 million). We can borrow less money at a lower rate now than in 2008. There’s also more retail space now than the older project. Less revenue, but less requirement.

And it’s now 10:01 p.m. Sandberg has one more question. You’re expecting the food and beverage and retail business to account for roughly half the revenue of the project? Answer: essentially, yes.

Any other questions? If not, five minutes for closing statements.

Motion by Gulley/Turner to approve the development agreement. We have a motion, ladies and gentlemen! Now we’re moving into closing statement. Gulley is ecstatic about the museum, library, and now the hotel moving forward tonight. It’s like Christmas, he says. All these gifts coming to downtown Peoria! (Nevermind that we’re paying for all these “gifts” ourselves.) “It’s evident that this is still a great project,” he says. Now he’s talking about his memories of the Pere… or as he pronounces it, the “pier.” That’s one in favor.

Van Auken says this is a wonderful thing for the entire community. She supports it strongly because of historic preservation. “It turns that grand old lady [Pere Marquette] into a four-star hotel.” That’s two in favor.

Turner says there are a lot of “strong opinions on both sides of these issues.” He’s afraid that he’ll open up the Journal Star and see “City Council misses another opportunity.” He wants to see us retain a larger portion of the 13,000 visitors that Cat brings to Peoria annually. He also thinks that this economic development is a revenue producer that will help us retain police officers and firefighters. Yes, there’s risk, “but the biggest risk is the risk of not doing anything.” This project will move forward, but this vote will decide if it goes forward in Peoria or East Peoria. If we vote it down, we will close the door on hotels in downtown Peoria. Blah blah blah. The usual talking points: “it’s better than doing nothing,” and “if we don’t approve this, they’ll go to East Peoria” and “the grass is greener on the other side of the river.” That’s three in favor.

Riggenbach: “This is the most intense issue that I’ve had to vote on.” If we did an RFP, the cost of the land would be greatly inflated. Good things about this plan: it will be a Marriott for the next thirty years. Pere Marquette will be full-service hotel. “The fact that it doesn’t look like Soldier Field is a good thing,” he says about the design. “There’s been a lot of fearmongering,” “naysaying” about this project. It’s a lot easier to say “no” than “yes.” Life lessons from Riggenbach and his family life. He’s voting yes. That’s four in favor.

Sandberg: “The project before you has less value than the project approved in 2008.” “Is it your responsibility to approve a project of less value?” What protections are there for the stockholders, i.e., the citizens of Peoria? “There are no protections.” Smacks down Riggenbach for supporting this when it’s his district that has MidTown Plaza, which failed due to mis-projections. What’s the risk? Public subsidizing of private businesses — not just hotels, but restaurants, too. The risk isn’t just if they don’t meet the projections — the risk is high if they meet their projections and other non-subsidized businesses go out of business, just like grocery stores went out of business due to MidTown Plaza. We’re just throwing money at the project like we did for the Maxxam building and the ballpark, etc. That’s one against.

Spain: “Hotel projects do matter. They matter a lot.” He doesn’t support project on blind faith. Says he agrees with philosophy that private business should take the risk, but that’s not the environment we’re in today. To get these projects, cities have to provide subsidies. Just look at East Peoria. We’re losing the “fight” with East Peoria (the boat, Bass Pro Shops, etc.). EP rolls out the red carpet with really sweet deals. Blah blah blah. You get the gist. Developer’s fees for the Embassy Suites was 16%, he mentions. And Embassy Suites is the top-performing hotel in that franchise nationally. Occupancy at Embassy Suites during March Madness was 82%; at the Pere, occupancy was 37%. He points out that Embassy Suites doesn’t contribute any H taxes toward the Civic Center, but there all kinds of shuttle buses between their hotel and the Civic Center. (It’s hard to see how that can be possible, considering they don’t have a climate controlled, covered walkway to the Civic Center.) Ironically, he follows up by saying we’ve missed out on 52,000 room nights because we didn’t have “attached hotel service.” This is a better project today than the one in 2008. This project has a lower cost of borrowing, better product, opportunity for cost savings, and lower obligation. “If you supported this project in 2008, you should support it now.” That’s five in favor.

Irving: It’s very difficult to vote “no” and it’s difficult to vote “yes.” I wasn’t here in 2008 when this deal was approved initially, but I’m here now, and this is a better deal. Would like to find a better way to protect the taxpayers. I support economic growth and want to see more jobs in Peoria, and that there is a danger in doing nothing. My problem with the deal rest with protections for the taxpayer. “If it goes south, everybody gets paid first but us.” I guess that’s two against, although he didn’t explicitly say he was voting no.

Montelongo: The risk is too large at this time with no protection [for the taxpayers]. Three or four percent is more of an industry standard for a developer’s fee. “I’ll be voting no.” “Do not settle for a mediocre project.” Wants to see the council send out an RFP for the project. That’s three against.

Ardis: Repeat of earlier comments. The project pays for itself out of project-generated revenue. Historic taxpayer credits will be split with the City. We can’t go out and do an RFP on property we don’t own. He has lots of accolades for Gary Matthews, Ron Samples, etc. The current owners of the Pere were going to sell it to another company that wasn’t going to restore it. This project will be much better than that. The other sellers on Main Street deserve thanks for coming forward and being willing to support this project. (It’s amazing how supportive you can be when you’re getting $11 million.) Ardis wonders how anyone can be “scared to succeed.” We need to have “confidence in ourselves.” “Confidence in our ability to have a new vision for our downtown, and confidence to make that vision a reality.” (Too bad he didn’t have that kind of confidence and “get-er-done” attitude about the Heart of Peoria Plan.) Blah blah blah. You get the idea. “We have negotiated a much better agreement than we had two years ago when you voted 10-1 for this.” “If you wait around for a better deal, downtown will look the same way it does today.” That’s six in favor.

One last question from Sandberg to Randy Ray: What is the council rule for a super-majority vote? Answer: (I didn’t understand it, exactly.) But, basically, Sandberg is making the case that this vote requires a super-majority under state law. This will require a budget amendment yet this year, so he believes a super-majority vote is required. Ray says his opinion is that the vote tonight requires six votes because it calls for issuance of bonds, and that isn’t the reason the council requires a budget amendment. (More legalese that I can’t follow; sorry.) But if Ray doesn’t think it needs to take a super-majority, then the council will proceed with passing it with a simple majority.

The motion passes at 10:56 p.m. by a final vote of 7-4, Sandberg, Jacob, Montelongo, and Irving voting against.

Good call, commenter “Angela”! Come on down to Whitey’s after the meeting and I’ll buy you a drink.

ITEM NO. 6 Communication from the City Manager and Corporation Counsel Requesting Adoption of an ORDINANCE Amending CHAPTER 18 and 27 of the Code of the City of Peoria Pertaining to BONDS for BUSINESS LICENSES Repealing the Bond Requirement.

The council chambers is emptier now. We took a short recess and now we’re back to the council business at 11 p.m. Regarding this motion, Turner explains why this reversal of the Council’s January vote is necessary. Moved by Turner/Van Auken to approve. Spain supports removing the bond requirement. Sandberg says we need to establish collection of sales taxes as a priority. Van Auken wants to know what we’re going to do for the folks who got their bond because the city required it, but now can’t get their money back since the Council no longer requires it. Answer: nothing. (I guess we’re going to punish the people who comply with City policy now.)

Jacob wants a report back on how this will be handled administratively. Gulley supports the motion, and wants to say “I told you so” since he was against it in the first place. Spears wants to state that he’s against the business license altogether.

Motion passes unanimously.

ITEM NO. 7 Communication from the City Manager and Assistant Director of Planning and Growth Management with Recommendation from the Zoning Commission and Staff to DENY a REQUEST to AMEND a PREVIOUS USE WITH APPROVAL, with a Request for a SPECIAL USE, in a C2 (Large Scale Commercial) District for an EXISTING MOTEL to INCREASE the SIZE of a FREESTANDING SIGN from 150 Sq. Ft. to 204 Sq. Ft. for Property Known as BAYMONT INN & SUITES, Located at 2002 W. WAR MEMORIAL DRIVE.

Spears moves for deferral to next council meeting, seconded by Van Auken. Passes unanimously.

UNFINISHED BUSINESS
(INCLUDING BUT NOT LIMITED TO MOTIONS TO RECONSIDER ITEMS, IF ANY, FROM THE PREVIOUS REGULAR MEETING)

None.

NEW BUSINESS

Turner moves to discharge sign committee from considering sign extensions and bring back item 10-191 for approval on temporary basis for the 6/8/2010 meeting. Sandberg won’t support because he thinks sign committee should be allowed to finish their work before we allow temporary signs that may end up in non-compliance. Seconded by Spain; motion passes 10-1 (Sandberg).

Riggenbach brings up adult-use ordinance. Requests that City Manager contact Riverside Community Church and other stakeholders in the downtown area and someone from Planning and Growth to address their concerns and explain the ordinance. Sandberg wants some additional info, but he didn’t turn on his mic, so I don’t know what it was.

CITIZEN REQUESTS TO ADDRESS THE COUNCIL

Guess who’s still here? Savino Sierra! He’s making his usual commentary on various items of discussion during the meeting. Craig Chase also is speaking to the Council about some issue regarding his personal property, evidently. I can’t believe these people waited until the end of this meeting to speak! I mean, I realize I’m crazy enough to stay here when I don’t have to, but who would have thought there were so many other crazy people? Yikes!

EXECUTIVE SESSION

ADJOURNMENT

If you’re still reading this, for heaven’s sake, go to bed! It’s late! The council finally adjourned at 11:25 p.m. Yes, Spears voted no again. Good night, Peoria.