At its next meeting scheduled for Monday, Dec. 15, the City Council will almost assuredly approve a new hotel development in downtown Peoria that includes an elevated pedestrian walkway, or sky-bridge, connecting the hotel to the Civic Center.

Naturally, the prospect of getting a downtown hotel of the caliber of a Marriott is exciting. New and/or improved hotels are desperately needed in our central business district by all accounts. When someone comes to the city and waves a $102 million project under their noses, it’s hard not to jump at the opportunity.

But this isn’t a purely private venture. The developer and investors are asking for just under $40 million in revenue bonds from the city to help pay for construction. These bonds would be paid back with revenues from the hotel over a 23-year period. It’s being presented as a sure thing — but there is a risk to consider — whether the hotel will perform well enough to pay back those bonds. The council members have an obligation to weigh that risk and make their decisions based on facts and the long-term interests of Peoria’s citizens, not hype.

And there’s no small amount of hype, starting with one city official’s pronouncement that this is a “wonderful development” before it was even made public. More recently, it’s been described as “a key to bringing large conventions to central Illinois and generating millions in revenues every year,” as the Journal Star put it. But are these predictions about the Civic Center and the need for a hotel with a sky-bridge to be believed?

Heywood Sanders warned the Peoria City Council back in 2004 — before they voted to expand the Civic Center — that similar predictions then of “millions in revenues” from “large conventions” being lured here were wildly optimistic. The Journal Star reported on October 18, 2004:

Since the mid-1980s, Sanders has reviewed more than 80 feasibility studies for new or expanded convention centers and tracked the outcome of those facilities in terms of new conventions and trade shows added to the annual roster, attendance at those events and hotel nights resulting from new convention business.

Without exception, every report has assured cities that if they “build it, you’ll do great.” But high expectations laid out within the studies are going unrealized as the convention market stagnates and new or recently renovated centers add millions of square feet of space per year, effectively shrinking the share of business to go around, Sanders said.

Sanders told a U.S. House of Representatives subcommittee basically the same thing in 2007:

The expansion of convention center supply, coupled with changes in demand and convention attendance since the late 1990s, has resulted in a highly competitive market. A great many cities have seen significant decreases in their annual convention and tradeshow attendance in recent years, and have come to rely on a variety of financial incentives.

And what are those “incentives”? Mainly discounts on rental costs and hotel rates. He goes on:

The increased competition for convention business has two direct implications for communities that have invested in new or expanded centers. First, discounts and incentives reduce the operating revenues of a center, increasing annual operating losses and the public subsidies required for convention center operation. Second, the volume of annual convention attendees has become increasingly uncertain, as groups and organizers face a growing roster of medium to large size centers seeking to gain new business.

So, what are the projected revenues for this hotel? Are they realistic? Or are they based on optimistic numbers in a consultant study like the C.H. Johnson Consulting study from August 2002 upon which the $55 million expansion of the Civic Center was based? Johnson Consulting at that time predicted “an additional 221,600 visitors to Downtown Peoria in the first year after improvements are complete, with 87,500 attending 66 new events in the convention and ballroom areas,” according to the Journal Star, and “The total of new visitors would spend an estimated $19 million, generating $1.4 million in general sales taxes, $188,000 in hotel taxes, $102,000 in restaurant taxes and $36,000 in amusement taxes.”

So, let’s add those numbers up and compare them to actual figures. In the first year after the expansion was completed, we should have seen 66 new events and $326,000 more in HRA tax revenue. The expansion was completed in 2007. At the end of fiscal year 2007, the Civic Center reported 544 events and $1,729,846 in HRA tax revenues. At the end of fiscal year 2008, the Civic Center reported 590 events and $1,779,762 in HRA tax revenues. That works out to an increase of 46 events and $49,916 in increased HRA tax revenues — both well short of projections, just as Sanders had predicted.

Note in particular how far short the HRA tax revenues fell — they rose only 15% of what was projected: $49,916 instead of $326,000. Will the hotel’s occupancy and revenue projections be more accurate? St. Louis’s taxpayer-owned convention center hotel (also a Marriott, incidentally), which opened in 2000, is on the verge of having its bondholders foreclose on it since it started missing payments due to lower occupancy than expected. Peoria would be wise to double- and triple-check the numbers before agreeing to put the city on the hook for $40 million.