Tag Archives: David Leitch

City of Peoria

Leitch banking on short memories for dual fleecing

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According to Monday’s “Word on the Street” column, State Rep. David Leitch wants to “consider financial relief” for investors in the downtown ballpark. In case you don’t remember, the City of Peoria contributed a little over $3.5 million towards this project (mostly in land acquisition), plus a TIF district.

“Leitch said he would like to see some public relief the investors spent on relocating AT&T fiber optic lines, which he believes cost the group more than $1 million,” according to the article. “They [ballpark investors] got stuck with expenses in that project I don’t think were legitimately theirs,” Leitch said.

But wait! According to a December 5, 2001, Journal Star article by Jennifer Davis, “the city has spent $700,000 more than it expected – $1.7 million instead of the $1 million estimated – to move underground Ameritech fiber-optic lines in the stadium’s way.”

So, does Rep. Leitch not know this? Or does he want the taxpayers to pay for this expense twice now?

I can find no record of ballpark investors paying the City back for that $1.7 million. But let’s suppose they did, just for the sake of argument. So what? Why would such a scenario be “unfair”? The City paid $2.2 million for Eagle Cleaners to make way for the stadium, and a total of $3,525,175 in direct city assistance. Talk about someone getting stuck with expenses that weren’t legitimately theirs–what about the taxpayers, Rep. Leitch?

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.