Tag Archives: downtown hotel

City Council, City of Peoria

City decides to do market study of Wonderful Development after all

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On the Peoria City Council agenda for Tuesday night is this item:

ACTION REQUESTED: AUTHORIZE THE CITY MANAGER TO CONTRACT WITH HVS FOR UP TO $15,000 TO PROVIDE ANALYSIS AND CONSULTATION REGARDING DOWNTOWN HOTEL PROJECTS.

BACKGROUND: Since 2006, the City has worked with HVS to analyze potential hotel projects involving the Peoria Civic Center. This work included conducting a 2006 market study for a Hilton adjacent to the Civic Center at Kumpf and Jefferson and professional advice on the redevelopment agreement reached with EM Properties in December 2008. Currently, the City has contracted with HVS to conduct a market study of the most recent version of the Marriott Pere Marquette project at a cost of $7,500 [emphasis added]. (The City was able to work with HVS to reduce the cost of a full market study by agreeing to complete some of the local staff work.) That specific task will be concluded by April 30, 2010, but HVS’ expertise may also be required to analyze particular facets of the redevelopment agreement. The proposal from HVS to provide these services is attached.

HVS’ 2006 market study is available here. The most recent version of the downtown hotel project has a different design and fewer rooms, but at the same overall cost of $102 million. The developer is asking for $37 million in public assistance for the project.

City of Peoria

No market study performed on Wonderful Development

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The other day, I was reading in the Journal Star about former mayor Bud Grieves’ plan to publicly unveil his all-hotels-connect-to-the-Civic-Center idea, and this just jumped out at me:

City Manager Scott Moore said the city is looking to do its own market study on Grieves’ plan, a similar process the city took in 2008 when Matthews of EM Properties Ltd. pitched the $102 million Marriott project.

The city did a market study on the “Wonderful Development”? Really? I don’t remember any council action authorizing funding for that. I immediately sent a Freedom of Information Act request to see this market study of which the City Manager spoke. Here’s the response I received:

Thank you for your inquiry regarding a “market study on Gary Matthews’ hotel plan.” No official market study of Mr. Matthews hotel plan in 2008 was conducted. [emphasis added] Over the past few years, the City has worked with HVS – a global hospitality services consulting firm – to determine the feasibility and reasonableness of a variety of hotel projects. Their largest work for the City was conducted in 2006-7 in support of a plan to build a Hilton at the corner of Kumpf and Jefferson. HVS was involved in the discussion regarding the December 2008 Matthews plan, but never produced any written analysis. They provided us with advice and counsel on the scope and need for the project and the parameters of the Redevelopment Agreement. Their involvement included a series of phone calls with City staff, representatives of EM Properties and our respective attorneys.

So, as it turns out, there was no market study. No independent analysis of Matthews’ plans. There are references to a feasibility study that took place before the recession started. This is evidently what the City of Peoria calls “due diligence.” And this is the process they’re going to use on Grieves’ plan as well.

I suppose we should be grateful that the City didn’t spend money on doing its own market study, since they’ve been known to ignore them anyway and just go with the developers’ promises, like they did with MidTown Plaza. That certainly turned out well; I’m glad we’re doing the same thing again, and with higher stakes.

City of Peoria

“Wonderful Development” Update

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The “Wonderful Development” (that’s what City Attorney Randy Ray called proposed downtown Marriott project when the City was still keeping it a closely-guarded secret) has yet to meet any of the deadlines in its redevelopment agreement with the City. The most recent Issues Update gives the details:

REDEVELOPMENT AGREEMENT BETWEEN THE CITY OF PEORIA AND EM PROPERTIES, LTD. This Redevelopment Agreement was approved by the Council on December 15, 2008. This Agreement provides that the Redeveloper shall commence construction of the Project not later than one year from the execution of the Agreement (December 19, 2009). Alternatively, the Redeveloper is to commence within 20 days of closing the initial series of the Bond, and the Bond issue has not occurred and the pre-conditions to the Bond issue have not yet been met. There is another deadline contained in Paragraph 3.5 of the Redevelopment Agreement which provides that the Redeveloper shall submit construction plans to the City no later than June 1, 2009. That has not occurred. Although this deadline has not been met, the Contract remains in full force and effect.

Going back to Paragraph 3.2.1 concerning commencement of the Agreement, the Agreement provides that if the Redeveloper does not commence construction of the Project within 18 months from the date of the execution (June 19, 2010), the City shall have the right to terminate the Agreement.

According to a recent Journal Star article, the Redeveloper is “optimistic” that he will be able to get all the financing he needs to acquire the Pere Marquette and adjacent properties by January 1, 2010, or thirteen days after the deadline for construction to commence. That would leave him five months to submit construction plans to the City (already four months past deadline itself), secure approval, and start construction — or else the City could terminate the agreement.

I don’t think he’s going to make it. But then, I don’t think it’s going to matter, either, because the City never cancels redevelopment agreements that miss deadlines. In fact, I don’t know why they even bother to put deadlines into their agreements anymore when they’re demonstrably meaningless.

This Wonderful Development — to the tune of approximately $4 million in debt service per year on average — will continue to sail through, even as we cut police officers (to save $1 million annually), road resurfacing, animal control, and other vital public services. Your streets will take a little longer to get plowed in the winter, but we’ll have a downtown Marriott. The police will take a little longer to respond to your emergency, but we’ll have a downtown Marriott. That rabid dog in your neighborhood threatening your family’s safety on a Saturday? Call back Monday; the office is closed weekends due to budget cuts — but we’ll have a downtown Marriott.

As taxes continue to rise and service continues to decline, more people will give up and move out of Peoria. But that’s okay, because when those folks come back to visit, they’ll have a place to stay: the downtown . . . Embassy Suites in East Peoria.