Tag Archives: Marriott Hotel

City Council, City of Peoria

Observations

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If you’re Marriott Hotels and you don’t want to see a strip club across the street from your property, the City of Peoria will work tirelessly to find a new location for the strip club. If you’re a lawyer and you don’t want a strip club on your street, the City of Peoria will work tirelessly to find a new location for the strip club. If you’re a large church and you don’t want to see a strip club down the block from your property, the City of Peoria will work tirelessly to find a new location for the strip club. If you’re a small-business owner running a daycare center and you have no political clout, but you don’t want a strip club next door to your business, the City of Peoria will say there’s no place else the strip club can locate.

The strip club owner was going to remodel the Madison Theater (which is currently in a terrible state of disrepair). By chasing them away from the Madison parking lot location, those remodeling plans are apparently scrapped, according to the Journal Star. So the council has helped scuttle plans for revitalization of an historic property. This is not particularly surprising, given the council’s demonstrated apathy toward historic preservation.

Meanwhile, the stated purpose of this move — to make way for a new hotel on the Pere Marquette block — is still missing in action. The project was approved way back in 2008, but to date the project has not begun. A change to the redevelopment agreement approved by the council on May 25, 2010, stated that the project should commence within one year. Almost nine months have passed since that agreement was signed.

All of this angst about a project that is so shaky, it can’t seem to get started despite an infusion of $37 million in taxpayer money and extraordinary help from the City in moving the strip club off the block.

City Council, City of Peoria

Potential Big Al’s location fraught with problems

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Big Al’s is now considering a move to a City-owned parking lot adjacent to the CityLink bus terminal at Jefferson and Harrison — a location that is within 500 feet of Swinger’s World, another adult business. Yet, according to the City’s municipal code (Sec. 18-53(a)(1) and (3)): “A sexually oriented adult use shall not be allowed within 500 feet of another existing sexually oriented adult use,” and “A sexually oriented adult use shall not be located within 500 feet of a preexisting school or place of worship.” So, doesn’t that disqualify the proposed location?

Section (b) of the ordinance was amended recently in order to allow Big Al’s to move to the parking lot adjacent to the Madison Theater. It allowed a provision that, “so long as the sexually oriented adult use continues and does not change the nature of the sexually oriented adult use, [it may] relocate to a location which brings the location more into compliance with the terms of section 18-53.” It adds, for clarity, “‘More into compliance’ means, for example, that if an existing sexually oriented adult use were within 250 feet of a place of worship, it would be more in compliance if it were relocated to a site more than 375 feet from any zoning district which is zoned for residential use, and satisfied all other requirements of subsection (a) above.” Since Big Al’s would still be within 500 feet of a church in the Madison Theater parking lot, but further away from a church than its current location, it would be in compliance with this newly-revised ordinance.

But moving closer to an existing adult use business like Swinger’s World would clearly violate this section. It wouldn’t be moving “more into compliance.”

Not only that, but CityLink also houses Myah’s Just 4 Kids Learning Center. It would appear that Big Al’s would also be in violation of the ordinance for moving within 500 feet of this school. According to the Journal Star, City attorney Randy Ray “said he’s not sure if the learning center would be considered a school under the city’s ordinance.” While it is certainly possible to devise a legal distinction between schools and daycare/learning centers, this is a textbook case of following the letter of the law but violating the spirit of it. Why do we have prohibitions on adult-use businesses being within 500 feet of schools? And wouldn’t those same reasons apply to a daycare/learning center?

Leaving that aside, there’s another problem with this location, and that regards its eligibility for a liquor license. Section 3-11(a) of the City’s code says, “No license shall be issued for the sale at retail of any alcoholic liquor within 100 feet of any church, school (other than an institution of higher learning) hospital, home for the aged or indigent persons, nursing homes or homes for veterans or their spouses or children, any military or naval station or any daycare facility licensed by the Illinois Department of Children and Family Services…” (emphasis added). This ordinance specifies daycare facilities, so we no longer have the ambiguity of what constitutes a “school.” Then the question becomes, how do you measure the distance? The ordinance says:

In the case of a church, the distance of 100 feet shall be measured to the nearest part of any building used for worship services or educational programs and not to property boundaries. In all other cases, the measurement shall be made in a straight line, without regard to intervening structures or objects, from the property line of school, hospital, home of the aged or indigent persons, nursing home or homes for veterans or their spouses or children or any military or naval stations, any daycare facility licensed by the Illinois Department of Children and Family Services, or any publicly owned housing development containing 200 or more housing units.

Myah’s is located in the CityLink Transfer Center. Thus, it would appear from this ordinance that the measurement would have to be made from the property line of the transfer center. In that case, Big Al’s would be within 100 feet and not in compliance with the ordinance.

But let’s face it, it doesn’t matter what the ordinance says. The City Council is committed to letting the strip club go wherever it wants to go, and they will not let this or that ordinance get in their way. Why? They have to make way for the Wonderful Development:

At-large City Councilman Eric Turner, who is the city’s deputy liquor commissioner, said while the parking lot isn’t the best place for Big Al’s, the business does need to move from its current location in order for construction of the Downtown Marriott Hotel, supported with $37 million in public financing.

“My biggest concern . . . there will not be a hotel, there will be no further Downtown development,” Turner said.

He said if the learning center fights the city over the Big Al’s location, the city could have to kill the move, and potentially sink the Marriott Hotel deal.

Marriott Hotel über alles. Ain’t no mountain high enough, ain’t no valley low enough, ain’t no children vulnerable enough to keep that hotel deal from going through, baby! If the Wonderful Development’s ever in trouble, Eric Turner will be there on the double.

City Council, City of Peoria

What’s the justification for the Wonderful Development?

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The ordinance that would authorize the Wonderful Development (downtown Marriott project) to move forward includes this justification:

WHEREAS, the City Council of the City of Peoria finds as follows:

  1. That the buildings on the Project Site have remained underused for a period of at least one year.
  2. That the Project is expected to create or retain job opportunities within the municipality.
  3. That the Project will serve to further the development of adjacent areas.
  4. That without the Agreement, the Project would not be possible.
  5. That the Developer, EM Properties Ltd., meets the high standards of credit worthiness and financial strength as demonstrated by a letter from a financial institution with assets of $10 million or more attesting to the financial strength of the Developer.
  6. That the Project will strengthen the commercial sector of the municipality.
  7. That the Project will enhance the tax base of the municipality.
  8. That the Agreement is made in the best interest of the municipality.

Is this the standard for getting $37 million from taxpayers? I can think of all kinds of businesses that could make such claims — it will create jobs, strengthen the commercial sector, enhance the tax base, meet “the high standards of credit worthiness,” etc., etc. Is that really a justification for taxpayer assistance? Where’s the line at City Hall for those handouts?

I would also like to point out that the buildings on the Project Site have been underused for the past year and a half precisely because of the previous unfulfilled redevelopment agreement with EM Properties, whose “high standards of credit worthiness and financial strength” were not impressive enough to result in actual financing of the original project. Why would the current owner try to get tenants for the vacant buildings when he has an agreement to sell those buildings for imminent demolition?

And I take great issue with the contention the Agreement is in the best interest of the municipality. If the hotels (there are two now!) do not perform up to expectations, the bonds will have to be repaid from the general fund — a fund which is insufficient to provide the basic needs of the City. The City Manager is asking City departments for wage concessions to plug an anticipated $10 million budget deficit for 2011.

Supporters of the project will point out that defeating this project will not help the current budget crisis, and they’re correct. But what Peoria residents need to know is that approving this hotel project will create a future budget crisis. The MidTown Plaza project didn’t create a budget crisis in year one either, but we’re feeling its effects now. The same goes for the Firefly Energy loan guarantee. We won’t have to pay the piper for this hotel fiasco for five years or so, but mark my words, we will be paying the piper for it.

City of Peoria

“Right now is an absolutely horrible time to be in the hotel business”

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So says Ben Thypin, senior market analyst for market research firm Real Capital Analytics, in a November 30, 2009, article for Moneynews.com. Why? Occupancy rates are falling on the order of 10%, and more and more hotels are going into default.

Hotel loans have begun falling into delinquency faster than any other kind of commercial real estate debt.

The rising defaults paint a grim picture for an industry with increasingly more rooms than guests, and more hotels still opening every day. It’s a problem that could get worse before it gets better, with demand expected to remain weak and ambitious new projects planned before the meltdown worsening the room glut.

The oversupply means room rates should stay low for at least another year, good news for consumers but not so great for hotel owners and the banks that lent them the cash to build or buy.

In a related story (forwarded to me by one of my alert readers), Governing magazine takes a look at cities building convention hotels and asks the question, “Should cities be in the mega-hotel business?”

[Heywood] Sanders, a professor of public administration at the University of Texas at San Antonio, is the nation’s leading critic of publicly funded convention centers and hotels. He argues that conventions in general, not to mention the facilities that host them, are a declining business. He says that more and more meetings take place online rather than in gigantic buildings, that the recession has only accelerated this process, and that recovery is not going to bring back the old days of massive trade and professional shows with participants flying in from all over the country. The crisis is causing some people to visit Sereno today instead of staying locally.

Sanders cringes as he sees cities betting on convention centers that cost hundreds of millions of dollars, then doubling down on that bet with hotels that cost hundreds of millions more. His research suggests to him that the link between new headquarters hotels and increased convention business rarely emerges. “You get to do a big project with big promises and lots of money for consultants and bond counsel and underwriters and engineers,” he says, “but you may do it at the expense of the very important things that may make a city’s future.” Sanders would prefer that cities invest in schools, roads and affordable housing.

Meanwhile, back in Peoria where we ignore data such as this, the City is still breathlessly waiting to pour $39.3 million into a new downtown Marriott hotel. Jim McConoughey, president of the Heartland Partnership, recently was interviewed by the Journal Star. It included this bewildering exchange:

Q: There has been some criticism of late with regards to the city of Peoria’s involvement with assisting the hotel project with a $39.3 million revenue bond. Given the current economy and considering the struggles with other TIF projects like MidTown Plaza, how do you respond to someone who says that now is not the time to do the hotel and that the hotel project is a different TIF project than MidTown Plaza?

A: I may never be able to convince that person. They are trying to save their way out of an economy. This is about investing. When you look at a hotel project compared to other things, you can look at it in a couple of different ways – one is that they have been collecting taxes on that site for a hundred years. They have needed positives for a very long time. It’s only been in recent years the condition of (the Pere Marquette) hasn’t paid its own way. To have some degree of investment in it is a positive event for that particular project. For the short term, if you did nothing, it would feel like you are taking a less risky position. But the riskiest position is to not do anything.

First of all, the question is incorrect. It’s not a $39.3 million revenue bond, but rather a general obligation bond. That means if the hotel flops, the taxpayers are still on the hook to repay the bond debt.

Secondly, McConoughey is right about one thing: he’ll “never be able to convince that person.” The rest of his answer is basically the Peoria motto, “it’s better than nothing!” McConoughey treats “investment” here as though it is a purely positive thing. In reality, there are good and bad investments, and this downtown hotel scheme is a bad one (for reasons stated above and previously). A great investment today would be in the cannabis industry, with plenty of notable companies investing in it and getting huge returns. You can check out this article “https://www.newcannabisventures.com/sol-global-reports-c244-million-investment-gains-in-q1/” to learn how companies are investing in the cannabis industry.

City of Peoria, Peoria County

City and County have golden opportunity to save $80 million+

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Both the city and county of Peoria are facing hard times. They’re in a budget shortfall and are looking at increasing revenue and cutting costs (which means services will be cut in some way). Each entity has unwisely committed themselves to large, approximately $40 million capital outlays for non-essential projects: the city for a private Marriott hotel downtown, and the county for a private museum that has received tepid support for multiple years.

Here’s the good news: Both of these projects have missed their contractual deadlines, meaning that the municipalities could easily cancel these agreements and save taxpayers a boatload of money, both in up-front capital costs and on-going operational expenses.

Here’s the bad news: They ain’t gonna do it. Despite a history of just these types of white elephants that have contributed to the current budget mess, you can bet your heavily-taxed bottom dollar that they’re still going to go through with them, even as they cry poverty when it comes to essential city services such as police protection and road maintenance.

It seems no one in the city is able to make the connection between large, non-essential projects, and high taxes. They all hate high taxes, and they all hate service cuts, yet they continue to support large, money-losing, unnecessary projects that swallow their tax money and give them little to nothing in return.

Residents are content to believe the tortured logic of their local politicians. Here are a few of my favorites:

  • “Canceling this capital project won’t do any good because the money to pay the debt can’t be reallocated to operational expenses; it can only be spent on this project.” — That’s true, but irrelevant. From the taxpayer’s perspective, canceling the project will save us money because we won’t have to support it with our tax money. It doesn’t matter that it can’t be reallocated; the municipalities are still going to have to plug their budgets with increased revenue from either taxes or fees. By canceling the agreements, that saves us from an even higher tax increase.
  • “This project will pay for itself.” — Let’s look at the hotel project. The developer can’t find financing for the rest of the project (apparently banks are a little more cautious with their money than the City of Peoria — which is saying something), and the Embassy Suites expansion in East Peoria was recently scrapped because, “The hospitality business as a whole in the country is experiencing extremely hard times.” Yeah, sounds like that will pay for itself, doesn’t it? Obviously the museum will never pay for itself; even ardent supporters don’t claim that.
  • “But the people voted for it.” This applies only to the museum, since the public didn’t know anything about the hotel until two days before the council voted on it, and basically had no voice in the matter. It’s not as if there isn’t precedent for the city council to ignore a vote by the people. They cut funding to the library expansion even after it was approved by a large majority of voters. This project was only narrowly approved, and mostly on the backs of Dunlap and North Peoria voters. It lost handily outside the city. I’ll bet if we had an referendum on increasing garbage fees, that would lose. Should the municipalities thus take that off the table? The fact is that any cuts in service or increases in revenue are going to be unpopular. Leadership requires that unpopular, but fiscally-responsible decisions be made in tough times.

The city and county need to cut the fat. They’re in debt. They can’t afford to provide basic services to their residents. If these developments are really the sure-fire money-makers they claim to be, let private interests finance them, not the taxpayers who are stretched already in this poor economy. Show some leadership.