Tag Archives: Peoria County

Museum Block, Peoria Civic Center, Peoria County, Taxes

Ritschel not seeing all the benefits of higher taxes

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Here’s an intriguing story from the Journal Star. It’s in regard to a request from City staff to raise sales taxes downtown to help repay general obligation bonds that will be used to build a new Mariott hotel:

Civic Center officials believe an extra 1 percent sales tax on concessions and catering could put the Downtown sports and recreations center at a competitive disadvantage compared to other nearby facilities . . . .

Ritschel said the 1 percent tax would generate approximately $30,000 a year for the Civic Center, which is less money than they anticipate losing to East Peoria and elsewhere because of the extra tax.

Peoria and East Peoria tax similarly when it comes to hotels, food and beverage sales, Ritschel said, so the extra 1 percent would make the Civic Center “more uncompetitive.”

Perhaps someone from the museum group can explain to Ms. Ritschel and the rest of the Civic Center officials the big benefits of higher sales taxes. They spur economic growth; they don’t hurt it. The new Marriott downtown will bring jobs and be like our own little stimulus package. And besides, it’s so cheap — only $1 for every $100 spent. How much does the average person spend on concessions downtown? $25? It’s only going to add an extra quarter to your purchase! Pocket change, dude. They must just be naysayers who don’t want to see progress in Peoria.

Obviously, I’m poking fun at the arguments given for the museum sales tax. But all sarcasm aside, I actually agree with Ritschel on this issue. The same thing that Ritschel fears will happen with a 1% sales tax increase will also happen if voters approve a .25% sales tax increase in Peoria County to pay for the proposed downtown museum. It will make us less competitive and drive more business across the river and elsewhere. Did you catch the phrase she used? She said a tax increase would make the Civic Center “more uncompetitive.” In other words, there’s already a tax disparity, and adding to it is just going to exacerbate the problem.

Did the Bradley professors take the cross-border effect of tax disparity into account when they did their economic analysis of the museum project? I’ve added that to my list of questions to ask when we meet. I expect a call soon to set up a meeting date/time.

Peoria County, State of Illinois

Did Peoria County break ethics law by conducting survey?

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Recently, Peoria County did a web-based survey regarding the proposed downtown museum with this explanation:

Your Peoria County Government is interested in your opinion regarding public funding of the Peoria Riverfront Museum. Museum partners have requested public funding to complete the project, so the County Board must decide whether to proceed with a referendum to increase the sales tax rate one quarter of one percent. Your participation in this brief survey will help with that decision.

And as part of its “National Citizen Survey” in 2008, it asked this question:

The Peoria Riverfront Museum project – with a focus on education, history, arts, and sciences – has fallen short of its public and private fundraising goals. To what degree would you support or oppose a voter referendum to increase the sales tax rate by .25 percent (for example, from 8.0% to 8.25% for the City of Peoria) to fund the remaining cost of constructing money?

The question is, can the county do this — legally? The municipal code (as required by state law under 5 ILCS 430) appears to prohibit this kind of political activity. Sec. 2-29(b)(1) and (2) states, “No officer or employee shall intentionally perform any prohibited political activity during any compensated time, as defined herein.” There’s a whole list of what is considered “prohibited political activity,” but here’s the one about surveys from Sec. 2-29(a) [emphasis mine]:

Prohibited political activity means [. . .] (5) Surveying or gathering information from potential or actual voters in an election to determine probable vote outcome in connection with a campaign for elective office or on behalf of a political organization for political purposes or for or against any referendum question.

Isn’t this precisely what the county has done? The web survey and the National Citizen Survey question are clear attempts to determine the probable vote outcome of a sales tax referendum for the museum. They were both done at county expense, on county time, by county employees. What service does this provide citizens of the county? None that I can see. The only thing it appears to provide is taxpayer-funded market research for the museum group.

Museum Block, Peoria County

Build the Block numbers questioned

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I took down my previous post on the economic impact study by a couple of Bradley professors because I unfairly portrayed them as being uncooperative and unwilling to back up their numbers. They have both contacted me and assured me that they will be happy to meet once they’re both in the country and can coordinate their schedules. My apologies to them for implying they were stonewalling me.

In the meantime, it appears I’m not the only one wondering how they came up with such impressive numbers in favor of the museum. (Last week, they held a press conference where they announced the museum and Cat visitor center would create 1,100 jobs during the two-year construction phase, 90 jobs per year after construction, and $572 million in economic growth over 20 years.) The chairman of the economics department at Knox College is skeptical of those numbers, too.

Richard Stout is the chairman of the economics department at Knox College in Galesburg. Though he hasn’t read the economic impact study, he said he has some questions about how the study drew some of its conclusions. He was skeptical about how the $572 million of economic growth over 20 years figure was calculated. For one thing, included in that figure is the $136 million cost of the project and estimated additional spending that would be created because of it.

“You can’t say the cost of construction is not a cost, that it’s an economic benefit. The cost of construction is a cost,” said Stout, who also questioned how the museum’s operating expenses through the years would also be tallied as an economic benefit to the region.

I also found this interesting. The Bradley professors told me that they weren’t “e-mailing out [their] spreadsheet work on Build the Block at this time.” But according to the Journal Star article, “The summary mentions a copy of the report will be filed with the Peoria County Clerk’s Office and available for sale. It has not yet been filed, according to Scott Sorrell, assistant to the county administrator.”

Once it’s filed with the County Clerk’s office, doesn’t it become a public document? How can it be available “for sale”? Couldn’t a person just FOIA it? Who would get the money from such a “sale”? If I write my own report on Build the Block, will Peoria County sell my report on consignment as well? Perhaps this was just a typo, and the “sale” referred to is simply photocopying charges, as allowed under the Freedom of Information Act.

City of Peoria, Museum Block, Peoria County, Peoria Park District

More than just sales taxes may support museum

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Did you know that your property taxes indirectly support Lakeview Museum? Karrie Alms does. She’s a community activist and frequent commenter here at the Peoria Chronicle. While doing her usual detailed research, she came across a property tax levy fund titled “Fund 123 MUSEUM PEORIA PARK.” That caught her eye, so she asked Park Board President Tim Cassidy about it. He explained:

Presently Lakeview museum owns and operates museum operations. The PPD [Peoria Park District] owns the land and building and allows Lakeview to use it under an agreement that is now several decades old.

Mr. Cassidy also confirmed that Lakeview does not pay rent for its use of the building, and “the amount of [the] museum fund levy going to Lakeview museum facility is $189,234 per the 2009 budget.” Not having to pay rent or upkeep on the building and grounds surely helps Lakeview’s bottom line and also explains why they didn’t include funds for capital improvement in their pro forma for the proposed downtown museum.

So, what happens if/when the museum moves downtown? As I reported in a previous post (“Is Peoria’s History Getting a Back Seat?” July 13, 2007) after talking to museum officials, “When the new museum opens, Lakeview is planning to hang on to its building at Lake and University to be used for storage because there’s not going to be enough storage space at the new museum. In particular, there’s not very much space planned in the new museum for special, climate-controlled storage of fragile pieces.” However, it doesn’t appear that the Park District has agreed to let the museum continue to use the building. Cassidy told Alms:

If Lakeview museum left the site to go downtown [its] continued [use] of present site would be subject to further agreement based on PPD needs for the facility. […] PPD has no final plans for Lakeview facility use if museum leaves. It remains open for discussion, although one use considered is a senior recreation/leisure facility for programming needs.

Cassidy also said that continued use of the Lakeview building “has never been approved by PPD. In fact specific request has not been made for PPD to formally act.”

If the new museum is unable to use the current Lakeview building for storage, they will have to find storage elsewhere. Without a rent-free (i.e., taxpayer-subsidized) facility to use, cost of that storage would impact the museum’s profitability. The Museum Collaboration Group can’t just assume they will be able to continue using that building (rent-free, at that) when their lease expires in 2012. Off-site, specialized storage costs should be figured into their pro forma.

The Park District/Lakeview Museum arrangement also raises another question. In the ground lease the Museum Collaboration Group signed with the City of Peoria for the old Sears block, it has this interesting provision:

11.2 Permitted Assignees. Notwithstanding anything in this Lease to the contrary, Tenant may assign Tenant’s interest in the Lease as follows:

11.2.1 Peoria Park District. Provided the District (“Peoria Park District”) agrees, the Tenant may assign Tenant’s leasehold interest in this Lease to the Peoria Park District, subject to the following: (i) Tenant shall not be relieved of any of its obligations under this Lease and Redevelopment Agreement; (ii) the Peoria Park District shall be obligated to observe the terms and conditions of the Lease applicable to Tenant; provided, however, that the Peoria Park District shall have no personal liability to Landlord, Tenant or any third parties with respect to the Lease, the Redevelopment Agreement or the Real Property, with such liability limited strictly to Tenant’s leasehold interest in the Lease; and (iii) the Landlord shall be entitled to enforce the provisions of the Lease and the Redevelopment Agreement directly against the Tenant, who shall continue to have available to it all the rights and obligations of the Tenant under this Lease and Redevelopment Agreement notwithstanding such assignment.

The “Tenant” would be the Peoria Riverfront Museum, and the “obligations under this lease” would include repair, maintenance, alterations, and additions to the building and grounds. If the museum were to assign its interest in the lease to the Park District, then the Park District could use its funds — i.e., Peoria property taxes — to maintain the building and grounds. Here you can check about student loan interest deduction with guide of an experienced firm like taxfyle. That would certainly be more than taxpayers bargained for if they approve the sales tax referendum on April’s ballot.

No deal has been made to assign the lease to the Park District at this time according to Cassidy. But the legal language is in place and could be acted upon if the sales tax referendum is approved and construction of the facility is allowed to proceed. It’s something to think about when you go to the polls on April 7.

Museum Block, Peoria County

County re-crunches museum numbers

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Earlier this month, Peoria County administrators crunched the pro forma numbers submitted by the Museum Collaboration Group and found that it was a money-losing proposition. The museum folks objected to that analysis, saying it wasn’t accurate. They got together with the County and re-crunched the numbers, and now the County shows the museum will make a tidy profit.

Erik Bush, the County’s Chief Financial Officer explains what changed:

The first analysis actually showed a dire projection. When discussing the revenues with PRM staff, it became clear that in developing their background materials, PRM had established discounts on their revenue projections, from which I assumed as 100% projections. In reality, these numbers were in some cases 70% of their true projections. In tum, I was discounting discounted figures. A line by line narrative of these changes may be found at the end of this memorandum.

I asked PRM to provide me with the 100% revenue estimates and proceeded to run the second iteration.

The results are summarized as follows:

a. Based on the PRM’s assumptions, their projections could be off up to 9% and still operate in the black over a 20-year period.

b. In using their 100% revenue projections it appears revenues annually meet or exceed 100% of expense projections. The margin of actual to budget has historically been 1-2%; therefore, I find a 9% cushion to a structural deficit reasonable.

c. A key item missing from their pro-forma is the cost of future capital investment. A common benchmark for capital investment is 10%. Based on an expected expense base of slightly more than $4 million, it can be reasonably expected the museum is not showing close to $400,000 in potential annual future costs to properly maintain its assets. This figure is a benchmark and can be driven by annual needs.

d. In the 100% scenario, roughly $100k of the endowment will be necessary to cover the cost of capital investment and break even annually. In the 95% scenario, an endowment ofroughly eight million dollars would be needed to generate the necessary interest (assuming 4% annual return, compounded monthly) to cover the annual cost of capital investment, combined with the projected excess of revenues over expenditures.

The changes are all well-argued, but I still have a problem with a couple of key assumptions:

  • Gallery admissions still based on projected 240,000 visitors per year. On their pro forma, the museum changed some parameters: they raised the average ticket price from $5.25 to $7.50, and they assumed 40% of the 240,000 visitors to the museum would buy a gallery admission, up from 33%. Those changes raised their projected revenue for gallery admissions from $420,000 to $718,000. However, if we use a more realistic estimate of 180,000 visitors per year, the revenue would be $540,000 — $178,000 less than the county/museum projection.

  • Planetarium tickets and attendance projected to go up. I’m stumped as to how the museum folks think they’re going to raise the admission price for the planetarium from $1.50 to $4.00 per student, yet end up having more students (19,000 vs. 16,000) visiting the planetarium, especially with schools in as bad of financial shape as they are these days. Nowhere do they explain how they came up with their number of students or how their number compares with historical attendance numbers. In my opinion, they have to assume at the very least that the number of students won’t increase. So take 16,000 students times $4 and you get $64,000, $12,000 less than the county/museum projection.

So, that’s a total difference of $190,000 from the proposed pro-forma, which would bring their projected revenues down to $4,298,000. That would still cover their projected expenses, but would only give them about a 4% cushion instead of 9%. Also, it would mean they’d have to use roughly $270,000 of their endowment for capital investment instead of $100,000. I don’t know how big of an endowment that would require, but to get $303,750 interest earned takes $6,750,000 of investable funds according to the previous pro-forma analysis available at the county’s website. Do they have that much in their endowment?

Here’s the other thing. The money raised by a county sales tax would have to go toward capital purchases, according to the statute:

For the purposes of this Section, “public facilities purposes” includes, but is not limited to, the acquisition, development, construction, reconstruction, rehabilitation, improvement, financing, architectural planning, and installation of capital facilities consisting of buildings, structures, and durable equipment and for the acquisition and improvement of real property and interest in real property required, or expected to be required, in connection with the public facilities, for use by the county for the furnishing of governmental services to its citizens, including but not limited to museums and nursing homes.

If the museum doesn’t meet their revenue projections, I think it’s logical to expect them to scrap the capital investment fund, especially since they didn’t have it in their pro forma in the first place. Without infusions of capital, the place will get out of date pretty fast, and then you know what will happen? They’ll be back asking the taxpayers for more county tax money under this statute for “durable equipment” and “improvement[s].” And then the taxpayers will really be over a barrel because the project at that point will be “too big to fail,” if you know what I mean.

I still believe that a more compact, urban design would be significantly less expensive to build while still being an attractive civic building, plus it would free up the rest of the block (outside of Caterpillar’s visitor center, of course) for private development (retail, residential components), which will bring in property and sales tax dollars to the city and county. Plus, it would be what the public said they wanted on that block, and what professional city planners over the past several decades have said is needed on that block. Why is this option not being pursued?

County board member Merle Widmer has written extensively on the topic of the museum. I encourage everyone who’s interested in this topic to take a look at his blog, Peoria Watch.

The county votes tonight (County Board Room 403, 6:00 p.m.) on whether to put a sales tax referendum on the April ballot. No other counties of which I’m aware are planning similar measures to support this “regional” museum.

Museum Block, Peoria County, Taxes

County committee approves museum tax referendum

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From the Peoria County website:

The Peoria County Finance/Legislative Committee passed a resolution late this afternoon that would place a referendum on the April ballot asking voters to raise the sales tax rate 1/4 of one percent to help fund public facilities. The County Board must approve the resolution before the referendum can be added to the April ballot. The Board must make its decision by January 30; a special board meeting will be called to allow the full board to vote on the resolution. The date of that meeting has not yet been set.

Should the County Board pass the resolution, the voters will ultimately decide whether to support the sales tax increase. The referendum would include a sunset date, set 20 years from the effective date of the tax increase. If the referendum is on the April ballot and the voters support the sales tax increase, money raised from the increase will be used to help fund construction of the Peoria Riverfront Museum.

Interested persons may click here for more information on the museum funding. From the information library, please select MuseumPolicyConsideration-REPORT.pdf or MuseumPolicyConsideration-REPORTandATTACHMENTS.pdf.

Museum Block, Peoria County

Sales tax referendum discussed at county finance committee meeting

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I couldn’t attend the Peoria County finance committee meeting Tuesday, but activist and regular commenter Karrie Alms did and provides this scoop:

Today’s Peoria County Finance Meeting was a real treat of new information.

  1. Peoria County feels that they will need to get the City of Peoria to title the museum property to them so that the County will be able to legally issue revenue bonds for the museum project. So, the County is in the process of carrying that water to the city.

  2. Roughly $35M will be needed for the museum project. Roughly — not a firm figure. Is that an increase, decrease or the same amount from the last figure on record? Wonder when that figure will be firmed up?

  3. That the resolution (the referendum language) will refer to a “public facility” not the museum specifically.

    I asked that as a voter in the voting booth, how would I know that the money would be specifically used for the museum? I wouldn’t know and that the museum people will have to make their appeal to let the voter know that the money is for the museum. Special, seeing that PA 95-1002 (born as SB 1290) refers to public facilities. I guess we will just vote to pass another tax for the County to start a fund for whatever suits them.

  4. And my favorite, that once the county has repaid the bonds, that the county could just give the land away to anyone — the city, the museum group or whomever. This concept was repeated at least twice.

After the bonds are paid off, Karrie told me, the County would then transfer title to the property back to the City or possibly the museum directly. I believe it was said in the meeting that it didn’t matter which entity got the property.

It’s interesting to me that they’re planning to use revenue bonds. What revenue will this project be producing exactly? Just a couple weeks ago, the city decided against using revenue bonds to pay for the new Marriott hotel downtown, opting for general obligation bonds because there was no established revenue stream. Now the county will be using revenue bonds for a project that will most likely need a perpetual operating subsidy? Where’s my municipal bond expert commenter? I need some more explanation on this one.

In answer to Karrie’s second question, the number was $24 million in November 2007 when it was first pitched to the county. By November 2008, the number reported was $35 million, evidently due to increased construction costs.

As for the referendum language, it is certainly vague if they’re indeed going to ask for a tax to go for a “public facility” without specifying said facility. They could use that money for anything, including other facilities besides the museum if the tax raised a surplus of money.

One other interesting note that Karrie didn’t mention: the results of the online survey were quite a bit more negative than the phone survey. On all the questions, a rather large majority was opposed to a sales tax increase regardless of the reason.

Museum Block, Nation/World, Peoria County

Did anybody not see this coming?

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From today’s Journal Star:

Museum backers hope the federal economic stimulus plan includes $4 million to construct an underground parking garage for the Downtown project.

Of course they do. Especially with Mr. LaHood as Secretary of Transportation, they probably feel pretty confident they’ll get that money, too. Nevermind the fact that we don’t need any additional parking for this project. Nevermind the fact that they haven’t raised their goal in private or public funding, indicating that there is not sufficient local support for this project. The latest spin on the project is to call it a “stimulus project,” designed to stimulate the local economy:

[Brad] McMillan said an agreement with museum representatives and Caterpillar – which wants to construct a $41 million visitors center next to the Downtown museum – said “100 percent” of jobs generated from the construction of the facility would come from “local construction” and trades.

“This could mean a lot of work during a tough economic time span,” McMillan said.

In order for the project to go forward, of course, Peoria residents would have to approve a .25% increase in the local sales tax. So, you see, a higher sales tax will be a good thing for the economy, because it will create 250 construction jobs. Let’s see, $24,000,000 in higher sales taxes, plus $4,000,000 in federal stimulus money, that’s $28 million for 250 jobs, or $112,000 per job.

So now, not only is this project an exercise in inefficient land use, it can also be poster child for inefficient use of public funds.

Museum Block, Peoria County

County carrying museum-backers’ water

30 Comments

The Journal Star has published the specific wording of the telephone poll recently completed by Peoria County regarding the proposed downtown museum:

The Peoria Riverfront Museum will enhance educational opportunities for all of central Illinois. The museum will house collections, a state-of-the-art planetarium, and an IMAX theater. The adjacent Caterpillar Visitor’s Center will welcome visitors from around the world. The project will create 250 union construction jobs, and upon completion will generate nearly $14 million annually to our local economy. The museum project is 86 percent funded.

This is practically the textbook definition of a push poll, which is inappropriate in general, but especially when perpetrated by the County government.

What do they mean it will “generate nearly $14 million annually to our local economy”? How do they figure that? According to a September 8, 2008, Journal Star article, “The annual operating budget [for the Peoria Regional Museum] is pegged at $4 million.” Where’s the other $10 million being generated? To just throw that out there as a fact is inappropriate; at best it should have read that “developers predict” it will generate $14 million annually or some other such clarification.

And the last line is really over the top. It states that “The museum project is 86 percent funded.” This is patently false. According to the Build the Block website, $73.7 million has been raised to date out of $119.4 million. That’s 61.7%. The overall funding for the project is divided into “public funding” and “private funding.” The “private funding” portion is reportedly at 86% ($67 million out of their $78 million goal). But this poll is about the public funding portion. It’s misleading to represent the “the museum project” — which can only be interpreted as the entire museum project, given that there is no context that would indicate otherwise — as “86% funded.” Even if the private funding were at 100% of their goal, the overall project would still only be 71% funded.

The bigger problem is that the county is doing this polling (at public expense) for one purpose: to develop wording for the referendum question that will make it most likely to gain the favor of voters. That means they’re actively advocating for a “yes” vote on the museum tax referendum and using public funds to do it. As Billy Dennis points out in his blog, that’s illegal. 10 ILCS 5/9-25.1(b) states, in part, “No public funds shall be used to urge any elector to vote for or against any candidate or proposition, or be appropriated for political or campaign purposes to any candidate or political organization.”

Why is the County carrying the museum’s water?

Museum Block, Peoria County, State Legislation

Museum tax strategy revealed in latest telephone poll

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Regular commentator Mahkno has left a most interesting comment on the Peoria Pundit website that I’m going to shamelessly steal and quote in its entirety here:

Museum folks ran a very push orientated poll this eve. Had a good 30 second to full minute intro about how great the education benefits would be, how much revenue it would bring in (14 million), how many jobs it would create ([250] union jobs), its 86% paid for so far, and how low a burden it would be (25 cents per…).

Would you support a sales tax increase? Mmm no.

What if it were tied to other public service like firefighting and police? Mmmm… no.

What if the tax were only temporary, to expire at some point? LOL… Civic Center? … MMmmm No…

Done.

The statute under which this tax referendum falls is called the “Special County Retailers’ Occupation Tax For Public Safety, Public Facilities, or Transportation” (Sec. 5-1006.5). This statute has been around a while, actually, except that it used to be just for public safety and transportation. The legislature recently amended it to include “public facilities” for the expressed purpose of helping the museum project go forward.

Since the tax can cover not only facilities, but safety and transportation too, it looks like the county and museum officials are contemplating a common political strategy. It happens all the time in Congress. For instance, say you have a pork-barrel project that doesn’t stand a chance of getting through Congress on a pure up-or-down vote. What do you do? You put it in, say, a veterans hospital bill as an earmark. That way, in order to vote against the pork, representatives have to vote against veterans. No one wants to vote against veterans (and certainly no one wants to be on record as voting against veterans), so the bill passes, pork and all. Voila!

The county is at least contemplating the same strategy here. They have an unpopular sales tax referendum for an unpopular museum project, so how do they get residents to vote for it? Of course! Pair it with something people will be reluctant to vote against — like public safety! Who wants to vote against firefighters or police officers? Then they can market it as a public-safety tax instead of what it really is — a museum-funding tax.

Expect the museum-backers to pull out all the stops in this campaign. They’ve already started behind-the-scenes efforts to silence their critics (like me) through intimidation tactics. I suppose I should be flattered that my little blog is perceived as such a big threat.