Tag Archives: Sen. Dave Koehler

City Council, City of Peoria, State of Illinois

Koehler goes to bat for Matthews

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The pressure is mounting on the Peoria City Council. Now State Senator David Koehler has weighed in with a letter supporting developer Gary Matthews:

Letter from Sen. Koehler

Here’s the text of the letter:

I am respectfully asking you to reconsider all available options so that we may see the Downtown Marriott Hotel Project agreement with EM Properlies, Ltd. move forward. Given the hard work carried out by you, the City of Peoria, EM Properties, Mike Everett and the West Central IL Building and Construction Trades, it would be a real setback if we were not able to move forward with this job creating and economic growth project at this time.

Further, if the project is abandoned now, we would be leaving behind valuable and hard won tax credits procured through the Illinois General Assembly. Just to clarify, if the tax credits are not used by the current developer, we would have to go back through the time consuming legislative process to have a new bill passed before they would be available to any other developer.

In the interest of downtown economic development and job creation, I hope that we can find a way to resume the Marriott Hotel Project. Again, I ask for your reconsideration of all available options to keep this project.

My take: I wonder if Sen. Koehler has sent any similar letters to developer Gary Matthews over the past two and a half years. You know, letters expressing the importance of this project and putting pressure on him to get started on it; letters explaining that the tax credits can only be used by him and that they will be lost if he fails to fulfill his agreement with the City. And about those “hard won tax credits” — are those the one that Governor Pat Quinn agreed to sign after Mr. Matthews contributed $10,000 to his campaign? Hard won, indeed. Was the point of that legislation to force the City to fulfill a contract with a developer whether or not he performs?

Also, is what Sen. Koehler said really true? According to Public Act 096-0933, “For tax years beginning on or after January 1, 2010 and ending on or before December 31, 2015, a taxpayer who qualifies for a credit under the Historic Preservation Tax Credit Pilot Program Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of this Act as provided in that Act.” And just who is a qualified taxpayer? It’s “the owner of the qualified historic structure or any other person who may qualify for the federal rehabilitation credit allowed by Section 47 of the federal Internal Revenue Code.” And finally, what is a “qualified historic structure”? “‘Qualified historic structure’ means a hotel that is located in the City of Peoria and that is defined as a certified historic structure under Section 47 (c)(3) of the federal Internal Revenue Code.” That pretty much means the Pere Marquette.

So from a plain reading of the law, it appears that the historic tax credits are limited to the Pere Marquette, but not limited to Gary Matthews as the developer. The current owners of the Pere Marquette, for instance, could get these tax credits, it would appear. The only other limitation in the law has to do with timing — the credit can only be taken during tax years prior to 2016. Could there be other restrictions? Certainly. I’ve heard anecdotally that there is some sort of application process, and that the window of opportunity for applying is now closed. But I have not been able to find a citation to such a provision so far.

But why question him? Let’s assume he’s right, and we’ll lose these tax credits. What are we losing? Nothing. This is like the person who thinks that, if they don’t buy a $5 box of Cheerios so they can use their 50-cents-off coupon, they will be “losing” fifty cents. In fact, they could just not buy the box of Cheerios and not spend $4.50. We’re not losing the tax credits; we’re not spending $37 million that we don’t have and may never be able to recoup. Furthermore, Gov. Quinn signed into law River Edge Redevelopment historic tax credits which the City could use toward redevelopment of the Pere if it’s included in the redevelopment zone.

Bottom line, with all due respect to Sen. Koehler, the City of Peoria needs to look out for the best interests of its taxpayers, and cancelling this project is the way to do it. I know there are a lot of good-hearted investors that only want what’s best for Peoria, and I applaud them for their efforts. But there is no reason to put any more faith in the developer, and with the economy’s continuing weakness, there is even less reason than in 2008 to believe this project will ever be profitable. Not all investments work out, and the government can’t afford to keep bailing out bad investments.

The Wonderful Development must die.

Business, City of Peoria, State of Illinois

Hotel news recap

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There were a couple of hotel-related news items over the weekend:

  • Gov. Quinn approved tax credits for the Wonderful Development. Incidentally, the Journal Star reported the bill number as SB2535, but it’s actually SB2534. The gist of Quinn’s comments was that these tax credits will help provide jobs for union workers, and that will spur economic growth that will actually generate more revenue for the state. “You put more people to work,” Quinn is quoted as saying. “They pay income taxes and other taxes. The key thing is more economic growth.” Koehler chimed in: “People say, ‘Doesn’t that drain money out of the state budget?’ No, it doesn’t. By the time you pay all those jobs and you are creating extra real estate value, the community and state are going to replenish all of that.”

    Are we supposed to believe these guys have suddenly converted to Reaganomics? Wasn’t it Gov. Quinn who proposed raising personal income taxes from 3 to 4.5% last year? And after he changed his proposed new rate to 4%, wasn’t it Dave Koehler who lamented, “From everything I’ve heard around the Capitol, there will not be any appetite for the income tax (increase) before the election. That’s too bad. I don’t agree with it, but it’s the decision I hear.” What? Why raise personal income taxes? Why not just cut corporate income taxes so the state can reap millions and millions of dollars from all the new jobs that would be created as a result? Or does supply-side economics only work on union-worker-built hotel projects at Main and Madison in Peoria?

    The paper also stated:

    The proposal potentially could reduce the project’s costs by $8 million, savings that are split between developer EM Properties and the city of Peoria. The City Council last month voted 7-4 in favor of a $37 million bond to assist in the hotel project. The tax credit could potentially drop that obligation to $33 million.

    Looking at it one way, this is good — the City’s obligation could be 12% or so less than originally planned. On the other hand, it’s actually a net increase of $4 million in taxpayer incentives, if one looks at tax incentives from all sources equally.

  • The Grand Hotel will be converted to a senior living center. Why? The hotel’s sales manager, Stan Marshall, explained: “[T]hose capacity needs [groups who come to Peoria for meetings or sports events] just aren’t frequent enough. There are a lot of holes in the calendar. We need a steady source of revenue.” Given that the Radisson (formerly Jumer’s Castle Lodge) closed last year, and now the City’s third-largest hotel is getting out of the hotel business, one would be tempted to think that there’s overcapacity of hotel rooms in Peoria. But I’m sure downtown hotel proponents will pooh-pooh such an obvious conclusion. After all, the whole rationale behind the Wonderful Development is this belief that Peoria’s hotel problem is undercapacity.