Peoria Pundit

From a St. Louis Post-Dispatch blog:

Here in St. Louis, we now know the folly of listening to consultants who promise that a big new hotel will attract more convention business. Our downtown Renaissance Hotel, built on the basis of such projections, has just defaulted on its debt payments. But 180 miles to the northeast, the consultants are still making such promises, and the leaders of Peoria are in a mood to believe them.

The Peoria City Council endorsed a plan last month that would provide $39 million of public financing for a new Marriott Hotel attached to the Civic Center. In one respect, the city would be making an even greater commitment than St. Louis did: Peoria appears to be talking about issuing general obligation bonds, which the city would repay out of tax revenue. St. Louis’ convention hotel was financed with revenue bonds, with no obligation for the city itself to make payments.

Last night I was ranting about property rights and eminent domain over on American Guesser. I observed that with the recession, we need to be on the looking for developers and politicians threatening to take private property away to make room for privately-owned projects.

And then it struck me: Are the powers-that-be planning on using eminent domain to grab the land needed to build the spiffy new and taxpayer funded expansion and renovation at the Pere Marquette?

So, I whisked off some letters to members of the council:

The first to reply was Gary Sandberg:

Question: Will the city use eminent domain to make this project happen?

In any earlier discussion, the use of eminent domain has never been mentioned. With the purchase of the Zuccarini /Abraham property by conventional means, I would think that eminent domain is not necessary. The only other potential use would be for he purchase of the underlying land at the Pere Marquette which for nearly a century had been under a land lease I believe. I asked Gary Mathews about what he “HAD” (note tense) purchased with respect to Pere and he stated that he had purchase agreements on both the building and the land. I suspect the presence of the term or power is more indicative of boiler plate and sloppiness of parties drafting the give-away than a power necessary for the development.

Question: Has there been any commitment with the developer to use eminent domain if they have trouble reaching a deal?

Not by the Councilperson, but I have NOT committed to anything more than the availability of any additional H tax from the Hospitality Zone for the local subsidy. In as much as meetings have been ongoing since and before Henry Holling was officially employed by the City as interim City Manager, yet he was involved and attending these meetings, I suspect that whether I have not made any commitment is mute,

Question: If eminent domain comes up for a vote, will you vote for it? Why or why not?

NO! I do NOT believe that the use of eminent domain for private development is legal. I do NOT believe (or have drank the kool-aid to make me believe) that the construction of a hotel, a skywalk, or a parking facility is public benefit. I also do NOT believe that economic development projects meet the legal threshold for public purpose. So NO!

I couldn’t agree more. It’s easy to understand why he has fans.

Patrick Nichting, 5th District, also replied, but he was much more brief:

I have not seen the development agreement so I can not comment as to its content.

Fair enough.

And then Barbara Van Auken, 2nd District, replied:

I know of no plans (or need) to use eminent domain. The City could not use eminent domain for this project in any event, as it involves a private versus public development. Even if the Supreme Court hadn’t ruled as it did in such matters, I wouldn’t support use of eminent domain for a private development.

And Mayor Jim Ardis put the issue to rest, as far as this project is concerned:

Eminent domain is always a possibility, but it won’t be necessary as the developer and property owners have already agreed on a price for the property.

Well, that’s that then.

Meanwhile, Merle Widmer takes a lok at the numbers here and here, while C.J. looks at the hype here and here.

UPDATE: Eric Turner replied:

One thing about this council is there is a belief in avoiding Eminent Domain we truly believe in and support property rights and will do all we can to avoid Eminent Domain. Hopefully we can agree by way of fair negotiations. As a council we are willing to work with all involved to avoid the negatives I.e. Eminent Domain.

About a month ago, someone deeply involved in the Hotel Pere Marquette renovation/expansion told me, and I’m paraphrasing here: “The new, second tower would not in any way resemble the Gem Terrace building in East Peoria.”

And I was reassured.

Here’s a picture of Gem Terrace. Perhaps you’ve seen it before, driving through over-grown series of unconnected, unwalkable strip malls that downtown East Peoria has become.

Actually, it’s an artist’s rendering … an idealized version of what it’s supposed to look like. In other words, this is what the creators think looks good, shown in its best possible light.

Now, here is a picture — another artist’s rendering — of the proposed addition to the Pere Marquette addition:

My first reaction upon seeing this image, courtesy of the Peoria Journal Star, was: “Oh, my God. This isn’t just ugly. It’s butt ugly.” My second reaction was “Oh, my God. It’s looks just like Gem Terrace.” My third reaction: “I’ve been lied to.”

Look at the damn thing. It’s ugly. It’s a glass monstrocity. Obviously, they are more concerned with the hotel looking like the Peoria Civic Center than they are with the new addition looking like the original hotel. And it’s ugly. Did I mention ugly?

Personally, I don’t care if someone wants to build an ugly building. Beauty is in the eye of the beholder, and if it were for the vulgarians among us, we woduld have no reason to appreciate true beauty and taste. 

But Dave Matthews and the other investors are coming before the city council, like beggars, asking for every single Peorians to help contribute to the financing for this thing. That means everyone ought to have a say about this thing. And I say that if these people want $39.3 million in public financing for their $102 million project, they can damn well send this thing back to the drawing board.

Blogger and Peoria County Board member Merle Widmer is notorious for keeping clips about how the government conducts its public business. He’s been keeping an eye on the Peoria Park District and the Riverplex project.

This week, he brough it all together with a five part recap, the first of which is this one. Here’s a paragraph that sums it up:

Most of the projections made by the PPD did not pan out. The major one was that the RiverPlex would be self supporting and later very profitable. It has operated at substantial losses since opening day. These are facts, generally denied by PPD officials. However, the saying goes, “To ignore or deny facts, does not change the facts.”

Well, Merle does have the facts on his side. But when this thing was built, there weren’t many people who held office, nor anyone in the media, who was standing up and saying this sort of thing was a bad idea.

My two cents: So why rehash old news? Here’s one reason: Just as the RiverPlex was a bad idea because it was and is taxpayer-funded way to compete with private businesses and already existing non-profit organizations, it is also a bad idea to give special property tax breaks to the proposed expansion and renovations of the Pere Marquette Hotel in downtown Peoria.

There are differences, of course. The RiverPlex is totally owned by local governments and financed by taxpayers. The Pere is and would be owned by private developers. But the whole sale of the hotel to local people depends on the success of the yet-unrevealed  and unapproved Tax Increment Financing district agreement.

And this isn’t just a helping hand the city would be offering, I’ve heard that the developers want something close to if not more than half of the cost of the whole thing to come from TIF sources.

And what does the city get? Well, maybe the thing will succeed and start paying taxes. Although, we’ve yet to see that happen with any TIF. While we’re waiting, school districts and other taxing bodies will see tax rates frozen. The people who run the Peoria Civic Center think this will help draw customers. One theory has it all these tourists and convention goers are going to spend big cash at bars and restaurants, But the others think the whole idea about the walkway is for the Civic Center to capture every single red cent of discretionary spending these fine folks spend during their stay in the river city.

And what do the other hotels in the Peoria area get? They get to compete against a business that’s being funded by taxpayers.

Just like Peoria area health clubs have to compete against the taxpayer funded RiverPlex.

Myself, I hope they do renovate the hotel, even if they add that walkway. But I don’t think taxpayers should fund ANY of it, let alone half of it, through a TIF or anything else.

I chatted with someone involved in the mega hotel project that we’ve been discussing. He wanted to remain anonymous, and I wasn’t taking votes. So here are the bullet points:

• The cost of the project is more than $100 million.
• Councilman Clyde Gulley wants a two-week delay on a vote on whether or not to approve a new liquor license that would let Big Al’s move down the block. The investors are paying Big Al’s some big money on an “option” to buy his current location, ansd they don’t want to have to keep paying more. The investors are leery of these sorts of delays and may pull out of the city strings along the project.
• This would not be a second hotel next door to the Pere Marquette. This would be an expanded Pere Marquette. A second tower would be built, and once completed, the inside of the Pere would be gutted, with many of the single rooms converted into suites designed for business travelers. Also the existing parking deck were be demolished and replaced with a new deck that is more in compliance with the principals of New Urbanism: Retail shops would be on the ground floor with parking on top.
• The new, second tower would not in any way resemble the Gem Terrace building in East Peoria.
• If the project happens, Gary Matthews and other Peoria-area investors would be the new owners of the Pere Marquette. The current owners are located out of state. Local ownership of the new Pere would be a boon to Peoria, as they would have more of a stake in supporting downtown businesses.
• The project is designed to stem the tide of East Peoria growing — with new hotels and restaurants — while Peoria is losing hotel occupancy and closing restaurants, especially in the downtown area. My source rattled off a list of restaurants in downtown Peoria that have closed in recent years, while he named one in East Peoria to suffer a similar fate: Corkey’s.
• Public financing accounted for roughly 40 percent of the cost of building Embassy Suites, which is running at close to 80 percent occupancy and is getting much of Caterpillar’s travel business.
• Project investors are hoping to secure a similar percentage of public financing for this project through a tax increment financing project agreement.
• Likewise the skywalk will not be the glass monstrosity may detractors claim it would be, my source said. Also the skywalk would not lure away potential retail level pedestrian traffic. Most of the people using it would be people who might not even be in Peoria were it not for the new connected hotel anyway. Convention goers do not want to go from their rooms to their events and be exposed to rain, snow, traffic etc.
• The new Pere Marquette might become affiliated with a hotel chain like Marriott and Sheraton, and thus benefit from their reservation system. Without improvement, a less desirable hotel chain might get involved, making it less desirable for business and convention business.
• In defense of the TIF District, my source said there’s a real possibility that other hotels in the TIF — like the downtown Holiday Inn — might close. If the owners submit a TIF agreement, their property taxes rates would be frozen instead of decline. He said there’s a possibility the Pere’s value also would decline if it were allowed to deteriorate.
• No one involved in the project is even contemplating asking the city to use eminent domain powers to grab the other properties on the block, including Big Al’s. To do so to build a private project would be inappropriate.
• Some bloggers and commenters suggest that Big Al’s relocate other than where it is requesting a new liquor license, such as the Warehouse District. This would kill the $100 million project because of the delays it would entail.

I told my source that I am 90 in favor if this. I hate the idea if adding another TIF district. But I do want to Civic Center to succeed.

Could this be what gave local hotel owners the idea Ransburg was in favor of bailing out their competition?

This is what WMBD reported on February 26 (scroll to the bottom):

It’s still unknown how much public involvement, if any, would come in a plan to help the Hotel Pere Marquette. Mayor Dave Ransburg, while saying there is currently no plan, also says a proposal is four to six weeks away. He explains it this way: “It’s just like being in the third trimester of having a baby. We’re closer now to having the baby than we were when you first started talking about it. But we don’t know the due date yet.”

Ransburg says the Pere is a full-service hotel with a high overhead and _should not try to compete on price with limited-service
competitors_.

Gee, where in the world do people get the idea Ransburg wants to help the Pere at the expense of its competition.

The answer: Right out of Ransburg’s own mouth.

People, you simply cannot trust the words that come out of this guy’s mouth.

dave ransburg,pere marquette

I went to PJStar.com looking for coverage of last night’s city council meeting. I couldn;t find one single link to any story about the meeting.

WMBD Radio reports that:

Mayor Dave Ransburg denounce[d] a Sunday Journal Star ad which stated he and two other council members backed a bail-out proposal for the Hotel Pere Marquette. Ransburg called the ad a “drive-by shooting.” No Pere discussion was on the agenda Tuesday.

Funny how the Juurnal Star forgets to link to a council story that includes criticism of the Journal Star.

I’m sure it’s just a coincidence.

journal star,dave ransburg,pere marquette

From WMBD 1470-AM*:

The idea of using city money to back new loans for Hotel Pere Marquette could come to the Peoria City Council later this month. WMBD’s Dan DiOrio quizzed Peoria Mayor Dave Ransburg about it during Ransburg’s monthly appearance on the 3D Morning Show.

Ransburg: “We’re coming at it not from the standpoint of propping up a business that is not locally owned – it is there in Overland Park, Kansas – but trying to make sure that the closest hotel, the oldest hotel, in close proximity to this magnificent facility we’ve got called the Civic Center, doesn’t go dark and in fact is operable as the Civic Center expands.”

DiOrio: “And I understand why you consider it important, but on principle, many people feel it’s just a bad idea, that there’s got to be a better way.”

Ransburg: “So far we haven’t found it. You may be right. It would be great if somebody came in and said, ‘Gee, I’d like to spend $15-20 million on the hotel, and I’ll put up my money.’ So far that hasn’t happened. We’ve talked to them for a year. We haven’t moved particularly far. I think the city manager is going to bring this to council soon, and we’ll vote it up or vote it down, and maybe the market will just take over and let it go its way.”

This idea has been bandied about in secret for months.

It’s an incredibly stupid and unfair use of taxpayer money.

If the Pere Marquette cannot survive located across the street from the Peoria Civic Center it’s being run by stupid people. Let the free market take its course.

*Forgive me for posting the entire article. These guys don’t have permalinking.

dave ransberg,pere marquette,civic center

From the Journal Star: Civic Center hotel among ideas

While offering up no details, Peoria City Manager Randy Oliver admitted Friday that “there has been some interest in attaching a hotel to the Civic Center.”

“Anytime you have a convention center and there’s not a hotel immediately attached to it, there is some interest by some people to create a convention center hotel,” Oliver said Friday. “We’re open to entertaining any and all proposals.”

The comments come on the heels of leaked reports that owners of the Hotel Pere Marquette are seeking substantial city funds and other local monies for an extensive renovation. A city source has told the Journal Star that the request is for $1 million a year in city tax dollars for the next 20 years for operation of the historic Downtown hotel, as well as a $6 million loan from the city for renovations.

The city loan would be paid back through hotel profits, but it would not be guaranteed unless those profits emerge, the source said, speaking on the condition of anonymity. The proposal also reportedly includes a combined $6 million gift from Caterpillar Inc. and the Peoria Civic Federation, a private group of top area CEO’s.

Caterpillar and the Civic Federation officials have both denied they’ve been approached with any such deal.

There doesn’t seem to be much support. Here:

“I will say that the proposal they provided, in my opinion, was not in the best interest of the city of Peoria nor was it in the best interest of the taxpayers,” Oliver said, adding he doesn’t believe that discussions to help the Pere Marquette are very far slong.

And here:

Meanwhile, some City Council members are upset that the media are informing them of negotiations with the hotel.

At-large Councilman Eric Turner says the various proposals should be discussed by the entire council in executive session.

“There are private investors in this community who I have talked to (Friday) that said they are willing to look at options for the Pere,” Turner added. “They’re very serious. I have a proposal. So, it’s out there. It’s just a matter of us beginning the discussion.”

At-large Councilman John Morris said the media’s involvement “makes it difficult for me to take any of these (proposals) seriously until we have a formal proposal. My principal concern is for the health and vitality of Downtown Peoria and that we’re looking at all the options. I want to protect the current taxpayers’ investments.”

Translation: “Cursed media! I’ll vote for anything that takes taxpayer money and puts into the hands of developers! But I won’t get the chance if you keep interfering!”

And Ransburg is still trying conduct secret meetings on the whole thing:

Mayor Dave Ransburg, who has been criticized by some council members for not involving them in the debate, said again Friday that “there’s no plan.”

“I think it’s inappropriate to share anybody’s proposal,” Ransburg said. *”I don’t want to design whatever we do in public.”*

Of course not. First, they have to get the plan together, map out a strategy to sell the idea, make sure all the players (i.e. beneficiaries) are on the the same page and are using the appropriate buzz words, then bring it up for a vote so it can be rubber stamped before opposition can build. THAT is how politics is done in Peoria.

And the Journal Star finds some backbone on today’s editorial page. They express some misgivings about spending taxpayer money to keep a privately owned, luxury hotel open. They better be careful; they come close to approaching common sense. When the guy who is supposed to update their Web page wakes up from his nap and actually posts the editorial, I’ll try to post a link to it.

*NOTE:* Speaking of the JS editorial board, it actually had the
nerve to chastise Ransburg and the council for not backing the referendum to eliminate the Peoria Election Commission and consolidate city elections services with the Peoria County Clerk’s office. It’s all about efficiencies, they said. Funny how the editorial didn’t mention that a very good case has been made that the consolidation could mean a loss of hundreds of thousands of dollars from the city’s budget.

dave randburg,peoria civic center,pere marquette

Notice how efficiency doesn’t matter when the spending is for a JS pet project like the downtown museum of Peoria history.