Thursday, February 17, 2005

The Answer Is Always Yes

An article in the February issue of Forbes is must reading for every tax payer in Peoria. The article is entitled “The Answer Is Always Yes” and asks the question “Where do politicians get the crazy idea that the world need another Convention Center? From the experts, of course”! The article goes on to say “over the last decade cities’ annual capital spending on centers has doubled to $2.4 billion. The projects are frequently backed by expensive feasibility studies from consultants that rarely give a thumbs-down. Seven million square feet will be built in the next few years including Peoria, Illinois. Unmentioned in the ribbon cutting is that the space will be impossible to fill. Attendance has fallen at most centers, this attendance being stolen by such destinations as Orlando and Las Vegas”. The article continues “trade show attendance peaked in the mid 1990. Shows in general are far less relevant. Consolidation in industries has left a smaller pool of exhibitors. So why concrete being is poured in Jackson, Miss., Peoria, Il. and Spokane, Wash? Politicians, playing local hero, are incapable of finding reasons not to build”. The article goes on to give a case history of Portland, Ore., that lost $5.5 million last year on their expanded Center. The Portland Center director is quoted as saying “We lose a lot of shows because we don’t have a big hotel. But it doesn’t pencil out for a private company. A hotel here would need a lot of help”. The article also says St. Louis made a huge convention expansion in 2003 projecting 800,000 rooms per night but are actually only getting half that number of hotel guests. The failure to meet expectations has left St. Louis in a severe financial situation.

The article continues “The assumptions that go into feasibility studies are the problem. Out of 75 potential projects reviewed by the firm Portland hired, only 4 were deemed unfit. Advisors conclusions often fly in the face of logic. Cities are often told that they can overcome obstacles like frigid weather by “specific marketing efforts”.

The article continues by saying “that the failure to fill space is an advantage to show managers who have the upper hand in negotiating”.

I heard today that the estimated cost of our local expansion has jumped from $55 million to $63 million. An article in the JS on 1/25/04 pegged the expansion costs to be 50 million so costs have already risen by more than 25%.

I again suggest you read the February 18 issue of Forbes magazine. Might influence who you vote for next Tuesday but it is probably too late. As they say, “the die is cast” and the future will determine whether Peoria becomes a destination or whether we are spending our way to becoming one of the highest taxed communities in the United States.

2 comments:

Karrie Alms said...

Merle:

I am glad to know that your recovery is going well. A bullseye once again. Not being a member of the 'progressive crowd' aka 'build it and they will come', Peoria is just about done in with the elite's Field of Dreams mentality. Hum, let's see --- what kind of a cupcake has been baked --- Riverplex, Ball Stadium, Riverfront Development with bond issues to be paid for via parking meter revenue, the Civic Center Expansion and now the Zoo Expansion will be the sprinkles on this rotten cupcake voted into effect by the elected officials. These are some of the worst uses of public dollars that not only have the upfront price tag but all the years of interest that usually double the price tag. When will enough be enough? Peoria Leaders for the most part are caught out of step and seem to build too late to capture new revenue streams while the basic city services remain unfinished. So, remember to cast your vote in Districts 1, 2, and 3 for a new councilperson, you know what you have, it is not difficult to imagine that a change would be an improvement! :)

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