Panetta's article below my comments was sent to me by a friend who assinged the above title to this article in today's Entertainment section of the JS
Nitpick? General Obligation bonds that will stick the already stuck taxpayer (72% from the taxpayer for the now $94+ million dollar museum; $147 million for the entire project)? Of course, the referendum didn't promise an IMAX but the MUSEUM BACKERS DID BEFORE THE REFERENDUM and Kathleen Woith promised one as late as February 2010, in an email. Revenue bonds were the vehicles promised to finance the project as was determined by Peoria County who will OWN the museum building and be liable to maintain the surroundings.
Of course there is a small savings using General Obligation Bonds, bonds that put the burden of the museums failure on the taxpayer, but all those savings will dwarf when the taxpayer is FORCED to take over after the first 20 years or sooner while this highly potential 'white elephant' will continue to sit on our riverfront for the next (fill in the blank) years.
The Journal Star is reluctant to mention that private and public funds of $13,450,000have already been spent including $41,000+ on 'trying' to secure an IMAX and that taxpayer funds are going to be the main contributors to the badly UNDERFUNDED endowment.
Tax dollars to be used to fund the ENDOWMENT???
Yes, the facility tax referendum did not exactly SPECIFY how this money was to be spent. The County Board first capped the tax to be used for the museum at $34+ million, now $41, but this tax expires in 20 years while the museum building could survive for 100 years.
Nit-picking? If so, it takes a nit-wick to know a nit-picker. Improvise? Much to do over nothing?
Indeed.
Merle Widmer
Backstage: Don't derail museum with nitpicks
By Journal Star staff
Journal Star
Posted Sep 12, 2010 @ 12:05 AM
PEORIA -
Opponents who want to stop the new museum undoubtedly think they are sincerely trying to make local government more responsible.
I think they're nitpicking and making much over nothing much at all and potentially mucking up a project that could turn out to be a real turning point for the city's art scene. This museum provides an opportunity to trade in Lakeview's current cramped quarters for something more spacious that could do real justice to arts and sciences and history exhibits, an opportunity for the city in a public way to signal that the arts matter in Peoria.
But Councilman Gary Sandberg and others would disagree. They're launching a petition to block the use of general obligation bonds to fund the new museum. The County Board's decision to use general obligation bonds instead of revenue bonds, Sandberg and others say, is another example of "bait-and-switch" by museum supporters who said that revenue bonds would be issued instead.
You'll remember that last year voters were asked to approve a sales tax hike to fund the museum. The County Board said if such a hike were approved, it would issue a revenue bond to help pay for the downtown complex.
I know. Your eyes are probably glassing over at this point. What's the difference between a revenue bond and a general obligation bond? What's really at stake here?
Less than you might think, despite what opponents might say.
Recall that bonds are really nothing more than special contracts - written evidence of debt owed by a corporation or a government.
Governments issue bonds because bonds are easy ways of borrowing money for municipal projects. When a city issues a bond it promises bondholders that it will pay back both the principal and the interest of what it has borrowed when the bond matures or comes due.
There are different kinds of bonds. Revenue bonds are bonds that are secured by specific income from the issuer. They pay for income-producing projects - income that takes the form of rent, tolls, fees and concessions. Money from rent, tolls, etc., is returned to investors, i.e., the people who bought the bonds.
A classic example would be a city that issues a revenue bond for a water project. Revenue would then be generated from usage and connection fees.
General obligation bonds are much different. They are not secured by specific income from the issuer. Instead, cities pledge to use all of their resources to pay back bondholders. Resources include raising more funds through credit and general taxation, including property taxes.
Cities use general obligation bonds for things that don't directly generate income but that are seen as generally valuable to the community: roads, equipment, public parks and - drum roll, please - museums.
By switching to general obligation bonds, is the County increasing a higher potential burden for taxpayers? The answer is yes.
But let's be realistic. Voters approved (by a slim margin) what's going to be one of the most important public projects in downtown Peoria in a long time.
You don't need to issue a general obligation bond to increase the potential liability that tax payers may have to shoulder in the future. That liability was already taken on when voters OK'd last year's referendum. A public project of this size by definition requires public sharing of the risk.
So why issue a general obligation bond? Why would the County - after mentioning on its website that revenue bonds would be issued - now favor general obligation bonds?
Basically, doing so would be cheaper for local taxpayers. Investors consider revenue bonds a higher risk than general obligation bonds. That's because revenue bonds, as I pointed out above, are secured by specific income. This income may or may not pan out. General obligation bonds are secured by a government's ability to raise taxes.
For the sake of argument, let's suppose the petition succeeds and the general obligation bonds are blocked. The County would then have to stick with its original idea: Issue the revenue bonds, potentially more costly to local taxpayers. Do museum opponents really want that?
This point goes to the heart of what's essentially wrong with current objections to the museum. Circumstances change. We don't live in a static world. Ideas, such as issuing revenue bonds, which may have made sense a year ago may not make sense now. Other alternatives - such as a general obligation bond - may make more sense now.
The same goes for the IMAX. IMAX may have seemed like the perfect solution at one point (although it's by no means off the table at this point). But as more information is gathered, it seems that other ideas might be more cost-effective for the new museum. What's wrong with allowing civic leaders some latitude to improvise in light of new information and circumstances?
The situation would be different if, in addition to approving for a sales tax increase, voters also had voted for an IMAX or for revenue bonds. But these alternatives, remember, were not on the ballot. Only the sales tax was. And the sales tax was approved, if by a bare majority.
The anti-museum people are passionate and mean well - and certainly should be allowed their latest effort. Unfortunately, this petition may have the unintended effect of simply rigidly dictating each jot and tittle that local officials are supposed to follow as they attempt to make one of the most important projects in downtown Peoria a reality.
I, for one, won't be signing it.
Gary Panetta is the fine arts columnist and a critic for the JS
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