|By Clare Howard, Journal Star, Peoria,
Ill.McClatchy-Tribune Regional News
February 16, 2010 --PEORIA -- Bud Grieves was buying and renovating hotels and restaurants in central Illinois during a time when bumper stickers started appearing that read, "Will the last person to leave Peoria please turn out the lights."
Since then, the area recovered, prospered and crashed again, this time in concert with a global recession.
Riding that economic cycle has given Grieves an informed and instructive perspective.
He has studied markets for more than 40 years. With an education in business and economics and a career in equities, Grieves, a former mayor of Peoria, said he's an advocate for investing in Peoria's Downtown. He is, however, concerned about the timing and structure of city backing of a Downtown hotel project linked by a glass walkway to the Peoria Civic Center.
Grieves hopes Peoria's City Council members revisit their commitment to issue bonds to help finance a portion of the $100 million project that will include a new hotel tower and the renovation of the Hotel Pere Marquette. The new property would be a Marriott Hotel.
"I came out publicly in favor of the Downtown Marriott, but I have to be honest. This recession is like none other I've seen," Grieves said. "I don't think we're going to come back quickly and I urge caution. I'm not throwing a wet blanket on this project, but I'm urging caution."
Gary Matthews, developer of the proposed Downtown hotel project, said that, while he agrees about the severity of this recession, he thinks waiting is the wrong move. He said he expects to have his private financing by March, and delaying the project would increase costs.
Since the City Council approved bonding in December 2008, the interest rate for bonds has decreased a full percent, creating a considerable saving for the city, Matthews said.
Grieves said it makes more sense to have the new museum up and running before the city backs Downtown hotel development.
He'd also like to see the city's backing for $40 million in bonds restricted to revitalizing the Downtown block surrounding the project, not used on the hotel property itself.
"I favor this project, but when this new hotel has flat screen TVs, that ratchets up pressure on competing hotels that have to follow suit," he said.
Grieves purchased the shuttered Downtown Howard Johnson Motel, renovated it and opened the Mark Twain Hotel in 1990 without any financial help from the city.
Since 1990, Grieves said, he has invested millions of dollars into upgrading the hotel.
"I have shied away from franchises. I have not paid 7 (percent) to 9 percent to the franchise each year and I've put that money back into the hotel," he said. "So I won't be hurt by the opening of a Marriott, but if the Holiday Inn (City Centre) goes out of business, what good does that do?"
Grieves said that, by waiting for the economy to recover and the Downtown museum to open, the city may be able to cut a better deal with the hotel developer.
"I'm not saying it shouldn't be done. I'm cautioning the council to look carefully at this," he said, suggesting it might be a year or longer before this kind of investment makes sense.
Matthews said that, even if the project moves forward quickly, it will be three years before the hotel opens.
"This is a great time to start construction. I'm optimistic," he said. "Downtown Peoria has been undersold, underestimated and undervalued."
Matthews said his existing restaurant and hotel properties in East Peoria actually saw an increase in sales in December and January, indicating an economic recovery has started.
Matthews said that, when representatives from Marriott came to Peoria early in the development process, they were impressed with the addition on the Peoria Civic Center and the proposed Downtown museum. Part of the reasoning behind the Civic Center expansion was attracting new hotel rooms to Downtown Peoria.
City attorney Randy Ray said city-backed bonds for the Downtown hotel project are contingent on private funding and would be used to upgrade the block, tearing down Big Al's and several other bars on the site. He said the new hotel would fill the entire block.
Grieves, who recently had a medical issue complete with hefty bills covered by his health insurance, said he's concerned about debt-financed growth that creates low-wage jobs with inadequate health insurance.
He provides scholarships for his employees to Illinois Central College, but said he couldn't afford comprehensive health insurance coverage for all his employees.
For businesses to remain competitive, Grieves said, there needs to be an overhaul of the health care system.
Clare Howard can be reached at 686-3250 or firstname.lastname@example.org.
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