By Michael Kleen
May 16, the Illinois House approved a Senate bill allowing Winnebago County and its municipalities to raise their hotel tax rate by 2 percent. These funds will go toward a $37.5-$43 million project (reclaimingfirst.org) to improve several existing Park District sports facilities, as well as to turn the former Ingersoll factory along the river in downtown Rockford into an indoor sports complex.
Proponents of this plan call it “Reclaiming First,” because it will supposedly reclaim Rockford’s place as the No. 1 destination for sporting events in the Midwest. While this plan has received bipartisan support among elected officials in the area, taxpayers have several reasons to be concerned.
The riverfront sports complex alone is projected to cost between $11 and $14.9 million and will be funded by several sources, all of which are public. If passed, the hotel tax increase will generate an estimated $750,000 a year. $7 million in funding will come from the Illinois Department of Commerce, and Rockford’s redevelopment fund and the Rockford Park District are expected to pick up the rest of the tab.
The new sports complex will join Sportscore One and Two as yet another publicly owned and operated sports facility in the Rockford area. Its proponents claim this new facility will benefit the region by bringing in more sports tournaments. Participants in these tournaments will, in theory, spend money at area businesses, which will generate more tax revenue and create jobs.
Proponents of the plan claim the combined facility upgrades in Reclaiming First could result in anywhere from $1 to 1.9 million in new annual tax revenue. Using their most generous number, that means it will take nearly two decades for state and local governments to recoup their initial investment. In reality, estimates such as these have a habit of falling significantly short, so the lower number is probably more accurate.
Arguments in favor of the new sports facility seem to be, at best, conjecture. Proponents of the plan throw around impressive-sounding numbers, but never explain how they arrived at those estimates. What evidence do they have that sports teams are going to flock to a facility located miles from the nearest cluster of hotels, inside the 14th most dangerous neighborhood in the country?
The lack of substance goes beyond financial estimates. For instance, in a March 9 guest column in the Register Star, Tim Dimke and John Groh wrote, “a national sports tournament director has already expressed a strong commitment to booking five basketball tournaments that have not previously been held in Rockford. He has toured the existing site, seen the architectural drawings and has told us it is ideal for his tournaments.”
Who was this person, and what is the magnitude of these tournaments? Are we supposed to get on board with spending millions of dollars on this public project based on a verbal commitment by an anonymous source? Without a written contractual agreement, how can we be confident in this person’s current or continued commitment? This assertion would not pass the sniff test in the private sector.
If demand for this new sports complex were so great, and profitability so assured, why haven’t its proponents been able to secure private funding sources? Why didn’t Dimke, Groh and other members of the Reclaiming First steering committee rush to form a corporation and invest their own money in it? I suspect it is because the risk of failure is so high, and the benefits so speculative, that no bank or private equity firm would touch it.
To secure private funding, one needs an appealing idea backed by things like a feasibility study and a solid business plan that demonstrates profitability. To secure public funding, one only needs an appealing idea and the right political connections.
Using tax dollars to fund the Ingersoll sports complex is appealing because there is no personal risk. If it fails, only the taxpayers lose. If it never makes a profit, tax dollars will subsidize its operations. Higher taxes and governmental ownership of businesses are things our local politicians love to get behind.
Both the State of Illinois and the City of Rockford are currently scrambling to cover their legitimate obligations. How is it that they can fund a highly speculative venture such as this while allowing roads to crumble and bills to pile up? If this is a good and truly profitable idea, private money will find its way to the effort. As a result, citizens of the Rockford area would not have to suffer the inevitable losses of yet another misguided venture by government into what should be undertaken by private enterprise.
Michael Kleen is a local author, historian and owner of Black Oak Media. He holds a master’s degree in history and a master’s degree in education. He was the Republican candidate for Rockford mayor in the 2013 election. Read his previous columns online at makleen.com.
From the May 29-June 4, 2013, issue