A Publication of WTVP

Peter Korn has been Peoria’s city manager since September 1990. He received a B.A. degree from the City College of New York and a Master of Governmental Administration from the Wharton Graduate School of the University of Pennsylvania. He has served as a budget director and city or county manager in four communities. He has also served as a professor of public administration at the State University of New York.

Your job status over the past two years has been somewhat uncertain. At one point, a year and a half ago, the Peoria City Council initially asked for your resignation, then changed its mind and asked you to stay. What is the political climate like at this point?

The council is in a state of flux right now. In the five years I have been here, it has changed dramatically. Of the original group that appointed me, there are only five of eleven still on the council. We lost some long-term people. As a result of cumulative voting the council is much more diverse than it was before – something that was a goal of cumulative voting.

In years past, the bulk of the council used to come from north of War Memorial Drive. That has changes; now much of the council comes from the south half of the city. They represent different kinds of interest and widely differing opinions. Individual council members respond to their constituency. When the constituency is somewhat narrow, it creates some problems.

When you have indecision about goals, it provides problems for management. That’s been a piece of the problem.

The council members themselves, especially the newer ones, represent a different generation – tending to be a bit younger, coming out of the Vietnam era, and questioning the government.

Throughout the country we find that city councilpersons want to be more activist and more hands-on. We have to restructure to accommodate that. Here in Peoria, we started some restructuring with the committee process where individual council people can specialize in certain areas. We have also tried to develop communication mechanisms between some of the department heads and the council committees.

The traditional model of the council going to the manager, who goes to the department heads, is changing. The city manager now tends to be in the center of a more circular organization, trying to coach, facilitate and be the hub of the wheel.

Do you feel fairly secure in your job with this council?

It should be obvious to everyone, based on what occurred a year and a half ago, that job security is not something this city manager has been afforded. In the current city council, I think a good half of the council is comfortable with me and the direction we are going. The remainder would probably like to see the manager go tomorrow morning, or are undecided. Those are not comforting numbers.

With all of the turmoil – the council flip-flopping on retaining you – how difficult is it to work under such circumstances?

It makes a difficult setting in which to operate. I’m a career public administrator. You learn, after 35 years in this business, to operate in the sunshine where everything is done in the open. Your records are all subject to public access; your meetings are all in public, everything that is done is in the media. I don’t think a businessperson would easily adjust to that. Public sector executives grow accustomed to it.

It can be frustrating, but that’s the way we do business; and if you want to be in this business you live with it.

A certain level of stress at City Hall has apparently caused several senior staff members to seek employment elsewhere. Attorney Glenn Collier has left to serve as a judge, finance director Lori Fleming has left. It is known that other senior staffers are looking to leave their positions. How is this affecting your work?

It has been very difficult to build a good organization of professionals and retain them. Good professionals need some stability and some clear goals through which to move ahead. In this particular period of time, many of the management leaders are uneasy. We have to provide stability for them and encourage them to move ahead and take some risks without fear of retribution. Otherwise I know we will lose some more over the next few months. I will work as strongly as possible to encourage people to stay, but it is becoming increasingly difficult. They see what has happened to other city administrators and wonder if they might not be next.

What has your experience been in dealing with the unions representing city employees?

Over time, there has been a sense that we have to deal in a better fashion with the city employees, who are largely organized. Some 700 of our 800 employees are unionized. While we have had reasonably decent union relations, it’s important to remember that unions are a constituency of a significant number of the members of my “board of directors.” That’s something you don’t have in a corporation; a corporation is owned by the stockholders, who elect the directors. Unless a union owns a significant amount of stock, it never elects someone to the board of directors. Our public unions are a significant constituency which actively work to elect people who are sympathetic to their cause. That creates some problems for those of us who deal with people who would ordinarily be employees but who have direct access to the “board of directors.”

I think our labor relations are better than they were before, depending on the particular group. We have good relations with three of our four unions.

How is managing in the public sector different than managing in the private sector?

Managing in the public sector is different. We often hear, “Why can’t government run like a business?” The fact is, government isn’t a business. The people who serve on the “board of directors” are not selected for the purpose of enhancing the corporation in the same way they would be in the private sector. They come from a wide variety of constituencies, including the “employees” who own “shares” through their voting.

Imagine a businessperson whose meetings with his board are all in public – every Tuesday night, on television. Imagine a businessperson who has to make his records and documents available to anybody who comes in with a freedom of information request. Imagine a business where every two years you have a wide open proxy fight for the seats on the board of directors. That’s the way we operate here. Because of the diversity of the population and the leadership, it leads to longer periods of times in which we make our decisions.

In some communities, these problems aren’t as prevalent because they are somewhat homogenous. Peoria is a very diverse, bipolar community. It is the only community I have ever seen where the oldest section of the city is joined to the classiest suburbs. The Richwoods area almost anywhere else would have been “The Village of Richwoods” – a separate suburb. Because the two are together, we have a bipolar community with widely differing perceptions and needs. That’s often seen in the “services versus infrastructure” debate and in who pays taxes and who gets services – with the Richwoods area paying two-thirds of the taxes and the older section requiring most of the police, fire and public works services.

What is your philosophy of management?

The manager carries out the policies set forth by the council. That’s number one. Where they are clear, we can do it. We have developed important communication mechanisms with most of the members of the council, to identify what their interests are. Maintaining that kind of relationship is important in terms of getting the departments to do what the council wants to do.

I believe we have to maximize the use of our employees. We have started to move from top-down management to more of a team effort – delegating things to departments and having them set up teams within their departments to improve performance. This is largely reflective of what is happening in the private sector. We must be willing to take tough decisions, assume risks, and move ahead.

We also have to manage with an eye toward the customers – the people who pay the taxes and get the services. To this end, we need tight budgets and a willingness to question how we do things. We have tried, through a variety of training programs, to get our people on the front line geared to serving the customer. We have been reasonably successful in some areas.

How is the council-manager form of government working in Peoria?

I think the council-manager form of government in Peoria is under some stress, largely because politics in the country is changing. We are rearranging the way in which we do things. Again, the hierarchical way id out; “managers as facilitators” is in.

We have to be more accepting of the diverse opinions of council people and understand of their need to be involved, communicating directly with department heads. I have a number of department heads who are uncomfortable with that; they are not used to dealing with legislators in that fashion. This is not a problem peculiar to Peoria; it is a problem across the country – a trend in more diverse, mid-sized communities.

What would you list as your accomplishments as city manager?

I think there are several. First, city finances are on solid footing. We have diversified our revenue sources; we have cut real estate taxes by forty percent; and we have shifted the tax burden from homeowners to commercial and tax-exempts through the use of utility taxes, which are largely paid by the nonresidential component and are exportable. Overall, we have led a drive to hold tax rates stable in this community, if not to bring them down.

Professionalization of the work force has been another achievement that most people don’t see. We have attracted quality staff; we have trained many of our people for opportunities within the organizations; and we have begun a variety of team efforts within city governments, which yield better decisions.

Growth management has been a major achievement. The “cell one” development near Knoxville resulted from a heroic one-year effort of the mayor, the manager, and a couple of council people, working with Peoria County government and the sanitary district. Over time, that effort is going to provide growth as significant as the Richwoods annexation.

Securing fifty percent of the riverboat revenues early in the administration was another achievement. We don’t’ even have the boat here, yet half the revenues come to Peoria. That amounts to $3.5 million per year, which we use for road improvements within the city.

Another achievement is our neighborhood program. When I came here, the city spent $250,000 a year on about 20 housing rehabilitations; we now spend $2.5 to $3 million a year on a whole variety of neighborhood improvements and programs, from housing loans to fix-up programs to neighborhood centers.

I think the older neighborhoods in the city are becoming more dynamic, despite the common gossip that the neighborhoods are dying. All you have to do is drive through the neighborhoods; things are coming back in a number of them. That’s not to say there aren’t some problems, but there is a feeling that there is reinvestment. Public reinvestment will yield private reinvestment.

I have tried to create an encouraging atmosphere where many good things can happen; that is one of the major functions of a CEO.

One of your tasks, when hired, was to revamp the city budget process. How does the city budget come together now as opposed to a few years ago?

The budget process is much more open than it was before. We are not secretive. The council is much more participative that it was before. We have invited labor to sit in on the meetings to see what the numbers are. The department heads now come to the council and talk to them about it.

The key point is the council now sets the budget targets before the manager submits the budge. Previously, the manager would submit a budget and hope the council would accept it. Now the council is asked to set the spending targets and set the expected tax rate before we do the budget. The departments now know what is available, and they don’t come up with a wish list that I have to spend time chopping up. We have received the “Outstanding Budget Award” of the Government Finance Officers Association three years in a row.

We had no capital program when I arrived. We now have a five-year capital program where we lay out the kind of reinvestment we want to do in the city. All of this is open and public. The council has given significant support for that by adopting increases in the utility tax and enacting a local motor fuel tax. They have stood behind this reinvestment in Peoria. That kind of reinvestment makes private investment happen.

There is a perceived conflict between financing basic city services and financing development. What are your thoughts on these issues?

The conflict comes from the differing perceptions of the people elected to serve on the council, and their differing constituencies. Folks who live in the neighborhoods, particularly in the First, Second, and Third Districts, have a basic and immediate interest in neighborhood services – traffic engineering, sanitary sewers, and police and fire services. We have other people on the council who point out that you can ‘generate the taxes to pay for the services unless you strengthen your tax base. So we have to reinvest in our infrastructure to encourage business.

I believe, however, that a significant number of people on the council are appreciative of both services and reinvestment and seek to balance them.

For years we have been hearing from developers and business people how hard it is to develop in Peoria. Now we are hearing things are improving. How have things changed since you have been city manager, and how would you assess the situation?

I can’t speak about how things were before I came here; the mayor has related that it was difficult. In the last five years we have spent a considerable amount of time trying to become more user-friendly. We have had developers come in to talk with us about needed changes in our operation.

City government has two functions. One is the regulatory function – setting land use designations, site plan reviews, establishing zoning variances. These kids of things are done by the regulatory bodies – the Zoning Board of Appeals, the Zoning Commission, and the City Planning Commission – that do their work with the City Council. The function of these bodies are to represent the public interest, not the applicants’ interests. From a regulatory standpoint there may be a misconception when somebody gets turned down for a variance because, for example, the Zoning Board has decided it is not in the community’s best interest. That type of decision is largely beyond the scope of city staff.

The second function is the service function – the issuing of permits and licenses, and the review of plans, etc. These are the things in our Buildings Department, Planning Department and Zoning Department, where we can improve our application processes and the speed at which we can accommodate these things. I think we have done a reasonably good job in improving our processes. I still hear once in a while from somebody who is having trouble, but I find that most people who do business with us like working with our professionals. The proof of our success is the significant amount of development we have had here in the last four to five years.

Let’s talk about development. The north and west borders of Peoria certainly have projects on the table. There is a conflict between developers who want to develop the real estate, and many citizens who wish their properties to remain in more rural settings. Again, this is related to the need for development and growth to build the tax base which will pay for city services. Are you comfortable that there is a good balance in the direction the city looks to go in the next few years?

The speed of development has been nothing short of dynamic in this community. It is as if the pent-up demand which resulted from the economically sagging 1980s has finally broken loose.

We have tremendous development on Route 150, for example. Two major employers have located hundreds of jobs there. A major retail establishment is being planned for Route 91 and Route 150, with another one across the street.

The development of “cell one” in the Knoxville/Alta area is going to be primarily residential, with some commercial. That development has had more conflict than that other one, largely because the Route 150 developments are bounded on the north by cornfields. Obviously, the folks on Knoxville north of Route 6 are concerned about what’s coming in. We have to raise their level of confidence about the quality of housing that will be built, but we are convinced that, if the city and county are to grow, we need to provide sewered, watered lots so developers can build. We are trying to resolve the problems in that area between people who live there – primarily east of Knoxville – and the developers who want to come in.

We have a deal with Peoria County; the “cell one” deal is done. The county is now working on small planning groups to come up with plans for the area surrounding the city in the “three-mile area.” When they finish their work, they will come back and we will work with them. I think it is in everyone’s interest to resolve this matter because Peoria County won’t grow unless the City of Peoria grows.

How do you resolve a situation where Peoria County residents are skeptical of development which pushes the City of Peoria further out into now-rural areas?

I’m not sure we will resolve it. I think it’s important for everybody to realize that, in a democracy, everyone has the right to speak up. Certainly those who represent the constituencies in that area should speak for their constituencies. In a democracy, we vote; if there is a majority, we move on.

Intergovernmental cooperation is a big issue. How successful has the City of Peoria been in efforts to work with surrounding government bodies?

Intergovernmental relations in Illinois is unusual because of the huge number of special districts we have. In previous positions I have held, generally the city government had all the functions. Here we have separate districts for parks, airports, mass transit, sanitary sewers, schools – you name it – so the city manager does a lot of negotiating. I feel, frankly, that we have excellent relations with the various districts. The park district is working with us on the riverfront; the sanitary district is working with us on the expansion of the sewer lines; the mass transit district is working with us on a new downtown bus transfer station; and we have excellent relations with District 150.

Many Peorians believe, for the first time, that Peoria’s riverfront is finally going to be developed to its full potential. The riverfront is a huge part of Peoria’s future. In your view, how is it going?

We started talking about this a few years ago. We soon realized as cit staff that we weren’t’ going to be able to go anything by ourselves without broadening our base of support. We started to work with the Tri-Centennial Commission, which was interested in riverfront development, and Leonard Marshal’s study group. We realized early on that we all needed to get together rather than each doing our own thing. It was out of those efforts that a plan was brought forth.

The success we have had thus far has been largely because the business leadership of this community has been willing to come forward to support it. As a result of that, the City Council felt comfortable in supporting the concept, funding it, and creating the Riverfront Commission. We have five business people on the commission, including the chairperson. The commission has been extraordinarily successful in providing the core strength for us to move ahead. If we can keep the business leadership involved and concerned we are going to have a tremendously successful riverfront development and a source of continuing pride for Peoria.

What is your general analysis of Peoria’s business climate and future growth opportunities?

Peoria is a hot business climate – quite honestly, because Caterpillar is hot. While we have diversified our job base to some extent, I don’t think we should fool ourselves – Caterpillar is clearly the driving force of the Tri-County area’s economic engine. I think that’s good. A $950 million profit in one year is very helpful to this community. Caterpillar is a major importer of money.

We have real growth with new industry and service groups that have come into the area. Just one Route 150, L.R. Nelson and Ruppman Marketing have created several hundred jobs. We have a lot of good businesses in town, which have made our business base broader.

Our position as the regional retailing center will also be further strengthened. From a retail standpoint we are underserved. We have known that for some time. We have a huge leakage in retail, where people go to Bloomington or Chicago to go shopping. Hopefully the new Cullinan retail development will go a long way toward plugging that gap, in keeping some of that spending here and recirculating it within the community.

While we are doing all of these larger projects, we have to be helpful to smaller businesses. They are the base on which we stand.

What are you priorities for the future, as city manager? Are there particular issues you feel are crucial for the successful development of the city?

Priority number one is rebuilding the older neighborhoods – maintaining the stability of the population. We need continued reinvestment, even though the federal government is going to cut back on our community development funding. The city has to find ways to maintain the infrastructure and housing in our poorer areas.

Second, we have to assist in the creation of jobs so people have places to work. We can do that through the Economic Development Council and through our own programs to assist both larger and smaller businesses.

Third, we have to insure that the population of this city grows. If the population drops or stays stagnant we are in bad shape. We don’t want to be the seventh largest city in Illinois. The “cell one” development will hopefully lead to a “cell two” and “cell three” development over the next ten years, and we will add 10,000-15,000 new people in the next two decades.

Fourth, we have to maintain the strength and viability of School District 150; that is a key issue for this whole city, more so than most people think. The city has to work in partnership with them to maintain good education and to provide them with the kinds of students who will be assets to the future of this city.

Peoria is facing problems with the funding of mass transit. A referendum in November will seek a tax increase for bus service. How critical is public transportation to Peoria?

The mass transit system is much more critical than most of us think. Many folks who may be reading this may not be very concerned about it because they drive care, but we have a significant number of people in this city who need mass transit – the aged, the infirmed, the disabled and poor people. Many of them have no other way to get to work, and they are the work force for the business community. Without mass transit, these people would not be able to get to work, and we would end up with significantly increased unemployment. The maintenance of a decent mass transit system in this city is critical.

Declining government funding brings up the issue of privatization. What services can be assumed by the private sector?

Privatization has to be looked at function by function. You can’t just say “privatize everything” and it will be better. Many of the savings made in privatization are made at the expense of the work force in terms of different levels of pay and benefits.

In privatizing it is critical to identify what functions can best benefit, and to make sure the standards expected of the private firm are clear.

Privatization doesn’t solve all problems. Mass transit is a perfect example. There may be segments of the mass transit operation that can be privatizes. But mass transit systems throughout the country were private until the 1950s. What happened was automobiles became more affordable, suburban growth began, and the bus systems – which were oriented toward a compact, dense population – couldn’t support themselves. As a result, a public subsidy was added to the budgets of mass transit systems. Today probably 70-80 percent of mass transit revenue is public subsidies of some kind. I doubt that any decent mass transit system in an urban area is going to get by without a significant among of public assistance, even if an attempt is made to convert individual pieces of the system to the private sector.

What messages would you like to convey to the business community?

The business community has a huge stake in the quality of city government. The business community has to be an active partner, on a continuing basis, with the public sector if we are going to have growth in this community. I would encourage the business leadership to be active and serve in a variety of capacities – task forces, committees, commissions, or on the City Council.

The business community needs to remember one thing: The parade is made of those who march, not those who stand on the sidelines and cheer. If the business leadership is unwilling to do this, others will come in and the business community and business leadership will find itself on the outside looking in.

The business community is the single most significant influence in Peoria today. Most of the good things that have happened here are because business leaders have taken a positive role in supporting progress for this city. And they can’t’ walk away from us now. IBI